The Bank of New York Mellon Corporation (BK) 8-K Fourth Quarter 2013 Financial Highlights

Exhibit 99.1

Quarterly Earnings Review

January 17, 2014

Table of Contents

Fourth Quarter 2013 Financial Highlights	2
Financial Summary/Key Metrics	3
Consolidated 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	12
Nonperforming Assets	13
Allowance for Credit Losses, Provision and Net Charge-offs	13
Review of Businesses	13
•   Investment Management	14
•   Investment Services	16
•   Other	18
Supplemental Information – Explanation of GAAP and Non-GAAP Financial Measures	19
Cautionary Statement	24

BNY Mellon 4Q13 Quarterly Earnings Review

FOURTH QUARTER 2013 FINANCIAL HIGHLIGHTS

(comparisons are 4Q13 vs. 4Q12 unless otherwise stated)

• Earnings

• Net income applicable to common shareholders was $513 million, or $0.44 per diluted common share, in 4Q13. Excluding the after-tax loss of $115 million, or $0.10 per diluted common share, related to an equity investment, net income applicable to common shareholders was $628 million, or $0.54 per diluted common share, compared with $622 million, or $0.53 per diluted common share, in 4Q12. (a)

• Total revenue was $3.6 billion, down 1%, or up 4% on a Non-GAAP basis.

• Investment services fees increased 5%.

• Asset servicing revenue increased 4% as a result of higher market values and organic growth.

• Clearing services revenue increased 10% driven by higher mutual fund fees, asset-based fees and volumes, partially offset by higher money market fee waivers.

• Issuer services revenue increased 10% driven by higher Depositary Receipts revenue, partially offset by the continued run-off of high margin securitizations in Corporate Trust.

• Investment management and performance fees increased 6%, driven by higher equity market values, net new business and higher performance fees, partially offset by higher money market fee waivers.

• Foreign exchange revenue increased 19% as a result of higher volumes and volatility.

• Other trading revenue decreased $13 million primarily related to lower derivatives trading revenue.

• Investment and other income decreased primarily reflecting the loss related to an equity investment.

• Net interest revenue increased 5% primarily driven by higher average interest-earning assets.

• The provision for credit losses was $6 million in 4Q13 driven by an increase in the allowance for a municipal-related entity.

• Noninterest expense increased 2%, or 4% on a Non-GAAP basis. The increase primarily reflects higher staff, legal, consulting and marketing expenses.

• Assets under custody and/or administration (“AUC/A”) and Assets under management (“AUM”)

• AUC/A of $27.6 trillion, increased 5% primarily reflecting higher market values and net new business.

• Estimated new AUC/A wins in Asset Servicing of $123 billion in 4Q13.

• AUM of a record $1.58 trillion, increased 14% driven by net new business and higher equity market values.

• Long-term inflows totaled $2 billion in 4Q13.

• Short-term inflows totaled $6 billion in 4Q13.

• Capital

• Repurchased 10 million common shares for $318 million.

(a) See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 19 for GAAP to Non-GAAP reconciliations.

Certain immaterial reclassifications have been made to prior periods to place them on a basis comparable with the current period presentation. Sequential growth rates are unannualized.

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BNY Mellon 4Q13 Quarterly Earnings Review

FINANCIAL SUMMARY

																4Q13 vs.
(dollars in millions, common shares in thousands)	4Q12			1Q13			2Q13			3Q13			4Q13			4Q12			3Q13
Revenue:
Fee and other revenue	$	2,850		$	2,844		$	3,187		$	2,963		$	2,797			(2	)%		(6	)%
Income from consolidated investment management funds		42			50			65			32			36
Net interest revenue		725			719			757			772			761
Total revenue – GAAP		3,617			3,613			4,009			3,767			3,594			(1	)		(5	)
Less:      Net income attributable to noncontrolling interests related to consolidated investment management funds		11			16			39			8			17
Gain (loss) related to an equity investment (pre-tax)		—			—			184			—			(175	)
Total revenue – Non-GAAP		3,606			3,597			3,786			3,759			3,752			4			—
Provision for credit losses		(61	)		(24	)		(19	)		2			6
Expense:
Noninterest expense – GAAP		2,825			2,828			2,822			2,779			2,877			2			4
Less:     Amortization of intangible assets		96			86			93			81			82
M&I, litigation and restructuring charges		46			39			13			16			2
Total noninterest expense – Non-GAAP		2,683			2,703			2,716			2,682			2,793			4	%		4	%
Income:
Income before income taxes		853			809			1,206			986			711
Provision (benefit) for income taxes		207			1,046			321			(2	)		155
Net income (loss)	$	646		$	(237	)	$	885		$	988		$	556
Net (income) attributable to noncontrolling interests(a)		(11	)		(16	)		(40	)		(8	)		(17	)
Net income (loss) applicable to shareholders of The Bank of New York Mellon Corporation		635			(253	)		845			980			539
Preferred stock dividends		(13	)		(13	)		(12	)		(13	)		(26	)
Net income (loss) applicable to common shareholders of The Bank of New York Mellon Corporation	$	622		$	(266	)	$	833		$	967		$	513
Key Metrics:
Pre-tax operating margin(b)		24	%		22	%		30	%		26	%		20	%
Non-GAAP(b)		27	%		26	%		32	%		29	%		22	%
Return on common equity(annualized) (b)		7.1	%		N/M			9.7	%		11.2	%		5.7	%
Non-GAAP(b)		8.2	%		7.8	%		10.5	%		8.9	%		6.3	%
Return on tangible common equity(annualized)
Non-GAAP(b)		18.8	%		N/M			25.0	%		28.4	%		14.3	%
Non-GAAP adjusted(b)		19.7	%		18.5	%		25.2	%		21.5	%		14.3	%
Fee revenue as a percentage of total revenue excluding net securities gains		78	%		78	%		79	%		79	%		78	%
Percentage of non-U.S. total revenue(c)		36	%		35	%		36	%		39	%		39	%
Period end:
Full-time employees		49,500			49,700			49,800			50,800			51,100
Market capitalization	$	29,902		$	32,487		$	32,271		$	34,674		$	39,910
Common shares outstanding		1,163,490			1,160,647			1,150,477			1,148,522			1,142,250

(a) Includes net income of $11 million in 4Q12, $16 million in 1Q13, $39 million in 2Q13, $8 million in 3Q13 and $17 million in 4Q13 attributable to noncontrolling interests related to consolidated investment management funds.

(b) Non-GAAP excludes M&I, litigation and restructuring charges and the impact of the U.S. Tax Court’s disallowance of certain foreign tax credits, if applicable. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 19 for GAAP to Non-GAAP reconciliations.

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

N/M – Not meaningful.

