NEW YORK, April 22, 2015 /PRNewswire/ --
- Earnings per common share up 18% year-over-year
TOTAL REVENUE INCREASED 6% YEAR-OVER-YEAR
- Increased 4% on an adjusted basis (a)
TOTAL EXPENSE DECREASED 1% YEAR-OVER-YEAR
- Decreased 2% on an adjusted basis (a)
GENERATED OVER 500 BASIS POINTS OF POSITIVE OPERATING
LEVERAGE YEAR-OVER-YEAR ON AN ADJUSTED BASIS (a)
EXECUTING ON CAPITAL PLAN AND RETURN OF VALUE TO COMMON
SHAREHOLDERS
- Repurchased 10.3 million common shares for $400 million in the first quarter of
2015
- Return on tangible common equity of 20% in the first
quarter of 2015 (b)
AS PREVIOUSLY ANNOUNCED, BOARD APPROVED THE REPURCHASE OF UP
TO $3.1 BILLION OF COMMON
STOCK
The Bank of New York Mellon Corporation ("BNY Mellon") (NYSE:
BK) today reported first quarter net income applicable to common
shareholders of $766 million, or
$0.67 per diluted common share.
In the first quarter of 2014, net income applicable to common
shareholders was $661 million, or
$0.57 per diluted per common
share. In the fourth quarter of 2014, net income applicable
to common shareholders was $209
million, or $0.18 per diluted
common share, or $667 million, or
$0.58 per diluted common share,
adjusted for litigation expense, restructuring charges and the
benefit of a tax carryback claim. (b)
"Our first quarter results reflect continued progress in
executing on our strategic priorities. Earnings per share
growth was driven by higher revenues across all of our businesses,
our success in holding our expenses in check and generating
positive operating leverage. We also returned significant
value to our shareholders in the form of share repurchases and
dividends, while increasing our return on equity," said
Gerald L. Hassell, chairman and
chief executive officer of BNY Mellon.
(a) See page 4 for the Non-GAAP
adjustments.
(b) See "Supplemental
information – Explanation of GAAP and Non-GAAP financial measures"
beginning on page 24 for the reconciliation of these Non-GAAP
measures.
"In Investment Services, growth in clearing and global
collateral management was particularly noteworthy during the
quarter where we have been investing to deliver enhanced
capabilities to our clients. In Investment Management, our
investments in the expansion of Wealth Management are paying off as
we extend our brand, expand our presence in high-value U.S.
markets, and connect our private banking solutions to Pershing
clients. We also saw solid long-term flows into various
strategies including alternatives," added Mr. Hassell.
"Our business improvement process is streamlining our
organization, utilizing technology to increase efficiency and
reducing our structural costs as we stay focused on achieving our
Investor Day goals," concluded Mr. Hassell.
CONFERENCE CALL INFORMATION
Gerald L. Hassell, chairman and
chief executive officer and Thomas P.
Gibbons, vice chairman and chief financial officer, along
with other members of executive management from BNY Mellon, will
host a conference call and simultaneous live audio webcast at
8:00 a.m. EDT on April 22, 2015. This conference call and
audio webcast will include forward-looking statements and may
include other material information.
Persons wishing to access the conference call and audio webcast
may do so by dialing (888) 677-5383 (U.S.) and
(773) 799-3611 (International), and using the passcode:
Earnings, or by logging on to www.bnymellon.com. Earnings
materials will be available at www.bnymellon.com beginning at
approximately 6:30 a.m. EDT on
April 22, 2015. Replays of the
conference call and audio webcast will be available beginning
April 22, 2015 at approximately
2 p.m. EDT through May 22, 2015 by dialing (888) 568-0407
(U.S.) or (402) 530-7943 (International). The archived
version of the conference call and audio webcast will also be
available at www.bnymellon.com for the same time period.
FIRST QUARTER 2015 FINANCIAL HIGHLIGHTS
(a)
(comparisons are 1Q15 vs. 1Q14 unless otherwise
stated)
|
Earnings per
share
|
|
Net income applicable
to
common shareholders
of The
Bank of New York
Mellon
Corporation
|
(in millions,
except per share amounts)
|
1Q14
|
1Q15
|
Inc(Dec)
|
|
1Q14
|
1Q15
|
Inc(Dec)
|
GAAP
results
|
$
|
0.57
|
|
$
|
0.67
|
|
18
|
%
|
|
$
|
661
|
|
$
|
766
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Total revenue was $3.9 billion,
an increase of 6%.
- Investment services fees increased 3% reflecting net new
business, largely driven by Global Collateral Services and
securities lending, and higher market values, partially offset by
the unfavorable impact of a stronger U.S. dollar.
- Investment management and performance fees increased 1%, or 6%
on a constant currency basis (Non-GAAP), driven by higher equity
market values, the impact of the Cutwater Asset Management
("Cutwater") acquisition and strategic initiatives, partially
offset by lower performance fees. (a)
- Foreign exchange revenue increased 67% driven by higher volumes
and volatility, as well as higher Depositary Receipts-related
activity.
- Investment and other income decreased $39 million driven by lower lease residual
gains.
- Net interest revenue was unchanged as an increase in deposits
drove the growth in our securities portfolio and offset the impact
of lower yields.
- The provision for credit losses was $2
million.
- Noninterest expense was $2.7
billion, a decrease of 1% reflecting lower expenses in all
categories, except sub-custodian which is volume-related and other
expense which includes the impact of the new EU Single Resolution
Fund.
- Effective tax rate of 24.4%; includes a 2.0% benefit related to
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 2% 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 $131 billion.
- AUM of a record $1.74 trillion,
increased 7% driven by higher equity market values, the Cutwater
acquisition and net new business, partially offset by the
unfavorable impact of a stronger U.S. dollar.
- Long-term inflows totaled $16
billion driven by liability-driven, index and fixed income
investments.
- Short-term inflows totaled $1
billion.
- Capital
- Repurchased 10.3 million common shares for $400 million in 1Q15.
- Return on tangible common equity of 20% in 1Q15
(a).
- As previously announced, the board approved the repurchase of
up to $3.1 billion of common stock
over a 5-quarter period. Common stock repurchases of
$700 million are contingent on a
prior issuance of $1 billion of
qualifying preferred stock.
(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, amortization of intangible assets, 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.
FINANCIAL SUMMARY
(dollars in
millions, except per share amounts; common shares in
thousands)
|
|
|
|
|
|
1Q15
vs.
|
1Q14
|
2Q14
|
3Q14
|
4Q14
|
1Q15
|
1Q14
|
4Q14
|
Revenue:
|
|
|
|
|
|
|
|
Fee and other
revenue
|
$
|
2,883
|
|
$
|
2,980
|
|
$
|
3,851
|
|
$
|
2,935
|
|
$
|
3,002
|
|
4
|
%
|
2
|
%
|
Income from
consolidated investment management funds
|
36
|
|
46
|
|
39
|
|
42
|
|
121
|
|
|
|
Net interest
revenue
|
728
|
|
719
|
|
721
|
|
712
|
|
728
|
|
|
|
Total revenue –
GAAP
|
3,647
|
|
3,745
|
|
4,611
|
|
3,689
|
|
3,851
|
|
6
|
|
4
|
|
Less: Net
income attributable to noncontrolling interests related to
consolidated investment management funds
|
20
|
|
17
|
|
23
|
|
24
|
|
90
|
|
|
|
Gain on the sale of our
investment in Wing Hang
|
—
|
|
—
|
|
490
|
|
—
|
|
—
|
|
|
|
Gain on the sale of
the One Wall Street building
|
—
|
|
—
|
|
346
|
|
—
|
|
—
|
|
|
|
Total revenue –
Non-GAAP
|
3,627
|
|
3,728
|
|
3,752
|
|
3,665
|
|
3,761
|
|
4
|
|
3
|
|
Provision for
credit losses
|
(18)
|
|
(12)
|
|
(19)
|
|
1
|
|
2
|
|
|
|
Expense:
|
|
|
|
|
|
|
|
Noninterest expense –
GAAP
|
2,739
|
|
2,946
|
|
2,968
|
|
3,524
|
|
2,700
|
|
(1)
|
|
(23)
|
|
Less:
Amortization of intangible assets
|
75
|
|
75
|
|
75
|
|
73
|
|
66
|
|
|
|
M&I, litigation
and restructuring charges
|
(12)
|
|
122
|
|
220
|
|
800
|
|
(3)
|
|
|
|
Charge (recovery)
related to investment management funds, net of
incentives
|
(5)
|
|
109
|
|
—
|
|
—
|
|
—
|
|
|
|
Total noninterest
expense – Non-GAAP
|
2,681
|
|
2,640
|
|
2,673
|
|
2,651
|
|
2,637
|
|
(2)
|
|
(1)
|
|
Income:
|
|
|
|
|
|
|
|
Income before income
taxes
|
926
|
|
811
|
|
1,662
|
|
164
|
|
1,149
|
|
24
|
%
|
N/M
|
Provision (benefit)
for income taxes
|
232
|
|
217
|
|
556
|
|
(93)
|
|
280
|
|
|
|
Net income
|
$
|
694
|
|
$
|
594
|
|
$
|
1,106
|
|
$
|
257
|
|
$
|
869
|
|
|
|
Net (income)
attributable to noncontrolling interests (a)
|
(20)
|
|
(17)
|
|
(23)
|
|
(24)
|
|
(90)
|
|
|
|
Net income
applicable to shareholders of The Bank of New York Mellon
Corporation
|
674
|
|
577
|
|
1,083
|
|
233
|
|
779
|
|
|
|
Preferred stock
dividends
|
(13)
|
|
(23)
|
|
(13)
|
|
(24)
|
|
(13)
|
|
|
|
Net income applicable
to common shareholders of The Bank of New York Mellon
Corporation
|
$
|
661
|
|
$
|
554
|
|
$
|
1,070
|
|
$
|
209
|
|
$
|
766
|
|
|
|
|
|
|
|
|
|
|
|
Key
Metrics:
|
|
|
|
|
|
|
|
Pre-tax operating
margin (b)
|
25
|
%
|
22
|
%
|
36
|
%
|
4
|
%
|
30
|
%
|
|
|
Non-GAAP
(b)
|
27
|
%
|
30
|
%
|
29
|
%
|
28
|
%
|
30
|
%
|
|
|
|
|
|
|
|
|
|
|
Return on common
equity (annualized) (b)
|
7.4
|
%
|
6.1
|
%
|
11.6
|
%
|
2.2
|
%
|
8.8
|
%
|
|
|
Non-GAAP
(b)
|
7.8
|
%
|
8.4
|
%
|
8.5
|
%
|
7.7
|
%
|
9.2
|
%
|
|
|
|
|
|
|
|
|
|
|
Return on tangible
common equity (annualized) – Non-GAAP (b)
|
17.6
|
%
|
14.5
|
%
|
26.2
|
%
|
5.9
|
%
|
20.3
|
%
|
|
|
Non-GAAP adjusted
(b)
|
17.3
|
%
|
18.4
|
%
|
18.4
|
%
|
16.3
|
%
|
20.2
|
%
|
|
|
|
|
|
|
|
|
|
|
Fee revenue as a
percentage of total revenue excluding net securities
gains
|
79
|
%
|
79
|
%
|
83
|
%
|
79
|
%
|
78
|
%
|
|
|
|
|
|
|
|
|
|
|
Percentage of
non-U.S. total revenue (c)
|
37
|
%
|
38
|
%
|
43
|
%
|
35
|
%
|
36
|
%
|
|
|
|
|
|
|
|
|
|
|
Average common shares
and equivalents outstanding:
|
|
|
|
|
|
|
|
Basic
|
1,138,645
|
|
1,133,556
|
|
1,126,946
|
|
1,120,672
|
|
1,118,602
|
|
|
|
Diluted
|
1,144,510
|
|
1,139,800
|
|
1,134,871
|
|
1,129,040
|
|
1,126,306
|
|
|
|
|
|
|
|
|
|
|
|
Period
end:
|
|
|
|
|
|
|
|
Full-time
employees
|
51,400
|
|
51,100
|
|
50,900
|
|
50,300
|
|
50,500
|
|
|
|
Book value per common
share – GAAP (b)
|
$
|
31.94
|
|
$
|
32.49
|
|
$
|
32.77
|
|
$
|
32.09
|
|
$
|
31.89
|
|
|
|
Tangible book value
per common share – Non-GAAP (b)
|
$
|
14.48
|
|
$
|
14.88
|
|
$
|
15.30
|
|
$
|
14.70
|
|
$
|
14.82
|
|
|
|
Cash dividends per
common share
|
$
|
0.15
|
|
$
|
0.17
|
|
$
|
0.17
|
|
$
|
0.17
|
|
$
|
0.17
|
|
|
|
Common dividend
payout ratio
|
26
|
%
|
35
|
%
|
18
|
%
|
94
|
%
|
25
|
%
|
|
|
Closing stock price
per common share
|
$
|
35.29
|
|
$
|
37.48
|
|
$
|
38.73
|
|
$
|
40.57
|
|
$
|
40.24
|
|
|
|
Market
capitalization
|
$
|
40,244
|
|
$
|
42,412
|
|
$
|
43,599
|
|
$
|
45,366
|
|
$
|
45,130
|
|
|
|
Common shares
outstanding
|
1,140,373
|
|
1,131,596
|
|
1,125,710
|
|
1,118,228
|
|
1,121,512
|
|
|
|
(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, amortization of intangible assets, 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.
