THE BANK OF NEW YORK MELLON CORPORATION

Third Quarter ~~2017~~2023 Form 10-Q

Table of Contents


		Page
Consolidated Financial Highlights (unaudited)		2

		~~Page~~
~~Consolidated Financial Highlights (unaudited)~~	2

Part I -– Financial Information
Items 2. and 3. Management’s Discussion and Analysis of Financial Condition and Results of Operations; Quantitative and Qualitative Disclosures about Market Risk:
General		4
Overview		4
~~Overview~~		4
Key third quarter ~~2017~~2023 events	4
Highlights of third quarter ~~2017~~2023 results		54
Fee and other revenue		76
Net interest revenue		109
~~Average balances and interest rates~~Noninterest expense		1112
~~Noninterest expense~~Income taxes		1312
~~Income taxes~~Review of business segments		1413
~~Review of businesses~~		14
Critical accounting estimates	2321
Consolidated balance sheet review		2422
Liquidity and dividends		3331
Capital		3736
Trading activities and risk management		4439
Asset/liability management		4741
~~Off-balance sheet arrangements~~		48
Supplemental information -– Explanation of GAAP and Non-GAAP financial measures	4943
Recent accounting and regulatory developments		5347
Website information		5649

Item 1. Financial Statements:
Consolidated Income Statement (unaudited)		5750
Consolidated Comprehensive Income Statement (unaudited)		5952
Consolidated Balance Sheet (unaudited)		6053
Consolidated Statement of Cash Flows (unaudited)		6154
Consolidated Statement of Changes in Equity (unaudited)		6255



		Page
Notes to Consolidated Financial Statements:
Note 1—Basis of presentation		6358
Note 2—New accounting guidance		58
Note ~~2—Accounting change~~3—Acquisitions and ~~new accounting guidance~~dispositions		6359
Note ~~3—Acquisitions~~4—Securities		6459
~~Note 4—Securities~~		64
Note 5—Loans and asset quality	6964

Note 6—Goodwill and intangible assets		7571
Note 7—Other assets		7773
Note 8—Contract revenue		74
Note 9—Net interest revenue		7876
Note 9—10—Employee benefit plans		7877
Note ~~10—~~11—Income taxes		7977
Note ~~11—~~12—Variable interest entities ~~and securitization~~		7977
Note ~~12—~~13—Preferred stock		8178
Note ~~13—~~14—Other comprehensive income (loss)		8279
~~Note 14—Fair value measurement~~		83
Note 15—Fair value ~~option~~measurement	9080
Note 16—~~Derivative instruments~~Fair value option		9085
Note 17—Derivative instruments		85
Note 18—Commitments and contingent liabilities		9892
Note ~~18—Lines of business~~19—Business segments		~~102~~98
Note ~~19—~~20—Supplemental information to the Consolidated Statement of Cash Flows		~~105~~101

Item 4. Controls and Procedures		~~106~~102
Forward-looking Statements		~~107~~103

Part II -– Other Information
Item 1. Legal ~~Proceedings~~Proceedings.		~~109~~105
~~Item 1A. Risk Factors~~		~~109~~
Item 2. Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities.		~~111~~105
Item 5. Other Information.		105
Item 6. ~~Exhibits~~Exhibits.		~~111~~105

Index to Exhibits		~~112~~106
Signature		~~114~~108

The Bank of New York Mellon Corporation (and its subsidiaries)

Consolidated Financial Highlights (unaudited)


																	Quarter ended									Year-to-date
	Quarter ended									Year-to-date
(dollar amounts in millions, except per share amounts and unless otherwise noted)	Sept. 30, 2017			June 30, 2017			Sept. 30, 2016			Sept. 30, 2017			Sept. 30, 2016
(dollars in millions, except per share amounts and unless otherwise noted)																(dollars in millions, except per share amounts and unless otherwise noted)	Sept. 30, 2023			June 30, 2023			Sept. 30, 2022			Sept. 30, 2023			Sept. 30, 2022
Results applicable to common shareholders of The Bank of New York Mellon Corporation:																Results applicable to common shareholders of The Bank of New York Mellon Corporation:
Net income	$	983		$	926		$	974		$	2,789		$	2,603		Net income	$	956		$	1,031		$	319		$	2,892		$	1,853
Basic earnings per share	0.94			0.88			0.90			2.66			2.39			Basic earnings per share	$	1.23		$	1.31		$	0.39		$	3.66		$	2.29
Diluted earnings per share	0.94			0.88			0.90			2.64			2.38			Diluted earnings per share	$	1.22		$	1.30		$	0.39		$	3.65		$	2.28

Fee and other revenue	$	3,167		$	3,120		$	3,150		$	9,305		$	9,119		Fee and other revenue	$	3,358		$	3,354		$	3,353		$	9,947		$	10,011
Income from consolidated investment management funds	10			10			17			53			21
Net interest revenue	839			826			774			2,457			2,307			Net interest revenue	1,016			1,100			926			3,244			2,448
Total revenue	$	4,016		$	3,956		$	3,941		$	11,815		$	11,447		Total revenue	$	4,374		$	4,454		$	4,279		$	13,191		$	12,459

Return on common equity (annualized) (a)	10.6		%	10.4		%	10.8		%	10.4		%	9.8		%
Adjusted return on common equity (annualized) – Non-GAAP (a)(b)	11.0		%	10.8		%	11.3		%	10.9		%	10.3		%

Return on tangible common equity (annualized) – Non-GAAP (a)(c)	21.9		%	21.9		%	23.5		%	22.0		%	21.5		%
Adjusted return on tangible common equity (annualized) – Non-GAAP (a)(b)(c)	22.0		%	22.1		%	23.6		%	22.1		%	21.7		%

Return on average assets (annualized)	1.13		%	1.09		%	1.10		%	1.09		%	0.96		%
Return on common equity (annualized)																Return on common equity (annualized)	10.5		%	11.6		%	3.5		%	10.8		%	6.8		%
Return on tangible common equity (annualized) – Non-GAAP (a)																Return on tangible common equity (annualized) – Non-GAAP (a)	20.5		%	22.6		%	7.5		%	21.1		%	14.0		%

Fee revenue as a percentage of total revenue	78		%	79		%	79		%	79		%	79		%	Fee revenue as a percentage of total revenue	74		%	73		%	76		%	73		%	78		%

Percentage of non-U.S. total revenue	36		%	35		%	36		%	35		%	34		%
Non-U.S. revenue as a percentage of total revenue																Non-U.S. revenue as a percentage of total revenue	36		%	37		%	35		%	36		%	35		%

Pre-tax operating margin (a)	34		%	33		%	33		%	33		%	31		%
Adjusted pre-tax operating margin – Non-GAAP (a)(b)	35		%	35		%	35		%	34		%	33		%
Pre-tax operating margin																Pre-tax operating margin	29		%	30		%	15		%	29		%	21		%

Net interest margin	1.15		%	1.14		%	1.05		%	1.14		%	1.00		%	Net interest margin	1.18		%	1.20		%	1.05		%	1.23		%	0.89		%
Net interest margin on a fully taxable equivalent (“FTE”) basis – Non-GAAP (d)	1.16		%	1.16		%	1.06		%	1.16		%	1.02		%
Net interest margin on a fully taxable equivalent (“FTE”) basis – Non-GAAP (b)																Net interest margin on a fully taxable equivalent (“FTE”) basis – Non-GAAP (b)	1.18		%	1.20		%	1.05		%	1.23		%	0.90		%

Assets under management (“AUM”) at period end (in billions) (e)	$	1,824		$	1,771		$	1,715		$	1,824		$	1,715
Assets under custody and/or administration (“AUC/A”) at period end (in trillions) (f)	$	32.2		$	31.1		$	30.5		$	32.2		$	30.5
Market value of securities on loan at period end (in billions) (g)	$	382		$	336		$	288		$	382		$	288
Assets under custody and/or administration (“AUC/A”) at period end (in trillions) (c)																Assets under custody and/or administration (“AUC/A”) at period end (in trillions) (c)	$	45.7		$	46.9		$	42.2		$	45.7		$	42.2
Assets under management (“AUM”) at period end (in billions) (d)																Assets under management (“AUM”) at period end (in billions) (d)	$	1,821		$	1,906		$	1,776		$	1,821		$	1,776

Average common shares and equivalents outstanding (in thousands): (h)
Average common shares and equivalents outstanding (in thousands):																Average common shares and equivalents outstanding (in thousands):
Basic	1,035,337			1,035,829			1,062,248			1,037,431			1,071,457			Basic	777,813			787,718			811,304			789,609			810,703
Diluted	1,041,138			1,041,879			1,067,682			1,043,585			1,077,150			Diluted	781,781			790,725			814,516			793,364			814,214

Selected average balances:																Selected average balances:
Interest-earning assets	$	291,841		$	289,496		$	296,703		$	288,283		$	308,560		Interest-earning assets	$	339,044		$	362,049		$	352,062		$	349,789		$	365,279
Assets of operations	$	344,966		$	341,607		$	350,190		$	340,588		$	362,092
Total assets	$	345,709		$	342,515		$	351,230		$	341,510		$	363,290		Total assets	$	397,492		$	421,174		$	415,670		$	408,685		$	431,074
Interest-bearing deposits	$	142,490		$	142,336		$	155,109		$	141,558		$	160,728		Interest-bearing deposits	$	209,641		$	215,057		$	203,659		$	209,624		$	215,271
Noninterest-bearing deposits																Noninterest-bearing deposits	$	52,467		$	62,152		$	84,804		$	61,438		$	88,952
Long-term debt	$	28,138		$	27,398		$	23,930		$	27,148		$	22,779		Long-term debt	$	31,161		$	31,970		$	28,449		$	31,129		$	26,754
Noninterest-bearing deposits	$	70,168		$	73,886		$	81,619		$	72,524		$	82,861
Preferred stock	$	3,542		$	3,542		$	3,284		$	3,542		$	2,798		Preferred stock	$	4,838		$	4,838		$	4,838		$	4,838		$	4,838
Total The Bank of New York Mellon Corporation common shareholders’ equity	$	36,780		$	35,862		$	35,767		$	35,876		$	35,616		Total The Bank of New York Mellon Corporation common shareholders’ equity	$	35,983		$	35,769		$	35,942		$	35,787		$	36,483

Other information at period end:																Other information at period end:
Cash dividends per common share	$	0.24		$	0.19		$	0.19		$	0.62		$	0.53		Cash dividends per common share	$	0.42		$	0.37		$	0.37		$	1.16		$	1.05
Common dividend payout ratio	26		%	22		%	21		%	23		%	22		%	Common dividend payout ratio	35		%	29		%	95		%	32		%	46		%
Common dividend yield (annualized)	1.8		%	1.5		%	1.9		%	1.6		%	1.8		%	Common dividend yield (annualized)	3.9		%	3.3		%	3.8		%	3.6		%	3.6		%
Closing stock price per common share	$	53.02		$	51.02		$	39.88		$	53.02		$	39.88		Closing stock price per common share	$	42.65		$	44.52		$	38.52		$	42.65		$	38.52
Market capitalization	$	54,294		$	52,712		$	42,167		$	54,294		$	42,167		Market capitalization	$	32,801		$	34,671		$	31,135		$	32,801		$	31,135
Book value per common share (a)	$	36.11		$	35.26		$	34.19		$	36.11		$	34.19
Tangible book value per common share – Non-GAAP (a)(c)	$	18.19		$	17.53		$	16.67		$	18.19		$	16.67
Book value per common share																Book value per common share	$	46.98		$	46.35		$	43.18		$	46.98		$	43.18
Tangible book value per common share – Non-GAAP (a)																Tangible book value per common share – Non-GAAP (a)	$	24.66		$	24.17		$	21.55		$	24.66		$	21.55
Full-time employees	52,900			52,800			52,300			52,900			52,300			Full-time employees	53,600			53,200			51,100			53,600			51,100
Common shares outstanding (in thousands)	1,024,022			1,033,156			1,057,337			1,024,022			1,057,337			Common shares outstanding (in thousands)	769,073			778,782			808,280			769,073			808,280

2 BNY Mellon

Consolidated Financial Highlights (unaudited)(continued)


Regulatory capital and other ratios	Sept. 30, 2023		June 30, 2023		Dec. 31, 2022
Average liquidity coverage ratio (“LCR”)	121	%	120	%	118	%
Average net stable funding ratio (“NSFR”)	136	%	136	%	N/A		(e)

Regulatory capital ratios: (f)
Advanced Approaches:
Common Equity Tier 1 (“CET1”) ratio	11.4	%	11.1	%	11.2	%
Tier 1 capital ratio	14.4		14.0		14.1
Total capital ratio	15.2		14.8		14.9
Standardized Approach:
CET1 ratio	11.9	%	11.8	%	11.3	%
Tier 1 capital ratio	15.1		15.0		14.4
Total capital ratio	16.1		16.0		15.3

Tier 1 leverage ratio	6.1	%	5.7	%	5.8	%
Supplementary leverage ratio (“SLR”)	7.2		7.0		6.8

BNY Mellon shareholders’ equity to total assets ratio	10.1	%	9.5	%	10.0	%
BNY Mellon common shareholders’ equity to total assets ratio	8.9		8.4		8.8

(a) Return on tangible common equity and tangible book value per common share, Non-GAAP measures, exclude goodwill and intangible assets, net of deferred tax liabilities. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 43 for the reconciliation of Non-GAAP measures.

(b) See “Net interest revenue” on page 9 for a reconciliation of this Non-GAAP measure.

(c) Consists of AUC/A primarily from the Asset Servicing line of business and, to a lesser extent, the Clearance and Collateral Management, Issuer Services, Pershing and Wealth Management lines of business. Includes the AUC/A of CIBC Mellon Global Securities Services Company (“CIBC Mellon”), a joint venture with the Canadian Imperial Bank of Commerce, of $1.5 trillion at Sept. 30, 2023, $1.6 trillion at June 30, 2023 and $1.4 trillion at Sept. 30, 2022.

(d) Excludes assets managed outside of the Investment and Wealth Management business segment.

(e) The reporting requirement for the average NSFR became effective in the second quarter of 2023. For additional information on our NSFR, see “Liquidity and dividends” beginning on page 31.

(f) For our CET1, Tier 1 capital and Total capital ratios, our effective capital ratios under U.S. capital rules are the lower of the ratios as calculated under the Standardized and Advanced Approaches. For additional information on our capital ratios, see “Capital” beginning on page 36.

N/A – Not applicable.

Regulatory and Capital ratios Sept. 30, 2017
June 30, 2017
Dec. 31, 2016
Average liquidity coverage ratio (“LCR”) (i)
119 % 116 % 114 %

Regulatory capital ratios: (j)

Standardized:
Common equity Tier 1 (“CET1”) ratio 12.3 % 12.0 % 12.3 %
Tier 1 capital ratio 14.6
14.3
14.5
Total (Tier 1 plus Tier 2) capital ratio 15.6
14.8
15.2
Advanced:
CET1 ratio 11.1
10.8
10.6
Tier 1 capital ratio 13.2
12.9
12.6
Total (Tier 1 plus Tier 2) capital ratio 14.0
13.2
13.0

Leverage capital ratio (j)
6.8
6.7
6.6
Supplementary leverage ratio (“SLR”) (j)
6.3
6.2
6.0

BNY Mellon shareholders’ equity to total assets ratio – GAAP 11.4
11.3
11.6
BNY Mellon common shareholders’ equity to total assets ratio – GAAP 10.4
10.3
10.6

Selected regulatory capital ratios – fully phased-in – Non-GAAP: (k)

Estimated CET1 ratio:
Standardized Approach 11.9 % 11.5 % 11.3 %
Advanced Approach 10.7
10.4
9.7

Estimated SLR 6.1
6.0
5.6


~~(a)~~	~~See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 49 for a reconciliation of Non-GAAP measures.~~

~~(b)~~

Non-GAAP information for all periods presented excludes the amortization of intangible assets and merger and integration (“M&I”), litigation and restructuring charges. Non-GAAP information for the third quarter of 2016 and for the first nine months of 2016 also excludes a recovery of the previously impaired loan to Sentinel Management Group, Inc. (“Sentinel”). Additionally, the pre-tax operating margin (Non-GAAP) excludes the net income attributable to noncontrolling interests of consolidated investment management funds.


~~(c)~~	Tangible common equity – Non-GAAP and tangible book value per common share – Non-GAAP exclude goodwill and intangible assets, net of deferred tax liabilities. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 49 for the reconciliation of Non-GAAP measures.


~~(d)~~	~~See “Average balances and interest rates” on page 11 for a reconciliation of Non-GAAP measures.~~


~~(e)~~	~~Excludes securities lending cash management assets and assets managed in the Investment Services business.~~


~~(f)~~	Includes the AUC/A of CIBC Mellon Global Securities Services Company (“CIBC Mellon”), a joint venture with the Canadian Imperial Bank of Commerce, of $1.3 trillion at Sept. 30, 2017 and $1.2 trillion at both June 30, 2017 and Sept. 30, 2016.


~~(g)~~	Represents the total amount of securities on loan in our agency securities lending program managed by the Investment Services business. Excludes securities for which BNY Mellon acts as an agent on behalf of CIBC Mellon clients, which totaled $68 billion at Sept. 30, 2017, $66 billion at June 30, 2017 and $64 billion at Sept. 30, 2016.

~~(h)~~

Beginning in the third quarter of 2017, vested stock awards to retirement eligible employees are included in common shares outstanding for earnings per share purposes. This change increased both average basic and average diluted shares outstanding by approximately 6 million for the quarter, which resulted in a de minimis impact to both basic and diluted earnings per share. For additional information, see the “Consolidated Income Statement” beginning on page 57.


~~(i)~~	~~For additional information on our LCR, see “Liquidity and dividends” beginning on page 33.~~

~~(j)~~

For our CET1, Tier 1 capital and Total capital ratios, our effective capital ratios under U.S. capital rules are the lower of the ratios as calculated under the Standardized and Advanced Approaches. The leverage capital ratio is based on Tier I capital, as phased-in, and quarterly average total assets. The SLR is based on Tier 1 capital, as phased-in, and average quarterly assets and certain off-balance sheet exposures. For additional information on our capital ratios, see “Capital” beginning on page 37.


~~(k)~~	The estimated fully phased-in CET1 and SLR ratios (Non-GAAP) are based on our interpretation of the U.S. capital rules, which are being gradually phased-in over a multi-year period. For additional information on these Non-GAAP ratios, see “Capital” beginning on page 37.

BNY Mellon 3

~~Part I - Financial Information~~



Part I – Financial Information


Items 2. and 3. Management’s Discussion and Analysis of Financial Condition and Results of Operations; Quantitative and Qualitative Disclosures about Market Risk

General

In this Quarterly Report on Form 10-Q, references to “our,” “we,” “us,” “BNY Mellon,” the “Company” and similar terms refer to The Bank of New York Mellon Corporation and its consolidated subsidiaries. The term “Parent” refers to The Bank of New York Mellon Corporation but not its subsidiaries.

Certain business terms used in this report are defined in the Glossary included in our Annual Report on Form 10-K for the year ended Dec. 31, ~~2016 (“2016~~2022 (the “2022 Annual Report”).

The following should be read in conjunction with the Consolidated Financial Statements included in this report. Investors should also read the section titled “Forward-looking Statements.”

~~How we reported~~

Overview

Established in 1784, BNY Mellon is America’s oldest bank and the first company listed on the New York Stock Exchange (NYSE: BK). Today, BNY Mellon powers capital markets around the world through comprehensive solutions that help clients manage and service their financial assets throughout the investment life cycle. BNY Mellon has been named among Fortune’s World’s Most Admired Companies and Fast Company’s Best Workplaces for Innovators. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation.

BNY Mellon has three business segments, Securities Services, Market and Wealth Services and Investment and Wealth Management, which offer a comprehensive set of capabilities and deep expertise across the investment life cycle, enabling the Company to provide solutions to buy-side and sell-side market participants, as well as leading institutional and wealth management clients globally.

The diagram below presents our three business segments and lines of business, with the remaining operations in the Other segment.

The Bank of New York Mellon Corporation

Securities
Services

Market and Wealth Services

Investment and Wealth Management

Asset
Servicing

Pershing

Investment
Management

Issuer
Services

Treasury
Services

Wealth
Management

Clearance and Collateral Management

Key third quarter 2023 events

Increase in cash dividend on common stock

In July, our Board of Directors approved a 14% increase in the quarterly cash dividend on our common stock, from $0.37 to $0.42 per share.

Highlights of third quarter 2023 results

~~Throughout this Form 10-Q, certain measures, which are noted as “Non-GAAP financial measures,” exclude certain~~Net income applicable to common shareholders was $956 million, or $1.22 per diluted common share, in the third quarter of 2023, including the impact of notable items. Notable items in the third quarter of 2023 include severance expense and litigation reserves. Excluding notable items, net income applicable to common shareholders was $992 million (Non-GAAP), or ~~otherwise~~$1.27 (Non-GAAP) per diluted common share, in the third quarter of 2023. Net income applicable to common shareholders was $319 million, or $0.39 per diluted common share, in the third quarter of 2022, including the impact of notable items. Notable items in the third quarter of 2022 include ~~components that differ from U.S. generally accepted accounting principles (“GAAP”).~~goodwill impairment in the Investment Management reporting unit, a disposal gain (reflected in investment and other revenue), severance expense and litigation reserves. Excluding notable items, net income applicable to common shareholders was $983

4 BNY Mellon ~~believes that these measures~~

million (Non-GAAP), or $1.21 (Non-GAAP) per diluted common share, in the third quarter of 2022.

The highlights below are ~~useful to investors because they permit a focus~~based on period-to-period comparisons using measures that relate to our ability to enhance revenues and limit expenses in circumstances where such matters are within our control or because they provide additional information about our ability to meet fully phased-in capital requirements. Certain immaterial reclassifications have been made to prior periods to place them on a basis comparablethe third quarter of 2023 compared with the ~~current period presentation.~~ third quarter of 2022, unless otherwise noted.

•Total revenue of $4.4 billion increased 2%, primarily reflecting:

•Fee revenue was flat, primarily reflecting higher market values, net new business and the favorable impact of a weaker U.S. dollar, partially offset by the impact of the Alcentra divestiture, the mix of cumulative AUM flows and lower foreign exchange volatility and volumes. (See “Fee and other revenue” beginning on page 6.)

•Net interest revenue increased 10%, primarily reflecting higher interest rates, partially offset by changes in balance sheet size and mix. (See “Net interest revenue” on page 9.)

•Provision for credit losses was $3 million, compared with a benefit of $30 million. (See “Consolidated balance sheet review – Allowance for credit losses” beginning on page 29.)

•Noninterest expense decreased 16%, primarily related to the third quarter 2022 goodwill impairment associated with the Investment Management reporting unit. Excluding notable items, noninterest expense increased 3% (Non-GAAP), primarily reflecting higher investments and revenue-related expenses, and the unfavorable impact of a weaker U.S. dollar, as well as the impact of inflation, partially offset by the favorable impact of efficiency savings and the impact of the Alcentra divestiture. (See “Noninterest expense” on page 12.)

•Effective tax rate of 18.8%. (See “Income taxes” on page 12.)

•Return on common equity (“ROE”) was 10.5% for the third quarter of 2023.

•Return on tangible common equity (“ROTCE”) was 20.5% (Non-GAAP) for the third quarter of 2023.

See “Supplemental information -– Explanation of GAAP and Non-GAAP financial measures” beginning on page 4943 for a reconciliation of ~~financial measures presented in accordance with GAAP to adjusted~~these Non-GAAP ~~financial~~ measures. See “Net interest revenue,” including the “Average balances and interest rates” beginning on page 10 for information on measures presented on a fully taxable equivalent basis. Also see “Capital” beginning on page 37 for information on our fully phased-in capital requirements.

Metrics

~~Overview~~

~~The Bank of New York Mellon Corporation was the first company listed on the New York Stock Exchange (NYSE: BK). With a rich history ofmaintaining our financial strength and stability through all business cycles, BNY Mellon is a global investments company dedicated to improving lives through investing.~~

We manage and service assets for financial institutions, corporations and individual investors in 35 countries and more than 100 markets. As of Sept. 30, 2017, BNY Mellon had $32.2 trillion in assets under custody and/or administration (“AUC/A”), and $1.8 trillion in assets under management (“AUM”).

BNY Mellon is focused on enhancing our clients’ experience by leveraging our scale and expertise to deliver innovative and strategic solutions for our clients, and building trusted relationships that drive value. We hold a unique position in the global financial services industry. We service both the buy-side and sell-side, providing us with distinctive marketplace insights that enable us to support our clients’ success.

BNY Mellon’s businesses benefit from global growth in financial assets, the globalization of the investment process, changes in demographics and the continued evolution of the regulatory landscape—each providing us with opportunities to advise and service clients.

~~Key third quarter 2017 events~~

~~Definitive agreement to sell CenterSquare Investment Management~~

In September 2017, we announced that we entered into a definitive agreement to sell CenterSquare Investment Management (“CenterSquare”), one of our Investment Management boutiques. CenterSquare had approximately $9 billion in AUM in U.S. and global real estate and infrastructure investments. The transaction is subject to standard regulatory and other required approvals and is expected to be completed in the fourth quarter of 2017 or first quarter of 2018.

~~4 BNY Mellon~~

~~Charles W. Scharf named chief executive officer; Gerald L. Hassell, chairman, to retire~~

In July 2017, Charles W. Scharf was appointed chief executive officer and member of the board of directors of the Company. Mr. Scharf succeeds Gerald L. Hassell, who will continue as the Company’s chairman of the board of directors until his retirement at the end of the year. After Mr. Hassell’s retirement, Mr. Scharf will become chairman, effective Jan. 1, 2018.

~~Resolution plan~~

As required by the Dodd-Frank Act, the Parent must submit annually to the Board of Governors of the Federal Reserve System (“Federal Reserve”) and the Federal Deposit Insurance Corporation (“FDIC”) a plan for its rapid and orderly resolution in the event of material financial distress or failure. The Parent filed its most recent resolution plan on July 1, 2017. We believe the 2017 resolution plan addresses all shortcomings and deficiencies identified by the FDIC and the Federal Reserve in the Company’s 2015 resolution plan. The public portion of our 2017 resolution plan is available on the Federal Reserve’s and FDIC’s websites.

~~In September 2017, the Federal Reserve and FDIC extended the filing deadline by one year to July 1, 2019 for the Parent’s next resolution plan.~~

~~Increase in cash dividend on common stock~~

BNY Mellon’s 2017 capital plan submitted in connection with our Comprehensive Capital Analysis and Review (“CCAR”) included a 26% increase in the quarterly cash dividend to $0.24 per common share. The first payment of the increased quarterly cash dividend was made on Aug. 11, 2017.

~~Highlights of third quarter 2017 results~~

We reported net income applicable to common shareholders of $983 million, or $0.94 per diluted common share, in the third quarter of 2017. Net income applicable to common shareholders was $974 million, or $0.90 per diluted common share, in the third quarter of 2016 and $926 million, or $0.88 per diluted common share, in the second quarter of 2017.

~~Highlights of the third quarter of 2017 include:~~

•AUC/A ~~totaled a record $32.2~~of $45.7 trillion ~~at Sept. 30, 2017 compared with $30.5 trillion at Sept. 30, 2016. The 6% increase~~increased 8%, primarily ~~reflects~~reflecting higher market values, client inflows, the favorable impact of a weaker U.S. dollar and net new business. ~~(See “Investment Services business” beginning on page 19.)~~

•AUM ~~totaled a record $1.82~~of $1.8 trillion at Sept. 30, 2017 compared with $1.72 trillion at Sept. 30, 2016. The 6% increase primarily reflects higher market values, net inflows and the favorable impact of a weaker U.S. dollar (principally versus the British pound). AUM excludes securities lending cash management assets and assets managed in the Investment Services business. (See “Investment Management business” beginning on page 16.)

Investment services fees totaled $1.92 billion, an increase of 1% compared with $1.89 billion in the third quarter of 2016. The increase primarily reflects higher money market fees, higher equity market values and net new business, partially offset by lower Depositary Receipts revenue. (See “Investment Services business” beginning on page 19.)

Investment management and performance fees totaled $901 million, an increase of 5% compared with $860 million in the third quarter of 2016. The increase primarily reflects higher equity market values and money market fees. (See “Investment Management business” beginning on page 16.)

Foreign exchange and other trading revenue totaled $173 million compared with $183 million in the third quarter of 2016. Foreign exchange revenue totaled $158 million, a decrease of 10% compared with $175 million in the third quarter of 2016,increased 3%, primarily reflecting ~~lower volatility and lower Depositary Receipt-related foreign exchange activity, partially offset by higher volumes. (See “Fee and other revenue” beginning on page 7.)~~

Investment and other income totaled $63 million compared with $92 million in the third quarter of 2016. The decrease primarily reflects lower other income driven by our investments in renewable energy and lower seed capital gains. (See “Fee and other revenue” beginning on page 7.)

~~BNY Mellon 5~~

~~Net interest revenue totaled $839 million compared with $774 million in the third quarter of 2016. The 8% increase was primarily driven by higher interest rates, partially offset by~~ ~~lower average deposits and loans~~. Net interest margin was 1.15% in the third quarter of 2017 compared with 1.05% in the third quarter of 2016. The net interest margin (FTE) (Non-GAAP) was 1.16% in the third quarter of 2017 compared with 1.06% in the third quarter of 2016. (See “Net interest revenue” on page 10.)

The provision for credit losses was a credit of $6 million in the third quarter of 2017 and a credit of $19 million in the third quarter of 2016. (See “Asset quality and allowance for credit losses” beginning on page 29.)

~~Noninterest expense totaled $2.65 billion compared with $2.64 billion in the third quarter of 2016. The increase primarily reflects~~ ~~higher software and professional, legal and other purchased services expenses, partially~~ ~~offset by lower litigation expense and bank assessment charges.~~ ~~(See “Noninterest expense” beginning on page 13.)~~

The provision for income taxes was $348 million and the effective rate was 25.4% in the third quarter of 2017 compared with an income tax provision of $324 million and an effective tax rate of 24.6% in the third quarter of 2016. (See “Income taxes” on page 14.)

The net unrealized pre-tax gain on the total investment securities portfolio was $257 million at Sept. 30, 2017 compared with a pre-tax gain of $151 million at June 30, 2017. The increase was primarily driven by a decrease in long-term interest rates. (See “Investment securities” beginning on page 25.)

Our CET1 ratio under the Advanced Approach was 11.1% at Sept. 30, 2017 and 10.8% at June 30, 2017. The increase was primarily driven by CET1 generation. Our CET1 ratio under the Standardized Approach was 12.3% at Sept. 30, 2017 and 12.0% at June 30, 2017. (See “Capital” beginning on page 37.)

Our estimated CET1 ratio (Non-GAAP) calculated under the Advanced Approach on a fully phased-in basis was 10.7% at Sept. 30, 2017 and 10.4% at June 30, 2017. The increase primarily reflects CET1 generation. Our estimated CET1 ratio (Non-GAAP) calculated under the Standardized Approach on a fully phased-in basis was 11.9% at Sept. 30, 2017 and 11.5% at June 30, 2017. (See “Capital” beginning on page 37.)

~~6 BNY Mellon~~

~~Fee and other revenue~~

Fee and other revenue YTD17
3Q17 vs. vs.
(dollars in millions, unless otherwise noted) 3Q17
2Q17
3Q16
2Q17
3Q16
YTD17
YTD16
YTD16
Investment services fees:
Asset servicing (a)
$ 1,105
$ 1,085
$ 1,067
2 % 4 % $ 3,253
$ 3,176
2 %
Clearing services 383
394
349
(3 ) 10
1,153
1,049
10
Issuer services 288
241
337
20
(15 ) 780
815
(4 )
Treasury services 141
140
137
1
3
420
407
3
Total investment services fees 1,917
1,860
1,890
3
1
5,606
5,447
3
Investment management and performance fees 901
879
860
3
5
2,622
2,502
5
Foreign exchange and other trading revenue 173
165
183
5
(5 ) 502
540
(7 )
Financing-related fees 54
53
58
2
(7 ) 162
169
(4 )
Distribution and servicing 40
41
43
(2 ) (7 ) 122
125
(2 )
Investment and other income 63
122
92
N/M
N/M
262
271
N/M
Total fee revenue 3,148
3,120
3,126
1
1
9,276
9,054
2
Net securities gains 19
—
24
N/M
N/M
29
65
N/M
Total fee and other revenue $ 3,167
$ 3,120
$ 3,150
2 % 1 % $ 9,305
$ 9,119
2 %

Fee revenue as a percentage of total revenue 78 % 79 % 79 % 79 % 79 %

AUM at period end (in billions) (b)
$ 1,824
$ 1,771
$ 1,715
3 % 6 % $ 1,824
$ 1,715
6 %
AUC/A at period end (in trillions) (c)
$ 32.2
$ 31.1
$ 30.5
4 % 6 % $ 32.2
$ 30.5
6 %


~~(a)~~	Asset servicing fees include securities lending revenue of $47 million in the third quarter of 2017, $48 million in the second quarter of 2017, $51 million in the third quarter of 2016, $144 million in the first nine months of 2017 and $153 million in the first nine months of 2016.


~~(b)~~	~~Excludes securities lending cash management assets and assets managed in the Investment Services business.~~


~~(c)~~	~~Includes the AUC/A of CIBC Mellon of $1.3 trillion at Sept. 30, 2017 and $1.2 trillion~~ ~~at both~~ ~~June 30, 2017 and Sept. 30, 2016.~~

~~N/M - Not meaningful.~~

Fee and other revenue increased 1% compared with the third quarter of 2016 and 2% (unannualized) compared with the second quarter of 2017. The increase compared with the third quarter of 2016 primarily reflects higher investment management and performance fees, asset servicing fees and clearing services fees, partially offset by lower issuer services fees, investment and other income and foreign exchange and other trading revenue. The increase compared with the second quarter of 2017 primarily reflects seasonally higher issuer services fees, investment management and performance fees, asset servicing fees and net securities gains, partially offset by lower investment and other income.

~~Investment services fees~~

~~Investment services fees were impacted by the following compared with the third quarter of 2016 and the second quarter of 2017:~~

~~Asset servicing fees increased 4% compared with the third quarter of 2016 and 2% (unannualized) compared with the second quarter of 2017. The~~

~~increase compared with the third quarter of 2016 primarily reflects~~ higher equity market values and net new business, including growth in collateral management, partially offset by the impact of downsizing the retail UK transfer agency business. The increase compared with the second quarter of 2017 was primarily driven by the favorable impact of a weaker U.S. dollar and higher ~~equity~~ market ~~values.~~values, partially offset by the divestiture of Alcentra.

Capital and liquidity

•Our CET1 ratio calculated under the Advanced Approaches was 11.4% at Sept. 30, 2023 and 11.1% at June 30, 2023. The increase primarily reflects capital generated through earnings and lower risk-weighted assets (“RWAs”), partially offset by capital deployed through common stock repurchases and dividends. (See “Capital” beginning on page 36.)

•Tier 1 leverage was 6.1% at Sept. 30, 2023 and 5.7% at June 30, 2023. The increase primarily reflects lower average assets. (See “Capital” beginning on page 36.)

•Returned $783 million to common shareholders, including $450 million of common share repurchases.

Highlights of our principal business segments

Securities Services

•Total revenue increased 1%.

•Income before income taxes decreased 7%.

•Pre-tax operating margin of 23%.

Market and Wealth Services

•Total revenue increased 6%.

•Income before income taxes was flat.

•Pre-tax operating margin of 44%.

Investment and Wealth Management

•Total revenue decreased 4%.

•Income before income taxes increased to $164 million from $(497) million.

•Pre-tax operating margin of 20%; adjusted pre-tax operating margin – Non-GAAP of 22%.

See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures”

~~Clearing services fees increased 10%~~

BNY Mellon 5

beginning on page 43 for a reconciliation of the Non-GAAP measure. See “Review of business segments” and Note 19 of the Notes to Consolidated Financial Statements f

or additional information on our business segments.

Fee and other revenue


Fee and other revenue																				YTD23
(dollars in millions, unless otherwise noted)										3Q23 vs.										vs.
	3Q23			2Q23			3Q22			2Q23		3Q22		YTD23			YTD22			YTD22
Investment services fees	$	2,230		$	2,252		$	2,157		(1)	%	3	%	$	6,601		$	6,356		4	%
Investment management and performance fees (a)	777			762			800			2		(3)		2,315			2,516			(8)
Foreign exchange revenue	154			158			203			(3)		(24)		488			632			(23)
Financing-related fees	45			50			43			(10)		5		147			132			11
Distribution and servicing fees	39			35			33			11		18		107			97			10
Total fee revenue	3,245			3,257			3,236			—		—		9,658			9,733			(1)
Investment and other revenue	113			97			117			N/M		N/M		289			278			N/M
Total fee and other revenue	$	3,358		$	3,354		$	3,353		—	%	—	%	$	9,947		$	10,011		(1)	%

Fee revenue as a percentage of total revenue	74		%	73		%	76		%					73		%	78		%

AUC/A at period end (in trillions) (b)	$	45.7		$	46.9		$	42.2		(3)	%	8	%	$	45.7		$	42.2		8	%
AUM at period end (in billions) (c)	$	1,821		$	1,906		$	1,776		(4)	%	3	%	$	1,821		$	1,776		3	%

(a) Excludes seed capital gains (losses) related to consolidated investment management funds.

(b) Consists of AUC/A primarily from the Asset Servicing line of business and, to a lesser extent, the Clearance and Collateral Management, Issuer Services, Pershing and Wealth Management lines of business. Includes the AUC/A of CIBC Mellon of $1.5 trillion at Sept. 30, 2023, $1.6 trillion at June 30, 2023 and $1.4 trillion at Sept. 30, 2022.

N/M – Not meaningful.

Fee revenue was flat compared with the third quarter of ~~2016~~2022 and the second quarter of 2023.Compared with the third quarter of 2022, higher investment services fees were offset by lower foreign exchange revenue and investment management and performance fees. Compared with the second quarter of 2023, lower investment services fees were offset by higher investment management and performance fees.

Investment and other revenue decreased ~~3% (unannualized)~~$4 million compared with the third quarter of 2022 and increased $16 million compared with the second quarter of ~~2017.~~2023. The ~~increase was primarily driven by~~ ~~higher money market fees and growth in long-term mutual fund assets.~~ ~~The~~ decrease ~~primarily reflects lower clearance volumes.~~

~~Issuer services fees decreased 15%~~ compared with the third quarter of ~~2016~~2022 primarily reflects a disposal gain recorded in the third quarter of 2022, a strategic equity investment loss and ~~increased 20% (unannualized)~~net securities losses, partially offset by debt extinguishment gains, higher other trading revenue and improved seed capital results. The increase compared with thesecond quarter of ~~2017. The decrease~~2023 primarily reflects ~~fewer corporate actions, lost business~~ debt extinguishment gains and ~~lower fees due to a reduction in shares outstanding in certain depositary receipts programs,~~higher other trading revenue, partially offset by ~~higher Corporate Trust revenue. The increase~~strategic equity investment losses and net securities losses.

Investment services fees

~~BNY Mellon 7~~

~~compared with the second quarter of 2017 primarily reflects seasonality in Depositary Receipts revenue and higher Corporate Trust revenue.~~

~~Treasury~~Investment services fees increased 3% compared with the third quarter of ~~2016~~2022 and decreased 1% ~~(unannualized)~~ compared with the second quarter of ~~2017. Both increases primarily reflect~~ ~~higher payment volumes, partially offset by higher compensating balance credits provided to clients, which reduces fee revenue and increases net interest revenue.~~

~~See the “Investment Services business” in “Review of businesses” for additional details.~~

~~Investment management and performance fees~~

Investment management and performance fees increased 5% compared with the third quarter of 2016 and 3% (unannualized) compared with the second quarter of 2017, primarily reflecting higher equity market values and money market fees.2023. The increase compared with the third quarter of ~~2016 also~~2022 primarily reflects higher market values, higher clearance volumes and collateral management balances and higher fees on sweep balances, partially offset by lost business in Pershing. The decrease compared with thesecond quarter of 2023 primarily reflects lower Depositary Receipts revenue, partially offset by higher fees on sweep balances and higher clearance volumes and collateral management balances.

AUC/A totaled $45.7 trillion at Sept. 30, 2023, an increase of 8% compared with Sept. 30, 2022, primarily reflecting higher market values, client inflows, the favorable impact of a weaker U.S. dollar and net new business. AUC/A consisted of 34% equity securities and 66% fixed income securities at Sept. 30, 2023, and 33% equity securities and 67% fixed income securities at Sept. 30, 2022.

See “Securities Services business segment” and “Market and Wealth Services business segment” in “Review of business segments” for additional details.

6 BNY Mellon

Investment management and performance fees

Investment management and performance fees decreased 3% compared with the third quarter of 2022 and increased 2% compared with the second quarter of 2023. The decrease compared with the third quarter of 2022 primarily reflects the impact of the Alcentra divestiture and the mix of cumulative AUM flows, partially offset by higher market values and performance fees. The increase compared with the second quarter of ~~2017 also~~2023 primarily reflects the ~~favorable impact~~timing of performance fees. Performance fees were $30 million in the third quarter of 2023 and $10 million in the third quarter of 2022 and second quarter of 2023. On a ~~weaker U.S. dollar. Changes in~~constant currency ~~rates had an insignificant impact on the growth rate of~~basis (Non-GAAP), investment management and performance fees decreased 5% compared with the third quarter of ~~2016. Performance fees were $15 million in the third quarter~~2022. See “Supplemental information – Explanation of ~~2017, $8 million in the third quarter of 2016~~GAAP and ~~$17 million in the second quarter of 2017.~~

~~Total AUM~~Non-GAAP financial measures” beginning on page 43 for the ~~Investment Management business increased 6%~~reconciliation of Non-GAAP measures.

AUM was $1.8 trillion at Sept. 30, 2023, an increase of 3% compared with Sept. 30, ~~2016 and 3% compared with June 30, 2017. The increase compared with Sept. 30, 2016~~2022, primarily ~~reflects higher market values, net inflows and~~reflecting the favorable impact of a weaker U.S. dollar ~~(principally versus the British pound). The increase compared with June 30, 2017 primarily reflects the favorable impact of a weaker U.S. dollar (principally versus the British pound),~~and higher market values, ~~and net inflows. Net long-term inflows of fixed income and multi-asset and alternative investments were~~partially offset by ~~outflows~~the divestiture of ~~index, equity~~Alcentra.

See “Investment and ~~liability-driven investments in the third quarter of 2017. Net short-term inflows of $10 billion in the third quarter of 2017 were a result of increased distribution through our liquidity portals.~~

~~See the “Investment~~Wealth Management ~~business”~~business segment” in “Review of ~~businesses”~~business segments” for additional details regarding the drivers of investment management and performance ~~fees.~~fees, AUM and AUM flows.

Foreign exchange ~~and other trading~~ revenue

Foreign exchange and other trading revenue
(in millions) 3Q17
2Q17
3Q16
YTD17
YTD16
Foreign exchange $ 158
$ 151
$ 175
$ 463
$ 512
Other trading revenue 15
14
8
39
28
Total foreign exchange and other trading revenue $ 173
$ 165
$ 183
$ 502
$ 540

~~Foreign exchange and other trading revenue decreased 5% compared with the third quarter of 2016 and increased 5% (unannualized) compared with the second quarter of 2017.~~

Foreign exchange revenue is primarily driven by the volume of client transactions and the spread realized on these transactions, both of which are impacted by market volatility, ~~and~~ the impact of foreign currency hedging ~~activities.~~activities and foreign currency remeasurement gain (loss). Foreign exchange revenue decreased ~~10%~~24% compared with the third quarter of ~~2016, primarily reflecting lower volatility~~2022 and ~~lower Depositary Receipt-related foreign exchange activity, partially offset by higher volumes. Foreign exchange revenue increased 5% (unannualized)~~3% compared with the second quarter of ~~2017 reflecting higher volumes~~.2023. The decrease compared with the third quarter of 2022 primarily reflects lower volatility and volumes. Foreign exchange revenue is primarily reported in the ~~Investment~~Securities Services business segment and, to a lesser extent, in the Market and Wealth Services and Investment and Wealth Management business segments and the Other segment.

Our custody clients may enter into foreign exchange transactions in a number of ways, including through our standing instruction programs. While the shift of custody clients from our standing instruction programs to other trading options has abated, our foreign exchange revenue continues to be impacted by changes in volume and volatility. For the quarter ended Sept. 30, 2017, our total revenue for all types of foreign exchange trading transactions was $158 million, or 4% of our total revenue, and approximately 28% of our foreign exchange revenue was generated by transactions in our standing instruction programs.

~~8 BNY Mellon~~

Financing-related fees

Financing-related fees, which are primarily reported in the ~~Investment~~Market and Wealth Services and Securities Services business ~~and the Other segment,~~segments, include capital ~~markets~~market fees, loan commitment fees and credit-related fees. Financing-related fees ~~decreased~~increased 5% compared with the third quarter of ~~2016 primarily reflecting lower syndication fees. Financing-related fees increased~~2022 and decreased 10% compared with the second quarter of ~~2017 primarily reflecting higher underwriting fees.~~

~~Distribution and servicing fees~~

~~Distribution and servicing fees decreased~~2023. The increase compared with the third quarter of ~~2016~~2022 primarily reflects higher fees on standby letters of credit and commitments, partially offset by lower underwriting fees. The decrease compared with the second quarter of 2023 primarily reflects lower underwriting fees.

Investment and other revenue

Investment and other revenue includes income or loss from consolidated investment management funds, seed capital gains or losses, other trading revenue or loss, renewable energy investments losses, income from corporate and bank-owned life insurance contracts, other investment gains or losses, gains or losses from disposals, expense reimbursements from our CIBC Mellon joint venture, other income or loss and net securities gains or losses. The income or loss from consolidated investment management funds should be considered together with the net income or loss attributable to noncontrolling interests, which reflects the portion of the consolidated funds for which we do not have an economic interest and is reflected below net income as a separate line item on the consolidated income statement. Other trading revenue or loss primarily includes the impact of market-risk hedging activity related to our seed capital investments in investment management funds, non-foreign currency derivative and fixed income trading, and other hedging activity. Investments in renewable energy generate losses in investment and other revenue that are more than offset by benefits and credits recorded to the provision for income taxes. Other investment gains or losses includes fair value changes of non-readily marketable strategic equity, private equity and other investments. Expense reimbursements from our CIBC Mellon joint venture relate to expenses incurred by BNY Mellon on behalf of the CIBC Mellon joint venture. Other income includes various miscellaneous revenues.

BNY Mellon 7

The following table provides the components of investment and other revenue.


Investment and other revenue
(in millions)	3Q23		2Q23		3Q22		YTD23		YTD22
(Loss) income from consolidated investment management funds	$	(11)	$	10	$	(7)	$	4	$	(51)
Seed capital (losses) gains (a)	(4)		7		(11)		11		(43)
Other trading revenue	86		53		65		184		115
Renewable energy investments (losses)	(45)		(45)		(44)		(122)		(132)
Corporate/bank-owned life insurance	29		23		32		79		93
Other investments (losses) gains (b)	(9)		10		13		(8)		152
Disposal gains (losses)	2		(1)		37		—		37
Expense reimbursements from joint venture	29		31		27		89		80
Other income	55		9		4		72		22
Net securities (losses) gains	(19)		—		1		(20)		5
Total investment and other revenue	$	113	$	97	$	117	$	289	$	278

(a) Includes gains (losses) on investments in BNY Mellon funds which hedge deferred incentive awards.

(b) Includes strategic equity, private equity and other investments.

The decrease in total investment and other revenue compared with the third quarter of 2022 primarily reflects a disposal gain recorded in the third quarter of 2022, a strategic equity investment loss and net securities losses, partially offset by debt extinguishment gains, higher other trading revenue and improved seed capital results. The increase compared with the second quarter of 2023 primarily reflects debt extinguishment gains and higher other trading revenue, partially offset by strategic equity investment losses and net securities losses.

Year-to-date 2023 compared with year-to-date 2022

Fee revenue decreased 1% compared with the first nine months of 2022, primarily reflecting lower investment management and performance fees ~~paid to introducing brokers,~~and foreign exchange revenue, partially offset by higher investment services fees. The 8% decrease in investment management and performance fees primarily reflects the impact of the Alcentra divestiture, the mix of cumulative AUM flows and

lower market values, partially offset by the abatement of money market ~~fees.~~fee waivers and higher performance

fees. The 23% decrease in foreign exchange revenue primarily reflects lower volatility and volumes. The 4% increase in investment services fees primarily reflects the abatement of money market fee waivers, the accelerated amortization of deferred costs for depositary receipts services related to Russia recorded in the first quarter of 2022, higher clearance volumes and collateral management balances, net new business in Asset Servicing and higher fees on sweep balances, partially offset by lower client activity, and lost business in Pershing.

Investment and other ~~income~~

Investment and other income
(in millions) 3Q17
2Q17
3Q16
YTD17
YTD16
Corporate/bank-owned life insurance $ 37
$ 43
$ 34
$ 110
$ 96
Lease-related gains —
51
—
52
44
Expense reimbursements from joint venture 18
17
18
49
52
Equity investment income (loss) —
7
(1 ) 33
(8 )
Seed capital gains (a)
6
10
16
25
38
Asset-related gains (losses) 1
(5 ) 8
(1 ) 9
Other income (loss) 1
(1 ) 17
(6 ) 40
Total investment and other income $ 63
$ 122
$ 92
$ 262
$ 271

~~(a)~~

Excludes the gains (losses) on seed capital investments in consolidated investment management funds which are reflected in operations of consolidated investment management funds, net of noncontrolling interests. The gains on seed capital investments in consolidated investment management funds were $7revenue increased $11 million in the third quarter of 2017, $7 million in the second quarter of 2017, $8 million in the third quarter of 2016, $29 million in the first nine months of 2017 and $15 million in the first nine months of 2016.

~~Investment and other income decreased~~ compared with ~~both~~the first nine months of 2022, primarily reflecting higher other trading revenue, improved seed capital results and debt extinguishment gains, partially offset by strategic equity investment gains recorded in the first nine months of 2022, a disposal gain recorded in the third quarter of ~~2016~~2022 and net securities losses.

8 BNY Mellon

Net interest revenue


Net interest revenue																				YTD23
										3Q23 vs.										vs.
(dollars in millions)	3Q23			2Q23			3Q22			2Q23		3Q22		YTD23			YTD22			YTD22
Net interest revenue	$	1,016		$	1,100		$	926		(8)%		10%		$	3,244		$	2,448		33%
Add: Tax equivalent adjustment	—			1			3			N/M		N/M		1			9			N/M
Net interest revenue (FTE) – Non-GAAP (a)	$	1,016		$	1,101		$	929		(8)%		9%		$	3,245		$	2,457		32%

Average interest-earning assets	$	339,044		$	362,049		$	352,062		(6)%		(4)%		$	349,789		$	365,279		(4)%

Net interest margin	1.18		%	1.20		%	1.05		%	(2)	bps	13	bps	1.23		%	0.89		%	34	bps
Net interest margin (FTE) – Non-GAAP (a)	1.18		%	1.20		%	1.05		%	(2)	bps	13	bps	1.23		%	0.90		%	33	bps

(a) Net interest revenue (FTE) – Non-GAAP and net interest margin (FTE) – Non-GAAP include the tax equivalent adjustments on tax-exempt income, which allows for comparisons of amounts arising from both taxable and tax-exempt sources and is consistent with industry practice. The adjustment to an FTE basis has no impact on net income.

N/M – Not meaningful.

bps – basis points.

Net interest revenue increased 10% compared with the third quarter of 2022 and decreased 8% compared with the second quarter of ~~2017.~~2023. The increase compared with the third quarter of 2022 primarily reflects higher interest rates, partially offset by changes in balance sheet size and mix. The decrease compared with the second quarter of 2023 primarily reflects changes in balance sheet size and mix, partially offset by higher interest rates.

Net interest margin increased 13 basis points compared with the third quarter of 2022 and decreased 2 basis points compared with the second quarter of 2023. The changes compared with the third quarter of 2022 and the second quarter of 2023 primarily reflect the factors mentioned above.

Average interest-earning assets decreased 4% compared with the third quarter of 2022 and decreased 6% compared with the second quarter of 2023. The decrease compared with the third quarter of ~~2016~~2022 primarily reflects lower ~~other income driven by increased pre-tax losses on our investments in renewable energy~~securities and ~~lower seed capital gains.~~loan balances and interest-bearing deposits with banks. The ~~pre-tax losses on the renewable energy investments are~~decrease was partially offset by ~~corresponding tax benefits~~higher interest-bearing deposits with the Federal Reserve and ~~credits recorded as a reduction to the provision for income taxes.~~other central banks. The decrease compared with the

second quarter of ~~2017 primarily reflects lease-related gains recorded in the second quarter of 2017 and lower income from corporate/bank-owned life insurance.~~

~~Year-to-date 2017 compared with year-to-date 2016~~

Fee and other revenue increased 2% compared with the first nine months of 2016, primarily reflecting higher investment management and performance fees, clearing services fees and asset servicing fees, partially offset by lower foreign exchange and other trading revenue, net securities gains and issuer services fees. The 5% increase in investment management and performance fees primarily reflects higher market values, money market fees and performance fees, partially offset by the unfavorable impact of a stronger U.S. dollar (principally versus the British pound). The 10% increase in clearing services fees primarily reflects higher money market fees and growth in long-term mutual fund assets. The 2% increase in asset servicing fees primarily reflects net new business, including growth in collateral management and higher equity market values, partially offset by the unfavorable impact of a stronger U.S. dollar and the impact of downsizing the retail UK transfer agency business. The 7% decrease in foreign exchange and other trading revenue2023 primarily reflects lower ~~volatility and lower Depositary Receipts-related foreign exchange activity. The 4% decrease in issuer services fees primarily reflects lower Depositary Receipts revenue.~~

~~BNY Mellon 9~~

~~Net interest revenue~~

Net interest revenue YTD17
3Q17 vs. vs.
(dollars in millions) 3Q17
2Q17
3Q16
2Q17
3Q16
YTD17
YTD16
YTD16
Net interest revenue $ 839
$ 826
$ 774
2 % 8 % $ 2,457
$ 2,307
7 %
Tax equivalent adjustment 12
12
12
N/M N/M 36
39
N/M
Net interest revenue (FTE) – Non-GAAP (a)
$ 851
$ 838
$ 786
2 % 8 % $ 2,493
$ 2,346
6 %

Average interest-earning assets $ 291,841
$ 289,496
$ 296,703
1 % (2 )% $ 288,283
$ 308,560
(7 )%

Net interest margin 1.15 % 1.14 % 1.05 % 1 bps 10 bps 1.14 % 1.00 % 14 bps
Net interest margin (FTE) – Non-GAAP (a)
1.16 % 1.16 % 1.06 % —
10 bps 1.16 % 1.02 % 14 bps


~~(a)~~	Net interest revenue (FTE) – Non-GAAP and net interest margin (FTE) – Non-GAAP include the tax equivalent adjustments on tax-exempt income which allows for comparisons of amounts arising from both taxable and tax-exempt sources and is consistent with industry practice. The adjustment to an FTE basis has no impact on net income.

~~FTE - fully taxable equivalent.~~

~~N/M - Not meaningful.~~

~~bps - basis points.~~

~~Net interest revenue increased 8% compared~~interest-bearing deposits with the ~~third quarter of 2016~~Federal Reserve and ~~2% (unannualized) compared~~other central banks, securities and interest-bearing deposits with the second quarter of 2017 primarily reflecting higher interest rates, partially offset by lower average deposits and loans. The sequential increase also reflects an additional interest-earning day during the quarter.banks.

~~Net interest margin increased 10 basis points compared with the third quarter of 2016, primarily reflecting the factors listed above.~~

Average non-U.S. dollar deposits comprised approximately ~~30%~~25% of our average total deposits in the third quarter of ~~2017.~~2023. Approximately 45% of the average non-U.S. dollar deposits in the third quarter of ~~2017~~2023 were euro-denominated.

Year-to-date ~~2017~~2023 compared with year-to-date ~~2016~~2022

Net interest revenue increased 7%33% compared with the first nine months of ~~2016,~~2022, primarily driven by higher interest rates, ~~and lower premium amortization,~~ partially offset by lower ~~average deposits and interest-earning assets.~~deposit balances. The increase in the net interest margin ~~was~~ primarily ~~driven by~~reflects the factors ~~listed~~mentioned above.

Average interest-earning assets decreased 4% compared with the first nine months of 2022, primarily reflecting lower securities and loan balances and interest-bearing deposits with banks. The decrease was partially offset by larger interest-bearing deposits with the Federal Reserve and other central banks.

~~10 BNY Mellon~~

Average balances and interest rates Quarter ended
Sept. 30, 2017 June 30, 2017 Sept. 30, 2016
(dollar amounts in millions, presented on an FTE basis)
Average
balance

Interest
Average
rates

Average
balance

Interest
Average
rates

Average balance
Interest
Average rates
Assets
Interest-earning assets:
Interest-bearing deposits with banks (primarily foreign banks) $ 15,899
$ 34
0.86 % $ 14,832
$ 27
0.73 % $ 14,066
$ 26
0.74 %
Interest-bearing deposits held at the Federal Reserve and other central banks 70,430
89
0.50
69,316
71
0.41
74,102
37
0.20
Federal funds sold and securities purchased under resale agreements 28,120
119
1.67
26,873
86
1.29
26,376
62
0.93
Margin loans 13,206
87
2.60
15,058
87
2.32
18,132
67
1.48
Non-margin loans:
Domestic offices 29,950
216
2.87
30,734
207
2.70
30,534
171
2.22
Foreign offices 12,788
67
2.09
13,001
65
1.99
12,912
47
1.45
Total non-margin loans 42,738
283
2.64
43,735
272
2.49
43,446
218
1.99
Securities:
U.S. Government obligations 25,349
106
1.67
25,928
106
1.64
25,279
94
1.49
U.S. Government agency obligations 61,710
309
2.00
59,533
290
1.95
56,464
240
1.70
State and political subdivisions – tax-exempt 3,226
25
3.06
3,298
26
3.09
3,598
27
2.98
Other securities 28,804
98
1.34
28,468
81
1.15
33,064
102
1.23
Trading securities 2,359
13
2.26
2,455
18
2.85
2,176
13
2.62
Total securities 121,448
551
1.81
119,682
521
1.74
120,581
476
1.58
Total interest-earning assets (a)
$ 291,841
$ 1,163
1.59 % $ 289,496
$ 1,064
1.47 % $ 296,703
$ 886
1.19 %
Allowance for loan losses (165 ) (164 ) (165 )
Cash and due from banks 4,961
4,972
4,189

Other assets 48,329
47,303
49,463

Assets of consolidated investment management funds 743
908
1,040

Total assets $ 345,709
$ 342,515
$ 351,230

Liabilities
Interest-bearing liabilities:
Interest-bearing deposits:
Money market rate accounts $ 7,509
$ 1
0.06 % $ 7,379
$ 1
0.04 % $ 7,346
$ 1
0.06 %
Savings 837
1
0.76
1,014
2
0.75
1,201
1
0.41
Demand deposits 5,932
5
0.27
5,659
2
0.14
2,681
3
0.36
Time deposits 29,934
24
0.32
34,757
15
0.18
45,186
7
0.07
Foreign offices 98,278
26
0.10
93,527
12
0.05
98,695
(18 ) (0.08 )
Total interest-bearing deposits 142,490
57
0.16
142,336
32
0.09
155,109
(6 ) (0.02 )
Federal funds purchased and securities sold under repurchase agreements 21,403
70
1.30
17,970
38
0.84
9,585
6
0.24
Trading liabilities 1,434
2
0.54
1,216
2
0.61
735
2
1.11
Other borrowed funds 2,197
7
1.38
1,193
4
1.24
874
1
0.76
Commercial paper 2,736
8
1.15
2,215
5
0.95
1,173
1
0.35
Payables to customers and broker-dealers 18,516
19
0.42
20,609
16
0.30
16,873
3
0.07
Long-term debt 28,138
149
2.07
27,398
129
1.87
23,930
93
1.54
Total interest-bearing liabilities $ 216,914
$ 312
0.57 % $ 212,937
$ 226
0.42 % $ 208,279
$ 100
0.19 %
Total noninterest-bearing deposits 70,168
73,886
81,619

Other liabilities 17,728
15,545
21,343

Liabilities and obligations of consolidated investment management funds 35
111
238

Total liabilities 304,845
302,479
311,479

Temporary equity
Redeemable noncontrolling interests 188
172
179

Permanent equity
Total BNY Mellon shareholders’ equity 40,322
39,404
39,051

Noncontrolling interests 354
460
521

Total permanent equity 40,676
39,864
39,572

Total liabilities, temporary equity and permanent equity $ 345,709
$ 342,515
$ 351,230

Net interest revenue (FTE) – Non-GAAP $ 851
$ 838
$ 786

Net interest margin (FTE) – Non-GAAP 1.16 % 1.16 % 1.06 %
Less: Tax equivalent adjustment (b)
12
12
12

Net interest revenue – GAAP $ 839
$ 826
$ 774

Net interest margin – GAAP 1.15 % 1.14 % 1.05 %


~~Note:~~	~~Interest and average rates were calculated on a taxable equivalent basis using dollar amounts in thousands and actual number of days in the year.~~


~~(a)~~	~~Interest income and average yield are presented on an FTE basis (Non-GAAP).~~


~~(b)~~	~~Based on the applicable tax rate of 35%.~~

BNY Mellon 119

Average balances and interest rates Year-to-date
Sept. 30, 2017 Sept. 30, 2016
(dollar amounts in millions, presented on an FTE basis) Average balance
Interest
Average rates
Average balance
Interest
Average rates
Assets
Interest-earning assets:
Interest-bearing deposits with banks (primarily foreign banks) $ 15,153
$ 83
0.73 % $ 14,455
$ 76
0.70 %
Interest-bearing deposits held at the Federal Reserve and other central banks 68,613
217
0.42
86,947
170
0.26
Federal funds sold and securities purchased under resale agreements 26,779
272
1.36
25,275
167
0.88
Margin loans 14,663
249
2.27
18,420
194
1.41
Non-margin loans:
Domestic offices 30,545
611
2.67
29,488
493
2.23
Foreign offices 13,126
189
1.93
13,112
144
1.47
Total non-margin loans 43,671
800
2.45
42,600
637
2.00
Securities:
U.S. Government obligations 25,835
316
1.64
24,778
278
1.50
U.S. Government agency obligations 59,384
870
1.95
56,161
727
1.73
State and political subdivisions – tax-exempt 3,298
77
3.09
3,784
83
2.92
Other securities 28,531
267
1.25
33,592
309
1.23
Trading securities 2,356
48
2.74
2,548
45
2.37
Total securities 119,404
1,578
1.76
120,863
1,442
1.59
Total interest-earning assets (a)
$ 288,283
$ 3,199
1.48 % $ 308,560
$ 2,686
1.16 %
Allowance for loan losses (166 ) (162 )
Cash and due from banks 5,010
4,070

Other assets 47,461
49,624

Assets of consolidated investment management funds 922
1,198

Total assets $ 341,510
$ 363,290

Liabilities
Interest-bearing liabilities:
Interest-bearing deposits:
Money market rate accounts $ 7,466
$ 3
0.05 % $ 7,337
$ 3
0.06 %
Savings 980
5
0.70
1,203
3
0.36
Demand deposits 5,656
8
0.18
1,782
5
0.40
Time deposits 33,354
50
0.20
44,832
19
0.06
Foreign offices 94,102
32
0.05
105,574
(9 ) (0.01 )
Total interest-bearing deposits 141,558
98
0.09
160,728
21
0.02
Federal funds purchased and securities sold under repurchase agreements 19,465
132
0.90
15,471
28
0.24
Trading liabilities 1,188
6
0.65
650
5
1.05
Other borrowed funds 1,409
13
1.26
827
5
0.90
Commercial paper 2,374
18
1.01
1,657
5
0.37
Payables to customers and broker-dealers 19,360
42
0.29
16,870
9
0.07
Long-term debt 27,148
397
1.93
22,779
267
1.55
Total interest-bearing liabilities $ 212,502
$ 706
0.44 % $ 218,982
$ 340
0.21 %
Total noninterest-bearing deposits 72,524
82,861

Other liabilities 16,299
21,993

Liabilities and obligations of consolidated investment management funds 129
250

Total liabilities 301,454
324,086

Temporary equity
Redeemable noncontrolling interests 174
183

Permanent equity
Total BNY Mellon shareholders’ equity 39,418
38,414

Noncontrolling interests 464
607

Total permanent equity 39,882
39,021

Total liabilities, temporary equity and permanent equity $ 341,510
$ 363,290

Net interest revenue (FTE) – Non-GAAP $ 2,493
$ 2,346

Net interest margin (FTE) – Non-GAAP 1.16 % 1.02 %
Less: Tax equivalent adjustment (b)
36
39

Net interest revenue – GAAP $ 2,457
$ 2,307

Net interest margin – GAAP 1.14 % 1.00 %


~~Note:~~	~~Interest and average rates were calculated on a taxable equivalent basis using dollar amounts in thousands and actual number of days in the year.~~


~~(a)~~	~~Interest income and average yield are presented on an FTE basis (Non-GAAP).~~


~~(b)~~	~~Based on the applicable tax rate of 35%.~~


Average balances and interest rates	Quarter ended
	Sept. 30, 2023						June 30, 2023						Sept. 30, 2022
(dollars in millions; average rates annualized)	Average balance		Interest		Average rates		Average balance		Interest		Average rates			Average balance		Interest		Average rates
Assets
Interest-earning assets:
Interest-bearing deposits with the Federal Reserve and other central banks	$	98,767	$	1,153	4.57	%	$	114,578	$	1,241	4.29	%		$	91,836	$	288	1.23	%
Interest-bearing deposits with banks	12,287		125		4.04		13,919		128		3.68			16,298		67		1.62
Federal funds sold and securities purchased under resale agreements (a)	26,915		2,066		30.47		26,989		1,776		26.38			22,971		321		5.55
Loans	63,962		1,029		6.39		63,459		957		6.05			68,082		581		3.39
Securities:
U.S. government obligations	32,224		250		3.08		34,147		247		2.90			40,829		179		1.75
U.S. government agency obligations	59,481		426		2.87		61,565		428		2.78			62,819		300		1.91
State and political subdivisions (b)	13		1		4.42		13		—		4.45			1,982		12		2.39
Other securities (b)	39,861		393		3.93		40,976		367		3.59			42,642		204		1.90
Total investment securities (b)	131,579		1,070		3.24		136,701		1,042		3.05			148,272		695		1.87
Trading securities (b)	5,534		76		5.49		6,403		81		5.02			4,603		35		3.06
Total securities (b)	137,113		1,146		3.33		143,104		1,123		3.14			152,875		730		1.91
Total interest-earning assets (b)	$	339,044	$	5,519	6.45	%	$	362,049	$	5,225	5.77	%		$	352,062	$	1,987	2.24	%
Noninterest-earning assets	58,448						59,125							63,608
Total assets	$	397,492					$	421,174						$	415,670

Liabilities and equity
Interest-bearing liabilities:
Interest-bearing deposits	$	209,641	$	1,911	3.62	%	$	215,057	$	1,739	3.24	%		$	203,659	$	488	0.95	%
Federal funds purchased and securities sold under repurchase agreements (a)	21,512		1,956		36.07		26,282		1,729		26.39			12,297		250		8.05
Trading liabilities	3,959		48		4.80		3,893		43		4.46			3,550		23		2.52
Other borrowed funds	540		6		4.47		2,702		32		4.60			504		1		1.15
Commercial paper	7		—		4.13		5		—		5.11			5		—		2.34
Payables to customers and broker-dealers	13,515		147		4.30		14,801		143		3.85			18,030		48		1.07
Long-term debt	31,161		435		5.52		31,970		438		5.45			28,449		248		3.43
Total interest-bearing liabilities	$	280,335	$	4,503	6.37	%	$	294,710	$	4,124	5.61	%		$	266,494	$	1,058	1.57	%
Total noninterest-bearing deposits	52,467						62,152							84,804
Other noninterest-bearing liabilities	23,790						23,625							23,547
Total liabilities	356,592						380,487							374,845
Total The Bank of New York Mellon Corporation shareholders’ equity	40,821						40,607							40,780
Noncontrolling interests	79						80							45
Total liabilities and equity	$	397,492					$	421,174						$	415,670
Net interest revenue (FTE) – Non-GAAP (b)(c)			$	1,016					$	1,101						$	929
Net interest margin (FTE) – Non-GAAP (b)(c)					1.18	%					1.20	%						1.05	%
Less: Tax equivalent adjustment			—						1							3
Net interest revenue – GAAP			$	1,016					$	1,100						$	926
Net interest margin – GAAP					1.18	%					1.20	%						1.05	%

~~12 BNY Mellon~~

~~Noninterest expense~~

Noninterest expense YTD17
3Q17 vs. vs.
(dollars in millions) 3Q17
2Q17
3Q16
2Q17
3Q16
YTD17
YTD16
YTD16
Staff $ 1,469
$ 1,417
$ 1,467
4 % — % $ 4,358
$ 4,338
— %
Professional, legal and other purchased services 305
319
292
(4 ) 4
936
860
9
Software 175
173
156
1
12
514
470
9
Net occupancy 141
139
143
1
(1 ) 416
437
(5 )
Distribution and servicing 109
104
105
5
4
313
307
2
Sub-custodian 62
65
59
(5 ) 5
191
188
2
Furniture and equipment 58
59
59
(2 ) (2 ) 174
187
(7 )
Bank assessment charges (a)
51
59
61
(14 ) (16 ) 167
166
1
Business development 49
63
52
(22 ) (6 ) 163
174
(6 )
Other (a)
177
192
170
(8 ) 4
536
546
(2 )
Amortization of intangible assets 52
53
61
(2 ) (15 ) 157
177
(11 )
M&I, litigation and restructuring charges 6
12
18
N/M N/M 26
42
N/M
Total noninterest expense – GAAP $ 2,654
$ 2,655
$ 2,643
— % — % $ 7,951
$ 7,892
1 %

Staff expense as a percentage of total revenue 37 % 36 % 37 % 37 % 38 %

Full-time employees at period end 52,900
52,800
52,300
— % 1 % 52,900
52,300
1 %

Memo:
Adjusted total noninterest expense excluding amortization of intangible assets and M&I, litigation and restructuring charges – Non-GAAP $ 2,596
$ 2,590
$ 2,564
— % 1 % $ 7,768
$ 7,673
1 %


~~(a)~~	In the first quarter of 2017, we began disclosing bank assessment charges on a quarterly basis. The bank assessment charges were previously included in other expense. All prior periods were reclassified.

~~N/M - Not meaningful.~~

~~Total noninterest expense increased less than 1% compared with~~(a)Includes the average impact of offsetting under enforceable netting agreements of approximately $126 billion for the third quarter of ~~2016 and decreased slightly compared with~~2023, $113 billion for the second quarter of ~~2017.~~2023 and $35 billion for the third quarter of 2022. On a Non-GAAP basis, excluding the impact of offsetting, the yield on federal funds sold and securities purchased under resale agreements would have been 5.36% for the third quarter of 2023, 5.10% for the second quarter of 2023 and 2.21% for the third quarter of 2022. On a Non-GAAP basis, excluding the impact of offsetting, the rate on federal funds purchased and securities sold under repurchase agreements would have been 5.26% for the third quarter of 2023, 4.99% for the second quarter of 2023 and 2.11% for the third quarter of 2022. We believe providing the rates excluding the impact of netting is useful to investors as it is more reflective of the actual rates earned and paid.

(b) Average rates were calculated on an FTE basis, at tax rates of approximately 21%.

10 BNY Mellon


Average balances and interest rates	Year-to-date
	Sept. 30, 2023						Sept. 30, 2022
(dollars in millions; average rates annualized)	Average balance		Interest		Average rates		Average balance		Interest		Average rates
Assets
Interest-earning assets:
Interest-bearing deposits with the Federal Reserve and other central banks	$	102,762	$	3,247	4.17	%	$	98,310	$	389	0.52	%
Interest-bearing deposits with banks	14,129		393		3.72		17,189		114		0.88
Federal funds sold and securities purchased under resale agreements (a)	26,187		4,833		24.68		24,715		474		2.56
Loans	63,563		2,852		6.00		67,980		1,211		2.38
Securities:
U.S. government obligations	35,050		776		2.95		40,988		363		1.19
U.S. government agency obligations	61,098		1,259		2.75		64,922		803		1.65
State and political subdivisions (b)	16		1		5.71		2,126		36		2.22
Other securities (b)	41,080		1,098		3.57		43,929		461		1.40
Total investment securities (b)	137,244		3,134		3.05		151,965		1,663		1.46
Trading securities (b)	5,904		227		5.15		5,120		79		2.07
Total securities (b)	143,148		3,361		3.13		157,085		1,742		1.48
Total interest-earning assets (b)	$	349,789	$	14,686	5.59	%	$	365,279	$	3,930	1.44	%
Noninterest-earning assets	58,896						65,795
Total assets	$	408,685					$	431,074

Liabilities and equity
Interest-bearing liabilities:
Interest-bearing deposits	$	209,624	$	5,016	3.20	%	$	215,271	$	541	0.34	%
Federal funds purchased and securities sold under repurchase agreements (a)	22,048		4,577		27.75		12,589		339		3.60
Trading liabilities	3,629		121		4.47		3,385		37		1.46
Other borrowed funds	1,317		41		4.08		467		6		1.85
Commercial paper	4		—		4.55		5		—		1.41
Payables to customers and broker-dealers	15,077		418		3.70		17,099		57		0.45
Long-term debt	31,129		1,268		5.39		26,754		493		2.44
Total interest-bearing liabilities	$	282,828	$	11,441	5.40	%	$	275,570	$	1,473	0.71	%
Total noninterest-bearing deposits	61,438						88,952
Other noninterest-bearing liabilities	23,734						25,097
Total liabilities	368,000						389,619
Total The Bank of New York Mellon Corporation shareholders’ equity	40,625						41,321
Noncontrolling interests	60						134
Total liabilities and equity	$	408,685					$	431,074
Net interest revenue (FTE) – Non-GAAP (b)(c)			$	3,245					$	2,457
Net interest margin (FTE) – Non-GAAP (b)(c)					1.23	%					0.90	%
Less: Tax equivalent adjustment			1						9
Net interest revenue – GAAP			$	3,244					$	2,448
Net interest margin – GAAP					1.23	%					0.89	%

(a) Includes the average impact of offsetting under enforceable netting agreements of approximately $101 billion for the first nine months of 2023 and $40 billion for the first nine months of 2022. On a Non-GAAP basis, excluding the impact of offsetting, the yield on federal funds sold and securities purchased under resale agreements would have been 5.10% for the first nine months of 2023 and 0.98% for the first nine months of 2022. On a Non-GAAP basis, excluding the impact of offsetting, the rate on federal funds purchased and securities sold under repurchase agreements would have been 4.99% for the first nine months of 2023 and 0.86% for the first nine months of 2022. We believe providing the rates excluding the impact of netting is useful to investors as it is more reflective of the actual rates earned and paid.

(b) Average rates were calculated on an FTE basis, at tax rates of approximately 21%.