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BNY Mellon 4Q13 Quarterly Earnings Review

CONSOLIDATED BUSINESS METRICS

Consolidated business metrics																4Q13 vs.
	4Q12			1Q13			2Q13			3Q13			4Q13			4Q12			3Q13
Changes in AUM(in billions) (a):
Beginning balance of AUM	$	1,359		$	1,386		$	1,429		$	1,432		$	1,532
Net inflows (outflows):
Long-term		14			40			21			32			2
Money market		(6	)		(13	)		(1	)		13			6
Total net inflows (outflows)		8			27			20			45			8
Net market/currency impact/other		19			16			(17	)		55			43
Ending balance of AUM	$	1,386		$	1,429		$	1,432		$	1,532		$	1,583	(b)		14	%		3	%
AUM at period end, by product type(a):
Equity securities		33	%		34	%		35	%		35	%		35	%
Fixed income securities		38			39			39			39			39
Money market		22			20			19			19			19
Alternative investments and overlay		7			7			7			7			7
Total AUM		100	%		100	%		100	%		100	%		100%	(b)
Wealth management:
Average loans(in millions)	$	8,478		$	8,972		$	9,253		$	9,453		$	9,755			15	%		3	%
Average deposits(in millions)	$	12,332		$	13,646		$	13,306		$	13,898		$	14,161			15	%		2	%
Investment Services:
Average loans(in millions)	$	24,868		$	26,697		$	27,814		$	27,865		$	31,210			26	%		12	%
Average deposits(in millions)	$	204,164		$	200,221		$	204,499		$	206,068		$	216,216			6	%		5	%
AUC/A at period end(in trillions) (c)	$	26.3		$	26.3		$	26.2		$	27.4		$	27.6	(b)		5	%		1	%
Market value of securities on loan at period end(in billions) (d)	$	237		$	244		$	255		$	255		$	235	(e)		(1	)%		(8	)%
Asset Servicing:
Estimated new business wins (AUC/A) (in billions)	$	190		$	205		$	201		$	110		$	123	(b)
Depositary Receipts:
Number of sponsored programs		1,379			1,359			1,349			1,350			1,335			(3	)%		(1	)%
Clearing Services:
Global DARTS volume(in thousands)		181			213			217			212			213			18	%		—	%
Average active clearing accounts (U.S. platform)(in thousands)		5,489			5,552			5,591			5,622			5,643			3	%		—	%
Average long-term mutual fund assets (U.S. platform)(in millions)	$	334,883		$	357,647		$	371,196		$	377,131		$	401,434			20	%		6	%
Average investor margin loans (U.S. platform) (in millions)	$	7,987		$	8,212		$	8,235		$	8,845		$	8,848			11	%		—	%
Broker-Dealer:
Average tri-party repo balances(in billions)	$	2,113		$	2,070		$	2,037		$	1,952		$	2,005			(5	)%		3	%

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

(b) Preliminary.

(c) Includes the AUC/A of CIBC Mellon Global Securities Services Company (“CIBC Mellon”), a joint venture with the Canadian Imperial Bank of Commerce, of $1.1 trillion at Dec. 31, 2012, $1.2 trillion at March 31, 2013, $1.1 trillion at June 30, 2013 and $1.2 trillion at both Sept. 30, 2013 and Dec. 31, 2013.

(d) Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities on loan relating to CIBC Mellon.

(e) Excludes securities booked on BNY Mellon beginning in the fourth quarter of 2013 resulting from the CIBC Mellon joint venture, which totaled $62 billion at Dec. 31, 2013.

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BNY Mellon 4Q13 Quarterly Earnings Review

The following table presents the value of certain market indices at period end and on an average basis.

Market indices											4Q13 vs.
	4Q12		1Q13		2Q13		3Q13		4Q13		4Q12			3Q13
S&P 500 Index(a)		1426		1569		1606		1682		1848		30	%		10	%
S&P 500 Index – daily average		1418		1514		1609		1675		1769		25			6
FTSE 100 Index(a)		5898		6412		6215		6462		6749		14			4
FTSE 100 Index – daily average		5844		6300		6438		6530		6612		13			1
MSCI World Index(a)		1339		1435		1434		1544		1661		24			8
MSCI World Index – daily average		1312		1405		1463		1511		1602		22			6
Barclays Capital Aggregate BondSM Index(a)		366		356		343		356		354		(3	)		(1	)
NYSE and NASDAQ share volume(in billions)		174		174		186		166		179		3			8
JPMorgan G7 Volatility Index – daily average(b)		7.56		9.02		9.84		9.72		8.20		8			(16	)

(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 4Q13 Quarterly Earnings Review

FEE AND OTHER REVENUE

Fee and other revenue																4Q13 vs.
(dollars in millions)	4Q12			1Q13			2Q13			3Q13			4Q13			4Q12			3Q13
Investment services fees:
Asset servicing(a)	$	945		$	969		$	988		$	964		$	984			4	%		2	%
Clearing services		294			304			321			315			324			10			3
Issuer services		215			237			294			322			237			10			(26	)
Treasury services		141			141			139			137			137			(3	)		—
Total investment services fees		1,595			1,651			1,742			1,738			1,682			5			(3	)
Investment management and performance fees		853			822			848			821			904			6			10
Foreign exchange and other trading revenue		139			161			207			160			146			5			(9	)
Distribution and servicing		52			49			45			43			43			(17	)		—
Financing-related fees		45			41			44			44			43			(4	)		(2	)
Investment and other income		116			72			269			135			(60	)		N/M			N/M
Total fee revenue		2,800			2,796			3,155			2,941			2,758			(2	)		(6	)
Net securities gains		50			48			32			22			39			N/M			N/M
Total fee and other revenue – GAAP	$	2,850		$	2,844		$	3,187		$	2,963		$	2,797			(2	)%		(6	)%
Fee revenue as a percentage of total revenue excluding net securities gains		78	%		78	%		79	%		79	%		78	%

(a) Asset servicing fees include securities lending revenue of $41 million in 4Q12, $39 million in 1Q13, $50 million in 2Q13, $35 million in 3Q13 and $31 million in 4Q13.

N/M – Not meaningful.

KEY POINTS

• Asset servicing fees were $984 million, an increase of 4% year-over-year and 2% sequentially. Both increases primarily reflect higher market values, organic growth and higher collateral management fees in Global Collateral Services. The year-over-year increase was partially offset by lower securities lending revenue primarily due to lower spreads.

• Clearing services fees were $324 million, an increase of 10% year-over-year and 3% sequentially. The year-over-year increase was driven by higher mutual fund fees, asset-based fees and volumes, partially offset by higher money market fee waivers. The sequential increase was primarily driven by higher clearing revenue and mutual funds fees.

• Issuer services fees were $237 million, an increase of 10% year-over-year and a decrease of 26% sequentially. The year-over-year increase primarily reflects higher Depositary Receipts revenue due to corporate actions, partially offset by the continued run-off of high margin securitizations in Corporate Trust. The sequential decrease primarily resulted from seasonally lower Depositary Receipts revenue.

• Investment management and performance fees were $904 million, an increase of 6% year-over-year and 10% sequentially. The growth rates in both prior periods were negatively impacted by approximately 1% due to the sale of the Newton private client business. The year-over-year increase was primarily driven by higher equity market values, net new business and higher performance fees, partially offset by higher money market fee waivers and the average impact of the stronger U.S. dollar. The sequential increase primarily reflects seasonally higher performance fees and higher equity market values.

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BNY Mellon 4Q13 Quarterly Earnings Review

• Foreign exchange and other trading revenue

(in millions)	4Q12		1Q13		2Q13		3Q13			4Q13
Foreign exchange	$	106	$	149	$	179	$	154		$	126
Other trading revenue:
Fixed income		25		8		12		(2	)		20
Equity/other		8		4		16		8			—
Total other trading revenue		33		12		28		6			20
Total foreign exchange and other trading revenue	$	139	$	161	$	207	$	160		$	146

Foreign exchange and other trading revenue totaled $146 million in 4Q13 compared with $139 million in 4Q12 and $160 million in 3Q13. In 4Q13, foreign exchange revenue totaled $126 million, an increase of 19% year-over-year and a decrease of 18% sequentially. The year-over-year increase primarily reflects higher volumes and volatility. The sequential decrease was primarily driven by lower volatility, partially offset by higher volumes. Other trading revenue was $20 million in 4Q13 compared with $33 million in 4Q12 and $6 million in 3Q13. The year-over-year decrease primarily reflects lower derivatives trading revenue. The sequential increase was primarily driven by higher fixed income trading revenue, partially offset by lower equity derivatives trading revenue.

