(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
Securities registered pursuant to Section 12(b) of the Act: Title of each class | Trading symbol(s) | Name of each exchange on which registered |
(fully and unconditionally guaranteed by The Bank of New York Mellon Corporation) | ||
Securities registered pursuant to Section 12(g) of the Act: | ||
None |
• | All of our SEC filings, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to these reports as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the SEC pursuant to Section 13(a) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any proxy statement mailed by us in connection with the solicitation of proxies; |
• | Our earnings materials and selected management conference calls and presentations; |
• | Other regulatory disclosures, including: Pillar 3 Disclosures (and Market Risk Disclosure contained therein); Liquidity Coverage Ratio Disclosures; Federal Financial Institutions Examination Council - Consolidated Reports of Condition and Income for a Bank With Domestic and Foreign Offices; Consolidated Financial Statements for Bank Holding Companies; and the Dodd-Frank Act Stress Test Results for BNY Mellon and The Bank of New York Mellon; and |
• | Our Corporate Governance Guidelines, Amended and Restated By-laws, Directors’ Code of Conduct and the Charters of the Audit, Finance, Corporate Governance, Nominating and Social Responsibility, Human Resources and Compensation, Risk and Technology Committees of our Board of Directors. |
• | a communications or technology disruption or failure within our infrastructure or the infrastructure of third parties that results in a loss of information, delays our ability to access information or impacts our ability to provide |
• | a cybersecurity incident, or a failure to protect our computer systems, networks and information and our clients’ information against cybersecurity threats, could result in the theft, loss, unauthorized access to, disclosure, use or alteration of information, system or network failures, or loss of access to information; any such incident or failure could adversely impact our ability to conduct our businesses, damage our reputation and cause losses; |
• | our business may be materially adversely affected by operational risk; |
• | our risk management framework may not be effective in mitigating risk and reducing the potential for losses; |
• | we are subject to extensive government rulemaking, regulation and supervision; these rules and regulations have, and in the future may, compel us to change how we manage our businesses, which could have a material adverse effect on our business, financial condition and results of operations; |
• | regulatory or enforcement actions or litigation could materially adversely affect our results of operations or harm our businesses or reputation; |
• | our businesses may be negatively affected by adverse events, publicity, government scrutiny or other reputational harm; |
• | failure to satisfy regulatory standards, including “well capitalized” and “well managed” status or capital adequacy and liquidity rules more generally, could result in limitations on our activities and adversely affect our business and financial condition; |
• | a failure or circumvention of our controls and procedures could have a material adverse effect on our business, reputation, results of operations and financial condition; |
• | the application of our Title I preferred resolution strategy or resolution under the Title II orderly liquidation authority could adversely affect the Parent’s liquidity and financial condition and the Parent’s security holders; |
• | impacts from climate change, natural disasters, acts of terrorism, pandemics, global conflicts and other geopolitical events may have a negative impact on our business and operations; |
• | we are dependent on fee-based business for a substantial majority of our revenue and our fee-based revenues could be adversely affected by |
• | weakness and volatility in financial markets and the economy generally may materially adversely affect our business, results of operations and financial condition; |
• | changes in interest rates and yield curves could have a material adverse effect on our profitability; |
• | transitions away from and the anticipated replacement of LIBOR and other IBORs could adversely impact our business and results of operations; |
• | the UK’s withdrawal from the EU may have negative effects on global economic conditions, global financial markets, and our business and results of operations; |
• | we may experience losses on securities related to volatile and illiquid market conditions, reducing our earnings and impacting our financial condition; |
• | the failure or perceived weakness of any of our significant clients or counterparties, many of whom are major financial institutions and sovereign entities, and our assumption of credit and counterparty risk, could expose us to loss and adversely affect our business; |
• | our business, financial condition and results of operations could be adversely affected if we do not effectively manage our liquidity; |
• | we could incur losses if our allowance for credit losses, including loan and lending-related commitments reserves, is inadequate; |
• | any material reduction in our credit ratings or the credit ratings of our principal bank subsidiaries, The Bank of New York Mellon or BNY Mellon, N.A., could increase the cost of funding and borrowing to us and our rated subsidiaries and have a material adverse effect on our results of operations and financial condition and on the value of the securities we issue; |
• | new lines of business, new products and services or transformational or strategic project initiatives may subject us to additional risks, and the failure to implement these initiatives could affect our results of operations; |
• | we are subject to competition in all aspects of our business, which could negatively affect our ability to maintain or increase our profitability; |
• | our business may be adversely affected if we are unable to attract and retain employees; |
• | our strategic transactions present risks and uncertainties and could have an adverse effect on our business, results of operations and financial condition; |
• | tax law changes or challenges to our tax positions with respect to historical transactions may adversely affect our net income, effective tax rate and our overall results of operations and financial condition; |
• | our ability to return capital to shareholders is subject to the discretion of our Board of Directors and may be limited by U.S. banking laws and regulations, including those governing capital and the approval of our capital plan, applicable provisions of Delaware law or our failure to pay full and timely dividends on our preferred stock; |
• | the Parent is a non-operating holding company, and as a result, is dependent on dividends from its |
• | changes in accounting standards governing the preparation of our financial statements and future events could have a material impact on our reported financial condition, results of operations, cash flows and other financial data. |
PART I | ||
PART II | ||
PART III | ||
PART IV | ||
PART I |
• | The Bank of New York Mellon, a New York state-chartered bank, which houses our Investment Services businesses, including Asset Servicing, Issuer Services, Treasury Services, Clearance and Collateral Management, as well as the bank-advised business of Asset Management; and |
• | BNY Mellon, National Association (“BNY Mellon, N.A.”), a national bank, which houses our Wealth Management business. |
I. | Distribution of Assets, Liabilities and Stockholders’ Equity; Interest Rates and Interest Differential |
A. | Book Value of Securities; |
B. | Maturity Distribution and Yields of Securities; and |
C. | Aggregate Book Value and Market Value of Securities Where Issuer Exceeds 10% of Stockholders’ Equity |
A. | Types of Loans; and |
B. | Maturities and Sensitivities of Loans to Changes in Interest Rates |
C. | Risk Elements; and |
D. | Other Interest-bearing Assets |
PART II |
PART III |
Name | Age | Positions and offices |
Jolen Anderson | 41 | Ms. Anderson has served as Senior Executive Vice President and Global Head of Human Resources of BNY Mellon since September 2019. From 2014 to September 2019, Ms. Anderson served as Senior Vice President, Chief Diversity Officer and Chief Counsel, Employment and Social Responsibility, for Visa Inc. |
Bridget E. Engle | 56 | Ms. Engle has served as Senior Executive Vice President and Chief Information Officer of BNY Mellon since June 2017. From April 2015 to March 2017, Ms. Engle served as Bank of America Corporation’s Chief Information Officer for Global Commercial Banking and Markets Technology. From 2011 to April 2015, Ms. Engle was Bank of America’s Chief Information Officer for Consumer Banking. |
Thomas P. (Todd) Gibbons | 63 | Mr. Gibbons has served as interim Chief Executive Officer of BNY Mellon since September 2019, and was Vice Chairman and Chief Executive Officer of Clearing, Markets and Client Management of BNY Mellon from January 2018 to September 2019, and Vice Chairman and Chief Financial Officer of BNY Mellon from July 2008 to January 2018. |
Mitchell E. Harris | 65 | Mr. Harris has served as Senior Executive Vice President and Chief Executive Officer of Investment Management of BNY Mellon since February 2016 and was President of Investment Management from May 2011 to February 2016. |
Hani A. Kablawi | 51 | Mr. Kablawi has served as Senior Executive Vice President and Head of International since January 2020 and Chairman of EMEA since January 2018 and was Chief Executive Officer of Global Asset Servicing of BNY Mellon from January 2018 to January 2020 and Chief Executive Officer of EMEA Investment Services from July 2016 to January 2018. Mr. Kablawi previously served as Chief Executive Officer of EMEA Asset Servicing from January 2012 to July 2016. |
Name | Age | Positions and offices |
Senthil Kumar | 54 | Mr. Kumar has served as Senior Executive Vice President and Chief Risk Officer of BNY Mellon since July 2019. Mr. Kumar served as Chief Risk Officer of the Institutional Clients Group at Citigroup Inc. from April 2014 to June 2019 and managed Citi’s risk for their Financial Institutions and Public Sector team, and Alternative Investments business from 2004 to 2014. |
Kurtis R. Kurimsky | 46 | Mr. Kurimsky has served as Vice President and Controller of BNY Mellon since July 2015 and was Acting Controller from February 2015 to July 2015. Mr. Kurimsky previously served as Deputy Controller of BNY Mellon from May 2014 to February 2015. |
Francis (Frank) La Salla | 56 | Mr. La Salla has served as Senior Executive Vice President and Chief Executive Officer of Issuer Services of BNY Mellon since January 2018 and was Chief Executive Officer of Corporate Trust from May 2017 to January 2018. Mr. La Salla previously served as Chief Executive Officer of Global Structured Products and Alternative Investment Services from March 2014 to May 2017. |
J. Kevin McCarthy | 55 | Mr. McCarthy has served as Senior Executive Vice President and General Counsel of BNY Mellon since April 2014. |
Lester J. Owens | 62 | Mr. Owens has served as Senior Executive Vice President and Head of Operations of BNY Mellon since February 2019. From 2007 to December 2018, Mr. Owens served as managing director responsible for Wholesale Banking Operations at JPMorgan Chase & Co., with additional responsibility for Corporate & Investment Bank Client Onboarding from 2017 through 2018. |
Roman Regelman | 48 | Mr. Regelman has served as Senior Executive Vice President and Head of Asset Servicing since January 2020 and Head of Digital of BNY Mellon since September 2018. From 2011 to December 2017, Mr. Regelman was partner, managing director and co-leader of the financial institutions digital business at Boston Consulting Group. |
Michael P. Santomassimo | 44 | Mr. Santomassimo has served as Senior Executive Vice President and Chief Financial Officer of BNY Mellon since January 2018 and was Chief Financial Officer of Investment Services from July 2016 to January 2018. Mr. Santomassimo served as Chief Financial Officer, Banking, at JPMorgan Chase & Co., which included Investment Banking (Advisory and Equity and Debt Capital Markets) as well as Treasury Services from December 2013 to June 2016. |
Akash Shah | 34 | Mr. Shah has served as Senior Executive Vice President and Head of Global Client Management since January 2020 and Head of Strategy of BNY Mellon since July 2018. From 2006 to July 2018, Mr. Shah worked at McKinsey & Company, most recently as a partner and co-head of the Capital Markets & Investment Banking practice. |
PART IV |
(a) | The financial statements, schedules and exhibits required for this Form 10-K are incorporated by reference as indicated in the following index. Page numbers refer to pages of the Annual Report for Items (1) and (2) Financial Statements and Schedules. |
(1)(2) | Financial Statements and Schedules | Page No. |
Consolidated Income Statement | 112-113 | |
Consolidated Comprehensive Income Statement | 114 | |
Consolidated Balance Sheet | 115 | |
Consolidated Statement of Cash Flows | 116 | |
Consolidated Statement of Changes in Equity | 117-119 | |
Notes to Consolidated Financial Statements | 120-191 | |
Report of Independent Registered Public Accounting Firm | 192 | |
Selected Quarterly Data (unaudited) | 104 | |
(3) | Exhibits | |
See (b) below. |
(b) | The exhibits listed on the Index to Exhibits on pages 15 through 23 hereof are incorporated by reference or filed or furnished herewith in response to this Item. |
(c) | Other Financial Data |
INDEX TO EXHIBITS |
Exhibit | Description | Method of Filing | |||
3.1 | Restated Certificate of Incorporation of The Bank of New York Mellon Corporation. | ||||
3.2 | Certificate of Amendment to The Bank of New York Mellon Corporation’s Restated Certificate of Incorporation, as filed with the Secretary of State of the State of Delaware on April 9, 2019. | ||||
3.3 | Certificate of Designations of The Bank of New York Mellon Corporation with respect to Series A Noncumulative Preferred Stock, dated June 15, 2007. | ||||
3.4 | Certificate of Designations of The Bank of New York Mellon Corporation with respect to Series C Noncumulative Perpetual Preferred Stock, dated Sept. 13, 2012. | ||||
3.5 | Certificate of Designations of The Bank of New York Mellon Corporation with respect to Series D Noncumulative Perpetual Preferred Stock, dated May 16, 2013. | ||||
3.6 | Certificate of Designations of The Bank of New York Mellon Corporation with respect to Series E Noncumulative Perpetual Preferred Stock, dated April 27, 2015. | ||||
3.7 | Certificate of Designations of The Bank of New York Mellon Corporation with respect to Series F Noncumulative Perpetual Preferred Stock, dated July 29, 2016. |
INDEX TO EXHIBITS (continued) |
Exhibit | Description | Method of Filing | |||
3.8 | Amended and Restated By-Laws of The Bank of New York Mellon Corporation, as amended and restated on July 10, 2007 and subsequently amended on April 14, 2009, Aug. 11, 2009, Feb. 9, 2010, July 2, 2010, Oct. 12, 2010, Oct. 8, 2013, March 5, 2015, Oct. 13, 2015 and Feb. 12, 2018. | ||||
4.1 | None of the instruments defining the rights of holders of long-term debt of the Parent or any of its subsidiaries represented long-term debt in excess of 10% of the total assets of the Company as of Dec. 31, 2019. The Company hereby agrees to furnish to the Commission, upon request, a copy of any such instrument. | N/A | |||
4.2 | Description of the Company’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. | ||||
10.1 | * | The Bank of New York Company, Inc. Excess Contribution Plan as amended through July 10, 1990. | Previously filed as Exhibit 10(b) to The Bank of New York Company, Inc.’s Annual Report on Form 10-K (File No. 001-06152) for the year ended Dec. 31, 1990, and incorporated herein by reference. | ||
10.2 | * | Amendments dated Feb. 23, 1994 and Nov. 9, 1993 to The Bank of New York Company, Inc. Excess Contribution Plan. | |||
10.3 | * | Amendment to The Bank of New York Company, Inc. Excess Contribution Plan dated as of Nov. 1, 1995. | |||
10.4 | * | Amendment to The Bank of New York Company, Inc. Excess Contribution Plan dated as of Nov. 12, 2002. | |||
10.5 | * | Amendment to The Bank of New York Company, Inc. Excess Contribution Plan dated as of Oct. 9, 2006. | |||
10.6 | * | The Bank of New York Company, Inc. Excess Benefit Plan as amended through Dec. 8, 1992. | Previously filed as Exhibit 10(d) to The Bank of New York Company, Inc.’s Annual Report on Form 10-K (File No. 001-06152) for the year ended Dec. 31, 1992, and incorporated herein by reference. |
INDEX TO EXHIBITS (continued) |
Exhibit | Description | Method of Filing | |||
10.7 | * | Amendment dated as of Aug. 11, 1994 to The Bank of New York Company, Inc. Excess Benefit Plan. | |||
10.8 | * | Amendment dated as of Nov. 1, 1995 to The Bank of New York Company, Inc. Excess Benefit Plan. | |||
10.9 | * | Amendment dated as of July 1, 1996 to The Bank of New York Company, Inc. Excess Benefit Plan. | |||
10.10 | * | The Bank of New York Company, Inc. Supplemental Executive Retirement Plan. | Previously filed as Exhibit 10(n) to The Bank of New York Company, Inc.’s Annual Report on Form 10-K (File No. 001-06152) for the year ended Dec. 31, 1992, and incorporated herein by reference. | ||
10.11 | * | Amendment dated as of March 9, 1993 to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan. | |||
10.12 | * | Amendment dated as of Oct. 11, 1994 to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan. | |||
10.13 | * | Amendment dated as of July 1, 1996 to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan. | |||
10.14 | * | Amendment dated as of Nov. 12, 1996 to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan. | |||
10.15 | * | Amendment dated as of July 11, 2000 to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan. |
INDEX TO EXHIBITS (continued) |
Exhibit | Description | Method of Filing | |||
10.16 | * | Amendment dated as of Feb. 13, 2001 to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan. | |||
10.17 | * | Amendment dated as of Jan. 1, 2006 to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan. | |||
10.18 | * | Deferred Compensation Plan for Non-Employee Directors of The Bank of New York Company, Inc. | |||
10.19 | * | Amendment dated as of Nov. 8, 1994 to Deferred Compensation Plan for Non-Employee Directors of The Bank of New York Company, Inc. | |||
10.20 | * | Amendment dated Feb. 11, 1997 to Deferred Compensation Plan for Non-Employee Directors of The Bank of New York Company, Inc. | |||
10.21 | * | Amendment to Deferred Compensation Plan for Non-Employee Directors of The Bank of New York Company, Inc. dated as of July 11, 2000. | |||
10.22 | * | Amendment dated as of Nov. 12, 2002 to Deferred Compensation Plan for Non-Employee Directors of The Bank of New York Company, Inc. | |||
10.23 | * | Mellon Financial Corporation Director Equity Plan (2006). | |||
10.24 | * | The Bank of New York Mellon Corporation Deferred Compensation Plan for Directors, effective Jan. 1, 2008. | |||
10.25 | * | The Bank of New York Mellon Corporation Deferred Compensation Plan for Employees. |
INDEX TO EXHIBITS (continued) |
Exhibit | Description | Method of Filing | |||
10.26 | * | Form of Long Term Incentive Plan Deferred Stock Unit Agreement for Directors of The Bank of New York Corporation. | |||
10.27 | * | Amendment to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan, dated as of Jan. 1, 2009. | |||
10.28 | * | Amendment to The Bank of New York Company, Inc. Excess Benefit Plan, dated as of Jan. 1, 2009. | |||
10.29 | * | Amendment to The Bank of New York Company, Inc. Excess Contribution Plan, dated as of Jan. 1, 2009. | |||
10.30 | * | The Bank of New York Mellon Corporation Policy Regarding Shareholder Approval of Future Senior Officers Severance Arrangements, adopted July 12, 2010. | |||
10.31 | * | 2011 Form of Executive Stock Option Agreement. | |||
10.32 | * | The Bank of New York Mellon Corporation Long-Term Incentive Plan. | |||
10.33 | * | Amended and Restated Long-Term Incentive Plan of The Bank of New York Mellon Corporation. | |||
10.34 | * | 2012 Form of Nonstatutory Stock Option Agreement. | |||
10.35 | * | The Bank of New York Mellon Corporation Defined Contribution IRC 401(a)(17) Plan. |
INDEX TO EXHIBITS (continued) |
Exhibit | Description | Method of Filing | |||
10.36 | * | Amendment to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan, dated as of Dec. 31, 2014. | |||
10.37 | * | The Bank of New York Mellon Corporation Defined Contribution IRC 401(a)(17) Plan (as amended and restated). | |||
10.38 | * | Amendment dated as of Dec. 14, 2015 to The Bank of New York Company, Inc. Excess Benefit Plan. | |||
10.39 | * | The Bank of New York Mellon Corporation Executive Severance Plan (as amended effective Feb. 19, 2016). | |||
10.40 | * | The Bank of New York Mellon Corporation 2016 Executive Incentive Compensation Plan. | |||
10.41 | * | Form of Amended and Restated Indemnification Agreement with Directors of The Bank of New York Mellon Corporation. | |||
10.42 | * | Form of Amended and Restated Indemnification Agreement with Executive Officers of The Bank of New York Mellon Corporation. | |||
10.43 | * | The Bank of New York Mellon Corporation Executive Severance Plan, as amended. | |||
10.44 | * | 2016 Form of Restricted Stock Unit Agreement. | |||
10.45 | * | 2016 Form of Performance Share Unit Agreement. |
INDEX TO EXHIBITS (continued) |
Exhibit | Description | Method of Filing | |||
10.46 | * | Letter Agreement, dated July 13, 2017, between The Bank of New York Mellon Corporation and Charles W. Scharf. | |||
10.47 | * | 2017 Form of Performance Share Unit Agreement. | |||
10.48 | * | 2017 Form of Restricted Stock Unit Agreement. | |||
10.49 | * | The Bank of New York Mellon Corporation Executive Severance Plan, as amended on Feb. 12, 2018. | |||
10.50 | * | 2018 Form of Performance Share Unit Agreement. | |||
10.51 | * | 2018 Form of Restricted Stock Unit Agreement. | |||
10.52 | * | Amendment dated as of Oct. 18, 2018 to The Bank of New York Company, Inc. Excess Benefit Plan. | |||
10.53 | * | The Bank of New York Mellon Corporation 2019 Long-Term Incentive Plan. | |||
10.54 | * | 2019 Form of Performance Share Unit Agreement. | |||
10.55 | * | 2019 Form of Restricted Stock Unit Agreement. |
INDEX TO EXHIBITS (continued) |
Exhibit | Description | Method of Filing | |||
10.56 | * | The Bank of New York Mellon Corporation 2019 Executive Incentive Compensation Plan. | |||
13.1 | All portions of The Bank of New York Mellon Corporation 2019 Annual Report to Shareholders that are incorporated herein by reference. The remaining portions are furnished for the information of the SEC and are not “filed” as part of this filing. | ||||
21.1 | Primary subsidiaries of the Company. | ||||
23.1 | Consent of KPMG LLP. | ||||
24.1 | Power of Attorney. | ||||
31.1 | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||||
31.2 | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||||
32.1 | Certification of the Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||||
32.2 | Certification of the Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||||
101.INS | Inline XBRL Instance Document. | This instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. | |||
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | Filed herewith. | |||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | Filed herewith. | |||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | Filed herewith. | |||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | Filed herewith. |
INDEX TO EXHIBITS (continued) |
Exhibit | Description | Method of Filing | |||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | Filed herewith. | |||
104 | The cover page of The Bank of New York Mellon Corporation’s Annual Report on Form 10-K for the year ended Dec. 31, 2019, formatted in inline XBRL. | The cover page interactive data file is embedded within the inline XBRL document and included in Exhibit 101. | |||
* Management contract or compensatory plan, contract or arrangement. |
The Bank of New York Mellon Corporation | ||
By: | /s/ Thomas P. Gibbons | |
Thomas P. Gibbons | ||
Interim Chief Executive Officer | ||
DATED: February 27, 2020 |
Signature | Capacities | |||
By: | /s/ Thomas P. Gibbons | Director and Principal Executive Officer | ||
Thomas P. Gibbons | ||||
Interim Chief Executive Officer | ||||
By: | /s/ Michael P. Santomassimo | Principal Financial Officer | ||
Michael P. Santomassimo | ||||
Chief Financial Officer | ||||
By: | /s/ Kurtis R. Kurimsky | Principal Accounting Officer | ||
Kurtis R. Kurimsky | ||||
Corporate Controller | ||||
Linda Z. Cook; Joseph J. Echevarria; Jeffrey A. Goldstein; Edmund F. Kelly; Jennifer B. Morgan; Elizabeth E. Robinson; Samuel C. Scott III; Alfred W. Zollar | Directors | |||
By: | /s/ J. Kevin McCarthy | DATED: February 27, 2020 | ||
J. Kevin McCarthy | ||||
Attorney-in-fact |
• | depends primarily upon the ability of its subsidiaries, including The Bank of New York Mellon, BNY Mellon, National Association and Pershing LLC, to pay dividends or otherwise transfer funds to it, |
• | is subject to policies established by the Federal Reserve Bank of New York (the “Federal Reserve”). See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Supervision and Regulation—Capital Planning and Stress Testing—Payment of Dividends, Stock Repurchases and Other Capital Distributions” and Part I, “Item 1. Business—Supervision and Regulation” in this Annual Report on Form 10-K, and |
• | will be prohibited, subject to certain restrictions, in the event that the Company does not declare and pay in full preferred dividends for the then-current dividend period of its Series A Noncumulative Preferred Stock, $100,000 liquidation preference per share (the “Series A Preferred Stock”) or the last preceding dividend period of its Series C Noncumulative Perpetual Preferred Stock, $100,000 liquidation preference per share (the “Series C Preferred Stock”), its Series D Noncumulative Perpetual Preferred Stock, $100,000 liquidation preference per share (the “Series D Preferred Stock”), its Series E Noncumulative Perpetual Preferred Stock, $100,000 liquidation preference per share (the “Series E Preferred Stock”) and its Series F |
• | prior to such date, the Company’s board of directors approve either the business combination or the transaction in which the stockholder became an interested stockholder; |
• | upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owns at least 85% of the outstanding voting stock (with certain exclusions); or |
• | the business combination is approved by the Company’s board of directors and authorized by a vote (and not by written consent) of at least 66 2/3% of the outstanding voting stock not owned by the interested stockholder. |
• | senior to the Company’s Common Stock and all other equity securities issued by the Company, the terms of which specifically provide that such equity securities will rank junior to the Series C Preferred Stock (for purposes of the description of the Series C Preferred Stock, the “junior stock”); |
• | on a parity with the Company’s Series A Preferred Stock, Series D Preferred Stock, Series E Preferred Stock and Series F Preferred Stock; |
• | senior to or on a parity with each other series of preferred stock the Company may issue (except for any senior series that may be issued upon the requisite vote or consent of the holders of at least two-thirds of the |
• | junior to all existing and future indebtedness and other non-equity claims on the Company. |
• | the redemption date; |
• | the number of shares of the Series C Preferred Stock to be redeemed and, if less than all shares of the Series C Preferred Stock held by the holder are to be redeemed, the number of shares to be redeemed from the holder; |
• | the redemption price; and |
• | if Series C Preferred Stock is evidenced by definitive certificates, the place or places where the certificates representing those shares are to be surrendered for payment of the redemption price. |
• | Amendment of Certificate of Incorporation or By-laws. Any amendment of the Company’s Restated Certificate of Incorporation to authorize or create, or increase the authorized amount of, any shares of any class or series of capital stock ranking senior to the Series C Preferred Stock with respect to payment of dividends or distribution of assets on the Company’s liquidation; as well as any amendment of the Company’s Restated Certificate of Incorporation or Amended and Restated By-laws that would adversely affect the special rights, preferences, privileges or voting powers of the Series C Preferred Stock; provided that the amendment of the Company’s Restated Certificate of Incorporation so as to authorize or create, or to increase the authorized amount of, any junior stock or any shares of any class or series or any securities convertible into shares of any class or series of dividend parity stock or other series of preferred stock ranking equally with the Series C Preferred Stock with respect to the distribution of assets upon liquidation, dissolution or winding up of the Company shall not be deemed to affect adversely the rights, preferences, privileges or voting powers of the Series C Preferred Stock; or |
• | Share Exchanges, Reclassifications, Mergers and Consolidations. Any consummation of a binding share exchange or reclassification involving the Series C Preferred Stock, or of a merger or consolidation of the Company with or into another corporation, or any merger or consolidation of the Company with or into any entity other than a corporation unless in each case (x) the shares of the Series C Preferred Stock remain |
• | all rights of the holders of such PCS called for redemption will cease, except the right of the holders of such PCS to receive the redemption price and any distribution payable in respect of the PCS on or prior to the redemption date, but without interest on such redemption price; and |
• | the PCS called for redemption will cease to be outstanding. |
• | certain events of bankruptcy, dissolution or liquidation of the holder of the Trust Common Securities; |
• | upon the direction of the holder of the Trust Common Securities; |
• | redemption of all of the PCS as described above; and |
• | the entry of an order for the dissolution of the Trust by a court of competent jurisdiction. |
• | the PCS will no longer be deemed to be outstanding; |
• | if the assets to be distributed are shares of Series A Preferred Stock, DTC or its nominee, as the record holder of the PCS, will receive a registered global certificate or certificates representing the Series A Preferred Stock to be delivered upon such distribution; |
• | any certificates representing the PCS not held by DTC or its nominee or surrendered to the exchange agent will be deemed to represent shares of Series A Preferred Stock having a Liquidation Preference equal to the PCS until such certificates are so surrendered for transfer and reissuance; and |
• | all rights of the holders of the PCS will cease, except the right to receive Series A Preferred Stock upon such surrender. |
• | the failure to comply in any material respect with the Company’s obligations as issuer of the Series A Preferred Stock, under the Company’s Restated Certificate of Incorporation, or those of the Trust, or arising under applicable law; |
• | the default by the Trust in the payment of any distribution on any Trust security of the Trust when such becomes due and payable, and continuation of such default for a period of 30 days; |
• | the default by the Trust in the payment of any redemption price of any Trust security of the Trust when such becomes due and payable; |
• | the failure to perform or the breach, in any material respect, of any other covenant or warranty of the trustees in the Trust Agreement for 90 days after the defaulting trustee or trustees have received written notice of the failure to perform or breach in the manner specified in such Trust Agreement; or |
• | the occurrence of certain events of bankruptcy or insolvency with respect to the Property Trustee and the Company’s failure to appoint a successor Property Trustee within 60 days. |
• | such successor entity either: |
o | expressly assumes all of the obligations of the Trust with respect to the PCS, or |
o | substitutes for the PCS other securities having substantially the same terms as the PCS, or the “Successor Securities,” so long as the Successor Securities rank the same as the PCS in priority with respect to distributions and payments upon liquidation, redemption and otherwise; or |
• | a trustee of such successor entity possessing the same powers and duties as the Property Trustee is appointed to hold the Series A Preferred Stock then held by or on behalf of the Property Trustee; |
• | such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not cause the PCS, including any Successor Securities, to be downgraded by any nationally recognized statistical rating organization; |
• | such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the holders of the PCS, including any Successor Securities, in any material respect; |
• | such successor entity has purposes substantially identical to those of the Trust; |
• | prior to such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, the Property Trustee has received an opinion from counsel to the Trust experienced in such matters to the effect that: |
o | such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the holders of the PCS, including any Successor Securities, in any material respect, and |
o | following such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, neither the Trust nor such successor entity will be required to register as an investment company under the Investment Company Act of 1940 (the “Investment Company Act”); |
• | the Trust has received an opinion of counsel experienced in such matters that such merger, consolidation, amalgamation, conveyance, transfer or lease will not cause the Trust or the successor entity to be classified as an association or a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes; and |
• | the Company or any permitted successor or assignee owns all of the common securities of such successor entity and guarantees the obligations of such successor entity under the Successor Securities at least to the extent provided by the Guarantee. |
