Delaware (State or other jurisdiction of incorporation) | 001-35651 (Commission File Number) | 13-2614959 (I.R.S. Employer Identification No.) |
225 Liberty Street, New York, New York | 10286 | |
(Address of principal executive offices) | (Zip Code) |
Exhibit Number | Description |
99.1 | The Bank of New York Mellon Corporation Earnings Release dated January 19, 2017, announcing financial results for the fourth quarter of 2016. |
The Bank of New York Mellon Corporation (Registrant) | |||
Date: January 30, 2017 | By: | /s/ Craig T. Beazer | |
Name: Craig T. Beazer | |||
Title: Secretary | |||
Exhibit Number | Description |
99.1 | The Bank of New York Mellon Corporation Earnings Release dated January 19, 2017, announcing financial results for the fourth quarter of 2016. |
BNY Mellon 4Q16 Earnings Release |
News Release | ![]() |
• | Earnings per common share up 35%, or 13% on an adjusted basis year-over-year (a) |
• | Fee and other revenue up slightly; Investment Services fees increased 4% |
• | Net interest revenue increased 9% |
• | Total noninterest expense decreased 2% year-over-year |
• | Earnings of $3.45 billion or $3.17 per common share on an adjusted basis (a) |
• | Earnings per common share up 16%, or 11% on an adjusted basis (a) |
• | Total revenue up slightly and total noninterest expense decreased 3% |
• | Repurchased 18.4 million common shares for $848 million in the fourth quarter of 2016 and 58.6 million common shares for $2.4 billion in full-year 2016 |
• | Return on common equity of 9% in the fourth quarter of 2016 and 10% in full-year 2016 |
• | Adjusted return on tangible common equity of 21% in both the fourth quarter and |
• | SLR – transitional of 6.0%; SLR – fully phased-in of 5.6% (a) |
(a) | These measures are considered to be Non-GAAP. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 24 for the adjusted earnings and earnings per common share reconciliation and the adjusted tangible common equity ratio reconciliation. See “Capital and Liquidity” beginning on page 13 for the reconciliation of the SLR. |
Media Relations: Ligia Braun (212) 635-8588 | Investor Relations: Valerie Haertel (212) 635-8529 |
BNY Mellon 4Q16 Earnings Release |
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BNY Mellon 4Q16 Earnings Release |
Earnings per share | Net income applicable to common shareholders of The Bank of New York Mellon Corporation | ||||||||||||||||||||
(in millions, except per share amounts) | 4Q16 | 4Q15 | Inc/(Dec) | 4Q16 | 4Q15 | Inc/(Dec) | |||||||||||||||
GAAP results | $ | 0.77 | $ | 0.57 | 35 | % | $ | 822 | $ | 637 | 29 | % | |||||||||
Add: M&I, litigation and restructuring charges | — | 0.01 | 4 | 12 | |||||||||||||||||
Impairment charge related to Sentinel | N/A | 0.10 | N/A | 106 | |||||||||||||||||
Non-GAAP results | $ | 0.77 | $ | 0.68 | 13 | % | $ | 826 | $ | 755 | 9 | % |
• | Total revenue of $3.8 billion, increased 2% on both a GAAP and adjusted basis (Non-GAAP) (a). |
• | The provision for credit losses was $7 million. |
• | Noninterest expense of $2.6 billion, decreased 2% on both a GAAP and adjusted basis (Non-GAAP) (a). The decrease reflects lower staff expense driven by the favorable impact of a stronger U.S. dollar, lower employee benefits and severance expense. |
• | Effective tax rate of 24.3%. |
(a) | See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 24 for the reconciliation of Non-GAAP measures. In all periods presented, Non-GAAP information excludes the net income (loss) attributable to noncontrolling interests of consolidated investment management funds, amortization of intangible assets and M&I, litigation and restructuring charges. Non-GAAP information for 4Q15 also excludes the impairment charge related to a court decision regarding Sentinel Management Group, Inc. (“Sentinel”). See “Capital and Liquidity” beginning on page 13 for the reconciliation of the SLR. |
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BNY Mellon 4Q16 Earnings Release |
(dollars in millions, except per share amounts; common shares in thousands) | 4Q16 vs. | ||||||||||||||||||
4Q16 | 3Q16 | 2Q16 | 1Q16 | 4Q15 | 3Q16 | 4Q15 | |||||||||||||
Revenue: | |||||||||||||||||||
Fee and other revenue | $ | 2,954 | $ | 3,150 | $ | 2,999 | $ | 2,970 | $ | 2,950 | (6)% | — | |||||||
Income (loss) from consolidated investment management funds | 5 | 17 | 10 | (6 | ) | 16 | |||||||||||||
Net interest revenue | 831 | 774 | 767 | 766 | 760 | 7 | 9 | ||||||||||||
Total revenue – GAAP | 3,790 | 3,941 | 3,776 | 3,730 | 3,726 | (4 | ) | 2 | |||||||||||
Less: Net income (loss) attributable to noncontrolling interests related to consolidated investment management funds | 4 | 9 | 4 | (7 | ) | 5 | |||||||||||||
Total revenue – Non-GAAP | 3,786 | 3,932 | 3,772 | 3,737 | 3,721 | (4 | ) | 2 | |||||||||||
Provision for credit losses | 7 | (19 | ) | (9 | ) | 10 | 163 | ||||||||||||
Expense: | |||||||||||||||||||
Noninterest expense – GAAP | 2,631 | 2,643 | 2,620 | 2,629 | 2,692 | — | (2 | ) | |||||||||||
Less: Amortization of intangible assets | 60 | 61 | 59 | 57 | 64 | ||||||||||||||
M&I, litigation and restructuring charges | 7 | 18 | 7 | 17 | 18 | ||||||||||||||
Total noninterest expense – Non-GAAP | 2,564 | 2,564 | 2,554 | 2,555 | 2,610 | — | (2 | ) | |||||||||||
Income: | |||||||||||||||||||
Income before income taxes | 1,152 | 1,317 | 1,165 | 1,091 | 871 | (13)% | 32% | ||||||||||||
Provision for income taxes | 280 | 324 | 290 | 283 | 175 | ||||||||||||||
Net income | $ | 872 | $ | 993 | $ | 875 | $ | 808 | $ | 696 | |||||||||
Net (income) loss attributable to noncontrolling interests (a) | (2 | ) | (6 | ) | (2 | ) | 9 | (3 | ) | ||||||||||
Net income applicable to shareholders of The Bank of New York Mellon Corporation | 870 | 987 | 873 | 817 | 693 | ||||||||||||||
Preferred stock dividends | (48 | ) | (13 | ) | (48 | ) | (13 | ) | (56 | ) | |||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 822 | $ | 974 | $ | 825 | $ | 804 | $ | 637 | |||||||||
Operating leverage (b) | (338 | ) bps | 399 | bps | |||||||||||||||
Adjusted operating leverage – Non-GAAP (b) | (371 | ) bps | 351 | bps | |||||||||||||||
Key Metrics: | |||||||||||||||||||
Pre-tax operating margin (c) | 30 | % | 33 | % | 31 | % | 29 | % | 23 | % | |||||||||
Adjusted pre-tax operating margin – Non-GAAP (c) | 32 | % | 35 | % | 33 | % | 31 | % | 30 | % | |||||||||
Return on common equity (annualized) (c) | 9.3 | % | 10.8 | % | 9.3 | % | 9.2 | % | 7.1 | % | |||||||||
Adjusted return on common equity (annualized) – Non-GAAP (c) | 9.8 | % | 11.3 | % | 9.7 | % | 9.7 | % | 8.9 | % | |||||||||
Return on tangible common equity (annualized) – Non- GAAP (c)(d) | 20.4 | % | 23.5 | % | 20.4 | % | 20.6 | % | 16.2 | % | |||||||||
Adjusted return on tangible common equity (annualized) – Non-GAAP (c)(d) | 20.5 | % | 23.6 | % | 20.5 | % | 20.8 | % | 19.0 | % | |||||||||
Fee revenue as a percentage of total revenue | 78 | % | 79 | % | 79 | % | 80 | % | 79 | % | |||||||||
Percentage of non-U.S. total revenue | 34 | % | 36 | % | 34 | % | 33 | % | 34 | % | |||||||||
Average common shares and equivalents outstanding: | |||||||||||||||||||
Basic | 1,050,888 | 1,062,248 | 1,072,583 | 1,079,641 | 1,088,880 | ||||||||||||||
Diluted | 1,056,818 | 1,067,682 | 1,078,271 | 1,085,284 | 1,096,385 | ||||||||||||||
Period end: | |||||||||||||||||||
Full-time employees | 52,000 | 52,300 | 52,200 | 52,100 | 51,200 | ||||||||||||||
Book value per common share – GAAP (d) | $ | 33.67 | $ | 34.19 | $ | 33.72 | $ | 33.34 | $ | 32.69 | |||||||||
Tangible book value per common share – Non-GAAP (d) | $ | 16.19 | $ | 16.67 | $ | 16.25 | $ | 15.87 | $ | 15.27 | |||||||||
Cash dividends per common share | $ | 0.19 | $ | 0.19 | $ | 0.17 | $ | 0.17 | $ | 0.17 | |||||||||
Common dividend payout ratio | 25 | % | 21 | % | 23 | % | 23 | % | 30 | % | |||||||||
Closing stock price per common share | $ | 47.38 | $ | 39.88 | $ | 38.85 | $ | 36.83 | $ | 41.22 | |||||||||
Market capitalization | $ | 49,630 | $ | 42,167 | $ | 41,479 | $ | 39,669 | $ | 44,738 | |||||||||
Common shares outstanding | 1,047,488 | 1,057,337 | 1,067,674 | 1,077,083 | 1,085,343 |
(b) | Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 24 for the components of this measure. |
(c) | Non-GAAP information for all periods presented excludes the net income (loss) attributable to noncontrolling interests related to consolidated investment management funds, amortization of intangible assets and M&I, litigation and restructuring charges. Non-GAAP information for 3Q16 also excludes a recovery of the previously impaired Sentinel loan and 4Q15 also excludes the impairment charge related to a court decision regarding Sentinel. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 24 for the reconciliation of Non-GAAP measures. |
(d) | Tangible book value per common share – Non-GAAP and tangible common equity exclude goodwill and intangible assets, net of deferred tax liabilities. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 24 for the reconciliation of Non-GAAP measures. |
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BNY Mellon 4Q16 Earnings Release |
Consolidated business metrics | 4Q16 vs. | |||||||||||||||||||
4Q16 | 3Q16 | 2Q16 | 1Q16 | 4Q15 | 3Q16 | 4Q15 | ||||||||||||||
Changes in AUM (in billions): (a) | ||||||||||||||||||||
Beginning balance of AUM | $ | 1,715 | $ | 1,664 | $ | 1,639 | $ | 1,625 | $ | 1,625 | ||||||||||
Net inflows (outflows): | ||||||||||||||||||||
Long-term strategies: | ||||||||||||||||||||
Equity | (4 | ) | (3 | ) | (2 | ) | (3 | ) | (9 | ) | ||||||||||
Fixed income | (1 | ) | — | (2 | ) | — | 1 | |||||||||||||
Liability-driven investments (b) | (7 | ) | 4 | 15 | 14 | 11 | ||||||||||||||
Alternative investments | 2 | 2 | 1 | 1 | 2 | |||||||||||||||
Total long-term active strategies (outflows) inflows | (10 | ) | 3 | 12 | 12 | 5 | ||||||||||||||
Index | (1 | ) | (2 | ) | (17 | ) | (11 | ) | (16 | ) | ||||||||||
Total long-term strategies (outflows) inflows | (11 | ) | 1 | (5 | ) | 1 | (11 | ) | ||||||||||||
Short term strategies: | ||||||||||||||||||||
Cash | (3 | ) | (1 | ) | 4 | (9 | ) | 2 | ||||||||||||
Total net (outflows) | (14 | ) | — | (1 | ) | (8 | ) | (9 | ) | |||||||||||
Net market impact/other | (11 | ) | 80 | 71 | 41 | 24 | ||||||||||||||
Net currency impact | (42 | ) | (29 | ) | (47 | ) | (19 | ) | (15 | ) | ||||||||||
Acquisition | — | — | 2 | — | — | |||||||||||||||
