UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ ü ] Quarterly Report Pursuant To Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 2012
or
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission File No. 000-52710
THE BANK OF NEW YORK MELLON CORPORATION
(Exact name of registrant as specified in its charter)
Delaware | 13-2614959 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
One Wall Street
New York, New York 10286
(Address of principal executive offices)(Zip Code)
Registrants telephone number, including area code (212) 495-1784
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ü No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ü No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer | [ü ] | Accelerated filer [ ] | ||||||
Non-accelerated filer | [ ] (Do not check if a smaller reporting company) | Smaller reporting company [ ] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ü
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.
Class | Outstanding as of March 31, 2012 | |
Common Stock, $0.01 par value | 1,192,716,454 |
THE BANK OF NEW YORK MELLON CORPORATION
First Quarter 2012 Form 10-Q
Table of Contents
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35 | ||||
39 | ||||
43 | ||||
43 | ||||
44 | ||||
45 | ||||
Supplemental information Explanation of Non-GAAP financial measures |
45 | |||
49 | ||||
57 | ||||
57 | ||||
59 | ||||
61 | ||||
62 | ||||
63 | ||||
64 | ||||
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84 | ||||
87 | ||||
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98 | ||||
102 | ||||
107 | ||||
Note 20 Supplemental information to the Consolidated Statement of Cash Flows |
109 | |||
110 | ||||
111 | ||||
113 | ||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
113 | |||
113 | ||||
114 | ||||
115 |
The Bank of New York Mellon Corporation
Consolidated Financial Highlights (unaudited)
Quarter ended |
||||||||||||
(dollar amounts in millions, except per share amounts and unless otherwise noted) |
March 31, 2012 |
Dec. 31, 2011 |
March 31, 2011 |
|||||||||
Results applicable to common shareholders of The Bank of New York Mellon Corporation: |
||||||||||||
Net income |
$ | 619 | $ | 505 | $ | 625 | ||||||
Basic EPS |
0.52 | 0.42 | 0.50 | |||||||||
Diluted EPS |
0.52 | 0.42 | 0.50 | |||||||||
Fee and other revenue |
$ | 2,838 | $ | 2,765 | $ | 2,838 | ||||||
Income (loss) of consolidated investment management funds |
43 | (5 | ) | 110 | ||||||||
Net interest revenue |
765 | 780 | 698 | |||||||||
|
|
|
|
|
|
|||||||
Total revenue |
$ | 3,646 | $ | 3,540 | $ | 3,646 | ||||||
Return on common equity (annualized) (a) |
7.4 | % | 5.9 | % | 7.7 | % | ||||||
Non-GAAP adjusted (a) |
8.2 | 7.7 | 8.6 | |||||||||
Return on tangible common equity (annualized) Non-GAAP (a) |
21.0 | % | 17.7 | % | 24.3 | % | ||||||
Non-GAAP adjusted (a) |
21.2 | 20.4 | 24.4 | |||||||||
Return on average assets (annualized) |
0.83 | % | 0.63 | % | 0.98 | % | ||||||
Fee revenue as a percentage of total revenue excluding net securities gains (losses) |
78 | % | 78 | % | 78 | % | ||||||
Annualized fee revenue per employee (based on average headcount) (in thousands) |
$ | 233 | $ | 223 | $ | 238 | ||||||
Percentage of non-U.S. total revenue (b) |
37 | % | 34 | % | 37 | % | ||||||
Pre-tax operating margin (a) |
24 | % | 19 | % | 26 | % | ||||||
Non-GAAP adjusted (a) |
27 | 27 | 28 | |||||||||
Net interest margin (FTE) |
1.32 | % | 1.27 | % | 1.49 | % | ||||||
Market value of assets under management at period end (in billions) |
$ | 1,308 | $ | 1,260 | $ | 1,229 | ||||||
Market value of assets under custody and administration at period end (in trillions) |
$ | 26.6 | $ | 25.8 | $ | 25.5 | ||||||
Market value of cross-border assets at period end (in trillions) |
$ | 10.4 | $ | 9.7 | $ | 9.9 | ||||||
Market value of securities on loan at period end (in billions) (c) |
$ | 265 | $ | 269 | $ | 278 | ||||||
Average common shares and equivalents outstanding (in thousands): |
||||||||||||
Basic |
1,193,931 | 1,204,994 | 1,234,076 | |||||||||
Diluted |
1,195,558 | 1,205,586 | 1,238,284 | |||||||||
Capital ratios: |
||||||||||||
Estimated Basel III Tier 1 common equity ratio Non-GAAP (a)(d) |
7.6 | % | 7.1 | % | 6.1 | % | ||||||
Basel I Tier 1 common equity to risk-weighted assets ratio Non-GAAP (a) |
13.9 | % | 13.4 | % | 12.4 | % | ||||||
Basel I Tier 1 capital ratio |
15.6 | % | 15.0 | % | 14.0 | % | ||||||
Basel I Total (Tier 1 plus Tier 2) capital ratio |
17.5 | % | 17.0 | % | 16.8 | % | ||||||
Basel I leverage capital ratio |
5.6 | % | 5.2 | % | 6.1 | % | ||||||
BNY Mellons shareholders equity to total assets ratio (a) |
11.3 | % | 10.3 | % | 12.5 | % | ||||||
Tangible common shareholders equity to tangible assets of operations ratio Non-GAAP (a) |
6.5 | % | 6.4 | % | 5.9 | % | ||||||
Selected average balances: |
||||||||||||
Interest-earning assets |
$ | 236,331 | $ | 247,724 | $ | 190,179 | ||||||
Assets of operations |
$ | 289,900 | $ | 304,235 | $ | 243,356 | ||||||
Total assets |
$ | 301,344 | $ | 316,074 | $ | 257,698 | ||||||
Interest-bearing deposits |
$ | 125,438 | $ | 130,343 | $ | 116,615 | ||||||
Noninterest-bearing deposits |
$ | 66,613 | $ | 76,309 | $ | 38,616 | ||||||
Total The Bank of New York Mellon Corporation shareholders equity |
$ | 33,718 | $ | 33,761 | $ | 32,827 |
2 BNY Mellon
The Bank of New York Mellon Corporation
Consolidated Financial Highlights (unaudited) continued
Quarter ended |
||||||||||||
(dollar amounts in millions, except per share amounts and unless otherwise noted) |
March 31, 2012 |
Dec. 31, 2011 |
March 31, 2011 |
|||||||||
Other information at period end: |
||||||||||||
Cash dividends per common share |
$ | 0.13 | $ | 0.13 | $ | 0.09 | ||||||
Common dividend payout ratio |
25 | % | 31 | % | 18 | % | ||||||
Dividend yield (annualized) |
2.2 | % | 2.6 | % | 1.2 | % | ||||||
Closing common stock price per common share |
$ | 24.13 | $ | 19.91 | $ | 29.87 | ||||||
Market capitalization |
$ | 28,780 | $ | 24,085 | $ | 37,090 | ||||||
Book value per common share GAAP (a) |
$ | 28.51 | $ | 27.62 | $ | 26.78 | ||||||
Tangible book value per common share Non-GAAP (a) |
$ | 11.17 | $ | 10.57 | $ | 9.67 | ||||||
Full-time employees |
47,800 | 48,700 | 48,400 | |||||||||
Common shares outstanding (in thousands) |
1,192,716 | 1,209,675 | 1,241,724 |
(a) | See Supplemental information Explanation of Non-GAAP financial measures beginning on page 45 for a calculation of these ratios. |
(b) | Includes fee revenue, net interest revenue and income of consolidated investment management funds, net of noncontrolling interests. |
(c) | Represents the securities on loan managed by the Investment Services business. |
(d) | Our estimated Basel III Tier 1 common equity ratio Non-GAAP reflects our current interpretation of the Basel III rules. Our estimated Basel III Tier 1 common equity ratio could change in the future as the U.S. regulatory agencies implement Basel III or if our businesses change. |
BNY Mellon 3 |
Part I Financial Information
Items 2. and 3. Managements Discussion and Analysis of Financial Condition and Results of Operations; Quantitative and Qualitative Disclosures about Market Risk
4 BNY Mellon
BNY Mellon 5
Fee and other revenue (a)
|
1Q12 vs. | |||||||||||||||||||
(dollars in millions, unless otherwise noted) | 1Q12 | 4Q11 | 1Q11 | 1Q11 | 4Q11 | |||||||||||||||
Investment services fees: |
||||||||||||||||||||
Asset servicing (b) |
$ | 943 | $ | 885 | $ | 917 | 3 | % | 7 | % | ||||||||||
Issuer services |
251 | 287 | 351 | (28 | ) | (13 | ) | |||||||||||||
Memo: Issuer services excluding Shareowner Services |
251 | 245 | 292 | (14 | ) | 2 | ||||||||||||||
Clearing services |
303 | 278 | 292 | 4 | 9 | |||||||||||||||
Treasury services |
136 | 134 | 134 | 1 | 1 | |||||||||||||||
Total investment services fees |
1,633 | 1,584 | 1,694 | (4 | ) | 3 | ||||||||||||||
Investment management and performance fees |
745 | 730 | 764 | (2 | ) | 2 | ||||||||||||||
Foreign exchange and other trading revenue |
191 | 228 | 198 | (4 | ) | (16 | ) | |||||||||||||
Distribution and servicing |
46 | 42 | 53 | (13 | ) | 10 | ||||||||||||||
Financing-related fees |
44 | 38 | 43 | 2 | 16 | |||||||||||||||
Investment income |
102 | 69 | 67 | 52 | 48 | |||||||||||||||
Other |
37 | 77 | 14 | 164 | (52 | ) | ||||||||||||||
Total fee revenue |
2,798 | 2,768 | 2,833 | (1 | ) | 1 | ||||||||||||||
Net securities gains (losses) |
40 | (3 | ) | 5 | N/M | N/M | ||||||||||||||
Total fee and other revenueGAAP |
2,838 | 2,765 | 2,838 | - | 3 | |||||||||||||||
Less: Fee and other revenue related to Shareowner Services (c) |
- | 142 | 62 | |||||||||||||||||
Total fee and other revenue excluding Shareowner Services Non-GAAP |
$ | 2,838 | $ | 2,623 | $ | 2,776 | 2 | % | 8 | % | ||||||||||
Fee revenue as a percent of total revenue excluding net securities gains (losses) |
78 | % | 78 | % | 78 | % | ||||||||||||||
Market value of AUM at period end (in billions) |
$ | 1,308 | $ | 1,260 | $ | 1,229 | 6 | % | 4 | % | ||||||||||
Market value of AUC and administration at period end (in trillions) |
$ | 26.6 | $ | 25.8 | $ | 25.5 | 4 | % | 3 | % |
(a) | See Supplemental information Explanation of Non-GAAP financial measures beginning on page 45 for fee and other revenue excluding Shareowner Services Non-GAAP. |
(b) | Asset servicing fees include securities lending revenue of $49 million in the first quarter of 2012, $43 million in the fourth quarter of 2011 and $37 million in the first quarter of 2011. |
(c) | The Shareowner Services business was sold on Dec. 31, 2011. Results in the fourth quarter of 2011 include a $98 million pre-tax gain on the sale. |
N/M | Not meaningful. |
6 BNY Mellon
BNY Mellon 7
8 BNY Mellon
Net interest revenue | ||||||||||||||||||||
1Q12 vs. | ||||||||||||||||||||
(dollars in millions) | 1Q12 | 4Q11 | 1Q11 | 1Q11 | 4Q11 | |||||||||||||||
Net interest revenue (non-FTE) |
$ | 765 | $ | 780 | $ | 698 | 10 | % | (2 | )% | ||||||||||
Tax equivalent adjustment |
11 | 10 | 4 | N/M | N/M | |||||||||||||||
Net interest revenue (FTE) Non-GAAP |
$ | 776 | $ | 790 | $ | 702 | 11 | % | (2 | )% | ||||||||||
Average interest-earning assets |
$ | 236,331 | $ | 247,724 | $ | 190,179 | 24 | % | (5 | )% | ||||||||||
Net interest margin (FTE) |
1.32 | % | 1.27 | % | 1.49 | % | (17 | ) bps | 5 bps |
bps - basis points.
BNY Mellon 9
Average balances and interest rates
Average balances and interest rates | Quarter ended | |||||||||||||||||||||||
March 31, 2012 | Dec. 31, 2011 | March 31, 2011 | ||||||||||||||||||||||
(dollar amounts in millions) | Average balance |
Average rates |
Average balance |
Average rates |
Average balance |
Average rates |
||||||||||||||||||
Assets |
||||||||||||||||||||||||
Interest-earning assets: |
||||||||||||||||||||||||
Interest-bearing deposits with banks |
||||||||||||||||||||||||
(primarily foreign banks) |
$ | 35,095 | 1.30 | % | $ | 43,628 | 1.08 | % | $ | 57,637 | 0.90 | % | ||||||||||||
Interest-bearing deposits held at the Federal Reserve and other central banks |
63,526 | 0.27 | 72,118 | 0.32 | 20,367 | 0.32 | ||||||||||||||||||
Federal funds sold and securities purchased under resale agreements |
5,174 | 0.73 | 5,271 | 0.64 | 4,514 | 0.50 | ||||||||||||||||||
Margin loans |
12,901 | 1.29 | 11,886 | 1.26 | 7,484 | 1.48 | ||||||||||||||||||
Non-margin loans: |
||||||||||||||||||||||||
Domestic offices |
20,128 | 2.46 | 21,794 | 2.37 | 21,856 | 2.57 | ||||||||||||||||||
Foreign offices |
10,180 | 1.77 | 10,556 | 1.54 | 9,226 | 1.44 | ||||||||||||||||||
|
|
|
|
|
|
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Total non-margin loans |
30,308 | 2.23 | 32,350 | 2.10 | 31,082 | 2.22 | ||||||||||||||||||
Securities: |
||||||||||||||||||||||||
U.S. government obligations |
17,268 | 1.56 | 18,693 | 1.45 | 12,849 | 1.61 | ||||||||||||||||||
U.S. government agency obligations |
32,347 | 2.44 | 25,006 | 2.58 | 20,221 | 2.98 | ||||||||||||||||||
State and political subdivisions tax exempt |
3,354 | 2.97 | 2,452 | 3.47 | 557 | 6.37 | ||||||||||||||||||
Other securities |
33,839 | 2.84 | 33,830 | 3.19 | 31,770 | 3.43 | ||||||||||||||||||
Trading securities |
2,519 | 2.78 | 2,490 | 2.94 | 3,698 | 2.44 | ||||||||||||||||||
|
|
|
|
|
|
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Total securities |
89,327 | 2.44 | 82,471 | 2.60 | 69,095 | 2.96 | ||||||||||||||||||
|
|
|
|
|
|
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Total interest-earning assets |
$ | 236,331 | 1.56 | % | $ | 247,724 | 1.50 | % | $ | 190,179 | 1.80 | % | ||||||||||||
Allowance for loan losses |
(392 | ) | (384 | ) | (494 | ) | ||||||||||||||||||
Cash and due from banks |
4,271 | 4,695 | 4,094 | |||||||||||||||||||||
Other assets |
49,690 | 52,200 | 49,577 | |||||||||||||||||||||
Assets of consolidated investment management funds |
11,444 | 11,839 | 14,342 | |||||||||||||||||||||
Total assets |
$ | 301,344 | $ | 316,074 | $ | 257,698 | ||||||||||||||||||
Liabilities |
||||||||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||||||
Interest-bearing deposits: |
||||||||||||||||||||||||
Money market rate accounts |
$ | 4,299 | 0.27 | % | $ | 4,666 | 0.27 | % | $ | 5,417 | 0.38 | % | ||||||||||||
Savings |
787 | 0.30 | 1,163 | 0.19 | 1,600 | 0.16 | ||||||||||||||||||
Certificates of deposit of $100,000 & over |
30 | 0.39 | 396 | 0.05 | 296 | 0.06 | ||||||||||||||||||
Other time deposits |
33,588 | 0.08 | 35,624 | 0.07 | 31,823 | 0.09 | ||||||||||||||||||
Demand deposits |
64 | 0.01 | | | | | ||||||||||||||||||
Foreign offices |
86,670 | 0.15 | 88,494 | 0.22 | 77,379 | 0.19 | ||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
Total interest-bearing deposits |
125,438 | 0.14 | 130,343 | 0.18 | 116,515 | 0.17 | ||||||||||||||||||
Federal funds purchased and securities sold under repurchase agreements |
8,584 | (0.02 | ) | 8,008 | (0.07 | ) | 5,172 | 0.07 | ||||||||||||||||
Trading liabilities |
1,153 | 1.55 | 1,225 | 1.62 | 2,764 | 1.86 | ||||||||||||||||||
Other borrowed funds |
2,579 | 0.79 | 2,159 | 0.93 | 1,821 | 1.61 | ||||||||||||||||||
Payables to customers and broker-dealers |
7,555 | 0.11 | 8,023 | 0.08 | 6,701 | 0.10 | ||||||||||||||||||
Long-term debt |
20,538 | 1.79 | 19,546 | 1.55 | 17,014 | 1.87 | ||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
Total interest-bearing liabilities |
$ | 165,847 | 0.34 | % | $ | 169,304 | 0.34 | % | $ | 149,987 | 0.40 | % | ||||||||||||
Total noninterest-bearing deposits |
66,613 | 76,309 | 38,616 | |||||||||||||||||||||
Other liabilities |
24,248 | 25,432 | 22,350 | |||||||||||||||||||||
Liabilities and obligations of consolidated investment management funds |
10,159 | 10,516 | 13,114 | |||||||||||||||||||||
Total liabilities |
266,867 | 281,561 | 224,067 | |||||||||||||||||||||
Temporary equity |
||||||||||||||||||||||||
Redeemable noncontrolling interests |
72 | 55 | 76 | |||||||||||||||||||||
Permanent equity |
||||||||||||||||||||||||
Total BNY Mellon shareholders equity |
33,718 | 33,761 | 32,827 | |||||||||||||||||||||
Noncontrolling interests |
| 1 | 8 | |||||||||||||||||||||
Noncontrolling interests of consolidated investment management funds |
687 | 696 | 720 | |||||||||||||||||||||
Total permanent equity |
34,405 | 34,458 | 33,555 | |||||||||||||||||||||
Total liabilities, temporary equity and permanent equity |
$ | 301,344 | $ | 316,074 | $ | 257,698 | ||||||||||||||||||
Net interest marginTaxable equivalent basis |
1.32 | % | 1.27 | % | 1.49 | % |
Note: | Interest and average rates were calculated on a taxable equivalent basis, at tax rates approximating 35%, using dollar amounts in thousands and actual number of days in the year. |
10 BNY Mellon
Noninterest expense | 1Q12 vs. | |||||||||||||||||||
(dollars in millions) |
1Q12 | 4Q11 | 1Q11 | 1Q11 | 4Q11 | |||||||||||||||
Staff: |
||||||||||||||||||||
Compensation |
$ | 861 | $ | 885 | $ | 876 | (2 | )% | (3 | )% | ||||||||||
Incentives |
352 | 281 | 325 | 8 | 25 | |||||||||||||||
Employee benefits |
240 | 216 | 223 | 8 | 11 | |||||||||||||||
Total staff |
1,453 | 1,382 | 1,424 | 2 | 5 | |||||||||||||||
Professional, legal and other purchased services |
299 | 322 | 283 | 6 | (7 | ) | ||||||||||||||
Net occupancy |
147 | 159 | 153 | (4 | ) | (8 | ) | |||||||||||||
Software |
119 | 129 | 122 | (2 | ) | (8 | ) | |||||||||||||
Distribution and servicing |
101 | 96 | 111 | (9 | ) | 5 | ||||||||||||||
Furniture and equipment |
86 | 84 | 84 | 2 | 2 | |||||||||||||||
Sub-custodian |
70 | 62 | 68 | 3 | 13 | |||||||||||||||
Business development |
56 | 75 | 56 | | (25 | ) | ||||||||||||||
Other |
320 | 274 | 277 | 16 | 17 | |||||||||||||||
Subtotal |
2,651 | 2,583 | 2,578 | 3 | 3 | |||||||||||||||
Amortization of intangible assets |
96 | 106 | 108 | (11 | ) | (9 | ) | |||||||||||||
Restructuring charges |
(9 | ) | 107 | (6 | ) | N/M | N/M | |||||||||||||
M&I expenses |
18 | 32 | 17 | 6 | (44 | ) | ||||||||||||||
Total noninterest expense GAAP |
$ | 2,756 | $ | 2,828 | $ | 2,697 | 2 | % | (3 | )% | ||||||||||
Total staff expense as a percent of total revenue |
40 | % | 39 | % | 39 | % | ||||||||||||||
Full-time employees at period end |
47,800 | 48,700 | 48,400 | (1 | )% | (2 | )% | |||||||||||||
N/MNot meaningful.
|
||||||||||||||||||||
Noninterest expense excluding Shareowner Services | 1Q12 vs. | |||||||||||||||||||
(dollars in millions) |
1Q12 | 4Q11 | 1Q11 | 1Q11 | 4Q11 | |||||||||||||||
Staff: |
||||||||||||||||||||
Compensation |
$ | 861 | $ | 871 | $ | 862 | | % | (1 | )% | ||||||||||
Incentives |
352 | 278 | 323 | 9 | 27 | |||||||||||||||
Employee benefits |
240 | 213 | 219 | 10 | 13 | |||||||||||||||
Total staff |
1,453 | 1,362 | 1,404 | 3 | 7 | |||||||||||||||
Professional, legal and other purchased services |
299 | 310 | 272 | 10 | (4 | ) | ||||||||||||||
Net occupancy |
147 | 156 | 150 | (2 | ) | (6 | ) | |||||||||||||
Software |
119 | 125 | 119 | | (5 | ) | ||||||||||||||
Distribution and servicing |
101 | 96 | 111 | (9 | ) | 5 | ||||||||||||||
Furniture and equipment |
86 | 83 | 83 | 4 | 4 | |||||||||||||||
Sub-custodian |
70 | 62 | 68 | 3 | 13 | |||||||||||||||
Business development |
56 | 74 | 56 | | (24 | ) | ||||||||||||||
Other |
320 | 269 | 269 | 19 | 19 | |||||||||||||||
Subtotal |
2,651 | 2,537 | 2,532 | 5 | 4 | |||||||||||||||
Amortization of intangible assets |
96 | 103 | 105 | (9 | ) | (7 | ) | |||||||||||||
Restructuring charges |
(9 | ) | 107 | (6 | ) | N/M | N/M | |||||||||||||
M&I expenses |
18 | 32 | 17 | 6 | (44 | ) | ||||||||||||||
Total noninterest expense Non-GAAP |
$ | 2,756 | $ | 2,779 | $ | 2,648 | 4 | % | (1 | )% | ||||||||||
Total staff expense as a percent of total revenue |
40 | % | 40 | % | 39 | % | ||||||||||||||
Full-time employees at period end |
47,800 | 47,800 | 47,500 | 1 | % | | % |
N/MNot meaningful.
BNY Mellon 11
12 BNY Mellon
The following table presents the value of certain market indices at period end and on an average basis.
Market indices | 1Q12 vs. | |||||||||||||||||||||||||||
1Q11 | 2Q11 | 3Q11 | 4Q11 | 1Q12 | 1Q11 | 4Q11 | ||||||||||||||||||||||
S&P 500 Index (a) |
1326 | 1321 | 1131 | 1258 | 1408 | 6 | % | 12 | % | |||||||||||||||||||
S&P 500 Index daily average |
1302 | 1318 | 1227 | 1224 | 1347 | 3 | 10 | |||||||||||||||||||||
FTSE 100 Index (a) |
5909 | 5946 | 5128 | 5572 | 5768 | (2 | ) | 4 | ||||||||||||||||||||
FTSE 100 Index daily average |
5945 | 5906 | 5470 | 5424 | 5818 | (2 | ) | 7 | ||||||||||||||||||||
MSCI World Index (a) |
1335 | 1331 | 1104 | 1183 | 1312 | (2 | ) | 11 | ||||||||||||||||||||
MSCI World Index daily average |
1320 | 1332 | 1217 | 1169 | 1268 | (4 | ) | 8 | ||||||||||||||||||||
Barclays Capital Aggregate BondSM Index (a) |
328 | 341 | 346 | 347 | 351 | 7 | 1 | |||||||||||||||||||||
NYSE and NASDAQ share volume (in billions) |
225 | 213 | 250 | 206 | 186 | (17 | ) | (10 | ) | |||||||||||||||||||
JPMorgan G7 Volatility Index daily average (b) |
11.07 | 11.21 | 12.60 | 12.95 | 10.39 | (6 | ) | (20 | ) |
(a) | Period end. |
(b) | The JPMorgan G7 Volatility Index is based on the implied volatility in 3-month currency options. |
The following consolidating schedules show the contribution of our businesses to our overall profitability.
