EX-99.2 3 ex992_quarterlytrendsx4q16.htm EXHIBIT 99.2 Exhibit

bnylogoa01a09.jpg    
The Bank of New York Mellon Corporation
 
Quarterly Financial Trends
 
January 19, 2017




 
 
Table of Contents
 
 
 
 
 
 
 
 
 
 
 
Consolidated Results
 
Page
 
 
 
Consolidated Corporate Earnings - Quarterly Trend
 
3
Fee and Other Revenue
 
4
Average Balances and Interest Rates
 
5
Noninterest Expense
 
7
Assets Under Management, Custody and/or Administration and Securities Lending; Key Market Metrics
 
8
Assets Under Management Net Flows
 
9
 
 
 
Business Segment Results
 
 
 
 
 
Investment Management Business - Quarterly Trend
 
10
Investment Services Business - Quarterly Trend
 
11
Other Segment - Quarterly Trend
 
12
Full Year Trends
 
13
 
 
 
 
 
 
Nonperforming Assets
 
14
Allowance for Credit Losses, Provision and Net Charge-offs
 
15
Notes
 
16
Appendix - GAAP to Non-GAAP Reconciliations
 
17
 
 
 




THE BANK OF NEW YORK MELLON CORPORATION - CONSOLIDATED CORPORATE EARNINGS - 12 Quarter Trend
 
 
2014
 
2015
 
2016
(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
 
3rd Qtr
 
4th Qtr
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment services fees
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset servicing
 
$
1,009

 
$
1,022

 
$
1,025

 
$
1,019

 
$
1,038

 
$
1,060

 
$
1,057

 
$
1,032

 
$
1,040

 
$
1,069

 
$
1,067

 
$
1,068

Issuer services
 
229

 
231

 
315

 
193

 
232

 
234

 
313

 
199

 
244

 
234

 
337

 
211

Clearing services
 
325

 
326

 
337

 
347

 
344

 
347

 
345

 
339

 
350

 
350

 
349

 
355

Treasury services
 
136

 
141

 
142

 
145

 
137

 
144

 
137

 
137

 
131

 
139

 
137

 
140

Total investment services fees
 
1,699

 
1,720

 
1,819

 
1,704

 
1,751

 
1,785

 
1,852

 
1,707

 
1,765

 
1,792

 
1,890

 
1,774

Investment management and performance fees (a)
 
843

 
883

 
881

 
885

 
867

 
878

 
829

 
864

 
812

 
830

 
860

 
848

Foreign exchange & other trading revenue
 
136

 
130

 
153

 
151

 
229

 
187

 
179

 
173

 
175

 
182

 
183

 
161

Distribution and servicing
 
43

 
43

 
44

 
43

 
41

 
39

 
41

 
41

 
39

 
43

 
43

 
41

Financing-related fees
 
38

 
44

 
44

 
43

 
40

 
58

 
71

 
51

 
54

 
57

 
58

 
50

Investment and other income (a)(b)
 
102

 
142

 
890

 
78

 
60

 
104

 
59

 
93

 
105

 
74

 
92

 
70

Total fee revenue (a)(b)
 
2,861

 
2,962

 
3,831

 
2,904

 
2,988

 
3,051

 
3,031

 
2,929

 
2,950

 
2,978

 
3,126

 
2,944

Net securities gains
 
22

 
18

 
20

 
31

 
24

 
16

 
22

 
21

 
20

 
21

 
24

 
10

Total fee and other revenue (a)(b)
 
2,883

 
2,980

 
3,851

 
2,935

 
3,012

 
3,067

 
3,053

 
2,950

 
2,970

 
2,999

 
3,150

 
2,954

Income (loss) from consolidated investment management funds (a)
 
36

 
46

 
39

 
42

 
52

 
40

 
(22
)
 
16

 
(6
)
 
10

 
17

 
5

Net interest revenue
 
728

 
719

 
721

 
712

 
728

 
779

 
759

 
760

 
766

 
767

 
774

 
831

Total revenue (a)(b)
 
3,647

 
3,745

 
4,611

 
3,689

 
3,792

 
3,886

 
3,790

 
3,726

 
3,730

 
3,776

 
3,941

 
3,790

Provision for credit losses
 
(18
)
 
(12
)
 
(19
)
 
1

 
2

 
(6
)
 
1

 
163

 
10

 
(9
)
 
(19
)
 
7

Noninterest expense
 
2,676

 
2,749

 
2,673

 
2,651

 
2,637

 
2,603

 
2,603

 
2,610

 
2,555

 
2,554

 
2,564

 
2,564

Amortization of intangible assets
 
75

 
75

 
75

 
73

 
66

 
65

 
66

 
64

 
57

 
59

 
61

 
60

Merger & integration, litigation and restructuring charges
 
(12
)
 
122

 
220

 
800

 
(3
)
 
59

 
11

 
18

 
17

 
7

 
18

 
7

Total noninterest expense
 
2,739

 
2,946

 
2,968

 
3,524

 
2,700

 
2,727

 
2,680

 
2,692

 
2,629

 
2,620

 
2,643

 
2,631

Income before taxes (b)
 
926

 
811

 
1,662

 
164

 
1,090

 
1,165

 
1,109

 
871

 
1,091

 
1,165

 
1,317

 
1,152

 Provision for income taxes (b)
 
232

 
217

 
556

 
(93
)
 
280

 
276

 
282

 
175

 
283

 
290

 
324

 
280

Net income (b)
 
694

 
594

 
1,106

 
257

 
810

 
889

 
827

 
696

 
808

 
875

 
993

 
872

Net income (loss) attributable to noncontrolling interest (a)(c)
 
(20
)
 
(17
)
 
(23
)
 
(24
)
 
(31
)
 
(36
)
 
6

 
(3
)
 
9

 
(2
)
 
(6
)
 
(2
)
Preferred stock dividends
 
(13
)
 
(23
)
 
(13
)
 
(24
)
 
(13
)
 
(23
)
 
(13
)
 
(56
)
 
(13
)
 
(48
)
 
(13
)
 
(48
)
Net income applicable to common shareholders of The Bank of New York Mellon Corporation (b)
 
$
661

 
$
554

 
$
1,070

 
$
209

 
$
766

 
$
830

 
$
820

 
$
637

 
$
804

 
$
825

 
$
974

 
$
822

Earnings per share (b)(d)
 
$
0.57

 
$
0.48

 
$
0.93

 
$
0.18

 
$
0.67

 
$
0.73

 
$
0.74

 
$
0.57

 
$
0.73

 
$
0.75

 
$
0.90

 
$
0.77

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax operating margin (a)
 
25
%
 
22
%
 
36
%
 
4
%
 
29
%
 
30
%
 
29
%
 
23
%
 
29
%
 
31
%
 
33
%
 
30
%
Adjusted pre-tax operating margin - Non-GAAP (a)(e)
 
27
%
 
30
%
 
29
%
 
28
%
 
30
%
 
33
%
 
31
%
 
30
%
 
31
%
 
33
%
 
35
%
 
32
%
Return on common equity (annualized) - GAAP
 
7.4
%
 
6.1
%
 
11.6
%
 
2.2
%
 
8.8
%
 
9.4
%
 
9.1
%
 
7.1
%
 
9.2
%
 
9.3
%
 
10.8
%
 
9.3
%
Return on tangible common equity (annualized) - Non-GAAP (e)
 
17.6
%
 
14.5
%
 
26.2
%
 
5.9
%
 
20.3
%
 
21.5
%
 
20.8
%
 
16.2
%
 
20.6
%
 
20.4
%
 
23.5
%
 
20.4
%
Percent of non-US total revenue
 
37
%
 
38
%
 
43
%
 
35
%
 
36
%
 
36
%
 
37
%
 
34
%
 
33
%
 
34
%
 
36
%
 
34
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)  The first quarter of 2015 was restated to reflect the retrospective application of adopting new accounting guidance related to Consolidations (ASU 2015-02).
(b)  In the first quarter of 2014, prior periods were restated to reflect the retrospective application of adopting new accounting guidance related to our investments in qualified affordable housing projects (ASU 2014-01).
(c)  Primarily attributable to noncontrolling interests related to consolidated investment management funds.
(d)  The second quarter of 2014 includes a $0.14 charge related to severance and certain investment management funds. The third quarter of 2014 includes a $0.27 gain related to the sale of an investment in Wing Hang, $0.18 related to a gain on the sale of the One Wall Street building and a $0.16 charge related to litigation and restructuring. The fourth quarter of 2014 includes a $0.13 benefit primarily related to a tax carryback claim, and a $0.53 charge related to litigation and restructuring. The second quarter of 2015 includes a $0.03 charge related to litigation and restructuring. The fourth quarter of 2015 includes an $0.11 charge for the impairment charge related to a court decision regarding Sentinel, litigation and restructuring charges. The first quarter, second quarter and third quarter of 2016 each include a $0.01 charge related to litigation and restructuring. The third quarter of 2016 also includes $0.01 recovery of the previously impaired Sentinel loan.
(e)  Non-GAAP excludes gain (loss) related to an equity investment, net (loss) income attributable to noncontrolling interests of consolidated investment management funds, the gains on the sales of our investment in Wing Hang and the One Wall Street building, M&I, litigation and restructuring charges (recoveries), a charge (recovery) related to investment management funds, net of incentives, amortization of intangible assets, the impairment charge related to a court decision regarding Sentinel, a recovery of the previously impaired Sentinel loan, and the benefit primarily related to a tax carryback claim, if applicable. See "Supplemental information - Explanation of GAAP and Non-GAAP financial measures" beginning on page 24 of the Quarterly Earnings Release dated January 19, 2017, for the fourth quarter of 2016 (the "Quarterly Earnings Release"), furnished as an exhibit to the Current Report on Form 8-K to which these Quarterly Financial Trends are furnished as an exhibit. Also, see "Appendix - GAAP to Non-GAAP Reconciliations" beginning on page 17 for the reconciliation of Non-GAAP measures.
Note: See pages 4 through 7 for additional details of revenue/expense items impacting consolidated results.
 



