Bank of New York Mellon Corp 8-K, filed Jul 15, 2021
Bank of New York Mellon Corp (BNY)
8-K
2021-07-15
For: 2021-07-15
View Original
Added on
April 09, 2026
About this 8-K
Bank of New York Mellon Corp filed this 8-K on July 15, 2021.
Items reported
- Item 2.02: Financial results
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) – July 15, 2021
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code – (212 ) 495-1784
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||
| (fully and unconditionally guaranteed by The Bank of New York Mellon Corporation) | ||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 under the Securities Act (17 CFR 230.405) or Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On July 15, 2021, The Bank of New York Mellon Corporation (“BNY Mellon”) released information on its financial results for the second quarter ended June 30, 2021. Copies of the Earnings Release and the Financial Supplement are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, and are incorporated herein by reference.
ITEM 7.01. REGULATION FD DISCLOSURE.
On July 15, 2021, BNY Mellon will hold a conference call and webcast to discuss its financial results for the second quarter ended June 30, 2021 and outlook. A copy of the Financial Highlights presentation for the conference call and webcast is attached hereto as Exhibit 99.3.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) EXHIBITS.
| Exhibit | ||||||||
| Number | Description | |||||||
| 99.1 | ||||||||
| The quotation in Exhibit 99.1 (the “Excluded Section”) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (“Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of BNY Mellon under the Securities Act of 1933 or the Exchange Act. The information included in Exhibit 99.1, other than in the Excluded Section, shall be deemed “filed” for purposes of the Exchange Act. | ||||||||
| 99.2 | ||||||||
| The information included in Exhibit 99.2 shall be deemed “filed” for purposes of the Exchange Act. | ||||||||
| 99.3 | ||||||||
| The information included in Exhibit 99.3 shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of BNY Mellon under the Securities Act of 1933 or the Exchange Act. | ||||||||
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. | |||||||
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
The Bank of New York Mellon Corporation (Registrant) | |||||
| Date: July 15, 2021 | By: /s/ James J. Killerlane III | ||||
| Name: James J. Killerlane III Title: Secretary | |||||
3
| News Release |  | ||||
BNY MELLON REPORTS SECOND QUARTER 2021 EARNINGS OF
$991 MILLION OR $1.13 PER COMMON SHARE
Fee & other rev. up 3% NIR down 17% | EPS up 12% | ROE 10% ROTCE 19% (a) | CET1 12.6% Tier 1 leverage 6.0% | |||||||||||||||||
NEW YORK, July 15, 2021 – The Bank of New York Mellon Corporation (“BNY Mellon”) (NYSE: BK) today reported:
| 2Q21 vs. | |||||||||||||||||
| 2Q21 | 1Q21 | 2Q20 | 1Q21 | 2Q20 | |||||||||||||
Net income applicable to common shareholders (in millions) | $ | 991 | $ | 858 | $ | 901 | 16 | % | 10 | % | |||||||
| Diluted earnings per common share | $ | 1.13 | $ | 0.97 | $ | 1.01 | 16 | % | 12 | % | |||||||
| Second Quarter Results | ||
Total revenue of $4.0 billion, decreased 1%
•Fee revenue increased 4%
•Fee revenue increased 10% excluding money market fee waivers (a)
•Other revenue decreased $50 million
•Net interest revenue decreased 17%
•Weaker U.S. dollar increased total revenue ~ 2%
Provision for credit losses was a benefit of $86 million
Total noninterest expense of $2.8 billion, increased 3%
•Weaker U.S. dollar increased expenses ~ 2%
Investment Services
•Total revenue decreased 4%
•Income before taxes increased 3%
•AUC/A of $45.0 trillion, increased 21%
Investment and Wealth Management
•Total revenue increased 13%
•Income before taxes increased 48%
•AUM of $2.3 trillion, increased 18%
Capital
•Repurchased 12.8 million common shares for $618 million
•Dividends of $273 million to common shareholders (including dividend-equivalents on share-based awards)
•Authorized to repurchase up to $6.0 billion of common shares through 4Q22 and increased quarterly dividend 10% to $0.34 per common share in 3Q21
| CEO Commentary | ||
“We delivered another strong quarter with EPS of $1.13 on $4 billion of revenue, and generated returns on common equity and tangible common equity of 10 percent and 19 percent. Fee revenue was up 4 percent, or 10 percent excluding the impact of money market fee waivers, reflecting the benefit of higher market levels as well as continued organic growth, driven by higher client activity levels and net new business momentum,” Todd Gibbons, Chief Executive Officer, said.
Mr. Gibbons added, “Our investments in digitization and open-architecture modular solutions continue to pay off and we are being recognized as a leading innovator enabling clients to optimize, scale and grow their businesses.”
“As we continued to generate further excess capital in the quarter, we were pleased with the results of this year’s supervisory stress tests. The stress capital buffer framework allows us to start returning our significant excess capital to our shareholders beginning in the third quarter. We increased our common dividend by 10 percent to 34 cents per share, and received authorization from our Board to repurchase up to $6 billion of common stock through the fourth quarter of 2022,” Mr. Gibbons concluded.
Media Relations: Erin Smith (212) 815-7170 | Investor Relations: Marius Merz (212) 298-1480 | ||||
| (a) For information on these Non-GAAP measures, see “Supplemental Information – Explanation of GAAP and Non-GAAP financial measures” on page 9. | |||||
| Note: Above comparisons are 2Q21 vs. 2Q20, unless otherwise noted. | |||||
| BNY Mellon 2Q21 Earnings Release | ||
CONSOLIDATED FINANCIAL HIGHLIGHTS
| (in millions, except per share amounts and unless otherwise noted; not meaningful - N/M) | 2Q21 vs. | ||||||||||||||||
| 2Q21 | 1Q21 | 2Q20 | 1Q21 | 2Q20 | |||||||||||||
| Fee revenue | $ | 3,224 | $ | 3,257 | $ | 3,089 | (1) | % | 4 | % | |||||||
| Other revenue | 91 | 9 | 141 | N/M | N/M | ||||||||||||
| Total fee and other revenue | 3,315 | 3,266 | 3,230 | 2 | 3 | ||||||||||||
| Net interest revenue | 645 | 655 | 780 | (2) | (17) | ||||||||||||
| Total revenue | 3,960 | 3,921 | 4,010 | 1 | (1) | ||||||||||||
| Provision for credit losses | (86) | (83) | 143 | N/M | N/M | ||||||||||||
| Noninterest expense | 2,778 | 2,851 | 2,686 | (3) | 3 | ||||||||||||
| Income before income taxes | 1,268 | 1,153 | 1,181 | 10 | 7 | ||||||||||||
| Provision for income taxes | 241 | 221 | 216 | 9 | 12 | ||||||||||||
| Net income | $ | 1,027 | $ | 932 | $ | 965 | 10 | % | 6 | % | |||||||
| Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 991 | $ | 858 | $ | 901 | 16 | % | 10 | % | |||||||
Operating leverage (a) | 356 | bps | (467) | bps | |||||||||||||
| Diluted earnings per common share | $ | 1.13 | $ | 0.97 | $ | 1.01 | 16 | % | 12 | % | |||||||
Average common shares and equivalents outstanding - diluted (in thousands) | 873,475 | 885,655 | 890,561 | ||||||||||||||
| Pre-tax operating margin | 32 | % | 29 | % | 29 | % | |||||||||||
(a) Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense.
bps – basis points.
KEY DRIVERS (comparisons are 2Q21 vs. 2Q20, unless otherwise stated)
•Total revenue decreased 1%, primarily reflecting:
•Fee revenue increased 4% primarily reflecting the positive impact of higher markets, the favorable impact of a weaker U.S. dollar and higher client volumes, partially offset by money market fee waivers. Excluding money market fee waivers, fee revenue increased 10% (a).
•Other revenue decreased primarily reflecting lower gains related to seed capital investments.
•Net interest revenue decreased 17% primarily reflecting lower interest rates on interest-earning assets. This was partially offset by the benefit of lower funding and deposit rates, lower debt balances, a larger securities portfolio and higher deposit balances.
•Provision for credit losses was a benefit of $86 million primarily driven by an improvement in the macroeconomic forecast.
•Noninterest expense increased 3% primarily reflecting the unfavorable impact of a weaker U.S. dollar, investments in efficiency and growth initiatives and higher revenue-related expenses.
•Effective tax rate of 19.0%.
Assets under custody and/or administration (“AUC/A”) and Assets under management (“AUM”)
•AUC/A of $45.0 trillion, increased 21%, primarily reflecting higher market values, net new business and the favorable impact of a weaker U.S. dollar.
•AUM of $2.3 trillion, increased 18%, primarily reflecting higher market values, the favorable impact of a weaker U.S. dollar (principally versus the British pound) and net inflows.
Capital and liquidity
•Repurchased 12.8 million common shares for $618 million; Dividends of $273 million to common shareholders (including dividend-equivalents on share-based awards).
•Return on common equity (“ROE”) of 10%; Return on tangible common equity (“ROTCE”) of 19% (a).
•Common Equity Tier 1 (“CET1”) ratio – 12.6%.
•Tier 1 leverage ratio – 6.0%.
•Average liquidity coverage ratio (“LCR”) – 110%.
•Total Loss Absorbing Capacity (“TLAC”) ratios exceed minimum requirements.
(a) See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” on page 9 for additional information.
Note: Throughout this document, sequential growth rates are unannualized.
Page - 2 | ||
| BNY Mellon 2Q21 Earnings Release | ||
INVESTMENT SERVICES BUSINESS HIGHLIGHTS
| (dollars in millions, unless otherwise noted; not meaningful - N/M) | 2Q21 vs. | ||||||||||||||||
| 2Q21 | 1Q21 | 2Q20 | 1Q21 | 2Q20 | |||||||||||||
| Total revenue by line of business: | |||||||||||||||||
| Asset Servicing | $ | 1,382 | $ | 1,424 | $ | 1,463 | (3) | % | (6) | % | |||||||
| Pershing | 590 | 605 | 578 | (2) | 2 | ||||||||||||
| Issuer Services | 405 | 363 | 431 | 12 | (6) | ||||||||||||
| Treasury Services | 319 | 317 | 340 | 1 | (6) | ||||||||||||
| Clearance and Collateral Management | 283 | 281 | 295 | 1 | (4) | ||||||||||||
| Total revenue by line of business | 2,979 | 2,990 | 3,107 | — | (4) | ||||||||||||
| Provision for credit losses | (77) | (79) | 145 | N/M | N/M | ||||||||||||
| Noninterest expense | 2,052 | 2,101 | 1,989 | (2) | 3 | ||||||||||||
| Income before taxes | $ | 1,004 | $ | 968 | $ | 973 | 4 | % | 3 | % | |||||||
| Pre-tax operating margin | 34 | % | 32 | % | 31 | % | |||||||||||
| Foreign exchange revenue | $ | 152 | $ | 193 | $ | 164 | (21) | % | (7) | % | |||||||
| Securities lending revenue | $ | 42 | $ | 41 | $ | 51 | 2 | % | (18) | % | |||||||
| Net interest revenue | $ | 643 | $ | 645 | $ | 768 | — | % | (16) | % | |||||||
| Metrics: | |||||||||||||||||
| Average loans | $ | 46,845 | $ | 43,468 | $ | 43,113 | 8 | % | 9 | % | |||||||
| Average deposits | $ | 313,923 | $ | 315,088 | $ | 268,467 | — | % | 17 | % | |||||||
AUC/A at period end (in trillions) (current period is preliminary) (a) | $ | 45.0 | $ | 41.7 | $ | 37.3 | 8 | % | 21 | % | |||||||
Market value of securities on loan at period end (in billions) (b) | $ | 456 | $ | 445 | $ | 384 | 2 | % | 19 | % | |||||||
(a) Consists of AUC/A primarily from the Asset Servicing business and, to a lesser extent, the Clearance and Collateral Management, Issuer Services, Pershing and Wealth Management businesses. Includes the AUC/A of CIBC Mellon Global Securities Services Company (“CIBC Mellon”), a joint venture with the Canadian Imperial Bank of Commerce, of $1.7 trillion at June 30, 2021, $1.6 trillion at March 31, 2021 and $1.3 trillion at June 30, 2020.
(b) Represents the total amount of securities on loan in our agency securities lending program managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $63 billion at June 30, 2021, $64 billion at March 31, 2021 and $62 billion at June 30, 2020.
KEY DRIVERS
•The drivers of the total revenue variances by line of business are indicated below. Also see page 6 for information related to money market fee waivers.
•Asset Servicing – The year-over-year decrease includes lower net interest revenue, higher money market fee waivers and lower foreign exchange revenue, partially offset by higher client activity and market values. The sequential decrease primarily reflects lower foreign exchange revenue and higher money market fee waivers.
•Pershing – The year-over-year increase primarily reflects higher market values, client activity and balances, partially offset by higher money market fee waivers. The sequential decrease primarily reflects lower clearance volumes, partially offset by higher market values.
•Issuer Services – The year-over-year decrease primarily reflects money market fee waivers and lower net interest revenue in Corporate Trust, partially offset by higher Depositary Receipts revenue. The sequential increase primarily reflects higher Depositary Receipts revenue, partially offset by money market fee waivers in Corporate Trust.
•Treasury Services – The year-over-year decrease primarily reflects lower interest rates and higher money market fee waivers, partially offset by higher payment volumes and deposits. The sequential increase primarily reflects higher net interest revenue and net new business, partially offset by higher money market fee waivers.
•Clearance and Collateral Management – The year-over-year decrease primarily reflects lower net interest revenue, intraday credit fees and clearance volumes, partially offset by higher tri-party collateral management balances. The sequential increase primarily reflects higher tri-party collateral management balances, partially offset by lower clearance volumes.
•Noninterest expense increased year-over-year primarily reflecting the unfavorable impact of a weaker U.S. dollar, investments in efficiency and growth initiatives and higher revenue-related expenses. Sequentially, noninterest expense decreased primarily reflecting lower staff and litigation expenses, partially offset by higher revenue-related expenses.
Page - 3 | ||
| BNY Mellon 2Q21 Earnings Release | ||
INVESTMENT AND WEALTH MANAGEMENT BUSINESS HIGHLIGHTS
| (dollars in millions, unless otherwise noted; not meaningful - N/M) | 2Q21 vs. | ||||||||||||||||
| 2Q21 | 1Q21 | 2Q20 | 1Q21 | 2Q20 | |||||||||||||
| Total revenue by line of business: | |||||||||||||||||
| Investment Management | $ | 700 | $ | 698 | $ | 621 | — | % | 13 | % | |||||||
| Wealth Management | 299 | 293 | 265 | 2 | 13 | ||||||||||||
| Total revenue by line of business | 999 | 991 | 886 | 1 | 13 | ||||||||||||
Provision for credit losses | (4) | 4 | 7 | N/M | N/M | ||||||||||||
Noninterest expense | 677 | 709 | 658 | (5) | 3 | ||||||||||||
| Income before taxes | $ | 326 | $ | 278 | $ | 221 | 17 | % | 48 | % | |||||||
| Pre-tax operating margin | 33 | % | 28 | % | 25 | % | |||||||||||
Adjusted pre-tax operating margin – Non-GAAP (a) | 35 | % | 30 | % | 28 | % | |||||||||||
| Net interest revenue | $ | 47 | $ | 48 | $ | 48 | (2) | % | (2) | % | |||||||
| Metrics: | |||||||||||||||||
| Average loans | $ | 11,871 | $ | 11,610 | $ | 11,791 | 2 | % | 1 | % | |||||||
| Average deposits | $ | 17,466 | $ | 19,177 | $ | 17,491 | (9) | % | — | % | |||||||
AUM (in billions) (current period is preliminary) (b) | $ | 2,320 | $ | 2,214 | $ | 1,961 | 5 | % | 18 | % | |||||||
Wealth Management client assets (in billions) (current period is preliminary) (c) | $ | 305 | $ | 292 | $ | 254 | 4 | % | 20 | % | |||||||
(a) Net of distribution and servicing expense. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” on page 9 for information on this Non-GAAP measure.
(b) Excludes securities lending cash management assets and assets managed in the Investment Services business.
(c) Includes AUM and AUC/A in the Wealth Management business.
KEY DRIVERS
•The drivers of the total revenue variances by line of business are indicated below. Also see page 6 for information related to money market fee waivers.
•Investment Management – The year-over-year increase primarily reflects the impact of higher market values, the favorable impact of a weaker U.S. dollar, higher performance fees and net inflows, partially offset by the impact of money market fee waivers. The slight sequential increase primarily reflects the impact of higher market values, equity investment gains (net of hedges), including seed capital, and net inflows, partially offset by the timing of performance fees and higher money market fee waivers.
•Wealth Management – The year-over-year and sequential increases primarily reflect the impact of higher market values.
•Noninterest expense increased year-over-year primarily reflecting the unfavorable impact of a weaker U.S. dollar and higher staff expense, partially offset by lower distribution and servicing expense. Sequentially, the decrease in noninterest expense primarily reflects lower staff expense.