For the quarter ended March 31, 2012
|
Investment Management |
Investment Services |
Other |
Consolidated |
||||||||||||
(dollar amounts in millions) |
||||||||||||||||
Fee and other revenue |
$ | 852 | (a) | $ | 1,854 | $ | 164 | $ | 2,870 | (a) | ||||||
Net interest revenue |
55 | 644 | 66 | 765 | ||||||||||||
Total revenue |
907 | 2,498 | 230 | 3,635 | ||||||||||||
Provision for credit losses |
- | 16 | (11 | ) | 5 | |||||||||||
Noninterest expense |
667 | 1,829 | 260 | 2,756 | ||||||||||||
Income (loss) before taxes |
$ | 240 | (a) | $ | 653 | $ | (19 | ) | $ | 874 | (a) | |||||
Pre-tax operating margin (b) |
26 | % | 26 | % | N/M | 24 | % | |||||||||
Average assets |
$ | 36,475 | $ | 215,899 | $ | 48,970 | $ | 301,344 | ||||||||
Excluding amortization of intangible assets: |
||||||||||||||||
Noninterest expense |
$ | 619 | $ | 1,781 | $ | 260 | $ | 2,660 | ||||||||
Income (loss) before taxes |
288 | (a) | 701 | (19 | ) | 970 | (a) | |||||||||
Pre-tax operating margin (b) |
32 | % | 28 | % | N/M | 27 | % |
(a) | Total fee and other revenue includes income from consolidated investment management funds of $43 million, net of noncontrolling interests of $11 million, for a net impact of $32 million. Income before taxes includes noncontrolling interests of $11 million. |
(b) | Income before taxes divided by total revenue. |
N/M | Not meaningful. |
BNY Mellon 13
For the quarter ended Dec. 31, 2011
|
||||||||||||||||
(dollar amounts in millions) |
Investment Management |
Investment Services |
Other | Consolidated | ||||||||||||
Fee and other revenue |
$ | 767 | (a) | $ | 1,781 | $ | 240 | $ | 2,788 | (a) | ||||||
Net interest revenue |
55 | 634 | 91 | 780 | ||||||||||||
Total revenue |
822 | 2,415 | 331 | 3,568 | ||||||||||||
Provision for credit losses |
- | - | 23 | 23 | ||||||||||||
Noninterest expense |
685 | 1,756 | 387 | 2,828 | ||||||||||||
Income (loss) before taxes |
$ | 137 | (a) | $ | 659 | $ | (79 | ) | $ | 717 | (a) | |||||
Pre-tax operating margin (b) |
17 | % | 27 | % | N/M | 20 | % | |||||||||
Average assets |
$ | 37,163 | $ | 228,668 | $ | 50,243 | $ | 316,074 | ||||||||
Excluding amortization of intangible assets: |
||||||||||||||||
Noninterest expense |
$ | 632 | $ | 1,706 | $ | 384 | $ | 2,722 | ||||||||
Income (loss) before taxes |
190 | (a) | 709 | (76 | ) | 823 | (a) | |||||||||
Pre-tax operating margin (b) |
23 | % | 29 | % | N/M | 23 | % |
(a) | Total fee and other revenue includes a loss from consolidated investment management funds of $5 million, net of loss attributable to noncontrolling interests of $28 million, for a net impact of $23 million. Income before taxes includes a loss attributable to noncontrolling interests of $28 million. |
(b) | Income before taxes divided by total revenue. |
N/M | Not meaningful. |
For the quarter ended Sept. 30, 2011
|
||||||||||||||||
(dollar amounts in millions) |
Investment Management |
Investment Services |
Other | Consolidated | ||||||||||||
Fee and other revenue |
$ | 757 | (a) | $ | 2,028 | $ | 121 | $ | 2,906 | (a) | ||||||
Net interest revenue |
51 | 661 | 63 | 775 | ||||||||||||
Total revenue |
808 | 2,689 | 184 | 3,681 | ||||||||||||
Provision for credit losses |
- | - | (22 | ) | (22 | ) | ||||||||||
Noninterest expense |
675 | 1,900 | 196 | 2,771 | ||||||||||||
Income (loss) before taxes |
$ | 133 | (a) | $ | 789 | $ | 10 | $ | 932 | (a) | ||||||
Pre-tax operating margin (b) |
16 | % | 29 | % | N/M | 25 | % | |||||||||
Average assets |
$ | 36,949 | $ | 220,930 | $ | 53,584 | $ | 311,463 | ||||||||
Excluding amortization of intangible assets: |
||||||||||||||||
Noninterest expense |
$ | 622 | $ | 1,851 | $ | 192 | $ | 2,665 | ||||||||
Income (loss) before taxes |
186 | (a) | 838 | 14 | 1,038 | (a) | ||||||||||
Pre-tax operating margin (b) |
23 | % | 31 | % | N/M | 28 | % |
(a) | Total fee and other revenue includes income from consolidated investment management funds of $32 million, net of noncontrolling interests of $13 million, for a net impact of $19 million. Income before taxes includes noncontrolling interests of $13 million. |
(b) | Income before taxes divided by total revenue. |
N/M | Not meaningful. |
14 BNY Mellon
For the quarter ended June 30, 2011
(dollar amounts in millions) |
Investment |
Investment |
Other | Consolidated | ||||||||||||
Fee and other revenue |
$ | 862 | (a) | $ | 1,967 | $ | 269 | $ | 3,098 | (a) | ||||||
Net interest revenue |
48 | 650 | 33 | 731 | ||||||||||||
Total revenue |
910 | 2,617 | 302 | 3,829 | ||||||||||||
Provision for credit losses |
1 | - | (1 | ) | - | |||||||||||
Noninterest expense |
694 | 1,825 | 297 | 2,816 | ||||||||||||
Income (loss) before taxes |
$ | 215 | (a) | $ | 792 | $ | 6 | $ | 1,013 | (a) | ||||||
Pre-tax operating margin (b) |
24 | % | 30 | % | N/M | 26 | % | |||||||||
Average assets |
$ | 36,741 | $ | 191,756 | $ | 49,983 | $ | 278,480 | ||||||||
Excluding amortization of intangible assets: |
||||||||||||||||
Noninterest expense |
$ | 641 | $ | 1,775 | $ | 292 | $ | 2,708 | ||||||||
Income (loss) before taxes |
268 | (a) | 842 | 11 | 1,121 | (a) | ||||||||||
Pre-tax operating margin (b) |
29 | % | 32 | % | N/M | 29 | % |
(a) | Total fee and other revenue includes income from consolidated investment management funds of $63 million, net of noncontrolling interests of $21 million, for a net impact of $42 million. Income before taxes includes noncontrolling interests of $21 million. |
(b) | Income before taxes divided by total revenue. |
N/M | Not meaningful. |
For the quarter ended March 31, 2011 | Investment | Investment | ||||||||||||||
(dollar amounts in millions) | Management | Services | Other | Consolidated | ||||||||||||
Fee and other revenue |
$ | 868 | (a) | $ | 1,889 | $ | 147 | $ | 2,904 | (a) | ||||||
Net interest revenue |
52 | 621 | 25 | 698 | ||||||||||||
Total revenue |
920 | 2,510 | 172 | 3,602 | ||||||||||||
Noninterest expense |
682 | 1,752 | 263 | 2,697 | ||||||||||||
Income (loss) before taxes |
$ | 238 | (a) | $ | 758 | $ | (91 | ) | $ | 905 | (a) | |||||
Pre-tax operating margin (b) |
26 | % | 30 | % | N/M | 25 | % | |||||||||
Average assets |
$ | 37,315 | $ | 176,162 | $ | 44,221 | $ | 257,698 | ||||||||
Excluding amortization of intangible assets: |
||||||||||||||||
Noninterest expense |
$ | 627 | $ | 1,702 | $ | 260 | $ | 2,589 | ||||||||
Income (loss) before taxes |
293 | (a) | 808 | (88 | ) | 1,013 | (a) | |||||||||
Pre-tax operating margin (b) |
32 | % | 32 | % | N/M | 28 | % |
(a) | Total fee and other revenue includes income from consolidated investment management funds of $110 million, net of noncontrolling interests of $44 million, for a net impact of $66 million. Income before taxes includes noncontrolling interests of $44 million. |
(b) | Income before taxes divided by total revenue. |
N/M | Not meaningful. |
BNY Mellon 15
Investment Management business
(dollar amounts in millions, |
1Q12 vs. | |||||||||||||||||||||||||||
unless otherwise noted) |
1Q11 | 2Q11 | 3Q11 | 4Q11 | 1Q12 | 1Q11 | 4Q11 | |||||||||||||||||||||
Revenue: |
||||||||||||||||||||||||||||
Investment management fees: |
||||||||||||||||||||||||||||
Mutual funds |
$ | 283 | $ | 290 | $ | 263 | $ | 237 | $ | 260 | (8 | )% | 10 | % | ||||||||||||||
Institutional clients |
319 | 319 | 311 | 299 | 322 | 1 | 8 | |||||||||||||||||||||
Wealth management |
164 | 163 | 157 | 154 | 157 | (4 | ) | 2 | ||||||||||||||||||||
Investment management fees |
766 | 772 | 731 | 690 | 739 | (4 | ) | 7 | ||||||||||||||||||||
Performance fees |
17 | 18 | 11 | 47 | 16 | (6 | ) | N/M | ||||||||||||||||||||
Distribution and servicing |
51 | 48 | 41 | 41 | 45 | (12 | ) | 10 | ||||||||||||||||||||
Other (a) |
34 | 24 | (26 | ) | (11 | ) | 52 | N/M | N/M | |||||||||||||||||||
Total fee and other revenue (a) |
868 | 862 | 757 | 767 | 852 | (2 | ) | 11 | ||||||||||||||||||||
Net interest revenue |
52 | 48 | 51 | 55 | 55 | 6 | - | |||||||||||||||||||||
Total revenue |
920 | 910 | 808 | 822 | 907 | (1 | ) | 10 | ||||||||||||||||||||
Provision for credit losses |
- | 1 | - | - | - | N/M | N/M | |||||||||||||||||||||
Noninterest expense (ex. amortization of intangible assets) |
627 | 641 | 622 | 632 | 619 | (1 | ) | (2 | ) | |||||||||||||||||||
Income before taxes (ex. amortization of intangible assets) |
293 | 268 | 186 | 190 | 288 | (2 | ) | 52 | ||||||||||||||||||||
Amortization of intangible assets |
55 | 53 | 53 | 53 | 48 | (13 | ) | (9 | ) | |||||||||||||||||||
Income before taxes |
$ | 238 | $ | 215 | $ | 133 | $ | 137 | $ | 240 | 1 | % | 75 | % | ||||||||||||||
Pre-tax operating margin |
26 | % | 24 | % | 16 | % | 17 | % | 26 | % | ||||||||||||||||||
Pre-tax operating margin (ex. amortization of intangible assets |
36 | % | 33 | % | 26 | % | 26 | % | 36 | % | ||||||||||||||||||
Wealth management: |
||||||||||||||||||||||||||||
Average loans |
$ | 6,825 | $ | 6,884 | $ | 6,958 | $ | 7,209 | $ | 7,422 | 9 | % | 3 | % | ||||||||||||||
Average deposits |
$ | 9,272 | $ | 8,996 | $ | 10,392 | $ | 11,761 | $ | 11,491 | 24 | % | (2 | )% |
(a) | Total fee and other revenue includes the impact of the consolidated investment management funds. See Supplemental information Explanation of Non-GAAP financial measures beginning on page 45. Additionally, other revenue includes asset servicing and treasury services revenue. |
(b) | Distribution and servicing expense is netted with the distribution and servicing revenue for the purpose of this calculation of pre-tax operating margin. Distribution and servicing expense totaled $110 million, $108 million, $99 million, $95 million and $100 million, respectively. |
N/M | Not meaningful. |
AUM trends (a) | 1Q12 vs. | |||||||||||||||||||||||||||
(in billions) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 1Q12 | 1Q11 | 4Q11 | |||||||||||||||||||||
AUM at period end, by product type: |
||||||||||||||||||||||||||||
Equity securities |
$ | 417 | $ | 428 | $ | 354 | $ | 390 | $ | 429 | 3 | % | 10 | % | ||||||||||||||
Fixed income securities |
362 | 398 | 419 | 437 | 451 | 25 | 3 | |||||||||||||||||||||
Money market |
337 | 337 | 321 | 328 | 319 | (5 | ) | (3 | ) | |||||||||||||||||||
Alternative investments and overlay |
113 | 111 | 104 | 105 | 109 | (4 | ) | 4 | ||||||||||||||||||||
Total AUM |
$ | 1,229 | $ | 1,274 | $ | 1,198 | $ | 1,260 | $ | 1,308 | 6 | % | 4 | % | ||||||||||||||
AUM at period end, by client type: |
||||||||||||||||||||||||||||
Institutional |
$ | 701 | $ | 733 | $ | 719 | $ | 757 | $ | 829 | 18 | % | 10 | % | ||||||||||||||
Mutual funds |
451 | 462 | 406 | 427 | 404 | (10 | ) | (5 | ) | |||||||||||||||||||
Private client |
77 | 79 | 73 | 76 | 75 | (3 | ) | (1 | ) | |||||||||||||||||||
Total AUM |
$ | 1,229 | $ | 1,274 | $ | 1,198 | $ | 1,260 | $ | 1,308 | 6 | % | 4 | % | ||||||||||||||
Changes in market value of AUM: |
||||||||||||||||||||||||||||
Beginning balance |
$ | 1,172 | $ | 1,229 | $ | 1,274 | $ | 1,198 | $ | 1,260 | ||||||||||||||||||
Net inflows (outflows): |
||||||||||||||||||||||||||||
Long-term |
31 | 32 | 4 | 16 | 7 | |||||||||||||||||||||||
Money market |
(5 | ) | (1 | ) | (15 | ) | 7 | (9 | ) | |||||||||||||||||||
Total net inflows (outflows) |
26 | 31 | (11 | ) | 23 | (2 | ) | |||||||||||||||||||||
Net market/currency impact |
31 | 14 | (65 | ) | 39 | 50 | ||||||||||||||||||||||
Ending balance |
$ | 1,229 | $ | 1,274 | $ | 1,198 | $ | 1,260 | $ | 1,308 | 6 | % | 4 | % |
(a) | Excludes securities lending cash management assets. |
16 BNY Mellon
BNY Mellon 17
Investment Services business
1Q12 vs. | ||||||||||||||||||||||||||||
(dollar amounts in millions, unless otherwise noted) | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 1Q12 | 1Q11 | 4Q11 | |||||||||||||||||||||
Revenue: |
||||||||||||||||||||||||||||
Investment services fees: |
||||||||||||||||||||||||||||
Asset servicing |
$ | 890 | $ | 943 | $ | 894 | $ | 858 | $ | 915 | 3 | % | 7 | % | ||||||||||||||
Issuer services |
292 | 314 | 401 | 245 | 251 | (14 | ) | 2 | ||||||||||||||||||||
Clearing services |
292 | 292 | 297 | 278 | 303 | 4 | 9 | |||||||||||||||||||||
Treasury services |
133 | 134 | 132 | 133 | 136 | 2 | 2 | |||||||||||||||||||||
Total investment services fees |
1,607 | 1,683 | 1,724 | 1,514 | 1,605 | - | 6 | |||||||||||||||||||||
Foreign exchange and other trading revenue |
209 | 203 | 236 | 196 | 176 | (16 | ) | (10 | ) | |||||||||||||||||||
Other (a) |
73 | 81 | 68 | 71 | 73 | - | 3 | |||||||||||||||||||||
Total fee and other revenue (a) |
1,889 | 1,967 | 2,028 | 1,781 | 1,854 | (2 | ) | 4 | ||||||||||||||||||||
Net interest revenue |
621 | 650 | 661 | 634 | 644 | 4 | 2 | |||||||||||||||||||||
Total revenue |
2,510 | 2,617 | 2,689 | 2,415 | 2,498 | - | 3 | |||||||||||||||||||||
Provision for credit losses |
- | - | - | - | 16 | N/M | N/M | |||||||||||||||||||||
Noninterest expense (ex. amortization of intangible assets) |
1,702 | 1,775 | 1,851 | 1,706 | 1,781 | 5 | 4 | |||||||||||||||||||||
Income before taxes (ex. amortization of intangible assets) |
808 | 842 | 838 | 709 | 701 | (13 | ) | (1 | ) | |||||||||||||||||||
Amortization of intangible assets |
50 | 50 | 49 | 50 | 48 | (4 | ) | (4 | ) | |||||||||||||||||||
Income before taxes |
$ | 758 | $ | 792 | $ | 789 | $ | 659 | $ | 653 | (14 | )% | (1 | )% | ||||||||||||||
Pre-tax operating margin |
30 | % | 30 | % | 29 | % | 27 | % | 26 | % | ||||||||||||||||||
Pre-tax operating margin (ex. amortization of intangible assets) |
32 | % | 32 | % | 31 | % | 29 | % | 28 | % | ||||||||||||||||||
Investment services fees as a percentage of noninterest expense (b) |
96 | % | 96 | % | 98 | % | 90 | % | 94 | % | ||||||||||||||||||
Securities lending revenue |
$ | 27 | $ | 52 | $ | 32 | $ | 35 | $ | 39 | 44 | % | 11 | % | ||||||||||||||
Metrics: |
||||||||||||||||||||||||||||
Average loans |
$ | 20,554 | $ | 22,891 | $ | 22,879 | $ | 26,804 | $ | 25,902 | 26 | % | (3 | )% | ||||||||||||||
Average deposits |
$ | 139,342 | $ | 153,863 | $ | 181,848 | $ | 188,539 | $ | 176,811 | 27 | % | (6 | )% | ||||||||||||||
Asset servicing: |
||||||||||||||||||||||||||||
New business wins (AUC) (in billions) |
$ | 496 | $ | 196 | $ | 96 | $ | 431 | $ | 453 | ||||||||||||||||||
Corporate Trust: |
||||||||||||||||||||||||||||
Total debt serviced (in trillions) |
$ | 11.9 | $ | 11.8 | $ | 11.9 | $ | 11.8 | $ | 11.9 | - | % | 1 | % | ||||||||||||||
Number of deals administered |
133,416 | 133,262 | 134,843 | 133,850 | 133,319 | - | % | - | % | |||||||||||||||||||
Depositary Receipts: |
||||||||||||||||||||||||||||
Number of sponsored programs |
1,367 | 1,386 | 1,384 | 1,389 | 1,391 | 2 | % | - | % | |||||||||||||||||||
Clearing services: |
||||||||||||||||||||||||||||
DARTS volume (in thousands) |
207.2 | 196.5 | 207.7 | 178.7 | 196.6 | (5 | )% | 10 | % | |||||||||||||||||||
Average active clearing accounts U.S. (in thousands) |
5,289 | 5,486 | 5,503 | 5,429 | 5,413 | 2 | % | - | % | |||||||||||||||||||
Average long-term mutual fund assets (U.S. platform) |
$ | 287,682 | $ | 306,193 | $ | 287,573 | $ | 287,562 | $ | 306,212 | 6 | % | 6 | % | ||||||||||||||
Average margin loans |
$ | 6,978 | $ | 7,506 | $ | 7,351 | $ | 7,548 | $ | 7,900 | 13 | % | 5 | % | ||||||||||||||
Broker-Dealer: |
||||||||||||||||||||||||||||
Average collateral management balances (in billions) |
$ | 1,806 | $ | 1,845 | $ | 1,872 | $ | 1,866 | $ | 1,929 | 7 | % | 3 | % | ||||||||||||||
Treasury services: |
||||||||||||||||||||||||||||
Global payments transaction volume (in thousands) |
10,761 | 10,944 | 11,088 | 10,856 | 10,838 | 1 | % | - | % |
(a) | Total fee and other revenue includes investment management fees and distribution and servicing revenue. |
(b) | Noninterest expense excludes amortization of intangible assets, support agreement charges and litigation expense. |
Assets under custody and administration trend | 1Q12 vs. | |||||||||||||||||||||||||||
1Q11 | 2Q11 | 3Q11 | 4Q11 | 1Q12 | 1Q11 | 4Q11 | ||||||||||||||||||||||
Market value of assets under custody and |
$ | 25.5 | $ | 26.3 | $ | 25.9 | $ | 25.8 | $ | 26.6 | 4 | % | 3 | % | ||||||||||||||
Market value of securities on loan at |
$ | 278 | $ | 273 | $ | 250 | $ | 269 | $ | 265 | (5 | )% | (1 | )% |
(a) | Includes the assets under custody or administration of CIBC Mellon Global Securities Services Company, a joint venture with the Canadian Imperial Bank of Commerce, of $1.1 trillion at March 31, 2011, $1.1 trillion at June 30, 2011, $1.0 trillion at Sept. 30, 2011, $1.1 trillion at Dec. 31, 2011 and $1.2 trillion at March 31, 2012. |
(b) | Represents the total amount of securities on loan managed by the Investment Services business. |
18 BNY Mellon
BNY Mellon 19
20 BNY Mellon
Other segment
(dollars in millions) |
1Q11 | 2Q11 | 3Q11 | 4Q11 | 1Q12 | |||||||||||||||
Revenue: |
||||||||||||||||||||
Fee and other revenue |
$ | 147 | $ | 269 | $ | 121 | $ | 240 | $ | 164 | ||||||||||
Net interest revenue |
25 | 33 | 63 | 91 | 66 | |||||||||||||||
Total revenue |
172 | 302 | 184 | 331 | 230 | |||||||||||||||
Provision for credit losses |
- | (1 | ) | (22 | ) | 23 | (11 | ) | ||||||||||||
Noninterest expense (ex. amortization of intangible assets, restructuring charges and M&I expenses) |
249 | 274 | 180 | 245 | 251 | |||||||||||||||
Income (loss) before taxes (ex. amortization of intangible assets, restructuring charges and M&I expenses) |
(77 | ) | 29 | 26 | 63 | (10 | ) | |||||||||||||
Amortization of intangible assets |
3 | 5 | 4 | 3 | - | |||||||||||||||
Restructuring charges |
(6 | ) | (7 | ) | (5 | ) | 107 | (9 | ) | |||||||||||
M&I expenses |
17 | 25 | 17 | 32 | 18 | |||||||||||||||
Income (loss) before taxes |
$ | (91 | ) | $ | 6 | $ | 10 | $ | (79 | ) | $ | (19 | ) | |||||||
Average loans and leases |
$ | 11,187 | $ | 10,553 | $ | 10,652 | $ | 10,223 | $ | 9,885 |
BNY Mellon 21
22 BNY Mellon
BNY Mellon 23
Exposure in the tables below reflects the country of operations and risk of the immediate counterparty.
On- and off-balance sheet exposure at March 31, 2012 | ||||||||||||||||||||
(in millions) |
Ireland | Italy | Spain | Portugal | Total | |||||||||||||||
On-balance sheet exposure |
||||||||||||||||||||
Gross: |
||||||||||||||||||||
Interest-bearing deposits with banks (a) |
$ | 100 | $ | 23 | $ | 12 | $ | - | $ | 135 | ||||||||||
Investment securities (primarily European |
||||||||||||||||||||
Floating Rate Notes) (b) |
215 | 153 | 28 | - | 396 | |||||||||||||||
Loans and leases (c) |
339 | 64 | 14 | - | 417 | |||||||||||||||
Trading assets (d) |
32 | 37 | 16 | 1 | 86 | |||||||||||||||
Total gross on-balance sheet exposure |
686 | 277 | 70 | 1 | 1,034 | |||||||||||||||
Less: |
||||||||||||||||||||
Collateral |
70 | 31 | 7 | 1 | 109 | |||||||||||||||
Guarantees |
- | 2 | 1 | - | 3 | |||||||||||||||
Total collateral and guarantees |
70 | 33 | 8 | 1 | 112 | |||||||||||||||
Total net on-balance sheet exposure |
$ | 616 | $ | 244 | $ | 62 | $ | - | $ | 922 | ||||||||||
Off-balance sheet exposure |
||||||||||||||||||||
Gross: |
||||||||||||||||||||
Lending-related commitments (e) |
$ | 223 | $ | - | $ | - | $ | - | $ | 223 | ||||||||||
Letters of credit (f) |
49 | 4 | 14 | - | 67 | |||||||||||||||
Total gross off-balance sheet exposure |
272 | 4 | 14 | - | 290 | |||||||||||||||
Less: |
||||||||||||||||||||
Collateral |
189 | - | 14 | - | 203 | |||||||||||||||
Total net off-balance sheet exposure |
$ | 83 | $ | 4 | $ | - | $ | - | $ | 87 | ||||||||||
Total exposure: |
||||||||||||||||||||
Total gross on- and off-balance sheet exposure |
$ | 958 | $ | 281 | $ | 84 | $ | 1 | $ | 1,324 | ||||||||||
Less: Total collateral and guarantees |
259 | 33 | 22 | 1 | 315 | |||||||||||||||
Total net on- and off-balance sheet exposure |
$ | 699 | $ | 248 | $ | 62 | $ | - | $ | 1,009 |
(a) | Interest-bearing deposits with banks represent a $99 million placement with an Irish subsidiary of a UK holding company and $36 million of nostro accounts related to our custody business. Subsequent to March 31, 2012, we approved additional short-term placement facilities to four large investment grade banks in Italy and Spain, which could be outstanding from time-to-time. |
(b) | Represents $368 million, fair value, of residential mortgage-backed securities located in Ireland, Italy and Spain, of which 75% were investment grade, $25 million, fair value, of investment grade asset-backed CLOs located in Ireland, and $3 million, fair value, of money market fund investments located in Ireland. |
(c) | Loans and leases include $348 million of overdrafts primarily to Irish-domiciled investment funds resulting from our custody business, a $65 million commercial lease to an Irish company, which was fully collateralized by U.S. Treasuries, a $1 million loan to a financial institution, which was fully collateralized by marketable securities and $3 million of leases to airline manufacturing companies which are under joint and several guarantee arrangements, with guarantors outside of the Eurozone. There is no impairment associated with these loans and leases. |
(d) | Trading assets represent over-the-counter mark-to-market on foreign exchange and interest rate receivables, net of master netting agreements. Trading assets include $32 million of receivables primarily due from Irish-domiciled investment funds and $54 million of receivables due from financial institutions in Italy, Spain and Portugal. Cash collateral on the trading assets totaled $4 million in Ireland, $31 million in Italy, $7 million in Spain and $1 million in Portugal. |
(e) | Lending-related commitments represent $100 million to an asset manager fully collateralized by marketable securities and $123 million to an insurance company, collateralized by $47 million of marketable securities. |
(f) | Represents $49 million of letters of credit extended to an insurance company in Ireland, collateralized by $42 million of marketable securities, a $4 million letter of credit extended to a financial institution in Italy and a $14 million letter of credit extended to an insurance company in Spain, fully collateralized by marketable securities. |
24 BNY Mellon
On- and off-balance sheet exposure at Dec. 31, 2011 | ||||||||||||||||||||
(in millions) | Ireland | Italy | Spain | Portugal | Total | |||||||||||||||
On-balance sheet exposure |
||||||||||||||||||||
Gross: |
||||||||||||||||||||
Interest-bearing deposits with banks (a) |
$ | 97 | $ | 24 | $ | 4 | $ | - | $ | 125 | ||||||||||
Investment securities (primarily European |
||||||||||||||||||||
Floating Rate Notes) (b) |
208 | 155 | 27 | - | 390 | |||||||||||||||
Loans and leases (c) |
411 | 3 | 4 | - | 418 | |||||||||||||||
Trading assets (d) |
117 | 53 | 16 | 3 | 189 | |||||||||||||||
Total gross on-balance sheet exposure |
833 | 235 | 51 | 3 | 1,122 | |||||||||||||||
Less: |
||||||||||||||||||||
Collateral |
102 | 39 | 7 | 3 | 151 | |||||||||||||||
Guarantees |
- | 3 | 1 | - | 4 | |||||||||||||||
Total collateral and guarantees |
102 | 42 | 8 | 3 | 155 | |||||||||||||||
Total net on-balance sheet exposure |
$ | 731 | $ | 193 | $ | 43 | $ | - | $ | 967 | ||||||||||
Off-balance sheet exposure |
||||||||||||||||||||
Gross: |
||||||||||||||||||||
Lending-related commitments (e) |
$ | 273 | $ | - | $ | - | $ | - | $ | 273 | ||||||||||
Letters of credit (f) |
- | 2 | 14 | - | 16 | |||||||||||||||
Total gross off-balance sheet exposure |
273 | 2 | 14 | - | 289 | |||||||||||||||
Less: |
||||||||||||||||||||
Collateral |
190 | - | 14 | - | 204 | |||||||||||||||
Total net off-balance sheet exposure |
$ | 83 | $ | 2 | $ | - | $ | - | $ | 85 | ||||||||||
Total exposure: |
||||||||||||||||||||
Total gross on- and off-balance sheet exposure |
$ | 1,106 | $ | 237 | $ | 65 | $ | 3 | $ | 1,411 | ||||||||||
Less: Total collateral and guarantees |
292 | 42 | 22 | 3 | 359 | |||||||||||||||
Total net on- and off-balance sheet exposure |
$ | 814 | $ | 195 | $ | 43 | $ | - | $ | 1,052 |
(a) | Interest-bearing deposits with banks represent a $96 million placement with an Irish subsidiary of a UK holding company and $29 million of nostro accounts related to our custody business. |
(b) | Represents $364 million, fair value, of residential mortgage-backed securities, of which 97% were investment grade, $23 million, fair value, of investment grade asset-backed CLOs, and $3 million, fair value, of money market fund investments located in Ireland. |
(c) | Loans and leases include $335 million of overdrafts primarily to Irish domiciled investment funds resulting from our custody business, a $65 million commercial lease fully collateralized by U.S. Treasuries, $15 million of financial institution loans, which were collateralized by marketable securities and $4 million of leases to airline manufacturing companies which are under joint and several guarantee arrangements, with guarantors outside of the Eurozone. There is no impairment associated with these loans and leases. |
(d) | Trading assets represent over-the-counter mark-to-market on foreign exchange and interest rate receivables, net of master netting agreements. Trading assets include $117 million of receivables due from Irish domiciled investment funds and $72 million due from financial institutions in Italy, Spain and Portugal. Cash collateral on the trading assets totaled $22 million in Ireland, $39 million in Italy, $7 million in Spain and $3 million in Portugal. |
(e) | Lending-related commitments represent $100 million to an asset manager fully collateralized by marketable securities, and $173 million to an insurance company, collateralized by $90 million of marketable securities. |
(f) | Represents a $14 million letter of credit extended to an insurance company in Spain fully collateralized by marketable securities. Exposure in Italy represents a $2 million letter of credit extended to a financial institution. |
BNY Mellon 25
The following table shows the distribution of our total investment securities portfolio:
Investment securities portfolio |
|
|
1Q12 change in unrealized gain/(loss) |
|
|
Fair value as a % of amortized cost(a) |
|
|
Unrealized gain/(loss) |
|
||||||||||||||||||||||||||||||||||
Dec. 31, 2011 |
March 31, 2012 | |||||||||||||||||||||||||||||||||||||||||||
Amortized cost |
Fair value |
Ratings |
||||||||||||||||||||||||||||||||||||||||||
(dollars in millions) | Fair value | AAA/ AA- |
A+/ A- |
BBB+/ BBB- |
BB+ and lower |
Not rated |
||||||||||||||||||||||||||||||||||||||
Agency RMBS |
$ | 27,493 | $ | 53 | $ | 33,882 | $ | 34,538 | 102 | % | $ | 656 | 100 | % | - | % | - | % | - | % | - | % | ||||||||||||||||||||||
U.S. Treasury securities |
17,999 | (119 | ) | 14,920 | 15,173 | 101 | 253 | 100 | - | - | - | - | ||||||||||||||||||||||||||||||||
Sovereign debt/sovereign guaranteed (b) |
11,881 | 53 | 11,961 | 12,171 | 102 | 210 | 100 | - | - | - | - | |||||||||||||||||||||||||||||||||
Non-agency RMBS (c) |
3,179 | 187 | 2,868 | 3,232 | 68 | 364 | 1 | 1 | 2 | 96 | - | |||||||||||||||||||||||||||||||||
Non-agency RMBS |
1,780 | 101 | 2,036 | 1,787 | 81 | (249 | ) | 20 | 15 | 12 | 53 | - | ||||||||||||||||||||||||||||||||
European floating rate notes (d) |
3,025 | 26 | 3,726 | 3,405 | 90 | (321 | ) | 69 | 23 | 5 | 3 | - | ||||||||||||||||||||||||||||||||
Commercial MBS |
3,003 | 41 | 3,052 | 3,161 | 104 | 109 | 82 | 16 | 2 | - | - | |||||||||||||||||||||||||||||||||
State and political subdivisions |
2,806 | (7 | ) | 4,055 | 4,067 | 101 | 12 | 83 | 14 | 2 | - | 1 | ||||||||||||||||||||||||||||||||
Foreign covered bonds (e) |
2,425 | 21 | 3,171 | 3,207 | 101 | 36 | 99 | 1 | - | - | - | |||||||||||||||||||||||||||||||||
Corporate bonds |
1,738 | 59 | 1,642 | 1,696 | 103 | 54 | 14 | 77 | 8 | 1 | - | |||||||||||||||||||||||||||||||||
CLO |
1,233 | 14 | 1,129 | 1,118 | 99 | (11 | ) | 100 | - | - | - | - | ||||||||||||||||||||||||||||||||
FDIC-insured debt |
1,112 | (12 | ) | 154 | 154 | 100 | - | 100 | - | - | - | - | ||||||||||||||||||||||||||||||||
U.S. Government agency debt |
958 | 3 | 1,079 | 1,108 | 103 | 29 | 100 | - | - | - | - | |||||||||||||||||||||||||||||||||
Credit cards |
397 | - | 324 | 328 | 102 | 4 | 20 | 80 | - | - | - | |||||||||||||||||||||||||||||||||
Other |
2,709 | (31 | ) | 3,022 | 3,058 | 101 | 36 | 44 | 52 | - | 1 | 3 | ||||||||||||||||||||||||||||||||
Total investment securities |
$ | 81,738 | (f) | $ | 389 | $ | 87,021 | $ | 88,203 | (f) | 101 | % | $ | 1,182 | 88 | % | 6 | % | 1 | % | 5 | % | - | % |
(a) | Amortized cost before impairments. |
(b) | Primarily comprised of exposure to United Kingdom, France, Germany and Netherlands. |
(c) | These RMBS were included in the former Grantor Trust and were marked-to-market in 2009. We believe these RMBS would receive higher credit ratings if these ratings incorporated, as additional credit enhancement, the difference between the written-down amortized cost and the current face amount of each of these securities. |
(d) | Includes RMBS, commercial MBS and other securities. Primarily comprised of exposure to UK and Netherlands. |
(e) | Primarily comprised of exposure to Germany and Canada. |
(f) | Includes net unrealized losses on derivatives hedging securities available-for-sale of $269 million at Dec. 31, 2011 and $20 million at March 31, 2012. |
26 BNY Mellon
BNY Mellon 27
Loans
Total exposure consolidated | March 31, 2012 | Dec. 31, 2011 | ||||||||||||||||||||||
Unfunded | Total | Unfunded | Total | |||||||||||||||||||||
(in billions) | Loans | commitments | exposure | Loans | commitments | exposure | ||||||||||||||||||
Non-margin loans: |
||||||||||||||||||||||||
Financial institutions |
$ | 11.0 | $ | 14.6 | $ | 25.6 | $ | 11.1 | $ | 15.5 | $ | 26.6 | ||||||||||||
Commercial |
1.2 | 16.6 | 17.8 | 1.3 | 16.3 | 17.6 | ||||||||||||||||||
Subtotal institutional |
12.2 | 31.2 | 43.4 | 12.4 | 31.8 | 44.2 | ||||||||||||||||||
Wealth management loans and mortgages |
7.3 | 1.5 | 8.8 | 7.3 | 1.5 | 8.8 | ||||||||||||||||||
Commercial real estate |
1.4 | 1.8 | 3.2 | 1.5 | 1.5 | 3.0 | ||||||||||||||||||
Lease financing |
2.6 | - | 2.6 | 2.6 | - | 2.6 | ||||||||||||||||||
Other residential mortgages |
1.9 | - | 1.9 | 1.9 | - | 1.9 | ||||||||||||||||||
Overdrafts |
3.7 | - | 3.7 | 4.8 | - | 4.8 | ||||||||||||||||||
Other |
0.8 | 0.1 | 0.9 | 0.7 | - | 0.7 | ||||||||||||||||||
Subtotal non-margin loans |
29.9 | 34.6 | 64.5 | 31.2 | 34.8 | 66.0 | ||||||||||||||||||
Margin loans |
13.1 | 0.8 | 13.9 | 12.8 | 0.7 | 13.5 | ||||||||||||||||||
Total |
$ | 43.0 | $ | 35.4 | $ | 78.4 | $ | 44.0 | $ | 35.5 | $ | 79.5 |
Financial institutions
The diversity of the financial institutions portfolio is shown in the following table:
March 31, 2012 | Dec. 31, 2011 | |||||||||||||||||||||||||||||||
Financial institutions portfolio exposure (dollar amounts in billions) |
Loans | Unfunded commitments |
Total exposure |
% Inv grade |
% due <1 yr |
Loans | Unfunded commitments |
Total exposure |
||||||||||||||||||||||||
Banks |
$ | 5.6 | $ | 1.6 | $ | 7.2 | 83 | % | 96 | % | $ | 6.3 | $ | 1.9 | $ | 8.2 | ||||||||||||||||
Securities industry |
4.4 | 2.2 | 6.6 | 92 | 95 | 3.8 | 2.6 | 6.4 | ||||||||||||||||||||||||
Insurance |
0.1 | 4.3 | 4.4 | 98 | 33 | 0.1 | 4.6 | 4.7 | ||||||||||||||||||||||||
Asset managers |
0.8 | 3.5 | 4.3 | 99 | 83 | 0.8 | 3.2 | 4.0 | ||||||||||||||||||||||||
Government |
- | 1.5 | 1.5 | 94 | 27 | - | 1.6 | 1.6 | ||||||||||||||||||||||||
Other |
0.1 | 1.5 | 1.6 | 98 | 59 | 0.1 | 1.6 | 1.7 | ||||||||||||||||||||||||
Total |
$ | 11.0 | $ | 14.6 | $ | 25.6 | 92 | % | 76 | % | $ | 11.1 | $ | 15.5 | $ | 26.6 |
28 BNY Mellon
Commercial
The diversity of the commercial portfolio is shown in the following table:
Commercial portfolio exposure | March 31, 2012 | Dec. 31, 2011 | ||||||||||||||||||||||||||||||
(dollar amounts in billions) | Loans | Unfunded commitments |
Total exposure |
% Inv grade |
% due <1 yr |
Loans | Unfunded commitments |
Total exposure |
||||||||||||||||||||||||
Manufacturing |
$ | 0.3 | $ | 5.8 | $ | 6.1 | 91 | % | 17 | % | $ | 0.3 | $ | 5.7 | $ | 6.0 | ||||||||||||||||
Energy and utilities |
0.3 | 4.9 | 5.2 | 96 | 12 | 0.3 | 4.8 | 5.1 | ||||||||||||||||||||||||
Services and other |
0.5 | 4.4 | 4.9 | 90 | 23 | 0.5 | 4.5 | 5.0 | ||||||||||||||||||||||||
Media and telecom |
0.1 | 1.5 | 1.6 | 89 | 15 | 0.2 | 1.3 | 1.5 | ||||||||||||||||||||||||
Total |
$ | 1.2 | $ | 16.6 | $ | 17.8 | 92 | % | 17 | % | $ | 1.3 | $ | 16.3 | $ | 17.6 |
Percentage of the portfolios that are investment grade | March 31, 2011 |
June 30, 2011 |
Sept. 30, 2011 |
Dec. 31, 2011 |
March 31, 2012 |
|||||||||||||||
Financial institutions |
91 | % | 91 | % | 92 | % | 93 | % | 92 | % | ||||||||||
Commercial |
90 | % | 91 | % | 91 | % | 91 | % | 92 | % |
BNY Mellon 29
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BNY Mellon 31
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BNY Mellon 33
34 BNY Mellon
Available and liquid funds | March 31, | Dec. 31, | Average | |||||||||||||||||
(in millions) | 2012 | 2011 | 1Q12 | 4Q11 | 1Q11 | |||||||||||||||
Available funds: |
||||||||||||||||||||
Liquid funds: |
||||||||||||||||||||
Interest-bearing deposits with banks |
$34,854 | $36,321 | $35,095 | $43,628 | $57,637 | |||||||||||||||
Federal funds sold and securities purchased under resale agreements |
5,437 | 4,510 | 5,174 | 5,271 | 4,514 | |||||||||||||||
Total liquid funds |
40,291 | 40,831 | 40,269 | 48,899 | 62,151 | |||||||||||||||
Cash and due from banks |
4,333 | 4,175 | 4,271 | 4,695 | 4,094 | |||||||||||||||
Interest-bearing deposits with the Federal Reserve and other central banks |
62,030 | 90,243 | 63,526 | 72,118 | 20,367 | |||||||||||||||
Total available funds |
$106,654 | $135,249 | $108,066 | $125,712 | $86,612 | |||||||||||||||
Total available funds as a percentage of total assets |
36 | % | 42 | % | 36 | % | 40 | % | 34 | % |
BNY Mellon 35
36 BNY Mellon
BNY Mellon 37
38 BNY Mellon
Capital data | ||||||||||||
(dollar amounts in millions except per share amounts; common shares in thousands) |
March 31, 2012 |
Dec. 31, 2011 |
March 31, 2011 |
|||||||||
Average common equity to average assets |
11.2 | % | 10.7 | % | 12.7 | % | ||||||
At period end: |
||||||||||||
BNY Mellon shareholders equity to total assets ratio |
11.3 | % | 10.3 | % | 12.5 | % | ||||||
Total BNY Mellon shareholders equity GAAP |
$ | 34,000 | $ | 33,417 | $ | 33,258 | ||||||
Tangible BNY Mellon shareholders equity Non-GAAP (a) |
$ | 13,326 | $ | 12,787 | $ | 12,005 | ||||||
Book value per common share GAAP |
$ | 28.51 | $ | 27.62 | $ | 26.78 | ||||||
Tangible book value per common share Non-GAAP (a) |
$ | 11.17 | $ | 10.57 | $ | 9.67 | ||||||
Closing common stock price per share |
$ | 24.13 | $ | 19.91 | $ | 29.87 | ||||||
Market capitalization |
$ | 28,780 | $ | 24,085 | $ | 37,090 | ||||||
Common shares outstanding |
1,192,716 | 1,209,675 | 1,241,724 | |||||||||
Cash dividends per common share |
$ | 0.13 | $ | 0.13 | $ | 0.09 | ||||||
Dividend yield (annualized) |
2.2 | % | 2.6 | % | 1.2 | % | ||||||
Common dividend payout ratio |
25 | % | 31 | % | 18 | % |
(a) | See Supplemental information Explanation of Non-GAAP financial measures beginning on page 45 for the reconciliation of GAAP to Non-GAAP. |
BNY Mellon 39
Our consolidated and largest bank subsidiary, The Bank of New York Mellon, capital ratios are shown below.
