UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) – April 22, 2015
THE BANK OF NEW YORK MELLON CORPORATION
(Exact name of registrant as specified in its charter)
|
| | | | |
Delaware | 001-35651 | 13-2614959 |
(State or other jurisdiction
of incorporation) | (Commission
File Number) | (I.R.S. Employer Identification No.) |
One Wall Street New York, New York (Address of principal executive offices) | 10286
(Zip code) | |
Registrant’s telephone number, including area code – (212) 495-1784
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On April 22, 2015, The Bank of New York Mellon Corporation (“BNY Mellon”) issued an Earnings Release announcing its financial results for the first quarter of 2015. A copy of the Earnings Release is attached hereto as Exhibit 99.1 and incorporated herein by reference. The quotation included in Exhibit 99.1 (the “Excluded Section”) is “furnished” by this Current Report on Form 8-K pursuant to General Instruction B.2 of Form 8-K and is not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any BNY Mellon filing under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act. The information included in Exhibit 99.1, other than in the Excluded Section, is to be considered “filed” under the Exchange Act and is incorporated by reference into all filings made by BNY Mellon under the Securities Act and the Exchange Act that state that this Current Report on Form 8-K is incorporated therein by reference.
ITEM 7.01. REGULATION FD DISCLOSURE.
On April 22, 2015, in conjunction with a conference call and webcast regarding BNY Mellon’s financial results, Quarterly Financial Trends, Key Facts and a First Quarter 2015 Financial Highlights presentation are available on BNY Mellon’s website, www.bnymellon.com. A copy of each of the Quarterly Financial Trends, Key Facts and the First Quarter 2015 Financial Highlights presentation is “furnished” as Exhibits 99.2, 99.3 and 99.4, respectively, to this Current Report on Form 8-K pursuant to General Instruction B.2 of Form 8-K and is not “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section. These exhibits shall not be incorporated by reference into any filings BNY Mellon has made or may make under the Securities Act or Exchange Act, except as otherwise expressly stated in such filing. The contents of BNY Mellon’s website referenced herein and in the exhibits are not incorporated into this Current Report on Form 8-K.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit 99.1 (other than the Excluded Section) shall be deemed filed herewith. The Excluded Section and Exhibits 99.2, 99.3 and 99.4 shall be deemed furnished herewith.
(d) EXHIBITS.
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| | | |
Exhibit | | |
Number | | Description |
| | |
99.1 |
| | The Bank of New York Mellon Corporation Earnings Release dated April 22, 2015, announcing financial results for the first quarter of 2015. |
| | |
99.2 |
| | The Bank of New York Mellon Corporation Quarterly Financial Trends dated April 22, 2015, for the first quarter of 2015. |
| | |
99.3 |
| | Key Facts – First Quarter 2015 dated April 22, 2015. |
| | |
99.4 |
| | First Quarter 2015 Financial Highlights Presentation dated April 22, 2015. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| |
| The Bank of New York Mellon Corporation (Registrant)
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Date: April 22, 2015 | By: /s/ Craig T. Beazer |
| Name: Craig T. Beazer Title: Secretary |
EXHIBIT INDEX
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| | |
Number | Description | Method of Filing |
99.1 | Earnings Release dated April 22, 2015. | Filed herewith (other than the Excluded Section) |
99.2 | Quarterly Financial Trends dated April 22, 2015. | Furnished herewith
|
99.3 | Key Facts – First Quarter 2015 dated April 22, 2015. | Furnished herewith
|
99.4 | First Quarter 2015 Financial Highlights Presentation dated April 22, 2015. | Furnished herewith
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|
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BNY Mellon 1Q15 Earnings Release |
News Release
|
| |
Contacts: MEDIA: | ANALYSTS: |
Kevin Heine | Valerie Haertel |
(212) 635-1590 | (212) 635-8529 |
kevin.heine@bnymellon.com | valerie.haertel@bnymellon.com |
BNY MELLON REPORTS FIRST QUARTER EARNINGS OF $766 MILLION OR $0.67 PER COMMON SHARE
| |
• | 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
NEW YORK, April 22, 2015 – 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.
_________________________________________________________________________________
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(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. |
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BNY Mellon 1Q15 Earnings Release |
“In Investment Services, growth in clearing and 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.
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BNY Mellon 1Q15 Earnings Release |
FIRST QUARTER 2015 FINANCIAL HIGHLIGHTS (a)
(comparisons are 1Q15 vs. 1Q14 unless otherwise stated)
•Earnings
|
| | | | | | | | | | | | | | | | | |
| Earnings per share | | Net income applicable to common shareholders of The Bank of New York Mellon Corporation |
(in millions, except per share amounts) | 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.
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• | The provision for credit losses was $2 million. |
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• | 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. |
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• | Effective tax rate of 24.4%; includes a 2.0% benefit related to the tax impact of consolidated investment management funds. |
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• | 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.
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BNY Mellon 1Q15 Earnings Release |
FINANCIAL SUMMARY
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| | | | | | | | | | | | | | | | | | | |
(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.
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BNY Mellon 1Q15 Earnings Release |
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. |
| |
(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. |
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|
BNY Mellon 1Q15 Earnings Release |
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 | ) |
| |
(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.
|
|
BNY Mellon 1Q15 Earnings Release |
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. |
|
|
BNY Mellon 1Q15 Earnings Release |
|
| | | | | | | | | | | | | | | | |
• | 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.
|
|
BNY Mellon 1Q15 Earnings Release |
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.
|
|
BNY Mellon 1Q15 Earnings Release |
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. |
|
|
BNY Mellon 1Q15 Earnings Release |
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) | Dec. 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. |
|
|
BNY Mellon 1Q15 Earnings Release |
NONPERFORMING ASSETS
|
| | | | | | | | | |
Nonperforming assets (dollars in millions) | March 31, 2014 |
| Dec. 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 |
| Dec. 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.
|
|
BNY Mellon 1Q15 Earnings Release |
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 | Dec. 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.
|
|
BNY Mellon 1Q15 Earnings Release |
The table presented below compares the fully phased-in Basel III capital components and ratios to those amounts determined under the currently effective rules using the transitional phase-in requirements.
|
| | | | | | | |
Basel III capital components and ratios at 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
|
|
BNY Mellon 1Q15 Earnings Release |
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) | Dec. 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.
|
|
BNY Mellon 1Q15 Earnings Release |
INVESTMENT MANAGEMENT provides investment management services to institutional and retail investors, as well as investment management, wealth and estate planning and private banking solutions to high net worth individuals and families, and foundations and endowments.
|
| | | | | | | | | | | | | | | | | | | | |
(dollars in millions, unless otherwise noted) | | | | | | | 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 this Non-GAAP measure. |
| |
(c) | Excludes securities lending cash management assets and assets managed in the Investment Services business. |
| |
(d) | Includes currency and overlay assets under management. |
N/M – Not meaningful.
|
|
BNY Mellon 1Q15 Earnings Release |
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. |
|
|
BNY Mellon 1Q15 Earnings Release |
INVESTMENT SERVICES provides global custody and related services, broker-dealer services, global collateral services, corporate trust, depositary receipt and clearing services as well as global payment/working capital solutions to global financial institutions.
|
| | | | | | | | | | | | | | | | | | | | |
(dollar amounts in millions, unless otherwise noted) | | | | | | | 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. |
| |
(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.
|
|
BNY Mellon 1Q15 Earnings Release |
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. |
|
|
BNY Mellon 1Q15 Earnings Release |
OTHER SEGMENT primarily includes credit-related activities, leasing operations, corporate treasury activities, global markets and institutional banking services, business exits, M&I expenses and other corporate revenue and expense items.
|
| | | | | | | | | | | | | | | |
| | | | | |
(dollars in millions) | 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. |
|
|
BNY Mellon 1Q15 Earnings Release |
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 |
|
|
|
BNY Mellon 1Q15 Earnings Release |
THE BANK OF NEW YORK MELLON CORPORATION
Condensed Consolidated Income Statement - continued
|
| | | | | | | | | |
Net income applicable to common shareholders of The Bank of New York Mellon Corporation used for the earnings per share calculation (in millions) | Quarter ended |
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 |
|
|
|
BNY Mellon 1Q15 Earnings Release |
THE BANK OF NEW YORK MELLON CORPORATION
Consolidated Balance Sheet
|
| | | | | | | |
| | (dollars in millions, except per share amounts) | March 31, 2015 |
| Dec. 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 |
|
|
|
BNY Mellon 1Q15 Earnings Release |
SUPPLEMENTAL INFORMATION – EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
BNY Mellon has included in this Earnings Release certain Non-GAAP financial measures based on fully phased-in Basel III CET1 and other risk-based capital ratios, SLR 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
|
|
BNY Mellon 1Q15 Earnings Release |
described above is used by management to monitor financial performance, both on a company-wide and on a business-level basis.
The following table presents the reconciliation of net income and diluted earnings per common share.
|
| | | | | | |
Reconciliation of net income and diluted EPS – GAAP to Non-GAAP | 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%. |
|
|
BNY Mellon 1Q15 Earnings Release |
The following table presents the reconciliation of the returns on common equity and tangible common equity.
|
| | | | | | | | | | | | | | | |
Return on common equity and tangible common equity | | | | | |
(dollars in millions) | 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. |
|
|
BNY Mellon 1Q15 Earnings Release |
The following table presents the reconciliation of the equity to assets ratio and book value per common share.
|
| | | | | | | | | |
Equity to assets and book value per common share | 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 | % |
|
|
BNY Mellon 1Q15 Earnings Release |
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.
|
|
BNY Mellon 1Q15 Earnings Release |
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.
THE BANK OF NEW YORK MELLON CORPORATION
Quarterly Financial Trends
April 22, 2015
|
|
Notes: |
The following transactions/changes have impacted the reporting of our results: |
|
In the first quarter of 2014, prior periods were restated to reflect the retrospective application of adopting new accounting guidance related to our investments in qualified affordable housing projects (ASU 2014-01). |
|
In the first quarter of 2014, results of Newton's private client business were reclassified from the Investment Management business to the Other segment. Newton's private client business was sold in September 2013. |
|
Restructuring charges in the second quarter of 2014 represent corporate initiatives and were recorded in the Other segment. In the fourth quarter of 2013, restructuring charges were recorded in the businesses. Prior to the fourth quarter of 2013, all restructuring charges were reported in the Other segment. |
|
In the first quarter of 2013, incentive expense related to restricted stock and certain corporate overhead charges were allocated to Investment Management and Investment Services businesses which were previously included in the Other segment. All prior periods were restated to reflect these changes. |
|
The following items have impacted the comparability of our results: |
The fourth quarter of 2014 includes a charge related to litigation. |
The fourth quarter of 2014 includes a benefit primarily related to a tax carryback claim. |
The third quarter of 2014 includes gains related to the sales of the investment in Wing Hang Bank and the One Wall Street building. |
The third quarter of 2014 includes charges related to litigation and restructuring. |
The second quarter of 2014 includes charges related to investment management funds and severance. |
The fourth quarter of 2013 includes a loss related to an equity investment. |
The third quarter of 2013 includes a benefit related to the U.S. Tax Court's partial reconsideration of a tax decision disallowing certain foreign tax credits. |
The second quarter of 2013 includes a gain related to an equity investment. |
The first quarter of 2013 includes a tax charge related to the disallowance of certain foreign tax credits. |
The second quarter of 2012 includes a charge related to the settlement of the Sigma class action lawsuit. |
|
All of these items are detailed in the trends that follow. |
|
Certain immaterial reclassifications/revisions have been made to prior periods to place them on a basis comparable with the current period's presentation. |
|
Average Assets: |
In businesses where average deposits are greater than average loans, average assets include an allocation of investment securities equal to the difference. |
|
Return on Common and Tangible Common Equity: |
Quarterly return on common and tangible common equity ratios are annualized. |
|
Non-GAAP Measures: |
Certain Non-GAAP measures are included in the following schedules. These measures are used by management to monitor financial performance, both on a company-wide and on a business basis. These Non-GAAP measures impact certain revenue/expense categories, percentages and ratios by the exclusion and/or adjustment of items listed above and described in footnotes. For further information, see 'Supplemental information -- Explanation of GAAP and Non-GAAP Financial Measures' in The Bank of New York Mellon Corporation's Quarterly Earnings Release dated April 22, 2015, for the first quarter of 2015, furnished as an exhibit to the Current Report on Form 8-K to which these Quarterly Financial Trends are furnished as an exhibit (the "Form 8-K"). Summations may not equal due to rounding. As a result of our rounding convention and reclassifications noted above, differences may exist between the business trends data versus business data in the Form 10-K for the year ended December 31, 2014 or other reports filed with the SEC. |
THE BANK OF NEW YORK MELLON CORPORATION - 9 Quarter Trend |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2013 | | 2014 | | 2015 | |
(dollar amounts in millions unless otherwise noted) | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | 4th Qtr | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | 4th Qtr | | 1st Qtr | |
Revenue: | | | | | | | | | | | | | | | | | | | |
Investment services fees | | | | | | | | | | | | | | | | | | | |
Asset servicing | | $ | 969 |
| | $ | 988 |
| | $ | 964 |
| | $ | 984 |
| | $ | 1,009 |
| | $ | 1,022 |
| | $ | 1,025 |
| | $ | 1,019 |
| | $ | 1,038 |
| |
Issuer services | | 237 |
| | 294 |
| | 322 |
| | 237 |
| | 229 |
| | 231 |
| | 315 |
| | 193 |
| | 232 |
| |
Clearing services | | 304 |
| | 321 |
| | 315 |
| | 324 |
| | 325 |
| | 326 |