• Investment and other income

(in millions)	4Q12			1Q13			2Q13		3Q13			4Q13
Corporate/bank-owned life insurance	$	41		$	34		$	32	$	38		$	40
Asset-related gains		22			7			7		35			22
Seed capital gains		7			6			1		7			20
Expense reimbursements from joint ventures		9			11			8		12			11
Private equity gains (losses)		4			(2	)		5		(2	)		5
Transitional service agreements		5			5			4		—			2
Lease residual gains		14			1			10		7			—
Equity investment revenue (loss)		(1	)		13			200		48			(163	)
Other income (loss)		15			(3	)		2		(10	)		3
Total investment and other income	$	116		$	72		$	269	$	135		$	(60	)

Investment and other income was a loss of $60 million in 4Q13 compared with income of $116 million in 4Q12 and income of $135 million in 3Q13. The decreases compared with both prior periods primarily reflect a loss related to an equity investment.

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BNY Mellon 4Q13 Quarterly Earnings Review

NET INTEREST REVENUE

Net interest revenue																4Q13 vs.
(dollars in millions)	4Q12			1Q13			2Q13			3Q13			4Q13			4Q12			3Q13
Net interest revenue (non-FTE)	$	725		$	719		$	757		$	772		$	761			5	%		(1	)%
Net interest revenue (FTE) – Non-GAAP		740			733			771			787			781			6			(1	)
Net interest margin (FTE)		1.09	%		1.11	%		1.15	%		1.16	%		1.09	%		—	bps		(7	) bps
Selected average balances:
Cash/interbank investments	$	118,796		$	111,685		$	106,561		$	116,165		$	132,198			11	%		14	%
Trading account securities		5,294			5,878			6,869			5,523			6,173			17			12
Securities		102,512			101,912			107,138			101,206			96,640			(6	)		(5	)
Loans		43,613			46,279			47,913			48,256			50,768			16			5
Interest-earning assets		270,215			265,754			268,481			271,150			285,779			6			5
Interest-bearing deposits		142,719			147,728			151,219			153,547			157,020			10			2
Noninterest-bearing deposits		79,987			70,337			70,648			72,075			79,999			—			11
Selected average yields/rates:
Cash/interbank investments		0.43	%		0.41	%		0.41	%		0.41	%		0.40	%
Trading account securities		2.54			2.40			2.33			2.83			2.82
Securities		1.94			1.88			1.84			1.98			2.02
Loans		1.89			1.78			1.76			1.73			1.64
Interest-earning assets		1.27			1.26			1.27			1.28			1.21
Interest-bearing deposits		0.09			0.08			0.07			0.06			0.06
Average cash/interbank investments as a percentage of average interest-earning assets		44	%		42	%		40	%		43	%		46	%
Average noninterest-bearing deposits as a percentage of average interest-earning assets		30	%		26	%		26	%		27	%		28	%

bps – basis points.

FTE – fully taxable equivalent.

KEY POINTS

• Net interest revenue totaled $761 million in 4Q13, an increase of $36 million compared with 4Q12 and a decrease of $11 million sequentially. The year-over-year increase in net interest revenue was primarily driven by higher average interest-earning assets. The sequential decrease primarily reflects a change in the mix of interest-earning assets, partially offset by an increase in average interest-earning assets driven by higher deposits.

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BNY Mellon 4Q13 Quarterly Earnings Review

NONINTEREST EXPENSE

Noninterest expense																4Q13 vs.
(dollars in millions)	4Q12			1Q13			2Q13			3Q13			4Q13			4Q12			3Q13
Staff:
Compensation	$	911		$	885		$	891		$	915		$	929			2	%		2	%
Incentives		311			338			364			339			343			10			1
Employee benefits		235			249			254			262			250			6			(5	)
Total staff		1,457			1,472			1,509			1,516			1,522			4			—
Professional, legal and other purchased services		322			295			317			296			344			7			16
Software and equipment		233			228			238			226			241			3			7
Net occupancy		156			163			159			153			154			(1	)		1
Distribution and servicing		108			106			111			108			110			2			2
Business development		88			68			90			63			96			9			52
Sub-custodian		64			64			77			71			68			6			(4	)
Other		255			307			215			249			258			1			4
Amortization of intangible assets		96			86			93			81			82			(15	)		1
M&I, litigation and restructuring charges		46			39			13			16			2			N/M			N/M
Total noninterest expense – GAAP	$	2,825		$	2,828		$	2,822		$	2,779		$	2,877			2	%		4	%
Total staff expense as a percentage of total revenue		40	%		41	%		38	%		40	%		42	%
Memo:
Total noninterest expense excluding amortizationof intangible assets and M&I, litigation andrestructuring charges – Non-GAAP	$	2,683		$	2,703		$	2,716		$	2,682		$	2,793			4	%		4	%

N/M – Not meaningful.

KEY POINTS

Total noninterest expense increased 4% both year-over-year and sequentially excluding amortization of intangible assets and M&I, litigation and restructuring charges (Non-GAAP).

• The year-over-year increase primarily resulted from:

• Increased staff expense resulting from higher incentives driven by higher pre-tax income, as well as increased employee benefit costs due to higher pension expense.

• Higher legal expense related to litigation defense.

• Increased consulting expense driven by regulatory/compliance requirements and in support of business initiatives.

• Higher business development expense primarily reflecting the corporate branding campaign and other marketing initiatives.

• The sequential increase primarily resulted from higher legal, consulting and business development expenses, primarily reflecting the factors noted above as well as seasonality and the timing of client conferences and corporate sponsorships.

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BNY Mellon 4Q13 Quarterly Earnings Review

OPERATIONAL EXCELLENCE INITIATIVES UPDATE

Expense initiatives (pre-tax)													Original annualized
	Program savings												targeted savings by
(dollar amounts in millions)	FY12		1Q13		2Q13		3Q13		4Q13		FY13		the end of 2013 (a)
Business operations	$	238	$	84	$	93	$	103	$	109	$	389	$310 - $320
Technology		82		27		30		36		39		132	$105 - $110
Corporate services		77		26		27		31		31		115	$85 - $90
Gross savings(b)	$	397	$	137	$	150	$	170	$	179	$	636	$500 - $520
Incremental program expenses to achieve goals(c)	$	88	$	16	$	11	$	11	$	20	$	58	$70 - $90

(a) Original target established at the inception of the program in 2011.

(b) Represents the estimated pre-tax run rate expense savings since program inception in 2011. Total Company actual operating expense may increase or decrease due to other factors.

(c) Program costs include incremental costs to plan and execute the programs including dedicated program managers, consultants, severance and other costs. These costs will fluctuate by quarter. Program costs may include restructuring expenses, where applicable.

Accomplishments

During 2013, we accomplished the targeted program savings of $650-700 million one year ahead of schedule by achieving savings of $716 million on a run-rate basis in 4Q13.

• Realized savings from business restructuring, management rationalization and vendor management in Investment Services.

• Realized savings from reengineering activities relating to Investment Boutique restructurings and Dreyfus back office operations consolidations.

• Realized savings from insourcing of third party contract developers to our global delivery centers and staffing efficiencies in the Technology organization.

