Bank of New York Mellon Corp - FORM 8-K - EX-99.2 - 2Q 2011 FINANCIAL TRENDS

Attached files

file	filename
8-K - FORM 8-K - Bank of New York Mellon Corp	d8k.htm
EX-99.1 - QUARTERLY EARNINGS REVIEW FOR SECOND QUARTER 2011 - Bank of New York Mellon Corp	dex991.htm

Exhibit 99.2

THE BANK OF NEW YORK MELLON CORPORATION

Financial Trends

Notes:

The following transactions/changes have impacted the reporting of our results:

In the first quarter of 2011, we realigned our internal reporting structure and business presentation to focus on two principal businesses, Investment Management and Investment Services. Investment Management includes the former Asset Management and Wealth Management businesses. Investment Services includes the former Asset Servicing, Issuer Services and Clearing Services businesses as well as the Cash Management business previously included in the Treasury Services business. The credit-related activities previously included in Treasury Services business, are now included in the Other segment. Accordingly, the income statement has been changed to reflect this realignment. Investment management and performance fees consist of the former asset and wealth management fee revenue and Investment services fees consist of the former securities servicing fees, including asset servicing, issuer services, clearing services, as well as treasury services fee revenue. All prior periods have been reclassified. The reclassifications did not affect the results of operations.

In the first quarter of 2011, we revised the net interest revenue for our businesses to reflect a new approach to transfer pricing domestic deposits. All prior period business results have been restated to reflect this revision. The revision did not impact consolidated results.

On July 1, 2010 and August 2, 2010 we completed the acquisitions of Global Investment Servicing (“GIS”) and BHF Asset Servicing GmbH (“BAS”). The financial results for GIS are included in the Investment Services and Other businesses. The financial results for BAS are included in the Investment Services business.

On Jan. 1, 2010, we adopted SFAS No. 167, “Amendments to FASB Interpretation No. 46 (R).” Certain asset management funds and seed capital investments are now disclosed separately on our balance sheet and securitizations are included in available for sale securities. The income statement separately discloses the operations of consolidated asset management funds and the net income attributable to noncontrolling interests of consolidated asset management funds; previously these were disclosed as asset and wealth management revenue and investment and other income.

On November 2, 2009, we completed the acquisition of Insight Asset Management (“Insight”) based in London. The financial results for Insight are included in the Investment Management business.

On January 1, 2009, we adopted FAS 160, which resulted in a reclassification of minority interest to equity from other liabilities on the balance sheet and to noncontrolling interest from other expense on the income statement.

The following items have impacted the comparability of our results:

Results for the first quarter of 2010 include a charge related to special litigation reserves.

Investment Securities Portfolio restructuring/Investment Write-downs – Impacted total revenue levels in the full year of 2008 and full year of 2009.

The TARP preferred dividends and related redemption premium impacted the fourth quarter of 2008 and the first and second quarters of 2009.

The FDIC Special Assessment of all depository institutions impacted the second quarter of 2009.

Global efficiency restructuring charges – Recorded charges in the fourth quarters of 2008 and 2009 and third quarter of 2010.

All of these items are detailed in the trends that follow.

Summations may not equal due to rounding. As a result of this rounding convention, immaterial differences may exist between the business trends data versus business data on the Form 10-K for the year ended December 31, 2010.

Certain reclassifications have been made to prior periods to place them on a basis comparable with the current periods presentation.

Discontinued Operations Accounting:

The income/(loss) and average assets from discontinued operations accounting have not been allocated to any business.

Average Assets:

In businesses where average deposits are greater than average loans, average assets include an allocation of investment securities equal to the difference. Consolidated average assets include average assets of discontinued operations.

Return on Common and Tangible Common Equity/Pretax Operating Margin:

Ratios are presented for continuing operations basis only. Quarterly return on common and tangible common equity ratios are annualized.

Non-GAAP Measures:

Certain Non-GAAP measures are included in the following schedules. These measures are used by management to monitor financial performance, both on a company-wide and on a business basis. These Non-GAAP measures impact certain revenue/expense categories, percentages and ratios by the exclusion and/or adjustment of items listed above and described in footnotes. For further information, see ‘Non-GAAP Financial Measures’ and ‘Supplemental Information – Explanation of Non-GAAP Financial Measures’ in The Bank of New York Mellon Corporation Quarterly Earnings Review dated July 19, 2011, furnished as an exhibit to the Report on Form 8-K to which these Financial Trends are furnished as an exhibit.

Page 1 of 14

THE BANK OF NEW YORK MELLON CORPORATION

CONTINUING OPERATIONS - 10 Quarter Trend


	2009												2010												2011
(dollar amounts in millions unless otherwise noted)	1st Qtr			2nd Qtr (a)			3rd Qtr (b)			4th Qtr			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr
Revenue:
Investment services fees
Asset servicing	$	609		$	671		$	643		$	650		$	637		$	668		$	870		$	914		$	923		$	980
Issuer services		364			372			359			368			333			354			364			409			351			365
Clearing services		253			250			236			223			230			245			252			278			292			292
Treasury services		125			132			128			134			131			125			132			129			128			127

Total investment services fees		1,351			1,425			1,366			1,375			1,331			1,392			1,618			1,730			1,694			1,764
Investment management and performance fees		622			645			664			746			686			686			696			800			764			779
Foreign exchange & other trading revenue		307			237			246			246			262			220			146			258			198			222
Distribution and servicing		101			95			73			57			48			51			56			55			53			49
Financing-related fees		48			54			56			57			50			48			49			48			43			49
Investment and other income		(2	)		53			205			81			145			145			97			80			81			145

Total fee revenue		2,427			2,509			2,610			2,562			2,522			2,542			2,662			2,971			2,833			3,008
Net Securities gains (losses)		(295	)		(256	)		(4,833	)		15			7			13			6			1			5			48

Total fee and other revenue		2,132			2,253			(2,223	)		2,577			2,529			2,555			2,668			2,972			2,838			3,056
Income of consolidated investment management funds		—			—			—			—			65			65			37			59			110			63
Net interest revenue		775			700			716			724			765			722			718			720			698			731

