October 20, 2015

BNY Mellon Reports Third Quarter Earnings Of $820 Million Or $0.74 Per Common Share


NEW YORK, Oct. 20, 2015 /PRNewswire/ --  

GENERATED MORE THAN 370 BASIS POINTS OF POSITIVE OPERATING LEVERAGE YEAR-OVER-YEAR ON AN ADJUSTED BASIS (a)

  • Total revenue up 1% on an adjusted basis (a)
    • Net interest revenue up 5%
  • Total noninterest expense decreased 3% on an adjusted basis (a)

RESULTS DEMONSTRATE CONTINUING FOCUS ON BUSINESS IMPROVEMENT PROCESS

  • Enhancing client service delivery
  • Investing in technology platforms for future revenue growth
  • Ongoing investments in risk management and regulatory compliance

EXECUTING ON CAPITAL PLAN AND RETURN OF VALUE TO COMMON SHAREHOLDERS

  • Repurchased 15.8 million common shares for $690 million in the third quarter of 2015
  • Return on tangible common equity of 21% in the third quarter of 2015 (b)

The Bank of New York Mellon Corporation ("BNY Mellon") (NYSE: BK) today reported third quarter net income applicable to common shareholders of $820 million, or $0.74 per diluted common share.  In the third quarter of 2014, net income applicable to common shareholders was $1.07 billion, or $0.93 per diluted common share, or $734 million, or $0.64 per diluted common share, adjusted for the gains on sales of our investment in Wing Hang Bank Limited ("Wing Hang") and the One Wall Street building, net of litigation and restructuring charges.  In the second quarter of 2015, net income applicable to common shareholders was $830 million, or $0.73 per diluted common share, or $868 million, or $0.77 per diluted common share, adjusted for litigation and restructuring charges. (b)

"Our third quarter results reflect our focus on delivering significant value to our shareholders in all market environments.  We are executing on our strategic priorities, which helped us to generate more than 370 basis points of positive operating leverage year-over-year and to remain on track to achieve the three-year targets we shared on Investor Day a year ago.  We are enhancing our risk management and regulatory compliance practices, investing in technology platforms for the future and have onboarded employees associated with two strategic relationships while simultaneously controlling expenses," Gerald L. Hassell, chairman and chief executive officer of BNY Mellon, said.

"Our business improvement process designed to leverage our scale and expertise is succeeding in enhancing service quality, improving productivity, and driving sustainable improvements in our profitability.  We are focused on deepening our client relationships through delivery of a superior client experience while maintaining our pricing discipline when competing in the marketplace.  This quarter, we completed the move to our new corporate headquarters, ahead of schedule, creating an open environment that supports innovation and collaboration," Mr. Hassell added.

"We returned more than $875 million to our shareholders in the form of share repurchases and dividends during the quarter while achieving a 21 percent return on tangible common equity," Mr. Hassell concluded.

_________________________________________________________________________________

(a)   See pages 3-4 for the Non-GAAP adjustments.

(b)   See "Supplemental information – Explanation of GAAP and Non-GAAP financial measures" beginning on page 25 for the reconciliation of these Non-GAAP measures.

CONFERENCE CALL INFORMATION

Gerald L. Hassell, chairman and chief executive officer, and Thomas P. Gibbons, vice chairman and chief financial officer, along with other members of executive management from BNY Mellon, will host a conference call and simultaneous live audio webcast at 8:00 a.m. EDT on Oct. 20, 2015.  This conference call and audio webcast will include forward-looking statements and may include other material information. 

Persons wishing to access the conference call and audio webcast may do so by dialing (888) 677-5383 (U.S.) and (773) 799-3611 (International), and using the passcode: Earnings, or by logging on to www.bnymellon.com. Earnings materials will be available at www.bnymellon.com beginning at approximately 6:30 a.m. EDT on Oct. 20, 2015.  Replays of the conference call and audio webcast will be available beginning Oct. 20, 2015 at approximately 2 p.m. EDT through Nov. 20, 2015 by dialing (866) 511-1893 (U.S.) or (203) 369-1948 (International).  The archived version of the conference call and audio webcast will also be available at www.bnymellon.com for the same time period.

THIRD QUARTER 2015 FINANCIAL HIGHLIGHTS (a)
(comparisons are 3Q15 vs. 3Q14 unless otherwise stated)

  • Earnings

 

Earnings per share


 

Net income applicable to
common shareholders of The
Bank of New York Mellon
Corporation

(in millions, except per share amounts)

3Q15


 

3Q14


 

Inc


 

3Q15


 

3Q14


 

Inc

GAAP results

$

0.74


 

 

$

0.93


 

 

 

 

$

820


 

 

$

1,070


 

 

 

Less:  Gain on the sale of our investment in Wing Hang

N/A


 

0.27


 

 

 

 

N/A


 

315


 

 

 

 Gain on the sale of the One Wall Street building

N/A


 

0.18


 

 

 

 

N/A


 

204


 

 

 

Add:   Litigation and restructuring charges

0.01


 

 

0.16


 

 

 

 

8


 

 

183


 

 

 

Non-GAAP results

$

0.74


 

(a)

$

0.64


 

 

16

%


 

$

828


 

 

$

734


 

 

13

%

 

(a)   Does not foot due to rounding.

N/A - Not applicable.

 


 

  • Total revenue was $3.8 billion, a decrease of 18%, or an increase of 1% (Non-GAAP), excluding the impact of 3Q14 gains on the sales of our equity investment in Wing Hang and the One Wall Street building.
    • Investment services fees increased 2% reflecting net new business and organic growth, primarily in Global Collateral Services, Broker-Dealer Services and Asset Servicing, and higher clearing services revenue, partially offset by the unfavorable impact of a stronger U.S. dollar.
    • Investment management and performance fees decreased 6%, or 2% on a constant currency basis (Non-GAAP), driven by lower performance fees, lower equity market values, net outflows and the sale of Meriten Investment Management GmbH ("Meriten"), partially offset by the impact of the 1Q15 acquisition of Cutwater Asset Management ("Cutwater") and strategic initiatives. (a)
    • Foreign exchange revenue increased 17% driven by higher volatility and volumes.
    • Financing-related fees increased $27 million driven by higher fees related to secured intraday credit provided to dealers in connection with their tri-party repo activity and higher underwriting fees.
    • Investment and other income decreased $831 million driven by the gains on the sales of our equity investment in Wing Hang and our One Wall Street building, both recorded in 3Q14.
    • Net interest revenue increased $38 million driven by higher securities and loans due to higher deposits and a shift out of cash, and lower interest expense incurred on deposits.
  • Noninterest expense was $2.7 billion, a decrease of 10%, or 3% (Non-GAAP) excluding litigation and restructuring charges.  Noninterest expense was lower in nearly all categories, reflecting the favorable impact of a stronger U.S. dollar and the benefit of the business improvement process which focuses on reducing structural costs.
  • Generated more than 370 basis points of positive operating leverage year-over-year on an adjusted basis.
  • Effective tax rate of 25.4%.
           
  • Assets under custody and/or administration ("AUC/A") and Assets under management ("AUM")
    • AUC/A of $28.5 trillion, increased 1% reflecting net new business, partially offset by the unfavorable impact of a stronger U.S. dollar and lower equity market values.
      • Estimated new AUC/A wins in Asset Servicing of $84 billion in 3Q15.
    • AUM of $1.63 trillion, flat reflecting higher market values, the Cutwater acquisition and net new business offset by the unfavorable impact of a stronger U.S. dollar.
      • Net long-term outflows totaled $5 billion in 3Q15 driven by index, equity and fixed income investments, partially offset by liability-driven and alternative investments.
      • Net short-term outflows totaled $10 billion in 3Q15.
               
  • Capital
    • Repurchased 15.8 million common shares for $690 million in 3Q15.
    • Return on tangible common equity of 21% in 3Q15 (a).

(a)

See "Supplemental information – Explanation of GAAP and Non-GAAP financial measures" beginning on page 25 for the reconciliation of Non-GAAP measures.  Non-GAAP excludes the gains on the sales of our investment in Wing Hang and the One Wall Street building, net income attributable to noncontrolling interests of consolidated investment management funds, amortization of intangible assets, M&I, litigation and restructuring charges, and the benefit primarily related to a tax carryback claim, if applicable.

Note: In the table above and throughout this document, sequential growth rates are unannualized.

FINANCIAL SUMMARY

(dollars in millions, except per share amounts; common shares in
thousands)


 

 

 

 

 

3Q15 vs.

3Q15

2Q15

1Q15

4Q14

3Q14

2Q15

3Q14

Revenue:


 

 

 

 

 

 

 

Fee and other revenue

$

3,053


 

$

3,067


 

$

3,012


 

$

2,935


 

$

3,851


 

%

(21)

%

(Loss) income from consolidated investment management funds

(22)


 

40


 

52


 

42


 

39


 

 

 

Net interest revenue

759


 

779


 

728


 

712


 

721


 

(3)


 

5


 

Total revenue – GAAP

3,790


 

3,886


 

3,792


 

3,689


 

4,611


 

(2)


 

(18)


 

Less:  Net (loss) income attributable to noncontrolling interests related to consolidated investment management funds

(5)


 

37


 

31


 

24


 

23


 

 

 

Gain on the sale of our investment in Wing Hang


 


 


 


 

490


 

 

 

Gain on the sale of the One Wall Street building


 


 


 


 

346


 

 

 

Total revenue – Non-GAAP

3,795


 

3,849


 

3,761


 

3,665


 

3,752


 

(1)


 

1


 

Provision for credit losses

1


 

(6)


 

2


 

1


 

(19)


 

 

 

Expense:


 

 

 

 

 

 

 

Noninterest expense – GAAP

2,680


 

2,727


 

2,700


 

3,524


 

2,968


 

(2)


 

(10)


 

Less:  Amortization of intangible assets

66


 

65


 

66


 

73


 

75


 

 

 

M&I, litigation and restructuring charges (recoveries)

11


 

59


 

(3)


 

800


 

220


 

 

 

Total noninterest expense – Non-GAAP

2,603


 

2,603


 

2,637


 

2,651


 

2,673


 


 

(3)


 

Income:


 

 

 

 

 

 

 

Income before income taxes

1,109


 

1,165


 

1,090


 

164


 

1,662


 

(5)

%

N/M

Provision (benefit) for income taxes

282


 

276


 

280


 

(93)


 

556


 

 

 

Net income

$

827


 

$

889


 

$

810


 

$

257


 

$

1,106


 

 

 

Net loss (income) attributable to noncontrolling interests (a)

6


 

(36)


 

(31)


 

(24)


 

(23)


 

 

 

Net income applicable to shareholders of The Bank of New York Mellon Corporation

833


 

853


 

779


 

233


 

1,083


 

 

 

Preferred stock dividends

(13)


 

(23)


 

(13)


 

(24)


 

(13)


 

 

 

Net income applicable to common shareholders of The Bank of New York Mellon Corporation

$

820


 

$

830


 

$

766


 

$

209


 

$

1,070


 

 

 

 

 

 

 

 

 

 

 

Key Metrics:


 

 

 

 

 

 

 

Pre-tax operating margin (b)

29

%

30

%

29

%

4

%

36

%


 

 

Non-GAAP (b)

31

%

33

%

30

%

28

%

29

%


 

 

 

 

 

 

 

 

 

 

Return on common equity (annualized) (b)

9.1

%

9.4

%

8.8

%

2.2

%

11.6

%


 

 

Non-GAAP (b)

9.7

%

10.3

%

9.2

%

7.7

%

8.5

%


 

 

 

 

 

 

 

 

 

 

Return on tangible common equity (annualized) – Non-GAAP (b)

20.8

%

21.5

%

20.3

%

5.9

%

26.2

%


 

 

Non-GAAP adjusted (b)

21.0

%

22.5

%

20.2

%

16.3

%

18.4

%


 

 

 

 

 

 

 

 

 

 

Fee revenue as a percentage of total revenue excluding net securities gains

80

%

79

%

79

%

79

%

83

%


 

 

 

 

 

 

 

 

 

 

Percentage of non-U.S. total revenue (c)

37

%

36

%

36

%

35

%

43

%


 

 

 

 

 

 

 

 

 

 

Average common shares and equivalents outstanding:


 

 

 

 

 

 

 

Basic

1,098,003


 

1,113,790


 

1,118,602


 

1,120,672


 

1,126,946


 

 

 

Diluted

1,105,645


 

1,122,135


 

1,126,306


 

1,129,040


 

1,134,871


 

 

 

 

 

 

 

 

 

 

 

Period end:


 

 

 

 

 

 

 

Full-time employees

51,300


 

50,700


 

50,500


 

50,300


 

50,900


 

 

 

Book value per common share – GAAP (b)

$

32.59


 

$

32.28


 

$

31.89


 

$

32.09


 

$

32.77


 

 

 

Tangible book value per common share – Non-GAAP (b)

$

15.16


 

$

14.86


 

$

14.82


 

$

14.70


 

$

15.30


 

 

 

Cash dividends per common share

$

0.17


 

$

0.17


 

$

0.17


 

$

0.17


 

$

0.17


 

 

 

Common dividend payout ratio

23

%

23

%

25

%

94

%

18

%


 

 

Closing stock price per common share

$

39.15


 

$

41.97


 

$

40.24


 

$

40.57


 

$

38.73


 

 

 

Market capitalization

$

42,789


 

$

46,441


 

$

45,130


 

$

45,366


 

$

43,599


 

 

 

Common shares outstanding

1,092,953


 

1,106,518


 

1,121,512


 

1,118,228


 

1,125,710


 

 

 

 

(a)

Primarily attributable to noncontrolling interests related to consolidated investment management funds.