CONSOLIDATED BUSINESS METRICS
Consolidated
business metrics
|
|
|
|
|
|
|
1Q15
vs.
|
1Q14
|
2Q14
|
3Q14
|
4Q14
|
1Q15
|
|
1Q14
|
4Q14
|
Changes in AUM
(in billions): (a)
|
|
|
|
|
|
|
|
|
Beginning balance of
AUM
|
$
|
1,583
|
|
$
|
1,620
|
|
$
|
1,636
|
|
$
|
1,646
|
|
$
|
1,710
|
|
|
|
|
Net inflows
(outflows):
|
|
|
|
|
|
|
|
|
Long-term:
|
|
|
|
|
|
|
|
|
Equity
|
(1)
|
|
(4)
|
|
(2)
|
|
(4)
|
|
(6)
|
|
|
|
|
Fixed
income
|
—
|
|
(1)
|
|
—
|
|
4
|
|
4
|
|
|
|
|
Index
|
—
|
|
7
|
|
(3)
|
|
1
|
|
8
|
|
|
|
|
Liability-driven
investments (b)
|
20
|
|
(17)
|
|
18
|
|
24
|
|
8
|
|
|
|
|
Alternative
investments
|
2
|
|
2
|
|
—
|
|
2
|
|
2
|
|
|
|
|
Total long-term
inflows (outflows)
|
21
|
|
(13)
|
|
13
|
|
27
|
|
16
|
|
|
|
|
Short
term:
|
|
|
|
|
|
|
|
|
Cash
|
(7)
|
|
(18)
|
|
19
|
|
5
|
|
1
|
|
|
|
|
Total net inflows
(outflows)
|
14
|
|
(31)
|
|
32
|
|
32
|
|
17
|
|
|
|
|
Net market/currency
impact/acquisition
|
23
|
|
47
|
|
(22)
|
|
32
|
|
14
|
|
|
|
|
Ending balance of
AUM
|
$
|
1,620
|
|
$
|
1,636
|
|
$
|
1,646
|
|
$
|
1,710
|
|
$
|
1,741
|
|
(c)
|
7
|
%
|
2
|
%
|
|
|
|
|
|
|
|
|
|
AUM at period end,
by product type: (a)
|
|
|
|
|
|
|
|
|
Equity
|
17
|
%
|
17
|
%
|
16
|
%
|
16
|
%
|
15
|
%
|
|
|
|
Fixed
income
|
14
|
|
14
|
|
13
|
|
13
|
|
13
|
|
|
|
|
Index
|
20
|
|
21
|
|
21
|
|
21
|
|
22
|
|
|
|
|
Liability-driven
investments (b)
|
27
|
|
27
|
|
28
|
|
29
|
|
29
|
|
|
|
|
Alternative
investments
|
4
|
|
4
|
|
4
|
|
4
|
|
4
|
|
|
|
|
Cash
|
18
|
|
17
|
|
18
|
|
17
|
|
17
|
|
|
|
|
Total AUM
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
(c)
|
|
|
|
|
|
|
|
|
|
|
|
Wealth
management:
|
|
|
|
|
|
|
|
|
Average loans (in
millions)
|
$
|
10,075
|
|
$
|
10,372
|
|
$
|
10,772
|
|
$
|
11,124
|
|
$
|
11,634
|
|
|
15
|
%
|
5
|
%
|
Average deposits
(in millions)
|
$
|
14,805
|
|
$
|
13,458
|
|
$
|
13,764
|
|
$
|
14,604
|
|
$
|
15,218
|
|
|
3
|
%
|
4
|
%
|
|
|
|
|
|
|
|
|
|
Investment
Services:
|
|
|
|
|
|
|
|
|
Average loans (in
millions)
|
$
|
31,468
|
|
$
|
33,115
|
|
$
|
33,785
|
|
$
|
35,448
|
|
$
|
37,699
|
|
|
20
|
%
|
6
|
%
|
Average deposits
(in millions)
|
$
|
214,947
|
|
$
|
220,701
|
|
$
|
221,734
|
|
$
|
228,282
|
|
$
|
234,183
|
|
|
9
|
%
|
3
|
%
|
|
|
|
|
|
|
|
|
|
AUC/A at period end
(in trillions) (d)
|
$
|
27.9
|
|
$
|
28.5
|
|
$
|
28.3
|
|
$
|
28.5
|
|
$
|
28.5
|
|
(c)
|
2
|
%
|
—
|
%
|
|
|
|
|
|
|
|
|
|
Market value of
securities on loan at period end (in billions)
(e)
|
$
|
264
|
|
$
|
280
|
|
$
|
282
|
|
$
|
289
|
|
$
|
291
|
|
|
10
|
%
|
1
|
%
|
|
|
|
|
|
|
|
|
|
Asset
servicing:
|
|
|
|
|
|
|
|
|
Estimated new
business wins (AUC/A) (in billions)
|
$
|
161
|
|
$
|
130
|
|
$
|
115
|
|
$
|
130
|
|
$
|
131
|
|
(c)
|
|
|
|
|
|
|
|
|
|
|
|
Depositary
Receipts:
|
|
|
|
|
|
|
|
|
Number of sponsored
programs
|
1,332
|
|
1,316
|
|
1,302
|
|
1,279
|
|
1,258
|
|
|
(6)%
|
|
(2)%
|
|
|
|
|
|
|
|
|
|
|
Clearing
services:
|
|
|
|
|
|
|
|
|
Global DARTS volume
(in thousands)
|
230
|
|
207
|
|
209
|
|
242
|
|
261
|
|
|
13
|
%
|
8
|
%
|
Average active
clearing accounts (U.S. platform) (in thousands)
|
5,695
|
|
5,752
|
|
5,805
|
|
5,900
|
|
5,979
|
|
|
5
|
%
|
1
|
%
|
Average long-term
mutual fund assets (U.S. platform) (in millions)
|
$
|
413,658
|
|
$
|
433,047
|
|
$
|
442,827
|
|
$
|
450,305
|
|
$
|
456,954
|
|
|
10
|
%
|
1
|
%
|
Average investor
margin loans (U.S. platform) (in millions)
|
$
|
8,919
|
|
$
|
9,236
|
|
$
|
9,861
|
|
$
|
10,711
|
|
$
|
11,232
|
|
|
26
|
%
|
5
|
%
|
|
|
|
|
|
|
|
|
|
Broker-Dealer:
|
|
|
|
|
|
|
|
|
Average tri-party
repo balances (in billions)
|
$
|
1,983
|
|
$
|
2,022
|
|
$
|
2,063
|
|
$
|
2,101
|
|
$
|
2,153
|
|
|
9
|
%
|
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 March 31, 2014, June 30,
2014 and Sept. 30, 2014 and
$1.1 trillion at Dec. 31, 2014 and March
31, 2015.
(e) Represents the
total amount of securities on loan managed by the Investment
Services business. Excludes securities for which BNY Mellon
acts as agent on behalf of CIBC Mellon clients, which totaled
$66 billion at March 31, 2014, $64
billion at June 30, 2014,
$65 billion at Sept. 30, 2014 and Dec.
31, 2014, and $69 billion at
March 31, 2015.
The following table presents key market metrics at period end
and on an average basis.
Key market
metrics
|
|
|
|
|
|
1Q15
vs.
|
|
1Q14
|
2Q14
|
3Q14
|
4Q14
|
1Q15
|
1Q14
|
4Q14
|
S&P 500 Index
(a)
|
1872
|
|
1960
|
|
1972
|
|
2059
|
|
2068
|
|
10
|
%
|
—
|
%
|
S&P 500 Index –
daily average
|
1835
|
|
1900
|
|
1976
|
|
2009
|
|
2064
|
|
12
|
|
3
|
|
FTSE 100 Index
(a)
|
6598
|
|
6744
|
|
6623
|
|
6566
|
|
6773
|
|
3
|
|
3
|
|
FTSE 100 Index –
daily average
|
6680
|
|
6764
|
|
6756
|
|
6526
|
|
6793
|
|
2
|
|
4
|
|
MSCI World Index
(a)
|
1674
|
|
1743
|
|
1698
|
|
1710
|
|
1741
|
|
4
|
|
2
|
|
MSCI World Index –
daily average
|
1647
|
|
1698
|
|
1733
|
|
1695
|
|
1726
|
|
5
|
|
2
|
|
Barclays Capital
Global Aggregate BondSM Index (a)(b)
|
365
|
|
376
|
|
361
|
|
357
|
|
348
|
|
(5)
|
|
(3)
|
|
NYSE and NASDAQ share
volume (in billions)
|
196
|
|
187
|
|
173
|
|
198
|
|
187
|
|
(5)
|
|
(6)
|
|
JPMorgan G7
Volatility Index – daily average (c)
|
7.80
|
|
6.22
|
|
6.21
|
|
8.54
|
|
10.40
|
|
33
|
|
22
|
|
Average Fed Funds
effective rate
|
0.07
|
%
|
0.09
|
%
|
0.09
|
%
|
0.10
|
%
|
0.11
|
%
|
4
|
bps
|
1
|
bps
|
Foreign exchange
rates vs. U.S. dollar:
|
|
|
|
|
|
|
|
British pound -
average rate
|
$
|
1.66
|
|
$
|
1.68
|
|
$
|
1.67
|
|
$
|
1.58
|
|
$
|
1.51
|
|
(9)%
|
|
(4)%
|
|
Euro - average
rate
|
1.37
|
|
1.37
|
|
1.33
|
|
1.25
|
|
1.13
|
|
(18)
|
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Period
end.
(b) Unhedged in U.S.
dollar terms.
(c) The
JPMorgan G7 Volatility Index is based on the implied volatility in
3-month currency options.
bps – basis
points.
FEE AND OTHER REVENUE
Fee and other
revenue
|
|
|
|
|
|
1Q15
vs.
|
(dollars in
millions)
|
1Q14
|
2Q14
|
3Q14
|
4Q14
|
1Q15
|
1Q14
|
4Q14
|
Investment services
fees:
|
|
|
|
|
|
|
|
Asset servicing
(a)
|
$
|
1,009
|
|
$
|
1,022
|
|
$
|
1,025
|
|
$
|
1,019
|
|
$
|
1,038
|
|
3
|
%
|
2
|
%
|
Clearing
services
|
325
|
|
326
|
|
337
|
|
347
|
|
344
|
|
6
|
|
(1)
|
|
Issuer
services
|
229
|
|
231
|
|
315
|
|
193
|
|
232
|
|
1
|
|
20
|
|
Treasury
services
|
136
|
|
141
|
|
142
|
|
145
|
|
137
|
|
1
|
|
(6)
|
|
Total investment
services fees
|
1,699
|
|
1,720
|
|
1,819
|
|
1,704
|
|
1,751
|
|
3
|
|
3
|
|
Investment management
and performance fees
|
843
|
|
883
|
|
881
|
|
885
|
|
854
|
|
1
|
|
(4)
|
|
Foreign exchange and
other trading revenue
|
136
|
|
130
|
|
153
|
|
151
|
|
229
|
|
68
|
|
52
|
|
Distribution and
servicing
|
43
|
|
43
|
|
44
|
|
43
|
|
41
|
|
(5)
|
|
(5)
|
|
Financing-related
fees
|
38
|
|
44
|
|
44
|
|
43
|
|
40
|
|
5
|
|
(7)
|
|
Investment and other
income
|
102
|
|
142
|
|
890
|
|
78
|
|
63
|
|
N/M
|
N/M
|
Total fee
revenue
|
2,861
|
|
2,962
|
|
3,831
|
|
2,904
|
|
2,978
|
|
4
|
|
3
|
|
Net securities
gains
|
22
|
|
18
|
|
20
|
|
31
|
|
24
|
|
N/M
|
N/M
|
Total fee and other
revenue
|
$
|
2,883
|
|
$
|
2,980
|
|
$
|
3,851
|
|
$
|
2,935
|
|
$
|
3,002
|
|
4
|
%
|
2
|
%
|
(a) Asset servicing fees include securities
lending revenue of $38 million in
1Q14, $46 million in 2Q14,
$37 million in 3Q14, $37 million in 4Q14 and $43 million in 1Q15.
N/M - Not
meaningful.
KEY POINTS
- Asset servicing fees were $1.0
billion, an increase of 3% year-over-year and 2%
sequentially. The year-over-year increase primarily reflects net
new business, largely driven by Global Collateral Services and
securities lending, and market values. The sequential increase
primarily reflects higher client expense reimbursements, securities
lending revenue and Global Collateral Services fees. Both increases
were partially offset by the unfavorable impact of a stronger U.S.
dollar.
- Clearing services fees were $344
million, an increase of 6% year-over-year and a decrease of
1% sequentially. The year-over-year increase was primarily driven
by higher mutual fund and asset-based fees and higher clearance
revenue driven by higher DARTS volume. The sequential decrease was
primarily driven by fewer trading days in 1Q15.
- Issuer services fees were $232
million, an increase of 1% year-over-year and 20%
sequentially. Both increases reflect higher corporate actions in
Depositary Receipts, partially offset by the unfavorable impact of
a stronger U.S. dollar. The sequential increase also reflects
higher Corporate Trust fees.
- Treasury services fees were $137
million, an increase of 1% year-over-year and a decrease of
6% sequentially. The sequential decrease primarily reflects
seasonally lower payment volumes.
- Investment management and performance fees were $854 million, an increase of 1% year-over-year,
or 6% on a constant currency basis (Non-GAAP), driven by higher
equity market values, the impact of the Cutwater acquisition and
strategic initiatives, partially offset by lower performance fees.