Consolidated and largest bank subsidiary capital ratios
Well capitalized |
Adequately capitalized |
March 31, 2012 |
Dec. 31, 2011 |
March 31, 2011 |
||||||||||||||||
Consolidated capital ratios: |
||||||||||||||||||||
Estimated Basel III Tier 1 common equity ratio Non-GAAP (a)(b) |
N/A | N/A | 7.6 | % | 7.1 | % | 6.1 | % | ||||||||||||
Tangible BNY Mellon shareholders equity to tangible assets of operations ratio Non-GAAP (b) |
N/A | N/A | 6.5 | 6.4 | 5.9 | |||||||||||||||
Determined under Basel I-based guidelines (c): |
||||||||||||||||||||
Tier 1 common equity to risk-weighted assets ratio Non-GAAP (b) |
N/A | N/A | 13.9 | % | 13.4 | % | 12.4 | % | ||||||||||||
Tier 1 capital |
6 | % | N/A | 15.6 | 15.0 | 14.0 | ||||||||||||||
Total capital |
10 | N/A | 17.5 | 17.0 | 16.8 | |||||||||||||||
Leverage guideline |
5 | N/A | 5.6 | 5.2 | 6.1 | |||||||||||||||
The Bank of New York Mellon capital ratios (c): |
||||||||||||||||||||
Tier 1 capital |
6 | % | 4 | % | 14.8 | % | 14.3 | % | 11.9 | % | ||||||||||
Total capital |
10 | 8 | 18.0 | 17.7 | 15.6 | |||||||||||||||
Leverage |
5 | 3 | 5.7 | 5.3 | 5.6 |
(a) | Our estimated Basel III Tier 1 common equity ratio (Non-GAAP) reflects our current interpretation of the Basel III rules. Our estimated Basel III Tier 1 common equity ratio could change in the future as the U.S. regulatory agencies implement Basel III or if our businesses change. |
(b) | See Supplemental information Explanation of Non-GAAP financial measures beginning on page 45 for a calculation of this ratio. |
(c) | When in this Form 10-Q we refer to BNY Mellons or a bank subsidiarys Basel I capital measures (e.g., Basel I Total capital or Basel I Tier 1 capital), we mean Total or Tier 1 capital, as applicable, as calculated under the Federal Reserves risk-based capital guidelines that are based on the 1988 Basel Accord, which is often referred to as Basel I. |
N/A Not applicable at the consolidated company level. Well capitalized and adequately capitalized have not been defined for Basel III.
40 BNY Mellon
BNY Mellon 41
The following table presents the components of our Basel I Tier 1 and Total risk-based capital at March 31, 2012, Dec. 31, 2011 and March 31, 2011, respectively.
Components of Basel I Tier 1 and total risk-based capital (a) (in millions) |
March 31, 2012 |
Dec. 31, 2011 |
March 31, 2011 |
|||||||||
Tier 1 capital: |
||||||||||||
Common shareholders equity |
$ | 34,000 | $ | 33,417 | $ | 33,258 | ||||||
Trust preferred securities |
1,669 | 1,659 | 1,686 | |||||||||
Adjustments for: |
||||||||||||
Goodwill and other intangibles (b) |
(20,674 | ) | (20,630 | ) | (21,253 | ) | ||||||
Pensions/cash flow hedges |
1,397 | 1,426 | 1,035 | |||||||||
Securities valuation allowance |
(663 | ) | (450 | ) | (303 | ) | ||||||
Merchant banking investments |
(34 | ) | (33 | ) | (21 | ) | ||||||
Total Tier 1 capital |
15,695 | 15,389 | 14,402 | |||||||||
Tier 2 capital: |
||||||||||||
Qualifying unrealized gains on equity securities |
2 | 2 | 7 | |||||||||
Qualifying subordinated debt |
1,414 | 1,545 | 2,281 | |||||||||
Qualifying allowance for credit losses |
494 | 497 | 554 | |||||||||
Total Tier 2 capital |
1,910 | 2,044 | 2,842 | |||||||||
Total risk-based capital |
$ | 17,605 | $ | 17,433 | $ | 17,244 | ||||||
Total risk-weighted assets |
$ | 100,763 | $ | 102,255 | $ | 102,887 | ||||||
Average assets for leverage capital purposes |
$ | 281,281 | $ | 296,484 | $ | 237,320 |
(a) | On a regulatory basis as determined under Basel I guidelines. |
(b) | Reduced by deferred tax liabilities associated with non-tax deductible identifiable intangible assets of $1,428 million at March 31, 2012, $1,459 million at Dec. 31, 2011 and $1,658 million at March 31, 2011, and deferred tax liabilities associated with tax deductible goodwill of $972 million at March 31, 2012, $967 million at Dec. 31, 2011 and $862 million at March 31, 2011. |
The following table presents the calculation of our estimated Basel III Tier 1 common equity ratio on a fully phased-in basis.
Estimated Basel III Tier 1 common equity ratio Non-GAAP (a) (dollars in millions) |
March 31, 2012 |
Dec. 31, 2011 |
March 31, 2011 |
|||||||||
Total Tier 1 capital Basel I |
$ | 15,695 | $ | 15,389 | $ | 14,402 | ||||||
Less: Trust preferred securities |
1,669 | 1,659 | 1,686 | |||||||||
Adjustments related to available-for-sale securities and pension liabilities included in accumulated other comprehensive income (b) |
700 | 944 | 729 | |||||||||
Adjustments related to equity method investments (b) |
571 | 555 | 524 | |||||||||
Net pension fund assets (b) |
100 | 90 | 409 | |||||||||
Other |
(2 | ) | (3 | ) | - | |||||||
Total estimated Basel III Tier 1 common equity |
$ | 12,657 | $ | 12,144 | $ | 11,054 | ||||||
Total risk-weighted assets Basel I |
$ | 100,763 | $ | 102,255 | $ | 102,887 | ||||||
Add: Adjustments (c) |
65,997 | 67,813 | 77,199 | |||||||||
Total estimated Basel III risk-weighted assets |
$ | 166,760 | $ | 170,068 | $ | 180,086 | ||||||
Estimated Basel III Tier 1 common equity ratio Non-GAAP |
7.6 | % | 7.1 | % | 6.1 | % |
(a) | Our estimated Basel III Tier 1 common equity ratio Non-GAAP reflects our current interpretation of the Basel III rules. Our estimated Basel III Tier 1 common equity ratio could change in the near future as the U.S. regulatory agencies implement Basel III or if our businesses change. |
(b) | Basel III does not add back to capital the adjustment to other comprehensive income that Basel I and Basel II make for pension liabilities and available-for-sale securities. Also, under Basel III, pension assets recorded on the balance sheet and adjustments related to equity method investments are a deduction from capital. |
(c) | Primary differences between Basel I and Basel III include: the determination of credit risk under Basel I uses predetermined risk weights and asset classes, while under Basel III it includes borrower credit ratings and internal risk models; the treatment of securitizations that fall below investment grade receive a significantly higher risk-weighting under Basel III than Basel I; also, Basel III risk-weighted assets include adjustments for operational risk, market risk, counterparty credit risk and equity exposures. |
42 BNY Mellon
BNY Mellon 43
44 BNY Mellon
BNY Mellon 45
46 BNY Mellon
Return on common equity and tangible common equity |
||||||||||||
(dollars in millions) |
1Q12 | 4Q11 | 1Q11 | |||||||||
Net income applicable to common shareholders of The Bank of New York Mellon |
||||||||||||
Corporation GAAP |
$ | 619 | $ | 505 | $ | 625 | ||||||
Add: Amortization of intangible assets, net of tax |
61 | 66 | 68 | |||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation excluding amortization of intangible assets Non-GAAP |
680 | 571 | 693 | |||||||||
Less: Net securities gains (losses) |
N/A | N/A | 3 | |||||||||
Add: Restructuring charges |
(6 | ) | 67 | (5 | ) | |||||||
M&I expenses |
12 | 21 | 11 | |||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation excluding amortization of intangible assets, net securities gains (losses), restructuring charges and M&I expenses Non-GAAP |
$ | 686 | $ | 659 | $ | 696 | ||||||
Average common shareholders equity |
$ | 33,718 | $ | 33,761 | $ | 32,827 | ||||||
Less: Average goodwill |
17,962 | 18,044 | 18,121 | |||||||||
Average intangible assets |
5,121 | 5,333 | 5,664 | |||||||||
Add: Deferred tax liability tax deductible goodwill |
972 | 967 | 862 | |||||||||
Deferred tax liability non-tax deductible intangible assets |
1,428 | 1,459 | 1,658 | |||||||||
Average tangible common shareholders equity Non-GAAP | $ | 13,035 | $ | 12,810 | $ | 11,562 | ||||||
Return on common equity GAAP (a) |
7.4 | % | 5.9 | % | 7.7 | % | ||||||
Return on common equity excluding amortization of intangible assets, net securities gains (losses), restructuring charges and M&I expenses Non-GAAP (a) |
8.2 | % | 7.7 | % | 8.6 | % | ||||||
Return on tangible common equity Non-GAAP (a) |
21.0 | % | 17.7 | % | 24.3 | % | ||||||
Return on tangible common equity excluding net securities gains (losses), restructuring charges and M&I expenses Non-GAAP (a) |
21.2 | % | 20.4 | % | 24.4 | % |
(a) | Annualized. |
N/A Not applicable.
Reconciliation of income before income taxes pre-tax operating margin (dollars in millions) |
1Q12 | 4Q11 | 1Q11 | |||||||||
Income before income taxes GAAP |
$ | 885 | $ | 689 | $ | 949 | ||||||
Less: Net income (loss) attributable to noncontrolling interests of consolidated investment management funds |
11 | (28 | ) | 44 | ||||||||
Add: Amortization of intangible assets |
96 | 106 | 108 | |||||||||
Restructuring charges |
(9 | ) | 107 | (6 | ) | |||||||
M&I expenses |
18 | 32 | 17 | |||||||||
Income before income taxes excluding net income (loss) attributable to noncontrolling interests of consolidated investment management funds, amortization of intangible assets, restructuring charges and M&I expenses Non-GAAP |
$ | 979 | $ | 962 | $ | 1,024 | ||||||
Fee and other revenue GAAP |
$ | 2,838 | $ | 2,765 | $ | 2,838 | ||||||
Income of consolidated investment management funds GAAP |
43 | (5 | ) | 110 | ||||||||
Net interest revenue GAAP |
765 | 780 | 698 | |||||||||
Total revenue GAAP |
3,646 | 3,540 | 3,646 | |||||||||
Less: Net income (loss) attributable to noncontrolling interests of consolidated investment management funds |
11 | (28 | ) | 44 | ||||||||
Total revenue excluding net income (loss) attributable to noncontrolling interests of consolidated investment management funds Non-GAAP |
$ | 3,635 | $ | 3,568 | $ | 3,602 | ||||||
Pre-tax operating margin (a) |
24 | % | 19 | % | 26 | % | ||||||
Pre-tax operating margin excluding net income (loss) attributable to noncontrolling interests of consolidated investment management funds, amortization of intangible assets, restructuring charges and M&I expenses Non-GAAP (a) |
27 | % | 27 | % | 28 | % |
(a) | Income before taxes divided by total revenue. |
BNY Mellon 47
Equity to assets and book value per common share (dollars in millions, unless otherwise noted) |
March 31, 2012 |
Dec. 31, 2011 |
March 31, 2011 |
|||||||||
BNY Mellon common shareholders equity at period end GAAP |
$ | 34,000 | $ | 33,417 | $ | 33,258 | ||||||
Less: Goodwill |
18,002 | 17,904 | 18,156 | |||||||||
Intangible assets |
5,072 | 5,152 | 5,617 | |||||||||
Add: Deferred tax liability tax deductible goodwill |
972 | 967 | 862 | |||||||||
Deferred tax liability non-tax deductible intangible assets |
1,428 | 1,459 | 1,658 | |||||||||
Tangible common shareholders equity at period end Non-GAAP |
$ | 13,326 | $ | 12,787 | $ | 12,005 | ||||||
Total assets at period end GAAP |
$ | 300,169 | $ | 325,266 | $ | 266,444 | ||||||
Less: Assets of consolidated investment management funds |
11,609 | 11,347 | 14,699 | |||||||||
Subtotal assets of operations Non-GAAP |
288,560 | 313,919 | 251,745 | |||||||||
Less: Goodwill |
18,002 | 17,904 | 18,156 | |||||||||
Intangible assets |
5,072 | 5,152 | 5,617 | |||||||||
Cash on deposit with the Federal Reserve and other central banks (a) |
61,992 | 90,230 | 24,613 | |||||||||
Total tangible assets of operations at period end Non-GAAP |
$ | 203,494 | $ | 200,633 | $ | 203,359 | ||||||
BNY Mellon common shareholders equity to total assets GAAP |
11.3 | % | 10.3 | % | 12.5 | % | ||||||
Tangible BNY Mellon common shareholders equity to tangible assets of operations Non-GAAP |
6.5 | % | 6.4 | % | 5.9 | % | ||||||
Period-end common shares outstanding (in thousands) |
1,192,716 | 1,209,675 | 1,241,724 | |||||||||
Book value per common share |
$ | 28.51 | $ | 27.62 | $ | 26.78 | ||||||
Tangible book value per common share Non-GAAP |
$ | 11.17 | $ | 10.57 | $ | 9.67 |
(a) | Assigned a zero percent risk weighting by the regulators. |
Calculation of Basel I Tier 1 common equity to risk-weighted assets ratio (dollars in millions) |
March 31, 2012 |
Dec. 31, 2011 |
March 31, 2011 |
|||||||||
Total Tier 1 capital Basel I |
$ | 15,695 | $ | 15,389 | $ | 14,402 | ||||||
Less: Trust preferred securities |
1,669 | 1,659 | 1,686 | |||||||||
Total Tier 1 common equity |
$ | 14,026 | $ | 13,730 | $ | 12,716 | ||||||
Total risk-weighted assets Basel I |
$ | 100,763 | $ | 102,255 | $ | 102,887 | ||||||
Basel I Tier 1 common equity to risk-weighted assets ratio |
13.9 | % | 13.4 | % | 12.4 | % |
The following table presents income from consolidated investment management funds, net of net income (loss) attributable to noncontrolling interests.
Income from consolidated investment management funds, net of noncontrolling interests (dollars in millions) |
1Q12 | 4Q11 | 1Q11 | |||||||||
Income (loss) of consolidated investment management funds |
$ | 43 | $ | (5 | ) | $ | 110 | |||||
Less: Net income (loss) attributable to noncontrolling interests of consolidated investment management funds |
11 | (28 | ) | 44 | ||||||||
Income from consolidated investment management funds,net of noncontrolling interests |
$ | 32 | $ | 23 | $ | 66 |
The following table presents the line items in the Investment Management business impacted by the consolidated investment management funds.
Income from consolidated investment management funds, net of noncontrolling interests (dollars in millions) |
1Q12 | 4Q11 | 1Q11 | |||||||||
Investment management and performance fees |
$ | 22 | $ | 20 | $ | 31 | ||||||
Other (Investment income) |
10 | 3 | 35 | |||||||||
Income from consolidated investment management funds,net of noncontrolling interests |
$ | 32 | $ | 23 | $ | 66 |
48 BNY Mellon
The following table presents fee and other revenue excluding the impact of the Shareowner Services business.
Fee and other revenue excluding Shareowner Services | 1Q12 vs. | |||||||||||||||||||
(dollars in millions) | 1Q12 | 4Q11 | 1Q11 | 1Q11 | 4Q11 | |||||||||||||||
Investment services fees: |
||||||||||||||||||||
Asset servicing |
$ | 943 | $ | 885 | $ | 917 | 3 | % | 7 | % | ||||||||||
Issuer services |
251 | 245 | 292 | (14 | ) | 2 | ||||||||||||||
Clearing services |
303 | 278 | 292 | 4 | 9 | |||||||||||||||
Treasury services |
136 | 134 | 134 | 1 | 1 | |||||||||||||||
Total investment services fees |
1,633 | 1,542 | 1,635 | - | 6 | |||||||||||||||
Investment management and performance fees |
745 | 730 | 764 | (2 | ) | 2 | ||||||||||||||
Foreign exchange and other trading revenue |
191 | 227 | 197 | (3 | ) | (16 | ) | |||||||||||||
Distribution and servicing |
46 | 42 | 53 | (13 | ) | 10 | ||||||||||||||
Financing-related fees |
44 | 37 | 41 | 7 | 19 | |||||||||||||||
Investment income |
102 | 69 | 67 | 52 | 48 | |||||||||||||||
Other income |
37 | (21 | ) | 14 | N/M | N/M | ||||||||||||||
Total fee revenue |
2,798 | 2,626 | 2,771 | 1 | 7 | |||||||||||||||
Net securities gains (losses) |
40 | (3 | ) | 5 | N/M | N/M | ||||||||||||||
Total fee and other revenue |
$ | 2,838 | $ | 2,623 | $ | 2,776 | 2 | % | 8 | % |
BNY Mellon 49
50 BNY Mellon
BNY Mellon 51
52 BNY Mellon
BNY Mellon 53
54 BNY Mellon
BNY Mellon 55
56 BNY Mellon
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58 BNY Mellon
Item 1. Financial Statements
The Bank of New York Mellon Corporation (and its subsidiaries)
Consolidated Income Statement (unaudited) | ||||||||||||
Quarter ended | ||||||||||||
(in millions) | March 31, 2012 |
Dec. 31, 2011 |
March 31, 2011 |
|||||||||
Fee and other revenue |
||||||||||||
Investment services fees: |
||||||||||||
Asset servicing |
$ | 943 | $ | 885 | $ | 917 | ||||||
Issuer services |
251 | 287 | 351 | |||||||||
Clearing services |
303 | 278 | 292 | |||||||||
Treasury services |
136 | 134 | 134 | |||||||||
Total investment services fees |
1,633 | 1,584 | 1,694 | |||||||||
Investment management and performance fees |
745 | 730 | 764 | |||||||||
Foreign exchange and other trading revenue |
191 | 228 | 198 | |||||||||
Distribution and servicing |
46 | 42 | 53 | |||||||||
Financing-related fees |
44 | 38 | 43 | |||||||||
Investment income |
102 | 69 | 67 | |||||||||
Other |
37 | 77 | 14 | |||||||||
Total fee revenue |
2,798 | 2,768 | 2,833 | |||||||||
Net securities gains (losses) including other-than-temporary impairment |
73 | (108 | ) | (22 | ) | |||||||
Noncredit-related gains (losses) on securities not expected to be sold (recognized in OCI) |
33 | (105 | ) | (27 | ) | |||||||
Net securities gains (losses) |
40 | (3 | ) | 5 | ||||||||
Total fee and other revenue |
2,838 | 2,765 | 2,838 | |||||||||
Operations of consolidated investment management funds |
||||||||||||
Investment income |
153 | 108 | 222 | |||||||||
Interest of investment management fund note holders |
110 | 113 | 112 | |||||||||
Income (loss) of consolidated investment management funds |
43 | (5 | ) | 110 | ||||||||
Net interest revenue |
||||||||||||
Interest revenue |
912 | 925 | 848 | |||||||||
Interest expense |
147 | 145 | 150 | |||||||||
Net interest revenue |
765 | 780 | 698 | |||||||||
Provision for credit losses |
5 | 23 | - | |||||||||
Net interest revenue after provision for credit losses |
760 | 757 | 698 | |||||||||
Noninterest expense |
||||||||||||
Staff |
1,453 | 1,382 | 1,424 | |||||||||
Professional, legal and other purchased services |
299 | 322 | 283 | |||||||||
Net occupancy |
147 | 159 | 153 | |||||||||
Software |
119 | 129 | 122 | |||||||||
Distribution and servicing |
101 | 96 | 111 | |||||||||
Furniture and equipment |
86 | 84 | 84 | |||||||||
Sub-custodian |
70 | 62 | 68 | |||||||||
Business development |
56 | 75 | 56 | |||||||||
Other |
320 | 274 | 277 | |||||||||
Subtotal |
2,651 | 2,583 | 2,578 | |||||||||
Amortization of intangible assets |
96 | 106 | 108 | |||||||||
Restructuring charges |
(9 | ) | 107 | (6 | ) | |||||||
Merger and integration expenses |
18 | 32 | 17 | |||||||||
Total noninterest expense |
2,756 | 2,828 | 2,697 | |||||||||
Income |
||||||||||||
Income before income taxes |
885 | 689 | 949 | |||||||||
Provision for income taxes |
254 | 211 | 279 | |||||||||
Net income |
631 | 478 | 670 | |||||||||
Net (income) loss attributable to noncontrolling interests (includes $(11), $28 and $(44) related to consolidated investment management funds, respectively) |
(12 | ) | 27 | (45 | ) | |||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation |
$ | 619 | $ | 505 | $ | 625 |
BNY Mellon 59
The Bank of New York Mellon Corporation (and its subsidiaries)
Consolidated Income Statement (unaudited) continued
Reconciliation of net income to the net income applicable to the common shareholders of The Bank of New York Mellon Corporation (in millions) |
Quarter ended | |||||||||||
March 31, 2012 |
Dec. 31, 2011 |
March 31, 2011 |
||||||||||
Net income |
$ | 631 | $ | 478 | $ | 670 | ||||||
Net (income) loss attributable to noncontrolling interests |
(12 | ) | 27 | (45 | ) | |||||||
Net income applicable to the common shareholders of The Bank of New York Mellon Corporation |
619 | 505 | 625 | |||||||||
Less: Earnings allocated to participating securities |
8 | 6 | 6 | |||||||||
Change in the excess of redeemable value over the fair value of noncontrolling interests |
(6 | ) | (1 | ) | 6 | |||||||
Net income applicable to the common shareholders of The Bank of New York Mellon Corporation after required adjustments for the calculation of basic and diluted earnings per share |
$ | 617 | $ | 500 | $ | 613 | ||||||
Average common shares and equivalents outstanding of The Bank of New York Mellon Corporation (in thousands) |
Quarter ended | |||||||||||
March 31, 2012 |
Dec. 31, 2011 |
March 31, 2011 |
||||||||||
Basic |
1,193,931 | 1,204,994 | 1,234,076 | |||||||||
Common stock equivalents |
8,688 | 6,985 | 10,778 | |||||||||
Less: Participating securities |
7,061 | 6,393 | 6,570 | |||||||||
Diluted |
1,195,558 | 1,205,586 | 1,238,284 | |||||||||
Anti-dilutive securities (a) |
94,498 | 91,745 | 79,555 | |||||||||
Earnings per share applicable to the common shareholders of The Bank of New York Mellon Corporation (b) (in dollars) |
Quarter ended | |||||||||||
March 31, 2012 |
Dec. 31, 2011 |
March 31, 2011 |
||||||||||
Basic |
$ | 0.52 | $ | 0.42 | $ | 0.50 | ||||||
Diluted |
$ | 0.52 | $ | 0.42 | $ | 0.50 |
(a) | Represents stock options, restricted stock, restricted stock units, participating securities and warrants outstanding but not included in the computation of diluted average common shares because their effect would be anti-dilutive. |
(b) | Basic and diluted earnings per share under the two-class method are determined on the net income reported on the income statement less earnings allocated to participating securities, and the change in the excess of redeemable value over the fair value of noncontrolling interests. |
See accompanying Notes to Consolidated Financial Statements.
