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Form 8-K Bank of New York Mellon For: Dec 31

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January 23, 2015 7:15 AM EST
4Q2014Earnings8-K--Jan23
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) – January 23, 2015
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 January 23, 2015, The Bank of New York Mellon Corporation (“BNY Mellon”) issued an Earnings Release announcing its financial results for the fourth 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 January 23, 2015, in conjunction with a conference call and webcast regarding BNY Mellon’s financial results, Key Facts and a Fourth 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 Fourth 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. These exhibits 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 8.01.    OTHER EVENTS.

In January 2011, the Enforcement Division of the U.S. Securities and Exchange Commission (the “SEC Staff”) informed several financial institutions, including BNY Mellon, that it had commenced an inquiry into certain of their business practices and relationships with sovereign wealth fund clients.  BNY Mellon has fully cooperated with the SEC Staff's investigation.  In the third quarter of 2014, the SEC Staff issued Wells notices to certain current and former employees of BNY Mellon, informing them that the SEC Staff has made a preliminary determination to recommend enforcement action against them for alleged violations of the U.S. Foreign Corrupt Practices Act in connection with the provision of a limited number of internships to relatives of sovereign wealth fund officials.  BNY Mellon received a similar Wells notice in the fourth quarter of 2014.  Although it is not possible to predict the ultimate resolution or financial liability with respect to this matter, BNY Mellon is currently of the opinion that the outcome of

2


this matter will not have a material effect on BNY Mellon’s business, financial condition or results of operations.
 
ITEM 9.01.    FINANCIAL STATEMENTS AND EXHIBITS.
(d)    EXHIBITS.
Exhibit
 
 
Number
 
Description
 
 
 
99.1

 
The Bank of New York Mellon Corporation Earnings Release dated January 23, 2015, announcing financial results for the fourth quarter of 2014.
 
 
 
99.2

 
The Bank of New York Mellon Corporation Quarterly Financial Trends dated January 23, 2015, for the fourth quarter of 2014.
 
 
 
99.3

 
Key Facts – Fourth Quarter 2014 dated January 23, 2015.
 
 
 
99.4

 
Fourth Quarter 2014 Financial Highlights Presentation dated January 23, 2015.


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: January 23, 2015
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 January 23, 2015.
Furnished herewith

99.2
Quarterly Financial Trends dated January 23, 2015.
Furnished herewith

99.3
Key Facts – Fourth Quarter 2014 dated January 23, 2015.
Furnished herewith

99.4
Fourth Quarter 2014 Financial Highlights Presentation dated January 23, 2015.
Furnished herewith





Ex99.1_EarningsRelease4Q14
BNY Mellon 4Q14 Earnings Release


News Release


Contacts: MEDIA:
ANALYSTS:
Kevin Heine
Valerie Haertel
(212) 635-1590
(212) 635-8529


BNY MELLON REPORTS FOURTH QUARTER EARNINGS OF $807 MILLION OR $0.70 PER COMMON SHARE, INCLUDING:
•
$0.12 per common share primarily from the previously disclosed tax benefit, net of litigation and restructuring charges
•
Earnings per common share up 7% year-over-year on an adjusted basis (a)

FULL-YEAR 2014 EARNINGS OF $3.1 BILLION OR $2.67 PER COMMON SHARE, INCLUDING $0.28 PER COMMON SHARE FROM NON-OPERATING ITEMS (a)
•
Earnings per common share up 5% in 2014 on an adjusted basis (a)

SIGNIFICANT PROGRESS ON EXPENSE CONTROL
•
Staff expense decreased 7% year-over-year

STRONG CAPITAL GENERATION AND RETURN OF VALUE TO COMMON SHAREHOLDERS
•
Repurchased 11.0 million common shares for $432 million in the fourth quarter and 46.2 million common shares for $1.7 billion in full-year 2014
•
Declared common stock dividend of $0.17 per share in the fourth quarter
•
Return on tangible common equity of 20%, or 16% on an adjusted basis, in the fourth quarter and 20%, or 18% on an adjusted basis, in full-year 2014 (a)


NEW YORK, January 23, 2015 – The Bank of New York Mellon Corporation (“BNY Mellon”) (NYSE: BK) today reported fourth quarter net income applicable to common shareholders of $807 million, or $0.70 per diluted common share, or $667 million, or $0.58 per diluted common share, adjusted for the previously disclosed benefit of a tax carryback claim, net of litigation and restructuring charges. In the fourth quarter of 2013, net income applicable to common shareholders was $513 million, or $0.44 per diluted per common share, or $629 million, or $0.54 per diluted common share, adjusted for a loss on an equity investment. In the third quarter of 2014, net income applicable to common shareholders was $1.07 billion, or $0.93 per diluted common share, or $734 million, or $0.64 per diluted common share, adjusted for the gains on the sales of our investment in Wing Hang Bank and the One Wall Street building, net of litigation and restructuring charges. (a)

“Our fourth quarter and full-year results cap solid performance for our shareholders. Throughout 2014, we demonstrated our focus on and commitment to controlling expenses to create positive operating leverage, strengthening our capital position, and creating value for our clients and shareholders. We generated positive


_________________________________________________________________________________
(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 4Q14 Earnings Release


operating leverage for the full year - even while absorbing elevated regulatory compliance costs and investing in our business to enhance future growth. Additionally, 79 percent of our earnings were returned to our shareholders in the form of dividends and share repurchases,” said Gerald L. Hassell, chairman and chief executive officer of BNY Mellon.

“Our fourth quarter results also reflect our strong expense discipline and continuing efforts to drive efficiency. On the revenue front, we were particularly pleased with the strong fourth-quarter performance in clearing services and global collateral services, where we have been focused on broadening our unique suite of solutions for clients,” added Mr. Hassell.

“As we look ahead, we remain confident in our ability to execute our strategic priorities, which include increasing revenue, maintaining a strong capital position and delivering value-added solutions to our clients. We also continue to focus on leveraging technology and operations innovations to drive continuous improvement in productivity and service quality while reducing costs and risk throughout the organization,” continued Mr. Hassell.

“I want to thank our employees around the world for their relentless efforts to deliver the solutions, expertise and value that the world’s most sophisticated investors rely on to achieve their investment objectives,” concluded Mr. Hassell.

In 2014, net income applicable to common shareholders totaled $3.1 billion, or $2.67 per diluted common share, or $2.8 billion, or $2.39 per diluted common share, adjusted for the gains on the sales of our investment in Wing Hang Bank and the One Wall Street building, the benefit primarily related to a tax carryback claim, litigation and restructuring charges and the charge related to investment management funds, net of incentives. In 2013, net income applicable to common shareholders totaled $2.0 billion, or $1.73 per diluted common share, or $2.7 billion, or $2.28 per diluted common share, adjusted for litigation and restructuring charges, the charge related to investment management funds, net of incentives, and the U.S. Tax Court’s decisions related to the disallowance of certain foreign tax credits. (a)


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. EST on Jan. 23, 2015. This conference call and audio webcast will include forward-looking statements and may include other material information.

Investors 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. EST on Jan. 23, 2015. Replays of the conference call and audio webcast will be available beginning Jan. 23, 2015 at approximately 2 p.m. EST through Feb. 23, 2015 by dialing (866) 513-9973 (U.S.) or (203) 369-1999 (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 4Q14 Earnings Release


FOURTH QUARTER 2014 FINANCIAL HIGHLIGHTS (a)
(comparisons are 4Q14 vs. 4Q13 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)
4Q13

4Q14

Inc(Dec)

 
4Q13

4Q14

Inc(Dec)

GAAP results
$
0.44

$
0.70

 
 
$
513

$
807

 
Add: Litigation and restructuring charges
—

0.01

 
 
1

10

 
 Loss related to an equity investment
0.10

—

 
 
115

—

 
Less: Benefit primarily related to a tax carryback claim
—

0.13

 
 
—

150

 
Non-GAAP results
$
0.54

$
0.58

7
%
 
$
629

$
667

6
%


•
Total revenue was $3.7 billion, an increase of 2%, or a decline of 3% as adjusted (Non-GAAP).
-    Investment services fees increased 1% reflecting organic growth, net new business offset by lower Depositary Receipts revenue and the unfavorable impact of a stronger U.S. dollar.
-    Investment management and performance fees decreased 2% reflecting the unfavorable impact of a stronger U.S. dollar and lower performance fees, partially offset by higher equity market values.
-    Foreign exchange revenue increased 31% driven by higher volumes and volatility, partially offset by lower Depositary Receipts-related activity.
-    Investment and other income increased $121 million driven by a loss related to an equity investment recorded in 4Q13, partially offset by lower seed capital gains.
-    Net interest revenue decreased 6% reflecting lower asset yields, higher premium amortization on agency mortgage backed securities, lower accretion and the impact of interest rate hedging.
•
The provision for credit losses was $1 million in 4Q14.
•
Noninterest expense decreased 5%. The decrease reflects lower staff expense, the favorable impact of a stronger U.S. dollar, lower asset-based taxes and business development expense, partially offset by higher professional, legal and other purchased services.
•
Effective tax rate of 9.4%; includes a 16.5% benefit primarily related to the previously disclosed approval of a tax carryback claim and the tax impact of consolidated investment management funds.

•
Assets under custody and/or administration (“AUC/A”) and Assets under management (“AUM”)
-
AUC/A of $28.5 trillion, increased 3% primarily reflecting higher market values and net new business, partially offset by the unfavorable impact of a stronger U.S. dollar.
--    Estimated new AUC/A wins in Asset Servicing of $130 billion in 4Q14.
-    AUM of a record $1.71 trillion, increased 8% driven by higher equity market values and net new business, partially offset by the unfavorable impact of a stronger U.S. dollar.
--    Long-term inflows totaled $27 billion in 4Q14 driven by liability-driven, fixed income and alternative investments.
--    Short-term inflows totaled $5 billion in 4Q14.

•Capital
-    Repurchased 11.0 million common shares for $432 million in 4Q14 and 46.2 million common shares for $1.7 billion in full-year 2014.
-    Return on tangible common equity of 20%, or 16% as adjusted (Non-GAAP), in 4Q14 and 20%, or 18% as adjusted (Non-GAAP), in full-year 2014 (a).
 
 
 
 
 
(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 the gains on the sales of our investment in Wing Hang Bank and the One Wall Street building, a loss related to an equity investment, M&I, litigation and restructuring charges, a charge (recovery) related to investment management funds, net of incentives, and the benefit primarily related to a tax carryback claim, if applicable.
Note: In the table above and throughout this document, sequential growth rates are unannualized.

Page - 3

BNY Mellon 4Q14 Earnings Release


FINANCIAL SUMMARY
(dollars in millions, except per share amounts; common shares in thousands)
 
 
 
 
 
4Q14 vs.
4Q13

1Q14

2Q14

3Q14

4Q14

4Q13
3Q14
Revenue:
 
 
 
 
 
 
 
Fee and other revenue
$
2,814

$
2,883

$
2,980

$
3,851

$
2,935

4
 %
(24
)%
Income from consolidated investment management funds
36

36

46

39

42

 
 
Net interest revenue
761

728

719

721

712

 
 
Total revenue – GAAP
3,611

3,647

3,745

4,611

3,689

2

(20
)
Less: Net income attributable to noncontrolling interests related to consolidated investment management funds
17

20

17

23

24

 
 
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
(175
)
—

—

—

—

 
 
Total revenue – Non-GAAP
3,769

3,627

3,728

3,752

3,665

(3
)
(2
)
Provision for credit losses
6

(18
)
(12
)
(19
)
1

 
 
Expense:
 
 
 
 
 
 
 
Noninterest expense – GAAP
2,877

2,739

2,946

2,968

2,745

(5
)
(8
)
Less: Amortization of intangible assets
82

75

75

75

73

 
 
M&I, litigation and restructuring charges
2

(12
)
122

220

21

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

(5
)
109

—

—

 
 
Total noninterest expense – Non-GAAP
2,793

2,681

2,640

2,673

2,651

(5
)
(1
)
Income:
 
 
 
 
 
 
 
Income before income taxes
728

926

811

1,662

943

30
 %
N/M

Provision for income taxes
172

232

217

556

88

 
 
Net income
$
556

$
694

$
594

$
1,106

$
855

 
 
Net (income) attributable to noncontrolling interests (a)
(17
)
(20
)
(17
)
(23
)
(24
)
 
 
  Net income applicable to shareholders of The Bank of New York Mellon Corporation
539

674

577

1,083

831

 
 
Preferred stock dividends
(26
)
(13
)
(23
)
(13
)
(24
)
 
 
Net income applicable to common shareholders of The Bank of New York Mellon Corporation
$
513

$
661

$
554

$
1,070

$
807

 
 
 
 
 
 
 
 
 
 
Key Metrics:
 
 
 
 
 
 
 
Pre-tax operating margin (b)
20
%
25
%
22
%
36
%
26
%
 
 
Non-GAAP (b)
26
%
27
%
30
%
29
%
28
%
 
 
 
 
 
 
 
 
 
 
Return on common equity (annualized) (b)
5.7
%
7.4
%
6.1
%
11.6
%
8.7
%
 
 
Non-GAAP (b)
7.6
%
7.8
%
8.4
%
8.5
%
7.7
%
 
 
 
 
 
 
 
 
 
 
Return on tangible common equity (annualized) - Non-GAAP (b)
14.3
%
17.6
%
14.5
%
26.2
%
19.5
%
 
 
Non-GAAP adjusted (b)
17.2
%
17.3
%
18.4
%
18.4
%
16.3
%
 
 
 
 
 
 
 
 
 
 
Fee revenue as a percentage of total revenue excluding net securities gains
78
%
79
%
79
%
83
%
79
%
 
 
 
 
 
 
 
 
 
 
Percentage of non-U.S. total revenue (c)
39
%
37
%
38
%
43
%
35
%
 
 
 
 
 
 
 
 
 
 
Average common shares and equivalents outstanding
 
 
 
 
 
 
 
Basic
1,142,861

1,138,645

1,133,556

1,126,946

1,120,672

 
 
Diluted
1,147,961

1,144,510

1,139,800

1,134,871

1,129,040

 
 
 
 
 
 
 
 
 
 
Period end:
 
 
 
 
 
 
 
Full-time employees
51,100

51,400

51,100

50,900

50,300

 
 
Book value per common share - GAAP (b)
$
31.46

$
31.94

$
32.49

$
32.77

$
32.62

 
 
Tangible book value per common share - Non-GAAP (b)
$
13.95

$
14.48

$
14.88

$
15.30

$
15.23

 
 
Cash dividends per common share
$
0.15

$
0.15

$
0.17

$
0.17

$
0.17

 
 
Common dividend payout ratio
34
%
26
%
35
%
18
%
24
%
 
 
Closing stock price per common share
$
34.94

$
35.29

$
37.48

$
38.73

$
40.57

 
 
Market capitalization
$
39,910

$
40,244

$
42,412

$
43,599

$
45,366

 
 
Common shares outstanding
1,142,250

1,140,373

1,131,596

1,125,710

1,118,228

 
 
(a)    Primarily attributable to noncontrolling interests related to consolidated investment management funds.
(b)
Non-GAAP excludes the gains on the sales of our investment in Wing Hang Bank and the One Wall Street building, a loss related to an equity investment, M&I, litigation and restructuring charges, a charge (recovery) related to investment management funds, net of incentives, and the benefit primarily related to a tax carryback claim, 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 4Q14 Earnings Release


CONSOLIDATED BUSINESS METRICS

Consolidated business metrics
 
 
 
 
 
 
4Q14 vs.
4Q13

1Q14

2Q14

3Q14

4Q14

 
4Q13
3Q14
Changes in AUM (in billions): (a)
 
 
 
 
 
 
 
 
Beginning balance of AUM
$
1,532

$
1,583

$
1,620

$
1,636

$
1,646

 
 
 
Net inflows (outflows):
 
 
 
 
 
 
 
 
Long-term:
 
 
 
 
 
 
 
 
Equity
(5
)
(1
)
(4
)
(2
)
(4
)
 
 
 
Fixed income
5

—

(1
)
—

4

 
 
 
Index
(3
)
—

7

(3
)
1

 
 
 
Liability-driven investments (b)
4

20

(17
)
18

24

 
 
 
Alternative investments
1

2

2

—

2

 
 
 
Total long-term inflows (outflows)
2

21

(13
)
13

27

 
 
 
Short term:
 
 
 
 
 
 
 
 
Cash
6

(7
)
(18
)
19

5

 
 
 
Total net inflows (outflows)
8

14

(31
)
32

32

 
 
 
Net market/currency impact
43

23

47

(22
)
32

 
 
 
Ending balance of AUM
$
1,583

$
1,620

$
1,636

$
1,646

$
1,710

(c)
8
 %
4
 %
 
 
 
 
 
 
 
 
 
AUM at period end, by product type: (a)
 
 
 
 
 
 
 
 
Equity
17
%
17
%
17
%
16
%
16
%
 
 
 
Fixed income
14

14

14

13

13

 
 
 
Index
20

20

21

21

21

 
 
 
Liability-driven investments (b)
26

27

27

28

29

 
 
 
Alternative investments
4

4

4

4

4

 
 
 
Cash
19

18

17

18

17

 
 
 
Total AUM
100
%
100
%
100
%
100
%
100
%
(c)
 
 
 
 
 
 
 
 
 
 
 
Wealth management:
 
 
 
 
 
 
 
 
Average loans (in millions)
$
9,755

$
10,075

$
10,372

$
10,772

$
11,124

 
14
 %
3
 %
Average deposits (in millions)
$
14,161

$
14,805

$
13,458

$
13,764

$
14,604

 
3
 %
6
 %
 
 
 
 
 
 
 
 
 
Investment Services:
 
 
 
 
 
 
 
 
Average loans (in millions)
$
31,211

$
31,468

$
33,115

$
33,785

$
35,448

 
14
 %
5
 %
Average deposits (in millions)
$
216,216

$
214,947

$
220,701

$
221,734

$
228,282

 
6
 %
3
 %
 
 
 
 
 
 
 
 
 
AUC/A at period end (in trillions) (d)
$
27.6

$
27.9

$
28.5

$
28.3

$
28.5

(c)
3
 %
1
 %
 
 
 
 
 
 
 
 
 
Market value of securities on loan at period end (in billions) (e)
$
235

$
264

$
280

$
282

$
289

 
23
 %
2
 %
 
 
 
 
 
 
 
 
 
Asset servicing:
 
 
 
 
 
 
 
 
Estimated new business wins (AUC/A) (in billions)
$
123

$
161

$
130

$
115

$
130

(c)
 
 
 
 
 
 
 
 
 
 
 
Depositary Receipts:
 
 
 
 
 
 
 
 
Number of sponsored programs
1,335

1,332

1,316

1,302

1,279

 
(4
)%
(2
)%
 
 
 
 
 
 
 
 
 
Clearing services:
 
 
 
 
 
 
 
 
Global DARTS volume (in thousands)
213

230

207

209

242

 
14
 %
16
 %
Average active clearing accounts (U.S. platform) (in thousands)
5,643

5,695

5,752

5,805

5,900

 
5
 %
2
 %
Average long-term mutual fund assets (U.S. platform) (in millions)
$
401,434

$
413,658

$
433,047

$
442,827

$
450,305

 
12
 %
2
 %
Average investor margin loans (U.S. platform) (in millions)
$
8,848

$
8,919

$
9,236

$
9,861

$
10,711

 
21
 %
9
 %
 
 
 
 
 
 
 
 
 
Broker-Dealer:
 
 
 
 
 
 
 
 
Average tri-party repo balances (in billions)
$
2,005

$
1,983

$
2,022

$
2,063

$
2,101

 
5
 %
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 Dec. 31, 2013, March 31, 2014, June 30, 2014 and Sept. 30, 2014, and $1.1 trillion at Dec. 31, 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 and Dec. 31, 2014.

