UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) – October 17, 2014
THE BANK OF NEW YORK MELLON CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
001-35651
13-2614959
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(I.R.S. Employer Identification No.)

One Wall Street
New York, New York
(Address of principal executive offices)
10286
(Zip code)
 
Registrant’s telephone number, including area code – (212) 495-1784

N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

1


ITEM 2.02.    RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On October 17, 2014, The Bank of New York Mellon Corporation (“BNY Mellon”) issued an Earnings Release announcing its financial results for the third quarter of 2014. In addition, in conjunction with a conference call and webcast regarding BNY Mellon’s financial results, Quarterly Financial Trends are available on BNY Mellon’s website, www.bnymellon.com. A copy of each of the Earnings Release and the Quarterly Financial Trends is “furnished” as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K pursuant to General Instruction B.2 of Form 8-K and is not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities under that Section. These exhibits shall not be incorporated by reference into any filings BNY Mellon has made or may make under the Securities Act of 1933 (the “Securities Act”) or Exchange Act, except as otherwise expressly stated in such filing. The contents of BNY Mellon’s website referenced herein or in the exhibits are not incorporated into this Current Report on Form 8-K.

ITEM 7.01.    REGULATION FD DISCLOSURE.

On October 17, 2014, in conjunction with a conference call and webcast regarding BNY Mellon’s financial results, Key Facts and a Third Quarter 2014 Financial Highlights presentation are available on BNY Mellon’s website, www.bnymellon.com. A copy of each of the Key Facts and the Third Quarter 2014 Financial Highlights presentation is “furnished” as Exhibits 99.3 and 99.4, respectively, to this Current Report on Form 8-K pursuant to General Instruction B.2 of Form 8-K and is not “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section. This exhibit shall not be incorporated by reference into any filings BNY Mellon has made or may make under the Securities Act or Exchange Act, except as otherwise expressly stated in such filing. The contents of BNY Mellon’s website referenced herein or in the exhibits are not incorporated into this Current Report on Form 8-K.

ITEM 9.01.    FINANCIAL STATEMENTS AND EXHIBITS.
(d)    EXHIBITS.

2


Exhibit
 
 
Number
 
Description
 
 
 
99.1

 
The Bank of New York Mellon Corporation Earnings Release dated October 17, 2014, announcing financial results for the third quarter of 2014.
 
 
 
99.2

 
The Bank of New York Mellon Corporation Quarterly Financial Trends dated October 17, 2014, for the third quarter of 2014.
 
 
 
99.3

 
Key Facts – Third Quarter 2014 dated October 17, 2014.
 
 
 
99.4

 
Third Quarter 2014 Financial Highlights Presentation dated October 17, 2014.


3


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
    
 
The Bank of New York Mellon Corporation
(Registrant)



Date: October 17, 2014
By: /s/ Craig T. Beazer
 
Name: Craig T. Beazer
Title: Assistant Secretary




4



EXHIBIT INDEX
Number
Description
Method of Filing
99.1
Earnings Release dated October 17, 2014.
Furnished herewith

99.2
Quarterly Financial Trends dated October 17, 2014.
Furnished herewith

99.3
Key Facts – Third Quarter 2014 dated October 17, 2014.
Furnished herewith

99.4
Third Quarter 2014 Financial Highlights Presentation dated October 17, 2014.
Furnished herewith





Ex99.1_EarningsRelease3Q14


Press Release


Contacts: MEDIA:
ANALYSTS:
Kevin Heine
Izzy Dawood
(212) 635-1590
(212) 635-1850
kevin.heine@bnymellon.com
izzy.dawood@bnymellon.com


BNY MELLON REPORTS THIRD QUARTER EARNINGS OF $1.07 BILLION OR $0.93 PER COMMON SHARE, INCLUDING:
•
$0.29 PER COMMON SHARE FOR PREVIOUSLY DISCLOSED GAINS NET OF LITIGATION AND RESTRUCTURING CHARGES

INVESTMENT MANAGEMENT AND PERFORMANCE FEES UP 7% YEAR-OVER-YEAR
•
Assets under management up 7% year-over-year to a record $1.65 trillion

INVESTMENT SERVICES REVENUE UP 5% YEAR-OVER-YEAR
•
Assets under custody and/or administration up 3% year-over-year

CONTINUED PROGRESS ON EXPENSE CONTROL
•
Staff expense decreased 3% year-over-year

REPURCHASED 11.0 MILLION COMMON SHARES FOR $431 MILLION IN THIRD QUARTER

RETURN ON TANGIBLE COMMON EQUITY OF 26%, OR 18% ON AN ADJUSTED BASIS (a)

NEW YORK, October 17, 2014 – The Bank of New York Mellon Corporation (“BNY Mellon”) (NYSE: BK) today reported third quarter net income applicable to common shareholders of $1.07 billion, or $0.93 per diluted common share, or $734 million, or $0.64 per diluted common share, adjusted for the previously disclosed gains net of litigation and restructuring charges. In the third quarter of 2013, net income applicable to common shareholders was $962 million, or $0.82 per diluted common share, or $713 million, or $0.61 per diluted common share, adjusted for the benefit related to certain tax matters net of litigation and restructuring charges. In the second quarter of 2014, net income applicable to common shareholders was $554 million, or $0.48 per diluted common share, or $715 million, or $0.62 per diluted common share, adjusted for the charge related to investment management funds and severance. (a)

“We had a strong quarter. We grew Investment Management and Investment Services fees, controlled expenses and executed on our capital plan. During the quarter, we also repositioned the Markets Group, which will improve our operating margin and return on capital. We achieved this despite a challenging environment, demonstrating the resilience of our business model and the exceptional efforts of our employees,” said Gerald L. Hassell, chairman and chief executive officer of BNY Mellon.


_________________________________________________________________________________
(a)
See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 24 for the reconciliation of Non-GAAP measures.

BNY Mellon 3Q14 Earnings Release


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. 17, 2014. 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. 17, 2014. Replays of the conference call and audio webcast will be available beginning Oct. 17, 2014 at approximately 2 p.m. EDT through Nov. 17, 2014 by dialing (800) 860-4696 (U.S.) or (203) 369-3836 (International). The archived version of the conference call and audio webcast will also be available at www.bnymellon.com for the same time period.


  Page - 2

BNY Mellon 3Q14 Earnings Release


THIRD QUARTER 2014 FINANCIAL HIGHLIGHTS (a)
(comparisons are 3Q14 vs. 3Q13 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)
3Q13

3Q14

Inc(Dec)

 
3Q13

3Q14

Inc(Dec)

GAAP results
$
0.82

$
0.93

 
 
$
962

$
1,070

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

0.27

 
 
—

315

 
Gain on the sale of the One Wall Street building
—

0.18

 
 
—

204

 
Add: Litigation and restructuring charges
0.01

0.16

 
 
12

183

 
Benefit related to the disallowance of certain foreign tax credits
(0.22
)
—

 
 
(261
)
—

 
Non-GAAP results
$
0.61

$
0.64

5
%
 
$
713

$
734

3
%


•
Total revenue was $4.6 billion, an increase of 22%, or a decline of 1% as adjusted (Non-GAAP).
-    Investment services fees increased 5% reflecting organic growth, higher market values and net new business.
-    Investment management and performance fees increased 7% reflecting higher equity markets, the impact of a weaker U.S. dollar and higher performance fees.
-    Foreign exchange revenue was flat as higher volumes were offset by lower volatility.
--    Sharp volume gains helped mitigate the 36% year-over-year decline in the G7 Volatility Index.
-    Investment and other income, excluding the previously disclosed gains, decreased $97 million driven by lower equity revenue and seed capital gains.
-    Net interest revenue decreased 7% reflecting lower asset yields and lower accretion, partially offset by higher average interest-earning assets driven by higher deposits.
•
The provision for credit losses was a credit of $19 million in 3Q14.
•
Noninterest expense increased 7%. Noninterest expense as adjusted (Non-GAAP) remained flat resulting from lower staff expense offset by higher professional, legal and other purchased services, the impact of a weaker U.S. dollar and the annual employee merit increase.
•
Effective tax rate of 33.5%. The previously disclosed gains, litigation and restructuring charges increased the effective rate 7.1% in 3Q14.

•
Assets under custody and/or administration (“AUC/A”) and Assets under management (“AUM”)
-
AUC/A of $28.3 trillion, increased 3% primarily reflecting higher market values.
--    Estimated new AUC/A wins in Asset Servicing of $115 billion in 3Q14.
-    AUM of a record $1.65 trillion, increased 7% driven by higher equity market values and net new business.
--    Long-term inflows totaled $13 billion in 3Q14 driven by liability-driven investments.
--    Short-term inflows totaled $19 billion in 3Q14.

•Capital
-    Repurchased 11.0 million common shares for $431 million in 3Q14.
-    Return on tangible common equity of 26%, or 18% as adjusted (Non-GAAP).
 
 
 
 
 
(a)
See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 24 for the reconciliation of Non-GAAP measures. Non-GAAP excludes M&I, litigation and restructuring charges, the gain on the sale of our investment in Wing Hang, the gain on the sale of the One Wall Street building, a charge (recovery) related to investment management funds, net of incentives and the benefit related to the disallowance of certain foreign tax credits, if applicable.


Certain immaterial reclassifications have been made to prior periods to place them on a basis comparable with the current period presentation. Sequential growth rates are unannualized.

  Page - 3

BNY Mellon 3Q14 Earnings Release


FINANCIAL SUMMARY
(dollars in millions, except per share amounts; common shares in thousands)
 
 
 
 
 
3Q14 vs.
3Q13

4Q13

1Q14

2Q14

3Q14

3Q13
2Q14
Revenue:
 
 
 
 
 
 
 
Fee and other revenue
$
2,979

$
2,814

$
2,883

$
2,980

$
3,851

29
 %
29
%
Income from consolidated investment management funds
32

36

36

46

39

 
 
Net interest revenue
772

761

728

719

721

 
 
Total revenue – GAAP
3,783

3,611

3,647

3,745

4,611

22

23

Less: Net income attributable to noncontrolling interests related to consolidated investment management funds
8

17

20

17

23

 
 
Gain on the sale of our investment in Wing Hang
—

—

—

—

490

 
 
Gain on the sale of the One Wall Street building
—

—

—

—

346

 
 
Loss related to an equity investment (pre-tax)
—

(175
)
—

—

—

 
 
Total revenue – Non-GAAP
3,775

3,769

3,627

3,728

3,752

(1
)
1

Provision for credit losses
2

6

(18
)
(12
)
(19
)
 
 
Expense:
 
 
 
 
 
 
 
Noninterest expense – GAAP
2,779

2,877

2,739

2,946

2,968

7

1

Less: Amortization of intangible assets
81

82

75

75

75

 
 
M&I, litigation and restructuring charges
16

2

(12
)
122

220

 
 
Charge (recovery) related to investment management funds, net of incentives
—

—

(5
)
109

—

 
 
Total noninterest expense – Non-GAAP
2,682

2,793

2,681

2,640

2,673

—

1

Income:
 
 
 
 
 
 
 
Income before income taxes
1,002

728

926

811

1,662

N/M

N/M

Provision for income taxes
19

172

232

217

556

 
 
Net income
$
983

$
556

$
694

$
594

$
1,106

 
 
Net (income) attributable to noncontrolling interests (a)
(8
)
(17
)
(20
)
(17
)
(23
)
 
 
Net income applicable to shareholders of The Bank of New York Mellon Corporation
975

539

674

577

1,083

 
 
Preferred stock dividends
(13
)
(26
)
(13
)
(23
)
(13
)
 
 
Net income applicable to common shareholders of The Bank of New York Mellon Corporation
$
962

$
513

$
661

$
554

$
1,070

 
 
 
 
 
 
 
 
 
 
Key Metrics:
 
 
 
 
 
 
 
Pre-tax operating margin (b)
26
%
20
%
25
%
22
%
36
%
 
 
Non-GAAP (b)
29
%
22
%
27
%
30
%
29
%
 
 
 
 
 
 
 
 
 
 
Return on common equity (annualized) (b)
11.1
%
5.7
%
7.4
%
6.1
%
11.6
%
 
 
Non-GAAP (b)
8.9
%
6.3
%
7.8
%
8.4
%
8.5
%
 
 
 
 
 
 
 
 
 
 
Return on tangible common equity (annualized) - Non-GAAP (b)
28.3
%
14.3
%
17.6
%
14.5
%
26.2
%
 
 
Non-GAAP adjusted (b)
21.3
%
14.3
%
17.3
%
18.4
%
18.4
%
 
 
 
 
 
 
 
 
 
 
Fee revenue as a percentage of total revenue excluding net securities gains
79
%
78
%
79
%
79
%
83
%
 
 
 
 
 
 
 
 
 
 
Percentage of non-U.S. total revenue (c)
38
%
39
%
37
%
38
%
43
%
 
 
 
 
 
 
 
 
 
 
Average common shares and equivalents outstanding
 
 
 
 
 
 
 
Basic
1,148,724

1,142,861

1,138,645

1,133,556

1,126,946

 
 
Diluted
1,152,679

1,147,961

1,144,510

1,139,800

1,134,871

 
 
 
 
 
 
 
 
 
 
Period end:
 
 
 
 
 
 
 
Full-time employees
50,800

51,100

51,400

51,100

50,900

 
 
Book value per common share - GAAP (b)
$
30.80

$
31.46

$
31.94

$
32.49

$
32.77

 
 
Tangible book value per common share - Non-GAAP (b)
$
13.34

$
13.95

$
14.48

$
14.88

$
15.30

 
 
Cash dividends per common share
$
0.15

$
0.15

$
0.15

$
0.17

$
0.17

 
 
Common dividend payout ratio
18
%
34
%
26
%
35
%
18
%
 
 
Closing stock price per common share
$
30.19

$
34.94

$
35.29

$
37.48

$
38.73

 
 
Market capitalization
$
34,674

$
39,910

$
40,244

$
42,412

$
43,599

 
 
Common shares outstanding
1,148,522

1,142,250

1,140,373

1,131,596

1,125,710

 
 
(a)    Primarily attributable to noncontrolling interests related to consolidated investment management funds.
(b)
Non-GAAP excludes M&I, litigation and restructuring charges, the gain on the sale of our investment in Wing Hang, the gain on the sale of the One Wall Street building, a charge (recovery) related to investment management funds, net of incentives and the benefit related to the disallowance of certain foreign tax credits, if applicable. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 24 for the reconciliation of Non-GAAP measures.
(c)
Includes fee revenue, net interest revenue and income from consolidated investment management funds, net of net income attributable to noncontrolling interests.
N/M - Not meaningful.

  Page - 4

BNY Mellon 3Q14 Earnings Release


CONSOLIDATED BUSINESS METRICS

Consolidated business metrics
 
 
 
 
 
 
3Q14 vs.
3Q13

4Q13

1Q14

2Q14

3Q14

 
3Q13
2Q14
Changes in AUM (in billions): (a)
 
 
 
 
 
 
 
 
Beginning balance of AUM
$
1,427

$
1,532

$
1,583

$
1,620

$
1,636

 
 
 
Net inflows (outflows):
 
 
 
 
 
 
 
 
Long-term:
 
 
 
 
 
 
 
 
Equity
3

(5
)
(1
)
(4
)
(2
)
 
 
 
Fixed income
(1
)
5

—

(1
)
—

 
 
 
Index
2

(3
)
—

7

(3
)
 
 
 
Liability-driven investments (b)
27

4

20

(17
)
18

 
 
 
Alternative investments
1

1

2

2

—

 
 
 
Total long-term inflows (outflows)
32

2

21

(13
)
13

 
 
 
Short term:
 
 
 
 
 
 
 
 
Cash
13

6

(7
)
(18
)
19

 
 
 
Total net inflows (outflows)
45

8

14

(31
)
32

 
 
 
Net market/currency impact
60

43

23

47

(22
)
 
 
 
Ending balance of AUM
$
1,532

$
1,583

$
1,620

$
1,636

$
1,646

(c)
7
 %
1
 %
 
 
 
 
 
 
 
 
 
AUM at period end, by product type: (a)
 
 
 
 
 
 
 
 
Equity
17
%
17
%
17
%
17
%
16
%
 
 
 
Fixed income
14

14

14

14

13

 
 
 
Index
20

20

20

21

21

 
 
 
Liability-driven investments (b)
26

26

27

27

28

 
 
 
Alternative investments
4

4

4

4

4

 
 
 
Cash
19

19

18

17

18

 
 
 
Total AUM
100
%
100
%
100
%
100
%
100
%
(c)
 
 
 
 
 
 
 
 
 
 
 
Wealth management:
 
 
 
 
 
 
 
 
Average loans (in millions)
$
9,453

$
9,755

$
10,075

$
10,372

$
10,772

 
14
 %
4
 %
Average deposits (in millions)
$
13,898

$
14,161

$
14,805

$
13,458

$
13,764

 
(1
)%
2
 %
 
 
 
 
 
 
 
 
 
Investment Services:
 
 
 
 
 
 
 
 
Average loans (in millions)
$
27,865

$
31,211

$
31,468

$
33,115

$
33,785

 
21
 %
2
 %
Average deposits (in millions)
$
206,068

$
216,216

$
214,947

$
220,701

$
221,734

 
8
 %
—
 %
 
 
 
 
 
 
 
 
 
AUC/A at period end (in trillions) (d)
$
27.4

$
27.6

$
27.9

$
28.5

$
28.3

(c)
3
 %
(1
)%
 
 
 
 
 
 
 
 
 
Market value of securities on loan at period end (in billions) (e)
$
255

$
235

$
264

$
280

$
282

 
11
 %
1
 %
 
 
 
 
 
 
 
 
 
Asset servicing:
 
 
 
 
 
 
 
 
Estimated new business wins (AUC/A) (in billions)
$
110

$
123

$
161

$
130

$
115

(c)
 
 
 
 
 
 
 
 
 
 
 
Depositary Receipts:
 
 
 
 
 
 
 
 
Number of sponsored programs
1,350

1,335

1,332

1,316

1,302

 
(4
)%
(1
)%
 
 
 
 
 
 
 
 
 
Clearing services:
 
 
 
 
 
 
 
 
Global DARTS volume (in thousands)
212

213

230

207

209

 
(1
)%
1
 %
Average active clearing accounts (U.S. platform) (in thousands)
5,622

5,643

5,695

5,752

5,805

 
3
 %
1
 %
Average long-term mutual fund assets (U.S. platform) (in millions)
$
377,131

$
401,434

$
413,658

$
433,047

$
442,827

 
17
 %
2
 %
Average investor margin loans (U.S. platform) (in millions)
$
8,845

$
8,848

$
8,919

$
9,236

$
9,861

 
11
 %
7
 %
 
 
 
 
 
 
 
 
 
Broker-Dealer:
 
 
 
 
 
 
 
 
Average tri-party repo balances (in billions)
$
1,952

$
2,005

$
1,983

$
2,022

$
2,063

 
6
 %
2
 %
(a)
Excludes securities lending cash management assets and assets managed in the Investment Services business.
(b)
Includes currency and 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 $1.2 trillion at Sept. 30, 2013, Dec. 31, 2013, March 31, 2014, June 30, 2014 and 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, beginning in the fourth quarter of 2013, on behalf of CIBC Mellon clients, which totaled $62 billion at Dec. 31, 2013, $66 billion at March 31, 2014, $64 billion at June 30, 2014 and $65 billion at Sept. 30, 2014.

  Page - 5

BNY Mellon 3Q14 Earnings Release


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

Key market metrics
 
 
 
 
 
 
 
 
 
 
 
 
3Q14 vs.
3Q13

4Q13

1Q14

2Q14

3Q14

3Q13

2Q14

S&P 500 Index (a)
1682

1848

1872

1960

1972

17
 %
1
 %
S&P 500 Index – daily average
1675

1769

1835

1900

1976

18

4

FTSE 100 Index (a)
6462

6749

6598

6744

6623

2

(2
)
FTSE 100 Index – daily average
6530

6612

6680

6764

6756

3

—

MSCI World Index (a)
1544

1661

1674

1743

1698

10

(3
)
MSCI World Index – daily average
1511

1602

1647

1698

1733

15

2

Barclays Capital Global Aggregate BondSM Index (a)(b)
356

354

365

376

361

1

(4
)
NYSE and NASDAQ share volume (in billions)
166

179

196

187

173

4

(7
)
JPMorgan G7 Volatility Index – daily average (c)
9.72

8.20

7.80

6.22

6.21

(36
)
—

Average Fed Funds effective rate
0.09
%
0.09
%
0.07
%
0.09
%
0.09
%
—

—

(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.


  Page - 6

BNY Mellon 3Q14 Earnings Release


FEE AND OTHER REVENUE

Fee and other revenue
 
 
 
 
 
3Q14 vs.
(dollars in millions)
3Q13

4Q13

1Q14

2Q14

3Q14

3Q13

2Q14

Investment services fees:
 
 
 
 
 
 
 
Asset servicing (a)
$
964

$
984

$
1,009

$
1,022

$
1,025

6
 %
—
 %
Clearing services
315

324

325

326

337

7

3

Issuer services
322

237

229

231

315

(2
)
36

Treasury services
137

137

136

141

142

4

1

Total investment services fees
1,738

1,682

1,699

1,720

1,819

5

6

Investment management and performance fees
821

904

843

883

881

7

—

Foreign exchange and other trading revenue
160

146

136

130

153

(4
)
18

Distribution and servicing
43

43

43

43

44

2

2

Financing-related fees
44

43

38

44

44

—

—

Investment and other income
151

(43
)
102

142

890

N/M
N/M
Total fee revenue
2,957

2,775

2,861

2,962

3,831

30

29

Net securities gains
22

39

22

18

20

N/M
N/M
Total fee and other revenue – GAAP
$
2,979

$
2,814

$
2,883

$
2,980

$
3,851

29
 %
29
 %
(a)
Asset servicing fees include securities lending revenue of $35 million in 3Q13, $31 million in 4Q13, $38 million in 1Q14, $46 million in 2Q14 and $37 million in 3Q14.
N/M - Not meaningful.


KEY POINTS

•
Asset servicing fees were $1.0 billion, an increase of 6% year-over-year and a slight increase sequentially. The year-over-year increase primarily reflects organic growth, higher market values, net new business and higher collateral management fees in Global Collateral Services. The sequential increase primarily reflects organic growth, partially offset by seasonally lower securities lending revenue.

•
Clearing services fees were $337 million, an increase of 7% year-over-year and 3% sequentially. Both increases were driven by growth in clearing accounts and mutual fund positions, and higher asset levels. The sequential increase also reflects higher DARTS volume.

•
Issuer services fees were $315 million, a decrease of 2% year-over-year and an increase of 36% sequentially. The year-over-year decrease reflects lower Corporate Trust fees, partially offset by new business in Depositary Receipts. The sequential increase is primarily due to seasonally higher dividend fees and new business in Depositary Receipts, partially offset by lower Corporate Trust fees.

•
Treasury services fees were $142 million in 3Q14 compared with $137 million in 3Q13 and $141 million in 2Q14. The year-over-year increase primarily reflect higher payment volumes.

•
Investment management and performance fees were $881 million, an increase of 7% year-over-year and a slight decrease sequentially. The year-over-year increase primarily resulted from higher equity markets, the impact of a weaker U.S. dollar and higher performance fees. The sequential decrease was primarily driven by seasonally lower performance fees and the impact of a stronger U.S. dollar.



