NEW YORK, Jan. 17, 2014 /PRNewswire/ --
INVESTMENT MANAGEMENT FEES UP 5% YEAR-OVER-YEAR
- Assets under management up 14% year-over-year
- Net long-term inflows of $95 billion over last 12 months
INVESTMENT SERVICES FEES UP 5% YEAR-OVER-YEAR
- Assets under custody and/or administration up $1.3 trillion over last 12 months
- Clearing services revenue up 10% year-over-year
REPURCHASED 10 MILLION COMMON SHARES FOR $318 MILLION IN FOURTH QUARTER OF 2013
RETURN ON TANGIBLE COMMON EQUITY FOR FULL YEAR 2013 15%(a)
The Bank of New York Mellon Corporation ("BNY Mellon") (NYSE: BK) today reported fourth quarter net income applicable to common shareholders of $513 million, or $0.44 per diluted common share. Excluding the after-tax loss of $115 million, or $0.10 per diluted common share, related to an equity investment, net income applicable to common shareholders totaled $628 million, or $0.54 per diluted common share.(a) Net income applicable to common shareholders was $622 million, or $0.53 per diluted common share, in the fourth quarter of 2012 and $967 million, or $0.82 per diluted common share, in the third quarter of 2013. Excluding the benefit related to the U.S. Tax Court's partial reconsideration of a tax decision, net income applicable to common shareholders totaled $706 million, or $0.60 per diluted common share, in the third quarter of 2013.(a)
"2013 marked a year of strong growth in our core investment services and investment management fees, as we benefitted from improved market conditions and our focus on driving organic growth. Our Investment Management business generated $95 billion of net long-term flows for the year and, in Investment Services, we realized strong fee growth in Asset Servicing, Clearing and Issuer Services," said Gerald L. Hassell, chairman and chief executive officer of BNY Mellon.
"We remain focused on controlling expenses and achieved our Operational Excellence Initiatives goals a full year ahead of schedule, setting the stage for a broader, continuous transformation process, which is expected to create significant financial benefit over the next few years. Our businesses continue to generate significant excess capital, which gives us increased financial flexibility going forward," added Mr. Hassell.
"Our accomplishments reflect the strength of our business model and the tremendous contributions of our colleagues across the company, who continue to serve our clients extraordinarily well and drive shareholder value," concluded Mr. Hassell.
Net income applicable to common shareholders totaled $2.047 billion, or $1.74 per diluted common share, for the full-year 2013 compared with $2.427 billion, or $2.03 per diluted common share, for the full-year 2012. Excluding the impact of the U.S. Tax Court's decisions related to the disallowance of certain foreign tax credits, net income applicable to common shareholders totaled $2.640 billion, or $2.24 per diluted common share, in 2013.(a)
Fourth Quarter Results – Sequential growth rates are unannualized. Please refer to the Quarterly Earnings Review for a detailed review of our businesses.
Total revenue
|
Reconciliation of total revenue
|
|
|
4Q13 vs.
|
|
(dollars in millions)
|
4Q13
|
3Q13
|
4Q12
|
|
4Q12
|
3Q13
|
|
Fee and other revenue
|
$ 2,797
|
$ 2,963
|
$ 2,850
|
|
(2)%
|
(6)%
|
|
Income from consolidated investment management funds
|
36
|
32
|
42
|
|
|
|
|
Net interest revenue
|
761
|
772
|
725
|
|
|
|
|
Total revenue – GAAP
|
3,594
|
3,767
|
3,617
|
|
(1)
|
(5)
|
|
Add: Loss related to an equity investment (pre-tax)
|
175
|
-
|
-
|
|
|
|
|
Less: Net income attributable to noncontrolling interests related to
consolidated investment management funds
|
17
|
8
|
11
|
|
|
|
|
Total revenue – Non-GAAP
|
$ 3,752
|
$ 3,759
|
$ 3,606
|
|
4%
|
-%
|
- Assets under custody and/or administration ("AUC/A") amounted to $27.6 trillion at Dec. 31, 2013, an increase of 5% compared with the prior year and 1% sequentially. The year-over-year increase was primarily driven by higher market values and net new business. The sequential increase primarily reflects higher market value. Assets under management ("AUM") amounted to a record $1.58 trillion at Dec. 31, 2013, an increase of 14% compared with the prior year and 3% sequentially. The year-over-year increase primarily resulted from net new business and higher equity market values. The sequential increase primarily reflects higher equity market values. Long-term inflows totaled $2 billion and short-term inflows totaled $6 billion for the fourth quarter of 2013.
- Investment services fees totaled $1.68 billion, an increase of 5% year-over-year and a decrease of 3% sequentially. The year-over-year increase primarily reflects higher asset servicing fees driven by higher market values and organic growth, higher clearing services fees resulting from higher mutual fund fees, asset-based fees and volumes and higher issuer services fees driven by higher Depositary Receipts revenue, partially offset by the continued run-off of high margin securitizations in Corporate Trust and lower securities lending revenue primarily due to lower spreads. The sequential decrease primarily reflects seasonally lower Depositary Receipts revenue, partially offset by higher asset servicing fees and clearing services fees.
- Investment management and performance fees were $904 million, an increase of 6% year-over-year and 10% sequentially. The growth rates in both prior periods were negatively impacted by approximately 1% due to the sale of the Newton private client business. The year-over-year increase was primarily driven by higher equity market values, net new business and higher performance fees, partially offset by higher money market fee waivers and the average impact of the stronger U.S. dollar. The sequential increase primarily reflects seasonally higher performance fees and equity market values.
- Foreign exchange and other trading revenue totaled $146 million compared with $139 million in the fourth quarter of 2012 and $160 million in the third quarter of 2013. In the fourth quarter of 2013, foreign exchange revenue totaled $126 million, an increase of 19% year-over-year and a decrease of 18% sequentially. The year-over-year increase primarily reflects higher volumes and volatility. The sequential decrease was primarily driven by lower volatility, partially offset by higher volumes. Other trading revenue was $20 million in the fourth quarter of 2013 compared with $33 million in fourth quarter of 2012 and $6 million in the third quarter of 2013. The year-over-year decrease primarily reflects lower derivatives trading revenue. The sequential increase was primarily driven by higher fixed income trading revenue, partially offset by lower equity derivatives trading revenue.