Page - 5

BNY Mellon 4Q14 Earnings Release


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

Key market metrics
 
 
 
 
 
 
 
 
 
 
 
 
4Q14 vs.
4Q13

1Q14

2Q14

3Q14

4Q14

4Q13

3Q14

S&P 500 Index (a)
1848

1872

1960

1972

2059

11
 %
4
 %
S&P 500 Index – daily average
1769

1835

1900

1976

2009

14

2

FTSE 100 Index (a)
6749

6598

6744

6623

6566

(3
)
(1
)
FTSE 100 Index – daily average
6612

6680

6764

6756

6526

(1
)
(3
)
MSCI World Index (a)
1661

1674

1743

1698

1710

3

1

MSCI World Index – daily average
1602

1647

1698

1733

1695

6

(2
)
Barclays Capital Global Aggregate BondSM Index (a)(b)
354

365

376

361

357

1

(1
)
NYSE and NASDAQ share volume (in billions)
179

196

187

173

198

11

14

JPMorgan G7 Volatility Index – daily average (c)
8.20

7.80

6.22

6.21

8.54

4

38

Average Fed Funds effective rate
0.09
%
0.07
%
0.09
%
0.09
%
0.10
%
1 bps

1 bps

(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 4Q14 Earnings Release


FEE AND OTHER REVENUE

Fee and other revenue
 
 
 
 
 
4Q14 vs.
(dollars in millions)
4Q13

1Q14

2Q14

3Q14

4Q14

4Q13

3Q14

Investment services fees:
 
 
 
 
 
 
 
Asset servicing (a)
$
984

$
1,009

$
1,022

$
1,025

$
1,019

4
 %
(1
)%
Clearing services
324

325

326

337

347

7

3

Issuer services
237

229

231

315

193

(19
)
(39
)
Treasury services
137

136

141

142

145

6

2

Total investment services fees
1,682

1,699

1,720

1,819

1,704

1

(6
)
Investment management and performance fees
904

843

883

881

885

(2
)
—

Foreign exchange and other trading revenue
146

136

130

153

151

3

(1
)
Distribution and servicing
43

43

43

44

43

—

(2
)
Financing-related fees
43

38

44

44

43

—

(2
)
Investment and other income
(43
)
102

142

890

78

N/M
N/M
Total fee revenue
2,775

2,861

2,962

3,831

2,904

5

(24
)
Net securities gains
39

22

18

20

31

N/M
N/M
Total fee and other revenue
$
2,814

$
2,883

$
2,980

$
3,851

$
2,935

4
 %
(24
)%
(a)
Asset servicing fees include securities lending revenue of $31 million in 4Q13, $38 million in 1Q14, $46 million in 2Q14, $37 million in 3Q14 and $37 million in 4Q14.
N/M - Not meaningful.


KEY POINTS

•
Asset servicing fees were $1.0 billion, an increase of 4% year-over-year and a decrease of 1% sequentially. The year-over-year increase primarily reflects organic growth and net new business, partially offset by the unfavorable impact of a stronger U.S. dollar. The sequential decrease primarily reflects the unfavorable impact of a stronger U.S. dollar, partially offset by net new business.

•
Clearing services fees were $347 million, an increase of 7% year-over-year and 3% sequentially. Both increases were driven by higher clearance revenue reflecting higher DARTS volume. The year-over-year increase also reflects higher mutual fund and asset-based fees.

•
Issuer services fees were $193 million, a decrease of 19% year-over-year and 39% sequentially. The year-over-year decrease reflects lower corporate actions and dividend fees in Depositary Receipts. The sequential decrease is primarily due to seasonality in Depositary Receipts, partially offset by higher Corporate Trust fees.

•
Treasury services fees were $145 million in 4Q14 compared with $137 million in 4Q13 and $142 million in 3Q14. Both increases primarily reflect higher payment volumes.

•
Investment management and performance fees were $885 million, a decrease of 2% year-over-year and up slightly sequentially. Both comparisons reflect the unfavorable impact of a stronger U.S. dollar and higher equity market values. The year-over-year decrease also resulted from lower performance fees. The sequential increase also reflects seasonally higher performance fees and net new business.


Page - 7

BNY Mellon 4Q14 Earnings Release


•
Foreign exchange and other trading revenue
 
 
 
 
 
 
(in millions)
4Q13

1Q14

2Q14

3Q14

4Q14

 
Foreign exchange
$
126

$
130

$
129

$
154

$
165

 
Other trading revenue (loss):
 
 
 
 
 
 
Fixed income
20

1

(1
)
2

(18
)
 
Equity/other
—

5

2

(3
)
4

 
Total other trading revenue (loss)
20

6

1

(1
)
(14
)
 
Total foreign exchange and other trading revenue
$
146

$
136

$
130

$
153

$
151



Foreign exchange and other trading revenue totaled $151 million in 4Q14 compared with $146 million in 4Q13 and $153 million in 3Q14. In 4Q14, foreign exchange revenue totaled $165 million, an increase of 31% year-over-year and 7% sequentially. Both increases reflect higher volumes and volatility, partially offset by lower Depositary Receipts-related activity.

Other trading loss was $14 million in 4Q14, compared with other trading revenue of $20 million in 4Q13 and other trading loss of $1 million in 3Q14. Both decreases primarily reflect lower fixed income derivatives trading revenue due to exiting the derivatives sales and trading business and losses on hedging activities within one of the Investment Management boutiques, partially offset by the positive impact of interest rate hedging (which is offset in net interest revenue).

•
Investment and other income (loss)
 
 
 
 
 
 
(in millions)
4Q13

1Q14

2Q14

3Q14

4Q14

 
Corporate/bank-owned life insurance
$
40

$
30

$
30

$
34

$
37

 
Asset-related gains (losses)
22

(1
)
17

836

20

 
Expense reimbursements from joint venture
11

12

15

13

15

 
Lease residual gains
—

35

4

5

5

 
Private equity gains (losses)
5

5

(2
)
2

1

 
Transitional service agreements
2

—

—

—

—

 
Seed capital gains (losses)
20

6

15

(1
)
—

 
Equity investment revenue (loss)
(163
)
(2
)
17

(9
)
(5
)
 
Other income
20

17

46

10

5

 
Total investment and other income (loss)
$
(43
)
$
102

$
142

$
890

$
78



Investment and other income was $78 million in 4Q14 compared with a loss of $43 million in 4Q13 and income of $890 million in 3Q14. The year-over-year increase primarily reflects a loss related to an equity investment recorded in 4Q13 and lower seed capital gains. The sequential decrease primarily reflects the gains on the sales of our equity investment in Wing Hang Bank and our One Wall Street building, both recorded in 3Q14.


Page - 8

BNY Mellon 4Q14 Earnings Release


NET INTEREST REVENUE

Net interest revenue
 
 
 
 
 
4Q14 vs.
(dollars in millions)
4Q13

1Q14

2Q14

3Q14

4Q14

4Q13

3Q14

Net interest revenue (non-FTE)
$
761

$
728

$
719

$
721

$
712

(6)%

(1
)%
Net interest revenue (FTE) – Non-GAAP
781

744

736

736

726

(7
)
(1
)
Net interest margin (FTE)
1.09
%
1.05
%
0.98
%
0.94
%
0.91
%
(18
) bps
(3
) bps
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
Cash/interbank investments
$
132,198

$
127,134

$
140,357

$
139,278

$
140,599

6%

1%

Trading account securities
6,173

5,217

5,532

5,435

3,922

(36
)
(28
)
Securities
96,640

100,534

101,420

112,055

117,243

21

5

Loans
50,768

51,647

53,449

54,835

56,844

12

4

Interest-earning assets
285,779

284,532

300,758

311,603

318,608

11

2

Interest-bearing deposits
157,020

152,986

162,674

164,233

163,149

4

(1
)
Noninterest-bearing deposits
79,999

81,430

77,820

82,334

85,330

7

4

 
 
 
 
 
 
 
 
Selected average yields/rates:
 
 
 
 
 
 
 
Cash/interbank investments
0.40
%
0.43
%
0.43
%
0.38
%
0.31
%
 
 
Trading account securities
2.82

2.60

2.19

2.36

2.64

 
 
Securities
2.02

1.79

1.68

1.56

1.54

 
 
Loans
1.64

1.65

1.66

1.61

1.58

 
 
Interest-earning assets
1.21

1.17

1.10

1.05

1.02

 
 
Interest-bearing deposits
0.06

0.06

0.06

0.06

0.03

 
 
 
 
 
 
 
 
 
 
Average cash/interbank investments as a percentage of average interest-earning assets
46
%
45
%
47
%
45
%
44
%
 
 
Average noninterest-bearing deposits as a percentage of average interest-earning assets
28
%
29
%
26
%
26
%
27
%
 
 
bps – basis points.
FTE – fully taxable equivalent.


KEY POINTS

•
Net interest revenue totaled $712 million in 4Q14, a decrease of $49 million compared with 4Q13 and $9 million sequentially.

-    The year-over-year decrease primarily resulted from lower asset yields, higher premium amortization on agency mortgage backed securities, lower accretion and the impact of interest rate hedging (which is primarily offset in foreign exchange and other trading revenue). The decrease was partially offset by a change in the mix of assets and higher average interest-earning assets driven by higher deposits.

-    The sequential decrease was primarily driven by the impact of interest rate hedging of approximately $13 million (which is primarily offset in foreign exchange and other trading revenue) and lower accretion.

•
In the fourth quarter of 2014, we completed our plan to reduce interbank placement assets and increase our high quality liquid assets in the securities portfolio.



Page - 9

BNY Mellon 4Q14 Earnings Release


NONINTEREST EXPENSE

Noninterest expense
 
 
 
 
 
4Q14 vs.
(dollars in millions)
4Q13

1Q14

2Q14

3Q14

4Q14

4Q13

3Q14

Staff:
 
 
 
 
 
 
 
Compensation
$
929

$
925

$
903

$
909

$
893

(4
)%
(2
)%
Incentives
343

359

313

340

319

(7
)
(6
)
Employee benefits
250

227

223

228

206

(18
)
(10
)
Total staff
1,522

1,511

1,439

1,477

1,418

(7
)
(4
)
Professional, legal and other purchased services
344

312

314

323

390

13

21

Software and equipment
241

237

236

234

235

(2
)
—

Net occupancy
154

154

152

154

150

(3
)
(3
)
Distribution and servicing
110

107

112

107

102

(7
)
(5
)
Business development
96

64

68

61

75

(22
)
23

Sub-custodian
68

68

81

67

70

3

4

Other
258

223

347

250

211

(18
)
(16
)
Amortization of intangible assets
82

75

75

75

73

(11
)
(3
)
M&I, litigation and restructuring charges
2

(12
)
122

220

21

N/M

N/M

Total noninterest expense – GAAP
$
2,877

$
2,739

$
2,946

$
2,968

$
2,745

(5
)%
(8
)%
 
 
 
 
 
 
 
 
Total staff expense as a percentage of total revenue
42
%
41
%
38
%
32
%
38
%
 
 
 
 
 
 
 
 
 
 
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
$
2,793

$
2,681

$
2,640

$
2,673

$
2,651

(5
)%
(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, net of incentives (Non-GAAP) decreased 5% year-over-year and 1% sequentially.

-    Both comparisons primarily reflect lower staff expense, the favorable impact of a stronger U.S. dollar and lower asset-based taxes, partially offset by higher professional, legal and other purchased services.

--
The decrease in staff expense primarily reflects lower headcount as a result of streamlining actions, the benefit of replacing technology contractors with permanent staff and lower healthcare costs.

--
The increase in professional, legal and other purchased services was driven by higher expenses related to the implementation of strategic platforms.

-    The year-over-year decrease also reflects lower business development expense as a result of discretionary expense control.

-    The sequential decrease was partially offset by higher business development expense due to seasonality and higher legal fees.


Page - 10

BNY Mellon 4Q14 Earnings Release


INVESTMENT SECURITIES PORTFOLIO

At Dec. 31, 2014, the fair value of our investment securities portfolio totaled $119.1 billion. The net unrealized pre-tax gain on our total securities portfolio was $1.3 billion at Dec. 31, 2014 compared with $1.1 billion at Sept. 30, 2014. The increase in the net unrealized pre-tax gain was primarily driven by a decline in market interest rates. During 4Q14, we received $115 million of paydowns of sub-investment grade securities and sold $116 million of sub-investment grade available-for-sale securities.

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

Investment securities
portfolio


(dollars in millions)
Sept. 30, 2014

 
4Q14
change in
unrealized
gain (loss)

Dec. 31, 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
$
44,372

 
$
229

$
46,574

$
46,762

 
100
%
$
188

 
100
%
—
%
—
%
—
%
—
%
U.S. Treasury
25,449

 
13

24,639

24,857

 
101

218

 
100

—

—

—

—

Sovereign debt/sovereign guaranteed
16,627

 
43

18,093

18,253

 
101

160

 
77

—

23

—

—

Non-agency RMBS (b)
2,449

 
(66
)
1,747

2,214

 
82

467

 
—

1

1

91

7

Non-agency RMBS
1,170

 
(5
)
1,095

1,113

 
94

18

 
1

8

22

68

1

European floating rate notes
2,296

 
(7
)
1,967

1,959

 
99

(8
)
 
70

23

—

7

—

Commercial MBS
4,829

 
8

4,958

4,997

 
101

39

 
93

6

1

—

—

State and political subdivisions
5,434

 
(13
)
5,200

5,271

 
101

71

 
79

20

—

—

1

Foreign covered bonds
2,949

 
(8
)
2,788

2,866

 
103

78

 
100

—

—

—

—

Corporate bonds
1,670

 
4

1,747

1,785

 
102

38

 
20

66

14

—

—

CLO
1,971

 
(10
)
2,109

2,111

 
100

2

 
100

—

—

—

—

U.S. Government agencies
699

 
3

686

684

 
100

(2
)
 
100

—

—

—

—

Consumer ABS
3,025

 
(2
)
3,241

3,240

 
100

(1
)
 
99

1

—

—

—

Other (c)
2,923

 
2

3,024

3,032

 
100

8

 
42

52

—

—

6

Total investment securities
$
115,863

(d)
$
191

$
117,868

$
119,144

(d)
100
%
$
1,276

(e)
90
%
4
%
4
%
2
%
—
%
(a)    Amortized cost before impairments.
(b)
These RMBS were included in the former Grantor Trust and were marked-to-market in 2009. We believe these RMBS would receive higher credit ratings if these ratings incorporated, as additional credit enhancements, the difference between the written-down amortized cost and the current face amount of each of these securities.
(c)
Includes commercial paper with a fair value of $1.6 billion and $1.6 billion and money market funds with a fair value of $789 million and $763 million at Sept. 30, 2014 and Dec. 31, 2014, respectively.
(d)
Includes net unrealized gains on derivatives hedging securities available-for-sale of $137 million at Sept. 30, 2014 and net unrealized losses on derivatives hedging securities available-for-sale of $313 million at Dec. 31, 2014.
(e)
Unrealized gains of $1,082 million at Dec. 31, 2014 related to available-for-sale securities.


Page - 11

BNY Mellon 4Q14 Earnings Release


NONPERFORMING ASSETS

Nonperforming assets
(dollars in millions)
Dec. 31, 2013

Sept. 30, 2014

Dec. 31, 2014

Loans:
 
 
 
Other residential mortgages
$
117

$
113

$
112

Commercial
15

13

—

Wealth management loans and mortgages
11

13

12

Foreign
6

—

—

Commercial real estate
4

4

1

Financial institutions
—

—

—

Total nonperforming loans
153

143

125

Other assets owned
3

4

3

Total nonperforming assets (a)
$
156

$
147

$
128

Nonperforming assets ratio
0.30
%
0.26
%
0.22
%
Allowance for loan losses/nonperforming loans
137.3

133.6

152.8

Total allowance for credit losses/nonperforming loans
224.8

201.4

224.0

(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 $16 million at Dec. 31, 2013, $79 million at Sept. 30, 2014 and $53 million at Dec. 31, 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 $128 million at Dec. 31, 2014, a decrease of $19 million from $147 million at Sept. 30, 2014. The decrease primarily resulted from repayments in the commercial and other residential mortgage portfolios and charges-offs in the commercial real estate portfolio.


ALLOWANCE FOR CREDIT LOSSES, PROVISION AND NET CHARGE-OFFS

Allowance for credit losses, provision and net charge-offs
(in millions)
Dec. 31, 2013

Sept. 30, 2014

Dec. 31, 2014

Allowance for credit losses - beginning of period
$
339

$
311

$
288

Provision for credit losses
6

(19
)
1

Net (charge-offs) recoveries:
 
 
 
Commercial
(1
)
(4
)
(8
)
Commercial real estate
—

—

(2
)
Foreign
(3
)
(1
)
—

Wealth management loans and mortgages
—

—

—

Other residential mortgages
—

1

—

Financial institutions
3

—

1

Net (charge-offs)
(1
)
(4
)
(9
)
Allowance for credit losses - end of period
$
344

$
288

$
280

Allowance for loan losses
$
210

$
191

$
191

Allowance for lending-related commitments
134

97

89



The allowance for credit losses was $280 million at Dec. 31, 2014, a decrease of $8 million compared with $288 million at Sept. 30, 2014. The decrease primarily reflects charge-offs in the commercial loan portfolio.

Page - 12

BNY Mellon 4Q14 Earnings Release


CAPITAL

Our consolidated capital ratios are shown in the following table. At Sept. 30, 2014 and Dec. 31, 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, and credit risk asset risk-weightings using the Advanced Approach framework under 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”). The leverage capital ratios for Sept. 30, 2014 and Dec. 31, 2014 are based on Basel III components of capital and quarterly average total assets, as phased-in. The risk-based and leverage capital ratios for Dec. 31, 2013 are based on Basel I rules (including Basel I Tier 1 common in the case of the CET1 ratio).

Capital ratios
Dec. 31, 2013

 
Sept. 30, 2014

 
Dec. 31, 2014

Consolidated regulatory capital ratios: (a)(b)(c)
 
 
 
 
 
CET1 ratio
14.5
%
(d)
11.4
%
 
11.6
%
Tier 1 capital ratio
16.2

 
12.3

 
12.6

Total (Tier 1 plus Tier 2) capital ratio
17.0

 
12.7

 
12.8

Leverage capital ratio
5.4

 
5.8

 
5.7

BNY Mellon shareholders’ equity to total assets ratio (d)
10.0

 
10.0

 
9.9

BNY Mellon common shareholders’ equity to total assets ratio (d)
9.6

 
9.5

 
9.5

BNY Mellon tangible common shareholders’ equity to tangible assets of operations ratio – Non-GAAP (d)
6.8

 
6.5

 
6.7

 
 
 
 
 
 
Selected regulatory capital ratios – fully phased-in – Non-GAAP: (a)(b)(d)
 
 
 
 
 
Estimated CET1 ratio: 
 
 
 
 
 
Standardized Approach
10.6

 
10.8

 
10.8

Advanced Approach
11.3

 
10.2

 
10.2

Estimated supplementary leverage ratio (“SLR”) (e)
N/A

 
4.6

 
4.5

(a)
Dec. 31, 2014 consolidated regulatory capital ratios are preliminary. See “Capital Ratios” beginning on page 29 for more detail.
(b)
Risk-based capital ratios at Sept. 30, 2014 and Dec. 31, 2014 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 the Dec. 31, 2013 risk-based ratios.  The leverage capital ratio was not impacted. 
(c)
The transitional Standardized Approach risk-based capital ratios (which represent the Collins Floor comparison) of the CET1, Tier 1 and Total risk-based consolidated regulatory capital ratios were 15.1%, 16.3% and 17.0%, respectively, at Sept. 30, 2014 and 15.5%, 16.8% and 17.4%, respectively, at Dec. 31, 2014, and are 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 Capital Rules (which for 2014 look to Basel I-based requirements).
(d)
See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 24 for a reconciliation of these ratios.
(e)
The estimated fully phased-in SLR as of Sept. 30, 2014 and Dec. 31, 2014 is based on our interpretation of the Final Capital Rules, as supplemented by the Federal Reserve’s final rules on the SLR. When fully phased-in, we expect to maintain an SLR of over 5%, 3% attributable to the minimum required SLR, and greater than 2% attributable to a buffer applicable to U.S. G-SIBs.
N/A – Not available.