• | cure any ambiguity, correct or supplement any provisions in the Trust Agreement that may be inconsistent with any other provision, or to make any other provisions with respect to matters or questions arising under such Trust Agreement, which may not be inconsistent with the other provisions of the Trust Agreement; |
• | modify, eliminate or add to any provisions of the Trust Agreement to such extent as shall be necessary to ensure that the Trust will be classified for U.S. federal income tax purposes as one or more grantor trusts or agency arrangements and not as an association or a publicly traded partnership taxable as a corporation at all times that any Trust securities are outstanding, to ensure that the Trust will not be required to register as an “investment company” under the Investment Company Act or to ensure the treatment of the PCS as Tier 1 capital under prevailing Federal Reserve rules and regulations; |
• | provide that certificates for the PCS may be executed by an administrative trustee by facsimile signature instead of manual signature, in which case such amendment(s) shall also provide for the appointment by the Company of an authentication agent and certain related provisions; |
• | require that holders that are not U.S. persons for U.S. federal income tax purposes irrevocably appoint a U.S. person to exercise any voting rights to ensure that the Trust will not be treated as a foreign trust for U.S. federal income tax purposes; or |
• | conform the terms of the Trust Agreement to the description of the Trust Agreement, the PCS and the Trust Common Securities in the prospectus supplement relating to the PCS, in the manner provided in the Trust Agreement. |
• | the consent of holders representing not less than a majority, based upon liquidation amounts, of the PCS affected by the amendments; and |
• | receipt by the administrative trustees of the Trust of an opinion of counsel to the effect that such amendment or the exercise of any power granted to the trustees of the Trust in accordance with such amendment will not affect the Trust’s status as one or more grantor trusts or agency arrangements for U.S. federal income tax purposes or affect the Trust’s exemption from status as an “investment company” under the Investment Company Act. |
• | change the amount or timing, or otherwise adversely affect the amount, of any distribution required to be made in respect of Trust securities as of a specified date; or |
• | restrict the right of a holder of Trust securities to institute a suit for the enforcement of any such payment on or after such date. |
• | any accumulated and unpaid distributions required to be paid on each series of PCS, to the extent the Trust has funds available to make the payment; and |
• | upon a voluntary or involuntary dissolution, winding-up or liquidation of the Trust, other than in connection with a distribution of a like amount of corresponding assets to the holders of the PCS, the lesser of: |
o | the aggregate of the liquidation amount and all accumulated and unpaid distributions on the PCS to the date of payment, to the extent the Trust has funds available to make the payment; and |
o | the amount of assets of the Trust remaining available for distribution to holders of the PCS upon liquidation of the Trust. |
• | upon full payment of the redemption price of all PCS; or |
• | upon full payment of the amounts payable in accordance with the Trust Agreement upon liquidation of the Trust. |
• | senior to the Company’s Common Stock and all other equity securities issued by the Company, the terms of which specifically provide that such equity securities will rank junior to the Series A Preferred Stock (for purposes of the description of the Series A Preferred Stock, the “junior stock”); |
• | on a parity with the Company’s Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock and Series F Preferred Stock; |
• | senior to or on a parity with each other series of preferred stock the Company may issue (except for any senior series that may be issued upon the requisite vote or consent of the holders of at least two-thirds of the shares of the Series A Preferred Stock at the time outstanding and entitled to vote and the requisite vote or |
• | junior to all existing and future indebtedness and other non-equity claims on the Company. |
• | first ratably by the holders of any such shares who have the right to receive dividends with respect to Dividend Periods prior to the then-current Dividend Period, in proportion to the respective amounts of the undeclared and unpaid dividends relating to prior Dividend Periods; and |
• | thereafter by the holders of these shares on a pro rata basis. |
• | the redemption date; |
• | the number of shares of Series A Preferred Stock to be redeemed and, if less than all shares of Series A Preferred Stock held by the holder are to be redeemed, the number of shares to be redeemed from the holder; |
• | the redemption price; and |
• | the place or places where the Series A Preferred Stock is to be redeemed. |
• | Amendment of Restated Certificate of Incorporation. Any amendment of the Company’s Restated Certificate of Incorporation to authorize, or increase the authorized amount of, any shares of any class or series of capital stock ranking senior to the Series A Preferred Stock with respect to payment of dividends or distribution of assets on the Company’s liquidation; as well as any amendment of the Company’s Restated Certificate of Incorporation or Amended and Restated By-laws that would alter or change the voting powers, preferences or special rights of the Series A Preferred Stock so as to affect them adversely; provided that the amendment of the Company’s Restated Certificate of Incorporation so as to authorize or create, or to increase the authorized amount of, any junior stock or any shares of any class or series or any securities convertible into shares of any class or series of Dividend Parity Stock or other capital stock of the Company ranking on a parity with the Series A Preferred Stock in the distribution of assets on the Company’s liquidation, dissolution or winding-up shall not be deemed to affect adversely the voting powers, preferences or special rights of the Series A Preferred Stock; or |
• | Certain Mergers and Consolidations. Any merger or consolidation of the Company with or into any entity other than a corporation, or any merger or consolidation of the Company with or into any other corporation if the Company is not the surviving corporation in such merger or consolidation and if the Series A Preferred Stock is changed in such merger or consolidation into anything other than a class or series of preferred stock of the surviving or resulting corporation, or a corporation controlling such corporation, having voting powers, preferences and special rights that, if such change were effected by amendment of the Company’s Restated Certificate of Incorporation, would not require a vote of the holders of the Series A Preferred Stock under the preceding paragraph. |
Page | |
Management’s Discussion and Analysis of Financial Condition and Results of Operations: | |
Results of Operations: | |
Key 2019 events | |
Acronyms | |
Page | ||
Financial Statements: | ||
Notes to Consolidated Financial Statements: | ||
Note 2 - Accounting changes and new accounting guidance | ||
Note 6 - Leasing | ||
Note 8 - Other assets | ||
Note 9 - Deposits | ||
Note 10 - Contract revenue | ||
Note 11 - Net interest revenue | ||
Note 12 - Income taxes | ||
Note 13 - Long-term debt | ||
Note 14 - Variable interest entities and securitization | ||
Note 15 - Shareholders’ equity | ||
Note 16 - Other comprehensive income (loss) | ||
Note 17 - Stock-based compensation | ||
Note 18 - Employee benefit plans | ||
Note 19 - Company financial information (Parent Corporation) | ||
Note 20 - Fair value measurement | ||
Note 21 - Fair value option | ||
Note 22 - Commitments and contingent liabilities | ||
Note 23 - Derivative instruments | ||
Note 24 - Lines of business | ||
Note 25 - International operations | ||
Note 26 - Supplemental information to the Consolidated Statement of Cash Flows | ||
Corporate Information | Inside back cover |
The Bank of New York Mellon Corporation (and its subsidiaries) |
Financial Summary |
(dollars in millions, except per share amounts and unless otherwise noted) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||
Selected income statement information: | |||||||||||||||
Fee and other revenue | $ | 13,218 | $ | 12,794 | $ | 12,165 | $ | 12,073 | $ | 12,082 | |||||
Income (loss) from consolidated investment management funds | 56 | (13 | ) | 70 | 26 | 86 | |||||||||
Net interest revenue | 3,188 | 3,611 | 3,308 | 3,138 | 3,026 | ||||||||||
Total revenue | 16,462 | 16,392 | 15,543 | 15,237 | 15,194 | ||||||||||
Provision for credit losses | (25 | ) | (11 | ) | (24 | ) | (11 | ) | 160 | ||||||
Noninterest expense | 10,900 | 11,211 | 10,957 | 10,523 | 10,799 | ||||||||||
Income before income taxes | 5,587 | 5,192 | 4,610 | 4,725 | 4,235 | ||||||||||
Provision for income taxes | 1,120 | 938 | 496 | 1,177 | 1,013 | ||||||||||
Net income | 4,467 | 4,254 | 4,114 | 3,548 | 3,222 | ||||||||||
Net (income) loss attributable to noncontrolling interests (a) | (26 | ) | 12 | (24 | ) | (1 | ) | (64 | ) | ||||||
Net income applicable to shareholders of The Bank of New York Mellon Corporation | 4,441 | 4,266 | 4,090 | 3,547 | 3,158 | ||||||||||
Preferred stock dividends | (169 | ) | (169 | ) | (175 | ) | (122 | ) | (105 | ) | |||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 4,272 | $ | 4,097 | $ | 3,915 | $ | 3,425 | $ | 3,053 | |||||
Earnings per share applicable to common shareholders of The Bank of New York Mellon Corporation: | |||||||||||||||
Basic | $ | 4.53 | $ | 4.06 | $ | 3.74 | $ | 3.16 | $ | 2.73 | |||||
Diluted | $ | 4.51 | $ | 4.04 | $ | 3.72 | $ | 3.15 | $ | 2.71 | |||||
Average common shares and equivalents outstanding of The Bank of New York Mellon Corporation (in thousands): | |||||||||||||||
Basic | 939,623 | 1,002,922 | 1,034,281 | 1,066,286 | 1,104,719 | ||||||||||
Diluted | 943,109 | 1,007,141 | 1,040,290 | 1,072,013 | 1,112,511 | ||||||||||
Selected balance sheet information (at period-end): | |||||||||||||||
Interest-earning assets | $ | 323,893 | $ | 308,749 | $ | 316,261 | $ | 280,332 | $ | 338,955 | |||||
Total assets | 381,508 | 362,873 | 371,758 | 333,469 | 393,780 | ||||||||||
Deposits | 259,466 | 238,778 | 244,322 | 221,490 | 279,610 | ||||||||||
Long-term debt | 27,501 | 29,163 | 27,979 | 24,463 | 21,547 | ||||||||||
Preferred stock | 3,542 | 3,542 | 3,542 | 3,542 | 2,552 | ||||||||||
Total The Bank of New York Mellon Corporation common shareholders’ equity | 37,941 | 37,096 | 37,709 | 35,269 | 35,485 | ||||||||||
At Dec. 31 | |||||||||||||||
Assets under custody and/or administration (“AUC/A”) (in trillions) (b) | $ | 37.1 | $ | 33.1 | $ | 33.3 | $ | 29.9 | $ | 28.9 | |||||
Assets under management (“AUM”) (in billions) (c) | 1,910 | 1,722 | 1,893 | 1,648 | 1,625 | ||||||||||
Market value of securities on loan (in billions) (d) | 378 | 373 | 408 | 296 | 277 | ||||||||||
Selected ratios: | |||||||||||||||
Return on common equity | 11.4 | % | 10.8 | % | 10.8 | % | 9.6 | % | 8.6 | % | |||||
Return on tangible common equity – Non-GAAP (e) | 23.2 | 22.5 | 23.9 | 21.2 | 19.7 | ||||||||||
Return on average assets | 1.23 | 1.19 | 1.14 | 0.96 | 0.82 | ||||||||||
Pre-tax operating margin | 34 | 32 | 30 | 31 | 28 | ||||||||||
Fee revenue as a percentage of total revenue | 80 | 78 | 78 | 79 | 79 | ||||||||||
Non-U.S. revenue as a percentage of total revenue | 35 | 37 | 36 | 34 | 36 | ||||||||||
Net interest margin | 1.10 | 1.25 | 1.14 | 1.03 | 0.96 |
(a) | Primarily attributable to noncontrolling interests related to consolidated investment management funds. |
(b) | Consists of AUC/A primarily from the Asset Servicing business and, to a lesser extent, the Clearance and Collateral Management, Issuer Services, Pershing and Wealth Management businesses. Includes the AUC/A of CIBC Mellon Global Securities Services Company (“CIBC Mellon”), a joint venture with the Canadian Imperial Bank of Commerce, of $1.5 trillion at Dec. 31, 2019, $1.2 trillion at Dec. 31, 2018, $1.3 trillion at Dec. 31, 2017, $1.2 trillion at Dec. 31, 2016 and $1.0 trillion at Dec. 31, 2015. |
(c) | Excludes securities lending cash management assets and assets managed in the Investment Services business. |
(d) | Represents the total amount of securities on loan in our agency securities lending program managed by the Investment Services business. Excludes securities for which BNY Mellon acts as an agent on behalf of CIBC Mellon clients, which totaled $60 billion at Dec. 31, 2019, $58 billion at Dec. 31, 2018, $71 billion at Dec. 31, 2017, $63 billion at Dec. 31, 2016 and $55 billion at Dec. 31, 2015. |
(e) | Return on tangible common equity, a Non-GAAP measure, excludes goodwill and intangible assets, net of deferred tax liabilities. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 101 for the reconciliation of the Non-GAAP measure. |
The Bank of New York Mellon Corporation (and its subsidiaries) |
Financial Summary (continued) |
(dollars in millions, except per share amounts and unless otherwise noted) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||
Cash dividends per common share | $ | 1.18 | $ | 1.04 | $ | 0.86 | $ | 0.72 | $ | 0.68 | |||||
Common dividend payout ratio | 26 | % | 26 | % | 23 | % | 23 | % | 25 | % | |||||
Common dividend yield | 2.3 | % | 2.2 | % | 1.6 | % | 1.5 | % | 1.6 | % | |||||
Closing stock price per common share | $ | 50.33 | $ | 47.07 | $ | 53.86 | $ | 47.38 | $ | 41.22 | |||||
Market capitalization (in billions) | $ | 45.3 | $ | 45.2 | $ | 54.6 | $ | 49.6 | $ | 44.7 | |||||
Book value per common share | $ | 42.12 | $ | 38.63 | $ | 37.21 | $ | 33.67 | $ | 32.69 | |||||
Tangible book value per common share – Non-GAAP (a) | $ | 21.33 | $ | 19.04 | $ | 18.24 | $ | 16.19 | $ | 15.27 | |||||
Full-time employees at year-end | 48,400 | 51,300 | 52,500 | 52,000 | 51,200 | ||||||||||
Common shares outstanding at year-end (in thousands) | 900,683 | 960,426 | 1,013,442 | 1,047,488 | 1,085,343 | ||||||||||
Average total equity to average total assets | 11.9 | % | 12.1 | % | 11.7 | % | 10.7 | % | 10.2 | % | |||||
Capital ratios (at year-end): | |||||||||||||||
Regulatory capital ratios - fully phased-in basis: (b) | |||||||||||||||
Advanced: | |||||||||||||||
Common Equity Tier 1 (“CET1”) ratio | 11.5 | % | 10.7 | % | 10.3 | % | 9.7 | % | 9.5 | % | |||||
Tier 1 capital ratio | 13.7 | 12.8 | 12.3 | 11.8 | 11.0 | ||||||||||
Total capital ratio | 14.4 | 13.6 | 13.0 | 12.1 | 11.1 | ||||||||||
Standardized: | |||||||||||||||
CET1 ratio | 12.5 | 11.7 | 11.5 | 11.3 | 10.2 | ||||||||||
Tier 1 capital ratio | 14.8 | 14.1 | 13.7 | 13.6 | 11.8 | ||||||||||
Total capital ratio | 15.8 | 15.1 | 14.7 | 14.2 | 12.0 | ||||||||||
Tier 1 leverage ratio | 6.6 | 6.6 | 6.4 | N/A | N/A | ||||||||||
Supplementary leverage ratio (“SLR”) | 6.1 | 6.0 | 5.9 | 5.6 | 4.9 | ||||||||||
BNY Mellon shareholders’ equity to total assets ratio | 10.9 | % | 11.2 | % | 11.1 | % | 11.6 | % | 9.7 | % | |||||
BNY Mellon common shareholders’ equity to total assets ratio | 9.9 | 10.2 | 10.1 | 10.6 | 9.0 |
(a) | Tangible book value per common share – Non-GAAP excludes goodwill and intangible assets, net of deferred tax liabilities. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 101 for the reconciliation of the Non-GAAP measure. |
(b) | For our CET1, Tier 1 and Total capital ratios, our effective capital ratios under U.S. capital rules are the lower of the ratios as calculated under the Standardized and Advanced Approaches. Beginning Jan. 1, 2018, consolidated regulatory ratios were fully phased-in. The regulatory ratios for all prior periods are presented on an estimated fully phased-in basis. For additional information on our regulatory capital ratios, see “Capital” beginning on page 41. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Results of Operations |
Results of Operations (continued) |
• | AUC/A totaled $37.1 trillion at Dec. 31, 2019 compared with $33.1 trillion at Dec. 31, 2018. The 12% increase primarily reflects higher market values and client inflows. (See “Investment Services business” beginning on page 13.) |
• | AUM totaled $1.9 trillion at Dec. 31, 2019 compared with $1.7 trillion at Dec. 31, 2018. The 11% increase primarily reflects higher market values and the favorable impact of a weaker U.S. dollar (principally versus the British pound), partially offset by net outflows. (See “Investment Management business” beginning on page 15.) |
• | Investment services fees totaled $7.9 billion in 2019, a slight increase compared with 2018, primarily reflecting growth in clearance and collateral management and the impact of higher equity markets, partially offset by the unfavorable impact of a stronger U.S. dollar and lower securities lending revenue. (See “Investment Services business” beginning on page 13.) |
• | Investment management and performance fees totaled $3.4 billion in 2019, compared with $3.6 billion in 2018, a decrease of 7%. The decrease primarily reflects the impact of cumulative AUM outflows, lower performance fees and the unfavorable impact of a stronger U.S. dollar (principally versus the British pound), partially offset by higher market values. On a constant currency basis (Non-GAAP), investment management and performance fees decreased 6% compared with 2018. (See “Investment Management business” beginning on page 15.) |
• | Foreign exchange and other trading revenue totaled $654 million in 2019, compared with $732 million in 2018. Foreign exchange revenue totaled $577 million in 2019, a decrease of 13%, compared with $663 million in 2018, primarily reflecting lower volatility, partially offset by foreign currency hedging. (See “Fee and other revenue” beginning on page 6.) |
• | Net interest revenue totaled $3.2 billion in 2019, compared with $3.6 billion in 2018, a decrease of 12%. The decrease primarily reflects higher deposit and funding costs, lower noninterest-bearing deposits and loan balances and a lease-related impairment, partially offset by higher yields on interest-earning assets. Net interest margin was 1.10% in 2019, compared with 1.25% in 2018. (See “Net interest revenue” beginning on page 8.) |
• | The provision for credit losses was a credit of $25 million in 2019 and a credit of $11 million in 2018. (See “Asset quality and allowance for credit losses” beginning on page 33.) |
• | Noninterest expense totaled $10.9 billion in 2019 compared with $11.2 billion in 2018. The 3% decrease primarily reflects the favorable impact of a stronger U.S. dollar, lower litigation and staff expenses, a reduction of previously established reserves for a tax-related exposure of certain investment management funds and expenses associated with consolidating real estate recorded in 2018, partially offset by continued investments in technology. See “Noninterest expense” beginning on page 11.) |
• | The provision for income taxes was $1.1 billion (20.0% effective tax rate) in 2019. (See “Income taxes” on page 11.) |
• | The net unrealized pre-tax gain on the securities portfolio, including the impact of related hedges, was $796 million at Dec. 31, 2019, compared |
Results of Operations (continued) |
• | Our CET1 ratio calculated under the Advanced Approaches was 11.5% at Dec. 31, 2019 and 10.7% at Dec. 31, 2018. The increase primarily reflects capital generated through earnings, unrealized gains on securities available-for-sale, |
• | Our SLR was 6.1% at Dec. 31, 2019 and 6.0%, at Dec. 31, 2018. (See “Capital” beginning on page 41.) |
Fee and other revenue | 2019 | 2018 | |||||||||||
vs. | vs. | ||||||||||||
(dollars in millions, unless otherwise noted) | 2019 | 2018 | 2017 | 2018 | 2017 | ||||||||
Investment services fees: | |||||||||||||
Asset servicing fees (a) | $ | 4,563 | $ | 4,608 | $ | 4,383 | (1 | )% | 5 | % | |||
Clearing services fees (b)(c) | 1,648 | 1,616 | 1,598 | 2 | 1 | ||||||||
Issuer services fees | 1,130 | 1,099 | 977 | 3 | 12 | ||||||||
Treasury services fees | 559 | 554 | 557 | 1 | (1 | ) | |||||||
Total investment services fees (c) | 7,900 | 7,877 | 7,515 | — | 5 | ||||||||
Investment management and performance fees (c) | 3,389 | 3,647 | 3,539 | (7 | ) | 3 | |||||||
Foreign exchange and other trading revenue | 654 | 732 | 668 | (11 | ) | 10 | |||||||
Financing-related fees | 196 | 207 | 216 | (5 | ) | (4 | ) | ||||||
Distribution and servicing | 129 | 139 | 160 | (7 | ) | (13 | ) | ||||||
Investment and other income | 968 | 240 | 64 | N/M | N/M | ||||||||
Total fee revenue | 13,236 | 12,842 | 12,162 | 3 | 6 | ||||||||
Net securities (losses) gains | (18 | ) | (48 | ) | 3 | N/M | N/M | ||||||
Total fee and other revenue | $ | 13,218 | $ | 12,794 | $ | 12,165 | 3 | % | 5 | % | |||
Fee revenue as a percentage of total revenue | 80 | % | 78 | % | 78 | % | |||||||
AUC/A at period end (in trillions) (d) | $ | 37.1 | $ | 33.1 | $ | 33.3 | 12 | % | (1 | )% | |||
AUM at period end (in billions) (e) | $ | 1,910 | $ | 1,722 | $ | 1,893 | 11 | % | (9 | )% |
(a) | Asset servicing fees include the fees from the Clearance and Collateral Management business and also include securities lending revenue of $179 million in 2019, $220 million in 2018 and $195 million in 2017. |
(b) | Clearing services fees are almost entirely earned by our Pershing business. |
(c) | In 2019, we reclassified certain platform-related fees to clearing services fees from investment management and performance fees. Prior periods have been reclassified. |
(d) | Consists of AUC/A primarily from the Asset Servicing business and, to a lesser extent, the Clearance and Collateral Management, Issuer Services, Pershing and Wealth Management businesses. Includes the AUC/A of CIBC Mellon of $1.5 trillion at Dec. 31, 2019, $1.2 trillion at Dec. 31, 2018 and $1.3 trillion at Dec. 31, 2017. |
(e) | Excludes securities lending cash management assets and assets managed in the Investment Services business. |
• | Asset servicing fees decreased 1%, primarily reflecting lower client activity, the unfavorable impact of a stronger U.S. dollar and lower security lending revenue, partially offset by growth in clearance volumes and collateral |
Results of Operations (continued) |
• | Clearing services fees increased 2%, primarily driven by growth in client assets and accounts. |
• | Issuer services fees increased 3%, primarily reflecting higher volumes in Corporate Trust, partially offset by lower Depositary Receipts revenue. |
• | Treasury services fees increased 1%, primarily reflecting higher payment fees. |
Foreign exchange and other trading revenue | |||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||
Foreign exchange | $ | 577 | $ | 663 | $ | 638 | |||
Other trading revenue | 77 | 69 | 30 | ||||||
Total foreign exchange and other trading revenue | $ | 654 | $ | 732 | $ | 668 |
Results of Operations (continued) |
Investment and other income | |||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||
Asset-related gains (losses) | $ | 819 | $ | 70 | $ | (1 | ) | ||
Corporate/bank-owned life insurance | 138 | 145 | 153 | ||||||
Expense reimbursements from joint venture | 79 | 71 | 64 | ||||||
Seed capital gains (a) | 14 | 3 | 32 | ||||||
Lease-related gains | — | 1 | 56 | ||||||
Other (loss) | (82 | ) | (50 | ) | (240 | ) | |||
Total investment and other income | $ | 968 | $ | 240 | $ | 64 |
(a) | Excludes seed capital gains related to consolidated investment management funds, which are reflected in operations of consolidated investment management funds. |
Net interest revenue | 2019 | 2018 | |||||||||||
vs. | vs. | ||||||||||||
(dollars in millions) | 2019 | 2018 | 2017 | 2018 | 2017 | ||||||||
Net interest revenue | $ | 3,188 | $ | 3,611 | $ | 3,308 | (12 | )% | 9 | % | |||
Add: Tax equivalent adjustment | 13 | 20 | 47 | N/M | N/M | ||||||||
Net interest revenue on a fully taxable equivalent (“FTE”) basis – Non-GAAP (a) | $ | 3,201 | $ | 3,631 | $ | 3,355 | (12 | )% | 8 | % | |||
Average interest-earning assets | $ | 290,489 | $ | 289,916 | $ | 290,522 | — | % | — | % | |||
Net interest margin | 1.10 | % | 1.25 | % | 1.14 | % | (15 | ) bps | 11 | bps | |||
Net interest margin (FTE) – Non-GAAP (a) | 1.10 | % | 1.25 | % | 1.15 | % | (15 | ) bps | 10 | bps |
(a) | Net interest revenue (FTE) – Non-GAAP and net interest margin (FTE) – Non-GAAP include the tax equivalent adjustments on tax-exempt income which allows for comparisons 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. |
Results of Operations (continued) |
Average balances and interest rates | 2019 | 2018 | ||||||||||||||||||||
(dollars in millions) | Average balance | Interest | Average rate | Average balance | Interest | Average rate | ||||||||||||||||
Assets | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Interest-bearing deposits with the Federal Reserve and other central banks | $ | 61,739 | $ | 448 | 0.73 | % | $ | 68,408 | $ | 531 | 0.78 | % | ||||||||||
Interest-bearing deposits with banks (primarily foreign banks) | 14,666 | 265 | 1.81 | 14,740 | 219 | 1.48 | ||||||||||||||||
Federal funds sold and securities purchased under resale agreements (a) | 36,705 | 2,154 | 5.87 | 27,883 | 1,116 | 4.00 | ||||||||||||||||
Margin loans | 11,370 | 454 | 3.99 | 14,397 | 510 | 3.54 | ||||||||||||||||
Non-margin loans: | ||||||||||||||||||||||
Domestic offices | 29,165 | 1,005 | 3.45 | (b) | 29,642 | 1,020 | 3.44 | |||||||||||||||
Foreign offices | 10,788 | 330 | 3.06 | 11,771 | 336 | 2.85 | ||||||||||||||||
Total non-margin loans (c) | 39,953 | 1,335 | 3.34 | (b) | 41,413 | 1,356 | 3.27 | |||||||||||||||
Securities: | ||||||||||||||||||||||
U.S. government obligations | 20,040 | 431 | 2.15 | 23,908 | 486 | 2.03 | ||||||||||||||||
U.S. government agency obligations | 66,519 | 1,671 | 2.51 | 63,902 | 1,518 | 2.37 | ||||||||||||||||
State and political subdivisions (d) | 1,569 | 46 | 2.89 | 2,565 | 69 | 2.69 | ||||||||||||||||
Other securities: | ||||||||||||||||||||||
Domestic offices (d) | 10,504 | 353 | 3.36 | 8,186 | 341 | 4.17 | ||||||||||||||||
Foreign offices | 21,616 | 248 | 1.15 | 19,848 | 179 | 0.90 | ||||||||||||||||
Total other securities (d) | 32,120 | 601 | 1.87 | 28,034 | 520 | 1.85 | ||||||||||||||||
Trading securities (primarily domestic) (d) | 5,808 | 156 | 2.69 | 4,666 | 127 | 2.74 | ||||||||||||||||
Total securities (d) | 126,056 | 2,905 | 2.30 | 123,075 | 2,720 | 2.21 | ||||||||||||||||
Total interest-earning assets (d) | $ | 290,489 | $ | 7,561 | 2.60 | % | (b) | $ | 289,916 | $ | 6,452 | 2.23 | % | |||||||||
Noninterest-earning assets | 55,466 | 53,858 | ||||||||||||||||||||
Total assets | $ | 345,955 | $ | 343,774 | ||||||||||||||||||
Liabilities | ||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||||
Domestic offices | $ | 78,698 | $ | 958 | 1.22 | % | $ | 59,226 | $ | 537 | 0.91 | % | ||||||||||
Foreign offices | 93,191 | 636 | 0.68 | 95,475 | 340 | 0.36 | ||||||||||||||||
Total interest-bearing deposits | 171,889 | 1,594 | 0.93 | 154,701 | 877 | 0.57 | ||||||||||||||||
Federal funds purchased and securities sold under repurchase agreements (a) | 12,463 | 1,437 | 11.53 | 15,546 | 758 | 4.88 | ||||||||||||||||
Trading liabilities | 1,479 | 35 | 2.33 | 1,310 | 29 | 2.21 | ||||||||||||||||
Other borrowed funds: | ||||||||||||||||||||||
Domestic offices | 1,655 | 59 | 3.54 | 2,122 | 55 | 2.57 | ||||||||||||||||
Foreign offices | 240 | — | 0.20 | 423 | 3 | 0.73 | ||||||||||||||||
Total other borrowed funds | 1,895 | 59 | 3.11 | 2,545 | 58 | 2.26 | ||||||||||||||||
Commercial paper | 2,485 | 55 | 2.22 | 2,607 | 51 | 1.97 | ||||||||||||||||
Payables to customers and broker-dealers | 15,595 | 238 | 1.53 | 16,353 | 191 | 1.17 | ||||||||||||||||
Long-term debt | 28,110 | 942 | 3.35 | 28,257 | 857 | 3.03 | ||||||||||||||||
Total interest-bearing liabilities | $ | 233,916 | $ | 4,360 | 1.86 | % | $ | 221,319 | $ | 2,821 | 1.27 | % | ||||||||||
Total noninterest-bearing deposits | 51,529 | 63,814 | ||||||||||||||||||||
Other noninterest-bearing liabilities | 19,244 | 16,952 | ||||||||||||||||||||
Total liabilities | 304,689 | 302,085 | ||||||||||||||||||||
Temporary equity | ||||||||||||||||||||||
Redeemable noncontrolling interests | 66 | 187 | ||||||||||||||||||||
Permanent equity | ||||||||||||||||||||||
Total The Bank of New York Mellon Corporation shareholders’ equity | 41,047 | 41,360 | ||||||||||||||||||||
Noncontrolling interests | 153 | 142 | ||||||||||||||||||||
Total permanent equity | 41,200 | 41,502 | ||||||||||||||||||||
Total liabilities, temporary equity and permanent equity | $ | 345,955 | $ | 343,774 | ||||||||||||||||||
Net interest revenue (FTE) – Non-GAAP | $ | 3,201 | $ | 3,631 | ||||||||||||||||||
Net interest margin (FTE) – Non-GAAP | 1.10 | % | (b) | 1.25 | % | |||||||||||||||||
Less: Tax equivalent adjustment (d) | 13 | 20 | ||||||||||||||||||||
Net interest revenue – GAAP | $ | 3,188 | $ | 3,611 | ||||||||||||||||||
Net interest margin – GAAP | 1.10 | % | (b) | 1.25 | % | |||||||||||||||||
Percentage of assets attributable to foreign offices (e) | 31 | % | 31 | % | ||||||||||||||||||
Percentage of liabilities attributable to foreign offices (e) | 34 | 34 |
(a) | Includes the average impact of offsetting under enforceable netting agreements of approximately $56 billion in 2019 and $25 billion in 2018. On a Non-GAAP basis, excluding the impact of offsetting, the yield on federal funds sold and securities purchased under resale agreements would have been 2.33% for 2019 and 2.10% for 2018, and the rate on federal funds purchased and securities sold under repurchase agreements would have been 2.11% for 2019 and 1.86% for 2018. We believe providing the rates excluding the impact of netting is useful to investors as it is more reflective of the actual rates earned and paid. |
(b) | Includes the impact of the lease-related impairment of $70 million in 2019. On a Non-GAAP basis, excluding the lease-related impairment, the yield on non-margin loans in domestic offices would have been 3.69%, the yield on total non-margin loans would have been 3.52%, the yield on total interest-earning assets would have been 2.63%, the net interest margin would have been 1.12% and the net interest margin (FTE) – Non-GAAP would have been 1.13% for 2019. We believe providing the rates excluding the lease-related impairment is useful to investors as it is more reflective of the actual rates earned. |
(c) | Interest income includes fees of $4 million in 2019 and $7 million in 2018. Nonaccrual loans are included in average loans; the associated income, which was recognized on a cash basis, is included in interest income. |
(d) | Average rates were calculated on an FTE basis, at tax rates of approximately 21% for both 2019 and 2018. |
(e) | Includes the Cayman Islands branch office. |
Results of Operations (continued) |
Average balances and interest rates (continued) | 2017 | |||||||||
(dollars in millions) | Average balance | Interest | Average rate | |||||||
Assets | ||||||||||
Interest-earning assets: | ||||||||||
Interest-bearing deposits with the Federal Reserve and other central banks | $ | 70,213 | $ | 319 | 0.45 | % | ||||
Interest-bearing deposits with banks (primarily foreign banks) | 14,879 | 120 | 0.80 | |||||||
Federal funds sold and securities purchased under resale agreements (a) | 27,192 | 423 | 1.55 | |||||||
Margin loans | 14,500 | 343 | 2.36 | |||||||
Non-margin loans: | ||||||||||
Domestic offices | 30,524 | 819 | 2.68 | |||||||
Foreign offices | 12,915 | 258 | 2.00 | |||||||
Total non-margin loans (b) | 43,439 | 1,077 | 2.48 | |||||||
Securities: | ||||||||||
U.S. government obligations | 25,674 | 425 | 1.66 | |||||||
U.S. government agency obligations | 60,268 | 1,195 | 1.98 | |||||||
State and political subdivisions (c) | 3,226 | 100 | 3.09 | |||||||
Other securities: | ||||||||||
Domestic offices (c) | 9,141 | 215 | 2.35 | |||||||
Foreign offices | 19,541 | 150 | 0.77 | |||||||
Total other securities (c) | 28,682 | 365 | 1.27 | |||||||
Trading securities (primarily domestic) (c) | 2,449 | 62 | 2.54 | |||||||
Total securities (c) | 120,299 | 2,147 | 1.79 | |||||||
Total interest-earning assets (c) | $ | 290,522 | $ | 4,429 | 1.52 | % | ||||
Noninterest-earning assets | 53,326 | |||||||||
Total assets | $ | 343,848 | ||||||||
Liabilities | ||||||||||
Interest-bearing liabilities: | ||||||||||
Interest-bearing deposits: | ||||||||||
Domestic offices | $ | 46,908 | $ | 107 | 0.23 | % | ||||
Foreign offices | 96,215 | 55 | 0.06 | |||||||
Total interest-bearing deposits | 143,123 | 162 | 0.11 | |||||||
Federal funds purchased and securities sold under repurchase agreements (a) | 19,653 | 225 | 1.14 | |||||||
Trading liabilities | 1,243 | 7 | 0.57 | |||||||
Other borrowed funds: | ||||||||||
Domestic offices | 1,113 | 21 | 1.86 | |||||||
Foreign offices | 803 | 5 | 0.67 | |||||||
Total other borrowed funds | 1,916 | 26 | 1.36 | |||||||
Commercial paper | 2,630 | 29 | 1.08 | |||||||
Payables to customers and broker-dealers | 18,984 | 64 | 0.34 | |||||||
Long-term debt | 27,424 | 561 | 2.05 | |||||||
Total interest-bearing liabilities | $ | 214,973 | $ | 1,074 | 0.50 | % | ||||
Total noninterest-bearing deposits | 71,664 | |||||||||
Other noninterest-bearing liabilities | 16,932 | |||||||||
Total liabilities | 303,569 | |||||||||
Temporary equity | ||||||||||
Redeemable noncontrolling interests | 180 | |||||||||
Permanent equity | ||||||||||
Total The Bank of New York Mellon Corporation shareholders’ equity | 39,687 | |||||||||
Noncontrolling interests | 412 | |||||||||
Total permanent equity | 40,099 | |||||||||
Total liabilities, temporary equity and permanent equity | $ | 343,848 | ||||||||
Net interest revenue (FTE) – Non-GAAP | $ | 3,355 | ||||||||
Net interest margin (FTE) – Non-GAAP | 1.15 | % | ||||||||
Less: Tax equivalent adjustment (c) | 47 | |||||||||
Net interest revenue – GAAP | $ | 3,308 | ||||||||
Net interest margin – GAAP | 1.14 | % | ||||||||
Percentage of assets attributable to foreign offices (d) | 30 | % | ||||||||
Percentage of liabilities attributable to foreign offices (d) | 35 |
(a) | Includes the average impact of offsetting under enforceable netting agreements of approximately $6 billion in 2017. On a Non-GAAP basis, excluding the impact of offsetting, the yield on federal funds sold and securities purchased under resale agreements would have been 1.29%, and the rate on federal funds purchased and securities sold under repurchase agreements would have been 0.89% for 2017. We believe providing the rates excluding the impact of netting is useful to investors as it is more reflective of the actual rates earned and paid. |