BNY Mellon 11

Noninterest expense


Noninterest expense															YTD23
							3Q23 vs.								vs.
(dollars in millions)	3Q23		2Q23		3Q22		2Q23		3Q22		YTD23		YTD22		YTD22
Staff	$	1,755	$	1,718	$	1,673	2	%	5	%	$	5,264	$	4,998	5	%
Software and equipment	452		450		421		—		7		1,331		1,225		9
Professional, legal and other purchased services	368		378		363		(3)		1		1,121		1,112		1
Net occupancy	140		121		124		16		13		380		371		2
Sub-custodian and clearing	121		119		124		2		(2)		358		373		(4)
Distribution and servicing	87		93		88		(6)		(1)		265		257		3
Business development	36		47		34		(23)		6		122		107		14
Bank assessment charges	37		41		35		(10)		6		118		107		10
Goodwill impairment	—		—		680		N/M		N/M		—		680		N/M
Amortization of intangible assets	15		14		17		7		(12)		43		51		(16)
Other	78		130		120		(40)		(35)		298		516		(42)
Total noninterest expense	$	3,089	$	3,111	$	3,679	(1)	%	(16)	%	$	9,300	$	9,797	(5)	%

Full-time employees at period end	53,600		53,200		51,100		1	%	5	%	53,600		51,100		5	%

Total noninterest expense decreased 16% primarily related to the third quarter 2022 goodwill impairment associated with the Investment Management reporting unit. Excluding notable items, noninterest expense increased 3% (Non-GAAP) primarily reflecting higher investments and revenue-related expenses, and the unfavorable impact of a weaker U.S. dollar, as well as the impact of inflation, partially offset by the favorable impact of efficiency savings and the impact of the Alcentra divestiture. The ~~increase~~investments, net of savings, are primarily ~~reflects higher~~included in staff, software and equipment, and professional, legal and other purchased services expenses, partially offset by lower litigation expense and bank assessment charges. The decrease primarily reflects lower other, professional, legal and other purchased services and business development expenses as well as lower bank assessment charges, partially offset by higher staff expense. Excluding amortization of intangible assets and M&I, litigation and restructuring charges, totalexpenses. Total noninterest expense ~~as adjusted (Non-GAAP), increased~~decreased 1% ~~compared with the third quarter of 2016 and less than 1% (unannualized)~~ compared with the second quarter of ~~2017.~~2023, primarily reflecting the favorable impact of efficiency savings and lower litigation reserves, partially offset by higher investments, severance and revenue-related expenses.

~~We continue~~Year-to-date 2023 compared with year-to-date 2022

Noninterest expense decreased 5% primarily related to invest in our risk management, regulatory compliance and other control functions to improve our safety and soundness and in light of increased global regulatory requirements. As a result of the submission of our 2017 resolution plan, we began to experience a modest decrease in the expenses relating to these functions in the third quarter ~~of 2017.~~

~~Staff expense~~

~~Given our mix of fee-based businesses, which are staffed~~2022 goodwill impairment associated with ~~high-quality professionals, staff expense comprised 55% of total~~the Investment Management reporting unit. Excluding notable items, noninterest expense ~~in the third quarter of 2017, 56% in the third quarter of 2016 and 53%in the second quarter of 2017.~~

~~Staff expense~~ increased slightly compared with the third quarter of 2016 as the annual employee merit increase was offset by lower severance. Staff expense increased 4% (unannualized) compared with the second quarter of 2017, primarily due to higher incentives expense reflecting stronger performance and the annual employee merit increase.

~~Non-staff expense~~

Non-staff expense includes certain expenses that vary with the levels of business activity and levels of expensed business investments, fixed infrastructure costs and expenses associated with corporate activities related to technology, compliance, legal, productivity initiatives and business development.

~~BNY Mellon 13~~

Non-staff expense totaled $1.2 billion, an increase of 1% compared with the third quarter of 2016 and a decrease of 4% (unannualized) compared with the second quarter of 2017. The increase primarily reflects higher software and professional, legal and other purchased services expenses, partially offset by lower litigation expense and bank assessment charges. The decrease primarily reflects lower other, professional, legal and other purchases services and business development expenses as well as lower bank assessment charges. The decrease in professional, legal and other purchased services was driven by lower consulting expense related to resolution planning.

~~Year-to-date 2017 compared with year-to-date 2016~~

~~Noninterest expense increased 1%~~2% (Non-GAAP) compared with the first nine months of ~~2016,~~2022, primarily reflecting higher ~~consulting~~

investments and ~~software~~revenue-related expenses, as well as the impact of inflation, partially offset by ~~lower net occupancy. The increase in consulting expense primarily reflects higher regulatory~~the favorable impact of efficiency savings, the impact of the Alcentra divestiture and ~~compliance costs. Net occupancy expense decreased as we continue to benefit from~~ the ~~savings generated by~~favorable impact of a stronger U.S. dollar.

See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 43 for the ~~business improvement process.~~reconciliation of this Non-GAAP measure.

Income taxes

BNY Mellon recorded an income tax provision of ~~$348~~$241 million ~~(25.4%~~(18.8% effective tax rate) in the third quarter of ~~2017. The~~2023. We recorded an income tax provision ~~was $324~~of $242 million ~~(24.6% effective tax rate)~~ in the third quarter of ~~2016 and $332~~2022. The effective tax rate was 38.4% in the third quarter of 2022, or 19.5% (Non-GAAP) excluding notable items, primarily goodwill impairment. We recorded an income tax provision of $270 million ~~(25.4%~~(20.2% effective tax rate) in the second quarter of ~~2017.~~2023. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 43 for the reconciliation of this Non-GAAP measure. For additional information, see Note 1011 of the Notes to Consolidated Financial Statements.

We expect the effective tax rate to be approximately 25-26% in 2017 based on current income tax rates. Based on our expected revenue growth as well as the mix of earnings we project for next year, we expect our effective tax rate may rise approximately 100 basis points in 2018.

Any legislation affecting income tax rates could have an impact on our future effective tax rate, the significance of which would depend on the timing, nature and scope of any such legislation, as well as the level and composition of our earnings.

12 BNY Mellon

Review of ~~businesses~~business segments

We have an internal information system that produces performance data along product and service lines for our ~~two~~three principal ~~businesses~~business segments: Securities Services, Market and Wealth Services and Investment and Wealth Management, and the Other segment.

Business segment accounting principles

Our business segment data has been determined on an internal management basis of accounting, rather than the generally accepted accounting principles (“GAAP”) used for consolidated financial reporting. These measurement principles are designed so that reported results of the businesses will track their economic performance.

For information on the accounting principles of our ~~businesses,~~business segments, see Note 19 of the Notes to Consolidated Financial Statements. For information on the primary products and services in each line of business, the primary types of revenue by line of business and how our ~~businesses~~business segments are presented and analyzed, see Note 1824 of the Notes to Consolidated Financial ~~Statements.~~Statements in our 2022 Annual Report.

Business segment results are subject to reclassification when organizational changes are made, or ~~when improvements~~for refinements in revenue and expense allocation methodologies. Refinements are ~~made~~typically reflected on a prospective basis. There were no reclassification or organizational changes in the ~~measurement principles.~~third quarter of 2023.

The results of our ~~businesses~~business segments may be influenced by client and other activities that vary by quarter. In the first quarter, ~~incentives~~staff expense typically increases, reflecting the vesting of long-term stock awards for retirement-eligible employees. In the ~~third~~second quarter, ~~Depositary Receipts revenue is~~staff expense typically ~~higher due to an increased level of client dividend payments. Also in~~increases, reflecting the annual employee merit increase. In the

third quarter, volume-related fees may decline due to reduced client activity. ~~In the third quarter, staff expense typically increases reflecting the annual employee merit increase.~~ In the fourth quarter, we typically incur higher business development and marketing expenses. In our Investment and Wealth Management business segment, performance fees are typically higher in the fourth ~~quarter,~~and first quarters, as ~~the fourth quarter represents~~those quarters represent the end of the measurement period for many of the performance fee-eligible relationships.

The results of our ~~businesses~~business segments may also be impacted by the translation of financial results denominated in foreign currencies to the U.S. dollar. We are primarily impacted by activities denominated in the British pound and the euro. On a consolidated basis and in our ~~Investment~~Securities Services and Market and Wealth Services business segments, we typically have more foreign ~~currency denominated~~currency-denominated expenses than revenues. However, our Investment

~~14 BNY Mellon~~

and Wealth Management business segment typically has more foreign ~~currency denominated~~currency-denominated revenues than expenses. Overall, currency fluctuations impact the year-over-year growth rate in the Investment and Wealth Management

business segment more than the ~~Investment~~Securities Services ~~business.~~and Market and Wealth Services business segments. However, currency fluctuations, in isolation, are not expected to significantly impact net income on a consolidated basis.

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

Key market metrics YTD17
3Q17 vs. vs.
3Q17
2Q17
1Q17
4Q16
3Q16
2Q17
3Q16
YTD17
YTD16
YTD16
Standard & Poor’s (“S&P”) 500 Index (a)
2519
2423
2363
2239
2168
4 % 16 % 2519
2168
16 %
S&P 500 Index – daily average 2467
2398
2326
2185
2162
3
14
2397
2065
16
FTSE 100 Index (a)
7373
7313
7323
7143
6899
1
7
7373
6899
7
FTSE 100 Index – daily average 7380
7391
7274
6923
6765
—
9
7348
6326
16
MSCI EAFE (a)
1974
1883
1793
1684
1702
5
16
1974
1702
16
MSCI EAFE – daily average 1934
1856
1749
1660
1677
4
15
1847
1640
13
Barclays Capital Global Aggregate Bond^SM Index (a)(b)
480
471
459
451
486
2
(1 ) 480
486
(1 )
NYSE and NASDAQ share volume (in billions)
179
199
186
189
186
(10 ) (4 ) 565
608
(7 )
JPMorgan G7 Volatility Index – daily average (c)
8.17
7.98
10.10
10.24
10.19
2
(20 ) 8.75
10.63
(18 )
Average interest on excess reserves paid by the Federal Reserve 1.25 % 1.04 % 0.79 % 0.55 % 0.50 % 21 bps 75 bps 1.03 % 0.50 % 53 bps

Foreign exchange rates vs. U.S. dollar:

British pound (a)
$ 1.34
$ 1.30
$ 1.25
$ 1.23
$ 1.30
3 % 3 % $ 1.34
$ 1.30
3 %
British pound – average rate 1.31
1.28
1.24
1.24
1.31
2
—
1.28
1.39
(8 )
Euro (a)
1.18
1.14
1.07
1.05
1.12
4
5
1.18
1.12
5
Euro – average rate 1.17
1.10
1.07
1.08
1.12
6
4
1.13
1.12
1


~~(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 revenue in the Investment and Wealth Management business segment, and, to a lesser extent, ~~in Investment~~the Securities Services and Market and Wealth Services business segments, is impacted by ~~the value of~~global market ~~indices.~~fluctuations. At Sept. 30, ~~2017,~~2023, we ~~estimate~~estimated that a 5% change in global equity markets, spread evenly throughout the year, would impact fee revenue by less than 1% and diluted earnings per common share by ~~$0.02~~$0.04 to ~~$0.04.~~

$0.07.

See Note 1819 of the Notes to Consolidated Financial Statements for the consolidating schedules, which show the contribution of our ~~businesses~~business segments to our overall profitability.

BNY Mellon 13

Securities Services business segment


																										YTD23
(dollars in millions, unless otherwise noted)																3Q23 vs.										vs.
	3Q23			2Q23			1Q23			4Q22			3Q22			2Q23		3Q22		YTD23			YTD22			YTD22
Revenue:
Investment services fees:
Asset Servicing	$	984		$	991		$	948		$	971		$	953		(1)	%	3	%	$	2,923		$	2,947		(1)	%
Issuer Services	281			319			236			271			288			(12)		(2)		836			738			13
Total investment services fees	1,265			1,310			1,184			1,242			1,241			(3)		2		3,759			3,685			2
Foreign exchange revenue	107			124			139			149			132			(14)		(19)		370			435			(15)
Other fees (a)	52			54			55			55			52			(4)		—		161			147			10
Total fee revenue	1,424			1,488			1,378			1,446			1,425			(4)		—		4,290			4,267			1
Investment and other revenue	65			84			72			70			111			N/M		N/M		221			221			N/M
Total fee and other revenue	1,489			1,572			1,450			1,516			1,536			(5)		(3)		4,511			4,488			1
Net interest revenue	600			668			666			656			538			(10)		12		1,934			1,372			41
Total revenue	2,089			2,240			2,116			2,172			2,074			(7)		1		6,445			5,860			10
Provision for credit losses	19			16			—			11			(6)			N/M		N/M		35			(3)			N/M
Noninterest expense (excluding amortization of intangible assets)	1,577			1,575			1,548			1,568			1,549			—		2		4,700			4,698			—
Amortization of intangible assets	8			7			8			8			8			14		—		23			25			(8)
Total noninterest expense	1,585			1,582			1,556			1,576			1,557			—		2		4,723			4,723			—
Income before income taxes	$	485		$	642		$	560		$	585		$	523		(24)	%	(7)	%	$	1,687		$	1,140		48	%

Pre-tax operating margin	23		%	29		%	26		%	27		%	25		%					26		%	19		%

Securities lending revenue (b)	$	46		$	47		$	48		$	50		$	48		(2)	%	(4)	%	$	141		$	132		7	%

Total revenue by line of business:
Asset Servicing	$	1,593		$	1,706		$	1,664		$	1,681		$	1,596		(7)	%	—	%	$	4,963		$	4,642		7	%
Issuer Services	496			534			452			491			478			(7)		4		1,482			1,218			22
Total revenue by line of business	$	2,089		$	2,240		$	2,116		$	2,172		$	2,074		(7)	%	1	%	$	6,445		$	5,860		10	%

Selected average balances:
Average loans	$	11,236		$	11,283		$	10,939		$	11,850		$	11,573		—	%	(3)	%	$	11,154		$	11,042		1	%
Average deposits	$	162,509		$	172,863		$	167,209		$	176,541		$	176,328		(6)	%	(8)	%	$	167,510		$	186,500		(10)	%

Selected metrics:
AUC/A at period end (in trillions) (c)	$	32.3		$	33.2		$	32.6		$	31.4		$	30.0		(3)	%	8	%
Market value of securities on loan at period end (in billions) (d)	$	406		$	415		$	441		$	449		$	435		(2)	%	(7)	%

(a) Other fees primarily include financing-related fees.

(b) Included in investment services fees reported in the Asset Servicing line of business.

(c) Consists of AUC/A primarily from the Asset Servicing line of business and, to a lesser extent, the Issuer Services line of business. Includes the AUC/A of CIBC Mellon of $1.5 trillion at Sept. 30, 2023, $1.6 trillion at June 30, 2023, $1.5 trillion at March 31, 2023 and Dec. 31, 2022 and $1.4 trillion at Sept. 30, 2022.

(d) Represents the total amount of securities on loan in our agency securities lending program. Excludes securities for which BNY Mellon 15

acts as agent on behalf of CIBC Mellon clients, which totaled $63 billion at Sept. 30, 2023, $66 billion at June 30, 2023, $69 billion at March 31, 2023, $68 billion at Dec. 31, 2022 and $75 billion at Sept. 30, 2022.

~~Investment Management business~~

YTD17
3Q17 vs. vs.
(dollars in millions) 3Q17
2Q17
1Q17
4Q16
3Q16
2Q17
3Q16
YTD17
YTD16
YTD16
Revenue:
Investment management fees:
Mutual funds $ 332
$ 314
$ 299
$ 297
$ 309
6 % 7 % $ 945
$ 913
4 %
Institutional clients 367
362
348
340
362
1
1
1,077
1,040
4
Wealth management 172
169
167
164
166
2
4
508
478
6
Investment management fees (a)
871
845
814
801
837
3
4
2,530
2,431
4
Performance fees 15
17
12
32
8
N/M
88
44
28
57
Investment management and performance fees 886
862
826
833
845
3
5
2,574
2,459
5
Distribution and servicing 51
53
52
48
49
(4 ) 4
156
144
8
Other (a)
(19 ) (16 ) (1 ) (1 ) (18 ) N/M
N/M
(36 ) (59 ) N/M
Total fee and other revenue (a)
918
899
877
880
876
2
5
2,694
2,544
6
Net interest revenue 82
87
86
80
82
(6 ) —
255
247
3
Total revenue 1,000
986
963
960
958
1
4
2,949
2,791
6
Provision for credit losses (2 ) —
3
6
—
N/M
N/M
1
—
N/M
Noninterest expense (ex. amortization of intangible assets) 687
683
668
672
680
1
1
2,038
2,024
1
Amortization of intangible assets 15
15
15
22
22
—
(32 ) 45
60
(25 )
Total noninterest expense 702
698
683
694
702
1
—
2,083
2,084
—
Income before taxes $ 300
$ 288
$ 277
$ 260
$ 256
4 % 17 % $ 865
$ 707
22 %
Income before taxes (ex. amortization of intangible assets) – Non-GAAP
$ 315
$ 303
$ 292
$ 282
$ 278
4 % 13 % $ 910
$ 767
19 %

Pre-tax operating margin 30 % 29 % 29 % 27 % 27 % 29 % 25 %
Adjusted pre-tax operating margin – Non-GAAP (b)
35 % 34 % 34 % 33 % 33 % 35 % 31 %

Average balances:
Average loans $ 16,724
$ 16,560
$ 16,153
$ 15,673
$ 15,308
1 % 9 % $ 16,481
$ 14,795
11 %
Average deposits $ 12,374
$ 14,866
$ 15,781
$ 15,511
$ 15,600
(17 )% (21 )% $ 14,283
$ 15,696
(9 )%

~~(a)~~

Total fee and other revenue includes the impact of the consolidated investment management funds, net of noncontrolling interests. See page 52 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 49 for the reconciliation of this Non-GAAP measure.

N/M -– Not meaningful.

~~16 BNY Mellon~~

AUM trends (a)
3Q17 vs.
(dollars in billions) 3Q17
2Q17
1Q17
4Q16
3Q16
2Q17
3Q16
AUM at period end, by product type:
Equity $ 158
$ 163
$ 158
$ 153
$ 156
(3 )% 1 %
Fixed income 206
198
191
186
194
4
6
Index 333
324
330
312
302
3
10
Liability-driven investments (b)
622
607
584
554
607
2
2
Multi-asset and alternative investments 207
192
188
181
189
8
10
Cash 298
287
276
262
267
4
12
Total AUM $ 1,824
$ 1,771
$ 1,727
$ 1,648
$ 1,715
3 % 6 %

AUM at period end, by client type:
Institutional $ 1,285
$ 1,265
$ 1,243
$ 1,182
$ 1,234
2 % 4 %
Mutual funds 447
418
397
381
396
7
13
Private client 92
88
87
85
85
5
8
Total AUM $ 1,824
$ 1,771
$ 1,727
$ 1,648
$ 1,715
3 % 6 %

Changes in AUM:
Beginning balance of AUM $ 1,771
$ 1,727
$ 1,648
$ 1,715
$ 1,664

Net inflows (outflows):
Long-term strategies:
Equity (2 ) (2 ) (4 ) (5 ) (6 )
Fixed income 4
2
2
(1 ) (1 )
Liability-driven investments (b)
(2 ) 15
14
(7 ) 4

Multi-asset and alternative investments 3
1
2
3
7

Total long-term active strategies inflows (outflows) 3
16
14
(10 ) 4

Index (3 ) (13 ) —
(1 ) (3 )
Total long-term strategies inflows (outflows) —
3
14
(11 ) 1

Short term strategies:
Cash 10
11
13
(3 ) (1 )
Total net inflows (outflows) 10
14
27
(14 ) —

Net market impact/other 17
1
41
(11 ) 80

Net currency impact 26
29
11
(42 ) (29 )
Ending balance of AUM $ 1,824
$ 1,771
$ 1,727
$ 1,648
$ 1,715
3 % 6 %


~~(a)~~	~~Excludes securities lending cash management assets and assets managed in the Investment Services business.~~


~~(b)~~	~~Includes currency overlay AUM.~~

Business segment description

~~Our Investment Management~~The Securities Services business segment consists of ~~our affiliated investment management boutiques, Wealth Management~~two distinct lines of business, Asset Servicing and ~~global distribution companies. See pages 19 and 20 of our 2016 Annual Report for additional information on our Investment Management business.~~

~~Review of financial results~~

AUM increased 6% compared with Sept. 30, 2016 primarily reflecting higher market values, net inflows and the favorable impact of the weaker U.S. dollar (principally versus the British pound). The increase compared with June 30, 2017 primarily reflects the favorable impact of the weaker U.S. dollar (principally versus the British pound), higher market values and net inflows.

Net long-term inflows of fixed income and multi-asset and alternative investments were offset by outflows of index, equity and liability-driven investments in the third quarter of 2017. Net short-term inflows of $10 billion in the third quarter of 2017 were a result of increased distribution through our liquidity portals. Market and regulatory trends have driven investable assets toward investments in lower fee asset management products,Issuer Services, which ~~negatively impacted our investment management fees.~~

Total revenue increased 4% compared with the third quarter of 2016 and 1% (unannualized) compared with the second quarter of 2017. Both increases primarily reflect higher investment management and performance fees.

~~Revenue generated in the Investment Management~~provide business ~~included 41% from non-U.S. sources in the~~

~~BNY Mellon 17~~

~~third quarter of 2017, compared with 40% in both the third quarter of 2016 and second quarter of 2017.~~

Investment management fees in the Investment Management business increased 4% compared with the third quarter of 2016 and 3% (unannualized) compared with the second quarter of 2017. Both increases primarily reflect higher equity market values and money market fees. The increase compared with the second quarter of 2017 also reflects the favorable impact of a weaker U.S. dollar.

~~Distribution and servicing fees increased compared with the third quarter of 2016 primarily reflecting higher money market fees.~~

~~Other revenue decreased compared with the third quarter of 2016 primarily reflecting higher payments to Investment Services related to higher money market fees.~~

Net interest revenue was unchanged compared with the third quarter of 2016 and decreased 6% (unannualized) compared with the second quarter of 2017. The decrease primarily reflects lower average deposits. Average loans increased 9% compared with the third quarter of 2016 and 1% compared with the second quarter of 2017. Average deposits decreased 21% compared with the third quarter of 2016 and 17% compared with the second quarter of 2017.

Noninterest expense, excluding amortization of intangible assets, increased 1% compared with the third quarter of 2016 and 1% (unannualized) compared with the second quarter of 2017. The increase compared with the third quarter of 2016 primarily reflects higher other and distribution and servicing expenses, partially offset by lower severance expense. The increase compared with the second quarter of 2017 primarily reflects higher distribution and servicing expense.

~~Year-to-date 2017 compared with year-to-date 2016~~

Income before taxes increased 22% compared with the first nine months of 2016, primarily reflecting revenue growth of 6%, partially offset by a 1% increase in noninterest expense, excluding amortization of intangible assets. Fee and other revenue increased 6% primarily reflecting higher investment management and performance fees. The increase in investment management and performance fees primarily reflects higher market values, money market fees and performance fees, partially offset by the unfavorable impact of a stronger U.S. dollar (principally versus the British pound). Net interest revenue increased 3% primarily due to higher interest rates and average loans, partially offset by lower average deposits. Noninterest expense, excluding amortization of intangible assets, increased 1% primarily reflecting higher incentives expense, driven by stronger performance, partially offset by the favorable impact of a stronger U.S. dollar (principally versus the British pound).

~~18 BNY Mellon~~

~~Investment Services business~~

YTD17
(dollar amounts in millions, unless otherwise noted) 3Q17 vs. vs.
3Q17
2Q17
1Q17
4Q16
3Q16
2Q17
3Q16
YTD17
YTD16
YTD16
Revenue:
Investment services fees:
Asset servicing $ 1,081
$ 1,061
$ 1,038
$ 1,043
$ 1,039
2 % 4 % $ 3,180
$ 3,098
3 %
Clearing services 381
393
375
354
347
(3 ) 10
1,149
1,045
10
Issuer services 288
241
250
211
336
20
(14 ) 779
813
(4 )
Treasury services 141
139
139
139
136
1
4
419
402
4
Total investment services fees 1,891
1,834
1,802
1,747
1,858
3
2
5,527
5,358
3
Foreign exchange and other trading revenue 154
145
153
157
177
6
(13 ) 452
506
(11 )
Other (a)
142
136
129
128
148
4
(4 ) 407
403
1
Total fee and other revenue 2,187
2,115
2,084
2,032
2,183
3
—
6,386
6,267
2
Net interest revenue 777
761
707
713
715
2
9
2,245
2,084
8
Total revenue 2,964
2,876
2,791
2,745
2,898
3
2
8,631
8,351
3
Provision for credit losses (2 ) (3 ) —
—
1
N/M N/M (5 ) 8
N/M
Noninterest expense (ex. amortization of intangible assets) 1,837
1,889
1,812
1,786
1,812
(3 ) 1
5,538
5,401
3
Amortization of intangible assets 37
38
37
38
39
(3 ) (5 ) 112
117
(4 )
Total noninterest expense 1,874
1,927
1,849
1,824
1,851
(3 ) 1
5,650
5,518
2
Income before taxes $ 1,092
$ 952
$ 942
$ 921
$ 1,046
15 % 4 % $ 2,986
$ 2,825
6 %
Income before taxes (ex. amortization of intangible assets) – Non-GAAP
$ 1,129
$ 990
$ 979
$ 959
$ 1,085
14 % 4 % $ 3,098
$ 2,942
5 %

Pre-tax operating margin 37 % 33 % 34 % 34 % 36 % 35 % 34 %

Adjusted pre-tax operating margin (ex. provision for credit losses and amortization of intangible assets) – Non-GAAP
38 % 34 % 35 % 35 % 37 % 36 % 35 %

Investment services fees as a percentage of noninterest expense (ex. amortization of intangible assets) 103 % 97 % 99 % 98 % 103 % 100 % 99 %

Securities lending revenue $ 41
$ 42
$ 40
$ 44
$ 42
(2 )% (2 )% $ 123
$ 126
(2 )%

Metrics:
Average loans $ 38,038
$ 40,931
$ 42,818
$ 45,832
$ 44,329
(7 )% (14 )% $ 40,578
$ 44,373
(9 )%
Average deposits $ 198,299
$ 200,417
$ 197,690
$ 213,531
$ 220,316
(1 )% (10 )% $ 198,796
$ 219,344
(9 )%

AUC/A at period end (in trillions) (b)
$ 32.2
$ 31.1
$ 30.6
$ 29.9
$ 30.5
4 % 6 % $ 32.2
$ 30.5
6 %
Market value of securities on loan at period end (in billions) (c)
$ 382
$ 336
$ 314
$ 296
$ 288
14 % 33 % $ 382
$ 288
33 %

Asset servicing:

Estimated new business wins
(AUC/A) (in billions)
$ 166
$ 152
$ 109
$ 141
$ 150

Clearing services:
Average active clearing accounts (U.S. platform) (in thousands)
6,203
6,159
6,058
5,960
5,942
1 % 4 %
Average long-term mutual fund assets (U.S. platform) $ 500,998
$ 480,532
$ 460,977
$ 438,460
$ 443,112
4 % 13 %
Average investor margin loans (U.S. platform) $ 8,886
$ 9,812
$ 10,740
$ 10,562
$ 10,834
(9 )% (18 )%

Depositary Receipts:

Number of sponsored programs 938
1,025
1,050
1,062
1,094
(8 )% (14 )%

Broker-Dealer:
Average tri-party repo balances (in billions)
$ 2,534
$ 2,498
$ 2,373
$ 2,307
$ 2,212
1 % 15 %


~~(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 $1.3 trillion at Sept. 30, 2017 and $1.2 trillion at June 30, 2017, March 31, 2017, Dec. 31, 2016 and Sept. 30, 2016.~~


~~(c)~~	Represents the total amount of securities on loan in our agency securities lending program managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $68 billion at Sept. 30, 2017, $66 billion at June 30, 2017, $65 billion at March 31, 2017, $63 billion at Dec. 31, 2016 and $64 billion at Sept. 30, 2016.

~~N/M - Not meaningful.~~

~~BNY Mellon 19~~

~~Business description~~

~~BNY Mellon Investment Services provides business and technology~~ solutions across the ~~investments process~~transaction life cycle to ~~financial institutions, corporations, foundations~~our global asset owner and ~~endowments, public funds and government agencies.~~

asset manager clients. We are one of the leading global investment services providers with ~~$32.2~~$32.3 trillion of AUC/A at Sept. 30, ~~2017.~~2023. For

information on the drivers of the Securities Services fee revenue, see Note 10 of the Notes to Consolidated Financial Statements in our 2022 Annual Report.

The Asset Servicing business provides a comprehensive suite of solutions. We are one of the ~~primary provider~~largest global custody and front-to-back outsourcing partners. We offer services for the safekeeping of ~~U.S. government securities clearance and a provider of non-U.S. government securities clearance. We provide services to settle securities transactions~~assets in ~~approximately 100 markets.~~capital markets globally, as well as fund

~~We are a leading provider of tri-party repo collateral services with approximately $2.5 trillion serviced globally and approximately $1.6 trillion of the U.S. tri-party repo market.~~

14 BNY Mellon

accounting services, exchange-traded funds servicing, transfer agency, trust and depository, front-to-back capabilities as well as data and analytics solutions for our clients. We deliver foreign exchange, and securities lending and financing solutions, on both an agency and principal basis. Our agency securities lending program is one of the largest lenders of U.S. and non-U.S. securities, servicing a lendable asset pool of approximately ~~$3.3~~$4.5 trillion in 3334 separate markets.

~~We serve as trustee and/or paying agent on more than 50,000 debt-related issuances globally.~~

~~As one of the largest providers of depositary receipts services in the world, we served as depositary for~~ ~~938~~ ~~sponsored American and global depositary receipts programs at~~ ~~Sept. 30, 2017, acting in partnership with leading companies from 59 countries.~~

We offer asset servicing, clearing services, issuer services and treasury services to our clients. BNY Mellon’s comprehensive suite of asset servicing solutions includes: custody, foreign exchange, fund services, securities finance, investment manager outsourcing, performance and risk analytics, alternative investment services, broker-dealer services, and collateral and liquidity services.

As one of the largest fund accounting providers and a trusted partner, we offer services to ensure the safekeeping of assets in capital markets globally. These services include financial reporting, tax reporting services, calculating and reporting net asset values (“NAV”), computing yields, maintaining brokerage account records, and providing

~~administrative support to clients so they may meet their Securities and Exchange Commission (“SEC”) and other compliance requirements.~~

Our alternative investment services and structured products business provides a full range of solutions for alternative investment managers, including prime custody, fund accounting, and client and regulatory reporting services. We also support exchange-traded funds and unit investment trusts, providing fund administration, custody, basket creation and dissemination, authorized participant interaction and order processing, among other services.

Securities finance delivers solutions on both an agency and principal basis. The principal finance program supports a diverse group of client segments, including hedge and liquid alternative funds and other institutional clients.

Inmarket-leading liquidity services ~~our market leading~~ portal enables cash investments for institutional clients ~~via money market funds, deposit products, and direct investments in money market securities,~~ and includes fund research and analytics.

The Issuer Services business includes Corporate Trust and Depositary Receipts. Our ~~broker-dealer services business clears and settles equity and fixed-income transactions globally and serves as custodian for tri-party repo collateral worldwide.~~

Clearing services, primarily Pershing LLC, an indirect subsidiary of BNY Mellon (“Pershing”) and its affiliates, provides business and technology solutions to financial organizations globally, delivering dependable operational support, robust trading services, flexible technology, an expansive array of investment and retirement solutions, practice management support and service excellence.

Our collateral services include collateral management, administration and segregation. We offer innovative solutions, like new collateral types and transaction structures, automation and efficiency, access to global markets, and industry expertise, to help financial institutions and institutional investors mine opportunities from liquidity, financing, risk and balance sheet challenges.

~~Our corporate trust~~Corporate Trust business delivers a full range of issuer and related investor services, including trustee, paying agency, fiduciary, escrow and other financial services.

~~20 BNY Mellon~~

Our treasury services include customizable solutions and innovative technology that deliver high-quality cash management, payment and trade support for corporate and institutional global treasury needs. We are a leading provider to the debt capital markets, providing customized and market-driven solutions to investors, bondholders and lenders.

Our Depositary Receipts business drives global investing by providing servicing and value-added solutions that enable, facilitate and enhance cross-border trading, clearing, settlement and ownership. We ~~also provide credit facilities and solutions to support our clients globally.~~

~~Role of BNY Mellon, as a trustee, for mortgage-backed securitizations~~

BNY Mellon acts as trustee and document custodian for certain mortgage-backed security (“MBS”) securitization trusts. The role of trustee for MBS securitizations is limited; our primary role as trustee is to calculate and distribute monthly bond payments to bondholders. As a document custodian, we hold the mortgage, note, and related documents provided to us by the loan originator or seller and provide periodic reporting to these parties. BNY Mellon, either as document custodian or trustee, does not receive mortgage underwriting files (the files that contain information related to the creditworthinessare one of the ~~borrower). As trustee or custodian, we have no responsibility or liability for the quality~~largest providers of ~~the portfolio; we are liable only for performance of our limited duties as described above and~~depositary receipts services in the ~~trust documents. BNY Mellon is indemnified by the servicers or directly~~world, partnering with leading companies from trust assets under the governing agreements. BNY Mellon may appear as the named plaintiff in legal actions brought by servicers in foreclosure and other related proceedings because the trustee is the nominee owner of the mortgage loans within the trusts.more than 50 countries.

BNY Mellon also has been named as a defendant in legal actions brought by MBS investors alleging that the trustee has expansive duties under the governing agreements, including to investigate and pursue claims against other parties to the MBS transaction. For additional information on our legal proceedings related to this matter, see Note 17 of the Notes to Consolidated Financial Statements.

Review of financial results

AUC/A of $32.3 trillion increased 6%8% compared with Sept. 30, ~~2016 to a record $32.2 trillion,~~2022, primarily reflecting higher market values and the favorable impact of a weaker U.S. ~~dollar and net new business. AUC/A consisted~~dollar.

Total revenue of

~~37% equity securities and 63% fixed income securities at Sept. 30, 2017, compared with 34% equity securities and 66% fixed income securities at Sept. 30, 2016.~~

~~Investment services fees~~ $2.1 billion increased 2%1% compared with the third quarter of ~~2016~~2022 and ~~3% (unannualized)~~decreased 7% compared with the second quarter of ~~2017, reflecting~~2023. The drivers of total revenue by line of business are indicated below.

Asset Servicing revenue of $1.6 billion was flat compared with the ~~following factors:~~third quarter of 2022 and decreased 7% compared with the second quarter of 2023. The comparison with the third quarter of 2022 primarily reflects a third quarter 2022 disposal gain, lower foreign exchange revenue and a strategic equity investment loss, partially offset by higher net interest revenue and market values and net new business. The decrease compared with the second quarter of 2023 primarily reflects lower net

~~Asset servicing fees (custody, fund services, broker-dealer services, securities finance, collateral~~interest revenue, lower foreign exchange revenue and ~~liquidity services)~~a strategic equity investment loss.

Issuer Services revenue of $496 million increased 4% compared with the third quarter of ~~2016~~2022 and ~~2% (unannualized)~~decreased 7% compared with the second quarter of ~~2017.~~2023. The increase compared with the third quarter of ~~2016~~2022 primarily reflects higher ~~equity market values and~~ net ~~new business, including growth in collateral management, partially offset by the impact of downsizing the retail UK transfer agency business.~~interest revenue. The ~~increase~~decrease compared with the second quarter of ~~2017 was primarily driven by the favorable impact of a weaker U.S. dollar and higher equity market values.~~

~~Clearing services fees increased 10% compared with the third quarter of 2016 primarily driven by~~ ~~higher money market fees and growth in long-term mutual fund assets.~~ ~~Clearing services fees decreased 3% (unannualized) compared with the second quarter of 2017 primarily reflecting lower clearance volumes.~~

Issuer services fees (Depositary Receipts and Corporate Trust) decreased 14% compared with the third quarter of 2016 and increased 20% (unannualized) compared with the second quarter of 2017. The decrease compared with the third quarter of 2016 primarily reflects fewer corporate actions, lost business and lower fees due to a reduction in shares outstanding in certain depositary receipts programs, partially offset by higher Corporate Trust revenue. The increase compared with the second quarter of 20172023 primarily reflects ~~seasonality in~~lower Depositary Receipts ~~revenue and higher Corporate Trust revenue.~~

Treasury services fees (global payments, trade finance and cash management) increased 4% compared with the third quarter of 2016 and 1% (unannualized) compared with the second quarter of 2017 primarily reflecting ~~higher payment volumes, partially offset by higher compensating~~

~~BNY Mellon 21~~

~~balance credits provided to clients, which reduces fee revenue and increases net interest~~ revenue.

Market and regulatory trends are driving investable assets toward lower fee asset management products at reduced margins for our clients. These dynamics are also negatively impacting our investment services fees. However, at the same time, these trends are providing additional outsourcing opportunities as clients and other market participants seek to comply with ~~new~~ regulations and reduce their operating costs.

~~Foreign exchange and other trading revenue decreased 13%~~Noninterest expense of $1.6 billion increased 2% compared with the third quarter of ~~2016 primarily reflecting lower volatility~~2022 and ~~lower Depositary Receipt-related foreign exchange activity, partially offset by higher volumes. Foreign exchange and other trading revenue increased 6% (unannualized)~~was flat compared with the second quarter of ~~2017~~2023. The increase compared with the third quarter of 2022 primarily reflects higher investments and the impact of inflation, partially offset by the favorable impact of efficiency savings.

Year-to-date 2023 compared with year-to-date 2022

Total revenue of $6.4 billion increased 10% compared with the first nine months of 2022. Asset Servicing revenue of $5.0 billion increased 7%, primarily reflecting higher ~~volumes~~.net interest revenue, net new business and the abatement of money market fee waivers, partially offset by lower foreign exchange revenue and client activity, and a third quarter 2022 disposal gain. Issuer Services revenue of $1.5 billion increased 22%, primarily reflecting higher net interest revenue, the accelerated amortization of deferred costs for depositary receipts services related to Russia recorded in the first quarter of 2022 and the abatement of money market fee waivers.

Noninterest expense of $4.7 billion was unchanged compared with the first nine months of 2022, primarily reflecting the favorable impact of efficiency savings and lower litigation reserves, partially offset by higher investments as well as the impact of inflation.

BNY Mellon 15

Market and Wealth Services business segment


																										YTD23
(dollars in millions, unless otherwise noted)																3Q23 vs.										vs.
	3Q23			2Q23			1Q23			4Q22			3Q22			2Q23		3Q22		YTD23			YTD22			YTD22
Revenue:
Investment services fees:
Pershing	$	506		$	496		$	499		$	502		$	494		2	%	2	%	$	1,501		$	1,406		7	%
Treasury Services	172			172			168			170			173			—		(1)		512			519			(1)
Clearance and Collateral Management	277			265			260			249			239			5		16		802			722			11
Total investment services fees	955			933			927			921			906			2		5		2,815			2,647			6
Foreign exchange revenue	21			21			18			20			20			—		5		60			68			(12)
Other fees (a)	51			55			54			47			49			(7)		4		160			129			24
Total fee revenue	1,027			1,009			999			988			975			2		5		3,035			2,844			7
Investment and other revenue	16			16			15			15			14			N/M		N/M		47			25			N/M
Total fee and other revenue	1,043			1,025			1,014			1,003			989			2		5		3,082			2,869			7
Net interest revenue	402			420			453			396			378			(4)		6		1,275			1,014			26
Total revenue	1,445			1,445			1,467			1,399			1,367			—		6		4,357			3,883			12
Provision for credit losses	6			7			—			6			(1)			N/M		N/M		13			1			N/M
Noninterest expense (excluding amortization of intangible assets)	806			779			768			783			735			3		10		2,353			2,141			10
Amortization of intangible assets	2			2			1			2			2			—		—		5			6			(17)
Total noninterest expense	808			781			769			785			737			3		10		2,358			2,147			10
Income before income taxes	$	631		$	657		$	698		$	608		$	631		(4)	%	—	%	$	1,986		$	1,735		14	%

Pre-tax operating margin	44		%	46		%	48		%	43		%	46		%					46		%	45		%

Total revenue by line of business:
Pershing	$	699		$	686		$	693		$	673		$	658		2	%	6	%	$	2,078		$	1,864		11	%
Treasury Services	389			402			412			382			390			(3)		—		1,203			1,101			9
Clearance and Collateral Management	357			357			362			344			319			—		12		1,076			918			17
Total revenue by line of business	$	1,445		$	1,445		$	1,467		$	1,399		$	1,367		—	%	6	%	$	4,357		$	3,883		12	%

Selected average balances:
Average loans	$	37,496		$	36,432		$	36,854		$	39,843		$	40,882		3	%	(8)	%	$	36,930		$	41,791		(12)	%
Average deposits	$	84,000		$	85,407		$	86,040		$	86,083		$	90,612		(2)	%	(7)	%	$	85,141		$	93,658		(9)	%

Selected metrics:
AUC/A at period end (in trillions) (b)	$	13.1		$	13.4		$	13.7		$	12.7		$	12.0		(2)	%	9	%

Pershing:
AUC/A at period end (in trillions)	$	2.4		$	2.4		$	2.4		$	2.3		$	2.1		—	%	14	%
Net new assets (U.S. platform) (in billions) (c)	$	23		$	(34)		$	37		$	42		$	45		N/M		N/M
Average active clearing accounts (in thousands)	7,979			7,946			7,849			7,603			7,466			—	%	7	%

Treasury Services:
Average daily U.S. dollar payment volumes	233,620			233,931			236,322			246,189			234,468			—	%	—	%

Clearance and Collateral Management:
Average tri-party collateral management balances (in billions)	$	5,706		$	6,044		$	5,626		$	5,451		$	5,457		(6)	%	5	%

(a) Other fees primarily include financing-related fees.

(b) Consists of AUC/A from the Clearance and Collateral Management and Pershing lines of business.

(c) Net new assets represents net flows of assets (e.g., net cash deposits and net securities transfers, including dividends and interest) in customer accounts in Pershing LLC, a U.S. broker-dealer.

N/M – Not meaningful.

Business segment description

The Market and Wealth Services business segment consists of three distinct lines of business, Pershing,

Treasury Services and Clearance and Collateral Management, which provide business services and technology solutions to entities including financial institutions, corporations, foundations and

16 BNY Mellon

endowments, public funds and government agencies. For information on the drivers of the Market and Wealth Services fee revenue, see Note 10 of the Notes to Consolidated Financial Statements in our 2022 Annual Report.

Pershing provides execution, clearing, custody, business and technology solutions, delivering operational support to broker-dealers, wealth managers and registered investment advisors (“RIAs”) globally.

Our Treasury Services business is a leading provider of global payments, liquidity management and trade finance services for financial institutions, corporations and the public sector.

Our Clearance and Collateral Management business clears and settles equity and fixed income transactions globally and serves as custodian for tri-party repo collateral worldwide. We are the primary provider of U.S. government securities clearance and a provider of non-U.S. government securities clearance. Our collateral services include collateral management, administration and segregation. We offer innovative solutions and industry expertise, which help financial institutions and institutional investors with their financing, risk and balance sheet challenges. We are a leading provider of tri-party collateral management services with an average of $5.7 trillion serviced globally, including approximately $4.6 trillion of the U.S. tri-party repo market at Sept. 30, 2023.

Review of financial results

AUC/A of $13.1 trillion increased 9% compared with Sept. 30, 2022, primarily reflecting net client inflows and higher market values.

Total revenue of $1.4 billion increased 6% compared with the third quarter of 2022 and was unchanged compared with the second quarter of 2023. The drivers of total revenue by line of business are indicated below.

Pershing revenue of $699 million increased 6% compared with the third quarter of 2022 and 2% compared with the second quarter of 2023. The increase compared with the third quarter of 2022 primarily reflects higher net interest revenue and higher fees on sweep balances, partially offset by lost

business. The increase compared with the second quarter of 2023 primarily reflects higher fees on sweep balances.

Treasury Services revenue of $389 million was flat compared with the third quarter of 2022 and decreased 3% compared with the second quarter of 2023. The decrease compared with the second quarter of 2023 primarily reflects lower net interest revenue.

Clearance and Collateral Management revenue of $357 million increased 12% compared with the third quarter of 2022 and was unchanged compared with the second quarter of 2023. The increase compared with the third quarter of 2022 primarily reflects higher clearance volumes and collateral management balances. Compared with the second quarter of 2023, higher clearance volumes and collateral management balances were offset by lower net interest revenue.

Noninterest expense of $808 million increased 10% compared with the third quarter of 2022 and 3% compared with the second quarter of 2023. The increases primarily reflect higher investments and revenue-related expenses, as well as the impact of inflation, partially offset by the favorable impact of efficiency savings.

Year-to-date 2023 compared with year-to-date 2022

Total revenue of $4.4 billion increased 12% compared with the first nine months of 2022. Pershing revenue of $2.1 billion increased 11%, primarily reflecting the abatement of money market fee waivers, higher net interest revenue and higher fees on sweep balances, partially offset by lower client activity and lost business. Treasury Services revenue of $1.2 billion increased 9%, primarily reflecting higher net interest revenue. Clearance and Collateral Management revenue of $1.1 billion increased 17%, primarily reflecting higher net interest revenue, U.S. collateral management balances and U.S. government clearance volumes.

Noninterest expense of $2.4 billion increased 10% compared with the first nine months of 2022, primarily reflecting higher investments and revenue-related expenses, as well as the impact of inflation, partially offset by the favorable impact of efficiency savings.

BNY Mellon 17

Investment and Wealth Management business segment


																												YTD23
																	3Q23 vs.											vs.
(dollars in millions)	3Q23			2Q23			1Q23			4Q22			3Q22				2Q23		3Q22		YTD23			YTD22				YTD22
Revenue:
Investment management fees	$	746		$	750		$	752		$	754		$	788			(1)	%	(5)	%	$	2,248		$	2,461			(9)	%
Performance fees	30			10			22			26			10				N/M		N/M		62			49				27
Investment management and performance fees (a)	776			760			774			780			798				2		(3)		2,310			2,510				(8)
Distribution and servicing fees	62			58			55			54			55				7		13		175			138				27
Other fees (b)	(50)			(56)			(53)			(58)			(45)				N/M		N/M		(159)			(75)				N/M
Total fee revenue	788			762			776			776			808				3		(2)		2,326			2,573				(10)
Investment and other revenue (c)	1			12			6			(3)			(3)				N/M		N/M		19			(24)				N/M
Total fee and other revenue (c)	789			774			782			773			805				2		(2)		2,345			2,549				(8)
Net interest revenue	38			39			45			52			57				(3)		(33)		122			176				(31)
Total revenue	827			813			827			825			862				2		(4)		2,467			2,725				(9)
Provision for credit losses	(9)			7			—			1			3				N/M		N/M		(2)			—				N/M
Noninterest expense (excluding goodwill impairment and amortization of intangible assets)	667			672			729			693			669				(1)		—		2,068			2,102				(2)
Goodwill impairment	—			—			—			—			680				N/M		N/M		—			680				N/M
Amortization of intangible assets	5			5			5			6			7				—		(29)		15			20				(25)
Total noninterest expense	672			677			734			699			1,356				(1)		(50)		2,083			2,802				(26)
Income (loss) before income taxes	$	164		$	129		$	93		$	125		$	(497)			27	%	N/M		$	386		$	(77)			N/M

Pre-tax operating margin	20		%	16		%	11		%	15		%	(57)		%						16		%	(3)		%
Adjusted pre-tax operating margin – Non-GAAP (d)	22		%	18		%	13		%	17		%	(64)		%	(e)					18		%	(3)		%	(e)

Total revenue by line of business:
Investment Management	$	557		$	546		$	557		$	550		$	579			2	%	(4)	%	$	1,660		$	1,840			(10)	%
Wealth Management	270			267			270			275			283				1		(5)		807			885				(9)
Total revenue by line of business	$	827		$	813		$	827		$	825		$	862			2	%	(4)	%	$	2,467		$	2,725			(9)	%

Average balances:
Average loans	$	13,519		$	13,995		$	13,960		$	14,404		$	14,482			(3)	%	(7)	%	$	13,823		$	13,937			(1)	%
Average deposits	$	13,578		$	15,410		$	16,144		$	16,416		$	17,225			(12)	%	(21)	%	$	15,035		$	20,157			(25)	%

(a) On a constant currency basis, investment management and performance fees decreased 5% (Non-GAAP) compared with the third quarter of 2022. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 43 for the reconciliation of this Non-GAAP measure.

(b) Other fees primarily include investment services fees.

(c) Investment and other revenue and total fee and other revenue are net of income (loss) attributable to noncontrolling interests related to consolidated investment management funds.

(d) Net of distribution and servicing expense. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 43 for the reconciliation of this Non-GAAP measure.

(e) Excluding notable items and net of distribution and servicing expense, the adjusted pre-tax operating margin was 24% (Non-GAAP) in the third quarter of 2022 and the first nine months of 2022. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 43 for the reconciliation of this Non-GAAP measure.

N/M – Not meaningful.

18 BNY Mellon


AUM trends											3Q23 vs.
(dollars in billions)	3Q23		2Q23		1Q23		4Q22		3Q22		2Q23		3Q22
AUM by product type: (a)
Equity	$	133	$	145	$	142	$	135	$	125	(8)	%	6	%
Fixed income	190		203		207		198		205		(6)		(7)
Index	425		440		408		395		366		(3)		16
Liability-driven investments	534		579		604		570		546		(8)		(2)
Multi-asset and alternative investments	156		162		161		153		181		(4)		(14)
Cash	383		377		386		385		353		2		8
Total AUM	$	1,821	$	1,906	$	1,908	$	1,836	$	1,776	(4)	%	3	%

Changes in AUM: (a)
Beginning balance of AUM	$	1,906	$	1,908	$	1,836	$	1,776	$	1,937
Net inflows (outflows):
Long-term strategies:
Equity	(3)		(3)		(4)		(5)		(5)
Fixed income	(7)		(4)		4		(12)		(3)
Liability-driven investments	1		(3)		10		19		30
Multi-asset and alternative investments	(4)		(1)		(3)		(4)		2
Total long-term active strategies (outflows) inflows	(13)		(11)		7		(2)		24
Index	(2)		2		(2)		(4)		(1)
Total long-term strategies (outflows) inflows	(15)		(9)		5		(6)		23
Short-term strategies:
Cash	7		(9)		—		27		(2)
Total net (outflows) inflows	(8)		(18)		5		21		21
Net market impact	(50)		(3)		52		18		(118)
Net currency impact	(27)		19		15		53		(64)
Divestiture	—		—		—		(32)		—
Ending balance of AUM	$	1,821	$	1,906	$	1,908	$	1,836	$	1,776	(4)	%	3	%

Wealth Management client assets (b)	$	292	$	286	$	279	$	269	$	256	2	%	14	%

(a) Excludes assets managed outside of the Investment and Wealth Management business segment.

(b) Includes AUM and AUC/A in the Wealth Management line of business.

Business segment description

Our Investment and Wealth Management business segment consists of two distinct lines of business: Investment Management and Wealth Management. Our investment firms deliver a highly diversified portfolio of investment strategies independently, and through our global distribution network, to institutional and retail clients globally. BNY Mellon Wealth Management provides investment management, custody, wealth and estate planning, private banking services, investment servicing and information management. See pages 19 and 20 of our 2022 Annual Report for additional information on our Investment and Wealth Management business segment.

Review of financial results

AUM increased 3% compared with Sept. 30, 2022, primarily reflecting the favorable impact of a weaker

U.S. dollar and higher market values, partially offset by the divestiture of Alcentra.

Net long-term strategy outflows were $15 billion in the third quarter of 2023, driven by fixed income, multi-asset and alternative investments and equity investments. Short-term strategy inflows were $7 billion in the third quarter of 2023. Market and regulatory trends have resulted in increased demand for lower fee asset management products and for performance-based fees.

Total revenue of $827 million decreased 4% compared with the third quarter of ~~2016~~2022 and increased ~~4% (unannualized)~~2% compared with the second quarter of ~~2017.~~2023. The ~~third quarter~~drivers of ~~2016 results include termination fees related to the clearing services business. Both comparisons reflect higher payments from~~ total revenue by line of business are indicated below.

Investment Management ~~related to higher money market fees.~~

~~Net interest~~ revenue ~~increased 9%~~of $557 million decreased 4% compared with the third quarter of ~~2016 primarily reflecting the impact of the higher interest rates, partially offset by lower average deposits~~2022 and ~~loans. Net interest revenue~~ increased 2% ~~(unannualized)~~ compared with the second quarter of ~~2017~~2023. The decrease compared with the

BNY Mellon 19

third quarter of 2022 primarily ~~reflecting~~reflects the impact of the Alcentra divestiture and the mix of cumulative AUM flows, partially offset by higher ~~interest rates.~~performance fees and market values, and the favorable impact of a weaker U.S. dollar. The increase compared with the second quarter of 2023 primarily reflects the timing of performance fees.

~~Noninterest expense, excluding amortization~~Wealth Management revenue of ~~intangible assets, increased 1%~~$270 million decreased 5% compared with the third quarter of ~~2016~~2022 and ~~decreased 3% (unannualized)~~increased 1% compared with the second quarter of ~~2017.~~2023. The ~~increase~~decrease compared with the third quarter of 2022 primarily reflects ~~additional technology related-costs,~~lower net interest revenue and changes in product mix, partially offset by ~~lower staff expense.~~higher market values. The increase compared with the second quarter of 2023 primarily reflects higher market values.

Revenue generated in the Investment and Wealth Management business segment included 33% from non-U.S. sources in the third quarter of 2023, compared with 33% in the third quarter of 2022 and 30% in the second quarter of 2023.

Noninterest expense of $672 million decreased 50% compared with the third quarter of 2022 and 1% compared with the second quarter of 2023. The decrease compared with the third quarter of 2022

primarily reflects ~~lower consulting expense, volume-related clearing~~the third quarter 2022 goodwill impairment in the Investment Management reporting unit and ~~sub-custodian expenses~~the impact of the Alcentra divestiture, partially offset by higher investments and ~~lower business development expense.~~the unfavorable impact of a weaker U.S. dollar.

Year-to-date ~~2017~~2023 compared with year-to-date ~~2016~~2022

~~Income before taxes increased 6%~~Total revenue of $2.5 billion decreased 9% compared with the first nine months of ~~2016, primarily driven by~~2022. Investment Management revenue ~~growth~~ of 3%$1.7 billion decreased 10%, ~~partially offset by a 3% increase in noninterest expense, excluding amortization of intangible assets. Fee and other revenue increased 2%~~ primarily reflecting ~~higher clearing services~~the impact of the Alcentra divestiture, the mix of cumulative AUM flows and ~~asset servicing fees, partially offset by~~ lower foreign exchange and other trading revenue. The increase in clearing services fees primarily reflects higher money market fees and growth in long-term mutual fund assets. The increase in asset servicing fees primarily reflects net new business, including growth in collateral management and higher equity market values, partially offset by the abatement of money market fee waivers and improved seed capital results. Wealth Management revenue of $807 million decreased 9%, primarily reflecting lower net interest revenue and changes in product mix.

Noninterest expense of $2.1 billion decreased 26% compared with the first nine months of 2022, primarily reflecting the third quarter 2022 goodwill impairment in the Investment Management reporting unit, the impact of ~~downsizing~~ the retail UK transfer agency business and the unfavorable impact of a stronger U.S. dollar. The decrease in foreign exchange and other trading revenue primarily reflects lower volatility and lower Depositary Receipt-related foreign exchange activity. Net interest revenue increased 8% primarily due to higher interest rates, partially offset by lower average deposits. Noninterest expense, excluding amortization of intangible assets, increased 3% primarily reflecting higher expenses from regulatory and compliance costs and additional technology investments, partially offset by lower litigation expenseAlcentra divestiture and the favorable impact of ~~a stronger U.S. dollar.~~efficiency savings, partially offset by higher revenue-related expenses and higher investments, as well as the impact of inflation.

~~22 BNY Mellon~~

Other segment



(in millions)	3Q23		2Q23		1Q23		4Q22		3Q22		YTD23		YTD22
Fee revenue	$	6	$	(2)	$	3	$	12	$	28	$	7	$	49
Investment and other revenue	28		(16)		(14)		(442)		(5)		(2)		69
Total fee and other revenue	34		(18)		(11)		(430)		23		5		118
Net interest expense	(24)		(27)		(36)		(48)		(47)		(87)		(114)
Total revenue	10		(45)		(47)		(478)		(24)		(82)		4
Provision for credit losses	(13)		(25)		27		2		(26)		(11)		21
Noninterest expense	24		71		41		153		29		136		125
(Loss) before income taxes	$	(1)	$	(91)	$	(115)	$	(633)	$	(27)	$	(207)	$	(142)

Average loans and leases	$	1,711	$	1,749	$	1,508	$	1,267	$	1,145	$	1,656	$	1,210

(in millions) 3Q17
2Q17
1Q17
4Q16
3Q16
YTD17
YTD16
Revenue:
Fee and other revenue $ 69
$ 113
$ 72
$ 42
$ 100
$ 254
$ 324
Net interest (expense) revenue (20 ) (22 ) (1 ) 38
(23 ) (43 ) (24 )
Total revenue 49
91
71
80
77
211
300
Provision for credit losses (2 ) (4 ) (8 ) 1
(20 ) (14 ) (26 )
Noninterest expense (ex. M&I and restructuring charges) 77
28
106
108
88
211
282
M&I and restructuring charges —
—
1
2
—
1
2
Total noninterest expense 77
28
107
110
88
212
284
(Loss) income before taxes $ (26 ) $ 67
$ (28 ) $ (31 ) $ 9
$ 13
$ 42
(Loss) income before taxes (ex. M&I and restructuring charges) – Non-GAAP
$ (26 ) $ 67
$ (27 ) $ (29 ) $ 9
$ 14
$ 44

Average loans and leases $ 1,182
$ 1,302
$ 1,341
$ 2,142
$ 1,941
$ 1,275
$ 1,853

See page 2621 of our ~~2016~~2022 Annual Report for additional information on the Other segment.

Review of financial results

Total revenue includes corporate treasury and other investment activity, including hedging activity, which has an offsetting impact between fee and other revenue ~~decreased $31~~and net interest expense.

Total revenue increased $34 million compared with the third quarter of ~~2016~~2022 and ~~$44~~$55 million compared with the second quarter of ~~2017.~~2023. The ~~decrease~~increase compared with the third quarter of ~~2016~~2022 primarily reflects ~~lower other income, driven~~debt extinguishment gains, partially offset by ~~increased losses on our investments in renewable energy, and lower asset-related and~~ net securities ~~gains.~~losses.

The provision for credit losses was a benefit of $13 million in the third quarter of 2023, primarily

20 BNY Mellon

reflecting a reduction in reserves related to financial institutions.

Noninterest expense decreased $5 million compared with the third quarter of 2022 and $47 million compared with the second quarter of 2023. The decrease compared with the second quarter of ~~2017~~2023 primarily reflects ~~lease-related gains recorded in the second quarter of 2017 and lower income from corporate/bank-owned life insurance, partially offset by higher net securities gains.~~

~~Net interest expense decreased $3 million compared with the third quarter of 2016 and $2 million compared with the second quarter of 2017. Both decreases primarily reflect higher interest rates.~~

Noninterest expense, excluding M&I and restructuring charges, decreased $11 million compared with the third quarter of 2016 and increased $49 million compared with the second quarter of 2017. The decrease was primarily driven by lower litigation and other expenses. The increase was primarily driven by higher staff expense resulting from a methodology change in the second quarter of 2017 for allocating employee benefits expense to the business segments with no impact to consolidated results. The increase was partially offset by lower other and professional, legal and other purchased services expenses.

reserves.

Year-to-date ~~2017~~2023 compared with year-to-date ~~2016~~2022

~~Income~~Loss before income taxes ~~decreased $29~~increased $65 million compared with the first nine months of ~~2016. Fee~~2022. Total fee and other revenue decreased ~~$70~~$113 million, primarily reflecting lower strategic equity investment gains and net securities ~~gains and lower other income driven~~losses, partially offset by ~~increased pre-tax losses on our investments in renewable energy. Net interest~~debt extinguishment gains.

Noninterest expense increased ~~$19~~$11 million ~~reflecting~~compared with the ~~impact~~first nine months of ~~higher crediting rates to the businesses. Noninterest expense, excluding M&I and restructuring charges, decreased $71 million~~2022, primarily reflecting ~~lower~~higher staff ~~other and litigation expenses.~~expense.

Critical accounting estimates

Our significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements in our ~~2016~~2022 Annual Report. Our critical accounting estimates are those related to the allowance for ~~loan~~credit losses, ~~and allowance for lending-related commitments, fair value of financial instruments and derivatives, other-than-temporary impairment (“OTTI”),~~ goodwill and other intangibles and ~~pension accounting,~~litigation and regulatory contingencies, as referenced below.



Critical ~~policy~~accounting estimates		Reference
Allowance for ~~loan~~credit losses ~~and allowance for lending-related commitments~~		~~2016~~2022 Annual Report, pages ~~29-31.~~23-25, and “Allowance for credit losses.”
~~Fair value of financial instruments~~Goodwill and ~~derivatives~~other intangibles		~~2016~~2022 Annual Report, pages ~~31-32.~~25-27. Also see below.
~~OTTI~~Litigation and regulatory contingencies		~~2016 Annual Report, page 33.~~
~~Goodwill and other intangibles~~	~~Second quarter 2017 Form 10-Q, page 24.~~
~~Pension accounting~~	~~2016 Annual Report, pages 34-36.~~“Legal proceedings” in Note 18 of the Notes to Consolidated Financial Statements.

Goodwill and other intangibles

BNY Mellon’s business segments include six reporting units for which goodwill impairment testing is performed on an annual basis. An interim test is performed when events or circumstances occur that may indicate that it is more likely than not that the fair value of any reporting unit may be less than its carrying value.

In the third quarter of 2023, due to the results of the second quarter 2023 interim goodwill impairment test and macroeconomic conditions, we performed an interim goodwill impairment test of the Investment Management reporting unit, which had $6.0 billion of allocated goodwill. The fair value of the Investment Management reporting unit exceeded its carrying value by approximately 2%. We determined the fair value of the Investment Management reporting unit using an income approach based on management’s projections as of Sept. 30, 2023. The discount rate applied to these cash flows was 10.5%.

As of Sept. 30, 2023, if the discount rate applied to the estimated cash flows was increased or decreased by 25 basis points, the fair value of the Investment Management reporting unit would decrease or increase by 4%, respectively. Similarly, if the long-term growth rate was increased or decreased by 10 basis points, the fair value of the Investment Management reporting unit would increase or decrease by approximately 1%, respectively.

Determining the fair value of a reporting unit is subject to uncertainty as it is reliant on estimates of cash flows that extend far into the future, and, by their nature, are difficult to estimate over such an extended time frame. In the future, changes in the assumptions or the discount rate could produce a material non-cash goodwill impairment.

BNY Mellon 2321

Consolidated balance sheet review

One of our key risk management objectives is to maintain a balance sheet that remains strong throughout market cycles to meet the expectations of our major stakeholders, including our shareholders, clients, creditors and regulators.

We also seek to ~~ensure that the~~undertake overall liquidity risk, including ~~intra-day~~intraday liquidity risk, that ~~we undertake~~ stays within our risk appetite. The objective of our balance sheet management strategy is to maintain a balance sheet that is characterized by strong liquidity and asset quality, ready access to external funding sources at competitive rates and a strong capital structure that supports our risk-taking activities and is adequate to absorb potential losses. In managing the balance sheet, appropriate consideration is given to balancing the competing needs of maintaining sufficient levels of liquidity and complying with applicable regulations and supervisory expectations while optimizing profitability.

At Sept. 30, ~~2017,~~2023, total assets were ~~$354~~$405 billion, compared with ~~$333~~$406 billion at Dec. 31, ~~2016.~~2022. The ~~increase~~decrease in total assets was primarily driven by lower securities and interest-bearing deposits with banks, partially offset by higher interest-bearing deposits with the Federal Reserve and other central ~~banks, partially offset by lower loans.~~banks. Deposits totaled ~~$231~~$277 billion at Sept. 30, ~~2017 and $221~~2023, compared with $279 billion at Dec. 31, ~~2016,~~2022. The decrease reflects lower noninterest-bearing (principally in U.S. offices) and ~~were driven~~interest-bearing deposits in non-U.S. offices, partially offset by higher interest-bearing deposits in ~~non-U.S.~~U.S. offices. ~~At Sept. 30, 2017, total~~Total interest-bearing deposits ~~were 50%~~as a percentage of total interest-earning assets ~~compared with 51%~~were 63% at Sept. 30, 2023 and 58% at Dec. 31, ~~2016.~~2022.

At Sept. 30, ~~2017, we had $43~~2023, available funds totaled $152 billion ~~of liquid funds (which include~~ and included cash and due from banks,

interest-bearing deposits with the Federal Reserve and other central banks, interest-bearing deposits with

banks and federal funds sold and securities purchased under resale ~~agreements) and $82 billion of cash (including $76 billion of overnight deposits with the Federal Reserve and other central banks) for a total of $125 billion of available funds.~~agreements. This compares with available funds of ~~$104~~$138 billion at Dec. 31, ~~2016.~~2022. Total available funds as a percentage of total assets ~~were 35%~~was 37% at Sept. 30, ~~2017 compared with 31%~~2023 and 34% at Dec. 31, ~~2016.~~2022. For additional information on our ~~liquid funds and~~ available funds, see “Liquidity and dividends.”

~~Investment securities~~Securities were ~~$120.0~~$128 billion, or ~~34%~~32% of total assets, at Sept. 30, ~~2017,~~2023, compared with ~~$114.7~~$143 billion, or ~~34%~~35% of total assets, at Dec. 31, ~~2016.~~2022. The ~~increase in investment securities~~decrease primarily reflects ~~additional investments in commercial mortgage-~~

~~backed~~lower U.S. Treasury securities ~~(“MBS”)~~ and agency residential mortgage-backed securities (“RMBS”), partially offset by ~~fewer investments in consumer asset-backed securities~~higher U.S. government agencies and collateralized loan obligations (“~~ABS”~~CLOs”). For additional information on our ~~investment~~ securities portfolio, see ~~“Investment securities”~~“Securities” and Note 4 of the Notes to Consolidated Financial Statements.

Loans were ~~$59.1~~$66.3 billion, or ~~17%~~16% of total assets, at Sept. 30, ~~2017,~~2023, compared with ~~$64.5~~$66.1 billion, or ~~19%~~16% of total assets, at Dec. 31, ~~2016.~~2022. The ~~decrease in loans~~increase was ~~primarily~~ driven by ~~lower margin loans and~~higher loans to financial ~~institutions.~~institutions and other residential mortgages, partially offset by lower overdrafts. For additional information on our loan portfolio, see “Loans” and Note 5 of the Notes to Consolidated Financial Statements.

Long-term debt totaled ~~$28.4~~$29 billion at Sept. 30, ~~2017~~2023 and ~~$24.5~~$30 billion at Dec. 31, ~~2016. The increase reflects issuances~~2022. Maturities and repurchases, and a decrease in the fair value of ~~$4.75 billion,~~hedged long-term debt were partially offset by ~~the maturity of $500 million and the redemption of trust preferred securities.~~issuances. For additional information on long-term debt, see “Liquidity and dividends.”

The Bank of New York Mellon Corporation total shareholders’ equity ~~increased to $40.5 billion from $38.8~~totaled $41 billion at Sept. 30, 2023 and Dec. 31, ~~2016.~~2022. For additional information, ~~on our capital,~~ see “Capital.”

22 BNY Mellon

Country risk exposure

~~We have exposure to~~The following table presents BNY Mellon’s top 10 exposures by country (excluding the U.S.) as of Sept. 30, 2023, as well as certain countries with higher risk profiles. ~~Exposure described below reflects~~The exposure is presented on an internal risk management basis and has not been reduced by the ~~country of operations and risk of the immediate counterparty.~~allowance for credit losses. We ~~continue to~~ monitor our exposure to these and other countries as part of our internal country risk management process. ~~See “Risk management” in~~

The country risk exposure below reflects the Company’s risk to an immediate default of the counterparty or obligor based on the country of residence of the entity which incurs the liability. If there is credit risk mitigation, the country of residence of the entity providing the risk mitigation is the country of risk. The country of risk for securities is generally based on the domicile of the issuer of the security.


Country risk exposure at Sept. 30, 2023	Interest-bearing deposits											Total exposure
(in billions)	Central banks		Banks			Lending (a)		Securities (b)		Other (c)
Top 10 country exposure:
Germany	$	17.0	$	0.7		$	0.9	$	3.9	$	0.3	$	22.8
United Kingdom (“UK”)	10.7		0.7			1.7		2.9		2.3		18.3
Japan	8.2		1.0			—		0.4		0.3		9.9
Belgium	7.8		0.9			0.1		0.7		—		9.5
Canada	—		1.8			0.4		3.9		1.3		7.4
Australia	—		2.0			0.3		0.7		0.5		3.5
South Korea	0.1		—			2.2		0.2		0.5		3.0
Luxembourg	0.1		0.1			1.5		—		1.2		2.9
France	—		—			0.2		1.8		0.7		2.7
Ireland	0.1		0.1			0.4		—		1.6		2.2
Total Top 10 country exposure	$	44.0	$	7.3		$	7.7	$	14.5	$	8.7	$	82.2	(d)

Select country exposure:
Brazil	$	—	$	—		$	0.9	$	0.1	$	0.3	$	1.3
Russia	—		0.4		(e)	—		—		—		0.4

(a)Lending includes loans, acceptances, issued letters of credit, net of participations, and lending-related commitments.

(b) Securities include both the available-for-sale and held-to-maturity portfolios.

(c)Other exposures include over-the-counter (“OTC”) derivative and securities financing transactions, net of collateral.

(d)The top 10 country exposures comprise approximately 70% of our ~~2016 Annual Report for additional information on how our exposures are managed.~~total non-U.S. exposure.

(e) Represents cash balances with exposure to Russia.

~~BNY Mellon has a limited economic interest in the performance of assets of consolidated investment management funds, and therefore they are excluded from this disclosure.~~

~~Italy and Spain~~

Events in recent years have resulted in increased focus on Italy and Spain. We had net exposure of $1.3 billion to Italy and $2.0 billion to Spain at Sept. 30, 2017. We had net exposure of $1.2 billion to Italy and $2.0 billion to Spain at Dec. 31, 2016. At both Sept. 30, 2017 and Dec. 31, 2016,Brazil. The country risk exposure to ~~Italy and Spain~~Brazil is primarily ~~consisted of investment grade~~

~~24 BNY Mellon~~

~~sovereign debt. Investment securities exposure totaled $1.2 billion in Italy and $1.7 billion in Spain at Sept. 30, 2017 and $1.1 billion in Italy and $1.8 billion in Spain at Dec. 31, 2016~~.

~~Brazil~~

~~Current conditions in Brazil have resulted in increased focus on its economic and political stability.~~short-term trade finance loans extended to large financial institutions. We also have operations in Brazil providing investment services and investment management services. ~~In addition, at Sept. 30, 2017 and Dec. 31, 2016, we had total net~~

The war in Ukraine has increased our focus on Russia. The country risk exposure to ~~Brazil~~Russia consists of ~~$1.4 billion~~cash balances related to our securities services businesses and ~~$1.3 billion, respectively. This included $1.2 billion~~ may increase in the future to the extent cash is received for the benefit of our clients that is subject to distribution restrictions. BNY Mellon has ceased new banking business in Russia

and ~~$1.3 billion, respectively, in loans, which are primarily short-term trade finance loans extended to large financial institutions.~~suspended investment management purchases of Russian securities. At Sept. 30, ~~2017~~2023, less than 0.1% of our AUC/A and ~~Dec. 31, 2016, we held $140~~less than 0.01% of our AUM consisted of Russian securities. We will continue to work with multinational clients that depend on our custody and recordkeeping services to manage their exposures.

We are monitoring our exposure to Israel as part of our internal country risk management process. At Sept. 30, 2023, our total exposure to Israel was $187 million and ~~$73 million, respectively,~~primarily consisted of ~~noninvestment~~investment grade ~~sovereign debt.~~short-term interest-bearing deposits and OTC derivatives maturing within six months.

BNY Mellon 23

~~Turkey~~

Events in recent years have resulted in increased focus on exposure to Turkey. We mainly provide treasury and issuer services, as well as foreign exchange products primarily to the top-10 largest financial institutions in the country. As of Sept. 30, 2017 and Dec. 31, 2016, our exposure totaled $780 million and $713 million, respectively, consisting primarily of syndicated credit facilities and trade finance loans.Securities

~~Investment securities~~

In the discussion of our ~~investment~~ securities portfolio, we have included certain credit ratings information because the information can indicate the degree of credit risk to which we are exposed. Significant changes in ratings classifications ~~for our investment securities portfolio~~ could indicate increased credit risk for us and could be accompanied by an increase in the allowance for credit losses and/or a reduction in the fair value of our ~~investment~~ securities portfolio.

