The Bank of New York Mellon Corporation 10Q 2024 Q2 Quarterly report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended June 30, 2024

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 001-35651

THE BANK OF NEW YORK MELLON CORPORATION

(Exact name of registrant as specified in its charter)


Delaware			13-2614959
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

240 Greenwich Street

New York, New York 10286

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code – (212) 495-1784

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	BK	New York Stock Exchange
6.244% Fixed-to-Floating Rate Normal Preferred Capital Securities of Mellon Capital IV	BK/P	New York Stock Exchange
(fully and unconditionally guaranteed by The Bank of New York Mellon Corporation)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of June 30, 2024, 737,957,499 shares of the registrant’s common stock, $0.01 par value per share, were outstanding.

THE BANK OF NEW YORK MELLON CORPORATION

Second Quarter 2024 Form 10-Q

Table of Contents


			Page
Consolidated Financial Highlights (unaudited)			2

Part I – Financial Information
Items 2. and 3. Management’s Discussion and Analysis of Financial Condition and Results of Operations; Quantitative and Qualitative Disclosures about Market Risk:
General			4
Overview			4
Key second quarter 2024 and subsequent events			4
Highlights of second quarter 2024 results			4
Fee and other revenue			6
Net interest income			9
Noninterest expense			12
Income taxes			12
Review of business segments			12
Critical accounting estimates			22
Consolidated balance sheet review			23
Liquidity and dividends			31
Capital			36
Trading activities and risk management			39
Asset/liability management			41
Supplemental information – Explanation of GAAP and Non-GAAP financial measures			43
Recent accounting and regulatory developments			47
Website information			48

Item 1. Financial Statements:
Consolidated Income Statement (unaudited)			49
Consolidated Comprehensive Income Statement (unaudited)			51
Consolidated Balance Sheet (unaudited)			52
Consolidated Statement of Cash Flows (unaudited)			53
Consolidated Statement of Changes in Equity (unaudited)			54


			Page
Notes to Consolidated Financial Statements:
Note 1—Basis of presentation			57
Note 2—New accounting guidance			57
Note 3—Acquisitions and dispositions			58
Note 4—Securities			59
Note 5—Loans and asset quality			63

Note 6—Goodwill and intangible assets			70
Note 7—Other assets			72
Note 8—Contract revenue			73
Note 9—Net interest income			76
Note 10—Employee benefit plans			76
Note 11—Income taxes			77
Note 12—Variable interest entities			77
Note 13—Preferred stock			78
Note 14—Other comprehensive income (loss)			79
Note 15—Fair value measurement			80
Note 16—Fair value option			85
Note 17—Derivative instruments			85
Note 18—Commitments and contingent liabilities			92
Note 19—Business segments			97
Note 20—Supplemental information to the Consolidated Statement of Cash Flows			100

Item 4. Controls and Procedures			101
Forward-looking Statements			102

Part II – Other Information
Item 1. Legal Proceedings.			105

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.			105
Item 5. Other Information.			105
Item 6. Exhibits.			105

Index to Exhibits			106
Signature			108

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

Consolidated Financial Highlights (unaudited)


	Quarter ended									Year-to-date
(dollars in millions, except per share amounts and unless otherwise noted)	June 30, 2024			March 31, 2024			June 30, 2023			June 30, 2024			June 30, 2023
Results applicable to common shareholders of The Bank of New York Mellon Corporation:
Net income (a)	$	1,143		$	953		$	1,036		$	2,096		$	1,947
Basic earnings per share (a)	$	1.53		$	1.26		$	1.32		$	2.79		$	2.45
Diluted earnings per share (a)	$	1.52		$	1.25		$	1.31		$	2.77		$	2.44

Fee and other revenue (a)	$	3,567		$	3,487		$	3,404		$	7,054		$	6,691
Net interest income	1,030			1,040			1,100			2,070			2,228
Total revenue (a)	$	4,597		$	4,527		$	4,504		$	9,124		$	8,919

Return on common equity (annualized) (a)	12.7		%	10.7		%	11.7		%	11.7		%	11.0		%
Return on tangible common equity (annualized) – Non-GAAP (a)(b)	24.6		%	20.7		%	22.8		%	22.7		%	21.7		%

Fee revenue as a percentage of total revenue (a)	74		%	73		%	72		%	73		%	72		%

Non-U.S. revenue as a percentage of total revenue (a)	36		%	34		%	36		%	35		%	35		%

Pre-tax operating margin (a)	33		%	29		%	31		%	31		%	30		%

Net interest margin	1.15		%	1.19		%	1.20		%	1.17		%	1.25		%
Net interest margin on a fully taxable equivalent (“FTE”) basis – Non-GAAP (c)	1.15		%	1.19		%	1.20		%	1.17		%	1.25		%

Assets under custody and/or administration (“AUC/A”) at period end (in trillions) (d)	$	49.5		$	48.8		$	46.9		$	49.5		$	46.9
Assets under management (“AUM”) at period end (in trillions) (e)	$	2.05		$	2.02		$	1.91		$	2.05		$	1.91

Average common shares and equivalents outstanding (in thousands):
Basic	746,904			756,937			787,718			751,961			795,512
Diluted	751,596			762,268			790,725			756,870			799,157

Selected average balances:
Interest-earning assets	$	353,633		$	346,133		$	362,049		$	349,883		$	355,251
Total assets (a)	$	412,499		$	403,985		$	420,961		$	408,242		$	414,157
Interest-bearing deposits	$	235,878		$	228,897		$	215,057		$	232,387		$	209,616
Noninterest-bearing deposits	$	48,965		$	49,949		$	62,152		$	49,457		$	65,997
Long-term debt	$	31,506		$	31,087		$	31,970		$	31,296		$	31,112
Preferred stock	$	4,343		$	4,343		$	4,838		$	4,343		$	4,838
Total The Bank of New York Mellon Corporation common shareholders’ equity (a)	$	36,044		$	35,905		$	35,655		$	35,975		$	35,569

Other information at period end:
Cash dividends per common share	$	0.42		$	0.42		$	0.37		$	0.84		$	0.74
Common dividend payout ratio (a)	28		%	34		%	29		%	31		%	31		%
Common dividend yield (annualized)	2.8		%	2.9		%	3.3		%	2.8		%	3.4		%
Closing stock price per common share	$	59.89		$	57.62		$	44.52		$	59.89		$	44.52
Market capitalization	$	44,196		$	43,089		$	34,671		$	44,196		$	34,671
Book value per common share (a)	$	49.46		$	48.44		$	46.21		$	49.46		$	46.21
Tangible book value per common share – Non-GAAP (a)(b)	$	26.19		$	25.44		$	24.03		$	26.19		$	24.03
Full-time employees (f)	52,000			52,100			53,200			52,000			53,200
Common shares outstanding (in thousands)	737,957			747,816			778,782			737,957			778,782

2 BNY

Consolidated Financial Highlights (unaudited) (continued)


Regulatory capital and other ratios	June 30, 2024		March 31, 2024		Dec. 31, 2023
Average liquidity coverage ratio (“LCR”)	115	%	117	%	117	%
Average net stable funding ratio (“NSFR”)	132	%	136	%	135	%

Regulatory capital ratios: (g)
Advanced Approaches:
Common Equity Tier 1 (“CET1”) ratio	11.5	%	11.1	%	11.5	%
Tier 1 capital ratio	14.2		13.7		14.2
Total capital ratio	15.0		14.5		14.9
Standardized Approach:
CET1 ratio	11.4	%	10.8	%	11.9	%
Tier 1 capital ratio	14.0		13.4		14.6
Total capital ratio	15.0		14.3		15.6

Tier 1 leverage ratio	5.8	%	5.9	%	6.0	%
Supplementary leverage ratio (“SLR”)	6.8		7.0		7.3

BNY shareholders’ equity to total assets ratio	9.5	%	9.3	%	9.9	%
BNY common shareholders’ equity to total assets ratio	8.5		8.3		8.9

(a) Results for the quarter ended June 30, 2023 and the six months ended June 30, 2023 were restated to reflect the retrospective application of adopting new accounting guidance related to our investments in renewable energy projects using the proportional amortization method (ASU 2023-02). See Note 2 of the Notes to Consolidated Financial Statements for additional information.

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

(d) Consists of AUC/A primarily from the Asset Servicing line of business and, to a lesser extent, the Clearance and Collateral Management, Issuer Services, Pershing and Wealth Management lines of business. Includes the AUC/A of CIBC Mellon Global Securities Services Company (“CIBC Mellon”), a joint venture with the Canadian Imperial Bank of Commerce, of $1.7 trillion at June 30, 2024 and March 31, 2024 and $1.6 trillion at June 30, 2023.

(e) Represents assets managed in the Investment and Wealth Management business segment.

(f) Beginning March 31, 2024, the number of full-time employees excludes interns.

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

BNY 3


Part I – Financial Information


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

General

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

Certain business terms used in this report are defined in the Glossary included in our Annual Report on Form 10-K for the year ended Dec. 31, 2023 (the “2023 Annual Report”).

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

Overview

BNY is a global financial services company that helps make money work for the world – managing it, moving it and keeping it safe. For 240 years we have partnered alongside our clients, putting our expertise and platforms to work to help them achieve their ambitions. Today we help over 90% of Fortune 100 companies and nearly all the top 100 banks globally access the money they need. We support governments in funding local projects and work with over 90% of the top 100 pension plans to safeguard investments for millions of individuals, and so much more. As of June 30, 2024, we oversee $49.5 trillion in assets under custody and/or administration and $2.0 trillion in assets under management.

BNY is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). We are headquartered in New York City, employ over 50,000 people globally and have been named among Fortune’s World’s Most Admired Companies and Fast Company’s Best Workplaces for Innovators.

BNY has three business segments, Securities Services, Market and Wealth Services and Investment and Wealth Management, which offer a comprehensive set of capabilities and deep expertise across the investment life cycle, enabling the Company to provide solutions to buy-side and sell-

side market participants, as well as leading institutional and wealth management clients globally.

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

The Bank of New York Mellon Corporation

Securities
Services

Market and Wealth Services

Investment and Wealth Management

Asset
Servicing

Pershing

Investment
Management

Issuer
Services

Treasury
Services

Wealth
Management

Clearance and Collateral Management

Key second quarter 2024 and subsequent events

Increase in cash dividend on common stock

In July, our Board of Directors approved a 12% increase in the quarterly cash dividend on our common stock, from $0.42 to $0.47 per share. The increased quarterly cash dividend was paid on Aug. 2, 2024.

Highlights of second quarter 2024 results

Net income applicable to common shareholders was $1,143 million, or $1.52 per diluted common share, in the second quarter of 2024, including the impact of notable items. Notable items in the second quarter of 2024 include a reduction in the FDIC special assessment, severance expense and litigation reserves. Excluding notable items, net income applicable to common shareholders was $1,136 million (Non-GAAP), or $1.51 (Non-GAAP) per diluted common share, in the second quarter of 2024. Net income applicable to common shareholders was $1,036 million, or $1.31 per diluted common share, in the second quarter of 2023, including the impact of

4 BNY

notable items. Notable items in the second quarter of 2023 include litigation reserves, severance expense and disposal losses. Excluding notable items, net income applicable to common shareholders was $1,092 million (Non-GAAP), or $1.38 (Non-GAAP) per diluted common share, in the second quarter of 2023.

The highlights below are based on the second quarter of 2024 compared with the second quarter of 2023, unless otherwise noted.

•Total revenue increased 2%, primarily reflecting:

•Fee revenue increased 4%, primarily reflecting higher market values, net new business, higher foreign exchange revenue and higher client activity, partially offset by the mix of AUM flows. (See “Fee and other revenue” beginning on page 6.)

•Investment and other revenue increased primarily reflecting higher client activity in our fixed income and equity trading business. (See “Fee and other revenue” beginning on page 6.)

•Net interest income decreased 6%, primarily reflecting changes in balance sheet mix, partially offset by higher interest rates. (See “Net interest income” on page 9.)

•Noninterest expense decreased 1%, primarily reflecting efficiency savings, a reduction in the FDIC special assessment and lower litigation reserves, partially offset by higher investments, employee merit increases and higher revenue-related expenses. Excluding notable items, noninterest expense increased 1% (Non-GAAP). (See “Noninterest expense” on page 12.)

•Effective tax rate of 23.4%. (See “Income taxes” on page 12.)

•Return on common equity (“ROE”) was 12.7% for the second quarter of 2024.

•Return on tangible common equity (“ROTCE”) was 24.6% (Non-GAAP) for the second quarter of 2024. Excluding notable items, the adjusted ROTCE was 24.4% (Non-GAAP) for the second quarter of 2024.

See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 43 for a reconciliation of these Non-GAAP measures.

Metrics

•AUC/A of $49.5 trillion increased 6%, primarily reflecting higher market values.

•AUM of $2.0 trillion increased 7%, primarily reflecting higher market values.

Capital and liquidity

•Our CET1 ratio was 11.4% at June 30, 2024 and 10.8% at March 31, 2024 under the Standardized Approach. The increase reflects an increase in capital and lower risk-weighted assets. (See “Capital” beginning on page 36.)

•Tier 1 leverage was 5.8% at June 30, 2024 and 5.9% at March 31, 2024. The decrease reflects higher average assets, partially offset by the increase in capital. (See “Capital” beginning on page 36.)

•Returned $923 million to common shareholders, including $601 million of common share repurchases.

BNY 5

Fee and other revenue


Fee and other revenue																				YTD24
(dollars in millions, unless otherwise noted)										2Q24 vs.										vs.
	2Q24			1Q24			2Q23			1Q24		2Q23		YTD24			YTD23			YTD23
Investment services fees	$	2,359		$	2,278		$	2,252		4	%	5	%	$	4,637		$	4,371		6	%
Investment management and performance fees (a)	761			776			762			(2)		—		1,537			1,538			—
Foreign exchange revenue	184			152			158			21		16		336			334			1
Financing-related fees	53			57			50			(7)		6		110			102			8
Distribution and servicing fees	41			42			35			(2)		17		83			68			22
Total fee revenue	3,398			3,305			3,257			3		4		6,703			6,413			5
Investment and other revenue (b)	169			182			147			N/M		N/M		351			278			N/M
Total fee and other revenue (b)	$	3,567		$	3,487		$	3,404		2	%	5	%	$	7,054		$	6,691		5	%

Fee revenue as a percentage of total revenue	74		%	73		%	72		%					73		%	72		%

AUC/A at period end (in trillions) (c)	$	49.5		$	48.8		$	46.9		1	%	6	%	$	49.5		$	46.9		6	%
AUM at period end (in billions) (d)	$	2,045		$	2,015		$	1,906		1	%	7	%	$	2,045		$	1,906		7	%

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

(b) Results for the quarter ended June 30, 2023 and the six months ended June 30, 2023 were restated to reflect the retrospective application of adopting new accounting guidance in the first quarter of 2024 related to our investments in renewable energy projects using the proportional amortization method (ASU 2023-02). See Note 2 of the Notes to Consolidated Financial Statements for additional information.

(c) Consists of AUC/A primarily from the Asset Servicing line of business and, to a lesser extent, the Clearance and Collateral Management, Issuer Services, Pershing and Wealth Management lines of business. Includes the AUC/A of CIBC Mellon of $1.7 trillion at June 30, 2024 and March 31, 2024 and $1.6 trillion at June 30, 2023.

(d) Represents assets managed in the Investment and Wealth Management business segment.

N/M – Not meaningful.

Fee revenue increased 4% compared with the second quarter of 2023 and 3% compared with the first quarter of 2024. The increase compared with the second quarter of 2023 primarily reflects higher investment services fees and foreign exchange revenue. The increase compared with the first quarter of 2024 primarily reflects higher investment services fees and foreign exchange revenue, partially offset by lower investment management and performance fees.

Investment and other revenue increased $22 million compared with the second quarter of 2023 and decreased $13 million compared with the first quarter of 2024. The increase compared with the second quarter of 2023 primarily reflects higher client activity in our fixed income and equity trading business. The decrease compared with the first quarter of 2024 primarily reflects net securities losses.

Investment services fees

Investment services fees increased 5% compared with the second quarter of 2023 and 4% compared with the first quarter of 2024. The increase compared with the second quarter of 2023 primarily reflects higher market values, net new business and higher client

activity, partially offset by lower Depositary Receipts revenue. The increase compared with the first quarter of 2024 primarily reflects higher Depositary Receipts revenue and net new business.

AUC/A totaled $49.5 trillion at June 30, 2024, an increase of 6% compared with June 30, 2023, primarily reflecting higher market values. AUC/A consisted of 37% equity securities and 63% fixed income securities at June 30, 2024, and 34% equity securities and 66% fixed income securities at June 30, 2023.

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

Investment management and performance fees

Investment management and performance fees were flat compared with the second quarter of 2023 and decreased 2% compared with the first quarter of 2024. Compared with the second quarter of 2023 higher market values were offset by the mix of AUM flows, lower equity investment income and changes in product mix. The decrease compared with the first quarter of 2024 primarily reflects the mix of AUM

6 BNY

flows and lower equity investment income, partially offset by higher market values. Performance fees were $8 million in the second quarter of 2024, $10 million in the second quarter of 2023 and $10 million in the first quarter of 2024. On a constant currency basis (Non-GAAP), investment management and performance fees were flat compared with the second quarter of 2023. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 43 for the reconciliation of Non-GAAP measures.

AUM was $2.0 trillion at June 30, 2024, an increase of 7% compared with June 30, 2023, primarily reflecting higher market values.

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

Foreign exchange revenue

Foreign exchange revenue is primarily driven by the volume of client transactions and the spread realized on these transactions, both of which are impacted by market volatility, the impact of foreign currency hedging activities and foreign currency remeasurement gain (loss). Foreign exchange revenue increased 16% compared with the second quarter of 2023 and 21% compared with the first quarter of 2024. Both increases were primarily driven by higher volumes. Foreign exchange revenue is primarily reported in the Securities Services business segment and, to a lesser extent, in the Market and Wealth Services and Investment and Wealth Management business segments and the Other segment.

Financing-related fees

Financing-related fees, which are primarily reported in the Market and Wealth Services and Securities Services business segments, include capital market fees, loan commitment fees and credit-related fees. Financing-related fees increased 6% compared with the second quarter of 2023 and decreased 7% compared with the first quarter of 2024. The increase compared with the second quarter of 2023 primarily reflects higher underwriting fees. The decrease compared with the first quarter of 2024 primarily reflects lower underwriting fees, partially offset by higher loan commitment fees.

Investment and other revenue

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

BNY 7

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


Investment and other revenue
(in millions)	2Q24		1Q24		2Q23		YTD24		YTD23
Income from consolidated investment management funds	$	8	$	15	$	10	$	23	$	15
Seed capital gains (a)	—		14		7		14		15
Other trading revenue	77		69		53		146		98
Renewable energy investments gains (b)	8		6		5		14		25
Corporate/bank-owned life insurance	26		28		23		54		50
Other investments gains (c)	30		17		10		47		1
Disposal (losses)	—		—		(1)		—		(2)
Expense reimbursements from joint venture	30		27		31		57		60
Other income	7		7		9		14		17
Net securities (losses)	(17)		(1)		—		(18)		(1)
Total investment and other revenue (b)	$	169	$	182	$	147	$	351	$	278

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

The increase in total investment and other revenue compared with the second quarter of 2023 primarily reflects higher client activity in our fixed income and equity trading business. The decrease compared with the first quarter of 2024 primarily reflects net securities losses.

Year-to-date 2024 compared with year-to-date 2023

Fee revenue increased 5% compared with the first six months of 2023, primarily reflecting higher investment services fees. The 6% increase in investment services fees primarily reflects higher market values, net new business and higher client activity. Investment management and performance fees were flat, reflecting higher market values, offset by the mix of AUM flows, lower performance fees and changes in product mix. The 1% increase in foreign exchange revenue primarily reflects higher volumes, partially offset by lower volatility.

Investment and other revenue increased $73 million compared with the first six months of 2023, primarily reflecting higher client activity in our fixed income and equity trading business and equity investment gains.

8 BNY

Net interest income


Net interest income																				YTD24
										2Q24 vs.										vs.
(dollars in millions)	2Q24			1Q24			2Q23			1Q24		2Q23		YTD24			YTD23			YTD23
Net interest income	$	1,030		$	1,040		$	1,100		(1)%		(6)%		$	2,070		$	2,228		(7)%
Add: Tax equivalent adjustment	1			—			1			N/M		N/M		1			1			N/M
Net interest income (FTE) – Non-GAAP (a)	$	1,031		$	1,040		$	1,101		(1)%		(6)%		$	2,071		$	2,229		(7)%

Average interest-earning assets	$	353,633		$	346,133		$	362,049		2%		(2)%		$	349,883		$	355,251		(2)%

Net interest margin	1.15		%	1.19		%	1.20		%	(4)	bps	(5)	bps	1.17		%	1.25		%	(8)	bps
Net interest margin (FTE) – Non-GAAP (a)	1.15		%	1.19		%	1.20		%	(4)	bps	(5)	bps	1.17		%	1.25		%	(8)	bps

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

N/M – Not meaningful.

bps – basis points.

Net interest income decreased 6% compared with the second quarter of 2023 and 1% compared with the first quarter of 2024. The decrease compared with the second quarter of 2023 primarily reflects changes in balance sheet mix, partially offset by higher interest rates. The decrease compared with the first quarter of 2024 primarily reflects changes in balance sheet mix, partially offset by the benefit of reinvesting maturing fixed-rate securities in higher yielding alternatives.

Net interest margin decreased 5 basis points compared with the second quarter of 2023 and 4 basis points compared with the first quarter of 2024. The changes compared with the second quarter of 2023 and the first quarter of 2024 primarily reflect the factors mentioned above.

Average interest-earning assets decreased 2% compared with the second quarter of 2023 and increased 2% compared with the first quarter of 2024. The decrease compared with the second quarter of 2023 primarily reflects lower interest-bearing deposits with the Federal Reserve and other central banks and interest-bearing deposits with banks, partially offset by higher loan balances and Federal funds sold and securities purchased under resale agreements. The increase compared with the first quarter of 2024 primarily reflects higher securities and loan balances and federal funds sold and securities purchased under resale agreements.

Average non-U.S. dollar deposits comprised approximately 25% of our average total deposits in the second quarter of 2024. Approximately 50% of the average non-U.S. dollar deposits in the second quarter of 2024 were euro-denominated.

Year-to-date 2024 compared with year-to-date 2023

Net interest income decreased 7% compared with the first six months of 2023, primarily driven by changes in balance sheet mix, partially offset by higher interest rates. The decrease in the net interest margin primarily reflects the factors mentioned above.

Average interest-earning assets decreased 2% compared with the first six months of 2023, primarily reflecting lower securities balances and interest-bearing deposits with banks, partially offset by higher loan balances.

BNY 9


Average balances and interest rates	Quarter ended
	June 30, 2024						March 31, 2024						June 30, 2023
(dollars in millions; average rates annualized)	Average balance		Interest		Average rates		Average balance		Interest		Average rates			Average balance		Interest		Average rates
Assets
Interest-earning assets:
Interest-bearing deposits with the Federal Reserve and other central banks	$	102,257	$	1,201	4.65	%	$	102,795	$	1,219	4.69	%		$	114,578	$	1,241	4.29	%
Interest-bearing deposits with banks	11,210		110		3.91		11,724		121		4.16			13,919		128		3.68
Federal funds sold and securities purchased under resale agreements (a)	29,013		2,631		36.48		27,019		2,433		36.22			26,989		1,776		26.38
Loans	68,283		1,119		6.58		65,844		1,061		6.48			63,459		957		6.05
Securities:
U.S. government obligations	28,347		269		3.82		27,242		250		3.70			34,147		247		2.90
U.S. government agency obligations	62,549		515		3.29		63,135		508		3.22			61,565		428		2.78

Other securities (b)	46,828		472		4.04		43,528		435		4.01			40,989		367		3.59
Total investment securities (b)	137,724		1,256		3.66		133,905		1,193		3.57			136,701		1,042		3.05
Trading securities (b)	5,146		76		5.89		4,846		69		5.75			6,403		81		5.02
Total securities (b)	142,870		1,332		3.74		138,751		1,262		3.65			143,104		1,123		3.14
Total interest-earning assets (b)	$	353,633	$	6,393	7.24	%	$	346,133	$	6,096	7.06	%		$	362,049	$	5,225	5.77	%
Noninterest-earning assets	58,866						57,852							58,912
Total assets	$	412,499					$	403,985						$	420,961

Liabilities and equity
Interest-bearing liabilities:
Interest-bearing deposits	$	235,878	$	2,255	3.85	%	$	228,897	$	2,187	3.84	%		$	215,057	$	1,739	3.24	%
Federal funds purchased and securities sold under repurchase agreements (a)	17,711		2,433		55.26		16,133		2,243		55.91			26,282		1,729		26.39
Trading liabilities	1,689		23		5.43		1,649		21		5.11			3,893		43		4.46
Other borrowed funds	351		8		8.61		502		4		3.47			2,702		32		4.60
Commercial paper	954		13		5.54		8		—		5.42			5		—		5.11
Payables to customers and broker-dealers	12,066		161		5.35		12,420		146		4.74			14,801		143		3.85
Long-term debt	31,506		469		5.92		31,087		455		5.82			31,970		438		5.45
Total interest-bearing liabilities	$	300,155	$	5,362	7.18	%	$	290,696	$	5,056	6.99	%		$	294,710	$	4,124	5.61	%
Total noninterest-bearing deposits	48,965						49,949							62,152
Other noninterest-bearing liabilities	22,839						23,005							23,526
Total liabilities	371,959						363,650							380,388
Total The Bank of New York Mellon Corporation shareholders’ equity	40,387						40,248							40,493
Noncontrolling interests	153						87							80
Total liabilities and equity	$	412,499					$	403,985						$	420,961
Net interest income (FTE) – Non-GAAP (b)(c)			$	1,031					$	1,040						$	1,101
Net interest margin (FTE) – Non-GAAP (b)(c)					1.15	%					1.19	%						1.20	%
Less: Tax equivalent adjustment			1						—							1
Net interest income – GAAP			$	1,030					$	1,040						$	1,100
Net interest margin – GAAP					1.15	%					1.19	%						1.20	%

(a) Includes the average impact of offsetting under enforceable netting agreements of approximately $163 billion for the second quarter of 2024, $151 billion for the first quarter of 2024 and $113 billion for the second quarter of 2023. On a Non-GAAP basis, excluding the impact of offsetting, the yield on federal funds sold and securities purchased under resale agreements would have been 5.51% for the second quarter of 2024, 5.49% for the first quarter of 2024 and 5.10% for the second quarter of 2023. On a Non-GAAP basis, excluding the impact of offsetting, the rate on federal funds purchased and securities sold under repurchase agreements would have been 5.41% for the second quarter of 2024, 5.38% for the first quarter of 2024 and 4.99% for the second quarter of 2023. We believe providing the rates excluding the impact of netting is useful to investors as it is more reflective of the actual rates earned and paid.

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

10 BNY


Average balances and interest rates	Year-to-date
	June 30, 2024						June 30, 2023
(dollars in millions; average rates annualized)	Average balance		Interest		Average rates		Average balance		Interest		Average rates
Assets
Interest-earning assets:
Interest-bearing deposits with the Federal Reserve and other central banks	$	102,526	$	2,420	4.67	%	$	104,793	$	2,094	3.97	%
Interest-bearing deposits with banks	11,467		231		4.04		15,065		268		3.59
Federal funds sold and securities purchased under resale agreements (a)	28,016		5,064		36.35		25,817		2,767		21.61
Loans	67,063		2,180		6.53		63,361		1,823		5.79
Securities:
U.S. government obligations	27,794		519		3.76		36,487		526		2.89
U.S. government agency obligations	62,842		1,023		3.26		61,920		833		2.69

Other securities (b)	45,178		907		4.02		41,717		705		3.40
Total investment securities (b)	135,814		2,449		3.61		140,124		2,064		2.95
Trading securities (b)	4,997		145		5.82		6,091		151		4.99
Total securities (b)	140,811		2,594		3.69		146,215		2,215		3.04
Total interest-earning assets (b)	$	349,883	$	12,489	7.15	%	$	355,251	$	9,167	5.18	%
Noninterest-earning assets	58,359						58,906
Total assets	$	408,242					$	414,157

Liabilities and equity
Interest-bearing liabilities:
Interest-bearing deposits	$	232,387	$	4,442	3.84	%	$	209,616	$	3,105	2.99	%
Federal funds purchased and securities sold under repurchase agreements (a)	16,922		4,676		55.57		22,321		2,621		23.68
Trading liabilities	1,669		44		5.27		3,461		73		4.28
Other borrowed funds	427		12		5.59		1,711		35		4.01
Commercial paper	481		13		5.54		3		—		5.11
Payables to customers and broker-dealers	12,244		307		5.04		15,872		271		3.44
Long-term debt	31,296		924		5.87		31,112		833		5.34
Total interest-bearing liabilities	$	295,426	$	10,418	7.08	%	$	284,096	$	6,938	4.92	%
Total noninterest-bearing deposits	49,457						65,997
Other noninterest-bearing liabilities	22,922						23,607
Total liabilities	367,805						373,700
Total The Bank of New York Mellon Corporation shareholders’ equity	40,318						40,407
Noncontrolling interests	119						50
Total liabilities and equity	$	408,242					$	414,157
Net interest income (FTE) – Non-GAAP (b)(c)			$	2,071					$	2,229
Net interest margin (FTE) – Non-GAAP (b)(c)					1.17	%					1.25	%
Less: Tax equivalent adjustment			1						1
Net interest income – GAAP			$	2,070					$	2,228
Net interest margin – GAAP					1.17	%					1.25	%

(a) Includes the average impact of offsetting under enforceable netting agreements of approximately $157 billion for the first six months of 2024 and $88 billion for the first six months of 2023. On a Non-GAAP basis, excluding the impact of offsetting, the yield on federal funds sold and securities purchased under resale agreements would have been 5.50% for the first six months of 2024 and 4.92% for the first six months of 2023. On a Non-GAAP basis, excluding the impact of offsetting, the rate on federal funds purchased and securities sold under repurchase agreements would have been 5.40% for the first six months of 2024 and 4.81% for the first six months of 2023. We believe providing the rates excluding the impact of netting is useful to investors as it is more reflective of the actual rates earned and paid.

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

BNY 11

Noninterest expense


Noninterest expense															YTD24
							2Q24 vs.								vs.
(dollars in millions)	2Q24		1Q24		2Q23		1Q24		2Q23		YTD24		YTD23		YTD23
Staff	$	1,720	$	1,857	$	1,718	(7)	%	—	%	$	3,577	$	3,509	2	%
Software and equipment	476		475		450		—		6		951		879		8
Professional, legal and other purchased services	374		349		378		7		(1)		723		753		(4)
Net occupancy	134		124		121		8		11		258		240		8
Sub-custodian and clearing	134		119		119		13		13		253		237		7
Distribution and servicing	88		96		93		(8)		(5)		184		178		3
Business development	50		36		47		39		6		86		86		—
Bank assessment charges	(7)		17		41		N/M		N/M		10		81		N/M

Amortization of intangible assets	13		12		14		8		(7)		25		28		(11)
Other	88		91		130		(3)		(32)		179		220		(19)
Total noninterest expense	$	3,070	$	3,176	$	3,111	(3)	%	(1)	%	$	6,246	$	6,211	1	%

Full-time employees at period end (a)	52,000		52,100		53,200		—	%	(2)	%	52,000		53,200		(2)	%

(a) Beginning March 31, 2024, the number of full-time employees excludes interns.

Total noninterest expense decreased 1% compared with the second quarter of 2023, primarily reflecting efficiency savings, a reduction in the FDIC special assessment and lower litigation reserves, partially offset by higher investments, employee merit increases and higher revenue-related expenses. Excluding notable items, noninterest expense increased 1% (Non-GAAP) compared with the second quarter of 2023. The investments in growth, infrastructure and efficiency initiatives are primarily included in staff, software and equipment, and professional, legal and other purchased services expenses. Total noninterest expense decreased 3% compared with the first quarter of 2024, primarily reflecting lower staff expense driven by the annual vesting of stock-based award to retirement-eligible employees recorded in the first quarter of 2024, as well as a reduction in the FDIC special assessment and efficiency savings, partially offset by employee merit increases. Excluding notable items, noninterest expense decreased 2% (Non-GAAP) compared with the first quarter of 2024.

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

Year-to-date 2024 compared with year-to-date 2023

Noninterest expense increased 1% primarily reflecting higher investments, employee merit increases and higher severance expense and revenue-related expenses, partially offset by efficiency

savings, lower litigation reserves and a reduction in the FDIC special assessment. Excluding notable items, noninterest expense increased 1% (Non-GAAP) compared with the first six months of 2023.

Income taxes

BNY recorded an income tax provision of $357 million (23.4% effective tax rate) in the second quarter of 2024. The income tax provision was $315 million (22.7% effective tax rate) in the second quarter of 2023 and $297 million (22.4% effective tax rate) in the first quarter of 2024.

On Jan. 1, 2024, we adopted ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, on a retrospective basis. See Note 2 of the Notes to Consolidated Financial Statements for additional information on the new accounting guidance.

For additional information on income taxes, see Note 11 of the Notes to Consolidated Financial Statements.

Review of business segments

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

12 BNY

Business segment accounting principles

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

For information on the accounting principles of our business segments, see Note 19 of the Notes to Consolidated Financial Statements. For information on the primary products and services in each line of business, the primary types of revenue by line of business and how our business segments are presented and analyzed, see Note 24 of the Notes to Consolidated Financial Statements in our 2023 Annual Report.

Business segment results are subject to reclassification when organizational changes are made, or for refinements in revenue and expense allocation methodologies. Refinements are typically reflected on a prospective basis. There were no reclassifications or organizational changes in the second quarter of 2024. In the first quarter of 2024, we made certain realignments of similar products and services within our lines of business consistent with the firm’s ongoing transition to a platforms operating model uniting related capabilities and enabling streamlining of internal processes to drive growth, efficiency, resiliency, and enhanced risk management. The largest change was the movement of Institutional Solutions from Pershing to Clearance and Collateral Management, both in the Market and Wealth Services business segment. We made other smaller changes that moved activity from Asset Servicing in the Securities Services business segment to Treasury Services in the Market and Wealth Services business segment, and from Wealth Management in the Investment and Wealth Management business segment and Pershing in the Market and Wealth Services business segment to Investment Management in the Investment and Wealth Management business segment. The Other segment was not impacted by the changes. Business segment results for the three- and six- months ended June 30, 2023 have been revised to reflect these changes.

