BNY Mellon Reports Fourth Quarter Earnings Of $622 Million Or $0.53 Per Common Share

NEW YORK, Jan. 16, 2013 /PRNewswire/ --

INVESTMENT MANAGEMENT AND PERFORMANCE FEES UP 17% YEAR-OVER-YEAR

ASSETS UNDER MANAGEMENT UP 10% YEAR-OVER-YEAR

  • Net long-term inflows of $56 billion over last 12 months, $14 billion in 4Q12

ASSETS UNDER CUSTODY/ADMINISTRATION UP 9% YEAR-OVER-YEAR

  • New wins of $1.5 trillion over last 12 months, $190 billion in 4Q12

ESTIMATED BASEL III TIER 1 COMMON EQUITY RATIO 9.8% (a)

RETURN ON TANGIBLE COMMON EQUITY 19% (a)

REPURCHASED 49.8 MILLION COMMON SHARES FOR $1.1 BILLION IN 2012

The Bank of New York Mellon Corporation ("BNY Mellon") (NYSE: BK) today reported fourth quarter net income applicable to common shareholders of $622 million, or $0.53 per diluted common share, compared with $505 million, or $0.42 per diluted common share, in the fourth quarter of 2011 and $720 million, or $0.61 per diluted common share, in the third quarter of 2012. 

"We are pleased to report strong year-over-year growth in fees in our Investment Management, Asset Servicing, Clearing and Treasury Services businesses.  We benefited from the improvement in market values and, more importantly, from our relentless focus on generating organic growth with our broad client base.  We are also driving our operational excellence initiatives to improve our efficiency and help mitigate the impact on our high margin revenues due to the low interest rate environment and tepid capital markets activity.  Our balance sheet and capital ratios strengthened in 2012 even after giving effect to the repurchase of approximately $1.1 billion of our common shares in 2012," said Gerald L. Hassell, chairman and chief executive officer of BNY Mellon.

"I wish to thank all of my colleagues across the company for their tremendous dedication and ongoing focus on improving our performance, delivering excellence to our clients and creating shareholder value," added Mr. Hassell.

Net income applicable to common shareholders totaled $2.427 billion, or $2.03 per diluted common share, for the full-year 2012 compared with $2.516 billion, or $2.03 per diluted common share, for the full-year 2011.

______________

(a) 

See "Supplemental information – Explanation of Non-GAAP financial measures" beginning on page 10 for the calculation


of the Non-GAAP measures of the estimated Basel III Tier 1 common equity ratio and the return on tangible common equity.

Fourth Quarter Results - Sequential growth rates are unannualized.  Please refer to the Quarterly Earnings Review for a detailed review of our businesses.  Unless otherwise noted, the results for all periods in 2011 include the impact of Shareowner Services.

Total revenue

Reconciliation of total revenue



4Q12 vs.

(dollars in millions)

4Q12

3Q12

4Q11


4Q11

3Q12

Fee and other revenue

$ 2,850

$ 2,879

$ 2,765


3%

(1)%

Income (loss) from consolidated investment management funds

42

47

(5)




Net interest revenue

725

749

780




Total revenue – GAAP

3,617

3,675

3,540


2

(2)

Less: Net income (loss) attributable to noncontrolling interests related to

             consolidated investment management funds

11

25

(28)




Fee and other revenue related to Shareowner Services (a)

-

-

142




Total revenue excluding fee and other revenue related to Shareowner

   Services – Non-GAAP

$ 3,606

$ 3,650

$ 3,426


5%

(1)%

(a)   The Shareowner Services business was sold on Dec. 31, 2011.


  • Assets under custody/administration amounted to $26.7 trillion at Dec. 31, 2012, an increase of 9% compared with the prior year and $100 billion sequentially.  The year-over-year increase was driven by higher market values and net new business.  The sequential increase reflects net new business.  Assets under management amounted to a record $1.4 trillion at Dec. 31, 2012, an increase of 10% compared with the prior year and 2% sequentially.  Both increases primarily resulted from higher market values and net new business.  Long-term inflows totaled $14 billion and short-term outflows totaled $6 billion for the fourth quarter of 2012.  Long-term inflows benefited from fixed income and liability-driven investments.

  • Investment services fees totaled $1.6 billion, an increase of 1% year-over-year and a decrease of 5% sequentially.  The year-over-year increase was primarily driven by higher asset servicing revenue as a result of net new business, improved market values and higher collateral management revenue, as well as higher volumes in clearing and treasury services.  This increase was partially offset by the impact of the sale of the Shareowner Services business in the fourth quarter of 2011 as well as lower Depositary Receipts and Corporate Trust revenue.  Sequentially, the decrease primarily resulted from a $107 million decrease in Depositary Receipts revenue largely reflecting seasonality and lower securities lending revenue, partially offset by higher asset servicing revenue driven by higher collateral management revenue, and higher clearing and treasury services revenue.

  • Investment management and performance fees were $853 million, an increase of 17% year-over-year and 9% sequentially.  Both increases were impacted by the acquisition of the remaining 50% interest in the West LB Mellon Asset Management joint venture, subsequently renamed Meriten Investment Management ("Meriten").  Excluding the Meriten acquisition, investment management and performance fees increased 15% year-over-year and 8% sequentially driven by higher market values, net new business and higher performance fees. The year-over-year increase also reflects lower money market fee waivers.