(b) | Interest income includes fees of $9 million in 2017. Nonaccrual loans are included in average loans; the associated income, which was recognized on a cash basis, is included in interest income. |
(c) | Average rates were calculated on an FTE basis, at tax rates of approximately 35% in 2017. |
(d) | Includes the Cayman Islands branch office. |
Results of Operations (continued) |
Noninterest expense | 2019 | 2018 | |||||||||||
vs. | vs. | ||||||||||||
(dollars in millions) | 2019 | 2018 | 2017 | 2018 | 2017 | ||||||||
Staff | $ | 6,063 | $ | 6,145 | $ | 6,033 | (1 | )% | 2 | % | |||
Professional, legal and other purchased services | 1,345 | 1,334 | 1,276 | 1 | 5 | ||||||||
Software and equipment | 1,222 | 1,062 | 985 | 15 | 8 | ||||||||
Net occupancy | 564 | 630 | 570 | (10 | ) | 11 | |||||||
Sub-custodian and clearing | 450 | 450 | 414 | — | 9 | ||||||||
Distribution and servicing | 374 | 406 | 419 | (8 | ) | (3 | ) | ||||||
Business development | 213 | 228 | 229 | (7 | ) | — | |||||||
Bank assessment charges | 125 | 170 | 220 | (26 | ) | (23 | ) | ||||||
Amortization of intangible assets | 117 | 180 | 209 | (35 | ) | (14 | ) | ||||||
Other | 427 | 606 | 602 | (30 | ) | 1 | |||||||
Total noninterest expense | $ | 10,900 | $ | 11,211 | $ | 10,957 | (3 | )% | 2 | % | |||
Full-time employees at year-end | 48,400 | 51,300 | 52,500 | (6 | )% | (2 | )% |
Results of Operations (continued) |
Results of Operations (continued) |
2019 | 2018 | ||||||||||||
(dollars in millions, unless otherwise noted) | vs. | vs. | |||||||||||
2019 | 2018 | 2017 | 2018 | 2017 | |||||||||
Revenue: | |||||||||||||
Investment services fees: | |||||||||||||
Asset servicing fees (a) | $ | 4,479 | $ | 4,520 | $ | 4,286 | (1 | )% | 5 | % | |||
Clearing services fees (b)(c) | 1,649 | 1,615 | 1,594 | 2 | 1 | ||||||||
Issuer services fees | 1,130 | 1,099 | 975 | 3 | 13 | ||||||||
Treasury services fees | 558 | 553 | 555 | 1 | — | ||||||||
Total investment services fees (c) | 7,816 | 7,787 | 7,410 | — | 5 | ||||||||
Foreign exchange and other trading revenue | 621 | 665 | 620 | (7 | ) | 7 | |||||||
Other (c)(d) | 457 | 474 | 497 | (4 | ) | (5 | ) | ||||||
Total fee and other revenue | 8,894 | 8,926 | 8,527 | — | 5 | ||||||||
Net interest revenue | 3,093 | 3,372 | 3,058 | (8 | ) | 10 | |||||||
Total revenue | 11,987 | 12,298 | 11,585 | (3 | ) | 6 | |||||||
Provision for credit losses | (16 | ) | 1 | (7 | ) | N/M | N/M | ||||||
Noninterest expense (excluding amortization of intangible assets) | 7,969 | 7,929 | 7,598 | 1 | 4 | ||||||||
Amortization of intangible assets | 80 | 129 | 149 | (38 | ) | (13 | ) | ||||||
Total noninterest expense | 8,049 | 8,058 | 7,747 | — | 4 | ||||||||
Income before income taxes | $ | 3,954 | $ | 4,239 | $ | 3,845 | (7 | )% | 10 | % | |||
Pre-tax operating margin | 33 | % | 34 | % | 33 | % | |||||||
Securities lending revenue | $ | 163 | $ | 198 | $ | 168 | (18 | )% | 18 | % | |||
Total revenue by line of business: | |||||||||||||
Asset Servicing | $ | 5,600 | $ | 5,932 | $ | 5,603 | (6 | )% | 6 | % | |||
Pershing | 2,256 | 2,255 | 2,180 | — | 3 | ||||||||
Issuer Services | 1,723 | 1,743 | 1,588 | (1 | ) | 10 | |||||||
Treasury Services | 1,275 | 1,302 | 1,251 | (2 | ) | 4 | |||||||
Clearance and Collateral Management | 1,133 | 1,066 | 963 | 6 | 11 | ||||||||
Total revenue by line of business | $ | 11,987 | $ | 12,298 | $ | 11,585 | (3 | )% | 6 | % | |||
Metrics: | |||||||||||||
Average loans | $ | 33,115 | $ | 36,931 | $ | 40,142 | (10 | )% | (8 | )% | |||
Average deposits | $ | 204,979 | $ | 203,279 | $ | 200,235 | 1 | % | 2 | % | |||
AUC/A at period end (in trillions) (e) | $ | 37.1 | $ | 33.1 | $ | 33.3 | 12 | % | (1 | )% | |||
Market value of securities on loan at period end (in billions) (f) | $ | 378 | $ | 373 | $ | 408 | 1 | % | (9 | )% | |||
Pershing: | |||||||||||||
Average active clearing accounts (U.S. platform) (in thousands) | 6,262 | 6,097 | 6,137 | 3 | % | (1 | )% | ||||||
Average long-term mutual fund assets (U.S. platform) | $ | 540,247 | $ | 511,004 | $ | 487,845 | 6 | % | 5 | % | |||
Average investor margin loans (U.S. platform) | $ | 9,541 | $ | 10,829 | $ | 9,810 | (12 | )% | 10 | % | |||
Clearance and Collateral Management: | |||||||||||||
Average tri-party collateral management balances (in billions) | $ | 3,446 | $ | 2,918 | $ | 2,502 | 18 | % | 17 | % |
(a) | Asset servicing fees include the fees from the Clearance and Collateral Management business. |
(b) | Clearing services fees are almost entirely earned by our Pershing business. |
(c) | In 2019, we reclassified certain platform-related fees to clearing services fees from investment management and performance fees. Prior periods have been reclassified. |
(d) | Other revenue includes investment management and performance fees, financing-related fees, distribution and servicing revenue, securities gains and losses and investment and other income. |
(e) | Consists of AUC/A primarily from the Asset Servicing business and, to a lesser extent, the Clearance and Collateral Management, Issuer Services and Pershing businesses. Includes the AUC/A of CIBC Mellon of $1.5 trillion at Dec. 31, 2019, $1.2 trillion at Dec. 31, 2018 and $1.3 trillion at Dec. 31, 2017. |
(f) | Represents the total amount of securities on loan in our agency securities lending program managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $60 billion at Dec. 31, 2019, $58 billion at Dec. 31, 2018 and $71 billion at Dec. 31, 2017. |
Results of Operations (continued) |
Results of Operations (continued) |
2019 | 2018 | ||||||||||||
vs. | vs. | ||||||||||||
(dollars in millions) | 2019 | 2018 | 2017 | 2018 | 2017 | ||||||||
Revenue: | |||||||||||||
Investment management fees (a) | $ | 3,290 | $ | 3,488 | $ | 3,428 | (6 | )% | 2 | % | |||
Performance fees | 83 | 144 | 94 | (42 | ) | 53 | |||||||
Investment management and performance fees (b) | 3,373 | 3,632 | 3,522 | (7 | ) | 3 | |||||||
Distribution and servicing | 178 | 190 | 207 | (6 | ) | (8 | ) | ||||||
Other (a) | (85 | ) | (41 | ) | (61 | ) | N/M | N/M | |||||
Total fee and other revenue (a) | 3,466 | 3,781 | 3,668 | (8 | ) | 3 | |||||||
Net interest revenue | 255 | 303 | 329 | (16 | ) | (8 | ) | ||||||
Total revenue | 3,721 | 4,084 | 3,997 | (9 | ) | 2 | |||||||
Provision for credit losses | (1 | ) | 3 | 2 | N/M | N/M | |||||||
Noninterest expense (excluding amortization of intangible assets) | 2,606 | 2,767 | 2,794 | (6 | ) | (1 | ) | ||||||
Amortization of intangible assets | 37 | 51 | 60 | (27 | ) | (15 | ) | ||||||
Total noninterest expense | 2,643 | 2,818 | 2,854 | (6 | ) | (1 | ) | ||||||
Income before income taxes | $ | 1,079 | $ | 1,263 | $ | 1,141 | (15 | )% | 11 | % | |||
Pre-tax operating margin | 29 | % | 31 | % | 29 | % | |||||||
Adjusted pre-tax operating margin – Non-GAAP (c) | 32 | % | 34 | % | 32 | % | |||||||
Total revenue by line of business: | |||||||||||||
Asset Management | $ | 2,548 | $ | 2,836 | $ | 2,775 | (10 | )% | 2 | % | |||
Wealth Management | 1,173 | 1,248 | 1,222 | (6 | ) | 2 | |||||||
Total revenue by line of business | $ | 3,721 | $ | 4,084 | $ | 3,997 | (9 | )% | 2 | % | |||
Average balances: | |||||||||||||
Average loans | $ | 16,372 | $ | 16,774 | $ | 16,565 | (2 | )% | 1 | % | |||
Average deposits | $ | 14,923 | $ | 14,291 | $ | 13,615 | 4 | % | 5 | % |
(a) | Total fee and other revenue includes the impact of the consolidated investment management funds, net of noncontrolling interests. Additionally, other revenue includes asset servicing fees, treasury services fees, foreign exchange and other trading revenue and investment and other income. |
(b) | On a constant currency basis, investment management and performance fees decreased 6% (Non-GAAP) compared with 2018. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 101 for the reconciliation of this Non-GAAP measure. |
(c) | Net of distribution and servicing expense. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 101 for the reconciliation of this Non-GAAP measure. |
Results of Operations (continued) |
AUM trends | ||||||||||
(dollars in billions) | 2019 | 2018 | 2017 | |||||||
AUM at period end, by product type: (a) | ||||||||||
Equity | $ | 154 | $ | 135 | $ | 161 | ||||
Fixed income | 224 | 200 | 206 | |||||||
Index | 339 | 301 | 350 | |||||||
Liability-driven investments | 728 | 659 | 667 | |||||||
Multi-asset and alternative investments | 192 | 167 | 214 | |||||||
Cash | 273 | 260 | 295 | |||||||
Total AUM by product type | $ | 1,910 | $ | 1,722 | $ | 1,893 | ||||
Changes in AUM: (a) | ||||||||||
Beginning balance of AUM | $ | 1,722 | $ | 1,893 | $ | 1,648 | ||||
Net inflows (outflows): | ||||||||||
Long-term strategies: | ||||||||||
Equity | (16 | ) | (13 | ) | (14 | ) | ||||
Fixed income | 6 | 4 | 6 | |||||||
Liability-driven investments | (1 | ) | 45 | 50 | ||||||
Multi-asset and alternative investments | (1 | ) | (6 | ) | 8 | |||||
Total long-term active strategies (outflows) inflows | (12 | ) | 30 | 50 | ||||||
Index | (32 | ) | (34 | ) | (17 | ) | ||||
Total long-term strategies (outflows) inflows | (44 | ) | (4 | ) | 33 | |||||
Short-term strategies: | ||||||||||
Cash | 8 | (35 | ) | 30 | ||||||
Total net (outflows) inflows | (36 | ) | (39 | ) | 63 | |||||
Net market impact | 191 | (48 | ) | 106 | ||||||
Net currency impact | 33 | (53 | ) | 76 | ||||||
Divestiture/other | — | (31 | ) | (b) | — | |||||
Ending balance of AUM | $ | 1,910 | $ | 1,722 | $ | 1,893 | ||||
Wealth Management client assets (c) | $ | 266 | $ | 239 | $ | 262 |
• | the beginning level of AUM; |
• | the net flows of new assets during the period resulting from new business wins and existing client enrichments, reduced by the loss of clients and withdrawals; and |
• | the impact of market price appreciation or depreciation, foreign exchange rates and investment firm acquisitions or divestitures. |
Results of Operations (continued) |
Results of Operations (continued) |
(in millions) | 2019 | 2018 | 2017 | ||||||
Fee revenue | $ | 904 | $ | 133 | $ | 4 | |||
Net securities (losses) gains | (16 | ) | (48 | ) | 3 | ||||
Total fee and other revenue | 888 | 85 | 7 | ||||||
Net interest (expense) | (160 | ) | (64 | ) | (79 | ) | |||
Total revenue (loss) | 728 | 21 | (72 | ) | |||||
Provision for credit losses | (8 | ) | (15 | ) | (19 | ) | |||
Noninterest expense | 208 | 334 | 347 | ||||||
Income (loss) before income taxes | $ | 528 | $ | (298 | ) | $ | (400 | ) | |
Average loans and leases | $ | 1,836 | $ | 2,105 | $ | 1,232 |
• | the leasing portfolio; |
• | corporate treasury activities, including our securities portfolio; |
• | derivatives and other trading activity; |
• | corporate and bank-owned life insurance; |
• | renewable energy investments; and |
• | business exits. |
• | net interest revenue and lease-related gains (losses) from leasing operations; |
• | net interest revenue from corporate treasury activity; |
• | fee and other revenue from corporate and bank- owned life insurance and business exits; and |
• | gains (losses) associated with investment securities and other assets, including renewable energy. |
• | direct expenses supporting leasing, investing, and funding activities; and |
• | expenses not directly attributable to Investment Services and Investment Management operations. |
Results of Operations (continued) |
Foreign exchange rates vs. U.S. dollar | 2019 | 2018 | 2017 | ||||||
Spot rate (at Dec. 31): | |||||||||
British pound | $ | 1.3199 | $ | 1.2801 | $ | 1.3532 | |||
Euro | 1.1231 | 1.1455 | 1.2009 | ||||||
Yearly average rate: | |||||||||
British pound | $ | 1.2770 | $ | 1.3349 | $ | 1.2885 | |||
Euro | 1.1195 | 1.1808 | 1.1390 |
Results of Operations (continued) |
Country risk exposure at Dec. 31, 2019 | Interest-bearing deposits | Investment securities (b) | Total exposure | ||||||||||||||||||||
(in billions) | Central banks | Banks | Lending (a) | Other (c) | |||||||||||||||||||
Top 10 country exposure: | |||||||||||||||||||||||
Japan | $ | 20.9 | $ | 0.6 | $ | 0.1 | $ | 0.4 | $ | 0.2 | $ | 22.2 | |||||||||||
Germany | 15.3 | 0.4 | 0.8 | 3.7 | 0.3 | 20.5 | |||||||||||||||||
United Kingdom (“UK”) | 10.0 | 0.4 | 1.8 | 4.7 | 2.1 | 19.0 | |||||||||||||||||
Belgium | 5.9 | 0.2 | 0.1 | 0.1 | — | 6.3 | |||||||||||||||||
Canada | — | 2.0 | 0.2 | 2.4 | 0.9 | 5.5 | |||||||||||||||||
China | — | 2.1 | 1.4 | — | 0.4 | 3.9 | |||||||||||||||||
Netherlands | 0.2 | 0.3 | 0.2 | 1.8 | 0.1 | 2.6 | |||||||||||||||||
France | — | 0.2 | — | 1.8 | 0.2 | 2.2 | |||||||||||||||||
Ireland | 0.3 | 0.1 | 0.2 | 0.3 | 1.2 | 2.1 | |||||||||||||||||
Italy | 0.1 | 0.6 | 0.1 | 1.2 | — | 2.0 | |||||||||||||||||
Total Top 10 country exposure | $ | 52.7 | $ | 6.9 | $ | 4.9 | $ | 16.4 | $ | 5.4 | $ | 86.3 | (d) | ||||||||||
Select country exposure: | |||||||||||||||||||||||
Brazil | $ | — | $ | — | $ | 1.6 | $ | 0.1 | $ | 0.1 | $ | 1.8 | |||||||||||
Total select country exposure | $ | — | $ | — | $ | 1.6 | $ | 0.1 | $ | 0.1 | $ | 1.8 |
(a) | Lending includes loans, acceptances, issued letters of credit, net of participations, and lending-related commitments. |
(b) | Investment securities include both the available-for-sale and held-to-maturity portfolios. |
(c) | Other exposures include over-the-counter (“OTC”) derivative and securities financing transactions, net of collateral. |
(d) | The top 10 country exposures comprise approximately 80% of our total non-U.S. exposure. |
Results of Operations (continued) |
Cross-border outstandings | Banks and other financial institutions (a) | Public sector | Commercial, industrial and other | Total cross-border outstandings (b) | ||||||||||||||
(in millions) | ||||||||||||||||||
2019: | ||||||||||||||||||
Germany* | $ | 2,547 | $ | 1,571 | $ | 1,187 | $ | 5,305 | ||||||||||
Canada** | 2,667 | 121 | 819 | 3,607 | ||||||||||||||
China** | 3,376 | — | 72 | 3,448 | ||||||||||||||
2018: | ||||||||||||||||||
Canada* | $ | 1,888 | $ | 381 | $ | 2,263 | $ | 4,532 | ||||||||||
Germany** | 1,655 | 736 | 1,079 | 3,470 | ||||||||||||||
China** | 3,030 | — | 5 | 3,035 | ||||||||||||||
2017: | ||||||||||||||||||
Germany** | $ | 1,530 | $ | 1,344 | $ | 600 | $ | 3,474 | ||||||||||
Canada** | 2,256 | 1 | 1,170 | 3,427 | ||||||||||||||
France** | 295 | 2,519 | 130 | 2,944 |
(a) | Primarily short-term interest-bearing deposits with banks. Also includes global trade finance loans. |
(b) | Excludes assets of consolidated investment management funds. |
• | an allowance for impaired credits of $1 million or greater; |
• | an allowance for higher risk-rated credits and pass-rated credits; and |
• | an allowance for residential mortgage loans. |
Results of Operations (continued) |
• | Ratio of nonperforming loans to total non-margin loans; |
• | Ratio of criticized assets to total loans and lending-related commitments; |
• | Borrower concentration; and |
• | Significant concentrations in high-risk industries and countries. |
Results of Operations (continued) |
Results of Operations (continued) |
Results of Operations (continued) |
Results of Operations (continued) |
Results of Operations (continued) |
Securities portfolio | Dec. 31, 2018 | 2019 change in unrealized gain (loss) | Dec. 31, 2019 | Fair value as a % of amortized cost (a) | Unrealized gain (loss) | Ratings (b) | ||||||||||||||||||||||||
BB+ and lower | ||||||||||||||||||||||||||||||
(dollars in millions) | Fair value | Amortized cost | Fair value | AAA/ AA- | A+/ A- | BBB+/ BBB- | Not rated | |||||||||||||||||||||||
Agency RMBS | $ | 50,214 | $ | 1,154 | $ | 54,379 | $ | 54,646 | 100 | % | $ | 267 | 100 | % | — | % | — | % | — | % | — | % | ||||||||
U.S. Treasury | 24,792 | 193 | 18,797 | 18,865 | 100 | 68 | 100 | — | — | — | — | |||||||||||||||||||
Sovereign debt/sovereign guaranteed (c) | 11,577 | 19 | 13,304 | 13,404 | 101 | 100 | 74 | 5 | 20 | 1 | — | |||||||||||||||||||
Agency commercial mortgage-backed securities (“MBS”) | 10,947 | 140 | 10,557 | 10,613 | 101 | 56 | 100 | — | — | — | — | |||||||||||||||||||
Foreign covered bonds (d) | 2,959 | 19 | 4,268 | 4,276 | 100 | 8 | 100 | — | — | — | — | |||||||||||||||||||
Collateralized loan obligations (“CLOs”) | 3,364 | 31 | 4,078 | 4,063 | 100 | (15 | ) | 99 | — | — | 1 | — | ||||||||||||||||||
Supranational | 3,006 | 15 | 3,724 | 3,734 | 100 | 10 | 100 | — | — | — | — | |||||||||||||||||||
U.S. government agencies | 3,157 | 36 | 2,913 | 2,933 | 101 | 20 | 100 | — | — | — | — | |||||||||||||||||||
Foreign government agencies (e) | 1,161 | 6 | 2,638 | 2,641 | 100 | 3 | 95 | 5 | — | — | — | |||||||||||||||||||
Non-agency commercial MBS | 1,470 | 52 | 2,134 | 2,165 | 101 | 31 | 98 | 2 | — | — | — | |||||||||||||||||||
Other asset-backed securities (“ABS”) | 1,773 | 5 | 2,141 | 2,143 | 100 | 2 | 100 | — | — | — | — | |||||||||||||||||||
Non-agency RMBS (f) | 1,427 | (34 | ) | 1,118 | 1,316 | 118 | 198 | 26 | 11 | 3 | 37 | 23 | ||||||||||||||||||
State and political subdivisions | 2,264 | 31 | 1,034 | 1,061 | 103 | 27 | 77 | 22 | — | — | 1 | |||||||||||||||||||
Corporate bonds | 1,054 | 41 | 832 | 853 | 103 | 21 | 17 | 68 | 15 | — | — | |||||||||||||||||||
Other | 77 | (5 | ) | 1 | 1 | 100 | — | — | — | — | — | 100 | ||||||||||||||||||
Total securities | $ | 119,242 | (g) | $ | 1,703 | $ | 121,918 | $ | 122,714 | (g) | 101 | % | $ | 796 | (g)(h) | 95 | % | 2 | % | 2 | % | 1 | % | — | % |
(a) | Amortized cost reflects historical impairments. |
(b) | Represents ratings by Standard & Poor’s (“S&P”) or the equivalent. |
(c) | Primarily consists of exposure to UK, France, Germany, Spain, Italy and the Netherlands. |
(d) | Primarily consists of exposure to Canada, UK, Australia and Germany. |
(e) | Primarily consists of exposure to Germany, the Netherlands and Finland. |
(f) | Includes RMBS that were included in the former Grantor Trust of $832 million at Dec. 31, 2018 and $640 million at Dec. 31, 2019. |
(g) | Includes net unrealized gains on derivatives hedging securities available-for-sale of $131 million at Dec. 31, 2018 and net unrealized losses of $641 million at Dec. 31, 2019. |
(h) | Includes unrealized gains of $474 million at Dec. 31, 2019 related to available-for-sale securities, net of hedges. |
Results of Operations (continued) |
Net premium amortization and discount accretion of securities (a) | |||||||||
(dollars in millions) | 2019 | 2018 | 2017 | ||||||
Amortizable purchase premium (net of discount) relating to securities: | |||||||||
Balance at period end | $ | 1,319 | $ | 1,429 | $ | 1,987 | |||
Estimated average life remaining at period end (in years) | 4.3 | 5.0 | 5.0 | ||||||
Amortization | $ | 364 | $ | 437 | $ | 547 | |||
Accretable discount related to the prior restructuring of the securities portfolio: | |||||||||
Balance at period end | $ | 163 | $ | 207 | $ | 274 | |||
Estimated average life remaining at period end (in years) | 6.3 | 6.3 | 6.3 | ||||||
Accretion | $ | 54 | $ | 86 | $ | 100 |
(a) | Amortization of purchase premium decreases net interest revenue while accretion of discount increases net interest revenue. Both were recorded on a level yield basis. |
Securities at fair value | Dec. 31, | ||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||
Agency RMBS | $ | 54,646 | $ | 50,215 | $ | 49,746 | |||
U.S. Treasury | 19,274 | 24,729 | 25,005 | ||||||
Sovereign debt/sovereign guaranteed | 13,433 | 11,609 | 14,180 | ||||||
Agency commercial MBS | 10,761 | 10,860 | 10,079 | ||||||
Foreign covered bonds | 4,276 | 2,959 | 2,615 | ||||||
CLOs | 4,063 | 3,364 | 2,909 | ||||||
Supranational | 3,736 | 3,011 | 2,107 | ||||||
U.S. government agencies | 2,971 | 3,144 | 2,549 | ||||||
Foreign government agencies | 2,643 | 1,161 | 630 | ||||||
Non-agency commercial MBS | 2,178 | 1,464 | 1,366 | ||||||
Other ABS | 2,143 | 1,773 | 1,043 | ||||||
Non-agency RMBS (a) | 1,316 | 1,427 | 1,853 | ||||||
State and political subdivisions | 1,061 | 2,264 | 2,973 | ||||||
Corporate bonds | 853 | 1,054 | 1,255 | ||||||
Money market funds | — | — | 963 | ||||||
Other | 1 | 77 | 782 | ||||||
Total securities | $ | 123,355 | $ | 119,111 | $ | 120,055 |
(a) | Includes other RMBS. |
Equity investments | Dec. 31, | |||||
(in millions) | 2019 | 2018 | ||||
Renewable energy investments | $ | 1,144 | $ | 1,264 | ||
Equity in a joint venture and other investments: | ||||||
CIBC Mellon | 626 | 548 | ||||
Siguler Guff | 233 | 244 | ||||
Other equity investments | 243 | 272 | ||||
Total equity in a joint venture and other investments | $ | 1,102 | $ | 1,064 | ||
Qualified affordable housing project investments | 1,024 | 999 | ||||
Federal Reserve Bank stock | 466 | 484 | ||||
Seed capital | 184 | 224 | ||||
Federal Home Loan Bank stock | 22 | 111 | ||||
Private equity investments (a) | 89 | 74 | ||||
Total equity investments | $ | 4,031 | $ | 4,220 |
(a) | Represents investments in small business investment companies (“SBICs”), which are compliant with the Volcker Rule. |
Results of Operations (continued) |
Total exposure – consolidated | Dec. 31, 2019 | Dec. 31, 2018 | |||||||||||||||||
(in billions) | Loans | Unfunded commitments | Total exposure | Loans | Unfunded commitments | Total exposure | |||||||||||||
Non-margin loans: | |||||||||||||||||||
Financial institutions | $ | 12.5 | $ | 34.4 | $ | 46.9 | $ | 11.6 | $ | 34.0 | $ | 45.6 | |||||||
Commercial | 1.8 | 12.6 | 14.4 | 2.1 | 15.2 | 17.3 | |||||||||||||
Subtotal institutional | 14.3 | 47.0 | 61.3 | 13.7 | 49.2 | 62.9 | |||||||||||||
Wealth management loans and mortgages | 16.2 | 0.8 | 17.0 | 16.0 | 0.8 | 16.8 | |||||||||||||
Commercial real estate | 5.6 | 3.6 | 9.2 | 4.8 | 3.5 | 8.3 | |||||||||||||
Lease financings | 1.1 | — | 1.1 | 1.3 | — | 1.3 | |||||||||||||
Other residential mortgages | 0.5 | — | 0.5 | 0.6 | — | 0.6 | |||||||||||||
Overdrafts | 2.7 | — | 2.7 | 5.5 | — | 5.5 | |||||||||||||
Other | 1.2 | — | 1.2 | 1.2 | — | 1.2 | |||||||||||||
Subtotal non-margin loans | 41.6 | 51.4 | 93.0 | 43.1 | 53.5 | 96.6 | |||||||||||||
Margin loans | 13.4 | 0.1 | 13.5 | 13.5 | 0.1 | 13.6 | |||||||||||||
Total | $ | 55.0 | $ | 51.5 | $ | 106.5 | $ | 56.6 | $ | 53.6 | $ | 110.2 |
Financial institutions portfolio exposure (dollars in billions) | Dec. 31, 2019 | Dec. 31, 2018 | |||||||||||||||||||||
Loans | Unfunded commitments | Total exposure | % Inv. grade | % due <1 yr. | Loans | Unfunded commitments | Total exposure | ||||||||||||||||
Securities industry | $ | 2.9 | $ | 23.4 | $ | 26.3 | 100 | % | 99 | % | $ | 3.1 | $ | 22.5 | $ | 25.6 | |||||||
Banks | 7.4 | 1.1 | 8.5 | 77 | 95 | 6.3 | 1.6 | 7.9 | |||||||||||||||
Asset managers | 1.3 | 6.4 | 7.7 | 98 | 82 | 1.3 | 6.1 | 7.4 | |||||||||||||||
Insurance | — | 2.7 | 2.7 | 100 | 13 | 0.1 | 2.5 | 2.6 | |||||||||||||||
Government | 0.1 | 0.3 | 0.4 | 100 | 54 | 0.1 | 0.5 | 0.6 | |||||||||||||||
Other | 0.8 | 0.5 | 1.3 | 85 | 54 | 0.7 | 0.8 | 1.5 | |||||||||||||||
Total | $ | 12.5 | $ | 34.4 | $ | 46.9 | 95 | % | 89 | % | $ | 11.6 | $ | 34.0 | $ | 45.6 |
Results of Operations (continued) |
Commercial portfolio exposure | Dec. 31, 2019 | Dec. 31, 2018 | |||||||||||||||||||||
(dollars in billions) | Loans | Unfunded commitments | Total exposure | % Inv. grade | % due <1 yr. | Loans | Unfunded commitments | Total exposure | |||||||||||||||
Manufacturing | $ | 0.9 | $ | 4.2 | $ | 5.1 | 95 | % | 10 | % | $ | 0.8 | $ | 5.1 | $ | 5.9 | |||||||
Services and other | 0.6 | 3.7 | 4.3 | 97 | 19 | 0.7 | 4.8 | 5.5 | |||||||||||||||
Energy and utilities | 0.3 | 3.7 | 4.0 | 98 | 5 | 0.5 | 4.1 | 4.6 | |||||||||||||||
Media and telecom | — | 1.0 | 1.0 | 92 | — | 0.1 | 1.2 | 1.3 | |||||||||||||||
Total | $ | 1.8 | $ | 12.6 | $ | 14.4 | 96 | % | 11 | % | $ | 2.1 | $ | 15.2 | $ | 17.3 |
Percentage of the portfolios that are investment grade | Dec. 31, | |||||
2019 | 2018 | 2017 | ||||
Financial institutions | 95 | % | 95 | % | 93 | % |
Commercial | 96 | % | 95 | % | 95 | % |
Results of Operations (continued) |
• | 60% of the counterparties were A or better; |
• | 38% were BBB; and |
• | 2% were non-investment grade. |
Results of Operations (continued) |
Loans by category | Dec. 31, | ||||||||||||||
(in millions) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||
Domestic: | |||||||||||||||
Commercial | $ | 1,442 | $ | 1,949 | $ | 2,744 | $ | 2,286 | $ | 2,115 | |||||
Commercial real estate | 5,575 | 4,787 | 4,900 | 4,639 | 3,899 | ||||||||||
Financial institutions | 4,852 | 5,091 | 5,568 | 6,342 | 6,640 | ||||||||||
Lease financings | 537 | 706 | 772 | 989 | 1,007 | ||||||||||
Wealth management loans and mortgages | 16,050 | 15,843 | 16,420 | 15,555 | 13,247 | ||||||||||
Other residential mortgages | 494 | 594 | 708 | 854 | 1,055 | ||||||||||
Overdrafts | 524 | 1,550 | 963 | 1,055 | 911 | ||||||||||
Other | 1,167 | 1,181 | 1,131 | 1,202 | 1,137 | ||||||||||
Margin loans | 11,907 | 13,343 | 15,689 | 17,503 | 19,340 | ||||||||||
Total domestic | 42,548 | 45,044 | 48,895 | 50,425 | 49,351 | ||||||||||
Foreign: | |||||||||||||||
Commercial | 347 | 183 | 167 | 331 | 227 | ||||||||||
Commercial real estate | 7 | — | — | 15 | 46 | ||||||||||
Financial institutions | 7,626 | 6,492 | 7,483 | 8,347 | 9,259 | ||||||||||
Lease financings | 576 | 551 | 527 | 736 | 850 | ||||||||||
Wealth management loans and mortgages | 140 | 122 | 108 | 99 | 100 | ||||||||||
Other (primarily overdrafts) | 2,230 | 4,031 | 4,264 | 4,418 | 3,637 | ||||||||||
Margin loans | 1,479 | 141 | 96 | 87 | 233 | ||||||||||
Total foreign | 12,405 | 11,520 | 12,645 | 14,033 | 14,352 | ||||||||||
Total loans (a) | $ | 54,953 | $ | 56,564 | $ | 61,540 | $ | 64,458 | $ | 63,703 |
(a) | Net of unearned income of $313 million at Dec. 31, 2019, $358 million at Dec. 31, 2018, $394 million at Dec. 31, 2017, $527 million at Dec. 31, 2016 and $674 million at Dec. 31, 2015, primarily on domestic and foreign lease financings. |
Maturity of loan portfolio at Dec. 31, 2019 (a) | ||||||||||||||
(in millions) | Within 1 year | Between 1 and 5 years | After 5 years | Total | ||||||||||
Domestic: | ||||||||||||||
Commercial | $ | 329 | $ | 1,113 | $ | — | $ | 1,442 | ||||||
Commercial real estate | 701 | 2,937 | 1,937 | 5,575 | ||||||||||
Financial institutions | 4,042 | 810 | — | 4,852 | ||||||||||
Overdrafts | 524 | — | — | 524 | ||||||||||
Other | 1,167 | — | — | 1,167 | ||||||||||
Margin loans | 11,888 | 19 | — | 11,907 | ||||||||||
Subtotal | 18,651 | 4,879 | 1,937 | 25,467 | ||||||||||
Foreign | 10,933 | 756 | — | 11,689 | ||||||||||
Total | $ | 29,584 | $ | 5,635 | (b) | $ | 1,937 | (b) | $ | 37,156 |
(a) | Excludes loans collateralized by residential properties, lease financings and wealth management loans and mortgages. |
(b) | Variable rate loans due after one year totaled $7.1 billion and fixed rate loans totaled $279 million. |
Results of Operations (continued) |
Allowance for credit losses activity (dollars in millions) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||
Non-margin loans | $ | 41,567 | $ | 43,080 | $ | 45,755 | $ | 46,868 | $ | 43,708 | |||||
Margin loans | 13,386 | 13,484 | 15,785 | 17,590 | 19,573 | ||||||||||
Total loans | $ | 54,953 | $ | 56,564 | $ | 61,540 | $ | 64,458 | $ | 63,281 | |||||
Average loans outstanding | 51,323 | 55,810 | 57,939 | 61,681 | 60,672 | ||||||||||
Balance, Jan. 1 | |||||||||||||||
Domestic | $ | 220 | $ | 226 | $ | 245 | $ | 240 | $ | 236 | |||||
Foreign | 32 | 35 | 36 | 35 | 44 | ||||||||||
Total allowance at Jan. 1 | 252 | 261 | 281 | 275 | 280 | ||||||||||
Charge-offs: | |||||||||||||||
Commercial | (12 | ) | — | — | — | — | |||||||||
Financial institutions | — | — | — | — | (170 | ) | |||||||||
Wealth management loans and mortgages | (1 | ) | — | — | — | — | |||||||||
Other residential mortgages | (1 | ) | (1 | ) | (1 | ) | (2 | ) | (2 | ) | |||||
Total charge-offs | (14 | ) | (1 | ) | (1 | ) | (2 | ) | (172 | ) | |||||
Recoveries: | |||||||||||||||
Financial institutions | — | — | — | 13 | 1 | ||||||||||
Other residential mortgages | 3 | 2 | 5 | 5 | 6 | ||||||||||
Foreign | — | 1 | — | 1 | — | ||||||||||
Total recoveries | 3 | 3 | 5 | 19 | 7 | ||||||||||
Net (charge-offs) recoveries | (11 | ) | 2 | 4 | 17 | (165 | ) | ||||||||
Provision for credit losses | (25 | ) | (11 | ) | (24 | ) | (11 | ) | 160 | ||||||
Balance, Dec. 31, | |||||||||||||||
Domestic | 192 | 220 | 226 | 245 | 240 | ||||||||||
Foreign | 24 | 32 | 35 | 36 | 35 | ||||||||||
Total allowance, Dec. 31, | $ | 216 | $ | 252 | $ | 261 | $ | 281 | $ | 275 | |||||
Allowance for loan losses | $ | 122 | $ | 146 | $ | 159 | $ | 169 | $ | 157 | |||||
Allowance for lending-related commitments | 94 | 106 | 102 | 112 | 118 | ||||||||||
Net charge-offs (recoveries) to average loans outstanding | 0.02 | % | — | % | (0.01 | )% | (0.03 | )% | 0.27 | % | |||||
Net charge-offs (recoveries) to total allowance for credit losses | 5.09 | (0.79 | ) | (1.53 | ) | (6.05 | ) | 60.00 | |||||||
Allowance for loan losses as a percentage of total loans | 0.22 | 0.26 | 0.26 | 0.26 | 0.25 | ||||||||||
Allowance for loan losses as a percentage of non-margin loans | 0.29 | 0.34 | 0.35 | 0.36 | 0.36 | ||||||||||
Total allowance for credit losses as a percentage of total loans | 0.39 | 0.45 | 0.42 | 0.44 | 0.43 | ||||||||||
Total allowance for credit losses as a percentage of non-margin loans | 0.52 | 0.58 | 0.57 | 0.60 | 0.63 |
Results of Operations (continued) |
Allocation of allowance | Dec. 31, | |||||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||||||
Commercial real estate | 35 | % | 30 | % | 29 | % | 26 | % | 22 | % |
Commercial | 28 | 32 | 30 | 29 | 30 | |||||
Foreign | 11 | 13 | 13 | 13 | 13 | |||||
Financial institutions | 9 | 9 | 9 | 9 | 11 | |||||
Wealth management (a) | 9 | 8 | 8 | 8 | 7 | |||||
Other residential mortgages | 6 | 6 | 8 | 10 | 12 | |||||
Lease financings | 2 | 2 | 3 | 5 | 5 | |||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
(a) | Includes the allowance for wealth management mortgages. |
Nonperforming assets | Dec. 31, | ||||||||||||||
(dollars in millions) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||
Nonperforming loans: | |||||||||||||||
Other residential mortgages | $ | 62 | $ | 67 | $ | 78 | $ | 91 | $ | 102 | |||||
Wealth management loans and mortgages | 24 | 9 | 7 | 8 | 11 | ||||||||||
Commercial real estate | — | — | 1 | — | 2 | ||||||||||
Lease financings | — | — | — | 4 | — | ||||||||||
Financial institutions | — | — | — | — | 171 | ||||||||||
Total nonperforming loans | 86 | 76 | 86 | 103 | 286 | ||||||||||
Other assets owned | 3 | 3 | 4 | 4 | 6 | ||||||||||
Total nonperforming assets | $ | 89 | $ | 79 | $ | 90 | $ | 107 | $ | 292 | |||||
Nonperforming assets ratio | 0.16 | % | 0.14 | % | 0.15 | % | 0.17 | % | 0.46 | % | |||||
Nonperforming assets ratio, excluding margin loans | 0.21 | 0.18 | 0.20 | 0.23 | 0.67 | ||||||||||
Allowance for loan losses/nonperforming loans | 141.9 | 192.1 | 184.9 | 164.1 | 54.9 | ||||||||||
Allowance for loan losses/nonperforming assets | 137.1 | 184.8 | 176.7 | 157.9 | 53.8 | ||||||||||
Total allowance for credit losses/nonperforming loans | 251.2 | 331.6 | 303.5 | 272.8 | 96.2 | ||||||||||
Total allowance for credit losses/nonperforming assets | 242.7 | 319.0 | 290.0 | 262.6 | 94.2 |
Past due loans ≥ 90 days still accruing interest at year-end | |||||||||||||||
(in millions) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||
Domestic: | |||||||||||||||
Consumer | $ | — | $ | 12 | $ | 5 | $ | 7 | $ | 5 | |||||
Commercial | — | — | — | — | — | ||||||||||
Total domestic | — | 12 | 5 | 7 | 5 | ||||||||||
Foreign | — | — | — | — | — | ||||||||||
Total past due loans | $ | — | $ | 12 | $ | 5 | $ | 7 | $ | 5 |
Results of Operations (continued) |
Domestic time deposits ≥ $100,000 at Dec. 31, 2019 | |||||||||
(in millions) | Certificates of deposit | Other time deposits | Total | ||||||
3 months or less | $ | 358 | $ | 43,970 | $ | 44,328 | |||
Between 3 and 6 months | 217 | — | 217 | ||||||
Between 6 and 12 months | 45 | — | 45 | ||||||
Over 12 months | 2 | — | 2 | ||||||
Total | $ | 622 | $ | 43,970 | $ | 44,592 |
Federal funds purchased and securities sold under repurchase agreements | |||||||||
(dollars in millions) | 2019 | 2018 | 2017 | ||||||
Maximum month-end balance during the year | $ | 16,967 | $ | 21,600 | $ | 21,850 | |||
Average daily balance (a) | $ | 12,463 | $ | 15,546 | $ | 19,653 | |||
Weighted-average rate during the year (a) | 11.53 | % | 4.88 | % | 1.14 | % | |||
Ending balance (b) | $ | 11,401 | $ | 14,243 | $ | 15,163 | |||
Weighted-average rate at Dec. 31 (b) | 9.47 | % | 12.99 | % | 2.33 | % |
(a) | Includes the average impact of offsetting under enforceable netting agreements of $55,595 million in 2019, $25,203 million in 2018 and $5,657 million in 2017. On a Non-GAAP basis, excluding the impact of offsetting, the weighted-average rates would have been 2.11% for 2019, 1.86% for 2018 and 0.89% for 2017. We believe providing the rates excluding the impact of netting is useful to investors as it is more reflective of the actual rates paid. |
(b) | Includes the impact of offsetting under enforceable netting agreements of $93,794 million at Dec. 31, 2019, $76,040 million at Dec. 31, 2018 and $25,848 million at Dec. 31, 2017. |
Results of Operations (continued) |
Payables to customers and broker-dealers | |||||||||
(dollars in millions) | 2019 | 2018 | 2017 | ||||||
Maximum month-end balance during the year | $ | 20,343 | $ | 20,905 | $ | 21,621 | |||
Average daily balance (a) | $ | 18,778 | $ | 19,450 | $ | 21,142 | |||
Weighted-average rate during the year (a) | 1.53 | % | 1.17 | % | 0.34 | % | |||
Ending balance at Dec. 31 | $ | 18,758 | $ | 19,731 | $ | 20,184 | |||
Weighted-average rate at Dec. 31 | 1.01 | % | 1.62 | % | 0.56 | % |
(a) | The weighted-average rate is calculated based on, and is applied to, the average interest-bearing payables to customers and broker-dealers, which were $15,595 million in 2019, $16,353 million in 2018 and $18,984 million in 2017. |
Commercial paper | |||||||||
(dollars in millions) | 2019 | 2018 | 2017 | ||||||
Maximum month-end balance during the year | $ | 8,894 | $ | 4,470 | $ | 4,714 | |||
Average daily balance | $ | 2,485 | $ | 2,607 | $ | 2,630 | |||
Weighted-average rate during the year | 2.22 | % | 1.97 | % | 1.08 | % | |||
Ending balance at Dec. 31 | $ | 3,959 | $ | 1,939 | $ | 3,075 | |||
Weighted-average rate at Dec. 31 | 1.60 | % | 2.34 | % | 1.27 | % |
Other borrowed funds | |||||||||
(dollars in millions) | 2019 | 2018 | 2017 | ||||||
Maximum month-end balance during the year | $ | 3,969 | $ | 3,269 | $ | 3,955 | |||
Average daily balance | $ | 1,895 | $ | 2,545 | $ | 1,916 | |||
Weighted-average rate during the year | 3.11 | % | 2.26 | % | 1.36 | % | |||
Ending balance at Dec. 31 | $ | 599 | $ | 3,227 | $ | 3,028 | |||
Weighted-average rate at Dec. 31 | 2.65 | % | 2.64 | % | 1.48 | % |
Results of Operations (continued) |
Available funds | Dec. 31, 2019 | Dec. 31, 2018 | Average | ||||||||||||
(dollars in millions) | 2019 | 2018 | 2017 | ||||||||||||