The results of our business segments may be influenced by client and other activities that vary by

quarter. In the first quarter, staff expense typically increases, reflecting the vesting of long-term stock awards for retirement-eligible employees. The timing of our annual employee merit increases also impacts staff expense. In 2024, the merit increase was effective in March, thus partially impacting the first quarter and second quarter staff expense variances. For 2023, the merit increase was effective at the beginning of the second quarter. In the third quarter, volume-related fees may decline due to reduced client activity. In the fourth quarter, we typically incur higher business development and marketing expenses. In our Investment and Wealth Management business segment, performance fees are typically higher in the fourth and first quarters, as those quarters represent the end of the measurement period for many of the performance fee-eligible relationships.

The results of our business segments may also be impacted by the translation of financial results denominated in foreign currencies to the U.S. dollar. We are primarily impacted by activities denominated in the British pound and the euro. On a consolidated basis and in our Securities Services and Market and Wealth Services business segments, we typically have more foreign currency-denominated expenses than revenues. However, our Investment and Wealth Management business segment typically has more foreign currency-denominated revenues than expenses. Overall, currency fluctuations impact the year-over-year growth rate in the Investment and Wealth Management business segment more than the Securities Services and Market and Wealth Services business segments. However, currency fluctuations, in isolation, are not expected to significantly impact net income on a consolidated basis.

Fee revenue in the Investment and Wealth Management business segment, and, to a lesser extent, the Securities Services and Market and Wealth Services business segments, is impacted by global market fluctuations. At June 30, 2024, we estimated that a 5% change in global equity markets, spread evenly throughout the year, would impact fee revenue by less than 1% and diluted earnings per common share by $0.04 to $0.07.

See Note 19 of the Notes to Consolidated Financial Statements for the consolidating schedules, which show the contribution of our business segments to our overall profitability.

BNY 13

Securities Services business segment


																										YTD24
(dollars in millions, unless otherwise noted)																2Q24 vs.										vs.
	2Q24			1Q24			4Q23			3Q23			2Q23			1Q24		2Q23		YTD24			YTD23			YTD23
Revenue:
Investment services fees:
Asset Servicing	$	1,018		$	1,013		$	975		$	976		$	980		—	%	4	%	$	2,031		$	1,921		6	%
Issuer Services	322			261			285			281			319			23		1		583			555			5
Total investment services fees	1,340			1,274			1,260			1,257			1,299			5		3		2,614			2,476			6
Foreign exchange revenue	144			124			118			107			124			16		16		268			263			2
Other fees (a)	56			59			54			52			54			(5)		4		115			109			6
Total fee revenue	1,540			1,457			1,432			1,416			1,477			6		4		2,997			2,848			5
Investment and other revenue	104			99			112			65			84			N/M		N/M		203			156			N/M
Total fee and other revenue	1,644			1,556			1,544			1,481			1,561			6		5		3,200			3,004			7
Net interest income	595			583			635			600			668			2		(11)		1,178			1,334			(12)
Total revenue	2,239			2,139			2,179			2,081			2,229			5		—		4,378			4,338			1
Provision for credit losses	(3)			11			64			19			16			N/M		N/M		8			16			N/M
Noninterest expense (excluding amortization of intangible assets)	1,547			1,530			1,645			1,590			1,560			1		(1)		3,077			3,092			—
Amortization of intangible assets	7			7			8			8			7			—		—		14			15			(7)
Total noninterest expense	1,554			1,537			1,653			1,598			1,567			1		(1)		3,091			3,107			(1)
Income before income taxes	$	688		$	591		$	462		$	464		$	646		16	%	7	%	$	1,279		$	1,215		5	%

Pre-tax operating margin	31		%	28		%	21		%	22		%	29		%					29		%	28		%

Securities lending revenue (b)	$	46		$	46		$	48		$	46		$	47		—	%	(2)	%	$	92		$	95		(3)	%

Total revenue by line of business:
Asset Servicing	$	1,687		$	1,668		$	1,675		$	1,585		$	1,695		1	%	—	%	$	3,355		$	3,352		—	%
Issuer Services	552			471			504			496			534			17		3		1,023			986			4
Total revenue by line of business	$	2,239		$	2,139		$	2,179		$	2,081		$	2,229		5	%	—	%	$	4,378		$	4,338		1	%

Selected average balances:
Average loans	$	11,103		$	11,204		$	11,366		$	11,236		$	11,283		(1)	%	(2)	%	$	11,154		$	11,112		—	%
Average deposits	$	178,495		$	174,687		$	171,086		$	162,509		$	172,863		2	%	3	%	$	176,591		$	170,051		4	%

Selected metrics:
AUC/A at period end (in trillions) (c)	$	35.7		$	35.4		$	34.2		$	32.3		$	33.2		1	%	8	%
Market value of securities on loan at period end (in billions) (d)	$	481		$	486		$	450		$	406		$	415		(1)	%	16	%

Issuer Services:
Total debt serviced at period end (in trillions)	$	14.1		$	14.0		$	14.0		$	13.8		$	13.8		1	%	2	%
Number of sponsored Depositary Receipts programs at period end	516			527			543			559			564			(2)	%	(9)	%

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

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

(c) Consists of AUC/A primarily from the Asset Servicing line of business and, to a lesser extent, the Issuer Services line of business. Includes the AUC/A of CIBC Mellon of $1.7 trillion at June 30, 2024, March 31, 2024 and Dec. 31, 2023, $1.5 trillion at Sept. 30, 2023 and $1.6 trillion at June 30, 2023.

(d) Represents the total amount of securities on loan in our agency securities lending program. Excludes securities for which BNY acts as agent on behalf of CIBC Mellon clients, which totaled $66 billion at June 30, 2024, $64 billion at March 31, 2024, $63 billion at Dec. 31, 2023 and Sept. 30, 2023 and $66 billion at June 30, 2023.

N/M – Not meaningful.

14 BNY

Business segment description

The Securities Services business segment consists of two distinct lines of business, Asset Servicing and Issuer Services, which provide business solutions across the transaction life cycle to our global asset owner and asset manager clients. We are one of the leading global investment services providers with $35.7 trillion of AUC/A at June 30, 2024. For information on the drivers of the Securities Services fee revenue, see Note 10 of the Notes to Consolidated Financial Statements in our 2023 Annual Report.

The Asset Servicing business provides a comprehensive suite of solutions. We are one of the largest global custody and front-to-back outsourcing partners. We offer services for the safekeeping of assets in capital markets globally, as well as fund accounting services, exchange-traded funds servicing, transfer agency, trust and depository, front-to-back capabilities as well as data and analytics solutions for our clients. We deliver foreign exchange, securities lending and financing solutions, on both an agency and principal basis. Our agency securities lending program is one of the largest lenders of U.S. and non-U.S. securities, servicing a lendable asset pool of approximately $5 trillion in 34 separate markets. Our market-leading liquidity services portal enables cash investments for institutional clients and includes fund research and analytics.

Our Digital Asset Custody platform offers custody and administration services for Bitcoin and Ether for select U.S. institutional clients. Our Digital Assets Funds Services provides accounting and administration, transfer agency and ETF services to digital asset funds. We expect to continue developing our digital asset capabilities and to work closely with clients to address their evolving digital asset needs. As of and for the quarter ended June 30, 2024, our Digital Asset Custody platform and related initiative had a de minimis impact on our assets, liabilities, revenues and expenses.

The Issuer Services business includes Corporate Trust and Depositary Receipts. Our Corporate Trust business delivers a full range of issuer and related investor services, including trustee, paying agency, fiduciary, escrow and other financial services. We are a leading provider to the debt capital markets, providing customized and market-driven solutions to investors, bondholders and lenders. Our Depositary Receipts business drives

global investing by providing servicing and value-added solutions that enable, facilitate and enhance cross-border trading, clearing, settlement and ownership. We are one of the largest providers of depositary receipts services in the world, partnering with leading companies from more than 50 countries.

Review of financial results

AUC/A of $35.7 trillion increased 8% compared with June 30, 2023, primarily reflecting higher market values and net client flows.

Total revenue of $2.2 billion was flat compared with the second quarter of 2023 and increased 5% compared with the first quarter of 2024. The drivers of total revenue by line of business are indicated below.

Asset Servicing revenue of $1.7 billion was flat compared with the second quarter of 2023 and increased 1% compared with the first quarter of 2024. Compared with the second quarter of 2023, higher market values, net new business and higher foreign exchange revenue were offset by lower net interest income. The increase compared with the first quarter of 2024 primarily reflects higher foreign exchange revenue and net new business.

Issuer Services revenue of $552 million increased 3% compared with the second quarter of 2023 and 17% compared with the first quarter of 2024. The increase compared with the second quarter of 2023 primarily reflects higher Corporate Trust fees and net interest income, partially offset by lower Depository Receipts revenue. The increase compared with the first quarter of 2024 primarily reflects higher Depository Receipts revenue, net interest income and Corporate Trust fees.

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

Noninterest expense of $1.6 billion decreased 1% compared with the second quarter of 2023 and

BNY 15

increased 1% compared with the first quarter of 2024. The decrease compared with the second quarter of 2023 primarily reflects efficiency savings, partially offset by higher investments, employee merit increases and higher revenue-related expenses. The increase compared with first quarter of 2024 primarily reflects higher revenue-related expenses and employee merit increases, partially offset by efficiency savings.

Year-to-date 2024 compared with year-to-date 2023

Total revenue of $4.4 billion increased 1% compared with the first six months of 2023. Asset Servicing revenue of $3.4 billion was flat compared with the first six months of 2023, primarily reflecting higher market values, net new business and higher client activity in our fixed income and trading business, offset by lower net interest income. Issuer Services revenue of $1.0 billion increased 4%, primarily reflecting higher Corporate Trust fees and net interest income.

Noninterest expense of $3.1 billion decreased 1% compared with the first six months of 2023, primarily reflecting efficiency savings, partially offset by higher investments and employee merit increases.

16 BNY

Market and Wealth Services business segment


																										YTD24
(dollars in millions, unless otherwise noted)																2Q24 vs.										vs.
	2Q24			1Q24			4Q23			3Q23			2Q23			1Q24		2Q23		YTD24			YTD23			YTD23
Revenue:
Investment services fees:
Pershing	$	474		$	482		$	472		$	478		$	466		(2)	%	2	%	$	956		$	935		2	%
Treasury Services	202			184			179			180			183			10		10		386			358			8
Clearance and Collateral Management	338			329			322			305			295			3		15		667			585			14
Total investment services fees	1,014			995			973			963			944			2		7		2,009			1,878			7
Foreign exchange revenue	23			24			21			21			21			(4)		10		47			39			21
Other fees (a)	58			58			50			49			52			—		12		116			103			13
Total fee revenue	1,095			1,077			1,044			1,033			1,017			2		8		2,172			2,020			8
Investment and other revenue	23			17			16			16			16			N/M		N/M		40			31			N/M
Total fee and other revenue	1,118			1,094			1,060			1,049			1,033			2		8		2,212			2,051			8
Net interest income	417			423			436			401			420			(1)		(1)		840			873			(4)
Total revenue	1,535			1,517			1,496			1,450			1,453			1		6		3,052			2,924			4
Provision for credit losses	(2)			5			28			6			7			N/M		N/M		3			7			N/M
Noninterest expense (excluding amortization of intangible assets)	832			833			836			790			792			—		5		1,665			1,573			6
Amortization of intangible assets	1			1			1			2			2			—		(50)		2			3			(33)
Total noninterest expense	833			834			837			792			794			—		5		1,667			1,576			6
Income before income taxes	$	704		$	678		$	631		$	652		$	652		4	%	8	%	$	1,382		$	1,341		3	%

Pre-tax operating margin	46		%	45		%	42		%	45		%	45		%					45		%	46		%

Total revenue by line of business:
Pershing	$	663		$	670		$	669		$	657		$	641		(1)	%	3	%	$	1,333		$	1,290		3	%
Treasury Services	426			416			408			397			413			2		3		842			832			1
Clearance and Collateral Management	446			431			419			396			399			3		12		877			802			9
Total revenue by line of business	$	1,535		$	1,517		$	1,496		$	1,450		$	1,453		1	%	6	%	$	3,052		$	2,924		4	%

Selected average balances:
Average loans	$	41,893		$	39,271		$	39,200		$	37,496		$	36,432		7	%	15	%	$	40,582		$	36,642		11	%
Average deposits	$	91,371		$	89,539		$	87,695		$	84,000		$	85,407		2	%	7	%	$	90,455		$	85,721		6	%

Selected metrics:
AUC/A at period end (in trillions) (b)	$	13.4		$	13.1		$	13.3		$	13.1		$	13.4		2	%	—	%

Pershing:
AUC/A at period end (in trillions)	$	2.6		$	2.6		$	2.5		$	2.4		$	2.4		—	%	8	%
Net new assets (U.S. platform) (in billions) (c)	$	(23)		$	(2)		$	(4)		$	23		$	(34)		N/M		N/M
Daily average revenue trades (“DARTs”) (U.S. platform) (in thousands)	280			290			229			223			223			(3)	%	26	%
Average active clearing accounts (in thousands)	8,057			7,991			8,012			7,979			7,946			1	%	1	%

Treasury Services:
Average daily U.S. dollar payment volumes	241,253			237,124			243,005			233,620			233,931			2	%	3	%

Clearance and Collateral Management:
Average tri-party collateral management balances (in billions)	$	5,298		$	5,157		$	5,248		$	5,706		$	6,044		3	%	(12)	%

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

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

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

N/M – Not meaningful.

BNY 17

Business segment description

The Market and Wealth Services business segment consists of three distinct lines of business, Pershing, Treasury Services and Clearance and Collateral Management, which provide business services and technology solutions to entities including financial institutions, corporations, foundations and endowments, public funds and government agencies. For information on the drivers of the Market and Wealth Services fee revenue, see Note 10 of the Notes to Consolidated Financial Statements in our 2023 Annual Report.

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

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

Our Clearance and Collateral Management business clears and settles equity and fixed income transactions globally and serves as custodian for tri-party repo collateral worldwide. We are the primary provider of U.S. government securities clearance and a provider of non-U.S. government securities clearance. Our collateral services include collateral management, administration and segregation. We offer innovative solutions and industry expertise, which help financial institutions and institutional investors with their financing, risk and balance sheet challenges. We are a leading provider of tri-party collateral management services with an average of $5.3 trillion serviced globally, including approximately $4.1 trillion of the U.S. tri-party repo market at June 30, 2024.

Review of financial results

AUC/A of $13.4 trillion was flat compared with June 30, 2023, primarily reflecting higher market values offset by lower collateral management balances.

Total revenue of $1.5 billion increased 6% compared with the second quarter of 2023 and 1% compared with the first quarter of 2024. The drivers of total revenue by line of business are indicated below.

Pershing revenue of $663 million increased 3% compared with the second quarter of 2023 and

decreased 1% compared with the first quarter of 2024. The increase compared with the second quarter of 2023 primarily reflects higher market values and client activity, partially offset by lost business in the prior year. The decrease compared with the first quarter of 2024 primarily reflects lower net interest income and lost business in the prior year, partially offset by an equity investment gain. Net new assets were $(23) billion in the second quarter of 2024, reflecting the ongoing deconversion of business lost in the prior year.

Treasury Services revenue of $426 million increased 3% compared with the second quarter of 2023 and 2% compared with the first quarter of 2024. Both increases primarily reflect net new business and higher client activity, partially offset by lower net interest income.

Clearance and Collateral Management revenue of $446 million increased 12% compared with the second quarter of 2023 and 3% compared with the first quarter of 2024. Both increases primarily reflect higher collateral management fees and clearance volumes.

Noninterest expense of $833 million increased 5% compared with the second quarter of 2023 and was flat compared with the first quarter of 2024. The increase compared with the second quarter of 2023 primarily reflects higher investments, employee merit increases and higher revenue-related expenses, partially offset by efficiency savings.

Year-to-date 2024 compared with year-to-date 2023

Total revenue of $3.1 billion increased 4% compared with the first six months of 2023. Pershing revenue of $1.3 billion increased 3%, primarily reflecting higher market values and client activity, partially offset by lost business in the prior year. Treasury Services revenue of $842 million increased 1%, primarily reflecting net new business and higher client activity, partially offset by lower net interest income. Clearance and Collateral Management revenue of $877 million increased 9%, primarily reflecting higher collateral management fees and clearance volumes.

Noninterest expense of $1.7 billion increased 6% compared with the first six months of 2023, primarily reflecting higher investments, employee merit increases and higher revenue-related expenses, partially offset by efficiency savings.

18 BNY

Investment and Wealth Management business segment


																												YTD24
																	2Q24 vs.										vs.
(dollars in millions)	2Q24			1Q24			4Q23				3Q23			2Q23			1Q24		2Q23		YTD24			YTD23				YTD23
Revenue:
Investment management fees	$	754		$	768		$	725			$	748		$	753		(2)	%	—	%	$	1,522		$	1,508			1	%
Performance fees	8			10			19				30			10			N/M		N/M		18			32				N/M
Investment management and performance fees (a)	762			778			744				778			763			(2)		—		1,540			1,540				—
Distribution and servicing fees	69			70			66				62			58			(1)		19		139			113				23
Other fees (b)	(64)			(60)			(55)				(50)			(56)			N/M		N/M		(124)			(109)				N/M
Total fee revenue	767			788			755				790			765			(3)		—		1,555			1,544				1
Investment and other revenue (c)	11			17			(121)				1			12			N/M		N/M		28			18				N/M
Total fee and other revenue (c)	778			805			634				791			777			(3)		—		1,583			1,562				1
Net interest income	43			41			45				39			39			5		10		84			84				—
Total revenue	821			846			679				830			816			(3)		1		1,667			1,646				1
Provision for credit losses	4			(1)			(2)				(9)			7			N/M		N/M		3			7				N/M
Noninterest expense (excluding amortization of intangible assets)	663			736			680				670			674			(10)		(2)		1,399			1,406				—

Amortization of intangible assets	5			4			5				5			5			25		—		9			10				(10)
Total noninterest expense	668			740			685				675			679			(10)		(2)		1,408			1,416				(1)
Income (loss) before income taxes	$	149		$	107		$	(4)			$	164		$	130		39	%	15	%	$	256		$	223			15	%

Pre-tax operating margin	18		%	13		%	(1)		%		20		%	16		%					15		%	14		%
Adjusted pre-tax operating margin – Non-GAAP (d)	20		%	14		%	(1)		%	(e)	22		%	18		%					17		%	15		%

Total revenue by line of business:
Investment Management	$	549		$	576		$	415			$	565		$	553		(5)	%	(1)	%	$	1,125		$	1,117			1	%
Wealth Management	272			270			264				265			263			1		3		542			529				2
Total revenue by line of business	$	821		$	846		$	679			$	830		$	816		(3)	%	1	%	$	1,667		$	1,646			1	%

Selected average balances:
Average loans	$	13,520		$	13,553		$	13,405			$	13,519		$	13,995		—	%	(3)	%	$	13,536		$	13,977			(3)	%
Average deposits	$	11,005		$	11,364		$	12,039			$	13,578		$	15,410		(3)	%	(29)	%	$	11,185		$	15,775			(29)	%

(a) On a constant currency basis, investment management and performance fees were flat (Non-GAAP) compared with the second quarter of 2023. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 43 for the reconciliation of this Non-GAAP measure.

(b) Other fees primarily include investment services fees.

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

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

(e) Excluding notable items and net of distribution and servicing expense, the adjusted pre-tax operating margin was 21% (Non-GAAP) in the fourth quarter of 2023. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 43 for the reconciliation of these Non-GAAP measures.

N/M – Not meaningful.

BNY 19


AUM trends												2Q24 vs.
(dollars in billions)	2Q24		1Q24			4Q23		3Q23		2Q23		1Q24		2Q23
AUM by product type: (a)
Equity	$	167	$	168		$	145	$	133	$	145	(1)	%	15	%
Fixed income	221		219			205		190		203		1		9
Index	485		474			459		425		440		2		10
Liability-driven investments	598		573			605		534		579		4		3
Multi-asset and alternative investments	173		174			170		156		162		(1)		7
Cash	401		407			390		383		377		(1)		6
Total AUM	$	2,045	$	2,015		$	1,974	$	1,821	$	1,906	1	%	7	%

Changes in AUM: (a)
Beginning balance of AUM	$	2,015	$	1,974		$	1,821	$	1,906	$	1,908
Net inflows (outflows):
Long-term strategies:
Equity	(4)		(4)			(2)		(3)		(3)
Fixed income	4		12			3		(7)		(4)
Liability-driven investments	4		13			4		1		(3)
Multi-asset and alternative investments	(2)		(5)			(1)		(4)		(1)
Total long-term active strategies inflows (outflows)	2		16			4		(13)		(11)
Index	(4)		(15)			(10)		(2)		2
Total long-term strategies (outflows) inflows	(2)		1			(6)		(15)		(9)
Short-term strategies:
Cash	(7)		16			7		7		(9)
Total net (outflows) inflows	(9)		17			1		(8)		(18)
Net market impact	40		16			122		(50)		(3)
Net currency impact	(1)		(10)			30		(27)		19
Other	—		18		(b)	—		—		—
Ending balance of AUM	$	2,045	$	2,015		$	1,974	$	1,821	$	1,906	1	%	7	%

Wealth Management client assets (c)	$	308	$	309		$	312	$	292	$	286	—	%	8	%

(a) Represents assets managed in the Investment and Wealth Management business segment.

(b) Reflects the realignment of similar products and services within our lines of business.

Business segment description

Our Investment and Wealth Management business segment consists of two distinct lines of business: Investment Management and Wealth Management. Our investment firms deliver a highly diversified portfolio of investment strategies independently, and through our global distribution network, to institutional and retail clients globally. Wealth Management provides investment management, custody, wealth and estate planning, private banking services, investment servicing and information management. See pages 18 and 19 of our 2023 Annual Report for additional information on our Investment and Wealth Management business segment.

Review of financial results

AUM of $2.0 trillion as of June 30, 2024, increased 7% compared with June 30, 2023, primarily reflecting higher market values.

Net long-term strategy outflows were $2 billion in the second quarter of 2024, driven by equity, index and multi-asset and alternative investments, partially offset by inflows of liability-driven and fixed income investments. Short-term strategy outflows were $7 billion in the second quarter of 2024. Market and regulatory trends have resulted in increased demand for lower fee asset management products and for performance-based fees.

Total revenue of $821 million increased 1% compared with the second quarter of 2023 and decreased 3% compared with the first quarter of 2024. The drivers of total revenue by line of business are indicated below.

20 BNY

Investment Management revenue of $549 million decreased 1% compared with the second quarter of 2023 and 5% compared with the first quarter of 2024. The decrease compared with the second quarter of 2023 primarily reflects the mix of AUM flows and lower equity investment income and seed capital gains, partially offset by higher market values. The decrease compared with the first quarter of 2024 primarily reflects the mix of AUM flows and lower seed capital gains and equity investment income, partially offset by higher market values.

Wealth Management revenue of $272 million increased 3% compared with the second quarter of 2023 and 1% compared with the first quarter of 2024. Both increases primarily reflect higher market values, partially offset by changes in product mix.

Revenue generated in the Investment and Wealth Management business segment included 30% from non-U.S. sources in the second quarter of 2024, second quarter of 2023 and first quarter of 2024.

Noninterest expense of $668 million decreased 2% compared with the second quarter of 2023 and 10%

compared with the first quarter of 2024. The decrease compared with the second quarter of 2023 primarily reflects efficiency savings and lower revenue-related expenses, partially offset by employee merit increases and higher investments. The decrease compared with the first quarter of 2024 primarily reflects lower revenue-related expenses.

Year-to-date 2024 compared with year-to-date 2023

Total revenue of $1.7 billion increased 1% compared with the first six months of 2023. Investment Management revenue of $1.1 billion increased 1%, primarily reflecting higher market values, partially offset by the mix of AUM flows and lower performance fees. Wealth Management revenue of $542 million increased 2%, primarily reflecting higher market values, partially offset by changes in product mix.

Noninterest expense of $1.4 billion decreased 1% compared with the first six months of 2023, primarily reflecting efficiency savings and lower revenue-related expenses, partially offset by higher investments and employee merit increases.

Other segment



(in millions)	2Q24		1Q24		4Q23		3Q23		2Q23		YTD24		YTD23
Fee revenue	$	(4)	$	(17)	$	(17)	$	6	$	(2)	$	(21)	$	1
Investment and other revenue (a)	29		47		38		74		34		76		72
Total fee and other revenue (a)	25		30		21		80		32		55		73
Net interest (expense)	(25)		(7)		(15)		(24)		(27)		(32)		(63)
Total revenue (a)	—		23		6		56		5		23		10
Provision for credit losses	1		12		(6)		(13)		(25)		13		2
Noninterest expense	15		65		820		24		71		80		112
(Loss) income before income taxes (a)	$	(16)	$	(54)	$	(808)	$	45	$	(41)	$	(70)	$	(104)

Average loans and leases	$	1,767	$	1,816	$	1,706	$	1,711	$	1,749	$	1,791	$	1,630

See page 20 of our 2023 Annual Report for additional information on the Other segment.

Review of financial results

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

Total revenue decreased $5 million compared with the second quarter of 2023 and $23 million compared with the first quarter of 2024. The decrease compared with the first quarter of 2024 primarily reflects net securities losses in the second quarter of 2024.

Noninterest expense decreased $56 million compared with the second quarter of 2023 and $50 million compared with the first quarter of 2024. The

BNY 21

decrease compared with the second quarter of 2023 primarily reflects a reduction in the FDIC special assessment and lower litigation reserves. The decrease compared with the first quarter of 2024 primarily reflects a reduction in the FDIC special assessment.

Year-to-date 2024 compared with year-to-date 2023

Loss before income taxes decreased $34 million compared with the first six months of 2023. Total fee and other revenue decreased $18 million, primarily reflecting the net securities losses in the second quarter of 2024.

Noninterest expense decreased $32 million compared with the first six months of 2023, primarily reflecting a reduction in the FDIC special assessment and lower litigation reserves, partially offset by higher severance expense.

Critical accounting estimates

Our significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements in our 2023 Annual Report. Our critical accounting estimates are those related to the allowance for credit losses, goodwill and other intangibles and litigation and regulatory contingencies, as referenced below.


Critical accounting estimates			Reference
Allowance for credit losses			2023 Annual Report, pages 23-24, and “Allowance for credit losses.”
Goodwill and other intangibles			2023 Annual Report, pages 24-25. Also see below.
Litigation and regulatory contingencies			“Legal proceedings” in Note 18 of the Notes to Consolidated Financial Statements.

Goodwill and other intangibles

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

In the second quarter of 2024, due to the results of the first quarter 2024 interim and annual goodwill impairment test and macroeconomic conditions, we performed an interim goodwill impairment test of the Investment Management reporting unit, which had $6.1 billion of allocated goodwill. The fair value of the Investment Management reporting unit exceeded its carrying value by approximately 3%. We determined the fair value of the Investment Management reporting unit using an income approach based on management’s projections as of June 30, 2024. The discount rate applied to these cash flows was 10.5%.

As of June 30, 2024, if the discount rate applied to the estimated cash flows was increased or decreased by 25 basis points, the fair value of the Investment Management reporting unit would decrease or increase by 4%, respectively. Similarly, if the long-term growth rate was increased or decreased by 10 basis points, the fair value of the Investment Management reporting unit would increase or decrease by approximately 1%, respectively.

In the second quarter of 2024, we also performed our annual goodwill impairment test on the remaining six reporting units using an income approach to estimate fair values of each reporting unit. Estimated cash flows used in the income approach were based on management’s projections as of April 1, 2024. The discount rate applied to these cash flows was 10%.

As a result of the annual goodwill impairment test, no goodwill impairment was recognized. The fair values of the Company’s remaining six reporting units were substantially in excess of the respective reporting units’ carrying value.

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

22 BNY

Consolidated balance sheet review

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

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

At June 30, 2024, total assets were $429 billion, compared with $410 billion at Dec. 31, 2023. The increase in total assets was primarily driven by higher securities, interest-bearing deposits with the Federal Reserve and other central banks and loans, partially offset by lower interest-bearing deposits with banks. Deposits totaled $304 billion at June 30, 2024, compared with $284 billion at Dec. 31, 2023. The increase reflects higher interest-bearing deposits in U.S. offices. Total interest-bearing deposits as a percentage of total interest-earning assets were 67% at June 30, 2024 and 66% at Dec. 31, 2023.

At June 30, 2024, available funds totaled $163 billion and included cash and due from banks, interest-bearing deposits with the Federal Reserve and other central banks, interest-bearing deposits with banks and federal funds sold and securities purchased under resale agreements. This compares with available funds of $158 billion at Dec. 31, 2023. Total available funds as a percentage of total assets was 38% at June 30, 2024 and Dec. 31, 2023. For additional information on our available funds, see “Liquidity and dividends.”

Securities were $137 billion, or 32% of total assets, at June 30, 2024, compared with $126 billion, or 31% of

total assets, at Dec. 31, 2023. The increase primarily reflects higher non-U.S. government, U.S. Treasury and agency residential mortgage-backed securities (“RMBS”), partially offset by lower U.S. government agencies securities and unrealized pre-tax losses in the first six months of 2024. For additional information on our securities portfolio, see “Securities” and Note 4 of the Notes to Consolidated Financial Statements.

Loans were $71 billion, or 16% of total assets, at June 30, 2024, compared with $67 billion, or 16% of total assets, at Dec. 31, 2023. The increase was driven by higher loans in the financial institutions portfolio and margin loans. For additional information on our loan portfolio, see “Loans” and Note 5 of the Notes to Consolidated Financial Statements.

Long-term debt totaled $31 billion at June 30, 2024 and Dec. 31, 2023. Maturities, redemptions and a decrease in the fair value of hedged long-term debt were offset by issuances. For additional information on long-term debt, see “Liquidity and dividends.”

The Bank of New York Mellon Corporation total shareholders’ equity totaled $41 billion at June 30, 2024 and Dec. 31, 2023. For additional information, see “Capital.”

Country risk exposure

The following table presents BNY’s top 10 exposures by country (excluding the U.S.) as of June 30, 2024, as well as certain countries with higher risk profiles. The exposure is presented on an internal risk management basis and has not been reduced by the allowance for credit losses. We monitor our exposure to these and other countries as part of our internal country risk management process.

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

BNY 23


Country risk exposure at June 30, 2024	Interest-bearing deposits											Total exposure
(in billions)	Central banks		Banks			Lending (a)		Securities (b)		Other (c)
Top 10 country exposure:
Germany	$	19.3	$	0.6		$	0.8	$	3.8	$	0.3	$	24.8
United Kingdom (“UK”)	10.5		0.4			1.4		4.0		2.5		18.8
Belgium	8.1		1.1			0.6		1.3		0.1		11.2
Japan	5.9		0.2			0.2		0.4		0.7		7.4
Canada	—		1.8			0.1		4.0		1.3		7.2
Luxembourg	0.1		0.3			1.4		0.1		2.0		3.9
Netherlands	1.7		0.1			0.2		1.5		0.2		3.7
South Korea	0.1		—			2.5		0.2		0.6		3.4
Australia	—		1.3			0.6		0.7		0.4		3.0
Ireland	0.1		0.2			0.5		—		1.7		2.5
Total Top 10 country exposure	$	45.8	$	6.0		$	8.3	$	16.0	$	9.8	$	85.9	(d)

Select country exposure:
Brazil	$	—	$	—		$	0.8	$	0.1	$	0.3	$	1.2
Russia	—		0.5		(e)	—		—		—		0.5

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

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

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

(d) The top 10 country exposures comprise approximately 70% of our total non-U.S. exposure.

(e) Represents cash balances with exposure to Russia.

Events in recent years have resulted in increased focus on Brazil. The country risk exposure to Brazil is primarily short-term trade finance loans extended to large financial institutions. We also have operations in Brazil providing investment services and investment management services.

The war in Ukraine increased our focus on Russia. The country risk exposure to Russia consists of cash balances related to our securities services businesses and may increase in the future to the extent cash is received for the benefit of our clients that is subject to distribution restrictions. BNY has ceased new banking business in Russia

and suspended investment management purchases of Russian securities. At June 30, 2024, less than 0.1% of our AUC/A and less than 0.01% of our AUM consisted of Russian securities. We will continue to work with multinational clients that depend on our custody and recordkeeping services to manage their exposures.

We are monitoring our exposure to Israel as part of our internal country risk management process. At June 30, 2024, our total exposure to Israel was $321 million and primarily consisted of investment grade short-term interest-bearing deposits and OTC derivatives maturing within six months.

Securities

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

24 BNY

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


Securities portfolio	March 31, 2024			2Q24 change in unrealized gain (loss)		June 30, 2024					Fair value as a % of amortized cost (a)		Unrealized gain (loss)			% Floating rate (b)		Ratings (c)
																						BBB+/ BBB-		BB+ and lower
(dollars in millions)	Fair value					Amortized cost (a)		Fair value										AAA/ AA-		A+/ A-						Not rated
Agency RMBS	$	41,642		$	(74)	$	45,135	$	40,898		91	%	$	(4,237)		23	%	100	%	—	%	—	%	—	%		—	%
U.S. Treasury	29,896			45		29,415		28,633			97		(782)			58		100		—		—		—			—
Non-U.S. government (d)	26,498			18		27,431		26,866			98		(565)			35		93		3		3		1			—
Agency commercial mortgage-backed securities (“MBS”)	11,083			13		11,551		10,983			95		(568)			41		100		—		—		—			—
CLOs	7,248			6		7,338		7,354			100		16			100		100		—		—		—			—
Foreign covered bonds (e)	7,259			11		7,484		7,334			98		(150)			46		100		—		—		—			—
U.S. government agencies	6,607			11		6,819		6,406			94		(413)			32		100		—		—		—			—
Non-agency commercial MBS	3,009			7		3,096		2,893			93		(203)			49		100		—		—		—			—
Non-agency RMBS	1,727			(3)		1,822		1,670			92		(152)			42		86		2		—		6			6
Other asset-backed securities (“ABS”)	899			8		892		823			92		(69)			13		100		—		—		—			—

Other	11			—		12		11			91		(1)			—		—		—		—		—			100
Total securities	$	135,879	(f)	$	42	$	140,995	$	133,871	(f)	95	%	$	(7,124)	(f)(g)	40	%	98	%	1	%	1	%	—	%		—	%

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

(b) Includes the impact of hedges.

