The Bank of New York Mellon Corporation |
Financial Supplement |
First Quarter 2019 |
Table of Contents | ||
Consolidated Results | Page | |
Consolidated Financial Highlights | ||
Condensed Consolidated Income Statement | ||
Condensed Consolidated Balance Sheet | ||
Fee and Other Revenue | ||
Average Balances and Interest Rates | ||
Capital and Liquidity | ||
Business Segment Results | ||
Investment Services Business | ||
Investment Management Business | ||
AUM by Product, AUM Flows and Wealth Management Client Assets | ||
Other Segment | ||
Other | ||
Investment Securities Portfolio | ||
Allowance for Credit Losses and Nonperforming Assets | ||
Supplemental Information – Explanation of GAAP and Non-GAAP Financial Measures |
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS | ||||||||||||||||||||
(dollars in millions, except per common share amounts, or unless otherwise noted) | 1Q19 vs. | |||||||||||||||||||
1Q19 | 4Q18 | 3Q18 | 2Q18 | 1Q18 | 4Q18 | 1Q18 | ||||||||||||||
Selected income statement data | ||||||||||||||||||||
Fee revenue | $ | 3,031 | $ | 3,146 | $ | 3,168 | $ | 3,209 | $ | 3,319 | (4 | )% | (9 | )% | ||||||
Net securities gains (losses) | 1 | — | — | 1 | (49 | ) | N/M | N/M | ||||||||||||
Fee and other revenue | 3,032 | 3,146 | 3,168 | 3,210 | 3,270 | (4 | ) | (7 | ) | |||||||||||
Income (loss) from consolidated investment management funds | 26 | (24 | ) | 10 | 12 | (11 | ) | N/M | N/M | |||||||||||
Net interest revenue | 841 | 885 | 891 | 916 | 919 | (5 | ) | (8 | ) | |||||||||||
Total revenue | 3,899 | 4,007 | 4,069 | 4,138 | 4,178 | (3 | ) | (7 | ) | |||||||||||
Provision for credit losses | 7 | — | (3 | ) | (3 | ) | (5 | ) | N/M | N/M | ||||||||||
Noninterest expense | 2,699 | 2,987 | 2,738 | 2,747 | 2,739 | (10 | ) | (1 | ) | |||||||||||
Income before income taxes | 1,193 | 1,020 | 1,334 | 1,394 | 1,444 | 17 | (17 | ) | ||||||||||||
Provision for income taxes | 237 | 150 | 220 | 286 | 282 | 58 | (16 | ) | ||||||||||||
Net income | $ | 956 | $ | 870 | $ | 1,114 | $ | 1,108 | $ | 1,162 | 10 | % | (18 | )% | ||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 910 | $ | 832 | $ | 1,075 | $ | 1,055 | $ | 1,135 | 9 | % | (20 | )% | ||||||
Diluted earnings per common share | $ | 0.94 | $ | 0.84 | $ | 1.06 | $ | 1.03 | $ | 1.10 | 12 | % | (15 | )% | ||||||
Average common shares and equivalents outstanding - diluted (in thousands) | 965,960 | 988,650 | 1,003,665 | 1,014,357 | 1,021,731 | (2 | )% | (5 | )% | |||||||||||
Financial ratios (Quarterly returns are annualized) | ||||||||||||||||||||
Pre-tax operating margin | 31 | % | 25 | % | 33 | % | 34 | % | 35 | % | ||||||||||
Return on common equity (a) | 10.0 | % | 8.7 | % | 11.2 | % | 11.2 | % | 12.2 | % | ||||||||||
Return on tangible common equity – Non-GAAP (a) | 20.7 | % | 17.9 | % | 23.1 | % | 23.5 | % | 25.9 | % | ||||||||||
Percent of non-U.S. total revenue | 36 | % | 36 | % | 37 | % | 37 | % | 37 | % | ||||||||||
Period end | ||||||||||||||||||||
Assets under custody and/or administration (“AUC/A”) (in trillions) (b) | $ | 34.5 | $ | 33.1 | $ | 34.5 | $ | 33.6 | $ | 33.5 | 4 | % | 3 | % | ||||||
Assets under management (“AUM”) (in trillions) | $ | 1.84 | $ | 1.72 | $ | 1.83 | $ | 1.81 | $ | 1.87 | 7 | % | (1 | )% | ||||||
Full-time employees | 49,800 | 51,300 | 52,000 | 52,000 | 52,100 | (3 | )% | (4 | )% | |||||||||||
Book value per common share (a) | $ | 39.36 | $ | 38.63 | $ | 38.45 | $ | 37.97 | $ | 37.78 | ||||||||||
Tangible book value per common share – Non-GAAP (a) | $ | 19.74 | $ | 19.04 | $ | 19.35 | $ | 19.00 | $ | 18.78 | ||||||||||
Cash dividends per common share | $ | 0.28 | $ | 0.28 | $ | 0.28 | $ | 0.24 | $ | 0.24 | ||||||||||
Common dividend payout ratio | 30 | % | 33 | % | 26 | % | 23 | % | 22 | % | ||||||||||
Closing stock price per common share | $ | 50.43 | $ | 47.07 | $ | 50.99 | $ | 53.93 | $ | 51.53 | ||||||||||
Market capitalization | $ | 48,288 | $ | 45,207 | $ | 50,418 | $ | 53,927 | $ | 52,080 | ||||||||||
Common shares outstanding (in thousands) | 957,517 | 960,426 | 988,777 | 999,945 | 1,010,676 | |||||||||||||||
Capital ratios at period end (c) | ||||||||||||||||||||
Common Equity Tier 1 ("CET1") ratio | 11.0 | % | 10.7 | % | 11.2 | % | 11.0 | % | 10.7 | % | ||||||||||
Tier 1 capital ratio | 13.1 | % | 12.8 | % | 13.3 | % | 13.1 | % | 12.7 | % | ||||||||||
Total capital ratio | 13.9 | % | 13.6 | % | 14.1 | % | 13.8 | % | 13.4 | % | ||||||||||
Supplementary leverage ratio ("SLR") | 6.3 | % | 6.0 | % | 6.4 | % | 6.1 | % | 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 16 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 $1.3 trillion at March 31, 2019, $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. | ||||||||||||||||||||
(c) Regulatory capital ratios for March 31, 2019 are preliminary. All risk-based capital ratios are presented using Advanced Approaches risk-weightings. | ||||||||||||||||||||
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) | 1Q19 vs. | |||||||||||||||||||
1Q19 | 4Q18 | 3Q18 | 2Q18 | 1Q18 | 4Q18 | 1Q18 | ||||||||||||||
Revenue | ||||||||||||||||||||
Investment services fees: | ||||||||||||||||||||
Asset servicing fees | $ | 1,122 | $ | 1,126 | $ | 1,157 | $ | 1,157 | $ | 1,168 | — | % | (4 | )% | ||||||
Clearing services fees (a) | 398 | 398 | 393 | 401 | 424 | — | (6 | ) | ||||||||||||
Issuer services fees | 251 | 286 | 287 | 266 | 260 | (12 | ) | (3 | ) | |||||||||||