60 BNY Mellon |
The Bank of New York Mellon Corporation (and its subsidiaries)
Consolidated Comprehensive Income Statement (unaudited) | ||||||||||||
Quarter ended | ||||||||||||
(in millions) | March 31, 2012 |
Dec. 31, 2011 |
March 31, 2011 |
|||||||||
Net income |
$ | 631 | $ | 478 | $ | 670 | ||||||
Other comprehensive income (loss), net of tax: |
||||||||||||
Foreign currency translation adjustments arising during the period |
172 | (170 | ) | 238 | ||||||||
Unrealized gain (loss) on assets available-for-sale: |
||||||||||||
Unrealized gain (loss) arising during the period |
237 | (18 | ) | 135 | ||||||||
Reclassification adjustment |
(24 | ) | 2 | (2 | ) | |||||||
Total unrealized gain (loss) on assets available-for-sale |
213 | (16 | ) | 133 | ||||||||
Defined benefit plans: |
||||||||||||
Net loss arising during the period |
- | (445 | ) | - | ||||||||
Foreign exchange adjustment |
- | (3 | ) | - | ||||||||
Amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost |
27 | 17 | 17 | |||||||||
Total defined benefit plans |
27 | (431 | ) | 17 | ||||||||
Net unrealized gain (loss) on cash flow hedges: |
||||||||||||
Unrealized hedge gain (loss) arising during the period |
- | (25 | ) | - | ||||||||
Reclassification adjustment |
3 | (2 | ) | - | ||||||||
Total unrealized gain (loss) on cash flow hedges |
3 | (27 | ) | - | ||||||||
Total other comprehensive income (loss), net of tax (a) |
415 | (644 | ) | 388 | ||||||||
Net (income) loss attributable to noncontrolling interests |
(12 | ) | 27 | (45 | ) | |||||||
Other comprehensive (income) loss attributable to noncontrolling interests |
(17 | ) | 21 | (36 | ) | |||||||
Net comprehensive income (loss) applicable to the common shareholders of The Bank of New York Mellon Corporation |
$ | 1,017 | $ | (118 | ) | $ | 977 |
(a) | Other comprehensive income (loss) attributable to The Bank of New York Mellon Corporation shareholders was $398 million for the quarter ended March 31, 2012, $(623) million for the quarter ended Dec. 31, 2011 and $352 million for the quarter ended March 31, 2011. |
BNY Mellon 61 |
The Bank of New York Mellon Corporation (and its subsidiaries)
Consolidated Balance Sheet (unaudited)
(dollar amounts in millions, except per share amounts) | March 31, 2012 |
Dec. 31, 2011 |
||||||
Assets |
||||||||
Cash and due from: |
||||||||
Banks |
$ | 4,333 | $ | 4,175 | ||||
Interest-bearing deposits with the Federal Reserve and other central banks |
62,030 | 90,243 | ||||||
Interest-bearing deposits with banks |
34,854 | 36,321 | ||||||
Federal funds sold and securities purchased under resale agreements |
5,437 | 4,510 | ||||||
Securities: |
||||||||
Held-to-maturity (fair value of $4,849 and $3,540) |
4,819 | 3,521 | ||||||
Available-for-sale |
83,374 | 78,467 | ||||||
Total securities |
88,193 | 81,988 | ||||||
Trading assets |
6,250 | 7,861 | ||||||
Loans |
43,028 | 43,979 | ||||||
Allowance for loan losses |
(386 | ) | (394 | ) | ||||
Net loans |
42,642 | 43,585 | ||||||
Premises and equipment |
1,715 | 1,681 | ||||||
Accrued interest receivable |
599 | 660 | ||||||
Goodwill |
18,002 | 17,904 | ||||||
Intangible assets |
5,072 | 5,152 | ||||||
Other assets (includes $1,200 and $1,848, at fair value) |
19,433 | 19,839 | ||||||
Subtotal assets of operations |
288,560 | 313,919 | ||||||
Assets of consolidated investment management funds, at fair value: |
||||||||
Trading assets |
11,079 | 10,751 | ||||||
Other assets |
530 | 596 | ||||||
Subtotal assets of consolidated investment management funds, at fair value |
11,609 | 11,347 | ||||||
Total assets |
$ | 300,169 | $ | 325,266 | ||||
Liabilities |
||||||||
Deposits: |
||||||||
Noninterest-bearing (principally U.S. offices) |
$ | 65,027 | $ | 95,335 | ||||
Interest-bearing deposits in U.S. offices |
38,608 | 41,231 | ||||||
Interest-bearing deposits in Non-U.S. offices |
88,827 | 82,528 | ||||||
Total deposits |
192,462 | 219,094 | ||||||
Federal funds purchased and securities sold under repurchase agreements |
8,285 | 6,267 | ||||||
Trading liabilities |
6,636 | 8,071 | ||||||
Payables to customers and broker-dealers |
12,959 | 12,671 | ||||||
Commercial paper |
1,070 | 10 | ||||||
Other borrowed funds |
2,062 | 2,174 | ||||||
Accrued taxes and other expenses |
5,819 | 6,235 | ||||||
Other liabilities (includes allowance for lending related commitments of $108 and $103, also includes $275 and $382, at fair value) |
5,383 | 6,525 | ||||||
Long-term debt (includes $320 and $326, at fair value) |
20,336 | 19,933 | ||||||
Subtotal liabilities of operations |
255,012 | 280,980 | ||||||
Liabilities of consolidated investment management funds, at fair value: |
||||||||
Trading liabilities |
10,290 | 10,053 | ||||||
Other liabilities |
38 | 32 | ||||||
Subtotal liabilities of consolidated investment management funds, at fair value |
10,328 | 10,085 | ||||||
Total liabilities |
265,340 | 291,065 | ||||||
Temporary equity |
||||||||
Redeemable noncontrolling interest |
120 | 114 | ||||||
Permanent equity |
||||||||
Common stock par value $0.01 per common share; authorized 3,500,000,000 common shares; issued 1,250,564,475 and 1,249,061,305 common shares |
12 | 12 | ||||||
Additional paid-in capital |
23,304 | 23,185 | ||||||
Retained earnings |
13,277 | 12,812 | ||||||
Accumulated other comprehensive loss, net of tax |
(1,229 | ) | (1,627 | ) | ||||
Less: Treasury stock of 57,848,021 and 39,386,698 common shares, at cost |
(1,364 | ) | (965 | ) | ||||
Total The Bank of New York Mellon Corporation shareholders equity |
34,000 | 33,417 | ||||||
Non-redeemable noncontrolling interests of consolidated investment management funds |
709 | 670 | ||||||
Total permanent equity |
34,709 | 34,087 | ||||||
Total liabilities, temporary equity and permanent equity |
$ | 300,169 | $ | 325,266 |
See accompanying Notes to Consolidated Financial Statements.
62 BNY Mellon
The Bank of New York Mellon Corporation (and its subsidiaries)
Consolidated Statement of Cash Flows (unaudited)
Three months ended March 31, |
||||||||
(in millions) | 2012 | 2011 | ||||||
Operating activities |
||||||||
Net income |
$ | 631 | $ | 670 | ||||
Net (income) attributable to noncontrolling interests |
(12 | ) | (45 | ) | ||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation |
619 | 625 | ||||||
Adjustments to reconcile net income to net cash provided by (used for) operating activities: |
||||||||
Provision for credit losses |
5 | - | ||||||
Pension plan contribution |
(11 | ) | (6 | ) | ||||
Depreciation and amortization |
299 | 183 | ||||||
Deferred tax expense (benefit) |
31 | 39 | ||||||
Net securities (gains) and venture capital (income) |
(44 | ) | (15 | ) | ||||
Change in trading activities |
176 | (692 | ) | |||||
Change in accruals and other, net |
(961 | ) | 292 | |||||
Net cash provided by operating activities |
114 | 426 | ||||||
Investing activities |
||||||||
Change in interest-bearing deposits with banks |
1,845 | (7,770 | ) | |||||
Change in interest-bearing deposits with Federal Reserve and other central banks |
28,213 | (6,052 | ) | |||||
Change in loans |
1,055 | (3,030 | ) | |||||
Purchases of securities held-to-maturity |
(1,441 | ) | (5 | ) | ||||
Paydowns of securities held-to-maturity |
61 | 56 | ||||||
Maturities of securities held-to-maturity |
131 | 198 | ||||||
Purchases of securities available-for-sale |
(13,227 | ) | (5,260 | ) | ||||
Sales of securities available-for-sale |
4,582 | 1,839 | ||||||
Paydowns of securities available-for-sale |
2,182 | 2,673 | ||||||
Maturities of securities available-for-sale |
2,273 | 1,873 | ||||||
Sales of loans and other real estate |
111 | 356 | ||||||
Change in federal funds sold and securities purchased under resale agreements |
(927 | ) | (1,123 | ) | ||||
Change in seed capital investments |
(11 | ) | - | |||||
Purchases of premises and equipment/capitalized software |
(129 | ) | (164 | ) | ||||
Acquisitions, net cash |
- | (12 | ) | |||||
Proceeds from the sale of premises and equipment |
5 | 5 | ||||||
Other, net |
(356 | ) | (64 | ) | ||||
Net cash provided by (used for) investing activities |
24,367 | (16,480 | ) | |||||
Financing activities |
||||||||
Change in deposits |
(27,549 | ) | 15,706 | |||||
Change in federal funds purchased and securities sold under repurchase agreements |
2,018 | 1,367 | ||||||
Change in payables to customers and broker-dealers |
288 | 588 | ||||||
Change in other borrowed funds |
(126 | ) | (1,861 | ) | ||||
Change in commercial paper |
1,060 | 3 | ||||||
Net proceeds from the issuance of long-term debt |
1,264 | 1,199 | ||||||
Repayments of long-term debt |
(773 | ) | (404 | ) | ||||
Proceeds from the exercise of stock options |
3 | 11 | ||||||
Issuance of common stock |
6 | 5 | ||||||
Treasury stock acquired |
(398 | ) | (60 | ) | ||||
Common cash dividends paid |
(158 | ) | (112 | ) | ||||
Other, net |
13 | (12 | ) | |||||
Net cash (used for) provided by financing activities |
(24,352 | ) | 16,430 | |||||
Effect of exchange rate changes on cash |
29 | 7 | ||||||
Change in cash and due from banks |
||||||||
Change in cash and due from banks |
158 | 383 | ||||||
Cash and due from banks at beginning of period |
4,175 | 3,675 | ||||||
Cash and due from banks at end of period |
$ | 4,333 | $ | 4,058 | ||||
Supplemental disclosures |
||||||||
Interest paid |
$ | 106 | $ | 102 | ||||
Income taxes paid |
208 | 135 | ||||||
Income taxes refunded |
2 | 3 |
See accompanying Notes to Consolidated Financial Statements.
BNY Mellon 63
The Bank of New York Mellon Corporation (and its subsidiaries)
Consolidated Statement of Changes in Equity (unaudited)
The Bank of New York Mellon Corporation shareholders | ||||||||||||||||||||||||||||||||
(in millions, except per share amounts) | Common stock |
Additional paid-in |
Retained earnings |
Accumulated comprehensive income (loss), net of tax |
Treasury stock |
Non- redeemable controlling consolidated investment management funds |
Total permanent equity |
Redeemable non- controlling interests/ temporary equity |
||||||||||||||||||||||||
Balance at Dec. 31, 2011 |
$ | 12 | $ | 23,185 | $ | 12,812 | $ | (1,627 | ) | $ | (965 | ) | $ | 670 | $ | 34,087 | (a) | $ | 114 | |||||||||||||
Shares issued to shareholders of noncontrolling interests |
- | - | - | - | - | - | - | 12 | ||||||||||||||||||||||||
Redemption of subsidiary shares from noncontrolling interests |
- | (9 | ) | - | - | - | - | (9 | ) | (7 | ) | |||||||||||||||||||||
Other net changes in noncontrolling interests |
- | 3 | 6 | - | - | 12 | 21 | (1 | ) | |||||||||||||||||||||||
Net income |
619 | 11 | 630 | 1 | ||||||||||||||||||||||||||||
Other comprehensive income |
- | - | - | 398 | - | 16 | 414 | 1 | ||||||||||||||||||||||||
Dividends on common stock at $0.13 per share |
- | - | (158 | ) | - | - | - | (158 | ) | - | ||||||||||||||||||||||
Repurchase of common stock |
- | - | - | - | (398 | ) | - | (398 | ) | - | ||||||||||||||||||||||
Common stock issued under: |
||||||||||||||||||||||||||||||||
Employee benefit plans |
- | 8 | - | - | - | - | 8 | - | ||||||||||||||||||||||||
Direct stock purchase and dividend reinvestment plan |
- | 5 | - | - | - | - | 5 | - | ||||||||||||||||||||||||
Stock awards and options exercised |
- | 112 | - | - | (1 | ) | - | 111 | - | |||||||||||||||||||||||
Other |
- | - | (2 | ) | - | - | - | (2 | ) | - | ||||||||||||||||||||||
Balance at March 31, 2012 |
$ | 12 | $ | 23,304 | $ | 13,277 | $ | (1,229 | ) | $ | (1,364 | ) | $ | 709 | $ | 34,709 | (a) | $ | 120 |
(a) | Includes total The Bank of New York Mellon Corporation common shareholders equity of $33,417 million at Dec. 31, 2011 and $34,000 million at March 31, 2012. |
See accompanying Notes to Consolidated Financial Statements.
64 BNY Mellon
Notes to Consolidated Financial Statements
BNY Mellon 65
Notes to Consolidated Financial Statements (continued)
66 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
BNY Mellon 67 |
Notes to Consolidated Financial Statements (continued)
The following tables show the aggregate related fair value of investments that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 months or more.
Temporarily impaired securities at March 31, 2012 | 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: |
||||||||||||||||||||||||
U.S. Treasury |
$ | 4,727 | $ | 101 | $ | - | $ | - | $ | 4,727 | $ | 101 | ||||||||||||
State and political subdivisions |
1,450 | 12 | 176 | 37 | 1,626 | 49 | ||||||||||||||||||
Agency RMBS |
8,547 | 27 | 133 | 1 | 8,680 | 28 | ||||||||||||||||||
Alt-A RMBS |
53 | 5 | 50 | 19 | 103 | 24 | ||||||||||||||||||
Prime RMBS |
113 | 8 | 518 | 49 | 631 | 57 | ||||||||||||||||||
Subprime RMBS |
22 | 13 | 382 | 162 | 404 | 175 | ||||||||||||||||||
Other RMBS |
168 | 4 | 822 | 210 | 990 | 214 | ||||||||||||||||||
Commercial MBS |
230 | 1 | 471 | 75 | 701 | 76 | ||||||||||||||||||
Asset-backed CLOs |
845 | 12 | 280 | 9 | 1,125 | 21 | ||||||||||||||||||
Other asset-backed securities |
141 | 1 | 18 | 2 | 159 | 3 | ||||||||||||||||||
Foreign covered bonds |
321 | 2 | 161 | - | 482 | 2 | ||||||||||||||||||
Corporate bonds |
120 | 3 | - | - | 120 | 3 | ||||||||||||||||||
Other debt securities |
2,311 | 2 | 58 | 22 | 2,369 | 24 | ||||||||||||||||||
Alt-A RMBS (a) |
266 | 11 | 99 | 13 | 365 | 24 | ||||||||||||||||||
Prime RMBS (a) |
84 | 5 | 37 | 2 | 121 | 7 | ||||||||||||||||||
Subprime RMBS (a) |
27 | 2 | - | - | 27 | 2 | ||||||||||||||||||
Total securities available-for-sale |
$ | 19,425 | $ | 209 | $ | 3,205 | $ | 601 | $ | 22,630 | $ | 810 | ||||||||||||
Held-to-maturity: |
||||||||||||||||||||||||
Alt-A RMBS |
$ | 47 | $ | 1 | $ | 79 | $ | 13 | $ | 126 | $ | 14 | ||||||||||||
Prime RMBS |
- | - | 57 | 7 | 57 | 7 | ||||||||||||||||||
Subprime RMBS |
- | - | 25 | 3 | 25 | 3 | ||||||||||||||||||
Other RMBS |
698 | 2 | 672 | 87 | 1,370 | 89 | ||||||||||||||||||
Commercial MBS |
- | - | 26 | 3 | 26 | 3 | ||||||||||||||||||
Total securities held-to-maturity |
$ | 745 | $ | 3 | $ | 859 | $ | 113 | $ | 1,604 | $ | 116 | ||||||||||||
Total temporarily impaired securities |
$ | 20,170 | $ | 212 | $ | 4,064 | $ | 714 | $ | 24,234 | $ | 926 |
(a) | Previously included in the Grantor Trust. The Grantor Trust was dissolved in the first quarter of 2011. |
Temporarily impaired securities at Dec. 31, 2011 | 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: |
||||||||||||||||||||||||
U.S. Treasury |
$ | 118 | $ | 2 | $ | - | $ | - | $ | 118 | $ | 2 | ||||||||||||
State and political subdivisions |
483 | 2 | 157 | 45 | 640 | 47 | ||||||||||||||||||
Agency RMBS |
3,844 | 10 | 140 | 1 | 3,984 | 11 | ||||||||||||||||||
Alt-A RMBS |
132 | 16 | 69 | 26 | 201 | 42 | ||||||||||||||||||
Prime RMBS |
324 | 25 | 447 | 77 | 771 | 102 | ||||||||||||||||||
Subprime RMBS |
- | - | 400 | 190 | 400 | 190 | ||||||||||||||||||
Other RMBS |
5 | 4 | 895 | 226 | 900 | 230 | ||||||||||||||||||
Commercial MBS |
340 | 2 | 495 | 75 | 835 | 77 | ||||||||||||||||||
Asset-backed CLOs |
1,143 | 26 | 211 | 11 | 1,354 | 37 | ||||||||||||||||||
Other asset-backed securities |
60 | 1 | 18 | 2 | 78 | 3 | ||||||||||||||||||
Foreign covered bonds |
368 | 1 | 406 | 2 | 774 | 3 | ||||||||||||||||||
Corporate bonds |
254 | 5 | - | - | 254 | 5 | ||||||||||||||||||
Other debt securities |
2,613 | 7 | 54 | 26 | 2,667 | 33 | ||||||||||||||||||
Alt-A RMBS (a) |
595 | 53 | 29 | 15 | 624 | 68 | ||||||||||||||||||
Prime RMBS (a) |
437 | 21 | - | - | 437 | 21 | ||||||||||||||||||
Subprime RMBS (a) |
50 | 3 | - | - | 50 | 3 | ||||||||||||||||||
Total securities available-for-sale |
$ | 10,766 | $ | 178 | $ | 3,321 | $ | 696 | $ | 14,087 | $ | 874 | ||||||||||||
Held-to-maturity: |
||||||||||||||||||||||||
Alt-A RMBS |
$ | 69 | $ | 3 | $ | 42 | $ | 16 | $ | 111 | $ | 19 | ||||||||||||
Prime RMBS |
- | - | 56 | 10 | 56 | 10 | ||||||||||||||||||
Subprime RMBS |
- | - | 25 | 3 | 25 | 3 | ||||||||||||||||||
Other RMBS |
107 | 2 | 573 | 91 | 680 | 93 | ||||||||||||||||||
Commercial MBS |
- | - | 26 | 2 | 26 | 2 | ||||||||||||||||||
Total securities held-to-maturity |
$ | 176 | $ | 5 | $ | 722 | $ | 122 | $ | 898 | $ | 127 | ||||||||||||
Total temporarily impaired securities |
$ | 10,942 | $ | 183 | $ | 4,043 | $ | 818 | $ | 14,985 | $ | 1,001 |
(a) | Previously included in the Grantor Trust. The Grantor Trust was dissolved in the first quarter of 2011. |
68 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
The following table shows the maturity distribution by carrying amount and yield (on a tax equivalent basis) of our investment securities portfolio at March 31, 2012.
Investment securities portfolio | U.S. Treasury | U.S. Government agency |
State and political subdivisions |
Other bonds, notes and debentures |
Mortgage/ asset-backed and equity securities |
|||||||||||||||||||||||||||||||||||||||
(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 | $ | 229 | 0.66 | % | $ | - | - | % | $ | 89 | 1.17 | % | $ | 2,903 | 1.16 | % | $ | - | - | % | $ | 3,221 | ||||||||||||||||||||||
Over 1 through 5 years | 9,233 | 0.98 | 1,009 | 1.61 | 1,784 | 1.68 | 13,889 | 1.47 | - | - | 25,915 | |||||||||||||||||||||||||||||||||
Over 5 through 10 years | 2,263 | 2.83 | 99 | 0.02 | 1,608 | 3.45 | 2,046 | 2.98 | - | - | 6,016 | |||||||||||||||||||||||||||||||||
Over 10 years | 2,526 | 3.13 | - | - | 492 | 5.07 | 219 | 5.09 | - | - | 3,237 | |||||||||||||||||||||||||||||||||
Mortgage-backed securities | - | - | - | - | - | - | - | - | 42,074 | 3.90 | 42,074 | |||||||||||||||||||||||||||||||||
Asset-backed securities | - | - | - | - | - | - | - | - | 1,920 | 2.02 | 1,920 | |||||||||||||||||||||||||||||||||
Equity securities (b) | - | - | - | - | - | - | - | - | 991 | - | 991 | |||||||||||||||||||||||||||||||||
Total |
$ | 14,251 | 1.65 | % | $ | 1,108 | 1.65 | % | $ | 3,973 | 2.80 | % | $ | 19,057 | 1.62 | % | $ | 44,985 | 3.74 | % | $ | 83,374 | ||||||||||||||||||||||
Securities held-to-maturity: | ||||||||||||||||||||||||||||||||||||||||||||
One year or less | $ | - | - | % | $ | - | - | % | $ | 1 | 6.87 | % | $ | 3 | 0.11 | % | $ | - | - | % | $ | 4 | ||||||||||||||||||||||
Over 1 through 5 years | 554 | 1.82 | - | - | - | - | - | - | - | - | 554 | |||||||||||||||||||||||||||||||||
Over 5 through 10 years | 351 | 2.65 | - | - | 31 | 6.65 | - | - | - | - | 382 | |||||||||||||||||||||||||||||||||
Over 10 years | - | - | - | - | 62 | 6.57 | - | - | - | - | 62 | |||||||||||||||||||||||||||||||||
Mortgage-backed securities | - | - | - | - | - | - | - | - | 3,847 | 2.49 | 3,847 | |||||||||||||||||||||||||||||||||
Total |
$ | 905 | 2.14 | % | $ | - | - | % | $ | 94 | 6.60 | % | $ | 3 | 0.11 | % | $ | 3,847 | 2.49 | % | $ | 4,849 |
(a) | Yields are based upon the amortized cost of securities. |
(b) | Includes money market funds. |
BNY Mellon 69 |
Notes to Consolidated Financial Statements (continued)
70 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
Allowance for credit losses
Transactions in the allowance for credit losses are summarized as follows:
Allowance for credit losses activity for the quarter ended March 31, 2012 | ||||||||||||||||||||||||||||||||||||
(in millions) | Commercial | Commercial real estate |
Financial institutions |
Lease financing |
Wealth management loans and mortgages |
Other residential mortgages |
All Other (a) |
Foreign | Total | |||||||||||||||||||||||||||
Beginning balance |
$ | 91 | $ | 34 | $ | 63 | $ | 66 | $ | 29 | $ | 156 | $ | $ | 58 | $ | 497 | |||||||||||||||||||
Charge-offs |
- | - | - | - | - | (10 | ) | - | - | (10 | ) | |||||||||||||||||||||||||
Recoveries |
- | - | - | - | - | 2 | - | - | 2 | |||||||||||||||||||||||||||
Net (charge-offs) recoveries |
- | - | - | - | - | (8 | ) | - | - | (8 | ) | |||||||||||||||||||||||||
Provision |
6 | (1 | ) | (10 | ) | (4 | ) | 5 | 17 | - | (8 | ) | 5 | |||||||||||||||||||||||
Ending balance |
$ | 97 | $ | 33 | $ | 53 | $ | 62 | $ | 34 | $ | 165 | $ | - | $ | 50 | $ | 494 | ||||||||||||||||||
Allowance for: |
||||||||||||||||||||||||||||||||||||
Loans losses |
$ | 36 | $ | 22 | $ | 30 | $ | 62 | $ | 29 | $ | 165 | $ | - | $ | 42 | $ | 386 | ||||||||||||||||||
Unfunded commitments |
61 | 11 | 23 | - | 5 | - | - | 8 | 108 | |||||||||||||||||||||||||||
Individually evaluated for impairment: |
||||||||||||||||||||||||||||||||||||
Loan balance |
$ | 66 | $ | 38 | $ | 14 | $ | $ | 31 | $ | - | $ | - | $ | 10 | $ | 159 | |||||||||||||||||||
Allowance for loan losses |
17 | 6 | 5 | - | 7 | - | - | 3 | 38 | |||||||||||||||||||||||||||
Collectively evaluated for impairment: |
||||||||||||||||||||||||||||||||||||
Loan balance |
$ | 697 | $ | 1,403 | $ | 4,881 | $ | 1,518 | $ | 7,281 | $ | 1,854 | $ | 15,964 | (a) | $ | 9,271 | $ | 42,869 | |||||||||||||||||
Allowance for loan losses |
19 | 16 | 25 | 62 | 22 | 165 | 39 | 348 |
(a) | Includes $1,971 million of domestic overdrafts, $13,144 million of margin loans and $849 million of other loans at March 31, 2012. |
Allowance for credit losses activity for the quarter ended Dec. 31, 2011 | ||||||||||||||||||||||||||||||||||||
(in millions) | Commercial | Commercial real estate |
Financial institutions |
Lease financing |
Wealth management loans and mortgages |
Other residential mortgages |
All Other (a) |
Foreign | Total | |||||||||||||||||||||||||||
Beginning balance |
$ | 98 | $ | 31 | $ | 30 | $ | 91 | $ | 31 | $ | 162 | $ | $ | 55 | $ | 498 | |||||||||||||||||||
Charge-offs |
- | (1 | ) | (7 | ) | - | - | (15 | ) | - | (2 | ) | (25 | ) | ||||||||||||||||||||||
Recoveries |
- | - | - | - | - | 1 | - | - | 1 | |||||||||||||||||||||||||||
Net (charge-offs) recoveries |
- | (1 | ) | (7 | ) | - | - | (14 | ) | - | (2 | ) | (24 | ) | ||||||||||||||||||||||
Provision |
(7 | ) | 4 | 40 | (25 | ) | (2 | ) | 8 | - | 5 | 23 | ||||||||||||||||||||||||
Ending balance |
$ | 91 | $ | 34 | $ | 63 | $ | 66 | $ | 29 | $ | 156 | $ | - | $ | 58 | $ | 497 | ||||||||||||||||||
Allowance for: |
||||||||||||||||||||||||||||||||||||
Loans losses |
$ | 33 | $ | 24 | $ | 41 | $ | 66 | $ | 23 | $ | 156 | $ | - | $ | 51 | $ | 394 | ||||||||||||||||||
Unfunded commitments |
58 | 10 | 22 | - | 6 | - | - | 7 | 103 | |||||||||||||||||||||||||||
Individually evaluated for impairment: |
||||||||||||||||||||||||||||||||||||
Loan balance |
$ | 26 | $ | 38 | $ | 24 | $ | - | $ | 30 | $ | - | $ | - | $ | 10 | $ | 128 | ||||||||||||||||||
Allowance for loan losses |
9 | 7 | 7 | - | 5 | - | - | 4 | 32 | |||||||||||||||||||||||||||
Collectively evaluated for impairment: |
||||||||||||||||||||||||||||||||||||
Loan balance |
$ | 726 | $ | 1,411 | $ | 4,582 | $ | 1,558 | $ | 7,312 | $ | 1,923 | $ | 16,341 | (a) | $ | 9,998 | $ | 43,851 | |||||||||||||||||
Allowance for loan losses |
24 | 17 | 34 | 66 | 18 | 156 | - | 47 | 362 |
(a) | Includes $2,958 million of domestic overdrafts, $12,760 million of margin loans and $623 million of other loans at Dec. 31, 2011. |
BNY Mellon 71 |
Notes to Consolidated Financial Statements (continued)
Allowance for credit losses activity for the quarter ended March 31, 2011 | ||||||||||||||||||||||||||||||||||||
(in millions) | Commercial | Commercial real estate |
Financial institutions |
Lease financing |
Wealth management loans and mortgages |
Other residential mortgages |
All Other (a) |
Foreign | Total | |||||||||||||||||||||||||||
Beginning balance |
$ | 93 | $ | 40 | $ | 11 | $ | 90 | $ | 41 | $ | 235 | $ | 1 | $ | 60 | $ | 571 | ||||||||||||||||||
Charge-offs |
- | (3 | ) | - | - | - | (16 | ) | - | - | (19 | ) | ||||||||||||||||||||||||
Recoveries |
1 | - | 1 | - | - | - | - | - | 2 | |||||||||||||||||||||||||||
Net (charge-offs) recoveries |
1 | (3 | ) | 1 | - | - | (16 | ) | - | - | (17 | ) | ||||||||||||||||||||||||
Provision |
6 | (3 | ) | 5 | 3 | (12 | ) | (6 | ) | 1 | 6 | - | ||||||||||||||||||||||||
Ending balance |
$ | 100 | $ | 34 | $ | 17 | $ | 93 | $ | 29 | $ | 213 | $ | 2 | $ | 66 | $ | 554 | ||||||||||||||||||
Allowance for: |
||||||||||||||||||||||||||||||||||||
Loans losses |
$ | 49 | $ | 24 | $ | 3 | $ | 93 | $ | 23 | $ | 213 | $ | 2 | $ | 60 | $ | 467 | ||||||||||||||||||
Unfunded commitments |
51 | 10 | 14 | - | 6 | - | - | 6 | 87 | |||||||||||||||||||||||||||
Individually evaluated for impairment: |
||||||||||||||||||||||||||||||||||||
Loan balance |
$ | 30 | $ | 36 | $ | 4 | $ | - | $ | 52 | $ | - | $ | - | $ | 7 | $ | 129 | ||||||||||||||||||
Allowance for loan losses |
10 | 5 | - | - | 5 | - | - | 2 | 22 | |||||||||||||||||||||||||||
Collectively evaluated for impairment: |
||||||||||||||||||||||||||||||||||||
Loan balance |
$ | 1,091 | $ | 1,542 | $ | 4,425 | $ | 1,579 | $ | 6,609 | $ | 2,128 | $ | 13,202 | (a) | $ | 9,307 | $ | 39,883 | |||||||||||||||||
Allowance for loan losses |
39 | 19 | 3 | 93 | 18 | 213 | 2 | 58 | 445 |
(a) | Includes $3,381 million of domestic overdrafts, $9,369 million of margin loans and $452 million of other loans at March 31, 2011. |
72 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
Impaired loans
The table below sets forth information about our impaired loans. We use the discounted cash flow method as the primary method for valuing impaired loans.
