The Bank of New York Mellon Corporation (BK) 8-K Bny Mellon Reports Fourth Quarter 2018 Earnings of

The Bank of New York Mellon Corporation

Financial Supplement

Fourth Quarter 2018

Table of Contents
Consolidated Results		Page
Consolidated Financial Highlights		3
Condensed Consolidated Income Statement		4
Condensed Consolidated Balance Sheet		5
Fee and Other Revenue		6
Average Balances and Interest Rates		7
Noninterest Expense		8
Capital and Liquidity		9
Key Market Metrics		10
Business Segment Results
Investment Services Business		11
Investment Management Business		13
AUM by Product, AUM Flows and Wealth Management Client Assets		14
Other Segment		15
Other
Investment Securities Portfolio		16
Allowance for Credit Losses and Nonperforming Assets		17
Supplemental Information – Explanation of GAAP and Non-GAAP Financial Measures		18

THE BANK OF NEW YORK MELLON CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(dollars in millions, except per common share amounts, or unless otherwise noted)																4Q18 vs.										FY18 vs.
	4Q18			3Q18			2Q18			1Q18			4Q17			3Q18		4Q17		FY18			FY17			FY17
Selected income statement data
Fee revenue	$	3,146		$	3,168		$	3,209		$	3,319		$	2,886		(1	)%	9	%	$	12,842		$	12,162		6	%
Net securities gains (losses)	—			—			1			(49		)	(26		)	N/M		N/M		(48		)	3			N/M
Fee and other revenue	3,146			3,168			3,210			3,270			2,860			(1	)	10		12,794			12,165			5
(Loss) income from consolidated investment management funds	(24		)	10			12			(11		)	17			N/M		N/M		(13		)	70			N/M
Net interest revenue	885			891			916			919			851			(1	)	4		3,611			3,308			9
Total revenue	4,007			4,069			4,138			4,178			3,728			(2	)	7		16,392			15,543			5
Provision for credit losses	—			(3		)	(3		)	(5		)	(6		)	N/M		N/M		(11		)	(24		)	N/M
Noninterest expense	2,987			2,738			2,747			2,739			3,006			9		(1	)	11,211			10,957			2
Income before income taxes	1,020			1,334			1,394			1,444			728			(24	)	40		5,192			4,610			13
Provision (benefit) for income taxes	150			220			286			282			(453		)	(32	)	N/M		938			496			N/M
Net income	$	870		$	1,114		$	1,108		$	1,162		$	1,181		(22	)%	(26	)%	$	4,254		$	4,114		3	%
Net income applicable to common shareholders of The Bank of New York Mellon Corporation	$	832		$	1,075		$	1,055		$	1,135		$	1,126		(23	)%	(26	)%	$	4,097		$	3,915		5	%
Diluted earnings per common share	$	0.84		$	1.06		$	1.03		$	1.10		$	1.08		(21	)%	(22	)%	$	4.04		$	3.72		9	%
Average common shares and equivalents outstanding - diluted (in thousands)	988,650			1,003,665			1,014,357			1,021,731			1,030,404			(1	)%	(4	)%	1,007,141			1,040,290			(3	)%
Financial ratios(Quarterly returns are annualized)
Pre-tax operating margin	25		%	33		%	34		%	35		%	20		%					32		%	30		%
Return on common equity (a)	8.7		%	11.2		%	11.2		%	12.2		%	12.1		%					10.8		%	10.8		%
Return on tangible common equity – Non-GAAP (a)	17.9		%	23.1		%	23.5		%	25.9		%	25.9		%					22.5		%	23.9		%
Percent of non-U.S. total revenue	36		%	37		%	37		%	37		%	39		%					37		%	36		%
Period end
Assets under custody and/or administration (“AUC/A”) (in trillions) (b)	$	33.1		$	34.5		$	33.6		$	33.5		$	33.3		(4	)%	(1	)%
Assets under management (“AUM”) (in trillions)	$	1.72		$	1.83		$	1.81		$	1.87		$	1.89		(6	)%	(9	)%
Book value per common share (a)	$	38.63		$	38.45		$	37.97		$	37.78		$	37.21
Tangible book value per common share – Non-GAAP (a)	$	19.04		$	19.35		$	19.00		$	18.78		$	18.24
Cash dividends per common share	$	0.28		$	0.28		$	0.24		$	0.24		$	0.24
Common dividend payout ratio	33		%	26		%	23		%	22		%	22		%
Closing stock price per common share	$	47.07		$	50.99		$	53.93		$	51.53		$	53.86
Market capitalization	$	45,207		$	50,418		$	53,927		$	52,080		$	54,584
Common shares outstanding (in thousands)	960,426			988,777			999,945			1,010,676			1,013,442
Capital ratios at period end(c)
Common Equity Tier 1 ("CET1") ratio	10.6		%	11.2		%	11.0		%	10.7		%	10.3		%
Tier 1 capital ratio	12.7		%	13.3		%	13.1		%	12.7		%	12.3		%
Total capital ratio	13.5		%	14.1		%	13.8		%	13.4		%	13.0		%
Supplementary leverage ratio ("SLR")	6.0		%	6.4		%	6.1		%	5.9		%	5.9		%
(a)    Non-GAAP information, for all periods presented, excludes goodwill and intangible assets, net of deferred tax liabilities. See "Supplemental Information - Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 18 for the reconciliation of Non-GAAP measures.
(b)    Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.2 trillion at Dec. 31, 2018, $1.4 trillion at Sept. 30, 2018 and June 30, 2018 and $1.3 trillion at March 31, 2018 and Dec. 31, 2017.
(c)    Regulatory capital ratios for Dec. 31, 2018 are preliminary. All risk-based capital ratios are presented using Advanced Approaches risk-weightings. The capital ratios for the 2017 periods are presented on a fully phased-in basis. See "Capital and Liquidity" for the transitional capital ratios.
N/M - Not meaningful.