  Page - 7

BNY Mellon 3Q14 Earnings Release


•
Foreign exchange and other trading revenue
 
 
 
 
 
 
(in millions)
3Q13

4Q13

1Q14

2Q14

3Q14

 
Foreign exchange
$
154

$
126

$
130

$
129

$
154

 
Other trading revenue (loss):
 
 
 
 
 
 
Fixed income
(2
)
20

1

(1
)
2

 
Equity/other
8

—

5

2

(3
)
 
Total other trading revenue (loss)
6

20

6

1

(1
)
 
Total foreign exchange and other trading revenue
$
160

$
146

$
136

$
130

$
153



Foreign exchange and other trading revenue totaled $153 million in 3Q14 compared with $160 million in 3Q13 and $130 million in 2Q14. In 3Q14, foreign exchange revenue totaled $154 million, unchanged year-over-year and up 19% sequentially. Year-over-year, higher volumes offset lower volatility. The sequential increase reflects higher volumes.

Other trading loss was $1 million in 3Q14, compared with other trading revenue of $6 million in 3Q13 and other trading revenue of $1 million in 2Q14. Both decreases primarily reflect lower derivatives trading revenue.

•
Investment and other income (loss)
 
 
 
 
 
 
(in millions)
3Q13

4Q13

1Q14

2Q14

3Q14

 
Asset-related gains (losses)
$
35

$
22

$
(1
)
$
17

$
836

 
Corporate/bank-owned life insurance
38

40

30

30

34

 
Expense reimbursements from joint venture
12

11

12

15

13

 
Lease residual gains
7

—

35

4

5

 
Private equity gains (losses)
(2
)
5

5

(2
)
2

 
Transitional service agreements
—

2

—

—

—

 
Seed capital gains (losses)
7

20

6

15

(1
)
 
Equity investment revenue (loss)
48

(163
)
(2
)
17

(9
)
 
Other income
6

20

17

46

10

 
Total investment and other income (loss)
$
151

$
(43
)
$
102

$
142

$
890



Investment and other income was $890 million in 3Q14 compared with $151 million in 3Q13 and $142 million in 2Q14. Both increases primarily reflect the gains on the sales of our equity investment in Wing Hang and our One Wall Street office building, partially offset by lower equity investment revenue and seed capital gains.

•
In July 2014, we sold our equity investment in Wing Hang resulting in an after-tax gain of $315 million, or $490 million pre-tax. Equity investment revenue related to our investment in Wing Hang totaled $20 million through July of 2014 and $95 million in full-year 2013, including $37 million from the sale of a property recorded in 3Q13.

•
In September 2014, we sold the corporate headquarters at One Wall Street resulting in an after-tax gain of $204 million, or $346 million pre-tax.


  Page - 8

BNY Mellon 3Q14 Earnings Release


NET INTEREST REVENUE

Net interest revenue
 
 
 
 
 
3Q14 vs.
(dollars in millions)
3Q13

4Q13

1Q14

2Q14

3Q14

3Q13

2Q14

Net interest revenue (non-FTE)
$
772

$
761

$
728

$
719

$
721

(7)%

—
 %
Net interest revenue (FTE) – Non-GAAP
787

781

744

736

736

(6
)
—

Net interest margin (FTE)
1.16
%
1.09
%
1.05
%
0.98
%
0.94
%
(22
) bps
(4
) bps
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
Cash/interbank investments
$
116,165

$
132,198

$
127,134

$
140,357

$
139,278

20%

(1)%

Trading account securities
5,523

6,173

5,217

5,532

5,435

(2
)
(2
)
Securities
101,206

96,640

100,534

101,420

112,055

11

10

Loans
48,256

50,768

51,647

53,449

54,835

14

3

Interest-earning assets
271,150

285,779

284,532

300,758

311,603

15

4

Interest-bearing deposits
153,547

157,020

152,986

162,674

164,233

7

1

Noninterest-bearing deposits
72,075

79,999

81,430

77,820

82,334

14

6

 
 
 
 
 
 
 
 
Selected average yields/rates:
 
 
 
 
 
 
 
Cash/interbank investments
0.41
%
0.40
%
0.43
%
0.43
%
0.38
%
 
 
Trading account securities
2.83

2.82

2.60

2.19

2.36

 
 
Securities
1.98

2.02

1.79

1.68

1.56

 
 
Loans
1.73

1.64

1.65

1.66

1.61

 
 
Interest-earning assets
1.28

1.21

1.17

1.10

1.05

 
 
Interest-bearing deposits
0.06

0.06

0.06

0.06

0.06

 
 
 
 
 
 
 
 
 
 
Average cash/interbank investments as a percentage of average interest-earning assets
43
%
46
%
45
%
47
%
45
%
 
 
Average noninterest-bearing deposits as a percentage of average interest-earning assets
27
%
28
%
29
%
26
%
26
%
 
 
bps – basis points.
FTE – fully taxable equivalent.


KEY POINTS

•
Net interest revenue totaled $721 million in 3Q14, a decrease of $51 million compared with 3Q13 and an increase of $2 million sequentially. The year-over-year decrease primarily resulted from lower asset yields and lower accretion, partially offset by higher average interest-earning assets driven by higher deposits. 

•
Euro-denominated deposit liabilities comprised 15% of average deposits in 3Q14 and 16% of average deposits in 2Q14.

•
In the fourth quarter of 2014, we are continuing to reduce our interbank placement assets and increasing our high quality liquid assets in the securities portfolio. The anticipated revenue as a result of these tactical actions should mitigate the impact on our net interest revenue as a result of:
-
the European Central Bank’s reduction in their deposit rate to negative, and the resulting impact on lower reinvestment rates across the euro yield curve; as well as,
-    prolonged low reinvestment rates in the U.S.



  Page - 9

BNY Mellon 3Q14 Earnings Release


NONINTEREST EXPENSE

Noninterest expense
 
 
 
 
 
3Q14 vs.
(dollars in millions)
3Q13

4Q13

1Q14

2Q14

3Q14

3Q13

2Q14

Staff:
 
 
 
 
 
 
 
Compensation
$
915

$
929

$
925

$
903

$
909

(1
)%
1
 %
Incentives
339

343

359

313

340

—

9

Employee benefits
262

250

227

223

228

(13
)
2

Total staff
1,516

1,522

1,511

1,439

1,477

(3
)
3

Professional, legal and other purchased services
296

344

312

314

323

9

3

Software and equipment
226

241

237

236

234

4

(1
)
Net occupancy
153

154

154

152

154

1

1

Distribution and servicing
108

110

107

112

107

(1
)
(4
)
Sub-custodian
71

68

68

81

67

(6
)
(17
)
Business development
63

96

64

68

61

(3
)
(10
)
Other
249

258

223

347

250

—

(28
)
Amortization of intangible assets
81

82

75

75

75

(7
)
—

M&I, litigation and restructuring charges
16

2

(12
)
122

220

N/M

N/M

      Total noninterest expense – GAAP
$
2,779

$
2,877

$
2,739

$
2,946

$
2,968

7
 %
1
 %
 
 
 
 
 
 
 
 
Total staff expense as a percentage of total revenue
40
%
42
%
41
%
38
%
32
%
 
 
 
 
 
 
 
 
 
 
Memo:
 
 
 
 
 
 
 
Total noninterest expense excluding amortization of intangible assets, M&I, litigation and restructuring charges and the charge (recovery) related to investment management funds, net of incentives – Non-GAAP
$
2,682

$
2,793

$
2,681

$
2,640

$
2,673

—
 %
1
 %
N/M – Not meaningful.


KEY POINTS

•
Total noninterest expense excluding amortization of intangible assets, M&I, litigation and restructuring charges, and the charge (recovery) related to investment management funds (Non-GAAP) decreased slightly year-over-year and increased 1% sequentially.

•
Year-over-year, staff expense decreased driven by lower pension expense, the benefit of replacing technology contractors with permanent staff and the impact of streamlining actions. The decrease was offset by higher professional, legal and other purchased services, the impact of a weaker U.S. dollar and the annual employee merit increase.

•
The sequential increase primarily reflects the incentive adjustment recorded in 2Q14 related to investment management funds, the impact of the annual employee merit increase and higher professional, legal and other purchased services expenses, partially offset by streamlining actions and lower sub-custodian expense.


  Page - 10

BNY Mellon 3Q14 Earnings Release


INVESTMENT SECURITIES PORTFOLIO

At Sept. 30, 2014, the fair value of our investment securities portfolio totaled $115.9 billion. The net unrealized pre-tax gain on our total securities portfolio was $1.1 billion at Sept. 30, 2014 compared with $1.2 billion at June 30, 2014. The decrease in the net unrealized pre-tax gain was primarily driven by the increase in market interest rates. During 3Q14, we received $134 million of paydowns of sub-investment grade securities and sold $24 million of sub-investment grade securities.

In 3Q14, we increased our level of Agency RMBS, U.S. Treasury and sovereign debt/sovereign guaranteed investment securities as we continued to reduce our interbank placement assets and increase our high quality liquid assets.

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

Investment securities
portfolio


(dollars in millions)
June 30, 2014

 
3Q14
change in
unrealized
gain (loss)

Sept. 30, 2014
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
$
41,552

 
$
(100
)
$
44,413

$
44,372

 
100
%
$
(41
)
 
100
%
—
%
—
%
—
%
—
%
U.S. Treasury
18,791

 
(18
)
25,244

25,449

 
101

205

 
100

—

—

—

—

Sovereign debt/sovereign guaranteed
14,812

 
41

16,510

16,627

 
101

117

 
87

—

13

—

—

Non-agency RMBS (b)
2,574

 
(31
)
1,916

2,449

 
81

533

 
—

1

1

90

8

Non-agency RMBS
1,227

 
3

1,147

1,170

 
94

23

 
1

9

23

66

1

European floating rate notes
2,525

 
9

2,297

2,296

 
100

(1
)
 
72

22

—

6

—

Commercial MBS
4,397

 
(28
)
4,798

4,829

 
101

31

 
93

6

1

—

—

State and political subdivisions
6,253

 
13

5,350

5,434

 
102

84

 
79

20

—

—

1

Foreign covered bonds
2,788

 
(3
)
2,863

2,949

 
103

86

 
100

—

—

—

—

Corporate bonds
1,693

 
(5
)
1,636

1,670

 
102

34

 
21

65

14

—

—

CLO
1,455

 
(1
)
1,959

1,971

 
101

12

 
100

—

—

—

—

U.S. Government agencies
787

 
(3
)
704

699

 
99

(5
)
 
100

—

—

—

—

Consumer ABS
3,278

 
(3
)
3,024

3,025

 
100

1

 
99

1

—

—

—

Other (c)
2,980

 
(3
)
2,917

2,923

 
100

6

 
40

53

—

—

7

Total investment securities
$
105,112

(d)
$
(129
)
$
114,778

$
115,863

(d)
100
%
$
1,085

(e)
90
%
4
%
2
%
3
%
1
%
(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 of $1.7 billion and $1.6 billion, fair value, and money market funds of $810 million and $789 million, fair value, at June 30, 2014 and Sept. 30, 2014, respectively.
(d)
Includes net unrealized gains on derivatives hedging securities available-for-sale of $213 million at June 30, 2014 and $137 million at Sept. 30, 2014.
(e)
Unrealized gains of $1,055 million at Sept. 30, 2014 related to available-for-sale securities.


  Page - 11

BNY Mellon 3Q14 Earnings Release


NONPERFORMING ASSETS

Nonperforming assets
(dollars in millions)
Sept. 30, 2013

June 30, 2014

Sept. 30, 2014

Loans:
 
 
 
Other residential mortgages
$
128

$
105

$
113

Commercial
15

13

13

Wealth management loans and mortgages
12

12

13

Foreign
9

4

—

Commercial real estate
4

4

4

Financial institutions
1

—

—

Total nonperforming loans
169

138

143

Other assets owned
3

4

4

Total nonperforming assets (a)
$
172

$
142

$
147

Nonperforming assets ratio
0.34
%
0.24
%
0.26
%
Allowance for loan losses/nonperforming loans
121.9

135.5

133.6

Total allowance for credit losses/nonperforming loans
200.6

225.4

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 $31 million at Sept. 30, 2013, $68 million at June 30, 2014 and $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.


Nonperforming assets were $147 million at Sept. 30, 2014, an increase of $5 million from $142 million at June 30, 2014. The increase primarily resulted from additions in the other residential mortgage loan portfolio which were partially offset by sales in the foreign and other residential mortgage loan portfolios.


ALLOWANCE FOR CREDIT LOSSES, PROVISION AND NET CHARGE-OFFS

Allowance for credit losses, provision and net charge-offs
(in millions)
Sept. 30, 2013

June 30, 2014

Sept. 30, 2014

Allowance for credit losses - beginning of period
$
337

$
326

$
311

Provision for credit losses
2

(12
)
(19
)
Net (charge-offs) recoveries:
 
 
 
Foreign
1

(2
)
(1
)
Wealth management loans and mortgages
—

(1
)
—

Other residential mortgages
—

(1
)
1

Commercial
(1
)
1

(4
)
Net (charge-offs)
—

(3
)
(4
)
Allowance for credit losses - end of period
$
339

$
311

$
288

Allowance for loan losses
$
206

$
187

$
191

Allowance for lending-related commitments
133

124

97



The provision for credit losses was a credit of $19 million in 3Q14 driven by the continued improvement in the
credit quality of the loan portfolio. The provision for credit losses was $2 million in 3Q13 and a credit of $12 million in 2Q14.


  Page - 12

BNY Mellon 3Q14 Earnings Release


CAPITAL

Our consolidated capital ratios are shown in the following table. At June 30, 2014 and Sept. 30, 2014, the common equity Tier 1 (“CET1”), Tier 1 and Total risk-based regulatory capital ratios are based on Basel III components of capital, as phased-in, with asset risk-weightings using the Advanced Approach framework. The leverage capital ratios are based on Basel III components of capital and quarterly average total assets, as phased-in. The capital ratios for Sept. 30, 2013 are based on Basel I rules (including Basel I Tier 1 common in the case of the CET1 ratio).

Capital ratios
Sept. 30, 2013

 
June 30, 2014

 
Sept. 30, 2014

 
Regulatory capital ratios: (a)(b)(c)
 
 
 
 
 
 
CET1 ratio
14.2
%
(d)
11.4
%
 
11.4
%
 
Tier 1 capital ratio
15.8

 
12.4

 
12.4

 
Total (Tier 1 plus Tier 2) capital ratio
16.8

 
12.8

 
12.7

 
Leverage capital ratio
5.6

 
5.9

 
5.8

 
BNY Mellon shareholders’ equity to total assets ratio (d)
9.9

 
9.6

 
10.0

 
BNY Mellon common shareholders’ equity to total assets ratio (d)
9.5

 
9.2

 
9.5

 
BNY Mellon tangible common shareholders’ equity to tangible assets of operations ratio – Non-GAAP (d)(e)
6.3

 
6.4

 
6.5

 
 
 
 
 
 
 
 
Selected regulatory capital ratios - fully phased-in – Non-GAAP: (a)(b)(d)
 
 
 
 
 
 
Estimated CET1: 
 
 
 
 
 
 
Standardized Approach
10.1

 
10.3

 
10.8

 
Advanced Approach
11.1

 
10.0

 
10.0

 
 
 
 
 
 
 
 
Estimated Supplementary leverage ratio (“SLR”) (f)
N/A

 
4.7

 
4.6

 
(a)
Sept. 30, 2014 regulatory capital ratios are preliminary. See “Capital Ratios” beginning on page 28 for more detail.
(b)
Beginning with June 30, 2014, risk-based capital ratios include the net impact of including the total consolidated assets of certain consolidated investment management funds in risk-weighted assets. These assets were not included in prior periods.  The leverage ratio was not affected. 
(c)
The Collins Floor comparison of the CET1, Tier 1 and Total risk-based regulatory capital ratios which is calculated based on Basel III components of capital, as phased-in, and asset risk-weightings using the general risk-based guidelines included in the final rules released by the Board of Governors of the Federal Reserve System (the “Federal Reserve”) on July 2, 2013 (the “Final Capital Rules”) (which for 2014 look to Basel I-based requirements) were 14.3%, 15.5% and 16.2%, respectively, at June 30, 2014 and 15.1%, 16.3% and 17.0%, respectively, at Sept. 30, 2014.
(d)
See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 24 for a reconciliation of these ratios.
(e)
Information for the period ended Sept. 30, 2013 was restated to reflect the retrospective application of adopting new accounting guidance in the first quarter of 2014 related to our investments in qualified affordable housing projects (ASU 2014-01). See page 23 for additional information.
(f)
The estimated fully phased-in SLR as of June 30, 2014 is based on our interpretation of the Final Capital Rules, as supplemented by the Notice of Proposed Rulemaking released in April 2014 concerning the SLR, except that off-balance sheet exposures included in total leverage exposure reflect the end of period measures, rather than a daily average. The estimated fully phased-in SLR as of Sept. 30, 2014 is based on our interpretation of the Final Capital Rules, as supplemented by the Federal Reserve’s final rules on the SLR. On a fully phased-in basis, we expect to satisfy a minimum SLR of over 5%, 3% attributable to a regulatory minimum SLR, and greater than 2% attributable to a buffer applicable to U.S. G-SIBs.
N/A – Not available.


Basel III CET1 generation presented on a fully phased-in basis - preliminary - Non-GAAP
 
(in millions)
3Q14

Estimated Basel III CET1 - Beginning of period balance
$
16,277

Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP
1,070

Goodwill and intangible assets, net of related deferred tax liabilities
265

Gross Basel III CET1 generated
1,335

Capital deployed:
 
Dividends
(196
)
Common stock repurchased
(431
)
Total capital deployed
(627
)
Other comprehensive (loss)
(514
)
Additional paid-in capital (a)
196

Other (primarily embedded goodwill)
53

Total other (deductions)
(265
)
Net Basel III CET1 generated
443

Basel III CET1 - End of period balance - Non-GAAP
$
16,720

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

  Page - 13

BNY Mellon 3Q14 Earnings Release


The table presented below compares the fully phased-in Basel III capital components and ratios to those amounts determined under the currently effective rules using the transitional phase-in requirements.

Basel III capital components and ratios at Sept. 30, 2014 - preliminary
Fully phased-in Basel III

 
 
Transitional Approach

 
Adjustments (a)
(dollars in millions)
CET1:
 
 
 
 
Common equity
$
36,889

$
97

(b)
$
36,986

Goodwill and intangible assets
(19,660
)
2,388

(c)
(17,272
)
Net pension fund assets
(106
)
85

(d)
(21
)
Equity method investments
(383
)
92

(c)
(291
)
Deferred tax assets
(17
)
14

(d)
(3
)
Other
(3
)
4

(e)
1

Total CET1
16,720

2,680

 
19,400

Other Tier 1 capital:
 
 
 
 
Preferred stock
1,562

—

 
1,562

Trust preferred securities
—

162

(f)
162

Disallowed deferred tax assets
—

(14
)
(d)
(14
)
Net pension fund assets
—

(85
)
(d)
(85
)
Other
(2
)
(4
)
 
(6
)
Total Tier 1 capital
18,280

2,739

 
21,019

 
 
 
 
 
Tier 2 capital:
 
 
 
 
Trust preferred securities
—

162

(f)
162

Subordinated debt
397

—

 
397

Allowance for credit losses
288

—

 
288

Other
(1
)
—

 
(1
)
Total Tier 2 capital - Standardized Approach
684

162

 
846

Excess of expected credit losses
38

—

 
38

Less: Allowance for credit losses
288

—

 
288

Total Tier 2 capital - Advanced Approach
$
434

$
162

 
$
596

Total capital - Standardized Approach
$
18,964

$
2,901

 
$
21,865

Total capital - Advanced Approach
$
18,714

$
2,901

 
$
21,615

 
 
 
 
 
Risk-weighted assets - Standardized Approach
$
154,298

$
(25,516
)
 
$
128,782

Risk-weighted assets - Advanced Approach
$
167,933

$
2,192

 
$
170,125

 
 
 
 
 
Standardized Approach:
 
 
 
 
Estimated Basel III CET1 ratio
10.8
%
 
 
15.1
%
Tier 1 capital ratio
11.8

 
 
16.3

Total (Tier 1 plus Tier 2) capital ratio
12.3

 
 
17.0

 
 
 
 
 
Advanced Approach:
 
 
 
 
Estimated Basel III CET1 ratio
10.0
%
 
 
11.4
%
Tier 1 capital ratio
10.9

 
 
12.4

Total (Tier 1 plus Tier 2) capital ratio
11.1

 
 
12.7

(a)    Reflects transitional adjustments to CET1, Tier 1 capital and Tier 2 capital required in 2014 under the Final Capital Rules.
(b)    Represents the portion of accumulated other comprehensive (income) loss excluded from common equity.
(c)    Represents intangible assets, other than goodwill, net of the corresponding deferred tax liabilities.
(d)    Represents the deduction for net pension fund assets and disallowed deferred tax assets in CET1 and Tier 1 capital.
(e)    Represents transitional adjustments related to cash flow hedges.
(f)
During 2014, 50% of outstanding trust preferred securities are included in Tier 1 capital and 50% in Tier 2 capital.



REVIEW OF BUSINESSES

Business results are subject to reclassification when organizational changes are made or whenever improvements are made in the measurement principles. The reclassifications did not impact the consolidated results. All prior periods have been restated.


  Page - 14

BNY Mellon 3Q14 Earnings Release


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)
 
 
 
 
 
 
3Q14 vs.
3Q13

4Q13

1Q14

2Q14

3Q14

 
3Q13
2Q14
Revenue:
 
 
 
 
 
 
 
 
Investment management fees:
 
 
 
 
 
 
 
 
Mutual funds
$
293

$
303

$
299

$
311

$
315

 
8
 %
1
 %
Institutional clients
367

385

372

385

382

 
4

(1
)
Wealth management
145

149

153

156

158

 
9

1

Investment management fees
805

837

824

852

855

 
6

—

Performance fees
10

72

20

29

22

 
N/M

N/M

Investment management and performance fees
815

909

844

881

877

 
8

—

Distribution and servicing
41

41

40

41

41

 
—

—

Other (a)
26

43

16

48

16

 
N/M

N/M

Total fee and other revenue (a)
882

993

900

970

934

 
6

(4
)
Net interest revenue
67

68

70

66

69

 
3

5

Total revenue
949

1,061

970

1,036

1,003

 
6

(3
)
Noninterest expense (ex. amortization of intangible assets and the charge (recovery) related to investment management funds, net of incentives)
689

760

698

725

727

 
6

—

Income before taxes (ex. amortization of intangible assets and the charge (recovery) related to investment management funds, net of incentives)
260

301

272

311

276

 
6

(11
)
Amortization of intangible assets
35

35

31

31

31

 
(11
)
—

Charge (recovery) related to investment management funds, net of incentives
—

—

(5
)
109

—

 
N/M

N/M

Income before taxes
$
225

$
266

$
246

$
171

$
245

 
9
 %
43
 %
 
 
 
 
 
 
 
 
 
Pre-tax operating margin
24
%
25
%
25
%
16
%
24
%
 
 
 
Adjusted pre-tax operating margin (b)
33
%
34
%
34
%
36
%
33
%
 
 
 
 
 
 
 
 
 
 
 
 
Changes in AUM (in billions): (c)
 
 
 
 
 
 
 
 
Beginning balance of AUM
$
1,427

$
1,532

$
1,583

$
1,620

$
1,636

 
 
 
Net inflows (outflows):
 
 
 
 
 
 
 
 
Long-term:
 
 
 
 
 
 
 
 
Equity
3

(5
)
(1
)
(4
)
(2
)
 
 
 
Fixed income
(1
)
5

—

(1
)
—

 
 
 
Index
2

(3
)
—

7

(3
)
 
 
 
Liability-driven investments (d)
27

4

20

(17
)
18

 
 
 
Alternative investments
1

1

2

2

—

 
 
 
Total long-term inflows (outflows)
32

2

21

(13
)
13

 
 
 
Short term:
 
 
 
 
 
 
 
 
Cash
13

6

(7
)
(18
)
19

 
 
 
Total net inflows (outflows)
45

8

14

(31
)
32

 
 
 
Net market/currency impact
60

43

23

47

(22
)
 
 
 
Ending balance of AUM
$
1,532

$
1,583

$
1,620

$
1,636

$
1,646

(e)
7
 %
1
 %
 
 
 
 
 
 
 
 
 
AUM at period end, by product type: (c)
 
 
 
 
 
 
 
 
Equity
17
%
17
%
17
%
17
%
16
%
 

 
Fixed income
14

14

14

14

13

 

 
Index
20

20

20

21

21

 

 
Liability-driven investments (d)
26

26

27

27

28

 

 
Alternative investments
4

4

4

4

4

 

 
Cash
19

19

18

17

18

 

 
Total AUM
100
%
100
%
100
%
100
%
100
%
(e)

 
 
 
 
 
 
 
 
 
 
Wealth management:
 
 
 
 
 
 
 
 
Average loans
$
9,453

$
9,755

$
10,075

$
10,372

$
10,772

 
14
 %
4
 %
Average deposits
$
13,898

$
14,161

$
14,805

$
13,458

$
13,764

 
(1
)%
2
 %
(a)
Total fee and other revenue includes the impact of the consolidated investment management funds. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 24 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 the charge (recovery) related to investment management funds net of incentives, and is net of distribution and servicing expense. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 24 for the reconciliation of Non-GAAP measures.
(c)
Excludes securities lending cash management assets and assets managed in the Investment Services business.
(d)
Includes currency and overlay assets under management.
(e)
Preliminary.
N/M – Not meaningful.