Ending balance of AUM | $ | 1,648 | (c) | $ | 1,715 | $ | 1,664 | $ | 1,639 | $ | 1,625 | (4 | )% | 1 | % | |||||
AUM at period end, by product type: (a) | ||||||||||||||||||||
Equity | 14 | % | 13 | % | 14 | % | 14 | % | 14 | % | ||||||||||
Fixed income | 13 | 14 | 13 | 13 | 13 | |||||||||||||||
Index | 19 | 18 | 18 | 19 | 20 | |||||||||||||||
Liability-driven investments (b) | 34 | 35 | 34 | 33 | 32 | |||||||||||||||
Alternative investments | 4 | 4 | 4 | 4 | 4 | |||||||||||||||
Cash | 16 | 16 | 17 | 17 | 17 | |||||||||||||||
Total AUM | 100 | % | (c) | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||
Investment Management: | ||||||||||||||||||||
Average loans (in millions) | $ | 15,673 | $ | 15,308 | $ | 14,795 | $ | 14,275 | $ | 13,447 | 2 | % | 17 | % | ||||||
Average deposits (in millions) | $ | 15,511 | $ | 15,600 | $ | 15,518 | $ | 15,971 | $ | 15,497 | (1 | )% | — | % | ||||||
Investment Services: | ||||||||||||||||||||
Average loans (in millions) | $ | 45,832 | $ | 44,329 | $ | 43,786 | $ | 45,004 | $ | 45,844 | 3 | % | — | % | ||||||
Average deposits (in millions) | $ | 213,531 | $ | 220,316 | $ | 221,998 | $ | 215,707 | $ | 229,241 | (3 | )% | (7 | )% | ||||||
AUC/A at period end (in trillions) (d) | $ | 29.9 | (c) | $ | 30.5 | $ | 29.5 | $ | 29.1 | $ | 28.9 | (2 | )% | 3 | % | |||||
Market value of securities on loan at period end (in billions) (e) | $ | 296 | $ | 288 | $ | 278 | $ | 300 | $ | 277 | 3 | % | 7 | % | ||||||
Asset servicing: | ||||||||||||||||||||
Estimated new business wins (AUC/A) (in billions) | $ | 141 | (c) | $ | 150 | $ | 167 | $ | 40 | $ | 49 | |||||||||
Depositary Receipts: | ||||||||||||||||||||
Number of sponsored programs | 1,062 | 1,094 | 1,112 | 1,131 | 1,145 | (3 | )% | (7 | )% | |||||||||||
Clearing services: | ||||||||||||||||||||
Average active clearing accounts (U.S. platform) (in thousands) | 5,960 | 5,942 | 5,946 | 5,947 | 5,959 | — | % | — | % | |||||||||||
Average long-term mutual fund assets (U.S. platform) (in millions) | $ | 438,460 | $ | 443,112 | $ | 431,150 | $ | 415,025 | $ | 437,260 | (1 | )% | — | % | ||||||
Average investor margin loans (U.S. platform) (in millions) | $ | 10,562 | $ | 10,834 | $ | 10,633 | $ | 11,063 | $ | 11,575 | (3 | )% | (9 | )% | ||||||
Broker-Dealer: | ||||||||||||||||||||
Average tri-party repo balances (in billions) | $ | 2,307 | $ | 2,212 | $ | 2,108 | $ | 2,104 | $ | 2,153 | 4 | % | 7 | % |
(a) | Excludes securities lending cash management assets and assets managed in the Investment Services business and the Other segment. |
(b) | Includes currency overlay assets under management. |
(c) | Preliminary. |
(d) | Includes the AUC/A of CIBC Mellon Global Securities Services Company (“CIBC Mellon”), a joint venture with the Canadian Imperial Bank of Commerce, of $1.2 trillion at Dec. 31, 2016 and Sept. 30, 2016, $1.1 trillion at June 30, 2016 and March 31, 2016 and $1.0 trillion at Dec. 31, 2015. |
(e) | Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $63 billion at Dec. 31, 2016, $64 billion at Sept. 30, 2016, $56 billion at June 30, 2016 and March 31, 2016 and $55 billion at Dec. 31, 2015. |
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BNY Mellon 4Q16 Earnings Release |
Key market metrics | 4Q16 vs. | ||||||||||||||||||
4Q16 | 3Q16 | 2Q16 | 1Q16 | 4Q15 | 3Q16 | 4Q15 | |||||||||||||
S&P 500 Index (a) | 2239 | 2168 | 2099 | 2060 | 2044 | 3% | 10% | ||||||||||||
S&P 500 Index – daily average | 2185 | 2162 | 2075 | 1951 | 2052 | 1 | 6 | ||||||||||||
FTSE 100 Index (a) | 7143 | 6899 | 6504 | 6175 | 6242 | 4 | 14 | ||||||||||||
FTSE 100 Index – daily average | 6923 | 6765 | 6204 | 5988 | 6271 | 2 | 10 | ||||||||||||
MSCI EAFE (a) | 1684 | 1702 | 1608 | 1652 | 1716 | (1 | ) | (2 | ) | ||||||||||
MSCI EAFE – daily average | 1660 | 1677 | 1648 | 1593 | 1732 | (1 | ) | (4 | ) | ||||||||||
Barclays Capital Global Aggregate BondSM Index (a)(b) | 451 | 486 | 482 | 468 | 442 | (7 | ) | 2 | |||||||||||
NYSE and NASDAQ share volume (in billions) | 189 | 186 | 203 | 218 | 198 | 2 | (5 | ) | |||||||||||
JPMorgan G7 Volatility Index – daily average (c) | 10.24 | 10.19 | 11.12 | 10.60 | 9.49 | — | 8 | ||||||||||||
Average Fed Funds effective rate | 0.45 | % | 0.39 | % | 0.37 | % | 0.36 | % | 0.16 | % | 6 bps | 29 bps | |||||||
Foreign exchange rates vs. U.S. dollar: | |||||||||||||||||||
British pound (a) | $ | 1.23 | $ | 1.30 | $ | 1.34 | $ | 1.44 | $ | 1.48 | (5)% | (17)% | |||||||
British pound – average rate | 1.24 | 1.31 | 1.43 | 1.43 | 1.52 | (5 | ) | (18 | ) | ||||||||||
Euro (a) | 1.05 | 1.12 | 1.11 | 1.14 | 1.09 | (6 | ) | (4 | ) | ||||||||||
Euro – average rate | 1.08 | 1.12 | 1.13 | 1.10 | 1.10 | (4 | ) | (2 | ) |
(a) | Period end. |
(b) | Unhedged in U.S. dollar terms. |
(c) | The JPMorgan G7 Volatility Index is based on the implied volatility in 3-month currency options. |
Page - 6 |
BNY Mellon 4Q16 Earnings Release |
Fee and other revenue | 4Q16 vs. | ||||||||||||||||||
(dollars in millions) | 4Q16 | 3Q16 | 2Q16 | 1Q16 | 4Q15 | 3Q16 | 4Q15 | ||||||||||||
Investment services fees: | |||||||||||||||||||
Asset servicing (a) | $ | 1,068 | $ | 1,067 | $ | 1,069 | $ | 1,040 | $ | 1,032 | — | % | 3 | % | |||||
Clearing services | 355 | 349 | 350 | 350 | 339 | 2 | 5 | ||||||||||||
Issuer services | 211 | 337 | 234 | 244 | 199 | (37 | ) | 6 | |||||||||||
Treasury services | 140 | 137 | 139 | 131 | 137 | 2 | 2 | ||||||||||||
Total investment services fees | 1,774 | 1,890 | 1,792 | 1,765 | 1,707 | (6 | ) | 4 | |||||||||||
Investment management and performance fees | 848 | 860 | 830 | 812 | 864 | (1 | ) | (2 | ) | ||||||||||
Foreign exchange and other trading revenue | 161 | 183 | 182 | 175 | 173 | (12 | ) | (7 | ) | ||||||||||
Financing-related fees | 50 | 58 | 57 | 54 | 51 | (14 | ) | (2 | ) | ||||||||||
Distribution and servicing | 41 | 43 | 43 | 39 | 41 | (5 | ) | — | |||||||||||
Investment and other income | 70 | 92 | 74 | 105 | 93 | (24 | ) | (25 | ) | ||||||||||
Total fee revenue | 2,944 | 3,126 | 2,978 | 2,950 | 2,929 | (6 | ) | 1 | |||||||||||
Net securities gains | 10 | 24 | 21 | 20 | 21 | N/M | N/M | ||||||||||||
Total fee and other revenue | $ | 2,954 | $ | 3,150 | $ | 2,999 | $ | 2,970 | $ | 2,950 | (6 | )% | — | % |
(a) | Asset servicing fees include securities lending revenue of $54 million in 4Q16, $51 million in 3Q16, $52 million in 2Q16, $50 million in 1Q16 and $46 million in 4Q15. |
• | Asset servicing fees were $1.1 billion, an increase of 3% year-over-year. The year-over-year increase primarily reflects higher money market fees, net new business and higher equity market values, partially offset by the unfavorable impact of a stronger U.S. dollar and the impact of downsizing of the UK retail transfer agency business. |
• | Clearing services fees were $355 million, an increase of 5% year-over-year and 2% sequentially. Both increases were primarily driven by higher money market fees. The year-over-year increase was partially offset by the impact of previously disclosed lost business. |
• | Issuer services fees were $211 million, an increase of 6% year-over-year and a decrease of 37% sequentially. The year-over-year increase primarily reflects higher fees in Depositary Receipts and higher money market fees in Corporate Trust. The sequential decrease primarily reflects seasonality in Depositary Receipts. |
• | Treasury services fees were $140 million, an increase of 2% both year-over-year and sequentially. Both increases primarily resulted from higher payment volumes. The year-over-year increase was partially offset by higher compensating balance credits provided to clients, which reduces fee revenue and increases net interest revenue. |
• | Investment management and performance fees were $848 million, a decrease of 2% year-over-year and 1% sequentially. The year-over-year decrease primarily reflects the unfavorable impact of a stronger U.S. dollar (principally versus the British pound) and lower performance fees, partially offset by higher market values and money market fees. The sequential decrease primarily reflects outflows of assets under management, lower fixed income market values and money market fees, partially offset by higher performance fees. |
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BNY Mellon 4Q16 Earnings Release |
• | Foreign exchange and other trading revenue | |||||||||||||||
(in millions) | 4Q16 | 3Q16 | 2Q16 | 1Q16 | 4Q15 | |||||||||||
Foreign exchange | $ | 175 | $ | 175 | $ | 166 | $ | 171 | $ | 165 | ||||||
Other trading revenue (loss) | (14 | ) | 8 | 16 | 4 | 8 | ||||||||||
Total foreign exchange and other trading revenue | $ | 161 | $ | 183 | $ | 182 | $ | 175 | $ | 173 |
• | Financing-related fees were $50 million in 4Q16, compared with $51 million in 4Q15 and $58 million in 3Q16. The sequential decrease primarily reflects lower underwriting fees. |
• | Distribution and servicing fees were $41 million in 4Q16, compared with $41 million in 4Q15 and $43 million in 3Q16. Year-over-year, higher money market fees were offset by fees paid to introducing brokers. |
• | Investment and other income | |||||||||||||||
(in millions) | 4Q16 | 3Q16 | 2Q16 | 1Q16 | 4Q15 | |||||||||||
Corporate/bank-owned life insurance | $ | 53 | $ | 34 | $ | 31 | $ | 31 | $ | 43 | ||||||
Expense reimbursements from joint venture | 15 | 18 | 17 | 17 | 16 | |||||||||||
Seed capital gains (a) | 6 | 16 | 11 | 11 | 10 | |||||||||||
Asset-related gains | 1 | 8 | 1 | — | 5 | |||||||||||
Equity investment (losses) | (2 | ) | (1 | ) | (4 | ) | (3 | ) | (2 | ) | ||||||
Lease-related gains (losses) | (6 | ) | — | — | 44 | (8 | ) | |||||||||
Other income | 3 | 17 | 18 | 5 | 29 | |||||||||||
Total investment and other income | $ | 70 | $ | 92 | $ | 74 | $ | 105 | $ | 93 |
(a) | Excludes the gain (loss) on seed capital investments in consolidated investment management funds which are reflected in operations of consolidated investment management funds, net of noncontrolling interests. The gain on seed capital investments in consolidated investment management funds was $1 million in 4Q16, $8 million in 3Q16, $6 million in 2Q16, $1 million in 1Q16 and $11 million in 4Q15. |
Page - 8 |
BNY Mellon 4Q16 Earnings Release |
Net interest revenue | 4Q16 vs. | ||||||||||||||||||
(dollars in millions) | 4Q16 | 3Q16 | 2Q16 | 1Q16 | 4Q15 | 3Q16 | 4Q15 | ||||||||||||