Cash and due from banks | $ | 4,830 | $ | 5,864 | $ | 5,084 | $ | 5,014 | $ | 5,039 | |||||
Interest-bearing deposits with the Federal Reserve and other central banks | 95,042 | 67,988 | 61,739 | 68,408 | 70,213 | ||||||||||
Interest-bearing deposits with banks | 14,811 | 14,148 | 14,666 | 14,740 | 14,879 | ||||||||||
Federal funds sold and securities purchased under resale agreements | 30,182 | 46,795 | 36,705 | 27,883 | 27,192 | ||||||||||
Total available funds | $ | 144,865 | $ | 134,795 | $ | 118,194 | $ | 116,045 | $ | 117,323 | |||||
Total available funds as a percentage of total assets | 38 | % | 37 | % | 34 | % | 34 | % | 34 | % |
Results of Operations (continued) |
Credit ratings at Dec. 31, 2019 | |||||||
Moody’s | S&P | Fitch | DBRS | ||||
Parent: | |||||||
Long-term senior debt | A1 | A | AA- | AA | |||
Subordinated debt | A2 | A- | A+ | AA (low) | |||
Preferred stock | Baa1 | BBB | BBB | A | |||
Outlook - Parent | Stable | Stable | Stable | Stable | |||
The Bank of New York Mellon: | |||||||
Long-term senior debt | Aa2 | AA- | AA | AA (high) | |||
Subordinated debt | NR | A | NR | NR | |||
Long-term deposits | Aa1 | AA- | AA+ | AA (high) | |||
Short-term deposits | P1 | A-1+ | F1+ | R-1 (high) | |||
Commercial paper | P1 | A-1+ | F1+ | R-1 (high) | |||
BNY Mellon, N.A.: | |||||||
Long-term senior debt | Aa2 | (a) | AA- | AA | (a) | AA (high) | |
Long-term deposits | Aa1 | AA- | AA+ | AA (high) | |||
Short-term deposits | P1 | A-1+ | F1+ | R-1 (high) | |||
Outlook - Banks | Stable | Stable | Stable | Stable |
(a) | Represents senior debt issuer default rating. |
Debt issuances | |||
(in millions) | 2019 | ||
Senior notes: | |||
3-month LIBOR + 28bps senior notes due in 2021 | $ | 1,250 | |
1.95% senior notes due 2022 | 1,000 | ||
2.10% senior notes due 2024 | 750 | ||
Total debt issuances | $ | 3,000 |
Results of Operations (continued) |
Consolidated HQLA and LCR | Dec. 31, 2019 | ||
(dollars in billions) | |||
Securities (a) | $ | 106 | |
Cash (b) | 87 | ||
Total consolidated HQLA (c) | $ | 193 | |
Total consolidated HQLA – average (c) | $ | 168 | |
Average LCR | 120 | % |
(a) | Primarily includes securities of U.S. government-sponsored enterprises, sovereign securities, U.S. Treasury, U.S. agency and investment-grade corporate debt. |
(b) | Primarily includes cash on deposit with central banks. |
(c) | Consolidated HQLA presented before adjustments. After haircuts and the impact of trapped liquidity, consolidated HQLA totaled $149 billion at Dec. 31, 2019 and averaged $125 billion for the fourth quarter of 2019. |
Results of Operations (continued) |
Contractual obligations at Dec. 31, 2019 | Payments due by period | ||||||||||||||
(in millions) | Total | Less than 1 year | 1-3 years | 3-5 years | Over 5 years | ||||||||||
Deposits without a stated maturity | $ | 154,130 | $ | 154,130 | $ | — | $ | — | $ | — | |||||
Term deposits | 48,281 | 48,278 | 2 | — | 1 | ||||||||||
Federal funds purchased and securities sold under repurchase agreements | 11,401 | 11,401 | — | — | — | ||||||||||
Payables to customers and broker-dealers | 18,758 | 18,758 | — | — | — | ||||||||||
Other borrowed funds (a) | 599 | 599 | — | — | — | ||||||||||
Operating leases | 2,066 | 284 | 423 | 302 | 1,057 | ||||||||||
Long-term debt (b) | 30,667 | 4,702 | 9,268 | 8,721 | 7,976 | ||||||||||
Unfunded pension and post-retirement benefits | 244 | 28 | 55 | 50 | 111 | ||||||||||
Investment commitments (c) | 422 | 152 | 243 | 7 | 20 | ||||||||||
Total contractual obligations | $ | 266,568 | $ | 238,332 | $ | 9,991 | $ | 9,080 | $ | 9,165 |
(a) | Includes finance leases. |
(b) | Includes interest. |
(c) | Includes Community Reinvestment Act commitments. |
Results of Operations (continued) |
Other commitments at Dec. 31, 2019 | Amount of commitment expiration per period | ||||||||||||||
(in millions) | Total | Less than 1 year | 1-3 years | 3-5 years | Over 5 years | ||||||||||
Securities lending indemnifications (a) | $ | 408,378 | $ | 408,378 | $ | — | $ | — | $ | — | |||||
Lending commitments | 49,119 | 31,042 | 7,017 | 10,772 | 288 | ||||||||||
Standby letters of credit | 2,298 | 1,572 | 628 | 95 | 3 | ||||||||||
Purchase obligations (b) | 1,862 | 971 | 666 | 210 | 15 | ||||||||||
Commercial letters of credit | 74 | 74 | — | — | — | ||||||||||
Private equity commitments (c) | 55 | 23 | 4 | 28 | — | ||||||||||
Total commitments | $ | 461,786 | $ | 442,060 | $ | 8,315 | $ | 11,105 | $ | 306 |
(a) | Excludes the indemnification for securities for which BNY Mellon acts as an agent on behalf of CIBC Mellon clients, which totaled $57 billion at Dec. 31, 2019. |
(b) | Purchase obligations are defined as agreements to purchase goods or services that are enforceable and legally binding and specify all significant terms. |
(c) | Relates to SBIC investments, which are compliant with the Volcker Rule. |
Capital data (dollars in millions, except per share amounts; common shares in thousands) | 2019 | 2018 | ||||
At period end: | ||||||
BNY Mellon shareholders’ equity to total assets ratio | 10.9 | % | 11.2 | % | ||
BNY Mellon common shareholders’ equity to total assets ratio | 9.9 | % | 10.2 | % | ||
Total BNY Mellon shareholders’ equity | $ | 41,483 | $ | 40,638 | ||
Total BNY Mellon common shareholders’ equity (a) | $ | 37,941 | $ | 37,096 | ||
BNY Mellon tangible common shareholders’ equity – Non-GAAP (a) | $ | 19,216 | $ | 18,290 | ||
Book value per common share (a) | $ | 42.12 | $ | 38.63 | ||
Tangible book value per common share – Non-GAAP (a) | $ | 21.33 | $ | 19.04 | ||
Closing stock price per common share | $ | 50.33 | $ | 47.07 | ||
Market capitalization | $ | 45,331 | $ | 45,207 | ||
Common shares outstanding | 900,683 | 960,426 | ||||
Full-year: | ||||||
Average common equity to average assets | 10.8 | % | 11.0 | % | ||
Cash dividends per common share | $ | 1.18 | $ | 1.04 | ||
Common dividend payout ratio | 26 | % | 26 | % | ||
Common dividend yield | 2.3 | % | 2.2 | % |
(a) | See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 101 for a reconciliation of GAAP to Non-GAAP. |
Results of Operations (continued) |
Consolidated and largest bank subsidiary regulatory capital ratios | Dec. 31, 2019 | Dec. 31, 2018 | |||||||||
Well capitalized | Minimum required | Capital ratios | Capital ratios | ||||||||
(a) | |||||||||||
Consolidated regulatory capital ratios: (b) | |||||||||||
Advanced Approaches: | |||||||||||
CET1 ratio | N/A | (c) | 8.5 | % | 11.5 | % | 10.7 | % | |||
Tier 1 capital ratio | 6 | % | 10 | 13.7 | 12.8 | ||||||
Total capital ratio | 10 | % | 12 | 14.4 | 13.6 | ||||||
Standardized Approach: | |||||||||||
CET1 ratio | N/A | (c) | 8.5 | % | 12.5 | % | 11.7 | % | |||
Tier 1 capital ratio | 6 | % | 10 | 14.8 | 14.1 | ||||||
Total capital ratio | 10 | % | 12 | 15.8 | 15.1 | ||||||
Tier 1 leverage ratio | N/A | (c) | 4 | 6.6 | 6.6 | ||||||
SLR (d) | N/A | (c) | 5 | 6.1 | 6.0 | ||||||
The Bank of New York Mellon regulatory capital ratios: (b) | |||||||||||
Advanced Approaches: | |||||||||||
CET1 ratio | 6.5 | % | 7 | % | 15.1 | % | 14.0 | % | |||
Tier 1 capital ratio | 8 | 8.5 | 15.1 | 14.3 | |||||||
Total capital ratio | 10 | 10.5 | 15.2 | 14.7 | |||||||
Tier 1 leverage ratio | 5 | 4 | 6.9 | 7.6 | |||||||
SLR (d) | 6 | 3 | 6.4 | 6.8 |
(a) | Minimum requirements for Dec. 31, 2019 include minimum thresholds plus currently applicable buffers. |
(b) | For our CET1, Tier 1 capital and Total capital ratios, our effective capital ratios under U.S. capital rules are the lower of the ratios as calculated under the Standardized and Advanced Approaches. The Tier 1 leverage ratio is based on Tier 1 capital and quarterly average total assets. The U.S. global systemically important banks (“G-SIB”) surcharge of 1.5% is subject to change. The countercyclical capital buffer is currently set to 0%. |
(c) | The Federal Reserve’s regulations do not establish well capitalized thresholds for these measures for BHCs. |
(d) | The SLR is based on Tier 1 capital and total leverage exposure, which includes certain off-balance sheet exposures. |
Results of Operations (continued) |
Capital components and risk-weighted assets | Dec. 31, | |||||
(in millions) | 2019 | 2018 | ||||
CET1: | ||||||
Common shareholders’ equity | $ | 37,941 | $ | 37,096 | ||
Adjustments for: | ||||||
Goodwill and intangible assets (a) | (18,725 | ) | (18,806 | ) | ||
Net pension fund assets | (272 | ) | (320 | ) | ||
Equity method investments | (311 | ) | (361 | ) | ||
Deferred tax assets | (46 | ) | (42 | ) | ||
Other | (47 | ) | — | |||
Total CET1 | 18,540 | 17,567 | ||||
Other Tier 1 capital: | ||||||
Preferred stock | 3,542 | 3,542 | ||||
Other | (86 | ) | (65 | ) | ||
Total Tier 1 capital | $ | 21,996 | $ | 21,044 | ||
Tier 2 capital: | ||||||
Subordinated debt | $ | 1,248 | $ | 1,250 | ||
Allowance for credit losses | 216 | 252 | ||||
Other | (11 | ) | (10 | ) | ||
Total Tier 2 capital – Standardized Approach | 1,453 | 1,492 | ||||
Excess of expected credit losses | — | 65 | ||||
Less: Allowance for credit losses | 216 | 252 | ||||
Total Tier 2 capital – Advanced Approaches | $ | 1,237 | $ | 1,305 | ||
Total capital: | ||||||
Standardized Approach | $ | 23,449 | $ | 22,536 | ||
Advanced Approaches | $ | 23,233 | $ | 22,349 | ||
Risk-weighted assets: | ||||||
Standardized Approach | $ | 148,695 | $ | 149,618 | ||
Advanced Approaches: | ||||||
Credit Risk | $ | 95,490 | $ | 92,917 | ||
Market Risk | 4,020 | 3,454 | ||||
Operational Risk | 61,388 | 68,300 | ||||
Total Advanced Approaches | $ | 160,898 | $ | 164,671 | ||
Average assets for Tier 1 leverage ratio | $ | 334,869 | $ | 319,007 | ||
Total leverage exposure for SLR | $ | 362,452 | $ | 347,943 |
(a) | Reduced by deferred tax liabilities associated with intangible assets and tax deductible goodwill. |
Results of Operations (continued) |
CET1 generation | 2019 | ||
(in millions) | |||
CET1 – Beginning of year | $ | 17,567 | |
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | 4,272 | ||
Goodwill and intangible assets, net of related deferred tax liabilities | 81 | ||
Gross CET1 generated | 4,353 | ||
Capital deployed: | |||
Common stock repurchases | (3,327 | ) | |
Common stock dividend payments | (1,120 | ) | |
Total capital deployed | (4,447 | ) | |
Other comprehensive income: | |||
Foreign currency translation | 148 | ||
Unrealized gain on assets available-for-sale | 526 | ||
Defined benefit plans | (54 | ) | |
Unrealized gain on cash flow hedges | 3 | ||
Other | (90 | ) | |
Total other comprehensive income | 533 | ||
Additional paid-in capital (a) | 397 | ||
Other additions (deductions): | |||
Embedded goodwill | 50 | ||
Net pension fund assets | 48 | ||
Deferred tax assets | (4 | ) | |
Other | 43 | ||
Total other additions | 137 | ||
Net CET1 generated | 973 | ||
CET1 – End of year | $ | 18,540 |
(a) | Primarily related to stock awards, the exercise of stock options and stock issued for employee benefit plans. |
Sensitivity of consolidated capital ratios at Dec. 31, 2019 | ||||
Increase or decrease of | ||||
(in basis points) | $100 million in common equity | $1 billion in RWA, quarterly average assets or total leverage exposure | ||
CET1: | ||||
Standardized Approach | 7 | bps | 8 | bps |
Advanced Approaches | 6 | 7 | ||
Tier 1 capital: | ||||
Standardized Approach | 7 | 10 | ||
Advanced Approaches | 6 | 9 | ||
Total capital: | ||||
Standardized Approach | 7 | 11 | ||
Advanced Approaches | 6 | 9 | ||
Tier 1 leverage | 3 | 2 | ||
SLR | 3 | 2 |
As a % of RWAs (a) | As a % of total leverage exposure | |
Eligible external TLAC ratios | Regulatory minimum of 18% plus a buffer (b) equal to the sum of 2.5%, the method 1 G-SIB surcharge (currently 1%), and the countercyclical capital buffer, if any | Regulatory minimum of 7.5% plus a buffer (c) equal to 2% |
Eligible external LTD ratios | Regulatory minimum of 6% plus the greater of the method 1 or method 2 G-SIB surcharge (currently 1.5%) | 4.5% |
(c) | Buffer to be met using only Tier 1 capital. |
Results of Operations (continued) |
TLAC and LTD ratios | Dec. 31, 2019 | |||||
Minimum required | Minimum ratios with buffers | |||||
Ratios | ||||||
Eligible external TLAC: | ||||||
As a percentage of RWA | 18.0 | % | 21.5 | % | 27.2 | % |
As a percentage of total leverage exposure | 7.5 | % | 9.5 | % | 12.1 | % |
Eligible external LTD: | ||||||
As a percentage of RWA | 7.5 | % | N/A | 12.2 | % | |
As a percentage of total leverage exposure | 4.5 | % | N/A | 5.4 | % |
Share repurchases – fourth quarter of 2019 | Total shares repurchased as part of a publicly announced plan or program | Maximum approximate dollar value of shares that may yet be purchased under the publicly announced plans or programs at Dec. 31, 2019 | ||||||||||||
(dollars in millions, except per share amounts; common shares in thousands) | Total shares repurchased | Average price per share | ||||||||||||
October 2019 | 16,548 | $ | 46.41 | 16,548 | $ | 2,191 | ||||||||
November 2019 | 5,500 | 48.39 | 5,500 | 1,925 | ||||||||||
December 2019 | 129 | 50.15 | 129 | 1,918 | ||||||||||
Fourth quarter of 2019 (a) | 22,177 | $ | 46.92 | 22,177 | 1,918 | (b) |
(a) | Includes 21 thousand shares repurchased at a purchase price of $1 million from employees, primarily in connection with the employees’ payment of taxes upon the vesting of restricted stock. The average price per share of open market purchases was $46.92. |
(b) | Represents the maximum value of the shares authorized to be repurchased through the second quarter of 2020, including employee benefit plan repurchases. |
Results of Operations (continued) |
• | VaR does not estimate potential losses over longer time horizons where moves may be extreme; |
• | VaR does not take account of potential variability of market liquidity; and |
• | Previous moves in market risk factors may not produce accurate predictions of all future market moves. |
VaR (a) | 2019 | Dec. 31, 2019 | ||||||||||
(in millions) | Average | Minimum | Maximum | |||||||||
Interest rate | $ | 4.3 | $ | 3.2 | $ | 7.3 | $ | 4.8 | ||||
Foreign exchange | 3.1 | 1.5 | 6.4 | 2.7 | ||||||||
Equity | 0.8 | 0.3 | 1.2 | 1.0 | ||||||||
Credit | 0.9 | 0.4 | 2.0 | 1.3 | ||||||||
Diversification | (3.3 | ) | N/M | N/M | (4.0 | ) | ||||||
Overall portfolio | 5.8 | 3.9 | 9.5 | 5.8 |
VaR (a) | 2018 | Dec. 31, 2018 | ||||||||||
(in millions) | Average | Minimum | Maximum | |||||||||
Interest rate | $ | 4.1 | $ | 3.0 | $ | 5.5 | $ | 4.3 | ||||
Foreign exchange | 4.3 | 2.9 | 8.3 | 4.1 | ||||||||
Equity | 0.7 | — | 1.2 | 0.8 | ||||||||
Credit | 0.9 | 0.6 | 2.6 | 0.6 | ||||||||
Diversification | (4.2 | ) | N/M | N/M | (3.2 | ) | ||||||
Overall portfolio | 5.8 | 3.6 | 10.4 | 6.6 |
(a) | VaR exposure does not include the impact of the Company’s consolidated investment management funds and seed capital investments. |
Results of Operations (continued) |
Distribution of trading revenue (loss) (a) | Quarter ended | ||||||||||
(dollars in millions) | Dec. 31, 2019 | Sept. 30, 2019 | June 30, 2019 | March 31, 2019 | Dec. 31, 2018 | ||||||
Revenue range: | Number of days | ||||||||||
Less than $(2.5) | 3 | 2 | — | 1 | 1 | ||||||
$(2.5) – $0 | 5 | 7 | 4 | 5 | 7 | ||||||
$0 – $2.5 | 23 | 26 | 30 | 22 | 17 | ||||||
$2.5 – $5.0 | 24 | 22 | 23 | 23 | 24 | ||||||
More than $5.0 | 7 | 7 | 7 | 10 | 13 |
(a) | Trading revenue (loss) includes realized and unrealized gains and losses primarily related to spot and forward foreign exchange transactions, derivatives and securities trades for our customers and excludes any associated commissions, underwriting fees and net interest revenue. |
Results of Operations (continued) |
Foreign exchange and other trading counterparty risk rating profile (a) | Quarter ended | |||||||||
Dec. 31, 2019 | Sept. 30, 2019 | June 30, 2019 | March 31, 2019 | Dec. 31, 2018 | ||||||
Rating: | ||||||||||
AAA to AA- | 54 | % | 55 | % | 54 | % | 49 | % | 50 | % |
A+ to A- | 24 | 24 | 26 | 28 | 28 | |||||
BBB+ to BBB- | 17 | 16 | 17 | 20 | 18 | |||||
BB+ and lower (b) | 5 | 5 | 3 | 3 | 4 | |||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
(a) | Represents credit rating agency equivalent of internal credit ratings. |
(b) | Non-investment grade. |
Estimated changes in net interest revenue (in millions) | Dec. 31, 2019 | Sept. 30, 2019 | Dec. 31, 2018 | ||||||
Up 200 bps parallel rate ramp vs. baseline (a) | $ | 195 | $ | 187 | $ | 411 | |||
Up 100 bps parallel rate ramp vs. baseline (a) | 79 | 74 | 198 | ||||||
Down 100 bps parallel rate ramp vs. baseline (a) | (40 | ) | (45 | ) | (163 | ) | |||
Long-term up 50 bps, short-term unchanged (b) | 110 | 115 | 82 | ||||||
Long-term down 50 bps, short-term unchanged (b) | (105 | ) | (119 | ) | (98 | ) |
(a) | In the parallel rate ramp, both short-term and long-term rates move in four equal quarterly increments. |
(b) | Long-term is equal to or greater than one year. |
Results of Operations (continued) |
Estimated changes in EVE | Dec. 31, 2019 | |
Rate change: | ||
Up 200 bps vs. baseline | (4.6 | )% |
Up 100 bps vs. baseline | (1.7 | )% |
Risk Management |
• | Leading by Example: BNY Mellon’s senior management and leaders set the tone and expectations regarding risk culture, maintaining consistent executive sponsorship and senior governance for risk, conduct and ethics issues. They hold themselves and others to the highest ethical standards and create a culture of transparency and accountability where learning from mistakes is valued. |
• | Demonstrating Integrity: We promptly identify and appropriately address potential client conflicts and ensure our business practices support market integrity. Further, BNY Mellon fosters open and honest relationships with supervisors and stakeholders. |
• | Ensuring Risk Ownership: We clearly articulate risk management responsibilities of the first and second line, and articulate our risk culture in the BNY Mellon risk appetite statement. We consistently evaluate risk issues when considering business decisions. |
• | Embedding Ethical Behavior: BNY Mellon integrates risk, conduct and ethics expectations throughout the employee lifecycle, reinforced through training and communications. We continually encourage the reporting and escalation of risk, conduct and ethics issues. |
Risk Management (continued) |
Risk Management (continued) |
• | Asia Pacific Senior Risk & Control Committee and Europe, Middle East, Africa Senior Risk & Control Committee: The most senior risk governance groups for the regions with oversight responsibility for risk and control matters. |
• | Operational Risk Committee: Oversees the operational risk framework and policies, reviews and monitors program outputs and metrics, monitors resolution of significant operational risk matters, including changes to the risk and control environment, and escalates concerns to the SRCC. |
• | Enterprise Model Risk Committee: Communicates an aggregate view of model risk to SRCC and the Board. Establishes policy and serves as an escalation point for key decisions on models. |
• | Technology & Information Risk Committee: Oversees the risks and associated policies related to enterprise technology initiatives to help maintain and protect the confidentiality, integrity, and availability of BNY Mellon’s information and technology assets from internal and external threats. |
• | Credit Portfolio Management Committees: Six Portfolio Management Committees, governed by the same charter and rules, manage, monitor and review one of Credit Risk’s primary portfolio segments, including underwriting criteria, portfolio limits and composition, concentration, credit strategy, quality and exposure. |
• | Asset Liability Committee: The Asset Liability Committee (“ALCO”) is the senior management committee responsible for balance sheet oversight, including capital, liquidity and interest rate risk management. |
• | Balance Sheet Risk Committee (“BSRC”): Provides governance over independent risk oversight of liquidity risks associated with assets and liabilities, liquidity risk limits calibration, and the adequacy of related control procedures. |
• | Resolvability Steering Committee: Oversees recovery and resolution planning, including but not limited to the project governance and oversight framework for all recovery and resolution planning requirements in relevant jurisdictions where BNY Mellon operates. |
• | Strategic Risk Committee: Considers for approval proposals for major strategic initiatives significantly impacting the risk profile of the company, including but not limited to acquisitions, material changes to existing products, material new products, significant business process changes and complex transactions. |
Risk Management (continued) |
Type of risk | Description |
Operational | The risk of loss resulting from inadequate or failed internal processes, human factors and systems, breaches of technology and information systems or from external events. |
Market | The risk of loss due to adverse changes in the financial markets. Our market risks are primarily interest rate, foreign exchange and equity risk. Market risk particularly impacts our exposures that are fair valued such as the securities portfolio, trading book and equity investments. |
Credit | The risk of loss if any of our borrowers or other counterparties were to default on their obligations to us. Credit risk is resident in the majority of our assets, but primarily concentrated in the loan and securities books, as well as off-balance sheet exposures such as lending commitments, letters of credit and securities lending indemnifications. |
Liquidity | The risk that BNY Mellon cannot meet its cash and collateral obligations at a reasonable cost for both expected and unexpected cash flows, without adversely affecting daily operations or financial conditions. Liquidity risk can arise from cash flow mismatches, market constraints from the inability to convert assets to cash, the inability to raise cash in the markets, deposit run-off or contingent liquidity events. |
Strategic | The risk arising from adverse business decisions, poor implementation of business decisions or lack of responsiveness to changes in the financial industry and operating environment. Strategic and/or business risks may also arise from the acceptance of new businesses, the introduction or modification of products, strategic finance and risk management decisions, business process changes, complex transactions, acquisitions/ divestitures/ joint ventures and major capital expenditures/ investments. |
• | Accountability of Businesses - Business managers are responsible for maintaining an effective system of internal controls commensurate with their risk profiles and in accordance with BNY Mellon policies and procedures. |
• | Corporate Operational Risk Management is the independent second line function responsible for developing risk management policies and tools for assessing, measuring, monitoring and managing operational risk for BNY Mellon. The primary objectives of Corporate Operational Risk Management are to promote effective risk management, identify emerging risks and drive continuous improvement in controls and to optimize capital. |
• | Technology risk is a subset of operational risk. Technology Risk Management is the independent operational risk management function that drives the development of global technology policies, controls and methods for assessing, measuring and monitoring information and technology risk for BNY Mellon. Technology Risk Management partners with the businesses to drive better |
Risk Management (continued) |
• | Operational resiliency is a top priority for the Company. The core of our enterprise resiliency strategy is built on the Enterprise Resiliency Office, with second line oversight from Resiliency Risk Management. Elements of the resiliency strategy include our Business Services Framework, IT Asset Management, Application transformation (Greenfield) and Mainframe modernization, as well as Disaster Recovery Testing and Business Continuity capabilities. We are also focused on the resiliency capabilities of our most important service providers. These capabilities are intended to enable the Company to deliver services to our clients, to prevent, respond to and recover from business disruptions and threats, and embed governance and management in order to prioritize delivery of critical assets and mitigate financial, operational, business, cyber and technological risks. |
Risk Management (continued) |
Risk Management (continued) |
Supervision and Regulation |
Supervision and Regulation (continued) |
Supervision and Regulation (continued) |
Supervision and Regulation (continued) |
Supervision and Regulation (continued) |
Supervision and Regulation (continued) |
Supervision and Regulation (continued) |
Supervision and Regulation (continued) |
Supervision and Regulation (continued) |
Supervision and Regulation (continued) |
• | Transfer any of the depository institution’s assets and liabilities to a new obligor, including a newly formed “bridge” bank without the approval of the depository institution’s creditors; |
• | Enforce the terms of the depository institution’s contracts pursuant to their terms without regard to any provisions triggered by the appointment of the FDIC in that capacity; or |
• | Repudiate or disaffirm any contract or lease to which the depository institution is a party, the performance of which is determined by the FDIC to be burdensome and the disaffirmance or repudiation of which is determined by the FDIC to promote the orderly administration of the depository institution. |
Supervision and Regulation (continued) |
Supervision and Regulation (continued) |
Supervision and Regulation (continued) |
Supervision and Regulation (continued) |
Supervision and Regulation (continued) |
Supervision and Regulation (continued) |
Supervision and Regulation (continued) |
Other Matters |
Risk Factors |
Risk Factors (continued) |
Risk Factors (continued) |
Risk Factors (continued) |
Risk Factors (continued) |
Risk Factors (continued) |
Risk Factors (continued) |
Risk Factors (continued) |
Risk Factors (continued) |
Risk Factors (continued) |
Risk Factors (continued) |
Risk Factors (continued) |
• | Geopolitical tension and economic instability in countries around the world can at times increase the demand for low-risk investments, particularly in U.S. Treasuries and the dollar. A “flight to safety” has historically increased BNY Mellon’s balance sheet, which has negatively impacted, and could continue to negatively impact, our leverage-based regulatory capital measures. A sustained “flight to safety” has historically triggered a decline in trading, capital markets and cross-border activity which would likely decrease our revenue, negatively impacting our results of operations, financial condition and, if sustained in the long term, our business. |
• | The fees earned by our Investment Management business are higher as assets under management and/or investment performance increase. Those fees are also impacted by the composition of the assets under management, with higher fees for some asset categories as compared to others. Uncertain and volatile capital markets, particularly declines, could result in reductions in assets under management because of investors’ decisions to withdraw assets, switch from higher |
• | Market conditions resulting in lower transaction volumes could have an adverse effect on the revenues and profitability of certain of our businesses such as clearing, settlement, payments and trading. |
• | Uncertain and volatile capital markets, particularly declines, could reduce the value of our investments in securities, including pension and other post-retirement plan assets and produce downward pressure on our stock price and credit availability without regard to our underlying financial strength. |
• | Derivative instruments we hold to hedge and manage exposure to market risks, including interest rate risk, equity price risk, foreign currency risk and credit risk associated with our products and businesses might not perform as intended or expected, resulting in higher realized losses and unforeseen stresses on liquidity. Our derivative-based hedging strategies also rely on the performance of counterparties to such derivatives. These counterparties may fail to perform for various reasons resulting in losses on under-collateralized positions. |
• | A decline in oil prices may negatively impact capital markets and the ability of certain of our clients, including oil and gas exploration and production companies and sovereign funds in oil-exporting countries, to continue using our services. Increased defaults among oil and gas exploration and production companies may also negatively impact the high-yield market and our high-yield funds. |
• | The process we use to estimate our projected credit losses and to ascertain the fair value of securities held by us is subject to uncertainty in that it requires use of statistical models and difficult, subjective and complex judgments, including forecasts of economic conditions and how these conditions might impair the ability of our borrowers and others to meet their obligations. In uncertain and volatile capital markets, our ability to estimate our projected credit losses may be impaired, which could |
Risk Factors (continued) |
• | continued compression of our net interest spreads, depending on our balance sheet position; |
• | constraining our ability to achieve a net interest margin consistent with historical averages; |
• | sustained weakness of our spread-based revenues, resulting in continued voluntary waiving of particular fees on certain money market mutual funds and related distribution fees by us in order to prevent the yields on such funds from becoming uneconomic; and |
• | adversely impacting the value of fixed-rate mortgage-backed securities we hold if there are |
• | less liquidity in bonds and fixed-income funds in the case of a sharp rise in interest rates resulting in lower performance, yield and fees; |
• | increased number of delinquencies, bankruptcies or defaults and more nonperforming assets and net charge-offs, as borrowers may have more difficulty making higher interest payments; |
• | higher redemptions from our fixed-income funds or separate accounts, as clients move funds into investments with higher rates of return; |
• | decreases in deposit levels, which may reduce our LCR measure; |
• | reduction in accumulated OCI in our shareholders’ equity and therefore our tangible common equity due to the impact of rising long term rates on our available-for-sale securities in our investment portfolio, which could negatively impact our risk-based and leverage based regulatory capital ratios; or |
• | higher funding costs. |
Risk Factors (continued) |
Risk Factors (continued) |
Risk Factors (continued) |
Risk Factors (continued) |
Risk Factors (continued) |
Risk Factors (continued) |
Risk Factors (continued) |
Risk Factors (continued) |
Risk Factors (continued) |
Risk Factors (continued) |
Risk Factors (continued) |
Risk Factors (continued) |
Recent Accounting Developments |
Supplemental Information (unaudited) |
Return on common equity and tangible common equity reconciliation | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||
(dollars in millions) | |||||||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP | $ | 4,272 | $ | 4,097 | $ | 3,915 | $ | 3,425 | $ | 3,053 | |||||
Add: Amortization of intangible assets | 117 | 180 | 209 | 237 | 261 | ||||||||||
Less: Tax impact of amortization of intangible assets | 28 | 42 | 72 | 81 | 89 | ||||||||||
Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets – Non-GAAP | $ | 4,361 | $ | 4,235 | $ | 4,052 | $ | 3,581 | $ | 3,225 | |||||
Average common shareholders’ equity | $ | 37,505 | $ | 37,818 | $ | 36,145 | $ | 35,504 | $ | 35,564 | |||||
Less: Average goodwill | 17,329 | 17,458 | 17,441 | 17,497 | 17,731 | ||||||||||
Average intangible assets | 3,162 | 3,314 | 3,508 | 3,737 | 3,992 | ||||||||||
Add: Deferred tax liability – tax deductible goodwill (a) | 1,098 | 1,072 | 1,034 | 1,497 | 1,401 | ||||||||||
Deferred tax liability – intangible assets (a) | 670 | 692 | 718 | 1,105 | 1,148 | ||||||||||
Average tangible common shareholders’ equity – Non-GAAP | $ | 18,782 | $ | 18,810 | $ | 16,948 | $ | 16,872 | $ | 16,390 | |||||
Return on common shareholders’ equity – GAAP | 11.4 | % | 10.8 | % | 10.8 | % | 9.6 | % | 8.6 | % | |||||
Return on tangible common shareholders’ equity – Non-GAAP | 23.2 | % | 22.5 | % | 23.9 | % | 21.2 | % | 19.7 | % |
(a) | Deferred tax liabilities are based on fully phased-in U.S. capital rules. |
Supplemental Information (unaudited) (continued) |
Book value and tangible book value per common share reconciliation | Dec. 31, | ||||||||||||||
(dollars in millions, except per share amounts and unless otherwise noted) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||
BNY Mellon shareholders’ equity at year end – GAAP | $ | 41,483 | $ | 40,638 | $ | 41,251 | $ | 38,811 | $ | 38,037 | |||||
Less: Preferred stock | 3,542 | 3,542 | 3,542 | 3,542 | 2,552 | ||||||||||
BNY Mellon common shareholders’ equity at year end – GAAP | 37,941 | 37,096 | 37,709 | 35,269 | 35,485 | ||||||||||
Less: Goodwill | 17,386 | 17,350 | 17,564 | 17,316 | 17,618 | ||||||||||
Intangible assets | 3,107 | 3,220 | 3,411 | 3,598 | 3,842 | ||||||||||
Add: Deferred tax liability – tax deductible goodwill (a) | 1,098 | 1,072 | 1,034 | 1,497 | 1,401 | ||||||||||
Deferred tax liability – intangible assets (a) | 670 | 692 | 718 | 1,105 | 1,148 | ||||||||||
BNY Mellon tangible common shareholders’ equity at year end – Non-GAAP | $ | 19,216 | $ | 18,290 | $ | 18,486 | $ | 16,957 | $ | 16,574 | |||||
Year-end common shares outstanding (in thousands) | 900,683 | 960,426 | 1,013,442 | 1,047,488 | 1,085,343 | ||||||||||
Book value per common share – GAAP | $ | 42.12 | $ | 38.63 | $ | 37.21 | $ | 33.67 | $ | 32.69 | |||||
Tangible book value per common share – Non-GAAP | $ | 21.33 | $ | 19.04 | $ | 18.24 | $ | 16.19 | $ | 15.27 |
(a) | Deferred tax liabilities are based on fully phased-in U.S. capital rules. |
Constant currency reconciliation – Consolidated | 2019 vs. | |||||||
(dollars in millions) | 2019 | 2018 | 2018 | |||||
Investment management and performance fees – GAAP (a) | $ | 3,389 | $ | 3,647 | (7 | )% | ||
Impact of changes in foreign currency exchange rates | — | (53 | ) | |||||
Adjusted investment management and performance fees – Non-GAAP | $ | 3,389 | $ | 3,594 | (6 | )% |
(a) | In 2019, we reclassified certain platform-related fees to clearing services fees from investment management and performance fees. Prior periods have been reclassified. |
Constant currency reconciliation – Investment Management business | 2019 vs. | |||||||