(d) Includes supranational securities. Primarily consists of exposure to Germany, UK, France and Canada.

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

(f) Includes net unrealized gains on derivatives hedging securities available-for-sale (including discontinued hedges) of $2,161 million at March 31, 2024 and $2,163 million at June 30, 2024.

(g) At June 30, 2024, includes pre-tax net unrealized losses of $1,982 million related to available-for-sale securities, net of hedges, and $5,142 million related to held-to-maturity securities. The after-tax unrealized losses, net of hedges, related to available-for-sale securities is $1,496 million and the after-tax equivalent related to held-to-maturity securities is $3,921 million.

The fair value of our securities portfolio, including related hedges, was $133.9 billion at June 30, 2024, compared with $123.3 billion at Dec. 31, 2023. The increase primarily reflects higher non-U.S. government, U.S. Treasury and agency RMBS, partially offset by lower U.S. government agencies securities and unrealized pre-tax losses in the first six months of 2024.

At June 30, 2024, the securities portfolio had a net unrealized loss, including the impact of related hedges, of $7.1 billion, compared with $7.0 billion at Dec. 31, 2023. The increase in the unrealized loss, including the impact of related hedges, primarily reflects the impact of higher interest rates, partially offset by securities moving closer to maturity.

The fair value of the available-for-sale securities totaled $92.6 billion at June 30, 2024, net of hedges, or 69% of the securities portfolio, net of hedges. The fair value of the held-to-maturity securities totaled $41.3 billion at June 30, 2024, or 31% of the securities portfolio, net of hedges.

The unrealized loss (after-tax) on our available-for-sale securities portfolio, net of hedges, included in accumulated other comprehensive income was $1.5 billion at June 30, 2024, compared with $1.6 billion at Dec. 31, 2023. Net unrealized loss, including the impact of hedges, decreased as securities moved closer to maturity, partially offset by the impact of higher interest rates.

At June 30, 2024, 98% of the securities in our portfolio were rated AAA/AA-, compared with 99% at Dec. 31, 2023.

See Note 4 of the Notes to Consolidated Financial Statements for the pre-tax net securities gains (losses) by security type. See Note 15 of the Notes to Consolidated Financial Statements for securities by level in the fair value hierarchy.

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


Amortizable purchase premium (net of discount) and net amortization of securities (a)
(in millions)	2Q24		1Q24		2Q23

Amortizable purchase premium, net of discount	$	344	$	419	$	1,028

Net amortization (b)	$	9	$	19	$	42

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

(b) Accumulated basis adjustments on discontinued hedges of securities of $371 million at June 30, 2024, $405 million at March 31, 2024 and $440 million at June 30, 2023 will also be accreted to net interest income over the remaining life of the security. Including the impact of the accretion of discontinued hedges, there was a net accretion of $25 million in the second quarter of 2024, a net accretion of $14 million in the first quarter of 2024 and a net amortization of $23 million in the second quarter of 2023.

Loans


Total exposure – consolidated	June 30, 2024						Dec. 31, 2023
(in billions)	Loans		Unfunded commitments		Total exposure		Loans		Unfunded commitments		Total exposure
Financial institutions	$	12.2	$	32.4	$	44.6	$	10.5	$	29.2	$	39.7
Commercial	2.2		12.0		14.2		2.1		11.4		13.5
Wealth management loans	8.8		0.5		9.3		9.1		0.5		9.6
Wealth management mortgages	9.0		0.2		9.2		9.1		0.3		9.4
Commercial real estate	6.9		3.2		10.1		6.8		3.4		10.2
Lease financings	0.6		—		0.6		0.6		—		0.6
Other residential mortgages	1.1		—		1.1		1.2		—		1.2
Overdrafts	3.2		—		3.2		3.1		—		3.1
Capital call financing	4.1		3.6		7.7		3.7		3.6		7.3
Other	2.9		—		2.9		2.7		—		2.7
Margin loans	19.6		—		19.6		18.0		—		18.0
Total	$	70.6	$	51.9	$	122.5	$	66.9	$	48.4	$	115.3

At June 30, 2024, our total lending-related exposure of $122.5 billion increased 6% compared with Dec. 31, 2023, primarily reflecting higher exposure in the financial institutions portfolio and higher margin loans.

Our financial institutions and commercial portfolios comprise our largest concentrated risk. These portfolios comprised 48% of our total exposure at June 30, 2024 and 46% at Dec. 31, 2023. Additionally, most of our overdrafts relate to financial institutions.

Financial institutions

The financial institutions portfolio is shown below.


Financial institutions portfolio exposure (dollars in billions)	June 30, 2024										Dec. 31, 2023
	Loans		Unfunded commitments		Total exposure		% Inv. grade		% due <1 yr.		Loans		Unfunded commitments		Total exposure
Securities industry	$	2.4	$	17.8	$	20.2	99	%	99	%	$	2.3	$	14.8	$	17.1
Asset managers	1.6		8.2		9.8		95		77		1.4		8.0		9.4
Banks	7.9		1.4		9.3		89		94		6.4		1.4		7.8
Insurance	0.1		4.1		4.2		100		17		0.1		3.9		4.0
Government	—		0.3		0.3		100		63		—		0.2		0.2
Other	0.2		0.6		0.8		98		51		0.3		0.9		1.2
Total	$	12.2	$	32.4	$	44.6	97	%	84	%	$	10.5	$	29.2	$	39.7

26 BNY

The financial institutions portfolio exposure was $44.6 billion at June 30, 2024, an increase of 12% compared with Dec. 31, 2023, primarily reflecting higher exposure in the securities industry and banks portfolios.

Financial institution exposures are high quality, with 97% of the exposures meeting the investment grade equivalent criteria of our internal credit rating classification at June 30, 2024. Each customer is assigned an internal credit rating, which is mapped to an equivalent external rating agency grade based upon a number of dimensions, which are continually evaluated and may change over time. For ratings of non-U.S. counterparties, our internal credit rating is generally capped at a rating equivalent to the sovereign rating of the country where the counterparty resides, regardless of the internal credit rating assigned to the counterparty or the underlying collateral.

The exposure to financial institutions is generally short term, with 84% of the exposures expiring within one year. At June 30, 2024, 16% of the exposure to financial institutions had an expiration within 90 days, compared with 19% at Dec. 31, 2023.

In addition, 65% of the financial institutions exposure is secured. For example, securities industry clients

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

At June 30, 2024, the secured intraday credit provided to dealers in connection with their tri-party repo activity totaled $13.5 billion and was included in the securities industry portfolio. Dealers secure the outstanding intraday credit with high-quality liquid collateral having a market value in excess of the amount of the outstanding credit. Secured intraday credit facilities represent approximately 30% of the exposure in the financial institutions portfolio and are reviewed and reapproved annually.

The asset managers portfolio exposure is high quality, with 95% of the exposures meeting our investment grade equivalent ratings criteria as of June 30, 2024. These exposures are generally short-term liquidity facilities, with the majority to regulated mutual funds.

Our banks portfolio exposure primarily relates to global trade finance. These exposures are short term in nature, with 94% due in less than one year. The investment grade percentage of our banks portfolio exposure was 89% at June 30, 2024, compared with 84% at Dec. 31, 2023. Our non-investment grade exposures are primarily trade finance loans in Brazil.

Commercial

The commercial portfolio is presented below.


Commercial portfolio exposure	June 30, 2024										Dec. 31, 2023
(dollars in billions)	Loans		Unfunded commitments		Total exposure		% Inv. grade		% due <1 yr.		Loans		Unfunded commitments		Total exposure
Services and other	$	1.4	$	3.6	$	5.0	98	%	36	%	$	1.2	$	3.4	$	4.6
Manufacturing	0.6		3.7		4.3		100		23		0.5		3.6		4.1
Energy and utilities	0.2		4.0		4.2		92		13		0.4		3.7		4.1
Media and telecom	—		0.7		0.7		79		3		—		0.7		0.7
Total	$	2.2	$	12.0	$	14.2	96	%	23	%	$	2.1	$	11.4	$	13.5

The commercial portfolio exposure was $14.2 billion at June 30, 2024, an increase of 5% from Dec. 31, 2023, primarily reflecting higher exposure in the services and other and manufacturing portfolios.

Our credit strategy is to focus on investment grade clients that are active users of our non-credit services. The following table summarizes the percentage of the

financial institutions and commercial portfolio exposures that are investment grade.


Percentage of the portfolios that are investment grade
	Quarter ended
	June 30, 2024		March 31, 2024		Dec. 31, 2023		Sept. 30, 2023		June 30, 2023
Financial institutions	97	%	97	%	92	%	94	%	94	%
Commercial	96	%	96	%	94	%	95	%	95	%

BNY 27

Wealth management loans

Our wealth management loan exposure was $9.3 billion at June 30, 2024, compared with $9.6 billion at Dec. 31, 2023. Wealth management loans primarily consist of loans to high-net-worth individuals, a majority of which are secured by the customers’ investment management accounts or custody accounts.

Wealth management mortgages

Our wealth management mortgage exposure was $9.2 billion at June 30, 2024, compared with $9.4 billion

at Dec. 31, 2023. Wealth management mortgages primarily consist of loans to high-net-worth individuals, which are secured by residential property. Wealth management mortgages are primarily interest-only, adjustable-rate mortgages with a weighted-average loan-to-value ratio of 61% at origination. At June 30, 2024, less than 1% of the mortgages were past due.

At June 30, 2024, the wealth management mortgage portfolio consisted of the following geographic concentrations: California – 21%; New York – 14%; Florida – 11%; Massachusetts – 8%; and other – 46%.

Commercial real estate

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


Composition of commercial real estate portfolio by asset class	June 30, 2024				Dec. 31, 2023
	Total exposure		Percentage secured (a)		Total exposure		Percentage secured (a)
(in billions)

Residential	$	4.2	87	%	$	4.3	88	%
Office	2.5		74		2.6		74
Retail	0.8		62		0.8		63
Mixed use	0.8		33		0.8		31
Hotels	0.6		43		0.6		40
Healthcare	0.6		49		0.5		57
Other	0.6		64		0.6		71
Total commercial real estate	$	10.1	71	%	$	10.2	73	%

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

Our commercial real estate exposure totaled $10.1 billion at June 30, 2024 and $10.2 billion at Dec. 31, 2023. Our income-producing commercial real estate facilities are focused on experienced owners and are structured with moderate leverage based on existing cash flows. Our commercial real estate lending activities also include construction and renovation facilities. Our client base consists of experienced developers and long-term holders of real estate assets. Loans are approved on the basis of existing or projected cash flows and supported by appraisals and knowledge of local market conditions. Development loans are structured with moderate leverage and, in many instances, involve some level of recourse to the developer.

At June 30, 2024, the unsecured portfolio consisted of real estate investment trusts (“REITs”) and real estate operating companies, which are both primarily investment grade.

At June 30, 2024, our commercial real estate portfolio consisted of the following concentrations: New York metro – 34%; REITs and real estate operating companies – 29%; and other – 37%.

Lease financings

The lease financings portfolio exposure totaled $600 million at June 30, 2024 and $599 million at Dec. 31, 2023. At June 30, 2024, nearly all of leasing exposure was investment grade, or investment grade equivalent, and consisted of exposures backed by well-diversified assets, primarily real estate and large-ticket transportation equipment. Assets are both domestic and foreign-based, with primary concentrations in Germany and the U.S.

28 BNY

Other residential mortgages

The other residential mortgages portfolio primarily consists of 1-4 family residential mortgage loans and totaled $1.1 billion at June 30, 2024 and $1.2 billion at Dec. 31, 2023.

Overdrafts

Overdrafts primarily relate to custody and securities clearance clients and are generally repaid within two business days.

Capital call financing

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

Other loans

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

Margin loans

Margin loan exposure of $19.6 billion at June 30, 2024 and $18.0 billion at Dec. 31, 2023 was collateralized with marketable securities. Borrowers are required to maintain a daily collateral margin in excess of 100% of the value of the loan. Margin loans included $9 billion at June 30, 2024 and $7 billion at Dec. 31, 2023 related to a term loan program that offers fully collateralized loans to broker-dealers.

Allowance for credit losses

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

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


Allowance for credit losses activity	June 30, 2024			March 31, 2024			Dec. 31, 2023			June 30, 2023
(dollars in millions)



Beginning balance of allowance for credit losses	$	440		$	414		$	325		$	320

Provision for credit losses	—			27			84			5
Net (charge-offs) recoveries:
Loans:
Commercial real estate	(43)			—			—			—

Other residential mortgages	—			—			—			(1)

Wealth management mortgages	—			(1)			—			—
Other	—			—			5			—
Other financial instruments	(1)			—			—			(1)
Net (charge-offs) recoveries	(44)			(1)			5			(2)
Ending balance of allowance for credit losses	$	396		$	440		$	414		$	323

Allowance for loan losses	$	286		$	322		$	303		$	191
Allowance for lending-related commitments	73			81			87			91
Allowance for other financial instruments (a)	37			37			24			41
Total allowance for credit losses	$	396		$	440		$	414		$	323

Total loans, at period end	$	70,642		$	73,615		$	66,879		$	64,469




Allowance for loan losses as a percentage of total loans	0.40		%	0.44		%	0.45		%	0.30		%
Allowance for loan losses and lending-related commitments as a percentage of total loans	0.51		%	0.55		%	0.58		%	0.44		%

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

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

management’s estimate of lifetime expected losses in our credit portfolio. This evaluation process is

BNY 29

subject to numerous estimates and judgments. To the extent actual results differ from forecasts or

management’s judgment, the allowance for credit losses may be greater or less than future charge-offs.

Based on an evaluation of the allowance for credit losses as discussed in “Critical accounting estimates” in our 2023 Annual Report, we have allocated our allowance for loans and lending-related commitments as presented below.


Allocation of allowance for loan losses and lending-related commitments (a)	June 30, 2024 (b)				March 31, 2024				Dec. 31, 2023				June 30, 2023
(dollars in millions)	$		%		$		%		$		%			$		%
Commercial real estate	$	298	83	%	$	347	86	%	$	325	83	%		$	199	71	%
Commercial	27		7		24		6		27		7			21		7
Financial institutions	21		6		17		4		19		4			32		11
Wealth management mortgages	6		1		7		1		9		2			15		5
Capital call financing	3		1		4		1		4		1			4		1
Other residential mortgages	3		1		3		1		4		1			9		3
Wealth management loans	1		1		1		1		1		1			1		1
Lease financings	—		—		—		—		1		1			1		1

Total	$	359	100	%	$	403	100	%	$	390	100	%		$	282	100	%

(a) The allowance allocated to margin loans, overdrafts and other loans was insignificant at June 30, 2024, March 31, 2024, Dec. 31, 2023 and June 30, 2023.

(b) The methodology used to allocate the qualitative reserves was modified in the second quarter of 2024 to align certain specifically identifiable qualitative reserves with the respective class of financing receivables. For additional information, see Note 5 of the Notes to Consolidated Financial Statements.

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

Our allowance for credit losses is sensitive to a number of inputs, most notably the macroeconomic forecast assumptions that are incorporated into our estimate of credit losses through the expected life of the loan portfolio, as well as the credit ratings assigned to each borrower. As the macroeconomic environment and related forecasts change, the allowance for credit losses may change materially. The following sensitivity analyses do not represent management’s expectations of the deterioration of our portfolios or the economic environment, but are provided as hypothetical scenarios to assess the sensitivity of the allowance for credit losses to changes in key inputs. If commercial real estate property values were increased 10% and all other credits were rated one grade better, the quantitative allowance would have decreased by $43 million, and if commercial real estate property values were decreased 10% and all other credits were rated one

grade worse, the quantitative allowance would have increased by $76 million. Our multi-scenario-based macroeconomic forecast used in determining the June 30, 2024 allowance for credit losses consisted of three scenarios. The baseline scenario reflects positive but slightly declining GDP growth, stable unemployment and slightly declining commercial real estate prices through the end of 2024. The upside scenario reflects higher GDP growth through the third quarter 2024 before moderating, declining unemployment through the end of 2024 and stable commercial real estate prices through the end of 2024 compared with the baseline. The downside scenario contemplates negative GDP growth through the third quarter of 2024 before moderating, rapidly increasing unemployment through mid-2025 and sharply lower commercial real estate prices than the baseline. At June 30, 2024, we placed the most weight on our baseline scenario, with the remaining weighting placed on the upside and downside scenarios. From a sensitivity perspective, at June 30, 2024, if we had applied 100% weighting to the downside scenario, the allowance for credit losses would have been approximately $91 million higher.

30 BNY

Nonperforming assets

The table below presents our nonperforming assets.


Nonperforming assets	June 30, 2024			Dec. 31, 2023
(dollars in millions)
Nonperforming loans:
Commercial real estate	$	185		$	189
Other residential mortgages	21			24
Wealth management mortgages	20			19




Total nonperforming loans	226			232
Other assets owned	1			5
Total nonperforming assets	$	227		$	237
Nonperforming assets ratio	0.32		%	0.35		%
Allowance for loan losses/nonperforming loans	126.5			130.6
Allowance for loan losses/nonperforming assets	126.0			127.8
Allowance for loan losses and lending-related commitments/nonperforming loans	158.8			168.1
Allowance for loan losses and lending-related commitments/nonperforming assets	158.1			164.6

Deposits

Total deposits were $304.3 billion at June 30, 2024, an increase of 7%, compared with $283.7 billion at Dec. 31, 2023. The increase primarily reflects higher interest-bearing deposits in U.S. offices and interest-bearing deposits in non-U.S. offices.

Noninterest-bearing deposits were $58.0 billion at June 30, 2024, compared with $58.3 billion at Dec. 31, 2023. Interest-bearing deposits were primarily demand deposits and totaled $246.3 billion at June 30, 2024, compared with $225.4 billion at Dec. 31, 2023.

Short-term borrowings

We fund ourselves primarily through deposits and, to a lesser extent, other short-term borrowings and long-term debt. Short-term borrowings consist of federal funds purchased and securities sold under repurchase agreements, payables to customers and broker-dealers, commercial paper and other borrowed funds. Certain short-term borrowings, for example, securities sold under repurchase agreements, require the delivery of securities as collateral.

Federal funds purchased and securities sold under repurchase agreements include repurchase agreement activity with the Fixed Income Clearing Corporation

(“FICC”), where we record interest expense on a gross basis, but the ending and average balances reflect the impact of offsetting under enforceable netting agreements. This activity primarily relates to government securities collateralized resale and repurchase agreements executed with clients that are novated to and settle with the FICC.

Payables to customers and broker-dealers represent funds awaiting reinvestment and short sale proceeds payable on demand. Payables to customers and broker-dealers are driven by customer trading activity and market volatility.

The Bank of New York Mellon may issue commercial paper that matures within 397 days from the date of issue and is not redeemable prior to maturity or subject to voluntary prepayment.

Other borrowed funds primarily include borrowings from the Federal Home Loan Bank, overdrafts of sub-custodian account balances in our Securities Services businesses, finance lease liabilities and borrowings under lines of credit by our Pershing subsidiaries. Overdrafts typically relate to timing differences for settlements.

Liquidity and dividends

BNY defines liquidity as the ability of the Parent and its subsidiaries to access funding or convert assets to cash quickly and efficiently, or to roll over or issue new debt, especially during periods of market stress, at a reasonable cost, and in order to meet its short-term (up to one year) obligations. Funding liquidity risk is the risk that BNY cannot meet its cash and collateral obligations at a reasonable cost for both expected and unexpected cash flow and collateral needs without adversely affecting daily operations or our financial condition. Funding liquidity risk can arise from funding mismatches, market constraints from the inability to convert assets into cash, the inability to hold or raise cash, low overnight deposits, deposit run-off or contingent liquidity events.

Changes in economic conditions or exposure to credit, market, operational, legal and reputational risks also can affect BNY’s liquidity risk profile and are considered in our liquidity risk framework. For additional information, see “Risk Management – Liquidity Risk” in our 2023 Annual Report.

BNY 31

The Parent’s policy is to have access to sufficient unencumbered cash and cash equivalents at each quarter-end to cover maturities and other forecasted debt redemptions, net interest payments and net tax payments for the following 18-month period, and to provide sufficient collateral to satisfy transactions subject to Section 23A of the Federal Reserve Act.

We monitor and control liquidity exposures and funding needs within and across significant legal entities, branches, currencies and business lines, taking into account, among other factors, any applicable restrictions on the transfer of liquidity among entities.

BNY also manages potential intraday liquidity risks. We monitor and manage intraday liquidity against existing and expected intraday liquid resources (such as cash balances, remaining intraday credit capacity, intraday contingency funding and available collateral) to enable BNY to meet its intraday obligations under normal and reasonably severe stressed conditions.

We define available funds for internal liquidity management purposes as cash and due from banks, interest-bearing deposits with the Federal Reserve and other central banks, interest-bearing deposits with banks and federal funds sold and securities purchased under resale agreements.

The following table presents our total available funds at period end and on an average basis.


Available funds	June 30, 2024			Dec. 31, 2023			Average
(dollars in millions)							2Q24			1Q24			2Q23			YTD24			YTD23
Cash and due from banks	$	5,311		$	4,922		$	5,556		$	5,480		$	5,295		$	5,518		$	5,495
Interest-bearing deposits with the Federal Reserve and other central banks	116,139			111,550			102,257			102,795			114,578			102,526			104,793
Interest-bearing deposits with banks	11,488			12,139			11,210			11,724			13,919			11,467			15,065
Federal funds sold and securities purchased under resale agreements	29,723			28,900			29,013			27,019			26,989			28,016			25,817
Total available funds	$	162,661		$	157,511		$	148,036		$	147,018		$	160,781		$	147,527		$	151,170
Total available funds as a percentage of total assets	38		%	38		%	36		%	36		%	38		%	36		%	37		%

Total available funds were $162.7 billion at June 30, 2024, compared with $157.5 billion at Dec. 31, 2023. The increase was primarily due to higher interest-bearing deposits with the Federal Reserve and other central banks.

Average non-core sources of funds, such as federal funds purchased and securities sold under repurchase agreements, trading liabilities, commercial paper and other borrowed funds, were $19.5 billion for the first six months of 2024, compared with $27.5 billion for the first six months of 2023. The decrease primarily reflects lower federal funds purchased and securities sold under repurchase agreements and lower trading liabilities.

Average interest-bearing domestic deposits were $140.6 billion for the first six months of 2024, compared with $119.3 billion for the first six months of 2023. Average interest-bearing foreign deposits, primarily from our European-based businesses included in the Securities Services and Market and Wealth Services segments, were $91.8 billion for the first six months of 2024, compared with $90.3 billion

for the first six months of 2023. The changes primarily reflect client activity.

Average payables to customers and broker-dealers were $12.2 billion for the first six months of 2024 and $15.9 billion for the first six months of 2023. Payables to customers and broker-dealers are driven by customer trading activity and market volatility.

Average long-term debt was $31.3 billion for the first six months of 2024 and $31.1 billion for the first six months of 2023.

Average noninterest-bearing deposits decreased to $49.5 billion for the first six months of 2024 from $66.0 billion for the first six months of 2023, primarily reflecting client activity.

A significant reduction of client activity in our Securities Services and Market and Wealth Services business segments would reduce our access to deposits. See “Asset/liability management” for additional factors that could impact our deposit balances.

32 BNY

Sources of liquidity

The Parent’s major sources of liquidity are access to the debt and equity markets, dividends from its subsidiaries, and cash on hand and cash otherwise made available in business-as-usual circumstances to the Parent through a committed credit facility with our intermediate holding company (“IHC”).

Our ability to access the capital markets on favorable terms, or at all, is partially dependent on our credit ratings, which are as follows:

Credit ratings at June 30, 2024

Moody’s

S&P

Fitch

DBRS

Parent:

Long-term senior debt

AA-

Subordinated debt

A-

AA (low)

Preferred stock

Baa1

BBB

BBB+

Outlook – Parent

Positive

Stable

The Bank of New York Mellon:

Long-term senior debt

Aa2

AA-

AA (high)

Subordinated debt

Long-term deposits

Aa1

AA-

AA+

AA (high)

Short-term deposits

P-1

A-1+

F1+

R-1 (high)

Commercial paper

P-1

A-1+

F1+

R-1 (high)

BNY Mellon, N.A.:

Long-term senior debt

Aa2

(a)

AA-

(a)

AA (high)

Long-term deposits

Aa1

AA-

AA+

AA (high)

Short-term deposits

P-1

A-1+

F1+

R-1 (high)

Outlook – Banks

Negative (multiple)

(b)

Stable

(a) Represents senior debt issuer default rating.

(b) Positive outlook on long-term senior debt ratings. Negative outlook on long-term deposits ratings. Positive outlook on senior unsecured rating for The Bank of New York Mellon.

NR – Not rated.

Long-term debt totaled $30.9 billion at June 30, 2024 and $31.3 billion at Dec. 31, 2023. Maturities and redemptions of $2.6 billion and a decrease in the fair value of hedged long-term debt were offset by issuances totaling $2.5 billion. Long-term debt of $2.6 billion will mature in the remainder of 2024.

In July, the Parent issued $2.5 billion of long-term debt in four tranches:

•$300 million of floating rate senior notes maturing in 2028 with an annual interest rate of compounded secured overnight financing rate (“SOFR”) plus 83 basis points,

•$600 million of fixed to floating rate senior notes maturing in 2028. The annual fixed interest rate is 4.890% from issuance to, but excluding, July 21, 2027, and then an annual interest rate of compounded SOFR plus 84 basis points,

•$1.1 billion of fixed to floating rate senior notes maturing in 2032. The annual fixed interest rate

is 5.060% from issuance to, but excluding, July 22, 2031, and then an annual interest rate of compounded SOFR plus 123 basis points, and

•$500 million of fixed to floating rate senior subordinated notes maturing in 2039. The annual fixed interest rate is 5.606% from issuance to, but excluding, July 21, 2034, and then an annual interest rate of compounded SOFR plus 177 basis points.

The Bank of New York Mellon may issue notes and certificates of deposit (“CDs”). At June 30, 2024 and Dec. 31, 2023, $1.8 billion and $1.3 billion, respectively, of notes were outstanding. At June 30, 2024 and Dec. 31, 2023, $1.3 billion and $397 million, respectively, of CDs were outstanding.

The Bank of New York Mellon also issues commercial paper that matures within 397 days from the date of issue and is not redeemable prior to maturity or subject to voluntary prepayment. There

BNY 33

was $301 million of commercial paper outstanding at June 30, 2024. There was no commercial paper outstanding at Dec. 31, 2023. The average commercial paper outstanding was $481 million for the first six months of 2024 and $3 million for the first six months of 2023.

Subsequent to June 30, 2024, our U.S. bank subsidiaries could declare dividends to the Parent of approximately $1.3 billion, without the need for a regulatory waiver. In addition, at June 30, 2024, non-bank subsidiaries of the Parent had liquid assets of approximately $3.6 billion. Restrictions on our ability to obtain funds from our subsidiaries are discussed in more detail in “Supervision and Regulation – Capital Planning and Stress Testing – Payment of Dividends, Stock Repurchases and Other Capital Distributions” and in Note 19 of the Notes to Consolidated Financial Statements, both in our 2023 Annual Report.

Pershing LLC has one uncommitted line of credit in place for funding purposes that is guaranteed by the Parent for $300 million. There were no borrowings under this line in the second quarter of 2024. Pershing Limited, an indirect UK-based subsidiary of BNY, has two separate uncommitted lines of credit amounting to $257 million in aggregate. Average borrowings under these lines were $1 million in the second quarter of 2024.

The double leverage ratio is the ratio of our equity investment in subsidiaries divided by our consolidated Parent company equity, which includes our noncumulative perpetual preferred stock. In short, the double leverage ratio measures the extent to which equity in subsidiaries is financed by Parent company debt. As the double leverage ratio increases, this can reflect greater demands on a company’s cash flows in order to service interest payments and debt maturities. BNY’s double leverage ratio is managed in a range considering the high level of unencumbered available liquid assets held in its principal subsidiaries (such as central bank deposit placements and government securities), the Company’s cash generating fee-based business model, with fee revenue representing 74% of total revenue in the second quarter of 2024, and the dividend capacity of our banking subsidiaries. Our double leverage ratio was 120.6% at June 30, 2024 and 120.5% at Dec. 31, 2023, and within the range targeted by management.

Uses of funds

The Parent’s major uses of funds are repurchases of common stock, payment of dividends, principal and interest payments on its borrowings, acquisitions and additional investments in its subsidiaries.

In June 2024, a quarterly dividend of $0.42 per common share was paid to common shareholders. Our common stock dividend payout ratio was 28% for the second quarter of 2024.

In July 2024, our Board of Directors approved a 12% increase in the quarterly cash dividend on common stock, from $0.42 to $0.47 per share. The increased quarterly cash dividend was paid on Aug. 2, 2024.

In the second quarter of 2024, we repurchased 10.3 million common shares at an average price of $58.52 per common share, for a total cost of $601 million.

Liquidity coverage ratio (“LCR”)

U.S. regulators have established an LCR that requires certain banking organizations, including BNY, to maintain a minimum amount of unencumbered high-quality liquid assets (“HQLA”) sufficient to withstand the net cash outflow under a hypothetical standardized acute liquidity stress scenario for a 30-day time horizon.

The following table presents BNY’s consolidated HQLA, and the average HQLA and average LCR.


Consolidated HQLA and LCR	June 30, 2024			March 31, 2024
(dollars in billions)
Cash (a)	$	116		$	119
Securities (b)	90			93
Total consolidated HQLA (c)	$	206		$	212

Total consolidated HQLA – average (c)	$	193		$	192
Average consolidated LCR	115		%	117		%

(a) Primarily includes cash on deposit with central banks.

(b) Primarily includes securities of U.S. government-sponsored enterprises, the U.S. Treasury, sovereigns and U.S. agencies.

(c) Consolidated HQLA presented before adjustments. After haircuts and the impact of trapped liquidity, consolidated HQLA totaled $148 billion at June 30, 2024 and $159 billion at March 31, 2024, and averaged $137 billion for the second quarter of 2024 and $143 billion for the first quarter of 2024.

34 BNY

BNY and each of our affected domestic bank subsidiaries were compliant with the U.S. LCR requirements of at least 100% throughout the second quarter of 2024.

Net stable funding ratio (“NSFR”)

The NSFR is a liquidity requirement applicable to large U.S. banking organizations, including BNY. The NSFR is expressed as a ratio of the available stable funding to the required stable funding amount over a one-year horizon. Our average consolidated NSFR was 132% for the second quarter of 2024 and 136% for the first quarter of 2024.

BNY and each of our affected domestic bank subsidiaries were compliant with the NSFR requirement of at least 100% throughout the second quarter of 2024.

Statement of cash flows

The following summarizes the activity reflected on the consolidated statement of cash flows. While this information may be helpful to highlight certain macro trends and business strategies, the cash flow analysis may not be as relevant when analyzing changes in our net earnings and net assets. We believe that in addition to the traditional cash flow analysis, the discussion related to liquidity and dividends and asset/liability management herein may provide more useful context in evaluating our liquidity position and related activity.

Net cash used for operating activities was $551 million in the six months ended June 30, 2024,

compared with net cash provided by operating activities of $2.9 billion in the six months ended June 30, 2023. In the six months ended June 30, 2024, cash flows used for operations primarily resulted from changes in trading assets and liabilities and changes in accruals and other, net, partially offset by earnings. In the six months ended June 30, 2023, cash flows provided by operations primarily resulted from earnings.

Net cash used for investing activities was $21.3 billion in the six months ended June 30, 2024, compared with $25.1 billion in the six months ended June 30, 2023. In the six months ended June 30, 2024, net cash used for investing activities primarily resulted from changes in securities, interest-bearing deposits with the Federal Reserve and other central banks and loans. In the six months ended June 30, 2023, net cash used for investing activities primarily resulted from changes in interest-bearing deposits with the Federal Reserve and other central banks and changes in federal funds sold and securities purchased under resale agreements, partially offset by net changes in securities and changes in interest-bearing deposits with banks.

Net cash provided by financing activities was $21.0 billion in the six months ended June 30, 2024, compared with $20.0 billion in the six months ended June 30, 2023. In the six months ended June 30, 2024, net cash provided by financing activities primarily resulted from changes in deposits. In the six months ended June 30, 2023, net cash provided by financing activities primarily resulted from changes in deposits and changes in federal funds purchased and securities sold under repurchase agreements.

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Capital


Capital data	June 30, 2024			March 31, 2024			Dec. 31, 2023
(dollars in millions, except per share amounts; common shares in thousands)



BNY shareholders’ equity to total assets ratio	9.5		%	9.3		%	9.9		%
BNY common shareholders’ equity to total assets ratio	8.5		%	8.3		%	8.9		%
Total BNY shareholders’ equity	$	40,843		$	40,569		$	40,770
Total BNY common shareholders’ equity	$	36,500		$	36,226		$	36,427
BNY tangible common shareholders’ equity – Non-GAAP (a)	$	19,325		$	19,023		$	19,174
Book value per common share	$	49.46		$	48.44		$	47.97
Tangible book value per common share – Non-GAAP (a)	$	26.19		$	25.44		$	25.25
Closing stock price per common share	$	59.89		$	57.62		$	52.05
Market capitalization	$	44,196		$	43,089		$	39,524
Common shares outstanding	737,957			747,816			759,344

Quarterly:

Cash dividends per common share	$	0.42		$	0.42		$	0.42
Common dividend payout ratio	28		%	34		%	202		%
Common dividend yield (annualized)	2.8		%	2.9		%	3.2		%

(a) See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 43 for a reconciliation of GAAP to Non-GAAP measures.