Page - 4 | ||
| BNY Mellon 2Q21 Earnings Release | ||
OTHER SEGMENT primarily includes leasing operations, certain corporate treasury activities, derivatives, business exits and other corporate revenue and expense items.
| (in millions) | 2Q21 | 1Q21 | 2Q20 | ||||||||
| Fee revenue | $ | 13 | $ | 9 | $ | 10 | |||||
| Other revenue | 9 | (36) | 28 | ||||||||
| Total fee and other revenue | 22 | (27) | 38 | ||||||||
| Net interest (expense) | (45) | (38) | (36) | ||||||||
| Total revenue | (23) | (65) | 2 | ||||||||
| Provision for credit losses | (5) | (8) | (9) | ||||||||
| Noninterest expense | 49 | 41 | 39 | ||||||||
| (Loss) before taxes | $ | (67) | $ | (98) | $ | (28) | |||||
KEY DRIVERS
•Total revenue includes corporate treasury and other investment activity, including hedging activity which has an offsetting impact in fee and other revenue and net interest expense. The decrease in fee and other revenue year-over-year was impacted by lower net securities gains. The sequential increase primarily reflects an impairment of a renewable energy investment recorded in 1Q21.
Page - 5 | ||
| BNY Mellon 2Q21 Earnings Release | ||
MONEY MARKET FEE WAIVERS
The following table presents the impact of money market fee waivers on our consolidated fee revenue, net of distribution and servicing expense. In 2Q21, the net impact of money market fee waivers was $252 million, up from $188 million in 1Q21, driven by lower short-term interest rates and higher money market balances.
| Money market fee waivers | |||||||||||||||||||||||
| (in millions) | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | YTD21 | YTD20 | ||||||||||||||||
| Investment services fees: | |||||||||||||||||||||||
| Asset servicing fees | $ | (42) | $ | (22) | $ | (13) | $ | (1) | $ | — | $ | (64) | $ | — | |||||||||
| Clearing services fees | (88) | (74) | (64) | (57) | (50) | (162) | (59) | ||||||||||||||||
| Issuer services fees | (15) | (10) | (6) | (1) | (1) | (25) | (1) | ||||||||||||||||
| Treasury services fees | (3) | (3) | (2) | (3) | (2) | (6) | (2) | ||||||||||||||||
| Total investment services fees | (148) | (109) | (85) | (62) | (53) | (257) | (62) | ||||||||||||||||
| Investment management and performance fees | (115) | (89) | (56) | (42) | (30) | (204) | (44) | ||||||||||||||||
| Distribution and servicing revenue | (13) | (13) | (8) | (6) | (3) | (26) | (3) | ||||||||||||||||
| Total fee revenue | (276) | (211) | (149) | (110) | (86) | (487) | (109) | ||||||||||||||||
| Less: Distribution and servicing expense | 24 | 23 | 15 | 9 | 7 | 47 | 7 | ||||||||||||||||
| Net impact of money market fee waivers | $ | (252) | $ | (188) | $ | (134) | $ | (101) | $ | (79) | $ | (440) | $ | (102) | |||||||||
Impact to revenue by line of business (a): | |||||||||||||||||||||||
| Asset Servicing | $ | (50) | $ | (29) | $ | (13) | $ | (4) | $ | (1) | $ | (79) | $ | (1) | |||||||||
| Pershing | (99) | (94) | (85) | (73) | (60) | (193) | (69) | ||||||||||||||||
| Issuer Services | (22) | (15) | (10) | (2) | (1) | (37) | (1) | ||||||||||||||||
| Treasury Services | (16) | (9) | (5) | (1) | — | (25) | — | ||||||||||||||||
| Investment Management | (85) | (61) | (34) | (28) | (24) | (146) | (38) | ||||||||||||||||
| Wealth Management | (4) | (3) | (2) | (2) | — | (7) | — | ||||||||||||||||
| Total impact to revenue by line of business | $ | (276) | $ | (211) | $ | (149) | $ | (110) | $ | (86) | $ | (487) | $ | (109) | |||||||||
(a) The line of business revenue for management reporting purposes reflects the impact of revenue transferred between the businesses.
Page - 6 | ||
| BNY Mellon 2Q21 Earnings Release | ||
CAPITAL AND LIQUIDITY
| Capital and liquidity ratios | June 30, 2021 | March 31, 2021 | Dec. 31, 2020 | ||||||||||||||
Consolidated regulatory capital ratios: (a) | |||||||||||||||||
| CET1 ratio | 12.6 | % | 12.6 | % | 13.1 | % | |||||||||||
| Tier 1 capital ratio | 15.2 | 15.2 | 15.8 | ||||||||||||||
| Total capital ratio | 16.0 | 16.1 | 16.7 | ||||||||||||||
| Tier 1 leverage ratio | 6.0 | 5.8 | 6.3 | ||||||||||||||
| SLR | 7.5 | 8.1 | (b) | 8.6 | (b) | ||||||||||||
| BNY Mellon shareholders’ equity to total assets ratio | 9.7 | % | 9.7 | % | 9.8 | % | |||||||||||
| BNY Mellon common shareholders’ equity to total assets ratio | 8.7 | % | 8.7 | % | 8.8 | % | |||||||||||
| Average LCR | 110 | % | 110 | % | 110 | % | |||||||||||
| Book value per common share | $ | 47.20 | $ | 46.16 | $ | 46.53 | |||||||||||
Tangible book value per common share – Non-GAAP (c) | $ | 25.64 | $ | 24.88 | $ | 25.44 | |||||||||||
Common shares outstanding (in thousands) | 863,174 | 875,481 | 886,764 | ||||||||||||||
(a) Regulatory capital ratios for June 30, 2021 are preliminary. For our CET1, Tier 1 capital and Total capital ratios, our effective capital ratios under the U.S. capital rules are the lower of the ratios as calculated under the Standardized and Advanced Approaches, which for June 30, 2021 and March 31, 2021, was the Standardized Approach for the CET1 and Tier 1 capital ratios and the Advanced Approaches for the Total capital ratio, and for Dec. 31, 2020, was the Advanced Approaches.
(b) Reflects the temporary exclusion of U.S. Treasury securities from the leverage exposure used in the SLR calculation which increased our consolidated SLR by 68 basis points at March 31, 2021 and 72 basis points at Dec. 31, 2020. The temporary exclusion ceased to apply beginning April 1, 2021.
(c) Tangible book value per common share – Non-GAAP excludes goodwill and intangible assets, net of deferred tax liabilities. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” on page 9 for information on this Non-GAAP measure.
•CET1 capital totaled $21.4 billion at June 30, 2021, an increase of $367 million compared with March 31, 2021. The increase primarily reflects capital generated through earnings, partially offset by capital deployed through common stock repurchases and dividends.
NET INTEREST REVENUE
| Net interest revenue | 2Q21 vs. | ||||||||||||||||
| (dollars in millions; not meaningful - N/M) | 2Q21 | 1Q21 | 2Q20 | 1Q21 | 2Q20 | ||||||||||||
| Net interest revenue | $ | 645 | $ | 655 | $ | 780 | (2) | % | (17) | % | |||||||
| Add: Tax equivalent adjustment | 3 | 3 | 2 | N/M | N/M | ||||||||||||
Net interest revenue, on a fully taxable equivalent (“FTE”) basis – Non-GAAP (a) | $ | 648 | $ | 658 | $ | 782 | (2) | % | (17) | % | |||||||
| Net interest margin | 0.67 | % | 0.66 | % | 0.88 | % | 1 | bps | (21) | bps | |||||||
Net interest margin (FTE) – Non-GAAP (a) | 0.67 | % | 0.67 | % | 0.88 | % | — | bps | (21) | bps | |||||||
(a) Net interest revenue (FTE) – Non-GAAP and net interest margin (FTE) – Non-GAAP include the tax equivalent adjustments on tax-exempt income. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” on page 9 for information on this Non-GAAP measure.
bps – basis points.
•Net interest revenue decreased year-over-year primarily reflecting lower interest rates on interest-earning assets. This was partially offset by the benefit of lower funding and deposit rates, lower debt balances, a larger securities portfolio and higher deposit balances.
•Sequentially, the decrease was primarily driven by lower interest rates on interest-earning assets. This was partially offset by the benefit of lower funding and deposit rates.
Page - 7 | ||
| BNY Mellon 2Q21 Earnings Release | ||
THE BANK OF NEW YORK MELLON CORPORATION
Condensed Consolidated Income Statement
| (in millions) | Quarter ended | Year-to-date | ||||||||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | ||||||||||||||||
| Fee and other revenue | ||||||||||||||||||||
| Investment services fees: | ||||||||||||||||||||
| Asset servicing fees | $ | 1,200 | $ | 1,199 | $ | 1,173 | $ | 2,399 | $ | 2,332 | ||||||||||
| Clearing services fees | 435 | 455 | 431 | 890 | 901 | |||||||||||||||
| Issuer services fees | 281 | 245 | 277 | 526 | 540 | |||||||||||||||
| Treasury services fees | 160 | 157 | 144 | 317 | 293 | |||||||||||||||
| Total investment services fees | 2,076 | 2,056 | 2,025 | 4,132 | 4,066 | |||||||||||||||
| Investment management and performance fees | 889 | 890 | 786 | 1,779 | 1,648 | |||||||||||||||
| Foreign exchange revenue | 184 | 231 | 193 | 415 | 438 | |||||||||||||||
| Financing-related fees | 48 | 51 | 58 | 99 | 117 | |||||||||||||||
| Distribution and servicing | 27 | 29 | 27 | 56 | 58 | |||||||||||||||
| Total fee revenue | 3,224 | 3,257 | 3,089 | 6,481 | 6,327 | |||||||||||||||
| Investment and other income | 89 | 9 | 132 | 98 | 179 | |||||||||||||||
| Net securities gains | 2 | — | 9 | 2 | 18 | |||||||||||||||
| Total other revenue | 91 | 9 | 141 | 100 | 197 | |||||||||||||||
| Total fee and other revenue | 3,315 | 3,266 | 3,230 | 6,581 | 6,524 | |||||||||||||||
| Net interest revenue | ||||||||||||||||||||
| Interest revenue | 685 | 738 | 943 | 1,423 | 2,513 | |||||||||||||||
| Interest expense | 40 | 83 | 163 | 123 | 919 | |||||||||||||||
| Net interest revenue | 645 | 655 | 780 | 1,300 | 1,594 | |||||||||||||||
| Total revenue | 3,960 | 3,921 | 4,010 | 7,881 | 8,118 | |||||||||||||||
| Provision for credit losses | (86) | (83) | 143 | (169) | 312 | |||||||||||||||
| Noninterest expense | ||||||||||||||||||||
| Staff | 1,518 | 1,602 | 1,464 | 3,120 | 2,946 | |||||||||||||||
| Software and equipment | 365 | 362 | 345 | 727 | 671 | |||||||||||||||
| Professional, legal and other purchased services | 363 | 343 | 337 | 706 | 667 | |||||||||||||||
| Sub-custodian and clearing | 132 | 124 | 120 | 256 | 225 | |||||||||||||||
| Net occupancy | 122 | 123 | 137 | 245 | 272 | |||||||||||||||
| Distribution and servicing | 73 | 74 | 85 | 147 | 176 | |||||||||||||||
| Bank assessment charges | 35 | 34 | 35 | 69 | 70 | |||||||||||||||
| Amortization of intangible assets | 20 | 24 | 26 | 44 | 52 | |||||||||||||||
| Business development | 22 | 19 | 20 | 41 | 62 | |||||||||||||||
| Other | 128 | 146 | 117 | 274 | 257 | |||||||||||||||
| Total noninterest expense | 2,778 | 2,851 | 2,686 | 5,629 | 5,398 | |||||||||||||||
| Income | ||||||||||||||||||||
| Income before income taxes | 1,268 | 1,153 | 1,181 | 2,421 | 2,408 | |||||||||||||||
| Provision for income taxes | 241 | 221 | 216 | 462 | 481 | |||||||||||||||
| Net income | 1,027 | 932 | 965 | 1,959 | 1,927 | |||||||||||||||
| Net (income) loss attributable to noncontrolling interests related to consolidated investment management funds | (5) | (5) | (15) | (10) | 3 | |||||||||||||||
| Net income applicable to shareholders of The Bank of New York Mellon Corporation | 1,022 | 927 | 950 | 1,949 | 1,930 | |||||||||||||||
| Preferred stock dividends | (31) | (69) | (49) | (100) | (85) | |||||||||||||||
| Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 991 | $ | 858 | $ | 901 | $ | 1,849 | $ | 1,845 | ||||||||||
| Earnings per share applicable to the common shareholders of The Bank of New York Mellon Corporation | Quarter ended | Year-to-date | ||||||||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | ||||||||||||||||
| (in dollars) | ||||||||||||||||||||
| Basic | $ | 1.14 | $ | 0.97 | $ | 1.01 | $ | 2.11 | $ | 2.06 | ||||||||||
| Diluted | $ | 1.13 | $ | 0.97 | $ | 1.01 | $ | 2.10 | $ | 2.06 | ||||||||||
Page - 8 | ||
| BNY Mellon 2Q21 Earnings Release | ||
SUPPLEMENTAL INFORMATION – EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
BNY Mellon has included in this Earnings Release certain Non-GAAP financial measures on a tangible basis as a supplement to GAAP information, which exclude goodwill and intangible assets, net of deferred tax liabilities. We believe that the return on tangible common equity – Non-GAAP is additional useful information for investors because it presents a measure of those assets that can generate income, and the tangible book value per common share – Non-GAAP is additional useful information because it presents the level of tangible assets in relation to shares of common stock outstanding.
Net interest revenue, on a fully taxable equivalent (“FTE”) basis – Non-GAAP and net interest margin (FTE) – Non-GAAP and other FTE measures include the tax equivalent adjustments on tax-exempt income which allows for the comparison of amounts arising from both taxable and tax-exempt sources and is consistent with industry practice. The adjustment to an FTE basis has no impact on net income.
BNY Mellon has also included the adjusted pre-tax operating margin – Non-GAAP, which is the pre-tax operating margin for the Investment and Wealth Management business, net of distribution and servicing expense that was passed to third parties who distribute or service our managed funds. We believe that this measure is useful when evaluating the performance of the Investment and Wealth Management business relative to industry competitors.
For the reconciliations of these Non-GAAP measures, see “Supplemental Information – Explanation of GAAP and Non-GAAP Financial Measures” in the Financial Supplement available at www.bnymellon.com.
BNY Mellon has presented the measure of fee revenue, excluding money market fee waivers – Non-GAAP. We believe that this measure is useful information for investors on the impact of current interest rates and market conditions on fee revenue growth rates and the performance of our business.
| Fee revenue reconciliation | 2Q21 vs. | ||||||||||
| (dollars in millions) | 2Q21 | 2Q20 | 2Q20 | ||||||||
| Fee revenue | $ | 3,224 | $ | 3,089 | 4 | % | |||||
| Less: Money market fee waivers | (276) | (86) | |||||||||
| Fee revenue, excluding money market fee waivers – Non-GAAP | $ | 3,500 | $ | 3,175 | 10 | % | |||||
Page - 9 | ||
| BNY Mellon 2Q21 Earnings Release | ||
CAUTIONARY STATEMENT
A number of statements (i) in this Earnings Release, (ii) in our Financial Supplement, (iii) in our presentations and (iv) in the responses to questions on our conference call discussing our quarterly results and other public events may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about our capital plans, strategic priorities, financial goals, organic growth, performance, organizational quality and efficiency, investments, including in technology and product development, resiliency, capabilities, revenue, net interest revenue, money market fee waivers, fees, expenses, cost discipline, sustainable growth, company management, human capital management (including related ambitions, objectives, aims and goals), deposits, interest rates and yield curves, securities portfolio, taxes, business opportunities, divestments, volatility, preliminary business metrics and regulatory capital ratios and statements regarding our aspirations, as well as our overall plans, strategies, goals, objectives, expectations, outlooks, estimates, intentions, targets, opportunities, focus and initiatives, including the potential effects of the coronavirus pandemic on any of the foregoing. These statements may be expressed in a variety of ways, including the use of future or present tense language. Words such as “estimate,” “forecast,” “project,” “anticipate,” “likely,” “target,” “expect,” “intend,” “continue,” “seek,” “believe,” “plan,” “goal,” “could,” “should,” “would,” “may,” “might,” “will,” “strategy,” “synergies,” “opportunities,” “trends,” “ambition,” “objective,” “aim,” “future,” “potentially,” “outlook” and words of similar meaning may signify forward-looking statements. These statements and other forward-looking statements contained in other public disclosures of BNY Mellon which make reference to the cautionary factors described in this Earnings Release are based upon current beliefs and expectations and are subject to significant risks and uncertainties (some of which are beyond BNY Mellon’s control). Actual results may differ materially from those expressed or implied as a result of a number of factors, including, but not limited to, the risk factors and other uncertainties set forth in BNY Mellon’s Annual Report on Form 10-K for the year ended Dec. 31, 2020 and BNY Mellon’s other filings with the Securities and Exchange Commission. Statements about the effects of the current and near-term market and macroeconomic outlook on BNY Mellon, including on its business, operations, financial performance and prospects, may constitute forward-looking statements, and are based on assumptions that involve risks and uncertainties and that are subject to change based on various important factors (some of which are beyond BNY Mellon’s control), including the scope and duration of the pandemic, actions taken by governmental authorities and other third parties in response to the pandemic, the availability, use and effectiveness of vaccines and the direct and indirect impact of the pandemic on us, our clients, customers and third parties. Preliminary business metrics and regulatory capital ratios are subject to change, possibly materially, as BNY Mellon completes its Quarterly Report on Form 10-Q for the quarter ended June 30, 2021. All forward-looking statements in this Earnings Release speak only as of July 15, 2021, and BNY Mellon undertakes no obligation to update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events.