  • Foreign exchange and other trading revenue totaled $139 million compared with $228 million in the fourth quarter of 2011 and $182 million in the third quarter of 2012.  In the fourth quarter of 2012, foreign exchange revenue totaled $106 million, a decrease of 42% year-over-year and 12% sequentially.  Both decreases reflect a sharp decline in volatility and a modest decrease in volumes.  Other trading revenue was $33 million in the fourth quarter of 2012 compared with $45 million in fourth quarter of 2011 and $61 million in the third quarter of 2012.  The decreases compared with both prior periods reflect lower fixed income trading revenue primarily driven by lower interest rate derivative trading revenue.

  • Investment and other income totaled $116 million compared with $146 million in the fourth quarter of 2011 and $124 million in the third quarter of 2012.  The year-over-year decrease primarily reflects the pre-tax gain on the sale of the Shareowner Services business recorded in the fourth quarter of 2011 which was partially offset by the write-down on an equity investment also recorded in the fourth quarter of 2011.  Additionally, the fourth quarter of 2012 includes higher net gains on loans held-for-sale retained from a previously divested bank subsidiary.  Sequentially, the decrease primarily reflects lower seed capital gains and equity investment revenue, partially offset by higher leasing gains.

  • Net interest revenue and the net interest margin (FTE) were $725 million and 1.09% compared with $780 million and 1.27% in the fourth quarter of 2011 and $749 million and 1.20% in the third quarter of 2012.  The year-over-year decrease in net interest revenue was primarily driven by the elimination of interest on European Central Bank deposits, lower accretion and lower yields on the reinvestment of securities, partially offset by higher interest-earning assets driven by higher deposit levels.  The decrease in net interest revenue compared with the third quarter of 2012 primarily reflects lower LIBOR rates, lower yields on the reinvestment of securities and lower accretion, partially offset by higher interest-earning assets driven by higher deposit levels.

    The decreases in net interest margin (FTE) compared with both prior periods primarily reflect higher interest-earning assets driven by higher deposits levels, lower reinvestment yields, the elimination of interest on European Central Bank deposits and lower accretion.

  • The unrealized pre-tax gain on our total investment securities portfolio was $2.4 billion at Dec. 31, 2012 compared with $2.5 billion at Sept. 30, 2012.  The decrease in the unrealized pre-tax gain was primarily driven by $50 million of net realized securities gains in the fourth quarter of 2012. The low rate environment creates the opportunity for us to realize gains as we rebalance and manage the duration risk of the investment securities portfolio.  Gains realized on these sales should be considered along with net interest revenue when evaluating our overall results.  In the fourth quarter of 2012, combined net interest revenue and net securities gains totaled $775 million, compared with $777 million in the year-ago quarter and $771 million in the linked quarter.

The provision for credit losses was a credit of $61 million in the fourth quarter of 2012.  The credit was largely driven by a reduction in the allowance for credit losses related to the residential mortgage loan portfolio.  Our residential mortgage loan portfolio has experienced better performance compared to aggregate industry historical losses.  In the fourth quarter of 2012, we began using our actual loan loss experience rather than industry data to estimate the allowance for credit losses.  The provision for credit losses was $23 million in the fourth quarter of 2011 and a credit of $5 million in the third quarter of 2012.

Total noninterest expense

Reconciliation of noninterest expense



4Q12 vs.

(dollars in millions)

4Q12

3Q12

4Q11


4Q11

3Q12

Noninterest expense – GAAP

$ 2,825

$ 2,705

$ 2,828


-%

4%

Less:  Amortization of intangible assets

96

95

106




          M&I, litigation and restructuring charges

46

26

176




       Noninterest expense related to Shareowner Services (a)

-

-

46




Total noninterest expense excluding amortization of intangible assets,

   M&I, litigation and restructuring charges and direct expense related to

   Shareowner Services – Non-GAAP

$ 2,683

$ 2,584

$ 2,500


7%

4%

(a)   Reflects direct expense related to the Shareowner Services business sold on Dec. 31, 2011.

  • Total noninterest expense increased 7% year-over-year and 4% sequentially excluding amortization of intangible assets, M&I, litigation and restructuring charges and direct expenses related to Shareowner Services (Non-GAAP).  Both increases were primarily driven by revenue mix as the lower interest rate environment and tepid capital markets have driven a decline in our low variable cost businesses, such as Depositary Receipts, foreign exchange and other trading and net interest revenue. These revenue declines were offset by increases in investment management, asset servicing, clearing and treasury services fees, all of which come with higher variable costs.  Additionally, higher software amortization expense, business development expense and the Meriten acquisition increased noninterest expense both year-over-year and sequentially.

The effective tax rate was 24.3% in the fourth quarter of 2012, which primarily reflects a benefit associated with the reorganization of certain foreign operations. 

Capital ratios

Dec. 31,

Sept. 30,

Dec. 31,


2012(a)

2012

2011

Estimated Basel III Tier 1 common equity ratio – Non-GAAP (b)(c)

9.8%

9.3%

N/A   

Basel I Tier 1 common equity to risk-weighted assets ratio – Non-GAAP (c)                                        

13.6

13.3

13.4%

Basel I Tier 1 capital ratio

15.1

15.3

15.0

Basel I Total (Tier 1 plus Tier 2) capital ratio

16.4

16.9

17.0

Basel I leverage capital ratio

5.3

5.6

5.2

BNY Mellon shareholders' equity to total assets ratio (c)

10.1

10.7

10.3

BNY Mellon common shareholders' equity to total assets ratio (c)

9.9

10.3

10.3

Tangible BNY Mellon common shareholders' equity to tangible

assets of operations ratio – Non-GAAP (c)

6.4

6.3

6.4

(a)

Preliminary.