Treasury services fees | 132 | 139 | 137 | 140 | 138 | (5 | ) | (4 | ) | |||||||||||
Total investment services fees (a) | 1,903 | 1,949 | 1,974 | 1,964 | 1,990 | (2 | ) | (4 | ) | |||||||||||
Investment management and performance fees (a) | 841 | 884 | 912 | 901 | 950 | (5 | ) | (11 | ) | |||||||||||
Foreign exchange and other trading revenue | 170 | 181 | 155 | 187 | 209 | (6 | ) | (19 | ) | |||||||||||
Financing-related fees | 51 | 50 | 52 | 53 | 52 | 2 | (2 | ) | ||||||||||||
Distribution and servicing | 31 | 35 | 34 | 34 | 36 | (11 | ) | (14 | ) | |||||||||||
Investment and other income | 35 | 47 | 41 | 70 | 82 | N/M | N/M | |||||||||||||
Total fee revenue | 3,031 | 3,146 | 3,168 | 3,209 | 3,319 | (4 | ) | (9 | ) | |||||||||||
Net securities gains (losses) | 1 | — | — | 1 | (49 | ) | N/M | N/M | ||||||||||||
Total fee and other revenue | 3,032 | 3,146 | 3,168 | 3,210 | 3,270 | (4 | ) | (7 | ) | |||||||||||
Income (loss) from consolidated investment management funds | 26 | (24 | ) | 10 | 12 | (11 | ) | N/M | N/M | |||||||||||
Net interest revenue | 841 | 885 | 891 | 916 | 919 | (5 | ) | (8 | ) | |||||||||||
Total revenue | 3,899 | 4,007 | 4,069 | 4,138 | 4,178 | (3 | ) | (7 | ) | |||||||||||
Provision for credit losses | 7 | — | (3 | ) | (3 | ) | (5 | ) | N/M | N/M | ||||||||||
Noninterest expense | ||||||||||||||||||||
Staff | 1,524 | 1,602 | 1,478 | 1,489 | 1,576 | (5 | ) | (3 | ) | |||||||||||
Professional, legal and other purchased services | 325 | 383 | 332 | 328 | 291 | (15 | ) | 12 | ||||||||||||
Software and equipment | 283 | 300 | 262 | 266 | 234 | (6 | ) | 21 | ||||||||||||
Net occupancy | 137 | 196 | 139 | 156 | 139 | (30 | ) | (1 | ) | |||||||||||
Sub-custodian and clearing | 105 | 115 | 106 | 110 | 119 | (9 | ) | (12 | ) | |||||||||||
Distribution and servicing | 91 | 95 | 99 | 106 | 106 | (4 | ) | (14 | ) | |||||||||||
Business development | 45 | 64 | 51 | 62 | 51 | (30 | ) | (12 | ) | |||||||||||
Bank assessment charges | 31 | 22 | 49 | 47 | 52 | 41 | (40 | ) | ||||||||||||
Amortization of intangible assets | 29 | 35 | 48 | 48 | 49 | (17 | ) | (41 | ) | |||||||||||
Other | 129 | 175 | 174 | 135 | 122 | (26 | ) | 6 | ||||||||||||
Total noninterest expense | 2,699 | 2,987 | 2,738 | 2,747 | 2,739 | (10 | ) | (1 | ) | |||||||||||
Income before income taxes | 1,193 | 1,020 | 1,334 | 1,394 | 1,444 | 17 | (17 | ) | ||||||||||||
Provision for income taxes | 237 | 150 | 220 | 286 | 282 | 58 | (16 | ) | ||||||||||||
Net income | 956 | 870 | 1,114 | 1,108 | 1,162 | 10 | (18 | ) | ||||||||||||
Net (income) loss attributable to noncontrolling interests | (10 | ) | 11 | (3 | ) | (5 | ) | 9 | N/M | N/M | ||||||||||
Preferred stock dividends | (36 | ) | (49 | ) | (36 | ) | (48 | ) | (36 | ) | N/M | N/M | ||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 910 | $ | 832 | $ | 1,075 | $ | 1,055 | $ | 1,135 | 9 | % | (20 | )% | ||||||
Average common shares and equivalents outstanding: Basic | 962,397 | 984,343 | 999,808 | 1,010,179 | 1,016,797 | (2 | )% | (5 | )% | |||||||||||
Diluted | 965,960 | 988,650 | 1,003,665 | 1,014,357 | 1,021,731 | (2 | )% | (5 | )% | |||||||||||
Earnings per common share: Basic | $ | 0.94 | $ | 0.84 | $ | 1.07 | $ | 1.04 | $ | 1.11 | 12 | % | (15 | )% | ||||||
Diluted | $ | 0.94 | $ | 0.84 | $ | 1.06 | $ | 1.03 | $ | 1.10 | 12 | % | (15 | )% | ||||||
(a) In 1Q19, we reclassified certain platform-related fees to clearing services fees from investment management and performance fees. Prior periods have been reclassified. | ||||||||||||||||||||
N/M - Not meaningful. |
4
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEET | ||||||||||||||||
2019 | 2018 | |||||||||||||||
(in millions) | March 31 | Dec. 31 | Sept. 30 | June 30 | March 31 | |||||||||||
Assets | ||||||||||||||||
Cash and due from: | ||||||||||||||||
Banks | $ | 5,980 | $ | 5,864 | $ | 5,047 | $ | 5,361 | $ | 4,636 | ||||||
Interest-bearing deposits with the Federal Reserve and other central banks | 60,699 | 67,988 | 74,725 | 75,116 | 91,431 | |||||||||||
Interest-bearing deposits with banks | 13,681 | 14,148 | 14,519 | 16,134 | 15,186 | |||||||||||
Federal funds sold and securities purchased under resale agreements | 40,158 | 46,795 | 28,722 | 26,494 | 28,784 | |||||||||||
Securities | 117,504 | 119,791 | 118,641 | 119,081 | 118,789 | |||||||||||
Trading assets | 6,868 | 7,035 | 7,804 | 7,035 | 8,596 | |||||||||||
Loans | 53,487 | 56,564 | 53,987 | 57,776 | 60,809 | |||||||||||
Allowance for loan losses | (146 | ) | (146 | ) | (140 | ) | (145 | ) | (156 | ) | ||||||
Net loans | 53,341 | 56,418 | 53,847 | 57,631 | 60,653 | |||||||||||
Premises and equipment (a) | 3,010 | 1,832 | 1,832 | 1,752 | 1,702 | |||||||||||
Accrued interest receivable | 651 | 671 | 640 | 663 | 610 | |||||||||||
Goodwill | 17,367 | 17,350 | 17,390 | 17,418 | 17,596 | |||||||||||
Intangible assets | 3,193 | 3,220 | 3,258 | 3,308 | 3,370 | |||||||||||
Other assets | 23,228 | 21,298 | 22,846 | 22,507 | 21,638 | |||||||||||
Subtotal assets of operations | 345,680 | 362,410 | 349,271 | 352,500 | 372,991 | |||||||||||
Assets of consolidated investment management funds, at fair value | 452 | 463 | 499 | 428 | 606 | |||||||||||
Total assets | $ | 346,132 | $ | 362,873 | $ | 349,770 | $ | 352,928 | $ | 373,597 | ||||||
Liabilities | ||||||||||||||||
Deposits | $ | 222,382 | $ | 238,778 | $ | 231,590 | $ | 230,560 | $ | 241,844 | ||||||
Federal funds purchased and securities sold under repurchase agreements | 11,761 | 14,243 | 10,158 | 13,200 | 21,600 | |||||||||||