  Page - 15

BNY Mellon 3Q14 Earnings Release


INVESTMENT MANAGEMENT KEY POINTS

•
Assets under management were a record $1.65 trillion at Sept. 30, 2014, an increase of 7% year-over-year and 1% sequentially. The year-over-year increase primarily resulted from higher equity market values and net new business. The sequential increase primarily reflects net new business.

•
Net long-term inflows were $13 billion in 3Q14 driven by liability-driven investments. Short-term inflows were $19 billion in 3Q14.

•
Income before taxes excluding amortization of intangible assets and the charge (recovery) related to investment management funds, net of incentives increased 6% year-over-year and decreased 11% sequentially.

•
Total revenue was $1.0 billion, an increase of 6% year-over-year and a decrease of 3% sequentially. Both comparisons were impacted by higher equity markets and lower seed capital gains. The year-over-year increase also reflects the impact of a weaker U.S. dollar and higher performance fees. The sequential decrease also reflects lower performance fees and the impact of a stronger U.S. dollar.

•
Investment management fees were $855 million, an increase of 6% year-over-year and a slight increase sequentially. Both increases primarily resulted from higher equity markets. The year-over-year increase also reflects the impact of a weaker U.S. dollar. The sequential increase was partially offset by the impact of a stronger U.S. dollar.

•
Performance fees were $22 million in 3Q14 compared with $10 million in 3Q13 and $29 million in 2Q14. The year-over-year increase primarily reflects strong performance of liability-driven investments. The sequential decrease was due to seasonality.

•
Net interest revenue increased 3% year-over-year and 5% sequentially. Both increases primarily reflect higher average loans. The year-over-year increase was partially offset by lower average deposits. The sequential increase also reflects higher average deposits.

•
Average loans increased 14% year-over-year and 4% sequentially; average deposits decreased 1% year-over-year and increased 2% sequentially.

•
Total noninterest expense (ex. amortization of intangible assets and the charge (recovery) related to investment management funds, net of incentives) increased 6% year-over-year and increased slightly sequentially. The year-over-year increase primarily reflects the impact of a weaker U.S. dollar and higher staff and business development expenses resulting from investments in strategic initiatives.

•
44% non-U.S. revenue in 3Q14 vs. 44% in 3Q13.

•
Insight Investment was named LDI Manager of the Year for the fifth consecutive year at Financial News Awards for Excellence in Institutional Asset Management and was named the Overall Defined Benefit Manager of the Year 2014 by Mallowstreet.



 

  Page - 16

BNY Mellon 3Q14 Earnings Release


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.

(dollar amounts in millions, unless otherwise noted)
 
 
 
 
 
 
3Q14 vs.
3Q13

4Q13

1Q14

2Q14

3Q14

 
3Q13

2Q14

Revenue:
 
 
 
 
 
 
 
 
Investment services fees:
 
 
 
 
 
 
 
 
Asset servicing
$
939

$
957

$
985

$
993

$
998

 
6
 %
1
 %
Clearing services
314

322

323

324

336

 
7

4

Issuer services
321

236

228

231

314

 
(2
)
36

Treasury services
135

137

134

140

139

 
3

(1
)
Total investment services fees
1,709

1,652

1,670

1,688

1,787

 
5

6

Foreign exchange and other trading revenue
177

150

158

145

159

 
(10
)
10

Other (a)
63

58

59

87

59

 
(6
)
(32
)
Total fee and other revenue (a)
1,949

1,860

1,887

1,920

2,005

 
3

4

Net interest revenue
619

610

590

593

583

 
(6
)
(2
)
Total revenue
2,568

2,470

2,477

2,513

2,588

 
1

3

Noninterest expense (ex. amortization of intangible assets)
1,765

1,822

1,778

1,824

1,835

 
4

1

Income before taxes (ex. amortization of intangible assets)
803

648

699

689

753

 
(6
)
9

Amortization of intangible assets
46

47

44

44

44

 
(4
)
—

Income before taxes
$
757

$
601

$
655

$
645

$
709

 
(6
)%
10
 %
 
 
 
 
 
 
 
 
 
Pre-tax operating margin
29
%
24
%
26
%
26
%
27
%
 
 
 
Pre-tax operating margin (ex. amortization of intangible assets)
31
%
26
%
28
%
27
%
29
%
 
 
 
 
 
 
 
 
 
 
 
 
Investment services fees as a percentage of noninterest expense (b)
97
%
90
%
93
%
93
%
100
%
 
 
 
 
 
 
 
 
 
 
 
 
Securities lending revenue
$
26

$
21

$
30

$
35

$
27

 
4
 %
(23
)%
 
 
 
 
 
 
 
 
 
Metrics:
 
 
 
 
 
 
 
 
Average loans
$
27,865

$
31,211

$
31,468

$
33,115

$
33,785

 
21
 %
2
 %
Average deposits
$
206,068

$
216,216

$
214,947

$
220,701

$
221,734

 
8
 %
—
 %
 
 
 
 
 
 
 
 
 
AUC/A at period end (in trillions) (c)
$
27.4

$
27.6

$
27.9

$
28.5

$
28.3

(d)
3
 %
(1
)%
Market value of securities on loan at period
end (in billions) (e)
$
255

$
235

$
264

$
280

$
282

 
11
 %
1
 %
 
 
 
 
 
 
 
 
 
Asset servicing:
 
 
 
 
 
 
 
 
Estimated new business wins (AUC/A) (in billions)
$
110

$
123

$
161

$
130

$
115

(d)
 
 
 
 
 
 
 
 
 
 
 
Depositary Receipts:
 
 
 
 
 
 
 
 
Number of sponsored programs
1,350

1,335

1,332

1,316

1,302

 
(4
)%
(1
)%
 
 
 
 
 
 
 
 
 
Clearing services:
 
 
 
 
 
 
 
 
Global DARTS volume (in thousands)
212

213

230

207

209

 
(1
)%
1
 %
Average active clearing accounts
(U.S. platform) (in thousands)
5,622

5,643

5,695

5,752

5,805

 
3
 %
1
 %
Average long-term mutual fund assets (U.S. platform)
$
377,131

$
401,434

$
413,658

$
433,047

$
442,827

 
17
 %
2
 %
Average investor margin loans (U.S. platform)
$
8,845

$
8,848

$
8,919

$
9,236

$
9,861

 
11
 %
7
 %
 
 
 
 
 
 
 
 
 
Broker-Dealer:
 
 
 
 
 
 
 
 
Average tri-party repo balances (in billions)
$
1,952

$
2,005

$
1,983

$
2,022

$
2,063

 
6
 %
2
 %
(a)
Total fee and other revenue includes investment management fees and distribution and servicing revenue.
(b)
Noninterest expense excludes amortization of intangible assets and litigation expense.
(c)
Includes the AUC/A of CIBC Mellon of $1.2 trillion at Sept. 30, 2013, Dec. 31, 2013, March 31, 2014, June 30, 2014 and 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, beginning in the fourth quarter of 2013, on behalf of CIBC Mellon clients, which totaled $62 billion at Dec. 31, 2013, $66 billion at March 31, 2014, $64 billion at June 30, 2014 and $65 billion at Sept. 30, 2014.
N/M – Not meaningful.

  Page - 17

BNY Mellon 3Q14 Earnings Release


INVESTMENT SERVICES KEY POINTS

•
Investment services fees totaled $1.8 billion, an increase of 5% year-over-year and 6% sequentially.

•
Asset servicing fees (global custody, broker-dealer services and global collateral services) were $998 million in 3Q14 compared with $939 million in 3Q13 and $993 million in 2Q14. The year-over-year increase primarily reflects organic growth, higher market values, net new business and higher collateral management fees in Global Collateral Services. The sequential increase primarily reflects organic growth, partially offset by seasonally lower securities lending revenue.

--    Estimated new business wins (AUC/A) in Asset Servicing of $115 billion in 3Q14.

•
Clearing services fees were $336 million in 3Q14 compared with $314 million in 3Q13 and $324 million in 2Q14. Both increases were driven by growth in clearing accounts and mutual fund positions, and higher asset levels. The sequential increase also reflects higher DARTS volume.

•
Issuer services fees (Corporate Trust and Depositary Receipts) were $314 million in 3Q14 compared with $321 million in 3Q13 and $231 million in 2Q14. The year-over-year decrease reflects lower Corporate Trust fees, partially offset by new business in Depositary Receipts. The sequential increase is primarily due to seasonally higher dividend fees and new business in Depositary Receipts, partially offset by lower Corporate Trust fees.

•
Treasury services fees were $139 million in 3Q14 compared with $135 million in 3Q13 and $140 million in 2Q14. The year-over-year increase primarily reflect higher payment volumes.

•
Foreign exchange and other trading revenue was $159 million in 3Q14 compared with $177 million in 3Q13 and $145 million in 2Q14. The year-over-year decrease primarily reflect lower volatility, partially offset by higher volumes. Sequentially, the increase reflects higher volumes.

•
Net interest revenue was $583 million in 3Q14 compared with $619 million in 3Q13 and $593 million in 2Q14. Both decreases primarily reflects lower yields, partially offset by higher average loans. The year-over-year decrease was partially offset by higher average deposits.

•
Noninterest expense (excluding amortization of intangible assets) was $1.835 billion in 3Q14 compared with $1.765 billion in 3Q13 and $1.824 billion in 2Q14. Both increases reflect higher litigation expense. The year-over-year increase also reflects higher professional and legal expenses, partially offset by lower staff expense. The sequential increase was partially offset by lower sub-custodian and staff expenses.

•
Investment services fees as a percentage of noninterest expense increased year-over-year reflecting an increase in investment services fees and limited expense growth.

•
39% non-U.S. revenue in 3Q14 vs. 36% in 3Q13.


  Page - 18

BNY Mellon 3Q14 Earnings Release


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)
3Q13

4Q13

1Q14

2Q14

3Q14

Revenue:
 
 
 
 
 
Fee and other revenue
$
172

$
(20
)
$
112

$
119

$
928

Net interest revenue
86

83

68

60

69

Total revenue
258

63

180

179

997

Provision for credit losses
2

6

(18
)
(12
)
(19
)
Noninterest expense (ex. M&I and restructuring charges)
230

200

193

93

274

Income (loss) before taxes (ex. M&I and restructuring charges)
26

(143
)
5

98

742

M&I and restructuring charges
14

13

—

120

57

Income (loss) before taxes
$
12

$
(156
)
$
5

$
(22
)
$
685

 
 
 
 
 
 
Average loans and leases
$
10,938

$
9,802

$
10,104

$
9,962

$
10,278



KEY POINTS

•
Total fee and other revenue increased $756 million compared with 3Q13 and increased $809 million compared with 2Q14. Both increases primarily reflect the gain on the sale of our investment in Wing Hang and the gain on the sale of the One Wall Street building, partially offset by lower equity investment and other income.

•
The provision for credit losses was a credit of $19 million in 3Q14 driven by the continued improvement in the
credit quality of the loan portfolio.

•
Noninterest expense (excluding M&I and restructuring charges) increased $44 million compared with 3Q13 and $181 million compared with 2Q14. Both increases primarily reflect higher litigation expense. The year-over-year increase was partially offset by lower staff expense. The sequential increase also reflects higher staff expenses.

•
M&I and restructuring charges recorded in 3Q14 primarily reflects severance expense.


  Page - 19

BNY Mellon 3Q14 Earnings Release


THE BANK OF NEW YORK MELLON CORPORATION
Condensed Consolidated Income Statement


(in millions)
Quarter ended
 
Year-to-date
Sept. 30, 2014

June 30, 2014

Sept. 30, 2013

 
Sept. 30, 2014

Sept. 30, 2013

 
Fee and other revenue
 
 
 
 
 
 
Investment services fees:
 
 
 
 
 
 
Asset servicing
$
1,025

$
1,022

$
964

 
$
3,056

$
2,921

Clearing services
337

326

315

 
988

940

Issuer services
315

231

322

 
775

853

Treasury services
142

141

137

 
419

417

Total investment services fees
1,819

1,720

1,738

 
5,238

5,131

Investment management and performance fees
881

883

821

 
2,607

2,491

Foreign exchange and other trading revenue
153

130

160

 
419

528

Distribution and servicing
44

43

43

 
130

137

Financing-related fees
44

44

44

 
126

129

Investment and other income (a)
890

142

151

 
1,134

524

Total fee revenue (a)
3,831

2,962

2,957

 
9,654

8,940

Net securities gains
20

18

22

 
60

102

Total fee and other revenue (a)
3,851

2,980

2,979

 
9,714

9,042

Operations of consolidated investment management funds
 
 
 
 
 
 
Investment income
123

141

134

 
402

439

Interest of investment management fund note holders
84

95

102

 
281

292

Income from consolidated investment management funds
39

46

32

 
121

147

Net interest revenue
 
 
 
 
 
 
Interest revenue
809

811

855

 
2,432

2,506

Interest expense
88

92

83

 
264

258

Net interest revenue
721

719

772

 
2,168

2,248

Provision for credit losses
(19
)
(12
)
2

 
(49
)
(41
)
Net interest revenue after provision for credit losses
740

731

770

 
2,217

2,289

Noninterest expense
 
 
 
 
 
 
Staff
1,477

1,439

1,516

 
4,427

4,497

Professional, legal and other purchased services
323

314

296

 
949

908

Software and equipment
234

236

226

 
707

692

Net occupancy
154

152

153

 
460

475

Distribution and servicing
107

112

108

 
326

325

Sub-custodian
67

81

71

 
216

212

Business development
61

68

63

 
193

221

Other
250

347

249

 
820

771

Amortization of intangible assets
75

75

81

 
225

260

Merger and integration, litigation and restructuring charges
220

122

16

 
330

68

Total noninterest expense
2,968

2,946

2,779

 
8,653

8,429

Income
 
 
 
 
 
 
Income before income taxes (a)
1,662

811

1,002

 
3,399

3,049

Provision for income taxes (a)
556

217

19

 
1,005

1,420

Net income (a)
1,106

594

983

 
2,394

1,629

Net (income) attributable to noncontrolling interests (includes $(23), $(17), $(8), $(60) and $(63) related to consolidated investment management funds, respectively)
(23
)
(17
)
(8
)
 
(60
)
(64
)
Net income applicable to shareholders of The Bank of New York Mellon Corporation (a)
1,083

577

975

 
2,334

1,565

Preferred stock dividends
(13
)
(23
)
(13
)
 
(49
)
(38
)
Net income applicable to common shareholders of The Bank of New York Mellon Corporation (a)
$
1,070

$
554

$
962

 
$
2,285

$
1,527

(a) Results for the first nine months of 2013 were restated to reflect the retrospective application of adopting new accounting guidance in the first quarter of 2014 related to our investments in qualified affordable housing projects (ASU 2014-01). See page 23 for additional information.




  Page - 20

BNY Mellon 3Q14 Earnings Release


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, 2014

June 30, 2014

Sept. 30, 2013

 
Sept. 30, 2014

Sept. 30, 2013

Net income applicable to common shareholders of The Bank of New York Mellon Corporation (a)
$
1,070

$
554

$
962

 
$
2,285

$
1,527

Less: Earnings allocated to participating securities (a)
20

10

18

 
43

27

      Change in the excess of redeemable value over the fair value of noncontrolling interests
N/A

N/A

—

 
N/A

1

   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 (a)
$
1,050

$
544

$
944

 
$
2,242

$
1,499

(a) Results for the first nine months of 2013 were restated to reflect the retrospective application of adopting new accounting guidance in the first quarter of 2014 related to our investments in qualified affordable housing projects (ASU 2014-01). See page 23 for additional information.
N/A – Not applicable.


Average common shares and equivalents outstanding of The Bank of New York Mellon Corporation
(in thousands)
Quarter ended
 
Year-to-date
Sept. 30, 2014

June 30, 2014

Sept. 30, 2013

 
Sept. 30, 2014

Sept. 30, 2013

Basic
1,126,946

1,133,556

1,148,724

 
1,133,006

1,153,327

Diluted
1,134,871

1,139,800

1,152,679

 
1,139,718

1,156,951



Earnings per share applicable to the common shareholders of The Bank of New York Mellon Corporation (a)
(in dollars)
Quarter ended
 
Year-to-date
Sept. 30, 2014

June 30, 2014

Sept. 30, 2013

 
Sept. 30, 2014

Sept. 30, 2013

Basic
$
0.93

$
0.48

$
0.82

 
$
1.98

$
1.30

Diluted
$
0.93

$
0.48

$
0.82

 
$
1.97

$
1.30

(a) Results for the first nine months of 2013 were restated to reflect the retrospective application of adopting new accounting guidance in the first quarter of 2014 related to our investments in qualified affordable housing projects (ASU 2014-01). See page 23 for additional information.
 


  Page - 21

BNY Mellon 3Q14 Earnings Release


THE BANK OF NEW YORK MELLON CORPORATION
Consolidated Balance Sheet

 
Sept. 30,

June 30,

Dec. 31,

(dollars in millions, except per share amounts)
2014

2014

2013

Assets
 
 
 
Cash and due from:
 
 
 
Banks
$
6,410

$
6,173

$
6,460

Interest-bearing deposits with the Federal Reserve and other central banks
92,317

105,657

104,359

Interest-bearing deposits with banks
30,341

41,459

35,300

Federal funds sold and securities purchased under resale agreements
17,375

15,062

9,161

Securities:
 
 
 
Held-to-maturity (fair value of $20,167, $19,211 and $19,443)
20,137

19,102

19,743

Available-for-sale
95,559

85,688

79,309

Total securities
115,696

104,790

99,052

Trading assets
11,613

10,856

12,098

Loans
57,527

59,248

51,657

Allowance for loan losses
(191
)
(187
)
(210
)
Net loans
57,336

59,061

51,447

Premises and equipment
1,351

1,590

1,655

Accrued interest receivable
565

624

621

Goodwill
17,992

18,196

18,073

Intangible assets
4,215

4,314

4,452

Other assets
21,523

22,530

20,566

Subtotal assets of operations
376,734

390,312

363,244

Assets of consolidated investment management funds, at fair value:
 
 
 
Trading assets
8,823

9,402

10,397

Other assets
739

1,026

875

Subtotal assets of consolidated investment management funds, at fair value
9,562

10,428

11,272

Total assets
$
386,296

$
400,740

$
374,516

Liabilities
 
 
 
Deposits:
 
 
 
Noninterest-bearing (principally U.S. offices)
$
101,105

$
109,570

$
95,475

Interest-bearing deposits in U.S. offices
56,740

52,954

56,640

Interest-bearing deposits in Non-U.S. offices
107,051

119,915

109,014

Total deposits
264,896

282,439

261,129

Federal funds purchased and securities sold under repurchase agreements
9,687

10,301

9,648

Trading liabilities
7,734

6,844

6,945

Payables to customers and broker-dealers
20,155

17,242

15,707

Commercial paper
—

27

96

Other borrowed funds
852

1,458

663

Accrued taxes and other expenses
6,482

6,433

6,996

Other liabilities (includes allowance for lending-related commitments of $97, $124 and $134)
7,169

7,066

4,827

Long-term debt
21,583

20,327

19,864

Subtotal liabilities of operations
338,558

352,137

325,875

Liabilities of consolidated investment management funds, at fair value:
 
 
 
Trading liabilities
8,130

9,123

10,085

Other liabilities
10

6

46

Subtotal liabilities of consolidated investment management funds, at fair value
8,140

9,129

10,131

Total liabilities
346,698

361,266

336,006

Temporary equity
 
 
 
Redeemable noncontrolling interests
246

239

230

Permanent equity
 
 
 
Preferred stock – par value $0.01 per share; authorized 100,000,000 shares; issued 15,826, 15,826 and 15,826 shares
1,562

1,562

1,562

Common stock – par value $0.01 per share; authorized 3,500,000,000 shares; issued 1,286,670,537, 1,281,585,137 and 1,268,036,220 shares
13

13

13

Additional paid-in capital
24,499

24,303

24,002

Retained earnings
17,670

16,796

15,952

Accumulated other comprehensive loss, net of tax
(916
)
(402
)
(892
)
Less: Treasury stock of 160,960,855, 149,988,907 and 125,786,430 common shares, at cost
(4,377
)
(3,946
)
(3,140
)
Total The Bank of New York Mellon Corporation shareholders’ equity
38,451

38,326

37,497

Nonredeemable noncontrolling interests of consolidated investment management funds
901

909

783

Total permanent equity
39,352

39,235

38,280

Total liabilities, temporary equity and permanent equity
$
386,296

$
400,740

$
374,516



  Page - 22

BNY Mellon 3Q14 Earnings Release


Impact of Adopting New Accounting Guidance

In the first quarter of 2014, BNY Mellon elected to early adopt the new accounting guidance included in Accounting Standards Update (“ASU”) 2014-01, “Accounting for Investments in Qualified Affordable Housing Projects - a Consensus of the FASB Emerging Issues Task Force.” This ASU allows companies that invest in qualified affordable housing projects to elect the proportional amortization method of accounting for these investments, if certain conditions are met. In the first quarter of 2014, we restated the prior period financial statements to reflect the impact of the retrospective application of the new accounting guidance.

The table below presents the impact of the new accounting guidance on our previously reported earnings per share applicable to the common shareholders.

Earnings per share applicable to the common shareholders of The Bank of New York Mellon Corporation
As previously reported
 
As revised
(in dollars)
3Q13

 
YTD13

 
3Q13

 
YTD13

Basic
$
0.83

 
$
1.31

 
$
0.82

 
$
1.30

Diluted
$
0.82

 
$
1.30

 
$
0.82

 
$
1.30



The table below presents the impact of this new accounting guidance on our previously reported income statements.

