NEW YORK, Oct. 17, 2014 /PRNewswire/ --

INVESTMENT MANAGEMENT AND PERFORMANCE FEES UP 7% YEAR-OVER-YEAR

• Assets under management up 7% year-over-year to a record $1.65 trillion

INVESTMENT SERVICES REVENUE UP 5% YEAR-OVER-YEAR

• Assets under custody and/or administration up 3% year-over-year

CONTINUED PROGRESS ON EXPENSE CONTROL

• Staff expense decreased 3% year-over-year

REPURCHASED 11.0 MILLION COMMON SHARES FOR $431 MILLION IN THIRD QUARTER

RETURN ON TANGIBLE COMMON EQUITY OF 26%, OR 18% ON AN ADJUSTED BASIS (a)

The Bank of New York Mellon Corporation ("BNY Mellon") (NYSE: BK) today reported third quarter net income applicable to common shareholders of $1.07 billion, or $0.93 per diluted common share, or $734 million, or $0.64 per diluted common share, adjusted for the previously disclosed gains net of litigation and restructuring charges.  In the third quarter of 2013, net income applicable to common shareholders was $962 million, or $0.82 per diluted common share, or $713 million, or $0.61 per diluted common share, adjusted for the benefit related to certain tax matters net of litigation and restructuring charges.  In the second quarter of 2014, net income applicable to common shareholders was $554 million, or $0.48 per diluted common share, or $715 million, or $0.62 per diluted common share, adjusted for the charge related to investment management funds and severance.  (a)

"We had a strong quarter. We grew Investment Management and Investment Services fees, controlled expenses and executed on our capital plan. During the quarter, we also repositioned the Markets Group, which will improve our operating margin and return on capital. We achieved this despite a challenging environment, demonstrating the resilience of our business model and the exceptional efforts of our employees," said Gerald L. Hassell, chairman and chief executive officer of BNY Mellon.

 

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. EDT on Oct. 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.  Earnings materials will be available at www.bnymellon.com beginning at approximately 6:30 a.m. EDT on Oct. 17, 2014.  Replays of the conference call and audio webcast will be available beginning Oct. 17, 2014 at approximately 2 p.m. EDT through Nov. 17, 2014 by dialing (800) 860-4696 (U.S.) or (203) 369-3836 (International).  The archived version of the conference call and audio webcast will also be available at www.bnymellon.com for the same time period.

 

THIRD QUARTER 2014 FINANCIAL HIGHLIGHTS (a)
(comparisons are 3Q14 vs. 3Q13 unless otherwise stated)

• Earnings

 

• Total revenue was $4.6 billion, an increase of 22%, or a decline of 1% as adjusted (Non-GAAP).
  • Investment services fees increased 5% reflecting organic growth, higher market values and net new business.
  • Investment management and performance fees increased 7% reflecting higher equity markets, the impact of a weaker U.S. dollar and higher performance fees.
  • Foreign exchange revenue was flat as higher volumes were offset by lower volatility.
    • Sharp volume gains helped mitigate the 36% year-over-year decline in the G7 Volatility Index.
  • Investment and other income, excluding the previously disclosed gains, decreased $97 million driven by lower equity revenue and seed capital gains.
  • Net interest revenue decreased 7% reflecting lower asset yields and lower accretion, partially offset by higher average interest-earning assets driven by higher deposits.
• The provision for credit losses was a credit of $19 million in 3Q14.
• Noninterest expense increased 7%.  Noninterest expense as adjusted (Non-GAAP) remained flat resulting from lower staff expense offset by higher professional, legal and other purchased services, the impact of a weaker U.S. dollar and the annual employee merit increase.
• Effective tax rate of 33.5%.  The previously disclosed gains, litigation and restructuring charges increased the effective rate 7.1% in 3Q14.
• Assets under custody and/or administration ("AUC/A") and Assets under management ("AUM")
  • AUC/A of $28.3 trillion, increased 3% primarily reflecting higher market values.
    • Estimated new AUC/A wins in Asset Servicing of $115 billion in 3Q14.
  • AUM of a record $1.65 trillion, increased 7% driven by higher equity market values and net new business.
    • Long-term inflows totaled $13 billion in 3Q14 driven by liability-driven investments.
    • Short-term inflows totaled $19 billion in 3Q14.
• Capital
  • Repurchased 11.0 million common shares for $431 million in 3Q14.
  • Return on tangible common equity of 26%, or 18% as adjusted (Non-GAAP).