Trading liabilities | 3,892 | 3,479 | 3,536 | 3,580 | 3,365 | |||||||||||
Payables to customers and broker-dealers | 19,310 | 19,731 | 18,683 | 19,123 | 20,172 | |||||||||||
Commercial paper | 2,773 | 1,939 | 735 | 2,508 | 3,936 | |||||||||||
Other borrowed funds | 3,932 | 3,227 | 2,934 | 3,053 | 1,550 | |||||||||||
Accrued taxes and other expenses | 4,686 | 5,669 | 5,601 | 5,452 | 5,349 | |||||||||||
Other liabilities (a) | 8,050 | 5,774 | 6,552 | 5,443 | 5,707 | |||||||||||
Long-term debt | 27,874 | 29,163 | 28,113 | 28,260 | 27,939 | |||||||||||
Subtotal liabilities of operations | 304,660 | 322,003 | 307,902 | 311,179 | 331,462 | |||||||||||
Liabilities of consolidated investment management funds, at fair value | 3 | 2 | 7 | 3 | 11 | |||||||||||
Total liabilities | 304,663 | 322,005 | 307,909 | 311,182 | 331,473 | |||||||||||
Temporary equity | ||||||||||||||||
Redeemable noncontrolling interests | 122 | 129 | 211 | 189 | 184 | |||||||||||
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 | 27,349 | 27,118 | 27,034 | 26,981 | 26,911 | |||||||||||
Retained earnings | 29,382 | 28,652 | 28,098 | 27,306 | 26,496 | |||||||||||
Accumulated other comprehensive loss, net of tax | (2,990 | ) | (3,171 | ) | (2,983 | ) | (2,795 | ) | (2,343 | ) | ||||||
Less: Treasury stock, at cost | (16,072 | ) | (15,517 | ) | (14,145 | ) | (13,543 | ) | (12,892 | ) | ||||||
Total The Bank of New York Mellon Corporation shareholders’ equity | 41,225 | 40,638 | 41,560 | 41,505 | 41,728 | |||||||||||
Nonredeemable noncontrolling interests of consolidated investment management funds | 122 | 101 | 90 | 52 | 212 | |||||||||||
Total permanent equity | 41,347 | 40,739 | 41,650 | 41,557 | 41,940 | |||||||||||
Total liabilities, temporary equity and permanent equity | $ | 346,132 | $ | 362,873 | $ | 349,770 | $ | 352,928 | $ | 373,597 | ||||||
(a) In 1Q19, we adopted new accounting guidance included in Accounting Standards Update ("ASU") 2016-02, Leases, prospectively, which required the recognition of right-of-use assets (included in premises and equipment) and lease liabilities (included in other liabilities). |
5
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||
FEE AND OTHER REVENUE | ||||||||||||||||||||
1Q19 vs. | ||||||||||||||||||||
(dollars in millions) | 1Q19 | 4Q18 | 3Q18 | 2Q18 | 1Q18 | 4Q18 | 1Q18 | |||||||||||||
Investment services fees: | ||||||||||||||||||||
Asset servicing fees | $ | 1,074 | $ | 1,079 | $ | 1,099 | $ | 1,097 | $ | 1,113 | — | % | (4 | )% | ||||||
Securities lending revenue | 48 | 47 | 58 | 60 | 55 | 2 | (13 | ) | ||||||||||||
Clearing services fees (a) | 398 | 398 | 393 | 401 | 424 | — | (6 | ) | ||||||||||||
Issuer services fees | 251 | 286 | 287 | 266 | 260 | (12 | ) | (3 | ) | |||||||||||
Treasury services fees | 132 | 139 | 137 | 140 | 138 | (5 | ) | (4 | ) | |||||||||||
Total investment services fees (a) | 1,903 | 1,949 | 1,974 | 1,964 | 1,990 | (2 | ) | (4 | ) | |||||||||||
Investment management and performance fees (a)(b)(c) | 841 | 884 | 912 | 901 | 950 | (5 | ) | (11 | ) | |||||||||||
Foreign exchange and other trading revenue: | ||||||||||||||||||||
Foreign exchange | 160 | 159 | 150 | 171 | 183 | 1 | (13 | ) | ||||||||||||
Other trading revenue | 10 | 22 | 5 | 16 | 26 | N/M | N/M | |||||||||||||
Total foreign exchange and other trading revenue | 170 | 181 | 155 | 187 | 209 | (6 | ) | (19 | ) | |||||||||||
Financing-related fees | 51 | 50 | 52 | 53 | 52 | 2 | (2 | ) | ||||||||||||
Distribution and servicing | 31 | 35 | 34 | 34 | 36 | (11 | ) | (14 | ) | |||||||||||
Investment and other income: | ||||||||||||||||||||
Corporate/bank-owned life insurance | 30 | 42 | 36 | 31 | 36 | N/M | N/M | |||||||||||||
Expense reimbursements from joint venture | 19 | 19 | 17 | 19 | 16 | N/M | N/M | |||||||||||||
Asset-related gains | 1 | 2 | 7 | 15 | 46 | N/M | N/M | |||||||||||||
Seed capital (losses) gains (b) | (2 | ) | (8 | ) | 8 | 3 | — | N/M | N/M | |||||||||||
Other (loss) income | (13 | ) | (8 | ) | (27 | ) | 2 | (16 | ) | N/M | N/M | |||||||||
Total investment and other income (b) | 35 | 47 | 41 | 70 | 82 | N/M | N/M | |||||||||||||
Total fee revenue | 3,031 | 3,146 | 3,168 | 3,209 | 3,319 | (4 | ) | (9 | ) | |||||||||||
Net securities gains (losses) | 1 | — | — | 1 | (49 | ) | N/M | N/M | ||||||||||||
Total fee and other revenue | $ | 3,032 | $ | 3,146 | $ | 3,168 | $ | 3,210 | $ | 3,270 | (4 | )% | (7 | )% | ||||||
(a) In 1Q19, we reclassified certain platform-related fees to clearing services fees from investment management and performance fees. Prior periods have been reclassified. | ||||||||||||||||||||
(b) Excludes seed capital gains related to consolidated investment management funds, which are reflected in operations of consolidated investment management funds. | ||||||||||||||||||||
(c) On a constant currency basis (Non-GAAP), investment management and performance fees decreased 9% compared with 1Q18. See "Supplemental Information - Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 16 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 | |||||||||||||||||||||||||||||
1Q19 | 4Q18 | 3Q18 | 2Q18 | 1Q18 | |||||||||||||||||||||||||
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) | $ | 13,857 | 1.85 | % | $ | 14,666 | 1.67 | % | $ | 14,691 | 1.58 | % | $ | 15,748 | 1.41 | % | $ | 13,850 | 1.25 | % | |||||||||
Interest-bearing deposits with the Federal Reserve and other central banks | 63,583 | 0.87 | 63,916 | 0.89 | 61,216 | 0.80 | 69,676 | 0.77 | 79,068 | 0.64 | |||||||||||||||||||