| | 337 |
| | 347 |
| | 344 |
| |
Treasury services | | 141 |
| | 139 |
| | 137 |
| | 137 |
| | 136 |
| | 141 |
| | 142 |
| | 145 |
| | 137 |
| |
Total investment services fees | | 1,651 |
| | 1,742 |
| | 1,738 |
| | 1,682 |
| | 1,699 |
| | 1,720 |
| | 1,819 |
| | 1,704 |
| | 1,751 |
| |
Investment management and performance fees | | 822 |
| | 848 |
| | 821 |
| | 904 |
| | 843 |
| | 883 |
| | 881 |
| | 885 |
| | 854 |
| |
Foreign exchange & other trading revenue | | 161 |
| | 207 |
| | 160 |
| | 146 |
| | 136 |
| | 130 |
| | 153 |
| | 151 |
| | 229 |
| |
Distribution and servicing | | 49 |
| | 45 |
| | 43 |
| | 43 |
| | 43 |
| | 43 |
| | 44 |
| | 43 |
| | 41 |
| |
Financing-related fees | | 41 |
| | 44 |
| | 44 |
| | 43 |
| | 38 |
| | 44 |
| | 44 |
| | 43 |
| | 40 |
| |
Investment and other income (a) | | 88 |
| | 285 |
| | 151 |
| | (43 | ) | | 102 |
| | 142 |
| | 890 |
| | 78 |
| | 63 |
| |
Total fee revenue (a) | | 2,812 |
| | 3,171 |
| | 2,957 |
| | 2,775 |
| | 2,861 |
| | 2,962 |
| | 3,831 |
| | 2,904 |
| | 2,978 |
| |
Net securities gains (losses) | | 48 |
| | 32 |
| | 22 |
| | 39 |
| | 22 |
| | 18 |
| | 20 |
| | 31 |
| | 24 |
| |
Total fee and other revenue (a) | | 2,860 |
| | 3,203 |
| | 2,979 |
| | 2,814 |
| | 2,883 |
| | 2,980 |
| | 3,851 |
| | 2,935 |
| | 3,002 |
| |
Income (loss) of consolidated investment management funds | | 50 |
| | 65 |
| | 32 |
| | 36 |
| | 36 |
| | 46 |
| | 39 |
| | 42 |
| | 121 |
| |
Net interest revenue | | 719 |
| | 757 |
| | 772 |
| | 761 |
| | 728 |
| | 719 |
| | 721 |
| | 712 |
| | 728 |
| |
Total revenue (a) | | 3,629 |
| | 4,025 |
| | 3,783 |
| | 3,611 |
| | 3,647 |
| | 3,745 |
| | 4,611 |
| | 3,689 |
| | 3,851 |
| |
Provision for credit losses | | (24 | ) | | (19 | ) | | 2 |
| | 6 |
| | (18 | ) | | (12 | ) | | (19 | ) | | 1 |
| | 2 |
| |
Noninterest expenses | | 2,703 |
| | 2,716 |
| | 2,682 |
| | 2,793 |
| | 2,676 |
| | 2,749 |
| | 2,673 |
| | 2,651 |
| | 2,637 |
| |
Amortization of intangible assets | | 86 |
| | 93 |
| | 81 |
| | 82 |
| | 75 |
| | 75 |
| | 75 |
| | 73 |
| | 66 |
| |
Merger & integration, litigation and restructuring charges | | 39 |
| | 13 |
| | 16 |
| | 2 |
| | (12 | ) | | 122 |
| | 220 |
| | 800 |
| | (3 | ) | |
Total noninterest expense | | 2,828 |
| | 2,822 |
| | 2,779 |
| | 2,877 |
| | 2,739 |
| | 2,946 |
| | 2,968 |
| | 3,524 |
| | 2,700 |
| |
Income (loss) from continuing operations before taxes (a) | | 825 |
| | 1,222 |
| | 1,002 |
| | 728 |
| | 926 |
| | 811 |
| | 1,662 |
| | 164 |
| | 1,149 |
| |
Provision for income taxes (a) | | 1,062 |
| | 339 |
| | 19 |
| | 172 |
| | 232 |
| | 217 |
| | 556 |
| | (93 | ) | | 280 |
| |
Net income (loss) from continuing operations (a) | | (237 | ) | | 883 |
| | 983 |
| | 556 |
| | 694 |
| | 594 |
| | 1,106 |
| | 257 |
| | 869 |
| |
Net income (loss) attributable to noncontrolling interest (b) | | (16 | ) | | (40 | ) | | (8 | ) | | (17 | ) | | (20 | ) | | (17 | ) | | (23 | ) | | (24 | ) | | (90 | ) | |
Preferred stock dividends | | (13 | ) | | (12 | ) | | (13 | ) | | (26 | ) | | (13 | ) | | (23 | ) | | (13 | ) | | (24 | ) | | (13 | ) | |
Net income (loss) applicable to common shareholders of The Bank of New York Mellon Corporation (a) | | (266 | ) | | 831 |
| | 962 |
| | 513 |
| | 661 |
| | 554 |
| | 1,070 |
| | $ | 209 |
| | 766 |
| |
Earnings Per Share (a)(c) | | $ | (0.23 | ) | | $ | 0.71 |
| | $ | 0.82 |
| | $ | 0.44 |
| | $ | 0.57 |
| | $ | 0.48 |
| | $ | 0.93 |
| | $ | 0.18 |
| | $ | 0.67 |
| |
| | | | | | | | | | | | | | | | | | | |
Assets under management at period-end (in billions) (d) | | $ | 1,423 |
| | $ | 1,427 |
| | $ | 1,532 |
| | $ | 1,583 |
| | $ | 1,620 |
| | $ | 1,636 |
| | $ | 1,646 |
| | $ | 1,710 |
| | $ | 1,741 |
| (e) |
Assets under custody and/or administration at period-end (in trillions) (f) | | $ | 26.3 |
| | $ | 26.2 |
| | $ | 27.4 |
| | $ | 27.6 |
| | $ | 27.9 |
| | $ | 28.5 |
| | $ | 28.3 |
| | $ | 28.5 |
| | $ | 28.5 |
| (e) |
Market value of securities on loan at period-end (in billions) (g) | | $ | 244 |
| | $ | 255 |
| | $ | 255 |
| | $ | 235 |
| | $ | 264 |
| | $ | 280 |
| | $ | 282 |
| | $ | 289 |
| | $ | 291 |
| |
Pre-tax operating margin - GAAP | | 23 | % | | 30 | % | | 26 | % | | 20 | % | | 25 | % | | 22 | % | | 36 | % | | 4 | % | | 30 | % | |
Non-GAAP (h) | | 27 | % | | 28 | % | | 29 | % | | 26 | % | | 27 | % | | 30 | % | | 29 | % | | 28 | % | | 30 | % | |
Return on common equity (annualized) - GAAP | | N/M |
| | 9.7 | % | | 11.1 | % | | 5.7 | % | | 7.4 | % | | 6.1 | % | | 11.6 | % | | 2.2 | % | | 8.8 | % | |
Return on tangible common equity (annualized) - Non-GAAP | | N/M |
| | 25.0 | % | | 28.3 | % | | 14.3 | % | | 17.6 | % | | 14.5 | % | | 26.2 | % | | 5.9 | % | | 20.3 | % | |
Percent of non-US total revenue (i) | | 35 | % | | 36 | % | | 38 | % | | 39 | % | | 37 | % | | 38 | % | | 43 | % | | 35 | % | | 36 | % | |
| |
(a) | In the 1st quarter 2014, prior periods were restated to reflect the retrospective application of adopting new accounting guidance related to our investments in qualified affordable housing projects (ASU 2014-01). |
(b) Primarily attributable to noncontrolling interests related to consolidated investment management funds.
| |
(c) | The 1st quarter 2013 includes a $0.73 charge related to the disallowance of certain foreign tax credits. The 2nd quarter 2013 includes a $0.09 gain related to an equity investment. The 3rd quarter 2013 includes a $0.22 benefit related to the U.S. Tax Court's partial reconsideration of a tax decision disallowing certain foreign tax credits. The 4th quarter 2013 includes a $0.10 loss related to an equity investment. The 2nd quarter 2014 includes a $0.14 charge related to severance and certain investment management funds. The 3rd quarter 2014 includes a $0.27 gain related to the sale of an investment in Wing Hang Bank, $0.18 related to a gain on the sale of the One Wall Street building and a $0.16 charge related to litigation and restructuring. The 4th quarter of 2014 includes a $0.13 benefit primarily related to a tax carryback claim, and a $0.53 charge related to litigation and restructuring. |
| |
(d) | Excludes securities lending cash management assets and assets managed in the Investment Services business. Also excludes assets under management related to Newton’s private client business that was sold in September 2013. |
| |
(f) | Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce of $1.2 trillion at March 31, 2013, $1.1 trillion at June 30, 2013, $1.2 trillion at Sept. 30, 2013, Dec. 31, 2013, March 31, 2014, June 30, 2014 and Sept. 30, 2014, and $1.1 trillion at Dec. 31, 2014 and March 31, 2015. |
| |
(g) | Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent, beginning in the fourth quarter of 2013, on behalf of CIBC Mellon clients, which totaled $62 billion at Dec. 31, 2013, $66 billion at March 31, 2014, $64 billion at June 30, 2014 and $65 billion at Sept. 30, 2014 and Dec. 31, 2014, and $69 billion at March 31, 2015. |
(h) Non-GAAP excludes gain (loss) related to equity investment, net income attributable to noncontrolling interests of consolidated investment management funds, the gains on the sales of our investment in Wing Hang and the One Wall Street building, M&I, litigation and restructuring charges, a charge (recovery) related to investment management funds, net of incentives, amortization of intangibles, 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 of the Quarterly Earnings Release.
| |
(i) | Includes fee revenue, net interest revenue and income from consolidated investment management funds, net of net income attributable to noncontrolling interests. |
Note: See pages 3 through 6 for additional details of revenue/expense items impacting consolidated results.
N/M - Not meaningful.
THE BANK OF NEW YORK MELLON CORPORATION
FEE AND OTHER REVENUE - 9 Quarter Trend
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2013 | | 2014 | | 2015 | |
(dollar amounts in millions unless otherwise noted) | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | 4th Qtr | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | 4th Qtr | | 1st Qtr | |
Investment services fees: | | | | | | | | | | | | | | | | | | |
Asset servicing | $ | 930 |
| | $ | 938 |
| | $ | 929 |
| | $ | 953 |
| | $ | 971 |
| | $ | 976 |
| | $ | 988 |
| | $ | 982 |
| | $ | 995 |
| |
Securities lending | 39 |
| | 50 |
| | 35 |
| | 31 |
| | 38 |
| | 46 |
| | 37 |
| | 37 |
| | 43 |
| |
Issuer services | 237 |
| | 294 |
| | 322 |
| | 237 |
| | 229 |
| | 231 |
| | 315 |
| | 193 |
| | 232 |
| |
Clearing services | 304 |
| | 321 |
| | 315 |
| | 324 |
| | 325 |
| | 326 |
| | 337 |
| | 347 |
| | 344 |
| |
Treasury services | 141 |
| | 139 |
| | 137 |
| | 137 |
| | 136 |
| | 141 |
| | 142 |
| | 145 |
| | 137 |
| |
Total investment services fees | 1,651 |
| | 1,742 |
| | 1,738 |
| | 1,682 |
| | 1,699 |
| | 1,720 |
| | 1,819 |
| | 1,704 |
| | 1,751 |
| |
Investment management and performance fees | 822 |
| | 848 |
| | 821 |
| | 904 |
| | 843 |
| | 883 |
| | 881 |
| | 885 |
| | 854 |
| |
Foreign exchange and other trading revenue | 161 |
| | 207 |
| | 160 |
| | 146 |
| | 136 |
| | 130 |
| | 153 |
| | 151 |
| | 229 |
| |
Distribution and servicing | 49 |
| | 45 |
| | 43 |
| | 43 |
| | 43 |
| | 43 |
| | 44 |
| | 43 |
| | 41 |
| |
Financing-related fees | 41 |
| | 44 |
| | 44 |
| | 43 |
| | 38 |
| | 44 |
| | 44 |
| | 43 |
| | 40 |
| |
Investment and other income | 88 |
| | 285 |
| | 151 |
| | (43 | ) | | 102 |
| | 142 |
| | 890 |
| | 78 |
| | 63 |
| |
Total fee revenue | $ | 2,812 |
| | $ | 3,171 |
| | $ | 2,957 |
| | $ | 2,775 |
| | $ | 2,861 |
| | $ | 2,962 |
| | $ | 3,831 |
| | 2,904 |
| | 2,978 |
| |
Net securities gains | 48 |
| | 32 |
| | 22 |
| | 39 |
| | 22 |
| | 18 |
| | 20 |
| | 31 |
| | 24 |
| |
Total fee and other revenue | $ | 2,860 |
| | $ | 3,203 |
| | $ | 2,979 |
| | $ | 2,814 |
| | $ | 2,883 |
| | $ | 2,980 |
| | $ | 3,851 |
| | $ | 2,935 |
| | $ | 3,002 |
| |
Fee revenue as a percentage of total revenue - excluding net securities gains | 79 | % | | 79 | % | | 79 | % | | 78 | % | | 79 | % | | 79 | % | | 83 | % | | 79 | % | | 78 | % | |
| | | | | | | | | | | | | | | | | | |
Assets under management at period-end (in billions) (a) | $ | 1,423 |
| | $ | 1,427 |
| | $ | 1,532 |
| | $ | 1,583 |
| | $ | 1,620 |
| | $ | 1,636 |
| | $ | 1,646 |
| | $ | 1,710 |
| | $ | 1,741 |
| (b) |
Assets under custody and/or administration at period-end (in trillions) (c) | $ | 26.3 |
| | $ | 26.2 |
| | $ | 27.4 |
| | $ | 27.6 |
| | $ | 27.9 |
| | $ | 28.5 |
| | $ | 28.3 |
| | $ | 28.5 |
| | $ | 28.5 |
| (b) |
Market value of securities on loan at period-end (in billions) (d) | $ | 244 |
| | $ | 255 |
| | $ | 255 |
| | $ | 235 |
| | $ | 264 |
| | $ | 280 |
| | $ | 282 |
| | $ | 289 |
| | $ | 291 |
| |
| | | | | | | | | | | | | | | | | | |
S&P 500 Index - period-end | 1569 | | 1606 | | 1682 | | 1848 | | 1872 | | 1960 | | 1972 | | 2059 | | 2068 | |
S&P 500 Index - daily average | 1514 | | 1609 | | 1675 | | 1769 | | 1835 | | 1900 | | 1976 | | 2009 | | 2064 | |
| | | | | | | | | | | | | | | | | | |
(a) Excludes securities lending cash management assets and assets managed in the Investment Services business. Also excludes assets under management related to Newton's private client business that was sold in September 2013. |
(b) Preliminary. |
(c) Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.2 trillion at March 31, 2013, $1.1 trillion at June 30, 2013, $1.2 trillion at Sept. 30, 2013, Dec. 31, 2013, March 31, 2014, June 30, 2014 and Sept. 30, 2014, and $1.1 trillion at Dec. 31, 2014 and March 31, 2015. |
(d) Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent, beginning in the fourth quarter of 2013, on behalf of CIBC Mellon clients, which totaled $62 billion at Dec. 31, 2013, $66 billion at March 31, 2014, $64 billion at June 30, 2014, $65 billion at Sept. 30, 2014 and Dec. 31, 2014, and $69 billion at March 31, 2015. |
THE BANK OF NEW YORK MELLON CORPORATION
Average Balances and Interest Rates
|
| | | | | | | | | | | | | | | | | | | | | | | |
| 2013 |
(dollar amounts in millions) | March 31 | | June 30 | | September 30 | | December 31 |
| Average
balance | Average
rates | | Average
balance | Average
rates | | Average
balance | Average
rates | | Average
balance | Average
rates |
Assets | | |
Interest-earning assets: | | | | | | | | | | | |
Interest-bearing deposits with banks (primarily foreign) | $ | 40,967 |
| 0.70 | % | | $ | 42,772 |
| 0.64 | % | | $ | 41,597 |
| 0.66 | % | | $ | 39,563 |
| 0.71 | % |
Interest-bearing deposits with Federal Reserve & other central banks | 63,240 |
| 0.20 |
| | 55,911 |
| 0.22 |
| | 65,704 |
| 0.23 |
| | 83,232 |
| 0.23 |
|
Federal funds sold and securities purchased under resale agreements | 7,478 |
| 0.54 |
| | 7,878 |
| 0.52 |
| | 8,864 |
| 0.56 |
| | 9,403 |
| 0.61 |
|
Margin loans | 13,346 |
| 1.17 |
| | 13,906 |
| 1.14 |
| | 14,653 |
| 1.10 |
| | 15,224 |
| 1.08 |
|
Non-margin loans: | | | | | | | | | | | |
Domestic offices | 21,358 |
| 2.38 |
| | 21,689 |
| 2.40 |
| | 21,378 |
| 2.40 |
| | 22,538 |
| 2.28 |
|
Foreign offices | 11,575 |
| 1.36 |
| | 12,318 |
| 1.32 |
| | 12,225 |
| 1.31 |
| | 13,006 |
| 1.22 |
|
Total non-margin loans | 32,933 |
| 2.02 |
| | 34,007 |
| 2.01 |
| | 33,603 |
| 2.01 |
| | 35,544 |
| 1.89 |
|
Securities | | | | | | | | | | | |
U.S. government obligations | 18,814 |
| 1.54 |
| | 19,887 |
| 1.62 |
| | 16,540 |
| 1.76 |
| | 13,418 |
| 1.96 |
|
U.S. government agency obligations | 42,397 |
| 1.85 |
| | 47,631 |
| 1.80 |
| | 45,745 |
| 2.02 |
| | 43,465 |
| 2.00 |
|
Obligations of states and political subdivisions | 6,194 |
| 2.38 |
| | 6,377 |
| 2.26 |
| | 6,518 |
| 2.47 |
| | 6,757 |
| 2.76 |
|
Other securities | 34,507 |
| 2.03 |
| | 33,243 |
| 1.93 |
| | 32,403 |
| 1.92 |
| | 33,000 |
| 1.78 |
|
Trading securities | 5,878 |
| 2.40 |
| | 6,869 |
| 2.33 |
| | 5,523 |
| 2.83 |
| | 6,173 |
| 2.82 |
|
Total securities | 107,790 |
| 1.91 |
| | 114,007 |
| 1.86 |
| | 106,729 |
| 2.02 |
| | 102,813 |
| 1.97 |
|
Total interest-earning assets | 265,754 |
| 1.26 |
| | 268,481 |
| 1.27 |
| | 271,150 |
| 1.28 |
| | 285,779 |
| 1.21 |
|
Allowance for loan losses | (264 | ) | | | (237 | ) | | | (212 | ) | | | (207 | ) | |
Cash and due from banks | 4,534 |
| | | 5,060 |
| | | 6,400 |
| | | 6,623 |
| |
Other assets | 52,137 |
| | | 52,627 |
| | | 52,549 |
| | | 52,434 |
| |
Total Asset Consol VIE FAS 167 | 11,503 |
| | | 11,524 |
| | | 11,863 |
| | | 11,506 |
| |
Total Assets | $ | 333,664 |
| | | $ | 337,455 |
| | | $ | 341,750 |
| | | $ | 356,135 |
| |
| | | | | | | | | | | |
Liabilities and total equity | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | |
Money market rate accounts and demand deposit accounts | $ | 8,778 |
| 0.19 | % | | $ | 8,183 |
| 0.22 | % | | $ | 8,626 |
| 0.16 | % | | $ | 11,042 |
| 0.12 | % |
Savings | 819 |
| 0.29 |
| | 897 |
| 0.24 |
| | 1,015 |
| 0.25 |
| | 993 |
| 0.25 |
|
Other time deposits | 39,091 |
| 0.05 |
| | 41,706 |
| 0.04 |
| | 41,546 |
| 0.04 |
| | 41,523 |
| 0.04 |
|
Foreign offices | 99,040 |
| 0.08 |
| | 100,433 |
| 0.07 |
| | 102,360 |
| 0.07 |
| | 103,462 |
| 0.06 |
|
Total interest-bearing deposits | 147,728 |
| 0.08 |
| | 151,219 |
| 0.07 |
| | 153,547 |
| 0.06 |
| | 157,020 |
| 0.06 |
|
Federal funds purchased and securities sold under repurchase agreements | 9,187 |
| (0.12 | ) | | 9,206 |
| (0.28 | ) | | 12,164 |
| (0.12 | ) | | 13,155 |
| (0.10 | ) |
Trading Liabilities | 2,552 |
| 1.35 |
| | 3,036 |
| 1.40 |
| | 2,325 |
| 1.69 |
| | 2,534 |
| 1.42 |
|
Other borrowed funds | 1,397 |
| 0.76 |
| | 1,443 |
| 0.19 |
| | 2,233 |
| 0.19 |
| | 2,378 |
| 0.42 |
|
Payables to customers and broker-dealers | 9,019 |
| 0.09 |
| | 9,073 |
| 0.08 |
| | 8,659 |
| 0.09 |
| | 9,400 |
| 0.09 |
|
Long-term debt | 18,878 |
| 1.18 |
| | 19,002 |
| 0.94 |
| | 19,025 |
| 1.00 |
| | 19,501 |
| 1.05 |
|
Total interest-bearing liabilities | 188,761 |
| 0.20 |
| | 192,979 |
| 0.16 |
| | 197,953 |
| 0.16 |
| | 203,988 |
| 0.17 |
|
Total noninterest-bearing deposits | 70,337 |
| | | 70,648 |
| | | 72,075 |
| | | 79,999 |
| |
Other liabilities | 27,416 |
| | | 26,779 |
| | | 24,380 |
| | | 23,546 |
| |
VIE Liabilities & Obligations FAS 167 | 10,186 |
| | | 10,242 |
| | | 10,466 |
| | | 10,283 |
| |
Total Shareholders' Equity | 35,966 |
| | | 35,817 |
| | | 35,826 |
| | | 37,260 |
| |
Noncontrolling interest | 998 |
| | | 990 |
| | | 1,050 |
| | | 1,059 |
| |
Total liabilities and shareholders' equity | $ | 333,664 |
| | | $ | 337,455 |
| | | $ | 341,750 |
| | | $ | 356,135 |
| |
Net interest margin - Taxable equivalent basis | | 1.11 | % | | | 1.15 | % | | | 1.16 | % | | | 1.09 | % |
Note: Interest and average rates were calculated on a taxable equivalent basis, at tax rates of approximately 35%, using dollar amounts in thousands and the actual number of days in the year.
