Lines of Businesses

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Lines of Businesses

Lines of businesses

We have an internal information system that produces performance data along product and services lines for our two principal businesses and the Other segment.

Business accounting principles

Our business data has been determined on an internal management basis of accounting, rather than the generally accepted accounting principles used for consolidated financial reporting. These measurement principles are designed so that reported results of the businesses will track their economic performance.

Business results are subject to reclassification when organizational changes are made or whenever improvements are made in the measurement principles. On Sept. 27, 2013, Newton Management Limited, together with Newton Investment Management Limited, an investment boutique of BNY Mellon, sold Newton’s private client business. In the first quarter of 2014, we reclassified the results of Newton’s private client business from the Investment Management business to the Other segment. The reclassifications did not impact consolidated results. All prior periods have been restated.

In addition, prior period consolidated and Other segment results have been restated to reflect the retrospective application of adopting accounting guidance related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 2 of the Notes to Consolidated Financial Statements for additional information.

The accounting policies of the businesses are the same as those described in Note 1 of the Notes to Consolidated Financial Statements in our 2013 Annual Report.

The primary types of revenue for our two principal businesses and the Other segment are presented below:

Business	Primary types of revenue
Investment Management	Ÿ   Investment management and performance fees from: Mutual funds Institutional clients Private clients High-net-worth individuals and families, endowments and foundations and related entities Ÿ   Distribution and servicing fees
Investment Services	Ÿ   Asset servicing fees, including institutional trust and custody fees, broker-dealer services, global collateral services and securities lending Ÿ   Issuer services fees, including Corporate Trust and Depositary Receipts Ÿ   Clearing services fees, including broker-dealer services, registered investment advisor services and prime brokerage services Ÿ   Treasury services fees, including global payment services and working capital solutions Ÿ   Foreign exchange
Other segment	Ÿ   Credit-related activities Ÿ   Leasing operations Ÿ   Corporate treasury activities Ÿ   Global markets and institutional banking services Ÿ   Business exits

The results of our businesses are presented and analyzed on an internal management reporting basis:

• Revenue amounts reflect fee and other revenue generated by each business. Fee and other revenue transferred between businesses under revenue transfer agreements is included within other revenue in each business.

• Revenues and expenses associated with specific client bases are included in those businesses. For example, foreign exchange activity associated with clients using custody products is allocated to Investment Services.

• Net interest revenue is allocated to businesses based on the yields on the assets and liabilities generated by each business. We employ a funds transfer pricing system that matches funds with the specific assets and liabilities of each business based on their interest sensitivity and maturity characteristics.

• Incentive expense related to restricted stock and certain corporate overhead charges are allocated to the businesses.

• Support and other indirect expenses are allocated to businesses based on internally-developed methodologies.

• Recurring FDIC expense is allocated to the businesses based on average deposits generated within each business.

• Litigation expense is generally recorded in the business in which the charge occurs.

• Management of the investment securities portfolio is a shared service contained in the Other segment. As a result, gains and losses associated with the valuation of the securities portfolio are included in the Other segment.

• Client deposits serve as the primary funding source for our investment securities portfolio. We typically allocate all interest revenue to the businesses generating the deposits. Accordingly, accretion related to the portion of the investment securities portfolio restructured in 2009 has been included in the results of the businesses.

• M&I expense is a corporate level item and is recorded in the Other segment.

• Beginning in the fourth quarter of 2013, restructuring charges were recorded in the businesses. Prior to the fourth quarter of 2013, restructuring charges were reported in the Other segment.

• Balance sheet assets and liabilities and their related income or expense are specifically assigned to each business. Businesses with a net liability position have been allocated assets.

• Goodwill and intangible assets are reflected within individual businesses.

The following consolidating schedules show the contribution of our businesses to our overall profitability.

For the quarter ended March 31, 2014 (dollar amounts in millions)	Investment Management				Investment Services			Other			Consolidated
Fee and other revenue	$	900		(a)	$	1,887		$	112		$	2,899		(a)
Net interest revenue	70				590			68			728
Total revenue	970			(a)	2,477			180			3,627			(a)
Provision for credit losses	—				—			(18		)	(18		)
Noninterest expense	724				1,821			194			2,739
Income before taxes	$	246		(a)	$	656		$	4		$	906		(a)
Pre-tax operating margin (b)	25		%		26		%	N/M			25		%
Average assets	$	39,463			$	258,470		$	57,059		$	354,992

(a) Both total fee and other revenue and total revenue include income from consolidated investment management funds of $36 million, net of noncontrolling interests of $20 million, for a net impact of $16 million. Income before taxes includes noncontrolling interests of $20 million.

(b) Income before taxes divided by total revenue.

N/M - Not meaningful.

For the quarter ended Dec. 31, 2013 (dollar amounts in millions)	Investment Management				Investment Services			Other			Consolidated
Fee and other revenue (a)	$	993		(b)	$	1,860		$	(20	)	$	2,833		(b)
Net interest revenue	68				610			83			761
Total revenue (a)	1,061			(b)	2,470			63			3,594			(b)
Provision for credit losses	—				—			6			6
Noninterest expense	795				1,867			215			2,877
Income (loss) before taxes (a)	$	266		(b)	$	603		$	(158	)	$	711		(b)
Pre-tax operating margin (a) (c)	25		%		24		%	N/M			20		%
Average assets	$	38,796			$	258,294		$	59,045		$	356,135

(a) Consolidated results and Other segment results have been restated to reflect the retrospective application of adopting new accounting guidance related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 2 of the Notes to Consolidated Financial Statements for additional information.

(b) Both total fee and other revenue and total revenue include income from consolidated investment management funds of $36 million, net of noncontrolling interests of $17 million, for a net impact of $19 million. Income before taxes includes noncontrolling interests of $17 million.

(c) Income before taxes divided by total revenue.

N/M - Not meaningful.

For the quarter ended March 31, 2013 (dollar amounts in millions)	Investment Management				Investment Services			Other			Consolidated
Fee and other revenue (a)	$	881		(b)	$	1,861		$	152		$	2,894		(b)
Net interest revenue	62				653			4			719
Total revenue (a)	943			(b)	2,514			156			3,613			(b)
Provision for credit losses	—				1			(25		)	(24		)
Noninterest expense	737				1,840			251			2,828
Income (loss) before taxes (a)	$	206		(b)	$	673		$	(70	)	$	809		(b)
Pre-tax operating margin (a) (c)	22		%		27		%	N/M			22		%
Average assets	$	38,743			$	240,187		$	54,734		$	333,664

(a) Consolidated results and Other segment results have been restated to reflect the retrospective application of adopting new accounting guidance related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 2 of the Notes to Consolidated Financial Statements for additional information.

(b) Both total fee and other revenue and total revenue include income from consolidated investment management funds of $50 million, net of noncontrolling interests of $16 million, for a net impact of $34 million. Income before taxes includes noncontrolling interests of $16 million.

(c) Income before taxes divided by total revenue.