(b)

Non-GAAP excludes the gains on the sales of our investment in Wing Hang and the One Wall Street building, net (loss) income attributable to noncontrolling interests of consolidated investment management funds, amortization of intangible assets and M&I, litigation and restructuring charges (recoveries).  See "Supplemental information – Explanation of GAAP and Non-GAAP financial measures" beginning on page 25 for the reconciliation of Non-GAAP measures.

(c)

Includes fee revenue, net interest revenue and (loss) income from consolidated investment management funds, net of net loss (income) attributable to noncontrolling interests.

N/M – Not meaningful.

CONSOLIDATED BUSINESS METRICS

Consolidated business metrics


 

 

 

 

 

 

3Q15 vs.

3Q15


 

2Q15

1Q15

4Q14

3Q14

2Q15

3Q14

Changes in AUM (in billions): (a)


 

 

 

 

 

 

 

 

Beginning balance of AUM

$

1,700


 

 

$

1,717


 

$

1,686


 

$

1,620


 

$

1,609


 

 

 

Net inflows (outflows):


 

 

 

 

 

 

 

 

Long-term:


 

 

 

 

 

 

 

 

Equity

(4)


 

 

(13)


 

(5)


 

(5)


 

(2)


 

 

 

Fixed income

(3)


 

 

(2)


 

3


 

4


 


 

 

 

Index

(10)


 

 

(9)


 

8


 

1


 

(3)


 

 

 

Liability-driven investments (b)

11


 

 

5


 

8


 

24


 

19


 

 

 

Alternative investments

1


 

 

3


 

1


 

2


 


 

 

 

Total long-term inflows (outflows)

(5)


 

 

(16)


 

15


 

26


 

14


 

 

 

Short term:


 

 

 

 

 

 

 

 

Cash

(10)


 

 

(11)


 

1


 

6


 

18


 

 

 

Total net inflows (outflows)

(15)


 

 

(27)


 

16


 

32


 

32


 

 

 

Net market/currency impact/acquisition

(60)


 

 

10


 

15


 

34


 

(21)


 

 

 

Ending balance of AUM

$

1,625


 

(c)

$

1,700


 

$

1,717


 

$

1,686


 

$

1,620


 

(4)

%

%


 

 

 

 

 

 

 

 

 

AUM at period end, by product type: (a)


 

 

 

 

 

 

 

 

Equity

14

%


 

15

%

15

%

15

%

16

%


 

 

Fixed income

13


 

 

13


 

12


 

12


 

13


 

 

 

Index

20


 

 

21


 

22


 

21


 

21


 

 

 

Liability-driven investments (b)

32


 

 

30


 

30


 

30


 

28


 

 

 

Alternative investments

4


 

 

4


 

4


 

4


 

4


 

 

 

Cash

17


 

 

17


 

17


 

18


 

18


 

 

 

Total AUM

100

%

(c)

100

%

100

%

100

%

100

%


 

 

 

 

 

 

 

 

 

 

 

Investment Management:


 

 

 

 

 

 

 

 

Average loans (in millions)

$

12,779


 

 

$

12,298


 

$

11,634


 

$

11,124


 

$

10,772


 

4

%

19

%

Average deposits (in millions)

$

15,282


 

 

$

14,638


 

$

15,217


 

$

14,602


 

$

13,762


 

4

%

11

%


 

 

 

 

 

 

 

 

 

Investment Services:


 

 

 

 

 

 

 

 

Average loans (in millions)

$

38,025


 

 

$

38,264


 

$

37,699


 

$

35,448


 

$

33,785


 

(1)

%

13

%

Average deposits (in millions)

$

230,153


 

 

$

237,193


 

$

234,183


 

$

228,282


 

$

221,734


 

(3)

%

4

%


 

 

 

 

 

 

 

 

 

AUC/A at period end (in trillions) (d)

$

28.5


 

(c)

$

28.6


 

$

28.5


 

$

28.5


 

$

28.3


 

%

1

%


 

 

 

 

 

 

 

 

 

Market value of securities on loan at period end (in billions) (e)

$

288


 

 

$

283


 

$

291


 

$

289


 

$

282


 

2

%

2

%


 

 

 

 

 

 

 

 

 

Asset servicing:


 

 

 

 

 

 

 

 

Estimated new business wins (AUC/A) (in billions) (f)

$

84


 

(c)

$

933


 

$

125


 

$

168


 

$

154


 

 

 

 

 

 

 

 

 

 

 

 

Depositary Receipts:


 

 

 

 

 

 

 

 

Number of sponsored programs

1,176


 

 

1,206


 

1,258


 

1,279


 

1,302


 

(2)

%

(10)

%


 

 

 

 

 

 

 

 

 

Clearing services:


 

 

 

 

 

 

 

 

Global DARTS volume (in thousands)

246


 

 

242


 

261


 

242


 

209


 

2

%

18

%

Average active clearing accounts (U.S. platform) (in thousands)

6,107


 

 

6,046


 

5,979


 

5,900


 

5,805


 

1

%

5

%

Average long-term mutual fund assets (U.S. platform) (in millions)

$

447,287


 

 

$

466,195


 

$

456,954


 

$

450,305


 

$

442,827


 

(4)

%

1

%

Average investor margin loans (U.S. platform) (in millions)

$

11,806


 

 

$

11,890


 

$

11,232


 

$

10,711


 

$

9,861


 

(1)

%

20

%


 

 

 

 

 

 

 

 

 

Broker-Dealer:


 

 

 

 

 

 

 

 

Average tri-party repo balances (in billions)

$

2,142


 

 

$

2,174


 

$

2,153


 

$

2,101


 

$

2,063


 

(1)

%

4

%

 

(a)

Excludes securities lending cash management assets and assets managed in the Investment Services business.  In 3Q15, prior period AUM was restated to reflect the reclassification of Meriten from the Investment Management business to the Other segment.

(b)

Includes currency overlay assets under management. 

(c)

Preliminary. 

(d)

Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.0 trillion at Sept. 30, 2015, $1.1 trillion at June 30, 2015, March 31, 2015 and Dec. 31, 2014 and $1.2 trillion at Sept. 30, 2014.

(e)

Represents the total amount of securities on loan managed by the Investment Services business.  Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled  $61 billion at Sept. 30, 2015, $68 billion at June 30, 2015, $69 billion at March 31, 2015 and $65 billion at Dec. 31, 2014 and Sept. 30, 2014.

(f)

Beginning with 3Q15, estimated new business wins are determined based on finalization of the contract as compared to the prior methodology of receipt of a mandate.  Prior periods have been restated for comparative purposes.

The following table presents key market metrics at period end and on an average basis.


 

Key market metrics


 

 

 

 

 

3Q15 vs.


 

3Q15

2Q15

1Q15

4Q14

3Q14

2Q15

3Q14

S&P 500 Index (a)

1920


 

2063


 

2068


 

2059


 

1972


 

(7)

%

(3)

%

S&P 500 Index – daily average

2027


 

2102


 

2064


 

2009


 

1976


 

(4)


 

3


 

FTSE 100 Index (a)

6062


 

6521


 

6773


 

6566


 

6623


 

(7)


 

(8)


 

FTSE 100 Index – daily average

6399


 

6920


 

6793


 

6526


 

6756


 

(8)


 

(5)


 

MSCI World Index (a)

1582


 

1736


 

1741


 

1710


 

1698


 

(9)


 

(7)


 

MSCI World Index – daily average

1691


 

1780


 

1726


 

1695


 

1733


 

(5)


 

(2)


 

Barclays Capital Global Aggregate BondSM Index (a)(b)

346


 

342


 

348


 

357


 

361


 

1


 

(4)


 

NYSE and NASDAQ share volume (in billions)

206


 

185


 

187


 

198


 

173


 

11


 

19


 

JPMorgan G7 Volatility Index – daily average (c)

9.93


 

10.06


 

10.40


 

8.54


 

6.21


 

(1)


 

60


 

Average Fed Funds effective rate

0.13

%

0.13

%

0.11

%

0.10

%

0.09

%

bps

4

bps

Foreign exchange rates vs. U.S. dollar:


 

 

 

 

 

 

 

British pound - average rate

$

1.55


 

$

1.53


 

$

1.51


 

$

1.58


 

$

1.67


 

1

%

(7)

%

Euro - average rate

1.11


 

1.11


 

1.13


 

1.25


 

1.33


 


 

(17)


 

(a)

Period end.

(b)

Unhedged in U.S. dollar terms.

(c)

The JPMorgan G7 Volatility Index is based on the implied volatility in 3-month currency options.

bps basis points.

FEE AND OTHER REVENUE

Fee and other revenue


 

 

 

 

 

3Q15 vs.

(dollars in millions)

3Q15

2Q15

1Q15

4Q14

3Q14

2Q15

3Q14

Investment services fees:


 

 

 

 

 

 

 

Asset servicing (a)

$

1,057


 

$

1,060


 

$

1,038


 

$

1,019


 

$

1,025


 

%

3

%

Clearing services

345


 

347


 

344


 

347


 

337


 

(1)


 

2


 

Issuer services

313


 

234


 

232


 

193


 

315


 

34


 

(1)


 

Treasury services

137


 

144


 

137


 

145


 

142


 

(5)


 

(4)


 

Total investment services fees

1,852


 

1,785


 

1,751


 

1,704


 

1,819


 

4


 

2


 

Investment management and performance fees

829


 

878


 

867


 

885


 

881


 

(6)


 

(6)


 

Foreign exchange and other trading revenue

179


 

187


 

229


 

151


 

153


 

(4)


 

17


 

Financing-related fees

71


 

58


 

40


 

43


 

44


 

22


 

61


 

Distribution and servicing

41


 

39


 

41


 

43


 

44


 

5


 

(7)


 

Total fee revenue excluding investment and other income

2,972


 

2,947


 

2,928


 

2,826


 

2,941


 

1


 

1


 

Investment and other income

59


 

104


 

60


 

78


 

890


 

(43)

N/M

Total fee revenue

3,031


 

3,051


 

2,988


 

2,904


 

3,831


 

(1)


 

(21)


 

Net securities gains

22


 

16


 

24


 

31


 

20


 

N/M

N/M

Total fee and other revenue

$

3,053


 

$

3,067


 

$

3,012


 

$

2,935


 

$

3,851


 

%

(21)

%

 

(a)

Asset servicing fees include securities lending revenue of $38 million in 3Q15, $49 million in 2Q15, $43 million in 1Q15 and $37 million
in both 4Q14 and 3Q14.

N/M - Not meaningful.

KEY POINTS

  • Asset servicing fees were $1.1 billion, an increase of 3% year-over-year and flat sequentially.  The year-over-year increase primarily reflects organic growth in the Global Collateral Services, Broker-Dealer Services and Asset Servicing businesses, and net new business, partially offset by the unfavorable impact of a stronger U.S. dollar.  Sequentially, organic growth and net new business were offset by lower securities lending revenue and lower market values.
  • Clearing services fees were $345 million, an increase of 2% year-over-year and a decrease of 1% sequentially.  The year-over-year increase was primarily driven by higher mutual fund and asset-based fees.
  • Issuer services fees were $313 million, a decrease of 1% year-over-year and an increase of 34% sequentially.  The year-over-year decrease primarily reflects lower fees in Depositary Receipts and the unfavorable impact of a stronger U.S. dollar in Corporate Trust, partially offset by net new business in Corporate Trust.  The sequential increase primarily reflects seasonally higher fees in Depositary Receipts.
  • Treasury services fees were $137 million, a decrease of 4% year-over-year and 5% sequentially.  Both decreases primarily reflect lower payment volumes.
  • Investment management and performance fees were $829 million, a decrease of 6% both year-over-year and sequentially.  On a constant currency basis (Non-GAAP), investment management and performance fees decreased 2% year-over-year, primarily driven by lower performance fees, lower equity market values and net outflows, partially offset by the impact of the 1Q15 acquisition of Cutwater and strategic initiatives.  Sequentially, investment management and performance fees decreased 6% primarily reflecting lower equity market values, net outflows and seasonally lower performance fees.  Both decreases also reflect the sale of Meriten in July 2015.

