The Bank of New York Mellon Corporation (BK) 8-K Second Quarter 2012 Financial Highlights

Exhibit 99.1

Quarterly Earnings Review

July 18, 2012

Table of Contents

Second Quarter 2012 Financial Highlights	2
Financial Summary/Key Metrics	3
Business Metrics	4
Fee and Other Revenue	6
Net Interest Revenue	8
Noninterest Expense	9
Operational Excellence Initiatives Update	10
Capital	11
Investment Securities Portfolio	13
Nonperforming Assets	14
Allowance for Credit Losses, Provision and Net Charge-offs	14
Review of Businesses
•      Investment Management	15
•      Investment Services	17
•      Other	19
Supplemental Information – Explanation of Non-GAAP Financial Measures	20
Cautionary Statement	25

BNY Mellon 2Q12 Quarterly Earnings Review

SECOND QUARTER 2012 FINANCIAL HIGHLIGHTS

(comparisons are unannualized 2Q12 vs. 1Q12 unless otherwise stated)

• Earnings

• Earnings per common share was $0.39, including the previously announced litigation charge of $0.18, compared with $0.52.

• Net income applicable to common shareholders was $466 million, including the previously announced litigation charge of $212 million (after-tax), compared with $619 million.

• Total revenue of $3.6 billion, down 1%.

• Fee and other revenue unchanged.

• Investment services fees increased 2% primarily due to higher Depositary Receipts revenue, net new business, seasonally higher securities lending revenue and higher Clearing Services fees, partially offset by lower equity market values and transaction volumes.

• Investment management and performance fees increased 7% driven by higher performance fees. Excluding performance fees, investment management fees increased 2% primarily reflecting net new business and higher money market fees, partially offset by lower equity market values.

• Foreign exchange revenue increased 15% primarily resulting from higher volumes.

• Investment and other income decreased 65% primarily as a result of lower leasing gains, seed capital gains and equity investment revenue.

• Net interest revenue decreased 4% primarily reflecting the impact of narrower spreads and lower accretion.

• Provision for credit losses was a credit of $19 million primarily resulting from a decline in the expected loss related to a broker-dealer customer that previously filed for bankruptcy, as well as improvements in the mortgage portfolio.

• Noninterest expense increased 11% (up 1% excluding amortization of intangible assets and M&I, litigation and restructuring charges). The 1% increase was primarily driven by the costs of certain tax credits, higher business development expenses and a deposit levy imposed on Belgium banks, including our Belgium bank subsidiary, largely offset by lower staff expense.

• The effective tax rate of 15.8% includes a reduction in the tax rate of approximately 9% related to the litigation charge. The operating tax rate – Non-GAAP was 26.1% and includes an increased benefit of certain tax credits.

• Assets under custody/administration and Assets under management

• AUC/A of a record $27.1 trillion, an increase of 2% reflecting net new business, partially offset by lower equity market values.

• AUM of $1.3 trillion, a decrease of 1% driven by lower equity market values, partially offset by net inflows.

• Long-term inflows totaled $26 billion.

• Short-term outflows totaled $14 billion.

• Capital

• Return on tangible common equity – Non-GAAP 15.7%.(a)

• Repurchased 12.2 million common shares for $286 million.

• Estimated Basel III Tier 1 common equity ratio 8.7%.(b)

(a) See “Supplemental information – Explanation of Non-GAAP financial measures” beginning on page 20 for GAAP to Non-GAAP reconciliations.

(b) See “Capital” beginning on page 11 for additional information.

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BNY Mellon 2Q12 Quarterly Earnings Review

FINANCIAL SUMMARY

																	2Q12 vs.
(dollars in millions, common shares in thousands)		2Q11			3Q11			4Q11			1Q12			2Q12			2Q11			1Q12
Revenue:
Fee and other revenue		$	3,056		$	2,887		$	2,765		$	2,838		$	2,826			(8	)%		—	%
Income (loss) from consolidated investment management funds			63			32			(5	)		43			57
Net interest revenue			731			775			780			765			734
Total revenue – GAAP			3,850			3,694			3,540			3,646			3,617			(6	)		(1	)
Less:	Net income (loss) attributable to noncontrolling interests related to consolidated investment management funds		21			13			(28	)		11			29
	Fee and other revenue related to Shareowner Services (a)		54			44			142			—			(3	)
Total revenue – Non-GAAP			3,775			3,637			3,426			3,635			3,591			(5	)		(1	)
Provision for credit losses			—			(22	)		23			5			(19	)
Expense:
Noninterest expense – GAAP			2,816			2,771			2,828			2,756			3,047			8			11
Less:	Amortization of intangible assets		108			106			106			96			97
	M&I, litigation and restructuring charges		63			92			176			109			378
	Direct expense related to Shareowner Services		47			37			46			—			—
Total noninterest expense – Non-GAAP			2,598			2,536			2,500			2,551			2,572			(1	)%		1	%
Income:
Income before income taxes			1,034			945			689			885			589
Provision for income taxes			277			281			211			254			93
Net income		$	757		$	664		$	478		$	631		$	496
Net (income) loss attributable to noncontrolling interests (b)			(22	)		(13	)		27			(12	)		(30	)
Net income applicable to common shareholders of The Bank of New York Mellon Corporation		$	735		$	651		$	505		$	619		$	466
Key Metrics:
Pre-tax operating margin (c)			27	%		26	%		19	%		24	%		16	%
Non-GAAP adjusted (c)			31	%		31	%		28	%		30	%		29	%
Return on common equity(annualized) (c)			8.8	%		7.6	%		5.9	%		7.4	%		5.5	%
Non-GAAP (c)			10.1	%		9.0	%		8.0	%		8.9	%		8.9	%
Return on tangible common equity(annualized)
Non-GAAP (c)			26.3	%		22.1	%		17.7	%		21.0	%		15.7	%
Non-GAAP adjusted (c)			27.6	%		23.8	%		21.1	%		23.0	%		22.4	%
Fee revenue as a percentage of total revenue excluding net securities gains (losses)			79	%		78	%		78	%		78	%		78	%
Percentage of non-U.S. total revenue (d)			37	%		39	%		34	%		37	%		37	%
Period end:
Full-time employees			48,900			49,600			48,700			47,800			48,200
Market capitalization		$	31,582		$	22,543		$	24,085		$	28,780		$	25,929
Common shares outstanding			1,232,691			1,212,632			1,209,675			1,192,716			1,181,298

(a) Results in the fourth quarter of 2011 include a $98 million pre-tax gain on the sale.

(b) Includes net income of $21 million in the second quarter of 2011, net income of $13 million in the third quarter of 2011, a net loss of $28 million in the fourth quarter of 2011, net income of $11 million in the first quarter of 2012 and net income of $29 million in the second quarter of 2012, respectively, attributable to noncontrolling interests related to consolidated investment management funds.

(c) See “Supplemental information – Explanation of Non-GAAP financial measures” beginning on page 20 for GAAP to Non-GAAP reconciliations.

(d) Includes fee revenue, net interest revenue and income from consolidated investment management funds, net of noncontrolling interests.

Certain immaterial reclassifications have been made to prior periods to place them on a basis comparable with the current period presentation. Unless otherwise noted, the results for all periods in 2011 include the impact of Shareowner Services.

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BNY Mellon 2Q12 Quarterly Earnings Review

BUSINESS METRICS

Investment Management metrics																2Q12 vs.
	2Q11			3Q11			4Q11			1Q12			2Q12			2Q11			1Q12
Changes in market value of assets under management(in billions) (a):
Beginning balance	$	1,229		$	1,274		$	1,198		$	1,260		$	1,308
Net inflows (outflows):
Long-term		32			4			16			7			26
Money market		(1	)		(15	)		7			(9	)		(14	)
Total net inflows (outflows)		31			(11	)		23			(2	)		12
Net market/currency impact		14			(65	)		39			50			(21	)
Ending balance	$	1,274		$	1,198		$	1,260		$	1,308		$	1,299	(b)		2	%		(1	)%
Composition of assets under management at period end (a):
Equity securities		34	%		30	%		31	%		33	%		32	%
Fixed income securities		31			35			35			35			37
Money market		26			27			26			24			23
Alternative investments and overlay		9			8			8			8			8
Total		100	%		100	%		100	%		100	%		100	%
Wealth management:
Average loans(in millions)	$	6,884		$	6,958		$	7,209		$	7,430		$	7,763			13	%		4	%
Average deposits(in millions)	$	8,996		$	10,392		$	11,761		$	11,491		$	11,259			25	%		(2	)%

(a) Excludes securities lending cash management assets.