Estimated Basel III CET1 generation presented on a fully phased-in basis – Non-GAAP – preliminary
 
 
(in millions)
4Q14

YTD14

Estimated fully phased-in Basel III CET1 – Non-GAAP – Beginning of period
$
16,720

$
14,810

Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP
807

3,092

Goodwill and intangible assets, net of related deferred tax liabilities
220

491

Gross Basel III CET1 generated
1,027

3,583

Capital deployed:
 
 
Dividends
(195
)
(762
)
Common stock repurchased
(432
)
(1,669
)
Total capital deployed
(627
)
(2,431
)
Other comprehensive (loss)
(718
)
(742
)
Additional paid-in capital (a)
127

624

Other
—

56

Total other additions (deductions)
(591
)
(62
)
Net Basel III CET1 generated
(191
)
1,090

Other (primarily net pension fund assets)
—

629

Estimated fully phased-in Basel III CET1 – Non-GAAP – End of period
$
16,529

$
16,529

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

Page - 13

BNY Mellon 4Q14 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 Dec. 31, 2014 – preliminary
Fully phased-in Basel III

 
 
Transitional Approach

 
Adjustments (a)
(dollars in millions)
CET1:
 
 
 
 
Common shareholders’ equity
$
36,477

$
447

(b)
$
36,924

Goodwill and intangible assets
(19,440
)
2,329

(c)
(17,111
)
Net pension fund assets
(87
)
70

(d)
(17
)
Equity method investments
(401
)
87

(c)
(314
)
Deferred tax assets
(18
)
14

(d)
(4
)
Other
(2
)
6

(e)
4

Total CET1
16,529

2,953

 
19,482

Other Tier 1 capital:
 
 
 
 
Preferred stock
1,562

—

 
1,562

Trust preferred securities
—

156

(f)
156

Disallowed deferred tax assets
—

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

(69
)
(d)
(69
)
Other
(12
)
(5
)
 
(17
)
Total Tier 1 capital
18,079

3,021

 
21,100

 
 
 
 
 
Tier 2 capital:
 
 
 
 
Trust preferred securities
—

156

(f)
156

Subordinated debt
298

—

 
298

Allowance for credit losses
280

—

 
280

Other
(11
)
—

 
(11
)
Total Tier 2 capital - Standardized Approach
567

156

 
723

Excess of expected credit losses
24

(11
)
 
13

Less: Allowance for credit losses
280

—

 
280

Total Tier 2 capital - Advanced Approach
$
311

$
145

 
$
456

 
 
 
 
 
Total capital:
 
 
 
 
Standardized Approach
$
18,646

$
3,177

 
$
21,823

Advanced Approach
$
18,390

$
3,166

 
$
21,556

 
 
 
 
 
Risk-weighted assets:
 
 
 
 
Standardized Approach
$
152,512

$
(26,950
)
 
$
125,562

Advanced Approach
$
162,030

$
5,998

 
$
168,028

 
 
 
 
 
Standardized Approach:
 
 
 
 
Estimated Basel III CET1 ratio
10.8
%
 
 
15.5
%
Tier 1 capital ratio
11.9

 
 
16.8

Total (Tier 1 plus Tier 2) capital ratio
12.2

 
 
17.4

 
 
 
 
 
Advanced Approach:
 
 
 
 
Estimated Basel III CET1 ratio
10.2
%
 
 
11.6
%
Tier 1 capital ratio
11.2

 
 
12.6

Total (Tier 1 plus Tier 2) capital ratio
11.3

 
 
12.8

(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 shareholders’ 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 the transitional adjustments related to cash flow hedges and debit valuation adjustment.
(f)
During 2014, 50% of outstanding trust preferred securities are included in Tier 1 capital and 50% in Tier 2 capital.



Page - 14

BNY Mellon 4Q14 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)
 
 
 
 
 
 
4Q14 vs.
4Q13

1Q14

2Q14

3Q14

4Q14

 
4Q13
3Q14
Revenue:
 
 
 
 
 
 
 
 
Investment management fees:
 
 
 
 
 
 
 
 
Mutual funds
$
303

$
299

$
311

$
315

$
306

 
1
 %
(3
)%
Institutional clients
385

372

385

382

375

 
(3
)
(2
)
Wealth management
149

153

156

158

157

 
5

(1
)
Investment management fees
837

824

852

855

838

 
—

(2
)
Performance fees
72

20

29

22

44

 
N/M

N/M

Investment management and performance fees
909

844

881

877

882

 
(3
)
1

Distribution and servicing
41

40

41

41

40

 
(2
)
(2
)
Other (a)
43

16

48

16

7

 
N/M

N/M

Total fee and other revenue (a)
993

900

970

934

929

 
(6
)
(1
)
Net interest revenue
68

70

66

69

69

 
1

—

Total revenue
1,061

970

1,036

1,003

998

 
(6
)
—

Noninterest expense (ex. amortization of intangible assets and the charge (recovery) related to investment management funds, net of incentives)
760

698

725

727

721

 
(5
)
(1
)
Income before taxes (ex. amortization of intangible assets and the charge (recovery) related to investment management funds, net of incentives)
301

272

311

276

277

 
(8
)
—

Amortization of intangible assets
35

31

31

31

30

 
(14
)
(3
)
Charge (recovery) related to investment management funds, net of incentives
—

(5
)
109

—

—

 
N/M

N/M

Income before taxes
$
266

$
246

$
171

$
245

$
247

 
(7
)%
1
 %
 
 
 
 
 
 
 
 
 
Pre-tax operating margin
25
%
25
%
16
%
24
%
25
%
 
 
 
Adjusted pre-tax operating margin (b)
34
%
34
%
36
%
33
%
33
%
 
 
 
 
 
 
 
 
 
 
 
 
Changes in AUM (in billions): (c)
 
 
 
 
 
 
 
 
Beginning balance of AUM
$
1,532

$
1,583

$
1,620

$
1,636

$
1,646

 
 
 
Net inflows (outflows):
 
 
 
 
 
 
 
 
Long-term:
 
 
 
 
 
 
 
 
Equity
(5
)
(1
)
(4
)
(2
)
(4
)
 
 
 
Fixed income
5

—

(1
)
—

4

 
 
 
Index
(3
)
—

7

(3
)
1

 
 
 
Liability-driven investments (d)
4

20

(17
)
18

24

 
 
 
Alternative investments
1

2

2

—

2

 
 
 
Total long-term inflows (outflows)
2

21

(13
)
13

27

 
 
 
Short term:
 
 
 
 
 
 
 
 
Cash
6

(7
)
(18
)
19

5

 
 
 
Total net inflows (outflows)
8

14

(31
)
32

32

 
 
 
Net market/currency impact
43

23

47

(22
)
32

 
 
 
Ending balance of AUM
$
1,583

$
1,620

$
1,636

$
1,646

$
1,710

(e)
8
 %
4
 %
 
 
 
 
 
 
 
 
 
AUM at period end, by product type: (c)
 
 
 
 
 
 
 
 
Equity
17
%
17
%
17
%
16
%
16
%
 

 
Fixed income
14

14

14

13

13

 

 
Index
20

20

21

21

21

 

 
Liability-driven investments (d)
26

27

27

28

29

 

 
Alternative investments
4

4

4

4

4

 

 
Cash
19

18

17

18

17

 

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

 
 
 
 
 
 
 
 
 
 
Wealth management:
 
 
 
 
 
 
 
 
Average loans
$
9,755

$
10,075

$
10,372

$
10,772

$
11,124

 
14
 %
3
 %
Average deposits
$
14,161

$
14,805

$
13,458

$
13,764

$
14,604

 
3
 %
6
 %
(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 4Q14 Earnings Release


INVESTMENT MANAGEMENT KEY POINTS

•
Assets under management were a record $1.71 trillion at Dec. 31, 2014, an increase of 8% year-over-year and 4% sequentially. Both increases primarily resulted from higher equity market values and net new business, partially offset by the unfavorable impact of a stronger U.S. dollar.

•
Net long-term inflows were $27 billion in 4Q14 driven by liability-driven, fixed income and alternative investments. Short-term inflows were $5 billion in 4Q14.

•
Income before taxes excluding amortization of intangible assets and the charge (recovery) related to investment management funds, net of incentives decreased 8% year-over-year and was essentially unchanged sequentially. Both comparisons reflect the unfavorable impact of a stronger U.S. dollar.

•
Total revenue was $998 million, a decrease of 6% year-over-year and down slightly sequentially. Both decreases reflect the unfavorable impact of a stronger U.S. dollar and lower other revenue. The year-over-year decrease also reflects lower performance fees, partially offset by higher equity market values. The sequential decrease was partially offset by seasonally higher performance fees.

•
Investment management fees were $838 million, essentially unchanged year-over-year and a decrease of 2% sequentially. Both comparisons reflect the unfavorable impact of a stronger U.S. dollar. The year-over-year comparison also reflects higher equity market values. The sequential decrease was partially offset by net new business and higher equity market values.

•
Performance fees were $44 million in 4Q14 compared with $72 million in 4Q13 and $22 million in 3Q14. The sequential increase was driven by seasonality.

•
Other revenue was $7 million in 4Q14 compared with $43 million in 4Q13 and $16 million in 3Q14. Both decreases primarily reflects lower other trading revenue related to losses on hedging activities within a boutique. The year-over-year decrease also reflects lower seed capital gains.

•
Net interest revenue increased 1% year-over-year and was unchanged sequentially. The year-over-year increase primarily reflects higher loan and deposit levels. Sequentially, higher loan and deposit levels were partially offset by lower deposit spreads.

•
Average loans increased 14% year-over-year and 3% sequentially; average deposits increased 3% year-over-year and 6% sequentially.

•
Total noninterest expense (excluding amortization of intangible assets and the charge (recovery) related to investment management funds, net of incentives) decreased 5% year-over-year and 1% sequentially. Both decreases reflect the favorable impact of a stronger U.S. dollar. The year-over-year decrease also reflects lower incentive and distribution and servicing expenses. The sequential decrease was partially offset by higher incentive expense driven by seasonally higher performance fees.

•
44% non-U.S. revenue in 4Q14 vs. 47% in 4Q13.

•
Insight Investment was named European Fixed Income Manager of the Year at the 2014 Professional Pensions Investment Awards and winner of Strategy & Tactics: Liability-Driven Investing at the 2014 aiCIO Awards. The Boston Company’s U.S. Small Cap Opportunistic Equity Strategy was winner of the “Best of the Best” 10 Year Performance Award by Asia Asset Management.

Page - 16

BNY Mellon 4Q14 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)
 
 
 
 
 
 
4Q14 vs.
4Q13

1Q14

2Q14

3Q14

4Q14

 
4Q13

3Q14

Revenue:
 
 
 
 
 
 
 
 
Investment services fees:
 
 
 
 
 
 
 
 
Asset servicing
$
957

$
985

$
993

$
998

$
992

 
4
 %
(1
)%
Clearing services
322

323

324

336

346

 
7

3

Issuer services
236

228

231

314

193

 
(18
)
(39
)
Treasury services
137

134

140

139

142

 
4

2

Total investment services fees
1,652

1,670

1,688

1,787

1,673

 
1

(6
)
Foreign exchange and other trading revenue
150

158

145

159

165

 
10

4

Other (a)
58

59

87

59

69

 
19

17

Total fee and other revenue (a)
1,860

1,887

1,920

2,005

1,907

 
3

(5
)
Net interest revenue
610

590

593

583

574

 
(6
)
(2
)
Total revenue
2,470

2,477

2,513

2,588

2,481

 
—

(4
)
Noninterest expense (ex. amortization of intangible assets)
1,822

1,778

1,824

1,835

1,828

 
—

—

Income before taxes (ex. amortization of intangible assets)
648

699

689

753

653

 
1

(13
)
Amortization of intangible assets
47

44

44

44

43

 
(9
)
(2
)
Income before taxes
$
601

$
655

$
645

$
709

$
610

 
1
 %
(14
)%
 
 
 
 
 
 
 
 
 
Pre-tax operating margin
24
%
26
%
26
%
27
%
25
%
 
 
 
Pre-tax operating margin (ex. amortization of intangible assets)
26
%
28
%
27
%
29
%
26
%
 
 
 
 
 
 
 
 
 
 
 
 
Investment services fees as a percentage of noninterest expense (b)
90
%
93
%
93
%
100
%
92
%
 
 
 
 
 
 
 
 
 
 
 
 
Securities lending revenue
$
21

$
30

$
35

$
27

$
28

 
33
 %
4
 %
 
 
 
 
 
 
 
 
 
Metrics:
 
 
 
 
 
 
 
 
Average loans
$
31,211

$
31,468

$
33,115

$
33,785

$
35,448

 
14
 %
5
 %
Average deposits
$
216,216

$
214,947

$
220,701

$
221,734

$
228,282

 
6
 %
3
 %
 
 
 
 
 
 
 
 
 
AUC/A at period end (in trillions) (c)
$
27.6

$
27.9

$
28.5

$
28.3

$
28.5

(d)
3
 %
1
 %
Market value of securities on loan at period
end (in billions) (e)
$
235

$
264

$
280

$
282

$
289

 
23
 %
2
 %
 
 
 
 
 
 
 
 
 
Asset servicing:
 
 
 
 
 
 
 
 
Estimated new business wins (AUC/A) (in billions)
$
123

$
161

$
130

$
115

$
130

(d)
 
 
 
 
 
 
 
 
 
 
 
Depositary Receipts:
 
 
 
 
 
 
 
 
Number of sponsored programs
1,335

1,332

1,316

1,302

1,279

 
(4
)%
(2
)%
 
 
 
 
 
 
 
 
 
Clearing services:
 
 
 
 
 
 
 
 
Global DARTS volume (in thousands)
213

230

207

209

242

 
14
 %
16
 %
Average active clearing accounts
(U.S. platform) (in thousands)
5,643

5,695

5,752

5,805

5,900

 
5
 %
2
 %
Average long-term mutual fund assets (U.S. platform)
$
401,434

$
413,658

$
433,047

$
442,827

$
450,305

 
12
 %
2
 %
Average investor margin loans (U.S. platform)
$
8,848

$
8,919

$
9,236

$
9,861

$
10,711

 
21
 %
9
 %
 
 
 
 
 
 
 
 
 
Broker-Dealer:
 
 
 
 
 
 
 
 
Average tri-party repo balances (in billions)
$
2,005

$
1,983

$
2,022

$
2,063

$
2,101

 
5
 %
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 Dec. 31, 2013, March 31, 2014, June 30, 2014 and Sept. 30, 2014, and $1.1 trillion at Dec. 31, 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 and Dec. 31, 2014.

Page - 17

BNY Mellon 4Q14 Earnings Release


INVESTMENT SERVICES KEY POINTS

•
Investment services fees totaled $1.7 billion, an increase of 1% year-over-year and a decrease of 6% sequentially.

•
Asset servicing fees (global custody, broker-dealer services and global collateral services) were $992 million in 4Q14 compared with $957 million in 4Q13 and $998 million in 3Q14. The year-over-year increase primarily reflects organic growth and net new business, partially offset by the unfavorable impact of a stronger U.S. dollar. The sequential decrease primarily reflects the unfavorable impact of a stronger U.S. dollar, partially offset by net new business.

--    Estimated new business wins (AUC/A) in Asset Servicing of $130 billion in 4Q14.

•
Clearing services fees were $346 million in 4Q14 compared with $322 million in 4Q13 and $336 million in 3Q14. Both increases were driven by higher clearance revenue reflecting higher DARTS volume. The year-over-year increase also reflects higher mutual fund and asset-based fees.

•
Issuer services fees (Corporate Trust and Depositary Receipts) were $193 million in 4Q14 compared with $236 million in 4Q13 and $314 million in 3Q14. The year-over-year decrease reflects lower corporate actions and dividend fees in Depositary Receipts. The sequential decrease is primarily due to seasonality in Depositary Receipts, partially offset by higher Corporate Trust fees.

•
Treasury services fees were $142 million in 4Q14 compared with $137 million in 4Q13 and $139 million in 3Q14. Both increases primarily reflect higher payment volumes.

•
Foreign exchange and other trading revenue was $165 million in 4Q14 compared with $150 million in 4Q13 and $159 million in 3Q14. Both increases primarily reflect higher volume and volatility, partially offset by lower Depositary Receipts-related activity.

•
Net interest revenue was $574 million in 4Q14 compared with $610 million in 4Q13 and $583 million in 3Q14. Both decreases primarily reflects lower yields, partially offset by higher average loans and deposits.

•
Noninterest expense (excluding amortization of intangible assets) was $1.828 billion in 4Q14 compared with $1.822 billion in 4Q13 and $1.835 billion in 3Q14. Both comparisons primarily reflect higher professional, legal and other purchased services expense, primarily driven by increased expenses related to the implementation of strategic platforms, partially offset by lower staff expense and the favorable impact of a stronger U.S. dollar. The year-over-year increase also reflects higher litigation expense offset by efficiency initiatives. The sequential decrease also reflects lower litigation expense.



Page - 18

BNY Mellon 4Q14 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)
4Q13

1Q14

2Q14

3Q14

4Q14

Revenue:
 
 
 
 
 
Fee and other revenue
$
(20
)
$
112

$
119

$
928

$
117

Net interest revenue
83

68

60

69

69

Total revenue
63

180

179

997

186

Provision for credit losses
6

(18
)
(12
)
(19
)
1

Noninterest expense (ex. M&I and restructuring charges)
200

193

93

274

123

Income (loss) before taxes (ex. M&I and restructuring charges)
(143
)
5

98

742

62

M&I and restructuring charges
13

—

120

57

—

Income (loss) before taxes
$
(156
)
$
5

$
(22
)
$
685

$
62

 
 
 
 
 
 
Average loans and leases
$
9,802

$
10,104

$
9,962

$
10,278

$
10,272



KEY POINTS

•
Total fee and other revenue increased $137 million compared with 4Q13 and decreased $811 million compared with 3Q14. The year-over-year increase primarily reflects the loss related to an equity investment recorded in 4Q13. The sequential decrease primarily reflects the gain on the sale of our investment in Wing Hang Bank and the gain on the sale of the One Wall Street building both recorded in 3Q14.

•
Noninterest expense (excluding M&I and restructuring charges) decreased $77 million compared with 4Q13 and $151 million compared with 3Q14. Both decreases primarily reflect lower staff expenses. The sequential decrease also reflects lower litigation expense, partially offset by higher professional, legal and other purchased services.


