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Delaware
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13-2614959
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(State or other jurisdiction of
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(I.R.S. Employer Identification No.)
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incorporation or organization)
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Large accelerated filer [ X ]
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Smaller reporting company [ ]
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Accelerated filer [ ]
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Emerging growth company [ ]
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Non-accelerated filer [ ] (Do not check if a smaller reporting company)
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Class
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Outstanding as of
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June 30, 2017
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Common Stock, $0.01 par value
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1,033,156,201
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Page
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Part I - Financial Information
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Items 2. and 3. Management’s Discussion and Analysis of Financial Condition and Results of Operations; Quantitative and Qualitative Disclosures about Market Risk:
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Key second quarter 2017 and subsequent events
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Highlights of second quarter 2017 results
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Item 1. Financial Statements:
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Page
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Notes to Consolidated Financial Statements:
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Part II - Other Information
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Quarter ended
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Year-to-date
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|||||||||||||
(dollar amounts in millions, except per common share amounts and unless otherwise noted)
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June 30, 2017
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March 31, 2017
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June 30, 2016
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June 30, 2017
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June 30, 2016
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|||||
Results applicable to common shareholders of The Bank of New York Mellon Corporation:
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||||||||||
Net income
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$
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926
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$
|
880
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$
|
825
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$
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1,806
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$
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1,629
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Basic earnings per share
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0.88
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|
0.83
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0.76
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1.71
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|
1.49
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|||||
Diluted earnings per share
|
0.88
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0.83
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0.75
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1.70
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1.48
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|||||
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||||||||||
Fee and other revenue
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$
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3,120
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$
|
3,018
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$
|
2,999
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$
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6,138
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$
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5,969
|
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Income from consolidated investment management funds
|
10
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|
33
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|
10
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|
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43
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4
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|||||
Net interest revenue
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826
|
|
792
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|
767
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1,618
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|
1,533
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|||||
Total revenue
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$
|
3,956
|
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$
|
3,843
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$
|
3,776
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$
|
7,799
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$
|
7,506
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||||||||||
Return on common equity
(annualized) (a)
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10.4
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%
|
10.2
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%
|
9.3
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%
|
|
10.3
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%
|
9.2
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%
|
|||||
Adjusted return on common equity
(annualized) –
Non-GAAP
(a)(b)
|
10.8
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%
|
10.7
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%
|
9.7
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%
|
|
10.8
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%
|
9.7
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%
|
|||||
|
|
|
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|
||||||||||
Return on tangible common equity
(annualized) –
Non-GAAP
(a)(c)
|
21.9
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%
|
22.2
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%
|
20.4
|
%
|
|
22.1
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%
|
20.5
|
%
|
|||||
Adjusted return on tangible common equity
(annualized) –
Non-GAAP
(a)(b)(c)
|
22.1
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%
|
22.4
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%
|
20.5
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%
|
|
22.2
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%
|
20.7
|
%
|
|||||
|
|
|
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||||||||||
Return on average assets
(annualized)
|
1.09
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%
|
1.06
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%
|
0.89
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%
|
|
1.07
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%
|
0.89
|
%
|
|||||
|
|
|
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|
||||||||||
Fee revenue as a percentage of total revenue
|
79
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%
|
78
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%
|
79
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%
|
|
79
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%
|
79
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%
|
|||||
|
|
|
|
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||||||||||
Percentage of non-U.S. total revenue
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35
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%
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34
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%
|
34
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%
|
|
34
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%
|
33
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%
|
|||||
|
|
|
|
|
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||||||||||
Pre-tax operating margin
(a)
|
33
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%
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31
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%
|
31
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%
|
|
32
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%
|
30
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%
|
|||||
Adjusted pre-tax operating margin
–
Non-GAAP
(a)(b)
|
35
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%
|
33
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%
|
33
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%
|
|
34
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%
|
32
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%
|
|||||
|
|
|
|
|
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|
||||||||||
Net interest margin
|
1.14
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%
|
1.13
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%
|
0.97
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%
|
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1.14
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%
|
0.98
|
%
|
|||||
Net interest margin on a fully taxable equivalent (“FTE”) basis
– Non-GAAP
(d)
|
1.16
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%
|
1.14
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%
|
0.98
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%
|
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1.15
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%
|
1.00
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%
|
|||||
|
|
|
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|
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||||||||||
Assets under management (“AUM”) at period end
(in billions) (e)
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$
|
1,771
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$
|
1,727
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$
|
1,664
|
|
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$
|
1,771
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$
|
1,664
|
|
Assets under custody and/or administration (“AUC/A”) at period end
(in trillions) (f)
|
$
|
31.1
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$
|
30.6
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$
|
29.5
|
|
|
$
|
31.1
|
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$
|
29.5
|
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Market value of securities on loan at period end
(in billions) (g)
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$
|
336
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$
|
314
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$
|
278
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$
|
336
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|
$
|
278
|
|
|
|
|
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||||||||||
Average common shares and equivalents outstanding
(in thousands)
:
|
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||||||||||
Basic
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1,035,829
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1,041,158
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1,072,583
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1,038,479
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1,076,112
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|||||
Diluted
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1,041,879
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1,047,746
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1,078,271
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1,044,809
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1,081,847
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|||||
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|
||||||||||
Selected average balances:
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|
||||||||||
Interest-earning assets
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$
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289,496
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$
|
283,421
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$
|
318,433
|
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$
|
286,475
|
|
$
|
314,556
|
|
Assets of operations
|
$
|
341,607
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$
|
335,080
|
|
$
|
372,974
|
|
|
$
|
338,362
|
|
$
|
368,110
|
|
Total assets
|
$
|
342,515
|
|
$
|
336,200
|
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$
|
374,220
|
|
|
$
|
339,375
|
|
$
|
369,387
|
|
Interest-bearing deposits
|
$
|
142,336
|
|
$
|
139,820
|
|
$
|
165,122
|
|
|
$
|
141,084
|
|
$
|
163,569
|
|
Long-term debt
|
$
|
27,398
|
|
$
|
25,882
|
|
$
|
22,838
|
|
|
$
|
26,644
|
|
$
|
22,197
|
|
Noninterest-bearing deposits
|
$
|
73,886
|
|
$
|
73,555
|
|
$
|
84,033
|
|
|
$
|
73,721
|
|
$
|
83,489
|
|
Preferred stock
|
$
|
3,542
|
|
$
|
3,542
|
|
$
|
2,552
|
|
|
$
|
3,542
|
|
$
|
2,552
|
|
Total The Bank of New York Mellon Corporation common shareholders’ equity
|
$
|
35,862
|
|
$
|
34,965
|
|
$
|
35,827
|
|
|
$
|
35,416
|
|
$
|
35,539
|
|
|
|
|
|
|
|
|
||||||||||
Other information at period end:
|
|
|
|
|
|
|
||||||||||
Cash dividends per common share
|
$
|
0.19
|
|
$
|
0.19
|
|
$
|
0.17
|
|
|
$
|
0.38
|
|
$
|
0.34
|
|
Common dividend payout ratio
|
22
|
%
|
23
|
%
|
23
|
%
|
|
22
|
%
|
23
|
%
|
|||||
Common dividend yield
(annualized)
|
1.5
|
%
|
1.6
|
%
|
1.8
|
%
|
|
1.5
|
%
|
1.8
|
%
|
|||||
Closing stock price per common share
|
$
|
51.02
|
|
$
|
47.23
|
|
$
|
38.85
|
|
|
$
|
51.02
|
|
$
|
38.85
|
|
Market capitalization
|
$
|
52,712
|
|
$
|
49,113
|
|
$
|
41,479
|
|
|
$
|
52,712
|
|
$
|
41,479
|
|
Book value per common share
(a)
|
$
|
35.26
|
|
$
|
34.23
|
|
$
|
33.72
|
|
|
$
|
35.26
|
|
$
|
33.72
|
|
Tangible book value per common share – Non-GAAP
(a)(c)
|
$
|
17.53
|
|
$
|
16.65
|
|
$
|
16.25
|
|
|
$
|
17.53
|
|
$
|
16.25
|
|
Full-time employees
|
52,800
|
|
52,600
|
|
52,200
|
|
|
52,800
|
|
52,200
|
|
|||||
Common shares outstanding
(in thousands)
|
1,033,156
|
|
1,039,877
|
|
1,067,674
|
|
|
1,033,156
|
|
1,067,674
|
|
Regulatory ratios
|
June 30, 2017
|
|
March 31, 2017
|
|
Dec. 31, 2016
|
|
Average liquidity coverage ratio (“LCR”)
(h)
|
116
|
%
|
117
|
%
|
114
|
%
|
|
|
|
|
|||
Consolidated regulatory capital ratios:
(i)
|
|
|
|
|||
Standardized:
|
|
|
|
|||
Common equity Tier 1 (“CET1”) ratio
|
12.0
|
%
|
12.0
|
%
|
12.3
|
%
|
Tier 1 capital ratio
|
14.3
|
|
14.4
|
|
14.5
|
|
Total (Tier 1 plus Tier 2) capital ratio
|
14.8
|
|
14.9
|
|
15.2
|
|
Advanced:
|
|
|
|
|||
CET1 ratio
|
10.8
|
|
10.4
|
|
10.6
|
|
Tier 1 capital ratio
|
12.9
|
|
12.5
|
|
12.6
|
|
Total (Tier 1 plus Tier 2) capital ratio
|
13.2
|
|
12.8
|
|
13.0
|
|
|
|
|
|
|||
Leverage capital ratio
(i)
|
6.7
|
|
6.6
|
|
6.6
|
|
Supplementary leverage ratio (“SLR”)
(i)
|
6.2
|
|
6.1
|
|
6.0
|
|
|
|
|
|
|||
BNY Mellon shareholders’ equity to total assets ratio – GAAP
|
11.3
|
|
11.6
|
|
11.6
|
|
BNY Mellon common shareholders’ equity to total assets ratio – GAAP
|
10.3
|
|
10.5
|
|
10.6
|
|
|
|
|
|
|||
Selected regulatory capital ratios – fully phased-in – Non-GAAP:
(j)
|
|
|
|
|||
Estimated CET1 ratio:
|
|
|
|
|||
Standardized Approach
|
11.5
|
%
|
11.5
|
%
|
11.3
|
%
|
Advanced Approach
|
10.4
|
|
10.0
|
|
9.7
|
|
|
|
|
|
|||
Estimated SLR
|
6.0
|
|
5.9
|
|
5.6
|
|
(a)
|
See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page
52
for a reconciliation of Non-GAAP measures.
|
(b)
|
Non-GAAP information for all periods presented excludes the amortization of intangible assets and M&I, litigation and restructuring charges. Pre-tax operating margin (Non-GAAP) also excludes the net income attributable to noncontrolling interests of consolidated investment management funds.
|
(c)
|
Tangible common equity – Non-GAAP and tangible book value per common share – Non-GAAP exclude goodwill and intangible assets, net of deferred tax liabilities. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page
52
for the reconciliation of Non-GAAP measures.
|
(d)
|
See “Average balances and interest rates” on page
11
for a reconciliation of Non-GAAP measures.
|
(e)
|
Excludes securities lending cash management assets and assets managed in the Investment Services business.
|
(f)
|
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
June 30, 2017
and
March 31, 2017
and
$1.1 trillion
at
June 30, 2016
.
|
(g)
|
Represents the total amount of securities on loan in our agency securities lending program managed by the Investment Services business. Excludes securities for which BNY Mellon acts as an agent on behalf of CIBC Mellon clients, which totaled
$66 billion
at
June 30, 2017
,
$65 billion
at
March 31, 2017
and
$56 billion
at
June 30, 2016
.
|
(h)
|
For additional information on our LCR, see “Liquidity and dividends” beginning on page
35
.
|
(i)
|
For our CET1, Tier 1 capital and Total capital ratios, our effective capital ratios under U.S. capital rules are the lower of the ratios as calculated under the Standardized and Advanced Approaches. The leverage capital ratio is based on Tier I capital, as phased-in, and quarterly average total assets. The SLR is based on Tier 1 capital, as phased-in, and average quarterly assets and certain off-balance sheet exposures. For additional information on our capital ratios, see “Capital” beginning on page
40
.
|
(j)
|
The estimated fully phased-in CET1 and SLR ratios (Non-GAAP) are based on our interpretation of the U.S. capital rules, which are being gradually phased-in over a multi-year period. For additional information on these Non-GAAP ratios, see “Capital” beginning on page
40
.
|
Part I - Financial Information
|
Items 2. and 3. Management’s Discussion and Analysis of Financial Condition and Results of Operations; Quantitative and Qualitative Disclosures about Market Risk
|
•
|
AUC/A totaled a record
$31.1 trillion
at
June 30, 2017
compared with
$29.5 trillion
at
June 30, 2016
. The
5%
increase primarily reflects higher market values. (See “Investment Services business” beginning on page
19
.)
|
•
|
AUM totaled
$1.77 trillion
at
June 30, 2017
compared with
$1.66 trillion
at
June 30, 2016
. The
6%
increase primarily reflects higher market values and net inflows, partially offset by the unfavorable impact of a stronger U.S. dollar (principally versus the British pound). AUM excludes securities lending cash management assets and assets managed in the Investment Services business. (See “Investment Management business” beginning on page
16
.)
|
•
|
Investment services fees totaled
$1.86 billion
, an increase of
4%
compared with
$1.79 billion
in the
second quarter of 2016
. The increase primarily reflects growth in clearing services fees, net new business, including collateral management solutions, and higher equity market values, partially offset by the unfavorable impact of a stronger U.S. dollar. (See “Investment Services business” beginning on page
19
.)
|
•
|
Investment management and performance fees totaled
$879 million
, an increase of
6%
compared with
$830 million
in the
second quarter of 2016
. The increase primarily reflects higher market values, money market fees and performance fees, partially offset by the
unfavorable impact of a stronger U.S. dollar (principally versus the British pound)
. (See “Investment Management business” beginning on page
16
.)
|
•
|
Foreign exchange and other trading revenue totaled
$165 million
compared with
$182 million
in the
second quarter of 2016
. Foreign exchange revenue totaled
$151 million
, a decrease of
9%
compared with
$166 million
in the
second quarter of 2016
, primarily reflecting lower volatility, partially offset by higher volumes. (See “Fee and other revenue” beginning on page
7
.)
|
•
|
Investment and other income totaled
$122 million
compared with
$74 million
in the
second quarter of 2016
. The increase primarily reflects lease-related gains. (See “Fee and other revenue” beginning on page
7
.)
|
•
|
Net interest revenue totaled
$826 million
compared with
$767 million
in the
second quarter of 2016
. The
8%
increase was primarily driven by higher interest rates and lower premium amortization, partially offset by lower interest-earning assets and higher average long-term debt. Net interest margin was
1.14%
in the
second quarter of 2017
compared with
0.97%
in the
second quarter of 2016
and net interest margin (FTE) (Non-GAAP) was
1.16%
in the
second quarter of 2017
compared with
0.98%
in the
second quarter of 2016
. (See “Net interest revenue” on page
10
.)
|
•
|
The provision for credit losses was a credit of
$7 million
in the
second quarter of 2017
and a credit of
$9 million
in the
second quarter of 2016
. (See “Asset quality and allowance for credit losses” beginning on page
31
.)
|
•
|
Noninterest expense totaled
$2.66 billion
compared with
$2.62 billion
in the
second quarter of 2016
. The increase reflects higher professional, legal and other purchased services (related to regulatory and compliance costs, including the 2017 resolution plan), software and litigation expenses, partially
offset by the favorable impact of a stronger U.S. dollar and lower net occupancy expense.
(See “Noninterest expense” beginning on page
13
.)
|
•
|
The provision for income taxes was
$332 million
and the effective rate was
25.4%
in the
second quarter of 2017
compared with an income tax provision of
$290 million
and an effective tax rate of
24.9%
in the
second quarter of 2016
. (See “Income taxes” on page
14
.)
|
•
|
The net unrealized pre-tax gain on the total investment securities portfolio was
$151 million
at
June 30, 2017
compared with a pre-tax loss of $23 million at
March 31, 2017
. The net unrealized pre-tax gain was primarily driven by a decrease in market interest rates. (See “Investment securities” beginning on page
26
.)
|
•
|
Our CET1 ratio under the Advanced Approach was
10.8%
at
June 30, 2017
and
10.4%
at
March 31, 2017
. The increase was primarily driven by CET1 generation. Our CET1 ratio under the Standardized Approach was
12.0%
at both
June 30, 2017
and
March 31, 2017
. (See “Capital” beginning on page
40
.)
|
•
|
Our estimated CET1 ratio (Non-GAAP) calculated under the Advanced Approach on a fully phased-in basis was
10.4%
at
June 30, 2017
and
10.0%
at
March 31, 2017
. The increase primarily reflects CET1 generation. Our estimated CET1 ratio (Non-GAAP) calculated under the Standardized Approach on a fully phased-in basis was
11.5%
at both
June 30, 2017
and
March 31, 2017
. (See “Capital” beginning on page
40
.)
|
Fee and other revenue
|
|
|
|
|
|
|
|
|
YTD17
|
|
||||||||||||
|
|
|
|
2Q17 vs.
|
|
|
|
vs.
|
||||||||||||||
(dollars in millions, unless otherwise noted)
|
2Q17
|
|
1Q17
|
|
2Q16
|
|
1Q17
|
|
2Q16
|
|
|
YTD17
|
|
YTD16
|
|
YTD16
|
|
|||||
Investment services fees:
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Asset servicing
(a)
|
$
|
1,085
|
|
$
|
1,063
|
|
$
|
1,069
|
|
2
|
%
|
1
|
%
|
|
$
|
2,148
|
|
$
|
2,109
|
|
2
|
%
|
Clearing services
|
394
|
|
376
|
|
350
|
|
5
|
|
13
|
|
|
770
|
|
700
|
|
10
|
|
|||||
Issuer services
|
241
|
|
251
|
|
234
|
|
(4
|
)
|
3
|
|
|
492
|
|
478
|
|
3
|
|
|||||
Treasury services
|
140
|
|
139
|
|
139
|
|
1
|
|
1
|
|
|
279
|
|
270
|
|
3
|
|
|||||
Total investment services fees
|
1,860
|
|
1,829
|
|
1,792
|
|
2
|
|
4
|
|
|
3,689
|
|
3,557
|
|
4
|
|
|||||
Investment management and performance fees
|
879
|
|
842
|
|
830
|
|
4
|
|
6
|
|
|
1,721
|
|
1,642
|
|
5
|
|
|||||
Foreign exchange and other trading revenue
|
165
|
|
164
|
|
182
|
|
1
|
|
(9
|
)
|
|
329
|
|
357
|
|
(8
|
)
|
|||||
Financing-related fees
|
53
|
|
55
|
|
57
|
|
(4
|
)
|
(7
|
)
|
|
108
|
|
111
|
|
(3
|
)
|
|||||
Distribution and servicing
|
41
|
|
41
|
|
43
|
|
—
|
|
(5
|
)
|
|
82
|
|
82
|
|
—
|
|
|||||
Investment and other income
|
122
|
|
77
|
|
74
|
|
N/M
|
|
N/M
|
|
|
199
|
|
179
|
|
N/M
|
|
|||||
Total fee revenue
|
3,120
|
|
3,008
|
|
2,978
|
|
4
|
|
5
|
|
|
6,128
|
|
5,928
|
|
3
|
|
|||||
Net securities gains
|
—
|
|
10
|
|
21
|
|
N/M
|
|
N/M
|
|
|
10
|
|
41
|
|
N/M
|
||||||
Total fee and other revenue
|
$
|
3,120
|
|
$
|
3,018
|
|
$
|
2,999
|
|
3
|
%
|
4
|
%
|
|
$
|
6,138
|
|
$
|
5,969
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Fee revenue as a percentage of total revenue
|
79
|
%
|
78
|
%
|
79
|
%
|
|
|
|
79
|
%
|
79
|
%
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
AUM at period end
(in billions) (b)
|
$
|
1,771
|
|
$
|
1,727
|
|
$
|
1,664
|
|
3
|
%
|
6
|
%
|
|
$
|
1,771
|
|
$
|
1,664
|
|
6
|
%
|
AUC/A at period end
(in trillions) (c)
|
$
|
31.1
|
|
$
|
30.6
|
|
$
|
29.5
|
|
2
|
%
|
5
|
%
|
|
$
|
31.1
|
|
$
|
29.5
|
|
5
|
%
|
(a)
|
Asset servicing fees include securities lending revenue of
$48 million
in the
second quarter of 2017
,
$49 million
in the
first quarter of 2017
and
$52 million
in the
second quarter of 2016
.