Sequentially, investment management and performance fees decreased
4% primarily reflecting seasonally lower performance fees, fewer
days in 1Q15 and the unfavorable impact of a stronger U.S. dollar,
partially offset by the impact of the Cutwater acquisition.
|
Foreign exchange
and other trading revenue
|
|
|
|
|
|
|
(in
millions)
|
1Q14
|
2Q14
|
3Q14
|
4Q14
|
1Q15
|
|
Foreign
exchange
|
$
|
130
|
|
$
|
129
|
|
$
|
154
|
|
$
|
165
|
|
$
|
217
|
|
|
Other trading revenue
(loss):
|
|
|
|
|
|
|
Fixed
income
|
1
|
|
(1)
|
|
2
|
|
(18)
|
|
11
|
|
|
Equity/other
|
5
|
|
2
|
|
(3)
|
|
4
|
|
1
|
|
|
Total other trading
revenue (loss)
|
6
|
|
1
|
|
(1)
|
|
(14)
|
|
12
|
|
|
Total foreign
exchange and other trading revenue
|
$
|
136
|
|
$
|
130
|
|
$
|
153
|
|
$
|
151
|
|
$
|
229
|
|
Foreign exchange and other trading revenue totaled $229 million in 1Q15 compared with $136 million in 1Q14 and $151 million in 4Q14. In 1Q15, foreign
exchange revenue totaled $217
million, an increase of 67% year-over-year and 32%
sequentially. Both increases reflect higher volumes and
volatility, as well as higher Depositary Receipts-related
activity.
Other trading revenue was $12
million in 1Q15, compared with other trading revenue of
$6 million in 1Q14 and other trading
loss of $14 million in 4Q14.
Both increases primarily reflect higher fixed income trading
revenue. The sequential increase also reflects reduced losses
on hedging activities within an Investment Management boutique.
|
Investment and
other income (loss)
|
|
|
|
|
|
|
(in
millions)
|
1Q14
|
2Q14
|
3Q14
|
4Q14
|
1Q15
|
|
Corporate/bank-owned
life insurance
|
$
|
30
|
|
$
|
30
|
|
$
|
34
|
|
$
|
37
|
|
$
|
33
|
|
|
Seed capital gains
(losses)
|
6
|
|
15
|
|
(1)
|
|
—
|
|
15
|
|
|
Expense
reimbursements from joint venture
|
12
|
|
15
|
|
13
|
|
15
|
|
14
|
|
|
Asset-related gains
(losses)
|
(1)
|
|
17
|
|
836
|
|
20
|
|
3
|
|
|
Lease residual gains
(losses)
|
35
|
|
4
|
|
5
|
|
5
|
|
(1)
|
|
|
Private equity gains
(losses)
|
5
|
|
(2)
|
|
2
|
|
1
|
|
(3)
|
|
|
Equity investment
revenue (loss)
|
(2)
|
|
17
|
|
(9)
|
|
(5)
|
|
(4)
|
|
|
Other
income
|
17
|
|
46
|
|
10
|
|
5
|
|
6
|
|
|
Total investment and
other income
|
$
|
102
|
|
$
|
142
|
|
$
|
890
|
|
$
|
78
|
|
$
|
63
|
|
Investment and other income was $63
million in 1Q15 compared with $102
million in 1Q14 and $78
million in 4Q14. The year-over-year decrease primarily
reflects lower lease residual gains. The sequential decrease
primarily reflects lower asset-related gains.
NET INTEREST REVENUE
Net interest
revenue
|
|
|
|
|
|
1Q15
vs.
|
(dollars in
millions)
|
1Q14
|
2Q14
|
3Q14
|
4Q14
|
1Q15
|
1Q14
|
4Q14
|
Net interest revenue
(non-FTE)
|
$
|
728
|
|
$
|
719
|
|
$
|
721
|
|
$
|
712
|
|
$
|
728
|
|
—
|
%
|
2
|
%
|
Net interest revenue
(FTE) – Non-GAAP
|
744
|
|
736
|
|
736
|
|
726
|
|
743
|
|
—
|
|
2
|
|
Net interest margin
(FTE)
|
1.05
|
%
|
0.98
|
%
|
0.94
|
%
|
0.91
|
%
|
0.97
|
%
|
(8)
|
bps
|
6
|
bps
|
|
|
|
|
|
|
|
|
Selected average
balances:
|
|
|
|
|
|
|
|
Cash/interbank
investments
|
$
|
127,134
|
|
$
|
140,357
|
|
$
|
139,278
|
|
$
|
140,599
|
|
$
|
123,642
|
|
(3)%
|
|
(12)%
|
|
Trading account
securities
|
5,217
|
|
5,532
|
|
5,435
|
|
3,922
|
|
3,046
|
|
(42)
|
|
(22)
|
|
Securities
|
100,534
|
|
101,420
|
|
112,055
|
|
117,243
|
|
123,476
|
|
23
|
|
5
|
|
Loans
|
51,647
|
|
53,449
|
|
54,835
|
|
56,844
|
|
57,935
|
|
12
|
|
2
|
|
Interest-earning
assets
|
284,532
|
|
300,758
|
|
311,603
|
|
318,608
|
|
308,099
|
|
8
|
|
(3)
|
|
Interest-bearing
deposits
|
152,986
|
|
162,674
|
|
164,233
|
|
163,149
|
|
159,520
|
|
4
|
|
(2)
|
|
Noninterest-bearing
deposits
|
81,430
|
|
77,820
|
|
82,334
|
|
85,330
|
|
89,592
|
|
10
|
|
5
|
|
|
|
|
|
|
|
|
|
Selected average
yields/rates:
|
|
|
|
|
|
|
|
Cash/interbank
investments
|
0.43
|
%
|
0.43
|
%
|
0.38
|
%
|
0.31
|
%
|
0.35
|
%
|
|
|
Trading account
securities
|
2.60
|
|
2.19
|
|
2.36
|
|
2.64
|
|
2.46
|
|
|
|
Securities
|
1.79
|
|
1.68
|
|
1.56
|
|
1.54
|
|
1.55
|
|
|
|
Loans
|
1.65
|
|
1.66
|
|
1.61
|
|
1.58
|
|
1.55
|
|
|
|
Interest-earning
assets
|
1.17
|
|
1.10
|
|
1.05
|
|
1.02
|
|
1.07
|
|
|
|
Interest-bearing
deposits
|
0.06
|
|
0.06
|
|
0.06
|
|
0.03
|
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
Average
cash/interbank investments as a percentage of average
interest-earning assets
|
45
|
%
|
47
|
%
|
45
|
%
|
44
|
%
|
40
|
%
|
|
|
Average
noninterest-bearing deposits as a percentage of average
interest-earning assets
|
29
|
%
|
26
|
%
|
26
|
%
|
27
|
%
|
29
|
%
|
|
|
bps – basis points.
FTE – fully taxable
equivalent.
KEY POINTS
- Net interest revenue totaled $728
million in 1Q15, unchanged compared with 1Q14 and an
increase of $16 million
sequentially.
- Year-over-year, the increase in deposits drove the growth in
our securities portfolio and offset the impact of lower
yields.
- The sequential increase was primarily driven by a change in the
mix of assets, partially offset by fewer days in 1Q15. Lower
hedging losses in 1Q15 were primarily offset by lower accretion and
higher amortization.
NONINTEREST EXPENSE
Noninterest
expense
|
|
|
|
|
|
1Q15
vs.
|
(dollars in
millions)
|
1Q14
|
2Q14
|
3Q14
|
4Q14
|
1Q15
|
1Q14
|
4Q14
|
Staff:
|
|
|
|
|
|
|
|
Compensation
|
$
|
925
|
|
$
|
903
|
|
$
|
909
|
|
$
|
893
|
|
$
|
871
|
|
(6)%
|
|
(2)%
|
|
Incentives
|
359
|
|
313
|
|
340
|
|
319
|
|
425
|
|
18
|
%
|
33
|
%
|
Employee
benefits
|
227
|
|
223
|
|
228
|
|
206
|
|
189
|
|
(17)%
|
|
(8)%
|
|
Total
staff
|
1,511
|
|
1,439
|
|
1,477
|
|
1,418
|
|
1,485
|
|
(2)%
|
|
5
|
%
|
Professional, legal
and other purchased services
|
312
|
|
314
|
|
323
|
|
390
|
|
302
|
|
(3)
|
|
(23)
|
|
Software and
equipment
|
237
|
|
236
|
|
234
|
|
235
|
|
228
|
|
(4)
|
|
(3)
|
|
Net
occupancy
|
154
|
|
152
|
|
154
|
|
150
|
|
151
|
|
(2)
|
|
1
|
|
Distribution and
servicing
|
107
|
|
112
|
|
107
|
|
102
|
|
98
|
|
(8)
|
|
(4)
|
|
Sub-custodian
|
68
|
|
81
|
|
67
|
|
70
|
|
70
|
|
3
|
|
—
|
|
Business
development
|
64
|
|
68
|
|
61
|
|
75
|
|
61
|
|
(5)
|
|
(19)
|
|
Other
|
223
|
|
347
|
|
250
|
|
211
|
|
242
|
|
9
|
|
15
|
|
Amortization of
intangible assets
|
75
|
|
75
|
|
75
|
|
73
|
|
66
|
|
(12)
|
|
(10)
|
|
M&I, litigation
and restructuring charges
|
(12)
|
|
122
|
|
220
|
|
800
|
|
(3)
|
|
N/M
|
N/M
|
Total noninterest
expense – GAAP
|
$
|
2,739
|
|
$
|
2,946
|
|
$
|
2,968
|
|
$
|
3,524
|
|
$
|
2,700
|
|
(1)%
|
|
(23)%
|
|
|
|
|
|
|
|
|
|
Total staff expense
as a percentage of total revenue
|
41
|
%
|
38
|
%
|
32
|
%
|
38
|
%
|
39
|
%
|
|
|
|
|
|
|
|
|
|
|
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
|
$
|
2,681
|
|
$
|
2,640
|
|
$
|
2,673
|
|
$
|
2,651
|
|
$
|
2,637
|
|
(2)%
|
|
(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 2% year-over-year and 1%
sequentially.
- The year-over-year decrease reflects lower expenses in all
categories, except sub-custodian which is volume-related and other
expense which includes the impact of the new EU Single Resolution
Fund. These lower expenses primarily reflect the favorable
impact of a stronger U.S. dollar and the benefit of the business
improvement process which focuses on reducing structural
costs.
- Total staff expense decreased 2% year-over-year primarily
reflecting the favorable impact of a stronger U.S. dollar, the
curtailment gain related to the U.S. pension plan and lower
headcount. The decrease was partially offset by higher
incentive expense reflecting better performance, a lower adjustment
for the finalization of the annual incentive awards and the impact
of vesting of long-term stock awards for retirement eligible
employees.
INVESTMENT SECURITIES PORTFOLIO
At March 31, 2015, the fair value
of our investment securities portfolio totaled $128.9 billion. The net unrealized pre-tax
gain on our total securities portfolio was $1.7 billion at March 31,
2015 compared with $1.3
billion at Dec. 31,
2014. The increase in the net unrealized pre-tax gain was
primarily driven by a decline in market interest rates. In
1Q15, Agency MBS, sovereign debt and U.S. Treasury securities with
an aggregate amortized cost and fair value of $11.6 billion were transferred from
available-for-sale securities to held-to-maturity securities.
Also in 1Q15, we continued to purchase held-to-maturity
securities. At March 31, 2015
and Dec. 31, 2014, the fair value of
the held-to-maturity securities totaled $41.7 billion and $21.1
billion, respectively, and represented 32% and 18% of the
fair value of the total investment securities portfolio,
respectively.
The following table shows the distribution of our investment
securities portfolio.
Investment
securities
portfolio
(dollars in
millions)
|
December 31,
2014
|
|
1Q15
change in
unrealized
gain
(loss)
|
March 31,
2015
|
Fair value
as a % of
amortized
cost (a)
|
Unrealized
gain
(loss)
|
|
Ratings
|
|
|
|
|
BB+
and
lower
|
|
Fair
value
|
|
Amortized
cost
|
Fair
value
|
|
|
AAA/
AA-
|
A+/
A-
|
BBB+/
BBB-
|
Not
rated
|
Agency
RMBS
|
$
|
46,762
|
|
|
$
|
278
|
|
$
|
50,635
|
|
$
|
51,101
|
|
|
101
|
%
|
$
|
466
|
|
|
100
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
U.S.