Income statement
As previously reported
 
Adjustments
 
As revised
(in millions)
3Q13

 
YTD13

 
3Q13

 
YTD13

 
3Q13

 
YTD13

Investment and other income
$
135

 
$
476

 
$
16

 
$
48

 
$
151

 
$
524

Total fee revenue
2,941

 
8,892

 
16

 
48

 
2,957

 
8,940

Total fee and other revenue
2,963

 
8,994

 
16

 
48

 
2,979

 
9,042

Income before income taxes
986

 
3,001

 
16

 
48

 
1,002

 
3,049

Provision (benefit) for income taxes
(2
)
 
1,365

 
21

 
55

 
19

 
1,420

Net income (loss)
988

 
1,636

 
(5
)
 
(7
)
 
983

 
1,629

Net income (loss) applicable to shareholders of The Bank of New York Mellon Corporation
980

 
1,572

 
(5
)
 
(7
)
 
975

 
1,565

Net income (loss) applicable to common shareholders of The Bank of New York Mellon Corporation
967

 
1,534

 
(5
)
 
(7
)
 
962

 
1,527



The table below presents the impact of this new accounting guidance on our previously reported consolidated ratios and other measures.

Consolidated ratios and other measures
As previously reported
 
As revised
(in dollars unless otherwise noted)
 
3Q13

 
 
3Q13

Return on common equity
 
11.2
%
 
 
11.1
%
Return on tangible common equity – Non-GAAP
 
28.4
%
 
 
28.3
%
Return on tangible common equity – Non-GAAP adjusted
 
21.5
%
 
 
21.3
%
BNY Mellon tangible common shareholders’ equity to tangible assets of operations – Non-GAAP
 
6.4
%
 
 
6.3
%
Book value per common share – GAAP
 
$
30.82

 
 
$
30.80

Tangible book value per common share – Non-GAAP
 
$
13.36

 
 
$
13.34




  Page - 23

BNY Mellon 3Q14 Earnings Release


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

BNY Mellon has included in this Earnings Release certain Non-GAAP financial measures based upon fully phased-in Basel III CET1, SLR, Basel I CET1 and tangible common shareholders’ equity. BNY Mellon believes that the Basel III CET1 ratio on a fully phased-in basis, the SLR on a fully phased-in basis, the ratio of Basel I CET1 to risk-weighted assets 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, utilized 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 BNY Mellon’s performance in reference to those assets that can generate income. BNY Mellon has provided a measure of tangible book value per share, which it believes additional useful information as to the level of such 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, a gain on the sale of the One Wall Street building, and a loss related to an equity investment; and expense measures which exclude M&I expenses, litigation charges, restructuring charges, amortization of intangible assets and the charge (recovery) related to investment management funds, net of incentives. Earnings per share, return on equity measures and operating margin measures, which exclude some or all of these items, are also presented. Earnings per share and return on equity measures also exclude the benefit related to the disallowance of certain foreign tax credits. 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 ongoing charges as a result of prior transactions or where we have incurred charges. M&I expenses primarily relate to the acquisitions of Global Investment Servicing on July 1, 2010 and BHF Asset Servicing GmbH on Aug. 2, 2010. M&I expenses generally continue for approximately three years after the transaction and can vary on a year-to-year basis depending on the stage of the integration. BNY Mellon believes that the exclusion of M&I expenses provides investors with a focus on BNY Mellon’s business as it would appear on a consolidated going-forward basis, after such M&I expenses have ceased. Future periods will not reflect such M&I expenses, and thus may be more easily compared to our current results if M&I expenses are excluded. 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 permits investors to view expenses on a basis consistent with how management views the business.

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

  Page - 24

BNY Mellon 3Q14 Earnings Release


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 net income and diluted earnings per common share.

Reconciliation of net income and diluted EPS – GAAP to Non-GAAP
3Q13
 
2Q14
 
3Q14
 
Net

Diluted

 
Net

Diluted

 
Net

Diluted

(in millions, except per common share amounts)
income

EPS

 
income

EPS

 
income

EPS

Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP
$
962

$
0.82

 
$
554

$
0.48

 
$
1,070

$
0.93

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

—

 
—

—

 
315

0.27

Gain on the sale of the One Wall Street building
—

—

 
—

—

 
204

0.18

Add: Litigation and restructuring charges
12

0.01

 
76

0.06

 
183

0.16

Charge related to investment management funds, net of incentives
—

—

 
85

0.07

 
—

—

Benefit related to the disallowance of certain foreign tax credits
(261
)
(0.22
)
 
—

—

 
—

—

Net income applicable to common shareholders of The Bank of New York Mellon Corporation – Non-GAAP
$
713

$
0.61

 
$
715

$
0.62

(a)
$
734

$
0.64

(a)
Does not foot due to rounding.


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)
3Q13

4Q13

1Q14

2Q14

3Q14

Income before income taxes – GAAP
$
1,002

$
728

$
926

$
811

$
1,662

Less: Net income attributable to noncontrolling interests of consolidated investment management funds
8

17

20

17

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
81

82

75

75

75

M&I, litigation and restructuring charges
16

2

(12
)
122

220

Charge (recovery) related to investment management funds, net of incentives
—

—

(5
)
109

—

Income before income taxes, as adjusted – Non-GAAP (b)
$
1,091

$
795

$
964

$
1,100

$
1,098

 
 
 
 
 
 
Fee and other revenue – GAAP
$
2,979

$
2,814

$
2,883

$
2,980

$
3,851

Income from consolidated investment management funds – GAAP
32

36

36

46

39

Net interest revenue – GAAP
772

761

728

719

721

Total revenue – GAAP
3,783

3,611

3,647

3,745

4,611

Less: Net income attributable to noncontrolling interests of consolidated investment management funds
8

17

20

17

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 (b)
$
3,775

$
3,594

$
3,627

$
3,728

$
3,752

 
 
 
 
 
 
Pre-tax operating margin (a)
26
%
20
%
25
%
22
%
36
%
Pre-tax operating margin – Non-GAAP (a)(b)
29
%
22
%
27
%
30
%
29
%
(a)
Income before taxes divided by total revenue.
(b)
Non-GAAP excludes M&I, litigation and restructuring charges, the gain on the sale of our investment in Wing Hang, the gain on the sale of the One Wall Street building, a charge (recovery) related to investment management funds, net of incentives and net income attributable to noncontrolling interests of consolidated investment management funds, if applicable.



  Page - 25

BNY Mellon 3Q14 Earnings Release


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)
3Q13

4Q13

1Q14

2Q14

3Q14

Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP
$
962

$
513

$
661

$
554

$
1,070

Add:  Amortization of intangible assets, net of tax
52

53

49

49

49

Net income applicable to common shareholders of The Bank of New York Mellon Corporation excluding amortization of intangible assets – Non-GAAP
1,014

566

710

603

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

Add: M&I, litigation and restructuring charges
12

1

(7
)
76

183

Charge (recovery) related to investment management funds, net of incentives
—

—

(4
)
85

—

Benefit related to the disallowance of certain foreign tax credits
(261
)
—

—

—

—

Net income applicable to common shareholders of The Bank of New York Mellon Corporation, as adjusted – Non-GAAP (b)
$
765

$
567

$
699

$
764

$
783

 
 
 
 
 
 
Average common shareholders’ equity
$
34,264

$
35,698

$
36,289

$
36,565

$
36,751

Less: Average goodwill
17,975

18,026

18,072

18,149

18,109

Average intangible assets
4,569

4,491

4,422

4,354

4,274

Add: Deferred tax liability – tax deductible goodwill (a)
1,262

1,302

1,306

1,338

1,317

Deferred tax liability – intangible assets (a)
1,242

1,222

1,259

1,247

1,230

Average tangible common shareholders’ equity – Non-GAAP
$
14,224

$
15,705

$
16,360

$
16,647

$
16,915

 
 
 
 
 
 
Return on common equity – GAAP (b)(c)
11.1
%
5.7
%
7.4
%
6.1
%
11.6
%
Return on common equity – Non-GAAP (b)(c)
8.9
%
6.3
%
7.8
%
8.4
%
8.5
%
 
 
 
 
 
 
Return on tangible common equity – Non-GAAP (b)(c)
28.3
%
14.3
%
17.6
%
14.5
%
26.2
%
Return on tangible common equity – Non-GAAP adjusted (b)(c)
21.3
%
14.3
%
17.3
%
18.4
%
18.4
%
(a)
Deferred tax liabilities are based on fully phased-in Basel III rules. The quarters of 2014 include deferred tax liabilities on tax deductible intangible assets permitted under Basel III rules.
(b)
Non-GAAP excludes M&I, litigation and restructuring charges, the gain on the sale of our investment in Wing Hang, the gain on the sale of the One Wall Street building, a charge (recovery) related to investment management funds, net of incentives and the benefit related to the disallowance of certain foreign tax credits, if applicable.
(c)
Annualized.



  Page - 26

BNY Mellon 3Q14 Earnings Release


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, 2013

June 30, 2014

Sept. 30, 2014

(dollars in millions, unless otherwise noted)
BNY Mellon shareholders’ equity at period end – GAAP
$
36,935

$
38,326

$
38,451

Less: Preferred stock
1,562

1,562

1,562

BNY Mellon common shareholders’ equity at period end – GAAP
35,373

36,764

36,889

Less: Goodwill
18,025

18,196

17,992

Intangible assets
4,527

4,314

4,215

Add: Deferred tax liability – tax deductible goodwill (a)
1,262

1,338

1,317

Deferred tax liability – intangible assets (a)
1,242

1,247

1,230

BNY Mellon tangible common shareholders’ equity at period end – Non-GAAP
$
15,325

$
16,839

$
17,229

 
 
 
 
Total assets at period end – GAAP
$
372,124

$
400,740

$
386,296

Less: Assets of consolidated investment management funds
11,691

10,428

9,562

Subtotal assets of operations – Non-GAAP
360,433

390,312

376,734

Less: Goodwill
18,025

18,196

17,992

Intangible assets
4,527

4,314

4,215

Cash on deposit with the Federal Reserve and other central banks (b)
96,316

104,916

90,978

Tangible total assets of operations at period end – Non-GAAP
$
241,565

$
262,886

$
263,549

 
 
 
 
BNY Mellon shareholders’ equity to total assets – GAAP
9.9
%
9.6
%
10.0
%
BNY Mellon common shareholders’ equity to total assets – GAAP
9.5
%
9.2
%
9.5
%
BNY Mellon tangible common shareholders’ equity to tangible assets of operations – Non-GAAP
6.3
%
6.4
%
6.5
%
 
 
 
 
Period-end common shares outstanding (in thousands)
1,148,522

1,131,596

1,125,710

 
 
 
 
Book value per common share – GAAP
$
30.80

$
32.49

$
32.77

Tangible book value per common share – Non-GAAP
$
13.34

$
14.88

$
15.30

(a)
Deferred tax liabilities are based on fully phased-in Basel III rules. The quarters of 2014 include deferred tax liabilities on tax deductible intangible assets permitted under 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)
3Q13

4Q13

1Q14

2Q14

3Q14

Income from consolidated investment management funds
$
32

$
36

$
36

$
46

$
39

Less: Net income attributable to noncontrolling interests of consolidated investment management funds
8

17

20

17

23

Income from consolidated investment management funds, net of noncontrolling interests
$
24

$
19

$
16

$
29

$
16



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

Income from consolidated investment management funds, net of noncontrolling interests
 
(in millions)
3Q13

4Q13

1Q14

2Q14

3Q14

Investment management fees
$
20

$
20

$
18

$
18

$
15

Other (Investment income)
4

(1
)
(2
)
11

1

Income from consolidated investment management funds, net of controlling interests
$
24

$
19

$
16

$
29

$
16




  Page - 27

BNY Mellon 3Q14 Earnings Release


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)
3Q13

4Q13

1Q14

2Q14

3Q14

Income before income taxes – GAAP
$
225

$
266

$
246

$
171

$
245

Add: Amortization of intangible assets
35

35

31

31

31

Money market fee waivers
30

33

35

28

29

Charge (recovery) related to investment management funds, net of incentives
—

—

(5
)
109

—

Income before income taxes excluding amortization of intangible assets, money market fee waivers and the charge (recovery) related to investment management funds, net of incentives – Non-GAAP
$
290

$
334

$
307

$
339

$
305

 
 
 
 
 
 
Total revenue – GAAP
$
949

$
1,061

$
970

$
1,036

$
1,003

Less: Distribution and servicing expense
107

108

106

111

105

Money market fee waivers benefiting distribution and servicing expense
38

38

38

37

38

Add: Money market fee waivers impacting total revenue
68

71

73

65

67

Total revenue net of distribution and servicing expense
and excluding money market fee waivers – Non-GAAP
$
872

$
986

$
899

$
953

$
927

 
 
 
 
 
 
Pre-tax operating margin (a)
24
%
25
%
25
%
16
%
24
%
Pre-tax operating margin excluding amortization of intangible assets, money market fee waivers, the charge (recovery) related to investment management funds, net of incentives and net of distribution and servicing expense – Non-GAAP (a)
33
%
34
%
34
%
36
%
33
%
(a)    Income before taxes divided by total revenue.


Capital Ratios

BNY Mellon has presented its estimated fully phased-in Basel III CET1 ratios and SLR based on its interpretation of the Final Capital Rules, which are being gradually phased-in over a multi-year period, as supplemented by the Federal Reserve’s final rules concerning the SLR published on Sept. 3, 2014, 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 ratio 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 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 ratios assume all relevant regulatory approvals. The Final Capital Rules require approval by banking regulators of certain models used as part of risk-weighted asset calculations. If these models are not approved, the estimated fully phased-in Basel III CET1 ratios would likely be adversely impacted.

Risk-weighted assets at Sept. 30, 2014 and June 30, 2014 under the transitional Advanced Approach do not reflect 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. BNY Mellon has requested written approval to use this methodology.

Our capital 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 risk-weighted asset 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 ratios remain subject to ongoing review and revision and may change based on these factors.

The following are the primary differences between risk-weighted assets determined under fully phased-in Basel III-Standardized Approach and Basel I. Credit risk is determined under Basel I using predetermined risk-weights and asset classes and relies in part on the use of external credit ratings. Under fully phased-in Basel III, the

  Page - 28

BNY Mellon 3Q14 Earnings Release


Standardized Approach uses a broader range of predetermined risk-weights and asset classes and certain alternatives to external credit ratings. Securitization exposure receives a higher risk-weighting under fully phased-in Basel III than Basel I, and fully phased-in Basel III includes additional adjustments for market risk, counterparty credit risk and equity exposures. Additionally, the Standardized Approach eliminates the use of the VaR approach, whereas the Advanced Approach permits the VaR approach but requires certain model qualifications and approvals, for determining risk-weighted assets on certain repo-style transactions. In 2014, Standardized Approach and Advanced Approach risk-weighted assets include transition adjustments for intangible assets, other than goodwill, and equity exposure.

The following table presents the reconciliation of our estimated fully phased-in Basel III CET1 ratio under the Standardized Approach and Advanced Approach.

Estimated fully phased-in Basel III CET1 ratio – Non-GAAP (a)
Sept. 30, 2013

June 30,
2014

Sept. 30, 2014

(dollars in millions)
Total Tier 1 capital
$
18,074

$
20,669

$
21,019

Adjustments to determine estimated fully phased-in Basel III CET1:
 
 
 
Deferred tax liability – tax deductible intangible assets
82

—

—

Intangible deduction
—

(2,453
)
(2,388
)
Preferred stock
(1,562
)
(1,562
)
(1,562
)
Trust preferred securities
(324
)
(171
)
(162
)
Other comprehensive income (loss) and net pension fund assets:
 
 
 
Securities available-for-sale
487

586

578

Pension liabilities
(1,348
)
(691
)
(675
)
Net pension fund assets
(279
)
—

—

Total other comprehensive income (loss) and net pension fund assets
(1,140
)
(105
)
(97
)
Equity method investments
(479
)
(99
)
(92
)
Deferred tax assets
(26
)
—

—

Other
18

(2
)
2

Total estimated fully phased-in Basel III CET1
$
14,643

$
16,277

$
16,720

 
 
 
 
Under the Standardized Approach:
 
 
 
Estimated fully phased-in Basel III risk-weighted assets
$
145,589

$
158,168

$
154,298

 
 
 
 
Estimated fully phased-in Basel III CET1 ratio – Non-GAAP (b)
10.1
%
10.3
%
10.8
%
 
 
 
 
Under the Advanced Approach:
 
 
 
Estimated fully phased-in Basel III risk-weighted assets
$
131,583

$
162,072

$
167,933

 
 
 
 
Estimated fully phased-in Basel III CET1 ratio – Non-GAAP (b)
11.1
%
10.0
%
10.0
%
(a)
Sept. 30, 2014 information is preliminary.
(b)
Beginning with June 30, 2014, risk-based capital ratios include the net impact of including the total consolidated assets of certain consolidated investment management funds in risk-weighted assets. These assets were not included in prior periods. 


The following table presents the reconciliation of our Basel I CET1 ratio.

Basel I CET1 ratio
(dollars in millions)
Sept. 30, 2013

Total Tier 1 capital – Basel I
$
18,074

Less: Trust preferred securities
324

Preferred stock
1,562

Total CET1 – Basel I
$
16,188

 
 
Total risk-weighted assets – Basel I
$
114,404

 
 
Basel I CET1 ratio – Non-GAAP
14.2
%



  Page - 29

BNY Mellon 3Q14 Earnings Release


The following table presents the components of our fully phased-in estimated SLR.

Estimated SLR – Non-GAAP (a)
(dollars in millions)
June 30,
2014

Sept. 30, 2014

Total CET1 - fully phased-in
$
16,277

$
16,720

Additional Tier 1 capital
1,562

1,560

Total Tier 1 capital
$
17,839

$
18,280

 
 
 
Total leverage exposure:
 
 
Quarterly average total assets
$
369,212

$
380,409

Less: Amounts deducted from Tier 1 capital
20,480

20,166

Total on-balance sheet assets, as adjusted
348,732

360,243

Off-balance sheet exposures:
 
 
Potential future exposure for derivatives contracts (plus certain other items)
11,115

11,694

Repo-style transaction exposures included in SLR
—

—

Credit-equivalent amount of other off-balance sheet exposures (less SLR exclusions)
22,658

21,924

Total off-balance sheet exposures
33,773

33,618

Total leverage exposure
$
382,505

$
393,861

 
 
 
Estimated SLR
4.7
%
4.6
%
(a)
The estimated fully phased-in SLR as of June 30, 2014 is based on our interpretation of the Final Capital Rules, as supplemented by the Notice of Proposed Rulemaking released in April 2014 concerning the SLR, except that off-balance sheet exposures included in total leverage exposure reflect the end of period measures, rather than a daily average. The estimated fully phased-in SLR as of Sept. 30, 2014 is based on our interpretation of the Final Capital Rules, as supplemented by the Federal Reserve’s final rules on the SLR. On a fully phased-in basis, we expect to satisfy a minimum SLR of over 5%, 3% attributable to a regulatory minimum SLR, and greater than 2% attributable to a buffer applicable to U.S. G-SIBs.

DIVIDENDS

Common – On Oct. 17, 2014, 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. 7, 2014 to shareholders of record as of the close of business on Oct. 28, 2014.

Preferred – On Oct. 17, 2014, 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 2014, in each case, payable on Dec. 22, 2014 to holders of record as of the close of business on Dec. 5, 2014:
•
$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 1/100th interest in a share of 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); and
•
$2,250.00 per share on the Series D Preferred Stock (equivalent to approximately $22.50 per depositary share, each representing a 1/100th interest in a share of the Series D 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, 2014, BNY Mellon had $28.3 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, or follow us on Twitter @BNYMellon.



  Page - 30

BNY Mellon 3Q14 Earnings Release


SUPPLEMENTAL FINANCIAL INFORMATION

The Quarterly Financial Trends for The Bank of New York Mellon Corporation has been updated through Sept. 30, 2014 and are available at www.bnymellon.com (Investor Relations - Financial Reports).


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 made regarding our margins and return on capital and our plans relating to the securities portfolio and impact on net interest revenue. These statements may be expressed in a variety of ways, including the use of future or present tense language. 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, 2013 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. 17, 2014, 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.


  Page - 31

Ex99.2_Quarterly Trends3Q14
THE BANK OF NEW YORK MELLON CORPORATION
Quarterly Financial Trends
October 17, 2014

Notes:
The following transactions/changes have impacted the reporting of our results:
 
In the first quarter of 2014, prior periods were restated to reflect the retrospective application of adopting new accounting guidance related to our investments in qualified affordable housing projects (ASU 2014-01).
 
In the first quarter of 2014, results of Newton's private client business were reclassified from the Investment Management business to the Other segment. Newton's private client business was sold in September 2013.
 
Restructuring charges in the second quarter of 2014 represent corporate initiatives and were recorded in the Other segment. In the fourth quarter of 2013, restructuring charges were recorded in the businesses. Prior to the fourth quarter of 2013, all restructuring charges were reported in the Other segment.
 
In the first quarter of 2013, incentive expense related to restricted stock and certain corporate overhead charges were allocated to Investment Management and Investment Services businesses which were previously included in the Other segment. All prior periods were restated to reflect these changes.
 
In the first quarter of 2012, we reclassified the results of the Shareowner Services business from the Investment Services business to the Other segment. The reclassification did not impact the consolidated results. All prior periods have been restated.
 
The following items have impacted the comparability of our results:
The third quarter of 2014 includes gains related to the sales of the investment in Wing Hang and One Wall Street building.
The third quarter of 2014 includes charges related to litigation and restructuring.
The second quarter of 2014 includes charges related to investment management funds and severance.
The fourth quarter of 2013 includes a loss related to an equity investment.
The third quarter of 2013 includes a benefit related to the U.S. Tax Court's partial reconsideration of a tax decision disallowing certain foreign tax credits.
The second quarter of 2013 includes a gain related to an equity investment.
The first quarter of 2013 includes a tax charge related to the disallowance of certain foreign tax credits.
The second quarter of 2012 includes a charge related to the settlement of the Sigma class action lawsuit.
 
All of these items are detailed in the trends that follow.
 
Certain immaterial reclassifications/revisions have been made to prior periods to place them on a basis comparable with the current period's presentation.
 
Average Assets:
In businesses where average deposits are greater than average loans, average assets include an allocation of investment securities equal to the difference.
 
Return on Common and Tangible Common Equity:
Quarterly return on common and tangible common equity ratios are annualized.
 
Non-GAAP Measures:
Certain Non-GAAP measures are included in the following schedules. These measures are used by management to monitor financial performance, both on a company-wide and on a business basis. These Non-GAAP measures impact certain revenue/expense categories, percentages and ratios by the exclusion and/or adjustment of items listed above and described in footnotes. For further information, see 'Supplemental information -- Explanation of GAAP and Non-GAAP Financial Measures' in The Bank of New York Mellon Corporation's Quarterly Earnings Release dated October 17, 2014, for the third quarter of 2014, furnished as an exhibit to the Current Report on Form 8-K to which these Quarterly Financial Trends are furnished as an exhibit (the "Form 8-K"). Summations may not equal due to rounding. As a result of our rounding convention and reclassifications noted above, differences may exist between the business trends data versus business data in the Form 10-K for the year ended December 31, 2013 or other reports filed with the SEC.




