BNY 8-K
Bank of New York Mellon Corp (BNY)
8-K
2022-10-17
For: 2022-10-17
View Original
Added on
April 09, 2026
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) – October 17, 2022
(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 October 17, 2022, The Bank of New York Mellon Corporation (“BNY Mellon”) released information on its financial results for the third quarter ended Sept. 30, 2022. 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 October 17, 2022, BNY Mellon will hold a conference call and webcast to discuss its financial results for the third quarter ended Sept. 30, 2022 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: October 17, 2022 | By: /s/ James J. Killerlane III | ||||
| Name: James J. Killerlane III Title: Secretary | |||||
3
| News Release |  | ||||
BNY MELLON REPORTS THIRD QUARTER 2022 EARNINGS OF
$319 MILLION OR $0.39 PER COMMON SHARE;
$983 MILLION OR $1.21 PER SHARE EXCLUDING NOTABLE ITEMS(a)
Revenue up 6% | EPS down 63% | ROE 4% ROTCE 7%(a) | CET1 10.0% Tier 1 leverage 5.4% | |||||||||||||||||
Adj. Revenue up 5%(a) | Adj. EPS up 11%(a) | Adj. ROE 11%(a) Adj. ROTCE 22%(a) | CET1 10.0% Tier 1 leverage 5.4% | |||||||||||||||||
NEW YORK, October 17, 2022 – The Bank of New York Mellon Corporation (“BNY Mellon”) (NYSE: BK) today reported:
| 3Q22 vs. | |||||||||||||||||
| (dollars in millions, except per share amounts) | 3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | ||||||||||||
| Net income applicable to common shareholders | $ | 319 | $ | 835 | $ | 881 | (62) | % | (64) | % | |||||||
Adjusted net income applicable to common shareholders – Non-GAAP (a) | $ | 983 | $ | 935 | $ | 926 | 5 | % | 6 | % | |||||||
| Diluted earnings per common share | $ | 0.39 | $ | 1.03 | $ | 1.04 | (62) | % | (63) | % | |||||||
Adjusted diluted earnings per common share – Non-GAAP (a) | $ | 1.21 | $ | 1.15 | $ | 1.09 | 5 | % | 11 | % | |||||||
| Notable items | ||
3Q22 results include $(664) million, or $(0.81) per share, primarily related to impairment of goodwill associated with the Investment Management reporting unit, which was driven by lower market values and a higher discount rate. This goodwill impairment represents a non-cash charge and did not affect BNY Mellon’s liquidity position, tangible common equity or regulatory capital ratios.
3Q21 results include $(45) million, or $(0.05) per share, primarily related to litigation.
| Third Quarter Results | ||
Total revenue of $4.3 billion, increased 6%
•Net interest revenue increased 44%
•Fee revenue decreased 1%
Total noninterest expense of $3.7 billion, increased 26%; or 4% excluding notable items (a)
AUC/A of $42.2 trillion, decreased 7%, primarily market impact
AUM of $1.8 trillion, decreased 23%, primarily market impact
Securities Services
•Total revenue increased 13%
•Income before taxes increased 67%; or 32% excluding notable items (a) (primarily litigation reserves in 3Q21)
•Pre-tax operating margin of 25%
Market and Wealth Services
•Total revenue increased 17%
•Income before taxes increased 21%
•Pre-tax operating margin of 46%
Investment and Wealth Management
•Total revenue decreased 16%
•Income before taxes decreased 243%; or 48% excluding notable items (a)
•Pre-tax operating margin of (57)%; adjusted pre-tax operating margin, excluding notable items – Non-GAAP of 24% (a)
| CEO Commentary | ||
Robin Vince, President and Chief Executive Officer, commented, “While third quarter reported results were impacted by a goodwill impairment charge, return on tangible common equity excluding notable items was 22%. Revenue grew 6% year-over-year, a testament to the earnings power of our diversified and resilient business model.”
“Our performance benefitted from higher interest rates and continued strength in client volumes and balances across our Securities Services and Market and Wealth Services segments. While Investment and Wealth Management was naturally more affected by the continued decline in global market values, in particular in Investment Management, the business delivered positive net inflows in the quarter and continued to deliver solid investment performance for our clients,” Mr. Vince added.
“Having spent a significant portion of the past few months engaging with clients, regulators, employees and other business leaders, I am excited about our exceptional client franchise, our central role in global financial markets, and the opportunity that lies ahead,” Mr. Vince concluded.
Media Relations: Garrett Marquis (949) 683-1503 | Investor Relations: Marius Merz (212) 298-1480 | ||||
(a) Adjusted results exclude notable items. For information on the Non-GAAP measures, see “Explanation of GAAP and Non-GAAP financial measures” beginning on page 11. | |||||
| Note: Above comparisons are 3Q22 vs. 3Q21, unless otherwise noted. | |||||
| BNY Mellon 3Q22 Earnings Release | ||
CONSOLIDATED FINANCIAL HIGHLIGHTS
| (in millions, except per share amounts and unless otherwise noted; not meaningful - N/M) | 3Q22 vs. | ||||||||||||||||
| 3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | |||||||||||||
| Fee revenue | $ | 3,236 | $ | 3,339 | $ | 3,265 | (3) | % | (1) | % | |||||||
| Investment and other revenue | 117 | 91 | 129 | N/M | N/M | ||||||||||||
| Total fee and other revenue | 3,353 | 3,430 | 3,394 | (2) | (1) | ||||||||||||
| Net interest revenue | 926 | 824 | 641 | 12 | 44 | ||||||||||||
| Total revenue | 4,279 | 4,254 | 4,035 | 1 | 6 | ||||||||||||
| Provision for credit losses | (30) | 47 | (45) | N/M | N/M | ||||||||||||
| Noninterest expense | 3,679 | 3,112 | 2,918 | 18 | 26 | ||||||||||||
| Income before taxes | 630 | 1,095 | 1,162 | (42) | (46) | ||||||||||||
| Provision for income taxes | 242 | 231 | 219 | 5 | 11 | ||||||||||||
| Net income | $ | 388 | $ | 864 | $ | 943 | (55) | % | (59) | % | |||||||
| Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 319 | $ | 835 | $ | 881 | (62) | % | (64) | % | |||||||
Operating leverage (a) | (1,763) | bps | (2,003) | bps | |||||||||||||
| Diluted earnings per common share | $ | 0.39 | $ | 1.03 | $ | 1.04 | (62) | % | (63) | % | |||||||
Average common shares and equivalents outstanding - diluted (in thousands) | 814,516 | 813,590 | 849,028 | ||||||||||||||
| Pre-tax operating margin | 15 | % | 26 | % | 29 | % | |||||||||||
Non-GAAP measures, excluding notable items: (b) | |||||||||||||||||
Adjusted operating leverage – Non-GAAP (a) | 118 | bps | 115 | bps | |||||||||||||
| Adjusted diluted earnings per common share – Non-GAAP | $ | 1.21 | $ | 1.15 | $ | 1.09 | 5 | % | 11 | % | |||||||
| Adjusted pre-tax operating margin – Non-GAAP | 31 | % | 28 | % | 30 | % | |||||||||||
(a) Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense.
(b) Notable items in 3Q22 include goodwill impairment, a disposal gain, severance expense and litigation reserves. Notable items in 2Q22 include litigation reserves. Notable items in 3Q21 include litigation reserves, gains on disposals and severance expense. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 11 for additional information.
bps – basis points.
KEY DRIVERS (comparisons are 3Q22 vs. 3Q21, unless otherwise stated)
Total revenue increased 6%, primarily reflecting:
•Fee revenue decreased 1%, primarily reflecting lower market values, the unfavorable impact of a stronger U.S. dollar, the impact of lost business in the prior year in both Pershing and Corporate Trust and an unfavorable change in the mix of AUM, partially offset by lower money market fee waivers and higher client activity.
•Investment and other revenue decreased primarily reflecting strategic equity investment gains recorded in 3Q21, partially offset by higher other trading revenue and higher disposal gains.
•Net interest revenue increased 44%, primarily reflecting higher interest rates on interest-earning assets, partially offset by higher funding expense and lower interest-earning assets.
•Provision for credit losses was a benefit of $30 million, primarily reflecting reserve releases related to cash balances with exposure to Russia and a modest benefit from our commercial real estate portfolio.
•Noninterest expense increased 26%, primarily reflecting goodwill impairment in the Investment Management reporting unit. Excluding notable items, noninterest expense increased 4% (a), primarily reflecting higher investments in growth, infrastructure and efficiency initiatives and higher revenue-related expenses, as well as the impact of inflation, partially offset by the favorable impact of a stronger U.S. dollar.
•Effective tax rate of 38.4%, or 19.5% (a) excluding notable items, primarily goodwill impairment.
Assets under custody and/or administration (“AUC/A”) and Assets under management (“AUM”)
•AUC/A of $42.2 trillion, decreased 7%, primarily reflecting lower market values and the unfavorable impact of a stronger U.S. dollar, partially offset by client inflows and net new business.
•AUM of $1.8 trillion, decreased 23%, primarily reflecting lower market values and the unfavorable impact of a stronger U.S. dollar, partially offset by net inflows.
Capital and liquidity
•Dividends of $303 million to common shareholders (including dividend-equivalents on share-based awards).
•Return on common equity (“ROE”) – 4%; Adjusted ROE – 11% (a).
•Return on tangible common equity (“ROTCE”) – 7%; Adjusted ROTCE – 22% (a).
•Common Equity Tier 1 (“CET1”) ratio – 10.0%.
•Tier 1 leverage ratio – 5.4%.
•Average liquidity coverage ratio (“LCR”) – 116%.
•Total Loss Absorbing Capacity (“TLAC”) ratios exceed minimum requirements.
(a) See “Explanation of GAAP and Non-GAAP financial measures” beginning on page 11 for additional information.
Note: Throughout this document, sequential growth rates are unannualized.
Page - 2 | ||
| BNY Mellon 3Q22 Earnings Release | ||
SECURITIES SERVICES BUSINESS SEGMENT HIGHLIGHTS
| (dollars in millions, unless otherwise noted; not meaningful - N/M) | 3Q22 vs. | |||||||||||||||||||||||||
| 3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | ||||||||||||||||||||||
| Investment services fees: | ||||||||||||||||||||||||||
| Asset Servicing | $ | 953 | $ | 995 | $ | 979 | (4) | % | (3) | % | ||||||||||||||||
| Issuer Services | 288 | 309 | 281 | (7) | 2 | |||||||||||||||||||||
| Total investment services fees | 1,241 | 1,304 | 1,260 | (5) | (2) | |||||||||||||||||||||
| Foreign exchange revenue | 132 | 155 | 125 | (15) | 6 | |||||||||||||||||||||
Other fees (a) | 52 | 54 | 30 | (4) | 73 | |||||||||||||||||||||
| Total fee revenue | 1,425 | 1,513 | 1,415 | (6) | 1 | |||||||||||||||||||||
| Investment and other revenue | 111 | 36 | 73 | N/M | N/M | |||||||||||||||||||||
| Total fee and other revenue | 1,536 | 1,549 | 1,488 | (1) | 3 | |||||||||||||||||||||
| Net interest revenue | 538 | 457 | 349 | 18 | 54 | |||||||||||||||||||||
| Total revenue | 2,074 | 2,006 | 1,837 | 3 | 13 | |||||||||||||||||||||
| Provision for credit losses | (6) | 13 | (19) | N/M | N/M | |||||||||||||||||||||
| Noninterest expense | 1,557 | 1,656 | 1,543 | (6) | 1 | |||||||||||||||||||||
| Income before taxes | $ | 523 | $ | 337 | $ | 313 | 55 | % | 67 | % | ||||||||||||||||
| Total revenue by line of business: | ||||||||||||||||||||||||||
| Asset Servicing | $ | 1,596 | $ | 1,534 | $ | 1,437 | 4 | % | 11 | % | ||||||||||||||||
| Issuer Services | 478 | 472 | 400 | 1 | 20 | |||||||||||||||||||||
| Total revenue by line of business | $ | 2,074 | $ | 2,006 | $ | 1,837 | 3 | % | 13 | % | ||||||||||||||||
| Pre-tax operating margin | 25 | % | 17 | % | (b) | 17 | % | (b) | ||||||||||||||||||
Securities lending revenue (c) | $ | 48 | $ | 45 | $ | 45 | 7 | % | 7 | % | ||||||||||||||||
| Metrics: | ||||||||||||||||||||||||||
| Average loans | $ | 11,573 | $ | 11,386 | $ | 8,389 | 2 | % | 38 | % | ||||||||||||||||
| Average deposits | $ | 176,328 | $ | 191,191 | $ | 198,680 | (8) | % | (11) | % | ||||||||||||||||
AUC/A at period end (in trillions) (current period is preliminary) (d) | $ | 30.0 | $ | 31.0 | $ | 33.8 | (3) | % | (11) | % | ||||||||||||||||
Market value of securities on loan at period end (in billions) (e) | $ | 435 | $ | 441 | $ | 443 | (1) | % | (2) | % | ||||||||||||||||
(a) Other fees primarily include financing-related fees.
(b) Excluding notable items, adjusted pre-tax operating margin was 21% (Non-GAAP) in 2Q22 and 3Q21. See “Explanation of GAAP and Non-GAAP financial measures” beginning on page 11 for information on this Non-GAAP measure.
(c) Included in investment services fees reported in the Asset Servicing line of business.
(d) Consists of AUC/A primarily from the Asset Servicing line of business and, to a lesser extent, the Issuer Services line of business. Includes the AUC/A of CIBC Mellon Global Securities Services Company (“CIBC Mellon”), a joint venture with the Canadian Imperial Bank of Commerce, of $1.4 trillion at Sept. 30, 2022, $1.5 trillion at June 30, 2022 and $1.7 trillion at Sept. 30, 2021.
(e) Represents the total amount of securities on loan in our agency securities lending program. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $75 billion at Sept. 30, 2022, $70 billion at June 30, 2022 and $68 billion at Sept. 30, 2021.
KEY DRIVERS
•The drivers of the total revenue variances by line of business are indicated below. Also see page 8 for information related to money market fee waivers.
•Asset Servicing – The year-over-year increase primarily reflects higher net interest revenue and lower money market fee waivers, partially offset by lower market values. The sequential increase primarily reflects higher net interest revenue and a disposal gain, partially offset by lower market values and the unfavorable impact of a stronger U.S. dollar.
•Issuer Services – The year-over-year increase primarily reflects higher net interest revenue and lower money market fee waivers, partially offset by the impact of lost business in the prior year in Corporate Trust and lower Depositary Receipts revenue. The sequential increase primarily reflects higher net interest revenue in Corporate Trust, partially offset by lower Depositary Receipts revenue.
•Noninterest expense increased year-over-year, primarily reflecting higher investments in growth, infrastructure and efficiency initiatives, as well as the impact of inflation, partially offset by lower litigation reserves and the favorable impact of a stronger U.S. dollar. The sequential decrease primarily reflects lower litigation reserves.
Page - 3 | ||
| BNY Mellon 3Q22 Earnings Release | ||
MARKET AND WEALTH SERVICES BUSINESS SEGMENT HIGHLIGHTS
| (dollars in millions, unless otherwise noted; not meaningful - N/M) | 3Q22 vs. | ||||||||||||||||
| 3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | |||||||||||||
| Investment services fees: | |||||||||||||||||
| Pershing | $ | 494 | $ | 479 | $ | 427 | 3 | % | 16 | % | |||||||
| Treasury Services | 173 | 176 | 168 | (2) | 3 | ||||||||||||
| Clearance and Collateral Management | 239 | 240 | 228 | — | 5 | ||||||||||||
| Total investment services fees | 906 | 895 | 823 | 1 | 10 | ||||||||||||
| Foreign exchange revenue | 20 | 22 | 23 | (9) | (13) | ||||||||||||
Other fees (a) | 49 | 46 | 31 | 7 | 58 | ||||||||||||
| Total fee revenue | 975 | 963 | 877 | 1 | 11 | ||||||||||||
| Investment and other revenue | 14 | 11 | 13 | N/M | N/M | ||||||||||||
| Total fee and other revenue | 989 | 974 | 890 | 2 | 11 | ||||||||||||
| Net interest revenue | 378 | 340 | 283 | 11 | 34 | ||||||||||||
| Total revenue | 1,367 | 1,314 | 1,173 | 4 | 17 | ||||||||||||
| Provision for credit losses | (1) | 4 | (16) | N/M | N/M | ||||||||||||
| Noninterest expense | 737 | 702 | 668 | 5 | 10 | ||||||||||||
| Income before taxes | $ | 631 | $ | 608 | $ | 521 | 4 | % | 21 | % | |||||||
| Total revenue by line of business: | |||||||||||||||||
| Pershing | $ | 658 | $ | 636 | $ | 566 | 3 | % | 16 | % | |||||||
| Treasury Services | 390 | 373 | 326 | 5 | 20 | ||||||||||||
| Clearance and Collateral Management | 319 | 305 | 281 | 5 | 14 | ||||||||||||
| Total revenue by line of business | $ | 1,367 | $ | 1,314 | $ | 1,173 | 4 | % | 17 | % | |||||||
| Pre-tax operating margin | 46 | % | 46 | % | 44 | % | |||||||||||
| Metrics: | |||||||||||||||||
| Average loans | $ | 40,882 | $ | 42,391 | $ | 39,041 | (4) | % | 5 | % | |||||||
| Average deposits | $ | 90,612 | $ | 94,716 | $ | 101,253 | (4) | % | (11) | % | |||||||
AUC/A at period end (in trillions) (current period is preliminary) (b) | $ | 12.0 | $ | 11.8 | $ | 11.2 | 2 | % | 7 | % | |||||||
(a) Other fees primarily include financing-related fees.
(b) Consists of AUC/A from the Clearance and Collateral Management and Pershing lines of business.