Impaired loans | Quarter ended | |||||||||||||||||||||||
March 31, 2012 | Dec. 31, 2011 | March 31, 2011 | ||||||||||||||||||||||
(in millions) | Average recorded |
Interest income |
Average recorded investment |
Interest income recognized |
Average recorded investment |
Interest income recognized |
||||||||||||||||||
Impaired loans with an allowance: |
||||||||||||||||||||||||
Commercial |
$ | 46 | $ | 1 | $ | 26 | $ | 1 | $ | 28 | $ | - | ||||||||||||
Commercial real estate |
35 | - | 25 | - | 24 | - | ||||||||||||||||||
Financial institutions |
16 | - | 17 | - | 4 | - | ||||||||||||||||||
Wealth management loans and mortgages |
28 | - | 26 | - | 52 | - | ||||||||||||||||||
Foreign |
10 | - | 11 | - | 7 | - | ||||||||||||||||||
Total impaired loans with an allowance |
135 | 1 | 105 | 1 | 115 | - | ||||||||||||||||||
Impaired loans without an allowance: |
||||||||||||||||||||||||
Commercial |
- | - | - | - | 4 | - | ||||||||||||||||||
Commercial real estate |
3 | - | 8 | - | 17 | - | ||||||||||||||||||
Financial institutions |
3 | - | 1 | - | - | - | ||||||||||||||||||
Wealth management loans and mortgages |
3 | - | 3 | - | 1 | - | ||||||||||||||||||
Total impaired loans without an allowance (a) |
9 | - | 12 | - | 22 | - | ||||||||||||||||||
Total impaired loans |
$ | 144 | $ | 1 | $ | 117 | $ | 1 | $ | 137 | $ | - |
(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 | March 31, 2012 | Dec. 31, 2011 | ||||||||||||||||||||||
(in millions) | Recorded investment |
Unpaid principal |
Related allowance (a) |
Recorded investment |
Unpaid principal balance |
Related allowance (a) |
||||||||||||||||||
Impaired loans with an allowance: |
||||||||||||||||||||||||
Commercial (a) |
$ | 66 | $ | 70 | $ | 17 | $ | 26 | $ | 31 | $ | 9 | ||||||||||||
Commercial real estate |
35 | 41 | 6 | 35 | 41 | 7 | ||||||||||||||||||
Financial institutions |
11 | 11 | 5 | 21 | 21 | 7 | ||||||||||||||||||
Wealth management loans and mortgages |
28 | 28 | 7 | 27 | 27 | 5 | ||||||||||||||||||
Foreign |
10 | 18 | 3 | 10 | 18 | 4 | ||||||||||||||||||
Total impaired loans with an allowance |
150 | 168 | 38 | 119 | 138 | 32 | ||||||||||||||||||
Impaired loans without an allowance: |
||||||||||||||||||||||||
Commercial |
- | - | N/A | - | - | N/A | ||||||||||||||||||
Commercial real estate |
3 | 3 | N/A | 3 | 3 | N/A | ||||||||||||||||||
Financial institutions |
3 | 9 | N/A | 3 | 9 | N/A | ||||||||||||||||||
Wealth management loans and mortgages |
3 | 3 | N/A | 3 | 3 | N/A | ||||||||||||||||||
Total impaired loans without an allowance (b) |
9 | 15 | N/A | 9 | 15 | N/A | ||||||||||||||||||
Total impaired loans (c) |
$ | 159 | $ | 183 | $ | 38 | $ | 128 | $ | 153 | $ | 32 |
(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 $2 million of impaired loans in amounts individually less than $1 million at both March 31, 2012 and Dec. 31, 2011. The allowance for loan loss associated with these loans totaled less than $1 million at both March 31, 2012 and Dec. 31, 2011. |
N/A | Not applicable. |
BNY Mellon 73 |
Notes to Consolidated Financial Statements (continued)
Past due loans
The table below sets forth information about our past due loans.
Past due loans and still accruing | March 31, 2012 | Dec. 31, 2011 | ||||||||||||||||||||||||||||||
Days past due | Total | Days past due | Total | |||||||||||||||||||||||||||||
(in millions) | 30-59 | 60-89 | >90 | past due | 30-59 | 60-89 | >90 | past due | ||||||||||||||||||||||||
Domestic: |
||||||||||||||||||||||||||||||||
Commercial real estate |
$ | 114 | $ | - | $ | - | $ | 114 | $ | 118 | $ | 9 | $ | - | $ | 127 | ||||||||||||||||
Wealth management loans and mortgages |
49 | 1 | - | 50 | 89 | 3 | - | 92 | ||||||||||||||||||||||||
Commercial |
- | - | - | - | 60 | 7 | - | 67 | ||||||||||||||||||||||||
Other residential mortgages |
28 | 5 | 9 | 42 | 36 | 10 | 13 | 59 | ||||||||||||||||||||||||
Financial institutions |
1 | - | - | 1 | 36 | - | - | 36 | ||||||||||||||||||||||||
Total domestic |
192 | 6 | 9 | 207 | 339 | 29 | 13 | 381 | ||||||||||||||||||||||||
Foreign |
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Total past due loans |
$ | 192 | $ | 6 | $ | 9 | $ | 207 | $ | 339 | $ | 29 | $ | 13 | $ | 381 |
74 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
Commercial loan portfolio
Commercial loan portfolio Credit risk profile by creditworthiness category | ||||||||||||||||||||||||
Commercial | Commercial real estate | Financial institutions | ||||||||||||||||||||||
(in millions) | March 31, 2012 |
Dec. 31, 2011 |
March 31, 2012 |
Dec. 31, 2011 |
March 31, 2012 |
Dec. 31, 2011 |
||||||||||||||||||
Investment grade |
$ | 793 | $ | 906 | $ | 1,005 | $ | 1,062 | $ | 9,552 | $ | 9,643 | ||||||||||||
Noninvestment grade |
386 | 374 | 436 | 387 | 1,421 | 1,501 | ||||||||||||||||||
Total |
$ | 1,179 | $ | 1,280 | $ | 1,441 | $ | 1,449 | $ | 10,973 | $ | 11,144 |
BNY Mellon 75 |
Notes to Consolidated Financial Statements (continued)
Goodwill by business (in millions) |
Investment Management |
Investment Services |
Other | Consolidated | ||||||||||||
Balance at Dec. 31, 2011 |
$ | 9,373 | $ | 8,491 | $ | 40 | $ | 17,904 | ||||||||
Foreign exchange translation |
59 | 40 | - | 99 | ||||||||||||
Other (a) |
(1 | ) | (10 | ) | 10 | (1 | ) | |||||||||
Balance at March 31, 2012 |
$ | 9,431 | $ | 8,521 | $ | 50 | $ | 18,002 |
(a) | Other changes in goodwill include purchase price adjustments and certain other reclassifications. |
Goodwill by business (in millions) |
Investment Management |
Investment Services |
Other | Consolidated | ||||||||||||
Balance at Dec. 31, 2010 |
$ | 9,359 | $ | 8,643 | $ | 40 | $ | 18,042 | ||||||||
Foreign exchange translation |
53 | 63 | - | 116 | ||||||||||||
Other (a) |
(1 | ) | (1 | ) | - | (2 | ) | |||||||||
Balance at March 31, 2011 |
$ | 9,411 | $ | 8,705 | $ | 40 | $ | 18,156 |
(a) | Other changes in goodwill include purchase price adjustments and certain other reclassifications. |
76 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
Intangible assets
The tables below provide a breakdown of intangible assets by business.
Intangible assets net carrying amount by business (in millions) |
Investment Management |
Investment Services |
Other | Consolidated | ||||||||||||
Balance at Dec. 31, 2011 |
$ | 2,382 | $ | 1,922 | $ | 848 | $ | 5,152 | ||||||||
Amortization |
(48 | ) | (48 | ) | - | (96 | ) | |||||||||
Foreign exchange translation |
13 | 3 | - | 16 | ||||||||||||
Other (a) |
- | (2 | ) | 2 | - | |||||||||||
Balance at March 31, 2012 |
$ | 2,347 | $ | 1,875 | $ | 850 | $ | 5,072 |
(a) | Other changes in intangible assets include purchase price adjustments and certain other reclassifications. |
Intangible assets net carrying amount by business (in millions) |
Investment Management |
Investment Services |
Other | Consolidated | ||||||||||||
Balance at Dec. 31, 2010 |
$ | 2,592 | $ | 2,254 | $ | 850 | $ | 5,696 | ||||||||
Acquisitions |
- | 12 | - | 12 | ||||||||||||
Amortization |
(55 | ) | (53 | ) | - | (108 | ) | |||||||||
Foreign exchange translation |
13 | 7 | - | 20 | ||||||||||||
Impairment |
- | (3 | ) | - | (3 | ) | ||||||||||
Balance at March 31, 2011 |
$ | 2,550 | $ | 2,217 | $ | 850 | $ | 5,617 |
The table below provides a breakdown of intangible assets by type.
Intangible assets | March 31, 2012 | Dec. 31, 2011 | ||||||||||||||||||
(in millions) | Gross carrying amount |
Accumulated amortization |
Net carrying amount |
Remaining weighted- average amortization period |
Net carrying |
|||||||||||||||
Subject to amortization: |
||||||||||||||||||||
Customer relationships - Investment Management |
$ | 2,104 | $ | (1,225 | ) | $ | 879 | 12 | yrs. | $ | 920 | |||||||||
Customer contracts - Investment Services |
2,354 | (880 | ) | 1,474 | 13 | 1,517 | ||||||||||||||
Other |
132 | (99 | ) | 33 | 5 | 36 | ||||||||||||||
Total subject to amortization |
4,590 | (2,204 | ) | 2,386 | 12 | yrs. | 2,473 | |||||||||||||
Not subject to amortization: (a) |
||||||||||||||||||||
Trade name |
1,368 | N/A | 1,368 | N/A | 1,366 | |||||||||||||||
Customer relationships |
1,318 | N/A | 1,318 | N/A | 1,313 | |||||||||||||||
Total not subject to amortization |
2,686 | N/A | 2,686 | N/A | 2,679 | |||||||||||||||
Total intangible assets |
$ | 7,276 | $ | (2,204 | ) | $ | 5,072 | N/A | $ | 5,152 |
(a) | Intangible assets not subject to amortization have an indefinite life. |
N/A - Not applicable.
BNY Mellon 77 |
Notes to Consolidated Financial Statements (continued)
78 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
Note 9 Employee benefit plans
The components of net periodic benefit cost are as follows:
Net periodic benefit cost | Quarter ended | |||||||||||||||||||||||
March 31, 2012 | March 31, 2011 | |||||||||||||||||||||||
(in millions) | Domestic pension benefits |
Foreign pension benefits |
Health care benefits |
Domestic pension benefits |
Foreign pension benefits |
Health care benefits |
||||||||||||||||||
Service cost |
$ | 15 | $ | 8 | $ | 1 | $ | 16 | $ | 8 | $ | 1 | ||||||||||||
Interest cost |
42 | 9 | 3 | 44 | 8 | 3 | ||||||||||||||||||
Expected return on assets |
(68 | ) | (12 | ) | (2 | ) | (70 | ) | (11 | ) | (2 | ) | ||||||||||||
Other |
38 | 3 | 3 | 23 | 4 | 2 | ||||||||||||||||||
Net periodic benefit cost |
$ | 27 | $ | 8 | $ | 5 | $ | 13 | $ | 9 | $ | 4 |
BNY Mellon 79 |
Notes to Consolidated Financial Statements (continued)
Global location strategy 2009 restructuring charge reserve activity
(in millions) |
Severance | Asset other |
Total | |||||||||
Original restructuring charge |
$ | 102 | $ | 37 | $ | 139 | ||||||
Additional charges |
14 | 6 | 20 | |||||||||
Utilization |
(89 | ) | (32 | ) | (121 | ) | ||||||
Balance at Dec. 31, 2011 |
$ | 27 | $ | 11 | $ | 38 | ||||||
Additional charges (recovery) |
(7 | ) | - | (7 | ) | |||||||
Utilization |
(7 | ) | - | (7 | ) | |||||||
Balance at March 31, 2012 |
$ | 13 | $ | 11 | $ | 24 |
80 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
BNY Mellon 81 |
Notes to Consolidated Financial Statements (continued)
82 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
Note 13 Other comprehensive income
Components of other comprehensive income for the quarter ended March 31, 2012 |
||||||||||||
(in millions) | Pre-tax amount |
Tax (expense) benefit |
After-tax amount |
|||||||||
Foreign currency translation adjustment arising during the period |
$ | 129 | $ | 43 | $ | 172 | ||||||
Unrealized gain (loss) on assets available-for-sale: |
||||||||||||
Unrealized gain (loss) arising during period |
378 | (141 | ) | 237 | ||||||||
Reclassification adjustment |
(40 | ) | 16 | (24 | ) | |||||||
Net unrealized gain (loss) on assets available-for-sale |
338 | (125 | ) | 213 | ||||||||
Defined benefit plans: |
||||||||||||
Amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost |
44 | (17 | ) | 27 | ||||||||
Total defined benefit plans |
44 | (17 | ) | 27 | ||||||||
Unrealized gain (loss) on cash flow hedges: |
||||||||||||
Unrealized hedge gain (loss) arising during period |
1 | (1 | ) | - | ||||||||
Reclassification adjustment |
5 | (2 | ) | 3 | ||||||||
Net unrealized gain (loss) on cash flow hedges |
6 | (3 | ) | 3 | ||||||||
Total other comprehensive income (loss) |
$ | 517 | $ | (102 | ) | $ | 415 |
Components of other comprehensive income for the quarter ended Dec. 31, 2011 |
||||||||||||
(in millions) | Pre-tax amount |
Tax (expense) benefit |
After-tax amount |
|||||||||
Foreign currency translation adjustment arising during the period |
$ | (157 | ) | $ | (13 | ) | $ | (170 | ) | |||
Unrealized gain (loss) on assets available-for-sale: |
||||||||||||
Unrealized gain (loss) arising during period |
(48 | ) | 30 | (18 | ) | |||||||
Reclassification adjustment |
3 | (1 | ) | 2 | ||||||||
Net unrealized gain (loss) on assets available-for-sale |
(45 | ) | 29 | (16 | ) | |||||||
Defined benefit plans: |
||||||||||||
Net loss arising during the period |
(741 | ) | 296 | (445 | ) | |||||||
Foreign exchange adjustment |
(4 | ) | 1 | (3 | ) | |||||||
Amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost |
29 | (12 | ) | 17 | ||||||||
Total defined benefit plans |
(716 | ) | 285 | (431 | ) | |||||||
Unrealized gain (loss) on cash flow hedges: |
||||||||||||
Unrealized hedge gain (loss) arising during period |
(44 | ) | 19 | (25 | ) | |||||||
Reclassification adjustment |
(4 | ) | 2 | (2 | ) | |||||||
Net unrealized gain (loss) on cash flow hedges |
(48 | ) | 21 | (27 | ) | |||||||
Total other comprehensive income (loss) |
$ | (966 | ) | $ | 322 | $ | (644 | ) |
Components of other comprehensive income for the quarter ended March 31, 2011 |
||||||||||||
(in millions) | Pre-tax amount |
Tax (expense) benefit |
After-tax amount |
|||||||||
Foreign currency translation adjustment arising during the period |
$ | 193 | $ | 45 | $ | 238 | ||||||
Unrealized gain (loss) on assets available-for-sale: |
||||||||||||
Unrealized gain (loss) arising during period |
226 | (91 | ) | 135 | ||||||||
Reclassification adjustment |
(5 | ) | 3 | (2 | ) | |||||||
Net unrealized gain (loss) on assets available-for-sale |
221 | (88 | ) | 133 | ||||||||
Defined benefit plans: |
||||||||||||
Amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost |
26 | (9 | ) | 17 | ||||||||
Total defined benefit plans |
26 | (9 | ) | 17 | ||||||||
Unrealized gain (loss) on cash flow hedges: |
||||||||||||
Unrealized gain (loss) arising during period |
1 | (1 | ) | - | ||||||||
Net unrealized gain (loss) on cash flow hedges |
1 | (1 | ) | - | ||||||||
Total other comprehensive income (loss) |
$ | 441 | $ | (53 | ) | $ | 388 |
BNY Mellon 83 |
Notes to Consolidated Financial Statements (continued)
84 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
BNY Mellon 85 |
Notes to Consolidated Financial Statements (continued)
Summary of financial instruments | March 31, 2012 | Dec. 31, 2011 | ||||||||||||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total estimated fair value |
Carrying amount |
Estimated fair value |
Carrying amount |
|||||||||||||||||||||
Assets: |
||||||||||||||||||||||||||||
Interest-bearing deposits with the Federal Reserve and other central banks |
$ | - | $ | 62,030 | $ | - | $ | 62,030 | $ | 62,030 | $ | 90,243 | $ | 90,243 | ||||||||||||||
Interest-bearing deposits with banks |
- | 34,902 | - | 34,902 | 34,854 | 36,381 | 36,321 | |||||||||||||||||||||
Federal funds sold and securities purchased under resale agreements |
- | 5,437 | - | 5,437 | 5,437 | 4,510 | 4,510 | |||||||||||||||||||||
Securities held-to-maturity |
905 | 3,944 | - | 4,849 | 4,819 | 3,540 | 3,521 | |||||||||||||||||||||
Loans |
- | 40,180 | - | 40,180 | 40,074 | 41,166 | 40,970 | |||||||||||||||||||||
Other financial assets |
4,333 | 1,156 | - | 5,489 | 5,489 | 5,336 | 5,336 | |||||||||||||||||||||
Total |
$ | 5,238 | $ | 147,649 | $ | - | $ | 152,887 | $ | 152,703 | $ | 181,176 | $ | 180,901 | ||||||||||||||
Liabilities: |
||||||||||||||||||||||||||||
Noninterest-bearing deposits |
$ | - | $ | 65,027 | $ | - | $ | 65,027 | $ | 65,027 | $ | 95,335 | $ | 95,335 | ||||||||||||||
Interest-bearing deposits |
- | 127,436 | - | 127,436 | 127,435 | 123,759 | 123,759 | |||||||||||||||||||||
Federal funds purchased and securities sold under repurchase agreements |
- | 8,285 | - | 8,285 | 8,285 | 6,267 | 6,267 | |||||||||||||||||||||
Payables to customers and broker-dealers |
- | 12,959 | - | 12,959 | 12,959 | 12,671 | 12,671 | |||||||||||||||||||||
Borrowings |
- | 3,365 | - | 3,365 | 3,365 | 2,376 | 2,376 | |||||||||||||||||||||
Long-term debt |
- | 21,003 | - | 21,003 | 20,336 | 20,459 | 19,933 | |||||||||||||||||||||
Total |
$ | - | $ | 238,075 | $ | - | $ | 238,075 | $ | 237,407 | $ | 260,867 | $ | 260,341 |
The table below summarizes the carrying amount of the hedged financial instruments, the notional amount of the hedge and the unrealized gain (loss) (estimated fair value) of the derivatives.
Hedged financial instruments | Carrying amount |
Notional amount of hedge |
Unrealized | |||||||||||||
(in millions) | Gain | (Loss) | ||||||||||||||
At March 31, 2012: |
||||||||||||||||
Interest-bearing deposits with banks |
$ | 9,211 | $ | 9,211 | $ | 42 | $ | - | ||||||||
Securities available-for-sale |
4,642 | 4,540 | 84 | (160 | ) | |||||||||||
Deposits |
10 | 10 | 1 | - | ||||||||||||
Long-term debt |
15,925 | 15,233 | 901 | (18 | ) | |||||||||||
At Dec. 31, 2011: |
||||||||||||||||
Interest-bearing deposits with banks |
$ | 8,789 | $ | 8,789 | $ | 441 | $ | (17 | ) | |||||||
Securities available-for-sale |
4,354 | 4,009 | - | (289 | ) | |||||||||||
Deposits |
10 | 10 | 1 | - | ||||||||||||
Long-term debt |
15,048 | 14,262 | 964 | (9 | ) |
86 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
BNY Mellon 87 |
Notes to Consolidated Financial Statements (continued)
88 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
BNY Mellon 89 |
Notes to Consolidated Financial Statements (continued)
90 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
Assets and liabilities measured at fair value on a recurring basis at March 31, 2012 | ||||||||||||||||||||
(dollar amounts in millions) | Level 1 | Level 2 | Level 3 | Netting (a) | Total carrying value |
|||||||||||||||
Available-for-sale securities: |
||||||||||||||||||||
U.S. Treasury |
$ | 14,251 | $ | - | $ | - | $ | - | $ | 14,251 | ||||||||||
U.S. Government agencies |
- | 1,108 | - | - | 1,108 | |||||||||||||||
Sovereign debt |
41 | 12,167 | - | - | 12,208 | |||||||||||||||
State and political subdivisions (b) |
- | 3,930 | 43 | - | 3,973 | |||||||||||||||
Agency RMBS |
- | 32,497 | - | - | 32,497 | |||||||||||||||
Alt-A RMBS |
- | 284 | - | - | 284 | |||||||||||||||
Prime RMBS |
- | 811 | - | - | 811 | |||||||||||||||
Subprime RMBS |
- | 421 | - | - | 421 | |||||||||||||||
Other RMBS |
- | 1,347 | - | - | 1,347 | |||||||||||||||
Commercial MBS |
- | 3,482 | - | - | 3,482 | |||||||||||||||
Asset-backed CLOs |
- | 1,338 | - | - | 1,338 | |||||||||||||||
Other asset-backed securities |
- | 582 | - | - | 582 | |||||||||||||||
Equity securities |
14 | 20 | - | - | 34 | |||||||||||||||
Money market funds (b) |
957 | - | - | - | 957 | |||||||||||||||
Corporate bonds |
- | 1,696 | - | - | 1,696 | |||||||||||||||
Other debt securities |
- | 1,946 | - | - | 1,946 | |||||||||||||||
Foreign covered bonds |
2,496 | 711 | - | - | 3,207 | |||||||||||||||
Alt-A RMBS (c) |
- | 1,962 | - | - | 1,962 | |||||||||||||||
Prime RMBS (c) |
- | 1,153 | - | - | 1,153 | |||||||||||||||
Subprime RMBS (c) |
- | 117 | - | - | 117 | |||||||||||||||
Total available-for-sale |
17,759 | 65,572 | 43 | - | 83,374 | |||||||||||||||
Trading assets: |
||||||||||||||||||||
Debt and equity instruments (d) |
614 | 1,770 | 58 | - | 2,442 | |||||||||||||||
Derivative assets: |
||||||||||||||||||||
Interest rate |
63 | 22,151 | 35 | N/A | ||||||||||||||||
Foreign exchange |
3,939 | 181 | - | N/A | ||||||||||||||||
Equity |
83 | 378 | 37 | N/A | ||||||||||||||||
Total derivative assets |
4,085 | 22,710 | 72 | (23,059 | ) (g) | 3,808 | ||||||||||||||
Total trading assets |
4,699 | 24,480 | 130 | (23,059 | ) | 6,250 | ||||||||||||||
Loans |
- | 9 | - | - | 9 | |||||||||||||||
Other assets (e) |
68 | 981 | 151 | - | 1,200 | |||||||||||||||
Subtotal assets of operations at fair value |
22,526 | 91,042 | 324 | (23,059 | ) | 90,833 | ||||||||||||||
Percentage of assets prior to netting |
20 | % | 80 | % | - | % | ||||||||||||||
Assets of consolidated investment management funds: |
||||||||||||||||||||
Trading assets |
332 | 10,747 | - | - | 11,079 | |||||||||||||||
Other assets |
371 | 159 | - | - | 530 | |||||||||||||||
Total assets of consolidated investment management funds |
703 | 10,906 | - | - | 11,609 | |||||||||||||||
Total assets |
$ | 23,229 | $ | 101,948 | $ | 324 | $ | (23,059 | ) | $ | 102,442 | |||||||||
Percentage of assets prior to netting |
19 | % | 81 | % | - | % | ||||||||||||||
Trading liabilities: |
||||||||||||||||||||
Debt and equity instruments |
$ | 686 | $ | 505 | $ | - | $ | - | $ | 1,191 | ||||||||||
Derivative liabilities: |
||||||||||||||||||||
Interest rate |
- | 23,037 | 178 | N/A | ||||||||||||||||
Foreign exchange |
3,734 | 119 | - | N/A | ||||||||||||||||
Equity |
45 | 348 | 68 | N/A | ||||||||||||||||
Other |
- | 1 | - | N/A | ||||||||||||||||
Total derivative liabilities |
3,779 | 23,505 | 246 | (22,085 | ) (g) | 5,445 | ||||||||||||||
Total trading liabilities |
4,465 | 24,010 | 246 | (22,085 | ) | 6,636 | ||||||||||||||
Long-term debt (b) |
- | 320 | - | - | 320 | |||||||||||||||
Other liabilities (f) |
- | 275 | - | - | 275 | |||||||||||||||
Subtotal liabilities at fair value |
4,465 | 24,605 | 246 | (22,085 | ) | 7,231 | ||||||||||||||
Percentage of liabilities prior to netting |
15 | % | 84 | % | 1 | % | ||||||||||||||
Liabilities of consolidated investment management funds: |
||||||||||||||||||||
Trading liabilities |
- | 10,290 | - | - | 10,290 | |||||||||||||||
Other liabilities |
2 | 36 | - | - | 38 | |||||||||||||||
Total liabilities of consolidated investment management funds |
2 | 10,326 | - | - | 10,328 | |||||||||||||||
Total liabilities |
$ | 4,467 | $ | 34,931 | $ | 246 | $ | (22,085 | ) | $ | 17,559 | |||||||||
Percentage of liabilities prior to netting |
11 | % | 88 | % | 1 | % |
(a) | ASC 815 permits the netting of derivative receivables and derivative payables under legally enforceable master netting agreements and permits the netting of cash collateral. |
(b) | Includes certain interests in securitizations. |
(c) | Previously included in the Grantor Trust. |
(d) | Includes loans classified as trading assets and certain interests in securitizations. |
(e) | Includes private equity investments, seed capital, a brokerage account, and derivatives in designated hedging relationships. |
(f) | Includes the fair value adjustment for certain unfunded lending-related commitments and derivatives in designated hedging relationships and support agreements. |
(g) | Netting cannot be disaggregated by product. |
BNY Mellon 91 |
Notes to Consolidated Financial Statements (continued)
Assets and liabilities measured at fair value on a recurring basis at Dec. 31, 2011 | ||||||||||||||||||||
(dollar amounts in millions) | Level 1 | Level 2 | Level 3 | Netting (a) | Total carrying value |
|||||||||||||||
Available-for-sale securities: |
||||||||||||||||||||
U.S. Treasury |
$ | 17,326 | $ | - | $ | - | $ | - | $ | 17,326 | ||||||||||
U.S. Government agencies |
- | 958 | - | - | 958 | |||||||||||||||
Sovereign debt |
44 | 11,910 | - | - | 11,954 | |||||||||||||||
State and political subdivisions (b) |
- | 2,694 | 45 | - | 2,739 | |||||||||||||||
Agency RMBS |
- | 26,796 | - | - | 26,796 | |||||||||||||||
Alt-A RMBS |
- | 273 | - | - | 273 | |||||||||||||||
Prime RMBS |
- | 815 | - | - | 815 | |||||||||||||||
Subprime RMBS |
- | 418 | - | - | 418 | |||||||||||||||
Other RMBS |
- | 903 | - | - | 903 | |||||||||||||||
Commercial MBS |
- | 3,339 | - | - | 3,339 | |||||||||||||||
Asset-backed CLOs |
- | 1,444 | - | - | 1,444 | |||||||||||||||
Other asset-backed securities |
- | 532 | - | - | 532 | |||||||||||||||
Equity securities |
9 | 21 | - | - | 30 | |||||||||||||||
Money market funds (b) |
973 | - | - | - | 973 | |||||||||||||||
Corporate bonds |
- | 1,738 | - | - | 1,738 | |||||||||||||||
Other debt securities |
- | 2,622 | 3 | - | 2,625 | |||||||||||||||
Foreign covered bonds |
1,820 | 605 | - | - | 2,425 | |||||||||||||||
Alt-A RMBS (c) |
- | 1,879 | - | - | 1,879 | |||||||||||||||
Prime RMBS (c) |
- | 1,175 | - | - | 1,175 | |||||||||||||||
Subprime RMBS (c) |
- | 125 | - | - | 125 | |||||||||||||||
Total available-for-sale |
20,172 | 58,247 | 48 | - | 78,467 | |||||||||||||||
Trading assets: |
||||||||||||||||||||
Debt and equity instruments (d) |
485 | 1,655 | 63 | - | 2,203 | |||||||||||||||
Derivative assets: |
||||||||||||||||||||
Interest rate |
164 | 26,434 | 54 | N/A | ||||||||||||||||
Foreign exchange |
4,519 | 113 | - | N/A | ||||||||||||||||
Equity |
91 | 284 | 43 | N/A | ||||||||||||||||
Other |
- | 3 | - | N/A | ||||||||||||||||
Total derivative assets |
4,774 | 26,834 | 97 | (26,047 | ) (g) | 5,658 | ||||||||||||||
Total trading assets |
5,259 | 28,489 | 160 | (26,047 | ) | 7,861 | ||||||||||||||
Loans |
- | 10 | - | - | 10 | |||||||||||||||
Other assets (e) |
672 | 1,019 | 157 | - | 1,848 | |||||||||||||||
Subtotal assets of operations at fair value |
26,103 | 87,765 | 365 | (26,047 | ) | 88,186 | ||||||||||||||
Percentage of assets prior to netting |
23 | % | 77 | % | - | % | ||||||||||||||
Assets of consolidated investment management funds: |
||||||||||||||||||||
Trading assets |
323 | 10,428 | - | - | 10,751 | |||||||||||||||
Other assets |
453 | 143 | - | - | 596 | |||||||||||||||
Total assets of consolidated investment management funds |
776 | 10,571 | - | - | 11,347 | |||||||||||||||
Total assets |
$ | 26,879 | $ | 98,336 | $ | 365 | $ | (26,047 | ) | $ | 99,533 | |||||||||
Percentage of assets prior to netting |