(b)

The estimated Basel III Tier 1 common equity ratio at Dec. 31, 2012 and Sept. 30, 2012 is based on the Notices of Proposed


Rulemaking ("NPRs") and final market risk rule initially released on June 7, 2012 and published in the Federal Register on Aug.


30, 2012. The estimated Basel III Tier 1 common equity ratio of 7.1% at Dec. 31, 2011 is based on prior Basel III guidance and


the proposed market risk rule.

(c)

See "Supplemental information – Explanation of Non-GAAP financial measures" beginning on page 10 for a calculation of these


ratios.

N/A

– Not applicable.

 

We generated $687 million of gross Basel I Tier 1 common equity in the fourth quarter of 2012. 

Our estimated Basel III Tier 1 common equity ratio was 9.8% at Dec. 31, 2012 compared with 9.3% at Sept. 30, 2012.  The increase was primarily due to lower risk-weighted assets.

Dividends (common) – On Jan. 16, 2013, The Bank of New York Mellon Corporation declared a quarterly common stock dividend of $0.13 per common share. This cash dividend is payable on Feb. 5, 2013 to shareholders of record as of the close of business on Jan. 28, 2013. 

Dividends (preferred) – On Jan. 16, 2013, The Bank of New York Mellon Corporation also declared dividends for the dividend period ending in March 2013 of $1,000.00 per share on the Series A Noncumulative Perpetual Preferred Stock, liquidation preference $100,000 per share (the "Series A Preferred Stock") (equivalent to approximately $10.00 per Normal Preferred Capital Security of Mellon Capital IV, referred to below, each representing 1/100th interest in a share of Series A Preferred Stock), and $1,300.00 per share on the Series C Noncumulative Perpetual Preferred Stock, liquidation preference $100,000 per share (the "Series C Preferred Stock") (equivalent to approximately $0.33 per depositary share, each representing a 1/4,000th interest in a share of the Series C Preferred Stock (the "Depositary Shares")), payable on March 20, 2013 to holders of record as of the close of business on March 5, 2013.  All of the outstanding shares of the Series A Preferred Stock are owned by Mellon Capital IV, which will pass through the March dividend on the Series A Preferred Stock on a proportionate basis to the holders of record, as of the close of business on March 5, 2013, of its Normal Preferred Capital Securities.  All of the outstanding shares of the Series C Preferred Stock are held by the depositary of the Depositary Shares, which will pass through the March dividend on the Series C Preferred Stock on a proportionate basis to the holders of record, as of the close of business on March 5, 2013, of the Depositary Shares.

BNY Mellon is a global financial services company focused on helping clients manage and service their financial assets, operating in 36 countries and serving more than 100 markets.  BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, offering superior investment management and investment services through a worldwide client-focused team.  It has $26.7 trillion in assets under custody/administration and $1.4 trillion in assets under management, services $11.4 trillion in outstanding debt and processes global payments averaging $1.5 trillion per day.  BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation.  Additional information is available on www.bnymellon.com or follow us on Twitter @BNYMellon.

Supplemental Financial Information
The Quarterly Earnings Review and Supplemental Financial Trends for The Bank of New York Mellon Corporation have been updated through Dec. 31, 2012 and are available at www.bnymellon.com (Investor Relations - Financial Reports).

Conference Call Data
Gerald L. Hassell, chairman and chief executive officer and Thomas P. Gibbons, vice chairman and chief financial officer, along with other members of executive management from BNY Mellon, will host a conference call and simultaneous live audio webcast at 8:00 a.m. EST on Jan. 16, 2013.  This conference call and audio webcast will include forward-looking statements and may include other material information. 

Persons wishing to access the conference call and audio webcast may do so by dialing (888) 677-5383 (U.S.) and (773) 799-3611 (International), and using the passcode: Earnings, or by logging on to www.bnymellon.com.  The Earnings Release, together with the Quarterly Earnings Review and Supplemental Financial Trends, will be available at www.bnymellon.com beginning at approximately 6:30 a.m. EST on Jan. 16, 2013.  Replays of the conference call and audio webcast will be available beginning Jan. 16, 2013 at approximately 2 p.m. EST through Jan. 30, 2013 by dialing (866) 465-2120 (U.S.) or (203) 369-1437 (International).  The archived version of the conference call and audio webcast will also be available at www.bnymellon.com for the same time period.

 


THE BANK OF NEW YORK MELLON CORPORATION

Financial Highlights























(dollar amounts in millions, except per common                  

Quarter ended


Year ended

amounts and unless otherwise noted; quarterly                 


Dec. 31,


Sept. 30,


Dec. 31,


Dec. 31,


Dec. 31,

returns are annualized)          


2012


2012


2011


2012


2011












Return on common equity (a)       


7.1 %


8.3 %


5.9 %


7.1 %


7.5 %

    Non-GAAP (a)         


8.2 %


9.2 %


8.0 %


8.8 %


9.0 %












Return on tangible common equity – Non-GAAP (a)        


18.8 %


22.1 %


17.7 %


19.3 %


22.6 %

    Non-GAAP adjusted (a)                


19.7 %


22.5 %


21.1 %


21.8 %


24.6 %












Fee revenue as a percentage of total revenue











  excluding net securities gains (losses)            