KEY DRIVERS
•The drivers of the total revenue variances by line of business are indicated below. Also see page 8 for information related to money market fee waivers.
•Pershing – The year-over-year increase primarily reflects lower money market fee waivers and higher client activity, partially offset by the impact of prior year lost business. The sequential increase primarily reflects lower money market fee waivers.
•Treasury Services – The year-over-year increase primarily reflects higher net interest revenue and lower money market fee waivers. The sequential increase primarily reflects higher net interest revenue.
•Clearance and Collateral Management – The year-over-year increase primarily reflects higher net interest revenue and clearance volumes. The sequential increase primarily reflects higher net interest revenue.
•Noninterest expense increased year-over-year, primarily reflecting higher investments in growth, infrastructure and efficiency initiatives, as well as the impact of inflation, partially offset by the favorable impact of a stronger U.S. dollar. The sequential increase reflects higher staff expense.
Page - 4 | ||
| BNY Mellon 3Q22 Earnings Release | ||
INVESTMENT AND WEALTH MANAGEMENT BUSINESS SEGMENT HIGHLIGHTS
| (dollars in millions, unless otherwise noted; not meaningful - N/M) | 3Q22 vs. | |||||||||||||||||||
| 3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | ||||||||||||||||
| Investment management fees | $ | 788 | $ | 825 | $ | 893 | (4) | % | (12) | % | ||||||||||
| Performance fees | 10 | 5 | 21 | N/M | (52) | |||||||||||||||
| Investment management and performance fees | 798 | 830 | 914 | (4) | (13) | |||||||||||||||
| Distribution and servicing fees | 55 | 51 | 28 | 8 | 96 | |||||||||||||||
Other fees (a) | (45) | (31) | 20 | N/M | N/M | |||||||||||||||
| Total fee revenue | 808 | 850 | 962 | (5) | (16) | |||||||||||||||
Investment and other revenue (b) | (3) | (13) | 23 | N/M | N/M | |||||||||||||||
Total fee and other revenue (b) | 805 | 837 | 985 | (4) | (18) | |||||||||||||||
| Net interest revenue | 57 | 62 | 47 | (8) | 21 | |||||||||||||||
| Total revenue | 862 | 899 | 1,032 | (4) | (16) | |||||||||||||||
| Provision for credit losses | 3 | — | (7) | N/M | N/M | |||||||||||||||
| Noninterest expense | 1,356 | 691 | 691 | 96 | 96 | |||||||||||||||
(Loss) income before taxes (c) | $ | (497) | $ | 208 | $ | 348 | (339) | % | (243) | % | ||||||||||
| Total revenue by line of business: | ||||||||||||||||||||
| Investment Management | $ | 579 | $ | 603 | $ | 727 | (4) | % | (20) | % | ||||||||||
| Wealth Management | 283 | 296 | 305 | (4) | (7) | |||||||||||||||
| Total revenue by line of business | $ | 862 | $ | 899 | $ | 1,032 | (4) | % | (16) | % | ||||||||||
| Pre-tax operating margin | (57) | % | 23 | % | 34 | % | ||||||||||||||
Adjusted pre-tax operating margin – Non-GAAP (d) | (64) | % | (e) | 26 | % | 36 | % | |||||||||||||
| Metrics: | ||||||||||||||||||||
| Average loans | $ | 14,482 | $ | 14,087 | $ | 12,248 | 3 | % | 18 | % | ||||||||||
| Average deposits | $ | 17,225 | $ | 20,802 | $ | 17,270 | (17) | % | — | % | ||||||||||
AUM (in billions) (current period is preliminary) (f) | $ | 1,776 | $ | 1,937 | $ | 2,310 | (8) | % | (23) | % | ||||||||||
Wealth Management client assets (in billions) (current period is preliminary) (g) | $ | 256 | $ | 264 | $ | 307 | (3) | % | (17) | % | ||||||||||
(a) Other fees primarily include investment services fees.
(b) Investment and other revenue and total fee and other revenue are net of income (loss) attributable to noncontrolling interests related to consolidated investment management funds.
(c) Excluding notable items, income before taxes decreased 48% (Non-GAAP) compared with 3Q21 and 13% (Non-GAAP) compared with 2Q22. See “Explanation of GAAP and Non-GAAP financial measures” beginning on page 11 for information on this Non-GAAP measure.
(d) Net of distribution and servicing expense. See “Explanation of GAAP and Non-GAAP financial measures” beginning on page 11 for information on this Non-GAAP measure.
(e) Excluding notable items and net of distribution and servicing expense, the adjusted pre-tax operating margin was 24% (Non-GAAP). See “Explanation of GAAP and Non-GAAP financial measures” beginning on page 11 for information on this Non-GAAP measure.
(f) Excludes assets managed outside of the Investment and Wealth Management business segment.
(g) Includes AUM and AUC/A in the Wealth Management line of business.
KEY DRIVERS
•The drivers of the total revenue variances by line of business are indicated below. Also see page 8 for information related to money market fee waivers.
•Investment Management – The year-over-year decrease primarily reflects lower market values, the unfavorable impact of a stronger U.S. dollar, an unfavorable change in the mix of AUM, lower equity income and strategic equity investment gains recorded in 3Q21, partially offset by lower money market fee waivers. The sequential decrease primarily reflects lower market values, the unfavorable impact of a stronger U.S. dollar and lower equity income, partially offset by lower money market fee waivers.
•Wealth Management – The year-over-year decrease primarily reflects lower market values, partially offset by higher net interest revenue.
•Noninterest expense increased primarily reflecting goodwill impairment in the Investment Management reporting unit. Excluding notable items, noninterest expense decreased 2% (a) year-over-year and sequentially, reflecting the favorable impact of a stronger U.S. dollar. The year-over-year decrease was partially offset by investments in growth initiatives and higher distribution and servicing expense.
(a) See “Explanation of GAAP and Non-GAAP financial measures” beginning on page 11 for additional information.
Page - 5 | ||
| BNY Mellon 3Q22 Earnings Release | ||
OTHER SEGMENT primarily includes the leasing portfolio, corporate treasury activities, including our securities portfolio, derivatives and other trading activity, renewable energy and other corporate investments, certain business exits and other corporate revenue and expense items.
| (in millions) | 3Q22 | 2Q22 | 3Q21 | ||||||||
| Fee revenue | $ | 28 | $ | 13 | $ | 12 | |||||
| Investment and other revenue | (5) | 62 | 23 | ||||||||
| Total fee and other revenue | 23 | 75 | 35 | ||||||||
| Net interest (expense) | (47) | (35) | (38) | ||||||||
| Total revenue | (24) | 40 | (3) | ||||||||
| Provision for credit losses | (26) | 30 | (3) | ||||||||
| Noninterest expense | 29 | 63 | 16 | ||||||||
| (Loss) before taxes | $ | (27) | $ | (53) | $ | (16) | |||||
KEY DRIVERS
•Total revenue includes corporate treasury and other investment activity, including hedging activity which has an offsetting impact between fee and other revenue and net interest expense. The sequential decrease in total revenue primarily reflects a strategic equity investment gain recorded in 2Q22.
•Provision for credit losses was a benefit of $26 million in 3Q22, including reserve releases related to cash balances with exposure to Russia.
•Noninterest expense increased year-over-year and decreased sequentially, primarily driven by staff expense.
Page - 6 | ||
| BNY Mellon 3Q22 Earnings Release | ||
NOTABLE ITEMS BY BUSINESS SEGMENT
Notable items by business segment (a) | 3Q22 | 3Q21 | |||||||||||||||||||||||||||||||||
| (in millions) | Securities Services | Market and Wealth Services | Investment and Wealth Management | Other | Total | Securities Services | Market and Wealth Services | Investment and Wealth Management | Other | Total | |||||||||||||||||||||||||
| Fee and other revenue | $ | 37 | $ | — | $ | — | $ | — | $ | 37 | $ | — | $ | — | $ | — | $ | 9 | $ | 9 | |||||||||||||||
| Net interest revenue | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| Total revenue | 37 | — | — | — | 37 | — | — | — | 9 | 9 | |||||||||||||||||||||||||
| Total noninterest expense | 18 | 6 | 679 | 11 | 714 | 70 | 1 | 1 | 1 | 73 | |||||||||||||||||||||||||
| (Loss) income before taxes | $ | 19 | $ | (6) | $ | (679) | $ | (11) | $ | (677) | $ | (70) | $ | (1) | $ | (1) | $ | 8 | $ | (64) | |||||||||||||||
(a) Notable items in 3Q22 include goodwill impairment, a disposal gain (reflected in investment and other revenue), severance expense and litigation reserves. Notable items in 3Q21 include litigation reserves, gains on disposals (reflected in investment and other revenue) and severance expense.
Notable items by business segment (a) | 2Q22 | ||||||||||||||||
| (in millions) | Securities Services | Market and Wealth Services | Investment and Wealth Management | Other | Total | ||||||||||||
| Fee and other revenue | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||
| Net interest revenue | — | — | — | — | — | ||||||||||||
| Total revenue | — | — | — | — | — | ||||||||||||
| Total noninterest expense | 92 | 1 | — | 10 | 103 | ||||||||||||
| (Loss) income before taxes | $ | (92) | $ | (1) | $ | — | $ | (10) | $ | (103) | |||||||
(a) Notable items in 2Q22 include litigation reserves.
Page - 7 | ||
| BNY Mellon 3Q22 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 3Q22, the net impact of money market fee waivers was $22 million, down from $66 million in 2Q22, driven by higher interest rates.
| Money market fee waivers | |||||||||||||||||||||||
| (in millions) | 3Q22 | 2Q22 | 1Q22 | 4Q21 | 3Q21 | YTD22 | YTD21 | ||||||||||||||||
| Investment services fees (see table below) | $ | (1) | $ | (26) | $ | (126) | $ | (148) | $ | (142) | $ | (153) | $ | (399) | |||||||||
| Investment management and performance fees | (21) | (40) | (85) | (116) | (109) | (146) | (313) | ||||||||||||||||
| Distribution and servicing fees | — | (2) | (11) | (14) | (11) | (13) | (37) | ||||||||||||||||
| Total fee revenue | (22) | (68) | (222) | (278) | (262) | (312) | (749) | ||||||||||||||||
| Less: Distribution and servicing expense | — | 2 | 23 | 35 | 29 | 25 | 76 | ||||||||||||||||
| Net impact of money market fee waivers | $ | (22) | $ | (66) | $ | (199) | $ | (243) | $ | (233) | $ | (287) | $ | (673) | |||||||||
Impact to investment services fees by line of business (a): | |||||||||||||||||||||||
| Asset Servicing | $ | — | $ | — | $ | (19) | $ | (31) | $ | (29) | $ | (19) | $ | (74) | |||||||||
| Issuer Services | — | (1) | (11) | (18) | (17) | (12) | (44) | ||||||||||||||||
| Pershing | (1) | (25) | (90) | (89) | (86) | (116) | (254) | ||||||||||||||||
| Treasury Services | — | — | (6) | (10) | (10) | (6) | (27) | ||||||||||||||||
| Total impact to investment services fees by line of business | $ | (1) | $ | (26) | $ | (126) | $ | (148) | $ | (142) | $ | (153) | $ | (399) | |||||||||
Impact to fee revenue by line of business (a): | |||||||||||||||||||||||
| Asset Servicing | $ | — | $ | (1) | $ | (28) | $ | (50) | $ | (47) | $ | (29) | $ | (126) | |||||||||
| Issuer Services | (1) | (1) | (14) | (24) | (22) | (16) | (59) | ||||||||||||||||
| Pershing | (1) | (29) | (107) | (106) | (102) | (137) | (295) | ||||||||||||||||
| Treasury Services | — | — | (8) | (14) | (13) | (8) | (38) | ||||||||||||||||
| Investment Management | (20) | (37) | (63) | (81) | (76) | (120) | (222) | ||||||||||||||||
| Wealth Management | — | — | (2) | (3) | (2) | (2) | (9) | ||||||||||||||||
| Total impact to fee revenue by line of business | $ | (22) | $ | (68) | $ | (222) | $ | (278) | $ | (262) | $ | (312) | $ | (749) | |||||||||
(a) The line of business revenue for management reporting purposes reflects the impact of revenue transferred between the businesses.
Page - 8 | ||
| BNY Mellon 3Q22 Earnings Release | ||
CAPITAL AND LIQUIDITY
| Capital and liquidity ratios | Sept. 30, 2022 | June 30, 2022 | Dec. 31, 2021 | ||||||||
Consolidated regulatory capital ratios: (a) | |||||||||||
| CET1 ratio | 10.0 | % | 10.0 | % | 11.2 | % | |||||
| Tier 1 capital ratio | 12.8 | 12.8 | 14.0 | ||||||||
| Total capital ratio | 13.7 | 13.6 | 14.9 | ||||||||
| Tier 1 leverage ratio | 5.4 | 5.2 | 5.5 | ||||||||
| Supplementary leverage ratio | 6.3 | 6.2 | 6.6 | ||||||||
| BNY Mellon shareholders’ equity to total assets ratio | 9.3 | % | 9.1 | % | 9.7 | % | |||||
| BNY Mellon common shareholders’ equity to total assets ratio | 8.2 | % | 8.0 | % | 8.6 | % | |||||
| Average LCR | 116 | % | 111 | % | 109 | % | |||||
| Book value per common share | $ | 43.18 | $ | 44.73 | $ | 47.50 | |||||
Tangible book value per common share – Non-GAAP (b) | $ | 21.55 | $ | 22.02 | $ | 24.31 | |||||
Common shares outstanding (in thousands) | 808,280 | 808,103 | 804,145 | ||||||||
(a) Regulatory capital ratios for Sept. 30, 2022 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 Sept. 30, 2022 was the Standardized Approach for the CET1 and Tier 1 capital ratios and the Advanced Approaches for the Total capital ratio, for June 30, 2022 was the Advanced Approaches, and for Dec. 31, 2021 was the Standardized Approach.
(b) Tangible book value per common share – Non-GAAP excludes goodwill and intangible assets, net of deferred tax liabilities. See “Explanation of GAAP and Non-GAAP financial measures” beginning on page 11 for information on this Non-GAAP measure.
•CET1 capital totaled $16.7 billion and Tier 1 capital totaled $21.5 billion at Sept. 30, 2022, both decreasing approximately $340 million, compared with June 30, 2022. The decreases primarily reflect unrealized losses on available-for-sale securities, foreign currency translation and capital deployed through dividends, partially offset by capital generated through earnings. The Tier 1 leverage ratio increased compared with June 30, 2022, driven by the benefit of lower average assets, partially offset by the decrease in capital.
NET INTEREST REVENUE
| Net interest revenue | 3Q22 vs. | ||||||||||||||||
| (dollars in millions; not meaningful - N/M) | 3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | ||||||||||||
| Net interest revenue | $ | 926 | $ | 824 | $ | 641 | 12% | 44% | |||||||||
| Add: Tax equivalent adjustment | 3 | 3 | 3 | N/M | N/M | ||||||||||||
Net interest revenue, on a fully taxable equivalent (“FTE”) basis – Non-GAAP (a) | $ | 929 | $ | 827 | $ | 644 | 12% | 44% | |||||||||
| Net interest margin | 1.05 | % | 0.89 | % | 0.67 | % | 16 | bps | 38 | bps | |||||||
Net interest margin (FTE) – Non-GAAP (a) | 1.05 | % | 0.89 | % | 0.68 | % | 16 | bps | 37 | 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 “Explanation of GAAP and Non-GAAP financial measures” beginning on page 11 for information on this Non-GAAP measure.
bps – basis points.
•Net interest revenue increased year-over-year, primarily reflecting higher interest rates on interest-earning assets, partially offset by higher funding expense and lower interest-earning assets.
•Sequentially, the increase primarily reflects higher interest rates on interest-earning assets. This was partially offset by higher funding expense.