The Bank of New York Mellon Corporation total shareholders’ equity was $40.8 billion at June 30, 2024 and Dec. 31, 2023, reflecting earnings, offset by common stock repurchases and dividend payments.

In the first six months of 2024, we repurchased 28.1 million common shares at an average price of $56.47 per common share for a total cost of $1.6 billion.

In January 2023, we announced a share repurchase program approved by our Board of Directors providing for the repurchase of up to $5.0 billion of common shares beginning Jan. 1, 2023. This share repurchase plan replaced all previously authorized share repurchase plans.

In April 2024, we announced a new authorization providing for the repurchase of $6.0 billion of common shares in addition to any remaining capacity under the existing January 2023 authorization.

Capital adequacy

Regulators establish certain levels of capital for bank holding companies (“BHCs”) and banks, including BNY and our bank subsidiaries, in accordance with established quantitative measurements. For the Parent to maintain its status as a financial holding company, our U.S. bank subsidiaries and BNY must, among other things, qualify as “well capitalized.” As of June 30, 2024 and Dec. 31, 2023, BNY and our U.S. bank subsidiaries were “well capitalized.” Failure to satisfy regulatory standards, including “well capitalized” status or capital adequacy rules more generally, could result in limitations on our activities and adversely affect our financial condition. See the discussion of these matters in “Supervision and Regulation – Regulated Entities of BNY Mellon and Ancillary Regulatory Requirements” and “Risk Factors – Capital and Liquidity Risk – Failure to satisfy regulatory standards, including “well capitalized” and “well managed” status or capital adequacy and liquidity rules more generally, could result in limitations on our activities and adversely affect our business and financial condition,” both of which are in our 2023 Annual Report.

The U.S. banking agencies’ capital rules are based on the framework adopted by the Basel Committee on Banking Supervision, as amended from time to time. For additional information on these capital requirements, see “Supervision and Regulation” in our 2023 Annual Report.

36 BNY

The table below presents our consolidated and largest bank subsidiary regulatory capital ratios.


Consolidated and largest bank subsidiary regulatory capital ratios	June 30, 2024								March 31, 2024		Dec. 31, 2023
	Well capitalized			Minimum required			Capital ratios		Capital ratios		Capital ratios
						(a)
Consolidated regulatory capital ratios: (b)
Advanced Approaches:
CET1 ratio	N/A		(c)	8.5	%		11.5	%	11.1	%	11.5	%
Tier 1 capital ratio	6	%		10			14.2		13.7		14.2
Total capital ratio	10			12			15.0		14.5		14.9
Standardized Approach:
CET1 ratio	N/A		(c)	8.5	%		11.4	%	10.8	%	11.9	%
Tier 1 capital ratio	6	%		10			14.0		13.4		14.6
Total capital ratio	10			12			15.0		14.3		15.6
Tier 1 leverage ratio	N/A		(c)	4			5.8		5.9		6.0
SLR (d)	N/A		(c)	5			6.8		7.0		7.3

The Bank of New York Mellon regulatory capital ratios: (b)

CET1 ratio	6.5	%		7	%		16.1	%	15.7	%	16.2	%
Tier 1 capital ratio	8			8.5			16.1		15.7		16.2
Total capital ratio	10			10.5			16.2		16.0		16.3
Tier 1 leverage ratio	5			4			6.4		6.5		6.6
SLR (d)	6			3			7.9		8.2		8.5

(a) Minimum requirements for June 30, 2024 include minimum thresholds plus currently applicable buffers. The U.S. global systemically important banks (“G-SIB”) surcharge of 1.5% is subject to change. The countercyclical capital buffer is currently set to 0%. The stress capital buffer (“SCB”) requirement is 2.5%, equal to the regulatory minimum for Standardized Approach capital ratios.

(b) For our CET1, Tier 1 capital and Total capital ratios, our effective capital ratios under U.S. capital rules are the lower of the ratios as calculated under the Standardized and Advanced Approaches. The Tier 1 leverage ratio is based on Tier 1 capital and quarterly average total assets.

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

N/A – Not applicable.

Our CET1 ratio under the Standardized Approach was 11.4% at June 30, 2024 and 11.5% at Dec. 31, 2023 under the Advanced Approaches. The decrease was driven by higher risk-weighted assets, partially offset by the increase in capital.

The Tier 1 leverage ratio was 5.8% at June 30, 2024 and 6.0% at Dec. 31, 2023. The decrease reflects higher average assets, partially offset by the increase in capital.

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

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

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

BNY 37

The following table presents our capital components and RWAs.


Capital components and risk-weighted assets
	June 30, 2024		March 31, 2024		Dec. 31, 2023
(in millions)
CET1:
Common shareholders’ equity	$	36,500	$	36,226	$	36,427
Adjustments for:
Goodwill and intangible assets (a)	(17,175)		(17,203)		(17,253)
Net pension fund assets	(311)		(302)		(297)
Embedded goodwill	(267)		(269)		(275)
Deferred tax assets	(66)		(61)		(62)
Other	(10)		(8)		(6)
Total CET1	18,671		18,383		18,534
Other Tier 1 capital:
Preferred stock	4,343		4,343		4,343
Other	(8)		(3)		(14)
Total Tier 1 capital	$	23,006	$	22,723	$	22,863
Tier 2 capital:
Subordinated debt	$	1,148	$	1,148	$	1,148
Allowance for credit losses	390		440		414
Other	(6)		(1)		(11)
Total Tier 2 capital – Standardized Approach	1,532		1,587		1,551
Excess of expected credit losses	53		70		85
Less: Allowance for credit losses	390		440		414
Total Tier 2 capital – Advanced Approaches	$	1,195	$	1,217	$	1,222
Total capital:
Standardized Approach	$	24,538	$	24,310	$	24,414
Advanced Approaches	$	24,201	$	23,940	$	24,085

Risk-weighted assets:
Standardized Approach	$	164,094	$	169,909	$	156,178
Advanced Approaches:
Credit Risk	$	92,837	$	91,980	$	87,223
Market Risk	3,291		3,208		3,380
Operational Risk	65,650		70,475		70,925
Total Advanced Approaches	$	161,778	$	165,663	$	161,528

Average assets for Tier 1 leverage ratio	$	394,672	$	386,148	$	383,705
Total leverage exposure for SLR	$	336,971	$	325,801	$	313,555

(a) Reduced by deferred tax liabilities associated with intangible assets and tax-deductible goodwill.

The table below presents the factors that impacted CET1 capital.


CET1 generation	2Q24
(in millions)
CET1 – Beginning of period	$	18,383
Net income applicable to common shareholders of The Bank of New York Mellon Corporation	1,143
Goodwill and intangible assets, net of related deferred tax liabilities	28
Gross CET1 generated	1,171
Capital returned:
Common stock repurchases	(601)
Common stock dividends (a)	(322)
Total capital returned	(923)
Other comprehensive gain (loss):
Unrealized gain on assets available-for-sale	2
Foreign currency translation	(30)
Unrealized gain on cash flow hedges	1
Defined benefit plans	3

Total other comprehensive (loss)	(24)
Additional paid-in capital (b)	84
Other additions (deductions):
Net pension fund assets	(9)
Embedded goodwill	2
Deferred tax assets	(5)
Other	(8)
Total other (deductions)	(20)
Net CET1 generated	288
CET1 – End of period	$	18,671

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

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

The following table shows the impact on the consolidated capital ratios at June 30, 2024 of a $100 million increase or decrease in common equity, or a $1 billion increase or decrease in RWAs, quarterly average assets or total leverage exposure.


Sensitivity of consolidated capital ratios at June 30, 2024
	Increase or decrease of
(in basis points)	$100 million in common equity		$1 billion in RWA, quarterly average assets or total leverage exposure
CET1:
Standardized Approach	6	bps	7	bps
Advanced Approaches	6		7

Tier 1 capital:
Standardized Approach	6		9
Advanced Approaches	6		9

Total capital:
Standardized Approach	6		9
Advanced Approaches	6		9

Tier 1 leverage	3		1

SLR	3		2

38 BNY

Stress capital buffer

In July 2023, the Federal Reserve announced that BNY’s SCB requirement would remain at 2.5%, equal to the regulatory floor, for the period from Oct. 1, 2023 through Sept. 30, 2024. The SCB replaced the static 2.5% capital conservation buffer for Standardized Approach capital ratios for CCAR BHCs. The SCB does not apply to bank subsidiaries, which remain subject to the static 2.5% capital conservation buffer. In June 2024, the Federal Reserve notified BNY that its preliminary SCB requirement would remain at 2.5%, equal to the regulatory floor, for the period from Oct. 1, 2024 through Sept. 30, 2025. See “Supervision and Regulation” in our 2023 Annual Report for additional information.

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

Total Loss-Absorbing Capacity (“TLAC”)

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


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

(a) RWA is the greater of Standardized Approach and Advanced Approaches.

(b) Buffer to be met using only CET1.

External TLAC consists of the Parent’s Tier 1 capital and eligible unsecured LTD issued by it that has a remaining term to maturity of at least one year and satisfies certain other conditions. Eligible LTD

consists of the unpaid principal balance of eligible unsecured debt securities, subject to haircuts for amounts due to be paid within two years, that satisfy certain other conditions. Debt issued prior to Dec. 31, 2016 has been permanently grandfathered to the extent these instruments otherwise would be ineligible only due to containing impermissible acceleration rights or being governed by foreign law.

The following table presents our external TLAC and external LTD ratios.


TLAC and LTD ratios	June 30, 2024
	Minimum required		Minimum ratios with buffers
					Ratios
Eligible external TLAC:
As a percentage of RWA	18.0	%	21.5	%	29.1	%
As a percentage of total leverage exposure	7.5	%	9.5	%	14.2	%

Eligible external LTD:
As a percentage of RWA	7.5	%	N/A		14.5	%
As a percentage of total leverage exposure	4.5	%	N/A		7.1	%

N/A – Not applicable.

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

Trading activities and risk management

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

BNY 39

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

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

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

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

See Note 17 of the Notes to Consolidated Financial Statements for additional information on the VaR methodology.

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


VaR (a)	2Q24						June 30, 2024
(in millions)	Average		Minimum		Maximum
Interest rate	$	2.5	$	2.0	$	3.8	$	2.1
Foreign exchange	2.2		1.6		2.9		1.9
Equity	0.1		—		0.2		0.1
Credit	1.4		0.9		1.8		1.1
Diversification	(4.2)		N/M		N/M		(3.6)
Overall portfolio	2.0		1.5		2.9		1.6


VaR (a)	1Q24						March 31, 2024
(in millions)	Average		Minimum		Maximum
Interest rate	$	2.5	$	1.9	$	3.6	$	2.0
Foreign exchange	2.2		1.6		3.0		1.9
Equity	0.1		—		0.2		0.1
Credit	1.3		0.9		1.9		1.2
Diversification	(4.3)		N/M		N/M		(3.5)
Overall portfolio	1.8		1.4		2.4		1.7


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


VaR (a)	YTD24
(in millions)	Average		Minimum		Maximum
Interest rate	$	2.5	$	1.9	$	3.8
Foreign exchange	2.2		1.6		3.0
Equity	0.1		—		0.2
Credit	1.3		0.9		1.9
Diversification	(4.2)		N/M		N/M
Overall portfolio	1.9		1.4		2.9


VaR (a)	YTD23
(in millions)	Average		Minimum		Maximum
Interest rate	$	3.4	$	2.0	$	7.6
Foreign exchange	3.3		2.0		5.7
Equity	0.1		—		0.3
Credit	1.6		0.7		3.5
Diversification	(4.9)		N/M		N/M
Overall portfolio	3.5		1.8		8.9

(a) VaR exposure does not include the impact of the Company’s consolidated investment management funds and seed capital investments.

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

The interest rate component of VaR represents instruments whose values are predominantly driven by interest rate levels. These instruments include, but are not limited to, U.S. Treasury securities, swaps, swaptions, forward rate agreements, exchange-traded futures and options, and other interest rate derivative products.

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

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

The credit component of VaR represents instruments whose values are predominantly driven by credit spread levels, i.e., idiosyncratic default risk. These instruments include, but are not limited to, single issuer credit default swaps, and securities with exposures from corporate and municipal credit spreads.

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

40 BNY

During the second quarter of 2024, interest rate risk generated 40% of average gross VaR, foreign exchange risk generated 35% of average gross VaR, credit risk generated 23% of average gross VaR and equity risk generated 2% of average gross. During the second quarter of 2024, our daily trading loss did not exceed our calculated VaR amount of the overall portfolio.

The following table of total daily trading revenue or loss illustrates the number of trading days in which our trading revenue or loss fell within particular ranges during the past five quarters. The number of trading days when trading revenue was more than $5 million increased compared with the second quarter of 2023 primarily due to higher foreign exchange volumes and higher client activity in our fixed income and equity trading business. The number of trading days when trading revenue was more than $5 million increased compared with the first quarter of 2024 primarily due to higher foreign exchange volumes.


Distribution of trading revenue (loss) (a)
	Quarter ended
(dollars in millions)	June 30, 2024	March 31, 2024	Dec. 31, 2023	Sept. 30, 2023	June 30, 2023

Revenue range:	Number of days
Less than $(2.5)	—	—	2	—	—
$(2.5) – $0	2	1	3	5	2
$0 – $2.5	8	19	18	14	15
$2.5 – $5.0	34	30	25	24	37
More than $5.0	19	12	15	20	9

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

Trading assets include debt and equity instruments and derivative assets, primarily foreign exchange and interest rate contracts, not designated as hedging instruments. Trading assets were $9.6 billion at June 30, 2024 and $10.1 billion at Dec. 31, 2023.

Trading liabilities include debt and equity instruments and derivative liabilities, primarily foreign exchange and interest rate contracts, not designated as hedging instruments. Trading liabilities were $3.4 billion at June 30, 2024 and $6.2 billion at Dec. 31, 2023.

Under our fair value methodology for derivative contracts, an initial “risk-neutral” valuation is performed on each position assuming time discounting based on a AA credit curve. In addition,

we consider credit risk in arriving at the fair value of our derivatives.

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

At June 30, 2024, our OTC derivative assets, including those in hedging relationships, of $1.4 billion included a credit valuation adjustment (“CVA”) deduction of $12 million. Our OTC derivative liabilities, including those in hedging relationships, of $1.9 billion included a debit valuation adjustment (“DVA”) of $5 million related to our own credit spread. Net of hedges, the CVA increased by less than $1 million and the DVA decreased by less than $1 million in the second quarter of 2024, which decreased investment and other revenue – other trading revenue by less than $1 million. The net impact of the CVA and DVA, net of hedges, did not impact investment and other revenue – other trading revenue in the first quarter of 2024. The net impact of the CVA and DVA, net of hedges, decreased investment and other revenue – other trading revenue by less than $1 million in the second quarter of 2023.

The table below summarizes our exposure, net of collateral related to our derivative counterparties, as determined on an internal risk management basis. Significant changes in counterparty credit ratings could alter the level of credit risk faced by BNY.


Foreign exchange and other trading counterparty risk-rating profile

	June 30, 2024				Dec. 31, 2023
(dollars in millions)	Exposure, net of collateral		Percentage of exposure, net of collateral		Exposure, net of collateral		Percentage of exposure, net of collateral

Investment grade	$	1,233	96	%	$	2,062	95	%
Non-investment grade	45		4	%	103		5	%
Total	$	1,278	100	%	$	2,165	100	%

Asset/liability management

Our diversified business activities include processing securities, accepting deposits, investing in securities, lending, raising money as needed to fund assets and other transactions. The market risks from these

BNY 41

activities include interest rate risk and foreign exchange risk. Our primary market risk is exposure to movements in U.S. dollar interest rates and certain foreign currency interest rates. We actively manage interest rate sensitivity and use earnings simulation and discounted cash flow models to identify interest rate exposures.

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

The baseline scenario incorporates the market’s forward rate expectations and management’s assumptions regarding client deposit rates, credit spreads, changes in the prepayment behavior of loans and securities and the impact of derivative financial instruments used for interest rate risk management purposes as of each respective quarter-end. These assumptions have been developed through a combination of historical analysis and future expected pricing behavior and are inherently uncertain. Actual results may differ materially from projected results due to timing, magnitude and frequency of interest rate changes, and changes in market conditions and management’s strategies, among other factors. Client deposit levels and mix are key assumptions impacting net interest income in the baseline as well as the hypothetical interest rate scenarios. The earnings simulation model assumes static deposit levels and mix, and it also assumes that no management actions will be taken to mitigate the effects of interest rate changes. Typically, the baseline scenario uses the average deposit balances of the quarter.

In the table below, we use the earnings simulation model to assess the impact of various hypothetical interest rate scenarios compared to the baseline scenario. In each of the scenarios, all currencies’ interest rates are instantaneously shifted higher or lower at the start of the forecast. Long-term interest rates are defined as all tenors equal to or greater than three years and short-term interest rates are defined as all tenors equal to or less than three months. Interim term points are interpolated where applicable. The impact of interest rate shifts may not be linear. The results of this earnings simulation should therefore not be extrapolated for more severe interest rate scenarios than those presented in the table below.

The following table shows net interest income sensitivity for BNY.


Estimated changes in net interest income (in millions)	June 30, 2024		March 31, 2024		June 30, 2023
Up 100 bps rate shock vs. baseline	$	162	$	86	$	324
Long-term up 100 bps, short-term unchanged	107		98		7
Short-term up 100 bps, long-term unchanged	55		(12)		317
Long-term down 100 bps, short-term unchanged	(109)		(102)		(13)
Short-term down 100 bps, long-term unchanged	(135)		(76)		(346)
Down 100 bps rate shock vs. baseline	(244)		(178)		(358)

At June 30, 2024, the change in the impact of a 100 bps upward or downward shift in rates on net interest income compared with March 31, 2024 was primarily driven by higher deposits and cash balances.

While the net interest income sensitivity scenario calculations assume static deposit balances to facilitate consistent period-over-period comparisons, net interest income is impacted by changes in deposit balances. Noninterest-bearing deposits are particularly sensitive to changes in short-term rates.

To illustrate the net interest income sensitivity to noninterest-bearing deposits, we estimate that a $5 billion instantaneous reduction/increase in U.S. dollar-denominated noninterest-bearing deposits would reduce/increase the net interest income sensitivity results in the up 100 basis point scenario in the table above by approximately $300 million, and in the down 100 basis point scenario by approximately $200 million. The impact would be smaller if the reduction/increase was assumed to be a mixture of interest-bearing and noninterest-bearing deposits.

Additionally, during periods of low short-term interest rates, money market mutual fund fees and other similar fees are typically waived to protect investors from negative returns.

For a discussion of factors impacting the growth or contraction of deposits, see “Risk Factors – Capital and Liquidity Risk – Our business, financial condition and results of operations could be adversely affected if we do not effectively manage our liquidity” in our 2023 Annual Report.

42 BNY

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

BNY has included in this Form 10-Q certain Non-GAAP financial measures on a tangible basis as a supplement to GAAP information, which exclude goodwill and intangible assets, net of deferred tax liabilities. We believe that the return on tangible common equity – Non-GAAP is additional useful information for investors because it presents a measure of those assets that can generate income, and the tangible book value per common share – Non-GAAP is additional useful information because it presents the level of tangible assets in relation to shares of common stock outstanding.

BNY has also included revenue measures excluding notable items, including the reduction in the fair value of a contingent consideration receivable related to a prior year divestiture and a disposal loss. Expense measures, excluding notable items, including the FDIC special assessment, severance expense and litigation reserves, are also presented. Litigation reserves represent accruals for loss contingencies that are both probable and reasonably estimable, but exclude standard business-related legal fees. Net income applicable to common shareholders of The Bank of New York Mellon Corporation, diluted earnings per share, return on common equity, return on tangible common equity and pre-tax operating

margin, excluding the notable items mentioned above, are also provided. These measures are provided to permit investors to view the financial measures on a basis consistent with how management views the businesses.

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. We believe 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.

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

BNY 43


Reconciliation of Non-GAAP measures, excluding notable items															YTD24
							2Q24 vs.								vs.
(dollars in millions, except per share amounts)	2Q24		1Q24		2Q23		1Q24		2Q23		YTD24		YTD23		YTD23




Total revenue – GAAP	$	4,597	$	4,527	$	4,504	2	%	2	%

Less: Disposal (losses) (a)	—		—		(1)

Adjusted total revenue – Non-GAAP	$	4,597	$	4,527	$	4,505	2	%	2	%

Noninterest expense – GAAP	$	3,070	$	3,176	$	3,111	(3)	%	(1)	%	$	6,246	$	6,211	1	%
Less: Severance (b)	29		36		26						65		26
Litigation reserves (b)	2		2		36						4		42
FDIC special assessment (b)	(38)		—		—						(38)		—

Adjusted noninterest expense – Non-GAAP	$	3,077	$	3,138	$	3,049	(2)	%	1	%	$	6,215	$	6,143	1	%






Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP	$	1,143	$	953	$	1,036	20	%	10	%

Less: Disposal (losses) (a)	—		—		—

Severance (b)	(22)		(27)		(20)
Litigation reserves (b)	—		(2)		(36)
FDIC special assessment (b)	29		—		—

Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation – Non-GAAP	$	1,136	$	982	$	1,092	16	%	4	%

Diluted earnings per common share – GAAP	$	1.52	$	1.25	$	1.31	22	%	16	%

Less: Disposal (losses) (a)	—		—		—

Severance (b)	(0.03)		(0.04)		(0.02)
Litigation reserves (b)	—		—		(0.05)
FDIC special assessment (b)	$	0.04	$	—	$	—
Total diluted earnings per common share impact of notable items	0.01		(0.04)		(0.07)
Adjusted diluted earnings per common share – Non-GAAP	$	1.51	$	1.29	$	1.38	17	%	9	%

(a) Reflected in investment and other revenue.

(b) Severance is reflected in staff expense, litigation reserves in other expense, and FDIC special assessment in bank assessment charges, respectively.

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


Pre-tax operating margin reconciliation
(dollars in millions)	2Q24			1Q24			2Q23			YTD24			YTD23
Income before taxes – GAAP	$	1,527		$	1,324		$	1,388		$	2,851		$	2,676
Impact of notable items (a)	7			(38)			(63)			(31)			(70)
Adjusted income before taxes, excluding notable items – Non-GAAP	$	1,520		$	1,362		$	1,451		$	2,882		$	2,746

Total revenue – GAAP	$	4,597		$	4,527		$	4,504		$	9,124		$	8,919
Impact of notable items (a)	—			—			(1)			—			(2)
Adjusted total revenue, excluding notable items – Non-GAAP	$	4,597		$	4,527		$	4,505		$	9,124		$	8,921

Pre-tax operating margin – GAAP (b)	33		%	29		%	31		%	31		%	30		%
Adjusted pre-tax operating margin – Non-GAAP (b)	33		%	30		%	32		%	32		%	31		%

(a) See above for details of notable items and line items impacted.

(b) Income before taxes divided by total revenue.

44 BNY

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


Return on common equity and tangible common equity reconciliation	2Q24			1Q24			2Q23			YTD24			YTD23
(dollars in millions)
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP	$	1,143		$	953		$	1,036		$	2,096		$	1,947
Add: Amortization of intangible assets	13			12			14			25			28
Less: Tax impact of amortization of intangible assets	3			3			4			6			7
Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets – Non-GAAP	1,153			962			1,046			$	2,115		$	1,968
Impact of notable items (a)	7			(29)			(56)			(22)			(60)
Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets and notable items – Non-GAAP	$	1,146		$	991		$	1,102		$	2,137		$	2,028

Average common shareholders’ equity	$	36,044		$	35,905		$	35,655		$	35,975		$	35,569
Less: Average goodwill	16,229			16,238			16,219			16,234			16,190
Average intangible assets	2,834			2,848			2,888			2,841			2,894
Add: Deferred tax liability – tax deductible goodwill	1,213			1,209			1,193			1,213			1,193
Deferred tax liability – intangible assets	655			655			660			655			660
Average tangible common shareholders’ equity – Non-GAAP	$	18,849		$	18,683		$	18,401		$	18,768		$	18,338

Return on common equity – GAAP (b)	12.7		%	10.7		%	11.7		%	11.7		%	11.0		%
Adjusted return on common equity – Non-GAAP (b)	12.7		%	11.0		%	12.3		%	11.8		%	11.4		%
Return on tangible common equity – Non-GAAP (b)	24.6		%	20.7		%	22.8		%	22.7		%	21.7		%
Adjusted return on tangible common equity – Non-GAAP (b)	24.4		%	21.3		%	24.1		%	22.9		%	22.3		%

(a) See page 44 for details of notable items and line items impacted.

(b) Returns are annualized.

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


Book value and tangible book value per common share reconciliation	June 30, 2024		March 31, 2024		Dec. 31, 2023		June 30, 2023
(dollars in millions, except per share amounts and unless otherwise noted)
The Bank of New York Mellon Corporation shareholders’ equity at period end – GAAP	$	40,843	$	40,569	$	40,770	$	40,824
Less: Preferred stock	4,343		4,343		4,343		4,838
The Bank of New York Mellon Corporation common shareholders’ equity at period end – GAAP	36,500		36,226		36,427		35,986
Less: Goodwill	16,217		16,228		16,261		16,246
Intangible assets	2,826		2,839		2,854		2,881
Add: Deferred tax liability – tax deductible goodwill	1,213		1,209		1,205		1,193
Deferred tax liability – intangible assets	655		655		657		660
The Bank of New York Mellon Corporation tangible common shareholders’ equity at period end – Non-GAAP	$	19,325	$	19,023	$	19,174	$	18,712

Period-end common shares outstanding (in thousands)	737,957		747,816		759,344		778,782

Book value per common share – GAAP	$	49.46	$	48.44	$	47.97	$	46.21
Tangible book value per common share – Non-GAAP	$	26.19	$	25.44	$	25.25	$	24.03

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


Constant currency reconciliation – Consolidated					2Q24 vs.
(dollars in millions)	2Q24		2Q23		2Q23
Investment management and performance fees – GAAP	$	761	$	762	—	%
Impact of changes in foreign currency exchange rates	—		(1)
Adjusted investment management and performance fees – Non-GAAP	$	761	$	761	—	%

BNY 45

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


Constant currency reconciliation – Investment and Wealth Management business segment					2Q24 vs.
(dollars in millions)	2Q24		2Q23		2Q23
Investment management and performance fees – GAAP	$	762	$	763	—	%
Impact of changes in foreign currency exchange rates	—		(1)
Adjusted investment management and performance fees – Non-GAAP	$	762	$	762	—	%

The following table presents the reconciliations of income before income taxes, total revenue and the pre-tax operating margin for the Investment and Wealth Management business segment.


Pre-tax operating margin reconciliation – Investment and Wealth Management business segment
(dollars in millions)	2Q24			1Q24			3Q23			2Q23			YTD24			YTD23
Income before income taxes – GAAP	$	149		$	107		$	164		$	130		$	256		$	223

Total revenue – GAAP	$	821		$	846		$	830		$	816		$	1,667		$	1,646
Less: Distribution and servicing expense	88			96			87			93			184			179
Adjusted total revenue, net of distribution and servicing expense – Non-GAAP	$	733		$	750		$	743		$	723		$	1,483		$	1,467

Pre-tax operating margin – GAAP (a)	18		%	13		%	20		%	16		%	15		%	14		%
Adjusted pre-tax operating margin, net of distribution and servicing expense – Non-GAAP (a)	20		%	14		%	22		%	18		%	17		%	15		%

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


Pre-tax operating margin reconciliation, excluding notable items – Investment and Wealth Management business segment
(dollars in millions)	4Q23
(Loss) before income taxes – GAAP	$	(4)
Less: Reduction in the fair value of a contingent consideration receivable related to a prior year divestiture (a)	(144)
Severance expense (b)	(12)
Adjusted income before income taxes – Non-GAAP	$	152

Total revenue – GAAP	$	679
Less: Reduction in the fair value of a contingent consideration receivable related to a prior year divestiture (a)	(144)
Adjusted total revenue – Non-GAAP	$	823
Less: Distribution and servicing expense	89
Adjusted total revenue excluding notable items, net of distribution and servicing expense – Non-GAAP	$	734

Pre-tax operating margin – GAAP (c)	(1)		%
Adjusted pre-tax operating margin, net of distribution and servicing expense – Non-GAAP (c)	(1)		%
Adjusted pre-tax operating margin, net of distribution and servicing expense and excluding notable items – Non-GAAP (c)	21		%

(a) Reflected in investment and other revenue on the consolidated income statement.

(b) Reflected in staff expense on the consolidated income statement.

46 BNY

Recent accounting and regulatory developments

Recent accounting developments

The following accounting guidance issued by the Financial Accounting Standards Board (“FASB”) has not yet been adopted as of June 30, 2024.

ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public entity to disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss (collectively referred to as the “significant expense principle”). In addition, disclosure will be required of the title and position of CODM, and how the CODM uses the reported measure of segment profit or loss in assessing segment performance and deciding how to allocate resources.

This ASU is effective for annual periods beginning after Dec. 15, 2023 and interim periods beginning in 2025, with early adoption permitted. BNY is currently evaluating this guidance and the impact on the business segment disclosures.

ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires a company to disclose, on an annual basis, additional disaggregated information related to the existing disclosures for the effective income tax rate reconciliation and income taxes paid.

This ASU is effective on a prospective basis, with a retrospective option, for annual periods beginning after Dec. 15, 2024, and interim periods within fiscal years beginning after Dec. 15, 2025. BNY is currently evaluating this guidance and the impact on the income tax disclosures.

Recent regulatory and other developments

For a summary of additional regulatory matters relevant to our operations, see “Recent regulatory developments” in our Form 10-Q for the quarter ended March 31, 2024, and “Supervision and Regulation” in our 2023 Annual Report. The following discussion summarizes certain regulatory, legislative and other developments that may affect BNY.

SEC Amendments to Regulation S-P

On May 16, 2024, the SEC adopted amendments (the “S-P Amendments”) to Regulation S-P, which governs the safeguarding, treatment and disposal of customer records and information by certain financial institutions, to enhance the protection of customer financial information and establish a federal minimum standard for data breach notifications to affected individuals by brokers, dealers, investment companies, registered investment advisers and transfer agents (“S-P covered institutions”). The S-P Amendments: (i) extend certain requirements of Regulation S-P to transfer agents registered with the SEC or another appropriate regulatory agency; (ii) require S-P covered institutions to develop, implement, and maintain written policies and procedures for an incident response program that is reasonably designed to detect, respond to, and recover from unauthorized access to or use of customer information; (iii) set forth a data breach notification requirement that requires S-P covered institutions to notify affected individuals whose customer information was, or is reasonably likely to have been, accessed or used without authorization (subject to certain exceptions) within 30 days after the S-P covered institution becomes aware that unauthorized access to or use of customer information has, or is reasonably likely to have, occurred; (iv) broaden the group of customers whose information is protected; (v) address the use of service providers by S-P covered institutions; and (vi) codify an existing statutory exemption to the requirement to provide annual privacy notices to customers. The S-P Amendments are effective as of Aug. 2, 2024 and BNY will have 18 months to come into compliance. BNY is evaluating the impact of the S-P Amendments.

BNY 47

EU Basel 3.1 Implementation: CRR3/CRD6

On June 19, 2024, the texts of the Capital Requirements Regulation (“CRR”) III and Capital Requirements Directive (“CRD”) VI, were formally published in the Official Journal of the EU. Through these regulations, the EU will implement the Basel 3.1 standards, which affect the capital and liquidity requirements of European banking entities, including The Bank of New York Mellon SA/NV, and will restrict the provision of prescribed core banking services (including lending, the provision of guarantees and commitments, and the taking of deposits or other repayable funds) by non-EU entities to EU customers, except where these services are provided through an authorized EU branch or where an exemption applies. The new regime will enter into force in phases beginning July 9, 2024 through to Jan. 11, 2027. BNY is assessing the impact of the rules.

EU Corporate Sustainability Due Diligence Directive

On May 24, 2024, the Council of the European Union formally adopted the Corporate Sustainability Due Diligence Directive (“CSDDD”). CSDDD applies to large EU companies and non-EU companies with significant EU activity. In-scope companies will be required to comply with due diligence obligations for their operations and for their upstream chains of activities and to adopt a transition plan for climate change mitigation. In addition to penalties for non-compliance, CSDDD will subject in-scope companies to potential civil liability, including potential injunctive relief and monetary damages. Publication of CSDDD in the Official Journal of the EU and entry into force is expected in or around the third quarter of 2024. CSDDD will apply on a phased-in basis starting three years after CSDDD’s entry into force, dependent on a company’s number of employees and net worldwide or EU turnover. BNY is assessing the potential impact of CSDDD on its business.

FDIC Amendments to Resolution Planning Rules

On June 20, 2024, the FDIC issued a final rule amending its resolution planning rule applicable to covered insured depository institutions (“IDIs”). The amended rule: (i) adjusts the frequency of resolution plan submissions by IDIs affiliated with a U.S. global systemically important banking organization (“US GSIB”), including The Bank of New York Mellon, from a 3-year cycle to a 2-year cycle; (ii) expands resolution plan content requirements; (iii) requires

IDIs to provide the FDIC with notice within 45 days of certain “extraordinary events”; and (iv) revises certain definitions to be more consistent with similar concepts and approaches under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). The final rule will be effective Oct. 1, 2024. We are evaluating the impact of the final rule.

Website information

Our website is www.bny.com. We currently make available the following information under the Investor Relations portion of our website. With respect to filings with the Securities and Exchange Commission (“SEC”), we post such information as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the SEC.

•All of our SEC filings, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to these reports, as well as proxy statements and SEC Forms 3, 4 and 5;

•Our earnings materials and selected management conference calls and presentations;

•Other regulatory disclosures, including: Pillar 3 Disclosures (and Market Risk Disclosure contained therein); Liquidity Coverage Ratio Disclosures; Net Stable Funding Ratio Disclosures; Federal Financial Institutions Examination Council – Consolidated Reports of Condition and Income for a Bank With Domestic and Foreign Offices; Consolidated Financial Statements for Bank Holding Companies; and the Dodd-Frank Act Stress Test Results for BNY and The Bank of New York Mellon; and

•Our Corporate Governance Guidelines, Amended and Restated By-Laws, Directors’ Code of Conduct and the Charters of the Audit, Finance, Corporate Governance, Nominating and Social Responsibility, Human Resources and Compensation, Risk and Technology Committees of our Board of Directors.