Foreign exchange and other trading revenue


 

 

 

 

 

 

(in millions)

3Q15

2Q15

1Q15

4Q14

3Q14


 

Foreign exchange

$

180


 

$

181


 

$

217


 

$

165


 

$

154


 

 

Other trading revenue (loss)

(1)


 

6


 

12


 

(14)


 

(1)


 

 

Total foreign exchange and other trading revenue

$

179


 

$

187


 

$

229


 

$

151


 

$

153


 

 

Foreign exchange and other trading revenue totaled $179 million in 3Q15 compared with $153 million in 3Q14 and $187 million in 2Q15.  In 3Q15, foreign exchange revenue totaled $180 million, an increase of 17% year-over-year and a decrease of 1% sequentially.  The year-over-year increase primarily reflects higher volatility and volumes.

  • Financing-related fees were $71 million in 3Q15 compared with $44 million in 3Q14 and $58 million in 2Q15.  The year-over-year increase primarily reflects higher fees related to secured intraday credit provided to dealers in connection with their tri-party repo activity.  Both increases also reflect higher underwriting fees. 

Investment and other income (loss)


 

 

 

 

 

 

(in millions)

3Q15

2Q15

1Q15

4Q14

3Q14


 

Corporate/bank-owned life insurance

$

32


 

$

31


 

$

33


 

$

37


 

$

34


 

 

Expense reimbursements from joint venture

16


 

17


 

14


 

15


 

13


 

 

Seed capital gains (losses) (a)

7


 

2


 

16


 


 

(1)


 

 

Private equity gains (losses)

1


 

3


 

(3)


 

1


 

2


 

 

Lease residual gains (losses)


 

54


 

(1)


 

5


 

5


 

 

Equity investment revenue (loss)

(6)


 

(7)


 

(4)


 

(5)


 

(9)


 

 

Asset-related gains (losses)

(9)


 

1


 

3


 

20


 

836


 

 

Other income

18


 

3


 

2


 

5


 

10


 

 

Total investment and other income

$

59


 

$

104


 

$

60


 

$

78


 

$

890


 

(a)

Does not include the gain (loss) on seed capital investments in consolidated investment management funds which are reflected in
operations of consolidated investment management funds, net of noncontrolling interests.

Investment and other income was $59 million in 3Q15 compared with $890 million in 3Q14 and $104 million in 2Q15.  The year-over-year decrease primarily reflects the gains on the sales of our equity investment in Wing Hang and our One Wall Street building, both recorded in 3Q14.  The sequential decrease primarily reflects lower leasing gains.


 

NET INTEREST REVENUE

Net interest revenue


 

 

 

 

 

3Q15 vs.

(dollars in millions)

3Q15

2Q15

1Q15

4Q14

3Q14

2Q15

3Q14

Net interest revenue (non-FTE)

$

759


 

$

779


 

$

728


 

$

712


 

$

721


 

(3)

%

5

%

Net interest revenue (FTE) – Non-GAAP

773


 

794


 

743


 

726


 

736


 

(3)


 

5


 

Net interest margin (FTE)

0.98

%

1.00

%

0.97

%

0.91

%

0.94

%

(2)

bps

4

bps


 

 

 

 

 

 

 

 

Selected average balances:


 

 

 

 

 

 

 

Cash/interbank investments

$

130,090


 

$

125,626


 

$

123,647


 

$

140,599


 

$

139,278


 

4

%

(7)

%

Trading account securities

2,737


 

3,253


 

3,046


 

3,922


 

5,435


 

(16)


 

(50)


 

Securities

121,188


 

128,641


 

123,476


 

117,243


 

112,055


 

(6)


 

8


 

Loans

61,657


 

61,076


 

57,935


 

56,844


 

54,835


 

1


 

12


 

Interest-earning assets

315,672


 

318,596


 

308,104


 

318,608


 

311,603


 

(1)


 

1


 

Interest-bearing deposits

169,753


 

170,716


 

159,520


 

163,149


 

164,233


 

(1)


 

3


 

Noninterest-bearing deposits

85,046


 

84,890


 

89,592


 

85,330


 

82,334


 


 

3


 

 

 

 

 

 

 

 

 

Selected average yields/rates:


 

 

 

 

 

 

 

Cash/interbank investments

0.32

%

0.34

%

0.35

%

0.31

%

0.38

%


 

 

Trading account securities

2.74


 

2.63


 

2.46


 

2.64


 

2.36


 

 

 

Securities

1.60


 

1.57


 

1.55


 

1.54


 

1.56


 

 

 

Loans

1.56


 

1.51


 

1.55


 

1.58


 

1.61


 

 

 

Interest-earning assets

1.08


 

1.08


 

1.07


 

1.02


 

1.05


 

 

 

Interest-bearing deposits

0.02


 

0.02


 

0.04


 

0.03


 

0.06


 

 

 

 

 

 

 

 

 

 

 

Average cash/interbank investments as a percentage of
average interest-earning assets

41

%

39

%

40

%

44

%

45

%


 

 

Average noninterest-bearing deposits as a percentage of average interest-earning assets

27

%

27

%

29

%

27

%

26

%


 

 

FTE – fully taxable equivalent.

bps – basis points.

KEY POINTS

  • Net interest revenue totaled $759 million in 3Q15, an increase of $38 million compared with 3Q14 and a decrease of $20 million sequentially.  The year-over-year increase primarily reflects higher securities and loans due to higher deposits and a shift out of cash, and lower interest expense on deposits.  The sequential decrease primarily reflects lower average securities and the impact of interest rate hedging activities.

NONINTEREST EXPENSE

Noninterest expense


 

 

 

 

 

3Q15 vs.

(dollars in millions)

3Q15

2Q15

1Q15

4Q14

3Q14

2Q15

3Q14

Staff:


 

 

 

 

 

 

 

Compensation

$

905


 

$

877


 

$

871


 

$

893


 

$

909


 

3

%

%

Incentives

326


 

349


 

425


 

319


 

340


 

(7)


 

(4)


 

Employee benefits

206


 

208


 

189


 

206


 

228


 

(1)


 

(10)


 

Total staff

1,437


 

1,434


 

1,485


 

1,418


 

1,477


 


 

(3)


 

Professional, legal and other purchased services

301


 

299


 

302


 

390


 

323


 

1


 

(7)


 

Software and equipment

226


 

228


 

228


 

235


 

234


 

(1)


 

(3)


 

Net occupancy

152


 

149


 

151


 

150


 

154


 

2


 

(1)


 

Distribution and servicing

95


 

96


 

98


 

102


 

107


 

(1)


 

(11)


 

Sub-custodian

65


 

75


 

70


 

70


 

67


 

(13)


 

(3)


 

Business development

59


 

72


 

61


 

75


 

61


 

(18)


 

(3)


 

Other

268


 

250


 

242


 

211


 

250


 

7


 

7


 

Amortization of intangible assets

66


 

65


 

66


 

73


 

75


 

2


 

(12)


 

M&I, litigation and restructuring charges

11


 

59


 

(3)


 

800


 

220


 

N/M

N/M

Total noninterest expense – GAAP

$

2,680


 

$

2,727


 

$

2,700


 

$

3,524


 

$

2,968


 

(2)

%

(10)

%


 

 

 

 

 

 

 

 

Total staff expense as a percentage of total revenue

38

%

37

%

39

%

38

%

32

%


 

 

 

 

 

 

 

 

 

 

Memo:


 

 

 

 

 

 

 

Total noninterest expense excluding amortization of intangible assets and M&I, litigation and restructuring charges – Non-GAAP

$

2,603


 

$

2,603


 

$

2,637


 

$

2,651


 

$

2,673


 

%

(3)

%

 

N/M - Not meaningful.

KEY POINTS

  • Total noninterest expense excluding amortization of intangible assets and M&I, litigation and restructuring charges (Non-GAAP) decreased 3% year-over-year and was unchanged sequentially. 
  • The year-over-year decrease reflects lower expenses in all categories, except other expense.  The lower expenses primarily reflect the favorable impact of a stronger U.S. dollar, lower legal and consulting expenses and the benefit of the business improvement process which focuses on reducing structural costs.  The decrease was partially offset by higher consulting expenses associated with regulatory requirements.
    • Total staff expense decreased 3% year-over-year primarily reflecting the favorable impact of a stronger U.S. dollar, the impact of curtailing the U.S. pension plan and lower incentive expense, partially offset by the annual employee merit increase and higher severance expense.
  • Sequentially, the annual employee merit increase and higher severance and other expenses were offset by lower incentive, business development and sub-custodian expenses.

INVESTMENT SECURITIES PORTFOLIO

At Sept. 30, 2015, the fair value of our investment securities portfolio totaled $120 billion.  The net unrealized pre-tax gain on our total securities portfolio was $1.05 billion at Sept. 30, 2015 compared with $752 million at June 30, 2015.  The increase in the net unrealized pre-tax gain was primarily driven by a decline in interest rates.  At Sept. 30, 2015, the fair value of the held-to-maturity securities totaled $43.8 billion and represented 36% of the fair value of the total investment securities portfolio.

The following table shows the distribution of our investment securities portfolio.



 


 

Investment securities portfolio

 

 



(dollars in millions)

June 30,
2015


 

3Q15

change in

unrealized

gain (loss)

Sept. 30, 2015

Fair value

as a % of
amortized

cost (a)

Unrealized

gain (loss)


 

Ratings


 

 

 

 

BB+

and

lower


 

 Fair

value


 

Amortized
cost

Fair
value


 

 

AAA/

AA-

A+/

A-

BBB+/

BBB-

Not

rated

Agency RMBS

$

50,018


 

 

$

252


 

$

49,563


 

$

49,850


 

 

101

%

$

287


 

 

100

%

%

%

%

%

U.S. Treasury

24,222


 

 

11


 

23,548


 

23,642


 

 

100


 

94


 

 

100


 


 


 


 


 

Sovereign debt/sovereign guaranteed

18,516


 

 

79


 

17,545


 

17,674


 

 

101


 

129


 

 

76


 

1


 

23


 


 


 

Non-agency RMBS (b)

2,040


 

 

(24)


 

1,548


 

1,938


 

 

81


 

390


 

 


 

1


 

2


 

90


 

7


 

Non-agency RMBS

1,024


 

 

1


 

955


 

973


 

 

94


 

18


 

 

2


 

8


 

20


 

69


 

1


 

European floating rate notes

1,737


 

 

(15)


 

1,660


 

1,634


 

 

98


 

(26)


 

 

71


 

21


 


 

8


 


 

Commercial MBS

5,888


 

 

(7)


 

5,715


 

5,730


 

 

100


 

15


 

 

95


 

4


 

1


 


 


 

State and political subdivisions

4,548


 

 

20


 

4,258


 

4,334


 

 

102


 

76


 

 

80


 

17


 


 


 

3


 

Foreign covered bonds

2,723


 

 

(7)


 

2,329


 

2,379


 

 

102


 

50


 

 

100


 


 


 


 


 

Corporate bonds

1,802


 

 

2


 

1,802


 

1,822


 

 

101


 

20


 

 

19


 

69


 

12


 


 


 

CLO

2,245


 

 

(10)


 

2,297


 

2,291


 

 

100


 

(6)


 

 

100


 


 


 


 


 

U.S. Government agencies

1,856


 

 

5


 

1,569


 

1,572


 

 

100


 

3


 

 

100


 


 


 


 


 

Consumer ABS

3,348


 

 

(10)


 

3,138


 

3,129


 

 

100


 

(9)


 

 

100


 


 


 


 


 

Other (c)

3,008


 

 


 

3,047


 

3,055


 

 

100


 

8


 

 

48


 


 

49


 


 

3


 

Total investment securities

$

122,975


 

(d)

$

297


 

$

118,974


 

$

120,023


 

(d)

100

%

$

1,049


 

(d)(e)

91

%

2

%

5

%

2

%

%

(a)

Amortized cost before impairments.

(b)

These RMBS were included in the former Grantor Trust and were marked-to-market in 2009.  We believe these RMBS would receive higher credit ratings if these ratings incorporated, as additional credit enhancements, the difference between the written-down amortized cost and the current face amount of each of these securities.

(c)

Includes commercial paper with a fair value of $1.7 billion and $1.5 billion and money market funds with a fair value of $779 million and $770 million at June 30, 2015 and Sept. 30, 2015, respectively.

(d)

Includes net unrealized losses on derivatives hedging securities available-for-sale of $71 million at June 30, 2015 and $417 million at Sept. 30, 2015.

(e)

Unrealized gains of $714 million at Sept. 30, 2015 related to available-for-sale securities.