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


Securities portfolio	June 30, 2023			3Q23 change in unrealized gain (loss)		Sept. 30, 2023					Fair value as a % of amortized cost (a)		Unrealized gain (loss)			% Floating rate (b)		Ratings (c)
																						BBB+/ BBB-		BB+ and lower
(dollars in millions)	Fair value					Amortized cost (a)		Fair value										AAA/ AA-		A+/ A-						Not rated
Agency RMBS	$	38,052		$	(961)	$	41,341	$	35,850		87	%	$	(5,491)		18	%	100	%	—	%	—	%	—	%		—	%
U.S. Treasury	33,818			18		32,689		31,439			96		(1,250)			59		100		—		—		—			—
Agency commercial mortgage-backed securities (“MBS”)	11,441			(64)		11,739		10,927			93		(812)			45		100		—		—		—			—
Sovereign debt/sovereign guaranteed (d)	10,662			75		10,648		10,168			95		(480)			28		90		5		4		1			—
Supranational	8,742			24		8,498		8,239			97		(259)			65		100		—		—		—			—
CLOs	6,765			48		6,948		6,908			99		(40)			100		100		—		—		—			—
U.S. government agencies	6,745			(66)		7,213		6,630			92		(583)			43		100		—		—		—			—
Foreign covered bonds (e)	6,133			22		6,364		6,137			96		(227)			59		100		—		—		—			—
Non-agency commercial MBS	3,031			(6)		3,315		3,012			91		(303)			55		100		—		—		—			—
Foreign government agencies/local governments (f)	2,380			29		2,334		2,243			96		(91)			40		92		8		—		—			—
Non-agency RMBS	1,895			(27)		1,953		1,763			90		(190)			47		85		3		—		6			6
Other asset-backed securities (“ABS”)	1,043			6		1,026		922			90		(104)			14		100		—		—		—			—
State and political subdivisions	11			(1)		12		10			85		(2)			—		—		—		3		—			97

Other	1			—		1		1			100		—			—		—		—		—		—			100
Total securities	$	130,719	(g)	$	(903)	$	134,081	$	124,249	(g)	93	%	$	(9,832)	(g)(h)	44	%	99	%	1	%	—	%	—	%		—	%

Investment securities
portfolio

(dollars in millions)
June 30, 2017

3Q17
change in
unrealized
gain (loss)

Sept. 30, 2017
Fair value
as a % of amortized
cost (a)

Unrealized
gain (loss)

Ratings (b)

BB+
and
lower

Fair
value

Amortized
cost

Fair
value

AAA/
AA-
A+/
A-
BBB+/
BBB-
Not
rated
Agency RMBS $ 49,544
$ 81
$ 50,121
$ 49,917
100 % $ (204 ) 100 % — % — % — % — %
U.S. Treasury 25,325
(5 ) 25,256
25,159
100
(97 ) 100
—
—
—
—
Sovereign debt/sovereign guaranteed (c)
14,025
6
13,951
14,102
101
151
72
6
21
1
—
Non-agency RMBS (d)
1,239
9
885
1,185
84
300
—
1
3
87
9
Non-agency RMBS 627
9
555
594
97
39
7
4
17
71
1
European floating rate
notes (e)
523
(1 ) 393
387
98
(6 ) 63
37
—
—
—
Commercial MBS 10,574
5
11,051
11,033
100
(18 ) 99
1
—
—
—
State and political subdivisions 3,299
1
3,109
3,141
101
32
80
17
—
—
3
Foreign covered bonds (f)
2,471
1
2,612
2,626
101
14
100
—
—
—
—
Corporate bonds 1,318
4
1,262
1,275
101
13
17
69
14
—
—
CLOs 2,642
1
2,542
2,550
100
8
99
—
—
1
—
U.S. government agencies 2,210
2
2,480
2,496
101
16
100
—
—
—
—
Consumer ABS 1,330
1
1,152
1,157
100
5
89
4
5
2
—
Other (g)
3,758
(8 ) 4,118
4,122
100
4
81
17
—
—
2
Total investment securities $ 118,885
(h) $ 106
$ 119,487
$ 119,744
(h) 100 % $ 257
(h)(i) 93 % 3 % 3 % 1 % — %


~~(a)~~	~~Amortized cost before impairments.~~


~~(b)~~	~~Represents ratings by S&P, or the equivalent.~~


~~(c)~~	~~Primarily consists of exposure to UK, France, Germany, Spain, Italy and the Netherlands.~~


~~(d)~~	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.


~~(e)~~	~~Includes RMBS and commercial MBS. Primarily consists of exposure to UK and the Netherlands.~~


~~(f)~~	~~Primarily consists of exposure to Canada, Australia, the Netherlands, Norway and UK.~~


~~(g)~~	~~Includes commercial paper with a fair value of $700 million and~~ ~~$700 million~~ ~~and money market funds with a fair value of $896 million and~~ ~~$939 million~~ ~~at June 30, 2017 and Sept. 30, 2017, respectively.~~


~~(h)~~	~~Includes net unrealized losses on derivatives hedging securities available-for-sale of $251 million at June 30, 2017 and $238 million at~~ ~~Sept. 30, 2017~~.


~~(i)~~	~~Unrealized gains of $324 million at~~ ~~Sept. 30, 2017~~ ~~related to available-for-sale securities, net of hedges.~~

(a) Amortized cost reflects historical impairments and is net of the allowance for credit losses.

(b) Includes the impact of hedges.

~~BNY Mellon 25~~(c) Represents ratings by Standard & Poor’s (“S&P”) or the equivalent.

(d) Primarily consists of exposure to Germany, France, UK, Canada, Singapore and Belgium.

(e) Primarily consists of exposure to Canada, UK, Australia, Germany and Norway.

(f) Primarily consists of exposure to Canada, Norway, the Netherlands, Sweden and Finland.

(g) Includes net unrealized gains on derivatives hedging securities available-for-sale (including terminated hedges) of $2,406 million at June 30, 2023 and $2,820 million at Sept. 30, 2023.

(h) At Sept. 30, 2023, includes pre-tax net unrealized losses of $3,036 million related to available-for-sale securities, net of hedges, and $6,796 million related to held-to-maturity securities. The after-tax unrealized losses, net of hedges, related to available-for-sale securities is $2,293 million and the after-tax equivalent related to held-to-maturity securities is $5,182 million.

The fair value of our ~~investment~~ securities portfolio, including related hedges, was ~~$119.7~~$124.2 billion at Sept. 30, ~~2017,~~2023, compared with ~~$114.3~~$139.3 billion at Dec. 31, ~~2016.~~2022. The ~~higher level of securities~~decrease primarily reflects ~~additional investments in commercial MBS~~lower U.S. Treasury securities and agency RMBS, partially offset by ~~a decrease in consumer ABS.~~higher U.S. government agencies and CLOs.

At Sept. 30, ~~2017,~~2023, the ~~total investment~~ securities portfolio had a net unrealized ~~pre-tax gain of $257 million compared with a pre-tax~~ loss, ~~of $221 million at Dec. 31, 2016,~~ including the impact of related hedges, of $9.8 billion, compared with $9.4 billion at Dec. 31, 2022. The increase in the unrealized loss, including the impact of related hedges, primarily reflects the impact of higher interest rates, partially offset by securities moving closer to maturity.

The fair value of the available-for-sale securities totaled $80.0 billion at Sept. 30, 2023, net of hedges, or 64% of the securities portfolio, net of hedges. The fair value of the held-to-maturity securities totaled $44.2 billion at Sept. 30, 2023, or 36% of the securities portfolio, net ~~unrealized pre-tax gain was primarily driven by a decrease in long-term interest rates.~~

of hedges.

The unrealized ~~gain, net of tax,~~loss (after-tax) on our available-for-sale ~~investment~~ securities portfolio, net of hedges, included in accumulated other comprehensive income ~~(“OCI”)~~ was ~~$226 million~~$2.3 billion at Sept. 30, ~~2017,~~2023, compared with ~~$45 million~~$2.4 billion at Dec. 31, ~~2016.~~2022. Net unrealized loss, including the impact of hedges, decreased as securities moved closer to maturity, partially offset by the impact of higher interest rates.

24 BNY Mellon

At Sept. 30, ~~2017, 93%~~2023, 99% of the securities in our portfolio were rated AAA/AA-, unchanged compared with Dec. 31, ~~2016.~~ 2022.

~~We routinely test our investment securities for OTTI. See “Critical accounting estimates” for additional information regarding OTTI.~~

The following table presents the amortizable purchase premium (net of discount) related to the investment securities portfolio and accretable discount related to the 2009 restructuring of the investment securities portfolio.

Net premium amortization and discount accretion of investment securities (a)

(dollars in millions) 3Q17
2Q17
1Q17
4Q16
3Q16
Amortizable purchase premium (net of discount) relating to investment securities:
Balance at period end $ 2,053
$ 2,111
$ 2,058
$ 2,188
$ 2,267
Estimated average life remaining at period end (in years)
5.0
5.0
4.9
4.9
4.5
Amortization $ 140
$ 134
$ 138
$ 146
$ 163
Accretable discount related to the prior restructuring of the investment securities portfolio:
Balance at period end $ 302
$ 279
$ 299
$ 315
$ 331
Estimated average life remaining at period end (in years)
6.5
6.3
6.2
6.2
5.9
Accretion $ 24
$ 25
$ 25
$ 25
$ 24


~~(a)~~	~~Amortization of purchase premium decreases net interest revenue while accretion of discount increases net interest revenue. Both were recorded on a level yield basis.~~

~~The following table presents pre-tax net securities gains (losses) by type.~~

Net securities gains (losses)
(in millions) 3Q17
2Q17
3Q16
YTD17
YTD16
Agency RMBS $ 4
$ —
$ 9
$ 5
$ 22
U.S. Treasury 1
(1 ) (1 ) —
4
Foreign covered bonds —
—
—
—
10
Non-agency RMBS (1 ) —
(1 ) (2 ) 1
Other 15
1
17
26
28
Total net securities gains $ 19
$ —
$ 24
$ 29
$ 65

On a quarterly basis, we perform our impairment analysis using several factors, including projected loss severities and default rates. In the third quarter of 2017, this analysis resulted in other-than-temporary credit losses of $1 million primarily in our non-agency RMBS portfolio. At Sept. 30, 2017, if we were to increase or decrease each of our projected loss severity and default rates by 100 basis points on each of the positions in our non-agency RMBS

~~portfolio, including the securities previously held by the Grantor Trust, credit-related impairment charges on these securities would have increased or decreased by less than $1 million (pre-tax).~~ See Note 4 of the Notes to Consolidated Financial Statements for the ~~projected weighted-average default rates and loss severities.~~

~~The following table shows the fair value of the European floating rate notes~~pre-tax net securities gains (losses) by ~~geographical location at Sept. 30, 2017. The net unrealized loss on these securities was $6 million at Sept. 30, 2017, compared with $11 million at Dec. 31, 2016.~~

European floating rate notes at Sept. 30, 2017 (a)
(in millions) RMBS
Other
Total fair
value

United Kingdom $ 169
$ 58
$ 227
Netherlands 160
—
160
Total fair value $ 329
$ 58
$ 387


~~(a)~~	~~Sixty-three percent of these securities are in the AAA to AA- ratings category.~~

~~26 BNY Mellon~~

security type. See Note 1415 of the Notes to Consolidated Financial Statements for ~~details of~~ securities by level in the fair value hierarchy.

The following table presents the amortizable purchase premium (net of discount) and net amortization related to the securities portfolio.


Amortizable purchase premium (net of discount) and net amortization of securities (a)
(in millions)	3Q23		2Q23		3Q22

Amortizable purchase premium, net of discount	$	973	$	1,028	$	1,386

Net amortization	$	45	$	42	$	82

(a) Amortization of purchase premium decreases net interest revenue while accretion of discount increases net interest revenue. Both were recorded on a level yield basis.

~~Loans~~

Loans

Total exposure – consolidated Sept. 30, 2017 Dec. 31, 2016
(in billions) Loans
Unfunded
commitments

Total
exposure

Loans
Unfunded
commitments

Total
exposure

Non-margin loans:
Financial institutions $ 11.9
$ 32.7
$ 44.6
$ 14.7
$ 33.7
$ 48.4
Commercial 3.0
16.6
19.6
2.6
17.5
20.1
Subtotal institutional 14.9
49.3
64.2
17.3
51.2
68.5
Wealth management loans and mortgages 16.3
1.1
17.4
15.6
1.3
16.9
Commercial real estate 4.9
3.5
8.4
4.7
3.2
7.9
Lease financings 1.3
—
1.3
1.7
—
1.7
Other residential mortgages 0.7
—
0.7
0.9
—
0.9
Overdrafts 5.8
—
5.8
5.5
—
5.5
Other 1.3
—
1.3
1.2
—
1.2
Subtotal non-margin loans 45.2
53.9
99.1
46.9
55.7
102.6
Margin loans 13.9
—
13.9
17.6
0.1
17.7
Total $ 59.1
$ 53.9
$ 113.0
$ 64.5
$ 55.8
$ 120.3


Total exposure – consolidated	Sept. 30, 2023						Dec. 31, 2022
(in billions)	Loans		Unfunded commitments		Total exposure		Loans		Unfunded commitments		Total exposure
Financial institutions	$	10.4	$	31.8	$	42.2	$	9.7	$	31.7	$	41.4
Commercial	1.9		11.4		13.3		1.7		11.7		13.4
Wealth management loans	9.4		0.6		10.0		10.3		0.6		10.9
Wealth management mortgages	9.2		0.2		9.4		9.0		0.2		9.2
Commercial real estate	6.7		3.4		10.1		6.2		3.9		10.1
Lease financings	0.6		—		0.6		0.7		—		0.7
Other residential mortgages	1.0		—		1.0		0.4		—		0.4
Overdrafts	3.6		—		3.6		4.8		—		4.8
Capital call financing	3.5		3.2		6.7		3.4		3.5		6.9
Other	2.8		—		2.8		3.0		—		3.0
Margin loans	17.2		—		17.2		16.9		—		16.9
Total	$	66.3	$	50.6	$	116.9	$	66.1	$	51.6	$	117.7

At Sept. 30, ~~2017,~~2023, our total ~~exposures~~lending-related exposure of ~~$113.0~~$116.9 billion decreased 6%1% compared with Dec. 31, ~~2016,~~2022, primarily reflecting lower ~~margin loans~~overdrafts and exposure ~~to financial institutions,~~in the wealth management loan portfolio, partially offset by higher ~~wealth management loans~~exposure in the financial institutions and ~~mortgages.~~other residential mortgage portfolios.

Our financial institutions and commercial portfolios comprise our largest concentrated risk. These portfolios comprised ~~57%~~47% of our total exposure at ~~both~~ Sept. 30, ~~2017~~2023 and Dec. 31, ~~2016.~~2022. Additionally, most of our overdrafts relate to financial institutions.

BNY Mellon 25

Financial institutions

The financial institutions portfolio is shown below.


Financial institutions portfolio exposure (dollar amounts in billions)	Sept. 30, 2017										Dec. 31, 2016
	Loans		Unfunded commitments		Total exposure		% Inv. grade		% due <1 yr.		Loans		Unfunded commitments		Total exposure
Financial institutions portfolio exposure (dollars in billions)																	Financial institutions portfolio exposure (dollars in billions)	Sept. 30, 2023										Dec. 31, 2022
																		Loans		Unfunded commitments		Total exposure		% Inv. grade		% due <1 yr.		Loans		Unfunded commitments		Total exposure
Securities industry	$	2.9	$	19.0	$	21.9	99	%	99	%	$	3.8	$	19.2	$	23.0	Securities industry	$	1.7	$	17.2	$	18.9	95	%	99	%	$	1.6	$	17.5	$	19.1
Asset managers	1.6		6.5		8.1		97		87		1.5		6.2		7.7		Asset managers	1.5		8.0		9.5		97		81		1.6		7.6		9.2
Banks	6.3		1.4		7.7		68		94		7.9		2.0		9.9		Banks	6.8		1.5		8.3		85		97		6.1		1.5		7.6
Insurance	0.1		3.4		3.5		99		17		0.1		3.8		3.9		Insurance	0.1		3.9		4.0		100		12		0.1		3.8		3.9
Government	—		1.0		1.0		91		46		0.1		0.9		1.0		Government	—		0.2		0.2		100		42		—		0.2		0.2
Other	1.0		1.4		2.4		98		45		1.3		1.6		2.9		Other	0.3		1.0		1.3		97		30		0.3		1.1		1.4
Total	$	11.9	$	32.7	$	44.6	93	%	86	%	$	14.7	$	33.7	$	48.4	Total	$	10.4	$	31.8	$	42.2	94	%	84	%	$	9.7	$	31.7	$	41.4

The financial institutions portfolio exposure was ~~$44.6~~$42.2 billion at Sept. 30, ~~2017,~~2023, an increase of 2% compared with ~~$48.4 billion at~~ Dec. 31, ~~2016. The decrease~~2022, primarily ~~reflects lower~~reflecting higher exposure in the banks ~~and securities industry portfolios.~~portfolio.

Financial institution exposures are ~~high-quality,~~high quality, with ~~93%~~94% of the exposures meeting the investment grade equivalent criteria of our internal credit rating classification at Sept. 30, ~~2017.~~2023. Each customer is assigned an internal credit rating, which is mapped to

an equivalent external rating agency grade based upon a number of dimensions, which are continually evaluated and may change over time. The exposure to financial institutions is generally short-term. Of these exposures, 86% expire within one year and 61% expire within 90 days. In addition, 80% of the financial institutions exposure is secured. For example, securities industry clients and asset managers often borrow against marketable securities held in custody.

~~BNY Mellon 27~~

For ratings of non-U.S. counterparties, our internal credit rating is generally capped at a rating equivalent to the sovereign rating of the country where the counterparty resides, regardless of the internal credit rating assigned to the counterparty or the underlying collateral.

The exposure to financial institutions is generally short term, with 84% of the exposures expiring within one year. At Sept. 30, 2023, 55% of the exposure to financial institutions had an expiration within 90 days, compared with 17% at Dec. 31, 2022.

In addition, 64% of the financial institutions exposure is secured. For example, securities industry clients

and asset managers often borrow against marketable securities held in custody.

At Sept. 30, ~~2017,~~2023, the secured intraday credit provided to dealers in connection with their tri-party repo activity totaled ~~$18.5~~$16.1 billion and was ~~primarily~~ included in the securities industry portfolio. Dealers secure the outstanding intraday credit with high-quality liquid collateral having a market value in excess of the amount of the outstanding credit.

Secured intraday credit facilities represent approximately 38% of the exposure in the financial institutions portfolio and are reviewed and reapproved annually.

Our bank exposure primarily relates to our global trade finance. These exposures are short-term in nature, with 94% due in less than one year. The investment grade percentage of our bank exposure was 68% at Sept. 30, 2017, compared with 69% at Dec. 31, 2016.

The asset ~~manager~~managers portfolio exposure ~~was high-quality~~is high quality, with 97% of the exposures meeting our investment grade equivalent ratings criteria as of Sept. 30, ~~2017.~~2023. These exposures are generally short-term liquidity facilities, with the ~~vast~~ majority to regulated mutual funds.

Our banks portfolio exposure primarily relates to global trade finance. These exposures are short term in nature, with 97% due in less than one year. The investment grade percentage of our banks portfolio exposure was 85% at Sept. 30, 2023, compared with 86% at Dec. 31, 2022. Our non-investment grade exposures are primarily trade finance loans in Brazil.

26 BNY Mellon

Commercial

The commercial portfolio is presented below.


Commercial portfolio exposure	Sept. 30, 2017										Dec. 31, 2016						Commercial portfolio exposure	Sept. 30, 2023										Dec. 31, 2022
(dollar amounts in billions)	Loans		Unfunded commitments		Total exposure		% Inv. grade		% due <1 yr.		Loans		Unfunded commitments		Total exposure
(dollars in billions)																	(dollars in billions)	Loans		Unfunded commitments		Total exposure		% Inv. grade		% due <1 yr.		Loans		Unfunded commitments		Total exposure
Services and other																	Services and other	$	1.1	$	3.4	$	4.5	98	%	34	%	$	0.8	$	3.2	$	4.0
Manufacturing	$	1.4	$	6.3	$	7.7	96	%	22	%	$	1.1	$	6.7	$	7.8	Manufacturing	0.5		3.6		4.1		96		15		0.5		4.1		4.6
Services and other	0.9		4.4		5.3		95		28		0.6		4.3		4.9
Energy and utilities	0.6		4.5		5.1		95		7		0.6		4.7		5.3		Energy and utilities	0.3		3.7		4.0		91		5		0.3		3.7		4.0
Media and telecom	0.1		1.4		1.5		95		15		0.3		1.8		2.1		Media and telecom	—		0.7		0.7		87		—		0.1		0.7		0.8
Total	$	3.0	$	16.6	$	19.6	95	%	19	%	$	2.6	$	17.5	$	20.1	Total	$	1.9	$	11.4	$	13.3	95	%	18	%	$	1.7	$	11.7	$	13.4

The commercial portfolio exposure ~~decreased to $19.6~~was $13.3 billion at Sept. 30, ~~2017,~~2023, a decrease of 1% from ~~$20.1 billion at~~ Dec. 31, ~~2016,~~2022, primarily reflecting lower exposure in the manufacturing and media and telecom ~~portfolio.~~

~~Utilities-related exposure represents approximately 78% of the energy and utilities portfolio. The remaining~~portfolios, partially offset by higher exposure in the ~~energy~~services and ~~utilities portfolio, which includes exposure to exploration and production companies, refining, pipelines and integrated companies, was 76% investment grade at both Sept. 30, 2017 and Dec. 31, 2016.~~other portfolio.

~~The following table summarizes the percentage of the financial institutions and commercial portfolio exposures that are investment grade.~~

Percentage of the portfolios that are investment grade
Sept. 30, 2017
June 30, 2017
March 31, 2017
Dec. 31, 2016
Sept. 30, 2016

Financial institutions 93 % 93 % 93 % 92 % 93 %
Commercial 95 % 96 % 95 % 94 % 94 %

Our credit strategy is to focus on investment grade clients that are active users of our non-credit services. The ~~execution~~following table summarizes the percentage of ~~our strategy has resulted in 93% of our~~the financial institutions ~~portfolio~~ and ~~95% of our~~ commercial portfolio ~~rated as~~exposures that are investment ~~grade at Sept. 30, 2017.~~grade.


Percentage of the portfolios that are investment grade
	Quarter ended
	Sept. 30, 2023		June 30, 2023		March 31, 2023		Dec. 31, 2022		Sept. 30, 2022
Financial institutions	94	%	94	%	95	%	95	%	96	%
Commercial	95	%	95	%	95	%	95	%	95	%

Wealth management loans ~~and mortgages~~

Our wealth management loan exposure was ~~$17.4~~$10.0 billion at Sept. 30, ~~2017,~~2023, compared with ~~$16.9~~$10.9 billion

at Dec. 31, 2022. Wealth management loans primarily consist of loans to high-net-worth individuals, a majority of which are secured by the customers’ investment management accounts or custody accounts.

Wealth management mortgages

Our wealth management mortgage exposure was $9.4 billion at Sept. 30, 2023, compared with $9.2 billion at Dec. 31, ~~2016.~~2022. Wealth management ~~loans and~~ mortgages primarily consist of loans to high-net-worth individuals, which are secured by ~~marketable securities and/or~~ residential property. Wealth management mortgages are primarily interest-only, adjustable-rate mortgages with a weighted-average loan-to-value ratio of ~~62%~~61% at origination. ~~In the wealth management portfolio,~~At Sept. 30, 2023, less than 1% of the mortgages were past ~~due at Sept. 30, 2017.~~due.

At Sept. 30, ~~2017,~~2023, the wealth management mortgage portfolio consisted of the following geographic concentrations: California ~~- 24%~~– 21%; New York ~~- 19%~~– 14%; Florida – 11%; Massachusetts ~~- 11%; Florida -~~– 8%; and other ~~- 38%~~– 46%.

28 BNY Mellon 27

Commercial real estate

The composition of the commercial real estate portfolio by asset class, including percentage secured, is presented below.


Composition of commercial real estate portfolio by asset class	Sept. 30, 2023				Dec. 31, 2022
	Total exposure		Percentage secured (a)		Total exposure		Percentage secured (a)
(in billions)

Residential	$	4.2	86	%	$	4.1	85	%
Office	2.6		74		2.8		75
Retail	0.8		65		0.9		58
Mixed use	0.8		30		0.8		33
Hotels	0.6		40		0.6		42
Healthcare	0.5		58		0.4		49
Other	0.6		71		0.5		66
Total commercial real estate	$	10.1	72	%	$	10.1	71	%

(a) Represents the percentage of exposure secured by real estate in each asset class.

Our commercial real estate exposure totaled ~~$8.4~~$10.1 billion at Sept. 30, ~~2017, compared with $7.9 billion at~~2023 and Dec. 31, ~~2016.~~2022. Our income-producing commercial real estate facilities are focused on experienced owners and are structured with moderate leverage based on existing cash flows. Our commercial real estate lending activities also include construction and renovation facilities. Our client base consists of experienced developers and long-term holders of real estate assets. Loans are approved on the basis of existing or projected cash flows and supported by appraisals and knowledge of local market conditions. Development loans are structured with moderate leverage and, in many instances, involve some level of recourse to the developer.

At Sept. 30, 2017, 59% of our commercial real estate portfolio was secured. The secured portfolio is diverse by project type, with 45% secured by residential buildings, 35% secured by office buildings, 12% secured by retail properties and 8% secured by other categories. Approximately 97% of2023, the unsecured portfolio ~~consists~~consisted of real estate investment trusts (“REITs”) and real estate operating companies, which are both ~~predominantly~~primarily investment grade.

At Sept. 30, ~~2017,~~2023, our commercial real estate portfolio ~~consists~~consisted of the following concentrations: New York metro ~~- 40%~~– 36%; REITs and real estate operating companies ~~- 40%~~– 28%; and other ~~- 20%~~– 36%.

Lease financings

The ~~leasing~~lease financings portfolio exposure totaled ~~$1.3 billion~~$633 million at Sept. 30, ~~2017 compared with $1.7 billion~~2023 and $657 million at Dec. 31, ~~2016.~~2022. At Sept. 30, ~~2017, approximately 94%~~2023, 100% of ~~the~~ leasing ~~portfolio~~ exposure was investment grade, or investment grade ~~equivalent.~~

~~At Sept. 30, 2017, the lease financings portfolio~~equivalent, and consisted of exposures backed by well-diversified assets, ~~including~~ primarily real estate and

large-ticket transportation equipment. The largest components of our lease residual value exposure relate to freight-related rail cars and aircraft. Assets are both domestic and foreign-based, with primary concentrations in Germany and the U.S.

Other residential mortgages

The other residential mortgages portfolio primarily consists of 1-4 family residential mortgage loans and totaled ~~$741 million~~$1.0 billion at Sept. 30, ~~2017~~2023 and ~~$854~~$345 million at Dec. 31, ~~2016.~~2022. Included in this portfolio at Sept. 30, ~~2017 are $181~~2023 was $750 million of fixed-rate jumbo mortgage loans,

purchased primarily in ~~2005, 2006 and~~ the first quarter of ~~2007 that are predominantly prime mortgage loans,~~2023, with ~~a small portion of Alt-A loans. As of Sept. 30, 2017, the purchased loans in this portfolio had~~ a weighted-average loan-to-value ratio of ~~76%~~73% at origination and 11% of the serviced loan balance was at least 60 days delinquent. The properties securing the prime and Alt-A mortgage loans were located (in order of concentration) in California, Florida, Virginia, the tri-state area (New York, New Jersey and Connecticut) and Maryland.origination.

To determine the projected loss on the prime and Alt-A mortgage portfolios, we calculate the total estimated defaults of these mortgages and multiply that amount by an estimate of realizable value upon sale in the marketplace (severity).

Overdrafts

Overdrafts primarily relate to custody and securities clearance ~~clients. Overdrafts occur on a daily basis in the custody and securities clearance business~~clients and are generally repaid within two business days.

Capital call financing

Capital call financing includes loans to private equity funds that are secured by the fund investors’ capital commitments and the funds’ rights to call capital.

Other loans

Other loans primarily include loans to consumers that are fully collateralized with equities, mutual funds and ~~fixed income~~fixed-income securities.

28 BNY Mellon

Margin loans

Margin ~~loans are~~loan exposure of $17.2 billion at Sept. 30, 2023 and $16.9 billion at Dec. 31, 2022 was collateralized with marketable ~~securities, and borrowers~~ securities. Borrowers

are required to maintain a daily collateral margin in excess of 100% of the value of the loan. Margin loans included ~~$4.2~~$6 billion at Sept. 30, ~~2017~~2023 and ~~$6.3 billion at~~ Dec. 31, ~~2016~~2022 related to a term loan program that offers fully collateralized loans to broker-dealers.

~~Asset quality and allowance~~Allowance for credit losses

Our credit strategy is to focus on investment grade clients who are active users of our non-credit services. Our primary exposure to the credit risk of a customer consists of funded loans, unfunded contractual commitments to lend, standby letters of credit and overdrafts associated with our custody and securities clearance businesses.

The following table details changes in our allowance for credit losses.

~~BNY Mellon 29~~


Allowance for credit losses activity	Sept. 30, 2023			June 30, 2023			Dec. 31, 2022			Sept. 30, 2022
(dollars in millions)



Beginning balance of allowance for credit losses	$	323		$	320		$	280		$	310

Provision for credit losses	3			5			20			(30)
Net (charge-offs) recoveries:
Loans:
Other residential mortgages	—			(1)			1			1




Other financial instruments	(1)			(1)			(9)			(1)
Net (charge-offs) recoveries	(1)			(2)			(8)			—
Ending balance of allowance for credit losses	$	325		$	323		$	292		$	280

Allowance for loan losses	$	211		$	191		$	176		$	164
Allowance for lending-related commitments	85			91			78			72
Allowance for other financial instruments (a)	29			41			38			44
Total allowance for credit losses	$	325		$	323		$	292		$	280

Total loans, at period end	$	66,290		$	64,469		$	66,063		$	69,829




Allowance for loan losses as a percentage of total loans	0.32		%	0.30		%	0.27		%	0.23		%
Allowance for loan losses and lending-related commitments as a percentage of total loans	0.45		%	0.44		%	0.38		%	0.34		%

(a) Includes allowance for credit losses on federal funds sold and securities purchased under resale agreements, available-for-sale securities, held-to-maturity securities, accounts receivable, cash and due from banks and interest-bearing deposits with banks.

Allowance for credit losses activity Sept. 30, 2017
June 30, 2017
Dec. 31, 2016
Sept. 30, 2016
(dollar amounts in millions)
Non-margin loans $ 45,196
$ 47,516
$ 46,868
$ 48,411
Margin loans 13,872
14,157
17,590
17,557
Total loans $ 59,068
$ 61,673
$ 64,458
$ 65,968
Beginning balance of allowance for credit losses $ 270
$ 276
$ 274
$ 280
Provision for credit losses (6 ) (7 ) 7
(19 )
Net recoveries:
Other residential mortgages 1
1
—
—
Financial institutions —
—
—
13
Net recoveries 1
1
—
13
Ending balance of allowance for credit losses $ 265
$ 270
$ 281
$ 274
Allowance for loan losses $ 161
$ 165
$ 169
$ 148
Allowance for lending-related commitments 104
105
112
126
Allowance for loan losses as a percentage of total loans 0.27 % 0.27 % 0.26 % 0.22 %
Allowance for loan losses as a percentage of non-margin loans 0.36
0.35
0.36
0.31
Total allowance for credit losses as a percentage of total loans 0.45
0.44
0.44
0.42
Total allowance for credit losses as a percentage of non-margin loans 0.59
0.57
0.60
0.57

~~Net recoveries were $1~~The provision for credit losses was $3 million in the third quarter of ~~2017 and second quarter~~2023, compared with a benefit of ~~2017. Net recoveries in the third quarter of 2016 of $13 million were recorded in the financial institutions portfolio.~~

~~The provision for credit losses was a credit of $6~~$30 million in the third quarter of ~~2017, a credit of $7 million in the second quarter of 2017 and a credit of $19 million in the third quarter of 2016.~~2022.

The total allowance for credit losses was $265 million at Sept. 30, 2017, $281 million at Dec. 31, 2016 and $274 million at Sept. 30, 2016. The ratio of the total allowance for credit losses to non-margin loans was 0.59% at Sept. 30, 2017, 0.60% at Dec. 31, 2016 and 0.57% at Sept. 30, 2016. The ratio of the allowance for loan losses to non-margin loans was 0.36% at Sept. 30, 2017, 0.36% at Dec. 31, 2016 and 0.31% at Sept. 30, 2016.

We had $13.9 billion of secured margin loans on our balance sheet at Sept. 30, 2017 compared with $17.6 billion at Dec. 31, 2016 and $17.6 billion at Sept. 30, 2016. We have rarely suffered a loss on these types of loans and do not allocate any of our allowance for credit losses to them. As a result, we believe that the ratio of total allowance for credit losses as a percentage of non-margin loans is a more appropriate metric to measure the adequacy of the reserve.

The allowance for loan losses and the allowance for lending-related commitments represent

management’s estimate of ~~probable~~lifetime expected losses ~~inherent~~ in our credit portfolio. This evaluation process is subject to numerous estimates and judgments. ~~For additional information on this process, see “Critical~~

~~accounting estimates” in our 2016 Annual Report.~~ To the extent actual results differ from forecasts or management’s judgment, the allowance for credit losses may be greater or less than future charge-offs.

BNY Mellon 29

Based on an evaluation of the allowance for credit losses as discussed in “Critical accounting estimates” ~~and Note 1 of the Notes to Consolidated Financial Statements, both~~ in our ~~2016~~2022 Annual Report, we have allocated our allowance for ~~credit losses~~loans and lending-related commitments as ~~follows.~~presented below.


Allocation of allowance for loan losses and lending-related commitments (a)	Sept. 30, 2023				June 30, 2023				Dec. 31, 2022					Sept. 30, 2022
(dollars in millions)	$		%		$		%			$		%			$		%
Commercial real estate	$	222	75	%	$	199	71	%		$	184	72	%		$	176	74	%
Commercial	32		10		21		7			18		7			17		7
Financial institutions	22		7		32		11			24		9			20		8
Wealth management mortgages	9		3		15		5			12		5			9		4
Other residential mortgages	6		2		9		3			8		3			8		3
Capital call financing	3		1		4		1			6		2			4		2
Lease financings	1		1		1		1			1		1			1		1
Wealth management loans	1		1		1		1			1		1			1		1

Total	$	296	100	%	$	282	100	%		$	254	100	%		$	236	100	%

(a) The allowance allocated to margin loans, overdrafts and other loans was insignificant at Sept. 30, 2023, June 30, 2023, Dec. 31, 2022 and Sept. 30, 2022.

Allocation of allowance Sept. 30, 2017
June 30, 2017
Dec. 31, 2016
Sept. 30, 2016

Commercial 31 % 30 % 29 % 33 %
Commercial real estate 28
28
26
23
Foreign 13
13
13
11
Financial institutions 9
8
9
11

Wealth management (a)
8
9
8
7
Other residential mortgages 8
8
10
10
Lease financing 3
4
5
5
Total 100 % 100 % 100 % 100 %


~~(a)~~	~~Includes the allowance for wealth management mortgages.~~

The allocation of the allowance for credit losses is inherently judgmental, and the entire allowance for credit losses is available to absorb credit losses regardless of the nature of the ~~loss.~~losses.

~~The~~Our allowance for credit ~~rating~~losses is sensitive to a number of inputs, most notably the credit ratings assigned to each borrower, as well as macroeconomic forecast assumptions that are incorporated into our estimate of credit ~~is a significant variable~~losses through the expected life of the loan portfolio. Thus, as the macroeconomic environment and related forecasts change, the allowance for credit losses may change materially. The following sensitivity analyses do not represent management’s expectations of the deterioration of our portfolios or the economic environment, but are provided as hypothetical scenarios to assess the sensitivity of the allowance for credit losses to changes in ~~determining the allowance.~~key inputs. If ~~each credit~~commercial real estate property values were increased 10% and all other credits were rated one grade better, the quantitative allowance would have decreased by ~~$65~~$47 million, ~~while~~and if ~~each credit~~commercial real estate property values were decreased 10% and all other credits were rated one grade worse, the quantitative allowance would have increased by ~~$109~~$83 million. ~~Similarly, if~~Our multi-scenario-based macroeconomic forecast used in determining the ~~loss given default were one rating worse, the~~

~~those of BNY Mellon, must maintain a 6% SLR to be considered “well capitalized.”~~

(b) For ~~additional information on the~~our CET1, Tier 1 capital and Total capital ratios, our effective capital ratios under U.S. capital rules ~~see “Supervision~~are the lower of the ratios as calculated under the Standardized and ~~Regulation - Capital Requirements - Generally” in our 2016 Annual Report.~~Advanced Approaches. The Tier 1 leverage ratio is based on Tier 1 capital and quarterly average total assets.

(d) The SLR is based on Tier 1 capital and total leverage exposure, which includes certain off-balance sheet exposures.

N/A – Not applicable.

Our CET1 ratio under the Advanced Approaches was 11.4% at Sept. 30, 2023 and 11.2% at Dec. 31, 2022. The increase was primarily driven by capital generated through earnings and lower RWAs, partially offset by capital deployed through common stock repurchases and dividends.

The ~~Advanced Approach~~Tier 1 leverage ratio was 6.1% at Sept. 30, 2023 and 5.8% at Dec. 31, 2022. The increase primarily reflects lower average assets.

Risk-based capital ratios vary depending on the size of the balance sheet at period end and the levels and types of investments in assets, and leverage ratios vary based on the average size of the balance sheet over the quarter. The balance sheet size fluctuates from period to period based on levels of customer and market activity. In general, when servicing clients are more actively trading securities, deposit balances and the balance sheet as a whole are higher. In addition, when markets experience significant

volatility or stress, our balance sheet size may increase considerably as client deposit levels increase.

Our capital ratios are ~~significantly impacted~~necessarily subject to, among other things, anticipated compliance with all necessary enhancements to model calibration, approval by ~~RWAs for operational risk. Our~~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. As a consequence of these factors, our capital ratios may materially change, and may be volatile over time and from period to period.

Under the Advanced Approaches, our operational loss risk model is informed by external losses, including fines and penalties levied against institutions in the financial services industry, particularly those that relate to businesses in which we operate, and as a result, external losses have impacted and could in the

BNY Mellon 37

future impact the amount of capital that we are required to hold.

Management views the estimated fully phased-in CET1 and other risk-based capital ratios and SLR as key measures in monitoring BNY Mellon’s capital position and progress against future regulatory capital standards. Additionally, the presentation of the estimated fully phased-in CET1 and other risk-based capital ratios and SLR are intended to allow investors to compare these ratios with estimates presented by other companies.

Our capital ratios are necessarily subject to, among other things, anticipated compliance with all necessary enhancements to model calibration, approval by regulators of certain models used as part of RWA calculations, further implementation guidance from regulators, market practices and standards and any changes BNY Mellon may make to its businesses. As a consequence of these factors, our capital ratios may materially change, and may be volatile over time and from period to period.

~~Minimum capital ratios and capital buffers~~

The U.S. capital rules include a series of buffers and surcharges over required minimums that apply to bank holding companies, including BNY Mellon, which are being phased-in over time. Banking organizations with a risk-based ratio or SLR above the minimum required level, but with a risk-based ratio or SLR below the minimum level with buffers

will face constraints on dividends, equity repurchases and discretionary executive compensation based on the amount of the shortfall. Different regulatory capital minimums, buffers and surcharges apply to our banking subsidiaries.

The U.S. capital rules introduced a capital conservation buffer and countercyclical capital buffer that add to the minimum regulatory capital ratios. The capital conservation buffer–1.25% for 2017 and 2.5% when fully phased-in on Jan. 1, 2019–is designed to absorb losses during periods of economic stress and applies to all banking organizations. During periods of excessive growth, the capital conservation buffer may be expanded through the imposition of a countercyclical capital buffer that may be as high as an additional 2.5%. The countercyclical capital buffer, when applicable, applies only to Advanced Approach banking organizations. The countercyclical capital buffer is currently set to zero with respect to U.S. exposures, but it could increase if the banking agencies determine that systemic vulnerabilities are meaningfully above normal.

BNY Mellon is subject to an additional G-SIB surcharge, which is implemented as an extension of the capital conservation buffer and must be satisfied with CET1 capital. For 2017, the G-SIB surcharge applicable to BNY Mellon is 0.75%, and, when fully phased-in on Jan. 1, 2019, as calculated, applying metrics as currently applicable to BNY Mellon, would be 1.5%.

The following table presents ~~the principal minimum~~our capital ~~ratio requirements~~components and RWAs.


Capital components and risk-weighted assets
	Sept. 30, 2023		June 30, 2023		Dec. 31, 2022
(in millions)
CET1:
Common shareholders’ equity	$	36,128	$	36,095	$	35,896
Adjustments for:
Goodwill and intangible assets (a)	(17,164)		(17,274)		(17,210)
Net pension fund assets	(353)		(350)		(317)
Embedded goodwill	(273)		(278)		(279)
Deferred tax assets	(63)		(58)		(56)
Other	(11)		(8)		(2)
Total CET1	18,264		18,127		18,032
Other Tier 1 capital:
Preferred stock	4,838		4,838		4,838
Other	(9)		(8)		(14)
Total Tier 1 capital	$	23,093	$	22,957	$	22,856
Tier 2 capital:
Subordinated debt	$	1,248	$	1,248	$	1,248
Allowance for credit losses	325		323		291
Other	(6)		(6)		(11)
Total Tier 2 capital – Standardized Approach	1,567		1,565		1,528
Excess of expected credit losses	78		61		50
Less: Allowance for credit losses	325		323		291
Total Tier 2 capital – Advanced Approaches	$	1,320	$	1,303	$	1,287
Total capital:
Standardized Approach	$	24,660	$	24,522	$	24,384
Advanced Approaches	$	24,413	$	24,260	$	24,143

Risk-weighted assets:
Standardized Approach	$	153,363	$	153,359	$	159,096
Advanced Approaches:
Credit Risk	$	86,836	$	89,894	$	90,243
Market Risk	3,072		2,629		2,979
Operational Risk	70,550		71,013		68,450
Total Advanced Approaches	$	160,458	$	163,536	$	161,672

Average assets for Tier 1 leverage ratio	$	379,630	$	403,206	$	396,643
Total leverage exposure for SLR	$	318,865	$	326,215	$	336,049

(a) Reduced by deferred tax liabilities associated with ~~buffers~~intangible assets and surcharges, as phased-in, applicable to the Parent and The Bank of New York Mellon. This table does not include the imposition of a countercyclical capital buffer. The U.S. capital rules also provide for transitional arrangements for qualifying instruments, deductions and adjustments, which are not reflected in this table. Buffers and surcharges are not applicable to the leverage capital ratio. These buffers, other than the SLR buffer, and surcharge began to phase-in on Jan. 1, 2016 and will be fully implemented on Jan. 1, 2019.

tax-deductible goodwill.

~~40 BNY Mellon~~

Capital ratio requirements Well capitalized
Minimum ratios

Minimum ratios with buffers, as phased-in (a)
2017
2018
2019

Capital conservation buffer (CET1) 1.25 % 1.875 % 2.5 %
U.S. G-SIB surcharge (CET1) (b)(c)
0.75 % 1.125 % 1.5 %

Consolidated:
CET1 ratio N/A
4.5 % 6.5 % 7.5 % 8.5 %
Tier 1 capital ratio 6.0 % 6.0 % 8.0 % 9.0 % 10.0 %
Total capital ratio 10.0 % 8.0 % 10.0 % 11.0 % 12.0 %

Enhanced SLR buffer (Tier 1 capital) N/A
N/A
2.0 % 2.0 %
SLR N/A
3.0 % N/A
5.0 % 5.0 %

Bank subsidiaries: (c)

CET1 ratio 6.5 % 4.5 % 5.75 % 6.375 % 7.0 %
Tier 1 capital ratio 8.0 % 6.0 % 7.25 % 7.875 % 8.5 %
Total capital ratio 10.0 % 8.0 % 9.25 % 9.875 % 10.5 %

SLR 6.0 % 3.0 % N/A
6.0 % (d) 6.0 % (d)


~~(a)~~	~~Countercyclical capital buffer currently set to 0%.~~


~~(b)~~	~~The fully phased-in U.S. G-SIB surcharge of 1.5% applicable to BNY Mellon is subject to change.~~


~~(c)~~	~~The U.S. G-SIB surcharge is not applicable to the regulatory capital ratios of the bank subsidiaries.~~


~~(d)~~	~~Well capitalized threshold.~~

The table below presents the factors that impacted ~~the transitional and fully phased-in CET1.~~CET1 capital.

Estimated CET1 generation Quarter ended Sept. 30, 2017
(in millions)
Transitional basis (a)

Fully phased-in - Non-GAAP (b)

CET1 – Beginning of period $ 18,371
$ 17,629
Net income applicable to common shareholders of The Bank of New York Mellon Corporation 983
983
Goodwill and intangible assets, net of related deferred tax liabilities (33 ) (26 )
Gross CET1 generated 950
957
Capital deployed:
Common stock dividends (253 ) (253 )
Common stock repurchased (650 ) (650 )
Total capital deployed (903 ) (903 )
Other comprehensive income:
Foreign currency translation 281
281
Unrealized loss on assets available-for-sale 13
16
Defined benefit plans 12
15
Total other comprehensive income 306
312
Additional paid-in capital (c)
156
156
Other additions (deductions):
Deferred tax assets (1 ) (2 )
Embedded goodwill (9 ) (8 )
Total other deductions (10 ) (10 )
Net CET1 generated 499
512
CET1 – End of period $ 18,870
$ 18,141

CET1 generation

3Q23

(in millions)

CET1 – Beginning of period

18,127

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

956

Goodwill and intangible assets, net of related deferred tax liabilities

110

Gross CET1 generated

1,066

Capital deployed:

Common stock repurchases

(450)

Common stock dividends (a)

(333)
Total capital deployed			(783)
Other comprehensive gain (loss):
Unrealized (loss) on assets available-for-sale			(15)
Foreign currency translation			(185)

~~(a)~~Defined benefit plans			~~Reflects transitional adjustments to CET1 required under the U.S. capital rules.~~(3)


~~(b)~~Total other comprehensive (loss)			~~Estimated.~~

(203)
~~(c)~~ Additional paid-in capital (b)			~~Primarily related to stock awards, the exercise of stock options and stock issued for employee benefit plans.~~

~~BNY Mellon 41~~

The following table presents the components of our transitional and fully phased-in CET1, Tier 1 and Tier 2 capital, the RWAs determined under both the Standardized and Advanced Approaches, the average assets used for leverage capital purposes and the total leverage exposure for estimated SLR purposes.

Capital components and ratios Sept. 30, 2017 June 30, 2017 Dec. 31, 2016
(dollars in millions)
Transitional
Approach (a)

Fully
phased-in - Non-GAAP (b)

Transitional
Approach (a)

Fully
phased-in - Non-GAAP (b)

Transitional
Approach (a)

Fully
phased-in - Non-GAAP (b)

CET1:
Common shareholders’ equity $ 37,195
$ 36,981
$ 36,652
$ 36,432
$ 35,794
$ 35,269
Goodwill and intangible assets (17,876 ) (18,351 ) (17,843 ) (18,325 ) (17,314 ) (18,312 )
Net pension fund assets (72 ) (90 ) (72 ) (90 ) (55 ) (90 )
Equity method investments (334 ) (348 ) (325 ) (340 ) (313 ) (344 )
Deferred tax assets (31 ) (39 ) (30 ) (37 ) (19 ) (32 )
Other (12 ) (12 ) (11 ) (11 ) —
(1 )
Total CET1 18,870
18,141

18,371
17,629
18,093
16,490
Other Tier 1 capital:
Preferred stock 3,542
3,542
3,542
3,542
3,542
3,542
Deferred tax assets (8 ) —
(7 ) —
(13 ) —
Net pension fund assets (19 ) —
(18 ) —
(36 ) —
Other (34 ) (34 ) (24 ) (24 ) (121 ) (121 )
Total Tier 1 capital $ 22,351
$ 21,649

$ 21,864
$ 21,147
$ 21,465
$ 19,911
Tier 2 capital:
Subordinated debt $ 1,300
$ 1,250
$ 550
$ 550
$ 550
$ 550
Allowance for credit losses 265
265
270
270
281
281
Trust preferred securities —
—
—
—
148
—
Other (7 ) (7 ) (7 ) (7 ) (12 ) (11 )
Total Tier 2 capital - Standardized Approach 1,558
1,508

813
813
967
820
Excess of expected credit losses 49
49
59
59
50
50
Less: Allowance for credit losses 265
265
270
270
281
281
Total Tier 2 capital - Advanced Approach $ 1,342
$ 1,292

$ 602
$ 602
$ 736
$ 589
Total capital:
Standardized Approach $ 23,909
$ 23,157
$ 22,677
$ 21,960
$ 22,432
$ 20,731
Advanced Approach $ 23,693
$ 22,941
$ 22,466
$ 21,749
$ 22,201
$ 20,500

Risk-weighted assets:
Standardized Approach $ 153,494
$ 152,995
$ 153,179
$ 152,645
$ 147,671
$ 146,475
Advanced Approach:
Credit Risk $ 98,201
$ 97,672
$ 99,030
$ 98,465
$ 97,659
$ 96,391
Market Risk 2,996
2,996
3,225
3,225
2,836
2,836
Operational Risk 68,625
68,625
67,788
67,788
70,000
70,000
Total Advanced Approach $ 169,822
$ 169,293

$ 170,043
$ 169,478
$ 170,495
$ 169,227

Standardized Approach:
CET1 ratio 12.3 % 11.9 % 12.0 % 11.5 % 12.3 % 11.3 %
Tier 1 capital ratio 14.6
14.2
14.3
13.9
14.5
13.6
Total (Tier 1 plus Tier 2) capital ratio 15.6
15.1
14.8
14.4
15.2
14.2
Advanced Approach:
CET1 ratio 11.1 % 10.7 % 10.8 % 10.4 % 10.6 % 9.7 %
Tier 1 capital ratio 13.2
12.8
12.9
12.5
12.6
11.8
Total (Tier 1 plus Tier 2) capital ratio 14.0
13.6
13.2
12.8
13.0
12.1

Average assets for leverage capital purposes $ 327,555
$ 324,423
$ 326,809

Total leverage exposure for SLR purposes $ 355,960
$ 352,448
$ 355,083

67
~~(a)~~			~~Reflects transitional adjustments to CET1, Tier 1 capital and Tier 2 capital required in 2017 and 2016 under the U.S. capital rules.~~

Other additions (deductions):
~~(b)~~Net pension fund assets	~~Estimated.~~(3)
Embedded goodwill	5
Deferred tax assets	(5)
Other	(7)
Total other (deductions)	(10)
Net CET1 generated	137
CET1 – End of period	$	18,264

(a) Includes dividend equivalents on share-based awards.

(b) Primarily related to stock awards and stock issued for employee benefit plans.

~~42 BNY Mellon~~

The following table shows the impact on the consolidated capital ratios at Sept. 30, ~~2017~~2023 of a $100 million increase or decrease in common equity, or a $1 billion increase or decrease in RWAs, quarterly average assets or total leverage exposure.


Sensitivity of consolidated capital ratios at Sept. 30, 2017
Sensitivity of consolidated capital ratios at Sept. 30, 2023					Sensitivity of consolidated capital ratios at Sept. 30, 2023
	Increase or decrease of					Increase or decrease of
(in basis points)	$100 million in common equity		$1 billion in RWA, quarterly average assets or total leverage exposure		(in basis points)	$100 million in common equity		$1 billion in RWA, quarterly average assets or total leverage exposure
CET1:					CET1:
Standardized Approach	7	bps	8	bps	Standardized Approach	7	bps	8	bps
Advanced Approach	6		7
Advanced Approaches					Advanced Approaches	6		7

Tier 1 capital:					Tier 1 capital:
Standardized Approach	7		10		Standardized Approach	7		10
Advanced Approach	6		8
Advanced Approaches					Advanced Approaches	6		9

Total capital:					Total capital:
Standardized Approach	7		10		Standardized Approach	7		11
Advanced Approach	6		8
Advanced Approaches					Advanced Approaches	6		10

Leverage capital	3		2
Tier 1 leverage					Tier 1 leverage	3		2

SLR	3		2		SLR	3		2

Estimated CET1 ratio, fully phased-in – Non-GAAP:
Standardized Approach	7		8
Advanced Approach	6		6

Estimated SLR, fully phased-in – Non-GAAP	3		2

38 BNY Mellon

~~Capital~~

Stress capital buffer

In July 2023, the Federal Reserve announced that BNY Mellon’s SCB requirement would remain at 2.5%, equal to the regulatory floor, for the period from Oct. 1, 2023 through Sept. 30, 2024. The SCB replaced the static 2.5% capital conservation buffer for Standardized Approach capital ratios ~~vary depending on~~for CCAR BHCs. The SCB does not apply to bank subsidiaries, which remain subject to the ~~size~~static 2.5% capital conservation buffer. See “Supervision and Regulation” in our 2022 Annual Report for additional information.

The SCB final rule generally eliminates the requirement for prior approval of common stock repurchases in excess of the ~~balance sheet at quarter-end~~distributions in a firm’s capital plan, provided that such distributions are consistent with applicable capital requirements and buffers, including the ~~levels~~SCB.

Total Loss-Absorbing Capacity (“TLAC”)

The following summarizes the minimum requirements for BNY Mellon’s external TLAC and ~~types~~external long-term debt (“LTD”) ratios, plus currently applicable buffers.


	As a % of RWAs (a)	As a % of total leverage exposure
Eligible external TLAC ratios	Regulatory minimum of 18% plus a buffer (b) equal to the sum of 2.5%, the method 1 G-SIB surcharge (currently 1%), and the countercyclical capital buffer, if any	Regulatory minimum of 7.5% plus a buffer (c) equal to 2%
Eligible external LTD ratios	Regulatory minimum of 6% plus the greater of the method 1 or method 2 G-SIB surcharge (currently 1.5%)	4.5%

(a) RWA is the greater of ~~investments in assets. The balance sheet size fluctuates from quarter~~Standardized Approach and Advanced Approaches.

(b) Buffer to quarter based on levels of customer and market activity. In general, when servicing clients are more actively trading securities, deposit balances and the balance sheet as a whole are higher. In addition, when markets experience significant volatility or stress, our balance sheet size may increase considerably as client deposit levels increase.be met using only CET1.

~~Supplementary Leverage Ratio~~

~~BNY Mellon has presented its consolidated and largest bank subsidiary’s estimated fully phased-in SLRs based on its interpretation~~External TLAC consists of the ~~U.S.~~Parent’s Tier 1 capital ~~rules, which are~~and eligible unsecured LTD issued by it that has a remaining term to maturity of at least one year and satisfies certain other conditions. Eligible LTD consists of the unpaid principal balance of eligible unsecured debt securities, subject to haircuts for amounts due to be paid within two years, that satisfy certain other conditions. Debt issued prior to Dec.

31, 2016 has been permanently grandfathered to the extent these instruments otherwise would be ineligible only due to containing impermissible acceleration rights or being ~~gradually phased-in over a multi-year period and on the application of such rules to BNY Mellon’s businesses as currently conducted.~~governed by foreign law.

~~BNY Mellon 43~~

The following table presents ~~the components of~~ our ~~SLR on both the transitional~~external TLAC and ~~fully phased-in basis for~~external LTD ratios.


TLAC and LTD ratios	Sept. 30, 2023
	Minimum required		Minimum ratios with buffers
					Ratios
Eligible external TLAC:
As a percentage of RWA	18.0	%	21.5	%	30.6	%
As a percentage of total leverage exposure	7.5	%	9.5	%	15.4	%

Eligible external LTD:
As a percentage of RWA	7.5	%	N/A		14.6	%
As a percentage of total leverage exposure	4.5	%	N/A		7.3	%

N/A – Not applicable.

If BNY Mellon maintains risk-based ratio or leverage TLAC measures above the minimum required level, but with a risk-based ratio or leverage below the minimum level with buffers, we will face constraints on dividends, equity repurchases and ~~our largest bank subsidiary, The Bank~~discretionary executive compensation based on the amount of ~~New York Mellon.~~the shortfall and eligible retained income.

SLR Sept. 30, 2017 June 30, 2017 Dec. 31, 2016
(dollars in millions) Transitional basis
Fully
phased-in -
Non-GAAP (a)

Transitional basis
Fully
phased-in -
Non-GAAP (a)

Transitional basis
Fully
phased-in -
Non-GAAP (a)

Consolidated:
Total Tier 1 capital $ 22,351
$ 21,649
$ 21,864
$ 21,147
$ 21,465
$ 19,911

Total leverage exposure:
Quarterly average total assets $ 345,709
$ 345,709
$ 342,515
$ 342,515
$ 344,142
$ 344,142
Less: Amounts deducted from Tier 1 capital 18,154
18,856
18,092
18,810
17,333
18,887
Total on-balance sheet assets, as adjusted 327,555
326,853

324,423
323,705
326,809
325,255
Off-balance sheet exposures:
Potential future exposure for derivative contracts (plus certain other items) 6,213
6,213
6,014
6,014
6,021
6,021
Repo-style transaction exposures 1,034
1,034
631
631
533
533
Credit-equivalent amount of other off-balance sheet exposures (less SLR exclusions) 21,860
21,860
22,098
22,098
23,274
23,274
Total off-balance sheet exposures 29,107
29,107

28,743
28,743
29,828
29,828
Total leverage exposure $ 356,662
$ 355,960

$ 353,166
$ 352,448
$ 356,637
$ 355,083

SLR - Consolidated (b)
6.3 % 6.1 % 6.2 % 6.0 % 6.0 % 5.6 %

The Bank of New York Mellon, our largest bank subsidiary:
Tier 1 capital $ 20,718
$ 19,955
$ 19,897
$ 19,125
$ 19,011
$ 17,708
Total leverage exposure $ 292,759
$ 292,421
$ 286,983
$ 286,634
$ 291,022
$ 290,230

SLR - The Bank of New York Mellon (b)
7.1 % 6.8 % 6.9 % 6.7 % 6.5 % 6.1 %


~~(a)~~	~~Estimated.~~

~~(b)~~

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.”

Trading activities and risk management

Our trading activities are focused on acting as a market-maker for our customers, facilitating customer trades and ~~risk mitigating~~risk-mitigating hedging in compliance with the Volcker Rule. The risk from market-making activities for customers is managed by our traders and limited in total exposure through a system of position limits, value-at-risk (“VaR”) methodology and other market sensitivity measures. VaR is the potential loss in value due to adverse market movements over a defined time horizon with a specified confidence level. The calculation of our VaR used by management and presented below assumes a one-day holding period, utilizes a 99% confidence level and incorporates non-linear product characteristics. VaR facilitates comparisons across portfolios of different risk characteristics. VaR also captures the

diversification of aggregated risk at the ~~firm wide~~firm-wide level.

BNY Mellon 39

VaR represents a key risk management measure, and it is important to note the inherent limitations to VaR, which include:

•VaR does not estimate potential losses over longer time horizons where moves may be extreme;

•VaR does not take into account ofthe potential variability of market liquidity; and

•Previous moves in market risk factors may not produce accurate predictions of all future market moves.

See Note 1617 of the Notes to Consolidated Financial Statements for additional information on the VaR methodology.

~~44 BNY Mellon~~

In an effort to improve our enterprise level risk management capabilities, we have changed our VaR model from Monte Carlo simulation to historical simulation for both management and RWA calculations. This change was effective as of Jan. 1, 2017. In addition to this model enhancement, the impact of credit valuation adjustment (“CVA”) is now included.

The following tables indicate the calculated VaR amounts for the trading portfolio for the designated periods using the ~~newly implemented~~ historical simulation VaR model. ~~The~~


VaR (a)	3Q23						Sept. 30, 2023
(in millions)	Average		Minimum		Maximum
Interest rate	$	2.6	$	1.9	$	4.6	$	2.4
Foreign exchange	2.5		2.0		3.2		2.1
Equity	0.1		—		0.3		0.2
Credit	1.2		0.9		1.7		1.3
Diversification	(4.3)		N/M		N/M		(4.1)
Overall portfolio	2.1		1.3		3.2		1.9


VaR (a)	2Q23						June 30, 2023
(in millions)	Average		Minimum		Maximum
Interest rate	$	3.1	$	2.0	$	5.1	$	2.6
Foreign exchange	3.0		2.0		4.5		2.3
Equity	0.1		—		0.3		0.1
Credit	1.4		1.0		2.0		1.3
Diversification	(4.6)		N/M		N/M		(4.0)
Overall portfolio	3.0		1.8		4.9		2.3


VaR (a)	3Q22						Sept. 30, 2022
(in millions)	Average		Minimum		Maximum
Interest rate	$	4.1	$	2.6	$	7.5	$	3.3
Foreign exchange	3.9		2.7		7.1		4.7
Equity	0.2		0.1		0.5		0.2
Credit	1.9		1.0		4.4		3.9
Diversification	(5.6)		N/M		N/M		(7.1)
Overall portfolio	4.5		2.5		7.7		5.0


VaR (a)	YTD23
(in millions)	Average		Minimum		Maximum
Interest rate	$	3.2	$	1.9	$	7.6
Foreign exchange	3.0		2.0		5.7
Equity	0.1		—		0.3
Credit	1.4		0.7		3.5
Diversification	(4.7)		N/M		N/M
Overall portfolio	3.0		1.3		8.9


VaR (a)	YTD22
(in millions)	Average		Minimum		Maximum
Interest rate	$	4.4	$	1.6	$	9.3
Foreign exchange	3.6		2.2		10.2
Equity	0.3		—		0.9
Credit	1.9		1.0		4.4
Diversification	(4.8)		N/M		N/M
Overall portfolio	5.4		2.5		11.4

(a) VaR exposure does not include the impact of ~~changes in methodology is not material.~~the Company’s consolidated investment management funds and seed capital investments.

VaR (a)
3Q17 Sept. 30, 2017
(in millions) Average
Minimum
Maximum
Interest rate $ 3.3
$ 2.8
$ 4.2
$ 2.7
Foreign exchange 3.7
3.1
5.6
4.8
Equity 0.9
0.8
1.1
0.9
Credit 1.0
0.6
1.4
1.0
Diversification (5.1 ) N/M
N/M
(5.3 )
Overall portfolio 3.8
3.2
5.3
4.1

VaR (a)
2Q17 June 30, 2017
(in millions) Average
Minimum
Maximum
Interest rate $ 3.3
$ 2.8
$ 4.1
$ 4.0
Foreign exchange 4.3
3.4
5.8
4.6
Equity 0.2
0.1
1.1
1.1
Credit 1.1
0.5
1.4
0.8
Diversification (4.8 ) N/M
N/M
(5.8 )
Overall portfolio 4.1
3.3
5.4
4.7

VaR (a)
YTD17
(in millions) Average
Minimum
Maximum
Interest rate $ 3.5
$ 2.8
$ 4.9
Foreign exchange 3.9
2.6
5.8
Equity 0.4
0.1
1.1
Credit 1.1
0.5
1.7
Diversification (4.9 ) N/M
N/M
Overall portfolio 4.0
3.2
5.4


~~(a)~~	~~Beginning Jan. 1, 2017, the~~ VaR figures reflect the impact of the CVA and hedges as per the guidance included in ASC 820, Fair Value Measurement. VaR exposure does not include the impact of the Company’s consolidated investment management funds and seed capital investments.

N/M -– Because the minimum and maximum may occur on different days for different risk components, it is not meaningful to compute a minimum and maximum portfolio diversification effect.

~~The following tables indicate the calculated VaR amounts for the trading portfolio for the designated periods as previously reported under the former Monte Carlo simulation VaR model.~~

VaR (a)
3Q16 Sept. 30, 2016
(in millions) Average
Minimum
Maximum
Interest rate $ 7.3
$ 5.4
$ 8.9
$ 7.9
Foreign exchange 4.2
3.2
7.5
3.7
Equity 0.6
0.5
0.8
0.6
Credit 0.3
0.3
0.4
0.4
Diversification (5.8 ) N/M
N/M
(5.7 )
Overall portfolio 6.6
5.0
7.7
6.9

VaR (a)
YTD16
(in millions) Average
Minimum
Maximum
Interest rate $ 6.3
$ 4.3
$ 8.9
Foreign exchange 2.8
1.2
11.1
Equity 0.6
0.4
0.8
Credit 0.3
0.2
0.4
Diversification (4.0 ) N/M
N/M
Overall portfolio 6.0
4.3
7.7


~~(a)~~	VaR figures do not reflect the impact of the CVA guidance in ASC 820, Fair Value Measurement. This is consistent with the regulatory treatment. VaR exposure does not include the impact of the Company’s consolidated investment management funds and seed capital investments.

~~N/M - Because the minimum and maximum may occur on different days for different risk components, it is not meaningful to compute a minimum and maximum portfolio diversification effect.~~

The interest rate component of VaR represents instruments whose values are predominantly ~~vary with the level or volatility of~~driven by interest ~~rates.~~rate levels. These instruments include, but are not limited ~~to: sovereign debt,~~to, U.S. Treasury securities, swaps, swaptions, forward rate agreements, exchange-traded futures and options, and other interest rate derivative products.

The foreign exchange component of VaR represents instruments whose values predominantly vary with the level or volatility of currency exchange rates or interest rates. These instruments include, but are not limited ~~to:~~to, currency balances, spot and forward transactions, currency options ~~exchange-traded futures and options,~~ and other currency derivative products.

The equity component of VaR consists of instruments that represent an ownership interest in the form of domestic and foreign common stock or other equity-linked instruments. These instruments include, but are not limited ~~to:~~to, common stock, exchange-traded funds, preferred stock, listed equity options (puts and calls), ~~over-the-counter (“OTC”)~~OTC equity options, equity total return swaps, equity index futures and other equity derivative products.

~~BNY Mellon 45~~

The credit component of VaR represents instruments whose values are predominantly ~~vary with the~~driven by credit ~~worthiness of counterparties.~~spread levels, i.e., idiosyncratic default risk. These instruments include, but are not limited to, single issuer credit ~~derivatives (credit~~ default swaps, and ~~exchange-traded credit index instruments) and~~securities with exposures from corporate and municipal credit ~~spreads, and mortgage prepayments. Credit derivatives are used to hedge various credit exposures.~~spreads.

The diversification component of VaR is the risk reduction benefit that occurs when combining portfolios and offsetting positions, and from the correlated behavior of risk factor movements.

40 BNY Mellon

During the third quarter of ~~2017,~~2023, interest rate risk generated ~~37%~~41% of average gross VaR, foreign exchange risk generated ~~42%~~39% of average gross VaR, equity risk ~~accounted for 10%~~generated 1% of average gross VaR and credit risk generated ~~11%~~19% of average gross VaR. During the third quarter of ~~2017,~~2023, our daily trading loss did not exceed our calculated VaR amount of the overall portfolio.

The following table of total daily trading revenue or loss illustrates the number of trading days in which our trading revenue or loss fell within particular ranges during the past five quarters.


Distribution of trading revenue (loss) (a)
	Quarter ended
(dollars in millions)	Sept. 30, 2023	June 30, 2023	March 31, 2023	Dec. 31, 2022	Sept. 30, 2022

Revenue range:	Number of days
Less than $(2.5)	—	—	—	2	—
$(2.5) – $0	5	2	1	4	3
$0 – $2.5	14	15	20	13	10
$2.5 – $5.0	24	37	26	24	32
More than $5.0	20	9	15	20	19

Distribution of trading revenue (loss) (a)

Quarter ended
(dollars in millions) Sept. 30, 2017
June 30,
2017
March 31,
2017
Dec. 31, 2016
Sept. 30, 2016
Revenue range: Number of days
Less than $(2.5) —
—
—
—
—
$(2.5) – $0 1
2
1
3
6
$0 – $2.5 29
31
31
28
22
$2.5 – $5.0 29
27
26
23
25
More than $5.0 4
4
4
7
11


~~(a)~~	(a) Trading revenue (loss) includes realized and unrealized gains and losses primarily related to spot and forward foreign exchange transactions, derivatives and securities trades for our customers and excludes any associated commissions, underwriting fees and net interest revenue.

Trading assets include debt and equity instruments and derivative assets, primarily foreign exchange and interest rate ~~and foreign exchange~~ contracts, not designated as hedging instruments. Trading assets were ~~$4.7~~$10.7 billion at Sept. 30, ~~2017~~2023 and ~~$5.7~~$9.9 billion atDec. 31, ~~2016.~~2022.

Trading liabilities include debt and equity instruments and derivative liabilities, primarily foreign exchange and interest rate ~~and~~

~~foreign exchange~~ contracts, not designated as hedging instruments. Trading liabilities were ~~$3.3~~$7.4 billion at Sept. 30, ~~2017~~2023 and ~~$4.4~~$5.4 billion at Dec. 31, ~~2016.~~2022.

Under our fair value methodology for derivative contracts, an initial “risk-neutral” valuation is performed on each position assuming ~~time-discounting~~time discounting based on a AA credit curve. In addition, we consider credit risk in arriving at the fair value of our ~~derivatives~~.derivatives.

We reflect external credit ratings as well as observable credit default swap spreads for both ourselves and our counterparties when measuring the fair value of our derivative positions. Accordingly, the valuation of our derivative positions is sensitive to

the current changes in our own credit spreads, as well as those of our counterparties.

At Sept. 30, ~~2017,~~2023, our OTC derivative assets, including those in hedging relationships, of ~~$3.6~~$2.7 billion included a ~~CVA~~credit valuation adjustment (“CVA”) deduction of ~~$30~~$12 million. Our OTC derivative liabilities, including those in hedging relationships, of $3.2 billion included a debit valuation adjustment (“DVA”) of $2$8 million related to our own credit spread. Net of hedges, the CVA decreased by less than $1 million and the DVA ~~was unchanged in the third quarter of 2017. The net impact of these adjustments~~ increased ~~foreign exchange and other trading revenue~~ by less than $1 million in the third quarter of ~~2017.~~

~~In the second quarter of 2017, net of hedges, the CVA decreased~~2023, which increased investment and other revenue – other trading revenue by ~~$3 million and the DVA decreased by~~less than $1 million. The net impact ~~of these adjustments increased foreign exchange~~decreased investment and other revenue – other trading revenue by $2less than $1 million in the second quarter of ~~2017.~~

~~In the third quarter of 2016, net of hedges, the CVA decreased by $8 million~~2023 and ~~the DVA decreased by $4 million. The net impact of these adjustments~~ increased ~~foreign exchange~~investment and other revenue – other trading revenue by $4$3 million in the third quarter of ~~2016.~~2022.

The table below summarizes ~~the~~our exposure, net of collateral related to our derivative counterparties, as determined on an internal risk ~~ratings for our foreign exchange and interest rate derivative counterparty credit exposure during the past five quarters. This information indicates the degree of risk to which we are exposed.~~management basis. Significant changes in counterparty credit ratings ~~classifications for our foreign exchange and other trading activity~~ could ~~result in increased~~alter the level of credit risk ~~for us.~~

faced by BNY Mellon.


Foreign exchange and other trading counterparty risk-rating profile

	Sept. 30, 2023				Dec. 31, 2022
(dollars in millions)	Exposure, net of collateral		Percentage of exposure, net of collateral		Exposure, net of collateral		Percentage of exposure, net of collateral

Investment grade	$	2,056	96	%	$	2,553	98	%
Non-investment grade	82		4	%	63		2	%
Total	$	2,138	100	%	$	2,616	100	%

~~46 BNY Mellon~~

Foreign exchange and other trading counterparty risk
rating profile (a)
Quarter ended
Sept. 30, 2017
June 30,
2017
March 31,
2017
Dec. 31, 2016
Sept. 30, 2016
Rating:
AAA to AA- 41 % 44 % 43 % 35 % 45 %
A+ to A- 30
27
36
39
32
BBB+ to BBB- 24
22
17
22
19
Noninvestment grade (BB+ and lower) 5
7
4
4
4
Total 100 % 100 % 100 % 100 % 100 %


~~(a)~~	~~Represents credit rating agency equivalent of internal credit ratings.~~

Asset/liability management

Our diversified business activities include processing securities, accepting deposits, investing in securities, lending, raising money as needed to fund assets and other transactions. The market risks from these activities ~~are~~include interest rate risk and foreign exchange risk. Our primary market risk is exposure to movements in U.S. dollar interest rates and certain foreign currency interest rates. We actively manage interest rate sensitivity and use earnings simulation and discounted cash flow models to identify interest rate exposures.

BNY Mellon 41

An earnings simulation model is the primary tool used to assess changes in pre-tax net interest ~~revenue.~~ revenue between a baseline scenario and hypothetical interest rate scenarios. Interest rate sensitivity is quantified by calculating the change in pre-tax net interest revenue between the scenarios over a 12-month measurement period.

The ~~model~~baseline scenario incorporates the market’s forward rate expectations and management’s assumptions regarding ~~interest~~client deposit rates, ~~balance changes on core deposits, market~~credit spreads, changes in the prepayment behavior of loans and securities and the impact of

derivative financial instruments used for interest rate risk management ~~purposes.~~purposes as of each respective quarter-end. These assumptions have been developed through a combination of historical analysis and future expected pricing behavior and are inherently uncertain. ~~As a result, the earnings simulation model cannot precisely estimate net interest revenue or the impact of higher or lower interest rates on net interest revenue.~~ Actual results may differ materially from projected results due to timing, magnitude and frequency of interest rate changes, and changes in market conditions and management’s strategies, among other factors. Client deposit levels and mix are key assumptions impacting net interest revenue in the baseline as well as the hypothetical interest rate scenarios. The earnings simulation model assumes static deposit levels and mix, and it also assumes that no management actions will be taken to mitigate the effects of interest rate changes. Typically, the baseline scenario uses the average deposit balances of the quarter.

~~The~~In the table below, ~~relies on certain critical assumptions regarding~~we use the ~~balance sheet and depositors’ behavior related~~earnings simulation model to interest rate fluctuations and the prepayment and extension risk in certain of our assets. Generally, there has been an inverse relationship between interest rates and client deposit levels. To the extent that actual behavior is different from that assumed in the models, there could be a change in interest rate sensitivity.

~~We evaluate the effect on earnings by running various interest rate ramp scenarios from a baseline scenario. The interest rate ramp scenarios are reviewed to examine~~assess the impact of ~~large~~various hypothetical interest rate ~~movements.~~scenarios compared to the baseline scenario. In each ~~scenario,~~of the scenarios, all ~~currencies~~currencies’ interest rates are instantaneously shifted higher or ~~lower. Interest~~lower at the start of the forecast. Long-term interest rates are defined as all tenors equal to or greater than three years and short-term interest rates are defined as all tenors equal to or less than three months. Interim term points are interpolated where applicable. The impact of interest rate ~~sensitivity is quantified by calculating~~shifts may not be linear. The results of this earnings simulation should therefore not be extrapolated for more severe interest rate scenarios than those presented in the ~~change in pre-tax net interest revenue between the scenarios over a 12-month measurement period.~~

table below.

The following table shows net interest revenue sensitivity for BNY Mellon.


Estimated changes in net interest revenue (in millions)	Sept. 30, 2023		June 30, 2023		Sept. 30, 2022
Up 100 bps rate shock vs. baseline	$	166	$	324	$	267
Long-term up 100 bps, short-term unchanged	13		7		(17)
Short-term up 100 bps, long-term unchanged	153		317		283
Long-term down 100 bps, short-term unchanged (a)	(14)		(13)		14
Short-term down 100 bps, long-term unchanged	(214)		(346)		(408)
Down 100 bps rate shock vs. baseline	(228)		(358)		(394)

Estimated changes in net interest revenue
(in millions)
Sept. 30, 2017
June 30,
2017
March 31,
2017
Dec. 31, 2016
Sept. 30, 2016
up 200 bps parallel rate ramp vs. baseline (a)
$ (2 ) $ (69 ) $ (136 ) $ 6
$ 62
up 100 bps parallel rate ramp vs. baseline (a)
112
58
87
145
147
Long-term up 50 bps, short-term unchanged (b)
113
92
92
81
116
Long-term down 50 bps, short-term unchanged (b)
(129 ) (85 ) (104 ) (88 ) (128 )
(a) Prior periods have been updated to reflect the impact of a 100 basis point decrease in long-term rates while short-term rates were unchanged.


~~(a)~~	~~In the parallel rate ramp, both short-term and long-term rates move~~ ~~in four equal quarterly increments.~~


~~(b)~~	~~Long-term is equal to or greater than one year.~~

At Sept. 30, 2023, the impact of a 100 bps ~~- basis points.~~

~~The baseline scenario used for the calculations~~upward shift in ~~the estimated changes in~~rates on net interest revenue ~~table above as of Sept. 30, 2017,~~decreased compared with June 30, ~~2017, March 31, 2017 and Dec. 31, 2016 arebased on our quarter-end balance sheet and~~2023. The primary driver is lower deposit balances in the ~~spot yield curve. The baseline scenario used for Sept. 30, 2016 was based on implied forward yield curves. We revised~~most recent quarter, which reduce the

benefit of rising interest rates.