|
(b)
|
Excludes securities lending cash management assets and assets managed in the Investment Services business.
|
(c)
|
Includes the AUC/A of CIBC Mellon of
$1.2 trillion
at
June 30, 2017
and
March 31, 2017
and
$1.1 trillion
at
June 30, 2016
.
|
•
|
Asset servicing fees increased
1%
compared with the
second quarter of 2016
and
2%
(unannualized) compared with the
first quarter of 2017
. Both increases primarily reflect
net new business, including growth of collateral management solutions, and higher equity market values. The increase compared with the second quarter of 2016 was partially offset by the unfavorable impact of a stronger U.S. dollar and
|
•
|
Clearing services fees increased
13%
compared with the
second quarter of 2016
and
5%
(unannualized) compared with the
first quarter of 2017
. Both increases were primarily driven by
higher money market fees and growth in long-term mutual fund assets.
|
•
|
Issuer services fees increased
3%
compared with the
second quarter of 2016
and decreased
4%
(unannualized) compared with the
first quarter of 2017
. The increase primarily reflects
higher Depositary Receipts revenue. The decrease primarily reflects seasonality in Depositary Receipts revenue.
|
•
|
Treasury services fees increased
1%
compared with both the
second quarter of 2016
and
first quarter of 2017
. Both increases primarily reflect
higher payment volumes, 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
|
|
|
|||||||||||||
(in millions)
|
2Q17
|
|
1Q17
|
|
2Q16
|
|
YTD17
|
|
YTD16
|
|
|||||
Foreign exchange
|
$
|
151
|
|
$
|
154
|
|
$
|
166
|
|
$
|
305
|
|
$
|
337
|
|
Other trading revenue
|
14
|
|
10
|
|
16
|
|
24
|
|
20
|
|
|||||
Total foreign exchange and other trading revenue
|
$
|
165
|
|
$
|
164
|
|
$
|
182
|
|
$
|
329
|
|
$
|
357
|
|
Investment and other income
|
|
|
|
||||||||||||
(in millions)
|
2Q17
|
|
1Q17
|
|
2Q16
|
|
YTD17
|
|
YTD16
|
|
|||||
Corporate/bank-owned life insurance
|
$
|
43
|
|
$
|
30
|
|
$
|
31
|
|
$
|
73
|
|
$
|
62
|
|
Lease-related gains
|
51
|
|
1
|
|
—
|
|
52
|
|
44
|
|
|||||
Equity investment income (loss)
|
7
|
|
26
|
|
(4
|
)
|
33
|
|
(7
|
)
|
|||||
Expense reimbursements from joint venture
|
17
|
|
14
|
|
17
|
|
31
|
|
34
|
|
|||||
Seed capital gains
(a)
|
10
|
|
9
|
|
11
|
|
19
|
|
22
|
|
|||||
Asset-related (losses) gains
|
(5
|
)
|
3
|
|
1
|
|
(2
|
)
|
1
|
|
|||||
Other (loss) income
|
(1
|
)
|
(6
|
)
|
18
|
|
(7
|
)
|
23
|
|
|||||
Total investment and other income
|
$
|
122
|
|
$
|
77
|
|
$
|
74
|
|
$
|
199
|
|
$
|
179
|
|
(a)
|
Excludes the gains (losses) on seed capital investments in consolidated investment management funds which are reflected in operations of consolidated investment management funds, net of noncontrolling interests. The gains on seed capital investments in consolidated investment management funds were
$7 million
in the
second quarter of 2017
,
$15 million
in the
first quarter of 2017
,
$6 million
in the
second quarter of 2016
,
$22 million
in the
first six months of 2017
and
$7 million
in the
first six months of 2016
.
|
Net interest revenue
|
|
|
|
|
|
|
|
|
YTD17
|
|
||||||||||||
|
|
|
|
2Q17 vs.
|
|
|
|
vs.
|
||||||||||||||
(dollars in millions)
|
2Q17
|
|
1Q17
|
|
2Q16
|
|
1Q17
|
|
2Q16
|
|
|
YTD17
|
|
YTD16
|
|
YTD16
|
|
|||||
Net interest revenue
|
$
|
826
|
|
$
|
792
|
|
$
|
767
|
|
4%
|
|
8%
|
|
|
$
|
1,618
|
|
$
|
1,533
|
|
6%
|
|
Tax equivalent adjustment
|
12
|
|
12
|
|
13
|
|
N/M
|
N/M
|
|
24
|
|
27
|
|
N/M
|
||||||||
Net interest revenue (FTE) – Non-GAAP
(a)
|
$
|
838
|
|
$
|
804
|
|
$
|
780
|
|
4%
|
|
7%
|
|
|
$
|
1,642
|
|
$
|
1,560
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Average interest-earning assets
|
$
|
289,496
|
|
$
|
283,421
|
|
$
|
318,433
|
|
2%
|
|
(9)%
|
|
|
$
|
286,475
|
|
$
|
314,556
|
|
(9)%
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net interest margin
|
1.14
|
%
|
1.13
|
%
|
0.97
|
%
|
1
|
bps
|
17
|
bps
|
|
1.14
|
%
|
0.98
|
%
|
16
|
bps
|
|||||
Net interest margin (FTE) – Non-GAAP
(a)
|
1.16
|
%
|
1.14
|
%
|
0.98
|
%
|
2
|
bps
|
18
|
bps
|
|
1.15
|
%
|
1.00
|
%
|
15
|
bps
|
(a)
|
Net interest revenue (FTE) – Non-GAAP and net interest margin (FTE) – Non-GAAP include the tax equivalent adjustments on tax-exempt income which allows for comparisons of amounts arising from both taxable and tax-exempt sources and is consistent with industry practice. The adjustment to an FTE basis has no impact on net income.
|
Average balances and interest rates
|
Quarter ended
|
|||||||||||||||||||||||||
|
June 30, 2017
|
|
March 31, 2017
|
|
June 30, 2016
|
|||||||||||||||||||||
(dollar amounts in millions, presented on an FTE basis)
|
Average
balance
|
|
Interest
|
|
Average
rates
|
|
|
Average
balance
|
|
Interest
|
|
Average
rates
|
|
|
Average balance
|
|
Interest
|
|
Average rates
|
|
||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest-bearing deposits with banks (primarily foreign banks)
|
$
|
14,832
|
|
$
|
27
|
|
0.73
|
%
|
|
$
|
14,714
|
|
$
|
22
|
|
0.60
|
%
|
|
$
|
14,394
|
|
$
|
24
|
|
0.68
|
%
|
Interest-bearing deposits held at the Federal Reserve and other central banks
|
69,316
|
|
71
|
|
0.41
|
|
|
66,043
|
|
57
|
|
0.35
|
|
|
97,788
|
|
72
|
|
0.30
|
|
||||||
Federal funds sold and securities purchased under resale agreements
|
26,873
|
|
86
|
|
1.29
|
|
|
25,312
|
|
67
|
|
1.07
|
|
|
25,813
|
|
56
|
|
0.87
|
|
||||||
Margin loans
|
15,058
|
|
87
|
|
2.32
|
|
|
15,753
|
|
75
|
|
1.94
|
|
|
18,226
|
|
64
|
|
1.40
|
|
||||||
Non-margin loans:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Domestic offices
|
30,734
|
|
207
|
|
2.70
|
|
|
30,963
|
|
188
|
|
2.44
|
|
|
29,413
|
|
165
|
|
2.25
|
|
||||||
Foreign offices
|
13,001
|
|
65
|
|
1.99
|
|
|
13,596
|
|
57
|
|
1.71
|
|
|
12,645
|
|
49
|
|
1.57
|
|
||||||
Total non-margin loans
|
43,735
|
|
272
|
|
2.49
|
|
|
44,559
|
|
245
|
|
2.22
|
|
|
42,058
|
|
214
|
|
2.04
|
|
||||||
Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
U.S. Government obligations
|
25,928
|
|
106
|
|
1.64
|
|
|
26,239
|
|
104
|
|
1.60
|
|
|
24,571
|
|
92
|
|
1.50
|
|
||||||
U.S. Government agency obligations
|
59,533
|
|
290
|
|
1.95
|
|
|
56,857
|
|
271
|
|
1.90
|
|
|
56,050
|
|
236
|
|
1.68
|
|
||||||
State and political subdivisions – tax-exempt
|
3,298
|
|
26
|
|
3.09
|
|
|
3,373
|
|
26
|
|
3.11
|
|
|
3,778
|
|
28
|
|
2.90
|
|
||||||
Other securities
|
28,468
|
|
81
|
|
1.15
|
|
|
28,317
|
|
88
|
|
1.25
|
|
|
33,603
|
|
104
|
|
1.24
|
|
||||||
Trading securities
|
2,455
|
|
18
|
|
2.85
|
|
|
2,254
|
|
17
|
|
3.12
|
|
|
2,152
|
|
13
|
|
2.45
|
|
||||||
Total securities
|
119,682
|
|
521
|
|
1.74
|
|
|
117,040
|
|
506
|
|
1.74
|
|
|
120,154
|
|
473
|
|
1.57
|
|
||||||
Total interest-earning assets
(a)
|
$
|
289,496
|
|
$
|
1,064
|
|
1.47
|
%
|
|
$
|
283,421
|
|
$
|
972
|
|
1.38
|
%
|
|
$
|
318,433
|
|
$
|
903
|
|
1.14
|
%
|
Allowance for loan losses
|
(164
|
)
|
|
|
|
(169
|
)
|
|
|
|
(163
|
)
|
|
|
||||||||||||
Cash and due from banks
|
4,972
|
|
|
|
|
5,097
|
|
|
|
|
4,141
|
|
|
|
||||||||||||
Other assets
|
47,303
|
|
|
|
|
46,731
|
|
|
|
|
50,563
|
|
|
|
||||||||||||
Assets of consolidated investment management funds
|
908
|
|
|
|
|
1,120
|
|
|
|
|
1,246
|
|
|
|
||||||||||||
Total assets
|
$
|
342,515
|
|
|
|
|
$
|
336,200
|
|
|
|
|
$
|
374,220
|
|
|
|
|||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest-bearing deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Money market rate accounts
|
$
|
7,379
|
|
$
|
1
|
|
0.04
|
%
|
|
$
|
7,510
|
|
$
|
1
|
|
0.05
|
%
|
|
$
|
7,280
|
|
$
|
1
|
|
0.06
|
%
|
Savings
|
1,014
|
|
2
|
|
0.75
|
|
|
1,094
|
|
2
|
|
0.61
|
|
|
1,175
|
|
1
|
|
0.39
|
|
||||||
Demand deposits
|
5,659
|
|
2
|
|
0.14
|
|
|
5,371
|
|
1
|
|
0.12
|
|
|
1,790
|
|
2
|
|
0.40
|
|
||||||
Time deposits
|
34,757
|
|
15
|
|
0.18
|
|
|
35,429
|
|
11
|
|
0.12
|
|
|
46,629
|
|
6
|
|
0.06
|
|
||||||
Foreign offices
|
93,527
|
|
12
|
|
0.05
|
|
|
90,416
|
|
(6
|
)
|
(0.03
|
)
|
|
108,248
|
|
2
|
|
0.01
|
|
||||||
Total interest-bearing deposits
|
142,336
|
|
32
|
|
0.09
|
|
|
139,820
|
|
9
|
|
0.03
|
|
|
165,122
|
|
12
|
|
0.03
|
|
||||||
Federal funds purchased and securities sold under repurchase agreements
|
17,970
|
|
38
|
|
0.84
|
|
|
18,995
|
|
24
|
|
0.51
|
|
|
18,204
|
|
13
|
|
0.28
|
|
||||||
Trading liabilities
|
1,216
|
|
2
|
|
0.61
|
|
|
908
|
|
2
|
|
0.89
|
|
|
662
|
|
1
|
|
0.66
|
|
||||||
Other borrowed funds
|
1,193
|
|
4
|
|
1.24
|
|
|
822
|
|
2
|
|
0.98
|
|
|
847
|
|
2
|
|
0.97
|
|
||||||
Commercial paper
|
2,215
|
|
5
|
|
0.95
|
|
|
2,164
|
|
5
|
|
0.88
|
|
|
3,781
|
|
4
|
|
0.37
|
|
||||||
Payables to customers and broker-dealers
|
20,609
|
|
16
|
|
0.30
|
|
|
18,961
|
|
7
|
|
0.16
|
|
|
16,935
|
|
2
|
|
0.05
|
|
||||||
Long-term debt
|
27,398
|
|
129
|
|
1.87
|
|
|
25,882
|
|
119
|
|
1.85
|
|
|
22,838
|
|
89
|
|
1.54
|
|
||||||
Total interest-bearing liabilities
|
$
|
212,937
|
|
$
|
226
|
|
0.42
|
%
|
|
$
|
207,552
|
|
$
|
168
|
|
0.33
|
%
|
|
$
|
228,389
|
|
$
|
123
|
|
0.21
|
%
|
Total noninterest-bearing deposits
|
73,886
|
|
|
|
|
73,555
|
|
|
|
|
84,033
|
|
|
|
||||||||||||
Other liabilities
|
15,545
|
|
|
|
|
15,600
|
|
|
|
|
22,345
|
|
|
|
||||||||||||
Liabilities and obligations of consolidated investment management funds
|
111
|
|
|
|
|
244
|
|
|
|
|
253
|
|
|
|
||||||||||||
Total liabilities
|
302,479
|
|
|
|
|
296,951
|
|
|
|
|
335,020
|
|
|
|
||||||||||||
Temporary equity
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Redeemable noncontrolling interests
|
172
|
|
|
|
|
161
|
|
|
|
|
181
|
|
|
|
||||||||||||
Permanent equity
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total BNY Mellon shareholders’ equity
|
39,404
|
|
|
|
|
38,507
|
|
|
|
|
38,379
|
|
|
|
||||||||||||
Noncontrolling interests
|
460
|
|
|
|
|
581
|
|
|
|
|
640
|
|
|
|
||||||||||||
Total permanent equity
|
39,864
|
|
|
|
|
39,088
|
|
|
|
|
39,019
|
|
|
|
||||||||||||
Total liabilities, temporary equity and permanent equity
|
$
|
342,515
|
|
|
|
|
$
|
336,200
|
|
|
|
|
$
|
374,220
|
|
|
|
|||||||||
Net interest revenue (FTE) – Non-GAAP
|
|
$
|
838
|
|
|
|
|
$
|
804
|
|
|
|
|
$
|
780
|
|
|
|||||||||
Net interest margin (FTE) – Non-GAAP
|
|
|
1.16
|
%
|
|
|
|
1.14
|
%
|
|
|
|
0.98
|
%
|
||||||||||||
Less: Tax equivalent adjustment
(b)
|
|
12
|
|
|
|
|
12
|
|
|
|
|
13
|
|
|
||||||||||||
Net interest revenue – GAAP
|
|
$
|
826
|
|
|
|
|
$
|
792
|
|
|
|
|
$
|
767
|
|
|
|||||||||
Net interest margin – GAAP
|
|
|
1.14
|
%
|
|
|
|
1.13
|
%
|
|
|
|
0.97
|
%
|
Note:
|
Interest and average rates were calculated on a taxable equivalent basis using dollar amounts in thousands and actual number of days in the year.
|
(a)
|
Interest income and average yield are presented on an FTE basis (Non-GAAP).
|
(b)
|
Based on the applicable tax rate of 35%.