Treasury
|
24,857
|
|
|
48
|
|
28,414
|
|
28,680
|
|
|
101
|
|
266
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Sovereign
debt/sovereign guaranteed
|
18,253
|
|
|
29
|
|
18,064
|
|
18,253
|
|
|
101
|
|
189
|
|
|
78
|
|
1
|
|
21
|
|
—
|
|
—
|
|
Non-agency RMBS
(b)
|
2,214
|
|
|
(28)
|
|
1,699
|
|
2,138
|
|
|
81
|
|
439
|
|
|
—
|
|
1
|
|
1
|
|
91
|
|
7
|
|
Non-agency
RMBS
|
1,113
|
|
|
—
|
|
1,052
|
|
1,070
|
|
|
94
|
|
18
|
|
|
1
|
|
8
|
|
21
|
|
69
|
|
1
|
|
European floating rate notes
|
1,959
|
|
|
3
|
|
1,728
|
|
1,723
|
|
|
99
|
|
(5)
|
|
|
71
|
|
22
|
|
—
|
|
7
|
|
—
|
|
Commercial
MBS
|
4,997
|
|
|
32
|
|
5,830
|
|
5,901
|
|
|
101
|
|
71
|
|
|
94
|
|
5
|
|
1
|
|
—
|
|
—
|
|
State and political
subdivisions
|
5,271
|
|
|
14
|
|
5,074
|
|
5,159
|
|
|
102
|
|
85
|
|
|
79
|
|
20
|
|
—
|
|
—
|
|
1
|
|
Foreign covered
bonds
|
2,866
|
|
|
(6)
|
|
2,732
|
|
2,804
|
|
|
103
|
|
72
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Corporate
bonds
|
1,785
|
|
|
12
|
|
1,695
|
|
1,745
|
|
|
103
|
|
50
|
|
|
21
|
|
67
|
|
12
|
|
—
|
|
—
|
|
CLO
|
2,111
|
|
|
6
|
|
2,250
|
|
2,258
|
|
|
100
|
|
8
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
—
|
|
U.S. Government
agencies
|
684
|
|
|
5
|
|
1,551
|
|
1,554
|
|
|
100
|
|
3
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Consumer
ABS
|
3,240
|
|
|
3
|
|
3,398
|
|
3,400
|
|
|
100
|
|
2
|
|
|
99
|
|
1
|
|
—
|
|
—
|
|
—
|
|
Other
(c)
|
3,032
|
|
|
6
|
|
3,092
|
|
3,106
|
|
|
100
|
|
14
|
|
|
44
|
|
—
|
|
50
|
|
—
|
|
6
|
|
Total investment
securities
|
$
|
119,144
|
|
(d)
|
$
|
402
|
|
$
|
127,214
|
|
$
|
128,892
|
|
(d)
|
101
|
%
|
$
|
1,678
|
|
(e)
|
91
|
%
|
2
|
%
|
5
|
%
|
2
|
%
|
—
|
%
|
(a) Amortized cost before
impairments.
(b) These RMBS were included in
the former Grantor Trust and were marked-to-market in 2009.
We believe these RMBS would receive higher credit ratings if these
ratings incorporated, as additional credit enhancements, the
difference between the written-down amortized cost and the current
face amount of each of these
securities.
(c) Includes commercial
paper with a fair value of $1.6
billion and $1.6 billion and
money market funds with a fair value of $763
million and $814 million at
Dec. 31, 2014 and March 31, 2015,
respectively.
(d) Includes net unrealized
losses on derivatives hedging securities available-for-sale of
$313 million at Dec. 31, 2014 and $501
million at March 31,
2015.
(e) Unrealized gains of
$1,239 million at March 31, 2015 related to available-for-sale
securities.
NONPERFORMING ASSETS
Nonperforming
assets
(dollars in
millions)
|
March 31,
2014
|
December
31,
2014
|
March
31,
2015
|
Loans:
|
|
|
|
Other residential
mortgages
|
$
|
107
|
|
$
|
112
|
|
$
|
111
|
|
Commercial
|
13
|
|
—
|
|
—
|
|
Wealth management
loans and mortgages
|
12
|
|
12
|
|
12
|
|
Foreign
|
7
|
|
—
|
|
—
|
|
Commercial real
estate
|
4
|
|
1
|
|
1
|
|
Total nonperforming
loans
|
143
|
|
125
|
|
124
|
|
Other assets
owned
|
3
|
|
3
|
|
4
|
|
Total nonperforming
assets (a)
|
$
|
146
|
|
$
|
128
|
|
$
|
128
|
|
Nonperforming assets
ratio
|
0.27
|
%
|
0.22
|
%
|
0.21
|
%
|
Allowance for loan
losses/nonperforming loans
|
138.5
|
|
152.8
|
|
153.2
|
|
Total allowance for
credit losses/nonperforming loans
|
228.0
|
|
224.0
|
|
228.2
|
|
(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 $74 million at
March 31, 2014, $53 million at
Dec. 31, 2014 and $73 million at March 31, 2015. 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 March 31, 2015
unchanged from Dec. 31, 2014.
ALLOWANCE FOR CREDIT LOSSES, PROVISION AND NET
CHARGE-OFFS
Allowance for
credit losses, provision and net charge-offs
(in
millions)
|
March 31,
2014
|
December
31,
2014
|
March 31,
2015
|
Allowance for credit
losses - beginning of period
|
$
|
344
|
|
$
|
288
|
|
$
|
280
|
|
Provision for credit
losses
|
(18)
|
|
1
|
|
2
|
|
Net (charge-offs)
recoveries:
|
|
|
|
Other residential
mortgages
|
—
|
|
—
|
|
1
|
|
Commercial
|
—
|
|
(8)
|
|
—
|
|
Commercial real
estate
|
—
|
|
(2)
|
|
—
|
|
Financial
institutions
|
—
|
|
1
|
|
—
|
|
Net (charge-offs)
recoveries
|
—
|
|
(9)
|
|
1
|
|
Allowance for credit
losses - end of period
|
$
|
326
|
|
$
|
280
|
|
$
|
283
|
|
Allowance for loan
losses
|
$
|
198
|
|
$
|
191
|
|
$
|
190
|
|
Allowance for
lending-related commitments
|
128
|
|
89
|
|
93
|
|
The allowance for credit losses was $283
million at March 31, 2015, an
increase of $3 million compared with
$280 million at Dec. 31, 2014.
CAPITAL
Our consolidated capital ratios are shown in the following
table. In 1Q15, we implemented the Basel III Standardized
Approach 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 Standardized Approach replaced the Basel I-based
calculation of risk-weighted assets ("RWA") with a revised
methodology using a broader array of more risk sensitive
risk-weighting categories. Our risk-based capital adequacy is
determined using the higher of RWA determined using the
Standardized Approach and Advanced Approach. The common
equity Tier 1 ("CET1"), Tier 1 and Total risk-based regulatory
capital ratios in the first section of the table below are based on
Basel III components of capital, as phased-in, and credit risk
asset risk-weightings using the Advanced Approach framework under
the Final Capital Rules as the related RWA were higher under the
Advanced Approach at both Dec. 31,
2014 and March 31, 2015.
The Advanced Approach ratios were impacted by increases in
operational risk RWA. The transitional capital ratios were
negatively impacted by the phase-in requirements for 2015.
The leverage capital ratios are based on Basel III components of
capital and quarterly average total assets, as phased-in.
Capital
ratios
|
December 31,
2014
|
March 31,
2015
|
Consolidated
regulatory capital ratios: (a)(b)(c)
|
|
|
CET1 ratio
|
11.2
|
%
|
10.0
|
%
|
Tier 1 capital
ratio
|
12.2
|
|
10.8
|
|
Total (Tier 1 plus
Tier 2) capital ratio
|
12.5
|
|
11.1
|
|
Leverage capital
ratio
|
5.6
|
|
5.6
|
|
BNY Mellon
shareholders' equity to total assets ratio – GAAP
(d)
|
9.7
|
|
9.4
|
|
BNY Mellon common
shareholders' equity to total assets ratio – GAAP
(d)
|
9.3
|
|
9.0
|
|
BNY Mellon tangible
common shareholders' equity to tangible assets of operations ratio
– Non-GAAP (d)
|
6.5
|
|
6.0
|
|
|
|
|
Selected
regulatory capital ratios – fully phased-in – Non-GAAP:
(a)(b)
|
|
|
Estimated CET1
ratio:
|
|
|
Standardized
Approach
|
10.6
|
|
9.5
|
|
Advanced
Approach
|
9.8
|
|
9.1
|
|
Estimated
supplementary leverage ratio ("SLR")
|
4.4
|
|
4.5
|
|
(a) Regulatory capital ratios for March 31, 2015 are
preliminary.
(b) Risk-based capital ratios at
Dec. 31, 2014 and March 31, 2015 include the net impact of the
total consolidated assets of certain consolidated investment
management funds in risk-weighted
assets.
(c) At Dec. 31, 2014, the CET1, Tier 1 and Total
risk-based consolidated regulatory capital ratios determined under
the transitional Standardized Approach were 15.0%, 16.3% and 16.9%,
and were calculated based on Basel III components of capital, as
phased-in, and asset risk-weightings using Basel I-based
requirements. At March 31,
2015, the CET1, Tier 1 and Total risk-based consolidated
regulatory capital ratios determined under the transitional Basel
III Standardized Approach were 10.7%, 11.6% and
12.0%.
(d) See "Supplemental information –
Explanation of GAAP and Non-GAAP financial measures" beginning on
page 24 for a reconciliation of these ratios.
Estimated Basel
III CET1 generation presented on a fully phased-in basis – Non-GAAP
– preliminary
|
|
(in
millions)
|
1Q15
|
|
Estimated fully
phased-in Basel III CET1 – Non-GAAP – Beginning of
period
|
$
|
15,931
|
|
Net income applicable
to common shareholders of The Bank of New York Mellon Corporation –
GAAP
|
766
|
|
Goodwill and
intangible assets, net of related deferred tax
liabilities
|
292
|
|
Gross Basel III CET1
generated
|
1,058
|
|
Capital
deployed:
|
|
Dividends
|
(192)
|
|
Common stock
repurchased
|
(400)
|
|
Total capital
deployed
|
(592)
|
|
Other comprehensive
(loss)
|
(548)
|
|
Additional paid-in
capital (a)
|
261
|
|
Other (primarily
embedded goodwill)
|
13
|
|
Total other
(deductions)
|
(274)
|
|
Net Basel III CET1
generated
|
192
|
|
Estimated fully
phased-in Basel III CET1 – Non-GAAP – End of period
|
$
|
16,123
|
|
(a) Primarily related to stock awards, the
exercise of stock options and stock issued for employee benefit
plans.
The table presented below compares the fully phased-in Basel III
capital components and ratios to those amounts determined under the
currently effective rules using the transitional phase-in
requirements.
Basel III capital
components and ratios at March 31, 2015 –
preliminary
|
Fully
phased-
in Basel
III
|
|
Transitional
Approach
(a)
|
(dollars in
millions)
|
|
CET1:
|
|
|
|
Common shareholders'
equity
|
$
|
35,766
|
|
|
$
|
36,092
|
|
Goodwill and
intangible assets
|
(19,148)
|
|
|
(17,440)
|
|
Net pension fund
assets
|
(105)
|
|
|
(42)
|
|
Equity method
investments
|
(375)
|
|
|
(315)
|
|
Deferred tax
assets
|
(16)
|
|
|
(7)
|
|
Other
|
1
|
|
|
5
|
|
Total CET1
|
16,123
|
|
|
18,293
|
|
Other Tier 1
capital:
|
|
|
|
Preferred
stock
|
1,562
|
|
|
1,562
|
|
Trust preferred
securities
|
—
|
|
|
74
|
|
Disallowed deferred
tax assets
|
—
|
|
|
(9)
|
|
Net pension fund
assets
|
—
|
|
|
(63)
|
|
Other
|
(2)
|
|
|
(5)
|
|
Total Tier 1
capital
|
17,683
|
|
|
19,852
|
|
|
|
|
|
Tier 2
capital:
|
|
|
|
Trust preferred
securities
|
—
|
|
|
223
|
|
Subordinated
debt
|
298
|
|
|
298
|
|
Allowance for credit
losses
|
283
|
|
|
283
|
|
Other
|
(1)
|
|
|
(1)
|
|
Total Tier 2 capital
- Standardized Approach
|
580
|
|
|
803
|
|
Excess of expected
credit losses
|
28
|
|
|
17
|
|
Less: Allowance for
credit losses
|
283
|
|
|
283
|
|
Total Tier 2 capital
- Advanced Approach
|
$
|
325
|
|
|
$
|
537
|
|
|
|
|
|
Total
capital:
|
|
|
|
Standardized
Approach
|
$
|
18,263
|
|
|
$
|
20,655
|
|
Advanced
Approach
|
$
|
18,008
|
|
|
$
|
20,389
|
|
|
|
|
|
Risk-weighted
assets:
|
|
|
|
Standardized
Approach
|
$
|
169,673
|
|
|
$
|
171,491
|
|
Advanced
Approach
|
$
|
176,680
|
|
|
$
|
183,134
|
|
|
|
|
|
Standardized
Approach:
|
|
|
|
Estimated Basel III
CET1 ratio
|
9.5
|
%
|
|
10.7
|
%
|
Tier 1 capital
ratio
|
10.4
|
|
|
11.6
|
|
Total (Tier 1 plus
Tier 2) capital ratio
|
10.8
|
|
|
12.0
|
|
|
|
|
|
Advanced
Approach:
|
|
|
|
Estimated Basel III
CET1 ratio
|
9.1
|
%
|
|
10.0
|
%
|
Tier 1 capital
ratio
|
10.0
|
|
|
10.8
|
|
Total (Tier 1 plus
Tier 2) capital ratio
|
10.2
|
|
|
11.1
|
|
(a) Reflects transitional adjustments to CET1,
Tier 1 capital and Tier 2 capital required in 2015 under the Final
Capital Rules.
BNY Mellon has presented its estimated fully phased-in Basel III
CET1 and other risk-based capital ratios and SLR based on its
interpretation of the 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 Dec. 31,
2014 and March 31, 2015 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 and liquidity ratios are necessarily subject to,
among other things, BNY Mellon's further review of applicable
rules, anticipated compliance with all necessary enhancements to
model calibration, approval by regulators of certain models used as
part of 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 and liquidity ratios
remain subject to ongoing review and revision and may change based
on these factors.
Supplementary Leverage Ratio ("SLR")
The following table presents the components of our fully
phased-in estimated SLR.