(b) Preliminary.

Investment Services metrics											2Q12 vs.
	2Q11		3Q11		4Q11		1Q12		2Q12		2Q11			1Q12
Market value of assets under custody and administration at period-end(in trillions)	$	26.3	$	25.9	$	25.8	$	26.6	$	27.1		3	%		2	%
Market value of securities on loan at period-end(in billions) (a)	$	273	$	250	$	269	$	265	$	275		1	%		4	%
Average loans(in millions)	$	22,891	$	22,879	$	26,804	$	25,902	$	24,981		9	%		(4	)%
Average deposits(in millions)	$	153,863	$	181,848	$	188,539	$	175,055	$	172,435		12	%		(1	)%
Asset servicing:
New business wins (AUC)(in billions)	$	196	$	96	$	431	$	453	$	314
Corporate Trust:
Total debt serviced(in trillions)	$	11.8	$	11.9	$	11.8	$	11.9	$	11.5		(3	)%		(3	)%
Number of deals administered		133,262		134,843		133,850		133,319		133,301		—	%		—	%
Depositary Receipts:
Number of sponsored programs		1,386		1,384		1,389		1,391		1,393		1	%		—	%
Clearing services:
DARTS volume(in thousands)		196.5		207.7		178.7		196.6		189.8		(3	)%		(3	)%
Average active clearing accounts U.S.(in thousands)		5,486		5,503		5,429		5,413		5,427		(1	)%		—	%
Average long-term mutual fund assets (U.S. platform)(in millions)	$	306,193	$	287,573	$	287,562	$	306,212	$	306,973		—	%		—	%
Average margin loans(in millions)	$	7,506	$	7,351	$	7,548	$	7,900	$	8,231		10	%		4	%
Broker-Dealer:
Average collateral management balances(in billions)	$	1,845	$	1,872	$	1,866	$	1,929	$	1,997		8	%		4	%
Treasury services:
Global payments transaction volume(in thousands)		10,944		11,088		10,856		10,838		11,117		2	%		3	%

(a) Represents the securities on loan managed by the Investment Services business.

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BNY Mellon 2Q12 Quarterly Earnings Review

Market indices											2Q12 vs.
	2Q11		3Q11		4Q11		1Q12		2Q12		2Q11			1Q12
S&P 500 Index(a)		1321		1131		1258		1408		1362		3	%		(3	)%
S&P 500 Index – daily average		1318		1227		1224		1347		1351		3			—
FTSE 100 Index(a)		5946		5128		5572		5768		5571		(6	)		(3	)
FTSE 100 Index – daily average		5906		5470		5424		5818		5555		(6	)		(5	)
MSCI World Index(a)		1331		1104		1183		1312		1236		(7	)		(6	)
MSCI World Index – daily average		1332		1217		1169		1268		1235		(7	)		(3	)
Barclays Capital Aggregate BondSMIndex(a)		341		346		347		351		353		4			1
NYSE and NASDAQ share volume(in billions)		213		250		206		186		192		(10	)		3
JPMorgan G7 Volatility Index – daily average(b)		11.21		12.60		12.95		10.39		10.30		(8	)		(1	)

(a) Period end.

(b) The JPMorgan G7 Volatility Index is based on the implied volatility in 3-month currency options.

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BNY Mellon 2Q12 Quarterly Earnings Review

FEE AND OTHER REVENUE

Fee and other revenue(a)																	2Q12 vs.
(dollars in millions)		2Q11			3Q11			4Q11			1Q12			2Q12			2Q11			1Q12
Investment services fees:
Asset servicing (b)		$	973		$	922		$	885		$	943		$	950			(2	)%		1	%
Issuer services			365			442			287			251			275			N/M			10
Memo: Issuer services excluding Shareowner Services			314			400			245			251			275			(12	)		10
Clearing services			292			297			278			303			309			6			2
Treasury services			134			133			134			136			134			—			(1	)
Total investment services fees			1,764			1,794			1,584			1,633			1,668			(5	)		2
Investment management and performance fees			779			729			730			745			797			2			7
Foreign exchange and other trading revenue			222			200			228			191			180			(19	)		(6	)
Distribution and servicing			49			43			42			46			46			(6	)		—
Financing-related fees			49			40			38			44			37			(24	)		(16	)
Investment and other income			145			83			146			139			48			(67	)		(65	)
Total fee revenue			3,008			2,889			2,768			2,798			2,776			(8	)		(1	)
Net securities gains (losses)			48			(2	)		(3	)		40			50			N/M			N/M
Total fee and other revenue – GAAP			3,056			2,887			2,765			2,838			2,826			(8	)		—
Less:	Fee and other revenue related to Shareowner Services (c)		54			44			142			—			(3	)
Total fee and other revenue – Non-GAAP		$	3,002		$	2,843		$	2,623		$	2,838		$	2,829			(6	)%		—	%
Fee revenue as a percentage of total revenue excluding net securities gains (losses)			79	%		78	%		78	%		78	%		78	%

(a) See “Supplemental information – Explanation of Non-GAAP financial measures” beginning on page 20 for fee and other revenue excluding Shareowner Services – Non-GAAP.

(b) Asset servicing fees include securities lending revenue of $62 million in the second quarter of 2011, $41 million in the third quarter of 2011, $43 million in the fourth quarter of 2011, $49 million in the first quarter of 2012 and $59 million in the second quarter of 2012.

(c) The Shareowner Services business was sold on Dec. 31, 2011. Results in the fourth quarter of 2011 include a $98 million pre-tax gain on the sale.

N/M – Not meaningful.

KEY POINTS

• Asset servicing fees were $950 million, a decrease of 2% year-over-year and an increase of 1% (unannualized) sequentially. The year-over year decrease primarily reflects lower equity market values and securities lending revenue, partially offset by net new business. The sequential increase was primarily driven by net new business and seasonally higher securities lending revenue, partially offset by lower equity market values.

• Issuer services fees excluding Shareowner Services were $275 million, a decrease of 12% year-over-year and an increase of 10% (unannualized) sequentially. The year-over-year decrease primarily resulted from lower Depositary Receipts revenue, lower money market related fees and lower trust fees related to the weakness in structured products in Corporate Trust. The increase sequentially resulted from higher Depositary Receipts revenue as well as higher money market related fees in Corporate Trust.

• Clearing services fees were $309 million, an increase of 6% year-over-year and 2% (unannualized) sequentially. The year-over-year increase was driven by higher mutual fund fees, partially offset by the impact of lower DARTS volume and higher money market fee waivers. The sequential increase primarily reflects higher mutual fund fees and lower money market fee waivers, partially offset by the impact of lower DARTS volume.

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BNY Mellon 2Q12 Quarterly Earnings Review

• Investment management and performance fees were $797 million, an increase of 2% year-over-year and 7% (unannualized) sequentially. Both increases reflect higher performance fees. Excluding performance fees, investment management fees decreased 2% year-over-year and increased 2% (unannualized) sequentially. The decrease year-over-year was primarily due to lower equity market values, partially offset by net new business. Sequentially, the increase was primarily due to net new business and higher money market fees, partially offset by lower equity market values.