3



THE BANK OF NEW YORK MELLON CORPORATION
FEE AND OTHER REVENUE - 12 Quarter Trend
 
 
2014
 
2015
 
2016
(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
 
3rd Qtr
 
4th Qtr
Investment services fees:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset servicing
 
$
971

 
$
976

 
$
988

 
$
982

 
$
995

 
$
1,011

 
$
1,019

 
$
986

 
$
990

 
$
1,017

 
$
1,016

 
$
1,014

Securities lending
 
38

 
46

 
37

 
37

 
43

 
49

 
38

 
46

 
50

 
52

 
51

 
54

Issuer services
 
229

 
231

 
315

 
193

 
232

 
234

 
313

 
199

 
244

 
234

 
337

 
211

Clearing services
 
325

 
326

 
337

 
347

 
344

 
347

 
345

 
339

 
350

 
350

 
349

 
355

Treasury services
 
136

 
141

 
142

 
145

 
137

 
144

 
137

 
137

 
131

 
139

 
137

 
140

Total investment services fees
 
1,699

 
1,720

 
1,819

 
1,704

 
1,751

 
1,785

 
1,852

 
1,707

 
1,765

 
1,792

 
1,890

 
1,774

Investment management and performance fees (a)
 
843

 
883

 
881

 
885

 
867

 
878

 
829

 
864

 
812

 
830

 
860

 
848

Foreign exchange and other trading revenue
 
136

 
130

 
153

 
151

 
229

 
187

 
179

 
173

 
175

 
182

 
183

 
161

Distribution and servicing
 
43

 
43

 
44

 
43

 
41

 
39

 
41

 
41

 
39

 
43

 
43

 
41

Financing-related fees
 
38

 
44

 
44

 
43

 
40

 
58

 
71

 
51

 
54

 
57

 
58

 
50

Investment and other income (a)
 
102

 
142

 
890

 
78

 
60

 
104

 
59

 
93

 
105

 
74

 
92

 
70

Total fee revenue (a)
 
2,861

 
2,962

 
3,831

 
2,904

 
2,988

 
3,051

 
3,031

 
2,929

 
2,950

 
2,978

 
3,126

 
2,944

Net securities gains
 
22

 
18

 
20

 
31

 
24

 
16

 
22

 
21

 
20

 
21

 
24

 
10

Total fee and other revenue (a)
 
$
2,883

 
$
2,980

 
$
3,851

 
$
2,935

 
$
3,012

 
$
3,067

 
$
3,053

 
$
2,950

 
$
2,970

 
$
2,999

 
$
3,150

 
$
2,954

Fee revenue as a percentage of total revenue
 
79
%
 
79
%
 
83
%
 
79
%
 
79
%
 
79
%
 
81
%
 
79
%
 
80
%
 
79
%
 
79
%
 
78
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)    The first quarter of 2015 was restated to reflect the retrospective application of adopting new accounting guidance related to Consolidations (ASU 2015-02).

4



THE BANK OF NEW YORK MELLON CORPORATION - Average Balances and Interest Rates - 12 Quarter Trend

 
 
2014
 
2015
(dollar amounts in millions)
 
March 31
 
June 30
 
Sept. 30
 
Dec. 31
 
March 31
 
June 30
 
 
Average
balance
Average
rate
 
Average
balance
Average
rate
 
Average
balance
Average
rate
 
Average
balance
Average
rate
 
Average
balance
Average
rate
 
Average
balance
Average
rate
Assets
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits with banks (primarily foreign)
 
$
41,617

0.71
 %
 
$
41,424

0.74
 %
 
$
34,882

0.66
 %
 
$
24,623

0.49
 %
 
$
22,071

0.56
 %
 
$
20,235

0.56
 %
Interest-bearing deposits with Federal Reserve & other central banks
 
74,399

0.25

 
85,546

0.26

 
88,713

0.23

 
97,440

0.22

 
81,160

0.23

 
81,846

0.21

Federal funds sold and securities purchased under resale agreements
 
11,118

0.61

 
13,387

0.58

 
15,683

0.61

 
18,536

0.56

 
20,416

0.59

 
23,545

0.61

Margin loans
 
15,840

1.07

 
17,050

1.05

 
18,108

1.04

 
18,897

1.01

 
20,051

1.00

 
20,467

1.01

Non-margin loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Domestic offices
 
22,002

2.31

 
22,566

2.30

 
23,826

2.20

 
25,103

2.20

 
25,256

2.14

 
26,716

2.06

Foreign offices
 
13,805

1.26

 
13,833

1.34

 
12,901

1.30

 
12,844

1.21

 
12,628

1.24

 
13,893

1.19

Total non-margin loans
 
35,807

1.90

 
36,399

1.94

 
36,727

1.88

 
37,947

1.86

 
37,884

1.84

 
40,609

1.77

Securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government obligations
 
17,213

1.61

 
17,462

1.63

 
23,067

1.38

 
24,331

1.48

 
27,454

1.38

 
28,331

1.42

U.S. government agency obligations
 
42,710

1.87

 
43,167

1.67

 
46,186

1.67

 
49,106

1.70

 
52,744

1.68

 
56,332

1.77

Obligations of states and political subdivisions
 
6,691

2.50

 
6,473

2.58

 
5,830

2.54

 
5,305

2.61

 
5,213

2.64

 
5,021

2.67

Other securities
 
33,920

1.64

 
34,318

1.55

 
36,972

1.37

 
38,501

1.23

 
38,065

1.33

 
38,957

1.24

Trading securities
 
5,217

2.60

 
5,532

2.19

 
5,435

2.36

 
3,922

2.64

 
3,046

2.46

 
3,253

2.63

Total securities
 
105,751

1.83

 
106,952

1.71

 
117,490

1.59

 
121,165

1.58

 
126,522

1.57

 
131,894

1.59

Total interest-earning assets
 
284,532

1.17

 
300,758

1.10

 
311,603

1.05

 
318,608

1.02

 
308,104

1.07

 
318,596

1.08

Allowance for loan losses
 
(210
)
 
 
(197
)
 
 
(187
)
 
 
(186
)
 
 
(191
)
 
 
(190
)
 
Cash and due from banks
 
5,886

 
 
5,064

 
 
6,225

 
 
4,715

 
 
6,204

 
 
6,785

 
Other assets
 
53,430

 
 
52,182

 
 
52,526

 
 
52,472

 
 
51,966

 
 
50,808

 
Assets of consolidated investment funds (a)
 
11,354

 
 
11,405

 
 
10,242

 
 
9,623

 
 
2,328

 
 
2,280

 
Total Assets (a)
 
$
354,992

 
 
$
369,212

 
 
$
380,409

 
 
$
385,232

 
 
$
368,411

 
 
$
378,279

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and total equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market rate accounts and demand deposit accounts
 
$
9,333

0.11
 %
 
$
7,583

0.13
 %
 
$
7,886

0.14
 %
 
$
8,869

0.12
 %
 
$
10,021

0.12
 %
 
$
10,322

0.13
 %
Savings
 
1,034

0.25

 
1,185

0.27

 
1,258

0.28

 
1,262

0.30

 
1,429

0.30

 
1,326

0.27

Other time deposits
 
41,544

0.04

 
42,824

0.04

 
41,248

0.04

 
41,507

0.04

 
43,259

0.04

 
46,807

0.03

Foreign offices
 
101,075

0.06

 
111,082

0.06

 
113,841

0.05

 
111,511

0.02

 
104,811

0.03

 
112,261

—

Total interest-bearing deposits
 
152,986

0.06

 
162,674

0.06

 
164,233

0.06

 
163,149

0.03

 
159,520

0.04

 
170,716

0.02

Federal funds purchased and securities sold under repurchase agreements
 
14,505

(0.13
)
 
19,030

(0.05
)
 
20,620

(0.07
)
 
20,285

(0.05
)
 
13,877

(0.09
)
 
16,732

(0.02
)
Trading Liabilities
 
1,978

1.59

 
2,993

0.97

 
2,806

0.84

 
1,024

1.44

 
795

1.07

 
632

1.84

Other borrowed funds
 
1,137

0.47

 
3,242

0.23

 
4,587

0.15

 
5,270

0.25

 
2,108

0.50

 
3,795

0.37

Payables to customers and broker-dealers
 
8,883

0.09

 
8,916

0.09

 
9,705

0.10

 
10,484

0.08

 
10,932

0.07

 
11,234

0.07

Long-term debt
 
20,420

1.09

 
20,361

1.16

 
20,429

1.12

 
21,187

1.27

 
20,199

1.21

 
20,625

0.99

Total interest-bearing liabilities
 
199,909

0.17

 
217,216

0.17

 
222,380

0.16

 
221,399

0.16

 
207,431

0.15

 
223,734

0.12

Total noninterest-bearing deposits
 
81,430

 
 
77,820

 
 
82,334

 
 
85,330

 
 
89,592

 
 
84,890

 
Other liabilities
 
24,608

 
 
24,854

 
 
27,369

 
 
30,743

 
 
32,341

 
 
29,840

 
Liabilities and obligations of consolidated investment funds (a)
 
10,128

 
 
10,180

 
 
8,879

 
 
8,101

 
 
1,004

 
 
857

 
Total The Bank of New York Mellon Corporation Shareholders' Equity
 
37,851

 
 
38,127

 
 
38,313

 
 
38,421

 
 
37,048

 
 
37,829

 
Noncontrolling interest (a)
 
1,066

 
 
1,015

 
 
1,134

 
 
1,238

 
 
995

 
 
1,129

 
Total liabilities and shareholders' equity (a)
 
$
354,992

 
 
$
369,212

 
 
$
380,409

 
 
$
385,232

 
 
$
368,411

 
 
$
378,279

 
Net interest margin - Taxable equivalent basis
 
 
1.05
 %
 
 
0.98
 %
 
 
0.94
 %
 
 
0.91
 %
 
 
0.97
 %
 
 
1.00
 %
(a) The first quarter of 2015 was restated to reflect the retrospective application of adopting new accounting guidance related to Consolidations (ASU 2015-02).
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.