THE BANK OF NEW YORK MELLON CORPORATION
Average Balances and Interest Rates (continued)
. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2014 | | 2015 |
(dollar amounts in millions) | March 31 | | June 30 | | September 30 | | December 31 | | March 31 |
| Average
balance | Average
rates | | Average
balance | Average
rates | | Average
balance | Average
rates | | Average
balance | Average
rates | | Average
balance | Average
rates |
Assets | | | | |
Interest-earning assets: | | | | | | | | | | | | | | |
Interest-bearing deposits with banks (primarily foreign) | $ | 41,617 |
| 0.71 | % | | $ | 41,424 |
| 0.74 | % | | $ | 34,882 |
| 0.66 | % | | $ | 24,623 |
| 0.49 | % | | $ | 22,071 |
| 0.56 | % |
Interest-bearing deposits with Federal Reserve & other central banks | 74,399 |
| 0.25 |
| | 85,546 |
| 0.26 |
| | 88,713 |
| 0.23 |
| | 97,440 |
| 0.22 |
| | 81,160 |
| 0.23 |
|
Federal funds sold and securities purchased under resale agreements | 11,118 |
| 0.61 |
| | 13,387 |
| 0.58 |
| | 15,683 |
| 0.61 |
| | 18,536 |
| 0.56 |
| | 20,411 |
| 0.59 |
|
Margin loans | 15,840 |
| 1.07 |
| | 17,050 |
| 1.05 |
| | 18,108 |
| 1.04 |
| | 18,897 |
| 1.01 |
| | 20,051 |
| 1.00 |
|
Non-margin loans: | | | | | | | | | | | | | | |
Domestic offices | 22,002 |
| 2.31 |
| | 22,566 |
| 2.30 |
| | 23,826 |
| 2.20 |
| | 25,103 |
| 2.20 |
| | 25,256 |
| 2.14 |
|
Foreign offices | 13,805 |
| 1.26 |
| | 13,833 |
| 1.34 |
| | 12,901 |
| 1.30 |
| | 12,844 |
| 1.21 |
| | 12,628 |
| 1.24 |
|
Total non-margin loans | 35,807 |
| 1.90 |
| | 36,399 |
| 1.94 |
| | 36,727 |
| 1.88 |
| | 37,947 |
| 1.86 |
| | 37,884 |
| 1.84 |
|
Securities | | | | | | | | | | | | | | |
U.S. government obligations | 17,213 |
| 1.61 |
| | 17,462 |
| 1.63 |
| | 23,067 |
| 1.38 |
| | 24,331 |
| 1.48 |
| | 27,454 |
| 1.38 |
|
U.S. government agency obligations | 42,710 |
| 1.87 |
| | 43,167 |
| 1.67 |
| | 46,186 |
| 1.67 |
| | 49,106 |
| 1.70 |
| | 52,744 |
| 1.68 |
|
Obligations of states and political subdivisions | 6,691 |
| 2.50 |
| | 6,473 |
| 2.58 |
| | 5,830 |
| 2.54 |
| | 5,305 |
| 2.61 |
| | 5,213 |
| 2.64 |
|
Other securities | 33,920 |
| 1.64 |
| | 34,318 |
| 1.55 |
| | 36,972 |
| 1.37 |
| | 38,501 |
| 1.23 |
| | 38,065 |
| 1.33 |
|
Trading securities | 5,217 |
| 2.60 |
| | 5,532 |
| 2.19 |
| | 5,435 |
| 2.36 |
| | 3,922 |
| 2.64 |
| | 3,046 |
| 2.46 |
|
Total securities | 105,751 |
| 1.83 |
| | 106,952 |
| 1.71 |
| | 117,490 |
| 1.59 |
| | 121,165 |
| 1.58 |
| | 126,522 |
| 1.57 |
|
Total interest-earning assets | 284,532 |
| 1.17 |
| | 300,758 |
| 1.10 |
| | 311,603 |
| 1.05 |
| | 318,608 |
| 1.02 |
| | 308,099 |
| 1.07 |
|
Allowance for loan losses | (210 | ) | | | (197 | ) | | | (187 | ) | | | (186 | ) | | | (191 | ) | |
Cash and due from banks | 5,886 |
| | | 5,064 |
| | | 6,225 |
| | | 4,715 |
| | | 6,204 |
| |
Other assets | 53,430 |
| | | 52,182 |
| | | 52,526 |
| | | 52,471 |
| | | 51,982 |
| |
Total Asset Consol VIE FAS 167 | 11,354 |
| | | 11,405 |
| | | 10,242 |
| | | 9,623 |
| | | 8,796 |
| |
Total Assets | $ | 354,992 |
| | | $ | 369,212 |
| | | $ | 380,409 |
| | | $ | 385,231 |
| | | $ | 374,890 |
| |
| | | | | | | | | | | | | | |
Liabilities and total equity | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | |
Money market rate accounts and demand deposit accounts | $ | 9,333 |
| 0.11 | % | | $ | 7,583 |
| 0.13 | % | | 7,886 |
| 0.14 | % | | 8,869 |
| 0.12 | % | | 10,021 |
| 0.12 | % |
Savings | 1,034 |
| 0.25 |
| | 1,185 |
| 0.27 |
| | 1,258 |
| 0.28 |
| | 1,262 |
| 0.30 |
| | 1,429 |
| 0.30 |
|
Other time deposits | 41,544 |
| 0.04 |
| | 42,824 |
| 0.04 |
| | 41,248 |
| 0.04 |
| | 41,507 |
| 0.04 |
| | 43,259 |
| 0.04 |
|
Foreign offices | 101,075 |
| 0.06 |
| | 111,082 |
| 0.06 |
| | 113,841 |
| 0.05 |
| | 111,511 |
| 0.02 |
| | 104,811 |
| 0.03 |
|
Total interest-bearing deposits | 152,986 |
| 0.06 |
| | 162,674 |
| 0.06 |
| | 164,233 |
| 0.06 |
| | 163,149 |
| 0.03 |
| | 159,520 |
| 0.04 |
|
Federal funds purchased and securities sold under repurchase agreements | 14,505 |
| (0.13 | ) | | 19,030 |
| (0.05 | ) | | 20,620 |
| (0.07 | ) | | 20,285 |
| (0.05 | ) | | 13,872 |
| (0.09 | ) |
Trading Liabilities | 1,978 |
| 1.59 |
| | 2,993 |
| 0.97 |
| | 2,806 |
| 0.84 |
| | 1,024 |
| 1.44 |
| | 795 |
| 1.07 |
|
Other borrowed funds | 1,137 |
| 0.47 |
| | 3,242 |
| 0.23 |
| | 4,587 |
| 0.15 |
| | 5,270 |
| 0.25 |
| | 2,108 |
| 0.50 |
|
Payables to customers and broker-dealers | 8,883 |
| 0.09 |
| | 8,916 |
| 0.09 |
| | 9,705 |
| 0.10 |
| | 10,484 |
| 0.08 |
| | 10,932 |
| 0.07 |
|
Long-term debt | 20,420 |
| 1.09 |
| | 20,361 |
| 1.16 |
| | 20,429 |
| 1.12 |
| | 21,187 |
| 1.27 |
| | 20,199 |
| 1.21 |
|
Total interest-bearing liabilities | 199,909 |
| 0.17 |
| | 217,216 |
| 0.17 |
| | 222,380 |
| 0.16 |
| | $ | 221,399 |
| 0.16 | % | | $ | 207,426 |
| 0.15 |
|
Total noninterest-bearing deposits | 81,430 |
| | | 77,820 |
| | | 82,334 |
| | | 85,330 |
| | | 89,592 |
| |
Other liabilities | 24,608 |
| | | 24,854 |
| | | 27,369 |
| | | 30,742 |
| | | 32,340 |
| |
VIE Liabilities & Obligations FAS 167 | 10,128 |
| | | 10,180 |
| | | 8,879 |
| | | 8,101 |
| | | 7,038 |
| |
Total Shareholders' Equity | 37,851 |
| | | 38,127 |
| | | 38,313 |
| | | 38,421 |
| | | 37,048 |
| |
Noncontrolling interest | 1,066 |
| | | 1,015 |
| | | 1,134 |
| | | 1,238 |
| | | 1,446 |
| |
Total liabilities and shareholders' equity | $ | 354,992 |
| | | $ | 369,212 |
| | | $ | 380,409 |
| | | $ | 385,231 |
| | | $ | 374,890 |
| |
Net interest margin - Taxable equivalent basis | | 1.05 | % | | | 0.98 | % | | | 0.94 | % | | | 0.91 | % | | | 0.97 | % |
Note: Interest and average rates were calculated on a taxable equivalent basis, at tax rates of approximately 35%, using dollar amounts in thousands and the actual number of days in the year.