(dollars in millions) | 2019 | 2018 | 2018 | |||||
Investment management and performance fees – GAAP | $ | 3,373 | $ | 3,632 | (7 | )% | ||
Impact of changes in foreign currency exchange rates | — | (53 | ) | |||||
Adjusted investment management and performance fees – Non-GAAP | $ | 3,373 | $ | 3,579 | (6 | )% |
Pre-tax operating margin reconciliation – Investment Management business | |||||||||
(dollars in millions) | 2019 | 2018 | 2017 | ||||||
Income before income taxes – GAAP | $ | 1,079 | $ | 1,263 | $ | 1,141 | |||
Total revenue – GAAP | $ | 3,721 | $ | 4,084 | $ | 3,997 | |||
Less: Distribution and servicing expense | 376 | 407 | 422 | ||||||
Adjusted total revenue, net of distribution and servicing expense – Non-GAAP | $ | 3,345 | $ | 3,677 | $ | 3,575 | |||
Pre-tax operating margin – GAAP (a) | 29 | % | 31 | % | 29 | % | |||
Adjusted pre-tax operating margin, net of distribution and servicing expense – Non-GAAP (a) | 32 | % | 34 | % | 32 | % |
(a) | Income before taxes divided by total revenue. |
Supplemental Information (unaudited) (continued) |
Rate/volume analysis (a) | 2019 over (under) 2018 | 2018 over (under) 2017 | |||||||||||||||||
Due to change in | Due to change in | ||||||||||||||||||
(in millions) | Average balance | Average rate | Net change | Average balance | Average rate | Net change | |||||||||||||
Interest revenue | |||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||
Interest-bearing deposits with the Federal Reserve and other central banks | $ | (49 | ) | $ | (34 | ) | $ | (83 | ) | $ | (9 | ) | $ | 221 | $ | 212 | |||
Interest-bearing deposits with banks (primarily foreign banks) | (1 | ) | 47 | 46 | (1 | ) | 100 | 99 | |||||||||||
Federal funds sold and securities purchased under resale agreements | 420 | 618 | 1,038 | 11 | 682 | 693 | |||||||||||||
Margin loans | (115 | ) | 59 | (56 | ) | (2 | ) | 169 | 167 | ||||||||||
Non-margin loans: | |||||||||||||||||||
Domestic offices | (16 | ) | 1 | (15 | ) | (21 | ) | 222 | 201 | ||||||||||
Foreign offices | (29 | ) | 23 | (6 | ) | (25 | ) | 103 | 78 | ||||||||||
Total non-margin loans | (45 | ) | 24 | (21 | ) | (46 | ) | 325 | 279 | ||||||||||
Securities: | |||||||||||||||||||
U.S. government obligations | (82 | ) | 27 | (55 | ) | (31 | ) | 92 | 61 | ||||||||||
U.S. government agency obligations | 63 | 90 | 153 | 76 | 247 | 323 | |||||||||||||
State and political subdivisions (b) | (28 | ) | 5 | (23 | ) | (19 | ) | (12 | ) | (31 | ) | ||||||||
Other securities: | |||||||||||||||||||
Domestic offices (b) | 86 | (74 | ) | 12 | (25 | ) | 151 | 126 | |||||||||||
Foreign offices | 17 | 52 | 69 | 3 | 26 | 29 | |||||||||||||
Total other securities (b) | 103 | (22 | ) | 81 | (22 | ) | 177 | 155 | |||||||||||
Trading securities (primarily domestic) (b) | 31 | (2 | ) | 29 | 60 | 5 | 65 | ||||||||||||
Total securities (b) | 87 | 98 | 185 | 64 | 509 | 573 | |||||||||||||
Total interest revenue (b) | $ | 297 | $ | 812 | $ | 1,109 | $ | 17 | $ | 2,006 | $ | 2,023 | |||||||
Interest expense | |||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||
Domestic offices | $ | 206 | $ | 215 | $ | 421 | $ | 35 | $ | 395 | $ | 430 | |||||||
Foreign offices | (8 | ) | 304 | 296 | — | 285 | 285 | ||||||||||||
Total interest-bearing deposits | 198 | 519 | 717 | 35 | 680 | 715 | |||||||||||||
Federal funds purchased and securities sold under repurchase agreements | (176 | ) | 855 | 679 | (56 | ) | 589 | 533 | |||||||||||
Trading liabilities | 4 | 2 | 6 | — | 22 | 22 | |||||||||||||
Other borrowed funds: | |||||||||||||||||||
Domestic offices | (14 | ) | 18 | 4 | 24 | 10 | 34 | ||||||||||||
Foreign offices | (1 | ) | (2 | ) | (3 | ) | (2 | ) | — | (2 | ) | ||||||||
Total other borrowed funds | (15 | ) | 16 | 1 | 22 | 10 | 32 | ||||||||||||
Commercial paper | (2 | ) | 6 | 4 | — | 22 | 22 | ||||||||||||
Payables to customers and broker-dealers | (9 | ) | 56 | 47 | (10 | ) | 137 | 127 | |||||||||||
Long-term debt | (4 | ) | 89 | 85 | 18 | 278 | 296 | ||||||||||||
Total interest expense | $ | (4 | ) | $ | 1,543 | $ | 1,539 | $ | 9 | $ | 1,738 | $ | 1,747 | ||||||
Changes in net interest revenue (b) | $ | 301 | $ | (731 | ) | $ | (430 | ) | $ | 8 | $ | 268 | $ | 276 |
(a) | Changes which are solely due to balance changes or rate changes are allocated to such categories on the basis of the respective percentage changes in average balances and average rates. Changes in interest revenue or interest expense arising from the combination of rate and volume variances are allocated proportionately to rate and volume based on their relative absolute magnitudes. |
(b) | Presented on an FTE basis. |
Selected Quarterly Data (unaudited) |
Selected Quarterly Data | Quarter ended | |||||||||||||||||||||||||
(dollars in millions, except per share amounts) | 2019 | 2018 | ||||||||||||||||||||||||
Dec. 31 | Sept. 30 | June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | March 31 | |||||||||||||||||||
Consolidated income statement | ||||||||||||||||||||||||||
Fee and other revenue | $ | 3,946 | $ | 3,128 | $ | 3,112 | $ | 3,032 | $ | 3,146 | $ | 3,168 | $ | 3,210 | $ | 3,270 | ||||||||||
Income (loss) from consolidated investment management funds | 17 | 3 | 10 | 26 | (24 | ) | 10 | 12 | (11 | ) | ||||||||||||||||
Net interest revenue | 815 | 730 | 802 | 841 | 885 | 891 | 916 | 919 | ||||||||||||||||||
Total revenue | 4,778 | 3,861 | 3,924 | 3,899 | 4,007 | 4,069 | 4,138 | 4,178 | ||||||||||||||||||
Provision for credit losses | (8 | ) | (16 | ) | (8 | ) | 7 | — | (3 | ) | (3 | ) | (5 | ) | ||||||||||||
Noninterest expense | 2,964 | 2,590 | 2,647 | 2,699 | 2,987 | 2,738 | 2,747 | 2,739 | ||||||||||||||||||
Income before taxes | 1,822 | 1,287 | 1,285 | 1,193 | 1,020 | 1,334 | 1,394 | 1,444 | ||||||||||||||||||
Provision for income taxes | 373 | 246 | 264 | 237 | 150 | 220 | 286 | 282 | ||||||||||||||||||
Net income | 1,449 | 1,041 | 1,021 | 956 | 870 | 1,114 | 1,108 | 1,162 | ||||||||||||||||||
Net (income) loss attributable to noncontrolling interests | (9 | ) | (3 | ) | (4 | ) | (10 | ) | 11 | (3 | ) | (5 | ) | 9 | ||||||||||||
Net income applicable to shareholders of The Bank of New York Mellon Corporation | 1,440 | 1,038 | 1,017 | 946 | 881 | 1,111 | 1,103 | 1,171 | ||||||||||||||||||
Preferred stock dividends | (49 | ) | (36 | ) | (48 | ) | (36 | ) | (49 | ) | (36 | ) | (48 | ) | (36 | ) | ||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 1,391 | $ | 1,002 | $ | 969 | $ | 910 | $ | 832 | $ | 1,075 | $ | 1,055 | $ | 1,135 | ||||||||||
Basic earnings per common share | $ | 1.52 | $ | 1.07 | $ | 1.01 | $ | 0.94 | $ | 0.84 | $ | 1.07 | $ | 1.04 | $ | 1.11 | ||||||||||
Diluted earnings per common share | $ | 1.52 | $ | 1.07 | $ | 1.01 | $ | 0.94 | $ | 0.84 | $ | 1.06 | $ | 1.03 | $ | 1.10 | ||||||||||
Average balances | ||||||||||||||||||||||||||
Interest-bearing deposits with banks | $ | 77,415 | $ | 75,354 | $ | 75,422 | $ | 77,440 | $ | 78,582 | $ | 75,907 | $ | 85,424 | $ | 92,918 | ||||||||||
Securities | 122,314 | 121,496 | 117,820 | 119,317 | 118,904 | 118,505 | 117,761 | 118,459 | ||||||||||||||||||
Trading securities | 6,695 | 5,653 | 5,764 | 5,102 | 5,543 | 4,261 | 3,784 | 4,183 | ||||||||||||||||||
Loans | 52,717 | 50,835 | 50,373 | 51,358 | 53,834 | 53,807 | 57,066 | 58,606 | ||||||||||||||||||
Total interest-earning assets | 297,987 | 294,154 | 287,417 | 282,185 | 285,706 | 279,218 | 292,086 | 302,069 | ||||||||||||||||||
Total assets | 354,341 | 350,679 | 342,384 | 336,165 | 338,591 | 332,341 | 346,328 | 358,175 | ||||||||||||||||||
Deposits | 232,056 | 226,428 | 220,501 | 214,462 | 220,635 | 209,313 | 217,567 | 226,709 | ||||||||||||||||||
Long-term debt | 28,117 | 28,386 | 27,681 | 28,254 | 28,201 | 28,074 | 28,349 | 28,407 | ||||||||||||||||||
Preferred stock | 3,542 | 3,542 | 3,542 | 3,542 | 3,542 | 3,542 | 3,542 | 3,542 | ||||||||||||||||||
Total The Bank of New York Mellon Corporation common shareholders’ equity | 37,842 | 37,597 | 37,487 | 37,086 | 37,886 | 38,036 | 37,750 | 37,593 | ||||||||||||||||||
Net interest margin | 1.09 | % | 0.99 | % | (a) | 1.12 | % | 1.20 | % | 1.24 | % | 1.27 | % | 1.26 | % | 1.22 | % | |||||||||
Annualized return on common equity | 14.6 | % | 10.6 | % | 10.4 | % | 10.0 | % | 8.7 | % | 11.2 | % | 11.2 | % | 12.2 | % | ||||||||||
Pre-tax operating margin | 38 | % | 33 | % | 33 | % | 31 | % | 25 | % | 33 | % | 34 | % | 35 | % | ||||||||||
Common stock data (b) | ||||||||||||||||||||||||||
Closing price per share (c) | $ | 50.33 | $ | 45.21 | $ | 44.15 | $ | 50.43 | $ | 47.07 | $ | 50.99 | $ | 53.93 | $ | 51.53 | ||||||||||
Cash dividends per share | $ | 0.31 | $ | 0.31 | $ | 0.28 | $ | 0.28 | $ | 0.28 | $ | 0.28 | $ | 0.24 | $ | 0.24 | ||||||||||
Market capitalization (c) | $ | 45,331 | $ | 41,693 | $ | 41,619 | $ | 48,288 | $ | 45,207 | $ | 50,418 | $ | 53,927 | $ | 52,080 |
(a) | Includes the impact of the lease-related impairment of $70 million recorded in the third quarter of 2019. Excluding the lease-related impairment, the adjusted net interest margin would have been 1.09% (Non-GAAP) in the third quarter of 2019. We believe providing the adjusted net interest margin is useful to investors as it is more reflective of the actual rates earned. |
(b) | At Dec. 31, 2019, there were 26,415 shareholders registered with our stock transfer agent, compared with 27,805 at Dec. 31, 2018 and 29,472 at Dec. 31, 2017. In addition, there were 44,876 of BNY Mellon’s current and former employees at Dec. 31, 2019 who participate in BNY Mellon’s 401(k) Retirement Savings Plan. All shares of BNY Mellon’s common stock held by the Plan for its participants are registered in the name of The Bank of New York Mellon, as trustee. |
(c) | At period end. |
Forward-looking Statements |
• | a communications or technology disruption or failure within our infrastructure or the infrastructure of third parties that results in a loss of information, delays our ability to access information or impacts our ability to provide services to our clients may materially adversely affect our business, financial condition and results of operations; |
• | a cybersecurity incident, or a failure to protect our computer systems, networks and information and our clients’ information against cybersecurity threats, could result in the theft, loss, unauthorized access to, disclosure, use or alteration of information, system or network failures, or loss of access to information; any such incident or failure could adversely impact |
• | our business may be materially adversely affected by operational risk; |
• | our risk management framework may not be effective in mitigating risk and reducing the potential for losses; |
• | we are subject to extensive government rulemaking, regulation and supervision; these rules and regulations have, and in the future may, compel us to change how we manage our businesses, which could have a material adverse effect on our business, financial condition and results of operations; |
• | regulatory or enforcement actions or litigation could materially adversely affect our results of operations or harm our businesses or reputation; |
• | our businesses may be negatively affected by adverse events, publicity, government scrutiny or other reputational harm; |
• | failure to satisfy regulatory standards, including “well capitalized” and “well managed” status or capital adequacy and liquidity rules more generally, could result in limitations on our activities and adversely affect our business and financial condition; |
• | a failure or circumvention of our controls and procedures could have a material adverse effect on our business, reputation, results of operations and financial condition; |
• | the application of our Title I preferred resolution strategy or resolution under the Title II orderly liquidation authority could adversely affect the Parent’s liquidity and financial condition and the Parent’s security holders; |
• | impacts from climate change, natural disasters, acts of terrorism, pandemics, global conflicts and other geopolitical events may have a negative impact on our business and operations; |
• | we are dependent on fee-based business for a substantial majority of our revenue and our fee-based revenues could be adversely affected by slowing in market activity, weak financial markets, underperformance and/or negative trends in savings rates or in investment preferences; |
• | weakness and volatility in financial markets and the economy generally may materially adversely affect our business, results of operations and financial condition; |
• | changes in interest rates and yield curves could have a material adverse effect on our profitability; |
Forward-looking Statements (continued) |
• | transitions away from and the anticipated replacement of LIBOR and other IBORs could adversely impact our business and results of operations; |
• | the UK’s withdrawal from the EU may have negative effects on global economic conditions, global financial markets, and our business and results of operations; |
• | we may experience losses on securities related to volatile and illiquid market conditions, reducing our earnings and impacting our financial condition; |
• | the failure or perceived weakness of any of our significant clients or counterparties, many of whom are major financial institutions and sovereign entities, and our assumption of credit and counterparty risk, could expose us to loss and adversely affect our business; |
• | our business, financial condition and results of operations could be adversely affected if we do not effectively manage our liquidity; |
• | we could incur losses if our allowance for credit losses, including loan and lending-related commitments reserves, is inadequate; |
• | any material reduction in our credit ratings or the credit ratings of our principal bank subsidiaries, The Bank of New York Mellon or BNY Mellon, N.A., could increase the cost of funding and borrowing to us and our rated subsidiaries and have a material adverse effect on our results of operations and financial condition and on the value of the securities we issue; |
• | new lines of business, new products and services or transformational or strategic project initiatives may subject us to additional risks, and the failure to implement these initiatives could affect our results of operations; |
• | we are subject to competition in all aspects of our business, which could negatively affect our ability to maintain or increase our profitability; |
• | our business may be adversely affected if we are unable to attract and retain employees; |
• | our strategic transactions present risks and uncertainties and could have an adverse effect on our business, results of operations and financial condition; |
• | tax law changes or challenges to our tax positions with respect to historical transactions may adversely affect our net income, effective tax rate and our overall results of operations and financial condition; |
• | our ability to return capital to shareholders is subject to the discretion of our Board of Directors and may be limited by U.S. banking laws and regulations, including those governing capital and the approval of our capital plan, applicable provisions of Delaware law or our failure to pay full and timely dividends on our preferred stock; |
• | the Parent is a non-operating holding company, and as a result, is dependent on dividends from its subsidiaries and extensions of credit from its IHC to meet its obligations, including with respect to its securities, and to provide funds for share repurchases and payment of dividends to its stockholders; and |
• | changes in accounting standards governing the preparation of our financial statements and future events could have a material impact on our reported financial condition, results of operations, cash flows and other financial data. |
Acronyms |
ABS | Asset-backed security |
APAC | Asia-Pacific region |
ASC | Accounting Standards Codification |
ASU | Accounting Standards Update |
AUC/A | Assets under custody and/or administration |
AUM | Assets under management |
BCBS | Basel Committee on Banking Supervision |
BHCs | Bank holding companies |
CCAR | Comprehensive Capital Analysis and Review |
CET1 | Common Equity Tier 1 capital |
CFTC | Commodity Futures Trading Commission |
CLO | Collateralized loan obligation |
EMEA | Europe, the Middle East and Africa |
FASB | Financial Accounting Standards Board |
FDIC | Federal Deposit Insurance Corporation |
FHC | Financial holding company |
FICC | Fixed Income Clearing Corporation |
FINRA | Financial Industry Regulatory Authority, Inc. |
FTE | Fully taxable equivalent |
GAAP | Generally accepted accounting principles |
G-SIBs | Global systemically important banks |
HQLA | High-quality liquid assets |
IDI | Insured depository institution |
IHC | Intermediate holding company |
LCR | Liquidity coverage ratio |
LIBOR | London Interbank Offered Rate |
LTD | Long-term debt |
MBS | Mortgage-backed security |
N/A | Not applicable or Not available |
N/M | Not meaningful |
NSFR | Net stable funding ratio |
OCC | Office of the Comptroller of the Currency |
OCI | Other comprehensive income |
OTC | Over-the-counter |
RMBS | Residential mortgage-backed security |
RWAs | Risk-weighted assets |
S&P | Standard & Poor’s |
SBIC | Small business investment company |
SBLC | Standby letters of credit |
SEC | Securities and Exchange Commission |
SIFIs | Systemically important financial institutions |
SLR | Supplementary leverage ratio |
TLAC | Total loss-absorbing capacity |
VaR | Value-at-risk |
VIE | Variable interest entity |
Glossary |
Report of Management on Internal Control Over Financial Reporting |
Report of Independent Registered Public Accounting Firm |
Report of Independent Registered Public Accounting Firm (continued) |
The Bank of New York Mellon Corporation (and its subsidiaries) |
Year ended Dec. 31, | |||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||
Fee and other revenue | |||||||||
Investment services fees: | |||||||||
Asset servicing fees | $ | $ | $ | ||||||
Clearing services fees (a) | |||||||||
Issuer services fees | |||||||||
Treasury services fees | |||||||||
Total investment services fees (a) | |||||||||
Investment management and performance fees (a) | |||||||||
Foreign exchange and other trading revenue | |||||||||
Financing-related fees | |||||||||
Distribution and servicing | |||||||||
Investment and other income | |||||||||
Total fee revenue | |||||||||
Net securities (losses) gains — including other-than-temporary impairment | ( | ) | ( | ) | |||||
Noncredit-related portion of other-than-temporary impairment (recognized in other comprehensive income) | |||||||||
Net securities (losses) gains | ( | ) | ( | ) | |||||
Total fee and other revenue | |||||||||
Operations of consolidated investment management funds | |||||||||
Investment income (loss) | ( | ) | |||||||
Interest of investment management fund note holders | |||||||||
Income (loss) from consolidated investment management funds | ( | ) | |||||||
Net interest revenue | |||||||||
Interest revenue | |||||||||
Interest expense | |||||||||
Net interest revenue | |||||||||
Total revenue | |||||||||
Provision for credit losses | ( | ) | ( | ) | ( | ) | |||
Noninterest expense | |||||||||
Staff | |||||||||
Professional, legal and other purchased services | |||||||||
Software and equipment | |||||||||
Net occupancy | |||||||||
Sub-custodian and clearing | |||||||||
Distribution and servicing | |||||||||
Business development | |||||||||
Bank assessment charges | |||||||||
Amortization of intangible assets | |||||||||
Other | |||||||||
Total noninterest expense | |||||||||
Income | |||||||||
Income before income taxes | |||||||||
Provision for income taxes | |||||||||
Net income | |||||||||
Net (income) loss attributable to noncontrolling interests (includes $(26), $12 and $(33) related to consolidated investment management funds, respectively) | ( | ) | ( | ) | |||||
Net income applicable to shareholders of The Bank of New York Mellon Corporation | |||||||||
Preferred stock dividends | ( | ) | ( | ) | ( | ) | |||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | $ | $ |
(a) | In 2019, we reclassified certain platform-related fees to clearing services fees from investment management and performance fees. Prior periods have been reclassified. |
The Bank of New York Mellon Corporation (and its subsidiaries) |
Net income applicable to common shareholders of The Bank of New York Mellon Corporation used for the earnings per share calculation | Year ended Dec. 31, | ||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | $ | $ | ||||||
Less: Earnings allocated to participating securities | |||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation after required adjustment for the calculation of basic and diluted earnings per common share | $ | $ | $ |
Average common shares and equivalents outstanding of The Bank of New York Mellon Corporation | Year ended Dec. 31, | |||||
(in thousands) | 2019 | 2018 | 2017 | |||
Basic | ||||||
Common stock equivalents | ||||||
Less: Participating securities | ( | ) | ( | ) | ( | ) |
Diluted | ||||||
Anti-dilutive securities (a) |
(a) | Represents stock options, restricted stock, restricted stock units and participating securities outstanding but not included in the computation of diluted average common shares because their effect would be anti-dilutive. |
Earnings per share applicable to common shareholders of The Bank of New York Mellon Corporation | Year ended Dec. 31, | ||||||||
(in dollars) | 2019 | 2018 | 2017 | ||||||
Basic | $ | $ | $ | ||||||
Diluted | $ | $ | $ |
The Bank of New York Mellon Corporation (and its subsidiaries) |
Year ended Dec. 31, | |||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||
Net income | $ | $ | $ | ||||||
Other comprehensive income (loss), net of tax: | |||||||||
Foreign currency translation adjustments | ( | ) | |||||||
Unrealized gain (loss) on assets available-for-sale: | |||||||||
Unrealized gain (loss) arising during the period | ( | ) | |||||||
Reclassification adjustment | ( | ) | |||||||
Total unrealized gain (loss) on assets available-for-sale | ( | ) | |||||||
Defined benefit plans: | |||||||||
Prior service cost arising during the period | ( | ) | |||||||
Net (loss) gain arising during the period | ( | ) | ( | ) | |||||
Foreign exchange adjustment | |||||||||
Amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost | |||||||||
Total defined benefit plans | ( | ) | ( | ) | |||||
Net unrealized gain (loss) on cash flow hedges | ( | ) | |||||||
Total other comprehensive income (loss), net of tax (a) | ( | ) | |||||||
Total comprehensive income | |||||||||
Net (income) loss attributable to noncontrolling interests | ( | ) | ( | ) | |||||
Other comprehensive (income) loss attributable to noncontrolling interests | ( | ) | ( | ) | |||||
Comprehensive income applicable to shareholders of The Bank of New York Mellon Corporation | $ | $ | $ |
(a) | Other comprehensive income (loss) attributable to The Bank of New York Mellon Corporation shareholders was $ |
The Bank of New York Mellon Corporation (and its subsidiaries) |
Dec. 31, | ||||||
(dollars in millions, except per share amounts) | 2019 | 2018 | ||||
Assets | ||||||
Cash and due from banks | $ | $ | ||||
Interest-bearing deposits with the Federal Reserve and other central banks | ||||||
Interest-bearing deposits with banks ($2,437 and $2,394 is restricted) | ||||||
Federal funds sold and securities purchased under resale agreements | ||||||
Securities: | ||||||
Held-to-maturity (fair value of $34,805 and $33,302) | ||||||
Available-for-sale | ||||||
Total securities | ||||||
Trading assets | ||||||
Loans | ||||||
Allowance for loan losses | ( | ) | ( | ) | ||
Net loans | ||||||
Premises and equipment | ||||||
Accrued interest receivable | ||||||
Goodwill | ||||||
Intangible assets | ||||||
Other assets (includes $419 and $742, at fair value) | ||||||
Subtotal assets of operations | ||||||
Assets of consolidated investment management funds, at fair value | ||||||
Total assets | $ | $ | ||||
Liabilities | ||||||
Deposits: | ||||||
Noninterest-bearing (principally U.S. offices) | $ | $ | ||||
Interest-bearing deposits in U.S. offices | ||||||
Interest-bearing deposits in non-U.S. offices | ||||||
Total deposits | ||||||
Federal funds purchased and securities sold under repurchase agreements | ||||||
Trading liabilities | ||||||
Payables to customers and broker-dealers | ||||||
Commercial paper | ||||||
Other borrowed funds | ||||||
Accrued taxes and other expenses | ||||||
Other liabilities (including allowance for lending-related commitments of $94 and $106, also includes $607 and $88, at fair value) | ||||||
Long-term debt (includes $387 and $371, at fair value) | ||||||
Subtotal liabilities of operations | ||||||
Liabilities of consolidated investment management funds, at fair value | ||||||
Total liabilities | ||||||
Temporary equity | ||||||
Redeemable noncontrolling interests | ||||||
Permanent equity | ||||||
Preferred stock – par value $0.01 per share; authorized 100,000,000 shares; issued 35,826 and 35,826 shares | ||||||
Common stock – par value $0.01 per share; authorized 3,500,000,000 shares; issued 1,374,443,376 and 1,364,877,915 shares | ||||||
Additional paid-in capital | ||||||
Retained earnings | ||||||
Accumulated other comprehensive loss, net of tax | ( | ) | ( | ) | ||
Less: Treasury stock of 473,760,338 and 404,452,246 common shares, at cost | ( | ) | ( | ) | ||
Total The Bank of New York Mellon Corporation shareholders’ equity | ||||||
Nonredeemable noncontrolling interests of consolidated investment management funds | ||||||
Total permanent equity | ||||||
Total liabilities, temporary equity and permanent equity | $ | $ |
The Bank of New York Mellon Corporation (and its subsidiaries) |
Year ended Dec. 31, | |||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||
Operating activities | |||||||||
Net income | $ | $ | $ | ||||||
Net (income) loss attributable to noncontrolling interests | ( | ) | ( | ) | |||||
Net income applicable to shareholders of The Bank of New York Mellon Corporation | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
Provision for credit losses | ( | ) | ( | ) | ( | ) | |||
Pension plan contributions | ( | ) | ( | ) | ( | ) | |||
Depreciation and amortization | |||||||||
Deferred tax (benefit) expense | ( | ) | ( | ) | |||||
Net securities losses (gains) | ( | ) | |||||||
Change in trading assets and liabilities | ( | ) | ( | ) | ( | ) | |||
Change in accruals and other, net | ( | ) | ( | ) | |||||
Net cash provided by operating activities | |||||||||
Investing activities | |||||||||
Change in interest-bearing deposits with banks | ( | ) | ( | ) | |||||
Change in interest-bearing deposits with the Federal Reserve and other central banks | ( | ) | ( | ) | |||||
Purchases of securities held-to-maturity | ( | ) | ( | ) | ( | ) | |||
Paydowns of securities held-to-maturity | |||||||||
Maturities of securities held-to-maturity | |||||||||
Purchases of securities available-for-sale | ( | ) | ( | ) | ( | ) | |||
Sales of securities available-for-sale | |||||||||
Paydowns of securities available-for-sale | |||||||||
Maturities of securities available-for-sale | |||||||||
Net change in loans | |||||||||
Sales of loans and other real estate | |||||||||
Change in federal funds sold and securities purchased under resale agreements | ( | ) | ( | ) | |||||
Net change in seed capital investments | ( | ) | |||||||
Purchases of premises and equipment/capitalized software | ( | ) | ( | ) | ( | ) | |||
Proceeds from the sale of premises and equipment | |||||||||
Proceeds from the sale of an equity method investment | |||||||||
Dispositions, net of cash | |||||||||
Other, net | ( | ) | ( | ) | |||||
Net cash (used for) provided by investing activities | ( | ) | ( | ) | |||||
Financing activities | |||||||||
Change in deposits | ( | ) | |||||||
Change in federal funds purchased and securities sold under repurchase agreements | ( | ) | ( | ) | |||||
Change in payables to customers and broker-dealers | ( | ) | ( | ) | ( | ) | |||
Change in other borrowed funds | ( | ) | |||||||
Change in commercial paper | ( | ) | |||||||
Net proceeds from the issuance of long-term debt | |||||||||
Repayments of long-term debt | ( | ) | ( | ) | ( | ) | |||
Proceeds from the exercise of stock options | |||||||||
Issuance of common stock | |||||||||
Treasury stock acquired | ( | ) | ( | ) | ( | ) | |||
Common cash dividends paid | ( | ) | ( | ) | ( | ) | |||
Preferred cash dividends paid | ( | ) | ( | ) | ( | ) | |||
Other, net | ( | ) | |||||||
Net cash provided by (used for) financing activities | ( | ) | |||||||
Effect of exchange rate changes on cash | ( | ) | |||||||
Change in cash and due from banks and restricted cash | |||||||||
Change in cash and due from banks and restricted cash | ( | ) | ( | ) | |||||
Cash and due from banks and restricted cash at beginning of year | |||||||||
Cash and due from banks and restricted cash at end of year | $ | $ | $ | ||||||
Cash and due from banks and restricted cash: | |||||||||
Cash and due from banks at end of year (unrestricted cash) | $ | $ | $ | ||||||
Restricted cash at end of year | |||||||||
Cash and due from banks and restricted cash at end of year | $ | $ | $ | ||||||
Supplemental disclosures | |||||||||
Interest paid | $ | $ | $ | ||||||
Income taxes paid | |||||||||
Income taxes refunded |
The Bank of New York Mellon Corporation (and its subsidiaries) |
The Bank of New York Mellon Corporation shareholders | Non-redeemable noncontrolling interests of consolidated investment management funds | Total permanent equity | Redeemable non- controlling interests/ temporary equity | |||||||||||||||||||||||||
(in millions, except per share amount) | Preferred stock | Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive (loss) income, net of tax | Treasury stock | ||||||||||||||||||||||
Balance at Dec. 31, 2018 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | (a) | $ | ||||||||||||||
Reclassification of certain tax effects related to adopting Accounting Standards Update (“ASU”) 2018-02 | — | — | — | ( | ) | — | — | — | — | |||||||||||||||||||
Adjusted balance at Jan. 1, 2019 | ( | ) | ( | ) | ||||||||||||||||||||||||
Shares issued to shareholders of noncontrolling interests | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Redemption of subsidiary shares from noncontrolling interests | — | — | — | — | — | — | — | — | ( | ) | ||||||||||||||||||
Other net changes in noncontrolling interests | — | — | — | — | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | ||||||||||||||||||||||
Dividends: | ||||||||||||||||||||||||||||
Common stock at $1.18 per share | — | — | — | ( | ) | — | — | — | ( | ) | — | |||||||||||||||||
Preferred stock | — | — | — | ( | ) | — | — | — | ( | ) | — | |||||||||||||||||
Repurchase of common stock | — | — | — | — | — | ( | ) | — | ( | ) | — | |||||||||||||||||
Common stock issued under: | ||||||||||||||||||||||||||||
Employee benefit plans | — | — | — | — | — | — | — | |||||||||||||||||||||
Direct stock purchase and dividend reinvestment plan | — | — | — | — | — | — | — | |||||||||||||||||||||
Stock awards and options exercised | — | — | — | — | — | — | — | |||||||||||||||||||||
Balance at Dec. 31, 2019 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | (a) | $ |
(a) | Includes total The Bank of New York Mellon Corporation common shareholders’ equity of $ |
The Bank of New York Mellon Corporation (and its subsidiaries) |
The Bank of New York Mellon Corporation shareholders | Non-redeemable noncontrolling interests of consolidated investment management funds | Total permanent equity | Redeemable non- controlling interests/ temporary equity | |||||||||||||||||||||||||
(in millions, except per share amount) | Preferred stock | Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive (loss), net of tax | Treasury stock | ||||||||||||||||||||||
Balance at Dec. 31, 2017 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | (a) | $ | ||||||||||||||
Adjustment for the cumulative effect of applying ASU 2014-09 for contract revenue | — | — | — | ( | ) | — | — | — | ( | ) | — | |||||||||||||||||
Adjustment for the cumulative effect of applying ASU 2017-12 for derivatives and hedging | — | — | — | ( | ) | — | — | — | ||||||||||||||||||||
Adjusted balance at Jan. 1, 2018 | ( | ) | ( | ) | ||||||||||||||||||||||||
Shares issued to shareholders of noncontrolling interests | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Redemption of subsidiary shares from noncontrolling interests | — | — | — | — | — | — | — | — | ( | ) | ||||||||||||||||||
Other net changes in noncontrolling interests | — | — | — | — | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Net income (loss) | — | — | — | — | — | ( | ) | |||||||||||||||||||||
Other comprehensive (loss) | — | — | — | — | ( | ) | — | — | ( | ) | ( | ) | ||||||||||||||||
Dividends: | ||||||||||||||||||||||||||||
Common stock at $1.04 per share | — | — | — | ( | ) | — | — | — | ( | ) | — | |||||||||||||||||
Preferred stock | — | — | — | ( | ) | — | — | — | ( | ) | — | |||||||||||||||||
Repurchase of common stock | — | — | — | — | — | ( | ) | — | ( | ) | — | |||||||||||||||||
Common stock issued under: | ||||||||||||||||||||||||||||
Employee benefit plans | — | — | — | — | — | — | — | |||||||||||||||||||||
Direct stock purchase and dividend reinvestment plan | — | — | — | — | — | — | — | |||||||||||||||||||||
Stock awards and options exercised | — | — | — | — | — | — | — | |||||||||||||||||||||
Balance at Dec. 31, 2018 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | (a) | $ |
(a) | Includes total The Bank of New York Mellon Corporation common shareholders’ equity of $ |
The Bank of New York Mellon Corporation (and its subsidiaries) |
The Bank of New York Mellon Corporation shareholders | Non-redeemable noncontrolling interests of consolidated investment management funds | Total permanent equity | Redeemable non- controlling interests/ temporary equity | |||||||||||||||||||||||||
(in millions, except per share amount) | Preferred stock | Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive (loss) income, net of tax | Treasury stock | ||||||||||||||||||||||
Balance at Dec. 31, 2016 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | (a) | $ | ||||||||||||||
Shares issued to shareholders of noncontrolling interests | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Redemption of subsidiary shares from noncontrolling interests | — | — | — | — | — | — | — | — | ( | ) | ||||||||||||||||||
Other net changes in noncontrolling interests | — | — | ( | ) | — | — | — | ( | ) | ( | ) | |||||||||||||||||