5



THE BANK OF NEW YORK MELLON CORPORATION - Average Balances and Interest Rates - 12 Quarter Trend (continued)

 
 
2015
 
2016
(dollar amounts in millions)
 
Sept. 30
 
Dec. 31
 
March 31
 
June 30
 
Sept. 30
 
Dec. 31
 
 
Average
balance
Average
rate
 
Average
balance
Average
rate
 
Average
balance
Average
rate
 
Average
balance
Average
rate
 
Average
balance
Average
rate
 
Average
balance
Average
rate
Assets
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits with banks (primarily foreign)
 
$
20,549

0.45
 %
 
$
19,301

0.45
 %
 
$
14,909

0.69
%
 
$
14,394

0.68
%
 
$
14,066

0.74
 %
 
$
15,447

0.71
 %
Interest-bearing deposits with Federal Reserve & other central banks
 
84,175

0.20

 
84,880

0.18

 
89,092

0.28

 
97,788

0.30

 
74,102

0.20

 
61,672

0.18

Federal funds sold and securities purchased under resale agreements
 
25,366

0.61

 
24,147

0.69

 
23,623

0.84

 
25,813

0.87

 
26,376

0.93

 
27,233

0.97

Margin loans
 
19,839

1.05

 
19,321

1.09

 
18,907

1.34

 
18,226

1.40

 
18,132

1.48

 
17,547

1.61

Non-margin loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Domestic offices
 
27,411

2.15

 
27,751

2.06

 
28,506

2.21

 
29,413

2.25

 
30,534

2.22

 
32,730

2.23

Foreign offices
 
14,407

1.13

 
14,892

1.17

 
13,783

1.39

 
12,645

1.57

 
12,912

1.45

 
13,370

1.58

Total non-margin loans
 
41,818

1.80

 
42,643

1.75

 
42,289

1.95

 
42,058

2.04

 
43,446

1.99

 
46,100

2.04

Securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government obligations
 
23,935

1.52

 
23,955

1.53

 
24,479

1.50

 
24,571

1.50

 
25,279

1.49

 
25,953

1.54

U.S. government agency obligations
 
55,624

1.76

 
55,441

1.81

 
55,966

1.79

 
56,050

1.68

 
56,464

1.70

 
57,049

1.82

Obligations of states and political subdivisions
 
4,465

2.81

 
4,164

2.80

 
3,979

2.89

 
3,778

2.90

 
3,598

2.98

 
3,461

3.08

Other securities
 
37,164

1.28

 
35,972

1.25

 
34,114

1.22

 
33,603

1.24

 
33,064

1.23

 
31,197

1.36

Trading securities
 
2,737

2.74

 
2,786

2.79

 
3,320

2.16

 
2,152

2.45

 
2,176

2.62

 
2,288

3.17

Total securities
 
123,925

1.63

 
122,318

1.65

 
121,858

1.62

 
120,154

1.57

 
120,581

1.58

 
119,948

1.70

Total interest-earning assets
 
315,672

1.08

 
312,610

1.08

 
310,678

1.16

 
318,433

1.14

 
296,703

1.19

 
287,947

1.30

Allowance for loan losses
 
(184
)
 
 
(181
)
 
 
(157
)
 
 
(163
)
 
 
(165
)
 
 
(148
)
 
Cash and due from banks
 
6,140

 
 
5,597

 
 
3,879

 
 
4,141

 
 
4,189

 
 
5,017

 
Other assets
 
49,700

 
 
48,849

 
 
48,845

 
 
50,563

 
 
49,463

 
 
50,322

 
Assets of consolidated investment funds (a)
 
2,125

 
 
1,715

 
 
1,309

 
 
1,246

 
 
1,040

 
 
1,004

 
Total Assets (a)
 
$
373,453

 
 
$
368,590

 
 
$
364,554

 
 
$
374,220

 
 
$
351,230

 
 
$
344,142

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and total equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market rate accounts and demand deposit accounts
 
$
10,623

0.13
 %
 
$
9,292

0.12
 %
 
$
8,249

0.11
%
 
$
9,070

0.13
%
 
$
10,027

0.14
 %
 
$
13,821

0.08
 %
Savings
 
1,279

0.27

 
1,217

0.27

 
1,235

0.27

 
1,175

0.39

 
1,201

0.41

 
1,152

0.42

Other time deposits
 
43,529

0.04

 
43,061

0.03

 
42,678

0.04

 
46,629

0.06

 
45,186

0.07

 
37,766

0.07

Foreign offices
 
114,322

—

 
106,764

—

 
109,855

0.03

 
108,248

0.01

 
98,695

(0.08
)
 
92,942

(0.07
)
Total interest-bearing deposits
 
169,753

0.02

 
160,334

0.01

 
162,017

0.04

 
165,122

0.03

 
155,109

(0.02
)
 
145,681

(0.01
)
Federal funds purchased and securities sold under repurchase agreements
 
14,796

(0.04
)
 
20,349

(0.03
)
 
18,689

0.20

 
18,204

0.28

 
9,585

0.24

 
11,567

0.30

Trading Liabilities
 
475

1.42

 
638

1.34

 
551

1.43

 
662

0.66

 
735

1.11

 
892

0.54

Other borrowed funds
 
2,823

0.35

 
733

1.13

 
781

0.96

 
4,628

0.48

 
2,047

0.53

 
1,286

0.77

Payables to customers and broker-dealers
 
11,504

0.06

 
12,904

0.06

 
16,801

0.09

 
16,935

0.05

 
16,873

0.07

 
17,091

0.07

Long-term debt
 
21,070

1.21

 
21,418

1.19

 
21,556

1.57

 
22,838

1.54

 
23,930

1.54

 
24,986

1.36

Total interest-bearing liabilities
 
220,421

0.14

 
216,376

0.14

 
220,395

0.21

 
228,389

0.21

 
208,279

0.19

 
201,503

0.19

Total noninterest-bearing deposits
 
85,046

 
 
85,878

 
 
82,944

 
 
84,033

 
 
81,619

 
 
82,267

 
Other liabilities
 
27,880

 
 
26,530

 
 
22,300

 
 
22,345

 
 
21,343

 
 
20,760

 
Liabilities and obligations of consolidated investment funds (a)
 
841

 
 
629

 
 
259

 
 
253

 
 
238

 
 
229

 
Total The Bank of New York Mellon Corporation Shareholders' Equity
 
38,140

 
 
38,216

 
 
37,804

 
 
38,379

 
 
39,051

 
 
38,713

 
Noncontrolling interest (a)
 
1,125

 
 
961

 
 
852

 
 
821

 
 
700

 
 
670

 
Total liabilities and shareholders' equity (a)
 
$
373,453

 
 
$
368,590

 
 
$
364,554

 
 
$
374,220

 
 
$
351,230

 
 
$
344,142

 
Net interest margin - Taxable equivalent basis
 
 
0.98
 %
 
 
0.99
 %
 
 
1.01
%
 
 
0.98
%
 
 
1.06
 %
 
 
1.17
 %
a) The first quarter of 2015 was restated to reflect the retrospective application of adopting new accounting guidance related to Consolidations (ASU 2015-02).
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.


6



THE BANK OF NEW YORK MELLON CORPORATION
NONINTEREST EXPENSE - 12 Quarter Trend

 
 
2014
 
2015
 
2016
(dollar amounts in millions)
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
Staff
 
$
1,511

 
$
1,439

 
$
1,477

 
$
1,418

 
$
1,485

 
$
1,434

 
$
1,437

 
$
1,481

 
$
1,459

 
$
1,412

 
$
1,467

 
$
1,395

Professional, legal and other purchased services
 
312

 
314

 
323

 
390

 
302

 
299

 
301

 
328

 
278

 
290

 
292

 
325

Software and equipment
 
237

 
236

 
234

 
235

 
228

 
228

 
226

 
225

 
219

 
223

 
215

 
237

Net occupancy
 
154

 
152

 
154

 
150

 
151

 
149

 
152

 
148

 
142

 
152

 
143

 
153

Distribution and servicing
 
107

 
112

 
107

 
102

 
98

 
96

 
95

 
92

 
100

 
102

 
105

 
98

Business development
 
64

 
68

 
61

 
75

 
61

 
72

 
59

 
75

 
57

 
65

 
52

 
71

Sub-custodian
 
68

 
81

 
67

 
70

 
70

 
75

 
65

 
60

 
59

 
70

 
59

 
57

Other
 
223

 
347

 
250

 
211

 
242

 
250

 
268

 
201

 
241

 
240

 
231

 
228

Amortization of intangible assets
 
75

 
75

 
75

 
73

 
66

 
65

 
66

 
64

 
57

 
59

 
61

 
60

Merger & integration, litigation and restructuring charges
 
(12
)
 
122

 
220

 
800

 
(3
)
 
59

 
11

 
18

 
17

 
7

 
18

 
7

Total noninterest expense
 
$
2,739

 
$
2,946

 
$
2,968

 
$
3,524

 
$
2,700

 
$
2,727

 
$
2,680

 
$
2,692

 
$
2,629

 
$
2,620

 
$
2,643

 
$
2,631

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Memo:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total noninterest expense excluding amortization of intangible assets and M&I, litigation and restructuring charges (recoveries), and the charge (recovery) related to investment management funds, net of incentives - Non-GAAP (a)
 
$
2,681

 
$
2,640

 
$
2,673

 
$
2,651

 
$
2,637

 
$
2,603

 
$
2,603

 
$
2,610

 
$
2,555

 
$
2,554

 
$
2,564

 
$
2,564

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full-time employees at period-end
 
51,400

 
51,100

 
50,900

 
50,300

 
50,500

 
50,700

 
51,300

 
51,200

 
52,100

 
52,200

 
52,300

 
52,000

(a) See "Appendix - GAAP to Non-GAAP Reconciliations" beginning on page 17 for the reconciliation of Non-GAAP measures.


7



THE BANK OF NEW YORK MELLON CORPORATION
ASSETS UNDER MANAGEMENT, CUSTODY AND/OR ADMINISTRATION AND SECURITIES LENDING - 12 Quarter Trend
 
 
2014
 
2015
 
2016
 
(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
 
3rd Qtr
 
4th Qtr
 
Assets under management at period end: (a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Institutional
 
$
1,092

 
$
1,084

 
$
1,106

 
$
1,164

 
$
1,188

 
$
1,163

 
$
1,129

 
$
1,127

 
$
1,155

 
$
1,182

 
$
1,234

 
$
1,182

 
Mutual Funds
 
415

 
440

 
430

 
438

 
445

 
454

 
419

 
420

 
405

 
398

 
396

 
381

 
Private Client
 
85

 
85

 
84

 
84

 
84

 
83

 
77

 
78

 
79

 
84

 
85

 
85

 
Assets under management
 
$
1,592

 
$
1,609

 
$
1,620

 
$
1,686

 
$
1,717

 
$
1,700

 
$
1,625

 
$
1,625

 
$
1,639

 
$
1,664

 
$
1,715

 
$
1,648

(b)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AUM at period end, by product type: (a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity
 
17
%
 
17
%
 
16
%
 
15
%
 
15
%
 
15
%
 
14
%
 
14
%
 
14
%
 
14
%
 
13
%
 
14
%
 
Fixed income
 
13

 
13

 
13

 
12

 
12

 
13

 
13

 
13

 
13

 
13

 
14

 
13

 
Index
 
21

 
22

 
21

 
21

 
22

 
21

 
20

 
20

 
19

 
18

 
18

 
19

 
Liability-driven investments (c)
 
27

 
27

 
28

 
30

 
30

 
30

 
32

 
32

 
33

 
34

 
35

 
34

 
Alternative investments
 
4

 
4

 
4

 
4

 
4

 
4

 
4

 
4

 
4

 
4

 
4

 
4

 
Cash
 
18

 
17

 
18

 
18

 
17

 
17

 
17

 
17

 
17

 
17

 
16

 
16

 
Total AUM
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
(b)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets under custody and/or administration at period end (in trillions) (d)
 