THE BANK OF NEW YORK MELLON CORPORATION
NONINTEREST EXPENSE - 9 Quarter Trend
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2013 | | 2014 | | 2015 |
(dollar amounts in millions) | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | 4th Qtr | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | 4th Qtr | | 1st Qtr |
Staff: | | | | | | | | | | | | | | | | | | |
Compensation | | $ | 885 |
| | $ | 891 |
| | $ | 915 |
| | $ | 929 |
| | $ | 925 |
| | $ | 903 |
| | $ | 909 |
| | $ | 893 |
| | $ | 871 |
|
Incentives | | 338 |
| | 364 |
| | 339 |
| | 343 |
| | 359 |
| | 313 |
| | 340 |
| | 319 |
| | 425 |
|
Employee benefits | | 249 |
| | 254 |
| | 262 |
| | 250 |
| | 227 |
| | 223 |
| | 228 |
| | 206 |
| | 189 |
|
Total staff | | 1,472 |
| | 1,509 |
| | 1,516 |
| | 1,522 |
| | 1,511 |
| | 1,439 |
| | 1,477 |
| | 1,418 |
| | 1,485 |
|
Professional, legal and other purchased services | | 295 |
| | 317 |
| | 296 |
| | 344 |
| | 312 |
| | 314 |
| | 323 |
| | 390 |
| | 302 |
|
Software and equipment | | 228 |
| | 238 |
| | 226 |
| | 241 |
| | 237 |
| | 236 |
| | 234 |
| | 235 |
| | 228 |
|
Net occupancy | | 163 |
| | 159 |
| | 153 |
| | 154 |
| | 154 |
| | 152 |
| | 154 |
| | 150 |
| | 151 |
|
Distribution and servicing | | 106 |
| | 111 |
| | 108 |
| | 110 |
| | 107 |
| | 112 |
| | 107 |
| | 102 |
| | 98 |
|
Business development | | 68 |
| | 90 |
| | 63 |
| | 96 |
| | 64 |
| | 68 |
| | 61 |
| | 75 |
| | 61 |
|
Sub-custodian | | 64 |
| | 77 |
| | 71 |
| | 68 |
| | 68 |
| | 81 |
| | 67 |
| | 70 |
| | 70 |
|
Other | | 307 |
| | 215 |
| | 249 |
| | 258 |
| | 223 |
| | 347 |
| | 250 |
| | 211 |
| | 242 |
|
Amortization of intangible assets | | 86 |
| | 93 |
| | 81 |
| | 82 |
| | 75 |
| | 75 |
| | 75 |
| | 73 |
| | 66 |
|
Merger & integration, litigation and restructuring charges | | 39 |
| | 13 |
| | 16 |
| | 2 |
| | (12 | ) | | 122 |
| | 220 |
| | 800 |
| | (3 | ) |
Total noninterest expense | | $ | 2,828 |
| | $ | 2,822 |
| | $ | 2,779 |
| | $ | 2,877 |
| | $ | 2,739 |
| | $ | 2,946 |
| | $ | 2,968 |
| | $ | 3,524 |
| | $ | 2,700 |
|
| | | | | | | | | | | | | | | | | | |
Memo: | | | | | | | | | | | | | | | | | | |
Total noninterest expense excluding M&I, litigation, restructuring, amortization of intangible assets and the charge (recovery) related to investment management funds, net of incentives - Non-GAAP | | $ | 2,664 |
| | $ | 2,743 |
| | $ | 2,682 |
| | $ | 2,793 |
| | $ | 2,681 |
| | $ | 2,640 |
| | $ | 2,673 |
| | $ | 2,651 |
| | $ | 2,637 |
|
| | | | | | | | | | | | | | | | | | |
Full-time employees at period-end | | 49,700 |
| | 49,800 |
| | 50,800 |
| | 51,100 |
| | 51,400 |
| | 51,100 |
| | 50,900 |
| | 50,300 |
| | 50,500 |
|
THE BANK OF NEW YORK MELLON CORPORATION
ASSETS UNDER MANAGEMENT, CUSTODY AND/OR ADMINISTRATION AND SECURITIES LENDING - 9 Quarter Trend
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2013 | | 2014 | | 2015 | |
(dollar amounts in billions unless otherwise noted) | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | 4th Qtr | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | 4th Qtr | | 1st Qtr | |
Assets under management at period-end: (a) | | | | | | | | | | | | | | | | | | | |
Institutional | | $ | 939 |
| | $ | 968 |
| | $ | 1,041 |
| | $ | 1,072 |
| | $ | 1,118 |
| | $ | 1,109 |
| | $ | 1,131 |
| | $ | 1,187 |
| | $ | 1,210 |
| |
Mutual Funds | | 405 |
| | 378 |
| | 407 |
| | 425 |
| | 415 |
| | 440 |
| | 430 |
| | 438 |
| | 445 |
| |
Private Client | | 79 |
| | 81 |
| | 84 |
| | 86 |
| | 87 |
| | 87 |
| | 85 |
| | 85 |
| | 86 |
| |
Assets under management | | $ | 1,423 |
| | $ | 1,427 |
| | $ | 1,532 |
| | $ | 1,583 |
| | $ | 1,620 |
| | $ | 1,636 |
| | $ | 1,646 |
| | $ | 1,710 |
| | $ | 1,741 |
| (b) |
| | | | | | | | | | | | | | | | | | | |
AUM at period-end, by product type: (a) | | | | | | | | | | | | | | | | | | | |
Equity | | 17 | % | | 17 | % | | 17 | % | | 17 | % | | 17 | % | | 17 | % | | 16 | % | | 16 | % | | 15 | % | |
Fixed income | | 15 |
| | 15 |
| | 14 |
| | 14 |
| | 14 |
| | 14 |
| | 13 |
| | 13 |
| | 13 |
| |
Index | | 19 |
| | 20 |
| | 20 |
| | 20 |
| | 20 |
| | 21 |
| | 21 |
| | 21 |
| | 22 |
| |
Liability-driven investments (c) | | 25 |
| | 25 |
| | 26 |
| | 26 |
| | 27 |
| | 27 |
| | 28 |
| | 29 |
| | 29 |
| |
Alternative investments | | 4 |
| | 4 |
| | 4 |
| | 4 |
| | 4 |
| | 4 |
| | 4 |
| | 4 |
| | 4 |
| |
Cash | | 20 |
| | 19 |
| | 19 |
| | 19 |
| | 18 |
| | 17 |
| | 18 |
| | 17 |
| | 17 |
| |
Total AUM | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | (b) |
| | | | | | | | | | | | | | | | | | | |
Assets under custody and/or administration at period-end (in trillions) (d) | | $ | 26.3 |
| | $ | 26.2 |
| | $ | 27.4 |
| | $ | 27.6 |
| | $ | 27.9 |
| | $ | 28.5 |
| | $ | 28.3 |
| | $ | 28.5 |
| | $ | 28.5 |
| (b) |
Market value of securities on loan at period-end (e) | | $ | 244 |
| | $ | 255 |
| | $ | 255 |
| | $ | 235 |
| | $ | 264 |
| | $ | 280 |
| | $ | 282 |
| | $ | 289 |
| | $ | 291 |
| |
Key Market Metrics | | | | | | | | | | | | | | | | | | | |
S&P 500 Index (f) | | 1569 |
| | 1606 |
| | 1682 |
| | 1848 |
| | 1872 |
| | 1960 |
| | 1972 |
| | 2059 |
| | 2068 |
| |
S&P 500 Index - daily average | | 1514 |
| | 1609 |
| | 1675 |
| | 1769 |
| | 1835 |
| | 1900 |
| | 1976 |
| | 2009 |
| | 2064 |
| |
FTSE 100 Index (f) | | 6412 |
| | 6215 |
| | 6462 |
| | 6749 |
| | 6598 |
| | 6744 |
| | 6623 |
| | 6566 |
| | 6773 |
| |
FTSE 100 Index-daily average | | 6300 |
| | 6438 |
| | 6530 |
| | 6612 |
| | 6680 |
| | 6764 |
| | 6756 |
| | 6526 |
| | 6793 |
| |
MSCI World Index (f) | | 1435 |
| | 1434 |
| | 1544 |
| | 1661 |
| | 1674 |
| | 1743 |
| | 1698 |
| | 1710 |
| | 1741 |
| |
MSCI World Index-daily average | | 1405 |
| | 1463 |
| | 1511 |
| | 1602 |
| | 1647 |
| | 1698 |
| | 1733 |
| | 1695 |
| | 1726 |
| |
Barclays Capital Global Aggregate BondSM Index (f)(g) | | 356 |
| | 343 |
| | 356 |
| | 354 |
| | 365 |
| | 376 |
| | 361 |
| | 357 |
| | 348 |
| |
NYSE & NASDAQ Share Volume (in billions) | | 174 |
| | 186 |
| | 166 |
| | 179 |
| | 196 |
| | 187 |
| | 173 |
| | 198 |
| | 187 |
| |
JP Morgan G7 Volatility Index - daily average (h) | | 9.02 |
| | 9.84 |
| | 9.72 |
| | 8.20 |
| | 7.80 |
| | 6.22 |
| | 6.21 |
| | 8.54 |
| | 10.40 |
| |
Average Fed Funds effective rate | | 0.14 | % | | 0.12 | % | | 0.09 | % | | 0.09 | % | | 0.07 | % | | 0.09 | % | | 0.09 | % | | 0.10 | % | | 0.11 | % | |
Foreign exchange rates vs. U.S. dollar: | | | | | | | | | | | | | | | | | | | |
British pound - average rate | | $1.55 | | $1.54 | | $1.55 | | $1.62 | | $1.66 | | $1.68 | | $1.67 | | $1.58 | | $1.51 | |
Euro - average rate | | 1.32 | | 1.31 | | 1.32 | | 1.36 | | 1.37 | | 1.37 | | 1.33 | | 1.25 | | 1.13 |
| |
(a) Excludes securities lending cash management assets and assets managed in the Investment Services business. Also excludes assets under management related to Newton's private client business that was sold in September 2013. |
(b) Preliminary. |
(c) Includes currency and overlay assets under management. |
(d) Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.2 trillion at March 31, 2013, $1.1 trillion at June 30, 2013, $1.2 trillion at Sept. 30, 2013, Dec. 31, 2013, March 31, 2014, June 30, 2014 and Sept. 30, 2014, and $1.1 trillion at Dec. 31, 2014 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, beginning in the fourth quarter of 2013, on behalf of CIBC Mellon clients, which totaled $62 billion at Dec. 31, 2013, $66 billion at March 31, 2014, $64 billion at June 30, 2014, $65 billion at Sept. 30, 2014 and Dec. 31, 2014, and $69 billion at March 31, 2015. |
(f) Period end. |
(g) Unhedged in U.S. dollar terms. |
(h) The JP Morgan G7 Volatility Index is based on the implied volatility in 3-month currency options. |
THE BANK OF NEW YORK MELLON CORPORATION
ASSETS UNDER MANAGEMENT NET FLOWS - 9 Quarter Trend
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2013 | | 2014 | | 2015 | |
(dollar amounts in billions ) | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | 4th Qtr | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | 4th Qtr | | 1st Qtr | |
| | | | | | | | | | | | | | | | | | | |
Assets under management at beginning of period (a) | | $ | 1,380 |
| | $ | 1,423 |
| | $ | 1,427 |
| | $ | 1,532 |
| | $ | 1,583 |
| | $ | 1,620 |
| | 1,636 |
| | $ | 1,646 |
| | $ | 1,710 |
| |
| | | | | | | | | | | | | | | | | | | |
Net inflows (outflows): | | | | | | | | | | | | | | | | | | | |
Long-term: | | | | | | | | | | | | | | | | | | | |
Equity | | 1 |
| | 1 |
| | 3 |
| | (5 | ) | | (1 | ) | | (4 | ) | | (2 | ) | | (4 | ) | | (6 | ) | |
Fixed income | | 5 |
| | 2 |
| | (1 | ) | | 5 |
| | — |
| | (1 | ) | | — |
| | 4 |
| | 4 |
| |
Index | | 12 |
| | 8 |
| | 2 |
| | (3 | ) | | — |
| | 7 |
| | (3 | ) | | 1 |
| | 8 |
| |
Liability-driven investments (b) | | 22 |
| | 11 |
| | 27 |
| | 4 |
| | 20 |
| | (17 | ) | | 18 |
| | 24 |
| | 8 |
| |
Alternative investments | | — |
| | (1 | ) | | 1 |
| | 1 |
| | 2 |
| | 2 |
| | — |
| | 2 |
| | 2 |
| |
Total long-term inflows (outflows) | | 40 |
| | 21 |
| | 32 |
| | 2 |
| | 21 |
| | (13 | ) | | 13 |
| | 27 |
| | 16 |
| |
Short-term: | | | | | | | | | | | | | | | | | | | |
Cash | | (13 | ) | | (1 | ) | | 13 |
| | 6 |
| | (7 | ) | | (18 | ) | | 19 |
| | 5 |
| | 1 |
| |
Total net inflows (outflows) | | 27 |
| | 20 |
| | 45 |
| | 8 |
| | 14 |
| | (31 | ) | | 32 |
| | 32 |
| | 17 |
| |
| | | | | | | | | | | | | | | | | | | |
Net market / currency impact / other | | 16 |
| | (16 | ) | | 60 |
| | 43 |
| | 23 |
| | 47 |
| | (22 | ) | | 32 |
| | 14 |
| |
| | | | | | | | | | | | | | | | | | | |
Assets under management at end of period (a) | | $ | 1,423 |
| | $ | 1,427 |
| | $ | 1,532 |
| | $ | 1,583 |
| | $ | 1,620 |
| | $ | 1,636 |
| | $ | 1,646 |
|
| $ | 1,710 |
| | $ | 1,741 |
| (c) |
| |
(a) | Excludes securities lending cash management assets and assets managed in the Investment Services business. Also excludes assets under management related to |
Newton’s private client business that was sold in September 2013.