Page - 9 | ||
| BNY Mellon 3Q22 Earnings Release | ||
THE BANK OF NEW YORK MELLON CORPORATION
Condensed Consolidated Income Statement
| (in millions) | Quarter ended | Year-to-date | ||||||||||||||||||
| Sept. 30, 2022 | June 30, 2022 | Sept. 30, 2021 | Sept. 30, 2022 | Sept. 30, 2021 | ||||||||||||||||
| Fee and other revenue | ||||||||||||||||||||
| Investment services fees | $ | 2,157 | $ | 2,206 | $ | 2,091 | $ | 6,356 | $ | 6,223 | ||||||||||
| Investment management and performance fees | 800 | 833 | 913 | 2,516 | 2,692 | |||||||||||||||
| Foreign exchange revenue | 203 | 222 | 185 | 632 | 600 | |||||||||||||||
| Financing-related fees | 43 | 44 | 48 | 132 | 147 | |||||||||||||||
| Distribution and servicing fees | 33 | 34 | 28 | 97 | 84 | |||||||||||||||
| Total fee revenue | 3,236 | 3,339 | 3,265 | 9,733 | 9,746 | |||||||||||||||
| Investment and other revenue | 117 | 91 | 129 | 278 | 229 | |||||||||||||||
| Total fee and other revenue | 3,353 | 3,430 | 3,394 | 10,011 | 9,975 | |||||||||||||||
| Net interest revenue | ||||||||||||||||||||
| Interest revenue | 1,984 | 1,159 | 693 | 3,921 | 2,116 | |||||||||||||||
| Interest expense | 1,058 | 335 | 52 | 1,473 | 175 | |||||||||||||||
| Net interest revenue | 926 | 824 | 641 | 2,448 | 1,941 | |||||||||||||||
| Total revenue | 4,279 | 4,254 | 4,035 | 12,459 | 11,916 | |||||||||||||||
| Provision for credit losses | (30) | 47 | (45) | 19 | (214) | |||||||||||||||
| Noninterest expense | ||||||||||||||||||||
| Staff | 1,673 | 1,623 | 1,584 | 4,998 | 4,704 | |||||||||||||||
| Software and equipment | 421 | 405 | 372 | 1,225 | 1,099 | |||||||||||||||
| Professional, legal and other purchased services | 363 | 379 | 363 | 1,112 | 1,069 | |||||||||||||||
| Sub-custodian and clearing | 124 | 131 | 129 | 373 | 385 | |||||||||||||||
| Net occupancy | 124 | 125 | 120 | 371 | 365 | |||||||||||||||
| Distribution and servicing | 88 | 90 | 76 | 257 | 223 | |||||||||||||||
| Bank assessment charges | 35 | 37 | 34 | 107 | 103 | |||||||||||||||
| Business development | 34 | 43 | 22 | 107 | 63 | |||||||||||||||
| Goodwill impairment | 680 | — | — | 680 | — | |||||||||||||||
| Amortization of intangible assets | 17 | 17 | 19 | 51 | 63 | |||||||||||||||
| Other | 120 | 262 | 199 | 516 | 473 | |||||||||||||||
| Total noninterest expense | 3,679 | 3,112 | 2,918 | 9,797 | 8,547 | |||||||||||||||
| Income | ||||||||||||||||||||
| Income before taxes | 630 | 1,095 | 1,162 | 2,643 | 3,583 | |||||||||||||||
| Provision for income taxes | 242 | 231 | 219 | 626 | 681 | |||||||||||||||
| Net income | 388 | 864 | 943 | 2,017 | 2,902 | |||||||||||||||
| Net loss (income) attributable to noncontrolling interests related to consolidated investment management funds | — | 5 | 4 | 13 | (6) | |||||||||||||||
| Net income applicable to shareholders of The Bank of New York Mellon Corporation | 388 | 869 | 947 | 2,030 | 2,896 | |||||||||||||||
| Preferred stock dividends | (69) | (34) | (66) | (177) | (166) | |||||||||||||||
| Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 319 | $ | 835 | $ | 881 | $ | 1,853 | $ | 2,730 | ||||||||||
| Earnings per share applicable to the common shareholders of The Bank of New York Mellon Corporation | Quarter ended | Year-to-date | ||||||||||||||||||
| Sept. 30, 2022 | June 30, 2022 | Sept. 30, 2021 | Sept. 30, 2022 | Sept. 30, 2021 | ||||||||||||||||
| (in dollars) | ||||||||||||||||||||
| Basic | $ | 0.39 | $ | 1.03 | $ | 1.04 | $ | 2.29 | $ | 3.15 | ||||||||||
| Diluted | $ | 0.39 | $ | 1.03 | $ | 1.04 | $ | 2.28 | $ | 3.14 | ||||||||||
Page - 10 | ||
| BNY Mellon 3Q22 Earnings Release | ||
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 segment, net of distribution and servicing expense that was passed to third parties who distribute or service our managed funds. We believe that this measure is useful when evaluating the performance of the Investment and Wealth Management business segment relative to industry competitors.
BNY Mellon has presented revenue measures excluding notable items, including disposal gains. Expense measures, excluding notable items, including goodwill impairment, severance expense and litigation reserves, are also presented. Litigation reserves represent accruals for loss contingencies that are both probable and reasonably estimable, but exclude standard business-related legal fees. Income before taxes, net income applicable to common shareholders of The Bank of New York Mellon Corporation, diluted earnings per share, operating leverage, return on common equity, return on tangible common equity, pre-tax operating margin and the effective tax rate, excluding the notable items mentioned above, are also provided. These measures have been provided to permit investors to view the financial measures on a basis consistent with how management views the businesses.
| Reconciliation of Non-GAAP measures, excluding notable items | 3Q22 vs. | |||||||||||||||||||
| (dollars in millions) | 3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | |||||||||||||||
| Total revenue – GAAP | $ | 4,279 | $ | 4,254 | $ | 4,035 | 0.59 | % | 6.05 | % | ||||||||||
Impact of notable items (a) | 37 | — | 9 | |||||||||||||||||
| Adjusted total revenue – Non-GAAP | $ | 4,242 | $ | 4,254 | $ | 4,026 | (0.28) | % | 5.37 | % | ||||||||||
| Total noninterest expense – GAAP | $ | 3,679 | $ | 3,112 | $ | 2,918 | 18.22 | % | 26.08 | % | ||||||||||
Impact of notable items (a) | 714 | 103 | 73 | |||||||||||||||||
| Adjusted total noninterest expense – Non-GAAP | $ | 2,965 | $ | 3,009 | $ | 2,845 | (1.46) | % | 4.22 | % | ||||||||||
| Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP | $ | 319 | $ | 835 | $ | 881 | (62) | % | (64) | % | ||||||||||
Impact of notable items (a) | (664) | (100) | (45) | |||||||||||||||||
| Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation – Non-GAAP | $ | 983 | $ | 935 | $ | 926 | 5 | % | 6 | % | ||||||||||
| Diluted earnings per share – GAAP | $ | 0.39 | $ | 1.03 | $ | 1.04 | (62) | % | (63) | % | ||||||||||
Impact of notable items (a) | (0.81) | (0.12) | (0.05) | |||||||||||||||||
| Adjusted diluted earnings per share – Non-GAAP | $ | 1.21 | (b) | $ | 1.15 | $ | 1.09 | 5 | % | 11 | % | |||||||||
Operating leverage – GAAP (c) | (1,763) | bps | (2,003) | bps | |||||||||||||
Adjusted operating leverage – Non-GAAP (a)(c) | 118 | bps | 115 | bps | |||||||||||||
(a) Notable items in 3Q22 include goodwill impairment, a disposal gain, severance expense and litigation reserves. Notable items in 2Q22 include litigation reserves. Notable items in 3Q21 include litigation reserves, gains on disposals and severance expense.
(b) Does not foot due to rounding.
(c) Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense.
bps – basis points
Page - 11 | ||
| BNY Mellon 3Q22 Earnings Release | ||
| Return on common equity and return on tangible common equity reconciliation | |||||
| (dollars in millions) | 3Q22 | ||||
| Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP | $ | 319 | |||
| Add: Amortization of intangible assets | 17 | ||||
| Less: Tax impact of amortization of intangible assets | 4 | ||||
| Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets – Non-GAAP | $ | 332 | |||
Impact of notable items (a) | (664) | ||||
| Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets and notable items – Non-GAAP | $ | 996 | |||
| Average common shareholders’ equity | $ | 35,942 | |||
| Less: Average goodwill | 17,189 | ||||
| Average intangible assets | 2,922 | ||||
| Add: Deferred tax liability – tax deductible goodwill | 1,175 | ||||
| Deferred tax liability – intangible assets | 660 | ||||
| Average tangible common shareholders’ equity – Non-GAAP | $ | 17,666 | |||
Return on common equity – GAAP (b) | 3.5 | % | |||
Adjusted return on common equity – Non-GAAP (b) | 10.9 | % | |||
Return on tangible common equity – Non-GAAP (b) | 7.5 | % | |||
Adjusted return on tangible common equity – Non-GAAP (b) | 22.4 | % | |||
(a) Notable items in 3Q22 include goodwill impairment, a disposal gain, severance expense and litigation reserves.
(b) Annualized.
| Pre-tax operating margin reconciliation | |||||||||||
| (dollars in millions) | 3Q22 | 2Q22 | 3Q21 | ||||||||
| Income before taxes – GAAP | $ | 630 | $ | 1,095 | $ | 1,162 | |||||
Impact of notable items (a) | (677) | (103) | (64) | ||||||||
| Adjusted income before taxes, excluding notable items – Non-GAAP | $ | 1,307 | $ | 1,198 | $ | 1,226 | |||||
| Total revenue – GAAP | $ | 4,279 | $ | 4,254 | $ | 4,035 | |||||
Pre-tax operating margin – GAAP (b) | 15 | % | 26 | % | 29 | % | |||||
Adjusted pre-tax operating margin – Non-GAAP (b) | 31 | % | 28 | % | 30 | % | |||||
(a) Notable items in 3Q22 include goodwill impairment, a disposal gain, severance expense and litigation reserves. Notable items in 2Q22 include litigation reserves. Notable items in 3Q21 include litigation reserves, gains on disposals and severance expense.
(b) Income before taxes divided by total revenue.
| Effective tax rate reconciliation | |||||
| (dollars in millions) | 3Q22 | ||||
| Provision for income taxes | $ | 242 | |||
Impact of notable items (a) | (13) | ||||
| Adjusted provision for income taxes, excluding notable items – Non-GAAP | $ | 255 | |||
| Income before taxes – GAAP | $ | 630 | |||
Impact of notable items (a) | (677) | ||||
| Adjusted income before taxes, excluding notable items – Non-GAAP | $ | 1,307 | |||
| Effective tax rate – GAAP | 38.4 | % | |||
| Adjusted effective tax rate – Non-GAAP | 19.5 | % | |||
(a) Notable items in 3Q22 include goodwill impairment, a disposal gain, severance expense and litigation reserves.
Page - 12 | ||
| BNY Mellon 3Q22 Earnings Release | ||
BNY Mellon has presented pre-tax operating margin, excluding notable items for certain business segments. These measures are provided to permit investors to view the financial measures on a basis consistent with how management views the businesses.
| Pre-tax operating margin reconciliation - Securities Services business segment | 3Q22 vs. | ||||||||||||||||
| (dollars in millions) | 3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | ||||||||||||
| Income (loss) before taxes – GAAP | $ | 523 | $ | 337 | $ | 313 | 55 | % | 67 | % | |||||||
Impact of notable items (a) | (19) | 92 | 70 | ||||||||||||||
| Adjusted income before taxes – Non-GAAP | $ | 504 | $ | 429 | $ | 383 | 17 | % | 32 | % | |||||||
| Total revenue – GAAP | $ | 2,006 | $ | 1,837 | |||||||||||||
Impact of notable items (a) | — | — | |||||||||||||||
| Adjusted total revenue – Non-GAAP | $ | 2,006 | $ | 1,837 | |||||||||||||
Pre-tax operating margin – GAAP (b) | 17 | % | 17 | % | |||||||||||||
Adjusted pre-tax operating margin – Non-GAAP (b) | 21 | % | 21 | % | |||||||||||||
(a) Notable items in 3Q22 include a disposal gain and severance expense. Notable items in 2Q22 include litigation reserves. Notable items in 3Q21 include litigation reserves and severance expense.
(b) Income before taxes divided by total revenue.
| Reconciliation of Non-GAAP measures, excluding notable items - Investment and Wealth Management | 3Q22 vs. | ||||||||||||||||
| (dollars in millions) | 3Q22 | 2Q22 | 3Q21 | 2Q22 | 3Q21 | ||||||||||||
| Noninterest expense – GAAP | $ | 1,356 | $ | 691 | $ | 691 | 96 | % | 96 | % | |||||||
Impact of notable items (a) | 679 | — | 1 | ||||||||||||||
| Adjusted noninterest expense – Non-GAAP | $ | 677 | $ | 691 | $ | 690 | (2) | % | (2) | % | |||||||
| (Loss) income before taxes – GAAP | $ | (497) | $ | 208 | $ | 348 | (339) | % | (243) | % | |||||||
Impact of notable items (a) | 679 | — | 1 | ||||||||||||||
| Adjusted income before taxes – Non-GAAP | $ | 182 | $ | 208 | $ | 349 | (13) | % | (48) | % | |||||||
| Total revenue – GAAP | $ | 862 | |||||||||||||||
| Less: Distribution and servicing expense | 88 | ||||||||||||||||
| Adjusted total revenue – Non-GAAP | $ | 774 | |||||||||||||||
Pre-tax operating margin – GAAP (b) | (57) | % | |||||||||||||||
Adjusted pre-tax operating margin, net of distribution and servicing expense (b) | (64) | % | |||||||||||||||
Adjusted pre-tax operating margin, net of distribution and servicing expense and excluding notable items – Non-GAAP (b) | 24 | % | |||||||||||||||
(a) Notable items in 3Q22 include goodwill impairment and severance expense. Notable items in 3Q21 include severance expense.
(b) Income before taxes divided by total revenue.
See “Explanation of GAAP and Non-GAAP Financial Measures” in the Financial Supplement available at www.bnymellon.com for additional reconciliations of Non-GAAP measures.
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, innovation in products and services, 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,
Page - 13 | ||
| BNY Mellon 3Q22 Earnings Release | ||
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, 2021 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 geopolitical risks (including those related to Russia’s invasion of Ukraine), as well as 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 Sept. 30, 2022. All forward-looking statements in this Earnings Release speak only as of Oct. 17, 2022, 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 Sept. 30, 2022, BNY Mellon had $42.2 trillion in assets under custody and/or administration, and $1.8 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.