78 %


78 %


78%


78 %


78%












Annualized fee revenue per employee











  (based on average headcount) (in thousands)        

$

227

$

235

$

223

$

232

$

237












Percentage of non-U.S. total revenue (b)


36 %


37 %


34 %


37 %


37 %












Pre-tax operating margin (a)       


24 %


27 %


19 %


23 %


25 %

    Non-GAAP (a)


27 %


29 %


28 %


29 %


30 %












Net interest margin (FTE)                                         


1.09 %


1.20 %


1.27 %


1.21 %


1.36 %












Selected average balances:











Interest-earning assets              

$

270,215

$

255,228

$

247,724

$

250,450

$

222,226

Assets of operations       

$

324,601

$

307,919

$

304,235

$

304,102

$

277,766

Total assets             

$

335,995

$

318,914

$

316,074

$

315,381

$

291,145

Interest-bearing deposits       

$

142,719

$

138,260

$

130,343

$

134,259

$

124,695

Noninterest-bearing deposits           

$

79,987

$

70,230

$

76,309

$

69,951

$

57,984

Preferred stock                  

$

1,066

$

611

$

-

$

437

$

-

Total The Bank of New York Mellon











  Corporation common shareholders' equity                             

$

34,962

$

34,522

$

33,761

$

34,333

$

33,519












Average common shares and equivalents











  outstanding (in thousands):











    Basic       


1,161,212


1,169,674


1,204,994


1,176,485


1,220,804

    Diluted                                        


1,163,753


1,171,534


1,205,586


1,178,430


1,223,026












Period-end data:











Market value of assets under management (in billions)

$

1,386

$

1,359

$

1,260

$

1,386

$

1,260

Market value of assets under custody/











  administration (in trillions) (c)

$

26.7

$

26.6

$

24.6

$

26.7

$

24.6

Market value of securities on loan (in billions) (d)          

$

246

$

259

$

269

$

246

$

269












Full-time employees                                           


49,500


48,700


48,700


49,500


48,700

Book value per common share – GAAP (a)             

$

30.39

$

30.11

$

27.62

$

30.39

$

27.62

Tangible book value per common share – Non-GAAP (a)        

$

12.82

$

12.59

$

10.57

$

12.82

$

10.57

Cash dividends per common share                              

$

0.13

$

0.13

$

0.13

$

0.52

$

0.48

Common dividend payout ratio                                                  


25 %


21 %


31 %


26 %


24 %

Closing stock price per common share                      

$

25.70

$

22.62

$

19.91

$

25.70

$

19.91

Market capitalization

$

29,902

$

26,434

$

24,085

$

29,902

$

24,085

(a)

See "Supplemental information – Explanation of Non-GAAP financial measures" beginning on page 10 for a calculation of these


ratios.

(b)

Includes fee revenue, net interest revenue and income (loss) from consolidated investment management funds, net of net income (loss)


attributable to noncontrolling interests.

(c)

Preliminary. Prior periods have been restated to reflect a correction of a double-count of a portion of legacy Mellon's assets under


custody/administration.

(d)

Represents the securities on loan managed by the Investment Services business.

 

THE BANK OF NEW YORK MELLON CORPORATION

Condensed Consolidated Income Statement

 


Quarter ended


Year-to-date


Dec. 31,

Sept. 30,

Dec. 31,


Dec. 31,

Dec. 31,

(in millions)

2012

2012

2011


2012

2011

Fee and other revenue







Investment services fees:







Asset servicing

$  945

$  942

$  885


$  3,780

$  3,697

Issuer services

215

311

287


1,052

1,445

Clearing services

294

287

278


1,193

1,159

Treasury services

141

138

134


549

535

Total investment services fees

1,595

1,678

1,584


6,574

6,836

Investment management and performance fees

853

779

730


3,174

3,002

Foreign exchange and other trading revenue

139

182

228


692

848

Distribution and servicing

52

48

42


192

187

Financing-related fees

45

46

38


172

170

Investment and other income

116

124

146


427

455

Total fee revenue

2,800

2,857

2,768


11,231

11,498

Net securities gains (losses)

50

22

(3)


162

48

Total fee and other revenue

2,850

2,879

2,765


11,393

11,546

Operations of consolidated investment management funds







Investment income

137

151

108


593

670

Interest of investment management fund note holders

95

104

113


404

470

Income (loss) from consolidated investment management funds

42

47

(5)


189

200

Net interest revenue







Interest revenue

843

877

925


3,507

3,588

Interest expense

118

128

145


534

604

Net interest revenue

725

749

780


2,973

2,984

Provision for credit losses

(61)

(5)

23


(80)

1

Net interest revenue after provision for credit losses

786

754

757


3,053

2,983

Noninterest expense







Staff

1,457

1,436

1,382


5,761

5,726

Professional, legal and other purchased services

322

292

322


1,222

1,217

Software and equipment

233

208

213


855

815

Net occupancy

156

149

159


593

624

Distribution and servicing

108

109

96


421

416

Business development

88

60

75


275

261

Sub-custodian

64

65

62


269

298

Other

255

265

237


994

937

Amortization of intangible assets

96

95

106


384

428

Merger and integration, litigation and restructuring charges

46

26

176


559

390

Total noninterest expense

2,825

2,705

2,828


11,333

11,112

Income







Income before income taxes

853

975

689


3,302

3,617

Provision for income taxes

207

225

211


779

1,048

Net income

646

750

478


2,523

2,569

Net (income) loss attributable to noncontrolling interests (includes

   $(11), $(25), $28, $(76) and $(50) related to consolidated

   investment management funds, respectively)