Page - 19

BNY Mellon 4Q14 Earnings Release


THE BANK OF NEW YORK MELLON CORPORATION
Condensed Consolidated Income Statement


(in millions)
Quarter ended
 
Year-to-date
Dec. 31, 2014

Sept. 30, 2014

Dec. 31, 2013

 
Dec. 31, 2014

Dec. 31, 2013

 
Fee and other revenue
 
 
 
 
 
 
Investment services fees:
 
 
 
 
 
 
Asset servicing
$
1,019

$
1,025

$
984

 
$
4,075

$
3,905

Clearing services
347

337

324

 
1,335

1,264

Issuer services
193

315

237

 
968

1,090

Treasury services
145

142

137

 
564

554

Total investment services fees
1,704

1,819

1,682

 
6,942

6,813

Investment management and performance fees
885

881

904

 
3,492

3,395

Foreign exchange and other trading revenue
151

153

146

 
570

674

Distribution and servicing
43

44

43

 
173

180

Financing-related fees
43

44

43

 
169

172

Investment and other income (a)
78

890

(43
)
 
1,212

481

Total fee revenue (a)
2,904

3,831

2,775

 
12,558

11,715

Net securities gains
31

20

39

 
91

141

Total fee and other revenue (a)
2,935

3,851

2,814

 
12,649

11,856

Operations of consolidated investment management funds
 
 
 
 
 
 
Investment income
101

123

109

 
503

548

Interest of investment management fund note holders
59

84

73

 
340

365

Income from consolidated investment management funds
42

39

36

 
163

183

Net interest revenue
 
 
 
 
 
 
Interest revenue
802

809

846

 
3,234

3,352

Interest expense
90

88

85

 
354

343

Net interest revenue
712

721

761

 
2,880

3,009

Provision for credit losses
1

(19
)
6

 
(48
)
(35
)
Net interest revenue after provision for credit losses
711

740

755

 
2,928

3,044

Noninterest expense
 
 
 
 
 
 
Staff
1,418

1,477

1,522

 
5,845

6,019

Professional, legal and other purchased services
390

323

344

 
1,339

1,252

Software and equipment
235

234

241

 
942

933

Net occupancy
150

154

154

 
610

629

Distribution and servicing
102

107

110

 
428

435

Sub-custodian
70

67

68

 
286

280

Business development
75

61

96

 
268

317

Other
211

250

258

 
1,031

1,029

Amortization of intangible assets
73

75

82

 
298

342

Merger and integration, litigation and restructuring charges
21

220

2

 
351

70

Total noninterest expense
2,745

2,968

2,877

 
11,398

11,306

Income
 
 
 
 
 
 
Income before income taxes (a)
943

1,662

728

 
4,342

3,777

Provision for income taxes (a)
88

556

172

 
1,093

1,592

Net income (a)
855

1,106

556

 
3,249

2,185

Net (income) attributable to noncontrolling interests (includes $(24), $(23), $(17), $(84) and $(80) related to consolidated investment management funds, respectively)
(24
)
(23
)
(17
)
 
(84
)
(81
)
Net income applicable to shareholders of The Bank of New York Mellon Corporation (a)
831

1,083

539

 
3,165

2,104

Preferred stock dividends
(24
)
(13
)
(26
)
 
(73
)
(64
)
Net income applicable to common shareholders of The Bank of New York Mellon Corporation (a)
$
807

$
1,070

$
513

 
$
3,092

$
2,040

(a)
Results for the full-year 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 4Q14 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
Dec. 31, 2014

Sept. 30, 2014

Dec. 31, 2013

 
Dec. 31, 2014

Dec. 31, 2013

Net income applicable to common shareholders of The Bank of New York Mellon Corporation (a)
$
807

$
1,070

$
513

 
$
3,092

$
2,040

Less: Earnings allocated to participating securities (a)
14

20

10

 
54

37

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)
$
793

$
1,050

$
503

 
$
3,038

$
2,002

(a)
Results for the full-year 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
Dec. 31, 2014

Sept. 30, 2014

Dec. 31, 2013

 
Dec. 31, 2014

Dec. 31, 2013

Basic
1,120,672

1,126,946

1,142,861

 
1,129,897

1,150,689

Diluted
1,129,040

1,134,871

1,147,961

 
1,137,480

1,154,441



Earnings per share applicable to the common shareholders of The Bank of New York Mellon Corporation (a)
(in dollars)
Quarter ended
 
Year-to-date
Dec. 31, 2014

Sept. 30, 2014

Dec. 31, 2013

 
Dec. 31, 2014

Dec. 31, 2013

Basic
$
0.71

$
0.93

$
0.44

 
$
2.69

$
1.74

Diluted
$
0.70

$
0.93

$
0.44

 
$
2.67

$
1.73

(a)
Results for the full-year 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 4Q14 Earnings Release


THE BANK OF NEW YORK MELLON CORPORATION
Consolidated Balance Sheet

 
(dollars in millions, except per share amounts)
Dec. 31, 2014

Sept. 30, 2014

Dec. 31, 2013

 
 
Assets
 
 
 
 
Cash and due from:
 
 
 
 
Banks
$
6,970

$
6,410

$
6,460

 
Interest-bearing deposits with the Federal Reserve and other central banks
96,682

92,317

104,359

 
Interest-bearing deposits with banks
19,495

30,341

35,300

 
Federal funds sold and securities purchased under resale agreements
20,302

17,375

9,161

 
Securities:
 
 
 
 
Held-to-maturity (fair value of $21,127, $20,167 and $19,443)
20,933

20,137

19,743

 
Available-for-sale
98,330

95,559

79,309

 
Total securities
119,263

115,696

99,052

 
Trading assets
9,881

11,613

12,098

 
Loans
59,132

57,527

51,657

 
Allowance for loan losses
(191
)
(191
)
(210
)
 
Net loans
58,941

57,336

51,447

 
Premises and equipment
1,394

1,351

1,655

 
Accrued interest receivable
607

565

621

 
Goodwill
17,869

17,992

18,073

 
Intangible assets
4,127

4,215

4,452

 
Other assets
20,490

21,523

20,566

 
Subtotal assets of operations
376,021

376,734

363,244

 
Assets of consolidated investment management funds, at fair value:
 
 
 
 
Trading assets
8,678

8,823

10,397

 
Other assets
604

739

875

 
Subtotal assets of consolidated investment management funds, at fair value
9,282

9,562

11,272

 
Total assets
$
385,303

$
386,296

$
374,516

 
Liabilities
 
 
 
 
Deposits:
 
 
 
 
Noninterest-bearing (principally U.S. offices)
$
104,240

$
101,105

$
95,475

 
Interest-bearing deposits in U.S. offices
53,236

56,740

56,640

 
Interest-bearing deposits in Non-U.S. offices
108,393

107,051

109,014

 
Total deposits
265,869

264,896

261,129

 
Federal funds purchased and securities sold under repurchase agreements
11,469

9,687

9,648

 
Trading liabilities
7,434

7,734

6,945

 
Payables to customers and broker-dealers
21,181

20,155

15,707

 
Commercial paper
—

—

96

 
Other borrowed funds
786

852

663

 
Accrued taxes and other expenses
6,305

6,482

6,996

 
Other liabilities (includes allowance for lending-related commitments of $89, $97 and $134)
5,025

7,169

4,827

 
Long-term debt
20,264

21,583

19,864

 
Subtotal liabilities of operations
338,333

338,558

325,875

 
Liabilities of consolidated investment management funds, at fair value:
 
 
 
 
Trading liabilities
7,660

8,130

10,085

 
Other liabilities
9

10

46

 
Subtotal liabilities of consolidated investment management funds, at fair value
7,669

8,140

10,131

 
Total liabilities
346,002

346,698

336,006

 
Temporary equity
 
 
 
 
Redeemable noncontrolling interests
229

246

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 1,290,222,821, 1,286,670,537 and 1,268,036,220 shares
13

13

13

 
Additional paid-in capital
24,626

24,499

24,002

 
Retained earnings
18,281

17,670

15,952

 
Accumulated other comprehensive loss, net of tax
(1,634
)
(916
)
(892
)
 
Less: Treasury stock of 171,995,262, 160,960,855 and 125,786,430 common shares, at cost
(4,809
)
(4,377
)
(3,140
)
 
Total The Bank of New York Mellon Corporation shareholders’ equity
38,039

38,451

37,497

 
Nonredeemable noncontrolling interests of consolidated investment management funds
1,033

901

783

 
Total permanent equity
39,072

39,352

38,280

 
Total liabilities, temporary equity and permanent equity
$
385,303

$
386,296

$
374,516



Page - 22

BNY Mellon 4Q14 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)
4Q13

YTD13

4Q13

YTD13

Basic
$
0.44

$
1.75

$
0.44

$
1.74

Diluted
$
0.44

$
1.74

$
0.44

$
1.73



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)
4Q13

YTD13

4Q13

YTD13

4Q13

YTD13

Investment and other income (loss)
$
(60
)
$
416

$
17

$
65

$
(43
)
$
481

Total fee revenue
2,758

11,650

17

65

2,775

11,715

Total fee and other revenue
2,797

11,791

17

65

2,814

11,856

Income before income taxes
711

3,712

17

65

728

3,777

Provision for income taxes
155

1,520

17

72

172

1,592

Net income (loss)
556

2,192

—

(7
)
556

2,185

Net income (loss) applicable to shareholders of The Bank of New York Mellon Corporation
539

2,111

—

(7
)
539

2,104

Net income (loss) applicable to common shareholders of The Bank of New York Mellon Corporation
513

2,047

—

(7
)
513

2,040





Page - 23

BNY Mellon 4Q14 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 on fully phased-in Basel III CET1 and other risk-based capital ratios, SLR, Basel I CET1 and tangible common shareholders’ equity. BNY Mellon believes that the Basel III CET1 and other risk-based capital ratios on a fully phased-in basis, the SLR on a fully phased-in basis, 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 those assets that can generate income. BNY Mellon has provided a measure of tangible book value per share, which it believes provides 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 Bank, 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 tax benefit primarily related to a tax carryback claim and the net charge 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 acquisitions and generally continue for approximately three years after the transaction. M&I expenses 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 described above is used by management to monitor financial performance, both on a company-wide and on a business-level basis.

Page - 24

BNY Mellon 4Q14 Earnings Release


The following tables present the reconciliation of net income and diluted earnings per common share.

Reconciliation of net income and diluted EPS – GAAP to Non-GAAP
4Q13
 
3Q14
 
4Q14
 
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
$
513

$
0.44

 
$
1,070

$
0.93

 
$
807

$
0.70

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

—

 
315

0.27

 
—

—

Gain on the sale of the One Wall Street building
—

—

 
204

0.18

 
—

—

Benefit primarily related to a tax carryback claim
—

—

 
—

—

 
150

0.13

Add: Litigation and restructuring charges
1

—

 
183

0.16

 
10

0.01

Loss related to an equity investment
115

0.10

 
—

—

 
—

—

Net income applicable to common shareholders of The Bank of New York Mellon Corporation – Non-GAAP
$
629

$
0.54

 
$
734

$
0.64

 
$
667

$
0.58


Reconciliation of net income and diluted EPS – GAAP to Non-GAAP
YTD13
 
YTD14
 
Net

Diluted

 
Net

Diluted

(in millions, except per common share amounts)
income

EPS

 
income

EPS

Net income applicable to common shareholders of The Bank of New York Mellon
Corporation – GAAP
$
2,040

$
1.73

 
$
3,092

$
2.67

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

—

 
315

0.27

Gain on the sale of the One Wall Street building
—

—

 
204

0.18

Benefit primarily related to a tax carryback claim
—

—

 
150

0.13

Add: Litigation and restructuring charges
45

0.04

 
262

0.23

Charge related to investment management funds, net of incentives
9

0.01

 
81

0.07

Net charge related to the disallowance of certain foreign tax credits
593

0.50

 
—

—

Net income applicable to common shareholders of The Bank of New York Mellon Corporation – Non-GAAP
$
2,687

$
2.28

 
$
2,766

$
2.39




Page - 25

BNY Mellon 4Q14 Earnings Release


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)
4Q13

1Q14

2Q14

3Q14

4Q14

Income before income taxes – GAAP
$
728

$
926

$
811

$
1,662

$
943

Less: Net income attributable to noncontrolling interests of consolidated investment management funds
17

20

17

23

24

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

—

—

490

—

Gain on the sale of the One Wall Street building
—

—

—

346

—

Add: Amortization of intangible assets
82

75

75

75

73

M&I, litigation and restructuring charges
2

(12
)
122

220

21

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

(5
)
109

—

—

Loss related to an equity investment
175

—

—

—

—

Income before income taxes, as adjusted – Non-GAAP (b)
$
970

$
964

$
1,100

$
1,098

$
1,013

 
 
 
 
 
 
Fee and other revenue – GAAP
$
2,814

$
2,883

$
2,980

$
3,851

$
2,935

Income from consolidated investment management funds – GAAP
36

36

46

39

42

Net interest revenue – GAAP
761

728

719

721

712

Total revenue – GAAP
3,611

3,647

3,745

4,611

3,689

Less: Net income attributable to noncontrolling interests of consolidated investment management funds
17

20

17

23

24

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

—

—

490

—

Gain on the sale of the One Wall Street building
—

—

—

346

—

Add: Loss related to an equity investment
175

—

—

—

—

Total revenue, as adjusted – Non-GAAP (b)
$
3,769

$
3,627

$
3,728

$
3,752

$
3,665

 
 
 
 
 
 
Pre-tax operating margin (a)
20
%
25
%
22
%
36
%
26
%
Pre-tax operating margin – Non-GAAP (a)(b)
26
%
27
%
30
%
29
%
28
%
(a)
Income before taxes divided by total revenue.
(b)
Non-GAAP excludes net income attributable to noncontrolling interests of consolidated investment management funds, the gains on the sales of our investment in Wing Hang Bank and the One Wall Street building, M&I, litigation and restructuring charges, a charge (recovery) related to investment management funds, net of incentives, and a loss on an equity investment, if applicable.

Page - 26

BNY Mellon 4Q14 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)
4Q13

1Q14

2Q14

3Q14

4Q14

YTD14

Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP
$
513

$
661

$
554

$
1,070

$
807

$
3,092

Add:  Amortization of intangible assets, net of tax
53

49

49

49

47

194

Net income applicable to common shareholders of The Bank of New York Mellon Corporation excluding amortization of intangible assets – Non-GAAP
566

710

603

1,119

854

3,286

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

—

—

315

—

315

Gain on the sale of the One Wall Street building
—

—

—

204

—

204

Benefit primarily related to a tax carryback claim
—

—

—

—

150

150

Add: M&I, litigation and restructuring charges
1

(7
)
76

183

10

262

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

(4
)
85

—

—

81

Loss on an equity investment
115

—

—

—

—

—

Net income applicable to common shareholders of The Bank of New York Mellon Corporation, as adjusted – Non-GAAP (b)
$
682

$
699

$
764

$
783

$
714

$
2,960

 
 
 
 
 
 
 
Average common shareholders’ equity
$
35,698

$
36,289

$
36,565

$
36,751

$
36,872

$
36,621

Less: Average goodwill
18,026

18,072

18,149

18,109

17,924

18,063

Average intangible assets
4,491

4,422

4,354

4,274

4,174

4,305

Add: Deferred tax liability – tax deductible goodwill (a)
1,302

1,306

1,338

1,317

1,340

1,340

Deferred tax liability – intangible assets (a)
1,222

1,259

1,247

1,230

1,216

1,216

Average tangible common shareholders’ equity – Non-GAAP
$
15,705

$
16,360

$
16,647

$
16,915

$
17,330

$
16,809

 
 
 
 
 
 
 
Return on common equity – GAAP (c)
5.7
%
7.4
%
6.1
%
11.6
%
8.7
%
8.4
%
Return on common equity – Non-GAAP (b)(c)
7.6
%
7.8
%
8.4
%
8.5
%
7.7
%
8.1
%
 
 
 
 
 
 
 
Return on tangible common equity – Non-GAAP (b)(c)
14.3
%
17.6
%
14.5
%
26.2
%
19.5
%
19.5
%
Return on tangible common equity – Non-GAAP adjusted (b)(c)
17.2
%
17.3
%
18.4
%
18.4
%
16.3
%
17.6
%
(a)
Deferred tax liabilities are based on fully phased-in Basel III rules. The quarters and full-year of 2014 include deferred tax liabilities on tax deductible intangible assets permitted under Basel III rules.
(b)
Non-GAAP excludes the gains on the sales of our investment in Wing Hang Bank and the One Wall Street building, the benefit primarily related to a tax carryback claim, M&I, litigation and restructuring charges, a charge (recovery) related to investment management funds, net of incentives, and a loss on an equity investment, if applicable.
(c)
Annualized.



Page - 27

BNY Mellon 4Q14 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
Dec. 31, 2013

Sept. 30, 2014

Dec. 31, 2014

(dollars in millions, unless otherwise noted)
BNY Mellon shareholders’ equity at period end – GAAP
$
37,497

$
38,451

$
38,039

Less: Preferred stock
1,562

1,562

1,562

BNY Mellon common shareholders’ equity at period end – GAAP
35,935

36,889

36,477

Less: Goodwill
18,073

17,992

17,869

Intangible assets
4,452

4,215

4,127

Add: Deferred tax liability – tax deductible goodwill (a)
1,302

1,317

1,340

Deferred tax liability – intangible assets (a)
1,222

1,230

1,216

BNY Mellon tangible common shareholders’ equity at period end – Non-GAAP
$
15,934

$
17,229

$
17,037

 
 
 
 
Total assets at period end – GAAP
$
374,516

$
386,296

$
385,303

Less: Assets of consolidated investment management funds
11,272

9,562

9,282

Subtotal assets of operations – Non-GAAP
363,244

376,734

376,021

Less: Goodwill
18,073

17,992

17,869

Intangible assets
4,452

4,215

4,127

Cash on deposit with the Federal Reserve and other central banks (b)
105,384

90,978

99,901

Tangible total assets of operations at period end – Non-GAAP
$
235,335

$
263,549

$
254,124

 
 
 
 
BNY Mellon shareholders’ equity to total assets – GAAP
10.0
%
10.0
%
9.9
%
BNY Mellon common shareholders’ equity to total assets – GAAP
9.6
%
9.5
%
9.5
%
BNY Mellon tangible common shareholders’ equity to tangible assets of operations – Non-GAAP
6.8
%
6.5
%
6.7
%
 
 
 
 
Period-end common shares outstanding (in thousands)
1,142,250

1,125,710

1,118,228

 
 
 
 
Book value per common share – GAAP
$
31.46

$
32.77

$
32.62

Tangible book value per common share – Non-GAAP
$
13.95

$
15.30

$
15.23

(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)
4Q13

1Q14

2Q14

3Q14

4Q14

Income from consolidated investment management funds
$
36

$
36

$
46

$
39

$
42

Less: Net income attributable to noncontrolling interests of consolidated investment management funds
17

20

17

23

24

Income from consolidated investment management funds, net of noncontrolling interests
$
19

$
16

$
29

$
16

$
18



The following table presents the revenue 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)
4Q13

1Q14

2Q14

3Q14

4Q14

Investment management fees
$
20

$
18

$
18

$
15

$
15

Other (Investment income)
(1
)
(2
)
11

1

3

Income from consolidated investment management funds, net of controlling interests
$
19

$
16

$
29

$
16

$
18




Page - 28

BNY Mellon 4Q14 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)
4Q13

1Q14

2Q14

3Q14

4Q14

Income before income taxes – GAAP
$
266

$
246

$
171

$
245

$
247

Add: Amortization of intangible assets
35

31

31

31

30

Money market fee waivers
33

35

28

29

34

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
$
334

$
307

$
339

$
305

$
311

 
 
 
 
 
 
Total revenue – GAAP
$
1,061

$
970

$
1,036

$
1,003

$
998

Less: Distribution and servicing expense
108

106

111

105

102

Money market fee waivers benefiting distribution and servicing expense
38

38

37

38

36

Add: Money market fee waivers impacting total revenue
71

73

65

67

70

Total revenue net of distribution and servicing expense
and excluding money market fee waivers – Non-GAAP
$
986

$
899

$
953

$
927

$
930

 
 
 
 
 
 
Pre-tax operating margin (a)
25
%
25
%
16
%
24
%
25
%
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)
34
%
34
%
36
%
33
%
33
%
(a)    Income before taxes divided by total revenue.