Federal funds sold and securities purchased under resale agreements (a) | 28,968 | 6.63 | 28,843 | 5.98 | 26,738 | 4.18 | 28,051 | 3.29 | 27,903 | 2.47 | |||||||||||||||||||
Margin loans | 12,670 | 4.34 | 13,369 | 4.08 | 13,738 | 3.74 | 14,838 | 3.46 | 15,674 | 2.98 | |||||||||||||||||||
Non-margin loans: | |||||||||||||||||||||||||||||
Domestic offices | 28,177 | 3.85 | 29,576 | 3.73 | 28,628 | 3.59 | 29,970 | 3.44 | 30,415 | 3.02 | |||||||||||||||||||
Foreign offices | 10,511 | 3.32 | 10,889 | 3.10 | 11,441 | 2.98 | 12,258 | 2.87 | 12,517 | 2.51 | |||||||||||||||||||
Total non-margin loans | 38,688 | 3.70 | 40,465 | 3.56 | 40,069 | 3.42 | 42,228 | 3.27 | 42,932 | 2.87 | |||||||||||||||||||
Securities: | |||||||||||||||||||||||||||||
U.S. government obligations | 23,597 | 2.22 | 24,531 | 2.14 | 24,423 | 2.09 | 23,199 | 2.02 | 23,460 | 1.88 | |||||||||||||||||||
U.S. government agency obligations | 64,867 | 2.63 | 64,496 | 2.54 | 64,612 | 2.40 | 63,022 | 2.37 | 62,975 | 2.23 | |||||||||||||||||||
State and political subdivisions - tax-exempt | 2,206 | 2.71 | 2,263 | 2.63 | 2,453 | 2.77 | 2,677 | 2.75 | 2,875 | 2.62 | |||||||||||||||||||
Other securities | 28,647 | 2.13 | 27,614 | 1.91 | 27,017 | 1.98 | 28,863 | 1.75 | 29,149 | 1.69 | |||||||||||||||||||
Trading securities | 5,102 | 2.91 | 5,543 | 2.77 | 4,261 | 3.05 | 3,784 | 3.10 | 4,183 | 2.62 | |||||||||||||||||||
Total securities | 124,419 | 2.45 | 124,447 | 2.33 | 122,766 | 2.28 | 121,545 | 2.19 | 122,642 | 2.05 | |||||||||||||||||||
Total interest-earning assets | $ | 282,185 | 2.75 | % | $ | 285,706 | 2.60 | % | $ | 279,218 | 2.33 | % | $ | 292,086 | 2.14 | % | $ | 302,069 | 1.85 | % | |||||||||
Noninterest-earning assets | 53,980 | 52,885 | 53,123 | 54,242 | 56,106 | ||||||||||||||||||||||||
Total assets | $ | 336,165 | $ | 338,591 | $ | 332,341 | $ | 346,328 | $ | 358,175 | |||||||||||||||||||
Liabilities and total equity | |||||||||||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||||||||||||
Domestic offices | $ | 70,562 | 1.29 | % | $ | 72,929 | 1.19 | % | $ | 57,942 | 0.97 | % | $ | 54,200 | 0.78 | % | $ | 51,612 | 0.55 | % | |||||||||
Foreign offices | 89,317 | 0.76 | 88,734 | 0.59 | 90,694 | 0.42 | 98,599 | 0.28 | 104,092 | 0.18 | |||||||||||||||||||
Total interest-bearing deposits | 159,879 | 0.99 | 161,663 | 0.86 | 148,636 | 0.63 | 152,799 | 0.45 | 155,704 | 0.30 | |||||||||||||||||||
Federal funds purchased and securities sold under repurchase agreements (a) | 11,922 | 11.26 | 10,980 | 10.95 | 14,199 | 5.33 | 18,146 | 3.48 | 18,963 | 2.29 | |||||||||||||||||||
Trading liabilities | 1,305 | 2.25 | 1,330 | 1.86 | 1,150 | 2.32 | 1,198 | 2.43 | 1,569 | 2.26 | |||||||||||||||||||
Other borrowed funds | 3,305 | 2.87 | 2,903 | 2.44 | 2,747 | 2.33 | 2,399 | 2.40 | 2,119 | 1.67 | |||||||||||||||||||
Commercial paper | 1,377 | 2.44 | 353 | 2.41 | 3,102 | 2.10 | 3,869 | 2.13 | 3,131 | 1.59 | |||||||||||||||||||
Payables to customers and broker-dealers | 16,108 | 1.76 | 15,727 | 1.61 | 16,252 | 1.23 | 16,349 | 1.10 | 17,101 | 0.75 | |||||||||||||||||||
Long-term debt | 28,254 | 3.52 | 28,201 | 3.29 | 28,074 | 3.17 | 28,349 | 3.06 | 28,407 | 2.49 | |||||||||||||||||||
Total interest-bearing liabilities | $ | 222,150 | 1.96 | % | $ | 221,157 | 1.75 | % | $ | 214,160 | 1.37 | % | $ | 223,109 | 1.14 | % | $ | 226,994 | 0.82 | % | |||||||||
Total noninterest-bearing deposits | 54,583 | 58,972 | 60,677 | 64,768 | 71,005 | ||||||||||||||||||||||||
Other noninterest-bearing liabilities | 18,628 | 16,754 | 15,660 | 16,857 | 18,571 | ||||||||||||||||||||||||
Total The Bank of New York Mellon Corporation shareholders’ equity | 40,628 | 41,428 | 41,578 | 41,292 | 41,135 | ||||||||||||||||||||||||
Noncontrolling interests | 176 | 280 | 266 | 302 | 470 | ||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 336,165 | $ | 338,591 | $ | 332,341 | $ | 346,328 | $ | 358,175 | |||||||||||||||||||
Net interest margin | 1.20 | % | 1.24 | % | 1.27 | % | 1.26 | % | 1.22 | % | |||||||||||||||||||
Net interest margin (FTE) – Non-GAAP (b) | 1.20 | % | 1.24 | % | 1.28 | % | 1.26 | % | 1.23 | % | |||||||||||||||||||
(a) Includes the impact of offsetting under enforceable netting agreements of approximately $44 billion for 1Q19, $43 billion for 4Q18, $26 billion for 3Q18, $18 billion for 2Q18 and $14 billion for 1Q18. Excluding the impact of offsetting, the yield on federal funds sold and securities purchased under resale agreements would have been 2.63% for 1Q19, 2.41% for 4Q18, 2.12% for 3Q18, 2.01% for 2Q18 and 1.65% for 1Q18. Excluding the impact of offsetting, the rate on federal funds purchased and securities sold under repurchase agreements would have been 2.40% for 1Q19, 2.24% for 4Q18, 1.88% for 3Q18, 1.75% for 2Q18 and 1.32% for 1Q18. | |||||||||||||||||||||||||||||
(b) See "Supplemental Information - Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 16 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%, using dollar amounts in thousands and the actual number of days in the year. |
7
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||
CAPITAL AND LIQUIDITY | ||||||||||||||||
2019 | 2018 | |||||||||||||||
(dollars in millions) | March 31 | Dec. 31 | Sept. 30 | June 30 | March 31 | |||||||||||
Consolidated regulatory capital ratios (a) | ||||||||||||||||
Standardized Approach: | ||||||||||||||||