3

THE BANK OF NEW YORK MELLON CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENT
(dollars in millions, except per share amounts; common shares in thousands)																4Q18 vs.										FY18 vs.
	4Q18			3Q18			2Q18			1Q18			4Q17			3Q18		4Q17		FY18			FY17			FY17
Revenue
Investment services fees:
Asset servicing	$	1,126		$	1,157		$	1,157		$	1,168		$	1,130		(3	)%	—	%	$	4,608		$	4,383		5	%
Clearing services	389			383			392			414			400			2		(3	)	1,578			1,553			2
Issuer services	286			287			266			260			197			—		45		1,099			977			12
Treasury services	139			137			140			138			137			1		1		554			557			(1	)
Total investment services fees	1,940			1,964			1,955			1,980			1,864			(1	)	4		7,839			7,470			5
Investment management and performance fees	893			922			910			960			962			(3	)	(7	)	3,685			3,584			3
Foreign exchange and other trading revenue	181			155			187			209			166			17		9		732			668			10
Financing-related fees	50			52			53			52			54			(4	)	(7	)	207			216			(4	)
Distribution and servicing	35			34			34			36			38			3		(8	)	139			160			(13	)
Investment and other income (loss)	47			41			70			82			(198		)	N/M		N/M		240			64			N/M
Total fee revenue	3,146			3,168			3,209			3,319			2,886			(1	)	9		12,842			12,162			6
Net securities gains (losses)	—			—			1			(49		)	(26		)	N/M		N/M		(48		)	3			N/M
Total fee and other revenue	3,146			3,168			3,210			3,270			2,860			(1	)	10		12,794			12,165			5
(Loss) income from consolidated investment management funds	(24		)	10			12			(11		)	17			N/M		N/M		(13		)	70			N/M
Net interest revenue	885			891			916			919			851			(1	)	4		3,611			3,308			9
Total revenue	4,007			4,069			4,138			4,178			3,728			(2	)	7		16,392			15,543			5
Provision for credit losses	—			(3		)	(3		)	(5		)	(6		)	N/M		N/M		(11		)	(24		)	N/M
Noninterest expense
Staff (a)	1,602			1,478			1,489			1,576			1,628			8		(2	)	6,145			6,033			2
Professional, legal and other purchased services	383			332			328			291			339			15		13		1,334			1,276			5
Software and equipment	300			262			266			234			297			15		1		1,062			985			8
Net occupancy	196			139			156			139			153			41		28		630			570			11
Sub-custodian and clearing (b)	115			106			110			119			102			8		13		450			414			9
Distribution and servicing	95			99			106			106			106			(4	)	(10	)	406			419			(3	)
Business development	64			51			62			51			66			25		(3	)	228			229			—
Bank assessment charges	22			49			47			52			53			(55	)	(58	)	170			220			(23	)
Amortization of intangible assets	35			48			48			49			52			(27	)	(33	)	180			209			(14	)
Other (a)(b)(c)	175			174			135			122			210			1		(17	)	606			602			1
Total noninterest expense	2,987			2,738			2,747			2,739			3,006			9		(1	)	11,211			10,957			2
Income before income taxes	1,020			1,334			1,394			1,444			728			(24	)	40		5,192			4,610			13
Provision (benefit) for income taxes	150			220			286			282			(453		)	(32	)	N/M		938			496			N/M
Net income	870			1,114			1,108			1,162			1,181			(22	)	(26	)	4,254			4,114			3
Net loss (income) attributable to noncontrolling interests	11			(3		)	(5		)	9			(6		)	N/M		N/M		12			(24		)	N/M
Preferred stock dividends	(49		)	(36		)	(48		)	(36		)	(49		)	N/M		N/M		(169		)	(175		)	(3	)
Net income applicable to common shareholders of The Bank of New York Mellon Corporation	$	832		$	1,075		$	1,055		$	1,135		$	1,126		(23	)%	(26	)%	$	4,097		$	3,915		5	%
Average common shares and equivalents outstanding: Basic	984,343			999,808			1,010,179			1,016,797			1,024,828			(2	)%	(4	)%	1,002,922			1,034,281			(3	)%
Diluted	988,650			1,003,665			1,014,357			1,021,731			1,030,404			(1	)%	(4	)%	1,007,141			1,040,290			(3	)%
Earnings per common share: Basic	$	0.84		$	1.07		$	1.04		$	1.11		$	1.09		(21	)%	(23	)%	$	4.06		$	3.74		9	%
Diluted	$	0.84		$	1.06		$	1.03		$	1.10		$	1.08		(21	)%	(22	)%	$	4.04		$	3.72		9	%
(a)    In 1Q18, we adopted new accounting guidance included in Accounting Standards Update ("ASU") 2017-07, Compensation-Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which required the reclassification of the components of pension and other postretirement costs, other than the service cost component. As a result, staff expense increased and other expense decreased. Prior periods have been reclassified.
(b)    Beginning in 1Q18, clearing expense, which was previously included in other expense, was included with sub-custodian expense. Prior periods have been reclassified.
(c)    Beginning in 1Q18, merger and integration ("M&I"), litigation and restructuring charges are no longer separately disclosed. Expenses previously reported in this line have been reclassified to existing expense categories, primarily other expense.
N/M - Not meaningful.

4

THE BANK OF NEW YORK MELLON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
	2018												2017
(in millions)	Dec. 31			Sept. 30			June 30			March 31			Dec. 31
Assets
Cash and due from:
Banks	$	5,864		$	5,047		$	5,361		$	4,636		$	5,382
Interest-bearing deposits with the Federal Reserve and other central banks	67,988			74,725			75,116			91,431			91,510
Interest-bearing deposits with banks	14,148			14,519			16,134			15,186			11,979
Federal funds sold and securities purchased under resale agreements	46,795			28,722			26,494			28,784			28,135
Securities	119,791			118,641			119,081			118,789			120,370
Trading assets	7,035			7,804			7,035			8,596			6,022
Loans	56,564			53,987			57,776			60,809			61,540
Allowance for loan losses	(146		)	(140		)	(145		)	(156		)	(159		)
Net loans	56,418			53,847			57,631			60,653			61,381
Premises and equipment	1,832			1,832			1,752			1,702			1,634
Accrued interest receivable	671			640			663			610			610
Goodwill	17,350			17,390			17,418			17,596			17,564
Intangible assets	3,220			3,258			3,308			3,370			3,411
Other assets	21,298			22,846			22,507			21,638			23,029
Subtotal assets of operations	362,410			349,271			352,500			372,991			371,027
Assets of consolidated investment management funds, at fair value	463			499			428			606			731
Total assets	$	362,873		$	349,770		$	352,928		$	373,597		$	371,758
Liabilities
Deposits	$	238,778		$	231,590		$	230,560		$	241,844		$	244,322
Federal funds purchased and securities sold under repurchase agreements	14,243			10,158			13,200			21,600			15,163
Trading liabilities	3,479			3,536			3,580			3,365			3,984
Payables to customers and broker-dealers	19,731			18,683			19,123			20,172			20,184
Commercial paper	1,939			735			2,508			3,936			3,075
Other borrowed funds	3,227			2,934			3,053			1,550			3,028
Accrued taxes and other expenses	5,669			5,601			5,452			5,349			6,225
Other liabilities	5,774			6,552			5,443			5,707			6,050
Long-term debt	29,163			28,113			28,260			27,939			27,979
Subtotal liabilities of operations	322,003			307,902			311,179			331,462			330,010
Liabilities of consolidated investment management funds, at fair value	2			7			3			11			2
Total liabilities	322,005			307,909			311,182			331,473			330,012
Temporary equity
Redeemable noncontrolling interests	129			211			189			184			179
Permanent equity
Preferred stock	3,542			3,542			3,542			3,542			3,542
Common stock	14			14			14			14			14
Additional paid-in capital	27,118			27,034			26,981			26,911			26,665
Retained earnings	28,652			28,098			27,306			26,496			25,635
Accumulated other comprehensive loss, net of tax	(3,171		)	(2,983		)	(2,795		)	(2,343		)	(2,357		)
Less: Treasury stock, at cost	(15,517		)	(14,145		)	(13,543		)	(12,892		)	(12,248		)
Total The Bank of New York Mellon Corporation shareholders’ equity	40,638			41,560			41,505			41,728			41,251
Nonredeemable noncontrolling interests of consolidated investment management funds	101			90			52			212			316
Total permanent equity	40,739			41,650			41,557			41,940			41,567
Total liabilities, temporary equity and permanent equity	$	362,873		$	349,770		$	352,928		$	373,597		$	371,758