• Foreign exchange and other trading revenue

(dollars in millions)	2Q11			3Q11			4Q11			1Q12			2Q12
Foreign exchange	$	184		$	221		$	183		$	136		$	157
Fixed income		28			(21	)		41			47			16
Credit derivatives (Used as economic hedges of loans)		(1	)		1			(2	)		(2	)		1
Other		11			(1	)		6			10			6
Total	$	222		$	200		$	228		$	191		$	180

Foreign exchange and other trading revenue totaled $180 million compared with $222 million in the second quarter of 2011 and $191 million in the first quarter of 2012. In the second quarter of 2012, foreign exchange revenue totaled $157 million, a decrease of 15% year-over-year and an increase of 15% (unannualized) sequentially. The year-over-year decrease reflects lower volatility and volumes, while the sequential increase primarily resulted from higher volumes. Other trading revenue was $23 million in the second quarter of 2012 compared with $38 million in the second quarter of 2011 and $55 million in the first quarter of 2012. Both decreases were primarily driven by lower fixed income trading.

• Investment and other income

(dollars in millions)	2Q11			3Q11			4Q11			1Q12			2Q12
Corporate/bank-owned life insurance	$	42		$	40		$	35		$	34		$	32
Lease residual gains (losses)		(5	)		14			20			34			3
Seed capital gains (losses)		3			(8	)		3			24			—
Expense reimbursements from joint ventures		8			11			10			10			9
Equity investment revenue (loss)		19			12			8			6			(5	)
Private equity gains (losses)		12			(7	)		3			4			1
Asset-related gains (losses)		66			28			69			(2	)		—
Other income (loss)		—			(7	)		(2	)		29			8
Total	$	145		$	83		$	146		$	139		$	48

Investment and other income totaled $48 million compared with $145 million in the second quarter of 2011 and $139 million in the first quarter of 2012. The year-over-year decrease primarily resulted from lower asset-related gains and equity investment revenue. Sequentially, the decline primarily resulted from lower leasing gains, seed capital gains and equity investment revenue.

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BNY Mellon 2Q12 Quarterly Earnings Review

NET INTEREST REVENUE

Net interest revenue																2Q12 vs.
(dollars in millions)	2Q11			3Q11			4Q11			1Q12			2Q12			2Q11			1Q12
Net interest revenue (non-FTE)	$	731		$	775		$	780		$	765		$	734			—	%		(4	)%
Net interest revenue (FTE)		737			782			790			776			747			1			(4	)
Net interest margin (FTE)		1.41	%		1.30	%		1.27	%		1.32	%		1.25	%		(16	) bps		(7	) bps
Selected average balances:
Cash/interbank investments	$	97,936		$	126,392		$	121,017		$	103,795		$	101,871			4	%		(2	)%
Trading account securities		2,877			2,509			2,490			2,519			3,033			5			20
Securities		68,782			70,863			79,981			86,808			91,859			34			6
Loans		40,328			40,489			44,236			43,209			42,992			7			(1	)
Interest-earning assets		209,923			240,253			247,724			236,331			239,755			14			1
Interest-bearing deposits		125,958			125,795			130,343			125,438			130,482			4			4
Noninterest-bearing deposits		43,038			73,389			76,309			66,613			62,860			46			(6	)
Selected average yields/rates:
Cash/interbank investments		0.73	%		0.66	%		0.61	%		0.64	%		0.56	%
Trading account securities		2.44			2.62			2.94			2.78			2.57
Securities		2.89			2.87			2.60			2.44			2.25
Loans		2.02			1.96			1.87			1.95			1.98
Interest-earning assets		1.70			1.55			1.50			1.56			1.48
Interest-bearing deposits		0.22			0.21			0.18			0.14			0.13
Average cash/interbank investments as a percentage of average interest-earning assets		47	%		53	%		49	%		44	%		42	%
Average noninterest-bearing deposits as a percentage of average interest-earning assets		21	%		31	%		31	%		28	%		26	%

bps – basis points.

FTE – fully taxable equivalent.

KEY POINTS

• Net interest revenue totaled $734 million in 2Q12, an increase of $3 million compared with 2Q11 and a decrease of $31 million sequentially. The year-over-year increase in net interest revenue was primarily driven by higher average client deposits, increased investment in high quality investment securities and higher loan levels, partially offset by narrower spreads and lower accretion. Compared with the first quarter of 2012, net interest revenue was adversely impacted by narrower spreads and lower accretion.

• Average noninterest-bearing client deposits increased $20 billion, or 46%, compared with 2Q11 and decreased $4 billion, or 6%, compared with 1Q12.

• The net interest margin (FTE) was 1.25% in 2Q12 compared with 1.41% in 2Q11 and 1.32% in 1Q12. The year-over-year decrease in the net interest margin (FTE) was primarily driven by increased client deposits which were invested in lower-yielding assets reflecting the current market environment. The sequential decrease in the net interest margin (FTE) reflects the impact of narrower spreads and lower accretion.

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BNY Mellon 2Q12 Quarterly Earnings Review

NONINTEREST EXPENSE

Noninterest expense(a)																2Q12 vs.
(dollars in millions)	2Q11			3Q11			4Q11			1Q12			2Q12			2Q11			1Q12
Staff:
Compensation	$	903		$	903		$	885		$	861		$	866			(4	)%		1	%
Incentives		328			328			281			352			311			(5	)		(12	)
Employee benefits		232			226			216			240			238			3			(1	)
Total staff		1,463			1,457			1,382			1,453			1,415			(3	)		(3	)
Professional, legal and other purchased services		301			311			322			299			309			3			3
Software and equipment		203			193			213			205			209			3			2
Net occupancy		161			151			159			147			141			(12	)		(4	)
Distribution and servicing		109			100			96			101			103			(6	)		2
Sub-custodian		88			80			62			70			70			(20	)		—
Business development		73			57			75			56			71			(3	)		27
Other		247			224			237			220			254			3			15
Amortization of intangible assets		108			106			106			96			97			(10	)		1
M&I, litigation and restructuring charges		63			92			176			109			378			N/M			N/M
Total noninterest expense – GAAP	$	2,816		$	2,771		$	2,828		$	2,756		$	3,047			8	%		11	%
Total staff expense as a percentage of total revenue		38	%		39	%		39	%		40	%		39	%
Memo:
Total noninterest expense excluding amortization of intangible assets, M&I, litigation and restructuring charges and direct expense related to Shareowner Services – Non-GAAP	$	2,598		$	2,536		$	2,500		$	2,551		$	2,572			(1	)%		1	%

(a) See “Supplemental information – Explanation of Non-GAAP financial measures” beginning on page 20 for noninterest expense excluding the direct expense related to Shareowner Services – Non-GAAP.

N/M – Not meaningful.

KEY POINTS

• Total noninterest expense (excluding amortization of intangible assets, merger and integration (“M&I”), litigation and restructuring charges and direct expense related to Shareowner Services) – (Non-GAAP) decreased 1% compared with the prior year period, reflecting the impact of our operational excellence initiatives, and increased 1% (unannualized) sequentially.

• Sequentially, noninterest expenses increased slightly primarily due to the costs of certain tax credits, higher business development expenses and a deposit levy imposed on Belgium banks, including our Belgium bank subsidiary, largely offset by lower staff expense.

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BNY Mellon 2Q12 Quarterly Earnings Review

OPERATIONAL EXCELLENCE INITIATIVES UPDATE

Expense initiatives (pre-tax)								Annualized
	Program savings (a)							targeted savings
(dollar amounts in millions)	1Q12		2Q12		through 2Q12			by the end of 2012
Business operations	$	45	$	55	$	100		$ 225 - 240
Technology		16		21		37		$ 75 - 85
Corporate services		14		18		32		$ 60 - 65
Gross savings		75		94		169		$ 360 - 390
Less: Incremental program costs (b)		5		23		28		$ 120 - 130
Net savings	$	70	$	71	$	141	(c)	$ 240 - 260

(a) Represents the estimated annual pre-tax run rate expense savings for 2012. Total Company actual operating expense may increase or decrease due to other factors.

(b) Represents incremental program costs incurred to implement the operational excellence initiatives. These costs will fluctuate by quarter.

(c) Net savings cannot be annualized due to the variability of program costs.

Accomplishments

Business Operations

• Consolidated Treasury Services functions from New York, Philadelphia, Atlanta and Boston to Pittsburgh.