Total revenue		2,907			2,953			(1,507	)		3,301			3,359			3,342			3,423			3,751			3,646			3,850
Provision for credit losses		59			61			147			65			35			20			(22	)		(22	)		—			—
Noninterest expenses		2,091			2,145			2,158			2,266			2,146			2,219			2,429			2,624			2,578			2,690
Special Litigation Reserves		N/A			N/A			N/A			N/A			164			N/A			N/A			N/A			N/A			N/A
FDIC special assessment		—			61			—			—			—			—			—			—			—			—
Amortization of intangible assets		107			108			104			107			97			98			111			115			108			108
Restructuring charges		10			6			(5	)		139			7			(15	)		15			21			(6	)		(7	)
Merger & integration expense		68			59			54			52			26			14			56			43			17			25

Total noninterest expense		2,276			2,379			2,311			2,564			2,440			2,316			2,611			2,803			2,697			2,816
Income/ (loss) from continuing operations before taxes		572			513			(3,965	)		672			884			1,006			834			970			949			1,034
Income taxes		161			12			(1,527	)		(41	)		258			304			220			265			279			277

Income/ (loss) from continuing operations		411			501			(2,438	)		713			626			702			614			705			670			757
Income/ (loss) from discontinued operations, net of tax		(41	)		(91	)		(19	)		(119	)		(42	)		(10	)		(3	)		(11	)		—			—
Net income attributable to noncontrolling interest		(1	)		2			(1	)		(1	)		(25	) (f)		(34	) (f)		11	(f)		(15	) (f)		(45	) (f)		(22	) (f)
Redemption charge and preferred dividends		(47	)		(236	)		—			—			—			—			—			—			—			—

Net income/ (loss) applicable to shareholders of The Bank of New York Mellon Corporation	$	322		$	176		$	(2,458	)	$	593		$	559		$	658		$	622		$	679		$	625		$	735

EPS from continuing operations	$	0.31		$	0.23		$	(2.04	)	$	0.59		$	0.49		$	0.55		$	0.51		$	0.55		$	0.50		$	0.59
EPS from continuing operations - Non-GAAP (c)	$	0.56		$	0.51		$	0.54		$	0.55		$	0.59		$	0.55		$	0.55		$	0.59		$	0.50		$	0.60
Market value of assets under management at period-end (in billions)	$	881		$	926		$	966		$	1,115		$	1,105		$	1,047		$	1,141		$	1,172		$	1,229		$	1,274
Market value of assets under custody and administration at period-end (in trillions)	$	19.5		$	20.7		$	22.1		$	22.3		$	22.4		$	21.8		$	24.4		$	25.0		$	25.5		$	26.3
Market value of securities on loan at period-end (in billions)	$	293		$	290		$	299		$	247		$	253		$	248		$	279		$	278		$	278		$	273
Pre-tax operating margin
GAAP-before extraordinary (loss)		20	%		17	%		N/M			20	%		26	%		30	%		24	%		26	%		26	%		27	%
Non-GAAP adjusted (d)		33	%		31	%		31	%		29	%		34	%		32	%		30	%		30	%		28	%		29	%
Return on tangible common equity (annualized):
Non-GAAP-before extraordinary (loss)		28.8	%		18.4	%		N/M			33.0	%		25.8	%		25.7	%		26.3	%		27.5	%		24.3	%		26.3	%
Return on common equity (annualized)
GAAP-before extraordinary (loss)		5.8	%		4.0	%		N/M			9.8	%		8.2	%		8.8	%		7.8	%		8.5	%		7.7	%		8.8	%
Percent of non-US fee and net interest revenue - GAAP		31	%		32	%		N/M			36	%		34	%		35	%		36	%		38	%		36	%		37	%
Percent of non-US fee and net interest revenue - Non-GAAP (e)		29	%		31	%		31	%		36	%		35	%		35	%		36	%		38	%		37	%		37	%

(a)

The second quarter of 2009 contains $134 million of tax benefits related to the final LILO/SILO tax settlement.

(b)

The third quarter of 2009 includes a $4.8 billion pretax charge related to investment securities portfolio restructuring.

(c)

Calculated excluding investment securities losses, TARP redemption premium/dividend, FDIC special assessment, SILO/LILO/tax settlements, M&I expenses, restructuring charges, benefit of tax settlements and tax discrete benefits and 1st quarter 2010 special litigation reserves.

(d)

Calculated excluding investment securities losses, asset-based taxes, FDIC special assessment, M&I expenses, restructuring charges, intangible amortization, 1st quarter 2010 special litigation reserves, 1st, 2nd, 3rd and 4th quarters 2010 and 1st, 2nd quarters of 2011 noncontrolling interests of consolidated asset management funds.

(e)

Calculated excluding net securities gains (losses) and including noncontrolling interest related to consolidated asset management funds.

(f)

Includes income of ($24) million for the first quarter of 2010, income of ($33) million for the second quarter of 2010, loss of $12 million for the third quarter of 2010, income of ($14) million for the fourth quarter of 2010, income of ($44) million for the first quarter of 2011 and income of ($21) million for the second quarter of 2011 related to consolidated asset management funds.

Note:

See pages 3 through 6 for additional details of revenue/expense items impacting continuing operations.