THE BANK OF NEW YORK MELLON CORPORATION
11 Quarter Trend
 
2012
 
2013
 
2014
(dollar amounts in millions unless otherwise noted)
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment services fees
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset servicing
$
943

 
$
950

 
$
942

 
$
945

 
$
969

 
$
988

 
$
964

 
$
984

 
$
1,009

 
$
1,022

 
$
1,025

 
Issuer services
251

 
275

 
311

 
215

 
237

 
294

 
322

 
237

 
229

 
231

 
315

 
Clearing services
303

 
309

 
287

 
294

 
304

 
321

 
315

 
324

 
325

 
326

 
337

 
Treasury services
136

 
134

 
138

 
141

 
141

 
139

 
137

 
137

 
136

 
141

 
142

 
Total investment services fees
1,633

 
1,668

 
1,678

 
1,595

 
1,651

 
1,742

 
1,738

 
1,682

 
1,699

 
1,720

 
1,819

 
Investment management and performance fees
745

 
797

 
779

 
853

 
822

 
848

 
821

 
904

 
843

 
883

 
881

 
Foreign exchange & other trading revenue
191

 
180

 
182

 
139

 
161

 
207

 
160

 
146

 
136

 
130

 
153

 
Distribution and servicing
46

 
46

 
48

 
52

 
49

 
45

 
43

 
43

 
43

 
43

 
44

 
Financing-related fees
44

 
37

 
46

 
45

 
41

 
44

 
44

 
43

 
38

 
44

 
44

 
Investment and other income (a)
152

 
61

 
137

 
132

 
88

 
285

 
151

 
(43
)
 
102

 
142

 
890

 
Total fee revenue (a)
2,811

 
2,789

 
2,870

 
2,816

 
2,812

 
3,171

 
2,957

 
2,775

 
2,861

 
2,962

 
3,831

 
Net securities gains (losses)
40

 
50

 
22

 
50

 
48

 
32

 
22

 
39

 
22

 
18

 
20

 
Total fee and other revenue (a)
2,851

 
2,839

 
2,892

 
2,866

 
2,860

 
3,203

 
2,979

 
2,814

 
2,883

 
2,980

 
3,851

 
Income (loss) of consolidated investment management funds
43

 
57

 
47

 
42

 
50

 
65

 
32

 
36

 
36

 
46

 
39

 
Net interest revenue
765

 
734

 
749

 
725

 
719

 
757

 
772

 
761

 
728

 
719

 
721

 
Total revenue (a)
3,659

 
3,630

 
3,688

 
3,633

 
3,629

 
4,025

 
3,783

 
3,611

 
3,647

 
3,745

 
4,611

 
Provision for credit losses
5

 
(19
)
 
(5
)
 
(61
)
 
(24
)
 
(19
)
 
2

 
6

 
(18
)
 
(12
)
 
(19
)
 
Noninterest expenses
2,551

 
2,572

 
2,584

 
2,683

 
2,703

 
2,716

 
2,682

 
2,793

 
2,676

 
2,749

 
2,673

 
Amortization of intangible assets
96

 
97

 
95

 
96

 
86

 
93

 
81

 
82

 
75

 
75

 
75

 
Merger & integration, litigation and restructuring charges
109

 
378

 
26

 
46

 
39

 
13

 
16

 
2

 
(12
)
 
122

 
220

 
Total noninterest expense
2,756

 
3,047

 
2,705

 
2,825

 
2,828

 
2,822

 
2,779

 
2,877

 
2,739

 
2,946

 
2,968

 
Income (loss) from continuing operations before taxes (a)
898

 
602

 
988

 
869

 
825

 
1,222

 
1,002

 
728

 
926

 
811

 
1,662

 
 Provision for income taxes
269

 
106

 
239

 
228

 
1,062

 
339

 
19

 
172

 
232

 
217

 
556

 
Net income (loss) from continuing operations (a)
629

 
496

 
749

 
641

 
(237
)
 
883

 
983

 
556

 
694

 
594

 
1,106

 
Net income (loss) attributable to noncontrolling interest
(12
)
 
(30
)
 
(25
)
 
(11
)
 
(16
)
 
(40
)
 
(8
)
 
(17
)
 
(20
)
 
(17
)
 
(23
)
 
Preferred stock dividends
—

 
—

 
(5
)
 
(13
)
 
(13
)
 
(12
)
 
(13
)
 
(26
)
 
(13
)
 
(23
)
 
(13
)
 
Net income (loss) applicable to common shareholders of The Bank of New York Mellon Corporation (a)
617

 
466

 
719

 
617

 
(266
)
 
831

 
962

 
513

 
661

 
554

 
$
1,070

 
Earnings Per Share (a)(b)
$
0.51

 
$
0.39

 
$
0.61

 
$
0.52

 
$
(0.23
)
 
$
0.71

 
$
0.82

 
$
0.44

 
$
0.57

 
$
0.48

 
$
0.93

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets under management at period-end (in billions) (c)
$
1,302

 
$
1,293

 
$
1,353

 
$
1,380

 
$
1,423

 
$
1,427

 
$
1,532

 
$
1,583

 
$
1,620

 
$
1,636

 
$
1,646

(d)
Assets under custody and/or administration at period-end (in trillions) (e)
$
25.7

 
$
25.2

 
$
26.4

 
$
26.3

 
$
26.3

 
$
26.2

 
$
27.4

 
$
27.6

 
$
27.9

 
$
28.5

 
$
28.3

(d)
Market value of securities on loan at period-end (in billions) (f)
$
256

 
$
267

 
$
251

 
$
237

 
$
244

 
$
255

 
$
255

 
$
235

 
$
264

 
$
280

 
$
282

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax operating margin - GAAP
24
%
 
16
%
 
27
%
 
24
%
 
23
%
 
30
%
 
26
%
 
20
%
 
25
%
 
22
%
 
36
%
 
Non-GAAP (g)
30
%
 
29
%
 
30
%
 
28
%
 
26
%
 
32
%
 
29
%
 
22
%
 
27
%
 
30
%
 
29
%
 
Return on common equity (annualized) - GAAP
7.4
%
 
5.5
%
 
8.3
%
 
7.1
%
 
N/M

 
9.7
%
 
11.1
%
 
5.7
%
 
7.4
%
 
6.1
%
 
11.6
%
 
Return on tangible common equity (annualized) - Non-GAAP
21.0
%
 
15.7
%
 
22.1
%
 
18.8
%
 
N/M

 
25.0
%
 
28.3
%
 
14.3
%
 
17.6
%
 
14.5
%
 
26.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 

 

 

 

 

 

 

 

 

 

 
Percent of non-US fee and net interest revenue - (h)
37
%
 
37
%
 
37
%
 
36
%
 
35
%
 
36
%
 
38
%
 
39
%
 
37
%
 
38
%
 
43
%
 
(a)
In the 1st quarter 2014, prior periods were restated to reflect the retrospective application of adopting new accounting guidance related to our investments in qualified affordable housing projects (ASU 2014-01). See page 23 of the Quarterly Earnings Release dated October 17, 2014 attached as an exhibit to the Form 8-K.
(b)
The 2nd quarter 2012 includes $0.18 of litigation expense. The 1st quarter 2013 includes a $0.73 charge related to the disallowance of certain foreign tax credits. The 2nd quarter 2013 includes a $0.09 gain related to an equity investment. The 3rd quarter 2013 includes a $0.22 benefit related to the U.S. Tax Court's partial reconsideration of a tax decision disallowing certain foreign tax credits. The 4th quarter 2013 includes a $0.10 loss related to an equity investment. The 2nd quarter 2014 includes a $0.14 charge related to severance and certain investment management funds. The 3rd quarter 2014 includes a $0.27 gain related to the sale of an investment in Wing Hang, $0.18 related to a gain on the sale of One Wall Street building and a $0.16 charge related to litigation and restructuring.
(c)
Excludes securities lending cash management assets and assets managed in the Investment Services business. Also excludes assets under management related to Newton’s private client business that was sold in September 2013.
(d)
Preliminary.
(e)
Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.2 trillion at March 31, 2012, June 30, 2012 and Sept. 30, 2012, $1.1 trillion at Dec. 31, 2012, $1.2 trillion at March 31, 2013, $1.1 trillion at June 30, 2013, and $1.2 trillion at Sept. 30, 2013, Dec. 31, 2013, March 31, 2014, June 30, 2014 and Sept. 30, 2014.
(f)
Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent, beginning in the fourth quarter of 2013, on behalf of CIBC Mellon clients, which totaled $62 billion at Dec. 31, 2013, $66 billion at March 31, 2014, $64 billion at June 30, 2014 and $65 billion at Sept. 30, 2014.
(g) Non-GAAP excludes M&I, litigation and restructuring charges, a gain on the sale of our investment in Wing Hang, the gain on the sale of the One Wall Street building, a charge (recovery) related to investment management funds, net of incentives and the benefit related to the disallowance of certain foreign tax credits, if applicable. See "Supplemental information - Explanation of GAAP and Non GAAP financial measures" beginning on page 24 of the Quarterly Earnings Release.
(h)
Includes fee revenue, net interest revenue and income from consolidated investment management funds, net of net income attributable to noncontrolling interests.
Note: See pages 3 through 6 for additional details of revenue/expense items impacting consolidated results.
N/M - Not meaningful.




THE BANK OF NEW YORK MELLON CORPORATION
FEE AND OTHER REVENUE - 11 Quarter Trend
 
2012
 
2013
 
2014
 
(dollar amounts in millions unless otherwise noted)
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
Investment services fees:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset servicing
$
894

 
$
891

 
$
893

 
$
904

 
$
930

 
$
938

 
$
929

 
$
953

 
$
971

 
$
976

 
$
988

 
Securities lending
49

 
59

 
49

 
41

 
39

 
50

 
35

 
31

 
38

 
46

 
37

 
Issuer services
251

 
275

 
311

 
215

 
237

 
294

 
322

 
237

 
229

 
231

 
315

 
Clearing services
303

 
309

 
287

 
294

 
304

 
321

 
315

 
324

 
325

 
326

 
337

 
Treasury services
136

 
134

 
138

 
141

 
141

 
139

 
137

 
137

 
136

 
141

 
142

 
Total investment services fees
1,633

 
1,668

 
1,678

 
1,595

 
1,651

 
1,742

 
1,738

 
1,682

 
1,699

 
1,720

 
1,819

 
Investment management and performance fees
745

 
797

 
779

 
853

 
822

 
848

 
821

 
904

 
843

 
883

 
881

 
Foreign exchange and other trading revenue
191

 
180

 
182

 
139

 
161

 
207

 
160

 
146

 
136

 
130

 
153

 
Distribution and servicing
46

 
46

 
48

 
52

 
49

 
45

 
43

 
43

 
43

 
43

 
44

 
Financing-related fees
44

 
37

 
46

 
45

 
41

 
44

 
44

 
43

 
38

 
44

 
44

 
Investment and other income
152

 
61

 
137

 
132

 
88

 
285

 
151

 
(43
)
 
102

 
142

 
890

 
Total fee revenue
$
2,811

 
$
2,789

 
$
2,870

 
$
2,816

 
$
2,812

 
$
3,171

 
$
2,957

 
$
2,775

 
$
2,861

 
$
2,962

 
$
3,831

 
Net securities gains (losses)
40

 
50

 
22

 
50

 
48

 
32

 
22

 
39

 
22

 
18

 
20

 
Total fee and other revenue - Non-GAAP
$
2,851

 
$
2,839

 
$
2,892

 
$
2,866

 
$
2,860

 
$
3,203

 
$
2,979

 
$
2,814

 
$
2,883

 
$
2,980

 
$
3,851

 
Fee and other revenue as a percentage of total revenue - excluding net securities gains
78
%
 
78
%
 
78
%
 
78
%
 
79
%
 
79
%
 
79
%
 
78
%
 
79
%
 
79
%
 
83
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets under management at period-end (in billions) (a)
$
1,302

 
$
1,293

 
$
1,353

 
$
1,380

 
$
1,423

 
$
1,427

 
$
1,532

 
$
1,583

 
$
1,620

 
$
1,636

 
$
1,646

(b)
Assets under custody and/or administration at period-end (in trillions) (c)
$
25.7

 
$
25.2

 
$
26.4

 
$
26.3

 
$
26.3

 
$
26.2

 
$
27.4

 
$
27.6

 
$
27.9

 
$
28.5

 
$
28.3

(b)
Market value of securities on loan at period-end (in billions) (d)
$
256

 
$
267

 
$
251

 
$
237

 
$
244

 
$
255

 
$
255

 
$
235

 
$
264

 
$
280

 
$
282

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
S&P 500 Index - period-end
1408
 
1362
 
1441
 
1426
 
1569
 
1606
 
1682
 
1848
 
1872
 
1960
 
1972
 
S&P 500 Index - daily average
1349
 
1350
 
1401
 
1418
 
1514
 
1609
 
1675
 
1769
 
1835
 
1900
 
1976
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)    Excludes securities lending cash management assets and assets managed in the Investment Services business. Also excludes assets under management related to Newton's private client business that was sold in September 2013.
(b)    Preliminary.
(c)    Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.2 trillion at March 31, 2012, June 30, 2012 and Sept. 30, 2012, $1.1 trillion at Dec. 31, 2012, $1.2 trillion at March 31, 2013, $1.1 trillion at June 30, 2013 and $1.2 trillion at Sept. 30, 2013, Dec. 31, 2013, March 31, 2014, June 30, 2014 and Sept. 30, 2014.
(d)    Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent, beginning in the fourth quarter of 2013, on behalf of CIBC Mellon clients, which totaled $62 billion at Dec. 31, 2013, $66 billion at March 31, 2014, $64 billion at June 30, 2014 and $65 billion at Sept. 30, 2014.




THE BANK OF NEW YORK MELLON CORPORATION
Average Balances and Interest Rates

 
2012
 
2013
(dollar amounts in millions)
March 31
 
June 30
 
September 30
 
December 31
 
March 31
 
June 30
 
Average
balance
Average
rates
 
Average
balance
Average
rates
 
Average
balance
Average
rates
 
Average
balance
Average
rates
 
Average
balance
Average
rates
 
Average
balance
Average
rates
Assets
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits with banks (primarily foreign)
$
35,095

1.30
 %
 
$
38,474

0.98
%
 
$
41,201

0.96
 %
 
$
41,018

0.80
%
 
$
40,967

0.70
 %
 
$
42,772

0.64
 %
Interest-bearing deposits with Federal Reserve & other central banks
63,526

0.27

 
57,904

0.27

 
61,849

0.21

 
71,794

0.21

 
63,240

0.20

 
55,911

0.22

Federal funds sold and securities purchased under resale agreements
5,174

0.73

 
5,493

0.62

 
5,315

0.64

 
5,984

0.56

 
7,478

0.54

 
7,878

0.52

Margin loans
12,901

1.29

 
13,331

1.27

 
13,033

1.30

 
13,085

1.26

 
13,346

1.17

 
13,906

1.14

Non-margin loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Domestic offices
20,128

2.46

 
19,663

2.52

 
18,821

2.62

 
20,560

2.42

 
21,358

2.38

 
21,689

2.40

Foreign offices
10,180

1.77

 
9,998

1.86

 
10,574

1.61

 
9,968

1.64

 
11,575

1.36

 
12,318

1.32

Total non-margin loans
30,308

2.23

 
29,661

2.30

 
29,395

2.26

 
30,528

2.16

 
32,933

2.02

 
34,007

2.01

Securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government obligations
17,268

1.56

 
15,387

1.65

 
18,917

1.39

 
19,915

1.39

 
18,814

1.54

 
19,887

1.62

U.S. government agency obligations
32,347

2.44

 
39,070

2.23

 
41,430

1.94

 
41,361

1.94

 
42,397

1.85

 
47,631

1.80

Obligations of states and political subdivisions
3,354

2.97

 
4,777

2.65

 
5,933

2.57

 
6,154

2.52

 
6,194

2.38

 
6,377

2.26

Other securities
33,839

2.84

 
32,625

2.51

 
33,724

2.51

 
35,082

2.04

 
34,507

2.03

 
33,243

1.93

Trading securities
2,519

2.78

 
3,033

2.57

 
4,431

2.40

 
5,294

2.54

 
5,878

2.40

 
6,869

2.33

Total securities
89,327

2.45

 
94,892

2.25

 
104,435

2.06

 
107,806

1.90

 
107,790

1.91

 
114,007

1.86

Total interest-earning assets
236,331

1.56

 
239,755

1.48

 
255,228

1.40

 
270,215

1.27

 
265,754

1.26

 
268,481

1.27

Allowance for loan losses
(392
)
 
 
(382
)
 
 
(361
)
 
 
(337
)
 
 
(264
)
 
 
(237
)
 
Cash and due from banks
4,271

 
 
4,412

 
 
4,277

 
 
4,284

 
 
4,534

 
 
5,060

 
Other assets
49,690

 
 
49,933

 
 
48,775

 
 
50,439

 
 
52,137

 
 
52,627

 
Total Asset Consol VIE FAS 167
11,444

 
 
11,284

 
 
10,995

 
 
11,394

 
 
11,503

 
 
11,524

 
Total Assets
$
301,344

 
 
$
305,002

 
 
$
318,914

 
 
$
335,995

 
 
$
333,664

 
 
$
337,455

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and total equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market rate accounts and demand deposit accounts
$
4,446

0.28
 %
 
$
8,421

0.24
%
 
$
9,724

0.16
 %
 
$
8,570

0.18
%
 
$
8,778

0.19
 %
 
$
8,183

0.22
 %
Savings
704

0.10

 
702

0.13

 
730

0.17

 
815

0.29

 
819

0.29

 
897

0.24

Other time deposits
33,618

0.08

 
33,180

0.11

 
34,193

0.07

 
38,085

0.06

 
39,091

0.05

 
41,706

0.04

Foreign offices
86,670

0.15

 
88,179

0.13

 
93,613

0.10

 
95,249

0.09

 
99,040

0.08

 
100,433

0.07

Total interest-bearing deposits
125,438

0.14

 
130,482

0.13

 
138,260

0.10

 
142,719

0.09

 
147,728

0.08

 
151,219

0.07

Federal funds purchased and securities sold under repurchase agreements
8,584

(0.02
)
 
11,254

0.01

 
10,092

(0.06
)
 
10,158

0.07

 
9,187

(0.12
)
 
9,206

(0.28
)
Trading Liabilities
1,153

1.55

 
1,256

1.87

 
1,397

1.87

 
1,943

1.41

 
2,552

1.35

 
3,036

1.40

Other borrowed funds
2,579

0.79

 
2,550

0.99

 
1,855

0.72

 
1,869

1.29

 
1,397

0.76

 
1,443

0.19

Payables to customers and broker-dealers
7,555

0.11

 
7,895

0.10

 
8,141

0.10

 
8,532

0.09

 
9,019

0.09

 
9,073

0.08

Long-term debt
20,538

1.79

 
20,084

1.67

 
19,535

1.66

 
19,259

1.46

 
18,878

1.18

 
19,002

0.94

Total interest-bearing liabilities
165,847

0.34

 
173,521

0.32

 
179,280

0.28

 
184,480

0.25

 
188,761

0.20

 
192,979

0.16

Total noninterest-bearing deposits
66,613

 
 
62,860

 
 
70,230

 
 
79,987

 
 
70,337

 
 
70,648

 
Other liabilities
24,248

 
 
23,588

 
 
23,712

 
 
24,458

 
 
27,416

 
 
26,779

 
VIE Liabilities & Obligations FAS 167
10,159

 
 
10,072

 
 
9,686

 
 
10,114

 
 
10,186

 
 
10,242

 
Total Shareholders' Equity
33,718

 
 
34,123

 
 
34,522

 
 
36,028

 
 
35,966

 
 
35,817

 
Noncontrolling interest
759

 
 
838

 
 
1,484

 
 
928

 
 
998

 
 
990

 
Total liabilities and shareholders' equity
$
301,344

 
 
$
305,002

 
 
$
318,914

 
 
$
335,995

 
 
$
333,664

 
 
$
337,455

 
Net interest margin - Taxable equivalent basis
 
1.32
 %
 
 
1.25
%
 
 
1.20
 %
 
 
1.09
%
 
 
1.11
 %
 
 
1.15
 %
Note: Interest and average rates were calculated on a taxable equivalent basis, at tax rates of approximately 35%, using dollar amounts in thousands and the actual number of days in the year.




THE BANK OF NEW YORK MELLON CORPORATION
Average Balances and Interest Rates (continued)

.
 
2013
 
2014
(dollar amounts in millions)
September 30
 
December 31
 
March 31
 
June 30
 
September 30
 
Average
balance
Average
rates
 
Average
balance
Average
rates
 
Average
balance
Average
rates
 
Average
balance
Average
rates
 
Average
balance
Average
rates
Assets
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits with banks (primarily foreign)
$
41,597

0.66
 %
 
$
39,563

0.71
 %
 
$
41,617

0.71
 %
 
$
41,424

0.74
 %
 
$
34,882

0.66
 %
Interest-bearing deposits with Federal Reserve & other central banks
65,704

0.23

 
83,232

0.23

 
74,399

0.25

 
85,546

0.26

 
88,713

0.23

Federal funds sold and securities purchased under resale agreements
8,864

0.56

 
9,403

0.61

 
11,118

0.61

 
13,387

0.58

 
15,683

0.61

Margin loans
14,653

1.10

 
15,224

1.08

 
15,840

1.07

 
17,050

1.05

 
18,108

1.04

Non-margin loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Domestic offices
21,378

2.40

 
22,538

2.28

 
22,002

2.31

 
22,566

2.30

 
23,826

2.20

Foreign offices
12,225

1.31

 
13,006

1.22

 
13,805

1.26

 
13,833

1.34

 
12,901

1.30

Total non-margin loans
33,603

2.01

 
35,544

1.89

 
35,807

1.90

 
36,399

1.94

 
36,727

1.88

Securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government obligations
16,540

1.76

 
13,418

1.96

 
17,213

1.61

 
17,462

1.63

 
23,067

1.38

U.S. government agency obligations
45,745

2.02

 
43,465

2.00

 
42,710

1.87

 
43,167

1.67

 
46,186

1.67

Obligations of states and political subdivisions
6,518

2.47

 
6,757

2.76

 
6,691

2.50

 
6,473

2.58

 
5,830

2.54

Other securities
32,403

1.92

 
33,000

1.78

 
33,920

1.64

 
34,318

1.55

 
36,972

1.37

Trading securities
5,523

2.83

 
6,173

2.82

 
5,217

2.60

 
5,532

2.19

 
5,435

2.36

Total securities
106,729

2.02

 
102,813

1.97

 
105,751

1.83

 
106,952

1.71

 
117,490

1.59

Total interest-earning assets
271,150

1.28

 
285,779

1.21

 
284,532

1.17

 
300,758

1.10

 
311,603

1.05

Allowance for loan losses
(212
)
 
 
(207
)
 
 
(210
)
 
 
(197
)
 
 
(187
)
 
Cash and due from banks
6,400

 
 
6,623

 
 
5,886

 
 
5,064

 
 
6,225

 
Other assets
52,549

 
 
52,434

 
 
53,430

 
 
52,182

 
 
52,526

 
Total Asset Consol VIE FAS 167
11,863

 
 
11,506

 
 
11,354

 
 
11,405

 
 
10,242

 
Total Assets
$
341,750

 
 
$
356,135

 
 
$
354,992

 
 
$
369,212

 
 
$
380,409

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and total equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market rate accounts and demand deposit accounts
$
8,626

0.16
 %
 
$
11,042

0.12
 %
 
$
9,333

0.11
 %
 
$
7,583

0.13
 %
 
7,886

0.14
 %
Savings
1,015

0.25

 
993

0.25

 
1,034

0.25

 
1,185

0.27

 
1,258

0.28

Other time deposits
41,546

0.04

 
41,523

0.04

 
41,544

0.04

 
42,824

0.04

 
41,248

0.04

Foreign offices
102,360

0.07

 
103,462

0.06

 
101,075

0.06

 
111,082

0.06

 
113,841

0.05

Total interest-bearing deposits
153,547

0.06

 
157,020

0.06

 
152,986

0.06

 
162,674

0.06

 
164,233

0.06

Federal funds purchased and securities sold under repurchase agreements
12,164

(0.12
)
 
13,155

(0.10
)
 
14,505

(0.13
)
 
19,030

(0.05
)
 
20,620

(0.07
)
Trading Liabilities
2,325

1.69

 
2,534

1.42

 
1,978

1.59

 
2,993

0.97

 
2,806

0.84

Other borrowed funds
2,233

0.19

 
2,378

0.42

 
1,137

0.47

 
3,242

0.23

 
4,587

0.15

Payables to customers and broker-dealers
8,659

0.09

 
9,400

0.09

 
8,883

0.09

 
8,916

0.09

 
9,705

0.10

Long-term debt
19,025

1.00

 
19,501

1.05

 
20,420

1.09

 
20,361

1.16

 
20,429

1.12

Total interest-bearing liabilities
197,953

0.16

 
203,988

0.17

 
199,909

0.17

 
217,216

0.17

 
222,380

0.16

Total noninterest-bearing deposits
72,075

 
 
79,999

 
 
81,430

 
 
77,820

 
 
82,334

 
Other liabilities
24,380

 
 
23,546

 
 
24,608

 
 
24,854

 
 
27,369

 
VIE Liabilities & Obligations FAS 167
10,466

 
 
10,283

 
 
10,128

 
 
10,180

 
 
8,879

 
Total Shareholders' Equity
35,826

 
 
37,484

 
 
38,097

 
 
38,127

 
 
38,313

 
Noncontrolling interest
1,050

 
 
835

 
 
820

 
 
1,015

 
 
1,134

 
Total liabilities and shareholders' equity
$
341,750

 
 
$
356,135

 
 
$
354,992

 
 
$
369,212

 
 
$
380,409

 
Net interest margin - Taxable equivalent basis
 
1.16
 %
 
 
1.09
 %
 
 
1.05
 %
 
 
0.98
 %
 
 
0.94
 %
Note: Interest and average rates were calculated on a taxable equivalent basis, at tax rates of approximately 35%, using dollar amounts in thousands and the actual number of days in the year.