(11)

(25)

27


(78)

(53)

Net income applicable to shareholders of The Bank of New

   York Mellon Corporation

635

725

505


2,445

2,516

Preferred stock dividends

(13)

(5)

-


(18)

-

Net income applicable to common shareholders of The Bank of

   New York Mellon Corporation

$  622

$  720

$  505


$  2,427

$  2,516

 

THE BANK OF NEW YORK MELLON CORPORATION

Condensed Consolidated Income Statement - continued

 

Reconciliation of net income to the net income applicable to the

common shareholders of The Bank of New York Mellon

Corporation

Quarter ended


Year-to-date


Dec. 31,

Sept. 30,

Dec. 31,


Dec. 31,

Dec. 31,

(in millions)

2012

2012

2011


2012

2011

Net income

$ 646

$ 750

$ 478


$ 2,523

$ 2,569

Net (income) loss attributable to noncontrolling interests

(11)

(25)

27


(78)

(53)

Net income applicable to shareholders of The Bank of New

   York Mellon Corporation

635

725

505


2,445

2,516

Preferred stock dividends

(13)

(5)

-


(18)

-

Net income applicable to common shareholders of The Bank of

   New York Mellon Corporation

622

720

505


2,427

2,516

Less:  Earnings allocated to participating securities

9

11

6


35

27

Change in the excess of redeemable value over the fair value

   of noncontrolling interests

-

-

(1)


(5)

9

Net income applicable to the common shareholders of The Bank

   of New York Mellon Corporation after required adjustments

   for the calculation of basic and diluted earnings per common

   share

$ 613

$ 709

$ 500


$ 2,397

$ 2,480





Earnings per share applicable to the common shareholders of

The Bank of New York Mellon Corporation

Quarter ended


Year-to-date


Dec. 31,

Sept. 30,

Dec. 31,


Dec. 31,

Dec. 31,

(in dollars)

2012

2012

2011


2012

2011

Basic

$ 0.53

$ 0.61

$ 0.42


$ 2.04

$ 2.03

Diluted

$ 0.53

$ 0.61

$ 0.42


$ 2.03

$ 2.03

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

 


THE BANK OF NEW YORK MELLON CORPORATION

Consolidated Balance Sheet

 


Dec. 31,

Sept. 30,

Dec. 31,

(dollars in millions, except per share amounts)

2012

2012

2011

Assets




Cash and due from:




Banks

$   4,727

$   4,991

$   4,175

Interest-bearing deposits with the Federal Reserve and other central banks

90,110

73,118

90,243

Interest-bearing deposits with banks

43,910

40,578

36,321

Federal funds sold and securities purchased under resale agreements

6,593

5,753

4,510

Securities:




Held-to-maturity (fair value of $8,389, $8,893 and $3,540)

8,205

8,702

3,521

Available-for-sale

92,619

95,148

78,467

Total securities

100,824

103,850

81,988

Trading assets

9,378

9,190

7,861

Loans

46,629

45,889

43,979

Allowance for loan losses

(266)

(339)

(394)

Net loans

46,363

45,550

43,585

Premises and equipment

1,659

1,690

1,681

Accrued interest receivable

593

545

660

Goodwill

18,075

17,984

17,904

Intangible assets

4,809

4,882

5,152

Other assets

20,468

20,444

19,839

Subtotal assets of operations

347,509

328,575

313,919

Assets of consolidated investment management funds, at fair value:




Trading assets

10,961

10,821

10,751

Other assets

520

548

596

Subtotal assets of consolidated investment management funds, at fair value

11,481

11,369

11,347

Total assets

$ 358,990

$ 339,944

$ 325,266

Liabilities




Deposits:




Noninterest-bearing (principally U.S. offices)

$   93,019

$   78,790

$   95,335

Interest-bearing deposits in U.S. offices

53,826

44,843

41,231

Interest-bearing deposits in Non-U.S. offices

99,250

99,316

82,528

Total deposits

246,095

222,949

219,094

Federal funds purchased and securities sold under repurchase agreements

7,427

12,450

6,267

Trading liabilities

8,176

7,754

8,071

Payables to customers and broker-dealers

16,095

13,675

12,671

Commercial paper

338

1,278

10

Other borrowed funds

1,380

1,139

2,174

Accrued taxes and other expenses

7,316

6,590

6,235

Other liabilities (includes allowance for lending-related commitments of $121, $117 and

   $103)

6,010

7,408

6,525

Long-term debt

18,530

19,516

19,933

Subtotal liabilities of operations

311,367

292,759

280,980

Liabilities of consolidated investment management funds, at fair value:




Trading liabilities

10,152

10,018

10,053

Other liabilities

29

28

32

Subtotal liabilities of consolidated investment management funds, at fair value

10,181

10,046

10,085

Total liabilities

321,548

302,805

291,065

Temporary equity




Redeemable noncontrolling interests

178

140

114

Permanent equity




Preferred stock – par value $0.01 per share; authorized 100,000,000 shares; issued

   10,826, 10,501 and - shares

1,068

1,036

-

Common stock – par value $0.01 per share; authorized 3,500,000,000 shares; issued

   1,254,182,209, 1,252,278,284 and 1,249,061,305 shares

13

13

12

Additional paid-in capital

23,485

23,429

23,185

Retained earnings

14,622

14,153

12,812

Accumulated other comprehensive loss, net of tax

(643)

(471)

(1,627)

Less:  Treasury stock of 90,691,868, 83,671,325 and 39,386,698 common shares, at cost

(2,114)

(1,942)

(965)

Total The Bank of New York Mellon Corporation shareholders' equity

36,431

36,218

33,417

Non-redeemable noncontrolling interests of consolidated investment management funds

833

781

670

Total permanent equity

37,264

36,999

34,087

Total liabilities, temporary equity and permanent equity

$ 358,990

$ 339,944

$ 325,266

 

Capital

The following table presents our Basel I Tier 1 common equity generated.