We may use our website, our X (formerly known as Twitter) account (@BNYMellon) and other social media channels as additional means of disclosing information to the public. The information disclosed through those channels may be considered to be material. The contents of our website or social media channels referenced herein are not incorporated by reference into this Quarterly Report on Form 10-Q.

48 BNY


Item 1. Financial Statements
The Bank of New York Mellon Corporation (and its subsidiaries)

Consolidated Income Statement (unaudited)


	Quarter ended						Year-to-date
	June 30, 2024		March 31, 2024		June 30, 2023		June 30, 2024		June 30, 2023
(in millions)
Fee and other revenue
Investment services fees	$	2,359	$	2,278	$	2,252	$	4,637	$	4,371
Investment management and performance fees	761		776		762		1,537		1,538
Foreign exchange revenue	184		152		158		336		334
Financing-related fees	53		57		50		110		102
Distribution and servicing fees	41		42		35		83		68
Total fee revenue	3,398		3,305		3,257		6,703		6,413
Investment and other revenue (a)	169		182		147		351		278
Total fee and other revenue (a)	3,567		3,487		3,404		7,054		6,691
Net interest income
Interest income	6,392		6,096		5,224		12,488		9,166
Interest expense	5,362		5,056		4,124		10,418		6,938
Net interest income	1,030		1,040		1,100		2,070		2,228
Total revenue (a)	4,597		4,527		4,504		9,124		8,919
Provision for credit losses	—		27		5		27		32
Noninterest expense
Staff	1,720		1,857		1,718		3,577		3,509
Software and equipment	476		475		450		951		879
Professional, legal and other purchased services	374		349		378		723		753
Net occupancy	134		124		121		258		240
Sub-custodian and clearing	134		119		119		253		237
Distribution and servicing	88		96		93		184		178
Business development	50		36		47		86		86
Bank assessment charges	(7)		17		41		10		81

Amortization of intangible assets	13		12		14		25		28
Other	88		91		130		179		220
Total noninterest expense	3,070		3,176		3,111		6,246		6,211
Income
Income before income taxes (a)	1,527		1,324		1,388		2,851		2,676
Provision for income taxes (a)	357		297		315		654		621
Net income (a)	1,170		1,027		1,073		2,197		2,055
Net (income) attributable to noncontrolling interests related to consolidated investment management funds	(2)		(2)		(1)		(4)		(1)
Net income applicable to shareholders of The Bank of New York Mellon Corporation (a)	1,168		1,025		1,072		2,193		2,054
Preferred stock dividends	(25)		(72)		(36)		(97)		(107)
Net income applicable to common shareholders of The Bank of New York Mellon Corporation (a)	$	1,143	$	953	$	1,036	$	2,096	$	1,947

(a) Results for the quarter ended June 30, 2023 and the six months ended June 30, 2023 were restated to reflect the retrospective application of adopting new accounting guidance in the first quarter of 2024 related to our investments in renewable energy projects using the proportional amortization method (ASU 2023-02). See Note 2 of the Notes to Consolidated Financial Statements for additional information.

BNY 49


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

Consolidated Income Statement (unaudited) (continued)


Net income applicable to common shareholders of The Bank of New York Mellon Corporation used for the earnings per share calculation	Quarter ended						Year-to-date
	June 30, 2024		March 31, 2024		June 30, 2023		June 30, 2024		June 30, 2023
(in millions)	June 30, 2024		March 31, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Net income applicable to common shareholders of The Bank of New York Mellon Corporation	$	1,143	$	953	$	1,036	$	2,096	$	1,947
Less: Earnings allocated to participating securities	—		—		—		—		—
Net income applicable to common shareholders of The Bank of New York Mellon Corporation after required adjustment for the calculation of basic and diluted earnings per common share	$	1,143	$	953	$	1,036	$	2,096	$	1,947


Average common shares and equivalents outstanding of The Bank of New York Mellon Corporation	Quarter ended			Year-to-date
	June 30, 2024	March 31, 2024	June 30, 2023	June 30, 2024	June 30, 2023
(in thousands)
Basic	746,904	756,937	787,718	751,961	795,512
Common stock equivalents	4,692	5,331	3,097	4,909	3,738
Less: Participating securities	—	—	(90)	—	(93)
Diluted	751,596	762,268	790,725	756,870	799,157

Anti-dilutive securities (a)	578	1,604	7,059	1,266	5,824

(a) Represents restricted stock, restricted stock units and participating securities outstanding but not included in the computation of diluted average common shares because their effect would be anti-dilutive.


Earnings per share applicable to common shareholders of The Bank of New York Mellon Corporation (a)	Quarter ended						Year-to-date
	June 30, 2024		March 31, 2024		June 30, 2023		June 30, 2024		June 30, 2023
(in dollars)	June 30, 2024		March 31, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Basic	$	1.53	$	1.26	$	1.32	$	2.79	$	2.45
Diluted	$	1.52	$	1.25	$	1.31	$	2.77	$	2.44

See accompanying unaudited Notes to Consolidated Financial Statements.

50 BNY


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

Consolidated Comprehensive Income Statement (unaudited)


	Quarter ended						Year-to-date
	June 30, 2024		March 31, 2024		June 30, 2023		June 30, 2024		June 30, 2023
(in millions)
Net income (a)	$	1,170	$	1,027	$	1,073	$	2,197	$	2,055
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(30)		(91)		97		(121)		200
Unrealized gain (loss) on assets available-for-sale:
Unrealized gain arising during the period	(11)		103		(157)		92		160
Reclassification adjustment	13		1		—		14		1
Total unrealized gain on assets available-for-sale	2		104		(157)		106		161
Defined benefit plans:



Amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost	3		3		(2)		6		(5)
Total defined benefit plans	3		3		(2)		6		(5)
Net unrealized gain (loss) on cash flow hedges	1		1		3		2		8
Total other comprehensive (loss) income, net of tax (b)	(24)		17		(59)		(7)		364
Total comprehensive income	1,146		1,044		1,014		2,190		2,419
Net (income) loss attributable to noncontrolling interests	(2)		(2)		(1)		(4)		(1)
Other comprehensive loss attributable to noncontrolling interests	—		—		—		—		—
Comprehensive income applicable to shareholders of The Bank of New York Mellon Corporation	$	1,144	$	1,042	$	1,013	$	2,186	$	2,418

(b) Other comprehensive income (loss) attributable to The Bank of New York Mellon Corporation shareholders was $(24) million for the quarter ended June 30, 2024, $17 million for the quarter ended March 31, 2024, $(59) million for the quarter ended June 30, 2023, $(7) million for the six months ended June 30, 2024 and $364 million for the six months ended June 30, 2023.

See accompanying unaudited Notes to Consolidated Financial Statements.

BNY 51


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

Consolidated Balance Sheet (unaudited)


	June 30, 2024		Dec. 31, 2023
(dollars in millions, except per share amounts)
Assets
Cash and due from banks, net of allowance for credit losses of $27 and $18	$	5,311	$	4,922
Interest-bearing deposits with the Federal Reserve and other central banks	116,139		111,550
Interest-bearing deposits with banks, net of allowance for credit losses of $1 and $2 (includes restricted of $2,026 and $3,420)	11,488		12,139
Federal funds sold and securities purchased under resale agreements	29,723		28,900
Securities:
Held-to-maturity, at amortized cost, net of allowance for credit losses of $1 and $1 (fair value of $41,287 and $44,711)	46,429		49,578
Available-for-sale, at fair value (amortized cost of $94,566 and $80,678, net of allowance for credit losses of $5 and less than $1)	90,421		76,817
Total securities	136,850		126,395
Trading assets	9,609		10,058
Loans	70,642		66,879
Allowance for credit losses	(286)		(303)
Net loans	70,356		66,576
Premises and equipment	3,267		3,163
Accrued interest receivable	1,253		1,150
Goodwill	16,217		16,261
Intangible assets	2,826		2,854
Other assets, net of allowance for credit losses on accounts receivable of $3 and $3 (includes $1,577 and $1,261, at fair value)	25,500		25,909
Total assets	$	428,539	$	409,877
Liabilities
Deposits:
Noninterest-bearing deposits (principally U.S. offices)	$	58,029	$	58,274
Interest-bearing deposits in U.S. offices	149,115		132,616
Interest-bearing deposits in non-U.S. offices	97,167		92,779
Total deposits	304,311		283,669
Federal funds purchased and securities sold under repurchase agreements	15,701		14,507
Trading liabilities	3,372		6,226
Payables to customers and broker-dealers	17,569		18,395
Commercial paper	301		—
Other borrowed funds	280		479
Accrued taxes and other expenses	4,729		5,411
Other liabilities (including allowance for credit losses on lending-related commitments of $73 and $87, also includes $63 and $195, at fair value)	10,208		9,028
Long-term debt	30,947		31,257
Total liabilities	387,418		368,972
Temporary equity
Redeemable noncontrolling interests	92		85
Permanent equity
Preferred stock – par value $0.01 per share; authorized 100,000,000 shares; issued 43,826 and 43,826 shares	4,343		4,343
Common stock – par value $0.01 per share; authorized 3,500,000,000 shares; issued 1,409,173,568 and 1,402,429,447 shares	14		14
Additional paid-in capital	29,139		28,908
Retained earnings	40,999		39,549
Accumulated other comprehensive loss, net of tax	(4,900)		(4,893)
Less: Treasury stock of 671,216,069 and 643,085,355 common shares, at cost	(28,752)		(27,151)
Total The Bank of New York Mellon Corporation shareholders’ equity	40,843		40,770
Nonredeemable noncontrolling interests of consolidated investment management funds	186		50
Total permanent equity	41,029		40,820
Total liabilities, temporary equity and permanent equity	$	428,539	$	409,877

See accompanying unaudited Notes to Consolidated Financial Statements.

52 BNY


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

Consolidated Statement of Cash Flows (unaudited)


	Six months ended June 30,
(in millions)	2024		2023
Operating activities
Net income (a)	$	2,197	$	2,055
Net (income) attributable to noncontrolling interests	(4)		(1)
Net income applicable to shareholders of The Bank of New York Mellon Corporation (a)	2,193		2,054
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Provision for credit losses	27		32
Pension plan contributions	(3)		(3)
Depreciation and amortization	924		800

Deferred tax (benefit) expense	(32)		53
Net securities losses	18		1
Change in trading assets and liabilities	(2,502)		91
Change in accruals and other, net (a)	(1,176)		(88)
Net cash (used for) provided by operating activities	(551)		2,940
Investing activities
Change in interest-bearing deposits with banks	(1,031)		2,144
Change in interest-bearing deposits with the Federal Reserve and other central banks	(6,180)		(26,819)
Purchases of securities held-to-maturity	(301)		(273)
Paydowns of securities held-to-maturity	2,040		2,298
Maturities of securities held-to-maturity	1,578		934
Purchases of securities available-for-sale	(26,130)		(12,922)
Sales of securities available-for-sale	2,558		7,947
Paydowns of securities available-for-sale	2,779		1,834
Maturities of securities available-for-sale	8,249		10,072
Net change in loans	(3,861)		1,591

Change in federal funds sold and securities purchased under resale agreements	(835)		(11,076)
Net change in seed capital investments	50		13
Purchases of premises and equipment/capitalized software	(681)		(615)



Other, net	451		(223)
Net cash (used for) investing activities	(21,314)		(25,095)
Financing activities
Change in deposits	22,943		12,808
Change in federal funds purchased and securities sold under repurchase agreements	1,218		8,992
Change in payables to customers and broker-dealers	(826)		(2,341)
Change in other borrowed funds	(180)		986
Change in commercial paper	301		—
Net proceeds from the issuance of long-term debt	2,494		4,493
Repayments, redemptions and repurchases of long-term debt	(2,613)		(2,503)

Issuance of common stock	8		8

Treasury stock acquired	(1,589)		(1,704)

Common cash dividends paid	(646)		(601)
Preferred cash dividends paid	(97)		(107)

Other, net	7		(4)
Net cash provided by financing activities	21,020		20,027
Effect of exchange rate changes on cash	(160)		211
Change in cash and due from banks and restricted cash
Change in cash and due from banks and restricted cash	(1,005)		(1,917)
Cash and due from banks and restricted cash at beginning of period	8,342		11,529
Cash and due from banks and restricted cash at end of period	$	7,337	$	9,612
Cash and due from banks and restricted cash
Cash and due from banks at end of period (unrestricted cash)	$	5,311	$	5,720
Restricted cash at end of period	2,026		3,892
Cash and due from banks and restricted cash at end of period	$	7,337	$	9,612
Supplemental disclosures
Interest paid	$	10,376	$	6,691
Income taxes paid	640		403
Income taxes refunded	17		8

(a) Information for the six months ended June 30, 2023 was restated to reflect the retrospective application of adopting new accounting guidance in the first quarter of 2024 related to our investments in renewable energy projects using the proportional amortization method (ASU 2023-02). See Note 2 of the Notes to Consolidated Financial Statements for additional information.

See accompanying unaudited Notes to Consolidated Financial Statements.

BNY 53


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

Consolidated Statement of Changes in Equity (unaudited)


	The Bank of New York Mellon Corporation shareholders												Nonredeemable noncontrolling interests of consolidated investment management funds		Total permanent equity			Redeemable non- controlling interests/ temporary equity
(in millions, except per share amount)	Preferred stock		Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive (loss), net of tax		Treasury stock
Balance at March 31, 2024	$	4,343	$	14	$	29,055	$	40,178	$	(4,876)	$	(28,145)	$	111	$	40,680	(a)	$	82


Shares issued to shareholders of noncontrolling interests	—		—		—		—		—		—		—		—			12
Redemption of subsidiary shares from noncontrolling interests	—		—		—		—		—		—		—		—			(1)
Other net changes in noncontrolling interests	—		—		2		—		—		—		73		75			(2)
Net income	—		—		—		1,168		—		—		2		1,170			—
Other comprehensive (loss)	—		—		—		—		(24)		—		—		(24)			—
Dividends:
Common stock at $0.42 per share (b)	—		—		—		(322)		—		—		—		(322)			—
Preferred stock	—		—		—		(25)		—		—		—		(25)			—
Repurchase of common stock	—		—		—		—		—		(601)		—		(601)			—
Common stock issued under employee benefit plans	—		—		5		—		—		—		—		5			—


Stock-based compensation	—		—		77		—		—		—		—		77			—
Excise tax on share repurchases	—		—		—		—		—		(6)		—		(6)			—
Other	—		—		—		—		—		—		—		—			1
Balance at June 30, 2024	$	4,343	$	14	$	29,139	$	40,999	$	(4,900)	$	(28,752)	$	186	$	41,029	(a)	$	92

(a) Includes total The Bank of New York Mellon Corporation common shareholders’ equity of $36,226 million at March 31, 2024 and $36,500 million at June 30, 2024.

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


	The Bank of New York Mellon Corporation shareholders												Nonredeemable noncontrolling interests of consolidated investment management funds		Total permanent equity			Redeemable non- controlling interests/ temporary equity
(in millions, except per share amount)	Preferred stock		Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive (loss) income, net of tax		Treasury stock
Balance at Dec. 31, 2023	$	4,343	$	14	$	28,908	$	39,549	$	(4,893)	$	(27,151)	$	50	$	40,820	(a)	$	85


Shares issued to shareholders of noncontrolling interests	—		—		—		—		—		—		—		—			10
Redemption of subsidiary shares from noncontrolling interests	—		—		—		—		—		—		—		—			(17)
Other net changes in noncontrolling interests	—		—		(5)		—		—		—		59		54			5
Net income	—		—		—		1,025		—		—		2		1,027			—
Other comprehensive income	—		—		—		—		17		—		—		17			—
Dividends:
Common stock at $0.42 per share (b)	—		—		—		(324)		—		—		—		(324)			—
Preferred stock	—		—		—		(72)		—		—		—		(72)			—
Repurchase of common stock	—		—		—		—		—		(988)		—		(988)			—

Common stock issued under employee benefit plans	—		—		7		—		—		—		—		7			—



Stock-based compensation	—		—		168		—		—		—		—		168			—

Excise tax on share repurchases	—		—		—		—		—		(6)		—		(6)			—

Other	—		—		(23)		—		—		—		—		(23)			(1)
Balance at March 31, 2024	$	4,343	$	14	$	29,055	$	40,178	$	(4,876)	$	(28,145)	$	111	$	40,680	(a)	$	82

(a) Includes total The Bank of New York Mellon Corporation common shareholders’ equity of $36,427 million at Dec. 31, 2023 and $36,226 million at March 31, 2024.

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

54 BNY


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

Consolidated Statement of Changes in Equity (unaudited) (continued)


	The Bank of New York Mellon Corporation shareholders												Nonredeemable noncontrolling interests of consolidated investment management funds		Total permanent equity			Redeemable non- controlling interests/ temporary equity
(in millions, except per share amount)	Preferred stock		Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive (loss), net of tax		Treasury stock
Balance at March 31, 2023 (a)	$	4,838	$	14	$	28,650	$	38,350	$	(5,543)	$	(25,790)	$	72	$	40,591	(b)	$	96


Shares issued to shareholders of noncontrolling interests	—		—		—		—		—		—		—		—			7

Other net changes in noncontrolling interests	—		—		2		—		—		—		(8)		(6)			(1)
Net income (a)	—		—		—		1,072		—		—		1		1,073			—
Other comprehensive (loss)	—		—		—		—		(59)		—		—		(59)			—
Dividends:
Common stock at $0.37 per share (c)	—		—		—		(297)		—		—		—		(297)			—
Preferred stock	—		—		—		(36)		—		—		—		(36)			—
Repurchase of common stock	—		—		—		—		—		(448)		—		(448)			—

Common stock issued under employee benefit plans	—		—		5		—		—		—		—		5			—



Stock-based compensation	—		—		69		—		—		—		—		69			—
Excise tax on share repurchases	—		—		—		—		—		(4)		—		(4)			—

Other	—		—		—		1		—		—		—		1			2
Balance at June 30, 2023 (a)	$	4,838	$	14	$	28,726	$	39,090	$	(5,602)	$	(26,242)	$	65	$	40,889	(b)	$	104

(a) Retained earnings and net income were restated to reflect the retrospective application of adopting new accounting guidance in the first quarter of 2024 related to our investments in renewable energy projects using the proportional amortization method (ASU 2023-02). See Note 2 of the Notes to Consolidated Financial Statements for additional information.

(b) Includes total The Bank of New York Mellon Corporation common shareholders’ equity of $35,681 million at March 31, 2023 and $35,986 million at June 30, 2023.




	The Bank of New York Mellon Corporation shareholders												Nonredeemable noncontrolling interests of consolidated investment management funds		Total permanent equity			Redeemable non- controlling interests/ temporary equity
(in millions, except per share amount)	Preferred stock		Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive (loss), net of tax		Treasury stock
Balance at Dec. 31, 2023	$	4,343	$	14	$	28,908	$	39,549	$	(4,893)	$	(27,151)	$	50	$	40,820	(a)	$	85


Shares issued to shareholders of noncontrolling interests	—		—		—		—		—		—		—		—			22
Redemption of subsidiary shares from noncontrolling interests	—		—		—		—		—		—		—		—			(18)
Other net changes in noncontrolling interests	—		—		(3)		—		—		—		132		129			3
Net income	—		—		—		2,193		—		—		4		2,197			—
Other comprehensive (loss)	—		—		—		—		(7)		—		—		(7)			—
Dividends:
Common stock at $0.84 per share (b)	—		—		—		(646)		—		—		—		(646)			—
Preferred stock	—		—		—		(97)		—		—		—		(97)			—
Repurchase of common stock	—		—		—		—		—		(1,589)		—		(1,589)			—

Common stock issued under employee benefit plans	—		—		12		—		—		—		—		12			—


Stock-based compensation	—		—		245		—		—		—		—		245			—
Excise tax on share repurchases	—		—		—		—		—		(12)		—		(12)			—
Other	—		—		(23)		—		—		—		—		(23)			—
Balance at June 30, 2024	$	4,343	$	14	$	29,139	$	40,999	$	(4,900)	$	(28,752)	$	186	$	41,029	(a)	$	92

(a) Includes total The Bank of New York Mellon Corporation common shareholders’ equity of $36,427 million at Dec. 31, 2023 and $36,500 million at June 30, 2024.

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

BNY 55


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

Consolidated Statement of Changes in Equity (unaudited) (continued)




	The Bank of New York Mellon Corporation shareholders												Nonredeemable noncontrolling interests of consolidated investment management funds		Total permanent equity			Redeemable non- controlling interests/ temporary equity
(in millions, except per share amount)	Preferred stock		Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive (loss) income, net of tax		Treasury stock
Balance at Dec. 31, 2022 (a)	$	4,838	$	14	$	28,508	$	37,743	$	(5,966)	$	(24,524)	$	7	$	40,620	(b)	$	109



Shares issued to shareholders of noncontrolling interests	—		—		—		—		—		—		—		—			17
Redemption of subsidiary shares from noncontrolling interests	—		—		—		—		—		—		—		—			(34)
Other net changes in noncontrolling interests	—		—		(6)		—		—		—		57		51			8
Net income (a)	—		—		—		2,054		—		—		1		2,055			—
Other comprehensive income	—		—		—		—		364		—		—		364			—
Dividends:
Common stock at $0.74 per share (c)	—		—		—		(601)		—		—		—		(601)			—
Preferred stock	—		—		—		(107)		—		—		—		(107)			—
Repurchase of common stock	—		—		—		—		—		(1,704)		—		(1,704)			—

Common stock issued under employee benefit plans	—		—		10		—		—		—		—		10			—



Stock-based compensation	—		—		214		—		—		—		—		214			—

Excise tax on share repurchases	—		—		—		—		—		(14)		—		(14)			—

Other	—		—		—		1		—		—		—		1			4
Balance at June 30, 2023 (a)	$	4,838	$	14	$	28,726	$	39,090	$	(5,602)	$	(26,242)	$	65	$	40,889	(b)	$	104

(b) Includes total The Bank of New York Mellon Corporation common shareholders’ equity of $35,775 million at Dec. 31, 2022 and $35,986 million at June 30, 2023.

See accompanying unaudited Notes to Consolidated Financial Statements.

56 BNY


Notes to Consolidated Financial Statements

Note 1–Basis of presentation

Basis of presentation

The accounting and financial reporting policies of BNY, a global financial services company, conform to U.S. generally accepted accounting principles (“GAAP”) and prevailing industry practices. For information on our significant accounting and reporting policies, see Note 1 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended Dec. 31, 2023 (the “2023 Annual Report”).

The accompanying consolidated financial statements are unaudited. In the opinion of management, all adjustments necessary, consisting of normal recurring adjustments, for a fair presentation of financial position, results of operations and cash flows for the periods presented have been made. These financial statements should be read in conjunction with our Consolidated Financial Statements included in our 2023 Annual Report.

On Jan. 1, 2024, we adopted Accounting Standards Update (“ASU”) 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method on a retrospective basis for our investments in renewable energy projects that have met the eligibility criteria, and restated prior period financial statements. See Note 2 for additional information.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates based upon assumptions about future economic and market conditions which affect reported amounts and related disclosures in our

financial statements. Although our current estimates contemplate current conditions and how we expect them to change in the future, it is reasonably possible that actual conditions could be worse than anticipated in those estimates, which could materially affect our results of operations and financial condition.

Note 2–New accounting guidance

The following accounting guidance was adopted on Jan. 1, 2024.

ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method

In March 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, which permits reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the income tax credits and other income tax benefits received, and recognizes the net amortization and income tax credits and other income tax benefits in the income statement as a component of the provision for income taxes.

We adopted this guidance on Jan.1, 2024. The impact of adopting this new guidance for our renewable energy investments that met the eligibility criteria was an increase in investment and other revenue and an increase in the provision for income taxes on the consolidated income statement. Renewable energy investments are recorded in other assets on the balance sheet. In the first quarter of 2024, we restated the prior period financial statements to reflect the impact of the retrospective application of the new accounting guidance. The required disclosures are included in Note 7.

BNY 57


Notes to Consolidated Financial Statements (continued)

The table below presents the impact of the new accounting guidance on our previously reported income statement amounts.


Consolidated Income Statement	Previously reported				Adjustment				Restated
(in millions)	2Q23		YTD23		2Q23		YTD23		2Q23		YTD23
Investment and other revenue	$	97	$	176	$	50	$	102	$	147	$	278
Total fee and other revenue	3,354		6,589		50		102		3,404		6,691
Total revenue	4,454		8,817		50		102		4,504		8,919
Income before income taxes	1,338		2,574		50		102		1,388		2,676
Provision for income taxes	270		530		45		91		315		621
Net income	1,068		2,044		5		11		1,073		2,055
Net income applicable to shareholders of The Bank of New York Mellon Corporation	1,067		2,043		5		11		1,072		2,054
Net income applicable to common shareholders of The Bank of New York Mellon Corporation	1,031		1,936		5		11		1,036		1,947

The table below presents the impact of the new accounting guidance on our previously reported earnings per share applicable to common shareholders.


Earnings per share applicable to common shareholders of The Bank of New York Mellon Corporation	Previously reported				Restated
(in dollars)	2Q23		YTD23		2Q23		YTD23
Basic	$	1.31	$	2.43	$	1.32	$	2.45
Diluted	1.30		2.42		1.31		2.44

The table below presents the impact of the new accounting guidance on our previously reported retained earnings.


Retained Earnings	Previously Reported		Adjustment		Restated
(in millions)
Dec. 31, 2022	$	37,864	$	(121)	$	37,743
March 31, 2023	38,465		(115)		38,350
June 30, 2023	39,199		(109)		39,090

See Note 2 of the Notes to Consolidated Financial Statements in our first quarter 2024 Form 10-Q for the impacts to the first quarter 2023 and fourth quarter 2023 income statement amounts and earnings per share and the impacts to the Dec. 31, 2023 balance sheet amounts.

Note 3–Acquisitions and dispositions

We sometimes structure our acquisitions and divestitures with both an initial payment or receipt and later contingent payments or receipts tied to post-closing revenue or income growth.

At June 30, 2024, we are potentially obligated to pay additional consideration which is recorded at fair value totaling approximately $20 million and, using reasonable assumptions and estimates, could range

from $15 million to $20 million over the next year. Contingent payments totaled $5 million in the first six months of 2024 and we recorded $1 million of increases to contingent earnout payables reflected in other expense.

At June 30, 2024, we could potentially receive additional consideration which is recorded at fair value totaling approximately $30 million and, using reasonable assumptions and estimates, could range from $20 million to $40 million over the next four years. There were no contingent receipts in the first six months of 2024.

See Note 3 of the Notes to Consolidated Financial Statements in our 2023 Annual Report for additional information.

58 BNY


Notes to Consolidated Financial Statements (continued)

Note 4–Securities

The following tables present the amortized cost, the gross unrealized gains and losses and the fair value of securities at June 30, 2024 and Dec. 31, 2023.


Securities at June 30, 2024			Gross unrealized				Fair value
	Amortized cost
(in millions)			Gains		Losses
Available-for-sale:
Non-U.S. government (a)	$	25,643	$	15	$	707	$	24,951
U.S. Treasury	21,254		45		1,809		19,490
Agency residential mortgage-backed securities (“RMBS”)	17,319		99		527		16,891
Agency commercial mortgage-backed securities (“MBS”)	8,045		58		555		7,548
Foreign covered bonds	7,484		12		167		7,329
Collateralized loan obligations (“CLOs”)	6,355		15		—		6,370
Non-agency commercial MBS	3,096		1		278		2,819
U.S. government agencies	2,678		34		160		2,552
Non-agency RMBS	1,799		28		180		1,647
Other asset-backed securities (“ABS”)	892		—		69		823
Other debt securities	1		—		—		1
Total securities available-for-sale (b)(c)	$	94,566	$	307	$	4,452	$	90,421
Held-to-maturity:
Agency RMBS	$	27,816	$	1	$	3,827	$	23,990
U.S. Treasury	8,161		—		567		7,594
U.S. government agencies	4,141		—		395		3,746
Agency commercial MBS	3,506		—		296		3,210
Non-U.S. government (a)	1,788		—		58		1,730
CLOs	983		1		—		984

Non-agency RMBS	23		1		1		23
Other debt securities	11		—		1		10
Total securities held-to-maturity	$	46,429	$	3	$	5,145	$	41,287
Total securities	$	140,995	$	310	$	9,597	$	131,708

(a) Includes supranational securities.

(b) The amortized cost of available-for-sale securities is net of the allowance for credit losses of $5 million. The allowance for credit loss relates to non-agency commercial MBS and non-agency RMBS.

(c) Includes gross unrealized gains of $210 million and gross unrealized losses of $130 million recorded in accumulated other comprehensive income related to securities that were transferred from available-for-sale to held-to-maturity. The unrealized gains primarily relate to agency RMBS, agency commercial MBS and U.S. Treasury securities. The unrealized losses primarily relate to agency RMBS and U.S. Treasury securities. The unrealized gains and losses will be amortized into net interest income over the contractual lives of the securities.


Securities at Dec. 31, 2023			Gross unrealized
	Amortized cost						Fair value
(in millions)			Gains		Losses
Available-for-sale:
Non-U.S. government (a)	$	18,998	$	68	$	684	$	18,382
U.S. Treasury	18,193		63		1,652		16,604
Agency RMBS	13,457		119		465		13,111
Agency commercial MBS	8,191		69		531		7,729
Foreign covered bonds	6,489		25		180		6,334
CLOs	6,142		5		10		6,137
Non-agency commercial MBS	3,245		1		311		2,935
U.S. government agencies	3,053		42		194		2,901
Non-agency RMBS	1,883		32		175		1,740
Other ABS	1,026		1		84		943
Other debt securities	1		—		—		1
Total securities available-for-sale (b)(c)	$	80,678	$	425	$	4,286	$	76,817
Held-to-maturity:
Agency RMBS	$	29,740	$	1	$	3,493	$	26,248
U.S. Treasury	9,123		—		612		8,511
U.S. government agencies	4,146		—		401		3,745
Agency commercial MBS	3,411		1		296		3,116
Non-U.S. government (a)	2,137		3		67		2,073
CLOs	983		—		1		982
Non-agency RMBS	26		1		1		26
Other debt securities	12		—		2		10
Total securities held-to-maturity	$	49,578	$	6	$	4,873	$	44,711
Total securities	$	130,256	$	431	$	9,159	$	121,528

(a) Includes supranational securities.

(b) The amortized cost of available-for-sale securities is net of the allowance for credit losses of less than $1 million. The allowance for credit loss primarily relates to non-agency RMBS.

(c) Includes gross unrealized gains of $250 million and gross unrealized losses of $146 million recorded in accumulated other comprehensive income related to securities that were transferred from available-for-sale to held-to-maturity. The unrealized gains primarily relate to agency RMBS, agency commercial MBS and U.S. Treasury securities. The unrealized losses primarily relate to agency RMBS and U.S. Treasury securities. The unrealized gains and losses will be amortized into net interest income over the contractual lives of the securities.

The following table presents the realized gains and losses, on a gross basis.


Net securities gains (losses)
(in millions)	2Q24		1Q24		2Q23		YTD24		YTD23
Realized gross gains	$	6	$	4	$	4	$	10	$	18
Realized gross losses	(23)		(5)		(4)		(28)		(19)
Total net securities (losses)	$	(17)	$	(1)	$	—	$	(18)	$	(1)

BNY 59


Notes to Consolidated Financial Statements (continued)

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


Net securities gains (losses)
(in millions)	2Q24		1Q24		2Q23		YTD24		YTD23
U.S. Treasury	$	(11)	$	(1)	$	—	$	(12)	$	(8)
Non-agency RMBS	—		—		—		—		2


Other	(6)		—		—		(6)		5
Total net securities (losses)	$	(17)	$	(1)	$	—	$	(18)	$	(1)

Allowance for credit losses – Securities

The allowance for credit losses related to securities was $6 million at June 30, 2024 and relates to non-agency commercial MBS and non-agency RMBS securities. The allowance for credit losses related to securities was $1 million at Dec. 31, 2023 and relates to non-agency RMBS and other debt securities.

Credit quality indicators – Securities

At June 30, 2024, the gross unrealized losses on the securities portfolio were primarily attributable to an increase in interest rates from the date of purchase, and for certain securities that were transferred from available-for-sale to held-to-maturity, an increase in interest rates through the date they were transferred. Specifically, $130 million of the unrealized losses at June 30, 2024 and $146 million at Dec. 31, 2023 reflected in the tables below relate to certain securities that were previously transferred from available-for-sale to held-to-maturity. As the transfers created a new cost basis for the securities, if these securities have experienced unrealized losses since the date of transfer, the corresponding unrealized losses would be reflected in the held-to-maturity securities portfolio in the following tables.

The following tables show the aggregate fair value of available-for-sale securities with a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 months or more without an allowance for credit losses.


Available-for-sale securities in an unrealized loss position without an allowance for credit losses at June 30, 2024	Less than 12 months				12 months or more				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
(in millions)
Non-U.S. government (a)	$	9,816	$	71	$	11,529	$	636	$	21,345	$	707
U.S. Treasury	4,662		59		14,580		1,750		19,242		1,809
Agency RMBS	5,812		69		8,123		458		13,935		527
Agency commercial MBS	210		1		6,958		554		7,168		555
Foreign covered bonds	1,886		9		2,731		158		4,617		167
Non-agency commercial MBS	163		1		2,456		277		2,619		278
U.S. government agencies	394		4		1,726		156		2,120		160
Non-agency RMBS	93		—		1,159		180		1,252		180

Other ABS	—		—		749		69		749		69

Total securities available-for-sale (b)	$	23,036	$	214	$	50,011	$	4,238	$	73,047	$	4,452

(a) Includes supranational securities.

(b) Includes $130 million of gross unrealized losses for 12 months or more recorded in accumulated other comprehensive income related to securities that were transferred from available-for-sale to held-to-maturity. There were no gross unrealized losses for less than 12 months. The unrealized losses are primarily related to agency RMBS and U.S. Treasury securities and will be amortized into net interest income over the contractual lives of the securities.