CET1 capital | $ | 18,157 | $ | 17,567 | $ | 18,517 | $ | 18,386 | $ | 18,334 | ||||||
Tier 1 capital | 21,639 | 21,044 | 22,002 | 21,877 | 21,835 | |||||||||||
Total capital | 23,136 | 22,536 | 23,497 | 23,375 | 23,340 | |||||||||||
Risk-weighted assets | 151,461 | 149,618 | 149,348 | 154,612 | 156,472 | |||||||||||
CET1 ratio | 12.0 | % | 11.7 | % | 12.4 | % | 11.9 | % | 11.7 | % | ||||||
Tier 1 capital ratio | 14.3 | 14.1 | 14.7 | 14.1 | 14.0 | |||||||||||
Total capital ratio | 15.3 | 15.1 | 15.7 | 15.1 | 14.9 | |||||||||||
Advanced Approaches: | ||||||||||||||||
CET1 capital | $ | 18,157 | $ | 17,567 | $ | 18,517 | $ | 18,386 | $ | 18,334 | ||||||
Tier 1 capital | 21,639 | 21,044 | 22,002 | 21,877 | 21,835 | |||||||||||
Total capital | 22,946 | 22,349 | 23,299 | 23,174 | 23,121 | |||||||||||
Risk-weighted assets | 165,532 | 164,671 | 165,137 | 167,580 | 171,910 | |||||||||||
CET1 ratio | 11.0 | % | 10.7 | % | 11.2 | % | 11.0 | % | 10.7 | % | ||||||
Tier 1 capital ratio | 13.1 | 12.8 | 13.3 | 13.1 | 12.7 | |||||||||||
Total capital ratio | 13.9 | 13.6 | 14.1 | 13.8 | 13.4 | |||||||||||
Tier 1 leverage ratio | 6.8 | % | 6.6 | % | 7.0 | % | 6.7 | % | 6.5 | % | ||||||
SLR: | ||||||||||||||||
Leverage exposure | $ | 344,790 | $ | 347,943 | $ | 341,566 | $ | 355,773 | $ | 367,818 | ||||||
SLR | 6.3 | % | 6.0 | % | 6.4 | % | 6.1 | % | 5.9 | % | ||||||
Average liquidity coverage ratio (“LCR”) | 118 | % | 118 | % | 121 | % | 118 | % | 116 | % | ||||||
(a) Regulatory capital ratios for March 31, 2019 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. |
8
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||
INVESTMENT SERVICES BUSINESS | ||||||||||||||||||||
1Q19 vs. | ||||||||||||||||||||
(dollars in millions) | 1Q19 | 4Q18 | 3Q18 | 2Q18 | 1Q18 | 4Q18 | 1Q18 | |||||||||||||
Revenue: | ||||||||||||||||||||
Investment services fees: | ||||||||||||||||||||
Asset servicing fees (ex. securities lending revenue) (a) | $ | 1,059 | $ | 1,063 | $ | 1,084 | $ | 1,080 | $ | 1,095 | — | % | (3 | )% | ||||||
Securities lending revenue | 44 | 43 | 52 | 55 | 48 | 2 | (8 | ) | ||||||||||||
Clearing services fees (b) | 398 | 398 | 393 | 400 | 424 | — | (6 | ) | ||||||||||||
Issuer services fees | 251 | 286 | 288 | 265 | 260 | (12 | ) | (3 | ) | |||||||||||
Treasury services fees | 132 | 139 | 136 | 140 | 138 | (5 | ) | (4 | ) | |||||||||||
Total investment services fees (b) | 1,884 | 1,929 | 1,953 | 1,940 | 1,965 | (2 | ) | (4 | ) | |||||||||||
Foreign exchange and other trading revenue | 157 | 163 | 161 | 172 | 169 | (4 | ) | (7 | ) | |||||||||||
Other (b)(c) | 113 | 121 | 116 | 121 | 116 | (7 | ) | (3 | ) | |||||||||||
Total fee and other revenue | 2,154 | 2,213 | 2,230 | 2,233 | 2,250 | (3 | ) | (4 | ) | |||||||||||
Net interest revenue | 796 | 827 | 827 | 874 | 844 | (4 | ) | (6 | ) | |||||||||||
Total revenue | 2,950 | 3,040 | 3,057 | 3,107 | 3,094 | (3 | ) | (5 | ) | |||||||||||
Provision for credit losses | 8 | 6 | 1 | 1 | (7 | ) | N/M | N/M | ||||||||||||
Noninterest expense (ex. amortization of intangible assets) | 1,949 | 2,090 | 1,995 | 1,931 | 1,913 | (7 | ) | 2 | ||||||||||||
Amortization of intangible assets | 20 | 22 | 35 | 36 | 36 | (9 | ) | (44 | ) | |||||||||||
Total noninterest expense | 1,969 | 2,112 | 2,030 | 1,967 | 1,949 | (7 | ) | 1 | ||||||||||||
Income before taxes | $ | 973 | $ | 922 | $ | 1,026 | $ | 1,139 | $ | 1,152 | 6 | % | (16 | )% | ||||||
Pre-tax operating margin | 33 | % | 30 | % | 34 | % | 37 | % | 37 | % | ||||||||||
Total revenue by line of business: | ||||||||||||||||||||
Asset Servicing | $ | 1,407 | $ | 1,435 | $ | 1,458 | $ | 1,520 | $ | 1,519 | (2 | )% | (7 | )% | ||||||
Pershing | 554 | 558 | 558 | 558 | 581 | (1 | ) | (5 | ) | |||||||||||
Issuer Services | 396 | 441 | 453 | 431 | 418 | (10 | ) | (5 | ) | |||||||||||
Treasury Services | 317 | 328 | 324 | 329 | 321 | (3 | ) | (1 | ) | |||||||||||
Clearance and Collateral Management | 276 | 278 | 264 | 269 | 255 | (1 | ) | 8 | ||||||||||||
Total revenue by line of business | $ | 2,950 | $ | 3,040 | $ | 3,057 | $ | 3,107 | $ | 3,094 | (3 | )% | (5 | )% | ||||||
(a) Asset servicing fees include the fees from the Clearance and Collateral Management business. | ||||||||||||||||||||
(b) In 1Q19, we reclassified certain platform-related fees to clearing services fees from investment management and performance fees. Prior periods have been reclassified. | ||||||||||||||||||||
(c) Other revenue includes investment management fees, financing-related fees, distribution and servicing revenue and investment and other income. | ||||||||||||||||||||
N/M - Not meaningful. |
9
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||
INVESTMENT SERVICES BUSINESS | ||||||||||||||||||||
1Q19 vs. | ||||||||||||||||||||
(dollars in millions unless otherwise noted) | 1Q19 | 4Q18 | 3Q18 | 2Q18 | 1Q18 | 4Q18 | 1Q18 | |||||||||||||
Average loans | $ | 33,171 | $ | 35,540 | $ | 35,044 | $ | 38,002 | $ | 39,200 | (7 | )% | (15 | )% | ||||||
Average assets | $ | 255,891 | $ | 262,584 | $ | 246,276 | $ | 264,387 | $ | 278,095 | (3 | )% | (8 | )% | ||||||
Average deposits | $ | 195,082 | $ | 203,416 | $ | 192,741 | $ | 203,064 | $ | 214,130 | (4 | )% | (9 | )% | ||||||
AUC/A at period end (in trillions) (a)(b) | $ | 34.5 | $ | 33.1 | $ | 34.5 | $ | 33.6 | $ | 33.5 | 4 | % | 3 | % | ||||||
Market value of securities on loan at period end (in billions) (c) | $ | 377 | $ | 373 | $ | 415 | $ | 432 | $ | 436 | 1 | % | (14 | )% | ||||||
Pershing | ||||||||||||||||||||
