NEW YORK, Jan. 19, 2017
/PRNewswire/ --
- Earnings per common share up 35%, or 13% on an adjusted
basis year-over-year (a)
TOTAL REVENUE OF $3.79 BILLION,
INCREASED 2% YEAR-OVER-YEAR
- Fee and other revenue up slightly; Investment Services fees
increased 4%
- Net interest revenue increased 9%
CONTINUED FOCUS ON EXPENSE CONTROL
- Total noninterest expense decreased 2%
year-over-year
FULL-YEAR 2016 EARNINGS OF $3.43 BILLION
OR $3.15 PER COMMON SHARE
- Earnings of $3.45 billion or
$3.17 per common share on an
adjusted basis (a)
- Earnings per common share up 16%, or 11% on an adjusted
basis (a)
- Total revenue up slightly and total noninterest expense
decreased 3%
EXECUTING ON CAPITAL PLAN AND RETURNING VALUE TO COMMON
SHAREHOLDERS
- Repurchased 18.4 million common shares for $848 million in the fourth quarter of 2016
and 58.6 million common shares for $2.4 billion in
full-year 2016
- Return on common equity of 9% in the fourth quarter of 2016
and 10% in full-year 2016
- Adjusted return on tangible common equity of 21% in both the
fourth quarter and full-year of 2016 (a)
- SLR – transitional of 6.0%; SLR –
fully phased-in of 5.6% (a)
The Bank of New York Mellon Corporation ("BNY Mellon") (NYSE:
BK) today reported fourth quarter net income applicable to common
shareholders of $822 million, or
$0.77 per diluted common share, or
$826 million, or $0.77 per diluted common share, as adjusted
(Non-GAAP). In the fourth quarter of 2015, net income
applicable to common shareholders was $637
million, or $0.57 per diluted
common share, or $755 million, or
$0.68 per diluted common share, as
adjusted (Non-GAAP). In the third quarter of 2016, net income
applicable to common shareholders was $974
million, or $0.90 per diluted
common share, or $979 million, or
$0.90 per diluted common share, as
adjusted (Non-GAAP) (a).
In 2016, net income applicable to common shareholders
totaled $3.43 billion, or $3.15 per diluted common
share, or $3.45 billion, or $3.17 per diluted common
share, as adjusted (Non-GAAP). In 2015, net income applicable
to common shareholders totaled $3.05 billion,
or $2.71 per diluted common share, or $3.22 billion,
or $2.85 per diluted common share, as adjusted (Non-GAAP)
(a).
"We delivered strong fourth-quarter results, capping another
year of solid execution against our three-year strategic plan. For
full-year 2016, our earnings per share increased significantly as
we delivered a strong return on capital. In the fourth quarter, we
also generated substantial positive operating leverage, as the
Investment Services business performed well and our business
improvement process helped reduce structural costs," Gerald L. Hassell, chairman and chief executive
officer, said.
"As we enter 2017, we continue to prioritize enhancing our
clients' experience with us in every way ... from ease of access of
information, to providing data-driven insights and solutions, to
improving responsiveness to inquiries. Our digital transformation
is enhancing the user experience, raising our levels of automation
and resiliency and allowing clients to connect to BNY Mellon
anywhere, anytime" Mr. Hassell added.
"We also remain committed to providing value to our shareholders
and, during the fourth quarter, we returned more than $1 billion through share repurchases and
dividends," Mr. Hassell continued.
"I want to thank our clients for entrusting us with their
business, my fellow shareholders for recognizing our value
proposition and our 50,000-plus BNY Mellon professionals for
executing on our strategy and challenging themselves to be the very
best every day," Mr. Hassell concluded.
BNY Mellon is a global investments company dedicated to helping
its clients manage and service their financial assets throughout
the investment lifecycle. Whether providing financial
services for institutions, corporations or individual investors,
BNY Mellon delivers informed investment management and investment
services in 35 countries and more than 100 markets. As of
Dec. 31, 2016, BNY Mellon had
$29.9 trillion in assets under
custody and/or administration, and $1.6
trillion in assets under management. BNY Mellon can
act as a single point of contact for clients looking to create,
trade, hold, manage, service, distribute or restructure
investments. BNY Mellon is the corporate brand of The Bank of
New York Mellon Corporation (NYSE: BK). Additional
information is available on www.bnymellon.com. Follow us on
Twitter @BNYMellon or visit our newsroom at
www.bnymellon.com/newsroom for the latest company news.
(a)
|
These measures are
considered to be Non-GAAP. See "Supplemental information –
Explanation of GAAP and Non-GAAP financial measures" beginning on
page 24 for the adjusted earnings and earnings per common share
reconciliation and the adjusted tangible common equity ratio
reconciliation. See "Capital and Liquidity" beginning on page
13 for the reconciliation of the SLR.
|
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 the executive management team from BNY
Mellon, will host a conference call and simultaneous live audio
webcast at 8:00 a.m. EST on
Jan. 19, 2017. This conference
call and audio webcast will include forward-looking statements and
may include other material information.
Investors and analysts wishing to access the conference call and
audio webcast may do so by dialing (800) 390-5696 (U.S.) or
(719) 325-2110 (International), and using the passcode:
445371, or by logging on to
www.bnymellon.com/investorrelations. Earnings materials will
be available at www.bnymellon.com/investorrelations beginning at
approximately 6:30 a.m. EST on
Jan. 19, 2017. Replays of the
conference call and audio webcast will be available beginning
Jan. 19, 2017 at approximately
2 p.m. EST through Feb. 19, 2017 by dialing (888) 203-1112
(U.S.) or (719) 457-0820 (International), and using the
passcode: 6203153. The archived version of the conference
call and audio webcast will also be available at
www.bnymellon.com/investorrelations for the same time period.
FOURTH QUARTER 2016 FINANCIAL HIGHLIGHTS (a)
(comparisons are 4Q16 vs. 4Q15, unless otherwise stated)
|
Earnings per
share
|
|
Net income applicable
to common
shareholders of The Bank of New
York Mellon Corporation
|
(in millions,
except per share amounts)
|
4Q16
|
|
4Q15
|
|
Inc/(Dec)
|
|
4Q16
|
|
4Q15
|
|
Inc/(Dec)
|
GAAP
results
|
$
|
0.77
|
|
|
$
|
0.57
|
|
|
35
|
%
|
|
$
|
822
|
|
|
$
|
637
|
|
|
29
|
%
|
Add: M&I,
litigation and restructuring charges
|
—
|
|
|
0.01
|
|
|
|
|
4
|
|
|
12
|
|
|
|
Impairment
charge related to Sentinel
|
N/A
|
|
|
0.10
|
|
|
|
|
N/A
|
|
|
106
|
|
|
|
Non-GAAP
results
|
$
|
0.77
|
|
|
$
|
0.68
|
|
|
13
|
%
|
|
$
|
826
|
|
|
$
|
755
|
|
|
9
|
%
|
- Total revenue of $3.8 billion,
increased 2% on both a GAAP and adjusted basis (Non-GAAP)
(a).
- Investment services fees increased 4% reflecting higher money
market fees.
- Investment management and performance fees decreased 2% due to
the unfavorable impact of a stronger U.S. dollar (principally
versus the British pound) and lower performance fees, partially
offset by higher market values and money market fees.
- Foreign exchange revenue increased 6% reflecting higher
volatility.
- Investment and other income decreased $23 million driven by lower other income related
to termination fees in our clearing business recorded in 4Q15.
- Net interest revenue increased $71
million driven by the increase in interest rates, impact of
interest rate hedging activities and premium amortization
adjustments, partially offset by lower interest-earning
assets.
- The provision for credit losses was $7
million.
- Noninterest expense of $2.6
billion, decreased 2% on both a GAAP and adjusted basis
(Non-GAAP) (a). The decrease reflects lower staff expense
driven by the favorable impact of a stronger U.S. dollar, lower
employee benefits and severance expense.
- Effective tax rate of 24.3%.
- Assets under custody and/or administration ("AUC/A") and
Assets under management ("AUM")
- AUC/A of $29.9 trillion increased
3% reflecting higher market values, offset by the unfavorable
impact of a stronger U.S. dollar.
- Estimated new AUC/A wins in Asset Servicing of $141 billion in 4Q16.
- AUM of $1.65 trillion increased
1% reflecting higher market values offset by the unfavorable impact
of a stronger U.S. dollar (principally versus the British pound).
- Net long-term outflows of $11
billion in 4Q16 were a combination of $10 billion of outflows from actively managed
strategies and $1 billion of outflows
from index strategies.
- Net short-term outflows totaled $3
billion in 4Q16.
- Capital
- Repurchased 18.4 million common shares for $848 million in 4Q16 and 58.6 million common
shares for $2.4 billion in full-year 2016.
- Return on common equity of 9% in 4Q16 and 10% in full-year
2016.
- Adjusted return on tangible common equity of 21% in both 4Q16
and full-year 2016 (a).
- SLR – transitional of 6.0%; SLR – fully phased-in
of 5.6% (a).
(a)
|
See "Supplemental
information – Explanation of GAAP and Non-GAAP financial measures"
beginning on page 24 for the reconciliation of Non-GAAP
measures. In all periods presented, Non-GAAP information
excludes the net income (loss) attributable to noncontrolling
interests of consolidated investment management funds, amortization
of intangible assets and M&I, litigation and restructuring
charges. Non-GAAP information for 4Q15 also excludes the
impairment charge related to a court decision regarding Sentinel
Management Group, Inc. ("Sentinel"). See "Capital and
Liquidity" beginning on page 13 for the reconciliation of the
SLR.
|
N/A –
Not applicable.
|
Note: Throughout
this document, sequential growth rates are
unannualized.
|
FINANCIAL
SUMMARY
|
(dollars in
millions, except per share amounts; common shares in
thousands)
|
|
|
|
|
|
4Q16
vs.
|
4Q16
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
3Q16
|
4Q15
|
Revenue:
|
|
|
|
|
|
|
|
Fee and other
revenue
|
$
|
2,954
|
|
$
|
3,150
|
|
$
|
2,999
|
|
$
|
2,970
|
|
$
|
2,950
|
|
(6)
|
%
|
—
|
%
|
Income (loss) from
consolidated investment management funds
|
5
|
|
17
|
|
10
|
|
(6)
|
|
16
|
|
|
|
Net interest
revenue
|
831
|
|
774
|
|
767
|
|
766
|
|
760
|
|
7
|
|
9
|
|
Total revenue –
GAAP
|
3,790
|
|
3,941
|
|
3,776
|
|
3,730
|
|
3,726
|
|
(4)
|
|
2
|
|
Less: Net
income (loss) attributable to noncontrolling interests related to
consolidated investment management funds
|
4
|
|
9
|
|
4
|
|
(7)
|
|
5
|
|
|
|
Total revenue –
Non-GAAP
|
3,786
|
|
3,932
|
|
3,772
|
|
3,737
|
|
3,721
|
|
(4)
|
|
2
|
|
Provision for
credit losses
|
7
|
|
(19)
|
|
(9)
|
|
10
|
|
163
|
|
|
|
Expense:
|
|
|
|
|
|
|
|
Noninterest expense –
GAAP
|
2,631
|
|
2,643
|
|
2,620
|
|
2,629
|
|
2,692
|
|
—
|
|
(2)
|
|
Less:
Amortization of intangible assets
|
60
|
|
61
|
|
59
|
|
57
|
|
64
|
|
|
|
M&I, litigation
and restructuring charges
|
7
|
|
18
|
|
7
|
|
17
|
|
18
|
|
|
|
Total noninterest
expense – Non-GAAP
|
2,564
|
|
2,564
|
|
2,554
|
|
2,555
|
|
2,610
|
|
—
|
|
(2)
|
|
Income:
|
|
|
|
|
|
|
|
Income before income
taxes
|
1,152
|
|
1,317
|
|
1,165
|
|
1,091
|
|
871
|
|
(13)
|
%
|
32
|
%
|
Provision for income
taxes
|
280
|
|
324
|
|
290
|
|
283
|
|
175
|
|
|
|
Net income
|
$
|
872
|
|
$
|
993
|
|
$
|
875
|
|
$
|
808
|
|
$
|
696
|
|
|
|
Net (income) loss
attributable to noncontrolling interests (a)
|
(2)
|
|
(6)
|
|
(2)
|
|
9
|
|
(3)
|
|
|
|
Net income applicable
to shareholders of The Bank of New York Mellon
Corporation
|
870
|
|
987
|
|
873
|
|
817
|
|
693
|
|
|
|
Preferred stock
dividends
|
(48)
|
|
(13)
|
|
(48)
|
|
(13)
|
|
(56)
|
|
|
|
Net income applicable
to common shareholders of The Bank of New York Mellon
Corporation
|
$
|
822
|
|
$
|
974
|
|
$
|
825
|
|
$
|
804
|
|
$
|
637
|
|
|
|
|
|
|
|
|
|
|
|
Operating leverage
(b)
|
|
|
|
|
|
(338)
|
bps
|
399
|
bps
|
Adjusted operating
leverage – Non-GAAP (b)
|
|
|
|
|
|
(371)
|
bps
|
351
|
bps
|
|
|
|
|
|
|
|
|
Key
Metrics:
|
|
|
|
|
|
|
|
Pre-tax operating
margin (c)
|
30
|
%
|
33
|
%
|
31
|
%
|
29
|
%
|
23
|
%
|
|
|
Adjusted pre-tax
operating margin – Non-GAAP (c)
|
32
|
%
|
35
|
%
|
33
|
%
|
31
|
%
|
30
|
%
|
|
|
|
|
|
|
|
|
|
|
Return on common
equity (annualized) (c)
|
9.3
|
%
|
10.8
|
%
|
9.3
|
%
|
9.2
|
%
|
7.1
|
%
|
|
|
Adjusted return on
common equity (annualized) – Non-GAAP (c)
|
9.8
|
%
|
11.3
|
%
|
9.7
|
%
|
9.7
|
%
|
8.9
|
%
|
|
|
|
|
|
|
|
|
|
|
Return on tangible
common equity (annualized) – Non-GAAP (c)(d)
|
20.4
|
%
|
23.5
|
%
|
20.4
|
%
|
20.6
|
%
|
16.2
|
%
|
|
|
Adjusted return on
tangible common equity (annualized) – Non-GAAP
(c)(d)
|
20.5
|
%
|
23.6
|
%
|
20.5
|
%
|
20.8
|
%
|
19.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Fee revenue as a
percentage of total revenue
|
78
|
%
|
79
|
%
|
79
|
%
|
80
|
%
|
79
|
%
|
|
|
|
|
|
|
|
|
|
|
Percentage of
non-U.S. total revenue
|
34
|
%
|
36
|
%
|
34
|
%
|
33
|
%
|
34
|
%
|
|
|
|
|
|
|
|
|
|
|
Average common shares
and equivalents outstanding:
|
|
|
|
|
|
|
|
Basic
|
1,050,888
|
|
1,062,248
|
|
1,072,583
|
|
1,079,641
|
|
1,088,880
|
|
|
|
Diluted
|
1,056,818
|
|
1,067,682
|
|
1,078,271
|
|
1,085,284
|
|
1,096,385
|
|
|
|
|
|
|
|
|
|
|
|
Period
end:
|
|
|
|
|
|
|
|
Full-time
employees
|
52,000
|
|
52,300
|
|
52,200
|
|
52,100
|
|
51,200
|
|
|
|
Book value per common
share – GAAP (d)
|
$
|
33.67
|
|
$
|
34.19
|
|
$
|
33.72
|
|
$
|
33.34
|
|
$
|
32.69
|
|
|
|
Tangible book value
per common share – Non-GAAP (d)
|
$
|
16.19
|
|
$
|
16.67
|
|
$
|
16.25
|
|
$
|
15.87
|
|
$
|
15.27
|
|
|
|
Cash dividends per
common share
|
$
|
0.19
|
|
$
|
0.19
|
|
$
|
0.17
|
|
$
|
0.17
|
|
$
|
0.17
|
|
|
|
Common dividend
payout ratio
|
25
|
%
|
21
|
%
|
23
|
%
|
23
|
%
|
30
|
%
|
|
|
Closing stock price
per common share
|
$
|
47.38
|
|
$
|
39.88
|
|
$
|
38.85
|
|
$
|
36.83
|
|
$
|
41.22
|
|
|
|
Market
capitalization
|
$
|
49,630
|
|
$
|
42,167
|
|
$
|
41,479
|
|
$
|
39,669
|
|
$
|
44,738
|
|
|
|
Common shares
outstanding
|
1,047,488
|
|
1,057,337
|
|
1,067,674
|
|
1,077,083
|
|
1,085,343
|
|
|
|
(a)
|
Primarily
attributable to noncontrolling interests related to consolidated
investment management funds.