5

THE BANK OF NEW YORK MELLON CORPORATION
FEE AND OTHER REVENUE
															4Q18 vs.										FY18 vs.
(dollars in millions)	4Q18			3Q18			2Q18		1Q18			4Q17			3Q18		4Q17		FY18			FY17			FY17
Investment services fees:
Asset servicing	$	1,079		$	1,099		$	1,097	$	1,113		$	1,079		(2	)%	—	%	$	4,388		$	4,188		5	%
Securities lending	47			58			60		55			51			(19	)	(8	)	220			195			13
Clearing services	389			383			392		414			400			2		(3	)	1,578			1,553			2
Issuer services	286			287			266		260			197			—		45		1,099			977			12
Treasury services	139			137			140		138			137			1		1		554			557			(1	)
Total investment services fees	1,940			1,964			1,955		1,980			1,864			(1	)	4		7,839			7,470			5
Investment management and performance fees (a)(b)	893			922			910		960			962			(3	)	(7	)	3,685			3,584			3
Foreign exchange and other trading revenue:
Foreign exchange	159			150			171		183			175			6		(9	)	663			638			4
Other trading revenue (loss)	22			5			16		26			(9		)	N/M		N/M		69			30			N/M
Total foreign exchange and other trading revenue	181			155			187		209			166			17		9		732			668			10
Financing-related fees	50			52			53		52			54			(4	)	(7	)	207			216			(4	)
Distribution and servicing	35			34			34		36			38			3		(8	)	139			160			(13	)
Investment and other income (loss):
Corporate/bank-owned life insurance	42			36			31		36			43			N/M		N/M		145			153			N/M
Expense reimbursements from joint venture	19			17			19		16			15			N/M		N/M		71			64			N/M
Asset-related gains (losses)	2			7			15		46			—			N/M		N/M		70			(1		)	N/M
Equity investment (loss) income	(1		)	3			2		—			4			N/M		N/M		4			37			N/M
Seed capital (losses) gains (a)	(8		)	8			3		—			7			N/M		N/M		3			32			N/M
Lease-related gains	1			—			—		—			4			N/M		N/M		1			56			N/M
Other loss	(8		)	(30		)	—		(16		)	(271		)	N/M		N/M		(54		)	(277		)	N/M
Total investment and other income (loss) (a)	47			41			70		82			(198		)	N/M		N/M		240			64			N/M
Total fee revenue	3,146			3,168			3,209		3,319			2,886			(1	)	9		12,842			12,162			6
Net securities gains (losses)	—			—			1		(49		)	(26		)	N/M		N/M		(48		)	3			N/M
Total fee and other revenue	$	3,146		$	3,168		$	3,210	$	3,270		$	2,860		(1	)%	10	%	$	12,794		$	12,165		5	%
(a)    Excludes seed capital gains related to consolidated investment management funds, which are reflected in operations of consolidated investment management funds.
(b)    On a constant currency basis (Non-GAAP), investment management and performance fees decreased 6% compared with 4Q17. See "Supplemental Information - Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 18 for the reconciliation of this Non-GAAP measure.
N/M - Not meaningful.