~~methodology as of Dec. 31, 2016 as we believe using~~While the ~~spot yield curve for the baseline scenario provides a more accurate reflection of~~ net interest revenue sensitivity ~~given the recent increase~~scenario calculations assume static deposit balances to facilitate consistent period-over-period comparisons, net interest revenue is impacted by changes in deposit balances. Noninterest-bearing deposits are particularly sensitive to changes in short-term ~~interest rates and~~rates.

To illustrate the ~~implied forward rates. Because interest rates and the implied forward yield curves were lower in prior periods, the impact of using a~~

~~BNY Mellon 47~~

spot yield curve versus an implied forward yield curve was not as significant. The 100 basis point ramp scenario assumes rates increase 25 basis points above the yield curve in each of the next four quarters and the 200 basis point ramp scenario assumes a 50 basis point per quarter increase.

~~Our~~ net interest revenue sensitivity ~~table above incorporates assumptions about~~to deposit run-off, we estimate that a $5 billion instantaneous reduction/increase in U.S. dollar-denominated noninterest-bearing deposits would reduce/increase the ~~impact of changes in~~net interest rates on depositor behavior based on historical experience. Given the current historically low interest rate environment and the potential change to the implementation of monetary policy, the impact of depositor behavior is highly uncertain. The lowerrevenue sensitivity results in the ~~ramp~~ up ~~200 basis point scenario compared with the~~ 100 basis point scenario ~~is driven by the assumption of increased deposit runoff and forecasted changes~~ in the ~~deposit pricing.~~table above by approximately $320 million. The impact would be smaller if the run-off was assumed to be a mixture of interest-bearing and noninterest-bearing deposits.

~~Growth~~Additionally, during periods of low short-term interest rates, money market mutual fund fees and other similar fees are typically waived to protect investors from negative returns. See “Fee and other revenue” in our 2022 Annual Report for additional details on money market fee waivers.

For a discussion of factors impacting the growth or contraction of deposits, see “Risk Factors – Capital and Liquidity Risk – Our business, financial condition and results of operations could ~~also~~ be adversely affected ~~by the following factors:~~if we do not effectively manage our liquidity” in our 2022 Annual Report.

~~Monetary policy;~~

~~Global economic uncertainty;~~

42 BNY Mellon

~~Our ratings relative to other financial institutions’ ratings; and~~

~~Regulatory reform.~~

~~Any of these events could change our assumptions about depositor behavior and have a significant impact on our balance sheet and net interest revenue.~~

~~Off-balance sheet arrangements~~

Off-balance sheet arrangements discussed in this section are limited to guarantees, retained or contingent interests and obligations arising out of unconsolidated variable interest entities (“VIEs”). For BNY Mellon, these items include certain credit guarantees and a securitization. Guarantees include lending-related guarantees issued as part of our corporate banking business and securities lending indemnifications issued as part of our Investment Services business. See Note 17 of the Notes to Consolidated Financial Statements for a further discussion of our off-balance sheet arrangements.

~~48 BNY Mellon~~

Supplemental information -– Explanation of GAAP and Non-GAAP financial measures

BNY Mellon has included in this Form 10-Q certain Non-GAAP financial measures based on estimated fully phased-in CET1 and other risk-based capital ratios, the estimated 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~~tangible basis ~~and the SLR, on~~as a ~~fully phased-in basis, are measures of capital strength that provide additional useful~~supplement to GAAP information, ~~to investors, supplementing the capital ratios~~ which ~~are, or were, required by regulatory authorities. The tangible common shareholders’ equity ratio, which excludes~~exclude goodwill and intangible assets, net of deferred tax ~~liabilities, includes changes in investment securities valuations which are reflected in total shareholders’ equity. BNY Mellon believes~~liabilities. We believe that the return on tangible common equity ~~measure~~– Non-GAAP is an additional useful ~~measure~~information for investors because it presents a measure of those assets that can generate ~~income. BNY Mellon has provided a measure of~~income, and the tangible book value per common share ~~which it believes provides~~– Non-GAAP is additional useful information ~~as to~~because it presents 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,~~excluding notable items, including disposal gains. Expense measures, excluding notable items, including goodwill impairment, severance expense and ~~expense measures, which exclude amortization of intangible assets and M&I,~~ litigation ~~and restructuring charges. Operating margin, operating leverage and return on equity measures, which~~

~~exclude some or all of these items, as well as the recovery related to Sentinel,~~reserves, 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~~reserves represent accruals for loss contingencies that are both probable and reasonably estimable, but exclude standard business-related legal fees. ~~Restructuring charges relate~~Total revenue, noninterest expense, net income applicable to ~~our streamlining actions~~common shareholders of The Bank of New York Mellon Corporation, diluted earnings per share and ~~Operational Excellence Initiatives. Excluding~~ the ~~charges~~ effective tax rate, excluding the notable items

mentioned above, ~~permits~~are also provided. These measures are provided to permit investors to view ~~expenses~~financial measures on a basis consistent with how management views the business.

The presentation of ~~income from consolidated~~the growth rates of investment management ~~funds, net of net income attributable to noncontrolling interests related to the consolidation of certain investment management funds,~~and performance fees on a constant currency basis permits investors to ~~view revenue~~assess the significance of changes in foreign currency exchange rates. Growth rates on a constant currency basis ~~consistent with how management views~~were determined by applying the ~~business. BNY Mellon believes~~current period foreign currency exchange rates to the prior period revenue. We believe that ~~these presentations,~~this presentation, as a supplement to GAAP information, ~~give~~gives investors a clearer picture of the related revenue results without the variability caused by fluctuations in foreign currency exchange rates.

BNY Mellon has also included the adjusted pre-tax operating margin – Non-GAAP, which is the pre-tax operating margin for the Investment and Wealth Management business segment, net of ~~its primary businesses.~~distribution and servicing expense that was passed to third parties who distribute or service our managed funds. We believe that this measure is useful when evaluating the performance of the Investment and Wealth Management business segment relative to industry competitors.

~~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.~~

~~BNY Mellon 49~~

The following table presents the reconciliation of the ~~pre-tax operating margin ratio.~~

Pre-tax operating margin 3Q17
2Q17
3Q16
YTD17
YTD16
(dollars in millions)
Income before income taxes – GAAP $ 1,368
$ 1,308
$ 1,317
$ 3,882
$ 3,573
Less: Net income attributable to noncontrolling interests of consolidated investment management funds 3
3
9
24
6
Add: Amortization of intangible assets 52
53
61
157
177
M&I, litigation and restructuring charges 6
12
18
26
42
Recovery related to Sentinel —
—
(13 ) —
(13 )
Income before income taxes, as adjusted – Non-GAAP (a)
$ 1,423
$ 1,370
$ 1,374
$ 4,041
$ 3,773

Fee and other revenue – GAAP $ 3,167
$ 3,120
$ 3,150
$ 9,305
$ 9,119
Income from consolidated investment management funds – GAAP 10
10
17
53
21
Net interest revenue – GAAP 839
826
774
2,457
2,307
Total revenue – GAAP 4,016
3,956
3,941
11,815
11,447
Less: Net income attributable to noncontrolling interests of consolidated investment management funds 3
3
9
24
6
Total revenue, as adjusted – Non-GAAP (a)
$ 4,013
$ 3,953
$ 3,932
$ 11,791
$ 11,441

Pre-tax operating margin – GAAP (b)(c)
34 % 33 % 33 % 33 % 31 %
Adjusted pre-tax operating margin – Non-GAAP (a)(b)(c)
35 % 35 % 35 % 34 % 33 %


~~(a)~~	Non-GAAP information for all periods presented excludes the net income attributable to noncontrolling interests of consolidated investment management funds, amortization of intangible assets and M&I, litigation and restructuring charges. Non-GAAP information for the third quarter of 2016 and for the first nine months of 2016 also excludes a recovery of the previously impaired Sentinel loan.


~~(b)~~	~~Income before taxes divided by total revenue.~~

~~(c)~~

Our GAAP earnings include tax-advantaged investments such as low income housing, renewable energy, corporate/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 $102 million for the third quarter of 2017, $106 million for the second quarter of 2017, $74 million for the third quarter of 2016, $309 million for the first nine months of 2017 and $225 million for the first nine months of 2016 and would increase our pre-tax operating margin by approximately 1.6% for the third quarter of 2017, ~~1.8% for the second quarter of 2017, 1.2% for the third quarter of 2016, 1.7% for the first nine months of 2017 and 1.3% for the first nine months of 2016.~~

~~The following table presents the reconciliation of operating leverage.~~

Operating leverage 3Q17
2Q17
3Q16
3Q17 vs.
(dollars in millions) 2Q17
3Q16
Total revenue – GAAP $ 4,016
$ 3,956
$ 3,941
1.52 % 1.90 %
Less: Net income attributable to noncontrolling interests of consolidated investment management funds 3
3
9

Total revenue, as adjusted – Non-GAAP $ 4,013
$ 3,953
$ 3,932
1.52 % 2.06 %

Total noninterest expense – GAAP $ 2,654
$ 2,655
$ 2,643
(0.04 )% 0.42 %
Less: Amortization of intangible assets 52
53
61

M&I, litigation and restructuring charges 6
12
18

Total noninterest expense, as adjusted – Non-GAAP $ 2,596
$ 2,590
$ 2,564
0.23 % 1.25 %

Operating leverage – GAAP (a)
156 bps 148 bps
Adjusted operating leverage – Non-GAAP (a)(b)
129 bps 81 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 the 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.~~

~~50 BNY Mellon~~

~~The following table presents the reconciliation of the returns~~return on common equity and tangible common equity.


Return on common equity and tangible common equity reconciliation	3Q23			2Q23			3Q22			YTD23			YTD22
(dollars in millions)
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP	$	956		$	1,031		$	319		$	2,892		$	1,853
Add: Amortization of intangible assets	15			14			17			43			51
Less: Tax impact of amortization of intangible assets	3			4			4			10			12
Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets – Non-GAAP	$	968		$	1,041		$	332		$	2,925		$	1,892



Average common shareholders’ equity	$	35,983		$	35,769		$	35,942		$	35,787		$	36,483
Less: Average goodwill	16,237			16,219			17,189			16,206			17,341
Average intangible assets	2,875			2,888			2,922			2,887			2,950
Add: Deferred tax liability – tax deductible goodwill	1,197			1,193			1,175			1,197			1,175
Deferred tax liability – intangible assets	657			660			660			657			660
Average tangible common shareholders’ equity – Non-GAAP	$	18,725		$	18,515		$	17,666		$	18,548		$	18,027

Return on common equity (annualized) – GAAP	10.5		%	11.6		%	3.5		%	10.8		%	6.8		%

Return on tangible common equity (annualized) – Non-GAAP	20.5		%	22.6		%	7.5		%	21.1		%	14.0		%

BNY Mellon 43

Return on common equity and tangible common equity 3Q17
2Q17
3Q16
YTD17
YTD16
(dollars in millions)
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP $ 983
$ 926
$ 974
$ 2,789
$ 2,603
Add: Amortization of intangible assets 52
53
61
157
177
Less: Tax impact of amortization of intangible assets 17
19
21
54
62
Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation excluding amortization of intangible assets – Non-GAAP 1,018
960
1,014
2,892
2,718
Add: M&I, litigation and restructuring charges 6
12
18
26
42
Recovery related to Sentinel —
—
(13 ) —
(13 )
Less: Tax impact of M&I, litigation and restructuring charges —
3
5
5
13
Tax impact of recovery related to Sentinel —
—
(5 ) —
(5 )
Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, as adjusted – Non-GAAP (a)
$ 1,024
$ 969
$ 1,019
$ 2,913
$ 2,739

Average common shareholders’ equity $ 36,780
$ 35,862
$ 35,767
$ 35,876
$ 35,616
Less: Average goodwill 17,497
17,408
17,463
17,415
17,549
Average intangible assets 3,487
3,532
3,711
3,532
3,770
Add: Deferred tax liability – tax deductible goodwill (b)
1,561
1,542
1,477
1,561
1,477
Deferred tax liability – intangible assets (b)
1,092
1,095
1,116
1,092
1,116
Average tangible common shareholders’ equity – Non-GAAP $ 18,449
$ 17,559
$ 17,186
$ 17,582
$ 16,890

Return on common equity – GAAP (c)
10.6 % 10.4 % 10.8 % 10.4 % 9.8 %
Adjusted return on common equity – Non-GAAP (a)(c)
11.0 % 10.8 % 11.3 % 10.9 % 10.3 %

Return on tangible common equity – Non-GAAP (c)
21.9 % 21.9 % 23.5 % 22.0 % 21.5 %
Adjusted return on tangible common equity – Non-GAAP (a)(c)
22.0 % 22.1 % 23.6 % 22.1 % 21.7 %


~~(a)~~	Non-GAAP information for all periods presented excludes the amortization of intangible assets and M&I, litigation and restructuring charges. Non-GAAP information for the third quarter of 2016 and for the first nine months of 2016 also excludes a recovery of the previously impaired Sentinel loan.


~~(b)~~	~~Deferred tax liabilities are based on fully phased-in Basel III capital rules.~~


~~(c)~~	~~Quarterly returns are annualized.~~

The following table presents the reconciliation of book value and tangible book value per common share.


Book value and tangible book value per common share reconciliation	Sept. 30, 2023		June 30, 2023		Dec. 31, 2022		Sept. 30, 2022
(dollars in millions, except per share amounts and unless otherwise noted)
BNY Mellon shareholders’ equity at period end – GAAP	$	40,966	$	40,933	$	40,734	$	39,737
Less: Preferred stock	4,838		4,838		4,838		4,838
BNY Mellon common shareholders’ equity at period end – GAAP	36,128		36,095		35,896		34,899
Less: Goodwill	16,159		16,246		16,150		16,412
Intangible assets	2,859		2,881		2,901		2,902
Add: Deferred tax liability – tax deductible goodwill	1,197		1,193		1,181		1,175
Deferred tax liability – intangible assets	657		660		660		660
BNY Mellon tangible common shareholders’ equity at period end – Non-GAAP	$	18,964	$	18,821	$	18,686	$	17,420

Period-end common shares outstanding (in thousands)	769,073		778,782		808,445		808,280

Book value per common share – GAAP	$	46.98	$	46.35	$	44.40	$	43.18
Tangible book value per common share – Non-GAAP	$	24.66	$	24.17	$	23.11	$	21.55

Book value per common share Sept. 30, 2017
June 30,
2017
Dec. 31, 2016
Sept. 30, 2016
(dollars in millions, unless otherwise noted)
BNY Mellon shareholders’ equity at period end – GAAP $ 40,523
$ 39,974
$ 38,811
$ 39,695
Less: Preferred stock 3,542
3,542
3,542
3,542
BNY Mellon common shareholders’ equity at period end – GAAP 36,981
36,432
35,269
36,153
Less: Goodwill 17,543
17,457
17,316
17,449
Intangible assets 3,461
3,506
3,598
3,671
Add: Deferred tax liability – tax deductible goodwill (a)
1,561
1,542
1,497
1,477
Deferred tax liability – intangible assets (a)
1,092
1,095
1,105
1,116
BNY Mellon tangible common shareholders’ equity at period end – Non-GAAP $ 18,630
$ 18,106
$ 16,957
$ 17,626

Period-end common shares outstanding (in thousands)
1,024,022
1,033,156
1,047,488
1,057,337

Book value per common share – GAAP $ 36.11
$ 35.26
$ 33.67
$ 34.19
Tangible book value per common share – Non-GAAP $ 18.19
$ 17.53
$ 16.19
$ 16.67


~~(a)~~	~~Deferred tax liabilities are based on fully phased-in Basel III capital rules.~~

~~BNY Mellon 51~~

~~The following table presents income from consolidated investment management funds, net of noncontrolling interests.~~

Income from consolidated investment management funds, net of noncontrolling interests
YTD17
YTD16
(in millions) 3Q17
2Q17
3Q16
Income from consolidated investment management funds $ 10
$ 10
$ 17
$ 53
$ 21
Less: Net income attributable to noncontrolling interests of consolidated investment management funds 3
3
9
24
6
Income from consolidated investment management funds, net of noncontrolling interests $ 7
$ 7
$ 8
$ 29
$ 15

The following table presents the reconciliation of growth in total revenue, ~~line items in the Investment Management business impacted by the consolidated investment management funds.~~noninterest expense, net income applicable to common shareholders and diluted earnings per common share.


Reconciliation of Non-GAAP measures, excluding notable items												YTD23
						3Q23 vs.						vs.
(dollars in millions, except per share amounts)	3Q23		3Q22			3Q22		YTD23		YTD22		YTD22
Total revenue – GAAP	$	4,374	$	4,279		2	%
Less: Disposal gain (reflected in investment and other revenue)	2		37
Adjusted total revenue – Non-GAAP	$	4,372	$	4,242		3	%

Noninterest expense – GAAP	$	3,089	$	3,679		(16)	%	$	9,300	$	9,797	(5)	%
Less: Severance	41		32					67		32
Litigation reserves	5		2					46		105
Goodwill impairment	—		680					—		680
Adjusted noninterest expense – Non-GAAP	$	3,043	$	2,965		3	%	$	9,187	$	8,980	2	%





Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP	$	956	$	319		200	%
Less: Disposal gain (reflected in investment and other revenue)	—		28
Less: Severance	(32)		(25)
Litigation reserves	(4)		(2)
Goodwill impairment	—		(665)
Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation – Non-GAAP	$	992	$	983		1	%


Diluted earnings per common share	$	1.22	$	0.39		213	%
Less: Disposal gain (loss) (reflected in investment and other revenue)	—		0.03
Less: Severance	(0.04)		(0.03)
Litigation reserves	(0.01)		—
Goodwill impairment	—		(0.82)
Total diluted earnings per share common share impact of notable items	(0.05)		(0.81)		(a)
Adjusted diluted earnings per common share – Non-GAAP	$	1.27	$	1.21		5	%

(a) Does not foot due to rounding.

44 BNY Mellon

Income from consolidated investment management funds, net of noncontrolling interests - Investment Management business
(in millions) 3Q17
2Q17
1Q17
4Q16
3Q16
YTD17
YTD16
Investment management fees $ 1
$ 2
$ 2
$ 4
$ 2
$ 5
$ 7
Other (Investment income (loss)) 6
5
13
(3 ) 6
24
8
Income from consolidated investment management funds, net of noncontrolling interests $ 7
$ 7
$ 15
$ 1
$ 8
$ 29
$ 15

The following table presents the reconciliation of the effective tax rate.


Effective tax rate reconciliation
(dollars in millions)	3Q22
Provision for income taxes – GAAP	$	242
Less: Disposal gain (reflected in investment and other revenue)	9
Less: Severance	(7)
Litigation reserves	—
Goodwill impairment	(15)
Adjusted provision for income taxes – Non-GAAP	$	255

Income before taxes – GAAP	$	630
Less: Disposal gain (reflected in investment and other revenue)	37
Less: Severance	(32)
Litigation reserves	(2)
Goodwill impairment	(680)
Adjusted income before taxes – Non-GAAP	$	1,307

Effective tax rate – GAAP	38.4		%
Adjusted effective tax rate – Non-GAAP	19.5		%

The following table presents the impact of changes in foreign currency exchange rates on our consolidated investment management and performance fees.


Constant currency reconciliation – Consolidated					3Q23 vs.
(dollars in millions)	3Q23		3Q22		3Q22
Investment management and performance fees – GAAP	$	777	$	800	(3)	%
Impact of changes in foreign currency exchange rates	—		15
Adjusted investment management and performance fees – Non-GAAP	$	777	$	815	(5)	%

The following table presents the impact of changes in foreign currency exchange rates on investment management and performance fees reported in the Investment and Wealth Management business segment.


Constant currency reconciliation – Investment and Wealth Management business segment					3Q23 vs.
(dollars in millions)	3Q23		3Q22		3Q22
Investment management and performance fees – GAAP	$	776	$	798	(3)	%
Impact of changes in foreign currency exchange rates	—		15
Adjusted investment management and performance fees – Non-GAAP	$	776	$	813	(5)	%

BNY Mellon 45

The following tables present the reconciliations of noninterest expense, income before income taxes and the pre-tax operating margin for the Investment and Wealth Management ~~business.~~business segment.


Reconciliation of Non-GAAP measures – Investment and Wealth Management business segment
						3Q23 vs.
(dollars in millions)	3Q23		3Q22			3Q22		YTD22
Noninterest expense – GAAP	$	672	$	1,356				$	2,802
Less: Severance	5		(1)					(1)
Goodwill impairment	—		680					680
Adjusted noninterest expense – Non-GAAP	$	667	$	677				$	2,123

Income (loss) before income taxes – GAAP	$	164	$	(497)		N/M		$	(77)
Less: Severance	(5)		1					1
Goodwill impairment	—		(680)					(680)
Adjusted income before income taxes – Non-GAAP	$	169	$	182		(7)	%	$	602

Total revenue – GAAP			$	862				$	2,725
Less: Distribution and servicing expense			88					258
Adjusted total revenue, net of distribution and servicing expense – Non-GAAP			$	774				$	2,467

Pre-tax operating margin – GAAP (a)			(57)		%			(3)		%
Adjusted pre-tax operating margin, net of distribution and servicing expense – Non-GAAP (a)			(64)		%			(3)		%
Adjusted pre-tax operating margin, net of distribution and servicing expense and excluding notable items – Non-GAAP (a)			24		%			24		%

(a) Income before income taxes divided by total revenue.


Pre-tax operating margin reconciliation – Investment and Wealth Management business segment
(dollars in millions)	3Q23			2Q23			1Q23			4Q22			YTD23
Income before income taxes – GAAP	$	164		$	129		$	93		$	125		$	386

Total revenue – GAAP	$	827		$	813		$	827		$	825		$	2,467
Less: Distribution and servicing expense	87			93			86			87			266
Adjusted total revenue, net of distribution and servicing expense – Non-GAAP	$	740		$	720		$	741		$	738		$	2,201

Pre-tax operating margin – GAAP (a)	20		%	16		%	11		%	15		%	16		%
Adjusted pre-tax operating margin, net of distribution and servicing expense – Non-GAAP (a)	22		%	18		%	13		%	17		%	18		%

(a) Income before income taxes divided by total revenue.

46 BNY Mellon

Pre-tax operating margin - Investment Management business
(dollars in millions) 3Q17
2Q17
1Q17
4Q16
3Q16
YTD17
YTD16
Income before income taxes – GAAP $ 300
$ 288
$ 277
$ 260
$ 256
$ 865
$ 707
Add: Amortization of intangible assets 15
15
15
22
22
45
60
Provision for credit losses (2 ) —
3
6
—
1
—
Adjusted income before income taxes, excluding amortization of intangible assets and provision for credit losses – Non-GAAP $ 313
$ 303
$ 295
$ 288
$ 278
$ 911
$ 767

Total revenue – GAAP $ 1,000
$ 986
$ 963
$ 960
$ 958
$ 2,949
$ 2,791
Less: Distribution and servicing expense
110
104
101
98
104
315
306
Adjusted total revenue, net of distribution and servicing expense – Non-GAAP $ 890
$ 882
$ 862
$ 862
$ 854
$ 2,634
$ 2,485

Pre-tax operating margin – GAAP (a)
30 % 29 % 29 % 27 % 27 % 29 % 25 %
Adjusted pre-tax operating margin, excluding amortization of intangible assets, provision for credit losses and distribution and servicing expense – Non-GAAP (a)
35 % 34 % 34 % 33 % 33 % 35 % 31 %


~~(a)~~	~~Income before taxes divided by total revenue.~~

~~52 BNY Mellon~~

Recent accounting and regulatory developments

~~Recently issued~~Recent accounting ~~standards~~developments

The following ~~Accounting Standards Updates (“ASUs”)~~accounting guidance issued by the Financial Accounting Standards Board (“FASB”) ~~have~~has not yet been ~~adopted.~~adopted as of Sept. 30, 2023.

~~ASU 2017-12, Derivatives~~Accounting Standards Update (“ASU”) 2023-02, Investments—Equity Method and ~~Hedging: Targeted Improvements to~~Joint Ventures (Topic 323): Accounting for ~~Hedging Activities~~Investments in Tax Credit Structures Using the Proportional Amortization Method

In ~~August 2017,~~March 2023, the FASB issued an ASU ~~Derivatives and Hedging: Targeted Improvements to~~ 2023-02, Accounting for ~~Hedging Activities. The objective of this ASU is~~Investments in Tax Credit Structures Using the Proportional Amortization Method, which permits reporting entities to ~~improve the financial reporting of hedging relationships~~elect to ~~better portray the economic results of an entity’s risk management activities and to simplify the application of hedge accounting guidance.~~

~~The most significant impact~~account for their tax equity investments, regardless of the ~~new guidance~~tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the ~~Company relates to~~income tax credits and other income tax benefits received, and recognizes the ~~new accounting alternatives for fair value hedges of interest rate risk, specifically,~~net amortization and income tax credits and other income tax benefits in the ~~ability to hedge only the benchmark~~income statement as a component of the ~~contractual cash flows, partial-term hedging and the introduction of the “last of layer” method~~provision for hedges of portfolios of prepayable financial assets. The guidance also changed presentation and disclosure requirements and made changes to how the shortcut method is applied which may result in the Company using that method going forward for certain hedging relationships.income taxes.

This ASU is effective ~~for the first quarter of 2019,~~Jan. 1, 2024 with early adoption permitted. Certain transition elections are available including the ability to reclassify a debt security from held-to-maturity to available-for-sale if it is eligible to be hedged under the last of layer method with any unrealized gain or loss at the transfer date being recorded in other comprehensive income. If this ASU is adopted early, the new guidance will be applicable as of the beginning of that year. BNY Mellon is currently ~~assessing~~evaluating this guidance with respect to our investments in renewable energy projects, which historically have not been eligible to apply the ~~impacts~~proportional amortization method. These investments currently generate losses in investment and other revenue that are more than offset by benefits and credits recorded to the provision for income taxes. The impact of adopting this new guidance for our renewable energy investments that meet the ~~new standard.~~

~~ASU 2017-07, Compensation-Retirement Benefits - Improving the Presentation of Net Periodic Pension Cost~~eligibility criteria would be an increase in investment and ~~Net Periodic Postretirement Benefit Cost~~

~~In March 2017, the FASB issued~~other revenue and an ~~ASU,~~ ~~Compensation-Retirement Benefits - Improving the~~

~~Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The ASU requires the disaggregation of the service cost component from the other components of the net benefit cost~~increase in the provision for income statement. The ASU also permits only the service cost component of net benefit cost to be eligible for capitalization. The ASU is effective for the first quarter of 2018, with early adoption permitted. The guidance in this ASU should be applied retrospectively for the presentation of the service cost component and the other components in the income statement, and prospectively for the capitalization of the service cost component in assets. BNY Mellon is assessing the impacts of the new standard. For informationtaxes on the components of our pension and post-retirement health plan costs, see Note 9 of the Notes to Consolidated Financial Statements in this Form 10-Q and Note 16 of the Notes to Consolidated Financial Statements in our 2016 Annual Report. To the extent that our recent trend of having a net credit for pension and other post-retirement costs continues, the standard will result in an increase to staff expense and a reduction in other expense. consolidated income statement.

~~ASU 2016-18, Statement of Cash Flows~~ – ~~Restricted Cash~~

~~In November 2016, the FASB issued an ASU,~~ ~~Statement of Cash Flows – Restricted Cash~~. This ASU provides guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flows and is effective for the first quarter of 2018. Earlier application is permitted. BNY Mellon is assessing the impacts of the new standard, and expects to include restricted cash (which totaled $4 billion as of Sept. 30, 2017) with cash and due from banks when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.

~~ASU 2016-15, Statement of Cash Flows~~ – ~~Classification of Certain Cash Receipts and Cash Payments~~

~~In August 2016, the FASB issued an ASU,~~ ~~Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments~~. This ASU provides guidance on eight specific cash flow presentation issues and is effective for the first quarter of 2018. Earlier application is permitted, however all of the amendments must be adopted in the same period. BNY Mellon is assessing the impacts of the new

~~BNY Mellon 53~~

~~standard, and does not expect this ASU to materially affect the results of operations or financial condition.~~

~~ASU 2016-13, Financial Instruments~~ – ~~Credit Losses~~

~~In June 2016, the FASB issued an ASU,~~ ~~Financial Instruments – Credit Losses~~. This ASU introduces a new current expected credit losses model, which will apply to financial assets subject to credit losses and measured at amortized cost, including held-to-maturity securities and certain off-balance sheet credit exposures. The guidance will also change current practice for the impairment model for available-for-sale debt securities. The available-for-sale debt securities model will require the use of an allowance to record estimated credit losses and subsequent recoveries. This ASU is effective for the first quarter of 2020. Earlier application is permitted beginning with the first quarter of 2019. BNY Mellon has begun its implementation efforts and is currently identifying key interpretive issues, and will assess existing credit loss forecasting models and processes against the new guidance to determine what modifications may be required. The extent of the impact to our financial statements upon adoption depends on several factors including the remaining expected life of financial instruments at the time of adoption, the establishment of an allowance for expected credit loss on held-to-maturity securities, and the macroeconomic conditions and forecasts that exist at that date.

~~ASU 2014-09, Revenue from Contracts with Customers~~

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~. This ASU, as amended, provides guidance on the recognition of revenue related to the transfer of promised goods or services to customers, guidance on accounting for certain contract costs and additional disclosure requirements about revenue and contract costs. The standard supersedes most existing revenue recognition guidance and is effective for the first quarter of 2018 using either the retrospective or cumulative effect transition method upon adoption.

The Company has completed its evaluation of the potential impact of this guidance on our accounting policies, and based on that evaluation, the timing of most of our revenue recognition will remain the same and the impacts will not be material. The impacts primarily relate to deferring and amortizing certain

sales commission costs related to obtaining customer contracts and the timing of recognizing the contra revenue related to certain payments made to customers. The Company plans to adopt the guidance as of Jan. 1, 2018 using the cumulative effect transition method. The Company is currently developing the disclosures required about revenue and contract costs and finalizing changes to internal control.

~~ASU 2016-02, Leases~~

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~. The primary objective of this ASU is to increase transparency and comparability by recognizing lease assets and liabilities on the balance sheet and expand related disclosures. ASU 2016-02 requires a “right-of-use” asset and a payment obligation liability on the balance sheet for most leases and subleases. Additionally, depending on the lease classification under the standard, it may result in different expense recognition patterns and classification than under existing accounting principles. For leases classified as finance leases, it will result in higher expense recognition in the earlier periods and lower expense in the later periods of the lease.

The standard is effective for the first quarter of 2019, with early adoption permitted. We will utilize the modified retrospective transition approach as of the beginning of the earliest period presented, which will result in a cumulative effect recorded in the earliest period presented. Additionally, the standard allows for various optional practical expedients to assist with the implementation and reporting requirements. We are currently evaluating the potential impact of the leasing standard on our consolidated financial statements and evaluating the practical expedients that may be elected. Upon adoption, the implementation of the leasing standard is expected to result in an immaterial increase in both assets and liabilities.

~~ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities~~

~~In January 2016, the FASB issued ASU 2016-01,~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities. The ASU requires investments in equity securities that do not result in consolidation and are not accounted for under the equity method to be measured at fair value with~~

~~54 BNY Mellon~~

changes in the fair value recognized through net income, unless one of two available exceptions apply. The first exception, a scope exception, allows Federal Reserve Bank stock, FHLB stock and other exchange memberships held by broker dealers to remain accounted for at cost, less impairment. The second exception, a practicability exception, will be available for equity investments that do not have readily determinable fair values and do not qualify for the practical expedient to estimate fair value under ASC 820, ~~Fair Value Measurement. To the extent the practicability exception applies, such investments will be accounted for at cost adjusted for impairment, if any, plus or minus changes from observable price changes.~~

The amendments also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from the entity’s “own credit risk” when the entity has elected to measure the liability at fair value. The amendments also eliminate the requirement to disclose the methods and significant assumptions used to estimate the fair values of financial instruments measured at amortized cost that are on the balance sheet.

The Company plans to adopt this guidance in the first quarter of 2018 using the cumulative effect method of adoption. BNY Mellon does not expect the adoption of this ASU to have a material impact to the financial statements.

Recent regulatory and other developments

For a summary of additional regulatory matters relevant to our operations, see ~~Supervision and Regulation~~“Recent regulatory developments” in our ~~2016~~Form 10-Q for the quarters ended March 31, 2023 and June 30, 2023, and “Supervision and Regulation” in our 2022 Annual ~~Report.~~

~~Final Rule on Qualified Financial Contracts~~

Report. The following discussion summarizes certain regulatory, legislative and other developments that may affect BNY Mellon.

Federal Deposit Insurance Corporation (“FDIC”) Special Assessment

On ~~Sept.~~May 11, 2023, the FDIC proposed a rule to impose a special assessment on insured depository institutions (“IDIs”) to recover losses to the Deposit Insurance Fund (“DIF”) associated with the closures of Silicon Valley Bank and Signature Bank. Under the proposal, the FDIC would collect from each IDI a special assessment at an annual rate of approximately 12.5 basis points of the IDI’s estimated uninsured deposits (excluding the first $5 billion of estimated uninsured deposits), as of Dec. 31, 2022. For an IDI that is part of a holding company containing multiple IDIs, the $5 billion deduction would be apportioned based on the IDI’s estimated uninsured deposits as a percentage of total estimated uninsured deposits held by all IDI affiliates in the consolidated banking organization. The special assessment would be collected during an initial special assessment period of eight quarters, with the first quarterly assessment period beginning on Jan. 1, ~~2017,~~2024, subject to potential extension and a potential one-time final special assessment for any shortfall to the DIF. If the assessment is finalized as proposed, we estimate a noninterest expense of approximately $470 million to be recorded in the quarter in which the rule is finalized, which would significantly affect the results of operations for that quarter.

U.S. Regulatory Capital Requirements

On July 27, 2023, the Federal Reserve, adopted a final rule to require U.S. global systemically important banking organizations (“G-SIBs”) and the U.S. operations of foreign G-SIBs to amend their covered qualified financial contracts (“QFCs”). The FDIC adopted a substantially equivalent proposal on Oct. 30, 2017 and the Office of the Comptroller of the Currency ~~is expected~~and the Federal Deposit Insurance Corporation proposed substantial revisions to ~~do so~~the capital requirements applicable to large banking organizations and to banking organizations with significant trading activity, including BNY Mellon. The proposed revisions would implement international capital standards issued by the Basel Committee on Banking Supervision in December 2017 to finalize the ~~near future. QFCs generally include derivatives, repurchase agreements and securities lending arrangements, among others.~~Basel III reforms, as well as the Basel Committee’s revised standard for market risk capital requirements finalized in February 2019. In addition, on July 27, 2023, the Federal Reserve proposed amendments to its rule regarding risk-based capital surcharges for GSIBs, including BNY Mellon. The ~~final rule includes two key requirements. First,~~period to submit comments on the ~~final rule generally requires~~proposals has been extended to Jan.

BNY Mellon 47

~~that QFCs~~

16, 2024. We continue to assess the potential impact of the proposals.

European Central Bank (“ECB”) remuneration on minimum reserves

On July 27, 2023, the Governing Council of the ECB established 0% as the remuneration of minimum reserves credit institutions are required to hold with their Eurosystem national central bank on average over a maintenance period. The change became effective as of the beginning of the reserve maintenance period starting Sept. 20, 2023.

FDIC Long-Term Debt and Clean Holding Company Requirements

On Aug. 29, 2023, the Federal Reserve proposed amendments to its total loss-absorbing capacity (“TLAC”) rule applicable to G-SIBs, including BNY Mellon. Among other requirements, the proposal would (i) require a $400,000 minimum denomination for newly issued long-term debt of G-SIBs ~~explicitly provide that any resolution stays applicable~~used to satisfy TLAC and long-term debt requirements and (ii) subject to notice and comment procedures, require a G-SIB to maintain an amount of eligible TLAC or long-term debt instruments greater or less than generally required under the ~~exercise~~rule. The proposal would also exempt certain agreements from the scope of ~~default rights~~the TLAC rule’s clean holding company prohibitions with respect to such QFCs and to any resolution transfers under U.S. special resolution regimes apply to such covered QFCs. Second, the final rule requires that QFCs of G-SIBs be amended to neither permit the exercise of default or cross-default rights against entities covered by the final rule basedqualified financial contracts with third parties. Comments on the ~~resolution or bankruptcy of an affiliate of such entities, nor allow for any transfer restrictions with respect to such QFCs.~~

~~The final~~proposed rule ~~allows G-SIBs to comply with~~are due by Nov. 30, 2023. We are evaluating the rule by adhering to the International Swaps and Derivatives Association 2015 Universal Resolution Stay Protocol (the “Protocol”) or a similar protocol that accomplishes the contractual amendments required by the rule. BNY Mellon entities that engage in QFC activities covered by the Protocol have adhered to the Protocol. Compliance with the Federal Reserve’s final rule will be required on a phased-in basis beginning on Jan. 1, 2019. BNY Mellon is evaluating thepotential impact of the ~~new regulations~~proposed rule.

FDIC Resolution Planning for Large Banks

On Aug. 29, 2023, the FDIC proposed revisions to the resolution plan rule applicable to covered IDIs. The proposed amendment would expand certain IDI resolution plan content requirements, adjust the frequency of resolution plan submissions from a 3-year cycle to a 2-year cycle, and require supplemental submissions of information in the interim period between filing years. Comments on ~~its activities.~~the proposed rule are due by Nov. 30, 2023. We are evaluating the potential impact of the proposed rule.

~~Resolution plan~~SEC Naming Convention Rules for Funds

~~As required~~On Sept. 20, 2023, the SEC adopted amendments expanding the scope of terms that the SEC considers materially deceptive and misleading in a fund’s name

without a corresponding policy and related controls to invest at least 80% of the fund’s net asset value (plus certain borrowings) in the manner suggested by the ~~Dodd-Frank~~fund’s name (“80% Policy”), including names that reference “growth” or “value,” or a name indicating that investment decisions incorporate any environmental, social and governance factors. The amendments will become effective 60 days after publication in the Federal Register and fund groups will have either 24 months or 30 months to come into compliance, depending upon their net asset size.

SEC Money Market Fund Reforms

On July 12, 2023, the SEC adopted amendments to rules that govern money market funds. The amendments became effective Oct. 2, 2023, with tiered compliance dates. The amendments include, among other things: (i) a mandatory liquidity fee for institutional prime and institutional tax-exempt money market funds, which will apply when a fund experiences daily net redemptions that exceed 5% of net assets (effective Oct. 2, 2023); (ii) maintenance of a fund board’s ability to impose liquidity fees (not to exceed 2% of the value of the shares redeemed) on a discretionary basis for non-government money market funds (effective April 2, 2024), (iii) substantially increasing the required minimum levels of daily and weekly liquid assets for all money market funds from 10% and 30%, to 25% and 50%, respectively (effective April 2, 2024), and (iv) removal of a money market fund’s ability to impose temporary “gates” to suspend redemptions in order to prevent dilution and remove the link between a money market fund’s liquidity level and its imposition of liquidity fees (effective Oct. 2, 2023).

California Climate Disclosure Laws

On Oct. 7, 2023, California enacted three climate-related bills imposing extensive new climate-related disclosure obligations applicable to companies doing business in California. The Climate Corporate Data Accountability Act (SB 253) requires covered companies with total annual revenues of $1 billion or more to disclose annually their Scope 1 (owned and controlled sources) and Scope 2 (from energy purchased and used) greenhouse gas emissions beginning in 2026, and Scope 3 (up and down value chain) greenhouse gas emissions beginning in 2027. The Climate-Related Financial Risk Act (SB 261) requires covered companies with total annual revenues of $500 million or more to publish biennial

48 BNY Mellon ~~must submit annually~~

reports disclosing climate-related financial risks and the measures adopted to mitigate the disclosed risks by Jan. 1, 2026. The Voluntary Carbon Market Disclosures Act (AB 1305), effective Jan. 1, 2024, requires companies making certain claims, including regarding carbon neutrality or reduction of greenhouse gas emissions, and companies purchasing carbon offsets in addition to making such claims, to disclose information on the determination of accuracy of the claim, interim progress measures, third-party verification and, if applicable, information on the carbon offsets purchased and emissions data. The laws may be modified by future legislation. We are assessing the potential impact of the climate disclosure laws.

Federal Reserve Novel Activities Supervisory Program

On Aug. 8, 2023, the Federal Reserve issued a Supervision and Regulation Letter (SR 23-7) announcing the ~~FDIC a plan for~~establishment of its ~~rapid~~Novel Activities Supervision Program (“NAS Program”) to complement its existing supervision and ~~orderly resolution in~~oversight of supervised banking organizations, including BNY Mellon. The NAS Program will encompass risk-based monitoring and examination and focus on novel activities related to crypto-assets, distributed ledger technology, and complex, technology-driven partnerships with nonbank providers of banking products and services to customers. We are evaluating the ~~event~~potential impact of ~~material financial distress or failure. BNY Mellon filed its most recent resolution plan on July 1, 2017. We believe~~ the 2017 resolution plan addresses all shortcomings and deficiencies identified by the FDIC and the Federal Reserve in the Company’s 2015 resolution plan. The public portion of our 2017 resolution plan is available on the Federal Reserve’s and FDIC’s websites.NAS Program.

~~In September 2017, the Federal Reserve and FDIC extended the filing deadline by one year to July 1, 2019 for the Parent’s next resolution plan.~~

~~BNY Mellon 55~~

Website information

Our website is ~~www.bnymellon.com~~.www.bnymellon.com. We currently make available the following information under the Investor Relations portion of our website. With respect to ~~SEC~~ filings with the Securities and Exchange Commission (“SEC”), we post such information as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the SEC.

•All of our SEC filings, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to these reports, as well as proxy statements and SEC Forms 3, 4 and ~~5 and any proxy statement mailed by us in connection with the solicitation of proxies;~~5;

~~Financial statements and footnotes prepared using eXtensible Business Reporting Language (“XBRL”);~~

•Our earnings materials and selected management conference calls and presentations;

•Other regulatory disclosures, including: Pillar 3 Disclosures (and Market Risk Disclosure contained therein); Liquidity Coverage Ratio Disclosures; Net Stable Funding Ratio Disclosures; Federal Financial Institutions Examination Council -– Consolidated Reports of Condition and Income for a Bank With Domestic and Foreign Offices; Consolidated Financial Statements for Bank Holding Companies; and the Dodd-Frank Act Stress Test Results for BNY Mellon and The Bank of New York Mellon; and

•Our Corporate Governance Guidelines, Amended and Restated ~~By-laws, Directors~~By-Laws, Directors’ Code of Conduct and the Charters of the Audit, Finance, Corporate Governance, ~~and~~ Nominating ~~Corporate~~and Social Responsibility, Human Resources and Compensation, Risk and Technology Committees of our Board of Directors.

We may use our website, our X (formerly known as Twitter) account (@BNYMellon) and other social media channels as additional means of disclosing information to the public. The information disclosed through those channels may be considered to be material. The contents of ~~the~~our website ~~listed above~~ or ~~any other websites~~social media channels referenced herein are not incorporated by reference into this Quarterly Report on Form 10-Q.

BNY Mellon 49

~~56 BNY Mellon~~



Item 1. Financial Statements

The Bank of New York Mellon Corporation (and its subsidiaries)

Consolidated Income Statement (unaudited)


	Quarter ended						Year-to-date
	Sept. 30, 2023		June 30, 2023		Sept. 30, 2022		Sept. 30, 2023		Sept. 30, 2022
(in millions)
Fee and other revenue
Investment services fees	$	2,230	$	2,252	$	2,157	$	6,601	$	6,356
Investment management and performance fees	777		762		800		2,315		2,516
Foreign exchange revenue	154		158		203		488		632
Financing-related fees	45		50		43		147		132
Distribution and servicing fees	39		35		33		107		97
Total fee revenue	3,245		3,257		3,236		9,658		9,733
Investment and other revenue	113		97		117		289		278
Total fee and other revenue	3,358		3,354		3,353		9,947		10,011
Net interest revenue
Interest revenue	5,519		5,224		1,984		14,685		3,921
Interest expense	4,503		4,124		1,058		11,441		1,473
Net interest revenue	1,016		1,100		926		3,244		2,448
Total revenue	4,374		4,454		4,279		13,191		12,459
Provision for credit losses	3		5		(30)		35		19
Noninterest expense
Staff	1,755		1,718		1,673		5,264		4,998
Software and equipment	452		450		421		1,331		1,225
Professional, legal and other purchased services	368		378		363		1,121		1,112
Net occupancy	140		121		124		380		371
Sub-custodian and clearing	121		119		124		358		373
Distribution and servicing	87		93		88		265		257
Business development	36		47		34		122		107
Bank assessment charges	37		41		35		118		107
Goodwill impairment	—		—		680		—		680
Amortization of intangible assets	15		14		17		43		51
Other	78		130		120		298		516
Total noninterest expense	3,089		3,111		3,679		9,300		9,797
Income
Income before income taxes	1,282		1,338		630		3,856		2,643
Provision for income taxes	241		270		242		771		626
Net income	1,041		1,068		388		3,085		2,017
Net (income) loss attributable to noncontrolling interests related to consolidated investment management funds	(3)		(1)		—		(4)		13
Net income applicable to shareholders of The Bank of New York Mellon Corporation	1,038		1,067		388		3,081		2,030
Preferred stock dividends	(82)		(36)		(69)		(189)		(177)
Net income applicable to common shareholders of The Bank of New York Mellon Corporation	$	956	$	1,031	$	319	$	2,892	$	1,853

50 BNY Mellon

Quarter ended Year-to-date
Sept. 30, 2017
June 30, 2017
Sept. 30, 2016
Sept. 30, 2017
Sept. 30, 2016
(in millions)
Fee and other revenue
Investment services fees:
Asset servicing $ 1,105
$ 1,085
$ 1,067
$ 3,253
$ 3,176
Clearing services 383
394
349
1,153
1,049
Issuer services 288
241
337
780
815
Treasury services 141
140
137
420
407
Total investment services fees 1,917
1,860
1,890
5,606
5,447
Investment management and performance fees 901
879
860
2,622
2,502
Foreign exchange and other trading revenue 173
165
183
502
540
Financing-related fees 54
53
58
162
169
Distribution and servicing 40
41
43
122
125
Investment and other income 63
122
92
262
271
Total fee revenue 3,148
3,120
3,126
9,276
9,054
Net securities gains — including other-than-temporary impairment 18
—
27
28
67
Noncredit-related portion of other-than-temporary impairment
(recognized in other comprehensive income)
(1 ) —
3
(1 ) 2
Net securities gains 19
—
24
29
65
Total fee and other revenue 3,167
3,120
3,150
9,305
9,119
Operations of consolidated investment management funds
Investment income 10
10
20
57
27
Interest of investment management fund note holders —
—
3
4
6
Income from consolidated investment management funds 10
10
17
53
21
Net interest revenue
Interest revenue 1,151
1,052
874
3,163
2,647
Interest expense 312
226
100
706
340
Net interest revenue 839
826
774
2,457
2,307
Total revenue 4,016
3,956
3,941
11,815
11,447
Provision for credit losses (6 ) (7 ) (19 ) (18 ) (18 )
Noninterest expense
Staff 1,469
1,417
1,467
4,358
4,338
Professional, legal and other purchased services 305
319
292
936
860
Software 175
173
156
514
470
Net occupancy 141
139
143
416
437
Distribution and servicing 109
104
105
313
307
Sub-custodian 62
65
59
191
188
Furniture and equipment 58
59
59
174
187
Bank assessment charges (a)
51
59
61
167
166
Business development 49
63
52
163
174
Other (a)
177
192
170
536
546
Amortization of intangible assets 52
53
61
157
177
Merger and integration, litigation and restructuring charges 6
12
18
26
42
Total noninterest expense 2,654
2,655
2,643
7,951
7,892
Income
Income before income taxes 1,368
1,308
1,317
3,882
3,573
Provision for income taxes 348
332
324
949
897
Net income 1,020
976
993
2,933
2,676
Net (income) loss attributable to noncontrolling interests (includes $(3), $(3), $(9), $(24) and $(6) related to consolidated investment management funds, respectively) (2 ) (1 ) (6 ) (18 ) 1
Net income applicable to shareholders of The Bank of New York Mellon Corporation 1,018
975
987
2,915
2,677
Preferred stock dividends (35 ) (49 ) (13 ) (126 ) (74 )
Net income applicable to common shareholders of The Bank of New York Mellon Corporation $ 983
$ 926
$ 974
$ 2,789
$ 2,603


~~(a)~~			In the first quarter of 2017, we began disclosing bank assessment charges on a quarterly basis. The bank assessment charges were previously included in other expense. All prior periods were reclassified.

~~BNY Mellon 57~~

The Bank of New York Mellon Corporation (and its subsidiaries)

Consolidated Income Statement (unaudited)(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
	Sept. 30, 2023		June 30, 2023		Sept. 30, 2022		Sept. 30, 2023		Sept. 30, 2022
(in millions)	Sept. 30, 2023		June 30, 2023		Sept. 30, 2022		Sept. 30, 2023		Sept. 30, 2022
Net income applicable to common shareholders of The Bank of New York Mellon Corporation	$	956	$	1,031	$	319	$	2,892	$	1,853
Less: Earnings allocated to participating securities	—		—		—		—		—
Net income applicable to common shareholders of The Bank of New York Mellon Corporation after required adjustment for the calculation of basic and diluted earnings per common share	$	956	$	1,031	$	319	$	2,892	$	1,853

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
Sept. 30, 2017
June 30, 2017
Sept. 30, 2016
Sept. 30, 2017
Sept. 30, 2016
(in millions)
Net income applicable to common shareholders of The Bank of New York Mellon Corporation $ 983
$ 926
$ 974
$ 2,789
$ 2,603
Less: Earnings allocated to participating securities (a)
8
13
15
35
39
Net income applicable to common shareholders of The Bank of New York Mellon Corporation after required adjustment for the calculation of basic and diluted earnings per common share $ 975
$ 913
$ 959

$ 2,754
$ 2,564


Average common shares and equivalents outstanding of The Bank of New York Mellon Corporation	Quarter ended			Year-to-date
	Sept. 30, 2023	June 30, 2023	Sept. 30, 2022	Sept. 30, 2023	Sept. 30, 2022
(in thousands)
Basic	777,813	787,718	811,304	789,609	810,703
Common stock equivalents	4,058	3,097	3,311	3,848	3,713
Less: Participating securities	(90)	(90)	(99)	(93)	(202)
Diluted	781,781	790,725	814,516	793,364	814,214

Anti-dilutive securities (a)	1,305	7,059	3,306	5,559	3,294

(a) Represents stock options, restricted stock, restricted stock units and participating securities outstanding but not included in the computation of diluted average common shares because their effect would be anti-dilutive.

Average common shares and equivalents outstanding of The Bank of New York Mellon Corporation (a)
Quarter ended Year-to-date
Sept. 30, 2017
June 30, 2017
Sept. 30, 2016
Sept. 30, 2017
Sept. 30, 2016
(in thousands)
Basic 1,035,337
1,035,829
1,062,248
1,037,431
1,071,457
Common stock equivalents 9,226
15,598
15,406
14,216
15,306
Less: Participating securities (3,425 ) (9,548 ) (9,972 ) (8,062 ) (9,613 )
Diluted 1,041,138
1,041,879
1,067,682
1,043,585
1,077,150

Anti-dilutive securities (b)
8,059
16,256
32,232
13,906
32,699


Earnings per share applicable to common shareholders of The Bank of New York Mellon Corporation	Quarter ended						Year-to-date
	Sept. 30, 2023		June 30, 2023		Sept. 30, 2022		Sept. 30, 2023		Sept. 30, 2022
(in dollars)	Sept. 30, 2023		June 30, 2023		Sept. 30, 2022		Sept. 30, 2023		Sept. 30, 2022
Basic	$	1.23	$	1.31	$	0.39	$	3.66	$	2.29
Diluted	$	1.22	$	1.30	$	0.39	$	3.65	$	2.28

Earnings per share applicable to common shareholders of The Bank of New York Mellon Corporation (c)
Quarter ended Year-to-date
Sept. 30, 2017
June 30, 2017
Sept. 30, 2016
Sept. 30, 2017
Sept. 30, 2016
(in dollars)
Basic $ 0.94
$ 0.88
$ 0.90
$ 2.66
$ 2.39
Diluted $ 0.94
$ 0.88
$ 0.90
$ 2.64
$ 2.38

~~(a)~~

Beginning in the third quarter of 2017, vested stock awards to retirement eligible employees are included in common shares outstanding for earnings per share purposes. This change increased both average basic and average diluted shares outstanding by approximately 6 million and reduced earnings allocated to participating securities by $6 million for the quarter, which resulted in a de minimis impact to both basic and diluted earnings per share.


~~(b)~~	Represents stock options, restricted stock, restricted stock units and participating securities outstanding but not included in the computation of diluted average common shares because their effect would be anti-dilutive.


~~(c)~~	Basic and diluted earnings per share under the two-class method are determined on the net income applicable to common shareholders of The Bank of New York Mellon Corporation reported on the income statement less earnings allocated to participating securities.

See accompanying unaudited Notes to Consolidated Financial Statements.

58 BNY Mellon 51



The Bank of New York Mellon Corporation (and its subsidiaries)

Consolidated Comprehensive Income Statement (unaudited)


	Quarter ended						Year-to-date
	Sept. 30, 2023		June 30, 2023		Sept. 30, 2022		Sept. 30, 2023		Sept. 30, 2022
(in millions)
Net income	$	1,041	$	1,068	$	388	$	3,085	$	2,017
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(185)		97		(442)		15		(1,150)
Unrealized gain (loss) on assets available-for-sale:
Unrealized (loss) gain arising during the period	(29)		(157)		(908)		131		(3,321)
Reclassification adjustment	14		—		(1)		15		(4)
Total unrealized (loss) gain on assets available-for-sale	(15)		(157)		(909)		146		(3,325)
Defined benefit plans:



Amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost	(3)		(2)		13		(8)		44
Total defined benefit plans	(3)		(2)		13		(8)		44
Net unrealized gain (loss) on cash flow hedges	—		3		(1)		8		(8)
Total other comprehensive (loss) income, net of tax (a)	(203)		(59)		(1,339)		161		(4,439)
Total comprehensive income (loss)	838		1,009		(951)		3,246		(2,422)
Net (income) loss attributable to noncontrolling interests	(3)		(1)		—		(4)		13
Other comprehensive loss attributable to noncontrolling interests	—		—		19		—		25
Comprehensive income (loss) applicable to shareholders of The Bank of New York Mellon Corporation	$	835	$	1,008	$	(932)	$	3,242	$	(2,384)

Quarter ended Year-to-date
Sept. 30, 2017
June 30, 2017
Sept. 30, 2016
Sept. 30, 2017
Sept. 30, 2016
(in millions)
Net income $ 1,020
$ 976
$ 993
$ 2,933
$ 2,676
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments 286
330
(186 ) 741
(433 )
Unrealized gain on assets available-for-sale:
Unrealized gain (loss) arising during the period 28
91
(53 ) 213
227
Reclassification adjustment (12 ) (1 ) (15 ) (19 ) (43 )
Total unrealized gain (loss) on assets available-for-sale 16
90
(68 ) 194
184
Defined benefit plans:
Net gain arising during the period —
—
—
2
2
Amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost 15
16
14
49
43
Total defined benefit plans 15
16
14
51
45
Net unrealized gain (loss) on cash flow hedges —
1
2
11
(4 )
Total other comprehensive income (loss), net of tax (a)
317
437
(238 ) 997
(208 )
Total comprehensive income 1,337
1,413
755
3,930
2,468
Net (income) loss attributable to noncontrolling interests (2 ) (1 ) (6 ) (18 ) 1
Other comprehensive (income) loss attributable to noncontrolling interests (5 ) (6 ) 5
(13 ) 23
Comprehensive income applicable to shareholders of The Bank of New York Mellon Corporation $ 1,330
$ 1,406
$ 754
$ 3,899
$ 2,492


~~(a)~~	Other comprehensive income (loss) attributable to The Bank of New York Mellon Corporation shareholders was $312 million for the quarter ended Sept. 30, 2017, $431 million for the quarter ended June 30, 2017, $(233) million for the quarter ended Sept. 30, 2016, $984 million for the nine months ended Sept. 30, 2017 and $(185) million for the nine months ended Sept. 30, 2016.

(a) Other comprehensive income (loss) attributable to The Bank of New York Mellon Corporation shareholders was $(203) million for the quarter ended Sept. 30, 2023, $(59) million for the quarter ended June 30, 2023, $(1,320) million for the quarter ended Sept. 30, 2022, $161 million for the nine months ended Sept. 30, 2023 and $(4,414) million for the nine months ended Sept. 30, 2022.

See accompanying unaudited Notes to Consolidated Financial Statements.

52 BNY Mellon 59



The Bank of New York Mellon Corporation (and its subsidiaries)

Consolidated Balance Sheet (unaudited)


	Sept. 30, 2023		Dec. 31, 2022
(dollars in millions, except per share amounts)
Assets
Cash and due from banks, net of allowance for credit losses of $23 and $29	$	4,904	$	5,030
Interest-bearing deposits with the Federal Reserve and other central banks	107,419		91,655
Interest-bearing deposits with banks, net of allowance for credit losses of $2 and $4 (includes restricted of $3,084 and $6,499)	12,999		17,169
Federal funds sold and securities purchased under resale agreements	26,299		24,298
Securities:
Held-to-maturity, at amortized cost, net of allowance for credit losses of $1 and less than $1 (fair value of $44,211 and $49,992)	51,007		56,194
Available-for-sale, at fair value (amortized cost of $83,074 and $92,484, net of allowance for credit losses of less than $1 and $1)	77,218		86,622
Total securities	128,225		142,816
Trading assets	10,699		9,908
Loans	66,290		66,063
Allowance for credit losses	(211)		(176)
Net loans	66,079		65,887
Premises and equipment	3,234		3,256
Accrued interest receivable	1,141		858
Goodwill	16,159		16,150
Intangible assets	2,859		2,901
Other assets, net of allowance for credit losses on accounts receivable of $3 and $4 (includes $1,561 and $971, at fair value)	25,231		25,855
Total assets	$	405,248	$	405,783
Liabilities
Deposits:
Noninterest-bearing (principally U.S. offices)	$	60,571	$	78,017
Interest-bearing deposits in U.S. offices	132,245		108,362
Interest-bearing deposits in non-U.S. offices	84,651		92,591
Total deposits	277,467		278,970
Federal funds purchased and securities sold under repurchase agreements	14,771		12,335
Trading liabilities	7,358		5,385
Payables to customers and broker-dealers	17,441		23,435

Other borrowed funds	728		397
Accrued taxes and other expenses	5,389		5,410
Other liabilities (including allowance for credit losses on lending-related commitments of $85 and $78, also includes $23 and $221, at fair value)	11,758		8,543
Long-term debt	29,205		30,458
Total liabilities	364,117		364,933
Temporary equity
Redeemable noncontrolling interests	109		109
Permanent equity
Preferred stock – par value $0.01 per share; authorized 100,000,000 shares; issued 48,826 and 48,826 shares	4,838		4,838
Common stock – par value $0.01 per share; authorized 3,500,000,000 shares; issued 1,402,122,865 and 1,395,725,198 shares	14		14
Additional paid-in capital	28,793		28,508
Retained earnings	39,822		37,864
Accumulated other comprehensive loss, net of tax	(5,805)		(5,966)
Less: Treasury stock of 633,049,587 and 587,280,598 common shares, at cost	(26,696)		(24,524)
Total The Bank of New York Mellon Corporation shareholders’ equity	40,966		40,734
Nonredeemable noncontrolling interests of consolidated investment management funds	56		7
Total permanent equity	41,022		40,741
Total liabilities, temporary equity and permanent equity	$	405,248	$	405,783

Sept. 30, 2017
Dec. 31, 2016
(dollars in millions, except per share amounts)
Assets
Cash and due from:
Banks $ 5,557
$ 4,822
Interest-bearing deposits with the Federal Reserve and other central banks 75,808
58,041
Interest-bearing deposits with banks 15,256
15,086
Federal funds sold and securities purchased under resale agreements 27,883
25,801
Securities:

Held-to-maturity (fair value of $39,928 and $40,669) 39,995
40,905
Available-for-sale 80,054
73,822
Total securities 120,049
114,727
Trading assets 4,666
5,733
Loans 59,068
64,458
Allowance for loan losses (161 ) (169 )
Net loans 58,907
64,289
Premises and equipment 1,631
1,303
Accrued interest receivable 547
568
Goodwill 17,543
17,316
Intangible assets 3,461
3,598
Other assets (includes $827 and $1,339, at fair value) 22,287
20,954
Subtotal assets of operations 353,595
332,238
Assets of consolidated investment management funds, at fair value 802
1,231
Total assets $ 354,397
$ 333,469
Liabilities

Deposits:

Noninterest-bearing (principally U.S. offices) $ 80,380
$ 78,342
Interest-bearing deposits in U.S. offices 46,023
52,049
Interest-bearing deposits in non-U.S. offices 104,593
91,099
Total deposits 230,996
221,490
Federal funds purchased and securities sold under repurchase agreements 10,314
9,989
Trading liabilities 3,253
4,389
Payables to customers and broker-dealers 21,176
20,987
Commercial paper 2,501
—
Other borrowed funds 3,353
754
Accrued taxes and other expenses
6,070
5,867
Other liabilities (including allowance for lending-related commitments of $104 and $112, also includes $812 and $597, at fair value) 7,195
5,635
Long-term debt (includes $369 and $363, at fair value) 28,408
24,463
Subtotal liabilities of operations 313,266
293,574
Liabilities of consolidated investment management funds, at fair value 27
315
Total liabilities 313,293
293,889
Temporary equity

Redeemable noncontrolling interests 197
151
Permanent equity

Preferred stock – par value $0.01 per share; authorized 100,000,000 shares; issued 35,826 and 35,826 shares 3,542
3,542
Common stock – par value $0.01 per share; authorized 3,500,000,000 shares; issued 1,352,363,932 and 1,333,706,427 shares 14
13
Additional paid-in capital 26,588
25,962
Retained earnings 24,757
22,621
Accumulated other comprehensive loss, net of tax (2,781 ) (3,765 )
Less: Treasury stock of 328,341,579 and 286,218,126 common shares, at cost (11,597 ) (9,562 )
Total The Bank of New York Mellon Corporation shareholders’ equity 40,523
38,811
Nonredeemable noncontrolling interests of consolidated investment management funds 384
618
Total permanent equity 40,907
39,429
Total liabilities, temporary equity and permanent equity $ 354,397
$ 333,469

See accompanying unaudited Notes to Consolidated Financial Statements.

60 BNY Mellon 53



The Bank of New York Mellon Corporation (and its subsidiaries)

Consolidated Statement of Cash Flows (unaudited)


	Nine months ended Sept. 30,
(in millions)	2023		2022
Operating activities
Net income	$	3,085	$	2,017
Net (income) loss attributable to noncontrolling interests	(4)		13
Net income applicable to shareholders of The Bank of New York Mellon Corporation	3,081		2,030
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Provision for credit losses	35		19
Pension plan contributions	(4)		(2)
Depreciation and amortization	1,122		1,255
Goodwill impairment	—		680
Deferred tax (benefit) expense	(42)		255
Net securities losses (gains)	20		(5)
Change in trading assets and liabilities	1,015		6,945
Change in accruals and other, net	2,753		967
Net cash provided by operating activities	7,980		12,144
Investing activities
Change in interest-bearing deposits with banks	453		2,937
Change in interest-bearing deposits with the Federal Reserve and other central banks	(16,667)		(12,186)
Purchases of securities held-to-maturity	(273)		(2,144)
Paydowns of securities held-to-maturity	3,540		5,851
Maturities of securities held-to-maturity	1,715		1,423
Purchases of securities available-for-sale	(15,779)		(26,007)
Sales of securities available-for-sale	9,449		11,303
Paydowns of securities available-for-sale	2,794		4,205
Maturities of securities available-for-sale	12,988		8,392
Net change in loans	(243)		(2,517)

Change in federal funds sold and securities purchased under resale agreements	(2,002)		6,109
Net change in seed capital investments	18		24
Purchases of premises and equipment/capitalized software	(951)		(989)
Proceeds from the sale of premises and equipment	—		45

Disposition, net of cash	—		51
Other, net	494		(1,747)
Net cash (used for) investing activities	(4,464)		(5,250)
Financing activities
Change in deposits	81		(8,202)
Change in federal funds purchased and securities sold under repurchase agreements	2,538		(129)
Change in payables to customers and broker-dealers	(5,983)		(1,108)
Change in other borrowed funds	342		(347)

Net proceeds from the issuance of long-term debt	4,493		6,684
Repayments, redemptions and repurchases of long-term debt	(5,466)		(3,250)
Proceeds from the exercise of stock options	—		9
Issuance of common stock	12		10

Treasury stock acquired	(2,154)		(122)

Common cash dividends paid	(934)		(860)
Preferred cash dividends paid	(189)		(177)

Other, net	—		(12)
Net cash (used for) financing activities	(7,260)		(7,504)
Effect of exchange rate changes on cash	203		327
Change in cash and due from banks and restricted cash
Change in cash and due from banks and restricted cash	(3,541)		(283)
Cash and due from banks and restricted cash at beginning of period	11,529		9,883
Cash and due from banks and restricted cash at end of period	$	7,988	$	9,600
Cash and due from banks and restricted cash
Cash and due from banks at end of period (unrestricted cash)	$	4,904	$	4,707
Restricted cash at end of period	3,084		4,893
Cash and due from banks and restricted cash at end of period	$	7,988	$	9,600
Supplemental disclosures
Interest paid	$	11,196	$	1,355
Income taxes paid	653		319
Income taxes refunded	13		7

Nine months ended Sept. 30,
(in millions) 2017
2016
Operating activities
Net income $ 2,933
$ 2,676
Net (income) loss attributable to noncontrolling interests (18 ) 1
Net income applicable to shareholders of The Bank of New York Mellon Corporation 2,915
2,677
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses (18 ) (18 )
Pension plan contributions (12 ) (17 )
Depreciation and amortization 1,044
1,118
Deferred tax expense (benefit) 272
(282 )
Net securities (gains) (29 ) (65 )
Change in trading assets and liabilities (66 ) 1,680
Originations of loans held-for-sale —
(350 )
Proceeds from the sales of loans originated for sale —
802
Change in accruals and other, net (756 ) (3,988 )
Net cash provided by operating activities 3,350
1,557
Investing activities
Change in interest-bearing deposits with banks 507
880
Change in interest-bearing deposits with the Federal Reserve and other central banks (14,467 ) 33,473
Purchases of securities held-to-maturity (5,878 ) (4,169 )
Paydowns of securities held-to-maturity 3,332
3,577
Maturities of securities held-to-maturity 3,412
2,933
Purchases of securities available-for-sale (18,974 ) (21,491 )
Sales of securities available-for-sale 3,531
5,624
Paydowns of securities available-for-sale 7,047
6,552
Maturities of securities available-for-sale 4,820
7,610
Net change in loans 5,283
(2,884 )
Sales of loans and other real estate 369
172
Change in federal funds sold and securities purchased under resale agreements (2,082 ) (10,456 )
Net change in seed capital investments (52 ) (57 )
Purchases of premises and equipment/capitalized software (933 ) (495 )
Proceeds from the sale of premises and equipment —
65
Acquisitions, net of cash —
(38 )
Dispositions, net of cash —
1
Other, net 82
(239 )
Net cash (used for) provided by investing activities (14,003 ) 21,058
Financing activities
Change in deposits 4,459
(18,378 )
Change in federal funds purchased and securities sold under repurchase agreements 325
(6,950 )
Change in payables to customers and broker-dealers 177
(743 )
Change in other borrowed funds 2,187
427
Change in commercial paper 2,501
—
Net proceeds from the issuance of long-term debt 4,739
4,982
Repayments of long-term debt (796 ) (2,453 )
Proceeds from the exercise of stock options 383
129
Issuance of common stock 24
20
Issuance of preferred stock —
990
Treasury stock acquired (2,035 ) (1,550 )
Common cash dividends paid (653 ) (576 )
Preferred cash dividends paid (126 ) (74 )
Other, net 46
(2 )
Net cash provided by (used for) financing activities 11,231
(24,178 )
Effect of exchange rate changes on cash 157
(17 )
Change in cash and due from banks
Change in cash and due from banks 735
(1,580 )
Cash and due from banks at beginning of period 4,822
6,537
Cash and due from banks at end of period $ 5,557
$ 4,957
Supplemental disclosures
Interest paid $ 721
$ 371
Income taxes paid 316
597
Income taxes refunded 19
293

See accompanying unaudited Notes to Consolidated Financial Statements.

54 BNY Mellon 61



The Bank of New York Mellon Corporation (and its subsidiaries)

Consolidated Statement of Changes in Equity (unaudited)


	The Bank of New York Mellon Corporation shareholders												Nonredeemable noncontrolling interests of consolidated investment management funds		Total permanent equity			Redeemable non- controlling interests/ temporary equity
(in millions, except per share amount)	Preferred stock		Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive (loss), net of tax		Treasury stock
Balance at June 30, 2023	$	4,838	$	14	$	28,726	$	39,199	$	(5,602)	$	(26,242)	$	65	$	40,998	(a)	$	104


Shares issued to shareholders of noncontrolling interests	—		—		—		—		—		—		—		—			10

Other net changes in noncontrolling interests	—		—		1		—		—		—		(12)		(11)			(2)
Net income	—		—		—		1,038		—		—		3		1,041			—
Other comprehensive (loss)	—		—		—		—		(203)		—		—		(203)			—
Dividends:
Common stock at $0.42 per share (b)	—		—		—		(333)		—		—		—		(333)			—
Preferred stock	—		—		—		(82)		—		—		—		(82)			—
Repurchase of common stock	—		—		—		—		—		(450)		—		(450)			—
Common stock issued under employee benefit plans	—		—		5		—		—		—		—		5			—


Stock-based compensation	—		—		61		—		—		—		—		61			—
Excise tax on share repurchases	—		—		—		—		—		(4)		—		(4)			—
Other	—		—		—		—		—		—		—		—			(3)
Balance at Sept. 30, 2023	$	4,838	$	14	$	28,793	$	39,822	$	(5,805)	$	(26,696)	$	56	$	41,022	(a)	$	109

(a) Includes total The Bank of New York Mellon Corporation common shareholders’ equity of $36,095 million at June 30, 2023 and $36,128 million at Sept. 30, 2023.

(b) Includes dividend equivalents on share-based awards.


	The Bank of New York Mellon Corporation shareholders												Nonredeemable noncontrolling interests of consolidated investment management funds		Total permanent equity			Redeemable non- controlling interests/ temporary equity
(in millions, except per share amount)	Preferred stock		Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive (loss), net of tax		Treasury stock
Balance at March 31, 2023	$	4,838	$	14	$	28,650	$	38,465	$	(5,543)	$	(25,790)	$	72	$	40,706	(a)	$	96


Shares issued to shareholders of noncontrolling interests	—		—		—		—		—		—		—		—			7

Other net changes in noncontrolling interests	—		—		2		—		—		—		(8)		(6)			(1)
Net income	—		—		—		1,067		—		—		1		1,068			—
Other comprehensive (loss)	—		—		—		—		(59)		—		—		(59)			—
Dividends:
Common stock at $0.37 per share (b)	—		—		—		(297)		—		—		—		(297)			—
Preferred stock	—		—		—		(36)		—		—		—		(36)			—
Repurchase of common stock	—		—		—		—		—		(448)		—		(448)			—

Common stock issued under employee benefit plans	—		—		5		—		—		—		—		5			—



Stock-based compensation	—		—		69		—		—		—		—		69			—

Excise tax of share repurchases	—		—		—		—		—		(4)		—		(4)			—
Other	—		—		—		—		—		—		—		—			2
Balance at June 30, 2023	$	4,838	$	14	$	28,726	$	39,199	$	(5,602)	$	(26,242)	$	65	$	40,998	(a)	$	104

(a) Includes total The Bank of New York Mellon Corporation common shareholders’ equity of $35,796 million at March 31, 2023 and $36,095 million at June 30, 2023.

(b) Includes dividend equivalents on share-based awards.

BNY Mellon 55

The Bank of New York Mellon Corporation shareholders
Non-
redeemable
noncontrolling
interests of
consolidated
investment
management
funds

Total
permanent
equity

Redeemable
non-
controlling
interests/
temporary
equity

(in millions, except per
share amount) Preferred stock
Common
stock

Additional
paid-in
capital

Retained
earnings

Accumulated
other
comprehensive (loss) income,
net of tax
Treasury
stock

Balance at Dec. 31, 2016 $ 3,542
$ 13
$ 25,962
$ 22,621
$ (3,765 ) $ (9,562 ) $ 618
$ 39,429
(a) $ 151
Shares issued to shareholders of noncontrolling interests —
—
—
—
—
—
—
—
40
Redemption of subsidiary shares from noncontrolling interests —
—
—
—
—
—
—
—
(16 )
Other net changes in noncontrolling interests —
—
(11 ) —
—
—
(258 ) (269 ) 15
Net income (loss) —
—
—
2,915
—
—
24
2,939
(6 )
Other comprehensive income —
—
—
—
984
—
—
984
13
Dividends:
Common stock at $0.62 per
share —
—
—
(653 ) —
—
—
(653 ) —
Preferred stock —
—
—
(126 ) —
—
—
(126 ) —
Repurchase of common stock —
—
—
—
—
(2,035 ) —
(2,035 ) —
Common stock issued under:
Employee benefit plans —
—
21
—
—
—
—
21
—
Direct stock purchase and dividend reinvestment plan —
—
18
—
—
—
—
18
—
Stock awards and options exercised —
1
598
—
—
—
—
599
—
Balance at Sept. 30, 2017 $ 3,542
$ 14
$ 26,588
$ 24,757
$ (2,781 ) $ (11,597 ) $ 384
$ 40,907
(a) $ 197


~~(a)~~			~~Includes total~~ The Bank of New York Mellon Corporation (and its subsidiaries)

Consolidated Statement of Changes in Equity (unaudited)(continued)


	The Bank of New York Mellon Corporation shareholders												Nonredeemable noncontrolling interests of consolidated investment management funds		Total permanent equity			Redeemable non- controlling interests/ temporary equity
(in millions, except per share amount)	Preferred stock		Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive (loss), net of tax		Treasury stock
Balance at June 30, 2022	$	4,838	$	14	$	28,316	$	37,644	$	(5,307)	$	(24,521)	$	7	$	40,991	(a)	$	154


Shares issued to shareholders of noncontrolling interests	—		—		—		—		—		—		—		—			17
Redemption of subsidiary shares from noncontrolling interests	—		—		—		—		—		—		—		—			(1)
Other net changes in noncontrolling interests	—		—		2		—		—		—		—		2			1
Net income	—		—		—		388		—		—		—		388			—
Other comprehensive (loss)	—		—		—		—		(1,320)		—		—		(1,320)			(19)
Dividends:
Common stock at $0.37 per share (b)	—		—		—		(303)		—		—		—		(303)			—
Preferred stock	—		—		—		(69)		—		—		—		(69)			—
Repurchase of common stock	—		—		—		—		—		(1)		—		(1)			—

Common stock issued under employee benefit plans	—		—		5		—		—		—		—		5			—



Stock awards and options exercised	—		—		51		—		—		—		—		51			—


Balance at Sept. 30, 2022	$	4,838	$	14	$	28,374	$	37,660	$	(6,627)	$	(24,522)	$	7	$	39,744	(a)	$	152

(a) Includes total The Bank of New York Mellon Corporation common shareholders’ equity of $36,146 million at June 30, 2022 and $34,899 million at Sept. 30, 2022.