Net interest revenue (non-FTE) | $ | 831 | $ | 774 | $ | 767 | $ | 766 | $ | 760 | 7% | 9% | |||||||
Net interest revenue (FTE) | 843 | 786 | 780 | 780 | 774 | 7 | 9 | ||||||||||||
Net interest margin (FTE) | 1.17 | % | 1.06 | % | 0.98 | % | 1.01 | % | 0.99 | % | 11 | bps | 18 | bps | |||||
Selected average balances: | |||||||||||||||||||
Cash/interbank investments | $ | 104,352 | $ | 114,544 | $ | 137,995 | $ | 127,624 | $ | 128,328 | (9 | )% | (19)% | ||||||
Trading account securities | 2,288 | 2,176 | 2,152 | 3,320 | 2,786 | 5 | (18 | ) | |||||||||||
Securities | 117,660 | 118,405 | 118,002 | 118,538 | 119,532 | (1 | ) | (2 | ) | ||||||||||
Loans | 63,647 | 61,578 | 60,284 | 61,196 | 61,964 | 3 | 3 | ||||||||||||
Interest-earning assets | 287,947 | 296,703 | 318,433 | 310,678 | 312,610 | (3 | ) | (8 | ) | ||||||||||
Interest-bearing deposits | 145,681 | 155,109 | 165,122 | 162,017 | 160,334 | (6 | ) | (9 | ) | ||||||||||
Noninterest-bearing deposits | 82,267 | 81,619 | 84,033 | 82,944 | 85,878 | 1 | (4 | ) | |||||||||||
Selected average yields/rates: | |||||||||||||||||||
Cash/interbank investments | 0.47 | % | 0.43 | % | 0.44 | % | 0.43 | % | 0.32 | % | |||||||||
Trading account securities | 3.17 | 2.62 | 2.45 | 2.16 | 2.79 | ||||||||||||||
Securities | 1.67 | 1.56 | 1.56 | 1.61 | 1.62 | ||||||||||||||
Loans | 1.92 | 1.84 | 1.85 | 1.76 | 1.54 | ||||||||||||||
Interest-earning assets | 1.30 | 1.19 | 1.14 | 1.16 | 1.08 | ||||||||||||||
Interest-bearing deposits | (0.01 | ) | (0.02 | ) | 0.03 | 0.04 | 0.01 | ||||||||||||
Average cash/interbank investments as a percentage of average interest-earning assets | 36 | % | 39 | % | 43 | % | 41 | % | 41 | % | |||||||||
Average noninterest-bearing deposits as a percentage of average interest-earning assets | 29 | % | 28 | % | 26 | % | 27 | % | 27 | % |
• | Net interest revenue totaled $831 million in 4Q16, an increase of $71 million year-over-year and $57 million sequentially. The year-over-year increase was primarily driven by the increase in interest rates, partially offset by lower interest-earning assets. Both increases reflect the impact of interest rate hedging activities, which positively impacted 4Q16 by approximately $25 million. Substantially all of this impact was offset in foreign exchange and other trading revenue. |
• | Effective Oct. 1, 2016, we changed our accounting method for the amortization of premiums and accretion of discounts on certain mortgage-backed securities from the prepayment method (also referred to as the retrospective method) to the contractual method. Net interest revenue for 4Q16 was positively adjusted approximately $15 million as a result of this change. Prior periods were not adjusted as the impacts were not material. Net interest revenue for 4Q16 would have been higher had we continued to use the prepayment method. |
• | The $25 million impact of interest rate hedging activities and the $15 million premium amortization adjustment positively impacted the 4Q16 net interest margin by 5 basis points. |
Page - 9 |
BNY Mellon 4Q16 Earnings Release |
Noninterest expense | 4Q16 vs. | ||||||||||||||||||
(dollars in millions) | 4Q16 | 3Q16 | 2Q16 | 1Q16 | 4Q15 | 3Q16 | 4Q15 | ||||||||||||
Staff | $ | 1,395 | $ | 1,467 | $ | 1,412 | $ | 1,459 | $ | 1,481 | (5 | )% | (6 | )% | |||||
Professional, legal and other purchased services | 325 | 292 | 290 | 278 | 328 | 11 | (1 | ) | |||||||||||
Software and equipment | 237 | 215 | 223 | 219 | 225 | 10 | 5 | ||||||||||||
Net occupancy | 153 | 143 | 152 | 142 | 148 | 7 | 3 | ||||||||||||
Distribution and servicing | 98 | 105 | 102 | 100 | 92 | (7 | ) | 7 | |||||||||||
Business development | 71 | 52 | 65 | 57 | 75 | 37 | (5 | ) | |||||||||||
Sub-custodian | 57 | 59 | 70 | 59 | 60 | (3 | ) | (5 | ) | ||||||||||
Other | 228 | 231 | 240 | 241 | 201 | (1 | ) | 13 | |||||||||||
Amortization of intangible assets | 60 | 61 | 59 | 57 | 64 | (2 | ) | (6 | ) | ||||||||||
M&I, litigation and restructuring charges | 7 | 18 | 7 | 17 | 18 | N/M | N/M | ||||||||||||
Total noninterest expense – GAAP | $ | 2,631 | $ | 2,643 | $ | 2,620 | $ | 2,629 | $ | 2,692 | — | % | (2 | )% | |||||
Total staff expense as a percentage of total revenue | 37 | % | 37 | % | 37 | % | 39 | % | 40 | % | |||||||||
Memo: | |||||||||||||||||||
Total noninterest expense excluding amortization of intangible assets and M&I, litigation and restructuring charges – Non-GAAP | $ | 2,564 | $ | 2,564 | $ | 2,554 | $ | 2,555 | $ | 2,610 | — | % | (2 | )% |
• | Total noninterest expense decreased 2% year-over-year and decreased slightly sequentially. Total noninterest expense excluding amortization of intangible assets and M&I, litigation and restructuring charges (Non-GAAP) decreased 2% year-over-year and was flat sequentially. |
• | The year-over-year decrease primarily reflects lower staff expense and M&I, litigation and restructuring charges, partially offset by higher other and software and equipment expenses. The decrease in staff expense year-over-year was primarily driven by the favorable impact of a stronger U.S. dollar, lower employee benefits and severance expense. The increase in other expense primarily reflects a downward adjustment in bank assessment charges recorded in 4Q15. |
• | The sequential decrease primarily reflects lower staff expense and M&I, litigation and restructuring charges, partially offset by higher professional, legal and other purchased services, software and equipment and business development expenses. The decrease in staff expense was primarily due to lower incentives and severance expenses. The increase in professional, legal and other purchased services primarily reflects higher regulatory compliance costs. |
Page - 10 |
BNY Mellon 4Q16 Earnings Release |
Investment securities portfolio (dollars in millions) | Sept. 30, 2016 | 4Q16 change in unrealized gain (loss) | Dec. 31, 2016 | Fair value as a % of amortized cost (a) | Unrealized gain (loss) | Ratings | ||||||||||||||||||||||||
BB+ and lower | ||||||||||||||||||||||||||||||
Fair value | Amortized cost | Fair value | AAA/ AA- | A+/ A- | BBB+/ BBB- | Not rated | ||||||||||||||||||||||||
Agency RMBS | $ | 48,987 | $ | (924 | ) | $ | 48,150 | $ | 47,715 | 99 | % | $ | (435 | ) | 100 | % | — | % | — | % | — | % | — | % | ||||||
U.S. Treasury | 25,135 | (269 | ) | 25,490 | 25,244 | 99 | (246 | ) | 100 | — | — | — | — | |||||||||||||||||
Sovereign debt/sovereign guaranteed | 15,998 | (94 | ) | 14,159 | 14,373 | 102 | 214 | 75 | 5 | 20 | — | — | ||||||||||||||||||
Non-agency RMBS (b) | 1,463 | (20 | ) | 1,080 | 1,357 | 80 | 277 | — | 1 | 2 | 87 | 10 | ||||||||||||||||||
Non-agency RMBS | 757 | 4 | 698 | 718 | 94 | 20 | 8 | 4 | 15 | 72 | 1 | |||||||||||||||||||
European floating rate notes | 851 | 7 | 717 | 706 | 98 | (11 | ) | 68 | 24 | 8 | — | — | ||||||||||||||||||
Commercial MBS | 7,310 | (143 | ) | 8,106 | 8,037 | 99 | (69 | ) | 98 | 2 | — | — | — | |||||||||||||||||
State and political subdivisions | 3,578 | (99 | ) | 3,411 | 3,396 | 100 | (15 | ) | 80 | 17 | — | — | 3 | |||||||||||||||||
Foreign covered bonds | 2,433 | (22 | ) | 2,200 | 2,216 | 101 | 16 | 100 | — | — | — | — | ||||||||||||||||||
Corporate bonds | 1,638 | (48 | ) | 1,391 | 1,396 | 100 | 5 | 18 | 67 | 15 | — | — | ||||||||||||||||||
CLOs | 2,534 | 1 | 2,593 | 2,598 | 100 | 5 | 100 | — | — | — | — | |||||||||||||||||||
U.S. Government agencies | 1,808 | 21 | 1,955 | 1,964 | 101 | 9 | 100 | — | — | — | — | |||||||||||||||||||
Consumer ABS | 2,203 | (3 | ) | 1,729 | 1,727 | 100 | (2 | ) | 90 | 4 | 5 | 1 | — | |||||||||||||||||
Other (c) | 3,961 | (19 | ) | 2,822 | 2,833 | 100 | 11 | 83 | — | 14 | — | 3 | ||||||||||||||||||
Total investment securities | $ | 118,656 | (d) | $ | (1,608 | ) | $ | 114,501 | $ | 114,280 | (d) | 99 | % | $ | (221 | ) | (d)(e) | 93 | % | 2 | % | 3 | % | 2 | % | — | % |
(b) | 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 enhancements, the difference between the written-down amortized cost and the current face amount of each of these securities. |
(c) | Includes commercial paper with a fair value of $1,503 million and $401 million and money market funds with a fair value of $931 million and $842 million at Sept. 30, 2016 and Dec. 31, 2016, respectively. |
(d) | Includes net unrealized losses on derivatives hedging securities available-for-sale of $1,001 million at Sept. 30, 2016 and $211 million at Dec. 31, 2016. |
(e) | Unrealized gains of $15 million at Dec. 31, 2016 related to available-for-sale securities. |
Page - 11 |
BNY Mellon 4Q16 Earnings Release |
Nonperforming assets (dollars in millions) | Dec. 31, 2016 | Sept. 30, 2016 | Dec. 31, 2015 | ||||||
Loans: | |||||||||
Financial institutions | $ | — | $ | — | $ | 171 | |||
Other residential mortgages | 91 | 93 | 102 | ||||||
Wealth management loans and mortgages | 8 | 7 | 11 | ||||||
Lease financing | 4 | 4 | — | ||||||
Commercial real estate | — | 1 | 2 | ||||||
Total nonperforming loans | 103 | 105 | 286 | ||||||
Other assets owned | 4 | 4 | 6 | ||||||
Total nonperforming assets | $ | 107 | $ | 109 | $ | 292 | |||
Nonperforming assets ratio | 0.17 | % | 0.17 | % | 0.46 | % | |||
Allowance for loan losses/nonperforming loans | 164.1 | 141.0 | 54.9 | ||||||
Total allowance for credit losses/nonperforming loans | 272.8 | 261.0 | 96.2 |
Allowance for credit losses, provision and net charge-offs (in millions) | Dec. 31, 2016 | Sept. 30, 2016 | Dec. 31, 2015 | ||||||
Allowance for credit losses - beginning of period | $ | 274 | $ | 280 | $ | 280 | |||
Provision for credit losses | 7 | (19 | ) | 163 | |||||
Net recoveries (charge-offs): | |||||||||
Financial institutions | — | 13 | (170 | ) | |||||
Other residential mortgages | — | — | 2 | ||||||
Net recoveries (charge-offs) | — | 13 | (168 | ) | |||||
Allowance for credit losses - end of period | $ | 281 | $ | 274 | $ | 275 | |||
Allowance for loan losses | $ | 169 | $ | 148 | $ | 157 | |||
Allowance for lending-related commitments | 112 | 126 | 118 |
Page - 12 |
BNY Mellon 4Q16 Earnings Release |
Capital ratios | Dec. 31, 2016 | Sept. 30, 2016 | Dec. 31, 2015 | |||
Consolidated regulatory capital ratios: (a) | ||||||
Standardized: | ||||||
Common equity Tier 1 (“CET1”) ratio | 12.3 | % | 12.2 | % | 11.5 | % |
Tier 1 capital ratio | 14.5 | 14.4 | 13.1 | |||
Total (Tier 1 plus Tier 2) capital ratio | 15.2 | 14.8 | 13.5 | |||
Advanced: | ||||||
CET1 ratio | 10.6 | 10.5 | 10.8 | |||