| |
(b) | Includes currency and overlay assets under management. |
THE BANK OF NEW YORK MELLON CORPORATION
INVESTMENT MANAGEMENT BUSINESS - 9 Quarter Trend
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2013 | | 2014 | | 2015 | |
(dollar amounts in millions unless otherwise noted) | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | 4th Qtr | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | 4th Qtr | | 1st Qtr | |
Revenue: | | | | | | | | | | | | | | | | | | | |
Investment management fees: | | | | | | | | | | | | | | | | | | | |
Mutual funds | | $ | 299 |
| | $ | 299 |
| | $ | 293 |
| | $ | 303 |
| | $ | 299 |
| | $ | 311 |
| | $ | 315 |
| | $ | 306 |
| | $ | 301 |
| |
Institutional clients | | 360 |
| | 366 |
| | 367 |
| | 385 |
| | 372 |
| | 385 |
| | 382 |
| | 375 |
| | 376 |
| |
Wealth management | | 143 |
| | 146 |
| | 145 |
| | 149 |
| | 153 |
| | 156 |
| | 158 |
| | 157 |
| | 158 |
| |
Total investment management fees | | 802 |
| | 811 |
| | 805 |
| | 837 |
| | 824 |
| | 852 |
| | 855 |
| | 838 |
| | 835 |
| |
Performance fees | | 15 |
| | 33 |
| | 10 |
| | 72 |
| | 20 |
| | 29 |
| | 22 |
| | 44 |
| | 15 |
| |
Investment management and performance fees | | 817 |
| | 844 |
| | 815 |
| | 909 |
| | 844 |
| | 881 |
| | 877 |
| | 882 |
| | 850 |
| |
Distribution and servicing | | 46 |
| | 44 |
| | 41 |
| | 41 |
| | 40 |
| | 41 |
| | 41 |
| | 40 |
| | 39 |
| |
Other (a) | | 18 |
| | 24 |
| | 26 |
| | 43 |
| | 16 |
| | 48 |
| | 16 |
| | 7 |
| | 47 |
| |
Total fee and other revenue (a) | | 881 |
| | 912 |
| | 882 |
| | 993 |
| | 900 |
| | 970 |
| | 934 |
| | 929 |
| | 936 |
| |
Net interest revenue | | 62 |
| | 63 |
| | 67 |
| | 68 |
| | 70 |
| | 66 |
| | 69 |
| | 69 |
| | 74 |
| |
Total revenue | | 943 |
| | 975 |
| | 949 |
| | 1,061 |
| | 970 |
| | 1,036 |
| | 1,003 |
| | 998 |
| | 1,010 |
| |
Noninterest expense (ex. intangible amortization and the charge (recovery) related to investment management funds, net of incentives) | | 659 |
| | 692 |
| | 689 |
| | 760 |
| | 698 |
| | 725 |
| | 727 |
| | 729 |
| | 721 |
| |
Income before taxes (ex. intangible amortization and the charge (recovery) related to investment management funds) | | 284 |
| | 283 |
| | 260 |
| | 301 |
| | 272 |
| | 311 |
| | 276 |
| | 269 |
| | 289 |
| |
Charge (recovery) related to investment management funds, net of incentives | | 39 |
| | (27 | ) | | — |
| | — |
| | (5 | ) | | 109 |
| | — |
| | — |
| | — |
| |
Amortization of intangible assets | | 39 |
| | 39 |
| | 35 |
| | 35 |
| | 31 |
| | 31 |
| | 31 |
| | 30 |
| | 25 |
| |
Income before taxes | | $ | 206 |
| | $ | 271 |
| | $ | 225 |
| | $ | 266 |
| | $ | 246 |
| | $ | 171 |
| | $ | 245 |
| | $ | 239 |
| | $ | 264 |
| |
| | | | | | | | | | | | | | | | | | | |
Average assets | | $ | 38,743 |
| | $ | 37,953 |
| | $ | 38,690 |
| | $ | 38,796 |
| | $ | 39,463 |
| | $ | 37,750 |
| | $ | 36,670 |
| | $ | 37,286 |
| | $ | 37,496 |
| |
| | | | | | | | | | | | | | | | | | | |
Assets under management at period-end (in billions) (b) | | $ | 1,423 |
| | $ | 1,427 |
| | $ | 1,532 |
| | $ | 1,583 |
| | $ | 1,620 |
| | $ | 1,636 |
| | $ | 1,646 |
| | $ | 1,710 |
| | $ | 1,741 |
| (c) |
| | | | | | | | | | | | | | | | | | | |
Pre-tax operating margin | | 22 | % | | 28 | % | | 24 | % | | 25 | % | | 25 | % | | 16 | % | | 24 | % | | 24 | % | | 26 | % | |
Adjusted pre-tax operating margin (d) | | 35 | % | | 34 | % | | 33 | % | | 34 | % | | 34 | % | | 36 | % | | 33 | % | | 32 | % | | 34 | % | |
| | | | | | | | | | | | | | | | | | | |
(a) Total fee and other revenue includes the impact of the consolidated investment management funds. See "Supplemental information - Explanation of GAAP and Non-GAAP financial measures" beginning on page 24 of the Quarterly Earnings Release for the reconciliation of Non-GAAP measures. Additionally, other revenue includes asset servicing, treasury services, foreign exchange and other trading revenue and investment and other income. | |
(b) Excludes securities lending cash management assets and assets managed in the Investment Services business. Also excludes assets under management related to Newton's private client business that was sold in September 2013. | |
(c) Preliminary. | |
(d) Excludes the net negative impact of money market fee waivers, amortization of intangible assets and the charge (recovery) related to investment management funds net of incentives, and is net of distribution and servicing expense. See "Supplemental information - Explanation of GAAP and Non-GAAP financial measures" beginning on page 24 of the Quarterly Earnings Release for the reconciliation of Non-GAAP measures. | |
THE BANK OF NEW YORK MELLON CORPORATION
INVESTMENT SERVICES BUSINESS - 9 Quarter Trend
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2013 | | 2014 | | 2015 | |
(dollar amounts in millions unless otherwise noted) | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | 4th Qtr | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | 4th Qtr | | 1st Qtr | |
Revenue: | | | | | | | | | | | | | | | | | | | |
Investment services fees | | | | | | | | | | | | | | | | | | | |
Asset servicing fees - ex. securities lending | | $ | 912 |
| | $ | 922 |
| | $ | 913 |
| | $ | 936 |
| | $ | 955 |
| | $ | 958 |
| | $ | 971 |
| | $ | 964 |
| | $ | 979 |
| |
Securities lending revenue | | 31 |
| | 39 |
| | 26 |
| | 21 |
| | 30 |
| | 35 |
| | 27 |
| | 28 |
| | 34 |
| |
Issuer services | | 236 |
| | 294 |
| | 321 |
| | 236 |
| | 228 |
| | 231 |
| | 314 |
| | 193 |
| | 231 |
| |
Clearing services | | 302 |
| | 320 |
| | 314 |
| | 322 |
| | 323 |
| | 324 |
| | 336 |
| | 346 |
| | 342 |
| |
Treasury services | | 137 |
| | 135 |
| | 135 |
| | 137 |
| | 134 |
| | 140 |
| | 139 |
| | 142 |
| | 135 |
| |
Total investment services fees | | 1,618 |
| | 1,710 |
| | 1,709 |
| | 1,652 |
| | 1,670 |
| | 1,688 |
| | 1,787 |
| | 1,673 |
| | 1,721 |
| |
Foreign Exchange and other trading revenue | | 173 |
| | 193 |
| | 177 |
| | 150 |
| | 158 |
| | 145 |
| | 159 |
| | 165 |
| | 209 |
| |
Other (a) | | 70 |
| | 67 |
| | 63 |
| | 58 |
| | 59 |
| | 87 |
| | 59 |
| | 69 |
| | 63 |
| |
Total fee and other revenue (a) | | 1,861 |
| | 1,970 |
| | 1,949 |
| | 1,860 |
| | 1,887 |
| | 1,920 |
| | 2,005 |
| | 1,907 |
| | 1,993 |
| |
Net interest revenue | | 653 |
| | 633 |
| | 619 |
| | 610 |
| | 590 |
| | 593 |
| | 583 |
| | 574 |
| | 600 |
| |
Total revenue | | 2,514 |
| | 2,603 |
| | 2,568 |
| | 2,470 |
| | 2,477 |
| | 2,513 |
| | 2,588 |
| | 2,481 |
| | 2,593 |
| |
Provision for credit losses | | 1 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
Noninterest expenses (ex. intangible amortization) | | 1,796 |
| | 1,825 |
| | 1,765 |
| | 1,822 |
| | 1,778 |
| | 1,824 |
| | 1,835 |
| | 2,512 |
| | 1,797 |
| |
Income before taxes (ex. intangible amortization) | | 717 |
| | 778 |
| | 803 |
| | 648 |
| | 699 |
| | 689 |
| | 753 |
| | (31 | ) | | 796 |
| |
Amortization of intangible assets | | 47 |
| | 54 |
| | 46 |
| | 47 |
| | 44 |
| | 44 |
| | 44 |
| | 43 |
| | 41 |
| |
Income before taxes | | $ | 670 |
| | $ | 724 |
| | $ | 757 |
| | $ | 601 |
| | $ | 655 |
| | $ | 645 |
| | $ | 709 |
| | $ | (74 | ) | | $ | 755 |
| |
| | | | | | | | | | | | | | | | | | | |
Average loans | | $ | 26,697 |
| | $ | 27,814 |
| | $ | 27,865 |
| | $ | 31,211 |
| | $ | 31,468 |
| | $ | 33,115 |
| | $ | 33,785 |
| | $ | 35,448 |
| | $ | 37,699 |
| |
Average assets | | $ | 240,187 |
| | $ | 244,802 |
| | $ | 246,252 |
| | $ | 258,294 |
| | $ | 258,470 |
| | $ | 264,221 |
| | $ | 266,455 |
| | $ | 276,586 |
| | $ | 284,978 |
| |
Average deposits | | $ | 200,222 |
| | $ | 204,499 |
| | $ | 206,068 |
| | $ | 216,216 |
| | $ | 214,947 |
| | $ | 220,701 |
| | $ | 221,734 |
| | $ | 228,282 |
| | $ | 234,183 |
| |
| | | | | | | | | | | | | | | | | | | |
Pre-tax operating margin | | 27 | % | | 28 | % | | 29 | % | | 24 | % | | 26 | % | | 26 | % | | 27 | % | | (3 | )% | | 29 | % | |
Pre-tax operating margin (ex. intangible amortization) | | 29 | % | | 30 | % | | 31 | % | | 26 | % | | 28 | % | | 27 | % | | 29 | % | | (1 | )% | | 31 | % | |
| | | | | | | | | | | | | | | | | | | |
Investment services fees as a percentage of noninterest expense (b) | | 92 | % | | 94 | % | | 97 | % | | 90 | % | | 93 | % | | 93 | % | | 100 | % | | 92 | % | | 96 | % | |
| | | | | | | | | | | | | | | | | | | |
Assets under custody and/or administration at period-end (in trillions) (c) | | $ | 26.3 |
| | $ | 26.2 |
| | $ | 27.4 |
| | $ | 27.6 |
| | $ | 27.9 |
| | $ | 28.5 |
| | $ | 28.3 |
| | $ | 28.5 |
| | $ | 28.5 |
| (d) |
| | | | | | | | | | | | | | | | | | | |
Market value of securities on loan at period-end (in billions) (e) | | $ | 244 |
| | $ | 255 |
| | $ | 255 |
| | $ | 235 |
| | $ | 264 |
| | $ | 280 |
| | $ | 282 |
| | $ | 289 |
| | $ | 291 |
| |
| | | | | | | | | | | | | | | | | | | |
(a) Total fee and other revenue includes investment management fees and distribution and servicing revenue. | |
(b) Noninterest expense excludes amortization of intangible assets and litigation expense. | |
(c) Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.2 trillion at March 31, 2013, $1.1 trillion at June 30, 2013, $1.2 trillion at Sept. 30, 2013, Dec. 31, 2013, March 31, 2014, June 30, 2014 and Sept. 30, 2014, and $1.1 trillion at Dec. 31, 2014 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, beginning in the fourth quarter of 2013, on behalf of CIBC Mellon clients, which totaled $62 billion at Dec. 31, 2013, $66 billion at March 31, 2014, $64 billion at June 30, 2014, $65 billion at Sept. 30, 2014 and Dec. 31, 2014, and $69 billion at March 31, 2015. | |
THE BANK OF NEW YORK MELLON
OTHER SEGMENT- 9 Quarter Trend
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2013 (a) | | 2014 | | 2015 |
(dollar amounts in millions) | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | 4th Qtr | | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | 4th Qtr | | 1st Qtr |
| | | | | | | | | | | | | | | | | | |
Revenue: | | | | | | | | | | | | | | | | | | |
Fee and other revenue (a) | | $ | 152 |
| | $ | 347 |
| | $ | 172 |
| | $ | (20 | ) | | $ | 112 |
| | $ | 119 |
| | $ | 928 |
| | $ | 117 |
| | $ | 104 |
|
Net interest revenue | | 4 |
| | 61 |
| | 86 |
| | 83 |
| | 68 |
| | 60 |
| | 69 |
| | 69 |
| | 54 |
|
Total revenue (a) | | 156 |
| | 408 |
| | 258 |
| | 63 |
| | 180 |
| | 179 |
| | 997 |
| | 186 |
| | 158 |
|
Provision for credit loss | | (25 | ) | | (19 | ) | | 2 |
| | 6 |
| | (18 | ) | | (12 | ) | | (19 | ) | | 1 |
| | 2 |
|
Noninterest expense (ex. M&I and restructuring charges) | | 243 |
| | 236 |
| | 230 |
| | 200 |
| | 193 |
| | 93 |
| | 274 |
| | 210 |
| | 120 |
|
Income (loss) before taxes (ex. M&I and restructuring charges) (a) | | $ | (62 | ) | | $ | 191 |
| | $ | 26 |
| | $ | (143 | ) | | $ | 5 |
| | $ | 98 |
| | $ | 742 |
| | $ | (25 | ) | | $ | 36 |
|
M&I and restructuring charges | | 5 |
| | 3 |
| | 14 |
| | 13 |
| | — |
| | 120 |
| | 57 |
| | — |
| | (4 | ) |
Income (loss) before taxes (a) | | $ | (67 | ) | | $ | 188 |
| | $ | 12 |
| | $ | (156 | ) | | $ | 5 |
| | $ | (22 | ) | | $ | 685 |
| | $ | (25 | ) | | $ | 40 |
|
| | | | | | | | | | | | | | | | | |
|
Average loans and leases | | $ | 10,610 |
| | $ | 10,846 |
| | $ | 10,938 |
| | $ | 9,802 |
| | $ | 10,104 |
| | $ | 9,962 |
| | $ | 10,278 |
| | $ | 10,272 |
| | $ | 8,602 |
|
Average assets | | $ | 54,734 |
| | $ | 54,700 |
| | $ | 56,808 |
| | $ | 59,045 |
| | $ | 57,059 |
| | $ | 67,240 |
| | $ | 77,284 |
| | $ | 71,359 |
| | $ | 52,416 |
|
| | | | | | | | | | | | | | | | | | |
(a) In the first quarter of 2014, prior periods were restated to reflect the retrospective application of adopting new accounting guidance related to our investments in qualified affordable housing projects (ASU 2014-01). |
THE BANK OF NEW YORK MELLON CORPORATION
BUSINESSES
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Investment Management | | Investment Services | | Other | | Consolidated Results | |
(dollar amounts in millions unless otherwise noted) | | 2014 | | 2013 | | 2012 | | 2014 | | 2013 | | 2012 | | 2014 | | 2013 | | 2012 | | 2014 | | 2013 | | 2012 | |
Revenue: | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Investment services fees | | | | | | | | | | | | | | | | | | | | | | | | | |
Asset servicing | | $ | 106 |
| | $ | 104 |
| | $ | 117 |
| | $ | 3,968 |
| | $ | 3,800 |
| | $ | 3,663 |
| | $ | 1 |
| | $ | 1 |
| | $ | — |
| | $ | 4,075 |
| | $ | 3,905 |
| | $ | 3,780 |
| |
Issuer services | | — |
| | — |
| | — |
| | 966 |
| | 1,087 |
| | 1,049 |
| | 2 |
| | 3 |
| | 3 |
| | 968 |
| | 1,090 |
| | 1,052 |
| |
Clearing services | | — |
| | — |
| | — |
| | 1,329 |
| | 1,258 |
| | 1,183 |
| | 6 |
| | 6 |
| | 10 |
| | 1,335 |
| | 1,264 |
| | 1,193 |
| |
Treasury services | | 9 |
| | 2 |
| | 2 |
| | 555 |
| | 544 |
| | 527 |
| | — |
| | 8 |
| | 20 |
| | 564 |
| | 554 |
| | 549 |
| |
Total investment services fees | | 115 |
| | 106 |
| | 119 |
| | 6,818 |
| | 6,689 |
| | 6,422 |
| | 9 |
| | 18 |
| | 33 |
| | 6,942 |
| | 6,813 |
| | 6,574 |
| |
Investment management fees | | 3,369 |
| | 3,255 |
| | 3,016 |
| | 74 |
| | 63 |
| | 66 |
| | — |
| | 27 |
| | 37 |
| | 3,443 |
| | 3,345 |
| | 3,119 |
| |
Performance fees | | 115 |
| | 130 |
| | 137 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (1 | ) | | 115 |
| | 130 |
| | 136 |
| |
Foreign exchange and other trading revenue | | (23 | ) | | 8 |
| | 9 |
| | 627 |
| | 693 |
| | 628 |
| | (34 | ) | | (27 | ) | | 55 |
| | 570 |
| | 674 |
| | 692 |
| |
Distribution and servicing | | 162 |
| | 172 |
| | 187 |
| | 11 |
| | 8 |
| | 5 |
| | — |
| | — |
| | — |
| | 173 |
| | 180 |
| | 192 |
| |
Financing-related fees | | 1 |
| | 5 |
| | 6 |
| | 50 |
| | 44 |
| | 42 |
| | 118 |
| | 123 |
| | 124 |
| | 169 |
| | 172 |
| | 172 |
| |
Investment and other income | | (7 | ) | | (14 | ) | | (9 | ) | | 139 |
| | 142 |
| | 171 |
| | 1,093 |
| (a) | 376 |
| (a) | 352 |
| (a) | 1,225 |
| (a) | 504 |
| (a) | 514 |
| (a) |
Total fee revenue | | 3,732 |
| | 3,662 |
| | 3,465 |
| | 7,719 |
| | 7,639 |
| | 7,334 |
| | 1,186 |
| (a) | 517 |
| (a) | 600 |
| (a) | 12,637 |
| (a)(b) | 11,818 |
| (a)(b) | 11,399 |
| (a)(b) |
Net securities gains (losses) | | 1 |
| | 6 |
| | (1 | ) | | — |
| | 1 |
| | 11 |
| | 90 |
| | 134 |
| | 152 |
| | 91 |
| | 141 |
| | 162 |
| |
Total fee and other revenue | | 3,733 |
| | 3,668 |
| | 3,464 |
| | 7,719 |
| | 7,640 |
| | 7,345 |
| | 1,276 |
| (a) | 651 |
| (a) | 752 |
| (a) | 12,728 |
| (a)(b) | 11,959 |
| (a)(b) | 11,561 |
| (a)(b) |
Net interest revenue (expense) | | 274 |
| | 260 |
| | 214 |
| | 2,340 |
| | 2,515 |
| | 2,439 |
| | 266 |
| | 234 |
| | 320 |
| | 2,880 |
| | 3,009 |
| | 2,973 |
| |
Total revenue | | 4,007 |
| | 3,928 |
| | 3,678 |
| | 10,059 |
| | 10,155 |
| | 9,784 |
| | 1,542 |
| (a) | 885 |
| (a) | 1,072 |
| (a) | 15,608 |
| (a) | 14,968 |
| (a) | 14,534 |
| (a) |
Provision for credit losses | | — |
| | — |
| | — |
| | — |
| | 1 |
| | (3 | ) | | (48 | ) | | (36 | ) | | (77 | ) | | (48 | ) | | (35 | ) | | (80 | ) | |
Noninterest expenses (ex. intangible amortization) | | 2,983 |
| | 2,812 |
| | 2,590 |
| | 7,949 |
| | 7,208 |
| | 7,368 |
| | 947 |
| | 944 |
| | 991 |
| | 11,879 |
| | 10,964 |
| | 10,949 |
| |
Income (loss) before taxes (ex. intangible amortization) | | 1,024 |
| | 1,116 |
| | 1,088 |
| | 2,110 |
| | 2,946 |
| | 2,419 |
| | 643 |
| (a) | (23 | ) | (a) | 158 |
| (a) | 3,777 |
| (a)(b) | 4,039 |
| (a)(b) | 3,665 |