NONPERFORMING ASSETS

Nonperforming assets

(dollars in millions)

Sept. 30,
2015


 

June 30,
2015


 

Sept. 30,
2014


 

Loans:


 

 

 

Other residential mortgages

$

103


 

$

110


 

$

113


 

Wealth management loans and mortgages

12


 

11


 

13


 

Commercial real estate

1


 

1


 

4


 

Commercial


 


 

13


 

Total nonperforming loans

116


 

122


 

143


 

Other assets owned

7


 

5


 

4


 

Total nonperforming assets (a)

$

123


 

$

127


 

$

147


 

Nonperforming assets ratio

0.20

%

0.20

%

0.26

%

Allowance for loan losses/nonperforming loans

156.0


 

150.0


 

133.6


 

Total allowance for credit losses/nonperforming loans

241.4


 

227.9


 

201.4


 

 

(a)

Loans of consolidated investment management funds are not part of BNY Mellon's loan portfolio.  Included in the loans of consolidated investment management funds are nonperforming loans of $79 million at Sept. 30, 2014.  These loans are recorded at fair value and therefore do not impact the provision for credit losses and allowance for loan losses, and accordingly are excluded from the nonperforming assets table above.  In 2Q15, BNY Mellon adopted the new accounting guidance included in ASU 2015-02, Consolidations.  As a result, we deconsolidated substantially all of the loans of consolidated investment management funds retroactively to Jan. 1, 2015. 

Nonperforming assets were $123 million at Sept. 30, 2015, a decrease of $4 million compared with $127 million at June 30, 2015, primarily in the other residential mortgage portfolio.

ALLOWANCE FOR CREDIT LOSSES, PROVISION AND NET CHARGE-OFFS

Allowance for credit losses, provision and net charge-offs

(in millions)

Sept. 30,
2015


 

June 30,
2015


 

Sept. 30,
2014


 

Allowance for credit losses - beginning of period

$

278


 

$

283


 

$

311


 

Provision for credit losses

1


 

(6)


 

(19)


 

Net (charge-offs) recoveries:


 

 

 

Financial institutions


 

1


 


 

Other residential mortgages

1


 


 

1


 

Commercial


 


 

(4)


 

Foreign


 


 

(1)


 

Net (charge-offs) recoveries

1


 

1


 

(4)


 

Allowance for credit losses - end of period

$

280


 

$

278


 

$

288


 

Allowance for loan losses

$

181


 

$

183


 

$

191


 

Allowance for lending-related commitments

99


 

95


 

97


 

The allowance for credit losses was $280 million at Sept. 30, 2015, an increase of $2 million compared with $278 million at June 30, 2015.

CAPITAL AND LIQUIDITY

The common equity Tier 1 ("CET1"), Tier 1 and Total risk-based regulatory capital ratios in the first section of the table below are based on Basel III components of capital, as phased-in, and credit risk asset risk-weightings using the U.S. capital rules' advanced approaches framework (the "Advanced Approach") as the related risk-weighted assets ("RWA") were higher when calculated under the Advanced Approach at Sept. 30, 2015, June 30, 2015 and Dec. 31, 2014.  Our risk-based capital adequacy is determined using the higher of RWA determined using the Advanced Approach and the U.S. capital rules' standardized approach (the "Standardized Approach").  The leverage capital ratios are based on Basel III components of capital, as phased-in and quarterly average total assets.  Our consolidated capital ratios are shown in the following table. 

Capital ratios

Sept. 30,
2015


 

June 30,
2015


 

December 31,
2014


 

Consolidated regulatory capital ratios: (a)(b)


 

 

 

CET1 ratio

10.5

%

10.9

%

11.2

%

Tier 1 capital ratio

11.9


 

12.5


 

12.2


 

Total (Tier 1 plus Tier 2) capital ratio

12.2


 

12.8


 

12.5


 

Leverage capital ratio

5.9


 

5.8


 

5.6


 

BNY Mellon shareholders' equity to total assets ratio – GAAP (c)

10.1


 

9.7


 

9.7


 

BNY Mellon common shareholders' equity to total assets ratio – GAAP (c)

9.4


 

9.0


 

9.3


 

BNY Mellon tangible common shareholders' equity to tangible assets of operations ratio – Non-GAAP (c)

6.2


 

6.2


 

6.5


 

 

 

 

 

Selected regulatory capital ratios – fully phased-in – Non-GAAP: (a)


 

 

 

Estimated CET1 ratio:


 

 

 

Standardized Approach

9.9


 

10.0


 

10.6


 

Advanced Approach

9.3


 

9.9


 

9.8


 

Estimated supplementary leverage ratio ("SLR") (d)

4.8


 

4.6


 

4.4


 

 

(a)

Regulatory capital ratios for Sept. 30, 2015 are preliminary.

(b)

At Sept. 30, 2015 and June 30, 2015, the CET1, Tier 1 and Total risk-based consolidated regulatory capital ratios determined under the
transitional Basel III Standardized Approach were 11.2%, 12.7% and 13.2%, and 11.3%, 12.9%, and 13.4%, respectively.  At Dec. 31,
2014, the CET1, Tier 1 and Total risk-based consolidated regulatory capital ratios determined under the transitional Standardized
Approach were 15.0%, 16.3% and 16.9%, and were calculated based on Basel III components of capital, as phased-in, and asset risk-
weightings using Basel I-based requirements. 

(c)

See "Supplemental information – Explanation of GAAP and Non-GAAP financial measures" beginning on page 25 for a reconciliation
of these ratios.

(d)

The estimated SLR on a fully phased-in basis (Non-GAAP) for our largest bank subsidiary, The Bank of New York Mellon, was 4.6% at
Sept. 30, 2015.

 


 

Estimated Basel III CET1 generation presented on a fully phased-in basis – Non-GAAP – preliminary


 

(in millions)

3Q15

Estimated fully phased-in Basel III CET1 – Non-GAAP – Beginning of period

$

15,931


 

Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP

820


 

Goodwill and intangible assets, net of related deferred tax liabilities

227


 

Gross Basel III CET1 generated

1,047


 

Capital deployed:


 

Dividends

(190)


 

Common stock repurchased

(690)


 

Total capital deployed

(880)


 

Other comprehensive (loss)

(130)


 

Additional paid-in capital (a)

90


 

Other (primarily embedded goodwill)

19


 

Total other deductions

(21)


 

Net Basel III CET1 generated

146


 

Estimated fully phased-in Basel III CET1 – Non-GAAP – End of period

$

16,077


 

(a)

Primarily related to stock awards, the exercise of stock options and stock issued for employee benefit plans.

The table presented below compares the fully phased-in Basel III capital components and ratios to those capital components and ratios determined on a phased-in basis (referred to as the "Transitional Approach").


 

Basel III capital components and ratios at Sept. 30, 2015 – preliminary

Fully phased-
in Basel III -
Non-GAAP


 

 

Transitional
Approach (a)


 

(dollars in millions)


 

CET1:


 

 

 

Common shareholders' equity

$

35,618


 

 

$

36,143


 

Goodwill and intangible assets

(19,050)


 

 

(17,401)


 

Net pension fund assets

(106)


 

 

(42)


 

Equity method investments

(356)


 

 

(300)


 

Deferred tax assets

(20)


 

 

(8)


 

Other

(9)


 

 

(5)


 

Total CET1

16,077


 

 

18,387


 

Other Tier 1 capital:


 

 

 

Preferred stock

2,552


 

 

2,552


 

Trust preferred securities


 

 

76


 

Disallowed deferred tax assets


 

 

(12)


 

Net pension fund assets


 

 

(4)


 

Other

(22)


 

 

(86)


 

Total Tier 1 capital

18,607


 

 

20,913


 

 

 

 

 

Tier 2 capital:


 

 

 

Trust preferred securities


 

 

227


 

Subordinated debt

249


 

 

249


 

Allowance for credit losses

280


 

 

280


 

Other

(7)


 

 

(7)


 

Total Tier 2 capital - Standardized Approach

522


 

 

749


 

Excess of expected credit losses

30


 

 

30


 

Less: Allowance for credit losses

280


 

 

280


 

Total Tier 2 capital - Advanced Approach

$

272


 

 

$

499


 

 

 

 

 

Total capital:


 

 

 

Standardized Approach

$

19,129


 

 

$

21,662


 

Advanced Approach

$

18,879


 

 

$

21,412


 

 

 

 

 

Risk-weighted assets:


 

 

 

Standardized Approach

$

162,769


 

 

$

164,520


 

Advanced Approach

$

173,747


 

 

$

175,634


 

 

 

 

 

Standardized Approach:


 

 

 

Estimated Basel III CET1 ratio

9.9

%


 

11.2

%

Tier 1 capital ratio

11.4


 

 

12.7


 

Total (Tier 1 plus Tier 2) capital ratio

11.8


 

 

13.2


 

 

 

 

 

Advanced Approach:


 

 

 

Estimated Basel III CET1 ratio

9.3

%


 

10.5

%

Tier 1 capital ratio

10.7


 

 

11.9


 

Total (Tier 1 plus Tier 2) capital ratio

10.9


 

 

12.2


 

(a)

Reflects transitional adjustments to CET1, Tier 1 capital and Tier 2 capital required in 2015 under the U.S. capital rules.

BNY Mellon has presented its estimated fully phased-in Basel III CET1 and other risk-based capital ratios and SLR based on its interpretation of the U.S. capital rules, which are being gradually phased-in over a multi-year period, and on the application of such rules to BNY Mellon's businesses as currently conducted.  Management views the estimated fully phased-in Basel III CET1 and other risk-based capital ratios and SLR as key measures in monitoring BNY Mellon's capital position and progress against future regulatory capital standards.  Additionally, the presentation of the estimated fully phased-in Basel III CET1 and other risk-based capital ratios and SLR are intended to allow investors to compare these ratios with estimates presented by other companies.  The estimated fully phased-in Basel III CET1 and other risk-based capital ratios assume certain regulatory approvals.  The U.S. capital rules require approval by banking regulators of certain models used as part of RWA calculations.  If these models are not approved, the estimated fully phased-in Basel III CET1 and other risk-based capital ratios would likely be adversely impacted.

RWA at June 30, 2015 and Dec. 31, 2014 for credit risk under the estimated fully phased-in Advanced Approach reflects the use of a simple value-at-risk methodology for repo-style transactions (including agented indemnified securities lending transactions), eligible margin loans, and similar transactions.  The estimated fully phased-in Advanced Approach RWA at Sept. 30, 2015 no longer assumes the use of this methodology.

Our capital and liquidity ratios are necessarily subject to, among other things, BNY Mellon's further review of applicable rules, anticipated compliance with all necessary enhancements to model calibration, approval by regulators of certain models used as part of RWA calculations, other refinements, further implementation guidance from regulators, market practices and standards and any changes BNY Mellon may make to its businesses.  Consequently, our capital and liquidity ratios remain subject to ongoing review and revision and may change based on these factors.

Supplementary Leverage Ratio ("SLR")

The following table presents the components of our estimated SLR using fully phased-in Basel III components of capital.

Estimated fully phased-in SLR – Non-GAAP (a)

(dollars in millions)

Sept. 30,
2015


 

(b)

June 30,
 2015


 

December 31,
 2014


 

Total estimated fully phased-in Basel III CET1 – Non-GAAP

$

16,077


 

 

$

15,931


 

$

15,931


 

Additional Tier 1 capital

2,530


 

 

2,545


 

1,550


 

Total Tier 1 capital

$

18,607


 

 

$

18,476


 

$

17,481


 

 

 

 

 

 

Total leverage exposure:


 

 

 

 

Quarterly average total assets

$

373,453


 

 

$

378,279


 

$

385,232


 

Less: Amounts deducted from Tier 1 capital

19,532


 

 

19,779


 

19,947


 

Total on-balance sheet assets, as adjusted

353,921


 

 

358,500


 

365,285


 

Off-balance sheet exposures:


 

 

 

 

Potential future exposure for derivatives contracts (plus certain other items)

8,358


 

 

9,222


 

11,376


 

Repo-style transaction exposures included in SLR

362


 

 

6,589


 

302


 

Credit-equivalent amount of other off-balance sheet exposures (less SLR exclusions)

27,482


 

 

27,251


 

21,850


 

Total off-balance sheet exposures

36,202


 

 

43,062


 

33,528


 

Total leverage exposure

$

390,123


 

 

$

401,562


 

$

398,813


 

 

 

 

 

 

Estimated fully phased-in SLR – Non-GAAP

4.8

%

(c)

4.6

%

4.4

%

 

(a)

The estimated fully phased-in SLR (Non-GAAP) is based on our interpretation of the U.S. capital rules.  When the SLR is fully phased-in,
we expect to maintain an SLR of over 5%.  The minimum required SLR is 3% and there is a 2% buffer, in addition to the minimum, that is
applicable to U.S. G-SIBs.  

(b)

Sept. 30, 2015 information is preliminary. 