|
Average balances and interest rates
|
Year-to-date
|
||||||||||||||||
|
June 30, 2017
|
|
June 30, 2016
|
||||||||||||||
(dollar amounts in millions, presented on an FTE basis)
|
Average balance
|
|
Interest
|
|
Average rates
|
|
|
Average balance
|
|
Interest
|
|
Average rates
|
|
||||
Assets
|
|
|
|
|
|
|
|
||||||||||
Interest-earning assets:
|
|
|
|
|
|
|
|
||||||||||
Interest-bearing deposits with banks (primarily foreign banks)
|
$
|
14,773
|
|
$
|
49
|
|
0.66
|
%
|
|
$
|
14,651
|
|
$
|
50
|
|
0.68
|
%
|
Interest-bearing deposits held at the Federal Reserve and other central banks
|
67,689
|
|
128
|
|
0.38
|
|
|
93,440
|
|
133
|
|
0.29
|
|
||||
Federal funds sold and securities purchased under resale agreements
|
26,097
|
|
153
|
|
1.18
|
|
|
24,718
|
|
105
|
|
0.85
|
|
||||
Margin loans
|
15,403
|
|
162
|
|
2.12
|
|
|
18,566
|
|
127
|
|
1.37
|
|
||||
Non-margin loans:
|
|
|
|
|
|
|
|
||||||||||
Domestic offices
|
30,848
|
|
395
|
|
2.57
|
|
|
28,960
|
|
322
|
|
2.23
|
|
||||
Foreign offices
|
13,297
|
|
122
|
|
1.85
|
|
|
13,214
|
|
97
|
|
1.48
|
|
||||
Total non-margin loans
|
44,145
|
|
517
|
|
2.35
|
|
|
42,174
|
|
419
|
|
2.00
|
|
||||
Securities:
|
|
|
|
|
|
|
|
||||||||||
U.S. Government obligations
|
26,083
|
|
210
|
|
1.62
|
|
|
24,526
|
|
184
|
|
1.50
|
|
||||
U.S. Government agency obligations
|
58,202
|
|
561
|
|
1.93
|
|
|
56,008
|
|
487
|
|
1.74
|
|
||||
State and political subdivisions – tax-exempt
|
3,335
|
|
52
|
|
3.10
|
|
|
3,879
|
|
57
|
|
2.89
|
|
||||
Other securities
|
28,393
|
|
169
|
|
1.20
|
|
|
33,858
|
|
207
|
|
1.23
|
|
||||
Trading securities
|
2,355
|
|
35
|
|
2.98
|
|
|
2,736
|
|
31
|
|
2.28
|
|
||||
Total securities
|
118,368
|
|
1,027
|
|
1.74
|
|
|
121,007
|
|
966
|
|
1.60
|
|
||||
Total interest-earning assets
(a)
|
$
|
286,475
|
|
$
|
2,036
|
|
1.43
|
%
|
|
$
|
314,556
|
|
$
|
1,800
|
|
1.15
|
%
|
Allowance for loan losses
|
(167
|
)
|
|
|
|
(160
|
)
|
|
|
||||||||
Cash and due from banks
|
5,035
|
|
|
|
|
4,010
|
|
|
|
||||||||
Other assets
|
47,019
|
|
|
|
|
49,704
|
|
|
|
||||||||
Assets of consolidated investment management funds
|
1,013
|
|
|
|
|
1,277
|
|
|
|
||||||||
Total assets
|
$
|
339,375
|
|
|
|
|
$
|
369,387
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||||
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
||||||||||
Interest-bearing deposits:
|
|
|
|
|
|
|
|
||||||||||
Money market rate accounts
|
$
|
7,444
|
|
$
|
2
|
|
0.05
|
%
|
|
$
|
7,332
|
|
$
|
2
|
|
0.06
|
%
|
Savings
|
1,054
|
|
4
|
|
0.68
|
|
|
1,205
|
|
2
|
|
0.33
|
|
||||
Demand deposits
|
5,515
|
|
3
|
|
0.13
|
|
|
1,327
|
|
3
|
|
0.43
|
|
||||
Time deposits
|
35,091
|
|
26
|
|
0.15
|
|
|
44,653
|
|
10
|
|
0.05
|
|
||||
Foreign offices
|
91,980
|
|
6
|
|
0.01
|
|
|
109,052
|
|
10
|
|
0.02
|
|
||||
Total interest-bearing deposits
|
141,084
|
|
41
|
|
0.06
|
|
|
163,569
|
|
27
|
|
0.03
|
|
||||
Federal funds purchased and securities sold under repurchase agreements
|
18,480
|
|
62
|
|
0.67
|
|
|
18,446
|
|
22
|
|
0.24
|
|
||||
Trading liabilities
|
1,063
|
|
4
|
|
0.73
|
|
|
606
|
|
3
|
|
1.01
|
|
||||
Other borrowed funds
|
1,009
|
|
6
|
|
1.13
|
|
|
803
|
|
4
|
|
0.97
|
|
||||
Commercial paper
|
2,190
|
|
10
|
|
0.91
|
|
|
1,902
|
|
4
|
|
0.37
|
|
||||
Payables to customers and broker-dealers
|
19,789
|
|
23
|
|
0.23
|
|
|
16,868
|
|
6
|
|
0.07
|
|
||||
Long-term debt
|
26,644
|
|
248
|
|
1.86
|
|
|
22,197
|
|
174
|
|
1.56
|
|
||||
Total interest-bearing liabilities
|
$
|
210,259
|
|
$
|
394
|
|
0.38
|
%
|
|
$
|
224,391
|
|
$
|
240
|
|
0.21
|
%
|
Total noninterest-bearing deposits
|
73,721
|
|
|
|
|
83,489
|
|
|
|
||||||||
Other liabilities
|
15,573
|
|
|
|
|
22,323
|
|
|
|
||||||||
Liabilities and obligations of consolidated investment management funds
|
177
|
|
|
|
|
256
|
|
|
|
||||||||
Total liabilities
|
299,730
|
|
|
|
|
330,459
|
|
|
|
||||||||
Temporary equity
|
|
|
|
|
|
|
|
||||||||||
Redeemable noncontrolling interests
|
167
|
|
|
|
|
186
|
|
|
|
||||||||
Permanent equity
|
|
|
|
|
|
|
|
||||||||||
Total BNY Mellon shareholders’ equity
|
38,958
|
|
|
|
|
38,091
|
|
|
|
||||||||
Noncontrolling interests
|
520
|
|
|
|
|
651
|
|
|
|
||||||||
Total permanent equity
|
39,478
|
|
|
|
|
38,742
|
|
|
|
||||||||
Total liabilities, temporary equity and permanent equity
|
$
|
339,375
|
|
|
|
|
$
|
369,387
|
|
|
|
||||||
Net interest revenue (FTE) – Non-GAAP
|
|
$
|
1,642
|
|
|
|
|
$
|
1,560
|
|
|
||||||
Net interest margin (FTE) – Non-GAAP
|
|
|
1.15
|
%
|
|
|
|
1.00
|
%
|
||||||||
Less: Tax equivalent adjustment
(b)
|
|
24
|
|
|
|
|
27
|
|
|
||||||||
Net interest revenue – GAAP
|
|
$
|
1,618
|
|
|
|
|
$
|
1,533
|
|
|
||||||
Net interest margin – GAAP
|
|
|
1.14
|
%
|
|
|
|
0.98
|
%
|
Note:
|
Interest and average rates were calculated on a taxable equivalent basis using dollar amounts in thousands and actual number of days in the year.
|
(a)
|
Interest income and average yield are presented on an FTE basis (Non-GAAP).
|
(b)
|
Based on the applicable tax rate of 35%.
|
Noninterest expense
|
|
|
|
|
|
|
|
|
YTD17
|
|
||||||||||||
|
|
|
|
2Q17 vs.
|
|
|
|
vs.
|
||||||||||||||
(dollars in millions)
|
2Q17
|
|
1Q17
|
|
2Q16
|
|
1Q17
|
|
2Q16
|
|
|
YTD17
|
|
YTD16
|
|
YTD16
|
|
|||||
Staff
|
$
|
1,417
|
|
$
|
1,472
|
|
$
|
1,412
|
|
(4
|
)%
|
—
|
%
|
|
$
|
2,889
|
|
$
|
2,871
|
|
1
|
%
|
Professional, legal and other purchased services
|
319
|
|
312
|
|
290
|
|
2
|
|
10
|
|
|
631
|
|
568
|
|
11
|
|
|||||
Software
|
173
|
|
166
|
|
160
|
|
4
|
|
8
|
|
|
339
|
|
314
|
|
8
|
|
|||||
Net occupancy
|
139
|
|
136
|
|
152
|
|
2
|
|
(9
|
)
|
|
275
|
|
294
|
|
(6
|
)
|
|||||
Distribution and servicing
|
104
|
|
100
|
|
102
|
|
4
|
|
2
|
|
|
204
|
|
202
|
|
1
|
|
|||||
Sub-custodian
|
65
|
|
64
|
|
70
|
|
2
|
|
(7
|
)
|
|
129
|
|
129
|
|
—
|
|
|||||
Furniture and equipment
|
59
|
|
57
|
|
63
|
|
4
|
|
(6
|
)
|
|
116
|
|
128
|
|
(9
|
)
|
|||||
Bank assessment charges
(a)
|
59
|
|
57
|
|
52
|
|
4
|
|
13
|
|
|
116
|
|
105
|
|
10
|
|
|||||
Business development
|
63
|
|
51
|
|
65
|
|
24
|
|
(3
|
)
|
|
114
|
|
122
|
|
(7
|
)
|
|||||
Other
(a)
|
192
|
|
167
|
|
188
|
|
15
|
|
2
|
|
|
359
|
|
376
|
|
(5
|
)
|
|||||
Amortization of intangible assets
|
53
|
|
52
|
|
59
|
|
2
|
|
(10
|
)
|
|
105
|
|
116
|
|
(9
|
)
|
|||||
M&I, litigation and restructuring charges
|
12
|
|
8
|
|
7
|
|
N/M
|
N/M
|
|
20
|
|
24
|
|
N/M
|
||||||||
Total noninterest expense – GAAP
|
$
|
2,655
|
|
$
|
2,642
|
|
$
|
2,620
|
|
—
|
%
|
1
|
%
|
|
$
|
5,297
|
|
$
|
5,249
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Staff expense as a percentage of total revenue
|
36
|
%
|
38
|
%
|
37
|
%
|
|
|
|
37
|
%
|
38
|
%
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Full-time employees at period end
|
52,800
|
|
52,600
|
|
52,200
|
|
—
|
%
|
1
|
%
|
|
52,800
|
|
52,200
|
|
1
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Memo:
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Adjusted total noninterest expense excluding amortization of intangible assets and M&I, litigation and restructuring charges – Non-GAAP
|
$
|
2,590
|
|
$
|
2,582
|
|
$
|
2,554
|
|
—
|
%
|
1
|
%
|
|
$
|
5,172
|
|
$
|
5,109
|
|
1
|
%
|
(a)
|
In the first quarter of 2017, we began disclosing bank assessment charges on a quarterly basis. The bank assessment charges were previously included in other expense. All prior periods were reclassified.
|
Key market metrics
|
|
|
|
|
|
|
|
|
|
|
YTD17
|
|
||||||||||||||||
|
|
|
|
|
|
2Q17 vs.
|
|
|
|
vs.
|
||||||||||||||||||
|
2Q17
|
|
1Q17
|
|
4Q16
|
|
3Q16
|
|
2Q16
|
|
1Q17
|
|
2Q16
|
|
|
YTD17
|
|
YTD16
|
|
YTD16
|
|
|||||||
Standard & Poor’s (“S&P”) 500 Index
(a)
|
2423
|
|
2363
|
|
2239
|
|
2168
|
|
2099
|
|
3 %
|
|
15 %
|
|
|
2423
|
|
2099
|
|
15 %
|
|
|||||||
S&P 500 Index – daily average
|
2398
|
|
2326
|
|
2185
|
|
2162
|
|
2075
|
|
3
|
|
16
|
|
|
2362
|
|
2015
|
|
17
|
|
|||||||
FTSE 100 Index
(a)
|
7313
|
|
7323
|
|
7143
|
|
6899
|
|
6504
|
|
—
|
|
12
|
|
|
7313
|
|
6504
|
|
12
|
|
|||||||
FTSE 100 Index – daily average
|
7391
|
|
7274
|
|
6923
|
|
6765
|
|
6204
|
|
2
|
|
19
|
|
|
7331
|
|
6097
|
|
20
|
|
|||||||
MSCI EAFE
(a)
|
1883
|
|
1793
|
|
1684
|
|
1702
|
|
1608
|
|
5
|
|
17
|
|
|
1883
|
|
1608
|
|
17
|
|
|||||||
MSCI EAFE – daily average
|
1856
|
|
1749
|
|
1660
|
|
1677
|
|
1648
|
|
6
|
|
13
|
|
|
1803
|
|
1620
|
|
11
|
|
|||||||
Barclays Capital Global Aggregate Bond
SM
Index
(a)(b)
|
471
|
|
459
|
|
451
|
|
486
|
|
482
|
|
3
|
|
(2
|
)
|
|
471
|
|
482
|
|
(2
|
)
|
|||||||
NYSE and NASDAQ share volume
(in billions)
|
199
|
|
186
|
|
189
|
|
186
|
|
203
|
|
7
|
|
(2
|
)
|
|
385
|
|
422
|
|
(9
|
)
|
|||||||
JPMorgan G7 Volatility Index – daily average
(c)
|
7.98
|
|
10.10
|
|
10.24
|
|
10.19
|
|
11.12
|
|
(21
|
)
|
(28
|
)
|
|
9.04
|
|
10.86
|
|
(17
|
)
|
|||||||
Average interest on excess reserves paid by the Federal Reserve
|
1.04
|
%
|
0.79
|
%
|
0.55
|
%
|
0.50
|
%
|
0.50
|
%
|
25 bps
|
|
54 bps
|
|
|
0.92
|
%
|
0.50
|
%
|
42 bps
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Foreign exchange rates vs. U.S. dollar:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
British pound
(a)
|
$
|
1.30
|
|
$
|
1.25
|
|
$
|
1.23
|
|
$
|
1.30
|
|
$
|
1.34
|
|
4 %
|
|
(3) %
|
|
|
$
|
1.30
|
|
$
|
1.34
|
|
(3) %
|
|
British pound – average rate
|
1.28
|
|
1.24
|
|
1.24
|
|
1.31
|
|
1.43
|
|
3
|
|
(10
|
)
|
|
1.26
|
|
1.43
|
|
(12
|
)
|
|||||||
Euro
(a)
|
1.14
|
|
1.07
|
|
1.05
|
|
1.12
|
|
1.11
|
|
7
|
|
3
|
|
|
1.14
|
|
1.11
|
|
3
|
|
|||||||
Euro – average rate
|
1.10
|
|
1.07
|
|
1.08
|
|
1.12
|
|
1.13
|
|
3
|
|
(3
|
)
|
|
1.08
|
|
1.12
|
|
(4
|
)
|
(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.
|
(a)
|
Total fee and other revenue includes the impact of the consolidated investment management funds, net of noncontrolling interests.
See page
55
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
52
for the reconciliation of this Non-GAAP measure.
|
AUM trends
(a)
|
|
|
|
|
|
2Q17 vs.
|
|||||||||||||
(dollars in billions)
|
2Q17
|
|
1Q17
|
|
4Q16
|
|
3Q16
|
|
2Q16
|
|
1Q17
|
|
2Q16
|
|
|||||
AUM at period end, by product type:
|
|
|
|
|
|
|
|
||||||||||||
Equity
|
$
|
163
|
|
$
|
158
|
|
$
|
153
|
|
$
|
156
|
|
$
|
152
|
|
3
|
%
|
7
|
%
|
Fixed income
|
198
|
|
191
|
|
186
|
|
194
|
|
192
|
|
4
|
|
3
|
|
|||||
Index
|
324
|
|
330
|
|
312
|
|
302
|
|
296
|
|
(2
|
)
|
9
|
|
|||||
Liability-driven investments
(b)
|
607
|
|
584
|
|
554
|
|
607
|
|
573
|
|
4
|
|
6
|
|
|||||
Multi-asset and alternative investments
|
192
|
|
188
|
|
181
|
|
189
|
|
183
|
|
2
|
|
5
|
|
|||||
Cash
|
287
|
|
276
|
|
262
|
|
267
|
|
268
|
|
4
|
|
7
|
|
|||||
Total AUM
|
$
|
1,771
|
|
$
|
1,727
|
|
$
|
1,648
|
|
$
|
1,715
|
|
$
|
1,664
|
|
3
|
%
|
6
|
%
|
|
|
|
|
|
|
|
|
||||||||||||
AUM at period end, by client type:
|
|
|
|
|
|
|
|
||||||||||||
Institutional
|
$
|
1,265
|
|
$
|
1,243
|
|
$
|
1,182
|
|
$
|
1,234
|
|
$
|
1,182
|
|
2
|
%
|
7
|
%
|
Mutual funds
|
418
|
|
397
|
|
381
|
|
396
|
|
398
|
|
5
|
|
5
|
|
|||||
Private client
|
88
|
|
87
|
|
85
|
|
85
|
|
84
|
|
1
|
|
5
|
|
|||||
Total AUM
|
$
|
1,771
|
|
$
|
1,727
|
|
$
|
1,648
|
|
$
|
1,715
|
|
$
|
1,664
|
|
3
|
%
|
6
|
%
|
|
|
|
|
|
|
|
|
||||||||||||
Changes in AUM:
|
|
|
|
|
|
|
|
||||||||||||
Beginning balance of AUM
|
$
|
1,727
|
|
$
|
1,648
|
|
$
|
1,715
|
|
$
|
1,664
|
|
$
|
1,639
|
|
|
|
||
Net inflows (outflows):
|
|
|
|
|
|
|
|
||||||||||||
Long-term strategies:
|
|
|
|
|
|
|
|
||||||||||||
Equity
|
(2
|
)
|
(4
|
)
|
(5
|
)
|
(6
|
)
|
(2
|
)
|
|
|
|||||||
Fixed income
|
2
|
|
2
|
|
(1
|
)
|
(1
|
)
|
(3
|
)
|
|
|
|||||||
Liability-driven investments
(b)
|
15
|
|
14
|
|
(7
|
)
|
4
|
|
15
|
|
|
|
|||||||
Multi-asset and alternative investments
|
1
|
|
2
|
|
3
|
|
7
|
|
2
|
|
|
|
|||||||
Total long-term active strategies inflows (outflows)
|
16
|
|
14
|
|
(10
|
)
|
4
|
|
12
|
|
|
|
|||||||
Index
|
(13
|
)
|
—
|
|
(1
|
)
|
(3
|
)
|
(17
|
)
|
|
|
|||||||
Total long-term strategies inflows (outflows)
|
3
|
|
14
|
|
(11
|
)
|
1
|
|
(5
|
)
|
|
|
|||||||
Short term strategies:
|
|
|
|
|
|
|
|
||||||||||||
Cash
|
11
|
|
13
|
|
(3
|
)
|
(1
|
)
|
4
|
|
|
|
|||||||
Total net inflows (outflows)
|
14
|
|
27
|
|
(14
|
)
|
—
|
|
(1
|
)
|
|
|
|||||||
Net market impact/other
|
1
|
|
41
|
|
(11
|
)
|
80
|
|
71
|
|
|
|
|||||||
Net currency impact
|
29
|
|
11
|
|
(42
|
)
|
(29
|
)
|
(47
|
)
|
|
|
|||||||
Acquisition
|
—
|
|
—
|
|
—
|
|
—
|
|
2
|
|
|
|
|||||||
Ending balance of AUM
|
$
|
1,771
|
|
$
|
1,727
|
|
$
|
1,648
|
|
$
|
1,715
|
|
$
|
1,664
|
|
3
|
%
|
6
|
%
|
(a)
|
Excludes securities lending cash management assets and assets managed in the Investment Services business.
|
(b)
|
Includes currency overlay AUM.
|
|
|
|
|
|
|
|
|
|
|
|
YTD17
|
|||||||||||||||||
(dollar amounts in millions, unless otherwise noted)
|
|
|
|
|
|
2Q17 vs.
|
|
|
|
vs.
