1




                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                   FORM 10-Q



(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended June 30, 2002

                                  OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

                        Commission file number 1-6152

                     THE BANK OF NEW YORK COMPANY, INC.
            (Exact name of registrant as specified in its charter)

NEW YORK                                             13-2614959
(State or other jurisdiction of                     (I.R.S. employer
 incorporation or organization)                      identification number)


One Wall Street, New York, New York                  10286
(Address of principal executive offices)            (Zip code)


                                (212) 495-1784
             (Registrant's telephone number, including area code)


    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months(or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.                         Yes [X]    No [ ]


    The number of shares outstanding of the issuer's Common Stock,
$7.50 par value, was 726,293,847 shares as of July 31, 2002.


 2


                     THE BANK OF NEW YORK COMPANY, INC.
                                 FORM 10-Q
                             TABLE OF CONTENTS



PART 1.  FINANCIAL INFORMATION
------------------------------

Item 1.  Financial Statements

          Consolidated Balance Sheets
          June 30, 2002 and December 31, 2001                       3

          Consolidated Statements of Income
          For the Three Months and Six Months Ended
          June 30, 2002 and 2001                                    4

          Consolidated Statement of Changes In
          Shareholders' Equity For the Six
          Months Ended June 30, 2002                                5

          Consolidated Statements of Cash Flows
          For the Six Months Ended June 30, 2002 and 2001           6

          Notes to Consolidated Financial Statements                7

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                  13 - 34

Item 3.  Quantitative and Qualitative Disclosures about Market
         Risk. (See "Trading Activities")                          19

PART 2.  OTHER INFORMATION
--------------------------

Item 1.  Legal Proceedings                                         35

Item 2.  Sales of Unregistered Common Stock                        37

Item 4.  Submission of Matters to Vote of Security Holders         37

Item 6.  Exhibits and Reports on Form 8-K                          38

SIGNATURE                                                          39


 3

PART 1.  FINANCIAL INFORMATION
Item 1.  Financial Statements
-----------------------------

                      THE BANK OF NEW YORK COMPANY, INC.
                          Consolidated Balance Sheets
                  (Dollars in millions, except per share amounts)
                                  (Unaudited)


                                                            June 30,          December 31,
                                                              2002                2001
                                                              ----                ----
                                                                         
Assets
------
Cash and Due from Banks                                    $ 2,885             $ 3,222
Interest-Bearing Deposits in Banks                           7,765               6,619
Securities:
  Held-to-Maturity (fair value of $1,198 in 2002
   and $1,178 in 2001)                                       1,201               1,211
  Available-for-Sale                                        15,176              11,651
                                                           -------             -------
    Total Securities                                        16,377              12,862
Trading Assets at Fair Value                                 6,577               8,270
Federal Funds Sold and Securities Purchased Under Resale
 Agreements                                                  2,645               4,795
Loans (less allowance for credit losses of $616 in 2002
 and 2001)                                                  35,382              35,131
Premises and Equipment                                       1,013                 992
Due from Customers on Acceptances                              502                 313
Accrued Interest Receivable                                    248                 236
Goodwill                                                     2,298               2,065
Intangible Assets                                               74                  19
Other Assets                                                 5,039               6,501
                                                           -------             -------
     Total Assets                                          $80,805             $81,025
                                                           =======             =======

Liabilities and Shareholders' Equity
------------------------------------
Deposits
 Noninterest-Bearing (principally domestic offices)        $11,627             $12,635
 Interest-Bearing
   Domestic Offices                                         18,093              16,553
   Foreign Offices                                          25,571              26,523
                                                           -------             -------
     Total Deposits                                         55,291              55,711
Federal Funds Purchased and Securities
 Sold Under Repurchase Agreements                            1,687               1,756
Trading Liabilities                                          3,033               2,264
Other Borrowed Funds                                         2,052               2,363
Acceptances Outstanding                                        504                 358
Accrued Taxes and Other Expenses                             3,998               3,766
Accrued Interest Payable                                        53                  92
Other Liabilities                                            1,909               3,422
Long-Term Debt                                               5,668               4,976
                                                           -------             -------
     Total Liabilities                                      74,195              74,708
                                                           -------             -------

Shareholders' Equity
 Class A Preferred Stock - par value $2.00 per share,
  authorized 5,000,000 shares, outstanding 3,500 shares
  in 2002 and 2001                                               -                   -
 Common Stock-par value $7.50 per share,
  authorized 2,400,000,000 shares, issued
  993,235,006 shares in 2002 and
  990,773,101 shares in 2001                                 7,449               7,431
 Additional Capital                                            809                 741
 Retained Earnings                                           4,831               4,383
 Accumulated Other Comprehensive Income                         32                  80
                                                           -------             -------
                                                            13,121              12,635
 Less: Treasury Stock (265,346,551 shares in 2002
        and 260,449,527 shares in 2001), at cost             6,505               6,312
       Loan to ESOP (823,810 shares in 2002
        and 2001), at cost                                       6                   6
                                                           -------             -------
     Total Shareholders' Equity                              6,610               6,317
                                                           -------             -------
     Total Liabilities and Shareholders' Equity            $80,805             $81,025
                                                           =======             =======

----------------------------------------------------------------------------------------
Note: The balance sheet at December 31, 2001 has been derived from the audited financial
statements at that date.
See accompanying Notes to Consolidated Financial Statements.





 4

                                     THE BANK OF NEW YORK COMPANY, INC.
                                     Consolidated Statements of Income
                                  (In millions, except per share amounts)
                                                (Unaudited)


                                                                For the three       For the six
                                                                months ended        months ended
                                                                  June 30,            June 30,

                                                              2002       2001     2002       2001
                                                              ----       ----     ----       ----
                                                                               
Interest Income
---------------
Loans                                                        $ 377      $ 595   $  760     $1,271
Securities
  Taxable                                                      158        100      299        178
  Exempt from Federal Income Taxes                              16         20       32         37
                                                             -----      -----    -----      -----
                                                               174        120      331        215
Deposits in Banks                                               44         62       79        132
Federal Funds Sold and Securities Purchased
  Under Resale Agreements                                       12         38       26         89
Trading Assets                                                  68        110      141        251
                                                             -----      -----    -----      -----
    Total Interest Income                                      675        925    1,337      1,958
                                                             -----      -----    -----      -----
Interest Expense
----------------
Deposits                                                       158        373      318        835
Federal Funds Purchased and Securities Sold
  Under Repurchase Agreements                                    8         23       16         55
Other Borrowed Funds                                            30         28       59         59
Long-Term Debt                                                  56         71      109        152
                                                             -----      -----    -----      -----
    Total Interest Expense                                     252        495      502      1,101
                                                             -----      -----    -----      -----
Net Interest Income                                            423        430      835        857
-------------------
Provision for Credit Losses                                     35         30       70         60
                                                             -----      -----    -----      -----
Net Interest Income After Provision for
  Credit Losses                                                388        400      765        797
                                                             -----      -----    -----      -----
Noninterest Income
------------------
Servicing Fees
  Securities                                                   478        443      932        906
  Global Payment Services                                       71         72      144        141
                                                             -----      -----    -----      -----
                                                               549        515    1,076      1,047
Private Client Services and
  Asset Management Fees                                         88         80      171        161
Service Charges and Fees                                        93         95      176        185
Foreign Exchange and Other Trading Activities                   72         98      134        181
Securities Gains                                                25         46       56         92
Other                                                           28         31       60         64
                                                             -----      -----    -----      -----
    Total Noninterest Income                                   855        865    1,673      1,730
                                                             -----      -----    -----      -----
Noninterest Expense
-------------------
Salaries and Employee Benefits                                 418        393      805        788
Net Occupancy                                                   49         47       98         97
Furniture and Equipment                                         35         31       70         62
Other                                                          194        193      372        377
                                                             -----      -----    -----      -----
    Total Noninterest Expense                                  696        664    1,345      1,324
                                                             -----      -----    -----      -----
Income Before Income Taxes                                     547        601    1,093      1,203
Income Taxes                                                   186        216      370        434
                                                             -----      -----   ------     ------
Net Income                                                   $ 361      $ 385   $  723     $  769
----------                                                   =====      =====   ======     ======


Per Common Share Data
---------------------
   Basic Earnings                                            $0.50      $0.53    $1.00      $1.05
   Diluted Earnings                                           0.50       0.52     0.99       1.03
   Cash Dividends Paid                                        0.19       0.18     0.38       0.36
Diluted Shares Outstanding                                     729        742      729        743


-------------------------------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements.



 5




                       THE BANK OF NEW YORK COMPANY, INC.
             Consolidated Statement of Changes in Shareholders' Equity
                       For the six months ended June 30, 2002
                                 (In millions)
                                  (Unaudited)
                                                                    

Common Stock
Balance, January 1                                                        $ 7,431
  Issuances in Connection with Employee Benefit Plans                          18
                                                                          -------

Balance, June 30                                                            7,449
                                                                          -------

Additional Capital
Balance, January 1                                                            741
  Issuances in Connection with Employee Benefit Plans                          68
                                                                          -------

Balance, June 30                                                              809
                                                                          -------

Retained Earnings
Balance, January 1                                                          4,383
  Net Income                                                       $ 723      723
  Cash Dividends on Common Stock                                             (275)
                                                                          -------

Balance, June 30                                                            4,831
                                                                          -------

Accumulated Other Comprehensive Income

    Securities Valuation Allowance
    Balance, January 1                                                        114
      Change in Fair Value of Securities Available-for-Sale,
        Net of Taxes of $(16) Million                                 (9)      (9)
      Reclassification Adjustment, Net of Taxes of $(25) Million     (40)     (40)
                                                                          -------

    Balance, June 30                                                           65
                                                                          -------

    Foreign Currency Items
    Balance, January 1                                                        (46)
      Foreign Currency Translation Adjustment,
        Net of Taxes of $(1) Million                                  (2)      (2)
                                                                          -------

    Balance, June 30                                                          (48)
                                                                          -------

    Unrealized Derivative Gains
    Balance, January 1                                                         12
      Net Unrealized Derivative Gains on Cash Flow Hedges,
       Net of Taxes of $3 Million                                      3        3
                                                                   -----  -------

    Balance, June 30                                                           15
                                                                          -------

Total Comprehensive Income                                         $ 675
                                                                   ======
Less Treasury Stock
Balance, January 1                                                          6,312
  Issued                                                                      (42)
  Acquired                                                                    235
                                                                          -------

Balance, June 30                                                            6,505
                                                                          -------

Less Loan to ESOP
Balance, January 1                                                              6
                                                                          -------

Balance, June 30                                                                6
                                                                          -------

Total Shareholders' Equity, June 30                                       $ 6,610
                                                                          =======



------------------------------------------------------------------------------------
Comprehensive Income for the three months ended June 30, 2002 and 2001 was
$387 million and $381 million.
Comprehensive Income for the six months ended June 30, 2002 and 2001 was $675 million
and $688 million.
See accompanying Notes to Consolidated Financial Statements.