|
(b)
|
Operating leverage
is the rate of increase (decrease) in total revenue less the rate
of increase (decrease) in total noninterest expense. See
"Supplemental information – Explanation of GAAP and Non-GAAP
financial measures" beginning on page 24 for the components of this
measure.
|
(c)
|
Non-GAAP
information for all periods presented excludes the net income
(loss) attributable to noncontrolling interests related to
consolidated investment management funds, amortization of
intangible assets and M&I, litigation and restructuring
charges. Non-GAAP information for 3Q16 also excludes a
recovery of the previously impaired Sentinel loan and 4Q15 also
excludes the impairment charge related to a court decision
regarding Sentinel. See "Supplemental information –
Explanation of GAAP and Non-GAAP financial measures" beginning on
page 24 for the reconciliation of Non-GAAP measures.
|
(d)
|
Tangible book
value per common share – Non-GAAP and tangible common equity
exclude goodwill and intangible assets, net of deferred tax
liabilities. See "Supplemental information – Explanation of
GAAP and Non-GAAP financial measures" beginning on page 24 for the
reconciliation of Non-GAAP measures.
|
bps – basis
points.
|
|
CONSOLIDATED
BUSINESS METRICS
|
|
Consolidated
business metrics
|
|
|
|
|
|
|
4Q16
vs.
|
4Q16
|
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
3Q16
|
4Q15
|
Changes in AUM
(in billions): (a)
|
|
|
|
|
|
|
|
|
Beginning balance of
AUM
|
$
|
1,715
|
|
|
$
|
1,664
|
|
$
|
1,639
|
|
$
|
1,625
|
|
$
|
1,625
|
|
|
|
Net inflows
(outflows):
|
|
|
|
|
|
|
|
|
Long-term
strategies:
|
|
|
|
|
|
|
|
|
Equity
|
(4)
|
|
|
(3)
|
|
(2)
|
|
(3)
|
|
(9)
|
|
|
|
Fixed income
|
(1)
|
|
|
—
|
|
(2)
|
|
—
|
|
1
|
|
|
|
Liability-driven
investments (b)
|
(7)
|
|
|
4
|
|
15
|
|
14
|
|
11
|
|
|
|
Alternative
investments
|
2
|
|
|
2
|
|
1
|
|
1
|
|
2
|
|
|
|
Total long-term active
strategies (outflows) inflows
|
(10)
|
|
|
3
|
|
12
|
|
12
|
|
5
|
|
|
|
Index
|
(1)
|
|
|
(2)
|
|
(17)
|
|
(11)
|
|
(16)
|
|
|
|
Total long-term
strategies (outflows) inflows
|
(11)
|
|
|
1
|
|
(5)
|
|
1
|
|
(11)
|
|
|
|
Short term
strategies:
|
|
|
|
|
|
|
|
|
Cash
|
(3)
|
|
|
(1)
|
|
4
|
|
(9)
|
|
2
|
|
|
|
Total net
(outflows)
|
(14)
|
|
|
—
|
|
(1)
|
|
(8)
|
|
(9)
|
|
|
|
Net market
impact/other
|
(11)
|
|
|
80
|
|
71
|
|
41
|
|
24
|
|
|
|
Net currency
impact
|
(42)
|
|
|
(29)
|
|
(47)
|
|
(19)
|
|
(15)
|
|
|
|
Acquisition
|
—
|
|
|
—
|
|
2
|
|
—
|
|
—
|
|
|
|
Ending balance of
AUM
|
$
|
1,648
|
(c)
|
|
$
|
1,715
|
|
$
|
1,664
|
|
$
|
1,639
|
|
$
|
1,625
|
|
(4)
|
%
|
1
|
%
|
|
|
|
|
|
|
|
|
|
AUM at period end,
by product type: (a)
|
|
|
|
|
|
|
|
|
Equity
|
14
|
%
|
|
13
|
%
|
14
|
%
|
14
|
%
|
14
|
%
|
|
|
Fixed
income
|
13
|
|
|
14
|
|
13
|
|
13
|
|
13
|
|
|
|
Index
|
19
|
|
|
18
|
|
18
|
|
19
|
|
20
|
|
|
|
Liability-driven
investments (b)
|
34
|
|
|
35
|
|
34
|
|
33
|
|
32
|
|
|
|
Alternative
investments
|
4
|
|
|
4
|
|
4
|
|
4
|
|
4
|
|
|
|
Cash
|
16
|
|
|
16
|
|
17
|
|
17
|
|
17
|
|
|
|
Total AUM
|
100
|
% (c)
|
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Investment
Management:
|
|
|
|
|
|
|
|
|
Average loans (in
millions)
|
$
|
15,673
|
|
|
$
|
15,308
|
|
$
|
14,795
|
|
$
|
14,275
|
|
$
|
13,447
|
|
2
|
%
|
17
|
%
|
Average deposits
(in millions)
|
$
|
15,511
|
|
|
$
|
15,600
|
|
$
|
15,518
|
|
$
|
15,971
|
|
$
|
15,497
|
|
(1)
|
%
|
—
|
%
|
|
|
|
|
|
|
|
|
|
Investment
Services:
|
|
|
|
|
|
|
|
|
Average loans (in
millions)
|
$
|
45,832
|
|
|
$
|
44,329
|
|
$
|
43,786
|
|
$
|
45,004
|
|
$
|
45,844
|
|
3
|
%
|
—
|
%
|
Average deposits
(in millions)
|
$
|
213,531
|
|
|
$
|
220,316
|
|
$
|
221,998
|
|
$
|
215,707
|
|
$
|
229,241
|
|
(3)
|
%
|
(7)
|
%
|
|
|
|
|
|
|
|
|
|
AUC/A at period end
(in trillions) (d)
|
$
|
29.9
|
(c)
|
|
$
|
30.5
|
|
$
|
29.5
|
|
$
|
29.1
|
|
$
|
28.9
|
|
(2)
|
%
|
3
|
%
|
|
|
|
|
|
|
|
|
|
Market value of
securities on loan at period end (in billions)
(e)
|
$
|
296
|
|
|
$
|
288
|
|
$
|
278
|
|
$
|
300
|
|
$
|
277
|
|
3
|
%
|
7
|
%
|
|
|
|
|
|
|
|
|
|
Asset
servicing:
|
|
|
|
|
|
|
|
|
Estimated new
business wins (AUC/A) (in billions)
|
$
|
141
|
(c)
|
|
$
|
150
|
|
$
|
167
|
|
$
|
40
|
|
$
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
Depositary
Receipts:
|
|
|
|
|
|
|
|
|
Number of sponsored
programs
|
1,062
|
|
|
1,094
|
|
1,112
|
|
1,131
|
|
1,145
|
|
(3)
|
%
|
(7)
|
%
|
|
|
|
|
|
|
|
|
|
Clearing
services:
|
|
|
|
|
|
|
|
|
Average active
clearing accounts (U.S. platform) (in thousands)
|
5,960
|
|
|
5,942
|
|
5,946
|
|
5,947
|
|
5,959
|
|
—
|
%
|
—
|
%
|
Average long-term
mutual fund assets (U.S. platform) (in millions)
|
$
|
438,460
|
|
|
$
|
443,112
|
|
$
|
431,150
|
|
$
|
415,025
|
|
$
|
437,260
|
|
(1)
|
%
|
—
|
%
|
Average investor
margin loans (U.S. platform) (in millions)
|
$
|
10,562
|
|
|
$
|
10,834
|
|
$
|
10,633
|
|
$
|
11,063
|
|
$
|
11,575
|
|
(3)
|
%
|
(9)
|
%
|
|
|
|
|
|
|
|
|
|
Broker-Dealer:
|
|
|
|
|
|
|
|
|
Average tri-party
repo balances (in billions)
|
$
|
2,307
|
|
|
$
|
2,212
|
|
$
|
2,108
|
|
$
|
2,104
|
|
$
|
2,153
|
|
4
|
%
|
7
|
%
|
(a)
|
Excludes
securities lending cash management assets and assets managed in the
Investment Services business and the Other segment.
|
(b)
|
Includes currency
overlay assets under management.
|
(c)
|
Preliminary.
|
(d)
|
Includes the AUC/A
of CIBC Mellon Global Securities Services Company ("CIBC Mellon"),
a joint venture with the Canadian Imperial Bank of Commerce, of
$1.2 trillion at Dec. 31, 2016 and Sept. 30, 2016, $1.1 trillion at
June 30, 2016 and March 31, 2016 and $1.0 trillion at Dec. 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 $63
billion at Dec. 31, 2016, $64 billion at Sept. 30, 2016, $56
billion at June 30, 2016 and March 31, 2016 and $55 billion at Dec.
31, 2015.
|
The following table presents key market metrics at period end
and on an average basis.
Key market
metrics
|
|
|
|
|
|
4Q16
vs.
|
|
4Q16
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
3Q16
|
4Q15
|
S&P 500 Index
(a)
|
2239
|
|
2168
|
|
2099
|
|
2060
|
|
2044
|
|
3
|
%
|
10
|
%
|
S&P 500 Index –
daily average
|
2185
|
|
2162
|
|
2075
|
|
1951
|
|
2052
|
|
1
|
|
6
|
|
FTSE 100 Index
(a)
|
7143
|
|
6899
|
|
6504
|
|
6175
|
|
6242
|
|
4
|
|
14
|
|
FTSE 100 Index –
daily average
|
6923
|
|
6765
|
|
6204
|
|
5988
|
|
6271
|
|
2
|
|
10
|
|
MSCI EAFE
(a)
|
1684
|
|
1702
|
|
1608
|
|
1652
|
|
1716
|
|
(1)
|
|
(2)
|
|
MSCI EAFE – daily
average
|
1660
|
|
1677
|
|
1648
|
|
1593
|
|
1732
|
|
(1)
|
|
(4)
|
|
Barclays Capital
Global Aggregate BondSM Index (a)(b)
|
451
|
|
486
|
|
482
|
|
468
|
|
442
|
|
(7)
|
|
2
|
|
NYSE and NASDAQ share
volume (in billions)
|
189
|
|
186
|
|
203
|
|
218
|
|
198
|
|
2
|
|
(5)
|
|
JPMorgan G7
Volatility Index – daily average (c)
|
10.24
|
|
10.19
|
|
11.12
|
|
10.60
|
|
9.49
|
|
—
|
|
8
|
|
Average Fed Funds
effective rate
|
0.45
|
%
|
0.39
|
%
|
0.37
|
%
|
0.36
|
%
|
0.16
|
%
|
6
|
bps
|
29
|
bps
|
Foreign exchange
rates vs. U.S. dollar:
|
|
|
|
|
|
|
|
British pound
(a)
|
$
|
1.23
|
|
$
|
1.30
|
|
$
|
1.34
|
|
$
|
1.44
|
|
$
|
1.48
|
|
(5)
|
%
|
(17)
|
%
|
British pound –
average rate
|
1.24
|
|
1.31
|
|
1.43
|
|
1.43
|
|
1.52
|
|
(5)
|
|
(18)
|
|
Euro
(a)
|
1.05
|
|
1.12
|
|
1.11
|
|
1.14
|
|
1.09
|
|
(6)
|
|
(4)
|
|
Euro – average
rate
|
1.08
|
|
1.12
|
|
1.13
|
|
1.10
|
|
1.10
|
|
(4)
|
|
(2)
|
|
(a)
|
Period
end.
|
(b)
|
Unhedged in U.S.
dollar terms.
|
(c)
|
The JPMorgan G7
Volatility Index is based on the implied volatility in 3-month
currency options.
|
bps – basis
points.
|
FEE AND OTHER
REVENUE
|
|
Fee and other
revenue
|
|
|
|
|
|
4Q16
vs.
|
(dollars in
millions)
|
4Q16
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
3Q16
|
4Q15
|
Investment services
fees:
|
|
|
|
|
|
|
|
Asset servicing
(a)
|
$
|
1,068
|
|
$
|
1,067
|
|
$
|
1,069
|
|
$
|
1,040
|
|
$
|
1,032
|
|
—
|
%
|
3
|
%
|
Clearing
services
|
355
|
|
349
|
|
350
|
|
350
|
|
339
|
|
2
|
|
5
|
|
Issuer
services
|
211
|
|
337
|
|
234
|
|
244
|
|
199
|
|
(37)
|
|
6
|
|
Treasury
services
|
140
|
|
137
|
|
139
|
|
131
|
|
137
|
|
2
|
|
2
|
|
Total investment
services fees
|
1,774
|
|
1,890
|
|
1,792
|
|
1,765
|
|
1,707
|
|
(6)
|
|
4
|
|
Investment management
and performance fees
|
848
|
|
860
|
|
830
|
|
812
|
|
864
|
|
(1)
|
|
(2)
|
|
Foreign exchange and
other trading revenue
|
161
|
|
183
|
|
182
|
|
175
|
|
173
|
|
(12)
|
|
(7)
|
|
Financing-related
fees
|
50
|
|
58
|
|
57
|
|
54
|
|
51
|
|
(14)
|
|
(2)
|
|
Distribution and
servicing
|
41
|
|
43
|
|
43
|
|
39
|
|
41
|
|
(5)
|
|
—
|
|
Investment and other
income
|
70
|
|
92
|
|
74
|
|
105
|
|
93
|
|
(24)
|
|
(25)
|
|
Total fee
revenue
|
2,944
|
|
3,126
|
|
2,978
|
|
2,950
|
|
2,929
|
|
(6)
|
|
1
|
|
Net securities
gains
|
10
|
|
24
|
|
21
|
|
20
|
|
21
|
|
N/M
|
|
N/M
|
|
Total fee and other
revenue
|
$
|
2,954
|
|
$
|
3,150
|
|
$
|
2,999
|
|
$
|
2,970
|
|
$
|
2,950
|
|
(6)
|
%
|
—
|
%
|
(a)
|
Asset servicing fees
include securities lending revenue of $54 million in 4Q16, $51
million in 3Q16, $52 million in 2Q16, $50 million in 1Q16
and $46 million in 4Q15.
|
N/M – Not
meaningful.
|
KEY POINTS
- Asset servicing fees were $1.1
billion, an increase of 3% year-over-year. The
year-over-year increase primarily reflects higher money market
fees, net new business and higher equity market values, partially
offset by the unfavorable impact of a stronger U.S. dollar and the
impact of downsizing of the UK retail transfer agency
business.
- Clearing services fees were $355
million, an increase of 5% year-over-year and 2%
sequentially. Both increases were primarily driven by higher
money market fees. The year-over-year increase was partially
offset by the impact of previously disclosed lost business.
- Issuer services fees were $211
million, an increase of 6% year-over-year and a decrease of
37% sequentially. The year-over-year increase primarily
reflects higher fees in Depositary Receipts and higher money market
fees in Corporate Trust. The sequential decrease primarily
reflects seasonality in Depositary Receipts.
- Treasury services fees were $140
million, an increase of 2% both year-over-year and
sequentially. Both increases primarily resulted from higher
payment volumes. The year-over-year increase was partially
offset by higher compensating balance credits provided to clients,
which reduces fee revenue and increases net interest revenue.
- Investment management and performance fees were $848 million, a decrease of 2% year-over-year and
1% sequentially. The year-over-year decrease primarily
reflects the unfavorable impact of a stronger U.S. dollar
(principally versus the British pound) and lower performance fees,
partially offset by higher market values and money market
fees. The sequential decrease primarily reflects outflows of
assets under management, lower fixed income market values and money
market fees, partially offset by higher performance
fees.
|
|
•
|
Foreign exchange and
other trading revenue
(in
millions)
|
4Q16
|
|
3Q16
|
|
2Q16
|
|
1Q16
|
|
4Q15
|
|
Foreign
exchange
|
$
|
175
|
|
$
|
175
|
|
$
|
166
|
|
$
|
171
|
|
$
|
165
|
|
Other trading revenue
(loss)
|
|
(14)
|
|
|
8
|
|
|
16
|
|
|
4
|
|
|
8
|
|
Total foreign exchange
and other trading revenue
|
$
|
161
|
|
$
|
183
|
|
$
|
182
|
|
$
|
175
|
|
$
|
173
|
Foreign exchange and other trading
revenue totaled $161 million in 4Q16
compared with $173 million in 4Q15
and $183 million in 3Q16. In
4Q16, foreign exchange revenue totaled $175
million, an increase of 6% year-over-year, primarily
reflecting higher volatility.