 

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

 

FINANCIAL SUMMARY

 

 

 

 

CONSOLIDATED BUSINESS METRICS

 

 

The following table presents key market metrics at period end and on an average basis.

 

 

 

FEE AND OTHER REVENUE

 

 

KEY POINTS

• Asset servicing fees were $1.0 billion, an increase of 6% year-over-year and a slight increase sequentially.  The year-over-year increase primarily reflects organic growth, higher market values, net new business and higher collateral management fees in Global Collateral Services.  The sequential increase primarily reflects organic growth, partially offset by seasonally lower securities lending revenue.
• Clearing services fees were $337 million, an increase of 7% year-over-year and 3% sequentially.  Both increases were driven by growth in clearing accounts and mutual fund positions, and higher asset levels. The sequential increase also reflects higher DARTS volume.
• Issuer services fees were $315 million, a decrease of 2% year-over-year and an increase of 36% sequentially.  The year-over-year decrease reflects lower Corporate Trust fees, partially offset by new business in Depositary Receipts.  The sequential increase is primarily due to seasonally higher dividend fees and new business in Depositary Receipts, partially offset by lower Corporate Trust fees.
• Treasury services fees were $142 million in 3Q14 compared with $137 million in 3Q13 and $141 million in 2Q14. The year-over-year increase primarily reflects higher payment volumes.
• Investment management and performance fees were $881 million, an increase of 7% year-over-year and a slight decrease sequentially.  The year-over-year increase primarily resulted from higher equity markets, the impact of a weaker U.S. dollar and higher performance fees.  The sequential decrease was primarily driven by seasonally lower performance fees and the impact of a stronger U.S. dollar.

 

 

Foreign exchange and other trading revenue totaled $153 million in 3Q14 compared with $160 million in 3Q13 and $130 million in 2Q14.  In 3Q14, foreign exchange revenue totaled $154 million, unchanged year-over-year and up 19% sequentially.  Year-over-year, higher volumes offset lower volatility.  The sequential increase reflects higher volumes.

Other trading loss was $1 million in 3Q14, compared with other trading revenue of $6 million in 3Q13 and other trading revenue of $1 million in 2Q14.  Both decreases primarily reflect lower derivatives trading revenue.

 

 

Investment and other income was $890 million in 3Q14 compared with $151 million in 3Q13 and $142 million in 2Q14.  Both increases primarily reflect the gains on the sales of our equity investment in Wing Hang and our One Wall Street office building, partially offset by lower equity investment revenue and seed capital gains.

• In July 2014, we sold our equity investment in Wing Hang resulting in an after-tax gain of $315 million, or $490 million pre-tax.  Equity investment revenue related to our investment in Wing Hang totaled $20 million through July of 2014 and $95 million in full-year 2013, including $37 million from the sale of a property recorded in 3Q13.
• In September 2014, we sold the corporate headquarters at One Wall Street resulting in an after-tax gain of $204 million, or $346 million pre-tax.

 

 

NET INTEREST REVENUE

 

 

KEY POINTS

• Net interest revenue totaled $721 million in 3Q14, a decrease of $51 million compared with 3Q13 and an increase of $2 million sequentially.  The year-over-year decrease primarily resulted from lower asset yields and lower accretion, partially offset by higher average interest-earning assets driven by higher deposits.
• Euro-denominated deposit liabilities comprised 15% of average deposits in 3Q14 and 16% of average deposits in 2Q14.
• In the fourth quarter of 2014, we are continuing to reduce our interbank placement assets and increasing our high quality liquid assets in the securities portfolio.  The anticipated revenue as a result of these tactical actions should mitigate the impact on our net interest revenue as a result of:
  • the European Central Bank's reduction in their deposit rate to negative, and the resulting impact on lower reinvestment rates across the euro yield curve; as well as,
  • prolonged low reinvestment rates in the U.S.

 

 

NONINTEREST EXPENSE

 

KEY POINTS

 

 

• Total noninterest expense excluding amortization of intangible assets, M&I, litigation and restructuring charges, and the charge (recovery) related to investment management funds (Non-GAAP) decreased slightly year-over-year and increased 1% sequentially.
  • Year-over-year, staff expense decreased driven by lower pension expense, the benefit of replacing technology contractors with permanent staff and the impact of streamlining actions. The decrease was offset by higher professional, legal and other purchased services, the impact of a weaker U.S. dollar and the annual employee merit increase.
  • The sequential increase primarily reflects the incentive adjustment recorded in 2Q14 related to investment management funds, the impact of the annual employee merit increase and higher professional, legal and other purchased services expenses, partially offset by streamlining actions and lower sub-custodian expense.