ABOUT BNY MELLON
BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment and wealth management and investment services in 35 countries. As of June 30, 2021, BNY Mellon had $45.0 trillion in assets under custody and/or administration, and $2.3 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.
Page - 10 | ||
| BNY Mellon 2Q21 Earnings Release | ||
CONFERENCE CALL INFORMATION
Todd Gibbons, Chief Executive Officer, and Emily Portney, Chief Financial Officer, will host a conference call and simultaneous live audio webcast at 8:00 a.m. ET on July 15, 2021. This conference call and audio webcast will include forward-looking statements and may include other material information.
Investors and analysts wishing to access the conference call and audio webcast may do so by dialing (800) 390-5696 (U.S.) or (720) 452-9082 (International), and using the passcode: 444308, or by logging onto www.bnymellon.com/investorrelations. Earnings materials will be available at www.bnymellon.com/investorrelations beginning at approximately 6:30 a.m. ET on July 15, 2021. Replays of the conference call and audio webcast will be available beginning July 15, 2021 at approximately 2:00 p.m. ET through Aug. 13, 2021 by dialing (888) 203-1112 (U.S.) or (719) 457-0820 (International), and using the passcode: 3619155. The archived version of the conference call and audio webcast will also be available at www.bnymellon.com/investorrelations for the same time period.
Page - 11 | ||
| The Bank of New York Mellon Corporation | ||
| Financial Supplement | ||
| Second Quarter 2021 | ||
| Table of Contents |  | |||||||
| Consolidated Results | Page | |||||||
| Consolidated Financial Highlights | ||||||||
| Condensed Consolidated Income Statement | ||||||||
| Condensed Consolidated Balance Sheet | ||||||||
| Fee and Other Revenue | ||||||||
| Average Balances and Interest Rates | ||||||||
| Capital and Liquidity | ||||||||
| Business Segment Results | ||||||||
| Investment Services Business | ||||||||
| Investment and Wealth Management Business | ||||||||
| AUM by Product, AUM Flows and Wealth Management Client Assets | ||||||||
| Other Segment | ||||||||
| Other | ||||||||
| Securities Portfolio | ||||||||
| Allowance for Credit Losses and Nonperforming Assets | ||||||||
| Supplemental Information – Explanation of GAAP and Non-GAAP Financial Measures | ||||||||
| THE BANK OF NEW YORK MELLON CORPORATION | | ||||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS | |||||||||||||||||||||||||||||||||||||||||
| (dollars in millions, except per common share amounts, or unless otherwise noted) | 2Q21 vs. | YTD21 vs. | |||||||||||||||||||||||||||||||||||||||
| 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | 1Q21 | 2Q20 | YTD21 | YTD20 | YTD20 | ||||||||||||||||||||||||||||||||
| Selected income statement data | |||||||||||||||||||||||||||||||||||||||||
| Fee revenue | $ | 3,224 | $ | 3,257 | $ | 3,114 | $ | 3,074 | $ | 3,089 | (1) | % | 4 | % | $ | 6,481 | $ | 6,327 | 2 | % | |||||||||||||||||||||
| Other revenue | 91 | 9 | 49 | 70 | 141 | N/M | N/M | 100 | 197 | N/M | |||||||||||||||||||||||||||||||
| Total fee and other revenue | 3,315 | 3,266 | 3,163 | 3,144 | 3,230 | 2 | 3 | 6,581 | 6,524 | 1 | |||||||||||||||||||||||||||||||
| Net interest revenue | 645 | 655 | 680 | 703 | 780 | (2) | (17) | 1,300 | 1,594 | (18) | |||||||||||||||||||||||||||||||
| Total revenue | 3,960 | 3,921 | 3,843 | 3,847 | 4,010 | 1 | (1) | 7,881 | 8,118 | (3) | |||||||||||||||||||||||||||||||
| Provision for credit losses | (86) | (83) | 15 | 9 | 143 | N/M | N/M | (169) | 312 | N/M | |||||||||||||||||||||||||||||||
| Noninterest expense | 2,778 | 2,851 | 2,925 | 2,681 | 2,686 | (3) | 3 | 5,629 | 5,398 | 4 | |||||||||||||||||||||||||||||||
| Income before income taxes | 1,268 | 1,153 | 903 | 1,157 | 1,181 | 10 | 7 | 2,421 | 2,408 | 1 | |||||||||||||||||||||||||||||||
| Provision for income taxes | 241 | 221 | 148 | 213 | 216 | 9 | 12 | 462 | 481 | (4) | |||||||||||||||||||||||||||||||
| Net income | $ | 1,027 | $ | 932 | $ | 755 | $ | 944 | $ | 965 | 10 | % | 6 | % | $ | 1,959 | $ | 1,927 | 2 | % | |||||||||||||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 991 | $ | 858 | $ | 702 | $ | 876 | $ | 901 | 16 | % | 10 | % | $ | 1,849 | $ | 1,845 | — | % | |||||||||||||||||||||
| Diluted earnings per common share | $ | 1.13 | $ | 0.97 | $ | 0.79 | $ | 0.98 | $ | 1.01 | 16 | % | 12 | % | $ | 2.10 | $ | 2.06 | 2 | % | |||||||||||||||||||||
Average common shares and equivalents outstanding – diluted (in thousands) | 873,475 | 885,655 | 891,846 | 891,069 | 890,561 | (1) | % | (2) | % | 879,409 | 893,603 | (2) | % | ||||||||||||||||||||||||||||
Financial ratios (Returns are annualized) | |||||||||||||||||||||||||||||||||||||||||
| Pre-tax operating margin | 32 | % | 29 | % | 24 | % | 30 | % | 29 | % | 31 | % | 30 | % | |||||||||||||||||||||||||||
| Return on common equity | 9.8 | % | 8.5 | % | 6.9 | % | 8.7 | % | 9.4 | % | 9.2 | % | 9.7 | % | |||||||||||||||||||||||||||
Return on tangible common equity – Non-GAAP (a) | 18.6 | % | 16.1 | % | 13.0 | % | 16.7 | % | 18.5 | % | 17.3 | % | 19.4 | % | |||||||||||||||||||||||||||
| Non-U.S. revenue as a percentage of total revenue | 38 | % | 37 | % | 38 | % | 37 | % | 36 | % | 38 | % | 36 | % | |||||||||||||||||||||||||||
| Period end | |||||||||||||||||||||||||||||||||||||||||
Assets under custody and/or administration (“AUC/A”) (in trillions) (b) | $ | 45.0 | $ | 41.7 | $ | 41.1 | $ | 38.6 | $ | 37.3 | 8 | % | 21 | % | |||||||||||||||||||||||||||
Assets under management (“AUM”) (in trillions) | $ | 2.32 | $ | 2.21 | $ | 2.21 | $ | 2.04 | $ | 1.96 | 5 | % | 18 | % | |||||||||||||||||||||||||||
| Full-time employees | 48,800 | 48,000 | 48,500 | 48,600 | 48,300 | 2 | % | 1 | % | ||||||||||||||||||||||||||||||||
| Book value per common share | $ | 47.20 | $ | 46.16 | $ | 46.53 | $ | 45.58 | $ | 44.21 | |||||||||||||||||||||||||||||||
Tangible book value per common share – Non-GAAP (a) | $ | 25.64 | $ | 24.88 | $ | 25.44 | $ | 24.60 | $ | 23.31 | |||||||||||||||||||||||||||||||
| Cash dividends per common share | $ | 0.31 | $ | 0.31 | $ | 0.31 | $ | 0.31 | $ | 0.31 | |||||||||||||||||||||||||||||||
| Common dividend payout ratio | 27 | % | 32 | % | 39 | % | 32 | % | 31 | % | |||||||||||||||||||||||||||||||
| Closing stock price per common share | $ | 51.23 | $ | 47.29 | $ | 42.44 | $ | 34.34 | $ | 38.65 | |||||||||||||||||||||||||||||||
| Market capitalization | $ | 44,220 | $ | 41,401 | $ | 37,634 | $ | 30,430 | $ | 34,239 | |||||||||||||||||||||||||||||||
Common shares outstanding (in thousands) | 863,174 | 875,481 | 886,764 | 886,136 | 885,862 | ||||||||||||||||||||||||||||||||||||
Capital ratios at period end (c) | |||||||||||||||||||||||||||||||||||||||||
| Common Equity Tier 1 ("CET1") ratio | 12.6 | % | 12.6 | % | 13.1 | % | 13.0 | % | 12.6 | % | |||||||||||||||||||||||||||||||
| Tier 1 capital ratio | 15.2 | % | 15.2 | % | 15.8 | % | 15.7 | % | 15.4 | % | |||||||||||||||||||||||||||||||
| Total capital ratio | 16.0 | % | 16.1 | % | 16.7 | % | 16.6 | % | 16.3 | % | |||||||||||||||||||||||||||||||
| Tier 1 leverage ratio | 6.0 | % | 5.8 | % | 6.3 | % | 6.5 | % | 6.2 | % | |||||||||||||||||||||||||||||||
| Supplementary leverage ratio ("SLR") | 7.5 | % | 8.1 | % | 8.6 | % | 8.5 | % | 8.2 | % | |||||||||||||||||||||||||||||||
(a) Non-GAAP information, for all periods presented, excludes goodwill and intangible assets, net of deferred tax liabilities. See "Supplemental Information – Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 16 for the reconciliation of Non-GAAP measures. | |||||||||||||||||||||||||||||||||||||||||
(b) Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.7 trillion at June 30, 2021, $1.6 trillion at March 31, 2021, $1.5 trillion at Dec. 31, 2020, $1.4 trillion at Sept. 30, 2020 and $1.3 trillion at June 30, 2020. | |||||||||||||||||||||||||||||||||||||||||
(c) Regulatory capital ratios for June 30, 2021 are preliminary. For our CET1, Tier 1 capital and Total capital ratios, our effective capital ratios under the U.S. capital rules are the lower of the ratios as calculated under the Standardized and Advanced Approaches, which for June 30, 2021 and March 31, 2021 was the Standardized Approach for the CET1 and Tier 1 capital ratios and the Advanced Approaches for the Total capital ratio, and for Dec. 31, 2020, Sept. 30, 2020 and June 30, 2020, was the Advanced Approaches. | |||||||||||||||||||||||||||||||||||||||||
| N/M – Not meaningful. | |||||||||||||||||||||||||||||||||||||||||
3
| THE BANK OF NEW YORK MELLON CORPORATION | | ||||||||||||||||||||||||||||||||||||||||
| CONDENSED CONSOLIDATED INCOME STATEMENT | |||||||||||||||||||||||||||||||||||||||||
(dollars in millions, except per share amounts; common shares in thousands) | 2Q21 vs. | YTD21 vs. | |||||||||||||||||||||||||||||||||||||||
| 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | 1Q21 | 2Q20 | YTD21 | YTD20 | YTD20 | ||||||||||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||||||||||||||
| Investment services fees: | |||||||||||||||||||||||||||||||||||||||||
| Asset servicing fees | $ | 1,200 | $ | 1,199 | $ | 1,138 | $ | 1,168 | $ | 1,173 | — | % | 2 | % | $ | 2,399 | $ | 2,332 | 3 | % | |||||||||||||||||||||
| Clearing services fees | 435 | 455 | 418 | 397 | 431 | (4) | 1 | 890 | 901 | (1) | |||||||||||||||||||||||||||||||
| Issuer services fees | 281 | 245 | 257 | 295 | 277 | 15 | 1 | 526 | 540 | (3) | |||||||||||||||||||||||||||||||
| Treasury services fees | 160 | 157 | 156 | 152 | 144 | 2 | 11 | 317 | 293 | 8 | |||||||||||||||||||||||||||||||
| Total investment services fees | 2,076 | 2,056 | 1,969 | 2,012 | 2,025 | 1 | 3 | 4,132 | 4,066 | 2 | |||||||||||||||||||||||||||||||
| Investment management and performance fees | 889 | 890 | 884 | 835 | 786 | — | 13 | 1,779 | 1,648 | 8 | |||||||||||||||||||||||||||||||
| Foreign exchange revenue | 184 | 231 | 187 | 149 | 193 | (20) | (5) | 415 | 438 | (5) | |||||||||||||||||||||||||||||||
| Financing-related fees | 48 | 51 | 46 | 49 | 58 | (6) | (17) | 99 | 117 | (15) | |||||||||||||||||||||||||||||||
| Distribution and servicing | 27 | 29 | 28 | 29 | 27 | (7) | — | 56 | 58 | (3) | |||||||||||||||||||||||||||||||
| Total fee revenue | 3,224 | 3,257 | 3,114 | 3,074 | 3,089 | (1) | 4 | 6,481 | 6,327 | 2 | |||||||||||||||||||||||||||||||
| Investment and other income | 89 | 9 | 43 | 61 | 132 | N/M | N/M | 98 | 179 | N/M | |||||||||||||||||||||||||||||||
| Net securities gains | 2 | — | 6 | 9 | 9 | N/M | N/M | 2 | 18 | N/M | |||||||||||||||||||||||||||||||
| Total other revenue | 91 | 9 | 49 | 70 | 141 | N/M | N/M | 100 | 197 | N/M | |||||||||||||||||||||||||||||||
| Total fee and other revenue | 3,315 | 3,266 | 3,163 | 3,144 | 3,230 | 2 | 3 | 6,581 | 6,524 | 1 | |||||||||||||||||||||||||||||||
| Net interest revenue | 645 | 655 | 680 | 703 | 780 | (2) | (17) | 1,300 | 1,594 | (18) | |||||||||||||||||||||||||||||||
| Total revenue | 3,960 | 3,921 | 3,843 | 3,847 | 4,010 | 1 | (1) | 7,881 | 8,118 | (3) | |||||||||||||||||||||||||||||||
| Provision for credit losses | (86) | (83) | 15 | 9 | 143 | N/M | N/M | (169) | 312 | N/M | |||||||||||||||||||||||||||||||
| Noninterest expense | |||||||||||||||||||||||||||||||||||||||||
| Staff | 1,518 | 1,602 | 1,554 | 1,466 | 1,464 | (5) | 4 | 3,120 | 2,946 | 6 | |||||||||||||||||||||||||||||||
| Software and equipment | 365 | 362 | 359 | 340 | 345 | 1 | 6 | 727 | 671 | 8 | |||||||||||||||||||||||||||||||
| Professional, legal and other purchased services | 363 | 343 | 381 | 355 | 337 | 6 | 8 | 706 | 667 | 6 | |||||||||||||||||||||||||||||||
| Sub-custodian and clearing | 132 | 124 | 116 | 119 | 120 | 6 | 10 | 256 | 225 | 14 | |||||||||||||||||||||||||||||||
| Net occupancy | 122 | 123 | 173 | 136 | 137 | (1) | (11) | 245 | 272 | (10) | |||||||||||||||||||||||||||||||
| Distribution and servicing | 73 | 74 | 75 | 85 | 85 | (1) | (14) | 147 | 176 | (16) | |||||||||||||||||||||||||||||||
| Bank assessment charges | 35 | 34 | 24 | 30 | 35 | 3 | — | 69 | 70 | (1) | |||||||||||||||||||||||||||||||
| Amortization of intangible assets | 20 | 24 | 26 | 26 | 26 | (17) | (23) | 44 | 52 | (15) | |||||||||||||||||||||||||||||||
| Business development | 22 | 19 | 26 | 17 | 20 | 16 | 10 | 41 | 62 | (34) | |||||||||||||||||||||||||||||||
| Other | 128 | 146 | 191 | 107 | 117 | (12) | 9 | 274 | 257 | 7 | |||||||||||||||||||||||||||||||
| Total noninterest expense | 2,778 | 2,851 | 2,925 | 2,681 | 2,686 | (3) | 3 | 5,629 | 5,398 | 4 | |||||||||||||||||||||||||||||||
| Income before income taxes | 1,268 | 1,153 | 903 | 1,157 | 1,181 | 10 | 7 | 2,421 | 2,408 | 1 | |||||||||||||||||||||||||||||||
| Provision for income taxes | 241 | 221 | 148 | 213 | 216 | 9 | 12 | 462 | 481 | (4) | |||||||||||||||||||||||||||||||
| Net income | 1,027 | 932 | 755 | 944 | 965 | 10 | 6 | 1,959 | 1,927 | 2 | |||||||||||||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests | (5) | (5) | (5) | (7) | (15) | N/M | N/M | (10) | 3 | N/M | |||||||||||||||||||||||||||||||
| Preferred stock dividends | (31) | (69) | (48) | (61) | (49) | N/M | N/M | (100) | (85) | N/M | |||||||||||||||||||||||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 991 | $ | 858 | $ | 702 | $ | 876 | $ | 901 | 16 | % | 10 | % | $ | 1,849 | $ | 1,845 | — | % | |||||||||||||||||||||
| Average common shares and equivalents outstanding: Basic | 869,460 | 882,558 | 889,928 | 889,499 | 889,020 | (1) | % | (2) | % | 876,006 | 891,642 | (2) | % | ||||||||||||||||||||||||||||