Net income (loss) | — | — | — | — | — | ( | ) | |||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | ||||||||||||||||||||||
Dividends: | ||||||||||||||||||||||||||||
Common stock at $0.86 per share | — | — | — | ( | ) | — | — | — | ( | ) | — | |||||||||||||||||
Preferred stock | — | — | — | ( | ) | — | — | — | ( | ) | — | |||||||||||||||||
Repurchase of common stock | — | — | — | — | — | ( | ) | — | ( | ) | — | |||||||||||||||||
Common stock issued under: | ||||||||||||||||||||||||||||
Employee benefit plans | — | — | — | — | — | — | — | |||||||||||||||||||||
Direct stock purchase and dividend reinvestment plan | — | — | — | — | — | — | — | |||||||||||||||||||||
Stock awards and options exercised | — | — | — | — | — | — | ||||||||||||||||||||||
Balance at Dec. 31, 2017 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | (a) | $ |
(a) | Includes total The Bank of New York Mellon Corporation common shareholders’ equity of $ |
Notes to Consolidated Financial Statements |
Notes to Consolidated Financial Statements (continued) |
• | do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support; or |
• | lack one or more of the following characteristics of a controlling financial interest: |
• | the power, through voting rights or similar rights, to direct the activities of an entity that most significantly impact the entity’s economic performance; |
• | the obligation to absorb the expected losses of the entity; and |
• | the right to receive the expected residual returns of the entity. |
Equity method investments at Dec. 31, 2019 | ||||||
(dollars in millions) | Percentage ownership | Book value | ||||
CIBC Mellon Global Securities Services Company (“CIBC Mellon”) | % | $ | ||||
Siguler Guff | % | $ |
Notes to Consolidated Financial Statements (continued) |
• | The length of time and the extent to which the fair value has been less than the amortized cost basis; |
• | Whether management has an intent to sell the security; |
• | Whether the decline in fair value is attributable to specific conditions, such as conditions in an industry or in a geographic area, affecting a particular investment; |
• | Whether a debt security has been downgraded by a rating agency; |
• | Whether a debt security exhibits cash flow deterioration; and |
• | For each non-agency residential mortgage-backed security (“RMBS”), we compare the remaining credit enhancement that protects the individual security from losses against the projected losses of principal and/or interest expected to come from the underlying mortgage collateral, to determine whether such credit losses might directly impact the relevant security. |
Notes to Consolidated Financial Statements (continued) |
Notes to Consolidated Financial Statements (continued) |
• | an allowance for impaired credits of $ |
• | an allowance for higher risk-rated credits and pass-rated credits; and |
• | an allowance for residential mortgage loans. |
Notes to Consolidated Financial Statements (continued) |
• | Ratio of nonperforming loans to total non-margin loans; |
• | Ratio of criticized assets to total loans and lending-related commitments; |
• | Borrower concentration; and |
• | Significant concentrations in high risk industries and countries. |
• | U.S. non-investment grade default rate; |
• | Unemployment rate; and |
• | Change in real gross domestic product. |
Notes to Consolidated Financial Statements (continued) |
Notes to Consolidated Financial Statements (continued) |
Notes to Consolidated Financial Statements (continued) |
Notes to Consolidated Financial Statements (continued) |
Notes to Consolidated Financial Statements (continued) |
Notes to Consolidated Financial Statements (continued) |
Securities at Dec. 31, 2019 | Gross unrealized | |||||||||||
Amortized cost | Fair value | |||||||||||
(in millions) | Gains | Losses | ||||||||||
Available-for-sale: | ||||||||||||
Agency RMBS | $ | $ | $ | $ | ||||||||
U.S. Treasury | ||||||||||||
Sovereign debt/sovereign guaranteed | ||||||||||||
Agency commercial mortgage-backed securities (“MBS”) | ||||||||||||
Foreign covered bonds | ||||||||||||
CLOs | ||||||||||||
Supranational | ||||||||||||
Foreign government agencies | ||||||||||||
Non-agency commercial MBS | ||||||||||||
Other asset-backed securities (“ABS”) | ||||||||||||
U.S. government agencies | ||||||||||||
Non-agency RMBS (a) | ||||||||||||
State and political subdivisions | ||||||||||||
Corporate bonds | ||||||||||||
Other debt securities | ||||||||||||
Total securities available-for-sale (b) | $ | $ | $ | $ | ||||||||
Held-to-maturity: | ||||||||||||
Agency RMBS | $ | $ | $ | $ | ||||||||
U.S. Treasury | ||||||||||||
Agency commercial MBS | ||||||||||||
U.S. government agencies | ||||||||||||
Sovereign debt/sovereign guaranteed | ||||||||||||
Non-agency RMBS | ||||||||||||
Foreign covered bonds | ||||||||||||
Supranational | ||||||||||||
State and political subdivisions | ||||||||||||
Total securities held-to-maturity | $ | $ | $ | $ | ||||||||
Total securities | $ | $ | $ | $ |
(a) | Includes $ |
(b) | Includes gross unrealized gains of $ |
Notes to Consolidated Financial Statements (continued) |
Securities at Dec. 31, 2018 | Gross unrealized | |||||||||||
Amortized cost | Fair value | |||||||||||
(in millions) | Gains | Losses | ||||||||||
Available-for-sale: | ||||||||||||
Agency RMBS | $ | $ | $ | $ | ||||||||
U.S. Treasury | ||||||||||||
Sovereign debt/sovereign guaranteed | ||||||||||||
Agency commercial MBS | ||||||||||||
CLOs | ||||||||||||
Supranational | ||||||||||||
Foreign covered bonds | ||||||||||||
State and political subdivisions | ||||||||||||
Other ABS | ||||||||||||
U.S. government agencies | ||||||||||||
Non-agency commercial MBS | ||||||||||||
Non-agency RMBS (a) | ||||||||||||
Foreign government agencies | ||||||||||||
Corporate bonds | ||||||||||||
Other debt securities | ||||||||||||
Total securities available-for-sale (b) | $ | $ | $ | $ | ||||||||
Held-to-maturity: | ||||||||||||
Agency RMBS | $ | $ | $ | $ | ||||||||
U.S. Treasury | ||||||||||||
U.S. government agencies | ||||||||||||
Agency commercial MBS | ||||||||||||
Sovereign debt/sovereign guaranteed | ||||||||||||
Non-agency RMBS | ||||||||||||
Foreign covered bonds | ||||||||||||
Supranational | ||||||||||||
State and political subdivisions | ||||||||||||
Total securities held-to-maturity | $ | $ | $ | $ | ||||||||
Total securities | $ | $ | $ | $ |
(a) | Includes $ |
(b) | Includes gross unrealized gains of $ |
Net securities (losses) gains | |||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||
Realized gross gains | $ | $ | $ | ||||||
Realized gross losses | ( | ) | ( | ) | ( | ) | |||
Recognized gross impairments | ( | ) | ( | ) | ( | ) | |||
Total net securities (losses) gains | $ | ( | ) | $ | ( | ) | $ |
Net securities (losses) gains | |||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||
U.S. Treasury | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Agency RMBS | ( | ) | ( | ) | |||||
Other | ( | ) | ( | ) | |||||
Total net securities (losses) gains | $ | ( | ) | $ | ( | ) | $ |
Notes to Consolidated Financial Statements (continued) |
Temporarily impaired securities at Dec. 31, 2019 | Less than 12 months | 12 months or more | Total | |||||||||||||||||
Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | |||||||||||||||
(in millions) | ||||||||||||||||||||
Available-for-sale: | ||||||||||||||||||||
Agency RMBS | $ | $ | $ | $ | $ | $ | ||||||||||||||
U.S. Treasury | ||||||||||||||||||||
Sovereign debt/sovereign guaranteed | ||||||||||||||||||||
Agency commercial MBS | ||||||||||||||||||||
Foreign covered bonds | ||||||||||||||||||||
CLOs | ||||||||||||||||||||
Supranational | ||||||||||||||||||||
Foreign government agencies | ||||||||||||||||||||
Non-agency commercial MBS | ||||||||||||||||||||
Other ABS | ||||||||||||||||||||
U.S. government agencies | ||||||||||||||||||||
Non-agency RMBS (a) | ||||||||||||||||||||
State and political subdivisions | ||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||
Total securities available-for-sale (b) | $ | $ | $ | $ | $ | $ | ||||||||||||||
Held-to-maturity: | ||||||||||||||||||||
Agency RMBS | $ | $ | $ | $ | $ | $ | ||||||||||||||
U.S. Treasury | ||||||||||||||||||||
Agency commercial MBS | ||||||||||||||||||||
U.S. government agencies | ||||||||||||||||||||
Non-agency RMBS | ||||||||||||||||||||
Total securities held-to-maturity | $ | $ | $ | $ | $ | $ | ||||||||||||||
Total temporarily impaired securities | $ | $ | $ | $ | $ | $ |
(a) | Includes $ |
(b) | Includes gross unrealized losses of $ |
Notes to Consolidated Financial Statements (continued) |
Temporarily impaired securities at Dec. 31, 2018 | Less than 12 months | 12 months or more | Total | |||||||||||||||||
(in millions) | Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | ||||||||||||||
Available-for-sale: | ||||||||||||||||||||
Agency RMBS | $ | $ | $ | $ | $ | $ | ||||||||||||||
U.S. Treasury | ||||||||||||||||||||
Sovereign debt/sovereign guaranteed | ||||||||||||||||||||
Agency commercial MBS | ||||||||||||||||||||
CLOs | ||||||||||||||||||||
Supranational | ||||||||||||||||||||
Foreign covered bonds | ||||||||||||||||||||
State and political subdivisions | ||||||||||||||||||||
Other ABS | ||||||||||||||||||||
U.S. government agencies | ||||||||||||||||||||
Non-agency commercial MBS | ||||||||||||||||||||
Non-agency RMBS (a) | ||||||||||||||||||||
Foreign government agencies | ||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||
Total securities available-for-sale (b) | $ | $ | $ | $ | $ | $ | ||||||||||||||
Held-to-maturity: | ||||||||||||||||||||
Agency RMBS | $ | $ | $ | $ | $ | $ | ||||||||||||||
U.S. Treasury | ||||||||||||||||||||
U.S. government agencies | ||||||||||||||||||||
Agency commercial MBS | ||||||||||||||||||||
Non-agency RMBS | ||||||||||||||||||||
Total securities held-to-maturity | $ | $ | $ | $ | $ | $ | ||||||||||||||
Total temporarily impaired securities | $ | $ | $ | $ | $ | $ |
(a) | Includes $ |
(b) | Includes gross unrealized losses of $ |
Maturity distribution and yields on securities at Dec. 31, 2019 | U.S. Treasury | U.S. government agencies | State and political subdivisions | Other bonds, notes and debentures | Mortgage/ asset-backed | ||||||||||||||||||||||||||||
(dollars in millions) | Amount | Yield (a) | Amount | Yield (a) | Amount | Yield (a) | Amount | Yield (a) | Amount | Yield (a) | Total | ||||||||||||||||||||||
Securities available-for-sale: | |||||||||||||||||||||||||||||||||
One year or less | $ | % | $ | % | $ | % | $ | % | $ | — | — | % | $ | ||||||||||||||||||||
Over 1 through 5 years | — | — | |||||||||||||||||||||||||||||||
Over 5 through 10 years | — | — | |||||||||||||||||||||||||||||||
Over 10 years | — | — | |||||||||||||||||||||||||||||||
Mortgage-backed securities | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Asset-backed securities | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Total | $ | % | $ | % | $ | % | $ | % | $ | % | $ | ||||||||||||||||||||||
Securities held-to-maturity: | |||||||||||||||||||||||||||||||||
One year or less | $ | % | $ | % | $ | % | $ | % | $ | — | — | % | $ | ||||||||||||||||||||
Over 1 through 5 years | — | — | |||||||||||||||||||||||||||||||
Over 5 through 10 years | — | — | |||||||||||||||||||||||||||||||
Over 10 years | — | — | |||||||||||||||||||||||||||||||
Mortgage-backed securities | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Total | $ | % | $ | % | $ | % | $ | % | $ | % | $ |
(a) | Yields are based upon the amortized cost of securities. |
Notes to Consolidated Financial Statements (continued) |
Debt securities credit loss roll forward | ||||||
(in millions) | 2019 | 2018 | ||||
Beginning balance as of Dec. 31 | $ | $ | ||||
Add: Initial OTTI credit losses | ||||||
Subsequent OTTI credit losses | ||||||
Less: Realized losses for securities sold | ||||||
Ending balance as of Dec. 31 | $ | $ |
Notes to Consolidated Financial Statements (continued) |
Loans | Dec. 31, | |||||
(in millions) | 2019 | 2018 | ||||
Domestic: | ||||||
Commercial | $ | $ | ||||
Commercial real estate | ||||||
Financial institutions | ||||||
Lease financings | ||||||
Wealth management loans and mortgages | ||||||
Other residential mortgages | ||||||
Overdrafts | ||||||
Other | ||||||
Margin loans | ||||||
Total domestic | ||||||
Foreign: | ||||||
Commercial | ||||||
Commercial real estate | ||||||
Financial institutions | ||||||
Lease financings | ||||||
Wealth management loans and mortgages | ||||||
Other (primarily overdrafts) | ||||||
Margin loans | ||||||
Total foreign | ||||||
Total loans (a) | $ | $ |
(a) | Net of unearned income of $ |
Notes to Consolidated Financial Statements (continued) |
Allowance for credit losses activity for the year ended Dec. 31, 2019 | Wealth management loans and mortgages | Other residential mortgages | All other | Foreign | Total | |||||||||||||||||||||||
(in millions) | Commercial | Commercial real estate | Financial institutions | Lease financings | ||||||||||||||||||||||||
Beginning balance | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Charge-offs | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Recoveries | ||||||||||||||||||||||||||||
Net (charge-offs) recoveries | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Provision | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
Ending balance | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Allowance for: | ||||||||||||||||||||||||||||
Loan losses | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Lending-related commitments | ||||||||||||||||||||||||||||
Individually evaluated for impairment: | ||||||||||||||||||||||||||||
Loan balance | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Allowance for loan losses | ||||||||||||||||||||||||||||
Collectively evaluated for impairment: | ||||||||||||||||||||||||||||
Loan balance | $ | $ | $ | $ | $ | $ | $ | (a) | $ | $ | ||||||||||||||||||
Allowance for loan losses |
(a) | Includes $ |
Allowance for credit losses activity for the year ended Dec. 31, 2018 | Wealth management loans and mortgages | Other residential mortgages | All other | Foreign | Total | |||||||||||||||||||||||
(in millions) | Commercial | Commercial real estate | Financial institutions | Lease financings | ||||||||||||||||||||||||
Beginning balance | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Charge-offs | ( | ) | ( | ) | ||||||||||||||||||||||||
Recoveries | ||||||||||||||||||||||||||||
Net recoveries | ||||||||||||||||||||||||||||
Provision | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
Ending balance | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Allowance for: | ||||||||||||||||||||||||||||
Loan losses | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Lending-related commitments | ||||||||||||||||||||||||||||
Individually evaluated for impairment: | ||||||||||||||||||||||||||||
Loan balance | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Allowance for loan losses | ||||||||||||||||||||||||||||
Collectively evaluated for impairment: | ||||||||||||||||||||||||||||
Loan balance | $ | $ | $ | $ | $ | $ | $ | (a) | $ | $ | ||||||||||||||||||
Allowance for loan losses |
(a) | Includes $ |
Notes to Consolidated Financial Statements (continued) |
Allowance for credit losses activity for the year ended Dec. 31, 2017 | Wealth management loans and mortgages | Other residential mortgages | All other | Foreign | Total | |||||||||||||||||||||||
(in millions) | Commercial | Commercial real estate | Financial institutions | Lease financings | ||||||||||||||||||||||||
Beginning balance | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Charge-offs | ( | ) | ( | ) | ||||||||||||||||||||||||
Recoveries | ||||||||||||||||||||||||||||
Net recoveries | ||||||||||||||||||||||||||||
Provision | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
Ending balance | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Allowance for: | ||||||||||||||||||||||||||||
Loans losses | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Unfunded commitments | ||||||||||||||||||||||||||||
Individually evaluated for impairment: | ||||||||||||||||||||||||||||
Loan balance | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Allowance for loan losses | ||||||||||||||||||||||||||||
Collectively evaluated for impairment: | ||||||||||||||||||||||||||||
Loan balance | $ | $ | $ | $ | $ | $ | $ | (a) | $ | $ | ||||||||||||||||||
Allowance for loan losses |
(a) | Includes $ |
Nonperforming assets (in millions) | Dec. 31, | |||||
2019 | 2018 | |||||
Nonperforming loans: | ||||||
Other residential mortgages | $ | $ | ||||
Wealth management loans and mortgages | ||||||
Total nonperforming loans | ||||||
Other assets owned | ||||||
Total nonperforming assets | $ | $ |
Lost interest | |||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||
Amount by which interest income recognized on nonperforming loans exceeded reversals | |||||||||
Total | $ | $ | $ | ||||||
Foreign | |||||||||
Amount by which interest income would have increased if nonperforming loans at year-end had been performing for the entire year | |||||||||
Total | $ | $ | $ | ||||||
Foreign |
Notes to Consolidated Financial Statements (continued) |
Impaired loans | 2019 | 2018 | 2017 | |||||||||||||||||
(in millions) | Average recorded investment | Interest revenue recognized | Average recorded investment | Interest revenue recognized | Average recorded investment | Interest revenue recognized | ||||||||||||||
Impaired loans with an allowance: | ||||||||||||||||||||
Commercial | $ | $ | $ | $ | $ | $ | ||||||||||||||
Financial institutions | ||||||||||||||||||||
Wealth management loans and mortgages | ||||||||||||||||||||
Lease financings | ||||||||||||||||||||
Total impaired loans with an allowance | ||||||||||||||||||||
Impaired loans without an allowance: (a) | ||||||||||||||||||||
Wealth management loans and mortgages | ||||||||||||||||||||
Total impaired loans | $ | $ | $ | $ | $ | $ |
(a) | When the discounted cash flows, collateral value or market price equals or exceeds the carrying value of the loan, then the loan does not require an allowance under the accounting standard related to impaired loans. |
Impaired loans | Dec. 31, 2019 | Dec. 31, 2018 | |||||||||||||||||
(in millions) | Recorded investment | Unpaid principal balance | Related allowance (a) | Recorded investment | Unpaid principal balance | Related allowance (a) | |||||||||||||
Impaired loans without an allowance: (b) | |||||||||||||||||||
Wealth management loans and mortgages | $ | $ | N/A | $ | $ | N/A | |||||||||||||
Total impaired loans (c) | $ | $ | $ | $ | $ | $ |
(a) | The allowance for impaired loans is included in the allowance for loan losses. |
(b) | When the discounted cash flows, collateral value or market price equals or exceeds the carrying value of the loan, then the loan does not require an allowance under the accounting standard related to impaired loans. |
(c) | Excludes an aggregate of less than $ |
Past due loans and still accruing interest | Dec. 31, 2019 | Dec. 31, 2018 | |||||||||||||||||||||||
Days past due | Total past due | Days past due | Total past due | ||||||||||||||||||||||
(in millions) | 30-59 | 60-89 | ≥90 | 30-59 | 60-89 | ≥90 | |||||||||||||||||||
Financial institutions | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Wealth management loans and mortgages | |||||||||||||||||||||||||
Commercial real estate | |||||||||||||||||||||||||
Other residential mortgages | |||||||||||||||||||||||||
Total past due loans | $ | $ | $ | $ | $ | $ | $ | $ |
Notes to Consolidated Financial Statements (continued) |
Commercial loan portfolio – Credit risk profile by creditworthiness category | Commercial | Commercial real estate | Financial institutions | |||||||||||||||||
Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
Investment grade | $ | $ | $ | $ | $ | $ | ||||||||||||||
Non-investment grade | ||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
Wealth management loans and mortgages – Credit risk profile by internally assigned grade | ||||||
Dec. 31, | ||||||
(in millions) | 2019 | 2018 | ||||
Wealth management loans: | ||||||
Investment grade | $ | $ | ||||
Non-investment grade | ||||||
Wealth management mortgages | ||||||
Total | $ | $ |
Notes to Consolidated Financial Statements (continued) |
Balance sheet information | Dec. 31, 2019 | ||||||||
(dollar in millions) | Operating leases | Finance leases | Total | ||||||
Right-of-use assets (a) | $ | $ | $ | ||||||
Lease liability (b) | $ | $ | $ | ||||||
Weighted average: | |||||||||
Remaining lease term | |||||||||
Discount rate (annualized) | % | % |
(a) | Included in premises and equipment on the consolidated balance sheet. |
(b) | Operating lease liabilities are included in other liabilities and finance lease liabilities are included in other borrowed funds, both on the consolidated balance sheet. |
Lease expense | Year ended | |||
(in millions) | Dec. 31, 2019 | |||
Operating lease expense | $ | |||
Variable lease expense | ||||
Sublease income | ( | ) | ||
Finance lease expense: | ||||
Amortization of right-of-use assets | ||||
Interest on lease liabilities | ||||
Total finance lease expense | $ | |||
Total lease expense | $ |
Cash flow information | Year ended | |||
(in millions) | Dec. 31, 2019 | |||
Cash paid for amounts included in measurement of liabilities: | ||||
Operating cash flows from finance leases | $ | |||
Operating cash flows from operating leases | $ | |||
Financing cash flows from finance leases | $ |
Notes to Consolidated Financial Statements (continued) |
Maturities of lease liabilities | Operating leases | Finance leases | ||||
(in millions) | ||||||
For the year ended Dec. 31, | ||||||
2020 | $ | $ | ||||
2021 | ||||||
2022 | ||||||
2023 | ||||||
2024 | ||||||
2025 and thereafter | ||||||
Total lease payments | ||||||
Less: Imputed interest | ( | ) | ||||
Total | $ | $ |
Maturities of lease liabilities | Operating leases | ||
(in millions) | |||
For the year ended Dec. 31, | |||
2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 and thereafter | |||
Total | $ |
Goodwill by business (in millions) | Investment Services | Investment Management | Other | Consolidated | ||||||||
Balance at Dec. 31, 2017 | $ | $ | $ | $ | ||||||||
Dispositions | ( | ) | ( | ) | ||||||||
Foreign currency translation | ( | ) | ( | ) | ( | ) | ||||||
Balance at Dec. 31, 2018 | $ | $ | $ | $ | ||||||||
Foreign currency translation | ( | ) | ||||||||||
Balance at Dec. 31, 2019 | $ | $ | $ | $ |
Intangible assets – net carrying amount by business (in millions) | Investment Services | Investment Management | Other | Consolidated | ||||||||
Balance at Dec. 31, 2017 | $ | $ | $ | $ | ||||||||
Amortization | ( | ) | ( | ) | ( | ) | ||||||
Foreign currency translation | ( | ) | ( | ) | ( | ) | ||||||
Balance at Dec. 31, 2018 | $ | $ | $ | $ | ||||||||
Amortization | ( | ) | ( | ) | ( | ) | ||||||
Foreign currency translation | ||||||||||||
Balance at Dec. 31, 2019 | $ | $ | $ | $ |
Notes to Consolidated Financial Statements (continued) |
Intangible assets | Dec. 31, 2019 | Dec. 31, 2018 | ||||||||||||||||||
(in millions) | Gross carrying amount | Accumulated amortization | Net carrying amount | Remaining weighted- average amortization period | Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||||||||
Subject to amortization: (a) | ||||||||||||||||||||
Customer contracts—Investment Services | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||
Customer relationships—Investment Management | ( | ) | ( | ) | ||||||||||||||||
Other | ( | ) | ( | ) | ||||||||||||||||
Total subject to amortization | ( | ) | ( | ) | ||||||||||||||||
Not subject to amortization: (b) | ||||||||||||||||||||
Tradenames | N/A | N/A | N/A | |||||||||||||||||
Customer relationships | N/A | N/A | N/A | |||||||||||||||||
Total not subject to amortization | N/A | N/A | N/A | |||||||||||||||||
Total intangible assets | $ | $ | ( | ) | $ | N/A | $ | $ | ( | ) | $ |
(a) | Excludes fully amortized intangible assets. |
(b) | Intangible assets not subject to amortization have an indefinite life. |
For the year ended Dec. 31, | Estimated amortization expense (in millions) | |||
2020 | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 |
Other assets | Dec. 31, | |||||
(in millions) | 2019 | 2018 | ||||
Corporate/bank-owned life insurance | $ | $ | ||||
Accounts receivable | ||||||
Fails to deliver | ||||||
Software | ||||||
Prepaid pension assets | ||||||
Renewable energy investments | ||||||
Equity in a joint venture and other investments | ||||||
Qualified affordable housing project investments | ||||||
Prepaid expense | ||||||
Federal Reserve Bank stock | ||||||
Income taxes receivable | ||||||
Seed capital | ||||||
Fair value of hedging derivatives | ||||||
Other (a) | ||||||
Total other assets | $ | $ |
(a) | At Dec. 31, 2019 and Dec. 31, 2018, other assets include $ |
Notes to Consolidated Financial Statements (continued) |
Non-readily marketable equity securities | Life-to-date | ||||||||
(in millions) | 2019 | 2018 | |||||||
Upward adjustments | $ | $ | $ | ||||||
Downward adjustments | ( | ) | ( | ) | ( | ) | |||
Net adjustments | $ | $ | $ |
Investments valued using NAV | Dec. 31, 2019 | Dec. 31, 2018 | |||||||||||||
(in millions) | Fair value | Unfunded commitments | Fair value | Unfunded commitments | |||||||||||
Seed capital (a) | $ | $ | $ | $ | |||||||||||
Private equity investments (SBICs) (b) | |||||||||||||||
Other (c) | |||||||||||||||
Total | $ | $ | $ | $ |
(a) | Primarily includes leveraged loans and structured credit funds which are generally not redeemable. Distributions from such investments will be received as the underlying investments in the funds, which have a life of six years, are liquidated. |
(b) | Private equity investments include Volcker Rule-compliant investments in SBICs that invest in various sectors of the economy. Private equity investments do not have redemption rights. Distributions from such investments will be received as the underlying investments in the private equity investments, which have a life of 10 years, are liquidated. |
(c) | Primarily relates to investments in funds that relate to deferred compensation arrangements with employees. Investments in funds can be redeemed on a quarterly basis with redemption notice periods up to |
Notes to Consolidated Financial Statements (continued) |
Notes to Consolidated Financial Statements (continued) |
Disaggregation of contract revenue by business segment (a) | |||||||||||||||||||||||||
Year ended Dec. 31, | |||||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||||
(in millions) | IS | IM | Other | Total | IS | IM | Other | Total | |||||||||||||||||
Fee revenue - contract revenue: | |||||||||||||||||||||||||
Investment services fees: | |||||||||||||||||||||||||
Asset servicing fees | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Clearing services fees (b) | ( | ) | |||||||||||||||||||||||
Issuer services fees | |||||||||||||||||||||||||
Treasury services fees | |||||||||||||||||||||||||
Total investment services fees (b) | |||||||||||||||||||||||||
Investment management and performance fees (b) | |||||||||||||||||||||||||
Financing-related fees | ( | ) | |||||||||||||||||||||||
Distribution and servicing | ( | ) | ( | ) | |||||||||||||||||||||
Investment and other income | ( | ) | ( | ) | |||||||||||||||||||||
Total fee revenue - contract revenue | |||||||||||||||||||||||||
Fee and other revenue - not in scope of ASC 606 (c)(d) | |||||||||||||||||||||||||
Total fee and other revenue | $ | $ | $ | $ | $ | $ | $ | $ |
(a) | Business segment data has been determined on an internal management basis of accounting, rather than the generally accepted accounting principles used for consolidated financial reporting. |
(b) | In 2019, we reclassified certain platform-related fees to clearing services fees from investment management and performance fees. Prior periods have been reclassified. |
(c) | Primarily includes investment and other income, foreign exchange and other trading revenue, financing-related fees, asset servicing fees and net securities gains (losses), all of which are accounted for using other accounting guidance. |
(d) | The Investment Management business includes income from consolidated investment management funds, net of noncontrolling interests, of $ |
Notes to Consolidated Financial Statements (continued) |
Net interest revenue | Year ended Dec. 31, | ||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||
Interest revenue | |||||||||
Deposits with the Federal Reserve and other central banks | $ | $ | $ | ||||||
Deposits with banks | |||||||||
Federal funds sold and securities purchased under resale agreements | |||||||||
Margin loans | |||||||||
Non-margin loans | |||||||||
Securities: | |||||||||
Taxable | |||||||||
Exempt from federal income taxes | |||||||||
Total securities | |||||||||
Trading securities | |||||||||
Total interest revenue | |||||||||
Interest expense | |||||||||
Deposits in domestic offices | |||||||||
Deposits in foreign offices | |||||||||
Federal funds purchased and securities sold under repurchase agreements | |||||||||
Trading liabilities | |||||||||
Other borrowed funds | |||||||||
Commercial paper | |||||||||
Customer payables | |||||||||
Long-term debt | |||||||||
Total interest expense | |||||||||
Net interest revenue | |||||||||
Provision for credit losses | ( | ) | ( | ) | ( | ) | |||
Net interest revenue after provision for credit losses | $ | $ | $ |
Provision for income taxes | Year ended Dec. 31, | ||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||
Current tax expense (benefit): | |||||||||
Federal | $ | $ | $ | ( | ) | ||||
Foreign | |||||||||
State and local | |||||||||
Total current tax expense | |||||||||
Deferred tax (benefit) expense: | |||||||||
Federal | ( | ) | ( | ) | |||||
Foreign | ( | ) | |||||||
State and local | ( | ) | |||||||
Total deferred tax (benefit) expense | ( | ) | ( | ) | |||||
Provision for income taxes | $ | $ | $ |
Notes to Consolidated Financial Statements (continued) |
Income before taxes | Year ended Dec. 31, | ||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||
Domestic | $ | $ | $ | ||||||
Foreign | |||||||||
Income before taxes | $ | $ | $ |
Net deferred tax liability | Dec. 31, | |||||
(in millions) | 2019 | 2018 | ||||
Depreciation and amortization | $ | $ | ||||
Pension obligation | ||||||
Renewable energy investment | ||||||
Equity investments | ||||||
Lease financings | ||||||
Securities valuation | ( | ) | ||||
Credit losses on loans | ( | ) | ( | ) | ||
Reserves not deducted for tax | ( | ) | ( | ) | ||
Employee benefits | ( | ) | ( | ) | ||
Other assets | ( | ) | ( | ) | ||
Other liabilities | ||||||
U.S. foreign tax credits | ( | ) | ||||
Valuation allowance | ||||||
Net deferred tax liability | $ | $ |
Effective tax rate | Year ended Dec. 31, | |||||
2019 | 2018 | 2017 | ||||
Federal rate | % | % | % | |||
State and local income taxes, net of federal income tax benefit | ||||||
Foreign operations | ( | ) | ||||
Tax credits | ( | ) | ( | ) | ( | ) |
Tax-exempt income | ( | ) | ( | ) | ( | ) |
Leverage lease adjustment | ( | ) | ||||
Federal Deposit Insurance Corporation (“FDIC”) assessment | ||||||
Stock compensation | ( | ) | ( | ) | ( | ) |
U.S. tax legislation | ( | ) | ( | ) | ||
Other – net | ( | ) | ( | ) | ||
Effective tax rate | % | % | % |
Unrecognized tax positions | |||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||
Beginning balance at Jan. 1, – gross | $ | $ | $ | ||||||
Prior period tax positions: | |||||||||
Increases | |||||||||
Decreases | ( | ) | ( | ) | ( | ) | |||
Current period tax positions | |||||||||
Settlements | ( | ) | ( | ) | ( | ) | |||
Ending balance at Dec. 31, – gross | $ | $ | $ |
Notes to Consolidated Financial Statements (continued) |
Long-term debt | Dec. 31, 2019 | Dec. 31, 2018 | ||||||||
(in millions) | Rate | Maturity | Amount | Rate | Amount | |||||
Senior debt: | ||||||||||
Fixed rate | 1.95 - 4.60% | 2020 - 2028 | $ | 2.05 - 5.45% | $ | |||||
Floating rate | 1.71 - 2.96% | 2020 - 2038 | 2.61 - 3.86% | |||||||
Subordinated debt (a) | 3.00 - 7.50% | 2021 - 2029 | 3.00 - 7.50% | |||||||
Total | $ | $ |
(a) | Fixed rate. |
Consolidated investments | Dec. 31, 2019 | Dec. 31, 2018 | |||||||||||||||||||
(in millions) | Investment Management funds | Securitization | Total consolidated investments | Investment Management funds | Securitization | Total consolidated investments | |||||||||||||||
Trading assets | $ | $ | $ | $ | $ | $ | |||||||||||||||
Other assets | |||||||||||||||||||||
Total assets | $ | (a) | $ | $ | $ | (b) | $ | $ | |||||||||||||
Other liabilities | $ | $ | $ | $ | $ | $ | |||||||||||||||
Total liabilities | $ | (a) | $ | $ | $ | (b) | $ | $ | |||||||||||||
Nonredeemable noncontrolling interests | $ | (a) | $ | $ | $ | (b) | $ | $ |
(a) | Includes VMEs with assets of $ |
(b) | Includes VMEs with assets of $ |
Notes to Consolidated Financial Statements (continued) |
Non-consolidated VIEs | Dec. 31, 2019 | Dec. 31, 2018 | |||||||||||||||||
(in millions) | Assets | Liabilities | Maximum loss exposure | Assets | Liabilities | Maximum loss exposure | |||||||||||||
Securities - Available-for-sale (a) | $ | $ | $ | $ | $ | $ | |||||||||||||
Other |
(a) | Includes investments in the Company’s sponsored CLOs. |
Notes to Consolidated Financial Statements (continued) |
Preferred stock summary (a) | Total shares issued and outstanding | Carrying value (b) | ||||||||||
(in millions) | ||||||||||||
Dec. 31, | Dec. 31, | |||||||||||
Per annum dividend rate | 2019 | 2018 | 2019 | 2018 | ||||||||
Series A | $ | $ | ||||||||||
Series C | ||||||||||||
Series D | ||||||||||||
Series E | ||||||||||||
Series F | ||||||||||||
Total | $ | $ |
(a) | All outstanding preferred stock is noncumulative perpetual preferred stock with a liquidation preference of $100,000 per share. |
(b) | The carrying value of the Series C, Series D, Series E and Series F preferred stock is recorded net of issuance costs. |
Preferred dividends paid | |||||||||||||||||||||||||
(dollars in millions, except per share amounts) | Depositary shares per share | 2019 | 2018 | 2017 | |||||||||||||||||||||
Per share | Total dividend | Per share | Total dividend | Per share | Total dividend | ||||||||||||||||||||
Series A | 100 | (a) | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Series C | 4,000 | ||||||||||||||||||||||||
Series D | 100 | ||||||||||||||||||||||||
Series E | 100 | ||||||||||||||||||||||||
Series F | 100 | ||||||||||||||||||||||||
Total | $ | $ | $ |
(a) | Represents Normal Preferred Capital Securities. |
Notes to Consolidated Financial Statements (continued) |
Consolidated and largest bank subsidiary regulatory capital ratios (a) | Dec. 31, | |||
2019 | 2018 | |||