| (a)(b) |
Amortization of intangible assets | | 123 |
| | 148 |
| | 192 |
| | 175 |
| | 194 |
| | 192 |
| | — |
| | — |
| | — |
| | 298 |
| | 342 |
| | 384 |
| |
Income (loss) before taxes and noncontrolling interest | | $ | 901 |
| | $ | 968 |
| | $ | 896 |
| | $ | 1,935 |
| | $ | 2,752 |
| | $ | 2,227 |
| | $ | 643 |
| (a) | $ | (23 | ) | (a) | $ | 158 |
| (a) | $ | 3,479 |
| (a)(b) | $ | 3,697 |
| (a)(b) | $ | 3,281 |
| (a)(b) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Average loans | | $ | 10,589 |
| | $ | 9,361 |
| | $ | 7,950 |
| | $ | 33,466 |
| | $ | 28,407 |
| | $ | 25,503 |
| | $ | 10,155 |
| | $ | 10,548 |
| | $ | 9,607 |
| | $ | 54,210 |
| | $ | 48,316 |
| | $ | 43,060 |
| |
Average assets | | $ | 37,783 |
| | $ | 38,546 |
| | $ | 36,120 |
| | $ | 266,483 |
| | $ | 247,430 |
| | $ | 223,233 |
| | $ | 68,300 |
| | $ | 56,335 |
| | $ | 56,028 |
| | $ | 372,566 |
| | $ | 342,311 |
| | $ | 315,381 |
| |
Average deposits | | $ | 14,156 |
| | $ | 13,755 |
| | $ | 11,311 |
| | $ | 221,453 |
| | $ | 206,793 |
| | $ | 185,441 |
| | $ | 6,930 |
| | $ | 5,148 |
| | $ | 7,458 |
| | $ | 242,539 |
| | $ | 225,696 |
| | $ | 204,210 |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Assets under management at period-end (in billions) (c) | | $ | 1,710 |
| | $ | 1,583 |
| | $ | 1,380 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 1,710 |
| | $ | 1,583 |
| | $ | 1,380 |
| |
Assets under custody and/or administration at period-end (in trillions) (d) | | $ | — |
| | $ | — |
| | $ | — |
| | $ | 28.5 |
| | $ | 27.6 |
| | $ | 26.3 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 28.5 |
| | $ | 27.6 |
| | $ | 26.3 |
| |
Market value of securities on loan at period-end (in billions) (e) | | $ | — |
| | $ | — |
| | $ | — |
| | $ | 289 |
| | $ | 235 |
| | $ | 237 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 289 |
| | $ | 235 |
| | $ | 237 |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Pre-tax operating margin - GAAP | | 22 | % | | 25 | % | | 24 | % | | 19 | % | | 27 | % | | 23 | % | | N/M |
| | N/M |
| | N/M |
| | 22 | % | | 25 | % | | 23 | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Memo: | | | | | | | | | | | | | | | | | | | | | | | | | |
Securities Lending Revenue | |
| |
| |
| |
| |
| |
| |
| |
| |
| | $ | 158 |
| | $ | 155 |
| | $ | 198 |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | |
|
(a) In the first quarter of 2014, prior periods were restated to reflect the retrospective application of adopting new accounting guidance related to our investments in qualified affordable housing projects (ASU 2014-01). |
(b) Total fee and other revenue and income before taxes for the years 2012, 2013 and 2014 includes income from consolidated investment management funds of $189 million, $183 million and $163 million, respectively, net of income attributable to noncontrolling interests of $76 million, $80 million and $84 million respectively. The net of these income statement line items of $113 million, $103 million and $79 million, respectively, are included above in fee and other revenue. |
(c) Excludes securities lending cash management assets and assets managed in the Investment Services business. Also excludes assets under management related to Newton's private client business that was sold in September 2013. |
(d) Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.1 trillion at Dec. 31, 2012, $1.2 trillion at Dec. 31, 2013 and $1.1 trillion at Dec. 31, 2014. |
(e) Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent, beginning in the fourth quarter of 2013, on behalf of CIBC Mellon clients, which totaled $62 billion at Dec. 31, 2013 and $65 billion at Dec. 31, 2014. |
Note: See pages 9 through 11 for businesses results. |
N/M - Not meaningful |
THE BANK OF NEW YORK MELLON CORPORATION
NONPERFORMING ASSETS - 9 Quarter Trend
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2013 | | 2014 | | 2015 |
(dollar amounts in millions) | | Mar 31 | | Jun 30 | | Sep 30 | | Dec 31 | | Mar 31 | | Jun 30 | | Sep 30 | | Dec 31 | | Mar 31 |
| | | | | | | | | | | | | | | | | | |
Nonperforming loans: | | | | | | | | | | | | | | | | | | |
Other residential mortgages | | $ | 148 |
| | $ | 135 |
| | $ | 128 |
| | $ | 117 |
| | $ | 107 |
| | $ | 105 |
| | $ | 113 |
| | $ | 112 |
| | $ | 111 |
|
Wealth management loans and mortgages | | 30 |
| | 13 |
| | 12 |
| | 11 |
| | 12 |
| | 12 |
| | 13 |
| | 12 |
| | 12 |
|
Commercial real estate | | 17 |
| | 18 |
| | 4 |
| | 4 |
| | 4 |
| | 4 |
| | 4 |
| | 1 |
| | 1 |
|
Commercial | | 24 |
| | 24 |
| | 15 |
| | 15 |
| | 13 |
| | 13 |
| | 13 |
| | — |
| | — |
|
Foreign | | 9 |
| | 9 |
| | 9 |
| | 6 |
| | 7 |
| | 4 |
| | — |
| | — |
| | — |
|
Financial institutions | | 3 |
| | 2 |
| | 1 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | | | | | | |
|
Total nonperforming loans | | 231 |
| | 201 |
| | 169 |
| | 153 |
| | 143 |
| | 138 |
| | 143 |
| | 125 |
| | 124 |
|
Other assets owned | | 3 |
| | 3 |
| | 3 |
| | 3 |
| | 3 |
| | 4 |
| | 4 |
| | 3 |
| | 4 |
|
| | | | | | | | | | | | | | | | | |
|
Total nonperforming assets (a) | | $ | 234 |
| | $ | 204 |
| | $ | 172 |
| | $ | 156 |
| | $ | 146 |
| | $ | 142 |
| | $ | 147 |
| | $ | 128 |
| | $ | 128 |
|
| | | | | | | | | | | | | | | | | |
|
Nonperforming assets ratio | | 0.48 | % | | 0.41 | % | | 0.34 | % | | 0.30 | % | | 0.27 | % | | 0.24 | % | | 0.26 | % | | 0.22 | % | | 0.21 | % |
Nonperforming assets ratio excluding margin loans | | 0.65 | % | | 0.57 | % | | 0.49 | % | | 0.43 | % | | 0.39 | % | | 0.34 | % | | 0.37 | % | | 0.33 | % | | 0.30 | % |
| | | | | | | | | | | | | | | | | |
|
Allowance for loan losses/nonperforming loans | | 102.6 |
| | 105.5 |
| | 121.9 |
| | 137.3 |
| | 138.5 |
| | 135.5 |
| | 133.6 |
| | 152.8 |
| | 153.2 |
|
Allowance for loan losses/nonperforming assets | | 101.3 |
| | 103.9 |
| | 119.8 |
| | 134.6 |
| | 135.6 |
| | 131.7 |
| | 129.9 |
| | 149.2 |
| | 148.4 |
|
Total allowance for credit losses/nonperforming loans | | 155.0 |
| | 167.7 |
| | 200.6 |
| | 224.8 |
| | 228.0 |
| | 225.4 |
| | 201.4 |
| | 224.0 |
| | 228.2 |
|
Total allowance for credit losses/nonperforming assets | | 153.0 |
| | 165.2 |
| | 197.1 |
| | 220.5 |
| | 221.8 |
| | 219.0 |
| | 195.9 |
| | 218.8 |
| | 221.1 |
|
| | | | | | | | | | | | | | | | | | |
(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 for the 1st through 4th quarters of 2013 of $161 million, $44 million, $31 million, and $16 million, respectively, for the 1st through 4th quarters of 2014 of $74 million, $68 million, $79 million, and $53 million, respectively, and for the 1st quarter of 2015 of $73 million. These loans are recorded at fair value and therefore do not impact the provision for credit losses and allowance for loan losses, and accordingly are excluded from the nonperforming assets table above.
|
THE BANK OF NEW YORK MELLON CORPORATION
ALLOWANCE FOR CREDIT LOSSES, PROVISION AND NET CHARGE-OFFS - 9 Quarter Trend
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2013 | | 2014 | | 2015 |
(dollar amounts in millions) | | Mar 31 | | Jun 30 | | Sep 30 | | Dec 31 | | Mar 31 | | Jun 30 | | Sep 30 | | Dec 31 | | Mar 31 |
| | | | | | | | | | | | | | | | | | |
Allowance for credit losses: | | | | | | | | | | | | | | | | | | |
Allowance for credit losses | | $ | 266 |
| | $ | 237 |
| | $ | 212 |
| | $ | 206 |
| | $ | 210 |
| | $ | 198 |
| | $ | 187 |
| | $ | 191 |
| | $ | 191 |
|
Allowance for lending-related commitments | | 121 |
| | 121 |
| | 125 |
| | 133 |
| | 134 |
| | 128 |
| | 124 |
| | 97 |
| | 89 |
|
Allowance for credit losses - beginning of period | | 387 |
| | 358 |
| | 337 |
| | 339 |
| | 344 |
| | 326 |
| | 311 |
| | 288 |
| | 280 |
|
| | | | | | | | | | | | | | | | | | |
Net (charge-offs) | | | | | | | | | | | | | | | | | | |
Charge-offs | | (5 | ) | | (3 | ) | | (2 | ) | | (6 | ) | | (1 | ) | | (4 | ) | | (5 | ) | | (10 | ) | | — |
|
Recoveries | | — |
| | 1 |
| | 2 |
| | 5 |
| | 1 |
| | 1 |
| | 1 |
| | 1 |
| | 1 |
|
Total Net (charge-offs) | | (5 | ) | | (2 | ) | | — |
| | (1 | ) | | — |
| | (3 | ) | | (4 | ) | | (9 | ) | | 1 |
|
| | | | | | | | | | | | | | | | | | |
Provision for credit losses | | (24 | ) | | (19 | ) | | 2 |
| | 6 |
| | (18 | ) | | (12 | ) | | (19 | ) | | 1 |
| | 2 |
|
| | | | | | | | | | | | | | | | | | |
Allowance for credit losses - end of period | | 358 |
| | 337 |
| | 339 |
| | 344 |
| | 326 |
| | 311 |
| | 288 |
| | 280 |
| | 283 |
|
Allowance for loan losses | | | | | | | | | | | | | | | | | | |
Allowance for loan losses | | $ | 237 |
| | $ | 212 |
| | $ | 206 |
| | $ | 210 |
| | $ | 198 |
| | $ | 187 |
| | $ | 191 |
| | $ | 191 |
| | $ | 190 |
|
Allowance for lending-related commitments | | 121 |
| | 125 |
| | 133 |
| | 134 |
| | 128 |
| | 124 |
| | 97 |
| | 89 |
| | 93 |
|
Allowance for credit losses - end of period | | 358 |
| | 337 |
| | 339 |
| | 344 |
| | 326 |
| | 311 |
| | 288 |
| | 280 |
| | 283 |
|
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Allowance for loan losses as a percentage of total loans | | 0.48 | % | | 0.42 | % | | 0.41 | % | | 0.41 | % | | 0.37 | % | | 0.32 | % | | 0.33 | % | | 0.32 | % | | 0.31 | % |
April 22, 2015
KEY FACTS – First Quarter 2015
Delivering for Shareholders
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| | | |
Total Shareholder Return | 2013 | 2014 | YTD 3/31/15 |
BNY Mellon | 38.6% | 18.3% | (0.4)% |
11-Member Peer Group Median (a) | 38.9% | 13.8% | (2.3)% |
S&P 500 Financials | 35.6% | 15.2% | (2.1)% |
S&P 500 Index | 32.4% | 13.7% | 1.0% |
|
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Strategic Priorities to Drive Growth |
Driving Revenue Growth | • Leveraging expertise and scale • Delivering innovative strategic solutions to clients |
Business Improvement Process | • Reducing structural expense • Positive operating leverage |
Being a Strong, Safe, Trusted Counterparty | • Strong capital position • Excellent credit ratings • Well positioned in stress scenarios |
Generating Excess Capital and Deploying Capital Effectively | • Balance sheet strength • Returning value to shareholders |
Attracting and Retaining Top Talent | • Enhanced leadership team • Added expertise to board of directors |
Positive Growth Trends
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• | Total revenue in 1Q15 increased 4% year-over-year, as adjusted (b) |
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• | Continued fee income growth |
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◦ | Investment Management and performance fees increased 1% year-over-year, or 6% on a constant currency basis, as adjusted (b) |
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◦ | Investment Services fees increased 3% year-over-year |
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• | Combination of Investment Management and Investment Services positions us well for future growth |
Expense Control and Significant Positive Operating Leverage
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• | Continued progress on expense control in 1Q15 |
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◦ | Expenses in 1Q15 decreased 2% year-over-year, as adjusted (b) |
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• | Generated over 500 basis points of positive operating leverage, as adjusted (b) |
Continued AUM and AUC/A Growth
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• | AUM up 7% in 1Q15 versus 1Q14 |
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◦ | $16 billion of net long-term AUM inflows in 1Q15 |
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• | AUC/A up 2% in 1Q15 versus 1Q14 |
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◦ | $131 billion of estimated new business wins in 1Q15 |
Managing Technology as a Strategic Asset
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• | Optimizing our infrastructure to create efficiencies and cost savings |
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• | Insourcing application development to retain talent and expertise |
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• | Shifting our investments from tactical to strategic, enhancing client experience |
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• | Digitizing BNY Mellon: BNY Mellon Extreme Platform (BXP); Digital Pulse |
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• | Extending technology solutions leadership: Eagle, Albridge, HedgeMark, NetX360 |
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• | Deploying NEXEN: Our next generation, intelligent and secure, open-architecture platform |
Initiatives to Streamline Organization and Drive Growth
|
| |
Revenue initiatives | Expense Initiatives |
o Created the Markets Group | o Resolved substantially all FX litigation |
o Created direct lending capability through investment management | o Sold One Wall Street Headquarters |
o Built separately managed accounts platform in Asia | o Sold Corporate Trust (Japan & Mexico) |
o Created dedicated technology solutions unit to increase return on technology investment | o Exited Transition Management and derivatives clearing (U.S. & Europe) |
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• | Numerous ongoing initiatives focused on: Portfolio Review; Operations and Technology Enhancements; Real Estate & Procurement; and Process Improvement |
Continued Strong Capital Position and Returning Value to Shareholders
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• | Strong capital and liquidity position |
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• | Key capital ratios continue to be strong, ending 1Q15 with an estimated common equity tier 1 ratio, fully phased-in (Non-GAAP) under the Advanced Approach of 9.2% (b) |
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• | Compliant with estimated U.S. LCR1: >100% (current requirement is 80%) |
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• | 2015 Capital Plan: repurchase up to $3.1 billion in common stock2 and maintain strong dividend payout ratio |
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◦ | Repurchased 10.3 million common shares for $400 million in 1Q15 and 56.5 million common shares for $2.1 billion over the last five quarters, ending 1Q15 |
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• | Delivered return on tangible common equity of 20% in 1Q15 (b) |
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• | Post financial crisis, our capital generation enabled us to more than double tangible capital |
Financial Goals3 -- Operating Basis: 2015 Through 2017
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| | |
| Flat | Normalizing |
Revenue Growth4 | 3.5 - 4.5% | 6 - 8% |
EPS Growth4 | 7 - 9% | 12 - 15% |
Return on Tangible Common Equity | 17 - 19% | 20 - 22% |
Assumptions | • NIM: 95 - 100 bps • Operating margin: 28 - 30% • Environment: no deterioration in volatility, volume, short-term interest rates | • NIM: 125 - 150 bps • Operating margin: 30 - 32% |
| 100% payout ratio Execution on expense and revenue initiatives Equity market, +5% p.a. Reasonable regulatory outcomes Deposits, money market balances and fee waivers recovery as modeled |
AUM = Assets Under Management; AUC/A = Assets Under Custody/Administration
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(a) | For information about our 11-Member Peer Group, see page 46 of our Proxy Statement dated |
March 13, 2015.