CONFERENCE CALL INFORMATION
Robin Vince, President and 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 Oct. 17, 2022. 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: 200200, 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 Oct. 17, 2022. Replays of the conference call and audio webcast will be available beginning Oct. 17, 2022 at approximately 2:00 p.m. ET through Nov. 17, 2022 by dialing (888) 203-1112 (U.S.) or (719) 457-0820 (International), and using the passcode: 5049084. 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 - 14 | ||
| The Bank of New York Mellon Corporation | ||
| Financial Supplement | ||
| Third Quarter 2022 | ||
| 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 | ||||||||
| Securities Services Business Segment | ||||||||
| Market and Wealth Services Business Segment | ||||||||
| Investment and Wealth Management Business Segment | ||||||||
| AUM by Product Type, Changes in AUM 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) | 3Q22 vs. | YTD22 vs. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3Q22 | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q22 | 3Q21 | YTD22 | YTD21 | YTD21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Selected income statement data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fee and other revenue | $ | 3,353 | $ | 3,430 | $ | 3,228 | $ | 3,338 | $ | 3,394 | (2) | % | (1) | % | $ | 10,011 | $ | 9,975 | — | % | ||||||||||||||||||||||||||||||||||||||||||
| Net interest revenue | 926 | 824 | 698 | 677 | 641 | 12 | 44 | 2,448 | 1,941 | 26 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | 4,279 | 4,254 | 3,926 | 4,015 | 4,035 | 1 | 6 | 12,459 | 11,916 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses | (30) | 47 | 2 | (17) | (45) | N/M | N/M | 19 | (214) | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest expense | 3,679 | 3,112 | 3,006 | 2,967 | 2,918 | 18 | 26 | 9,797 | 8,547 | 15 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income before income taxes | 630 | 1,095 | 918 | 1,065 | 1,162 | (42) | (46) | 2,643 | 3,583 | (26) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for income taxes | 242 | 231 | 153 | 196 | 219 | 5 | 11 | 626 | 681 | (8) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 388 | $ | 864 | $ | 765 | $ | 869 | $ | 943 | (55) | % | (59) | % | $ | 2,017 | $ | 2,902 | (30) | % | ||||||||||||||||||||||||||||||||||||||||||
| Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 319 | $ | 835 | $ | 699 | $ | 822 | $ | 881 | (62) | % | (64) | % | $ | 1,853 | $ | 2,730 | (32) | % | ||||||||||||||||||||||||||||||||||||||||||
| Diluted earnings per common share | $ | 0.39 | $ | 1.03 | $ | 0.86 | $ | 1.01 | $ | 1.04 | (62) | % | (63) | % | $ | 2.28 | $ | 3.14 | (27) | % | ||||||||||||||||||||||||||||||||||||||||||
Average common shares and equivalents outstanding – diluted (in thousands) | 814,516 | 813,590 | 813,986 | 817,345 | 849,028 | — | % | (4) | % | 814,214 | 869,324 | (6) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Financial ratios (Returns are annualized) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax operating margin | 15 | % | 26 | % | 23 | % | 27 | % | 29 | % | 21 | % | 30 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Return on common equity | 3.5 | % | 9.3 | % | 7.6 | % | 8.6 | % | 8.8 | % | 6.8 | % | 9.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Return on tangible common equity – Non-GAAP (a) | 7.5 | % | 19.2 | % | 15.4 | % | 17.2 | % | 16.8 | % | 14.0 | % | 17.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Non-U.S. revenue as a percentage of total revenue | 35 | % | 36 | % | 35 | % | 38 | % | 38 | % | 35 | % | 38 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Period end | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets under custody and/or administration (“AUC/A”) (in trillions) (b) | $ | 42.2 | $ | 43.0 | $ | 45.5 | $ | 46.7 | $ | 45.3 | (2) | % | (7) | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Assets under management (“AUM”) (in trillions) | $ | 1.78 | $ | 1.94 | $ | 2.27 | $ | 2.43 | $ | 2.31 | (8) | % | (23) | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Full-time employees | 51,100 | 50,800 | 49,600 | 49,100 | 48,900 | 1 | % | 4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Book value per common share | $ | 43.18 | $ | 44.73 | $ | 45.76 | $ | 47.50 | $ | 47.30 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Tangible book value per common share – Non-GAAP (a) | $ | 21.55 | $ | 22.02 | $ | 22.76 | $ | 24.31 | $ | 24.88 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends per common share | $ | 0.37 | $ | 0.34 | $ | 0.34 | $ | 0.34 | $ | 0.34 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common dividend payout ratio | 95 | % | 33 | % | 40 | % | 34 | % | 34 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Closing stock price per common share | $ | 38.52 | $ | 41.71 | $ | 49.63 | $ | 58.08 | $ | 51.84 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Market capitalization | $ | 31,135 | $ | 33,706 | $ | 40,091 | $ | 46,705 | $ | 42,811 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Common shares outstanding (in thousands) | 808,280 | 808,103 | 807,798 | 804,145 | 825,821 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital ratios at period end (c) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Equity Tier 1 ("CET1") ratio | 10.0 | % | 10.0 | % | 10.1 | % | 11.2 | % | 11.7 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 capital ratio | 12.8 | % | 12.8 | % | 12.9 | % | 14.0 | % | 14.4 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total capital ratio | 13.7 | % | 13.6 | % | 13.7 | % | 14.9 | % | 15.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 leverage ratio | 5.4 | % | 5.2 | % | 5.3 | % | 5.5 | % | 5.7 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Supplementary leverage ratio ("SLR") | 6.3 | % | 6.2 | % | 6.2 | % | 6.6 | % | 7.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(a) Non-GAAP information, for all periods presented, excludes goodwill and intangible assets, net of deferred tax liabilities. See "Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 18 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 $1.4 trillion at Sep. 30, 2022, $1.5 trillion at June 30, 2022 and $1.7 trillion at March 31, 2022, Dec. 31, 2021, and Sept. 30, 2021. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c) Regulatory capital ratios for Sept. 30, 2022 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 Sept. 30, 2022 was the Standardized Approach for the CET1 and Tier 1 capital ratios and the Advanced Approaches for the Total capital ratio, for June 30, 2022 was the Advanced Approaches, for March 31, 2022 and Dec. 31, 2021 was the Standardized Approach, and for Sept. 30, 2021 was the Standardized Approach for the CET1 and Tier 1 capital ratios and the Advanced Approaches for the Total capital ratio. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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) | 3Q22 vs. | YTD22 vs. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3Q22 | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q22 | 3Q21 | YTD22 | YTD21 | YTD21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment services fees | $ | 2,157 | $ | 2,206 | $ | 1,993 | $ | 2,061 | $ | 2,091 | (2) | % | 3 | % | $ | 6,356 | $ | 6,223 | 2 | % | ||||||||||||||||||||||||||||||||||||||||||
| Investment management and performance fees | 800 | 833 | 883 | 896 | 913 | (4) | (12) | 2,516 | 2,692 | (7) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange revenue | 203 | 222 | 207 | 199 | 185 | (9) | 10 | 632 | 600 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financing-related fees | 43 | 44 | 45 | 47 | 48 | (2) | (10) | 132 | 147 | (10) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distribution and servicing fees | 33 | 34 | 30 | 28 | 28 | (3) | 18 | 97 | 84 | 15 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fee revenue | 3,236 | 3,339 | 3,158 | 3,231 | 3,265 | (3) | (1) | 9,733 | 9,746 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment and other revenue | 117 | 91 | 70 | 107 | 129 | N/M | N/M | 278 | 229 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fee and other revenue | 3,353 | 3,430 | 3,228 | 3,338 | 3,394 | (2) | (1) | 10,011 | 9,975 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest revenue | 926 | 824 | 698 | 677 | 641 | 12 | 44 | 2,448 | 1,941 | 26 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | 4,279 | 4,254 | 3,926 | 4,015 | 4,035 | 1 | 6 | 12,459 | 11,916 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses | (30) | 47 | 2 | (17) | (45) | N/M | N/M | 19 | (214) | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest expense | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Staff | 1,673 | 1,623 | 1,702 | 1,633 | 1,584 | 3 | 6 | 4,998 | 4,704 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Software and equipment | 421 | 405 | 399 | 379 | 372 | 4 | 13 | 1,225 | 1,099 | 11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Professional, legal and other purchased services | 363 | 379 | 370 | 390 | 363 | (4) | — | 1,112 | 1,069 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sub-custodian and clearing | 124 | 131 | 118 | 120 | 129 | (5) | (4) | 373 | 385 | (3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net occupancy | 124 | 125 | 122 | 133 | 120 | (1) | 3 | 371 | 365 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distribution and servicing | 88 | 90 | 79 | 75 | 76 | (2) | 16 | 257 | 223 | 15 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bank assessment charges | 35 | 37 | 35 | 30 | 34 | (5) | 3 | 107 | 103 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business development | 34 | 43 | 30 | 44 | 22 | (21) | 55 | 107 | 63 | 70 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill impairment | 680 | — | — | — | — | N/M | N/M | 680 | — | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 17 | 17 | 17 | 19 | 19 | — | (11) | 51 | 63 | (19) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 120 | 262 | 134 | 144 | 199 | (54) | (40) | 516 | 473 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total noninterest expense | 3,679 | 3,112 | 3,006 | 2,967 | 2,918 | 18 | 26 | 9,797 | 8,547 | 15 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income before income taxes | 630 | 1,095 | 918 | 1,065 | 1,162 | (42) | (46) | 2,643 | 3,583 | (26) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for income taxes | 242 | 231 | 153 | 196 | 219 | 5 | 11 | 626 | 681 | (8) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | 388 | 864 | 765 | 869 | 943 | (55) | (59) | 2,017 | 2,902 | (30) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss (income) attributable to noncontrolling interests | — | 5 | 8 | (6) | 4 | N/M | N/M | 13 | (6) | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividends | (69) | (34) | (74) | (41) | (66) | N/M | N/M | (177) | (166) | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 319 | $ | 835 | $ | 699 | $ | 822 | $ | 881 | (62) | % | (64) | % | $ | 1,853 | $ | 2,730 | (32) | % | ||||||||||||||||||||||||||||||||||||||||||
| Average common shares and equivalents outstanding: Basic | 811,304 | 810,903 | 809,469 | 811,463 | 844,088 | — | % | (4) | % | 810,703 | 865,374 | (6) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Diluted | 814,516 | 813,590 | 813,986 | 817,345 | 849,028 | — | % | (4) | % | 814,214 | 869,324 | (6) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings per common share: Basic | $ | 0.39 | $ | 1.03 | $ | 0.86 | $ | 1.01 | $ | 1.04 | (62) | % | (63) | % | $ | 2.29 | $ | 3.15 | (27) | % | ||||||||||||||||||||||||||||||||||||||||||
| Diluted | $ | 0.39 | $ | 1.03 | $ | 0.86 | $ | 1.01 | $ | 1.04 | (62) | % | (63) | % | $ | 2.28 | $ | 3.14 | (27) | % | ||||||||||||||||||||||||||||||||||||||||||
| N/M – Not meaningful. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4
| THE BANK OF NEW YORK MELLON CORPORATION | | |||||||||||||||||||||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEET | ||||||||||||||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||||||
| (in millions) | Sept. 30 | June 30 | March 31 | Dec. 31 | Sept. 30 | |||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Cash and due from banks | $ | 4,707 | $ | 5,185 | $ | 6,143 | $ | 6,061 | $ | 6,752 | ||||||||||||||||||||||
| Interest-bearing deposits with the Federal Reserve and other central banks | 107,427 | 125,372 | 135,691 | 102,467 | 126,959 | |||||||||||||||||||||||||||
| Interest-bearing deposits with banks | 13,890 | 16,639 | 18,268 | 16,630 | 20,057 | |||||||||||||||||||||||||||
| Federal funds sold and securities purchased under resale agreements | 23,483 | 22,940 | 27,131 | 29,607 | 28,497 | |||||||||||||||||||||||||||
| Securities | 144,181 | 150,844 | 153,396 | 158,705 | 157,274 | |||||||||||||||||||||||||||
| Trading assets | 12,650 | 10,759 | 14,703 | 16,577 | 17,854 | |||||||||||||||||||||||||||
| Loans | 69,829 | 69,347 | 68,052 | 67,787 | 64,328 | |||||||||||||||||||||||||||
| Allowance for loan losses | (164) | (181) | (171) | (196) | (233) | |||||||||||||||||||||||||||
Net loans | 69,665 | 69,166 | 67,881 | 67,591 | 64,095 | |||||||||||||||||||||||||||
| Premises and equipment | 3,311 | 3,354 | 3,359 | 3,431 | 3,422 | |||||||||||||||||||||||||||
| Accrued interest receivable | 723 | 548 | 467 | 457 | 464 | |||||||||||||||||||||||||||
| Goodwill | 16,412 | 17,271 | 17,462 | 17,512 | 17,420 | |||||||||||||||||||||||||||
| Intangible assets | 2,902 | 2,934 | 2,968 | 2,991 | 2,941 | |||||||||||||||||||||||||||
| Other assets | 28,602 | 27,609 | 26,342 | 22,409 | 24,798 | |||||||||||||||||||||||||||
Total assets | $ | 427,953 | $ | 452,621 | $ | 473,811 | $ | 444,438 | $ | 470,533 | ||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
| Deposits | $ | 301,989 | $ | 325,813 | $ | 345,565 | $ | 319,694 | $ | 343,139 | ||||||||||||||||||||||
| Federal funds purchased and securities sold under repurchase agreements | 11,339 | 11,434 | 13,181 | 11,566 | 11,973 | |||||||||||||||||||||||||||
| Trading liabilities | 7,494 | 5,595 | 5,587 | 5,469 | 5,152 | |||||||||||||||||||||||||||
| Payables to customers and broker-dealers | 23,741 | 25,769 | 26,608 | 25,150 | 26,002 | |||||||||||||||||||||||||||
| Other borrowed funds | 357 | 520 | 312 | 749 | 767 | |||||||||||||||||||||||||||
| Accrued taxes and other expenses | 5,316 | 5,011 | 4,534 | 5,767 | 5,609 | |||||||||||||||||||||||||||
| Other liabilities | 10,001 | 9,724 | 10,626 | 6,721 | 8,796 | |||||||||||||||||||||||||||
| Long-term debt | 27,820 | 27,610 | 25,246 | 25,931 | 25,043 | |||||||||||||||||||||||||||
Total liabilities | 388,057 | 411,476 | 431,659 | 401,047 | 426,481 | |||||||||||||||||||||||||||
| Temporary equity | ||||||||||||||||||||||||||||||||
| Redeemable noncontrolling interests | 152 | 154 | 155 | 161 | 178 | |||||||||||||||||||||||||||
| Permanent equity | ||||||||||||||||||||||||||||||||
| Preferred stock | 4,838 | 4,838 | 4,838 | 4,838 | 4,541 | |||||||||||||||||||||||||||
| Common stock | 14 | 14 | 14 | 14 | 14 | |||||||||||||||||||||||||||
| Additional paid-in capital | 28,374 | 28,316 | 28,258 | 28,128 | 28,075 | |||||||||||||||||||||||||||
| Retained earnings | 37,660 | 37,644 | 37,088 | 36,667 | 36,125 | |||||||||||||||||||||||||||
| Accumulated other comprehensive loss, net of tax | (6,627) | (5,307) | (3,881) | (2,213) | (2,003) | |||||||||||||||||||||||||||
Less: Treasury stock, at cost | (24,522) | (24,521) | (24,518) | (24,400) | (23,151) | |||||||||||||||||||||||||||
| Total The Bank of New York Mellon Corporation shareholders’ equity | 39,737 | 40,984 | 41,799 | 43,034 | 43,601 | |||||||||||||||||||||||||||
Nonredeemable noncontrolling interests of consolidated investment management funds | 7 | 7 | 198 | 196 | 273 | |||||||||||||||||||||||||||
Total permanent equity | 39,744 | 40,991 | 41,997 | 43,230 | 43,874 | |||||||||||||||||||||||||||
Total liabilities, temporary equity and permanent equity | $ | 427,953 | $ | 452,621 | $ | 473,811 | $ | 444,438 | $ | 470,533 | ||||||||||||||||||||||
5
| THE BANK OF NEW YORK MELLON CORPORATION | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FEE AND OTHER REVENUE | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3Q22 vs. | YTD22 vs. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in millions) | 3Q22 | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q22 | 3Q21 | YTD22 | YTD21 | YTD21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment services fees | $ | 2,157 | $ | 2,206 | $ | 1,993 | $ | 2,061 | $ | 2,091 | (2) | % | 3 | % | $ | 6,356 | $ | 6,223 | 2 | % | ||||||||||||||||||||||||||||||||||||||||||
| Investment management and performance fees: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment management fees (a) | 790 | 828 | 849 | 864 | 892 | (5) | (11) | 2,467 | 2,617 | (6) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Performance fees | 10 | 5 | 34 | 32 | 21 | N/M | (52) | 49 | 75 | (35) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total investment management and performance fees (b) | 800 | 833 | 883 | 896 | 913 | (4) | (12) | 2,516 | 2,692 | (7) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange revenue | 203 | 222 | 207 | 199 | 185 | (9) | 10 | 632 | 600 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financing-related fees | 43 | 44 | 45 | 47 | 48 | (2) | (10) | 132 | 147 | (10) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distribution and servicing fees | 33 | 34 | 30 | 28 | 28 | (3) | 18 | 97 | 84 | 15 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fee revenue | 3,236 | 3,339 | 3,158 | 3,231 | 3,265 | (3) | (1) | 9,733 | 9,746 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment and other revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Loss) income from consolidated investment management funds | (7) | (24) | (20) | 9 | (7) | N/M | N/M | (51) | 23 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Seed capital (losses) gains (c) | (11) | (24) | (8) | 12 | 7 | N/M | N/M | (43) | 28 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other trading revenue (loss) | 65 | 45 | 5 | (6) | 20 | N/M | N/M | 115 | 12 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Renewable energy investment (losses) | (44) | (44) | (44) | (37) | (42) | N/M | N/M | (132) | (164) | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate/bank-owned life insurance | 32 | 28 | 33 | 45 | 33 | N/M | N/M | 93 | 95 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other investments gains (d) | 13 | 78 | 61 | 55 | 70 | N/M | N/M | 152 | 104 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disposal gains | 37 | — | — | — | 7 | N/M | N/M | 37 | 13 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Expense reimbursements from joint venture | 27 | 26 | 27 | 23 | 25 | N/M | N/M | 80 | 73 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other income | 4 | 6 | 12 | 5 | 14 | N/M | N/M | 22 | 41 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net securities gains | 1 | — | 4 | 1 | 2 | N/M | N/M | 5 | 4 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total investment and other revenue | 117 | 91 | 70 | 107 | 129 | N/M | N/M | 278 | 229 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fee and other revenue | $ | 3,353 | $ | 3,430 | $ | 3,228 | $ | 3,338 | $ | 3,394 | (2) | % | (1) | % | $ | 10,011 | $ | 9,975 | — | % | ||||||||||||||||||||||||||||||||||||||||||