60 BNY


Notes to Consolidated Financial Statements (continued)


Available-for-sale securities in an unrealized loss position without an allowance for credit losses at Dec. 31, 2023	Less than 12 months				12 months or more				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
(in millions)
U.S. Treasury	$	694	$	48	$	14,862	$	1,604	$	15,556	$	1,652
Non-U.S. government (a)	2,756		24		11,767		660		14,523		684
Agency RMBS	2,753		27		6,793		438		9,546		465
Agency commercial MBS	328		5		7,060		526		7,388		531
CLOs	784		—		3,158		10		3,942		10
Foreign covered bonds	268		1		3,603		179		3,871		180
Non-agency commercial MBS	187		2		2,607		309		2,794		311
U.S. government agencies	573		4		1,779		190		2,352		194
Non-agency RMBS	30		1		1,300		174		1,330		175
Other ABS	—		—		832		84		832		84

Total securities available-for-sale (b)	$	8,373	$	112	$	53,761	$	4,174	$	62,134	$	4,286

(a) Includes supranational securities.

(b) Includes $146 million of gross unrealized losses for 12 months or more recorded in accumulated other comprehensive income related to securities that were transferred from available-for-sale to held-to-maturity. There were no gross unrealized losses for less than 12 months. The unrealized losses are primarily related to agency RMBS and U.S. Treasury securities and will be amortized into net interest income over the contractual lives of the securities.

The following tables show the credit quality of the held-to-maturity securities. We have included certain credit ratings information because the information can indicate the degree of credit risk to which we are exposed. Significant changes in ratings classifications could indicate increased credit risk for us and could be accompanied by an increase in the allowance for credit losses and/or a reduction in the fair value of our securities portfolio.


Held-to-maturity securities portfolio at June 30, 2024					Ratings (a)
			Net unrealized gain (loss)								BB+ and lower
(dollars in millions)	Amortized cost				AAA/ AA-		A+/ A-		BBB+/ BBB-				Not rated
Agency RMBS	$	27,816	$	(3,826)	100	%	—	%	—	%	—	%		—	%
U.S. Treasury	8,161		(567)		100		—		—		—			—
U.S. government agencies	4,141		(395)		100		—		—		—			—
Agency commercial MBS	3,506		(296)		100		—		—		—			—
Non-U.S. government (b)(c)	1,788		(58)		100		—		—		—			—
CLOs	983		1		100		—		—		—			—
Non-agency RMBS	23		—		24		53		2		17			4
Other debt securities	11		(1)		—		—		—		—			100
Total held-to-maturity securities	$	46,429	$	(5,142)	100	%	—	%	—	%	—	%		—	%

(a) Represents ratings by Standard & Poor’s (“S&P”) or the equivalent.

(b) Includes supranational securities.

BNY 61


Notes to Consolidated Financial Statements (continued)


Held-to-maturity securities portfolio at Dec. 31, 2023					Ratings (a)
			Net unrealized gain (loss)								BB+ and lower
(dollars in millions)	Amortized cost				AAA/ AA-		A+/ A-		BBB+/ BBB-				Not rated
Agency RMBS	$	29,740	$	(3,492)	100	%	—	%	—	%	—	%		—	%
U.S. Treasury	9,123		(612)		100		—		—		—			—
U.S. government agencies	4,146		(401)		100		—		—		—			—
Agency commercial MBS	3,411		(295)		100		—		—		—			—
Non-U.S. government (b)(c)	2,137		(64)		100		—		—		—			—
CLOs	983		(1)		100		—		—		—			—
Non-agency RMBS	26		—		25		54		2		17			2

Other debt securities	12		(2)		—		—		—		—			100
Total held-to-maturity securities	$	49,578	$	(4,867)	100	%	—	%	—	%	—	%		—	%

(a) Represents ratings by S&P or the equivalent.

(b) Includes supranational securities.

Maturity distribution

The following table shows the maturity distribution by carrying amount and yield (on a tax equivalent basis) of our securities portfolio.


Maturity distribution and yields on securities at June 30, 2024
	Within 1 year				1-5 years				5-10 years				After 10 years				Total
(dollars in millions)	Amount		Yield (a)		Amount		Yield (a)		Amount		Yield (a)		Amount		Yield (a)		Amount		Yield (a)
Available-for-sale:
U.S. Treasury	$	1,956	1.01	%	$	13,336	1.89	%	$	2,275	2.93	%	$	1,923	2.92	%	$	19,490	2.04	%
Non-U.S. government (b)	5,002		2.26		16,303		3.09		3,333		2.45		313		3.48		24,951		2.84
Foreign covered bonds	1,082		3.26		5,780		3.40		467		2.36		—		—		7,329		3.31
U.S. government agencies	69		1.47		1,625		3.86		858		2.78		—		—		2,552		3.41

Other debt securities	—		—		—		—		—		—		1		4.94		1		4.94
Mortgage-backed securities:
Agency RMBS																	16,891		5.17
Non-agency RMBS																	1,647		4.41
Agency commercial MBS																	7,548		3.06
Non-agency commercial MBS																	2,819		3.41
CLOs																	6,370		6.79
Other ABS																	823		2.24
Total securities available-for-sale	$	8,109	2.09	%	$	37,044	2.72	%	$	6,933	2.65	%	$	2,237	2.98	%	$	90,421	3.47	%
Held-to-maturity:
U.S. Treasury	$	2,215	1.29	%	$	5,215	1.22	%	$	731	0.95	%	$	—	—	%	$	8,161	1.22	%
U.S. government agencies	903		1.20		2,549		1.57		476		1.51		213		1.99		4,141		1.50
Non-U.S. government (b)	878		0.96		834		1.45		76		0.59		—		—		1,788		1.17
Other debt securities	—		—		—		—		11		3.76		—		—		11		3.76
Mortgage-backed securities:
Agency RMBS																	27,816		2.33
Non-agency RMBS																	23		4.36
Agency commercial MBS																	3,506		2.59
CLOs																	983		6.73
Total securities held-to-maturity	$	3,996	1.20	%	$	8,598	1.35	%	$	1,294	1.16	%	$	213	1.99	%	$	46,429	2.13	%
Total securities	$	12,105	1.79	%	$	45,642	2.47	%	$	8,227	2.43	%	$	2,450	2.91	%	$	136,850	3.03	%

(a) Yields are based upon the amortized cost of securities and consider the contractual coupon, amortization of premiums and accretion of discounts, excluding the effect of related hedging derivatives.

(b) Includes supranational securities.

62 BNY


Notes to Consolidated Financial Statements (continued)

Pledged assets

At June 30, 2024, BNY had pledged assets of $140 billion, including $93 billion pledged as collateral for potential borrowings at the Federal Reserve Discount Window and $9 billion pledged as collateral for borrowing at the Federal Home Loan Bank. The components of the assets pledged at June 30, 2024 included $122 billion of securities, $13 billion of loans, $4 billion of trading assets and $1 billion of interest-bearing deposits with banks.

If there has been no borrowing at the Federal Reserve Discount Window, the Federal Reserve generally allows banks to freely move assets in and out of their pledged assets account to sell or repledge the assets for other purposes. BNY regularly moves assets in and out of its pledged assets account at the Federal Reserve as there have been no borrowings.

At Dec. 31, 2023, BNY had pledged assets of $134 billion, including $93 billion pledged as collateral for potential borrowing at the Federal Reserve Discount Window and $9 billion pledged as collateral for borrowing at the Federal Home Loan Bank. The components of the assets pledged at Dec. 31, 2023 included $116 billion of securities, $13 billion of loans, $4 billion of trading assets and $1 billion of interest-bearing deposits with banks.

At June 30, 2024 and Dec. 31, 2023, pledged assets included $24 billion and $24 billion, respectively, for which the recipients were permitted to sell or repledge the assets delivered.

We also obtain securities as collateral, including receipts under resale agreements, securities borrowed, derivative contracts and custody agreements, on terms which permit us to sell or repledge the securities to others. At June 30, 2024 and Dec. 31, 2023, the market value of the securities received that can be sold or repledged was $226 billion and $212 billion, respectively. We routinely sell or repledge these securities through delivery to third parties. As of June 30, 2024 and Dec. 31, 2023, the market value of securities collateral sold or repledged was $200 billion and $180 billion, respectively.

Restricted cash and securities

Cash and securities may be segregated under federal and other regulations or requirements. At June 30, 2024 and Dec. 31, 2023, cash segregated under federal and other regulations or requirements was $2 billion and $3 billion, respectively. Restricted cash is primarily included in interest-bearing deposits with banks on the consolidated balance sheet. Securities segregated under federal and other regulations or requirements were $3 billion at June 30, 2024 and $3 billion at Dec. 31, 2023. Restricted securities were sourced from securities purchased under resale agreements and are included in federal funds sold and securities purchased under resale agreements on the consolidated balance sheet.

Note 5–Loans and asset quality

Loans

The table below provides the details of our loan portfolio.


Loans	June 30, 2024		Dec. 31, 2023
(in millions)
Commercial	$	2,247	$	2,112
Commercial real estate	6,942		6,760
Financial institutions	12,169		10,521
Lease financings	600		599
Wealth management loans	8,823		9,109
Wealth management mortgages	9,018		9,131
Other residential mortgages	1,119		1,166
Capital call financing	4,106		3,700
Other	2,837		2,717
Overdrafts	3,193		3,053
Margin loans	19,588		18,011
Total loans (a)	$	70,642	$	66,879

(a) Net of unearned income of $251 million at June 30, 2024 and $268 million at Dec. 31, 2023 primarily related to lease financings.

We disclose information related to our loans and asset quality by the class of the financing receivable in the following tables.

BNY 63


Notes to Consolidated Financial Statements (continued)

Allowance for credit losses

Activity in the allowance for credit losses on loans and lending-related commitments is presented below. This does not include activity in the allowance for credit losses related to other financial instruments, including cash and due from banks, interest-bearing deposits with banks, federal funds sold and securities purchased under resale agreements, available-for-sale securities, held-to-maturity securities and accounts receivable.


Allowance for credit losses activity for the quarter ended June 30, 2024									Wealth management loans		Wealth management mortgages		Other residential mortgages		Capital call financing
(in millions)	Commercial		Commercial real estate		Financial institutions		Lease financings										Total
Beginning balance	$	24	$	347	$	17	$	—	$	1	$	7	$	3	$	4	$	403
Charge-offs	—		(43)		—		—		—		—		—		—		(43)
Recoveries	—		—		—		—		—		—		—		—		—
Net (charge-offs)	—		(43)		—		—		—		—		—		—		(43)
Provision (a)(b)	3		(6)		4		—		—		(1)		—		(1)		(1)
Ending balance	$	27	$	298	$	21	$	—	$	1	$	6	$	3	$	3	$	359
Allowance for:
Loan losses	$	16	$	247	$	12	$	—	$	1	$	5	$	3	$	2	$	286
Lending-related commitments	11		51		9		—		—		1		—		1		73
Individually evaluated for impairment:
Loan balance (c)	$	—	$	287	$	—	$	—	$	—	$	13	$	1	$	—	$	301
Allowance for loan losses	—		73		—		—		—		—		—		—		73

(a) Does not include the provision for credit losses related to other financial instruments of $1 million for the quarter ended June 30, 2024.

(b) The methodology used to allocate the qualitative reserves was modified in the second quarter of 2024 to align certain specifically identifiable qualitative reserves with the respective class of financing receivables. The methodology change primarily impacted the reserve for commercial real estate portfolio (decreased $10 million) and the reserve for financial institutions (increased $10 million).


Allowance for credit losses activity for the quarter ended March 31, 2024									Wealth management loans		Wealth management mortgages		Other residential mortgages		Capital call financing
(in millions)	Commercial		Commercial real estate		Financial institutions		Lease financings										Total
Beginning balance	$	27	$	325	$	19	$	1	$	1	$	9	$	4	$	4	$	390
Charge-offs	—		—		—		—		—		(1)		—		—		(1)
Recoveries	—		—		—		—		—		—		—		—		—
Net (charge-offs)	—		—		—		—		—		(1)		—		—		(1)
Provision (a)	(3)		22		(2)		(1)		—		(1)		(1)		—		14
Ending balance	$	24	$	347	$	17	$	—	$	1	$	7	$	3	$	4	$	403
Allowance for:
Loan losses	$	14	$	287	$	8	$	—	$	1	$	6	$	3	$	3	$	322
Lending-related commitments	10		60		9		—		—		1		—		1		81
Individually evaluated for impairment:
Loan balance (b)	$	—	$	331	$	—	$	—	$	—	$	16	$	1	$	—	$	348
Allowance for loan losses	—		107		—		—		—		—		—		—		107

(a) Does not include the provision for credit losses related to other financial instruments of $13 million for the quarter ended March 31, 2024.

(b) Includes collateral-dependent loans of $348 million with $303 million of collateral value.

64 BNY


Notes to Consolidated Financial Statements (continued)


Allowance for credit losses activity for the quarter ended June 30, 2023									Wealth management loans		Wealth management mortgages		Other residential mortgages		Capital call financing		Total
(in millions)	Commercial		Commercial real estate		Financial institutions		Lease financings
Beginning balance	$	21	$	177	$	24	$	1	$	1	$	14	$	9	$	6	$	253
Charge-offs	—		—		—		—		—		—		(3)		—		(3)
Recoveries	—		—		—		—		—		—		2		—		2
Net (charge-offs)	—		—		—		—		—		—		(1)		—		(1)
Provision (a)	—		22		8		—		—		1		1		(2)		30
Ending balance	$	21	$	199	$	32	$	1	$	1	$	15	$	9	$	4	$	282
Allowance for:
Loan losses	$	4	$	143	$	17	$	1	$	1	$	14	$	9	$	2	$	191
Lending-related commitments	17		56		15		—		—		1		—		2		91
Individually evaluated for impairment:
Loan balance (b)	$	—	$	101	$	—	$	—	$	—	$	11	$	1	$	—	$	113
Allowance for loan losses	—		3		—		—		—		—		—		—		3

(a) Does not include the provision for credit losses benefit related to other financial instruments of $25 million for the quarter ended June 30, 2023.

(b) Includes collateral-dependent loans of $113 million with $167 million of collateral at fair value.


Allowance for credit losses activity for the six months ended June 30, 2024													Other residential mortgages		Capital call financing		Total
(in millions)	Commercial		Commercial real estate		Financial institutions		Lease financings		Wealth management loans		Wealth management mortgages
Beginning balance	$	27	$	325	$	19	$	1	$	1	$	9	$	4	$	4	$	390
Charge-offs	—		(43)		—		—		—		(1)		—		—		(44)
Recoveries	—		—		—		—		—		—		—		—		—
Net (charge-offs)	—		(43)		—		—		—		(1)		—		—		(44)
Provision (a)	—		16		2		(1)		—		(2)		(1)		(1)		13
Ending balance	$	27	$	298	$	21	$	—	$	1	$	6	$	3	$	3	$	359

(a) Does not include provision for credit losses related to other financial instruments of $14 million for the six months ended June 30, 2024.


Allowance for credit losses activity for the six months ended June 30, 2023													Other residential mortgages		Capital call financing		Total
(in millions)	Commercial		Commercial real estate		Financial institutions		Lease financings		Wealth management loans		Wealth management mortgages
Beginning balance	$	18	$	184	$	24	$	1	$	1	$	12	$	8	$	6	$	254
Charge-offs	—		—		—		—		—		—		(3)		—		(3)
Recoveries	1		—		—		—		—		—		2		—		3
Net recoveries (charge-offs)	1		—		—		—		—		—		(1)		—		—
Provision (a)	2		15		8		—		—		3		2		(2)		28
Ending balance	$	21	$	199	$	32	$	1	$	1	$	15	$	9	$	4	$	282

(a) Does not include provision for credit losses related to other financial instruments of $4 million for the six months ended June 30, 2023.

Nonperforming assets

The table below presents our nonperforming assets.


Nonperforming assets	June 30, 2024						Dec. 31, 2023
	Recorded investment						Recorded investment
	With an allowance		Without an allowance				With an allowance		Without an allowance
(in millions)					Total						Total
Nonperforming loans:
Commercial real estate	$	185	$	—	$	185	$	189	$	—	$	189
Other residential mortgages	20		1		21		23		1		24
Wealth management mortgages	6		14		20		7		12		19


Total nonperforming loans	211		15		226		219		13		232
Other assets owned	—		1		1		—		5		5
Total nonperforming assets	$	211	$	16	$	227	$	219	$	18	$	237

BNY 65


Notes to Consolidated Financial Statements (continued)

Past due loans

The table below presents our past due loans.


Past due loans and still accruing interest	June 30, 2024								Dec. 31, 2023
	Days past due				Total past due				Days past due						Total past due
(in millions)	30-59		60-89						≥90	30-59			60-89				≥90
Wealth management loans	$	45	$	—	$	—	$	45		$	52		$	—	$	—	$	52
Commercial real estate	16		—		—		16			9			3		—		12
Other residential mortgages	11		1		—		12			7			1		—		8
Wealth management mortgages	—		8		—		8			26			3		—		29
Financial institutions	—		—		—		—			339		(a)	—		—		339



Total past due loans	$	72	$	9	$	—	$	81		$	433		$	7	$	—	$	440

(a) Past due financial institution loans have been collected since Dec. 31, 2023.

Loan modifications

Modified loans are evaluated to determine whether a modification or restructuring with a borrower experiencing financial difficulty results in principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension. The modification could result in a new loan or a continuation of the existing loan.

In the second quarter of 2024, we modified one commercial real estate exposure, with a recorded investment of $59 million and an unfunded lending commitment of $1 million, by extending the maturity date.

At June 30, 2024, other residential mortgage loans that were modified in the previous 12 months and that are now past due by more than 90 days totaled $1 million.

In the first quarter of 2024, we modified one commercial real estate exposure, with a recorded investment of $59 million and an unfunded lending commitment of $15 million, by extending the maturity dates. We also modified one residential mortgage loan, with an aggregate recorded investment of less than $1 million, by providing payment modifications and extending the maturity date.

In the second quarter of 2023, we modified one commercial real estate loan, with a recorded investment of $59 million and an unfunded lending commitment of $15 million, by extending the maturity date. We also modified two residential mortgage loans, with an aggregate recorded investment of less than $1 million, by extending the maturity dates and reducing the interest rates.

66 BNY


Notes to Consolidated Financial Statements (continued)

Credit quality indicators

Our credit strategy is to focus on investment-grade clients that are active users of our non-credit services. Each customer is assigned an internal credit rating, which is mapped to an external rating agency grade equivalent, if possible, based upon a number of dimensions, which are continually evaluated and may change over time. The tables below provide information about the credit profile of the loan portfolio by the period of origination.


Credit profile of the loan portfolio													June 30, 2024
													Revolving loans
	Originated, at amortized cost												Amortized cost		Converted to term loans – Amortized cost				Accrued interest receivable
(in millions)	YTD24		2023		2022		2021		2020		Prior to 2020						Total (a)
Commercial:
Investment grade	$	16	$	125	$	33	$	58	$	—	$	116	$	1,816	$	—	$	2,164
Non-investment grade	2		—		—		24		—		—		57		—		83
Total commercial	18		125		33		82		—		116		1,873		—		2,247		$	2
Commercial real estate: (b)
Investment grade	168		534		719		475		561		1,661		228		22		4,368
Non-investment grade	210		268		869		429		271		438		89		—		2,574
Total commercial real estate	378		802		1,588		904		832		2,099		317		22		6,942		32
Financial institutions:
Investment grade	342		393		24		26		72		8		9,954		—		10,819
Non-investment grade	55		—		10		—		—		—		1,285		—		1,350
Total financial institutions	397		393		34		26		72		8		11,239		—		12,169		124
Wealth management loans:
Investment grade	6		30		31		109		29		145		8,347		100		8,797
Non-investment grade	—		—		—		—		—		—		26		—		26
Total wealth management loans	6		30		31		109		29		145		8,373		100		8,823		63
Wealth management mortgages (b)	222		829		1,621		1,871		841		3,616		18		—		9,018		24
Lease financings	—		—		—		12		35		553		—		—		600		—
Other residential mortgages (b)	—		174		543		197		5		200		—		—		1,119		4
Capital call financing	41		10		—		—		—		—		4,055		—		4,106		14
Other loans	—		—		—		—		—		—		2,837		—		2,837		6
Margin loans	8,546		—		—		—		—		—		11,042		—		19,588		39
Total loans	$	9,608	$	2,363	$	3,850	$	3,201	$	1,814	$	6,737	$	39,754	$	122	$	67,449	$	308

(a) Excludes overdrafts of $3,193 million. Overdrafts occur on a daily basis primarily in the custody and securities clearance business and are generally repaid within two business days.

(b) In the first six months of 2024, the gross write-offs related to commercial real estate loans were $46 million, other residential mortgage loans were less than $1 million and wealth management mortgage loans were less than $1 million.

BNY 67


Notes to Consolidated Financial Statements (continued)


Credit profile of the loan portfolio													Dec. 31, 2023
													Revolving loans
	Originated, at amortized cost												Amortized cost		Converted to term loans – Amortized cost				Accrued interest receivable
(in millions)	2023		2022		2021		2020		2019		Prior to 2019						Total (a)
Commercial:
Investment grade	$	193	$	114	$	70	$	—	$	—	$	45	$	1,483	$	—	$	1,905
Non-investment grade	52		18		—		—		—		—		137		—		207
Total commercial	245		132		70		—		—		45		1,620		—		2,112		$	3
Commercial real estate:
Investment grade	1,518		864		585		152		271		875		136		22		4,423
Non-investment grade	1,172		685		154		43		47		152		84		—		2,337
Total commercial real estate	2,690		1,549		739		195		318		1,027		220		22		6,760		30
Financial institutions:
Investment grade	616		74		57		—		—		10		6,948		—		7,705
Non-investment grade	134		10		—		—		—		—		2,672		—		2,816
Total financial institutions	750		84		57		—		—		10		9,620		—		10,521		120
Wealth management loans:
Investment grade	39		30		110		26		7		167		8,542		101		9,022
Non-investment grade	—		2		—		—		—		—		85		—		87
Total wealth management loans	39		32		110		26		7		167		8,627		101		9,109		57
Wealth management mortgages	850		1,689		1,909		863		736		3,066		18		—		9,131		22
Lease financings	230		—		—		40		7		322		—		—		599		—
Other residential mortgages (b)	184		561		200		5		—		216		—		—		1,166		5
Capital call financing	10		—		—		—		—		—		3,690		—		3,700		15
Other loans	—		—		—		—		—		—		2,717		—		2,717		7
Margin loans	7,283		—		—		—		—		—		10,728		—		18,011		41
Total loans	$	12,281	$	4,047	$	3,085	$	1,129	$	1,068	$	4,853	$	37,240	$	123	$	63,826	$	300

(a) Excludes overdrafts of $3,053 million. Overdrafts occur on a daily basis primarily in the custody and securities clearance business and are generally repaid within two business days.

(b) The gross write-offs related to other residential mortgage loans were $3 million in 2023.

Commercial loans

The commercial loan portfolio is divided into investment grade and non-investment grade categories based on the assigned internal credit ratings, which are generally consistent with those of the public rating agencies. Customers with ratings consistent with BBB- (S&P)/Baa3 (Moody’s) or better are considered to be investment grade. Those clients with ratings lower than this threshold are considered to be non-investment grade.

Commercial real estate

Our income-producing commercial real estate facilities are focused on experienced owners and are structured with moderate leverage based on existing cash flows. Our commercial real estate lending activities also include construction and renovation facilities.

Financial institutions

Financial institution exposures are high quality, with 97% of the exposures meeting the investment grade equivalent criteria of our internal credit rating classification at June 30, 2024. In addition, 65% of the financial institutions exposure is secured. For example, securities industry clients and asset managers often borrow against marketable securities held in custody. The exposure to financial institutions is generally short term, with 84% expiring within one year.

Wealth management loans

Wealth management loans are not typically rated by external rating agencies. A majority of the wealth management loans are secured by the customers’ investment management accounts or custody accounts. Eligible assets pledged for these loans are typically investment grade fixed-income securities, equities and/or mutual funds. Internal ratings for this portion of the wealth management loan portfolio, therefore, would equate to investment grade external

68 BNY


Notes to Consolidated Financial Statements (continued)

ratings. Wealth management loans are provided to select customers based on the pledge of other types of assets. For the loans collateralized by other assets, the credit quality of the obligor is carefully analyzed, but we do not consider this portion of our wealth management loan portfolio to be investment grade.

Wealth management mortgages

Credit quality indicators for wealth management mortgages are not correlated to external ratings. Wealth management mortgages are typically loans to high-net-worth individuals, which are secured primarily by residential property. These loans are primarily interest-only, adjustable-rate mortgages with a weighted-average loan-to-value ratio of 61% at origination. Delinquency rate is a key indicator of credit quality in our wealth management portfolio. At June 30, 2024, less than 1% of the mortgages were past due.

Lease financings

At June 30, 2024, nearly all of the leasing exposure was investment grade, or investment grade equivalent, and consisted of exposures backed by well-diversified assets. The largest components of our lease residual value exposure relate to real estate and large-ticket transportation equipment. Assets are both domestic and foreign-based, with primary concentrations in Germany and the U.S.

Other residential mortgages

The other residential mortgages portfolio primarily consists of 1-4 family residential mortgage loans and

totaled $1.1 billion at June 30, 2024 and $1.2 billion at Dec. 31, 2023. These loans are not typically correlated to external ratings.

Capital call financing

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

Other loans

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

Margin loans

We had $19.6 billion of secured margin loans at June 30, 2024, compared with $18.0 billion at Dec. 31, 2023. Margin loans are collateralized with marketable securities, and borrowers are required to maintain a daily collateral margin in excess of 100% of the value of the loan. We have rarely suffered a loss on these types of loans.

Overdrafts

Overdrafts primarily relate to custody and securities clearance clients and totaled $3.2 billion at June 30, 2024 and $3.1 billion at Dec. 31, 2023. Overdrafts occur on a daily basis and are generally repaid within two business days.

Reverse repurchase agreements

Reverse repurchase agreements at June 30, 2024 and Dec. 31, 2023 were fully secured with high-quality collateral. As a result, there was no allowance for credit losses related to these assets at June 30, 2024 and Dec. 31, 2023.

BNY 69


Notes to Consolidated Financial Statements (continued)

Note 6–Goodwill and intangible assets

Goodwill

The tables below provide a breakdown of goodwill by business segment.


Goodwill by business segment (in millions)	Securities Services		Market and Wealth Services		Investment and Wealth Management		Consolidated
Balance at Dec. 31, 2023
Goodwill	$	7,004	$	1,429	$	8,508	$	16,941
Accumulated impairment losses	—		—		(680)		(680)
Net goodwill	$	7,004	$	1,429	$	7,828	$	16,261

Business realignment (a)	(51)		48		3		—

Foreign currency translation	(22)		(1)		(21)		(44)
Balance at June 30, 2024
Goodwill	$	6,931	$	1,476	$	8,490	$	16,897
Accumulated impairment losses	—		—		(680)		(680)
Net goodwill	$	6,931	$	1,476	$	7,810	$	16,217

(a) In the first quarter of 2024, we made certain realignments of similar products and services within our lines of business. See Note 19 for additional information.


Goodwill by business segment (in millions)	Securities Services		Market and Wealth Services		Investment and Wealth Management		Consolidated
Balance at Dec. 31, 2022
Goodwill	$	6,973	$	1,424	$	8,433	$	16,830
Accumulated impairment losses	—		—		(680)		(680)
Net goodwill	$	6,973	$	1,424	$	7,753	$	16,150


Foreign currency translation	22		4		70		96

Balance at June 30, 2023
Goodwill	$	6,995	$	1,428	$	8,503	$	16,926
Accumulated impairment losses	—		—		(680)		(680)
Net goodwill	$	6,995	$	1,428	$	7,823	$	16,246

Goodwill impairment testing

The goodwill impairment test is performed at least annually at the reporting unit level. An interim goodwill impairment test is performed when events or circumstances occur that may indicate that it is more likely than not that the fair value of any reporting unit may be less than its carrying value.

In the second quarter of 2024, due to the results of the first quarter 2024 interim and annual goodwill

impairment test and macroeconomic conditions, we performed an interim goodwill impairment test of the Investment Management reporting unit, which had $6.1 billion of allocated goodwill. No additional goodwill impairment was recognized.

In the second quarter of 2024, we also performed our annual goodwill impairment test on the remaining reporting units. As a result of the annual goodwill impairment test, no goodwill impairment was recognized.

70 BNY


Notes to Consolidated Financial Statements (continued)

Intangible assets

The tables below provide a breakdown of intangible assets by business segment.


Intangible assets – net carrying amount by business segment (in millions)	Securities Services		Market and Wealth Services		Investment and Wealth Management		Other		Consolidated
Balance at Dec. 31, 2023	$	164	$	378	$	1,463	$	849	$	2,854

Amortization	(14)		(2)		(9)		—		(25)
Foreign currency translation	(2)		—		(1)		—		(3)
Balance at June 30, 2024	$	148	$	376	$	1,453	$	849	$	2,826


Intangible assets – net carrying amount by business segment (in millions)	Securities Services		Market and Wealth Services		Investment and Wealth Management		Other		Consolidated
Balance at Dec. 31, 2022	$	193	$	384	$	1,475	$	849	$	2,901

Amortization	(15)		(3)		(10)		—		(28)
Foreign currency translation	1		—		7		—		8
Balance at June 30, 2023	$	179	$	381	$	1,472	$	849	$	2,881

The table below provides a breakdown of intangible assets by type.


Intangible assets	June 30, 2024							Dec. 31, 2023
(dollars in millions)	Gross carrying amount		Accumulated amortization		Net carrying amount		Remaining weighted- average amortization period	Gross carrying amount		Accumulated amortization		Net carrying amount
Subject to amortization: (a)
Customer contracts – Securities Services	$	728	$	(580)	$	148	9 years	$	731	$	(567)	$	164
Customer contracts – Market and Wealth Services	280		(275)		5		2 years	280		(273)		7
Customer relationships – Investment and Wealth Management	553		(487)		66		8 years	553		(479)		74
Other	41		(13)		28		13 years	41		(12)		29
Total subject to amortization	$	1,602	$	(1,355)	$	247	9 years	$	1,605	$	(1,331)	$	274
Not subject to amortization: (b)
Tradenames	$	1,292	N/A		$	1,292	N/A	$	1,292	N/A		$	1,292
Customer relationships	1,287		N/A		1,287		N/A	1,288		N/A		1,288
Total not subject to amortization	$	2,579	N/A		$	2,579	N/A	$	2,580	N/A		$	2,580
Total intangible assets	$	4,181	$	(1,355)	$	2,826	N/A	$	4,185	$	(1,331)	$	2,854

(a) Excludes fully amortized intangible assets.

(b) Intangible assets not subject to amortization have an indefinite life.

N/A – Not applicable.

Estimated annual amortization expense for current intangibles for the next five years is as follows:


For the year ended Dec. 31,	Estimated amortization expense (in millions)
2024		$	50
2025		43
2026		34
2027		28
2028		24

Intangible asset impairment testing

Intangible assets not subject to amortization are tested for impairment annually or more often if events or circumstances indicate they may be impaired.

BNY 71


Notes to Consolidated Financial Statements (continued)

Note 7–Other assets

The following table provides the components of other assets presented on the consolidated balance sheet.


Other assets	June 30, 2024		Dec. 31, 2023
(in millions)
Corporate/bank-owned life insurance	$	5,504	$	5,480
Accounts receivable (a)	5,200		6,567
Software	2,497		2,430
Tax credit investments	2,159		2,186
Fails to deliver	2,083		1,514
Prepaid pension assets	2,050		1,818
Equity method investments	896		873
Prepaid expense	799		737
Other equity investments (b)	769		741
Assets of consolidated investment management funds	674		526
Federal Reserve Bank stock	474		480
Fair value of hedging derivatives	402		236
Income taxes receivable	378		270
Cash collateral receivable on derivative transactions	259		621
Seed capital (c)	202		232
Other (d)	1,154		1,198
Total other assets	$	25,500	$	25,909

(a) Includes receivables for securities sold or matured that have not yet settled.

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

(d) At June 30, 2024 and Dec. 31, 2023, other assets include $57 million and $7 million, respectively, of Federal Home Loan Bank stock, at cost.

Non-readily marketable equity securities

Non-readily marketable equity securities do not have readily determinable fair values. These investments are valued using a measurement alternative where the investments are carried at cost, less any impairment, and plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. The observable price changes are recorded in investment and other revenue on the consolidated income statement. Our non-readily marketable equity securities totaled $494 million at June 30, 2024 and $479 million at Dec. 31, 2023, and are included in other equity investments in the table above.

The following table presents the adjustments on the non-readily marketable equity securities.


Adjustments on non-readily marketable equity securities											Life-to- date
(in millions)	2Q24		1Q24		2Q23		YTD24		YTD23		Life-to- date
Upward adjustments	$	1	$	—	$	5	$	1	$	5	$	336
Downward adjustments	—		—		(1)		—		(19)		(53)
Net adjustments	$	1	$	—	$	4	$	1	$	(14)	$	283

Tax credit investments

Tax credit investments include affordable housing projects and renewable energy investments. We invest in affordable housing projects primarily to satisfy the Company’s requirements under the Community Reinvestment Act. On Jan. 1, 2024, we adopted ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method for our renewable energy projects that met the eligibility criteria. See Note 2 for additional information.

Our tax credit investments totaled $2.2 billion at June 30, 2024 and $2.2 billion at Dec. 31, 2023. Commitments to fund future investments totaled $846 million at June 30, 2024 and $780 million at Dec. 31, 2023 and are recorded in other liabilities on the consolidated balance sheet. A summary of the commitments to fund future investments is as follows: remainder of 2024 – $245 million; 2025 – $258 million; 2026 – $101 million; 2027 – $61 million; 2028 – $66 million; and 2029 and thereafter – $115 million.

Tax credits and other tax benefits recognized were $115 million in the second quarter of 2024, $114 million in the first quarter of 2024, $94 million in the second quarter of 2023, $229 million in the first six months of 2024 and $184 million in the first six months of 2023.

Amortization expense included in the provision for income taxes was $92 million in the second quarter of 2024, $92 million in the first quarter of 2024, $73 million in the second quarter of 2023, $184 million in the first six months of 2024 and $146 million in the first six months of 2023.