22 | % | 78 | % | - | % | ||||||||||||||
Trading liabilities: |
||||||||||||||||||||
Debt and equity instruments |
$ | 418 | $ | 537 | $ | - | $ | - | $ | 955 | ||||||||||
Derivative liabilities: |
||||||||||||||||||||
Interest rate |
- | 27,201 | 239 | N/A | ||||||||||||||||
Foreign exchange |
4,311 | 44 | - | N/A | ||||||||||||||||
Equity |
55 | 200 | 75 | N/A | ||||||||||||||||
Total derivative liabilities |
4,366 | 27,445 | 314 | (25,009 | ) (g) | 7,116 | ||||||||||||||
Total trading liabilities |
4,784 | 27,982 | 314 | (25,009 | ) | 8,071 | ||||||||||||||
Long-term debt (b) |
- | 326 | - | - | 326 | |||||||||||||||
Other liabilities (f) |
14 | 368 | - | - | 382 | |||||||||||||||
Subtotal liabilities at fair value |
4,798 | 28,676 | 314 | (25,009 | ) | 8,779 | ||||||||||||||
Percentage of liabilities prior to netting |
14 | % | 85 | % | 1 | % | ||||||||||||||
Liabilities of consolidated investment management funds: |
||||||||||||||||||||
Trading liabilities |
- | 10,053 | - | - | 10,053 | |||||||||||||||
Other liabilities |
2 | 30 | - | - | 32 | |||||||||||||||
Total liabilities of consolidated investment management funds |
2 | 10,083 | - | - | 10,085 | |||||||||||||||
Total liabilities |
$ | 4,800 | $ | 38,759 | $ | 314 | $ | (25,009 | ) | $ | 18,864 | |||||||||
Percentage of liabilities prior to netting |
11 | % | 88 | % | 1 | % |
(a) | ASC 815 permits the netting of derivative receivables and derivative payables under legally enforceable master netting agreements and permits the netting of cash collateral. |
(b) | Includes certain interests in securitizations. |
(c) | Previously included in the Grantor Trust. |
(d) | Includes loans classified as trading assets and certain interests in securitizations. |
(e) | Includes private equity investments, seed capital, a brokerage account, and derivatives in designated hedging relationships. |
(f) | Includes the fair value adjustment for certain unfunded lending-related commitments and derivatives in designated hedging relationships and support agreements. |
(g) | Netting cannot be disaggregated by product. |
92 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
Details of certain items measured at fair value on a recurring basis | ||||||||||||||||||||||||||||||||||||||||
March 31, 2012 | Dec. 31, 2011 | |||||||||||||||||||||||||||||||||||||||
Ratings | Ratings | |||||||||||||||||||||||||||||||||||||||
(dollar amounts in millions) | Total carrying |
AAA/ AA- |
A+/ A- |
BBB+/ BBB- |
BB+ and lower |
Total carrying value (a) |
AAA/ AA- |
A+/ A- |
BBB+/ BBB- |
BB+ and lower |
||||||||||||||||||||||||||||||
Alt-A RMBS, originated in: |
||||||||||||||||||||||||||||||||||||||||
2006-2007 |
$ | 110 | - | % | - | % | - | % | 100 | % | $ | 99 | - | % | - | % | - | % | 100 | % | ||||||||||||||||||||
2005 |
110 | - | - | - | 100 | 113 | - | - | - | 100 | ||||||||||||||||||||||||||||||
2004 and earlier |
64 | 26 | 13 | 48 | 13 | 61 | 27 | 13 | 47 | 13 | ||||||||||||||||||||||||||||||
Total Alt-A RMBS |
$ | 284 | 6 | % | 3 | % | 11 | % | 80 | % | $ | 273 | 6 | % | 3 | % | 11 | % | 80 | % | ||||||||||||||||||||
Prime RMBS, originated in: |
||||||||||||||||||||||||||||||||||||||||
2007 |
$ | 115 | 42 | % | 4 | % | - | % | 54 | % | $ | 121 | 38 | % | 4 | % | - | % | 58 | % | ||||||||||||||||||||
2006 |
74 | - | - | - | 100 | 75 | - | - | - | 100 | ||||||||||||||||||||||||||||||
2005 |
237 | 32 | - | - | 68 | 230 | 32 | - | - | 68 | ||||||||||||||||||||||||||||||
2004 and earlier |
385 | 27 | 39 | 12 | 22 | 389 | 29 | 38 | 11 | 22 | ||||||||||||||||||||||||||||||
Total prime RMBS |
$ | 811 | 28 | % | 19 | % | 6 | % | 47 | % | $ | 815 | 28 | % | 19 | % | 5 | % | 48 | % | ||||||||||||||||||||
Subprime RMBS, originated in: |
||||||||||||||||||||||||||||||||||||||||
2007 |
$ | 2 | - | % | - | % | 100 | % | - | % | $ | 2 | - | % | 2 | % | 98 | % | - | % | ||||||||||||||||||||
2005 |
89 | 23 | 12 | 27 | 38 | 82 | 23 | 12 | 29 | 36 | ||||||||||||||||||||||||||||||
2004 and earlier |
330 | 4 | 15 | 19 | 62 | 334 | 5 | 15 | 18 | 62 | ||||||||||||||||||||||||||||||
Total subprime RMBS |
$ | 421 | 8 | % | 14 | % | 21 | % | 57 | % | $ | 418 | 8 | % | 14 | % | 21 | % | 57 | % | ||||||||||||||||||||
Commercial MBS - Domestic, originated in: |
||||||||||||||||||||||||||||||||||||||||
2009-2012 |
$ | 238 | 100 | % | - | % | - | % | - | % | $ | 200 | 100 | % | - | % | - | % | - | % | ||||||||||||||||||||
2008 |
25 | 16 | 84 | - | - | 25 | 16 | 84 | - | - | ||||||||||||||||||||||||||||||
2007 |
832 | 60 | 32 | 8 | - | 789 | 66 | 26 | 8 | - | ||||||||||||||||||||||||||||||
2006 |
937 | 83 | 17 | - | - | 892 | 85 | 15 | - | - | ||||||||||||||||||||||||||||||
2005 |
721 | 94 | 6 | - | - | 696 | 94 | 6 | - | - | ||||||||||||||||||||||||||||||
2004 and earlier |
409 | 96 | 3 | 1 | - | 403 | 97 | 2 | 1 | - | ||||||||||||||||||||||||||||||
Total commercial MBS - Domestic |
$ | 3,162 | 82 | % | 16 | % | 2 | % | - | % | $ | 3,005 | 84 | % | 14 | % | 2 | % | - | % | ||||||||||||||||||||
Foreign covered bonds: |
||||||||||||||||||||||||||||||||||||||||
Germany |
$ | 1,515 | 99 | % | 1 | % | - | % | - | % | $ | 1,461 | 99 | % | 1 | % | - | % | - | % | ||||||||||||||||||||
Canada |
955 | 100 | - | - | - | 795 | 100 | - | - | - | ||||||||||||||||||||||||||||||
Other |
737 | 100 | - | - | - | 169 | 100 | - | - | - | ||||||||||||||||||||||||||||||
Total foreign covered bonds |
$ | 3,207 | 100 | % | - | % | - | % | - | % | $ | 2,425 | 100 | % | - | % | - | % | - | % | ||||||||||||||||||||
European floating rate notes available-for-sale: |
||||||||||||||||||||||||||||||||||||||||
United Kingdom |
$ | 855 | 64 | % | 36 | % | - | % | - | % | $ | 686 | 72 | % | 28 | % | - | % | - | % | ||||||||||||||||||||
Netherlands |
335 | 90 | 10 | - | - | 47 | 35 | 65 | - | - | ||||||||||||||||||||||||||||||
Ireland |
208 | 12 | - | 46 | 42 | 203 | - | 50 | 47 | 3 | ||||||||||||||||||||||||||||||
Italy |
148 | 100 | - | - | - | 150 | 100 | - | - | - | ||||||||||||||||||||||||||||||
Luxembourg |
146 | - | 100 | - | - | 140 | - | 100 | - | - | ||||||||||||||||||||||||||||||
Australia |
95 | 92 | 8 | - | - | 101 | 91 | 9 | - | - | ||||||||||||||||||||||||||||||
Germany |
71 | - | 8 | 91 | 1 | 93 | 21 | 6 | 73 | - | ||||||||||||||||||||||||||||||
France |
10 | 100 | - | - | - | 9 | 100 | - | - | - | ||||||||||||||||||||||||||||||
Total European floating rate notes available-for-sale |
$ | 1,868 | 60 | % | 27 | % | 8 | % | 5 | % | $ | 1,429 | 55 | % | 34 | % | 11 | % | - | % | ||||||||||||||||||||
Sovereign debt: |
||||||||||||||||||||||||||||||||||||||||
United Kingdom |
$ | 4,743 | 100 | % | - | % | - | % | - | % | $ | 4,526 | 100 | % | - | % | - | % | - | % | ||||||||||||||||||||
Netherlands |
3,590 | 100 | - | - | - | 2,230 | 100 | - | - | - | ||||||||||||||||||||||||||||||
France |
2,194 | 100 | - | - | - | 2,790 | 100 | - | - | - | ||||||||||||||||||||||||||||||
Germany |
1,625 | 100 | - | - | - | 2,347 | 100 | - | - | - | ||||||||||||||||||||||||||||||
Other |
56 | 98 | 2 | - | - | 61 | 97 | 3 | - | - | ||||||||||||||||||||||||||||||
Total sovereign debt |
$ | 12,208 | 100 | % | - | % | - | % | - | % | $ | 11,954 | 100 | % | - | % | - | % | - | % | ||||||||||||||||||||
Alt-A RMBS (b), originated in: |
||||||||||||||||||||||||||||||||||||||||
2007 |
$ | 584 | - | % | - | % | - | % | 100 | % | $ | 554 | - | % | - | % | - | % | 100 | % | ||||||||||||||||||||
2006 |
521 | - | - | - | 100 | 488 | - | - | - | 100 | ||||||||||||||||||||||||||||||
2005 |
643 | 4 | - | 1 | 95 | 628 | 5 | - | 1 | 94 | ||||||||||||||||||||||||||||||
2004 and earlier |
214 | - | 4 | 26 | 70 | 209 | - | 4 | 27 | 69 | ||||||||||||||||||||||||||||||
Total Alt-A RMBS (b) |
$ | 1,962 | 2 | % | - | % | 3 | % | 95 | % | $ | 1,879 | 2 | % | - | % | 3 | % | 95 | % | ||||||||||||||||||||
Prime RMBS (b), originated in: |
||||||||||||||||||||||||||||||||||||||||
2007 |
$ | 361 | - | % | - | % | - | % | 100 | % | $ | 370 | - | % | - | % | - | % | 100 | % | ||||||||||||||||||||
2006 |
306 | - | - | - | 100 | 308 | - | - | - | 100 | ||||||||||||||||||||||||||||||
2005 |
452 | 1 | 3 | - | 96 | 465 | - | 4 | - | 96 | ||||||||||||||||||||||||||||||
2004 and earlier |
34 | 8 | - | 22 | 70 | 32 | 9 | - | 22 | 69 | ||||||||||||||||||||||||||||||
Total prime RMBS (b) |
$ | 1,153 | - | % | 1 | % | 1 | % | 98 | % | $ | 1,175 | - | % | 2 | % | 1 | % | 97 | % | ||||||||||||||||||||
Subprime RMBS (b), originated in: |
||||||||||||||||||||||||||||||||||||||||
2007 |
$ | 4 | - | % | - | % | - | % | 100 | % | $ | 3 | - | % | - | % | - | % | 100 | % | ||||||||||||||||||||
2006 |
66 | - | - | - | 100 | 74 | - | - | - | 100 | ||||||||||||||||||||||||||||||
2005 |
11 | - | - | - | 100 | 11 | - | - | - | 100 | ||||||||||||||||||||||||||||||
2004 and earlier |
36 | 5 | 34 | - | 61 | 37 | 5 | 34 | - | 61 | ||||||||||||||||||||||||||||||
Total subprime RMBS (b) |
$ | 117 | 2 | % | 10 | % | - | % | 88 | % | $ | 125 | 2 | % | 10 | % | - | % | 88 | % |
(a) | At March 31, 2012 and Dec. 31, 2011, the German foreign covered bonds were considered Level 1 in the valuation hierarchy. All other assets in the table above are primarily Level 2 assets in the valuation hierarchy. |
(b) | Previously included in the Grantor Trust. |
BNY Mellon 93 |
Notes to Consolidated Financial Statements (continued)
Fair value measurements for assets using significant unobservable inputs for three months ended March 31, 2012 |
||||||||||||||||||||||||
Available-for-sale securities | Trading assets | |||||||||||||||||||||||
(in millions) | State and political subdivisions |
Other debt securities |
Debt and equity instruments |
Derivative assets |
Other assets |
Total assets |
||||||||||||||||||
Fair value at Dec. 31, 2011 |
$ | 45 | $ | 3 | $ | 63 | $ | 97 | $ | 157 | $ | 365 | ||||||||||||
Total gains or (losses) for the period: |
||||||||||||||||||||||||
Included in earnings (or changes in net assets) |
- | (a) | (3 | ) (a) | (3 | ) (b) | (25 | ) (b) | 3 | (c) | (28 | ) | ||||||||||||
Purchases, sales and settlements: |
||||||||||||||||||||||||
Purchases |
- | - | - | - | 3 | 3 | ||||||||||||||||||
Sales |
- | - | (2 | ) | - | (4 | ) | (6 | ) | |||||||||||||||
Settlements |
(2 | ) | - | - | - | (8 | ) | (10 | ) | |||||||||||||||
Fair value at March 31, 2012 |
$ | 43 | $ | - | $ | 58 | $ | 72 | $ | 151 | $ | 324 | ||||||||||||
Change in unrealized gains or (losses) for the period included in earnings (or changes in net assets) for assets held at the end of the reporting period |
$ | (3 | ) | $ | (25 | ) | $ | - | $ | (28 | ) |
(a) | Realized gains (losses) are reported in securities gains (losses). Unrealized gains (losses) are reported in accumulated other comprehensive income (loss) except for the credit portion of OTTI losses which are recorded in securities gains (losses). |
(b) | Reported in foreign exchange and other trading revenue. |
(c) | Reported in investment income. |
Fair value measurements for liabilities using significant unobservable inputs for three months ended March 31, 2012 |
||||||||
Trading liabilities | ||||||||
Derivative liabilities |
Total liabilities |
|||||||
(in millions) | ||||||||
Fair value at Dec. 31, 2011 |
$ | 314 | $ | 314 | ||||
Total (gains) or losses for the period: |
||||||||
Included in earnings (or changes in net liabilities) |
(68 | ) (a) | (68 | ) | ||||
Fair value at March 31, 2012 |
$ | 246 | $ | 246 | ||||
Change in unrealized (gains) or losses for the period included in earnings (or changes in net assets) for liabilities held at the end of the reporting period |
$ | (51 | ) | $ | (51 | ) |
(a) | Reported in foreign exchange and other trading revenue. |
94 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
Fair value measurements for assets using significant unobservable inputs for three months ended March 31, 2011 |
||||||||||||||||||||||||||||
Available-for-sale securities | Trading assets | |||||||||||||||||||||||||||
(in millions) | State and political subdivisions |
Other debt securities |
Debt and equity instruments |
Derivative assets |
Loans | Other assets |
Total assets |
|||||||||||||||||||||
Fair value at Dec. 31, 2010 |
$ | 10 | $ | 58 | $ | 32 | $ | 119 | $ | 6 | $ | 113 | $ | 338 | ||||||||||||||
Transfers into Level 3 |
- | 6 | - | 1 | - | - | 7 | |||||||||||||||||||||
Transfers out of Level 3 |
- | - | - | 14 | 2 | - | 16 | |||||||||||||||||||||
Total gains or (losses) for the period: |
||||||||||||||||||||||||||||
Included in earnings (or changes in net assets) |
- | (a) | - | (a) | - | (b) | 25 | (b) | - | 6 | (c) | 31 | ||||||||||||||||
Purchases, issues, sales and settlements: |
||||||||||||||||||||||||||||
Purchases |
- | - | - | - | - | 1 | 1 | |||||||||||||||||||||
Fair value at March 31, 2011 |
$ | 10 | $ | 64 | $ | 32 | $ | 131 | $ | 4 | $ | 120 | $ | 361 | ||||||||||||||
Change in unrealized gains or (losses) for the period included in earnings (or changes in net assets) for assets held at the end of the reporting period |
$ | - | $ | 38 | $ | - | $ | - | $ | 38 |
(a) | Realized gains (losses) are reported in securities gains (losses). Unrealized gains (losses) are reported in accumulated other comprehensive income (loss) except for the credit portion of OTTI losses which are recorded in securities gains (losses). |
(b) | Reported in foreign exchange and other trading revenue. |
(c) | Reported in investment income. |
Fair value measurements for liabilities using significant unobservable inputs for three months ended March 31, 2011 |
||||||||||||||||
Trading liabilities | ||||||||||||||||
(in millions) | Debt and equity instruments |
Derivative liabilities |
Other liabilities |
Total liabilities |
||||||||||||
Fair value at Dec. 31, 2010 |
$ | 6 | $ | 171 | $ | 2 | $ | 179 | ||||||||
Total (gains) or losses for the period: |
||||||||||||||||
Included in earnings (or changes in net assets) |
- | (49 | ) (a) | - | (49 | ) | ||||||||||
Purchases, issues, sales and settlements: |
||||||||||||||||
Settlements |
(6 | ) | 4 | - | (2 | ) | ||||||||||
Fair value at March 31, 2011 |
$ | - | $ | 126 | $ | 2 | $ | 128 | ||||||||
Change in unrealized (gains) or losses for the period included in earnings (or changes in net assets) for liabilities held at the end of the reporting period |
$ | - | $ | (19 | ) | $ | - | $ | (19 | ) |
(a) | Reported in foreign exchange and other trading revenue. |
BNY Mellon 95 |
Notes to Consolidated Financial Statements (continued)
Level 3 unobservable inputs
The following tables present the unobservable inputs used in valuation of assets and liabilities classified as Level 3 within the fair value hierarchy.
Quantitative information about Level 3 fair value measurements of assets | ||||||||||||
(dollars in millions) | Fair value at March 31, 2012 |
Valuation techniques |
Unobservable input |
Range | ||||||||
Measured on a recurring basis: |
||||||||||||
Available-for-sale securities: |
||||||||||||
subdivisions |
$ | 43 | Discounted cash flow | Expected credit loss | 9 - 41% | |||||||
Trading assets: |
||||||||||||
Debt and equity instruments: |
||||||||||||
Structured debt |
29 | Option pricing model | Correlation risk | 15% | ||||||||
Long-term foreign exchange volatility | 13-18% | |||||||||||
Distressed debt |
29 | Discounted cash flows | Expected maturity | 3-10 years | ||||||||
Credit spreads | 200-900 bps | |||||||||||
Derivative assets: |
||||||||||||
Interest rate: |
||||||||||||
Structured foreign |
35 | Option pricing model | Correlation risk | 0-25% | ||||||||
Long-term foreign exchange volatility | 13-18% | |||||||||||
Equity: |
||||||||||||
Equity options |
37 | Option pricing model | Long-term equity volatility | 23-32% | ||||||||
Measured on a nonrecurring basis: |
||||||||||||
Loans |
44 | Discounted cash flows | Timing of sale | 0-21 months | ||||||||
Cap rate | 5.5 8.0% | |||||||||||
Cost to complete/sell | 0-29% |
Quantitative information about Level 3 fair value measurements of liabilities | ||||||||||||
(dollars in millions) | Fair value at March 31, 2012 |
Valuation techniques |
Unobservable input |
Range | ||||||||
Measured on a recurring basis: |
||||||||||||
Trading liabilities: |
||||||||||||
Derivative liabilities: |
||||||||||||
Interest rate: |
||||||||||||
Structured foreign |
$ | 178 | Option pricing model | Correlation risk | 0-25 | % | ||||||
Long-term foreign exchange volatility | 13-18 | % | ||||||||||
Equity: |
||||||||||||
Equity options |
68 | Option pricing model | Long-term equity volatility | 23-32 | % |
(a) The option pricing model uses market inputs such as foreign currency exchange rates, interest rates and volatility to calculate the fair value of the option.
bps basis points
96 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
Assets measured at fair value on a nonrecurring basis at March 31, 2012 | Total | |||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | carrying value | ||||||||||||
Loans (a) |
$ | - | $ | 213 | $ | 44 | $ | 257 | ||||||||
Other assets (b) |
- | 111 | - | 111 | ||||||||||||
Total assets at fair value on a nonrecurring basis |
$ | - | $ | 324 | $ | 44 | $ | 368 |
Assets measured at fair value on a nonrecurring basis at Dec. 31, 2011 | Total | |||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | carrying value | ||||||||||||
Loans (a) |
$ | - | $ | 178 | $ | 43 | $ | 221 | ||||||||
Other assets (b) |
- | 126 | - | 126 | ||||||||||||
Total assets at fair value on a nonrecurring basis |
$ | - | $ | 304 | $ | 43 | $ | 347 |
(a) | During the quarters ended March 31, 2012 and Dec. 31, 2011, the fair value of these loans was reduced $13 million and $32 million, respectively, based on the fair value of the underlying collateral as allowed by ASC 310, Accounting by Creditors for Impairment of a Loan, with an offset to the allowance for credit losses. |
(b) | Includes other assets received in satisfaction of debt and loans held for sale. Loans held for sale are carried on the balance sheet at the lower of cost or market value. |
BNY Mellon 97 |
Notes to Consolidated Financial Statements (continued)
98 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
BNY Mellon 99 |
Notes to Consolidated Financial Statements (continued)
Impact of derivative instruments on the balance sheet | ||||||||||||||||||||||||
Notional Value | Asset Derivatives Fair Value (a) |
Liability Derivatives Fair Value (a) |
||||||||||||||||||||||
(in millions) | March 31, 2012 |
Dec. 31, 2011 |
March 31, 2012 |
Dec. 31, 2011 |
March 31, 2012 |
Dec. 31, 2011 |
||||||||||||||||||
Derivatives designated as hedging instruments (b): |
||||||||||||||||||||||||
Interest rate contracts |
$ | 19,783 | $ | 18,281 | $ | 986 | $ | 965 | $ | 178 | $ | 298 | ||||||||||||
Foreign exchange contracts |
14,599 | 14,160 | 49 | 635 | 11 | 21 | ||||||||||||||||||
Total derivatives designated as hedging instruments |
$ | 1,035 | $ | 1,600 | $ | 189 | $ | 319 | ||||||||||||||||
Derivatives not designated as hedging instruments (c): |
||||||||||||||||||||||||
Interest rate contracts |
$ | 962,564 | $ | 975,308 | $ | 22,249 | $ | 26,652 | $ | 23,215 | $ | 27,440 | ||||||||||||
Equity contracts |
9,746 | 8,205 | 498 | 418 | 461 | 330 | ||||||||||||||||||
Credit contracts |
270 | 333 | - | 3 | 1 | - | ||||||||||||||||||
Foreign exchange contracts |
406,788 | 379,235 | 4,120 | 4,632 | 3,853 | 4,355 | ||||||||||||||||||
Total derivatives not designated as hedging instruments |
$ | 26,867 | $ | 31,705 | $ | 27,530 | $ | 32,125 | ||||||||||||||||
Total derivatives fair value (d) |
$ | 27,902 | $ | 33,305 | $ | 27,719 | $ | 32,444 | ||||||||||||||||
Effect of master netting agreements |
(23,059 | ) | (26,047 | ) | (22,085 | ) | (25,009 | ) | ||||||||||||||||
Fair value after effect of master netting agreements |
$ | 4,843 | $ | 7,258 | $ | 5,634 | $ | 7,435 |
(a) | Derivative financial instruments are reported net of cash collateral received and paid of $1,148 million and $174 million, respectively, at March 31, 2012, and $1,269 million and $231 million, respectively at Dec. 31, 2011. |
(b) | The fair value of asset derivatives and liability derivatives designated as hedging instruments is recorded as other assets and other liabilities, respectively, on the 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 balance sheet. |
(d) | Fair values are on a gross basis, before consideration of master netting agreements, as required by ASC 815. |
Impact of derivative instruments on the income statement (in millions)
|
| |||||||||||||||||||||||||||||||
Derivatives in fair value hedging |
Location of gain or (loss) recognized in income on |
Gain or (loss) recognized in income on derivatives |
Location of gain or (loss) recognized in income on |
Gain or (loss) recognized in hedged item |
||||||||||||||||||||||||||||
relationships | derivatives | 1Q12 | 4Q11 | 1Q11 | hedged item | 1Q12 | 4Q11 | 1Q11 | ||||||||||||||||||||||||
Interest rate contracts |
Net interest revenue | $ | 127 | $ | (192 | ) | $ | (79 | ) | Net interest revenue | $ | (127 | ) | $ | 185 | $ | 73 |
Derivatives in cash flow hedging |
Gain or (loss) recognized in accumulated OCI on derivatives (effective portion) |
Location of gain or (loss) reclassified from accumulated OCI into income |
Gain
or (loss) reclassified from accumulated OCI into income (effective portion) |
Location of gain or (loss) recognized in income on derivatives (ineffective portion and amount excluded from |
Gain or (loss) recognized in income on derivatives (ineffectiveness portion and amount excluded from effectiveness testing) |
|||||||||||||||||||||||||||||||||||
relationships | 1Q12 | 4Q11 | 1Q11 | (effective portion) | 1Q12 | 4Q11 | 1Q11 | effectiveness testing) | 1Q12 | 4Q11 | 1Q11 | |||||||||||||||||||||||||||||
FX contracts |
$ | (2 | ) | $ | (61 | ) | $ | (5 | ) | Net interest revenue | $ | (4 | ) | $ | (10 | ) | $ | (11 | ) | Net interest revenue | $ | - | $ | - | $ | - | ||||||||||||||
FX contracts |
3 | - | - | Other revenue | 2 | (2 | ) | 3 | Other revenue | 0.1 | (0.1 | ) | (0.1 | ) | ||||||||||||||||||||||||||
FX contracts |
342 | 43 | (491 | ) | Trading revenue | 342 | 43 | (491 | ) | Trading revenue | - | - | - | |||||||||||||||||||||||||||
FX contracts |
(1 | ) | - | 3 | Salary expense | (1 | ) | - | - | Salary expense | - | - | - | |||||||||||||||||||||||||||
Total |
$ | 342 | $ | (18 | ) | $ | (493 | ) | $ | 339 | $ | 31 | $ | (499 | ) | $ | 0.1 | $ | (0.1 | ) | $ | (0.1 | ) |
Derivatives in net investment hedging |
Gain or (loss) recognized in accumulated OCI on derivatives (effective portion) |
Location of gain or (loss) reclassified from accumulated OCI into income |
Gain
or (loss) reclassified from accumulated OCI into income (effective portion) |
Location of gain or (loss) recognized in income on derivatives (ineffective portion and amount excluded from |
Gain or (loss) recognized in income on derivatives (ineffectiveness portion and amount excluded from effectiveness testing) |
|||||||||||||||||||||||||||||||||||
relationships | 1Q12 | 4Q11 | 1Q11 | (effective portion) | 1Q12 | 4Q11 | 1Q11 | effectiveness testing) | 1Q12 | 4Q11 | 1Q11 | |||||||||||||||||||||||||||||
FX contracts |
$ | (139 | ) | $ | 36 | $ | (169 | ) | Net interest revenue | $ | - | $ | - | $ | - | Other revenue | $ | (0.1 | ) | $ | 0.1 | $ | 0.1 |
100 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
BNY Mellon 101 |
Notes to Consolidated Financial Statements (continued)
102 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
BNY Mellon 103 |
Notes to Consolidated Financial Statements (continued)
104 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
BNY Mellon 105 |
Notes to Consolidated Financial Statements (continued)
106 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
BNY Mellon 107 |
Notes to Consolidated Financial Statements (continued)
The primary types of revenue for two principal businesses and the Other segment are presented below:
Business | Primary types of revenue | |
Investment Management |
Investment management and performance fees from: Mutual funds Institutional clients Private clients High-net-worth individuals and families, endowments and foundations and related entities Distribution and servicing fees | |
Investment Services |
Asset servicing fees, including institutional trust and custody fees, broker-dealer services and securities lending Issuer services fees, including Corporate Trust and Depositary Receipts Clearing services fees, including broker-dealer services, registered investment advisor services and prime brokerage services Treasury services fees, including global payment services and working capital solutions Foreign exchange | |
Other segment |
Credit-related activities Leasing operations Corporate treasury activities Global markets and institutional banking services Business exits |
108 BNY Mellon |
Notes to Consolidated Financial Statements (continued)
The following consolidating schedules show the contribution of our businesses to our overall profitability.