- Investment and other income was a loss of $60 million in the fourth quarter of 2013 compared with income of $116 million in the fourth quarter of 2012 and income of $135 million in the third quarter of 2013. The decreases compared with both prior periods primarily reflect a loss related to an equity investment.
- Net interest revenue and the net interest margin (FTE) were $761 million and 1.09% in the fourth quarter of 2013 compared with $725 million and 1.09% in the fourth quarter of 2012 and $772 million and 1.16% in the third quarter of 2013. The year-over-year increase in net interest revenue was primarily driven by higher average interest-earning assets. The sequential decrease primarily reflects a change in the mix of interest-earning assets, partially offset by an increase in average interest-earning assets.
- The net unrealized pre-tax gain on our total investment securities portfolio was $309 million at Dec. 31, 2013 compared with $723 million at Sept. 30, 2013. The decrease was primarily driven by an increase in market interest rates.
The provision for credit losses was $6 million in the fourth quarter of 2013, a credit of $61 million in the fourth quarter of 2012 and a provision of $2 million in the third quarter of 2013. The provision in the fourth quarter of 2013 was driven by an increase in the allowance for a municipal-related entity.
_________________________________________________________________________________
(a) See "Supplemental information – Explanation of GAAP and Non-GAAP financial measures" beginning on page 10 for the calculation of the Non-GAAP measures.
Total noninterest expense
|
Reconciliation of noninterest expense
|
|
|
4Q13 vs.
|
|
(dollars in millions)
|
4Q13
|
3Q13
|
4Q12
|
|
4Q12
|
3Q13
|
|
Noninterest expense – GAAP
|
$ 2,877
|
$ 2,779
|
$ 2,825
|
|
2%
|
4%
|
|
Less: Amortization of intangible assets
|
82
|
81
|
96
|
|
|
|
|
M&I, litigation and restructuring charges
|
2
|
16
|
46
|
|
|
|
|
Total noninterest expense excluding amortization of intangible assets,
M&I, litigation and restructuring charges – Non-GAAP
|
$ 2,793
|
$ 2,682
|
$ 2,683
|
|
4%
|
4%
|
- Total noninterest expense excluding amortization of intangible assets, M&I, litigation and restructuring charges (Non-GAAP) increased 4% both year-over-year and sequentially. The year-over-year increase primarily resulted from higher staff, legal, consulting and marketing expenses. The sequential increase primarily resulted from higher legal, consulting and business development expenses.
The effective tax rate was 21.8% in the fourth quarter of 2013 and was positively impacted by the tax benefit associated with the loss related to an equity investment and lower state taxes.
|
Capital ratios
|
Dec. 31,
|
Sept. 30,
|
Dec. 31,
|
|
|
2013 (a)
|
2013
|
2012
|
|
|
Estimated Basel III Tier 1 common equity ratio – Non-GAAP (b)(c):
|
|
|
|
|
|
Standardized Approach
|
10.6%
|
10.1%
|
N/A
|
|
|
Advanced Approach
|
11.3 (d)
|
11.1
|
9.8%
|
|
|
Basel I Tier 1 common equity to risk-weighted assets ratio – Non-GAAP (c)
|
14.5
|
14.2
|
13.5
|
|
|
Basel I Tier 1 capital ratio
|
16.2
|
15.8
|
15.0
|
|
|
Basel I Total (Tier 1 plus Tier 2) capital ratio
|
17.0
|
16.8
|
16.3
|
|
|
Basel I leverage capital ratio
|
5.4
|
5.6
|
5.3
|
|
|
BNY Mellon shareholders' equity to total assets ratio (c)
|
10.0
|
9.9
|
10.1
|
|
|
BNY Mellon common shareholders' equity to total assets ratio (c)
|
9.6
|
9.5
|
9.9
|
|
|
Tangible BNY Mellon shareholders' equity to tangible
assets of operations ratio – Non-GAAP (c)
|
6.8
|
6.4
|
6.4
|
|
|
(a) Basel III and Basel I ratios are preliminary.
|
|
|
(b) At Dec. 31, 2013 and Sept. 30, 2013, the estimated Basel III Tier 1 common equity ratio is based on our interpretation of and expectations regarding the final rules released by the Board of Governors of the Federal Reserve (the "Federal Reserve") on July 2, 2013, on a fully phased-in basis. For periods prior to June 30, 2013, these ratios were estimated using our interpretation of the Federal Reserve's Notices of Proposed Rulemaking ("NPRs") dated June 7, 2012, on a fully phased-in basis.
|
|
|
(c) See "Supplemental information – Explanation of GAAP and Non-GAAP financial measures" beginning on page 10 for a calculation of these ratios.
|
|
|
(d) Changes in January 2014 to the probable loss model associated with unsecured wholesale credit exposures within our Advanced Approach capital model will impact risk-weighted assets. The Company did not include the impact at Dec. 31, 2013. However, a preliminary estimate of the revised methodology to the portfolio at Sept. 30, 2013 would have added approximately 6% to the risk-weighted assets.
|
|
N/A – Not available.
|
|
Dividends
Common – On Jan. 17, 2014, The Bank of New York Mellon Corporation declared a quarterly common stock dividend of $0.15 per common share. This cash dividend is payable on Feb. 7, 2014 to shareholders of record as of the close of business on Jan. 31, 2014.
Preferred – On Jan. 17, 2014, The Bank of New York Mellon Corporation also declared the following dividends for the noncumulative perpetual preferred stock, liquidation preference $100,000 per share, for the dividend period ending in March 2014, in each case, payable on March 20, 2014 to holders of record as of the close of business on March 5, 2014:
- $1,000.00 per share on the Series A Preferred Stock (equivalent to approximately $10.00 per Normal Preferred Capital Security of Mellon Capital IV, each representing 1/100th interest in a share of Series A Preferred Stock); and
- $1,300.00 per share on 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).