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(b) | This fact sheet includes Non-GAAP measures. These measures are used by management to monitor financial performance and capital adequacy and BNY Mellon believes they are useful to investors in analyzing financial results and trends of ongoing operations because they permit a focus on period-to-period comparisons, which relate to the ability of BNY Mellon to enhance revenue and limit expenses in circumstances where such matters are within BNY Mellon's control. For a reconciliation of these measures and further information, see “Supplemental information – Explanation of GAAP and Non-GAAP Financial Measures” in BNY Mellon’s Quarterly Earnings Release dated April 22, 2015, filed as an exhibit to the Current Report on Form 8-K to which this fact sheet is furnished as an exhibit. |
1 Estimated U.S. Liquidity Coverage Ratio (LCR) is compliant with the fully-phased in requirements as
of March 31, 2015 based on our current understanding of the U.S. LCR rules.
2 Common stock repurchases of $700 million are contingent on prior issuance of $1 billion of qualifying
preferred stock.
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3 | Additional information regarding Financial Goals is available in the company’s 2014 Investor Day presentation available at www.bnymellon.com/investorrelations. |
4 Represents compound annual growth rates (CAGR).
NOTE: Normalizing environment represents market consensus on rates; Flat environment assumes no rate increase from present. Financial projections are reflected on a non-GAAP basis - excludes merger and integration, restructuring and litigation expenses, and other non-recurring items. Additional disclosure regarding non-GAAP measures is available in the Corporation’s reports filed with the SEC, available at www.bnymellon.com/investorrelations. Actual results may vary materially.
This fact sheet may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our estimated capital ratios, preliminary business metrics and our strategic priorities, technology, streamlining initiatives, capital plans and financial goals. These statements, which may be expressed in a variety of ways, include the use of future or present tense language. These statements and other forward-looking statements contained in other public disclosures of BNY Mellon, are based upon current beliefs and expectations and are subject to significant risks and uncertainties (some of which are beyond BNY Mellon’s control). Factors that could cause BNY Mellon’s results to differ materially from those described in the forward-looking statements can be found in the risk factors set forth in BNY Mellon’s Annual Report on Form 10-K for the year ended Dec. 31, 2014 and its other filings with the Securities and Exchange Commission. All forward-looking statements in this fact sheet 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.
Additional information about BNY Mellon is available in our annual report on Form 10-K, proxy statement, quarterly reports on Form 10-Q and our current reports on Form 8-K filed with the SEC, available at www.sec.gov.
BNY Mellon First Quarter 2015 Financial Highlights April 22, 2015
2 First Quarter 2015 – Financial Highlights Cautionary Statement A number of statements in our presentations, the accompanying slides and the responses to your questions are “forward-looking statements.” 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 relate to, among other things, The Bank of New York Mellon Corporation’s (the “Corporation”) expectations regarding: our capital plans, estimated capital ratios and expectations regarding those ratios; preliminary business metrics; and statements regarding the Corporation's aspirations, as well as the Corporation’s overall plans, strategies, goals, objectives, expectations, estimates, intentions, targets, opportunities and initiatives. These forward-looking statements are based on assumptions that involve risks and uncertainties and that are subject to change based on various important factors (some of which are beyond the Corporation’s control). Actual results may differ materially from those expressed or implied as a result of the factors described under “Forward Looking Statements” and “Risk Factors” in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2014 (the “2014 Annual Report”), and in other filings of the Corporation with the Securities and Exchange Commission (the “SEC”). Such forward-looking statements speak only as of April 22, 2015, and the Corporation undertakes no obligation to update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events. Non-GAAP Measures: In this presentation we may discuss some non-GAAP measures in detailing the Corporation’s performance, which exclude certain items or otherwise include components that differ from GAAP. We believe these measures are useful to the investment community in analyzing the financial results and trends of ongoing operations. We believe they facilitate comparisons with prior periods and reflect the principal basis on which our management monitors financial performance. Additional disclosures relating to non-GAAP adjusted measures are contained in the Corporation’s reports filed with the SEC, including the 2014 Annual Report and the Corporation's Earnings Release for the quarter ended March 31, 2015, included as an exhibit to our Current Report on Form 8-K filed on April 22, 2015 (the “Earnings Release”), available at www.bnymellon.com/investorrelations.
3 First Quarter 2015 – Financial Highlights First Quarter 2015 Financial Highlights • Earnings per common share of $0.67 • Earnings per common share +18% year-over-year • Total revenue +6% year-over-year; +4% year-over-year on an adjusted basis1 • Total expense (1%) year-over-year, (23%) sequentially • (2%) year-over-year; (1%) sequentially on an adjusted basis1 • Generated over 500 bps of positive operating leverage year-over-year on an adjusted basis1 • Executing on capital plan and return of value to common shareholders • Return on tangible common equity1 of 20%; 20% on an adjusted basis • Repurchased 10.3 million common shares for $400 million in 1Q15 and 56.5 million common shares for $2.1 billion over the last five quarters, ending 1Q15; declared common stock dividend of $0.17 per share • As previously announced, Board of Directors approved the repurchase of up to $3.1 billion of common stock through 2Q162 1 Represents a Non-GAAP measure. See Appendix for reconciliations. Additional disclosures regarding these measures and other Non-GAAP adjusted measures are available in the Corporation’s reports filed with the SEC, available at www.bnymellon.com/investorrelations. 2 $700 million of this amount is contingent on prior issuance of $1 billion of qualifying preferred stock.
4 First Quarter 2015 – Financial Highlights First Quarter 2015 Key Performance Drivers • Earnings per common share of $0.67, +18%, driven by foreign exchange and other trading revenue and expense control • Investment management and performance fees +1%, or +6% on a constant currency basis (Non-GAAP)1, driven by higher equity market values, the impact of the Cutwater Asset Management acquisition and strategic initiatives, partially offset by lower performance fees • Investment services fees +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 • Market-sensitive revenue driven by volume and volatility • Foreign Exchange +67% driven by higher volumes and volatility, as well as higher Depositary Receipts-related activity • Securities Lending +13% driven by volume • Net interest revenue unchanged reflecting a larger balance sheet and lower asset yields • Provision for credit losses was $2 million in 1Q15 versus a credit of $18 million in 1Q14 • Noninterest expense1 (2%) 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% in 1Q15; includes a 2.0% benefit related to the tax impact of consolidated investment management funds 1 Represents a Non-GAAP measure. See Appendix for reconciliations. Additional disclosures regarding these measures and other Non-GAAP adjusted measures are available in the Corporation’s reports filed with the SEC, available at www.bnymellon.com/investorrelations. Note: All comparisons are 1Q15 vs. 1Q14 unless otherwise stated.
5 First Quarter 2015 – Financial Highlights Summary Financial Results for First Quarter 2015 Growth vs. $ in millions, except per share data 1Q15 4Q14 1Q14 1Q14 4Q14 Revenue $ 3,851 $ 3,689 $ 3,647 6 % 4 % Expenses $ 2,700 $ 3,524 $ 2,739 (1 )% (23 )% Income before income taxes $ 1,149 $ 164 $ 926 24 % N/M Pre-tax operating margin 30 % 4 % 25 % EPS $ 0.67 $ 0.18 $ 0.57 18 % N/M Return on Tangible Common Equity1 20.3 % 5.9 % 17.6 % 1 Represents a Non-GAAP measure. See Appendix for reconciliation. Additional disclosures regarding this measure and other Non-GAAP adjusted measures are available in the Corporation’s reports filed with the SEC, available at www.bnymellon.com/investorrelations. Note: Provision for credit losses was $2 million in 1Q15 versus a credit of $18 million in 1Q14 and a provision of $1 million in 4Q14. N/M - not meaningful
6 First Quarter 2015 – Financial Highlights Summary Financial Results for First Quarter 2015 (Non-GAAP)1 Growth vs. $ in millions, except per share data 1Q15 4Q14 1Q14 1Q14 4Q14 Revenue $ 3,761 $ 3,665 $ 3,627 4% 3 % Expenses $ 2,637 $ 2,651 $ 2,681 (2)% (1 )% Operating leverage 533 bps 315 bps Income before income taxes $ 1,122 $ 1,013 $ 964 16 % 11 % Pre-tax operating margin 30 % 28 % 27 % EPS $ 0.67 $ 0.58 $ 0.57 18 % 16 % Return on Tangible Common Equity 20.2 % 16.3 % 17.3 % 1 Represent Non-GAAP measures. See Appendix for reconciliations. Additional disclosures regarding these measures and other Non-GAAP adjusted measures are available in the Corporation’s reports filed with the SEC, available at www.bnymellon.com/investorrelations. bps - basis points
7 First Quarter 2015 – Financial Highlights Investment Management Metrics Change in Assets Under Management (AUM)1 $ in billions 1Q15 LTM 1Q15 Beginning balance of AUM $1,710 $1,620 Net inflows (outflows): Long-Term: Equity (6 ) (16 ) Fixed income 4 7 Index 8 13 Liability-driven investments2 8 33 Alternative investments 2 6 Total long-term inflows 16 43 Short-term: Cash 1 7 Total net inflows 17 50 Net market/currency impact/acquisition 14 71 Ending balance of AUM3 $1,741 $1,741 Wealth Management Growth vs. $ in millions 1Q15 1Q14 4Q14 Average loans $ 11,634 15 % 5 % Average deposits $ 15,218 3 % 4 % 1 Excludes securities lending cash management assets and assets managed in the Investment Services business. 2 Includes currency and overlay assets under management. 3 Preliminary.
8 First Quarter 2015 – Financial Highlights Investment Management . Growth vs. Drivers ($ in millions) 1Q15 1Q14 4Q14 Investment management and performance fees $ 850 1 % (4 )% Investment management fees YoY: +7% on a constant currency basis (Non-GAAP)3, driven by higher equity market values, the impact of the Cutwater acquisition and strategic initiatives QoQ: Fewer days in 1Q15 and unfavorable impact of stronger U.S. dollar, partially offset by the impact of the Cutwater acquisition Performance fees YoY: ($5MM) QoQ: ($29MM) Seasonality Other revenue YoY: $31MM: Higher seed capital gains QoQ: $40MM: Higher seed capital gains and reduced losses on hedging activities within a boutique Net interest revenue Higher loan and deposit levels Noninterest expense YoY: Higher compensation and purchased services expenses resulting from the Cutwater acquisition and investments in strategic initiatives and higher incentive expense, partially offset by favorable impact of stronger U.S. dollar QoQ: Lower litigation, legal and distribution and servicing expenses and favorable impact of stronger U.S. dollar, partially offset by higher incentive expense and the impact of the Cutwater acquisition Distribution and servicing 39 (3 ) (3 ) Other1 47 N/M N/M Net interest revenue 74 6 7 Total Revenue $ 1,010 4 % 1 % Noninterest expense (ex. amortization of intangible assets and (recovery) related to investment management funds, net of incentives) $ 721 3 % (1 )% Income before taxes (ex. amortization of intangible assets and (recovery) related to investment management funds, net of incentives) $ 289 6 % 7 % Amortization of intangible assets 25 (19 ) (17 ) (Recovery) related to investment management funds, net of incentives — N/M N/M Income before taxes $ 264 7 % 10 % Pre-tax operating margin 26 % 71 bps 212 bps Adjusted pre-tax operating margin2,3 34 % (12) bps 157 bps 1 Total fee and other revenue includes the impact of the consolidated investment management funds, net of noncontrolling interests. Additionally, other revenue includes asset servicing, treasury services, foreign exchange and other trading revenue and investment and other income. 2 Excludes the net negative impact of money market fee waivers, amortization of intangible assets and the charge (recovery) related to investment management funds, net of incentives, and is net of distribution and servicing expense. 3 Represents a Non-GAAP measure. See Appendix for reconciliations. Additional disclosures regarding these measures and other Non-GAAP adjusted measures are available in the Corporation’s reports filed with the SEC, available at www.bnymellon.com/investorrelations. N/M - not meaningful bps – basis points
9 First Quarter 2015 – Financial Highlights Investment Services Metrics Growth vs. 1Q15 1Q14 4Q14 Assets under custody and/or administration at period end (trillions)1,2 $ 28.5 2 % — % Market value of securities on loan at period end (billions)3 $ 291 10 % 1 % Average loans (millions) $ 37,699 20 % 6 % Average deposits (millions) $ 234,183 9 % 3 % Broker-Dealer Average tri-party repo balances (billions) $ 2,153 9 % 2 % Clearing Services Global DARTS volume (thousands) 261 13 % 8 % Average active clearing accounts (U.S. platform) (thousands) 5,979 5 % 1 % Average long-term mutual fund assets (U.S. platform) (millions) $ 456,954 10 % 1 % Depositary Receipts Number of sponsored programs 1,258 (6 )% (2 )% 1 Includes the AUC/A of CIBC Mellon of $1.2 trillion at March 31, 2014, $1.1 trillion at Dec. 31, 2014 and $1.1 trillion at March 31, 2015. 2 Preliminary. 3 Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $66 billion at March 31, 2014, $65 billion at Dec. 31, 2014 and $69 billion at March 31, 2015.