• Realized savings from optimizing internal technology platforms used by employees.

• Executed an enhanced procurement process to reduce operating expenses.

• Continued the global footprint position migrations. Lowered operating costs as we continued job migrations to the new Eastern European Global Delivery Center and our existing Global Delivery Centers.

• Consolidated offices and reduced real estate by an additional 250,000 square feet, primarily in the NY metro region.

• Moved the New York-based treasury and trading operations from leased space in December 2013 and January 2014 and consolidated into an owned building in downtown Manhattan which will facilitate future savings.

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BNY Mellon 4Q13 Quarterly Earnings Review

CAPITAL

The following table presents our capital ratios.

	Dec. 31,			Sept. 30,			Dec. 31,
Capital ratios	2012			2013			2013(a)
Estimated Basel III Tier 1 common equity ratio – Non-GAAP(b)(c):
Standardized Approach		N/A			10.1	%		10.6	%
Advanced Approach		9.8	%		11.1			11.3	(d)
Basel I Tier 1 common equity to risk-weighted assets ratio – Non-GAAP(c)		13.5			14.2			14.5
Basel I Tier 1 capital ratio		15.0			15.8			16.2
Basel I Total (Tier 1 plus Tier 2) capital ratio		16.3			16.8			17.0
Basel I leverage capital ratio		5.3			5.6			5.4
BNY Mellon shareholders’ equity to total assets ratio(c)		10.1			9.9			10.0
BNY Mellon common shareholders’ equity to total assets ratio(c)		9.9			9.5			9.6
Tangible BNY Mellon shareholders’ equity to tangible assets of operations ratio – Non-GAAP(c)		6.4			6.4			6.8

(a) Basel III and Basel I ratios are preliminary.

(b) At Dec. 31, 2013 and Sept. 30, 2013, the estimated Basel III Tier 1 common equity ratio is based on our interpretation of and expectations regarding the final rules released by the Board of Governors of the Federal Reserve (the “Federal Reserve”) on July 2, 2013, on a fully phased-in basis. For periods prior to June 30, 2013, these ratios were estimated using our interpretation of the Federal Reserve’s Notices of Proposed Rulemaking (“NPRs”) dated June 7, 2012, on a fully phased-in basis.

(c) See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 19 for a calculation of these ratios.

(d) Changes in January 2014 to the probable loss model associated with unsecured wholesale credit exposures within our Advanced Approach capital model will impact risk-weighted assets. The Company did not include the impact at Dec. 31, 2013. However, a preliminary estimate of the revised methodology to the portfolio at Sept. 30, 2013 would have added approximately 6% to the risk-weighted assets.

N/A – Not available.

Quarterly impact to the estimated Basel III Tier 1 common equity ratio – Non-GAAP

	Standardized			Advanced
	Approach			Approach
Estimated Basel III Tier 1 common equity ratio – Non-GAAP at Sept. 30, 2013		10.1	%		11.1	%
Impacted by:
Net capital generation		5 bps			5 bps
Change in accumulated other comprehensive income (loss) and net pension fund assets		(6	) bps		(6	) bps
Change in risk-weighted assets		42 bps			6 bps
Other(a)		12 bps			14 bps
Estimated Basel III Tier 1 common equity ratio – Non-GAAP at Dec. 31, 2013		10.6	%		11.3	%

(a) Includes foreign currency translation.

bps – basis points.

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BNY Mellon 4Q13 Quarterly Earnings Review

INVESTMENT SECURITIES PORTFOLIO

At Dec. 31, 2013, the fair value of our investment securities portfolio totaled $99.4 billion. The net unrealized pre-tax gain on our total securities portfolio was $309 million at Dec. 31, 2013 compared with $723 million at Sept. 30, 2013. The decrease in the net unrealized pre-tax gain was primarily driven by an increase in market interest rates. During 4Q13, we received $181 million of paydowns of sub-investment grade securities and sold $83 million of sub-investment grade securities.

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

Investment securities portfolio	Sep. 30,       2013       Fair value			4Q13 change in unrealized gain/(loss)			Dec. 31, 2013					Fair value as a % of amortized cost(a)			Unrealized gain/(loss)			Ratings
(dollars in millions)							Amortized cost		Fair value									AAA/ AA-			A+/ A-			BBB+/ BBB-			BB+ and lower			Not rated
Agency RMBS	$	41,663		$	(294	)	$	40,132	$	39,673			99	%	$	(459	)		100	%		—	%		—	%		—	%		—	%
U.S. Treasury securities		14,267			(73	)		16,687		16,827			101			140			100			—			—			—			—
Sovereign debt/ sovereign guaranteed(b)		11,210			(36	)		12,003		12,028			100			25			98			—			2			—			—
Non-agency RMBS (c)		2,769			9			2,131		2,695			78			564			—			1			2			93			4
Non-agency RMBS		1,395			6			1,334		1,335			92			1			1			11			25			62			1
European floating rate notes (d)		3,120			21			2,922		2,878			98			(44	)		66			29			—			5			—
Commercial MBS		3,687			(10	)		4,052		4,064			100			12			91			8			1			—			—
State and political subdivisions		6,775			(16	)		6,750		6,718			100			(32	)		80			18			1			—			1
Foreign covered bonds (e)		2,855			(2	)		2,798		2,872			103			74			100			—			—			—			—
Corporate bonds		1,504			(13	)		1,808		1,815			100			7			21			66			13			—			—
CLO		1,450			3			1,485		1,496			101			11			100			—			—			—			—
U.S. Government agency debt		1,490			(6	)		1,356		1,354			100			(2	)		100			—			—			—			—
Consumer ABS		2,490			1			2,894		2,891			100			(3	)		94			6			—			—			—
Other(f)		3,193			(4	)		2,769		2,784			101			15			33			60			—			—			7
Total investment securities	$	97,868	(g)	$	(414	)	$	99,121	$	99,430	(g)		99	%	$	309			89	%		5	%		1	%		4	%		1	%

(a) Amortized cost before impairments.

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

(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 enhancements, 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 Canada, UK and Netherlands.

(f) Includes commercial paper of $2.1 billion and $1.7 billion, fair value, and money market funds of $941 million and $938 million, fair value, at Sept. 30, 2013 and Dec. 31, 2013, respectively.

(g) Includes net unrealized gains on derivatives hedging securities available-for-sale of $469 million at Sept. 30, 2013 and $678 million at Dec. 31, 2013.

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BNY Mellon 4Q13 Quarterly Earnings Review

NONPERFORMING ASSETS

Nonperforming assets	Dec. 31,			Sept. 30,			Dec. 31,
(dollars in millions)	2012			2013			2013
Nonperforming loans:
Other residential mortgages	$	158		$	128		$	117
Commercial		27			15			15
Wealth management loans and mortgages		30			12			11
Foreign loans		9			9			6
Commercial real estate		18			4			4
Financial institutions		3			1			—
Total nonperforming loans		245			169			153
Other assets owned		4			3			3
Total nonperforming assets(a)	$	249		$	172		$	156
Nonperforming assets ratio		0.53	%		0.34	%		0.30	%
Allowance for loan losses/nonperforming loans		108.6			121.9			137.3
Total allowance for credit losses/nonperforming loans		158.0			200.6			224.8

(a) Loans of consolidated investment management funds are not part of BNY Mellon’s loan portfolio. Included in the loans of consolidated investment management funds are nonperforming loans of $174 million at Dec. 31, 2012, $31 million at Sept. 30, 2013 and $16 million at Dec. 31, 2013. These loans are recorded at fair value and therefore do not impact the provision for credit losses and allowance for loan losses, and accordingly are excluded from the nonperforming assets table above.