• Continued global footprint position migrations.

• Reengineered Dreyfus and Global Fund Accounting operations to reduce headcount.

• Realized synergies in custody operations and clearing related to the Global Investment Servicing (“GIS”) acquisition.

Technology

• Migrated GIS systems to BNY Mellon platforms – over 90% of the production applications have been successfully migrated as of June 30, 2012.

• Insourced software engineers to Global Delivery Centers.

• Standardized infrastructure through server elimination and software rationalization.

Corporate Services

• Consolidated real estate in Los Angeles and New York.

• Benefited from the new global procurement program.

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BNY Mellon 2Q12 Quarterly Earnings Review

CAPITAL

The following table presents our Basel I Tier 1 common equity generated.

Basel I Tier 1 common equity generation
(dollars in millions)		2Q11		3Q11			4Q11			1Q12		2Q12
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP		$	735	$	651		$	505		$	619	$	466
Add:	Amortization of intangible assets, net of tax		68		67			66			61		61
Gross Basel I Tier 1 common equity generated			803		718			571			680		527
Less capital deployed:
Common stock dividends			163		160			159			158		156
Common stock repurchased			272		462			69			371		286
Goodwill and intangible assets related to acquisitions/dispositions			—		16			(241	)		—		—
Total capital deployed			435		638			(13	)		529		442
Add:	Other		139		(43	)		(114	)		146		(53	)
Net Basel I Tier 1 common equity generated		$	507	$	37		$	470		$	297	$	32

The following table presents our capital ratios.

Capital ratios	June 30, 2011			March 31, 2012			June 30, 2012 (a)
Estimated Basel III Tier 1 common equity ratio(b)		N/A			N/A			8.7	%
Basel I Tier 1 common equity to risk-weighted assets ratio – Non-GAAP		12.6	%		13.9	%		13.2
Basel I Tier 1 capital ratio		14.1			15.6			14.7
Basel I Total (Tier 1 plus Tier 2) capital ratio		16.7			17.5			16.4
Basel I leverage capital ratio		5.8			5.6			5.5
BNY Mellon shareholders’ equity to total assets ratio(c)		11.1			11.3			10.5
BNY Mellon common shareholders’ equity to total assets ratio(c)		11.1			11.3			10.3
Tangible common shareholders’ equity to tangible assets of operations ratio – Non-GAAP(c)		6.0			6.5			6.1

(a) Preliminary.

(b) The estimated Basel III Tier 1 common equity ratio at June 30, 2012 is based on the Notices of Proposed Rulemaking (“NPRs”) and final market risk rule released on June 7, 2012. The estimated Basel III Tier 1 common equity ratios of 6.5% at June 30, 2011 and 7.6% at March 31, 2012 were based on prior Basel III guidance and the proposed market risk rule.

(c) See “Supplemental information – Explanation of Non-GAAP financial measures” beginning on page 20 for a calculation of these ratios.

The following table presents the calculation of our Basel I Tier 1 common equity ratio.

Calculation of Basel I Tier 1 common equity to risk-weighted assets ratio – Non-GAAP		June 30,			March 31,			June 30,
(dollars in millions)		2011			2012			2012 (a)
Total Tier 1 capital – Basel I		$	14,892		$	15,695		$	15,722
Less:	Trust preferred securities		1,669			1,669			1,164
	Preferred stock		—			—			500
Total Tier 1 common equity		$	13,223		$	14,026		$	14,058
Total risk-weighted assets – Basel I		$	105,316		$	100,763		$	106,790
Basel I Tier 1 common equity to risk-weighted assets ratio – Non-GAAP			12.6	%		13.9	%		13.2	%

(a) Preliminary.

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BNY Mellon 2Q12 Quarterly Earnings Review

The following table presents the calculation of our estimated Basel III Tier 1 common equity ratio on a fully-phased-in basis.

Estimated Basel III Tier 1 common equity ratio(a)		June 30,			March 31,			June 30,
(dollars in millions)		2011			2012			2012 (b)
Total Tier 1 capital – Basel I		$	14,892		$	15,695		$	15,722
Less:	Trust preferred securities		1,669			1,669			1,164
	Preferred stock		—			—			500
	Adjustments related to available-for-sale securities and pension liabilities included in accumulated other comprehensive income (c)		551			700			513
	Adjustments related to equity method investments (c)		578			571			558
	Deferred tax assets		—			—			46
	Net pensions fund assets (c)		542			100			43
	Other		(4	)		(2	)		2
Total estimated Basel III Tier 1 common equity		$	11,556		$	12,657		$	12,896
Total risk-weighted assets – Basel I		$	105,316		$	100,763		$	106,790
Add:	Adjustments (d)		71,965			65,997			41,467
Total estimated Basel III risk-weighted assets		$	177,281		$	166,760		$	148,257
Estimated Basel III Tier 1 common equity ratio			6.5	%		7.6	%		8.7	%

(a) The estimated Basel III Tier 1 common equity ratio at June 30, 2012 is based on the NPRs and final market risk rule released on June 7, 2012. The estimated Basel III Tier 1 common equity ratios at June 30, 2011 and March 31, 2012 were based on our interpretation of prior Basel III guidance and proposed market risk rule.

(b) Preliminary.

(c) The NPRs and prior Basel III guidance do not add back to capital the adjustment to other comprehensive income that Basel I makes for pension liabilities and available-for-sale securities. Also, under the NPRs and prior Basel III guidance, pension assets recorded on the balance sheet and adjustments related to equity method investments are a deduction from capital.

(d) Primary differences between risk-weighted assets determined under Basel I compared with the NPRs and prior Basel III guidance include: the determination of credit risk under Basel I uses predetermined risk weights and asset classes, while the NPRs use an investment grade standard and internal risk models. Securitization exposure receives a higher risk-weighting under the NPRs and prior Basel III guidance than Basel I; also, the NPRs and prior Basel III guidance includes additional adjustments for operational risk, market risk, counterparty credit risk and equity exposures.

We generated $527 million of gross Basel I Tier 1 common equity in the second quarter of 2012.

Our estimated Basel III Tier 1 common equity ratio was 8.7% at June 30, 2012 based on the NPRs and final market risk rule. The increase in the ratio from 7.6% at March 31, 2012, which was calculated under prior Basel III guidance and the proposed market risk rule, was primarily due to the reduction in risk-weighted assets related to treatment of sub-investment grade securities. This benefit was partially offset by the treatment of investment grade securitizations and financial institution exposure, as well as balance sheet growth in the second quarter.

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BNY Mellon 2Q12 Quarterly Earnings Review

INVESTMENT SECURITIES PORTFOLIO

At June 30, 2012, the fair value of our investment securities portfolio totaled $93.0 billion. The unrealized pre-tax net gain on our total securities portfolio was $1.4 billion at June 30, 2012 compared with $1.2 billion at March 31, 2012. During the second quarter of 2012, we received $246 million of paydowns and sold approximately $24 million of sub-investment grade securities.

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

Investment securities portfolio
				2Q12								Fair value
	March 31,			change in			June 30, 2012					as a % of						Ratings
	2012			unrealized			Amortized		Fair			amortized			Unrealized			AAA/			A+/			BBB+/			BB+ and			Not
(dollars in millions)	Fair value			gain/(loss)			cost		value			cost(a)			gain/(loss)			AA-			A-			BBB-			lower			rated
Agency RMBS	$	34,538		$	187		$	38,598	$	39,441			102	%	$	843			100	%		—	%		—	%		—	%		—	%
U.S. Treasury securities		15,173			43			14,777		15,073			102			296			100			—			—			—			—
Sovereign debt/sovereign guaranteed (b)		12,171			(57	)		8,782		8,935			102			153			100			—			—			—			—
Non-agency RMBS (c)		3,232			(72	)		2,745		3,037			67			292			1			1			2			96			—
Non-agency RMBS		1,787			41			1,900		1,692			81			(208	)		17			15			11			57			—
European floating rate notes (d)		3,405			37			4,337		4,053			92			(284	)		79			15			3			3			—
Commercial MBS		3,161			(2	)		2,905		3,012			104			107			82			16			2			—			—
State and political subdivisions		4,067			32			5,640		5,684			101			44			84			14			1			1			—
Foreign covered bonds (e)		3,207			22			3,870		3,928			101			58			99			1			—			—			—
Corporate bonds		1,696			3			1,571		1,628			104			57			17			73			9			1			—
CLO		1,118			(1	)		1,025		1,013			99			(12	)		100			—			—			—			—
U.S. Government agency debt		1,108			2			1,066		1,097			103			31			100			—			—			—			—
Consumer ABS		447			5			1,051		1,060			101			9			77			22			—			1			—
Other (f)		3,093			18			3,285		3,339			102			54			31			60			2			1			6
Total investment securities	$	88,203	(g)	$	258		$	91,552	$	92,992	(g)		99	%	$	1,440			89	%		6	%		1	%		4	%		—	%

(a) Amortized cost before impairments.