Basel I Tier 1 common equity generation




(in millions)

4Q12

3Q12

4Q11

Net income applicable to common shareholders of The Bank of New York

  Mellon Corporation – GAAP

$ 622

$  720

$  505

Add:  Amortization of intangible assets, net of tax

65

60

66

Gross Basel I Tier 1 common equity generated

687

780

571

Less capital deployed:




Common stock dividends

154

155

159

Common stock repurchased

170

288

69

Goodwill and intangible assets related to acquisitions/dispositions

93

-

(241)

Total capital deployed

417

443

(13)

Add:  Other

143

193

(114)

Net Basel I Tier 1 common equity generated

$  413

$  530

$  470

 

Supplemental information – Explanation of Non-GAAP financial measures

BNY Mellon has included in this Earnings Release certain Non-GAAP financial measures based upon tangible common shareholders' equity.  BNY Mellon believes that the ratio of Tier 1 common equity to risk-weighted assets and the ratio of tangible common shareholders' equity to tangible assets of operations are measures of capital strength that provide additional useful information to investors, supplementing the Tier 1 and Total capital ratios which are utilized by regulatory authorities.  The ratio of Basel I Tier 1 common equity to risk-weighted assets excludes preferred stock, as well as the trust preferred securities which will be phased out of Basel I Tier 1 regulatory capital beginning in 2013.  Unlike the Basel I Tier 1 and Total capital ratios, the tangible common shareholders' equity ratio fully incorporates those changes in investment securities valuations which are reflected in total shareholders' equity.  In addition, this ratio is expressed as a percentage of the actual book value of assets, as opposed to a percentage of a risk-based reduced value established in accordance with regulatory requirements, although BNY Mellon in its calculation has excluded certain assets which are given a zero percent risk-weighting for regulatory purposes.  Further, BNY Mellon believes that the return on tangible common equity measure, which excludes goodwill and intangible assets net of deferred tax liabilities, is a useful additional measure for investors because it presents a measure of BNY Mellon's performance in reference to those assets which are productive in generating income.  BNY Mellon has presented its estimated Basel III Tier 1 common equity ratio on a basis that is representative of how it currently understands the Basel III rules.  Management views the Basel III Tier 1 common equity ratio as a key measure in monitoring BNY Mellon's capital position.  The presentation of the Basel III Tier 1 common equity ratio allows investors to compare BNY Mellon's Basel III Tier 1 common equity ratio with estimates presented by other companies.  Additionally, BNY Mellon has provided a measure of tangible book value per share, which it believes provides additional useful information as to the level of such assets in relation to shares of common stock outstanding. 

BNY Mellon has presented revenue measures which exclude the effect of noncontrolling interests related to consolidated investment management funds and other revenue related to the Shareowner Services business, which was sold on Dec. 31, 2011, and expense measures which exclude M&I expenses, litigation charges, restructuring charges, amortization of intangible assets and direct expenses related to the Shareowner Services business.  Return on equity measures and operating margin measures, which exclude some or all of these items, are also presented.  BNY Mellon believes that these measures are useful to investors because they permit a focus on period-to-period comparisons which relate to the ability of BNY Mellon to enhance revenues and limit expenses in circumstances where such matters are within BNY Mellon's control.  The excluded items in general relate to certain ongoing charges as a result of prior transactions or where we have incurred charges.  M&I expenses primarily relate to the acquisitions of Global Investment Servicing on July 1, 2010 and BHF Asset Servicing GmbH on Aug. 2, 2010.  M&I expenses generally continue for approximately three years after the transaction and can vary on a year-to-year basis depending on the stage of the integration.  BNY Mellon believes that the exclusion of M&I expenses provides investors with a focus on BNY Mellon's business as it would appear on a consolidated going-forward basis, after such M&I expenses have ceased.  Future periods will not reflect such M&I expenses, and thus may be more easily compared with our current results if M&I expenses are excluded.  Litigation charges represent accruals for loss contingencies that are both probable and reasonably estimable, but exclude standard business-related legal fees.  Restructuring charges relate to our operational excellence initiatives and migrating positions to global delivery centers.  Excluding these charges permits investors to view expenses on a basis consistent with how management views the business.  BNY Mellon also presents revenue and noninterest expense excluding results relating to the Shareowner Services business so that an investor may compare those results with other periods, which do not include the Shareowner Services business.

In this Earnings Release, the net interest margin is presented on an FTE basis.  We believe that this presentation provides comparability 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. 

Each of these measures as described above is used by management to monitor financial performance, both on a company-wide and business-level basis.

The following table presents investment management fees net of performance fees.

Investment management and performance fees




4Q12 vs.