| Diluted | 873,475 | 885,655 | 891,846 | 891,069 | 890,561 | (1) | % | (2) | % | 879,409 | 893,603 | (2) | % | ||||||||||||||||||||||||||||
| Earnings per common share: Basic | $ | 1.14 | $ | 0.97 | $ | 0.79 | $ | 0.98 | $ | 1.01 | 18 | % | 13 | % | $ | 2.11 | $ | 2.06 | 2 | % | |||||||||||||||||||||
| Diluted | $ | 1.13 | $ | 0.97 | $ | 0.79 | $ | 0.98 | $ | 1.01 | 16 | % | 12 | % | $ | 2.10 | $ | 2.06 | 2 | % | |||||||||||||||||||||
N/M – Not meaningful. | |||||||||||||||||||||||||||||||||||||||||
4
| THE BANK OF NEW YORK MELLON CORPORATION | | ||||||||||||||||||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEET | |||||||||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||||||||
| (in millions) | June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | ||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Cash and due from banks | $ | 5,154 | $ | 5,991 | $ | 6,252 | $ | 4,104 | $ | 4,776 | |||||||||||||||||||
| Interest-bearing deposits with the Federal Reserve and other central banks | 126,355 | 125,524 | 141,775 | 106,185 | 112,728 | ||||||||||||||||||||||||
| Interest-bearing deposits with banks | 21,270 | 23,763 | 17,300 | 19,027 | 18,045 | ||||||||||||||||||||||||
| Federal funds sold and securities purchased under resale agreements | 29,762 | 28,263 | 30,907 | 29,647 | 36,638 | ||||||||||||||||||||||||
| Securities | 155,906 | 155,844 | 156,441 | 155,339 | 154,682 | ||||||||||||||||||||||||
| Trading assets | 15,520 | 16,884 | 15,272 | 13,074 | 14,150 | ||||||||||||||||||||||||
| Loans | 63,547 | 60,732 | 56,469 | 55,491 | 55,397 | ||||||||||||||||||||||||
| Allowance for loan losses | (269) | (327) | (358) | (325) | (302) | ||||||||||||||||||||||||
Net loans | 63,278 | 60,405 | 56,111 | 55,166 | 55,095 | ||||||||||||||||||||||||
| Premises and equipment | 3,442 | 3,521 | 3,602 | 3,617 | 3,598 | ||||||||||||||||||||||||
| Accrued interest receivable | 492 | 485 | 510 | 489 | 540 | ||||||||||||||||||||||||
| Goodwill | 17,487 | 17,469 | 17,496 | 17,357 | 17,253 | ||||||||||||||||||||||||
| Intangible assets | 2,964 | 2,983 | 3,012 | 3,026 | 3,045 | ||||||||||||||||||||||||
| Other assets | 25,333 | 23,852 | 20,955 | 21,367 | 21,766 | ||||||||||||||||||||||||
Total assets | $ | 466,963 | $ | 464,984 | $ | 469,633 | $ | 428,398 | $ | 442,316 | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Deposits | $ | 338,670 | $ | 336,768 | $ | 341,545 | $ | 296,312 | $ | 305,470 | |||||||||||||||||||
| Federal funds purchased and securities sold under repurchase agreements | 12,425 | 15,150 | 11,305 | 15,907 | 14,512 | ||||||||||||||||||||||||
| Trading liabilities | 6,451 | 4,566 | 6,031 | 6,084 | 5,595 | ||||||||||||||||||||||||
| Payables to customers and broker-dealers | 23,704 | 23,827 | 25,085 | 23,514 | 25,012 | ||||||||||||||||||||||||
| Commercial paper | — | — | — | 671 | 665 | ||||||||||||||||||||||||
| Other borrowed funds | 451 | 348 | 350 | 420 | 1,628 | ||||||||||||||||||||||||
| Accrued taxes and other expenses | 5,213 | 4,916 | 5,696 | 5,347 | 5,029 | ||||||||||||||||||||||||
| Other liabilities | 8,626 | 8,656 | 7,517 | 8,675 | 12,873 | ||||||||||||||||||||||||
| Long-term debt | 25,629 | 25,350 | 25,984 | 26,121 | 27,566 | ||||||||||||||||||||||||
Total liabilities | 421,169 | 419,581 | 423,513 | 383,051 | 398,350 | ||||||||||||||||||||||||
| Temporary equity | |||||||||||||||||||||||||||||
| Redeemable noncontrolling interests | 169 | 187 | 176 | 179 | 157 | ||||||||||||||||||||||||
| Permanent equity | |||||||||||||||||||||||||||||
Preferred stock | 4,541 | 4,541 | 4,541 | 4,532 | 4,532 | ||||||||||||||||||||||||
Common stock | 14 | 14 | 14 | 14 | 14 | ||||||||||||||||||||||||
| Additional paid-in capital | 28,006 | 27,928 | 27,823 | 27,741 | 27,702 | ||||||||||||||||||||||||
| Retained earnings | 35,540 | 34,822 | 34,241 | 33,821 | 33,224 | ||||||||||||||||||||||||
| Accumulated other comprehensive loss, net of tax | (1,670) | (1,819) | (985) | (1,359) | (1,943) | ||||||||||||||||||||||||
Less: Treasury stock, at cost | (21,150) | (20,532) | (19,833) | (19,832) | (19,832) | ||||||||||||||||||||||||
Total The Bank of New York Mellon Corporation shareholders’ equity | 45,281 | 44,954 | 45,801 | 44,917 | 43,697 | ||||||||||||||||||||||||
Nonredeemable noncontrolling interests of consolidated investment management funds | 344 | 262 | 143 | 251 | 112 | ||||||||||||||||||||||||
Total permanent equity | 45,625 | 45,216 | 45,944 | 45,168 | 43,809 | ||||||||||||||||||||||||
Total liabilities, temporary equity and permanent equity | $ | 466,963 | $ | 464,984 | $ | 469,633 | $ | 428,398 | $ | 442,316 | |||||||||||||||||||
5
| THE BANK OF NEW YORK MELLON CORPORATION | | ||||||||||||||||||||||||||||||||||||||||
| FEE AND OTHER REVENUE | |||||||||||||||||||||||||||||||||||||||||
| 2Q21 vs. | YTD21 vs. | ||||||||||||||||||||||||||||||||||||||||
| (dollars in millions) | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | 1Q21 | 2Q20 | YTD21 | YTD20 | YTD20 | |||||||||||||||||||||||||||||||
| Investment services fees: | |||||||||||||||||||||||||||||||||||||||||
Asset servicing fees (a) | $ | 1,155 | $ | 1,154 | $ | 1,099 | $ | 1,128 | $ | 1,117 | — | % | 3 | % | $ | 2,309 | $ | 2,225 | 4 | % | |||||||||||||||||||||
| Securities lending revenue | 45 | 45 | 39 | 40 | 56 | — | (20) | 90 | 107 | (16) | |||||||||||||||||||||||||||||||
Clearing services fees (b) | 435 | 455 | 418 | 397 | 431 | (4) | 1 | 890 | 901 | (1) | |||||||||||||||||||||||||||||||
| Issuer services fees | 281 | 245 | 257 | 295 | 277 | 15 | 1 | 526 | 540 | (3) | |||||||||||||||||||||||||||||||
| Treasury services fees | 160 | 157 | 156 | 152 | 144 | 2 | 11 | 317 | 293 | 8 | |||||||||||||||||||||||||||||||
| Total investment services fees | 2,076 | 2,056 | 1,969 | 2,012 | 2,025 | 1 | 3 | 4,132 | 4,066 | 2 | |||||||||||||||||||||||||||||||
| Investment management and performance fees: | |||||||||||||||||||||||||||||||||||||||||
Investment management fees (c) | 875 | 850 | 839 | 828 | 781 | 3 | 12 | 1,725 | 1,593 | 8 | |||||||||||||||||||||||||||||||
| Performance fees | 14 | 40 | 45 | 7 | 5 | N/M | N/M | 54 | 55 | (2) | |||||||||||||||||||||||||||||||
Total investment management and performance fees (d) | 889 | 890 | 884 | 835 | 786 | — | 13 | 1,779 | 1,648 | 8 | |||||||||||||||||||||||||||||||
| Foreign exchange revenue | 184 | 231 | 187 | 149 | 193 | (20) | (5) | 415 | 438 | (5) | |||||||||||||||||||||||||||||||
| Financing-related fees | 48 | 51 | 46 | 49 | 58 | (6) | (17) | 99 | 117 | (15) | |||||||||||||||||||||||||||||||
| Distribution and servicing | 27 | 29 | 28 | 29 | 27 | (7) | — | 56 | 58 | (3) | |||||||||||||||||||||||||||||||
| Total fee revenue | 3,224 | 3,257 | 3,114 | 3,074 | 3,089 | (1) | 4 | 6,481 | 6,327 | 2 | |||||||||||||||||||||||||||||||
| Investment and other income: | |||||||||||||||||||||||||||||||||||||||||
| Income from consolidated investment management funds | 13 | 17 | 41 | 27 | 54 | N/M | N/M | 30 | 16 | N/M | |||||||||||||||||||||||||||||||
Seed capital gains (losses) (e) | 18 | 3 | 22 | 9 | 23 | N/M | N/M | 21 | (8) | N/M | |||||||||||||||||||||||||||||||
| Other trading (loss) revenue | (1) | (7) | (31) | (14) | (8) | N/M | N/M | (8) | 58 | N/M | |||||||||||||||||||||||||||||||
| Renewable energy investment (losses) | (41) | (81) | (27) | (34) | (34) | N/M | N/M | (122) | (68) | N/M | |||||||||||||||||||||||||||||||
| Corporate/bank-owned life insurance | 29 | 33 | 43 | 33 | 36 | N/M | N/M | 62 | 72 | N/M | |||||||||||||||||||||||||||||||
Other investments gains (f) | 23 | 11 | 18 | 11 | 13 | N/M | N/M | 34 | 6 | N/M | |||||||||||||||||||||||||||||||
| Disposal gains (losses) | 6 | — | (61) | — | — | N/M | N/M | 6 | — | N/M | |||||||||||||||||||||||||||||||
| Expense reimbursements from joint venture | 25 | 23 | 22 | 23 | 19 | N/M | N/M | 48 | 40 | N/M | |||||||||||||||||||||||||||||||
| Other income | 17 | 10 | 16 | 6 | 29 | N/M | N/M | 27 | 63 | N/M | |||||||||||||||||||||||||||||||
| Total investment and other income | 89 | 9 | 43 | 61 | 132 | N/M | N/M | 98 | 179 | N/M | |||||||||||||||||||||||||||||||
| Net securities gains | 2 | — | 6 | 9 | 9 | N/M | N/M | 2 | 18 | N/M | |||||||||||||||||||||||||||||||
| Total other revenue | 91 | 9 | 49 | 70 | 141 | N/M | N/M | 100 | 197 | N/M | |||||||||||||||||||||||||||||||
| Total fee and other revenue | $ | 3,315 | $ | 3,266 | $ | 3,163 | $ | 3,144 | $ | 3,230 | 2 | % | 3 | % | $ | 6,581 | $ | 6,524 | 1 | % | |||||||||||||||||||||
(a) Asset servicing fees include the fees from the Clearance and Collateral Management business. | |||||||||||||||||||||||||||||||||||||||||
(b) Clearing services fees are almost entirely earned by our Pershing business. | |||||||||||||||||||||||||||||||||||||||||
(c) Excludes seed capital gains (losses) related to consolidated investment management funds. | |||||||||||||||||||||||||||||||||||||||||
(d) On a constant currency basis (Non-GAAP), investment management and performance fees increased 9% compared with 2Q20. See "Supplemental Information – Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 16 for the reconciliation of this Non-GAAP measure. | |||||||||||||||||||||||||||||||||||||||||
| (e) Includes gains (losses) on investments in BNY Mellon funds which hedge deferred incentive awards. | |||||||||||||||||||||||||||||||||||||||||
| (f) Includes strategic equity, private equity and other investments. | |||||||||||||||||||||||||||||||||||||||||
| N/M – Not meaningful. | |||||||||||||||||||||||||||||||||||||||||
6
| THE BANK OF NEW YORK MELLON CORPORATION | | |||||||||||||||||||||||||||||||||||||||||||
| AVERAGE BALANCES AND INTEREST RATES | ||||||||||||||||||||||||||||||||||||||||||||
| 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | ||||||||||||||||||||||||||||||||||||||||
| Average balance | Average rate | Average balance | Average rate | Average balance | Average rate | Average balance | Average rate | Average balance | Average rate | |||||||||||||||||||||||||||||||||||
| (dollars in millions; average rates are annualized) | ||||||||||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing deposits with the Federal Reserve and other central banks | $ | 114,564 | (0.09) | % | $ | 125,930 | (0.05) | % | $ | 112,274 | (0.04) | % | $ | 90,670 | (0.04) | % | $ | 94,229 | (0.03) | % | ||||||||||||||||||||||||
| Interest-bearing deposits with banks (primarily foreign banks) | 22,465 | 0.20 | 21,313 | 0.27 | 19,281 | 0.32 | 19,202 | 0.42 | 21,093 | 0.76 | ||||||||||||||||||||||||||||||||||
Federal funds sold and securities purchased under resale agreements (a) | 27,857 | 0.36 | 29,186 | 0.44 | 28,389 | 0.55 | 30,342 | 0.63 | 30,265 | 0.82 | ||||||||||||||||||||||||||||||||||
| Margin loans | 18,995 | 1.04 | 15,891 | 1.14 | 14,097 | 1.23 | 12,870 | 1.24 | 12,791 | 1.28 | ||||||||||||||||||||||||||||||||||
| Non-margin loans: | ||||||||||||||||||||||||||||||||||||||||||||
| Domestic offices | 36,455 | 1.90 | 31,218 | 2.02 | 30,855 | 2.08 | 30,053 | 2.12 | 31,185 | 2.21 | ||||||||||||||||||||||||||||||||||
| Foreign offices | 5,070 | 1.14 | 9,680 | 1.18 | 9,776 | 1.31 | 10,693 | 1.45 | 12,743 | 1.84 | ||||||||||||||||||||||||||||||||||
| Total non-margin loans | 41,525 | 1.81 | 40,898 | 1.82 | 40,631 | 1.90 | 40,746 | 1.94 | 43,928 | 2.10 | ||||||||||||||||||||||||||||||||||
| Securities: | ||||||||||||||||||||||||||||||||||||||||||||
| U.S. government obligations | 33,212 | 1.42 | 28,759 | 1.43 | 27,783 | 1.46 | 30,073 | 1.36 | 27,901 | 1.52 | ||||||||||||||||||||||||||||||||||
| U.S. government agency obligations | 72,809 | 1.46 | 77,623 | 1.50 | 79,712 | 1.56 | 78,300 | 1.68 | 74,583 | 1.92 | ||||||||||||||||||||||||||||||||||
State and political subdivisions (b) | 2,768 | 1.96 | 2,526 | 1.92 | 2,104 | 2.01 | 1,500 | 2.51 | 1,025 | 2.98 | ||||||||||||||||||||||||||||||||||
Other securities (b) | 47,451 | 0.26 | 47,030 | 0.50 | 46,280 | 0.48 | 46,719 | 0.59 | 45,511 | 0.82 | ||||||||||||||||||||||||||||||||||
Total investment securities (b) | 156,240 | 1.10 | 155,938 | 1.19 | 155,879 | 1.23 | 156,592 | 1.30 | 149,020 | 1.51 | ||||||||||||||||||||||||||||||||||
Trading securities (b) | 6,639 | 0.72 | 8,141 | 0.95 | 8,123 | 0.95 | 7,212 | 0.91 | 6,236 | 1.13 | ||||||||||||||||||||||||||||||||||
Total securities (b) | 162,879 | 1.08 | 164,079 | 1.18 | 164,002 | 1.22 | 163,804 | 1.28 | 155,256 | 1.50 | ||||||||||||||||||||||||||||||||||
Total interest-earning assets (b) | $ | 388,285 | 0.71 | % | $ | 397,297 | 0.75 | % | $ | 378,674 | 0.82 | % | $ | 357,634 | 0.92 | % | $ | 357,562 | 1.06 | % | ||||||||||||||||||||||||
| Noninterest-earning assets | 64,044 | 63,082 | 58,814 | 57,231 | 57,797 | |||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 452,329 | $ | 460,379 | $ | 437,488 | $ | 414,865 | $ | 415,359 | ||||||||||||||||||||||||||||||||||
| Liabilities and equity | ||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||||||||||||||||||||||
| Domestic offices | $ | 126,953 | (0.02) | % | $ | 128,543 | (0.02) | % | $ | 119,012 | (0.02) | % | $ | 102,767 | (0.01) | % | $ | 102,135 | 0.06 | % | ||||||||||||||||||||||||
| Foreign offices | 112,513 | (0.15) | 116,572 | (0.10) | 112,306 | (0.10) | 108,733 | (0.09) | 108,508 | (0.12) | ||||||||||||||||||||||||||||||||||
| Total interest-bearing deposits | 239,466 | (0.08) | 245,115 | (0.06) | 231,318 | (0.06) | 211,500 | (0.05) | 210,643 | (0.03) | ||||||||||||||||||||||||||||||||||