Other trading losses were
$14 million in 4Q16, compared with
other trading revenue of $8 million
in both 4Q15 and 3Q16. Both decreases primarily reflect the
impact of interest rate hedging activities, which are offset in net
interest revenue.
- Financing-related fees were $50
million in 4Q16, compared with $51
million in 4Q15 and $58
million in 3Q16. The sequential decrease primarily
reflects lower underwriting fees.
- Distribution and servicing fees were $41
million in 4Q16, compared with $41
million in 4Q15 and $43
million in 3Q16. Year-over-year, higher money market
fees were offset by fees paid to introducing brokers.
•
|
Investment and
other income
|
|
|
|
|
|
|
(in
millions)
|
4Q16
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
|
Corporate/bank-owned
life insurance
|
$
|
53
|
|
$
|
34
|
|
$
|
31
|
|
$
|
31
|
|
$
|
43
|
|
|
Expense
reimbursements from joint venture
|
15
|
|
18
|
|
17
|
|
17
|
|
16
|
|
|
Seed capital gains
(a)
|
6
|
|
16
|
|
11
|
|
11
|
|
10
|
|
|
Asset-related
gains
|
1
|
|
8
|
|
1
|
|
—
|
|
5
|
|
|
Equity investment
(losses)
|
(2)
|
|
(1)
|
|
(4)
|
|
(3)
|
|
(2)
|
|
|
Lease-related gains
(losses)
|
(6)
|
|
—
|
|
—
|
|
44
|
|
(8)
|
|
|
Other
income
|
3
|
|
17
|
|
18
|
|
5
|
|
29
|
|
|
Total investment and
other income
|
$
|
70
|
|
$
|
92
|
|
$
|
74
|
|
$
|
105
|
|
$
|
93
|
|
(a)
|
Excludes the gain
(loss) on seed capital investments in consolidated investment
management funds which are reflected in operations of consolidated
investment management funds, net of noncontrolling interests.
The gain on seed capital investments in consolidated investment
management funds was $1 million in 4Q16, $8 million in 3Q16, $6
million in 2Q16, $1 million in 1Q16 and $11 million in
4Q15.
|
Investment and other income was
$70 million in 4Q16, compared with
$93 million in 4Q15 and $92 million in 3Q16. The year-over-year
decrease primarily reflects lower other income related to
termination fees in our clearing business recorded in 4Q15,
partially offset by higher income from corporate/bank-owned life
insurance. The year-over-year and sequential decreases in
other income also reflect the impact of increased investments in
renewable energy, which generate losses in other revenue that are
more than offset by tax benefits recorded to the provision for
income taxes.
NET INTEREST
REVENUE
|
|
Net interest
revenue
|
|
|
|
|
|
4Q16
vs.
|
(dollars in
millions)
|
4Q16
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
3Q16
|
4Q15
|
Net interest revenue
(non-FTE)
|
$
|
831
|
|
$
|
774
|
|
$
|
767
|
|
$
|
766
|
|
$
|
760
|
|
7
|
%
|
9
|
%
|
Net interest revenue
(FTE)
|
843
|
|
786
|
|
780
|
|
780
|
|
774
|
|
7
|
|
9
|
|
Net interest margin
(FTE)
|
1.17
|
%
|
1.06
|
%
|
0.98
|
%
|
1.01
|
%
|
0.99
|
%
|
11
|
bps
|
18
|
bps
|
|
|
|
|
|
|
|
|
Selected average
balances:
|
|
|
|
|
|
|
|
Cash/interbank
investments
|
$
|
104,352
|
|
$
|
114,544
|
|
$
|
137,995
|
|
$
|
127,624
|
|
$
|
128,328
|
|
(9)
|
%
|
(19)
|
%
|
Trading account
securities
|
2,288
|
|
2,176
|
|
2,152
|
|
3,320
|
|
2,786
|
|
5
|
|
(18)
|
|
Securities
|
117,660
|
|
118,405
|
|
118,002
|
|
118,538
|
|
119,532
|
|
(1)
|
|
(2)
|
|
Loans
|
63,647
|
|
61,578
|
|
60,284
|
|
61,196
|
|
61,964
|
|
3
|
|
3
|
|
Interest-earning
assets
|
287,947
|
|
296,703
|
|
318,433
|
|
310,678
|
|
312,610
|
|
(3)
|
|
(8)
|
|
Interest-bearing
deposits
|
145,681
|
|
155,109
|
|
165,122
|
|
162,017
|
|
160,334
|
|
(6)
|
|
(9)
|
|
Noninterest-bearing
deposits
|
82,267
|
|
81,619
|
|
84,033
|
|
82,944
|
|
85,878
|
|
1
|
|
(4)
|
|
|
|
|
|
|
|
|
|
Selected average
yields/rates:
|
|
|
|
|
|
|
|
Cash/interbank
investments
|
0.47
|
%
|
0.43
|
%
|
0.44
|
%
|
0.43
|
%
|
0.32
|
%
|
|
|
Trading account
securities
|
3.17
|
|
2.62
|
|
2.45
|
|
2.16
|
|
2.79
|
|
|
|
Securities
|
1.67
|
|
1.56
|
|
1.56
|
|
1.61
|
|
1.62
|
|
|
|
Loans
|
1.92
|
|
1.84
|
|
1.85
|
|
1.76
|
|
1.54
|
|
|
|
Interest-earning
assets
|
1.30
|
|
1.19
|
|
1.14
|
|
1.16
|
|
1.08
|
|
|
|
Interest-bearing
deposits
|
(0.01)
|
|
(0.02)
|
|
0.03
|
|
0.04
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
Average
cash/interbank investments as a percentage of
average interest-earning
assets
|
36
|
%
|
39
|
%
|
43
|
%
|
41
|
%
|
41
|
%
|
|
|
Average
noninterest-bearing deposits as a percentage of
average interest-earning
assets
|
29
|
%
|
28
|
%
|
26
|
%
|
27
|
%
|
27
|
%
|
|
|
FTE – fully
taxable equivalent.
|
bps – basis
points.
|
KEY POINTS
- Net interest revenue totaled $831
million in 4Q16, an increase of $71
million year-over-year and $57
million sequentially. The year-over-year increase was
primarily driven by the increase in interest rates, partially
offset by lower interest-earning assets. Both increases
reflect the impact of interest rate hedging activities, which
positively impacted 4Q16 by approximately $25 million. Substantially all of this
impact was offset in foreign exchange and other trading
revenue.
- Effective Oct. 1, 2016, we
changed our accounting method for the amortization of premiums and
accretion of discounts on certain mortgage-backed securities from
the prepayment method (also referred to as the retrospective
method) to the contractual method. Net interest revenue for
4Q16 was positively adjusted approximately $15 million as a result of this change.
Prior periods were not adjusted as the impacts were not
material. Net interest revenue for 4Q16 would have been
higher had we continued to use the prepayment method.
- The $25 million impact of
interest rate hedging activities and the $15
million premium amortization adjustment positively impacted
the 4Q16 net interest margin by 5 basis points.
NONINTEREST
EXPENSE
|
|
Noninterest
expense
|
|
|
|
|
|
4Q16
vs.
|
(dollars in
millions)
|
4Q16
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
3Q16
|
4Q15
|
Staff
|
$
|
1,395
|
|
$
|
1,467
|
|
$
|
1,412
|
|
$
|
1,459
|
|
$
|
1,481
|
|
(5)
|
%
|
(6)
|
%
|
Professional, legal
and other purchased services
|
325
|
|
292
|
|
290
|
|
278
|
|
328
|
|
11
|
|
(1)
|
|
Software and
equipment
|
237
|
|
215
|
|
223
|
|
219
|
|
225
|
|
10
|
|
5
|
|
Net
occupancy
|
153
|
|
143
|
|
152
|
|
142
|
|
148
|
|
7
|
|
3
|
|
Distribution and
servicing
|
98
|
|
105
|
|
102
|
|
100
|
|
92
|
|
(7)
|
|
7
|
|
Business
development
|
71
|
|
52
|
|
65
|
|
57
|
|
75
|
|
37
|
|
(5)
|
|
Sub-custodian
|
57
|
|
59
|
|
70
|
|
59
|
|
60
|
|
(3)
|
|
(5)
|
|
Other
|
228
|
|
231
|
|
240
|
|
241
|
|
201
|
|
(1)
|
|
13
|
|
Amortization of
intangible assets
|
60
|
|
61
|
|
59
|
|
57
|
|
64
|
|
(2)
|
|
(6)
|
|
M&I, litigation
and restructuring charges
|
7
|
|
18
|
|
7
|
|
17
|
|
18
|
|
N/M
|
|
N/M
|
|
Total noninterest
expense – GAAP
|
$
|
2,631
|
|
$
|
2,643
|
|
$
|
2,620
|
|
$
|
2,629
|
|
$
|
2,692
|
|
—
|
%
|
(2)
|
%
|
|
|
|
|
|
|
|
|
Total staff expense
as a percentage of total revenue
|
37
|
%
|
37
|
%
|
37
|
%
|
39
|
%
|
40
|
%
|
|
|
|
|
|
|
|
|
|
|
Memo:
|
|
|
|
|
|
|
|
Total noninterest
expense excluding amortization of intangible assets and M&I,
litigation and restructuring charges – Non-GAAP
|
$
|
2,564
|
|
$
|
2,564
|
|
$
|
2,554
|
|
$
|
2,555
|
|
$
|
2,610
|
|
—
|
%
|
(2)
|
%
|
KEY POINTS
- Total noninterest expense decreased 2% year-over-year and
decreased slightly sequentially. Total noninterest expense
excluding amortization of intangible assets and M&I, litigation
and restructuring charges (Non-GAAP) decreased 2% year-over-year
and was flat sequentially.
- The year-over-year decrease primarily reflects lower staff
expense and M&I, litigation and restructuring charges,
partially offset by higher other and software and equipment
expenses. The decrease in staff expense year-over-year was
primarily driven by the favorable impact of a stronger U.S. dollar,
lower employee benefits and severance expense. The increase
in other expense primarily reflects a downward adjustment in bank
assessment charges recorded in 4Q15.
- The sequential decrease primarily reflects lower staff expense
and M&I, litigation and restructuring charges, partially offset
by higher professional, legal and other purchased services,
software and equipment and business development expenses. The
decrease in staff expense was primarily due to lower incentives and
severance expenses. The increase in professional, legal and
other purchased services primarily reflects higher regulatory
compliance costs.
INVESTMENT
SECURITIES PORTFOLIO
|
|
At Dec. 31, 2016, the
fair value of our investment securities portfolio totaled $114.3
billion. The net unrealized pre-tax loss on our total
securities portfolio was $221 million at Dec. 31, 2016 compared
with a net unrealized pre-tax gain of $1.4 billion at Sept. 30,
2016. The decrease in the net unrealized pre-tax gain was
primarily driven by an increase in market interest rates. At
Dec. 31, 2016, the fair value of the held-to-maturity securities
totaled $40.7 billion and represented 36% of the fair value of the
total investment securities portfolio.
|
|
The following table
shows the distribution of our investment securities
portfolio.
|
|
Investment
securities
portfolio
(dollars in
millions)
|
Sept. 30,
2016
|
|
4Q16
change in
unrealized
gain
(loss)
|
Dec. 31,
2016
|
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
|
$
|
48,987
|
|
|
$
|
(924)
|
|
$
|
48,150
|
|
$
|
47,715
|
|
|
99
|
%
|
$
|
(435)
|
|
|
100
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
U.S.
Treasury
|
25,135
|
|
|
(269)
|
|
25,490
|
|
25,244
|
|
|
99
|
|
(246)
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Sovereign
debt/sovereign guaranteed
|
15,998
|
|
|
(94)
|
|
14,159
|
|
14,373
|
|
|
102
|
|
214
|
|
|
75
|
|
5
|
|
20
|
|
—
|
|
—
|
|
Non-agency RMBS
(b)
|
1,463
|
|
|
(20)
|
|
1,080
|
|
1,357
|
|
|
80
|
|
277
|
|
|
—
|
|
1
|
|
2
|
|
87
|
|
10
|
|
Non-agency
RMBS
|
757
|
|
|
4
|
|
698
|
|
718
|
|
|
94
|
|
20
|
|
|
8
|
|
4
|
|
15
|
|
72
|
|
1
|
|
European floating rate notes
|
851
|
|
|
7
|
|
717
|
|
706
|
|
|
98
|
|
(11)
|
|
|
68
|
|
24
|
|
8
|
|
—
|
|
—
|
|
Commercial
MBS
|
7,310
|
|
|
(143)
|
|
8,106
|
|
8,037
|
|
|
99
|
|
(69)
|
|
|
98
|
|
2
|
|
—
|
|
—
|
|
—
|
|
State and political
subdivisions
|
3,578
|
|
|
(99)
|
|
3,411
|
|
3,396
|
|
|
100
|
|
(15)
|
|
|
80
|
|
17
|
|
—
|
|
—
|
|
3
|
|
Foreign covered
bonds
|
2,433
|
|
|
(22)
|
|
2,200
|
|
2,216
|
|
|
101
|
|
16
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Corporate
bonds
|
1,638
|
|
|
(48)
|
|
1,391
|
|
1,396
|
|
|
100
|
|
5
|
|
|
18
|
|
67
|
|
15
|
|
—
|
|
—
|
|
CLOs
|
2,534
|
|
|
1
|
|
2,593
|
|
2,598
|
|
|
100
|
|
5
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
—
|
|
U.S. Government
agencies
|
1,808
|
|
|
21
|
|
1,955
|
|
1,964
|
|
|
101
|
|
9
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Consumer
ABS
|
2,203
|
|
|
(3)
|
|
1,729
|
|
1,727
|
|
|
100
|
|
(2)
|
|
|
90
|
|
4
|
|
5
|
|
1
|
|
—
|
|
Other
(c)
|
3,961
|
|
|
(19)
|
|
2,822
|
|
2,833
|
|
|
100
|
|
11
|
|
|
83
|
|
—
|
|
14
|
|
—
|
|
3
|
|
Total investment
securities
|
$
|
118,656
|
|
(d)
|
$
|
(1,608)
|
|
$
|
114,501
|
|
$
|
114,280
|
|
(d)
|
99
|
%
|
$
|
(221)
|
|
(d)(e)
|
93
|
%
|
2
|
%
|
3
|
%
|
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 $1,503 million and $401
million and money market funds with a fair value of $931 million
and $842 million at Sept. 30, 2016 and Dec. 31, 2016,
respectively.
|
(d)
|
Includes net
unrealized losses on derivatives hedging securities
available-for-sale of $1,001 million at Sept. 30, 2016 and $211
million at Dec. 31, 2016.
|
(e)
|
Unrealized gains
of $15 million at Dec. 31, 2016 related to available-for-sale
securities.
|
NONPERFORMING
ASSETS
|
|
Nonperforming
assets
(dollars in
millions)
|
Dec.
31,
2016
|
Sept. 30,
2016
|
Dec. 31,
2015
|
Loans:
|
|
|
|
Financial
institutions
|
$
|
—
|
|
$
|
—
|
|
$
|
171
|
|
Other residential
mortgages
|
91
|
|
93
|
|
102
|
|
Wealth management
loans and mortgages
|
8
|
|
7
|
|
11
|
|
Lease
financing
|
4
|
|
4
|
|
—
|
|
Commercial real
estate
|
—
|
|
1
|
|
2
|
|
Total nonperforming
loans
|
103
|
|
105
|
|
286
|
|
Other assets
owned
|
4
|
|
4
|
|
6
|
|
Total nonperforming
assets
|
$
|
107
|
|
$
|
109
|
|
$
|
292
|
|
Nonperforming assets
ratio
|
0.17
|
%
|
0.17
|
%
|
0.46
|
%
|
Allowance for loan
losses/nonperforming loans
|
164.1
|
|
141.0
|
|
54.9
|
|
Total allowance for
credit losses/nonperforming loans
|
272.8
|
|
261.0
|
|
96.2
|
|
Nonperforming assets were $107
million at Dec. 31, 2016, a
decrease of $2 million compared with
Sept. 30, 2016, and a decrease of
$185 million compared with
Dec. 31, 2015. The decrease
compared with Dec. 31, 2015 primarily
reflects the receipt of trust assets from the bankruptcy proceeding
of Sentinel.