Nonperforming assets were $156 million at Dec. 31, 2013, a decrease of $16 million from $172 million at Sept. 30, 2013. The decrease primarily resulted from returns to accrual status and sales of loans in the other residential mortgage portfolio.

ALLOWANCE FOR CREDIT LOSSES, PROVISION AND NET CHARGE-OFFS

Allowance for credit losses, provision and net charge-offs
(in millions)	4Q12			3Q13			4Q13
Allowance for credit losses – beginning of period	$	456		$	337		$	339
Provision for credit losses		(61	)		2			6
Net (charge-offs) recoveries:
Foreign		—			1			(3	)
Other residential mortgages		(3	)		—			—
Financial institutions		(5	)		—			—
Commercial		—			(1	)		2
Net (charge-offs) recoveries		(8	)		—			(1	)
Allowance for credit losses – end of period	$	387		$	339		$	344
Allowance for loan losses	$	266		$	206		$	210
Allowance for lending-related commitments		121			133			134

The provision for credit losses was $6 million in 4Q13, a credit of $61 million in 4Q12 and a provision of $2 million in 3Q13. The provision in the fourth quarter of 2013 was driven by an increase in the allowance for a municipal-related entity.

REVIEW OF BUSINESSES

Segment results are subject to reclassification whenever improvements are made in the measurement principles or when organizational changes are made. Internal crediting rates for deposits are regularly updated to reflect the value of deposit balances and distribution of overall interest revenue. In 4Q13, restructuring charges were recorded in the businesses. Prior to 4Q13, all restructuring charges were reported in the Other segment.

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BNY Mellon 4Q13 Quarterly Earnings Review

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.

																4Q13 vs.
(dollars in millions, unless otherwise noted)	4Q12			1Q13			2Q13			3Q13			4Q13			4Q12			3Q13
Revenue:
Investment management fees:
Mutual funds	$	293		$	295		$	295		$	289		$	298			2	%		3	%
Institutional clients		349			355			360			362			389			11			7
Wealth management(a)		157			161			165			164			149			(5	)		(9	)
Investment management fees		799			811			820			815			836			5			3
Performance fees		57			15			33			10			72			26			N/M
Investment management and performance fees		856			826			853			825			908			6			10
Distribution and servicing		50			46			44			41			41			(18	)		—
Other(b)		25			19			25			54			44			N/M			N/M
Total fee and other revenue(b)		931			891			922			920			993			7			8
Net interest revenue		56			62			63			67			68			21			1
Total revenue		987			953			985			987			1,061			7			7
Noninterest expense (ex. amortization of intangible assets)		713			704			674			697			769			8			10
Income before taxes (ex. amortization of intangible assets)		274			249			311			290			292			7			1
Amortization of intangible assets		48			39			39			35			35			(27	)		—
Income before taxes	$	226		$	210		$	272		$	255		$	257			14	%		1	%
Pre-tax operating margin		23	%		22	%		28	%		26	%		24	%
Pre-tax operating margin (ex. amortization of intangible assets and net of distribution and servicing expense)(c)		31	%		29	%		36	%		33	%		31	%
Metrics:
Changes in AUM(in billions) (d):
Beginning balance of AUM	$	1,359		$	1,386		$	1,429		$	1,432		$	1,532
Net inflows (outflows):
Long-term		14			40			21			32			2
Money market		(6	)		(13	)		(1	)		13			6
Total net inflows (outflows)		8			27			20			45			8
Net market/currency impact/other		19			16			(17	)		55			43
Ending balance of AUM(e)	$	1,386		$	1,429		$	1,432		$	1,532		$	1,583	(f)		14	%		3	%
AUM at period end, by product type(d):
Equity securities		33	%		34	%		35	%		35	%		35	%
Fixed income securities		38			39			39			39			39
Money market		22			20			19			19			19
Alternative investments and overlay		7			7			7			7			7
Total AUM(e)		100	%		100	%		100	%		100	%		100	%(f)
Wealth management:
Average loans	$	8,478		$	8,972		$	9,253		$	9,453		$	9,755			15	%		3	%
Average deposits	$	12,332		$	13,646		$	13,306		$	13,898		$	14,161			15	%		2	%

(a) Includes revenue related to the Newton private client business prior to the sale of the business in 3Q13.

(b) Total fee and other revenue includes the impact of the consolidated investment management funds. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 19. Additionally, other revenue includes asset servicing and treasury services revenue.

(c) 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 $106 million, $104 million, $110 million, $107 million and $108 million, respectively.

(d) Excludes securities lending cash management assets.

(e) Excludes assets managed in the Investment Services business.

(f) Preliminary.

N/M – Not meaningful.

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BNY Mellon 4Q13 Quarterly Earnings Review

INVESTMENT MANAGEMENT KEY POINTS

• Assets under management were a record $1.58 trillion at Dec. 31, 2013, an increase of 14% year-over-year and 3% sequentially. The year-over-year increase primarily resulted from net new business and higher equity market values. The sequential increase was primarily due to higher equity market values.

• 17^th consecutive quarter of positive long-term inflows.

• Net long-term inflows were $2 billion and short-term inflows were $6 billion in 4Q13.

• Total revenue was $1.06 billion, an increase of 7% both year-over-year and sequentially. Excluding the impact of the sale of the Newton private client business, total revenue increased 9% year-over-year and 12% sequentially. The year-over-year increase primarily reflects higher equity market values, net new business and higher performance fees, partially offset by higher money market fee waivers and the average impact of the stronger U.S. dollar. The sequential increase primarily reflects seasonally higher performance fees, higher equity market values and net new business.

• Investment management fees were $836 million, an increase of 5% year-over-year and 3% sequentially. Excluding the impact of the sale of the Newton private client business, investment management fees increased 6% year-over-year and 4% sequentially. The year-over-year increase primarily reflects higher equity market values and net new business, partially offset by higher money market fee waivers and the average impact of a stronger U.S. dollar. The sequential increase was primarily driven by higher equity market values and the average impact of a weaker U.S. dollar.

• Performance fees were $72 million in 4Q13 compared with $57 million in 4Q12 and $10 million in 3Q13. The year-over-year increase primarily reflects strong investment performance. The sequential increase primarily reflects seasonality.

• Net interest revenue increased 21% year-over-year and 1% sequentially. Both the year-over-year and sequential increases resulted from higher average loans and deposits.

• Average loans increased 15% year-over-year and 3% sequentially; average deposits increased 15% year-over-year and 2% sequentially.

• Total noninterest expense (ex. amortization of intangible assets) increased 8% year-over-year and 10% sequentially. Excluding the impact of the sale of the Newton private client business, total noninterest expense increased 7% year-over-year and 10% sequentially. Both increases primarily reflect higher incentive expense driven by improved performance, partially offset by savings from operational initiatives. Additionally, the year-over-year increase reflects investments in strategic initiatives, while the sequential increase reflects seasonally higher business development expense.

• 47% non-U.S. revenue in 4Q13 vs. 47% in 4Q12.

• BNY Mellon Asset Management International was the winner of the 2013 Gold Standard Award for Fund Management, BNY Mellon was the winner of 2013 Best Targeted Absolute Return Fund Provider by Investment Life & Pensions Moneyfacts and the Newton Asian Income Fund was named a Top 5 Performer by the FERI Fund Award.