Capital Ratios

BNY Mellon has presented its estimated fully phased-in Basel III CET1 and other risk-based capital ratios and SLR based on its interpretation of the 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 and other risk-based capital ratios and SLR as key measures in monitoring BNY Mellon’s capital position and progress against future regulatory capital standards. Additionally, the presentation of the estimated fully phased-in Basel III CET1 and other risk-based capital ratios and SLR are intended to allow investors to compare these ratios with estimates presented by other companies. The estimated fully phased-in Basel III CET1 and other risk-based capital ratios assume 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 and other risk-based capital ratios would likely be adversely impacted.

Risk-weighted assets at Sept. 30, 2014 and Dec. 31, 2014 for credit risk 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

Page - 29

BNY Mellon 4Q14 Earnings Release


asset classes and relies in part on the use of external credit ratings. Under fully phased-in Basel III, the 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 transitional 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)
Dec. 31, 2013

Sept. 30, 2014

Dec. 31, 2014

(dollars in millions)
Total Tier 1 capital (b)
$
18,335

$
21,015

$
21,100

Adjustments to determine estimated fully phased-in Basel III CET1:
 
 
 
Deferred tax liability – tax deductible intangible assets
70

—

—

Intangible deduction
—

(2,388
)
(2,329
)
Preferred stock
(1,562
)
(1,562
)
(1,562
)
Trust preferred securities
(330
)
(162
)
(156
)
Other comprehensive income (loss) and net pension fund assets:
 
 
 
Securities available-for-sale
387

578

594

Pension liabilities
(900
)
(675
)
(1,041
)
Net pension fund assets
(713
)
—

—

Total other comprehensive income (loss) and net pension fund assets
(1,226
)
(97
)
(447
)
Equity method investments
(445
)
(92
)
(87
)
Deferred tax assets
(49
)
—

—

Other
17

6

10

Total estimated fully phased-in Basel III CET1 – Non-GAAP
$
14,810

$
16,720

$
16,529

 
 
 
 
Under the Standardized Approach:
 
 
 
Estimated fully phased-in Basel III risk-weighted assets – Non-GAAP
$
139,865

$
154,272

$
152,512

 
 
 
 
Estimated fully phased-in Basel III CET1 ratio – Non-GAAP (c)
10.6
%
10.8
%
10.8
%
 
 
 
 
Under the Advanced Approach:
 
 
 
Estimated fully phased-in Basel III risk-weighted assets – Non-GAAP
$
130,849

$
164,088

$
162,030

 
 
 
 
Estimated fully phased-in Basel III CET1 ratio – Non-GAAP (c)
11.3
%
10.2
%
10.2
%
(a)
Dec. 31, 2014 information is preliminary.
(b)
Tier 1 capital at Dec. 31, 2013 is based on Basel I rules. Tier 1 capital at Sept. 30, 2014 and Dec.31, 2014 are based on Basel III rules, as phased-in.
(c)
Risk-based capital ratios at Sept. 30, 2014 and Dec. 31, 2014 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 the Dec. 31, 2013 risk-based ratios.
    



Page - 30

BNY Mellon 4Q14 Earnings Release


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

Basel I CET1 ratio
(dollars in millions)
Dec. 31, 2013

Total Tier 1 capital – Basel I
$
18,335

Less: Trust preferred securities
330

Preferred stock
1,562

Total CET1 – Basel I
$
16,443

 
 
Total risk-weighted assets – Basel I
$
113,322

 
 
Basel I CET1 ratio – Non-GAAP
14.5
%


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

Estimated fully phased-in SLR – Non-GAAP (a)
(dollars in millions)
Sept. 30, 2014

Dec. 31, 2014

Total estimated fully phased-in Basel III CET1 – Non-GAAP
$
16,720

$
16,529

Additional Tier 1 capital
1,556

1,550

Total Tier 1 capital
$
18,276

$
18,079

 
 
 
Total leverage exposure:
 
 
Quarterly average total assets
$
380,409

$
385,232

Less: Amounts deducted from Tier 1 capital
20,166

19,947

Total on-balance sheet assets, as adjusted
360,243

365,285

Off-balance sheet exposures:
 
 
Potential future exposure for derivatives contracts (plus certain other items)
11,694

11,021

Repo-style transaction exposures included in SLR
—

—

Credit-equivalent amount of other off-balance sheet exposures (less SLR exclusions)
21,924

21,913

Total off-balance sheet exposures
33,618

32,934

Total leverage exposure
$
393,861

$
398,219

 
 
 
Estimated fully phased-in SLR – Non-GAAP
4.6
%
4.5
%
(a)
The estimated fully phased-in SLR is based on our interpretation of the Final Capital Rules, as supplemented by the Federal Reserve’s final rules on the SLR. When fully phased-in, we expect to maintain an SLR of over 5%, 3% attributable to the minimum required SLR, and greater than 2% attributable to a buffer applicable to U.S. G-SIBs.



DIVIDENDS

Common – On Jan. 23, 2015, The Bank of New York Mellon Corporation declared a quarterly common stock dividend of $0.17 per common share. This cash dividend is payable on Feb. 13, 2015 to shareholders of record as of the close of business on Feb. 3, 2015.

Preferred – On Jan. 23, 2015, The Bank of New York Mellon Corporation also declared the following dividends for the noncumulative perpetual preferred stock, liquidation preference $100,000 per share, for the dividend period ending in March 2015, in each case, payable on March 20, 2015 to holders of record as of the close of business on March 5, 2015:
•
$977.78 per share on the Series A Preferred Stock (equivalent to $9.7778 per Normal Preferred Capital Security of Mellon Capital IV, each representing 1/100th interest in a share of Series A Preferred Stock); and
•
$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).



Page - 31

BNY Mellon 4Q14 Earnings Release


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 Dec. 31, 2014, BNY Mellon had $28.5 trillion in assets under custody and/or administration, and $1.7 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.


SUPPLEMENTAL FINANCIAL INFORMATION

The Quarterly Financial Trends for The Bank of New York Mellon Corporation has been updated through Dec. 31, 2014 and is 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 ability to execute on strategic priorities and drive further efficiencies and cost savings. 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 Jan. 23, 2015, and BNY Mellon undertakes no obligation to update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events.


Page - 32

Ex99.2_Quarterly Trends4Q14
THE BANK OF NEW YORK MELLON CORPORATION
Quarterly Financial Trends
January 23, 2015

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 fourth quarter of 2014 includes a benefit primarily related to a tax carryback claim.
The third quarter of 2014 includes gains related to the sales of the investment in Wing Hang Bank and the 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 January 23, 2015, for the fourth 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
12 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
 
4th Qtr
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment services fees
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset servicing
$
943

 
$
950

 
$
942

 
$
945

 
$
969

 
$
988

 
$
964

 
$
984

 
$
1,009

 
$
1,022

 
$
1,025

 
$
1,019

 
Issuer services
251

 
275

 
311

 
215

 
237

 
294

 
322

 
237

 
229

 
231

 
315

 
193

 
Clearing services
303

 
309

 
287

 
294

 
304

 
321

 
315

 
324

 
325

 
326

 
337

 
347

 
Treasury services
136

 
134

 
138

 
141

 
141

 
139

 
137

 
137

 
136

 
141

 
142

 
145

 
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

 
1,704

 
Investment management and performance fees
745

 
797

 
779

 
853

 
822

 
848

 
821

 
904

 
843

 
883

 
881

 
885

 
Foreign exchange & other trading revenue
191

 
180

 
182

 
139

 
161

 
207

 
160

 
146

 
136

 
130

 
153

 
151

 
Distribution and servicing
46

 
46

 
48

 
52

 
49

 
45

 
43

 
43

 
43

 
43

 
44

 
43

 
Financing-related fees
44

 
37

 
46

 
45

 
41

 
44

 
44

 
43

 
38

 
44

 
44

 
43

 
Investment and other income (a)
152

 
61

 
137

 
132

 
88

 
285

 
151

 
(43
)
 
102

 
142

 
890

 
78

 
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

 
2,904

 
Net securities gains (losses)
40

 
50

 
22

 
50

 
48

 
32

 
22

 
39

 
22

 
18

 
20

 
31

 
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

 
2,935

 
Income (loss) of consolidated investment management funds
43

 
57

 
47

 
42

 
50

 
65

 
32

 
36

 
36

 
46

 
39

 
42

 
Net interest revenue
765

 
734

 
749

 
725

 
719

 
757

 
772

 
761

 
728

 
719

 
721

 
712

 
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

 
3,689

 
Provision for credit losses
5

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

 
6

 
(18
)
 
(12
)
 
(19
)
 
1

 
Noninterest expenses
2,551

 
2,572

 
2,584

 
2,683

 
2,703

 
2,716

 
2,682

 
2,793

 
2,676

 
2,749

 
2,673

 
2,651

 
Amortization of intangible assets
96

 
97

 
95

 
96

 
86

 
93

 
81

 
82

 
75

 
75

 
75

 
73

 
Merger & integration, litigation and restructuring charges
109

 
378

 
26

 
46

 
39

 
13

 
16

 
2

 
(12
)
 
122

 
220

 
21

 
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

 
2,745

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

 
602

 
988

 
869

 
825

 
1,222

 
1,002

 
728

 
926

 
811

 
1,662

 
943

 
 Provision for income taxes
269

 
106

 
239

 
228

 
1,062

 
339

 
19

 
172

 
232

 
217

 
556

 
88

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

 
496

 
749

 
641

 
(237
)
 
883

 
983

 
556

 
694

 
594

 
1,106

 
855

 
Net income (loss) attributable to noncontrolling interest (b)
(12
)
 
(30
)
 
(25
)
 
(11
)
 
(16
)
 
(40
)
 
(8
)
 
(17
)
 
(20
)
 
(17
)
 
(23
)
 
(24
)
 
Preferred stock dividends
—

 
—

 
(5
)
 
(13
)
 
(13
)
 
(12
)
 
(13
)
 
(26
)
 
(13
)
 
(23
)
 
(13
)
 
(24
)
 
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

 
807

 
Earnings Per Share (a)(c)
$
0.51

 
$
0.39

 
$
0.61

 
$
0.52

 
$
(0.23
)
 
$
0.71

 
$
0.82

 
$
0.44

 
$
0.57

 
$
0.48

 
$
0.93

 
$
0.70

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

 
$
1,293

 
$
1,353

 
$
1,380

 
$
1,423

 
$
1,427

 
$
1,532

 
$
1,583

 
$
1,620

 
$
1,636

 
$
1,646

 
$
1,710

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

 
$
25.2

 
$
26.4

 
$
26.3

 
$
26.3

 
$
26.2

 
$
27.4

 
$
27.6

 
$
27.9

 
$
28.5

 
$
28.3

 
$
28.5

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

 
$
267

 
$
251

 
$
237

 
$
244

 
$
255

 
$
255

 
$
235

 
$
264

 
$
280

 
$
282

 
$
289

 
Pre-tax operating margin - GAAP
24
%
 
16
%
 
27
%
 
24
%
 
23
%
 
30
%
 
26
%
 
20
%
 
25
%
 
22
%
 
36
%
 
26
%
 
Non-GAAP (h)
30
%
 
29
%
 
30
%
 
28
%
 
27
%
 
28
%
 
29
%
 
26
%
 
27
%
 
30
%
 
29
%
 
28
%
 
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
%
 
8.7
%
 
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
%
 
19.5
%
 
Percent of non-US fee and net interest revenue - (i)
37
%
 
37
%
 
37
%
 
36
%
 
35
%
 
36
%
 
38
%
 
39
%
 
37
%
 
38
%
 
43
%
 
35
%
 
(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 January 23, 2015 attached as an exhibit to the Form 8-K.
(b) Primarily attributable to noncontrolling interests related to consolidated investment management funds.
(c)
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 Bank, $0.18 related to a gain on the sale of the One Wall Street building and a $0.16 charge related to litigation and restructuring. The 4th quarter of 2014 includes a $0.12 benefit primarily related to a tax carryback claim, net of litigation and restructuring charges.
(d)
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.
(e)
Preliminary.
(f)
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, $1.2 trillion at Sept. 30, 2013, Dec. 31, 2013, March 31, 2014, June 30, 2014 and Sept. 30, 2014, and $1.1 trillion at Dec. 31, 2014.
(g)
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 and Dec. 31, 2014.
(h) Non-GAAP excludes gain (loss) related to equity investment, net income attributable to noncontrolling interests of consolidated investment management funds, the gains on the sales of our investment in Wing Hang and the One Wall Street building, M&I, litigation and restructuring charges, a charge (recovery) related to investment management funds, net of incentives and amortization of intangibles, if applicable. See "Supplemental information - Explanation of GAAP and Non GAAP financial measures" beginning on page 24 of the Quarterly Earnings Release.
(i)
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 - 12 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
 
4th Qtr
 
Investment services fees:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset servicing
$
894

 
$
891

 
$
893

 
$
904

 
$
930

 
$
938

 
$
929

 
$
953

 
$
971

 
$
976

 
$
988

 
$
982

 
Securities lending
49

 
59

 
49

 
41

 
39

 
50

 
35

 
31

 
38

 
46

 
37

 
37

 
Issuer services
251

 
275

 
311

 
215

 
237

 
294

 
322

 
237

 
229

 
231

 
315

 
193

 
Clearing services
303

 
309

 
287

 
294

 
304

 
321

 
315

 
324

 
325

 
326

 
337

 
347

 
Treasury services
136

 
134

 
138

 
141

 
141

 
139

 
137

 
137

 
136

 
141

 
142

 
145

 
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

 
1,704

 
Investment management and performance fees
745

 
797

 
779

 
853

 
822

 
848

 
821

 
904

 
843

 
883

 
881

 
885

 
Foreign exchange and other trading revenue
191

 
180

 
182

 
139

 
161

 
207

 
160

 
146

 
136

 
130

 
153

 
151

 
Distribution and servicing
46

 
46

 
48

 
52

 
49

 
45

 
43

 
43

 
43

 
43

 
44

 
43

 
Financing-related fees
44

 
37

 
46

 
45

 
41

 
44

 
44

 
43

 
38

 
44

 
44

 
43

 
Investment and other income
152

 
61

 
137

 
132

 
88

 
285

 
151

 
(43
)
 
102

 
142

 
890

 
78

 
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

 
2,904

 
Net securities gains (losses)
40

 
50

 
22

 
50

 
48

 
32

 
22

 
39

 
22

 
18

 
20

 
31

 
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

 
$
2,935

 
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
%
 
79
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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

 
$
1,710

(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

 
$
28.5

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

 
$
267

 
$
251

 
$
237

 
$
244

 
$
255

 
$
255

 
$
235

 
$
264

 
$
280

 
$
282

 
$
289

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
S&P 500 Index - period-end
1408
 
1362
 
1441
 
1426
 
1569
 
1606
 
1682
 
1848
 
1872
 
1960
 
1972
 
2059
 
S&P 500 Index - daily average
1349
 
1350
 
1401
 
1418
 
1514
 
1609
 
1675
 
1769
 
1835
 
1900
 
1976
 
2009
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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, $1.2 trillion at Sept. 30, 2013, Dec. 31, 2013, March 31, 2014, June 30, 2014 and Sept. 30, 2014, and $1.1 trillion at Dec. 31, 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 and Dec. 31, 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
 
December 31
 
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)
$
41,597

0.66
 %
 
$
39,563

0.71
 %
 
$
41,617

0.71
 %
 
$
41,424

0.74
 %
 
$
34,882

0.66
 %
 
$
24,623

0.49
 %
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

 
97,440

0.22

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

 
18,536

0.56

Margin loans
14,653

1.10

 
15,224

1.08

 
15,840

1.07

 
17,050

1.05

 
18,108

1.04

 
18,897

1.01

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

 
25,103

2.20

Foreign offices
12,225

1.31

 
13,006

1.22

 
13,805

1.26

 
13,833

1.34

 
12,901

1.30

 
12,844

1.21

Total non-margin loans
33,603

2.01

 
35,544

1.89

 
35,807

1.90

 
36,399

1.94

 
36,727

1.88

 
37,947

1.86

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

 
24,331

1.48

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

 
49,106

1.70

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

 
5,305

2.61

Other securities
32,403

1.92

 
33,000

1.78

 
33,920

1.64

 
34,318

1.55

 
36,972

1.37

 
38,501

1.23

Trading securities
5,523

2.83

 
6,173

2.82

 
5,217

2.60

 
5,532

2.19

 
5,435

2.36

 
3,922

2.64

Total securities
106,729

2.02

 
102,813

1.97

 
105,751

1.83

 
106,952

1.71

 
117,490

1.59

 
121,165

1.58

Total interest-earning assets
271,150

1.28

 
285,779

1.21

 
284,532

1.17

 
300,758

1.10

 
311,603

1.05

 
318,608

1.02

Allowance for loan losses
(212
)
 
 
(207
)
 
 
(210
)
 
 
(197
)
 
 
(187
)
 
 
(186
)
 
Cash and due from banks
6,400

 
 
6,623

 
 
5,886

 
 
5,064

 
 
6,225

 
 
4,715

 
Other assets
52,549

 
 
52,434

 
 
53,430

 
 
52,182

 
 
52,526

 
 
52,472

 
Total Asset Consol VIE FAS 167
11,863

 
 
11,506

 
 
11,354

 
 
11,405

 
 
10,242

 
 
9,623

 
Total Assets
$
341,750

 
 
$
356,135

 
 
$
354,992

 
 
$
369,212

 
 
$
380,409

 
 
$
385,232

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 %
 
8,869

0.12
 %
Savings
1,015

0.25

 
993

0.25

 
1,034

0.25

 
1,185

0.27

 
1,258

0.28

 
1,262

0.30

Other time deposits
41,546

0.04

 
41,523

0.04

 
41,544

0.04

 
42,824

0.04

 
41,248

0.04

 
41,507

0.04

Foreign offices
102,360

0.07

 
103,462

0.06

 
101,075

0.06

 
111,082

0.06

 
113,841

0.05

 
111,511

0.02

Total interest-bearing deposits
153,547

0.06

 
157,020

0.06

 
152,986

0.06

 
162,674

0.06

 
164,233

0.06

 
163,149

0.03

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
)
 
20,285

(0.05
)
Trading Liabilities
2,325

1.69

 
2,534

1.42

 
1,978

1.59

 
2,993

0.97

 
2,806

0.84

 
1,024

1.44

Other borrowed funds
2,233

0.19

 
2,378

0.42

 
1,137

0.47

 
3,242

0.23

 
4,587

0.15

 
5,270

0.25

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

 
10,484

0.08

Long-term debt
19,025

1.00

 
19,501

1.05

 
20,420

1.09

 
20,361

1.16

 
20,429

1.12

 
21,187

1.27

Total interest-bearing liabilities
197,953

0.16

 
203,988

0.17

 
199,909

0.17

 
217,216

0.17

 
222,380

0.16

 
$
221,399

0.16

Total noninterest-bearing deposits
72,075

 
 
79,999

 
 
81,430

 
 
77,820

 
 
82,334

 
 
85,330

 
Other liabilities
24,380

 
 
23,546

 
 
24,608

 
 
24,854

 
 
27,369

 
 
30,730

 
VIE Liabilities & Obligations FAS 167
10,466

 
 
10,283

 
 
10,128

 
 
10,180

 
 
8,879

 
 
8,101

 
Total Shareholders' Equity
35,826

 
 
37,484

 
 
38,097

 
 
38,127

 
 
38,313

 
 
38,434

 
Noncontrolling interest
1,050

 
 
835

 
 
820

 
 
1,015

 
 
1,134

 
 
1,238

 
Total liabilities and shareholders' equity
$
341,750

 
 
$
356,135

 
 
$
354,992

 
 
$
369,212

 
 
$
380,409

 
 
$
385,232

 
Net interest margin - Taxable equivalent basis
 
1.16
 %
 
 
1.09
 %
 
 
1.05
 %
 
 
0.98
 %
 
 
0.94
 %
 
 
0.91
 %
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 - 12 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
 