ALLOWANCE FOR
CREDIT LOSSES, PROVISION AND NET CHARGE-OFFS
|
|
Allowance for
credit losses, provision and net charge-offs
(in
millions)
|
Dec.
31,
2016
|
Sept. 30,
2016
|
Dec. 31,
2015
|
Allowance for credit
losses - beginning of period
|
$
|
274
|
|
$
|
280
|
|
$
|
280
|
|
Provision for credit
losses
|
7
|
|
(19)
|
|
163
|
|
Net recoveries
(charge-offs):
|
|
|
|
Financial
institutions
|
—
|
|
13
|
|
(170)
|
|
Other residential
mortgages
|
—
|
|
—
|
|
2
|
|
Net recoveries
(charge-offs)
|
—
|
|
13
|
|
(168)
|
|
Allowance for credit
losses - end of period
|
$
|
281
|
|
$
|
274
|
|
$
|
275
|
|
Allowance for loan
losses
|
$
|
169
|
|
$
|
148
|
|
$
|
157
|
|
Allowance for
lending-related commitments
|
112
|
|
126
|
|
118
|
|
The allowance for credit losses was $281
million at Dec. 31, 2016, an
increase of $7 million compared with
$274 million at Sept. 30, 2016.
CAPITAL AND
LIQUIDITY
|
|
Capital
ratios
|
Dec. 31,
2016
|
Sept. 30,
2016
|
Dec. 31,
2015
|
Consolidated
regulatory capital ratios: (a)
|
|
|
|
Standardized:
|
|
|
|
Common equity Tier 1
("CET1") ratio
|
12.3
|
%
|
12.2
|
%
|
11.5
|
%
|
Tier 1 capital
ratio
|
14.5
|
|
14.4
|
|
13.1
|
|
Total (Tier 1 plus Tier
2) capital ratio
|
15.2
|
|
14.8
|
|
13.5
|
|
Advanced:
|
|
|
|
CET1 ratio
|
10.6
|
|
10.5
|
|
10.8
|
|
Tier 1 capital
ratio
|
12.6
|
|
12.5
|
|
12.3
|
|
Total (Tier 1 plus Tier
2) capital ratio
|
13.0
|
|
12.6
|
|
12.5
|
|
Leverage capital
ratio (b)
|
6.6
|
|
6.6
|
|
6.0
|
|
Supplementary
leverage ratio ("SLR")
|
6.0
|
|
6.0
|
|
5.4
|
|
BNY Mellon
shareholders' equity to total assets ratio – GAAP
(c)
|
11.6
|
|
10.6
|
|
9.7
|
|
BNY Mellon common
shareholders' equity to total assets ratio – GAAP
(c)
|
10.6
|
|
9.7
|
|
9.0
|
|
BNY Mellon tangible
common shareholders' equity to tangible assets of operations ratio
– Non-GAAP (c)
|
6.7
|
|
6.5
|
|
6.5
|
|
|
|
|
|
Selected
regulatory capital ratios – fully phased-in – Non-GAAP:
(a)(d)
|
|
|
|
CET1
ratio:
|
|
|
|
Standardized
Approach
|
11.3
|
%
|
11.4
|
%
|
10.2
|
%
|
Advanced
Approach
|
9.7
|
|
9.8
|
|
9.5
|
|
SLR
|
5.6
|
|
5.7
|
|
4.9
|
|
(a)
|
Regulatory capital
ratios for Dec. 31, 2016 are preliminary. For our CET1, Tier
1 capital and Total capital ratios, our effective capital ratios
under the U.S. capital rules are the lower of the ratios as
calculated under the Standardized and Advanced
Approaches.
|
(b)
|
The leverage
capital ratio is based on Tier 1 capital, as phased-in and
quarterly average total assets.
|
(c)
|
See "Supplemental
information – Explanation of GAAP and Non-GAAP financial measures"
beginning on page 24 for a reconciliation of these
ratios.
|
(d)
|
Estimated.
|
CET1 generation in
4Q16 – preliminary
|
Transitional
basis
(b)
|
Fully
phased-in
-
Non-GAAP
(c)
|
|
|
|
(in
millions)
|
|
CET1 – Beginning of
period
|
$
|
18,559
|
|
$
|
17,159
|
|
|
Net income applicable
to common shareholders of The Bank of New York Mellon Corporation –
GAAP
|
822
|
|
822
|
|
|
Goodwill and
intangible assets, net of related deferred tax
liabilities
|
191
|
|
215
|
|
|
Gross CET1
generated
|
1,013
|
|
1,037
|
|
|
Capital
deployed:
|
|
|
|
Dividends
|
(203)
|
|
(203)
|
|
|
Common stock
repurchased
|
(848)
|
|
(848)
|
|
|
Total capital
deployed
|
(1,051)
|
|
(1,051)
|
|
|
Other comprehensive
income
|
(752)
|
|
(980)
|
|
|
Additional paid-in
capital (a)
|
325
|
|
325
|
|
|
Other
|
(1)
|
|
—
|
|
|
Total other
deductions
|
(428)
|
|
(655)
|
|
|
Net CET1
generated
|
(466)
|
|
(669)
|
|
|
CET1 – End of
period
|
$
|
18,093
|
|
$
|
16,490
|
|
|
(a)
|
Primarily related
to stock awards, the exercise of stock options and stock issued for
employee benefit plans.
|
(b)
|
Reflects
transitional adjustments to CET1 required under the U.S. capital
rules.
|
(c)
|
Estimated.
|
The table presented below compares the fully phased-in Basel III
capital components and risk-based ratios to those capital
components and ratios determined on a transitional basis.
Basel III capital
components and ratios
|
Dec. 31, 2016
(a)
|
|
Sept. 30,
2016
|
|
Dec. 31,
2015
|
(dollars in
millions)
|
Transitional
basis (b)
|
Fully
phased-in -
Non-GAAP (c)
|
|
Transitional
basis
(b)
|
Fully
phased-in
-
Non-GAAP
(c)
|
|
Transitional
basis
(b)
|
Fully
phased-in
-
Non-GAAP
(c)
|
CET1:
|
|
|
|
|
|
|
|
|
Common shareholders'
equity
|
$
|
35,794
|
|
$
|
35,269
|
|
|
$
|
36,450
|
|
$
|
36,153
|
|
|
$
|
36,067
|
|
$
|
35,485
|
|
Goodwill and
intangible assets
|
(17,314)
|
|
(18,312)
|
|
|
(17,505)
|
|
(18,527)
|
|
|
(17,295)
|
|
(18,911)
|
|
Net pension fund
assets
|
(54)
|
|
(90)
|
|
|
(56)
|
|
(94)
|
|
|
(46)
|
|
(116)
|
|
Equity method
investments
|
(313)
|
|
(344)
|
|
|
(314)
|
|
(347)
|
|
|
(296)
|
|
(347)
|
|
Deferred tax
assets
|
(19)
|
|
(32)
|
|
|
(15)
|
|
(25)
|
|
|
(8)
|
|
(20)
|
|
Other
|
(1)
|
|
(1)
|
|
|
(1)
|
|
(1)
|
|
|
(5)
|
|
(9)
|
|
Total CET1
|
18,093
|
|
16,490
|
|
|
18,559
|
|
17,159
|
|
|
18,417
|
|
16,082
|
|
Other Tier 1
capital:
|
|
|
|
|
|
|
|
|
Preferred
stock
|
3,542
|
|
3,542
|
|
|
3,542
|
|
3,542
|
|
|
2,552
|
|
2,552
|
|
Trust preferred
securities
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
74
|
|
—
|
|
Deferred tax
assets
|
(13)
|
|
—
|
|
|
(10)
|
|
—
|
|
|
(12)
|
|
—
|
|
Net pension fund
assets
|
(36)
|
|
—
|
|
|
(38)
|
|
—
|
|
|
(70)
|
|
—
|
|
Other
|
(121)
|
|
(121)
|
|
|
(110)
|
|
(109)
|
|
|
(25)
|
|
(22)
|
|
Total Tier 1
capital
|
21,465
|
|
19,911
|
|
|
21,943
|
|
20,592
|
|
|
20,936
|
|
18,612
|
|
|
|
|
|
|
|
|
|
|
Tier 2
capital:
|
|
|
|
|
|
|
|
|
Trust preferred
securities
|
148
|
|
—
|
|
|
156
|
|
—
|
|
|
222
|
|
—
|
|
Subordinated
debt
|
550
|
|
550
|
|
|
149
|
|
149
|
|
|
149
|
|
149
|
|
Allowance for credit
losses
|
281
|
|
281
|
|
|
274
|
|
274
|
|
|
275
|
|
275
|
|
Other
|
(12)
|
|
(11)
|
|
|
(6)
|
|
(6)
|
|
|
(12)
|
|
(12)
|
|
Total Tier 2 capital -
Standardized
Approach
|
967
|
|
820
|
|
|
573
|
|
417
|
|
|
634
|
|
412
|
|
Excess of expected
credit losses
|
61
|
|
61
|
|
|
33
|
|
33
|
|
|
37
|
|
37
|
|
Less: Allowance for
credit losses
|
281
|
|
281
|
|
|
274
|
|
274
|
|
|
275
|
|
275
|
|
Total Tier 2 capital -
Advanced
Approach
|
$
|
747
|
|
$
|
600
|
|
|
$
|
332
|
|
$
|
176
|
|
|
$
|
396
|
|
$
|
174
|
|
|
|
|
|
|
|
|
|
|
Total
capital:
|
|
|
|
|
|
|
|
|
Standardized
Approach
|
$
|
22,432
|
|
$
|
20,731
|
|
|
$
|
22,516
|
|
$
|
21,009
|
|
|
$
|
21,570
|
|
$
|
19,024
|
|
Advanced
Approach
|
$
|
22,212
|
|
$
|
20,511
|
|
|
$
|
22,275
|
|
$
|
20,768
|
|
|
$
|
21,332
|
|
$
|
18,786
|
|
|
|
|
|
|
|
|
|
|
Risk-weighted
assets:
|
|
|
|
|
|
|
|
|
Standardized
Approach
|
$
|
147,581
|
|
$
|
146,392
|
|
|
$
|
152,410
|
|
$
|
151,173
|
|
|
$
|
159,893
|
|
$
|
158,015
|
|
Advanced
Approach
|
$
|
170,519
|
|
$
|
169,259
|
|
|
$
|
176,232
|
|
$
|
174,912
|
|
|
$
|
170,384
|
|
$
|
168,509
|
|
|
|
|
|
|
|
|
|
|
Standardized
Approach:
|
|
|
|
|
|
|
|
|
CET1 ratio
|
12.3
|
%
|
11.3
|
%
|
|
12.2
|
%
|
11.4
|
%
|
|
11.5
|
%
|
10.2
|
%
|
Tier 1 capital
ratio
|
14.5
|
|
13.6
|
|
|
14.4
|
|
13.6
|
|
|
13.1
|
|
11.8
|
|
Total (Tier 1 plus
Tier 2) capital ratio
|
15.2
|
|
14.2
|
|
|
14.8
|
|
13.9
|
|
|
13.5
|
|
12.0
|
|
Advanced
Approach:
|
|
|
|
|
|
|
|
|
CET1 ratio
|
10.6
|
%
|
9.7
|
%
|
|
10.5
|
%
|
9.8
|
%
|
|
10.8
|
%
|
9.5
|
%
|
Tier 1 capital
ratio
|
12.6
|
|
11.8
|
|
|
12.5
|
|
11.8
|
|
|
12.3
|
|
11.0
|
|
Total (Tier 1 plus
Tier 2) capital ratio
|
13.0
|
|
12.1
|
|
|
12.6
|
|
11.9
|
|
|
12.5
|
|
11.1
|
|
(a)
|
Preliminary.
|
(b)
|
Reflects
transitional adjustments to CET1, Tier 1 capital and Tier 2 capital
required under the U.S. capital rules.
|
(c)
|
Estimated.
|
BNY Mellon has presented its estimated fully phased-in CET1 and
other risk-based capital ratios and the fully phased-in SLR based
on its interpretation of the U.S. capital rules, which are being
gradually phased-in over a multi-year period, and on the
application of such rules to BNY Mellon's businesses as currently
conducted. Management views the estimated fully phased-in
CET1 and other risk-based capital ratios and fully phased-in 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
CET1 and other risk-based capital ratios and fully phased-in SLR
are intended to allow investors to compare these ratios with
estimates presented by other companies.
Our capital and liquidity ratios are necessarily subject to,
among other things, BNY Mellon's further review of applicable
rules, anticipated compliance with all necessary enhancements to
model calibration, approval by regulators of certain models used as
part of RWA calculations, other refinements, further implementation
guidance from regulators, market practices and standards and any
changes BNY Mellon may make to its businesses. Consequently,
our capital and liquidity ratios remain subject to ongoing review
and revision and may change based on these factors.
Supplementary Leverage Ratio ("SLR")
The following table presents the SLR on both the transitional
and fully phased-in Basel III basis for BNY Mellon and our largest
bank subsidiary, The Bank of New York Mellon.
SLR
|
Dec. 31, 2016
(a)
|
|
Sept. 30,
2016
|
|
Dec. 31,
2015
|
(dollars in
millions)
|
Transitional
basis
|
Fully
phased-in -
Non-GAAP (b)
|
|
Transitional
basis
|
Fully
phased-in -
Non-GAAP (b)
|
|
Transitional
basis
|
Fully
phased-in
-
Non-GAAP
(b)
|
Consolidated:
|
|
|
|
|
|
|
|
|
Tier 1
capital
|
$
|
21,465
|
|
$
|
19,911
|
|
|
$
|
21,943
|
|
$
|
20,592
|
|
|
$
|
20,936
|
|
$
|
18,612
|
|
|
|
|
|
|
|
|
|
|
Total leverage
exposure:
|
|
|
|
|
|
|
|
|
Quarterly average
total assets
|
$
|
344,142
|
|
$
|
344,142
|
|
|
$
|
351,230
|
|
$
|
351,230
|
|
|
$
|
368,590
|
|
$
|
368,590
|
|
Less: Amounts
deducted from Tier 1 capital
|
17,562
|
|
18,886
|
|
|
17,743
|
|
19,095
|
|
|
17,650
|
|
19,403
|
|
Total on-balance
sheet assets
|
326,580
|
|
325,256
|
|
|
333,487
|
|
332,135
|
|
|
350,940
|
|
349,187
|
|
Off-balance sheet
exposures:
|
|
|
|
|
|
|
|
|
Potential future
exposure for derivatives contracts (plus certain other
items)
|
6,021
|
|
6,021
|
|
|
6,149
|
|
6,149
|
|
|
7,158
|
|
7,158
|
|
Repo-style
transaction exposures
|
533
|
|
533
|
|
|
447
|
|
447
|
|
|
440
|
|
440
|
|
Credit-equivalent
amount of other off-balance sheet exposures (less SLR
exclusions)
|
23,274
|
|
23,274
|
|
|
23,571
|
|
23,571
|
|
|
26,025
|
|
26,025
|
|
Total off-balance
sheet exposures
|
29,828
|
|
29,828
|
|
|
30,167
|
|
30,167
|
|
|
33,623
|
|
33,623
|
|
Total leverage
exposure
|
$
|
356,408
|
|
$
|
355,084
|
|
|
$
|
363,654
|
|
$
|
362,302
|
|
|
$
|
384,563
|
|
$
|
382,810
|
|
|
|
|
|
|
|
|
|
|
SLR - Consolidated
(c)
|
6.0
|
%
|
5.6
|
%
|
|
6.0
|
%
|
5.7
|
%
|
|
5.4
|
%
|
4.9
|
%
|
|
|
|
|
|
|
|
|
|
The Bank of New
York Mellon, our largest bank subsidiary:
|
|
|
|
|
|
|
|
|
Tier 1
capital
|
$
|
19,019
|
|
$
|
17,715
|
|
|
$
|
18,701
|
|
$
|
17,592
|
|
|
$
|
16,814
|
|
$
|
15,142
|
|
Total leverage
exposure
|
$
|
290,623
|
|
$
|
290,230
|
|
|
$
|
299,641
|
|
$
|
299,236
|
|
|
$
|
316,812
|
|
$
|
316,270
|
|
|
|
|
|
|
|
|
|
|
SLR - The Bank of New
York Mellon (c)
|
6.5
|
%
|
6.1
|
%
|
|
6.2
|
%
|
5.9
|
%
|
|
5.3
|
%
|
4.8
|
%
|
(a)
|
Dec. 31, 2016
information is preliminary.
|
(b)
|
Estimated.
|
(c)
|
The estimated
fully phased-in SLR (Non-GAAP) is based on our interpretation of
the U.S. capital rules. When the SLR is fully phased-in in
2018 as a required minimum ratio, we expect to maintain an SLR of
over 5%. The minimum required SLR is 3% and there is a 2%
buffer, in addition to the minimum, that is applicable to U.S.