Page 2 of 14

THE BANK OF NEW YORK MELLON CORPORATION

CONTINUING OPERATIONS - 10 Quarter Trend

FEE AND OTHER REVENUE

2009

2010

2011

(dollar amounts in millions unless otherwise noted)

1st Qtr

2nd Qtr

3rd Qtr (a)

4th Qtr

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

1st Qtr

2nd Qtr

Investment services fees

Asset servicing

519

574

600

621

608

622

832

877

887

919

Securities lending

Issuer services

364

372

359

368

333

354

364

409

351

365

Clearing services

253

250

236

223

230

245

252

278

292

Treasury services

125

132

128

134

131

125

132

129

128

127

Total investment services fees

1,351

1,425

1,366

1,375

1,331

1,392

1,618

1,730

1,694

1,764

Investment management and performance fees

622

645

664

746

686

696

800

764

779

Foreign exchange & other trading revenue

307

237

246

262

220

146

258

198

222

Distribution and servicing

101

Financing-related fees

Investment and other income

)

205

145

Total fee revenue

2,427

2,509

2,610

2,562

2,522

2,542

2,662

2,971

2,833

3,008

Income of consolidated asset management funds, net of noncontrolling interest

—

(c)

Total fee revenue - Non-GAAP

2,427

2,509

2,610

2,562

2,563

2,574

2,711

(d)

3,016

(d)

2,899

(d)

3,050

(d)

Net securities gains (losses)

(295

)

(256

)

(4,833

)

Total fee and other revenue - Non-GAAP

2,132

2,253

(2,223

)

2,577

2,570

2,587

2,717

3,017

2,904

3,098

Fee and other revenue as a percentage of total revenue - Non-GAAP (b)

Market value of assets under management at period-end (in billions)

881

926

966

1,115

1,105

1,047

1,141

1,172

1,229

1,274

Market value of assets under custody and administration at period-end (in trillions)

19.5

20.7

22.1

22.3

22.4

21.8

24.4

25.0

25.5

26.3

Market value of securities on loan at period-end (in billions)

293

290

299

247

253

248

279

278

273

S&P 500 Index - period-end

798

919

1057

1115

1169

1031

1141

1258

1326

1321

S&P 500 Index - daily average

809

891

995

1088

1123

1135

1095

1204

1302

1318

(a)

The third quarter of 2009 includes a $4.8 billion charge related to investment securities portfolio restructuring.

(b)

Excludes net securities gains/(losses).

(c)

Includes $25 million, $29 million, $36 million, $35 million, $31 million and $29 million previously included in investment management and performance fees and $16 million, $3 million, $13 million, $10 million, $35 million and $13 million previously included in investment and other income for the first, second, third and fourth quarters of 2010 and first and second quarters of 2011, respectively.

(d)

Total fee revenue from the GIS/BAS acquisitions was $234 million in the third quarter of 2010, $246 million in the fourth quarter of 2010 and $261 million in both the first and second quarters of 2011.

Page 3 of 14

THE BANK OF NEW YORK MELLON CORPORATION

CONTINUING OPERATIONS

Average Balances and Interest Rates

Quarter Ended

March 31,
2009

June 30,
2009

September 30,
2009

December 31,
2009

March 31,
2010

June 30,
2010

(dollar amounts in millions)

Average
balance

Average
rates

Average
balance

Average
rates

Average
balance

Average
rates

Average
balance

Average
rates

Average
balance

Average
rates

Average
balance

Average
rates

Assets

Interest-earning assets:

Interest-bearing deposits with banks (primarily foreign)

56,505

1.56

56,917

1.18

54,343

1.08

55,467

1.09

55,800

1.03

50,741

1.01

Interest-bearing deposits with Federal Reserve bank

23,192

0.37

6,338

0.37

6,976

0.32

11,430

0.32

12,129

0.33

18,280

0.34

Other Short Term Investment (FRB)

1,269

3.15

—

Federal funds sold and securities under resale agreements

2,310

0.81

2,899

1.29

3,443

1.19

4,276

0.65

3,859

0.71

4,652

0.66

Margin loans

4,219

1.63

4,134

1.62

4,335

1.55

4,665

1.55

5,241

1.49

5,786

1.49

Non-margin loans:

Domestic offices

21,630

2.91

20,740

3.18

19,412

3.22

20,212

2.89

19,510

3.12

20,750

2.89

Foreign offices

13,109

2.56

12,155

2.21

10,788

1.99

10,362

1.75

9,463

1.62

10,128

1.53

Total non-margin loans

34,739

2.78

32,895

2.82

30,200

2.78

30,574

2.51

28,973

2.63

30,878

2.45

Securities

U.S. government obligations

787

2.50

1,679

1.67

4,605

1.45

5,729

1.44

6,600

1.40

6,162

1.46

U.S. government agency obligations

12,063

3.71

14,748

3.74

17,635

3.79

19,530

3.59

19,429

3.58

19,629

3.48

Obligations of states and political subdivisions

767

6.71

710

6.92

639

7.30

607

7.35

670

6.37

638

6.56

Other securities

29,848

4.47

34,766

2.85

31,010

3.04

29,707

3.49

28,653

4.20

27,601

4.14

Trading securities

1,728

2.86

2,179

2.50

1,973

2.30

2,090

2.53

2,075

2.49

2,752

2.62

Total securities

45,193

4.22

54,082

3.10

55,862

3.16

57,663

3.32

57,427

3.63

56,782

3.58

Total interest-earning assets

167,427

2.37

157,265

2.16

155,159

2.14

164,075

2.09

163,429

2.18

167,119

2.08

Allowance for credit losses

(378

)

(426

)

(425

)

(448

)

(502

)

(517

)

Cash and due from banks

4,824

3,412

3,247

3,104

3,514

3,673

Other assets

45,880

45,975

45,728

45,481

45,346

46,266

Discontinued Operations

2,366

2,307

2,077

1,993

898

260

Total Asset Consol VIE FAS 167

—

12,730

12,040

Total Assets

220,119

208,533

205,786

214,205

225,415

228,841

Liabilities and total equity

Interest-bearing liabilities:

Money market rate accounts

2,057

0.23

2,387

0.41

2,569

0.37

3,384

0.26

3,164

0.43

3,892

0.48

Savings

1,165

0.61

1,070

0.44

1,115

0.32

1,196

0.49

1,372

0.27

1,389

0.27

Certificates of deposit of $100,000 & over

1,479

1.11

942

1.00

847

0.62

589

0.32

648

0.25

332

0.16

Other time deposits

22,080

0.20

20,840

0.14

19,306

0.14

21,550

0.13

23,801

0.09

26,289

0.08

Foreign offices

75,202

0.31

73,657

0.14

69,795

0.08

71,685

0.10

72,049

0.16

68,061

0.19

Total interest-bearing deposits

101,983

0.30

98,896

0.16

93,632

0.11

98,404

0.12

101,034

0.16

99,963

0.17

Federal funds purchased and securities under repurchase agreements

1,839

0.09

2,485

(0.46

)

