Loans and asset quality (Tables)

3 Months Ended

Mar. 31, 2012

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.

Loans (in millions)	March 31, 2012		Dec. 31, 2011
Domestic:
Financial institutions	$	4,895	$	4,606
Commercial		763		752
Wealth management loans and mortgages		7,312		7,342
Commercial real estate		1,441		1,449
Lease financings (a)		1,518		1,558
Other residential mortgages		1,854		1,923
Overdrafts		1,971		2,958
Other		849		623
Margin loans		13,144		12,760
Total domestic		33,747		33,971
Foreign:
Financial institutions		6,078		6,538
Commercial		416		528
Lease financings (a)		1,043		1,051
Other (primarily overdrafts)		1,744		1,891
Total foreign		9,281		10,008
Total loans	$	43,028	$	43,979

(a) Net of unearned income on domestic and foreign lease financings of $1,301 million at March 31, 2012 and $1,343 million at Dec. 31, 2011.

Allowance for Credit Losses Activity

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.

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.

Nonperforming Assets

The table below sets forth information about our nonperforming assets.

Nonperforming assets (in millions)	March 31, 2012		Dec. 31, 2011
Loans:
Other residential mortgages	$	188	$	203
Commercial real estate		39		40
Wealth management		35		32
Commercial		32		21
Financial institutions		14		23
Foreign		10		10
Total nonperforming loans	$	318	$	329
Other assets owned		13		12
Total nonperforming assets (a)	$	331	$	341

(a) Loans of consolidated investment management funds are not part of BNY Mellon’s loan portfolio. Included in these loans are nonperforming loans of $180 million at March 31, 2012 and $101 million at Dec. 31, 2011. These loans are recorded at fair value and therefore do not impact the provision for credit losses and allowance for loan losses, and accordingly are excluded from the nonperforming assets table above.

Lost Interest

Lost interest (in millions)	1Q12		4Q11		1Q11
Amount by which interest income recognized on nonperforming loans exceeded reversals	$	-	$	-	$	1
Amount by which interest income would have increased if nonperforming loans at period- end had been performing for the entire year	$	5	$	4	$	5

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.

Impaired loans	Quarter ended
	March 31, 2012				Dec. 31, 2011				March 31, 2011
(in millions)	Average recorded investment		Interest income recognized		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 balance		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.

Information about 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

Troubled Debt Restructurings

The following table presents TDRs that occurred during the first quarter of 2012.

TDRs during the first quarter of 2012
			Outstanding recorded investment
(dollars in millions)	Number of contracts		Pre- modification		Post- modification
Commercial		1	$	38	$	32
Commercial real estate		2		11		12
Other residential mortgages		30		7		8
Foreign		1		3		3
Total TDRs		34	$	59	$	55

Credit Quality Indicators - Commercial Portfolio Credit Risk Profile by Creditworthiness Category

The following tables set forth information about credit quality indicators.

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

Credit Quality Indicators - Wealth Management Loans and Mortgages - Credit Risk Profile by Internally Assigned Grade

Wealth management loans and mortgages

Wealth management loans and mortgages – Credit risk profile by internally assigned grade
(in millions)	March 31, 2012		Dec. 31, 2011
Wealth management loans:
Investment grade	$	3,378	$	3,450
Noninvestment grade		104		111
Wealth management mortgages		3,830		3,781
Total	$	7,312	$	7,342