INVESTMENT SECURITIES PORTFOLIO

At Sept. 30, 2014, the fair value of our investment securities portfolio totaled $115.9 billion.  The net unrealized pre-tax gain on our total securities portfolio was $1.1 billion at Sept. 30, 2014 compared with $1.2 billion at June 30, 2014.  The decrease in the net unrealized pre-tax gain was primarily driven by the increase in market interest rates.  During 3Q14, we received $134 million of paydowns of sub-investment grade securities and sold $24 million of sub-investment grade securities.

In 3Q14, we increased our level of Agency RMBS, U.S. Treasury and sovereign debt/sovereign guaranteed investment securities as we continued to reduce our interbank placement assets and increase our high quality liquid assets.

The following table shows the distribution of our investment securities portfolio.

 

 

 

 

NONPERFORMING ASSETS

 

 

Nonperforming assets were $147 million at Sept. 30, 2014, an increase of $5 million from $142 million at June 30, 2014.  The increase primarily resulted from additions in the other residential mortgage loan portfolio which were partially offset by sales in the foreign and other residential mortgage loan portfolios.

 

ALLOWANCE FOR CREDIT LOSSES, PROVISION AND NET CHARGE-OFFS

 

The provision for credit losses was a credit of $19 million in 3Q14 driven by the continued improvement in the credit quality of the loan portfolio.  The provision for credit losses was $2 million in 3Q13 and a credit of $12 million in 2Q14.

 

CAPITAL                            

Our consolidated capital ratios are shown in the following table.  At June 30, 2014 and Sept. 30, 2014, the common equity Tier 1 ("CET1"), Tier 1 and Total risk-based regulatory capital ratios are based on Basel III components of capital, as phased-in, with asset risk-weightings using the Advanced Approach framework.  The leverage capital ratios are based on Basel III components of capital and quarterly average total assets, as phased-in.  The capital ratios for Sept. 30, 2013 are based on Basel I rules (including Basel I Tier 1 common in the case of the CET1 ratio).

 

 

 

 

 

 

The table presented below compares the fully phased-in Basel III capital components and ratios to those amounts determined under the currently effective rules using the transitional phase-in requirements.

 

 

REVIEW OF BUSINESSES

Business results are subject to reclassification when organizational changes are made or whenever improvements are made in the measurement principles.  The reclassifications did not impact the consolidated results.  All prior periods have been restated.

 

INVESTMENT MANAGEMENT provides investment management services to institutional and retail investors, as well as investment management, wealth and estate planning and private banking solutions to high net worth individuals and families, and foundations and endowments.

 

 

INVESTMENT MANAGEMENT KEY POINTS

• Assets under management were a record $1.65 trillion at Sept. 30, 2014, an increase of 7% year-over-year and 1% sequentially.  The year-over-year increase primarily resulted from higher equity market values and net new business.  The sequential increase primarily reflects net new business.
  • Net long-term inflows were $13 billion in 3Q14 driven by liability-driven investments.  Short-term inflows were $19 billion in 3Q14.
• Income before taxes excluding amortization of intangible assets and the charge (recovery) related to investment management funds, net of incentives increased 6% year-over-year and decreased 11% sequentially.
• Total revenue was $1.0 billion, an increase of 6% year-over-year and a decrease of 3% sequentially.  Both comparisons were impacted by higher equity markets and lower seed capital gains.  The year-over-year increase also reflects the impact of a weaker U.S. dollar and higher performance fees.  The sequential decrease also reflects lower performance fees and the impact of a stronger U.S. dollar.
• Investment management fees were $855 million, an increase of 6% year-over-year and a slight increase  sequentially.  Both increases primarily resulted from higher equity markets.  The year-over-year increase also reflects the impact of a weaker U.S. dollar.  The sequential increase was partially offset by the impact of a stronger U.S. dollar.
• Performance fees were $22 million in 3Q14 compared with $10 million in 3Q13 and $29 million in 2Q14.  The year-over-year increase primarily reflects strong performance of liability-driven investments.  The sequential decrease was due to seasonality.
• Net interest revenue increased 3% year-over-year and 5% sequentially.  Both increases primarily reflect higher average loans.  The year-over-year increase was partially offset by lower average deposits.  The sequential increase also reflects higher average deposits.
  • Average loans increased 14% year-over-year and 4% sequentially; average deposits decreased 1% year-over-year and increased 2% sequentially.
• Total noninterest expense (ex. amortization of intangible assets and the charge (recovery) related to investment management funds, net of incentives) increased 6% year-over-year and increased slightly sequentially.  The year-over-year increase primarily reflects the impact of a weaker U.S. dollar and higher staff and business development expenses resulting from investments in strategic initiatives.
• 44% non-U.S. revenue in 3Q14 vs. 44% in 3Q13.
• Insight Investment was named LDI Manager of the Year for the fifth consecutive year at Financial News Awards for Excellence in Institutional Asset Management and was named the Overall Defined Benefit Manager of the Year 2014 by Mallowstreet.