$
27.9

 
$
28.5

 
$
28.3

 
$
28.5

 
$
28.5

 
$
28.6

 
$
28.5

 
$
28.9

 
$
29.1

 
$
29.5

 
$
30.5

 
$
29.9

(b)
Market value of securities on loan at period end (e)
 
$
264

 
$
280

 
$
282

 
$
289

 
$
291

 
$
283

 
$
288

 
$
277

 
$
300

 
$
278

 
$
288

 
$
296

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Key Market Metrics
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  S&P 500 Index (f)
 
1872

 
1960

 
1972

 
2059

 
2068

 
2063

 
1920

 
2044

 
2060

 
2099

 
2168

 
2239

 
  S&P 500 Index - daily average
 
1835

 
1900

 
1976

 
2009

 
2064

 
2102

 
2027

 
2052

 
1951

 
2075

 
2162

 
2185

 
  FTSE 100 Index (f)
 
6598

 
6744

 
6623

 
6566

 
6773

 
6521

 
6062

 
6242

 
6175

 
6504

 
6899

 
7143

 
  FTSE 100 Index-daily average
 
6680

 
6764

 
6756

 
6526

 
6793

 
6920

 
6399

 
6271

 
5988

 
6204

 
6765

 
6923

 
  MSCI EAFE (f)
 
1916

 
1972

 
1846

 
1775

 
1849

 
1842

 
1644

 
1716

 
1652

 
1608

 
1702

 
1684

 
  MSCI EAFE-daily average
 
1893

 
1942

 
1922

 
1796

 
1818

 
1905

 
1785

 
1732

 
1593

 
1648

 
1677

 
1660

 
  Barclays Capital Global Aggregate BondSM Index (f)(g)
 
465

 
476

 
461

 
457

 
448

 
442

 
446

 
442

 
468

 
482

 
486

 
451

 
  NYSE & NASDAQ Share Volume (in billions)
 
196

 
187

 
173

 
198

 
187

 
185

 
206

 
198

 
218

 
203

 
186

 
189

 
  JP Morgan G7 Volatility Index - daily average (h)
 
7.80

 
6.22

 
6.21

 
8.54

 
10.40

 
10.06

 
9.93

 
9.49

 
10.60

 
11.12

 
10.19

 
10.24

 
  Average Fed Funds effective rate
 
0.07
%
 
0.09
%
 
0.09
%
 
0.10
%
 
0.11
%
 
0.13
%
 
0.13
%
 
0.16
%
 
0.36
%
 
0.37
%
 
0.39
%
 
0.45
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange rates vs. U.S. dollar:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  British pound (f)
 
$
1.67

 
$
1.71

 
$
1.62

 
$
1.56

 
$
1.48

 
$
1.57

 
$
1.52

 
$
1.48

 
$
1.44

 
$
1.34

 
$
1.30

 
$
1.23

 
  British pound - average rate
 
1.66

 
1.68

 
1.67

 
1.58

 
1.51

 
1.53

 
1.55

 
1.52

 
1.43

 
1.43

 
1.31

 
1.24

 
  Euro (f)
 
1.38

 
1.37

 
1.26

 
1.22

 
1.07

 
1.11

 
1.12

 
1.09

 
1.14

 
1.11

 
1.12

 
1.05

 
  Euro - average rate
 
1.37

 
1.37

 
1.33

 
1.25

 
1.13

 
1.11

 
1.11

 
1.10

 
1.10

 
1.13

 
1.12

 
1.08

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) Excludes securities lending cash management assets and assets managed in the Investment Services business and the Other segment.  In the third quarter of 2015, prior period AUM was restated to reflect the reclassification of Meriten from the Investment Management business to the Other segment.
(b) Preliminary.
(c) Includes currency overlay assets under management.
(d)  Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.2 trillion at March 31, 2014, June 30, 2014 and Sept. 30, 2014, $1.1 trillion at Dec. 31, 2014, March 31, 2015, and June 30, 2015, $1.0 trillion at Sept. 30, 2015 and Dec. 31, 2015, and $1.1 trillion at March 31, 2016 and June 30, 2016, and $1.2 trillion at Sept. 30, 2016 and Dec. 31, 2016.
(e) Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent, on behalf of CIBC Mellon clients, which totaled $66 billion at March 31, 2014, $64 billion at June 30, 2014, $65 billion at Sept. 30, 2014 and Dec. 31, 2014, $69 billion at March 31, 2015, $68 billion at June 30, 2015, $61 billion at Sept. 30, 2015, $55 billion at Dec. 31, 2015, $56 billion at March 31, 2016 and June 30, 2016, $64 billion at Sept. 30, 2016 and $63 billion at Dec. 31, 2016.
(f) Period end.
(g) Unhedged in U.S. dollar terms.
(h) The JP Morgan G7 Volatility Index is based on the implied volatility in 3-month currency options.

8



THE BANK OF NEW YORK MELLON CORPORATION
ASSETS UNDER MANAGEMENT NET FLOWS - 12 Quarter Trend

 
 
2014
 
2015
 
2016
 
(dollar amounts in billions)
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
Assets under management at beginning of period (a)
 
$
1,557

 
$
1,592

 
$
1,609

 
$
1,620

 
$
1,686

 
$
1,717

 
$
1,700

 
$
1,625

 
$
1,625

 
$
1,639

 
$
1,664

 
$
1,715

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net inflows (outflows):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity
 
(1
)
 
(5
)
 
(2
)
 
(5
)
 
(5
)
 
(13
)
 
(4
)
 
(9
)
 
(3
)
 
(2
)
 
(3
)
 
(4
)
 
Fixed income
 
—

 
—

 
—

 
4

 
3

 
(2
)
 
(3
)
 
1

 
—

 
(2
)
 
—

 
(1
)
 
Liability-driven investments (b)
 
20

 
(17
)
 
19

 
24

 
8

 
5

 
11

 
11

 
14

 
15

 
4

 
(7
)
 
Alternative investments
 
2

 
2

 
—

 
2

 
1

 
3

 
1

 
2

 
1

 
1

 
2

 
2

 
Total long-term active inflows (outflows)
 
21

 
(20
)
 
17

 
25

 
7

 
(7
)
 
5

 
5

 
12

 
12

 
3

 
(10
)
 
Index
 
—

 
7

 
(3
)
 
1

 
8

 
(9
)
 
(10
)
 
(16
)
 
(11
)
 
(17
)
 
(2
)
 
(1
)
 
Total long-term inflows (outflows)
 
21

 
(13
)
 
14

 
26

 
15

 
(16
)
 
(5
)
 
(11
)
 
1

 
(5
)
 
1

 
(11
)
 
Short-term:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash
 
(7
)
 
(17
)
 
18

 
6

 
1

 
(11
)
 
(10
)
 
2

 
(9
)
 
4

 
(1
)
 
(3
)
 
Total net inflows (outflows)
 
14

 
(30
)
 
32

 
32

 
16

 
(27
)
 
(15
)
 
(9
)
 
(8
)
 
(1
)
 
—

 
(14
)
 
Net market impact / Other
 
17

 
31

 
15

 
59

 
32

 
(29
)
 
(35
)
 
24

 
41

 
71

 
80

 
(11
)
 
Net currency impact
 
4

 
16

 
(36
)
 
(25
)
 
(35
)
 
39

 
(25
)
 
(15
)
 
(19
)
 
(47
)
 
(29
)
 
(42
)
 
Acquisitions
 
—

 
—

 
—

 
—

 
18

 
—

 
—

 
—

 
—

 
2

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets under management at period end (a)
 
$
1,592

 
$
1,609

 
$
1,620

 
$
1,686

 
$
1,717

 
$
1,700

 
$
1,625

 
$
1,625

 
$
1,639

 
$
1,664

 
$
1,715

 
$
1,648

(c)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) Excludes securities lending cash management assets and assets managed in the Investment Services business and the Other segment. In the third quarter of 2015, prior period AUM was restated to reflect the reclassification of Meriten from the Investment Management business to the Other segment.
(b) Includes currency overlay assets under management.
(c) Preliminary.



9



THE BANK OF NEW YORK MELLON CORPORATION
INVESTMENT MANAGEMENT BUSINESS - 12 Quarter Trend

 
2014
 
2015
 
2016
 
(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
 
3rd Qtr
 
4th Qtr
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment management fees:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mutual funds
 
$
299

 
$
311

 
$
315

 
$
306

 
$
301

 
$
312

 
$
301

 
$
294

 
$
300

 
$
304

 
$
309

 
$
297

 
Institutional clients
 
359

 
373

 
370

 
364

 
365

 
363

 
347

 
350

 
334

 
344

 
362

 
340

 
Wealth management
 
153

 
156

 
158

 
157

 
159

 
160

 
156

 
155

 
152

 
160

 
166

 
164

 
Total investment management fees (a)
 
811

 
840

 
843

 
827

 
825

 
835

 
804

 
799

 
786

 
808

 
837

 
801

 
Performance fees
 
20

 
29

 
22

 
40

 
15

 
20

 
7

 
55

 
11

 
9

 
8

 
32

 
Investment management and performance fees
 
831

 
869

 
865

 
867

 
840

 
855

 
811

 
854

 
797

 
817

 
845

 
833

 
     Distribution and servicing
 
39

 
39

 
40

 
39

 
38

 
38

 
37

 
39

 
46

 
49

 
49

 
48

 
     Other (a)
 
12

 
43

 
11

 
2

 
41

 
17

 
(5
)
 
22

 
(31
)
 
(10
)
 
(18
)
 
(1
)
 
Total fee and other revenue (a)
 
882

 
951

 
916

 
908

 
919

 
910

 
843

 
915

 
812

 
856

 
876

 
880

 
Net interest revenue
 
69

 
67

 
69

 
69

 
75

 
77

 
83

 
84

 
83

 
82

 
82

 
80

 
Total revenue
 
951

 
1,018

 
985

 
977

 
994

 
987

 
926

 
999

 
895

 
938

 
958

 
960

 
  Provision for credit losses
 
(1
)
 
1

 
—

 
—

 
(1
)
 
3

 
1

 
(4
)
 
(1
)
 
1

 
—

 
6

 
Noninterest expense (ex. intangible amortization and the charge (recovery) related to investment management funds, net of incentives)
 
680

 
711

 
712

 
714

 
708

 
700

 
665

 
689

 
660

 
684

 
680

 
672

 
Charge (recovery) related to investment management funds, net of incentives
 
(5
)
 
109

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
Amortization of intangible assets
 