(b) Includes dividend equivalents on share-based awards.




	The Bank of New York Mellon Corporation shareholders												Nonredeemable noncontrolling interests of consolidated investment management funds		Total permanent equity			Redeemable non- controlling interests/ temporary equity
(in millions, except per share amount)	Preferred stock		Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive (loss) income, net of tax		Treasury stock
Balance at Dec. 31, 2022	$	4,838	$	14	$	28,508	$	37,864	$	(5,966)	$	(24,524)	$	7	$	40,741	(a)	$	109


Shares issued to shareholders of noncontrolling interests	—		—		—		—		—		—		—		—			27
Redemption of subsidiary shares from noncontrolling interests	—		—		—		—		—		—		—		—			(34)
Other net changes in noncontrolling interests	—		—		(5)		—		—		—		45		40			6
Net income	—		—		—		3,081		—		—		4		3,085			—
Other comprehensive income	—		—		—		—		161		—		—		161			—
Dividends:
Common stock at $1.16 per share (b)	—		—		—		(934)		—		—		—		(934)			—
Preferred stock	—		—		—		(189)		—		—		—		(189)			—
Repurchase of common stock	—		—		—		—		—		(2,154)		—		(2,154)			—

Common stock issued under employee benefit plans	—		—		15		—		—		—		—		15			—


Stock-based compensation	—		—		275		—		—		—		—		275			—
Excise tax on share repurchases	—		—		—		—		—		(18)		—		(18)			—
Other	—		—		—		—		—		—		—		—			1
Balance at Sept. 30, 2023	$	4,838	$	14	$	28,793	$	39,822	$	(5,805)	$	(26,696)	$	56	$	41,022	(a)	$	109

(a) Includes total The Bank of New York Mellon Corporation common shareholders’ equity of $35,896 million at Dec. 31, 2022 and $36,128 million at Sept. 30, 2023.

(b) Includes dividend equivalents on share-based awards.

56 BNY Mellon


The Bank of ~~$35,269 million at Dec. 31, 2016 and $36,981 million at Sept. 30, 2017.~~New York Mellon Corporation (and its subsidiaries)

Consolidated Statement of Changes in Equity (unaudited)(continued)




	The Bank of New York Mellon Corporation shareholders												Nonredeemable noncontrolling interests of consolidated investment management funds		Total permanent equity			Redeemable non- controlling interests/ temporary equity
(in millions, except per share amount)	Preferred stock		Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive (loss), net of tax		Treasury stock
Balance at Dec. 31, 2021	$	4,838	$	14	$	28,128	$	36,667	$	(2,213)	$	(24,400)	$	196	$	43,230	(a)	$	161



Shares issued to shareholders of noncontrolling interests	—		—		—		—		—		—		—		—			26
Redemption of subsidiary shares from noncontrolling interests	—		—		—		—		—		—		—		—			(15)
Other net changes in noncontrolling interests	—		—		(3)		—		—		—		(176)		(179)			5
Net income (loss)	—		—		—		2,030		—		—		(13)		2,017			—
Other comprehensive (loss)	—		—		—		—		(4,414)		—		—		(4,414)			(25)
Dividends:
Common stock at $1.05 per share (b)	—		—		—		(860)		—		—		—		(860)			—
Preferred stock	—		—		—		(177)		—		—		—		(177)			—
Repurchase of common stock	—		—		—		—		—		(122)		—		(122)			—

Common stock issued under employee benefit plans	—		—		15		—		—		—		—		15			—

Stock awards and options exercised	—		—		234		—		—		—		—		234			—
Balance at Sept. 30, 2022	$	4,838	$	14	$	28,374	$	37,660	$	(6,627)	$	(24,522)	$	7	$	39,744	(a)	$	152

(a) Includes total The Bank of New York Mellon Corporation common shareholders’ equity of $38,196 million at Dec. 31, 2021 and $34,899 million at Sept. 30, 2022.

(b) Includes dividend equivalents on share-based awards.

See accompanying unaudited Notes to Consolidated Financial Statements.

~~62 BNY Mellon~~

BNY Mellon 57



Notes to Consolidated Financial Statements

Note ~~1 -~~ 1–Basis of presentation

Basis of presentation

The accounting and financial reporting policies of BNY Mellon, a global financial services company, conform to U.S. generally accepted accounting principles (“GAAP”) and prevailing industry practices. For information on our significant accounting and reporting policies, see Note 1 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended Dec. 31, 2022 (the “2022 Annual Report”).

The accompanying consolidated financial statements are unaudited. In the opinion of management, all adjustments necessary, consisting of normal recurring adjustments, for a fair presentation of financial position, results of operations and cash flows for the periods presented have been made. These financial statements should be read in conjunction with ~~BNY Mellon’s~~our Consolidated Financial Statements included in our 2022 Annual ~~Report on Form 10-K for the year ended Dec. 31, 2016.~~Report. Certain additional immaterial reclassifications have been made to prior periods to place them on a basis comparable with the current period presentation.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates based upon assumptions about future economic and market conditions which affect reported amounts and related disclosures in our financial statements. Although our current estimates contemplate current conditions and how we expect them to change in the future, it is reasonably possible that actual conditions could be worse than anticipated in those estimates, which could materially affect our results of operations and financial condition. Amounts subject to estimates are items such as the allowance for loan losses and lending-related commitments, the fair value of financial instruments and derivatives, other-than-temporary impairment, goodwill and other intangibles and pension accounting. Among other effects, such changes in estimates could result in future impairments of investment securities, goodwill and intangible assets and establishment of allowances for loan losses and lending-related commitments as well as changes in pension and post-retirement expense.

Note ~~2 - Accounting change and new~~2–New accounting guidance

~~ASU 2017-04, Simplifying the Test for Goodwill Impairment~~

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Simplifying the Test for Goodwill Impairment. This ASU simplifies the annual goodwill impairment test by eliminating Step 2.~~ The ~~Step 2 calculation estimated the implied goodwill using the fair values of all assets, including previously unrecorded intangibles, and liabilities at the date of the test. Step 2~~following accounting guidance was required if the first step of the annual test indicated that the fair value of a reporting unit is less than its carrying value. After adopting this ASU, the amount of any goodwill impairment will be determined by the excess of the carrying value of a reporting unit over its fair value. The Company early adopted ~~this ASU in the second quarter of 2017, in conjunction with its annual goodwill impairment test. The annual test did not result in any impairment.~~

~~ASU 2016-09, Compensation~~ – ~~Stock Compensation~~

~~In March 2016, the FASB issued ASU 2016-09,~~ ~~Compensation~~ – ~~Stock Compensation~~. This ASU simplifies several aspects of the accounting for share-based payment transactions, including income tax consequences, recognition of forfeitures and classification on the statement of cash flows. The Company adopted this ASU effective Jan. 1, 2017.

For the first nine months of 2017, we recorded an income tax benefit of $45 million related to the vesting of stock awards and option exercises in the provision for income taxes. Previously, this had been recorded directly to additional paid-in capital. The impact in future periods will vary depending on the number of restricted stock units vesting (which primarily occurs in the first quarter of ~~each year)~~2023.

Accounting Standards Update (“ASU”) 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method, which provides guidance that expands the ~~number~~ability to hedge interest rate risk by permitting the use of ~~stock options exercised~~multiple hedged layers of a single closed portfolio of assets and will (1) Allow multiple layer hedging within the ~~change~~same closed portfolio, (2) Expand the scope of the portfolio layer method to include non-prepayable assets, (3) Expand the eligible hedging instruments to be utilized in ~~value since~~a single-layer hedge, and (4) Permit held-to-maturity debt securities to be transferred to available-for-sale at the ~~grant~~date of adoption, provided such transferred securities are designated in a portfolio layer method hedge within 30 days of the adoption date.

The standard also provides further guidance and disclosure requirements with respect to hedge basis adjustments related to portfolio layer method hedges.

We ~~continue~~adopted this guidance as of Jan. 1, 2023. The Company did not choose to make the one-time election to reclassify securities classified as held-to-maturity to available-for-sale as of Jan. 1, 2023 and can choose to prospectively apply ~~our accounting policy election for estimating forfeitures. Additionally, beginning in~~portfolio layer method hedging.

ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures

In March 2022, the ~~quarter ended March 31, 2017, we report excess tax benefits~~FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which provides post-implementation guidance related to ~~stock-based compensation as operating activities~~the adoption of ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments, which was effective Jan. 1, 2020. This ASU amends the ~~statement~~guidance related to two issues: Troubled Debt Restructurings (“TDRs”) and disclosure requirements for the credit profile of ~~cash flows~~the loan portfolio. This ASU eliminates the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. An entity must apply the ~~employee taxes paid will continue~~loan refinancing and restructuring guidance to ~~be reported as financing activities.~~

determine whether a

58 BNY Mellon 63



Notes to Consolidated Financial Statements(continued)

modification results in a new loan or a continuation of an existing loan.

This ASU also requires that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments – Credit Losses – Measured at Amortized Cost.

We adopted the revised guidance related to loan modifications on Jan. 1, 2023. The impact was immaterial. The updated disclosures are included in Note 5.

Note ~~3 -~~ 3–Acquisitions and dispositions

We sometimes structure our acquisitions and divestitures with both an initial payment or receipt and later contingent payments or receipts tied to post-closing revenue or income growth. Contingent payments totaled $2$5 million in ~~the third quarter of 2017 and~~ the first nine months of ~~2017.~~

2023. There were no contingent receipts in the first nine months of 2023. At Sept. 30, ~~2017,~~2023, we are potentially obligated to pay additional considerationwhich, using reasonable assumptions and estimates, could range from $0$25 million to ~~$16~~$40 millionover the nexttwo years~~, but~~. At Sept. 30, 2023, we could potentially receive additional consideration which, using reasonable assumptions and estimates, could be ~~higher as certain~~up to $390 million over the next five years.

See Note 3 of the ~~arrangements do not contain a contractual maximum.~~ ~~The acquisition described below did~~ ~~not have a material impact on BNY Mellon’s results of operations.~~

~~Acquisition~~Notes to Consolidated Financial Statements in ~~2016~~

~~On April 1, 2016, BNY Mellon acquired the assets of Atherton Lane Advisers, LLC, a U.S.-based investment manager with approximately $2.45 billion in AUM and servicer~~our 2022 Annual Report for ~~approximately 700 high-net-worth clients, for cash of $38 million, plus contingent payments measured at $22 million. Goodwill~~information related to ~~this acquisition totaled $29 million and is included in~~ the Investment Management business. The customer relationship intangible asset related to this acquisition is included in the Investment Management business, with an estimated life of 14 years, and totaled $30 million at acquisition.2022 transactions.

Note ~~4 -~~ 4–Securities

The following tables present the amortized cost, the gross unrealized gains and losses and the fair value of securities at Sept. 30, ~~2017~~2023 and Dec. 31, ~~2016.~~2022.


Securities at Sept. 30, 2023			Gross unrealized				Fair value
	Amortized cost
(in millions)			Gains		Losses
Available-for-sale:
U.S. Treasury	$	23,212	$	67	$	2,381	$	20,898
Agency residential mortgage-backed securities (“RMBS”)	10,581		93		687		9,987
Sovereign debt/sovereign guaranteed	9,192		2		504		8,690
Supranational	7,988		1		421		7,568
Agency commercial mortgage-backed securities (“MBS”)	8,233		69		770		7,532
Foreign covered bonds	6,364		3		257		6,110
Collateralized loan obligations (“CLOs”)	5,965		4		34		5,935
Non-agency commercial MBS	3,315		1		399		2,917
U.S. government agencies	3,014		43		295		2,762
Foreign government agencies/local governments	2,256		—		97		2,159
Non-agency RMBS	1,927		31		221		1,737
Other asset-backed securities (“ABS”)	1,026		—		104		922


Other debt securities	1		—		—		1
Total securities available-for-sale (a)(b)	$	83,074	$	314	$	6,170	$	77,218
Held-to-maturity:
Agency RMBS	$	30,760	$	1	$	4,898	$	25,863
U.S. Treasury	9,477		—		835		8,642
U.S. government agencies	4,199		—		543		3,656
Agency commercial MBS	3,506		—		407		3,099
Sovereign debt/sovereign guaranteed	1,456		—		73		1,383
CLOs	983		—		10		973

Supranational	510		—		24		486
Foreign government agencies	78		—		5		73
Non-agency RMBS	26		1		1		26
State and political subdivisions	12		—		2		10
Total securities held-to-maturity	$	51,007	$	2	$	6,798	$	44,211
Total securities	$	134,081	$	316	$	12,968	$	121,429

(a) The amortized cost of available-for-sale is net of the allowance for credit losses of less than $1 million. The allowance for credit loss relates to non-agency RMBS.

(b) Includes gross unrealized gains of $272 million and gross unrealized losses of $153 million recorded in accumulated other comprehensive income related to securities that were transferred from available-for-sale to held-to-maturity. The unrealized gains primarily relate to agency RMBS, agency commercial MBS and U.S. Treasury securities. The unrealized losses primarily relate to agency RMBS and U.S. Treasury securities. The unrealized gains and losses will be amortized into net interest revenue over the contractual lives of the securities.

BNY Mellon 59

Securities at Sept. 30, 2017
Gross
unrealized

Amortized cost
Fair
value

(in millions) Gains
Losses
Available-for-sale:
U.S. Treasury $ 15,389
$ 236
$ 123
$ 15,502
U.S. government agencies 866
4
6
864
State and political subdivisions 3,091
57
24
3,124
Agency RMBS 24,546
135
250
24,431
Non-agency RMBS 491
37
3
525
Other RMBS 270
3
8
265
Commercial MBS 960
9
4
965
Agency commercial MBS 9,026
41
57
9,010
CLOs 2,542
9
1
2,550
Other asset-backed securities 1,152
5
—
1,157
Foreign covered bonds 2,529
20
7
2,542
Corporate bonds 1,262
21
8
1,275
Sovereign debt/sovereign guaranteed 12,393
195
23
12,565
Other debt securities 3,149
12
10
3,151
Equity securities 2
2
—
4
Money market funds 939
—
—
939
Non-agency RMBS (a)
885
304
4
1,185
Total securities available-for-sale (b)
$ 79,492
$ 1,090
$ 528
$ 80,054
Held-to-maturity:
U.S. Treasury $ 9,867
$ 21
$ 29
$ 9,859
U.S. government agencies 1,614
—
6
1,608
State and political subdivisions 18
—
1
17
Agency RMBS 25,575
96
185
25,486
Non-agency RMBS 64
5
—
69
Other RMBS 65
—
1
64
Commercial MBS 6
—
—
6
Agency commercial MBS 1,118
5
5
1,118
Foreign covered bonds 83
1
—
84
Sovereign debt/sovereign guaranteed 1,558
32
—
1,590
Other debt securities 27
—
—
27
Total securities held-to-maturity $ 39,995
$ 160
$ 227
$ 39,928
Total securities $ 119,487
$ 1,250
$ 755
$ 119,982


~~(a)~~			~~Previously included in the Grantor Trust. The Grantor Trust was dissolved in 2011.~~

~~(b)~~

Includes gross unrealized gains of $53 million and gross unrealized losses of $155 million recorded in accumulated other comprehensive income related to investment securities that were transferred from available-for-sale to held-to-maturity. The unrealized gains and losses are primarily related to Agency RMBS and will be amortized into net interest revenue over the contractual lives of the securities.

~~64 BNY Mellon~~



Notes to Consolidated Financial Statements(continued)


Securities at Dec. 31, 2022			Gross unrealized
	Amortized cost						Fair value
(in millions)			Gains		Losses
Available-for-sale:
U.S. Treasury	$	32,103	$	93	$	2,663	$	29,533
Sovereign debt/sovereign guaranteed	10,906		5		547		10,364
Agency RMBS	9,388		113		544		8,957
Agency commercial MBS	8,656		89		685		8,060
Supranational	8,129		4		399		7,734
Foreign covered bonds	6,041		3		286		5,758
CLOs	5,446		1		104		5,343
Non-agency commercial MBS	3,334		—		357		2,977
U.S. government agencies	2,465		52		223		2,294
Foreign government agencies/local governments	2,363		1		123		2,241
Non-agency RMBS	2,197		43		211		2,029
Other ABS	1,443		—		124		1,319
State and political subdivisions	12		—		—		12

Other debt securities	1		—		—		1
Total securities available-for-sale (a)(b)	$	92,484	$	404	$	6,266	$	86,622
Held-to-maturity:
Agency RMBS	$	34,188	$	1	$	4,229	$	29,960
U.S. Treasury	10,863		—		895		9,968
U.S. government agencies	4,206		—		534		3,672
Agency commercial MBS	4,014		—		411		3,603
Sovereign debt/sovereign guaranteed	1,388		—		76		1,312
CLOs	983		—		26		957
Supranational	443		—		25		418
Foreign government agencies	66		—		6		60
Non-agency RMBS	30		2		1		31
State and political subdivisions	13		—		2		11
Total securities held-to-maturity	$	56,194	$	3	$	6,205	$	49,992
Total securities	$	148,678	$	407	$	12,471	$	136,614

(a) The amortized cost of available-for-sale securities is net of the allowance for credit losses of $1 million. The allowance for credit loss primarily relates to non-agency RMBS.

(b) Includes gross unrealized gains of $347 million and gross unrealized losses of $179 million recorded in accumulated other comprehensive income related to securities that were transferred from available-for-sale to held-to-maturity. The unrealized gains primarily relate to agency RMBS, U.S. Treasury securities and agency commercial MBS. The unrealized losses primarily relate to agency RMBS and U.S. Treasury securities. The unrealized gains and losses will be amortized into net interest revenue over the contractual lives of the securities.

Securities at Dec. 31, 2016 Gross
unrealized

Amortized cost
Fair
value

(in millions) Gains
Losses
Available-for-sale:
U.S. Treasury $ 14,373
$ 115
$ 181
$ 14,307
U.S. government agencies 366
2
9
359
State and political subdivisions 3,392
38
52
3,378
Agency RMBS 22,929
148
341
22,736
Non-agency RMBS 620
31
13
638
Other RMBS 517
4
8
513
Commercial MBS 931
8
11
928
Agency commercial MBS 6,505
28
84
6,449
CLOs 2,593
6
1
2,598
Other asset-backed securities 1,729
4
6
1,727
Foreign covered bonds 2,126
24
9
2,141
Corporate bonds 1,391
22
17
1,396
Sovereign debt/sovereign guaranteed 12,248
261
20
12,489
Other debt securities 1,952
19
10
1,961
Equity securities 2
1
—
3
Money market funds 842
—
—
842
Non-agency RMBS (a)
1,080
286
9
1,357
Total securities available-for-sale (b)
$ 73,596
$ 997
$ 771
$ 73,822
Held-to-maturity:
U.S. Treasury $ 11,117
$ 22
$ 41
$ 11,098
U.S. government agencies 1,589
—
6
1,583
State and political subdivisions 19
—
1
18
Agency RMBS 25,221
57
299
24,979
Non-agency RMBS 78
4
2
80
Other RMBS 142
—
4
138
Commercial MBS 7
—
—
7
Agency commercial MBS 721
1
10
712
Foreign covered bonds 74
1
—
75
Sovereign debt/sovereign guaranteed 1,911
42
—
1,953
Other debt securities 26
—
—
26
Total securities held-to-maturity $ 40,905
$ 127
$ 363
$ 40,669
Total securities $ 114,501
$ 1,124
$ 1,134
$ 114,491


~~(a)~~	~~Previously included in the Grantor Trust. The Grantor Trust was dissolved in 2011.~~

~~(b)~~

Includes gross unrealized gains of $62 million and gross unrealized losses of $190 million recorded in accumulated other comprehensive income related to investment securities that were transferred from available-for-sale to held-to-maturity. The unrealized gains and losses are primarily related to Agency RMBS and will be amortized into net interest revenue over the contractual lives of the securities.

The following table presents the realized gains and losses, on a gross basis.


Net securities gains (losses)
(in millions)	3Q23		2Q23		3Q22		YTD23		YTD22
Realized gross gains	$	1	$	4	$	9	$	19	$	89
Realized gross losses	(20)		(4)		(8)		(39)		(84)
Total net securities (losses) gains	$	(19)	$	—	$	1	$	(20)	$	5

The following table presents pre-tax net securities gains (losses) by type.


Net securities gains (losses)
(in millions)	3Q23		2Q23		3Q22		YTD23		YTD22
Non-agency RMBS	$	—	$	—	$	—	$	2	$	49
U.S. Treasury	(19)		—		—		(27)		12
State and political subdivisions	—		—		—		—		(13)
Corporate bonds	—		—		—		—		(51)
Other	—		—		1		5		8
Total net securities (losses) gains	$	(19)	$	—	$	1	$	(20)	$	5

Allowance for credit losses – Securities

The allowance for credit losses related to securities was $1 million at Sept. 30, 2023 and ~~impairments.~~$1 million at Dec. 31, 2022, and relates to state and political subdivision and non-agency RMBS securities.

Credit quality indicators – Securities

Net securities gains (losses)
(in millions) 3Q17
2Q17
3Q16
YTD17
YTD16
Realized gross gains $ 20
$ 3
$ 26
$ 34
$ 71
Realized gross losses —
(2 ) (1 ) (2 ) (1 )
Recognized gross impairments (1 ) (1 ) (1 ) (3 ) (5 )
Total net securities gains $ 19
$ —
$ 24
$ 29
$ 65

In September 2017, other residential mortgage-backed securities with an aggregate amortized cost of $74 million and fair value of $76 million were transferred from held-to-maturity securities to available-for-sale securities. Due to recent ratings downgrades, the Company no longer intends to hold these securities to maturity.

~~Temporarily impaired securities~~

At Sept. 30, ~~2017,~~2023, the gross unrealized losses on the ~~investment~~ securities portfolio were primarily attributable to an increase in interest rates from the date of purchase, and for certain securities that were transferred from available-for-sale to held-to-maturity, an increase in interest rates through the date they were transferred. Specifically, ~~$155~~$153 million of the unrealized losses at Sept. 30, ~~2017~~2023 and ~~$190~~$179 million at Dec. 31, ~~2016~~2022 reflected in ~~the available-for-sale sections of~~ the tables below relate to certain securities ~~(primarily Agency RMBS)~~ that were previously transferred ~~in prior periods~~ from available-for-sale to held-to-maturity. The unrealized losses will be amortized into net interest revenue over the contractual lives of the securities. The transfer created a new cost basis for the securities. As a result, if these securities have experienced unrealized losses since the date of transfer, the corresponding ~~fair value and~~ unrealized losses would be reflected in the held-to-maturity ~~sections of~~securities portfolio in the following tables. We do not intend to sell these securities, and it is not more likely than not that we will have to sell these securities.

60 BNY Mellon 65



Notes to Consolidated Financial Statements(continued)

The following tables show the aggregate ~~related~~ fair value of ~~investments~~available-for-sale securities with a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 months or more ~~at Sept. 30, 2017~~without an allowance for credit losses.


Available-for-sale securities in an unrealized loss position without an allowance for credit losses at Sept. 30, 2023	Less than 12 months				12 months or more				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
(in millions)
U.S. Treasury	$	749	$	64	$	20,149	$	2,317	$	20,898	$	2,381
Agency RMBS	2,975		108		6,848		579		9,823		687
Sovereign debt/sovereign guaranteed	1,686		27		5,988		477		7,674		504
Agency commercial MBS	474		23		6,925		747		7,399		770
Supranational	2,555		58		4,499		363		7,054		421
Foreign covered bonds	1,449		18		3,606		239		5,055		257
CLOs	459		1		4,233		33		4,692		34
Non-agency commercial MBS	139		1		2,632		398		2,771		399
U.S. government agencies	837		25		1,685		270		2,522		295
Foreign government agencies/local governments	587		10		1,512		87		2,099		97

Non-agency RMBS	53		2		1,288		219		1,341		221
Other ABS	—		—		858		104		858		104


Total securities available-for-sale (a)	$	11,963	$	337	$	60,223	$	5,833	$	72,186	$	6,170

(a) Includes $153 million of gross unrealized losses for 12 months or more recorded in accumulated other comprehensive income related to securities that were transferred from available-for-sale to held-to-maturity. There were no gross unrealized losses for less than 12 months. The unrealized losses are primarily related to agency RMBS and ~~Dec. 31, 2016.~~U.S. Treasury securities and will be amortized into net interest revenue over the contractual lives of the securities.


Available-for-sale securities in an unrealized loss position without an allowance for credit losses at Dec. 31, 2022	Less than 12 months				12 months or more				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
(in millions)
U.S. Treasury	$	14,058	$	824	$	15,236	$	1,839	$	29,294	$	2,663
Agency RMBS	7,929		376		789		168		8,718		544
Agency commercial MBS	6,088		389		1,878		296		7,966		685
Sovereign debt/sovereign guaranteed	4,176		184		3,788		363		7,964		547
Supranational	3,451		109		2,571		290		6,022		399
CLOs	4,806		94		403		10		5,209		104
Foreign covered bonds	2,830		83		1,977		203		4,807		286
Non-agency commercial MBS	1,914		201		932		156		2,846		357
Foreign government agencies/local governments	1,148		43		1,013		80		2,161		123
U.S. government agencies	1,710		186		208		37		1,918		223
Non-agency RMBS	588		16		1,148		193		1,736		209
Other ABS	333		18		876		106		1,209		124

State and political subdivisions	—		—		12		—		12		—

Total securities available-for-sale (a)	$	49,031	$	2,523	$	30,831	$	3,741	$	79,862	$	6,264

(a) Includes $120 million of gross unrealized losses for less than 12 months and $59 million of gross unrealized losses for 12 months or more recorded in accumulated other comprehensive income related to securities that were transferred from available-for-sale to held-to-maturity. The unrealized losses are primarily related to agency RMBS and U.S. Treasury securities and will be amortized into net interest revenue over the contractual lives of the securities.

BNY Mellon 61

Temporarily impaired securities at Sept. 30, 2017 Less than 12 months 12 months or more Total
(in millions) Fair
value
Unrealized
losses
Fair
value
Unrealized
losses
Fair
value
Unrealized
losses
Available-for-sale:
U.S. Treasury $ 7,900
$ 111
$ 495
$ 12
$ 8,395
$ 123
U.S. government agencies 399
6
—
—
399
6
State and political subdivisions 310
4
384
20
694
24
Agency RMBS 8,935
72
4,145
178
13,080
250
Non-agency RMBS 5
—
156
3
161
3
Other RMBS 72
4
83
4
155
8
Commercial MBS 193
2
92
2
285
4
Agency commercial MBS 3,610
47
561
10
4,171
57
CLOs 449
1
—
—
449
1
Foreign covered bonds 1,017
7
28
—
1,045
7
Corporate bonds 306
3
144
5
450
8
Sovereign debt/sovereign guaranteed 2,263
20
137
3
2,400
23
Other debt securities 1,347
9
84
1
1,431
10
Non-agency RMBS (a)
8
2
13
2
21
4
Total securities available-for-sale (b)
$ 26,814
$ 288
$ 6,322
$ 240
$ 33,136
$ 528
Held-to-maturity:
U.S. Treasury $ 7,281
$ 29
$ —
$ —
$ 7,281
$ 29
U.S. government agencies 1,459
5
99
1
1,558
6
State and political subdivisions —
—
4
1
4
1
Agency RMBS 17,125
172
847
13
17,972
185
Other RMBS 15
—
35
1
50
1
Agency commercial MBS 557
5
—
—
557
5
Total securities held-to-maturity $ 26,437
$ 211
$ 985
$ 16
$ 27,422
$ 227
Total temporarily impaired securities $ 53,251
$ 499
$ 7,307
$ 256
$ 60,558
$ 755


~~(a)~~			~~Previously included in the Grantor Trust. The Grantor Trust was dissolved in 2011.~~

~~(b)~~

Gross unrealized losses for 12 months or more of $155 million were recorded in accumulated other comprehensive income and related to investment securities that were transferred from available-for-sale to held-to-maturity. The unrealized losses are primarily related to Agency RMBS and will be amortized into net interest revenue over the contractual lives of the securities. There were no gross unrealized losses for less than 12 months.

~~66 BNY Mellon~~



Notes to Consolidated Financial Statements(continued)

The following tables show the credit quality of the held-to-maturity securities. We have included certain credit ratings information because the information can indicate the degree of credit risk to which we are exposed. Significant changes in ratings classifications could indicate increased credit risk for us and could be accompanied by an increase in the allowance for credit losses and/or a reduction in the fair value of our securities portfolio.


Held-to-maturity securities portfolio at Sept. 30, 2023					Ratings (a)
			Net unrealized gain (loss)								BB+ and lower
(dollars in millions)	Amortized cost				AAA/ AA-		A+/ A-		BBB+/ BBB-				Not rated
Agency RMBS	$	30,760	$	(4,897)	100	%	—	%	—	%	—	%		—	%
U.S. Treasury	9,477		(835)		100		—		—		—			—
U.S. government agencies	4,199		(543)		100		—		—		—			—
Agency commercial MBS	3,506		(407)		100		—		—		—			—
Sovereign debt/sovereign guaranteed (b)	1,456		(73)		100		—		—		—			—
CLOs	983		(10)		100		—		—		—			—
Supranational	510		(24)		100		—		—		—			—
Foreign government agencies	78		(5)		100		—		—		—			—
Non-agency RMBS	26		—		27		52		2		17			2
State and political subdivisions	12		(2)		—		—		3		—			97
Total held-to-maturity securities	$	51,007	$	(6,796)	100	%	—	%	—	%	—	%		—	%

(a) Represents ratings by Standard & Poor’s (“S&P”) or the equivalent.

(b) Primarily consists of exposure to Germany, France, UK and the Netherlands.


Held-to-maturity securities portfolio at Dec. 31, 2022					Ratings (a)
			Net unrealized gain (loss)								BB+ and lower
(dollars in millions)	Amortized cost				AAA/ AA-		A+/ A-		BBB+/ BBB-				Not rated
Agency RMBS	$	34,188	$	(4,228)	100	%	—	%	—	%	—	%		—	%
U.S. Treasury	10,863		(895)		100		—		—		—			—
U.S. government agencies	4,206		(534)		100		—		—		—			—
Agency commercial MBS	4,014		(411)		100		—		—		—			—
Sovereign debt/sovereign guaranteed (b)	1,388		(76)		100		—		—		—			—
CLOs	983		(26)		100		—		—		—			—
Supranational	443		(25)		100		—		—		—			—
Foreign government agencies	66		(6)		100		—		—		—			—
Non-agency RMBS	30		1		22		58		2		17			1
State and political subdivisions	13		(2)		2		2		3		—			93


Total held-to-maturity securities	$	56,194	$	(6,202)	100	%	—	%	—	%	—	%		—	%

(a) Represents ratings by S&P or the equivalent.

(b) Primarily consists of exposure to Germany, UK and France.

62 BNY Mellon

Temporarily impaired securities at Dec. 31, 2016 Less than 12 months 12 months or more Total
(in millions)
Fair
value

Unrealized
losses

Fair
value

Unrealized
losses

Fair
value

Unrealized
losses

Available-for-sale:
U.S. Treasury $ 8,489
$ 181
$ —
$ —
$ 8,489
$ 181
U.S. government agencies 257
9
—
—
257
9
State and political subdivisions 1,058
33
131
19
1,189
52
Agency RMBS 14,766
141
1,673
200
16,439
341
Non-agency RMBS 21
—
332
13
353
13
Other RMBS 26
—
136
8
162
8
Commercial MBS 302
7
163
4
465
11
Agency commercial MBS 3,570
78
589
6
4,159
84
CLOs 443
1
404
—
847
1
Other asset-backed securities 276
1
357
5
633
6
Foreign covered bonds 712
9
—
—
712
9
Corporate bonds 594
16
7
1
601
17
Sovereign debt/sovereign guaranteed 1,521
20
63
—
1,584
20
Other debt securities 742
10
50
—
792
10
Non-agency RMBS (a)
25
—
47
9
72
9
Total securities available-for-sale (b)
$ 32,802
$ 506

$ 3,952
$ 265

$ 36,754
$ 771
Held-to-maturity:
U.S. Treasury $ 6,112
$ 41
$ —
$ —
$ 6,112
$ 41
U.S. government agencies 1,533
6
—
—
1,533
6
State and political subdivisions —
—
4
1
4
1
Agency RMBS 19,498
297
102
2
19,600
299
Non-agency RMBS 4
—
48
2
52
2
Other RMBS 15
—
123
4
138
4
Agency commercial MBS 621
10
—
—
621
10
Total securities held-to-maturity $ 27,783
$ 354

$ 277
$ 9

$ 28,060
$ 363
Total temporarily impaired securities $ 60,585
$ 860

$ 4,229
$ 274

$ 64,814
$ 1,134


~~(a)~~			~~Previously included in the Grantor Trust. The Grantor Trust was dissolved in 2011.~~

	Notes to Consolidated Financial Statements (continued)
~~(b)~~			Includes gross unrealized losses for 12 months or more of $190 million recorded in accumulated other comprehensive income related to investment securities that were transferred from available-for-sale to held-to-maturity. The unrealized losses are primarily related to Agency RMBS and will be amortized into net interest revenue over the contractual lives of the securities. There were no gross unrealized losses for less than 12 months.

Maturity distribution

The following table shows the maturity distribution by carrying amount and yield (on a tax equivalent basis) of our ~~investment~~ securities ~~portfolio at~~ ~~Sept. 30, 2017~~.portfolio.


Maturity distribution and yields on securities at Sept. 30, 2023
	Within 1 year				1-5 years				5-10 years				After 10 years				Total
(dollars in millions)	Amount		Yield (a)		Amount		Yield (a)		Amount		Yield (a)		Amount		Yield (a)		Amount		Yield (a)
Available-for-sale:
U.S. Treasury	$	5,957	0.87	%	$	12,059	1.15	%	$	1,055	1.35	%	$	1,827	2.92	%	$	20,898	1.27	%
Sovereign debt/sovereign guaranteed	2,850		2.29		4,934		1.95		841		1.31		65		3.55		8,690		2.00
Supranational	530		1.33		5,438		2.88		1,570		3.28		30		3.42		7,568		2.86
Foreign covered bonds	748		1.47		4,969		3.50		393		1.05		—		—		6,110		3.08
Foreign government agencies/local governments	348		2.12		1,682		2.63		129		3.68		—		—		2,159		2.61
U.S. government agencies	20		2.98		1,605		3.37		1,033		2.90		104		2.73		2,762		3.15


Other debt securities	—		—		—		—		—		—		1		4.85		1		4.85
Mortgage-backed securities:
Agency RMBS																	9,987		4.94
Non-agency RMBS																	1,737		4.50
Agency commercial MBS																	7,532		3.03
Non-agency commercial MBS																	2,917		3.56
CLOs																	5,935		6.83
Other ABS																	922		2.21
Total securities available-for-sale	$	10,453	1.37	%	$	30,687	2.13	%	$	5,021	2.26	%	$	2,027	2.93	%	$	77,218	2.97	%
Held-to-maturity:
U.S. Treasury	$	1,307	1.99	%	$	7,256	1.21	%	$	914	1.24	%	$	—	—	%	$	9,477	1.32	%
U.S. government agencies	294		1.32		2,629		1.48		1,063		1.48		213		1.99		4,199		1.49
Sovereign debt/sovereign guaranteed	573		1.17		810		0.99		73		0.59		—		—		1,456		1.04
Supranational	—		—		510		1.42		—		—		—		—		510		1.42
Foreign government agencies	—		—		78		1.16		—		—		—		—		78		1.16
State and political subdivisions	—		—		—		—		12		4.75		—		—		12		4.75
Mortgage-backed securities:
Agency RMBS																	30,760		2.32
Non-agency RMBS																	26		2.75
Agency commercial MBS																	3,506		2.40
CLOs																	983		6.73
Total securities held-to-maturity	$	2,174	1.69	%	$	11,283	1.27	%	$	2,062	1.36	%	$	213	1.99	%	$	51,007	2.11	%
Total securities	$	12,627	1.42	%	$	41,970	1.91	%	$	7,083	2.02	%	$	2,240	2.86	%	$	128,225	2.64	%

(a) Yields are based upon the amortized cost of securities and consider the contractual coupon, amortization of premiums and accretion of discounts, excluding the effect of related hedging derivatives.

Maturity distribution and yield on investment securities at Sept. 30, 2017 U.S. Treasury
U.S. government
agencies

State and political
subdivisions
Other bonds, notes and debentures
Mortgage/
asset-backed and
equity securities

(dollars in millions) Amount
Yield (a)

Amount
Yield (a)

Amount
Yield (a)

Amount
Yield (a)

Amount
Yield (a)

Total
Securities available-for-sale:
One year or less $ 2,223
1.02 % $ —
— % $ 438
2.60 % $ 3,852
1.01 % $ —
— % $ 6,513
Over 1 through 5 years 5,790
1.66
174
1.29
1,576
3.07
12,648
0.99
—
—
20,188
Over 5 through 10 years 4,002
1.90
690
2.46
912
3.34
2,835
0.81
—
—
8,439
Over 10 years 3,487
3.11
—
—
198
2.36
198
1.64
—
—
3,883
Mortgage-backed securities —
—
—
—
—
—
—
—
36,381
2.78
36,381
Asset-backed securities —
—
—
—
—
—
—
—
3,707
2.32
3,707
Equity securities (b)
—
—
—
—
—
—
—
—
943
—
943
Total $ 15,502
1.96 % $ 864
2.23 % $ 3,124
3.04 % $ 19,533
0.97 % $ 41,031
2.68 % $ 80,054
Securities held-to-maturity:
One year or less $ 4,943
0.97 % $ 731
0.99 % $ —
— % $ 700
0.60 % $ —
— % $ 6,374
Over 1 through 5 years 3,517
1.67
883
1.38
2
6.88
307
0.59
—
—
4,709
Over 5 through 10 years 1,407
1.92
—
—
2
6.86
661
0.73
—
—
2,070
Over 10 years —
—
—
—
14
5.32
—
—
—
—
14
Mortgage-backed securities —
—
—
—
—
—
—
—
26,828
2.80
26,828
Total $ 9,867
1.36 % $ 1,614
1.20 % $ 18
5.64 % $ 1,668
0.65 % $ 26,828
2.80 % $ 39,995


~~(a)~~	~~Yields are based upon the amortized cost of securities.~~


~~(b)~~	~~Includes money market funds.~~

~~BNY Mellon 67~~

~~Notes to Consolidated Financial Statements(continued)~~

~~Other-than-temporary impairment~~

We conduct periodic reviews of all securities to determine whether OTTI has occurred. Such reviews may incorporate the use of economic models. Various inputs to the economic models are used to determine if an unrealized loss on securities is other-than-temporary. For example, the most significant inputs related to non-agency RMBS are:

Default rate - the number of mortgage loans expected to go into default over the life of the transaction, which is driven by the roll rate of loans in each performance bucket that will ultimately migrate to default; and

~~Severity - the loss expected to be realized when a loan defaults.~~

To determine if an unrealized loss is other-than-temporary, we project total estimated defaults of the underlying assets (mortgages) and multiply that calculated amount by an estimate of realizable value upon sale of these assets in the marketplace (severity) in order to determine the projected collateral loss. In determining estimated default rate and severity assumptions, we review the performance of the underlying securities, industry studies and market forecasts, as well as our view of the economic outlook affecting collateral. We also evaluate the current credit enhancement underlying the bond to determine the impact on cash flows. If we determine that a given security will be subject to a write-down or loss, we record the expected credit loss as a charge to earnings.

The table below shows the projected weighted-average default rates and loss severities for the 2007, 2006 and late 2005 non-agency RMBS and the securities previously held in the Grantor Trust that we established in connection with the restructuring of our investment securities portfolio in 2009, at ~~Sept. 30, 2017~~ ~~and~~ ~~Dec. 31, 2016~~.

Projected weighted-average default rates and loss severities
Sept. 30, 2017 Dec. 31, 2016
Default rate
Severity
Default rate
Severity
Alt-A 22 % 54 % 30 % 54 %
Subprime 38 % 66 % 49 % 70 %
Prime 13 % 39 % 18 % 39 %

~~The following table presents pre-tax net securities gains (losses) by type.~~

The following tables reflect investment securities credit losses recorded in earnings. The beginning balance represents the credit loss component for which OTTI occurred on debt securities in prior periods. The additions represent the first time a debt security was credit impaired or when subsequent credit impairments have occurred. The deductions represent credit losses on securities that have been sold, are required to be sold, or for which it is our intention to sell.

Debt securities credit loss roll forward
(in millions) 3Q17
3Q16
Beginning balance as of June 30 $ 85
$ 91
Add: Initial OTTI credit losses —
—
Subsequent OTTI credit losses 1
1
Less: Realized losses for securities sold 2
5
Ending balance as of Sept. 30 $ 84
$ 87

Debt securities credit loss roll forward
(in millions) YTD17
YTD16
Beginning balance as of Jan. 1 $ 88
$ 91
Add: Initial OTTI credit losses —
—
Subsequent OTTI credit losses 3
5
Less: Realized losses for securities sold 7
9
Ending balance as of Sept. 30 $ 84
$ 87

Pledged assets

At Sept. 30, ~~2017,~~2023, BNY Mellon had pledged assets of ~~$108~~$127 billion, including ~~$87~~$95 billion pledged as collateral for potential borrowings at the Federal Reserve Discount Window and $4$9 billion pledged as collateral for borrowing at the Federal Home Loan Bank. The components of the assets pledged at Sept. 30, ~~2017~~2023 included ~~$92~~$109 billion of securities, $13 billion of loans, $2$4 billion of trading assets and $1 billion of interest-bearing deposits with banks.

~~68 BNY Mellon~~

~~Notes to Consolidated Financial Statements(continued)~~

If there has been no borrowing at the Federal Reserve Discount Window, the Federal Reserve generally allows banks to freely move assets in and out of their pledged assets account to sell or repledge the assets

for other purposes. BNY Mellon regularly moves assets in and out of its pledged assets account at the Federal ~~Reserve.~~Reserve as there have been no borrowings.

At Dec. 31, ~~2016,~~2022, BNY Mellon had pledged assets of ~~$102~~$138 billion, including ~~$84~~$106 billion pledged as collateral for potential borrowing at the Federal Reserve Discount ~~Window.~~Window and $8 billion pledged as collateral for borrowing at the Federal Home Loan Bank. The components of the assets pledged at Dec. 31, ~~2016~~2022 included ~~$87~~$121 billion of securities, $8$12 billion of loans, $4 billion of trading assets and $1 billion of interest-bearing deposits with ~~banks and $3 billion of trading assets.~~banks.

At Sept. 30, ~~2017~~2023 and Dec. 31, ~~2016,~~2022, pledged assets included ~~$13~~$23 billion and $6$24 billion, respectively, for

BNY Mellon 63


Notes to Consolidated Financial Statements (continued)

which the recipients were permitted to sell or repledge the assets delivered.

We also obtain securities as collateral, including receipts under resale agreements, securities borrowed, derivative contracts and custody agreements, on terms which permit us to sell or repledge the securities to others. At Sept. 30, ~~2017~~2023 and Dec. 31, ~~2016,~~2022, the market value of the securities received that can be sold or repledged was ~~$68~~$191 billion and ~~$50~~$115 billion, respectively. We routinely sell or repledge these securities through delivery to third parties. As of Sept. 30, ~~2017~~2023 and Dec. 31, ~~2016,~~2022, the market value of securities collateral sold or repledged was ~~$39~~$163 billion and ~~$20~~$78 billion, respectively.

Restricted cash and securities

Cash and securities may ~~also~~ be segregated under federal and other regulations or requirements. At Sept. 30, ~~2017~~2023 and Dec. 31, ~~2016,~~2022, cash segregated under federal and other regulations or requirements was $4$3 billion and $3$7 billion, respectively. Restricted cash is primarily included in interest-bearing deposits with banks on the consolidated balance sheet. Securities segregated ~~for these purposes~~under federal and other regulations or requirements were $2$3 billion at Sept. 30, ~~2017~~2023 and $2$3 billion at Dec. 31, ~~2016.~~2022. Restricted securities were sourced from securities purchased under resale agreements ~~at Sept. 30, 2017 and Dec. 31, 2016~~ and are included in federal funds sold and securities purchased under resale agreements on the consolidated balance sheet.

Note ~~5 -~~ 5–Loans and asset quality

Loans

The table below provides the details of our loan ~~portfolio and industry concentrations~~portfolio.


Loans	Sept. 30, 2023		Dec. 31, 2022
(in millions)
Commercial	$	1,944	$	1,732
Commercial real estate	6,730		6,226
Financial institutions	10,441		9,684
Lease financings	633		657
Wealth management loans	9,415		10,302
Wealth management mortgages	9,130		8,966
Other residential mortgages	972		345
Capital call financing	3,410		3,438
Other	2,804		2,941
Overdrafts	3,628		4,839
Margin loans	17,183		16,933
Total loans (a)	$	66,290	$	66,063

(a)Net of ~~credit risk~~unearned income of $270 million at Sept. 30, ~~2017~~2023 and $225 million at Dec. 31, ~~2016.~~2022 primarily related to lease financings.

We disclose information related to our loans and asset quality by the class of the financing receivable in the following tables.

64 BNY Mellon

Loans Sept. 30, 2017
Dec. 31, 2016
(in millions)
Domestic:
Financial institutions $ 5,155
$ 6,342
Commercial 2,698
2,286
Wealth management loans and mortgages 16,161
15,555
Commercial real estate 4,921
4,639
Lease financings 823
989
Other residential mortgages 741
854
Overdrafts 1,487
1,055
Other 1,159
1,202
Margin loans 13,720
17,503
Total domestic 46,865
50,425
Foreign:
Financial institutions 6,741
8,347
Commercial 305
331
Wealth management loans and mortgages 104
99
Commercial real estate 6
15
Lease financings 522
736
Other (primarily overdrafts) 4,373
4,418
Margin loans 152
87
Total foreign 12,203
14,033
Total loans (a)
$ 59,068
$ 64,458


~~(a)~~			~~Net of unearned income of~~ ~~$414 million~~ at ~~Sept. 30, 2017~~ ~~and~~ ~~$527 million~~ at ~~Dec. 31, 2016~~ ~~primarily on domestic and foreign lease financings.~~

Our loan portfolio consists of three portfolio segments: commercial, lease financings and mortgages. We manage our portfolio at the class level which consists of six classes of financing receivables: commercial, commercial real estate, financial institutions, lease financings, wealth management loans and mortgages, and other residential mortgages.

~~The following tables are presented for each class of financing receivable and provide additional information about our credit risks and the adequacy of our allowance for credit losses.~~

~~BNY Mellon 69~~



Notes to Consolidated Financial Statements(continued)

Allowance for credit losses

~~Transactions~~Activity in the allowance for credit losses ~~are summarized as follows.~~on loans and lending-related commitments is presented below. This does not include activity in the allowance for credit losses related to other financial instruments, including cash and due from banks, interest-bearing deposits with banks, federal funds sold and securities purchased under resale agreements, available-for-sale securities, held-to-maturity securities and accounts receivable.


Allowance for credit losses activity for the quarter ended Sept. 30, 2023									Wealth management loans		Wealth management mortgages		Other residential mortgages		Capital call financing
(in millions)	Commercial		Commercial real estate		Financial institutions		Lease financings										Total
Beginning balance	$	21	$	199	$	32	$	1	$	1	$	15	$	9	$	4	$	282
Charge-offs	—		—		—		—		—		—		—		—		—
Recoveries	—		—		—		—		—		—		—		—		—
Net (charge-offs) recoveries	—		—		—		—		—		—		—		—		—
Provision (a)	11		23		(10)		—		—		(6)		(3)		(1)		14
Ending balance	$	32	$	222	$	22	$	1	$	1	$	9	$	6	$	3	$	296
Allowance for:
Loan losses	$	17	$	166	$	10	$	1	$	1	$	8	$	6	$	2	$	211
Lending-related commitments	15		56		12		—		—		1		—		1		85
Individually evaluated for impairment:
Loan balance (b)	$	—	$	102	$	—	$	—	$	—	$	14	$	1	$	—	$	117
Allowance for loan losses	—		2		—		—		—		—		—		—		2

(a) Does not include the provision for credit losses benefit related to other financial instruments of $11 million for the quarter ended Sept. 30, 2023.

(b) Includes collateral-dependent loans of $117 million with $198 million of collateral at fair value.


Allowance for credit losses activity for the quarter ended June 30, 2023									Wealth management loans		Wealth management mortgages		Other residential mortgages		Capital call financing
(in millions)	Commercial		Commercial real estate		Financial institutions		Lease financings										Total
Beginning balance	$	21	$	177	$	24	$	1	$	1	$	14	$	9	$	6	$	253
Charge-offs	—		—		—		—		—		—		(3)		—		(3)
Recoveries	—		—		—		—		—		—		2		—		2
Net (charge-offs)	—		—		—		—		—		—		(1)		—		(1)
Provision (a)	—		22		8		—		—		1		1		(2)		30
Ending balance	$	21	$	199	$	32	$	1	$	1	$	15	$	9	$	4	$	282
Allowance for:
Loan losses	$	4	$	143	$	17	$	1	$	1	$	14	$	9	$	2	$	191
Lending-related commitments	17		56		15		—		—		1		—		2		91
Individually evaluated for impairment:
Loan balance (b)	$	—	$	101	$	—	$	—	$	—	$	11	$	1	$	—	$	113
Allowance for loan losses	—		3		—		—		—		—		—		—		3

(a) Does not include the provision for credit losses benefit related to other financial instruments of $25 million for the quarter ended June 30, 2023.

(b) Includes collateral-dependent loans of $113 million with $167 million of collateral at fair value.

BNY Mellon 65

Allowance for credit losses activity for the quarter ended Sept. 30, 2017 Wealth management loans and mortgages
Other
residential
mortgages

(in millions) Commercial
Commercial
real estate

Financial
institutions

Lease
financings

All
other

Foreign
Total
Beginning balance $ 80
$ 75
$ 23
$ 10
$ 25
$ 23
$ —
$ 34
$ 270
Charge-offs —
—
—
—
—
—
—
—
—
Recoveries —
—
—
—
—
1
—
—
1
Net recoveries —
—
—
—
—
1
—
—
1
Provision 1
—
—
(1 ) (4 ) (3 ) —
1
(6 )
Ending balance $ 81
$ 75
$ 23
$ 9
$ 21
$ 21
$ —
$ 35
$ 265
Allowance for:
Loan losses $ 26
$ 57
$ 7
$ 9
$ 17
$ 21
$ —
$ 24
$ 161
Lending-related commitments 55
18
16
—
4
—
—
11
104
Individually evaluated for impairment:
Loan balance $ —
$ —
$ 2
$ —
$ 5
$ —
$ —
$ —
$ 7
Allowance for loan losses —
—
2
—
—
—
—
—
2
Collectively evaluated for impairment:
Loan balance $ 2,698
$ 4,921
$ 5,153
$ 823
$ 16,156
$ 741
$ 16,366
(a) $ 12,203
$ 59,061
Allowance for loan losses 26
57
5
9
17
21
—
24
159


~~(a)~~			~~Includes $1,487 million of domestic overdrafts, $13,720 million of margin loans and $1,159 million of other loans at Sept. 30, 2017.~~

Allowance for credit losses activity for the quarter ended June 30, 2017 Wealth management loans and mortgages
Other
residential
mortgages

(in millions) Commercial
Commercial
real estate

Financial
institutions

Lease
financings

All
other

Foreign
Total
Beginning balance $ 82
$ 73
$ 23
$ 10
$ 26
$ 25
$ —
$ 37
$ 276
Charge-offs —
—
—
—
—
—
—
—
—
Recoveries —
—
—
—
—
1
—
—
1
Net recoveries —
—
—
—
—
1
—
—
1
Provision (2 ) 2
—
—
(1 ) (3 ) —
(3 ) (7 )
Ending balance $ 80
$ 75
$ 23
$ 10
$ 25
$ 23
$ —
$ 34
$ 270
Allowance for:
Loan losses $ 26
$ 55
$ 7
$ 10
$ 21
$ 23
$ —

$ 23
$ 165
Lending-related commitments 54
20
16
—
4
—
—

11
105
Individually evaluated for impairment:
Loan balance $ —
$ —
$ 2
$ —
$ 7
$ —
$ —

$ —
$ 9
Allowance for loan losses —
—
2
—
3
—
—

—
5
Collectively evaluated for impairment:
Loan balance $ 2,580
$ 5,017
$ 5,952
$ 847
$ 16,024
$ 780
$ 15,950
(a) $ 14,514
$ 61,664
Allowance for loan losses 26
55
5
10
18
23
—

23
160


~~(a)~~	~~Includes $855 million of domestic overdrafts, $13,973 million of margin loans and $1,122 million of other loans at June 30, 2017.~~

~~70 BNY Mellon~~

Notes to Consolidated Financial Statements(continued)

Allowance for credit losses activity for the quarter ended Sept. 30, 2016 Wealth management loans and mortgages
Other
residential
mortgages

All
other

Foreign
Total
(in millions) Commercial
Commercial
real estate

Financial
institutions

Lease
financings

Beginning balance $ 90
$ 63
$ 29
$ 14
$ 18
$ 29
$ —
$ 37
$ 280
Charge-offs —
—
—
—
—
(1 ) —
—
(1 )
Recoveries —
—
13
—
—
1
—
—
14
Net recoveries —
—
13
—
—
—
—
—
13
Provision 1
—
(13 ) —
—
(1 ) —
(6 ) (19 )
Ending balance $ 91
$ 63
$ 29
$ 14
$ 18
$ 28
$ —
$ 31
$ 274
Allowance for:
Loan losses $ 22
$ 45
$ 9
$ 14
$ 14
$ 28
$ —
$ 16
$ 148
Lending-related commitments 69
18
20
—
4
—
—
15
126
Individually evaluated for impairment:
Loan balance $ —
$ 1
$ —
$ 4
$ 4
$ —
$ —
$ —
$ 9
Allowance for loan losses —
1
—
2
—
—
—
—
3
Collectively evaluated for impairment:
Loan balance $ 2,292
$ 4,693
$ 6,783
$ 1,013
$ 15,027
$ 901
$ 20,189
(a) $ 15,061
$ 65,959
Allowance for loan losses 22
44
9
12
14
28
—
16
145


~~(a)~~	~~Includes $1,580 million of domestic overdrafts, $17,487 million of margin loans and $1,122 million of other loans at Sept. 30, 2016.~~

Allowance for credit losses activity for the nine months ended Sept. 30, 2017 Wealth management loans and mortgages
Other
residential
mortgages
All
other
Foreign
Total
(in millions) Commercial
Commercial
real estate
Financial
institutions
Lease
financings
Beginning balance $ 82
$ 73
$ 26
$ 13
$ 23
$ 28
$ —
$ 36
$ 281
Charge-offs —
—
—
—
—
(1 ) —
—
(1 )
Recoveries —
—
—
—
—
3
—
—
3
Net recoveries —
—
—
—
—
2
—
—
2
Provision (1 ) 2
(3 ) (4 ) (2 ) (9 ) —
(1 ) (18 )
Ending balance $ 81
$ 75
$ 23
$ 9
$ 21
$ 21
$ —
$ 35
$ 265

Allowance for credit losses activity for the nine months ended Sept. 30, 2016 Wealth management loans and mortgages
Other
residential
mortgages
All
other
Foreign
Total
(in millions) Commercial
Commercial
real estate
Financial
institutions
Lease
financings
Beginning balance $ 82
$ 59
$ 31
$ 15
$ 19
$ 34
$ —
$ 35
$ 275
Charge-offs —
—
—
—
—
(1 ) —
—
(1 )
Recoveries —
—
13
—
—
4
—
1
18
Net recoveries —
—
13
—
—
3
—
1
17
Provision 9
4
(15 ) (1 ) (1 ) (9 ) —
(5 ) (18 )
Ending balance $ 91
$ 63
$ 29
$ 14
$ 18
$ 28
$ —
$ 31
$ 274

~~BNY Mellon 71~~



~~Notes to Consolidated Financial Statements(continued)~~


Allowance for credit losses activity for the quarter ended Sept. 30, 2022									Wealth management loans		Wealth management mortgages		Other residential mortgages		Capital call financing		Total
(in millions)	Commercial		Commercial real estate		Financial institutions		Lease financings
Beginning balance	$	16	$	184	$	21	$	1	$	1	$	7	$	7	$	6	$	243
Charge-offs	—		—		—		—		—		—		—		—		—
Recoveries	—		—		—		—		—		—		1		—		1
Net recoveries	—		—		—		—		—		—		1		—		1
Provision (a)	1		(8)		(1)		—		—		2		—		(2)		(8)
Ending balance	$	17	$	176	$	20	$	1	$	1	$	9	$	8	$	4	$	236
Allowance for:
Loan losses	$	4	$	130	$	9	$	1	$	1	$	8	$	8	$	3	$	164
Lending-related commitments	13		46		11		—		—		1		—		1		72
Individually evaluated for impairment:
Loan balance (b)	$	—	$	75	$	—	$	—	$	—	$	14	$	1	$	—	$	90
Allowance for loan losses	—		1		—		—		—		—		—		—		1

(a) Does not include the provision for credit losses benefit related to other financial instruments of $22 million for the quarter ended Sept. 30, 2022.

(b) Includes collateral-dependent loans of $90 million with $135 million of collateral at fair value.


Allowance for credit losses activity for the nine months ended Sept. 30, 2023													Other residential mortgages		Capital call financing		Total
(in millions)	Commercial		Commercial real estate		Financial institutions		Lease financings		Wealth management loans		Wealth management mortgages
Beginning balance	$	18	$	184	$	24	$	1	$	1	$	12	$	8	$	6	$	254
Charge-offs	—		—		—		—		—		—		(3)		—		(3)
Recoveries	1		—		—		—		—		—		2		—		3
Net recoveries (charge-offs)	1		—		—		—		—		—		(1)		—		—
Provision (a)	13		38		(2)		—		—		(3)		(1)		(3)		42
Ending balance	$	32	$	222	$	22	$	1	$	1	$	9	$	6	$	3	$	296

(a) Does not include provision for credit losses benefit related to other financial instruments of $7 million for the nine months ended Sept. 30, 2023.


Allowance for credit losses activity for the nine months ended Sept. 30, 2022													Other residential mortgages		Capital call financing		Total
(in millions)	Commercial		Commercial real estate		Financial institutions		Lease financings		Wealth management loans		Wealth management mortgages
Beginning balance	$	12	$	199	$	13	$	1	$	1	$	6	$	7	$	2	$	241
Charge-offs	—		—		—		—		—		—		—		—		—
Recoveries	—		—		—		—		—		—		3		—		3
Net recoveries	—		—		—		—		—		—		3		—		3
Provision (a)	5		(23)		7		—		—		3		(2)		2		(8)
Ending balance	$	17	$	176	$	20	$	1	$	1	$	9	$	8	$	4	$	236

(a) Does not include provision for credit losses related to other financial instruments of $27 million for the nine months ended Sept. 30, 2022.

Nonperforming assets

The table below presents our nonperforming assets.


Nonperforming assets	Sept. 30, 2023						Dec. 31, 2022
	Recorded investment						Recorded investment
	With an allowance		Without an allowance				With an allowance		Without an allowance
(in millions)					Total						Total
Nonperforming loans:

Other residential mortgages	$	23	$	1	$	24	$	30	$	1	$	31
Wealth management mortgages	7		15		22		8		14		22
Commercial real estate	—		—		—		—		54		54

Total nonperforming loans	30		16		46		38		69		107
Other assets owned	—		2		2		—		2		2
Total nonperforming assets	$	30	$	18	$	48	$	38	$	71	$	109

66 BNY Mellon

Nonperforming assets
(in millions)
Sept. 30, 2017
Dec. 31, 2016

Nonperforming loans:
Other residential mortgages $ 80
$ 91
Wealth management loans and mortgages 8
8
Financial institutions 2
—
Lease financings —
4
Total nonperforming loans 90
103
Other assets owned 4
4
Total nonperforming assets $ 94
$ 107

At ~~Sept. 30, 2017, undrawn commitments to borrowers whose loans were classified as nonaccrual or reduced rate were not material.~~

~~Lost interest~~

~~The table below presents the amount of lost interest income.~~

Lost interest
(in millions) 3Q17
2Q17
3Q16
YTD17
YTD16
Amount by which interest income recognized on nonperforming loans exceeded reversals $ —
$ —
$ —
$ —
$ —
Amount by which interest income would have increased if nonperforming loans at period end had been performing for the entire period $ 1
$ 1
$ 1
$ 4
$ 4

~~Impaired loans~~

~~The tables below present information about our impaired loans. We use the discounted cash flow method as the primary method for valuing impaired loans.~~

Impaired loans 3Q17 2Q17 3Q16 YTD17 YTD16
(in millions)
Average
recorded
investment

Interest
income
recognized
Average
recorded
investment

Interest
income
recognized

Average
recorded
investment
Interest
income
recognized
Average
recorded
investment
Interest
income
recognized
Average
recorded
investment
Interest
income
recognized
Impaired loans with an allowance:
Commercial real estate $ —
$ —
$ —
$ —
$ 1
$ —
$ —
$ —
$ 1
$ —
Financial institutions 2
—
1
—
—
—
1
—
—
—
Wealth management loans and mortgages 2
—
3
—
3
—
3
—
5
—
Lease financings —
—
—
—
4
—
1
—
3
—
Total impaired loans with an allowance 4
—
4
—
8
—
5
—
9
—
Impaired loans without an allowance:

Commercial real estate —
—
—
—
1
—
—
—
1
—
Financial institutions —
—
—
—
85
—
—
—
128
—
Wealth management loans and mortgages 4
—
3
—
3
—
3
—
2
—
Total impaired
loans without an allowance (a)
4
—
3
—
89
—
3
—
131
—
Total impaired loans $ 8
$ —
$ 7
$ —
$ 97
$ —
$ 8
$ —
$ 140
$ —


~~(a)~~			When the discounted cash flows, collateral value or market price equals or exceeds the carrying value of the loan, then the loan does not require an allowance under the accounting standard related to impaired loans.

~~72 BNY Mellon~~



Notes to Consolidated Financial Statements(continued)

Impaired loans Sept. 30, 2017 Dec. 31, 2016
(in millions)
Recorded
investment

Unpaid
principal
balance

Related
allowance (a)

Recorded
investment

Unpaid
principal
balance

Related
allowance (a)

Impaired loans with an allowance:
Commercial real estate $ —
$ 3
$ —
$ —
$ 3
$ —
Financial institutions 2
2
2
—
—
—
Wealth management loans and mortgages 1
1
—
3
3
3
Lease financings —
—
—
4
4
2
Total impaired loans with an allowance 3
6
2
7
10
5
Impaired loans without an allowance:

Wealth management loans and mortgages 4
4
N/A
2
2
N/A
Total impaired loans without an allowance (b)
4
4
N/A
2
2
N/A
Total impaired loans (c)
$ 7
$ 10
$ 2
$ 9
$ 12
$ 5


~~(a)~~	~~The allowance for impaired loans is included in the allowance for loan losses.~~


~~(b)~~	When the discounted cash flows, collateral value or market price equals or exceeds the carrying value of the loan, then the loan does not require an allowance under the accounting standard related to impaired loans.


~~(c)~~	~~Excludes an aggregate of less than $1 million of impaired loans in amounts individually less than~~ ~~$1 million~~ ~~at both~~ ~~Sept. 30, 2017~~ ~~and~~ ~~Dec. 31, 2016, respectively. The allowance for loan losses associated with these loans totaled less than~~ ~~$1 million~~ ~~at both~~ ~~Sept. 30, 2017~~ ~~and~~ ~~Dec. 31, 2016, respectively.~~

Past due loans

The table below presents our past due loans.


Past due loans and still accruing interest																	Past due loans and still accruing interest	Sept. 30, 2023								Dec. 31, 2022
																		Days past due						Total past due		Days past due						Total past due
(in millions)																	(in millions)	30-59		60-89		≥90				30-59		60-89		≥90
Wealth management loans																	Wealth management loans	$	40	$	1	$	—	$	41	$	43	$	1	$	—	$	44
Commercial real estate																	Commercial real estate	9		4		—		13		11		—		—		11
Other residential mortgages																	Other residential mortgages	6		2		—		8		5		—		—		5
Wealth management mortgages																	Wealth management mortgages	1		2		—		3		54		1		—		55

Past due loans and still accruing interest	Sept. 30, 2017								Dec. 31, 2016
	Days past due						Total past due		Days past due						Total past due
(in millions)	30-59		60-89		≥90				30-59		60-89		≥90
Commercial real estate	$	51	$	60	$	—	$	111	$	78	$	—	$	—	$	78
Wealth management loans and mortgages	86		15		1		102		21		2		—		23
Other residential mortgages	20		3		5		28		20		6		7		33
Financial institutions	—		—		—		—		1		27		—		28

Total past due loans	$	157	$	78	$	6	$	241	$	120	$	35	$	7	$	162	Total past due loans	$	56	$	9	$	—	$	65	$	113	$	2	$	—	$	115

Loan modifications

~~Troubled debt restructurings (“TDRs”)~~

Modified loans are evaluated to determine whether a modification or restructuring with a borrower experiencing financial difficulty results in principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension. The modification could result in a new loan or a continuation of the existing loan.

In the third quarter of 2023, we modified one other residential mortgage loan, iswith an aggregate recorded investment of less than $1 million, by providing payment modifications.

In the second quarter of 2023, we modified one commercial real estate exposure, with a recorded investment of $59 million and an unfunded lending commitment of $15 million, by extending the maturity date. We also modified two other residential mortgage loans, with an aggregate recorded investment of less than $1 million, by extending the maturity dates and reducing the interest rates.

We modified one commercial real estate loan in the first quarter of 2023, with a recorded investment of $12 million, by extending the maturity date.

Loans modified prior to 2023 are considered ~~a TDR~~to be TDRs if the debtor is experiencing financial difficulties and the creditor grants a concession to the debtor that would not

otherwise be considered. A TDR may include a transfer of real estate or other assets from the debtor to the creditor, or a modification of the term of the loan. Not all modified loans are considered TDRs.

~~The following table presents our TDRs.~~

TDRs 3Q17 2Q17 3Q16

Outstanding
recorded investment

Outstanding
recorded investment

Outstanding
recorded investment
(dollars in millions)
Number of
contracts

Pre-modification Post-modification Number of contracts
Pre-modification Post-modification Number of contracts
Pre-modification Post-modification
Other residential mortgages 19
$ 5
$ 5
16
$ 4
$ 4
17
$ 4
$ 4
Wealth management loans and mortgages 1
2
2
—
—
—
—
—
—
Total TDRs 20
$ 7
$ 7
16
$ 4
$ 4
17
$ 4
$ 4

~~BNY Mellon 73~~

~~Notes to Consolidated Financial Statements(continued)~~

~~Other residential mortgages~~

We modified eight loans in the first nine months of 2022 with an aggregate recorded investment of $13 million. The modifications of the other residential ~~mortgage~~and commercial real estate loans in the ~~third quarter~~first nine months of ~~2017, second quarter of 2017 and third quarter of 2016~~2022 consisted of reducing the stated interest rates and, in certain cases, a forbearance of default and extending the maturity dates. ~~The modified loans are primarily collateral dependent for which the value is based on the fair value of the collateral.~~

~~TDRs that subsequently defaulted~~

~~There were three residential mortgage loans that had been restructured in a TDR during the previous 12~~

BNY Mellon 67

~~months and have subsequently defaulted in the third quarter of 2017. The total recorded investment of these loans was less than $1 million.~~


Notes to Consolidated Financial Statements (continued)

Credit quality indicators

Our credit strategy is to focus on ~~investment grade~~investment-grade clients that are active users of our non-credit services. Each customer is assigned an internal credit rating, which is mapped to an external rating agency grade equivalent, if possible, based upon a number of dimensions, which are continually evaluated and may change over time.

The ~~following~~ tables ~~present~~below provide information about the credit ~~quality indicators.~~

~~Commercial~~profile of the loan portfolio by the period of origination.


Credit profile of the loan portfolio													Sept. 30, 2023
													Revolving loans
	Originated, at amortized cost												Amortized cost		Converted to term loans – Amortized cost				Accrued interest receivable
(in millions)	YTD23		2022		2021		2020		2019		Prior to 2019						Total (a)
Commercial:
Investment grade	$	128	$	121	$	69	$	—	$	—	$	45	$	1,440	$	—	$	1,803
Non-investment grade	56		18		—		—		—		—		67		—		141
Total commercial	184		139		69		—		—		45		1,507		—		1,944		$	2
Commercial real estate:
Investment grade	1,538		882		585		153		307		894		187		22		4,568
Non-investment grade	1,098		634		154		43		30		142		61		—		2,162
Total commercial real estate	2,636		1,516		739		196		337		1,036		248		22		6,730		29
Financial institutions:
Investment grade	579		86		58		—		—		10		7,390		—		8,123
Non-investment grade	4		10		—		—		—		—		2,304		—		2,318
Total financial institutions	583		96		58		—		—		10		9,694		—		10,441		103
Wealth management loans:
Investment grade	36		32		61		22		8		164		8,949		100		9,372
Non-investment grade	—		2		—		—		—		—		41		—		43
Total wealth management loans	36		34		61		22		8		164		8,990		100		9,415		69
Wealth management mortgages	692		1,709		1,931		873		742		3,163		20		—		9,130		21
Lease financings	167		—		—		42		8		416		—		—		633		—
Other residential mortgages (b)	1		547		196		5		—		223		—		—		972		3
Capital call financing	—		—		—		—		—		—		3,410		—		3,410		14
Other loans	—		—		—		—		—		—		2,804		—		2,804		6
Margin loans	6,452		—		—		—		—		—		10,731		—		17,183		36
Total loans	$	10,751	$	4,041	$	3,054	$	1,138	$	1,095	$	5,057	$	37,404	$	122	$	62,662	$	283

(a) Excludes overdrafts of $3,628 million. Overdrafts occur on a daily basis primarily in the custody and securities clearance business and are generally repaid within two business days.

(b) The gross write-offs related to other residential mortgage loans were $3 million in the third quarter of 2023.

68 BNY Mellon

Commercial loan portfolio – Credit risk profile
by creditworthiness category
Commercial Commercial real estate Financial institutions
Sept. 30, 2017
Dec. 31, 2016
Sept. 30, 2017
Dec. 31, 2016
Sept. 30, 2017
Dec. 31, 2016
(in millions)
Investment grade $ 2,857
$ 2,397
$ 4,339
$ 3,823
$ 9,217
$ 11,459
Non-investment grade 146
220
588
831
2,679
3,230
Total $ 3,003
$ 2,617
$ 4,927
$ 4,654
$ 11,896
$ 14,689


Notes to Consolidated Financial Statements (continued)


Credit profile of the loan portfolio													Dec. 31, 2022
													Revolving loans
	Originated, at amortized cost												Amortized cost		Converted to term loans – Amortized cost				Accrued interest receivable
(in millions)	2022		2021		2020		2019		2018		Prior to 2018						Total (a)
Commercial:
Investment grade	$	379	$	148	$	—	$	—	$	43	$	45	$	963	$	—	$	1,578
Non-investment grade	78		6		—		—		—		—		70		—		154
Total commercial	457		154		—		—		43		45		1,033		—		1,732		$	2
Commercial real estate:
Investment grade	1,265		973		407		739		204		904		183		—		4,675
Non-investment grade	431		511		145		323		93		6		20		22		1,551
Total commercial real estate	1,696		1,484		552		1,062		297		910		203		22		6,226		25
Financial institutions:
Investment grade	126		389		—		—		—		25		7,216		—		7,756
Non-investment grade	20		—		—		—		—		—		1,896		12		1,928
Total financial institutions	146		389		—		—		—		25		9,112		12		9,684		78
Wealth management loans:
Investment grade	45		57		22		45		—		217		9,887		—		10,273
Non-investment grade	—		—		—		—		—		—		29		—		29
Total wealth management loans	45		57		22		45		—		217		9,916		—		10,302		49
Wealth management mortgages	1,775		1,976		918		775		485		3,012		25		—		8,966		20
Lease financings	17		—		49		11		7		573		—		—		657		—
Other residential mortgages	27		70		—		—		—		248		—		—		345		1
Capital call financing	—		—		—		—		—		—		3,438		—		3,438		17
Other loans	—		—		—		—		—		—		2,941		—		2,941		6
Margin loans	5,984		—		—		—		—		—		10,949		—		16,933		33
Total loans	$	10,147	$	4,130	$	1,541	$	1,893	$	832	$	5,030	$	37,617	$	34	$	61,224	$	231

(a) Excludes overdrafts of $4,839 million. Overdrafts occur on a daily basis primarily in the custody and securities clearance business and are generally repaid within two business days.

Commercial loans

The commercial loan portfolio is divided into investment grade and non-investment grade categories based on ~~rating criteria largely consistent with those of~~ the ~~public rating agencies. Each customer in the portfolio is~~ assigned an internal credit ~~rating. These internal credit~~ ratings, which are generally consistent with ~~the ratings categories~~those of the public rating agencies. Customers with ratings consistent with BBB- (S&P)/Baa3 (Moody’s) or better are considered to be investment grade. Those clients with ratings lower than this threshold are considered to be non-investment grade.

Commercial real estate

Our income-producing commercial real estate facilities are focused on experienced owners and are structured with moderate leverage based on existing cash flows. Our commercial real estate lending activities also include construction and renovation facilities.

Financial institutions

Financial institution exposures are high quality, with 94% of the exposures meeting the investment grade

equivalent criteria of our internal credit rating classification at Sept. 30, 2023. In addition, 64% of the financial institutions exposure is secured. For example, securities industry clients and asset managers often borrow against marketable securities held in custody. The exposure to financial institutions is generally short term, with 84% expiring within one year.

Wealth management loans ~~and mortgages~~

Wealth management loans and mortgages – Credit risk
profile by internally assigned grade
(in millions) Sept. 30, 2017
Dec. 31, 2016
Wealth management loans:
Investment grade $ 7,128
$ 7,127
Non-investment grade 135
260
Wealth management mortgages 9,002
8,267
Total $ 16,265
$ 15,654

Wealth management ~~non-mortgage~~ loans are not typically rated by external rating agencies. A majority of the wealth management loans are secured by the customers’ investment management accounts or custody accounts. Eligible assets pledged for these loans are typically investment grade fixed-income securities, equities and/or mutual funds. Internal ratings for this portion of the wealth management loan portfolio, therefore, would equate to investment grade external ratings. Wealth management loans are provided to select customers based on the pledge of other types of ~~assets, including business assets, fixed assets or a modest amount of commercial real estate.~~assets. For the loans collateralized by other assets, the credit quality of the obligor is carefully analyzed,

BNY Mellon 69


Notes to Consolidated Financial Statements (continued)

but we do not consider this ~~portfolio~~portion of ~~loans~~our wealth management loan portfolio to be investment grade.