4th Qtr
Staff:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation
$
861

 
$
866

 
$
893

 
$
911

 
$
885

 
$
891

 
$
915

 
$
929

 
$
925

 
$
903

 
$
909

 
$
893

Incentives
352

 
311

 
306

 
311

 
338

 
364

 
339

 
343

 
359

 
313

 
340

 
319

Employee benefits
240

 
238

 
237

 
235

 
249

 
254

 
262

 
250

 
227

 
223

 
228

 
206

Total staff
1,453

 
1,415

 
1,436

 
1,457

 
1,472

 
1,509

 
1,516

 
1,522

 
1,511

 
1,439

 
1,477

 
1,418

Professional, legal and other purchased services
299

 
309

 
292

 
322

 
295

 
317

 
296

 
344

 
312

 
314

 
323

 
390

Software and equipment
205

 
209

 
208

 
233

 
228

 
238

 
226

 
241

 
237

 
236

 
234

 
235

Net occupancy
147

 
141

 
149

 
156

 
163

 
159

 
153

 
154

 
154

 
152

 
154

 
150

Distribution and servicing
101

 
103

 
109

 
108

 
106

 
111

 
108

 
110

 
107

 
112

 
107

 
102

Business development
56

 
71

 
60

 
88

 
68

 
90

 
63

 
96

 
64

 
68

 
61

 
75

Sub-custodian
70

 
70

 
65

 
64

 
64

 
77

 
71

 
68

 
68

 
81

 
67

 
70

Other
220

 
254

 
265

 
255

 
307

 
215

 
249

 
258

 
223

 
347

 
250

 
211

Amortization of intangible assets
96

 
97

 
95

 
96

 
86

 
93

 
81

 
82

 
75

 
75

 
75

 
73

Merger & integration, litigation and restructuring charges
109

 
378

 
26

 
46

 
39

 
13

 
16

 
2

 
(12
)
 
122

 
220

 
21

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

 
$
2,745

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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

 
$
2,651

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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

 
50,300






THE BANK OF NEW YORK MELLON CORPORATION
ASSETS UNDER MANAGEMENT, CUSTODY AND/OR ADMINISTRATION AND SECURITIES LENDING - 12 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
 
4th Qtr

 
Assets under management at period-end
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Institutional
$
829

 
$
835

 
$
882

 
$
894

 
$
939

 
$
968

 
$
1,041

 
$
1,072

 
$
1,118

 
$
1,109

 
$
1,131

 
$
1,187

 
Mutual Funds
404

 
388

 
398

 
411

 
405

 
378

 
407

 
425

 
415

 
440

 
430

 
438

 
Private Client
69

 
70

 
73

 
75

 
79

 
81

 
84

 
86

 
87

 
87

 
85

 
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

 
$
1,710

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

 
15

 
15

 
15

 
15

 
15

 
14

 
14

 
14

 
14

 
13

 
13

 
Index
17

 
17

 
18

 
18

 
19

 
20

 
20

 
20

 
20

 
21

 
21

 
21

 
Liability-driven investments (c)
22

 
23

 
23

 
24

 
25

 
25

 
26

 
26

 
27

 
27

 
28

 
29

 
Alternative investments
4

 
5

 
4

 
4

 
4

 
4

 
4

 
4

 
4

 
4

 
4

 
4

 
Cash
24

 
23

 
23

 
22

 
20

 
19

 
19

 
19

 
18

 
17

 
18

 
17

 
Total AUM (a)
100
%
 
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

 
$
28.5

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

 
$
267

 
$
251

 
$
237

 
$
244

 
$
255

 
$
255

 
$
235

 
$
264

 
$
280

 
$
282

 
$
289

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

 
1362

 
1441

 
1426

 
1569

 
1606

 
1682

 
1848

 
1872

 
1960

 
1972

 
2059

 
S&P 500 Index - daily average
1349

 
1350

 
1401

 
1418

 
1514

 
1609

 
1675

 
1769

 
1835

 
1900

 
1976

 
2009

 
FTSE 100 Index (f)
5768

 
5571

 
5742

 
5898

 
6412

 
6215

 
6462

 
6749

 
6598

 
6744

 
6623

 
6566

 
FTSE 100 Index-daily average
5822

 
5551

 
5744

 
5844

 
6300

 
6438

 
6530

 
6612

 
6680

 
6764

 
6756

 
6526

 
MSCI World Index (f)
1312

 
1236

 
1312

 
1339

 
1435

 
1434

 
1544

 
1661

 
1674

 
1743

 
1698

 
1710

 
MSCI World Index-daily average
1268

 
1233

 
1274

 
1312

 
1405

 
1463

 
1511

 
1602

 
1647

 
1698

 
1733

 
1695

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

 
353

 
368

 
366

 
356

 
343

 
356

 
354

 
365

 
376

 
361

 
357

 
NYSE & NASDAQ Share Volume (in billions)
186

 
192

 
173

 
174

 
174

 
186

 
166

 
179

 
196

 
187

 
173

 
198

 
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

 
8.54

 
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
%
 
0.10
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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, $1.2 trillion at Sept. 30, 2013, Dec. 31, 2013, March 31, 2014, June 30, 2014 and Sept. 30, 2014, and $1.1 trillion at Dec. 31, 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 and Dec. 31, 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 - 12 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
 
4th 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

 
$
1,646

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

 
(1
)
 
—

 
(1
)
 
1

 
1

 
3

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

 
7

 
5

 
2

 
5

 
2

 
(1
)
 
5

 
—

 
(1
)
 
—

 
4

 
Index
(2
)
 
7

 
5

 
(1
)
 
12

 
8

 
2

 
(3
)
 
—

 
7

 
(3
)
 
1

 
Liability-driven investments (b)
—

 
11

 
—

 
14

 
22

 
11

 
27

 
4

 
20

 
(17
)
 
18

 
24

 
Alternative investments
2

 
2

 
(1
)
 
—

 
—

 
(1
)
 
1

 
1

 
2

 
2

 
—

 
2

 
Total long-term inflows (outflows)
7

 
26

 
9

 
14

 
40

 
21

 
32

 
2

 
21

 
(13
)
 
13

 
27

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

 
(6
)
 
(13
)
 
(1
)
 
13

 
6

 
(7
)
 
(18
)
 
19

 
5

 
Total net inflows (outflows)
(2
)
 
12

 
18

 
8

 
27

 
20

 
45

 
8

 
14

 
(31
)
 
32

 
32

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net market / currency impact / other
49

 
(21
)
 
42

 
19

 
16

 
(16
)
 
60

 
43

 
23

 
47

 
(22
)
 
32

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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


$
1,710

(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 - 12 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
 
4th Qtr
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment management fees:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mutual funds
$
265

 
$
275

 
$
287

 
$
298

 
$
299

 
$
299

 
$
293

 
$
303

 
$
299

 
$
311

 
$
315

 
$
306

 
Institutional clients
327

 
326

 
339

 
355

 
360

 
366

 
367

 
385

 
372

 
385

 
382

 
375

 
Wealth management
134

 
136

 
136

 
138

 
143

 
146

 
145

 
149

 
153

 
156

 
158

 
157

 
Total investment management fees
726

 
737

 
762

 
791

 
802

 
811

 
805

 
837

 
824

 
852

 
855

 
838

 
Performance fees
16

 
54

 
10

 
57

 
15

 
33

 
10

 
72

 
20

 
29

 
22

 
44

 
Investment management and performance fees
742

 
791

 
772

 
848

 
817

 
844

 
815

 
909

 
844

 
881

 
877

 
882

 
Distribution and servicing
45

 
45

 
47

 
50

 
46

 
44

 
41

 
41

 
40

 
41

 
41

 
40

 
Other (a)
50

 
12

 
39

 
23

 
18

 
24

 
26

 
43

 
16

 
48

 
16

 
7

 
Total fee and other revenue (a)
837

 
848

 
858

 
921

 
881

 
912

 
882

 
993

 
900

 
970

 
934

 
929

 
Net interest revenue
55

 
52

 
51

 
56

 
62

 
63

 
67

 
68

 
70

 
66

 
69

 
69

 
Total revenue
892

 
900

 
909

 
977

 
943

 
975

 
949

 
1,061

 
970

 
1,036

 
1,003

 
998

 
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

 
721

 
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

 
277

 
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

 
30

 
Income before taxes
$
231

 
$
217

 
$
225

 
$
223

 
$
206

 
$
271

 
$
225

 
$
266

 
$
246

 
$
171

 
$
245

 
$
247

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average assets
$
36,112

 
$
35,603

 
$
35,285

 
$
37,474

 
$
38,743

 
$
37,953

 
$
38,690

 
$
38,796

 
$
39,463

 
$
37,750

 
$
36,670

 
$
37,286

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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

 
$
1,710

(c)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax operating margin
26
%
 
24
%
 
25
%
 
23
%
 
22
%
 
28
%
 
24
%
 
25
%
 
25
%
 
16
%
 
24
%
 
25
%
 
Adjusted pre-tax operating margin (d)
37
%
 
35
%
 
37
%
 
32
%
 
35
%
 
34
%
 
33
%
 
34
%
 
34
%
 
36
%
 
33
%
 
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, treasury services, foreign exchange and other trading revenue and investment and other income.
(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 - 12 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
 
4th Qtr
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment services fees
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset servicing fees - ex. securities lending
$
876

 
$
871

 
$
876

 
$
885

 
$
912

 
$
922

 
$
913

 
$
936

 
$
955

 
$
958

 
$
971

 
$
964

 
Securities lending revenue
39

 
48

 
37

 
31

 
31

 
39

 
26

 
21

 
30

 
35

 
27

 
28

 
Issuer services
251

 
275

 
310

 
213

 
236

 
294

 
321

 
236

 
228

 
231

 
314

 
193

 
Clearing services
300

 
307

 
285

 
291

 
302

 
320

 
314

 
322

 
323

 
324

 
336

 
346

 
Treasury services
131

 
129

 
131

 
136

 
137

 
135

 
135

 
137

 
134

 
140

 
139

 
142

 
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

 
1,673

 
Foreign Exchange and other trading revenue
173

 
176

 
153

 
126

 
173

 
193

 
177

 
150

 
158

 
145

 
159

 
165

 
Other (a)
75

 
67

 
78

 
75

 
70

 
67

 
63

 
58

 
59

 
87

 
59

 
69

 
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

 
1,907

 
Net interest revenue
642

 
607

 
609

 
581

 
653

 
633

 
619

 
610

 
590

 
593

 
583

 
574

 
Total revenue
2,487

 
2,480

 
2,479

 
2,338

 
2,514

 
2,603

 
2,568

 
2,470

 
2,477

 
2,513

 
2,588

 
2,481

 
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

 
1,828

 
Income before taxes (ex. intangible amortization)
687

 
405

 
754

 
573

 
717

 
778

 
803

 
648

 
699

 
689

 
753

 
653

 
Amortization of intangible assets
48

 
49

 
47

 
48

 
47

 
54

 
46

 
47

 
44

 
44

 
44

 
43

 
Income before taxes
$
639

 
$
356

 
$
707

 
$
525

 
$
670

 
$
724

 
$
757

 
$
601

 
$
655

 
$
645

 
$
709

 
$
610

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average loans
$
26,630

 
$
25,611

 
$
24,917

 
$
24,868

 
$
26,697

 
$
27,814

 
$
27,865

 
$
31,211

 
$
31,468

 
$
33,115

 
$
33,785

 
$
35,448

 
Average assets
$
214,592

 
$
210,064

 
$
224,986

 
$
243,052

 
$
240,187

 
$
244,802

 
$
246,252

 
$
258,294

 
$
258,470

 
$
264,221

 
$
266,455

 
$
276,586

 
Average deposits
$
175,526

 
$
173,087

 
$
188,743

 
$
204,164

 
$
200,222

 
$
204,499

 
$
206,068

 
$
216,216

 
$
214,947

 
$
220,701

 
$
221,734

 
$
228,282

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax operating margin
26
%
 
15
%
 
29
%
 
22
%
 
27
%
 
28
%
 
29
%
 
24
%
 
26
%
 
26
%
 
27
%
 
25
%
 
Pre-tax operating margin (ex. intangible amortization)
28
%
 
17
%
 
30
%
 
24
%
 
29
%
 
30
%
 
31
%
 
26
%
 
28
%
 
27
%
 
29
%
 
26
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment services fees as a percentage of noninterest expense (b)
94
%
 
94
%
 
96
%
 
90
%
 
92
%
 
94
%
 
97
%
 
90
%
 
93
%
 
93
%
 
100
%
 
92
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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

 
$
28.5

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

 
$
267

 
$
251

 
$
237

 
$
244

 
$
255

 
$
255

 
$
235

 
$
264

 
$
280

 
$
282

 
$
289

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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, $1.2 trillion at Sept. 30, 2013, Dec. 31, 2013, March 31, 2014, June 30, 2014, and Sept. 30, 2014, and $1.1 trillion at Dec. 31, 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 and Dec. 31, 2014.




THE BANK OF NEW YORK MELLON
OTHER SEGMENT- 12 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
 
4th Qtr
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee and other revenue (a)
$
201

 
$
146

 
$
186

 
$
219

 
$
152

 
$
347

 
$
172

 
$
(20
)
 
$
112

 
$
119

 
$
928

 
$
117

Net interest revenue
68

 
75

 
89

 
88

 
4

 
61

 
86

 
83

 
68

 
60

 
69

 
69

Total revenue (a)
269

 
221

 
275

 
307

 
156

 
408

 
258

 
63

 
180

 
179

 
997

 
186

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

 
6

 
(18
)
 
(12
)
 
(19
)
 
1

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

 
203

 
232

 
230

 
243

 
236

 
230

 
200

 
193

 
93

 
274

 
123

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

 
$
22

 
$
44

 
$
137

 
$
(62
)
 
$
191

 
$
26

 
$
(143
)
 
$
5

 
$
98

 
$
742

 
$
62

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

 
$
62

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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

 
$
10,272

Average assets
$
50,640

 
$
59,335

 
$
58,643

 
$
55,469

 
$
54,734

 
$
54,700

 
$
56,808

 
$
59,045

 
$
57,059

 
$
67,240

 
$
77,284

 
$
71,360

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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)
 
2014
 
2013
 
2012
 
2014
 
2013
 
2012
 
2014
 
2013
 
2012
 
2014
 
2013
 
2012
 
Revenue:
 

 

 

 

 

 

 

 

 

 

 

 

 
Investment services fees
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset servicing
 
$
106

 
$
104

 
$
117

 
$
3,968

 
$
3,800

 
$
3,663

 
$
1

 
$
1

 
$
—

 
$
4,075

 
$
3,905

 
$
3,780

 
Issuer services
 
—

 
—

 
—

 
966

 
1,087

 
1,049

 
2

 
3

 
3

 
968

 
1,090

 
1,052

 
Clearing services
 
—

 
—

 
—

 
1,329

 
1,258

 
1,183

 
6

 
6

 
10

 
1,335

 
1,264

 
1,193

 
Treasury services
 
9

 
2

 
2

 
555

 
544

 
527

 
—

 
8

 
20

 
564

 
554

 
549

 
Total investment services fees
 
115

 
106

 
119

 
6,818

 
6,689

 
6,422

 
9

 
18

 
33

 
6,942

 
6,813

 
6,574

 
Investment management fees
 
3,369

 
3,255

 
3,016

 
74

 
63

 
66

 
—

 
27

 
37

 
3,443

 
3,345

 
3,119

 
Performance fees
 
115

 
130

 
137

 
—

 
—

 
—

 
—

 
—

 
(1
)
 
115

 
130

 
136

 
Foreign exchange and other trading revenue
 
(23
)
 
8

 
9

 
627

 
693

 
628

 
(34
)
 
(27
)
 
55

 
570

 
674

 
692

 
Distribution and servicing
 
162

 
172

 
187

 
11

 
8

 
5

 
—

 
—

 
—

 
173

 
180

 
192

 
Financing-related fees
 
1

 
5

 
6

 
50

 
44

 
42

 
118

 
123

 
124

 
169

 
172

 
172

 
Investment and other income
 
(7
)
 
(14
)
 
(9
)
 
139

 
142

 
171

 
1,093

(a)
376

(a)
352

(a)
1,225

(a)
504

(a)
514

(a)
Total fee revenue
 
3,732

 
3,662

 
3,465

 
7,719

 
7,639

 
7,334

 
1,186

(a)
517

(a)
600

(a)
12,637

(a)(b)
11,818

(a)(b)
11,399

(a)(b)
Net securities gains (losses)
 
1

 
6

 
(1
)
 
—

 
1

 
11

 
90

 
134

 
152

 
91

 
141

 
162

 
Total fee and other revenue
 
3,733

 
3,668

 
3,464

 
7,719

 
7,640

 
7,345

 
1,276

(a)
651

(a)
752

(a)
12,728

(a)(b)
11,959

(a)(b)
11,561

(a)(b)
Net interest revenue (expense)
 
274

 
260

 
214

 
2,340

 
2,515

 
2,439

 
266

 
234

 
320

 
2,880

 
3,009

 
2,973

 
Total revenue
 
4,007

 
3,928

 
3,678

 
10,059

 
10,155

 
9,784

 
1,542

(a)
885

(a)
1,072

(a)
15,608

(a)
14,968

(a)
14,534

(a)
Provision for credit losses
 
—

 
—

 
—

 
—

 
1

 
(3
)
 
(48
)
 
(36
)
 
(77
)
 
(48
)
 
(35
)
 
(80
)
 
Noninterest expenses (ex. intangible amortization)
 
2,975

 
2,812

 
2,590

 
7,265

 
7,208

 
7,368

 
860

 
944

 
991

 
11,100

 
10,964

 
10,949

 
Income (loss) before taxes (ex. intangible amortization)
 
1,032

 
1,116

 
1,088

 
2,794

 
2,946

 
2,419

 
730

(a)
(23
)
(a)
158

(a)
4,556

(a)(b)
4,039

(a)(b)
3,665

(a)(b)
Amortization of intangible assets
 
123

 
148

 
192

 
175

 
194

 
192

 
—

 
—

 
—

 
298

 
342

 
384

 
Income (loss) before taxes and noncontrolling interest
 
$
909

 
$
968

 
$
896

 
$
2,619

 
$
2,752

 
$
2,227

 
$
730

(a)
$
(23
)
(a)
$
158

(a)
$
4,258

(a)(b)
$
3,697

(a)(b)
$
3,281

(a)(b)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average loans
 
$
10,589

 
$
9,361

 
$
7,950

 
$
33,466

 
$
28,407

 
$
25,503

 
$
10,155

 
$
10,548

 
$
9,607

 
$
54,210

 
$
48,316

 
$
43,060

 
Average assets
 
$
37,783

 
$
38,546

 
$
36,120

 
$
266,483

 
$
247,430

 
$
223,233

 
$
68,300

 
$
56,335

 
$
56,028

 
$
372,566

 
$
342,311

 
$
315,381

 
Average deposits
 
$
14,156

 
$
13,755

 
$
11,311

 
$
221,453

 
$
206,793

 
$
185,441

 
$
6,930

 
$
5,148

 
$
7,458

 
$
242,539

 
$
225,696

 
$
204,210

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets under management at period-end (in billions) (c)
 
$
1,710

 
$
1,583

 
$
1,380

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
1,710

 
$
1,583

 
$
1,380

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

 
$
—

 
$
—

 
$
28.5

 
$
27.6

 
$
26.3

 
$
—

 
$
—

 
$
—

 
$
28.5

 
$
27.6

 
$
26.3

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

 
$
—

 
$
—

 
$
289

 
$
235

 
$
237

 
$
—

 
$
—

 
$
—

 
$
289

 
$
235

 
$
237

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax operating margin - GAAP
 
23
%
 
25
%
 
24
%
 
26
%
 
27
%
 
23
%
 
N/M

 
N/M

 
N/M

 
27
%
 
25
%
 
23
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Memo:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities Lending Revenue
 