 6


                        THE BANK OF NEW YORK COMPANY, INC.
                      Consolidated Statements of Cash Flows
                                 (In millions)
                                  (Unaudited)



                                                          For the six months
                                                             Ended June 30,

                                                             2002       2001
                                                             ----       ----
                                                                
Operating Activities
Net Income                                                 $  723     $  769
Adjustments to Determine Net Cash attributable to
 Operating Activities:
  Provision for Losses on Credit and Other Real Estate         70         62
  Depreciation and Amortization                                91        127
  Deferred Income Taxes                                       329        319
  Securities Gains                                            (56)       (92)
  Change in Trading Activities                              2,464      1,549
  Change in Accruals and Other, Net                            22         99
                                                           ------     ------
Net Cash Provided by Operating Activities                   3,643      2,833
                                                           ------     ------
Investing Activities
Change in Interest-Bearing Deposits in Banks                 (831)      (868)
Purchases of Securities Held-to-Maturity                      (60)         -
Maturities of Securities Held-to-Maturity                      69         20
Purchases of Securities Available-for-Sale                (10,353)    (5,060)
Sales of Securities Available-for-Sale                      3,979      1,575
Maturities of Securities Available-for-Sale                 2,888        928
Net Principal Disbursed on Loans to Customers                (508)      (545)
Sales of Loans and Other Real Estate                          205        276
Change in Federal Funds Sold and Securities
 Purchased Under Resale Agreements                          2,150      3,158
Purchases of Premises and Equipment                          (126)       (59)
Acquisitions, Net of Cash Acquired                           (323)      (520)
Proceeds from the Sale of Premises and Equipment                -          3
Other, Net                                                     66        (20)
                                                           ------     ------
Net Cash (Used) by Investing Activities                    (2,844)    (1,112)
                                                           ------     ------
Financing Activities
Change in Deposits                                         (1,073)    (2,035)
Change in Federal Funds Purchased and Securities
 Sold Under Repurchase Agreements                             (69)     1,093
Change in Other Borrowed Funds                               (211)       361
Proceeds from the Issuance of Long-Term Debt                  675        100
Repayments of Long-Term Debt                                  (60)       (60)
Issuance of Common Stock                                      128        232
Treasury Stock Acquired                                      (235)      (522)
Cash Dividends Paid                                          (275)      (264)
                                                           ------     ------
Net Cash (Used) by Financing Activities                    (1,120)    (1,095)
                                                           ------     ------
Effect of Exchange Rate Changes on Cash                       (16)       244
                                                           ------     ------
Change in Cash and Due From Banks                            (337)       870
Cash and Due from Banks at Beginning of Period              3,222      3,125
                                                           ------     ------
Cash and Due from Banks at End of Period                   $2,885     $3,995
                                                           ======     ======

----------------------------------------------------------------------------
Supplemental Disclosure of Cash Flow Information
Cash Paid During the Period for:
    Interest                                               $  541     $1,083
    Income Taxes                                               24         77
Noncash Investing Activity
 (Primarily Foreclosure of Real Estate)                         1          1

----------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements.




 7
                        THE BANK OF NEW YORK COMPANY, INC.
                    Notes to Consolidated Financial Statements

1.  General
    -------

     The accounting and reporting policies of The Bank of New York Company,
Inc. (the Company), a financial holding company, and its subsidiaries conform
with generally accepted accounting principles and general practice within the
banking industry. Such policies are consistent with those applied in the
preparation of the Company's annual financial statements.

     The accompanying consolidated financial statements are unaudited. In the
opinion of management, all adjustments necessary for a fair presentation of
financial position, results of operations and cash flows for the interim
periods have been made. Such adjustments are of a normal recurring nature.

2.  Acquisitions and Dispositions
    -----------------------------

     The Company continues to be an active acquirer of securities servicing
and asset management businesses. During the second quarter of 2002, 3
businesses were acquired for a total cost of $116 million, primarily paid in
cash. The Company records the fair value of contingent payments as an
additional cost of the entity acquired in the period that the payment becomes
probable. Potential contingent payments related to second quarter acquisitions
are $99 million. During the first six months of 2002, the Company acquired 7
businesses for $321 million, and is contingently liable for payments of $284
million.

     Goodwill related to second quarter and year-to-date 2002 acquisition
transactions was $95 million and $228 million respectively. The tax deductible
portion of goodwill for the second quarter and year-to-date 2002 is $95
million and $165 million. All of the goodwill was assigned to the Company's
Servicing and Fiduciary Business segment. At June 30, 2002, the Company was
liable for potential contingent payments related to acquisitions in the amount
of $451 million. During the second quarter and first six months of 2002, the
Company paid $4 million and $10 million for contingent payments related to
acquisitions made in prior years. The pro forma effect of the 2002
acquisitions is not material to second quarter 2002 net income.

     In February 2002, the Company acquired Autranet, Inc., a subsidiary of
Credit Suisse First Boston (USA), Inc. This acquisition provides the Company
with one of the largest providers of independently originated research
services in the U.S. and maintains relationships with over 500 institutional
investment managers. Autranet provides a full range of services covering every
aspect of the third party research process including trade execution,
operational and administrative support, research selection and procurement
services and regulatory support.

     In February 2002, the Company acquired G-Trade Services, Ltd. and other
related wholly-owned subsidiaries of the Credit Lyonnais SA Group. G-Trade, a
leading provider of wholesale execution services including electronic direct
access trading in 22 markets and basket trading capabilities in 65 markets
worldwide, is the executing and clearing broker for non-U.S. equities executed
through the Bloomberg Tradebook system. This acquisition will greatly expand
the Company's non-dollar institutional trading capabilities and enhance the
range of international services that the Company offers in the institutional
brokerage and clearing services sector.

     In February 2002, the Company acquired the Core International ADR and
Domestic Equity Index institutional investment management businesses of Axe-

 8

Houghton Associates, Inc. based in Rye Brook, New York. This transaction will
add approximately $2.6 billion in assets under management.

     In March 2002, the Company acquired Jaywalk, Inc., a third-party
aggregator of quality independent investment research. The acquisition offers
quantitative, fundamental, technical, sell strategy and intellectual property
analyses covering thousands of securities. Jaywalk brings together top
independent research providers on one platform, enabling institutional money
management clients to generate new investment ideas and strategies.

     In May 2002, the Company acquired Gannet Welsh & Kotler, Inc ("GW&K"), a
privately held asset management firm based in Boston, Massachusetts. GW&K
manages approximately $5 billion for high net worth individuals and small to
mid-size institutions located in the Boston area and nationwide. This
acquisition offers both fixed income and equity portfolio management services.

     In June 2002, the Company acquired Beacon Fiduciary Advisors, a privately
held asset management firm based in Chestnut Hill, Massachusetts. This
acquisition manages in excess of $700 million for over 350 high-net-worth
individuals nationwide.

     In June 2002, the Company acquired Francis P. Maglio & Co., Inc., a
leading institutional trading firm. This acquisition complements the Company's
comprehensive suite of trading strategies and systems, which include: volume
weighted-average price, program and portfolio transitions trading to its core
block, and electronic trading capabilities.

     In July 2002, the Company acquired the correspondent clearing business of
Weiss, Peck & Greer, LLC adding approximately 50 new correspondent clearing
clients.

     In August 2002, the Company acquired the Structured Investment Vehicle
(SIV) management business of Quadrant Capital Limited based in London,
England. Quadrant Capital provides investment management and administrative
services for SIV programs. This acquisition involves the transfer of Quadrant
Capital's administrative personnel, proprietary program documentation and a
specialized software tool known as Quasar, which is unique in its abilities to
provide customized asset and liability management reporting for SIV programs.

     In August 2002, the Company signed a definitive agreement to acquire
Lockwood Financial Group Inc. ("LFG") based in Malvern, Pennsylvania. LFG is
the industry's largest provider of individually managed account services to
independent financial advisors. This acquisition confirms the Company's
commitment to provide customized investment solutions to individuals and
institutions through independent financial advisors in the separate account
industry.

     In August 2002, the Company signed a definitive agreement to acquire EMAT
based in Malvern, Pennsylvania. EMAT is the leading provider of processing
services for individually managed accounts. This acquisition confirms the
Company's commitment to provide a wide range of customized investment
processing solutions to its worldwide network of mutual fund companies, banks
and money managers.

3.  Allowance for Credit Losses
    ---------------------------

     The allowance for credit losses is maintained at a level that, in
management's judgment, is adequate to absorb probable losses associated with
specifically identified loans, as well as estimated probable credit losses
inherent in the remainder of the loan portfolio at the balance sheet date.
Management's judgment includes the following factors, among others: risks of

 9

individual credits; past experience; the volume, composition, and growth of
the loan portfolio; and economic conditions.

     The Company conducts a quarterly portfolio review to determine the
adequacy of its allowance for credit losses. All commercial loans over $1
million are assigned to specific risk categories. Smaller commercial and
consumer loans are evaluated on a pooled basis and assigned to specific risk
categories. Following this review, senior management of the Company analyzes
the results and determines the allowance for credit losses. The Risk Committee
of the Company's Board of Directors reviews the allowance at the end of each
quarter.

     The portion of the allowance for credit losses allocated to impaired
loans (nonaccrual commercial loans over $1 million) is measured by the
difference between their recorded value and fair value. Fair value is either
the present value of the expected future cash flows from borrowers, the market
value of the loan, or the fair value of the collateral.

     Commercial loans are placed on nonaccrual status when collateral is
insufficient and principal or interest is past due 90 days or more, or when
there is reasonable doubt that interest or principal will be collected.
Accrued interest is usually reversed when a loan is placed on nonaccrual
status. Interest payments received on nonaccrual loans may be recognized as
income or applied to principal depending upon management's judgment.
Nonaccrual loans are restored to accrual status when principal and interest
are current or they become fully collateralized. Consumer loans are not
classified as nonperforming assets, but are charged off and interest accrued
is suspended based upon an established delinquency schedule determined by
product. Real estate acquired in satisfaction of loans is carried in other
assets at the lower of the recorded investment in the property or fair value
minus estimated costs to sell.


     Transactions in the allowance for credit losses are summarized as
follows:
                                           Six months ended
                                               June 30,
(In millions)                            2002            2001
                                         ----            ----

Balance, Beginning of Period             $616            $616
  Charge-Offs                             (76)            (64)
  Recoveries                                6               4
                                         ----            ----
  Net Charge-Offs                         (70)            (60)
  Provision                                70              60
                                         ----            ----
Balance, End of Period                   $616            $616
                                         ====            ====

4.  Capital Transactions
    --------------------

     As of July 31, 2002, the Company has approximately 4 million common
shares remaining to repurchase under its 16 million share buyback programs.
During the second quarter of 2002, the Company filed a new shelf registration
statement. At July 31, 2002, the registration statement has a remaining
capacity of approximately $2.4 billion of debt, preferred stock, preferred
trust securities, or common stock.

 10


5.  New Accounting Pronouncements
    -----------------------------

     In June 2001, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards No.143, "Accounting for
Asset Retirement Obligations" (SFAS 143). SFAS 143 is effective for financial
statements issued for fiscal years beginning after June 15, 2002. SFAS 143
addresses financial accounting and reporting for obligations associated with
the retirement of tangible long-lived assets and the associated asset
retirement costs. The Company does not expect the adoption of this
pronouncement to have an impact on its results of operations or financial
condition.

     In August 2001, the FASB issued Statement of Financial Accounting
Standards No.144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" (SFAS 144). SFAS 144 was effective for financial statements issued for
fiscal years beginning after December 15, 2001. The standard addresses
financial accounting and reporting for the impairment or disposal of long-
lived assets. SFAS 144 became effective for the Company on January 1, 2002.
The adoption of this standard had no impact on the Company's results of
operations or financial condition.

     See footnote 8 regarding the impact of Statement of Financial Accounting
Standards No.142 "Goodwill and Other Intangible Assets".

     In November 2001, the FASB issued Emerging Issues Task Force ("EITF") No.
01-14, "Income Statement Characterization of Reimbursements Received for Out-
Of-Pocket Expenses Incurred." This guidance, effective January 1, 2002
requires companies to recognize the reimbursement of client-related expenses
as revenue and the costs as operating expense. Historically, the Company has
netted these reimbursements against the related operating expenses. Client
reimbursements for out-of-pocket expenses are reflected in securities
servicing and private client services and asset management fee revenue in the
accompanying financial statements. Prior periods have been reclassified to
reflect this new presentation which has resulted in an increase to noninterest
income and a corresponding increase to noninterest expenses of $7 million and
$9 million for the three months ending June 30, 2002 and 2001 and $14 million
and $16 million for the year-to-date periods ending June 30, 2002 and 2001.