G-SIBs. The insured depository institution subsidiaries of
the U.S. G-SIBs, including those of BNY Mellon, must maintain a 6%
SLR to be considered "well capitalized."
|
Liquidity Coverage Ratio ("LCR")
The U.S. LCR rules became effective Jan.
1, 2015 and require BNY Mellon to meet an LCR of 100% when
fully phased-in on Jan. 1,
2017. Our estimated LCR on a consolidated basis is compliant
with the fully phased-in requirements of the U.S. LCR as of
Dec. 31, 2016. Our consolidated
HQLA before haircuts totaled $156
billion at Dec. 31, 2016,
compared with $195 billion at
Sept. 30, 2016 and $218 billion at Dec. 31,
2015.
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)
|
|
|
|
|
|
|
4Q16
vs.
|
4Q16
|
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
3Q16
|
4Q15
|
Revenue:
|
|
|
|
|
|
|
|
|
Investment management
fees:
|
|
|
|
|
|
|
|
|
Mutual funds
|
$
|
297
|
|
|
$
|
309
|
|
$
|
304
|
|
$
|
300
|
|
$
|
294
|
|
(4)
|
%
|
1
|
%
|
Institutional
clients
|
340
|
|
|
362
|
|
344
|
|
334
|
|
350
|
|
(6)
|
|
(3)
|
|
Wealth
management
|
164
|
|
|
166
|
|
160
|
|
152
|
|
155
|
|
(1)
|
|
6
|
|
Investment management
fees (a)
|
801
|
|
|
837
|
|
808
|
|
786
|
|
799
|
|
(4)
|
|
—
|
|
Performance
fees
|
32
|
|
|
8
|
|
9
|
|
11
|
|
55
|
|
N/M
|
(42)
|
|
Investment management
and performance fees
|
833
|
|
|
845
|
|
817
|
|
797
|
|
854
|
|
(1)
|
|
(2)
|
|
Distribution and
servicing
|
48
|
|
|
49
|
|
49
|
|
46
|
|
39
|
|
(2)
|
|
23
|
|
Other
(a)
|
(1)
|
|
|
(18)
|
|
(10)
|
|
(31)
|
|
22
|
|
N/M
|
N/M
|
Total fee and other
revenue (a)
|
880
|
|
|
876
|
|
856
|
|
812
|
|
915
|
|
—
|
|
(4)
|
|
Net interest
revenue
|
80
|
|
|
82
|
|
82
|
|
83
|
|
84
|
|
(2)
|
|
(5)
|
|
Total
revenue
|
960
|
|
|
958
|
|
938
|
|
895
|
|
999
|
|
—
|
|
(4)
|
|
Provision for credit
losses
|
6
|
|
|
—
|
|
1
|
|
(1)
|
|
(4)
|
|
N/M
|
N/M
|
Noninterest expense
(ex. amortization of intangible assets)
|
672
|
|
|
680
|
|
684
|
|
660
|
|
689
|
|
(1)
|
|
(2)
|
|
Amortization of
intangible assets
|
22
|
|
|
22
|
|
19
|
|
19
|
|
24
|
|
—
|
|
(8)
|
|
Total noninterest
expense
|
694
|
|
|
702
|
|
703
|
|
679
|
|
713
|
|
(1)
|
|
(3)
|
|
Income before
taxes
|
$
|
260
|
|
|
$
|
256
|
|
$
|
234
|
|
$
|
217
|
|
$
|
290
|
|
2
|
%
|
(10)
|
%
|
Income before taxes
(ex. amortization of intangible assets) – Non-GAAP
|
$
|
282
|
|
|
$
|
278
|
|
$
|
253
|
|
$
|
236
|
|
$
|
314
|
|
1
|
%
|
(10)
|
%
|
|
|
|
|
|
|
|
|
|
Pre-tax operating
margin
|
27
|
%
|
|
27
|
%
|
25
|
%
|
24
|
%
|
29
|
%
|
|
|
Adjusted pre-tax
operating margin – Non-GAAP (b)
|
33
|
%
|
|
33
|
%
|
30
|
%
|
30
|
%
|
34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Changes in AUM
(in billions): (c)
|
|
|
|
|
|
|
|
|
Beginning balance of
AUM
|
$
|
1,715
|
|
|
$
|
1,664
|
|
$
|
1,639
|
|
$
|
1,625
|
|
$
|
1,625
|
|
|
|
Net inflows
(outflows):
|
|
|
|
|
|
|
|
|
Long-term
strategies:
|
|
|
|
|
|
|
|
|
Equity
|
(4)
|
|
|
(3)
|
|
(2)
|
|
(3)
|
|
(9)
|
|
|
|
Fixed income
|
(1)
|
|
|
—
|
|
(2)
|
|
—
|
|
1
|
|
|
|
Liability-driven
investments (d)
|
(7)
|
|
|
4
|
|
15
|
|
14
|
|
11
|
|
|
|
Alternative
investments
|
2
|
|
|
2
|
|
1
|
|
1
|
|
2
|
|
|
|
Total long-term active
strategies (outflows) inflows
|
(10)
|
|
|
3
|
|
12
|
|
12
|
|
5
|
|
|
|
Index
|
(1)
|
|
|
(2)
|
|
(17)
|
|
(11)
|
|
(16)
|
|
|
|
Total long-term
strategies (outflows) inflows
|
(11)
|
|
|
1
|
|
(5)
|
|
1
|
|
(11)
|
|
|
|
Short term
strategies:
|
|
|
|
|
|
|
|
|
Cash
|
(3)
|
|
|
(1)
|
|
4
|
|
(9)
|
|
2
|
|
|
|
Total net
(outflows)
|
(14)
|
|
|
—
|
|
(1)
|
|
(8)
|
|
(9)
|
|
|
|
Net market
impact/other
|
(11)
|
|
|
80
|
|
71
|
|
41
|
|
24
|
|
|
|
Net currency
impact
|
(42)
|
|
|
(29)
|
|
(47)
|
|
(19)
|
|
(15)
|
|
|
|
Acquisition
|
—
|
|
|
—
|
|
2
|
|
—
|
|
—
|
|
|
|
Ending balance of
AUM
|
$
|
1,648
|
|
(e)
|
$
|
1,715
|
|
$
|
1,664
|
|
$
|
1,639
|
|
$
|
1,625
|
|
(4)
|
%
|
1
|
%
|
|
|
|
|
|
|
|
|
|
AUM at period end,
by product type: (c)
|
|
|
|
|
|
|
|
|
Equity
|
14
|
%
|
|
13
|
%
|
14
|
%
|
14
|
%
|
14
|
%
|
|
|
Fixed
income
|
13
|
|
|
14
|
|
13
|
|
13
|
|
13
|
|
|
|
Index
|
19
|
|
|
18
|
|
18
|
|
19
|
|
20
|
|
|
|
Liability-driven
investments (d)
|
34
|
|
|
35
|
|
34
|
|
33
|
|
32
|
|
|
|
Alternative
investments
|
4
|
|
|
4
|
|
4
|
|
4
|
|
4
|
|
|
|
Cash
|
16
|
|
|
16
|
|
17
|
|
17
|
|
17
|
|
|
|
Total AUM
|
100
|
%
|
(e)
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Average
balances:
|
|
|
|
|
|
|
|
|
Average
loans
|
$
|
15,673
|
|
|
$
|
15,308
|
|
$
|
14,795
|
|
$
|
14,275
|
|
$
|
13,447
|
|
2
|
%
|
17
|
%
|
Average
deposits
|
$
|
15,511
|
|
|
$
|
15,600
|
|
$
|
15,518
|
|
$
|
15,971
|
|
$
|
15,497
|
|
(1)
|
%
|
—
|
%
|
(a)
|
Total fee and
other revenue includes the impact of the consolidated investment
management funds, net of noncontrolling interests. See page
28 for a breakdown of the revenue line items in the Investment
Management business impacted by the consolidated investment
management funds. Additionally, other revenue includes asset
servicing, treasury services, foreign exchange and other trading
revenue and investment and other income.
|
(b)
|
Excludes
amortization of intangible assets, provision for credit losses and
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 and the Other segment.
|
(d)
|
Includes currency
overlay assets under management.
|
(e)
|
Preliminary.
|
N/M – Not
meaningful.
|
INVESTMENT MANAGEMENT KEY POINTS
- Income before taxes totaled $260
million in 4Q16, a decrease of 10% year-over-year and an
increase of 2% sequentially. Income before taxes, excluding
amortization of intangible assets (Non-GAAP), totaled $282 million in 4Q16, a decrease of 10%
year-over-year and an increase of 1% sequentially.
- Pre-tax operating margin of 27% in 4Q16 decreased 197 basis
points year-over-year and increased 41 basis points
sequentially.
- Adjusted pre-tax operating margin (Non-GAAP) of 33% in 4Q16
decreased 85 basis points year-over-year and increased 83 basis
points sequentially.
- Total revenue was $960 million, a
decrease of 4% year-over-year and a slight increase sequentially.
- 42% non-U.S. revenue in 4Q16 vs. 42% in 4Q15.
- Investment management fees were $801
million, a slight increase year-over-year and a decrease of
4% sequentially. The year-over-year increase primarily
reflects higher market values and money market fees, partially
offset by the unfavorable impact of a stronger U.S. dollar
(principally versus the British pound). The sequential
decrease primarily reflects outflows of assets under management,
lower fixed income market values and money market fees.
- Net long-term outflows of $11
billion in 4Q16 were a combination of $10 billion of outflows from actively managed
strategies and $1 billion of outflows
from index strategies.
- Net short-term outflows were $3
billion in 4Q16.
- Performance fees were $32 million
in 4Q16 compared with $55 million in
4Q15 and $8 million in 3Q16.
The sequential increase was driven by seasonality.
- Distribution and servicing fees were $48
million in 4Q16 compared with $39
million in 4Q15 and $49
million in 3Q16. The year-over-year increase primarily
reflects higher money market fees.
- Other revenue was a loss of $1
million in 4Q16 compared with other revenue of $22 million in 4Q15 and a loss of $18 million in 3Q16. The year-over-year
decrease reflects payments to Investment Services related to higher
money market fees and lower seed capital gains, partially offset by
gains on investments. The sequential increase primarily
reflects gains on hedging activity and investments, as well as
losses on investments recorded in 3Q16, partially offset by lower
seed capital gains.
- Net interest revenue decreased 5% year-over-year and 2%
sequentially. The year-over-year decrease primarily reflects
the impact of the 1Q16 changes in the internal crediting rates,
partially offset by record average loans and higher rates on
deposits.
- Average loans increased 17% year-over-year and 2% sequentially;
average deposits increased slightly year-over-year and decreased 1%
sequentially. The increases in average loans were driven by
our program to extend banking solutions to high net worth
clients.
- Total noninterest expense (excluding amortization of intangible
assets) decreased 2% year-over-year and 1% sequentially. The
year-over-year decrease was primarily driven by the favorable
impact of a stronger U.S. dollar (principally versus the British
pound) and lower professional, legal and other purchased services
and lower staff expense, partially offset by higher distribution
and servicing expense as a result of lower money market fee
waivers. The sequential decrease primarily reflects lower
severance expense, partially offset by higher other expenses.
INVESTMENT SERVICES provides business and technology
solutions to financial institutions, corporations, public funds and
government agencies, including: asset servicing (custody,
accounting, broker-dealer services, securities lending, collateral
and liquidity services), clearing services, issuer services
(depositary receipts and corporate trust) and treasury services
(global payments, trade finance and cash management).
(dollars in
millions, unless otherwise noted)
|
|
|
|
|
|
|
4Q16
vs.
|
4Q16
|
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
3Q16
|
4Q15
|
Revenue:
|
|
|
|
|
|
|
|
|
Investment services
fees:
|
|
|
|
|
|
|
|
|
Asset
servicing
|
$
|
1,043
|
|
|
$
|
1,039
|
|
$
|
1,043
|
|
$
|
1,016
|
|
$
|
1,009
|
|
—
|
%
|
3
|
%
|
Clearing
services
|
354
|
|
|
347
|
|
350
|
|
348
|
|
337
|
|
2
|
|
5
|
|
Issuer
services
|
211
|
|
|
336
|
|
233
|
|
244
|
|
199
|
|
(37)
|
|
6
|
|
Treasury
services
|
139
|
|
|
136
|
|
137
|
|
129
|
|
135
|
|
2
|
|
3
|
|
Total investment
services fees
|
1,747
|
|
|
1,858
|
|
1,763
|
|
1,737
|
|
1,680
|
|
(6)
|
|
4
|
|
Foreign exchange and
other trading revenue
|
157
|
|
|
177
|
|
161
|
|
168
|
|
150
|
|
(11)
|
|
5
|
|
Other
(a)
|
128
|
|
|
148
|
|
130
|
|
125
|
|
127
|
|
(14)
|
|
1
|
|
Total fee and other
revenue
|
2,032
|
|
|
2,183
|
|
2,054
|
|
2,030
|
|
1,957
|
|
(7)
|
|
4
|
|
Net interest
revenue
|
713
|
|
|
715
|
|
690
|
|
679
|
|
664
|
|
—
|
|
7
|
|
Total
revenue
|
2,745
|
|
|
2,898
|
|
2,744
|
|
2,709
|
|
2,621
|
|
(5)
|
|
5
|
|
Provision for credit
losses
|
—
|
|
|
1
|
|
(7)
|
|
14
|
|
8
|
|
N/M
|
N/M
|
Noninterest expense
(ex. amortization of intangible assets)
|
1,786
|
|
|
1,812
|
|
1,819
|
|
1,770
|
|
1,791
|
|
(1)
|
|
—
|
|
Amortization of
intangible assets
|
38
|
|
|
39
|
|
40
|
|
38
|
|
40
|
|
(3)
|
|
(5)
|
|
Total noninterest
expense
|
1,824
|
|
|
1,851
|
|
1,859
|
|
1,808
|
|
1,831
|
|
(1)
|
|
—
|
|
Income before
taxes
|
$
|
921
|
|
|
$
|
1,046
|
|
$
|
892
|
|
$
|
887
|
|
$
|
782
|
|
(12)
|
%
|
18
|
%
|
Income before taxes
(ex. amortization of intangible assets) – Non-GAAP
|
$
|
959
|
|
|
$
|
1,085
|
|
$
|
932
|
|
$
|
925
|
|
$
|
822
|
|
(12)
|
%
|
17
|
%
|
|
|
|
|
|
|
|
|
|
Pre-tax operating
margin
|
34
|
%
|
|
36
|
%
|
33
|
%
|
33
|
%
|
30
|
%
|
|
|
Adjusted pre-tax
operating margin (ex. provision for credit losses and amortization
of intangible assets) – Non-GAAP
|
35
|
%
|
|
37
|
%
|
34
|
%
|
35
|
%
|
32
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Investment services
fees as a percentage of noninterest expense (ex. amortization of
intangible assets)
|
98
|
%
|
|
103
|
%
|
97
|
%
|
98
|
%
|
94
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Securities lending
revenue
|
$
|
44
|
|
|
$
|
42
|
|
$
|
42
|
|
$
|
42
|
|
$
|
39
|
|
5
|
%
|
13
|
%
|
|
|
|
|
|
|
|
|
|
Metrics:
|
|
|
|
|
|
|
|
|
Average
loans
|
$
|
45,832
|
|
|
$
|
44,329
|
|
$
|
43,786
|
|
$
|
45,004
|
|
$
|
45,844
|
|
3
|
%
|
—
|
%
|
Average
deposits
|
$
|
213,531
|
|
|
$
|
220,316
|
|
$
|
221,998
|
|
$
|
215,707
|
|
$
|
229,241
|
|
(3)
|
%
|
(7)
|
%
|
|
|
|
|
|
|
|
|
|
AUC/A at period end
(in trillions) (b)
|
$
|
29.9
|
|
(c)
|
$
|
30.5
|
|
$
|
29.5
|
|
$
|
29.1
|
|
$
|
28.9
|
|
(2)
|
%
|
3
|
%
|
Market value of
securities on loan at period end (in billions) (d)
|
$
|
296
|
|
|
$
|
288
|
|
$
|
278
|
|
$
|
300
|
|
$
|
277
|
|
3
|
%
|
7
|
%
|
|
|
|
|
|
|
|
|
|
Asset
servicing:
|
|
|
|
|
|
|
|
|
Estimated new
business wins (AUC/A) (in billions)
|
$
|
141
|
|
(c)
|
$
|
150
|
|
$
|
167
|
|
$
|
40
|
|
$
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
Depositary
Receipts:
|
|
|
|
|
|
|
|
|
Number of sponsored
programs
|
1,062
|
|
|
1,094
|
|
1,112
|
|
1,131
|
|
1,145
|
|
(3)
|
%
|
(7)
|
%
|
|
|
|
|
|
|
|
|
|
Clearing
services:
|
|
|
|
|
|
|
|
|
Average active
clearing accounts (U.S. platform)
(in
thousands)
|
5,960
|
|
|
5,942
|
|
5,946
|
|
5,947
|
|
5,959
|
|
—
|
%
|
—
|
%
|
Average long-term
mutual fund assets (U.S. platform)
|
$
|
438,460
|
|
|
$
|
443,112
|
|
$
|
431,150
|
|
$
|
415,025
|
|
$
|
437,260
|
|
(1)
|
%
|
—
|
%
|
Average investor
margin loans (U.S. platform)
|
$
|
10,562
|
|
|
$
|
10,834
|
|
$
|
10,633
|
|
$
|
11,063
|
|
$
|
11,575
|
|
(3)
|
%
|
(9)
|
%
|
|
|
|
|
|
|
|
|
|
Broker-Dealer:
|
|
|
|
|
|
|
|
|
Average tri-party
repo balances (in billions)
|
$
|
2,307
|
|
|
$
|
2,212
|
|
$
|
2,108
|
|
$
|
2,104
|
|
$
|
2,153
|
|
4
|
%
|
7
|
%
|
(a)
|
Other revenue
includes investment management fees, financing-related fees,
distribution and servicing revenue and investment and other
income.