(dollars in millions)

4Q12

3Q12

4Q11

4Q11

3Q12

Investment management and performance fees

$ 853

$ 779

$ 730

17%

9%

Less:  Meriten acquisition

13

N/A

N/A

N/M

N/M

     Investment management and performance fees excluding the

     Meriten acquisition

$ 840

$ 779

$ 730

15%

8%

N/A – Not applicable.
N/M – Not meaningful.

 

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

Return on common equity and tangible common equity






(dollars in millions)

4Q12

3Q12

4Q11

YTD12

YTD11

Net income applicable to common shareholders of The Bank of

   New York Mellon Corporation – GAAP

$ 622

$ 720

$ 505

$ 2,427

$ 2,516

Add: Amortization of intangible assets, net of tax

65

60

66

247

269

Net income applicable to common shareholders of The Bank of

   New York Mellon Corporation excluding amortization of

   intangible assets – Non-GAAP

687

780

571

2,674

2,785

Add:   M&I, litigation and restructuring charges

31

18

110

339

240

Net income applicable to common shareholders of The Bank of

   New York Mellon Corporation excluding amortization of

   intangible assets and M&I, litigation and restructuring charges –

   Non-GAAP

$ 718

$ 798

$ 681

$ 3,013

$ 3,025







Average common shareholders' equity

$ 34,962

$ 34,522

$ 33,761

$ 34,333

$ 33,519

Less:  Average goodwill

18,046

17,918

18,044

17,967

18,129

           Average intangible assets

4,860

4,926

5,333

4,982

5,498

Add:   Deferred tax liability – tax deductible goodwill

1,130

1,057

967

1,130

967

           Deferred tax liability – non-tax deductible intangible assets

1,310

1,339

1,459

1,310

1,459

Average tangible common shareholders' equity – Non-GAAP

$ 14,496

$ 14,074

$ 12,810

$ 13,824

$ 12,318







Return on common equity – GAAP (a)

7.1%

8.3%

5.9%

7.1%

7.5%

Return on common equity excluding amortization of intangible

   assets and M&I, litigation and restructuring

   charges – Non-GAAP (a)

8.2%

9.2%

8.0%

8.8%

9.0%

Return on tangible common equity – Non-GAAP (a)

18.8%

22.1%

17.7%

19.3%

22.6%

Return on tangible common equity excluding M&I, litigation and

   restructuring charges – Non-GAAP (a)

19.7%

22.5%

21.1%

21.8%

24.6%

(a)           Annualized.

 

The following table presents the calculation of the equity to assets ratio and book value per common share.

Equity to assets and book value per common share

Dec. 31,

Sept. 30,

Dec. 31,

(dollars in millions, unless otherwise noted)

2012

2012

2011

BNY Mellon shareholders' equity at period end – GAAP

$ 36,431

$ 36,218

$ 33,417

Less:  Preferred stock

1,068

1,036

-

BNY Mellon common shareholders' equity at period end – GAAP

35,363

35,182

33,417

Less:  Goodwill

18,075

17,984

17,904

Intangible assets

4,809

4,882

5,152

Add:  Deferred tax liability – tax deductible goodwill

1,130

1,057

967

Deferred tax liability – non-tax deductible intangible assets

1,310

1,339

1,459

Tangible BNY Mellon common shareholders' equity at period end – Non-GAAP

$ 14,919

$ 14,712

$ 12,787





Total assets at period end – GAAP

$ 358,990

$ 339,944

$ 325,266

Less:  Assets of consolidated investment management funds

11,481

11,369

11,347

Subtotal assets of operations – Non-GAAP

347,509

328,575

313,919

Less:  Goodwill

18,075

17,984

17,904

Intangible assets

4,809

4,882

5,152

Cash on deposit with the Federal Reserve and other central banks (a)

90,040

73,037

90,230

Tangible total assets of operations at period end – Non-GAAP

$ 234,585

$ 232,672

$ 200,633





BNY Mellon shareholders' equity to total assets – GAAP

10.1%

10.7%

10.3%

BNY Mellon common shareholders' equity to total assets – GAAP

9.9%

10.3%

10.3%

Tangible BNY Mellon common shareholders' equity to tangible assets of

   operations – Non-GAAP

6.4%

6.3%

6.4%





Period-end common shares outstanding (in thousands)

1,163,490

1,168,607

1,209,675





Book value per common share

$ 30.39

$ 30.11

$ 27.62

Tangible book value per common share – Non-GAAP

$ 12.82

$ 12.59

$ 10.57

(a)   Assigned a zero percent risk weighting by the regulators.




 

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

Pre-tax operating margin

(dollars in millions)

4Q12

3Q12

4Q11

YTD12

YTD11

Income before income taxes – GAAP

$    853

$    975

$    689

$ 3,302

$ 3,617

Less:  Net income (loss) attributable to noncontrolling interests of

              consolidated investment management funds

11

25

(28)

76

50

Add:  Amortization of intangible assets

96

95

106

384

428

M&I, litigation and restructuring charges

46

26

176

559

390

Income before income taxes excluding net income (loss)

   attributable to noncontrolling interests of consolidated

   investment management funds, amortization of intangible

   assets and M&I, litigation and restructuring charges – Non-

   GAAP

$ 984

$ 1,071

$    999

$ 4,169

$ 4,385







Fee and other revenue – GAAP

$ 2,850

$ 2,879

$ 2,765

$ 11,393

$ 11,546

Income from consolidated investment management funds – GAAP

42

47

(5)