Average active clearing accounts (U.S. platform) (in thousands) | 6,169 | 6,125 | 6,108 | 6,080 | 6,075 | 1 | % | 2 | % | |||||||||||
Average long-term mutual fund assets (U.S. platform) | $ | 507,606 | $ | 489,491 | $ | 527,336 | $ | 512,645 | $ | 514,542 | 4 | % | (1 | )% | ||||||
Average investor margin loans (U.S. platform) | $ | 10,093 | $ | 10,921 | $ | 10,696 | $ | 10,772 | $ | 10,930 | (8 | )% | (8 | )% | ||||||
Clearance and Collateral Management | ||||||||||||||||||||
Average tri-party collateral management balances (in billions) | $ | 3,266 | $ | 3,181 | $ | 2,995 | $ | 2,801 | $ | 2,698 | 3 | % | 21 | % | ||||||
(a) March 31, 2019 information is preliminary. | ||||||||||||||||||||
(b) Includes the AUC/A of CIBC Mellon of $1.3 trillion at March 31, 2019, $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. | ||||||||||||||||||||
(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 $62 billion at March 31, 2019, $58 billion at Dec.31, 2018, $69 billion at Sept. 30, 2018, $70 billion at June 30, 2018 and $73 billion at March 31, 2018. |
10
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||
INVESTMENT MANAGEMENT BUSINESS | ||||||||||||||||||||
1Q19 vs. | ||||||||||||||||||||
(dollars in millions) | 1Q19 | 4Q18 | 3Q18 | 2Q18 | 1Q18 | 4Q18 | 1Q18 | |||||||||||||
Revenue: | ||||||||||||||||||||
Investment management fees (a) | $ | 806 | $ | 826 | $ | 879 | $ | 885 | $ | 898 | (2 | )% | (10 | )% | ||||||
Performance fees | 31 | 54 | 30 | 12 | 48 | N/M | (35 | ) | ||||||||||||
Investment management and performance fees (b) | 837 | 880 | 909 | 897 | 946 | (5 | ) | (12 | ) | |||||||||||
Distribution and servicing | 45 | 45 | 47 | 48 | 50 | — | (10 | ) | ||||||||||||
Other (a) | (18 | ) | (35 | ) | (18 | ) | (4 | ) | 16 | N/M | N/M | |||||||||
Total fee and other revenue (a) | 864 | 890 | 938 | 941 | 1,012 | (3 | ) | (15 | ) | |||||||||||
Net interest revenue | 75 | 73 | 77 | 77 | 76 | 3 | (1 | ) | ||||||||||||
Total revenue | 939 | 963 | 1,015 | 1,018 | 1,088 | (2 | ) | (14 | ) | |||||||||||
Provision for credit losses | 1 | 1 | (2 | ) | 2 | 2 | N/M | N/M | ||||||||||||
Noninterest expense (ex. amortization of intangible assets) | 660 | 702 | 688 | 685 | 692 | (6 | ) | (5 | ) | |||||||||||
Amortization of intangible assets | 9 | 13 | 13 | 12 | 13 | (31 | ) | (31 | ) | |||||||||||
Total noninterest expense | 669 | 715 | 701 | 697 | 705 | (6 | ) | (5 | ) | |||||||||||
Income before taxes | $ | 269 | $ | 247 | $ | 316 | $ | 319 | $ | 381 | 9 | % | (29 | )% | ||||||
Pre-tax operating margin | 29 | % | 26 | % | 31 | % | 31 | % | 35 | % | ||||||||||
Adjusted pre-tax operating margin – Non-GAAP (c) | 32 | % | 29 | % | 35 | % | 35 | % | 39 | % | ||||||||||
Total revenue by line of business: | ||||||||||||||||||||
Asset Management | $ | 637 | $ | 660 | $ | 704 | $ | 702 | $ | 770 | (3 | )% | (17 | )% | ||||||
Wealth Management | 302 | 303 | 311 | 316 | 318 | — | (5 | ) | ||||||||||||
Total revenue by line of business | $ | 939 | $ | 963 | $ | 1,015 | $ | 1,018 | $ | 1,088 | (2 | )% | (14 | )% | ||||||
Average loans | $ | 16,403 | $ | 16,485 | $ | 16,763 | $ | 16,974 | $ | 16,876 | — | % | (3 | )% | ||||||
Average assets | $ | 31,857 | $ | 31,043 | $ | 31,283 | $ | 31,504 | $ | 31,963 | 3 | % | — | % | ||||||
Average deposits | $ | 15,815 | $ | 14,893 | $ | 14,634 | $ | 14,252 | $ | 13,363 | 6 | % | 18 | % | ||||||
(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 fees, treasury services fees, foreign exchange and other trading revenue and investment and other income. | ||||||||||||||||||||
(b) On a constant currency basis, investment management and performance fees decreased 9% (Non-GAAP) compared with 1Q18. See "Supplemental Information - Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 16 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 16 for the reconciliation of this Non-GAAP measure. | ||||||||||||||||||||
N/M - Not meaningful. |
11
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||
AUM BY PRODUCT, AUM FLOWS AND WEALTH MANAGEMENT CLIENT ASSETS | ||||||||||||||||||||
1Q19 vs. | ||||||||||||||||||||
(dollars in billions) | 1Q19 | 4Q18 | 3Q18 | 2Q18 | 1Q18 | 4Q18 | 1Q18 | |||||||||||||
AUM by product type (a)(b) | ||||||||||||||||||||
Equity | $ | 149 | $ | 135 | $ | 167 | $ | 160 | $ | 161 | 10 | % | (7 | )% | ||||||
Fixed income | 208 | 200 | 202 | 197 | 206 | 4 | 1 | |||||||||||||
Index | 333 | 301 | 352 | 334 | 333 | 11 | — | |||||||||||||
Liability-driven investments | 709 | 659 | 652 | 663 | 700 | 8 | 1 | |||||||||||||
Multi-asset and alternative investments | 178 | 167 | 184 | 181 | 185 | 7 | (4 | ) | ||||||||||||
Cash | 264 | 260 | 271 | 270 | 283 | 2 | (7 | ) | ||||||||||||
Total AUM by product type | $ | 1,841 | $ | 1,722 | $ | 1,828 | $ | 1,805 | $ | 1,868 | 7 | % | (1 | )% | ||||||
Changes in AUM (a)(b) | ||||||||||||||||||||
Beginning balance of AUM | $ | 1,722 | $ | 1,828 | $ | 1,805 | $ | 1,868 | $ | 1,893 | ||||||||||
Net inflows (outflows): | ||||||||||||||||||||
Long-term strategies: | ||||||||||||||||||||
Equity | (4 | ) | (8 | ) | (2 | ) | (3 | ) | — | |||||||||||
Fixed income | 3 | (1 | ) | 2 | (4 | ) | 7 | |||||||||||||
Liability-driven investments | 5 | 14 | 16 | 2 | 13 | |||||||||||||||
Multi-asset and alternative investments | (4 | ) | (2 | ) | 2 | (3 | ) | (3 | ) | |||||||||||
Total long-term active strategies inflows (outflows) | — | 3 | 18 | (8 | ) | 17 | ||||||||||||||