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BNY Mellon 4Q13 Quarterly Earnings Review

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

																4Q13 vs.
(dollars in millions, unless otherwise noted)	4Q12			1Q13			2Q13			3Q13			4Q13			4Q12			3Q13
Revenue:
Investment service fees:
Asset servicing	$	916		$	943		$	961		$	939		$	957			4	%		2	%
Clearing services		294			304			321			315			324			10			3
Issuer services		213			236			294			321			236			11			(26	)
Treasury services		136			137			135			135			137			1			1
Total investment services fees		1,559			1,620			1,711			1,710			1,654			6			(3	)
Foreign exchange and other trading revenue		128			172			194			173			148			16			(14	)
Other(a)		75			70			66			64			58			(23	)		(9	)
Total fee and other revenue(a)		1,762			1,862			1,971			1,947			1,860			6			(4	)
Net interest revenue		583			653			633			619			609			4			(2	)
Total revenue		2,345			2,515			2,604			2,566			2,469			5			(4	)
Provision for credit losses		—			1			—			—			—			N/M			N/M
Noninterest expense (ex. amortization of intangible assets)		1,773			1,796			1,826			1,766			1,819			3			3
Income before taxes (ex. amortization of intangible assets)		572			718			778			800			650			14			(19	)
Amortization of intangible assets		48			47			54			46			47			(2	)		2
Income before taxes	$	524		$	671		$	724		$	754		$	603			15	%		(20	)%
Pre-tax operating margin		22	%		27	%		28	%		29	%		24	%
Pre-tax operating margin (ex. amortization of intangible assets)		24	%		29	%		30	%		31	%		26	%
Investment services fees as a percentage of noninterest expense(b)		90	%		92	%		94	%		97	%		90	%
Securities lending revenue	$	31		$	31		$	39		$	26		$	21			(32	)%		(19	)%
Metrics:
Average loans	$	24,868		$	26,697		$	27,814		$	27,865		$	31,210			26	%		12	%
Average deposits	$	204,164		$	200,221		$	204,499		$	206,068		$	216,216			6	%		5	%
AUC/A at period end(in trillions) (c)	$	26.3		$	26.3		$	26.2		$	27.4		$	27.6	(d)		5	%		1	%
Market value of securities on loan at period end(in billions) (e)	$	237		$	244		$	255		$	255		$	235	(f)		(1	)%		(8	)%
Asset servicing:
Estimated new business wins (AUC/A)(in billions)	$	190		$	205		$	201		$	110		$	123	(d)
Depositary Receipts:
Number of sponsored programs		1,379			1,359			1,349			1,350			1,335			(3	)%		(1	)%
Clearing services:
Global DARTS volume(in thousands)		181			213			217			212			213			18	%		—	%
Average active clearing accounts (U.S. platform)(in thousands)		5,489			5,552			5,591			5,622			5,643			3	%		—	%
Average long-term mutual fund assets (U.S. platform)	$	334,883		$	357,647		$	371,196		$	377,131		$	401,434			20	%		6	%
Average investor margin loans (U.S. platform)	$	7,987		$	8,212		$	8,235		$	8,845		$	8,848			11	%		—	%
Broker-Dealer:
Average tri-party repo balances (in billions)	$	2,113		$	2,070		$	2,037		$	1,952		$	2,005			(5	)%		3	%

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

(b) Noninterest expense excludes amortization of intangible assets and litigation expense.

(c) Includes the AUC/A of CIBC Mellon Global Securities Services Company (“CIBC Mellon”), a joint venture with the Canadian Imperial Bank of Commerce, of $1.1 trillion at Dec. 31, 2012, $1.2 trillion at March 31, 2013, $1.1 trillion at June 30, 2013, $1.2 trillion at both Sept. 30, 2013 and Dec. 31, 2013.

(d) Preliminary.

(e) Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities on loan relating to CIBC Mellon.

(f) Excludes securities booked on BNY Mellon beginning in the fourth quarter of 2013 resulting from the CIBC Mellon joint venture, which totaled $62 billion at Dec. 31, 2013.

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BNY Mellon 4Q13 Quarterly Earnings Review

INVESTMENT SERVICES KEY POINTS

• Investment services fees totaled $1.7 billion, an increase of 6% year-over-year and a decrease of 3% sequentially.

• Asset servicing fees (global custody, broker-dealer services and global collateral services) were $957 million in 4Q13 compared with $916 million in 4Q12 and $939 million in 3Q13. Both increases primarily reflect higher market values, organic growth and higher collateral management fees in Global Collateral Services. The year-over-year increase was partially offset by lower securities lending revenue due to lower spreads.

• Estimated new business wins (AUC/A) of $123 billion in 4Q13.

• Clearing services fees were $324 million in 4Q13 compared with $294 million in 4Q12 and $315 million in 3Q13. The year-over-year increase was driven by higher mutual fund fees, asset-based fees and volumes, partially offset by higher money market fee waivers. The sequential increase was primarily driven by higher clearing revenue and mutual funds fees.

• Issuer services fees (Corporate Trust and Depositary Receipts) were $236 million in 4Q13 compared with $213 million in 4Q12 and $321 million in 3Q13. The year-over-year increase primarily resulted from higher Depositary Receipts revenue due to corporate actions, partially offset by the continued run-off of high margin securitizations in Corporate Trust. The sequential decrease primarily reflects seasonally lower Depositary Receipts revenue.

• Treasury services fees were $137 million in 4Q13 compared with $136 million in 4Q12 and $135 million in 3Q13. Both increases primarily reflect higher cash management fees.

• Foreign exchange and other trading revenue was $148 million in 4Q13 compared with $128 million in 4Q12 and $173 million in 3Q13. The year-over-year increase was primarily driven by higher volumes and volatility. The sequential decrease primarily reflects lower volatility, partially offset by higher volumes.

• Net interest revenue was $609 million in 4Q13 compared with $583 million in 4Q12 and $619 million in 3Q13. The year-over-year increase primarily reflects higher average loans and deposits. The sequential decrease primarily reflects lower spreads, partially offset by higher average loans and deposits.

• Generated 200 basis points of positive operating leverage year-over-year.

• Noninterest expense (excluding amortization of intangible assets) was $1.819 billion in 4Q13 compared with $1.773 billion in 4Q12 and $1.766 billion in 3Q13. The year-over-year increase was in support of higher revenue growth. The sequential increase was primarily driven by higher legal expense in support of litigation defense and seasonally higher business development expense. Both comparisons also reflect higher consulting expense driven by regulatory/compliance requirements and business initiatives.

• 35% non-U.S. revenue in 4Q13 vs. 34% in 4Q12.

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BNY Mellon 4Q13 Quarterly Earnings Review

OTHER SEGMENTprimarily includes credit-related activities, leasing operations, corporate treasury activities, global markets and institutional banking services, business exits, M&I expenses and other corporate revenue and expense items.

(in millions)	4Q12			1Q13			2Q13			3Q13			4Q13
Revenue:
Fee and other revenue	$	188		$	125		$	320		$	120		$	(37	)
Net interest revenue		86			4			61			86			84
Total revenue		274			129			381			206			47
Provision for credit losses		(61	)		(25	)		(19	)		2			6
Noninterest expense		243			242			229			235			207
Income (loss) before taxes	$	92		$	(88	)	$	171		$	(31	)	$	(166	)
Average loans and leases	$	10,267		$	10,610		$	10,846		$	10,938		$	9,803

KEY POINTS

• Total fee and other revenue decreased $225 million compared with 4Q12 and $157 million compared with 3Q13. Both decreases primarily resulted from the loss related to an equity investment.