THE BANK OF NEW YORK MELLON CORPORATION
NONINTEREST EXPENSE - 11 Quarter Trend

 
2012
 
2013
 
2014
(dollar amounts in millions)
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
Staff:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation
$
861

 
$
866

 
$
893

 
$
911

 
$
885

 
$
891

 
$
915

 
$
929

 
$
925

 
$
903

 
$
909

Incentives
352

 
311

 
306

 
311

 
338

 
364

 
339

 
343

 
359

 
313

 
340

Employee benefits
240

 
238

 
237

 
235

 
249

 
254

 
262

 
250

 
227

 
223

 
228

Total staff
1,453

 
1,415

 
1,436

 
1,457

 
1,472

 
1,509

 
1,516

 
1,522

 
1,511

 
1,439

 
1,477

Professional, legal and other purchased services
299

 
309

 
292

 
322

 
295

 
317

 
296

 
344

 
312

 
314

 
323

Software and equipment
205

 
209

 
208

 
233

 
228

 
238

 
226

 
241

 
237

 
236

 
234

Net occupancy
147

 
141

 
149

 
156

 
163

 
159

 
153

 
154

 
154

 
152

 
154

Distribution and servicing
101

 
103

 
109

 
108

 
106

 
111

 
108

 
110

 
107

 
112

 
107

Business development
56

 
71

 
60

 
88

 
68

 
90

 
63

 
96

 
64

 
68

 
61

Sub-custodian
70

 
70

 
65

 
64

 
64

 
77

 
71

 
68

 
68

 
81

 
67

Other
220

 
254

 
265

 
255

 
307

 
215

 
249

 
258

 
223

 
347

 
250

Amortization of intangible assets
96

 
97

 
95

 
96

 
86

 
93

 
81

 
82

 
75

 
75

 
75

Merger & integration, litigation and restructuring charges
109

 
378

 
26

 
46

 
39

 
13

 
16

 
2

 
(12
)
 
122

 
220

Total noninterest expense
$
2,756

 
$
3,047

 
$
2,705

 
$
2,825

 
$
2,828

 
$
2,822

 
$
2,779

 
$
2,877

 
$
2,739

 
$
2,946

 
$
2,968

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Memo:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total noninterest expense excluding M&I, litigation, restructuring, amortization of intangible assets and the charge (recovery) related to investment management funds, net of incentives - Non-GAAP
$
2,551

 
$
2,572

 
$
2,568

 
$
2,683

 
$
2,664

 
$
2,743

 
$
2,682

 
$
2,793

 
$
2,681

 
$
2,640

 
$
2,673

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full Time Employees at period-end
47,800

 
48,300

 
48,700

 
49,500

 
49,700

 
49,800

 
50,800

 
51,100

 
51,400

 
51,100

 
50,900






THE BANK OF NEW YORK MELLON CORPORATION
ASSETS UNDER MANAGEMENT, CUSTODY AND/OR ADMINISTRATION AND SECURITIES LENDING - 11 Quarter Trend

 
2012
 
2013
 
2014
 
(dollar amounts in billions unless otherwise noted)
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
Assets under management at period-end
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Institutional
$
829

 
$
835

 
$
882

 
$
894

 
$
939

 
$
968

 
$
1,041

 
$
1,072

 
$
1,118

 
$
1,109

 
$
1,131

 
Mutual Funds
404

 
388

 
398

 
411

 
405

 
378

 
407

 
425

 
415

 
440

 
430

 
Private Client
69

 
70

 
73

 
75

 
79

 
81

 
84

 
86

 
87

 
87

 
85

 
Assets under management (a)
$
1,302

 
$
1,293

 
$
1,353

 
$
1,380

 
$
1,423

 
$
1,427

 
$
1,532

 
$
1,583

 
$
1,620

 
$
1,636

 
$
1,646

(b)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AUM at period-end, by product type: (a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity
18
%
 
17
%
 
17
%
 
17
%
 
17
%
 
17
%
 
17
%
 
17
%
 
17
%
 
17
%
 
16
%
 
Fixed Income
15

 
15

 
15

 
15

 
15

 
15

 
14

 
14

 
14

 
14

 
13

 
Index
17

 
17

 
18

 
18

 
19

 
20

 
20

 
20

 
20

 
21

 
21

 
Liability-driven investments (c)
22

 
23

 
23

 
24

 
25

 
25

 
26

 
26

 
27

 
27

 
28

 
Alternative investments
4

 
5

 
4

 
4

 
4

 
4

 
4

 
4

 
4

 
4

 
4

 
Cash
24

 
23

 
23

 
22

 
20

 
19

 
19

 
19

 
18

 
17

 
18

 
Total AUM (a)
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
(b)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets under custody and/or administration at period-end (in trillions) (d)
$
25.7

 
$
25.2

 
$
26.4

 
$
26.3

 
$
26.3

 
$
26.2

 
$
27.4

 
$
27.6

 
$
27.9

 
$
28.5

 
$
28.3

(b)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Market value of securities on loan at period-end (e)
$
256

 
$
267

 
$
251

 
$
237

 
$
244

 
$
255

 
$
255

 
$
235

 
$
282

 
$
282

 
$
282

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Key Market Metrics
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
S&P 500 Index (f)
1408

 
1362

 
1441

 
1426

 
1569

 
1606

 
1682

 
1848

 
1872

 
1960

 
1972

 
S&P 500 Index - daily average
1349

 
1350

 
1401

 
1418

 
1514

 
1609

 
1675

 
1769

 
1835

 
1900

 
1976

 
FTSE 100 Index (f)
5768

 
5571

 
5742

 
5898

 
6412

 
6215

 
6462

 
6749

 
6598

 
6744

 
6623

 
FTSE 100 Index-daily average
5822

 
5551

 
5744

 
5844

 
6300

 
6438

 
6530

 
6612

 
6680

 
6764

 
6756

 
MSCI World Index (f)
1312

 
1236

 
1312

 
1339

 
1435

 
1434

 
1544

 
1661

 
1674

 
1743

 
1698

 
MSCI World Index-daily average
1268

 
1233

 
1274

 
1312

 
1405

 
1463

 
1511

 
1602

 
1647

 
1698

 
1733

 
Barclays Capital Global Aggregate BondSM Index (f)(g)
351

 
353

 
368

 
366

 
356

 
343

 
356

 
354

 
365

 
376

 
361

 
NYSE & NASDAQ Share Volume (in billions)
186

 
192

 
173

 
174

 
174

 
186

 
166

 
179

 
196

 
187

 
173

 
JP Morgan G7 Volatility Index - daily average (h)
10.39

 
10.30

 
8.70

 
7.56

 
9.02

 
9.84

 
9.72

 
8.20

 
7.80

 
6.22

 
6.21

 
Average Fed Funds effective rate
0.10
%
 
0.15
%
 
0.14
%
 
0.16
%
 
0.14
%
 
0.12
%
 
0.09
%
 
0.09
%
 
0.07
%
 
0.09
%
 
0.09
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) Excludes securities lending cash management assets and assets managed in the Investment Services business. Also excludes assets under management related to Newton's private client business that was sold in September 2013.
 
(b) Preliminary.
 
(c) Includes currency and overlay assets under management.
 
(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 $1.2 trillion at March 31, 2012, June 30, 2012 and Sept. 30, 2012, $1.1 trillion at Dec. 31, 2012, $1.2 trillion at March 31, 2013, $1.1 trillion at June 30, 2013, and $1.2 trillion at Sept. 30, 2013, Dec. 31, 2013, March 31, 2014, June 30, 2014 and 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, beginning in the fourth quarter of 2013, on behalf of CIBC Mellon clients, which totaled $62 billion at Dec. 31, 2013, $66 billion at March 31, 2014, $64 billion at June 30, 2014 and $65 billion at Sept. 30, 2014..
 
(f) Period end.
 
(g) Unhedged in U.S. dollar terms.
 
(h) The JP Morgan G7 Volatility Index is based on the implied volatility in 3-month currency options.
 




THE BANK OF NEW YORK MELLON CORPORATION
ASSETS UNDER MANAGEMENT NET FLOWS - 11 Quarter Trend

 
2012
 
2013
 
2014
 
(dollar amounts in billions )
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets under management at beginning of period (a)
$
1,255

 
$
1,302

 
$
1,293

 
$
1,353

 
$
1,380

 
$
1,423

 
$
1,427

 
$
1,532

 
$
1,583

 
$
1,620

 
1,636

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net inflows (outflows):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity
2

 
(1
)
 
—

 
(1
)
 
1

 
1

 
3

 
(5
)
 
(1
)
 
(4
)
 
(2
)
 
Fixed income
5

 
7

 
5

 
2

 
5

 
2

 
(1
)
 
5

 
—

 
(1
)
 
—

 
Index
(2
)
 
7

 
5

 
(1
)
 
12

 
8

 
2

 
(3
)
 
—

 
7

 
(3
)
 
Liability-driven investments (b)
—

 
11

 
—

 
14

 
22

 
11

 
27

 
4

 
20

 
(17
)
 
18

 
Alternative investments
2

 
2

 
(1
)
 
—

 
—

 
(1
)
 
1

 
1

 
2

 
2

 
—

 
Total long-term inflows (outflows)
7

 
26

 
9

 
14

 
40

 
21

 
32

 
2

 
21

 
(13
)
 
13

 
Short-term:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash
(9
)
 
(14
)
 
9

 
(6
)
 
(13
)
 
(1
)
 
13

 
6

 
(7
)
 
(18
)
 
19

 
Total net inflows (outflows)
(2
)
 
12

 
18

 
8

 
27

 
20

 
45

 
8

 
14

 
(31
)
 
32

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net market / currency impact / other
49

 
(21
)
 
42

 
19

 
16

 
(16
)
 
60

 
43

 
23

 
47

 
(22
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets under management at end of period (a)
$
1,302

 
$
1,293

 
$
1,353

 
$
1,380

 
$
1,423

 
$
1,427

 
$
1,532

 
$
1,583

 
$
1,620

 
$
1,636

 
$
1,646

(c)
(a)
Excludes securities lending cash management assets and assets managed in the Investment Services business. Also excludes assets under management related to Newton’s private client business that was sold in September 2013.
(b)
Includes currency and overlay assets under management.
(c)
Preliminary.





THE BANK OF NEW YORK MELLON CORPORATION
INVESTMENT MANAGEMENT BUSINESS - 11 Quarter Trend

 
2012
 
2013
 
2014
(dollar amounts in millions unless otherwise noted)
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment management fees:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mutual funds
$
265

 
$
275

 
$
287

 
$
298

 
$
299

 
$
299

 
$
293

 
$
303

 
$
299

 
$
311

 
$
315

 
Institutional clients
327

 
326

 
339

 
355

 
360

 
366

 
367

 
385

 
372

 
385

 
382

 
Wealth management
134

 
136

 
136

 
138

 
143

 
146

 
145

 
149

 
153

 
156

 
158

 
Total investment management fees
726

 
737

 
762

 
791

 
802

 
811

 
805

 
837

 
824

 
852

 
855

 
Performance fees
16

 
54

 
10

 
57

 
15

 
33

 
10

 
72

 
20

 
29

 
22

 
Investment management and performance fees
742

 
791

 
772

 
848

 
817

 
844

 
815

 
909

 
844

 
881

 
877

 
Distribution and servicing
45

 
45

 
47

 
50

 
46

 
44

 
41

 
41

 
40

 
41

 
41

 
Other (a)
50

 
12

 
39

 
23

 
18

 
24

 
26

 
43

 
16

 
48

 
16

 
Total fee and other revenue (a)
837

 
848

 
858

 
921

 
881

 
912

 
882

 
993

 
900

 
970

 
934

 
Net interest revenue
55

 
52

 
51

 
56

 
62

 
63

 
67

 
68

 
70

 
66

 
69

 
Total revenue
892

 
900

 
909

 
977

 
943

 
975

 
949

 
1,061

 
970

 
1,036

 
1,003

 
Noninterest expense (ex. intangible amortization and the charge (recovery) related to investment management funds)
613

 
635

 
620

 
706

 
659

 
692

 
689

 
760

 
698

 
725

 
727

 
Income before taxes (ex. intangible amortization and the charge (recovery) related to investment management funds)
279

 
265

 
289

 
271

 
284

 
283

 
260

 
301

 
272

 
311

 
276

 
Charge (recovery) related to investment management funds, net of incentives
—

 
—

 
16

 
—

 
39

 
(27
)
 
—

 
—

 
(5
)
 
109

 
—

 
Amortization of intangible assets
48

 
48

 
48

 
48

 
39

 
39

 
35

 
35

 
31

 
31

 
31

 
Income before taxes
$
231

 
$
217

 
$
225

 
$
223

 
$
206

 
$
271

 
$
225

 
$
266

 
$
246

 
$
171

 
$
245

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average assets
$
36,112

 
$
35,603

 
$
35,285

 
$
37,474

 
$
38,743

 
$
37,953

 
$
38,690

 
$
38,796

 
$
39,463

 
$
37,750

 
$
36,670

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets under management at period-end (in billions) (b)
$
1,302

 
$
1,293

 
$
1,353

 
$
1,380

 
$
1,423

 
$
1,427

 
$
1,532

 
$
1,583

 
$
1,620

 
$
1,636

 
$
1,646

(c)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax operating margin
26
%
 
24
%
 
25
%
 
23
%
 
22
%
 
28
%
 
24
%
 
25
%
 
25
%
 
16
%
 
24
%
 
Adjusted pre-tax operating margin (d)
37
%
 
35
%
 
37
%
 
32
%
 
35
%
 
34
%
 
33
%
 
34
%
 
34
%
 
36
%
 
33
%
 

(a)
Total fee and other revenue includes the impact of the consolidated investment management funds. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 24 of the Quarterly Earnings Release for the reconciliation of Non-GAAP measures. Additionally, other revenue includes asset servicing and treasury services revenue.
(b) Excludes securities lending cash management assets and assets managed in the Investment Services business. Also excludes assets under management related to Newton's private client business that was sold in September 2013.
(c)
Preliminary.
(d)
Excludes the net negative impact of money market fee waivers, amortization of intangible assets and the charge (recovery) related to investment management funds net of incentives, and is net of distribution and servicing expense. See "Supplemental information - Explanation of GAAP and Non-GAAP financial measures" beginning on page 24 of the Quarterly Earnings Release for the reconciliation of Non-GAAP measures.




THE BANK OF NEW YORK MELLON CORPORATION
INVESTMENT SERVICES BUSINESS - 11 Quarter Trend
 
2012
 
2013
 
2014
 
(dollar amounts in millions unless otherwise noted)
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment services fees
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset servicing fees - ex. securities lending
$
876

 
$
871

 
$
876

 
$
885

 
$
912

 
$
922

 
$
913

 
$
936

 
$
955

 
$
958

 
$
971

 
Securities lending revenue
39

 
48

 
37

 
31

 
31

 
39

 
26

 
21

 
30

 
35

 
27

 
Issuer services
251

 
275

 
310

 
213

 
236

 
294

 
321

 
236

 
228

 
231

 
314

 
Clearing services
300

 
307

 
285

 
291

 
302

 
320

 
314

 
322

 
323

 
324

 
336

 
Treasury services
131

 
129

 
131

 
136

 
137

 
135

 
135

 
137

 
134

 
140

 
139

 
Total investment services fees
1,597

 
1,630

 
1,639

 
1,556

 
1,618

 
1,710

 
1,709

 
1,652

 
1,670

 
1,688

 
1,787

 
Foreign Exchange and other trading revenue
173

 
176

 
153

 
126

 
173

 
193

 
177

 
150

 
158

 
145

 
159

 
Other (a)
75

 
67

 
78

 
75

 
70

 
67

 
63

 
58

 
59

 
87

 
59

 
Total fee and other revenue (a)
1,845

 
1,873

 
1,870

 
1,757

 
1,861

 
1,970

 
1,949

 
1,860

 
1,887

 
1,920

 
2,005

 
Net interest revenue
642

 
607

 
609

 
581

 
653

 
633

 
619

 
610

 
590

 
593

 
583

 
Total revenue
2,487

 
2,480

 
2,479

 
2,338

 
2,514

 
2,603

 
2,568

 
2,470

 
2,477

 
2,513

 
2,588

 
Provision for credit losses
17

 
(15
)
 
(4
)
 
(1
)
 
1

 
—

 
—

 
—

 
—

 
—

 
—

 
Noninterest expenses (ex. intangible amortization)
1,783

 
2,090

 
1,729

 
1,766

 
1,796

 
1,825

 
1,765

 
1,822

 
1,778

 
1,824

 
1,835

 
Income before taxes (ex. intangible amortization)
687

 
405

 
754

 
573

 
717

 
778

 
803

 
648

 
699

 
689

 
753

 
Amortization of intangible assets
48

 
49

 
47

 
48

 
47

 
54

 
46

 
47

 
44

 
44

 
44

 
Income before taxes
$
639

 
$
356

 
$
707

 
$
525

 
$
670

 
$
724

 
$
757

 
$
601

 
$
655

 
$
645

 
$
709

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average loans
$
26,630

 
$
25,611

 
$
24,917

 
$
24,868

 
$
26,697

 
$
27,814

 
$
27,865

 
$
31,211

 
$
31,468

 
$
33,115

 
$
33,785

 
Average assets
$
214,592

 
$
210,064

 
$
224,986

 
$
243,052

 
$
240,187

 
$
244,802

 
$
246,252

 
$
258,294

 
$
258,470

 
$
264,221

 
$
266,455

 
Average deposits
$
175,526

 
$
173,087

 
$
188,743

 
$
204,164

 
$
200,222

 
$
204,499

 
$
206,068

 
$
216,216

 
$
214,947

 
$
220,701

 
$
221,734

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax operating margin
26
%
 
15
%
 
29
%
 
22
%
 
27
%
 
28
%
 
29
%
 
24
%
 
26
%
 
26
%
 
27
%
 
Pre-tax operating margin (ex. intangible amortization)
28
%
 
17
%
 
30
%
 
24
%
 
29
%
 
30
%
 
31
%
 
26
%
 
28
%
 
27
%
 
29
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment services fees as a percentage of noninterest expense (b)
94
%
 
94
%
 
96
%
 
90
%
 
92
%
 
94
%
 
97
%
 
90
%
 
93
%
 
93
%
 
100
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets under custody and/or administration at period-end (in trillions) (c)
$
25.7

 
$
25.2

 
$
26.4

 
$
26.3

 
$
26.3

 
$
26.2

 
$
27.4

 
$
27.6

 
$
27.9

 
$
28.5

 
$
28.3

(d)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Market value of securities on loan at period-end (in billions) (e)
$
256

 
$
267

 
$
251

 
$
237

 
$
244

 
$
255

 
$
255

 
$
235

 
$
264

 
$
280

 
$
282

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) Total fee and other revenue includes investment management fees and distribution and servicing revenue.
 
(b) Noninterest expense excludes amortization of intangible assets and litigation expense.
(c) Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.2 trillion at March 31, 2012, June 30, 2012 and Sept. 30, 2012, $1.1 trillion at Dec. 31, 2012, $1.2 trillion at March 31, 2013, $1.1 trillion at June 30, 2013, and $1.2 trillion at Sept. 30, 2013, Dec. 31, 2013, March 31, 2014, June 30, 2014 and 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, beginning in the fourth quarter of 2013, on behalf of CIBC Mellon clients, which totaled $62 billion at Dec. 31, 2013, $66 billion at March 31, 2014, $64 billion at June 30, 2014 and $65 billion at Sept. 30, 2014.




THE BANK OF NEW YORK MELLON
OTHER SEGMENT- 11 Quarter Trend

 
2012 (a)
 
2013 (a)
 
2014
(dollar amounts in millions)
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee and other revenue (a)
$
201

 
$
146

 
$
186

 
$
219

 
$
152

 
$
347

 
$
172

 
$
(20
)
 
$
112

 
$
119

 
$
928

Net interest revenue
68

 
75

 
89

 
88

 
4

 
61

 
86

 
83

 
68

 
60

 
69

Total revenue (a)
269

 
221

 
275

 
307

 
156

 
408

 
258

 
63

 
180

 
179

 
997

Provision for credit loss
(12
)
 
(4
)
 
(1
)
 
(60
)
 
(25
)
 
(19
)
 
2

 
6

 
(18
)
 
(12
)
 
(19
)
Noninterest expense (ex. M&I and restructuring charges)
255

 
203

 
232

 
230

 
243

 
236

 
230

 
200

 
193

 
93

 
274

Income (loss) before taxes (ex. M&I and restructuring charges) (a)
$
26

 
$
22

 
$
44

 
$
137

 
$
(62
)
 
$
191

 
$
26

 
$
(143
)
 
$
5

 
$
98

 
$
742

M&I and restructuring charges
9

 
22

 
13

 
27

 
5

 
3

 
14

 
13

 
—

 
120

 
57

Income (loss) before taxes (a)
$
17

 
$
—

 
$
31

 
$
110

 
$
(67
)
 
$
188

 
$
12

 
$
(156
)
 
$
5

 
$
(22
)
 
$
685

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average loans and leases
$
9,148

 
$
9,618

 
$
9,389

 
$
10,267

 
$
10,610

 
$
10,846

 
$
10,938

 
$
9,802

 
$
10,104

 
$
9,962

 
$
10,278

Average assets
$
50,640

 
$
59,335

 
$
58,643

 
$
55,469

 
$
54,734

 
$
54,700

 
$
56,808

 
$
59,045

 
$
57,059

 
$
67,240

 
$
77,284

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) In the first quarter of 2014, prior periods were restated to reflect the retrospective application of adopting new accounting guidance related to our investments in qualified affordable housing projects (ASU 2014-01).
 