(c)

The estimated SLR on a fully phased-in basis (Non-GAAP) for our largest bank subsidiary, The Bank of New York Mellon, was 4.6% at
Sept. 30, 2015.

Liquidity Coverage Ratio ("LCR")

The U.S. LCR rules became effective Jan. 1, 2015 and require BNY Mellon to meet an LCR of 80%, increasing annually by 10% increments until fully phased-in on Jan. 1, 2017, at which time we will be required to meet an LCR of 100%.  Our estimated LCR on a consolidated basis is compliant with the fully phased-in requirements of the U.S. LCR as of Sept. 30, 2015 based on our current understanding of the U.S. LCR rules.

REVIEW OF BUSINESSES

Segment results are subject to reclassification whenever improvements are made in the measurement principles or when organizational changes are made.  On July 31, 2015, BNY Mellon completed the sale of Meriten Investment Management GmbH ("Meriten"), a German-based investment management boutique.  In the third quarter of 2015, we reclassified the results of Meriten from the Investment Management business to the Other segment.  The reclassifications did not impact the consolidated results.  All prior periods have been restated.

INVESTMENT MANAGEMENT provides investment management services to institutional and retail investors, as well as investment management, wealth and estate planning and private banking solutions to high net worth individuals and families, and foundations and endowments.



 

(dollars in millions, unless otherwise noted)


 

 

 

 

 

 

3Q15 vs.

3Q15


 

2Q15

1Q15

4Q14

3Q14

2Q15

3Q14

Revenue:


 

 

 

 

 

 

 

 

Investment management fees:


 

 

 

 

 

 

 

 

Mutual funds

$

301


 

 

$

312


 

$

301


 

$

306


 

$

315


 

(4)

%

(4)

%

Institutional clients

347


 

 

363


 

365


 

364


 

370


 

(4)


 

(6)


 

Wealth management

156


 

 

160


 

159


 

157


 

158


 

(3)


 

(1)


 

Investment management fees

804


 

 

835


 

825


 

827


 

843


 

(4)


 

(5)


 

Performance fees

7


 

 

20


 

15


 

40


 

22


 

N/M

(68)


 

Investment management and performance fees

811


 

 

855


 

840


 

867


 

865


 

(5)


 

(6)


 

Distribution and servicing

37


 

 

38


 

38


 

39


 

40


 

(3)


 

(8)


 

Other (a)

(2)


 

 

20


 

45


 

6


 

15


 

N/M

N/M

Total fee and other revenue (a)

846


 

 

913


 

923


 

912


 

920


 

(7)


 

(8)


 

Net interest revenue

83


 

 

78


 

74


 

69


 

69


 

6


 

20


 

Total revenue

929


 

 

991


 

997


 

981


 

989


 

(6)


 

(6)


 

Noninterest expense (ex. amortization of intangible assets)

668


 

 

703


 

710


 

716


 

715


 

(5)


 

(7)


 

Income before taxes (ex. amortization of intangible assets)

261


 

 

288


 

287


 

265


 

274


 

(9)


 

(5)


 

Amortization of intangible assets

24


 

 

25


 

24


 

29


 

29


 

(4)


 

(17)


 

Income before taxes

$

237


 

 

$

263


 

$

263


 

$

236


 

$

245


 

(10)

%

(3)

%


 

 

 

 

 

 

 

 

 

Pre-tax operating margin

26

%


 

27

%

26

%

24

%

25

%


 

 

Adjusted pre-tax operating margin (b)

34

%


 

34

%

34

%

33

%

33

%


 

 

 

 

 

 

 

 

 

 

 

Changes in AUM (in billions): (c)


 

 

 

 

 

 

 

 

Beginning balance of AUM

$

1,700


 

 

$

1,717


 

$

1,686


 

$

1,620


 

$

1,609


 

 

 

Net inflows (outflows):


 

 

 

 

 

 

 

 

Long-term:


 

 

 

 

 

 

 

 

Equity

(4)


 

 

(13)


 

(5)


 

(5)


 

(2)


 

 

 

Fixed income

(3)


 

 

(2)


 

3


 

4


 


 

 

 

Index

(10)


 

 

(9)


 

8


 

1


 

(3)


 

 

 

Liability-driven investments (d)

11


 

 

5


 

8


 

24


 

19


 

 

 

Alternative investments

1


 

 

3


 

1


 

2


 


 

 

 

Total long-term inflows (outflows)

(5)


 

 

(16)


 

15


 

26


 

14


 

 

 

Short term:


 

 

 

 

 

 

 

 

Cash

(10)


 

 

(11)


 

1


 

6


 

18


 

 

 

Total net inflows (outflows)

(15)


 

 

(27)


 

16


 

32


 

32


 

 

 

Net market/currency impact/acquisition

(60)


 

 

10


 

15


 

34


 

(21)


 

 

 

Ending balance of AUM

$

1,625


 

(e)

$

1,700


 

$

1,717


 

$

1,686


 

$

1,620


 

(4)

%

%


 

 

 

 

 

 

 

 

 

AUM at period end, by product type: (c)


 

 

 

 

 

 

 

 

Equity

14

%


 

15

%

15

%

15

%

16

%


 

 

Fixed income

13


 

 

13


 

12


 

12


 

13


 

 

 

Index

20


 

 

21


 

22


 

21


 

21


 

 

 

Liability-driven investments (d)

32


 

 

30


 

30


 

30


 

28


 

 

 

Alternative investments

4


 

 

4


 

4


 

4


 

4


 

 

 

Cash

17


 

 

17


 

17


 

18


 

18


 

 

 

Total AUM

100

%

(e)

100

%

100

%

100

%

100

%


 

 

 

 

 

 

 

 

 

 

 

Average balances:


 

 

 

 

 

 

 

 

Average loans

$

12,779


 

 

$

12,298


 

$

11,634


 

$

11,124


 

$

10,772


 

4

%

19

%

Average deposits

$

15,282


 

 

$

14,638


 

$

15,217


 

$

14,602


 

$

13,762


 

4

%

11

%

(a)

Total fee and other revenue includes the impact of the consolidated investment management funds, net of noncontrolling interests.  See
"Supplemental information – Explanation of GAAP and Non-GAAP financial measures" beginning on page 25 for the reconciliation of Non-
GAAP measures.  Additionally, other revenue includes asset servicing, treasury services, foreign exchange and other trading revenue and
investment and other income. 

(b)

Excludes the net negative impact of money market fee waivers, amortization of intangible assets and is net of distribution and servicing expense. 
See "Supplemental information – Explanation of GAAP and Non-GAAP financial measures" beginning on page 25 for the reconciliation of this
Non-GAAP measure.

(c)

Excludes securities lending cash management assets and assets managed in the Investment Services business.  In 3Q15, prior period AUM was
restated to reflect the reclassification of Meriten from the Investment Management business to the Other segment.

(d)

Includes currency overlay assets under management.

(e)

Preliminary.

N/M – Not meaningful.

INVESTMENT MANAGEMENT KEY POINTS

  • Assets under management were $1.63 trillion at Sept. 30, 2015, unchanged year-over-year and a decrease of 4% sequentially. Year-over-year, higher market values, the Cutwater acquisition and net new business offset the unfavorable impact of a stronger U.S. dollar. The sequential decrease primarily resulted from lower equity market values.
    • Net long-term outflows were $5 billion in 3Q15 driven by index, equity and fixed income investments, partially offset by liability-driven and alternative investments.
    • Net short-term outflows were $10 billion in 3Q15.
  • Income before taxes excluding amortization of intangible assets decreased 5% year-over-year and 9% on a sequential basis.
  • Total revenue was $929 million, a decrease of 6% both year-over-year and sequentially. The year-over-year decrease primarily reflects the unfavorable impact of a stronger U.S. dollar. Both decreases also reflect seed capital losses, lower equity market values and net outflows, partially offset by higher net interest revenue.
    • 42% non-U.S. revenue in 3Q15 vs. 43% in 3Q14.
  • Investment management fees were $804 million, a decrease of 5% year-over-year, or flat on a constant currency basis (Non-GAAP). On a constant currency basis (Non-GAAP), investment management fees reflect the impact of the 1Q15 acquisition of Cutwater and strategic initiatives, offset by lower equity market values and net outflows. Sequentially, investment management fees decreased 4% primarily reflecting lower equity market values and net outflows.
  • Performance fees were $7 million in 3Q15 compared with $22 million in 3Q14 and $20 million in 2Q15.
  • Other losses were $2 million in 3Q15 compared with other revenue of $15 million in 3Q14 and other revenue of $20 million in 2Q15. Both decreases primarily reflect seed capital losses.
  • Net interest revenue increased 20% year-over-year and 6% sequentially. Both increases primarily reflect higher internal crediting rates for deposits and record high average loans and deposits.
    • Average loans increased 19% year-over-year and 4% sequentially; average deposits increased 11% year-over-year and 4% sequentially.
  • Total noninterest expense (excluding amortization of intangible assets) decreased 7% year-over-year and 5% sequentially. The year-over-year decrease primarily reflects the favorable impact of a stronger U.S. dollar, lower incentives and distribution and servicing expenses and the business improvement process, partially offset by strategic initiatives. The sequential decrease primarily reflects lower incentives.

INVESTMENT SERVICES provides global custody and related services, broker-dealer services, global collateral services, corporate trust, depositary receipt and clearing services as well as global payment/working capital solutions to global financial institutions.

(dollars in millions, unless otherwise noted)


 

 

 

 

 

 

3Q15 vs.

3Q15


 

2Q15

1Q15

4Q14

3Q14

2Q15

3Q14

Revenue:


 

 

 

 

 

 

 

 

Investment services fees:


 

 

 

 

 

 

 

 

Asset servicing

$

1,031


 

 

$

1,035


 

$

1,013


 

$

992


 

$

998


 

%

3

%

Clearing services

345


 

 

346


 

342


 

346


 

336


 


 

3


 

Issuer services

312


 

 

234


 

231


 

193


 

314


 

33


 

(1)


 

Treasury services

135


 

 

141


 

135


 

142


 

139


 

(4)


 

(3)


 

Total investment services fees

1,823


 

 

1,756


 

1,721


 

1,673


 

1,787


 

4


 

2


 

Foreign exchange and other trading revenue

177


 

 

179


 

209


 

165


 

159


 

(1)


 

11


 

Other (a)

87


 

 

85


 

63


 

70


 

59


 

2


 

47


 

Total fee and other revenue

2,087


 

 

2,020


 

1,993


 

1,908


 

2,005


 

3


 

4


 

Net interest revenue

628


 

 

636


 

599


 

573


 

583


 

(1)


 

8


 

Total revenue

2,715


 

 

2,656


 

2,592


 

2,481


 

2,588


 

2


 

5


 

Noninterest expense (ex. amortization of intangible assets)

1,822


 

 

1,840


 

1,794


 

2,509


 

1,831


 

(1)


 


 

Income (loss) before taxes (ex. amortization of intangible assets)

893


 

 

816


 

798


 

(28)


 

757


 

9


 

18


 

Amortization of intangible assets

41


 

 

40


 

41


 

43


 

44


 

3


 

(7)


 

Income (loss) before taxes

$

852


 

 

$

776


 

$

757


 

$

(71)


 

$

713


 

10

%

19

%


 

 

 

 

 

 

 

 

 

Pre-tax operating margin

31

%


 

29

%

29

%

(3)

%

28

%


 

 

Pre-tax operating margin (ex. amortization of intangible assets)

33

%


 

31

%

31

%

(1)

%

29

%


 

 

 

 

 

 

 

 

 

 

 

Investment services fees as a percentage of noninterest expense (b)

101

%


 

98

%

96

%

93

%

100

%


 

 

 

 

 

 

 

 

 

 

 

Securities lending revenue

$

30


 

 

$

40


 

$

34


 

$

28


 

$

27


 

(25)

%

11

%


 

 

 

 

 

 

 

 

 

Metrics:


 

 

 

 

 

 

 

 

Average loans

$

38,025


 

 

$

38,264


 

$

37,699


 

$

35,448


 

$

33,785


 

(1)

%

13

%

Average deposits

$

230,153


 

 

$

237,193


 

$

234,183


 

$

228,282


 

$

221,734


 

(3)

%

4

%


 

 

 

 

 

 

 

 

 

AUC/A at period end (in trillions) (c)

$

28.5


 

(d)

$

28.6


 

$

28.5


 

$

28.5


 

$

28.3


 

%

1

%

Market value of securities on loan at period end
   (in billions) (e)

$

288


 

 

$

283


 

$

291


 

$

289


 

$

282


 

2

%

2

%


 

 

 

 

 

 

 

 

 

Asset servicing:


 

 

 

 

 

 

 

 

Estimated new business wins (AUC/A) (in billions) (f)

$

84


 

(d)

$

933


 

$

125


 

$

168


 

$

154


 

 

 

 

 

 

 

 

 

 

 

 

Depositary Receipts:


 

 

 

 

 

 

 

 

Number of sponsored programs

1,176


 

 

1,206


 

1,258


 

1,279


 

1,302


 

(2)

%

(10)

%


 

 

 

 

 

 

 

 

 

Clearing services:


 

 

 

 

 

 

 

 

Global DARTS volume (in thousands)

246


 

 

242


 

261


 

242


 

209


 

2

%

18

%

Average active clearing accounts (U.S. platform) (in thousands)

6,107


 

 

6,046


 

5,979


 

5,900


 

5,805


 

1

%

5

%

Average long-term mutual fund assets (U.S. platform)

$

447,287


 

 

$

466,195


 

$

456,954


 

$

450,305


 

$

442,827


 

(4)

%

1

%

Average investor margin loans (U.S. platform)

$

11,806


 

 

$

11,890


 

$

11,232


 

$

10,711


 

$

9,861


 

(1)

%

20

%


 

 

 

 

 

 

 

 

 

Broker-Dealer:


 

 

 

 

 

 

 

 

Average tri-party repo balances (in billions)

$

2,142


 

 

$

2,174


 

$

2,153


 

$

2,101


 

$

2,063


 

(1)

%

4

%

(a)

Other revenue includes investment management fees, financing-related fees, distribution and servicing revenue and investment and other income.