(b) Primarily comprised of exposure to UK, France, Germany and Netherlands.

(c) 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 enhancement, the difference between the written-down amortized cost and the current face amount of each of these securities.

(d) Includes RMBS, commercial MBS and other securities. Primarily comprised of exposure to UK and Netherlands.

(e) Primarily comprised of exposure to Germany, Canada and UK.

(f) Includes commercial paper of $2.0 billion, fair value, and money market funds of $917 million, fair value, at June 30, 2012.

(g) Includes net unrealized losses on derivatives hedging securities available-for-sale of $20 million at March 31, 2012 and $417 million at June 30, 2012.

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BNY Mellon 2Q12 Quarterly Earnings Review

NONPERFORMING ASSETS

Nonperforming assets	June 30,			March 31,			June 30,
(dollars in millions)	2011			2012			2012
Nonperforming loans:
Other residential mortgages	$	236		$	188		$	177
Wealth management		31			35			35
Commercial		31			32			31
Commercial real estate		28			39			30
Foreign		13			10			9
Financial institutions		4			14			3
Total nonperforming loans		343			318			285
Other assets owned		8			13			9
Total nonperforming assets(a)	$	351		$	331		$	294
Nonperforming assets ratio		0.83	%		0.77	%		0.65	%
Allowance for loan losses/nonperforming loans		128.6			121.4			127.0
Total allowance for credit losses/nonperforming loans		156.0			155.3			163.9

(a) Loans of consolidated investment management funds are not part of BNY Mellon’s loan portfolio. Included in these loans are nonperforming loans of $216 million at June 30, 2011, $180 million at March 31, 2012 and $155 million at June 30, 2012. These loans are recorded at fair value and therefore do not impact the provision for credit losses and allowance for loan losses, and accordingly are excluded from the nonperforming assets table above.

ALLOWANCE FOR CREDIT LOSSES, PROVISION AND NET CHARGE-OFFS

Allowance for credit losses, provision and net charge-offs
(dollars in millions)	2Q11			1Q12			2Q12
Allowance for credit losses – beginning of period	$	554		$	497		$	494
Provision for credit losses		—			5			(19	)
Net (charge-offs) recoveries:
Other residential mortgages		(9	)		(8	)		(5	)
Financial institutions		—			—			(4	)
Commercial		(3	)		—			1
Foreign		(6	)		—			—
Commercial real estate		(1	)		—			—
Net (charge-offs) recoveries		(19	)		(8	)		(8	)
Allowance for credit losses – end of period	$	535		$	494		$	467
Allowance for loan losses	$	441		$	386		$	362
Allowance for lending-related commitments		94			108			105

The provision for credit losses was a credit of $19 million in the second quarter of 2012 primarily resulting from a decline in the expected loss related to a broker-dealer customer that previously filed for bankruptcy, as well as improvements in the mortgage portfolio. There was no provision in the second quarter of 2011 and a charge of $5 million in the first quarter of 2012.

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BNY Mellon 2Q12 Quarterly Earnings Review

REVIEW OF BUSINESSES

INVESTMENT MANAGEMENTprovides investment management services to institutional and retail investors, as well as investment management, wealth and estate planning and private banking solutions to high net worth individuals and families, and foundations and endowments.

																2Q12 vs.
(dollars in millions, unless otherwise noted)	2Q11			3Q11			4Q11			1Q12			2Q12			2Q11			1Q12
Revenue:
Investment management fees:
Mutual funds	$	290		$	263		$	237		$	260		$	270			(7	)%		4	%
Institutional clients		319			311			299			322			321			1			—
Wealth management		163			157			154			157			158			(3	)		1
Investment management fees		772			731			690			739			749			(3	)		1
Performance fees		18			11			47			16			54			N/M			N/M
Distribution and servicing		48			41			41			45			45			(6	)		—
Other (a)		24			(26	)		(11	)		52			13			N/M			N/M
Total fee and other revenue (a)		862			757			767			852			861			—			1
Net interest revenue		48			51			55			55			52			8			(5	)
Total revenue		910			808			822			907			913			—			1
Provision for credit losses		1			—			—			—			—			N/M			N/M
Noninterest expense (ex. amortization of intangible assets)		641			622			632			619			642			—			4
Income before taxes (ex. amortization of intangible assets)		268			186			190			288			271			1			(6	)
Amortization of intangible assets		53			53			53			48			48			(9	)		—
Income before taxes	$	215		$	133		$	137		$	240		$	223			4	%		(7	)%
Pre-tax operating margin		24	%		16	%		17	%		26	%		24	%
Pre-tax operating margin (ex. amortization of intangible assets and net of distribution and servicing expense) (b)		33	%		26	%		26	%		36	%		34	%
Metrics:
Changes in market value of assets under management(in billions) (c):
Beginning balance	$	1,229		$	1,274		$	1,198		$	1,260		$	1,308
Net inflows (outflows):
Long-term		32			4			16			7			26
Money market		(1	)		(15	)		7			(9	)		(14	)
Total net inflows (outflows)		31			(11	)		23			(2	)		12
Net market/currency impact		14			(65	)		39			50			(21	)
Ending balance	$	1,274		$	1,198		$	1,260		$	1,308		$	1,299	(d)		2	%		(1	)%
Composition of assets under management at period end(c):
Equity securities		34	%		30	%		31	%		33	%		32	%
Fixed income securities		31			35			35			35			37
Money market		26			27			26			24			23
Alternative investments and overlay		9			8			8			8			8
Total		100	%		100	%		100	%		100	%		100	%
Wealth management:
Average loans	$	6,884		$	6,958		$	7,209		$	7,430		$	7,763			13	%		4	%
Average deposits	$	8,996		$	10,392		$	11,761		$	11,491		$	11,259			25	%		(2	)%

(a) Total fee and other revenue includes the impact of the consolidated investment management funds. See “Supplemental information – Explanation of Non-GAAP financial measures” beginning on page 20. Additionally, other revenue includes asset servicing and treasury services revenue.

(b) Distribution and servicing expense is netted with distribution and servicing revenue for the purpose of this calculation of pre-tax operating margin. Distribution and servicing expense totaled $108 million, $99 million, $95 million, $100 million and $102 million, respectively.

(c) Excludes securities lending cash management assets.

(d) Preliminary.

N/M – Not meaningful.

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BNY Mellon 2Q12 Quarterly Earnings Review

INVESTMENT MANAGEMENT KEY POINTS

• Assets under management were $1.3 trillion at June 30, 2012, an increase of 2% year-over-year and a decrease of 1% sequentially. Year-over-year, net inflows were partially offset by lower equity market values. On a sequential basis, the decrease resulted from lower equity market values, partially offset by net inflows.

• Net long-term inflows were $26 billion and short-term outflows were $14 billion in 2Q12. Long-term inflows benefited from fixed income and equity indexed products.

• Investment management and performance fees were $803 million, an increase of 2% year-over-year and 6% (unannualized) sequentially. Both increases reflect higher performance fees. Excluding performance fees, investment management fees decreased 3% year-over-year and increased 1% (unannualized) sequentially. The decrease year-over-year was primarily due to lower equity market values, partially offset by net new business. Sequentially, the increase was primarily due to net new business and higher money market fees, partially offset by lower equity market values.