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 management and investment services in 35 countries and more than 100 markets. As of December 31, 2013, BNY Mellon had $27.6 trillion in assets under custody and/or administration, and $1.6 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, 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, 2013 and are available at www.bnymellon.com (Investor Relations - Financial Reports).
Conference Call Information
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. 17, 2014. 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. 17, 2014. Replays of the conference call and audio webcast will be available beginning Jan. 17, 2014 at approximately 2 p.m. EST through Jan. 31, 2014 by dialing (866) 499-4577 (U.S.) or (203) 369-1811 (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
amounts and unless otherwise noted; quarterly
returns are annualized)
|
Quarter ended
|
|
Year-to-date
|
|
Dec. 31,
2013
|
Sept. 30,
2013
|
Dec. 31,
2012
|
|
Dec. 31,
2013
|
Dec. 31,
2012
|
|
|
|
|
|
|
|
|
|
Return on common equity (a)
|
5.7%
|
11.2%
|
7.1%
|
|
5.9%
|
7.1%
|
|
Non-GAAP (a)
|
6.3%
|
8.9%
|
8.2%
|
|
8.3%
|
8.8%
|
|
|
|
|
|
|
|
|
|
Return on tangible common equity – Non-GAAP (a)
|
14.3%
|
28.4%
|
18.8%
|
|
15.4%
|
19.3%
|
|
Non-GAAP adjusted (a)
|
14.3%
|
21.5%
|
19.7%
|
|
19.7%
|
21.8%
|
|
|
|
|
|
|
|
|
|
Fee revenue as a percentage of total revenue excluding net securities gains
|
78%
|
79%
|
78%
|
|
78%
|
78%
|
|
|
|
|
|
|
|
|
|
Annualized fee revenue per employee (based on average headcount) (in thousands)
|
$ 215
|
$ 232
|
$ 227
|
|
$ 232
|
$ 232
|
|
|
|
|
|
|
|
|
|
Percentage of non-U.S. total revenue (b)
|
39%
|
39%
|
36%
|
|
37%
|
37%
|
|
|
|
|
|
|
|
|
|
Pre-tax operating margin (a)
|
20%
|
26%
|
24%
|
|
25%
|
23%
|
|
Non-GAAP (a)
|
22%
|
29%
|
27%
|
|
27%
|
29%
|
|
|
|
|
|
|
|
|
|
Net interest margin (FTE)
|
1.09%
|
1.16%
|
1.09%
|
|
1.13%
|
1.21%
|
|
|
|
|
|
|
|
|
|
Selected average balances:
|
|
|
|
|
|
|
|
Interest-earning assets
|
$285,779
|
$271,150
|
$270,215
|
|
$272,841
|
$250,450
|
|
Assets of operations
|
$344,629
|
$329,887
|
$324,601
|
|
$330,711
|
$304,102
|
|
Total assets
|
$356,135
|
$341,750
|
$335,995
|
|
$342,311
|
$315,381
|
|
Interest-bearing deposits
|
$157,020
|
$153,547
|
$142,719
|
|
$152,408
|
$134,259
|
|
Noninterest-bearing deposits
|
$ 79,999
|
$ 72,075
|
$ 79,987
|
|
$ 73,288
|
$ 69,951
|
|
Preferred stock
|
$ 1,562
|
$ 1,562
|
$ 1,066
|
|
$ 1,388
|
$ 437
|
|
Total The Bank of New York Mellon Corporation common
shareholders' equity
|
$ 35,698
|
$ 34,264
|
$ 34,962
|
|
$ 34,832
|
$ 34,333
|
|
|
|
|
|
|
|
|
|
Average common shares and equivalents
outstanding (in thousands):
|
|
|
|
|
|
|
|
Basic
|
1,142,861
|
1,148,724
|
1,161,212
|
|
1,150,689
|
1,176,485
|
|
Diluted
|
1,147,961
|
1,152,679
|
1,163,753
|
|
1,154,441
|
1,178,430
|
|
|
|
|
|
|
|
|
|
Period-end data:
|
|
|
|
|
|
|
|
Assets under management (in billions) (c)
|
$ 1,583 (d)
|
$ 1,532
|
$ 1,386
|
|
$ 1,583 (d)
|
$ 1,386
|
|
Assets under custody and/or administration (in trillions) (e)
|
$ 27.6 (d)
|
$ 27.4
|
$ 26.3
|
|
$ 27.6 (d)
|
$ 26.3
|
|
Market value of securities on loan (in billions) (f)
|
$ 235 (g)
|
$ 255
|
$ 237
|
|
$ 235 (g)
|
$ 237
|
|
|
|
|
|
|
|
|
|
Full-time employees
|
51,100
|
50,800
|
49,500
|
|
51,100
|
49,500
|
|
Book value per common share – GAAP (a)
|
$ 31.48
|
$ 30.82
|
$ 30.39
|
|
$ 31.48
|
$ 30.39
|
|
Tangible book value per common share – Non-GAAP (a)
|
$ 13.97
|
$ 13.36
|
$ 12.82
|
|
$ 13.97
|
$ 12.82
|
|
Cash dividends per common share
|
$ 0.15
|
$ 0.15
|
$ 0.13
|
|
$ 0.58
|
$ 0.52
|
|
Common dividend payout ratio
|
34%
|
18%
|
25%
|
|
33%
|
26%
|
|
Closing stock price per common share
|
$ 34.94
|
$ 30.19
|
$ 25.70
|
|
$ 34.94
|
$ 25.70
|
|
Market capitalization
|
$ 39,910
|
$ 34,674
|
$ 29,902
|
|
$ 39,910
|
$ 29,902
|
|
(a) Non-GAAP excludes M&I, litigation and restructuring charges and the impact of the U.S. Tax Court's disallowance of certain foreign tax credits, if applicable. See "Supplemental information – Explanation of GAAP and Non-GAAP financial measures" beginning on page 10 for a calculation of these ratios.
|
|
(b) Includes fee revenue, net interest revenue and income from consolidated investment management funds, net of net income attributable to noncontrolling interests.
|
|
(c) Excludes assets managed in the Investment Services business.
|
|
(d) Preliminary.
|
|
(e) Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.2 trillion at both Dec. 31, 2013 and Sept. 30, 2013 and $1.1 trillion at Dec. 31, 2012.
|
|
(f) Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities on loan relating to CIBC Mellon.