6

THE BANK OF NEW YORK MELLON CORPORATION
AVERAGE BALANCES AND INTEREST RATES
	4Q18				3Q18				2Q18				1Q18				4Q17
	Average balance		Average rate		Average balance		Average rate		Average balance		Average rate		Average balance		Average rate		Average balance		Average rate
(dollars in millions, presented on an FTE basis)
Assets
Interest-earning assets:
Interest-bearing deposits with banks (primarily foreign banks)	$	14,666	1.67	%	$	14,691	1.58	%	$	15,748	1.41	%	$	13,850	1.25	%	$	14,068	1.03	%
Interest-bearing deposits held at the Federal Reserve and other central banks	63,916		0.89		61,216		0.80		69,676		0.77		79,068		0.64		74,961		0.54
Federal funds sold and securities purchased under resale agreements (a)	28,843		5.98		26,738		4.18		28,051		3.29		27,903		2.47		28,417		2.11
Margin loans	13,369		4.08		13,738		3.74		14,838		3.46		15,674		2.98		14,018		2.67
Non-margin loans:
Domestic offices	29,576		3.73		28,628		3.59		29,970		3.44		30,415		3.02		30,462		2.73
Foreign offices	10,889		3.10		11,441		2.98		12,258		2.87		12,517		2.51		12,292		2.21
Total non-margin loans	40,465		3.56		40,069		3.42		42,228		3.27		42,932		2.87		42,754		2.58
Securities:
U.S. government obligations	24,531		2.14		24,423		2.09		23,199		2.02		23,460		1.88		25,195		1.71
U.S. government agency obligations	64,496		2.54		64,612		2.40		63,022		2.37		62,975		2.23		62,889		2.07
State and political subdivisions - tax-exempt	2,263		2.63		2,453		2.77		2,677		2.75		2,875		2.62		3,010		3.10
Other securities	27,614		1.91		27,017		1.98		28,863		1.75		29,149		1.69		29,131		1.34
Trading securities	5,543		2.77		4,261		3.05		3,784		3.10		4,183		2.62		2,723		2.02
Total securities	124,447		2.33		122,766		2.28		121,545		2.19		122,642		2.05		122,948		1.85
Total interest-earning assets	$	285,706	2.60	%	$	279,218	2.33	%	$	292,086	2.14	%	$	302,069	1.85	%	$	297,166	1.65	%
Noninterest-earning assets	52,885				53,123				54,242				56,106				53,620
Total assets	$	338,591			$	332,341			$	346,328			$	358,175			$	350,786
Liabilities and total equity
Interest-bearing liabilities:
Interest-bearing deposits:
Domestic offices	$	72,929	1.19	%	$	57,942	0.97	%	$	54,200	0.78	%	$	51,612	0.55	%	$	45,280	0.36	%
Foreign offices	88,734		0.59		90,694		0.42		98,599		0.28		104,092		0.18		102,483		0.09
Total interest-bearing deposits	161,663		0.86		148,636		0.63		152,799		0.45		155,704		0.30		147,763		0.17
Federal funds purchased and securities sold under repurchase agreements (a)	10,980		10.95		14,199		5.33		18,146		3.48		18,963		2.29		20,211		1.83
Trading liabilities	1,330		1.86		1,150		2.32		1,198		2.43		1,569		2.26		1,406		0.38
Other borrowed funds	2,903		2.44		2,747		2.33		2,399		2.40		2,119		1.67		3,421		1.46
Commercial paper	353		2.41		3,102		2.10		3,869		2.13		3,131		1.59		3,391		1.23
Payables to customers and broker-dealers	15,727		1.61		16,252		1.23		16,349		1.10		17,101		0.75		17,868		0.49
Long-term debt	28,201		3.29		28,074		3.17		28,349		3.06		28,407		2.49		28,245		2.29
Total interest-bearing liabilities	$	221,157	1.75	%	$	214,160	1.37	%	$	223,109	1.14	%	$	226,994	0.82	%	$	222,305	0.65	%
Total noninterest-bearing deposits	58,972				60,677				64,768				71,005				69,111
Other noninterest-bearing liabilities	16,754				15,660				16,857				18,571				18,422
Total The Bank of New York Mellon Corporation shareholders’ equity	41,428				41,578				41,292				41,135				40,494
Noncontrolling interests	280				266				302				470				454
Total liabilities and shareholders’ equity	$	338,591			$	332,341			$	346,328			$	358,175			$	350,786
Net interest margin			1.24	%			1.27	%			1.26	%			1.22	%			1.14	%
Net interest margin (FTE) – Non-GAAP (b)			1.24	%			1.28	%			1.26	%			1.23	%			1.16	%
(a)    Includes the impact of offsetting under enforceable netting agreements of approximately $43 billion for 4Q18, $26 billion for 3Q18, $18 billion for 2Q18, $14 billion for 1Q18 and $14 billion for 4Q17.
(b)    See "Supplemental Information - Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 18 for the reconciliation of this Non-GAAP measure.
Note: Interest and average rates were calculated on an FTE basis, at tax rates of approximately 21% for quarters in 2018 and approximately 35% for quarters in 2017, using dollar amounts in thousands and the actual number of days in the year.

7

THE BANK OF NEW YORK MELLON CORPORATION
NONINTEREST EXPENSE
											4Q18 vs.								FY18 vs.
(dollars in millions)	4Q18		3Q18		2Q18		1Q18		4Q17		3Q18		4Q17		FY18		FY17		FY17
Staff (a)	$	1,602	$	1,478	$	1,489	$	1,576	$	1,628	8	%	(2	)%	$	6,145	$	6,033	2	%
Professional, legal and other purchased services	383		332		328		291		339		15		13		1,334		1,276		5
Software and equipment	300		262		266		234		297		15		1		1,062		985		8
Net occupancy	196		139		156		139		153		41		28		630		570		11
Sub-custodian and clearing (b)	115		106		110		119		102		8		13		450		414		9
Distribution and servicing	95		99		106		106		106		(4	)	(10	)	406		419		(3	)
Business development	64		51		62		51		66		25		(3	)	228		229		—
Bank assessment charges	22		49		47		52		53		(55	)	(58	)	170		220		(23	)
Amortization of intangible assets	35		48		48		49		52		(27	)	(33	)	180		209		(14	)
Other (a)(b)(c)	175		174		135		122		210		1		(17	)	606		602		1
Total noninterest expense	$	2,987	$	2,738	$	2,747	$	2,739	$	3,006	9	%	(1	)%	$	11,211	$	10,957	2	%
Full-time employees at period end	51,300		52,000		52,000		52,100		52,500		(1	)%	(2	)%
(a)    In 1Q18, we adopted new accounting guidance included in ASU 2017-07, Compensation-Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which required the reclassification of the components of pension and other postretirement costs, other than the service cost component. As a result, staff expense increased and other expense decreased. Prior periods have been reclassified.
(b)    Beginning in 1Q18, clearing expense, which was previously included in other expense, was included with sub-custodian expense. Prior periods have been reclassified.
(c)    Beginning in 1Q18, M&I, litigation and restructuring charges are no longer separately disclosed. Expenses previously reported in this line have been reclassified to existing expense categories, primarily other expense.

8

THE BANK OF NEW YORK MELLON CORPORATION
CAPITAL AND LIQUIDITY
	2018												2017
(dollars in millions)	Dec. 31			Sept. 30			June 30			March 31			Dec. 31
Consolidated regulatory capital ratios - fully phased-in basis: (a)
Standardized Approach:
CET1 capital	$	17,567		$	18,517		$	18,386		$	18,334		$	17,838
Tier 1 capital	21,044			22,002			21,877			21,835			21,339
Total capital	22,536			23,497			23,375			23,340			22,838
Risk-weighted assets	150,049			149,348			154,612			156,472			155,324
CET1 ratio	11.7		%	12.4		%	11.9		%	11.7		%	11.5		%
Tier 1 capital ratio	14.0			14.7			14.1			14.0			13.7
Total capital ratio	15.0			15.7			15.1			14.9			14.7
Advanced Approaches:
CET1 capital	$	17,567		$	18,517		$	18,386		$	18,334		$	17,838
Tier 1 capital	21,044			22,002			21,877			21,835			21,339
Total capital	22,349			23,299			23,174			23,121			22,608
Risk-weighted assets	165,130			165,137			167,580			171,910			173,711
CET1 ratio	10.6		%	11.2		%	11.0		%	10.7		%	10.3		%
Tier 1 capital ratio	12.7			13.3			13.1			12.7			12.3
Total capital ratio	13.5			14.1			13.8			13.4			13.0
Tier 1 leverage ratio	6.6		%	7.0		%	6.7		%	6.5		%	6.4		%
SLR:
Leverage exposure	$	347,922		$	341,566		$	355,773		$	367,818		$	360,543
SLR	6.0		%	6.4		%	6.1		%	5.9		%	5.9		%
Average liquidity coverage ratio (“LCR”)	118		%	121		%	118		%	116		%	118		%
Consolidated regulatory capital ratios - transitional basis:
Advanced Approaches:
CET1 ratio	N/A			N/A			N/A			N/A			10.7		%
Tier 1 capital ratio	N/A			N/A			N/A			N/A			12.7
Total capital ratio	N/A			N/A			N/A			N/A			13.4
Tier 1 leverage ratio	N/A			N/A			N/A			N/A			6.6
SLR	N/A			N/A			N/A			N/A			6.1
(a)    Regulatory capital ratios for Dec. 31, 2018 are preliminary. For our CET1, Tier 1 capital and Total capital ratios, our effective capital ratios under the U.S. capital rules are the lower of the ratios as calculated under the Standardized and Advanced Approaches, which for the periods noted above was the Advanced Approaches.
N/A - Not applicable. Beginning Jan. 1, 2018, regulatory capital ratios are fully phased-in.