3,075

0.20

3,361

0.14

3,697

0.07

4,441

0.19

Other borrowed funds

3,785

1.57

2,756

1.04

2,286

1.49

2,618

1.86

2,805

1.97

4,223

2.08

Borrowings from FRB Related to ABCP

1,269

2.25

—

Payables to customers and broker-dealers

3,797

0.20

4,901

0.13

5,844

0.10

6,476

0.07

6,372

0.08

6,596

0.09

Long-term debt

15,493

2.72

16,793

2.35

17,393

1.74

17,863

1.89

16,808

1.50

16,462

1.75

Total interest-bearing liabilities

128,166

0.64

125,831

0.46

122,230

0.37

128,722

0.40

130,716

0.36

131,685

0.43

Total noninterest-bearing deposits

43,051

32,852

34,920

34,991

33,330

34,628

Other liabilities

18,523

18,578

18,386

19,633

18,420

20,042

2,366

2,307

2,077

1,993

898

260

VIE Liabilities & Obligations FAS 167

—

11,540

11,046

Total Shareholders’ Equity

27,978

28,934

28,144

28,843

29,715

30,434

Noncontrolling interest

796

746

Total liabilities and shareholders’ equity

220,119

208,533

205,786

214,205

225,415

228,841

Net interest margin - Taxable equivalent basis

1.87

1.80

1.85

1.77

1.89

1.74

Net interest margin excluding the SILO/LILO charge - Non-GAAP

Note:

Interest and average rates were calculated on a taxable equivalent basis, at tax rates of approximately 35%, using dollar amounts in thousands and the actual number of days in the year. In the second quarter of 2011, certain Money market rate accounts were reclassified to Other time deposits. All prior periods have been restated.

Page 4 of 14

THE BANK OF NEW YORK MELLON CORPORATION

CONTINUING OPERATIONS

Average Balances and Interest Rates (continued)

Quarter Ended

September 30,
2010

December 31,
2010

March 31,
2011

June 30,
2011

(dollar amounts in millions)

Average
balance

Average
rates

Average
balance

Average
rates

Average
balance

Average
rates

Average
balance

Average
rates

Assets

Interest-earning assets:

Interest-bearing deposits with banks (primarily foreign)

60,431

0.93

59,660

0.96

57,637

1.03

59,291

1.24

Interest-bearing deposits with Federal Reserve bank

9,813

0.40

16,787

0.32

20,373

0.32

34,078

0.32

Other Short Term Investment (FRB)

—

Federal funds sold and securities under resale agreements

4,559

0.46

5,553

3.15

4,514

0.50

4,577

0.46

Margin loans

6,269

1.47

6,289

1.55

6,984

1.48

7,508

1.40

Non-margin loans:

Domestic offices

21,110

2.74

21,780

2.55

22,391

2.52

23,113

2.42

Foreign offices

9,390

1.61

9,460

1.53

9,191

1.44

9,707

1.53

Total non-margin loans

30,500

2.39

31,240

2.24

31,582

2.21

32,820

2.16

Securities

U.S. government obligations

7,229

1.63

11,390

1.51

12,849

1.61

14,337

1.63

U.S. government agency obligations

20,074

3.29

21,406

2.95

20,221

2.98

20,466

3.09

Obligations of states and political subdivisions

615

6.43

587

6.53

557

6.37

934

5.30

Other securities

30,075

3.86

31,987

3.55

31,770

3.43

33,045

3.24

Trading securities

3,194

2.57

2,698

3.02

3,698

2.44

2,877

2.44

Total securities

61,187

3.36

68,068

3.02

69,095

2.93

71,659

2.87

Total interest-earning assets

172,759

2.03

187,597

1.95

190,185

1.85

209,933

1.78

Allowance for credit losses

(538

)

(530

)

(494

)

(463

)

Cash and due from banks

3,903

4,224

4,088

4,325

Other assets

50,007

50,220

49,577

50,459

Discontinued Operations

247

223

—

Total Asset Consol VIE FAS 167

13,947

14,675

14,342

14,226

Total Assets

240,325

256,409

257,698

278,480

Liabilities and total equity

Interest-bearing liabilities:

Money market rate accounts

4,466

0.52

6,296

0.41

5,417

0.38

4,029

0.41

Savings

1,389

0.26

1,433

0.22

1,600

0.16

1,646

0.16

Certificates of deposit of $100,000 & over

214

0.11

285

0.08

296

0.06

369

0.05

Other time deposits

27,440

0.07

29,002

0.07

31,823

0.09

34,484

0.08

Foreign offices

70,524

0.22

74,760

0.26

77,379

0.29

85,430

0.44

Total interest-bearing deposits

104,033

0.19

111,776

0.22

116,515

0.23

125,958

0.34

Federal funds purchased and securities under repurchase agreements

5,984

0.09

7,256

2.13

5,172

0.07

10,894

0.06

Other borrowed funds

4,029

1.66

3,703

1.36

4,585

1.92

3,401

1.57

Borrowings from FRB Related to ABCP

—

Payables to customers and broker-dealers

6,910

0.08

5,878

0.11

6,701

0.10

6,843

0.08

Long-term debt

16,798

2.04

16,624

1.87

17,014

1.87

17,380

1.63

Total interest-bearing liabilities

137,754

0.45

145,237

0.53

149,987

0.45

164,476

0.47

Total noninterest-bearing deposits

33,198

39,625

38,616

43,038

Other liabilities

23,770

24,740

22,350

23,694

Discontinued Operations

247

223

—

VIE Liabilities & Obligations FAS 167

12,778

13,481

13,114

12,966

Total Shareholders' Equity

31,868

32,379

32,827

33,464

Noncontrolling interest

710

724

804

842

Total liabilities and total equity

240,325

256,409

257,698

278,480

Net interest margin - Taxable equivalent basis

1.67

1.54

1.49

1.41

Net interest margin excluding the SILO/LILO charge -Non-GAAP

Note:

Page 5 of 14

THE BANK OF NEW YORK MELLON CORPORATION

CONTINUING OPERATIONS - 10 Quarter Trend

NONINTEREST EXPENSE

2009

2010

2011

(dollar amounts in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

1st Qtr

2nd Qtr

Staff:

Compensation

732

740

747

766

753

763

850

871

876

903

Incentives

247

241

242

266

284

272

289

348

325

328

Employee benefits

190

172

168

189

183

199

205

198

223

232

Total staff

1,169

1,153

1,157

1,221

1,220

1,234

1,344

1,417

1,424

1,463

Professional, legal and other purchased services

237

265

278

241

256

282

320

283

301

Software and equipment

158

169

171

178

169

162

187

207

206

203

Net occupancy

139

142

141

137

143

150

158

153

161

Distribution and servicing

103

102

104

111

109

Sub-custodian

Business development

Other

202

233

232

226

186

201

249

260

277

292

Subtotal

2,091

2,145

2,158

2,266

2,146

2,219

2,429

(b)

2,624

(b)

2,578

(b)

2,690

(b)

Special Litigation Reserves

N/A

164

N/A

FDIC special assessment

—

Amortization of intangible assets

107

108

104

107

111

115

108

Restructuring charges

)

139

(15

)

Merger & integration expense

Total noninterest expense

2,276

2,379

2,311

2,564

2,440

2,316

2,611

2,803

2,697

2,816

Employees at period-end (a)

41,700

41,800

42,000

42,200

42,300

42,700

47,700

48,000

48,400

48,900

(a)

Represents full time employees.

(b)

Noninterest expense from the GIS/BAS acquisitions was $185 million in the third quarter of 2010, $196 million in the fourth quarter of 2010, $203 million in the first quarter of 2011 and $210 million in the second quarter of 2011.

Page 6 of 14

THE BANK OF NEW YORK MELLON CORPORATION

ASSETS UNDER MANAGEMENT/ CUSTODY AND ADMINISTRATION / SECURITIES LENDING - 10 Quarter Trend


	2009												2010												2011
*(dollar amounts in billions unless otherwise noted)*	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr
Market value of assets under management at period-end *(in billions)*
Institutional	$	394		$	425		$	461		$	611		$	620		$	595		$	639		$	639		$	701		$	733
Mutual Funds		413			421			421			416			396			370			418			454			451			462
Private Client		74			80			84			88			89			82			84			79			77			79

Total market value of assets under management		881			926			966			1,115			1,105			1,047			1,141			1,172			1,229			1,274
Composition of assets under management at period-end
Equity		29	%		30	%		32	%		30	%		31	%		30	%		31	%		32	%		34	%		34	%
Money Market		44	%		43	%		39	%		32	%		30	%		30	%		29	%		29	%		27	%		26	%
Fixed Income		17	%		17	%		18	%		27	%		28	%		30	%		30	%		29	%		30	%		31	%
Alternative investments and overlay		10	%		10	%		11	%		11	%		11	%		10	%		10	%		10	%		9	%		9	%

Total		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%
Market value of assets under custody and administration at period-end (in trillions)	$	19.5		$	20.7		$	22.1		$	22.3		$	22.4		$	21.8		$	24.4		$	25.0		$	25.5		$	26.3
Market value of securities on loan at period-end	$	293		$	290		$	299		$	247		$	253		$	248		$	279		$	278		$	278		$	273
Market Indices
S&P 500 Index (a)		798			919			1057			1115			1169			1031			1141			1258			1326			1321
S&P 500 Index—daily average		809			891			995			1088			1123			1135			1095			1204			1302			1318
FTSE 100 Index (a)		3926			4249			5134			5413			5680			4917			5549			5900			5909			5946
FTSE 100 Index-daily average		4040			4258			4708			5235			5431			5361			5312			5760			5945			5906
Barclays Capital Aggregate Bond Index (a)		262			280			304			301			300			299			329			323			328			341
MSCI EAFE Index (a)		1056			1307			1553			1581			1584			1348			1561			1658			1703			1708
NTSE & NASDAQ Share Volume (in billions)		297			303			270			243			246			299			233			219			225			209

(a)

Period end

Page 7 of 14

THE BANK OF NEW YORK MELLON CORPORATION

ASSETS UNDER MANAGEMENT NET FLOWS –10 Quarter Trend


	2009												2010										2011
*(dollar amounts in billions)*	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr			3rd Qtr		4th Qtr		1st Qtr			2nd Qtr
Market value of assets under management at beginning of period	$	928		$	881		$	926		$	966		$	1,115		$	1,105		$	1,047	$	1,141	$	1,172		$	1,229
Net Flows
Long-term		(1	)		(17	)		(2	)		14			16			12			11		9		31			32
Money market		(11	)		(2	)		(14	)		(22	)		(25	)		(17	)		18		6		(5	)		(1	)

Total net inflows		(12	)		(19	)		(16	)		(8	)		(9	)		(5	)		29		15		26			31
Net Market and currency impact/other		(35	)		64			56			10			(1	)		(53	)		65		16		31			14
Acquisitions		—			—			—			147	(a)		—			—			—		—		—			—

Market value of assets under management
at end of period	$	881		$	926		$	966		$	1,115		$	1,105		$	1,047		$	1,141	$	1,172	$	1,229		$	1,274

(a)

Represents acquisitions of Insight ($139 billion) and 20% interest in Siguler Guff ($8 billion).