Federal funds purchased and securities sold under repurchase agreements (a) | 13,773 | (0.17) | 15,288 | (0.07) | 14,452 | 0.01 | 16,850 | 0.13 | 14,209 | 0.03 | ||||||||||||||||||||||||||||||||||
| Trading liabilities | 2,282 | 0.38 | 2,227 | 0.53 | 2,408 | 0.72 | 2,692 | 0.30 | 1,974 | 0.39 | ||||||||||||||||||||||||||||||||||
| Other borrowed funds | 298 | 2.21 | 331 | 2.01 | 338 | 1.71 | 873 | 1.40 | 2,272 | 1.30 | ||||||||||||||||||||||||||||||||||
| Commercial paper | — | — | — | — | 275 | 0.10 | 2,274 | 0.09 | 191 | 1.02 | ||||||||||||||||||||||||||||||||||
| Payables to customers and broker-dealers | 16,811 | (0.01) | 17,691 | (0.01) | 17,521 | (0.01) | 18,501 | (0.01) | 18,742 | (0.01) | ||||||||||||||||||||||||||||||||||
| Long-term debt | 25,275 | 1.43 | 26,199 | 1.81 | 25,704 | 1.88 | 26,511 | 2.01 | 28,122 | 2.42 | ||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | $ | 297,905 | 0.05 | % | $ | 306,851 | 0.11 | % | $ | 292,016 | 0.13 | % | $ | 279,201 | 0.16 | % | $ | 276,153 | 0.24 | % | ||||||||||||||||||||||||
| Total noninterest-bearing deposits | 85,802 | 83,429 | 75,840 | 67,610 | 72,411 | |||||||||||||||||||||||||||||||||||||||
| Other noninterest-bearing liabilities | 23,317 | 24,556 | 23,783 | 23,393 | 24,121 | |||||||||||||||||||||||||||||||||||||||
| Total The Bank of New York Mellon Corporation shareholders’ equity | 44,934 | 45,261 | 45,539 | 44,456 | 42,486 | |||||||||||||||||||||||||||||||||||||||
| Noncontrolling interests | 371 | 282 | 310 | 205 | 188 | |||||||||||||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 452,329 | $ | 460,379 | $ | 437,488 | $ | 414,865 | $ | 415,359 | ||||||||||||||||||||||||||||||||||
| Net interest margin | 0.67 | % | 0.66 | % | 0.72 | % | 0.79 | % | 0.88 | % | ||||||||||||||||||||||||||||||||||
Net interest margin (FTE) – Non-GAAP (c) | 0.67 | % | 0.67 | % | 0.72 | % | 0.79 | % | 0.88 | % | ||||||||||||||||||||||||||||||||||
(a) Includes the average impact of offsetting under enforceable netting agreements of approximately $41 billion for 2Q21, $37 billion for 1Q21, $41 billion for 4Q20, $43 billion for 3Q20 and $67 billion for 2Q20. On a Non-GAAP basis, excluding the impact of offsetting, the yield on federal funds sold and securities purchased under resale agreements would have been 0.15% for 2Q21, 0.19% for 1Q21, 0.23% for 4Q20 and 0.26% for 3Q20 and 2Q20. On a Non-GAAP basis, excluding the impact of offsetting, the rate on federal funds purchased and securities sold under repurchase agreements would have been (0.04)% for 2Q21, (0.02)% for 1Q21, 0.00% for 4Q20, 0.04% for 3Q20 and 0.00% for 2Q20. We believe providing the rates excluding the impact of netting is useful to investors as it is more reflective of the actual rates earned and paid. | ||||||||||||||||||||||||||||||||||||||||||||
(b) Average rates were calculated on an FTE basis, at tax rates of approximately 21%. | ||||||||||||||||||||||||||||||||||||||||||||
(c) See "Supplemental Information – Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 16 for the reconciliation of this Non-GAAP measure. | ||||||||||||||||||||||||||||||||||||||||||||
7
| THE BANK OF NEW YORK MELLON CORPORATION | | |||||||||||||||||||||||||||||||||||||||||||
| CAPITAL AND LIQUIDITY | ||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | |||||||||||||||||||||||||||||||||||||||||||
| (dollars in millions) | June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | |||||||||||||||||||||||||||||||||||||||
Consolidated regulatory capital ratios (a) | ||||||||||||||||||||||||||||||||||||||||||||
| Standardized Approach: | ||||||||||||||||||||||||||||||||||||||||||||
| CET1 capital | $ | 21,457 | $ | 21,090 | $ | 21,875 | $ | 21,171 | $ | 20,035 | ||||||||||||||||||||||||||||||||||
| Tier 1 capital | 25,891 | 25,534 | 26,310 | 25,611 | 24,478 | |||||||||||||||||||||||||||||||||||||||
| Total capital | 27,459 | 27,190 | 28,038 | 27,327 | 26,183 | |||||||||||||||||||||||||||||||||||||||
| Risk-weighted assets | 169,870 | 167,510 | 163,848 | 156,698 | 157,290 | |||||||||||||||||||||||||||||||||||||||
| CET1 ratio | 12.6 | % | 12.6 | % | 13.4 | % | 13.5 | % | 12.7 | % | ||||||||||||||||||||||||||||||||||
| Tier 1 capital ratio | 15.2 | 15.2 | 16.1 | 16.3 | 15.6 | |||||||||||||||||||||||||||||||||||||||
| Total capital ratio | 16.2 | 16.2 | 17.1 | 17.4 | 16.6 | |||||||||||||||||||||||||||||||||||||||
| Advanced Approaches: | ||||||||||||||||||||||||||||||||||||||||||||
| CET1 capital | $ | 21,457 | $ | 21,090 | $ | 21,875 | $ | 21,171 | $ | 20,035 | ||||||||||||||||||||||||||||||||||
| Tier 1 capital | 25,891 | 25,534 | 26,310 | 25,611 | 24,478 | |||||||||||||||||||||||||||||||||||||||
| Total capital | 27,172 | 26,908 | 27,795 | 27,081 | 25,937 | |||||||||||||||||||||||||||||||||||||||
| Risk-weighted assets | 169,322 | 167,035 | 166,426 | 163,108 | 159,340 | |||||||||||||||||||||||||||||||||||||||
| CET1 ratio | 12.7 | % | 12.6 | % | 13.1 | % | 13.0 | % | 12.6 | % | ||||||||||||||||||||||||||||||||||
| Tier 1 capital ratio | 15.3 | 15.3 | 15.8 | 15.7 | 15.4 | |||||||||||||||||||||||||||||||||||||||
| Total capital ratio | 16.0 | 16.1 | 16.7 | 16.6 | 16.3 | |||||||||||||||||||||||||||||||||||||||
| Tier 1 leverage ratio: | ||||||||||||||||||||||||||||||||||||||||||||
| Average assets for Tier 1 leverage ratio | $ | 432,948 | $ | 440,968 | $ | 417,982 | $ | 394,945 | $ | 394,394 | ||||||||||||||||||||||||||||||||||
| Tier 1 leverage ratio | 6.0 | % | 5.8 | % | 6.3 | % | 6.5 | % | 6.2 | % | ||||||||||||||||||||||||||||||||||
| SLR: | ||||||||||||||||||||||||||||||||||||||||||||
| Leverage exposure | $ | 347,127 | $ | 314,334 | (b) | $ | 304,823 | (b) | $ | 300,265 | (b) | $ | 297,300 | (b) | ||||||||||||||||||||||||||||||
| SLR | 7.5 | % | 8.1 | % | (b) | 8.6 | % | (b) | 8.5 | % | (b) | 8.2 | % | (b) | ||||||||||||||||||||||||||||||
| Average liquidity coverage ratio | 110 | % | 110 | % | 110 | % | 111 | % | 112 | % | ||||||||||||||||||||||||||||||||||
(a) Regulatory capital ratios for June 30, 2021 are preliminary. For our CET1, Tier 1 capital and Total capital ratios, our effective capital ratios under the U.S. capital rules are the lower of the ratios as calculated under the Standardized and Advanced Approaches, which for June 30, 2021 and March 31, 2021 was the Standardized Approach for the CET1 and Tier 1 capital ratios and the Advanced Approaches for the Total capital ratio, and for Dec. 31, 2020, Sept. 30, 2020 and June 30, 2020, was the Advanced Approaches. | ||||||||||||||||||||||||||||||||||||||||||||
(b) Reflects the temporary exclusion of U.S. Treasury securities from the leverage exposure used in the SLR calculation which increased our consolidated SLR by 68 basis points at March 31, 2021, 72 basis points at Dec. 31, 2020, 78 basis points at Sept. 30, 2020 and 40 basis points at June 30, 2020. The temporary exclusion ceased to apply beginning April 1, 2021. | ||||||||||||||||||||||||||||||||||||||||||||
8
| THE BANK OF NEW YORK MELLON CORPORATION | | ||||||||||||||||||||||||||||||||||||||||
| INVESTMENT SERVICES BUSINESS | |||||||||||||||||||||||||||||||||||||||||
| 2Q21 vs. | YTD21 vs. | ||||||||||||||||||||||||||||||||||||||||
| (dollars in millions) | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | 1Q21 | 2Q20 | YTD21 | YTD20 | YTD20 | |||||||||||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||||||||||||||||||||
| Investment services fees: | |||||||||||||||||||||||||||||||||||||||||
Asset servicing fees (ex. securities lending revenue) (a) | $ | 1,150 | $ | 1,150 | $ | 1,094 | $ | 1,119 | $ | 1,113 | — | % | 3 | % | $ | 2,300 | $ | 2,214 | 4 | % | |||||||||||||||||||||
| Securities lending revenue | 42 | 41 | 36 | 37 | 51 | 2 | (18) | 83 | 97 | (14) | |||||||||||||||||||||||||||||||
Clearing services fees (b) | 435 | 455 | 418 | 397 | 431 | (4) | 1 | 890 | 901 | (1) | |||||||||||||||||||||||||||||||
| Issuer services fees | 281 | 245 | 257 | 295 | 277 | 15 | 1 | 526 | 540 | (3) | |||||||||||||||||||||||||||||||
| Treasury services fees | 160 | 157 | 156 | 152 | 144 | 2 | 11 | 317 | 293 | 8 | |||||||||||||||||||||||||||||||
| Total investment services fees | 2,068 | 2,048 | 1,961 | 2,000 | 2,016 | 1 | 3 | 4,116 | 4,045 | 2 | |||||||||||||||||||||||||||||||
| Foreign exchange revenue | 152 | 193 | 163 | 126 | 164 | (21) | (7) | 345 | 392 | (12) | |||||||||||||||||||||||||||||||
Other (c) | 116 | 104 | 111 | 120 | 159 | 12 | (27) | 220 | 338 | (35) | |||||||||||||||||||||||||||||||
| Total fee and other revenue | 2,336 | 2,345 | 2,235 | 2,246 | 2,339 | — | — | 4,681 | 4,775 | (2) | |||||||||||||||||||||||||||||||
| Net interest revenue | 643 | 645 | 670 | 681 | 768 | — | (16) | 1,288 | 1,574 | (18) | |||||||||||||||||||||||||||||||
| Total revenue | 2,979 | 2,990 | 2,905 | 2,927 | 3,107 | — | (4) | 5,969 | 6,349 | (6) | |||||||||||||||||||||||||||||||
| Provision for credit losses | (77) | (79) | 31 | (10) | 145 | N/M | N/M | (156) | 294 | N/M | |||||||||||||||||||||||||||||||
| Noninterest expense (ex. amortization of intangible assets) | 2,040 | 2,084 | 2,157 | 2,002 | 1,971 | (2) | 4 | 4,124 | 3,940 | 5 | |||||||||||||||||||||||||||||||
| Amortization of intangible assets | 12 | 17 | 17 | 18 | 18 | (29) | (33) | 29 | 36 | (19) | |||||||||||||||||||||||||||||||
| Total noninterest expense | 2,052 | 2,101 | 2,174 | 2,020 | 1,989 | (2) | 3 | 4,153 | 3,976 | 4 | |||||||||||||||||||||||||||||||
| Income before taxes | $ | 1,004 | $ | 968 | $ | 700 | $ | 917 | $ | 973 | 4 | % | 3 | % | $ | 1,972 | $ | 2,079 | (5) | % | |||||||||||||||||||||
| Pre-tax operating margin | 34 | % | 32 | % | 24 | % | 31 | % | 31 | % | 33 | % | 33 | % | |||||||||||||||||||||||||||
| Total revenue by line of business: | |||||||||||||||||||||||||||||||||||||||||
| Asset Servicing | $ | 1,382 | $ | 1,424 | $ | 1,357 | $ | 1,354 | $ | 1,463 | (3) | % | (6) | % | $ | 2,806 | $ | 2,994 | (6) | % | |||||||||||||||||||||
| Pershing | 590 | 605 | 563 | 538 | 578 | (2) | 2 | 1,195 | 1,231 | (3) | |||||||||||||||||||||||||||||||
| Issuer Services | 405 | 363 | 385 | 435 | 431 | 12 | (6) | 768 | 850 | (10) | |||||||||||||||||||||||||||||||
| Treasury Services | 319 | 317 | 325 | 323 | 340 | 1 | (6) | 636 | 679 | (6) | |||||||||||||||||||||||||||||||
| Clearance and Collateral Management | 283 | 281 | 275 | 277 | 295 | 1 | (4) | 564 | 595 | (5) | |||||||||||||||||||||||||||||||
| Total revenue by line of business | $ | 2,979 | $ | 2,990 | $ | 2,905 | $ | 2,927 | $ | 3,107 | — | % | (4) | % | $ | 5,969 | $ | 6,349 | (6) | % | |||||||||||||||||||||
(a) Asset servicing fees include the fees from the Clearance and Collateral Management business. | |||||||||||||||||||||||||||||||||||||||||
(b) Clearing services fees are almost entirely earned by our Pershing business. | |||||||||||||||||||||||||||||||||||||||||
| (c) Other revenue includes investment management fees, financing-related fees, distribution and servicing revenue, securities gains and losses and investment and other income. | |||||||||||||||||||||||||||||||||||||||||
| N/M – Not meaningful. | |||||||||||||||||||||||||||||||||||||||||
9
| THE BANK OF NEW YORK MELLON CORPORATION | | ||||||||||||||||||||||||||||||||||||||||
| INVESTMENT SERVICES BUSINESS | |||||||||||||||||||||||||||||||||||||||||
| 2Q21 vs. | YTD21 vs. | ||||||||||||||||||||||||||||||||||||||||
| (dollars in millions, unless otherwise noted) | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | 1Q21 | 2Q20 | YTD21 | YTD20 | YTD20 | |||||||||||||||||||||||||||||||
| Average loans | $ | 46,845 | $ | 43,468 | $ | 41,437 | $ | 40,308 | $ | 43,113 | 8 | % | 9 | % | $ | 45,166 | $ | 42,451 | 6 | % | |||||||||||||||||||||
| Average assets | $ | 383,330 | $ | 385,054 | $ | 358,270 | $ | 329,324 | $ | 335,288 | — | % | 14 | % | $ | 384,187 | $ | 319,689 | 20 | % | |||||||||||||||||||||
| Average deposits | $ | 313,923 | $ | 315,088 | $ | 292,631 | $ | 263,621 | $ | 268,467 | — | % | 17 | % | $ | 314,502 | $ | 255,327 | 23 | % | |||||||||||||||||||||
AUC/A at period end (in trillions) (a)(b) | $ | 45.0 | $ | 41.7 | $ | 41.1 | $ | 38.6 | $ | 37.3 | 8 | % | 21 | % | |||||||||||||||||||||||||||
Market value of securities on loan at period end (in billions) (c) | $ | 456 | $ | 445 | $ | 435 | $ | 378 | $ | 384 | 2 | % | 19 | % | |||||||||||||||||||||||||||
| Pershing | |||||||||||||||||||||||||||||||||||||||||
Net new assets (U.S. platform) (in billions) (d) | $ | 40 | $ | 28 | $ | 28 | $ | 12 | $ | 11 | N/M | N/M | |||||||||||||||||||||||||||||
Average active clearing accounts (U.S. platform) (in thousands) | 6,889 | 6,757 | 6,635 | 6,556 | 6,507 | 2 | % | 6 | % | ||||||||||||||||||||||||||||||||
Average long-term mutual fund assets (U.S. platform) | $ | 730,954 | $ | 678,556 | $ | 630,086 | $ | 597,312 | $ | 547,579 | 8 | % | 33 | % | |||||||||||||||||||||||||||
Average investor margin loans (U.S. platform) | $ | 12,097 | $ | 10,937 | $ | 10,097 | $ | 9,350 | $ | 9,235 | 11 | % | 31 | % | |||||||||||||||||||||||||||
| Clearance and Collateral Management | |||||||||||||||||||||||||||||||||||||||||
Average tri-party collateral management balances (in billions) | $ | 3,898 | $ | 3,638 | $ | 3,555 | $ | 3,417 | $ | 3,573 | 7 | % | 9 | % | |||||||||||||||||||||||||||
(a) June 30, 2021 information is preliminary. | |||||||||||||||||||||||||||||||||||||||||