Index | (2 | ) | (11 | ) | (3 | ) | (7 | ) | (13 | ) | ||||||||||
Total long-term strategies (outflows) inflows | (2 | ) | (8 | ) | 15 | (15 | ) | 4 | ||||||||||||
Short-term strategies: | ||||||||||||||||||||
Cash | 2 | (10 | ) | — | (11 | ) | (14 | ) | ||||||||||||
Total net inflows (outflows) | — | (18 | ) | 15 | (26 | ) | (10 | ) | ||||||||||||
Net market impact | 103 | (69 | ) | 18 | 17 | (14 | ) | |||||||||||||
Net currency impact | 16 | (19 | ) | (10 | ) | (53 | ) | 29 | ||||||||||||
Divestiture/Other | — | — | — | (1 | ) | (30 | ) | |||||||||||||
Ending balance of AUM | $ | 1,841 | $ | 1,722 | $ | 1,828 | $ | 1,805 | $ | 1,868 | 7 | % | (1 | )% | ||||||
Wealth Management client assets (a)(c) | $ | 253 | $ | 239 | $ | 261 | $ | 254 | $ | 255 | 6 | % | (1 | )% | ||||||
(a) March 31, 2019 information is preliminary. | ||||||||||||||||||||
(b) Excludes securities lending cash management assets and assets managed in the Investment Services business. | ||||||||||||||||||||
(c) Includes AUM and AUC/A in the Wealth Management business. The 1Q18 amount was revised to include additional AUC/A. |
12
THE BANK OF NEW YORK MELLON CORPORATION | |||||||||||||||
OTHER SEGMENT | |||||||||||||||
(in millions) | 1Q19 | 4Q18 | 3Q18 | 2Q18 | 1Q18 | ||||||||||
Fee revenue | $ | 29 | $ | 29 | $ | 7 | $ | 40 | $ | 57 | |||||
Net securities gains (losses) | 1 | — | — | 1 | (49 | ) | |||||||||
Total fee and other revenue | 30 | 29 | 7 | 41 | 8 | ||||||||||
Net interest (expense) | (30 | ) | (15 | ) | (13 | ) | (35 | ) | (1 | ) | |||||
Total revenue (loss) | — | 14 | (6 | ) | 6 | 7 | |||||||||
Provision for credit losses | (2 | ) | (7 | ) | (2 | ) | (6 | ) | — | ||||||
Noninterest expense | 61 | 160 | 6 | 81 | 87 | ||||||||||
(Loss) before taxes | $ | (59 | ) | $ | (139 | ) | $ | (10 | ) | $ | (69 | ) | $ | (80 | ) |
Average loans and leases | $ | 1,784 | $ | 1,809 | $ | 2,000 | $ | 2,090 | $ | 2,530 | |||||
Average assets | $ | 48,417 | $ | 44,964 | $ | 54,782 | $ | 50,437 | $ | 48,117 |
13
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||||||||||||
INVESTMENT SECURITIES PORTFOLIO | ||||||||||||||||||||||||||||||
(dollars in millions) | Dec. 31, 2018 | 1Q19 change in unrealized gain (loss) | March 31, 2019 | 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 | $ | 50,214 | $ | 428 | $ | 51,331 | $ | 50,872 | 99 | % | $ | (459 | ) | 100 | % | — | % | — | % | — | % | — | % | |||||||
U.S. Treasury | 24,792 | 55 | 19,615 | 19,545 | 100 | (70 | ) | 100 | — | — | — | — | ||||||||||||||||||
Sovereign debt/sovereign guaranteed | 11,577 | 26 | 12,704 | 12,811 | 101 | 107 | 76 | 5 | 18 | 1 | — | |||||||||||||||||||
Agency commercial MBS | 10,947 | 39 | 10,845 | 10,800 | 100 | (45 | ) | 100 | — | — | — | — | ||||||||||||||||||
U.S. government agencies | 3,157 | 13 | 3,559 | 3,556 | 100 | (3 | ) | 100 | — | — | — | — | ||||||||||||||||||
Supranational | 3,006 | 14 | 3,532 | 3,541 | 100 | 9 | 100 | — | — | — | — | |||||||||||||||||||
CLOs | 3,364 | 21 | 3,398 | 3,373 | 99 | (25 | ) | 98 | — | — | 1 | 1 | ||||||||||||||||||
Foreign covered bonds | 2,959 | 13 | 3,051 | 3,053 | 100 | 2 | 100 | — | — | — | — | |||||||||||||||||||
State and political subdivisions | 2,264 | 21 | 2,166 | 2,183 | 101 | 17 | 78 | 21 | — | — | 1 | |||||||||||||||||||
Other asset-backed securities | 1,773 | 1 | 2,039 | 2,037 | 100 | (2 | ) | 99 | — | 1 | — | — | ||||||||||||||||||
Non-agency commercial MBS | 1,470 | 16 | 1,481 | 1,476 | 100 | (5 | ) | 97 | 3 | — | — | — | ||||||||||||||||||
Non-agency RMBS (c) | 1,427 | (7 | ) | 1,129 | 1,354 | 120 | 225 | 11 | 12 | 6 | 46 | 25 | ||||||||||||||||||
Corporate bonds | 1,054 | 23 | 900 | 903 | 100 | 3 | 14 | 68 | 18 | — | — | |||||||||||||||||||
Other | 1,238 | — | 1,474 | 1,476 | 100 | 2 | 95 | — | — | — | 5 | |||||||||||||||||||
Total investment securities | $ | 119,242 | (d) | $ | 663 | $ | 117,224 | $ | 116,980 | (d) | 100 | % | $ | (244 | ) | (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 $832 million at Dec. 31, 2018 and $791 million at March 31, 2019. | ||||||||||||||||||||||||||||||
(d) Includes net unrealized gains on derivatives hedging securities available-for-sale of $131 million at Dec. 31, 2018 and net unrealized losses of $252 million at March 31, 2019. | ||||||||||||||||||||||||||||||
(e) Includes unrealized gains of $28 million at March 31, 2019 related to available-for-sale securities, net of hedges. |
14
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||
ALLOWANCE FOR CREDIT LOSSES AND NONPERFORMING ASSETS | ||||||||||||||||
2019 | 2018 | |||||||||||||||
(dollars in millions) | March 31 | Dec. 31 | Sept. 30 | June 30 | March 31 | |||||||||||
Allowance for credit losses - beginning 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 - beginning of period | $ | 252 | $ | 251 | $ | 254 | $ | 256 | $ | 261 | ||||||
Net (charge-offs) recoveries : | ||||||||||||||||
Charge-offs | (11 | ) | — | (1 | ) | — | — | |||||||||
Recoveries | — | 1 | 1 | 1 | — | |||||||||||
Total net (charge-offs) recoveries | (11 | ) | 1 | — | 1 | — | ||||||||||
Provision for credit losses | 7 | — | (3 | ) | (3 | ) | (5 | ) | ||||||||
Allowance for credit losses - end of period | $ | 248 | $ | 252 | $ | 251 | $ | 254 | $ | 256 | ||||||
Allowance for credit losses - end of period: | ||||||||||||||||
Allowance for loan losses | $ | 146 | $ | 146 | $ | 140 | $ | 145 | $ | 156 | ||||||
Allowance for lending-related commitments | 102 | 106 | 111 | 109 | 100 | |||||||||||