|
||||||||||||||||||
2Q17
|
|
1Q17
|
|
4Q16
|
|
3Q16
|
|
2Q16
|
|
1Q17
|
|
2Q16
|
|
|
YTD17
|
|
YTD16
|
|
YTD16
|
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Investment services fees:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Asset servicing
|
$
|
1,061
|
|
$
|
1,038
|
|
$
|
1,043
|
|
$
|
1,039
|
|
$
|
1,043
|
|
2
|
%
|
2
|
%
|
|
$
|
2,099
|
|
$
|
2,059
|
|
2
|
%
|
Clearing services
|
393
|
|
375
|
|
354
|
|
347
|
|
350
|
|
5
|
|
12
|
|
|
768
|
|
698
|
|
10
|
|
|||||||
Issuer services
|
241
|
|
250
|
|
211
|
|
336
|
|
233
|
|
(4
|
)
|
3
|
|
|
491
|
|
477
|
|
3
|
|
|||||||
Treasury services
|
139
|
|
139
|
|
139
|
|
136
|
|
137
|
|
—
|
|
1
|
|
|
278
|
|
266
|
|
5
|
|
|||||||
Total investment services fees
|
1,834
|
|
1,802
|
|
1,747
|
|
1,858
|
|
1,763
|
|
2
|
|
4
|
|
|
3,636
|
|
3,500
|
|
4
|
|
|||||||
Foreign exchange and other trading revenue
|
145
|
|
153
|
|
157
|
|
177
|
|
161
|
|
(5
|
)
|
(10
|
)
|
|
298
|
|
329
|
|
(9
|
)
|
|||||||
Other
(a)
|
136
|
|
129
|
|
128
|
|
148
|
|
130
|
|
5
|
|
5
|
|
|
265
|
|
255
|
|
4
|
|
|||||||
Total fee and other revenue
|
2,115
|
|
2,084
|
|
2,032
|
|
2,183
|
|
2,054
|
|
1
|
|
3
|
|
|
4,199
|
|
4,084
|
|
3
|
|
|||||||
Net interest revenue
|
761
|
|
707
|
|
713
|
|
715
|
|
690
|
|
8
|
|
10
|
|
|
1,468
|
|
1,369
|
|
7
|
|
|||||||
Total revenue
|
2,876
|
|
2,791
|
|
2,745
|
|
2,898
|
|
2,744
|
|
3
|
|
5
|
|
|
5,667
|
|
5,453
|
|
4
|
|
|||||||
Provision for credit losses
|
(3
|
)
|
—
|
|
—
|
|
1
|
|
(7
|
)
|
N/M
|
N/M
|
|
(3
|
)
|
7
|
|
N/M
|
||||||||||
Noninterest expense (ex. amortization of intangible assets)
|
1,889
|
|
1,812
|
|
1,786
|
|
1,812
|
|
1,819
|
|
4
|
|
4
|
|
|
3,701
|
|
3,589
|
|
3
|
|
|||||||
Amortization of intangible assets
|
38
|
|
37
|
|
38
|
|
39
|
|
40
|
|
3
|
|
(5
|
)
|
|
75
|
|
78
|
|
(4
|
)
|
|||||||
Total noninterest expense
|
1,927
|
|
1,849
|
|
1,824
|
|
1,851
|
|
1,859
|
|
4
|
|
4
|
|
|
3,776
|
|
3,667
|
|
3
|
|
|||||||
Income before taxes
|
$
|
952
|
|
$
|
942
|
|
$
|
921
|
|
$
|
1,046
|
|
$
|
892
|
|
1
|
%
|
7
|
%
|
|
$
|
1,894
|
|
$
|
1,779
|
|
6
|
%
|
Income before taxes (ex. amortization of intangible assets)
–
Non-GAAP
|
$
|
990
|
|
$
|
979
|
|
$
|
959
|
|
$
|
1,085
|
|
$
|
932
|
|
1
|
%
|
6
|
%
|
|
$
|
1,969
|
|
$
|
1,857
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Pre-tax operating margin
|
33
|
%
|
34
|
%
|
34
|
%
|
36
|
%
|
33
|
%
|
|
|
|
33
|
%
|
33
|
%
|
|
|
|||||||||
Adjusted pre-tax operating margin (ex. provision for credit losses and amortization of intangible assets)
–
Non-GAAP
|
34
|
%
|
35
|
%
|
35
|
%
|
37
|
%
|
34
|
%
|
|
|
|
35
|
%
|
34
|
%
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Investment services fees as a percentage of noninterest expense (ex. amortization of intangible assets)
|
97
|
%
|
99
|
%
|
98
|
%
|
103
|
%
|
97
|
%
|
|
|
|
98
|
%
|
98
|
%
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Securities lending revenue
|
$
|
42
|
|
$
|
40
|
|
$
|
44
|
|
$
|
42
|
|
$
|
42
|
|
5
|
%
|
—
|
%
|
|
$
|
82
|
|
$
|
84
|
|
(2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Metrics:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Average loans
|
$
|
40,931
|
|
$
|
42,818
|
|
$
|
45,832
|
|
$
|
44,329
|
|
$
|
43,786
|
|
(4
|
)%
|
(7
|
)%
|
|
$
|
41,870
|
|
$
|
44,395
|
|
(6
|
)%
|
Average deposits
|
$
|
200,417
|
|
$
|
197,690
|
|
$
|
213,531
|
|
$
|
220,316
|
|
$
|
221,998
|
|
1
|
%
|
(10
|
)%
|
|
$
|
199,206
|
|
$
|
218,852
|
|
(9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
AUC/A at period end
(in trillions) (b)
|
$
|
31.1
|
|
$
|
30.6
|
|
$
|
29.9
|
|
$
|
30.5
|
|
$
|
29.5
|
|
2
|
%
|
5
|
%
|
|
$
|
31.1
|
|
$
|
29.5
|
|
5
|
%
|
Market value of securities on loan at period end
(in billions) (c)
|
$
|
336
|
|
$
|
314
|
|
$
|
296
|
|
$
|
288
|
|
$
|
278
|
|
7
|
%
|
21
|
%
|
|
$
|
336
|
|
$
|
278
|
|
21
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Asset servicing:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Estimated new business wins
(AUC/A)
(in billions)
|
$
|
152
|
|
$
|
109
|
|
$
|
141
|
|
$
|
150
|
|
$
|
167
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Clearing services:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Average active clearing accounts (U.S. platform) (
in thousands)
|
6,159
|
|
6,058
|
|
5,960
|
|
5,942
|
|
5,946
|
|
2
|
%
|
4
|
%
|
|
|
|
|
||||||||||
Average long-term mutual fund assets (U.S. platform)
|
$
|
480,532
|
|
$
|
460,977
|
|
$
|
438,460
|
|
$
|
443,112
|
|
$
|
431,150
|
|
4
|
%
|
11
|
%
|
|
|
|
|
|||||
Average investor margin loans (U.S. platform)
|
$
|
9,812
|
|
$
|
10,740
|
|
$
|
10,562
|
|
$
|
10,834
|
|
$
|
10,633
|
|
(9
|
)%
|
(8
|
)%
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Depositary Receipts:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Number of sponsored programs
|
1,025
|
|
1,050
|
|
1,062
|
|
1,094
|
|
1,112
|
|
(2
|
)%
|
(8
|
)%
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Broker-Dealer:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Average tri-party repo balances (
in billions)
|
$
|
2,498
|
|
$
|
2,373
|
|
$
|
2,307
|
|
$
|
2,212
|
|
$
|
2,108
|
|
5
|
%
|
19
|
%
|
|
|
|
|
(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
June 30, 2017
,
March 31, 2017
,
Dec. 31, 2016
and
Sept. 30, 2016
and
$1.1 trillion
at
June 30, 2016
.
|
(c)
|
Represents the total amount of securities on loan in our agency securities lending program managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled
$66 billion
at
June 30, 2017
,
$65 billion
at
March 31, 2017
,
$63 billion
at
Dec. 31, 2016
,
$64 billion
at
Sept. 30, 2016
and
$56 billion
at
June 30, 2016
.
|
•
|
We are a leader in both global and U.S. government securities clearance. We provide services to settle securities transactions in approximately 100 markets.
|
•
|
We are a leader in servicing tri-party repo collateral with approximately $2.5 trillion serviced globally and
approximately $1.6 trillion, or approximately 86%, of the $1.9 trillion tri-party repo market in the U.S.
|
•
|
Our agency securities lending program is one of the largest lenders of U.S. and non-U.S. securities, servicing a lendable asset pool of approximately $3.2 trillion in 33 separate markets.
|
•
|
We serve as trustee and/or paying agent on more than 50,000 debt-related issuances globally.
|
•
|
As one of the largest providers of depositary receipts services in the world, we served as depositary for
1,025
sponsored American and global depositary receipt programs at
June 30, 2017
, acting in partnership with leading companies from 60 countries.
|
•
|
Asset servicing fees (custody, fund services, broker-dealer services, securities finance, collateral and liquidity services) increased
2%
compared with the
second quarter of 2016
and
2%
(unannualized) compared with the
first quarter of 2017
. Both increases primarily reflect
net new business, including growth of collateral management solutions, and higher equity market values. The increase compared with the second quarter of 2016 was partially offset by the unfavorable impact of a stronger U.S. dollar and the impact of downsizing the retail UK transfer agency business.
|
•
|
Clearing services fees increased
12%
compared with the
second quarter of 2016
and
5%
(unannualized) compared with the
first quarter of 2017
. Both increases primarily reflect
higher
|
•
|
Issuer services fees (Depositary Receipts and Corporate Trust) increased
3%
compared with the
second quarter of 2016
and decreased
4%
(unannualized) compared with the
first quarter of 2017
. The increase primarily reflects
higher Depositary Receipts revenue. The decrease primarily reflects seasonality in Depositary Receipts revenue.
|
•
|
Treasury services fees (global payments, trade finance and cash management) increased
1%
compared with the
second quarter of 2016
and was unchanged compared with the
first quarter of 2017
. The increase primarily reflects
higher payment volumes, partially offset by higher compensating balance credits provided to clients, which reduces fee revenue and increases net interest revenue.
|
|
|
|
|
|
|
|
|
||||||||||||||
(in millions)
|
2Q17
|
|
1Q17
|
|
4Q16
|
|
3Q16
|
|
2Q16
|
|
YTD17
|
|
YTD16
|
|
|||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||||||||
Fee and other revenue
|
$
|
113
|
|
$
|
72
|
|
$
|
42
|
|
$
|
100
|
|
$
|
95
|
|
$
|
185
|
|
$
|
224
|
|
Net interest (expense) revenue
|
(22
|
)
|
(1
|
)
|
38
|
|
(23
|
)
|
(5
|
)
|
(23
|
)
|
(1
|
)
|
|||||||
Total revenue
|
91
|
|
71
|
|
80
|
|
77
|
|
90
|
|
162
|
|
223
|
|
|||||||
Provision for credit losses
|
(4
|
)
|
(8
|
)
|
1
|
|
(20
|
)
|
(3
|
)
|
(12
|
)
|
(6
|
)
|
|||||||
Noninterest expense (ex. M&I and restructuring charges)
|
28
|
|
106
|
|
108
|
|
88
|
|
53
|
|
134
|
|
194
|
|
|||||||
M&I and restructuring charges
|
—
|
|
1
|
|
2
|
|
—
|
|
3
|
|
1
|
|
2
|
|
|||||||
Total noninterest expense
|
28
|
|
107
|
|
110
|
|
88
|
|
56
|
|
135
|
|
196
|
|
|||||||
Income (loss) before taxes
|
$
|
67
|
|
$
|
(28
|
)
|
$
|
(31
|
)
|
$
|
9
|
|
$
|
37
|
|
$
|
39
|
|
$
|
33
|
|
Income (loss) before taxes (ex. M&I and restructuring charges)
–
Non-GAAP
|
$
|
67
|
|
$
|
(27
|
)
|
$
|
(29
|
)
|
$
|
9
|
|
$
|
40
|
|
$
|
40
|
|
$
|
35
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Average loans and leases
|
$
|
1,302
|
|
$
|
1,341
|
|
$
|
2,142
|
|
$
|
1,941
|
|
$
|
1,703
|
|
$
|
1,320
|
|
$
|
1,810
|
|
Critical policy
|
Reference
|
Allowance for loan losses and allowance for lending-related commitments
|
2016 Annual Report, pages 29 - 31.
|
Fair value of financial instruments and derivatives
|
2016 Annual Report, pages 31 - 32.
|
OTTI
|
2016 Annual Report, page 33.
|
Pension accounting
|
2016 Annual Report, pages 34 - 36.
|
Investment securities
portfolio
(dollars in millions)
|
March 31, 2017
|
|
|
2Q17
change in
unrealized
gain (loss)
|
|
June 30, 2017
|
Fair value
as a % of amortized
cost
(a)
|
|
Unrealized
gain (loss)
|
|
|
Ratings
(b)
|
||||||||||||||||||
|
|
|
|
BB+
and
lower
|
|
|||||||||||||||||||||||||
Fair
value
|
|
|
Amortized
cost
|
|
Fair
value
|
|
|
|
AAA/
AA-
|
A+/
A-
|
BBB+/
BBB-
|
Not
rated
|
||||||||||||||||||
Agency RMBS
|
$
|
47,680
|
|
|
$
|
79
|
|
$
|
49,829
|
|
$
|
49,544
|
|
|
99
|
%
|
$
|
(285
|
)
|
|
100
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
U.S. Treasury
|
26,149
|
|
|
47
|
|
25,417
|
|
25,325
|
|
|
100
|
|
(92
|
)
|
|
100
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Sovereign debt/sovereign guaranteed
(c)
|
13,885
|
|
|
(14
|
)
|
13,880
|
|
14,025
|
|
|
101
|
|
145
|
|
|
74
|
|
6
|
|
19
|
|
1
|
|
—
|
|
|||||
Non-agency RMBS
(d)
|
1,298
|
|
|
9
|
|
948
|
|
1,239
|
|
|
82
|
|
291
|
|
|
—
|
|
1
|
|
3
|
|
87
|
|
9
|
|
|||||
Non-agency RMBS
|
670
|
|
|
8
|
|
597
|
|
627
|
|
|
96
|
|
30
|
|
|
7
|
|
4
|
|
15
|
|
73
|
|
1
|
|
|||||
European floating rate
notes
(e)
|
639
|
|
|
3
|
|
528
|
|
523
|
|
|
98
|
|
(5
|
)
|
|
70
|
|
30
|
|
—
|
|
—
|
|
—
|
|
|||||
Commercial MBS
|
8,796
|
|
|
20
|
|
10,597
|
|
10,574
|
|
|
100
|
|
(23
|
)
|
|
99
|
|
1
|
|
—
|
|
—
|
|
—
|
|
|||||
State and political subdivisions
|
3,322
|
|
|
21
|
|
3,268
|
|
3,299
|
|
|
101
|
|
31
|
|
|
81
|
|
16
|
|
—
|
|
—
|
|
3
|
|
|||||
Foreign covered bonds
(f)
|
2,144
|
|
|
(4
|
)
|
2,458
|
|
2,471
|
|
|
101
|
|
13
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Corporate bonds
|
1,366
|
|
|
4
|
|
1,309
|
|
1,318
|
|
|
101
|
|
9
|
|
|
17
|
|
70
|
|
13
|
|
—
|
|
—
|
|
|||||
CLOs
|
2,569
|
|
|
(1
|
)
|
2,635
|
|
2,642
|
|
|
100
|
|
7
|
|
|
99
|
|
—
|
|
—
|
|
—
|
|
1
|
|
|||||
U.S. government agencies
|
1,985
|
|
|
—
|
|
2,196
|
|
2,210
|
|
|
101
|
|
14
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Consumer ABS
|
1,456
|
|
|
2
|
|
1,326
|
|
1,330
|
|
|
100
|
|
4
|
|
|
90
|
|
4
|
|
4
|
|
2
|
|
—
|
|
|||||
Other
(g)
|
3,553
|
|
|
—
|
|
3,746
|
|
3,758
|
|
|
100
|
|
12
|
|
|
79
|
|
19
|
|
—
|
|
—
|
|
2
|
|
|||||
Total investment securities
|
$
|
115,512
|
|
(h)
|
$
|
174
|
|
$
|
118,734
|
|
$
|
118,885
|
|
(h)
|
100
|
%
|
$
|
151
|
|
(h)(i)
|
93
|
%
|
3
|
%
|
3
|
%
|
1
|
%
|
—
|
%
|
(a)
|
Amortized cost before impairments.
|
(b)
|
Represents rating by S&P, or the equivalent.
|
(c)
|
Primarily consists of exposure to UK, France, Germany, Spain and the Netherlands.
|
(d)
|
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.
|
(e)
|
Includes RMBS and commercial MBS. Primarily consists of exposure to UK and the Netherlands.
|
(f)
|
Primarily consists of exposure to Canada, Norway, the Netherlands and UK.
|
(g)
|
Includes commercial paper with a fair value of
$701 million
and
$700 million
and money market funds with a fair value of
$853 million
and
$896 million
at
March 31, 2017
and
June 30, 2017
, respectively.
|
(h)
|
Includes net unrealized losses on derivatives hedging securities available-for-sale of
$134 million
at
March 31, 2017
and
$251 million
at
June 30, 2017
.
|
(i)
|
Unrealized gains of
$275 million
at
June 30, 2017
related to available-for-sale securities, net of hedges.
|
Net premium amortization and discount accretion of investment securities
(a)
|
|
|
|
|
|
||||||||||
(dollars in millions)
|
2Q17
|
|
1Q17
|
|
4Q16
|
|
3Q16
|
|
2Q16
|
|
|||||
Amortizable purchase premium (net of discount) relating to investment securities:
|
|
|
|
|
|
||||||||||
Balance at period end
|
$
|
2,111
|
|
$
|
2,058
|
|
$
|
2,188
|
|
$
|
2,267
|
|
$
|
2,251
|
|
Estimated average life remaining at period end
(in years)
|
5.0
|
|
4.9
|
|
4.9
|
|
4.5
|
|
4.4
|
|
|||||
Amortization
|
$
|
134
|
|
$
|
138
|
|
$
|
146
|
|
$
|
163
|
|
$
|
169
|
|
Accretable discount related to the prior restructuring of the investment securities portfolio:
|
|
|
|
|
|
||||||||||
Balance at period end
|
$
|
279
|
|
$
|
299
|
|
$
|
315
|
|
$
|
331
|
|
$
|
342
|
|
Estimated average life remaining at period end
(in years)
|
6.3
|
|
6.2
|
|
6.2
|
|
5.9
|
|
5.9
|
|
|||||
Accretion
|
$
|
25
|
|
$
|
25
|
|
$
|
25
|
|
$
|
24
|
|
$
|
26
|
|
(a)
|
Amortization of purchase premium decreases net interest revenue while accretion of discount increases net interest revenue. Both were recorded on a level yield basis.
|
(a)
|
Seventy percent
of these securities are in the AAA to AA- ratings category.
|
Total exposure – consolidated
|
June 30, 2017
|
|
Dec. 31, 2016
|
||||||||||||||||
(in billions)
|
Loans
|
|
Unfunded
commitments
|
|
Total
exposure
|
|
|
Loans
|
|
Unfunded
commitments
|
|
Total
exposure
|
|
||||||
Non-margin loans:
|
|
|
|
|
|
|
|
||||||||||||
Financial institutions
|
$
|
13.2
|
|
$
|
33.0
|
|
$
|
46.2
|
|
|
$
|
14.7
|
|
$
|
33.7
|
|
$
|
48.4
|
|
Commercial
|
2.9
|
|
17.0
|
|
19.9
|
|
|
2.6
|
|
17.5
|
|
20.1
|
|
||||||
Subtotal institutional
|
16.1
|
|
50.0
|
|
66.1
|
|
|
17.3
|
|
51.2
|
|
68.5
|
|
||||||
Wealth management loans and mortgages
|
16.1
|
|
1.4
|
|
17.5
|
|
|
15.6
|
|
1.3
|
|
16.9
|
|
||||||
Commercial real estate
|
5.0
|
|
3.4
|
|
8.4
|
|
|
4.7
|
|
3.2
|
|
7.9
|
|
||||||
Lease financings
|
1.4
|
|
—
|
|
1.4
|
|
|
1.7
|
|
—
|
|
1.7
|
|
||||||
Other residential mortgages
|
0.8
|
|
—
|
|
0.8
|
|
|
0.9
|
|
—
|
|
0.9
|
|
||||||
Overdrafts
|
6.9
|
|
—
|
|
6.9
|
|
|
5.5
|
|
—
|
|
5.5
|
|
||||||
Other
|
1.2
|
|
—
|
|
1.2
|
|
|
1.2
|
|
—
|
|
1.2
|
|
||||||
Subtotal non-margin loans
|
47.5
|
|
54.8
|
|
102.3
|
|
|
46.9
|
|
55.7
|
|
102.6
|
|
||||||
Margin loans
|
14.2
|
|
—
|
|
14.2
|
|
|
17.6
|
|
0.1
|
|
17.7
|
|
||||||
Total
|
$
|
61.7
|
|
$
|
54.8
|
|
$
|
116.5
|
|
|
$
|
64.5
|
|
$
|
55.8
|
|
$
|
120.3
|
|
Financial institutions
portfolio exposure
(dollar amounts in billions)
|
June 30, 2017
|
|
Dec. 31, 2016
|
||||||||||||||||||||
Loans
|
|
Unfunded
commitments
|
|
Total
exposure
|
|
% Inv.