Estimated fully
phased-in SLR – Non-GAAP (a)
(dollars in
millions)
|
December 31,
2014
|
|
March 31,
2015
|
(b)
|
Total estimated fully
phased-in Basel III CET1 – Non-GAAP
|
$
|
15,931
|
|
$
|
16,123
|
|
|
Additional Tier 1
capital
|
1,550
|
|
1,560
|
|
|
Total Tier 1
capital
|
$
|
17,481
|
|
$
|
17,683
|
|
|
|
|
|
|
Total leverage
exposure:
|
|
|
|
Quarterly average
total assets
|
$
|
385,232
|
|
$
|
374,890
|
|
|
Less: Amounts
deducted from Tier 1 capital
|
19,947
|
|
19,643
|
|
|
Total on-balance
sheet assets, as adjusted
|
365,285
|
|
355,247
|
|
|
Off-balance sheet
exposures:
|
|
|
|
Potential future
exposure for derivatives contracts (plus certain other
items)
|
11,376
|
|
9,295
|
|
|
Repo-style
transaction exposures included in SLR
|
302
|
|
6,474
|
|
|
Credit-equivalent
amount of other off-balance sheet exposures (less SLR
exclusions)
|
21,850
|
|
22,046
|
|
|
Total off-balance
sheet exposures
|
33,528
|
|
37,815
|
|
|
Total leverage
exposure
|
$
|
398,813
|
|
$
|
393,062
|
|
|
|
|
|
|
Estimated fully
phased-in SLR – Non-GAAP
|
4.4
|
%
|
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.
(b)
March 31, 2015 information is
preliminary.
Liquidity Coverage Ratio ("LCR")
The U.S. LCR rules became effective Jan.
1, 2015 and require BNY Mellon to meet an LCR of 80%,
increasing annually by 10% increments until fully phased-in on
Jan. 1, 2017, at which time we will
be required to meet an LCR of 100%. Our estimated LCR on a
consolidated basis is compliant with the fully phased-in
requirements of the U.S. LCR as of March 31,
2015 based on our current understanding of the U.S. LCR
rules.
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)
|
|
|
|
|
|
|
1Q15
vs.
|
1Q14
|
2Q14
|
3Q14
|
4Q14
|
1Q15
|
|
1Q14
|
4Q14
|
Revenue:
|
|
|
|
|
|
|
|
|
Investment management
fees:
|
|
|
|
|
|
|
|
|
Mutual
funds
|
$
|
299
|
|
$
|
311
|
|
$
|
315
|
|
$
|
306
|
|
$
|
301
|
|
|
1
|
%
|
(2)%
|
|
Institutional
clients
|
372
|
|
385
|
|
382
|
|
375
|
|
376
|
|
|
1
|
|
—
|
|
Wealth
management
|
153
|
|
156
|
|
158
|
|
157
|
|
158
|
|
|
3
|
|
1
|
|
Investment management
fees
|
824
|
|
852
|
|
855
|
|
838
|
|
835
|
|
|
1
|
|
—
|
|
Performance
fees
|
20
|
|
29
|
|
22
|
|
44
|
|
15
|
|
|
(25)
|
|
N/M
|
Investment management
and performance fees
|
844
|
|
881
|
|
877
|
|
882
|
|
850
|
|
|
1
|
|
(4)
|
|
Distribution and
servicing
|
40
|
|
41
|
|
41
|
|
40
|
|
39
|
|
|
(3)
|
|
(3)
|
|
Other
(a)
|
16
|
|
48
|
|
16
|
|
7
|
|
47
|
|
|
N/M
|
N/M
|
Total fee and other
revenue (a)
|
900
|
|
970
|
|
934
|
|
929
|
|
936
|
|
|
4
|
|
1
|
|
Net interest
revenue
|
70
|
|
66
|
|
69
|
|
69
|
|
74
|
|
|
6
|
|
7
|
|
Total
revenue
|
970
|
|
1,036
|
|
1,003
|
|
998
|
|
1,010
|
|
|
4
|
|
1
|
|
Noninterest expense
(ex. amortization of intangible assets and the charge (recovery)
related to investment management funds, net of
incentives)
|
698
|
|
725
|
|
727
|
|
729
|
|
721
|
|
|
3
|
|
(1)
|
|
Income before taxes
(ex. amortization of intangible assets and the charge (recovery)
related to investment management funds, net of
incentives)
|
272
|
|
311
|
|
276
|
|
269
|
|
289
|
|
|
6
|
|
7
|
|
Amortization of
intangible assets
|
31
|
|
31
|
|
31
|
|
30
|
|
25
|
|
|
(19)
|
|
(17)
|
|
Charge (recovery)
related to investment management funds, net of
incentives
|
(5)
|
|
109
|
|
—
|
|
—
|
|
—
|
|
|
N/M
|
N/M
|
Income before
taxes
|
$
|
246
|
|
$
|
171
|
|
$
|
245
|
|
$
|
239
|
|
$
|
264
|
|
|
7
|
%
|
10
|
%
|
|
|
|
|
|
|
|
|
|
Pre-tax operating
margin
|
25
|
%
|
16
|
%
|
24
|
%
|
24
|
%
|
26
|
%
|
|
|
|
Adjusted pre-tax
operating margin (b)
|
34
|
%
|
36
|
%
|
33
|
%
|
32
|
%
|
34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in AUM
(in billions): (c)
|
|
|
|
|
|
|
|
|
Beginning balance of
AUM
|
$
|
1,583
|
|
$
|
1,620
|
|
$
|
1,636
|
|
$
|
1,646
|
|
$
|
1,710
|
|
|
|
|
Net inflows
(outflows):
|
|
|
|
|
|
|
|
|
Long-term:
|
|
|
|
|
|
|
|
|
Equity
|
(1)
|
|
(4)
|
|
(2)
|
|
(4)
|
|
(6)
|
|
|
|
|
Fixed
income
|
—
|
|
(1)
|
|
—
|
|
4
|
|
4
|
|
|
|
|
Index
|
—
|
|
7
|
|
(3)
|
|
1
|
|
8
|
|
|
|
|
Liability-driven
investments (d)
|
20
|
|
(17)
|
|
18
|
|
24
|
|
8
|
|
|
|
|
Alternative
investments
|
2
|
|
2
|
|
—
|
|
2
|
|
2
|
|
|
|
|
Total long-term
inflows (outflows)
|
21
|
|
(13)
|
|
13
|
|
27
|
|
16
|
|
|
|
|
Short
term:
|
|
|
|
|
|
|
|
|
Cash
|
(7)
|
|
(18)
|
|
19
|
|
5
|
|
1
|
|
|
|
|
Total net inflows
(outflows)
|
14
|
|
(31)
|
|
32
|
|
32
|
|
17
|
|
|
|
|
Net market/currency
impact/acquisition
|
23
|
|
47
|
|
(22)
|
|
32
|
|
14
|
|
|
|
|
Ending balance of
AUM
|
$
|
1,620
|
|
$
|
1,636
|
|
$
|
1,646
|
|
$
|
1,710
|
|
$
|
1,741
|
|
(e)
|
7
|
%
|
2
|
%
|
|
|
|
|
|
|
|
|
|
AUM at period end,
by product type: (c)
|
|
|
|
|
|
|
|
|
Equity
|
17
|
%
|
17
|
%
|
16
|
%
|
16
|
%
|
15
|
%
|
|
|
|
Fixed
income
|
14
|
|
14
|
|
13
|
|
13
|
|
13
|
|
|
|
|
Index
|
20
|
|
21
|
|
21
|
|
21
|
|
22
|
|
|
|
|
Liability-driven
investments (d)
|
27
|
|
27
|
|
28
|
|
29
|
|
29
|
|
|
|
|
Alternative
investments
|
4
|
|
4
|
|
4
|
|
4
|
|
4
|
|
|
|
|
Cash
|
18
|
|
17
|
|
18
|
|
17
|
|
17
|
|
|
|
|
Total AUM
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
(e)
|
|
|
|
|
|
|
|
|
|
|
|
Wealth
management:
|
|
|
|
|
|
|
|
|
Average
loans
|
$
|
10,075
|
|
$
|
10,372
|
|
$
|
10,772
|
|
$
|
11,124
|
|
$
|
11,634
|
|
|
15
|
%
|
5
|
%
|
Average
deposits
|
$
|
14,805
|
|
$
|
13,458
|
|
$
|
13,764
|
|
$
|
14,604
|
|
$
|
15,218
|
|
|
3
|
%
|
4
|
%
|
(a) Total fee and other revenue includes the
impact of the consolidated investment management funds, net of
noncontrolling interests. See "Supplemental information –
Explanation of GAAP and Non-GAAP financial measures" beginning on
page 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.
INVESTMENT MANAGEMENT KEY POINTS
- Assets under management were a record $1.74 trillion at March
31, 2015, an increase of 7% year-over-year and 2%
sequentially. Both increases primarily resulted from higher equity
market values, the Cutwater acquisition and net new business,
partially offset by the unfavorable impact of a stronger U.S.
dollar.
- Net long-term inflows were $16
billion in 1Q15 driven by liability-driven, index and fixed
income investments. Short-term inflows were $1 billion in 1Q15.
- Income before taxes excluding amortization of intangible assets
and the charge (recovery) related to investment management funds,
net of incentives increased 6% year-over-year and 7%
sequentially.
- Total revenue was $1.0 billion,
an increase of 4% year-over-year and 1% sequentially. The
year-over-year increase primarily reflects higher equity market
values and seed capital gains, partially offset by the unfavorable
impact of a stronger U.S. dollar. The sequential increase primarily
reflects higher seed capital gains and reduced trading losses,
partially offset by seasonally lower performance fees.
- 42% non-U.S. revenue in 1Q15 vs. 45% in 1Q14.
- Investment management fees were $835
million, an increase of 1% year-over-year, or 7% on a
constant currency basis (Non-GAAP), driven by higher equity market
values, the impact of the Cutwater acquisition and strategic
initiatives. Sequentially, investment management fees decreased
slightly reflecting fewer days in 1Q15 and the unfavorable impact
of a stronger U.S. dollar, partially offset by the impact of the
Cutwater acquisition.
- Performance fees were $15 million
in 1Q15 compared with $20 million in
1Q14 and $44 million in 4Q14. The
sequential decrease was driven by seasonality.
- Other revenue was $47 million in
1Q15 compared with $16 million in
1Q14 and $7 million in 4Q14. Both
increases primarily reflect higher seed capital gains. The
sequential increase also reflects reduced losses on hedging
activities within a boutique.
- Net interest revenue increased 6% year-over-year and 7%
sequentially. Both increases primarily reflect higher loan and
deposit levels.
- Average loans increased 15% year-over-year and 5% sequentially;
average deposits increased 3% year-over-year and 4%
sequentially.
- Total noninterest expense (excluding amortization of intangible
assets and the charge (recovery) related to investment management
funds, net of incentives) increased 3% year-over-year and decreased
1% sequentially. The year-over-year increase reflects higher
compensation and purchased services expenses resulting from the
Cutwater acquisition and investments in strategic initiatives and
higher incentive expense. The sequential decrease primarily
reflects lower litigation, legal and distribution and servicing
expenses, partially offset by higher incentive expense and the
impact of the Cutwater acquisition. Both comparisons reflect the
favorable impact of a stronger U.S. dollar.
- In 1Q15, the Dreyfus/Standish Global Fixed Income Fund hit the
#1 ranking in U.S. News' World Bond category for long-term
investors and has been consistently in the top three
since.
- The Wealth Management business was named the 2015 top National
Private Asset Manager and top Private Bank Offering for Family
Offices by the Family Wealth Report.
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)
|
|
|
|
|
|
|
1Q15
vs.