Page 8 of 14

THE BANK OF NEW YORK MELLON CORPORATION

BUSINESSES

INVESTMENT MANAGEMENT – 10 Quarter Trend


	2009												2010												2011
(dollar amounts in millions unless otherwise noted)	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr (a)			1st Qtr (a), (b)			2nd Qtr (a), (b)			3rd Qtr (a), (b)			4th Qtr (a), (b)			1st Qtr (a), (b)			2nd Qtr (a), (b)
Revenue:
Investment management:
Mutual funds		267			271			283			277			249			254			270			293			283			290
Institutional clients		198			191			216			242			280			279			282			300			319			319
Wealth management fees		139			146			153			158			159			153			154			157			164			163
Performance fees		7			26			1			59			13			19			16			75			17			18

Total investment management revenue		611			634			653			736			701			705			722			825			783			790
Distribution and servicing		81			79			64			55			47			49			53			52			51			48
Other fee revenue (c)		(76	)		(47	)		12			23			27			13			18			22			36			27

Total fee and other revenue		616			666			729			814			775			767			793			899			870			865
Net interest revenue		72			62			58			50			52			53			50			50			53			47

Total revenue		688			728			787			864			827			820			843			949			923			912
Provision for credit losses		—			—			—			1			—			1			—			2			—			1
Noninterest expenses (ex. intangible amortization)		524			551			573			587			569			596			624			667			630			643

Income before taxes (ex. intangible amortization)		164			177			214			276			258			223			219			280			293			268
Amortization of intangible assets		67			66			64			67			58			59			59			61			55			53

Income before taxes		97			111			150			209			200			164			160			219			238			215
Average assets	$	22,274		$	21,536		$	21,546		$	22,009		$	33,805		$	33,944		$	36,197		$	37,648		$	37,318		$	36,742
Market value of assets under management at period-end (in billions)	$	881		$	926		$	966		$	1,115		$	1,105		$	1,047		$	1,141		$	1,172		$	1,229		$	1,274
Pre-tax operating margin
GAAP		14	%		15	%		19	%		24	%		24	%		20	%		19	%		23	%		26	%		24	%
Non-GAAP (ex. intangible amortization and net distribution and servicing expense) (d)		28	%		28	%		31	%		36	%		35	%		31	%		29	%		33	%		36	%		33	%

(a)

Insight Investment Management acquisition closed November 2, 2009.

(b)

Total fee and other revenue for the first, second, third and fourth quarters of 2010 and the first and second quarters of 2011 includes income from consolidated asset management funds of $65 million, $65 million, $37 million, $59 million, $110 million and $63 million, respectively, and net income attributable to noncontrolling interest of $24 million, $33 million, ($12) million, $14 million, $44 million and $21 million, respectively. The net of these income statement line items is included above in institutional client revenue of $25 million, $29 million, $36 million, $33 million, $31 million and $29 million respectively, and other revenue of $16 million, $3 million, $13 million, $10 million, $35 million and $13 million, respectively, and performance fees of $2 million for the fourth quarter of 2010.

(c)

Includes investment write-downs of $34 million and $45 million in the first and second quarters of 2009.

(d)

Distribution and servicing expense totaled for 2009 $103, $102, $96, and $92, respectively, for 2010 $88 million, $90 million, $94 million, and $104 million, respectively, for 2011 $110 million, and $108 million, respectively.

Page 9 of 14

THE BANK OF NEW YORK MELLON CORPORATION

BUSINESSES

INVESTMENT SERVICES - 10 Quarter Trend

2009

2010

2011

(dollar amounts in millions unless otherwise noted)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

1st Qtr

2nd Qtr

Revenue:

Investment services fees

Asset servicing fees - ex. securities lending (a)

506

557

581

595

583

597

819

861

870

898

Securities lending revenue

Issuer services

364

373

359

367

333

354

364

409

351

365

Clearing services

249

248

232

219

227

240

250

276

290

Treasury services

124

130

128

133

130

124

131

128

127

Total investment services fees

1,322

1,394

1,332

1,339

1,297

1,345

1,590

1,701

1,665

1,732

Foreign Exchange and other trading revenue

289

287

242

241

221

249

185

227

208

202

Other fee revenue (b)

120

124

115

120

Total fee and other revenue (b)

1,731

1,805

1,689

1,662

1,590

1,714

1,865

2,010

1,950

2,018

Net interest revenue

643

595

559

552

653

608

589

598

639

666

Total revenue (c)

2,374

2,400

2,248

2,214

2,243

2,322

2,454

2,608

2,589

2,684

Provision for credit losses

—

Noninterest expenses (ex. intangible amortization) (d)

1,408

1,417

1,422

1,489

1,419

1,521

1,630

1,759

1,763

1,837

Income before taxes (ex. intangible amortization)

966

983

826

725

824

801

824

849

826

847

Amortization of intangible assets

Income before taxes

926

940

787

686

786

762

772

796

773

793

Average loans

15,193

13,639

12,449

13,766

14,273

17,053

17,941

19,053

20,554

22,891

Average assets

157,011

146,407

144,734

153,476

153,666

153,836

158,837

174,815

178,718

193,498

Average deposits

126,250

117,639

115,071

120,652

122,350

121,468

123,212

136,060

141,115

154,771

Pre-tax operating margin

GAAP

Non-GAAP adjusted (excluding intangible amortization)

Market value of assets under custody and administration at period-end (in trillions)

19.5

20.7

22.1

22.3

22.4

21.8

24.4

25.0

25.5

26.3

Market value of securities on loan at period-end (in billions) (a)

293

290

299

247

253

248

279

278

273

(a)

Represents the total amount of securities on loan (both cash and non-cash) managed by the Investment Services business.

(b)

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

(c)

Total revenue from the Acquisitions was $237 million in the third quarter of 2010, $253 million in the fourth quarter, $270 million in first quarter of 2011 and $274 million in the second quarter of 2011.

(d)

Noninterest expense from the Acquisitions was $185 million in the third quarter of 2010, $196 million in the fourth quarter of 2010, $203 million in the first quarter of 2011 and $210 million in the second quarter of 2011.