Consolidated regulatory capital ratios: | ||||
Common Equity Tier 1 (“CET1”) ratio | % | % | ||
Tier 1 capital ratio | ||||
Total capital ratio | ||||
Tier 1 leverage ratio | ||||
Supplementary leverage raio (“SLR”) (b) | ||||
The Bank of New York Mellon regulatory capital ratios: | ||||
CET1 ratio | % | % | ||
Tier 1 capital ratio | ||||
Total capital ratio | ||||
Tier 1 leverage ratio | ||||
SLR (b) |
(a) | For our CET1, Tier 1 capital and Total capital ratios, our effective capital ratios under U.S. capital rules are the lower of the ratios as calculated under the Standardized and Advanced Approaches, which for the periods noted above was the Advanced Approaches. The Tier 1 leverage ratio is based on Tier 1 capital and quarterly average total assets. For BNY Mellon to qualify as “well capitalized,” its Tier 1 capital and Total capital ratios must be at least 6% and 10%, respectively. For The Bank of New York Mellon, our largest bank subsidiary, to qualify as “well capitalized,” its CET1, Tier 1 capital, Total capital and Tier 1 leverage ratios must be at least 6.5%, 8%, 10% and 5%, respectively. |
(b) | The SLR is based on Tier 1 capital and total leverage exposure, which includes certain off-balance sheet exposures. For The Bank of New York Mellon to qualify as “well capitalized,” its SLR must be at least 6%. |
Notes to Consolidated Financial Statements (continued) |
Regulatory capital ratio components | ||||||
Dec. 31, | ||||||
(in millions) | 2019 | 2018 | ||||
CET1: | ||||||
Common shareholders’ equity | $ | $ | ||||
Adjustments for: | ||||||
Goodwill and intangible assets (a) | ( | ) | ( | ) | ||
Net pension fund assets | ( | ) | ( | ) | ||
Equity method investments | ( | ) | ( | ) | ||
Deferred tax assets | ( | ) | ( | ) | ||
Other | ( | ) | ||||
Total CET1 | ||||||
Other Tier 1 capital: | ||||||
Preferred stock | ||||||
Other | ( | ) | ( | ) | ||
Total Tier 1 capital | $ | $ | ||||
Tier 2 capital: | ||||||
Subordinated debt | $ | $ | ||||
Allowance for credit losses | ||||||
Other | ( | ) | ( | ) | ||
Total Tier 2 capital – Standardized Approach | ||||||
Excess of expected credit losses | ||||||
Less: Allowance for credit losses | ||||||
Total Tier 2 capital – Advanced Approaches | $ | $ | ||||
Total capital: | ||||||
Standardized Approach | $ | $ | ||||
Advanced Approaches | $ | $ | ||||
Risk-weighted assets: | ||||||
Standardized Approach | $ | $ | ||||
Advanced Approaches: | ||||||
Credit Risk | $ | $ | ||||
Market Risk | ||||||
Operational Risk | ||||||
Total Advanced Approaches | $ | $ | ||||
Average assets for Tier 1 leverage ratio | $ | $ | ||||
Total leverage exposure for SLR | $ | $ |
(a) | Reduced by deferred tax liabilities associated with intangible assets and tax deductible goodwill. |
Capital above thresholds at Dec. 31, 2019 | ||||||||
(in millions) | Consolidated | (a) | The Bank of New York Mellon | (b) | ||||
CET1 | $ | $ | ||||||
Tier 1 capital | ||||||||
Total capital | ||||||||
Tier 1 leverage ratio | ||||||||
SLR |
(a) | Based on minimum required standards, with applicable buffers. |
(b) | Based on well capitalized standards. |
Notes to Consolidated Financial Statements (continued) |
Components of other comprehensive income (loss) | Year ended Dec. 31, | ||||||||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||||||||||
(in millions) | Pre-tax amount | Tax (expense) benefit | After-tax amount | Pre-tax amount | Tax (expense) benefit | After-tax amount | Pre-tax amount | Tax (expense) benefit | After-tax amount | ||||||||||||||||||||
Foreign currency translation: | |||||||||||||||||||||||||||||
Foreign currency translation adjustments arising during the period (a) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||
Total foreign currency translation | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
Unrealized gain (loss) on assets available-for-sale: | |||||||||||||||||||||||||||||
Unrealized gain (loss) arising during period | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
Reclassification adjustment (b) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
Net unrealized gain (loss) on assets available-for-sale | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
Defined benefit plans: | |||||||||||||||||||||||||||||
Prior service cost arising during the period | ( | ) | ( | ) | |||||||||||||||||||||||||
Net (loss) gain arising during the period | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
Foreign exchange adjustment | |||||||||||||||||||||||||||||
Amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost (b) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
Total defined benefit plans | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
Unrealized gain (loss) on cash flow hedges: | |||||||||||||||||||||||||||||
Unrealized hedge gain (loss) arising during period | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
Reclassification of net loss (gain) to net income: | |||||||||||||||||||||||||||||
Interest rate contracts - interest expense | ( | ) | ( | ) | |||||||||||||||||||||||||
Foreign exchange (“FX”) contracts - other revenue | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
FX contracts - trading revenue | ( | ) | ( | ) | |||||||||||||||||||||||||
FX contracts - staff expense | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
Total reclassifications to net income | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
Net unrealized gain (loss) on cash flow hedges | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
Total other comprehensive income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ |
(a) | Includes the impact of hedges of net investments in foreign subsidiaries. See Note 23 for additional information. |
(b) | The reclassification adjustment related to the unrealized gain (loss) on assets available-for-sale is recorded as net securities gains on the consolidated income statement. The amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost is recorded as staff expense on the consolidated income statement. |
Changes in accumulated other comprehensive income (loss) attributable to The Bank of New York Mellon Corporation shareholders | ||||||||||||||||||||||||
Unrealized gain (loss) on assets available-for-sale | Unrealized gain (loss) on cash flow hedges | Total accumulated other comprehensive income (loss), net of tax | ||||||||||||||||||||||
(in millions) | Foreign currency translation | Pensions | Other post-retirement benefits | |||||||||||||||||||||
2016 ending balance | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||||
Change in 2017 | ( | ) | ||||||||||||||||||||||
2017 ending balance | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | ||||||||||
Adjustment for the cumulative effect of applying ASU 2017-12 for derivatives and hedging | ( | ) | ( | ) | ||||||||||||||||||||
Adjusted balance at Jan. 1, 2018 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
Change in 2018 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
2018 ending balance | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
Adjustment for the cumulative effect of applying ASU 2018-02 for income taxes | ( | ) | ( | ) | ||||||||||||||||||||
Adjusted balance at Jan. 1, 2019 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
Change in 2019 | ( | ) | ||||||||||||||||||||||
2019 ending balance | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) |
Notes to Consolidated Financial Statements (continued) |
Non-vested PSU, restricted stock and RSU activity | Number of shares | Weighted-average fair value at grant date | |||
Non-vested PSUs, restricted stock and RSUs at Dec. 31, 2018 | $ | ||||
Granted | |||||
Vested | ( | ) | |||
Forfeited | ( | ) | |||
Non-vested PSUs, restricted stock and RSUs at Dec. 31, 2019 | $ |
Notes to Consolidated Financial Statements (continued) |
Stock option activity | Shares subject to option | Weighted-average exercise price | Weighted-average remaining contractual term (in years) | |||
Balance at Dec. 31, 2018 | $ | |||||
Granted | ||||||
Exercised | ( | ) | ||||
Canceled/Expired | ( | ) | ||||
Balance at Dec. 31, 2019 | $ | |||||
Vested and expected to vest at Dec. 31, 2019 | ||||||
Exercisable at Dec. 31, 2019 |
Stock options outstanding at Dec. 31, 2019 | ||||||||||||||
Options outstanding | Options exercisable (a) | |||||||||||||
Range of exercise prices | Outstanding | Weighted-average remaining contractual life (in years) | Weighted-average exercise price | Exercisable | Weighted-average exercise price | |||||||||
$ 18 to 31 | $ | $ |
(a) | At Dec. 31, 2018 and Dec. 31, 2017, |
Aggregate intrinsic value of options | |||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||
Outstanding at Dec. 31, | $ | $ | $ | ||||||
Exercisable at Dec. 31, | $ | $ | $ |
Notes to Consolidated Financial Statements (continued) |
Pension Benefits | Healthcare Benefits | ||||||||||||||||||||||||||
Domestic | Foreign | Domestic | Foreign | ||||||||||||||||||||||||
(dollars in millions) | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||
Weighted-average assumptions used to determine benefit obligations | |||||||||||||||||||||||||||
Discount rate | % | % | % | % | % | % | % | % | |||||||||||||||||||
Rate of compensation increase | N/A | N/A | N/A | N/A | |||||||||||||||||||||||
Cash balance interest crediting rate | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||
Change in benefit obligation (a) | |||||||||||||||||||||||||||
Benefit obligation at beginning of period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Service cost | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
Interest cost | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Amendments | ( | ) | |||||||||||||||||||||||||
Actuarial gain (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Curtailments | |||||||||||||||||||||||||||
Benefits paid | |||||||||||||||||||||||||||
Foreign exchange adjustment | N/A | N/A | ( | ) | N/A | N/A | |||||||||||||||||||||
Benefit obligation at end of period | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Change in fair value of plan assets | |||||||||||||||||||||||||||
Fair value at beginning of period | |||||||||||||||||||||||||||
Actual return on plan assets | ( | ) | ( | ) | |||||||||||||||||||||||
Employer contributions | |||||||||||||||||||||||||||
Benefit payments | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Foreign exchange adjustment | N/A | N/A | ( | ) | N/A | N/A | |||||||||||||||||||||
Fair value at end of period | |||||||||||||||||||||||||||
Funded status at end of period | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||
Amounts recognized in accumulated other comprehensive loss (income) consist of: | |||||||||||||||||||||||||||
Net loss | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Prior service cost (credit) | ( | ) | ( | ) | |||||||||||||||||||||||
Total loss (before tax effects) | $ | $ | $ | $ | $ | $ | $ | $ |
(a) | The benefit obligation for pension benefits is the projected benefit obligation, and for healthcare benefits, it is the accumulated benefit obligation. |
Notes to Consolidated Financial Statements (continued) |
Net periodic benefit (credit) cost | Pension Benefits | Healthcare Benefits | |||||||||||||||||||||||||||||||||||||
Domestic | Foreign | Domestic | Foreign | ||||||||||||||||||||||||||||||||||||
(dollars in millions) | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Weighted-average assumptions as of Jan. 1: | |||||||||||||||||||||||||||||||||||||||
Market-related value of plan assets | $ | $ | $ | $ | $ | $ | $ | $ | $ | N/A | N/A | N/A | |||||||||||||||||||||||||||
Discount rate | % | % | % | % | % | % | % | % | % | % | % | % | |||||||||||||||||||||||||||
Expected rate of return on plan assets | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||
Rate of compensation increase | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||
Cash balance interest crediting rate | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||
Components of net periodic benefit (credit) cost : | |||||||||||||||||||||||||||||||||||||||
Service cost | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Interest cost | |||||||||||||||||||||||||||||||||||||||
Expected return on assets | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
Amortization of: | |||||||||||||||||||||||||||||||||||||||
Prior service cost (credit) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
Net actuarial loss | |||||||||||||||||||||||||||||||||||||||
Settlement loss | |||||||||||||||||||||||||||||||||||||||
Net periodic benefit (credit) cost | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | $ |
Changes in other comprehensive loss (income) in 2019 | Pension Benefits | Healthcare Benefits | |||||||||||
(in millions) | Domestic | Foreign | Domestic | Foreign | |||||||||
Net loss (gain) arising during period | $ | $ | $ | ( | ) | $ | |||||||
Recognition of prior years’ net (loss) | ( | ) | ( | ) | ( | ) | |||||||
Prior service cost arising during the period | |||||||||||||
Recognition of prior years’ service credit | |||||||||||||
Total recognized in other comprehensive (income) loss (before tax effects) | $ | ( | ) | $ | $ | ( | ) | $ |
Domestic | Foreign | ||||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||
Pension benefits: | |||||||||||||
Prepaid benefit cost | $ | $ | $ | $ | |||||||||
Accrued benefit cost | ( | ) | ( | ) | ( | ) | ( | ) | |||||
Total pension benefits | $ | $ | $ | $ | |||||||||
Healthcare benefits: | |||||||||||||
Accrued benefit cost | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |
Total healthcare benefits | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Notes to Consolidated Financial Statements (continued) |
Plans with obligations in excess of plan assets | Pension Benefits | Healthcare Benefits | |||||||||||||||||||||
Domestic | Foreign | Domestic | Foreign | ||||||||||||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||
Projected benefit obligation | $ | $ | $ | $ | N/A | N/A | N/A | N/A | |||||||||||||||
Fair value of plan assets | N/A | N/A | N/A | N/A | |||||||||||||||||||
Accumulated benefit obligation | |||||||||||||||||||||||
Fair value of plan assets |
Expected benefit payments | ||||||||
(in millions) | Domestic | Foreign | ||||||
Pension benefits: | ||||||||
Year | 2020 | $ | $ | |||||
2021 | ||||||||
2022 | ||||||||
2023 | ||||||||
2024 | ||||||||
2025-2029 | ||||||||
Total pension benefits | $ | $ | ||||||
Healthcare benefits: | ||||||||
Year | 2020 | $ | $ | |||||
2021 | ||||||||
2022 | ||||||||
2023 | ||||||||
2024 | ||||||||
2025-2029 | ||||||||
Total healthcare benefits | $ | $ |
Notes to Consolidated Financial Statements (continued) |
Asset allocations | Domestic | Foreign | |||||||
2019 | 2018 | 2019 | 2018 | ||||||
Fixed income | % | % | % | % | |||||
Equities | |||||||||
Alternative investments | |||||||||
Private equities | |||||||||
Real estate | |||||||||
Cash | |||||||||
Total pension benefits | % | % | % | % |
Notes to Consolidated Financial Statements (continued) |
Plan assets measured at fair value on a recurring basis— domestic plans at Dec. 31, 2019 | ||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total fair value | ||||||||
Common and preferred stock: | ||||||||||||
U.S. equity | $ | $ | $ | $ | ||||||||
Non-U.S. equity | ||||||||||||
Derivatives | ( | ) | ( | ) | ||||||||
Collective trust funds: | ||||||||||||
Commingled | ||||||||||||
U.S. equity | ||||||||||||
Fixed income: | ||||||||||||
U.S. Treasury securities | ||||||||||||
U.S. government agencies | ||||||||||||
Sovereign government obligations | ||||||||||||
U.S. corporate bonds | ||||||||||||
Other | ||||||||||||
Mutual funds | ||||||||||||
Total domestic plan assets in the fair value hierarchy | $ | $ | $ | $ | ||||||||
Other assets measured at NAV: | ||||||||||||
Funds of funds | ||||||||||||
Venture capital and partnership interests | ||||||||||||
Total domestic plan assets, at fair value | $ |
Plan assets measured at fair value on a recurring basis— foreign plans at Dec. 31, 2019 | ||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total fair value | ||||||||
Equity funds | $ | $ | $ | $ | ||||||||
Sovereign/government obligation funds | ||||||||||||
Corporate debt funds | ||||||||||||
Cash and currency | ||||||||||||
Total foreign plan assets in the fair value hierarchy | $ | $ | $ | $ | ||||||||
Other assets measured at NAV | ||||||||||||
Total foreign plan assets, at fair value | $ |
Plan assets measured at fair value on a recurring basis— domestic plans at Dec. 31, 2018 | ||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total fair value | ||||||||
Common and preferred stock: | ||||||||||||
U.S. equity | $ | $ | $ | $ | ||||||||
Non-U.S. equity | ||||||||||||
Collective trust funds: | ||||||||||||
Commingled | ||||||||||||
U.S. equity | ||||||||||||
Fixed income: | ||||||||||||
U.S. Treasury securities | ||||||||||||
U.S. government agencies | ||||||||||||
Sovereign government obligations | ||||||||||||
U.S. corporate bonds | ||||||||||||
Other | ||||||||||||
Mutual funds | ||||||||||||
Total domestic plan assets in the fair value hierarchy | $ | $ | $ | $ | ||||||||
Other assets measured at NAV: | ||||||||||||
Funds of funds | ||||||||||||
Venture capital and partnership interests | ||||||||||||
Total domestic plan assets, at fair value | $ |
Plan assets measured at fair value on a recurring basis— foreign plans at Dec. 31, 2018 | ||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total fair value | ||||||||
Equity funds | $ | $ | $ | $ | ||||||||
Sovereign/government obligation funds | ||||||||||||
Corporate debt funds | ||||||||||||
Cash and currency | ||||||||||||
Total foreign plan assets in the fair value hierarchy | $ | $ | $ | $ | ||||||||
Other assets measured at NAV | ||||||||||||
Total foreign plan assets, at fair value | $ |
Notes to Consolidated Financial Statements (continued) |
Assets valued using NAV at Dec. 31, 2019 | ||||||||
(dollars in millions) | Fair value | Unfunded commitments | Redemption frequency | Redemption notice period | ||||
Funds of funds (a) | $ | $ | 30-45 days | |||||
Venture capital and partnership interests (b) | N/A | N/A | ||||||
Property funds (c) | 0-90 days | |||||||
Other contracts (d) | N/A | N/A | ||||||
Total | $ | $ |
Assets valued using NAV at Dec. 31, 2018 | ||||||||
(dollars in millions) | Fair value | Unfunded commitments | Redemption frequency | Redemption notice period | ||||
Funds of funds (a) | $ | $ | 30-45 days | |||||
Venture capital and partnership interests (b) | N/A | N/A | ||||||
Property funds (c) | 0-90 days | |||||||
Corporate debt | N/A | N/A | ||||||
Other contracts (d) | N/A | N/A | ||||||
Total | $ | $ |
(a) | Funds of funds include multi-strategy hedge funds that utilize investment strategies that invest over both long-term investment and short-term investment horizons. |
(b) | Venture capital and partnership interests do not have redemption rights. Distributions from such funds will be received as the underlying investments are liquidated. |
(c) | Property funds include funds invested in regional real estate vehicles that hold direct interest in real estate properties. |
(d) | Other contracts include assets invested in pooled accounts at insurance companies that are privately valued by the asset manager. |
Notes to Consolidated Financial Statements (continued) |
Notes to Consolidated Financial Statements (continued) |
Notes to Consolidated Financial Statements (continued) |
Year ended Dec. 31, | |||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||
Dividends from bank subsidiaries | $ | $ | $ | ||||||
Dividends from nonbank subsidiaries | |||||||||
Interest revenue from bank subsidiaries | |||||||||
Interest revenue from nonbank subsidiaries | |||||||||
(Loss) gain on securities held for sale | ( | ) | |||||||
Other revenue | |||||||||
Total revenue | |||||||||
Interest expense (including, $64, $59, $73, to subsidiaries, respectively) | |||||||||
Other expense | |||||||||
Total expense | |||||||||
Income before income taxes and equity in undistributed net income of subsidiaries | |||||||||
(Benefit) for income taxes | ( | ) | ( | ) | ( | ) | |||
Equity in undistributed net income: | |||||||||
Bank subsidiaries | ( | ) | ( | ) | |||||
Nonbank subsidiaries | ( | ) | |||||||
Net income | |||||||||
Preferred stock dividends | ( | ) | ( | ) | ( | ) | |||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | $ | $ |
Dec. 31, | ||||||
(in millions) | 2019 | 2018 | ||||
Assets: | ||||||
Cash and due from banks | $ | $ | ||||
Securities | ||||||
Investment in and advances to subsidiaries and associated companies: | ||||||
Banks | ||||||
Other | ||||||
Subtotal | ||||||
Corporate-owned life insurance | ||||||
Other assets | ||||||
Total assets | $ | $ | ||||
Liabilities: | ||||||
Deferred compensation | $ | $ | ||||
Affiliate borrowings | ||||||
Other liabilities | ||||||
Long-term debt | ||||||
Total liabilities | ||||||
Shareholders’ equity | ||||||
Total liabilities and shareholders’ equity | $ | $ |
Year ended Dec. 31, | |||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||
Operating activities: | |||||||||
Net income | $ | $ | $ | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
Equity in undistributed net loss (income) of subsidiaries | ( | ) | |||||||
Change in accrued interest receivable | ( | ) | ( | ) | |||||
Change in accrued interest payable | ( | ) | |||||||
Change in taxes payable (a) | ( | ) | |||||||
Other, net | ( | ) | ( | ) | |||||
Net cash provided by operating activities | |||||||||
Investing activities: | |||||||||
Purchases of securities | ( | ) | |||||||
Proceeds from sales of securities | |||||||||
Change in loans | |||||||||
Acquisitions of, investments in, and advances to subsidiaries (b) | ( | ) | ( | ) | |||||
Other, net | |||||||||
Net cash provided by (used for) investing activities | ( | ) | ( | ) | |||||
Financing activities: | |||||||||
Proceeds from issuance of long-term debt | |||||||||
Repayments of long-term debt | ( | ) | ( | ) | ( | ) | |||
Change in advances from subsidiaries | ( | ) | ( | ) | |||||
Issuance of common stock | |||||||||
Treasury stock acquired | ( | ) | ( | ) | ( | ) | |||
Cash dividends paid | ( | ) | ( | ) | ( | ) | |||
Net cash (used for) financing activities | ( | ) | ( | ) | ( | ) | |||
Change in cash and due from banks | ( | ) | ( | ) | ( | ) | |||
Cash and due from banks at beginning of year | |||||||||
Cash and due from banks at end of year | $ | $ | $ | ||||||
Supplemental disclosures | |||||||||
Interest paid | $ | $ | $ | ||||||
Income taxes paid | |||||||||
Income taxes refunded |
(a) | Includes payments received from subsidiaries for taxes of $ |
(b) | Includes $ |
Notes to Consolidated Financial Statements (continued) |
Notes to Consolidated Financial Statements (continued) |
Notes to Consolidated Financial Statements (continued) |
Notes to Consolidated Financial Statements (continued) |
Assets measured at fair value on a recurring basis at Dec. 31, 2019 | Total carrying value | ||||||||||||||
(dollars in millions) | Level 1 | Level 2 | Level 3 | Netting (a) | |||||||||||
Available-for-sale securities: | |||||||||||||||
Agency RMBS | $ | $ | $ | $ | — | $ | |||||||||
U.S. Treasury | — | ||||||||||||||
Sovereign debt/sovereign guaranteed | — | ||||||||||||||
Agency commercial MBS | — | ||||||||||||||
Foreign covered bonds | — | ||||||||||||||
CLOs | — | ||||||||||||||
Supranational | — | ||||||||||||||
Foreign government agencies | — | ||||||||||||||
Non-agency commercial MBS | — | ||||||||||||||
Other ABS | — | ||||||||||||||
U.S. government agencies | — | ||||||||||||||
Non-agency RMBS (b) | — | ||||||||||||||
State and political subdivisions | — | ||||||||||||||
Corporate bonds | — | ||||||||||||||
Other debt securities | — | ||||||||||||||
Total available-for-sale securities | — | ||||||||||||||
Trading assets: | |||||||||||||||
Debt instruments | — | ||||||||||||||
Equity instruments (c) | — | ||||||||||||||
Derivative assets not designated as hedging: | |||||||||||||||
Interest rate | ( | ) | |||||||||||||
Foreign exchange | ( | ) | |||||||||||||
Equity and other contracts | ( | ) | |||||||||||||
Total derivative assets not designated as hedging | ( | ) | |||||||||||||
Total trading assets | ( | ) | |||||||||||||
Other assets: | |||||||||||||||
Derivative assets designated as hedging: | |||||||||||||||
Foreign exchange | — | ||||||||||||||
Total derivative assets designated as hedging | — | ||||||||||||||
Other assets (d) | — | ||||||||||||||
Assets measured at NAV (d) | |||||||||||||||
Subtotal assets of operations at fair value | ( | ) | |||||||||||||
Percentage of assets of operations prior to netting | % | % | % | ||||||||||||
Assets of consolidated investment management funds | — | ||||||||||||||
Total assets | $ | $ | $ | $ | ( | ) | $ | ||||||||
Percentage of total assets prior to netting | % | % | % |
Notes to Consolidated Financial Statements (continued) |
Liabilities measured at fair value on a recurring basis at Dec. 31, 2019 | Total carrying value | ||||||||||||||
(dollars in millions) | Level 1 | Level 2 | Level 3 | Netting (a) | |||||||||||
Trading liabilities: | |||||||||||||||
Debt instruments | $ | $ | $ | $ | — | $ | |||||||||
Equity instruments | — | ||||||||||||||
Derivative liabilities not designated as hedging: | |||||||||||||||
Interest rate | ( | ) | |||||||||||||
Foreign exchange | ( | ) | |||||||||||||
Equity and other contracts | ( | ) | |||||||||||||
Total derivative liabilities not designated as hedging | ( | ) | |||||||||||||
Total trading liabilities | ( | ) | |||||||||||||
Long-term debt (c) | — | ||||||||||||||
Other liabilities – derivative liabilities designated as hedging: | |||||||||||||||
Interest rate | — | ||||||||||||||
Foreign exchange | — | ||||||||||||||
Total other liabilities – derivative liabilities designated as hedging | — | ||||||||||||||
Subtotal liabilities of operations at fair value | ( | ) | |||||||||||||
Percentage of liabilities of operations prior to netting | % | % | % | ||||||||||||
Liabilities of consolidated investment management funds | — | ||||||||||||||
Total liabilities | $ | $ | $ | $ | ( | ) | $ | ||||||||
Percentage of total liabilities prior to netting | % | % | % |
(a) | ASC 815, Derivatives and Hedging, permits the netting of derivative receivables and derivative payables under legally enforceable master netting agreements and permits the netting of cash collateral. Netting is applicable to derivatives not designated as hedging instruments included in trading assets or trading liabilities and derivatives designated as hedging instruments included in other assets or other liabilities. Netting is allocated to the derivative products based on the net fair value of each product. |
(b) | Includes $ |
(c) | Includes certain interests in securitizations. |
(d) | Includes seed capital, private equity investments and other assets. |
Notes to Consolidated Financial Statements (continued) |
Assets measured at fair value on a recurring basis at Dec. 31, 2018 | Total carrying value | ||||||||||||||
(dollars in millions) | Level 1 | Level 2 | Level 3 | Netting (a) | |||||||||||
Available-for-sale securities: | |||||||||||||||
Agency RMBS | $ | $ | $ | $ | — | $ | |||||||||
U.S. Treasury | — | ||||||||||||||
Sovereign debt/sovereign guaranteed | — | ||||||||||||||
Agency commercial MBS | — | ||||||||||||||
CLOs | — | ||||||||||||||
Supranational | — | ||||||||||||||
Foreign covered bonds | — | ||||||||||||||
State and political subdivisions | — | ||||||||||||||
Other ABS | — | ||||||||||||||
U.S. government agencies | — | ||||||||||||||
Non-agency commercial MBS | — | ||||||||||||||
Non-agency RMBS (b) | — | ||||||||||||||
Foreign government agencies | — | ||||||||||||||
Corporate bonds | — | ||||||||||||||
Other debt securities | — | ||||||||||||||
Total available-for-sale securities | — | ||||||||||||||
Trading assets: | |||||||||||||||
Debt instruments | — | ||||||||||||||
Equity instruments (c) | — | ||||||||||||||
Derivative assets not designated as hedging: | |||||||||||||||
Interest rate | ( | ) | |||||||||||||
Foreign exchange | ( | ) | |||||||||||||
Equity and other contracts | ( | ) | |||||||||||||
Total derivative assets not designated as hedging | ( | ) | |||||||||||||
Total trading assets | ( | ) | |||||||||||||
Other assets: | |||||||||||||||
Derivative assets designated as hedging: | |||||||||||||||
Interest rate | — | ||||||||||||||
Foreign exchange | — | ||||||||||||||
Total derivative assets designated as hedging | — | ||||||||||||||
Other assets (d) | — | ||||||||||||||
Assets measured at NAV (d) | |||||||||||||||
Subtotal assets of operations at fair value | ( | ) | |||||||||||||
Percentage of assets of operations prior to netting | % | % | % | ||||||||||||
Assets of consolidated investment management funds | — | ||||||||||||||
Total assets | $ | $ | $ | $ | ( | ) | $ | ||||||||
Percentage of total assets prior to netting | % | % | % |
Notes to Consolidated Financial Statements (continued) |
Liabilities measured at fair value on a recurring basis at Dec. 31, 2018 | Total carrying value | ||||||||||||||
(dollars in millions) | Level 1 | Level 2 | Level 3 | Netting (a) | |||||||||||
Trading liabilities: | |||||||||||||||
Debt instruments | $ | $ | $ | $ | — | $ | |||||||||
Equity instruments | — | ||||||||||||||
Derivative liabilities not designated as hedging: | |||||||||||||||
Interest rate | ( | ) | |||||||||||||
Foreign exchange | ( | ) | |||||||||||||
Equity and other contracts | ( | ) | |||||||||||||
Total derivative liabilities not designated as hedging | ( | ) | |||||||||||||
Total trading liabilities | ( | ) | |||||||||||||
Long-term debt (c) | — | ||||||||||||||
Other liabilities – derivative liabilities designated as hedging: | |||||||||||||||
Interest rate | — | ||||||||||||||
Foreign exchange | — | ||||||||||||||
Total other liabilities – derivative liabilities designated as hedging | — | ||||||||||||||
Subtotal liabilities of operations at fair value | ( | ) | |||||||||||||
Percentage of liabilities of operations prior to netting | % | % | % | ||||||||||||
Liabilities of consolidated investment management funds | — | ||||||||||||||
Total liabilities | $ | $ | $ | $ | ( | ) | $ | ||||||||
Percentage of total liabilities prior to netting | % | % | % |
(a) | ASC 815, Derivatives and Hedging, permits the netting of derivative receivables and derivative payables under legally enforceable master netting agreements and permits the netting of cash collateral. Netting is applicable to derivatives not designated as hedging instruments included in trading assets or trading liabilities and derivatives designated as hedging instruments included in other assets or other liabilities. Netting is allocated to the derivative products based on the net fair value of each product. |
(b) | Includes $ |
(c) | Includes certain interests in securitizations. |
(d) | Includes seed capital, private equity investments and other assets. |
Notes to Consolidated Financial Statements (continued) |
Details of certain available-for-sale securities measured at fair value on a recurring basis | Dec. 31, 2019 | Dec. 31, 2018 | |||||||||||||||||||||||
Total carrying value | Ratings (a) | Total carrying value | Ratings (a) | ||||||||||||||||||||||
AAA/ AA- | A+/ A- | BBB+/ BBB- | BB+ and lower | AAA/ AA- | A+/ A- | BBB+/ BBB- | BB+ and lower | ||||||||||||||||||
(dollars in millions) | (b) | (b) | |||||||||||||||||||||||
Non-agency RMBS (c), originated in: | |||||||||||||||||||||||||
2007-2019 | $ | % | % | % | % | $ | % | % | % | % | |||||||||||||||
2006 | |||||||||||||||||||||||||
2005 | |||||||||||||||||||||||||
2004 and earlier | |||||||||||||||||||||||||
Total non-agency RMBS | $ | % | % | % | % | $ | % | % | % | % | |||||||||||||||
Non-agency commercial MBS originated in: | |||||||||||||||||||||||||
2009-2019 | $ | % | % | % | % | $ | % | % | % | % | |||||||||||||||
Foreign covered bonds: | |||||||||||||||||||||||||
Canada | $ | % | % | % | % | $ | % | % | % | % | |||||||||||||||
UK | |||||||||||||||||||||||||
Australia | |||||||||||||||||||||||||
Germany | |||||||||||||||||||||||||
Norway | |||||||||||||||||||||||||
Other | |||||||||||||||||||||||||
Total foreign covered bonds | $ | % | % | % | % | $ | % | % | % | % | |||||||||||||||
Sovereign debt/sovereign guaranteed: | |||||||||||||||||||||||||
UK | $ | % | % | % | % | $ | % | % | % | % | |||||||||||||||
Germany | |||||||||||||||||||||||||
Spain | |||||||||||||||||||||||||
France | |||||||||||||||||||||||||
Italy | |||||||||||||||||||||||||
Netherlands | |||||||||||||||||||||||||
Singapore | |||||||||||||||||||||||||
Hong Kong | |||||||||||||||||||||||||
Ireland | |||||||||||||||||||||||||
Other (d) | |||||||||||||||||||||||||
Total sovereign debt/sovereign guaranteed | $ | % | % | % | % | $ | % | % | % | % | |||||||||||||||
Foreign government agencies: | |||||||||||||||||||||||||
Germany | $ | % | % | % | % | $ | % | % | % | % | |||||||||||||||
Netherlands | |||||||||||||||||||||||||
Finland | |||||||||||||||||||||||||
Other | |||||||||||||||||||||||||
Total foreign government agencies | $ | % | % | % | % | $ | % | % | % | % |
(a) | Represents ratings by S&P or the equivalent. |
(b) | At Dec. 31, 2019 and Dec. 31, 2018, sovereign debt/sovereign guaranteed securities were included in Level 1 and Level 2 in the valuation hierarchy. All other assets in the table are Level 2 assets in the valuation hierarchy. |
(c) | Includes $ |
(d) | Includes non-investment grade sovereign debt/sovereign guaranteed securities related to Brazil of $ |
Notes to Consolidated Financial Statements (continued) |
Assets measured at fair value on a nonrecurring basis | Dec. 31, 2019 | Dec. 31, 2018 | |||||||||||||||||||||||
Total carrying value | Total carrying value | ||||||||||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
Loans (a) | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Other assets (b) | |||||||||||||||||||||||||
Total assets at fair value on a nonrecurring basis | $ | $ | $ | $ | $ | $ | $ | $ |
(a) | The fair value of these loans decreased $ |
(b) | Includes non-readily marketable equity securities carried at cost with upward or downward adjustments and other assets received in satisfaction of debt. |
Summary of financial instruments | Dec. 31, 2019 | ||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total estimated fair value | Carrying amount | ||||||||||
Assets: | |||||||||||||||
Interest-bearing deposits with the Federal Reserve and other central banks | $ | $ | $ | $ | $ | ||||||||||
Interest-bearing deposits with banks | |||||||||||||||
Federal funds sold and securities purchased under resale agreements | |||||||||||||||
Securities held-to-maturity | |||||||||||||||
Loans (a) | |||||||||||||||
Other financial assets | |||||||||||||||
Total | $ | $ | $ | $ | $ | ||||||||||