(b)

Noninterest expense excludes amortization of intangible assets and litigation expense. 

(c)

Includes the AUC/A of CIBC Mellon of $1.0 trillion at Sept. 30, 2015, $1.1 trillion at June 30, 2015, March 31, 2015 and Dec. 31, 2014 and $1.2
trillion at Sept. 30, 2014.

(d)

Preliminary.

(e)

Represents the total amount of securities on loan managed by the Investment Services business.  Excludes securities for which BNY Mellon acts
as agent on behalf of CIBC Mellon clients, which totaled $61 billion at Sept. 30, 2015, $68 billion at June 30, 2015, $69 billion at March 31,
2015 and $65 billion at Dec. 31, 2014 and Sept. 30, 2014.

(f)

Beginning with 3Q15, estimated new business wins are determined based on finalization of the contract as compared to the prior methodology of receipt
of a mandate.  Prior periods have been restated for comparative purposes.

INVESTMENT SERVICES KEY POINTS


 

  • Income (loss) before taxes excluding amortization of intangible assets totaled $893 million, an increase of 18% year-over-year and 9% sequentially.
    • The pre-tax operating margin excluding amortization of intangible assets was 33% in 3Q15 and the investment services fees as a percentage of noninterest expense was 101% in 3Q15, reflecting the continued focus on driving operating leverage.
  • Investment services fees totaled $1.8 billion, an increase of 2% year-over-year and 4% sequentially.
    • Asset servicing fees (global custody, broker-dealer services and global collateral services) were $1.03 billion in 3Q15 compared with $998 million in 3Q14 and $1.04 billion in 2Q15. The year-over-year increase primarily reflects organic growth in the Global Collateral Services, Broker-Dealer Services and Asset Servicing businesses, and net new business, partially offset by the unfavorable impact of a stronger U.S. dollar. Sequentially, organic growth and net new business were offset by lower securities lending revenue and lower market values.
      • Estimated new business wins (AUC/A) in Asset Servicing of $84 billion in 3Q15.
    • Clearing services fees were $345 million in 3Q15 compared with $336 million in 3Q14 and $346 million in 2Q15. The year-over-year increase was primarily driven by higher mutual fund and asset-based fees.
    • Issuer services fees (Corporate Trust and Depositary Receipts) were $312 million in 3Q15 compared with $314 million in 3Q14 and $234 million in 2Q15. The year-over-year decrease primarily reflects lower fees in Depositary Receipts and the unfavorable impact of a stronger U.S. dollar in Corporate Trust, partially offset by net new business in Corporate Trust. The sequential increase primarily reflects seasonally higher fees in Depositary Receipts.
    • Treasury services fees were $135 million in 3Q15 compared with $139 million in 3Q14 and $141 million in 2Q15. Both decreases primarily reflect lower payment volumes.
  • Foreign exchange and other trading revenue was $177 million in 3Q15 compared with $159 million in 3Q14 and $179 million in 2Q15. The year-over-year increase primarily reflects higher volatility and volumes.
  • Net interest revenue was $628 million in 3Q15 compared with $583 million in 3Q14 and $636 million in 2Q15. The year-over-year increase primarily reflects higher average deposits and higher internal crediting rates for deposits. The sequential decrease primarily reflects lower average deposits.
  • Noninterest expense (excluding amortization of intangible assets) was $1.82 billion in 3Q15 compared with $1.83 billion in 3Q14 and $1.84 billion in 2Q15. The year-over-year decrease primarily reflects lower litigation and consulting expenses, as well as the favorable impact of a stronger U.S. dollar, partially offset by higher staff expense. The sequential decrease primarily reflects lower litigation expense, partially offset by higher staff expense.

OTHER SEGMENT primarily includes credit-related activities, leasing operations, corporate treasury activities, global markets and institutional banking services, business exits, M&I expenses and other corporate revenue and expense items.


 

 

 

 

 

 

(dollars in millions)

3Q15

2Q15

1Q15

4Q14

3Q14

Revenue:


 

 

 

 

 

Fee and other revenue

$

103


 

$

137


 

$

117


 

$

133


 

$

942


 

Net interest revenue

48


 

65


 

55


 

70


 

69


 

Total revenue

151


 

202


 

172


 

203


 

1,011


 

Provision for credit losses

1


 

(6)


 

2


 

1


 

(19)


 

Noninterest expense (ex. amortization of intangible assets, M&I and 
     restructuring charges (recoveries))

125


 

110


 

134


 

226


 

290


 

Income (loss) before taxes (ex. amortization of intangible assets, M&I and 
     restructuring charges (recoveries))

25


 

98


 

36


 

(24)


 

740


 

Amortization of intangible assets

1


 


 

1


 

1


 

2


 

M&I and restructuring charges (recoveries)

(2)


 

8


 

(4)


 


 

57


 

Income (loss) before taxes

$

26


 

$

90


 

$

39


 

$

(25)


 

$

681


 

 

 

 

 

 

 

Average loans and leases

$

10,853


 

$

10,514


 

$

8,602


 

$

10,272


 

$

10,278


 

KEY POINTS

  • Total fee and other revenue decreased $839 million compared with 3Q14 and $34 million compared with 2Q15. The year-over-year decrease primarily reflects the gains on the sales of our equity investment in Wing Hang and our One Wall Street building, both recorded in 3Q14. The sequential decrease primarily reflects lower leasing gains.
  • Net interest revenue decreased $21 million compared with 3Q14 and $17 million compared with 2Q15. Both decreases reflect higher internal crediting rates to the businesses for deposits.
  • Noninterest expense, excluding amortization of intangible assets, M&I and restructuring charges (recoveries), decreased $165 million compared with 3Q14 and increased $15 million compared with 2Q15. The year-over-year decrease primarily reflects lower litigation expense and the impact of curtailing the U.S. pension plan. The sequential increase was primarily driven by the annual employee merit increase and higher severance.

THE BANK OF NEW YORK MELLON CORPORATION
Condensed Consolidated Income Statement

(in millions)

Quarter ended


 

Year-to-date


 

Sept. 30,
2015


 

June 30,
2015


 

Sept. 30,
2014


 

 

Sept. 30,
2015


 

Sept. 30,
2014


 

 

 

 

Fee and other revenue


 

 

 

 

 

 

 

Investment services fees:


 

 

 

 

 

 

 

Asset servicing

$

1,057


 

$

1,060


 

$

1,025


 

 

$

3,155


 

$

3,056


 

 

Clearing services

345


 

347


 

337


 

 

1,036


 

988


 

 

Issuer services

313


 

234


 

315


 

 

779


 

775


 

 

Treasury services

137


 

144


 

142


 

 

418


 

419


 

 

Total investment services fees

1,852


 

1,785


 

1,819


 

 

5,388


 

5,238


 

 

Investment management and performance fees

829


 

878


 

881


 

 

2,574


 

2,607


 

 

Foreign exchange and other trading revenue

179


 

187


 

153


 

 

595


 

419


 

 

Financing-related fees

71


 

58


 

44


 

 

169


 

126


 

 

Distribution and servicing

41


 

39


 

44


 

 

121


 

130


 

 

Investment and other income

59


 

104


 

890


 

 

223


 

1,134


 

 

Total fee revenue

3,031


 

3,051


 

3,831


 

 

9,070


 

9,654


 

 

Net securities gains

22


 

16


 

20


 

 

62


 

60


 

 

Total fee and other revenue

3,053


 

3,067


 

3,851


 

 

9,132


 

9,714


 

 

Operations of consolidated investment management funds


 

 

 

 

 

 

 

Investment (loss) income

(6)


 

46


 

123


 

 

96


 

402


 

 

Interest of investment management fund note holders

16


 

6


 

84


 

 

26


 

281


 

 

(Loss) income from consolidated investment management funds

(22)


 

40


 

39


 

 

70


 

121


 

 

Net interest revenue


 

 

 

 

 

 

 

Interest revenue

838


 

847


 

809


 

 

2,492


 

2,432


 

 

Interest expense

79


 

68


 

88


 

 

226


 

264


 

 

Net interest revenue

759


 

779


 

721


 

 

2,266


 

2,168


 

 

Provision for credit losses

1


 

(6)


 

(19)


 

 

(3)


 

(49)


 

 

Net interest revenue after provision for credit losses

758


 

785


 

740


 

 

2,269


 

2,217


 

 

Noninterest expense


 

 

 

 

 

 

 

Staff

1,437


 

1,434


 

1,477


 

 

4,356


 

4,427


 

 

Professional, legal and other purchased services

301


 

299


 

323


 

 

902


 

949


 

 

Software and equipment

226


 

228


 

234


 

 

682


 

707


 

 

Net occupancy

152


 

149


 

154


 

 

452


 

460


 

 

Distribution and servicing

95


 

96


 

107


 

 

289


 

326


 

 

Sub-custodian

65


 

75


 

67


 

 

210


 

216


 

 

Business development

59


 

72


 

61


 

 

192


 

193


 

 

Other

268


 

250


 

250


 

 

760


 

820


 

 

Amortization of intangible assets

66


 

65


 

75


 

 

197


 

225


 

 

Merger and integration, litigation and restructuring charges

11


 

59


 

220


 

 

67


 

330


 

 

Total noninterest expense

2,680


 

2,727


 

2,968


 

 

8,107


 

8,653


 

 

Income


 

 

 

 

 

 

 

Income before income taxes

1,109


 

1,165


 

1,662


 

 

3,364


 

3,399


 

 

Provision for income taxes

282


 

276


 

556


 

 

838


 

1,005


 

 

Net income

827


 

889


 

1,106


 

 

2,526


 

2,394


 

 

Net loss (income) attributable to noncontrolling interests (includes $5, $(37), $(23), $(63) and $(60) related to consolidated investment management funds, respectively)

6


 

(36)


 

(23)


 

 

(61)


 

(60)


 

 

Net income applicable to shareholders of The Bank of New York Mellon Corporation

833


 

853


 

1,083


 

 

2,465


 

2,334


 

 

Preferred stock dividends

(13)


 

(23)


 

(13)


 

 

(49)


 

(49)


 

 

Net income applicable to common shareholders of The Bank of New York Mellon Corporation

$

820


 

$

830


 

$

1,070


 

 

$

2,416


 

$

2,285


 

 

 

THE BANK OF NEW YORK MELLON CORPORATION
Condensed Consolidated Income Statement - continued

Net income applicable to common shareholders of The Bank of 
     New York Mellon Corporation used for the earnings per share 
     calculation

(in millions)

Quarter ended


 

Year-to-date


 

 

 

Sept. 30,
2015


 

June 30,
2015


 

Sept. 30,
2014


 

 

Sept. 30,
2015


 

Sept. 30,
2014


 

 

Net income applicable to common shareholders of The Bank of New 
     York Mellon Corporation

$

820


 

$

830


 

$

1,070


 

 

$

2,416


 

$

2,285


 

 

Less:  Earnings allocated to participating securities

6


 

9


 

20


 

 

34


 

43


 

 

Net income applicable to the common shareholders of The Bank of 
     New York Mellon Corporation after required adjustments for the 
     calculation of basic and diluted earnings per common share

$

814


 

$

821


 

$

1,050


 

 

$

2,382


 

$

2,242


 

 

 

Average common shares and equivalents outstanding of The Bank
of New York Mellon Corporation

(in thousands)

Quarter ended


 

Year-to-date

Sept. 30,
2015


 

June 30,
2015


 

Sept. 30,
2014


 

 

Sept. 30,
2015


 