Wealth management mortgages

Credit quality indicators for wealth management mortgages are not correlated to external ratings. Wealth management mortgages are typically loans to high-net-worth individuals, which are secured primarily by residential property. These loans are primarily interest-only, ~~adjustable rate~~adjustable-rate mortgages with a weighted-average loan-to-value ratio of ~~62%~~61% at origination. ~~In the~~Delinquency rate is a key indicator of credit quality in our wealth management ~~portfolio,~~portfolio. At Sept. 30, 2023, less

~~74 BNY Mellon~~

~~Notes to Consolidated Financial Statements(continued)~~

than 1% of the mortgages were past ~~due at Sept. 30, 2017.~~due.

Lease financings

At Sept. 30, 2023, the lease financings portfolio consisted of exposures backed by well-diversified assets, primarily real estate and large-ticket transportation equipment. The largest components of our lease residual value exposure relate to freight-related rail cars and aircraft. Assets are both domestic and foreign-based, with primary concentrations in Germany and the U.S.

Other residential mortgages

The other residential ~~mortgage~~mortgages portfolio primarily consists of 1-4 family residential mortgage loans and totaled ~~$741 million~~$1.0 billion at Sept. 30, ~~2017~~2023 and ~~$854~~$345 million at Dec. 31, ~~2016.~~2022. Included in this portfolio at Sept. 30, 2023 were $750 million of fixed-rate jumbo mortgage loans, purchased primarily in the first

quarter of 2023, with a weighted-average loan-to-value ratio of 73% at origination. These loans are not typically correlated to external ratings. ~~Included in this portfolio at Sept. 30, 2017~~

Capital call financing

Capital call financing includes loans to private equity funds that are ~~$181 million of mortgage loans purchased in 2005, 2006~~secured by the fund investors’ capital commitments and the first quarter of 2007 that are predominantly prime mortgage loans, with a small portion of Alt-A loans. As of Sept. 30, 2017, the purchased loans in this portfolio had a weighted-average loan-to-value ratio of 76% at origination and 11% of the serviced loan balance was at least 60 days delinquent. The properties securing the prime and Alt-A mortgage loans were located (in order of concentration) in California, Florida, Virginia, the tri-state area (New York, New Jersey and Connecticut) and Maryland.funds’ right to call capital.

~~Overdrafts~~

~~Overdrafts primarily relate to custody and securities clearance clients and totaled $5.8 billion at Sept. 30,~~

~~2017 and $5.5 billion at Dec. 31, 2016. Overdrafts occur on a daily basis in the custody and securities clearance business and are generally repaid within two business days.~~

Other loans

Other loans primarily include loans to consumers that are fully collateralized with equities, mutual funds and ~~fixed income~~fixed-income securities.

Margin loans

We had ~~$13.9~~$17.2 billion of secured margin loans ~~on our balance sheet~~ at Sept. 30, ~~2017~~2023, compared with ~~$17.6~~$16.9 billion at Dec. 31, ~~2016.~~2022. Margin loans are collateralized with marketable securities, and borrowers are required to maintain a daily collateral margin in excess of 100% of the value of the loan. We have rarely suffered a loss on these types of ~~loans~~loans.

Overdrafts

Overdrafts primarily relate to custody and ~~do not allocate any of our~~securities clearance clients and totaled $3.6 billion at Sept. 30, 2023 and $4.8 billion at Dec. 31, 2022. Overdrafts occur on a daily basis and are generally repaid within two business days.

Reverse repurchase agreements

Reverse repurchase agreements at Sept. 30, 2023 and Dec. 31, 2022 were fully secured with high-quality collateral. As a result, there was no allowance for credit losses related to ~~margin loans.~~

~~Reverse repurchase agreements~~

~~Reverse repurchase agreements are transactions fully collateralized with high-quality liquid securities. These transactions carry minimal credit risk~~these assets at Sept. 30, 2023 and ~~therefore are not allocated an allowance for credit losses.~~

Dec. 31, 2022.

70 BNY Mellon


Notes to Consolidated Financial Statements (continued)

Note ~~6 -~~ 6–Goodwill and intangible assets

Goodwill

The tables below provide a breakdown of goodwill by ~~business.~~business segment.


Goodwill by business segment (in millions)	Securities Services		Market and Wealth Services		Investment and Wealth Management		Consolidated
Balance at Dec. 31, 2022
Goodwill	$	6,973	$	1,424	$	8,433	$	16,830
Accumulated impairment losses	—		—		(680)		(680)
Net goodwill	$	6,973	$	1,424	$	7,753	$	16,150


Foreign currency translation	(7)		1		15		9
Balance at Sept. 30, 2023
Goodwill	$	6,966	$	1,425	$	8,448	$	16,839
Accumulated impairment losses	—		—		(680)		(680)
Net goodwill	$	6,966	$	1,425	$	7,768	$	16,159


Goodwill by business segment (in millions)	Securities Services		Market and Wealth Services		Investment and Wealth Management		Consolidated
Balance at Dec. 31, 2021	$	7,062	$	1,435	$	9,015	$	17,512
Impairment loss	—		—		(680)		(680)
Dispositions	(13)		—		—		(13)
Foreign currency translation	(142)		(18)		(247)		(407)

Balance at Sept. 30, 2022
Goodwill	$	6,907	$	1,417	$	8,768	$	17,092
Accumulated impairment losses	—		—		(680)		(680)
Net goodwill	$	6,907	$	1,417	$	8,088	$	16,412

Goodwill impairment testing

The goodwill impairment test is performed at least annually at the reporting unit level. An interim test is performed when events or circumstances occur that may indicate that it is more likely than not that the fair value of any reporting unit may be less than its carrying value.

BNY Mellon 71

Goodwill by business
(in millions)
Investment
Management
Investment
Services
Other
Consolidated
Balance at Dec. 31, 2016 $ 9,000
$ 8,269
$ 47
$ 17,316
Foreign currency translation 120
107
—
227
Balance at Sept. 30, 2017 $ 9,120
$ 8,376
$ 47
$ 17,543

Goodwill by business
(in millions)
Investment
Management
Investment
Services
Other
Consolidated
Balance at Dec. 31, 2015 $ 9,207
$ 8,366
$ 45
$ 17,618
Acquisitions 29
(1 ) —
28
Foreign currency translation (167 ) (30 ) —
(197 )
Other (a)
2
(4 ) 2
—
Balance at Sept. 30, 2016 $ 9,071
$ 8,331
$ 47
$ 17,449


~~(a)~~			~~Other changes in goodwill include purchase price adjustments and certain other reclassifications.~~

~~BNY Mellon 75~~



Notes to Consolidated Financial Statements(continued)

Intangible assets

The tables below provide a breakdown of intangible assets by ~~business.~~business segment.


Intangible assets – net carrying amount by business segment (in millions)	Securities Services		Market and Wealth Services		Investment and Wealth Management		Other		Consolidated
Balance at Dec. 31, 2022	$	193	$	384	$	1,475	$	849	$	2,901

Amortization	(23)		(5)		(15)		—		(43)
Foreign currency translation	—		—		1		—		1
Balance at Sept. 30, 2023	$	170	$	379	$	1,461	$	849	$	2,859

Intangible assets – net carrying amount by business
(in millions)
Investment
Management
Investment
Services
Other
Consolidated
Balance at Dec. 31, 2016 $ 1,717
$ 1,032
$ 849
$ 3,598
Amortization (45 ) (112 ) —
(157 )
Foreign currency translation 16
4
—
20
Balance at Sept. 30, 2017 $ 1,688
$ 924
$ 849
$ 3,461


Intangible assets – net carrying amount by business segment (in millions)	Securities Services		Market and Wealth Services		Investment and Wealth Management		Other		Consolidated
Balance at Dec. 31, 2021	$	230	$	392	$	1,520	$	849	$	2,991

Amortization	(25)		(6)		(20)		—		(51)
Foreign currency translation	(8)		—		(30)		—		(38)
Balance at Sept. 30, 2022	$	197	$	386	$	1,470	$	849	$	2,902

Intangible assets – net carrying amount by business
(in millions)
Investment
Management
Investment
Services
Other
Consolidated
Balance at Dec. 31, 2015 $ 1,807
$ 1,186
$ 849
$ 3,842
Acquisitions 30
2
—
32
Amortization (60 ) (117 ) —
(177 )
Foreign currency translation (27 ) 1
—
(26 )
Balance at Sept. 30, 2016 $ 1,750
$ 1,072
$ 849
$ 3,671

The table below provides a breakdown of intangible assets by type.


Intangible assets	Sept. 30, 2023							Dec. 31, 2022
(dollars in millions)	Gross carrying amount		Accumulated amortization		Net carrying amount		Remaining weighted- average amortization period	Gross carrying amount		Accumulated amortization		Net carrying amount
Subject to amortization: (a)
Customer contracts – Securities Services	$	727	$	(558)	$	169	10 years	$	731	$	(539)	$	192
Customer contracts – Market and Wealth Services	280		(271)		9		3 years	280		(267)		13
Customer relationships – Investment and Wealth Management	553		(475)		78		8 years	553		(461)		92
Other	41		(11)		30		13 years	41		(9)		32
Total subject to amortization	$	1,601	$	(1,315)	$	286	10 years	$	1,605	$	(1,276)	$	329
Not subject to amortization: (b)
Tradename	$	1,290	N/A		$	1,290	N/A	$	1,290	N/A		$	1,290
Customer relationships	1,283		N/A		1,283		N/A	1,282		N/A		1,282
Total not subject to amortization	$	2,573	N/A		$	2,573	N/A	$	2,572	N/A		$	2,572
Total intangible assets	$	4,174	$	(1,315)	$	2,859	N/A	$	4,177	$	(1,276)	$	2,901

Intangible assets Sept. 30, 2017 Dec. 31, 2016
(in millions)
Gross
carrying
amount

Accumulated
amortization

Net
carrying
amount

Remaining
weighted-
average
amortization
period
Gross
carrying
amount
Accumulated
amortization
Net
carrying
amount

Subject to amortization: (a)

Customer relationships—Investment Management $ 1,483
$ (1,221 ) $ 262
11 years $ 1,439
$ (1,136 ) $ 303
Customer contracts—Investment Services 2,257
(1,705 ) 552
10 years 2,249
(1,590 ) 659
Other 25
(22 ) 3
2 years 37
(33 ) 4
Total subject to amortization 3,765
(2,948 ) 817
10 years 3,725
(2,759 ) 966
Not subject to amortization: (b)

Trade name 1,350
N/A
1,350
N/A 1,348
N/A
1,348
Customer relationships 1,294
N/A
1,294
N/A 1,284
N/A
1,284
Total not subject to amortization 2,644
N/A
2,644
N/A 2,632
N/A
2,632
Total intangible assets $ 6,409
$ (2,948 ) $ 3,461
N/A $ 6,357
$ (2,759 ) $ 3,598


~~(a)~~	(a) Excludes fully amortized intangible assets.


~~(b)~~	~~Intangible assets not subject to amortization have an indefinite life.~~

(b)Intangible assets not subject to amortization have an indefinite life.

N/A – Not applicable.

Estimated annual amortization expense for current intangibles for the next five years is as follows:


For the year ended Dec. 31,	Estimated amortization expense (in millions)
2023		$	57
2024		49
2025		43
2026		34
2027		28

For the year ended
Dec. 31,
Estimated amortization expense
(in millions)

2017 $ 209
2018 180
2019 109
2020 98
2021 75

~~Impairment~~Intangible asset impairment testing

~~The goodwill impairment test is performed at least annually at the reporting unit level.~~ Intangible assets not subject to amortization are tested for impairment annually or more often if events or circumstances indicate they may be impaired.

~~BNY Mellon’s three business segments include eight reporting units for which goodwill impairment testing is performed on an annual basis. In the second quarter of 2017,~~

72 BNY Mellon ~~conducted an annual goodwill impairment test on all eight reporting units.~~

~~76 BNY Mellon~~



Notes to Consolidated Financial Statements(continued)

~~As a result of the annual goodwill impairment test of the eight reporting units, no goodwill impairment was recognized.~~

Note ~~7 -~~ 7–Other assets

The following table provides the components of other assets presented on the consolidated balance sheet.


Other assets	Sept. 30, 2023		Dec. 31, 2022
(in millions)
Corporate/bank-owned life insurance	$	5,449	$	5,417
Accounts receivable	5,054		4,924
Software	2,385		2,260
Fails to deliver	2,163		2,569
Prepaid pension assets	1,943		1,651
Qualified affordable housing project investments	1,225		1,298
Cash collateral receivable on derivative transactions	881		1,014
Equity method investments	873		803
Prepaid expense	809		764
Renewable energy investments	711		871
Other equity investments (a)	694		695
Fair value of hedging derivatives	589		319
Assets of consolidated investment management funds	541		209
Federal Reserve Bank stock	485		478
Income taxes receivable	475		481
Seed capital (b)	191		218
Other (c)	763		1,884
Total other assets	$	25,231	$	25,855

(a) Includes strategic equity, private equity and other investments.

(b) Includes investments in BNY Mellon funds that hedge deferred incentive awards.

(c) At Sept. 30, 2023 and Dec. 31, 2022, other assets include $7 million and $6 million, respectively, of Federal Home Loan Bank stock, at cost.

Non-readily marketable equity securities

Non-readily marketable equity securities do not have readily determinable fair values. These investments are valued using a measurement alternative where the investments are carried at cost, less any impairment, and plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. The observable price changes are recorded in investment and other revenue on the consolidated income statement. Our non-readily marketable equity securities totaled $420 million at Sept. 30, 2023 and $445 million at Dec. 31, 2022, and are included in other equity investments in the table above.

The following table presents the adjustments on the non-readily marketable equity securities.

Other assets Sept. 30, 2017
Dec. 31, 2016
(in millions)
Corporate/bank-owned life insurance $ 4,824
$ 4,789
Accounts receivable 3,899
4,060
Fails to deliver 3,532
1,732
Software 1,513
1,451
Renewable energy investments 1,344
1,282
Equity in a joint venture and other investments 1,153
1,063
Income taxes receivable 1,020
1,172
Qualified affordable housing project investments

988
914
Prepaid pension assets 951
836
Prepaid expenses 512
438
Federal Reserve Bank stock 474
466
Fair value of hedging derivatives 344
784
Due from customers on acceptances 318
340
Seed capital 302
395
Other (a)
1,113
1,232
Total other assets $ 22,287
$ 20,954


~~(a)~~	~~At Sept. 30, 2017, other assets include $76 million of Federal Home Loan Bank stock, at cost.~~


Adjustments on non-readily marketable equity securities											Life-to-date
(in millions)	3Q23		2Q23		3Q22		YTD23		YTD22		Life-to-date
Upward adjustments	$	—	$	5	$	3	$	5	$	125	$	288
Downward adjustments	(21)		(1)		—		(40)		(7)		(52)
Net adjustments	$	(21)	$	4	$	3	$	(35)	$	118	$	236

Qualified affordable housing project investments

We invest in affordable housing projects primarily to satisfy the Company’s requirements under the Community Reinvestment Act. Our total investment in qualified affordable housing projects totaled ~~$988 million~~$1.2 billion at Sept. 30, ~~2017~~2023 and ~~$914 million~~$1.3 billion at Dec. 31, ~~2016.~~2022. Commitments to fund future investments in qualified affordable housing projects totaled ~~$439~~$589 million at Sept. 30, ~~2017~~2023 and ~~$369~~$614 million at Dec. 31, ~~2016.~~2022 and are recorded in other liabilities on the consolidated balance sheet. A summary of the commitments to fund future investments is as follows: ~~2017~~remainder of 2023 – ~~$75~~$175 million; ~~2018~~2024 –

~~$161~~ $137 million; ~~2019~~2025 – ~~$107~~$183 million; ~~2020~~2026 – ~~$79~~$24 million; ~~2021~~2027 – $1$28 million; and ~~2022~~2028 and thereafter – ~~$16~~$42 million.

Tax credits and other tax benefits recognized were ~~$39~~$45 million in the third quarter of ~~2017, $39~~2023, $45 million in the second quarter of 2023, $38 million in the third quarter of ~~2016, $38 million in the second quarter of 2017, $115~~2022, $135 million in the first nine months of ~~2017~~2023 and ~~$115~~$114 million in the first nine months of ~~2016.~~2022.

Amortization expense included in the provision for income taxes was ~~$29~~$38 million in the third quarter of ~~2017, $30~~2023, $38 million in the second quarter of 2023, $32 million in the third quarter of ~~2016, $28 million in the second quarter of 2017, $84~~2022, $114 million in the first nine months of ~~2017~~2023 and ~~$86~~$97 million in the first nine months of ~~2016.~~2022.

~~Certain seed capital and private equity investments~~

Investments valued using net asset value (“NAV”) per share

In our Investment and Wealth Management business ~~we manage investment assets, including equities, fixed income, money market and alternative investment funds for institutions and other investors. As part of that activity,~~segment, we make seed capital investments in certain ~~funds. BNY Mellon~~funds we manage. We also ~~holds~~hold private equity investments, ~~specifically in~~primarily small business investment companies (“SBICs”), which are compliant with the Volcker ~~Rule.~~Rule, and certain other corporate

BNY Mellon 73


Notes to Consolidated Financial Statements (continued)

investments. Seed capital, ~~and~~ private equity and other corporate investments are ~~generally~~ included in other ~~assets. Certain risk retention investments in our CLOs are classified as available-for-sale securities.~~

assets on the consolidated balance sheet. The fair value of

certain of these investments ~~has been~~was estimated using the NAV per share ~~of BNY Mellon’s~~for our ownership interest in the funds.

The table below presents information ~~about~~on our investments valued using NAV.


Investments valued using NAV	Sept. 30, 2023					Dec. 31, 2022
(in millions)	Fair value		Unfunded commitments			Fair value		Unfunded commitments
Seed capital (a) (b)	$	3		$	—	$	3		$	—
Private equity investments (c)	144			47		130			53
Other	7			—		5			—
Total	$	154		$	47	$	138		$	53

(a)Seed capital investments at Sept. 30, 2023 are generally redeemable on request. Distributions are received as the underlying investments in ~~seed capital and~~the funds, which have redemption notice periods of seven days, are liquidated.

(b) Includes investments in funds that relate to deferred compensation arrangements with employees.

(c) Private equity investments primarily include Volcker Rule-compliant investments in SBICs that invest in various sectors of the economy. Private equity investments do not have redemption rights. Distributions from such investments will be received as the underlying investments in the private equity investments, ~~that~~which have a life of 10 years, are liquidated.

Note 8–Contract revenue

Fee and other revenue in the Securities Services, Market and Wealth Services and Investment and Wealth Management business segments is primarily variable, based on levels of assets under custody and/or administration, assets under management and the level of client-driven transactions, as specified in the fee schedules. See Note 10 of the Notes to Consolidated Financial Statements in our 2022 Annual Report for information on the nature of our services and revenue recognition. See Note 24 of the Notes to Consolidated Financial Statements in our 2022 Annual Report for additional information on our principal business segments — Securities Services,

Market and Wealth Services and Investment and Wealth Management — and the primary services provided.

Disaggregation of contract revenue

Contract revenue is included in fee and other revenue on the consolidated income statement. The following tables present fee and other revenue related to contracts with customers, disaggregated by type of fee revenue, for each business segment. Business segment data has been ~~valued using NAV.~~determined on an internal management basis of accounting, rather than GAAP, which is used for consolidated financial reporting.


Disaggregation of contract revenue by business segment
	Quarter ended
	Sept. 30, 2023										Sept. 30, 2022
(in millions)	Securities Services		Market and Wealth Services		Investment and Wealth Management		Other		Total			Securities Services		Market and Wealth Services		Investment and Wealth Management		Other		Total
Fee and other revenue – contract revenue:
Investment services fees	$	1,259	$	952	$	27	$	(19)	$	2,219		$	1,233	$	903	$	26	$	(16)	$	2,146
Investment management and performance fees	—		4		774		(2)		776			—		5		800		(3)		802
Financing-related fees	7		2		—		—		9			7		3		—		1		11
Distribution and servicing fees	2		(25)		62		—		39			1		(23)		55		—		33
Investment and other revenue	58		52		(81)		—		29			56		49		(76)		(1)		28
Total fee and other revenue – contract revenue	1,326		985		782		(21)		3,072			1,297		937		805		(19)		3,020
Fee and other revenue – not in scope of Accounting Standards Codification (“ASC”) 606 (a)(b)	163		58		7		55		283			239		52		—		42		333
Total fee and other revenue	$	1,489	$	1,043	$	789	$	34	$	3,355		$	1,536	$	989	$	805	$	23	$	3,353

(a) Primarily includes investment services fees, foreign exchange revenue, financing-related fees and investment and other revenue, all of which are accounted for using other accounting guidance.

(b) The Investment and Wealth Management business segment is net of income (loss) attributable to noncontrolling interests related to consolidated investment management funds of $3 million in the third quarter of 2023 and $— million in the third quarter of 2022.

74 BNY Mellon

Seed capital and private equity investments valued using NAV
Sept. 30, 2017 Dec. 31, 2016
(dollar amounts in millions)
Fair
value

Unfunded
commitments

Redemption
frequency
Redemption
notice period

Fair
value

Unfunded
commitments

Redemption
frequency
Redemption
notice period
Seed capital and other funds (a)
$ 97
$ 2
Daily-quarterly 1-95 days $ 171
$ 1
Daily-quarterly 1-180 days
Private equity investments (SBICs) (b)
54
47
N/A N/A 43
46
N/A N/A
Total $ 151
$ 49
$ 214
$ 47


~~(a)~~			~~Other funds include various leveraged loans, hedge funds and structured credit funds. Redemption notice periods vary by fund.~~


~~(b)~~	Private equity investments primarily include Volcker Rule-compliant investments in SBICs that invest in various sectors of the economy. Private equity investments do not have redemption rights. Distributions from such investments will be received as the underlying investments in the private equity investments are liquidated.

~~BNY Mellon 77~~



Notes to Consolidated Financial Statements(continued)


Disaggregation of contract revenue by business segment	Quarter ended
	June 30, 2023
(in millions)	Securities Services		Market and Wealth Services		Investment and Wealth Management		Other		Total
Fee and other revenue – contract revenue:
Investment services fees	$	1,299	$	932	$	23	$	(14)	$	2,240
Investment management and performance fees	—		5		760		(4)		761
Financing-related fees	10		4		—		1		15
Distribution and servicing fees	1		(23)		58		(1)		35
Investment and other revenue	60		50		(79)		—		31
Total fee and other revenue – contract revenue	1,370		968		762		(18)		3,082
Fee and other revenue – not in scope of ASC 606 (a)(b)	202		57		12		—		271
Total fee and other revenue	$	1,572	$	1,025	$	774	$	(18)	$	3,353

(a) Primarily includes investment services fees, foreign exchange revenue, financing-related fees and investment and other revenue, all of which are accounted for using other accounting guidance.


Disaggregation of contract revenue by business segment
	Year-to-date
	Sept. 30, 2023										Sept. 30, 2022
(in millions)	Securities Services		Market and Wealth Services		Investment and Wealth Management		Other		Total		Securities Services		Market and Wealth Services		Investment and Wealth Management		Other		Total
Fee and other revenue – contract revenue:
Investment services fees	$	3,734	$	2,809	$	74	$	(48)	$	6,569	$	3,657	$	2,647	$	75	$	(50)	$	6,329
Investment management and performance fees	—		14		2,315		(9)		2,320		—		17		2,509		(11)		2,515
Financing-related fees	30		11		—		1		42		21		21		—		1		43
Distribution and servicing fees	3		(71)		175		—		107		3		(44)		138		—		97
Investment and other revenue	178		152		(240)		1		91		157		96		(169)		(1)		83
Total fee and other revenue – contract revenue	3,945		2,915		2,324		(55)		9,129		3,838		2,737		2,553		(61)		9,067
Fee and other revenue – not in scope of ASC 606 (a)(b)	566		167		21		60		814		650		132		(4)		179		957
Total fee and other revenue	$	4,511	$	3,082	$	2,345	$	5	$	9,943	$	4,488	$	2,869	$	2,549	$	118	$	10,024

(a) Primarily includes investment services fees, foreign exchange revenue, financing-related fees and investment and other revenue, all of which are accounted for using other accounting guidance.

(b) The Investment and Wealth Management business segment is net of income (loss) income attributable to noncontrolling interests related to consolidated investment management funds of $4 million in the first nine months of 2023 and $(13) million in the first nine months of 2022.

Contract balances

Our clients are billed based on fee schedules that are agreed upon in each customer contract. Receivables from customers were $2.6 billion at Sept. 30, 2023 and Dec. 31, 2022.

Contract assets represent accrued revenues that have not yet been billed to customers due to certain contractual terms other than the passage of time and were $49 million at Sept. 30, 2023 and $48 million at Dec. 31, 2022. Accrued revenues recorded as contract assets are usually billed on an annual basis.

Both receivables from customers and contract assets are included in other assets on the consolidated balance sheet.

Contract liabilities represent payments received in advance of providing services under certain contracts and were $205 million at Sept. 30, 2023 and $164 million at Dec. 31, 2022. Contract liabilities are included in other liabilities on the consolidated balance sheet. Revenue recognized in the first nine months of 2023 relating to contract liabilities as of Dec. 31, 2022 was $104 million. Revenue recognized in the third quarter of 2023 relating to contract liabilities as of June 30, 2023 was $77 million.

BNY Mellon 75


Notes to Consolidated Financial Statements (continued)

Changes in contract assets and liabilities primarily relate to either party’s performance under the contracts.

Contract costs

Incremental costs for obtaining contracts that are deemed recoverable are capitalized as contract costs. Such costs result from the payment of sales incentives, primarily in the Wealth Management business, and totaled $51 million at Sept. 30, 2023 and $58 million at Dec. 31, 2022. Capitalized sales incentives are amortized based on the transfer of goods or services to which the assets relate. The amortization of capitalized sales incentives, which is included in staff expense on the consolidated income statement, totaled $4 million in the third quarter of 2023, $5 million in the third quarter of 2022, $4 million in the second quarter of 2023, $12 million in the first nine months of 2023 and $14 million in the first nine months of 2022.

Costs to fulfill a contract are capitalized when they relate directly to an existing contract or a specific

anticipated contract, generate or enhance resources that will be used to fulfill performance obligations, and are recoverable. Such costs generally represent set-up costs, which include any direct cost incurred at the inception of a contract which enables the fulfillment of the performance obligation, and totaled $88 million at Sept. 30, 2023 and $77 million at Dec. 31, 2022. These capitalized costs are amortized on a straight-line basis over the expected contract period.

Unsatisfied performance obligations

We do not have any unsatisfied performance obligations other than those that are subject to a practical expedient election under ASC 606, Revenue From Contracts With Customers. The practical expedient election applies to (i) contracts with an original expected length of one year or less, and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

Note ~~8 -~~ 9–Net interest revenue

The following table provides the components of net interest revenue presented on the consolidated income statement.


Net interest revenue	Quarter ended						Year-to-date
(in millions)	Sept. 30, 2023		June 30, 2023		Sept. 30, 2022		Sept. 30, 2023		Sept. 30, 2022
Interest revenue
Deposits with the Federal Reserve and other central banks	$	1,153	$	1,241	$	288	$	3,247	$	389
Deposits with banks	125		128		67		393		114
Federal funds sold and securities purchased under resale agreements	2,066		1,776		321		4,833		474
Loans	1,029		957		581		2,852		1,211
Securities:
Taxable	1,069		1,042		683		3,133		1,626
Exempt from federal income taxes	1		—		9		1		29
Total securities	1,070		1,042		692		3,134		1,655
Trading securities	76		80		35		226		78
Total interest revenue	5,519		5,224		1,984		14,685		3,921
Interest expense
Deposits	1,911		1,739		488		5,016		541
Federal funds purchased and securities sold under repurchase agreements	1,956		1,729		250		4,577		339
Trading liabilities	48		43		23		121		37
Other borrowed funds	6		32		1		41		6

Customer payables	147		143		48		418		57
Long-term debt	435		438		248		1,268		493
Total interest expense	4,503		4,124		1,058		11,441		1,473
Net interest revenue	1,016		1,100		926		3,244		2,448
Provision for credit losses	3		5		(30)		35		19
Net interest revenue after provision for credit losses	$	1,013	$	1,095	$	956	$	3,209	$	2,429

76 BNY Mellon

Net interest revenue Quarter ended Year-to-date
Sept. 30, 2017
June 30, 2017
Sept. 30, 2016
Sept. 30, 2017
Sept. 30, 2016
(in millions)
Interest revenue
Non-margin loans $ 283
$ 272
$ 218
$ 800
$ 637
Margin loans 87
87
67
249
194
Securities:
Taxable 510
476
434
1,447
1,307
Exempt from federal income taxes 16
16
17
49
53
Total securities 526
492
451

1,496
1,360
Deposits with banks 34
27
26
83
76
Deposits with the Federal Reserve and other central banks 89
71
37
217
170
Federal funds sold and securities purchased under resale agreements 119
86
62
272
167
Trading assets 13
17
13
46
43
Total interest revenue 1,151
1,052
874

3,163
2,647
Interest expense
Deposits 57
32
(6 ) 98
21
Federal funds purchased and securities sold under repurchase agreements 70
38
6
132
28
Trading liabilities 2
2
2
6
5
Other borrowed funds 7
4
1
13
5
Commercial paper 8
5
1
18
5
Customer payables 19
16
3
42
9
Long-term debt 149
129
93
397
267
Total interest expense 312
226
100

706
340
Net interest revenue 839
826
774

2,457
2,307
Provision for credit losses (6 ) (7 ) (19 ) (18 ) (18 )
Net interest revenue after provision for credit losses $ 845
$ 833
$ 793

$ 2,475
$ 2,325


Notes to Consolidated Financial Statements (continued)

Note ~~9 -~~ 10–Employee benefit plans

The components of net periodic benefit (credit) cost are ~~as follows.~~presented below. The service cost component is reflected in staff expense, whereas the remaining components are reflected in other expense.


Net periodic benefit (credit) cost	Quarter ended
	Sept. 30, 2023						June 30, 2023						Sept. 30, 2022
(in millions)	Domestic pension benefits		Foreign pension benefits		Health care benefits		Domestic pension benefits		Foreign pension benefits		Health care benefits		Domestic pension benefits		Foreign pension benefits		Health care benefits
Service cost	$	—	$	3	$	—	$	—	$	2	$	—	$	—	$	3	$	—
Interest cost	47		9		1		47		9		2		35		6		1
Expected return on assets	(95)		(23)		(2)		(95)		(22)		(3)		(78)		(8)		(2)
Other	2		(4)		(3)		3		(4)		(3)		17		1		(1)
Net periodic benefit (credit) cost	$	(46)	$	(15)	$	(4)	$	(45)	$	(15)	$	(4)	$	(26)	$	2	$	(2)

Net periodic benefit (credit) cost Quarter ended
Sept. 30, 2017 June 30, 2017 Sept. 30, 2016
(in millions) Domestic pension benefits
Foreign pension benefits
Health care benefits
Domestic pension benefits
Foreign pension benefits
Health care benefits
Domestic pension benefits
Foreign pension benefits
Health care benefits
Service cost $ —
$ 7
$ —
$ —
$ 7
$ —
$ —
$ 8
$ 1
Interest cost 45
8
2
45
8
2
45
9
2
Expected return on assets (81 ) (12 ) (2 ) (81 ) (12 ) (2 ) (82 ) (13 ) (2 )
Other 17
9
(1 ) 17
9
(1 ) 17
4
(1 )
Net periodic benefit (credit) cost $ (19 ) $ 12
$ (1 ) $ (19 ) $ 12
$ (1 ) $ (20 ) $ 8
$ —


Net periodic benefit (credit) cost	Year-to-date
	Sept. 30, 2023						Sept. 30, 2022
(in millions)	Domestic pension benefits		Foreign pension benefits		Health care benefits		Domestic pension benefits		Foreign pension benefits		Health care benefits
Service cost	$	—	$	8	$	—	$	—	$	9	$	—
Interest cost	142		26		4		105		21		3
Expected return on assets	(285)		(67)		(7)		(234)		(27)		(5)
Other	7		(11)		(9)		51		3		(3)
Net periodic benefit (credit) cost	$	(136)	$	(44)	$	(12)	$	(78)	$	6	$	(5)

~~78 BNY Mellon~~

~~Notes to Consolidated Financial Statements(continued)~~

Net periodic benefit (credit) cost Year-to-date
Sept. 30, 2017 Sept. 30, 2016
(in millions) Domestic pension benefits
Foreign pension benefits
Health care benefits
Domestic pension benefits
Foreign pension benefits
Health care benefits
Service cost $ —
$ 21
$ —
$ —
$ 24
$ 3
Interest cost 135
24
6
135
27
6
Expected return on assets (243 ) (36 ) (6 ) (246 ) (39 ) (6 )
Other 51
27
(3 ) 52
13
(3 )
Net periodic benefit (credit) cost $ (57 ) $ 36
$ (3 ) $ (59 ) $ 25
$ —

Note ~~10 -~~ 11–Income taxes

BNY Mellon recorded an income tax provision of ~~$348~~$241 million ~~(25.4%~~(18.8% effective tax rate) in the third quarter of ~~2017.~~2023. The income tax provision was ~~$324~~$242 million ~~(24.6%~~(38.4% effective tax rate) in the third quarter of ~~2016 and $332~~2022, which includes approximately 19% impact due to the goodwill impairment. The income tax provision was $270 million ~~(25.4%~~(20.2% effective tax rate) in the second quarter of ~~2017.~~2023.

Our total tax reserves as of Sept. 30, ~~2017~~2023 were ~~$157~~$109 million, compared with ~~$143~~$106 million at ~~June 30, 2017.~~Dec. 31, 2022. If these tax reserves were unnecessary, ~~$157~~$109 million would affect the effective tax rate in future periods. We recognize accrued interest and penalties, if applicable, related to income taxes in income tax expense. Included in the balance sheet at Sept. 30, ~~2017~~2023 is accrued interest, where applicable, of ~~$24~~$36 million. The additional tax expense related to interest for the nine months ended Sept. 30, ~~2017~~2023 was $7$3 million, compared with $2$3 million for the nine months ended Sept. 30, ~~2016.~~2022.

It is reasonably possible the total reserve for uncertain tax positions could decrease within the next 12 months by approximately ~~$57~~$9 million as a result of

adjustments related to tax years that are still subject to examination.

Our federal income tax returns are closed to examination through ~~2013.~~2016. Our New York State and New York City ~~and~~income tax returns are closed to examination through 2014. Our UK income tax returns are closed to examination through ~~2012.~~2020.

Note ~~11 -~~ 12–Variable interest entities ~~and securitization~~

~~BNY Mellon has~~We have variable interests in ~~VIEs,~~variable interest entities (“VIEs”), which include investments in retail, institutional and alternative investment funds, including collateralized loan obligation (“CLO”) structures in which we provide asset management services, some of which are consolidated. The investment funds are offered to our retail and institutional clients to provide them

funds.

~~with access to investment vehicles with specific investment objectives and strategies that address the client’s investment needs.~~

~~BNY Mellon earns~~We earn management fees from these funds, as well as performance fees in certain funds, and may also provide start-up capital for ~~its~~ new funds. The funds are primarily financed by our customers’ investments in the funds’ equity or debt.

Additionally, ~~BNY Mellon invests~~we invest in qualified affordable housing and renewable energy projects, which are designed to generate a return primarily through the realization of tax ~~credits by the Company.~~credits. The projects, which are structured as limited partnerships and ~~LLCs,~~limited liability companies, are also VIEs, but are not consolidated.

~~The VIEs discussed above are included in the scope of ASU 2015-02, which was adopted effective Jan. 1, 2015, and are reviewed for consolidation based on the guidance in ASC 810,~~ ~~Consolidation~~.We reconsider and reassess whether or not we are the primary beneficiary of a VIE when governing documents or contractual arrangements are changed that would reallocate the obligation to absorb expected losses or receive expected residual returns between

BNY Mellon and the other investors. This could occur when BNY Mellon disposes of its variable interests in the fund, when additional variable interests are issued to other investors or when we acquire additional variable interests in the VIE.77


Notes to Consolidated Financial Statements (continued)

The following ~~tables present~~table presents the incremental assets and liabilities included ~~in BNY Mellon’s~~on the consolidated ~~financial statements, after applying intercompany eliminations,~~balance sheet as of Sept. 30, ~~2017~~2023 and Dec. 31, ~~2016.~~2022. The net assets of any consolidated VIE are solely available to settle the liabilities of the VIE and to settle any investors’ ownership liquidation requests, including any seed capital we invested in the ~~VIE by BNY Mellon.~~VIE.


Consolidated investment management funds
	Sept. 30, 2023		Dec. 31, 2022
(in millions)

Trading assets	$	529		$	203
Other assets	12			6
Total assets (a)	$	541		$	209

Other liabilities	$	7		$	1
Total liabilities (b)	$	7		$	1
Nonredeemable noncontrolling interests (c)	$	56		$	7

(a) Includes voting model entities (“VMEs”) with assets of $113 million at Sept. 30, 2023 and $86 million at Dec. 31, 2022.

(b) Includes VMEs with liabilities of $1 million at Sept. 30, 2023 and $1 million at Dec. 31, 2022.

(c) Includes VMEs with nonredeemable noncontrolling interests of $16 million at Sept. 30, 2023 and $7 million at Dec. 31, 2022.

~~BNY Mellon 79~~

~~Notes to Consolidated Financial Statements(continued)~~

Investments consolidated at Sept. 30, 2017
(in millions)
Investment
Management
funds
Securitization
Total
consolidated
investments

Securities - Available-for-sale $ —
$ 400
$ 400
Trading assets 576
—
576
Other assets 226
—
226
Total assets $ 802
(a) $ 400
$ 1,202
Other liabilities $ 27
$ 369
$ 396
Total liabilities $ 27
(a) $ 369
$ 396
Nonredeemable noncontrolling interests $ 384
(a) $ —
$ 384


~~(a)~~	~~Includes voting model entities (“VMEs”) with assets of $90 million, liabilities of $2 million and nonredeemable noncontrolling interests of $20 million.~~

Investments consolidated at Dec. 31, 2016
(in millions)
Investment
Management
funds
Securitization
Total
consolidated
investments

Securities - Available-for-sale $ —
$ 400
$ 400
Trading assets 979
—
979
Other assets 252
—
252
Total assets $ 1,231
(a) $ 400
$ 1,631
Trading liabilities $ 282
$ —
$ 282
Other liabilities 33
363
396
Total liabilities $ 315
(a) $ 363
$ 678
Nonredeemable noncontrolling interests $ 618
(a) $ —
$ 618


~~(a)~~	~~Includes VMEs with assets of $114 million, liabilities of $3 million and nonredeemable noncontrolling interests of $25 million.~~

~~BNY Mellon has~~We have not provided financial or other support that was not otherwise contractually required to be provided to our VIEs. Additionally, creditors of any consolidated VIEs do not have any recourse to the general credit of BNY Mellon.

Non-consolidated VIEs

As of Sept. 30, ~~2017~~2023 and Dec. 31, ~~2016, the following~~2022, assets and liabilities related to the VIEs where ~~BNY Mellon is~~we are not the primary beneficiary ~~are~~were included in ~~our~~other assets and other liabilities on the consolidated ~~financial statements~~balance sheet and primarily ~~relate~~related to accounting for our investments in qualified affordable housing and renewable energy projects.

Non-consolidated VIEs at Sept. 30, 2017
(in millions) Assets
Liabilities
Maximum loss exposure
Securities - Available-for-sale (a)
$ 143
$ —
$ 143
Other 2,559
439
3,321


~~(a)~~	~~Investments in the Company’s sponsored CLOs.~~

Non-consolidated VIEs at Dec. 31, 2016
(in millions) Assets
Liabilities
Maximum loss exposure
Securities - Available-for-sale (a)
$ 42
$ —
$ 42
Other 2,400
369
2,769


~~(a)~~	~~Investments in the Company’s sponsored CLOs.~~

The maximum loss exposure indicated in the ~~above tables~~following table relates solely to ~~BNY Mellon’s~~our investments in, and unfunded commitments to, the VIEs.


Non-consolidated VIEs	Sept. 30, 2023		Dec. 31, 2022
(in millions)
Other assets	$	2,005	$	2,235
Other liabilities	589		614
Maximum loss exposure	2,595		2,850

~~80 BNY Mellon~~

~~Notes to Consolidated Financial Statements(continued)~~

Note ~~12 -~~ 13–Preferred stock

~~BNY Mellon~~The Parent has 100 million authorized shares of preferred stock with a par value of $0.01 per share. The following table summarizes ~~BNY Mellon’s~~the Parent’s preferred stock issued and outstanding at Sept. 30, ~~2017~~2023 and Dec. 31, ~~2016.~~2022.


Preferred stock summary (a)		Total shares issued and outstanding		Carrying value (b)
				(in millions)
		Sept. 30, 2023	Dec. 31, 2022	Sept. 30, 2023		Dec. 31, 2022
	Per annum dividend rate (c)
Series A	Greater of (i) SOFR plus 0.565% and (ii) 4.000%	5,001	5,001	$	500	$	500
Series D	SOFR plus 2.46%	5,000	5,000	494		494
Series F	4.625% to but excluding Sept. 20, 2026, then SOFR plus 3.131%	10,000	10,000	990		990
Series G	4.700% to but excluding Sept. 20, 2025, then a floating rate equal to the five-year treasury rate plus 4.358%	10,000	10,000	990		990
Series H	3.700% to but excluding March 20, 2026, then a floating rate equal to the five-year treasury rate plus 3.352%	5,825	5,825	577		577
Series I	3.750% to but excluding Dec. 20, 2026, then a floating rate equal to the five-year treasury rate plus 2.630%	13,000	13,000	1,287		1,287
Total		48,826	48,826	$	4,838	$	4,838

Preferred stock summary (a)
Total shares issued and outstanding
Carrying value (b)
(in millions)
Per annum dividend rate Sept. 30, 2017
Dec. 31, 2016
Sept. 30, 2017
Dec. 31, 2016
Series A Greater of (i) three-month LIBOR plus 0.565% for the related distribution period; or (ii) 4.000% 5,001
5,001
$ 500
$ 500
Series C 5.2% 5,825
5,825
568
568
Series D 4.50% to but excluding June 20, 2023, then a floating rate equal to the three-month LIBOR plus 2.46% 5,000
5,000
494
494
Series E 4.95% to and including June 20, 2020, then a floating rate equal to the three-month LIBOR plus 3.42% 10,000
10,000
990
990
Series F 4.625% to and including Sept. 20, 2026, then a floating rate equal to the three-month LIBOR plus 3.131% 10,000
10,000
990
990
Total 35,826
35,826
$ 3,542
$ 3,542


~~(a)~~	(a) All outstanding preferred stock is ~~noncumulative perpetual preferred stock with a liquidation preference of $100,000 per share.~~


~~(b)~~	~~The carrying value of the Series C, Series D, Series E and Series F preferred stock is recorded net of issuance costs.~~

~~On Sept. 20, 2017, The Bank of New York Mellon Corporation paid the following dividends for the~~ noncumulative perpetual preferred stock ~~for the dividend period ending in September 2017 to holders~~with a liquidation preference of ~~record as~~$100,000 per share.

(b) The carrying value of the ~~close~~Series D, Series F, Series G, Series H and Series I preferred stock is recorded net of ~~business on Sept. 5, 2017:~~issuance costs.

(c) References to SOFR are to a floating rate equal to the three-month CME Term SOFR (plus a spread adjustment of 0.26161% per annum).

~~$1,022.22 per share~~

78 BNY Mellon


Notes to Consolidated Financial Statements (continued)

The table below presents the Parent’s preferred dividends.


Preferred dividends
(dollars in millions, except per share amounts)	Depositary shares per share		3Q23				2Q23				3Q22				YTD23				YTD22
			Per share		Total dividend		Per share		Total dividend		Per share		Total dividend		Per share		Total dividend		Per share		Total dividend
Series A	100	(a)	$	1,552.50	$	8	$	1,412.60	$	7	$	1,011.11	$	5	$	4,292.82	$	22	$	3,044.44	$	15
Series D	100		2,036.78		10		2,250.00		11		—		—		4,286.78		21		2,250.00		11

Series F	100		2,312.50		23		—		—		2,312.50		23		4,625.00		46		4,625.00		46
Series G	100		2,350.00		23		—		—		2,350.00		23		4,700.00		47		4,700.00		47
Series H	100		925.00		6		925.00		6		925.00		6		2,775.00		17		2,775.00		17
Series I	100		937.50		12		937.50		12		937.50		12		2,812.50		36		3,145.83		41
Total					$	82			$	36			$	69			$	189			$	177

(a) Represents Normal Preferred Capital Securities.

All of the outstanding shares of the Series A preferred stock are owned by Mellon Capital IV, a 100% owned finance subsidiary of the Parent, which will pass through any dividend on the Series A ~~Preferred Stock (equivalent~~preferred stock to ~~$10.2222 per~~the holders of its Normal Preferred Capital ~~Security~~Securities. The Parent’s obligations under the trust and other agreements relating to Mellon Capital IV have the effect of providing a full and unconditional

guarantee, on a subordinated basis, of payments due on the Normal Preferred Capital Securities. No other subsidiary of the Parent guarantees the securities of Mellon Capital ~~IV, each representing a 1/100th interest in a share of the Series A Preferred Stock);~~IV.

~~$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~~

~~$2,312.50 per share on the Series F Preferred Stock (equivalent to $23.1250 per depositary share, each representing a 1/100th interest in a share of the Series F Preferred Stock).~~

For additional information on ~~the~~our preferred stock, see Note 1315 of the Notes to Consolidated Financial Statements in our ~~2016~~2022 Annual Report.

~~Terms~~

Note 14–Other comprehensive income (loss)


Components of other comprehensive income (loss)	Quarter ended
	Sept. 30, 2023						June 30, 2023						Sept. 30, 2022
(in millions)	Pre-tax amount		Tax (expense) benefit		After-tax amount		Pre-tax amount		Tax (expense) benefit		After-tax amount		Pre-tax amount		Tax (expense) benefit		After-tax amount
Foreign currency translation:
Foreign currency translation adjustments arising during the period (a)	$	(106)	$	(79)	$	(185)	$	61	$	36	$	97	$	(292)	$	(150)	$	(442)
Total foreign currency translation	(106)		(79)		(185)		61		36		97		(292)		(150)		(442)
Unrealized gain (loss) on assets available-for-sale:
Unrealized (loss) arising during period	(38)		9		(29)		(202)		45		(157)		(1,205)		297		(908)
Reclassification adjustment (b)	19		(5)		14		—		—		—		(1)		—		(1)
Net unrealized (loss) on assets available-for-sale	(19)		4		(15)		(202)		45		(157)		(1,206)		297		(909)
Defined benefit plans:


Amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost (b)	(5)		2		(3)		(4)		2		(2)		17		(4)		13
Total defined benefit plans	(5)		2		(3)		(4)		2		(2)		17		(4)		13
Unrealized gain (loss) on cash flow hedges:
Unrealized hedge (loss) gain arising during period	(1)		1		—		3		(1)		2		(5)		1		(4)
Reclassification of net loss to net income:
FX contracts – investment and other revenue	2		(1)		1		1		—		1		1		—		1
Foreign exchange (“FX”) contracts – staff expense	(2)		1		(1)		—		—		—		3		(1)		2

Total reclassifications to net income	—		—		—		1		—		1		4		(1)		3
Net unrealized (loss) gain on cash flow hedges	(1)		1		—		4		(1)		3		(1)		—		(1)
Total other comprehensive (loss) income	$	(131)	$	(72)	$	(203)	$	(141)	$	82	$	(59)	$	(1,482)	$	143	$	(1,339)

(a) Includes the impact of hedges of net investments in foreign subsidiaries. See Note 17 for additional information.

(b) The reclassification adjustment related to the ~~Series A, Series C, Series D, Series E and Series F preferred stock are more fully described in each of their Certificates of Designations, each of~~unrealized gain (loss) on assets available-for-sale is recorded as net securities gains (losses), which is ~~filed~~included in investment and other revenue on the consolidated income statement. The amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost is recorded as ~~an Exhibit to this Form 10-Q.~~other expense on the consolidated income statement.

BNY Mellon 79

~~BNY Mellon 81~~



Notes to Consolidated Financial Statements(continued)

~~Note 13 - Other comprehensive income (loss)~~

Components of other comprehensive income (loss) Quarter ended
Sept. 30, 2017 June 30, 2017 Sept. 30, 2016
(in millions)
Pre-tax
amount

Tax
(expense)
benefit

After-tax
amount

Pre-tax
amount

Tax
(expense)
benefit

After-tax
amount

Pre-tax
amount

Tax
(expense)
benefit

After-tax
amount

Foreign currency translation:
Foreign currency translation adjustments arising during the period (a)
$ 221
$ 65
$ 286
$ 249
$ 81
$ 330
$ (104 ) $ (82 ) $ (186 )
Total foreign currency translation 221
65
286
249
81
330
(104 ) (82 ) (186 )
Unrealized gain (loss) on assets available-for-sale:
Unrealized gain (loss) arising during period 47
(19 ) 28
146
(55 ) 91
(87 ) 34
(53 )
Reclassification adjustment (b)
(19 ) 7
(12 ) —
(1 ) (1 ) (24 ) 9
(15 )
Net unrealized gain (loss) on assets available-for-sale 28
(12 ) 16
146
(56 ) 90
(111 ) 43
(68 )
Defined benefit plans:
Net gain (loss) arising during the period —
—
—
—
—
—
—
—
—
Amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost (b)
25
(10 ) 15
24
(8 ) 16
22
(8 ) 14
Total defined benefit plans 25
(10 ) 15
24
(8 ) 16
22
(8 ) 14
Unrealized gain (loss) on cash flow hedges:
Unrealized hedge gain (loss) arising during period (2 ) —
(2 ) (8 ) 4
(4 ) (24 ) 7
(17 )
Reclassification adjustment (b)
3
(1 ) 2
9
(4 ) 5
28
(9 ) 19
Net unrealized gain (loss) on cash flow hedges 1
(1 ) —
1
—
1
4
(2 ) 2
Total other comprehensive income (loss) $ 275
$ 42
$ 317
$ 420
$ 17
$ 437
$ (189 ) $ (49 ) $ (238 )


~~(a)~~	~~Includes the impact of hedges of net investments in foreign subsidiaries. See Note 16 for additional information.~~

~~(b)~~

The reclassification adjustment related to the unrealized gain (loss) on assets available-for-sale is recorded as net securities gains on the Consolidated Income Statement. The amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost is recorded as staff expense on the Consolidated Income Statement. See Note 16 of the Notes to Consolidated Financial Statements for the location of the reclassification adjustment related to cash flow hedges on the Consolidated Income Statement.

Components of other comprehensive income (loss) Year-to-date
Sept. 30, 2017 Sept. 30, 2016
(in millions)
Pre-tax
amount

Tax
(expense)
benefit

After-tax
amount

Pre-tax
amount

Tax
(expense)
benefit

After-tax
amount

Foreign currency translation:
Foreign currency translation adjustments arising during the period (a)
$ 566
$ 175
$ 741
$ (223 ) $ (210 ) $ (433 )
Total foreign currency translation 566
175
741
(223 ) (210 ) (433 )
Unrealized gain (loss) on assets available-for-sale:
Unrealized gain (loss) arising during period 357
(144 ) 213
338
(111 ) 227
Reclassification adjustment (b)
(29 ) 10
(19 ) (65 ) 22
(43 )
Net unrealized gain (loss) on assets available-for-sale 328
(134 ) 194
273
(89 ) 184
Defined benefit plans:
Net gain (loss) arising during the period 3
(1 ) 2
3
(1 ) 2
Amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost (b)
74
(25 ) 49
65
(22 ) 43
Total defined benefit plans 77
(26 ) 51
68
(23 ) 45
Unrealized gain (loss) on cash flow hedges:
Unrealized hedge gain (loss) arising during period 4
(1 ) 3
(115 ) 38
(77 )
Reclassification adjustment (b)
13
(5 ) 8
110
(37 ) 73
Net unrealized gain (loss) on cash flow hedges 17
(6 ) 11
(5 ) 1
(4 )
Total other comprehensive income (loss) $ 988
$ 9
$ 997
$ 113
$ (321 ) $ (208 )


~~(a)~~	~~Includes the impact of hedges of net investments in foreign subsidiaries. See Note 16 for additional information.~~

~~(b)~~

~~82 BNY Mellon~~



~~Notes to Consolidated Financial Statements(continued)~~


Components of other comprehensive income (loss)	Year-to-date
	Sept. 30, 2023						Sept. 30, 2022
(in millions)	Pre-tax amount		Tax (expense) benefit		After-tax amount		Pre-tax amount		Tax (expense) benefit		After-tax amount
Foreign currency translation:
Foreign currency translation adjustments arising during the period (a)	$	32	$	(17)	$	15	$	(848)	$	(302)	$	(1,150)
Total foreign currency translation	32		(17)		15		(848)		(302)		(1,150)
Unrealized gain (loss) on assets available-for-sale:
Unrealized gain (loss) arising during period	179		(48)		131		(4,393)		1,072		(3,321)
Reclassification adjustment (b)	20		(5)		15		(5)		1		(4)
Net unrealized gain (loss) on assets available-for-sale	199		(53)		146		(4,398)		1,073		(3,325)
Defined benefit plans:

Amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost (b)	(13)		5		(8)		51		(7)		44
Total defined benefit plans	(13)		5		(8)		51		(7)		44
Unrealized gain (loss) on cash flow hedges:
Unrealized hedge gain (loss) arising during period	6		(1)		5		(16)		4		(12)
Reclassification of net loss to net income:

FX contracts – staff expense	1		—		1		4		(1)		3
FX contracts – investment and other revenue	3		(1)		2		1		—		1

Total reclassifications to net income	4		(1)		3		5		(1)		4
Net unrealized gain (loss) on cash flow hedges	10		(2)		8		(11)		3		(8)
Total other comprehensive income (loss)	$	228	$	(67)	$	161	$	(5,206)	$	767	$	(4,439)

(a) Includes the impact of hedges of net investments in foreign subsidiaries. See Note 17 for additional information.

(b) The reclassification adjustment related to the unrealized gain (loss) on assets available-for-sale is recorded as net securities gains, which is included in investment and other revenue on the consolidated income statement. The amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost is recorded as other expense on the consolidated income statement.

Note ~~14 -~~ 15–Fair value measurement

Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. A three-level hierarchy for fair value measurements is utilized based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. BNY Mellon’s own creditworthiness is considered when valuing liabilities. See Note 1820 of the Notes to Consolidated Financial Statements in our ~~2016~~2022 Annual Report for

information on how we determine fair value and the fair value hierarchy.

The following tables present the financial instruments carried at fair value at Sept. 30, ~~2017~~2023 and Dec. 31, ~~2016,~~2022, by caption on the consolidated balance sheet and by the three-level valuation hierarchy. We have included credit ratings information in certain of the tables because the information indicates the degree of credit risk to which we are exposed, and significant changes in ratings classifications could result in increased risk for us. ~~There~~

80 BNY Mellon


Notes to Consolidated Financial Statements (continued)


Assets and liabilities measured at fair value on a recurring basis at Sept. 30, 2023												Total carrying value
(dollars in millions)	Level 1			Level 2			Level 3			Netting (a)

Available-for-sale securities:
U.S. Treasury	$	20,898		$	—		$	—		$	—	$	20,898
Agency RMBS	—			9,987			—			—		9,987
Sovereign debt/sovereign guaranteed	2,583			6,107			—			—		8,690
Supranational	—			7,568			—			—		7,568
Agency commercial MBS	—			7,532			—			—		7,532
Foreign covered bonds	—			6,110			—			—		6,110
CLOs	—			5,935			—			—		5,935
Non-agency commercial MBS	—			2,917			—			—		2,917
U.S. government agencies	—			2,762			—			—		2,762
Foreign government agencies/local governments	—			2,159			—			—		2,159
Non-agency RMBS	—			1,737			—			—		1,737
Other ABS	—			922			—			—		922


Other debt securities	—			1			—			—		1
Total available-for-sale securities	23,481			53,737			—			—		77,218
Trading assets:
Debt instruments	2,068			2,048			—			—		4,116
Equity instruments	4,431			—			—			—		4,431
Derivative assets not designated as hedging:
Interest rate	11			1,041			—			(1,052)		—
Foreign exchange	—			7,813			—			(5,734)		2,079
Equity and other contracts	9			126			—			(62)		73
Total derivative assets not designated as hedging	20			8,980			—			(6,848)		2,152
Total trading assets	6,519			11,028			—			(6,848)		10,699
Other assets:
Derivative assets designated as hedging:
Interest rate	—			369			—			—		369
Foreign exchange	—			220			—			—		220
Total derivative assets designated as hedging	—			589			—			—		589
Other assets (b)	469			349			—			—		818
Total other assets	469			938			—			—		1,407
Assets measured at NAV (b)												154
Total assets	$	30,469		$	65,703		$	—		$	(6,848)	$	89,478
Percentage of total assets prior to netting	32		%	68		%	—		%




Liabilities
Trading liabilities:
Debt instruments	$	4,069		$	19		$	—		$	—	$	4,088
Equity instruments	49			—			—			—		49
Derivative liabilities not designated as hedging:
Interest rate	3			1,483			—			(501)		985
Foreign exchange	2			7,701			—			(5,472)		2,231
Equity and other contracts	—			15			—			(10)		5
Total derivative liabilities not designated as hedging	5			9,199			—			(5,983)		3,221
Total trading liabilities	4,123			9,218			—			(5,983)		7,358
Other liabilities:
Derivative liabilities designated as hedging:

Foreign exchange	—			16			—			—		16
Total derivative liabilities designated as hedging	—			16			—			—		16
Other liabilities	—			7			—			—		7
Total other liabilities	—			23			—			—		23
Total liabilities	$	4,123		$	9,241		$	—		$	(5,983)	$	7,381
Percentage of total liabilities prior to netting	31		%	69		%	—		%

(a)ASC 815, Derivatives and Hedging, permits the netting of derivative receivables and derivative payables under legally enforceable master netting agreements and permits the netting of cash collateral. Netting is applicable to derivatives not designated as hedging instruments included in trading assets or trading liabilities and derivatives designated as hedging instruments included in other assets or other liabilities. Netting is allocated to the derivative products based on the net fair value of each product.

(b)Includes seed capital, private equity investments and other assets.

BNY Mellon 81


Notes to Consolidated Financial Statements (continued)


Assets and liabilities measured at fair value on a recurring basis at Dec. 31, 2022												Total carrying value
(dollars in millions)	Level 1			Level 2			Level 3			Netting (a)
Assets
Available-for-sale securities:
U.S. Treasury	$	29,533		$	—		$	—		$	—	$	29,533
Sovereign debt/sovereign guaranteed	4,237			6,127			—			—		10,364
Agency RMBS	—			8,957			—			—		8,957
Agency commercial MBS	—			8,060			—			—		8,060
Supranational	—			7,734			—			—		7,734
Foreign covered bonds	—			5,758			—			—		5,758
CLOs	—			5,343			—			—		5,343
Non-agency commercial MBS	—			2,977			—			—		2,977
U.S. government agencies	—			2,294			—			—		2,294
Foreign government agencies/local governments	—			2,241			—			—		2,241
Non-agency RMBS	—			2,029			—			—		2,029
Other ABS	—			1,319			—			—		1,319
State and political subdivisions	—			12			—			—		12

Other debt securities	—			1			—			—		1
Total available-for-sale securities	33,770			52,852			—			—		86,622
Trading assets:
Debt instruments	1,590			1,901			—			—		3,491
Equity instruments	3,791			—			—			—		3,791
Derivative assets not designated as hedging:
Interest rate	10			1,287			—			(986)		311
Foreign exchange	—			9,433			—			(7,215)		2,218
Equity and other contracts	4			98			—			(5)		97
Total derivative assets not designated as hedging	14			10,818			—			(8,206)		2,626
Total trading assets	5,395			12,719			—			(8,206)		9,908
Other assets:
Derivative assets designated as hedging:
Interest rate	—			205			—			—		205
Foreign exchange	—			114			—			—		114
Total derivative assets designated as hedging	—			319			—			—		319
Other assets (b)	294			220			—			—		514
Total other assets	294			539			—			—		833
Assets measured at NAV (b)												138
Total assets	$	39,459		$	66,110		$	—		$	(8,206)	$	97,501
Percentage of total assets prior to netting	37		%	63		%	—		%




Liabilities
Trading liabilities:
Debt instruments	$	2,373		$	101		$	—		$	—	$	2,474
Equity instruments	97			—			—			—		97
Derivative liabilities not designated as hedging:
Interest rate	6			1,578			—			(798)		786
Foreign exchange	—			9,456			—			(7,444)		2,012
Equity and other contracts	—			17			—			(1)		16
Total derivative liabilities not designated as hedging	6			11,051			—			(8,243)		2,814
Total trading liabilities	2,476			11,152			—			(8,243)		5,385
Other liabilities:
Derivative liabilities designated as hedging:

Foreign exchange	—			220			—			—		220
Total derivative liabilities designated as hedging	—			220			—			—		220
Other liabilities	—			1			—			—		1
Total other liabilities	—			221			—			—		221
Total liabilities	$	2,476		$	11,373		$	—		$	(8,243)	$	5,606
Percentage of total liabilities prior to netting	18		%	82		%	—		%

(b)Includes seed capital, private equity investments and other assets.

82 BNY Mellon


Notes to Consolidated Financial Statements (continued)


Details of certain available-for-sale securities measured at fair value on a recurring basis	Sept. 30, 2023												Dec. 31, 2022
	Total carrying value (b)			Ratings (a)											Total carrying value (b)			Ratings (a)
			AAA/ AA-	A+/ A-		BBB+/ BBB-		BB+ and lower				Not rated				AAA/ AA-		A+/ A-	BBB+/ BBB-		BB+ and lower				Not rated
(dollars in millions)
Non-agency RMBS, originated in:
2008-2023	$	1,479		100	%	—	%	—	%	—	%		—	%		$	1,728		100	%	—	%	—	%	—	%	—	%



2007 and earlier	258			4		14		1		41			40			301			5		13		1		45		36
Total non-agency RMBS	$	1,737		86	%	2	%	—	%	6	%		6	%		$	2,029		86	%	2	%	—	%	7	%	5	%
Non-agency commercial MBS originated in:
2009-2023	$	2,917		100	%	—	%	—	%	—	%		—	%		$	2,977		100	%	—	%	—	%	—	%	—	%
Foreign covered bonds:
Canada	$	2,476		100	%	—	%	—	%	—	%		—	%		$	2,384		100	%	—	%	—	%	—	%	—	%
UK	1,045			100		—		—		—			—			1,215			100		—		—		—		—
Australia	703			100		—		—		—			—			696			100		—		—		—		—
Germany	580			100		—		—		—			—			542			100		—		—		—		—
Norway	266			100		—		—		—			—			377			100		—		—		—		—
Other	1,040			100		—		—		—			—			544			100		—		—		—		—
Total foreign covered bonds	$	6,110		100	%	—	%	—	%	—	%		—	%		$	5,758		100	%	—	%	—	%	—	%	—	%
Sovereign debt/sovereign guaranteed:
Germany	$	2,778		100	%	—	%	—	%	—	%		—	%		$	3,103		100	%	—	%	—	%	—	%	—	%
France	1,445			100		—		—		—			—			1,665			100		—		—		—		—
UK	1,232			100		—		—		—			—			2,225			100		—		—		—		—
Canada	608			100		—		—		—			—			702			100		—		—		—		—
Singapore	562			100		—		—		—			—			797			100		—		—		—		—
Japan	341			—		100		—		—			—			475			—		100		—		—		—
Spain	287			—		28		72		—			—			214			—		40		60		—		—
Hong Kong	254			100		—		—		—			—			273			100		—		—		—		—
Italy	211			—		—		100		—			—			390			—		—		100		—		—
Austria	197			100		—		—		—			—			177			100		—		—		—		—
Other (c)	775			80		5		—		15			—			343			55		9		—		36		—
Total sovereign debt/sovereign guaranteed	$	8,690		89	%	5	%	5	%	1	%		—	%		$	10,364		88	%	6	%	5	%	1	%	—	%
Foreign government agencies/local governments:
Canada	$	746		85	%	15	%	—	%	—	%		—	%		$	652		83	%	17	%	—	%	—	%	—	%
Norway	430			100		—		—		—			—			427			100		—		—		—		—
Netherlands	296			100		—		—		—			—			363			100		—		—		—		—
Sweden	212			100		—		—		—			—			260			100		—		—		—		—
France	18			100		—		—		—			—			240			100		—		—		—		—

Other	457			86		14		—		—			—			299			100		—		—		—		—
Total foreign government agencies/local governments	$	2,159		92	%	8	%	—	%	—	%		—	%		$	2,241		95	%	5	%	—	%	—	%	—	%

(a)Represents ratings by S&P or the equivalent.

(b) At Sept. 30, 2023 and Dec. 31, 2022, sovereign debt/sovereign guaranteed securities were ~~no material transfers between~~included in Level 1 and Level 2 ~~during~~in the ~~third quarter~~valuation hierarchy. All other assets in the table are Level 2 assets in the valuation hierarchy.

$118 million at Sept. 30, 2023 and $123 million at Dec. 31, 2022.

Assets measured at fair value on a recurring basis at Sept. 30, 2017 Total carrying
value
(dollar amounts in millions) Level 1
Level 2
Level 3
Netting (a)

Available-for-sale securities:
U.S. Treasury $ 15,502
$ —
$ —
$ —
$ 15,502
U.S. government agencies —
864
—
—
864
Sovereign debt/sovereign guaranteed 74
12,491
—
—
12,565
State and political subdivisions —
3,124
—
—
3,124
Agency RMBS —
24,431
—
—
24,431
Non-agency RMBS —
525
—
—
525
Other RMBS —
265
—
—
265
Commercial MBS —
965
—
—
965
Agency commercial MBS —
9,010
—
—
9,010
CLOs —
2,550
—
—
2,550
Other asset-backed securities —
1,157
—
—
1,157
Equity securities 4
—
—
—
4
Money market funds (b)
939
—
—
—
939
Corporate bonds —
1,275
—
—
1,275
Other debt securities —
3,151
—
—
3,151
Foreign covered bonds 2,284
258
—
—
2,542
Non-agency RMBS (c)
—
1,185
—
—
1,185
Total available-for-sale securities 18,803
61,251
—
—
80,054
Trading assets:
Debt and equity instruments (b)
433
1,016
—
—
1,449
Derivative assets not designated as hedging:
Interest rate 3
6,731
—
(5,301 ) 1,433
Foreign exchange —
4,879
—
(3,120 ) 1,759
Equity and other contracts 1
73
—
(49 ) 25
Total derivative assets not designated as hedging 4
11,683
—
(8,470 ) 3,217
Total trading assets 437
12,699
—
(8,470 ) 4,666
Other assets:
Derivative assets designated as hedging:
Interest rate —
307
—
—
307
Foreign exchange —
37
—
—
37
Total derivative assets designated as hedging —
344
—
—
344
Other assets (d)
148
184
—
—
332
Other assets measured at net asset value (d)
151
Total other assets 148
528
—
—
827
Subtotal assets of operations at fair value 19,388
74,478
—
(8,470 ) 85,547
Percentage of assets of operations prior to netting 21 % 79 % — %
Assets of consolidated investment management funds 398
404
—
—
802
Total assets $ 19,786
$ 74,882
$ —
$ (8,470 ) $ 86,349
Percentage of total assets prior to netting 21 % 79 % — %

BNY Mellon 83



Notes to Consolidated Financial Statements(continued)

Liabilities measured at fair value on a recurring basis at Sept. 30, 2017 Total carrying
value
(dollar amounts in millions) Level 1
Level 2
Level 3
Netting (a)

Trading liabilities:
Debt and equity instruments $ 684
$ 159
$ —
$ —
$ 843
Derivative liabilities not designated as hedging:
Interest rate 3
6,681
—
(5,705 ) 979
Foreign exchange —
4,463
—
(3,095 ) 1,368
Equity and other contracts 3
135
—
(75 ) 63
Total derivative liabilities not designated as hedging 6
11,279
—
(8,875 ) 2,410
Total trading liabilities 690
11,438
—
(8,875 ) 3,253
Long-term debt (b)
—
369
—
—
369
Other liabilities – derivative liabilities designated as hedging:

Interest rate —
494
—
—
494
Foreign exchange —
318
—
—
318
Total other liabilities – derivative liabilities designated as hedging —
812
—
—
812
Subtotal liabilities of operations at fair value 690
12,619
—
(8,875 ) 4,434
Percentage of liabilities of operations prior to netting 5 % 95 % — %
Liabilities of consolidated investment management funds 2
25
—
—
27
Total liabilities $ 692
$ 12,644
$ —
$ (8,875 ) $ 4,461
Percentage of total liabilities prior to netting 5 % 95 % — %

~~(a)~~

ASC 815, Derivatives and Hedging, permits the netting of derivative receivables and derivative payables under legally enforceable master netting agreements and permits the netting of cash collateral. Netting is applicable to derivatives not designated as hedging instruments included in trading assets or trading liabilities, and derivatives designated as hedging instruments included in other assets or other liabilities. Netting is allocated to the derivative products based on the net fair value of each product.


~~(b)~~	~~Includes certain interests in securitizations.~~


~~(c)~~	~~Previously included in the Grantor Trust. The Grantor Trust was dissolved in 2011.~~


~~(d)~~	~~Includes private equity investments and seed capital.~~

~~84 BNY Mellon~~



~~Notes to Consolidated Financial Statements(continued)~~

Assets measured at fair value on a recurring basis at Dec. 31, 2016
Total carrying
value

(dollar amounts in millions) Level 1
Level 2
Level 3
Netting (a)

Available-for-sale securities:
U.S. Treasury $ 14,307
$ —
$ —
$ —
$ 14,307
U.S. government agencies —
359
—
—
359
Sovereign debt/sovereign guaranteed 66
12,423
—
—
12,489
State and political subdivisions —
3,378
—
—
3,378
Agency RMBS —
22,736
—
—
22,736
Non-agency RMBS —
638
—
—
638
Other RMBS —
513
—
—
513
Commercial MBS —
928
—
—
928
Agency commercial MBS —
6,449
—
—
6,449
CLOs —
2,598
—
—
2,598
Other asset-backed securities —
1,727
—
—
1,727
Equity securities 3
—
—
—
3
Money market funds (b)
842
—
—
—
842
Corporate bonds —
1,396
—
—
1,396
Other debt securities —
1,961
—
—
1,961
Foreign covered bonds 1,876
265
—
—
2,141
Non-agency RMBS (c)
—
1,357
—
—
1,357
Total available-for-sale securities 17,094
56,728
—
—
73,822
Trading assets:
Debt and equity instruments (b)
240
2,013
—
—
2,253
Derivative assets not designated as hedging:
Interest rate 4
7,583
—
(6,047 ) 1,540
Foreign exchange —
6,104
—
(4,172 ) 1,932
Equity and other contracts —
46
—
(38 ) 8
Total derivative assets not designated as hedging 4
13,733
—
(10,257 ) 3,480
Total trading assets 244
15,746
—
(10,257 ) 5,733
Other assets:

Derivative assets designated as hedging:
Interest rate —
415
—
—
415
Foreign exchange —
369
—
—
369
Total derivative assets designated as hedging —
784
—
—
784
Other assets (d)
268
73
—
—
341
Other assets measured at net asset value (d)
214
Total other assets 268
857
—
—
1,339
Subtotal assets of operations at fair value 17,606
73,331
—
(10,257 ) 80,894
Percentage of assets of operations prior to netting 19 % 81 % — %
Assets of consolidated investment management funds 464
767
—
—
1,231
Total assets $ 18,070
$ 74,098
$ —
$ (10,257 ) $ 82,125
Percentage of total assets prior to netting 20 % 80 % — %

~~BNY Mellon 85~~

~~Notes to Consolidated Financial Statements(continued)~~

Liabilities measured at fair value on a recurring basis at Dec. 31, 2016
Total carrying
value

(dollar amounts in millions) Level 1
Level 2
Level 3
Netting (a)

Trading liabilities:
Debt and equity instruments $ 349
$ 236
$ —
$ —
$ 585
Derivative liabilities not designated as hedging:
Interest rate 4
7,629
—
(6,634 ) 999
Foreign exchange —
6,103
—
(3,363 ) 2,740
Equity and other contracts —
115
—
(50 ) 65
Total derivative liabilities not designated as hedging 4
13,847
—
(10,047 ) 3,804
Total trading liabilities 353
14,083
—
(10,047 ) 4,389
Long-term debt (b)
—
363
—
—
363
Other liabilities – derivative liabilities designated as hedging:

Interest rate —
545
—
—
545
Foreign exchange —
52
—
—
52
Total other liabilities – derivative liabilities designated as hedging —
597
—
—
597
Subtotal liabilities of operations at fair value 353
15,043
—
(10,047 ) 5,349
Percentage of liabilities of operations prior to netting 2 % 98 % — %
Liabilities of consolidated investment management funds 3
312
—
—
315
Total liabilities $ 356
$ 15,355
$ —
$ (10,047 ) $ 5,664
Percentage of total liabilities prior to netting 2 % 98 % — %

~~(a)~~


~~(b)~~	~~Includes certain interests in securitizations.~~


~~(c)~~	~~Previously included in the Grantor Trust. The Grantor Trust was dissolved in 2011.~~


~~(d)~~	~~Includes private equity investments and seed capital.~~

~~86 BNY Mellon~~

~~Notes to Consolidated Financial Statements(continued)~~

Details of certain items measured at fair value
on a recurring basis
Sept. 30, 2017 Dec. 31, 2016
Total
carrying
value (b)

Ratings (a)

Total
carrying value (b)

Ratings (a)
AAA/
AA-

A+/
A-

BBB+/
BBB-

BB+ and
lower

AAA/
AA-

A+/
A-

BBB+/
BBB-

BB+ and
lower

(dollar amounts in millions)
Non-agency RMBS, originated in:
2007 $ 42
— % — % — % 100 % $ 58
— % — % — % 100 %
2006 85
—
—
—
100
98
—
—
—
100
2005 152
20
3
18
59
180
23
5
9
63
2004 and earlier 246
4
2
27
67
302
5
3
24
68
Total non-agency RMBS $ 525
8 % 2 % 14 % 76 % $ 638
9 % 3 % 14 % 74 %
Commercial MBS - Domestic, originated in:
2009-2017 $ 909
89 % 11 % — % — % $ 674
84 % 16 % — % — %
2008 5
100
—
—
—
14
100
—
—
—
2007 —
—
—
—
—
190
71
29
—
—
2006 —
—
—
—
—
3
7
93
—
—
Total commercial MBS - Domestic $ 914
89 % 11 % — % — % $ 881
81 % 19 % — % — %
Foreign covered bonds:
Canada $ 1,648
100 % — % — % — % $ 1,320
100 % — % — % — %
Australia 261
100
—
—
—
40
100
—
—
—
Netherlands 177
100
—
—
—
160
100
—
—
—
United Kingdom 136
100
—
—
—
280
100
—
—
—
Other 320
100
—
—
—
341
100
—
—
—
Total foreign covered bonds $ 2,542
100 % — % — % — % $ 2,141
100 % — % — % — %
European floating rate notes - available-for-sale:
United Kingdom $ 204
87 % 13 % — % — % $ 379
90 % 10 % — % — %
Netherlands 113
37
63
—
—
125
100
—
—
—
Ireland —
—
—
—
—
58
—
—
100
—
Total European floating rate notes - available-for-sale $ 317
69 % 31 % — % — % $ 562
83 % 7 % 10 % — %
Sovereign debt/sovereign guaranteed:
United Kingdom $ 3,036
100 % — % — % — % $ 3,209
100 % — % — % — %
France 1,993
100
—
—
—
1,998
100
—
—
—
Spain 1,740
—
—
100
—
1,749
—
—
100
—
Germany 1,688
100
—
—
—
1,347
100
—
—
—
Italy 1,169
—
—
100
—
1,130
—
—
100
—
Netherlands 1,016
100
—
—
—
1,061
100
—
—
—
Ireland 832
—
100
—
—
736
—
100
—
—
Belgium 809
100
—
—
—
1,005
100
—
—
—
Other (c)
282
48
3
—
49
254
71
—
—
29
Total sovereign debt/sovereign guaranteed $ 12,565
69 % 7 % 23 % 1 % $ 12,489
70 % 6 % 23 % 1 %
Non-agency RMBS (d), originated in:

2007 $ 337
— % — % — % 100 % $ 387
— % — % — % 100 %
2006 345
—
—
—
100
391
—
—
—
100
2005 387
1
1
1
97
437
—
2
1
97
2004 and earlier 116
2
2
22
74
142
2
2
17
79
Total non-agency RMBS (d)
$ 1,185
— % 1 % 3 % 96 % $ 1,357
— % 1 % 2 % 97 %


~~(a)~~	~~Represents ratings by S&P, or the equivalent.~~


~~(b)~~	At Sept. 30, 2017 and Dec. 31, 2016, foreign covered bonds and sovereign debt/sovereign guaranteed securities were included in Level 1 and Level 2 in the valuation hierarchy. All other assets in the table are Level 2 assets in the valuation hierarchy.