30

 
30

 
30

 
28

 
24

 
25

 
24

 
24

 
19

 
19

 
22

 
22

 
Total noninterest expense
 
705

 
850

 
742

 
742

 
732

 
725

 
689

 
713

 
679

 
703

 
702

 
694

 
Income before taxes
 
247

 
167

 
243

 
235

 
263

 
259

 
236

 
290

 
217

 
234

 
256

 
260

 
Income before taxes (ex. intangible amortization and the charge (recovery) related to investment management funds, net of incentives) - Non-GAAP
 
$
272

 
$
306

 
$
273

 
$
263

 
$
287

 
$
284

 
$
260

 
$
314

 
$
236

 
$
253

 
$
278

 
$
282

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average assets
 
$
39,333

 
$
37,619

 
$
36,542

 
$
37,163

 
$
31,361

 
$
30,414

 
$
30,960

 
$
30,982

 
$
29,971

 
$
30,229

 
$
30,392

 
$
30,532

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets under management at period end (in billions) (b)
 
$
1,592

 
$
1,609

 
$
1,620

 
$
1,686

 
$
1,717

 
$
1,700

 
$
1,625

 
$
1,625

 
$
1,639

 
$
1,664

 
$
1,715

 
$
1,648

(c)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax operating margin
 
26
%
 
16
%
 
25
%
 
24
%
 
26
%
 
26
%
 
25
%
 
29
%
 
24
%
 
25
%
 
27
%
 
27
%
 
Adjusted pre-tax operating margin - Non-GAAP (d)
 
32
%
 
34
%
 
31
%
 
30
%
 
32
%
 
32
%
 
31
%
 
34
%
 
30
%
 
30
%
 
33
%
 
33
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)  Total fee and other revenue includes the impact of the consolidated investment management funds, net of noncontrolling interests. Additionally, other revenue includes asset servicing, treasury services, foreign exchange and other trading revenue and investment and other income.
(b)  Excludes securities lending cash management assets and assets managed in the Investment Services business and the Other segment. In the third quarter of 2015, prior period AUM was restated to reflect the reclassification of Meriten from the Investment Management business to the Other segment.
(c)  Preliminary.
(d)  Excludes amortization of intangible assets, provision for credit losses, distribution and servicing expense, and the charge (recovery) related to investment management funds, net of incentives. See "Supplemental information - Explanation of GAAP and Non-GAAP financial measures" beginning on page 24 of the Quarterly Earnings Release for the reconciliation of Non-GAAP measures. Also, see "Appendix - GAAP to Non-GAAP Reconciliations" beginning on page 17 for the reconciliation of Non-GAAP measures.

10



THE BANK OF NEW YORK MELLON CORPORATION
INVESTMENT SERVICES BUSINESS - 12 Quarter Trend

 
 
2014
 
2015
 
2016
 
(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
 
3rd Qtr
 
4th Qtr
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment services fees
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset servicing - ex. securities lending
 
$
955

 
$
958

 
$
971

 
$
964

 
$
979

 
$
995

 
$
1,001

 
$
970

 
$
974

 
$
1,001

 
$
997

 
$
999

 
Securities lending revenue
 
33

 
39

 
31

 
32

 
38

 
43

 
33

 
39

 
42

 
42

 
42

 
44

 
Issuer services
 
228

 
231

 
314

 
193

 
231

 
234

 
312

 
199

 
244

 
233

 
336

 
211

 
Clearing services
 
323

 
324

 
336

 
346

 
342

 
346

 
345

 
337

 
348

 
350

 
347

 
354

 
Treasury services
 
134

 
140

 
139

 
142

 
135

 
141

 
135

 
135

 
129

 
137

 
136

 
139

 
Total investment services fees
 
1,673

 
1,692

 
1,791

 
1,677

 
1,725

 
1,759

 
1,826

 
1,680

 
1,737

 
1,763

 
1,858

 
1,747

 
Foreign exchange and other trading revenue
 
164

 
148

 
164

 
167

 
212

 
181

 
179

 
150

 
168

 
161

 
177

 
157

 
Other (a)
 
86

 
117

 
90

 
113

 
92

 
117

 
129

 
127

 
125

 
130

 
148

 
128

 
Total fee and other revenue
 
1,923

 
1,957

 
2,045

 
1,957

 
2,029

 
2,057

 
2,134

 
1,957

 
2,030

 
2,054

 
2,183

 
2,032

 
Net interest revenue
 
625

 
630

 
613

 
600

 
629

 
667

 
662

 
664

 
679

 
690

 
715

 
713

 
Total revenue
 
2,548

 
2,587

 
2,658

 
2,557

 
2,658

 
2,724

 
2,796

 
2,621

 
2,709

 
2,744

 
2,898

 
2,745

 
Provision for credit losses
 
(7
)
 
(8
)
 
7

 
10

 
7

 
6

 
7

 
8

 
14

 
(7
)
 
1

 
—

 
Noninterest expense (ex. intangible amortization)
 
1,815

 
1,856

 
1,863

 
2,532

 
1,822

 
1,874

 
1,853

 
1,791

 
1,770

 
1,819

 
1,812

 
1,786

 
Amortization of intangible assets
 
44

 
44

 
44

 
43

 
41

 
40

 
41

 
40

 
38

 
40

 
39

 
38

 
Total noninterest expense
 
1,859

 
1,900

 
1,907

 
2,575

 
1,863

 
1,914

 
1,894

 
1,831

 
1,808

 
1,859

 
1,851

 
1,824

 
Income before taxes
 
$
696

 
$
695

 
$
767

 
$
(28
)
 
$
788

 
$
804

 
$
895

 
$
782

 
$
887

 
$
892

 
$
1,046

 
$
921

 
Income before taxes (ex. intangible amortization) - Non-GAAP
 
$
740

 
$
739

 
$
811

 
$
15

 
$
829

 
$
844

 
$
936

 
$
822

 
$
925

 
$
932

 
$
1,085

 
$
959

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average loans
 
$
38,077

 
$
39,737

 
$
40,344

 
$
42,342

 
$
45,071

 
$
45,822

 
$
46,222

 
$
45,844

 
$
45,004

 
$
43,786

 
$
44,329

 
$
45,832

 
Average assets
 
$
264,875

 
$
269,636

 
$
272,331

 
$
278,902

 
$
287,321

 
$
292,264

 
$
285,195

 
$
281,766

 
$
273,289

 
$
277,225

 
$
275,714

 
$
269,036

 
Average deposits
 
$
220,393

 
$
225,316

 
$
226,576

 
$
229,613

 
$
235,524

 
$
238,404

 
$
232,250

 
$
229,241

 
$
215,707

 
$
221,998

 
$
220,316

 
$
213,531

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax operating margin
 
27
%
 
27
%
 
29
%
 
(1
)%
 
30
%
 
30
%
 
32
%
 
30
%
 
33
%
 
33
%
 
36
%
 
34
%
 
Adjusted pre-tax operating margin (ex. provision for credit losses and intangible amortization) - Non-GAAP
 
29
%
 
28
%
 
30
%
 
1
 %
 
31
%
 
31
%
 
34
%
 
32
%
 
35
%
 
34
%
 
37
%
 
35
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment services fees as a percentage of noninterest expense (ex. intangible amortization) (b)
 
92
%
 
91
%
 
96
%
 
66
 %
 
95
%
 
94
%
 
99
%
 
94
%
 
98
%
 
97
%
 
103
%
 
98
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets under custody and/or administration at period end (in trillions) (c)
 
$
27.9

 
$
28.5

 
$
28.3

 
$
28.5

 
$
28.5

 
$
28.6

 
$
28.5

 
$
28.9

 
$
29.1

 
$
29.5

 
$
30.5

 
$
29.9

(d)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Market value of securities on loan at period end (in billions) (e)
 
$
264

 
$
280

 
$
282

 
$
289

 
$
291

 
$
283

 
$
288

 
$
277

 
$
300

 
$
278

 
$
288

 
$
296

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) Other revenue includes investment management fees, financing-related fees, distribution and servicing revenue, and investment and other income.
(b) Investment services fees as a percentage of noninterest expense (ex. intangible amortization) was lower in 4Q14 primarily reflecting litigation expense.
(c) Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.2 trillion at March 31, 2014, June 30, 2014 and Sept. 30, 2014, $1.1 trillion at Dec. 31, 2014, March 31, 2015, and June 30, 2015, $1.0 trillion at Sept. 30, 2015 and Dec. 31, 2015, $1.1 trillion at March 31, 2016 and June 30, 2016, and $1.2 trillion at Sept. 30, 2016 and Dec. 31, 2016.
(d)  Preliminary.
(e)  Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $66 billion at March 31, 2014, $64 billion at June 30, 2014, $65 billion at Sept. 30, 2014 and Dec. 31, 2014, $69 billion at March 31, 2015, $68 billion at June 30, 2015, $61 billion at Sept. 30, 2015, $55 billion at Dec. 31, 2015, $56 billion at March 31, 2016 and at June 30, 2016, $64 billion at Sept. 30, 2016 and $63 billion at Dec. 31, 2016.

11



THE BANK OF NEW YORK MELLON
OTHER SEGMENT- 12 Quarter Trend

 
 
2014
 
2015
 
2016
(dollar amounts in millions)
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee and other revenue
 
$
94

 
$
101

 
$
906

 
$
88

 
$
85

 
$
103

 
$
59

 
$
89

 
$
129

 
$
95

 
$
100

 
$
42

Net interest revenue (expense)
 
34

 
22

 
39

 
43

 
24

 
35

 
14

 
12

 
4

 
(5
)
 
(23
)
 
38

Total revenue
 
128

 
123

 
945

 
131

 
109

 
138

 
73

 
101

 
133

 
90

 
77

 
80

Provision for credit losses
 
(10
)
 
(5
)
 
(3
)
 
(9
)
 
(4
)
 
(15
)
 
(7
)
 
159

 
(3
)
 
(3
)
 
(20
)
 
1

Noninterest expense (ex. amortization of intangible assets, M&I and restructuring (recoveries) charges)
 
174

 
75

 
261

 
205

 
108

 
79

 
97

 
150

 
141

 
53

 
88

 
108

Amortization of intangible assets
 
1

 
1

 
1

 
2

 
1

 
—

 
1

 
—

 
—

 
—

 
—

 
—

M&I and restructuring (recoveries) charges
 
—

 
120

 
57

 
—

 
(4
)
 
8

 
(2
)
 
(4
)
 
(1
)
 
3

 
—

 
2

Total noninterest expense
 
175

 
196

 
319

 
207

 
105

 
87

 
96

 
146

 
140

 
56

 
88

 
110

Income (loss) before taxes
 
$
(37
)
 
$
(68
)
 
$
629

 
$
(67
)
 
$
8

 
$
66

 
$
(16
)
 
$
(204
)
 