|
1Q14
|
2Q14
|
3Q14
|
4Q14
|
1Q15
|
|
1Q14
|
4Q14
|
Revenue:
|
|
|
|
|
|
|
|
|
Investment services
fees:
|
|
|
|
|
|
|
|
|
Asset
servicing
|
$
|
985
|
|
$
|
993
|
|
$
|
998
|
|
$
|
992
|
|
$
|
1,013
|
|
|
3
|
%
|
2
|
%
|
Clearing
services
|
323
|
|
324
|
|
336
|
|
346
|
|
342
|
|
|
6
|
|
(1)
|
|
Issuer
services
|
228
|
|
231
|
|
314
|
|
193
|
|
231
|
|
|
1
|
|
20
|
|
Treasury
services
|
134
|
|
140
|
|
139
|
|
142
|
|
135
|
|
|
1
|
|
(5)
|
|
Total investment
services fees
|
1,670
|
|
1,688
|
|
1,787
|
|
1,673
|
|
1,721
|
|
|
3
|
|
3
|
|
Foreign exchange and
other trading revenue
|
158
|
|
145
|
|
159
|
|
165
|
|
209
|
|
|
32
|
|
27
|
|
Other
(a)
|
59
|
|
87
|
|
59
|
|
69
|
|
63
|
|
|
7
|
|
(9)
|
|
Total fee and other
revenue (a)
|
1,887
|
|
1,920
|
|
2,005
|
|
1,907
|
|
1,993
|
|
|
6
|
|
5
|
|
Net interest
revenue
|
590
|
|
593
|
|
583
|
|
574
|
|
600
|
|
|
2
|
|
5
|
|
Total
revenue
|
2,477
|
|
2,513
|
|
2,588
|
|
2,481
|
|
2,593
|
|
|
5
|
|
5
|
|
Noninterest expense
(ex. amortization of intangible assets)
|
1,778
|
|
1,824
|
|
1,835
|
|
2,512
|
|
1,797
|
|
|
1
|
|
(28)
|
|
Income (loss) before
taxes (ex. amortization of intangible assets)
|
699
|
|
689
|
|
753
|
|
(31)
|
|
796
|
|
|
14
|
|
N/M
|
Amortization of
intangible assets
|
44
|
|
44
|
|
44
|
|
43
|
|
41
|
|
|
(7)
|
|
(5)
|
|
Income (loss) before
taxes
|
$
|
655
|
|
$
|
645
|
|
$
|
709
|
|
$
|
(74)
|
|
$
|
755
|
|
|
15
|
%
|
N/M
|
|
|
|
|
|
|
|
|
|
Pre-tax operating
margin
|
26
|
%
|
26
|
%
|
27
|
%
|
(3)%
|
|
29
|
%
|
|
|
|
Pre-tax operating
margin (ex. amortization of intangible assets)
|
28
|
%
|
27
|
%
|
29
|
%
|
(1)%
|
|
31
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment services
fees as a percentage of noninterest expense (b)
|
93
|
%
|
93
|
%
|
100
|
%
|
92
|
%
|
96
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities lending
revenue
|
$
|
30
|
|
$
|
35
|
|
$
|
27
|
|
$
|
28
|
|
$
|
34
|
|
|
13
|
%
|
21
|
%
|
|
|
|
|
|
|
|
|
|
Metrics:
|
|
|
|
|
|
|
|
|
Average
loans
|
$
|
31,468
|
|
$
|
33,115
|
|
$
|
33,785
|
|
$
|
35,448
|
|
$
|
37,699
|
|
|
20
|
%
|
6
|
%
|
Average
deposits
|
$
|
214,947
|
|
$
|
220,701
|
|
$
|
221,734
|
|
$
|
228,282
|
|
$
|
234,183
|
|
|
9
|
%
|
3
|
%
|
|
|
|
|
|
|
|
|
|
AUC/A at period end
(in trillions) (c)
|
$
|
27.9
|
|
$
|
28.5
|
|
$
|
28.3
|
|
$
|
28.5
|
|
$
|
28.5
|
|
(d)
|
2
|
%
|
—
|
%
|
Market value of
securities on loan at period end
(in billions)
(e)
|
$
|
264
|
|
$
|
280
|
|
$
|
282
|
|
$
|
289
|
|
$
|
291
|
|
|
10
|
%
|
1
|
%
|
|
|
|
|
|
|
|
|
|
Asset
servicing:
|
|
|
|
|
|
|
|
|
Estimated new
business wins (AUC/A) (in billions)
|
$
|
161
|
|
$
|
130
|
|
$
|
115
|
|
$
|
130
|
|
$
|
131
|
|
(d)
|
|
|
|
|
|
|
|
|
|
|
|
Depositary
Receipts:
|
|
|
|
|
|
|
|
|
Number of sponsored
programs
|
1,332
|
|
1,316
|
|
1,302
|
|
1,279
|
|
1,258
|
|
|
(6)%
|
|
(2)%
|
|
|
|
|
|
|
|
|
|
|
Clearing
services:
|
|
|
|
|
|
|
|
|
Global DARTS volume
(in thousands)
|
230
|
|
207
|
|
209
|
|
242
|
|
261
|
|
|
13
|
%
|
8
|
%
|
Average active
clearing accounts
(U.S. platform) (in
thousands)
|
5,695
|
|
5,752
|
|
5,805
|
|
5,900
|
|
5,979
|
|
|
5
|
%
|
1
|
%
|
Average long-term
mutual fund assets (U.S. platform)
|
$
|
413,658
|
|
$
|
433,047
|
|
$
|
442,827
|
|
$
|
450,305
|
|
$
|
456,954
|
|
|
10
|
%
|
1
|
%
|
Average investor
margin loans (U.S. platform)
|
$
|
8,919
|
|
$
|
9,236
|
|
$
|
9,861
|
|
$
|
10,711
|
|
$
|
11,232
|
|
|
26
|
%
|
5
|
%
|
|
|
|
|
|
|
|
|
|
Broker-Dealer:
|
|
|
|
|
|
|
|
|
Average tri-party
repo balances (in billions)
|
$
|
1,983
|
|
$
|
2,022
|
|
$
|
2,063
|
|
$
|
2,101
|
|
$
|
2,153
|
|
|
9
|
%
|
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 March 31, 2014, June 30,
2014 and Sept. 30, 2014 and
$1.1 trillion at Dec. 31, 2014 and March
31, 2015.
(d)
Preliminary.
(e) Represents the total
amount of securities on loan managed by the Investment Services
business. Excludes securities for which BNY Mellon acts as
agent on behalf of CIBC Mellon clients, which totaled $66 billion at March 31,
2014, $64 billion at
June 30, 2014, $65 billion at Sept. 30,
2014 and Dec. 31, 2014, and
$69 billion at March 31, 2015.
N/M - Not
meaningful.
INVESTMENT SERVICES KEY POINTS
- Income before taxes excluding amortization of intangible assets
totaled $796 million, an increase of
14% year-over-year.
- The pre-tax operating margin excluding amortization of
intangible assets was 31% in 1Q15 and the investment services fees
as a percentage of noninterest expense was 96% in 1Q15, both
improving approximately 250 basis points year-over-year.
- Investment services fees totaled $1.7
billion, an increase of 3% both year-over-year and
sequentially.
- Asset servicing fees (global custody, broker-dealer services
and global collateral services) were $1.0
billion in 1Q15 compared with $985
million in 1Q14 and $992
million in 4Q14. The year-over-year increase primarily
reflects net new business, largely driven by Global Collateral
Services and securities lending, and market values. The sequential
increase primarily reflects higher client expense reimbursements,
securities lending revenue and Global Collateral Services fees.
Both increases were partially offset by the unfavorable impact of a
stronger U.S. dollar.
- Estimated new business wins (AUC/A) in Asset Servicing of
$131 billion in 1Q15.
- Clearing services fees were $342
million in 1Q15 compared with $323
million in 1Q14 and $346
million in 4Q14. The year-over-year increase was primarily
driven by higher mutual fund and asset-based fees and higher
clearance revenue driven by higher DARTS volume. The sequential
decrease primarily reflects fewer trading days in 1Q15.
- Issuer services fees (Corporate Trust and Depositary Receipts)
were $231 million in 1Q15 compared
with $228 million in 1Q14 and
$193 million in 4Q14. Both increases
reflect higher corporate actions in Depositary Receipts, partially
offset by the unfavorable impact of a stronger U.S. dollar. The
sequential increase also reflects higher Corporate Trust fees.
- Treasury services fees were $135
million in 1Q15 compared with $134
million in 1Q14 and $142
million in 4Q14. The sequential decrease primarily reflects
seasonally lower payment volumes.
- Foreign exchange and other trading revenue was $209 million in 1Q15 compared with $158 million in 1Q14 and $165 million in 4Q14. Both increases primarily
reflect higher volume and volatility, as well as higher Depositary
Receipts-related activity.
- Net interest revenue was $600
million in 1Q15 compared with $590
million in 1Q14 and $574
million in 4Q14. Both increases primarily reflect higher
average loans and deposits. The sequential increase also reflects
higher internal crediting rates for deposits.
- Noninterest expense (excluding amortization of intangible
assets) was $1.80 billion in 1Q15
compared with $1.78 billion in 1Q14
and $2.51 billion in 4Q14. Both
comparisons reflect higher incentive expense and the impact of the
new EU Single Resolution Fund, partially offset by lower
compensation expense and the favorable impact of a stronger U.S.
dollar. The sequential decrease primarily reflects lower litigation
and professional, legal and other purchased services expenses.
- Pershing Advisor Solutions won the Private Banking - Innovation
Award at the 2015 Private Asset Management (PAM) awards, hosted by
Private Asset magazine.
- Anita Borg Institute names BNY Mellon top company for women
technologists for achieving the highest overall score of all
companies evaluated.
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)
|
1Q14
|
2Q14
|
3Q14
|
4Q14
|
1Q15
|
Revenue:
|
|
|
|
|
|
Fee and other
revenue
|
$
|
112
|
|
$
|
119
|
|
$
|
928
|
|
$
|
117
|
|
$
|
104
|
|
Net interest
revenue
|
68
|
|
60
|
|
69
|
|
69
|
|
54
|
|
Total
revenue
|
180
|
|
179
|
|
997
|
|
186
|
|
158
|
|
Provision for credit
losses
|
(18)
|
|
(12)
|
|
(19)
|
|
1
|
|
2
|
|
Noninterest expense
(ex. M&I and restructuring charges)
|
193
|
|
93
|
|
274
|
|
210
|
|
120
|
|
Income (loss) before
taxes (ex. M&I and restructuring charges)
|
5
|
|
98
|
|
742
|
|
(25)
|
|
36
|
|
M&I and
restructuring charges
|
—
|
|
120
|
|
57
|
|
—
|
|
(4)
|
|
Income (loss) before
taxes
|
$
|
5
|
|
$
|
(22)
|
|
$
|
685
|
|
$
|
(25)
|
|
$
|
40
|
|
|
|
|
|
|
|
Average loans and
leases
|
$
|
10,104
|
|
$
|
9,962
|
|
$
|
10,278
|
|
$
|
10,272
|
|
$
|
8,602
|
|
KEY POINTS
- Total fee and other revenue decreased $8
million compared with 1Q14 and $13
million compared with 4Q14. The year-over-year
decrease primarily reflects lower leasing gains. The
sequential decrease primarily reflects lower asset-related gains
and net securities gains. Both decreases were partially
offset by higher other trading revenue.
- Net interest revenue decreased $14
million compared with 1Q14 and $15
million compared with 4Q14. Both decreases reflect
higher internal crediting rates to the businesses for
deposits.
- Noninterest expense (excluding M&I and restructuring
charges) decreased $73 million
compared with 1Q14 and $90 million
compared with 4Q14. The year-over-year decrease primarily
reflects the curtailment gain related to the U.S. pension plan,
partially offset by higher incentives reflecting better
performance, a lower adjustment for the finalization of the annual
incentive awards and the impact of vesting of long-term stock
awards for retirement eligible employees. The sequential
decrease was driven by lower litigation expense and lower pension
expense.