189

200

Net interest revenue – GAAP

725

749

780

2,973

2,984

Total revenue – GAAP

3,617

3,675

3,540

14,555

14,730

Less:  Net income (loss) attributable to noncontrolling interests of

              consolidated investment management funds

11

25

(28)

76

50

Total revenue excluding net income (loss) attributable to

   noncontrolling interests of consolidated investment management

   funds – Non-GAAP

$ 3,606

$ 3,650

$ 3,568

$ 14,479

$ 14,680







Pre-tax operating margin (a)

24%

27%

19%

23%

25%

Pre-tax operating margin excluding net income (loss) attributable to

   noncontrolling interests of consolidated investment management

   funds, amortization of intangible assets and M&I, litigation and

   restructuring charges – Non-GAAP (a)

27%

29%

28%

29%

30%

(a)   Income before taxes divided by total revenue.

 

The following table presents the calculation of our Basel I Tier 1 common equity to risk-weighted assets ratio – Non-GAAP.

Calculation of Basel I Tier 1 common equity to risk-weighted

   assets ratio – Non-GAAP

Dec. 31,

Sept. 30,

Dec. 31,

(dollars in millions)

2012(a)

2012

2011

Total Tier 1 capital – Basel I

$   16,692

$   16,797

$  15,389

Less:  Trust preferred securities

623

1,173

1,659

Preferred stock

1,068

1,036

-

Total Tier 1 common equity

$   15,001

$   14,588

$  13,730





Total risk-weighted assets – Basel I

$ 110,643

$ 109,867

$ 102,255





Basel I Tier 1 common equity to risk-weighted assets ratio – Non-GAAP                                          

13.6%

13.3%

13.4%

(a)   Preliminary.




 

The following table presents the calculation of our estimated Basel III Tier 1 common equity ratio – Non-GAAP on a fully-phased in basis.

Estimated Basel III Tier 1 common equity ratio – Non-GAAP (a)

Dec. 31,

Sept. 30,

Dec. 31,

(dollars in millions)

2012 (b)

2012

2011

Total Tier 1 capital – Basel I

$   16,692

$   16,797

$   15,389

Add:   Deferred tax liability - tax deductible intangible assets

78

N/A   

N/A  

Less:  Trust preferred securities

623

1,173

1,659

Preferred stock

1,068

1,036

-

Adjustments related to available-for-sale securities and pension

  liabilities included in accumulated other comprehensive income (c)

83

(124)

944

Adjustments related to equity method investments (c)                                                               

501

571

555

Deferred tax assets

47

46

-

Net pension fund assets (c)

249

43

90

Other

-

3

(3)

Total estimated Basel III Tier 1 common equity

$14,199

$   14,049

$   12,144





Total risk-weighted assets – Basel I

$ 110,643

$ 109,867

$ 102,255

Add:  Adjustments (d)

33,641

41,816

67,813

Total estimated Basel III risk-weighted assets (e)

$ 144,284

$ 151,683

$ 170,068

Estimated Basel III Tier 1 common equity ratio – Non-GAAP

9.8%

9.3%

7.1%

(a)

The estimated Basel III Tier 1 common equity ratios at Dec. 31, 2012 and Sept. 30, 2012 were based on the NPRs and final market


risk rule initially released on June 7, 2012 and published in the Federal Register on Aug. 30, 2012. The estimated Basel III Tier 1


common equity ratio at Dec. 31, 2011 was based on our interpretation of prior Basel III guidance and the proposed market risk rule.

(b)

Preliminary.

(c)

The NPRs and prior Basel III guidance do not add back to capital the adjustment to other comprehensive income that Basel I makes


for pension liabilities and available-for-sale securities. Also, under the NPRs and prior Basel III guidance, pension assets recorded


on the balance sheet and adjustments related to equity method investments are a deduction from capital.

(d)

Primary differences between risk-weighted assets determined under Basel I compared with the NPRs and prior Basel III guidance


include: the determination of credit risk under Basel I uses predetermined risk weights and asset classes and relies in part on the use


of external credit ratings, while the NPRs use, in addition to the broader range of predetermined risk weights and asset classes,


certain alternatives to external credit ratings. Securitization exposure receives a higher risk-weighting under the NPRs and prior


Basel III guidance than Basel I; also, the NPRs and prior Basel III guidance includes additional adjustments for operational risk,


market risk, counterparty credit risk and equity exposures.

(e)

Calculated on an Advanced Approaches basis, as amended by Basel III.

N/A

- Not applicable.

 

Cautionary Statement

The information presented in this Earnings Release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including our estimated capital ratios and preliminary operating measures and statements made regarding driving our operational excellence initiatives to improve our efficiency and help mitigate impacts on our revenues and the opportunity for us to realize gains in our investment securities portfolio.  These statements, which may be expressed in a variety of ways, include the use of future or present tense language.  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).  Factors that could cause BNY Mellon's results to differ materially from those described in the forward-looking statements can be found in the risk factors set forth in BNY Mellon's Quarterly Reports on Form 10-Q for the quarters ended June 30, 2012 and Sept. 30, 2012, BNY Mellon's Annual Report on Form 10-K for the year ended Dec. 31, 2011 and its other filings with the Securities and Exchange Commission.  All forward-looking statements in this Earnings Release speak only as of Jan. 16, 2013 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.

 

SOURCE The Bank of New York Mellon Corporation



RELATED LINKS
http://www.bnymellon.com

More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.