6.  Earnings Per Share
    ------------------

     The following table illustrates the computations of basic and diluted
earnings per share for the three month and six month periods ended June 30,
2002 and 2001:



                                          Three Months Ended  Six Months Ended
                                                June 30,           June 30,
(In millions, except per share amounts)
                                                            
                                             2002    2001         2002    2001
                                             ----    ----         ----    ----

Net Income (1)                               $361    $385         $723    $769
                                             ====    ====         ====    ====
Basic Weighted Average
 Shares Outstanding                           722     731          722     731
Shares Issuable on Exercise of
  Employee Stock Options                        7      11            7      12
                                             ----    ----         ----    ----
Diluted Weighted Average Shares Outstanding   729     742          729     743
                                             ====    ====         ====    ====

Basic Earnings Per Share:                  $ 0.50  $ 0.53       $ 1.00  $ 1.05
Diluted Earnings Per Share:                  0.50    0.52         0.99    1.03


(1)  Net income, net income available to common shareholders and diluted net
    income are the same for all periods presented.



 11

7.  Commitments and Contingent Liabilities
    --------------------------------------

     In the ordinary course of business, there are various legal claims
pending against the Company and its subsidiaries. In the opinion of
management, liabilities arising from such claims, if any, would not have a
material effect upon the Company's consolidated financial statements.

8.  Goodwill and Intangibles
    ------------------------

     Effective January 1, 2002, a new accounting standard requires the Company
to test goodwill and indefinite lived intangible assets for impairment rather
than amortize them. A reconciliation of previously reported net income and
earnings per share to the amounts adjusted for the exclusion of goodwill
amortization net of the related tax effect follows:



(In millions, except                                                 Six Months        Three Months
 per share amounts)                                                Ended June 30,     Ended June 30,
                                 2001        2000        1999           2001               2001
                               --------    --------    --------    --------------     --------------
                                                                           

Net Income                      $1,343      $1,429      $1,739         $ 769              $ 385
Add: Goodwill Amortization,
      Net of Tax                    73          85          77            36                 16
                                ------      ------      ------         -----              -----
Adjusted Net Income             $1,416      $1,514      $1,816         $ 805              $ 401
                                ======      ======      ======         =====              =====


Basic Earnings Per Common Share:

Net Income                       $1.84       $1.95       $2.31         $1.05              $0.53
Goodwill Amortization,
 Net of Tax                       0.10        0.12        0.10          0.05               0.02
                                 -----       -----       -----         -----              -----
Adjusted Net Income              $1.94       $2.07       $2.41         $1.10              $0.55
                                 =====       =====       =====         =====              =====


Diluted Earnings Per Common Share:

Net Income                       $1.81       $1.92       $2.27         $1.03              $0.52
Goodwill Amortization,
 Net of Tax                       0.10        0.11        0.10          0.05               0.02
                                 -----       -----       -----         -----              -----
Adjusted Net Income              $1.91       $2.03       $2.37         $1.08              $0.54
                                 =====       =====       =====         =====              =====


Goodwill by segment for the quarter ended June 30, 2002 is as follows:



                    Servicing
                       and
                    Fiduciary   Corporate   Retail   Financial Consolidated
(In millions)       Businesses   Banking    Banking   Markets     Total
                    ----------  ---------   -------  --------- -----------
                                                  
Balance as of
June 30, 2002        $2,158        $31       $109       $ -      $2,298
                     ======        ===       ====       ===      ======


     The Company's business segments are tested annually for goodwill
impairment. The Company completed its initial evaluation of goodwill for
impairment and determined that no impairment loss was required.

 12



Intangible Assets
---------------------


                                                                     Weighted
                                 Gross                    Net        Average
(In millions)                   Carrying  Accumulated   Carrying   Amortization
                                 Amount  Amortization    Amount   Period in Years
                                -------- ------------   --------  ---------------
                                                            
Intangible Assets                 $104       $(30)         $74          14



     The aggregate amortization expense of intangibles and goodwill was
$2 million and $25 million for the quarters ended June 30, 2002 (intangibles
only) and 2001, respectively and $4 million and $54 million for the six months
ended June 30, 2002 (intangibles only) and 2001, respectively. Estimated
amortization expense for the next five years is as follows:

                  For the year ended        Amortization
(In millions)        December 31,             Expense
                ----------------------    ----------------

                         2002                   $ 8
                         2003                     9
                         2004                     9
                         2005                     9
                         2006                     9

 13



Item 2.  Management's Discussion and Analysis of Financial Condition and
------------------------------------------------------------------------
Results of Operations
---------------------

     The Company's actual results of future operations may differ from those
set forth in certain forward looking statements contained herein. Refer to
further discussion under the heading "Forward Looking Statements".

     The Company reported second quarter 2002 net income of $361 million or 50
cents per diluted share compared with $385 million or 52 cents per diluted
share in the second quarter of 2001. Net income for the first six months was
$723 million or 99 cents per diluted share compared with $769 million or $1.03
per diluted share last year.  Second quarter 2002 results included $16 million
of pre-tax severance expense associated with a 400 person staff reduction,
which reduced net income by 1 cent per share.

     The Company's fee-based businesses performed well in a lackluster global
capital markets environment.  Compared with the first quarter of 2002, second
quarter securities servicing fee revenues increased 5% to $478 million.
Private client services and asset management fees were $88 million, up 6%
versus the first quarter.  These increases in securities servicing and private
client services and asset management were driven by core growth and
acquisitions.  The Company is consistently winning new business, contributing
to its top line growth and representing further market share gains.  The
Company's continued focus on fee-based businesses resulted in noninterest
income growing to 67% of total revenue in the second quarter, compared with
67% last quarter.

     The Company continues to execute its long-term growth strategy through
investments in technology, internal product development, and strategic
acquisitions.  These initiatives have added clients, opened new markets, and
expanded its suite of global product offerings for both issuers and investors.
The Company expects this to result in meaningful operating leverage when the
capital markets environment improves.

     Fees from the Company's securities servicing businesses increased 5% to
$478 million for the second quarter from $454 million last quarter and
increased 8% from $443 million in the prior year.  Core growth in the
businesses accounted for approximately half of the sequential quarter revenue
growth, which annualizes to an 11% growth rate.  The remaining growth resulted
largely from the full quarter benefit of acquisitions closed in the first
quarter.  Strong performers for the quarter include custody, corporate trust,
broker-dealer services, and stock transfer.  Custody growth resulted from
domestic new business wins and increased customer activity, particularly in
Europe and Asia.  Corporate trust benefited from strong fixed-income issue
volume, particularly in the corporate and municipal markets.  Broker-dealer
services were positively impacted by new business wins, strong fixed income
activity and the increased use of the Company's global collateral management
system.  Stock transfer growth resulted from a large corporate action related
fee and several new business wins.  The Company continues to be the world's
leading custodian with assets of $6.6 trillion, including $1.8 trillion of
cross-border custody assets.

     Private client services and asset management fees increased to $88
million for the second quarter of 2002, up 6% from $83 million last quarter
and up 10% from $80 million in the second quarter of 2001.  Strong sequential
quarter growth primarily benefited from the acquisitions of Gannet Welsh &
Kotler and Beacon Fiduciary Advisors, both of which closed during the quarter.
Fees were also favorably impacted by continued strong flows into alternative
investment funds offered by the Company's Ivy Asset Management subsidiary and
demand for the Company's retail investment products.

 14

     Foreign exchange and other trading revenues were $72 million in the
second quarter of 2002 compared to $63 million last quarter and $98 million in
the second quarter of 2001.  Relative to a year ago, second quarter foreign
exchange activity was negatively impacted by continuation of the first
quarter's lower volatility and narrow spreads.  However, the weakening trend
of the dollar led to a higher volume of client hedging activity and greater
volatility as the second quarter progressed.  Other trading revenues decreased
as a result of a stable interest rate environment, which negatively impacted
the Company's interest rate hedging and risk management businesses.  In the
second quarter of 2001, other trading revenues were also favorably impacted by
revenues from seasonal arbitrage strategies related to the Company's
securities lending business.

     Net interest income on a taxable equivalent basis for the second quarter
was $436 million, up from $425 million last quarter reflecting growth in the
Company's investment securities portfolio and improved pricing on loan and
deposit products.

     The provision for credit losses remained steady at $35 million in the
second quarter.  The Company continues to make significant progress in its
program to reduce corporate loan exposures, as it reallocates capital towards
its fee-based businesses.  At June 30, 2002, exposures related to the
Company's emerging telecom accelerated loan disposition program had been
reduced to $63 million with related outstandings of $53 million.

     Return on average common equity for the second quarter of 2002 was 22.59%
compared with 23.76% in the first quarter of 2002 and 25.44% in the second
quarter of 2001.  Return on average assets for the second quarter of 2002 was
1.82% compared with 1.84% in the first quarter of 2002 and 2.01% in the second
quarter of 2001.  For the first six months of 2002, return on average common
equity was 23.16% compared with 25.68% in 2001.  Return on average assets was
1.83% for the first six months of 2002 compared with 2.02% in 2001.

NONINTEREST INCOME



                                          2nd      1st      2nd
                                        Quarter  Quarter  Quarter   Year-to-Date
                                        -------  -------  -------   ------------
(In millions)                            2002     2002     2001     2002    2001
                                         ----     ----     ----     ----    ----
                                                           
Servicing Fees
  Securities                             $478     $454     $443   $  932  $  906
  Global Payment Services                  71       73       72      144     141
                                         ----     ----     ----   ------  ------
                                          549      527      515    1,076   1,047
Private Client Services and
  Asset Management Fees                    88       83       80      171     161
Service Charges and Fees                   93       83       95      176     185
Foreign Exchange and
  Other Trading Activities                 72       63       98      134     181
Securities Gains                           25       31       46       56      92
Other                                      28       31       31       60      64
                                         ----     ----     ----   ------  ------
Total Noninterest Income*                $855     $818     $865   $1,673  $1,730
                                         ====     ====     ====   ======  ======


* The Company adopted a new accounting pronouncement related to reimbursable
  expenses effective January 1, 2002 and reclassified prior year results. As a
  result, noninterest income increased by $7 million and $9 million in the
  second quarter of 2002 and 2001 and by $14 million and $16 million in the
  first half of 2002 and 2001.



 15

     Total noninterest income for the second quarter of 2002 increased by 5%
compared with the first quarter of 2002 and decreased 1% compared with the
second quarter of 2001.  Securities servicing fees increased by 5% from the
prior quarter and 8% from one year ago, with revenue growth resulting from
core growth and acquisitions.  Global payment services fees were essentially
flat on both a sequential quarter and a year-over-year basis as growth in cash
management was offset by modest declines in trade finance.  Private client
services and asset management fees were up 6% from the prior quarter and 10%
from one year ago, with growth resulting from acquisitions and new business in
alternative and retail investment products.  Service charges and fees were up
12% from the prior quarter and down slightly from one year ago.  The
sequential quarter increase reflects a pick-up in loan syndication and capital
markets fees from the first quarter.  Foreign exchange and other trading
revenues were up 14% from the prior quarter and down 27% from one year ago.
Securities gains of $25 million in the second quarter were down from $31
million in the prior quarter and $46 million one year ago, reflecting the
Company's capital allocation initiatives away from equity investing, as well
as weak equity market conditions.