|
(b)
|
Includes the AUC/A
of CIBC Mellon of $1.2 trillion at Dec. 31, 2016 and Sept. 30,
2016, $1.1 trillion at June 30, 2016 and March 31, 2016 and $1.0
trillion at Dec. 31, 2015.
|
(c)
|
Preliminary.
|
(d)
|
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 $63
billion at Dec. 31, 2016, $64 billion at Sept. 30, 2016, $56
billion at June 30, 2016 and March 31, 2016 and $55 billion at Dec.
31, 2015.
|
N/M – Not
meaningful.
|
INVESTMENT SERVICES KEY POINTS
- Income before taxes totaled $921
million in 4Q16. Income before taxes, excluding
amortization of intangible assets (Non-GAAP), totaled $959 million in 4Q16.
- The pre-tax operating margin was 34% in 4Q16. The pre-tax
operating margin, excluding the provision for credit losses and
amortization of intangible assets (Non-GAAP), was 35% in 4Q16 and
the investment services fees as a percentage of noninterest expense
(excluding amortization of intangible assets) was 98% in 4Q16,
reflecting the continued focus on the business improvement process
to drive operating leverage.
- Investment services fees were $1.7
billion, an increase of 4% year-over-year and a decrease of
6% sequentially.
- Asset servicing fees were $1.043
billion in 4Q16 compared with $1.009
billion in 4Q15 and $1.039
billion in 3Q16. The year-over-year increase primarily
reflects higher money market fees, net new business and higher
equity market values, partially offset by the unfavorable impact of
a stronger U.S. dollar and the impact of downsizing of the UK
retail transfer agency business.
- Estimated new business wins (AUC/A) in Asset Servicing of
$141 billion in 4Q16.
- Clearing services fees were $354
million in 4Q16 compared with $337
million in 4Q15 and $347
million in 3Q16. Both increases were primarily driven
by higher money market fees. The year-over-year increase was
partially offset by the impact of previously disclosed lost
business.
- Issuer services fees were $211
million in 4Q16 compared with $199
million in 4Q15 and $336
million in 3Q16. The year-over-year increase primarily
reflects higher fees in Depositary Receipts and higher money market
fees in Corporate Trust. The sequential decrease primarily
reflects seasonality in Depositary Receipts.
- Treasury services fees were $139
million in 4Q16 compared with $135
million in 4Q15 and $136
million in 3Q16. Both increases primarily resulted
from higher payment volumes. The year-over-year increase was
partially offset by higher compensating balance credits provided to
clients, which reduces fee revenue and increases net interest
revenue.
- Foreign exchange and other trading revenue was $157 million in 4Q16 compared with $150 million in 4Q15 and $177 million in 3Q16. The year-over-year
increase primarily reflects higher volatility. The sequential
decrease primarily reflects lower Depositary Receipt-related
foreign exchange activity, partially offset by higher
volatility.
- Other revenue was $128 million in
4Q16 compared with $127 million in
4Q15 and $148 million in 3Q16.
Year-over-year, increased payments from Investment Management
related to higher money market fees were offset by termination fees
related to lost business in our clearing services business recorded
in 4Q15 and certain fees paid to introducing brokers. The
sequential decrease primarily reflects termination fees related to
lost business in our clearing services business in 3Q16.
- Net interest revenue was $713
million in 4Q16 compared with $664
million in 4Q15 and $715
million in 3Q16. The year-over-year increase primarily
reflects the impact of the higher short-term rates on lower
balances.
- Noninterest expense (excluding amortization of intangible
assets) was $1.786 billion in 4Q16
compared with $1.791 billion in 4Q15
and $1.812 billion in 3Q16.
Both decreases primarily reflect lower incentive and litigation
expense. The year-over-year decrease also reflects lower
severance and temporary services expenses. The sequential
decrease was partially offset by higher software expense.
OTHER SEGMENT primarily includes leasing operations,
certain corporate treasury activities, derivatives, global markets,
business exits and other corporate revenue and expense items.
|
|
|
|
|
|
(dollars in
millions)
|
4Q16
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
Revenue:
|
|
|
|
|
|
Fee and other
revenue
|
$
|
42
|
|
$
|
100
|
|
$
|
95
|
|
$
|
129
|
|
$
|
89
|
|
Net interest revenue
(expense)
|
38
|
|
(23)
|
|
(5)
|
|
4
|
|
12
|
|
Total
revenue
|
80
|
|
77
|
|
90
|
|
133
|
|
101
|
|
Provision for credit
losses
|
1
|
|
(20)
|
|
(3)
|
|
(3)
|
|
159
|
|
Noninterest expense
(ex. amortization of intangible assets and M&I and
restructuring charges (recoveries))
|
108
|
|
88
|
|
53
|
|
141
|
|
150
|
|
Amortization of
intangible assets
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
M&I and
restructuring charges (recoveries)
|
2
|
|
—
|
|
3
|
|
(1)
|
|
(4)
|
|
Total noninterest
expense
|
110
|
|
88
|
|
56
|
|
140
|
|
146
|
|
(Loss) income before
taxes
|
$
|
(31)
|
|
$
|
9
|
|
$
|
37
|
|
$
|
(4)
|
|
$
|
(204)
|
|
(Loss) income before
taxes (ex. amortization of intangible assets and M&I and
restructuring charges (recoveries)) – Non-GAAP
|
$
|
(29)
|
|
$
|
9
|
|
$
|
40
|
|
$
|
(5)
|
|
$
|
(208)
|
|
|
|
|
|
|
|
Average loans and
leases
|
$
|
2,142
|
|
$
|
1,941
|
|
$
|
1,703
|
|
$
|
1,917
|
|
$
|
2,673
|
|
KEY POINTS
- Total fee and other revenue decreased $47 million compared with 4Q15 and $58 million compared with 3Q16. Both
decreases primarily reflect the negative impact of interest rate
hedging activities, which are offset in net interest revenue.
Both decreases also reflect lower net securities gains and
investment and other income.
- Net interest revenue increased $26
million compared with 4Q15 and $61
million compared with 3Q16. Both increases were driven
by the positive impact of interest rate hedging activities.
Substantially all of this impact was offset in fee and other
revenue. The sequential increase also reflects approximately
$15 million related to the premium
amortization adjustment, partially offset by the results of the
leasing portfolio.
- The provision for credit losses was $1
million in 4Q16, compared with $159
million in 4Q15 and a credit of $20
million in 3Q16.
- Noninterest expense (excluding amortization of intangible
assets and M&I and restructuring charges (recoveries))
decreased $42 million compared with
4Q15 and increased $20 million
compared with 3Q16. The year-over-year decrease primarily
reflects lower staff expense. The sequential increase was
primarily driven by higher professional, legal and other purchased
services and software expense.
THE BANK OF NEW
YORK MELLON CORPORATION
Condensed
Consolidated Income Statement
|
|
|
(in
millions)
|
Quarter
ended
|
|
Year-to-date
|
|
Dec. 31,
2016
|
Sept. 30,
2016
|
Dec. 31,
2015
|
|
Dec. 31,
2016
|
Dec. 31,
2015
|
|
|
|
Fee and other
revenue
|
|
|
|
|
|
|
|
Investment services
fees:
|
|
|
|
|
|
|
|
Asset
servicing
|
$
|
1,068
|
|
$
|
1,067
|
|
$
|
1,032
|
|
|
$
|
4,244
|
|
$
|
4,187
|
|
|
Clearing
services
|
355
|
|
349
|
|
339
|
|
|
1,404
|
|
1,375
|
|
|
Issuer
services
|
211
|
|
337
|
|
199
|
|
|
1,026
|
|
978
|
|
|
Treasury
services
|
140
|
|
137
|
|
137
|
|
|
547
|
|
555
|
|
|
Total investment
services fees
|
1,774
|
|
1,890
|
|
1,707
|
|
|
7,221
|
|
7,095
|
|
|
Investment management
and performance fees
|
848
|
|
860
|
|
864
|
|
|
3,350
|
|
3,438
|
|
|
Foreign exchange and
other trading revenue
|
161
|
|
183
|
|
173
|
|
|
701
|
|
768
|
|
|
Financing-related
fees
|
50
|
|
58
|
|
51
|
|
|
219
|
|
220
|
|
|
Distribution and
servicing
|
41
|
|
43
|
|
41
|
|
|
166
|
|
162
|
|
|
Investment and other
income
|
70
|
|
92
|
|
93
|
|
|
341
|
|
316
|
|
|
Total fee
revenue
|
2,944
|
|
3,126
|
|
2,929
|
|
|
11,998
|
|
11,999
|
|
|
Net securities
gains
|
10
|
|
24
|
|
21
|
|
|
75
|
|
83
|
|
|
Total fee and other
revenue
|
2,954
|
|
3,150
|
|
2,950
|
|
|
12,073
|
|
12,082
|
|
|
Operations of
consolidated investment management funds
|
|
|
|
|
|
|
|
Investment
income
|
8
|
|
20
|
|
19
|
|
|
35
|
|
115
|
|
|
Interest of
investment management fund note holders
|
3
|
|
3
|
|
3
|
|
|
9
|
|
29
|
|
|
Income from
consolidated investment management funds
|
5
|
|
17
|
|
16
|
|
|
26
|
|
86
|
|
|
Net interest
revenue
|
|
|
|
|
|
|
|
Interest
revenue
|
928
|
|
874
|
|
834
|
|
|
3,575
|
|
3,326
|
|
|
Interest
expense
|
97
|
|
100
|
|
74
|
|
|
437
|
|
300
|
|
|
Net interest
revenue
|
831
|
|
774
|
|
760
|
|
|
3,138
|
|
3,026
|
|
|
Total
revenue
|
3,790
|
|
3,941
|
|
3,726
|
|
|
15,237
|
|
15,194
|
|
|
Provision for
credit losses
|
7
|
|
(19)
|
|
163
|
|
|
(11)
|
|
160
|
|
|
Noninterest
expense
|
|
|
|
|
|
|
|
Staff
|
1,395
|
|
1,467
|
|
1,481
|
|
|
5,733
|
|
5,837
|
|
|
Professional, legal
and other purchased services
|
325
|
|
292
|
|
328
|
|
|
1,185
|
|
1,230
|
|
|
Software and
equipment
|
237
|
|
215
|
|
225
|
|
|
894
|
|
907
|
|
|
Net
occupancy
|
153
|
|
143
|
|
148
|
|
|
590
|
|
600
|
|
|
Distribution and
servicing
|
98
|
|
105
|
|
92
|
|
|
405
|
|
381
|
|
|
Sub-custodian
|
57
|
|
59
|
|
60
|
|
|
245
|
|
270
|
|
|
Business
development
|
71
|
|
52
|
|
75
|
|
|
245
|
|
267
|
|
|
Other
|
228
|
|
231
|
|
201
|
|
|
940
|
|
961
|
|
|
Amortization of
intangible assets
|
60
|
|
61
|
|
64
|
|
|
237
|
|
261
|
|
|
M&I, litigation
and restructuring charges
|
7
|
|
18
|
|
18
|
|
|
49
|
|
85
|
|
|
Total noninterest
expense
|
2,631
|
|
2,643
|
|
2,692
|
|
|
10,523
|
|
10,799
|
|
|
Income
|
|
|
|
|
|
|
|
Income before income
taxes
|
1,152
|
|
1,317
|
|
871
|
|
|
4,725
|
|
4,235
|
|
|
Provision for income
taxes
|
280
|
|
324
|
|
175
|
|
|
1,177
|
|
1,013
|
|
|
Net income
|
872
|
|
993
|
|
696
|
|
|
3,548
|
|
3,222
|
|
|
Net (income)
attributable to noncontrolling interests (includes $(4), $(9),
$(5), $(10) and $(68) related to consolidated investment management
funds, respectively)
|
(2)
|
|
(6)
|
|
(3)
|
|
|
(1)
|
|
(64)
|
|
|
Net income applicable
to shareholders of The Bank of New York Mellon
Corporation
|
870
|
|
987
|
|
693
|
|
|
3,547
|
|
3,158
|
|
|
Preferred stock
dividends
|
(48)
|
|
(13)
|
|
(56)
|
|
|
(122)
|
|
(105)
|
|
|
Net income applicable
to common shareholders of The Bank of New York Mellon
Corporation
|
$
|
822
|
|
$
|
974
|
|
$
|
637
|
|
|
$
|
3,425
|
|
$
|
3,053
|
|
|
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
|
Quarter
ended
|
|
Year-to-date
|
|
Dec. 31,
2016
|
Sept. 30,
2016
|
Dec. 31,
2015
|
|
Dec. 31,
2016
|
Dec. 31,
2015
|
|
(in
millions)
|
|
|
Net income applicable
to common shareholders of The Bank of New York
Mellon Corporation
|
$
|
822
|
|
$
|
974
|
|
$
|
637
|
|
|
$
|
3,425
|
|
$
|
3,053
|
|
|
Less: Earnings
allocated to participating securities
|
13
|
|
15
|
|
9
|
|
|
52
|
|
43
|
|
|
Net income applicable
to the common shareholders of The Bank of New York Mellon
Corporation after required adjustments for the calculation of basic
and diluted earnings per common share
|
$
|
809
|
|
$
|
959
|
|
$
|
628
|
|
|
$
|
3,373
|
|
$
|
3,010
|
|
|
|
|
|
|
|
|
Average common
shares and equivalents outstanding of The Bank of
New York Mellon
Corporation
|
Quarter
ended
|
|
Year-to-date
|
|
Dec. 31,
2016
|
Sept. 30,
2016
|
Dec. 31,
2015
|
|
Dec. 31,
2016
|
Dec. 31,
2015
|
|
(in
thousands)
|
|
|
Basic
|
1,050,888
|
|
1,062,248
|
|
1,088,880
|
|
|
1,066,286
|
|
1,104,719
|
|
|
Diluted
|
1,056,818
|
|
1,067,682
|
|
1,096,385
|
|
|
1,072,013
|
|
1,112,511
|
|
|
|
|
|
|
Earnings per share
applicable to the common shareholders of The Bank
of New York Mellon
Corporation
|
Quarter
ended
|
|
Year-to-date
|
|
Dec. 31,
2016
|
Sept. 30,
2016
|
Dec. 31,
2015
|
|
Dec. 31,
2016
|
Dec. 31,
2015
|
|
(in
dollars)
|
|
|
Basic
|
$
|
0.77
|
|
$
|
0.90
|
|
$
|
0.58
|
|
|
$
|
3.16
|
|
$
|
2.73
|
|
|
Diluted
|
$
|
0.77
|
|
$
|
0.90
|
|
$
|
0.57
|
|
|
$
|
3.15
|
|
$
|
2.71
|
|
|
THE BANK OF NEW
YORK MELLON CORPORATION
Consolidated