Page 10 of 14

THE BANK OF NEW YORK MELLON CORPORATION

BUSINESSES

OTHER—10 Quarter Trend


	2009												2010												2011
*(dollar amounts in millions unless otherwise noted)*	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr (b)			1st Qtr (c)			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr
Revenue:
Fee and other revenue (a)		(215	)		(218	)		(4,641	)		101			205			106			59			108			84			215
Net interest revenue		60			43			99			122			60			61			79			72			6			18

Total revenue		(155	)		(175	)		(4,542	)		223			265			167			138			180			90			233
Provision for credit losses		59			61			147			64			35			19			(22	)		(24	)		—			(1	)
Noninterest expenses (ex. FDIC special assessment, special litigation reserves, intangible amortization, M&I expenses and restructuring charges)		159			177			163			190			158			102			175			198			185			210

Income before taxes and extraordinary (loss) (ex. FDIC special assessment, special litigation reserves, intangible amortization, M&I expenses and restructuring charges)		(373	)		(413	)		(4,852	)		(31	)		72			46			(15	)		6			(95	)		24
Amortization of intangible assets		—			(1	)		1			1			1			—			—			1			—			1
Special Litigation Reserves		N/A			N/A			N/A			N/A			164			N/A			N/A			N/A			N/A			N/A
FDIC special assessment		—			61			—			—			—			—			—			—			—			—
Restructuring charges		10			6			(5	)		139			7			(15	)		15			21			(6	)		(7	)
Merger & integration expenses		68			59			54			52			26			14			56			43			17			25

Income before taxes and extraordinary (loss)		(451	)		(538	)		(4,902	)		(223	)		(126	)		47			(86	)		(59	)		(106	)		5
Average loans	$	18,377		$	17,707		$	16,076		$	15,282		$	13,639		$	13,261		$	12,308		$	11,808		$	11,187		$	10,553
Average assets	$	38,468		$	38,283		$	37,429		$	36,727		$	37,046		$	40,801		$	45,044		$	43,723		$	41,662		$	48,240
Average deposits	$	11,710		$	7,473		$	6,866		$	5,911		$	4,689		$	5,105		$	5,564		$	6,201		$	4,744		$	5,229

(a)

Total fee and other revenue includes investment write-downs of $316 million, $209 million and $4.8 billion in the first, second and third quarters of 2009.

(b)

The fourth quarter of 2009 includes a pretax global efficiency restructuring charge of $139 million.

(c)

The first quarter of 2010 includes a $164 million pretax charge related to special litigation reserves.

Page 11 of 14

THE BANK OF NEW YORK MELLON CORPORATION

BUSINESSES


	Investment Management									Investment Services									Other									Consolidated Results
*(dollar amounts in millions unless otherwise noted)*	2010			2009			2008			2010			2009			2008			2010			2009			2008			2010 (b)			2009			2008
Revenue:
Investment services fees
Asset servicing		122			113			152			2,967			2,461			3,241			—			(1	)		(23	)		3,089			2,573			3,370
Issuer services		—			—			—			1,460			1,463			1,685			—			—			—			1,460			1,463			1,685
Clearing services		12			12			13			993			948			1,040			—			2			12			1,005			962			1,065
Treasury services		3			3			3			513			515			509			1			1			2			517			519			514

Total investment services fees		137			128			168			5,933			5,387			6,475			1			2			(9	)		6,071			5,517			6,634
Investment management fees		2,830			2,541			3,073			36			30			42			4			13			20			2,870			2,584			3,135
Performance fees		123			93			83			—			—			—			—			—			—			123			93			83
Foreign exchange and other trading revenue		26			28			35			882			1,059			1,301			(22	)		(51	)		126			886			1,036			1,462
Distribution and servicing		201			279			375			8			54			49			1			(7	)		(3	)		210			326			421
Financing-related fees		7			10			14			52			49			55			136			156			117			195			215			186
Investment and other income		(102	)		(178	)		(251	)		268			308			314			343			207			358			509			337			421

Total fee revenue		3,222			2,901			3,497			7,179			6,887			8,236			463			320			609			10,864			10,108			12,342
Net Securities gains (losses)		12			(76	)		(78	)		—			—			(11	)		15			(5,293	)		(1,539	)		27			(5,369	)		(1,628	)

Total fee and other revenue		3,234			2,825			3,419			7,179			6,887			8,225			478			(4,973	)		(930	)		10,891			4,739			10,714
Net interest revenue (expense)		205			242			283			2,448			2,349			2,600			272			324			(24	)		2,925			2,915			2,859

Total revenue		3,439			3,067			3,702			9,627			9,236			10,825			750			(4,649	)		(954	)		13,816			7,654			13,573
Provision for credit losses		3			1			—			—			—			—			8			331			104			11			332			104
Noninterest expenses (ex. M&I expenses and intangible amortization)		2,456			2,235			2,971			6,329			5,736			6,822			825			900			774			9,610			8,871			10,567

Income before taxes and extraordinary (loss) (ex. M&I expenses and intangible amortization)		980			831			731			3,298			3,500			4,003			(83	)		(5,880	)		(1,832	)		4,195			(1,549	)		2,902
Amortization of intangible assets		237			264			308			182			161			158			2			1			7			421			426			473
Merger & integration expense		—			—			—			—			—			—			139			233			483			139			233			483