grade
|
|
% due
<1 yr.
|
|
|
Loans
|
|
Unfunded
commitments
|
|
Total
exposure
|
|
|||||||
Securities industry
|
$
|
3.4
|
|
$
|
19.4
|
|
$
|
22.8
|
|
98
|
%
|
99
|
%
|
|
$
|
3.8
|
|
$
|
19.2
|
|
$
|
23.0
|
|
Banks
|
6.7
|
|
1.9
|
|
8.6
|
|
70
|
|
98
|
|
|
7.9
|
|
2.0
|
|
9.9
|
|
||||||
Asset managers
|
1.8
|
|
6.2
|
|
8.0
|
|
97
|
|
82
|
|
|
1.5
|
|
6.2
|
|
7.7
|
|
||||||
Insurance
|
0.2
|
|
3.3
|
|
3.5
|
|
99
|
|
16
|
|
|
0.1
|
|
3.8
|
|
3.9
|
|
||||||
Government
|
—
|
|
0.9
|
|
0.9
|
|
91
|
|
52
|
|
|
0.1
|
|
0.9
|
|
1.0
|
|
||||||
Other
|
1.1
|
|
1.3
|
|
2.4
|
|
98
|
|
45
|
|
|
1.3
|
|
1.6
|
|
2.9
|
|
||||||
Total
|
$
|
13.2
|
|
$
|
33.0
|
|
$
|
46.2
|
|
93
|
%
|
86
|
%
|
|
$
|
14.7
|
|
$
|
33.7
|
|
$
|
48.4
|
|
Commercial portfolio exposure
|
June 30, 2017
|
|
Dec. 31, 2016
|
||||||||||||||||||||
(dollar amounts in billions)
|
Loans
|
|
Unfunded
commitments
|
|
Total
exposure
|
|
% Inv.
grade
|
|
% due
<1 yr.
|
|
|
Loans
|
|
Unfunded
commitments
|
|
Total
exposure
|
|
||||||
Manufacturing
|
$
|
1.4
|
|
$
|
6.2
|
|
$
|
7.6
|
|
97
|
%
|
21
|
%
|
|
$
|
1.1
|
|
$
|
6.7
|
|
$
|
7.8
|
|
Energy and utilities
|
0.6
|
|
4.7
|
|
5.3
|
|
95
|
|
10
|
|
|
0.6
|
|
4.7
|
|
5.3
|
|
||||||
Services and other
|
0.7
|
|
4.4
|
|
5.1
|
|
95
|
|
24
|
|
|
0.6
|
|
4.3
|
|
4.9
|
|
||||||
Media and telecom
|
0.2
|
|
1.7
|
|
1.9
|
|
96
|
|
29
|
|
|
0.3
|
|
1.8
|
|
2.1
|
|
||||||
Total
|
$
|
2.9
|
|
$
|
17.0
|
|
$
|
19.9
|
|
96
|
%
|
20
|
%
|
|
$
|
2.6
|
|
$
|
17.5
|
|
$
|
20.1
|
|
Allowance for credit losses activity
|
June 30, 2017
|
|
March 31, 2017
|
|
Dec. 31, 2016
|
|
June 30, 2016
|
|
||||
(dollar amounts in millions)
|
||||||||||||
Non-margin loans
|
$
|
47,516
|
|
$
|
44,719
|
|
$
|
46,868
|
|
$
|
45,601
|
|
Margin loans
|
14,157
|
|
16,149
|
|
17,590
|
|
18,594
|
|
||||
Total loans
|
$
|
61,673
|
|
$
|
60,868
|
|
$
|
64,458
|
|
$
|
64,195
|
|
Beginning balance of allowance for credit losses
|
$
|
276
|
|
$
|
281
|
|
274
|
|
$
|
287
|
|
|
Provision for credit losses
|
(7
|
)
|
(5
|
)
|
7
|
|
(9
|
)
|
||||
Net recoveries (charge-offs):
|
|
|
|
|
||||||||
Other residential mortgages
|
1
|
|
—
|
|
—
|
|
1
|
|
||||
Foreign
|
—
|
|
—
|
|
—
|
|
1
|
|
||||
Net recoveries (charge-offs)
|
1
|
|
—
|
|
—
|
|
2
|
|
||||
Ending balance of allowance for credit losses
|
$
|
270
|
|
$
|
276
|
|
$
|
281
|
|
$
|
280
|
|
Allowance for loan losses
|
$
|
165
|
|
$
|
164
|
|
$
|
169
|
|
$
|
158
|
|
Allowance for lending-related commitments
|
105
|
|
112
|
|
112
|
|
122
|
|
||||
Allowance for loan losses as a percentage of total loans
|
0.27
|
%
|
0.27
|
%
|
0.26
|
%
|
0.25
|
%
|
||||
Allowance for loan losses as a percentage of non-margin loans
|
0.35
|
|
0.37
|
|
0.36
|
|
0.35
|
|
||||
Total allowance for credit losses as a percentage of total loans
|
0.44
|
|
0.45
|
|
0.44
|
|
0.44
|
|
||||
Total allowance for credit losses as a percentage of non-margin loans
|
0.57
|
|
0.62
|
|
0.60
|
|
0.61
|
|
Allocation of allowance
|
June 30, 2017
|
|
March 31, 2017
|
|
Dec. 31, 2016
|
|
June 30, 2016
|
|
|
Commercial
|
30
|
%
|
30
|
%
|
29
|
%
|
32
|
%
|
|
Commercial real estate
|
28
|
|
27
|
|
26
|
|
23
|
|
|
Foreign
|
13
|
|
13
|
|
13
|
|
13
|
|
|
Wealth management
(a)
|
9
|
|
9
|
|
8
|
|
7
|
|
|
Other residential mortgages
|
8
|
|
9
|
|
10
|
|
10
|
|
|
Financial institutions
|
8
|
|
8
|
|
9
|
|
10
|
|
|
Lease financing
|
4
|
|
4
|
|
5
|
|
5
|
|
|
Total
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
(a)
|
Includes the allowance for wealth management mortgages.
|
Nonperforming assets
|
June 30, 2017
|
|
March 31, 2017
|
|
Dec. 31, 2016
|
|
|||
(dollars in millions)
|
|||||||||
Nonperforming loans:
|
|
|
|
||||||
Other residential mortgages
|
$
|
84
|
|
$
|
88
|
|
$
|
91
|
|
Wealth management loans and mortgages
|
10
|
|
10
|
|
8
|
|
|||
Financial institutions
|
2
|
|
—
|
|
—
|
|
|||
Lease financings
|
—
|
|
—
|
|
4
|
|
|||
Total nonperforming loans
|
96
|
|
98
|
|
103
|
|
|||
Other assets owned
|
4
|
|
9
|
|
4
|
|
|||
Total nonperforming assets
|
$
|
100
|
|
$
|
107
|
|
$
|
107
|
|
Nonperforming assets ratio
|
0.16
|
%
|
0.18
|
%
|
0.17
|
%
|
|||
Nonperforming assets ratio, excluding margin loans
|
0.21
|
|
0.24
|
|
0.23
|
|
|||
Allowance for loan losses/nonperforming loans
|
171.9
|
|
167.3
|
|
164.1
|
|
|||
Allowance for loan losses/nonperforming assets
|
165.0
|
|
153.3
|
|
157.9
|
|
|||
Total allowance for credit losses/nonperforming loans
|
281.3
|
|
281.6
|
|
272.8
|
|
|||
Total allowance for credit losses/nonperforming assets
|
270.0
|
|
257.9
|
|
262.6
|
|
Nonperforming assets activity
|
June 30, 2017
|
|
March 31, 2017
|
|
Dec. 31, 2016
|
|
|||
(in millions)
|
|||||||||
Balance at beginning of quarter
|
$
|
107
|
|
$
|
107
|
|
$
|
109
|
|
Additions
|
2
|
|
9
|
|
4
|
|
|||
Return to accrual status
|
—
|
|
(4
|
)
|
—
|
|
|||
Charge-offs
|
—
|
|
(1
|
)
|
—
|
|
|||
Paydowns/sales
|
(9
|
)
|
(4
|
)
|
(6
|
)
|
|||
Balance at end of quarter
|
$
|
100
|
|
$
|
107
|
|
$
|
107
|
|
Federal funds purchased and securities sold under
repurchase agreements
|
|||||||||
|
Quarter ended
|
||||||||
(dollars in millions)
|
June 30, 2017
|
|
March 31, 2017
|
|
June 30, 2016
|
|
|||
Maximum month-end balance during the quarter
|
$
|
19,786
|
|
$
|
18,703
|
|
$
|
23,355
|
|
Average daily balance
|
$
|
17,970
|
|
$
|
18,995
|
|
$
|
18,204
|
|
Weighted-average rate during the quarter
|
0.84
|
%
|
0.51
|
%
|
0.28
|
%
|
|||
Ending balance
|
$
|
10,934
|
|
$
|
11,149
|
|
$
|
7,611
|
|
Weighted-average rate at period end
|
0.93
|
%
|
0.53
|
%
|
0.34
|
%
|
(a)
|
The weighted-average rate is calculated based on, and is applied to, the average interest-bearing payables to customers and broker-dealers, which were
$20,609 million
in the
second quarter of 2017
,
$18,961 million
in the
first quarter of 2017
and
$16,935 million
in the
second quarter of 2016
.
|
Commercial paper
|
Quarter ended
|
||||||||
(dollars in millions)
|
June 30, 2017
|
|
March 31, 2017
|
|
June 30, 2016
|
|
|||
Maximum month-end balance during the quarter
|
$
|
2,193
|
|
$
|
2,642
|
|
$
|
4,950
|
|
Average daily balance
|
$
|
2,215
|
|
$
|
2,164
|
|
$
|
3,781
|
|
Weighted-average rate during the quarter
|
0.95
|
%
|
0.88
|
%
|
0.37
|
%
|
|||
Ending balance
|
$
|
876
|
|
$
|
2,543
|
|
$
|
—
|
|
Weighted-average rate at period end
|
0.98
|
%
|
0.93
|
%
|
—
|
%
|
Other borrowed funds
|
Quarter ended
|
||||||||
(dollars in millions)
|
June 30, 2017
|
|
March 31, 2017
|
|
June 30, 2016
|
|
|||
Maximum month-end balance during the quarter
|
$
|
2,379
|
|
$
|
1,173
|
|
$
|
1,098
|
|
Average daily balance
|
$
|
1,193
|
|
$
|
822
|
|
$
|
847
|
|
Weighted-average rate during the quarter
|
1.24
|
%
|
0.98
|
%
|
0.97
|
%
|
|||
Ending balance
|
$
|
1,338
|
|
$
|
1,022
|
|
$
|
1,098
|
|
Weighted-average rate at period end
|
1.69
|
%
|
1.30
|
%
|
0.44
|
%
|
Available and liquid funds
|
June 30, 2017
|
|
Dec. 31, 2016
|
|
Average
|
||||||||||
(in millions)
|
2Q17
|
|
1Q17
|
|
2Q16
|
|
|||||||||
Available funds:
|
|
|
|
|
|
||||||||||
Liquid funds:
|
|
|
|
|
|
||||||||||
Interest-bearing deposits with banks
|
$
|
13,601
|
|
$
|
15,086
|
|
$
|
14,832
|
|
$
|
14,714
|
|
$
|
14,394
|
|
Federal funds sold and securities purchased under resale agreements
|
27,440
|
|
25,801
|
|
26,873
|
|
25,312
|
|
25,813
|
|
|||||
Total liquid funds
|
41,041
|
|
40,887
|
|
41,705
|
|
40,026
|
|
40,207
|
|
|||||
Cash and due from banks
|
4,725
|
|
4,822
|
|
4,972
|
|
5,097
|
|
4,141
|
|
|||||
Interest-bearing deposits with the Federal Reserve and other central banks
|
74,130
|
|
58,041
|
|
69,316
|
|
66,043
|
|
97,788
|
|
|||||
Total available funds
|
$
|
119,896
|
|
$
|
103,750
|
|
$
|
115,993
|
|
$
|
111,166
|
|
$
|
142,136
|
|
Total available funds as a percentage of total assets
|
34
|
%
|
31
|
%
|
34
|
%
|
33
|
%
|
38
|
%
|
Credit ratings at June 30, 2017
|
|
|
|
|
|
|
|
|
Moody’s
|
|
S&P
|
|
Fitch
|
|
DBRS
|
Parent:
|
|
|
|
|
|
|
|
Long-term senior debt
|
A1
|
|
A
|
|
AA-
|
|
AA (low)
|
Subordinated debt
|
A2
|
|
A-
|
|
A+
|
|
A (high)
|
Preferred stock
|
Baa1
|
|
BBB
|
|
BBB
|
|
A (low)
|
Outlook - Parent:
|
Stable
|
|
Stable
|
|
Stable
|
|
Stable
|
|
|||||||
The Bank of New York Mellon:
|
|||||||
Long-term senior debt
|
Aa2
|
|
AA-
|
|
AA
|
|
AA
|
Subordinated debt
|
Aa3
|
|
A
|
|
A+
|
|
NR
|
Long-term deposits
|
Aa1
|
|
AA-
|
|
AA+
|
|
AA
|
Short-term deposits
|
P1
|
|
A-1+
|
|
F1+
|
|
R-1 (high)
|
Commercial paper
|
P1
|
|
A-1+
|
|
F1+
|
|
R-1 (high)
|
|
|
|
|
|
|
|
|
BNY Mellon, N.A.:
|
|
|
|
|
|
|
|
Long-term senior debt
|
Aa2
|
|
AA-
|
|
AA
|
(a)
|
AA
|
Long-term deposits
|
Aa1
|
|
AA-
|
|
AA+
|
|
AA
|
Short-term deposits
|
P1
|
|
A-1+
|
|
F1+
|
|
R-1 (high)
|
|
|
|
|
|
|
|
|
Outlook - Banks:
|
Stable
|
|
Stable
|
|
Stable
|
|
Stable
|
(a)
|
Represents senior debt issuer default rating.
|
Consolidated HQLA and LCR
|
June 30, 2017
|
|
|
(in billions)
|
|||
Securities
(a)
|
$
|
106
|
|
Cash
(b)
|
68
|
|
|
Total consolidated HQLA
(c)
|
$
|
174
|
|
|
|
||
Total consolidated HQLA - average
(c)
|
$
|
166
|
|
Average LCR
|
116
|
%
|
(a)
|
Primarily includes U.S. Treasury, U.S. agency, sovereign securities, securities of U.S. government-sponsored enterprises, investment-grade corporate debt and publicly traded common equity.
|
(b)
|
Primarily includes cash on deposit with central banks.
|
(c)
|
Consolidated HQLA presented before adjustments. After haircuts and the impact of trapped liquidity, consolidated HQLA totaled
$138 billion
at
June 30, 2017
and averaged
$129 billion
for the
second quarter of 2017
.
|
Capital data
(dollar amounts in millions except per share amounts; common shares in thousands)
|
June 30, 2017
|
|
March 31, 2017
|
|
Dec. 31, 2016
|
|
|||
Average common equity to average assets
|
10.5
|
%
|
10.4
|
%
|
10.2
|
%
|
|||
|
|
|
|
||||||
At period end:
|
|
|
|
||||||
BNY Mellon shareholders’ equity to total assets ratio
|
11.3
|
%
|
11.6
|
%
|
11.6
|
%
|
|||
BNY Mellon common shareholders’ equity to total assets ratio
|
10.3
|
%
|
10.5
|
%
|
10.6
|
%
|
|||
Total BNY Mellon shareholders’ equity
|
$
|
39,974
|
|
$
|
39,138
|
|
$
|
38,811
|
|
Total BNY Mellon common shareholders’ equity
|
$
|
36,432
|
|
$
|
35,596
|
|
$
|
35,269
|
|
BNY Mellon tangible common shareholders’ equity – Non-GAAP
(a)
|
$
|
18,106
|
|
$
|
17,310
|
|
$
|
16,957
|
|
Book value per common share
(a)
|
$
|
35.26
|
|
$
|
34.23
|
|
$
|
33.67
|
|
Tangible book value per common share – Non-GAAP
(a)
|
$
|
17.53
|
|
$
|
16.65
|
|
$
|
16.19
|
|
Closing stock price per common share
|
$
|
51.02
|
|
$
|
47.23
|
|
$
|
47.38
|
|
Market capitalization
|
$
|
52,712
|
|
$
|
49,113
|
|
$
|
49,630
|
|
Common shares outstanding
|
1,033,156
|
|
1,039,877
|
|
1,047,488
|
|
|||
|
|
|
|
||||||
Cash dividends per common share
|
$
|
0.19
|
|
$
|
0.19
|
|
$
|
0.19
|
|
Common dividend payout ratio
|
22
|
%
|
23
|
%
|
25
|
%
|
|||
Common dividend yield
|
1.5
|
%
|
1.6
|
%
|
1.6
|
%
|
(a)
|
See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page
52
for a reconciliation of GAAP to Non-GAAP.
|
Consolidated and largest bank subsidiary regulatory capital ratios
|
June 30, 2017
|
|
|
|
|
|||||||||
Well capitalized
|
|
|
Minimum
required |
|
|
Capital
ratios
|
|
|
March 31, 2017
|
|
|
Dec. 31, 2016
|
|
|
|
(a)
|
|
|
|||||||||||
Consolidated regulatory capital ratios
:
(b)
|
|
|
|
|
|
|
|
|
|
|||||
Standardized:
|
|
|
|
|
|
|
|
|
|
|||||
CET1 ratio
|
N/A
|
|
(c)
|
6.5
|
%
|
|
12.0
|
%
|
|
12.0
|
%
|
|
12.3
|
%
|
Tier 1 capital ratio
|
6
|
%
|
|
8
|
|
|
14.3
|
|
|
14.4
|
|
|
14.5
|
|
Total (Tier 1 plus Tier 2) capital ratio
|
10
|
|
|
10
|
|
|
14.8
|
|
|
14.9
|
|
|
15.2
|
|
Advanced:
|
|
|
|
|
|
|
|
|
|
|||||
CET1 ratio
|
N/A
|
|
(c)
|
6.5
|
%
|
|
10.8
|
%
|
|
10.4
|
%
|
|
10.6
|
%
|
Tier 1 capital ratio
|
6
|
%
|
|
8
|
|
|
12.9
|
|
|
12.5
|
|
|
12.6
|
|
Total (Tier 1 plus Tier 2) capital ratio
|
10
|
|
|
10
|
|
|
13.2
|
|
|
12.8
|
|
|
13.0
|
|
Leverage capital ratio
(b)
|
N/A
|
|
(c)
|
4
|
|
|
6.7
|
|
|
6.6
|
|
|
6.6
|
|
SLR
(d)
|
5
|
|
(c)(e)
|
3
|
|
|
6.2
|
|
|
6.1
|
|
|
6.0
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Selected regulatory capital ratios – fully phased-in – Non-GAAP
:
(c)
|
|
|
|
|
|
|
|
|
|
|||||
Estimated CET1 ratio:
|
|
|
|
|
|
|
|
|
|
|||||
Standardized Approach
|
8.5
|
%
|
(e)
|
6.5
|
%
|
|
11.5
|
%
|
|
11.5
|
%
|
|
11.3
|
%
|
Advanced Approach
|
8.5
|
|
(e)
|
6.5
|
|
|
10.4
|
|
|
10.0
|
|
|
9.7
|
|
Estimated SLR
|
5
|
|
(e)
|
3
|
|
|
6.0
|
|
|
5.9
|
|
|
5.6
|
|
|
|
|
|
|
|
|
|
|
|
|||||
The Bank of New York Mellon regulatory capital ratios
:
(b)
|
|
|
|
|
|
|
|
|
|
|||||
Advanced:
|
|
|
|
|
|
|
|
|
|
|||||
CET1 ratio
|
6.5
|
%
|
|
5.75
|
%
|
|
14.1
|
%
|
|
13.9
|
%
|
|
13.6
|
%
|
Tier 1 capital ratio
|
8
|
|
|
7.25
|
|
|
14.4
|
|
|
14.2
|
|
|
13.9
|
|
Total (Tier 1 plus Tier 2) capital ratio
|
10
|
|
|
9.25
|
|
|
14.8
|
|
|
14.6
|
|
|
14.2
|
|
Leverage capital ratio
|
5
|
|
|
4
|
|
|
7.6
|
|
|
7.6
|
|
|
7.2
|
|
SLR
(d)
|
6
|
|
|
3
|
|
|
6.9
|
|
|
6.9
|
|
|
6.5
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Selected regulatory capital ratios – fully phased-in – Non-GAAP
:
|
|
|
|
|
|
|
|
|
|
|||||
Estimated SLR
|
6
|
%
|
|
3
|
%
|
|
6.7
|
%
|
|
6.6
|
%
|
|
6.1
|
%
|
(a)
|
Minimum requirements for June 30, 2017 include Basel III minimum thresholds plus currently applicable buffers.