(g) Excludes securities booked on BNY Mellon beginning in the fourth quarter of 2013 resulting from the CIBC Mellon joint venture, which totaled $62 billion at Dec. 31, 2013.
|
|
THE BANK OF NEW YORK MELLON CORPORATION
|
|
Condensed Consolidated Income Statement
|
|
|
(in millions)
|
Quarter ended
|
|
Year-to-date
|
|
Dec. 31,
2013
|
Sept. 30,
2013
|
Dec. 31,
2012
|
|
Dec. 31,
2013
|
Dec. 31,
2012
|
|
|
Fee and other revenue
|
|
|
|
|
|
|
|
Investment services fees:
|
|
|
|
|
|
|
|
Asset servicing
|
$ 984
|
$ 964
|
$ 945
|
|
$ 3,905
|
$ 3,780
|
|
Clearing services
|
324
|
315
|
294
|
|
1,264
|
1,193
|
|
Issuer services
|
237
|
322
|
215
|
|
1,090
|
1,052
|
|
Treasury services
|
137
|
137
|
141
|
|
554
|
549
|
|
Total investment services fees
|
1,682
|
1,738
|
1,595
|
|
6,813
|
6,574
|
|
Investment management and performance fees
|
904
|
821
|
853
|
|
3,395
|
3,174
|
|
Foreign exchange and other trading revenue
|
146
|
160
|
139
|
|
674
|
692
|
|
Distribution and servicing
|
43
|
43
|
52
|
|
180
|
192
|
|
Financing-related fees
|
43
|
44
|
45
|
|
172
|
172
|
|
Investment and other income
|
(60)
|
135
|
116
|
|
416
|
427
|
|
Total fee revenue
|
2,758
|
2,941
|
2,800
|
|
11,650
|
11,231
|
|
Net securities gains
|
39
|
22
|
50
|
|
141
|
162
|
|
Total fee and other revenue
|
2,797
|
2,963
|
2,850
|
|
11,791
|
11,393
|
|
Operations of consolidated investment management funds
|
|
|
|
|
|
|
|
Investment income
|
109
|
134
|
137
|
|
548
|
593
|
|
Interest of investment management fund note holders
|
73
|
102
|
95
|
|
365
|
404
|
|
Income from consolidated investment management funds
|
36
|
32
|
42
|
|
183
|
189
|
|
Net interest revenue
|
|
|
|
|
|
|
|
Interest revenue
|
846
|
855
|
843
|
|
3,352
|
3,507
|
|
Interest expense
|
85
|
83
|
118
|
|
343
|
534
|
|
Net interest revenue
|
761
|
772
|
725
|
|
3,009
|
2,973
|
|
Provision for credit losses
|
6
|
2
|
(61)
|
|
(35)
|
(80)
|
|
Net interest revenue after provision for credit losses
|
755
|
770
|
786
|
|
3,044
|
3,053
|
|
Noninterest expense
|
|
|
|
|
|
|
|
Staff
|
1,522
|
1,516
|
1,457
|
|
6,019
|
5,761
|
|
Professional, legal and other purchased services
|
344
|
296
|
322
|
|
1,252
|
1,222
|
|
Software and equipment
|
241
|
226
|
233
|
|
933
|
855
|
|
Net occupancy
|
154
|
153
|
156
|
|
629
|
593
|
|
Distribution and servicing
|
110
|
108
|
108
|
|
435
|
421
|
|
Business development
|
96
|
63
|
88
|
|
317
|
275
|
|
Sub-custodian
|
68
|
71
|
64
|
|
280
|
269
|
|
Other
|
258
|
249
|
255
|
|
1,029
|
994
|
|
Amortization of intangible assets
|
82
|
81
|
96
|
|
342
|
384
|
|
Merger and integration, litigation and restructuring charges
|
2
|
16
|
46
|
|
70
|
559
|
|
Total noninterest expense
|
2,877
|
2,779
|
2,825
|
|
11,306
|
11,333
|
|
Income
|
|
|
|
|
|
|
|
Income before income taxes
|
711
|
986
|
853
|
|
3,712
|
3,302
|
|
Provision (benefit) for income taxes
|
155
|
(2)
|
207
|
|
1,520
|
779
|
|
Net income
|
556
|
988
|
646
|
|
2,192
|
2,523
|
|
Net (income) attributable to noncontrolling interests (includes $(17), $(8), $(11), $(80) and $(76) related to consolidated investment management funds, respectively)
|
(17)
|
(8)
|
(11)
|
|
(81)
|
(78)
|
|
Net income applicable to shareholders of The Bank of New York Mellon Corporation
|
539
|
980
|
635
|
|
2,111
|
2,445
|
|
Preferred stock dividends
|
(26)
|
(13)
|
(13)
|
|
(64)
|
(18)
|
|
Net income applicable to common shareholders of The Bank of New York Mellon Corporation
|
$ 513
|
$ 967
|
$ 622
|
|
$ 2,047
|
$ 2,427
|
|
THE BANK OF NEW YORK MELLON CORPORATION
|
|
Condensed Consolidated Income Statement - continued
|
|
|
Net income applicable to common shareholders of The
Bank of New York Mellon Corporation used for the
earnings per share calculation
(in millions)
|
|
|
|
|
Quarter ended
|
|
Year-to-date
|
|
Dec. 31,
2013
|
Sept. 30,
2013
|
Dec. 31,
2012
|
Dec. 31,
2013
|
Dec. 31,
2012
|
|
Net income applicable to common shareholders of The
Bank of New York Mellon Corporation
|
$ 513
|
$ 967
|
$ 622
|
|
$ 2,047
|
$ 2,427
|
|
Less: Earnings allocated to participating securities
|
10
|
18
|
9
|
|
37
|
35
|
|
Change in the excess of redeemable value over the
fair value of noncontrolling interests
|
-
|
-
|
-
|
|
1
|
(5)
|
|
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
|
$ 503
|
$ 949
|
$ 613
|
|
$ 2,009
|
$ 2,397
|
|
|
|
|
|
|
|
|
|
Earnings per share applicable to the common
shareholders of The Bank of New York Mellon
Corporation (a)
(in dollars)
|
|
|
|
Quarter ended
|
|
Year-to-date
|
|
Dec. 31,
2013
|
Sept. 30,
2013
|
Dec. 31,
2012
|
|
Dec. 31,
2013
|
Dec. 31,
2012
|
|
Basic
|
$ 0.44
|
$ 0.83
|
$ 0.53
|
|
$ 1.75
|
$ 2.04
|
|
Diluted
|
$ 0.44
|
$ 0.82
|
$ 0.53
|
|
$ 1.74
|
$ 2.03
|
|
(a) Basic and diluted earnings per share under the two-class method are determined on the net income applicable to common shareholders of The Bank of New York Mellon Corporation reported on the income statement less earnings allocated to participating securities, and the change in the excess of redeemable value over the fair value of noncontrolling interests.