INVESTMENT SERVICES provides global custody and related services, broker-dealer services, global collateral services, corporate trust, depositary receipt and clearing services as well as global payment/working capital solutions to global financial institutions.

 

 

INVESTMENT SERVICES KEY POINTS

 

• Investment services fees totaled $1.8 billion, an increase of 5% year-over-year and 6% sequentially.
  • Asset servicing fees (global custody, broker-dealer services and global collateral services) were $998 million in 3Q14 compared with $939 million in 3Q13 and $993 million in 2Q14.  The year-over-year increase primarily reflects organic growth, higher market values, net new business and higher collateral management fees in Global Collateral Services.  The sequential increase primarily reflects organic growth, partially offset by seasonally lower securities lending revenue.
    • Estimated new business wins (AUC/A) in Asset Servicing of $115 billion in 3Q14.
  • Clearing services fees were $336 million in 3Q14 compared with $314 million in 3Q13 and $324 million in 2Q14.  Both increases were driven by growth in clearing accounts and mutual fund positions, and higher asset levels. The sequential increase also reflects higher DARTS volume.
  • Issuer services fees (Corporate Trust and Depositary Receipts) were $314 million in 3Q14 compared with $321 million in 3Q13 and $231 million in 2Q14.  The year-over-year decrease reflects lower Corporate Trust fees, partially offset by new business in Depositary Receipts.  The sequential increase is primarily due to seasonally higher dividend fees and new business in Depositary Receipts, partially offset by lower Corporate Trust fees.
  • Treasury services fees were $139 million in 3Q14 compared with $135 million in 3Q13 and $140 million in 2Q14.  The year-over-year increase primarily reflect higher payment volumes.
• Foreign exchange and other trading revenue was $159 million in 3Q14 compared with $177 million in 3Q13 and $145 million in 2Q14.  The year-over-year decrease primarily reflect lower volatility, partially offset by higher volumes.  Sequentially, the increase reflects higher volumes.
• Net interest revenue was $583 million in 3Q14 compared with $619 million in 3Q13 and $593 million in 2Q14.  Both decreases primarily reflects lower yields, partially offset by higher average loans.  The year-over-year decrease was partially offset by higher average deposits.
• Noninterest expense (excluding amortization of intangible assets) was $1.835 billion in 3Q14 compared with $1.765 billion in 3Q13 and $1.824 billion in 2Q14.  Both increases reflect higher litigation expense.  The year-over-year increase also reflects higher professional and legal expenses, partially offset by lower staff expense.  The sequential increase was partially offset by lower sub-custodian and staff expenses.
  • Investment services fees as a percentage of noninterest expense increased year-over-year reflecting an increase in investment services fees and limited expense growth.
• 39% non-U.S. revenue in 3Q14 vs. 36% in 3Q13.

OTHER SEGMENT primarily includes credit-related activities, leasing operations, corporate treasury activities, global markets and institutional banking services, business exits, M&I expenses and other corporate revenue and expense items.

 

 

KEY POINTS

• Total fee and other revenue increased $756 million compared with 3Q13 and increased $809 million compared with 2Q14.  Both increases primarily reflect the gain on the sale of our investment in Wing Hang and the gain on the sale of the One Wall Street building, partially offset by lower equity investment and other income.
• The provision for credit losses was a credit of $19 million in 3Q14 driven by the continued improvement in the credit quality of the loan portfolio.
• Noninterest expense (excluding M&I and restructuring charges) increased $44 million compared with 3Q13 and $181 million compared with 2Q14.  Both increases primarily reflect higher litigation expense.  The year-over-year increase was partially offset by lower staff expense.  The sequential increase also reflects higher staff expenses.
• M&I and restructuring charges recorded in 3Q14 primarily reflects severance expense.