(a) Excludes seed capital gains (losses) related to consolidated investment management funds. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) On a constant currency basis (Non-GAAP), investment management and performance fees decreased 8% compared with 3Q21. See "Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 18 for the reconciliation of this Non-GAAP measure. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (c) Includes gains (losses) on investments in BNY Mellon funds which hedge deferred incentive awards. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (d) 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 | |||||||||||||||||||||||||||||||||||||||||||||||
| 3Q22 | 2Q22 | 1Q22 | 4Q21 | 3Q21 | |||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | 91,836 | 1.23 | % | $ | 102,844 | 0.38 | % | $ | 100,303 | 0.01 | % | $ | 105,065 | (0.06) | % | $ | 108,110 | (0.07) | % | |||||||||||||||||||||||||||
| Interest-bearing deposits with banks | 16,298 | 1.62 | 18,097 | 0.74 | 17,181 | 0.33 | 18,818 | 0.23 | 20,465 | 0.22 | |||||||||||||||||||||||||||||||||||||
Federal funds sold and securities purchased under resale agreements (a) | 22,971 | 5.55 | 24,212 | 1.91 | 27,006 | 0.56 | 27,780 | 0.45 | 29,304 | 0.44 | |||||||||||||||||||||||||||||||||||||
| Loans | 68,082 | 3.39 | 69,036 | 2.15 | 66,810 | 1.57 | 64,650 | 1.55 | 61,206 | 1.55 | |||||||||||||||||||||||||||||||||||||
| Securities: | |||||||||||||||||||||||||||||||||||||||||||||||
| U.S. government obligations | 40,829 | 1.75 | 41,267 | 1.07 | 40,868 | 0.74 | 39,169 | 0.73 | 36,255 | 0.73 | |||||||||||||||||||||||||||||||||||||
| U.S. government agency obligations | 62,819 | 1.91 | 64,939 | 1.59 | 67,055 | 1.46 | 69,691 | 1.35 | 70,199 | 1.34 | |||||||||||||||||||||||||||||||||||||
State and political subdivisions (b) | 1,982 | 2.39 | 2,065 | 2.13 | 2,337 | 2.16 | 2,569 | 2.11 | 2,628 | 2.07 | |||||||||||||||||||||||||||||||||||||
Other securities (b) | 42,642 | 1.90 | 43,635 | 1.31 | 45,541 | 1.02 | 47,493 | 0.97 | 47,334 | 0.94 | |||||||||||||||||||||||||||||||||||||
Total investment securities (b) | 148,272 | 1.87 | 151,906 | 1.37 | 155,801 | 1.15 | 158,922 | 1.10 | 156,416 | 1.09 | |||||||||||||||||||||||||||||||||||||
Trading securities (b) | 4,603 | 3.06 | 4,687 | 1.91 | 6,085 | 1.43 | 6,447 | 0.93 | 5,564 | 0.53 | |||||||||||||||||||||||||||||||||||||
Total securities (b) | 152,875 | 1.91 | 156,593 | 1.39 | 161,886 | 1.16 | 165,369 | 1.09 | 161,980 | 1.07 | |||||||||||||||||||||||||||||||||||||
Total interest-earning assets (b) | $ | 352,062 | 2.24 | % | $ | 370,782 | 1.25 | % | $ | 373,186 | 0.84 | % | $ | 381,682 | 0.76 | % | $ | 381,065 | 0.73 | % | |||||||||||||||||||||||||||
| Noninterest-earning assets | 63,608 | 66,841 | 67,016 | 67,956 | 65,696 | ||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 415,670 | $ | 437,623 | $ | 440,202 | $ | 449,638 | $ | 446,761 | |||||||||||||||||||||||||||||||||||||
| Liabilities and equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | $ | 203,659 | 0.95 | % | $ | 219,124 | 0.16 | % | $ | 223,243 | (0.07) | % | $ | 231,086 | (0.08) | % | $ | 233,363 | (0.08) | % | |||||||||||||||||||||||||||
Federal funds purchased and securities sold under repurchase agreements (a) | 12,297 | 8.05 | 12,610 | 2.47 | 12,864 | 0.36 | 12,421 | 0.07 | 13,415 | 0.08 | |||||||||||||||||||||||||||||||||||||
| Trading liabilities | 3,550 | 2.52 | 3,231 | 1.25 | 3,372 | 0.53 | 3,019 | 0.28 | 2,821 | 0.11 | |||||||||||||||||||||||||||||||||||||
| Other borrowed funds | 504 | 1.15 | 437 | 2.14 | 458 | 2.36 | 517 | 1.80 | 383 | 2.53 | |||||||||||||||||||||||||||||||||||||
| Commercial paper | 5 | 2.34 | 5 | 1.61 | 4 | 0.09 | — | — | 11 | 0.07 | |||||||||||||||||||||||||||||||||||||
| Payables to customers and broker-dealers | 18,030 | 1.07 | 16,592 | 0.21 | 16,661 | 0.01 | 16,414 | (0.01) | 16,648 | (0.01) | |||||||||||||||||||||||||||||||||||||
| Long-term debt | 28,449 | 3.43 | 26,195 | 2.22 | 25,588 | 1.53 | 25,932 | 1.36 | 25,751 | 1.39 | |||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | $ | 266,494 | 1.57 | % | $ | 278,194 | 0.48 | % | $ | 282,190 | 0.11 | % | $ | 289,389 | 0.07 | % | $ | 292,392 | 0.07 | % | |||||||||||||||||||||||||||
| Total noninterest-bearing deposits | 84,804 | 91,893 | 90,179 | 91,535 | 85,581 | ||||||||||||||||||||||||||||||||||||||||||
| Other noninterest-bearing liabilities | 23,547 | 26,354 | 25,419 | 25,481 | 24,164 | ||||||||||||||||||||||||||||||||||||||||||
| Total The Bank of New York Mellon Corporation shareholders’ equity | 40,780 | 41,037 | 42,201 | 42,968 | 44,296 | ||||||||||||||||||||||||||||||||||||||||||
| Noncontrolling interests | 45 | 145 | 213 | 265 | 328 | ||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 415,670 | $ | 437,623 | $ | 440,202 | $ | 449,638 | $ | 446,761 | |||||||||||||||||||||||||||||||||||||
| Net interest margin | 1.05 | % | 0.89 | % | 0.75 | % | 0.71 | % | 0.67 | % | |||||||||||||||||||||||||||||||||||||
Net interest margin (FTE) – Non-GAAP (c) | 1.05 | % | 0.89 | % | 0.76 | % | 0.71 | % | 0.68 | % | |||||||||||||||||||||||||||||||||||||
(a) Includes the average impact of offsetting under enforceable netting agreements of approximately $35 billion for 3Q22, $33 billion for 2Q22, $53 billion for 1Q22, $54 billion for 4Q21 and $47 billion for 3Q21. 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 2.21% for 3Q22, 0.80% for 2Q22, 0.19% for 1Q22, 0.15% for 4Q21 and 0.17% for 3Q21. 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 2.11% for 3Q22, 0.68% for 2Q22, 0.07% for 1Q22, 0.01% for 4Q21 and 0.02% for 3Q21. 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 "Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 18 for the reconciliation of this Non-GAAP measure. | |||||||||||||||||||||||||||||||||||||||||||||||
7
| THE BANK OF NEW YORK MELLON CORPORATION | | |||||||||||||||||||||||||||||||
| CAPITAL AND LIQUIDITY | ||||||||||||||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||||||
| (dollars in millions) | Sept. 30 | June 30 | March 31 | Dec. 31 | Sept. 30 | |||||||||||||||||||||||||||
Consolidated regulatory capital ratios (a) | ||||||||||||||||||||||||||||||||
| Standardized Approach: | ||||||||||||||||||||||||||||||||
| CET1 capital | $ | 16,726 | $ | 17,067 | $ | 17,579 | $ | 18,746 | $ | 19,844 | ||||||||||||||||||||||
| Tier 1 capital | 21,494 | 21,824 | 22,335 | 23,485 | 24,292 | |||||||||||||||||||||||||||
| Total capital | 23,008 | 23,366 | 23,835 | 24,972 | 25,816 | |||||||||||||||||||||||||||
| Risk-weighted assets | 167,276 | 169,710 | 173,629 | 167,608 | 169,216 | |||||||||||||||||||||||||||
| CET1 ratio | 10.0 | % | 10.1 | % | 10.1 | % | 11.2 | % | 11.7 | % | ||||||||||||||||||||||
| Tier 1 capital ratio | 12.8 | 12.9 | 12.9 | 14.0 | 14.4 | |||||||||||||||||||||||||||
| Total capital ratio | 13.8 | 13.8 | 13.7 | 14.9 | 15.3 | |||||||||||||||||||||||||||
| Advanced Approaches: | ||||||||||||||||||||||||||||||||
| CET1 capital | $ | 16,726 | $ | 17,067 | $ | 17,579 | $ | 18,746 | $ | 19,844 | ||||||||||||||||||||||
| Tier 1 capital | 21,494 | 21,824 | 22,335 | 23,485 | 24,292 | |||||||||||||||||||||||||||
| Total capital | 22,757 | 23,112 | 23,582 | 24,722 | 25,534 | |||||||||||||||||||||||||||
| Risk-weighted assets | 165,739 | 169,919 | 169,091 | 165,067 | 167,607 | |||||||||||||||||||||||||||
| CET1 ratio | 10.1 | % | 10.0 | % | 10.4 | % | 11.4 | % | 11.8 | % | ||||||||||||||||||||||
| Tier 1 capital ratio | 13.0 | 12.8 | 13.2 | 14.2 | 14.5 | |||||||||||||||||||||||||||
| Total capital ratio | 13.7 | 13.6 | 13.9 | 15.0 | 15.2 | |||||||||||||||||||||||||||
| Tier 1 leverage ratio: | ||||||||||||||||||||||||||||||||
| Average assets for Tier 1 leverage ratio | $ | 397,427 | $ | 418,467 | $ | 420,778 | $ | 430,102 | $ | 427,461 | ||||||||||||||||||||||
| Tier 1 leverage ratio | 5.4 | % | 5.2 | % | 5.3 | % | 5.5 | % | 5.7 | % | ||||||||||||||||||||||
| SLR: | ||||||||||||||||||||||||||||||||
| Leverage exposure | $ | 340,312 | $ | 351,552 | $ | 361,464 | $ | 354,033 | $ | 347,856 | ||||||||||||||||||||||
| SLR | 6.3 | % | 6.2 | % | 6.2 | % | 6.6 | % | 7.0 | % | ||||||||||||||||||||||
| Average liquidity coverage ratio | 116 | % | 111 | % | 109 | % | 109 | % | 111 | % | ||||||||||||||||||||||
(a) Regulatory capital ratios for Sept. 30, 2022 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 Sept. 30, 2022 was the Standardized Approach for the CET1 and Tier 1 capital ratios and the Advanced Approaches for the Total capital ratio, for June 30, 2022 was the Advanced Approaches, for March 31, 2022 and Dec. 31, 2021 was the Standardized Approach, and for Sept. 30, 2021 was the Standardized Approach for the CET1 and Tier 1 capital ratios and the Advanced Approaches for the Total capital ratio. | ||||||||||||||||||||||||||||||||
8
| THE BANK OF NEW YORK MELLON CORPORATION | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SECURITIES SERVICES BUSINESS SEGMENT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3Q22 vs. | YTD22 vs. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in millions) | 3Q22 | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q22 | 3Q21 | YTD22 | YTD21 | YTD21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment services fees: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Asset Servicing | $ | 953 | $ | 995 | $ | 999 | $ | 984 | $ | 979 | (4) | % | (3) | % | $ | 2,947 | $ | 2,892 | 2 | % | ||||||||||||||||||||||||||||||||||||||||||
| Issuer Services | 288 | 309 | 141 | 253 | 281 | (7) | 2 | 738 | 808 | (9) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total investment services fees | 1,241 | 1,304 | 1,140 | 1,237 | 1,260 | (5) | (2) | 3,685 | 3,700 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange revenue | 132 | 155 | 148 | 148 | 125 | (15) | 6 | 435 | 426 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other fees (a) | 52 | 54 | 41 | 28 | 30 | (4) | 73 | 147 | 85 | 73 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fee revenue | 1,425 | 1,513 | 1,329 | 1,413 | 1,415 | (6) | 1 | 4,267 | 4,211 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment and other revenue | 111 | 36 | 74 | 53 | 73 | N/M | N/M | 221 | 141 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fee and other revenue | 1,536 | 1,549 | 1,403 | 1,466 | 1,488 | (1) | 3 | 4,488 | 4,352 | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest revenue | 538 | 457 | 377 | 367 | 349 | 18 | 54 | 1,372 | 1,059 | 30 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | 2,074 | 2,006 | 1,780 | 1,833 | 1,837 | 3 | 13 | 5,860 | 5,411 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses | (6) | 13 | (10) | (7) | (19) | N/M | N/M | (3) | (127) | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest expense (ex. amortization of intangible assets) | 1,549 | 1,647 | 1,502 | 1,481 | 1,535 | (6) | 1 | 4,698 | 4,339 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 8 | 9 | 8 | 9 | 8 | (11) | — | 25 | 23 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total noninterest expense | 1,557 | 1,656 | 1,510 | 1,490 | 1,543 | (6) | 1 | 4,723 | 4,362 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income before income taxes | $ | 523 | $ | 337 | $ | 280 | $ | 350 | $ | 313 | 55 | % | 67 | % | $ | 1,140 | $ | 1,176 | (3) | % | ||||||||||||||||||||||||||||||||||||||||||
| Total revenue by line of business: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Asset Servicing | $ | 1,596 | $ | 1,534 | $ | 1,512 | $ | 1,456 | $ | 1,437 | 4 | % | 11 | % | $ | 4,642 | $ | 4,243 | 9 | % | ||||||||||||||||||||||||||||||||||||||||||
| Issuer Services | 478 | 472 | 268 | 377 | 400 | 1 | 20 | 1,218 | 1,168 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue by line of business | $ | 2,074 | $ | 2,006 | $ | 1,780 | $ | 1,833 | $ | 1,837 | 3 | % | 13 | % | $ | 5,860 | $ | 5,411 | 8 | % | ||||||||||||||||||||||||||||||||||||||||||
| Financial ratios: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax operating margin | 25 | % | 17 | % | 16 | % | 19 | % | 17 | % | 19 | % | 22 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Memo: Securities lending revenue (b) | $ | 48 | $ | 45 | $ | 39 | $ | 45 | $ | 45 | 7 | % | 7 | % | $ | 132 | $ | 128 | 3 | % | ||||||||||||||||||||||||||||||||||||||||||
| (a) Other fees primarily include financing-related fees. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (b) Included in investment services fees reported in the Asset Servicing line of business. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| N/M – Not meaningful. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9
| THE BANK OF NEW YORK MELLON CORPORATION | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SECURITIES SERVICES BUSINESS SEGMENT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3Q22 vs. | YTD22 vs. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in millions, unless otherwise noted) | 3Q22 | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q22 | 3Q21 | YTD22 | YTD21 | YTD21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Selected balance sheet data: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average loans | $ | 11,573 | $ | 11,386 | $ | 10,150 | $ | 9,764 | $ | 8,389 | 2 | % | 38 | % | $ | 11,042 | $ | 8,416 | 31 | % | ||||||||||||||||||||||||||||||||||||||||||
Average assets (a) | $ | 203,063 | $ | 219,797 | $ | 220,889 | $ | 229,511 | $ | 226,930 | (8) | % | (11) | % | $ | 214,518 | $ | 228,714 | (6) | % | ||||||||||||||||||||||||||||||||||||||||||
| Average deposits | $ | 176,328 | $ | 191,191 | $ | 192,156 | $ | 200,272 | $ | 198,680 | (8) | % | (11) | % | $ | 186,500 | $ | 200,553 | (7) | % | ||||||||||||||||||||||||||||||||||||||||||
| Selected metrics: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AUC/A at period end (in trillions) (b)(c) | $ | 30.0 | $ | 31.0 | $ | 33.7 | $ | 34.6 | $ | 33.8 | (3) | % | (11) | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Market value of securities on loan at period end (in billions) (d) | $ | 435 | $ | 441 | $ | 449 | $ | 447 | $ | 443 | (1) | % | (2) | % | ||||||||||||||||||||||||||||||||||||||||||||||||
(a) In business segments where average deposits are greater than average loans, average assets include an allocation of investment securities equal to the difference. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) Sept. 30, 2022 information is preliminary. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c) Consists of AUC/A primarily from the Asset Servicing line of business and, to a lesser extent, the Issuer Services line of business. Includes the AUC/A of CIBC Mellon of $1.4 trillion at Sept. 30, 2022, $1.5 trillion at June 30, 2022 and $1.7 trillion at March 31, 2022, Dec. 31, 2021 and Sept. 30, 2021. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(d) Represents the total amount of securities on loan in our agency securities lending program. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $75 billion at Sept. 30, 2022, $70 billion at June 30, 2022, $78 billion at March 31, 2022, $71 billion at Dec. 31, 2021 and $68 billion at Sept. 30, 2021. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10
| THE BANK OF NEW YORK MELLON CORPORATION | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MARKET AND WEALTH SERVICES BUSINESS SEGMENT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3Q22 vs. | YTD22 vs. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in millions) | 3Q22 | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q22 | 3Q21 | YTD22 | YTD21 | YTD21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment services fees: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pershing | $ | 494 | $ | 479 | $ | 433 | $ | 412 | $ | 427 | 3 | % | 16 | % | $ | 1,406 | $ | 1,325 | 6 | % | ||||||||||||||||||||||||||||||||||||||||||
| Treasury Services | 173 | 176 | 170 | 170 | 168 | (2) | 3 | 519 | 492 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Clearance and Collateral Management | 239 | 240 | 243 | 236 | 228 | — | 5 | 722 | 682 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total investment services fees | 906 | 895 | 846 | 818 | 823 | 1 | 10 | 2,647 | 2,499 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange revenue | 20 | 22 | 26 | 21 | 23 | (9) | (13) | 68 | 67 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other fees (a) | 49 | 46 | 34 | 31 | 31 | 7 | 58 | 129 | 100 | 29 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fee revenue | 975 | 963 | 906 | 870 | 877 | 1 | 11 | 2,844 | 2,666 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment and other revenue | 14 | 11 | — | 6 | 13 | N/M | N/M | 25 | 41 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fee and other revenue | 989 | 974 | 906 | 876 | 890 | 2 | 11 | 2,869 | 2,707 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest revenue | 378 | 340 | 296 | 297 | 283 | 11 | 34 | 1,014 | 861 | 18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | 1,367 | 1,314 | 1,202 | 1,173 | 1,173 | 4 | 17 | 3,883 | 3,568 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses | (1) | 4 | (2) | (3) | (16) | N/M | N/M | 1 | (64) | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest expense (ex. amortization of intangible assets) | 735 | 700 | 706 | 670 | 665 | 5 | 11 | 2,141 | 1,985 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 2 | 2 | 2 | 4 | 3 | — | (33) | 6 | 17 | (65) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total noninterest expense | 737 | 702 | 708 | 674 | 668 | 5 | 10 | 2,147 | 2,002 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income before income taxes | $ | 631 | $ | 608 | $ | 496 | $ | 502 | $ | 521 | 4 | % | 21 | % | $ | 1,735 | $ | 1,630 | 6 | % | ||||||||||||||||||||||||||||||||||||||||||