$
(4
)
 
$
37

 
$
9

 
$
(31
)
Income (loss) before taxes (ex. amortization of intangible assets, M&I and restructuring (recoveries) charges) Non-GAAP
 
$
(36
)
 
$
53

 
$
687

 
$
(65
)
 
$
5

 
$
74

 
$
(17
)
 
$
(208
)
 
$
(5
)
 
$
40

 
$
9

 
$
(29
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average loans and leases
 
$
3,495

 
$
3,340

 
$
3,719

 
$
3,378

 
$
1,230

 
$
2,956

 
$
2,656

 
$
2,673

 
$
1,917

 
$
1,703

 
$
1,941

 
$
2,142

Average assets
 
$
50,784

 
$
61,957

 
$
71,536

 
$
69,167

 
$
49,729

 
$
55,601

 
$
57,298

 
$
55,842

 
$
61,294

 
$
66,766

 
$
45,124

 
$
44,577

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



12



THE BANK OF NEW YORK MELLON CORPORATION BUSINESSES
 
 
Investment Management
 
Investment Services
 
Other
 
Consolidated Results
 
(dollar amounts in millions unless otherwise noted)
 
2016
 
2015
 
2014
 
2016
 
2015
 
2014
 
2016
 
2015
 
2014
 
2016
 
2015
 
2014
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment services fees
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset servicing
 
$
102

 
$
89

 
$
91

 
$
4,141

 
$
4,098

 
$
3,983

 
$
1

 
$
—

 
$
1

 
$
4,244

 
$
4,187

 
$
4,075

 
Issuer services
 
—

 
—

 
—

 
1,024

 
976

 
966

 
2

 
2

 
2

 
1,026

 
978

 
968

 
Clearing services
 
—

 
—

 
—

 
1,399

 
1,370

 
1,329

 
5

 
5

 
6

 
1,404

 
1,375

 
1,335

 
Treasury services
 
6

 
9

 
9

 
541

 
546

 
555

 
—

 
—

 
—

 
547

 
555

 
564

 
Total investment services fees
 
108

 
98

 
100

 
7,105

 
6,990

 
6,833

 
8

 
7

 
9

 
7,221

 
7,095

 
6,942

 
Investment management fees
 
3,232

 
3,263

 
3,321

 
69

 
70

 
74

 
—

 
22

 
48

 
3,301

 
3,355

 
3,443

 
Performance fees
 
60

 
97

 
111

 
—

 
—

 
—

 
—

 
1

 
4

 
60

 
98

 
115

 
Foreign exchange and other trading revenue
 
(81
)
 
(13
)
 
(23
)
 
663

 
722

 
643

 
119

 
59

 
(50
)
 
701

 
768

 
570

 
Distribution and servicing
 
192

 
152

 
157

 
(26
)
 
10

 
11

 
—

 
—

 
5

 
166

 
162

 
173

 
Financing-related fees
 
(3
)
 
(1
)
 
1

 
226

 
222

 
168

 
(4
)
 
(1
)
 
—

 
219

 
220

 
169

 
Investment and other income
 
(84
)
 
(10
)
 
(11
)
 
262

 
163

 
153

 
168

(a)
166

(a)
1,083

(a)
346

(a)
319

(a)
1,225

(a)
Total fee revenue
 
3,424

 
3,586

 
3,656

 
8,299

 
8,177

 
7,882

 
291

(a)(b)
254

(a)(b)
1,099

(a)(b)
12,014

(a)(b)
12,017

(a)(b)
12,637

(a)(b)
Net securities gains (losses)
 
—

 
1

 
1

 
—

 
—

 
—

 
75

 
82

 
90

 
75

 
83

 
91

 
Total fee and other revenue
 
3,424

 
3,587

 
3,657

 
8,299

 
8,177

 
7,882

 
366

(a)(b)
336

(a)(b)
1,189

(a)(b)
12,089

(a)(b)
12,100

(a)(b)
12,728

(a)(b)
Net interest revenue (expense)
 
327

 
319

 
274

 
2,797

 
2,622

 
2,468

 
14

 
85

 
138

 
3,138

 
3,026

 
2,880

 
Total revenue
 
3,751

 
3,906

 
3,931

 
11,096

 
10,799

 
10,350

 
380

(a)
421

(a)
1,327

(a)
15,227

(a)
15,126

(a)
15,608

(a)
     Provision for credit losses
 
6

 
(1
)
 
—

 
8

 
28

 
(21
)
 
(25
)
 
133

 
(27
)
 
(11
)
 
160

 
(48
)
 
     Noninterest expenses (ex. intangible amortization)
 
2,696

 
2,762

 
2,921

 
7,187

 
7,340

 
8,066

 
394

 
432

 
892

 
10,277

 
10,534

 
11,879

 
Amortization of intangible assets
 
82

 
97

 
118

 
155

 
162

 
175

 
—

 
2

 
5

 
237

 
261

 
298

 
Total noninterest expense
 
2,778

 
2,859

 
3,039

 
7,342

 
7,502

 
8,241

 
394

 
434

 
897

 
10,514

 
10,795

 
12,177

 
Income (loss) before taxes and noncontrolling interest
 
$
967

 
$
1,048

 
$
892

 
$
3,746

 
$
3,269

 
$
2,130

 
$
11

(a)(b)
$
(146
)
(a)(b)
$
457

(a)(b)
$
4,724

(a)(b)
$
4,171

(a)(b)
$
3,479

(a)(b)
Income (loss) before taxes (ex. intangible amortization)
 
$
1,049

 
$
1,145

 
$
1,010

 
$
3,901

 
$
3,431

 
$
2,305

 
$
11

(a)(b)
$
(144
)
(a)(b)
$
462

(a)(b)
$
4,961

(a)(b)
$
4,432

(a)(b)
$
3,777

(a)(b)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average loans
 
$
15,015

 
$
12,545

 
$
10,589

 
$
44,740

 
$
45,743

 
$
40,137

 
$
1,926

 
$
2,384

 
$
3,484

 
$
61,681

 
$
60,672

 
$
54,210

 
Average assets
 
$
30,170

 
$
30,928

 
$
37,655

 
$
273,808

 
$
286,617

 
$
271,477

 
$
54,500

 
$
54,642

 
$
63,434

 
$
358,478

 
$
372,187

 
$
372,566

 
Average deposits
 
$
15,650

 
$
15,160

 
$
14,154

 
$
217,882

 
$
233,833

 
$
225,503

 
$
6,127

 
$
2,441

 
$
2,882

 
$
239,659

 
$
251,434

 
$
242,539

 
Assets under management at period end (in billions) (c)
 
$
1,648

 
$
1,625

 
$
1,686

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
1,648

 
$
1,625

 
$
1,686

 
Assets under custody and/or administration at period end (in trillions) (d)
 
$
—

 
$
—

 
$
—

 
$
29.9

 
$
28.9

 
$
28.5

 
$
—

 
$
—

 
$
—

 
$
29.9

 
$
28.9

 
$
28.5

 
Market value of securities on loan at period end (in billions) (e)
 
$
—

 
$
—

 
$
—

 
$
296

 
$
277

 
$
289

 
$
—

 
$
—

 
$
—

 
$
296

 
$
277

 
$
289

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax operating margin
 
26
%
 
27
%
 
23
%
 
34
%
 
30
%
 
21
%
 
N/M

 
N/M

 
N/M

 
31
%
 
28
%
 
22
%
 
Memo:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities lending revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
207

 
$
176

 
$
158

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) In the first quarter of 2014, prior periods were restated to reflect the retrospective application of adopting new accounting guidance related to our investments in qualified affordable housing projects (ASU 2014-01).
(b) Total fee and other revenue and income before taxes for the years 2014, 2015 and 2016 include income from consolidated investment management funds of $163 million, $86 million and $26 million, respectively, net of income attributable to noncontrolling interests of $84 million, $64 million and $1 million respectively. The net of these income statement line items of $79 million, $18 million and $16 million, respectively, are included above in fee and other revenue. The years 2015 and 2016 include losses attributable to noncontrolling interest of $4 million and $9 million, respectively, related to other consolidated subsidiaries.
(c) Excludes securities lending cash management assets and assets managed in the Investment Services business and the Other segment. In the third quarter of 2015, prior period AUM was restated to reflect the reclassification of Meriten from the Investment Management business to the Other segment.
(d) Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.1 trillion at Dec. 31, 2014, $1.0 trillion at Dec. 31, 2015 and $1.2 trillion at Dec. 31, 2016.
(e) Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent, beginning in the fourth quarter of 2013, on behalf of CIBC Mellon clients, which totaled $65 billion at Dec. 31, 2014, $55 billion at Dec. 31, 2015 and $63 billion at Dec. 31, 2016.
Note: See pages 10 through 12 for businesses results.
N/M - Not meaningful

13



THE BANK OF NEW YORK MELLON CORPORATION
NONPERFORMING ASSETS - 12 Quarter Trend
 
 
2014
 
2015
 
2016
(dollar amounts in millions)
 
March 31
 
June 30
 
Sept. 30
 
Dec. 31
 
March 31
 
June 30
 
Sept. 30
 
Dec. 31
 
March 31
 
June 30
 
Sept. 30
 
Dec. 31
Nonperforming loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other residential mortgages
 
$
107

 
$
105

 
$
113

 
$
112

 
$
111

 
$
110

 
$
103

 
$
102

 
$
99

 
$
97

 
$
93

 
$
91

Wealth management loans and mortgages
 
12

 
12

 
13

 
12

 
12

 
11

 
12

 
11

 
11

 
10

 
7

 
8

Commercial real estate
 
4

 
4

 
4

 
1

 
1

 
1

 
1

 
2

 
2

 
2

 
1

 
—

Lease financing
 
13

 
13

 
13

 
—

 
—

 
—

 
—

 
—

 
5

 
4

 
4

 
4

Foreign
 
7

 
4

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Financial institutions
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
171

 
171

 
171

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total nonperforming loans
 
143

 
138

 
143

 
125

 
124

 
122

 
116

 
286

 
288

 
284

 
105

 
103

Other assets owned
 
3

 
4

 
4

 
3

 
4

 
5

 
7

 
6

 
4

 
5

 
4

 
4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total nonperforming assets (a)
 
$
146

 
$
142

 
$
147

 
$
128

 
$
128

 
$
127

 
$
123

 
$
292

 
$
292

 
$
289

 
$
109

 
$
107

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonperforming assets ratio
 
0.27
%
 
0.24
%
 
0.26
%
 
0.22
%
 
0.21
%
 
0.20
%
 
0.20
%
 
0.46
%
 
0.48
%
 
0.45
%
 
0.17
%
 
0.17
%
Nonperforming assets ratio excluding margin loans
 
0.39
%
 
0.34
%
 
0.37
%
 
0.33
%
 
0.30
%
 
0.30
%
 
0.28
%
 
0.67
%
 
0.69
%
 
0.63
%
 
0.23
%
 
0.23
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses/nonperforming loans
 