For the quarter ended March 31, 2012
(dollar amounts in millions) |
Investment Management |
Investment Services |
Other | Consolidated | ||||||||||||
Fee and other revenue |
$ | 852 | (a) | $ | 1,854 | $ | 164 | $ | 2,870 | (a) | ||||||
Net interest revenue |
55 | 644 | 66 | 765 | ||||||||||||
Total revenue |
907 | 2,498 | 230 | 3,635 | ||||||||||||
Provision for credit losses |
- | 16 | (11 | ) | 5 | |||||||||||
Noninterest expense |
667 | 1,829 | 260 | 2,756 | ||||||||||||
Income (loss) before taxes |
$ | 240 | (a) | $ | 653 | $ | (19 | ) | $ | 874 | (a) | |||||
Pre-tax operating margin (b) |
26 | % | 26 | % | N/M | 24 | % | |||||||||
Average assets |
$ | 36,475 | $ | 215,899 | $ | 48,970 | $ | 301,344 |
(a) | Total fee and other revenue includes income from consolidated investment management funds of $43 million, net of noncontrolling interests of $11 million, for a net impact of $32 million. Income before taxes includes noncontrolling interests of $11 million. |
(b) | Income before taxes divided by total revenue. |
N/M - Not meaningful.
For the quarter ended Dec. 31, 2011
(dollar amounts in millions) |
Investment Management |
Investment Services |
Other | Consolidated | ||||||||||||
Fee and other revenue |
$ | 767 | (a) | $ | 1,781 | $ | 240 | $ | 2,788 | (a) | ||||||
Net interest revenue |
55 | 634 | 91 | 780 | ||||||||||||
Total revenue |
822 | 2,415 | 331 | 3,568 | ||||||||||||
Provision for credit losses |
- | - | 23 | 23 | ||||||||||||
Noninterest expense |
685 | 1,756 | 387 | 2,828 | ||||||||||||
Income (loss) before taxes |
$ | 137 | (a) | $ | 659 | $ | (79 | ) | $ | 717 | (a) | |||||
Pre-tax operating margin (b) |
17 | % | 27 | % | N/M | 20 | % | |||||||||
Average assets |
$ | 37,163 | $ | 228,668 | $ | 50,243 | $ | 316,074 |
(a) | Total fee and other revenue includes a loss from consolidated investment management funds of $5 million, net of loss attributable to noncontrolling interests of $28 million, for a net impact of $23 million. Income before taxes includes a loss attributable to noncontrolling interests of $28 million. |
(b) | Income before taxes divided by total revenue. |
N/M - Not meaningful.
For the quarter ended March 31, 2011
(dollar amounts in millions) |
Investment Management |
Investment Services |
Other | Consolidated | ||||||||||||
Fee and other revenue |
$ | 868 | (a) | $ | 1,889 | $ | 147 | $ | 2,904 | (a) | ||||||
Net interest revenue |
52 | 621 | 25 | 698 | ||||||||||||
Total revenue |
920 | 2,510 | 172 | 3,602 | ||||||||||||
Noninterest expense |
682 | 1,752 | 263 | 2,697 | ||||||||||||
Income (loss) before taxes |
$ | 238 | (a) | $ | 758 | $ | (91 | ) | $ | 905 | (a) | |||||
Pre-tax operating margin (b) |
26 | % | 30 | % | N/M | 25 | % | |||||||||
Average assets |
$ | 37,315 | $ | 176,162 | $ | 44,221 | $ | 257,698 |
(a) | Total fee and other revenue includes income from consolidated investment management funds of $110 million, net of noncontrolling interests of $44 million, for a net impact of $66 million. Income before taxes includes noncontrolling interests of $44 million. |
(b) | Income before taxes divided by total revenue. |
N/M - Not meaningful.
Note 20 Supplemental information to the Consolidated Statement of Cash Flows
Noncash investing and financing transactions that, appropriately, are not reflected in the Consolidated Statement of Cash Flows are listed below.
Noncash investing and financing transactions |
Three
months ended March 31, |
|||||||
(in millions) | 2012 | 2011 | ||||||
Transfers from loans to other assets for OREO |
$ | 3 | $ | 3 | ||||
Assets of consolidated VIEs |
262 | (67 | ) | |||||
Liabilities of consolidated VIEs |
243 | (246 | ) | |||||
Noncontrolling interests of consolidated VIEs |
39 | 78 |
BNY Mellon 109 |
Notes to Consolidated Financial Statements (continued)
110 BNY Mellon |
Forward-looking Statements (continued)
BNY Mellon 111 |
Forward-looking Statements (continued)
112 BNY Mellon |
Part II Other Information
Item 1. Legal Proceedings
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(c) | The following table discloses repurchases of our common stock made in the first quarter of 2012. |
Issuer purchases of equity securities
Share repurchases in the first quarter of 2012 | ||||||||||||||||||||
(dollars in billions, except per share information; common shares in thousands) |
Total shares repurchased |
Average price per share |
Total shares repurchased as part of a publicly announced plan |
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs |
||||||||||||||||
Amounts | Shares | |||||||||||||||||||
During the month of: |
||||||||||||||||||||
January 2012 |
5,022 | 21.06 | 5,000 | N/A | 7,021 | |||||||||||||||
February 2012 |
12,298 | 21.71 | 12,250 | N/A | 6,771 | |||||||||||||||
March 2012 |
1,131 | 22.45 | - | $ | 1.16 | (b) | - | (b) | ||||||||||||
First quarter 2012 |
18,451 | (a) | $ | 21.58 | 17,250 | $ | 1.16 | (b) | - | (b) |
(a) | Includes shares purchased at a purchase price of approximately $27 million from employees, primarily in connection with the employees payment of taxes upon the vesting of restricted stock. |
(b) | On Dec. 18, 2007, the Board of Directors of BNY Mellon authorized the repurchase of up to 35 million shares of common stock. On March 22, 2011, the Board of Directors of BNY Mellon authorized the repurchase of up to an additional 13 million shares of common stock. On Feb. 14, 2012, in order to continue with share repurchases under our 2011 capital plan, the Board of Directors authorized the repurchase of an additional 12 million shares of common stock. At March 31, 2012, 6.8 million shares of common stock remained available for repurchase under the Feb. 2012 board authorization. While there are no expiration dates on the prior share repurchase authorizations, BNY Mellon does not intend to use the prior authorizations for any future share repurchases. On March 13, 2012, the Board of Directors authorized a new stock purchase program providing for the repurchase of an aggregate of $1.16 billion of common stock. The new share repurchase program may be executed through open market purchases or privately negotiated transactions at such prices, times and upon such other terms as may be determined from time to time. |
BNY Mellon 113 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
THE BANK OF NEW YORK MELLON CORPORATION (Registrant) | ||||||
Date: May 9, 2012 | By: | /s/ John A. Park | ||||
John A. Park | ||||||
Corporate Controller | ||||||
(Duly Authorized Officer and | ||||||
Principal Accounting Officer of | ||||||
the Registrant) |
114 BNY Mellon
Index to Exhibits
Exhibit No. |
Description |
Method of Filing | ||
2.1 | Amended and Restated Agreement and Plan of Merger, dated as of Dec. 3, 2006, as amended and restated as of Feb. 23, 2007, and as further amended and restated as of March 30, 2007, between The Bank of New York Company, Inc., Mellon Financial Corporation and The Bank of New York Mellon Corporation (the Company). | Previously filed as Exhibit 2.1 to the Companys Current Report on Form 8-K (File Nos. 000-52710 and 001-06152) as filed with the Commission on July 2, 2007, and incorporated herein by reference. | ||
2.2 | Stock Purchase Agreement, dated as of Feb. 1, 2010, by and between The PNC Financial Services Group, Inc. and The Bank of New York Mellon Corporation. | Previously filed as Exhibit 2.1 to the Companys Current Report on Form 8-K (File No. 000-52710) as filed with the Commission on Feb. 3, 2010, and incorporated herein by reference. | ||
3.1 | Restated Certificate of Incorporation of The Bank of New York Mellon Corporation. | Previously filed as Exhibit 3.1 to the Companys Current Report on Form 8-K (File Nos. 000-52710 and 001-06152) as filed with the Commission on July 2, 2007, and incorporated herein by reference. | ||
3.2 | Amended and Restated By-Laws of The Bank of New York Mellon Corporation, as amended and restated on Oct. 12, 2010. | Previously filed as Exhibit 3.2 to the Companys Annual Report on Form 10-K (File No. 000-52710) for the year ended Dec. 31, 2010, as filed with the Commission on Feb. 28, 2011, and incorporated herein by reference. | ||
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 March 31, 2012. The Company hereby agrees to furnish to the Commission, upon request, a copy of any such instrument. | N/A | ||
12.1 | Computation of Ratio of Earnings to Fixed Charges. | Filed herewith. | ||
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. | Filed herewith. | ||
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. | Filed herewith. | ||
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. | Furnished herewith. |
BNY Mellon 115 |
Index to Exhibits (continued)
Exhibit No. |
Description |
Method of Filing | ||
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. | Furnished herewith. | ||
101.INS | XBRL Instance Document. | Filed herewith. | ||
101.SCH | XBRL Taxonomy Extension Schema Document. | Filed herewith. | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | Filed herewith. | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | Filed herewith. | ||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | Filed herewith. | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | Filed herewith. |
116 BNY Mellon |
Exhibit 12.1
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
The Bank of New York Mellon Corporation
Quarter ended | ||||||||||||
(dollar amounts in millions) | March 31, 2012 |
Dec. 31, 2011 |
March 31, 2011 |
|||||||||
Earnings |
||||||||||||
Income before income taxes |
$ | 885 | $ | 689 | $ | 949 | ||||||
Fixed charges, excluding interest on deposits |
131 | 114 | 132 | |||||||||
Income before income taxes and fixed charges, excluding interest on deposits |
1,016 | 803 | 1,081 | |||||||||
Interest on deposits |
43 | 59 | 48 | |||||||||
Income before income taxes and fixed charges, including interest on deposits |
$ | 1,059 | $ | 862 | $ | 1,129 | ||||||
Fixed charges |
||||||||||||
Interest expense, excluding interest on deposits |
$ | 104 | $ | 86 | $ | 102 | ||||||
One-third net rental expense (a) |
27 | 28 | 30 | |||||||||
Total fixed charges, excluding interest on deposits |
131 | 114 | 132 | |||||||||
Interest on deposits |
43 | 59 | 48 | |||||||||
Total fixed charges, including interests on deposits |
$ | 174 | $ | 173 | $ | 180 | ||||||
Earnings to fixed charges ratios |
||||||||||||
Excluding interest on deposits |
7.77 | 7.00 | 8.23 | |||||||||
Including interest on deposits |
6.09 | 4.97 | 6.28 |
(a) | The proportion deemed representative of the interest factor. |
Exhibit 31.1
CERTIFICATION
I, Gerald L. Hassell, certify that:
1. | I have reviewed this quarterly report on Form 10-Q 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 registrants 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 registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants 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 registrants 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 registrants internal control over financial reporting. |
Date: May 9, 2012
/s/ Gerald L. Hassell | ||
Name: |
Gerald L. Hassell | |
Title: |
Chief Executive Officer |
Exhibit 31.2
CERTIFICATION
I, Thomas P. Gibbons, certify that:
1. | I have reviewed this quarterly report on Form 10-Q 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 registrants 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 registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants 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 registrants 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 registrants internal control over financial reporting. |
Date: May 9, 2012
/s/ Thomas P. Gibbons | ||
Name: | Thomas P. Gibbons | |
Title: | Chief Financial Officer |
Exhibit 32.1
CERTIFICATION
Pursuant to 18 U.S.C. Section 1350, the undersigned officer of The Bank of New York Mellon Corporation (BNY Mellon), hereby certifies, to his knowledge, that BNY Mellons Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 (the Report) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of BNY Mellon.
Dated: May 9, 2012 | /s/ Gerald L. Hassell |
|||||
Name: | Gerald L. Hassell | |||||
Title: | Chief Executive Officer |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.
Exhibit 32.2
CERTIFICATION
Pursuant to 18 U.S.C. Section 1350, the undersigned officer of The Bank of New York Mellon Corporation (BNY Mellon), hereby certifies, to his knowledge, that BNY Mellons Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 (the Report) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of BNY Mellon.
Dated: May 9, 2012 | /s/ Thomas P. Gibbons |
|||||
Name: | Thomas P. Gibbons | |||||
Title: | Chief Financial Officer |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.
Income taxes (Tables)
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Statutory Federal Income Tax Rate to Effective Income Tax Rate | The statutory federal income tax rate is reconciled to our effective income tax rate below:
|
Supplemental information to the Consolidated Statement of Cash Flows (Tables)
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncash Investing and Financing Transactions that are Not Reflected in the Consolidated Statement of Cash Flows | Noncash investing and financing transactions that, appropriately, are not reflected in the Consolidated Statement of Cash Flows are listed below.
|
Credit Quality Indicators - Commercial Portfolio Credit Risk Profile by Creditworthiness Category (Detail) (USD $)
In Millions, unless otherwise specified |
Mar. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | $ 43,028 | $ 43,979 |
Commercial
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 1,179 | 1,280 |
Commercial | Investment grade
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 793 | 906 |
Commercial | Noninvestment grade
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 386 | 374 |
Commercial Real Estate
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 1,441 | 1,449 |
Commercial Real Estate | Investment grade
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 1,005 | 1,062 |
Commercial Real Estate | Noninvestment grade
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 436 | 387 |
Financial Institutions
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 10,973 | 11,144 |
Financial Institutions | Investment grade
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 9,552 | 9,643 |
Financial Institutions | Noninvestment grade
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | $ 1,421 | $ 1,501 |
Projected Weighted-Average Default Rates and Loss Severities (Detail) (Recent Vintage)
|
Mar. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Alt-A
|
||
Gain (Loss) on Investments [Line Items] | ||
Default Rate | 44.00% | 44.00% |
Severity | 57.00% | 57.00% |
Subprime RMBS
|
||
Gain (Loss) on Investments [Line Items] | ||
Default Rate | 63.00% | 63.00% |
Severity | 72.00% | 73.00% |
Prime RMBS
|
||
Gain (Loss) on Investments [Line Items] | ||
Default Rate | 25.00% | 25.00% |
Severity | 43.00% | 43.00% |
Seed Capital and Private Equity Investments Valued Using NAV (Detail) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Line Items] | ||||||||
Fair Value | $ 213 | |||||||
Unfunded commitments | 43 | |||||||
Hedge Funds
|
||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Line Items] | ||||||||
Fair Value | 16 | [1] | ||||||
Redemption frequency | Monthly-quarterly | [1] | ||||||
Redemption notice period | 3-45 days | [1] | ||||||
Private Equity Funds
|
||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Line Items] | ||||||||
Fair Value | 121 | [2] | ||||||
Unfunded commitments | 23 | [2] | ||||||
Other Funds
|
||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Line Items] | ||||||||
Fair Value | 76 | [3] | ||||||
Unfunded commitments | $ 20 | [3] | ||||||
Redemption frequency | Monthly-yearly | [3] | ||||||
|
Fair Value Option - Changes in Fair Value Included in Foreign Exchange and Other Trading Activities (Detail) (Long-term Debt, USD $)
In Millions, unless otherwise specified |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
|||||
Long-term Debt
|
||||||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||||||
Changes in fair value under the fair value option election | $ 6 | [1] | $ 1 | [1] | ||
|
Commitments and contingent liabilities (Tables)
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2012
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Off-Balance Sheet Risks Significant Industry Concentrations | Significant industry concentrations related to credit exposure at March 31, 2012 are disclosed in the Financial institutions portfolio exposure table and the Commercial portfolio exposure table below.
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Summary of Off-Balance Sheet Credit Transactions, Net of Participations | The following table presents a summary of our off-balance sheet credit risks, net of participations.
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Standby Letters of Credits (SBLCs) by Investment Grade | The table below shows SBLCs by investment grade:
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Loans and asset quality (Tables)
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3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2012
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Details of our Loan Distribution and Industry Concentrations of Credit Risk | The table below provides the details of our loan distribution and industry concentrations of credit risk at March 31, 2012 and Dec. 31, 2011.
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Allowance for Credit Losses Activity | Transactions in the allowance for credit losses are summarized as follows:
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Nonperforming Assets | The table below sets forth information about our nonperforming assets.
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Lost Interest |
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Information about Impaired Loans | The table below sets forth information about our impaired loans. We use the discounted cash flow method as the primary method for valuing impaired loans.
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Information about Past Due Loans | The table below sets forth information about our past due loans.
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Troubled Debt Restructurings | The following table presents TDRs that occurred during the first quarter of 2012.
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Credit Quality Indicators - Commercial Portfolio Credit Risk Profile by Creditworthiness Category | The following tables set forth information about credit quality indicators.
Commercial loan portfolio
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Credit Quality Indicators - Wealth Management Loans and Mortgages - Credit Risk Profile by Internally Assigned Grade | Wealth management loans and mortgages
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Net Interest Revenue (Detail) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2012
|
Dec. 31, 2011
|
Mar. 31, 2011
|
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Interest revenue | |||
Non-margin loans | $ 169 | $ 171 | $ 171 |
Margin loans | 42 | 38 | 27 |
Securities: | |||
Taxable | 503 | 500 | 473 |
Exempt from federal income taxes | 15 | 13 | 5 |
Total securities | 518 | 513 | 478 |
Deposits with banks | 114 | 118 | 128 |
Deposits with the Federal Reserve and other central banks | 43 | 58 | 16 |
Federal funds sold and securities purchased under resale agreements | 9 | 8 | 6 |
Trading assets | 17 | 19 | 22 |
Total interest revenue | 912 | 925 | 848 |
Interest expense | |||
Deposits | 43 | 59 | 48 |
Federal funds purchased and securities sold under repurchase agreements | (1) | 1 | |
Trading liabilities | 4 | 4 | 13 |
Other borrowed funds | 5 | 5 | 7 |
Customer payables | 2 | 2 | 2 |
Long-term debt | 93 | 76 | 79 |
Total interest expense | 147 | 145 | 150 |
Net interest revenue | $ 765 | $ 780 | $ 698 |
Contribution of Segments to Overall Profitability (Parenthetical) (Detail) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | |||||||||||
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Mar. 31, 2012
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Dec. 31, 2011
|
Mar. 31, 2011
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Segment Reporting Information [Line Items] | ||||||||||||
Net (income) loss attributable to noncontrolling interests | $ (12) | $ 27 | $ (45) | |||||||||
Total fee and other revenue | 2,870 | [1] | 2,788 | [2] | 2,904 | [3] | ||||||
Investment Management Funds
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Segment Reporting Information [Line Items] | ||||||||||||
Income of consolidated investment management funds | 43 | (5) | 110 | |||||||||
Net (income) loss attributable to noncontrolling interests | (11) | 28 | (44) | |||||||||
Total fee and other revenue | $ 32 | $ 23 | $ 66 | |||||||||
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Intangible Assets by Business Segment (Detail) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
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Dec. 31, 2011
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Mar. 31, 2011
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Mar. 31, 2012
Investment Management
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Mar. 31, 2011
Investment Management
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Mar. 31, 2012
Investment Services
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Mar. 31, 2011
Investment Services
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Mar. 31, 2012
Other Operating Segment
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Mar. 31, 2011
Other Operating Segment
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Dec. 31, 2010
Other Operating Segment
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Intangible Assets by Major Class [Line Items] | ||||||||||||||
Beginning Balance | $ 5,152 | $ 5,696 | $ 2,382 | $ 2,592 | $ 1,922 | $ 2,254 | $ 848 | $ 850 | $ 850 | |||||
Acquisitions | 12 | 12 | ||||||||||||
Amortization | (96) | (106) | (108) | (48) | (55) | (48) | (53) | |||||||
Foreign exchange translation | 16 | 20 | 13 | 13 | 3 | 7 | ||||||||
Impairment | (3) | (3) | ||||||||||||
Other | (2) | [1] | 2 | [1] | ||||||||||
Ending Balance | $ 5,072 | $ 5,152 | $ 5,617 | $ 2,347 | $ 2,550 | $ 1,875 | $ 2,217 | $ 850 | $ 850 | $ 850 | ||||
|
Securitizations and variable interest entities - Additional Information (Detail) (Credit Supported, USD $)
In Millions, unless otherwise specified |
Mar. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Credit Supported
|
||
Variable Interest Entity [Line Items] | ||
Liabilities related to VIEs for which credit support agreements were provided | $ 18 | $ 22 |
Debt Securities Credit Losses Roll Forward Recorded in Earnings (Detail) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | |
---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
|
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Beginning balance as of Jan. 1 | $ 253 | $ 182 |
Add: Initial OTTI credit losses | 9 | 2 |
Subsequent OTTI credit losses | 12 | 3 |
Less: Realized losses for securities sold / consolidated | 8 | 4 |
Ending balance as of March 31 | $ 266 | $ 183 |
Impact of Derivative Instruments on Income Statement (Detail) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2012
|
Dec. 31, 2011
|
Mar. 31, 2011
|
|
Fair Value Hedging | Interest Rate Contract | Net Interest Revenue
|
|||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount of gain or (loss) recognized in income on derivatives | $ 127 | $ (192) | $ (79) |
Amount of gain or (loss) recognized in hedged item | (127) | 185 | 73 |
Cash Flow Hedging
|
|||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount of gain or (loss) recognized in OCI on derivative (effective portion) | 342 | (18) | (493) |
Amount of gain or (loss) reclassified from accumulated OCI into income (effective portion) | 339 | 31 | (499) |
Amount of gain or (loss) recognized in income on derivatives (ineffectiveness portion and amount excluded from effectiveness testing) | 0.1 | (0.1) | (0.1) |
Cash Flow Hedging | Foreign Exchange Contract | Net Interest Revenue
|
|||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount of gain or (loss) recognized in OCI on derivative (effective portion) | (2) | (61) | (5) |
Amount of gain or (loss) reclassified from accumulated OCI into income (effective portion) | (4) | (10) | (11) |
Cash Flow Hedging | Foreign Exchange Contract | Other Revenue
|
|||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount of gain or (loss) recognized in OCI on derivative (effective portion) | 3 | ||
Amount of gain or (loss) reclassified from accumulated OCI into income (effective portion) | 2 | (2) | 3 |
Amount of gain or (loss) recognized in income on derivatives (ineffectiveness portion and amount excluded from effectiveness testing) | 0.1 | (0.1) | (0.1) |
Cash Flow Hedging | Foreign Exchange Contract | Trading Revenue
|
|||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount of gain or (loss) recognized in OCI on derivative (effective portion) | 342 | 43 | (491) |
Amount of gain or (loss) reclassified from accumulated OCI into income (effective portion) | 342 | 43 | (491) |
Cash Flow Hedging | Foreign Exchange Contract | Salary Expense
|
|||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount of gain or (loss) recognized in OCI on derivative (effective portion) | (1) | 3 | |
Amount of gain or (loss) reclassified from accumulated OCI into income (effective portion) | (1) | ||
Net Investment Hedging | Foreign Exchange Contract
|
|||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount of gain or (loss) recognized in OCI on derivative (effective portion) | (139) | 36 | (169) |
Net Investment Hedging | Foreign Exchange Contract | Other Revenue
|
|||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount of gain or (loss) recognized in income on derivatives (ineffectiveness portion and amount excluded from effectiveness testing) | $ (0.1) | $ 0.1 | $ 0.1 |
Other Assets (Detail) (USD $)
In Millions, unless otherwise specified |
Mar. 31, 2012
|
Dec. 31, 2011
|
||||
---|---|---|---|---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Line Items] | ||||||
Corporate/bank owned life insurance | $ 4,230 | $ 4,216 | ||||
Accounts receivable | 3,801 | 4,208 | ||||
Equity in joint ventures and other investments | 2,774 | [1] | 2,677 | [1] | ||
Income taxes receivable | 2,714 | 2,573 | ||||
Fails to deliver | 1,157 | 961 | ||||
Software | 1,019 | 986 | ||||
Fair value of hedging derivatives | 1,035 | 1,600 | ||||
Prepaid expenses | 624 | 784 | ||||
Due from customers on acceptances | 300 | 321 | ||||
Prepaid pension assets | 160 | 144 | ||||
Other | 1,619 | 1,369 | ||||
Total other assets | $ 19,433 | $ 19,839 | ||||
|
Incremental Assets and Liabilities of VIEs Included in Consolidated Financial Statements (Detail) (Variable Interest Entity, Primary Beneficiary, USD $)
In Millions, unless otherwise specified |
Mar. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Variable Interest Entity [Line Items] | ||
Available-for-sale | $ 485 | $ 479 |
Trading assets | 11,079 | 10,751 |
Other assets | 530 | 596 |
Total assets | 12,094 | 11,826 |
Trading liabilities | 10,290 | 10,053 |
Other liabilities | 475 | 475 |
Total liabilities | 10,765 | 10,528 |
Non-redeemable noncontrolling interests | 709 | 670 |
Investment Management Funds
|
||
Variable Interest Entity [Line Items] | ||
Trading assets | 11,079 | 10,751 |
Other assets | 530 | 596 |
Total assets | 11,609 | 11,347 |
Trading liabilities | 10,290 | 10,053 |
Other liabilities | 38 | 32 |
Total liabilities | 10,328 | 10,085 |
Non-redeemable noncontrolling interests | 709 | 670 |
Securitizations
|
||
Variable Interest Entity [Line Items] | ||
Available-for-sale | 485 | 479 |
Total assets | 485 | 479 |
Other liabilities | 437 | 443 |
Total liabilities | $ 437 | $ 443 |
Restructuring charges - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 12 Months Ended | 36 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
Dec. 31, 2011
|
Mar. 31, 2011
|
Mar. 31, 2012
Operational Excellence Initiatives 2011
|
Dec. 31, 2011
Operational Excellence Initiatives 2011
Person
|
Mar. 31, 2012
Global Location Strategy 2009
Person
|
Mar. 31, 2011
Global Location Strategy 2009
|
Dec. 31, 2009
Global Location Strategy 2009
|
Dec. 31, 2011
Global Location Strategy 2009
|
|
Restructuring Cost and Reserve [Line Items] | |||||||||
Estimated reduction in workforce due to restructuring, number of positions | 1,500 | 2,400 | |||||||
Estimated reduction in workforce due to restructuring, percentage of positions | 3.00% | ||||||||
Restructuring charge, pre-tax | $ (9) | $ 107 | $ (6) | $ (2) | $ 107 | $ (7) | $ (6) | $ 139 | |
Additional charges/(recovery) | $ (2) | $ (7) | $ 20 |
Non-consolidated VIEs (Detail) (USD $)
In Millions, unless otherwise specified |
Mar. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Variable Interest Entity [Line Items] | ||
Assets | $ 42 | |
Liabilities | ||
Other Assets and Liabilities, Net
|
||
Variable Interest Entity [Line Items] | ||
Assets | 53 | 41 |
Liabilities | ||
Trading
|
||
Variable Interest Entity [Line Items] | ||
Assets | 1 | |
Liabilities | ||
Variable Interest Entity, Not Primary Beneficiary
|
||
Variable Interest Entity [Line Items] | ||
Maximum loss exposure | 42 | |
Variable Interest Entity, Not Primary Beneficiary | Other Assets and Liabilities, Net
|
||
Variable Interest Entity [Line Items] | ||
Maximum loss exposure | 53 | 41 |
Variable Interest Entity, Not Primary Beneficiary | Trading
|
||
Variable Interest Entity [Line Items] | ||
Maximum loss exposure | $ 1 |
Other Assets (Parenthetical) (Detail) (USD $)
In Millions, unless otherwise specified |
Mar. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Line Items] | ||
Federal Reserve Bank stock | $ 432 | $ 429 |
Credit Quality Indicators - Wealth Management Loans and Mortgages - Credit Risk Profile by Internally Assigned Grade (Detail) (USD $)
In Millions, unless otherwise specified |
Mar. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | $ 43,028 | $ 43,979 |
Wealth Management Loans Portfolio Segment | Investment grade
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 3,378 | 3,450 |
Wealth Management Loans Portfolio Segment | Noninvestment grade
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 104 | 111 |
Wealth Management Mortgages Portfolio Segment
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 3,830 | 3,781 |
Wealth Management Loans and Mortgages
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | $ 7,312 | $ 7,342 |
Fair value measurement
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3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2012
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Fair value measurement | Note 15 – Fair value measurement The guidance related to “Fair Value Measurement” included in ASC 820 defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date and establishes a framework for measuring fair value. It establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and expands the disclosures about instruments measured at fair value. ASC 820 requires consideration of a company’s own creditworthiness when valuing liabilities. The standard provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The objective is to determine from weighted indicators of fair value a reasonable point within the range that is most representative of fair value under current market conditions. Determination of fair value Following is a description of our valuation methodologies for assets and liabilities measured at fair value. We have established processes for determining fair values. Fair value is based upon quoted market prices in active markets, where available. For financial instruments where quotes from recent exchange transactions are not available, we determine fair value based on discounted cash flow analysis, comparison to similar instruments, and the use of financial models. Discounted cash flow analysis is dependent upon estimated future cash flows and the level of interest rates. Model-based pricing uses inputs of observable prices, where available, for interest rates, foreign exchange rates, option volatilities and other factors. Models are benchmarked and validated by an independent internal risk management function. Our valuation process takes into consideration factors such as counterparty credit quality, liquidity, concentration concerns, and observability of model parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. Most derivative contracts are valued using internally developed models which are calibrated to observable market data and employ standard market pricing theory for their valuations. An initial “risk-neutral” valuation is performed on each position assuming time-discounting based on a AA credit curve. Then, to arrive at a fair value that incorporates counterparty credit risk, a credit adjustment is made to these results by discounting each trade’s expected exposures to the counterparty using the counterparty’s credit spreads, as implied by the credit default swap market. We also adjust expected liabilities to the counterparty using BNY Mellon’s own credit spreads, as implied by the credit default swap market. Accordingly, the valuation of our derivative position is sensitive to the current changes in our own credit spreads as well as those of our counterparties. In certain cases, recent prices may not be observable for instruments that trade in inactive or less active markets. Upon evaluating the uncertainty in valuing financial instruments subject to liquidity issues, we make an adjustment to their value. The determination of the liquidity adjustment includes the availability of external quotes, the time since the latest available quote and the price volatility of the instrument. Certain parameters in some financial models are not directly observable and, therefore, are based on management’s estimates and judgments. These financial instruments are normally traded less actively. We apply valuation adjustments to mitigate the possibility of error and revision in the model-based estimate value. Examples include products where parameters such as correlation and recovery rates are unobservable. The methods described above for instruments that trade in inactive or less active markets may produce a current fair value calculation that may not be indicative of net realizable value or reflective of future fair values. We believe our methods of determining fair value are appropriate and consistent with other market participants. However, the use of different methodologies or different assumptions to value certain financial instruments could result in a different estimate of fair value. Valuation hierarchy ASC 820 established a three-level valuation hierarchy for disclosure of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are described below. Level 1: Inputs to the valuation methodology are recent quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 1 assets and liabilities include debt and equity securities and derivative financial instruments actively traded on exchanges, and U.S. Treasury securities and U.S. Government securities that are actively traded in highly liquid over-the-counter markets. Level 2: Observable inputs other than Level 1 prices, for example, quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs that are observable or can be corroborated, either directly or indirectly, for substantially the full term of the financial instrument. Level 2 assets and liabilities include debt instruments that are traded less frequently than exchange-traded securities and derivative instruments whose model inputs are observable in the market or can be corroborated by market observable data. Examples in this category are certain variable and fixed rate agency and non-agency securities, corporate debt securities and derivative contracts. Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Examples in this category include interests in certain securitized financial assets, certain private equity investments, and derivative contracts that are highly structured or long-dated. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy. Securities Where quoted prices are available in an active market, we classify the securities within Level 1 of the valuation hierarchy. Securities are defined as both long and short positions. Level 1 securities include highly liquid government bonds, money market mutual funds and exchange-traded equities. If quoted market prices are not available, we estimate fair value using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Examples of such instruments, which would generally be classified within Level 2 of the valuation hierarchy, include certain agency and non-agency mortgage-backed securities, commercial mortgage-backed securities and European floating rate notes. For securities where quotes from recent transactions are not available for identical securities, we determine fair value primarily based on pricing sources with reasonable levels of price transparency that employ financial models or obtain comparisons to similar instruments to arrive at “consensus” prices. Specifically, the pricing sources obtain recent transactions for similar types of securities (e.g., vintage, position in the securitization structure) and ascertain variables such as discount rate and speed of prepayment for the types of transaction and apply such variables to similar types of bonds. We view these as observable transactions in the current marketplace and classify such securities as Level 2. Pricing sources discontinue pricing any specific security whenever they determine there is insufficient observable data to provide a good faith opinion on price. In addition, we have significant investments in more actively traded agency RMBS and other types of securities such as FDIC-insured debt and sovereign debt. The pricing sources derive the prices for these securities largely from quotes they obtain from three major inter-dealer brokers. The pricing sources receive their daily observed trade price and other information feeds from the inter-dealer brokers. For securities with bond insurance, the financial strength of the insurance provider is analyzed and that information is included in the fair value assessment for such securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, we classify those securities in Level 3 of the valuation hierarchy. Securities classified within Level 3 primarily include other debt securities and securities of state and political subdivisions. At March 31, 2012, approximately 99% of our securities were valued by pricing sources with reasonable levels of price transparency. Less than 1% of our securities were priced based on economic models and non-binding dealer quotes, and are included in Level 3 of the ASC 820 hierarchy. Consolidated collateralized loan obligations BNY Mellon values assets in consolidated CLOs using observable market prices observed from the secondary loan market. The returns to the note holders are solely dependent on the assets and accordingly equal the value of those assets. Based on the structure of the CLOs, the valuation of the assets is attributable to the senior note holders. Changes in the values of assets and liabilities are reflected in the income statement as investment income and interest of investment management fund note holders, respectively. Derivatives We classify exchange-traded derivatives valued using quoted prices in Level 1 of the valuation hierarchy. Examples include exchanged-traded equity and foreign exchange options. Since few other classes of derivative contracts are listed on an exchange, most of our derivative positions are valued using internally developed models that use as their basis readily observable market parameters, and we classify them in Level 2 of the valuation hierarchy. Such derivatives include basic swaps and options and credit default swaps. Derivatives valued using models with significant unobservable market parameters in markets that lack two-way flow are classified in Level 3 of the valuation hierarchy. Examples include long-dated interest rate or currency swaps and options, where parameters may be unobservable for longer maturities; and certain products, where correlation rates are unobservable. The fair value of these derivatives compose less than 1% of our derivative financial instruments. Additional disclosures of derivative instruments are provided in Note 17 of the Notes to Consolidated Financial Statements. Loans and unfunded lending-related commitments Where quoted market prices are not available, we generally base the fair value of loans and unfunded lending-related commitments on observable market prices of similar instruments, including bonds, credit derivatives and loans with similar characteristics. If observable market prices are not available, we base the fair value on estimated cash flows adjusted for credit risk which are discounted using an interest rate appropriate for the maturity of the applicable loans or the unfunded lending-related commitments. Unrealized gains and losses on unfunded lending-related commitments carried at fair value are classified in Other assets and Other liabilities, respectively. Loans and unfunded lending-related commitments carried at fair value are generally classified within Level 2 of the valuation hierarchy. Seed capital In our Investment Management business we manage investment assets, including equities, fixed income, money market and alternative investment funds for institutions and other investors; as part of that activity we make seed capital investments in certain funds. Seed capital is included in other assets. When applicable, we value seed capital based on the published NAV of the fund. We include funds in which ownership interests in the fund are publicly traded in an active market and institutional funds in which investors trade in and out daily in Level 1 of the valuation hierarchy. We include open-end funds where investors are allowed to sell their ownership interest back to the fund less frequently than daily and where our interest in the fund contains no other rights or obligations in Level 2 of the valuation hierarchy. However, we generally include investments in funds that allow investors to sell their ownership interest back to the fund less frequently than monthly in Level 3, unless actual redemption prices are observable. For other types of investments in funds, we consider all of the rights and obligations inherent in our ownership interest, including the reported NAV as well as other factors that affect the fair value of our interest in the fund. To the extent the NAV measurements reported for the investments are based on unobservable inputs or include other rights and obligations (e.g., obligation to meet cash calls), we generally classify them in Level 3 of the valuation hierarchy. Certain interests in securitizations For certain interests in securitizations which are classified in securities available-for-sale, trading assets and long-term debt, we use discounted cash flow models which generally include assumptions of projected finance charges related to the securitized assets, estimated net credit losses, prepayment assumptions and estimates of payments to third-party investors. When available, we compare our fair value estimates and assumptions to market activity and to the actual results of the securitized portfolio. Private equity investments Our Other segment includes holdings of nonpublic private equity investment through funds managed by third-party investment managers. We value private equity investments initially based upon the transaction price, which we subsequently adjust to reflect expected exit values as evidenced by financing and sale transactions with third parties or through ongoing reviews by the investment managers. Private equity investments also include publicly held equity investments, generally obtained through the initial public offering of privately held equity investments. These equity investments are often held in a partnership structure. Publicly held investments are marked-to-market at the quoted public value less adjustments for regulatory or contractual sales restrictions or adjustments to reflect the difficulty in selling a partnership interest. Discounts for restrictions are quantified by analyzing the length of the restriction period and the volatility of the equity security. Publicly held private equity investments are primarily classified in Level 2 of the valuation hierarchy. The following tables present the financial instruments carried at fair value at March 31, 2012 and Dec. 31, 2011, by caption on the consolidated balance sheet and by ASC 820 valuation hierarchy (as described above). We have included credit ratings information in certain of the tables because the information indicates the degree of credit risk to which we are exposed, and significant changes in ratings classifications could result in increased risk for us. There were no transfers between Level 1 and Level 2 during the first quarter of 2012.