 

 

THE BANK OF NEW YORK MELLON CORPORATION
Condensed Consolidated Income Statement

 

 

 

THE BANK OF NEW YORK MELLON CORPORATION
Condensed Consolidated Income Statement - continued

 

 

 

 

 

 

 

 

 

THE BANK OF NEW YORK MELLON CORPORATION
Consolidated Balance Sheet

 

 

Impact of Adopting New Accounting Guidance

In the first quarter of 2014, BNY Mellon elected to early adopt the new accounting guidance included in Accounting Standards Update ("ASU") 2014-01, "Accounting for Investments in Qualified Affordable Housing Projects - a Consensus of the FASB Emerging Issues Task Force."  This ASU allows companies that invest in qualified affordable housing projects to elect the proportional amortization method of accounting for these investments, if certain conditions are met.  In the first quarter of 2014, we restated the prior period financial statements to reflect the impact of the retrospective application of the new accounting guidance.

The table below presents the impact of the new accounting guidance on our previously reported earnings per share applicable to the common shareholders.

 

 

The table below presents the impact of this new accounting guidance on our previously reported income statements.

 

 

 

The table below presents the impact of this new accounting guidance on our previously reported consolidated ratios and other measures.

 

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 fully phased-in Basel III CET1, SLR, Basel I CET1 and tangible common shareholders' equity.  BNY Mellon believes that the Basel III CET1 ratio on a fully phased-in basis, the SLR on a fully phased-in basis, the ratio of Basel I CET1 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 capital ratios which are, or were, utilized by regulatory authorities.  The tangible common shareholders' equity ratio includes 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 reconciliation has excluded certain assets which are given a zero percent risk-weighting for regulatory purposes and the assets of consolidated investment management funds to which BNY Mellon has limited economic exposure.  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 that can generate income.  BNY Mellon has provided a measure of tangible book value per share, which it believes 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, a gain on the sale of our investment in Wing Hang, a gain on the sale of the One Wall Street building, and a loss related to an equity investment; and expense measures which exclude M&I expenses, litigation charges, restructuring charges, amortization of intangible assets and the charge (recovery) related to investment management funds, net of incentives.  Earnings per share, return on equity measures and operating margin measures, which exclude some or all of these items, are also presented.  Earnings per share and return on equity measures also exclude the benefit related to the disallowance of certain foreign tax credits.  Operating margin measures may also exclude amortization of intangible assets and the net negative impact of money market fee waivers, net of distribution and servicing expense.  BNY Mellon believes that these measures are useful to investors because they permit a focus on period-to-period comparisons, which relate to the ability of BNY Mellon to enhance revenues and limit expenses in circumstances where such matters are within BNY Mellon's control.  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 to 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 streamlining actions, 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.

The presentation of income from consolidated investment management funds, net of net income attributable to noncontrolling interests related to the consolidation of certain investment management funds permits investors to view revenue on a basis consistent with how management views the business.  BNY Mellon believes that these presentations, as a supplement to GAAP information, give investors a clearer picture of the results of its primary businesses.

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 on a business-level basis.

 

The following table presents the reconciliation of net income and diluted earnings per common share.

 

 

 

 

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

 

 

The following table presents the reconciliation of the returns on common equity and tangible common equity.

 

 

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

 

 

The following table presents income from consolidated investment management funds, net of noncontrolling interests.

 

 

 

 

The following table presents the line items in the Investment Management business impacted by the consolidated investment management funds.

 

 

The following table presents the reconciliation of the pre-tax operating margin for the Investment Management business.