|
(b)
|
For our CET1, Tier 1 capital and Total capital ratios, our effective capital ratios under U.S. capital rules are the lower of the ratios as calculated under the Standardized and Advanced Approaches. The leverage capital ratio is based on Tier 1 capital, as phased-in and quarterly average total assets.
|
(c)
|
The Federal Reserve’s regulations do not establish well capitalized thresholds for these measures for bank holding companies.
|
(d)
|
The SLR does not become a binding measure until the first quarter of 2018. The SLR is based on Tier 1 capital, as phased-in, and average quarterly assets and certain off-balance sheet exposures.
|
(e)
|
Fully phased-in Basel III minimum with expected buffers. See page
44
for the capital ratios with the phase-in of the capital conservation buffer and the U.S. G-SIB surcharge, as well as the introduction of the SLR buffer.
|
Consolidated capital ratio requirements
|
Well capitalized
|
|
|
Minimum ratios
|
|
|
Minimum ratios with buffers, as phased-in
(a)
|
||||||||
|
|
|
2017
|
|
|
2018
|
|
|
2019
|
|
|
||||
Capital conservation buffer (CET1)
|
|
|
|
|
1.25
|
%
|
|
1.875
|
%
|
|
2.5
|
%
|
|
||
U.S. G-SIB surcharge (CET1)
(b)(c)
|
|
|
|
|
0.75
|
%
|
|
1.125
|
%
|
|
1.5
|
%
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|||||
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|||||
CET1 ratio
|
N/A
|
|
|
4.5
|
%
|
|
6.5
|
%
|
|
7.5
|
%
|
|
8.5
|
%
|
|
Tier 1 capital ratio
|
6.0
|
%
|
|
6.0
|
%
|
|
8.0
|
%
|
|
9.0
|
%
|
|
10.0
|
%
|
|
Total capital ratio
|
10.0
|
%
|
|
8.0
|
%
|
|
10.0
|
%
|
|
11.0
|
%
|
|
12.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Enhanced SLR buffer (Tier 1 capital)
|
N/A
|
|
|
|
|
N/A
|
|
|
2.0
|
%
|
|
2.0
|
%
|
|
|
SLR
|
N/A
|
|
|
3.0
|
%
|
|
N/A
|
|
|
5.0
|
%
|
|
5.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Bank subsidiaries:
(c)
|
|
|
|
|
|
|
|
|
|
|
|||||
CET1 ratio
|
6.5
|
%
|
|
4.5
|
%
|
|
5.75
|
%
|
|
6.375
|
%
|
|
7.0
|
%
|
|
Tier 1 capital ratio
|
8.0
|
%
|
|
6.0
|
%
|
|
7.25
|
%
|
|
7.875
|
%
|
|
8.5
|
%
|
|
Total capital ratio
|
10.0
|
%
|
|
8.0
|
%
|
|
9.25
|
%
|
|
9.875
|
%
|
|
10.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
SLR
|
6.0
|
%
|
|
3.0
|
%
|
|
N/A
|
|
|
6.0
|
%
|
(d)
|
6.0
|
%
|
(d)
|
(a)
|
Countercyclical capital buffer currently set to 0%.
|
(b)
|
The fully phased-in U.S. G-SIB surcharge of 1.5% applicable to BNY Mellon is subject to change.
|
(c)
|
The U.S. G-SIB surcharge is not applicable to the regulatory capital ratios of the bank subsidiaries.
|
(d)
|
Well capitalized threshold.
|
Estimated CET1 generation
|
Quarter ended June 30, 2017
|
|||||
(in millions)
|
Transitional basis
(a)
|
|
Fully phased-in - Non-GAAP
(b)
|
|
||
CET1 – Beginning of period
|
$
|
17,606
|
|
$
|
16,835
|
|
Net income applicable to common shareholders of The Bank of New York Mellon Corporation
|
926
|
|
926
|
|
||
Goodwill and intangible assets, net of related deferred tax liabilities
|
(47
|
)
|
(39
|
)
|
||
Gross CET1 generated
|
879
|
|
887
|
|
||
Capital deployed:
|
|
|
||||
Common stock dividends
|
(199
|
)
|
(199
|
)
|
||
Common stock repurchased
|
(506
|
)
|
(506
|
)
|
||
Total capital deployed
|
(705
|
)
|
(705
|
)
|
||
Other comprehensive income:
|
|
|
||||
Foreign currency translation
|
324
|
|
324
|
|
||
Unrealized loss on assets available-for-sale
|
72
|
|
90
|
|
||
Defined benefit plans
|
13
|
|
16
|
|
||
Unrealized gain on cash flow hedges
|
1
|
|
1
|
|
||
Total other comprehensive income
|
410
|
|
431
|
|
||
Additional paid-in capital
(c)
|
184
|
|
184
|
|
||
Other additions (deductions):
|
|
|
||||
Deferred tax assets
|
(3
|
)
|
(3
|
)
|
||
Embedded goodwill
|
1
|
|
1
|
|
||
Other
|
(1
|
)
|
(1
|
)
|
||
Total other deductions
|
(3
|
)
|
(3
|
)
|
||
Net CET1 generated
|
765
|
|
794
|
|
||
CET1 – End of period
|
$
|
18,371
|
|
$
|
17,629
|
|
(a)
|
Reflects transitional adjustments to CET1 required under the U.S. capital rules.
|
(b)
|
Estimated.
|
(c)
|
Primarily related to stock awards, the exercise of stock options and stock issued for employee benefit plans.
|
Capital components and ratios
|
June 30, 2017
|
|
March 31, 2017
|
|
Dec. 31, 2016
|
|||||||||||||||
(dollars in millions)
|
Transitional
Approach
(a)
|
|
Fully
phased-in - Non-GAAP
(b)
|
|
|
Transitional
Approach (a) |
|
Fully
phased-in - Non-GAAP
(b)
|
|
|
Transitional
Approach (a) |
|
Fully
phased-in - Non-GAAP
(b)
|
|
||||||
CET1:
|
|
|
|
|
|
|
|
|
||||||||||||
Common shareholders’ equity
|
$
|
36,652
|
|
$
|
36,432
|
|
|
$
|
35,837
|
|
$
|
35,596
|
|
|
$
|
35,794
|
|
$
|
35,269
|
|
Goodwill and intangible assets
|
(17,843
|
)
|
(18,325
|
)
|
|
(17,796
|
)
|
(18,286
|
)
|
|
(17,314
|
)
|
(18,312
|
)
|
||||||
Net pension fund assets
|
(72
|
)
|
(90
|
)
|
|
(72
|
)
|
(90
|
)
|
|
(55
|
)
|
(90
|
)
|
||||||
Equity method investments
|
(325
|
)
|
(340
|
)
|
|
(326
|
)
|
(341
|
)
|
|
(313
|
)
|
(344
|
)
|
||||||
Deferred tax assets
|
(30
|
)
|
(37
|
)
|
|
(27
|
)
|
(34
|
)
|
|
(19
|
)
|
(32
|
)
|
||||||
Other
|
(11
|
)
|
(11
|
)
|
|
(10
|
)
|
(10
|
)
|
|
—
|
|
(1
|
)
|
||||||
Total CET1
|
18,371
|
|
17,629
|
|
|
17,606
|
|
16,835
|
|
|
18,093
|
|
16,490
|
|
||||||
Other Tier 1 capital:
|
|
|
|
|
|
|
|
|
||||||||||||
Preferred stock
|
3,542
|
|
3,542
|
|
|
3,542
|
|
3,542
|
|
|
3,542
|
|
3,542
|
|
||||||
Deferred tax assets
|
(7
|
)
|
—
|
|
|
(7
|
)
|
—
|
|
|
(13
|
)
|
—
|
|
||||||
Net pension fund assets
|
(18
|
)
|
—
|
|
|
(18
|
)
|
—
|
|
|
(36
|
)
|
—
|
|
||||||
Other
|
(24
|
)
|
(24
|
)
|
|
(14
|
)
|
(14
|
)
|
|
(121
|
)
|
(121
|
)
|
||||||
Total Tier 1 capital
|
$
|
21,864
|
|
$
|
21,147
|
|
|
$
|
21,109
|
|
$
|
20,363
|
|
|
$
|
21,465
|
|
$
|
19,911
|
|
Tier 2 capital:
|
|
|
|
|
|
|
|
|
||||||||||||
Subordinated debt
|
$
|
550
|
|
$
|
550
|
|
|
$
|
550
|
|
$
|
550
|
|
|
$
|
550
|
|
$
|
550
|
|
Allowance for credit losses
|
270
|
|
270
|
|
|
276
|
|
276
|
|
|
281
|
|
281
|
|
||||||
Trust preferred securities
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
148
|
|
—
|
|
||||||
Other
|
(7
|
)
|
(7
|
)
|
|
(2
|
)
|
(2
|
)
|
|
(12
|
)
|
(11
|
)
|
||||||
Total Tier 2 capital - Standardized Approach
|
813
|
|
813
|
|
|
824
|
|
824
|
|
|
967
|
|
820
|
|
||||||
Excess of expected credit losses
|
59
|
|
59
|
|
|
51
|
|
51
|
|
|
50
|
|
50
|
|
||||||
Less: Allowance for credit losses
|
270
|
|
270
|
|
|
276
|
|
276
|
|
|
281
|
|
281
|
|
||||||
Total Tier 2 capital - Advanced Approach
|
$
|
602
|
|
$
|
602
|
|
|
$
|
599
|
|
$
|
599
|
|
|
$
|
736
|
|
$
|
589
|
|
Total capital:
|
|
|
|
|
|
|
|
|
||||||||||||
Standardized Approach
|
$
|
22,677
|
|
$
|
21,960
|
|
|
$
|
21,933
|
|
$
|
21,187
|
|
|
$
|
22,432
|
|
$
|
20,731
|
|
Advanced Approach
|
$
|
22,466
|
|
$
|
21,749
|
|
|
$
|
21,708
|
|
$
|
20,962
|
|
|
$
|
22,201
|
|
$
|
20,500
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Risk-weighted assets:
|
|
|
|
|
|
|
|
|
||||||||||||
Standardized Approach
|
$
|
153,179
|
|
$
|
152,645
|
|
|
$
|
146,747
|
|
$
|
146,122
|
|
|
$
|
147,671
|
|
$
|
146,475
|
|
Advanced Approach:
|
|
|
|
|
|
|
|
|
||||||||||||
Credit Risk
|
$
|
99,030
|
|
$
|
98,465
|
|
|
$
|
96,316
|
|
$
|
95,655
|
|
|
$
|
97,659
|
|
$
|
96,391
|
|
Market Risk
|
3,225
|
|
3,225
|
|
|
3,566
|
|
3,566
|
|
|
2,836
|
|
2,836
|
|
||||||
Operational Risk
|
67,788
|
|
67,788
|
|
|
69,313
|
|
69,313
|
|
|
70,000
|
|
70,000
|
|
||||||
Total Advanced Approach
|
$
|
170,043
|
|
$
|
169,478
|
|
|
$
|
169,195
|
|
$
|
168,534
|
|
|
$
|
170,495
|
|
$
|
169,227
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Standardized Approach:
|
|
|
|
|
|
|
|
|
||||||||||||
CET1 ratio
|
12.0
|
%
|
11.5
|
%
|
|
12.0
|
%
|
11.5
|
%
|
|
12.3
|
%
|
11.3
|
%
|
||||||
Tier 1 capital ratio
|
14.3
|
|
13.9
|
|
|
14.4
|
|
13.9
|
|
|
14.5
|
|
13.6
|
|
||||||
Total (Tier 1 plus Tier 2) capital ratio
|
14.8
|
|
14.4
|
|
|
14.9
|
|
14.5
|
|
|
15.2
|
|
14.2
|
|
||||||
Advanced Approach:
|
|
|
|
|
|
|
|
|
||||||||||||
CET1 ratio
|
10.8
|
%
|
10.4
|
%
|
|
10.4
|
%
|
10.0
|
%
|
|
10.6
|
%
|
9.7
|
%
|
||||||
Tier 1 capital ratio
|
12.9
|
|
12.5
|
|
|
12.5
|
|
12.1
|
|
|
12.6
|
|
11.8
|
|
||||||
Total (Tier 1 plus Tier 2) capital ratio
|
13.2
|
|
12.8
|
|
|
12.8
|
|
12.4
|
|
|
13.0
|
|
12.1
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||||||||
Average assets for leverage capital purposes
|
$
|
324,423
|
|
|
|
$
|
318,184
|
|
|
|
$
|
326,809
|
|
|
||||||
Total leverage exposure for SLR purposes
|
|
$
|
352,448
|
|
|
|
$
|
346,772
|
|
|
|
$
|
355,083
|
|
(a)
|
Reflects transitional adjustments to CET1, Tier 1 capital and Tier 2 capital required in 2017 and 2016 under the U.S. capital rules.
|
(b)
|
Estimated.
|
Capital above thresholds at June 30, 2017
|
|||||||
(in millions)
|
Consolidated
(a)
|
|
|
The Bank of New York Mellon
(b)
|
|
||
CET1
|
$
|
7,318
|
|
|
$
|
10,526
|
|
Tier 1 capital
|
8,261
|
|
|
8,874
|
|
||
Total capital
|
5,462
|
|
|
6,593
|
|
||
Leverage capital
|
8,887
|
|
|
6,852
|
|
(a)
|
Based on minimum required standards, with applicable buffers.
|
(b)
|
Based on well capitalized standards.
|
SLR
|
June 30, 2017
|
|
March 31, 2017
|
|
Dec. 31, 2016
|
|||||||||||||||
(dollars in millions)
|
Transitional basis
|
|
Fully
phased-in -
Non-GAAP
(a)
|
|
|
Transitional basis
|
|
Fully
phased-in -
Non-GAAP
(a)
|
|
|
Transitional basis
|
|
Fully
phased-in -
Non-GAAP
(a)
|
|
||||||
Consolidated:
|
|
|
|
|
|
|
|
|
||||||||||||
Total Tier 1 capital
|
$
|
21,864
|
|
$
|
21,147
|
|
|
$
|
21,109
|
|
$
|
20,363
|
|
|
$
|
21,465
|
|
$
|
19,911
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total leverage exposure:
|
|
|
|
|
|
|
|
|
||||||||||||
Quarterly average total assets
|
$
|
342,515
|
|
$
|
342,515
|
|
|
$
|
336,200
|
|
$
|
336,200
|
|
|
$
|
344,142
|
|
$
|
344,142
|
|
Less: Amounts deducted from Tier 1 capital
|
18,092
|
|
18,810
|
|
|
18,016
|
|
18,763
|
|
|
17,333
|
|
18,887
|
|
||||||
Total on-balance sheet assets, as adjusted
|
324,423
|
|
323,705
|
|
|
318,184
|
|
317,437
|
|
|
326,809
|
|
325,255
|
|
||||||
Off-balance sheet exposures:
|
|
|
|
|
|
|
|
|
||||||||||||
Potential future exposure for derivative contracts (plus certain other items)
|
6,014
|
|
6,014
|
|
|
5,898
|
|
5,898
|
|
|
6,021
|
|
6,021
|
|
||||||
Repo-style transaction exposures
|
631
|
|
631
|
|
|
536
|
|
536
|
|
|
533
|
|
533
|
|
||||||
Credit-equivalent amount of other off-balance sheet exposures (less SLR exclusions)
|
22,098
|
|
22,098
|
|
|
22,901
|
|
22,901
|
|
|
23,274
|
|
23,274
|
|
||||||
Total off-balance sheet exposures
|
28,743
|
|
28,743
|
|
|
29,335
|
|
29,335
|
|
|
29,828
|
|
29,828
|
|
||||||
Total leverage exposure
|
$
|
353,166
|
|
$
|
352,448
|
|
|
$
|
347,519
|
|
$
|
346,772
|
|
|
$
|
356,637
|
|
$
|
355,083
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
SLR - Consolidated
(b)
|
6.2
|
%
|
6.0
|
%
|
|
6.1
|
%
|
5.9
|
%
|
|
6.0
|
%
|
5.6
|
%
|
||||||
|
|
|
|
|
|
|
|
|
||||||||||||
The Bank of New York Mellon, our largest bank subsidiary:
|
|
|
|
|
|
|
|
|
||||||||||||
Tier 1 capital
|
$
|
19,897
|
|
$
|
19,125
|
|
|
$
|
19,320
|
|
$
|
18,523
|
|
|
$
|
19,011
|
|
$
|
17,708
|
|
Total leverage exposure
|
$
|
286,983
|
|
$
|
286,634
|
|
|
$
|
281,114
|
|
$
|
280,741
|
|
|
$
|
291,022
|
|
$
|
290,230
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
SLR - The Bank of New York Mellon
(b)
|
6.9
|
%
|
6.7
|
%
|
|
6.9
|
%
|
6.6
|
%
|
|
6.5
|
%
|
6.1
|
%
|
(a)
|
Estimated.
|
(b)
|
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.”
|
•
|
VaR does not estimate potential losses over longer time horizons where moves may be extreme;
|
•
|
VaR does not take account of potential variability of market liquidity; and
|
•
|
Previous moves in market risk factors may not produce accurate predictions of all future market moves.