• Other revenue was $13 million in 2Q12 compared with revenue of $24 million in 2Q11 and $52 million in 1Q12. Both decreases primarily reflect lower seed capital gains.

• Net interest revenue increased 8% year-over-year and decreased 5% (unannualized) sequentially. The year-over-year increase primarily resulted from higher average loans and deposits partially offset by tighter spreads. The sequential decrease reflects tighter spreads and lower deposit balances, partially offset by higher average loans.

• Average loans increased 13% year-over-year and 4% sequentially; average deposits increased 25% year-over-year and decreased 2% sequentially.

• Total noninterest expense (ex. amortization of intangible assets) was unchanged year-over-year and increased 4% (unannualized) sequentially. The sequential increase primarily resulted from higher incentive expense driven by an increase in performance fees, as well as higher business development and distribution and servicing expenses.

• 44% non-U.S. revenue in 2Q12 vs. 41% in 2Q11.

• Ranked #1 for providing liability-driven investment strategies byPensions & Investments (published 6/11/2012).

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BNY Mellon 2Q12 Quarterly Earnings Review

INVESTMENT SERVICESprovides global custody and related services, broker-dealer services, alternative investment services, corporate trust, depositary receipt and clearing services as well as global payment/working capital solutions to global financial institutions.

																2Q12 vs.
(dollars in millions, unless otherwise noted)	2Q11			3Q11			4Q11			1Q12			2Q12			2Q11			1Q12
Revenue:
Investment services fees:
Asset servicing	$	943		$	894		$	858		$	915		$	920			(2	)%		1	%
Issuer services		314			401			245			251			275			(12	)		10
Clearing services		292			297			278			303			309			6			2
Treasury services		134			132			133			136			132			(1	)		(3	)
Total investment services fees		1,683			1,724			1,514			1,605			1,636			(3	)		2
Foreign exchange and other trading revenue		203			236			196			176			179			(12	)		2
Other (a)		81			68			71			71			66			(19	)		(7	)
Total fee and other revenue (a)		1,967			2,028			1,781			1,852			1,881			(4	)		2
Net interest revenue		649			661			634			642			607			(6	)		(5	)
Total revenue		2,616			2,689			2,415			2,494			2,488			(5	)		—
Provision for credit losses		—			—			—			16			(14	)		N/M			N/M
Noninterest expense (ex. amortization of intangible assets)		1,777			1,849			1,706			1,779			2,097			18			18
Income before taxes (ex. amortization of intangible assets)		839			840			709			699			405			(52	)		(42	)
Amortization of intangible assets		50			49			50			48			49			(2	)		2
Income before taxes	$	789		$	791		$	659		$	651		$	356			(55	)%		(45	)%
Pre-tax operating margin		30	%		29	%		27	%		26	%		14	%
Pre-tax operating margin (ex. amortization of intangible assets)		32	%		31	%		29	%		28	%		16	%
Investment services fees as a percentage of noninterest expense (b)		96	%		98	%		90	%		94	%		94	%
Securities lending revenue	$	52		$	32		$	35		$	39		$	48			(8	)%		23	%
Metrics:
Market value of assets under custody and administration at period-end(in trillions)	$	26.3		$	25.9		$	25.8		$	26.6		$	27.1			3	%		2	%
Market value of securities on loan at period-end(in billions) (c)	$	273		$	250		$	269		$	265		$	275			1	%		4	%
Average loans	$	22,891		$	22,879		$	26,804		$	25,902		$	24,981			9	%		(4	)%
Average deposits	$	153,863		$	181,848		$	188,539		$	175,055		$	172,435			12	%		(1	)%
Asset servicing:
New business wins (AUC)(in billions)	$	196		$	96		$	431		$	453		$	314
Corporate Trust:
Total debt serviced(in trillions)	$	11.8		$	11.9		$	11.8		$	11.9		$	11.5			(3	)%		(3	)%
Number of deals administered		133,262			134,843			133,850			133,319			133,301			—	%		—	%
Depositary Receipts:
Number of sponsored programs		1,386			1,384			1,389			1,391			1,393			1	%		—	%
Clearing services:
DARTS volume(in thousands)		196.5			207.7			178.7			196.6			189.8			(3	)%		(3	)%
Average active clearing accounts U.S.(in thousands)		5,486			5,503			5,429			5,413			5,427			(1	)%		—	%
Average long-term mutual fund assets (U.S. platform)	$	306,193		$	287,573		$	287,562		$	306,212		$	306,973			—	%		—	%
Average margin loans	$	7,506		$	7,351		$	7,548		$	7,900		$	8,231			10	%		4	%
Broker-Dealer:
Average collateral management balances(in billions)	$	1,845		$	1,872		$	1,866		$	1,929		$	1,997			8	%		4	%
Treasury services:
Global payments transaction volume(in thousands)		10,944			11,088			10,856			10,838			11,117			2	%		3	%

(a) Total fee and other revenue includes investment management fees and distribution and servicing revenue.

(b) Noninterest expense excludes amortization of intangible assets, support agreement charges and litigation expense.

(c) Represents the securities on loan managed by the Investment Services business.

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BNY Mellon 2Q12 Quarterly Earnings Review

INVESTMENT SERVICES KEY POINTS

• Investment services fees totaled $1.6 billion, a decrease of 3% year-over-year and an increase of 2% (unannualized) sequentially.

• Asset servicing fees (global custody, broker-dealer services and alternative investment services) were $920 million in 2Q12 compared with $943 million in 2Q11 and $915 million in 1Q12. The year-over year decrease primarily reflects lower equity market values and securities lending revenue, partially offset by net new business. The sequential increase was primarily driven by net new business and seasonally higher securities lending revenue, partially offset by lower equity market values.

• Issuer services fees (Corporate Trust and Depositary Receipts) were $275 million in 2Q12 compared with $314 million in 2Q11 and $251 million in 1Q12. The year-over-year decrease primarily resulted from lower Depositary Receipts revenue, lower money market related fees and lower trust fees related to the weakness in structured products in Corporate Trust. The increase sequentially resulted from higher Depositary Receipts revenue as well as money market related fees in Corporate Trust.

• Clearing services fees (Pershing) were $309 million in 2Q12 compared with $292 million in 2Q11 and $303 million in 1Q12. The year-over-year increase was driven by higher mutual fund fees, partially offset by the impact of lower DARTS volume and higher money market fee waivers. The sequential increase primarily reflects higher mutual fund fees and lower money market fee waivers, partially offset by the impact of lower DARTS volume.

• Foreign exchange and other trading revenue was $179 million in 2Q12 compared with $203 million in 2Q11 and $176 million in 1Q12. The year-over-year decrease reflects lower volatility and volumes, while the sequential increase primarily resulted from higher volumes.

• Net interest revenue was $607 million in 2Q12 compared with $649 million in 2Q11 and $642 million in 1Q12. The year-over-year decrease reflects lower spreads and accretion, partially offset by higher average interest-earning deposits. The sequential decrease reflects lower spreads, average interest-earning deposits and accretion.

• The provision for credit losses was a credit of $14 million in the second quarter of 2012 primarily resulting from a decline in the expected loss related to a broker-dealer customer that previously filed for bankruptcy.

• Noninterest expense (excluding amortization of intangible assets) was $2.1 billion in 2Q12 compared with $1.8 billion in both 2Q11 and 1Q12. Both increases primarily reflect higher litigation expense and a deposit levy imposed on Belgium banks, including our Belgium bank subsidiary.

• 36% non-U.S. revenue in 2Q12 vs. 39% in 2Q11.

• Ranked #1 global custodian in 17 categories in the 2012Global Investor global custody survey.

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BNY Mellon 2Q12 Quarterly Earnings Review

OTHER SEGMENTprimarily includes credit-related services, the leasing portfolio, corporate treasury activities, business exits, M&I expenses and other corporate revenue and expense items. Results in 2011 include the Shareowner Services business.