9

THE BANK OF NEW YORK MELLON CORPORATION
KEY MARKET METRICS
																4Q18 vs.										FY18 vs.
	4Q18			3Q18			2Q18			1Q18			4Q17			3Q18		4Q17		FY18			FY17			FY17
Key market metrics:
S&P 500 Index (a)	2507			2914			2718			2641			2674			(14	)%	(6	)%	2507			2674			(6	)%
S&P 500 Index - daily average	2699			2850			2703			2733			2603			(5	)	4		2746			2449			12
FTSE 100 Index (a)	6728			7510			7637			7057			7688			(10	)	(12	)	6728			7688			(12	)
FTSE 100 Index - daily average	7001			7553			7549			7354			7477			(7	)	(6	)	7363			7380			—
MSCI EAFE (a)	1720			1974			1959			2006			2051			(13	)	(16	)	1720			2051			(16	)
MSCI EAFE - daily average	1812			1964			2018			2073			2005			(8	)	(10	)	1966			1887			4
Bloomberg Barclays Global-Aggregate Total Return Index (a)(b)	479			473			478			491			485			1		(1	)	479			485			(1	)
Average interest on excess reserves paid by the Federal Reserve	2.23		%	1.96		%	1.79		%	1.53		%	1.30		%	27	bps	93	bps	1.88		%	1.10		%	78	bps
Foreign exchange rates vs. U.S. dollar:
British pound (a)	$	1.28		$	1.30		$	1.32		$	1.41		$	1.35		(2	)%	(5	)%	$	1.28		$	1.35		(5	)%
British pound - average rate	1.29			1.30			1.36			1.39			1.33			(1	)	(3	)	1.33			1.29			3
Euro (a)	1.15			1.16			1.17			1.23			1.20			(1	)	(4	)	1.15			1.20			(4	)
Euro - average rate	1.14			1.16			1.19			1.23			1.18			(2	)	(3	)	1.18			1.14			4
(a)    Period end.
(b)    Unhedged in U.S. dollar terms.
bps - basis points.

10

THE BANK OF NEW YORK MELLON CORPORATION
INVESTMENT SERVICES BUSINESS
																4Q18 vs.										FY18 vs.
(dollars in millions)	4Q18			3Q18			2Q18			1Q18			4Q17			3Q18		4Q17		FY18			FY17			FY17
Revenue:
Investment services fees:
Asset servicing (ex. securities lending revenue)	$	1,063		$	1,084		$	1,080		$	1,095		$	1,061		(2	)%	—	%	$	4,322		$	4,118		5	%
Securities lending revenue	43			52			55			48			45			(17	)	(4	)	198			168			18
Clearing services	389			383			391			414			400			2		(3	)	1,577			1,549			2
Issuer services	286			288			265			260			196			(1	)	46		1,099			975			13
Treasury services	139			136			140			138			136			2		2		553			555			—
Total investment services fees	1,920			1,943			1,931			1,955			1,838			(1	)	4		7,749			7,365			5
Foreign exchange and other trading revenue	163			161			172			169			168			1		(3	)	665			620			7
Other (a)	130			126			130			126			135			3		(4	)	512			542			(6	)
Total fee and other revenue	2,213			2,230			2,233			2,250			2,141			(1	)	3		8,926			8,527			5
Net interest revenue	827			827			874			844			813			—		2		3,372			3,058			10
Total revenue	3,040			3,057			3,107			3,094			2,954			(1	)	3		12,298			11,585			6
Provision for credit losses	6			1			1			(7		)	(2		)	N/M		N/M		1			(7		)	N/M
Noninterest expense (ex. amortization of intangible assets)	2,090			1,995			1,931			1,913			2,060			5		1		7,929			7,598			4
Amortization of intangible assets	22			35			36			36			37			(37	)	(41	)	129			149			(13	)
Total noninterest expense	2,112			2,030			1,967			1,949			2,097			4		1		8,058			7,747			4
Income before taxes	$	922		$	1,026		$	1,139		$	1,152		$	859		(10	)%	7	%	$	4,239		$	3,845		10	%
Pre-tax operating margin	30		%	34		%	37		%	37		%	29		%					34		%	33		%
Total revenue by line of business:
Asset Servicing	$	1,435		$	1,458		$	1,520		$	1,519		$	1,459		(2	)%	(2	)%	$	5,932		$	5,603		6	%
Pershing	558			558			558			581			569			—		(2	)	2,255			2,180			3
Issuer Services	441			453			431			418			352			(3	)	25		1,743			1,588			10
Treasury Services	328			324			329			321			322			1		2		1,302			1,251			4
Clearance and Collateral Management	278			264			269			255			252			5		10		1,066			963			11
Total revenue by line of business	$	3,040		$	3,057		$	3,107		$	3,094		$	2,954		(1	)%	3	%	$	12,298		$	11,585		6	%
(a)    Other revenue includes investment management fees, financing-related fees, distribution and servicing revenue and investment and other income.
N/M - Not meaningful.