NET INTEREST INCOME





                             2nd         1st         2nd
                           Quarter     Quarter     Quarter        Year-to-Date
(Dollars in millions on    -------     -------     -------       --------------
 a tax equivalent basis)    2002        2002        2001        2002        2001
                            ----        ----        ----        ----        ----
                                                             
Net Interest Income         $436        $425        $446        $861        $887
Net Interest Rate
 Spread                     2.31%       2.30%       2.00%       2.31%       1.89%
Net Yield on Interest
 Earning Assets             2.65        2.63        2.79        2.64        2.77



     Net interest income on a taxable equivalent basis was $436 million in the
second quarter of 2002 compared with $425 million in the first quarter of 2002
and $446 million in the second quarter of 2001.  The net interest rate spread
was 2.31% in the second quarter of 2002, compared with 2.30% in the first
quarter of 2002 and 2.00% one year ago.  The net yield on interest earning
assets was 2.65% compared with 2.63% in the first quarter of 2002 and 2.79% in
last year's second quarter.

     The increase in net interest income from the first quarter is primarily
due to growth in the Company's highly-rated investment securities portfolio,
improved pricing on loan and deposit products, and an extra day in the
quarter. During the quarter, the Company adopted a neutral position in terms
of its exposure to changing interest rates.

     For the first six months of 2002, net interest income on a taxable
equivalent basis amounted to $861 million compared with $887 million in the
first half of 2001.  The year-to-date net interest rate spread was 2.31% in
2002 compared with 1.89% in 2001, while the net yield on interest earning
assets was 2.64% in 2002 and 2.77% in 2001.

     Interest income would have been increased by $4 million and $2 million
for the second quarters of 2002 and 2001 and $8 million and $5 million for the
first six months of 2002 and 2001 if loans on nonaccrual status at June 30,
2002 and 2001 had been performing for the entire period.

 16


NONINTEREST EXPENSE AND INCOME TAXES

     Noninterest expense for the second quarter of 2002 was $696 million
compared with $649 million in the first quarter of 2002 and $664 million in
2001.  Of the $47 million in sequential quarter expense increase, $16 million
relates to severance and $12 million relates to acquisitions.  The growth in
core expenses annualizes to an 11% rate, driven by higher technology spending,
incentive compensation and other variable expenses.

     As a result of applying a new accounting pronouncement related to
goodwill and intangibles, amortization in the second quarter and the first six
months of 2002 declined to $2 million and $4 million compared with $25 million
and $54 million in 2001.

     The efficiency ratio for the second quarter of 2002 was 55.0% compared
with 53.5% in the first quarter of 2002 and 52.5% in the second quarter of
2001.  For the first half of 2002, the efficiency ratio was 54.3% compared
with 52.4% last year.  Excluding severance costs, the efficiency ratio for the
second quarter would have been 53.7%.

     The effective tax rates for the second quarter and the first six months
of 2002 were 34.0% and 33.8% compared with 36.0% in the second quarter and
36.1% in the first six months of 2001.  The decline in the rate from a year
ago primarily reflects fewer nondeductible expenses as well as the benefit
from federal Section 29 synthetic fuel tax credits.


CAPITAL

     Regulators establish certain levels of capital for bank holding companies
and banks, including the Company and The Bank of New York ("the Bank"), in
accordance with established quantitative measurements. In order for the
Company to maintain its status as a financial holding company, the Bank must
qualify as well capitalized. In addition, major bank holding companies such as
the Company are expected by the regulators to be well capitalized. As of June
30, 2002 and 2001, the Company and the Bank were considered well capitalized
on the basis of the ratios (defined by regulation) of Total and Tier 1 capital
to risk-weighted assets and leverage (Tier 1 capital to average assets), which
are shown as follows:




                    June 30, 2002          June 30, 2001
                ---------------------  ---------------------               Well       Adequately
                                                              Company   Capitalized   Capitalized
                   Company     Bank       Company     Bank    Targets   Guidelines    Guidelines
                   -------     ----       -------    ------   -------   -----------   -----------
                                                                     
Tier 1*              7.70%     7.59%        8.07%     7.62%     7.75%        6%            4%
Total Capital**     11.48     11.21        12.07     11.05     11.75        10             8
Leverage             6.82      6.70         7.40      6.92      7.00         5            3-5
Tangible Common
  Equity             5.41      6.07         5.56      6.95    5.25-6.00


* Tier 1 capital consists, generally, of common equity and certain qualifying preferred
  stock, less goodwill.
**Total Capital consists of Tier 1 capital plus Tier 2 capital. Tier 2 capital consists,
  generally, of certain qualifying preferred stock and subordinated debt and a portion of the
  loan loss allowance.



     If a bank holding company or bank fails to qualify as "adequately
capitalized", regulatory sanctions and limitations are imposed.

 17


LIQUIDITY

     The Company maintains its liquidity through the management of its assets
and liabilities, utilizing worldwide financial markets. The diversification of
liabilities reflects the Company's efforts to maintain flexibility of funding
sources under changing market conditions. Stable core deposits, including
demand, retail time, and trust deposits from processing businesses, are
generated through the Company's diversified network and managed with the use
of trend studies and deposit pricing. The use of derivative products such as
interest rate swaps and financial futures enhances liquidity by enabling the
Company to issue long-term liabilities with limited exposure to interest rate
risk. Liquidity also results from the maintenance of a portfolio of assets
which can be easily sold and the monitoring of unfunded loan commitments,
thereby reducing unanticipated funding requirements. Liquidity is managed on
both a consolidated basis and also at The Bank of New York Company, Inc.
Parent Company ("Parent").

     On a consolidated basis, non-core sources of funds such as money market
rate accounts, certificates of deposits greater than $100,000, federal funds
purchased and other borrowings were $14.3 billion and $11.0 billion on an
average basis for the first six months of 2002 and 2001. Stable foreign
deposits, primarily from the Company's European based securities servicing
business, were $24.8 billion and $26.4 billion for the first six months of
2002 and 2001. Savings and other time deposits were $9.7 billion on a year-to-
date average basis at June 30, 2002 compared to $9.5 billion at June 30, 2001.
A significant reduction in the Company's securities businesses would reduce
its access to foreign deposits.

     The Parent has five major sources of liquidity: dividends from its
subsidiaries, a collateralized line of credit with the Bank, the commercial
paper market, a revolving credit agreement with third party financial
institutions, and access to the capital markets.

     At June 30, 2002, the amount of dividends the Bank could pay to the
Parent and remain in compliance with federal bank regulatory requirements was
$466 million. This dividend capacity would increase in the remainder of 2002
to the extent of net income, less dividends. Nonbank subsidiaries of the
Parent have liquid assets of approximately $900 million. These assets could be
liquidated and the proceeds delivered by dividend or loaned to the Parent.

     The Company has a line of credit with the Bank, which is subject to
limits imposed by federal banking law. At June 30, 2002, the Parent could use
the subsidiaries' liquid securities as collateral to allow it to borrow $436
million rather than liquidate the securities and loan or dividend the proceeds
to the Parent and remain in compliance with federal banking regulations. The
Parent had no borrowings from the Bank at June 30, 2002.

     At June 30, 2002, the Parent's quarterly average commercial paper
borrowings were $66 million compared with $340 million in 2001. Commercial
paper outstandings were $127 million and $320 million at June 30, 2002 and
2001. At June 30, 2002, the Parent had cash of $866 million.

     The Parent has back-up lines of credit of $350 million at financial
institutions. This line of credit matures in October 2002. The Parent expects
to enter into a replacement line of credit on or before the maturity. There
were no borrowings under the line of credit at June 30, 2002 and June 30,
2001.

 18


     The Parent also has the ability to access the capital markets. The Parent
has a shelf registration statement with a remaining capacity of $2.4 billion
of debt, preferred stock, preferred trust securities, or common stock. Access
to the capital markets is partially dependent on the Company's credit ratings,
which as of July 31, 2002 were as follows:

                                                              The Bank of
               Parent         Parent        Parent Senior     New York
               Commercial  Subordinated       Long-Term       Long-Term
               Paper       Long-Term Debt       Debt          Deposits
              -----------  ---------------  ---------------   ------------
Standard &        A-1           A                A+               AA-
 Poor's

Moody's           P1            A-1              Aa3              Aa2

Fitch             F1+           A+               AA-              AA

     The Parent's major uses of funds are payment of principal and interest on
its borrowings, acquisitions, and additional investment in its subsidiaries.

     The Parent has approximately $600 million of long-term debt that becomes
due before December 31, 2002. In addition, at June 30, 2002 the Parent has the
option to call $350 million of debt in the remainder of 2002 and expects to
call and refinance if market conditions are favorable. The Parent expects to
refinance any debt it repays by issuing a combination of senior and
subordinated debt.

     The Parent has $400 million of trust preferred securities that has been
called for redemption September 1, 2002. As a result, these securities no
longer qualify as Tier 1 Capital.

     Double leverage is the ratio of investment in subsidiaries divided by the
Company's consolidated equity plus trust preferred securities. The Company's
double leverage ratio at June 30, 2002 and 2001 was 101.58% and 101.40%. The
Company's target double leverage ratio is a maximum of 120%. The double
leverage ratio is monitored by regulators and rating agencies and is an
important constraint on the Company's ability to invest in its subsidiaries to
expand its businesses.

 19


TRADING ACTIVITIES

     The fair value and notional amounts of the Company's financial
instruments held for trading purposes at June 30, 2002 and June 30, 2001 are
as follows:
                                                            2nd Quarter 2002
                                    June 30, 2002               Average
                            ----------------------------   -------------------
(In millions)                             Fair Value           Fair Value
                                      ------------------   -------------------
                            Notional
Trading Account              Amount   Assets Liabilities   Assets  Liabilities
---------------             --------  ------ -----------   ------  -----------
Interest Rate Contracts:
 Futures and Forward
  Contracts                 $ 43,100  $   98    $    -     $   81    $    -
 Swaps                       144,429   1,423       811      1,448       881
 Written Options             123,597       -     1,066          -     1,023
 Purchased Options            44,083     188         -        174         -
Foreign Exchange Contracts:
 Swaps                         1,969       -         -          -         -
 Written Options              15,278       -       166          -        83
 Purchased Options            17,611      68         -         79         -
 Commitments to Purchase
  and Sell Foreign Exchange   59,371     825       835        437       463
Debt Securities                    -   3,938       142      4,473        37
Credit Derivatives             2,075       8         1         17         7
Equity Derivatives                 -      29        12         27         7
                                      ------    ------     ------    ------
Total Trading Account                 $6,577    $3,033     $6,736    $2,501
                                      ======    ======     ======    ======

                                                            2nd Quarter 2001
                                    June 30, 2001               Average
                            ----------------------------   -------------------
(In millions)                             Fair Value           Fair Value
                                      ------------------   -------------------
                            Notional
Trading Account              Amount   Assets Liabilities   Assets  Liabilities
---------------             --------  ------ -----------   ------  -----------
Interest Rate Contracts:
 Futures and Forward
  Contracts                 $ 39,741  $    2    $    -    $     -    $    -
 Swaps                       113,972     842       342        986       467
 Written Options              92,828       -       845          -       887
 Purchased Options            39,917     125         -        135         -
Foreign Exchange Contracts:
 Swaps                         1,297       -         -          -         -
 Written Options              10,953       -        24          -        76
 Purchased Options            14,563      68         -        109         -
 Commitments to Purchase
  and Sell Foreign Exchange   54,974     538       540        599       596
Debt Securities                    -   8,302         9      8,992        10
Credit Derivatives             1,860       9         3          6         3
Equity Derivatives                 -      18         -        292       312
                                      ------    ------    -------    ------
Total Trading Account                 $9,904    $1,763    $11,119    $2,351
                                      ======    ======    =======    ======

     The Company manages trading risk through a system of position limits, a
value at risk (VAR) methodology, based on a Monte Carlo simulation, stop loss
advisory triggers, and other market sensitivity measures. Risk is monitored
and reported to senior management by an independent unit on a daily basis. The
VAR methodology captures, based on certain assumptions, the potential
overnight pre-tax dollar loss from adverse changes in fair values of all
trading positions. The calculation assumes a one day holding period for most
instruments, utilizes a 99% confidence level, and incorporates the non-linear

 20

characteristics of options. As the VAR methodology does not evaluate risk
attributable to extraordinary financial, economic or other occurrences, the
risk assessment process includes a number of stress scenarios based upon the
risk factors in the portfolio and management's assessment of market
conditions. Additional stress scenarios based upon historic market events are
also tested.