 

 

 

Capital Ratios

BNY Mellon has presented its estimated fully phased-in Basel III CET1 ratios and SLR based on its interpretation of the Final Capital Rules, which are being gradually phased-in over a multi-year period, as supplemented by the Federal Reserve's final rules concerning the SLR published on Sept. 3, 2014, and on the application of such rules to BNY Mellon's businesses as currently conducted.  Management views the estimated fully phased-in Basel III CET1 ratio and SLR as key measures in monitoring BNY Mellon's capital position and progress against future regulatory capital standards.  Additionally, the presentation of the estimated fully phased-in Basel III CET1 ratios and SLR are intended to allow investors to compare these ratios with estimates presented by other companies.  The estimated fully phased-in Basel III CET1 ratios assume all relevant regulatory approvals.  The Final Capital Rules require approval by banking regulators of certain models used as part of risk-weighted asset calculations.  If these models are not approved, the estimated fully phased-in Basel III CET1 ratios would likely be adversely impacted.

Risk-weighted assets at Sept. 30, 2014 and June 30, 2014 under the transitional Advanced Approach do not reflect the use of a simple value-at-risk methodology for repo-style transactions (including agented indemnified securities lending transactions), eligible margin loans, and similar transactions.  BNY Mellon has requested written approval to use this methodology.

Our capital ratios are necessarily subject to, among other things, BNY Mellon's further review of applicable rules, anticipated compliance with all necessary enhancements to model calibration, approval by regulators of certain models used as part of risk-weighted asset calculations, other refinements, further implementation guidance from regulators, market practices and standards and any changes BNY Mellon may make to its businesses.  Consequently, our capital ratios remain subject to ongoing review and revision and may change based on these factors.

The following are the primary differences between risk-weighted assets determined under fully phased-in Basel III-Standardized Approach and Basel I.  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 fully phased-in Basel III, the Standardized Approach uses 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 fully phased-in Basel III than Basel I, and fully phased-in 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, whereas the Advanced Approach permits the VaR approach but requires certain model qualifications and approvals, for determining risk-weighted assets on certain repo-style transactions.  In 2014, Standardized Approach and Advanced Approach risk-weighted assets include transition adjustments for intangible assets, other than goodwill, and equity exposure.

 

The following table presents the reconciliation of our estimated fully phased-in Basel III CET1 ratio under the Standardized Approach and Advanced Approach.

 

 

The following table presents the reconciliation of our Basel I CET1 ratio.

 

 

The following table presents the components of our fully phased-in estimated SLR.

 

 

DIVIDENDS

 

Common – On Oct. 17, 2014, The Bank of New York Mellon Corporation declared a quarterly common stock dividend of $0.17 per common share.  This cash dividend is payable on Nov. 7, 2014 to shareholders of record as of the close of business on Oct. 28, 2014.

Preferred – On Oct. 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 December 2014, in each case, payable on Dec. 22, 2014 to holders of record as of the close of business on Dec. 5, 2014:

• $1,011.11 per share on the Series A Preferred Stock (equivalent to $10.1111 per Normal Preferred Capital Security of Mellon Capital IV, each representing 1/100th interest in a share of Series A Preferred Stock);
• $1,300.00 per share on the Series C Preferred Stock (equivalent to $0.3250 per depositary share, each representing a 1/4,000th interest in a share of the Series C Preferred Stock); and
• $2,250.00 per share on the Series D Preferred Stock (equivalent to approximately $22.50 per depositary share, each representing a 1/100th interest in a share of the Series D 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 Sept. 30, 2014, BNY Mellon had $28.3 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 Financial Trends for The Bank of New York Mellon Corporation has been updated through Sept. 30, 2014 and are available at www.bnymellon.com (Investor Relations - Financial Reports).

 

CAUTIONARY STATEMENT

A number of statements (i) in this Earnings Release, (ii) in our presentations and (iii) in the responses to questions on our conference call discussing our quarterly results and other public events may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 including our estimated capital ratios and expectations relating to those ratios, preliminary business metrics and statements made regarding our margins and return on capital and our plans relating to the securities portfolio and impact on net interest revenue.  These statements may be expressed in a variety of ways, including the use of future or present tense language.  These statements and other forward-looking statements contained in other public disclosures of The Bank of New York Mellon Corporation which make reference to the cautionary factors described in this Earnings Release are based upon current beliefs and expectations and are subject to significant risks and uncertainties (some of which are beyond BNY Mellon's control).  Actual results may differ materially from those expressed or implied as a result of these risks and uncertainties, including, but not limited to, the risk factors and other uncertainties set forth in BNY Mellon's Annual Report on Form 10-K for the year ended Dec. 31, 2013 and BNY Mellon's other filings with the Securities and Exchange Commission.  All forward-looking statements in this Earnings Release speak only as of Oct. 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.

 

SOURCE BNY Mellon