|
|
|
|
|
|
|
|
|
|
|
THE BANK OF NEW YORK MELLON CORPORATION
|
|
Consolidated Balance Sheet
|
|
|
Dec. 31,
|
Sept. 30,
|
Dec. 31,
|
|
(dollars in millions, except per share amounts)
|
2013
|
2013
|
2012
|
|
Assets
|
|
|
|
|
Cash and due from:
|
|
|
|
|
Banks
|
$ 6,460
|
$ 7,304
|
$ 4,727
|
|
Interest-bearing deposits with the Federal Reserve and other central banks
|
104,359
|
95,519
|
90,110
|
|
Interest-bearing deposits with banks
|
35,300
|
41,390
|
43,910
|
|
Federal funds sold and securities purchased under resale agreements
|
9,161
|
9,191
|
6,593
|
|
Securities:
|
|
|
|
|
Held-to-maturity (fair value of $19,443, $20,300 and $8,389)
|
19,743
|
20,358
|
8,205
|
|
Available-for-sale
|
79,309
|
77,099
|
92,619
|
|
Total securities
|
99,052
|
97,457
|
100,824
|
|
Trading assets
|
12,098
|
12,101
|
9,378
|
|
Loans
|
51,657
|
50,138
|
46,629
|
|
Allowance for loan losses
|
(210)
|
(206)
|
(266)
|
|
Net loans
|
51,447
|
49,932
|
46,363
|
|
Premises and equipment
|
1,655
|
1,569
|
1,659
|
|
Accrued interest receivable
|
621
|
545
|
593
|
|
Goodwill
|
18,073
|
18,025
|
18,075
|
|
Intangible assets
|
4,452
|
4,527
|
4,809
|
|
Other assets
|
20,360
|
22,701
|
20,468
|
|
Subtotal assets of operations
|
363,038
|
360,261
|
347,509
|
|
Assets of consolidated investment management funds, at fair value:
|
|
|
|
|
Trading assets
|
10,397
|
10,725
|
10,961
|
|
Other assets
|
875
|
966
|
520
|
|
Subtotal assets of consolidated investment management funds, at fair value
|
11,272
|
11,691
|
11,481
|
|
Total assets
|
$ 374,310
|
$ 371,952
|
$ 358,990
|
|
Liabilities
|
|
|
|
|
Deposits:
|
|
|
|
|
Noninterest-bearing (principally U.S. offices)
|
$ 95,475
|
$ 87,303
|
$ 93,019
|
|
Interest-bearing deposits in U.S. offices
|
56,640
|
58,505
|
53,826
|
|
Interest-bearing deposits in Non-U.S. offices
|
109,014
|
109,752
|
99,250
|
|
Total deposits
|
261,129
|
255,560
|
246,095
|
|
Federal funds purchased and securities sold under repurchase agreements
|
9,648
|
9,737
|
7,427
|
|
Trading liabilities
|
6,945
|
9,022
|
8,176
|
|
Payables to customers and broker-dealers
|
15,707
|
15,293
|
16,095
|
|
Commercial paper
|
96
|
1,851
|
338
|
|
Other borrowed funds
|
663
|
844
|
1,380
|
|
Accrued taxes and other expenses
|
6,985
|
6,467
|
7,316
|
|
Other liabilities (includes allowance for lending-related commitments of $134, $133 and $121)
|
4,608
|
5,848
|
6,010
|
|
Long-term debt
|
19,864
|
18,889
|
18,530
|
|
Subtotal liabilities of operations
|
325,645
|
323,511
|
311,367
|
|
Liabilities of consolidated investment management funds, at fair value:
|
|
|
|
|
Trading liabilities
|
10,085
|
10,380
|
10,152
|
|
Other liabilities
|
46
|
78
|
29
|
|
Subtotal liabilities of consolidated investment management funds, at fair value
|
10,131
|
10,458
|
10,181
|
|
Total liabilities
|
335,776
|
333,969
|
321,548
|
|
Temporary equity
|
|
|
|
|
Redeemable noncontrolling interests
|
230
|
203
|
178
|
|
Permanent equity
|
|
|
|
|
Preferred stock – par value $0.01 per share; authorized 100,000,000 shares; issued 15,826,
15,826 and 10,826 shares
|
1,562
|
1,562
|
1,068
|
|
Common stock – par value $0.01 per share; authorized 3,500,000,000 shares; issued
1,268,036,220, 1,264,234,315 and 1,254,182,209 shares
|
13
|
13
|
13
|
|
Additional paid-in capital
|
24,002
|
23,903
|
23,485
|
|
Retained earnings
|
15,976
|
15,639
|
14,622
|
|
Accumulated other comprehensive loss, net of tax
|
(892)
|
(1,339)
|
(643)
|
|
Less: Treasury stock of 125,786,430, 115,712,764 and 90,691,868 common shares, at cost
|
(3,140)
|
(2,819)
|
(2,114)
|
|
Total The Bank of New York Mellon Corporation shareholders' equity
|
37,521
|
36,959
|
36,431
|
|
Nonredeemable noncontrolling interests of consolidated investment management funds
|
783
|
821
|
833
|
|
Total permanent equity
|
38,304
|
37,780
|
37,264
|
|
Total liabilities, temporary equity and permanent equity
|
$ 374,310
|
$ 371,952
|
$ 358,990
|
Supplemental information – Explanation of GAAP and Non-GAAP financial measures
BNY Mellon has included in this Earnings Release certain Non-GAAP financial measures based upon Tier 1 common equity and 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 and trust preferred securities from the numerator of the ratio. 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 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 its estimated Basel III Tier 1 common equity ratio based on its interpretation, expectations and understanding of the final Basel III rules released by the Federal Reserve on July 2, 2013, on a fully phased in basis and on the application of such rules to BNY Mellon's businesses as currently conducted. The estimated Basel III Tier 1 common equity ratio is necessarily subject to, among other things, BNY Mellon's further review and implementation of the final Basel III rules, anticipated compliance with all necessary enhancements to model calibration, and other refinements, further implementation guidance from regulators and any changes BNY Mellon may make to its businesses. Consequently, BNY Mellon's estimated Basel III Tier 1 common equity ratio may change based on these factors. Management views the estimated Basel III Tier 1 common equity ratio as a key measure in monitoring BNY Mellon's capital position and progress against future regulatory capital standards. Additionally, the presentation of the estimated Basel III Tier 1 common equity ratio is intended to allow investors to compare BNY Mellon's estimated Basel III Tier 1 common equity ratio with estimates presented by other companies.