(b) Consists of AUC/A primarily from the Asset Servicing business and, to a lesser extent, the Clearance and Collateral Management, Issuer Services, Pershing and Wealth Management businesses. Includes the AUC/A of CIBC Mellon of $1.7 trillion at June 30, 2021, $1.6 trillion at March 31, 2021, $1.5 trillion at Dec. 31, 2020, $1.4 trillion at Sept. 30, 2020 and $1.3 trillion at June 30, 2020. | |||||||||||||||||||||||||||||||||||||||||
(c) Represents the total amount of securities on loan in our agency securities lending program managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $63 billion at June 30, 2021, $64 billion at March 31, 2021, $68 billion at Dec. 31, 2020 and $62 billion at Sept. 30, 2020 and June 30, 2020. | |||||||||||||||||||||||||||||||||||||||||
(d) Net new assets represent net flows of assets excluding dividends and interest (e.g., net cash deposits and net securities transfers) in customer accounts in Pershing LLC, a U.S. broker-dealer. | |||||||||||||||||||||||||||||||||||||||||
| N/M – Not meaningful. | |||||||||||||||||||||||||||||||||||||||||
10
| THE BANK OF NEW YORK MELLON CORPORATION | | ||||||||||||||||||||||||||||||||||||||||
| INVESTMENT AND WEALTH MANAGEMENT BUSINESS | |||||||||||||||||||||||||||||||||||||||||
| 2Q21 vs. | YTD21 vs. | ||||||||||||||||||||||||||||||||||||||||
| (dollars in millions) | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | 1Q21 | 2Q20 | YTD21 | YTD20 | YTD20 | |||||||||||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||||||||||||||||||||
Investment management fees (a) | $ | 876 | $ | 850 | $ | 839 | $ | 828 | $ | 782 | 3 | % | 12 | % | $ | 1,726 | $ | 1,594 | 8 | % | |||||||||||||||||||||
| Performance fees | 14 | 40 | 45 | 7 | 5 | N/M | 180 | 54 | 55 | (2) | |||||||||||||||||||||||||||||||
Investment management and performance fees (b) | 890 | 890 | 884 | 835 | 787 | — | 13 | 1,780 | 1,649 | 8 | |||||||||||||||||||||||||||||||
| Distribution and servicing | 28 | 28 | 29 | 31 | 34 | — | (18) | 56 | 77 | (27) | |||||||||||||||||||||||||||||||
Other (a) | 34 | 25 | 27 | 5 | 17 | N/M | N/M | 59 | (42) | N/M | |||||||||||||||||||||||||||||||
Total fee and other revenue (a) | 952 | 943 | 940 | 871 | 838 | 1 | 14 | 1,895 | 1,684 | 13 | |||||||||||||||||||||||||||||||
| Net interest revenue | 47 | 48 | 50 | 47 | 48 | (2) | (2) | 95 | 100 | (5) | |||||||||||||||||||||||||||||||
| Total revenue | 999 | 991 | 990 | 918 | 886 | 1 | 13 | 1,990 | 1,784 | 12 | |||||||||||||||||||||||||||||||
| Provision for credit losses | (4) | 4 | (8) | 12 | 7 | N/M | N/M | — | 16 | N/M | |||||||||||||||||||||||||||||||
| Noninterest expense (ex. amortization of intangible assets) | 669 | 702 | 678 | 653 | 650 | (5) | 3 | 1,371 | 1,337 | 3 | |||||||||||||||||||||||||||||||
| Amortization of intangible assets | 8 | 7 | 9 | 8 | 8 | 14 | — | 15 | 16 | (6) | |||||||||||||||||||||||||||||||
| Total noninterest expense | 677 | 709 | 687 | 661 | 658 | (5) | 3 | 1,386 | 1,353 | 2 | |||||||||||||||||||||||||||||||
| Income before taxes | $ | 326 | $ | 278 | $ | 311 | $ | 245 | $ | 221 | 17 | % | 48 | % | $ | 604 | $ | 415 | 46 | % | |||||||||||||||||||||
| Pre-tax operating margin | 33 | % | 28 | % | 32 | % | 27 | % | 25 | % | 30 | % | 23 | % | |||||||||||||||||||||||||||
Adjusted pre-tax operating margin – Non-GAAP (c) | 35 | % | 30 | % | 34 | % | 29 | % | 28 | % | 33 | % | 26 | % | |||||||||||||||||||||||||||
| Total revenue by line of business: | |||||||||||||||||||||||||||||||||||||||||
| Investment Management | $ | 700 | $ | 698 | $ | 714 | $ | 641 | $ | 621 | — | % | 13 | % | $ | 1,398 | $ | 1,241 | 13 | % | |||||||||||||||||||||
| Wealth Management | 299 | 293 | 276 | 277 | 265 | 2 | 13 | 592 | 543 | 9 | |||||||||||||||||||||||||||||||
| Total revenue by line of business | $ | 999 | $ | 991 | $ | 990 | $ | 918 | $ | 886 | 1 | % | 13 | % | $ | 1,990 | $ | 1,784 | 12 | % | |||||||||||||||||||||
| Average loans | $ | 11,871 | $ | 11,610 | $ | 11,497 | $ | 11,503 | $ | 11,791 | 2 | % | 1 | % | $ | 11,742 | $ | 11,958 | (2) | % | |||||||||||||||||||||
| Average assets | $ | 30,370 | $ | 32,066 | $ | 30,804 | $ | 30,160 | $ | 30,327 | (5) | % | — | % | $ | 31,213 | $ | 30,435 | 3 | % | |||||||||||||||||||||
| Average deposits | $ | 17,466 | $ | 19,177 | $ | 18,144 | $ | 17,570 | $ | 17,491 | (9) | % | — | % | $ | 18,317 | $ | 16,817 | 9 | % | |||||||||||||||||||||
(a) Total fee and other revenue includes the impact of the consolidated investment management funds, net of noncontrolling interests. Additionally, other revenue includes asset servicing fees, treasury services fees, foreign exchange revenue and investment and other income. | |||||||||||||||||||||||||||||||||||||||||
(b) On a constant currency basis (Non-GAAP), investment management and performance fees increased 9% compared with 2Q20. See "Supplemental Information – Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 16 for the reconciliation of this Non-GAAP measure. | |||||||||||||||||||||||||||||||||||||||||
(c) Net of distribution and servicing expense. See "Supplemental Information – Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 16 for the reconciliation of this Non-GAAP measure. | |||||||||||||||||||||||||||||||||||||||||
| N/M – Not meaningful. | |||||||||||||||||||||||||||||||||||||||||
11
| THE BANK OF NEW YORK MELLON CORPORATION | | ||||||||||||||||||||||||||||||||||||||||
| AUM BY PRODUCT, AUM FLOWS AND WEALTH MANAGEMENT CLIENT ASSETS | |||||||||||||||||||||||||||||||||||||||||
| 2Q21 vs. | YTD21 vs. | ||||||||||||||||||||||||||||||||||||||||
| (dollars in billions) | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | 1Q21 | 2Q20 | YTD21 | YTD20 | YTD20 | |||||||||||||||||||||||||||||||
AUM by product type (a)(b) | |||||||||||||||||||||||||||||||||||||||||
| Equity | $ | 187 | $ | 173 | $ | 170 | $ | 149 | $ | 141 | 8 | % | 33 | % | |||||||||||||||||||||||||||
| Fixed income | 272 | 261 | 259 | 241 | 224 | 4 | 21 | ||||||||||||||||||||||||||||||||||
| Index | 440 | 419 | 393 | 350 | 333 | 5 | 32 | ||||||||||||||||||||||||||||||||||
| Liability-driven investments | 841 | 802 | 855 | 788 | 752 | 5 | 12 | ||||||||||||||||||||||||||||||||||
| Multi-asset and alternative investments | 222 | 214 | 209 | 193 | 185 | 4 | 20 | ||||||||||||||||||||||||||||||||||
| Cash | 358 | 345 | 325 | 320 | 326 | 4 | 10 | ||||||||||||||||||||||||||||||||||
| Total AUM by product type | $ | 2,320 | $ | 2,214 | $ | 2,211 | $ | 2,041 | $ | 1,961 | 5 | % | 18 | % | |||||||||||||||||||||||||||
Changes in AUM (a)(b) | |||||||||||||||||||||||||||||||||||||||||
| Beginning balance of AUM | $ | 2,214 | $ | 2,211 | $ | 2,041 | $ | 1,961 | $ | 1,796 | $ | 2,211 | $ | 1,910 | |||||||||||||||||||||||||||
| Net inflows (outflows): | |||||||||||||||||||||||||||||||||||||||||
| Long-term strategies: | |||||||||||||||||||||||||||||||||||||||||
| Equity | (3) | — | (2) | (4) | (2) | (3) | (4) | ||||||||||||||||||||||||||||||||||
| Fixed income | 8 | 8 | 5 | 1 | 4 | 16 | 4 | ||||||||||||||||||||||||||||||||||
| Liability-driven investments | 11 | 8 | 15 | 14 | (2) | 19 | (7) | ||||||||||||||||||||||||||||||||||
| Multi-asset and alternative investments | 1 | (2) | — | (3) | — | (1) | (1) | ||||||||||||||||||||||||||||||||||
| Total long-term active strategies inflows (outflows) | 17 | 14 | 18 | 8 | — | 31 | (8) | ||||||||||||||||||||||||||||||||||
| Index | (5) | 3 | (3) | (3) | 9 | (2) | 12 | ||||||||||||||||||||||||||||||||||
| Total long-term strategies inflows | 12 | 17 | 15 | 5 | 9 | 29 | 4 | ||||||||||||||||||||||||||||||||||
| Short-term strategies: | |||||||||||||||||||||||||||||||||||||||||
| Cash | 13 | 19 | 5 | (10) | 11 | 32 | 54 | ||||||||||||||||||||||||||||||||||
| Total net inflows (outflows) | 25 | 36 | 20 | (5) | 20 | 61 | 58 | ||||||||||||||||||||||||||||||||||
| Net market impact | 79 | (36) | 93 | 41 | 143 | 43 | 52 | ||||||||||||||||||||||||||||||||||
| Net currency impact | 2 | 3 | 57 | 44 | 2 | 5 | (59) | ||||||||||||||||||||||||||||||||||
| Ending balance of AUM | $ | 2,320 | $ | 2,214 | $ | 2,211 | $ | 2,041 | $ | 1,961 | 5 | % | 18 | % | $ | 2,320 | $ | 1,961 | 18 | % | |||||||||||||||||||||
Wealth Management client assets (a)(c) | $ | 305 | $ | 292 | $ | 286 | $ | 265 | $ | 254 | 4 | % | 20 | % | |||||||||||||||||||||||||||
(a) June 30, 2021 information is preliminary. | |||||||||||||||||||||||||||||||||||||||||
(b) Excludes securities lending cash management assets and assets managed in the Investment Services business. | |||||||||||||||||||||||||||||||||||||||||
(c) Includes AUM and AUC/A in the Wealth Management business. | |||||||||||||||||||||||||||||||||||||||||
12
| THE BANK OF NEW YORK MELLON CORPORATION | | |||||||||||||||||||||||||
| OTHER SEGMENT | ||||||||||||||||||||||||||
| (in millions) | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | YTD21 | YTD20 | |||||||||||||||||||
| Fee revenue | $ | 13 | $ | 9 | $ | 11 | $ | 7 | $ | 10 | $ | 22 | $ | 16 | ||||||||||||
| Other revenue | 9 | (36) | (28) | 13 | 28 | (27) | 52 | |||||||||||||||||||
| Total fee and other revenue | 22 | (27) | (17) | 20 | 38 | (5) | 68 | |||||||||||||||||||
| Net interest (expense) | (45) | (38) | (40) | (25) | (36) | (83) | (80) | |||||||||||||||||||
| Total revenue | (23) | (65) | (57) | (5) | 2 | (88) | (12) | |||||||||||||||||||
| Provision for credit losses | (5) | (8) | (8) | 7 | (9) | (13) | 2 | |||||||||||||||||||
| Noninterest expense | 49 | 41 | 64 | — | 39 | 90 | 69 | |||||||||||||||||||
| (Loss) before taxes | $ | (67) | $ | (98) | $ | (113) | $ | (12) | $ | (28) | $ | (165) | $ | (83) | ||||||||||||
| Average loans and leases | $ | 1,804 | $ | 1,711 | $ | 1,794 | $ | 1,805 | $ | 1,815 | $ | 1,757 | $ | 1,887 | ||||||||||||
| Average assets | $ | 38,629 | $ | 43,259 | $ | 48,414 | $ | 55,381 | $ | 49,744 | $ | 40,932 | $ | 50,194 | ||||||||||||
13
| THE BANK OF NEW YORK MELLON CORPORATION | | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| SECURITIES PORTFOLIO | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in millions) | March 31, 2021 | 2Q21 change in unrealized gain (loss) | June 30, 2021 | Fair value as a % of amortized cost (a) | Unrealized gain (loss) | % Floating rate | Ratings (c) | ||||||||||||||||||||||||||||||||||||||||||||||
| Amortized cost | Fair value | AAA/ AA- | A+/ A- | BBB+/ BBB- | BB+ and lower | A1+/ A2 & SP-1 | Not rated | ||||||||||||||||||||||||||||||||||||||||||||||
| Fair value | (b) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Agency RMBS | $ | 58,831 | $ | 66 | $ | 53,154 | $ | 53,944 | 101 | % | $ | 790 | 14 | % | 100 | % | — | % | — | % | — | % | — | % | — | % | |||||||||||||||||||||||||||
| U.S. Treasury | 30,595 | (28) | 34,112 | 34,267 | 100 | 155 | 53 | 100 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Sovereign debt/sovereign guaranteed | 14,571 | (6) | 14,098 | 14,209 | 101 | 111 | 16 | 75 | 5 | 19 | 1 | — | — | ||||||||||||||||||||||||||||||||||||||||
| Agency commercial MBS | 11,730 | 72 | 11,360 | 11,678 | 103 | 318 | 30 | 100 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Supranational | 7,505 | — | 8,121 | 8,157 | 100 | 36 | 56 | 100 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Foreign covered bonds | 6,542 | (10) | 6,752 | 6,793 | 101 | 41 | 35 | 100 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
U.S. government agencies | 5,469 | 43 | 5,446 | 5,460 | 100 | 14 | 25 | 100 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| CLOs | 4,754 | (1) | 5,137 | 5,139 | 100 | 2 | 100 | 99 | — | — | — | — | 1 | ||||||||||||||||||||||||||||||||||||||||
Non-agency commercial MBS | 2,948 | 41 | 3,181 | 3,263 | 103 | 82 | 24 | 99 | 1 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Foreign government agencies | 2,697 | (4) | 2,693 | 2,708 | 101 | 15 | 13 | 92 | 8 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
State and political subdivisions | 2,649 | 27 | 2,610 | 2,621 | 100 | 11 | — | 83 | 10 | — | — | 6 | 1 | ||||||||||||||||||||||||||||||||||||||||
Non-agency RMBS (d) | 2,509 | (5) | 2,391 | 2,530 | 106 | 139 | 50 | 74 | 4 | — | 11 | — | 11 | ||||||||||||||||||||||||||||||||||||||||
Other asset-backed securities | 2,628 | (1) | 2,446 | 2,456 | 100 | 10 | 19 | 100 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Corporate bonds | 2,238 | 50 | 2,348 | 2,347 | 100 | (1) | — | 16 | 68 | 16 | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Other | 1 | — | 1 | 1 | 100 | — | — | — | — | — | — | — | 100 | ||||||||||||||||||||||||||||||||||||||||
Total securities | $ | 155,667 | (e) | $ | 244 | $ | 153,850 | $ | 155,573 | (e)(f) | 101 | % | $ | 1,723 | (e)(g) | 31 | % | 96 | % | 2 | % | 2 | % | — | % | — | % | — | % | ||||||||||||||||||||||||
| (a) Amortized cost reflects historical impairments, and is net of allowance for credit losses. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (b) Includes the impact of hedges. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(c) Represents ratings by S&P, or the equivalent. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(d) Includes RMBS that were included in the former Grantor Trust of $451 million at March 31, 2021 and $416 million at June 30, 2021. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(e) Includes net unrealized losses on derivatives hedging securities available-for-sale (including terminated hedges) of $634 million at March 31, 2021 and $927 million at June 30, 2021. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(f) The fair value of available-for-sale securities totaled $102,654 million at June 30, 2021, net of hedges, or 66% of the fair value of the securities portfolio, net of hedges. The fair value of the held-to-maturity securities totaled $52,919 million at June 30, 2021, or 34% of the fair value of the securities portfolio, net of hedges. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (g) At June 30, 2021, unrealized gains of $1,129 million related to available-for-sale securities, net of hedges, and $594 million related to held-to-maturity securities. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Note: The amortizable purchase premium (net of discount) relating to securities was $1,949 million at June 30, 2021 and the amortization of that net purchase premium was $174 million in 2Q21. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