Tier 1 capital ratio | 12.6 | 12.5 | 12.3 | |||
Total (Tier 1 plus Tier 2) capital ratio | 13.0 | 12.6 | 12.5 | |||
Leverage capital ratio (b) | 6.6 | 6.6 | 6.0 | |||
Supplementary leverage ratio (“SLR”) | 6.0 | 6.0 | 5.4 | |||
BNY Mellon shareholders’ equity to total assets ratio – GAAP (c) | 11.6 | 10.6 | 9.7 | |||
BNY Mellon common shareholders’ equity to total assets ratio – GAAP (c) | 10.6 | 9.7 | 9.0 | |||
BNY Mellon tangible common shareholders’ equity to tangible assets of operations ratio – Non-GAAP (c) | 6.7 | 6.5 | 6.5 | |||
Selected regulatory capital ratios – fully phased-in – Non-GAAP: (a)(d) | ||||||
CET1 ratio: | ||||||
Standardized Approach | 11.3 | % | 11.4 | % | 10.2 | % |
Advanced Approach | 9.7 | 9.8 | 9.5 | |||
SLR | 5.6 | 5.7 | 4.9 |
(a) | Regulatory capital ratios for Dec. 31, 2016 are preliminary. For our CET1, Tier 1 capital and Total capital ratios, our effective capital ratios under the U.S. capital rules are the lower of the ratios as calculated under the Standardized and Advanced Approaches. |
(b) | The leverage capital ratio is based on Tier 1 capital, as phased-in and quarterly average total assets. |
(c) | See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 24 for a reconciliation of these ratios. |
(d) | Estimated. |
CET1 generation in 4Q16 – preliminary | Transitional basis (b) | Fully phased-in - Non-GAAP (c) | ||||
(in millions) | ||||||
CET1 – Beginning of period | $ | 18,559 | $ | 17,159 | ||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP | 822 | 822 | ||||
Goodwill and intangible assets, net of related deferred tax liabilities | 191 | 215 | ||||
Gross CET1 generated | 1,013 | 1,037 | ||||
Capital deployed: | ||||||
Dividends | (203 | ) | (203 | ) | ||
Common stock repurchased | (848 | ) | (848 | ) | ||
Total capital deployed | (1,051 | ) | (1,051 | ) | ||
Other comprehensive income | (752 | ) | (980 | ) | ||
Additional paid-in capital (a) | 325 | 325 | ||||
Other | (1 | ) | — | |||
Total other deductions | (428 | ) | (655 | ) | ||
Net CET1 generated | (466 | ) | (669 | ) | ||
CET1 – End of period | $ | 18,093 | $ | 16,490 |
Page - 13 |
BNY Mellon 4Q16 Earnings Release |
Basel III capital components and ratios | Dec. 31, 2016 (a) | Sept. 30, 2016 | Dec. 31, 2015 | |||||||||||||||||
(dollars in millions) | Transitional basis (b) | Fully phased-in - Non-GAAP (c) | Transitional basis (b) | Fully phased-in - Non-GAAP (c) | Transitional basis (b) | Fully phased-in - Non-GAAP (c) | ||||||||||||||
CET1: | ||||||||||||||||||||
Common shareholders’ equity | $ | 35,794 | $ | 35,269 | $ | 36,450 | $ | 36,153 | $ | 36,067 | $ | 35,485 | ||||||||
Goodwill and intangible assets | (17,314 | ) | (18,312 | ) | (17,505 | ) | (18,527 | ) | (17,295 | ) | (18,911 | ) | ||||||||
Net pension fund assets | (54 | ) | (90 | ) | (56 | ) | (94 | ) | (46 | ) | (116 | ) | ||||||||
Equity method investments | (313 | ) | (344 | ) | (314 | ) | (347 | ) | (296 | ) | (347 | ) | ||||||||
Deferred tax assets | (19 | ) | (32 | ) | (15 | ) | (25 | ) | (8 | ) | (20 | ) | ||||||||
Other | (1 | ) | (1 | ) | (1 | ) | (1 | ) | (5 | ) | (9 | ) | ||||||||
Total CET1 | 18,093 | 16,490 | 18,559 | 17,159 | 18,417 | 16,082 | ||||||||||||||
Other Tier 1 capital: | ||||||||||||||||||||
Preferred stock | 3,542 | 3,542 | 3,542 | 3,542 | 2,552 | 2,552 | ||||||||||||||
Trust preferred securities | — | — | — | — | 74 | — | ||||||||||||||
Deferred tax assets | (13 | ) | — | (10 | ) | — | (12 | ) | — | |||||||||||
Net pension fund assets | (36 | ) | — | (38 | ) | — | (70 | ) | — | |||||||||||
Other | (121 | ) | (121 | ) | (110 | ) | (109 | ) | (25 | ) | (22 | ) | ||||||||
Total Tier 1 capital | 21,465 | 19,911 | 21,943 | 20,592 | 20,936 | 18,612 | ||||||||||||||
Tier 2 capital: | ||||||||||||||||||||
Trust preferred securities | 148 | — | 156 | — | 222 | — | ||||||||||||||
Subordinated debt | 550 | 550 | 149 | 149 | 149 | 149 | ||||||||||||||
Allowance for credit losses | 281 | 281 | 274 | 274 | 275 | 275 | ||||||||||||||
Other | (12 | ) | (11 | ) | (6 | ) | (6 | ) | (12 | ) | (12 | ) | ||||||||
Total Tier 2 capital - Standardized Approach | 967 | 820 | 573 | 417 | 634 | 412 | ||||||||||||||
Excess of expected credit losses | 61 | 61 | 33 | 33 | 37 | 37 | ||||||||||||||
Less: Allowance for credit losses | 281 | 281 | 274 | 274 | 275 | 275 | ||||||||||||||
Total Tier 2 capital - Advanced Approach | $ | 747 | $ | 600 | $ | 332 | $ | 176 | $ | 396 | $ | 174 | ||||||||
Total capital: | ||||||||||||||||||||
Standardized Approach | $ | 22,432 | $ | 20,731 | $ | 22,516 | $ | 21,009 | $ | 21,570 | $ | 19,024 | ||||||||
Advanced Approach | $ | 22,212 | $ | 20,511 | $ | 22,275 | $ | 20,768 | $ | 21,332 | $ | 18,786 | ||||||||
Risk-weighted assets: | ||||||||||||||||||||
Standardized Approach | $ | 147,581 | $ | 146,392 | $ | 152,410 | $ | 151,173 | $ | 159,893 | $ | 158,015 | ||||||||
Advanced Approach | $ | 170,519 | $ | 169,259 | $ | 176,232 | $ | 174,912 | $ | 170,384 | $ | 168,509 | ||||||||
Standardized Approach: | ||||||||||||||||||||
CET1 ratio | 12.3 | % | 11.3 | % | 12.2 | % | 11.4 | % | 11.5 | % | 10.2 | % | ||||||||
Tier 1 capital ratio | 14.5 | 13.6 | 14.4 | 13.6 | 13.1 | 11.8 | ||||||||||||||
Total (Tier 1 plus Tier 2) capital ratio | 15.2 | 14.2 | 14.8 | 13.9 | 13.5 | 12.0 | ||||||||||||||
Advanced Approach: | ||||||||||||||||||||
CET1 ratio | 10.6 | % | 9.7 | % | 10.5 | % | 9.8 | % | 10.8 | % | 9.5 | % | ||||||||
Tier 1 capital ratio | 12.6 | 11.8 | 12.5 | 11.8 | 12.3 | 11.0 | ||||||||||||||
Total (Tier 1 plus Tier 2) capital ratio | 13.0 | 12.1 | 12.6 | 11.9 | 12.5 | 11.1 |
Page - 14 |
BNY Mellon 4Q16 Earnings Release |
SLR | Dec. 31, 2016 (a) | Sept. 30, 2016 | Dec. 31, 2015 | |||||||||||||||||
(dollars in millions) | Transitional basis | Fully phased-in - Non-GAAP (b) | Transitional basis | Fully phased-in - Non-GAAP (b) | Transitional basis | Fully phased-in - Non-GAAP (b) | ||||||||||||||
Consolidated: | ||||||||||||||||||||
Tier 1 capital | $ | 21,465 | $ | 19,911 | $ | 21,943 | $ | 20,592 | $ | 20,936 | $ | 18,612 | ||||||||
Total leverage exposure: | ||||||||||||||||||||
Quarterly average total assets | $ | 344,142 | $ | 344,142 | $ | 351,230 | $ | 351,230 | $ | 368,590 | $ | 368,590 | ||||||||
Less: Amounts deducted from Tier 1 capital | 17,562 | 18,886 | 17,743 | 19,095 | 17,650 | 19,403 | ||||||||||||||
Total on-balance sheet assets | 326,580 | 325,256 | 333,487 | 332,135 | 350,940 | 349,187 | ||||||||||||||
Off-balance sheet exposures: | ||||||||||||||||||||
Potential future exposure for derivatives contracts (plus certain other items) | 6,021 | 6,021 | 6,149 | 6,149 | 7,158 | 7,158 | ||||||||||||||
Repo-style transaction exposures | 533 | 533 | 447 | 447 | 440 | 440 | ||||||||||||||
Credit-equivalent amount of other off-balance sheet exposures (less SLR exclusions) | 23,274 | 23,274 | 23,571 | 23,571 | 26,025 | 26,025 | ||||||||||||||
Total off-balance sheet exposures | 29,828 | 29,828 | 30,167 | 30,167 | 33,623 | 33,623 | ||||||||||||||
Total leverage exposure | $ | 356,408 | $ | 355,084 | $ | 363,654 | $ | 362,302 | $ | 384,563 | $ | 382,810 | ||||||||
SLR - Consolidated (c) | 6.0 | % | 5.6 | % | 6.0 | % | 5.7 | % | 5.4 | % | 4.9 | % | ||||||||
The Bank of New York Mellon, our largest bank subsidiary: | ||||||||||||||||||||
Tier 1 capital | $ | 19,019 | $ | 17,715 | $ | 18,701 | $ | 17,592 | $ | 16,814 | $ | 15,142 | ||||||||
Total leverage exposure | $ | 290,623 | $ | 290,230 | $ | 299,641 | $ | 299,236 | $ | 316,812 | $ | 316,270 | ||||||||
SLR - The Bank of New York Mellon (c) | 6.5 | % | 6.1 | % | 6.2 | % | 5.9 | % | 5.3 | % | 4.8 | % |
(a) | Dec. 31, 2016 information is preliminary. |
(b) | Estimated. |
(c) | The estimated fully phased-in SLR (Non-GAAP) is based on our interpretation of the U.S. capital rules. When the SLR is fully phased-in in 2018 as a required minimum ratio, we expect to maintain an SLR of over 5%. The minimum required SLR is 3% and there is a 2% buffer, in addition to the minimum, that is applicable to U.S. G-SIBs. The insured depository institution subsidiaries of the U.S. G-SIBs, including those of BNY Mellon, must maintain a 6% SLR to be considered “well capitalized.” |
Page - 15 |
BNY Mellon 4Q16 Earnings Release |
(dollars in millions, unless otherwise noted) | 4Q16 vs. | |||||||||||||||||||
4Q16 | 3Q16 | 2Q16 | 1Q16 | 4Q15 | 3Q16 | 4Q15 | ||||||||||||||
Revenue: | ||||||||||||||||||||
Investment management fees: | ||||||||||||||||||||
Mutual funds | $ | 297 | $ | 309 | $ | 304 | $ | 300 | $ | 294 | (4 | )% | 1 | % | ||||||
Institutional clients | 340 | 362 | 344 | 334 | 350 | (6 | ) | (3 | ) | |||||||||||
Wealth management | 164 | 166 | 160 | 152 | 155 | (1 | ) | 6 | ||||||||||||
Investment management fees (a) | 801 | 837 | 808 | 786 | 799 | (4 | ) | — | ||||||||||||
Performance fees | 32 | 8 | 9 | 11 | 55 | N/M | (42 | ) | ||||||||||||
Investment management and performance fees | 833 | 845 | 817 | 797 | 854 | (1 | ) | (2 | ) | |||||||||||
Distribution and servicing | 48 | 49 | 49 | 46 | 39 | (2 | ) | 23 | ||||||||||||
Other (a) | (1 | ) | (18 | ) | (10 | ) | (31 | ) | 22 | N/M | N/M | |||||||||
Total fee and other revenue (a) | 880 | 876 | 856 | 812 | 915 | — | (4 | ) | ||||||||||||
Net interest revenue | 80 | 82 | 82 | 83 | 84 | (2 | ) | (5 | ) | |||||||||||
Total revenue | 960 | 958 | 938 | 895 | 999 | — | (4 | ) | ||||||||||||
Provision for credit losses | 6 | — | 1 | (1 | ) | (4 | ) | N/M | N/M | |||||||||||
Noninterest expense (ex. amortization of intangible assets) | 672 | 680 | 684 | 660 | 689 | (1 | ) | (2 | ) | |||||||||||
Amortization of intangible assets | 22 | 22 | 19 | 19 | 24 | — | (8 | ) | ||||||||||||
Total noninterest expense | 694 | 702 | 703 | 679 | 713 | (1 | ) | (3 | ) | |||||||||||
Income before taxes | $ | 260 | $ | 256 | $ | 234 | $ | 217 | $ | 290 | 2 | % | (10 | )% | ||||||
Income before taxes (ex. amortization of intangible assets) – Non-GAAP | $ | 282 | $ | 278 | $ | 253 | $ | 236 | $ | 314 | 1 | % | (10 | )% | ||||||
Pre-tax operating margin | 27 | % | 27 | % | 25 | % | 24 | % | 29 | % | ||||||||||
Adjusted pre-tax operating margin – Non-GAAP (b) | 33 | % | 33 | % | 30 | % | 30 | % | 34 | % | ||||||||||
Changes in AUM (in billions): (c) | ||||||||||||||||||||
Beginning balance of AUM | $ | 1,715 | $ | 1,664 | $ | 1,639 | $ | 1,625 | $ | 1,625 | ||||||||||
Net inflows (outflows): | ||||||||||||||||||||