Liabilities: | |||||||||||||||
Noninterest-bearing deposits | $ | $ | $ | $ | $ | ||||||||||
Interest-bearing deposits | |||||||||||||||
Federal funds purchased and securities sold under repurchase agreements | |||||||||||||||
Payables to customers and broker-dealers | |||||||||||||||
Commercial paper | |||||||||||||||
Borrowings | |||||||||||||||
Long-term debt | |||||||||||||||
Total | $ | $ | $ | $ | $ |
(a) | Does not include the leasing portfolio. |
Notes to Consolidated Financial Statements (continued) |
Summary of financial instruments | Dec. 31, 2018 | ||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total estimated fair value | Carrying amount | ||||||||||
Assets: | |||||||||||||||
Interest-bearing deposits with the Federal Reserve and other central banks | $ | $ | $ | $ | $ | ||||||||||
Interest-bearing deposits with banks | |||||||||||||||
Federal funds sold and securities purchased under resale agreements | |||||||||||||||
Securities held-to-maturity | |||||||||||||||
Loans (a) | |||||||||||||||
Other financial assets | |||||||||||||||
Total | $ | $ | $ | $ | $ | ||||||||||
Liabilities: | |||||||||||||||
Noninterest-bearing deposits | $ | $ | $ | $ | $ | ||||||||||
Interest-bearing deposits | |||||||||||||||
Federal funds purchased and securities sold under repurchase agreements | |||||||||||||||
Payables to customers and broker-dealers | |||||||||||||||
Commercial paper | |||||||||||||||
Borrowings | |||||||||||||||
Long-term debt | |||||||||||||||
Total | $ | $ | $ | $ | $ |
(a) | Does not include the leasing portfolio. |
Assets and liabilities of consolidated investment management funds, at fair value | ||||||
Dec. 31, | ||||||
(in millions) | 2019 | 2018 | ||||
Assets of consolidated investment management funds: | ||||||
Trading assets | $ | $ | ||||
Other assets | ||||||
Total assets of consolidated investment management funds | $ | $ | ||||
Liabilities of consolidated investment management funds: | ||||||
Other liabilities | ||||||
Total liabilities of consolidated investment management funds | $ | $ |
Change in fair value of long-term debt (a) | |||||||||
Year ended Dec. 31, | |||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||
Foreign exchange and other trading revenue | $ | ( | ) | $ | ( | ) | $ | ( | ) |
(a) | The changes in fair value are approximately offset by an economic hedge included in foreign exchange and other trading revenue. |
Notes to Consolidated Financial Statements (continued) |
Off-balance sheet credit risks | Dec. 31, | |||||
(in millions) | 2019 | 2018 | ||||
Lending commitments | $ | $ | ||||
Standby letters of credit (“SBLC”) (a) | ||||||
Commercial letters of credit | ||||||
Securities lending indemnifications (b)(c) |
(a) | Net of participations totaling $ |
(b) | Excludes the indemnification for securities for which BNY Mellon acts as an agent on behalf of CIBC Mellon clients, which totaled $ |
(c) | Includes cash collateral, invested in indemnified repurchase agreements, held by us as securities lending agent of $ |
Standby letters of credit | Dec. 31, | |||
2019 | 2018 | |||
Investment grade | % | % | ||
Non-investment grade | % | % |
Notes to Consolidated Financial Statements (continued) |
Financial institutions portfolio exposure (in billions) | Dec. 31, 2019 | ||||||||
Loans | Unfunded commitments | Total exposure | |||||||
Securities industry | $ | $ | $ | ||||||
Banks | |||||||||
Asset managers | |||||||||
Insurance | |||||||||
Government | |||||||||
Other | |||||||||
Total | $ | $ | $ |
Commercial portfolio exposure (in billions) | Dec. 31, 2019 | ||||||||
Loans | Unfunded commitments | Total exposure | |||||||
Manufacturing | $ | $ | $ | ||||||
Services and other | |||||||||
Energy and utilities | |||||||||
Media and telecom | |||||||||
Total | $ | $ | $ |
Notes to Consolidated Financial Statements (continued) |
Notes to Consolidated Financial Statements (continued) |
Notes to Consolidated Financial Statements (continued) |
Notes to Consolidated Financial Statements (continued) |
Notes to Consolidated Financial Statements (continued) |
Income statement impact of fair value and cash flow hedges | Year ended Dec. 31, | |||||||||
(in millions) | Location of gains (losses) | 2019 | 2018 | 2017 | ||||||
Interest rate fair value hedges of available-for-sale securities | ||||||||||
Derivative | Interest revenue | $ | ( | ) | $ | $ | ||||
Hedged item | Interest revenue | ( | ) | ( | ) | |||||
Interest rate fair value hedges of long-term debt | ||||||||||
Derivative | Interest expense | ( | ) | ( | ) | |||||
Hedged item | Interest expense | ( | ) | |||||||
Foreign exchange fair value hedges of available-for-sale securities | ||||||||||
Derivative (a) | Other revenue | ( | ) | |||||||
Hedged item | Other revenue | ( | ) | |||||||
Cash flow hedge of interest rate risk | ||||||||||
Gain reclassified from OCI into income | Interest expense | |||||||||
Cash flow hedges of forecasted FX exposures | ||||||||||
Gain reclassified from OCI into income | Trading revenue | |||||||||
Gain reclassified from OCI into income | Other revenue | |||||||||
Gain (loss) reclassified from OCI into income | Staff expense | ( | ) | |||||||
Gain (loss) recognized in the consolidated income statement due to fair value and cash flow hedging relationships | $ | $ | $ | ( | ) |
(a) | Includes a gain of $ |
Impact of derivative instruments used in net investment hedging relationships | ||||||||||||||||||||
(in millions) | ||||||||||||||||||||
Gain or (loss) recognized in accumulated OCI on derivatives Year ended Dec. 31, | Gain or (loss) reclassified from accumulated OCI into income Year ended Dec. 31, | |||||||||||||||||||
Derivatives in net investment hedging relationships | Location of gain or (loss) reclassified from accumulated OCI into income | |||||||||||||||||||
2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||
FX contracts | $ | ( | ) | $ | $ | ( | ) | Net interest revenue | $ | $ | $ |
Hedged items in fair value hedging relationships | Carrying amount of hedged asset or liability | Hedge accounting basis adjustment increase (decrease) (a) | |||||||||||
Dec. 31, | Dec. 31, | ||||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||
Available-for-sale securities (b)(c) | $ | $ | $ | $ | ( | ) | |||||||
Long-term debt | $ | $ | $ | $ | ( | ) |
(a) | Includes $ |
(b) | Excludes hedged items where only foreign currency risk is the designated hedged risk, as the basis adjustments related to foreign currency hedges will not reverse through the consolidated income statement in future periods. The carrying amount excluded for available-for-sale securities was $ |
(c) | Carrying amount represents the amortized cost. |
Notes to Consolidated Financial Statements (continued) |
Impact of derivative instruments on the balance sheet | Notional value | Asset derivatives fair value | Liability derivatives fair value | |||||||||||||||||
Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
Derivatives designated as hedging instruments: (a)(b) | ||||||||||||||||||||
Interest rate contracts | $ | $ | $ | $ | $ | $ | ||||||||||||||
Foreign exchange contracts | ||||||||||||||||||||
Total derivatives designated as hedging instruments | $ | $ | $ | $ | ||||||||||||||||
Derivatives not designated as hedging instruments: (b)(c) | ||||||||||||||||||||
Interest rate contracts | $ | $ | $ | $ | $ | $ | ||||||||||||||
Foreign exchange contracts | ||||||||||||||||||||
Equity contracts | ||||||||||||||||||||
Credit contracts | ||||||||||||||||||||
Total derivatives not designated as hedging instruments | $ | $ | $ | $ | ||||||||||||||||
Total derivatives fair value (d) | $ | $ | $ | $ | ||||||||||||||||
Effect of master netting agreements (e) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
Fair value after effect of master netting agreements | $ | $ | $ | $ |
(a) | The fair value of asset derivatives and liability derivatives designated as hedging instruments is recorded as other assets and other liabilities, respectively, on the consolidated balance sheet. |
(b) | For derivative transactions settled at clearing organizations, cash collateral exchanged is deemed a settlement of the derivative each day. The settlement reduces the gross fair value of derivative assets and liabilities and a corresponding decrease in the effect of master netting agreements, with no impact to the consolidated balance sheet. |
(c) | The fair value of asset derivatives and liability derivatives not designated as hedging instruments is recorded as trading assets and trading liabilities, respectively, on the consolidated balance sheet. |
(d) | Fair values are on a gross basis, before consideration of master netting agreements, as required by ASC 815, Derivatives and Hedging. |
(e) | Effect of master netting agreements includes cash collateral received and paid of $ |
Foreign exchange and other trading revenue | Year ended Dec. 31, | ||||||||
(in millions) | 2019 | 2018 | 2017 | ||||||
Foreign exchange | $ | $ | $ | ||||||
Other trading revenue | |||||||||
Total foreign exchange and other trading revenue | $ | $ | $ |
Notes to Consolidated Financial Statements (continued) |
Dec. 31, | ||||||
(in millions) | 2019 | 2018 | ||||
Aggregate fair value of OTC derivatives in net liability positions (a) | $ | $ | ||||
Collateral posted | $ | $ |
(a) | Before consideration of cash collateral. |
Potential close-out exposures (fair value) (a) | ||||||
Dec. 31, | ||||||
(in millions) | 2019 | 2018 | ||||
If The Bank of New York Mellon’s rating changed to: (b) | ||||||
A3/A- | $ | $ | ||||
Baa2/BBB | $ | $ | ||||
Ba1/BB+ | $ | $ |
(a) | The amounts represent potential total close-out values if The Bank of New York Mellon’s long-term issuer rating were to immediately drop to the indicated levels, and do not reflect collateral posted. |
(b) | Represents rating by Moody’s/S&P. |
Notes to Consolidated Financial Statements (continued) |
Offsetting of derivative assets and financial assets at Dec. 31, 2019 | |||||||||||||||||||
Gross assets recognized | Gross amounts offset in the balance sheet | Net assets recognized in the balance sheet | Gross amounts not offset in the balance sheet | ||||||||||||||||
(in millions) | (a) | Financial instruments | Cash collateral received | Net amount | |||||||||||||||
Derivatives subject to netting arrangements: | |||||||||||||||||||
Interest rate contracts | $ | $ | $ | $ | $ | $ | |||||||||||||
Foreign exchange contracts | |||||||||||||||||||
Equity and other contracts | |||||||||||||||||||
Total derivatives subject to netting arrangements | |||||||||||||||||||
Total derivatives not subject to netting arrangements | — | — | — | ||||||||||||||||
Total derivatives | |||||||||||||||||||
Reverse repurchase agreements | (b) | ||||||||||||||||||
Securities borrowing | — | — | |||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
(a) | Includes the effect of netting agreements and net cash collateral received. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions. |
(b) | Offsetting of reverse repurchase agreements relates to our involvement in the FICC, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system. |
Offsetting of derivative assets and financial assets at Dec. 31, 2018 | |||||||||||||||||||
Gross assets recognized | Gross amounts offset in the balance sheet | Net assets recognized in the balance sheet | Gross amounts not offset in the balance sheet | ||||||||||||||||
(in millions) | (a) | Financial instruments | Cash collateral received | Net amount | |||||||||||||||
Derivatives subject to netting arrangements: | |||||||||||||||||||
Interest rate contracts | $ | $ | $ | $ | $ | $ | |||||||||||||
Foreign exchange contracts | |||||||||||||||||||
Equity and other contracts | |||||||||||||||||||
Total derivatives subject to netting arrangements | |||||||||||||||||||
Total derivatives not subject to netting arrangements | — | — | — | ||||||||||||||||
Total derivatives | |||||||||||||||||||
Reverse repurchase agreements | (b) | ||||||||||||||||||
Securities borrowing | — | — | |||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
(a) | Includes the effect of netting agreements and net cash collateral received. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions. |
(b) | Offsetting of reverse repurchase agreements relates to our involvement in the FICC, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system. |
Notes to Consolidated Financial Statements (continued) |
Offsetting of derivative liabilities and financial liabilities at Dec. 31, 2019 | Net liabilities recognized in the balance sheet | ||||||||||||||||||
Gross liabilities recognized | Gross amounts offset in the balance sheet | Gross amounts not offset in the balance sheet | |||||||||||||||||
(in millions) | (a) | Financial instruments | Cash collateral pledged | Net amount | |||||||||||||||
Derivatives subject to netting arrangements: | |||||||||||||||||||
Interest rate contracts | $ | $ | $ | $ | $ | $ | |||||||||||||
Foreign exchange contracts | |||||||||||||||||||
Equity and other contracts | |||||||||||||||||||
Total derivatives subject to netting arrangements | |||||||||||||||||||
Total derivatives not subject to netting arrangements | — | — | — | ||||||||||||||||
Total derivatives | |||||||||||||||||||
Repurchase agreements | (b) | ||||||||||||||||||
Securities lending | — | — | |||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
(a) | Includes the effect of netting agreements and net cash collateral paid. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions. |
(b) | Offsetting of repurchase agreements relates to our involvement in the FICC, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system. |
Offsetting of derivative liabilities and financial liabilities at Dec. 31, 2018 | Net liabilities recognized in the balance sheet | ||||||||||||||||||
Gross liabilities recognized | Gross amounts offset in the balance sheet | Gross amounts not offset in the balance sheet | |||||||||||||||||
(in millions) | (a) | Financial instruments | Cash collateral pledged | Net amount | |||||||||||||||
Derivatives subject to netting arrangements: | |||||||||||||||||||
Interest rate contracts | $ | $ | $ | $ | $ | $ | |||||||||||||
Foreign exchange contracts | |||||||||||||||||||
Equity and other contracts | |||||||||||||||||||
Total derivatives subject to netting arrangements | |||||||||||||||||||
Total derivatives not subject to netting arrangements | — | — | — | ||||||||||||||||
Total derivatives | |||||||||||||||||||
Repurchase agreements | (b) | ||||||||||||||||||
Securities lending | — | — | |||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
(a) | Includes the effect of netting agreements and net cash collateral paid. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions. |
(b) | Offsetting of repurchase agreements relates to our involvement in the FICC, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system. |
Notes to Consolidated Financial Statements (continued) |
Repurchase agreements and securities lending transactions accounted for as secured borrowings | |||||||||||||||||||||||||
Dec. 31, 2019 | Dec. 31, 2018 | ||||||||||||||||||||||||
Remaining contractual maturity | Total | Remaining contractual maturity | Total | ||||||||||||||||||||||
(in millions) | Overnight and continuous | Up to 30 days | 30 days or more | Overnight and continuous | Up to 30 days | 30 days or more | |||||||||||||||||||
Repurchase agreements: | |||||||||||||||||||||||||
U.S. Treasury | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
U.S. government agencies | |||||||||||||||||||||||||
Agency RMBS | |||||||||||||||||||||||||
Corporate bonds | |||||||||||||||||||||||||
Other debt securities | |||||||||||||||||||||||||
Equity securities | |||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Securities lending: | |||||||||||||||||||||||||
U.S. government agencies | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Other debt securities | |||||||||||||||||||||||||
Equity securities | |||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Total borrowings | $ | $ | $ | $ | $ | $ | $ | $ |
Notes to Consolidated Financial Statements (continued) |
Investment Services business | ||||
Line of business | Primary products and services | Primary types of revenue | ||
Asset Servicing | Custody, accounting, ETF services, middle-office solutions, transfer agency, services for private equity and real estate funds, foreign exchange, securities lending, liquidity/lending services, prime brokerage and data analytics | - Asset servicing fees (includes securities lending revenue) - Foreign exchange revenue - Net interest revenue - Financing-related fees | ||
Pershing | Clearing and custody, investment, wealth and retirement solutions, technology and enterprise data management, trading services and prime brokerage | - Clearing services fees - Net interest revenue | ||
Issuer Services | Corporate Trust (trustee, administration and agency services and reporting and transparency) and Depositary Receipts (issuer services and support for brokers and investors) | - Issuer services fees - Net interest revenue - Foreign exchange revenue | ||
Treasury Services | Integrated cash management solutions including payments, foreign exchange, liquidity management, receivables processing and payables management and trade finance and processing | - Treasury services fees - Net interest revenue | ||
Clearance and Collateral Management | U.S. government clearing, global collateral management and tri-party repo | - Asset servicing fees - Net interest revenue | ||
Investment Management business | ||||
Line of business | Primary products and services | Primary types of revenue | ||
Asset Management | Diversified investment management strategies and distribution of investment products | - Investment management fees - Performance fees - Distribution and servicing fees | ||
Wealth Management | Investment management, custody, wealth and estate planning and private banking services | - Investment management fees - Net interest revenue | ||
Other segment | Description | Primary types of revenue | ||
Includes leasing portfolio, corporate treasury activities, including our securities portfolio, derivatives and other trading activity, corporate and bank-owned life insurance, renewable energy investments and business exits | - Net interest revenue - Investment and other income - Net gain (loss) on securities - Other trading revenue |
Notes to Consolidated Financial Statements (continued) |
• | Revenue amounts reflect fee and other revenue generated by each business. Fee and other revenue transferred between businesses under revenue transfer agreements is included within other revenue in each business. |
• | Revenues and expenses associated with specific client bases are included in those businesses. For example, foreign exchange activity associated with clients using custody products is included in Investment Services. |
• | Net interest revenue is allocated to businesses based on the yields on the assets and liabilities generated by each business. We employ a funds transfer pricing system that matches funds with the specific assets and liabilities of each business based on their interest sensitivity and maturity characteristics. |
• | The provision for credit losses associated with the respective credit portfolios is reflected in each business segment. |
• | Incentives expense related to restricted stock is allocated to the businesses. |
• | Support and other indirect expenses, including services provided between segments that are not |
• | Recurring FDIC expense is allocated to the businesses based on average deposits generated within each business. |
• | Litigation expense is generally recorded in the business in which the charge occurs. |
• | Management of the securities portfolio is a shared service contained in the Other segment. As a result, gains and losses associated with the valuation of the securities portfolio are generally included in the Other segment. |
• | Client deposits serve as the primary funding source for our securities portfolio. We typically allocate all interest revenue to the businesses generating the deposits. Accordingly, accretion related to the portion of the securities portfolio restructured in 2009 has been included in the results of the businesses. |
• | Balance sheet assets and liabilities and their related income or expense are specifically assigned to each business. Businesses with a net liability position have been allocated assets. |
• | Goodwill and intangible assets are reflected within individual businesses. |
For the year ended Dec. 31, 2019 | Investment Services | Investment Management | Other | Consolidated | ||||||||||||
(dollars in millions) | ||||||||||||||||
Total fee and other revenue | $ | $ | (a) | $ | $ | (a) | ||||||||||
Net interest revenue (expense) | ( | ) | ||||||||||||||
Total revenue | (a) | (a) | ||||||||||||||
Provision for credit losses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Noninterest expense | ||||||||||||||||
Income before income taxes | $ | $ | (a) | $ | $ | (a) | ||||||||||
Pre-tax operating margin (b) | % | % | N/M | % | ||||||||||||
Average assets | $ | $ | $ | $ |
(a) | Total fee and other revenue includes net income from consolidated investment management funds of $ |
(b) | Income before income taxes divided by total revenue. |
Notes to Consolidated Financial Statements (continued) |
For the year ended Dec. 31, 2018 | Investment Services | Investment Management | Other | Consolidated | ||||||||||||
(dollars in millions) | ||||||||||||||||
Total fee and other revenue | $ | $ | (a) | $ | $ | (a) | ||||||||||
Net interest revenue (expense) | ( | ) | ||||||||||||||
Total revenue | (a) | (a) | ||||||||||||||
Provision for credit losses | ( | ) | ( | ) | ||||||||||||
Noninterest expense | (b) | |||||||||||||||
Income (loss) before income taxes | $ | $ | (a) | $ | ( | ) | $ | (a)(b) | ||||||||
Pre-tax operating margin (c) | % | % | N/M | % | ||||||||||||
Average assets | $ | $ | $ | $ |
(a) | Total fee and other revenue include a net loss from consolidated investment management funds of $ |
(b) | Noninterest expense and income before income taxes include a loss attributable to noncontrolling interests of $ |
(c) | Income before income taxes divided by total revenue. |
For the year ended Dec. 31, 2017 | Investment Services | Investment Management | Other | Consolidated | ||||||||||||
(dollars in millions) | ||||||||||||||||
Total fee and other revenue | $ | $ | (a) | $ | $ | (a) | ||||||||||
Net interest revenue (expense) | ( | ) | ||||||||||||||
Total revenue (loss) | (a) | ( | ) | (a) | ||||||||||||
Provision for credit losses | ( | ) | ( | ) | ( | ) | ||||||||||
Noninterest expense | (b) | |||||||||||||||
Income (loss) before income taxes | $ | $ | (a) | $ | ( | ) | $ | (a)(b) | ||||||||
Pre-tax operating margin (c) | % | % | N/M | % | ||||||||||||
Average assets | $ | $ | $ | $ |
(a) | Total fee and other revenue includes net income from consolidated investment management funds of $ |
(b) | Noninterest expense and income before income taxes include a loss attributable to noncontrolling interest of $ |
(c) | Income before taxes divided by total revenue. |
• | Income from international operations is determined after internal allocations for interest revenue, taxes, expenses and provision for credit losses. |
• | Expense charges to international operations include those directly incurred in connection with such activities, as well as an allocable share of general support and overhead charges. |
Notes to Consolidated Financial Statements (continued) |
International operations | International | Total International | Total Domestic | |||||||||||||||||||
(in millions) | Europe, the Middle East and Africa | Asia-Pacific region | Other | Total | ||||||||||||||||||
2019 | ||||||||||||||||||||||
Total assets at period end (a) | $ | (b) | $ | $ | $ | $ | $ | |||||||||||||||
Total revenue | (b) | |||||||||||||||||||||
Income before income taxes | ||||||||||||||||||||||
Net income | ||||||||||||||||||||||
2018 | ||||||||||||||||||||||
Total assets at period end (a) | $ | (b) | $ | $ | $ | $ | $ | |||||||||||||||
Total revenue | (b) | |||||||||||||||||||||
Income before income taxes | ||||||||||||||||||||||
Net income | ||||||||||||||||||||||
2017 | ||||||||||||||||||||||
Total assets at period end (a) | $ | (b) | $ | $ | $ | $ | $ | |||||||||||||||
Total revenue | (b) | |||||||||||||||||||||
Income before income taxes | ||||||||||||||||||||||
Net income |
(a) | Total assets include long-lived assets, which are not considered by management to be significant in relation to total assets. Long-lived assets are primarily located in the U.S. |
(b) | Includes assets of approximately $ |
Non-cash investing and financing transactions | Year ended Dec. 31, | |||||||||
(in millions) | 2019 | 2018 | 2017 | |||||||
Transfers from loans to other assets for other real estate owned | $ | $ | $ | |||||||
Change in assets of consolidated investment management funds | ||||||||||
Change in liabilities of consolidated investment management funds | ||||||||||
Change in nonredeemable noncontrolling interests of consolidated investment management funds | ||||||||||
Securities purchased not settled | ||||||||||
Securities sold not settled | ||||||||||
Securities matured not settled | ||||||||||
Available-for-sale securities transferred to trading assets | ||||||||||
Held-to-maturity securities transferred to available-for-sale | ||||||||||
Premises and equipment/capitalized software funded by finance lease obligations | ||||||||||
Premises and equipment/operating lease obligations | (a) | |||||||||
Investment redemptions not settled |
(a) | Includes $ |
Report of Independent Registered Public Accounting Firm |
Report of Independent Registered Public Accounting Firm (continued) |
• | evaluating BNY Mellon’s methodology for compliance with U.S. generally accepted accounting principles, the credit exposure classifications, the model, and the factors and assumptions; and |
• | assessing the credit risk-ratings on a selection of credits. |
Directors, Executive Committee and Other Executive Officers |
Directors | ||||
Linda Z. Cook | Jeffrey A. Goldstein | Elizabeth E. Robinson | ||
Partner and Managing Director of | Chairman, SpringHarbor Holding Company LLC, | Retired Global Treasurer of | ||
EIG Global Energy Partners, an investment firm, | a financial services advisor and investor; Advisor | The Goldman Sachs Group, Inc. | ||
and Chief Executive Officer of Harbour | Emeritus, Hellman & Friedman LLC, a private | Global financial services company | ||
Energy, Ltd., an energy investment vehicle | equity firm; and Senior Advisor, Canapi Ventures, | |||
a venture capital fund | Samuel C. Scott III | |||
Joseph J. Echevarria | Retired Chairman, President and | |||
Chairman | Edmund F. (Ted) Kelly | Chief Executive Officer of | ||
The Bank of New York Mellon Corporation | Retired Chairman of | Ingredion Incorporated (formerly Corn | ||
Retired Chief Executive Officer of | Liberty Mutual Group | Products International, Inc.) | ||
Deloitte LLP | Multi-line insurance company | Global ingredient solutions provider | ||
Global provider of audit, consulting, financial | ||||
advisory, risk management, tax and related | Jennifer B. Morgan | Alfred W. (Al) Zollar | ||
services | Co-Chief Executive Officer | Executive Partner at | ||
SAP SE | Siris Capital Group, LLC | |||
Thomas P. (Todd) Gibbons | Global software company | Private equity firm | ||
Interim Chief Executive Officer | ||||
The Bank of New York Mellon Corporation | ||||
Executive Committee and Other Executive Officers | ||||
Jolen Anderson * | Hani A. Kablawi * | Lester J. Owens * | ||
Global Head of Human Resources | Head of International and Chairman, Europe, | Head of Operations | ||
Middle East and Africa | ||||
Paul Camp | Roman Regelman * | |||
Chief Executive Officer, Treasury Services | Catherine Keating | Head of Asset Servicing and Digital | ||
Chief Executive Officer, Wealth Management | ||||
James T. Crowley | Brian Ruane | |||
Chief Executive Officer, Pershing | Senthil Kumar * | Chief Executive Officer, BNY Mellon | ||
Chief Risk Officer | Government Securities Services Corp. and | |||
Bridget E. Engle * | Clearance & Collateral Management | |||
Chief Information Officer | Kurtis R. Kurimsky * | |||
Corporate Controller | Michael P. Santomassimo * | |||
Thomas P. (Todd) Gibbons * | Chief Financial Officer | |||
Interim Chief Executive Officer | Francis (Frank) La Salla * | |||
Chief Executive Officer, Issuer Services | Akash A. Shah * | |||
Mitchell E. Harris * | Head of Strategy and Global Client Management | |||
Chief Executive Officer, Investment Management | J. Kevin McCarthy * | |||
General Counsel | James S. Wiener | |||
Head of Balance Sheet and Capital Strategy | ||||
* | Designated as an Executive Officer. |
Performance Graph |
Cumulative shareholder returns (a) | Dec. 31, | ||||||||||||||||||||||
(in dollars) | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | |||||||||||||||||
The Bank of New York Mellon Corporation | $ | 100.0 | $ | 103.3 | $ | 120.9 | $ | 139.9 | $ | 124.7 | $ | 136.6 | |||||||||||
S&P 500 Financials Index | 100.0 | 98.5 | 120.9 | 147.8 | 128.5 | 169.8 | |||||||||||||||||
S&P 500 Index | 100.0 | 101.4 | 113.5 | 138.3 | 132.2 | 173.9 | |||||||||||||||||
Peer Group | 100.0 | 99.8 | 120.7 | 146.2 | 122.1 | 162.8 |
(a) | Returns are weighted by market capitalization at the beginning of the measurement period. |
Peer Group | ||
BlackRock, Inc. The Charles Schwab Corporation Franklin Resources, Inc. JPMorgan Chase & Co. | Morgan Stanley Northern Trust Corporation The PNC Financial Services Group, Inc. Prudential Financial, Inc. | State Street Corporation U.S. Bancorp Wells Fargo & Company |
• | BNY Capital Funding LLC – State of Organization: Delaware |
• | BNY Capital Markets Holdings, Inc. – State of Incorporation: New York |
• | BNY Capital Resources Corporation – State of Incorporation: New York |
• | BNY International Financing Corporation – Incorporation: United States |
• | BNY Lease Equities (Cap Funding) LLC – State of Incorporation: Delaware |
• | BNY Mellon Asset Management Japan Limited – Incorporation: Japan |
• | BNY Mellon Capital Markets, LLC – State of Organization: Delaware |
• | BNY Mellon Fund Management (Luxembourg) SA – Incorporation: Luxembourg |
• | BNY Mellon Fund Managers Limited – Incorporation: England |
• | BNY Mellon IHC, LLC – State of Organization: Delaware |
• | BNY Mellon International Asset Management Group Limited – Incorporation: England |
• | BNY Mellon International Asset Management (Holdings) Limited – Incorporation: England and Wales |
• | BNY Mellon International Asset Management (Holdings) No. 1 Limited – Incorporation: England and Wales |
• | BNY Mellon Investment Adviser, Inc. (formerly The Dreyfus Corporation) – State of Incorporation: New York |
• | BNY Mellon Investment Management (APAC) Holdings Limited – Incorporation: England |
• | BNY Mellon Investment Management APAC LP – Incorporation: England and Wales |
• | BNY Mellon Investment Management Cayman Limited – Incorporation: Cayman Islands |
• | BNY Mellon Investment Management EMEA Limited – Incorporation: England |
• | BNY Mellon Investment Management Europe Holdings Limited – Incorporation: England |
• | BNY Mellon Investment Management (Europe) Limited – Incorporation: England |
• | BNY Mellon Investment Management (Jersey) Limited – Incorporation: Jersey |
• | BNY Mellon, National Association – Incorporation: United States |
• | BNY Mellon US Services Holdings LLC – State of Organization: Delaware |
• | BNY Real Estate Holding LLC – State of Incorporation: Delaware |
• | Colson Services Corporation – State of Incorporation: Delaware |
• | Insight Investment Management (Global) Limited – Incorporation: England |
• | Insight Investment Management (Europe) Limited – Incorporation: Ireland |
• | Insight Investment Management Limited – Incorporation: England |
• | MBC Investments Corporation – State of Incorporation: Delaware |
• | MCDI Holdings LLC – State of Organization: Delaware |
• | Mellon Investments Corporation – State of Incorporation: Delaware |
• | PAS Holdings LLC – State of Organization: Delaware |
• | Pershing Advisor Solutions LLC – State of Organization: Delaware |
• | Pershing Group LLC – State of Organization: Delaware |
• | Pershing Limited – Incorporation: England |
• | Pershing LLC – State of Organization: Delaware |
• | Pershing Securities Limited – Incorporation: England |
• | The Bank of New York Mellon – State of Organization: New York |
• | The Bank of New York Mellon (International) Limited – Incorporation: England |
• | The Bank of New York Mellon SA/NV – Incorporation: Belgium |
• | The Bank of New York Mellon Trust Company, National Association – Incorporation: United States |
• | Walter Scott & Partners Limited – Incorporation: Scotland |
Form | Registration Statement | Filer | ||
S-8 | 333-233308 | The Bank of New York Mellon Corporation | ||
S-8 | 333-198152 | The Bank of New York Mellon Corporation | ||
S-8 | 333-174342 | The Bank of New York Mellon Corporation | ||
S-8 | 333-171258 | The Bank of New York Mellon Corporation | ||
S-8 | 333-150324 | The Bank of New York Mellon Corporation | ||
S-8 | 333-150323 | The Bank of New York Mellon Corporation | ||
S-8 | 333-149473 | The Bank of New York Mellon Corporation | ||
S-8 | 333-144216 | The Bank of New York Mellon Corporation | ||
S-3 | 333-228787 | The Bank of New York Mellon Corporation |
/s/ Linda Z. Cook | /s/ Jennifer B. Morgan | ||
Linda Z. Cook, Director | Jennifer B. Morgan, Director | ||
/s/ Joseph J. Echevarria | /s/ Elizabeth E. Robinson | ||
Joseph J. Echevarria, Director | Elizabeth E. Robinson, Director | ||
/s/ Jeffrey A. Goldstein | /s/ Samuel C. Scott III | ||
Jeffrey A. Goldstein, Director | Samuel C. Scott III, Director | ||
/s/ Edmund F. Kelly | /s/ Alfred W. Zollar | ||
Edmund F. Kelly, Director | Alfred W. Zollar, Director | ||
1. | I have reviewed this annual report on Form 10-K of The Bank of New York Mellon Corporation (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Thomas P. Gibbons | |
Name: Thomas P. Gibbons | |
Title: Interim Chief Executive Officer |
1. | I have reviewed this annual report on Form 10-K of The Bank of New York Mellon Corporation (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Michael P. Santomassimo | |
Name: Michael P. Santomassimo | |
Title: Chief Financial Officer |
Dated: February 27, 2020 | /s/ Thomas P. Gibbons | |||
Name: | Thomas P. Gibbons | |||
Title: | Interim Chief Executive Officer |
Dated: February 27, 2020 | /s/ Michael P. Santomassimo | |||
Name: | Michael P. Santomassimo | |||
Title: | Chief Financial Officer |