     The following table indicates the calculated VAR amounts for the trading
portfolio for the periods indicated. During these periods, the daily trading
loss did not exceed the calculated VAR amounts on any given day.




(In millions)                  2nd Quarter 2002                Year-to-Date 2002
                      ------------------------------     -------------------------------------
                      Average    Minimum    Maximum      Average   Minimum   Maximum   6/30/02
                      --------   --------   --------     -------   -------   -------   -------
                                                                    
Interest rate           $4.8       $3.5       $6.6         $5.0      $3.4      $9.2      $4.6
Foreign Exchange         1.5        0.7        3.8          1.2       0.6       3.8       0.9
Equity                     -          -        1.1            -         -       1.1       0.8
Diversification         (2.1)        NM         NM         (1.8)       NM        NM      (1.8)
Overall Portfolio        4.2        3.0        7.2          4.4       3.0       8.3       4.5


(In millions)                  2nd Quarter 2001                Year-to-Date 2001
                      ------------------------------     -------------------------------------
                      Average    Minimum    Maximum      Average   Minimum   Maximum   6/30/01
                      --------   --------   --------     -------   -------   -------   -------
                                                                    
Interest rate           $4.4       $2.9       $6.4         $4.5      $2.6      $6.4      $5.8
Foreign Exchange         1.2        0.7        1.9          1.2       0.6       2.7       0.8
Equity                     -          -        0.3            -         -       0.3         -
Diversification         (2.0)        NM         NM         (2.0)       NM        NM      (2.2)
Overall Portfolio        3.6        2.3        5.9          3.7       2.3       6.1       4.4



NM - Because the minimum and maximum may occur on different days for different risk components,
     it is not meaningful to compute a portfolio diversification effect.




 21



CRITICAL ACCOUNTING POLICIES

     The Company's significant accounting policies are described in the "Notes
to Consolidated Financial Statements" under "Summary of Significant Accounting
and Reporting Policies" in the Company's 2001 Annual Report on Form 10-K. Two
of the Company's more critical accounting policies are those related to the
allowance for credit losses and to the valuation of derivatives and securities
where quoted market prices are not available.

ALLOWANCE FOR CREDIT LOSSES

     The allocated portion of the allowance for credit losses is principally
determined using an expected loss model driven by Probability of Default and
Loss Given Default ratings. Ratings are assigned after analyzing the credit
quality of each borrower and the collateral/structure of each individual
asset. These ratings are periodically compared to internal company and
external rating agency default and loss databases to ensure consistency. Other
factors used in establishing the allocated portion of the allowance include
forecasts of future cash flows and maturity.

     The Company's unallocated allowance is based on management's judgment.
Factors that influence this judgment include:

   -  Economic conditions, including duration of the current cycle
   -  Past experience, including recent loss experience
   -  Credit quality trends
   -  Collateral values
   -  Volume, composition, and growth of the loan portfolio
   -  Specific credits and industry conditions
   -  Results of bank regulatory and internal credit exams
   -  Actions by the Federal Reserve Board
   -  Delay in receipt of information to evaluate loans or confirm existing
      credit deterioration

     To the extent actual results differ from forecasts or management's
judgment, the allowance for credit losses may be greater or less than future
charge-offs.

VALUATION OF DERIVATIVES AND SECURITIES WHERE QUOTED MARKET PRICES ARE NOT
 AVAILABLE

     When quoted market prices are not available, derivatives and securities
values are determined based on discounted cash flow analysis, comparison to
similar instruments, and the use of financial models. Discounted cash flow
analysis is dependent upon estimated future cash flows and the level of
interest rates. Model-based pricing uses inputs of observable prices for
interest rates, foreign exchange rates, option volatilities and other factors.
Models are benchmarked and validated by external parties.

     These valuation methods could expose the Company to materially different
results should the models used or underlying assumptions be inaccurate.


 22


NONPERFORMING ASSETS



                                                                   Change
                                                                 6/30/02 vs.
(Dollars in millions)                 6/30/02       3/31/02        3/31/02
                                     --------      --------       --------
                                                            
Loans:
     Commercial                        $184          $187            $(3)
     Foreign                             97            67             30
     Other                               34            20             14
                                       ----          ----            ---
  Total Nonperforming Loans             315           274             41
Other Real Estate                         1             1              -
                                       ----          ----            ---
  Total Nonperforming Assets           $316          $275            $41
                                       ====          ====            ===

Nonperforming Assets Ratio              0.9%          0.8%
Allowance/Nonperforming Loans         195.7         225.1
Allowance/Nonperforming Assets        194.9         223.8



     Nonperforming assets totaled $316 million at June 30, 2002, compared with
$275 million at March 31, 2002 and $245 million at June 30, 2001.  The
increase in foreign nonperforming loans primarily reflects Argentine loans
which became nonperforming in the second quarter of 2002.  The increase in
other nonperforming loans primarily reflects a private banking loan placed on
nonaccrual in the second quarter of 2002.

     As a result of continued weakness in the economy, the Company expects
nonperforming loans to continue to rise in the third and fourth quarters of
2002. The Company has a large exposure in aggregate to the subsidiaries of a
major cable operator that has filed for voluntary bankruptcy. The Company
currently anticipates that it will achieve full recovery on this exposure;
however, this exposure may be classified as nonperforming at some future date.

IMPAIRED LOANS

     The table below sets forth information about the Company's impaired
loans. The Company uses the discounted cash flow method as its primary method
for valuing its impaired loans:

(Dollars in millions)                         6/30/02            3/31/02
                                             --------           --------

Impaired Loans with an Allowance                $246               $208
Impaired Loans without an Allowance(1)            23                 30
                                                ----               ----
Total Impaired Loans                            $269               $238
                                                ====               ====
Allowance for Impaired Loans(2)                 $110               $ 77
Average Balance of Impaired Loans
 during the Quarter                              245                212
Interest Income Recognized on
 Impaired Loans during the Quarter               0.6                0.7

(1)  When the discounted cash flows, collateral value or market price equals
     or exceeds the carrying value of the loan, then the loan does not require
     an allowance under the accounting standard related to impaired loans.
(2)  The allowance for impaired loans is included in the Company's allowance
     for credit losses.

 23


CREDIT LOSS PROVISION AND NET CHARGE-OFFS



                                  2nd         1st          2nd
                                Quarter     Quarter      Quarter    Year-to-date
                                -------     -------      -------   -------------
(In millions)                     2002        2002        2001     2002     2001
                                  ----        ----        ----     ----     ----
                                                             
Provision                         $ 35        $ 35        $ 30     $ 70     $ 60
                                  ====        ====        ====     ====     ====
Net Charge-offs:
  Commercial                      $(17)       $(30)       $(26)    $(47)    $(54)
  Foreign                            -           1           -        1        -
  Other                            (14)          -          (1)     (14)      (1)
  Consumer                          (4)         (6)         (3)     (10)      (5)
                                  -----       -----       -----    -----    -----
     Total                        $(35)       $(35)       $(30)    $(70)    $(60)
                                  =====       =====       =====    =====    =====

Other Real Estate Expenses        $  -        $  -        $  -     $  -     $  2



     The allowance for credit losses consists of four elements: (1) an
allowance for impaired credits (nonaccrual commercial credits over $1
million), (2) an allowance for higher risk rated credits, (3) an allowance for
pass rated credits, and (4) an unallocated allowance based on general economic
conditions and risk factors in the Company's individual markets.

     The first element - impaired credits - is based on individual analysis of
all nonperforming commercial credits over $1 million. The allowance is
measured by the difference between the recorded value of impaired loans and
their fair value. Fair value is either the present value of the expected
future cash flows from borrowers, the market value of the loan, or the fair
value of the collateral.

     The second element - higher risk rated credits - is based on the
assignment of loss factors for each specific risk category of higher risk
credits. The Company rates each credit in its portfolio that exceeds $1
million and assigns the credits to specific risk pools. A potential loss
factor is assigned to each pool and an amount is included in the allowance
equal to the product of the amount of the loan in the pool and the risk
factor. Reviews of higher risk rated loans are conducted quarterly and the
loan's rating is updated as necessary. The Company prepares a loss migration
analysis and compares its actual loss experience to the loss factors on an
annual basis to attempt to ensure the accuracy of the loss factors assigned to
each pool. Pools of past due consumer loans are included in specific risk
categories based on their length of time past due.

     The third element - pass rated credits - is based on the assignment of
loss factors to the remaining pools of credit exposure. The loss factors are
based on the expected average credit losses. Loss factors are periodically
compared to rating agency and other default data bases to determine their
validity. Commercial loans over $1 million are individually analyzed before
being assigned to a risk pool. All current consumer loans are included in the
pass rated consumer pools.

 24


     The fourth element - an unallocated allowance - is based on management's
judgment regarding the following factors:

   -  Economic conditions including duration of the current cycle
   -  Past experience including recent loss experience
   -  Credit quality trends
   -  Collateral values
   -  Volume, composition, and growth of the loan portfolio
   -  Specific credits and industry conditions
   -  Results of bank regulatory and internal credit exams
   -  Actions by the Federal Reserve Board
   -  Delay in receipt of information to evaluate loans or confirm
      existing credit deterioration

     Based on a review of these elements, the allowance for credit losses was
$616 million, or 1.71% of loans at June 30, 2002, compared with $616 million,
or 1.74% of loans at March 31, 2002, and $616 million, or 1.68% of loans at
June 30, 2001.  The ratio of the allowance to nonperforming assets was 194.9%
at June 30, 2002, compared with 223.8% at March 31, 2002, and 251.0% at June
30, 2001. Included in the Company's allowance for credit losses at June 30,
2002 is an allocated transfer risk reserve related to Argentina of $31
million.

     Applying the four elements to the various segments of the loan portfolio
results in an allocation of the allowance for credit losses as follows:

                                  6/30/02      3/31/02
                                  -------      -------

Domestic
     Real Estate                        4%           6%
     Commercial                        72           70
     Consumer                           1            1
Foreign                                13            9
Unallocated                            10           14
                                      ---          ---
                                      100%         100%
                                      ===          ===

     Such an allocation is inherently judgmental, and the entire allowance for
credit losses is available to absorb credit losses regardless of the nature of
the loss.

 25


WORLD TRADE CENTER DISASTER

     The Company's insurance claim has been segmented into four major
components.  As of the date of this filing, the Company has submitted claims
or presented estimated losses for all of the categories to its insurance
carriers. There is still a verification and negotiation process to take place
but the Company expects to receive continued payments over the coming months.

     The Company has developed a migration plan for returning to its downtown
facilities. The reoccupation has begun and is expected to be completed by the
end of the third quarter. The Company's diversification plans include moving
some staff to other locations including new space in the metropolitan area as
well as to growth centers in Syracuse, New York and Orlando, Florida. In the
meantime, the Company continues to operate from several interim facilities in
Manhattan. As the Company vacates the interim facilities it offers them for
sublet. The Company expects that the loss on sublease could exceed $200
million, and that this amount will be covered by insurance.