72 BNY


Notes to Consolidated Financial Statements (continued)

Investments valued using net asset value (“NAV”) per share

In our Investment and Wealth Management business segment, we make seed capital investments in certain funds we manage. We also hold private equity investments, primarily small business investment companies (“SBICs”), which are compliant with the

Volcker Rule, and certain other corporate investments. Seed capital, private equity and other corporate investments are included in other assets on the consolidated balance sheet. The fair value of certain of these investments was estimated using the NAV per share for our ownership interest in the funds.

The table below presents information on our investments valued using NAV.


Investments valued using NAV	June 30, 2024					Dec. 31, 2023
(in millions)	Fair value		Unfunded commitments			Fair value		Unfunded commitments
Seed capital (a)(b)	$	7		$	—	$	3		$	—
Private equity investments (c)	152			40		143			42
Other	7			—		7			—
Total	$	166		$	40	$	153		$	42

(a) Seed capital investments at June 30, 2024 are generally redeemable on request. Distributions are received as the underlying investments in the funds, which have redemption notice periods of up to seven days, are liquidated.

(b) Includes investments in funds that relate to deferred compensation arrangements with employees.

(c) Private equity investments primarily include Volcker Rule-compliant investments in SBICs that invest in various sectors of the economy. Private equity investments do not have redemption rights. Distributions from such investments will be received as the underlying investments in the private equity investments, which have a life of 10 years, are liquidated.

Note 8–Contract revenue

Fee and other revenue in the Securities Services, Market and Wealth Services and Investment and Wealth Management business segments is primarily variable, based on levels of assets under custody and/or administration, assets under management and the level of client-driven transactions, as specified in the fee schedules. See Note 10 of the Notes to Consolidated Financial Statements in our 2023 Annual Report for information on the nature of our services and revenue recognition. See Note 24 of the Notes to Consolidated Financial Statements in our 2023 Annual Report for additional information on our principal business segments — Securities Services,

Market and Wealth Services and Investment and Wealth Management — and the primary services provided.

Disaggregation of contract revenue

Contract revenue is included in fee and other revenue on the consolidated income statement. The following tables present fee and other revenue related to contracts with customers, disaggregated by type of fee revenue, for each business segment. Business segment data has been determined on an internal management basis of accounting, rather than GAAP, which is used for consolidated financial reporting.

BNY 73


Notes to Consolidated Financial Statements (continued)


Disaggregation of contract revenue by business segment
	Quarter ended
	June 30, 2024										June 30, 2023 (a)
(in millions)	Securities Services		Market and Wealth Services		Investment and Wealth Management		Other		Total			Securities Services		Market and Wealth Services		Investment and Wealth Management		Other		Total
Fee and other revenue – contract revenue:
Investment services fees	$	1,327	$	1,009	$	23	$	(19)	$	2,340		$	1,288	$	943	$	23	$	(14)	$	2,240
Investment management and performance fees	—		2		766		(3)		765			—		2		763		(4)		761
Financing-related fees	12		5		1		—		18			10		4		—		1		15
Distribution and servicing fees	—		(30)		69		2		41			1		(23)		58		(1)		35
Investment and other revenue	62		61		(92)		—		31			60		50		(79)		—		31
Total fee and other revenue – contract revenue	1,401		1,047		767		(20)		3,195			1,359		976		765		(18)		3,082
Fee and other revenue – not in scope of Accounting Standards Codification (“ASC”) 606 (b)(c)(d)	243		71		11		45		370			202		57		12		50		321
Total fee and other revenue	$	1,644	$	1,118	$	778	$	25	$	3,565		$	1,561	$	1,033	$	777	$	32	$	3,403

(a) Results for the quarter ended June 30, 2023 were revised to reflect certain realignments of similar products and services within our lines of business in the first quarter of 2024. See Note 19 for additional information.

(b) Primarily includes investment services fees, foreign exchange revenue, financing-related fees and investment and other revenue, all of which are accounted for using other accounting guidance.

(c) The Investment and Wealth Management business segment is net of income (loss) attributable to noncontrolling interests related to consolidated investment management funds of $2 million in the second quarter of 2024 and $1 million in the second quarter of 2023.

(d) Fee and other revenue – not in scope of ASC 606 for the Other segment was restated to reflect the retrospective application of adopting new accounting guidance in the first quarter of 2024 related to our investments in renewable energy projects using the proportional amortization method (ASU 2023-02). See Note 2 for additional information.


Disaggregation of contract revenue by business segment	Quarter ended
	March 31, 2024
(in millions)	Securities Services		Market and Wealth Services		Investment and Wealth Management		Other		Total
Fee and other revenue – contract revenue:
Investment services fees	$	1,260	$	992	$	26	$	(16)	$	2,262
Investment management and performance fees	—		2		774		(4)		772
Financing-related fees	15		8		—		—		23
Distribution and servicing fees	1		(29)		70		—		42
Investment and other revenue	57		60		(90)		1		28
Total fee and other revenue – contract revenue	1,333		1,033		780		(19)		3,127
Fee and other revenue – not in scope of ASC 606 (a)(b)	223		61		25		49		358
Total fee and other revenue	$	1,556	$	1,094	$	805	$	30	$	3,485

(a) Primarily includes investment services fees, foreign exchange revenue, financing-related fees and investment and other revenue, all of which are accounted for using other accounting guidance.

(b) The Investment and Wealth Management business segment is net of income (loss) attributable to noncontrolling interests related to consolidated investment management funds of $2 million in the first quarter of 2024.

74 BNY


Notes to Consolidated Financial Statements (continued)


Disaggregation of contract revenue by business segment
	Year-to-date
	June 30, 2024										June 30, 2023 (a)
(in millions)	Securities Services		Market and Wealth Services		Investment and Wealth Management		Other		Total		Securities Services		Market and Wealth Services		Investment and Wealth Management		Other		Total
Fee and other revenue – contract revenue:
Investment services fees	$	2,587	$	2,001	$	49	$	(35)	$	4,602	$	2,457	$	1,875	$	47	$	(29)	$	4,350
Investment management and performance fees	—		4		1,540		(7)		1,537		—		4		1,547		(7)		1,544
Financing-related fees	27		13		1		—		41		23		9		—		1		33
Distribution and servicing fees	1		(59)		139		2		83		1		(46)		113		—		68
Investment and other revenue	119		121		(182)		1		59		120		100		(159)		1		62
Total fee and other revenue – contract revenue	2,734		2,080		1,547		(39)		6,322		2,601		1,942		1,548		(34)		6,057
Fee and other revenue – not in scope of ASC 606 (b)(c)(d)	466		132		36		94		728		403		109		14		107		633
Total fee and other revenue	$	3,200	$	2,212	$	1,583	$	55	$	7,050	$	3,004	$	2,051	$	1,562	$	73	$	6,690

(a) Results for the first six months of 2023 were revised to reflect certain realignments of similar products and services within our lines of business in the first quarter of 2024. See Note 19 for additional information.

(b) Primarily includes investment services fees, foreign exchange revenue, financing-related fees and investment and other revenue, all of which are accounted for using other accounting guidance.

(c) The Investment and Wealth Management business segment is net of income (loss) income attributable to noncontrolling interests related to consolidated investment management funds of $4 million in the first six months of 2024 and $1 million in the first six months of 2023.

Contract balances

Our clients are billed based on fee schedules that are agreed upon in each customer contract. Receivables from customers were $2.6 billion at June 30, 2024 and Dec. 31, 2023.

Contract assets represent accrued revenues that have not yet been billed to customers due to certain contractual terms other than the passage of time and were $71 million at June 30, 2024 and $27 million at Dec. 31, 2023. Accrued revenues recorded as contract assets are usually billed on an annual basis.

Both receivables from customers and contract assets are included in other assets on the consolidated balance sheet.

Contract liabilities represent payments received in advance of providing services under certain contracts and were $225 million at June 30, 2024 and $172 million at Dec. 31, 2023. Contract liabilities are included in other liabilities on the consolidated balance sheet. Revenue recognized in the first six months of 2024 relating to contract liabilities as of Dec. 31, 2023 was $85 million. Revenue recognized in the second quarter of 2024 relating to contract liabilities as of March 31, 2024 was $69 million.

Changes in contract assets and liabilities primarily relate to either party’s performance under the contracts.

Contract costs

Incremental costs for obtaining contracts that are deemed recoverable are capitalized as contract costs. Such costs result from the payment of sales incentives, primarily in the Wealth Management business, and totaled $49 million at June 30, 2024 and $46 million at Dec. 31, 2023. Capitalized sales incentives are amortized based on the transfer of goods or services to which the assets relate. The amortization of capitalized sales incentives, which is included in staff expense on the consolidated income statement, totaled $4 million in the second quarter of 2024, $4 million in the second quarter of 2023, $3 million in the first quarter of 2024, $7 million in the first six months of 2024 and $8 million in the first six months of 2023.

Costs to fulfill a contract are capitalized when they relate directly to an existing contract or a specific anticipated contract, generate or enhance resources that will be used to fulfill performance obligations, and are recoverable. Such costs generally represent set-up costs, which include any direct cost incurred at the inception of a contract which enables the

BNY 75


Notes to Consolidated Financial Statements (continued)

fulfillment of the performance obligation, and totaled $93 million at June 30, 2024 and $90 million at Dec. 31, 2023. These capitalized costs are amortized on a straight-line basis over the expected contract period.

Unsatisfied performance obligations

We do not have any unsatisfied performance obligations other than those that are subject to a

practical expedient election under ASC 606, Revenue From Contracts With Customers. The practical expedient election applies to (i) contracts with an original expected length of one year or less, and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

Note 9–Net interest income

The following table provides the components of net interest income presented on the consolidated income statement.


Net interest income	Quarter ended						Year-to-date
(in millions)	June 30, 2024		March 31, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Interest income
Deposits with the Federal Reserve and other central banks	$	1,201	$	1,219	$	1,241	$	2,420	$	2,094
Deposits with banks	110		121		128		231		268
Federal funds sold and securities purchased under resale agreements	2,631		2,433		1,776		5,064		2,767
Loans	1,119		1,061		957		2,180		1,823
Securities:
Taxable	1,256		1,193		1,042		2,449		2,064
Exempt from federal income taxes	—		—		—		—		—
Total securities	1,256		1,193		1,042		2,449		2,064
Trading securities	75		69		80		144		150
Total interest income	6,392		6,096		5,224		12,488		9,166
Interest expense
Deposits	2,255		2,187		1,739		4,442		3,105
Federal funds purchased and securities sold under repurchase agreements	2,433		2,243		1,729		4,676		2,621
Trading liabilities	23		21		43		44		73
Other borrowed funds	8		4		32		12		35
Commercial paper	13		—		—		13		—
Customer payables	161		146		143		307		271
Long-term debt	469		455		438		924		833
Total interest expense	5,362		5,056		4,124		10,418		6,938
Net interest income	1,030		1,040		1,100		2,070		2,228
Provision for credit losses	—		27		5		27		32
Net interest income after provision for credit losses	$	1,030	$	1,013	$	1,095	$	2,043	$	2,196

Note 10–Employee benefit plans

The components of net periodic benefit (credit) cost are presented below. The service cost component is reflected in staff expense, whereas the remaining components are reflected in other expense.


Net periodic benefit (credit) cost	Quarter ended
	June 30, 2024						March 31, 2024						June 30, 2023
(in millions)	Domestic pension benefits		Foreign pension benefits		Health care benefits		Domestic pension benefits		Foreign pension benefits		Health care benefits		Domestic pension benefits		Foreign pension benefits		Health care benefits
Service cost	$	—	$	3	$	—	$	—	$	3	$	—	$	—	$	2	$	—
Interest cost	46		9		1		45		10		1		47		9		2
Expected return on assets	(95)		(19)		(2)		(95)		(20)		(2)		(95)		(22)		(3)
Other	6		(1)		(2)		6		(1)		(2)		3		(4)		(3)
Net periodic benefit (credit)	$	(43)	$	(8)	$	(3)	$	(44)	$	(8)	$	(3)	$	(45)	$	(15)	$	(4)

76 BNY


Notes to Consolidated Financial Statements (continued)


Net periodic benefit (credit) cost	Year-to-date
	June 30, 2024						June 30, 2023
(in millions)	Domestic pension benefits		Foreign pension benefits		Health care benefits		Domestic pension benefits		Foreign pension benefits		Health care benefits
Service cost	$	—	$	6	$	—	$	—	$	5	$	—
Interest cost	91		19		2		95		17		3
Expected return on assets	(190)		(39)		(4)		(190)		(44)		(5)
Other	12		(2)		(4)		5		(7)		(6)
Net periodic benefit (credit)	$	(87)	$	(16)	$	(6)	$	(90)	$	(29)	$	(8)

Note 11–Income taxes

BNY recorded an income tax provision of $357 million (23.4% effective tax rate) in the second quarter of 2024, $315 million (22.7% effective tax rate) in the second quarter of 2023 and $297 million (22.4% effective tax rate) in the first quarter of 2024.

In accordance with ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, we elected to account for investments in renewable energy projects that met the eligibility requirement using the proportional amortization method on a retrospective basis. Prior to 2024, we used the hypothetical liquidation at book value (“HLBV”) methodology to determine the pre-tax loss that is recognized in each period. This change resulted in an increase in investment and other revenue and an increase in the provision for income taxes on the consolidated income statement beginning in the first quarter of 2024. For additional information, see Note 2 and Note 7.

Our total tax reserves as of June 30, 2024 were $107 million, compared with $109 million at Dec. 31, 2023. If these tax reserves were unnecessary, $107 million would affect the effective tax rate in future periods. We recognize accrued interest and penalties, if applicable, related to income taxes in income tax expense. Included in the balance sheet at June 30, 2024 is accrued interest, where applicable, of $36 million. The tax benefit related to interest for the six months ended June 30, 2024 was $3 million, compared with $1 million of tax expense for the six months ended June 30, 2023.

It is reasonably possible the total reserve for uncertain tax positions could decrease within the next 12 months by approximately $10 million as a result of

adjustments related to tax years that are still subject to examination.

Our federal income tax returns are closed to examination through 2016. Our New York State and New York City income tax returns are closed to examination through 2014. Our UK income tax returns are closed to examination through 2020.

Note 12–Variable interest entities

We have variable interests in variable interest entities (“VIEs”), which include investments in retail, institutional and alternative investment funds.

We earn management fees from these funds, as well as performance fees in certain funds, and may also provide start-up capital for new funds. The funds are primarily financed by our customers’ investments in the funds’ equity or debt.

Additionally, we invest in qualified affordable housing and renewable energy projects, which are designed to generate a return primarily through the realization of tax credits. The projects, which are structured as limited partnerships and limited liability companies, are also VIEs, but are not consolidated.

The following table presents the incremental assets and liabilities included on the consolidated balance sheet as of June 30, 2024 and Dec. 31, 2023. The net assets of any consolidated VIE are solely available to settle the liabilities of the VIE and to settle any

BNY 77


Notes to Consolidated Financial Statements (continued)

investors’ ownership liquidation requests, including any seed capital we invested in the VIE.


Consolidated investment management funds
	June 30, 2024		Dec. 31, 2023
(in millions)

Trading assets	$	652		$	510
Other assets	22			16
Total assets (a)	$	674		$	526

Other liabilities	$	5		$	1
Total liabilities (b)	$	5		$	1
Nonredeemable noncontrolling interests (c)	$	186		$	50

(a) Includes voting model entities (“VMEs”) with assets of $51 million at June 30, 2024 and $91 million at Dec. 31, 2023.

(b) Includes VMEs with liabilities of $1 million at June 30, 2024 and $1 million at Dec. 31, 2023.

(c) Includes VMEs with nonredeemable noncontrolling interests of $3 million at June 30, 2024 and $12 million at Dec. 31, 2023.

We have not provided financial or other support that was not otherwise contractually required to be provided to our VIEs. Additionally, creditors of any

consolidated VIEs do not have any recourse to the general credit of BNY.

Non-consolidated VIEs

As of June 30, 2024 and Dec. 31, 2023, assets and liabilities related to the VIEs where we are not the primary beneficiary were included in other assets and other liabilities on the consolidated balance sheet and primarily related to accounting for our investments in qualified affordable housing and renewable energy projects.

The maximum loss exposure indicated in the following table relates solely to our investments in, and unfunded commitments to, the VIEs.


Non-consolidated VIEs	June 30, 2024		Dec. 31, 2023
(in millions)
Other assets	$	2,242	$	2,261
Other liabilities	846		780
Maximum loss exposure	3,088		3,041

Note 13–Preferred stock

The Parent has 100 million authorized shares of preferred stock with a par value of $0.01 per share. The following table summarizes the Parent’s preferred stock issued and outstanding at June 30, 2024 and Dec. 31, 2023.


Preferred stock summary (a)		Total shares issued and outstanding		Carrying value (b)
				(in millions)
		June 30, 2024	Dec. 31, 2023	June 30, 2024		Dec. 31, 2023
	Per annum dividend rate (c)
Series A	Greater of (i) SOFR plus 0.565% and (ii) 4.000%	5,001	5,001	$	500	$	500
Series F	4.625% to but excluding Sept. 20, 2026, then SOFR plus 3.131%	10,000	10,000	990		990
Series G	4.700% to but excluding Sept. 20, 2025, then a floating rate equal to the five-year treasury rate plus 4.358%	10,000	10,000	990		990
Series H	3.700% to but excluding March 20, 2026, then a floating rate equal to the five-year treasury rate plus 3.352%	5,825	5,825	576		576
Series I	3.750% to but excluding Dec. 20, 2026, then a floating rate equal to the five-year treasury rate plus 2.630%	13,000	13,000	1,287		1,287
Total		43,826	43,826	$	4,343	$	4,343

(a) All outstanding preferred stock is noncumulative perpetual preferred stock with a liquidation preference of $100,000 per share.

(b) The carrying value of the Series F, Series G, Series H and Series I preferred stock is recorded net of issuance costs.

(c) References to SOFR are to a floating rate equal to the three-month CME Term SOFR (plus a spread adjustment of 0.26161% per annum).

78 BNY


Notes to Consolidated Financial Statements (continued)

The table below presents the Parent’s preferred dividends.


Preferred dividends
(dollars in millions, except per share amounts)	Depositary shares per share		2Q24				1Q24				2Q23				YTD24				YTD23
			Per share		Total dividend		Per share		Total dividend		Per share		Total dividend		Per share		Total dividend		Per share		Total dividend
Series A	100	(a)	$	1,574.00	$	8	$	1,566.46	$	8	$	1,412.60	$	7	$	3,140.46	$	16	$	2,740.32	$	14
Series D	100		N/A		N/A		N/A		N/A		2,250.00		11		N/A		N/A		2,250.00		11

Series F	100		—		—		2,312.50		23		—		—		2,312.50		23		2,312.50		23
Series G	100		—		—		2,350.00		24		—		—		2,350.00		24		2,350.00		24
Series H	100		925.00		5		925.00		5		925.00		6		1,850.00		10		1,850.00		11
Series I	100		937.50		12		937.50		12		937.50		12		1,875.00		24		1,875.00		24
Total					$	25			$	72			$	36			$	97			$	107

(a) Represents Normal Preferred Capital Securities.

N/A - Not applicable.

In December 2023, all of the outstanding shares of the Series D preferred stock were redeemed.

All of the outstanding shares of the Series A preferred stock are owned by Mellon Capital IV, a 100% owned finance subsidiary of the Parent, which will pass through any dividend on the Series A preferred stock to the holders of its Normal Preferred Capital Securities. The Parent’s obligations under the trust and other agreements relating to Mellon Capital IV

have the effect of providing a full and unconditional guarantee, on a subordinated basis, of payments due on the Normal Preferred Capital Securities. No other subsidiary of the Parent guarantees the securities of Mellon Capital IV.

For additional information on our preferred stock, see Note 15 of the Notes to Consolidated Financial Statements in our 2023 Annual Report.

Note 14–Other comprehensive income (loss)


Components of other comprehensive income (loss)	Quarter ended
	June 30, 2024						March 31, 2024						June 30, 2023
(in millions)	Pre-tax amount		Tax (expense) benefit		After-tax amount		Pre-tax amount		Tax (expense) benefit		After-tax amount		Pre-tax amount		Tax (expense) benefit		After-tax amount
Foreign currency translation:
Foreign currency translation adjustments arising during the period (a)	$	(9)	$	(21)	$	(30)	$	(44)	$	(47)	$	(91)	$	61	$	36	$	97
Total foreign currency translation	(9)		(21)		(30)		(44)		(47)		(91)		61		36		97
Unrealized gain on assets available-for-sale:
Unrealized (loss) gain arising during period	(13)		2		(11)		137		(34)		103		(202)		45		(157)
Reclassification adjustment (b)	17		(4)		13		1		—		1		—		—		—
Net unrealized gain (loss) on assets available-for-sale	4		(2)		2		138		(34)		104		(202)		45		(157)
Defined benefit plans:


Amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost (b)	4		(1)		3		3		—		3		(4)		2		(2)
Total defined benefit plans	4		(1)		3		3		—		3		(4)		2		(2)
Unrealized gain (loss) on cash flow hedges:
Unrealized hedge gain arising during period	3		(1)		2		4		(1)		3		3		(1)		2
Reclassification of net (gain) loss to net income:
Foreign exchange (“FX”) contracts – staff expense	(2)		1		(1)		(2)		—		(2)		—		—		—
FX contracts – investment and other revenue	—		—		—		—		—		—		1		—		1

Total reclassifications to net income	(2)		1		(1)		(2)		—		(2)		1		—		1
Net unrealized gain on cash flow hedges	1		—		1		2		(1)		1		4		(1)		3
Total other comprehensive income (loss)	$	—	$	(24)	$	(24)	$	99	$	(82)	$	17	$	(141)	$	82	$	(59)

(a) Includes the impact of hedges of net investments in foreign subsidiaries. See Note 17 for additional information.

(b) The reclassification adjustment related to the unrealized gain (loss) on assets available-for-sale is recorded as net securities gains (losses), which is included in investment and other revenue on the consolidated income statement. The amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost is recorded as other expense on the consolidated income statement.

BNY 79


Notes to Consolidated Financial Statements (continued)


Components of other comprehensive income (loss)	Year-to-date
	June 30, 2024						June 30, 2023
(in millions)	Pre-tax amount		Tax (expense) benefit		After-tax amount		Pre-tax amount		Tax (expense) benefit		After-tax amount
Foreign currency translation:
Foreign currency translation adjustments arising during the period (a)	$	(53)	$	(68)	$	(121)	$	138	$	62	$	200
Total foreign currency translation	(53)		(68)		(121)		138		62		200
Unrealized gain on assets available-for-sale:
Unrealized gain arising during period	124		(32)		92		217		(57)		160
Reclassification adjustment (b)	18		(4)		14		1		—		1
Net unrealized gain on assets available-for-sale	142		(36)		106		218		(57)		161
Defined benefit plans:

Amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost (b)	7		(1)		6		(8)		3		(5)
Total defined benefit plans	7		(1)		6		(8)		3		(5)
Unrealized gain on cash flow hedges:
Unrealized hedge gain arising during period	7		(2)		5		7		(2)		5
Reclassification of net loss to net income:

FX contracts – staff expense	(4)		1		(3)		3		(1)		2
FX contracts – investment and other revenue	—		—		—		1		—		1

Total reclassifications to net income	(4)		1		(3)		4		(1)		3
Net unrealized gain on cash flow hedges	3		(1)		2		11		(3)		8
Total other comprehensive income (loss)	$	99	$	(106)	$	(7)	$	359	$	5	$	364

(a) Includes the impact of hedges of net investments in foreign subsidiaries. See Note 17 for additional information.

(b) The reclassification adjustment related to the unrealized gain (loss) on assets available-for-sale is recorded as net securities gains, which is included in investment and other revenue on the consolidated income statement. The amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost is recorded as other expense on the consolidated income statement.

Note 15–Fair value measurement

Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. A three-level hierarchy for fair value measurements is utilized based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. BNY’s own creditworthiness is considered when valuing liabilities. See Note 20 of the Notes to Consolidated Financial Statements in our 2023 Annual Report for

information on how we determine fair value and the fair value hierarchy.

The following tables present the financial instruments carried at fair value at June 30, 2024 and Dec. 31, 2023, by caption on the consolidated balance sheet and by the three-level valuation hierarchy. We have included credit ratings information in certain of the tables because the information indicates the degree of credit risk to which we are exposed, and significant changes in ratings classifications could result in increased risk for us.

80 BNY


Notes to Consolidated Financial Statements (continued)


Assets and liabilities measured at fair value on a recurring basis at June 30, 2024												Total carrying value
(dollars in millions)	Level 1			Level 2			Level 3			Netting (a)
Assets:
Available-for-sale securities:
Non-U.S. government (b)	$	4,031		$	20,920		$	—		$	—	$	24,951
U.S. Treasury	19,490			—			—			—		19,490
Agency RMBS	—			16,891			—			—		16,891
Agency commercial MBS	—			7,548			—			—		7,548
Foreign covered bonds	—			7,329			—			—		7,329
CLOs	—			6,370			—			—		6,370
Non-agency commercial MBS	—			2,819			—			—		2,819
U.S. government agencies	—			2,552			—			—		2,552
Non-agency RMBS	—			1,647			—			—		1,647
Other ABS	—			823			—			—		823
Other debt securities	—			1			—			—		1
Total available-for-sale securities	23,521			66,900			—			—		90,421
Trading assets:
Debt instruments	1,407			2,016			—			—		3,423
Equity instruments	5,202			—			—			—		5,202
Derivative assets not designated as hedging:
Interest rate	6			870			—			(861)		15
Foreign exchange	—			4,935			—			(3,966)		969
Equity and other contracts	—			15			—			(15)		—
Total derivative assets not designated as hedging	6			5,820			—			(4,842)		984
Total trading assets	6,615			7,836			—			(4,842)		9,609
Other assets:
Derivative assets designated as hedging:
Interest rate	—			295			—			—		295
Foreign exchange	—			107			—			—		107
Total derivative assets designated as hedging	—			402			—			—		402
Other assets (c)	454			555			—			—		1,009
Total other assets	454			957			—			—		1,411
Assets measured at NAV (c)												166
Total assets	$	30,590		$	75,693		$	—		$	(4,842)	$	101,607
Percentage of total assets prior to netting	29		%	71		%	—		%




Liabilities:
Trading liabilities:
Debt instruments	$	1,465		$	31		$	—		$	—	$	1,496
Equity instruments	18			—			—			—		18
Derivative liabilities not designated as hedging:
Interest rate	3			1,289			—			(519)		773
Foreign exchange	—			4,938			—			(3,893)		1,045
Equity and other contracts	1			102			—			(63)		40
Total derivative liabilities not designated as hedging	4			6,329			—			(4,475)		1,858
Total trading liabilities	1,487			6,360			—			(4,475)		3,372
Other liabilities:
Derivative liabilities designated as hedging:

Foreign exchange	—			41			—			—		41
Total derivative liabilities designated as hedging	—			41			—			—		41
Other liabilities	—			22			—			—		22
Total other liabilities	—			63			—			—		63
Total liabilities	$	1,487		$	6,423		$	—		$	(4,475)	$	3,435
Percentage of total liabilities prior to netting	19		%	81		%	—		%

(a) ASC 815, Derivatives and Hedging, permits the netting of derivative receivables and derivative payables under legally enforceable master netting agreements and permits the netting of cash collateral. Netting is applicable to derivatives not designated as hedging instruments included in trading assets or trading liabilities and derivatives designated as hedging instruments included in other assets or other liabilities. Netting is allocated to the derivative products based on the net fair value of each product.

(b) Includes supranational securities.

BNY 81


Notes to Consolidated Financial Statements (continued)


Assets and liabilities measured at fair value on a recurring basis at Dec. 31, 2023												Total carrying value
(dollars in millions)	Level 1			Level 2			Level 3			Netting (a)
Assets:
Available-for-sale securities:
Non-U.S. government (b)	$	2,439		$	15,943		$	—		$	—	$	18,382
U.S. Treasury	16,604			—			—			—		16,604
Agency RMBS	—			13,111			—			—		13,111
Agency commercial MBS	—			7,729			—			—		7,729
Foreign covered bonds	—			6,334			—			—		6,334
CLOs	—			6,137			—			—		6,137
Non-agency commercial MBS	—			2,935			—			—		2,935
U.S. government agencies	—			2,901			—			—		2,901
Non-agency RMBS	—			1,740			—			—		1,740
Other ABS	—			943			—			—		943
Other debt securities	—			1			—			—		1
Total available-for-sale securities	19,043			57,774			—			—		76,817
Trading assets:
Debt instruments	1,246			2,255			—			—		3,501
Equity instruments	4,518			—			—			—		4,518
Derivative assets not designated as hedging:
Interest rate	7			1,053			—			(751)		309
Foreign exchange	—			9,227			—			(7,498)		1,729
Equity and other contracts	—			8			—			(7)		1
Total derivative assets not designated as hedging	7			10,288			—			(8,256)		2,039
Total trading assets	5,771			12,543			—			(8,256)		10,058
Other assets:
Derivative assets designated as hedging:
Interest rate	—			214			—			—		214
Foreign exchange	—			22			—			—		22
Total derivative assets designated as hedging	—			236			—			—		236
Other assets (c)	486			386			—			—		872
Total other assets	486			622			—			—		1,108
Assets measured at NAV (c)												153
Total assets	$	25,300		$	70,939		$	—		$	(8,256)	$	88,136
Percentage of total assets prior to netting	26		%	74		%	—		%




Liabilities:
Trading liabilities:
Debt instruments	$	2,508		$	12		$	—		$	—	$	2,520
Equity instruments	23			—			—			—		23
Derivative liabilities not designated as hedging:
Interest rate	8			1,339			—			(635)		712
Foreign exchange	—			9,282			—			(6,341)		2,941
Equity and other contracts	9			135			—			(114)		30
Total derivative liabilities not designated as hedging	17			10,756			—			(7,090)		3,683
Total trading liabilities	2,548			10,768			—			(7,090)		6,226
Other liabilities:
Derivative liabilities designated as hedging:

Foreign exchange	—			173			—			—		173
Total derivative liabilities designated as hedging	—			173			—			—		173
Other liabilities	—			22			—			—		22
Total other liabilities	—			195			—			—		195
Total liabilities	$	2,548		$	10,963		$	—		$	(7,090)	$	6,421
Percentage of total liabilities prior to netting	19		%	81		%	—		%

(b) Includes supranational securities.

82 BNY


Notes to Consolidated Financial Statements (continued)


Details of certain available-for-sale securities measured at fair value on a recurring basis	June 30, 2024													Dec. 31, 2023
	Total carrying value (b)			Ratings (a)											Total carrying value (b)			Ratings (a)
			AAA/ AA-	A+/ A-		BBB+/ BBB-		BB+ and lower		Not rated				AAA/ AA-			A+/ A-	BBB+/ BBB-		BB+ and lower		Not rated
(dollars in millions)
Non-agency RMBS, originated in:
2008-2024	$	1,414		100	%	—	%	—	%	—	%	—	%		$	1,487		100	%	—	%	—	%	—	%	—	%



2007 and earlier	233			5		12		—		39		44			253			5		13		1		40		41
Total non-agency RMBS	$	1,647		86	%	2	%	—	%	6	%	6	%		$	1,740		86	%	2	%	—	%	6	%	6	%
Non-agency commercial MBS originated in:
2009-2023	$	2,819		100	%	—	%	—	%	—	%	—	%		$	2,935		100	%	—	%	—	%	—	%	—	%
Foreign covered bonds:
Canada	$	2,346		100	%	—	%	—	%	—	%	—	%		$	2,473		100	%	—	%	—	%	—	%	—	%
UK	1,014			100		—		—		—		—			1,035			100		—		—		—		—
Germany	662			100		—		—		—		—			664			100		—		—		—		—
Australia	636			100		—		—		—		—			689			100		—		—		—		—
Other	2,671			100		—		—		—		—			1,473			100		—		—		—		—
Total foreign covered bonds	$	7,329		100	%	—	%	—	%	—	%	—	%		$	6,334		100	%	—	%	—	%	—	%	—	%
Non-U.S. government:
Germany	$	2,737		100	%	—	%	—	%	—	%	—	%		$	2,658		100	%	—	%	—	%	—	%	—	%
UK	2,353			100		—		—		—		—			1,316			100		—		—		—		—
France	1,697			100		—		—		—		—			1,562			100		—		—		—		—
Canada	1,604			91		9		—		—		—			1,336			95		5		—		—		—
Belgium	891			100		—		—		—		—			511			100		—		—		—		—
Finland	648			100		—		—		—		—			282			100		—		—		—		—
Spain	623			—		8		92		—		—			293			—		17		83		—		—
Netherlands	532			100		—		—		—		—			334			100		—		—		—		—
Singapore	387			100		—		—		—		—			302			100		—		—		—		—
Japan	384			—		100		—		—		—			410			—		100		—		—		—
Norway	351			100		—		—		—		—			374			100		—		—		—		—
Other (c)	1,697			63		17		12		8		—			1,348			70		3		17		10		—
Supranational	11,047			100		—		—		—		—			7,656			100		—		—		—		—
Total non-U.S. government:	$	24,951		93	%	3	%	3	%	1	%	—	%		$	18,382		94	%	3	%	2	%	1	%	—	%

(a) Represents ratings by S&P or the equivalent.

(b) At June 30, 2024 and Dec. 31, 2023, non-U.S. government securities were included in Level 1 and Level 2 in the valuation hierarchy. All other assets in the table are Level 2 assets in the valuation hierarchy.

(c) Includes non-investment grade non-U.S. securities related to Brazil of $136 million at June 30, 2024 and $140 million at Dec. 31, 2023.

Assets and liabilities measured at fair value on a nonrecurring basis

Under certain circumstances, we make adjustments to the fair value of our assets, liabilities and unfunded lending-related commitments, although they are not measured at fair value on an ongoing basis. The following table presents the carrying value as of June 30, 2024 and Dec. 31, 2023 of financial instruments for which nonrecurring adjustments to fair value have been recorded during 2024 and/or 2023 and all non-readily marketable equity securities carried at cost with upward or downward adjustments by balance sheet caption and level in the fair value hierarchy.