Allowance for credit losses - end of period | $ | 248 | $ | 252 | $ | 251 | $ | 254 | $ | 256 | ||||||
Allowance for loan losses as a percentage of total loans | 0.27 | % | 0.26 | % | 0.26 | % | 0.25 | % | 0.26 | % | ||||||
Nonperforming assets | $ | 174 | (a) | $ | 79 | $ | 81 | $ | 82 | $ | 85 | |||||
(a) Includes nonperforming loans to a California utility company that filed for bankruptcy. |
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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 we believe 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) | 1Q19 | 4Q18 | 3Q18 | 2Q18 | 1Q18 | ||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP | $ | 910 | $ | 832 | $ | 1,075 | $ | 1,055 | $ | 1,135 | |||||
Add: Amortization of intangible assets | 29 | 35 | 48 | 48 | 49 | ||||||||||
Less: Tax impact of amortization of intangible assets | 7 | 8 | 11 | 11 | 12 | ||||||||||
Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets – Non-GAAP | $ | 932 | $ | 859 | $ | 1,112 | $ | 1,092 | $ | 1,172 | |||||
Average common shareholders’ equity | $ | 37,086 | $ | 37,886 | $ | 38,036 | $ | 37,750 | $ | 37,593 | |||||
Less: Average goodwill | 17,376 | 17,358 | 17,391 | 17,505 | 17,581 | ||||||||||
Average intangible assets | 3,209 | 3,239 | 3,283 | 3,341 | 3,397 | ||||||||||
Add: Deferred tax liability – tax deductible goodwill | 1,083 | 1,072 | 1,066 | 1,054 | 1,042 | ||||||||||
Deferred tax liability – intangible assets | 690 | 692 | 699 | 709 | 716 | ||||||||||
Average tangible common shareholders’ equity – Non-GAAP | $ | 18,274 | $ | 19,053 | $ | 19,127 | $ | 18,667 | $ | 18,373 | |||||
Return on common equity – GAAP | 10.0 | % | 8.7 | % | 11.2 | % | 11.2 | % | 12.2 | % | |||||
Return on tangible common equity – Non-GAAP | 20.7 | % | 17.9 | % | 23.1 | % | 23.5 | % | 25.9 | % |
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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 | 2019 | 2018 | ||||||||||||||
(dollars in millions, except common shares) | March 31 | Dec. 31 | Sept. 30 | June 30 | March 31 | |||||||||||
BNY Mellon shareholders’ equity at period end – GAAP | $ | 41,225 | $ | 40,638 | $ | 41,560 | $ | 41,505 | $ | 41,728 | ||||||
Less: Preferred stock | 3,542 | 3,542 | 3,542 | 3,542 | 3,542 | |||||||||||
BNY Mellon common shareholders’ equity at period end – GAAP | 37,683 | 37,096 | 38,018 | 37,963 | 38,186 | |||||||||||
Less: Goodwill | 17,367 | 17,350 | 17,390 | 17,418 | 17,596 | |||||||||||
Intangible assets | 3,193 | 3,220 | 3,258 | 3,308 | 3,370 | |||||||||||
Add: Deferred tax liability – tax deductible goodwill | 1,083 | 1,072 | 1,066 | 1,054 | 1,042 | |||||||||||
Deferred tax liability – intangible assets | 690 | 692 | 699 | 709 | 716 | |||||||||||
BNY Mellon tangible common shareholders’ equity at period end – Non-GAAP | $ | 18,896 | $ | 18,290 | $ | 19,135 | $ | 19,000 | $ | 18,978 | ||||||
Period-end common shares outstanding (in thousands) | 957,517 | 960,426 | 988,777 | 999,945 | 1,010,676 | |||||||||||
Book value per common share – GAAP | $ | 39.36 | $ | 38.63 | $ | 38.45 | $ | 37.97 | $ | 37.78 | ||||||
Tangible book value per common share – Non-GAAP | $ | 19.74 | $ | 19.04 | $ | 19.35 | $ | 19.00 | $ | 18.78 | ||||||
Net interest margin reconciliation | ||||||||||||||||
(dollars in millions) | 1Q19 | 4Q18 | 3Q18 | 2Q18 | 1Q18 | |||||||||||
Net interest revenue – GAAP | $ | 841 | $ | 885 | $ | 891 | $ | 916 | $ | 919 | ||||||
Add: Tax equivalent adjustment | 4 | 4 | 5 | 5 | 6 | |||||||||||
Net interest revenue (FTE) – Non-GAAP | $ | 845 | $ | 889 | $ | 896 | $ | 921 | $ | 925 | ||||||
Average interest-earning assets | $ | 282,185 | $ | 285,706 | $ | 279,218 | $ | 292,086 | $ | 302,069 | ||||||
Net interest margin – GAAP (a) | 1.20 | % | 1.24 | % | 1.27 | % | 1.26 | % | 1.22 | % | ||||||
Net interest margin (FTE) – Non-GAAP (a) | 1.20 | % | 1.24 | % | 1.28 | % | 1.26 | % | 1.23 | % | ||||||
(a) Net interest margin is annualized. |
17
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) | 1Q19 | 4Q18 | 3Q18 | 2Q18 | 1Q18 | ||||||||||
Income before income taxes – GAAP | $ | 269 | $ | 247 | $ | 316 | $ | 319 | $ | 381 | |||||
Total revenue – GAAP | $ | 939 | $ | 963 | $ | 1,015 | $ | 1,018 | $ | 1,088 | |||||
Less: Distribution and servicing expense | 91 | 95 | 99 | 103 | 110 | ||||||||||
Adjusted total revenue, net of distribution and servicing expense – Non-GAAP | $ | 848 | $ | 868 | $ | 916 | $ | 915 | $ | 978 | |||||
Pre-tax operating margin – GAAP (a) | 29 | % | 26 | % | 31 | % | 31 | % | 35 | % | |||||
Adjusted pre-tax operating margin, net of distribution and servicing expense – Non-GAAP (a) | 32 | % | 29 | % | 35 | % | 35 | % | 39 | % | |||||
(a) Income before income taxes divided by total revenue. | |||||||||||||||
Constant currency reconciliations | 1Q19 vs. | ||||||||||||||
(dollars in millions) | 1Q19 | 1Q18 | 1Q18 | ||||||||||||
Consolidated: | |||||||||||||||
Investment management and performance fees | $ | 841 | $ | 950 | (11 | )% | |||||||||
Impact of changes in foreign currency exchange rates | — | (22 | ) | ||||||||||||
Adjusted investment management and performance fees – Non-GAAP | $ | 841 | $ | 928 | (9 | )% | |||||||||
Investment Management business: | |||||||||||||||
Investment management and performance fees | $ | 837 | $ | 946 | (12 | )% | |||||||||
Impact of changes in foreign currency exchange rates | — | (22 | ) | ||||||||||||
Adjusted investment management and performance fees – Non-GAAP | $ | 837 | $ | 924 | (9 | )% |
18