      During the second quarter, the Company incurred $31 million of expenses
associated with its interim operating facilities which were netted against an
offsetting insurance recovery.  In addition, during the second quarter the
Company completed its assessment of damaged equipment from the WTC disaster
and wrote off an incremental $38 million of technology equipment, against
which it booked an offsetting insurance recovery.  Since the WTC disaster, the
Company has recorded expenses and lost revenue of $334 million, insurance
recoveries of $267 million, and received payments on its claim of $275
million. Additional recoveries will be reflected in the future, largely
related to interim space costs.

POTENTIAL IMPACT OF LOWER EQUITY PRICE LEVELS

     As of the market close on August 9th, the S&P 500 has declined by 8.2%
and the Dow Jones Industrial Average has declined by 5.4% from June 30th
levels. The continued deterioration in the equity markets has several
potential negative effects on the Company.

     The Company holds investments in portfolios of 1) equity securities of
other financial institutions, 2) LBO sponsor-managed private equities and 3)
fixed income investment securities in part to generate securities gains. The
weakness in the equity markets could negatively impact the Company's ability
to sustain securities gains at the same levels as occurred in the first two
quarters of 2002 ($31 and $25 million, respectively).

     The lower equity price levels also affect selected other revenue
categories of the Company, including private client services/asset management
fees, as well as fees of certain securities servicing business lines, such as
custody and mutual fund services. In general, however, the Company's overall
securities servicing business revenue generation is more dependent on market
volumes and volatility than asset price levels, both of which have trended up
in the third quarter-to-date.

     Lastly, the Company has an overfunded pension plan which has generated
sizable pension credits in recent years.  Lower actual returns on assets,
potentially combined with a projected lower rate of return on plan assets
going forward, could result in smaller pension credits in 2003 and beyond.

 26


SEGMENT PROFITABILITY

Segment Data

     The Company has an internal information system that produces performance
data for its four business segments along product and service lines.

     The Servicing and Fiduciary businesses segment provides a broad array of
fee-based services. This segment includes the Company's securities servicing,
global payment services, and private client services and asset management
businesses. Securities servicing includes global custody, securities
clearance, mutual funds, unit investment trust, securities lending, depositary
receipts, corporate trust, stock transfer and execution services. Global
payment services products primarily relate to funds transfer, cash management
and trade finance. Private client services and asset management provide
traditional banking and trust services to affluent clients and asset
management to institutional and private clients.

     The Corporate Banking segment focuses on providing lending services, such
as term loans, lines of credit, asset based financings, and commercial
mortgages, to the large public and private corporations nationwide, as well as
public and private mid-size businesses in the New York metropolitan area.
Special industry groups focus on financial institutions, securities,
insurance, media and telecommunications, energy, real estate, retailing,
automotive, and government banking institutions. Through BNY Capital Markets,
the Company provides syndicated loans, bond underwriting, private placements
of corporate debt and equity securities, and merger, acquisition, and advisory
services.

     The Retail Banking segment includes consumer lending, residential
mortgage lending, and retail deposit services. The Company operates 342
branches in 23 counties in three states.

     The Financial Markets segment includes trading of foreign exchange and
interest rate products, investing and leasing activities, and treasury
services to other segments. This segment offers a comprehensive array of
multi-currency hedging and yield enhancement strategies.

 27


The segments contributed to the Company's profitability as follows:



In Millions             Servicing
                           and
For the Quarter Ended   Fiduciary   Corporate  Retail   Financial  Reconciling  Consolidated
June 30, 2002           Businesses   Banking   Banking   Markets      Items        Total
---------------------   ----------  ---------  -------  ---------  -----------  ------------
                                                               
Net Interest Income         $120       $102       $122      $ 91       $(12)        $423
Provision for
  Credit Losses                -         26          3         -          6           35
Noninterest Income           691         73         28        64         (1)         855
Noninterest Expense          486         50         78        21         61          696
                            ----       ----       ----      ----       -----        ----
Income Before Taxes         $325       $ 99       $ 69      $134       $(80)        $547
                            ====       ====       ====      ====       =====        ====

Average Assets            $8,994    $22,979     $5,108   $40,303      $2,303     $79,687
                          ======    =======     ======   =======      ======     =======




In Millions             Servicing
                           and
For the Quarter Ended   Fiduciary   Corporate  Retail   Financial  Reconciling  Consolidated
June 30, 2001           Businesses   Banking   Banking   Markets      Items        Total
---------------------   ----------  ---------  -------  ---------  -----------  ------------
                                                               
Net Interest Income         $137       $127       $124      $ 62       $(20)        $430
Provision for
  Credit Losses                -         30          2         1         (3)          30
Noninterest Income           675         78         28        70         14          865
Noninterest Expense          434         56         74        19         81          664
                            ----       ----      -----      ----      ------        ----
Income Before Taxes         $378       $119       $ 76      $112       $(84)        $601
                            ====       ====      =====      ====       =====        ====

Average Assets            $9,067    $26,997     $4,422   $34,327      $1,898     $76,711
                          ======    =======     ======   =======      ======     =======





In Millions             Servicing
                           and
For the Six Months      Fiduciary   Corporate   Retail  Financial  Reconciling  Consolidated
Ended June 30, 2002     Businesses   Banking    Banking  Markets      Items        Total
---------------------   ----------  ---------   ------- ---------  -----------  ------------
                                                                
Net Interest Income       $  241        $207      $235      $176      $ (24)      $  835
Provision for
  Credit Losses                -          53         6         -         11           70
Noninterest Income         1,350         142        58       117          6        1,673
Noninterest Expense          946          96       159        43        101        1,345
                          ------        ----      ----      ----      ------      ------
Income Before Taxes       $  645        $200      $128      $250      $(130)      $1,093
                          ======        ====      ====      ====      ======      ======

Average Assets            $8,982     $23,425    $4,960   $40,032      $2,249     $79,648
                          ======     =======    ======   =======      ======     =======




In Millions             Servicing
                           and
For the Six Months      Fiduciary   Corporate   Retail  Financial  Reconciling  Consolidated
Ended June 30, 2001     Businesses   Banking    Banking  Markets      Items        Total
---------------------   ----------  ---------   ------- ---------  -----------  ------------
                                                               
Net Interest Income       $  303        $255      $252      $ 88      $ (41)      $  857
Provision for
  Credit Losses                -          61         3         -         (4)          60
Noninterest Income         1,354         155        55       144         22        1,730
Noninterest Expense          873         115       151        35        150        1,324
                          ------        ----      ----      ----      ------      ------
Income Before Taxes       $  784        $234      $153      $197      $(165)      $1,203
                          ======        ====      ====      ====      ======      ======

Average Assets            $8,836     $27,353    $4,445   $34,223      $1,839     $76,696
                          ======     =======    ======   =======      ======     =======



 28

Segment Highlights

Servicing and Fiduciary Businesses
----------------------------------

     In the second quarter of 2002, noninterest income was $691 million
compared with $675 million in 2001.

     Fees from the Company's securities servicing businesses increased 5% to
$478 million for the second quarter from $454 million last quarter and
increased 8% from $443 million in the prior year.  Core growth in the
businesses accounted for approximately half of the sequential quarter revenue
growth, which annualizes to an 11% growth rate.  The remaining growth resulted
largely from the full quarter benefit of acquisitions closed in the first
quarter.  Strong performers for the quarter include custody, corporate trust,
broker-dealer services, and stock transfer.  Custody growth resulted from
domestic new business wins and increased customer activity, particularly in
Europe and Asia.  Corporate trust benefited from strong fixed-income issue
volume, particularly in the corporate and municipal markets.  Broker-dealer
services were positively impacted by new business wins, strong fixed income
activity and the increased use of the Company's global collateral management
system.  Stock transfer growth resulted from a large corporate action related
fee and several new business wins.  The Company continues to be the world's
leading custodian with assets of $6.6 trillion, including $1.8 trillion of
cross-border custody assets.

     Private client services and asset management fees increased to $88
million for the second quarter of 2002, up 6% from $83 million last quarter
and up 10% from $80 million in the second quarter of 2001.  Strong sequential
quarter growth primarily benefited from the acquisitions of Gannet Welsh &
Kotler and Beacon Fiduciary Advisors, both of which closed during the quarter.
Fees were also favorably impacted by continued strong flows into alternative
investment funds offered by the Company's Ivy Asset Management subsidiary and
demand for the Company's retail investment products.  Assets under management
were $75 billion while assets under administration were $30 billion at June
30, 2002.

     Net interest income in the Servicing and Fiduciary businesses segment was
$120 million for the second quarter of 2002 compared with $137 million in
2001. The decrease in net interest income is primarily due to a decline in
interest rates, which lowers the value of low-cost deposits generated by these
businesses.

     Net charge-offs in the Servicing and Fiduciary Businesses segment were
zero in the second quarters of 2002 and 2001. Noninterest expense for the
second quarter of 2002 was $486 million compared with $434 million in 2001.
The rise in noninterest expense is attributable to acquisitions, as well as
the Company's continued investment in technology.

Corporate Banking
-----------------

     The Corporate Banking segment's net interest income was $102 million in
the second quarter of 2002, compared with last year's $127 million. The
decrease reflects the decline in loan assets, as well as a decline in both the
volume and the value of low cost short-term deposits.

     The second quarter of 2002 provision for credit losses was $26 million
compared with $30 million last year. The decrease principally reflects a
reduction in corporate credit exposure in 2002. Net charge-offs in the
Corporate Banking segment were $30 million and $27 million in the second
quarter's of 2002 and 2001. Noninterest income was $73 million in the current
year compared with $78 million last year. This reflects lower loan syndication
and capital markets fees from slow market activity and the Company's efforts

 29

to reduce corporate loan commitments. Total loan commitments declined to $40.0
billion at June 30, 2002 from $42.6 billion at March 31, 2002. Noninterest
expenses were $50 million in the second quarter of 2002 compared with $56
million in 2001 reflecting lower compensation expenses.

Retail Banking
--------------

     In the Retail Banking segment, net interest income in the second quarter
of 2002 was $122 million compared with $124 million in 2001 reflecting a
decline in the value of demand deposits in a lower interest rate environment.
Noninterest income was $28 million for the quarter flat with $28 million last
year. Noninterest expense in the second quarter of 2002 was $78 million
compared with $74 million in the previous year's period because of higher
compensation and technology expenses. Net charge-offs increased to $5 million
in the second quarter of 2002 from $3 million in the second quarter of 2001
due to higher loss experience in the consumer loan portfolio.

Financial Markets
-----------------

     In the Financial Markets segment, net interest income for the quarter was
$91 million compared with $62 million in 2001 reflecting both an increase in
assets, primarily asset backed securities, as well as lower funding costs.
Noninterest income was $64 million in the second quarter of 2002 compared with
$70 million in the second quarter of 2001, as both foreign exchange and
interest rate derivative trading results were adversely affected by narrower
spreads and decreased volatility. Net charge-offs were zero in the second
quarters of 2002 and 2001.

Segment Accounting Principles
-----------------------------

     The Company's segment data has been determined on an internal management
basis of accounting, rather than the generally accepted accounting principles
used for consolidated financial reporting. These measurement principles are
designed so that reported results of the segments will track their economic
performance. Segment results are subject to restatement whenever improvements
are made in the measurement principles or organizational changes are made. In
the first quarter of 2002, the Company changed certain assumptions related to
the duration of sector assets and liabilities and the related interest rates.
As a result, sector results for 2001 were restated.