~~(c)~~	~~Includes noninvestment grade sovereign debt/sovereign guaranteed securities related to Brazil of $140 million at Sept. 30, 2017 and $73 million at Dec. 31, 2016.~~


~~(d)~~	~~Previously included in the Grantor Trust. The Grantor Trust was dissolved in 2011.~~

~~Changes in Level 3 fair value measurements~~

Our classification of a financial instrument in Level 3 of the valuation hierarchy is based on the significance of the unobservable factors to the overall fair value measurement. However, these instruments generally include other observable components that are actively quoted or validated to third-party sources; accordingly, the gains and losses in the table below include changes in fair value due to observable parameters as well as the unobservable parameters in our valuation methodologies. We also manage the

risks of Level 3 financial instruments using securities and derivatives positions that are Level 1 or Level 2 instruments which are not included in the table; accordingly, the gains or losses below do not reflect the effect of our risk management activities related to the Level 3 instruments.

~~The Company has a Level 3 Pricing Committee which evaluates the valuation techniques used in~~

~~BNY Mellon 87~~

~~Notes to Consolidated Financial Statements(continued)~~

~~determining the fair value of Level 3 assets and liabilities.~~

~~There were no financial instruments recorded at fair value on a recurring basis classified in Level 3 of the valuation hierarchy in the first nine months of 2017.~~

The table below includes a roll forward of the balance sheet amount for the three and nine months ended Sept. 30, 2016 (including the change in fair value), for financial instruments classified in Level 3 of the valuation hierarchy.

Fair value measurements for assets using significant unobservable inputs Loans
(in millions) 3Q16
YTD16
Fair value at the beginning of the period $ 101
$ —
Transfers into Level 3 —
19
Total gains for the period included in earnings (a)
—
2
Purchases and sales:
Purchases —
113
Issuances 1
1
Sales (102 ) (135 )
Fair value at Sept. 30, 2016 $ —
$ —
Change in unrealized gains for the period included in earnings for assets held at the end of the reporting period $ —
$ —


~~(a)~~	~~Reported in investment and other income.~~

Assets and liabilities measured at fair value on a nonrecurring basis

Under certain circumstances, we make adjustments to the fair value of our assets, liabilities and unfunded lending-related commitments, although they are not measured at fair value on an ongoing basis. ~~An example would be the recording of an impairment of an asset.~~

The following ~~tables present~~table presents the carrying value as of Sept. 30, 2023 and Dec. 31, 2022 of financial instruments for which nonrecurring adjustments to fair value have been recorded during 2023 and/or 2022 and all non-readily marketable equity securities carried ~~on the consolidated~~at cost with upward or downward adjustments by balance sheet by caption and by level in the fair value ~~hierarchy as of Sept. 30, 2017 and Dec. 31, 2016, for which a nonrecurring change in~~hierarchy.


Assets measured at fair value on a nonrecurring basis	Sept. 30, 2023								Dec. 31, 2022
							Total carrying value									Total carrying value
(in millions)	Level 1		Level 2		Level 3					Level 1		Level 2		Level 3
Loans (a)	$	—	$	29	$	—	$	29		$	—	$	33	$	—	$	33
Other assets (b)	—		421		—		421			—		448		—		448
Total assets at fair value on a nonrecurring basis	$	—	$	450	$	—	$	450		$	—	$	481	$	—	$	481

(a) The fair value ~~has been recorded during~~of these loans was unchanged in the ~~quarters ended Sept. 30, 2017~~in the third quarter of 2023 and ~~Dec. 31, 2016.~~

the fourth quarter of 2022, based on the fair value of the underlying collateral, as required by guidance in ASC 326, Financial Instruments – Credit Losses, with an offset to the allowance for credit losses.

(b) Includes non-readily marketable equity securities carried at cost with upward or downward adjustments and other assets received in satisfaction of debt.

Assets measured at fair value on a nonrecurring basis at Sept. 30, 2017
Total carrying
value

(in millions) Level 1
Level 2
Level 3
Loans (a)
$ —
$ 75
$ 7
$ 82
Other assets (b)
—
4
—
4
Total assets at fair value on a nonrecurring basis $ —
$ 79
$ 7
$ 86

Assets measured at fair value on a nonrecurring basis at Dec. 31, 2016
Total carrying
value

(in millions) Level 1
Level 2
Level 3
Loans (a)
$ —
$ 84
$ 7
$ 91
Other assets (b)
—
4
—
4
Total assets at fair value on a nonrecurring basis $ —
$ 88
$ 7
$ 95


~~(a)~~	During the quarters ended Sept. 30, 2017 and Dec. 31, 2016, the fair value of these loans decreased less than $1 million and $1 million, respectively, based on the fair value of the underlying collateral based on guidance in ASC 310, Receivables, with an offset to the allowance for credit losses.


~~(b)~~	~~Includes other assets received in satisfaction of debt.~~

Estimated fair value of financial instruments

The following tables present the estimated fair value and the carrying amount of financial instruments not carried at fair value on the consolidated balance sheet at Sept. 30, ~~2017~~2023 and Dec. 31, ~~2016,~~2022, by caption on the consolidated balance sheet and by the valuation

hierarchy.


Summary of financial instruments	Sept. 30, 2023
(in millions)	Level 1		Level 2		Level 3		Total estimated fair value		Carrying amount
Assets:
Interest-bearing deposits with the Federal Reserve and other central banks	$	—	$	107,419	$	—	$	107,419	$	107,419
Interest-bearing deposits with banks	—		12,995		—		12,995		12,999
Federal funds sold and securities purchased under resale agreements	—		26,299		—		26,299		26,299
Securities held-to-maturity	9,617		34,594		—		44,211		51,007
Loans (a)	—		64,309		—		64,309		65,446
Other financial assets	4,904		2,086		—		6,990		6,990
Total	$	14,521	$	247,702	$	—	$	262,223	$	270,160
Liabilities:
Noninterest-bearing deposits	$	—	$	60,571	$	—	$	60,571	$	60,571
Interest-bearing deposits	—		212,309		—		212,309		216,896
Federal funds purchased and securities sold under repurchase agreements	—		14,771		—		14,771		14,771
Payables to customers and broker-dealers	—		17,441		—		17,441		17,441

Borrowings	—		1,487		—		1,487		1,487
Long-term debt	—		27,306		—		27,306		29,205
Total	$	—	$	333,885	$	—	$	333,885	$	340,371

(a) Does not include the leasing portfolio.

hierarchy. See Note 18 of the Notes to Consolidated Financial Statements in our 2016 Annual Report for additional information regarding the financial instruments within the scope of this disclosure, and the methods and significant assumptions used to estimate their fair value.

8884 BNY Mellon



Notes to Consolidated Financial Statements(continued)

Summary of financial instruments Sept. 30, 2017
(in millions) Level 1
Level 2
Level 3
Total
estimated
fair value

Carrying
amount

Assets:
Interest-bearing deposits with the Federal Reserve and other central banks $ —
$ 75,808
$ —
$ 75,808
$ 75,808
Interest-bearing deposits with banks —
15,254
—
15,254
15,256
Federal funds sold and securities purchased under resale agreements —
27,883
—
27,883
27,883
Securities held-to-maturity 9,943
29,985
—
39,928
39,995
Loans (a)
—
57,709
—
57,709
57,562
Other financial assets 5,557
1,169
—
6,726
6,726
Total $ 15,500
$ 207,808
$ —
$ 223,308
$ 223,230
Liabilities:
Noninterest-bearing deposits $ —
$ 80,380
$ —
$ 80,380
$ 80,380
Interest-bearing deposits —
148,967
—
148,967
150,616
Federal funds purchased and securities sold under repurchase agreements —
10,314
—
10,314
10,314
Payables to customers and broker-dealers —
21,176
—
21,176
21,176
Commercial paper —
2,501
—
2,501
2,501
Borrowings —
3,544
—
3,544
3,544
Long-term debt —
28,335
—
28,335
28,039
Total $ —
$ 295,217
$ —
$ 295,217
$ 296,570


~~(a)~~	~~Does not include the leasing portfolio.~~

Summary of financial instruments Dec. 31, 2016
(in millions) Level 1
Level 2
Level 3
Total estimated
fair value
Carrying
amount
Assets:
Interest-bearing deposits with the Federal Reserve and other central banks $ —
$ 58,041
$ —
$ 58,041
$ 58,041
Interest-bearing deposits with banks —
15,091
—
15,091
15,086
Federal funds sold and securities purchased under resale agreements —
25,801
—
25,801
25,801
Securities held-to-maturity 11,173
29,496
—
40,669
40,905
Loans (a)
—
62,829
—
62,829
62,564
Other financial assets 4,822
1,112
—
5,934
5,934
Total $ 15,995
$ 192,370
$ —
$ 208,365
$ 208,331
Liabilities:
Noninterest-bearing deposits $ —
$ 78,342
$ —
$ 78,342
$ 78,342
Interest-bearing deposits —
141,418
—
141,418
143,148
Federal funds purchased and securities sold under repurchase agreements —
9,989
—
9,989
9,989
Payables to customers and broker-dealers —
20,987
—
20,987
20,987
Borrowings —
960
—
960
960
Long-term debt —
24,184
—
24,184
24,100
Total $ —
$ 275,880
$ —
$ 275,880
$ 277,526


~~(a)~~	~~Does not include the leasing portfolio.~~

~~The table below summarizes the carrying amount of the hedged financial instruments, the notional amount of the hedge and the unrealized gain (loss) (estimated fair value) of the derivatives.~~

Hedged financial instruments
Carrying
amount

Notional amount of hedge

Unrealized
(in millions) Gain
(Loss)
Sept. 30, 2017
Securities available-for-sale $ 12,416
$ 12,333
$ 56
$ (337 )
Long-term debt 24,249
24,200
249
(157 )
Dec. 31, 2016
Securities available-for-sale $ 9,184
$ 9,233
$ 83
$ (342 )
Long-term debt 20,511
20,450
330
(203 )

~~BNY Mellon 89~~



~~Notes to Consolidated Financial Statements(continued)~~


Summary of financial instruments	Dec. 31, 2022
(in millions)	Level 1		Level 2		Level 3		Total estimated fair value		Carrying amount
Assets:
Interest-bearing deposits with the Federal Reserve and other central banks	$	—	$	91,655	$	—	$	91,655	$	91,655
Interest-bearing deposits with banks	—		17,167		—		17,167		17,169
Federal funds sold and securities purchased under resale agreements	—		24,298		—		24,298		24,298
Securities held-to-maturity	10,948		39,044		—		49,992		56,194
Loans (a)	—		64,668		—		64,668		65,230
Other financial assets	5,030		1,817		—		6,847		6,847
Total	$	15,978	$	238,649	$	—	$	254,627	$	261,393
Liabilities:
Noninterest-bearing deposits	$	—	$	78,017	$	—	$	78,017	$	78,017
Interest-bearing deposits	—		196,258		—		196,258		200,953
Federal funds purchased and securities sold under repurchase agreements	—		12,335		—		12,335		12,335
Payables to customers and broker-dealers	—		23,435		—		23,435		23,435
Borrowings	—		911		—		911		911
Long-term debt	—		28,977		—		28,977		30,458
Total	$	—	$	339,933	$	—	$	339,933	$	346,109

(a) Does not include the leasing portfolio.

Note ~~15 -~~ 16–Fair value option

We elected fair value as an alternative measurement for selected financial assets and ~~financial liabilities.~~liabilities that are not otherwise required to be measured at fair value, including the assets and liabilities of consolidated investment management funds and subordinated notes associated with certain equity investments.

The following table presents the assets and liabilities ~~by type,~~ of consolidated investment management funds, ~~recorded~~ at fair value.


Assets and liabilities of consolidated investment management funds, at fair value
	Sept. 30, 2023		Dec. 31, 2022
(in millions)
Assets of consolidated investment management funds:
Trading assets	$	529	$	203
Other assets	12		6
Total assets of consolidated investment management funds	$	541	$	209
Liabilities of consolidated investment management funds:

Other liabilities	$	7	$	1
Total liabilities of consolidated investment management funds	$	7	$	1

Assets and liabilities of consolidated investment management funds, at fair value
Sept. 30, 2017
Dec. 31, 2016
(in millions)
Assets of consolidated investment management funds:
Trading assets $ 576
$ 979
Other assets 226
252
Total assets of consolidated investment management funds $ 802
$ 1,231
Liabilities of consolidated investment management funds:
Trading liabilities $ —
$ 282
Other liabilities 27
33
Total liabilities of consolidated investment management funds $ 27
$ 315

~~BNY Mellon values~~The assets and liabilities of the consolidated investment management funds are included in other assets and other liabilities on the consolidated balance sheet. We value the assets and liabilities of ~~its~~ consolidated investment management funds using quoted prices for identical assets or liabilities in

active markets or observable inputs such as quoted prices for similar assets or liabilities. Quoted prices for either identical or similar assets or liabilities in inactive markets may also be used. Accordingly, fair value best reflects the interests BNY Mellon holds in the economic performance of the consolidated investment management funds. Changes in the fair value of the assets and liabilities are recorded ~~in the~~as income ~~statement as investment income of~~(loss) from consolidated investment management funds, which is included in investment and inother revenue on the ~~interest of investment management fund note holders, respectively.~~consolidated income statement.

We ~~have~~ elected the fair value option on ~~$240 million~~ ~~of long-term debt.~~subordinated notes associated with certain equity investments. The fair value of ~~this long-term debt~~these subordinated notes was ~~$369~~$8 million at Sept. 30, ~~2017~~2023 and ~~$363~~$10 million at Dec. 31, ~~2016.~~2022. The ~~long-term debt is~~subordinated notes were valued using observable market inputs and is included in Level 2 of the valuation hierarchy.

The following table presents the changes in fair value of long-term debt and certain loans for which we elected the fair value option that we previously held in 2016, and the location of the changes in the income statement.

Impact of changes in fair value in the income statement (a)
(in millions) 3Q17
2Q17
3Q16
YTD17
YTD16
Loans:
Investment and other income $ —
$ —
$ (1 ) $ —
$ 13
Long-term debt:
Foreign exchange and other trading revenue $ (1 ) $ (4 ) $ 2
$ (6 ) $ (17 )


~~(a)~~	~~The changes in fair value of the loans and long-term debt are approximately offset by economic hedges included in foreign exchange and other trading revenue.~~

Note ~~16 -~~ 17–Derivative instruments

We use derivatives to manage exposure to market risk, including interest rate risk, equity price risk and foreign currency risk, as well as credit risk. Our trading activities are focused on acting as a market-maker for our customers and facilitating customer trades in compliance with the Volcker Rule.

The notional amounts for derivative financial instruments express the dollar volume of the transactions; however, credit risk is much smaller.

BNY Mellon 85


Notes to Consolidated Financial Statements (continued)

We perform credit reviews and enter into netting agreements and collateral arrangements to minimize the credit risk of derivative financial instruments. We enter into offsetting positions to reduce exposure to foreign currency, interest rate and equity price risk.

Use of derivative financial instruments involves reliance on counterparties. Failure of a counterparty to honor its obligation under a derivative contract is a risk we assume whenever we engage in a derivative contract. There were no counterparty default losses recorded in the third quarter of ~~2017 or the third quarter of 2016.~~2023.

Hedging derivatives

We utilize interest rate swap agreements to manage our exposure to interest rate fluctuations. ~~For~~We enter into fair value hedges ~~of available-for-sale investment securities, deposits and long-term debt, the hedge documentation specifies the terms of the hedged items and the~~as an interest rate ~~swaps and indicates that the derivative is hedging a fixed rate item and is a fair value hedge, that the hedge exposure is~~risk management strategy to ~~the changes in the fair value of the hedged item due to changes in benchmark interest rates, and that the strategy is to eliminate~~reduce fair value variability by converting certain fixed rate interest payments associated with available-for-sale securities and long-term debt to ~~LIBOR.~~floating interest rates. We also utilize interest rate swaps and forward exchange contracts as cash flow hedges to manage our exposure to interest rate and foreign exchange rate changes.

~~90 BNY Mellon~~

~~Notes to Consolidated Financial Statements(continued)~~

The available-for-sale ~~investment~~ securities hedged consist of U.S. Treasury, ~~bonds,~~ agency and non-agency commercial MBS, sovereign ~~debt~~debt/sovereign guaranteed and foreign covered bonds that had original maturities of 30 years or less at initial purchase. The swaps on all of these investment securities are not callable. All of these securities are hedged with “pay fixed rate, receive variable rate” swaps of similar maturity, repricing and fixed rate coupon.bonds. At Sept. 30, ~~2017, $12.4~~2023, $31.4 billion ~~face amount~~par value of available-for-sale securities were hedged with interest rate swaps designated as fair value hedges that had notional values of ~~$12.3~~$31.4 billion.

The fixed rate long-term debt instruments hedged generally have original maturities of five to 30 years. ~~We issue both callable and non-callable debt. The non-callable~~In fair value hedging relationships, fixed rate debt is hedged with “receive fixed rate, pay variable rate” ~~swaps with similar maturity, repricing and fixed rate coupon. Callable debt is hedged with callable swaps where the call dates of the swaps exactly match the call dates of the debt.~~swaps. At Sept. 30, ~~2017, $24.2~~2023, $22.7 billion par value of debt was hedged with interest rate swaps designated as fair value hedges that had notional values of ~~$24.2~~$22.7 billion.

In addition, we ~~enter into~~utilize forward foreign exchange ~~hedges.~~contracts as hedges to mitigate foreign exchange

exposures. We use forward foreign exchange contracts as cash flow hedges to convert certain forecasted non-U.S. dollar revenue and expenses into U.S. dollars. We use forward foreign exchange contracts with maturities of ~~nine~~18 months or less as cash flow hedges to hedge our foreign exchange exposure to currencies such as the Indian rupee, ~~British pound,~~Polish zloty, Hong Kong dollar, Singapore dollar, ~~Polish zloty, Canadian dollar~~British pound and ~~Japanese yen foreign exchange exposure with respect to foreign currency forecasted~~euro used in revenue and expense transactions infor entities that have the U.S. dollar as their functional currency. As of Sept. 30, ~~2017,~~2023, the hedged forecasted foreign currency transactions and designated forward foreign exchange contract hedges were ~~$539~~$639 million (notional), with a net pre-tax ~~loss~~gain of $9$4 million recorded in accumulated other comprehensive ~~income.~~income (“OCI”). This ~~loss~~gain will be reclassified to ~~income or expense~~earnings over the next ~~nine~~12 months.

In 2022, we utilized forward foreign exchange contracts as fair value hedges of the foreign exchange risk associated with available-for-sale securities. At Sept. 30, 2023, there were no remaining foreign exchange contracts. Forward points are designated as an excluded component and amortized into earnings over the hedge period.

Forward foreign exchange contracts are also used to hedge the value of our net investments in foreign subsidiaries. These forward foreign exchange contracts have maturities of less than ~~two years.~~one year. The derivatives employed are designated as hedges of changes in value of our foreign investments due to exchange rates. ~~Changes in the value of the forward foreign exchange contracts offset the changes in value of the foreign investments due to changes in foreign exchange rates.~~ The change in fair market value of these forward foreign exchange contracts is ~~deferred and~~ reported within foreign currency translation adjustments in shareholders’ equity, net of tax. At Sept. 30, ~~2017,~~2023, forward foreign exchange contracts with notional amounts totaling ~~$7.8~~$9.4 billion were designated as net investment hedges.

~~In addition~~From time to ~~forward foreign exchange contracts,~~time, we also designate non-derivative financial instruments as hedges of our net investments in foreign subsidiaries. ~~Those~~At Sept. 30, 2023, there were no non-derivative financial instruments ~~designated as hedges of~~hedging our net investments in foreign ~~subsidiaries were all long-term liabilities of~~subsidiaries.

86 BNY Mellon ~~in various currencies, and, at Sept. 30, 2017, had a combined U.S. dollar equivalent value of $181 million.~~

~~Ineffectiveness related to derivatives and hedging relationships was recorded in income as follows:~~

Ineffectiveness Nine months ended
(in millions) Sept. 30, 2017
Sept. 30, 2016
Fair value hedges of securities $ (13.3 ) $ (5.4 )
Fair value hedges of long-term debt 0.1
(23.0 )
Cash flow hedges —
—
Other (a)
—
—
Total $ (13.2 ) $ (28.4 )


~~(a)~~			~~Includes ineffectiveness recorded on foreign exchange hedges.~~

~~BNY Mellon 91~~



Notes to Consolidated Financial Statements(continued)

The following table presents the pre-tax gains (losses) related to our fair value and cash flow hedging activities recognized in the consolidated income statement.


Income statement impact of fair value and cash flow hedges
(in millions)	Location of gains (losses)	3Q23		2Q23		3Q22		YTD23		YTD22
Interest rate fair value hedges of available-for-sale securities
Derivative	Interest revenue	$	439	$	388	$	1,294	$	392	$	3,644
Hedged item	Interest revenue	(438)		(389)		(1,292)		(393)		(3,630)
Interest rate fair value hedges of long-term debt
Derivative	Interest expense	(281)		(277)		(540)		(279)		(1,573)
Hedged item	Interest expense	281		278		539		280		1,570
Foreign exchange fair value hedges of available-for-sale securities
Derivative (a)	Foreign exchange revenue	—		—		(2)		—		(4)
Hedged item	Foreign exchange revenue	—		—		2		—		5


Cash flow hedges of forecasted FX exposures


Gain (loss) reclassified from OCI into income	Staff expense	2		—		(3)		(1)		(4)
(Loss) reclassified from OCI into income	Investment and other revenue	(2)		(1)		(1)		(3)		(1)
Gain (loss) recognized in the consolidated income statement due to fair value and cash flow hedging relationships		$	1	$	(1)	$	(3)	$	(4)	$	7

(a) There was no amortization associated with the excluded component in the third quarter of 2023, second quarter of 2023 and first nine months of 2023. Includes gains of less than $1 million in the third quarter of 2022 and $1 million in the first nine months of 2022 associated with the amortization of the excluded component.

The following table presents the impact of hedging derivatives used in net investment hedging relationships.


Impact of derivative instruments used in net investment hedging relationships
(in millions)
Derivatives in net investment hedging relationships	Gain or (loss) recognized in accumulated OCI on derivatives										Location of gain or (loss) reclassified from accumulated OCI into income	Gain or (loss) reclassified from accumulated OCI into income
Derivatives in net investment hedging relationships	3Q23		2Q23		3Q22		YTD23		YTD22			3Q23		2Q23		3Q22		YTD23		YTD22
FX contracts	$	333	$	(152)	$	631	$	70	$	1,279	Net interest revenue	$	—	$	—	$	—	$	—	$	—

The following table presents information on the hedged items in fair value hedging relationships.


Hedged items in fair value hedging relationships	Carrying amount of hedged asset or liability				Hedge accounting basis adjustment increase (decrease) (a)


(in millions)	Sept. 30, 2023		Dec. 31, 2022		Sept. 30, 2023		Dec. 31, 2022
Available-for-sale securities (b)	$	31,303	$	31,370	$	(2,820)	$	(2,678)
Long-term debt	$	21,236	$	23,510	$	(1,497)	$	(1,232)

(a) Includes a $464 million decrease and less than $1 million increase of basis adjustment on discontinued hedges associated with available-for-sale securities at Sept. 30, 2023 and Dec. 31, 2022, respectively, and $49 million and $48 million of basis adjustment decreases on discontinued hedges associated with long-term debt at Sept. 30, 2023 and Dec. 31, 2022, respectively.

(b) Carrying amount represents the amortized cost.

BNY Mellon 87


Notes to Consolidated Financial Statements (continued)

The following table summarizes the notional amount and ~~credit exposure~~carrying values of our total derivative ~~portfolio~~portfolio.


Impact of derivative instruments on the balance sheet	Notional value				Asset derivatives fair value				Liability derivatives fair value
	Sept. 30, 2023		Dec. 31, 2022		Sept. 30, 2023		Dec. 31, 2022		Sept. 30, 2023		Dec. 31, 2022
(in millions)
Derivatives designated as hedging instruments: (a)(b)
Interest rate contracts	$	54,076	$	56,142	$	369	$	205	$	—	$	—
Foreign exchange contracts	10,058		10,096		220		114		16		220
Total derivatives designated as hedging instruments					$	589	$	319	$	16	$	220
Derivatives not designated as hedging instruments: (b)(c)
Interest rate contracts	$	160,712	$	190,917	$	1,052	$	1,297	$	1,486	$	1,584
Foreign exchange contracts	895,679		880,948		7,813		9,433		7,703		9,456
Equity contracts	3,801		2,993		135		102		10		13
Credit contracts	220		200		—		—		5		4
Total derivatives not designated as hedging instruments					$	9,000	$	10,832	$	9,204	$	11,057
Total derivatives fair value (d)					$	9,589	$	11,151	$	9,220	$	11,277
Effect of master netting agreements (e)					(6,848)		(8,206)		(5,983)		(8,243)
Fair value after effect of master netting agreements					$	2,741	$	2,945	$	3,237	$	3,034

(a)The fair value of asset derivatives and liability derivatives designated as hedging instruments is recorded as other assets and other liabilities, respectively, on the consolidated balance sheet.

(b) For derivative transactions settled at clearing organizations, cash collateral exchanged is deemed a settlement of the derivative each day. The settlement reduces the gross fair value of derivative assets and liabilities and results in a corresponding decrease in the effect of master netting agreements, with no impact to the consolidated balance sheet.

(c) The fair value of asset derivatives and liability derivatives not designated as hedging instruments is recorded as trading assets and trading liabilities, respectively, on the consolidated balance sheet.

(d)Fair values are on a gross basis, before consideration of master netting agreements, as required by ASC 815, Derivatives and Hedging.

(e) Effect of master netting agreements includes cash collateral received and paid of $1,909 million and $1,044 million, respectively, at Sept. 30, ~~2017~~2023, and $1,786 million and $1,823 million, respectively, at Dec. 31, ~~2016~~.2022.

Impact of derivative instruments on the balance sheet Notional value
Asset derivatives
fair value

Liability derivatives
fair value
(in millions) Sept. 30, 2017
Dec. 31, 2016
Sept. 30, 2017
Dec. 31, 2016
Sept. 30, 2017
Dec. 31, 2016
Derivatives designated as hedging instruments: (a)

Interest rate contracts $ 36,533
$ 29,683
$ 307
$ 415
$ 494
$ 545
Foreign exchange contracts 8,399
7,796
37
369
318
52
Total derivatives designated as hedging instruments $ 344
$ 784
$ 812
$ 597
Derivatives not designated as hedging instruments: (b)

Interest rate contracts $ 283,384
$ 325,412
$ 6,734
$ 7,587
$ 6,684
$ 7,633
Foreign exchange contracts 639,336
530,729
4,879
6,104
4,463
6,103
Equity contracts 1,354
1,167
74
46
134
112
Credit contracts 180
160
—
—
4
3
Total derivatives not designated as hedging instruments $ 11,687
$ 13,737
$ 11,285
$ 13,851
Total derivatives fair value (c)
$ 12,031
$ 14,521
$ 12,097
$ 14,448
Effect of master netting agreements (d)
(8,470 ) (10,257 ) (8,875 ) (10,047 )
Fair value after effect of master netting agreements $ 3,561
$ 4,264
$ 3,222
$ 4,401


~~(a)~~	~~The fair value of asset derivatives and liability derivatives designated as hedging instruments is recorded as other assets and other liabilities, respectively, on the balance sheet.~~


~~(b)~~	~~The fair value of asset derivatives and liability derivatives not designated as hedging instruments is recorded as trading assets and trading liabilities, respectively, on the balance sheet.~~


~~(c)~~	~~Fair values are on a gross basis, before consideration of master netting agreements, as required by ASC 815, Derivatives and Hedging.~~


~~(d)~~	~~Effect of master netting agreements includes cash collateral received and paid of $834 million and $1,239 million, respectively, at~~ ~~Sept. 30, 2017, and $1,119 million and $909 million, respectively, at~~ ~~Dec. 31, 2016~~.

~~The following tables present the impact of derivative instruments used in fair value, cash flow and net investment hedging relationships in the income statement.~~

Impact of derivative instruments in the income statement
(in millions)

Derivatives in fair value hedging relationships
Location of
gain or (loss)
recognized in income
on derivatives

Gain or (loss) recognized in income
on derivatives

Location of
gain or (loss)
recognized in income
on hedged item

Gain or (loss) recognized
in hedged item
3Q17
2Q17
3Q16
3Q17
2Q17
3Q16
Interest rate contracts Net interest revenue $ (33 ) $ 2
$ (174 ) Net interest revenue $ 31
$ (9 ) $ 168

Derivatives in cash flow hedging
relationships
Gain or (loss)
recognized in
accumulated OCI
on derivatives
(effective portion)

Location of gain or
(loss) reclassified
from accumulated
OCI into income
(effective portion)

Gain or (loss)
reclassified
from accumulated
OCI into income
(effective portion)

Location of gain or
(loss) recognized in
income on derivatives
(ineffective portion and
amount excluded from
effectiveness testing)

Gain or (loss) recognized
in income on derivatives
(ineffectiveness portion
and amount excluded from
effectiveness testing)
3Q17
2Q17
3Q16
3Q17
2Q17
3Q16
3Q17
2Q17
3Q16
FX contracts $ —
$ —
$ (7 ) Net interest revenue $ —
$ —
$ (6 ) Net interest revenue $ —
$ —
$ —
FX contracts 3
(1 ) —
Other revenue —
—
—
Other revenue —
—
—
FX contracts (1 ) —
(19 ) Trading revenue (1 ) —
(19 ) Trading revenue —
—
—
FX contracts (4 ) (7 ) 2
Salary expense (2 ) (9 ) (3 ) Salary expense —
—
—
Total $ (2 ) $ (8 ) $ (24 ) $ (3 ) $ (9 ) $ (28 ) $ —
$ —
$ —

~~92 BNY Mellon~~

~~Notes to Consolidated Financial Statements(continued)~~

Derivatives in net
investment hedging
relationships
Gain or (loss)
recognized in
accumulated OCI
on derivatives
(effective portion)

Location of gain or
(loss) reclassified
from accumulated
OCI into income
(effective portion)

Gain or (loss)
reclassified
from accumulated
OCI into income
(effective portion)

Location of gain or
(loss) recognized in
income on derivatives
(ineffective portion and
amount excluded from
effectiveness testing)

Gain or (loss) recognized
in income on derivatives
(ineffectiveness portion
and amount excluded from
effectiveness testing)
3Q17
2Q17
3Q16
3Q17
2Q17
3Q16
3Q17
2Q17
3Q16
FX contracts $ (206 ) $ (274 ) $ 47
Net interest revenue $ —
$ —
$ —
Other revenue $ —
$ —
$ —

Impact of derivative instruments in the income statement
(in millions)

Derivatives in fair value hedging relationships
Location of
gain or (loss)
recognized in income
on derivatives
Gain or (loss) recognized in income on derivatives
Location of
gain or (loss)
recognized in income
on hedged item

Gain or (loss) recognized
in hedged item
YTD17
YTD16
YTD17
YTD16
Interest rate contracts Net interest revenue $ (21 ) $ (445 ) Net interest revenue $ 8
$ 417

Derivatives in cash flow hedging
relationships
Gain or (loss)
recognized in
accumulated OCI
on derivatives
(effective portion)

Location of gain or
(loss) reclassified
from accumulated
OCI into income
(effective portion)

Gain or (loss) reclassified
from accumulated
OCI into income
(effective portion)

Location of gain or
(loss) recognized in
income on derivatives
(ineffective portion and
amount excluded from
effectiveness testing)

Gain or (loss) recognized
in income on derivatives
(ineffectiveness portion
and amount excluded from
effectiveness testing)
YTD17
YTD16
YTD17
YTD16
YTD17
YTD16
FX contracts $ —
$ (16 ) Net interest revenue $ —
$ (16 ) Net interest revenue $ —
$ —
FX contracts 2
—
Other revenue —
—
Other revenue —
—
FX contracts 2
(89 ) Trading revenue 2
(89 ) Trading revenue —
—
FX contracts —
(10 ) Salary expense (15 ) (5 ) Salary expense —
—
Total $ 4
$ (115 ) $ (13 ) $ (110 ) $ —
$ —

Derivatives in net
investment hedging
relationships
Gain or (loss)
recognized in
accumulated OCI
on derivatives
(effective portion)

Location of gain or
(loss) reclassified
from accumulated
OCI into income
(effective portion)

Gain or (loss)
reclassified
from accumulated
OCI into income
(effective portion)

Location of gain or
(loss) recognized in
income on derivatives
(ineffective portion and
amount excluded from
effectiveness testing)

Gain or (loss) recognized
in income on derivatives
(ineffectiveness portion
and amount excluded from
effectiveness testing)
YTD17
YTD16
YTD17
YTD16
YTD17
YTD16
FX contracts $ (576 ) $ 320
Net interest revenue $ —
$ —
Other revenue $ —
$ —

Trading activities (including trading derivatives)

Our trading activities are focused on acting as a market-maker for our customers, facilitating customer trades and risk-mitigating economic hedging in compliance with the Volcker Rule. The change in the fair value of the derivatives utilized in our trading activities is recorded in foreign exchange revenue and investment and other revenue on the consolidated income statement.

The following table presents our foreign exchange revenue and other trading revenue.


Foreign exchange revenue and other trading revenue
(in millions)	3Q23		2Q23		3Q22		YTD23		YTD22
Foreign exchange revenue	$	154	$	158	$	203	$	488	$	632
Other trading revenue	86		53		65		184		115

Foreign exchange revenue includes income from purchasing and selling foreign currencies, currency forwards, futures and options as well as foreign currency remeasurement. Other trading revenue reflects results from trading in cash instruments, including fixed income and equity securities, and

trading and economic hedging activity with non-foreign exchange derivatives.

We also use derivative financial instruments as risk-mitigating economic hedges, which are not formally designated as accounting hedges. This includes hedging the foreign currency, interest rate or market risks inherent in some of our balance sheet exposures, such as seed capital investments and deposits, as well as certain investment management fee revenue streams. We also use total return swaps to economically hedge obligations arising from the Company’s deferred compensation plan whereby the participants defer compensation and earn a return linked to the performance of investments they select. The gains or losses on these total return swaps are recorded in staff expense on the consolidated income statement and were losses of $11 million in the third quarter of 2023 and $11 million in the third quarter of 2022, gains of $8 million in the second quarter of 2023 and $4 million in the first nine months of 2023 and a loss of $54 million in the first nine months of 2022.

We manage trading risk through a system of position limits, a ~~VaR~~value-at-risk (“VaR”) methodology based on historical simulation and other market sensitivity

88 BNY Mellon


Notes to Consolidated Financial Statements (continued)

measures. Risk is monitored and reported to senior management by a separate unit, independent from trading, on a daily basis. Based on certain assumptions, the VaR methodology is designed to capture the potential overnight pre-tax dollar loss from adverse changes in fair values of all trading positions. The calculation assumes a ~~one-day~~one-day holding period, utilizes a 99% confidence level and incorporates non-linear product characteristics. The VaR model is one of several statistical models used to develop economic capital results, which are allocated to lines of business for computing risk-adjusted performance.

~~As the~~ VaR methodology does not evaluate risk attributable to extraordinary financial, economic or other ~~occurrences,~~occurrences. As a result, the risk assessment process includes a number of stress scenarios based upon the risk factors in the portfolio and management’s assessment of market conditions. Additional stress scenarios based upon historical market events are also performed. Stress tests may incorporate the impact of reduced market liquidity and the breakdown of historically observed correlations and extreme scenarios. VaR and other statistical measures, stress testing and sensitivity analysis are incorporated ininto other risk management materials.

~~BNY Mellon 93~~

~~Notes to Consolidated Financial Statements(continued)~~

~~The following table presents our foreign exchange and other trading revenue.~~

Foreign exchange revenue includes income from purchasing and selling foreign currencies and currency forwards, futures and options. Other trading revenue reflects results from futures and forward contracts, interest rate swaps, structured foreign currency swaps, options, equity derivatives and fixed income and equity securities.

Counterparty credit risk and collateral

We assess the credit risk of our counterparties through regular examination of their financial statements, confidential communication with the management of those counterparties and regular monitoring of publicly available credit rating information. This and other information is used to develop proprietary credit rating metrics used to assess credit quality.

Collateral requirements are determined after a comprehensive review of the credit quality of each counterparty. Collateral is generally held or pledged in the form of cash and/or highly liquid government securities. Collateral requirements are monitored and adjusted daily.

Additional disclosures concerning derivative financial instruments are provided in Note ~~14 of the Notes to Consolidated Financial Statements.~~15.

Disclosure of contingent features in ~~OTC~~over-the-counter (“OTC”) derivative instruments

Certain OTC derivative contracts and/or collateral agreements contain credit risk-contingent features

triggered upon a rating downgrade in which the counterparty has the right to request additional collateral or the right to terminate the contracts in a net liability position.

The following table shows the aggregate fair value of OTC derivative contracts in net liability positions that contained credit risk-contingent features and the value of collateral that has been posted.


	Sept. 30, 2023		Dec. 31, 2022
(in millions)
Aggregate fair value of OTC derivatives in net liability positions (a)	$	1,479	$	3,069
Collateral posted	$	1,519	$	3,484

(a) Before consideration of cash collateral.

The aggregate fair value of OTC derivative contracts containing credit risk-contingent features can fluctuate from quarter to quarter due to changes in market conditions, composition of counterparty trades, new business or changes to the contingent features.

The Bank of New York Mellon, our largest banking subsidiary, ~~and the subsidiary through which BNY Mellon~~ enters into the substantial majority of ~~its~~our OTC derivative contracts and/or collateral ~~agreements, contain provisions that~~agreements. As such, the contingent features may ~~require us to take certain actions~~be triggered if The Bank of New York Mellon’s ~~public debt~~long-term issuer rating ~~fell to a certain level. Early termination provisions, or “close-out”~~

were downgraded.

agreements, in those contracts could trigger immediate payment of outstanding contracts that are in net liability positions. Certain collateral agreements would require The Bank of New York Mellon to immediately post additional collateral to cover some or all of The Bank of New York Mellon’s liabilities to a counterparty.

The following table shows the fair value of contracts falling under early termination provisions that were in net liability positions ~~as of Sept. 30, 2017~~ for three key ratings triggers.


Potential close-out exposures (fair value) (a)
	Sept. 30, 2023		Dec. 31, 2022
(in millions)
If The Bank of New York Mellon’s rating changed to: (b)
A3/A-	$	60	$	20
Baa2/BBB	$	814	$	545
Ba1/BB+	$	1,714	$	1,803

If The Bank of New York Mellon’s rating was changed to (Moody’s/S&P)
Potential close-out exposures (fair value) (a)

A3/A- $ 92 million
Baa2/BBB $ 430 million
Ba1/BB+ $ 1,899 million


~~(a)~~	(a) The amounts represent potential total close-out values if The Bank of New York Mellon’s long-term issuer rating were to immediately drop ~~to the indicated levels.~~

The aggregated fair value of contracts impacting potential trade close-out amounts and collateral obligations can fluctuate from quarter to quarter due to changes in market conditions, changes in the composition of counterparty trades, new business or changes to the ~~agreement definitions establishing close-out or~~indicated levels, and do not reflect collateral ~~obligations.~~posted.

(b) Represents ratings by Moody’s/S&P.

~~Additionally, if~~

If The Bank of New York Mellon’s debt rating had fallen below investment grade on Sept. 30, ~~2017,~~2023 and Dec. 31, 2022, existing collateral arrangements would have required us to post an additional ~~$151~~collateral of $378 million ~~of collateral.~~

and $214 million, respectively.

94 BNY Mellon 89



Notes to Consolidated Financial Statements(continued)

Offsetting assets and liabilities

The following tables present derivative ~~instruments~~ and financial instruments ~~that are either subject to an enforceable netting agreement or offset by collateral arrangements.~~and their related offsets. There were no derivative instruments or financial instruments subject to a legally enforceable netting agreement for which we are not currently netting.


Offsetting of derivative assets and financial assets at Sept. 30, 2023
	Gross assets recognized		Gross amounts offset in the balance sheet			Net assets recognized in the balance sheet		Gross amounts not offset in the balance sheet
(in millions)					(a)			Financial instruments		Cash collateral received		Net amount
Derivatives subject to netting arrangements:
Interest rate contracts	$	1,297	$	1,052		$	245	$	56	$	—	$	189
Foreign exchange contracts	7,361		5,734			1,627		46		—		1,581
Equity and other contracts	126		62			64		1		—		63
Total derivatives subject to netting arrangements	8,784		6,848			1,936		103		—		1,833
Total derivatives not subject to netting arrangements	805		—			805		—		—		805
Total derivatives	9,589		6,848			2,741		103		—		2,638
Reverse repurchase agreements	151,944		134,691		(b)	17,253		17,204		—		49
Securities borrowing	9,046		—			9,046		8,649		—		397
Total	$	170,579	$	141,539		$	29,040	$	25,956	$	—	$	3,084

(a)Includes the effect of netting agreements and net cash collateral received. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions.

(b)Offsetting of reverse repurchase agreements relates to our involvement in the Fixed Income Clearing Corporation (“FICC”), where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system.


Offsetting of derivative assets and financial assets at Dec. 31, 2022
	Gross assets recognized		Gross amounts offset in the balance sheet			Net assets recognized in the balance sheet		Gross amounts not offset in the balance sheet
(in millions)					(a)			Financial instruments		Cash collateral received		Net amount
Derivatives subject to netting arrangements:
Interest rate contracts	$	1,208	$	986		$	222	$	33	$	—	$	189
Foreign exchange contracts	8,920		7,215			1,705		314		—		1,391
Equity and other contracts	95		5			90		—		—		90
Total derivatives subject to netting arrangements	10,223		8,206			2,017		347		—		1,670
Total derivatives not subject to netting arrangements	928		—			928		—		—		928
Total derivatives	11,151		8,206			2,945		347		—		2,598
Reverse repurchase agreements	75,614		60,322		(b)	15,292		15,182		—		110
Securities borrowing	9,006		—			9,006		8,531		—		475
Total	$	95,771	$	68,528		$	27,243	$	24,060	$	—	$	3,183

(a)Includes the effect of netting agreements and net cash collateral received. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions.

(b)Offsetting of reverse repurchase agreements relates to our involvement in the FICC, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system.

90 BNY Mellon

Offsetting of derivative assets and financial assets at Sept. 30, 2017
Gross assets recognized
Gross amounts offset in the balance sheet
Net assets recognized on the balance sheet
Gross amounts not offset in the balance sheet
(in millions) (a) Financial instruments
Cash collateral received
Net amount
Derivatives subject to netting arrangements:
Interest rate contracts $ 6,182
$ 5,301
$ 881
$ 189
$ —
$ 692
Foreign exchange contracts 4,281
3,120
1,161
82
—
1,079
Equity and other contracts 69
49
20
—
—
20
Total derivatives subject to netting arrangements 10,532
8,470
2,062
271
—
1,791
Total derivatives not subject to netting arrangements 1,499
—
1,499
—
—
1,499
Total derivatives 12,031
8,470
3,561
271
—
3,290
Reverse repurchase agreements 36,118
19,171
(b) 16,947
16,890
—
57
Securities borrowing 10,936
—
10,936
10,627
—
309
Total $ 59,085
$ 27,641
$ 31,444
$ 27,788
$ —
$ 3,656


~~(a)~~			~~Includes the effect of netting agreements and net cash collateral received. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions.~~


~~(b)~~	Offsetting of reverse repurchase agreements relates to our involvement in the Fixed Income Clearing Corporation, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system.

Offsetting of derivative assets and financial assets at Dec. 31, 2016
Gross assets recognized
Gross amounts offset in the balance sheet

Net assets recognized
on the
balance sheet

Gross amounts not offset in the balance sheet
(in millions) (a) Financial instruments
Cash collateral received
Net amount
Derivatives subject to netting arrangements:
Interest rate contracts $ 7,205
$ 6,047
$ 1,158
$ 321
$ —
$ 837
Foreign exchange contracts 5,265
4,172
1,093
202
—
891
Equity and other contracts 44
38
6
—
—
6
Total derivatives subject to netting arrangements 12,514
10,257
2,257
523
—
1,734
Total derivatives not subject to netting arrangements 2,007
—
2,007
—
—
2,007
Total derivatives 14,521
10,257
4,264
523
—
3,741
Reverse repurchase agreements 17,588
481
(b) 17,107
17,104
—
3
Securities borrowing 8,694
—
8,694
8,425
—
269
Total $ 40,803
$ 10,738
$ 30,065
$ 26,052
$ —
$ 4,013


~~(a)~~	~~Includes the effect of netting agreements and net cash collateral received. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions.~~


~~(b)~~	Offsetting of reverse repurchase agreements relates to our involvement in the Fixed Income Clearing Corporation, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system.

~~BNY Mellon 95~~



Notes to Consolidated Financial Statements(continued)


Offsetting of derivative liabilities and financial liabilities at Sept. 30, 2023						Net liabilities recognized in the balance sheet
	Gross liabilities recognized		Gross amounts offset in the balance sheet					Gross amounts not offset in the balance sheet
(in millions)					(a)			Financial instruments		Cash collateral pledged		Net amount
Derivatives subject to netting arrangements:
Interest rate contracts	$	1,073	$	501		$	572	$	71	$	—	$	501
Foreign exchange contracts	6,992		5,472			1,520		280		—		1,240
Equity and other contracts	10		10			—		—		—		—
Total derivatives subject to netting arrangements	8,075		5,983			2,092		351		—		1,741
Total derivatives not subject to netting arrangements	1,145		—			1,145		—		—		1,145
Total derivatives	9,220		5,983			3,237		351		—		2,886
Repurchase agreements	147,027		134,691		(b)	12,336		12,278		58		—
Securities lending	2,435		—			2,435		2,344		—		91
Total	$	158,682	$	140,674		$	18,008	$	14,973	$	58	$	2,977

(a)Includes the effect of netting agreements and net cash collateral paid. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions.

(b)Offsetting of repurchase agreements relates to our involvement in the FICC, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system.


Offsetting of derivative liabilities and financial liabilities at Dec. 31, 2022						Net liabilities recognized in the balance sheet
	Gross liabilities recognized		Gross amounts offset in the balance sheet					Gross amounts not offset in the balance sheet
(in millions)					(a)			Financial instruments		Cash collateral pledged		Net amount
Derivatives subject to netting arrangements:
Interest rate contracts	$	1,306	$	798		$	508	$	67	$	—	$	441
Foreign exchange contracts	9,261		7,444			1,817		51		—		1,766
Equity and other contracts	15		1			14		—		—		14
Total derivatives subject to netting arrangements	10,582		8,243			2,339		118		—		2,221
Total derivatives not subject to netting arrangements	695		—			695		—		—		695
Total derivatives	11,277		8,243			3,034		118		—		2,916
Repurchase agreements	70,830		60,322		(b)	10,508		10,476		31		1
Securities lending	1,827		—			1,827		1,754		—		73
Total	$	83,934	$	68,565		$	15,369	$	12,348	$	31	$	2,990

(a)Includes the effect of netting agreements and net cash collateral paid. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions.

(b)Offsetting of repurchase agreements relates to our involvement in the FICC, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system.

BNY Mellon 91

Offsetting of derivative liabilities and financial liabilities at Sept. 30, 2017 Net liabilities recognized on the balance sheet

Gross liabilities recognized
Gross amounts offset in the balance sheet
Gross amounts not offset in the balance sheet
(in millions) (a) Financial instruments
Cash collateral pledged
Net amount
Derivatives subject to netting arrangements:
Interest rate contracts $ 7,103
$ 5,705
$ 1,398
$ 1,311
$ —
$ 87
Foreign exchange contracts 4,074
3,095
979
234
—
745
Equity and other contracts 130
75
55
49
—
6
Total derivatives subject to netting arrangements 11,307
8,875
2,432
1,594
—
838
Total derivatives not subject to netting arrangements 790
—
790
—
—
790
Total derivatives 12,097
8,875
3,222
1,594
—
1,628
Repurchase agreements 27,321
19,171
(b) 8,150
8,149
—
1
Securities lending 1,904
—
1,904
1,812
—
92
Total $ 41,322
$ 28,046
$ 13,276
$ 11,555
$ —
$ 1,721


~~(a)~~			~~Includes the effect of netting agreements and net cash collateral paid. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions.~~


~~(b)~~	Offsetting of repurchase agreements relates to our involvement in the Fixed Income Clearing Corporation, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system.

Offsetting of derivative liabilities and financial liabilities at Dec. 31, 2016
Net liabilities recognized
on the
balance sheet

Gross liabilities recognized
Gross amounts offset in the balance sheet
Gross amounts not offset in the balance sheet
(in millions) (a) Financial instruments
Cash collateral pledged
Net amount
Derivatives subject to netting arrangements:
Interest rate contracts $ 8,116
$ 6,634
$ 1,482
$ 1,266
$ —
$ 216
Foreign exchange contracts 4,957
3,363
1,594
355
—
1,239
Equity and other contracts 104
50
54
54
—
—
Total derivatives subject to netting arrangements 13,177
10,047
3,130
1,675
—
1,455
Total derivatives not subject to netting arrangements 1,271
—
1,271
—
—
1,271
Total derivatives 14,448
10,047
4,401
1,675
—
2,726
Repurchase agreements 8,703
481
(b) 8,222
8,222
—
—
Securities lending 1,615
—
1,615
1,522
—
93
Total $ 24,766
$ 10,528
$ 14,238
$ 11,419
$ —
$ 2,819


~~(a)~~	~~Includes the effect of netting agreements and net cash collateral paid. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions.~~


~~(b)~~	Offsetting of repurchase agreements relates to our involvement in the Fixed Income Clearing Corporation, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system.

~~96 BNY Mellon~~



Notes to Consolidated Financial Statements(continued)

Secured borrowings

The following ~~tables present~~table presents the contract value of repurchase agreements and securities lending transactions accounted for as secured borrowings by the type of collateral provided to counterparties.


Repurchase agreements and securities lending transactions accounted for as secured borrowings
	Sept. 30, 2023										Dec. 31, 2022
	Remaining contractual maturity								Total		Remaining contractual maturity								Total
(in millions)	Overnight and continuous		Up to 30 days		30-90 days		Over 90 days				Overnight and continuous		Up to 30 days		30-90 days		Over 90 days
Repurchase agreements:
U.S. Treasury	$	115,930	$	743	$	1,044	$	627	$	118,344	$	62,401	$	7	$	827	$	553	$	63,788
Agency RMBS	21,846		508		371		25		22,750		1,460		493		—		—		1,953
Corporate bonds	91		122		1,039		628		1,880		99		88		782		306		1,275
Sovereign debt/sovereign guaranteed	1,445		—		—		—		1,445		1,008		—		—		—		1,008
State and political subdivisions	48		37		431		272		788		38		49		443		159		689
U.S. government agencies	164		7		47		7		225		161		—		—		—		161
Other debt securities	2		129		90		14		235		13		102		92		7		214
Equity securities	—		5		1,353		2		1,360		—		61		1,681		—		1,742
Total	$	139,526	$	1,551	$	4,375	$	1,575	$	147,027	$	65,180	$	800	$	3,825	$	1,025	$	70,830
Securities lending:
Agency RMBS	$	98	$	—	$	—	$	—	$	98	$	110	$	—	$	—	$	—	$	110
Other debt securities	40		—		—		—		40		66		—		—		—		66
Equity securities	2,297		—		—		—		2,297		1,651		—		—		—		1,651
Total	$	2,435	$	—	$	—	$	—	$	2,435	$	1,827	$	—	$	—	$	—	$	1,827
Total secured borrowings	$	141,961	$	1,551	$	4,375	$	1,575	$	149,462	$	67,007	$	800	$	3,825	$	1,025	$	72,657

Repurchase agreements and securities lending transactions accounted for as secured borrowings at Sept. 30, 2017
Remaining contractual maturity of the agreements
(in millions) Overnight and continuous
Up to 30 days
30 days or more
Total
Repurchase agreements:
U.S. Treasury $ 21,432
$ —
$ —
$ 21,432
U.S. government agencies 489
110
—
599
Agency RMBS 1,798
190
—
1,988
Corporate bonds 282
—
940
1,222
Other debt securities 254
—
871
1,125
Equity securities 466
—
489
955
Total $ 24,721
$ 300
$ 2,300
$ 27,321
Securities lending:
U.S. government agencies $ 15
$ —
$ —
$ 15
Other debt securities 477
—
—
477
Equity securities 1,412
—
—
1,412
Total $ 1,904
$ —
$ —
$ 1,904
Total borrowings $ 26,625
$ 300
$ 2,300
$ 29,225

Repurchase agreements and securities lending transactions accounted for as secured borrowings at Dec. 31, 2016
Remaining contractual maturity of the agreements
(in millions) Overnight and continuous
Up to 30 days
30 days or more
Total
Repurchase agreements:
U.S. Treasury $ 2,488
$ 4
$ —
$ 2,492
U.S. government agencies 396
10
—
406
Agency RMBS 3,294
386
—
3,680
Corporate bonds 304
—
694
998
Other debt securities 146
—
563
709
Equity securities 375
—
43
418
Total $ 7,003
$ 400
$ 1,300
$ 8,703
Securities lending:
U.S. government agencies $ 39
$ —
$ —
$ 39
Other debt securities 477
—
—
477
Equity securities 1,099
—
—
1,099
Total $ 1,615
$ —
$ —
$ 1,615
Total borrowings $ 8,618
$ 400
$ 1,300
$ 10,318

BNY Mellon’s repurchase agreements and securities lending transactions primarily encounter risk associated with liquidity. We are required to pledge collateral based on predetermined terms within the agreements. If we were to experience a decline in the fair value of the collateral pledged for these transactions, we could be required to provide

additional collateral to the counterparty, therefore decreasing the amount of assets available for other liquidity needs that may arise. BNY Mellon also offers tri-party collateral agency services in the tri-party repo market where we are exposed to credit risk. In order to mitigate this risk, we require dealers to fully secure intraday credit.

~~BNY Mellon 97~~

~~Notes to Consolidated Financial Statements(continued)~~

Note ~~17 -~~ 18–Commitments and contingent liabilities

Off-balance sheet arrangements

In the normal course of business, various commitments and contingent liabilities are outstanding that are not reflected in the accompanying consolidated balance sheets.

Our significant trading and off-balance sheet risks are securities, foreign currency and interest rate risk management products, commercial lending commitments, letters of credit and securities lending indemnifications. We assume these risks to reduce interest rate and foreign currency risks, to provide customers with the ability to meet credit and liquidity needs and to hedge foreign currency and interest rate risks. These items involve, to varying degrees, credit, foreign currency and interest rate ~~risk~~risks not recognized on the balance sheet. Our off-balance sheet risks are managed and monitored in manners similar to those used for on-balance sheet risks.

92 BNY Mellon


Notes to Consolidated Financial Statements (continued)

The following table presents a summary of our off-balance sheet credit risks.


Off-balance sheet credit risks	Sept. 30, 2023		Dec. 31, 2022
(in millions)
Lending commitments	$	48,624	$	49,750
Standby letters of credit (“SBLC”) (a)	1,974		1,918
Commercial letters of credit	51		19
Securities lending indemnifications (b)(c)	452,620		491,043

Off-balance sheet credit risks Sept. 30, 2017
Dec. 31, 2016
(in millions)
Lending commitments $ 49,983
$ 51,270
Standby letters of credit (a)
3,619
4,185
Commercial letters of credit 265
339
Securities lending indemnifications (b)
406,434
317,690


~~(a)~~	~~Net of participations totaling $681 million at Sept. 30, 2017 and $662 million at Dec. 31, 2016.~~


~~(b)~~	~~Excludes the~~ ~~indemnification for securities for which BNY Mellon acts as an agent on behalf of CIBC Mellon clients,~~ ~~which totaled $65 billion at Sept. 30, 2017 and $61 billion at Dec. 31, 2016.~~

(a)Net of participations totaling $184 million at Sept. 30, 2023 and $175 million at Dec. 31, 2022.

(b)Excludes the indemnification for securities for which BNY Mellon acts as an agent on behalf of CIBC Mellon clients, which totaled $60 billion at Sept. 30, 2023 and $64 billion at Dec. 31, 2022.

(c)Includes cash collateral, invested in indemnified repurchase agreements, held by us as securities lending agent of $48 billion at Sept. 30, 2023 and $43 billion at Dec. 31, 2022.

The total potential loss on undrawn lending commitments, standby and commercial letters of credit and securities lending indemnifications is equal to the total notional amount if drawn upon, which does not consider the value of any collateral.

Since many of the lending commitments are expected to expire without being drawn upon, the total amount does not necessarily represent future cash requirements. A summary of lending commitment maturities is as follows: ~~$29.8~~$28.8 billion in less than one year, ~~$20.0~~$19.5 billion in one to five years and ~~$158~~$337 million over five years.

~~Standby letters of credit (“SBLC”)~~SBLCs principally support obligations of corporate ~~obligations~~clients and were collateralized with cash and securities of ~~$178~~$145 million at Sept. 30, ~~2017~~2023 and ~~$293~~$144 million at Dec. 31, ~~2016.~~2022. At Sept. 30, ~~2017, $2.3~~2023, $1.3 billion of the SBLCs will expire within one year, ~~and $1.2 billion~~$634 million in one to five years and ~~$48~~$8 million in over five years.

We must recognize, at the inception of an SBLC and foreign and other guarantees, a liability for the fair value of the obligation undertaken in issuing the guarantee. The fair value of the liability, which was recorded with a corresponding asset in other assets, was estimated as the present value of contractual customer fees. The estimated liability for losses related to SBLCs and foreign and other guarantees, if any, is included in the allowance for lending-related commitments. ~~The allowance for lending-related commitments was $104 million at Sept. 30, 2017 and $112 million at Dec. 31, 2016.~~

Payment/performance risk of SBLCs is monitored using both historical performance and internal ratings criteria. BNY Mellon’s historical experience is that SBLCs typically expire without being funded. SBLCs below investment grade are monitored closely for payment/performance risk. The table below shows SBLCs by investment grade:


Standby letters of credit	Sept. 30, 2023		Dec. 31, 2022

Investment grade	74	%	75	%
Non-investment grade	26	%	25	%

Standby letters of credit Sept. 30, 2017
Dec. 31, 2016

Investment grade 86 % 89 %
Non-investment grade 14 % 11 %

A commercial letter of credit is normally a short-term instrument used to finance a commercial contract for the shipment of goods from a seller to a buyer. Although the commercial letter of credit is contingent upon the satisfaction of specified conditions, it represents a credit exposure if the buyer defaults on the underlying transaction. As a result, the total contractual amounts do not necessarily represent future cash requirements. Commercial letters of credit totaled ~~$265~~$51 million at Sept. 30, ~~2017~~2023 and ~~$339~~$19 million at Dec. 31, ~~2016.~~2022.

We expect many of the lending commitments and letters of credit to expire without the need to advance any cash. The revenue associated with guarantees frequently depends on the credit rating of the obligor and the structure of the transaction, including collateral, if any.

The allowance for lending-related commitments was $85 million at Sept. 30, 2023 and $78 million at Dec. 31, 2022.

~~98 BNY Mellon~~

~~Notes to Consolidated Financial Statements(continued)~~

A securities lending transaction is a fully collateralized transaction in which the owner of a security agrees to lend the security (typically through an agent, in our case, The Bank of New York Mellon), to a borrower, usually a broker-dealer or bank, on an open, overnight or term basis, under the terms of a prearranged ~~contract, which normally matures in less than 90 days.~~contract.

We typically lend securities with indemnification against borrower default. We generally require the borrower to provide collateral with a minimum value of102% of the fair value of the securities borrowed, which is monitored on a daily basis, thus reducing credit risk. Market risk can also arise in securities lending transactions. These risks are controlled through policies limiting the level of risk that can be undertaken. Securities lending transactions are generally entered into only with highly rated counterparties. Securities lending indemnifications

BNY Mellon 93


Notes to Consolidated Financial Statements (continued)

were secured by collateral of $~~424~~476 billion at Sept. 30, ~~2017~~2023 and $~~331~~515 billion at Dec. 31, ~~2016.~~2022.

CIBC Mellon, a joint venture between BNY Mellon and the Canadian Imperial Bank of Commerce (“CIBC”), engages in securities lending activities. CIBC Mellon, BNY Mellon and CIBC jointly and severally indemnify securities lenders against specific types of borrower default. At Sept. 30, ~~2017~~2023 and Dec. 31, ~~2016, $65~~2022, $60 billion and ~~$61~~$64 billion, respectively, of borrowings at CIBC Mellon, for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, were secured by collateral of ~~$69~~$63 billion and ~~$64~~$68 billion, respectively. If, upon a default, a borrower’s collateral was not sufficient to cover its related obligations, certain losses related to the indemnification could be covered by the indemnitors.

Unsettled repurchase and reverse repurchase agreements

In the normal course of business, we enter into repurchase agreements and reverse repurchase agreements that settle at a future date. In repurchase agreements, BNY Mellon receives cash from and provides securities as collateral to a counterparty at settlement. In reverse repurchase agreements, BNY Mellon advances cash to and receives securities as collateral from the counterparty at settlement. These transactions are recorded on the consolidated balance sheet on the settlement date. At Sept. 30, 2023, we had no unsettled repurchase agreements and $65.9 billion of unsettled reverse repurchase agreements. At Dec. 31, 2022, we had $4.0 billion of unsettled repurchase agreements and $11.3 billion of unsettled reverse repurchase agreements.

Industry concentrations

We have significant industry concentrations related to credit exposure at Sept. 30, ~~2017.~~2023. The tables below present our credit exposure in the financial institutions and commercial portfolios.


Financial institutions portfolio exposure (in billions)	Sept. 30, 2017						Financial institutions portfolio exposure (in billions)	Sept. 30, 2023
	Loans		Unfunded commitments		Total exposure			Loans		Unfunded commitments		Total exposure
Securities industry	$	2.9	$	19.0	$	21.9	Securities industry	$	1.7	$	17.2	$	18.9
Asset managers	1.6		6.5		8.1		Asset managers	1.5		8.0		9.5
Banks	6.3		1.4		7.7		Banks	6.8		1.5		8.3
Insurance	0.1		3.4		3.5		Insurance	0.1		3.9		4.0
Government	—		1.0		1.0		Government	—		0.2		0.2
Other	1.0		1.4		2.4		Other	0.3		1.0		1.3
Total	$	11.9	$	32.7	$	44.6	Total	$	10.4	$	31.8	$	42.2


Commercial portfolio exposure (in billions)	Sept. 30, 2017						Commercial portfolio exposure (in billions)	Sept. 30, 2023
	Loans		Unfunded commitments		Total exposure			Loans		Unfunded commitments		Total exposure
Services and other							Services and other	$	1.1	$	3.4	$	4.5
Manufacturing	$	1.4	$	6.3	$	7.7	Manufacturing	0.5		3.6		4.1
Services and other	0.9		4.4		5.3
Energy and utilities	0.6		4.5		5.1		Energy and utilities	0.3		3.7		4.0
Media and telecom	0.1		1.4		1.5		Media and telecom	—		0.7		0.7
Total	$	3.0	$	16.6	$	19.6	Total	$	1.9	$	11.4	$	13.3

Major concentrations in securities lending are primarily to broker-dealers and are generally collateralized with cash and/or securities.

~~Exposure~~Sponsored member repo program

BNY Mellon is a sponsoring member in the FICC sponsored member program, where we submit eligible repurchase and reverse repurchase transactions in U.S. Treasury and agency securities (“Sponsored Member Transactions”) between BNY Mellon and our sponsored member clients for ~~certain administrative errors~~

Innovation and clearing through FICC pursuant to the FICC Government Securities Division rulebook (the “FICC Rules”). We also guarantee to FICC the prompt and full payment and performance of our sponsored member clients’ respective obligations under the FICC Rules in connection with ~~certain offshore tax-exempt funds that we manage, we may be liable to the funds~~such clients’ Sponsored Member Transactions. We minimize our credit exposure under this guaranty by obtaining a security interest in our sponsored member clients’ collateral and rights under Sponsored Member Transactions. See “Offsetting assets and liabilities” in Note 17 for certain administrative errors. The errors relate to the resident status of such funds, potentially exposing the Company to a tax liability related to the funds’ earnings. The Company is in discussions with tax authorities regarding the funds. We believe we are appropriately accruedadditional information on our repurchase and ~~the additional reasonably possible exposure is not significant.~~reverse repurchase agreements.

Indemnification arrangements

We have provided standard representations for underwriting agreements, acquisition and divestiture agreements, sales of loans and commitments, and other similar types of arrangements and customary indemnification for claims and legal proceedings

94 BNY Mellon


Notes to Consolidated Financial Statements (continued)

related to providing financial services that are not otherwise included above. Insurance has been purchased to mitigate certain of these risks. Generally, there are no stated or notional amounts included in these indemnifications, and the contingencies triggering the obligation for indemnification are not expected to occur. Furthermore, often counterparties to these transactions provide us with comparable indemnifications. We are unable to develop an estimate of the maximum payout under these

~~BNY Mellon 99~~

~~Notes to Consolidated Financial Statements(continued)~~

indemnifications for several reasons. In addition to the lack of a stated or notional amount in a majority of such indemnifications, we are unable to predict the nature of events that would trigger indemnification or the level of indemnification for a certain event. We believe, however, that the possibility that we will have to make any material payments for these indemnifications is remote. At Sept. 30, ~~2017~~2023 and Dec. 31, ~~2016,~~2022, we have not recorded any material liabilities under these arrangements.

Clearing and settlement exchanges

We are a noncontrolling equity investor in, and/or member of, several industry clearing or settlement exchanges through which foreign exchange, securities, derivatives or other transactions settle. Certain of these industry clearing and settlement exchanges require their members to guarantee their obligations and liabilities and/or to provide liquidity support in the event other members do not honor their obligations. We believe the likelihood that a clearing or settlement exchange (of which we are a member) would become insolvent is remote. Additionally, certain settlement exchanges have implemented loss allocation policies that enable the exchange to allocate settlement losses to the members of the exchange. It is not possible to quantify such mark-to-market loss until the loss occurs. Any ancillary costs that occur as a result of any mark-to-market loss cannot be quantified. In addition, we also sponsor clients as members on clearing and settlement exchanges and guarantee their obligations. At Sept. 30, ~~2017~~2023 and Dec. 31, ~~2016,~~2022, we ~~have~~did not ~~recorded~~record any material liabilities under these arrangements.

Legal proceedings

In the ordinary course of business, ~~BNY~~The Bank of New York Mellon Corporation and its subsidiaries are routinely named as defendants in or made parties to pending and potential legal actions. We also are subject to governmental and regulatory examinations,

information-gathering requests, investigations and proceedings (both formal and informal). Claims for significant monetary damages are often asserted in many of these legal actions, while claims for disgorgement, restitution, penalties and/or other remedial actions or sanctions may be sought in governmental and regulatory matters. It is inherently difficult to predict the eventual outcomes of such matters given their complexity and the particular facts and circumstances at issue in each of these matters. However, on the basis of our current

knowledge and understanding, we do not believe that judgments, settlements or orders, if any, arising from these matters (either individually or in the aggregate, after giving effect to applicable reserves and insurance coverage) will have a material adverse effect on the consolidated financial position or liquidity of BNY Mellon, although they could have a material effect on ~~net income~~our results of operations in a given period.

In view of the inherent unpredictability of outcomes in litigation ~~and governmental~~ and regulatory matters, particularly where (i) the damages sought are substantial or indeterminate, (ii) the proceedings are in the early stages, or (iii) the matters involve novel legal theories or a large number of parties, as a matter of course there is considerable uncertainty surrounding the timing or ultimate resolution of litigation and ~~governmental and~~ regulatory matters, including a possible eventual loss, fine, penalty or business impact, if any, associated with each such matter. In accordance with applicable accounting guidance, ~~BNY Mellon establishes~~we establish accruals for litigation ~~and governmental~~ and regulatory matters when those matters proceed to a stage where they present loss contingencies that are both probable and reasonably estimable. In such cases, there may be a possible exposure to loss in excess of any amounts accrued. ~~BNY Mellon will continue to~~We regularly monitor such matters for developments that could affect the amount of the accrual, and will adjust the accrual amount as appropriate. If the loss contingency in question is not both probable and reasonably estimable, ~~BNY Mellon does~~we do not establish an accrual and the matter ~~will continue~~continues to be monitored for any developments that would make the loss contingency both probable and reasonably estimable. ~~BNY Mellon believes~~We believe that ~~its~~our accruals for legal proceedings are appropriate and, in the aggregate, are not material to the consolidated financial position of BNY Mellon, although future accruals could have a material effect on ~~net income~~the results of operations in a given period. In addition, if we have the potential to recover a portion of an estimated loss from a third party, we record a

BNY Mellon 95


Notes to Consolidated Financial Statements (continued)

receivable up to the amount of the accrual that is probable of recovery.

For certain of those matters described here for which a loss contingency may, in the future, be reasonably possible (whether in excess of a related accrued liability or where there is no accrued liability), BNY Mellon is currently unable to estimate a range of reasonably possible loss. For those matters described here where BNY Mellon is able to estimate a reasonably possible loss, the aggregate range of such reasonably possible loss is up to ~~$940~~$590 millionin excess of the accrued liability (if any) related to those matters.

For matters where a reasonably possible loss is denominated in a foreign currency, our estimate is adjusted quarterly based on prevailing exchange rates. We do not consider potential recoveries when estimating reasonably possible losses.

~~100 BNY Mellon~~

~~Notes to Consolidated Financial Statements(continued)~~

The following describes certain judicial, regulatory and arbitration proceedings involving BNY Mellon:

Mortgage-Securitization Trusts Proceedings

~~The Bank of New York~~BNY Mellon has been named as a defendant in a number of legal actions brought by MBS investors alleging that the trustee has expansive duties under the governing agreements, including the duty to investigate and pursue breach of representation and warranty claims against other parties to the MBS transactions. ~~These~~Two actions ~~include a lawsuit brought~~commenced in December 2015 and February 2017 are pending in New York ~~State court on June 18,~~federal court. An action commenced in December 2014 ~~and later re-filed~~ in New York federal court ~~by a group of institutional investors who purport to sue~~was dismissed and the dismissal was affirmed on ~~behalf of 253 MBS trusts.~~appeal in April 2023. In New York state court, six actions are pending: one case commenced in May 2016; two related cases commenced in September 2021 and October 2022; and three related cases commenced in October 2021, December 2021 and February 2022.

Matters Related to R. Allen Stanford

In late December 2005, Pershing LLC (“Pershing”) became a clearing firm for Stanford Group Co. (“SGC”), a registered broker-dealer that was part of a group of entities ultimately controlled by R. Allen Stanford (“Stanford”). Stanford International Bank, ~~(“SIB”),~~ also controlled by Stanford, issued certificates of deposit (“CDs”). Some investors allegedly wired funds from their SGC accounts to purchase CDs. In 2009, the ~~SEC~~Securities and Exchange Commission charged Stanford with operating a Ponzi scheme in connection with the sale of CDs, and SGC was placed into receivership. Alleged purchasers of CDs have

filed ~~15 lawsuits against Pershing that are pending in Texas, including~~ two putative class ~~actions.~~action proceedings against Pershing: one in November 2009 in Texas federal court, and one in May 2016 in New Jersey federal court. On Nov. 5, 2021, the court dismissed the class action filed in New Jersey and that matter has concluded. Three lawsuits remain against Pershing in Louisiana and New Jersey federal courts, which were filed in January 2010, October 2015 and May 2016. The purchasers allege that Pershing, as SGC’s clearing firm, assisted Stanford in a fraudulent scheme and assert contractual, statutory and common law claims. In March 2019, a group of investors filed a putative class action against The ~~remaining FINRA~~Bank of New York Mellon in New Jersey federal court, making the same allegations as in the prior actions brought against Pershing. On Nov. 12, 2021, the court dismissed the class action ~~has~~against The Bank of New York Mellon; on Dec. 15, 2022, an appeals court reversed the dismissal and returned the case to the trial court for further proceedings. All the cases that have been ~~resolved and dismissed.~~brought in federal court against Pershing have been consolidated in Texas federal court for discovery purposes. Various alleged Stanford CD purchasers asserted similar claims in Financial Industry Regulatory Authority, Inc. (“FINRA”) arbitration proceedings.