14
| THE BANK OF NEW YORK MELLON CORPORATION | | ||||||||||||||||||||||||||||
| ALLOWANCE FOR CREDIT LOSSES AND NONPERFORMING ASSETS | |||||||||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||||||||
| (dollars in millions) | June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | ||||||||||||||||||||||||
| Allowance for credit losses – beginning of period: | |||||||||||||||||||||||||||||
| Allowance for loan losses | $ | 327 | $ | 358 | $ | 325 | $ | 302 | $ | 140 | |||||||||||||||||||
| Allowance for lending-related commitments | 73 | 121 | 135 | 152 | 148 | ||||||||||||||||||||||||
Allowance for other financial instruments (a) | 19 | 22 | 26 | 21 | 41 | ||||||||||||||||||||||||
| Allowance for credit losses – beginning of period | $ | 419 | $ | 501 | $ | 486 | $ | 475 | $ | 329 | |||||||||||||||||||
| Net (charge-offs) recoveries: | |||||||||||||||||||||||||||||
| Charge-offs | (1) | (1) | (1) | — | — | ||||||||||||||||||||||||
| Recoveries | 3 | 2 | 1 | 2 | 3 | ||||||||||||||||||||||||
| Total net recoveries | 1 | 1 | — | 2 | 3 | ||||||||||||||||||||||||
Provision for credit losses (b) | (86) | (83) | 15 | 9 | 143 | ||||||||||||||||||||||||
| Allowance for credit losses - end of period | $ | 335 | $ | 419 | $ | 501 | $ | 486 | $ | 475 | |||||||||||||||||||
| Allowance for credit losses – end of period: | |||||||||||||||||||||||||||||
| Allowance for loan losses | $ | 269 | $ | 327 | $ | 358 | $ | 325 | $ | 302 | |||||||||||||||||||
| Allowance for lending-related commitments | 50 | 73 | 121 | 135 | 152 | ||||||||||||||||||||||||
Allowance for other financial instruments (a) | 16 | 19 | 22 | 26 | 21 | ||||||||||||||||||||||||
| Allowance for credit losses – end of period | $ | 335 | $ | 419 | $ | 501 | $ | 486 | $ | 475 | |||||||||||||||||||
| Allowance for loan losses as a percentage of total loans | 0.42 | % | 0.54 | % | 0.63 | % | 0.59 | % | 0.55 | % | |||||||||||||||||||
| Nonperforming assets | $ | 90 | $ | 112 | $ | 89 | $ | 84 | $ | 88 | |||||||||||||||||||
(a) Includes allowance for credit losses on federal funds sold and securities purchased under resale agreements, available-for-sale securities, accounts receivable, cash and due from banks and interest-bearing deposits with banks. | |||||||||||||||||||||||||||||
(b) Includes all other instruments within the scope of ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments. | |||||||||||||||||||||||||||||
15
| THE BANK OF NEW YORK MELLON CORPORATION | | |||||||||||||||||||||||||
| SUPPLEMENTAL INFORMATION – EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||||||||
| BNY Mellon has included in this Financial Supplement certain Non-GAAP financial measures on a tangible basis as a supplement to GAAP information, which exclude goodwill and intangible assets, net of deferred tax liabilities. We believe that the return on tangible common equity – Non-GAAP is additional useful information for investors because it presents a measure of those assets that can generate income, and the tangible book value per common share – Non-GAAP is additional useful information because it presents the level of tangible assets in relation to shares of common stock outstanding. | ||||||||||||||||||||||||||
| Net interest revenue, on a fully taxable equivalent ("FTE") basis – Non-GAAP and net interest margin (FTE) – Non-GAAP and other FTE measures include the tax equivalent adjustments on tax-exempt income which allows for the comparison of amounts arising from both taxable and tax-exempt sources and is consistent with industry practice. The adjustment to an FTE basis has no impact on net income. | ||||||||||||||||||||||||||
| BNY Mellon has also included the adjusted pre-tax operating margin – Non-GAAP, which is the pre-tax operating margin for the Investment and Wealth Management business, net of distribution and servicing expense that was passed to third parties who distribute or service our managed funds. We believe that this measure is useful when evaluating the performance of the Investment and Wealth Management business relative to industry competitors. | ||||||||||||||||||||||||||
| The presentation of the growth rates of investment management and performance fees on a constant currency basis permits investors to assess the significance of changes in foreign currency exchange rates. Growth rates on a constant currency basis were determined by applying the current period foreign currency exchange rates to the prior period revenue. We believe that this presentation, as a supplement to GAAP information, gives investors a clearer picture of the related revenue results without the variability caused by fluctuations in foreign currency exchange rates. | ||||||||||||||||||||||||||
| Notes: | ||||||||||||||||||||||||||
| Certain immaterial reclassifications/revisions have been made to prior periods to place them on a basis comparable with the current period's presentation. | ||||||||||||||||||||||||||
| In businesses where average deposits are greater than average loans, average assets include an allocation of investment securities equal to the difference. | ||||||||||||||||||||||||||
| Return on common and tangible common equity ratios are annualized. | ||||||||||||||||||||||||||
| Return on common equity and tangible common equity reconciliation | ||||||||||||||||||||||||||
| (dollars in millions) | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | YTD21 | YTD20 | |||||||||||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP | $ | 991 | $ | 858 | $ | 702 | $ | 876 | $ | 901 | $ | 1,849 | $ | 1,845 | ||||||||||||
| Add: Amortization of intangible assets | 20 | 24 | 26 | 26 | 26 | 44 | 52 | |||||||||||||||||||
| Less: Tax impact of amortization of intangible assets | 5 | 6 | 6 | 7 | 6 | 11 | 12 | |||||||||||||||||||
Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets – Non-GAAP | $ | 1,006 | $ | 876 | $ | 722 | $ | 895 | $ | 921 | $ | 1,882 | $ | 1,885 | ||||||||||||
| Average common shareholders’ equity | $ | 40,393 | $ | 40,720 | $ | 40,712 | $ | 39,924 | $ | 38,476 | 40,556 | $ | 38,070 | |||||||||||||
| Less: Average goodwill | 17,517 | 17,494 | 17,411 | 17,357 | 17,243 | 17,506 | 17,277 | |||||||||||||||||||
| Average intangible assets | 2,975 | 3,000 | 3,019 | 3,039 | 3,058 | 2,987 | 3,073 | |||||||||||||||||||
| Add: Deferred tax liability – tax deductible goodwill | 1,163 | 1,153 | 1,144 | 1,132 | 1,119 | 1,163 | 1,119 | |||||||||||||||||||
| Deferred tax liability – intangible assets | 675 | 665 | 667 | 666 | 664 | 675 | 664 | |||||||||||||||||||
| Average tangible common shareholders’ equity – Non-GAAP | $ | 21,739 | $ | 22,044 | $ | 22,093 | $ | 21,326 | $ | 19,958 | $ | 21,901 | $ | 19,503 | ||||||||||||
| Return on common equity – GAAP | 9.8 | % | 8.5 | % | 6.9 | % | 8.7 | % | 9.4 | % | 9.2 | % | 9.7 | % | ||||||||||||
| Return on tangible common equity – Non-GAAP | 18.6 | % | 16.1 | % | 13.0 | % | 16.7 | % | 18.5 | % | 17.3 | % | 19.4 | % | ||||||||||||
16
| THE BANK OF NEW YORK MELLON CORPORATION | | ||||||||||||||||||||||||||||
| SUPPLEMENTAL INFORMATION – EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES | |||||||||||||||||||||||||||||
| Book value and tangible book value per common share reconciliation | 2021 | 2020 | |||||||||||||||||||||||||||
| (dollars in millions, except common shares) | June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | ||||||||||||||||||||||||
| BNY Mellon shareholders’ equity at period end – GAAP | $ | 45,281 | $ | 44,954 | $ | 45,801 | $ | 44,917 | $ | 43,697 | |||||||||||||||||||
| Less: Preferred stock | 4,541 | 4,541 | 4,541 | 4,532 | 4,532 | ||||||||||||||||||||||||
| BNY Mellon common shareholders’ equity at period end – GAAP | 40,740 | 40,413 | 41,260 | 40,385 | 39,165 | ||||||||||||||||||||||||
| Less: Goodwill | 17,487 | 17,469 | 17,496 | 17,357 | 17,253 | ||||||||||||||||||||||||
| Intangible assets | 2,964 | 2,983 | 3,012 | 3,026 | 3,045 | ||||||||||||||||||||||||
| Add: Deferred tax liability – tax deductible goodwill | 1,163 | 1,153 | 1,144 | 1,132 | 1,119 | ||||||||||||||||||||||||
| Deferred tax liability – intangible assets | 675 | 665 | 667 | 666 | 664 | ||||||||||||||||||||||||
| BNY Mellon tangible common shareholders’ equity at period end – Non-GAAP | $ | 22,127 | $ | 21,779 | $ | 22,563 | $ | 21,800 | $ | 20,650 | |||||||||||||||||||
Period-end common shares outstanding (in thousands) | 863,174 | 875,481 | 886,764 | 886,136 | 885,862 | ||||||||||||||||||||||||
| Book value per common share – GAAP | $ | 47.20 | $ | 46.16 | $ | 46.53 | $ | 45.58 | $ | 44.21 | |||||||||||||||||||
| Tangible book value per common share – Non-GAAP | $ | 25.64 | $ | 24.88 | $ | 25.44 | $ | 24.60 | $ | 23.31 | |||||||||||||||||||
| Net interest margin reconciliation | |||||||||||||||||||||||||||||
| (dollars in millions) | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | ||||||||||||||||||||||||
| Net interest revenue – GAAP | $ | 645 | $ | 655 | $ | 680 | $ | 703 | $ | 780 | |||||||||||||||||||
| Add: Tax equivalent adjustment | 3 | 3 | 3 | 2 | 2 | ||||||||||||||||||||||||
| Net interest revenue (FTE) – Non-GAAP | $ | 648 | $ | 658 | $ | 683 | $ | 705 | $ | 782 | |||||||||||||||||||
| Average interest-earning assets | $ | 388,285 | $ | 397,297 | $ | 378,674 | $ | 357,634 | $ | 357,562 | |||||||||||||||||||
Net interest margin – GAAP (a) | 0.67 | % | 0.66 | % | 0.72 | % | 0.79 | % | 0.88 | % | |||||||||||||||||||
Net interest margin (FTE) – Non-GAAP (a) | 0.67 | % | 0.67 | % | 0.72 | % | 0.79 | % | 0.88 | % | |||||||||||||||||||
| (a) Net interest margin is annualized. | |||||||||||||||||||||||||||||
17
| THE BANK OF NEW YORK MELLON CORPORATION | | |||||||||||||||||||||||||
| SUPPLEMENTAL INFORMATION – EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||||||||
| Pre-tax operating margin reconciliation - Investment and Wealth Management business | ||||||||||||||||||||||||||
| (dollars in millions) | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | YTD21 | YTD20 | |||||||||||||||||||
| Income before income taxes – GAAP | $ | 326 | $ | 278 | $ | 311 | $ | 245 | $ | 221 | $ | 604 | $ | 415 | ||||||||||||
| Total revenue – GAAP | $ | 999 | $ | 991 | $ | 990 | $ | 918 | $ | 886 | $ | 1,990 | $ | 1,784 | ||||||||||||
| Less: Distribution and servicing expense | 74 | 75 | 76 | 85 | 86 | 149 | 177 | |||||||||||||||||||
| Adjusted total revenue, net of distribution and servicing expense – Non-GAAP | $ | 925 | $ | 916 | $ | 914 | $ | 833 | $ | 800 | $ | 1,841 | $ | 1,607 | ||||||||||||
Pre-tax operating margin – GAAP (a) | 33 | % | 28 | % | 32 | % | 27 | % | 25 | % | 30 | % | 23 | % | ||||||||||||
Adjusted pre-tax operating margin, net of distribution and servicing expense – Non-GAAP (a) | 35 | % | 30 | % | 34 | % | 29 | % | 28 | % | 33 | % | 26 | % | ||||||||||||
| (a) Income before income taxes divided by total revenue. | ||||||||||||||||||||||||||
| Constant currency reconciliations | 2Q21 vs. | |||||||||||||||||||||||||
| (dollars in millions) | 2Q21 | 2Q20 | 2Q20 | |||||||||||||||||||||||
| Consolidated: | ||||||||||||||||||||||||||
| Investment management and performance fees – GAAP | $ | 889 | $ | 786 | 13 | % | ||||||||||||||||||||
| Impact of changes in foreign currency exchange rates | — | 31 | ||||||||||||||||||||||||
| Adjusted investment management and performance fees – Non-GAAP | $ | 889 | $ | 817 | 9 | % | ||||||||||||||||||||
| Investment and Wealth Management business: | ||||||||||||||||||||||||||
| Investment management and performance fees – GAAP | $ | 890 | $ | 787 | 13 | % | ||||||||||||||||||||
| Impact of changes in foreign currency exchange rates | — | 31 | ||||||||||||||||||||||||
| Adjusted investment management and performance fees – Non-GAAP | $ | 890 | $ | 818 | 9 | % | ||||||||||||||||||||
18
Second Quarter 2021 Financial Highlights J u l y 1 5 , 2 0 2 1
2 Second Quarter 2021 – Financial Highlights 2Q21 Financial Highlights $1.13 EPS $1.27 bn Pre-tax income ROE: 9.8% ROTCE: 18.6% Returns CET1: 12.6% Tier 1 leverage: 6.0% Capital ratios › Revenue down 1% year-over-year › Fee revenue up 4%, excluding money market fee (“MMF”) waivers, up 10% (a) › Net interest revenue down 17% › Expense up 3% year-over-year › Provision for credit losses – benefit of $86 million › Average deposits down 1% quarter-over-quarter › Tier 1 leverage of 6.0% up ~20bps quarter-over-quarter › Returned approximately $0.9 billion to common shareholders in share repurchases and dividends › Authorized to repurchase up to $6.0 billion of common shares through 4Q22 and increased quarterly dividend 10% to $0.34 per common share in 3Q21 (a) $3.96 bn Revenue 32% Pre-tax margin (a) Represents a non-GAAP measure. See pages 15 and 16 in the Appendix for the corresponding reconciliations of the non -GAAP measures, consolidated fee revenue growth excluding MMF waivers and ROTCE, respectively.