11

THE BANK OF NEW YORK MELLON CORPORATION
INVESTMENT SERVICES BUSINESS
											4Q18 vs.								FY18 vs.
(dollars in millions unless otherwise noted)	4Q18		3Q18		2Q18		1Q18		4Q17		3Q18		4Q17		FY18		FY17		FY17
Average loans	$	35,540	$	35,044	$	38,002	$	39,200	$	38,845	1	%	(9	)%	$	36,931	$	40,142	(8	)%
Average assets	$	262,584	$	246,276	$	264,387	$	278,095	$	260,494	7	%	1	%	$	262,747	$	254,646	3	%
Average deposits	$	203,416	$	192,741	$	203,064	$	214,130	$	204,680	6	%	(1	)%	$	203,279	$	200,235	2	%
AUC/A at period end (in trillions) (a)(b)	$	33.1	$	34.5	$	33.6	$	33.5	$	33.3	(4	)%	(1	)%	$	33.1	$	33.3	(1	)%
Market value of securities on loan at period end (in billions) (c)	$	373	$	415	$	432	$	436	$	408	(10	)%	(9	)%	$	373	$	408	(9	)%
Pershing
Average active clearing accounts (U.S. platform) (in thousands)	6,125		6,108		6,080		6,075		6,126		—		—
Average long-term mutual fund assets (U.S. platform)	$	489,491	$	527,336	$	512,645	$	514,542	$	508,873	(7	)%	(4	)%
Average investor margin loans (U.S. platform)	$	10,921	$	10,696	$	10,772	$	10,930	$	9,822	2	%	11	%
Clearance and Collateral Management
Average tri-party collateral management balances (in billions)	$	3,181	$	2,995	$	2,801	$	2,698	$	2,606	6	%	22	%
(a)    Dec. 31, 2018 information is preliminary.
(b)    Includes the AUC/A of CIBC Mellon of $1.2 trillion at Dec. 31, 2018, $1.4 trillion at Sept. 30, 2018 and June 30, 2018 and $1.3 trillion at March 31, 2018 and Dec. 31, 2017.
(c)    Represents the total amount of securities on loan in our agency securities lending program managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $58 billion at Dec.31, 2018, $69 billion at Sept. 30, 2018, $70 billion at June 30, 2018, $73 billion at March 31, 2018 and $71 billion at Dec. 31, 2017.

12

THE BANK OF NEW YORK MELLON CORPORATION
INVESTMENT MANAGEMENT BUSINESS
																4Q18 vs.										FY18 vs.
(dollars in millions)	4Q18			3Q18			2Q18			1Q18			4Q17			3Q18		4Q17		FY18			FY17			FY17
Revenue:
Investment management fees (a)	$	826		$	879		$	885		$	898		$	898		(6	)%	(8	)%	$	3,488		$	3,428		2	%
Performance fees	54			30			12			48			50			N/M		8		144			94			53
Investment management and performance fees (b)	880			909			897			946			948			(3	)	(7	)	3,632			3,522			3
Distribution and servicing	45			47			48			50			51			(4	)	(12	)	190			207			(8	)
Other (a)	(35		)	(18		)	(4		)	16			(25		)	N/M		N/M		(41		)	(61		)	N/M
Total fee and other revenue (a)	890			938			941			1,012			974			(5	)	(9	)	3,781			3,668			3
Net interest revenue	73			77			77			76			74			(5	)	(1	)	303			329			(8	)
Total revenue	963			1,015			1,018			1,088			1,048			(5	)	(8	)	4,084			3,997			2
Provision for credit losses	1			(2		)	2			2			1			N/M		N/M		3			2			N/M
Noninterest expense (ex. amortization of intangible assets)	702			688			685			692			756			2		(7	)	2,767			2,794			(1	)
Amortization of intangible assets	13			13			12			13			15			—		(13	)	51			60			(15	)
Total noninterest expense	715			701			697			705			771			2		(7	)	2,818			2,854			(1	)
Income before taxes	$	247		$	316		$	319		$	381		$	276		(22	)%	(11	)%	$	1,263		$	1,141		11	%
Pre-tax operating margin	26		%	31		%	31		%	35		%	26		%					31		%	29		%
Adjusted pre-tax operating margin – Non-GAAP (c)	29		%	35		%	35		%	39		%	29		%					34		%	32		%
Total revenue by line of business:
Asset Management	$	660		$	704		$	702		$	770		$	738		(6	)%	(11	)%	$	2,836		$	2,775		2	%
Wealth Management	303			311			316			318			310			(3	)	(2	)	1,248			1,222			2
Total revenue by line of business	$	963		$	1,015		$	1,018		$	1,088		$	1,048		(5	)%	(8	)%	$	4,084		$	3,997		2	%
Average loans	$	16,485		$	16,763		$	16,974		$	16,876		$	16,813		(2	)%	(2	)%	$	16,774		$	16,565		1	%
Average assets	$	31,043		$	31,283		$	31,504		$	31,963		$	31,681		(1	)%	(2	)%	$	31,446		$	31,450		—	%
Average deposits	$	14,893		$	14,634		$	14,252		$	13,363		$	11,633		2	%	28	%	$	14,291		$	13,615		5	%
(a)    Total fee and other revenue includes the impact of the consolidated investment management funds, net of noncontrolling interests. Additionally, other revenue includes asset servicing, foreign exchange and other trading revenue, treasury services and investment and other income.
(b)    On a constant currency basis, investment management and performance fees decreased 6% (Non-GAAP) compared with 4Q17. See "Supplemental Information - Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 18 for the reconciliation of this Non-GAAP measure.
(c)    Net of distribution and servicing expense. See "Supplemental Information - Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 18 for the reconciliation of this Non-GAAP measure. In 1Q18, the adjusted pre-tax operating margin – Non-GAAP for prior periods was restated to include amortization of intangible assets and the provision for credit losses.
N/M - Not meaningful.

13

THE BANK OF NEW YORK MELLON CORPORATION
AUM BY PRODUCT, AUM FLOWS AND WEALTH MANAGEMENT CLIENT ASSETS
																4Q18 vs.										FY18 vs.
(dollars in billions)	4Q18			3Q18			2Q18			1Q18			4Q17			3Q18		4Q17		FY18			FY17			FY17
AUM by product type (a)(b)
Equity	$	135		$	167		$	160		$	161		$	161		(19	)%	(16	)%
Fixed income	200			202			197			206			206			(1	)	(3	)
Index	301			352			334			333			350			(14	)	(14	)
Liability-driven investments	659			652			663			700			667			1		(1	)
Multi-asset and alternative investments	167			184			181			185			214			(9	)	(22	)
Cash	260			271			270			283			295			(4	)	(12	)
Total AUM by product type	$	1,722		$	1,828		$	1,805		$	1,868		$	1,893		(6	)%	(9	)%
Changes in AUM(a)(b)
Beginning balance of AUM	$	1,828		$	1,805		$	1,868		$	1,893		$	1,824						$	1,893		$	1,648
Net (outflows) inflows:
Long-term strategies:
Equity	(8		)	(2		)	(3		)	—			(6		)					(13		)	(14		)
Fixed income	(1		)	2			(4		)	7			(2		)					4			6
Liability-driven investments	14			16			2			13			23							45			50
Multi-asset and alternative investments	(2		)	2			(3		)	(3		)	2							(6		)	8
Total long-term active strategies inflows (outflows)	3			18			(8		)	17			17							30			50
Index	(11		)	(3		)	(7		)	(13		)	(1		)					(34		)	(17		)
Total long-term strategies (outflows) inflows	(8		)	15			(15		)	4			16							(4		)	33
Short-term strategies:
Cash	(10		)	—			(11		)	(14		)	(4		)					(35		)	30
Total net (outflows) inflows	(18		)	15			(26		)	(10		)	12							(39		)	63
Net market impact	(69		)	18			17			(14		)	47							(48		)	106
Net currency impact	(19		)	(10		)	(53		)	29			10							(53		)	76
Divestiture/Other (c)	—			—			(1		)	(30		)	—							(31		)	—
Ending balance of AUM	$	1,722		$	1,828		$	1,805		$	1,868		$	1,893		(6	)%	(9	)%	$	1,722		$	1,893		(9	)%
Wealth Management client assets (a)(d)	$	239		$	261		$	254		$	246		$	251		(8	)%	(5	)%
(a)    Dec. 31, 2018 information is preliminary.
(b)    Excludes securities lending cash management assets and assets managed in the Investment Services business.
(c)    Primarily reflects a change in methodology beginning in 1Q18 to exclude AUM related to equity method investments as well as the CenterSquare divestiture.
(d)    Includes AUM and AUC/A in the Wealth Management business.