138.5
%
 
135.5
%
 
133.6
%
 
152.8
%
 
153.2
%
 
150.0
%
 
156.0
%
 
54.9
%
 
56.3
%
 
55.6
%
 
141.0
%
 
164.1
%
Allowance for loan losses/nonperforming assets
 
135.6
%
 
131.7
%
 
129.9
%
 
149.2
%
 
148.4
%
 
144.1
%
 
147.2
%
 
53.8
%
 
55.5
%
 
54.7
%
 
135.8
%
 
157.9
%
Total allowance for credit losses/nonperforming loans
 
228.0
%
 
225.4
%
 
201.4
%
 
224.0
%
 
228.2
%
 
227.9
%
 
241.4
%
 
96.2
%
 
99.7
%
 
98.6
%
 
261.0
%
 
272.8
%
Total allowance for credit losses/nonperforming assets
 
223.3
%
 
219.0
%
 
195.9
%
 
218.8
%
 
221.1
%
 
218.9
%
 
227.6
%
 
94.2
%
 
98.3
%
 
96.9
%
 
251.4
%
 
262.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) Loans of consolidated investment management funds are not part of BNY Mellon's loan portfolio. Included in the loans of consolidated investment management funds are nonperforming loans for the 1st through 4th quarters of 2014 of $74 million, $68 million, $79 million, and $53 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. In 2Q15, BNY Mellon adopted the new accounting guidance included in ASU 2015-02, Consolidations. As a result, we deconsolidated substantially all of the loans of consolidated investment management funds retroactively to Jan.1, 2015. 


14



THE BANK OF NEW YORK MELLON CORPORATION
ALLOWANCE FOR CREDIT LOSSES, PROVISION AND NET CHARGE-OFFS - 12 Quarter Trend

 
 
2014
 
2015
 
2016
(dollar amounts in millions)
 
March 31
 
June 30
 
Sept. 30
 
Dec. 31
 
March 31
 
June 30
 
Sept. 30
 
Dec. 31
 
March 31
 
June 30
 
Sept. 30
 
Dec. 31
Allowance for credit losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses
 
$
210

 
$
198

 
$
187

 
$
191

 
$
191

 
$
190

 
$
183

 
$
181

 
$
157

 
$
162

 
$
158

 
$
148

Allowance for lending-related commitments
 
134

 
128

 
124

 
97

 
89

 
93

 
95

 
99

 
118

 
125

 
122

 
126

Allowance for credit losses - beginning of period
 
$
344

 
$
326

 
$
311

 
$
288

 
$
280

 
$
283

 
$
278

 
$
280

 
$
275

 
$
287

 
$
280

 
$
274

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (charge-offs) recoveries:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Charge-offs
 
(1
)
 
(4
)
 
(5
)
 
(10
)
 
—

 
—

 
—

 
(170
)
 
—

 
—

 
(1
)
 
(1
)
Recoveries
 
1

 
1

 
1

 
1

 
1

 
1

 
1

 
2

 
2

 
2

 
14

 
1

Total Net (charge-offs) recoveries
 
—

 
(3
)
 
(4
)
 
(9
)
 
1

 
1

 
1

 
(168
)
 
2

 
2

 
13

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for credit losses
 
(18
)
 
(12
)
 
(19
)
 
1

 
2

 
(6
)
 
1

 
163

 
10

 
(9
)
 
(19
)
 
7


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses - end of period
 
$
326

 
$
311

 
$
288

 
$
280

 
$
283

 
$
278

 
$
280

 
$
275

 
$
287

 
$
280

 
$
274

 
$
281

Allowance for loan losses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses
 
$
198

 
$
187

 
$
191

 
$
191

 
$
190

 
$
183

 
$
181

 
$
157

 
$
162

 
$
158

 
$
148

 
$
169

Allowance for lending-related commitments
 
128

 
124

 
97

 
89

 
93

 
95

 
99

 
118

 
125

 
122

 
126

 
112

Allowance for credit losses - end of period
 
$
326

 
$
311

 
$
288

 
$
280

 
$
283

 
$
278

 
$
280

 
$
275

 
$
287

 
$
280

 
$
274

 
$
281

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses as a percentage of total loans
 
0.37
%
 
0.32
%
 
0.33
%
 
0.32
%
 
0.31
%
 
0.29
%
 
0.29
%
 
0.25
%
 
0.26
%
 
0.25
%
 
0.22
%
 
0.26
%


15


THE BANK OF NEW YORK MELLON CORPORATION
Quarterly Financial Trends
January 19, 2017

Notes:
The following transactions/changes have impacted the reporting of our results:
 
In the first quarter of 2016, results of credit-related activities were reclassified from the Other segment to the Investment Services segment. Also, concurrent with this reclassification, the provision for credit losses associated with the respective credit portfolios is now reflected in each business segment. All prior periods have been restated.
 
Beginning in the first quarter of 2016, we revised the net interest revenue for our business to reflect adjustments to our transfer pricing methodology to better reflect the value of certain deposits. This change did not impact the consolidated results.
 
Beginning in the first quarter of 2016, we refined the expense allocation process for indirect expenses to simplify the expenses recorded in the Other segment to include only expenses not directly attributable to the Investment Management and Investment Services operations. This change did not impact the consolidated results.
 
In the third quarter of 2015, results of Meriten were reclassified from the Investment Management business to the Other segment. Meriten Investment Management was sold in July 2015.
 
The first quarter of 2015 was restated to reflect the retrospective application of adopting new accounting guidance related to Consolidations (ASU 2015-02).
 
In the first quarter of 2014, prior periods were restated to reflect the retrospective application of adopting new accounting guidance related to our investments in qualified affordable housing projects (ASU 2014-01).
 
Restructuring charges in the second quarter of 2014 represent corporate initiatives and were recorded in the Other segment.
 
Certain immaterial reclassifications/revisions have been made to prior periods to place them on a basis comparable with the current period's presentation.
 
In businesses where average deposits are greater than average loans, average assets include an allocation of investment securities equal to the difference.
 
Quarterly return on common and tangible common equity ratios are annualized.
 
Non-GAAP Measures:
Certain Non-GAAP measures are included in this document. These measures are used by management to monitor financial performance, both on a company-wide and on a business basis. These Non-GAAP measures relate to certain revenue/expense categories, impairment charge/(recovery) related to Sentinel, percentages and ratios as described in footnotes. For further information, see 'Supplemental information -- Explanation of GAAP and Non-GAAP Financial Measures' in the Quarterly Earnings Release. Also, see "Appendix - GAAP to Non-GAAP Reconciliations" beginning on page 17 for the reconciliation of Non-GAAP measures. Summations may not equal due to rounding. As a result of our rounding convention and reclassifications noted above, differences may exist between the business trends data versus business data in the Form 10-Q for the quarter ended September 30, 2016 or other reports filed with the SEC.

16


    
 
 
 
Appendix - GAAP to Non-GAAP Reconciliations
 
 
 


17


 
THE BANK OF NEW YORK MELLON CORPORATION
 
SUPPLEMENTAL INFORMATION – EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
 
 
 
BNY Mellon has included in these Quarterly Financial Trends certain Non-GAAP financial measures based on tangible common shareholders’ equity. BNY Mellon believes that the ratio of tangible common shareholders’ equity to tangible assets of operations is a measure of capital strength that provides additional useful information to investors. The tangible common shareholders’ equity ratio, which excludes goodwill and intangible assets net of deferred tax liabilities, includes changes in investment securities valuations which are reflected in total shareholders’ equity. Further, BNY Mellon believes that the return on tangible common equity measure, which excludes goodwill and intangible assets, net of deferred tax liabilities, is a useful additional measure for investors because it presents a measure of those assets that can generate income.
 
 
 
BNY Mellon has presented revenue measures, which exclude the effect of noncontrolling interests related to consolidated investment management funds, and expense measures, which exclude M&I, litigation and restructuring charges and amortization of intangible assets. Operating margin measures, which exclude some or all of these items, as well as the impairment charge/(recovery) related to Sentinel, are also presented. Operating margin measures may also exclude the provision for credit losses and distribution and servicing expense. BNY Mellon believes that these measures are useful to investors because they permit a focus on period-to-period comparisons, which relate to the ability of BNY Mellon to enhance revenues and limit expenses in circumstances where such matters are within BNY Mellon’s control. M&I expenses primarily relate to acquisitions and generally continue for approximately three years after the transaction. Litigation charges represent accruals for loss contingencies that are both probable and reasonably estimable, but exclude standard business-related legal fees. Restructuring charges relate to our streamlining actions, Operational Excellence Initiatives and migrating positions to Global Delivery Centers. Excluding these charges mentioned above permits investors to view expenses on a basis consistent with how management views the business.
 
 
 
The Quarterly Financial Trends revenue measures also exclude the gain on the sale of our equity investment in Wing Hang and the gain on the sale of our One Wall Street building. Expense measures also exclude the charge related to investment management funds, net of incentives.
 
 
 
The presentation of income (loss) from consolidated investment management funds, net of net income (loss) attributable to noncontrolling interests related to the consolidation of certain investment management funds permits investors to view revenue on a basis consistent with how management views the business. BNY Mellon believes that these presentations, as a supplement to GAAP information, give investors a clearer picture of the results of its primary businesses.
 