THE BANK OF NEW YORK MELLON CORPORATION
BUSINESSES
 
 
Investment Management
 
Investment Services
 
Other
 
Consolidated Results
 
(dollar amounts in millions unless otherwise noted)
 
2013
 
2012
 
2011
 
2013
 
2012
 
2011
 
2013
 
2012
 
2011
 
2013
 
2012
 
2011
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment services fees
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset servicing
 
$
104

 
$
117

 
$
112

 
$
3,800

 
$
3,663

 
$
3,585

 
$
1

 
$
—

 
$
—

 
$
3,905

 
$
3,780

 
$
3,697

 
Issuer services
 
—

 
—

 
—

 
1,087

 
1,049

 
1,252

 
3

 
3

 
193

 
1,090

 
1,052

 
1,445

 
Clearing services
 
—

 
—

 
—

 
1,258

 
1,183

 
1,149

 
6

 
10

 
10

 
1,264

 
1,193

 
1,159

 
Treasury services
 
2

 
2

 
2

 
544

 
527

 
513

 
8

 
20

 
20

 
554

 
549

 
535

 
Total investment services fees
 
106

 
119

 
114

 
6,689

 
6,422

 
6,499

 
18

 
33

 
223

 
6,813

 
6,574

 
6,836

 
Investment management fees
 
3,255

 
3,016

 
2,905

 
63

 
66

 
64

 
27

 
37

 
46

 
3,345

 
3,119

 
3,015

 
Performance fees
 
130

 
137

 
93

 
—

 
—

 
1

 
—

 
(1
)
 
—

 
130

 
136

 
94

 
Foreign exchange and other trading revenue
 
8

 
9

 
(1
)
 
693

 
628

 
827

 
(27
)
 
55

 
22

 
674

 
692

 
848

 
Distribution and servicing
 
172

 
187

 
181

 
8

 
5

 
6

 
—

 
—

 
—

 
180

 
192

 
187

 
Financing-related fees
 
5

 
6

 
6

 
44

 
42

 
46

 
123

 
124

 
118

 
172

 
172

 
170

 
Investment and other income
 
(14
)
 
(9
)
 
(107
)
 
142

 
171

 
186

 
376

(a)
352

(a)
487

(a)
504

(a)
514

(a)
566

(a)
Total fee revenue
 
3,662

 
3,465

 
3,191

 
7,639

 
7,334

 
7,629

 
517

(a)
600

(a)
896

(a)
11,818

(a)(b)
11,399

(a)(b)
11,716

(a)(b)
Net securities gains (losses)
 
6

 
(1
)
 
1

 
1

 
11

 
—

 
134

 
152

 
47

 
141

 
162

 
48

 
Total fee and other revenue
 
3,668

 
3,464

 
3,192

 
7,640

 
7,345

 
7,629

 
651

(a)
752

(a)
943

(a)
11,959

(a)(b)
11,561

(a)(b)
11,764

(a)(b)
Net interest revenue (expense)
 
260

 
214

 
204

 
2,515

 
2,439

 
2,567

 
234

 
320

 
212

 
3,009

 
2,973

 
2,983

 
Total revenue
 
3,928

 
3,678

 
3,396

 
10,155

 
9,784

 
10,196

 
885

(a)
1,072

(a)
1,155

(a)
14,968

(a)
14,534

(a)
14,747

(a)
Provision for credit losses
 
—

 
—

 
1

 
1

 
(3
)
 
—

 
(36
)
 
(77
)
 
—

 
(35
)
 
(80
)
 
1

 
Noninterest expenses (ex. intangible amortization)
 
2,812

 
2,590

 
2,500

 
7,208

 
7,368

 
6,996

 
944

 
991

 
1,187

 
10,964

 
10,949

 
10,683

 
Income (loss) before taxes (ex. intangible amortization)
 
1,116

 
1,088

 
895

 
2,946

 
2,419

 
3,200

 
(23
)
(a)
158

(a)
(32
)
(a)
4,039

(a)(b)
3,665

(a)(b)
4,063

(a)(b)
Amortization of intangible assets
 
148

 
192

 
213

 
194

 
192

 
199

 
—

 
—

 
16

 
342

 
384

 
428

 
Income (loss) before taxes and noncontrolling interest
 
$
968

 
$
896

 
$
682

 
$
2,752

 
$
2,227

 
$
3,001

 
$
(23
)
(a)
$
158

(a)
$
(48
)
(a)
$
3,697

(a)(b)
$
3,281

(a)(b)
$
3,635

(a)(b)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average loans
 
$
9,361

 
$
7,950

 
$
6,970

 
$
28,407

 
$
25,503

 
$
24,326

 
$
10,548

 
$
9,607

 
$
9,623

 
$
48,316

 
$
43,060

 
$
40,919

 
Average assets
 
$
38,546

 
$
36,120

 
$
36,696

 
$
247,430

 
$
223,233

 
$
205,336

 
$
56,335

 
$
56,028

 
$
49,113

 
$
342,311

 
$
315,381

 
$
291,145

 
Average deposits
 
$
13,755

 
$
11,311

 
$
9,769

 
$
206,793

 
$
185,441

 
$
166,823

 
$
5,148

 
$
7,458

 
$
6,087

 
$
225,696

 
$
204,210

 
$
182,679

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets under management at period-end (in billions) (c)
 
$
1,583

 
$
1,380

 
$
1,255

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
1,583

 
$
1,380

 
$
1,255

 
Assets under custody and/or administration at period-end (in trillions) (d)
 
$
—

 
$
—

 
$
—

 
$
27.6

 
$
26.3

 
$
25.1

 
$
—

 
$
—

 
$
—

 
$
27.6

 
$
26.3

 
$
25.1

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

 
$
—

 
$
—

 
$
235

 
$
237

 
$
266

 
$
—

 
$
—

 
$
—

 
$
235

 
$
237

 
$
266

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax operating margin - GAAP
 
25
%
 
24
%
 
20
%
 
27
%
 
23
%
 
29
%
 
N/M

 
N/M

 
N/M

 
25
%
 
23
%
 
25
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Memo:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities Lending Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
155

 
$
198

 
$
183

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: On December 31, 2011, BNY Mellon sold its Shareowner Services business. In the first quarter of 2012, we reclassified the results of the Shareowner Services business from the Investment Services business to the Other segment. The reclassification did not impact the consolidated results. All prior periods have been restated.
(a) In the first quarter of 2014, prior periods were restated to reflect the retrospective application of adopting new accounting guidance related to our investments in qualified affordable housing projects (ASU 2014-01).
(b) Total fee and other revenue and income before taxes for the years 2011, 2012 and 2013 includes income from consolidated investment management funds of $200 million, $189 million and $183 million, respectively, net of income attributable to noncontrolling interests of $50 million, $76 million and $80 million respectively. The net of these income statement line items of $150 million, $113 million and $103 million,respectively, are included above in fee and other revenue.
(c) Excludes securities lending cash management assets and assets managed in the Investment Services business. Also excludes assets under management related to Newton's private client business that was sold in September 2013.
(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 $1.1 trillion at Dec. 31, 2011 and Dec. 31, 2012, and $1.2 trillion at Dec. 31, 2013.
(e) Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent, beginning in the fourth quarter of 2013, on behalf of CIBC Mellon clients, which totaled $62 billion at Dec. 31, 2013.
Note: See pages 9 through 11 for businesses results.
N/M - Not meaningful




THE BANK OF NEW YORK MELLON CORPORATION
NONPERFORMING ASSETS - 11 Quarter Trend
 
2012
 
2013
 
2014
 
(dollar amounts in millions)
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonperforming loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other residential mortgages
$
188

 
$
177

 
$
166

 
$
158

 
$
148

 
$
135

 
$
128

 
$
117

 
$
107

 
$
105

 
$
113

 
Wealth management
35

 
35

 
33

 
30

 
30

 
13

 
12

 
11

 
12

 
12

 
13

 
Commercial real estate
39

 
30

 
29

 
18

 
17

 
18

 
4

 
4

 
4

 
4

 
4

 
Commercial
32

 
31

 
29

 
27

 
24

 
24

 
15

 
15

 
13

 
13

 
13

 
Foreign loans
10

 
9

 
9

 
9

 
9

 
9

 
9

 
6

 
7

 
4

 
—

 
Financial institutions
14

 
3

 
3

 
3

 
3

 
2

 
1

 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total nonperforming loans
318

 
285

 
269

 
245

 
231

 
201

 
169

 
153

 
143

 
138

 
143

 
Other assets owned
13

 
9

 
5

 
4

 
3

 
3

 
3

 
3

 
3

 
4

 
4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total nonperforming assets (a)
$
331

 
$
294

 
$
274

 
$
249

 
$
234

 
$
204

 
$
172

 
$
156

 
$
146

 
$
142

 
$
147

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonperforming assets ratio
0.77
%
 
0.65
%
 
0.60
%
 
0.53
%
 
0.48
%
 
0.41
%
 
0.34
%
 
0.30
%
 
0.27
%
 
0.24
%
 
0.26
%
 
Nonperforming assets ratio excluding margin loans
1.11
%
 
0.92
%
 
0.83
%
 
0.74
%
 
0.65
%
 
0.57
%
 
0.49
%
 
0.43
%
 
0.39
%
 
0.34
%
 
0.37
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses/nonperforming loans
121.4

 
127.0

 
126.0

 
108.6

 
102.6

 
105.5

 
121.9

 
137.3

 
138.5

 
135.5

 
133.6

 
Allowance for loan losses/nonperforming assets
116.6

 
123.1

 
123.7

 
106.8

 
101.3

 
103.9

 
119.8

 
134.6

 
135.6

 
131.7

 
129.9

 
Total allowance for credit losses/nonperforming loans
155.3

 
163.9

 
169.5

 
158.0

 
155.0

 
167.7

 
200.6

 
224.8

 
228.0

 
225.4

 
201.4

 
Total allowance for credit losses/nonperforming assets
149.2

 
158.8

 
166.4

 
155.4

 
153.0

 
165.2

 
197.1

 
220.5

 
221.8

 
219.0

 
195.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 the 1st, 2nd, 3rd and 4th quarters of 2012 of $180 million, $155 million, $153 million, and $174 million, respectively, for the 1st through 4th quarters of 2013 of $161 million, $44 million, $31 million, and $16 million, respectively, and for the 1st quarter through 3rd quarters of 2014 of $74 million, $68 million, and $79 million, respectively. 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.
 





THE BANK OF NEW YORK MELLON CORPORATION
ALLOWANCE FOR CREDIT LOSSES, PROVISION AND NET CHARGE-OFFS - 11 Quarter Trend

 
 
2012
 
2013
 
2014
 
(dollar amounts in millions)
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses
 
$
394

 
$
386

 
$
362

 
$
339

 
$
266

 
$
237

 
$
212

 
$
206

 
$
210

 
$
198

 
$
187

 
Allowance for lending-related commitments
 
103

 
108

 
105

 
117

 
121

 
121

 
125

 
133

 
134

 
128

 
124

 
Allowance for credit losses - beginning of period
 
497

 
494

 
467

 
456

 
387

 
358

 
337

 
339

 
344

 
326

 
311

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (charge-offs)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Charge-offs
 
(10
)
 
(10
)
 
(8
)
 
(10
)
 
(5
)
 
(3
)
 
(2
)
 
(6
)
 
(1
)
 
(4
)
 
(5
)
 
Recoveries
 
2

 
2

 
2

 
2

 
—

 
1

 
2

 
5

 
1

 
1

 
1

 
Total Net (charge-offs)
 
(8
)
 
(8
)
 
(6
)
 
(8
)
 
(5
)
 
(2
)
 
—

 
(1
)
 
—

 
(3
)
 
(4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for credit losses
 
5

 
(19
)
 
(5
)
 
(61
)
 
(24
)
 
(19
)
 
2

 
6

 
(18
)
 
(12
)
 
(19
)
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses - end of period
 
494

 
467

 
456

 
387

 
358

 
337

 
339

 
344

 
326

 
311

 
288

 
Allowance for loan losses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses
 
$
386

 
$
362

 
$
339

 
$
266

 
$
237

 
$
212

 
$
206

 
$
210

 
$
198

 
$
187

 
$
191

 
Allowance for lending-related commitments
 
108

 
105

 
117

 
121

 
121

 
125

 
133

 
134

 
128

 
124

 
97

 
Allowance for credit losses - end of period
 
494

 
467

 
456

 
387

 
358

 
337

 
339

 
344

 
326

 
311

 
288

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses as a percentage of total loans
 
0.90
%
 
0.80
%
 
0.74
%
 
0.57
%
 
0.48
%
 
0.42
%
 
0.41
%
 
0.41
%
 
0.37
%
 
0.32
%
 
0.33
%
 



EX99.3_KeyFacts3Q14

October 17, 2014
KEY FACTS – Third Quarter 2014
Delivering for Shareholders
Total Shareholder Return
2012
2013
YTD 9/30/14
BNY Mellon
32.1%
38.6%
12.4%
11-Member Peer Group Median (a)
27.4%
38.9%
5.7%
S&P 500 Financials
28.7%
35.6%
7.4%
S&P 500 Index
16.0%
32.4%
8.3%
Positive Growth Trends
•
Strong fee income growth
◦
Investment Management fee income up 5%, LTM 3Q14 versus LTM 3Q13
◦
Investment Services fee income up 3%, LTM 3Q14 versus LTM 3Q13
Continued AUM and AUC/A Growth
•
AUM up 7% in 3Q14 versus 3Q13
•
AUC/A up 3% in 3Q14 versus 3Q13
Strong Expense Control
•
3Q14 operating expenses (Non-GAAP) were up 1% sequentially and decreased slightly year-over-year
Ongoing Initiatives to Streamline Organization
•
Organizational realignment announced in June 2014
•
Reduction in real estate footprint
o
Sale of One Wall Street closed in 3Q14; net reduction in footprint of ~750K square feet
•
Numerous actions over time to streamline organization:
o    Exiting Derivatives Sales and Trading
o    Exited U.S. Derivatives Clearing 
(Futures Commission Merchant)
o    Sold Newton Private Client business
o    Sold Corporate Trust (Japan & Mexico)
o    Exited Beta Transition Management
o    Sold Shareowner Services
o    Sold SourceNet Solutions
 
Continued Strong Capital Position
•
Significant capital generation
•
Key capital ratios continue to be strong, ending 3Q14 with an estimated common equity tier 1 ratio, fully phased-in (Non-GAAP) under the Advanced Approach of 10.0% (b)
•
Combination of Investment Management and Investment Services positions us well for stress scenarios
•
Delivering high returns on tangible equity
◦
Achieved excellent return on tangible common equity of 18% (Non-GAAP, adjusted) in 3Q14 (b)
•
Post financial crisis, our capital generation has enabled us to more than double tangible capital while also reducing shares outstanding to below pre-crisis levels




LTM = last twelve months; AUM = Assets Under Management; AUC/A = Assets Under Custody/Administration

(a)
For information about our 11-Member Peer Group, see page 32 of our Proxy Statement dated March 7, 2014.

(b)
This fact sheet includes Non-GAAP measures. These measures are used by management to monitor financial performance and are useful to the investment community in analyzing financial results and trends of ongoing operations.  For a reconciliation of these measures and further information, see “Supplemental information – Explanation of GAAP and Non-GAAP Financial Measures” in BNY Mellon’s Quarterly Earnings Release dated October 17, 2014, furnished as an exhibit to the Current Report on Form 8-K to which this fact sheet is furnished as an exhibit.

This fact sheet may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including our estimated capital ratios and statements made regarding the combination of Investment Management and Investment Services and our positioning for stress scenarios. These statements, which may be expressed in a variety of ways, include the use of future or present tense language. These statements and other forward-looking statements contained in other public disclosures of BNY Mellon, are based upon current beliefs and expectations and are subject to significant risks and uncertainties (some of which are beyond BNY Mellon’s control). Factors that could cause BNY Mellon’s results to differ materially from those described in the forward-looking statements can be found in the risk factors set forth in BNY Mellon’s Annual Report on Form 10-K for the year ended Dec. 31, 2013 and its other filings with the Securities and Exchange Commission. All forward-looking statements in this fact sheet speak only as of October 17, 2014 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.
Additional information about BNY Mellon is available in our annual report on Form 10-K, proxy statement, quarterly reports on Form 10-Q and our current reports on Form 8-K filed with the SEC, available at www.sec.gov.


ex994quarterlyhighlights
BNY Mellon Third Quarter 2014 Financial Highlights October 17, 2014

 
2 Third Quarter 2014 – Financial Highlights Cautionary Statement A number of statements in our presentations, the accompanying slides and the responses to your questions are “forward-looking statements.” These statements relate to, among other things, The Bank of New York Mellon Corporation’s (the “Corporation”) expectations regarding: our estimated capital ratios and expectations regarding those ratios; preliminary business metrics; our plans relating to the securities portfolio and impact on net interest revenue; and statements regarding the Corporation's aspirations, as well as the Corporation’s overall plans, strategies, goals, objectives, expectations, estimates, intentions, targets, opportunities and initiatives. These forward-looking statements are based on assumptions that involve risks and uncertainties and that are subject to change based on various important factors (some of which are beyond the Corporation’s control). Actual results may differ materially from those expressed or implied as a result of the factors described under “Forward Looking Statements” and “Risk Factors” in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013 (the “2013 Annual Report”), and in other filings of the Corporation with the Securities and Exchange Commission (the “SEC”). Such forward-looking statements speak only as of October 17, 2014, and the Corporation 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. Non-GAAP Measures: In this presentation we may discuss some non-GAAP adjusted measures in detailing the Corporation’s performance. We believe these measures are useful to the investment community in analyzing the financial results and trends of ongoing operations. We believe they facilitate comparisons with prior periods and reflect the principal basis on which our management monitors financial performance. Additional disclosures relating to non-GAAP adjusted measures are contained in the Corporation’s reports filed with the SEC, including the 2013 Annual Report, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 and the Corporation's Earnings Release for the quarter ended September 30, 2014, included as an exhibit to our Current Report on Form 8-K filed on October 17, 2014 (the “Earnings Release”), available at www.bnymellon.com/investorrelations.

 
3 Third Quarter 2014 – Financial Highlights Third Quarter 2014 Financial Highlights • Earnings per share of $0.93 including: • $0.29 per common share for previously disclosed gains net of litigation and restructuring charges • Investment management and performance fees +7% year-over-year • Assets under management (AUM) +7% year-over-year to a record $1.65 trillion • $13 billion of net long-term inflows • Investment services fees +5% year-over-year • Assets under custody and/or administration (AUC/A) totaled $28.3 trillion, +3% year-over year • $529 billion of new AUC/A last twelve months • Continued progress on expense control • Noninterest expense – +7% year-over-year, +1% sequentially • Non-GAAP1 – 0% year-over-year, +1% sequentially ▪ Staff expense (3%) year-over-year • Return on tangible common equity1 of 26%; 18% on an adjusted basis • Repurchased 11.0 million common shares for $431 million in third quarter 1 Represents a Non-GAAP measure. See Appendix for reconciliations. Additional disclosures regarding this measure and other Non-GAAP adjusted measures are available in the Corporation’s reports filed with the SEC, available at www.bnymellon.com/investorrelations.

 
4 Third Quarter 2014 – Financial Highlights Third Quarter 2014 Key Performance Drivers • EPS (Non-GAAP)1 of $0.64, +5% year-over-year and +3% sequentially, driven by growth in Investment Management and Investment Services fees and continued progress on expense control • Investment management and performance fees +7% year-over-year reflecting higher equity markets, currency impact and higher performance fees • Investment services fees +5% year-over-year driven by continued growth in Asset servicing, Clearing services and Treasury services fees • Market-related revenue impacted by seasonality and macro factors • Foreign Exchange - Higher volumes helping to mitigate lower volatility • Securities Lending - Seasonal decline sequentially; rate environment continues to compress spreads • Net interest revenue/margin - Tactical asset/liability actions and higher balance levels offset by continued low short-term interest rates • Provision for credit losses was a credit of $19 million in 3Q14 versus a provision of $2 million in 3Q13 and a credit of$12 million in 2Q14 • Noninterest expense (Non-GAAP)1 flat year-over-year primarily reflecting lower staff expense • Effective tax rate of 33.5% in 3Q14. The previously disclosed gains, litigation and restructuring charges increased the effective tax rate 7.1% in 3Q14 1 Represents a Non-GAAP measure. See Appendix for reconciliations. Additional disclosures regarding this measure and other Non-GAAP adjusted measures are available in the Corporation’s reports filed with the SEC, available at www.bnymellon.com/investorrelations.

 
5 Third Quarter 2014 – Financial Highlights Summary Financial Results for the Third Quarter 2014 Growth vs. $ in millions, except per share data 3Q14 2Q14 3Q13 3Q13 2Q14 Revenue $ 4,611 $ 3,745 $ 3,783 22 % 23 % Provision for credit losses $ (19 ) $ (12 ) $ 2 N/M N/M Expenses $ 2,968 $ 2,946 $ 2,779 7 % 1 % Pre-tax operating margin 36 % 22 % 26 % EPS $ 0.93 $ 0.48 $ 0.82 13 % N/M Return on Tangible Common Equity1 26.2 % 14.5 % 28.3 % 1 Represents a Non-GAAP measure. See Appendix for reconciliation. Additional disclosures regarding this measure and other Non-GAAP adjusted measures are available in the Corporation’s reports filed with the SEC, available at www.bnymellon.com/investorrelations. NM - Not Meaningful

 
6 Third Quarter 2014 – Financial Highlights Summary Financial Results for the Third Quarter 2014 (Non-GAAP) Growth vs. $ in millions, except per share data 3Q14 2Q14 3Q13 3Q13 2Q14 Revenue1 $ 3,752 $ 3,728 $ 3,775 (1)% 1 % Expenses1 $ 2,673 $ 2,640 $ 2,682 —% 1 % Operating leverage1 (27) bps (61) bps EPS - Non-GAAP1 $ 0.64 $ 0.62 $ 0.61 5% 3 % Pre-tax operating margin1 29 % 30 % 29 % Return on Tangible Common Equity1 18.4 % 18.4 % 21.3 % 1 Represents a Non-GAAP measure. See Appendix for additional reconciliations. Additional disclosures regarding this measure and other Non-GAAP adjusted measures are available in the Corporation’s reports filed with the SEC, available at www.bnymellon.com/investorrelations. bps - basis points YoY Operating leverage of 245 bps; 183 bps QoQ excluding Investment and other income and Net securities gains1

 
7 Third Quarter 2014 – Financial Highlights Investment Management Metrics Asset Under Management (AUM)1 $ in billions 3Q14 LTM 9/30/14 Beginning balance of AUM $1,636 $1,532 Net inflows (outflows): Long-Term: Equity (2 ) (12 ) Fixed income — 4 Index (3 ) 1 Liability-driven investments2 18 25 Alternative investments — 5 Total long-term inflows 13 23 Short-term: Cash 19 — Total net inflows 32 23 Net market/currency impact (22 ) 91 Ending balance of AUM3 $1,646 $1,646 Wealth Management Growth vs. $ in millions 3Q14 3Q13 2Q14 Average loans $ 10,772 14 % 4 % Average deposits $ 13,764 (1 )% 2 % 1 Excludes securities lending cash management assets and assets managed in the Investment Services business. 2 Includes currency and overlay assets under management. 3 Preliminary. LTM - Last Twelve Months

 
8 Third Quarter 2014 – Financial Highlights Investment Services Metrics Growth vs. 3Q14 3Q13 2Q14 Asset under custody /administration at period end (trillions)1,2 $ 28.3 3 % (1 )% Market value of securities on loan at period end (billions)3 $ 282 11 % 1 % Average loans (millions) $ 33,785 21 % 2 % Average deposits (millions) $ 221,734 8 % — % Broker-Dealer Average tri-party repo balances (billions) $ 2,063 6 % 2 % Clearing Services Global DARTS volume (thousands) 209 (1 )% 1 % Average active clearing accounts (U.S. platform) (thousands) 5,805 3 % 1 % Average long-term mutual fund assets (U.S. platform) (millions) $ 442,827 17 % 2 % Depositary Receipts Number of sponsored programs 1,302 (4 )% (1 )% 1 Includes the AUC/A of CIBC Mellon of $1.2 trillion at Sept. 30, 2013, June 30, 2014 and Sept. 30, 2014. 2 Preliminary. 3 Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent, beginning in the fourth quarter of 2013, on behalf of CIBC Mellon clients, which totaled $62 billion at Dec. 31, 2013, $66 billion at March 31, 2014, $64 billion at June 30, 2014 and $65 billion at Sept. 30, 2014.