14

THE BANK OF NEW YORK MELLON CORPORATION
OTHER SEGMENT
(in millions)	4Q18			3Q18			2Q18			1Q18			4Q17			FY18			FY17
Fee revenue (loss)	$	29		$	7		$	40		$	57		$	(221	)	$	133		$	4
Net securities gains (losses)	—			—			1			(49		)	(26		)	(48		)	3
Total fee and other revenue (loss)	29			7			41			8			(247		)	85			7
Net interest (expense)	(15		)	(13		)	(35		)	(1		)	(36		)	(64		)	(79		)
Total revenue (loss)	14			(6		)	6			7			(283		)	21			(72		)
Provision for credit losses	(7		)	(2		)	(6		)	—			(5		)	(15		)	(19		)
Noninterest expense	160			6			81			87			135			334			347
(Loss) before taxes	$	(139	)	$	(10	)	$	(69	)	$	(80	)	$	(413	)	$	(298	)	$	(400	)
Average loans and leases	$	1,809		$	2,000		$	2,090		$	2,530		$	1,114		$	2,105		$	1,232
Average assets	$	44,964		$	54,782		$	50,437		$	48,117		$	58,611		$	49,581		$	57,752

15

THE BANK OF NEW YORK MELLON CORPORATION
INVESTMENT SECURITIES PORTFOLIO
(dollars in millions)	Sept. 30, 2018			4Q18 change in unrealized gain (loss)			Dec. 31, 2018					Fair value as a % of amortized cost (a)		Unrealized gain (loss)				Ratings (b)
							Amortized cost		Fair value									AAA/ AA-		A+/ A-		BBB+/ BBB-		BB+ and lower		Not rated
	Fair value
Agency RMBS	$	49,555		$	492		$	51,101	$	50,214		98	%	$	(887	)		100	%	—	%	—	%	—	%	—	%
U.S. Treasury	24,622			80			24,917		24,792			99		(125		)		100		—		—		—		—
Sovereign debt/sovereign guaranteed	12,386			33			11,496		11,577			101		81				74		5		20		1		—
Agency commercial MBS	11,050			(5		)	11,031		10,947			99		(84		)		100		—		—		—		—
CLOs	3,363			(41		)	3,410		3,364			99		(46		)		98		—		—		1		1
U.S. government agencies	3,127			—			3,173		3,157			99		(16		)		100		—		—		—		—
Supranational	2,675			9			3,011		3,006			100		(5		)		100		—		—		—		—
Foreign covered bonds	3,054			1			2,970		2,959			100		(11		)		100		—		—		—		—
State and political subdivisions	2,352			16			2,268		2,264			100		(4		)		78		21		—		—		1
Other asset-backed securities	748			(4		)	1,776		1,773			100		(3		)		99		—		1		—		—
Non-agency commercial MBS	1,473			(10		)	1,491		1,470			99		(21		)		96		4		—		—		—
Non-agency RMBS (c)	1,529			(32		)	1,195		1,427			119		232				12		12		5		47		24
Corporate bonds	1,118			2			1,074		1,054			98		(20		)		14		68		18		—		—
Other	1,041			5			1,236		1,238			100		2				94		—		—		—		6
Total investment securities	$	118,093	(d)	$	546		$	120,149	$	119,242	(d)	99	%	$	(907	)	(d)(e)	95	%	2	%	2	%	1	%	—	%
(a)    Amortized cost reflects historical impairments.
(b)    Represents ratings by S&P, or the equivalent.
(c)    Includes RMBS that were included in the former Grantor Trust of $889 million at Sept. 30, 2018 and $832 million at Dec. 31, 2018.
(d)    Includes net unrealized gains on derivatives hedging securities available-for-sale of $593 million at Sept. 30, 2018 and $131 million at Dec. 31, 2018.
(e)    Includes unrealized losses of $227 million at Dec. 31, 2018 related to available-for-sale securities, net of hedges.

16

THE BANK OF NEW YORK MELLON CORPORATION
ALLOWANCE FOR CREDIT LOSSES AND NONPERFORMING ASSETS
	2018												2017
(dollars in millions)	Dec. 31			Sept. 30			June 30			March 31			Dec. 31
Allowance for credit losses - beginning of period:
Allowance for loan losses	$	140		$	145		$	156		$	159		$	161
Allowance for lending-related commitments	111			109			100			102			104
Allowance for credit losses - beginning of period	$	251		$	254		$	256		$	261		$	265
Net recoveries (charge-offs):
Charge-offs	—			(1		)	—			—			—
Recoveries	1			1			1			—			2
Total net recoveries (charge-offs)	1			—			1			—			2
Provision for credit losses	—			(3		)	(3		)	(5		)	(6		)
Allowance for credit losses - end of period	$	252		$	251		$	254		$	256		$	261
Allowance for credit losses - end of period:
Allowance for loan losses	$	146		$	140		$	145		$	156		$	159
Allowance for lending-related commitments	106			111			109			100			102
Allowance for credit losses - end of period	$	252		$	251		$	254		$	256		$	261
Allowance for loan losses as a percentage of total loans	0.26		%	0.26		%	0.25		%	0.26		%	0.26		%
Nonperforming assets	$	79		$	81		$	82		$	85		$	90