| Total revenue by line of business: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pershing | $ | 658 | $ | 636 | $ | 570 | $ | 553 | $ | 566 | 3 | % | 16 | % | $ | 1,864 | $ | 1,761 | 6 | % | ||||||||||||||||||||||||||||||||||||||||||
| Treasury Services | 390 | 373 | 338 | 331 | 326 | 5 | 20 | 1,101 | 962 | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Clearance and Collateral Management | 319 | 305 | 294 | 289 | 281 | 5 | 14 | 918 | 845 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue by line of business | $ | 1,367 | $ | 1,314 | $ | 1,202 | $ | 1,173 | $ | 1,173 | 4 | % | 17 | % | $ | 3,883 | $ | 3,568 | 9 | % | ||||||||||||||||||||||||||||||||||||||||||
| Financial ratios: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax operating margin | 46 | % | 46 | % | 41 | % | 43 | % | 44 | % | 45 | % | 46 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| (a) Other fees primarily include financing-related fees. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| N/M – Not meaningful. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11
| THE BANK OF NEW YORK MELLON CORPORATION | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MARKET AND WEALTH SERVICES BUSINESS SEGMENT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3Q22 vs. | YTD22 vs. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in millions, unless otherwise noted) | 3Q22 | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q22 | 3Q21 | YTD22 | YTD21 | YTD21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Selected balance sheet data: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average loans | $ | 40,882 | $ | 42,391 | $ | 42,113 | $ | 40,812 | $ | 39,041 | (4) | % | 5 | % | $ | 41,791 | $ | 37,513 | 11 | % | ||||||||||||||||||||||||||||||||||||||||||
Average assets (a) | $ | 138,204 | $ | 141,952 | $ | 141,183 | $ | 143,816 | $ | 143,630 | (3) | % | (4) | % | $ | 140,435 | $ | 145,562 | (4) | % | ||||||||||||||||||||||||||||||||||||||||||
| Average deposits | $ | 90,612 | $ | 94,716 | $ | 95,704 | $ | 100,653 | $ | 101,253 | (4) | % | (11) | % | $ | 93,658 | $ | 103,720 | (10) | % | ||||||||||||||||||||||||||||||||||||||||||
| Selected metrics: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AUC/A at period end (in trillions) (b)(c) | $ | 12.0 | $ | 11.8 | $ | 11.6 | $ | 11.8 | $ | 11.2 | 2 | % | 7 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Pershing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AUC/A at period end (in trillions) (b) | $ | 2.1 | $ | 2.2 | $ | 2.5 | $ | 2.6 | $ | 2.6 | (5) | % | (19) | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Net new assets (U.S. platform) (in billions) (d) | $ | 45 | $ | 16 | $ | 18 | $ | 69 | $ | 13 | N/M | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||
Average active clearing accounts (in thousands) | 7,466 | 7,432 | 7,432 | 7,334 | 7,259 | — | % | 3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Treasury Services | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average daily U.S. dollar payment volumes | 234,468 | 237,763 | 240,403 | 245,634 | 232,144 | (1) | % | 1 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Clearance and Collateral Management | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average tri-party collateral management balances (in billions) | $ | 5,457 | $ | 5,207 | $ | 5,026 | $ | 4,972 | $ | 4,516 | 5 | % | 21 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
(a) In business segments where average deposits are greater than average loans, average assets include an allocation of investment securities equal to the difference. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) Sept. 30, 2022 information is preliminary. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c) Consists of AUC/A from the Clearance and Collateral Management and Pershing lines of business. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(d) Net new assets represent net flows of assets (e.g., net cash deposits and net securities transfers, including dividends and interest) in customer accounts in Pershing LLC, a U.S. broker-dealer. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| N/M – Not meaningful. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
12
| THE BANK OF NEW YORK MELLON CORPORATION | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INVESTMENT AND WEALTH MANAGEMENT BUSINESS SEGMENT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3Q22 vs. | YTD22 vs. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in millions) | 3Q22 | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q22 | 3Q21 | YTD22 | YTD21 | YTD21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment management fees | $ | 788 | $ | 825 | $ | 848 | $ | 864 | $ | 893 | (4) | % | (12) | % | $ | 2,461 | $ | 2,619 | (6) | % | ||||||||||||||||||||||||||||||||||||||||||
| Performance fees | 10 | 5 | 34 | 32 | 21 | N/M | (52) | 49 | 75 | (35) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment management and performance fees (a) | 798 | 830 | 882 | 896 | 914 | (4) | (13) | 2,510 | 2,694 | (7) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distribution and servicing fees | 55 | 51 | 32 | 28 | 28 | 8 | 96 | 138 | 84 | 64 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other fees (b) | (45) | (31) | 1 | 22 | 20 | N/M | N/M | (75) | 58 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fee revenue | 808 | 850 | 915 | 946 | 962 | (5) | (16) | 2,573 | 2,836 | (9) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment and other revenue (c) | (3) | (13) | (8) | 23 | 23 | N/M | N/M | (24) | 44 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total fee and other revenue (c) | 805 | 837 | 907 | 969 | 985 | (4) | (18) | 2,549 | 2,880 | (11) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest revenue | 57 | 62 | 57 | 51 | 47 | (8) | 21 | 176 | 142 | 24 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | 862 | 899 | 964 | 1,020 | 1,032 | (4) | (16) | 2,725 | 3,022 | (10) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for credit losses | 3 | — | (3) | (6) | (7) | N/M | N/M | — | (7) | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest expense (ex. goodwill impairment and amortization of intangible assets) | 669 | 685 | 748 | 741 | 684 | (2) | (2) | 2,102 | 2,055 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill impairment | 680 | — | — | — | — | N/M | N/M | 680 | — | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 7 | 6 | 7 | 7 | 7 | 17 | — | 20 | 22 | (9) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total noninterest expense | 1,356 | 691 | 755 | 748 | 691 | 96 | 96 | 2,802 | 2,077 | 35 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Loss) income before income taxes | $ | (497) | $ | 208 | $ | 212 | $ | 278 | $ | 348 | (339) | % | (243) | % | $ | (77) | $ | 952 | (108) | % | ||||||||||||||||||||||||||||||||||||||||||
| Total revenue by line of business: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment Management | $ | 579 | $ | 603 | $ | 658 | $ | 709 | $ | 727 | (4) | % | (20) | % | $ | 1,840 | $ | 2,125 | (13) | % | ||||||||||||||||||||||||||||||||||||||||||
| Wealth Management | 283 | 296 | 306 | 311 | 305 | (4) | (7) | 885 | 897 | (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue by line of business | $ | 862 | $ | 899 | $ | 964 | $ | 1,020 | $ | 1,032 | (4) | % | (16) | % | $ | 2,725 | $ | 3,022 | (10) | % | ||||||||||||||||||||||||||||||||||||||||||
| Financial ratios: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax operating margin | (57) | % | 23 | % | 22 | % | 27 | % | 34 | % | (3) | % | 31 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted pre-tax operating margin – Non-GAAP (d) | (64) | % | 26 | % | 24 | % | 29 | % | 36 | % | (3) | % | 34 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Selected balance sheet data: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average loans | $ | 14,482 | $ | 14,087 | $ | 13,228 | $ | 12,737 | $ | 12,248 | 3 | % | 18 | % | $ | 13,937 | $ | 11,912 | 17 | % | ||||||||||||||||||||||||||||||||||||||||||
Average assets (e) | $ | 29,996 | $ | 33,668 | $ | 35,629 | $ | 31,306 | $ | 30,195 | (11) | % | (1) | % | $ | 33,077 | $ | 30,870 | 7 | % | ||||||||||||||||||||||||||||||||||||||||||
| Average deposits | $ | 17,225 | $ | 20,802 | $ | 22,501 | $ | 18,374 | $ | 17,270 | (17) | % | — | % | $ | 20,157 | $ | 17,964 | 12 | % | ||||||||||||||||||||||||||||||||||||||||||
(a) On a constant currency basis, investment management and performance fees decreased 8% (Non-GAAP) compared with 3Q21. See "Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 18 for the reconciliation of this Non-GAAP measure. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (b) Other fees primarily include investment services fees. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c) Investment and other revenue and total fee and other revenue are net of income (loss) attributable to noncontrolling interests related to consolidated investment management funds. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(d) Net of distribution and servicing expense. See "Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 18 for the reconciliation of this Non-GAAP measure. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(e) In business segments where average deposits are greater than average loans, average assets include an allocation of investment securities equal to the difference. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| N/M – Not meaningful. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
13
| THE BANK OF NEW YORK MELLON CORPORATION | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| AUM BY PRODUCT TYPE, CHANGES IN AUM AND WEALTH MANAGEMENT CLIENT ASSETS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3Q22 vs. | YTD22 vs. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in billions) | 3Q22 | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q22 | 3Q21 | YTD22 | YTD21 | YTD21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
AUM by product type (a)(b): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity | $ | 125 | $ | 139 | $ | 168 | $ | 187 | $ | 180 | (10) | % | (31) | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed income | 205 | 226 | 248 | 267 | 269 | (9) | (24) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Index | 366 | 387 | 440 | 467 | 436 | (5) | (16) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liability-driven investments | 546 | 641 | 812 | 890 | 843 | (15) | (35) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Multi-asset and alternative investments | 181 | 188 | 215 | 228 | 218 | (4) | (17) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash | 353 | 356 | 383 | 395 | 364 | (1) | (3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total AUM | $ | 1,776 | $ | 1,937 | $ | 2,266 | $ | 2,434 | $ | 2,310 | (8) | % | (23) | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Changes in AUM (a)(b): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Beginning balance of AUM | $ | 1,937 | $ | 2,266 | $ | 2,434 | $ | 2,310 | $ | 2,320 | $ | 2,434 | $ | 2,211 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net inflows (outflows): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-term strategies: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity | (5) | (4) | (4) | (4) | (5) | (13) | (8) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed income | (3) | (1) | (5) | — | 1 | (9) | 17 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liability-driven investments | 30 | 12 | 17 | 1 | 16 | 59 | 35 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Multi-asset and alternative investments | 2 | (5) | (4) | 1 | (2) | (7) | (3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total long-term active strategies inflows (outflows) | 24 | 2 | 4 | (2) | 10 | 30 | 41 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Index | (1) | 12 | (5) | (2) | (3) | 6 | (5) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total long-term strategies inflows (outflows) | 23 | 14 | (1) | (4) | 7 | 36 | 36 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Short-term strategies: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash | (2) | (26) | (11) | 31 | 7 | (39) | 39 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total net inflows (outflows) | 21 | (12) | (12) | 27 | 14 | (3) | 75 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net market impact | (118) | (241) | (130) | 96 | 4 | (489) | 47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net currency impact | (64) | (76) | (26) | 1 | (28) | (166) | (23) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ending balance of AUM | $ | 1,776 | $ | 1,937 | $ | 2,266 | $ | 2,434 | $ | 2,310 | (8) | % | (23) | % | $ | 1,776 | $ | 2,310 | (23) | % | ||||||||||||||||||||||||||||||||||||||||||
Wealth Management client assets (a)(c) | $ | 256 | $ | 264 | $ | 305 | $ | 321 | $ | 307 | (3) | % | (17) | % | ||||||||||||||||||||||||||||||||||||||||||||||||
(a) Sept. 30, 2022 information is preliminary. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) Excludes assets managed outside of the Investment and Wealth Management business segment. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c) Includes AUM and AUC/A in the Wealth Management line of business. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
14
| THE BANK OF NEW YORK MELLON CORPORATION | | |||||||||||||||||||||||||||||||||||||||||||
| OTHER SEGMENT | ||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | 3Q22 | 2Q22 | 1Q22 | 4Q21 | 3Q21 | YTD22 | YTD21 | |||||||||||||||||||||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||||||||||||||||||||||
| Fee revenue | $ | 28 | $ | 13 | $ | 8 | $ | 2 | $ | 12 | $ | 49 | $ | 34 | ||||||||||||||||||||||||||||||
| Investment and other revenue | (5) | 62 | 12 | 19 | 23 | 69 | (4) | |||||||||||||||||||||||||||||||||||||
| Total fee and other revenue | 23 | 75 | 20 | 21 | 35 | 118 | 30 | |||||||||||||||||||||||||||||||||||||
| Net interest (expense) | (47) | (35) | (32) | (38) | (38) | (114) | (121) | |||||||||||||||||||||||||||||||||||||
| Total revenue | (24) | 40 | (12) | (17) | (3) | 4 | (91) | |||||||||||||||||||||||||||||||||||||
| Provision for credit losses | (26) | 30 | 17 | (1) | (3) | 21 | (16) | |||||||||||||||||||||||||||||||||||||
| Noninterest expense | 29 | 63 | 33 | 55 | 16 | 125 | 106 | |||||||||||||||||||||||||||||||||||||
| (Loss) before taxes | $ | (27) | $ | (53) | $ | (62) | $ | (71) | $ | (16) | $ | (142) | $ | (181) | ||||||||||||||||||||||||||||||
| Selected balance sheet data: | ||||||||||||||||||||||||||||||||||||||||||||
| Average loans and leases | $ | 1,145 | $ | 1,172 | $ | 1,319 | $ | 1,337 | $ | 1,528 | $ | 1,210 | $ | 1,680 | ||||||||||||||||||||||||||||||
| Average assets | $ | 44,407 | $ | 42,206 | $ | 42,501 | $ | 45,005 | $ | 46,006 | $ | 43,044 | $ | 47,960 | ||||||||||||||||||||||||||||||
15
| THE BANK OF NEW YORK MELLON CORPORATION | | |||||||||||||||||||||||||||||||||||||||||||||||||
| SECURITIES PORTFOLIO | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in millions) | June 30, 2022 | 3Q22 change in unrealized gain (loss) | Sept. 30, 2022 | Fair value as a % of amortized cost (a) | Unrealized gain (loss) | % Floating rate (b) | Ratings (c) | |||||||||||||||||||||||||||||||||||||||||||
Amortized cost (a) | Fair value | AAA/ AA- | A+/ A- | BBB+/ BBB- | BB+ and lower | Not rated | ||||||||||||||||||||||||||||||||||||||||||||
| Fair value | ||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Treasury | $ | 42,547 | $ | (426) | $ | 41,617 | $ | 40,031 | 96 | % | $ | (1,586) | 56 | % | 100 | % | — | % | — | % | — | % | — | % | ||||||||||||||||||||||||||
| Agency RMBS | 42,241 | (1,839) | 44,081 | 39,035 | 89 | (5,046) | 15 | 100 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Agency commercial MBS | 12,257 | (294) | 12,840 | 12,005 | 93 | (835) | 41 | 100 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Sovereign debt/sovereign guaranteed | 12,577 | (259) | 12,280 | 11,697 | 95 | (583) | 20 | 88 | 5 | 6 | 1 | — | ||||||||||||||||||||||||||||||||||||||
| Supranational | 7,949 | (112) | 8,429 | 8,135 | 97 | (294) | 62 | 100 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
| CLOs | 6,046 | (43) | 6,408 | 6,181 | 96 | (227) | 100 | 99 | — | — | — | 1 | ||||||||||||||||||||||||||||||||||||||
U.S. government agencies | 5,671 | (186) | 6,386 | 5,807 | 91 | (579) | 35 | 100 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Foreign covered bonds | 5,831 | (74) | 5,546 | 5,293 | 95 | (253) | 54 | 100 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Non-agency commercial MBS | 3,045 | (69) | 3,270 | 2,976 | 91 | (294) | 52 | 100 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Foreign government agencies | 2,599 | (20) | 2,509 | 2,404 | 96 | (105) | 29 | 92 | 8 | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Non-agency RMBS | 2,346 | (62) | 2,306 | 2,143 | 93 | (163) | 50 | 85 | 3 | — | 8 | 4 | ||||||||||||||||||||||||||||||||||||||
State and political subdivisions | 2,049 | (59) | 2,200 | 1,914 | 87 | (286) | 25 | 90 | 9 | — | — | 1 | ||||||||||||||||||||||||||||||||||||||
Other asset-backed securities | 1,668 | (26) | 1,594 | 1,465 | 92 | (129) | 19 | 100 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Corporate bonds | 1,342 | (26) | 1,409 | 1,270 | 90 | (139) | 47 | 17 | 68 | 15 | — | — | ||||||||||||||||||||||||||||||||||||||
| Other | 1 | — | 1 | 1 | 100 | — | — | — | — | — | — | 100 | ||||||||||||||||||||||||||||||||||||||
| Total securities | $ | 148,169 | (d) | $ | (3,495) | $ | 150,876 | $ | 140,357 | (d)(e) | 93 | % | $ | (10,519) | (d)(f) | 40 | % | 98 | % | 1 | % | 1 | % | — | % | — | % | |||||||||||||||||||||||
| (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 net unrealized gains on derivatives hedging securities available-for-sale (including terminated hedges) of $1,764 million at June 30, 2022 and $2,948 million at Sept. 30, 2022. | ||||||||||||||||||||||||||||||||||||||||||||||||||
(e) The fair value of available-for-sale securities totaled $89,872 million at Sept. 30, 2022, net of hedges, or 64% of the fair value of the securities portfolio, net of hedges. The fair value of the held-to-maturity securities totaled $50,485 million at Sept. 30, 2022, or 36% of the fair value of the securities portfolio, net of hedges. | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (f) At Sept. 30, 2022, net unrealized losses of $3,747 million related to available-for-sale securities, net of hedges, and $6,772 million related to held-to-maturity securities. | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Note: The amortizable purchase premium (net of discount) relating to securities was $1,387 million at Sept. 30, 2022 and the amortization of that net purchase premium was $81 million in 3Q22. | ||||||||||||||||||||||||||||||||||||||||||||||||||