Brazilian Postalis Litigation

BNY Mellon Servicos Financeiros DTVM S.A. (“DTVM”), a subsidiary that provides ~~a number of~~ asset services in Brazil, acts as administrator for certain investment funds in which ~~the exclusive investor is~~ a public pension fund for postal workers called Postalis-Instituto de Seguridade Social dos Correios e Telégrafos (“Postalis”). invested. On Aug. 22, 2014, Postalis sued DTVM in Rio de Janeiro, Brazil for losses related to a Postalis ~~investment~~ fund for which DTVM ~~serves as fund~~is administrator. Postalis alleges that DTVM failed to properly perform ~~alleged~~ duties, including ~~duties~~ to conduct due diligence of and exert control over the ~~fund manager, Atlântica Administração de Recursos (“Atlântica”), and Atlântica’s investments.~~manager. On March 12, 2015, Postalis filed a lawsuit in Rio de Janeiro against DTVM and

BNY Mellon Administração de Ativos Ltda. (“Ativos”) alleging failure to properly perform ~~alleged~~ duties relating to another fund of which DTVM is administrator and Ativos is ~~investment~~ manager. On Dec. 14, 2015, ~~Associaceã~~Associacão ~~Dos~~dos Profissionais ~~Dos Correiros~~dos Correios (“ADCAP”), a Brazilian postal workers association, filed a lawsuit in São Paulo against DTVM and other defendants alleging that DTVM improperly contributed to Postalis investment ~~losses in the Postalis portfolio.~~losses. On March 20, 2017, the lawsuit was dismissed without prejudice, and ADCAP ~~has~~appealed. On Aug. 4, 2021, the appellate court overturned the dismissal and sent the lawsuit to a

96 BNY Mellon


Notes to Consolidated Financial Statements (continued)

state lower court. On March 2, 2023, DTVM appealed ~~that decision.~~the August 4 decision to Brazil’s Superior Court of Justice. On Dec. 17, 2015, Postalis filed three ~~additional~~ lawsuits in Rio de Janeiro against DTVM and Ativos alleging failure to properly perform ~~alleged~~ duties ~~and liabilities for losses~~ with respect to investments in several other funds. On May 20, 2021, the court in one of those lawsuits entered a judgment of approximately $3 million against DTVM and Ativos. On Aug. 23, 2021, DTVM and Ativos filed an appeal of the May 20 decision. On June 7, 2022, the appellate court partially granted and partially denied the appeal, reducing the judgment to approximately $2 million. On July 13, 2023, DTVM and Ativos filed a further appeal to Brazil’s Superior Court of Justice. On Aug. 24, 2022, the court dismissed one of the other lawsuits. On Nov. 24, 2022, Postalis appealed that decision. On Feb. 4, 2016, Postalis filed ~~another~~a lawsuit in Brasilia against DTVM, Ativos and BNY Mellon Alocação de Patrimônio Ltda. (“Alocação de Patrimônio”), an investment management subsidiary, alleging failure to properly perform duties and liability for losses with respect to investments in various ~~other~~ funds of which the defendants were administrator and/or manager. ~~The~~On Jan. 16, 2018, the Brazilian Federal Prosecution Service (“MPF”) filed a civil lawsuit ~~has been transferred to~~in São ~~Paulo.~~Paulo against DTVM alleging liability for Postalis losses based on alleged failures to properly perform certain duties as administrator to certain funds in which Postalis invested or as controller of Postalis’s own investment portfolio. On April 18, 2018, the court dismissed the lawsuit without prejudice. On Aug. 4, 2021, the appellate court overturned the dismissal and returned the lawsuit to the lower court. On April 11, 2022, DTVM appealed the Aug. 4 decision to Brazil’s Superior Court of Justice. On Aug. 21, 2023, DTVM’s appeal was denied. In addition, the Tribunal de Contas da União (“TCU”), an administrative tribunal, has initiated proceedings with the purpose of determining liability for losses to three investment funds administered by DTVM in which Postalis was an investor. On Sept. 9, 2020, TCU rendered a decision in one of the proceedings, finding DTVM and two former Postalis directors jointly and severally liable for approximately $50 million. TCU also imposed on DTVM a fine of approximately $2 million. DTVM’s administrative appeal of the decision was denied. On Feb. 25, 2022, DTVM filed a lawsuit in Brazil federal court in Brasilia seeking annulment of TCU’s decision and an injunction preventing TCU from enforcing the judgment. On Aug. 24, 2022, the Brazilian Federal Attorneys filed

~~Depositary Receipt Litigation~~

~~Between late December 2015~~an action in Rio de Janeiro court seeking to enforce the fine portion of the judgment. On Nov. 8, 2022, the Brasilia federal court in the annulment action granted DTVM’s request for an injunction, suspending the Sept. 9, 2020 TCU decision until the annulment action is decided. On Oct. 4, 2019, Postalis and ~~February 2016, four putative class action lawsuits~~another pension fund filed a request for arbitration in São Paulo against DTVM and Ativos alleging liability for losses to an investment fund for which DTVM was administrator and Ativos was manager. On March 26, 2021, DTVM and Ativos filed a lawsuit in São Paulo challenging the decision rendered by the Arbitration Court with respect to its jurisdiction over the case. On Feb. 24, 2023, the São Paulo court annulled the Arbitration Court’s decision that it had jurisdiction, and Postalis and the other pension fund have appealed. On Sept. 21, 2023, the São Paulo court issued an order suspending the arbitration; the Arbitration Court implemented the suspension on Oct. 6, 2023. On Oct. 25, 2019, Postalis filed a lawsuit in Rio de Janeiro against DTVM and Alocação de Patrimônio, alleging liability for losses in another fund for which DTVM was administrator and Alocação de Patrimônio and Ativos were ~~filed against BNY Mellon asserting claims relating to BNY Mellon’s foreign exchange pricing when converting dividends~~managers. On May 9, 2022, the court found DTVM and ~~other distributions from non-U.S. companies in its role as depositary bank to Depositary Receipt issuers. The claims are~~Alocação de Patrimônio jointly and severally liable for ~~breach of contract~~approximately $20 million. On Aug. 12, 2022, DTVM and ~~violations of ERISA. The lawsuits have been consolidated into two suits that are pending~~Alocação de Patrimônio appealed the decision. On June 19, 2020, a lawsuit was filed in federal court in Rio de Janeiro against DTVM, Postalis, and various other defendants alleging liability against DTVM for certain Postalis losses in an investment fund of which DTVM was administrator. On Feb. 10, 2021, Postalis and another pension fund served DTVM in a lawsuit filed in Rio de Janeiro, alleging liability for losses in another investment fund for which DTVM was administrator and the ~~Southern District of New York.~~other defendant was manager.

Brazilian Silverado Litigation

DTVM acts as administrator for the Fundo de Investimento em Direitos Creditórios Multisetorial Silverado Maximum (“Silverado Maximum Fund”), which invests in commercial credit receivables. On June 2, 2016, the Silverado Maximum Fund sued DTVM in its capacity as administrator, along with Deutsche Bank S.A. - Banco Alemão in its capacity as custodian and Silverado Gestão e Investimentos Ltda. in its capacity as investment manager. The Fund alleges that each of the defendants failed to fulfill its respective duty, and caused losses to the Fund for which the defendants are jointly and severally liable.

BNY Mellon ~~101~~97



Notes to Consolidated Financial Statements(continued)

German Tax Matters

~~Depositary Receipt Pre-Release Inquiry~~

German authorities are investigating past “cum/ex” trading, which involved the purchase of equity securities on or shortly before the dividend date, but settled after that date, potentially resulting in an unwarranted refund of withholding tax. German authorities have taken the view that past cum/ex trading may have resulted in tax avoidance or evasion. European subsidiaries of BNY Mellon have been informed by German authorities about investigations into potential cum/ex trading by certain third-party investment funds, where one of the subsidiaries had acquired entities that served as depositary and/or fund manager for those third-party investment funds. We have received information requests from the authorities relating to pre-acquisition activity and are cooperating fully with those requests. In August 2019, the District Court of Bonn ordered that one of these subsidiaries be joined as a secondary party in connection with the prosecution of unrelated individual defendants. Trial commenced in September 2019. In March ~~2014,~~2020, the ~~Staff~~court stated that it would refrain from taking action against the subsidiary in order to expedite the conclusion of the ~~U.S. Securities~~trial. The court convicted the unrelated individual defendants, and ~~Exchange Commission’s Enforcement Division (the “Staff”) commenced~~determined that the cum/ex trading activities of the relevant third-party investment funds were unlawful. In November and December 2020 and February 2023, we received secondary liability notices from the German tax authorities totaling approximately $150 million (at then-prevailing exchange rates) related to pre-acquisition activity in various funds for which the entities we acquired were depositary and/or fund manager. We have appealed the notices. In connection with the acquisition of the subject entities, we obtained an ~~investigation into certain issuers of American Depositary Receipts (“ADRs”), including BNY Mellon,~~indemnity for liabilities from the ~~period of 2011~~sellers that we intend to ~~2015.~~ pursue as necessary.

Off-Channel Business-Related Communications

The Company has been responding to a request for information from the SEC concerning compliance with recordkeeping obligations relating to business communications transmitted on unapproved electronic communication platforms. SEC Staff has ~~issued several requests to BNY Mellon for information relating to the pre-release of ADRs. In May 2017, BNY Mellon began discussions~~stated that it is conducting similar inquiries into recordkeeping practices at other financial institutions. The Company is cooperating with the ~~Staff about~~inquiry. In April 2023, the Company received a ~~possible resolution of~~similar request from the ~~investigation. BNY Mellon has fully cooperated~~Commodity Futures Trading Commission and is cooperating with ~~this matter.~~that inquiry as well.

Note ~~18 - Lines of business~~19–Business segments

We have an internal information system that produces performance data along product and service lines for our ~~two~~three principal business segments and the Other segment. The primary products and services and types of revenue for our principal businesses and a description of the Other ~~segment.~~segment are presented in Note 24 of the Notes to Consolidated Financial Statements in our 2022 Annual Report.

Business accounting principles

Our business data has been determined on an internal management basis of accounting, rather than ~~the generally accepted accounting principles~~GAAP which is used for consolidated financial reporting. These measurement principles are designed so that reported results of the businesses will track their economic performance.

Business segment results are subject to reclassification when organizational changes are made, or ~~when improvements~~for refinements in revenue and expense allocation methodologies. Refinements are ~~made~~typically reflected on a prospective basis. There were no reclassifications or organization changes in the ~~measurement principles.~~third quarter of 2023.

The accounting policies of the businesses are the same as those described in Note 1 of the Notes to Consolidated Financial Statements in our ~~2016~~2022 Annual Report.

~~The primary types of revenue for our two principal businesses and the Other segment are presented below.~~



~~Business~~	~~Primary types of revenue~~
~~Investment Management~~	• ~~Investment management and performance fees from:~~ ~~Mutual funds~~ ~~Institutional clients~~ ~~Private clients~~ ~~High-net-worth individuals and families, endowments and foundations and related entities~~ • ~~Distribution and servicing fees~~ • ~~Other revenue from seed capital investments~~
~~Investment Services~~	• ~~Asset servicing fees, including custody fees, fund services, broker-dealer services, securities finance and collateral and liquidity services~~ • ~~Issuer services fees, including Depositary Receipts and Corporate Trust~~ • ~~Clearing services fees~~ • ~~Treasury services fees, including global payments, trade finance and cash management~~ • ~~Foreign exchange revenue~~ • ~~Financing-related fees and net interest revenue from credit-related activities~~
~~Other segment~~	• ~~Net interest revenue and lease-related gains (losses) from leasing operations~~ • ~~Gain (loss) on securities and net interest revenue from corporate treasury activity~~ • ~~Other trading revenue from derivatives and other trading activity~~ • ~~Results of business exits~~

The results of our ~~businesses~~business segments are presented and analyzed on an internal management reporting basis.

•Revenue amounts reflect fee and other revenue generated by each ~~business.~~business and include revenue for services provided between the segments that are also provided to third parties. Fee and other revenue transferred between businesses under revenue transfer agreements is included within other ~~revenue~~fees in each ~~business.~~segment.

•Revenues and expenses associated with specific client bases are included in those businesses. For example, foreign exchange activity associated

with clients using custody products is included in ~~Investment Services.~~the Securities Services segment.

•Net interest revenue is allocated to businesses based on the yields on the assets and liabilities generated by each business. We employ a funds

98 BNY Mellon


Notes to Consolidated Financial Statements (continued)

transfer pricing system that matches funds with the specific assets and liabilities of each business based on their interest sensitivity and maturity characteristics.

•The provision for credit losses associated with the respective credit portfolios is reflected in each ~~business~~ segment.

~~102 BNY Mellon~~

~~Notes to Consolidated Financial Statements(continued)~~

•Incentives expense related to restricted stock and RSUs is allocated to the ~~businesses.~~segments.

•Support and other indirect expenses, including services provided between segments that are not provided to third parties or not subject to a revenue transfer agreement, are allocated to the businesses based on internally developed ~~methodologies.~~methodologies and reflected in noninterest expense.

•Recurring FDIC expense is allocated to the businesses based on average deposits generated within each business.

•Severance expense is recorded in the segments based on the business or function the impacted employees reside, with severance related to

corporate staff, technology and operations reflected in the Other segment.

•Litigation expense is generally recorded in the business in which the charge occurs.

•Management of the ~~investment~~ securities portfolio is a shared service contained in the Other segment. As a result, gains and losses associated with the valuation of the securities portfolio are generally included in the Other segment.

•Client deposits serve as the primary funding source for our ~~investment~~ securities portfolio.

We typically allocate all interest revenue to the businesses generating the deposits. Accordingly, accretion related to the portion of the ~~investment~~ securities portfolio restructured in 2009 has been included in the results of the businesses.

~~M&I expense is a corporate level item and is recorded in the Other segment.~~

~~Restructuring charges relate to corporate-level initiatives and were therefore recorded in the Other segment.~~

•Balance sheet assets and liabilities and their related income or expense are specifically assigned to each business. ~~Businesses~~Segments with a net liability position have been allocated assets.

•Goodwill and intangible assets are reflected within individual businesses.

The following consolidating schedules ~~presents~~present the contribution of our ~~businesses~~segments to our overall profitability.


For the quarter ended Sept. 30, 2023	Securities Services			Market and Wealth Services			Investment and Wealth Management				Other		Consolidated
(dollars in millions)
Total fee and other revenue	$	1,489		$	1,043		$	789		(a)	$	34	$	3,355		(a)
Net interest revenue (expense)	600			402			38				(24)		1,016
Total revenue	2,089			1,445			827			(a)	10		4,371			(a)
Provision for credit losses	19			6			(9)				(13)		3
Noninterest expense	1,585			808			672				24		3,089
Income (loss) before income taxes	$	485		$	631		$	164		(a)	$	(1)	$	1,279		(a)
Pre-tax operating margin (b)	23		%	44		%	20		%		N/M		29		%
Average assets	$	190,964		$	129,804		$	26,531			$	50,193	$	397,492

(a)Total fee and other revenue, total revenue and income before income taxes are net of income attributable to noncontrolling interests related to consolidated investment management funds of $3 million.

(b) Income before income taxes divided by total revenue.

N/M – Not meaningful.

BNY Mellon 99

For the quarter ended Sept. 30, 2017 Investment
Management
Investment
Services
Other
Consolidated

(dollar amounts in millions)
Fee and other revenue $ 918
(a) $ 2,187
$ 69
$ 3,174
(a)
Net interest revenue (expense) 82
777
(20 ) 839

Total revenue 1,000
(a) 2,964
49
4,013
(a)
Provision for credit losses (2 ) (2 ) (2 ) (6 )
Noninterest expense 702
1,874
77
2,653
(b)
Income (loss) before taxes $ 300
(a) $ 1,092
$ (26 ) $ 1,366
(a)(b)
Pre-tax operating margin (c)
30 % 37 % N/M
34 %
Average assets $ 31,689
$ 252,461
$ 61,559
$ 345,709


~~(a)~~			Both fee and other revenue and total revenue include the net income from consolidated investment management funds of $7 million representing $10 million of income and noncontrolling interests of $3 million. ~~Income before taxes is net of noncontrolling interests of $3 million~~.


~~(b)~~	~~Noninterest expense includes a loss attributable to noncontrolling interest of $1 million related to other consolidated subsidiaries.~~


~~(c)~~	~~Income before taxes divided by total revenue.~~

~~N/M - Not meaningful.~~

For the quarter ended June 30, 2017
Investment
Management

Investment
Services

Other
Consolidated

(dollar amounts in millions)
Fee and other revenue $ 899
(a) $ 2,115
$ 113
$ 3,127
(a)
Net interest revenue (expense) 87
761
(22 ) 826

Total revenue 986
(a) 2,876
91
3,953
(a)
Provision for credit losses —
(3 ) (4 ) (7 )
Noninterest expense 698
1,927
28
2,653
(b)
Income before taxes $ 288
(a) $ 952
$ 67
$ 1,307
(a)(b)
Pre-tax operating margin (c)
29 % 33 % N/M
33 %
Average assets $ 31,355
$ 254,724
$ 56,436
$ 342,515


~~(a)~~	Both fee and other revenue and total revenue include the net income from consolidated investment management funds of $7 million, representing $10 million of income and noncontrolling interests of $3 million. Income before taxes is net of noncontrolling interests of $3 million.


~~(b)~~	~~Noninterest expense includes a loss attributable to noncontrolling interest of $2 millionrelated to other consolidated subsidiaries.~~


~~(c)~~	~~Income before taxes divided by total revenue.~~

~~N/M - Not meaningful.~~

~~BNY Mellon 103~~



Notes to Consolidated Financial Statements(continued)


For the quarter ended June 30, 2023	Securities Services			Market and Wealth Services			Investment and Wealth Management				Other		Consolidated
(dollars in millions)
Total fee and other revenue	$	1,572		$	1,025		$	774		(a)	$	(18)	$	3,353		(a)
Net interest revenue (expense)	668			420			39				(27)		1,100
Total revenue (loss)	2,240			1,445			813			(a)	(45)		4,453			(a)
Provision for credit losses	16			7			7				(25)		5
Noninterest expense	1,582			781			677				71		3,111
Income (loss) before income taxes	$	642		$	657		$	129		(a)	$	(91)	$	1,337		(a)
Pre-tax operating margin (b)	29		%	46		%	16		%		N/M		30		%
Average assets	$	202,207		$	131,657		$	27,260			$	60,050	$	421,174

(b)Income before income taxes divided by total revenue.

N/M – Not meaningful.


For the quarter ended Sept. 30, 2022	Securities Services			Market and Wealth Services			Investment and Wealth Management				Other		Consolidated
(dollars in millions)
Total fee and other revenue	$	1,536		$	989		$	805		(a)	$	23	$	3,353		(a)
Net interest revenue (expense)	538			378			57				(47)		926
Total revenue (loss)	2,074			1,367			862			(a)	(24)		4,279			(a)
Provision for credit losses	(6)			(1)			3				(26)		(30)
Noninterest expense	1,557			737			1,356				29		3,679
Income (loss) before income taxes	$	523		$	631		$	(497)		(a)	$	(27)	$	630		(a)
Pre-tax operating margin (b)	25		%	46		%	(57)		%		N/M		15		%
Average assets	$	203,063		$	138,204		$	29,996			$	44,407	$	415,670

(a)Total fee and other revenue, total revenue and income before income taxes are net of loss attributable to noncontrolling interests related to consolidated investment management funds of $— million.

(b)Income before income taxes divided by total revenue.

N/M – Not meaningful.


For the nine months ended Sept. 30, 2023	Securities Services			Market and Wealth Services			Investment and Wealth Management				Other		Consolidated
(dollars in millions)
Total fee and other revenue	$	4,511		$	3,082		$	2,345		(a)	$	5	$	9,943		(a)
Net interest revenue (expense)	1,934			1,275			122				(87)		3,244
Total revenue (loss)	6,445			4,357			2,467			(a)	(82)		13,187			(a)
Provision for credit losses	35			13			(2)				(11)		35
Noninterest expense	4,723			2,358			2,083				136		9,300
Income (loss) before income taxes	$	1,687		$	1,986		$	386		(a)	$	(207)	$	3,852		(a)
Pre-tax operating margin (b)	26		%	46		%	16		%		N/M		29		%
Average assets	$	196,556		$	131,193		$	26,968			$	53,968	$	408,685

(b) Income before income taxes divided by total revenue.

N/M – Not meaningful.

100 BNY Mellon

For the quarter ended Sept. 30, 2016 Investment
Management
Investment
Services
Other
Consolidated

(dollar amounts in millions)
Fee and other revenue $ 876
(a) $ 2,183
$ 100
$ 3,159
(a)
Net interest revenue (expense) 82
715
(23 ) 774

Total revenue 958
(a) 2,898
77
3,933
(a)
Provision for credit losses —
1
(20 ) (19 )
Noninterest expense 702
1,851
88
2,641
(b)
Income before taxes $ 256
(a) $ 1,046
$ 9
$ 1,311
(a)(b)
Pre-tax operating margin (c)
27 % 36 % N/M
33 %
Average assets $ 30,392
$ 275,714
$ 45,124
$ 351,230


~~(a)~~			Both fee and other revenue and total revenue include net income from consolidated investment management funds of $8 million, representing $17 million of income and noncontrolling interests of $9 million. Income before taxes is net of noncontrolling interests of $9 million.


~~(b)~~	~~Noninterest expense includes a loss attributable to noncontrolling interest of $2 millionrelated to other consolidated subsidiaries.~~


~~(c)~~	~~Income before taxes divided by total revenue.~~

~~N/M - Not meaningful.~~

For the nine months ended Sept. 30, 2017 Investment
Management
Investment
Services
Other
Consolidated

(dollar amounts in millions)
Fee and other revenue $ 2,694
(a) $ 6,386
$ 254
$ 9,334
(a)
Net interest revenue (expense) 255
2,245
(43 ) 2,457

Total revenue 2,949
(a) 8,631
211
11,791
(a)
Provision for credit losses 1
(5 ) (14 ) (18 )
Noninterest expense 2,083
5,650
212
7,945
(b)
Income before taxes $ 865
(a) $ 2,986
$ 13
$ 3,864
(a)(b)
Pre-tax operating margin (c)
29 % 35 % N/M
33 %
Average assets $ 31,372
$ 252,675
$ 57,463
$ 341,510


~~(a)~~	Both total fee and other revenue and total revenue include net income from consolidated investment management funds of $29 million, representing $53 million of income and noncontrolling interests of $24 million. Income before taxes is net of noncontrolling interests of $24 million.


~~(b)~~	~~Noninterest expense includes a loss attributable to noncontrolling interest of $6 million related to other consolidated subsidiaries.~~


~~(c)~~	~~Income before taxes divided by total revenue.~~

~~N/M - Not meaningful.~~

For the nine months ended Sept. 30, 2016 Investment
Management
Investment
Services
Other
Consolidated

(dollar amounts in millions)
Fee and other revenue $ 2,544
(a) $ 6,267
$ 324
$ 9,135
(a)
Net interest revenue (expense) 247
2,084
(24 ) 2,307

Total revenue 2,791
(a) 8,351
300
11,442
(a)
Provision for credit losses —
8
(26 ) (18 )
Noninterest expense 2,084
5,518
284
7,886
(b)
Income before taxes $ 707
(a) $ 2,825
$ 42
$ 3,574
(a)(b)
Pre-tax operating margin (c)
25 % 34 % N/M
31 %
Average assets $ 30,048
$ 275,410
$ 57,832
$ 363,290


~~(a)~~	Both total fee and other revenue and total revenue include net income from consolidated investment management funds of $15 million, representing $21 million of income and noncontrolling interests of $6 million. Income before taxes is net of a loss attributable to noncontrolling interests of $6 million.


~~(b)~~	~~Noninterest expense includes a loss attributable to noncontrolling interest of $6 million related to other consolidated subsidiaries.~~


~~(c)~~	~~Income before taxes divided by total revenue.~~

~~N/M - Not meaningful.~~

~~104 BNY Mellon~~



Notes to Consolidated Financial Statements(continued)


For the nine months ended Sept. 30, 2022	Securities Services			Market and Wealth Services			Investment and Wealth Management				Other		Consolidated
(dollars in millions)
Total fee and other revenue	$	4,488		$	2,869		$	2,549		(a)	$	118	$	10,024		(a)
Net interest revenue (expense)	1,372			1,014			176				(114)		2,448
Total revenue	5,860			3,883			2,725			(a)	4		12,472			(a)
Provision for credit losses	(3)			1			—				21		19
Noninterest expense	4,723			2,147			2,802				125		9,797
Income (loss) before income taxes	$	1,140		$	1,735		$	(77)		(a)	$	(142)	$	2,656		(a)
Pre-tax operating margin (b)	19		%	45		%	(3)		%		N/M		21		%
Average assets	$	214,518		$	140,435		$	33,077			$	43,044	$	431,074

(b) Income before income taxes divided by total revenue.

N/M – Not meaningful.

Note ~~19 -~~ 20–Supplemental information to the Consolidated Statement of Cash Flows

~~Noncash~~Non-cash investing and financing transactions that, appropriately, are not reflected in the ~~Consolidated Statement~~consolidated statement of ~~Cash Flows~~cash flows are listed below.


Non-cash investing and financing transactions	Nine months ended Sept. 30,
(in millions)	2023		2022
Transfers from loans to other assets for other real estate owned	$	1	$	1
Change in assets of consolidated investment management funds	332		248
Change in liabilities of consolidated investment management funds	6		2
Change in nonredeemable noncontrolling interests of consolidated investment management funds	49		189
Securities purchased not settled	234		126

Securities matured not settled	455		—
Available-for-sale securities transferred to held-to-maturity securities	—		6,067



Premises and equipment/operating lease obligations	203		177

Excise tax on share repurchases	18		—

Noncash investing and financing transactions Nine months ended Sept. 30,
(in millions) 2017
2016
Transfers from loans to other assets for other real estate owned (“OREO”) $ 3
$ 4
Change in assets of consolidated VIEs 429
392
Change in liabilities of consolidated VIEs 288
14
Change in nonredeemable noncontrolling interests of consolidated investment management funds 234
238
Securities purchased not settled 1,277
229
Securities sales not settled —
218
Securities matured not settled 350
—
Held-to-maturity securities transferred to available-for-sale 74
10
Premises and equipment/capitalized software funded by capital lease obligations 347
12

BNY Mellon ~~105~~101



Item 4. Controls and Procedures

Disclosure controls and procedures

Our management, including the Chief Executive Officer and Chief Financial Officer, with participation by the members of the Disclosure Committee, has responsibility for ensuring that there is an adequate and effective process for establishing, maintaining, and evaluating disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in our SEC reports is timely recorded, processed, summarized and reported and that information required to be disclosed by BNY Mellon is accumulated and communicated to BNY Mellon’s management to allow timely decisions regarding the required disclosure. In addition, our ethics hotline can also be used by employees and others for the anonymous communication of concerns about financial controls or reporting matters. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

As of the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.

Changes in internal control over financial reporting

In the ordinary course of business, we may routinely modify, upgrade or enhance our internal controls and procedures for financial reporting. There have not been any changes in our internal control over financial reporting as defined in Rule 13a-15(f) of the Exchange Act during the third quarter of ~~2017~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~106~~102 BNY Mellon



Forward-looking Statements

Some statements in this ~~document are forward-looking.~~Quarterly Report may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These include ~~all~~ statements about the usefulness of Non-GAAP measures, the future results of BNY Mellon, our businesses, financial, liquidity and capital condition, results of operations, liquidity, risk and capital management and processes, goals, strategies, outlook, objectives, expectations (including those regarding our performance results, efficiency, expenses, nonperforming assets, products, impacts of currency fluctuations, deposits, securities portfolio, divestments, impacts of trends on our businesses, regulatory, technology, market, economic or accounting developments and the impacts of such developments on our businesses, legal proceedings and other ~~contingencies,~~contingencies), human capital management (including related ambitions, objectives, aims and goals), effective tax rate, net interest revenue, estimates (including those regarding expenses, losses inherent in our credit portfolios and capital ratios), intentions (including those regarding our ~~resolution strategy)~~capital returns and expenses, including our investments in technology and pension expense), targets, opportunities, potential actions, growth, focus and initiatives.

In this report, any other report, any press release or any written or oral statement that BNY Mellon or its executives may make, words, such as “estimate,” “forecast,” “project,” “anticipate,” “likely,” “target,” “expect,” “intend,” “continue,” “seek,” “believe,” “plan,” “goal,” “could,” “should,” “would,” “may,” “might,” “will,” “strategy,” “synergies,” “opportunities,” ~~“trends”~~“trends,” “ambition,” “objective,” “aim,” “future,” “potentially,” “outlook” and words of similar meaning, may signify forward-looking statements.

Actual results may differ materially from those expressed or implied as a result of a number of factors, including those discussed in ~~the~~ “Risk Factors” ~~section of~~in our ~~2016~~2022 Annual Report, ~~and this Form 10-Q,~~ such as: ~~an information security event~~

•errors or delays in our operational and transaction processing, or those of third parties, may materially adversely affect our business, financial condition, results of operations and reputation;

•our risk management framework, models and processes may not be effective in identifying or mitigating risk and reducing the potential for losses;

•our business may be adversely affected if we are unable to attract, retain, develop and motivate employees;

•a communications or technology disruption or failure within our infrastructure or the infrastructure of third parties that results in a loss of information, delays our ability to access information or impacts our ability to provide services to our clients ~~and any material adverse effect on~~may materially adversely affect our business, financial condition and results of operations;

•a cybersecurity incident, or a failure in our computer systems, networks and information, or those of third parties, could result in the theft, loss, unauthorized access to, disclosure, use or alteration of information, system or network failures, or loss of access to information. Any such incident or failure could adversely impact our ~~technology or that of a third party or vendor, or if~~ ability to conduct our businesses, damage our reputation and cause losses;

•we ~~neglect~~are subject to update our technology, develop and market new technology to meet clients’ needs or protect our intellectual property and any material adverse effect on our business; a determination that our resolution plan is not credible and any material negative impact on our business, reputation, results of operations and financial condition and the application of our Title I preferred resolution strategy or resolution under the Title II orderly liquidation authority and any adverse effects on our liquidity, financial condition and security holders; extensive government rulemaking, policies, regulation and supervision ~~which~~that impact our operations. Changes to and introduction of new rules and regulations have compelled, and in the future may compel, us to change how we manage our businesses, which could have a material adverse effect on our business, financial condition and results of ~~operations and have increased our compliance and operational risks and costs; failure to satisfy regulatory standards, including “well capitalized” and~~

operations;

~~“well managed” status or capital adequacy and liquidity rules, and any resulting limitations on our activities, or adverse effects on our business and financial condition;~~ •regulatory or enforcement actions or litigation ~~and any material adverse effect on~~could materially adversely affect our results of operations or harm to our businesses or reputation; ~~adverse events, publicity, government scrutiny or other reputational harm and any negative effect on our businesses; operational risk and any material adverse effect on our business;~~

•a failure or circumvention of our controls and procedures ~~and any~~could have a material adverse effect on our business, ~~reputation,~~financial condition, results of operations and financial condition; failure of our risk management framework to be effective in mitigating risk and reducing the potential for losses; change or uncertainty in monetary, tax and other governmental policies and the impact on our businesses, profitability and ability to compete; political, economic, legal, operational and other risks inherent in operating globally and any adverse effect on our business; acts of terrorism, natural disasters, pandemics and global conflicts and any negative impact on our business and operations; ongoing concerns about the financial stability of certain countries, the failure or instability of any of our significant global counterparties, new barriers to global trade or a breakup of the EU or Eurozone and any material adverse effect on our business and results of operations; the United Kingdom’s referendum decision to leave the EU and any negative effects on global economic conditions, global financial markets, and our business and results of operations; weakness and volatility in financial markets and the economy generally and any material adverse effect on our business, results of operations and financial condition; changes in interest rates and any material adverse effect on our profitability; write-downs of securities that reputation;

•we ~~own and other losses related to volatile and illiquid market conditions and any reduction in our earnings or impact on our financial condition; our dependence~~are dependent on fee-based business for a substantial majority of our revenue and ~~the adverse effects of a~~our fee-based revenues could be adversely affected by slowing in market activity, weak financial markets, underperformance and/or negative trends in savings rates or in investment preferences; ~~any adverse effect~~

•weakness and volatility in financial markets and the economy generally may materially adversely affect our business, financial condition and results of operations;

•levels of and changes in interest rates have impacted, and will in the future continue to impact, our profitability and capital levels, at times adversely;

•we have experienced, and may continue to experience, unrealized or realized losses on

BNY Mellon 103


Forward-looking Statements (continued)

securities related to volatile and illiquid market conditions, reducing our ~~foreign exchange revenues~~capital levels and/or earnings;

•transitions away from ~~decreased market volatility or cross-border investment activity~~and the replacement of LIBOR and other IBORs could adversely impact our ~~clients;~~ business, financial condition and results of operations;

•the failure or perceived weakness of any of our significant clients or counterparties, many of whom are major financial institutions or sovereign entities, and our assumption of credit, counterparty and ~~counterparty~~concentration risk, ~~which~~ could expose us to loss and adversely affect our business;

•we could incur losses if our allowance for credit losses, including loan and lending-related commitment reserves, is inadequate or if our expectations of future economic conditions deteriorate;

•our business, financial condition and results of operations could be adversely affected if we do not effectively manage our liquidity;

•failure to satisfy regulatory standards, including “well capitalized” and “well managed” status or capital adequacy and liquidity rules more generally, could result in limitations on our activities and adversely affect our business and financial condition;

•the Parent is a non-operating holding company and, as a result, is dependent on dividends from its subsidiaries and extensions of credit from its IHC to meet its obligations, including with respect to its securities, and to provide funds for share repurchases and payment of dividends to its stockholders;

•our ability to return capital to shareholders is subject to the discretion of our Board of Directors and may be limited by U.S. banking laws and regulations, including those governing capital and capital planning, applicable provisions of Delaware law and our failure to pay full and timely dividends on our preferred stock;

•any material reduction in our credit ratings or the credit ratings of

~~BNY Mellon 107~~

~~Forward-looking Statements~~ ~~(continued)~~

our principal bank subsidiaries, ~~which~~The Bank of New York Mellon or BNY Mellon, N.A., could increase the cost of funding and borrowing to us and our rated subsidiaries and have a material adverse effect on our business, financial condition and results of operations ~~and financial condition~~ and on the value of the securities we issue; ~~any adverse effect on~~

•the application of our ~~business,~~Title I preferred resolution strategy or resolution under the Title II orderly liquidation authority could adversely affect the

Parent’s liquidity and financial condition and ~~results of operations of not effectively managing our liquidity;~~ the ~~potential to incur losses if our allowance for credit losses is inadequate; the risks relating to~~ Parent’s security holders;

•new lines of business, new products and services or transformational or strategic project initiatives subject us to new or additional risks, and the failure to implement these initiatives ~~which~~ could affect our results of operations; ~~the risks and uncertainties relating~~

•we are subject to ~~our strategic transactions and any adverse effect on our business, results of operations and financial condition;~~ competition in all aspects of our business, ~~and any negative effect on~~which could negatively affect our ability to maintain or increase our profitability; ~~failure to attract~~

•our strategic transactions present risks and ~~retain employees~~uncertainties and ~~any~~could have an adverse effect on our ~~business;~~ business, financial condition and results of operations;

•our businesses may be negatively affected by adverse events, publicity, government scrutiny or other reputational harm;

•climate change concerns could adversely affect our business, affect client activity levels and damage our reputation;

•impacts from natural disasters, climate change, acts of terrorism, pandemics, global conflicts and other geopolitical events may have a negative impact on our business and operations;

•tax law changes or challenges to our tax positions ~~and any adverse effect on~~with respect to historical transactions may adversely affect our net income, effective tax rate and our overall results of operations and financial condition;

•changes in accounting standards governing the preparation of our financial statements and ~~any~~future events could have a material impact on our reported financial condition, results of operations,

cash flows and other financial data; and

•risks ~~associated with being a non-operating holding company, including our dependence on dividends from our subsidiaries~~relating to meet obligations, to provide funds for payment of dividends and for stock repurchases; and the impact of provisions of U.S. banking laws and regulations, including those governing capital and the approval of our capital plan, applicable provisions of Delaware law or failure to pay full and timely dividends on our preferred stock, on our ability to return capital to shareholders.FDIC special deposits insurance assessments.

Investors should not place undue reliance on any forward-looking statement and consider all risk factors discussed in our ~~2016~~2022 Annual Report ~~this Form 10-Q~~ and any subsequent reports filed with the SEC by BNY Mellon pursuant to the Exchange Act. All forward-looking statements speak only as of the date on which such statements are made, and BNY Mellon undertakes no obligation to update any statement to reflect events or circumstances after the date on which such forward-looking statement is made or to reflect the occurrence of unanticipated events. The contents of BNY Mellon’s website or any other ~~websites~~website referenced herein are not part of this report.

104 BNY Mellon

~~108 BNY Mellon~~



Part II -– Other Information

Item 1. Legal Proceedings.

The information required by this Item is set forth in the “Legal proceedings” section in Note 1718 of the

Notes to Consolidated Financial Statements, which portion is incorporated herein by reference in response to this item.

~~Item 1A.~~ ~~Risk Factors~~

The following discussion supplements the discussion of risk factors that could affect our business, financial condition or results of operations set forth in Part I, Item 1A, Risk Factors, on pages 90 through 116 of our 2016 Annual Report. The discussion of Risk Factors, as so supplemented, sets forth our most significant risk factors that could affect our business, financial condition or results of operations. However, other factors, besides that discussed below or in our 2016 Annual Report or other of our reports filed with or furnished to the SEC, also could adversely affect our business or results. We cannot assure you that the risk factors described below or elsewhere in this report and such other reports address all potential risks that we may face. These risk factors also serve to describe factors which may cause our results to differ materially from those described in forward-looking statements included herein or in other documents or statements that make reference to this Form 10-Q. See Forward-looking Statements.

If our resolution plan is determined not to be credible or not to facilitate an orderly resolution under the U.S. Bankruptcy Code, our business, reputation, results of operations and financial condition could be materially negatively impacted. The application of our Title I preferred resolution strategy or resolution under the Title II orderly liquidation authority could adversely affect our liquidity and financial condition and our security holders.

Large BHCs must develop and submit to the Federal Reserve and the FDIC for review plans for their rapid and orderly resolution in the event of material financial distress or failure. BNY Mellon and The Bank of New York Mellon each file periodic complementary resolution plans. In April 2016, the Federal Reserve and the FDIC jointly determined that our 2015 resolution plan was not credible or would not facilitate an orderly resolution under the U.S. Bankruptcy Code. The agencies issued a joint notice of deficiencies and shortcomings and the actions that

must be taken to address them, which we responded to in an Oct. 1, 2016 submission. In December 2016, the agencies jointly determined that our Oct. 1, 2016 submission adequately remedied the identified deficiencies. If the agencies determine that our future submissions are not credible or would not facilitate an orderly resolution under the U.S. Bankruptcy Code, and we fail to address the deficiencies in a timely manner, the agencies may jointly impose more stringent capital, leverage or liquidity requirements or restrictions on our growth, activities or operations. If we continue to fail to adequately remedy any deficiencies identified in future submissions, we could be required to divest assets or operations that the agencies determine necessary to facilitate our orderly resolution.

Following the receipt of feedback from the Federal Reserve and the FDIC in April 2016 on our 2015 resolution plan, we determined that, in the event of our material financial distress or failure, our preferred resolution strategy under Title I of the Dodd-Frank Act is a single point of entry strategy.

In connection with our single point of entry resolution strategy, we have established the IHC to facilitate the provision of capital and liquidity resources to certain key subsidiaries in the event of material financial distress or failure. In the second quarter of 2017, we entered into a binding support agreement that required the IHC to provide that support. The support agreement required the Parent to transfer its intercompany loans and most of its cash to the IHC, and requires the Parent to continue to transfer cash and other liquid financial assets to the IHC.

If our projected liquidity resources deteriorate so severely that resolution of the Parent becomes imminent, the committed line of credit the IHC provided to the Parent will automatically terminate, with all amounts outstanding becoming due and payable, and the support agreement will require the Parent to transfer most of its remaining assets (other than stock in subsidiaries and a cash reserve to fund bankruptcy expenses) to the IHC. As a result, during a period of severe financial stress the Parent might commence bankruptcy proceedings at an earlier time than it otherwise would if the support agreement had not been implemented.

~~If the Parent were to become subject to a bankruptcy proceeding and our single point of entry strategy is successful, creditors of some or all of our material~~

~~BNY Mellon 109~~

~~Part II - Other Information~~ ~~(continued)~~

entities would receive full recoveries on their claims, while the Parent’s security holders, including unsecured debt holders, could face significant losses, potentially including the loss of their entire investment. It is possible that the application of the single point of entry strategy – in which the Parent would be the only legal entity to enter resolution proceedings – could result in greater losses to holders of our unsecured debt securities and other securities than the losses that could result from the application of a different resolution strategy. Further, if the single point of entry strategy is not successful, our liquidity and financial condition would be adversely affected and our security holders may, as a consequence, be in a worse position than if the strategy had not been implemented.

In addition, Title II of the Dodd-Frank Act established an orderly liquidation process in the event of the failure of a large systemically important financial institution, such as BNY Mellon, in order to avoid or mitigate serious adverse effects on the U.S. financial system. Specifically, when a U.S. G-SIB, such as BNY Mellon is in default or danger of default, and certain specified conditions are met, the FDIC may be appointed receiver under the orderly liquidation authority, and BNY Mellon would be resolved under that authority instead of the U.S. Bankruptcy Code.

U.S. supervisors have indicated that a single point of entry strategy may be a desirable strategy to resolve a large financial institution such as BNY Mellon under Title II in a manner that would, similar to our preferred strategy under our Title I resolution plan, impose losses on shareholders, unsecured debt holders and other unsecured creditors of the top-tier holding company (in our case, the Parent), while permitting the holding company’s subsidiaries to continue to operate and remain solvent. Under such a strategy, assuming the Parent entered resolution proceedings and its subsidiaries remained solvent, losses at the subsidiary level could be transferred to the Parent and ultimately borne by the Parent’s security holders (including holders of the Parent’s unsecured debt securities), while third-party creditors of the Parent’s subsidiaries would receive full recoveries on their claims. Accordingly, the Parent’s security holders (including holders of unsecured debt securities and other unsecured creditors) could face losses in excess of what otherwise would have been the case.

~~110 BNY Mellon~~

~~Part II - Other Information~~ ~~(continued)~~

Item 2. Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities.


~~(c)~~	The following table discloses repurchases of our common stock made in the third quarter of 2017. All of the Company’s preferred stock outstanding has preference over the Company’s common stock with respect to the payment of dividends.

(c) The following table discloses repurchases of our common stock made in the third quarter of 2023. All of the Company’s preferred stock outstanding has preference over the Company’s common stock with respect to the payment of dividends.

Issuer purchases of equity securities


Share repurchases – third quarter of 2023				Total shares repurchased as part of a publicly announced plan or program	Maximum approximate dollar value of shares that may yet be purchased under the publicly announced plans or programs at Sept. 30, 2023
(dollars in millions, except per share amounts; common shares in thousands)	Total shares repurchased	Average price per share
July 2023	1,909	$	45.52	1,909		$	3,209
August 2023	4,238	44.73		4,238		3,019
September 2023	3,832	45.13		3,832		2,846
Third quarter of 2023 (a)	9,979	$	45.03	9,979		$	2,846	(b)

Share repurchases - third quarter of 2017 Total shares repurchased as part of a publicly announced plan or program
Maximum approximate dollar value of shares that may yet be purchased under the publicly announced plans or programs at Sept. 30, 2017
(dollars in millions, except per share information; common shares in thousands) Total shares
repurchased
Average price
per share

July 2017 7
$ 51.08
7
$ 2,600

August 2017 12,300
52.74
12,300
1,951

September 2017 9
52.29
9
1,950

Third quarter of 2017 (a)
12,316
$ 52.74
12,316
$ 1,950
(b)


~~(a)~~	~~Includes 32 thousand shares repurchased at a purchase price of $2~~(a) Includes 62 thousand shares repurchased at a purchase price of $3 million from employees, primarily ~~in connection with the employees’ payment of taxes upon the vesting of restricted stock. The average price per share of open market purchases was $52.74.~~


~~(b)~~	Represents the maximum value of the shares authorized to be repurchased through the second quarter of 2018, including employee benefit plan repurchases, in connection with the Federal Reserve’s non-objection to our 2017 capital plan.

~~On June 28, 2017,~~ in connection with the ~~Federal Reserve’s non-objection~~employees’ payment of taxes upon the vesting of restricted stock. The average price per share of open market repurchases was $45.03.

(b) Represents the maximum value of the shares to ~~our 2017 capital~~be repurchased under the share repurchase plan ~~BNY Mellon~~announced in January 2023 and includes shares repurchased in connection with employee benefit plans.

In January 2023, we announced a share repurchase ~~plan~~program approved by our Board of Directors providing for the repurchase of up to ~~$2.6~~$5.0 billion of common stock and up to an additional $500 million of common stock contingent on a prior issuance of $500 million of noncumulative perpetual preferred stock. The 2017 capital plan began in the third quarter of 2017 and continues through the second quarter of 2018.shares beginning Jan. 1, 2023. This new share repurchase plan ~~replaces~~replaced all previously authorized share repurchase plans.

Share repurchases may be executed through open market repurchases, in privately negotiated transactions or by other means, including through repurchase plans designed to comply with Rule 10b5-1 and ~~through~~other derivative, accelerated share repurchase and other structured transactions. The timing and exact amount of any common stock repurchases will depend on various factors, including market conditions and the common stock trading price; the Company’s capital position, liquidity and financial performance; alternative uses of capital; and legal and regulatory limitations and considerations.

Item 5. Other Information.

(a) An amendment to the offer terms for Dermot McDonogh, Chief Financial Officer of the Company, was approved by the Human Resources and Compensation Committee of the Company on Oct. 30, 2023. The amended terms

provide that Mr. McDonogh will receive a cash payment of $2,230,000 in 2023 to reflect additional tax obligations on previously disclosed equity buyout awards resulting from the Company’s request that he relocate from the United Kingdom to the United States in connection with his employment. Such payment will be subject to the Company’s standard terms and conditions, including clawback and recoupment.

(c) Certain of our officers or directors have made elections to participate in, and are participating in, our dividend reinvestment plan, employee stock purchase plan and 401(k) plan, and have made, and may from time to time make, elections to have shares withheld to cover withholding taxes or pay the exercise price of stock awards, which may be designed to satisfy the affirmative defense conditions of Rule 10b5-1 under the Exchange Act or may constitute non-Rule 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K).

Item 6. Exhibits.

The list of exhibits required to be filed as exhibits to this report appears below.

BNY Mellon 105

~~BNY Mellon 111~~



Index to Exhibits

Exhibit No.

Description

Method of Filing

3.1

Restated Certificate of Incorporation of The Bank of New York Mellon Corporation.

Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 000-52710) as filed with the Securities and Exchange Commission (the “Commission”) on July 2, 2007, and incorporated herein by reference.

3.2

Certificate of Amendment to The Bank of New York Mellon Corporation’s Restated Certificate of Incorporation, as filed with the Secretary of State of the State of Delaware on April 9, 2019.

Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-35651) as filed with the Commission on April 10, 2019, and incorporated herein by reference.

3.3

Certificate of Designations of The Bank of New York Mellon Corporation with respect to the Series A Noncumulative Preferred Stock, dated June 15, ~~2007~~.2007.

Previously filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 000-52710) as filed with the Commission on July 5, 2007, and incorporated herein by reference.

~~3.3~~3.4

~~Certificate of Designations of The Bank of New York Mellon Corporation with respect to Series C Noncumulative Perpetual Preferred Stock, dated Sept. 13, 2012.~~

~~Previously filed as Exhibit 3.2 to the Company’s Registration Statement on Form 8A12B (File No. 001-35651) as filed with the Commission on Sept. 14, 2012, and incorporated herein by reference.~~

~~3.4~~

Certificate of Designations of The Bank of New York Mellon Corporation with respect to the Series D Noncumulative Perpetual Preferred Stock, dated May 16, 2013.

Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-35651) as filed with the Commission on May 16, 2013, and incorporated herein by reference.

3.5

~~Certificate of Designations of The Bank of New York Mellon Corporation with respect to the Series E Noncumulative Perpetual Preferred Stock, dated April 27, 2015.~~

~~Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-35651) as filed with the Commission on April 28, 2015, and incorporated herein by reference.~~

~~3.6~~

Certificate of Designations of The Bank of New York Mellon Corporation with respect to the Series F Noncumulative Perpetual Preferred Stock, dated July 29, 2016.

Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-35651) as filed with the Commission on Aug. 1, 2016, and incorporated herein by reference.

~~3.7~~3.6

~~Amended and Restated By-Laws~~Certificate of Designations of The Bank of New York Mellon Corporation ~~as amended and restated on Oct. 13, 2015.~~

with respect to the Series G Noncumulative Perpetual Preferred Stock, dated May 15, 2020.

Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-35651) as filed with the Commission on ~~Oct.~~May 19, ~~2015,~~2020, and incorporated herein by reference.

~~4.1~~3.7

Certificate of Designations of The Bank of New York Mellon Corporation with respect to the Series H Noncumulative Perpetual Preferred Stock, dated Nov. 2, 2020.

Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-35651) as filed with the Commission on Nov. 3, 2020, and incorporated herein by reference.

3.8

Certificate of Designations of The Bank of New York Mellon Corporation with respect to the Series I Noncumulative Perpetual Preferred Stock, dated Nov. 16, 2021.

Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-35651) as filed with the Commission on Nov. 18, 2021, and incorporated herein by reference.

3.9

Amended and Restated By-Laws of The Bank of New York Mellon Corporation, as amended and restated on Aug. 8, 2023.

Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-35651) as filed with the Commission on Aug. 11, 2023, and incorporated herein by reference.

106 BNY Mellon


Index to Exhibits (continued)

Exhibit No.

Description

Method of Filing

4.1

None of the instruments defining the rights of holders of long-term debt of the Parent or any of its subsidiaries represented long-term debt in excess of 10% of the total assets of the Company as of Sept. 30, ~~2017.~~2023. The Company hereby agrees to furnish to the Commission, upon request, a copy of any such instrument.

N/A

~~112 BNY Mellon~~


22.1
	Subsidiary Issuer of Guaranteed Securities.	~~Index~~Previously filed as Exhibit 22.1 to ~~Exhibits~~ ~~(continued)~~the Company’s Quarterly Report on Form 10-Q (File No. 001-35651) for the quarter ended March 31, 2021, and incorporated herein by reference.

31.1

~~Exhibit No.~~

~~Description~~

~~Method of Filing~~

~~12.1~~

~~Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.~~

~~Filed herewith.~~

~~31.1~~

Certification of the Chief Executive Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Filed herewith.

31.2

Certification of the Chief Financial Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Filed herewith.

32.1

Certification of the Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Furnished herewith.

32.2

Certification of the Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Furnished herewith.

101.INS

Inline XBRL Instance Document.

~~Filed herewith.~~The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

Filed herewith.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

Filed herewith.

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

Filed herewith.

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.

Filed herewith.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

Filed herewith.

104

The cover page of The Bank of New York Mellon Corporation’s Quarterly Report on Form 10-Q for the quarter ended Sept. 30, 2023, formatted in inline XBRL.

The cover page interactive data file is embedded within the inline XBRL document and included in Exhibit 101.

BNY Mellon ~~113~~107

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	THE BANK OF NEW YORK MELLON CORPORATION
			(Registrant)




Date: November ~~7, 2017~~3, 2023	By:	/s/ Kurtis R. Kurimsky
			Kurtis R. Kurimsky
			Corporate Controller
			(Duly Authorized Officer and
			Principal Accounting Officer of
			the Registrant)

108 BNY Mellon

~~114 BNY Mellon~~



Delaware			13-2614959
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
~~incorporation or organization)~~


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	BK	New York Stock Exchange
6.244% Fixed-to-Floating Rate Normal Preferred Capital Securities of Mellon Capital IV	BK/P	New York Stock Exchange
(fully and unconditionally guaranteed by The Bank of New York Mellon Corporation)



	~~Class~~	~~Outstanding as of~~
		~~Sept. 30, 2017~~
	~~Common Stock, $0.01 par value~~	~~1,024,022,353~~



Regulatory and Capital ratios	Sept. 30, 2017		June 30, 2017		Dec. 31, 2016
Average liquidity coverage ratio (“LCR”) (i)	119	%	116	%	114	%

Regulatory capital ratios: (j)
Standardized:
Common equity Tier 1 (“CET1”) ratio	12.3	%	12.0	%	12.3	%
Tier 1 capital ratio	14.6		14.3		14.5
Total (Tier 1 plus Tier 2) capital ratio	15.6		14.8		15.2
Advanced:
CET1 ratio	11.1		10.8		10.6
Tier 1 capital ratio	13.2		12.9		12.6
Total (Tier 1 plus Tier 2) capital ratio	14.0		13.2		13.0

Leverage capital ratio (j)	6.8		6.7		6.6
Supplementary leverage ratio (“SLR”) (j)	6.3		6.2		6.0

BNY Mellon shareholders’ equity to total assets ratio – GAAP	11.4		11.3		11.6
BNY Mellon common shareholders’ equity to total assets ratio – GAAP	10.4		10.3		10.6

Selected regulatory capital ratios – fully phased-in – Non-GAAP: (k)
Estimated CET1 ratio:
Standardized Approach	11.9	%	11.5	%	11.3	%
Advanced Approach	10.7		10.4		9.7

Estimated SLR	6.1		6.0		5.6



Fee and other revenue																				YTD17
										3Q17 vs.										vs.
(dollars in millions, unless otherwise noted)	3Q17			2Q17			3Q16			2Q17		3Q16		YTD17			YTD16			YTD16
Investment services fees:
Asset servicing (a)	$	1,105		$	1,085		$	1,067		2	%	4	%	$	3,253		$	3,176		2	%
Clearing services	383			394			349			(3	)	10		1,153			1,049			10
Issuer services	288			241			337			20		(15	)	780			815			(4	)
Treasury services	141			140			137			1		3		420			407			3
Total investment services fees	1,917			1,860			1,890			3		1		5,606			5,447			3
Investment management and performance fees	901			879			860			3		5		2,622			2,502			5
Foreign exchange and other trading revenue	173			165			183			5		(5	)	502			540			(7	)
Financing-related fees	54			53			58			2		(7	)	162			169			(4	)
Distribution and servicing	40			41			43			(2	)	(7	)	122			125			(2	)
Investment and other income	63			122			92			N/M		N/M		262			271			N/M
Total fee revenue	3,148			3,120			3,126			1		1		9,276			9,054			2
Net securities gains	19			—			24			N/M		N/M		29			65			N/M
Total fee and other revenue	$	3,167		$	3,120		$	3,150		2	%	1	%	$	9,305		$	9,119		2	%

Fee revenue as a percentage of total revenue	78		%	79		%	79		%					79		%	79		%

AUM at period end (in billions) (b)	$	1,824		$	1,771		$	1,715		3	%	6	%	$	1,824		$	1,715		6	%
AUC/A at period end (in trillions) (c)	$	32.2		$	31.1		$	30.5		4	%	6	%	$	32.2		$	30.5		6	%



Key market metrics																										YTD17
																3Q17 vs.										vs.
	3Q17			2Q17			1Q17			4Q16			3Q16			2Q17		3Q16		YTD17			YTD16			YTD16
Standard & Poor’s (“S&P”) 500 Index (a)	2519			2423			2363			2239			2168			4	%	16	%	2519			2168			16	%
S&P 500 Index – daily average	2467			2398			2326			2185			2162			3		14		2397			2065			16
FTSE 100 Index (a)	7373			7313			7323			7143			6899			1		7		7373			6899			7
FTSE 100 Index – daily average	7380			7391			7274			6923			6765			—		9		7348			6326			16
MSCI EAFE (a)	1974			1883			1793			1684			1702			5		16		1974			1702			16
MSCI EAFE – daily average	1934			1856			1749			1660			1677			4		15		1847			1640			13
Barclays Capital Global Aggregate Bond^SM Index (a)(b)	480			471			459			451			486			2		(1	)	480			486			(1	)
NYSE and NASDAQ share volume (in billions)	179			199			186			189			186			(10	)	(4	)	565			608			(7	)
JPMorgan G7 Volatility Index – daily average (c)	8.17			7.98			10.10			10.24			10.19			2		(20	)	8.75			10.63			(18	)
Average interest on excess reserves paid by the Federal Reserve	1.25		%	1.04		%	0.79		%	0.55		%	0.50		%	21	bps	75	bps	1.03		%	0.50		%	53	bps

Foreign exchange rates vs. U.S. dollar:
British pound (a)	$	1.34		$	1.30		$	1.25		$	1.23		$	1.30		3	%	3	%	$	1.34		$	1.30		3	%
British pound – average rate	1.31			1.28			1.24			1.24			1.31			2		—		1.28			1.39			(8	)
Euro (a)	1.18			1.14			1.07			1.05			1.12			4		5		1.18			1.12			5
Euro – average rate	1.17			1.10			1.07			1.08			1.12			6		4		1.13			1.12			1



AUM trends (a)																3Q17 vs.
(dollars in billions)	3Q17			2Q17			1Q17			4Q16			3Q16			2Q17		3Q16
AUM at period end, by product type:
Equity	$	158		$	163		$	158		$	153		$	156		(3	)%	1	%
Fixed income	206			198			191			186			194			4		6
Index	333			324			330			312			302			3		10
Liability-driven investments (b)	622			607			584			554			607			2		2
Multi-asset and alternative investments	207			192			188			181			189			8		10
Cash	298			287			276			262			267			4		12
Total AUM	$	1,824		$	1,771		$	1,727		$	1,648		$	1,715		3	%	6	%

AUM at period end, by client type:
Institutional	$	1,285		$	1,265		$	1,243		$	1,182		$	1,234		2	%	4	%
Mutual funds	447			418			397			381			396			7		13
Private client	92			88			87			85			85			5		8
Total AUM	$	1,824		$	1,771		$	1,727		$	1,648		$	1,715		3	%	6	%

Changes in AUM:
Beginning balance of AUM	$	1,771		$	1,727		$	1,648		$	1,715		$	1,664
Net inflows (outflows):
Long-term strategies:
Equity	(2		)	(2		)	(4		)	(5		)	(6		)
Fixed income	4			2			2			(1		)	(1		)
Liability-driven investments (b)	(2		)	15			14			(7		)	4
Multi-asset and alternative investments	3			1			2			3			7
Total long-term active strategies inflows (outflows)	3			16			14			(10		)	4
Index	(3		)	(13		)	—			(1		)	(3		)
Total long-term strategies inflows (outflows)	—			3			14			(11		)	1
Short term strategies:
Cash	10			11			13			(3		)	(1		)
Total net inflows (outflows)	10			14			27			(14		)	—
Net market impact/other	17			1			41			(11		)	80
Net currency impact	26			29			11			(42		)	(29		)
Ending balance of AUM	$	1,824		$	1,771		$	1,727		$	1,648		$	1,715		3	%	6	%



																										YTD17
(dollar amounts in millions, unless otherwise noted)																3Q17 vs.										vs.
	3Q17			2Q17			1Q17			4Q16			3Q16			2Q17		3Q16		YTD17			YTD16			YTD16
Revenue:
Investment services fees:
Asset servicing	$	1,081		$	1,061		$	1,038		$	1,043		$	1,039		2	%	4	%	$	3,180		$	3,098		3	%
Clearing services	381			393			375			354			347			(3	)	10		1,149			1,045			10
Issuer services	288			241			250			211			336			20		(14	)	779			813			(4	)
Treasury services	141			139			139			139			136			1		4		419			402			4
Total investment services fees	1,891			1,834			1,802			1,747			1,858			3		2		5,527			5,358			3
Foreign exchange and other trading revenue	154			145			153			157			177			6		(13	)	452			506			(11	)
Other (a)	142			136			129			128			148			4		(4	)	407			403			1
Total fee and other revenue	2,187			2,115			2,084			2,032			2,183			3		—		6,386			6,267			2
Net interest revenue	777			761			707			713			715			2		9		2,245			2,084			8
Total revenue	2,964			2,876			2,791			2,745			2,898			3		2		8,631			8,351			3
Provision for credit losses	(2		)	(3		)	—			—			1			N/M		N/M		(5		)	8			N/M
Noninterest expense (ex. amortization of intangible assets)	1,837			1,889			1,812			1,786			1,812			(3	)	1		5,538			5,401			3
Amortization of intangible assets	37			38			37			38			39			(3	)	(5	)	112			117			(4	)
Total noninterest expense	1,874			1,927			1,849			1,824			1,851			(3	)	1		5,650			5,518			2
Income before taxes	$	1,092		$	952		$	942		$	921		$	1,046		15	%	4	%	$	2,986		$	2,825		6	%
Income before taxes (ex. amortization of intangible assets) – Non-GAAP	$	1,129		$	990		$	979		$	959		$	1,085		14	%	4	%	$	3,098		$	2,942		5	%

Pre-tax operating margin	37		%	33		%	34		%	34		%	36		%					35		%	34		%
Adjusted pre-tax operating margin (ex. provision for credit losses and amortization of intangible assets) – Non-GAAP	38		%	34		%	35		%	35		%	37		%					36		%	35		%

Investment services fees as a percentage of noninterest expense (ex. amortization of intangible assets)	103		%	97		%	99		%	98		%	103		%					100		%	99		%

Securities lending revenue	$	41		$	42		$	40		$	44		$	42		(2	)%	(2	)%	$	123		$	126		(2	)%

Metrics:
Average loans	$	38,038		$	40,931		$	42,818		$	45,832		$	44,329		(7	)%	(14	)%	$	40,578		$	44,373		(9	)%
Average deposits	$	198,299		$	200,417		$	197,690		$	213,531		$	220,316		(1	)%	(10	)%	$	198,796		$	219,344		(9	)%

AUC/A at period end (in trillions) (b)	$	32.2		$	31.1		$	30.6		$	29.9		$	30.5		4	%	6	%	$	32.2		$	30.5		6	%
Market value of securities on loan at period end (in billions) (c)	$	382		$	336		$	314		$	296		$	288		14	%	33	%	$	382		$	288		33	%

Asset servicing:
Estimated new business wins (AUC/A) (in billions)	$	166		$	152		$	109		$	141		$	150

Clearing services:
Average active clearing accounts (U.S. platform) (in thousands)	6,203			6,159			6,058			5,960			5,942			1	%	4	%
Average long-term mutual fund assets (U.S. platform)	$	500,998		$	480,532		$	460,977		$	438,460		$	443,112		4	%	13	%
Average investor margin loans (U.S. platform)	$	8,886		$	9,812		$	10,740		$	10,562		$	10,834		(9	)%	(18	)%

Depositary Receipts:
Number of sponsored programs	938			1,025			1,050			1,062			1,094			(8	)%	(14	)%

Broker-Dealer:
Average tri-party repo balances (in billions)	$	2,534		$	2,498		$	2,373		$	2,307		$	2,212		1	%	15	%



Investment securities portfolio (dollars in millions)	June 30, 2017			3Q17 change in unrealized gain (loss)			Sept. 30, 2017					Fair value as a % of amortized cost (a)		Unrealized gain (loss)				Ratings (b)
	June 30, 2017						Sept. 30, 2017																	BB+ and lower
	Fair value						Amortized cost		Fair value									AAA/ AA-		A+/ A-		BBB+/ BBB-		BB+ and lower		Not rated
Agency RMBS	$	49,544		$	81		$	50,121	$	49,917		100	%	$	(204	)		100	%	—	%	—	%	—	%	—	%
U.S. Treasury	25,325			(5		)	25,256		25,159			100		(97		)		100		—		—		—		—
Sovereign debt/sovereign guaranteed (c)	14,025			6			13,951		14,102			101		151				72		6		21		1		—
Non-agency RMBS (d)	1,239			9			885		1,185			84		300				—		1		3		87		9
Non-agency RMBS	627			9			555		594			97		39				7		4		17		71		1
European floating rate notes (e)	523			(1		)	393		387			98		(6		)		63		37		—		—		—
Commercial MBS	10,574			5			11,051		11,033			100		(18		)		99		1		—		—		—
State and political subdivisions	3,299			1			3,109		3,141			101		32				80		17		—		—		3
Foreign covered bonds (f)	2,471			1			2,612		2,626			101		14				100		—		—		—		—
Corporate bonds	1,318			4			1,262		1,275			101		13				17		69		14		—		—
CLOs	2,642			1			2,542		2,550			100		8				99		—		—		1		—
U.S. government agencies	2,210			2			2,480		2,496			101		16				100		—		—		—		—
Consumer ABS	1,330			1			1,152		1,157			100		5				89		4		5		2		—
Other (g)	3,758			(8		)	4,118		4,122			100		4				81		17		—		—		2
Total investment securities	$	118,885	(h)	$	106		$	119,487	$	119,744	(h)	100	%	$	257		(h)(i)	93	%	3	%	3	%	1	%	—	%



European floating rate notes at Sept. 30, 2017 (a)
(in millions)	RMBS		Other		Total fair value
United Kingdom	$	169	$	58	$	227
Netherlands	160		—		160
Total fair value	$	329	$	58	$	387



Allocation of allowance	Sept. 30, 2017		June 30, 2017		Dec. 31, 2016		Sept. 30, 2016
Allocation of allowance	Sept. 30, 2017		June 30, 2017		Dec. 31, 2016		Sept. 30, 2016
Commercial	31	%	30	%	29	%	33	%
Commercial real estate	28		28		26		23
Foreign	13		13		13		11
Financial institutions	9		8		9		11
Wealth management (a)	8		9		8		7
Other residential mortgages	8		8		10		10
Lease financing	3		4		5		5
Total	100	%	100	%	100	%	100	%



Nonperforming assets activity	Sept. 30, 2017			June 30, 2017			Dec. 31, 2016
(in millions)	Sept. 30, 2017			June 30, 2017			Dec. 31, 2016
Balance at beginning of quarter	$	100		$	107		$	109
Additions	3			2			4
Return to accrual status	(1		)	—			—
Charge-offs	—			—			—
Paydowns/sales	(8		)	(9		)	(6		)
Balance at end of quarter	$	94		$	100		$	107


~~(a)~~	The weighted-average rate is calculated based on, and is applied to, the average interest-bearing payables to customers and broker-dealers, which were $18,516 million in the third quarter of 2017, $20,609 million in the second quarter of 2017 and $16,873 million in the ~~third quarter of 2016~~.


Available funds	Sept. 30, 2023			Dec. 31, 2022			Average
(dollars in millions)							3Q23			2Q23			3Q22			YTD23			YTD22
Cash and due from banks	$	4,904		$	5,030		$	5,183		$	5,295		$	5,089		$	5,390		$	5,585
Interest-bearing deposits with the Federal Reserve and other central banks	107,419			91,655			98,767			114,578			91,836			102,762			98,310
Interest-bearing deposits with banks	12,999			17,169			12,287			13,919			16,298			14,129			17,189
Federal funds sold and securities purchased under resale agreements	26,299			24,298			26,915			26,989			22,971			26,187			24,715
Total available funds	$	151,621		$	138,152		$	143,152		$	160,781		$	136,194		$	148,468		$	145,799
Total available funds as a percentage of total assets	37		%	34		%	36		%	38		%	33		%	36		%	34		%



Available and liquid funds	Sept. 30, 2017			Dec. 31, 2016			Average
(dollars in millions)							3Q17			2Q17			3Q16
Available funds:
Liquid funds:
Interest-bearing deposits with banks	$	15,256		$	15,086		$	15,899		$	14,832		$	14,066
Federal funds sold and securities purchased under resale agreements	27,883			25,801			28,120			26,873			26,376
Total liquid funds	43,139			40,887			44,019			41,705			40,442
Cash and due from banks	5,557			4,822			4,961			4,972			4,189
Interest-bearing deposits with the Federal Reserve and other central banks	75,808			58,041			70,430			69,316			74,102
Total available funds	$	124,504		$	103,750		$	119,410		$	115,993		$	118,733
Total available funds as a percentage of total assets	35		%	31		%	35		%	34		%	34		%


Consolidated HQLA and LCR	Sept. 30, 2023			June 30, 2023
(dollars in billions)
Cash (a)	$	107		$	118
Securities (b)	70			93
Total consolidated HQLA (c)	$	177		$	211

Total consolidated HQLA – average (c)	$	180		$	198
Average consolidated LCR	121		%	120		%


~~(a)~~	~~Primarily includes U.S. Treasury, U.S. agency, sovereign securities, securities of U.S. government-sponsored enterprises, investment-grade corporate debt and publicly traded common equity.~~


~~(b)~~	~~Primarily includes cash on deposit with central banks.~~


~~(c)~~	Consolidated HQLA presented before adjustments. After haircuts and the impact of trapped liquidity, consolidated HQLA totaled $137 billion at Sept. 30, 2017 and averaged $126 billion for the third quarter of 2017.


Capital data	Sept. 30, 2023			June 30, 2023			Dec. 31, 2022
(dollars in millions, except per share amounts; common shares in thousands)



BNY Mellon shareholders’ equity to total assets ratio	10.1		%	9.5		%	10.0		%
BNY Mellon common shareholders’ equity to total assets ratio	8.9		%	8.4		%	8.8		%
Total BNY Mellon shareholders’ equity	$	40,966		$	40,933		$	40,734
Total BNY Mellon common shareholders’ equity	$	36,128		$	36,095		$	35,896
BNY Mellon tangible common shareholders’ equity – Non-GAAP (a)	$	18,964		$	18,821		$	18,686
Book value per common share	$	46.98		$	46.35		$	44.40
Tangible book value per common share – Non-GAAP (a)	$	24.66		$	24.17		$	23.11
Closing stock price per common share	$	42.65		$	44.52		$	45.52
Market capitalization	$	32,801		$	34,671		$	36,800
Common shares outstanding	769,073			778,782			808,445



Cash dividends per common share	$	0.42		$	0.37		$	0.37
Common dividend payout ratio	35		%	29		%	60		%
Common dividend yield (annualized)	3.9		%	3.3		%	3.2		%



Capital data (dollar amounts in millions except per share amounts; common shares in thousands)	Sept. 30, 2017			June 30, 2017			Dec. 31, 2016
Average common equity to average assets	10.6		%	10.5		%	10.2		%

At period end:
BNY Mellon shareholders’ equity to total assets ratio	11.4		%	11.3		%	11.6		%
BNY Mellon common shareholders’ equity to total assets ratio	10.4		%	10.3		%	10.6		%
Total BNY Mellon shareholders’ equity	$	40,523		$	39,974		$	38,811
Total BNY Mellon common shareholders’ equity	$	36,981		$	36,432		$	35,269
BNY Mellon tangible common shareholders’ equity – Non-GAAP (a)	$	18,630		$	18,106		$	16,957
Book value per common share (a)	$	36.11		$	35.26		$	33.67
Tangible book value per common share – Non-GAAP (a)	$	18.19		$	17.53		$	16.19
Closing stock price per common share	$	53.02		$	51.02		$	47.38
Market capitalization	$	54,294		$	52,712		$	49,630
Common shares outstanding	1,024,022			1,033,156			1,047,488

Cash dividends per common share	$	0.24		$	0.19		$	0.19
Common dividend payout ratio	26		%	22		%	25		%
Common dividend yield	1.8		%	1.5		%	1.6		%


Consolidated and largest bank subsidiary regulatory capital ratios	Sept. 30, 2023								June 30, 2023		Dec. 31, 2022
	Well capitalized			Minimum required			Capital ratios		Capital ratios		Capital ratios
						(a)
Consolidated regulatory capital ratios: (b)
Advanced Approaches:
CET1 ratio	N/A		(c)	8.5	%		11.4	%	11.1	%	11.2	%
Tier 1 capital ratio	6	%		10			14.4		14.0		14.1
Total capital ratio	10			12			15.2		14.8		14.9
Standardized Approach:
CET1 ratio	N/A		(c)	8.5	%		11.9	%	11.8	%	11.3	%
Tier 1 capital ratio	6	%		10			15.1		15.0		14.4
Total capital ratio	10			12			16.1		16.0		15.3
Tier 1 leverage ratio	N/A		(c)	4			6.1		5.7		5.8
SLR (d)	N/A		(c)	5			7.2		7.0		6.8

The Bank of New York Mellon regulatory capital ratios: (b)
Advanced Approaches:
CET1 ratio	6.5	%		7	%		15.8	%	15.6	%	15.6	%
Tier 1 capital ratio	8			8.5			15.8		15.6		15.6
Total capital ratio	10			10.5			15.9		15.7		15.7
Tier 1 leverage ratio	5			4			6.6		6.2		6.2
SLR (d)	6			3			8.3		8.2		7.7


~~(a)~~	~~Minimum requirements for Sept. 30, 2017~~2023 include ~~Basel III~~ minimum thresholds plus currently applicable buffers.


~~(b)~~	~~For our CET1, Tier 1 capital and Total capital ratios, our effective capital ratios under U.S. capital rules are the lower of the ratios as calculated under the Standardized and Advanced Approaches.~~ The ~~leverage capital ratio is based on Tier 1 capital, as phased-in and quarterly average total assets.~~


~~(c)~~	~~The Federal Reserve’s regulations do not establish well capitalized thresholds for these measures for bank holding companies.~~


~~(d)~~	~~The SLR does not become a binding measure until the first quarter of 2018. The SLR is based on Tier 1 capital, as phased-in, and average quarterly assets and certain off-balance sheet exposures.~~


~~(e)~~	Fully phased-in Basel III minimum with expected buffers. See page 41 for the capital ratios with the phase-in of the capital conservation buffer and the U.S. G-SIB surcharge, as well as the introduction of the SLR buffer.



Capital ratio requirements	Well capitalized		Minimum ratios		Minimum ratios with buffers, as phased-in (a)
	Well capitalized		Minimum ratios		2017		2018			2019
Capital conservation buffer (CET1)					1.25	%	1.875	%		2.5	%
U.S. G-SIB surcharge (CET1) (b)(c)					0.75	%	1.125	%		1.5	%

Consolidated:
CET1 ratio	N/A		4.5	%	6.5	%	7.5	%		8.5	%
Tier 1 capital ratio	6.0	%	6.0	%	8.0	%	9.0	%		10.0	%
Total capital ratio	10.0	%	8.0	%	10.0	%	11.0	%		12.0	%

Enhanced SLR buffer (Tier 1 capital)	N/A				N/A		2.0	%		2.0	%
SLR	N/A		3.0	%	N/A		5.0	%		5.0	%

Bank subsidiaries: (c)
CET1 ratio	6.5	%	4.5	%	5.75	%	6.375	%		7.0	%
Tier 1 capital ratio	8.0	%	6.0	%	7.25	%	7.875	%		8.5	%
Total capital ratio	10.0	%	8.0	%	9.25	%	9.875	%		10.5	%

SLR	6.0	%	3.0	%	N/A		6.0	%	(d)	6.0	%	(d)



Estimated CET1 generation	Quarter ended Sept. 30, 2017
(in millions)	Transitional basis (a)			Fully phased-in - Non-GAAP (b)
CET1 – Beginning of period	$	18,371		$	17,629
Net income applicable to common shareholders of The Bank of New York Mellon Corporation	983			983
Goodwill and intangible assets, net of related deferred tax liabilities	(33		)	(26		)
Gross CET1 generated	950			957
Capital deployed:
Common stock dividends	(253		)	(253		)
Common stock repurchased	(650		)	(650		)
Total capital deployed	(903		)	(903		)
Other comprehensive income:
Foreign currency translation	281			281
Unrealized loss on assets available-for-sale	13			16
Defined benefit plans	12			15
Total other comprehensive income	306			312
Additional paid-in capital (c)	156			156
Other additions (deductions):
Deferred tax assets	(1		)	(2		)
Embedded goodwill	(9		)	(8		)
Total other deductions	(10		)	(10		)
Net CET1 generated	499			512
CET1 – End of period	$	18,870		$	18,141