THE BANK OF NEW
YORK MELLON CORPORATION
Condensed Consolidated
Income Statement
(in
millions)
|
Quarter
ended
|
|
March
31,
2015
|
Dec. 31,
2014
|
March 31,
2014
|
|
|
Fee and other
revenue
|
|
|
|
|
Investment services
fees:
|
|
|
|
|
Asset
servicing
|
$
|
1,038
|
|
$
|
1,019
|
|
$
|
1,009
|
|
|
Clearing
services
|
344
|
|
347
|
|
325
|
|
|
Issuer
services
|
232
|
|
193
|
|
229
|
|
|
Treasury
services
|
137
|
|
145
|
|
136
|
|
|
Total investment
services fees
|
1,751
|
|
1,704
|
|
1,699
|
|
|
Investment management
and performance fees
|
854
|
|
885
|
|
843
|
|
|
Foreign exchange and
other trading revenue
|
229
|
|
151
|
|
136
|
|
|
Distribution and
servicing
|
41
|
|
43
|
|
43
|
|
|
Financing-related
fees
|
40
|
|
43
|
|
38
|
|
|
Investment and other
income
|
63
|
|
78
|
|
102
|
|
|
Total fee
revenue
|
2,978
|
|
2,904
|
|
2,861
|
|
|
Net securities
gains
|
24
|
|
31
|
|
22
|
|
|
Total fee and other
revenue
|
3,002
|
|
2,935
|
|
2,883
|
|
|
Operations of
consolidated investment management funds
|
|
|
|
|
Investment
income
|
189
|
|
101
|
|
138
|
|
|
Interest of
investment management fund note holders
|
68
|
|
59
|
|
102
|
|
|
Income from
consolidated investment management funds
|
121
|
|
42
|
|
36
|
|
|
Net interest
revenue
|
|
|
|
|
Interest
revenue
|
807
|
|
802
|
|
812
|
|
|
Interest
expense
|
79
|
|
90
|
|
84
|
|
|
Net interest
revenue
|
728
|
|
712
|
|
728
|
|
|
Provision for credit
losses
|
2
|
|
1
|
|
(18)
|
|
|
Net interest revenue
after provision for credit losses
|
726
|
|
711
|
|
746
|
|
|
Noninterest
expense
|
|
|
|
|
Staff
|
1,485
|
|
1,418
|
|
1,511
|
|
|
Professional, legal
and other purchased services
|
302
|
|
390
|
|
312
|
|
|
Software and
equipment
|
228
|
|
235
|
|
237
|
|
|
Net
occupancy
|
151
|
|
150
|
|
154
|
|
|
Distribution and
servicing
|
98
|
|
102
|
|
107
|
|
|
Sub-custodian
|
70
|
|
70
|
|
68
|
|
|
Business
development
|
61
|
|
75
|
|
64
|
|
|
Other
|
242
|
|
211
|
|
223
|
|
|
Amortization of
intangible assets
|
66
|
|
73
|
|
75
|
|
|
Merger and
integration, litigation and restructuring charges
|
(3)
|
|
800
|
|
(12)
|
|
|
Total noninterest
expense
|
2,700
|
|
3,524
|
|
2,739
|
|
|
Income
|
|
|
|
|
Income before income
taxes
|
1,149
|
|
164
|
|
926
|
|
|
Provision (benefit)
for income taxes
|
280
|
|
(93)
|
|
232
|
|
|
Net income
|
869
|
|
257
|
|
694
|
|
|
Net (income)
attributable to noncontrolling interests (includes $(90), $(24) and
$(20) related to consolidated investment management funds,
respectively)
|
(90)
|
|
(24)
|
|
(20)
|
|
|
Net income applicable
to shareholders of The Bank of New York Mellon
Corporation
|
779
|
|
233
|
|
674
|
|
|
Preferred stock
dividends
|
(13)
|
|
(24)
|
|
(13)
|
|
|
Net income applicable
to common shareholders of The Bank of New York Mellon
Corporation
|
$
|
766
|
|
$
|
209
|
|
$
|
661
|
|
|
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
|
March 31,
2015
|
Dec. 31,
2014
|
March 31,
2014
|
Net income applicable
to common shareholders of The Bank of New York Mellon
Corporation
|
$
|
766
|
|
$
|
209
|
|
$
|
661
|
|
Less: Earnings
allocated to participating securities
|
12
|
|
4
|
|
13
|
|
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
|
$
|
754
|
|
$
|
205
|
|
$
|
648
|
|
Average common
shares and equivalents outstanding of The Bank of New York Mellon
Corporation
(in
thousands)
|
Quarter
ended
|
March 31,
2015
|
Dec. 31,
2014
|
March 31,
2014
|
Basic
|
1,118,602
|
|
1,120,672
|
|
1,138,645
|
|
Diluted
|
1,126,306
|
|
1,129,040
|
|
1,144,510
|
|
Earnings per share
applicable to the common shareholders of The Bank of New York
Mellon Corporation
(in
dollars)
|
Quarter
ended
|
March 31,
2015
|
Dec. 31,
2014
|
March 31,
2014
|
Basic
|
$
|
0.67
|
|
$
|
0.18
|
|
$
|
0.57
|
|
Diluted
|
$
|
0.67
|
|
$
|
0.18
|
|
$
|
0.57
|
|
THE BANK OF NEW
YORK MELLON CORPORATION
Consolidated Balance
Sheet
(dollars in
millions, except per share amounts)
|
March
31,
2015
|
December 31,
2014
|
|
|
Assets
|
|
|
|
Cash and due
from:
|
|
|
|
Banks
|
$
|
7,167
|
|
$
|
6,970
|
|
|
Interest-bearing
deposits with the Federal Reserve and other central
banks
|
89,704
|
|
96,682
|
|
|
Interest-bearing
deposits with banks
|
18,937
|
|
19,495
|
|
|
Federal funds sold
and securities purchased under resale agreements
|
28,268
|
|
20,302
|
|
|
Securities:
|
|
|
|
Held-to-maturity (fair
value of $41,676 and $21,127)
|
41,237
|
|
20,933
|
|
|
Available-for-sale
|
87,717
|
|
98,330
|
|
|
Total
securities
|
128,954
|
|
119,263
|
|
|
Trading
assets
|
9,505
|
|
9,881
|
|
|
Loans
|
62,326
|
|
59,132
|
|
|
Allowance for loan
losses
|
(190)
|
|
(191)
|
|
|
Net loans
|
62,136
|
|
58,941
|
|
|
Premises and
equipment
|
1,410
|
|
1,394
|
|
|
Accrued interest
receivable
|
557
|
|
607
|
|
|
Goodwill
|
17,663
|
|
17,869
|
|
|
Intangible
assets
|
4,047
|
|
4,127
|
|
|
Other
assets
|
22,315
|
|
20,490
|
|
|
Subtotal assets of
operations
|
390,663
|
|
376,021
|
|
|
Assets of
consolidated investment management funds, at fair value:
|
|
|
|
Trading
assets
|
7,852
|
|
8,678
|
|
|
Other
assets
|
573
|
|
604
|
|
|
Subtotal assets of
consolidated investment management funds, at fair value
|
8,425
|
|
9,282
|
|
|
Total
assets
|
$
|
399,088
|
|
$
|
385,303
|
|
|
Liabilities
|
|
|
|
Deposits:
|
|
|
|
Noninterest-bearing
(principally U.S. offices)
|
$
|
111,622
|
|
$
|
104,240
|
|
|
Interest-bearing
deposits in U.S. offices
|
60,624
|
|
53,236
|
|
|
Interest-bearing
deposits in Non-U.S. offices
|
109,013
|
|
108,393
|
|
|
Total
deposits
|
281,259
|
|
265,869
|
|
|
Federal funds
purchased and securities sold under repurchase
agreements
|
7,919
|
|
11,469
|
|
|
Trading
liabilities
|
7,342
|
|
7,434
|
|
|
Payables to customers
and broker-dealers
|
21,959
|
|
21,181
|
|
|
Commercial
paper
|
—
|
|
—
|
|
|
Other borrowed
funds
|
869
|
|
786
|
|
|
Accrued taxes and
other expenses
|
6,258
|
|
6,903
|
|
|
Other liabilities
(includes allowance for lending-related commitments of $93 and
$89)
|
7,581
|
|
5,025
|
|
|
Long-term
debt
|
20,401
|
|
20,264
|
|
|
Subtotal liabilities
of operations
|
353,588
|
|
338,931
|
|
|
Liabilities of
consolidated investment management funds, at fair value:
|
|
|
|
Trading
liabilities
|
6,584
|
|
7,660
|
|
|
Other
liabilities
|
36
|
|
9
|
|
|
Subtotal liabilities
of consolidated investment management funds, at fair
value
|
6,620
|
|
7,669
|
|
|
Total
liabilities
|
360,208
|
|
346,600
|
|
|
Temporary
equity
|
|
|
|
Redeemable
noncontrolling interests
|
215
|
|
229
|
|
|
Permanent
equity
|
|
|
|
Preferred stock – par
value $0.01 per share; authorized 100,000,000 shares; issued 15,826
and 15,826 shares
|
1,562
|
|
1,562
|
|
|
Common stock – par
value $0.01 per share; authorized 3,500,000,000 shares; issued
1,303,799,499 and 1,290,222,821 shares
|
13
|
|
13
|
|
|
Additional paid-in
capital
|
24,887
|
|
24,626
|
|
|
Retained
earnings
|
18,257
|
|
17,683
|
|
|
Accumulated other
comprehensive loss, net of tax
|
(2,182)
|
|
(1,634)
|
|
|
Less: Treasury
stock of 182,287,827 and 171,995,262 common shares, at
cost
|
(5,209)
|
|
(4,809)
|
|
|
Total The Bank of New
York Mellon Corporation shareholders' equity
|
37,328
|
|
37,441
|
|
|
Nonredeemable
noncontrolling interests of consolidated investment management
funds
|
1,337
|
|
1,033
|
|
|
Total permanent
equity
|
38,665
|
|
38,474
|
|
|
Total liabilities,
temporary equity and permanent equity
|
$
|
399,088
|
|
$
|
385,303
|
|
|
SUPPLEMENTAL INFORMATION – EXPLANATION OF GAAP AND NON-GAAP
FINANCIAL MEASURES
BNY Mellon has included in this Earnings Release certain
Non-GAAP financial measures based on fully phased-in Basel III CET1
and other risk-based capital ratios, SLR and tangible common
shareholders' equity. BNY Mellon believes that the Basel III
CET1 and other risk-based capital ratios on a fully phased-in
basis, the SLR on a fully phased-in basis and the ratio of tangible
common shareholders' equity to tangible assets of operations are
measures of capital strength that provide additional useful
information to investors, supplementing the capital ratios which
are, or were, 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
tangible assets in relation to shares of common stock
outstanding.
BNY Mellon has presented revenue measures which exclude the
effect of noncontrolling interests related to consolidated
investment management funds, a gain on the sale of our investment
in Wing Hang Bank and a gain on the sale of the One Wall Street
building; and expense measures which exclude M&I expenses,
litigation charges, restructuring charges, amortization of
intangible assets and the charge (recovery) related to investment
management funds, net of incentives. Earnings per share,
return on equity measures and operating margin measures, which
exclude some or all of these items, are also presented.
Earnings per share and return on equity measures also exclude the
benefit primarily related to a tax carryback claim. Operating
margin measures may also exclude amortization of intangible assets
and the net negative impact of money market fee waivers, net of
distribution and servicing expense. BNY Mellon believes that
these measures are useful to investors because they permit a focus
on period-to-period comparisons, which relate to the ability of BNY
Mellon to enhance revenues and limit expenses in circumstances
where such matters are within BNY Mellon's control. The
excluded items, in general, relate to certain charges as a result
of prior transactions. M&I expenses primarily relate to
acquisitions and generally continue for approximately three years
after the transaction. Litigation charges represent accruals
for loss contingencies that are both probable and reasonably
estimable, but exclude standard business-related legal fees.
Restructuring charges relate to our streamlining actions,
Operational Excellence Initiatives and migrating positions to
Global Delivery Centers. Excluding these charges mentioned
above permits investors to view expenses on a basis consistent with
how management views the business.
The presentation of revenue growth on a constant currency basis
permits investors to assess the significance of changes in foreign
currency exchange rates. Growth rates on a constant currency
basis were determined by applying the current period foreign
currency exchange rates to the prior period revenue. BNY
Mellon believes that this presentation, as a supplement to GAAP
information, gives investors a clearer picture of the related
revenue results without the variability caused by fluctuations in
foreign currency exchange rates.
The presentation of income from consolidated investment
management funds, net of net income attributable to noncontrolling
interests related to the consolidation of certain investment
management funds permits investors to view revenue on a basis
consistent with how management views the business. BNY Mellon
believes that these presentations, as a supplement to GAAP
information, give investors a clearer picture of the results of its
primary businesses.
In this Earnings Release, the net interest margin is presented
on an FTE basis. We believe that this presentation provides
comparability of amounts arising from both taxable and tax-exempt
sources, and is consistent with industry practice. The
adjustment to an FTE basis has no impact on net income. Each
of these measures as described above is used by management to
monitor financial performance, both on a company-wide and on a
business-level basis.
The following table presents the reconciliation of net income
and diluted earnings per common share.
Reconciliation of
net income and diluted EPS – GAAP to Non-GAAP
|
4Q14
|
|
Net
|
Diluted
|
(in millions,
except per common share amounts)
|
income
|
EPS
|
Net income applicable
to common shareholders of The Bank of New York Mellon Corporation –
GAAP
|
$
|
209
|
|
$
|
0.18
|
|
Less: Benefit
primarily related to a tax carryback claim
|
150
|
|
0.13
|
|
Add:
Litigation and restructuring charges
|
608
|
|
0.53
|
|
Net income applicable
to common shareholders of The Bank of New York Mellon Corporation –
Non-GAAP
|
$
|
667
|
|
$
|
0.58
|
|
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)
|
1Q14
|
2Q14
|
3Q14
|
4Q14
|
1Q15
|
|
Income before income
taxes – GAAP
|
$
|
926
|
|
$
|
811
|
|
$
|
1,662
|
|
$
|
164
|
|
$
|
1,149
|
|
|
Less: Net
income attributable to noncontrolling interests of consolidated
investment management funds
|
20
|
|
17
|
|
23
|
|
24
|
|
90
|
|
|
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
|
75
|
|
75
|
|
75
|
|
73
|
|
66
|
|
|
M&I, litigation
and restructuring charges
|
(12)
|
|
122
|
|
220
|
|
800
|
|
(3)
|
|
|
Charge (recovery)
related to investment management funds, net of
incentives
|
(5)
|
|
109
|
|
—
|
|
—
|
|
—
|
|
|
Income before income
taxes, as adjusted – Non-GAAP (a)
|
$
|
964
|
|
$
|
1,100
|
|
$
|
1,098
|
|
$
|
1,013
|
|
$
|
1,122
|
|
|
|
|
|
|
|
|
|
Fee and other revenue
– GAAP
|
$
|
2,883
|
|
$
|
2,980
|
|
$
|
3,851
|
|
$
|
2,935
|
|
$
|
3,002
|
|
|
Income from
consolidated investment management funds – GAAP
|
36
|
|
46
|
|
39
|
|
42
|
|
121
|
|
|
Net interest revenue
– GAAP
|
728
|
|
719
|
|
721
|
|
712
|
|
728
|
|
|
Total revenue –
GAAP
|
3,647
|
|
3,745
|
|
4,611
|
|
3,689
|
|
3,851
|
|
|
Less: Net
income attributable to noncontrolling interests of consolidated
investment management funds
|
20
|
|
17
|
|
23
|
|
24
|
|
90
|
|
|
Gain on the sale of
our investment in Wing Hang Bank
|
—
|
|
—
|
|
490
|
|
—
|
|
—
|
|
|
Gain on the sale of
the One Wall Street building
|
—
|
|
—
|
|
346
|
|
—
|
|
—
|
|
|
Total revenue, as
adjusted – Non-GAAP (a)
|
$
|
3,627
|
|
$
|
3,728
|
|
$
|
3,752
|
|
$
|
3,665
|
|
$
|
3,761
|
|
|
|
|
|
|
|
|
|
Pre-tax operating
margin (b)
|
25
|
%
|
22
|
%
|
36
|
%
|
4
|
%
|
30
|
%
|
(c)
|
Pre-tax operating
margin – Non-GAAP (a)(b)
|
27
|
%
|
30
|
%
|
29
|
%
|
28
|
%
|
30
|
%
|
(c)
|
(a) Non-GAAP excludes net income attributable to
noncontrolling interests of consolidated investment management
funds, the gains on the sales of our investment in Wing Hang Bank
and the One Wall Street building, amortization of intangible
assets, M&I, litigation and restructuring charges, and a charge
(recovery) related to investment management funds, net of
incentives, if applicable.
(b) Income before
taxes divided by total revenue.
(c)
Our GAAP earnings include tax-advantaged investments such as low
income housing, renewable energy, bank-owned life insurance and
tax-exempt securities. The benefits of these investments are
primarily reflected in tax expense. If reported on a
tax-equivalent basis these investments would increase revenue and
income before taxes by $64 million
for 1Q15 and would increase our pre-tax operating margin by
approximately 1.2%.