 
 
 


18


THE BANK OF NEW YORK MELLON CORPORATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PRE-TAX OPERATING MARGIN RATIO RECONCILIATION - 12 QUARTER TREND
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2015
 
2016
(dollar amounts in millions)
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes – GAAP
 
$
926

 
$
811

 
$
1,662

 
$
164

 
$
1,090

 
$
1,165

 
$
1,109

 
$
871

 
$
1,091

 
$
1,165

 
$
1,317

 
$
1,152

   Less: Net income (loss) attributable to noncontrolling interests of consolidated investment management funds
 
20

 
17

 
23

 
24

 
31

 
37

 
(5
)
 
5

 
(7
)
 
4

 
9

 
4

            Gain on the sale of our equity investment in Wing Hang
 
—

 
—

 
490

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

            Gain on the sale of our One Wall Street building
 
—

 
—

 
346

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

   Add: Amortization of intangible assets
 
75

 
75

 
75

 
73

 
66

 
65

 
66

 
64

 
57

 
59

 
61

 
60

             M&I, litigation and restructuring charges (recoveries)
 
(12
)
 
122

 
220

 
800

 
(3
)
 
59

 
11

 
18

 
17

 
7

 
18

 
7

             Impairment charge (recovery) related to Sentinel
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
170

 
—

 
—

 
(13
)
 
—

             Charge (recovery) related to investment management funds, net of incentives
 
(5
)
 
109

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

     Income before income taxes, as adjusted – Non-GAAP (a)
 
$
964

 
$
1,100

 
$
1,098

 
$
1,013

 
$
1,122

 
$
1,252

 
$
1,191

 
$
1,118

 
$
1,172

 
$
1,227

 
$
1,374

 
$
1,215

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee and other revenue – GAAP
 
$
2,883

 
$
2,980

 
$
3,851

 
$
2,935

 
$
3,012

 
$
3,067

 
$
3,053

 
$
2,950

 
$
2,970

 
$
2,999

 
$
3,150

 
$
2,954

Income (loss) from consolidated investment management funds – GAAP
 
36

 
46

 
39

 
42

 
52

 
40

 
(22
)
 
16

 
(6
)
 
10

 
17

 
5

Net interest revenue – GAAP
 
728

 
719

 
721

 
712

 
728

 
779

 
759

 
760

 
766

 
767

 
774

 
831

     Total revenue – GAAP
 
3,647

 
3,745

 
4,611

 
3,689

 
3,792

 
3,886

 
3,790

 
3,726

 
3,730

 
3,776

 
3,941

 
3,790

Less: Net income (loss) attributable to noncontrolling interests of consolidated investment management funds
 
20

 
17

 
23

 
24

 
31

 
37

 
(5
)
 
5

 
(7
)
 
4

 
9

 
4

          Gain on the sale of our equity investment in Wing Hang
 
—

 
—

 
490

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

          Gain on the sale of our One Wall Street building
 
—

 
—

 
346

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Total revenue, as adjusted – Non-GAAP (a)
 
$
3,627

 
$
3,728

 
$
3,752

 
$
3,665

 
$
3,761

 
$
3,849

 
$
3,795

 
$
3,721

 
$
3,737

 
$
3,772

 
$
3,932

 
$
3,786

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax operating margin - GAAP (b)(c)
 
25
%
 
22
%
 
36
%
 
4
%
 
29
%
 
30
%
 
29
%
 
23
%
 
29
%
 
31
%
 
33
%
 
30
%
Adjusted pre-tax operating margin – Non-GAAP (a)(b)(c)
 
27
%
 
30
%
 
29
%
 
28
%
 
30
%
 
33
%
 
31
%
 
30
%
 
31
%
 
33
%
 
35
%
 
32
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) Non-GAAP information for all periods presented excludes net income (loss) attributable to noncontrolling interests of consolidated investment management funds, amortization of intangible assets and M&I, litigation and restructuring charges. Non-GAAP information for 1Q14 and 2Q14 also excludes charges (recoveries) related to investment management funds, net of incentives. Non-GAAP information for 3Q15 also excludes the gain on the sale of our equity investment in Wing Hang and the gain on the sale of our One Wall Street building. Non-GAAP information for 4Q15 also excludes the impairment charge related to a court decision regarding Sentinel. Non-GAAP information for 3Q16 also excludes a recovery of the previously impaired Sentinel loan.
(b) Income before taxes divided by total revenue.
(c) Our GAAP earnings include tax-advantaged investments such as low income housing, renewable energy, bank-owned life insurance and tax-exempt securities. The benefits of these investments are primarily reflected in tax expense. If reported on a tax-equivalent basis, beginning with 2015, these investments would increase revenue and income before taxes by $64 million for 1Q15, $52 million for 2Q15, $53 million for 3Q15, $73 million for 4Q15, $77 million for 1Q16, $74 million for 2Q16, $74 million for 3Q16 and $92 million for 4Q16, and would increase our pre-tax operating margin by approximately 1.2% for 1Q15, 0.9% for 2Q15, 1.0% for 3Q15, 1.5% for 4Q15, 1.4% for 1Q16, 1.3% for 2Q16, 1.2% for 3Q16 and 1.7% for 4Q16.


19


THE BANK OF NEW YORK MELLON CORPORATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RETURN ON TANGIBLE COMMON EQUITY RECONCILIATION - 12 QUARTER TREND
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2015
 
2016
(dollar amounts in millions)
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP
 
$
661

 
$
554

 
$
1,070

 
$
209

 
$
766

 
$
830

 
$
820

 
$
637

 
$
804

 
$
825

 
$
974

 
$
822

   Add:  Amortization of intangible assets
 
75

 
75

 
75

 
73

 
66

 
65

 
66

 
64

 
57

 
59

 
61

 
60

   Less: Tax impact of amortization of intangible assets
 
26

 
26

 
26

 
26

 
23

 
21

 
23

 
22

 
20

 
21

 
21

 
19

Net income applicable to common shareholders of The Bank of New York Mellon Corporation excluding amortization of intangible assets – Non-GAAP
 
$
710

 
$
603

 
$
1,119

 
$
256

 
$
809

 
$
874

 
$
863

 
$
679

 
$
841

 
$
863

 
$
1,014

 
$
863

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average common shareholders’ equity
 
$
36,289

 
$
36,565

 
$
36,751

 
$
36,859

 
$
35,486

 
$
35,516

 
$
35,588

 
$
35,664

 
$
35,252

 
$
35,827

 
$
35,767

 
$
35,171

Less: Average goodwill
 
18,072

 
18,149

 
18,109

 
17,924

 
17,756

 
17,752

 
17,742

 
17,673

 
17,562

 
17,622

 
17,463

 
17,344

          Average intangible assets
 
4,422

 
4,354

 
4,274

 
4,174

 
4,088

 
4,031

 
3,962

 
3,887

 
3,812

 
3,789

 
3,711

 
3,638

Add: Deferred tax liability – tax deductible goodwill (a)
 
1,306

 
1,338

 
1,317

 
1,340

 
1,362

 
1,351

 
1,379

 
1,401

 
1,428

 
1,452

 
1,477

 
1,497

         Deferred tax liability – intangible assets (a)
 
1,259

 
1,247

 
1,230

 
1,216

 
1,200

 
1,179

 
1,164

 
1,148

 
1,140

 
1,129

 
1,116

 
1,105

Average tangible common shareholders’ equity – Non-GAAP
 
$
16,360

 
$
16,647

 
$
16,915

 
$
17,317

 
$
16,204

 
$
16,263

 
$
16,427

 
$
16,653

 
$
16,446

 
$
16,997

 
$
17,186

 
$
16,791

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on tangible common equity – Non-GAAP (b)
 
17.6
%
 
14.5
%
 
26.2
%
 
5.9
%
 
20.3
%
 
21.5
%
 
20.8
%
 
16.2
%
 
20.6
%
 
20.4
%
 
23.5
%
 
20.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) Deferred tax liabilities are based on fully phased-in Basel III rules.
(b) Annualized.


20


THE BANK OF NEW YORK MELLON CORPORATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NONINTEREST EXPENSE RECONCILIATION - 12 QUARTER TREND
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2015
 
2016
(dollar amounts in millions)
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total noninterest expense -GAAP
 
$
2,739

 
$
2,946

 
$
2,968

 
$
3,524

 
$
2,700

 
$
2,727

 
$
2,680

 
$
2,692

 
$
2,629

 
$
2,620

 
$
2,643

 
$
2,631

Less: Amortization of intangible assets
 
75

 
75

 
75

 
73

 
66

 
65

 
66

 
64

 
57

 
59

 
61

 
60

          M&I, litigation and restructuring charges (recoveries)
 
(12
)
 
122

 
220

 
800

 
(3
)
 
59

 
11

 
18

 
17

 
7

 
18

 
7

          Charge (recovery) related to investment management funds, net of incentives
 
(5
)
 
109

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Total noninterest expense excluding amortization of intangible assets and M&I, litigation and restructuring charges (recoveries), and the charge (recovery) related to investment management funds, net of incentives - Non-GAAP
 
$
2,681

 
$
2,640

 
$
2,673

 
$
2,651

 
$
2,637

 
$
2,603

 
$
2,603

 
$
2,610

 
$
2,555

 
$
2,554

 
$
2,564

 
$
2,564



21


 
THE BANK OF NEW YORK MELLON CORPORATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PRE-TAX OPERATING MARGIN - INVESTMENT MANAGEMENT BUSINESS - 12 QUARTER TREND
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2015
 
2016
 
(dollar amounts in millions)
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
1st Qtr
 
2nd Qtr
 
3rd Qtr
 
4th Qtr
 
Income before income taxes – GAAP
 
$
247

 
$
167

 
$
243

 
$
235

 
$
263

 
$
259

 
$
236

 
$
290

 
$
217

 
$
234

 
$
256

 
$
260

 
Add: Amortization of intangible assets
 
30

 
30

 
30

 
28

 
24

 
25

 
24

 
24

 
19

 
19

 
22

 
22

 
         Provision for credit losses
 
(1
)
 
1

 
—

 
—

 
(1
)
 
3

 
1

 
(4
)
 
(1
)
 
1

 
—

 
6

 
         Charge (recovery) related to investment management funds, net of incentives
 
(5
)
 
109

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
Income before income taxes excluding amortization of intangible assets, provision for credit losses and the charge (recovery) related to investment management funds, net of incentives – Non-GAAP
 
$
271

 
$
307

 
$
273

 
$
263

 
$
286

 
$
287

 
$
261

 
$
310

 
$
235

 
$
254

 
$
278

 
$
288

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue – GAAP
 
$
951

 
$
1,018

 
$
985

 
$
977

 
$
994

 
$
987

 
$
926

 
$
999

 
$
895

 
938

 
$
958

 
$
960

 
Less: Distribution and servicing expense
 
106

 
111

 
105

 
101

 
97

 
95

 
94

 
92

 
100

 
102

 
104

 
98

 
Total revenue net of distribution and servicing expense – Non-GAAP
 
$
845

 
$
907

 
$
880

 
$
876

 
$
897

 
$
892

 
$
832

 
$
907

 
$
795

 
$
836

 
$
854

 
$
862

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax operating margin - GAAP (a)
 
26
%
 
16
%
 
25
%
 
24
%
 
26
%
 
26
%
 
25
%
 
29
%
 
24
%
 
25
%
 
27
%
 
27
%
 
Adjusted pre-tax operating margin excluding amortization of intangible assets, provision for credit losses, distribution and servicing expense, and the charge (recovery) related to investment management funds, net of incentives – Non-GAAP (a)
 
32
%
 
34
%
 
31
%
 
30
%
 
32
%
 
32
%
 
31
%
 
34
%
 
30
%
 
30
%
 
33
%
 
33
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) Income before taxes divided by total revenue.


22