BNY Mellon has presented revenue measures which exclude the effect of noncontrolling interests related to consolidated investment management funds and a loss related to an equity investment; and expense measures which exclude M&I expenses, litigation charges, restructuring charges and amortization of intangible assets. Return on equity measures and operating margin measures, which exclude some or all of these items, are also presented. Return on equity measures also exclude the (benefit) net charge related to the disallowance of certain foreign tax credits. 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.
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 tables present the reconciliation of net income and diluted earnings per common share.
|
Reconciliation of net income and diluted EPS – GAAP to Non-GAAP
|
4Q13
|
3Q13
|
|
Net
|
Diluted
|
Net
|
Diluted
|
|
(in millions, except per common share amounts)
|
income
|
EPS
|
income
|
EPS
|
|
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP
|
$ 513
|
$ 0.44
|
$ 967
|
$ 0.82
|
|
Loss related to an equity investment (after-tax)
|
115
|
0.10
|
N/A
|
N/A
|
|
Benefit related to the U.S. Tax Court's partial reconsideration of a tax decision disallowing certain foreign tax credits
|
N/A
|
N/A
|
261
|
0.22
|
|
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – Non-GAAP
|
$ 628
|
$ 0.54
|
$ 706
|
$ 0.60
|
|
N/A – Not applicable.
|
|
|
|
|
|
Reconciliation of net income and diluted EPS – GAAP to Non-GAAP
|
YTD13
|
|
Net
|
Diluted
|
|
(in millions, except per common share amounts)
|
income
|
EPS
|
|
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP
|
$ 2,047
|
$ 1.74
|
|
Net charge related to the U.S. Tax Court's decisions disallowing certain foreign tax credits (after-tax)
|
593
|
0.50
|
|
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – Non-GAAP
|
$ 2,640
|
$ 2.24
|
The following table presents the calculation of the pre-tax operating margin ratio.
|
Pre-tax operating margin
|
|
|
|
|
|
|
|
|
(dollars in millions)
|
4Q13
|
3Q13
|
4Q12
|
|
YTD13
|
YTD12
|
|
|
Income before income taxes – GAAP
|
$ 711
|
$ 986
|
$ 853
|
|
$ 3,712
|
$ 3,302
|
|
Less: Net income attributable to noncontrolling interests of consolidated investment management funds
|
17
|
8
|
11
|
|
80
|
76
|
|
Add: Amortization of intangible assets
|
82
|
81
|
96
|
|
342
|
384
|
|
M&I, litigation and restructuring charges
|
2
|
16
|
46
|
|
70
|
559
|
|
Income before income taxes excluding net income attributable to noncontrolling interests of consolidated investment management funds, amortization of intangible assets and M&I, litigation and restructuring charges – Non-GAAP
|
$ 778
|
$ 1,075
|
$ 984
|
|
$ 4,044
|
$ 4,169
|
|
|
|
|
|
|
|
|
Fee and other revenue – GAAP
|
$ 2,797
|
$ 2,963
|
$ 2,850
|
|
$ 11,791
|
$ 11,393
|
|
Income from consolidated investment management
funds – GAAP
|
36
|
32
|
42
|
|
183
|
189
|
|
Net interest revenue – GAAP
|
761
|
772
|
725
|
|
3,009
|
2,973
|
|
Total revenue – GAAP
|
3,594
|
3,767
|
3,617
|
|
14,983
|
14,555
|
|
Less: Net income attributable to noncontrolling interests of consolidated investment management funds
|
17
|
8
|
11
|
|
80
|
76
|
|
Total revenue excluding net income attributable to noncontrolling interests of consolidated investment management funds – Non-GAAP
|
$ 3,577
|
$ 3,759
|
$ 3,606
|
|
$ 14,903
|
$ 14,479
|
|
|
|
|
|
|
|
|
Pre-tax operating margin (a)
|
20%
|
26%
|
24%
|
|
25%
|
23%
|
|
Pre-tax operating margin excluding net income attributable
to noncontrolling interests of consolidated investment
management funds, amortization of intangible assets
and M&I, litigation and restructuring charges – Non-GAAP (a)
|
22%
|
29%
|
27%
|
|
27%
|
29%
|
|
(a) Income before taxes divided by total revenue.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
4Q13
|
3Q13
|
4Q12
|
|
YTD13
|
YTD12
|
|
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP
|
$ 513
|
$ 967
|
$ 622
|
|
$ 2,047
|
$ 2,427
|
|
Add: Amortization of intangible assets, net of tax
|
53
|
52
|
65
|
|
220
|
247
|
|
Net income applicable to common shareholders of The Bank of New York Mellon Corporation excluding amortization of intangible assets – Non-GAAP
|
566
|
1,019
|
687
|
|
2,267
|
2,674
|
|
Add: M&I, litigation and restructuring charges
|
1
|
12
|
31
|
|
45
|
339
|
|