• Net interest revenue decreased $2 million compared with both 4Q12 and 3Q13. Both decreases primarily reflect lower average loans and leases.

• The provision for credit losses was $6 million in 4Q13 driven by an increase in the allowance for a municipal-related entity.

• Noninterest expense decreased $36 million compared with 4Q12 and $28 million compared with 3Q13. The year-over-year decrease primarily reflects lower M&I expense. The sequential decrease was primarily due to lower staff expense.

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BNY Mellon 4Q13 Quarterly Earnings Review

SUPPLEMENTAL INFORMATION – EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES

BNY Mellon has included in this Earnings Review certain Non-GAAP financial measures based upon Tier 1 common equity and tangible common shareholders’ equity. BNY Mellon believes that the ratio of Tier 1 common equity to risk-weighted assets and the ratio of tangible common shareholders’ equity to tangible assets of operations are measures of capital strength that provide additional useful information to investors, supplementing the Tier 1 and Total capital ratios which are utilized by regulatory authorities. The ratio of Basel I Tier 1 common equity to risk-weighted assets excludes preferred stock and trust preferred securities from the numerator of the ratio. Unlike the Basel I Tier 1 and Total capital ratios, the tangible common shareholders’ equity ratio fully incorporates those changes in investment securities valuations which are reflected in total shareholders’ equity. In addition, this ratio is expressed as a percentage of the actual book value of assets, as opposed to a percentage of a risk-based reduced value established in accordance with regulatory requirements, although BNY Mellon in its calculation has excluded certain assets which are given a zero percent risk-weighting for regulatory purposes. Further, BNY Mellon believes that the return on tangible common equity measure, which excludes goodwill and intangible assets net of deferred tax liabilities, is a useful additional measure for investors because it presents a measure of BNY Mellon’s performance in reference to those assets which are productive in generating income. BNY Mellon has presented its estimated Basel III Tier 1 common equity ratio based on its interpretation, expectations and understanding of the final Basel III rules released by the Federal Reserve on July 2, 2013, on a fully phased-in basis and on the application of such rules to BNY Mellon’s businesses as currently conducted. The estimated Basel III Tier 1 common equity ratio is necessarily subject to, among other things, BNY Mellon’s further review and implementation of the final Basel III rules, anticipated compliance with all necessary enhancements to model calibration, and other refinements, further implementation guidance from regulators and any changes BNY Mellon may make to its businesses. Consequently, BNY Mellon’s estimated Basel III Tier 1 common equity ratio may change based on these factors. Management views the estimated Basel III Tier 1 common equity ratio as a key measure in monitoring BNY Mellon’s capital position and progress against future regulatory capital standards. Additionally, the presentation of the estimated Basel III Tier 1 common equity ratio is intended to allow investors to compare BNY Mellon’s estimated Basel III Tier 1 common equity ratio with estimates presented by other companies.

BNY Mellon has presented revenue measures which exclude the effect of noncontrolling interests related to consolidated investment management funds and a loss related to an equity investment; and expense measures which exclude M&I expenses, litigation charges, restructuring charges and amortization of intangible assets. Return on equity measures and operating margin measures, which exclude some or all of these items, are also presented. Return on equity measures also exclude the net charge (benefit) related to the disallowance of certain foreign tax credits. 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.

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BNY Mellon 4Q13 Quarterly Earnings Review

The presentation of income from consolidated investment management funds, net of net income 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. The adjustment to an FTE basis has no impact on net income. Each of these measures as described above is used by management to monitor financial performance, both on a company-wide and on a business-level basis.

The following table presents the reconciliation of net income and diluted earnings per common share.

Reconciliation of net income and diluted EPS – GAAP to Non-GAAP	4Q13
(in millions, except per common share amounts)	Net income		Diluted EPS
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP	$	513	$	0.44
Loss related to an equity investment		115		0.10
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – Non-GAAP	$	628	$	0.54

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

Pre-tax operating margin
(dollars in millions)	4Q12			1Q13			2Q13			3Q13			4Q13
Income before income taxes – GAAP	$	853		$	809		$	1,206		$	986		$	711
Less: Net income attributable to noncontrolling interests of consolidated investment management funds		11			16			39			8			17
Add: Amortization of intangible assets		96			86			93			81			82
M&I, litigation and restructuring charges		46			39			13			16			2
Income before income taxes excluding net income attributable to noncontrolling interests of consolidated investment management funds, amortization of intangible assets and M&I, litigation and restructuring charges – Non-GAAP	$	984		$	918		$	1,273		$	1,075		$	778
Fee and other revenue – GAAP	$	2,850		$	2,844		$	3,187		$	2,963		$	2,797
Income from consolidated investment management funds – GAAP		42			50			65			32			36
Net interest revenue – GAAP		725			719			757			772			761
Total revenue – GAAP		3,617			3,613			4,009			3,767			3,594
Less: Net income attributable to noncontrolling interests of consolidated investment management funds		11			16			39			8			17
Total revenue excluding net income attributable to noncontrolling interests of consolidated investment management funds – Non-GAAP	$	3,606		$	3,597		$	3,970		$	3,759		$	3,577
Pre-tax operating margin(a)		24	%		22	%		30	%		26	%		20	%
Pre-tax operating margin excluding net income attributable to noncontrolling interests of consolidated investment management funds, amortization of intangible assets and, M&I, litigation and restructuring charges – Non-GAAP(a)		27	%		26	%		32	%		29	%		22	%

(a) Income before taxes divided by total revenue.

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BNY Mellon 4Q13 Quarterly Earnings Review

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

Return on common equity and tangible common equity
(dollars in millions)	4Q12			1Q13			2Q13			3Q13			4Q13
Net income (loss) applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP	$	622		$	(266	)	$	833		$	967		$	513
Add: Amortization of intangible assets, net of tax		65			56			59			52			53
Net income (loss) applicable to common shareholders of The Bank of New York Mellon Corporation excludingamortization of intangible assets – Non-GAAP		687			(210	)		892			1,019			566
Add: M&I, litigation and restructuring charges		31			24			8			12			1
Net charge (benefit) related to the disallowance of certain foreign tax credits		—			854			—			(261	)		—
Net income applicable to common shareholders of The Bank of New York Mellon Corporation excluding amortization of intangible assets, M&I, litigation and restructuring charges and the net charge (benefit) related to the disallowance of certain foreign tax credits – Non-GAAP	$	718		$	668		$	900		$	770		$	567
Average common shareholders’ equity	$	34,962		$	34,898		$	34,467		$	34,264		$	35,698
Less: Average goodwill		18,046			17,993			17,957			17,975			18,026
Average intangible assets		4,860			4,758			4,661			4,569			4,491
Add: Deferred tax liability – tax deductible goodwill		1,130			1,170			1,200			1,262			1,302
Deferred tax liability – non-tax deductible intangible assets		1,310			1,293			1,269			1,242			1,222
Average tangible common shareholders’ equity – Non-GAAP	$	14,496		$	14,610		$	14,318		$	14,224		$	15,705
Return on common equity– GAAP(a)		7.1	%		N/M			9.7	%		11.2	%		5.7	%
Return on common equity excluding amortization of intangible assets, M&I, litigation and restructuring charges and the net charge (benefit) related to the disallowance of certain foreign tax credits – Non-GAAP(a)		8.2	%		7.8	%		10.5	%		8.9	%		6.3	%
Return on tangible common equity – Non-GAAP(a)		18.8	%		N/M			25.0	%		28.4	%		14.3	%
Return on tangible common equity excluding M&I, litigation and restructuring charges and the net charge (benefit) related to the disallowance of certain foreign tax credits – Non-GAAP(a)		19.7	%		18.5	%		25.2	%		21.5	%		14.3	%

(a) Annualized.