|
VaR
(a)
|
2Q17
|
June 30, 2017
|
|
|||||||||
(in millions)
|
Average
|
|
Minimum
|
|
Maximum
|
|
||||||
Interest rate
|
$
|
3.3
|
|
$
|
2.8
|
|
$
|
4.1
|
|
$
|
4.0
|
|
Foreign exchange
|
4.3
|
|
3.4
|
|
5.8
|
|
4.6
|
|
||||
Equity
|
0.2
|
|
0.1
|
|
1.1
|
|
1.1
|
|
||||
Credit
|
1.1
|
|
0.5
|
|
1.4
|
|
0.8
|
|
||||
Diversification
|
(4.8
|
)
|
N/M
|
|
N/M
|
|
(5.8
|
)
|
||||
Overall portfolio
|
4.1
|
|
3.3
|
|
5.4
|
|
4.7
|
|
VaR
(a)
|
1Q17
|
March 31, 2017
|
|
|||||||||
(in millions)
|
Average
|
|
Minimum
|
|
Maximum
|
|
||||||
Interest rate
|
$
|
3.9
|
|
$
|
2.9
|
|
$
|
4.9
|
|
$
|
3.3
|
|
Foreign exchange
|
3.6
|
|
2.6
|
|
4.9
|
|
3.3
|
|
||||
Equity
|
0.2
|
|
0.2
|
|
0.4
|
|
0.2
|
|
||||
Credit
|
1.3
|
|
1.1
|
|
1.7
|
|
1.2
|
|
||||
Diversification
|
(4.9
|
)
|
N/M
|
|
N/M
|
|
(4.5
|
)
|
||||
Overall portfolio
|
4.1
|
|
3.3
|
|
5.0
|
|
3.5
|
|
VaR
(a)
|
YTD17
|
||||||||
(in millions)
|
Average
|
|
Minimum
|
|
Maximum
|
|
|||
Interest rate
|
$
|
3.6
|
|
$
|
2.8
|
|
$
|
4.9
|
|
Foreign exchange
|
3.9
|
|
2.6
|
|
5.8
|
|
|||
Equity
|
0.2
|
|
0.1
|
|
1.1
|
|
|||
Credit
|
1.2
|
|
0.5
|
|
1.7
|
|
|||
Diversification
|
(4.8
|
)
|
N/M
|
|
N/M
|
|
|||
Overall portfolio
|
4.1
|
|
$
|
3.3
|
|
$
|
5.4
|
|
(a)
|
Beginning Jan. 1, 2017, the
VaR figures reflect the impact of the CVA and hedges as per the guidance included in ASC 820, Fair Value Measurement. VaR exposure does not include the impact of the Company’s consolidated investment management funds and seed capital investments.
|
VaR
(a)
|
2Q16
|
June 30, 2016
|
|
|||||||||
(in millions)
|
Average
|
|
Minimum
|
|
Maximum
|
|
||||||
Interest rate
|
$
|
6.2
|
|
$
|
5.5
|
|
$
|
7.1
|
|
$
|
6.4
|
|
Foreign exchange
|
2.5
|
|
1.9
|
|
11.1
|
|
2.8
|
|
||||
Equity
|
0.6
|
|
0.4
|
|
0.7
|
|
0.6
|
|
||||
Credit
|
0.3
|
|
0.2
|
|
0.4
|
|
0.3
|
|
||||
Diversification
|
(3.7
|
)
|
N/M
|
|
N/M
|
|
(3.6
|
)
|
||||
Overall portfolio
|
5.9
|
|
5.0
|
|
6.9
|
|
6.5
|
|
VaR
(a)
|
YTD16
|
||||||||
(in millions)
|
Average
|
|
Minimum
|
|
Maximum
|
|
|||
Interest rate
|
$
|
5.8
|
|
$
|
4.3
|
|
$
|
7.1
|
|
Foreign exchange
|
2.0
|
|
1.2
|
|
11.1
|
|
|||
Equity
|
0.6
|
|
0.4
|
|
0.8
|
|
|||
Credit
|
0.3
|
|
0.2
|
|
0.4
|
|
|||
Diversification
|
(3.1
|
)
|
N/M
|
|
N/M
|
|
|||
Overall portfolio
|
5.6
|
|
$
|
4.3
|
|
$
|
6.9
|
|
(a)
|
VaR figures do not reflect the impact of the CVA guidance in ASC 820, Fair Value Measurement. This is consistent with the regulatory treatment. VaR exposure does not include the impact of the Company’s consolidated investment management funds and seed capital investments.
|
(a)
|
Trading revenue (loss) includes realized and unrealized gains and losses primarily related to spot and forward foreign exchange transactions, derivatives, and securities trades for our customers and excludes any associated commissions, underwriting fees and net interest revenue.
|
Foreign exchange and other trading counterparty risk
rating profile
(a)
|
||||||||||
|
Quarter ended
|
|||||||||
|
June 30, 2017
|
|
March 31,
2017 |
|
Dec. 31, 2016
|
|
Sept. 30, 2016
|
|
June 30,
2016 |
|
Rating:
|
|
|
|
|
|
|||||
AAA to AA-
|
44
|
%
|
43
|
%
|
35
|
%
|
45
|
%
|
38
|
%
|
A+ to A-
|
27
|
|
36
|
|
39
|
|
32
|
|
40
|
|
BBB+ to BBB-
|
22
|
|
17
|
|
22
|
|
19
|
|
18
|
|
Noninvestment grade (BB+ and lower)
|
7
|
|
4
|
|
4
|
|
4
|
|
4
|
|
Total
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
(a)
|
Represents credit rating agency equivalent of internal credit ratings.
|
Estimated changes in net interest revenue
(dollars in millions) |
June 30, 2017
|
|
March 31,
2017 |
|
Dec. 31, 2016
|
|
Sept. 30, 2016
|
|
June 30,
2016 |
|
|||||
up 200 bps parallel rate ramp vs. baseline
(a)
|
$
|
(69
|
)
|
$
|
(136
|
)
|
$
|
6
|
|
$
|
62
|
|
$
|
91
|
|
up 100 bps parallel rate ramp vs. baseline
(a)
|
58
|
|
87
|
|
145
|
|
147
|
|
158
|
|
|||||
Long-term up 50 bps, short-term unchanged
(b)
|
92
|
|
92
|
|
81
|
|
116
|
|
130
|
|
|||||
Long-term down 50 bps, short-term unchanged
(b)
|
(85
|
)
|
(104
|
)
|
(88
|
)
|
(128
|
)
|
(96
|
)
|
(a)
|
In the parallel rate ramp, both short-term and long-term rates move
in four equal quarterly increments.
|
(b)
|
Long-term is equal to or greater than one year.
|
•
|
Monetary policy;
|
•
|
Global economic uncertainty;
|
•
|
Our ratings relative to other financial institutions’ ratings; and
|
•
|
Regulatory reform.
|
Reconciliation of income before income taxes – pre-tax operating margin
|
2Q17
|
|
1Q17
|
|
2Q16
|
|
YTD17
|
|
YTD16
|
|
|||||
(dollars in millions)
|
|||||||||||||||
Income before income taxes – GAAP
|
$
|
1,308
|
|
$
|
1,206
|
|
$
|
1,165
|
|
$
|
2,514
|
|
$
|
2,256
|
|
Less: Net income (loss) attributable to noncontrolling interests of consolidated investment management funds
|
3
|
|
18
|
|
4
|
|
21
|
|
(3
|
)
|
|||||
Add: Amortization of intangible assets
|
53
|
|
52
|
|
59
|
|
105
|
|
116
|
|
|||||
M&I, litigation and restructuring charges
|
12
|
|
8
|
|
7
|
|
20
|
|
24
|
|
|||||
Income before income taxes, as adjusted – Non-GAAP
(a)
|
$
|
1,370
|
|
$
|
1,248
|
|
$
|
1,227
|
|
$
|
2,618
|
|
$
|
2,399
|
|
|
|
|
|
|
|
||||||||||
Fee and other revenue – GAAP
|
$
|
3,120
|
|
$
|
3,018
|
|
$
|
2,999
|
|
$
|
6,138
|
|
$
|
5,969
|
|
Income from consolidated investment management funds – GAAP
|
10
|
|
33
|
|
10
|
|
43
|
|
4
|
|
|||||
Net interest revenue – GAAP
|
826
|
|
792
|
|
767
|
|
1,618
|
|
1,533
|
|
|||||
Total revenue – GAAP
|
3,956
|
|
3,843
|
|
3,776
|
|
7,799
|
|
7,506
|
|
|||||
Less: Net income (loss) attributable to noncontrolling interests of consolidated investment management funds
|
3
|
|
18
|
|
4
|
|
21
|
|
(3
|
)
|
|||||
Total revenue, as adjusted – Non-GAAP
(a)
|
$
|
3,953
|
|
$
|
3,825
|
|
$
|
3,772
|
|
$
|
7,778
|
|
$
|
7,509
|
|
|
|
|
|
|
|
||||||||||
Pre-tax operating margin – GAAP
(b)(c)
|
33
|
%
|
31
|
%
|
31
|
%
|
32
|
%
|
30
|
%
|
|||||
Adjusted pre-tax operating margin – Non-GAAP
(a)(b)(c)
|
35
|
%
|
33
|
%
|
33
|
%
|
34
|
%
|
32
|
%
|
(a)
|
Non-GAAP information for all periods presented 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.
|
(b)
|
Income before taxes divided by total revenue.
|
(c)
|
Our GAAP earnings include tax-advantaged investments such as low income housing, renewable energy, corporate/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 $106 million for the second quarter of 2017, $101 million for the first quarter of 2017, $74 million for the second quarter of 2016, $207 million for the first six months of 2017 and $151 million for the first six months of 2016 and would increase our pre-tax operating margin by approximately 1.8% for the second quarter of 2017 and the first quarter of 2017, 1.3% for the second quarter of 2016, 1.8% for the first six months of 2017 and 1.4% for the first six months of 2016.
|
Operating leverage
|
2Q17
|
|
1Q17
|
|
2Q16
|
|
2Q17 vs.
|
||||||
(dollars in millions)
|
1Q17
|
|
2Q16
|
|
|||||||||
Total revenue – GAAP
|
$
|
3,956
|
|
$
|
3,843
|
|
$
|
3,776
|
|
2.94%
|
|
4.77%
|
|
Less: Net income attributable to noncontrolling interests of consolidated investment management funds
|
3
|
|
18
|
|
4
|
|
|
|
|||||
Total revenue, as adjusted – Non-GAAP
|
$
|
3,953
|
|
$
|
3,825
|
|
$
|
3,772
|
|
3.35%
|
|
4.80%
|
|
|
|
|
|
|
|
||||||||
Total noninterest expense – GAAP
|
$
|
2,655
|
|
$
|
2,642
|
|
$
|
2,620
|
|
0.49%
|
|
1.34%
|
|
Less: Amortization of intangible assets
|
53
|
|
52
|
|
59
|
|
|
|
|||||
M&I, litigation and restructuring charges
|
12
|
|
8
|
|
7
|
|
|
|
|||||
Total noninterest expense, as adjusted – Non-GAAP
|
$
|
2,590
|
|
$
|
2,582
|
|
$
|
2,554
|
|
0.31%
|
|
1.41%
|
|
|
|
|
|
|
|
||||||||
Operating leverage – GAAP
(a)
|
|
|
|
245
|
bps
|
343
|
bps
|
||||||
Adjusted operating leverage – Non-GAAP
(a)(b)
|
|
|
|
304
|
bps
|
339
|
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 the 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
|
2Q17
|
|
1Q17
|
|
2Q16
|
|
YTD17
|
|
YTD16
|
|
|||||
(dollars in millions)
|
|||||||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP
|
$
|
926
|
|
$
|
880
|
|
$
|
825
|
|
$
|
1,806
|
|
$
|
1,629
|
|
Add: Amortization of intangible assets
|
53
|
|
52
|
|
59
|
|
105
|
|
116
|
|
|||||
Less: Tax impact of amortization of intangible assets
|
19
|
|
18
|
|
21
|
|
37
|
|
41
|
|
|||||
Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation excluding amortization of intangible assets – Non-GAAP
|
960
|
|
914
|
|
863
|
|
1,874
|
|
1,704
|
|
|||||
Add: M&I, litigation and restructuring charges
|
12
|
|
8
|
|
7
|
|
20
|
|
24
|
|
|||||
Less: Tax impact of M&I, litigation and restructuring charges
|
3
|
|
2
|
|
2
|
|
5
|
|
8
|
|
|||||
Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, as adjusted – Non-GAAP
(a)
|
$
|
969
|
|
$
|
920
|
|
$
|
868
|
|
$
|
1,889
|
|
$
|
1,720
|
|
|
|
|
|
|
|
||||||||||
Average common shareholders’ equity
|
$
|
35,862
|
|
$
|
34,965
|
|
$
|
35,827
|
|
$
|
35,416
|
|
$
|
35,539
|
|
Less: Average goodwill
|
17,408
|
|
17,338
|
|
17,622
|
|
17,373
|
|
17,592
|
|
|||||
Average intangible assets
|
3,532
|
|
3,578
|
|
3,789
|
|
3,555
|
|
3,801
|
|
|||||
Add: Deferred tax liability – tax deductible goodwill
(b)
|
1,542
|
|
1,518
|
|
1,452
|
|
1,542
|
|
1,452
|
|
|||||
Deferred tax liability – intangible assets
(b)
|
1,095
|
|
1,100
|
|
1,129
|
|
1,095
|
|
1,129
|
|
|||||
Average tangible common shareholders’ equity – Non-GAAP
|
$
|
17,559
|
|
$
|
16,667
|
|
$
|
16,997
|
|
$
|
17,125
|
|
$
|
16,727
|
|
|
|
|
|
|
|
||||||||||
Return on common equity – GAAP
(c)
|
10.4
|
%
|
10.2
|
%
|
9.3
|
%
|
10.3
|
%
|
9.2
|
%
|
|||||
Adjusted return on common equity – Non-GAAP
(a)(c)
|
10.8
|
%
|
10.7
|
%
|
9.7
|
%
|
10.8
|
%
|
9.7
|
%
|
|||||
|
|
|
|
|
|
||||||||||
Return on tangible common equity – Non-GAAP
(c)
|
21.9
|
%
|
22.2
|
%
|
20.4
|
%
|
22.1
|
%
|
20.5
|
%
|
|||||
Adjusted return on tangible common equity – Non-GAAP
(a)(c)
|
22.1
|
%
|
22.4
|
%
|
20.5
|
%
|
22.2
|
%
|
20.7
|
%
|
(a)
|
Non-GAAP information for all periods presented excludes the amortization of intangible assets and M&I, litigation and restructuring charges.
|
(b)
|
Deferred tax liabilities are based on fully phased-in Basel III rules.
|
(c)
|
Quarterly returns are annualized.
|
Book value per common share
|
June 30, 2017
|
|
March 31,
2017 |
|
Dec. 31, 2016
|
|
June 30,
2016 |
|
||||
(dollars in millions, unless otherwise noted)
|
||||||||||||
BNY Mellon shareholders’ equity at period end – GAAP
|
$
|
39,974
|
|
$
|
39,138
|
|
$
|
38,811
|
|
$
|
38,559
|
|
Less: Preferred stock
|
3,542
|
|
3,542
|
|
3,542
|
|
2,552
|
|
||||
BNY Mellon common shareholders’ equity at period end – GAAP
|
36,432
|
|
35,596
|
|
35,269
|
|
36,007
|
|
||||
Less: Goodwill
|
17,457
|
|
17,355
|
|
17,316
|
|
17,501
|
|
||||
Intangible assets
|
3,506
|
|
3,549
|
|
3,598
|
|
3,738
|
|
||||
Add: Deferred tax liability – tax deductible goodwill
(a)
|
1,542
|
|
1,518
|
|
1,497
|
|
1,452
|
|
||||
Deferred tax liability – intangible assets
(a)
|
1,095
|
|
1,100
|
|
1,105
|
|
1,129
|
|
||||
BNY Mellon tangible common shareholders’ equity at period end – Non-GAAP
|
$
|
18,106
|
|
$
|
17,310
|
|
$
|
16,957
|
|
$
|
17,349
|
|
|
|
|
|
|
||||||||
Period-end common shares outstanding
(in thousands)
|
1,033,156
|
|
1,039,877
|
|
1,047,488
|
|
1,067,674
|
|
||||
|
|
|
|
|
||||||||
Book value per common share – GAAP
|
$
|
35.26
|
|
$
|
34.23
|
|
$
|
33.67
|
|
$
|
33.72
|
|
Tangible book value per common share – Non-GAAP
|
$
|
17.53
|
|
$
|
16.65
|
|
$
|
16.19
|
|
$
|
16.25
|
|
(a)
|
Deferred tax liabilities are based on fully phased-in Basel III rules.
|
Investment management and performance fees – Consolidated
|
|
|
2Q17 vs.
|
|
||||
(dollars in millions)
|
2Q17
|
|
2Q16
|
|
2Q16
|
|
||
Investment management and performance fees – GAAP
|
$
|
879
|
|
$
|
830
|
|
6
|
%
|
Impact of changes in foreign currency exchange rates
|
—
|
|
(26
|
)
|
|
|||
Investment management and performance fees, as adjusted – Non-GAAP
|
$
|
879
|
|
$
|
804
|
|
9
|
%
|
Investment management fees - Investment Management business
|
|
|
2Q17 vs.
|
|
||||
(dollars in millions)
|
2Q17
|
|
2Q16
|
|
2Q16
|
|
||
Investment management fees – GAAP
|
$
|
845
|
|
$
|
808
|
|
5
|
%
|
Impact of changes in foreign currency exchange rates
|
—
|
|
(25
|
)
|
|
|||
Investment management fees, as adjusted – Non-GAAP
|
$
|
845
|
|
$
|
783
|
|
8
|
%
|
Pre-tax operating margin - Investment Management business
|
|
|
|
|
|
|
|||||||||||||||
(dollars in millions)
|
2Q17
|
|
1Q17
|
|
4Q16
|
|
3Q16
|
|
2Q16
|
|
YTD17
|
|
YTD16
|
|
|||||||
Income before income taxes – GAAP
|
$
|
288
|
|
$
|
277
|
|
$
|
260
|
|
$
|
256
|
|
$
|
234
|
|
$
|
565
|
|
$
|
451
|
|
Add: Amortization of intangible assets
|
15
|
|
15
|
|
22
|
|
22
|
|
19
|
|
30
|
|
38
|
|
|||||||
Provision for credit losses
|
—
|
|
3
|
|
6
|
|
—
|
|
1
|
|
3
|
|
—
|
|
|||||||
Adjusted income before income taxes, excluding amortization of intangible assets and provision for credit losses – Non-GAAP
|
$
|
303
|
|
$
|
295
|
|
$
|
288
|
|
$
|
278
|
|
$
|
254
|
|
$
|
598
|
|
$
|
489
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total revenue – GAAP
|
$
|
986
|
|
$
|
963
|
|
$
|
960
|
|
$
|
958
|
|
$
|
938
|
|
$
|
1,949
|
|
$
|
1,833
|
|
Less:
Distribution and servicing expense
|
104
|
|
101
|
|
98
|
|
104
|
|
102
|
|
205
|
|
202
|
|
|||||||
Adjusted total revenue, net of distribution and servicing expense – Non-GAAP
|
$
|
882
|
|
$
|
862
|
|
$
|
862
|
|
$
|
854
|
|
$
|
836
|
|
$
|
1,744
|
|
$
|
1,631
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Pre-tax operating margin – GAAP
(a)
|
29
|
%
|
29
|
%
|
27
|
%
|
27
|
%
|
25
|
%
|
29
|
%
|
25
|
%
|
|||||||
Adjusted pre-tax operating margin, excluding amortization of intangible assets, provision for credit losses and distribution and servicing expense – Non-GAAP
(a)
|
34
|
%
|
34
|
%
|
33
|
%
|
33
|
%
|
30
|
%
|
34
|
%
|
30
|
%
|
(a)
|
Income before taxes divided by total revenue.