10 First Quarter 2015 – Financial Highlights Investment Services Growth vs. Drivers ($ in millions) 1Q15 1Q14 4Q14 Investment services fees: Asset Servicing YoY: Net new business, largely driven by Global Collateral Services and securities lending, and market values, partially offset by unfavorable impact of stronger U.S. dollar QoQ: Higher client expense reimbursements, securities lending revenue and Global Collateral Services fees, partially offset by unfavorable impact of stronger U.S. dollar Clearing Services YoY: Higher mutual fund and asset-based fees and higher clearance revenue driven by higher DARTS volume QoQ: Fewer trading days in 1Q15 Issuer Services YoY: Higher corporate actions in Depositary Receipts, partially offset by unfavorable impact of stronger U.S. dollar QoQ: Higher corporate actions in Depositary Receipts and higher Corporate Trust fees, partially offset by unfavorable impact of stronger U.S. dollar Treasury Services QoQ: Seasonally lower payment volumes Foreign exchange and other trading Higher volume and volatility, as well as higher Depositary Receipts-related activity Net interest revenue YoY: Higher average loans and deposits QoQ: Higher average loans and deposits and higher internal crediting rates for deposits Noninterest expense YoY: Higher incentive expense and the impact of the new EU Single Resolution Fund, partially offset by lower compensation expense and favorable impact of stronger U.S. dollar QoQ: Lower litigation and professional, legal and other purchased services expenses, lower compensation expense and favorable impact of stronger U.S. dollar, partially offset by higher incentive expense and the impact of the new EU Single Resolution Fund Asset servicing $ 1,013 3 % 2 % Clearing services 342 6 (1 ) Issuer services 231 1 20 Treasury services 135 1 (5 ) Total investment services fees 1,721 3 3 Foreign exchange and other trading revenue 209 32 27 Other1 63 7 (9 ) Net interest revenue 600 2 5 Total revenue $ 2,593 5 % 5 % Noninterest expense (ex. amortization of intangible assets) $ 1,797 1 % (28 )% Income before taxes (ex. amortization of intangible assets) $ 796 14 % N/M Amortization of intangible assets 41 (7 ) (5 ) Income before taxes $ 755 15 % N/M Pre-tax operating margin 29 % 266 bps N/M Pre-tax operating margin (ex. amortization of intangible assets) 31 % 247 bps N/M Investment services fees as a percentage of noninterest expense2 96 % 250 bps 338 bps 1 Total fee and other revenue includes investment management fees and distribution and servicing revenue. 2 Noninterest expense excludes amortization of intangible assets and litigation expense. N/M - not meaningful bps – basis points
11 First Quarter 2015 – Financial Highlights Fee and Other Revenue Growth vs. Drivers ($ in millions) 1Q15 1Q14 4Q14 Asset servicing1 $ 1,038 3 % 2 % Asset Servicing YoY: Net new business, largely driven by Global Collateral Services and securities lending, and market values, partially offset by unfavorable impact of stronger U.S. dollar QoQ: Higher client expense reimbursements, securities lending revenue, and Global Collateral Services fees, partially offset by unfavorable impact of stronger U.S. dollar Clearing Services YoY: Higher mutual fund and asset-based fees and higher clearance revenue driven by higher DARTS volume QoQ: Fewer trading days in 1Q15 Issuer Services YoY: Higher corporate actions in Depositary Receipts, partially offset by unfavorable impact of stronger U.S. dollar QoQ: Higher corporate actions in Depositary Receipts and higher Corporate Trust fees, partially offset by unfavorable impact of stronger U.S. dollar Treasury Services QoQ: Seasonally lower payment volumes Investment Management and Performance Fees YoY: +6% on a constant currency basis (Non-GAAP)2, driven by higher equity market values, the impact of the Cutwater acquisition and strategic initiatives, partially offset by lower performance fees QoQ: Seasonally lower performance fees, fewer days in 1Q15 and unfavorable impact of stronger U.S. dollar, partially offset by the impact of the Cutwater acquisition Foreign Exchange & Other Trading Revenue YoY: Higher volumes and volatility, higher Depositary Receipts-related activity and higher fixed income trading revenue QoQ: Higher volumes and volatility, higher Depositary Receipts-related activity, higher fixed income trading revenue and reduced losses on hedging activities within an Investment Management boutique Clearing services 344 6 (1 ) Issuer services 232 1 20 Treasury services 137 1 (6 ) Total investment services fees 1,751 3 3 Investment management and performance fees 854 1 (4 ) Foreign exchange and other trading revenue 229 68 52 Distribution and servicing 41 (5 ) (5 ) Financing-related fees 40 5 (7 ) Investment and other income 63 N/M N/M Total fee revenue 2,978 4 3 Net securities gains 24 N/M N/M Total fee and other revenue - GAAP $ 3,002 4 % 2 % 1 Asset servicing fees include securities lending revenue of $43 million in 1Q15, $38 million in 1Q14, and $37 million in 4Q14. 2 Represents a Non-GAAP measure. See Appendix for reconciliation. Additional disclosures regarding this measure and other Non-GAAP adjusted measures are available in the Corporation’s reports filed with the SEC, available at www.bnymellon.com/investorrelations. N/M - not meaningful
12 First Quarter 2015 – Financial Highlights Net Interest Revenue Growth vs. Drivers ($ in millions) 1Q15 1Q14 4Q14 Net interest revenue (non-FTE) $ 728 — % 2 % Net Interest Revenue YoY: Increase in deposits drove growth in securities portfolio and offset impact of lower yields QoQ: 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 Net interest revenue (FTE) - Non-GAAP 743 — 2 Net interest margin (FTE) 0.97 % (8) bps 6 bps Selected Average Balances: Cash/interbank investments $ 123,642 (3 )% (12 )% Trading account securities 3,046 (42 ) (22 ) Securities 123,476 23 5 Loans 57,935 12 2 Interest-earning assets 308,099 8 (3 ) Interest-bearing deposits 159,520 4 (2 ) Noninterest-bearing deposits 89,592 10 5 FTE – fully taxable equivalent bps – basis points
13 First Quarter 2015 – Financial Highlights Noninterest Expense Growth vs. Drivers ($ in millions) 1Q15 1Q14 4Q14 Staff $ 1,485 (2 )% 5 % YoY: 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 primarily reflects favorable impact of 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 Headcount primarily driven by streamlining actions, partially offset by acquisitions in 1Q15 Professional, legal and other purchased services 302 (3 ) (23 ) Software and equipment 228 (4 ) (3 ) Net occupancy 151 (2 ) 1 Distribution and servicing 98 (8 ) (4 ) Sub-custodian 70 3 — Business development 61 (5 ) (19 ) Other 242 9 15 Amortization of intangible assets 66 (12 ) (10 ) M&I, litigation and restructuring charges (3 ) N/M N/M Total noninterest expense – GAAP $ 2,700 (1 )% (23 )% Total noninterest expense excluding amortization of intangible assets, M&I, litigation and restructuring charges and the (recovery) related to investment management funds, net of incentives – Non-GAAP1 $ 2,637 (2 )% (1 )% Full-time employees 50,500 (900) 200 1 Represents a Non-GAAP measure. See Appendix for reconciliation. Additional disclosures regarding this measure and other Non-GAAP adjusted measures are available in the Corporation’s reports filed with the SEC, available at www.bnymellon.com/investorrelations. N/M - not meaningful
14 First Quarter 2015 – Financial Highlights Capital Ratios Highlights 3/31/15 12/31/14 Regulatory capital ratios:1,2,3 Capital ratios remain strong Advanced Approach ratios were impacted by increases in operational risk RWA 1Q15: Net CET1 increased $192 million Repurchased 10.3 million common shares for $400 million in 1Q15 and 56.5 million common shares for $2.1 billion over the last five quarters, ending 1Q15 In 1Q15, declared a quarterly dividend of $0.17 per common share Compliant with U.S. Liquidity Coverage Ratio (LCR)5 CET1 ratio 10.0 % 11.2 % Tier 1 capital ratio 10.8 12.2 Total (Tier 1 plus Tier 2) capital ratio 11.1 12.5 Leverage capital ratio 5.6 5.6 Selected regulatory capital ratios - fully phased-in - Non-GAAP:1,2,4 Estimated CET1: Standardized approach 9.5 % 10.6 % Advanced approach 9.1 9.8 Estimated Supplementary leverage ratio ("SLR")4 4.5 % 4.4 % Note: See corresponding footnotes on Page 19 of the Appendix. RWA - risk-weighted assets
APPENDIX
16 First Quarter 2015 – Financial Highlights Expense & Pre-Tax Operating Margin - Non-GAAP Reconciliation 1Q15 4Q14 1Q14 ($ in millions) Total revenue – GAAP $ 3,851 $ 3,689 $ 3,647 Less: Net income attributable to noncontrolling interests of consolidated investment management funds 90 24 20 Total revenue, as adjusted – Non-GAAP2 $ 3,761 $ 3,665 $ 3,627 Total noninterest expense – GAAP $ 2,700 $ 3,524 $ 2,739 Less: Amortization of intangible assets 66 73 75 M&I, litigation and restructuring charges (3 ) 800 (12 ) (Recovery) related to investment management funds, net of incentives — — (5 ) Total noninterest expense excluding amortization of intangible assets, M&I, litigation and restructuring charges and the (recovery) related to investment management funds, net of incentives – Non-GAAP2 $ 2,637 $ 2,651 $ 2,681 Provision for credit losses 2 1 (18 ) Income before income taxes, as adjusted – Non-GAAP2 $ 1,122 $ 1,013 $ 964 Pre-tax operating margin – Non-GAAP1,2 30 % 3 28 % 27 % 1 Income before taxes divided by total revenue. 2 Non-GAAP excludes net income attributable to noncontrolling interests of consolidated investment management funds, amortization of intangible assets, M&I, litigation and restructuring charges, and a charge (recovery) related to investment management funds, net of incentives, if applicable. 3 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 $64 million for 1Q15 and would increase our pre-tax operating margin by approximately 1.2%.
17 First Quarter 2015 – Financial Highlights Return on Tangible Common Equity Reconciliation 1Q15 4Q14 1Q14 ($ in millions) Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP $ 766 $ 209 $ 661 Add: Amortization of intangible assets, net of tax 43 47 49 Net income applicable to common shareholders of The Bank of New York Mellon Corporation excluding amortization of intangible assets – Non-GAAP 809 256 710 Less: Benefit primarily related to a tax carryback claim — 150 — Add: M&I, litigation and restructuring charges (2 ) 608 (7 ) (Recovery) related to investment management funds, net of incentives — — (4 ) Net income applicable to common shareholders of The Bank of New York Mellon Corporation, as adjusted – Non-GAAP2 $ 807 $ 714 $ 699 Average common shareholders’ equity $ 35,486 $ 36,859 $ 36,289 Less: Average goodwill 17,756 17,924 18,072 Average intangible Assets 4,088 4,174 4,422 Add: Deferred tax liability – tax deductible goodwill1 1,362 1,340 1,306 Deferred tax liability – intangible assets1 1,200 1,216 1,259 Average tangible common shareholders’ equity - Non-GAAP $ 16,204 $ 17,317 $ 16,360 Return on tangible common equity – Non-GAAP2,3 20.3 % 5.9 % 17.6 % Return on tangible common equity – Non-GAAP adjusted2,3 20.2 % 16.3 % 17.3 % 1 Deferred tax liabilities are based on fully phased-in Basel III rules. 2 Non-GAAP excludes amortization of intangible assets, 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. 3 Annualized.
18 First Quarter 2015 – Financial Highlights Earnings Per Share & GAAP Revenue Reconciliation Earnings per share Growth vs. ($ in dollars) 1Q15 4Q14 1Q14 1Q14 4Q14 GAAP results $ 0.67 $ 0.18 $ 0.57 Add: Litigation and restructuring charges — 0.53 — Less: Benefit primarily related to a tax carryback claim — 0.13 — Non-GAAP results $ 0.67 $ 0.58 $ 0.57 18 % 16 % Revenue - GAAP ($ in millions) 1Q15 1Q14 4Q14 Asset servicing1 $ 1,038 $ 1,009 $ 1,019 Clearing services 344 325 347 Issuer services 232 229 193 Treasury services 137 136 145 Total investment services fees 1,751 1,699 1,704 Investment management and performance fees 854 843 885 Foreign exchange and other trading revenue 229 136 151 Distribution and servicing 41 43 43 Financing-related fees 40 38 43 Investment and other income 63 102 78 Total fee revenue 2,978 2,861 2,904 Net securities gains 24 22 31 Total fee and other revenue - GAAP $ 3,002 $ 2,883 $ 2,935 Income from consolidated investment management funds 121 36 42 Net interest revenue 728 728 712 Total revenue - GAAP $ 3,851 $ 3,647 $ 3,689 1 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 $43 million in 1Q15.
19 First Quarter 2015 – Financial Highlights Capital Ratio Footnotes 1 March 31, 2015 consolidated regulatory capital ratios are preliminary. Please reference slides 20 and 21. See the “Capital Ratios” section in the Earnings Release for additional detail. 2 Risk-based capital ratios at Dec. 31, 2014 and March 31, 2015 include the net impact of the total consolidated assets of certain consolidated investment management funds in risk-weighted assets. 3 At Dec. 31, 2014, the CET1, Tier 1 and Total risk-based consolidated regulatory capital ratios determined under the transitional Standardized Approach were 15.0%, 16.3% and 16.9%, and were calculated based on Basel III components of capital, as phased-in, and asset risk-weightings using Basel I-based requirements. At March 31, 2015, the CET1, Tier 1 and Total risk-based consolidated regulatory capital ratios determined under the transitional Basel III Standardized Approach were 10.7%, 11.6% and 12.0%. 4 Please reference slides 20 and 21. See the “Capital Ratios” section in the Earnings Release for additional detail. 5 The U.S. LCR rules became effective Jan. 1, 2015 and require BNY Mellon to meet an LCR of 80%, increasing annually by 10% increments until fully phased-in on Jan. 1, 2017, at which time we will be required to meet an LCR of 100%. Our estimated LCR on a consolidated basis is compliant with the fully phased-in requirements of the U.S. LCR as of March 31, 2015 based on our current understanding of the U.S. LCR rules. Note: In 1Q15, BNY Mellon implemented the Basel III Standardized Approach under the final rules released by the Board of Governors of the Federal Reserve System (the “Federal Reserve”) on July 2, 2013 (the “Final Capital Rules”). The transitional capital ratios were negatively impacted by the phase-in requirements for 2015.
20 First Quarter 2015 – Financial Highlights Estimated Fully Phased-In SLR1 - Non-GAAP Reconciliation ($ in millions) 12/31/14 3/31/152 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 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 % 1 The estimated fully phased-in SLR is based on our interpretation of the Final Capital Rules, as supplemented by the Federal Reserve’s final rules on the SLR. When fully phased-in, we expect to maintain an SLR of over 5%, 3% attributable to the minimum required SLR, and greater than 2% attributable to a buffer applicable to U.S. G-SIBs. 2 March 31, 2015 information is preliminary.
21 First Quarter 2015 – Financial Highlights Estimated Fully Phased-In Basel III CET1 Ratio - Non-GAAP1,2 1 Regulatory capital ratios for March 31, 2015 are preliminary. 2 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. ($ in millions) 3/31/15 Total estimated fully phased-in Basel III CET1 - Non-GAAP - End of period $ 16,123 Under the Standardized Approach: Estimated fully phased-in Basel III risk-weighted assets - Non-GAAP $ 169,673 Estimated fully phased-in Basel III CET1 ratio – Non-GAAP3 9.5 % Under the Advanced Approach: Estimated fully phased-in Basel III risk-weighted assets - Non-GAAP $ 176,680 Estimated fully phased-in Basel III CET1 ratio – Non-GAAP3 9.1 %
22 First Quarter 2015 – Financial Highlights Pre-Tax Operating Margin – Investment Management Reconciliation 1Q15 4Q14 1Q14 ($ in millions) Income before income taxes – GAAP $ 264 $ 239 $ 246 Add: Amortization of intangible assets 25 30 31 Money market fee waivers 34 34 35 (Recovery) related to investment management funds, net of incentives — — (5 ) Income before income taxes excluding amortization of intangible assets, money market fee waivers and the (recovery) related to investment management funds, net of incentives – Non-GAAP $ 323 $ 303 $ 307 Total revenue – GAAP $ 1,010 $ 998 $ 970 Less: Distribution and servicing expense 97 102 106 Money market fee waivers benefiting distribution and servicing expense 38 36 38 Add: Money market fee waivers impacting total revenue 72 70 73 Total revenue net of distribution and servicing expense and excluding money market fee waivers - Non- GAAP $ 947 $ 930 $ 899 Pre-tax operating margin1 26 % 24 % 25 % Pre-tax operating margin excluding amortization of intangible assets, money market fee waivers, the (recovery) related to investment management funds, net of incentives and net of distribution and servicing expense – Non-GAAP1 34 % 32 % 34 % 1 Income before taxes divided by total revenue.
23 First Quarter 2015 – Financial Highlights Investment Management and Performance Fees - Non-GAAP Investment management and performance fees - Consolidated Growth vs. ($ in millions) 1Q15 1Q14 1Q14 Investment management and performance fees - GAAP $ 854 $ 843 1 % Impact of changes in foreign currency exchange rates — (40 ) Investment management and performance fees, as adjusted - Non-GAAP $ 854 $ 803 6 % Investment management fees - Investment Management business Growth vs. ($ in millions) 1Q15 1Q14 1Q14 Investment management fees - GAAP $ 835 $ 824 1 % Impact of changes in foreign currency exchange rates — (40 ) Investment management fees, as adjusted - Non-GAAP $ 835 $ 784 7 %
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