 
9 Third Quarter 2014 – Financial Highlights Fee and Other Revenue Growth vs. Drivers ($ in millions) 3Q14 3Q13 2Q14 Asset servicing1 $ 1,025 6 % — % Asset Servicing  YoY: Organic growth, higher market values, net new business and higher collateral management fees  QoQ: Organic growth and seasonally lower securities lending revenue Clearing Services  YoY: Higher clearing accounts, higher mutual fund positions and higher asset levels  QoQ: Higher clearing accounts, higher mutual fund positions, higher asset levels and higher DARTS volume Issuer Services  YoY: Lower Corporate Trust fees  QoQ: Seasonally higher Depositary Receipt fees Treasury Services  Higher payment volumes Investment Management and Performance Fees  YoY: Higher equity markets, currency impact and higher performance fees  QoQ: Higher equity markets, currency impact and seasonally lower performance fees Foreign Exchange & Other Trading Revenue  YoY: Higher FX volumes and lower volatility  QoQ: Higher FX volumes Clearing services 337 7 3 Issuer services 315 (2 ) 36 Treasury services 142 4 1 Total investment services fees 1,819 5 6 Investment management and performance fees 881 7 — Foreign exchange and other trading revenue 153 (4 ) 18 Distribution and servicing 44 2 2 Financing-related fees 44 — — Investment and other income 890 N/M N/M Total fee revenue 3,831 30 29 Net securities gains 20 N/M N/M Total fee and other revenue - GAAP $ 3,851 29 % 29 % 1 Asset servicing fees include securities lending revenue of $35 million in 3Q13, $46 million in 2Q14 and $37 million in 3Q14. NM - Not Meaningful

 
10 Third Quarter 2014 – Financial Highlights Net Interest Revenue Growth vs. Drivers ($ in millions) 3Q14 3Q13 2Q14 Net interest revenue (non-FTE) $ 721 (7 )% — % Net Interest Revenue  YoY: Lower asset yields, lower accretion and higher average interest-earning assets driven by higher deposits  QoQ: Higher interest-earnings deposits and lower asset yields  Euro-denominated deposit liabilities comprised 15% of average deposits in 3Q14 and 16% in 2Q14 Net interest revenue (FTE) - Non-GAAP 736 (6 ) — Net interest margin (FTE) 0.94 % (22) bps (4) bps Selected Average Balances: Cash/interbank investments $ 139,278 20 % (1 )% Trading account securities 5,435 (2 ) (2 ) Securities 112,055 11 10 Loans 54,835 14 3 Interest-earning assets 311,603 15 4 Interest-bearing deposits 164,233 7 1 Noninterest-bearing deposits 82,334 14 6 bps – basis points FTE – fully taxable equivalent

 
11 Third Quarter 2014 – Financial Highlights Noninterest Expense Growth vs. Drivers ($ in millions) 3Q14 3Q13 2Q14 Staff $ 1,477 (3 )% 3 %  YoY: Lower pension, benefits of technology insourcing, streamlining actions, lower business development, annual merit increase and higher professional, legal and other purchased services  QoQ: Higher incentives due to 2Q14 adjustment related to previously disclosed charge, annual merit increase, higher professional, legal and other purchased services, lower sub-custody and business development expenses and streamlining actions Professional, legal and other purchased services 323 9 3 Software and equipment 234 4 (1 ) Net occupancy 154 1 1 Distribution and servicing 107 (1 ) (4 ) Sub-custodian 67 (6 ) (17 ) Business development 61 (3 ) (10 ) Other 250 — (28 ) Amortization of intangible assets 75 (7 ) — M&I, litigation and restructuring charges 220 N/M N/M Total noninterest expense – GAAP $ 2,968 7 % 1 % Total noninterest expense excluding amortization of intangible assets, M&I, litigation and restructuring charges and the charge related to investment management funds, net of incentives – Non-GAAP1 $ 2,673 — % 1 % Full-time employees 50,900 100 (200) 1 Represents a Non-GAAP measure. See Appendix for reconciliation. Additional disclosures regarding this measure and other Non-GAAP adjusted measures are available in the Corporation’s reports filed with the SEC, available at www.bnymellon.com/investorrelations. NM - Not Meaningful

 
12 Third Quarter 2014 – Financial Highlights Capital Ratios Highlights 9/30/14 6/30/14 9/30/13 Regulatory capital ratios:1,2,3  Capital ratios remain strong  Sept. YTD '14: Generated $1.9 billion of net Tier 1 common  In 3Q14, purchased 11 million common shares for $431 million; 35 million shares for $1.2 billion YTD  Declared a quarterly dividend of $0.17 per common share CET1 ratio 11.4 % 11.4 % 14.2 % 4 Tier 1 capital ratio 12.4 12.4 15.8 Total (Tier 1 plus Tier 2) capital ratio 12.7 12.8 16.8 Leverage capital ratio 5.8 5.9 5.6 Selected regulatory capital ratios - fully phased- in - Non-GAAP:1,2,4 Estimated CET1: Standardized approach 10.8 % 10.3 % 10.1 % Advanced approach 10.0 10.0 11.1 Estimated Supplementary leverage ratio ("SLR")5 4.6 % 4.7 % N/A * Footnotes 1 through 5 provided in the Appendix.e Append N/A (Not available)

 
13 Third Quarter 2014 – Financial Highlights Investment Management . Growth vs. Drivers ($ in millions) 3Q14 3Q13 2Q14 Investment management and performance fees $ 877 8 % — % Investment management fees  YoY & QoQ: Higher equity markets and currency impact Performance fees  YoY +$10MM: Strong performance of liability-driven investments  QoQ ($7MM): Seasonality Other revenue  Declined ($10MM) YoY; ($32MM) QoQ primarily reflecting lower seed capital gains Net interest revenue  YoY & QoQ: Higher average loans and impact of changing average deposit levels Noninterest expense  YoY: Currency impact and business development expenses related to strategic initiatives Distribution and servicing 41 — — Other1 16 N/M N/M Net interest revenue 69 3 5 Total Revenue $ 1,003 6 % (3 )% Noninterest expense (ex. amortization of intangible assets and the charge related to investment management funds, net of incentives) $ 727 6 % — % Income before taxes (ex. amortization of intangible assets and the charge related to investment management funds, net of incentives) $ 276 6 % (11 )% Pre-tax operating margin 24 % 76 bps N/M Adjusted pre-tax operating margin2 33 % (36) bps (267) bps Assets Under Management3 (in billions) $ 1,646 7 % 1 % Memo: Assets Under Management net inflows $ 32 Net long-term inflows 13 Net short-term inflows 19 1 Total fee and other revenue includes the impact of the consolidated investment management funds. Additionally, other revenue includes asset servicing, treasury services, foreign exchange and other trading revenue and investment and other income 2 Excludes the net negative impact of money market fee waivers, amortization of intangible assets and the charge related to investment management funds net of incentives, and is net of distribution and servicing expense. Represents a Non-GAAP measure. See Appendix for reconciliation. Additional disclosures regarding this measure and other Non-GAAP adjusted measures are available in the Corporation’s reports filed with the SEC, available at www.bnymellon.com/investorrelations. 3 Preliminary. NM - Not Meaningful bps – basis points

 
14 Third Quarter 2014 – Financial Highlights Investment Services Growth vs. Drivers ($ in millions) 3Q14 3Q13 2Q14 Investment services fees: Asset Servicing  YoY: Organic growth, higher market values, net new business and higher collateral management fees  QoQ: Organic growth and seasonally lower securities lending revenue Clearing Services  YoY: Higher clearing accounts, higher mutual fund positions and higher asset levels  QoQ: Higher clearing accounts, higher mutual fund positions, higher asset levels and higher DARTS volume Issuer Services  YoY: Lower Corporate Trust fees  QoQ: Seasonally higher Depositary Receipt fees Treasury Services  Higher payment volumes Foreign exchange and other trading  YoY: Higher FX volumes and lower volatility  QoQ: Higher FX volumes Net interest revenue  YoY: and QoQ: Higher deposits and loans, lower yield and lower accretion Noninterest expense  YoY: Higher litigation, higher professional, legal and other purchased services and lower staff  QoQ: Higher litigation, lower sub-custody and lower staff Asset servicing $ 998 6 % 1 % Clearing services 336 7 4 Issuer services 314 (2 ) 36 Treasury services 139 3 (1 ) Total investment services fees 1,787 5 6 Foreign exchange and other trading revenue 159 (10 ) 10 Other1 59 (6 ) (32 ) Net interest revenue 583 (6 ) (2 ) Total revenue $ 2,588 1 % 3 % Noninterest expense (ex. amortization of intangible assets) $ 1,835 4 % 1 % Income before taxes (ex. amortization of intangible assets) $ 753 (6 )% 9 % Pre-tax operating margin 27 % (208) bps 173 bps Pre-tax operating margin (ex. amortization of intangible assets) 29 % (217) bps 168 bps Investment services fees as a percentage of noninterest expense2 100 % 279 bps 752 bps AUC/A at period end3 (in trillions) $ 28.3 3 % (1 )% 1 Total fee and other revenue includes investment management fees and distribution and servicing revenue 2 Noninterest expense excludes amortization of intangible assets and litigation expense. 3 Preliminary. bps – basis points

 
APPENDIX

 
16 Third Quarter 2014 – Financial Highlights Expense & Pre-Tax Operating Margin - Non-GAAP Reconciliation 3Q14 2Q14 3Q13 ($ in millions) Total revenue – GAAP $ 4,611 $ 3,745 $ 3,783 Less: Net income attributable to noncontrolling interests of consolidated investment management funds 23 17 8 Gain on the sale of investment in Wing Hang 490 — — Gain on the sale of One Wall Street building 346 — — Total revenue, as adjusted – Non-GAAP $ 3,752 $ 3,728 $ 3,775 Total noninterest expense – GAAP $ 2,968 $ 2,946 $ 2,779 Less: Amortization of intangible assets 75 75 81 M&I, litigation and restructuring charges 220 122 16 Charge related to investment management funds, net of incentives — 109 — Total noninterest expense excluding amortization of intangible assets, M&I, litigation and restructuring charges and the charge related to investment management funds, net of incentives – Non-GAAP2 $ 2,673 $ 2,640 $ 2,682 Provision for credit losses (19 ) (12 ) 2 Income before income taxes, as adjusted – Non-GAAP2 $ 1,098 $ 1,100 $ 1,091 Pre-tax operating margin – Non-GAAP1,2 29 % 30 % 29 % 1 Income before taxes divided by total revenue. 2 Non-GAAP excludes M&I, litigation and restructuring charges, the gain on the sale of our investment in Wing Hang, the gain on the sale of the One Wall Street building, a charge related to investment management funds, net of incentives and net income attributable to noncontrolling interests of consolidated investment management funds, if applicable. .

 
17 Third Quarter 2014 – Financial Highlights Return on Tangible Common Equity Reconciliation 3Q14 2Q14 3Q13 ($ in millions) Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP $ 1,070 $ 554 $ 962 Add: Amortization of intangible assets, net of tax 49 49 52 Net income applicable to common shareholders of The Bank of New York Mellon Corporation excluding amortization of intangible assets – Non-GAAP 1,119 603 1,014 Less: Gain on the sale of investment in Wing Hang 315 — — Gain on the sale of the One Wall Street building 204 — — Add: M&I, litigation and restructuring charges 183 76 12 Benefit related to the disallowance of certain foreign tax credits — — (261 ) Charge related to investment management funds, net of incentives — 85 — Net income applicable to common shareholders of The Bank of New York Mellon Corporation, as adjusted – Non-GAAP2 $ 783 $ 764 $ 765 Average common shareholders’ equity $ 36,751 $ 36,565 $ 34,264 Less: Average goodwill 18,109 18,149 17,975 Average intangible Assets 4,274 4,354 4,569 Add: Deferred tax liability – tax deductible goodwill1 1,317 1,338 1,262 Deferred tax liability – intangible assets1 1,230 1,247 1,242 Average tangible common shareholders’ equity $ 16,915 $ 16,647 $ 14,224 Return on tangible common equity – Non-GAAP2,3 26.2 % 14.5 % 28.3 % Return on tangible common equity – Non-GAAP adjusted2,3 18.4 % 18.4 % 21.3 % 1 Deferred tax liabilities are based on fully phased-in Basel III rules. The first and second quarters of 2014 include deferred tax liabilities on tax deductible intangible assets permitted under Basel III rules. 2 Non-GAAP excludes M&I, litigation and restructuring charges, the gain on the sale of our investment in Wing Hang, the gain on the sale of the One Wall Street building, a charge related to investment management funds, net of incentives and the benefit related to the disallowance of certain foreign tax credits, if applicable. 3 Annualized. .

 
18 Third Quarter 2014 – Financial Highlights Earnings Per Share Reconciliation Growth vs. ($ in dollars) 3Q14 2Q14 3Q13 3Q13 2Q14 GAAP results $ 0.93 $ 0.48 0.82 Add: Charge related to investment management funds, net of incentives — 0.07 — Litigation and restructuring charges 0.16 0.06 0.01 Benefit related to the disallowance of certain foreign tax credits — — (0.22 ) Less: Gain on the sale of investment in Wing Hang Bank Limited 0.27 — — Gain on the sale of One Wall Street building 0.18 — — Non-GAAP results $ 0.64 $ 0.62 $ 0.61 5 % 3 % 1 Does not foot due to rounding. 1

 
19 Third Quarter 2014 – Financial Highlights ($ in millions) 3Q14 3Q13 2Q14 Asset servicing1 $ 1,025 $ 964 $ 1,022 Clearing services 337 315 326 Issuer services 315 322 231 Treasury services 142 137 141 Total investment services fees 1,819 1,738 1,720 Investment management and performance fees 881 821 883 Foreign exchange and other trading revenue 153 160 130 Distribution and servicing 44 43 43 Financing-related fees 44 44 44 Investment and other income 890 151 142 Total fee revenue 3,831 2,957 2,962 Net securities gains 20 22 18 Total fee and other revenue - GAAP $ 3,851 $ 2,979 $ 2,980 Income from consolidated investment management funds 39 32 46 Net interest revenue 721 772 719 Total revenue - GAAP $ 4,611 $ 3,783 $ 3,745 ($ in millions) 3Q14 3Q13 2Q14 Total revenue - GAAP $ 4,611 $ 3,783 $ 3,745 Less: Investment and other income 890 151 142 Net securities gains 20 22 18 Add: Net income attributable to noncontrolling interests related to consolidated investment management funds (23 ) (8 ) (17 ) Revenue (excluding investment and other income and net securities gains) $ 3,678 $ 3,602 $ 3,568 Revenue (ex. investment and other income & net securities gains) 1 Asset servicing fees include securities lending revenue of $35 million in 3Q13, $46 million in 2Q14 and $37 million in 3Q14.

 
20 Third Quarter 2014 – Financial Highlights Operating leverage (ex. investment and other income & net securities gains) 1 Non-GAAP excludes M&I, litigation and restructuring charges, the gain on the sale of our investment in Wing Hang, the gain on the sale of the One Wall Street building, a charge related to investment management funds, net of incentives and net income attributable to noncontrolling interests of consolidated investment management funds, if applicable. bps – basis points Growth vs. ($ in dollars) 3Q14 2Q14 3Q13 3Q13 2Q14 Revenue (excluding investment and other income and net securities gains) 3,678 3,568 3,602 2 % 3 % Total noninterest expense excluding amortization of intangible assets, M&I, litigation and restructuring charges and the charge related to investment management funds, net of incentives – Non-GAAP1 2,673 2,640 2,682 — % 1 % Operating leverage (excluding investment and other income and net securities gains) 245 bps 183 bps

 
21 Third Quarter 2014 – Financial Highlights Capital Ratio Footnotes 1 Sept. 30, 2014 regulatory capital ratios are preliminary. Please reference slides 22 and 23. See the “Capital Ratios” section in the Earnings Release for additional detail. 2 Beginning with June 30, 2014, risk-based capital ratios include the net impact of including the total consolidated assets of certain consolidated investment management funds in risk-weighted assets. These assets were not included in prior periods. The leverage ratio was not affected. 3 The Collins Floor comparison of the CET1, Tier 1 and Total risk-based regulatory capital ratios which is calculated based on Basel III components of capital, as phased-in, and asset risk-weightings using the general risk-based guidelines included in the final rules released by the Board of Governors of the Federal Reserve System (the “Federal Reserve”) on July 2, 2013 (the “Final Capital Rules”) (which for 2014 look to Basel I-based requirements) were 14.3%, 15.5% and 16.2%, respectively, at June 30, 2014 and 15.1%, 16.3% and 17.0%, respectively, at Sept. 30, 2014. 4 Please reference slides 22 and 23. See the “Capital Ratios” section in the Earnings Release for additional detail. 5The estimated fully phased-in SLR as of June 30, 2014 is based on our interpretation of the Final Capital Rules, as supplemented by the Notice of Proposed Rulemaking released in April 2014 concerning the SLR, except that off-balance sheet exposures included in total leverage exposure reflect the end of period measures, rather than a daily average. The estimated fully phased-in SLR as of Sept. 30, 2014 is based on our interpretation of the Final Capital Rules, as supplemented by the Federal Reserve’s final rules on the SLR. On a fully phased-in basis, we expect to satisfy a minimum SLR of over 5%, 3% attributable to a regulatory minimum SLR, and greater than 2% attributable to a buffer applicable to U.S. G-SIBs. t

 
22 Third Quarter 2014 – Financial Highlights Estimated Fully Phased-In Basel III CET1 Ratio - Non-GAAP1 9/30/14 6/30/14 9/30/13 ($ in millions) Total Tier 1 capital $ 21,019 $ 20,669 $ 18,074 Adjustments to determine estimated fully phased-in Basel III CET1: Deferred tax liability – tax deductible intangible assets — — 82 Intangible deduction (2,388 ) (2,453 ) — Preferred stock (1,562 ) (1,562 ) (1,562 ) Trust preferred securities (162 ) (171 ) (324 ) Other comprehensive income (loss) and net pension fund assets: Securities available-for-sale 578 586 487 Pension liabilities (675 ) (691 ) (1,348 ) Net pension fund assets — — (279 ) Total other comprehensive income (loss) and net pension fund assets (97 ) (105 ) (1,140 ) Equity method investments (92 ) (99 ) (479 ) Deferred tax assets — — (26 ) Other 2 (2 ) 18 Total estimated fully phased-in Basel III CET1 $ 16,720 $ 16,277 $ 14,643 Under the Standardized Approach: Estimated fully phased-in Basel III risk-weighted assets $ 154,298 $ 158,168 $ 145,589 Estimated fully phased-in Basel III CET1 ratio – Non-GAAP2 10.8 % 10.3 % 10.1 % Under the Advanced Approach: Estimated fully phased-in Basel III risk-weighted assets $ 167,933 $ 162,072 $ 131,583 Estimated fully phased-in Basel III CET1 ratio – Non-GAAP2 10.0 % 10.0 % 11.1 % 1 Sept. 30, 2014 information is preliminary. 2 Beginning with June 30, 2014, risk-based capital ratios include the net impact of including the total consolidated assets of certain consolidated investment management funds in risk-weighted assets. These assets were not included in prior periods.

 
23 Third Quarter 2014 – Financial Highlights Basel I CET1 Ratio & Estimated SLR - Non-GAAP Reconciliation Basel I CET1 ratio ($ in millions) 9/30/13 Total Tier 1 capital – Basel I $ 18,074 Less: Trust preferred securities 324 Preferred stock 1,562 Total CET1 – Basel I $ 16,188 Total risk-weighted assets – Basel I $ 114,404 Basel I CET1 ratio – Non-GAAP 14.2 % Estimated SLR - Non-GAAP1 ($ in millions) 6/30/14 9/30/14 Total CET1 - fully phased-in $ 16,277 $ 16,720 Additional Tier 1 capital 1,562 1,560 Total Tier 1 capital $ 17,839 $ 18,280 Total leverage exposure: Quarterly average total assets 369,212 380,409 Less: Amounts deducted from Tier 1 capital 20,480 20,166 Total on-balance sheet assets, as adjusted 348,732 360,243 Off-balance sheet exposures: Potential future exposure for derivatives contracts (plus certain other items) 11,115 11,694 Repo-style transaction exposures included in SLR — — Credit-equivalent amount other off-balance sheet exposures (less SLR exclusions) 22,658 21,924 Total off-balance sheet exposures 33,773 33,618 Total leverage exposure $ 382,505 $ 393,861 Estimated SLR 4.7 % 4.6 % 1 The estimated fully phased-in SLR as of June 30, 2014 is based on our interpretation of the Final Capital Rules, as supplemented by the Notice of Proposed Rulemaking released in April 2014 concerning the SLR, except that off-balance sheet exposures included in total leverage exposure reflect the end of period measures, rather than a daily average. The estimated fully phased-in SLR as of Sept. 30, 2014 is based on our interpretation of the Final Capital Rules, as supplemented by the Federal Reserve’s final rules on the SLR. On a fully phased-in basis, we expect to satisfy a minimum SLR of over 5%, 3% attributable to a regulatory minimum SLR, and greater than 2% attributable to a buffer applicable to U.S. G-SIBs.

 
24 Third Quarter 2014 – Financial Highlights Pre-Tax Operating Margin – Investment Management Reconciliation 3Q14 2Q14 3Q13 ($ in millions) Income before income taxes – GAAP $ 245 $ 171 $ 225 Add: Amortization of intangible assets 31 31 35 Money market fee waivers 29 28 30 Charge related to investment management funds, net of incentives — 109 — Income before income taxes excluding amortization of intangible assets, money market fee waivers and the charge related to investment management funds, net of incentives – Non-GAAP $ 305 $ 339 $ 290 Total revenue – GAAP $ 1,003 $ 1,036 $ 949 Less: Distribution and servicing expense 105 111 107 Money market fee waivers benefiting distribution and servicing expense 38 37 38 Add: Money market fee waivers impacting total revenue 67 65 68 Total revenue net of distribution and servicing expense and excluding money market fee waivers - Non- GAAP $ 927 $ 953 $ 872 Pre-tax operating margin1 24 % 16 % 24 % Pre-tax operating margin excluding amortization of intangible assets, money market fee waivers, the charge related to investment management funds, net of incentives and net of distribution and servicing expense – Non-GAAP1 33 % 36 % 33 % 1 Income before taxes divided by total revenue. .