(Benefit) net charge related to the disallowance of certain foreign tax credits
|
-
|
(261)
|
-
|
|
593
|
-
|
|
Net income applicable to common shareholders of The Bank of New York Mellon Corporation excluding amortization of intangible assets, M&I, litigation and restructuring charges and the (benefit) net charge related to the disallowance of certain foreign tax
credits – Non-GAAP
|
$ 567
|
$ 770
|
$ 718
|
|
$ 2,905
|
$ 3,013
|
|
|
|
|
|
|
|
|
Average common shareholders' equity
|
$ 35,698
|
$ 34,264
|
$ 34,962
|
|
$ 34,832
|
$ 34,333
|
|
Less: Average goodwill
|
18,026
|
17,975
|
18,046
|
|
17,988
|
17,967
|
|
Average intangible assets
|
4,491
|
4,569
|
4,860
|
|
4,619
|
4,982
|
|
Add: Deferred tax liability – tax deductible goodwill
|
1,302
|
1,262
|
1,130
|
|
1,302
|
1,130
|
|
Deferred tax liability – non-tax deductible intangible assets
|
1,222
|
1,242
|
1,310
|
|
1,222
|
1,310
|
|
Average tangible common shareholders' equity – Non-GAAP
|
$ 15,705
|
$ 14,224
|
$ 14,496
|
|
$ 14,749
|
$ 13,824
|
|
|
|
|
|
|
|
|
Return on common equity – GAAP (a)
|
5.7%
|
11.2%
|
7.1%
|
|
5.9%
|
7.1%
|
|
Return on common equity excluding amortization of intangible assets, M&I, litigation and restructuring charges and the (benefit) net charge related to the disallowance of certain foreign tax credits – Non-GAAP (a)
|
6.3%
|
8.9%
|
8.2%
|
|
8.3%
|
8.8%
|
|
|
|
|
|
|
|
|
Return on tangible common equity – Non-GAAP (a)
|
14.3%
|
28.4%
|
18.8%
|
|
15.4%
|
19.3%
|
|
Return on tangible common equity excluding M&I, litigation and restructuring charges and the (benefit) net charge related to the disallowance of certain foreign tax credits – Non-GAAP (a)
|
14.3%
|
21.5%
|
19.7%
|
|
19.7%
|
21.8%
|
|
(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)
|
2013
|
2013
|
2012
|
|
BNY Mellon shareholders' equity at period end – GAAP
|
$ 37,521
|
$ 36,959
|
$ 36,431
|
|
Less: Preferred stock
|
1,562
|
1,562
|
1,068
|
|
BNY Mellon common shareholders' equity at period end – GAAP
|
35,959
|
35,397
|
35,363
|
|
Less: Goodwill
|
18,073
|
18,025
|
18,075
|
|
Intangible assets
|
4,452
|
4,527
|
4,809
|
|
Add: Deferred tax liability – tax deductible goodwill
|
1,302
|
1,262
|
1,130
|
|
Deferred tax liability – non-tax deductible intangible assets
|
1,222
|
1,242
|
1,310
|
|
Tangible BNY Mellon common shareholders' equity at period end – Non-GAAP
|
$ 15,958
|
$ 15,349
|
$ 14,919
|
|
|
|
|
|
Total assets at period end – GAAP
|
$374,310
|
$371,952
|
$358,990
|
|
Less: Assets of consolidated investment management funds
|
11,272
|
11,691
|
11,481
|
|
Subtotal assets of operations – Non-GAAP
|
363,038
|
360,261
|
347,509
|
|
Less: Goodwill
|
18,073
|
18,025
|
18,075
|
|
Intangible assets
|
4,452
|
4,527
|
4,809
|
|
Cash on deposit with the Federal Reserve and other central banks (a)
|
105,384
|
96,316
|
90,040
|
|
Tangible total assets of operations at period end – Non-GAAP
|
$235,129
|
$241,393
|
$234,585
|
|
|
|
|
|
BNY Mellon shareholders' equity to total assets – GAAP
|
10.0%
|
9.9%
|
10.1%
|
|
BNY Mellon common shareholders' equity to total assets – GAAP
|
9.6%
|
9.5%
|
9.9%
|
|
Tangible BNY Mellon common shareholders' equity to tangible assets of
operations – Non-GAAP
|
6.8%
|
6.4%
|
6.4%
|
|
|
|
|
|
Period-end common shares outstanding (in thousands)
|
1,142,250
|
1,148,522
|
1,163,490
|
|
|
|
|
|
Book value per common share
|
$ 31.48
|
$ 30.82
|
$ 30.39
|
|
Tangible book value per common share – Non-GAAP
|
$ 13.97
|
$ 13.36
|
$ 12.82
|
|
(a) Assigned a zero percent risk-weighting by the regulators.
|
|
|
|
The following table presents the calculation of our Basel I Tier 1 common equity 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)
|
2013 (a)
|
2013
|
2012
|
|
Total Tier 1 capital – Basel I
|
$ 18,336
|
$ 18,074
|
$ 16,694
|
|
Less: Trust preferred securities
|
330
|
324
|
623
|
|
Preferred stock
|
1,562
|
1,562
|
1,068
|
|
Total Tier 1 common equity
|
$ 16,444
|
$ 16,188
|
$ 15,003
|
|
|
|
|
|
Total risk-weighted assets – Basel I
|
$ 113,354
|
$ 114,404
|
$ 111,180
|
|
|
|
|
|
Basel I Tier 1 common equity to risk-weighted assets ratio – Non-GAAP
|
14.5%
|
14.2%
|
13.5%
|
|
(a) Preliminary.
|
|
|
|
The following table presents the calculation of our estimated Basel III Tier 1 common equity ratio under the Standardized Approach and Advanced Approach.