N/M – Not meaningful.

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

Income from consolidated investment management funds, net of noncontrolling interests
(in millions)	4Q12		1Q13		2Q13		3Q13		4Q13
Income from consolidated investment management funds	$	42	$	50	$	65	$	32	$	36
Less: Net income attributable to noncontrolling interests of consolidated investment management funds		11		16		39		8		17
Income from consolidated investment management funds, net of noncontrolling interests	$	31	$	34	$	26	$	24	$	19

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
(in millions)	4Q12		1Q13		2Q13		3Q13		4Q13
Investment management fees	$	19	$	20	$	20	$	20	$	20
Other (Investment income)		12		14		6		4		(1	)
Income from consolidated investment management funds, net of noncontrolling interests	$	31	$	34	$	26	$	24	$	19

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BNY Mellon 4Q13 Quarterly Earnings Review

The following table presents the calculation of the equity to assets ratio.

Equity to assets ratio	Dec. 31,			Sept. 30,			Dec. 31,
(dollars in millions, unless otherwise noted)	2012			2013			2013
BNY Mellon shareholders’ equity at period end – GAAP	$	36,431		$	36,959		$	37,521
Less: Preferred stock		1,068			1,562			1,562
BNY Mellon common shareholders’ equity at period end – GAAP		35,363			35,397			35,959
Less: Goodwill		18,075			18,025			18,073
Intangible assets		4,809			4,527			4,452
Add: Deferred tax liability – tax deductible goodwill		1,130			1,262			1,302
Deferred tax liability – non-tax deductible intangible assets		1,310			1,242			1,222
Tangible BNY Mellon common shareholders’ equity at period end – Non-GAAP	$	14,919		$	15,349		$	15,958
Total assets at period end – GAAP	$	358,990		$	371,952		$	374,310
Less: Assets of consolidated investment management funds		11,481			11,691			11,272
Subtotal assets of operations – Non-GAAP		347,509			360,261			363,038
Less: Goodwill		18,075			18,025			18,073
Intangible assets		4,809			4,527			4,452
Cash on deposit with the Federal Reserve and other central banks(a)		90,040			96,316			105,384
Tangible total assets of operations at period end – Non-GAAP	$	234,585		$	241,393		$	235,129
BNY Mellon shareholders’ equity to total assets – GAAP		10.1	%		9.9	%		10.0	%
BNY Mellon common shareholders’ equity to total assets – GAAP		9.9	%		9.5	%		9.6	%
Tangible BNY Mellon common shareholders’ equity to tangible assets of operations – Non-GAAP		6.4	%		6.4	%		6.8	%

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

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

Calculation of Basel I Tier 1 common equity to risk-weighted assets ratio – Non-GAAP	Dec. 31,			Sept. 30,			Dec. 31,
(dollars in millions)	2012			2013			2013(a)
Total Tier 1 capital – Basel I	$	16,694		$	18,074		$	18,336
Less: Trust preferred securities		623			324			330
Preferred stock		1,068			1,562			1,562
Total Tier 1 common equity	$	15,003		$	16,188		$	16,444
Total risk-weighted assets – Basel I	$	111,180		$	114,404		$	113,354
Basel I Tier 1 common equity to risk-weighted assets ratio – Non-GAAP		13.5	%		14.2	%		14.5	%

(a) Preliminary.

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BNY Mellon 4Q13 Quarterly Earnings Review

The following table presents the calculation of our estimated Basel III Tier 1 common equity ratio under the Standardized Approach and Advanced Approach.

Estimated Basel III Tier 1 common equity ratio – Non-GAAP(a)	Dec. 31,			Sept. 30,			Dec. 31,
(dollars in millions)	2012			2013			2013(b)
Total Tier 1 capital – Basel I	$	16,694		$	18,074		$	18,336
Adjustment to determine Basel III Tier 1 common equity:
Deferred tax liability – tax deductible intangible assets		78			82			70
Preferred stock		(1,068	)		(1,562	)		(1,562	)
Trust preferred securities		(623	)		(324	)		(330	)
Other comprehensive income (loss) and net pension fund assets:
Securities available-for-sale		1,350			487			387
Pension liabilities		(1,453	)		(1,348	)		(900	)
Net pensions fund assets		(249	)		(279	)		(713	)
Total other comprehensive income (loss) and net pension fund assets		(352	)		(1,140	)		(1,226	)
Equity method investments		(501	)		(479	)		(445	)
Deferred tax assets		(47	)		(26	)		(49	)
Other		18			18			16
Total estimated Basel III Tier 1 common equity	$	14,199		$	14,643		$	14,810
Under the Standardized Approach:
Total risk-weighted assets – Basel I		N/A		$	114,404		$	113,354
Add: Adjustments(c)		N/A			31,185			26,511
Total estimated Basel III risk-weighted assets		N/A		$	145,589		$	139,865
Estimated Basel III Tier 1 common equity ratio – Non-GAAP calculated under the Standardized Approach		N/A			10.1	%		10.6	%
Under the Advanced Approach:
Total risk-weighted assets – Basel I	$	111,180		$	114,404		$	113,354
Add: Adjustments(c)		33,104			17,179			17,495
Total estimated Basel III risk-weighted assets	$	144,284		$	131,583		$	130,849
Estimated Basel III Tier 1 common equity ratio – Non-GAAP calculated under the Advanced Approach		9.8	%		11.1	%		11.3	%(d)

(a) At Sept. 30, 2013 and Dec. 31, 2013, the estimated Basel III Tier 1 common equity ratio is based on our preliminary interpretation of and expectations regarding the final rules released by the Federal Reserve on July 2, 2013, on a fully phased-in basis. For periods prior to June 30, 2013, these ratios were estimated using our interpretation of the NPRs dated June 7, 2012, on a fully phased-in basis.

(b) Preliminary.

(c) Following are the primary differences between risk-weighted assets determined under Basel I and Basel III. Credit risk is determined under Basel I using predetermined risk-weights and asset classes and relies in part on the use of external credit ratings. Under Basel III both the Standardized and Advanced Approaches use a broader range of predetermined risk-weights and asset classes and certain alternatives to external credit ratings. Securitization exposure receives a higher risk-weighting under Basel III than Basel I, and Basel III includes additional adjustments for market risk, counterparty credit risk and equity exposures. Additionally, the Standardized Approach eliminates the use of the VaR approach for determining risk-weighted assets on certain repo-style transactions. Risk-weighted assets calculated under the Advanced Approach also include the use of internal credit models and parameters as well as an adjustment for operational risk

(d) Changes in January 2014 to the probable loss model associated with unsecured wholesale credit exposures within our Advanced Approach capital model will impact risk-weighted assets. The Company did not include the impact at Dec. 31, 2013. However, a preliminary estimate of the revised methodology to the portfolio at Sept. 30, 2013 would have added approximately 6% to the risk-weighted assets.

N/A – Not available.

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BNY Mellon 4Q13 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 our estimated capital ratios and expectations relating to those ratios, preliminary business metrics and statements made regarding our Operational Excellence Initiatives. 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, 2012 and BNY Mellon’s other filings with the Securities and Exchange Commission. All forward-looking statements in this Earnings Review speak only as of Jan. 17, 2014, 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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