17

THE BANK OF NEW YORK MELLON CORPORATION
SUPPLEMENTAL INFORMATION – EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
BNY Mellon has included in this Financial Supplement certain Non-GAAP financial measures on a tangible basis, as a supplement to GAAP information. Tangible common shareholders’ equity excludes goodwill and intangible assets, net of deferred tax liabilities. BNY Mellon believes that the return on tangible common equity measure is an additional useful measure for investors because it presents a measure of those assets that can generate income. BNY Mellon has provided a measure of tangible book value per common share, which it believes provides additional useful information as to the level of tangible assets in relation to shares of common stock outstanding.
Net interest revenue (FTE) – Non-GAAP and net interest margin (FTE) – Non-GAAP include the tax equivalent adjustments on tax-exempt income which allows for the comparison 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.
BNY Mellon has presented the operating margin for the Investment Management business net of distribution and servicing expense that was passed to third parties who distribute or service our managed funds. BNY Mellon believes that this measure is useful when evaluating the performance of the Investment Management business relative to industry competitors.
The presentation of the growth rates of investment management and performance fees on a constant currency basis permits investors to assess the significance of changes in foreign currency exchange rates. Growth rates on a constant currency basis were determined by applying the current period foreign currency exchange rates to the prior period revenue. BNY Mellon believes that this presentation, as a supplement to GAAP information, gives investors a clearer picture of the related revenue results without the variability caused by fluctuations in foreign currency exchange rates.
Notes:
Certain immaterial reclassifications/revisions have been made to prior periods to place them on a basis comparable with the current period's presentation.
In businesses where average deposits are greater than average loans, average assets include an allocation of investment securities equal to the difference.
Quarterly return on common and tangible common equity ratios are annualized.
Return on common equity and tangible common equity reconciliation
(dollars in millions)	4Q18			3Q18			2Q18			1Q18			4Q17			FY18			FY17
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP	$	832		$	1,075		$	1,055		$	1,135		$	1,126		$	4,097		$	3,915
Add: Amortization of intangible assets	35			48			48			49			52			180			209
Less: Tax impact of amortization of intangible assets	8			11			11			12			18			42			72
Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets – Non-GAAP	$	859		$	1,112		$	1,092		$	1,172		$	1,160		$	4,235		$	4,052
Average common shareholders’ equity	$	37,886		$	38,036		$	37,750		$	37,593		$	36,952		$	37,818		$	36,145
Less: Average goodwill	17,358			17,391			17,505			17,581			17,518			17,458			17,441
Average intangible assets	3,239			3,283			3,341			3,397			3,437			3,314			3,508
Add: Deferred tax liability – tax deductible goodwill (a)	1,072			1,066			1,054			1,042			1,034			1,072			1,034
Deferred tax liability – intangible assets (a)	692			699			709			716			718			692			718
Average tangible common shareholders’ equity – Non-GAAP	$	19,053		$	19,127		$	18,667		$	18,373		$	17,749		$	18,810		$	16,948
Return on common equity – GAAP	8.7		%	11.2		%	11.2		%	12.2		%	12.1		%	10.8		%	10.8		%
Return on tangible common equity – Non-GAAP	17.9		%	23.1		%	23.5		%	25.9		%	25.9		%	22.5		%	23.9		%
(a)    Deferred tax liabilities for the periods in 2017 are based on fully phased-in U.S. capital rules.

18

THE BANK OF NEW YORK MELLON CORPORATION
SUPPLEMENTAL INFORMATION – EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
Book value and tangible book value per common share reconciliation	2018												2017
(dollars in millions except common shares)	Dec. 31			Sept. 30			June 30			March 31			Dec. 31
BNY Mellon shareholders’ equity at period end – GAAP	$	40,638		$	41,560		$	41,505		$	41,728		$	41,251
Less: Preferred stock	3,542			3,542			3,542			3,542			3,542
BNY Mellon common shareholders’ equity at period end – GAAP	37,096			38,018			37,963			38,186			37,709
Less: Goodwill	17,350			17,390			17,418			17,596			17,564
Intangible assets	3,220			3,258			3,308			3,370			3,411
Add: Deferred tax liability – tax deductible goodwill (a)	1,072			1,066			1,054			1,042			1,034
Deferred tax liability – intangible assets (a)	692			699			709			716			718
BNY Mellon tangible common shareholders’ equity at period end – Non-GAAP	$	18,290		$	19,135		$	19,000		$	18,978		$	18,486
Period-end common shares outstanding (in thousands)	960,426			988,777			999,945			1,010,676			1,013,442
Book value per common share – GAAP	$	38.63		$	38.45		$	37.97		$	37.78		$	37.21
Tangible book value per common share – Non-GAAP	$	19.04		$	19.35		$	19.00		$	18.78		$	18.24
(a)    Deferred tax liabilities at Dec. 31, 2017 are based on fully phased-in U.S. capital rules.
Net interest margin reconciliation
(dollars in millions)	4Q18			3Q18			2Q18			1Q18			4Q17
Net interest revenue – GAAP	$	885		$	891		$	916		$	919		$	851
Add: Tax equivalent adjustment	4			5			5			6			11
Net interest revenue (FTE) – Non-GAAP	$	889		$	896		$	921		$	925		$	862
Average interest-earning assets	$	285,706		$	279,218		$	292,086		$	302,069		$	297,166
Net interest margin – GAAP (a)	1.24		%	1.27		%	1.26		%	1.22		%	1.14		%
Net interest margin (FTE) – Non-GAAP (a)	1.24		%	1.28		%	1.26		%	1.23		%	1.16		%
(a)    Net interest margin is annualized.

19

THE BANK OF NEW YORK MELLON CORPORATION
SUPPLEMENTAL INFORMATION – EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
Pre-tax operating margin reconciliation - Investment Management business
(dollars in millions)	4Q18			3Q18			2Q18			1Q18			4Q17			FY18			FY17
Income before income taxes – GAAP	$	247		$	316		$	319		$	381		$	276		$	1,263		$	1,141
Total revenue – GAAP	$	963		$	1,015		$	1,018		$	1,088		$	1,048		$	4,084		$	3,997
Less: Distribution and servicing expense	95			99			103			110			107			407			422
Adjusted total revenue, net of distribution and servicing expense – Non-GAAP	$	868		$	916		$	915		$	978		$	941		$	3,677		$	3,575
Pre-tax operating margin – GAAP (a)	26		%	31		%	31		%	35		%	26		%	31		%	29		%
Adjusted pre-tax operating margin, net of distribution and servicing expense – Non-GAAP (a)	29		%	35		%	35		%	39		%	29		%	34		%	32		%
(a)    Income before taxes divided by total revenue.
Constant currency reconciliations							4Q18 vs.
(dollars in millions)	4Q18			4Q17			4Q17
Consolidated:
Investment management and performance fees	$	893		$	962		(7		)%
Impact of changes in foreign currency exchange rates	—			(12		)
Adjusted investment management and performance fees – Non-GAAP	$	893		$	950		(6		)%
Investment Management business:
Investment management and performance fees	$	880		$	948		(7		)%
Impact of changes in foreign currency exchange rates	—			(12		)
Adjusted investment management and performance fees – Non-GAAP	$	880		$	936		(6		)%

20