 

 

 

 

 

 

 

 

 
$
158

 
$
155

 
$
198

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: 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.
(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 2012, 2013 and 2014 includes income from consolidated investment management funds of $189 million, $183 million and $163 million, respectively, net of income attributable to noncontrolling interests of $76 million, $80 million and $84 million respectively. The net of these income statement line items of $113 million, $103 million and $79 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, 2012, $1.2 trillion at Dec. 31, 2013 and $1.1 trillion at Dec. 31, 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 and $65 billion at Dec. 31, 2014.
Note: See pages 9 through 11 for businesses results.
N/M - Not meaningful




THE BANK OF NEW YORK MELLON CORPORATION
NONPERFORMING ASSETS - 12 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
 
4th Qtr
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonperforming loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other residential mortgages
$
188

 
$
177

 
$
166

 
$
158

 
$
148

 
$
135

 
$
128

 
$
117

 
$
107

 
$
105

 
$
113

 
$
112

Wealth management loans and mortgages
35

 
35

 
33

 
30

 
30

 
13

 
12

 
11

 
12

 
12

 
13

 
12

Commercial real estate
39

 
30

 
29

 
18

 
17

 
18

 
4

 
4

 
4

 
4

 
4

 
1

Commercial
32

 
31

 
29

 
27

 
24

 
24

 
15

 
15

 
13

 
13

 
13

 
—

Foreign
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

 
125

Other assets owned
13

 
9

 
5

 
4

 
3

 
3

 
3

 
3

 
3

 
4

 
4

 
3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Total nonperforming assets (a)
$
331

 
$
294

 
$
274

 
$
249

 
$
234

 
$
204

 
$
172

 
$
156

 
$
146

 
$
142

 
$
147

 
$
128

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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
%
 
0.22
%
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
%
 
0.33
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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

 
152.8

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

 
149.2

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

 
224.0

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

 
218.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 4th quarters of 2014 of $74 million, $68 million, $79 million and $53 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 - 12 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
 
4th Qtr
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses
 
$
394

 
$
386

 
$
362

 
$
339

 
$
266

 
$
237

 
$
212

 
$
206

 
$
210

 
$
198

 
$
187

 
$
191

Allowance for lending-related commitments
 
103

 
108

 
105

 
117

 
121

 
121

 
125

 
133

 
134

 
128

 
124

 
97

Allowance for credit losses - beginning of period
 
497

 
494

 
467

 
456

 
387

 
358

 
337

 
339

 
344

 
326

 
311

 
288

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

 
2

 
2

 
2

 
—

 
1

 
2

 
5

 
1

 
1

 
1

 
1

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

 
(1
)
 
—

 
(3
)
 
(4
)
 
(9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for credit losses
 
5

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

 
6

 
(18
)
 
(12
)
 
(19
)
 
1


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses - end of period
 
494

 
467

 
456

 
387

 
358

 
337

 
339

 
344

 
326

 
311

 
288

 
280

Allowance for loan losses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses
 
$
386

 
$
362

 
$
339

 
$
266

 
$
237

 
$
212

 
$
206

 
$
210

 
$
198

 
$
187

 
$
191

 
$
191

Allowance for lending-related commitments
 
108

 
105

 
117

 
121

 
121

 
125

 
133

 
134

 
128

 
124

 
97

 
89

Allowance for credit losses - end of period
 
494

 
467

 
456

 
387

 
358

 
337

 
339

 
344

 
326

 
311

 
288

 
280

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
%
 
0.32
%



EX99.3_KeyFacts4Q14
January 23, 2015
KEY FACTS – Fourth Quarter 2014
Delivering for Shareholders
Total Shareholder Return
2012
2013
2014
BNY Mellon
32.1%
38.6%
18.3%
11-Member Peer Group Median (a)
27.4%
38.9%
13.8%
S&P 500 Financials
28.7%
35.6%
15.2%
S&P 500 Index
16.0%
32.4%
13.7%
Positive Growth Trends
•
Strong fee income growth full-year 2014 (FY14) versus full-year 2013 (FY13)
◦
Investment Management fee income up 3%, FY14 versus FY13
◦
Investment Services fee income up 2%, FY14 versus FY13
Continued AUM and AUC/A Growth
•
AUM up 8% in 4Q14 versus 4Q13
◦
$48 billion of net long-term AUM inflows in FY14
•
AUC/A up 3% in 4Q14 versus 4Q13
◦
$536 billion of estimated AUC/A new business wins in FY14
Strong Expense Control
•
Significant progress on expense control in 4Q14 and FY14
◦
Adjusted expenses in 4Q14 decreased 5% year-over-year and 1% sequentially;
and decreased 2% FY14 versus FY13 (b)
Ongoing Initiatives to Streamline Organization
•
Numerous actions over time to streamline organization:
o    Sold One Wall Street headquarters
o    Sold equity investment in Wing Hang Bank
o    Sold Investment Management JV
(BNY Mellon Western Fund Management)
o    Exited U.S. Derivatives Clearing
(Futures Commission Merchant)
o    Exiting Derivatives Sales and Trading
o    Sold SourceNet Solutions
o    Sold Newton Private Client business
o    Sold Corporate Trust (Japan & Mexico)
o    Exited Beta Transition Management
o    Sold Shareowner Services
Continued Strong Capital Position and Return of Value to Shareholders
•
Strong capital position
•
Key capital ratios continue to be strong, ending 2014 with an estimated common equity tier 1 ratio, fully phased-in (Non-GAAP) under the Advanced Approach of 10.2% (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 20%, or 16% on an adjusted basis, in 4Q14 and 20%, or 18% on an adjusted basis in FY14 (b)
•
Repurchased 11.0 million common shares for $432 million in 4Q14 and 46.2 million common shares for $1.7 billion in FY14
•
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 January 23, 2015, 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, preliminary business metrics 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 January 23, 2015 and BNY Mellon undertakes no obligation to update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events.
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 Fourth Quarter 2014 Financial Highlights January 23, 2015

 
2 Fourth 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; 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 January 23, 2015, 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 September 30, 2014 and the Corporation's Earnings Release for the quarter ended December 31, 2014, included as an exhibit to our Current Report on Form 8-K filed on January 23, 2015 (the “Earnings Release”), available at www.bnymellon.com/investorrelations.

 
3 Fourth Quarter 2014 – Financial Highlights Fourth Quarter and Full Year 2014 Financial Highlights 4Q14 • Earnings per common share of $0.70 including: • $0.12 per common share primarily from the previously disclosed tax benefit, net of litigation and restructuring charges • Earnings per common share +7% year-over-year on an adjusted basis1 • Significant progress on expense control • Noninterest expense1 (5)% year-over-year, (1)% sequentially • Staff expense (7%) year-over-year, (4%) sequentially • Positive operating leverage of 232 bps on an adjusted basis1 • Strong capital generation and return of value to common shareholders • Repurchased 11.0 million common shares for $432 million; declared common stock dividend of $0.17 per share • Return on tangible common equity1 of 20%; 16% on an adjusted basis FY 2014 • Earnings per common share of $2.67, including: • $0.28 per common share from non-operating items1 • Earnings per common share +5% on an adjusted basis1 • Positive operating leverage of 87 bps on an adjusted basis1 • $536 billion of estimated AUC/A new business wins; $48 billion of net long-term AUM inflows • $2.4 billion of value returned to shareholders in the form of common stock dividends and share repurchases • Return on tangible common equity1 of 20%; 18% on an adjusted basis 1 Represents a Non-GAAP measure. See Appendix for reconciliations. Additional disclosures regarding these measures and other Non-GAAP adjusted measures are available in the Corporation’s reports filed with the SEC, available at www.bnymellon.com/investorrelations.

 
4 Fourth Quarter 2014 – Financial Highlights Fourth Quarter 2014 Year-over-Year Performance • Earnings per common share1 of $0.58, +7% driven by significant progress on expense control • Investment management and performance fees (2)% reflecting the unfavorable impact of a stronger U.S. dollar and lower performance fees, partially offset by higher equity market values • Investment services fees +1% reflecting organic growth, net new business offset by lower Depositary Receipts revenue and the unfavorable impact of a stronger U.S. dollar • Market-sensitive revenue driven by volume, volatility and rates • Foreign Exchange +31% driven by higher volumes and volatility, partially offset by lower Depositary Receipts-related activity • Securities Lending +19% driven by volume • Net interest revenue (6%) reflecting lower asset yields, higher premium amortization on agency mortgage-backed securities and the impact of interest rate hedging • Provision for credit losses was $1 million in 4Q14 versus a provision of $6 million in 4Q13 • Noninterest expense1 (5)% primarily reflecting lower staff expense, the favorable impact of a stronger U.S. dollar, lower asset-based taxes and business development expense, partially offset by higher professional, legal and other purchased services • Effective tax rate of 9.4% in 4Q14; includes a 16.5% benefit primarily related to the previously disclosed approval of a tax carryback claim and the tax impact of consolidated investment management funds 1 Represents a Non-GAAP measure. See Appendix for reconciliations. Additional disclosures regarding these measures and other Non-GAAP adjusted measures are available in the Corporation’s reports filed with the SEC, available at www.bnymellon.com/investorrelations. Note: All comparisons are 4Q14 vs. 4Q13 unless otherwise stated.

 
5 Fourth Quarter 2014 – Financial Highlights Summary Financial Results for Fourth Quarter 2014 Growth vs. $ in millions, except per share data 4Q14 3Q14 4Q13 4Q13 3Q14 Revenue $ 3,689 $ 4,611 $ 3,611 2 % (20 )% Expenses $ 2,745 $ 2,968 $ 2,877 (5 )% (8 )% Income before income taxes $ 943 $ 1,662 $ 728 30 % N/M Pre-tax operating margin 26 % 36 % 20 % EPS $ 0.70 $ 0.93 $ 0.44 N/M N/M Return on Tangible Common Equity1 19.5 % 26.2 % 14.3 % 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. Note: Provision for credit losses was $1 million in 4Q14 versus a provision of $6 million in 4Q13 and a credit of $19 million in 3Q14. N/M - not meaningful

 
6 Fourth Quarter 2014 – Financial Highlights Summary Financial Results for Fourth Quarter 2014 (Non-GAAP) Growth vs. $ in millions, except per share data 4Q14 3Q14 4Q13 4Q13 3Q14 Revenue1 $ 3,665 $ 3,752 $ 3,769 (3)% (2 )% Expenses1 $ 2,651 $ 2,673 $ 2,793 (5)% (1 )% Operating leverage1 232 bps (150) bps Income before income taxes1 $ 1,013 $ 1,098 $ 970 4 % (8 )% Pre-tax operating margin1 28 % 29 % 26 % EPS1 $ 0.58 $ 0.64 $ 0.54 7 % (10 )% Return on Tangible Common Equity1 16.3 % 18.4 % 17.2 % 1 Represents a Non-GAAP measure. See Appendix for reconciliations. Additional disclosures regarding these measures 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 392 bps excluding investment and other income and net securities gains1

 
7 Fourth Quarter 2014 – Financial Highlights Full-Year 2014 Performance • Earnings per common share1 of $2.39, +5% driven by significant progress on expense control • Investment management and performance fees +3% reflecting higher equity market values and net new business, partially offset by higher money market fee waivers and lower performance fees • Investment services fees +2% reflecting higher asset servicing and clearing services fees, partially offset by lower Depositary Receipts and Corporate Trust fees • Market-sensitive revenue driven by volume, volatility and rates • Foreign Exchange (5)% driven by lower volatility, partially offset by higher volumes • Securities Lending +2% driven by higher volumes, partially offset by lower spreads • Net interest revenue (4)% reflecting lower interest rate environment, partially offset by higher balances • Provision for credit losses was a credit of $48 million in 2014 versus a credit of $35 million in 4Q13 • Noninterest expense1 (2)% primarily reflecting lower staff and business development expense and decrease in the cost of generating certain tax credits, partially offset by higher professional legal and other purchased services • Total payout ratio of 79%, or 94% on an adjusted basis1 1 Represents a Non-GAAP measure. See Appendix for reconciliations. Additional disclosures regarding these measures and other Non-GAAP adjusted measures are available in the Corporation’s reports filed with the SEC, available at www.bnymellon.com/investorrelations. Note: All comparisons are 2014 vs. 2013 unless otherwise stated.

 
8 Fourth Quarter 2014 – Financial Highlights Summary Financial Results for Full-Year 2014 Growth vs. $ in millions, except per share data FY 2014 FY 2013 FY 2013 Revenue $ 15,692 $ 15,048 4% Expenses $ 11,398 $ 11,306 1% Income before income taxes $ 4,342 $ 3,777 N/M Pre-tax operating margin 28 % 25 % EPS $ 2.67 $ 1.73 N/M Return on Tangible Common Equity1 19.5 % 15.3 % 1 Represents a Non-GAAP measure. See Appendix for reconciliation. Additional disclosures regarding these measures and other Non-GAAP adjusted measures are available in the Corporation’s reports filed with the SEC, available at www.bnymellon.com/investorrelations. Note: Provision for credit losses was a credit of $48 million in 2014 versus a credit of $35 million in 2013. N/M - not meaningful

 
9 Fourth Quarter 2014 – Financial Highlights Summary Financial Results for Full-Year 2014 (Non-GAAP) Growth vs. $ in millions, except per share data FY 2014 FY 2013 FY 2013 Revenue1 $ 14,772 $ 14,968 (1)% Expenses1 $ 10,645 $ 10,882 (2)% Operating leverage1 87 bps Income before income taxes1 $ 4,175 $ 4,121 1% Pre-tax operating margin1 28 % 28 % EPS1 $ 2.39 $ 2.28 5% Return on Tangible Common Equity1 17.6 % 19.7 % 1 Represents a Non-GAAP measure. See Appendix for reconciliations. Additional disclosures regarding these measures 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 190 bps excluding investment and other income and net securities gains1

 
10 Fourth Quarter 2014 – Financial Highlights Investment Management Metrics Assets Under Management (AUM)1 $ in billions 4Q14 FY 2014 Beginning balance of AUM $1,646 $1,583 Net inflows (outflows): Long-Term: Equity (4 ) (11 ) Fixed income 4 3 Index 1 5 Liability-driven investments2 24 45 Alternative investments 2 6 Total long-term inflows 27 48 Short-term: Cash 5 (1 ) Total net inflows 32 47 Net market/currency impact 32 80 Ending balance of AUM3 $1,710 $1,710 Wealth Management Growth vs. $ in millions 4Q14 4Q13 3Q14 Average loans $ 11,124 14 % 3 % Average deposits $ 14,604 3 % 6 % 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.

 
11 Fourth Quarter 2014 – Financial Highlights Investment Management . Growth vs. Drivers ($ in millions) 4Q14 4Q13 3Q14 Investment management and performance fees $ 882 (3 )% 1 % Investment management fees  YoY: Higher equity market values and unfavorable impact of stronger U.S. dollar  QoQ: Unfavorable impact of stronger U.S. dollar, partially offset by net new business and higher equity market values Performance fees  YoY: ($28MM): Lower relative to stronger-than-average 4Q13  QoQ: +$22MM: Seasonality Other revenue  YoY: ($36MM) Lower other trading revenue related to losses on hedging activities within a boutique and lower seed capital gains  QoQ: ($9MM) Lower other trading revenue related to losses on hedging activities within a boutique Net interest revenue  YoY: Higher loan and deposit levels  QoQ: Higher loan and deposit levels, partially offset by lower deposit spreads Noninterest expense  YoY: Favorable impact of stronger U.S. dollar and lower incentive and distribution and servicing expense  QoQ: Favorable impact of stronger U.S. dollar, partially offset by higher incentive expense driven by seasonally higher performance fees Distribution and servicing 40 (2 ) (2 ) Other1 7 N/M N/M Net interest revenue 69 1 — Total Revenue $ 998 (6 )% — % Noninterest expense (ex. amortization of intangible assets) $ 721 (5 )% (1 )% Income before taxes (ex. amortization of intangible assets) $ 277 (8 )% — % Pre-tax operating margin 25 % (11) bps 57 bps Adjusted pre-tax operating margin2 33 % (43) bps 54 bps 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 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. N/M - not meaningful bps – basis points

 
12 Fourth Quarter 2014 – Financial Highlights Investment Services Metrics Growth vs. 4Q14 4Q13 3Q14 Assets under custody /administration at period end (trillions)1,2 $ 28.5 3 % 1 % Market value of securities on loan at period end (billions)3 $ 289 23 % 2 % Average loans (millions) $ 35,448 14 % 5 % Average deposits (millions) $ 228,282 6 % 3 % Broker-Dealer Average tri-party repo balances (billions) $ 2,101 5 % 2 % Clearing Services Global DARTS volume (thousands) 242 14 % 16 % Average active clearing accounts (U.S. platform) (thousands) 5,900 5 % 2 % Average long-term mutual fund assets (U.S. platform) (millions) $ 450,305 12 % 2 % Depositary Receipts Number of sponsored programs 1,279 (4 )% (2 )% 1 Includes the AUC/A of CIBC Mellon of $1.2 trillion at Dec. 31, 2013 and Sept. 30, 2014 and $1.1 trillion at Dec. 31, 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 and $65 billion at Sept. 30, 2014 and Dec. 31, 2014.