(dollars in millions)	2Q11			3Q11			4Q11			1Q12			2Q12
Revenue:
Fee and other revenue	$	269		$	121		$	240		$	166		$	112
Net interest revenue		34			63			91			68			75
Total revenue		303			184			331			234			187
Provision for credit losses		(1	)		(22	)		23			(11	)		(5	)
Noninterest expense (ex. amortization of intangible assets and M&I and restructuring charges)		272			182			245			253			189
Income (loss) before taxes (ex. amortization of intangible assets and M&I and restructuring charges)		32			24			63			(8	)		3
Amortization of intangible assets		5			4			3			—			—
M&I and restructuring charges		18			12			139			9			22
Income (loss) before taxes	$	9		$	8		$	(79	)	$	(17	)	$	(19	)
Average loans and leases	$	10,553		$	10,652		$	10,223		$	9,877		$	10,248

KEY POINTS

• Total fee and other revenue decreased $157 million compared with 2Q11 and $54 million compared with 1Q12. The year-over-year decrease reflects lower asset-related gains, the impact of the sale of the Shareowner Services business and lower equity investment revenue. The sequential decrease was driven by lower leasing gains and equity investment revenue and a lower credit valuation adjustment.

• The provision for credit losses was a credit of $5 million in the second quarter of 2012 primarily resulting from improvements in the mortgage portfolio.

• Noninterest expense (excluding amortization of intangible assets and M&I and restructuring charges) decreased $83 million compared with 2Q11 and $64 million compared with 1Q12. The decrease compared with 2Q11 resulted from the impact of the sale of the Shareowner Services business and lower incentive expense. The decrease compared with 1Q12 reflects lower incentives and benefits expense.

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BNY Mellon 2Q12 Quarterly Earnings Review

SUPPLEMENTAL INFORMATION – EXPLANATION OF NON-GAAP FINANCIAL MEASURES

BNY Mellon has included in this Earnings Review certain Non-GAAP financial measures based upon tangible common shareholders’ equity. BNY Mellon believes that the return on tangible common equity measure, which excludes goodwill and intangible assets net of deferred tax liabilities, is a useful additional measure for investors because it presents a measure of BNY Mellon’s performance in reference to those assets which are productive in generating income. The tangible common shareholders’ equity ratio is expressed as a percentage of the actual book value of assets, as opposed to a percentage of a risk-based reduced value established in accordance with regulatory requirements, although BNY Mellon in its calculation has excluded certain assets which are given a zero percent risk-weighting for regulatory purposes. BNY Mellon has provided a measure of tangible book value per share, which it believes provides additional useful information as to the level of such assets in relation to shares of common stock outstanding.

BNY Mellon has presented revenue measures which exclude the effect of noncontrolling interests related to consolidated investment management funds and other revenue related to the Shareowner Services business, which was sold on Dec. 31 201l; and expense measures which exclude M&I expenses, litigation charges, restructuring charges and amortization of intangible assets and direct expense related to the Shareowner Services business. Return on equity measures and operating margin measures, which exclude some or all of these items, are also presented. BNY Mellon believes that these measures are useful to investors because they permit a focus on period-to-period comparisons which relate to the ability of BNY Mellon to enhance revenues and limit expenses in circumstances where such matters are within BNY Mellon’s control. The excluded items in general relate to certain ongoing charges as a result of prior transactions or where we have incurred charges. M&I expenses primarily relate to the acquisitions of Global Investment Servicing on July 1, 2010 and BHF Asset Servicing GmbH on Aug. 2, 2010. M&I expenses generally continue for approximately three years after the transaction and can vary on a year-to-year basis depending on the stage of the integration. BNY Mellon believes that the exclusion of M&I expenses provides investors with a focus on BNY Mellon’s business as it would appear on a consolidated going-forward basis, after such M&I expenses have ceased. Future periods will not reflect such M&I expenses, and thus may be more easily compared to our current results if M&I expenses are excluded. Litigation charges represent accruals for loss contingencies that are both probable and reasonably estimable, but exclude standard business-related legal fees. Restructuring charges relate to our operational excellence initiatives and migrating positions to global delivery centers. Excluding these charges permits investors to view expenses on a basis consistent with how management views the business. BNY Mellon also presents revenue and noninterest expense results relating to the Shareowner Services business so that an investor may compare those results with other periods, which do not include the Shareowner Services business.

The presentation of income (loss) from consolidated investment management funds, net of net income (loss) attributable to noncontrolling interest related to the consolidation of certain investment management funds permits investors to view revenue on a basis consistent with prior periods. BNY Mellon believes that these presentations, as a supplement to GAAP information, give investors a clearer picture of the results of its primary businesses.

In this Earnings Review, the net interest margin is presented on an FTE basis. We believe that this presentation provides comparability of amounts arising from both taxable and tax-exempt sources, and is consistent with industry practice.

Each of these measures as described above is used by management to monitor financial performance, both on a company-wide and on a business-level basis.

The following table presents a reconciliation of the tax rate from an effective rate to an operating rate for the second quarter of 2012.

Reconciliation of effective tax rate	2Q12
Effective tax rate – GAAP		15.8	%
Tax reduction related to litigation charge		8.7
Other		1.6
Effective tax rate – Operating basis – Non-GAAP		26.1	%

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BNY Mellon 2Q12 Quarterly Earnings Review

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

Pre-tax operating margin
(dollars in millions)			2Q11			3Q11			4Q11			1Q12			2Q12
Income before income taxes – GAAP			$	1,034		$	945		$	689		$	885		$	589
Less:	Net income (loss) attributable to noncontrolling interests of consolidated investment management funds			21			13			(28	)		11			29
Add:	Amortization of intangible assets			108			106			106			96			97
	M&I, litigation and restructuring charges			63			92			176			109			378
Income before income taxes excluding net income (loss) attributable to noncontrolling interests of consolidated investment management funds, amortization of intangible assets, M&I, litigation and restructuring charges – Non-GAAP			$	1,184		$	1,130		$	999		$	1,079		$	1,035
Fee and other revenue – GAAP			$	3,056		$	2,887		$	2,765		$	2,838		$	2,826
Income (loss) from consolidated investment management funds – GAAP				63			32			(5	)		43			57
Net interest revenue – GAAP				731			775			780			765			734
	Total revenue – GAAP			3,850			3,694			3,540			3,646			3,617
	Less:	Net income (loss) attributable to noncontrolling interests of consolidated investment management funds		21			13			(28	)		11			29
	Total revenue excluding net income (loss) attributable to noncontrolling interests of consolidated investment management funds – Non-GAAP		$	3,829		$	3,681		$	3,568		$	3,635		$	3,588
Pre-tax operating margin(a)				27	%		26	%		19	%		24	%		16	%
Pre-tax operating margin excluding net income (loss) attributable to noncontrolling interests of consolidated investment management funds, amortization of intangible assets, M&I, litigation and restructuring charges – Non-GAAP(a)				31	%		31	%		28	%		30	%		29	%

(a) Income before taxes divided by total revenue.

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BNY Mellon 2Q12 Quarterly Earnings Review

The following table presents the calculation of the return on common equity and the return on tangible common equity.