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)
|
1Q14
|
2Q14
|
3Q14
|
4Q14
|
1Q15
|
Net income applicable
to common shareholders of The Bank of New York Mellon Corporation –
GAAP
|
$
|
661
|
|
$
|
554
|
|
$
|
1,070
|
|
$
|
209
|
|
$
|
766
|
|
Add:
Amortization of intangible assets, net of tax
|
49
|
|
49
|
|
49
|
|
47
|
|
43
|
|
Net income applicable
to common shareholders of The Bank of New York Mellon Corporation
excluding amortization of intangible assets – Non-GAAP
|
710
|
|
603
|
|
1,119
|
|
256
|
|
809
|
|
Less: Gain on
the sale of our investment in Wing Hang Bank
|
—
|
|
—
|
|
315
|
|
—
|
|
—
|
|
Gain on the sale of
the One Wall Street building
|
—
|
|
—
|
|
204
|
|
—
|
|
—
|
|
Benefit primarily
related to a tax carryback claim
|
—
|
|
—
|
|
—
|
|
150
|
|
—
|
|
Add: M&I,
litigation and restructuring charges
|
(7)
|
|
76
|
|
183
|
|
608
|
|
(2)
|
|
Charge (recovery)
related to investment management funds, net of
incentives
|
(4)
|
|
85
|
|
—
|
|
—
|
|
—
|
|
Net income applicable
to common shareholders of The Bank of New York Mellon Corporation,
as adjusted – Non-GAAP (a)
|
$
|
699
|
|
$
|
764
|
|
$
|
783
|
|
$
|
714
|
|
$
|
807
|
|
|
|
|
|
|
|
Average common
shareholders' equity
|
$
|
36,289
|
|
$
|
36,565
|
|
$
|
36,751
|
|
$
|
36,859
|
|
$
|
35,486
|
|
Less: Average
goodwill
|
18,072
|
|
18,149
|
|
18,109
|
|
17,924
|
|
17,756
|
|
Average intangible
assets
|
4,422
|
|
4,354
|
|
4,274
|
|
4,174
|
|
4,088
|
|
Add: Deferred
tax liability – tax deductible goodwill (b)
|
1,306
|
|
1,338
|
|
1,317
|
|
1,340
|
|
1,362
|
|
Deferred tax liability
– intangible assets (b)
|
1,259
|
|
1,247
|
|
1,230
|
|
1,216
|
|
1,200
|
|
Average tangible
common shareholders' equity – Non-GAAP
|
$
|
16,360
|
|
$
|
16,647
|
|
$
|
16,915
|
|
$
|
17,317
|
|
$
|
16,204
|
|
|
|
|
|
|
|
Return on common
equity – GAAP (c)
|
7.4
|
%
|
6.1
|
%
|
11.6
|
%
|
2.2
|
%
|
8.8
|
%
|
Return on common
equity – Non-GAAP (a)(c)
|
7.8
|
%
|
8.4
|
%
|
8.5
|
%
|
7.7
|
%
|
9.2
|
%
|
|
|
|
|
|
|
Return on tangible
common equity – Non-GAAP (a)(c)
|
17.6
|
%
|
14.5
|
%
|
26.2
|
%
|
5.9
|
%
|
20.3
|
%
|
Return on tangible
common equity – Non-GAAP adjusted (a)(c)
|
17.3
|
%
|
18.4
|
%
|
18.4
|
%
|
16.3
|
%
|
20.2
|
%
|
(a) Non-GAAP excludes amortization of intangible
assets, 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, and a charge (recovery) related to investment management
funds, net of incentives, if applicable.
(b)
Deferred tax liabilities are based on fully phased-in Basel III
rules.
(c) Annualized.
The following table presents the reconciliation of the equity to
assets ratio and book value per common share.
Equity to assets
and book value per common share
|
March 31,
2014
|
Dec. 31,
2014
|
March
31,
2015
|
(dollars in
millions, unless otherwise noted)
|
BNY Mellon
shareholders' equity at period end – GAAP
|
$
|
37,986
|
|
$
|
37,441
|
|
$
|
37,328
|
|
Less: Preferred
stock
|
1,562
|
|
1,562
|
|
1,562
|
|
BNY Mellon common
shareholders' equity at period end – GAAP
|
36,424
|
|
35,879
|
|
35,766
|
|
Less:
Goodwill
|
18,100
|
|
17,869
|
|
17,663
|
|
Intangible
assets
|
4,380
|
|
4,127
|
|
4,047
|
|
Add: Deferred
tax liability – tax deductible goodwill (a)
|
1,306
|
|
1,340
|
|
1,362
|
|
Deferred tax liability
– intangible assets (a)
|
1,259
|
|
1,216
|
|
1,200
|
|
BNY Mellon tangible
common shareholders' equity at period end – Non-GAAP
|
$
|
16,509
|
|
$
|
16,439
|
|
$
|
16,618
|
|
|
|
|
|
Total assets at
period end – GAAP
|
$
|
368,241
|
|
$
|
385,303
|
|
$
|
399,088
|
|
Less: Assets of
consolidated investment management funds
|
11,451
|
|
9,282
|
|
8,425
|
|
Subtotal assets of
operations – Non-GAAP
|
356,790
|
|
376,021
|
|
390,663
|
|
Less:
Goodwill
|
18,100
|
|
17,869
|
|
17,663
|
|
Intangible
assets
|
4,380
|
|
4,127
|
|
4,047
|
|
Cash on deposit with
the Federal Reserve and other central banks (b)
|
83,736
|
|
99,901
|
|
93,044
|
|
Tangible total assets
of operations at period end – Non-GAAP
|
$
|
250,574
|
|
$
|
254,124
|
|
$
|
275,909
|
|
|
|
|
|
BNY Mellon
shareholders' equity to total assets ratio – GAAP
|
10.3
|
%
|
9.7
|
%
|
9.4
|
%
|
BNY Mellon common
shareholders' equity to total assets ratio – GAAP
|
9.9
|
%
|
9.3
|
%
|
9.0
|
%
|
BNY Mellon tangible
common shareholders' equity to tangible assets of
operations
ratio –
Non-GAAP
|
6.6
|
%
|
6.5
|
%
|
6.0
|
%
|
|
|
|
|
Period-end common
shares outstanding (in thousands)
|
1,140,373
|
|
1,118,228
|
|
1,121,512
|
|
|
|
|
|
Book value per common
share – GAAP
|
$
|
31.94
|
|
$
|
32.09
|
|
$
|
31.89
|
|
Tangible book value
per common share – Non-GAAP
|
$
|
14.48
|
|
$
|
14.70
|
|
$
|
14.82
|
|
(a) Deferred tax liabilities are based on fully
phased-in Basel III rules.
(b) Assigned a
zero percent risk-weighting by the regulators.
The following table presents income from consolidated investment
management funds, net of noncontrolling interests.
Income from
consolidated investment management funds, net of noncontrolling
interests
|
|
|
(in
millions)
|
1Q14
|
2Q14
|
3Q14
|
4Q14
|
1Q15
|
Income from
consolidated investment management funds
|
$
|
36
|
|
$
|
46
|
|
$
|
39
|
|
$
|
42
|
|
$
|
121
|
|
Less: Net
income attributable to noncontrolling interests of consolidated
investment management funds
|
20
|
|
17
|
|
23
|
|
24
|
|
90
|
|
Income from
consolidated investment management funds, net of noncontrolling
interests
|
$
|
16
|
|
$
|
29
|
|
$
|
16
|
|
$
|
18
|
|
$
|
31
|
|
The following table presents the impact of changes in foreign
currency exchange rates on our consolidated investment management
and performance fees.
Investment
management and performance fees - Consolidated
|
|
|
1Q15
vs.
|
(dollars in
millions)
|
1Q14
|
1Q15
|
1Q14
|
Investment management
and performance fees - GAAP
|
$
|
843
|
|
$
|
854
|
|
1
|
%
|
Impact of changes in
foreign currency exchange rates
|
(40)
|
|
—
|
|
|
Investment management
and performance fees, as adjusted - Non-GAAP
|
$
|
803
|
|
$
|
854
|
|
6
|
%
|
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 - Investment Management business
|
|
|
|
|
|
(in
millions)
|
1Q14
|
2Q14
|
3Q14
|
4Q14
|
1Q15
|
Investment management
fees
|
$
|
18
|
|
$
|
18
|
|
$
|
15
|
|
$
|
15
|
|
$
|
14
|
|
Other (Investment
income)
|
(2)
|
|
11
|
|
1
|
|
3
|
|
17
|
|
Income from
consolidated investment management funds, net of noncontrolling
interests
|
$
|
16
|
|
$
|
29
|
|
$
|
16
|
|
$
|
18
|
|
$
|
31
|
|
The following table presents the impact of changes in foreign
currency exchange rates on investment management fees reported in
the Investment Management segment.
Investment
management fees - Investment Management business
|
|
|
1Q15
vs.
|
(dollars in
millions)
|
1Q14
|
1Q15
|
1Q14
|
Investment management
fees - GAAP
|
$
|
824
|
|
$
|
835
|
|
1
|
%
|
Impact of changes in
foreign currency exchange rates
|
(40)
|
|
—
|
|
|
Investment management
fees, as adjusted - Non-GAAP
|
$
|
784
|
|
$
|
835
|
|
7
|
%
|
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)
|
1Q14
|
2Q14
|
3Q14
|
4Q14
|
1Q15
|
Income before income
taxes – GAAP
|
$
|
246
|
|
$
|
171
|
|
$
|
245
|
|
$
|
239
|
|
$
|
264
|
|
Add:
Amortization of intangible assets
|
31
|
|
31
|
|
31
|
|
30
|
|
25
|
|
Money market fee
waivers
|
35
|
|
28
|
|
29
|
|
34
|
|
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
|
$
|
307
|
|
$
|
339
|
|
$
|
305
|
|
$
|
303
|
|
$
|
323
|
|
|
|
|
|
|
|
Total revenue –
GAAP
|
$
|
970
|
|
$
|
1,036
|
|
$
|
1,003
|
|
$
|
998
|
|
$
|
1,010
|
|
Less:
Distribution and servicing expense
|
106
|
|
111
|
|
105
|
|
102
|
|
97
|
|
Money market fee
waivers benefiting distribution and servicing expense
|
38
|
|
37
|
|
38
|
|
36
|
|
38
|
|
Add: Money
market fee waivers impacting total revenue
|
73
|
|
65
|
|
67
|
|
70
|
|
72
|
|
Total revenue net of
distribution and servicing expense
and excluding money
market fee waivers – Non-GAAP
|
$
|
899
|
|
$
|
953
|
|
$
|
927
|
|
$
|
930
|
|
$
|
947
|
|
|
|
|
|
|
|
Pre-tax operating
margin (a)
|
25
|
%
|
16
|
%
|
24
|
%
|
24
|
%
|
26
|
%
|
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
|
%
|
36
|
%
|
33
|
%
|
32
|
%
|
34
|
%
|
(a) Income before taxes divided by total
revenue.
DIVIDENDS
Common – On April 22, 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 May 14,
2015 to shareholders of record as of the close of business
on May 4, 2015.
Preferred – On April 22, 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 June 2015, in each
case, payable on June 22, 2015 to
holders of record as of the close of business on June 5, 2015:
- $1,044.44 per share on the Series
A Preferred Stock (equivalent to $10.4444 per Normal Preferred Capital Security of
Mellon Capital IV, each representing 1/100th interest in a share of
Series A Preferred Stock);
- $1,300.00 per share on the Series
C Preferred Stock (equivalent to $0.3250 per depositary share, each representing a
1/4,000th interest in a share of the Series C Preferred Stock);
and
- $2,250.00 per share on the Series
D Preferred Stock (equivalent to approximately $22.50 per depositary share, each representing a
1/100th interest in a share of the Series D Preferred Stock).
BNY Mellon is a global investments company dedicated to helping
its clients manage and service their financial assets throughout
the investment lifecycle. Whether providing financial
services for institutions, corporations or individual investors,
BNY Mellon delivers informed investment management and investment
services in 35 countries and more than 100 markets. As of
March 31, 2015, 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.
CAUTIONARY STATEMENT
A number of statements (i) in this Earnings Release, (ii) in our
presentations and (iii) in the responses to questions on our
conference call discussing our quarterly results and other public
events may contain "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995 including
our estimated capital ratios and expectations relating to those
ratios, preliminary business metrics and statements regarding our
capital plans; strategic priorities; initiatives in Investment
Services and Investment Management; our business improvement
process; and investment securities portfolio. These
statements may be expressed in a variety of ways, including the use
of future or present tense language. Words such as
"estimate", "forecast", "project", "anticipate", "target",
"expect", "intend", "continue", "seek", "believe", "plan", "goal",
"could", "should", "may", "will", "strategy", "opportunities",
"trends" and words of similar meaning signify forward-looking
statements. These statements and other forward-looking
statements contained in other public disclosures of The Bank of New
York Mellon Corporation which make reference to the cautionary
factors described in this Earnings Release are based upon current
beliefs and expectations and are subject to significant risks and
uncertainties (some of which are beyond BNY Mellon's
control). Actual results may differ materially from those
expressed or implied as a result of these risks and uncertainties,
including, but not limited to, the risk factors and other
uncertainties set forth in BNY Mellon's Annual Report on Form 10-K
for the year ended Dec. 31, 2014 and
BNY Mellon's other filings with the Securities and Exchange
Commission. All forward-looking statements in this Earnings
Release speak only as of April 22,
2015, and BNY Mellon undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after
that date or to reflect the occurrence of unanticipated events.
Contacts:
MEDIA:
Kevin
Heine
(212) 635-1590
kevin.heine@bnymellon.com
ANALYSTS:
Valerie Haertel
(212)
635-8529
valerie.haertel@bnymellon.com
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/bny-mellon-reports-first-quarter-earnings-of-766-million-or-067-per-common-share-300070083.html
SOURCE BNY Mellon