Long-term strategies: | ||||||||||||||||||||
Equity | (4 | ) | (3 | ) | (2 | ) | (3 | ) | (9 | ) | ||||||||||
Fixed income | (1 | ) | — | (2 | ) | — | 1 | |||||||||||||
Liability-driven investments (d) | (7 | ) | 4 | 15 | 14 | 11 | ||||||||||||||
Alternative investments | 2 | 2 | 1 | 1 | 2 | |||||||||||||||
Total long-term active strategies (outflows) inflows | (10 | ) | 3 | 12 | 12 | 5 | ||||||||||||||
Index | (1 | ) | (2 | ) | (17 | ) | (11 | ) | (16 | ) | ||||||||||
Total long-term strategies (outflows) inflows | (11 | ) | 1 | (5 | ) | 1 | (11 | ) | ||||||||||||
Short term strategies: | ||||||||||||||||||||
Cash | (3 | ) | (1 | ) | 4 | (9 | ) | 2 | ||||||||||||
Total net (outflows) | (14 | ) | — | (1 | ) | (8 | ) | (9 | ) | |||||||||||
Net market impact/other | (11 | ) | 80 | 71 | 41 | 24 | ||||||||||||||
Net currency impact | (42 | ) | (29 | ) | (47 | ) | (19 | ) | (15 | ) | ||||||||||
Acquisition | — | — | 2 | — | — | |||||||||||||||
Ending balance of AUM | $ | 1,648 | (e) | $ | 1,715 | $ | 1,664 | $ | 1,639 | $ | 1,625 | (4 | )% | 1 | % | |||||
AUM at period end, by product type: (c) | ||||||||||||||||||||
Equity | 14 | % | 13 | % | 14 | % | 14 | % | 14 | % | ||||||||||
Fixed income | 13 | 14 | 13 | 13 | 13 | |||||||||||||||
Index | 19 | 18 | 18 | 19 | 20 | |||||||||||||||
Liability-driven investments (d) | 34 | 35 | 34 | 33 | 32 | |||||||||||||||
Alternative investments | 4 | 4 | 4 | 4 | 4 | |||||||||||||||
Cash | 16 | 16 | 17 | 17 | 17 | |||||||||||||||
Total AUM | 100 | % | (e) | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||
Average balances: | ||||||||||||||||||||
Average loans | $ | 15,673 | $ | 15,308 | $ | 14,795 | $ | 14,275 | $ | 13,447 | 2 | % | 17 | % | ||||||
Average deposits | $ | 15,511 | $ | 15,600 | $ | 15,518 | $ | 15,971 | $ | 15,497 | (1 | )% | — | % |
(a) | Total fee and other revenue includes the impact of the consolidated investment management funds, net of noncontrolling interests. See page 28 for a breakdown of the revenue line items in the Investment Management business impacted by the consolidated investment management funds. Additionally, other revenue includes asset servicing, treasury services, foreign exchange and other trading revenue and investment and other income. |
(b) | Excludes amortization of intangible assets, provision for credit losses and distribution and servicing expense. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 24 for the reconciliation of this Non-GAAP measure. |
(c) | Excludes securities lending cash management assets and assets managed in the Investment Services business and the Other segment. |
(d) | Includes currency overlay assets under management. |
(e) | Preliminary. |
Page - 16 |
BNY Mellon 4Q16 Earnings Release |
• | Income before taxes totaled $260 million in 4Q16, a decrease of 10% year-over-year and an increase of 2% sequentially. Income before taxes, excluding amortization of intangible assets (Non-GAAP), totaled $282 million in 4Q16, a decrease of 10% year-over-year and an increase of 1% sequentially. |
• | Pre-tax operating margin of 27% in 4Q16 decreased 197 basis points year-over-year and increased 41 basis points sequentially. |
• | Adjusted pre-tax operating margin (Non-GAAP) of 33% in 4Q16 decreased 85 basis points year-over-year and increased 83 basis points sequentially. |
• | Total revenue was $960 million, a decrease of 4% year-over-year and a slight increase sequentially. |
• | 42% non-U.S. revenue in 4Q16 vs. 42% in 4Q15. |
• | Investment management fees were $801 million, a slight increase year-over-year and a decrease of 4% sequentially. The year-over-year increase primarily reflects higher market values and money market fees, partially offset by the unfavorable impact of a stronger U.S. dollar (principally versus the British pound). The sequential decrease primarily reflects outflows of assets under management, lower fixed income market values and money market fees. |
• | Net long-term outflows of $11 billion in 4Q16 were a combination of $10 billion of outflows from actively managed strategies and $1 billion of outflows from index strategies. |
• | Net short-term outflows were $3 billion in 4Q16. |
• | Performance fees were $32 million in 4Q16 compared with $55 million in 4Q15 and $8 million in 3Q16. The sequential increase was driven by seasonality. |
• | Distribution and servicing fees were $48 million in 4Q16 compared with $39 million in 4Q15 and $49 million in 3Q16. The year-over-year increase primarily reflects higher money market fees. |
• | Other revenue was a loss of $1 million in 4Q16 compared with other revenue of $22 million in 4Q15 and a loss of $18 million in 3Q16. The year-over-year decrease reflects payments to Investment Services related to higher money market fees and lower seed capital gains, partially offset by gains on investments. The sequential increase primarily reflects gains on hedging activity and investments, as well as losses on investments recorded in 3Q16, partially offset by lower seed capital gains. |
• | Net interest revenue decreased 5% year-over-year and 2% sequentially. The year-over-year decrease primarily reflects the impact of the 1Q16 changes in the internal crediting rates, partially offset by record average loans and higher rates on deposits. |
• | Average loans increased 17% year-over-year and 2% sequentially; average deposits increased slightly year-over-year and decreased 1% sequentially. The increases in average loans were driven by our program to extend banking solutions to high net worth clients. |
• | Total noninterest expense (excluding amortization of intangible assets) decreased 2% year-over-year and 1% sequentially. The year-over-year decrease was primarily driven by the favorable impact of a stronger U.S. dollar (principally versus the British pound) and lower professional, legal and other purchased services and lower staff expense, partially offset by higher distribution and servicing expense as a result of lower money market fee waivers. The sequential decrease primarily reflects lower severance expense, partially offset by higher other expenses. |
Page - 17 |
BNY Mellon 4Q16 Earnings Release |
(dollars in millions, unless otherwise noted) | 4Q16 vs. | |||||||||||||||||||
4Q16 | 3Q16 | 2Q16 | 1Q16 | 4Q15 | 3Q16 | 4Q15 | ||||||||||||||
Revenue: | ||||||||||||||||||||
Investment services fees: | ||||||||||||||||||||
Asset servicing | $ | 1,043 | $ | 1,039 | $ | 1,043 | $ | 1,016 | $ | 1,009 | — | % | 3 | % | ||||||
Clearing services | 354 | 347 | 350 | 348 | 337 | 2 | 5 | |||||||||||||
Issuer services | 211 | 336 | 233 | 244 | 199 | (37 | ) | 6 | ||||||||||||
Treasury services | 139 | 136 | 137 | 129 | 135 | 2 | 3 | |||||||||||||
Total investment services fees | 1,747 | 1,858 | 1,763 | 1,737 | 1,680 | (6 | ) | 4 | ||||||||||||
Foreign exchange and other trading revenue | 157 | 177 | 161 | 168 | 150 | (11 | ) | 5 | ||||||||||||
Other (a) | 128 | 148 | 130 | 125 | 127 | (14 | ) | 1 | ||||||||||||
Total fee and other revenue | 2,032 | 2,183 | 2,054 | 2,030 | 1,957 | (7 | ) | 4 | ||||||||||||
Net interest revenue | 713 | 715 | 690 | 679 | 664 | — | 7 | |||||||||||||
Total revenue | 2,745 | 2,898 | 2,744 | 2,709 | 2,621 | (5 | ) | 5 | ||||||||||||
Provision for credit losses | — | 1 | (7 | ) | 14 | 8 | N/M | N/M | ||||||||||||
Noninterest expense (ex. amortization of intangible assets) | 1,786 | 1,812 | 1,819 | 1,770 | 1,791 | (1 | ) | — | ||||||||||||
Amortization of intangible assets | 38 | 39 | 40 | 38 | 40 | (3 | ) | (5 | ) | |||||||||||
Total noninterest expense | 1,824 | 1,851 | 1,859 | 1,808 | 1,831 | (1 | ) | — | ||||||||||||
Income before taxes | $ | 921 | $ | 1,046 | $ | 892 | $ | 887 | $ | 782 | (12 | )% | 18 | % | ||||||
Income before taxes (ex. amortization of intangible assets) – Non-GAAP | $ | 959 | $ | 1,085 | $ | 932 | $ | 925 | $ | 822 | (12 | )% | 17% | |||||||
Pre-tax operating margin | 34 | % | 36 | % | 33 | % | 33 | % | 30 | % | ||||||||||
Adjusted pre-tax operating margin (ex. provision for credit losses and amortization of intangible assets) – Non-GAAP | 35 | % | 37 | % | 34 | % | 35 | % | 32 | % | ||||||||||
Investment services fees as a percentage of noninterest expense (ex. amortization of intangible assets) | 98 | % | 103 | % | 97 | % | 98 | % | 94 | % | ||||||||||
Securities lending revenue | $ | 44 | $ | 42 | $ | 42 | $ | 42 | $ | 39 | 5 | % | 13 | % | ||||||
Metrics: | ||||||||||||||||||||
Average loans | $ | 45,832 | $ | 44,329 | $ | 43,786 | $ | 45,004 | $ | 45,844 | 3 | % | — | % | ||||||
Average deposits | $ | 213,531 | $ | 220,316 | $ | 221,998 | $ | 215,707 | $ | 229,241 | (3 | )% | (7 | )% | ||||||
AUC/A at period end (in trillions) (b) | $ | 29.9 | (c) | $ | 30.5 | $ | 29.5 | $ | 29.1 | $ | 28.9 | (2 | )% | 3 | % | |||||
Market value of securities on loan at period end (in billions) (d) | $ | 296 | $ | 288 | $ | 278 | $ | 300 | $ | 277 | 3 | % | 7 | % | ||||||
Asset servicing: | ||||||||||||||||||||
Estimated new business wins (AUC/A) (in billions) | $ | 141 | (c) | $ | 150 | $ | 167 | $ | 40 | $ | 49 | |||||||||
Depositary Receipts: | ||||||||||||||||||||
Number of sponsored programs | 1,062 | 1,094 | 1,112 | 1,131 | 1,145 | (3 | )% | (7 | )% | |||||||||||
Clearing services: | ||||||||||||||||||||
Average active clearing accounts (U.S. platform) (in thousands) | 5,960 | 5,942 | 5,946 | 5,947 | 5,959 | — | % | — | % | |||||||||||
Average long-term mutual fund assets (U.S. platform) | $ | 438,460 | $ | 443,112 | $ | 431,150 | $ | 415,025 | $ | 437,260 | (1 | )% | — | % | ||||||
Average investor margin loans (U.S. platform) | $ | 10,562 | $ | 10,834 | $ | 10,633 | $ | 11,063 | $ | 11,575 | (3 | )% | (9 | )% | ||||||
Broker-Dealer: | ||||||||||||||||||||
Average tri-party repo balances (in billions) | $ | 2,307 | $ | 2,212 | $ | 2,108 | $ | 2,104 | $ | 2,153 | 4 | % | 7 | % |
(a) | Other revenue includes investment management fees, financing-related fees, distribution and servicing revenue and investment and other income. |
(b) | Includes the AUC/A of CIBC Mellon of $1.2 trillion at Dec. 31, 2016 and Sept. 30, 2016, $1.1 trillion at June 30, 2016 and March 31, 2016 and $1.0 trillion at Dec. 31, 2015. |
(c) | Preliminary. |
(d) | Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $63 billion at Dec. 31, 2016, $64 billion at Sept. 30, 2016, $56 billion at June 30, 2016 and March 31, 2016 and $55 billion at Dec. 31, 2015. |