Sept. 30,
2014


 

Basic

1,098,003


 

1,113,790


 

1,126,946


 

 

1,110,056


 

1,133,006


 

Diluted

1,105,645


 

1,122,135


 

1,134,871


 

 

1,117,975


 

1,139,718


 

 

Earnings per share applicable to the common shareholders of The
Bank of New York Mellon Corporation

(in dollars)

Quarter ended


 

Year-to-date

Sept. 30,
2015


 

June 30,
2015


 

Sept. 30,
2014


 

 

Sept. 30,
2015


 

Sept. 30,
2014


 

Basic

$

0.74


 

$

0.74


 

$

0.93


 

 

$

2.15


 

$

1.98


 

Diluted

$

0.74


 

$

0.73


 

$

0.93


 

 

$

2.13


 

$

1.97


 

 

THE BANK OF NEW YORK MELLON CORPORATION
Consolidated Balance Sheet

(dollars in millions, except per share amounts)

Sept. 30,
2015


 

June 30,
2015


 

Dec. 31,
2014


 

 

 

Assets


 

 

 

 

Cash and due from:


 

 

 

 

Banks

$

8,234


 

$

8,353


 

$

6,970


 

 

Interest-bearing deposits with the Federal Reserve and other central banks

82,426


 

103,137


 

96,682


 

 

Interest-bearing deposits with banks

20,002


 

19,179


 

19,495


 

 

Federal funds sold and securities purchased under resale agreements

28,901


 

23,930


 

20,302


 

 

Securities:


 

 

 

 

Held-to-maturity (fair value of $43,758, $43,438 and $21,127)

43,423


 

43,426


 

20,933


 

 

Available-for-sale

76,682


 

79,608


 

98,330


 

 

Total securities

120,105


 

123,034


 

119,263


 

 

Trading assets

6,645


 

7,568


 

9,881


 

 

Loans

63,309


 

63,138


 

59,132


 

 

Allowance for loan losses

(181)


 

(183)


 

(191)


 

 

Net loans

63,128


 

62,955


 

58,941


 

 

Premises and equipment

1,361


 

1,412


 

1,394


 

 

Accrued interest receivable

530


 

574


 

607


 

 

Goodwill

17,679


 

17,807


 

17,869


 

 

Intangible assets

3,914


 

4,000


 

4,127


 

 

Other assets

22,149


 

21,074


 

20,490


 

 

Subtotal assets of operations

375,074


 

393,023


 

376,021


 

 

Assets of consolidated investment management funds, at fair value:


 

 

 

 

Trading assets

2,087


 

2,012


 

8,678


 

 

Other assets

210


 

219


 

604


 

 

Subtotal assets of consolidated investment management funds, at fair value

2,297


 

2,231


 

9,282


 

 

Total assets

$

377,371


 

$

395,254


 

$

385,303


 

 

Liabilities


 

 

 

 

Deposits:


 

 

 

 

Noninterest-bearing (principally U.S. offices)

$

101,111


 

$

114,810


 

$

104,240


 

 

Interest-bearing deposits in U.S. offices

54,073


 

58,312


 

53,236


 

 

Interest-bearing deposits in Non-U.S. offices

111,584


 

111,308


 

108,393


 

 

Total deposits

266,768


 

284,430


 

265,869


 

 

Federal funds purchased and securities sold under repurchase agreements

8,824


 

10,020


 

11,469


 

 

Trading liabilities

4,756


 

5,418


 

7,434


 

 

Payables to customers and broker-dealers

22,236


 

22,050


 

21,181


 

 

Commercial paper


 


 


 

 

Other borrowed funds

648


 

706


 

786


 

 

Accrued taxes and other expenses

6,457


 

6,522


 

6,903


 

 

Other liabilities (includes allowance for lending-related commitments of $99, $95 and $89)

5,890


 

5,427


 

5,025


 

 

Long-term debt

21,430


 

20,375


 

20,264


 

 

Subtotal liabilities of operations

337,009


 

354,948


 

338,931


 

 

Liabilities of consolidated investment management funds, at fair value:


 

 

 

 

Trading liabilities

1,072


 

770


 

7,660


 

 

Other liabilities

91


 

112


 

9


 

 

Subtotal liabilities of consolidated investment management funds, at fair value

1,163


 

882


 

7,669


 

 

Total liabilities

338,172


 

355,830


 

346,600


 

 

Temporary equity


 

 

 

 

Redeemable noncontrolling interests

247


 

244


 

229


 

 

Permanent equity


 

 

 

 

Preferred stock – par value $0.01 per share; authorized 100,000,000 shares; issued 25,826, 25,826 and 15,826 shares

2,552


 

2,552


 

1,562


 

 

Common stock – par value $0.01 per share; authorized 3,500,000,000 shares; issued 1,310,436,554, 1,308,181,033 and 1,290,222,821 shares

13


 

13


 

13


 

 

Additional paid-in capital

25,168


 

25,078


 

24,626


 

 

Retained earnings

19,525


 

18,895


 

17,683


 

 

Accumulated other comprehensive loss, net of tax

(2,355)


 

(2,225)


 

(1,634)


 

 

Less:  Treasury stock of 217,483,962, 201,663,375 and 171,995,262 common shares, at cost

(6,733)


 

(6,043)


 

(4,809)


 

 

Total The Bank of New York Mellon Corporation shareholders' equity

38,170


 

38,270


 

37,441


 

 

Nonredeemable noncontrolling interests of consolidated investment management funds

782


 

910


 

1,033


 

 

Total permanent equity

38,952


 

39,180


 

38,474


 

 

Total liabilities, temporary equity and permanent equity

$

377,371


 

$

395,254


 

$

385,303


 

 

 

SUPPLEMENTAL INFORMATION – EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES

BNY Mellon has included in this Earnings Release certain Non-GAAP financial measures based on fully phased-in Basel III CET1 and other risk-based capital ratios, SLR and tangible common shareholders' equity.  BNY Mellon believes that the Basel III CET1 and other risk-based capital ratios on a fully phased-in basis, the SLR on a fully phased-in basis and the ratio of tangible common shareholders' equity to tangible assets of operations are measures of capital strength that provide additional useful information to investors, supplementing the capital ratios which are, or were, required by regulatory authorities.  The tangible common shareholders' equity ratio includes changes in investment securities valuations which are reflected in total shareholders' equity.  In addition, this ratio is expressed as a percentage of the actual book value of assets, as opposed to a percentage of a risk-based reduced value established in accordance with regulatory requirements, although BNY Mellon in its reconciliation has excluded certain assets which are given a zero percent risk-weighting for regulatory purposes and the assets of consolidated investment management funds to which BNY Mellon has limited economic exposure.  Further, BNY Mellon believes that the return on tangible common equity measure, which excludes goodwill and intangible assets net of deferred tax liabilities, is a useful additional measure for investors because it presents a measure of those assets that can generate income.  BNY Mellon has provided a measure of tangible book value per common share, which it believes provides additional useful information as to the level of tangible assets in relation to shares of common stock outstanding.

BNY Mellon has presented revenue measures which exclude the effect of noncontrolling interests related to consolidated investment management funds, a gain on the sale of our investment in Wing Hang and a gain on the sale of the One Wall Street building; and expense measures which exclude M&I expenses, litigation charges, restructuring charges and amortization of intangible assets.  Earnings per share, return on equity measures and operating margin measures, which exclude some or all of these items, are also presented.  Return on equity measures also exclude the benefit primarily related to a tax carryback claim.  Operating margin measures may also exclude amortization of intangible assets and the net negative impact of money market fee waivers, net of distribution and servicing expense.  BNY Mellon believes that these measures are useful to investors because they permit a focus on period-to-period comparisons, which relate to the ability of BNY Mellon to enhance revenues and limit expenses in circumstances where such matters are within BNY Mellon's control.  The excluded items, in general, relate to certain charges as a result of prior transactions.  M&I expenses primarily relate to acquisitions and generally continue for approximately three years after the transaction.  Litigation charges represent accruals for loss contingencies that are both probable and reasonably estimable, but exclude standard business-related legal fees.  Restructuring charges relate to our streamlining actions, Operational Excellence Initiatives and migrating positions to Global Delivery Centers.  Excluding these charges mentioned above permits investors to view expenses on a basis consistent with how management views the business.

The presentation of revenue growth on a constant currency basis permits investors to assess the significance of changes in foreign currency exchange rates.  Growth rates on a constant currency basis were determined by applying the current period foreign currency exchange rates to the prior period revenue.  BNY Mellon believes that this presentation, as a supplement to GAAP information, gives investors a clearer picture of the related revenue results without the variability caused by fluctuations in foreign currency exchange rates.

The presentation of income from consolidated investment management funds, net of net income attributable to noncontrolling interests related to the consolidation of certain investment management funds permits investors to view revenue on a basis consistent with how management views the business.  BNY Mellon believes that these presentations, as a supplement to GAAP information, give investors a clearer picture of the results of its primary businesses.

In this Earnings Release, the net interest margin is presented on an FTE basis.  We believe that this presentation provides comparability of amounts arising from both taxable and tax-exempt sources, and is consistent with industry practice.  The adjustment to an FTE basis has no impact on net income.  Each of these measures as described above is used by management to monitor financial performance, both on a company-wide and on a business-level basis.

The following table presents the reconciliation of the pre-tax operating margin ratio.

Reconciliation of income before income taxes – pre-tax operating margin


 

 

 

 

 

 

 

 

 

(dollars in millions)

3Q15


 

2Q15


 

1Q15


 

4Q14


 

3Q14

Income before income taxes – GAAP

$

1,109


 

 

$

1,165


 

 

$

1,090


 

 

$

164


 

 

$

1,662


 

Less:  Net (loss) income attributable to noncontrolling interests of consolidated investment management funds

(5)


 

 

37


 

 

31


 

 

24


 

 

23


 

Gain on the sale of our investment in Wing Hang


 

 


 

 


 

 


 

 

490


 

Gain on the sale of the One Wall Street building


 

 


 

 


 

 


 

 

346


 

Add:  Amortization of intangible assets

66


 

 

65


 

 

66


 

 

73


 

 

75


 

M&I, litigation and restructuring charges (recoveries)

11


 

 

59


 

 

(3)


 

 

800


 

 

220


 

Income before income taxes, as adjusted – Non-GAAP (a)

$

1,191


 

 

$

1,252


 

 

$

1,122


 

 

$

1,013


 

 

$

1,098


 

 

 

 

 

 

 

 

 

 

 

Fee and other revenue – GAAP

$

3,053


 

 

$

3,067


 

 

$

3,012


 

 

$

2,935


 

 

$

3,851


 

(Loss) income from consolidated investment management funds – GAAP

(22)


 

 

40


 

 

52


 

 

42


 

 

39


 

Net interest revenue – GAAP

759


 

 

779


 

 

728


 

 

712


 

 

721


 

Total revenue – GAAP

3,790


 

 

3,886


 

 

3,792


 

 

3,689


 

 

4,611


 

Less:  Net (loss) income attributable to noncontrolling interests of consolidated investment management funds

(5)


 

 

37


 

 

31


 

 

24


 

 

23


 

Gain on the sale of our investment in Wing Hang


 

 


 

 


 

 


 

 

490


 

Gain on the sale of the One Wall Street building


 

 


 

 


 

 


 

 

346


 

Total revenue, as adjusted – Non-GAAP (a)

$

3,795


 

 

$

3,849


 

 

$

3,761


 

 

$

3,665


 

 

$

3,752


 

 

 

 

 

 

 

 

 

 

 

Pre-tax operating margin (b)

29

%

(c)

30

%

(c)

29

%

(c)

4

%


 

36

%

Pre-tax operating margin – Non-GAAP (a)(b)

31

%

(c)

33

%

(c)

30

%

(c)

28

%


 

29

%

 

(a)

Non-GAAP excludes net income attributable to noncontrolling interests of consolidated investment management funds, the gains on the
sales of our investment in Wing Hang Bank and the One Wall Street building, amortization of intangible assets and M&I, litigation and
restructuring charges (recoveries), if applicable. 

(b)

Income before taxes divided by total revenue. 

(c)

Our GAAP earnings include tax-advantaged investments such as low income housing, renewable energy, bank-owned life insurance and
tax-exempt securities.  The benefits of these investments are primarily reflected in tax expense.  If reported on a tax-equivalent basis
these investments would increase revenue and income before taxes by $53 million for 3Q15, $52 million for 2Q15 and $64 million for
1Q15 and would increase our pre-tax operating margin by approximately 1.0% for 3Q15, 0.9% for 2Q15 and 1.2% for 1Q15.

The following table presents the reconciliation of the returns on common equity and tangible common equity.