3 Second Quarter 2021 – Financial Highlights 2 Q 2 1 1 Q 2 1 2 Q 2 0 T O T A L R E V E N U E $3,960 1% (1)% Fee revenue 3,224 (1) 4 Other revenue 91 N/M N/M Net interest revenue 645 (2) (17) Provision for credit losses (86) N/M N/M Noninterest expense 2,778 (3) 3 Income before income taxes 1,268 10 7 Net income applicable to common shareholders $991 16% 10% E A R N I N G S P E R C O M M O N S H A R E $1.13 16% 12% Operating leverage(a) 356 bps (467) bps Pre-tax operating margin 32% 258 bps 256 bps Return on common equity (annualized) 9.8% 130 bps 43 bps Return on tangible common equity – non-GAAP (annualized)(b) 18.6% 247 bps 3 bps 2Q21 Financial Highlights ($ mill ions, except per share data) Note: See page 14 in the Appendix for corresponding footnotes. N/M – not meaningful
4 Second Quarter 2021 – Financial Highlights 9.4 8.5 9.8 5 10 15 2Q21 Key Financial Trends 838 943 952 48 48 47 999 886 2Q20 1Q21 2Q21 991 +13% I& W M r e v e n u e ($ millions) 2,7782,686 2Q20 1Q21 2Q21 2,851 +3% 18.618.5 2Q20 1Q21 2Q21 16.1 +3 bps IS r e v en u e ($ millions) N o n i nt e re s t e xp e n se ($ millions) R O T C E / R O E (%) 10 15 20 25 30 35 40 45 501,2681,181 2Q20 1Q21 2Q21 29% 29% 1,153 Pre-tax operating margin P r e - t ax i n c o me ($ millions) +7% 1.13 1.01 2Q20 1Q21 2Q21 0.97 E P S ($) ROE Total fee and other revenue Net interest revenue 2,339 2,345 2,336 768 645 643 2,9793,107 2Q20 1Q21 2Q21 2,990 (4)% Total fee and other revenue Net interest revenue 32% (a) Represents a non-GAAP measure. See page 16 for the corresponding reconciliation of ROTCE. +12% (a)
5 Second Quarter 2021 – Financial Highlights Capital and Liquidity Note: See page 14 in the Appendix for corresponding footnotes. 2 Q 2 1 1 Q 2 1 2 Q 2 0 Consolidated regulatory capital ratios:(a) Common Equity Tier 1 (“CET1”) ratio 12.6% 12.6% 12.6% Tier 1 capital ratio 15.2 15.2 15.4 Total capital ratio 16.0 16.1 16.3 Tier 1 leverage ratio 6.0 5.8 6.2 Supplementary leverage ratio (“SLR“) 7.5 8.1 8.2 Average liquidity coverage ratio (“LCR“) 110% 110% 112% Book value per common share $47.20 $46.16 $44.21 Tangible book value per common share – non-GAAP(c) $25.64 $24.88 $23.31 Cash dividends per common share $0.31 $0.31 $0.31 Common shares outstanding (thousands) 863,174 875,481 885,862 (b) (b)
6 Second Quarter 2021 – Financial Highlights Net Interest Revenue ($ millions) - Lower interest rates on interest- earning assets - Other, including hedging + Benefit of lower debt and other funding rates D R I V E R S O F S E Q U E N T I A L N I R C H A N G E 2Q211Q21 655 645 + Volume mix (lower debt and higher loans, partially offset by lower trading assets) 2Q211Q21 (1.5)% 0.03 0.13 0.61 1.32 0.01 0.17 0.84 1.59 0.12 0.20 0.10 0.16 USD LIBOR AVERAGE 1m 3m 5Y2Y 10Y US TREASURY AVERAGE (%) (%) 1m
7 Second Quarter 2021 – Financial Highlights 123 126 126 26 30 30 1.51% 1.19% 1.10% 0.00 2.00 4.00 0.0 50.0 100.0 150.0 200.0 Balance Sheet Trends AV E R A G E D E P O S I T S Interest-bearing deposits rate AV E R A G E S E C U R I T I E S P O R T F O L I O Average securities portfolio rate High Quality Liquid Assets (“HQLA”) Non-HQLA 149 156 156 1Q212Q20 2Q21 +5% - % Note: May not foot due to rounding. (a) Average rates were calculated on an FTE basis, at tax rates of approximately 21%. (a) 72 83 86 211 245 239 (0.03)% (0.06)% (0.08)% 1Q212Q20 2Q21 329 283 325 Interest-bearing deposits +15% Noninterest-bearing deposits (1)% 146 176 165 149 156 156 6 8 7 57 57 61 A V E R A G E I N T E R E S T - E A R N I N G A S S E T S Securities Loans Cash/ Reverse repo 2Q211Q212Q20 388 358 397 (2)% +9% ($ billions) Trading
8 Second Quarter 2021 – Financial Highlights Noninterest Expense › Noninterest expenses up 3% year-over-year, primarily reflecting the unfavorable impact of a weaker U.S. dollar, investments in efficiency and growth initiatives and higher revenue-related expenses 2 Q 2 1 1 Q 2 1 2 Q 2 0 Staff $1,518 (5)% 4% Software and equipment 365 1 6 Professional, legal and other purchased services 363 6 8 Sub-custodian and clearing 132 6 10 Net occupancy 122 (1) (11) Distribution and servicing 73 (1) (14) Bank assessment charges 35 3 - Amortization of intangible assets 20 (17) (23) Business development 22 16 10 Other 128 (12) 9 Total noninterest expense $2,778 (3)% 3% ($ mill ions)
9 Second Quarter 2021 – Financial Highlights Investment Services Note: See page 14 in the Appendix for corresponding footnotes. N/M – not meaningful › Asset Servicing down year-over-year on lower net interest revenue, higher MMF waivers and lower foreign exchange revenue, partially offset by higher client activity and market values › Pershing up primarily on higher market values, client activity and balances, partially offset by higher MMF waivers › Issuer Services down primarily on MMF waivers and lower net interest revenue in Corporate Trust, partially offset by higher Depositary Receipts revenue › Treasury Services down primarily on lower interest rates and higher MMF waivers, partially offset by higher payment volumes and deposits › Clearance and Collateral Management down primarily on lower net interest revenue, intraday credit fees and clearance volumes, partially offset by higher tri-party collateral management balances › AUC/A up primarily on higher market values, net new business and the favorable impact of a weaker U.S. dollar F I N A N C I A L H I G H L I G H T S ($ mill ions unless otherwise noted) 2 Q 2 1 1 Q 2 1 2 Q 2 0 Total revenue by line of business: Asset Servicing $1,382 (3)% (6)% Pershing 590 (2) 2 Issuer Services 405 12 (6) Treasury Services 319 1 (6) Clearance and Collateral Management 283 1 (4) Total revenue 2,979 - (4) Provision for credit losses (77) N/M N/M Noninterest expense 2,052 (2) 3 Income before taxes $1,004 4% 3% Pre-tax operating margin 34% 131 bps 235 bps K E Y M E T R I C S Net interest revenue $643 -% (16)% Foreign exchange revenue 152 (21) (7) Securities lending revenue 42 2 (18) Average loans 46,845 8 9 Average deposits 313,923 - 17 AUC/A at period end (tr)(a) 45.0 8 21 Market value of securities on loan at period end (bn)(b) 456 2 19 Pershing Net new assets (U.S. platform) (bn)(c) $40 N/M N/M Average active clearing accounts (U.S. platform) (thousands) 6,889 2 6 Clearance and Collateral Management Average tri-party collateral mgmt. balances (tr) $3.9 7% 9%
10 Second Quarter 2021 – Financial Highlights Investment Services - Revenue Drivers A S S E T S E R V I C I N G I S S U E R S E R V I C E SP E R S H I N G T R E A S U R Y S E R V I C E S C L E A R A N C E A N D C O L L AT E R A L - Interest rates - MMF waivers - FX volatility + Client activity + Market levels + Market levels + Client assets and accounts - MMF waivers - Clearing volumes - Interest rates - MMF waivers + Payment volumes + Product mix - Interest rates - Intraday credit fees - Clearance volumes + Tri-party collateral management balances 1,463 1,382 2Q20 2Q21 578 590 431 405 340 319 295 283 (6)% +2% (6)% (4)% ($ mill ions) 2Q20 2Q21 2Q20 2Q21 2Q20 2Q21 2Q20 2Q21 - Interest rates - MMF waivers + Depositary Receipts Note: Graphs not to scale. (6)%
11 Second Quarter 2021 – Financial Highlights Investment and Wealth Management (a) Net of distribution and servicing expense. See page 17 in the Appendix for the reconciliation of this non-GAAP measure. Note: see page 14 in the Appendix for corresponding footnotes (b) and (c). N/M – not meaningful › Investment Management up year-over-year primarily on higher market values, the favorable impact of a weaker U.S. dollar, higher performance fees and net inflows, partially offset by the impact of MMF waivers › Wealth Management up primarily on the impact of higher market values › Noninterest expense up on the unfavorable impact of a weaker U.S. dollar and higher staff expense, partially offset by lower distribution and servicing expenses › Record AUM up primarily on higher market values, the favorable impact of a weaker U.S. dollar and net inflows F I N A N C I A L H I G H L I G H T S ($ mill ions unless otherwise noted) 2 Q 2 1 1 Q 2 1 2 Q 2 0 Total revenue by line of business: Investment Management $700 -% 13% Wealth Management 299 2 13 Total revenue 999 1 13 Provision for credit losses (4) N/M N/M Noninterest expense 677 (5) 3 Income before taxes $326 17% 48% Pre-tax operating margin 33% 458 bps 774 bps Adjusted pre-tax operating margin – non-GAAP(a) 35% 489 bps 767 bps K E Y M E T R I C S Net interest revenue $47 (2)% (2)% Average loans 11,871 2 1 Average deposits 17,466 (9) - Wealth Management client assets (bn)(b) 305 4 20 C H A N G E S I N A U M ( b n ) ( C ) 2 Q 2 1 1 Q 2 1 2 Q 2 0 Beginning balance $2,214 $2,211 $1,796 Equity (3) - (2) Fixed income 8 8 4 Liability-driven investments 11 8 (2) Multi-asset and alternatives investments 1 (2) - Index (5) 3 9 Cash 13 19 11 Total net inflows 25 36 20 Net market impact 79 (36) 143 Net currency impact 2 3 2 Ending balance $2,320 $2,214 $1,961
12 Second Quarter 2021 – Financial Highlights Other Segment › Total revenue includes corporate treasury and other investment activity, including hedging activity which has an offsetting impact in fee and other revenue and net interest expense › Total fee and other revenue decreased year-over-year on lower net securities gains. The sequential increase primarily reflects an impairment of a renewable energy investment recorded in 1Q21 F I N A N C I A L H I G H L I G H T S ($ mill ions unless otherwise noted) 2 Q 2 1 1 Q 2 1 2 Q 2 0 Fee revenue $13 $9 $10 Other revenue 9 (36) 28 Total fee and other revenue 22 (27) 38 Net interest (expense) (45) (38) (36) Total revenue (23) (65) 2 Provision for credit losses (5) (8) (9) Noninterest expense 49 41 39 (Loss) before taxes $(67) $(98) $(28)
Appendix
14 Second Quarter 2021 – Financial Highlights Footnotes 2Q21 Financial Highlights, Page 3 a) Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense. b) See page 16 for corresponding reconciliation of this non-GAAP measure. Capital and Liquidity, Page 5 a) Regulatory capital ratios for June 30, 2021 are preliminary. For our CET1, Tier 1 capital and Total capital ratios, our effective capital ratios under the U.S. capital rules are the low er of the ratios as calculated under the Standardized and Advanced Approaches, w hich for June 30, 2021 and March 31, 2021 w as the Standardized Approach for the CET1 and Tier 1 capital ratios and the Advanced Approaches for the Total capital ratio, and for June 30, 2020, w as the Advanced Approaches. b) Reflects the temporary exclusion of U.S. Treasury securities from the leverage exposure used in the SLR calculation w hich inc reased our consolidated SLR by 68 basis points at March 31, 2021 and 40 basis points at June 30, 2020. The temporary exclusion ceased to apply beginning April 1, 2021. c) Tangible book value per common share – non-GAAP excludes goodw ill and intangible assets, net of deferred tax liabilities. See page 16 for corresponding reconciliation of this non-GAAP measure. Investment Services, Page 9 a) Current period is preliminary. Consists of AUC/A primarily from the Asset Servicing business and, to a lesser extent, the Clearance and Collateral Management, Issuer Services, Pershing and Wealth Management businesses. Includes the AUC/A of CIBC Mellon Global Securities Services Company (“CIBC Mellon”), a joint venture w ith the Canadian Imperial Bank of Commerce, of $1.7 trillion at June 30, 2021, $1.6 trillion at March 31, 2021 and $1.3 trillion at June 30, 2020. b) Represents the total amount of securities on loan in our agency securities lending program managed by the Investment Services business. Excludes securities for w hich BNY Mellon acts as agent on behalf of CIBC Mellon clients, w hich totaled $63 billion at June 30, 2021, $64 billion at March 31, 2021 and $62 billion at June 30, 2020. c) Net new assets represent net f low s of assets excluding dividends and interest (e.g., net cash deposits and net securities transfers) in customer accounts in Pershing LLC, a U.S. broker-dealer. Investment and Wealth Management, Page 11 b) Current period is preliminary. Includes AUM and AUC/A in the Wealth Management business. c) Current period is preliminary. Excludes securities lending cash management assets and assets managed in the Investment Servic es business.
15 Second Quarter 2021 – Financial Highlights Money Market Fee Waiver Impact 2 Q 2 1 1 Q 2 1 4 Q 2 0 3 Q 2 0 2 Q 2 0 Investment services fees: Asset servicing fees $(42) $(22) $(13) $(1) $ - Clearing services fees (88) (74) (64) (57) (50) Issuer services fees (15) (10) (6) (1) (1) Treasury services fees (3) (3) (2) (3) (2) Total investment services fees (148) (109) (85) (62) (53) Investment management and performance fees (115) (89) (56) (42) (30) Distribution and servicing revenue (13) (13) (8) (6) (3) Total fee and other revenue (276) (211) (149) (110) (86) Less: Distribution and servicing expense 24 23 15 9 7 Net impact of money market fee waivers $(252) $(188) $(134) $(101) $(79) Impact to revenue by line of business: (a) Asset Servicing $(50) $(29) $(13) $(4) $(1) Pershing (99) (94) (85) (73) (60) Issuer Services (22) (15) (10) (2) (1) Treasury Services (16) (9) (5) (1) - Total Investment Services (187) (147) (113) (80) (62) Investment Management (85) (61) (34) (28) (24) Wealth Management (4) (3) (2) (2) - Total Investment and Wealth Management (89) (64) (36) (30) (24) Total impact to revenue by line of business $(276) $(211) $(149) $(110) $(86) (a) The line of business revenue for management reporting purposes reflects the impact of revenue transferred between the businesses. Fee revenue, Excluding MMF Waivers Reconciliation 2 Q 2 1 v s ($ mill ions) 2 Q 2 1 2 Q 2 0 2 Q 2 0 I&WM business, total fee and other revenue – GAAP $952 $838 14% Less: MMF waivers (89) (24) I&WM business, total fee and other revenue, ex-MMF waivers – non-GAAP $1,041 $862 21% Investment Services business, total fee and other revenue – GAAP $2,336 $2,339 -% Less: MMF waivers (187) (62) Investment Services business, total fee and other revenue, ex-MMF waivers – non-GAAP $2,523 $2,401 5% Fee revenue – GAAP $3,224 $3,089 4% Less: MMF waivers (276) (86) Fee revenue, ex-MMF waivers – non-GAAP $3,500 $3,175 10% Note: Reported I&WM total fee and other revenue up 14% year-over-year. Reported Investment Services total fee and other revenue flat year-over-year. ($ mill ions)
16 Second Quarter 2021 – Financial Highlights Return on Common Equity and Tangible Common Equity Reconciliation 2 Q 2 1 1 Q 2 1 2 Q 2 0 Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP $991 $858 $901 Add: Amortization of intangible assets 20 24 26 Less: Tax impact of amortization of intangible assets 5 6 6 Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets – non-GAAP $1,006 $876 $921 Average common shareholders’ equity $40,393 $40,720 $38,476 Less: Average goodwill 17,517 17,494 17,243 Average intangible assets 2,975 3,000 3,058 Add: Deferred tax liability – tax deductible goodwill 1,163 1,153 1,119 Deferred tax liability – intangible assets 675 665 664 Average tangible common shareholders’ equity – non-GAAP $21,739 $22,044 $19,958 Return on common equity (annualized) – GAAP 9.8% 8.5% 9.4% Return on tangible common equity (annualized) – non-GAAP 18.6% 16.1% 18.5% Book Value and Tangible Book Value Per Common Share Reconciliation ($ mill ions, except common shares) June 30, 2021 March 31, 2021 June 30, 2020 BNY Mellon shareholders’ equity at period end – GAAP $45,281 $44,954 $43,697 Less: Preferred stock 4,541 4,541 4,532 BNY Mellon common shareholders’ equity at period end – GAAP 40,740 40,413 39,165 Less: Goodwill 17,487 17,469 17,253 Intangible assets 2,964 2,983 3,045 Add: Deferred tax liability – tax deductible goodwill 1,163 1,153 1,119 Deferred tax liability – intangible assets 675 665 664 BNY Mellon tangible common shareholders’ equity at period end – non-GAAP $22,127 $21,779 $20,650 Period-end common shares outstanding (in thousands) 863,174 875,481 885,862 Book value per common share – GAAP $47.20 $46.16 $44.21 Tangible book value per common share – non-GAAP $25.64 $24.88 $23.31 ($ mill ions)
17 Second Quarter 2021 – Financial Highlights Pre-tax Operating Margin Reconciliation – Investment and Wealth Management Business (a) Income before income taxes divided by total revenue. 2 Q 2 1 1 Q 2 1 2 Q 2 0 Income before income taxes – GAAP $326 $278 $221 Total revenue – GAAP $999 $991 $886 Less: Distribution and servicing expense 74 75 86 Adjusted total revenue, net of distribution and servicing expense – non-GAAP $925 $916 $800 Pre-tax operating margin – GAAP (a) 33% 28% 25% Adjusted pre-tax operating margin, net of distribution and servicing expense – non-GAAP (a) 35% 30% 28% ($ mill ions)
18 Second Quarter 2021 – Financial Highlights Cautionary Statement A number of statements in this discussion and the responses to your questions may contain “forward-looking statements,” including statements about The Bank of New York Mellon Corporation’s (the “Corporation”) capital plans, strategic priorities, financial goals, organic growth, performance, organizational quality and efficiency, investments, including in technology and product development, resiliency, capabilities, revenue, net interest revenue, money market fee waivers, fees, expenses, cost discipline, sustainable growth, company management, human capital management (including related ambitions, objectives, aims and goals), deposits, interest rates and yield curves, securities portfolio, taxes, business opportunities, divestments, volatility, preliminary business metrics and regulatory capital ratios and statements regarding the Corporation's aspirations, as well as the Corporation’s overall plans, strategies, goals, objectives, expectations, outlooks, estimates, intentions, targets, opportunities, focus and initiatives, including the potential effects of the coronavirus pandemic on any of the foregoing. These statements may be expressed in a variety of ways, including the use of future or present tense language. Words such as “estimate,” “forecast,” “project,” “anticipate,” “likely,” “target,” “expect,” “intend,” “continue,” “seek,” “believe,” “plan,” “goal,” “could,” “should,” “would,” “may,” “might,” “will,” “strategy,” “synergies,” “opportunities,” “trends,” “ambition”, “objective,” “aim,” “future,” “potent ially,” “outlook” and words of similar meaning may signify forward-looking statements. These forward-looking statements are based upon current beliefs and expectations and are subject to significant risks and uncertainties (some of which are beyond the Corporation’s control). Actual outcomes may differ materially from those expressed or implied as a result of a number of factors, including, but not limited to, those discussed in “Risk Factors” in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Annual Report”) and in other filings of the Corporation with the Securities and Exchange Commission (the “SEC”). Statements about the effects of the current and near-term market and macroeconomic outlook on the Corporation, including on its business, operations, financial performance and prospects, may constitute forward- looking statements, and are based on assumptions that involve risks and uncertainties and that are subject to change based on various important factors (some of which are beyond the Corporation's control), including the scope and duration of the pandemic, actions taken by governmental authorities and other third parties in response to the pandemic, the availability, use and effectiveness of vaccines, and the direct and indirect impact of the pandemic on the Corporation, its clients, customers and third parties. Preliminary business metrics and regulatory capital ratios are subject to change, possibly materially, as the Corporation completes its Quarterly Report on Form 10-Q for the quarter ended June 30, 2021. All forward-looking statements speak only as of July 15, 2021, and the Corporation undertakes no obligation to update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events. For additional information regarding the Corporation, please refer to the Corporation's SEC filings available at www.bnymellon.com/investorrelations. Non-GAAP Measures: In this presentation we discuss certain non-GAAP measures in detailing the Corporation’s performance, which exclude certain items or otherwise include components that differ from GAAP. We believe these measures are useful to the investment community in analyzing the financial results and trends of ongoing operations. We believe they facilitate comparisons with prior periods and reflect the principal basis on which the Corporation’s management monitors financial performance. Additional disclosures relating to non-GAAP measures are contained in the Corporation’s reports filed with the SEC, including the 2020 Annual Report, the second quarter 2021 earnings release and the second quarter 2021 financial supplement, and are available at www.bnymellon.com/investorrelations.