Assets measured at fair value on a nonrecurring basis	June 30, 2024								Dec. 31, 2023
							Total carrying value									Total carrying value
(in millions)	Level 1		Level 2		Level 3					Level 1		Level 2		Level 3
Loans (a)	$	—	$	27	$	—	$	27		$	—	$	28	$	—	$	28
Other assets (b)	—		494		—		494			—		481		—		481
Total assets at fair value on a nonrecurring basis	$	—	$	521	$	—	$	521		$	—	$	509	$	—	$	509

(a) The fair value of these loans decreased $1 million in the second quarter of 2024 and was unchanged in the fourth quarter of 2023, based on the fair value of the underlying collateral, as required by guidance in ASC 326, Financial Instruments – Credit Losses, with an offset to the allowance for credit losses.

(b) Includes non-readily marketable equity securities carried at cost with upward or downward adjustments and other assets received in satisfaction of debt.

BNY 83


Notes to Consolidated Financial Statements (continued)

Estimated fair value of financial instruments

The following tables present the estimated fair value and the carrying amount of financial instruments not carried at fair value on the consolidated balance sheet at June 30, 2024 and Dec. 31, 2023, by caption on the consolidated balance sheet and by the valuation hierarchy.


Summary of financial instruments	June 30, 2024
(in millions)	Level 1		Level 2		Level 3		Total estimated fair value		Carrying amount
Assets:
Interest-bearing deposits with the Federal Reserve and other central banks	$	—	$	116,139	$	—	$	116,139	$	116,139
Interest-bearing deposits with banks	—		11,494		—		11,494		11,488
Federal funds sold and securities purchased under resale agreements	—		29,723		—		29,723		29,723
Securities held-to-maturity	8,345		32,942		—		41,287		46,429
Loans (a)	—		68,641		—		68,641		69,757
Other financial assets	5,311		2,307		—		7,618		7,618
Total	$	13,656	$	261,246	$	—	$	274,902	$	281,154
Liabilities:
Noninterest-bearing deposits	$	—	$	58,029	$	—	$	58,029	$	58,029
Interest-bearing deposits	—		241,568		—		241,568		246,282
Federal funds purchased and securities sold under repurchase agreements	—		15,701		—		15,701		15,701
Payables to customers and broker-dealers	—		17,569		—		17,569		17,569
Commercial paper	—		301		—		301		301
Borrowings	—		1,117		—		1,117		1,117
Long-term debt	—		30,037		—		30,037		30,947
Total	$	—	$	364,322	$	—	$	364,322	$	369,946

(a) Does not include the leasing portfolio.


Summary of financial instruments	Dec. 31, 2023
(in millions)	Level 1		Level 2		Level 3		Total estimated fair value		Carrying amount
Assets:
Interest-bearing deposits with the Federal Reserve and other central banks	$	—	$	111,550	$	—	$	111,550	$	111,550
Interest-bearing deposits with banks	—		12,134		—		12,134		12,139
Federal funds sold and securities purchased under resale agreements	—		28,900		—		28,900		28,900
Securities held-to-maturity	9,545		35,166		—		44,711		49,578
Loans (a)	—		65,026		—		65,026		65,977
Other financial assets	4,922		2,149		—		7,071		7,071
Total	$	14,467	$	254,925	$	—	$	269,392	$	275,215
Liabilities:
Noninterest-bearing deposits	$	—	$	58,274	$	—	$	58,274	$	58,274
Interest-bearing deposits	—		221,463		—		221,463		225,395
Federal funds purchased and securities sold under repurchase agreements	—		14,507		—		14,507		14,507
Payables to customers and broker-dealers	—		18,395		—		18,395		18,395
Borrowings	—		1,274		—		1,274		1,274
Long-term debt	—		30,596		—		30,596		31,257
Total	$	—	$	344,509	$	—	$	344,509	$	349,102

(a) Does not include the leasing portfolio.

84 BNY


Notes to Consolidated Financial Statements (continued)

Note 16–Fair value option

We elected fair value as an alternative measurement for selected financial assets and liabilities that are not otherwise required to be measured at fair value, including the assets and liabilities of consolidated investment management funds and subordinated notes associated with certain equity investments.

The following table presents the assets and liabilities of consolidated investment management funds, at fair value.


Assets and liabilities of consolidated investment management funds, at fair value
	June 30, 2024		Dec. 31, 2023
(in millions)
Assets of consolidated investment management funds:
Trading assets	$	652	$	510
Other assets	22		16
Total assets of consolidated investment management funds	$	674	$	526
Liabilities of consolidated investment management funds:

Other liabilities	$	5	$	1
Total liabilities of consolidated investment management funds	$	5	$	1

The assets and liabilities of the consolidated investment management funds are included in other assets and other liabilities, respectively, on the consolidated balance sheet. We value the assets and liabilities of consolidated investment management funds using quoted prices for identical assets or liabilities in active markets or observable inputs such as quoted prices for similar assets or liabilities. Quoted prices for either identical or similar assets or liabilities in inactive markets may also be used. Accordingly, fair value best reflects the interests BNY holds in the economic performance of the consolidated investment management funds. Changes in the fair value of the assets and liabilities are recorded as income (loss) from consolidated investment management funds, which is included in investment and other revenue on the consolidated income statement.

We elected the fair value option on subordinated notes associated with certain equity investments. The fair value of these subordinated notes was $16 million at June 30, 2024 and $4 million at Dec. 31, 2023. The subordinated notes were valued using observable market inputs and included in Level 2 of the valuation hierarchy.

Note 17–Derivative instruments

We use derivatives to manage exposure to market risk, including interest rate risk, equity price risk and foreign currency risk, as well as credit risk. Our trading activities are focused on acting as a market-maker for our customers and facilitating customer trades in compliance with the Volcker Rule.

The notional amounts for derivative financial instruments express the dollar volume of the transactions; however, credit risk is much smaller. We perform credit reviews and enter into netting agreements and collateral arrangements to minimize the credit risk of derivative financial instruments. We enter into offsetting positions to reduce exposure to foreign currency, interest rate and equity price risk.

Use of derivative financial instruments involves reliance on counterparties. Failure of a counterparty to honor its obligation under a derivative contract is a risk we assume whenever we engage in a derivative contract. There were no counterparty default losses recorded in the second quarter of 2024.

Hedging derivatives

We utilize interest rate swap agreements to manage our exposure to interest rate fluctuations. We enter into fair value hedges as an interest rate risk management strategy to reduce fair value variability by converting certain fixed rate interest payments associated with available-for-sale securities, loans and long-term debt to floating interest rates. We also utilize interest rate swaps and forward exchange contracts as cash flow hedges to manage our exposure to interest rate and foreign exchange rate changes.

The available-for-sale securities hedged consist of U.S. Treasury, agency and non-agency commercial MBS, non-U.S. government and foreign covered bonds. At June 30, 2024, $34.3 billion par value of available-for-sale securities was hedged with interest rate swaps designated as fair value hedges that had notional values of $34.3 billion.

At June 30, 2024, $1.4 billion of interest rate swaps was designated as portfolio layer method fair value hedges of loans against a closed portfolio of fixed rate loans of $3.3 billion, essentially converting $1.4 billion of such fixed rate loans to a floating rate.

BNY 85


Notes to Consolidated Financial Statements (continued)

The fixed rate long-term debt instruments hedged generally have original maturities of five to 30 years. In fair value hedging relationships, fixed rate debt is hedged with “receive fixed rate, pay variable rate” swaps. At June 30, 2024, $22.9 billion par value of debt was hedged with interest rate swaps designated as fair value hedges that had notional values of $22.9 billion.

In addition, we utilize forward foreign exchange contracts as hedges to mitigate foreign exchange exposures. We use forward foreign exchange contracts as cash flow hedges to convert certain forecasted non-U.S. dollar revenue and expenses into U.S. dollars. We use forward foreign exchange contracts with maturities of 15 months or less as cash flow hedges to hedge our foreign exchange exposure to currencies such as the Indian rupee, Polish zloty, Hong Kong dollar, Singapore dollar, British pound and euro used in revenue and expense transactions for entities that have the U.S. dollar as their functional currency. As of June 30, 2024, the hedged forecasted foreign currency transactions and designated forward foreign exchange contract hedges were $741 million (notional), with a net pre-tax gain of $6 million recorded in accumulated other comprehensive income (“OCI”). Over the next 12 months, a gain of $6 million will be reclassified into earnings.

From time to time, we have utilized forward foreign exchange contracts as fair value hedges of the foreign exchange risk associated with available-for-sale securities. Forward points are designated as an excluded component and amortized into earnings over the hedge period. At June 30, 2024, there were no remaining foreign exchange contracts.

Forward foreign exchange contracts are also used to hedge the value of our net investments in foreign subsidiaries. These forward foreign exchange contracts have maturities of less than one year. The derivatives employed are designated as hedges of changes in value of our foreign investments due to exchange rates. The change in fair market value of these forward foreign exchange contracts is reported within foreign currency translation adjustments in shareholders’ equity, net of tax. At June 30, 2024, forward foreign exchange contracts with notional amounts totaling $10.5 billion were designated as net investment hedges.

From time to time, we also designate non-derivative financial instruments as hedges of our net investments in foreign subsidiaries. At June 30, 2024, there were no non-derivative financial instruments hedging our net investments in foreign subsidiaries.

The following table presents the pre-tax gains (losses) related to our fair value and cash flow hedging activities recognized in the consolidated income statement.


Income statement impact of fair value and cash flow hedges
(in millions)	Location of gains (losses)	2Q24		1Q24		2Q23		YTD24		YTD23
Interest rate fair value hedges of available-for-sale securities
Derivative	Interest income	$	79	$	449	$	388	$	528	$	(47)
Hedged item	Interest income	(77)		(449)		(389)		(526)		45
Interest rate fair value hedges of long-term debt
Derivative	Interest expense	13		(221)		(277)		(208)		2
Hedged item	Interest expense	(13)		221		278		208		(1)
Interest rate fair value hedges of loans
Derivative	Interest expense	(14)		(1)		—		(15)		—
Hedged item	Interest expense	14		1		—		15		—





Cash flow hedges of forecasted FX exposures


Gain (loss) reclassified from OCI into income	Staff expense	2		2		—		4		(3)
(Loss) reclassified from OCI into income	Investment and other revenue	—		—		(1)		—		(1)
Gain (loss) recognized in the consolidated income statement due to fair value and cash flow hedging relationships		$	4	$	2	$	(1)	$	6	$	(5)

86 BNY


Notes to Consolidated Financial Statements (continued)

The following table presents the impact of hedging derivatives used in net investment hedging relationships.


Impact of derivative instruments used in net investment hedging relationships
(in millions)
Derivatives in net investment hedging relationships	Gain or (loss) recognized in accumulated OCI on derivatives										Location of gain or (loss) reclassified from accumulated OCI into income	Gain or (loss) reclassified from accumulated OCI into income
Derivatives in net investment hedging relationships	2Q24		1Q24		2Q23		YTD24		YTD23			2Q24		1Q24		2Q23		YTD24		YTD23
FX contracts	$	87	$	198	$	(152)	$	285	$	(263)	Net interest income	$	—	$	—	$	—	$	—	$	—

The following table presents information on the hedged items in fair value hedging relationships.


Hedged items in fair value hedging relationships	Carrying amount of hedged asset or liability				Hedge accounting basis adjustment increase (decrease) (a)
	Carrying amount of hedged asset or liability				Hedge accounting basis adjustment increase (decrease) (a)

(in millions)	June 30, 2024		Dec. 31, 2023		June 30, 2024		Dec. 31, 2023
Available-for-sale securities (b)(c)	$	33,988	$	29,941	$	(2,163)	$	(1,767)
Loans (d)	$	1,407	$	—	$	15	$	—
Long-term debt	$	21,807	$	21,854	$	(1,043)	$	(846)

(a) Includes $371 million and $434 million of basis adjustment decreases on discontinued hedges associated with available-for-sale securities at June 30, 2024 and Dec. 31, 2023, respectively, and $15 million and $26 million of basis adjustment decreases on discontinued hedges associated with long-term debt at June 30, 2024 and Dec. 31, 2023, respectively.

(b) Carrying amount represents the amortized cost.

(c) At June 30, 2024, the amortized cost of the available-for-sale securities included in closed portfolios subject to portfolio layer method hedging was $5.9 billion, of which $2.5 billion was designated as hedged. The cumulative basis adjustments for active hedging relationships associated with such hedges as of June 30, 2024 was a decrease of $21 million.

(d) At June 30, 2024, loans included in closed portfolios subject to portfolio layer method hedging was $3.3 billion, of which $1.4 billion was designated as hedged. The cumulative basis adjustment for active hedging relationships associated with such hedges as of June 30, 2024 was an increase of $15 million.

The following table summarizes the notional amount and carrying values of our total derivative portfolio.


Impact of derivative instruments on the balance sheet	Notional value				Asset derivatives fair value				Liability derivatives fair value
	June 30, 2024		Dec. 31, 2023		June 30, 2024		Dec. 31, 2023		June 30, 2024		Dec. 31, 2023
(in millions)
Derivatives designated as hedging instruments: (a)(b)
Interest rate contracts	$	58,561	$	52,808	$	295	$	214	$	—	$	—
Foreign exchange contracts	11,254		11,099		107		22		41		173
Total derivatives designated as hedging instruments					$	402	$	236	$	41	$	173
Derivatives not designated as hedging instruments: (b)(c)
Interest rate contracts	$	156,069	$	155,535	$	876	$	1,060	$	1,292	$	1,347
Foreign exchange contracts	994,914		944,241		4,935		9,227		4,938		9,282
Equity contracts	4,584		3,886		15		8		99		138
Credit contracts	255		220		—		—		4		6
Total derivatives not designated as hedging instruments					$	5,826	$	10,295	$	6,333	$	10,773
Total derivatives fair value (d)					$	6,228	$	10,531	$	6,374	$	10,946
Effect of master netting agreements (e)					(4,842)		(8,256)		(4,475)		(7,090)
Fair value after effect of master netting agreements					$	1,386	$	2,275	$	1,899	$	3,856

(a) The fair value of asset derivatives and liability derivatives designated as hedging instruments is recorded as other assets and other liabilities, respectively, on the consolidated balance sheet.

(b) For derivative transactions settled at clearing organizations, cash collateral exchanged is deemed a settlement of the derivative each day. The settlement reduces the gross fair value of derivative assets and liabilities and results in a corresponding decrease in the effect of master netting agreements, with no impact to the consolidated balance sheet.

(c) The fair value of asset derivatives and liability derivatives not designated as hedging instruments is recorded as trading assets and trading liabilities, respectively, on the consolidated balance sheet.

(d) Fair values are on a gross basis, before consideration of master netting agreements, as required by ASC 815, Derivatives and Hedging.

(e) Effect of master netting agreements includes cash collateral received and paid of $1,253 million and $886 million, respectively, at June 30, 2024, and $2,353 million and $1,187 million, respectively, at Dec. 31, 2023.

BNY 87


Notes to Consolidated Financial Statements (continued)

Trading activities (including trading derivatives)

Our trading activities are focused on acting as a market-maker for our customers, facilitating customer trades and risk-mitigating economic hedging in compliance with the Volcker Rule. The change in the fair value of the derivatives utilized in our trading activities is recorded in foreign exchange revenue and investment and other revenue on the consolidated income statement.

The following table presents our foreign exchange revenue and other trading revenue.


Foreign exchange revenue and other trading revenue
(in millions)	2Q24		1Q24		2Q23		YTD24		YTD23
Foreign exchange revenue	$	184	$	152	$	158	$	336	$	334
Other trading revenue	77		69		53		146		98

Foreign exchange revenue includes income from purchasing and selling foreign currencies, currency forwards, futures and options as well as foreign currency remeasurement. Other trading revenue reflects results from trading in cash instruments, including fixed income and equity securities, and trading and economic hedging activity with non-foreign exchange derivatives.

We also use derivative financial instruments as risk-mitigating economic hedges, which are not formally designated as accounting hedges. This includes hedging the foreign currency, interest rate or market risks inherent in some of our balance sheet exposures, such as seed capital investments and deposits, as well as certain investment management fee revenue streams. We also use total return swaps to economically hedge obligations arising from the Company’s deferred compensation plan whereby the participants defer compensation and earn a return linked to the performance of investments they select. The gains or losses on these total return swaps are recorded in staff expense on the consolidated income statement. There was no impact in the second quarter of 2024. We recorded a gain of $8 million in the second quarter of 2023, $11 million in the first quarter of 2024, $11 million in the first six months of 2024 and $15 million in the first six months of 2023.

We manage trading risk through a system of position limits, a value-at-risk (“VaR”) methodology based on historical simulation and other market sensitivity measures. Risk is monitored and reported to senior

management by a separate unit, independent from trading, on a daily basis. Based on certain assumptions, the VaR methodology is designed to capture the potential overnight pre-tax dollar loss from adverse changes in fair values of all trading positions. The calculation assumes a one-day holding period, utilizes a 99% confidence level and incorporates non-linear product characteristics. The VaR model is one of several statistical models used to develop economic capital results, which are allocated to lines of business for computing risk-adjusted performance.

VaR methodology does not evaluate risk attributable to extraordinary financial, economic or other occurrences. As a result, the risk assessment process includes a number of stress scenarios based upon the risk factors in the portfolio and management’s assessment of market conditions. Additional stress scenarios based upon historical market events are also performed. Stress tests may incorporate the impact of reduced market liquidity and the breakdown of historically observed correlations and extreme scenarios. VaR and other statistical measures, stress testing and sensitivity analysis are incorporated into other risk management materials.

Counterparty credit risk and collateral

We assess the credit risk of our counterparties through regular examination of their financial statements, confidential communication with the management of those counterparties and regular monitoring of publicly available credit rating information. This and other information is used to develop proprietary credit rating metrics used to assess credit quality.

Collateral requirements are determined after a comprehensive review of the credit quality of each counterparty. Collateral is generally held or pledged in the form of cash and/or highly liquid government securities. Collateral requirements are monitored and adjusted daily.

Additional disclosures concerning derivative financial instruments are provided in Note 15.

Disclosure of contingent features in over-the-counter (“OTC”) derivative instruments

Certain OTC derivative contracts and/or collateral agreements contain credit risk-contingent features triggered upon a rating downgrade in which the

88 BNY


Notes to Consolidated Financial Statements (continued)

counterparty has the right to request additional collateral or the right to terminate the contracts in a net liability position.

The following table shows the aggregate fair value of OTC derivative contracts in net liability positions that contained credit risk-contingent features and the value of collateral that has been posted.


	June 30, 2024		Dec. 31, 2023
(in millions)
Aggregate fair value of OTC derivatives in net liability positions (a)	$	1,100	$	1,003
Collateral posted	$	1,190	$	1,001

(a) Before consideration of cash collateral.

The aggregate fair value of OTC derivative contracts containing credit risk-contingent features can fluctuate from quarter to quarter due to changes in market conditions, composition of counterparty trades, new business or changes to the contingent features.

The Bank of New York Mellon, our largest banking subsidiary, enters into the substantial majority of our OTC derivative contracts and/or collateral agreements. As such, the contingent features may be

triggered if The Bank of New York Mellon’s long-term issuer rating were downgraded.

The following table shows the fair value of contracts falling under early termination provisions that were in net liability positions for three key ratings triggers.


Potential close-out exposures (fair value) (a)
	June 30, 2024		Dec. 31, 2023
(in millions)
If The Bank of New York Mellon’s rating changed to: (b)
A3/A-	$	28	$	115
Baa2/BBB	$	341	$	792
Ba1/BB+	$	1,179	$	1,920

(a) The amounts represent potential total close-out values if The Bank of New York Mellon’s long-term issuer rating were to immediately drop to the indicated levels, and do not reflect collateral posted.

(b) Represents ratings by Moody’s/S&P.

If The Bank of New York Mellon’s debt rating had fallen below investment grade on June 30, 2024 and Dec. 31, 2023, existing collateral arrangements would have required us to post additional collateral of $281 million and $235 million, respectively.

Offsetting assets and liabilities

The following tables present derivative and financial instruments and their related offsets. There were no derivative instruments or financial instruments subject to a legally enforceable netting agreement for which we are not currently netting.


Offsetting of derivative assets and financial assets at June 30, 2024
	Gross assets recognized		Gross amounts offset in the balance sheet			Net assets recognized in the balance sheet		Gross amounts not offset in the balance sheet
(in millions)					(a)			Financial instruments		Cash collateral received		Net amount
Derivatives subject to netting arrangements:
Interest rate contracts	$	1,013	$	861		$	152	$	36	$	—	$	116
Foreign exchange contracts	4,812		3,966			846		83		—		763
Equity and other contracts	15		15			—		—		—		—
Total derivatives subject to netting arrangements	5,840		4,842			998		119		—		879
Total derivatives not subject to netting arrangements	388		—			388		—		—		388
Total derivatives	6,228		4,842			1,386		119		—		1,267
Reverse repurchase agreements	183,313		167,863		(b)	15,450		15,414		—		36
Securities borrowing	14,273		—			14,273		13,488		—		785
Total	$	203,814	$	172,705		$	31,109	$	29,021	$	—	$	2,088

(a) Includes the effect of netting agreements and net cash collateral received. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions.

(b) Offsetting of reverse repurchase agreements relates to our involvement in the Fixed Income Clearing Corporation (“FICC”), where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system.

BNY 89


Notes to Consolidated Financial Statements (continued)


Offsetting of derivative assets and financial assets at Dec. 31, 2023
	Gross assets recognized		Gross amounts offset in the balance sheet			Net assets recognized in the balance sheet		Gross amounts not offset in the balance sheet
(in millions)					(a)			Financial instruments		Cash collateral received		Net amount
Derivatives subject to netting arrangements:
Interest rate contracts	$	979	$	751		$	228	$	60	$	—	$	168
Foreign exchange contracts	8,552		7,498			1,054		320		—		734
Equity and other contracts	7		7			—		—		—		—
Total derivatives subject to netting arrangements	9,538		8,256			1,282		380		—		902
Total derivatives not subject to netting arrangements	993		—			993		—		—		993
Total derivatives	10,531		8,256			2,275		380		—		1,895
Reverse repurchase agreements	169,092		150,667		(b)	18,425		18,422		—		3
Securities borrowing	10,475		—			10,475		10,011		—		464
Total	$	190,098	$	158,923		$	31,175	$	28,813	$	—	$	2,362

(a) Includes the effect of netting agreements and net cash collateral received. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions.

(b) Offsetting of reverse repurchase agreements relates to our involvement in the FICC, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system.


Offsetting of derivative liabilities and financial liabilities at June 30, 2024						Net liabilities recognized in the balance sheet
	Gross liabilities recognized		Gross amounts offset in the balance sheet					Gross amounts not offset in the balance sheet
(in millions)					(a)			Financial instruments		Cash collateral pledged		Net amount
Derivatives subject to netting arrangements:
Interest rate contracts	$	993	$	519		$	474	$	50	$	—	$	424
Foreign exchange contracts	4,578		3,893			685		211		—		474
Equity and other contracts	98		63			35		24		—		11
Total derivatives subject to netting arrangements	5,669		4,475			1,194		285		—		909
Total derivatives not subject to netting arrangements	705		—			705		—		—		705
Total derivatives	6,374		4,475			1,899		285		—		1,614
Repurchase agreements	180,502		167,863		(b)	12,639		12,622		16		1
Securities lending	3,062		—			3,062		2,941		—		121
Total	$	189,938	$	172,338		$	17,600	$	15,848	$	16	$	1,736

(a) Includes the effect of netting agreements and net cash collateral paid. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions.

(b) Offsetting of repurchase agreements relates to our involvement in the FICC, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system.

90 BNY


Notes to Consolidated Financial Statements (continued)


Offsetting of derivative liabilities and financial liabilities at Dec. 31, 2023						Net liabilities recognized in the balance sheet
	Gross liabilities recognized		Gross amounts offset in the balance sheet					Gross amounts not offset in the balance sheet
(in millions)					(a)			Financial instruments		Cash collateral pledged		Net amount
Derivatives subject to netting arrangements:
Interest rate contracts	$	1,118	$	635		$	483	$	78	$	—	$	405
Foreign exchange contracts	8,454		6,341			2,113		93		—		2,020
Equity and other contracts	128		114			14		—		—		14
Total derivatives subject to netting arrangements	9,700		7,090			2,610		171		—		2,439
Total derivatives not subject to netting arrangements	1,246		—			1,246		—		—		1,246
Total derivatives	10,946		7,090			3,856		171		—		3,685
Repurchase agreements	162,661		150,667		(b)	11,994		11,966		28		—
Securities lending	2,513		—			2,513		2,404		—		109
Total	$	176,120	$	157,757		$	18,363	$	14,541	$	28	$	3,794

(a) Includes the effect of netting agreements and net cash collateral paid. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions.

(b) Offsetting of repurchase agreements relates to our involvement in the FICC, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system.

Secured borrowings

The following table presents the contract value of repurchase agreements and securities lending transactions accounted for as secured borrowings by the type of collateral provided to counterparties.


Repurchase agreements and securities lending transactions accounted for as secured borrowings
	June 30, 2024										Dec. 31, 2023
	Remaining contractual maturity								Total		Remaining contractual maturity								Total
(in millions)	Overnight and continuous		Up to 30 days		30-90 days		Over 90 days				Overnight and continuous		Up to 30 days		30-90 days		Over 90 days
Repurchase agreements:
U.S. Treasury	$	139,392	$	—	$	1,392	$	461	$	141,245	$	128,304	$	15	$	1,409	$	510	$	130,238
Agency RMBS	30,489		20		1,007		375		31,891		25,815		—		896		120		26,831
Sovereign debt/sovereign guaranteed	943		1,369		—		—		2,312		1,049		—		—		—		1,049
Corporate bonds	88		158		1,325		698		2,269		103		72		1,315		590		2,080
State and political subdivisions	52		20		521		256		849		37		38		449		257		781
U.S. government agencies	94		—		75		75		244		44		—		61		32		137
Other debt securities	422		154		61		1		638		4		180		73		24		281
Equity securities	—		6		594		454		1,054		—		10		1,172		82		1,264
Total	$	171,480	$	1,727	$	4,975	$	2,320	$	180,502	$	155,356	$	315	$	5,375	$	1,615	$	162,661
Securities lending:
Agency RMBS	$	121	$	—	$	—	$	—	$	121	$	111	$	—	$	—	$	—	$	111
Other debt securities	66		—		—		—		66		25		—		—		—		25
Equity securities	2,875		—		—		—		2,875		2,377		—		—		—		2,377
Total	$	3,062	$	—	$	—	$	—	$	3,062	$	2,513	$	—	$	—	$	—	$	2,513
Total secured borrowings	$	174,542	$	1,727	$	4,975	$	2,320	$	183,564	$	157,869	$	315	$	5,375	$	1,615	$	165,174

BNY’s repurchase agreements and securities lending transactions primarily encounter risk associated with liquidity. We are required to pledge collateral based on predetermined terms within the agreements. If we were to experience a decline in the fair value of the collateral pledged for these transactions, we could be required to provide

additional collateral to the counterparty, therefore decreasing the amount of assets available for other liquidity needs that may arise. BNY also offers tri-party collateral agency services in the tri-party repo market where we are exposed to credit risk. In order to mitigate this risk, we require dealers to fully secure intraday credit.

BNY 91


Notes to Consolidated Financial Statements (continued)

Note 18–Commitments and contingent liabilities

Off-balance sheet arrangements

In the normal course of business, various commitments and contingent liabilities are outstanding that are not reflected in the accompanying consolidated balance sheets.

Our significant trading and off-balance sheet risks are securities, foreign currency and interest rate risk management products, commercial lending commitments, letters of credit and securities lending indemnifications. We assume these risks to reduce interest rate and foreign currency risks, to provide customers with the ability to meet credit and liquidity needs and to hedge foreign currency and interest rate risks. These items involve, to varying degrees, credit, foreign currency and interest rate risks not recognized on the balance sheet. Our off-balance sheet risks are managed and monitored in manners similar to those used for on-balance sheet risks.

The following table presents a summary of our off-balance sheet credit risks.


Off-balance sheet credit risks	June 30, 2024		Dec. 31, 2023
(in millions)
Lending commitments	$	50,158	$	46,518
Standby letters of credit (“SBLC”) (a)	1,731		1,816
Commercial letters of credit	41		41
Securities lending indemnifications (b)(c)	539,559		492,739

(a)Net of participations totaling $195 million at June 30, 2024 and $163 million at Dec. 31, 2023.

(b)Excludes the indemnification for securities for which BNY acts as an agent on behalf of CIBC Mellon clients, which totaled $66 billion at June 30, 2024 and $59 billion at Dec. 31, 2023.

(c)Includes cash collateral, invested in indemnified repurchase agreements, held by us as securities lending agent of $61 billion at June 30, 2024 and $45 billion at Dec. 31, 2023.

The total potential loss on undrawn lending commitments, standby and commercial letters of credit and securities lending indemnifications is equal to the total notional amount if drawn upon, which does not consider the value of any collateral.

Since many of the lending commitments are expected to expire without being drawn upon, the total amount does not necessarily represent future cash requirements. A summary of lending commitment

maturities is as follows: $31.2 billion in less than one year, $18.5 billion in one to five years and $380 million over five years.

SBLCs principally support obligations of corporate clients and were collateralized with cash and securities of $179 million at June 30, 2024 and $158 million at Dec. 31, 2023. At June 30, 2024, $1.3 billion of the SBLCs will expire within one year and $455 million in one to five years. No SBLCs expire in over five years.

We must recognize, at the inception of an SBLC and foreign and other guarantees, a liability for the fair value of the obligation undertaken in issuing the guarantee. The fair value of the liability, which was recorded with a corresponding asset in other assets, was estimated as the present value of contractual customer fees. The estimated liability for losses related to SBLCs and foreign and other guarantees, if any, is included in the allowance for lending-related commitments.

Payment/performance risk of SBLCs is monitored using both historical performance and internal ratings criteria. BNY’s historical experience is that SBLCs typically expire without being funded. SBLCs below investment grade are monitored closely for payment/performance risk. The table below shows SBLCs by investment grade:


Standby letters of credit	June 30, 2024		Dec. 31, 2023

Investment grade	68	%	74	%
Non-investment grade	32	%	26	%

A commercial letter of credit is normally a short-term instrument used to finance a commercial contract for the shipment of goods from a seller to a buyer. Although the commercial letter of credit is contingent upon the satisfaction of specified conditions, it represents a credit exposure if the buyer defaults on the underlying transaction. As a result, the total contractual amounts do not necessarily represent future cash requirements. Commercial letters of credit totaled $41 million at June 30, 2024 and $41 million at Dec. 31, 2023.

We expect many of the lending commitments and letters of credit to expire without the need to advance any cash. The revenue associated with guarantees frequently depends on the credit rating of the obligor and the structure of the transaction, including

92 BNY


Notes to Consolidated Financial Statements (continued)

collateral, if any. The allowance for lending-related commitments was $73 million at June 30, 2024 and $87 million at Dec. 31, 2023.

A securities lending transaction is a fully collateralized transaction in which the owner of a security agrees to lend the security (typically through an agent, in our case, The Bank of New York Mellon) to a borrower, usually a broker-dealer or bank, on an open, overnight or term basis, under the terms of a prearranged contract.

We typically lend securities with indemnification against borrower default. We generally require the borrower to provide collateral with a minimum value of 102% of the fair value of the securities borrowed, which is monitored on a daily basis, thus reducing credit risk. Market risk can also arise in securities lending transactions. These risks are controlled through policies limiting the level of risk that can be undertaken. Securities lending transactions are generally entered into only with highly rated counterparties. Securities lending indemnifications were secured by collateral of $566 billion at June 30, 2024 and $518 billion at Dec. 31, 2023.

CIBC Mellon, a joint venture between BNY and the Canadian Imperial Bank of Commerce (“CIBC”), engages in securities lending activities. CIBC Mellon, BNY and CIBC jointly and severally indemnify securities lenders against specific types of borrower default. At June 30, 2024 and Dec. 31, 2023, $66 billion and $59 billion, respectively, of borrowings at CIBC Mellon, for which BNY acts as agent on behalf of CIBC Mellon clients, were secured by collateral of $70 billion and $62 billion, respectively. If, upon a default, a borrower’s collateral was not sufficient to cover its related obligations, certain losses related to the indemnification could be covered by the indemnitors.

Unsettled repurchase and reverse repurchase agreements

In the normal course of business, we enter into repurchase agreements and reverse repurchase agreements that settle at a future date. In repurchase agreements, BNY receives cash from and provides securities as collateral to a counterparty at settlement. In reverse repurchase agreements, BNY advances cash to and receives securities as collateral from the counterparty at settlement. These transactions are recorded on the consolidated balance sheet on the

settlement date. At June 30, 2024, we had no unsettled repurchase agreements and $78.9 billion of unsettled reverse repurchase agreements. At Dec. 31, 2023, we had no unsettled repurchase agreements and $77.9 billion of unsettled reverse repurchase agreements.

Industry concentrations

We have significant industry concentrations related to credit exposure at June 30, 2024. The tables below present our credit exposure in the financial institutions and commercial portfolios.


Financial institutions portfolio exposure (in billions)	June 30, 2024
	Loans		Unfunded commitments		Total exposure
Securities industry	$	2.4	$	17.8	$	20.2
Asset managers	1.6		8.2		9.8
Banks	7.9		1.4		9.3
Insurance	0.1		4.1		4.2
Government	—		0.3		0.3
Other	0.2		0.6		0.8
Total	$	12.2	$	32.4	$	44.6


Commercial portfolio exposure (in billions)	June 30, 2024
	Loans		Unfunded commitments		Total exposure
Services and other	$	1.4	$	3.6	$	5.0
Manufacturing	0.6		3.7		4.3
Energy and utilities	0.2		4.0		4.2
Media and telecom	—		0.7		0.7
Total	$	2.2	$	12.0	$	14.2

Major concentrations in securities lending are primarily to broker-dealers and are generally collateralized with cash and/or securities.

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	8th grade Avg

The Bank of New York Mellon Corporation (BK) 10-Q2024 Q2 Quarterly report

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