Changes in Level 3 fair value measurements The tables below include a roll forward of the balance sheet amounts (including the change in fair value) for financial instruments classified in Level 3 of the valuation hierarchy. Our classification of a financial instrument in Level 3 of the valuation hierarchy is based on the significance of the unobservable factors to the overall fair value measurement. However, these instruments generally include other observable components that are actively quoted or validated to third-party sources; accordingly, the gains and losses in the table below include changes in fair value due to observable parameters as well as the unobservable parameters in our valuation methodologies. We also frequently manage the risks of Level 3 financial instruments using securities and derivatives positions that are Level 1 or 2 instruments which are not included in the table; accordingly, the gains or losses below do not reflect the effect of our risk management activities related to the Level 3 instruments.
Level 3 unobservable inputs The following tables present the unobservable inputs used in valuation of assets and liabilities classified as Level 3 within the fair value hierarchy.
(a) The option pricing model uses market inputs such as foreign currency exchange rates, interest rates and volatility to calculate the fair value of the option. bps — basis points
At March 31, 2012, the available-for-sale securities categorized as Level 3 within the fair value hierarchy primarily consist of a security issued by a municipality that has filed for bankruptcy. The fair value of this security was determined based on expected credit losses. A significant deviation from the expected credit losses would result in a significantly higher or lower fair value. At March 31, 2012, debt and equity instruments reported as trading assets on the balance sheet include structured debt and distressed debt. For our structured debt, changes in foreign exchange volatility generally results in a higher or lower fair value, while changes in the correlation of interest and foreign exchange factors generally increases or decreases the fair value of the instrument. The principal unobservable inputs for distressed debt include credit spreads and expected maturity. Changes in credit spreads or the expected period until maturity would result in an increase or decrease in the fair value of these instruments. At March 31, 2012, our trading assets and trading liabilities included interest rate derivative assets and liabilities, respectively, and equity derivative assets and liabilities, respectively, classified as Level 3 within the fair value hierarchy. For our structured foreign exchange swaptions, changes in foreign exchange volatility generally results in an increased or decreased liability while changes in the correlation of interest and foreign exchange factors generally results in a favorable or unfavorable movement in the fair value of the instrument. The Company purchases and sells certain long-term equity options based on changes in volatility, which in turn offset option values. At March 31, 2012, loans measured at fair value on a nonrecurring basis that are included in Level 3 of the fair value hierarchy include collateral dependent loans. Principal unobservable inputs may include forecast timing of sales, cap rates and costs to complete/sell. An increase in holding period, cap rate or costs to complete/sell would generally result in a decrease of the fair value of loans. A decrease in holding period, cap rate or costs to complete/sell would generally result in an increase in fair value of the loans.
Assets and liabilities measured at fair value on a nonrecurring basis Under certain circumstances, we make adjustments to fair values of our assets, liabilities and unfunded lending-related commitments although they are not measured at fair value on an ongoing basis. An example would be the recording of an impairment of an asset. The following tables present the financial instruments carried on the consolidated balance sheet by caption and by level in the fair value hierarchy as of March 31, 2012 and Dec. 31, 2011, for which a nonrecurring change in fair value has been recorded during the quarters ended March 31, 2012 and Dec. 31, 2011.
|
Amortized Cost, Gross Unrealized Gains and Losses and Fair Value of Securities (Detail) (USD $)
In Millions, unless otherwise specified |
Mar. 31, 2012
|
Dec. 31, 2011
|
||||||||
---|---|---|---|---|---|---|---|---|---|---|
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | $ 87,021 | $ 80,945 | ||||||||
Gross unrealized Gains | 2,128 | 2,063 | ||||||||
Gross unrealized Losses | 926 | 1,001 | ||||||||
Fair value | 88,223 | 82,007 | ||||||||
Available-for-sale
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 82,202 | 77,424 | ||||||||
Gross unrealized Gains | 1,982 | 1,917 | ||||||||
Gross unrealized Losses | 810 | 874 | ||||||||
Fair value | 83,374 | 78,467 | ||||||||
Available-for-sale | U.S. Treasury
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 14,058 | 16,814 | ||||||||
Gross unrealized Gains | 294 | 514 | ||||||||
Gross unrealized Losses | 101 | 2 | ||||||||
Fair value | 14,251 | 17,326 | ||||||||
Available-for-sale | U.S. Government Agencies
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 1,079 | 932 | ||||||||
Gross unrealized Gains | 29 | 26 | ||||||||
Fair value | 1,108 | 958 | ||||||||
Available-for-sale | State And Political Subdivisions
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 3,964 | 2,724 | ||||||||
Gross unrealized Gains | 58 | 62 | ||||||||
Gross unrealized Losses | 49 | 47 | ||||||||
Fair value | 3,973 | 2,739 | ||||||||
Available-for-sale | Agency RMBS
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 31,882 | 26,232 | ||||||||
Gross unrealized Gains | 643 | 575 | ||||||||
Gross unrealized Losses | 28 | 11 | ||||||||
Fair value | 32,497 | 26,796 | ||||||||
Available-for-sale | Alt-A RMBS
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 289 | 306 | ||||||||
Gross unrealized Gains | 19 | 9 | ||||||||
Gross unrealized Losses | 24 | 42 | ||||||||
Fair value | 284 | 273 | ||||||||
Available-for-sale | Prime RMBS
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 865 | 916 | ||||||||
Gross unrealized Gains | 3 | 1 | ||||||||
Gross unrealized Losses | 57 | 102 | ||||||||
Fair value | 811 | 815 | ||||||||
Available-for-sale | Subprime RMBS
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 593 | 606 | ||||||||
Gross unrealized Gains | 3 | 2 | ||||||||
Gross unrealized Losses | 175 | 190 | ||||||||
Fair value | 421 | 418 | ||||||||
Available-for-sale | Other RMBS
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 1,559 | 1,133 | ||||||||
Gross unrealized Gains | 2 | |||||||||
Gross unrealized Losses | 214 | 230 | ||||||||
Fair value | 1,347 | 903 | ||||||||
Available-for-sale | Commercial MBS
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 3,435 | 3,327 | ||||||||
Gross unrealized Gains | 123 | 89 | ||||||||
Gross unrealized Losses | 76 | 77 | ||||||||
Fair value | 3,482 | 3,339 | ||||||||
Available-for-sale | Asset-Backed CLOs
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 1,357 | 1,480 | ||||||||
Gross unrealized Gains | 2 | 1 | ||||||||
Gross unrealized Losses | 21 | 37 | ||||||||
Fair value | 1,338 | 1,444 | ||||||||
Available-for-sale | Other Asset-Backed Securities
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 576 | 527 | ||||||||
Gross unrealized Gains | 9 | 8 | ||||||||
Gross unrealized Losses | 3 | 3 | ||||||||
Fair value | 582 | 532 | ||||||||
Available-for-sale | Foreign Covered Bonds
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 3,171 | 2,410 | ||||||||
Gross unrealized Gains | 38 | 18 | ||||||||
Gross unrealized Losses | 2 | 3 | ||||||||
Fair value | 3,207 | 2,425 | ||||||||
Available-for-sale | Corporate Bonds
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 1,642 | 1,696 | ||||||||
Gross unrealized Gains | 57 | 47 | ||||||||
Gross unrealized Losses | 3 | 5 | ||||||||
Fair value | 1,696 | 1,738 | ||||||||
Available-for-sale | Other Debt Securities
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 13,878 | 14,320 | ||||||||
Gross unrealized Gains | 300 | 292 | ||||||||
Gross unrealized Losses | 24 | 33 | ||||||||
Fair value | 14,154 | [1] | 14,579 | [2] | ||||||
Available-for-sale | Equity Securities
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 28 | 26 | ||||||||
Gross unrealized Gains | 6 | 4 | ||||||||
Fair value | 34 | 30 | ||||||||
Available-for-sale | Money Market Funds
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 957 | 973 | ||||||||
Fair value | 957 | 973 | ||||||||
Available-for-sale | Grantor Trust Alt-A RMBS
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 1,734 | [3] | 1,790 | [3] | ||||||
Gross unrealized Gains | 252 | [3] | 157 | [3] | ||||||
Gross unrealized Losses | 24 | [3] | 68 | [3] | ||||||
Fair value | 1,962 | [3] | 1,879 | [3] | ||||||
Available-for-sale | Grantor Trust Prime RMBS
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 1,024 | [3] | 1,090 | [3] | ||||||
Gross unrealized Gains | 136 | [3] | 106 | [3] | ||||||
Gross unrealized Losses | 7 | [3] | 21 | [3] | ||||||
Fair value | 1,153 | [3] | 1,175 | [3] | ||||||
Available-for-sale | Grantor Trust Sub Prime RMBS
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 111 | [3] | 122 | [3] | ||||||
Gross unrealized Gains | 8 | [3] | 6 | [3] | ||||||
Gross unrealized Losses | 2 | [3] | 3 | [3] | ||||||
Fair value | 117 | [3] | 125 | [3] | ||||||
Held-to-maturity
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 4,819 | 3,521 | ||||||||
Gross unrealized Gains | 146 | 146 | ||||||||
Gross unrealized Losses | 116 | 127 | ||||||||
Fair value | 4,849 | 3,540 | ||||||||
Held-to-maturity | U.S. Treasury
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 862 | 813 | ||||||||
Gross unrealized Gains | 43 | 53 | ||||||||
Fair value | 905 | 866 | ||||||||
Held-to-maturity | State And Political Subdivisions
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 91 | 100 | ||||||||
Gross unrealized Gains | 3 | 3 | ||||||||
Fair value | 94 | 103 | ||||||||
Held-to-maturity | Agency RMBS
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 2,000 | 658 | ||||||||
Gross unrealized Gains | 41 | 39 | ||||||||
Fair value | 2,041 | 697 | ||||||||
Held-to-maturity | Alt-A RMBS
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 143 | 153 | ||||||||
Gross unrealized Gains | 6 | 4 | ||||||||
Gross unrealized Losses | 14 | 19 | ||||||||
Fair value | 135 | 138 | ||||||||
Held-to-maturity | Prime RMBS
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 117 | 121 | ||||||||
Gross unrealized Gains | 1 | |||||||||
Gross unrealized Losses | 7 | 10 | ||||||||
Fair value | 111 | 111 | ||||||||
Held-to-maturity | Subprime RMBS
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 28 | 28 | ||||||||
Gross unrealized Losses | 3 | 3 | ||||||||
Fair value | 25 | 25 | ||||||||
Held-to-maturity | Other RMBS
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 1,546 | 1,617 | ||||||||
Gross unrealized Gains | 52 | 47 | ||||||||
Gross unrealized Losses | 89 | 93 | ||||||||
Fair value | 1,509 | 1,571 | ||||||||
Held-to-maturity | Commercial MBS
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 29 | 28 | ||||||||
Gross unrealized Losses | 3 | 2 | ||||||||
Fair value | 26 | 26 | ||||||||
Held-to-maturity | Other Securities
|
||||||||||
Gain (Loss) on Investments [Line Items] | ||||||||||
Amortized cost | 3 | 3 | ||||||||
Fair value | $ 3 | $ 3 | ||||||||
|
Fair value of financial instruments (Tables)
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2012
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Carrying Amount and Fair Value of Financial Instruments |
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Summary of Carrying Amount of Hedged Financial Instruments, Related Notional Amount of the Hedge and Estimated Fair Value of Derivatives | The table below summarizes the carrying amount of the hedged financial instruments, the notional amount of the hedge and the unrealized gain (loss) (estimated fair value) of the derivatives.
|
Estimated Annual Amortization Expense (Detail) (USD $)
In Millions, unless otherwise specified |
3 Months Ended |
---|---|
Mar. 31, 2012
|
|
Expected Amortization Expense [Line Items] | |
2012 | $ 384 |
2013 | 335 |
2014 | 298 |
2015 | 267 |
2016 | $ 237 |
Fair Value Measurements Using Significant Unobservable Inputs (Detail) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 3 Months Ended | 3 Months Ended | |||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
Mar. 31, 2012
Available-for-sale
State And Political Subdivisions
|
Mar. 31, 2011
Available-for-sale
State And Political Subdivisions
|
Dec. 31, 2010
Available-for-sale
State And Political Subdivisions
|
Mar. 31, 2012
Available-for-sale
Other Debt Securities
|
Mar. 31, 2011
Available-for-sale
Other Debt Securities
|
Mar. 31, 2012
Trading Assets
Debt and equity instruments
|
Mar. 31, 2011
Trading Assets
Debt and equity instruments
|
Dec. 31, 2010
Trading Assets
Debt and equity instruments
|
Mar. 31, 2012
Trading Assets
Derivative assets
|
Mar. 31, 2011
Trading Assets
Derivative assets
|
Mar. 31, 2011
Loans
|
Mar. 31, 2012
Other Assets
|
Mar. 31, 2011
Other Assets
|
Mar. 31, 2011
Trading Liabilities
Debt and equity instruments
|
Mar. 31, 2012
Trading Liabilities
Derivative liabilities
|
Mar. 31, 2011
Trading Liabilities
Derivative liabilities
|
Mar. 31, 2011
Other Liabilities
|
Dec. 31, 2010
Other Liabilities
|
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Fair value measurements for assets using significant unobservable inputs | ||||||||||||||||||||||||||||||||||
Beginning Balance | $ 365 | $ 338 | $ 45 | $ 10 | $ 10 | $ 3 | $ 58 | $ 63 | $ 32 | $ 32 | $ 97 | $ 119 | $ 6 | $ 157 | $ 113 | |||||||||||||||||||
Transfers into Level 3 | 7 | 6 | 1 | |||||||||||||||||||||||||||||||
Transfers out of Level 3 | 16 | 14 | 2 | |||||||||||||||||||||||||||||||
Total gains or (losses) for the period included in earnings (or changes in net assets) | (28) | 31 | (3) | [1] | (3) | [2] | (25) | [2] | 25 | [2] | 3 | [3] | 6 | [3] | ||||||||||||||||||||
Purchases | 3 | 1 | 3 | 1 | ||||||||||||||||||||||||||||||
Sales | (6) | (2) | (4) | |||||||||||||||||||||||||||||||
Settlements | (10) | (2) | (8) | |||||||||||||||||||||||||||||||
Ending Balance | 324 | 361 | 43 | 10 | 10 | 64 | 58 | 32 | 32 | 72 | 131 | 4 | 151 | 120 | ||||||||||||||||||||
Change in unrealized gains or (losses) for the period included in earnings (or changes in net assets) for assets held at the end of the reporting period | (28) | 38 | (3) | (25) | 38 | |||||||||||||||||||||||||||||
Fair value measurements for liabilities using significant unobservable inputs | ||||||||||||||||||||||||||||||||||
Beginning Balance | 314 | 179 | 6 | 314 | 171 | 2 | 2 | |||||||||||||||||||||||||||
Total (gains) or losses for the period included in earnings (or changes in net assets) | (68) | (49) | (68) | [2] | (49) | [2] | ||||||||||||||||||||||||||||
Settlements | (2) | (6) | 4 | |||||||||||||||||||||||||||||||
Ending Balance | 246 | 128 | 246 | 126 | 2 | 2 | ||||||||||||||||||||||||||||
Change in unrealized (gains) or losses for the period included in earnings (or changes in net assets) for liabilities held at the end of the reporting period | $ (51) | $ (19) | $ (51) | $ (19) | ||||||||||||||||||||||||||||||
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Employee benefit plans (Tables)
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2012
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Net Periodic Benefit Cost | The components of net periodic benefit cost are as follows:
|
Realized Gross Gains, Realized Gross Losses and Recognized Gross Impairments on Securities (Detail) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2012
|
Dec. 31, 2011
|
Mar. 31, 2011
|
|
Gain (Loss) on Investments [Line Items] | |||
Realized gross gains | $ 62 | $ 91 | $ 19 |
Realized gross losses | (34) | (9) | |
Recognized gross impairments | (22) | (60) | (5) |
Net securities gains (losses) | $ 40 | $ (3) | $ 5 |
Information about Past Due Loans (Detail) (USD $)
In Millions, unless otherwise specified |
Mar. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
30-59 Days past due | $ 192 | $ 339 |
60-89 Days past due | 6 | 29 |
>90 Days past due | 9 | 13 |
Total past due | 207 | 381 |
Domestic
|
||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
30-59 Days past due | 192 | 339 |
60-89 Days past due | 6 | 29 |
>90 Days past due | 9 | 13 |
Total past due | 207 | 381 |
Domestic | Commercial Real Estate
|
||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
30-59 Days past due | 114 | 118 |
60-89 Days past due | 9 | |
Total past due | 114 | 127 |
Domestic | Wealth Management Loans and Mortgages
|
||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
30-59 Days past due | 49 | 89 |
60-89 Days past due | 1 | 3 |
Total past due | 50 | 92 |
Domestic | Commercial
|
||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
30-59 Days past due | 60 | |
60-89 Days past due | 7 | |
Total past due | 67 | |
Domestic | Other Residential Mortgages
|
||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
30-59 Days past due | 28 | 36 |
60-89 Days past due | 5 | 10 |
>90 Days past due | 9 | 13 |
Total past due | 42 | 59 |
Domestic | Financial Institutions
|
||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
30-59 Days past due | 1 | 36 |
Total past due | $ 1 | $ 36 |
Fair Value of Derivative Contracts Falling under Early Termination Provisions in Net Liability Position (Detail) (USD $)
In Millions, unless otherwise specified |
Mar. 31, 2012
|
|||
---|---|---|---|---|
A3/A-
|
||||
Credit Derivatives [Line Items] | ||||
Potential close-out exposures (fair value) | $ 839 | [1] | ||
Baa2/BBB
|
||||
Credit Derivatives [Line Items] | ||||
Potential close-out exposures (fair value) | 1,146 | [1] | ||
Bal/BB+
|
||||
Credit Derivatives [Line Items] | ||||
Potential close-out exposures (fair value) | $ 2,431 | [1] | ||
|
Allowance for Credit Losses Activity (Parenthetical) (Detail) (USD $)
In Millions, unless otherwise specified |
Mar. 31, 2012
|
Dec. 31, 2011
|
Mar. 31, 2011
|
---|---|---|---|
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Loans | $ 43,028 | $ 43,979 | |
Overdrafts
|
|||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Loans | 3,715 | 4,849 | |
Domestic
|
|||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Loans | 33,747 | 33,971 | |
Domestic | Overdrafts
|
|||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Loans | 1,971 | 2,958 | 3,381 |
Domestic | Margin Loans
|
|||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Loans | 13,144 | 12,760 | 9,369 |
Domestic | Other loans
|
|||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Loans | $ 849 | $ 623 | $ 452 |
Review of businesses (Tables)
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3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2012
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Contribution of Segments to Overall Profitability | The following consolidating schedules show the contribution of our businesses to our overall profitability.
N/M - Not meaningful.
N/M - Not meaningful.
N/M - Not meaningful. |
Consolidated Statement of Changes in Equity (USD $)
In Millions |
Total
|
Common stock
|
Additional paid-in capital
|
Retained earnings
|
Accumulated other comprehensive income (loss), net of tax
|
Treasury stock
|
Non- redeemable non controlling interest of consolidated investment management funds
|
Redeemable non- controlling interests/ temporary equity
|
|||
---|---|---|---|---|---|---|---|---|---|---|---|
Beginning Balance at Dec. 31, 2011 | $ 34,087 | [1] | $ 12 | $ 23,185 | $ 12,812 | $ (1,627) | $ (965) | $ 670 | $ 114 | ||
Shares issued to shareholders of noncontrolling interests | 12 | ||||||||||
Redemption of subsidiary shares from noncontrolling interests | (9) | (9) | (7) | ||||||||
Other net changes in noncontrolling interests | 21 | 3 | 6 | 12 | (1) | ||||||
Net income | 630 | 619 | 11 | 1 | |||||||
Other comprehensive income | 414 | 398 | 16 | 1 | |||||||
Dividends on common stock at $0.13 per share | (158) | (158) | |||||||||
Repurchase of common stock | (398) | (398) | |||||||||
Common stock issued under employee benefit plans | 8 | 8 | |||||||||
Common stock issued under direct stock purchase and dividend reinvestment plan | 5 | 5 | |||||||||
Stock awards and options exercised | 111 | 112 | (1) | ||||||||
Other | (2) | (2) | |||||||||
Ending Balance at Mar. 31, 2012 | $ 34,709 | [1] | $ 12 | $ 23,304 | $ 13,277 | $ (1,229) | $ (1,364) | $ 709 | $ 120 | ||
|
Standby Letters of Credits (SBLCs) by Investment Grade (Detail) (Standby letters of credit)
|
Mar. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Investment grade
|
||
Concentration Risk [Line Items] | ||
Standby letters of credit | 90.00% | 91.00% |
Noninvestment grade
|
||
Concentration Risk [Line Items] | ||
Standby letters of credit | 10.00% | 9.00% |
Nonperforming Assets (Detail) (USD $)
In Millions, unless otherwise specified |
Mar. 31, 2012
|
Dec. 31, 2011
|
||||
---|---|---|---|---|---|---|
Financing Receivable, Impaired [Line Items] | ||||||
Nonperforming loans | $ 318 | $ 329 | ||||
Other assets owned | 13 | 12 | ||||
Total nonperforming assets | 331 | [1] | 341 | [1] | ||
Domestic | Other Residential Mortgages
|
||||||
Financing Receivable, Impaired [Line Items] | ||||||
Nonperforming loans | 188 | 203 | ||||
Domestic | Commercial Real Estate
|
||||||
Financing Receivable, Impaired [Line Items] | ||||||
Nonperforming loans | 39 | 40 | ||||
Domestic | Wealth Management Loans and Mortgages
|
||||||
Financing Receivable, Impaired [Line Items] | ||||||
Nonperforming loans | 35 | 32 | ||||
Domestic | Commercial
|
||||||
Financing Receivable, Impaired [Line Items] | ||||||
Nonperforming loans | 32 | 21 | ||||
Domestic | Financial Institutions
|
||||||
Financing Receivable, Impaired [Line Items] | ||||||
Nonperforming loans | 14 | 23 | ||||
Foreign
|
||||||
Financing Receivable, Impaired [Line Items] | ||||||
Nonperforming loans | $ 10 | $ 10 | ||||
|