Page - 18 |
BNY Mellon 4Q16 Earnings Release |
• | Income before taxes totaled $921 million in 4Q16. Income before taxes, excluding amortization of intangible assets (Non-GAAP), totaled $959 million in 4Q16. |
• | The pre-tax operating margin was 34% in 4Q16. The pre-tax operating margin, excluding the provision for credit losses and amortization of intangible assets (Non-GAAP), was 35% in 4Q16 and the investment services fees as a percentage of noninterest expense (excluding amortization of intangible assets) was 98% in 4Q16, reflecting the continued focus on the business improvement process to drive operating leverage. |
• | Investment services fees were $1.7 billion, an increase of 4% year-over-year and a decrease of 6% sequentially. |
• | Asset servicing fees were $1.043 billion in 4Q16 compared with $1.009 billion in 4Q15 and $1.039 billion in 3Q16. The year-over-year increase primarily reflects higher money market fees, net new business and higher equity market values, partially offset by the unfavorable impact of a stronger U.S. dollar and the impact of downsizing of the UK retail transfer agency business. |
• | Clearing services fees were $354 million in 4Q16 compared with $337 million in 4Q15 and $347 million in 3Q16. Both increases were primarily driven by higher money market fees. The year-over-year increase was partially offset by the impact of previously disclosed lost business. |
• | Issuer services fees were $211 million in 4Q16 compared with $199 million in 4Q15 and $336 million in 3Q16. The year-over-year increase primarily reflects higher fees in Depositary Receipts and higher money market fees in Corporate Trust. The sequential decrease primarily reflects seasonality in Depositary Receipts. |
• | Treasury services fees were $139 million in 4Q16 compared with $135 million in 4Q15 and $136 million in 3Q16. Both increases primarily resulted from higher payment volumes. The year-over-year increase was partially offset by higher compensating balance credits provided to clients, which reduces fee revenue and increases net interest revenue. |
• | Foreign exchange and other trading revenue was $157 million in 4Q16 compared with $150 million in 4Q15 and $177 million in 3Q16. The year-over-year increase primarily reflects higher volatility. The sequential decrease primarily reflects lower Depositary Receipt-related foreign exchange activity, partially offset by higher volatility. |
• | Other revenue was $128 million in 4Q16 compared with $127 million in 4Q15 and $148 million in 3Q16. Year-over-year, increased payments from Investment Management related to higher money market fees were offset by termination fees related to lost business in our clearing services business recorded in 4Q15 and certain fees paid to introducing brokers. The sequential decrease primarily reflects termination fees related to lost business in our clearing services business in 3Q16. |
• | Net interest revenue was $713 million in 4Q16 compared with $664 million in 4Q15 and $715 million in 3Q16. The year-over-year increase primarily reflects the impact of the higher short-term rates on lower balances. |
• | Noninterest expense (excluding amortization of intangible assets) was $1.786 billion in 4Q16 compared with $1.791 billion in 4Q15 and $1.812 billion in 3Q16. Both decreases primarily reflect lower incentive and litigation expense. The year-over-year decrease also reflects lower severance and temporary services expenses. The sequential decrease was partially offset by higher software expense. |
Page - 19 |
BNY Mellon 4Q16 Earnings Release |
(dollars in millions) | 4Q16 | 3Q16 | 2Q16 | 1Q16 | 4Q15 | ||||||||||
Revenue: | |||||||||||||||
Fee and other revenue | $ | 42 | $ | 100 | $ | 95 | $ | 129 | $ | 89 | |||||
Net interest revenue (expense) | 38 | (23 | ) | (5 | ) | 4 | 12 | ||||||||
Total revenue | 80 | 77 | 90 | 133 | 101 | ||||||||||
Provision for credit losses | 1 | (20 | ) | (3 | ) | (3 | ) | 159 | |||||||
Noninterest expense (ex. amortization of intangible assets and M&I and restructuring charges (recoveries)) | 108 | 88 | 53 | 141 | 150 | ||||||||||
Amortization of intangible assets | — | — | — | — | — | ||||||||||
M&I and restructuring charges (recoveries) | 2 | — | 3 | (1 | ) | (4 | ) | ||||||||
Total noninterest expense | 110 | 88 | 56 | 140 | 146 | ||||||||||
(Loss) income before taxes | $ | (31 | ) | $ | 9 | $ | 37 | $ | (4 | ) | $ | (204 | ) | ||
(Loss) income before taxes (ex. amortization of intangible assets and M&I and restructuring charges (recoveries)) – Non-GAAP | $ | (29 | ) | $ | 9 | $ | 40 | $ | (5 | ) | $ | (208 | ) | ||
Average loans and leases | $ | 2,142 | $ | 1,941 | $ | 1,703 | $ | 1,917 | $ | 2,673 |
• | Total fee and other revenue decreased $47 million compared with 4Q15 and $58 million compared with 3Q16. Both decreases primarily reflect the negative impact of interest rate hedging activities, which are offset in net interest revenue. Both decreases also reflect lower net securities gains and investment and other income. |
• | Net interest revenue increased $26 million compared with 4Q15 and $61 million compared with 3Q16. Both increases were driven by the positive impact of interest rate hedging activities. Substantially all of this impact was offset in fee and other revenue. The sequential increase also reflects approximately $15 million related to the premium amortization adjustment, partially offset by the results of the leasing portfolio. |
• | The provision for credit losses was $1 million in 4Q16, compared with $159 million in 4Q15 and a credit of $20 million in 3Q16. |
• | Noninterest expense (excluding amortization of intangible assets and M&I and restructuring charges (recoveries)) decreased $42 million compared with 4Q15 and increased $20 million compared with 3Q16. The year-over-year decrease primarily reflects lower staff expense. The sequential increase was primarily driven by higher professional, legal and other purchased services and software expense. |
Page - 20 |
BNY Mellon 4Q16 Earnings Release |
(in millions) | Quarter ended | Year-to-date | ||||||||||||||
Dec. 31, 2016 | Sept. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | ||||||||||||
Fee and other revenue | ||||||||||||||||
Investment services fees: | ||||||||||||||||
Asset servicing | $ | 1,068 | $ | 1,067 | $ | 1,032 | $ | 4,244 | $ | 4,187 | ||||||
Clearing services | 355 | 349 | 339 | 1,404 | 1,375 | |||||||||||
Issuer services | 211 | 337 | 199 | 1,026 | 978 | |||||||||||
Treasury services | 140 | 137 | 137 | 547 | 555 | |||||||||||
Total investment services fees | 1,774 | 1,890 | 1,707 | 7,221 | 7,095 | |||||||||||
Investment management and performance fees | 848 | 860 | 864 | 3,350 | 3,438 | |||||||||||
Foreign exchange and other trading revenue | 161 | 183 | 173 | 701 | 768 | |||||||||||
Financing-related fees | 50 | 58 | 51 | 219 | 220 | |||||||||||
Distribution and servicing | 41 | 43 | 41 | 166 | 162 | |||||||||||
Investment and other income | 70 | 92 | 93 | 341 | 316 | |||||||||||
Total fee revenue | 2,944 | 3,126 | 2,929 | 11,998 | 11,999 | |||||||||||
Net securities gains | 10 | 24 | 21 | 75 | 83 | |||||||||||
Total fee and other revenue | 2,954 | 3,150 | 2,950 | 12,073 | 12,082 | |||||||||||
Operations of consolidated investment management funds | ||||||||||||||||
Investment income | 8 | 20 | 19 | 35 | 115 | |||||||||||
Interest of investment management fund note holders | 3 | 3 | 3 | 9 | 29 | |||||||||||
Income from consolidated investment management funds | 5 | 17 | 16 | 26 | 86 | |||||||||||
Net interest revenue | ||||||||||||||||
Interest revenue | 928 | 874 | 834 | 3,575 | 3,326 | |||||||||||
Interest expense | 97 | 100 | 74 | 437 | 300 | |||||||||||
Net interest revenue | 831 | 774 | 760 | 3,138 | 3,026 | |||||||||||
Total revenue | 3,790 | 3,941 | 3,726 | 15,237 | 15,194 | |||||||||||
Provision for credit losses | 7 | (19 | ) | 163 | (11 | ) | 160 | |||||||||
Noninterest expense | ||||||||||||||||
Staff | 1,395 | 1,467 | 1,481 | 5,733 | 5,837 | |||||||||||
Professional, legal and other purchased services | 325 | 292 | 328 | 1,185 | 1,230 | |||||||||||
Software and equipment | 237 | 215 | 225 | 894 | 907 | |||||||||||
Net occupancy | 153 | 143 | 148 | 590 | 600 | |||||||||||
Distribution and servicing | 98 | 105 | 92 | 405 | 381 | |||||||||||
Sub-custodian | 57 | 59 | 60 | 245 | 270 | |||||||||||
Business development | 71 | 52 | 75 | 245 | 267 | |||||||||||
Other | 228 | 231 | 201 | 940 | 961 | |||||||||||
Amortization of intangible assets | 60 | 61 | 64 | 237 | 261 | |||||||||||
M&I, litigation and restructuring charges | 7 | 18 | 18 | 49 | 85 | |||||||||||
Total noninterest expense | 2,631 | 2,643 | 2,692 | 10,523 | 10,799 | |||||||||||
Income | ||||||||||||||||
Income before income taxes | 1,152 | 1,317 | 871 | 4,725 | 4,235 | |||||||||||
Provision for income taxes | 280 | 324 | 175 | 1,177 | 1,013 | |||||||||||
Net income | 872 | 993 | 696 | 3,548 | 3,222 | |||||||||||
Net (income) attributable to noncontrolling interests (includes $(4), $(9), $(5), $(10) and $(68) related to consolidated investment management funds, respectively) | (2 | ) | (6 | ) | (3 | ) | (1 | ) | (64 | ) | ||||||
Net income applicable to shareholders of The Bank of New York Mellon Corporation | 870 | 987 | 693 | 3,547 | 3,158 | |||||||||||
Preferred stock dividends | (48 | ) | (13 | ) | (56 | ) | (122 | ) | (105 | ) | ||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 822 | $ | 974 | $ | 637 | $ | 3,425 | $ | 3,053 |
Page - 21 |
BNY Mellon 4Q16 Earnings Release |
Net income applicable to common shareholders of The Bank of New York Mellon Corporation used for the earnings per share calculation | Quarter ended | Year-to-date | ||||||||||||||
Dec. 31, 2016 | Sept. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | ||||||||||||
(in millions) | ||||||||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 822 | $ | 974 | $ | 637 | $ | 3,425 | $ | 3,053 | ||||||
Less: Earnings allocated to participating securities | 13 | 15 | 9 | 52 | 43 | |||||||||||
Net income applicable to the common shareholders of The Bank of New York Mellon Corporation after required adjustments for the calculation of basic and diluted earnings per common share | $ | 809 | $ | 959 | $ | 628 | $ | 3,373 | $ | 3,010 |
Average common shares and equivalents outstanding of The Bank of New York Mellon Corporation | Quarter ended | Year-to-date | |||||||||