16
| THE BANK OF NEW YORK MELLON CORPORATION | | |||||||||||||||||||||||||||||||
| ALLOWANCE FOR CREDIT LOSSES AND NONPERFORMING ASSETS | ||||||||||||||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||||||
| (dollars in millions) | Sept. 30 | June 30 | March 31 | Dec. 31 | Sept. 30 | |||||||||||||||||||||||||||
| Allowance for credit losses – beginning of period: | ||||||||||||||||||||||||||||||||
| Allowance for loan losses | $ | 181 | $ | 171 | $ | 196 | $ | 233 | $ | 269 | ||||||||||||||||||||||
| Allowance for lending-related commitments | 62 | 53 | 45 | 40 | 50 | |||||||||||||||||||||||||||
Allowance for other financial instruments (a) | 67 | 39 | 19 | 18 | 16 | |||||||||||||||||||||||||||
| Allowance for credit losses – beginning of period | $ | 310 | $ | 263 | $ | 260 | $ | 291 | $ | 335 | ||||||||||||||||||||||
| Net (charge-offs) recoveries: | ||||||||||||||||||||||||||||||||
| Charge-offs | (1) | (1) | — | (16) | — | |||||||||||||||||||||||||||
| Recoveries | 1 | 1 | 1 | 2 | 1 | |||||||||||||||||||||||||||
| Total net (charge-offs) recoveries | — | — | 1 | (14) | 1 | |||||||||||||||||||||||||||
Provision for credit losses (b) | (30) | 47 | 2 | (17) | (45) | |||||||||||||||||||||||||||
| Allowance for credit losses – end of period | $ | 280 | $ | 310 | $ | 263 | $ | 260 | $ | 291 | ||||||||||||||||||||||
| Allowance for credit losses – end of period: | ||||||||||||||||||||||||||||||||
| Allowance for loan losses | $ | 164 | $ | 181 | $ | 171 | $ | 196 | $ | 233 | ||||||||||||||||||||||
| Allowance for lending-related commitments | 72 | 62 | 53 | 45 | 40 | |||||||||||||||||||||||||||
Allowance for other financial instruments (a) | 44 | 67 | 39 | 19 | 18 | |||||||||||||||||||||||||||
| Allowance for credit losses – end of period | $ | 280 | $ | 310 | $ | 263 | $ | 260 | $ | 291 | ||||||||||||||||||||||
| Allowance for loan losses as a percentage of total loans | 0.23 | % | 0.26 | % | 0.25 | % | 0.29 | % | 0.36 | % | ||||||||||||||||||||||
| Nonperforming assets | $ | 107 | $ | 114 | $ | 119 | $ | 120 | $ | 108 | ||||||||||||||||||||||
(a) Includes allowance for credit losses on federal funds sold and securities purchased under resale agreements, available-for-sale securities, held-to-maturity securities, accounts receivable, cash and due from banks and interest-bearing deposits with banks. | ||||||||||||||||||||||||||||||||
(b) Includes all other instruments within the scope of ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments. | ||||||||||||||||||||||||||||||||
17
| THE BANK OF NEW YORK MELLON CORPORATION | | |||||||||||||||||||||||||||||||||||||||||||
| 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 segment, net of distribution and servicing expense that was passed to third parties who distribute or service our managed funds. We believe that this measure is useful when evaluating the performance of the Investment and Wealth Management business segment relative to industry competitors. | ||||||||||||||||||||||||||||||||||||||||||||
| 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: | ||||||||||||||||||||||||||||||||||||||||||||
| Return on common and tangible common equity ratios are annualized. | ||||||||||||||||||||||||||||||||||||||||||||
| Return on common equity and tangible common equity reconciliation | ||||||||||||||||||||||||||||||||||||||||||||
| (dollars in millions) | 3Q22 | 2Q22 | 1Q22 | 4Q21 | 3Q21 | YTD22 | YTD21 | |||||||||||||||||||||||||||||||||||||
| Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP | $ | 319 | $ | 835 | $ | 699 | $ | 822 | $ | 881 | $ | 1,853 | $ | 2,730 | ||||||||||||||||||||||||||||||
| Add: Amortization of intangible assets | 17 | 17 | 17 | 19 | 19 | 51 | 63 | |||||||||||||||||||||||||||||||||||||
| Less: Tax impact of amortization of intangible assets | 4 | 4 | 4 | 5 | 4 | 12 | 15 | |||||||||||||||||||||||||||||||||||||
| Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets – Non-GAAP | $ | 332 | $ | 848 | $ | 712 | $ | 836 | $ | 896 | $ | 1,892 | $ | 2,778 | ||||||||||||||||||||||||||||||
| Average common shareholders’ equity | $ | 35,942 | $ | 36,199 | $ | 37,363 | $ | 37,941 | $ | 39,755 | $ | 36,483 | $ | 40,286 | ||||||||||||||||||||||||||||||
| Less: Average goodwill | 17,189 | 17,347 | 17,490 | 17,481 | 17,474 | 17,341 | 17,495 | |||||||||||||||||||||||||||||||||||||
| Average intangible assets | 2,922 | 2,949 | 2,979 | 2,988 | 2,953 | 2,950 | 2,976 | |||||||||||||||||||||||||||||||||||||
| Add: Deferred tax liability – tax deductible goodwill | 1,175 | 1,187 | 1,184 | 1,178 | 1,173 | 1,175 | 1,173 | |||||||||||||||||||||||||||||||||||||
| Deferred tax liability – intangible assets | 660 | 668 | 673 | 676 | 673 | 660 | 673 | |||||||||||||||||||||||||||||||||||||
| Average tangible common shareholders’ equity – Non-GAAP | $ | 17,666 | $ | 17,758 | $ | 18,751 | $ | 19,326 | $ | 21,174 | $ | 18,027 | $ | 21,661 | ||||||||||||||||||||||||||||||
| Return on common equity – GAAP | 3.5 | % | 9.3 | % | 7.6 | % | 8.6 | % | 8.8 | % | 6.8 | % | 9.1 | % | ||||||||||||||||||||||||||||||
| Return on tangible common equity – Non-GAAP | 7.5 | % | 19.2 | % | 15.4 | % | 17.2 | % | 16.8 | % | 14.0 | % | 17.1 | % | ||||||||||||||||||||||||||||||
18
| THE BANK OF NEW YORK MELLON CORPORATION | | |||||||||||||||||||||||||||||||
| EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||||||||||||||
| Book value and tangible book value per common share reconciliation | 2022 | 2021 | ||||||||||||||||||||||||||||||
| (dollars in millions, except common shares and unless otherwise noted) | Sept. 30 | June 30 | March 31 | Dec. 31 | Sept. 30 | |||||||||||||||||||||||||||
| BNY Mellon shareholders’ equity at period end – GAAP | $ | 39,737 | $ | 40,984 | $ | 41,799 | $ | 43,034 | $ | 43,601 | ||||||||||||||||||||||
| Less: Preferred stock | 4,838 | 4,838 | 4,838 | 4,838 | 4,541 | |||||||||||||||||||||||||||
| BNY Mellon common shareholders’ equity at period end – GAAP | 34,899 | 36,146 | 36,961 | 38,196 | 39,060 | |||||||||||||||||||||||||||
| Less: Goodwill | 16,412 | 17,271 | 17,462 | 17,512 | 17,420 | |||||||||||||||||||||||||||
| Intangible assets | 2,902 | 2,934 | 2,968 | 2,991 | 2,941 | |||||||||||||||||||||||||||
| Add: Deferred tax liability – tax deductible goodwill | 1,175 | 1,187 | 1,184 | 1,178 | 1,173 | |||||||||||||||||||||||||||
| Deferred tax liability – intangible assets | 660 | 668 | 673 | 676 | 673 | |||||||||||||||||||||||||||
| BNY Mellon tangible common shareholders’ equity at period end – Non-GAAP | $ | 17,420 | $ | 17,796 | $ | 18,388 | $ | 19,547 | $ | 20,545 | ||||||||||||||||||||||
Period-end common shares outstanding (in thousands) | 808,280 | 808,103 | 807,798 | 804,145 | 825,821 | |||||||||||||||||||||||||||
| Book value per common share – GAAP | $ | 43.18 | $ | 44.73 | $ | 45.76 | $ | 47.50 | $ | 47.30 | ||||||||||||||||||||||
| Tangible book value per common share – Non-GAAP | $ | 21.55 | $ | 22.02 | $ | 22.76 | $ | 24.31 | $ | 24.88 | ||||||||||||||||||||||
| Net interest margin reconciliation | ||||||||||||||||||||||||||||||||
| (dollars in millions) | 3Q22 | 2Q22 | 1Q22 | 4Q21 | 3Q21 | |||||||||||||||||||||||||||
| Net interest revenue – GAAP | $ | 926 | $ | 824 | $ | 698 | $ | 677 | $ | 641 | ||||||||||||||||||||||
| Add: Tax equivalent adjustment | 3 | 3 | 3 | 4 | 3 | |||||||||||||||||||||||||||
| Net interest revenue (FTE) – Non-GAAP | $ | 929 | $ | 827 | $ | 701 | $ | 681 | $ | 644 | ||||||||||||||||||||||
| Average interest-earning assets | $ | 352,062 | $ | 370,782 | $ | 373,186 | $ | 381,682 | $ | 381,065 | ||||||||||||||||||||||
Net interest margin – GAAP (a) | 1.05 | % | 0.89 | % | 0.75 | % | 0.71 | % | 0.67 | % | ||||||||||||||||||||||
Net interest margin (FTE) – Non-GAAP (a) | 1.05 | % | 0.89 | % | 0.76 | % | 0.71 | % | 0.68 | % | ||||||||||||||||||||||
| (a) Net interest margin is annualized. | ||||||||||||||||||||||||||||||||
19
| THE BANK OF NEW YORK MELLON CORPORATION | | |||||||||||||||||||||||||||||||||||||||||||
| EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax operating margin reconciliation - Investment and Wealth Management business segment | ||||||||||||||||||||||||||||||||||||||||||||
| (dollars in millions) | 3Q22 | 2Q22 | 1Q22 | 4Q21 | 3Q21 | YTD22 | YTD21 | |||||||||||||||||||||||||||||||||||||
| Income before income taxes – GAAP | $ | (497) | $ | 208 | $ | 212 | $ | 278 | $ | 348 | $ | (77) | $ | 952 | ||||||||||||||||||||||||||||||
| Total revenue – GAAP | $ | 862 | $ | 899 | $ | 964 | $ | 1,020 | $ | 1,032 | $ | 2,725 | $ | 3,022 | ||||||||||||||||||||||||||||||
| Less: Distribution and servicing expense | 88 | 91 | 79 | 75 | 76 | 258 | 225 | |||||||||||||||||||||||||||||||||||||
| Adjusted total revenue, net of distribution and servicing expense – Non-GAAP | $ | 774 | $ | 808 | $ | 885 | $ | 945 | $ | 956 | $ | 2,467 | $ | 2,797 | ||||||||||||||||||||||||||||||
Pre-tax operating margin – GAAP (a) | (57) | % | 23 | % | 22 | % | 27 | % | 34 | % | (3) | % | 31 | % | ||||||||||||||||||||||||||||||
Adjusted pre-tax operating margin, net of distribution and servicing expense – Non-GAAP (a) | (64) | % | 26 | % | 24 | % | 29 | % | 36 | % | (3) | % | 34 | % | ||||||||||||||||||||||||||||||
| (a) Income before income taxes divided by total revenue. | ||||||||||||||||||||||||||||||||||||||||||||
| Constant currency reconciliations | 3Q22 vs. | |||||||||||||||||||||||||||||||||||||||||||
| (dollars in millions) | 3Q22 | 3Q21 | 3Q21 | |||||||||||||||||||||||||||||||||||||||||
| Consolidated: | ||||||||||||||||||||||||||||||||||||||||||||
| Investment management and performance fees – GAAP | $ | 800 | $ | 913 | (12) | % | ||||||||||||||||||||||||||||||||||||||
| Impact of changes in foreign currency exchange rates | — | (48) | ||||||||||||||||||||||||||||||||||||||||||
| Adjusted investment management and performance fees – Non-GAAP | $ | 800 | $ | 865 | (8) | % | ||||||||||||||||||||||||||||||||||||||
| Investment and Wealth Management business segment: | ||||||||||||||||||||||||||||||||||||||||||||
| Investment management and performance fees – GAAP | $ | 798 | $ | 914 | (13) | % | ||||||||||||||||||||||||||||||||||||||
| Impact of changes in foreign currency exchange rates | — | (48) | ||||||||||||||||||||||||||||||||||||||||||
| Adjusted investment management and performance fees – Non-GAAP | $ | 798 | $ | 866 | (8) | % | ||||||||||||||||||||||||||||||||||||||
20
3Q22 Financial Highlights O C T O B E R 1 7 , 2 0 2 2
2 3Q22 Financial Highlights Revenue $4,279mm $0.39 Pre-tax income $630mm Pre-tax margin Returns Capital ratios ROE: 3.5% ROTCE: 7.5% T1L: 5.4% CET1: 10.0% • Revenue up 6% YoY, up 5%(a) excluding the impact of notable items – Fee revenue down 1% YoY – Net interest revenue up 44% YoY • Expense up 26% YoY, up 4%(a) excluding the impact of notable items – Recorded a $680mm non-cash goodwill impairment charge(c) • Provision for credit losses was a benefit of $30mm compared to a provision benefit of $45mm in 3Q21 • Average loans up 11% YoY and down 1% QoQ • Average deposits down 10% YoY and down 7% QoQ • Returned $0.3bn to common shareholders in dividends (a) Represents a non-GAAP measure. See pages 14 and 15 in the Appendix for the corresponding reconciliation of the non-GAAP measures of revenue, revenue growth, expense growth, pre-tax income, earnings per share, pre-tax margin, ROE and ROTCE excluding notable items. (b) Represents a non-GAAP measure. See page 17 in the Appendix for the corresponding reconciliation of the non-GAAP measure of ROTCE. (c) Impairment of goodwill associated with the Investment Management reporting unit, which was driven by lower market values and a higher discount rate. This goodwill impairment represents a non-cash charge and did not affect BNY Mellon’s liquidity position, tangible common equity or regulatory capital ratios. $1.21 EPS (a) (b) Reported Excluding notable items $4,242mm Reported ReportedReported Reported $1,307mm 31%15% (a) (a) (a) (a) (a) 10.9% 22.4% Excluding notable items Excluding notable items Excluding notable items Excluding notable items (c) (c)
3 3Q22 vs. $mm, except per share data or unless otherwise noted 3Q22 2Q22 3Q21 2Q22 3Q21 Fee revenue $3,236 $3,339 $3,265 (3)% (1)% Investment and other revenue 117 91 129 N/M N/M Net interest revenue 926 824 641 12% 44% Total revenue $4,279 $4,254 $4,035 1% 6% Provision for credit losses (30) 47 (45) N/M N/M Noninterest expense 3,679 3,112 2,918 18% 26% Income before income taxes $630 $1,095 $1,162 (42)% (46)% Net income applicable to common shareholders $319 $835 $881 (62)% (64)% EPS $0.39 $1.03 $1.04 (62)% (63)% Avg. common shares and equivalents outstanding (mm) – diluted 815 814 849 — (4)% Operating leverage(a) N/M N/M Pre-tax margin 15% 26% 29% ROE 3.5% 9.3% 8.8% ROTCE(b) 7.5% 19.2% 16.8% Increase / (decrease) Revenue Expense EPS 3Q22 37 714 $(0.81) 2Q22 — 103 $(0.12) 3Q21 9 73 $(0.05) (a) Note: See page 12 in the Appendix for corresponding footnotes. (b) Represents a non-GAAP measure. See page 17 in the Appendix for the corresponding reconciliation of the non-GAAP measure of ROTCE. (c) Represents a non-GAAP measure. See pages 14 and 15 in the Appendix for the corresponding reconciliation of the non-GAAP measures of expense growth, earnings per share, operating leverage, pre-tax margin, ROE and ROTCE excluding notable items. N/M – not meaningful. 3Q22 Financial Results Notable items impacting the quarter Impact of goodwill impairment, a disposal gain, severance expense and litigation reserves Impact of higher litigation reserves Impact of litigation reserves, gains on disposals and severance expense Down 1%(c) excluding notable items Up 4%(c) excluding notable items Up 5%(c) excluding notable items Up 11%(c) excluding notable items +115 bps(c) excluding notable items Excluding notable items 31%(c) 10.9%(c) 22.4%(c)
4 3Q22 2Q22 3Q21 Consolidated regulatory capital ratios:(a) Tier 1 leverage ratio 5.4% 5.2% 5.7% Supplementary leverage ratio ("SLR") 6.3 6.2 7.0 Common Equity Tier 1 ratio – Advanced Approaches 10.1 10.0 11.8 Common Equity Tier 1 ratio – Standardized Approach 10.0 10.1 11.7 Consolidated regulatory liquidity ratios: Liquidity coverage ratio ("LCR") 116% 111% 111% Cash dividends per common share $0.37 $0.34 $0.34 Common stock dividends ($mm) $303 $279 $296 Common stock repurchases ($mm) 2 3 2,001 Book value per common share $43.18 $44.73 $47.30 Tangible book value per common share(b) 21.55 22.02 24.88 Common shares outstanding (mm) 808 808 826 Capital and Liquidity Note: See page 12 in the Appendix for corresponding footnotes.
5 3Q22 vs. $bn, avg. 3Q22 2Q22 3Q21 Deposits: Noninterest-bearing $85 (8)% (1)% Interest-bearing 204 (7)% (13)% Total deposits $288 (7)% (10)% Interest-earning assets: Cash and reverse repo 131 (10)% (17)% Loans 68 (1)% 11% Investment securities: HQLA 121 (2)% (4)% Non-HQLA 27 (3)% (9)% Total investment securities $148 (2)% (5)% Total interest-earning assets $352 (5)% (8)% Net Interest Revenue and Balance Sheet Trends N e t I n t e r e s t R e v e n u e ( $ m m ) +12% +44% • Avg. deposits of $288bn down 7% QoQ • Avg. interest-earning assets of $352bn down 5% QoQ • Net interest revenue of $926mm up 12% QoQ, primarily reflects higher interest rates on interest-earning assets, partially offset by higher funding expense 641 824 926 3Q21 2Q22 3Q22
6 3Q22 vs. $mm, unless otherwise noted 3Q22 2Q22 3Q21 Staff $1,673 3% 6% Software and equipment 421 4% 13% Professional, legal and other purchased services 363 (4)% — Sub-custodian and clearing 124 (5)% (4)% Net occupancy 124 (1)% 3% Distribution and servicing 88 (2)% 16% Bank assessment charges 35 (5)% 3% Business development 34 (21)% 55% Goodwill impairment 680 N/M N/M Amortization of intangible assets 17 — (11)% Other 120 (54)% (40)% Total noninterest expense $3,679 18% 26% Noninterest Expense • Noninterest expense up 26% YoY, primarily reflecting goodwill impairment in the Investment Management reporting unit – Excluding notable items, noninterest expense up 4%(a), primarily reflecting higher investments in growth, infrastructure and efficiency initiatives and higher revenue-related expenses, as well as the impact of inflation, partially offset by the favorable impact of a stronger U.S. dollar – Distribution and servicing expense up 16%, driven by higher distribution costs associated with money market funds – Business development expense increase driven by normalization of travel and entertainment – Other expense decrease largely driven by higher litigation reserves in 3Q21 • Noninterest expense up 18% QoQ, excluding notable items, noninterest expense down 1%(a) (a) Represents a non-GAAP measure. See page 14 in the Appendix for the corresponding reconciliation of the non-GAAP measures of expense growth excluding notable items. Up 4%(a) excluding notable items Down 1%(a) excluding notable items
7 3Q22 vs. $mm, unless otherwise noted 3Q22 2Q22 3Q21 Total revenue by line of business: Asset Servicing $1,596 4% 11% Issuer Services 478 1% 20% Total revenue $2,074 3% 13% Provision for credit losses (6) N/M N/M Noninterest expense 1,557 (6)% 1% Income before income taxes $523 55% 67% Fee revenue 1,425 (6)% 1% Net interest revenue 538 18% 54% Foreign exchange revenue 132 (15)% 6% Securities lending revenue(a) 48 7% 7% Financial ratios, balance sheet data and metrics: Pre-tax margin 25% 836 bps 808 bps AUC/A ($trn, period end)(b)(c) $30.0 (3)% (11)% Deposits ($bn, avg.) $176 (8)% (11)% Market value of securities on loan ($bn, period end)(d) $435 (1)% (2)% • Total revenue of $2,074mm up 13% YoY – Asset Servicing up 11%% YoY, primarily reflecting higher net interest revenue and lower money market fee waivers, partially offset by lower market values – Issuer Services up 20% YoY, primarily reflecting higher net interest revenue and lower money market fee waivers, partially offset by the impact of lost business in the prior year in Corporate Trust and lower Depositary Receipts revenue • Noninterest expense of $1,557mm up 1% YoY, primarily reflecting higher investments in growth, infrastructure and efficiency initiatives, as well as the impact of inflation, partially offset by lower litigation reserves and the favorable impact of a stronger U.S. dollar • Income before income taxes of $523mm up 67% YoY Securities Services Note: See page 12 in the Appendix for the corresponding footnotes. N/M – not meaningful.