Return on common equity and tangible common equity
(dollars in millions)		2Q11			3Q11			4Q11			1Q12			2Q12
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP		$	735		$	651		$	505		$	619		$	466
Add:	Amortization of intangible assets, net of tax		68			67			66			61			61
Net income applicable to common shareholders of The Bank of New York Mellon Corporation excluding amortization of intangible assets – Non-GAAP			803			718			571			680			527
Add:	M&I, litigation and restructuring charges		41			55			110			65			225
Net income applicable to common shareholders of The Bank of New York Mellon Corporation excluding amortization of intangible assets and M&I, litigation and restructuring charges – Non-GAAP		$	844		$	773		$	681		$	745		$	752
Average common shareholders’ equity		$	33,464		$	34,008		$	33,761		$	33,718		$	34,123
Less:	Average goodwill		18,193			18,156			18,044			17,962			17,941
	Average intangible assets		5,547			5,453			5,333			5,121			5,024
Add:	Deferred tax liability – tax deductible goodwill		895			915			967			972			982
	Deferred tax liability – non-tax deductible intangible assets		1,630			1,604			1,459			1,428			1,400
Average tangible common shareholders’ equity – Non-GAAP		$	12,249		$	12,918		$	12,810		$	13,035		$	13,540
Return on common equity – GAAP(a)			8.8	%		7.6	%		5.9	%		7.4	%		5.5	%
Return on common equity excluding amortization of intangible assets and M&I, litigation and restructuring charges – Non-GAAP (a)			10.1	%		9.0	%		8.0	%		8.9	%		8.9	%
Return on tangible common equity – Non-GAAP (a)			26.3	%		22.1	%		17.7	%		21.0	%		15.7	%
Return on tangible common equity excluding M&I, litigation and restructuring charges – Non-GAAP (a)			27.6	%		23.8	%		21.1	%		23.0	%		22.4	%

(a) Annualized.

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BNY Mellon 2Q12 Quarterly Earnings Review

The following table presents the calculation of the equity to assets ratio and book value per common share.

Equity to assets and book value per common share (dollars in millions, unless otherwise noted)		June 30, 2011			March 31, 2012			June 30, 2012
BNY Mellon shareholders’ equity at period end – GAAP		$	33,851		$	34,000		$	34,533
Less:	Preferred stock		—			—			500
BNY Mellon common shareholders’ equity at period-end – GAAP			33,851			34,000			34,033
Less:	Goodwill		18,191			18,002			17,909
	Intangible assets		5,514			5,072			4,962
Add:	Deferred tax liability – tax deductible goodwill		895			972			982
	Deferred tax liability – non-tax deductible intangible assets		1,630			1,428			1,400
Tangible BNY Mellon common shareholders’ equity at period end – Non-GAAP		$	12,671		$	13,326		$	13,544
Total assets at period end – GAAP		$	304,706		$	300,169		$	330,283
Less:	Assets of consolidated investment management funds		13,533			11,609			10,955
Subtotal assets of operations – Non-GAAP			291,173			288,560			319,328
Less:	Goodwill		18,191			18,002			17,909
	Intangible assets		5,514			5,072			4,962
	Cash on deposit with the Federal Reserve and other central banks (a)		56,478			61,992			72,838
Tangible total assets of operations at period end – Non-GAAP		$	210,990		$	203,494		$	223,619
BNY Mellon shareholders’ equity to total assets – GAAP			11.1	%		11.3	%		10.5	%
BNY Mellon common shareholders’ equity to total assets – GAAP			11.1	%		11.3	%		10.3	%
Tangible BNY Mellon common shareholders’ equity to tangible assets of operations – Non-GAAP			6.0	%		6.5	%		6.1	%
Period end common shares outstanding(in thousands)			1,232,691			1,192,716			1,181,298
Book value per common share		$	27.46		$	28.51		$	28.81
Tangible book value per common share – Non-GAAP		$	10.28		$	11.17		$	11.47

(a) Assigned a zero percent risk-weighting by the regulators.

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

Income from consolidated investment management funds, net of noncontrolling interests
(dollars in millions)		2Q11		3Q11		4Q11			1Q12		2Q12
Income (loss) from consolidated investment management funds		$	63	$	32	$	(5	)	$	43	$	57
Less:	Net income (loss) attributable to noncontrolling interests of consolidated investment management funds		21		13		(28	)		11		29
Income from consolidated investment management funds, net of noncontrolling interests		$	42	$	19	$	23		$	32	$	28

The following table presents the line items in the Investment Management business impacted by the consolidated investment management funds.

Income from consolidated investment management funds, net of noncontrolling interests
(dollars in millions)	2Q11		3Q11			4Q11		1Q12		2Q12
Investment management and performance fees	$	29	$	27		$	20	$	22	$	20
Other (Investment income)		13		(8	)		3		10		8
Income from consolidated investment management funds, net of noncontrolling interests	$	42	$	19		$	23	$	32	$	28

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BNY Mellon 2Q12 Quarterly Earnings Review

The following table presents investment management fees net of performance fees.

Investment management and performance fees											2Q12 vs.
(dollars in millions)	2Q11		3Q11		4Q11		1Q12		2Q12		2Q11			1Q12
Investment management and performance fees	$	779	$	729	$	730	$	745	$	797		2	%		7	%
Less: Performance fees		18		11		47		16		54		N/M			N/M
Investment management fees	$	761	$	718	$	683	$	729	$	743		(2	)%		2	%

The following tables present fee and other revenue and noninterest expense excluding Shareowner Services.

Fee and other revenue excluding Shareowner Services													2Q12 vs.
(dollars in millions)	2Q11		3Q11			4Q11			1Q12		2Q12		2Q11			1Q12
Investment services fees:
Asset servicing	$	973	$	922		$	885		$	943	$	950		(2	)%		1	%
Issuer services		314		400			245			251		275		(12	)		10
Clearing services		292		297			278			303		309		6			2
Treasury services		134		133			134			136		134		—			(1	)
Total investment services fees		1,713		1,752			1,542			1,633		1,668		(3	)		2
Investment management and performance fees		779		729			730			745		797		2			7
Foreign exchange and other trading revenue		221		200			227			191		180		(19	)		(6	)
Distribution and servicing		49		43			42			46		46		(6	)		—
Financing-related fees		47		38			37			44		37		(21	)		(16	)
Investment and other income		145		83			48			139		51		(65	)		(63	)
Total fee revenue		2,954		2,845			2,626			2,798		2,779		(6	)		(1	)
Net securities gains (losses)		48		(2	)		(3	)		40		50		N/M			N/M
Total fee and other revenue	$	3,002	$	2,843		$	2,623		$	2,838	$	2,829		(6	)%		—	%

Noninterest expense excluding Shareowner Services											2Q12 vs.
(dollars in millions)	2Q11		3Q11		4Q11		1Q12		2Q12		2Q11			1Q12
Staff:
Compensation	$	888	$	889	$	871	$	861	$	866		(2	)%		1	%
Incentives		327		327		278		352		311		(5	)		(12	)
Employee benefits		229		222		213		240		238		4			(1	)
Total staff		1,444		1,438		1,362		1,453		1,415		(2	)		(3	)
Professional, legal and other purchased services		289		300		310		299		309		7			3
Software and equipment		201		189		208		205		209		4			2
Net occupancy		158		149		156		147		141		(11	)		(4	)
Distribution and servicing		109		100		96		101		103		(6	)		2
Sub-custodian		88		80		62		70		70		(20	)		—
Business development		72		57		74		56		71		(1	)		27
Other		237		223		232		220		254		7			15
Amortization of intangible assets		104		103		103		96		97		(7	)		1
M&I, litigation and restructuring charges		63		92		176		109		378		N/M			N/M
Total noninterest expense	$	2,765	$	2,731	$	2,779	$	2,756	$	3,047		10	%		11	%

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BNY Mellon 2Q12 Quarterly Earnings Review

Cautionary Statement

A number of statements (i) in this Quarterly Earnings Review, (ii) in our presentations and (iii) in the responses to questions on our conference call discussing our quarterly results and other public events may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 including statements made regarding our estimated capital ratios and our operational excellence initiatives, including targeted savings by the end of 2012. These statements may be expressed in a variety of ways, including the use of future or present tense language. These statements and other forward-looking statements contained in other public disclosures of The Bank of New York Mellon Corporation which make reference to the cautionary factors described in this Earnings Review, are based upon current beliefs and expectations and are subject to significant risks and uncertainties (some of which are beyond BNY Mellon’s control). Actual results may differ materially from those expressed or implied as a result of these risks and uncertainties, including, but not limited to, the risk factors and other uncertainties set forth in BNY Mellon’s Annual Report on Form 10-K for the year ended Dec. 31, 2011 and BNY Mellon’s other filings with the Securities and Exchange Commission. All forward-looking statements in this Earnings Review speak only as of July 18, 2012, and BNY Mellon undertakes no obligation to update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events.

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