     The measure of revenues and profit or loss by operating segment has been
adjusted to present segment data on a taxable equivalent basis. The provision
for credit losses allocated to each reportable segment is based on
management's judgment as to average credit losses that will be incurred in the
operations of the segment over a credit cycle of a period of years.
Management's judgment includes the following factors among others: historical
charge-off experience and the volume, composition and growth of the loan
portfolio. This method is different from that required under generally
accepted accounting principles as it anticipates future losses which are not
yet probable and therefore not recognizable under generally accepted
accounting principles. Assets and liabilities are match funded. Support and
other indirect expenses are allocated to segments based on general internal
guidelines.

 30


Reconciling Items
-----------------

     Reconciling items for net interest income primarily relate to the
recording of interest income on a taxable equivalent basis, reallocation of
capital and the funding of goodwill and intangibles. Reconciling items for
noninterest income primarily relate to the sale of certain securities.
Reconciling items for noninterest expense include amortization of goodwill and
intangibles, severance, and corporate overhead. The adjustment to the
provision for credit losses reflects the difference between the aggregate of
the credit provision over a credit cycle for the reportable segments and the
Company's recorded provision. The reconciling items for average assets consist
of goodwill and other intangible assets.


                                  Second     Second     Year-to-Date
                                  Quarter    Quarter      June 30,
(In millions)                      2002       2001      2002    2001
                                  -------    -------   --------------
Segment's revenue                 $1,291     $1,301    $2,526  $2,606

Adjustments:
     Earnings associated with
       assignment of capital         (25)       (34)      (52)    (68)
     Securities gains                 (2)         7         1      12
     Taxable equivalent basis and
       other tax-related items        13         15        28      27
     Other                             1          6         5      10
                                  ------     ------    ------  ------
Subtotal-revenue adjustments         (13)        (6)      (18)    (19)
                                  ------     ------    ------  ------
Consolidated revenue              $1,278     $1,295    $2,508  $2,587
                                  ======     ======    ======  ======

Segment's income before tax       $  627     $  685    $1,223  $1,368
Adjustments:
     Revenue adjustments (above)     (13)        (6)      (18)    (19)
     Provision for credit losses
       different than GAAP            (6)         3       (11)      4
     Severance costs                 (16)         -       (16)      -
     Goodwill and
       intangible amortization        (2)       (26)       (4)    (54)
     Corporate overhead              (43)       (55)      (81)    (96)
                                  ------     ------    ------  ------
Consolidated income before tax    $  547     $  601    $1,093  $1,203
                                  ======     ======    ======  ======

Segments' total average assets   $77,384    $74,813   $77,399 $74,857
Adjustments:
     Goodwill and Intangibles      2,303      1,898     2,249   1,839
                                 -------    -------   ------- -------
Consolidated average assets      $79,687    $76,711   $79,648 $76,696
                                 =======    =======   ======= =======

 31


FORWARD LOOKING STATEMENTS

     The information presented with respect to, among other things, earnings
outlook, projected business strategy, the outcome of legal and investigatory
proceedings, the Company's plans, objectives and strategies reallocating
assets and moving into fee-based businesses, future loan losses and planned
capital expenditures, is forward looking information. Forward looking
statements are the Company's current estimates or expectations of future
events or future results.

     The Company or its executive officers and directors on behalf of the
Company, may from time to time make forward looking statements. When used in
this report, any press release or oral statements, the words "estimate",
"forecast", "project", "anticipate", "expect", "intend", "believe", "plan",
"goal", "should", "may", "strategy", and words of like import are intended to
identify forward looking statements in addition to statements specifically
identified as forward looking statements.

     Forward looking statements, including the Company's future results of
operations and discussions of future plans contained in Management's
Discussion and Analysis and elsewhere in this Form 10-Q, are subject to risks
and uncertainties, some of which are discussed herein, that could cause actual
results to differ materially from projected results. Forward looking
statements, projections or future plans, could be affected by a number of
factors that the Company is necessarily unable to predict with accuracy,
including the economic and other effects of the WTC disaster and the
subsequent U.S. military action, lower than expected performance or higher
than expected costs in connection with acquisitions and integration of
acquired businesses, changes in relationships with customers, variations in
management projections or market forecasts and the actions that management
could take in response to these changes, management's ability to achieve
efficiency goals, changes in customer credit quality, future changes in
interest rates, general credit quality, the levels of economic, capital
market, cross-border investing and merger and acquisition activity, consumer
behavior, government monetary policy, domestic and foreign legislation,
regulation and investigation, competition, credit, market and operating risk,
and loan demand, as well as the pace of recovery of the domestic economy,
market demand for the Company's products and services and future global
economic conditions.  This is not an exhaustive list and as a result of
variations in any of these factors actual results may differ materially from
any forward looking statements.

     Forward looking statements speak only as of the date they are made. The
Company will not update forward looking statements to reflect facts,
assumptions, circumstances or events which have changed after a forward
looking statement was made.

Government Monetary Policies

     The Federal Reserve Board has the primary responsibility for United
States monetary policy. Its actions have an important influence on the demand
for credit and investments and the level of interest rates and thus on the
earnings of the Company.

 32

Competition

     The businesses in which the Company operates are very competitive.
Competition is provided by both unregulated and regulated financial services
organizations, whose products and services span the local, national, and
global markets in which the Company conducts operations.

     Commercial banks, savings banks, savings and loan associations, and
credit unions actively compete for deposits, and money market funds and
brokerage houses offer deposit-like services. These institutions, as well as
consumer and commercial finance companies, national retail chains, factors,
insurance companies and pension trusts, are important competitors for various
types of loans. Issuers of commercial paper compete actively for funds and
reduce demand for bank loans. For personal and corporate trust services and
investment counseling services, insurance companies, investment counseling
firms, and other business firms and individuals offer active competition. A
wide variety of domestic and foreign companies compete for processing
services.




 33

                             THE BANK OF NEW YORK COMPANY, INC.
                 Average Balances and Rates on a Taxable Equivalent Basis
                                  (Dollars in millions)



                                            For the three months              For the three months
                                            ended June 30, 2002               ended June 30, 2001
                                       ------------------------------     ------------------------------
                                       Average                Average     Average                Average
                                       Balance    Interest     Rate       Balance    Interest     Rate
                                       -------    --------    -------     -------    --------    -------
                                                                                 
ASSETS
------
Interest-Bearing
 Deposits in Banks
 (primarily foreign)                   $ 5,737       $  44       3.03%    $ 5,563       $  62      4.46%
Federal Funds Sold and Securities
 Purchased Under Resale Agreements       2,834          12       1.69       3,602          38      4.28
Loans
 Domestic Offices                       19,068         245       5.16      18,941         321      6.80
 Foreign Offices                        15,566         132       3.40      18,228         274      6.04
                                       -------       -----                -------       -----
   Total Loans                          34,634         377       4.37      37,169         595      6.43
                                       -------       -----                -------       -----
Securities
 U.S. Government Obligations               669           9       5.40       1,019          14      5.68
 U.S. Government Agency Obligations      3,253          45       5.54       2,880          47      6.43
 Obligations of States and
  Political Subdivisions                   580           9       6.54         638          13      7.88
 Other Securities                       10,112         124       4.89       4,086          61      6.02
 Trading Securities                      8,124          68       3.36       9,003         111      4.91
                                       -------       -----                -------       -----
   Total Securities                     22,738         255       4.49      17,626         246      5.57
                                       -------       -----                -------       -----
Total Interest-Earning Assets           65,943         688       4.18%     63,960         941      5.90%
                                                     -----                              -----
Allowance for Credit Losses               (616)                              (612)
Cash and Due from Banks                  2,726                              2,791
Other Assets                            11,634                             10,572
                                       -------                            -------
   TOTAL ASSETS                        $79,687                            $76,711
                                       =======                            =======

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Interest-Bearing Deposits
 Money Market Rate Accounts            $ 6,405       $  21       1.33%    $ 6,190       $  53      3.41%
 Savings                                 8,171          22       1.10       7,650          41      2.14
 Certificates of Deposit
  $100,000 & Over                        1,252           8       2.50         377           5      5.37
 Other Time Deposits                     1,567           9       2.27       1,975          22      4.48
 Foreign Offices                        24,459          98       1.60      25,935         252      3.91
                                       -------       -----                -------       -----
  Total Interest-Bearing Deposits       41,854         158       1.51      42,127         373      3.55
Federal Funds Purchased and
 Securities Sold Under Repurchase
 Agreements                              2,299           8       1.47       2,279          23      4.05
Other Borrowed Funds                     4,394          30       2.73       2,031          28      5.43
Long-Term Debt                           5,450          56       4.06       4,502          71      6.34
                                       -------       -----                -------       -----
  Total Interest-Bearing Liabilities    53,997         252       1.87%     50,939         495      3.90%
                                                     -----                              -----
Noninterest-Bearing Deposits            10,257                             10,696
Other Liabilities                        9,017                              9,011
Common Shareholders' Equity              6,416                              6,065
                                       -------                            -------
  TOTAL LIABILITIES AND
   SHAREHOLDERS' EQUITY                $79,687                            $76,711
                                       =======                            =======
Net Interest Earnings
 and Interest Rate Spread                            $ 436       2.31%                  $ 446      2.00%
                                                     =====       ====                   =====      ====
Net Yield on Interest-Earning Assets                             2.65%                             2.79%
                                                                 ====                              ====





 34
                             THE BANK OF NEW YORK COMPANY, INC.
                 Average Balances and Rates on a Taxable Equivalent Basis
                                  (Dollars in millions)



                                            For the six months                 For the six months
                                            ended June 30, 2002                ended June 30, 2001
                                       ------------------------------     ------------------------------
                                       Average                Average     Average                Average
                                       Balance    Interest     Rate       Balance    Interest     Rate
                                       -------    --------    -------     -------    --------    -------
                                                                                 
ASSETS
------
Interest-Bearing
 Deposits in Banks
 (primarily foreign)                   $ 5,481       $  79       2.88%    $ 5,697       $ 132      4.66%
Federal Funds Sold and Securities
 Purchased Under Resale Agreements       3,069          26       1.72       3,666          89      4.92
Loans
 Domestic Offices                       19,211         490       5.15      19,028         661      6.99
 Foreign Offices                        15,869         270       3.43      18,667         611      6.61
                                       -------       -----                -------       -----
   Total Loans                          35,080         760       4.37      37,695       1,272      6.80
                                       -------       -----                -------       -----
Securities
 U.S. Government Obligations               736          20       5.37       1,146          32      5.71
 U.S. Government Agency Obligations      3,075          87       5.66       2,340          76      6.55
 Obligations of States and
  Political Subdivisions                   574          19       6.57         660          26      7.90
 Other Securities                        9,322         231       4.96       3,682         108      5.93
 Trading Securities                      8,435         141       3.38       9,596         253      5.27
                                       -------       -----                -------       -----
   Total Securities                     22,142         498       4.51      17,424         495      5.72
                                       -------       -----                -------       -----
Total Interest-Earning Assets           65,772       1,363       4.18%     64,482       1,988      6.21%
                                                     -----                              -----
Allowance for Credit Losses               (616)                              (613)
Cash and Due from Banks                  2,683                              2,712
Other Assets                            11,809                             10,115
                                       -------                            -------
   TOTAL ASSETS                        $79,648                            $76,696
                                       =======                            =======

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Interest-Bearing Deposits
 Money Market Rate Accounts            $ 6,661       $  44       1.34%    $ 6,197       $ 123      4.01%
 Savings                                 8,114          48       1.18       7,572          90      2.39
 Certificates of Deposit
  $100,000 & Over                          877          12       2.74         392          11      5.79
 Other Time Deposits                     1,585          19       2.38       1,940          45      4.72
 Foreign Offices                        24,816         195       1.59      26,372         566      4.33
                                       -------       -----                -------       -----
  Total Interest-Bearing Deposits       42,053         318       1.53      42,473         835      3.97
Federal Funds Purchased and
 Securities Sold Under Repurchase
 Agreements                              2,203          16       1.47       2,375          55      4.66
Other Borrowed Funds                     4,566          59       2.58       2,030          59      5.84
Long-Term Debt                           5,239         109       4.15       4,510         152      6.75
                                       -------       -----                -------       -----
  Total Interest-Bearing Liabilities    54,061         502       1.87%     51,388       1,101      4.32%
                                                     -----                              -----
Noninterest-Bearing Deposits            10,192                             10,852
Other Liabilities                        9,097                              8,415
Common Shareholders' Equity              6,298                              6,041
                                       -------                            -------
  TOTAL LIABILITIES AND
   SHAREHOLDERS' EQUITY                $79,648                            $76,696
                                       =======                            =======
Net Interest Earnings
 and Interest Rate Spread                            $ 861       2.31%                  $ 887      1.89%
                                                     =====       ====                   =====      ====
Net Yield on Interest-Earning Assets                             2.64%                             2.77%
                                                                 ====                              ====





 35

PART 2.  OTHER INFORMATION

Item 1.  Legal Proceedings
--------------------------

     The Company continues to cooperate with investigations by federal and
state law enforcement and bank regulatory authorities. The investigations
focus on funds transfer activities in certain accounts at the Bank,
principally involving wire transfers from Russian and other sources in Eastern
Europe, as well as certain other matters involving the Bank and its
affiliates. The funds transfer investigations center around accounts
controlled by Peter Berlin, his wife, Lucy Edwards (until discharged in
September 1999, an officer of the Bank), and companies and persons associated
with them. Berlin and Edwards pled guilty to various federal criminal charges.
The Company cannot predict when or on what basis the investigations will
conclude or their effect, if any, on the Company.