Balance Sheet
|
|
|
|
|
|
(dollars in
millions, except per share amounts)
|
Dec. 31,
2016
|
Sept. 30,
2016
|
Dec. 31,
2015
|
|
|
Assets
|
|
|
|
|
Cash and due
from:
|
|
|
|
|
Banks
|
$
|
4,822
|
|
$
|
4,957
|
|
$
|
6,537
|
|
|
Interest-bearing
deposits with the Federal Reserve and other central
banks
|
58,041
|
|
80,359
|
|
113,203
|
|
|
Interest-bearing
deposits with banks
|
15,086
|
|
14,416
|
|
15,146
|
|
|
Federal funds sold
and securities purchased under resale agreements
|
25,801
|
|
34,851
|
|
24,373
|
|
|
Securities:
|
|
|
|
|
Held-to-maturity (fair
value of $40,669, $41,387 and $43,204)
|
40,905
|
|
40,728
|
|
43,312
|
|
|
Available-for-sale
|
73,822
|
|
78,270
|
|
75,867
|
|
|
Total
securities
|
114,727
|
|
118,998
|
|
119,179
|
|
|
Trading
assets
|
5,733
|
|
5,340
|
|
7,368
|
|
|
Loans
|
64,458
|
|
65,997
|
|
63,703
|
|
|
Allowance for loan
losses
|
(169)
|
|
(148)
|
|
(157)
|
|
|
Net loans
|
64,289
|
|
65,849
|
|
63,546
|
|
|
Premises and
equipment
|
1,303
|
|
1,338
|
|
1,379
|
|
|
Accrued interest
receivable
|
568
|
|
522
|
|
562
|
|
|
Goodwill
|
17,316
|
|
17,449
|
|
17,618
|
|
|
Intangible
assets
|
3,598
|
|
3,671
|
|
3,842
|
|
|
Other
assets
|
20,954
|
|
25,355
|
|
19,626
|
|
|
Subtotal assets of
operations
|
332,238
|
|
373,105
|
|
392,379
|
|
|
Assets of
consolidated investment management funds, at fair value:
|
|
|
|
|
Trading
assets
|
979
|
|
873
|
|
1,228
|
|
|
Other
assets
|
252
|
|
136
|
|
173
|
|
|
Subtotal assets of
consolidated investment management funds, at fair value
|
1,231
|
|
1,009
|
|
1,401
|
|
|
Total
assets
|
$
|
333,469
|
|
$
|
374,114
|
|
$
|
393,780
|
|
|
Liabilities
|
|
|
|
|
Deposits:
|
|
|
|
|
Noninterest-bearing
(principally U.S. offices)
|
$
|
78,342
|
|
$
|
105,632
|
|
$
|
96,277
|
|
|
Interest-bearing
deposits in U.S. offices
|
52,049
|
|
56,713
|
|
51,704
|
|
|
Interest-bearing
deposits in Non-U.S. offices
|
91,099
|
|
99,033
|
|
131,629
|
|
|
Total
deposits
|
221,490
|
|
261,378
|
|
279,610
|
|
|
Federal funds
purchased and securities sold under repurchase
agreements
|
9,989
|
|
8,052
|
|
15,002
|
|
|
Trading
liabilities
|
4,389
|
|
4,154
|
|
4,501
|
|
|
Payables to customers
and broker-dealers
|
20,987
|
|
21,162
|
|
21,900
|
|
|
Other borrowed
funds
|
754
|
|
993
|
|
523
|
|
|
Accrued taxes and
other expenses
|
5,867
|
|
5,687
|
|
5,986
|
|
|
Other liabilities
(includes allowance for lending-related commitments of $112, $126
and $118)
|
5,635
|
|
7,709
|
|
5,490
|
|
|
Long-term
debt
|
24,463
|
|
24,374
|
|
21,547
|
|
|
Subtotal liabilities
of operations
|
293,574
|
|
333,509
|
|
354,559
|
|
|
Liabilities of
consolidated investment management funds, at fair value:
|
|
|
|
|
Trading
liabilities
|
282
|
|
219
|
|
229
|
|
|
Other
liabilities
|
33
|
|
13
|
|
17
|
|
|
Subtotal liabilities
of consolidated investment management funds, at fair
value
|
315
|
|
232
|
|
246
|
|
|
Total
liabilities
|
293,889
|
|
333,741
|
|
354,805
|
|
|
Temporary
equity
|
|
|
|
|
Redeemable
noncontrolling interests
|
151
|
|
178
|
|
200
|
|
|
Permanent
equity
|
|
|
|
|
Preferred stock – par
value $0.01 per share; authorized 100,000,000 shares; issued
35,826, 35,826 and 25,826 shares
|
3,542
|
|
3,542
|
|
2,552
|
|
|
Common stock – par
value $0.01 per share; authorized 3,500,000,000 shares; issued
1,333,706,427, 1,325,167,583 and 1,312,941,113 shares
|
13
|
|
13
|
|
13
|
|
|
Additional paid-in
capital
|
25,962
|
|
25,637
|
|
25,262
|
|
|
Retained
earnings
|
22,621
|
|
22,002
|
|
19,974
|
|
|
Accumulated other
comprehensive loss, net of tax
|
(3,765)
|
|
(2,785)
|
|
(2,600)
|
|
|
Less: Treasury
stock of 286,218,126, 267,830,962 and 227,598,128 common shares, at
cost
|
(9,562)
|
|
(8,714)
|
|
(7,164)
|
|
|
Total The Bank of New
York Mellon Corporation shareholders' equity
|
38,811
|
|
39,695
|
|
38,037
|
|
|
Nonredeemable
noncontrolling interests of consolidated investment management
funds
|
618
|
|
500
|
|
738
|
|
|
Total permanent
equity
|
39,429
|
|
40,195
|
|
38,775
|
|
|
Total liabilities,
temporary equity and permanent equity
|
$
|
333,469
|
|
$
|
374,114
|
|
$
|
393,780
|
|
|
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 CET1 and other
risk-based capital ratios, the fully phased-in SLR and tangible
common shareholders' equity. BNY Mellon believes that the
CET1 and other risk-based capital ratios on a fully phased-in
basis, the SLR on a fully phased-in basis and the ratio of tangible
common shareholders' equity to tangible assets of operations are
measures of capital strength that provide additional useful
information to investors, supplementing the capital ratios which
are, or were, required by regulatory authorities. The
tangible common shareholders' equity ratio, which excludes goodwill
and intangible assets, net of deferred tax liabilities, includes
changes in investment securities valuations which are reflected in
total shareholders' equity. In addition, this ratio is
expressed as a percentage of the actual book value of assets, as
opposed to a percentage of a risk-based reduced value established
in accordance with regulatory requirements, although BNY Mellon in
its reconciliation has excluded certain assets which are given a
zero percent risk-weighting for regulatory purposes and the assets
of consolidated investment management funds to which BNY Mellon has
limited economic exposure. Further, BNY Mellon believes that
the return on tangible common equity measure, which excludes
goodwill and intangible assets, net of deferred tax liabilities, is
a useful additional measure for investors because it presents a
measure of those assets that can generate income. BNY Mellon
has provided a measure of tangible book value per common share,
which it believes provides additional useful information as to the
level of tangible assets in relation to shares of common stock
outstanding.
BNY Mellon has presented revenue measures, which exclude the
effect of noncontrolling interests related to consolidated
investment management funds, and expense measures, which exclude
M&I, litigation and restructuring charges and amortization of
intangible assets. Earnings per share, return on equity,
operating leverage and operating margin measures, which exclude
some or all of these items, as well as the (recovery) impairment
charge related to Sentinel, are also presented. Operating
margin measures may also exclude the provision for credit losses
and 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. 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 income (loss) from consolidated investment
management funds, net of net income (loss) 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.
Each of these measures as described above is used by management
to monitor financial performance, both on a company-wide and on a
business-level basis.
The following tables present the reconciliation of net income
applicable to common shareholders of The Bank of New York Mellon
Corporation and diluted earnings per common share.
Reconciliation of
net income and diluted EPS – GAAP to Non-GAAP
|
4Q16
|
|
3Q16
|
|
4Q15
|
(in millions,
except per common share amounts)
|
Net
income
|
|
Diluted
EPS
|
|
|
|
Net
income
|
|
Diluted
EPS
|
|
|
|
Net
income
|
|
Diluted
EPS
|
|
|
Net income applicable
to common shareholders of The Bank of New York Mellon Corporation
– GAAP
|
$
|
822
|
|
$
|
0.77
|
|
|
|
$
|
974
|
|
$
|
0.90
|
|
|
|
$
|
637
|
|
$
|
0.57
|
|
|
Add: M&I,
litigation and restructuring charges
|
7
|
|
|
|
|
18
|
|
|
|
|
18
|
|
|
|
Tax impact of
M&I, litigation and restructuring charges
|
(3)
|
|
|
|
|
(5)
|
|
|
|
|
(6)
|
|
|
|
Net impact of M&I,
litigation and restructuring charges
|
4
|
|
—
|
|
|
|
13
|
|
0.01
|
|
|
|
12
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: (Recovery)
impairment charge related to Sentinel
|
N/A
|
|
|
|
|
(13)
|
|
|
|
|
170
|
|
|
|
Tax impact of
recovery (impairment charge) related to Sentinel
|
N/A
|
|
|
|
|
5
|
|
|
|
|
(64)
|
|
|
|
(Recovery) impairment
charge related to Sentinel – after-tax
|
N/A
|
|
N/A
|
|
|
|
(8)
|
|
(0.01)
|
|
|
|
106
|
|
0.10
|
|
|
Non-GAAP adjustments
– after-tax
|
4
|
|
—
|
|
|
|
5
|
|
—
|
|
|
|
118
|
|
0.11
|
|
|
Non-GAAP
results
|
$
|
826
|
|
$
|
0.77
|
|
|
|
$
|
979
|
|
$
|
0.90
|
|
|
|
$
|
755
|
|
$
|
0.68
|
|
|
Reconciliation of
net income and diluted EPS – GAAP to Non-GAAP
|
Full-year
2016
|
|
Full-year
2015
|
|
Growth
|
|
(in millions,
except per common share amounts)
|
Net
income
|
|
Diluted
EPS
|
|
|
|
Net
income
|
|
Diluted
EPS
|
|
|
|
Net
income
|
Diluted
EPS
|
|
Net income applicable
to common shareholders of The Bank of New York Mellon Corporation
– GAAP
|
$
|
3,425
|
|
$
|
3.15
|
|
|
|
$
|
3,053
|
|
$
|
2.71
|
|
|
|
12
|
%
|
16
|
%
|
|
Add: M&I,
litigation and restructuring charges
|
49
|
|
|
|
|
85
|
|
|
|
|
|
|
|
Tax impact of
M&I, litigation and restructuring charges
|
(16)
|
|
|
|
|
(29)
|
|
|
|
|
|
|
|
Net impact of M&I,
litigation and restructuring charges
|
33
|
|
0.03
|
|
|
|
56
|
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: (Recovery)
impairment charge related to Sentinel
|
(13)
|
|
|
|
|
170
|
|
|
|
|
|
|
|
Tax impact of
recovery (impairment charge) related to Sentinel
|
5
|
|
|
|
|
(64)
|
|
|
|
|
|
|
|
(Recovery) impairment
charge related to Sentinel – after-tax
|
(8)
|
|
(0.01)
|
|
|
|
106
|
|
0.09
|
|
|
|
|
|
|
Non-GAAP adjustments
– after-tax
|
25
|
|
0.02
|
|
|
|
162
|
|
0.14
|
|
|
|
|
|
|
Non-GAAP
results
|
$
|
3,450
|
|
$
|
3.17
|
|
|
|
$
|
3,215
|
|
$
|
2.85
|
|
|
|
7
|
%
|
11
|
%
|
|
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)
|
4Q16
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
Income before income
taxes – GAAP
|
$
|
1,152
|
|
$
|
1,317
|
|
$
|
1,165
|
|
$
|
1,091
|
|
$
|
871
|
|
Less: Net
income (loss) attributable to noncontrolling interests of
consolidated investment management funds
|
4
|
|
9
|
|
4
|
|
(7)
|
|
5
|
|
Add:
Amortization of intangible assets
|
60
|
|
61
|
|
59
|
|
57
|
|
64
|
|
M&I, litigation
and restructuring charges
|
7
|
|
18
|
|
7
|
|
17
|
|
18
|
|
(Recovery) impairment
charge related to Sentinel
|
—
|
|
(13)
|
|
—
|
|
—
|
|
170
|
|
Income before income
taxes, as adjusted – Non-GAAP (a)
|
$
|
1,215
|
|
$
|
1,374
|
|
$
|
1,227
|
|
$
|
1,172
|
|
$
|
1,118
|
|
|
|
|
|
|
|
Fee and other revenue
– GAAP
|
$
|
2,954
|
|
$
|
3,150
|
|
$
|
2,999
|
|
$
|
2,970
|
|
$
|
2,950
|
|
Income (loss) from
consolidated investment management funds – GAAP
|
5
|
|
17
|
|
10
|
|
(6)
|
|
16
|
|
Net interest revenue
– GAAP
|
831
|
|
774
|
|
767
|
|
766
|
|
760
|
|
Total revenue –
GAAP
|
3,790
|
|
3,941
|
|
3,776
|
|
3,730
|
|
3,726
|
|
Less: Net
income (loss) attributable to noncontrolling interests of
consolidated investment management funds
|
4
|
|
9
|
|
4
|
|
(7)
|
|
5
|
|
Total revenue, as
adjusted – Non-GAAP (a)
|
$
|
3,786
|
|
$
|
3,932
|
|
$
|
3,772
|
|
$
|
3,737
|
|
$
|
3,721
|
|
|
|
|
|
|
|
Pre-tax operating
margin – GAAP (b)(c)
|
30
|
%
|
33
|
%
|
31
|
%
|
29
|
%
|
23
|
%
|
Adjusted pre-tax
operating margin – Non-GAAP (a)(b)(c)
|
32
|
%
|
35
|
%
|
33
|
%
|
31
|
%
|
30
|
%
|
(a)
|
Non-GAAP information
for all periods presented excludes net income (loss) attributable
to noncontrolling interests of consolidated investment management
funds, amortization of intangible assets and M&I, litigation
and restructuring charges. Non-GAAP information for 3Q16 also
excludes a recovery of the previously impaired Sentinel loan and
4Q15 also excludes the impairment charge related to a court
decision regarding Sentinel.
|
(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 $92 million for 4Q16, $74 million for 3Q16 and 2Q16, $77
million for 1Q16 and $73 million for 4Q15 and would increase our
pre-tax operating margin by approximately 1.7% for 4Q16, 1.2% for
3Q16, 1.3% for 2Q16, 1.4% for 1Q16 and 1.5% for 4Q15.
|
The following tables present the reconciliation of the operating
leverage.