Income before taxes, noncontrolling interest and extraordinary (loss)		743			567			423			3,116			3,339			3,845			(224	)		(6,114	)		(2,322	)		3,635			(2,208	)		1,946
Average loans	$	6,461		$	5,821		$	4,939		$	17,096		$	13,754		$	21,380		$	12,748		$	16,849		$	20,287		$	36,305		$	36,424		$	46,606
Average assets	$	35,411		$	21,840		$	23,087		$	160,343		$	150,382		$	131,086		$	41,682		$	37,717		$	53,343		$	237,436		$	209,939		$	207,516
Average deposits	$	8,240		$	6,788		$	7,684		$	125,803		$	119,874		$	102,285		$	5,395		$	7,990		$	15,670		$	139,438		$	134,652		$	125,639
Market value of assets under management at period-end (in billions)	$	1,172		$	1,115		$	928		$	—		$	—		$	—		$	—		$	—		$	—		$	1,172		$	1,115		$	928
Market value of assets under custody and administration at period-end (in trillions)	$	—		$	—		$	—		$	25.0		$	22.3		$	20.2		$	—		$	—		$	—		$	25.0		$	22.3		$	20.2
Market value of securities on loan at period-end (in billions)	$	—		$	—		$	—		$	—		$	247		$	326		$	—		$	—		$	—		$	—		$	247		$	326
Pre-tax operating margin—GAAP		22	%		18	%		11	%		32	%		36	%		36	%		n/m			n/m			243	%		26	%		n/m			14	%
Pre-tax operating margin (ex. intangible amortization)—Non-GAAP		28	%		27	%		20	%		34	%		38	%		37	%		n/m			n/m			243	%		29	%		n/m			18	%
Pre-tax operating margin—Non-GAAP (a)		29	%		30	%		30	%		34	%		42	%		42	%		n/m			n/m			n/m			32	%		31	%		39	%
Memo:
Securities Lending Revenue																													150			259			789

(a)

Excludes M&I expenses, tax settlements, support agreement charges, restructuring charges, special litigation, investment write-downs and intangible amortization expense.

(b)

Total fee and other revenue and income before taxes for the year 2010 included income from consolidated asset management funds of $226 million net a loss attributable to noncontrolling interests of $59 million. The net of these income statement line items of $167 million is included above in fee and other revenue.

n/m—not meaningful

Note: See pages 9-11 for details of revenue/expense items impacting respective business results.

Page 12 of 14

THE BANK OF NEW YORK MELLON CORPORATION

CONTINUING OPERATIONS - 10 Quarter Trend

NONPERFORMING ASSETS


	2009												2010												2011
*(dollar amounts in millions)*	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr
Loans:
Other residential mortgages	$	143		$	163		$	183		$	190		$	204		$	229		$	238		$	244		$	245		$	236
Wealth Management		6			63			58			58			58			62			66			59			56			31
Commercial real estate		197			63			63			61			50			49			39			44			36			28
Commercial		34			43			71			65			40			40			35			34			32			31
Foreign		2			1			—			—			7			7			7			7			7			13
Financial Institutions		30			39			180			172			95			13			9			5			4			4

Total nonperforming loans		412			372			555			546			454			400			394			393			380			343
Other assets owned		9			6			5			4			5			6			7			6			6			8

Total nonperforming assets (a)	$	421		$	378		$	560		$	550		$	459		$	406		$	401		$	399		$	386		$	351

Nonperforming assets ratio		1.0	%		1.0	%		1.5	%		1.5	%		1.4	%		1.1	%		1.1	%		1.1	%		1.0	%		1.0	%
Allowance for loan losses/nonperforming loans		114.1			116.7			82.2			92.1			114.5			135.5			135.5			126.7			122.9			128.6
Allowance for loan losses/nonperforming assets		111.6			114.8			81.4			91.5			113.3			133.5			133.2			124.8			121.0			125.6
Total allowance for credit losses/nonperforming loans		135.7			141.4			107.4			115.0			140.5			161.3			154.3			145.3			145.8			156.0
Total allowance for credit losses/nonperforming assets		132.8			139.2			106.4			114.2			139.0			158.9			151.6			143.1			143.5			152.4

(a)

Loans of consolidated investment management funds are not part of BNY Mellon's loan portfolio. Included in these loans are nonperforming loans for the 1st, 2nd, 3rd and 4th quarters of 2010 of $150 million, $131 million, $231 million and $218 million, respectively, and for 1st and 2nd quarters of 2011 of $239 million and $216 million, respectively. These loans are recorded at fair value and therefore do not impact the provision for credit losses and allowance for loan losses, and accordingly are excluded from the nonperforming assets table above.

Page 13 of 14

THE BANK OF NEW YORK MELLON CORPORATION

CONTINUING OPERATIONS - 10 Quarter Trend

ALLOWANCE FOR CREDIT LOSSES, PROVISION AND NET CHARGE-OFFS


	2009												2010												2011
*(dollar amounts in millions)*	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr
Allowance for credit losses:
Allowance for loan losses	$	415		$	470		$	434		$	456		$	503		$	520		$	542		$	534		$	498		$	467
Allowance for lending-related commitments		114			89			92			140			125			118			103			74			73			87

Allowance at beginning of period		529			559			526			596			628			638			645			608			571			554

Net (charge-offs)/recoveries
Charge-offs		(51	)		(54	)		(77	)		(33	)		(37	)		(14	)		(17	)		(17	)		(19	)		(21	)
Recoveries		1			—			—			—			12			1			2			2			2			2

Total Net (charge-offs)/recoveries		(50	)		(54	)		(77	)		(33	)		(25	)		(13	)		(15	)		(15	)		(17	)		(19	)
Provision for credit losses (a)		59			61			147			65			35			20			(22	)		(22	)		—			—
Impact of Merger		—			—			—			—			—			—			—			—			—			—
Transfer to Discontinued Operations		21			(40	)		—			—			—			—			—			—			—			—
Sale of Mellon 1st Business Bank		—			—			—			—			—			—			—			—			—			—
SFAS 159 Adoption		—			—			—			—			—			—			—			—			—			—

Allowance at end of period		559			526			596			628			638			645			608			571			554			535

Allowance for loan losses	$	470		$	434		$	456		$	503		$	520		$	542		$	534		$	498		$	467		$	441
Allowance for lending related-commitments		89			92			140			125			118			103			74			73			87			94

Allowance at end of period (a)		559			526			596			628			638			645			608			571			554			535

Allowance for loan losses as a percentage of total loans (b)		1.13	%		1.14	%		1.26	%		1.37	%		1.54	%		1.46	%		1.41	%		1.32	%		1.17	%		1.05	%

(a)

The allowance and provision for credit losses for the first quarter 2009 exclude discontinued operations.

(b)

Excluding purchase accounting adjustments.

Page 14 of 14

Attached files

Stock widget

Investing forum

Also read