Dec. 31, 2016 | Sept. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |||||||
(in thousands) | |||||||||||
Basic | 1,050,888 | 1,062,248 | 1,088,880 | 1,066,286 | 1,104,719 | ||||||
Diluted | 1,056,818 | 1,067,682 | 1,096,385 | 1,072,013 | 1,112,511 |
Earnings per share applicable to the common shareholders of The Bank of New York Mellon Corporation | Quarter ended | Year-to-date | ||||||||||||||
Dec. 31, 2016 | Sept. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | ||||||||||||
(in dollars) | ||||||||||||||||
Basic | $ | 0.77 | $ | 0.90 | $ | 0.58 | $ | 3.16 | $ | 2.73 | ||||||
Diluted | $ | 0.77 | $ | 0.90 | $ | 0.57 | $ | 3.15 | $ | 2.71 |
Page - 22 |
BNY Mellon 4Q16 Earnings Release |
(dollars in millions, except per share amounts) | Dec. 31, 2016 | Sept. 30, 2016 | Dec. 31, 2015 | |||||||
Assets | ||||||||||
Cash and due from: | ||||||||||
Banks | $ | 4,822 | $ | 4,957 | $ | 6,537 | ||||
Interest-bearing deposits with the Federal Reserve and other central banks | 58,041 | 80,359 | 113,203 | |||||||
Interest-bearing deposits with banks | 15,086 | 14,416 | 15,146 | |||||||
Federal funds sold and securities purchased under resale agreements | 25,801 | 34,851 | 24,373 | |||||||
Securities: | ||||||||||
Held-to-maturity (fair value of $40,669, $41,387 and $43,204) | 40,905 | 40,728 | 43,312 | |||||||
Available-for-sale | 73,822 | 78,270 | 75,867 | |||||||
Total securities | 114,727 | 118,998 | 119,179 | |||||||
Trading assets | 5,733 | 5,340 | 7,368 | |||||||
Loans | 64,458 | 65,997 | 63,703 | |||||||
Allowance for loan losses | (169 | ) | (148 | ) | (157 | ) | ||||
Net loans | 64,289 | 65,849 | 63,546 | |||||||
Premises and equipment | 1,303 | 1,338 | 1,379 | |||||||
Accrued interest receivable | 568 | 522 | 562 | |||||||
Goodwill | 17,316 | 17,449 | 17,618 | |||||||
Intangible assets | 3,598 | 3,671 | 3,842 | |||||||
Other assets | 20,954 | 25,355 | 19,626 | |||||||
Subtotal assets of operations | 332,238 | 373,105 | 392,379 | |||||||
Assets of consolidated investment management funds, at fair value: | ||||||||||
Trading assets | 979 | 873 | 1,228 | |||||||
Other assets | 252 | 136 | 173 | |||||||
Subtotal assets of consolidated investment management funds, at fair value | 1,231 | 1,009 | 1,401 | |||||||
Total assets | $ | 333,469 | $ | 374,114 | $ | 393,780 | ||||
Liabilities | ||||||||||
Deposits: | ||||||||||
Noninterest-bearing (principally U.S. offices) | $ | 78,342 | $ | 105,632 | $ | 96,277 | ||||
Interest-bearing deposits in U.S. offices | 52,049 | 56,713 | 51,704 | |||||||
Interest-bearing deposits in Non-U.S. offices | 91,099 | 99,033 | 131,629 | |||||||
Total deposits | 221,490 | 261,378 | 279,610 | |||||||
Federal funds purchased and securities sold under repurchase agreements | 9,989 | 8,052 | 15,002 | |||||||
Trading liabilities | 4,389 | 4,154 | 4,501 | |||||||
Payables to customers and broker-dealers | 20,987 | 21,162 | 21,900 | |||||||
Other borrowed funds | 754 | 993 | 523 | |||||||
Accrued taxes and other expenses | 5,867 | 5,687 | 5,986 | |||||||
Other liabilities (includes allowance for lending-related commitments of $112, $126 and $118) | 5,635 | 7,709 | 5,490 | |||||||
Long-term debt | 24,463 | 24,374 | 21,547 | |||||||
Subtotal liabilities of operations | 293,574 | 333,509 | 354,559 | |||||||
Liabilities of consolidated investment management funds, at fair value: | ||||||||||
Trading liabilities | 282 | 219 | 229 | |||||||
Other liabilities | 33 | 13 | 17 | |||||||
Subtotal liabilities of consolidated investment management funds, at fair value | 315 | 232 | 246 | |||||||
Total liabilities | 293,889 | 333,741 | 354,805 | |||||||
Temporary equity | ||||||||||
Redeemable noncontrolling interests | 151 | 178 | 200 | |||||||
Permanent equity | ||||||||||
Preferred stock – par value $0.01 per share; authorized 100,000,000 shares; issued 35,826, 35,826 and 25,826 shares | 3,542 | 3,542 | 2,552 | |||||||
Common stock – par value $0.01 per share; authorized 3,500,000,000 shares; issued 1,333,706,427, 1,325,167,583 and 1,312,941,113 shares | 13 | 13 | 13 | |||||||
Additional paid-in capital | 25,962 | 25,637 | 25,262 | |||||||
Retained earnings | 22,621 | 22,002 | 19,974 | |||||||
Accumulated other comprehensive loss, net of tax | (3,765 | ) | (2,785 | ) | (2,600 | ) | ||||
Less: Treasury stock of 286,218,126, 267,830,962 and 227,598,128 common shares, at cost | (9,562 | ) | (8,714 | ) | (7,164 | ) | ||||
Total The Bank of New York Mellon Corporation shareholders’ equity | 38,811 | 39,695 | 38,037 | |||||||
Nonredeemable noncontrolling interests of consolidated investment management funds | 618 | 500 | 738 | |||||||
Total permanent equity | 39,429 | 40,195 | 38,775 | |||||||
Total liabilities, temporary equity and permanent equity | $ | 333,469 | $ | 374,114 | $ | 393,780 |
Page - 23 |
BNY Mellon 4Q16 Earnings Release |
Page - 24 |
BNY Mellon 4Q16 Earnings Release |
Reconciliation of net income and diluted EPS – GAAP to Non-GAAP | 4Q16 | 3Q16 | 4Q15 | ||||||||||||||||||||
(in millions, except per common share amounts) | Net income | Diluted EPS | Net income | Diluted EPS | Net income | Diluted EPS | |||||||||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP | $ | 822 | $ | 0.77 | $ | 974 | $ | 0.90 | $ | 637 | $ | 0.57 | |||||||||||
Add: M&I, litigation and restructuring charges | 7 | 18 | 18 | ||||||||||||||||||||
Tax impact of M&I, litigation and restructuring charges | (3 | ) | (5 | ) | (6 | ) | |||||||||||||||||
Net impact of M&I, litigation and restructuring charges | 4 | — | 13 | 0.01 | 12 | 0.01 | |||||||||||||||||
Add: (Recovery) impairment charge related to Sentinel | N/A | (13 | ) | 170 | |||||||||||||||||||
Tax impact of recovery (impairment charge) related to Sentinel | N/A | 5 | (64 | ) | |||||||||||||||||||
(Recovery) impairment charge related to Sentinel – after-tax | N/A | N/A | (8 | ) | (0.01 | ) | 106 | 0.10 | |||||||||||||||
Non-GAAP adjustments – after-tax | 4 | — | 5 | — | 118 | 0.11 | |||||||||||||||||
Non-GAAP results | $ | 826 | $ | 0.77 | $ | 979 | $ | 0.90 | $ | 755 | $ | 0.68 |
Reconciliation of net income and diluted EPS – GAAP to Non-GAAP | Full-year 2016 | Full-year 2015 | Growth | ||||||||||||||||||
(in millions, except per common share amounts) | Net income | Diluted EPS | Net income | Diluted EPS | Net income | Diluted EPS | |||||||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP | $ | 3,425 | $ | 3.15 | $ | 3,053 | $ | 2.71 | 12 | % | 16 | % | |||||||||
Add: M&I, litigation and restructuring charges | 49 | 85 | |||||||||||||||||||
Tax impact of M&I, litigation and restructuring charges | (16 | ) | (29 | ) | |||||||||||||||||
Net impact of M&I, litigation and restructuring charges | 33 | 0.03 | 56 | 0.05 | |||||||||||||||||
Add: (Recovery) impairment charge related to Sentinel | (13 | ) | 170 | ||||||||||||||||||
Tax impact of recovery (impairment charge) related to Sentinel | 5 | (64 | ) | ||||||||||||||||||
(Recovery) impairment charge related to Sentinel – after-tax | (8 | ) | (0.01 | ) | 106 | 0.09 | |||||||||||||||
Non-GAAP adjustments – after-tax | 25 | 0.02 | 162 | 0.14 | |||||||||||||||||
Non-GAAP results | $ | 3,450 | $ | 3.17 | $ | 3,215 | $ | 2.85 | 7 | % | 11 | % |
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BNY Mellon 4Q16 Earnings Release |
Reconciliation of income before income taxes – pre-tax operating margin | |||||||||||||||
(dollars in millions) | 4Q16 | 3Q16 | 2Q16 | 1Q16 | 4Q15 | ||||||||||
Income before income taxes – GAAP | $ | 1,152 | $ | 1,317 | $ | 1,165 | $ | 1,091 | $ | 871 | |||||
Less: Net income (loss) attributable to noncontrolling interests of consolidated investment management funds | 4 | 9 | 4 | (7 | ) | 5 | |||||||||
Add: Amortization of intangible assets | 60 | 61 | 59 | 57 | 64 | ||||||||||
M&I, litigation and restructuring charges | 7 | 18 | 7 | 17 | 18 | ||||||||||
(Recovery) impairment charge related to Sentinel | — | (13 | ) | — | — | 170 | |||||||||
Income before income taxes, as adjusted – Non-GAAP (a) | $ | 1,215 | $ | 1,374 | $ | 1,227 | $ | 1,172 | $ | 1,118 | |||||
Fee and other revenue – GAAP | $ | 2,954 | $ | 3,150 | $ | 2,999 | $ | 2,970 | $ | 2,950 | |||||
Income (loss) from consolidated investment management funds – GAAP | 5 | 17 | 10 | (6 | ) | 16 | |||||||||
Net interest revenue – GAAP | 831 | 774 | 767 | 766 | 760 | ||||||||||
Total revenue – GAAP | 3,790 | 3,941 | 3,776 | 3,730 | 3,726 | ||||||||||
Less: Net income (loss) attributable to noncontrolling interests of consolidated investment management funds | 4 | 9 | 4 | (7 | ) | 5 | |||||||||
Total revenue, as adjusted – Non-GAAP (a) | $ | 3,786 | $ | 3,932 | $ | 3,772 | $ | 3,737 | $ | 3,721 | |||||
Pre-tax operating margin – GAAP (b)(c) | 30 | % | 33 | % | 31 | % | 29 | % | 23 | % | |||||
Adjusted pre-tax operating margin – Non-GAAP (a)(b)(c) | 32 | % | 35 | % | 33 | % | 31 | % | 30 | % |
(a) | Non-GAAP information for all periods presented excludes net income (loss) attributable to noncontrolling interests of consolidated investment management funds, amortization of intangible assets and M&I, litigation and restructuring charges. Non-GAAP information for 3Q16 also excludes a recovery of the previously impaired Sentinel loan and 4Q15 also excludes the impairment charge related to a court decision regarding Sentinel. |
(b) | Income before taxes divided by total revenue. |
(c) | Our GAAP earnings include tax-advantaged investments such as low income housing, renewable energy, bank-owned life insurance and tax-exempt securities. The benefits of these investments are primarily reflected in tax expense. If reported on a tax-equivalent basis, these investments would increase revenue and income before taxes by $92 million for 4Q16, $74 million for 3Q16 and 2Q16, $77 million for 1Q16 and $73 million for 4Q15 and would increase our pre-tax operating margin by approximately 1.7% for 4Q16, 1.2% for 3Q16, 1.3% for 2Q16, 1.4% for 1Q16 and 1.5% for 4Q15. |
Operating leverage | 4Q16 vs. | ||||||||||||
(dollars in millions) | 4Q16 | 3Q16 | 4Q15 | 3Q16 | 4Q15 | ||||||||
Total revenue – GAAP | $ | 3,790 | $ | 3,941 | $ | 3,726 | (3.83)% | 1.72% | |||||
Less: Net income attributable to noncontrolling interests of consolidated investment management funds | 4 | 9 | 5 | ||||||||||
Total revenue, as adjusted – Non-GAAP | $ | 3,786 | $ | 3,932 | $ | 3,721 | (3.71)% | 1.75% | |||||