Estimated Basel III Tier 1 common equity ratio – Non-GAAP (a)
|
Dec. 31,
|
Sept. 30,
|
Dec. 31,
|
|
(dollars in millions)
|
2013 (b)
|
2013
|
2012
|
|
Total Tier 1 capital – Basel I
|
$ 18,336
|
$ 18,074
|
$ 16,694
|
|
Adjustment to determine estimated Basel III Tier 1 common equity:
|
|
|
|
|
Deferred tax liability – tax deductible intangible assets
|
70
|
82
|
78
|
|
Preferred stock
|
(1,562)
|
(1,562)
|
(1,068)
|
|
Trust preferred securities
|
(330)
|
(324)
|
(623)
|
|
Other comprehensive income (loss) and net pension fund assets:
|
|
|
|
|
Securities available-for-sale
|
387
|
487
|
1,350
|
|
Pension liabilities
|
(900)
|
(1,348)
|
(1,453)
|
|
Net pension fund assets
|
(713)
|
(279)
|
(249)
|
|
Total other comprehensive income (loss) and net pension fund assets
|
(1,226)
|
(1,140)
|
(352)
|
|
Equity method investments
|
(445)
|
(479)
|
(501)
|
|
Deferred tax assets
|
(49)
|
(26)
|
(47)
|
|
Other
|
16
|
18
|
18
|
|
Total estimated Basel III Tier 1 common equity
|
$ 14,810
|
$ 14,643
|
$ 14,199
|
|
|
|
|
|
Under the Standardized Approach:
|
|
|
|
|
Total risk-weighted assets – Basel I
|
$ 113,354
|
$ 114,404
|
N/A
|
|
Add: Adjustments (c)
|
26,511
|
31,185
|
N/A
|
|
Total estimated Basel III risk-weighted assets
|
$ 139,865
|
$ 145,589
|
N/A
|
|
|
|
|
|
Estimated Basel III Tier 1 common equity ratio – Non-GAAP
calculated under the Standardized Approach
|
10.6%
|
10.1%
|
N/A
|
|
|
|
|
|
|
|
|
|
Under the Advanced Approach:
|
|
|
|
|
Total risk-weighted assets – Basel I
|
$ 113,354
|
$ 114,404
|
$ 111,180
|
|
Add: Adjustments (c)
|
17,495
|
17,179
|
33,104
|
|
Total estimated Basel III risk-weighted assets
|
$ 130,849
|
$ 131,583
|
$ 144,284
|
|
|
|
|
|
Estimated Basel III Tier 1 common equity ratio – Non-GAAP
calculated under the Advanced Approach
|
11.3% (d)
|
11.1%
|
9.8%
|
|
(a) At Dec. 31, 2013 and Sept. 30, 2013, the estimated Basel III Tier 1 common equity ratio is based on our interpretation of and expectations regarding the final rules released by the Federal Reserve on July 2, 2013, on a fully phased-in basis. For periods prior to June 30, 2013, these ratios were estimated using our interpretation of the NPRs dated June 7, 2012, on a fully phased-in basis.
|
|
(b) Preliminary.
|
|
(c) Following are the primary differences between risk-weighted assets determined under Basel I and Basel III. Credit risk is determined under Basel I using predetermined risk-weights and asset classes and relies in part on the use of external credit ratings. Under Basel III both the Standardized and Advanced Approaches use a broader range of predetermined risk-weights and asset classes and certain alternatives to external credit ratings. Securitization exposure receives a higher risk-weighting under Basel III than Basel I, and Basel III includes additional adjustments for market risk, counterparty credit risk and equity exposures. Additionally, the Standardized Approach eliminates the use of the VaR approach for determining risk-weighted assets on certain repo-style transactions. Risk-weighted assets calculated under the Advanced Approach also include the use of internal credit models and parameters as well as an adjustment for operational risk.
|
|
(d) Changes in January 2014 to the probable loss model associated with unsecured wholesale credit exposures within our Advanced Approach capital model will impact risk-weighted assets. The Company did not include the impact at Dec. 31, 2013. However, a preliminary estimate of the revised methodology to the portfolio at Sept. 30, 2013 would have added approximately 6% to the risk-weighted assets.
|
|
N/A – Not available.
|
|
Quarterly impact to the estimated Basel III Tier 1 common equity ratio – Non-GAAP
|
|
|
|
Standardized
Approach
|
Advanced
Approach
|
|
Estimated Basel III Tier 1 common equity ratio – Non-GAAP at Sept. 30, 2013
|
10.1%
|
11.1%
|
|
Impacted by:
|
|
|
|
Net capital generation
|
5 bps
|
5 bps
|
|
Change in accumulated other comprehensive income (loss) and net pension fund assets
|
(6) bps
|
(6) bps
|
|
Change in risk-weighted assets
|
42 bps
|
6 bps
|
|
Other (a)
|
12 bps
|
14 bps
|
|
Estimated Basel III Tier 1 common equity ratio – Non-GAAP at Dec. 31, 2013
|
10.6%
|
11.3%
|
|
(a) Includes foreign currency translation.
|
|
|
|
bps – basis points.
|
|
|
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 expectations relating to those ratios, preliminary business metrics and statements made regarding our focus on driving organic growth, our focus on controlling expenses, a broader, continuous transformation process and our businesses generating significant capital and giving us increased financial flexibility. 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 Annual Report on Form 10-K for the year ended Dec. 31, 2012 and its other filings with the Securities and Exchange Commission. All forward-looking statements in this Earnings Release speak only as of Jan. 17, 2014 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.
|
Contacts:
|
MEDIA:
|
ANALYSTS:
|
|
Kevin Heine
|
Andy Clark
|
|
(212) 635-1590
|
(212) 635-1803
|
SOURCE The Bank of New York Mellon Corporation