Return on common equity and tangible common equity


 

 

 

 

 

(dollars in millions)

3Q15

2Q15

1Q15

4Q14

3Q14

Net income applicable to common shareholders of The Bank of New York Mellon 
     Corporation – GAAP

$

820


 

$

830


 

$

766


 

$

209


 

$

1,070


 

Add:  Amortization of intangible assets, net of tax

43


 

44


 

43


 

47


 

49


 

Net income applicable to common shareholders of The Bank of New York 
     Mellon Corporation excluding amortization of intangible assets – Non-
     GAAP

863


 

874


 

809


 

256


 

1,119


 

Less:  Gain on the sale of our investment in Wing Hang


 


 


 


 

315


 

Gain on the sale of the One Wall Street building


 


 


 


 

204


 

Benefit primarily related to a tax carryback claim


 


 


 

150


 


 

Add:  M&I, litigation and restructuring charges (recoveries)

8


 

38


 

(2)


 

608


 

183


 

Net income applicable to common shareholders of The Bank of New York Mellon Corporation, as adjusted – Non-GAAP (a)

$

871


 

$

912


 

$

807


 

$

714


 

$

783


 

 

 

 

 

 

 

Average common shareholders' equity

$

35,588


 

$

35,516


 

$

35,486


 

$

36,859


 

$

36,751


 

Less:  Average goodwill

17,742


 

17,752


 

17,756


 

17,924


 

18,109


 

Average intangible assets

3,962


 

4,031


 

4,088


 

4,174


 

4,274


 

Add:  Deferred tax liability – tax deductible goodwill (b)

1,379


 

1,351


 

1,362


 

1,340


 

1,317


 

Deferred tax liability – intangible assets (b)

1,164


 

1,179


 

1,200


 

1,216


 

1,230


 

Average tangible common shareholders' equity – Non-GAAP

$

16,427


 

$

16,263


 

$

16,204


 

$

17,317


 

$

16,915


 

 

 

 

 

 

 

Return on common equity – GAAP (c)

9.1

%

9.4

%

8.8

%

2.2

%

11.6

%

Return on common equity – Non-GAAP (a)(c)

9.7

%

10.3

%

9.2

%

7.7

%

8.5

%


 

 

 

 

 

 

Return on tangible common equity – Non-GAAP (a)(c)

20.8

%

21.5

%

20.3

%

5.9

%

26.2

%

Return on tangible common equity – Non-GAAP adjusted (a)(c)

21.0

%

22.5

%

20.2

%

16.3

%

18.4

%

 

(a)

Non-GAAP excludes amortization of intangible assets, net of tax, the gains on the sales of our investment in Wing Hang and the One
Wall Street building, the benefit primarily related to a tax carryback claim and M&I, litigation and restructuring charges, if applicable. 

(b)

Deferred tax liabilities are based on fully phased-in Basel III rules. 

(c)

Annualized. 

The following table presents the reconciliation of the equity to assets ratio and book value per common share.

Equity to assets and book value per common share

Sept. 30,
2015


 

June 30,
2015


 

March 31,
2015


 

Dec. 31,
2014


 

Sept. 30,
2014


 

(dollars in millions, unless otherwise noted)

BNY Mellon shareholders' equity at period end – GAAP

$

38,170


 

$

38,270


 

$

37,328


 

$

37,441


 

$

38,451


 

Less:  Preferred stock

2,552


 

2,552


 

1,562


 

1,562


 

1,562


 

BNY Mellon common shareholders' equity at period end – GAAP

35,618


 

35,718


 

35,766


 

35,879


 

36,889


 

Less:  Goodwill

17,679


 

17,807


 

17,663


 

17,869


 

17,992


 

Intangible assets

3,914


 

4,000


 

4,047


 

4,127


 

4,215


 

Add:  Deferred tax liability – tax deductible goodwill (a)

1,379


 

1,351


 

1,362


 

1,340


 

1,317


 

Deferred tax liability – intangible assets (a)

1,164


 

1,179


 

1,200


 

1,216


 

1,230


 

BNY Mellon tangible common shareholders' equity at period end – 
     Non-GAAP

$

16,568


 

$

16,441


 

$

16,618


 

$

16,439


 

$

17,229


 

 

 

 

 

 

 

Total assets at period end – GAAP

$

377,371


 

$

395,254


 

$

392,337


 

$

385,303


 

$

386,296


 

Less:  Assets of consolidated investment management funds

2,297


 

2,231


 

1,681


 

9,282


 

9,562


 

Subtotal assets of operations – Non-GAAP

375,074


 

393,023


 

390,656


 

376,021


 

376,734


 

Less:  Goodwill

17,679


 

17,807


 

17,663


 

17,869


 

17,992


 

Intangible assets

3,914


 

4,000


 

4,047


 

4,127


 

4,215


 

Cash on deposit with the Federal Reserve and other central banks (b)

86,426


 

106,628


 

93,044


 

99,901


 

90,978


 

Tangible total assets of operations at period end – Non-GAAP

$

267,055


 

$

264,588


 

$

275,902


 

$

254,124


 

$

263,549


 

 

 

 

 

 

 

BNY Mellon shareholders' equity to total assets ratio – GAAP

10.1

%

9.7

%

9.5

%

9.7

%

10.0

%

BNY Mellon common shareholders' equity to total assets ratio – GAAP

9.4

%

9.0

%

9.1

%

9.3

%

9.5

%

BNY Mellon tangible common shareholders' equity to tangible assets of operations ratio – Non-GAAP

6.2

%

6.2

%

6.0

%

6.5

%

6.5

%


 

 

 

 

 

 

Period-end common shares outstanding (in thousands)

1,092,953


 

1,106,518


 

1,121,512


 

1,118,228


 

1,125,710


 

 

 

 

 

 

 

Book value per common share – GAAP

$

32.59


 

$

32.28


 

$

31.89


 

$

32.09


 

$

32.77


 

Tangible book value per common share – Non-GAAP

$

15.16


 

$

14.86


 

$

14.82


 

$

14.70


 

$

15.30


 

 

(a)

Deferred tax liabilities are based on fully phased-in Basel III rules.

(b)

Assigned a zero percent risk-weighting by the regulators.

The following table presents income from consolidated investment management funds, net of noncontrolling interests.

Income from consolidated investment management funds, net of noncontrolling interests

(in millions)

3Q15

2Q15

1Q15

4Q14

3Q14

(Loss) income from consolidated investment management funds

$

(22)


 

$

40


 

$

52


 

$

42


 

$

39


 

Less:  Net (loss) income attributable to noncontrolling interests of consolidated 
     investment management funds

(5)


 

37


 

31


 

24


 

23


 

(Loss) income from consolidated investment management funds, net of 
     noncontrolling interests

$

(17)


 

$

3


 

$

21


 

$

18


 

$

16


 

The following table presents the impact of changes in foreign currency exchange rates on our consolidated investment management and performance fees.

Investment management and performance fees – Consolidated


 

 

3Q15 vs.

(dollars in millions)

3Q15

3Q14

3Q14

Investment management and performance fees – GAAP

$

829


 

$

881


 

(6)

%

Impact of changes in foreign currency exchange rates


 

(39)


 

 

Investment management and performance fees, as adjusted – Non-GAAP

$

829


 

$

842


 

(2)

%

The following table presents the revenue line items in the Investment Management business impacted by the consolidated investment management funds.

(Loss) income from consolidated investment management funds, net of 
     noncontrolling interests - Investment Management business


 

 

 

 

 

(in millions)

3Q15

2Q15

1Q15

4Q14

3Q14

Investment management fees

$

3


 

$

4


 

$

1


 

$

15


 

$

15


 

Other (Investment (loss) income)

(20)


 

(1)


 

20


 

3


 

1


 

(Loss) income from consolidated investment management funds, net of 
     noncontrolling interests

$

(17)


 

$

3


 

$

21


 

$

18


 

$

16


 

The following table presents the impact of changes in foreign currency exchange rates on investment management fees reported in the Investment Management segment.

Investment management fees - Investment Management business


 

 

3Q15 vs.

(dollars in millions)

3Q15

3Q14

3Q14

Investment management fees – GAAP

$

804


 

$

843


 

(5)

%

Impact of changes in foreign currency exchange rates


 

(37)


 

 

Investment management fees, as adjusted – Non-GAAP

$

804


 

$

806


 

%

The following table presents the reconciliation of the pre-tax operating margin for the Investment Management business.

Pre-tax operating margin - Investment Management business


 

 

 

 

 

(dollars in millions)

3Q15

2Q15

1Q15

4Q14

3Q14

Income before income taxes – GAAP

$

237


 

$

263


 

$

263


 

$

236


 

$

245


 

Add:  Amortization of intangible assets

24


 

25


 

24


 

29


 

29


 

Money market fee waivers

28


 

29


 

33


 

33


 

30


 

Income before income taxes excluding amortization of intangible assets and 
     money market fee waivers – Non-GAAP

$

289


 

$

317


 

$

320


 

$

298


 

$

304


 

 

 

 

 

 

 

Total revenue – GAAP

$

929


 

$

991


 

$

997


 

$

981


 

$

989


 

Less:  Distribution and servicing expense

94


 

95


 

97


 

101


 

105


 

Money market fee waivers benefiting distribution and servicing expense

35


 

37


 

38


 

37


 

37


 

Add:  Money market fee waivers impacting total revenue

63


 

66


 

71


 

70


 

67


 

Total revenue net of distribution and servicing expense
     and excluding money market fee waivers – Non-GAAP

$

863


 

$

925


 

$

933


 

$

913


 

$

914


 

 

 

 

 

 

 

Pre-tax operating margin (a)

26

%

27

%

26

%

24

%

25

%

Pre-tax operating margin excluding amortization of intangible assets, money market 
     fee waivers and net of distribution and servicing expense – Non-GAAP (a)

34

%

34

%

34

%

33

%

33

%

 

(a)

Income before taxes divided by total revenue.

DIVIDENDS

Common – On Oct. 20, 2015, The Bank of New York Mellon Corporation declared a quarterly common stock dividend of $0.17 per common share.  This cash dividend is payable on Nov. 13, 2015 to shareholders of record as of the close of business on Nov. 2, 2015. 

Preferred – On Oct. 20, 2015, The Bank of New York Mellon Corporation also declared the following dividends for the noncumulative perpetual preferred stock, liquidation preference $100,000 per share, for the dividend period ending in December 2015, in each case payable on Dec. 21, 2015 to holders of record as of the close of business on Dec. 5, 2015:

  • $1,011.11 per share on the Series A Preferred Stock (equivalent to $10.1111 per Normal Preferred Capital Security of Mellon Capital IV, each representing a 1/100th interest in a share of the Series A Preferred Stock);
  • $1,300.00 per share on the Series C Preferred Stock (equivalent to $0.3250 per depositary share, each representing a 1/4,000th interest in a share of the Series C Preferred Stock);
  • $2,250.00 per share on the Series D Preferred Stock (equivalent to $22.50 per depositary share, each representing a 1/100th interest in a share of the Series D Preferred Stock); and
  • $3,190.00 per share on the Series E Preferred Stock (equivalent to $31.90 per depositary share, each representing a 1/100th interest in a share of the Series E Preferred Stock).

BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 35 countries and more than 100 markets. As of Sept. 30, 2015, BNY Mellon had $28.5 trillion in assets under custody and/or administration, and $1.6 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.

CAUTIONARY STATEMENT

A number of statements (i) in this Earnings Release, (ii) in our presentations and (iii) in the responses to questions on our conference call discussing our quarterly results and other public events may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 including our estimated capital ratios and expectations relating to those ratios, preliminary business metrics and statements regarding our capital plans; strategic priorities; initiatives in Investment Services and Investment Management; and our business improvement process.  These statements may be expressed in a variety of ways, including the use of future or present tense language.  Words such as "estimate", "forecast", "project", "anticipate", "target", "expect", "intend", "continue", "seek", "believe", "plan", "goal", "could", "should", "may", "will", "strategy", "opportunities", "trends" and words of similar meaning signify forward-looking statements.  These statements and other forward-looking statements contained in other public disclosures of The Bank of New York Mellon Corporation which make reference to the cautionary factors described in this Earnings Release are based upon current beliefs and expectations and are subject to significant risks and uncertainties (some of which are beyond BNY Mellon's control).  Actual results may differ materially from those expressed or implied as a result of these risks and uncertainties, including, but not limited to, the risk factors and other uncertainties set forth in BNY Mellon's Annual Report on Form 10-K for the year ended Dec. 31, 2014 and BNY Mellon's other filings with the Securities and Exchange Commission. All forward-looking statements in this Earnings Release speak only as of Oct. 20, 2015, and BNY Mellon undertakes no obligation to update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events.

Contacts: 

MEDIA:
Kevin Heine
(212) 635-1590
kevin.heine@bnymellon.com

ANALYSTS:
Valerie Haertel
(212) 635-8529
valerie.haertel@bnymellon.com

SOURCE BNY Mellon