8 3Q22 vs. $mm, unless otherwise noted 3Q22 2Q22 3Q21 Total revenue by line of business: Pershing $658 3% 16% Treasury Services 390 5% 20% Clearance and Collateral Management 319 5% 14% Total revenue $1,367 4% 17% Provision for credit losses (1) N/M N/M Noninterest expense 737 5% 10% Income before income taxes $631 4% 21% Fee revenue 975 1% 11% Net interest revenue 378 11% 34% Financial ratios, balance sheet data and metrics: Pre-tax margin 46% (8) bps 182 bps AUC/A ($trn, end of period)(a)(b) $12.0 2% 7% Deposits ($bn, avg.) $91 (4)% (11)% Pershing: Net new assets (U.S. platform) ($bn)(c) $45 N/M N/M Avg. active clearing accounts ('000) 7,466 — 3% Treasury Services: Avg. daily U.S. dollar payment volumes ('000) 234 (1)% 1% Clearance and Collateral Management: Avg. tri-party collateral management balances ($bn) $5,457 5% 21% Market and Wealth Services • Total revenue of $1,367mm up 17% YoY – Pershing up 16% YoY, primarily reflecting lower money market fee waivers and higher client activity, partially offset by the impact of prior year lost business – Treasury Services up 20% YoY, primarily reflecting higher net interest revenue and lower money market fee waivers – Clearance and Collateral Management up 14% YoY, primarily reflecting higher net interest revenue and clearance volumes • Noninterest expense of $737mm up 10% YoY, primarily reflecting higher investments in growth, infrastructure and efficiency initiatives, as well as the impact of inflation, partially offset by the favorable impact of a stronger U.S. dollar • Income before income taxes of $631mm up 21% YoY Note: See page 12 in the Appendix for the corresponding footnotes. N/M – not meaningful.
9 • Total revenue of $862mm down 16% YoY – Investment Management down 20% YoY, primarily reflecting lower market values, the unfavorable impact of a stronger U.S. dollar, an unfavorable change in the mix of AUM, lower equity income and strategic equity investment gains recorded in 3Q21, partially offset by lower money market fee waivers – Wealth Management revenue down 7% YoY, primarily reflecting lower market values, partially offset by higher net interest revenue • Noninterest expense up 96% YoY, primarily reflecting goodwill impairment in the Investment Management reporting unit. Excluding notable items, noninterest expense down 2%(a) YoY, reflecting the favorable impact of a stronger U.S. dollar, partially offset by investments in growth initiatives and higher distribution and servicing expenses • Income before income taxes of $(497)mm down 243% YoY; excluding notable items down 48%(a) YoY • AUM of $1.8trn down 23% YoY, driven by lower market values and the unfavorable impact of a stronger U.S. dollar, partially offset by client inflows • Wealth Management client assets of $256bn down 17% YoY primarily driven by lower markets 3Q22 vs. $mm, unless otherwise noted 3Q22 2Q22 3Q21 Total revenue by line of business: Investment Management $579 (4)% (20)% Wealth Management 283 (4)% (7)% Total revenue $862 (4)% (16)% Provision for credit losses 3 N/M N/M Noninterest expense 1,356 96% 96% Income before income taxes $(497) (339)% (243)% Fee revenue 808 (5)% (16)% Net interest revenue 57 (8)% 21% Financial ratios, balance sheet data and metrics: Pre-tax margin (57)% (8,046) bps (9,113) bps Adjusted pre-tax operating margin – Non-GAAP(b) (64)% (8,957) bps (10,035) bps AUM ($bn, end of period)(c) $1,776 (8)% (23)% Loans ($bn, avg.) $14 3% 18% Deposits ($bn, avg.) 17 (17)% — Wealth Management: Client assets ($bn, end of period)(d) $256 (3)% (17)% Investment and Wealth Management (a) Represents a non-GAAP measure. See page 16 in the Appendix for the corresponding reconciliation of the non-GAAP measures of expense growth, pre-tax income growth, pre-tax margin and adjusted pre-tax operating margin excluding notable items. (b) Adjusted pre-tax operating margin is net of distribution and servicing expense. Represents a non-GAAP measure. See page 16 in the Appendix for corresponding reconciliation of the non-GAAP measure of adjusted pre-tax operating margin. Note: See page 12 in the Appendix for the corresponding footnotes (c) and (d). N/M – not meaningful. 21%(a) excluding notable items 24%(a) excluding notable items
10 $mm, unless otherwise noted 3Q22 2Q22 3Q21 Fee revenue $28 $13 $12 Investment and other revenue (5) 62 23 Net interest (expense) (47) (35) (38) Total revenue $(24) $40 $(3) Provision for credit losses (26) 30 (3) Noninterest expense 29 63 16 (Loss) before income taxes $(27) $(53) $(16) • Total revenue includes corporate treasury and other investment activity, including hedging activity which has an offsetting impact between fee and other revenue and net interest expense – YoY and QoQ decreases in total revenue primarily reflects strategic equity investment gains in 2Q22 and 3Q21 • Provision for credit losses was a benefit of $26mm including reserve releases related to cash balances with exposure to Russia • Noninterest expense increased YoY and decreased QoQ primarily driven by staff expense Other Segment
Appendix
12 Footnotes Page 3 – 3Q22 Financial Results (a) Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense. Page 4 – Capital and Liquidity (a) Regulatory capital ratios for September 30, 2022 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 September 30, 2022 was the Standardized Approach for CET1 and Tier 1 capital ratios and the Advanced Approaches for the Total capital ratio, for June 30, 2022 was the Advanced Approaches, and for September 30, 2021 was the Standardized Approach for the CET1 and Tier 1 capital ratios and the Advanced Approaches for the Total capital ratio. (b) Tangible book value per common share — Non-GAAP excludes goodwill and intangible assets, net of deferred tax liabilities. See page 17 for corresponding reconciliation of this non-GAAP measure. Page 7 – Securities Services (a) Included in investment services fees in the Asset Servicing business. (b) September 30, 2022 information is preliminary. (c) Consists of AUC/A primarily from the Asset Servicing business and, to a lesser extent, the Issuer Services business. Includes the AUC/A of CIBC Mellon Global Securities Services Company (“CIBC Mellon”), a joint venture with the Canadian Imperial Bank of Commerce, of $1.4trn at September 30, 2022, $1.5trn at June 30, 2022 and $1.7trn at September 30, 2021. (d) Represents the total amount of securities on loan in our agency securities lending program. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $75bn at September 30, 2022, $70bn at June 30, 2022 and $68bn at September 30, 2021. Page 8 – Market and Wealth Services (a) September 30, 2022 information is preliminary. (b) Consists of AUC/A from the Clearance and Collateral Management and Pershing lines of business. (c) Net new assets represent net flows of assets (e.g., net cash deposits and net securities transfers, including dividends and interest) in customer accounts in Pershing LLC, a U.S. broker-dealer. Page 9 – Investment and Wealth Management (c) September 30, 2022 information is preliminary. Excludes assets managed outside of the Investment and Wealth Management business segment. (d) September 30, 2022 information is preliminary. Includes AUM and AUC/A in the Wealth Management business.
13 3Q22 2Q22 1Q22 4Q21 3Q21 Investment services fees (see table below) $(1) $(26) $(126) $(148) $(142) Investment management and performance fees (21) (40) (85) (116) (109) Distribution and servicing fees — (2) (11) (14) (11) Total fee revenue (22) (68) (222) (278) (262) Less: Distribution and servicing expense — 2 23 35 29 Net impact of money market fee waivers $(22) $(66) $(199) $(243) $(233) Impact to investment services fees by line of business(a) Asset Servicing $— $— $(19) $(31) $(29) Issuer Services — (1) (11) (18) (17) Pershing (1) (25) (90) (89) (86) Treasury Services — — (6) (10) (10) Total impact to investment services fees by line of business $(1) $(26) $(126) $(148) $(142) Impact to revenue by line of business(a) Asset Servicing $— $(1) $(28) $(50) $(47) Issuer Services (1) (1) (14) (24) (22) Pershing (1) (29) (107) (106) (102) Treasury Services — — (8) (14) (13) Investment Management (20) (37) (63) (81) (76) Wealth Management — — (2) (3) (2) Total impact to revenue by line of business $(22) $(68) $(222) $(278) $(262) Money Market Fee Waivers Impact (a) The line of business revenue for management reporting purposes reflects the impact of revenue transferred between the businesses.
14 3Q22 Results – GAAP Notable items(a) Results – Non-GAAP ex. notable items Total revenue $ 4,279 37 $ 4,242 Provision for credit losses (30) — (30) Noninterest expense 3,679 714 2,965 Income before income taxes $ 630 $ (677) $ 1,307 Pre-tax operating margin(d) 15 % 31 % 3Q22 vs. 3Q22 2Q22 3Q21 2Q22 3Q21 Total Revenue — GAAP $ 4,279 $ 4,254 $ 4,035 1 % 6 % Notable items(a) 37 — 9 Total revenue, ex-notables — Non-GAAP $ 4,242 $ 4,254 $ 4,026 — % 5 % Noninterest expense — GAAP $ 3,679 $ 3,112 $ 2,918 18 % 26 % Notable items(a) 714 103 73 Noninterest expense, ex-notables — Non-GAAP $ 2,965 $ 3,009 $ 2,845 (1) % 4 % Income before income taxes — GAAP $ 630 $ 1,095 $ 1,162 Notable items(a) (677) (103) (64) Income before income taxes, ex. notables — Non-GAAP $ 1,307 $ 1,198 $ 1,226 Net income applicable to common shareholders — GAAP $ 319 $ 835 $ 881 (62) % (64) % Notable items(a) (664) (100) (45) Net income applicable to common shareholders, ex. notables — Non-GAAP $ 983 $ 935 $ 926 5 % 6 % Diluted earnings per share — GAAP $ 0.39 $ 1.03 $ 1.04 (62) % (63) % Notable items(a) (0.81) (0.12) (0.05) Diluted earnings per share, ex. notables — Non-GAAP $ 1.21 $ 1.15 $ 1.09 5 % 11 % Operating leverage — GAAP(c) (1,763) bps (2,003) bps Operating leverage, ex. notables — Non-GAAP(a)(c) 118 bps 115 bps (a) Notable items in 3Q22 include goodwill impairment, a disposal gain, severance expense and litigation reserves. Notable items in 2Q22 include litigation reserves. Notable items in 3Q21 include litigation reserves, gains on disposals and severance expense. (b) Does not foot due to rounding. (c) Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense. (d) Income before income taxes divided by total revenue. Reconciliation of Non-GAAP measures – Impact of Notable Items Pre-tax Operating Margin Reconciliation – Impact of Notable Items (b)
15 3Q22 Results Notable items(a) Non-GAAP ex. notable items Net income applicable to common shareholders of The Bank of New York Mellon Corporation — GAAP $319 $ (664) $983 Add: Amortization of intangible assets 17 — 17 Less: Tax impact of amortization of intangible assets 4 — 4 Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets — Non-GAAP $332 $ (664) $996 Average common shareholders’ equity $35,942 — $35,942 Less: Average goodwill 17,189 — $17,189 Average intangible assets 2,922 — $2,922 Add: Deferred tax liability — tax deductible goodwill 1,175 — $1,175 Deferred tax liability — intangible assets 660 — $660 Average tangible common shareholders’ equity — Non-GAAP $17,666 — $17,666 Return on common equity — GAAP 3.5 % 10.9 % Return on tangible common equity (annualized) — Non-GAAP 7.5 % 22.4 % Return on Common Equity and Tangible Common Equity Reconciliation – Impact of Notable Items (a) Notable items in 3Q22 include goodwill impairment, a disposal gain, severance expense and litigation reserves. 3Q22 Results – GAAP Notable items(a) Results – Non-GAAP ex. notable items Provision for income taxes $ 242 $ (13) $ 255 Income before income taxes — GAAP $ 630 $ (677) $ 1,307 Effective tax rate — GAAP 38.4 % 19.5 % Tax Rate Reconciliation – Impact of Notable Items
16 (a) Income before income taxes divided by total revenue. (b) Notable items in 3Q22 include goodwill impairment and severance expense. Notable items in 3Q21 include severance expense. 3Q22 2Q22 3Q21 Income before income taxes — GAAP $(497) $208 $348 Total revenue — GAAP $862 $899 $1,032 Less: Distribution and servicing expense 88 91 76 Adjusted total revenue, net of distribution and servicing expense — Non-GAAP $774 $808 $956 Pre-tax operating margin — GAAP(a) (57%) 23% 34% Adjusted pre-tax operating margin, net of distribution and servicing expense — Non-GAAP(a) (64%) 26% 36% Pre-tax Operating Margin Reconciliation – Investment and Wealth Management Business Investment and Wealth Management Segment Reconciliation of Non-GAAP measures – Impact of Notable Items 3Q22 Results Notable items(b) Non-GAAP ex. notable items Income before income taxes — GAAP $ (497) 679 $ 182 Total revenue — GAAP $ 862 — $ 862 Less: Distribution and servicing expense 88 — 88 Adjusted total revenue, net of distribution and servicing expense — Non-GAAP $ 774 — $ 774 Pre-tax operating margin — GAAP(a) (57) % 21 % Adjusted pre-tax operating margin, net of distribution and servicing expense — Non-GAAP(b) (64) % 24 % 3Q22 vs 3Q22 3Q21 3Q21 Investment and Wealth Management segment, noninterest expense — GAAP $ 1,356 $ 691 96 % Notable items(b) 679 1 Investment and Wealth Management segment, noninterest expense, ex-notables — Non-GAAP $ 677 $ 690 (2) %
17 2022 2021 Sept. 30 Jun. 30 Sept. 30 BNY Mellon shareholders’ equity at period end — GAAP $ 39,737 $ 40,984 $ 43,601 Less: Preferred stock 4,838 4,838 4,541 BNY Mellon common shareholders’ equity at period end — GAAP 34,899 36,146 39,060 Less: Goodwill 16,412 17,271 17,420 Intangible assets 2,902 2,934 2,941 Add: Deferred tax liability — tax deductible goodwill 1,175 1,187 1,173 Deferred tax liability — intangible assets 660 668 673 BNY Mellon tangible common shareholders’ equity at period end — Non-GAAP $ 17,420 $ 17,796 $ 20,545 Period-end common shares outstanding (in thousands) 808,280 808,103 825,821 Book value per common share — GAAP $ 43.18 $ 44.73 $ 47.30 Tangible book value per common share — Non-GAAP $ 21.55 $ 22.02 $ 24.88 3Q22 2Q22 3Q21 Net income applicable to common shareholders of The Bank of New York Mellon Corporation — GAAP $319 $835 $881 Add: Amortization of intangible assets 17 17 19 Less: Tax impact of amortization of intangible assets 4 4 4 Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets — Non-GAAP $332 $848 $896 Average common shareholders’ equity $35,942 $36,199 $39,755 Less: Average goodwill 17,189 17,347 17,474 Average intangible assets 2,922 2,949 2,953 Add: Deferred tax liability — tax deductible goodwill 1,175 1,187 1,173 Deferred tax liability — intangible assets 660 668 673 Average tangible common shareholders’ equity — Non-GAAP $17,666 $17,758 $21,174 Return on common equity (annualized) — GAAP 3.5% 9.3% 8.8% Return on tangible common equity (annualized) — non-GAAP 7.5% 19.2% 16.8% Return on Common Equity and Tangible Common Equity Reconciliation Book Value and Tangible Book Value Per Common Share Reconciliation
18 A number of statements in The Bank of New York Mellon Corporation’s (the “Corporation”) presentations, the accompanying slides and the responses to your questions are “forward-looking statements.” 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 relate to, among other things, the Corporation’s expectations regarding: capital plans, strategic priorities, financial goals, organic growth, performance, organizational quality and efficiency, investments, including in technology and product development, capabilities, resiliency, revenue, net interest revenue, money market fee waivers, fees, expenses, cost discipline, sustainable growth, innovation in products and services, 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 forward-looking statements 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). 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, 2021 (the “2021 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 geopolitical risks (including those related to Russia’s invasion of Ukraine), as well as 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 September 30, 2022. All forward-looking statements speak only as of October 17, 2022, 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 2021 Annual Report, and the third quarter 2022 earnings release and the third quarter 2022 financial supplement, and are available at www.bnymellon.com/investorrelations. Cautionary Statement