     Four purported shareholder derivative actions have been filed in
connection with these Russian related matters - - two in the United States
District Court for the Southern District of New York and two in the New York
Supreme Court, New York County - - against certain directors and officers of
the Company and the Bank alleging that the defendants have breached their
fiduciary duties of due care and loyalty by aggressively pursuing business
with Russian banks and entities without implementing sufficient safeguards and
failing to supervise properly those responsible for that business. The actions
seek, on behalf of the Company and the Bank, monetary damages from the
defendants, corrective action and attorneys' fees. On September 1, 2000,
plaintiffs in the two federal actions filed an amended, consolidated complaint
that names all of the directors and certain officers of the Bank and the
Company as defendants, repeats the allegations of the original complaints and
adds allegations that certain officers of the Bank and the Company
participated in a scheme to transfer cash improperly from Russia to various
off-shore accounts and to avoid Russian customs, currency and tax laws.
Management believes that the allegations of both the original complaints and
the amended complaint are without merit. On September 12, 2000, the boards of
directors of the Bank and the Company authorized a Special Litigation
Committee ("SLC") to consider the response of the Bank and the Company to the
state and federal court shareholder derivative actions. The SLC issued an
Interim Report dated May 21, 2001 which concluded that there was "no credible
evidence" to support the allegations of personal misconduct against Mr. Renyi
and "credible evidence" that contradicts "critical allegations" in the amended
complaint in the federal action.

     On August 31, 2001, defendants moved to dismiss the two actions filed in
the United States District Court for the Southern District of New York.  On
November 27, 2001, the federal district court granted defendants' motion and
dismissed the two actions.  On December 19, 2001, plaintiffs filed a Notice of
Appeal to the United States Court of Appeals for the Second Circuit.  Argument
on that appeal is expected in the fall of 2002.

     On February 1, 2002, counsel for plaintiffs in the two federal court
actions filed a shareholder derivative action in New York Supreme Court, New
York County that made allegations substantially similar to the two federal
court actions that were dismissed.  The Company and the Bank requested that
the New York State Supreme Court issue an order consolidating the new state
court shareholder derivative action with the two shareholder derivative
actions previously filed.  Plaintiffs in the new shareholder derivative action
opposed consolidation.  On July 15, 2002, the court ordered the consolidation
of the new action.

     The two previously filed state court derivative actions, which do not
include any allegations of personal misconduct, are still pending.  Lead
plaintiffs' counsel for all pending shareholder derivative actions and counsel
for defendants are currently undertaking court-appointed mediation.

 36

     Additionally, on October 7, 1999, six alleged depositors of Joint Stock
Bank Inkombank ("Inkombank"), a Russian bank, filed a purported class action
in the United States District Court for the Southern District of New York on
behalf of all depositors of Inkombank who lost their deposits when that bank
collapsed in 1998. The complaint, as subsequently amended twice, alleges that
the Company and the Bank and their senior officers knew about, and aided and
abetted the looting of Inkombank by its principals and participated in a
scheme to transfer cash improperly from Russia to various off-shore accounts
and to avoid Russian customs, currency and tax laws. The amended complaint
asserts causes of action for conversion and aiding and abetting conversion
under New York law. In addition, the amended complaint states a claim under
the Racketeer Influenced and Corrupt Organizations Act ("RICO"). On March 21,
2001, the court dismissed the second amended complaint without leave to
replead. On January 14, 2002, the United States Court of Appeals for the
Second Circuit vacated the dismissal of the Second Amended Complaint because
it disagreed with one ground of the district court's dismissal, and remanded
the case to the lower court to consider alternate bases for dismissal.  On
March 19, 2002, the Company and the Bank filed a motion to dismiss the second
amended complaint; that motion will be heard later this year. The Company and
the Bank believe that the allegations made in this action are without merit,
and intend to defend the action vigorously.

     On October 24, 2000, three alleged shareholders of Inkombank filed an
action in the Supreme Court, New York County against the Company, the Bank and
Inkombank. The complaint alleges that the defendants fraudulently induced the
plaintiffs to refrain from redeeming their alleged $40 million investment in
Inkombank. The complaint asserts a single cause of action for fraud, seeking
$40 million plus 12% interest from January 1994, punitive damages, costs,
interest and attorney fees. The Court denied the Company and the Bank's motion
to dismiss the complaint on January 15, 2002. The Company and the Bank's
motion to reargue is pending. Discovery is ongoing. The Company and the Bank
believe that the allegations of the complaint are without merit and intend to
defend the action vigorously.

     The Company does not expect that any of the foregoing civil actions will
have a material impact on the Company's consolidated financial statements.

     In the ordinary course of business, there are various legal claims
pending against the Company and its subsidiaries. In the opinion of
management, liabilities arising from such claims, if any, would not have a
material effect on the Company's consolidated financial statements.



 37


Item 2.  Sales of Unregistered Common Stock
-------------------------------------------


     During the second quarter of 2002, shares of the Company's common stock
were issued in the following transactions exempt from registration under the
Securities Act of 1933 pursuant to Section 4(2) thereof:

     (a) On June 14, 2002, 14,400 shares of common stock were issued to
serving non-employee directors as part of their annual retainer and 2,400
shares of common stock were issued to a retired director who had deferred
receipt of such common stock pursuant to the Deferred Compensation Plan for
Non-Employee Directors of The Bank of New York Company, Inc.

     (b) On June 19, 2002, 34,590 shares of the Company's common stock were
issued to the former shareholders of a corporation previously acquired by the
Company.

Item 4.  Submission of Matters to Vote of Security Holders
----------------------------------------------------------

     The Company held its annual meeting on May 14, 2002 at The Bank of New
York at 385 Rifle Camp Road, West Paterson, New Jersey. The shareholders:

     (1)  elected fourteen persons to serve as directors of the Company;

     (2)  ratified the appointment of Ernst & Young LLP as the Company's
          independent public accountants for 2002; and

     (3)  defeated a shareholder proposal with respect to former
          government officials.

The number of votes cast for, against or withheld, and the number of
abstentions with respect to each such matter is set forth below, as are the
number of broker non-votes, where applicable. Pursuant to New York law,
abstentions and broker non-votes are not counted toward the election of
directors.




                                 FOR          AGAINST/WITHHELD     ABSTAINED     BROKER NON-VOTES
                                                                      

(1)  Election of Directors:

     J. Carter Bacot             611,171,253      24,911,239
     Frank J. Biondi, Jr.        618,531,372      17,551,120
     William R. Chaney           617,820,894      18,261,598
     Nicholas M. Donofrio        615,442,967      20,639,525
     Alan R. Griffith            618,487,137      17,595,355
     Gerald L. Hassell           618,555,691      17,526,801
     Richard J. Kogan            618,528,219      17,554,273
     John A. Luke, Jr.           615,312,189      20,770,303
     John C. Malone              617,439,569      18,642,923
     Paul Myners                 618,611,212      17,471,280
     Catherine A. Rein           615,489,446      20,593,046
     Thomas A. Renyi             618,583,608      17,498,884
     William C. Richardson       615,520,406      20,562,086
     Brian L. Roberts            615,469,977      20,612,515

(2)  Ratification of Auditors    614,445,128      18,177,756        3,459,608

(3)  Approval of Shareholder
     Proposal With Respect to
     Former Government Officials  23,946,554     489,159,861       16,389,046     106,587,031



 38


Item 6.  Exhibits and Reports on Form 8-K
-----------------------------------------

(a)  The exhibits filed as part of this report are as follows:

     Exhibit 12 - Statement Re:  Ratio of Earnings to Fixed Charges for the
     Three Months and Six Months Ended June 30, 2002 and 2001.

(b)  The Company filed the following reports on Form 8-K since
     March 31, 2002:

     On April 17, 2002, the Company filed a Form 8-K Current Report (Items 5
and 7), which report included unaudited interim financial information and
accompanying discussion for the first quarter of 2002 contained in the
Company's press release dated April 17, 2002.

     On May 23, 2002, the Company filed a Form 8-K Current Report (Item 5
and 7), which report included four exhibits in connection with the
Registration Statement on Form S-3 (File Nos. 333-62516, 333-62516-01, 333-
62516-02, 333-62516-03, 333-62516-04) covering the Company's 5.20% Senior
Notes due 2007, issuable under an Indenture, dated as of July 18, 1991 between
the Company and Deutsche Bank Trust Company Americas. The exhibits consist of
the Pricing Agreement dated May 14, 2002; the Form of Note; an Officers'
Certificate pursuant to Section 301 of the Indenture; and the opinion of
counsel as to the legality of the Notes.

     On June 26, 2002, the Company filed a Form 8-K Current Report (Item 5
and 7), which report included seven exhibits in connection with the
Registration Statement on Form S-3 (File Nos. 333-89586, 333-89586-01, 333-
89586-02, 333-89586-03, 333-89586-04) covering the Company's Senior
Subordinated Medium-Term Notes, Series F and Senior Medium-Term Notes, Series
E, issuable under an Indenture, dated as of October 1, 1993 between the
Company and J.P. Morgan Trust Company and an Indenture, dated July 18, 1991
between the Company and Deutsche Bank Trust Company Americas. The exhibits
consist of the form of Distribution Agreement dated June 26, 2002; the Forms
of Notes; Officers' Certificates pursuant to Section 301 of the Indentures;
and the opinion of counsel as to the legality of the Notes.

     On July 17, 2002, the Company filed a Form 8-K Current Report (Items 5
and 7), which report included unaudited interim financial information and
accompanying discussion for the second quarter of 2002 contained in the
Company's press release dated July 17, 2002.



 39


                              SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.



                                       THE BANK OF NEW YORK COMPANY, INC.
                                       ----------------------------------
                                       (Registrant)





Date: August 14, 2002             By:  /s/ Thomas J. Mastro
                                       ---------------------------------
                                Name:  Thomas J. Mastro
                               Title:  Comptroller



 40



                                EXHIBIT INDEX
                                --------------


Exhibit        Description
-------        -----------



   12          Ratio of Earnings to Fixed Charges for the Three Months
               and Six Months Ended June 30, 2002 and 2001.