Operating
leverage
|
|
|
|
4Q16
vs.
|
(dollars in
millions)
|
4Q16
|
3Q16
|
4Q15
|
3Q16
|
4Q15
|
Total revenue
– GAAP
|
$
|
3,790
|
|
$
|
3,941
|
|
$
|
3,726
|
|
(3.83)
|
%
|
1.72
|
%
|
Less: Net
income attributable to noncontrolling interests of consolidated
investment management funds
|
4
|
|
9
|
|
5
|
|
|
|
Total revenue, as
adjusted – Non-GAAP
|
$
|
3,786
|
|
$
|
3,932
|
|
$
|
3,721
|
|
(3.71)
|
%
|
1.75
|
%
|
|
|
|
|
|
|
Total noninterest
expense – GAAP
|
$
|
2,631
|
|
$
|
2,643
|
|
$
|
2,692
|
|
(0.45)
|
%
|
(2.27)
|
%
|
Less:
Amortization of intangible assets
|
60
|
|
61
|
|
64
|
|
|
|
M&I, litigation
and restructuring charges
|
7
|
|
18
|
|
18
|
|
|
|
Total noninterest
expense, as adjusted – Non-GAAP
|
$
|
2,564
|
|
$
|
2,564
|
|
$
|
2,610
|
|
—
|
%
|
(1.76)
|
%
|
|
|
|
|
|
|
Operating leverage
– GAAP (a)
|
|
|
|
(338)
|
bps
|
399
|
bps
|
Adjusted operating
leverage – Non-GAAP (a)(b)
|
|
|
|
(371)
|
bps
|
351
|
bps
|
(a)
|
Operating leverage is
the rate of increase (decrease) in total revenue less the rate of
increase (decrease) in total noninterest expense.
|
(b)
|
Non-GAAP operating
leverage for all periods presented excludes net income attributable
to noncontrolling interests of consolidated investment management
funds, amortization of intangible assets and M&I, litigation
and restructuring charges.
|
bps –
basis points.
|
Operating
leverage
|
|
|
2016
vs.
|
(dollars in
millions)
|
2016
|
2015
|
2015
|
Total revenue
– GAAP
|
$
|
15,237
|
|
$
|
15,194
|
|
0.28
|
%
|
Less: Net
income attributable to noncontrolling interests of consolidated
investment management funds
|
10
|
|
68
|
|
|
Total revenue, as
adjusted – Non-GAAP
|
$
|
15,227
|
|
$
|
15,126
|
|
0.67
|
%
|
|
|
|
|
Total noninterest
expense – GAAP
|
10,523
|
|
10,799
|
|
(2.56)
|
%
|
Less:
Amortization of intangible assets
|
237
|
|
261
|
|
|
M&I, litigation
and restructuring charges
|
49
|
|
85
|
|
|
Total noninterest
expense, as adjusted – Non-GAAP
|
$
|
10,237
|
|
$
|
10,453
|
|
(2.07)
|
%
|
|
|
|
|
Operating leverage
– GAAP (a)
|
|
|
284
|
bps
|
Adjusted operating
leverage – Non-GAAP (a)(b)
|
|
|
274
|
bps
|
(a)
|
Operating leverage is
the rate of increase (decrease) in total revenue less the rate of
increase (decrease) in total noninterest expense.
|
(b)
|
Non-GAAP operating
leverage for all periods presented excludes net income attributable
to noncontrolling interests of consolidated investment management
funds, amortization of intangible assets and M&I, litigation
and restructuring charges.
|
bps – basis
points.
|
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)
|
4Q16
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
FY16
|
Net income applicable
to common shareholders of The Bank of New York Mellon Corporation –
GAAP
|
$
|
822
|
|
$
|
974
|
|
$
|
825
|
|
$
|
804
|
|
$
|
637
|
|
$
|
3,425
|
|
Add:
Amortization of intangible assets
|
60
|
|
61
|
|
59
|
|
57
|
|
64
|
|
237
|
|
Less: Tax
impact of amortization of intangible assets
|
19
|
|
21
|
|
21
|
|
20
|
|
22
|
|
81
|
|
Net income applicable
to common shareholders of The Bank of New York Mellon Corporation
excluding amortization of intangible assets – Non-GAAP
|
863
|
|
1,014
|
|
863
|
|
841
|
|
679
|
|
3,581
|
|
Add: M&I,
litigation and restructuring charges
|
7
|
|
18
|
|
7
|
|
17
|
|
18
|
|
49
|
|
(Recovery)
impairment charge related to Sentinel
|
—
|
|
(13)
|
|
—
|
|
—
|
|
170
|
|
(13)
|
|
Less: Tax
impact of M&I, litigation and restructuring charges
|
3
|
|
5
|
|
2
|
|
6
|
|
6
|
|
16
|
|
Tax impact of
(recovery) impairment charge related to Sentinel
|
—
|
|
(5)
|
|
—
|
|
—
|
|
64
|
|
(5)
|
|
Net income applicable
to common shareholders of The Bank of New York Mellon Corporation,
as adjusted – Non-GAAP (a)
|
$
|
867
|
|
$
|
1,019
|
|
$
|
868
|
|
$
|
852
|
|
$
|
797
|
|
$
|
3,606
|
|
|
|
|
|
|
|
|
Average common
shareholders' equity
|
$
|
35,171
|
|
$
|
35,767
|
|
$
|
35,827
|
|
$
|
35,252
|
|
$
|
35,664
|
|
$
|
35,504
|
|
Less: Average
goodwill
|
17,344
|
|
17,463
|
|
17,622
|
|
17,562
|
|
17,673
|
|
17,497
|
|
Average intangible
assets
|
3,638
|
|
3,711
|
|
3,789
|
|
3,812
|
|
3,887
|
|
3,737
|
|
Add: Deferred
tax liability – tax deductible goodwill (b)
|
1,497
|
|
1,477
|
|
1,452
|
|
1,428
|
|
1,401
|
|
1,497
|
|
Deferred tax liability
– intangible assets (b)
|
1,105
|
|
1,116
|
|
1,129
|
|
1,140
|
|
1,148
|
|
1,105
|
|
Average tangible
common shareholders' equity – Non-GAAP
|
$
|
16,791
|
|
$
|
17,186
|
|
$
|
16,997
|
|
$
|
16,446
|
|
$
|
16,653
|
|
$
|
16,872
|
|
|
|
|
|
|
|
|
Return on common
equity – GAAP (c)
|
9.3
|
%
|
10.8
|
%
|
9.3
|
%
|
9.2
|
%
|
7.1
|
%
|
9.6
|
%
|
Adjusted return on
common equity – Non-GAAP (a)(c)
|
9.8
|
%
|
11.3
|
%
|
9.7
|
%
|
9.7
|
%
|
8.9
|
%
|
10.2
|
%
|
|
|
|
|
|
|
|
Return on tangible
common equity – Non-GAAP (c)
|
20.4
|
%
|
23.5
|
%
|
20.4
|
%
|
20.6
|
%
|
16.2
|
%
|
21.2
|
%
|
Adjusted return on
tangible common equity – Non-GAAP (a)(c)
|
20.5
|
%
|
23.6
|
%
|
20.5
|
%
|
20.8
|
%
|
19.0
|
%
|
21.4
|
%
|
(a)
|
Non-GAAP information
for all periods presented excludes amortization of intangible
assets and M&I, litigation and restructuring charges.
Non-GAAP information for 3Q16 also excludes a recovery of the
previously impaired Sentinel loan and 4Q15 also excludes the
impairment charge related to a court decision regarding
Sentinel.
|
(b)
|
Deferred tax
liabilities are based on fully phased-in Basel III
rules.
|
(c)
|
Quarterly returns are
annualized.
|
The following table presents the reconciliation of the equity to
assets ratio and book value per common share.
Equity to assets
and book value per common share
|
Dec.
31,
2016
|
Sept. 30,
2016
|
June 30,
2016
|
March 31,
2016
|
Dec. 31,
2015
|
(dollars in
millions, unless otherwise noted)
|
BNY Mellon
shareholders' equity at period end – GAAP
|
$
|
38,811
|
|
$
|
39,695
|
|
$
|
38,559
|
|
$
|
38,459
|
|
$
|
38,037
|
|
Less: Preferred
stock
|
3,542
|
|
3,542
|
|
2,552
|
|
2,552
|
|
2,552
|
|
BNY Mellon common
shareholders' equity at period end – GAAP
|
35,269
|
|
36,153
|
|
36,007
|
|
35,907
|
|
35,485
|
|
Less:
Goodwill
|
17,316
|
|
17,449
|
|
17,501
|
|
17,604
|
|
17,618
|
|
Intangible
assets
|
3,598
|
|
3,671
|
|
3,738
|
|
3,781
|
|
3,842
|
|
Add: Deferred
tax liability – tax deductible goodwill (a)
|
1,497
|
|
1,477
|
|
1,452
|
|
1,428
|
|
1,401
|
|
Deferred tax liability
– intangible assets (a)
|
1,105
|
|
1,116
|
|
1,129
|
|
1,140
|
|
1,148
|
|
BNY Mellon tangible
common shareholders' equity at period end – Non-GAAP
|
$
|
16,957
|
|
$
|
17,626
|
|
$
|
17,349
|
|
$
|
17,090
|
|
$
|
16,574
|
|
|
|
|
|
|
|
Total assets at
period end – GAAP
|
$
|
333,469
|
|
$
|
374,114
|
|
$
|
372,351
|
|
$
|
372,870
|
|
$
|
393,780
|
|
Less: Assets of
consolidated investment management funds
|
1,231
|
|
1,009
|
|
1,083
|
|
1,300
|
|
1,401
|
|
Subtotal assets of
operations – Non-GAAP
|
332,238
|
|
373,105
|
|
371,268
|
|
371,570
|
|
392,379
|
|
Less:
Goodwill
|
17,316
|
|
17,449
|
|
17,501
|
|
17,604
|
|
17,618
|
|
Intangible
assets
|
3,598
|
|
3,671
|
|
3,738
|
|
3,781
|
|
3,842
|
|
Cash on deposit with
the Federal Reserve and other central banks (b)
|
58,146
|
|
80,362
|
|
88,080
|
|
96,421
|
|
116,211
|
|
Tangible total assets
of operations at period end – Non-GAAP
|
$
|
253,178
|
|
$
|
271,623
|
|
$
|
261,949
|
|
$
|
253,764
|
|
$
|
254,708
|
|
|
|
|
|
|
|
BNY Mellon
shareholders' equity to total assets ratio – GAAP
|
11.6
|
%
|
10.6
|
%
|
10.4
|
%
|
10.3
|
%
|
9.7
|
%
|
BNY Mellon common
shareholders' equity to total assets ratio – GAAP
|
10.6
|
%
|
9.7
|
%
|
9.7
|
%
|
9.6
|
%
|
9.0
|
%
|
BNY Mellon tangible
common shareholders' equity to tangible assets of operations ratio
– Non-GAAP
|
6.7
|
%
|
6.5
|
%
|
6.6
|
%
|
6.7
|
%
|
6.5
|
%
|
|
|
|
|
|
|
Period-end common
shares outstanding (in thousands)
|
1,047,488
|
|
1,057,337
|
|
1,067,674
|
|
1,077,083
|
|
1,085,343
|
|
|
|
|
|
|
|
Book value per common
share – GAAP
|
$
|
33.67
|
|
$
|
34.19
|
|
$
|
33.72
|
|
$
|
33.34
|
|
$
|
32.69
|
|
Tangible book value
per common share – Non-GAAP
|
$
|
16.19
|
|
$
|
16.67
|
|
$
|
16.25
|
|
$
|
15.87
|
|
$
|
15.27
|
|
(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 (loss) from
consolidated investment management funds, net of noncontrolling
interests
|
(in
millions)
|
4Q16
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
Income (loss) from
consolidated investment management funds
|
$
|
5
|
|
$
|
17
|
|
$
|
10
|
|
$
|
(6)
|
|
$
|
16
|
|
Less: Net
income (loss) attributable to noncontrolling interests of
consolidated investment management funds
|
4
|
|
9
|
|
4
|
|
(7)
|
|
5
|
|
Income from
consolidated investment management funds, net of noncontrolling
interests
|
$
|
1
|
|
$
|
8
|
|
$
|
6
|
|
$
|
1
|
|
$
|
11
|
|
The following table presents the revenue line items in the
Investment Management business impacted by the consolidated
investment management funds.
Income (loss) from
consolidated investment management funds, net of noncontrolling
interests - Investment Management business
|
(in
millions)
|
4Q16
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
Investment management
fees
|
$
|
4
|
|
$
|
2
|
|
$
|
3
|
|
$
|
2
|
|
$
|
7
|
|
Other (Investment
income (loss))
|
(3)
|
|
6
|
|
3
|
|
(1)
|
|
4
|
|
Income from
consolidated investment management funds, net of noncontrolling
interests
|
$
|
1
|
|
$
|
8
|
|
$
|
6
|
|
$
|
1
|
|
$
|
11
|
|
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)
|
4Q16
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
Income before income
taxes – GAAP
|
$
|
260
|
|
$
|
256
|
|
$
|
234
|
|
$
|
217
|
|
$
|
290
|
|
Add:
Amortization of intangible assets
|
22
|
|
22
|
|
19
|
|
19
|
|
24
|
|
Provision for credit
losses
|
6
|
|
—
|
|
1
|
|
(1)
|
|
(4)
|
|
Income before income
taxes excluding amortization of intangible assets and provision for
credit losses – Non-GAAP
|
$
|
288
|
|
$
|
278
|
|
$
|
254
|
|
$
|
235
|
|
$
|
310
|
|
|
|
|
|
|
|
Total revenue –
GAAP
|
$
|
960
|
|
$
|
958
|
|
$
|
938
|
|
$
|
895
|
|
$
|
999
|
|
Less:
Distribution and servicing expense
|
98
|
|
104
|
|
102
|
|
100
|
|
92
|
|
Total revenue net of
distribution and servicing expense – Non-GAAP
|
$
|
862
|
|
$
|
854
|
|
$
|
836
|
|
$
|
795
|
|
$
|
907
|
|
|
|
|
|
|
|
Pre-tax operating
margin – GAAP (a)
|
27
|
%
|
27
|
%
|
25
|
%
|
24
|
%
|
29
|
%
|
Pre-tax operating
margin, excluding amortization of intangible assets, provision for
credit losses and distribution and servicing expense – Non-GAAP
(a)
|
33
|
%
|
33
|
%
|
30
|
%
|
30
|
%
|
34
|
%
|
(a)
|
Income before taxes
divided by total revenue.
|
DIVIDENDS
Common – On Jan. 19, 2017,
The Bank of New York Mellon Corporation declared a quarterly common
stock dividend of $0.19 per common
share. This cash dividend is payable on Feb. 10, 2017 to shareholders of record as of the
close of business on Jan. 31,
2017.
Preferred – On Jan. 19,
2017, The Bank of New York Mellon Corporation declared the
following dividends for the noncumulative perpetual preferred
stock, liquidation preference $100,000 per share, for the dividend period
ending in March 2017, in each case
payable on March 20, 2017 to holders
of record as of the close of business on March 5, 2017:
- $1,000.00 per share on the Series
A Preferred Stock (equivalent to $10.0000 per Normal Preferred Capital Security of
Mellon Capital IV, each representing a 1/100th interest in a share
of the Series A Preferred Stock);
- $1,300.00 per share on the Series
C Preferred Stock (equivalent to $0.3250 per depositary share, each representing a
1/4,000th interest in a share of the Series C Preferred Stock);
and
- $2,942.01 per share on the Series
F Preferred Stock (equivalent to $29.4201 per depositary share, each representing
a 1/100th interest in a share of the Series F Preferred
Stock).
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
enhancing our clients' experience, the impact of our digital
transformation and capital plans. 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," "likely," "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, 2015, the Quarterly Report on Form 10-Q for the period
ended Sept. 30, 2016 and BNY Mellon's
other filings with the Securities and Exchange
Commission. All forward-looking statements in this
Earnings Release speak only as of Jan. 19,
2017, 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.
Media Relations: Ligia Braun (212)
635-8588
Investor Relations: Valerie Haertel (212)
635-8529
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/bny-mellon-reports-fourth-quarter-earnings-of-822-million-or-077-per-common-share-300393484.html
SOURCE BNY Mellon