Total noninterest expense – GAAP | $ | 2,631 | $ | 2,643 | $ | 2,692 | (0.45)% | (2.27)% | |||||
Less: Amortization of intangible assets | 60 | 61 | 64 | ||||||||||
M&I, litigation and restructuring charges | 7 | 18 | 18 | ||||||||||
Total noninterest expense, as adjusted – Non-GAAP | $ | 2,564 | $ | 2,564 | $ | 2,610 | — | (1.76)% | |||||
Operating leverage – GAAP (a) | (338 | ) bps | 399 | bps | |||||||||
Adjusted operating leverage – Non-GAAP (a)(b) | (371 | ) bps | 351 | bps |
(a) | Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense. |
(b) | Non-GAAP operating leverage for all periods presented excludes net income attributable to noncontrolling interests of consolidated investment management funds, amortization of intangible assets and M&I, litigation and restructuring charges. |
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BNY Mellon 4Q16 Earnings Release |
Operating leverage | 2016 vs. | |||||||
(dollars in millions) | 2016 | 2015 | 2015 | |||||
Total revenue – GAAP | $ | 15,237 | $ | 15,194 | 0.28% | |||
Less: Net income attributable to noncontrolling interests of consolidated investment management funds | 10 | 68 | ||||||
Total revenue, as adjusted – Non-GAAP | $ | 15,227 | $ | 15,126 | 0.67% | |||
Total noninterest expense – GAAP | 10,523 | 10,799 | (2.56)% | |||||
Less: Amortization of intangible assets | 237 | 261 | ||||||
M&I, litigation and restructuring charges | 49 | 85 | ||||||
Total noninterest expense, as adjusted – Non-GAAP | $ | 10,237 | $ | 10,453 | (2.07)% | |||
Operating leverage – GAAP (a) | 284 | bps | ||||||
Adjusted operating leverage – Non-GAAP (a)(b) | 274 | bps |
(a) | Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense. |
(b) | Non-GAAP operating leverage for all periods presented excludes net income attributable to noncontrolling interests of consolidated investment management funds, amortization of intangible assets and M&I, litigation and restructuring charges. |
Return on common equity and tangible common equity | ||||||||||||||||||
(dollars in millions) | 4Q16 | 3Q16 | 2Q16 | 1Q16 | 4Q15 | FY16 | ||||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP | $ | 822 | $ | 974 | $ | 825 | $ | 804 | $ | 637 | $ | 3,425 | ||||||
Add: Amortization of intangible assets | 60 | 61 | 59 | 57 | 64 | 237 | ||||||||||||
Less: Tax impact of amortization of intangible assets | 19 | 21 | 21 | 20 | 22 | 81 | ||||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation excluding amortization of intangible assets – Non-GAAP | 863 | 1,014 | 863 | 841 | 679 | 3,581 | ||||||||||||
Add: M&I, litigation and restructuring charges | 7 | 18 | 7 | 17 | 18 | 49 | ||||||||||||
(Recovery) impairment charge related to Sentinel | — | (13 | ) | — | — | 170 | (13 | ) | ||||||||||
Less: Tax impact of M&I, litigation and restructuring charges | 3 | 5 | 2 | 6 | 6 | 16 | ||||||||||||
Tax impact of (recovery) impairment charge related to Sentinel | — | (5 | ) | — | — | 64 | (5 | ) | ||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation, as adjusted – Non-GAAP (a) | $ | 867 | $ | 1,019 | $ | 868 | $ | 852 | $ | 797 | $ | 3,606 | ||||||
Average common shareholders’ equity | $ | 35,171 | $ | 35,767 | $ | 35,827 | $ | 35,252 | $ | 35,664 | $ | 35,504 | ||||||
Less: Average goodwill | 17,344 | 17,463 | 17,622 | 17,562 | 17,673 | 17,497 | ||||||||||||
Average intangible assets | 3,638 | 3,711 | 3,789 | 3,812 | 3,887 | 3,737 | ||||||||||||
Add: Deferred tax liability – tax deductible goodwill (b) | 1,497 | 1,477 | 1,452 | 1,428 | 1,401 | 1,497 | ||||||||||||
Deferred tax liability – intangible assets (b) | 1,105 | 1,116 | 1,129 | 1,140 | 1,148 | 1,105 | ||||||||||||
Average tangible common shareholders’ equity – Non-GAAP | $ | 16,791 | $ | 17,186 | $ | 16,997 | $ | 16,446 | $ | 16,653 | $ | 16,872 | ||||||
Return on common equity – GAAP (c) | 9.3 | % | 10.8 | % | 9.3 | % | 9.2 | % | 7.1 | % | 9.6 | % | ||||||
Adjusted return on common equity – Non-GAAP (a)(c) | 9.8 | % | 11.3 | % | 9.7 | % | 9.7 | % | 8.9 | % | 10.2 | % | ||||||
Return on tangible common equity – Non-GAAP (c) | 20.4 | % | 23.5 | % | 20.4 | % | 20.6 | % | 16.2 | % | 21.2 | % | ||||||
Adjusted return on tangible common equity – Non-GAAP (a)(c) | 20.5 | % | 23.6 | % | 20.5 | % | 20.8 | % | 19.0 | % | 21.4 | % |
(a) | Non-GAAP information for all periods presented excludes amortization of intangible assets and M&I, litigation and restructuring charges. Non-GAAP information for 3Q16 also excludes a recovery of the previously impaired Sentinel loan and 4Q15 also excludes the impairment charge related to a court decision regarding Sentinel. |
(b) | Deferred tax liabilities are based on fully phased-in Basel III rules. |
(c) | Quarterly returns are annualized. |
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BNY Mellon 4Q16 Earnings Release |
Equity to assets and book value per common share | Dec. 31, 2016 | Sept. 30, 2016 | June 30, 2016 | March 31, 2016 | Dec. 31, 2015 | ||||||||||
(dollars in millions, unless otherwise noted) | |||||||||||||||
BNY Mellon shareholders’ equity at period end – GAAP | $ | 38,811 | $ | 39,695 | $ | 38,559 | $ | 38,459 | $ | 38,037 | |||||
Less: Preferred stock | 3,542 | 3,542 | 2,552 | 2,552 | 2,552 | ||||||||||
BNY Mellon common shareholders’ equity at period end – GAAP | 35,269 | 36,153 | 36,007 | 35,907 | 35,485 | ||||||||||
Less: Goodwill | 17,316 | 17,449 | 17,501 | 17,604 | 17,618 | ||||||||||
Intangible assets | 3,598 | 3,671 | 3,738 | 3,781 | 3,842 | ||||||||||
Add: Deferred tax liability – tax deductible goodwill (a) | 1,497 | 1,477 | 1,452 | 1,428 | 1,401 | ||||||||||
Deferred tax liability – intangible assets (a) | 1,105 | 1,116 | 1,129 | 1,140 | 1,148 | ||||||||||
BNY Mellon tangible common shareholders’ equity at period end – Non-GAAP | $ | 16,957 | $ | 17,626 | $ | 17,349 | $ | 17,090 | $ | 16,574 | |||||
Total assets at period end – GAAP | $ | 333,469 | $ | 374,114 | $ | 372,351 | $ | 372,870 | $ | 393,780 | |||||
Less: Assets of consolidated investment management funds | 1,231 | 1,009 | 1,083 | 1,300 | 1,401 | ||||||||||
Subtotal assets of operations – Non-GAAP | 332,238 | 373,105 | 371,268 | 371,570 | 392,379 | ||||||||||
Less: Goodwill | 17,316 | 17,449 | 17,501 | 17,604 | 17,618 | ||||||||||
Intangible assets | 3,598 | 3,671 | 3,738 | 3,781 | 3,842 | ||||||||||
Cash on deposit with the Federal Reserve and other central banks (b) | 58,146 | 80,362 | 88,080 | 96,421 | 116,211 | ||||||||||
Tangible total assets of operations at period end – Non-GAAP | $ | 253,178 | $ | 271,623 | $ | 261,949 | $ | 253,764 | $ | 254,708 | |||||
BNY Mellon shareholders’ equity to total assets ratio – GAAP | 11.6 | % | 10.6 | % | 10.4 | % | 10.3 | % | 9.7 | % | |||||
BNY Mellon common shareholders’ equity to total assets ratio – GAAP | 10.6 | % | 9.7 | % | 9.7 | % | 9.6 | % | 9.0 | % | |||||
BNY Mellon tangible common shareholders’ equity to tangible assets of operations ratio – Non-GAAP | 6.7 | % | 6.5 | % | 6.6 | % | 6.7 | % | 6.5 | % | |||||
Period-end common shares outstanding (in thousands) | 1,047,488 | 1,057,337 | 1,067,674 | 1,077,083 | 1,085,343 | ||||||||||
Book value per common share – GAAP | $ | 33.67 | $ | 34.19 | $ | 33.72 | $ | 33.34 | $ | 32.69 | |||||
Tangible book value per common share – Non-GAAP | $ | 16.19 | $ | 16.67 | $ | 16.25 | $ | 15.87 | $ | 15.27 |
(a) | Deferred tax liabilities are based on fully phased-in Basel III rules. |
Income (loss) from consolidated investment management funds, net of noncontrolling interests | |||||||||||||||
(in millions) | 4Q16 | 3Q16 | 2Q16 | 1Q16 | 4Q15 | ||||||||||
Income (loss) from consolidated investment management funds | $ | 5 | $ | 17 | $ | 10 | $ | (6 | ) | $ | 16 | ||||
Less: Net income (loss) attributable to noncontrolling interests of consolidated investment management funds | 4 | 9 | 4 | (7 | ) | 5 | |||||||||
Income from consolidated investment management funds, net of noncontrolling interests | $ | 1 | $ | 8 | $ | 6 | $ | 1 | $ | 11 |
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BNY Mellon 4Q16 Earnings Release |
Income (loss) from consolidated investment management funds, net of noncontrolling interests - Investment Management business | |||||||||||||||
(in millions) | 4Q16 | 3Q16 | 2Q16 | 1Q16 | 4Q15 | ||||||||||
Investment management fees | $ | 4 | $ | 2 | $ | 3 | $ | 2 | $ | 7 | |||||
Other (Investment income (loss)) | (3 | ) | 6 | 3 | (1 | ) | 4 | ||||||||
Income from consolidated investment management funds, net of noncontrolling interests | $ | 1 | $ | 8 | $ | 6 | $ | 1 | $ | 11 |
Pre-tax operating margin - Investment Management business | |||||||||||||||
(dollars in millions) | 4Q16 | 3Q16 | 2Q16 | 1Q16 | 4Q15 | ||||||||||
Income before income taxes – GAAP | $ | 260 | $ | 256 | $ | 234 | $ | 217 | $ | 290 | |||||
Add: Amortization of intangible assets | 22 | 22 | 19 | 19 | 24 | ||||||||||
Provision for credit losses | 6 | — | 1 | (1 | ) | (4 | ) | ||||||||
Income before income taxes excluding amortization of intangible assets and provision for credit losses – Non-GAAP | $ | 288 | $ | 278 | $ | 254 | $ | 235 | $ | 310 | |||||
Total revenue – GAAP | $ | 960 | $ | 958 | $ | 938 | $ | 895 | $ | 999 | |||||
Less: Distribution and servicing expense | 98 | 104 | 102 | 100 | 92 | ||||||||||
Total revenue net of distribution and servicing expense – Non-GAAP | $ | 862 | $ | 854 | $ | 836 | $ | 795 | $ | 907 | |||||
Pre-tax operating margin – GAAP (a) | 27 | % | 27 | % | 25 | % | 24 | % | 29 | % | |||||
Pre-tax operating margin, excluding amortization of intangible assets, provision for credit losses and distribution and servicing expense – Non-GAAP (a) | 33 | % | 33 | % | 30 | % | 30 | % | 34 | % |
• | $1,000.00 per share on the Series A Preferred Stock (equivalent to $10.0000 per Normal Preferred Capital Security of Mellon Capital IV, each representing a 1/100th interest in a share of the Series A Preferred Stock); |
• | $1,300.00 per share on the Series C Preferred Stock (equivalent to $0.3250 per depositary share, each representing a 1/4,000th interest in a share of the Series C Preferred Stock); and |
• | $2,942.01 per share on the Series F Preferred Stock (equivalent to $29.4201 per depositary share, each representing a 1/100th interest in a share of the Series F Preferred Stock). |
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BNY Mellon 4Q16 Earnings Release |
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