 
13 Fourth Quarter 2014 – Financial Highlights Investment Services Growth vs. Drivers ($ in millions) 4Q14 4Q13 3Q14 Investment services fees: Asset Servicing  YoY: Organic growth and net new business, partially offset by unfavorable impact of stronger U.S. dollar  QoQ: Unfavorable impact of stronger U.S. dollar, partially offset by net new business Clearing Services  YoY: Higher mutual fund/asset-based fees and higher DARTS volume  QoQ: Higher DARTS volume Issuer Services  YoY: Lower corporate actions and dividend fees in Depositary Receipts  QoQ: Seasonality in Depositary Receipts, partially offset by higher Corporate Trust fees Treasury Services  Higher payment volumes Foreign exchange and other trading  Higher FX volumes/volatility, offset by lower Depositary Receipts-related activity Net interest revenue  Lower yields, partially offset by higher average loans/deposits Noninterest expense  YoY: Higher professional, legal and other purchased services expense and litigation expense, partially offset by lower staff expense, efficiency initiatives and the favorable impact of a stronger U.S. dollar  QoQ: Lower staff expense, favorable impact of a stronger U.S. dollar, lower litigation expense, partially offset by higher professional, legal and other purchased services expense Asset servicing $ 992 4 % (1 )% Clearing services 346 7 3 Issuer services 193 (18 ) (39 ) Treasury services 142 4 2 Total investment services fees 1,673 1 (6 ) Foreign exchange and other trading revenue 165 10 4 Other1 69 19 17 Net interest revenue 574 (6 ) (2 ) Total revenue $ 2,481 — % (4 )% Noninterest expense (ex. amortization of intangible assets) $ 1,828 — % — % Income before taxes (ex. amortization of intangible assets) $ 653 1 % (13 )% Pre-tax operating margin 25 % 25 bps (281) bps Pre-tax operating margin (ex. amortization of intangible assets) 26 % 9 bps (278) bps Investment services fees as a percentage of noninterest expense2 92 % 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. bps – basis points

 
14 Fourth Quarter 2014 – Financial Highlights Fee and Other Revenue Growth vs. Drivers ($ in millions) 4Q14 4Q13 3Q14 Asset servicing1 $ 1,019 4 % (1 )% Asset Servicing  YoY: Organic growth and net new business, partially offset by unfavorable impact of stronger U.S. dollar  QoQ: Unfavorable impact of stronger U.S. dollar, partially offset by net new business Clearing Services  YoY: Higher mutual fund/asset-based fees and higher DARTS volume  QoQ: Higher DARTS volume Issuer Services  YoY: Lower corporate actions and dividend fees in Depositary Receipts  QoQ: Seasonality in Depositary Receipts, partially offset by higher Corporate Trust fees Treasury Services  Higher payment volumes Investment Management and Performance Fees  YoY: Lower performance fees, unfavorable impact of stronger U.S. dollar and higher equity market values  QoQ: Seasonally higher performance fees, net new business, unfavorable impact of stronger U.S. dollar and higher equity market values Foreign Exchange & Other Trading Revenue  Higher FX volumes/volatility, partially offset by lower Depositary Receipts-related activity Clearing services 347 7 % 3 Issuer services 193 (19 ) (39 ) Treasury services 145 6 2 Total investment services fees 1,704 1 (6 ) Investment management and performance fees 885 (2 ) — Foreign exchange and other trading revenue 151 3 (1 ) Distribution and servicing 43 — (2 ) Financing-related fees 43 — (2 ) Investment and other income 78 N/M N/M Total fee revenue 2,904 5 (24 ) Net securities gains 31 N/M N/M Total fee and other revenue - GAAP $ 2,935 4 % (24 )% 1 Asset servicing fees include securities lending revenue of $31 million in 4Q13, $37 million in 3Q14 and $37 million in 4Q14. N/M - not meaningful

 
15 Fourth Quarter 2014 – Financial Highlights Net Interest Revenue Growth vs. Drivers ($ in millions) 4Q14 4Q13 3Q14 Net interest revenue (non-FTE) $ 712 (6 )% (1 )% Net Interest Revenue  YoY: Lower asset yields, higher premium amortization on agency MBS, lower accretion, impact of interest rate hedging (primarily offset in foreign exchange and other trading revenue), partially offset by change in asset mix and higher average interest-earning assets driven by higher deposits  QoQ: Impact of interest rate hedging (primarily offset in foreign exchange and other trading revenue) and lower accretion Net interest revenue (FTE) - Non-GAAP 726 (7 ) (1 ) Net interest margin (FTE) 0.91 % (18) bps (3) bps Selected Average Balances: Cash/interbank investments $ 140,599 6 % 1 % Trading account securities 3,922 (36 ) (28 ) Securities 117,243 21 5 Loans 56,844 12 4 Interest-earning assets 318,608 11 2 Interest-bearing deposits 163,149 4 (1 ) Noninterest-bearing deposits 85,330 7 4 bps – basis points FTE – fully taxable equivalent

 
16 Fourth Quarter 2014 – Financial Highlights Noninterest Expense Growth vs. Drivers ($ in millions) 4Q14 4Q13 3Q14 Staff $ 1,418 (7 )% (4 )%  YoY: Lower staff expense primarily reflecting lower headcount as a result of streamlining actions, the benefit of replacing technology contractors with permanent staff and lower healthcare costs, favorable impact of stronger U.S. dollar, lower asset-based taxes, lower business development expense as a result of discretionary expense control, partially offset by higher professional, legal and other purchased services driven by higher expenses related to the implementation of strategic platforms  QoQ: Lower staff expense primarily reflecting lower headcount as a result of streamlining actions, the benefit of replacing technology contractors with permanent staff and lower healthcare costs, favorable impact of stronger U.S. dollar, lower asset-based taxes, partially offset by higher professional, legal and other purchased services driven by higher expenses related to the implementation of strategic platforms and higher business development expense due to seasonality Professional, legal and other purchased services 390 13 21 Software and equipment 235 (2 ) — Net occupancy 150 (3 ) (3 ) Distribution and servicing 102 (7 ) (5 ) Sub-custodian 70 3 4 Business development 75 (22 ) 23 Other 211 (18 ) (16 ) Amortization of intangible assets 73 (11 ) (3 ) M&I, litigation and restructuring charges 21 N/M N/M Total noninterest expense – GAAP $ 2,745 (5 )% (8 )% 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 $ 2,651 (5 )% (1 )% Full-time employees 50,300 (800) (600) 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. N/M - not meaningful

 
17 Fourth Quarter 2014 – Financial Highlights Capital Ratios Highlights 12/31/14 9/30/14 12/31/13 Regulatory capital ratios:1,2,3  Capital ratios remain strong  FY14: Net CET1 increased $1.1 billion  In 4Q14, repurchased 11 million common shares for $432 million and a total of 46.2 million common shares for $1.7 billion in FY14  In 4Q14, declared a quarterly dividend of $0.17 per common share; $0.66 per common share in FY14 CET1 ratio 11.6 % 11.4 % 14.5 % 4 Tier 1 capital ratio 12.6 12.3 16.2 Total (Tier 1 plus Tier 2) capital ratio 12.8 12.7 17.0 Leverage capital ratio 5.7 5.8 5.4 Selected regulatory capital ratios - fully phased-in - Non-GAAP:1,2,4 Estimated CET1: Standardized approach 10.8 % 10.8 % 10.6 % Advanced approach 10.2 10.2 11.3 Estimated Supplementary leverage ratio ("SLR")4,5 4.5 % 4.6 % N/A Note: See corresponding footnotes on Page 25 of the Appendix.Append N/A - not available

 
APPENDIX

 
19 Fourth Quarter 2014 – Financial Highlights Expense & Pre-Tax Operating Margin - Non-GAAP Reconciliation 4Q14 3Q14 4Q13 FY 2014 FY 2013 ($ in millions) Total revenue – GAAP $ 3,689 $ 4,611 $ 3,611 $ 15,692 $ 15,048 Less: Net income attributable to noncontrolling interests of consolidated investment management funds 24 23 17 84 80 Gain on the sale of our investment in Wing Hang Bank — 490 — 490 — Gain on the sale of the One Wall Street building — 346 — 346 — Add: Loss related to an equity investment — — 175 — — Total revenue, as adjusted – Non-GAAP $ 3,665 $ 3,752 $ 3,769 $ 14,772 $ 14,968 Total noninterest expense – GAAP $ 2,745 $ 2,968 $ 2,877 $ 11,398 $ 11,306 Less: Amortization of intangible assets 73 75 82 298 342 M&I, litigation and restructuring charges 21 220 2 351 70 Charge (recovery) related to investment management funds, net of incentives — — — 104 12 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-GAAP2 $ 2,651 $ 2,673 $ 2,793 $ 10,645 $ 10,882 Provision for credit losses 1 (19 ) 6 (48 ) (35 ) Income before income taxes, as adjusted – Non-GAAP2 $ 1,013 $ 1,098 $ 970 $ 4,175 $ 4,121 Pre-tax operating margin – Non-GAAP1,2 28 % 29 % 26 % 28 % 28 % 1 Income before taxes divided by total revenue. 2 Non-GAAP excludes net income attributable to noncontrolling interests of consolidated investment management funds, the gains on the sales of our investment in Wing Hang Bank and the One Wall Street building, M&I, litigation, restructuring charges, a charge (recovery) related to investment management funds, net of incentives, and a loss on an equity investment, if applicable. .

 
20 Fourth Quarter 2014 – Financial Highlights Return on Tangible Common Equity Reconciliation 4Q14 3Q14 4Q13 FY 2014 FY 2013 ($ in millions) Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP $ 807 $ 1,070 $ 513 $ 3,092 $ 2,040 Add: Amortization of intangible assets, net of tax 47 49 53 194 220 Net income applicable to common shareholders of The Bank of New York Mellon Corporation excluding amortization of intangible assets – Non-GAAP 854 1,119 566 3,286 2,260 Less: Gain on the sale of our investment in Wing Hang Bank — 315 — 315 — Gain on the sale of the One Wall Street building — 204 — 204 — Benefit primarily related to a tax carryback claim 150 — — 150 — Add: M&I, litigation and restructuring charges 10 183 1 262 45 Charge (benefit) related to the disallowance of certain foreign tax credits — — — — 593 Charge (recovery) related to investment management funds, net of incentives — — — 81 9 Loss related to an equity investment — — 115 — — Net income applicable to common shareholders of The Bank of New York Mellon Corporation, as adjusted – Non-GAAP2 $ 714 $ 783 $ 682 $ 2,960 $ 2,907 Average common shareholders’ equity $ 36,872 $ 36,751 $ 35,698 $ 36,621 $ 34,832 Less: Average goodwill 17,924 18,109 18,026 18,063 17,988 Average intangible Assets 4,174 4,274 4,491 4,305 4,619 Add: Deferred tax liability – tax deductible goodwill1 1,340 1,317 1,302 1,340 1,302 Deferred tax liability – intangible assets1 1,216 1,230 1,222 1,216 1,222 Average tangible common shareholders’ equity - Non-GAAP $ 17,330 $ 16,915 $ 15,705 $ 16,809 $ 14,749 Return on tangible common equity – Non-GAAP2,3 19.5 % 26.2 % 14.3 % 19.5 % 15.3 % Return on tangible common equity – Non-GAAP adjusted2,3 16.3 % 18.4 % 17.2 % 17.6 % 19.7 % 1 Deferred tax liabilities are based on fully phased-in Basel III rules. The quarters and full-year of 2014 include deferred tax liabilities on tax deductible intangible assets permitted under Basel III rules. 2 Non-GAAP excludes the gains on the sales of our investment in Wing Hang Bank and the One Wall Street building, the benefit primarily related to a tax carryback claim, M&I, litigation and restructuring charges, the charge (benefit) related to the disallowance of certain foreign tax credits, a charge (recovery) related to investment management funds, net of incentives, and a loss on an equity investment, if applicable. 3 Annualized. .

 
21 Fourth Quarter 2014 – Financial Highlights Earnings Per Share Reconciliation Growth vs. ($ in dollars) 4Q14 3Q14 4Q13 4Q13 3Q14 GAAP results $ 0.70 $ 0.93 $ 0.44 Add: Litigation and restructuring charges 0.01 0.16 — Loss related to an equity investment — — 0.10 Less: Gain on the sale of our investment in Wing Hang Bank — 0.27 — Gain on the sale of the One Wall Street building — 0.18 — Benefit primarily related to a tax carryback claim 0.13 — — Non-GAAP results $ 0.58 $ 0.64 $ 0.54 7 % (10 )% 1 Growth vs. ($ in dollars) FY 2014 FY 2013 Growth GAAP results $ 2.67 $ 1.73 Add: Litigation and restructuring charges 0.23 0.04 Charge (recovery) related to investment management funds, net of incentives 0.07 0.01 Net charge related to the disallowance of certain foreign tax credits — 0.50 Less: Gain on the sale of our investment in Wing Hang Bank 0.27 — Gain on the sale of the One Wall Street building 0.18 — Benefit primarily related to a tax carryback claim 0.13 — Non-GAAP results $ 2.39 $ 2.28 5 %

 
22 Fourth Quarter 2014 – Financial Highlights Total Payout Ratio Growth vs. ($ in millions) FY 2014 Total Payout Ratio Dividends $ 762 Common stock repurchased 1,669 Total Capital Deployed 2,431 Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP 3,092 79% Less: Gain on the sale of our investment in Wing Hang Bank 315 Gain on the sale of the One Wall Street building 204 Net income applicable to common shareholders of The Bank of New York Mellon Corporation – excluding gain on sale of our investment in Wing Hang Bank and on the sale of the One Wall Street building $ 2,573 94%

 
23 Fourth Quarter 2014 – Financial Highlights ($ in millions) 4Q14 4Q13 3Q14 FY 2014 FY 2013 Asset servicing1 $ 1,019 $ 984 $ 1,025 $ 4,075 $ 3,905 Clearing services 347 324 337 1,335 1,264 Issuer services 193 237 315 968 1,090 Treasury services 145 137 142 564 554 Total investment services fees 1,704 1,682 1,819 6,942 6,813 Investment management and performance fees 885 904 881 3,492 3,395 Foreign exchange and other trading revenue 151 146 153 570 674 Distribution and servicing 43 43 44 173 180 Financing-related fees 43 43 44 169 172 Investment and other income 78 (43 ) 890 1,212 481 Total fee revenue 2,904 2,775 3,831 12,558 11,715 Net securities gains 31 39 20 91 141 Total fee and other revenue - GAAP $ 2,935 $ 2,814 $ 3,851 $ 12,649 $ 11,856 Income from consolidated investment management funds 42 36 39 163 183 Net interest revenue 712 761 721 2,880 3,009 Total revenue - GAAP $ 3,689 $ 3,611 $ 4,611 $ 15,692 $ 15,048 ($ in millions) 4Q14 4Q13 3Q14 FY 2014 FY 2013 Total revenue - GAAP $ 3,689 $ 3,611 $ 4,611 $ 15,692 $ 15,048 Less: Investment and other income 78 (43 ) 890 1,212 481 Net securities gains 31 39 20 91 141 Add: Net income attributable to noncontrolling interests related to consolidated investment management funds (24 ) (17 ) (23 ) (84 ) (81 ) Revenue (excluding investment and other income and net securities gains) $ 3,556 $ 3,598 $ 3,678 $ 14,305 $ 14,345 Revenue (ex. investment and other income & net securities gains) 1 Asset servicing fees include securities lending revenue of $31 million in 4Q13, $37 million in 3Q14 and $37 million in 4Q14; $155 million for 2013 and $158 million for 2014.

 
24 Fourth 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 (recovery) 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) 4Q14 4Q13 4Q13 Revenue (excluding investment and other income and net securities gains) $ 3,556 $ 3,598 (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 2,651 2,793 (5 )% Operating leverage (excluding investment and other income and net securities gains) 392 bps Growth vs. ($ in dollars) FY 2014 FY 2013 FY 2013 Revenue (excluding investment and other income and net securities gains) $ 14,305 $ 14,345 — % 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-GAAP1 10,645 10,882 (2 )% Operating leverage (excluding investment and other income and net securities gains) 190 bps

 
25 Fourth Quarter 2014 – Financial Highlights Capital Ratio Footnotes 1 Dec. 31, 2014 consolidated regulatory capital ratios are preliminary. Please reference slides 26 and 27. See the “Capital Ratios” section in the Earnings Release for additional detail. 2 Risk-based capital ratios at Sept. 30, 2014 and Dec. 31, 2014 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 the Dec. 31, 2013 risk-based ratios. The leverage capital ratio was not impacted. 3 The transitional Standardized Approach risk-based capital ratios (which represent the Collins Floor comparison) of the CET1, Tier 1 and Total risk-based consolidated regulatory capital ratios were 15.1%, 16.3% and 17.0%, respectively, at Sept. 30, 2014 and 15.5%, 16.8% and 17.4%, respectively, at Dec. 31, 2014, and are 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 Capital Rules (which for 2014 look to Basel I-based requirements). 4 Please reference slides 26 and 27. See the “Capital Ratios” section in the Earnings Release for additional detail. 5 The estimated fully phased-in SLR as of Sept. 30, 2014 and Dec. 31, 2014 is based on our interpretation of the Final Capital Rules, as supplemented by the Federal Reserve’s final rules on the SLR. When fully phased-in, we expect to maintain an SLR of over 5%, 3% attributable to the minimum required SLR, and greater than 2% attributable to a buffer applicable to U.S. G-SIBs. t

 
26 Fourth Quarter 2014 – Financial Highlights Estimated Fully Phased-In Basel III CET1 Ratio - Non-GAAP1 12/31/14 9/30/14 12/31/13 ($ in millions) Total Tier 1 capital2 $ 21,100 $ 21,015 $ 18,335 Adjustments to determine estimated fully phased-in Basel III CET1: Deferred tax liability – tax deductible intangible assets — — 70 Intangible deduction (2,329 ) (2,388 ) — Preferred stock (1,562 ) (1,562 ) (1,562 ) Trust preferred securities (156 ) (162 ) (330 ) Other comprehensive income (loss) and net pension fund assets: Securities available-for-sale 594 578 387 Pension liabilities (1,041 ) (675 ) (900 ) Net pension fund assets — — (713 ) Total other comprehensive income (loss) and net pension fund assets (447 ) (97 ) (1,226 ) Equity method investments (87 ) (92 ) (445 ) Deferred tax assets — — (49 ) Other 10 6 17 Total estimated fully phased-in Basel III CET1 - Non-GAAP $ 16,529 $ 16,720 $ 14,810 Under the Standardized Approach: Estimated fully phased-in Basel III risk-weighted assets - Non-GAAP $ 152,512 $ 154,272 $ 139,865 Estimated fully phased-in Basel III CET1 ratio – Non-GAAP3 10.8 % 10.8 % 10.6 % Under the Advanced Approach: Estimated fully phased-in Basel III risk-weighted assets - Non-GAAP $ 162,030 $ 164,088 $ 130,849 Estimated fully phased-in Basel III CET1 ratio – Non-GAAP3 10.2 % 10.2 % 11.3 % 1 Dec. 31, 2014 information is preliminary. 2 Tier 1 capital at Dec. 31, 2013 is based on Basel I rules. Tier 1 capital at Sept. 30, 2014 and Dec. 31, 2014 are based on Basel III rules, as phased-in. 3 Risk-based capital ratios at Sept. 30, 2014 and Dec. 31, 2014 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 the Dec. 31, 2013 risk-based ratios.

 
27 Fourth Quarter 2014 – Financial Highlights Basel I CET1 Ratio & Estimated SLR - Non-GAAP Reconciliation Basel I CET1 ratio ($ in millions) 12/31/13 Total Tier 1 capital – Basel I $ 18,335 Less: Trust preferred securities 330 Preferred stock 1,562 Total CET1 – Basel I $ 16,443 Total risk-weighted assets – Basel I $ 113,322 Basel I CET1 ratio – Non-GAAP 14.5 % Estimated SLR - Non-GAAP1 ($ in millions) 9/30/14 12/31/14 Total estimated fully phased-in Basel III CET1 - Non-GAAP $ 16,720 $ 16,529 Additional Tier 1 capital 1,556 1,550 Total Tier 1 capital $ 18,276 $ 18,079 Total leverage exposure: Quarterly average total assets $ 380,409 $ 385,232 Less: Amounts deducted from Tier 1 capital 20,166 19,947 Total on-balance sheet assets, as adjusted 360,243 365,285 Off-balance sheet exposures: Potential future exposure for derivatives contracts (plus certain other items) 11,694 11,021 Repo-style transaction exposures included in SLR — — Credit-equivalent amount other off-balance sheet exposures (less SLR exclusions) 21,924 21,913 Total off-balance sheet exposures 33,618 32,934 Total leverage exposure $ 393,861 $ 398,219 Estimated fully phased-in SLR - Non-GAAP 4.6 % 4.5 % 1 The estimated fully phased-in SLR is based on our interpretation of the Final Capital Rules, as supplemented by the Federal Reserve’s final rules on the SLR. When fully phased-in, we expect to maintain an SLR of over 5%, 3% attributable to the minimum required SLR, and greater than 2% attributable to a buffer applicable to U.S. G-SIBs.

 
28 Fourth Quarter 2014 – Financial Highlights Pre-Tax Operating Margin – Investment Management Reconciliation 4Q14 3Q14 4Q13 ($ in millions) Income before income taxes – GAAP $ 247 $ 245 $ 266 Add: Amortization of intangible assets 30 31 35 Money market fee waivers 34 29 33 Income before income taxes excluding amortization of intangible assets and money market fee waivers – Non-GAAP $ 311 $ 305 $ 334 Total revenue – GAAP $ 998 $ 1,003 $ 1,061 Less: Distribution and servicing expense 102 105 108 Money market fee waivers benefiting distribution and servicing expense 36 38 38 Add: Money market fee waivers impacting total revenue 70 67 71 Total revenue net of distribution and servicing expense and excluding money market fee waivers - Non- GAAP $ 930 $ 927 $ 986 Pre-tax operating margin1 25 % 24 % 25 % Pre-tax operating margin excluding amortization of intangible assets, money market fee waivers and net of distribution and servicing expense – Non-GAAP1 33 % 33 % 34 % 1 Income before taxes divided by total revenue. .

 

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