|
•
|
All of our SEC filings, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to these reports, SEC Forms 3, 4 and 5 and any proxy statement mailed by us in connection with the solicitation of proxies;
|
•
|
Financial statements and footnotes prepared using eXtensible Business Reporting Language (“XBRL”);
|
•
|
Our earnings materials and selected management conference calls and presentations;
|
•
|
Other regulatory disclosures, including: Pillar 3 Disclosures (and Market Risk Disclosure contained therein); Federal Financial Institutions Examination Council - Consolidated Reports of Condition and Income for a Bank With Domestic and Foreign Offices; Consolidated Financial Statements for Bank Holding Companies; and the Dodd-Frank Act Stress Test Results for BNY Mellon and The Bank of New York Mellon; and
|
•
|
Our Corporate Governance Guidelines, Amended and Restated By-laws, Directors Code of Conduct and the Charters of the Audit, Finance, Corporate Governance and Nominating, Corporate Social Responsibility, Human Resources and Compensation, Risk and Technology Committees of our Board of Directors.
|
Item 1. Financial Statements
|
|
The Bank of New York Mellon Corporation (and its subsidiaries)
|
|
|
Quarter ended
|
|
Year-to-date
|
|||||||||||||
|
June 30, 2017
|
|
March 31, 2017
|
|
June 30, 2016
|
|
|
June 30, 2017
|
|
June 30, 2016
|
|
|||||
(in millions)
|
|
|||||||||||||||
Fee and other revenue
|
|
|
|
|
|
|
||||||||||
Investment services fees:
|
|
|
|
|
|
|
||||||||||
Asset servicing
|
$
|
1,085
|
|
$
|
1,063
|
|
$
|
1,069
|
|
|
$
|
2,148
|
|
$
|
2,109
|
|
Clearing services
|
394
|
|
376
|
|
350
|
|
|
770
|
|
700
|
|
|||||
Issuer services
|
241
|
|
251
|
|
234
|
|
|
492
|
|
478
|
|
|||||
Treasury services
|
140
|
|
139
|
|
139
|
|
|
279
|
|
270
|
|
|||||
Total investment services fees
|
1,860
|
|
1,829
|
|
1,792
|
|
|
3,689
|
|
3,557
|
|
|||||
Investment management and performance fees
|
879
|
|
842
|
|
830
|
|
|
1,721
|
|
1,642
|
|
|||||
Foreign exchange and other trading revenue
|
165
|
|
164
|
|
182
|
|
|
329
|
|
357
|
|
|||||
Financing-related fees
|
53
|
|
55
|
|
57
|
|
|
108
|
|
111
|
|
|||||
Distribution and servicing
|
41
|
|
41
|
|
43
|
|
|
82
|
|
82
|
|
|||||
Investment and other income
|
122
|
|
77
|
|
74
|
|
|
199
|
|
179
|
|
|||||
Total fee revenue
|
3,120
|
|
3,008
|
|
2,978
|
|
|
6,128
|
|
5,928
|
|
|||||
Net securities gains — including other-than-temporary impairment
|
—
|
|
10
|
|
21
|
|
|
10
|
|
40
|
|
|||||
Noncredit-related portion of other-than-temporary impairment
(recognized in other comprehensive income)
|
—
|
|
—
|
|
—
|
|
|
—
|
|
(1
|
)
|
|||||
Net securities gains
|
—
|
|
10
|
|
21
|
|
|
10
|
|
41
|
|
|||||
Total fee and other revenue
|
3,120
|
|
3,018
|
|
2,999
|
|
|
6,138
|
|
5,969
|
|
|||||
Operations of consolidated investment management funds
|
|
|
|
|
|
|
||||||||||
Investment income
|
10
|
|
37
|
|
10
|
|
|
47
|
|
7
|
|
|||||
Interest of investment management fund note holders
|
—
|
|
4
|
|
—
|
|
|
4
|
|
3
|
|
|||||
Income from consolidated investment management funds
|
10
|
|
33
|
|
10
|
|
|
43
|
|
4
|
|
|||||
Net interest revenue
|
|
|
|
|
|
|
||||||||||
Interest revenue
|
1,052
|
|
960
|
|
890
|
|
|
2,012
|
|
1,773
|
|
|||||
Interest expense
|
226
|
|
168
|
|
123
|
|
|
394
|
|
240
|
|
|||||
Net interest revenue
|
826
|
|
792
|
|
767
|
|
|
1,618
|
|
1,533
|
|
|||||
Total revenue
|
3,956
|
|
3,843
|
|
3,776
|
|
|
7,799
|
|
7,506
|
|
|||||
Provision for credit losses
|
(7
|
)
|
(5
|
)
|
(9
|
)
|
|
(12
|
)
|
1
|
|
|||||
Noninterest expense
|
|
|
|
|
|
|
||||||||||
Staff
|
1,417
|
|
1,472
|
|
1,412
|
|
|
2,889
|
|
2,871
|
|
|||||
Professional, legal and other purchased services
|
319
|
|
312
|
|
290
|
|
|
631
|
|
568
|
|
|||||
Software
|
173
|
|
166
|
|
160
|
|
|
339
|
|
314
|
|
|||||
Net occupancy
|
139
|
|
136
|
|
152
|
|
|
275
|
|
294
|
|
|||||
Distribution and servicing
|
104
|
|
100
|
|
102
|
|
|
204
|
|
202
|
|
|||||
Sub-custodian
|
65
|
|
64
|
|
70
|
|
|
129
|
|
129
|
|
|||||
Furniture and equipment
|
59
|
|
57
|
|
63
|
|
|
116
|
|
128
|
|
|||||
Bank assessment charges
(a)
|
59
|
|
57
|
|
52
|
|
|
116
|
|
105
|
|
|||||
Business development
|
63
|
|
51
|
|
65
|
|
|
114
|
|
122
|
|
|||||
Other
(a)
|
192
|
|
167
|
|
188
|
|
|
359
|
|
376
|
|
|||||
Amortization of intangible assets
|
53
|
|
52
|
|
59
|
|
|
105
|
|
116
|
|
|||||
Merger and integration, litigation and restructuring charges
|
12
|
|
8
|
|
7
|
|
|
20
|
|
24
|
|
|||||
Total noninterest expense
|
2,655
|
|
2,642
|
|
2,620
|
|
|
5,297
|
|
5,249
|
|
|||||
Income
|
|
|
|
|
|
|
||||||||||
Income before income taxes
|
1,308
|
|
1,206
|
|
1,165
|
|
|
2,514
|
|
2,256
|
|
|||||
Provision for income taxes
|
332
|
|
269
|
|
290
|
|
|
601
|
|
573
|
|
|||||
Net income
|
976
|
|
937
|
|
875
|
|
|
1,913
|
|
1,683
|
|
|||||
Net (income) loss attributable to noncontrolling interests (includes $(3), $(18), $(4), $(21) and $3 related to consolidated investment management funds, respectively)
|
(1
|
)
|
(15
|
)
|
(2
|
)
|
|
(16
|
)
|
7
|
|
|||||
Net income applicable to shareholders of The Bank of New York Mellon Corporation
|
975
|
|
922
|
|
873
|
|
|
1,897
|
|
1,690
|
|
|||||
Preferred stock dividends
|
(49
|
)
|
(42
|
)
|
(48
|
)
|
|
(91
|
)
|
(61
|
)
|
|||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation
|
$
|
926
|
|
$
|
880
|
|
$
|
825
|
|
|
$
|
1,806
|
|
$
|
1,629
|
|
(a)
|
In the first quarter of 2017, we began disclosing bank assessment charges on a quarterly basis. The bank assessment charges were previously included in other expense. All prior periods were reclassified.
|
The Bank of New York Mellon Corporation (and its subsidiaries)
|
Net income applicable to common shareholders of The Bank of New York Mellon Corporation used for the earnings per share calculation
|
Quarter ended
|
|
Year-to-date
|
|||||||||||||
June 30, 2017
|
|
March 31, 2017
|
|
June 30, 2016
|
|
|
June 30, 2017
|
|
June 30, 2016
|
|
||||||
(in millions)
|
|
|||||||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation
|
$
|
926
|
|
$
|
880
|
|
$
|
825
|
|
|
$
|
1,806
|
|
$
|
1,629
|
|
Less: Earnings allocated to participating securities
|
13
|
|
14
|
|
13
|
|
|
27
|
|
24
|
|
|||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation after required adjustment for the calculation of basic and diluted earnings per common share
|
$
|
913
|
|
$
|
866
|
|
$
|
812
|
|
|
$
|
1,779
|
|
$
|
1,605
|
|
Earnings per share applicable to common shareholders of The Bank of New York Mellon Corporation
(b)
|
Quarter ended
|
|
Year-to-date
|
|||||||||||||
June 30, 2017
|
|
March 31, 2017
|
|
June 30, 2016
|
|
|
June 30, 2017
|
|
June 30, 2016
|
|
||||||
(in dollars)
|
|
|||||||||||||||
Basic
|
$
|
0.88
|
|
$
|
0.83
|
|
$
|
0.76
|
|
|
$
|
1.71
|
|
$
|
1.49
|
|
Diluted
|
$
|
0.88
|
|
$
|
0.83
|
|
$
|
0.75
|
|
|
$
|
1.70
|
|
$
|
1.48
|
|
(a)
|
Represents stock options, restricted stock, restricted stock units and participating securities outstanding but not included in the computation of diluted average common shares because their effect would be anti-dilutive.
|
(b)
|
Basic and diluted earnings per share under the two-class method are determined on the net income applicable to common shareholders of The Bank of New York Mellon Corporation reported on the income statement less earnings allocated to participating securities.
|
The Bank of New York Mellon Corporation (and its subsidiaries)
|
|
Quarter ended
|
|
Year-to-date
|
|||||||||||||
|
June 30, 2017
|
|
March 31, 2017
|
|
June 30, 2016
|
|
|
June 30, 2017
|
|
June 30, 2016
|
|
|||||
(in millions)
|
|
|||||||||||||||
Net income
|
$
|
976
|
|
$
|
937
|
|
$
|
875
|
|
|
$
|
1,913
|
|
$
|
1,683
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
330
|
|
125
|
|
(284
|
)
|
|
455
|
|
(247
|
)
|
|||||
Unrealized gain on assets available-for-sale:
|
|
|
|
|
|
|
||||||||||
Unrealized gain arising during the period
|
91
|
|
94
|
|
117
|
|
|
185
|
|
280
|
|
|||||
Reclassification adjustment
|
(1
|
)
|
(6
|
)
|
(13
|
)
|
|
(7
|
)
|
(28
|
)
|
|||||
Total unrealized gain on assets available-for-sale
|
90
|
|
88
|
|
104
|
|
|
178
|
|
252
|
|
|||||
Defined benefit plans:
|
|
|
|
|
|
|
||||||||||
Net gain arising during the period
|
—
|
|
2
|
|
—
|
|
|
2
|
|
2
|
|
|||||
Amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost
|
16
|
|
18
|
|
14
|
|
|
34
|
|
29
|
|
|||||
Total defined benefit plans
|
16
|
|
20
|
|
14
|
|
|
36
|
|
31
|
|
|||||
Net unrealized gain (loss) on cash flow hedges
|
1
|
|
10
|
|
(9
|
)
|
|
11
|
|
(6
|
)
|
|||||
Total other comprehensive income (loss), net of tax
(a)
|
437
|
|
243
|
|
(175
|
)
|
|
680
|
|
30
|
|
|||||
Total comprehensive income
|
1,413
|
|
1,180
|
|
700
|
|
|
2,593
|
|
1,713
|
|
|||||
Net (income) loss attributable to noncontrolling interests
|
(1
|
)
|
(15
|
)
|
(2
|
)
|
|
(16
|
)
|
7
|
|
|||||
Other comprehensive (income) loss attributable to noncontrolling interests
|
(6
|
)
|
(2
|
)
|
13
|
|
|
(8
|
)
|
18
|
|
|||||
Comprehensive income applicable to shareholders of The Bank of New York Mellon Corporation
|
$
|
1,406
|
|
$
|
1,163
|
|
$
|
711
|
|
|
$
|
2,569
|
|
$
|
1,738
|
|
(a)
|
Other comprehensive income (loss) attributable to The Bank of New York Mellon Corporation shareholders was
$431 million
for the
quarter ended
June 30, 2017
,
$241 million
for the
quarter ended
March 31, 2017
,
$(162) million
for the
quarter ended
June 30, 2016
,
$672 million
for the
six months ended June 30, 2017
and
$48 million
for the
six months ended June 30, 2016
.
|
The Bank of New York Mellon Corporation (and its subsidiaries)
|
|
June 30, 2017
|
|
Dec. 31, 2016
|
|
||
(dollars in millions, except per share amounts)
|
||||||
Assets
|
|
|
||||
Cash and due from:
|
|
|
||||
Banks
|
$
|
4,725
|
|
$
|
4,822
|
|
Interest-bearing deposits with the Federal Reserve and other central banks
|
74,130
|
|
58,041
|
|
||
Interest-bearing deposits with banks
|
13,601
|
|
15,086
|
|
||
Federal funds sold and securities purchased under resale agreements
|
27,440
|
|
25,801
|
|
||
Securities:
|
|
|
|
|||
Held-to-maturity (fair value of $40,862 and $40,669)
|
40,986
|
|
40,905
|
|
||
Available-for-sale
|
78,274
|
|
73,822
|
|
||
Total securities
|
119,260
|
|
114,727
|
|
||
Trading assets
|
5,279
|
|
5,733
|
|
||
Loans
|
61,673
|
|
64,458
|
|
||
Allowance for loan losses
|
(165
|
)
|
(169
|
)
|
||
Net loans
|
61,508
|
|
64,289
|
|
||
Premises and equipment
|
1,640
|
|
1,303
|
|
||
Accrued interest receivable
|
567
|
|
568
|
|
||
Goodwill
|
17,457
|
|
17,316
|
|
||
Intangible assets
|
3,506
|
|
3,598
|
|
||
Other assets (includes $911 and $1,339, at fair value)
|
25,000
|
|
20,954
|
|
||
Subtotal assets of operations
|
354,113
|
|
332,238
|
|
||
Assets of consolidated investment management funds, at fair value
|
702
|
|
1,231
|
|
||
Total assets
|
$
|
354,815
|
|
$
|
333,469
|
|
Liabilities
|
|
|
|
|||
Deposits:
|
|
|
|
|||
Noninterest-bearing (principally U.S. offices)
|
$
|
89,063
|
|
$
|
78,342
|
|
Interest-bearing deposits in U.S. offices
|
48,798
|
|
52,049
|
|
||
Interest-bearing deposits in Non-U.S. offices
|
97,816
|
|
91,099
|
|
||
Total deposits
|
235,677
|
|
221,490
|
|
||
Federal funds purchased and securities sold under repurchase agreements
|
10,934
|
|
9,989
|
|
||
Trading liabilities
|
4,100
|
|
4,389
|
|
||
Payables to customers and broker-dealers
|
21,622
|
|
20,987
|
|
||
Commercial paper
|
876
|
|
—
|
|
||
Other borrowed funds
|
1,338
|
|
754
|
|
||
Accrued taxes and other expenses
|
5,670
|
|
5,867
|
|
||
Other liabilities (including allowance for lending-related commitments of $105 and $112, also includes $815 and $597, at fair value)
|
6,379
|
|
5,635
|
|
||
Long-term debt (includes $368 and $363, at fair value)
|
27,699
|
|
24,463
|
|
||
Subtotal liabilities of operations
|
314,295
|
|
293,574
|
|
||
Liabilities of consolidated investment management funds, at fair value
|
22
|
|
315
|
|
||
Total liabilities
|
314,317
|
|
293,889
|
|
||
Temporary equity
|
|
|
|
|||
Redeemable noncontrolling interests
|
181
|
|
151
|
|
||
Permanent equity
|
|
|
|
|||
Preferred stock – par value $0.01 per share; authorized 100,000,000 shares; issued 35,826 and 35,826 shares
|
3,542
|
|
3,542
|
|
||
Common stock – par value $0.01 per share; authorized 3,500,000,000 shares; issued 1,349,181,914 and 1,333,706,427 shares
|
13
|
|
13
|
|
||
Additional paid-in capital
|
26,432
|
|
25,962
|
|
||
Retained earnings
|
24,027
|
|
22,621
|
|
||
Accumulated other comprehensive loss, net of tax
|
(3,093
|
)
|
(3,765
|
)
|
||
Less: Treasury stock of 316,025,713 and 286,218,126 common shares, at cost
|
(10,947
|
)
|
(9,562
|
)
|
||
Total The Bank of New York Mellon Corporation shareholders’ equity
|
39,974
|
|
38,811
|
|
||
Nonredeemable noncontrolling interests of consolidated investment management funds
|
343
|
|
618
|
|
||
Total permanent equity
|
40,317
|
|
39,429
|
|
||
Total liabilities, temporary equity and permanent equity
|
$
|
354,815
|
|
$
|
333,469
|
|
The Bank of New York Mellon Corporation (and its subsidiaries)
|
|
Six months ended June 30,
|
||||||
(in millions)
|
2017
|
|
|
2016
|
|
||
Operating activities
|
|
|
|
||||
Net income
|
$
|
1,913
|
|
|
$
|
1,683
|
|
Net (income) loss attributable to noncontrolling interests
|
(16
|
)
|
|
7
|
|
||
Net income applicable to shareholders of The Bank of New York Mellon Corporation
|
1,897
|
|
|
1,690
|
|
||
Adjustments to reconcile net income to net cash (used for) provided by operating activities:
|
|
|
|
||||
Provision for credit losses
|
(12
|
)
|
|
1
|
|
||
Pension plan contributions
|
(8
|
)
|
|
(13
|
)
|
||
Depreciation and amortization
|
693
|
|
|
748
|
|
||
Deferred tax expense (benefit)
|
124
|
|
|
(299
|
)
|
||
Net securities (gains)
|
(10
|
)
|
|
(41
|
)
|
||
Change in trading assets and liabilities
|
167
|
|
|
1,914
|
|
||
Originations of loans held-for-sale
|
—
|
|
|
(171
|
)
|
||
Proceeds from the sales of loans originated for sale
|
—
|
|
|
280
|
|
||
Change in accruals and other, net
|
(4,706
|
)
|
|
(2,647
|
)
|
||
Net cash (used for) provided by operating activities
|
(1,855
|
)
|
|
1,462
|
|
||
Investing activities
|
|
|
|
||||
Change in interest-bearing deposits with banks
|
1,961
|
|
|
1,979
|
|
||
Change in interest-bearing deposits with the Federal Reserve and other central banks
|
(13,836
|
)
|
|
25,717
|
|
||
Purchases of securities held-to-maturity
|
(4,494
|
)
|
|
(2,165
|
)
|
||
Paydowns of securities held-to-maturity
|
2,146
|
|
|
2,209
|
|
||
Maturities of securities held-to-maturity
|
2,825
|
|
|
2,471
|
|
||
Purchases of securities available-for-sale
|
(13,569
|
)
|
|
(14,524
|
)
|
||
Sales of securities available-for-sale
|
2,093
|
|
|
4,624
|
|
||
Paydowns of securities available-for-sale
|
4,679
|
|
|
4,155
|
|
||
Maturities of securities available-for-sale
|
3,842
|
|
|
6,086
|
|
||
Net change in loans
|
2,653
|
|
|
(1,080
|
)
|
||
Sales of loans and other real estate
|
364
|
|
|
170
|
|
||
Change in federal funds sold and securities purchased under resale agreements
|
(1,639
|
)
|
|
(3,665
|
)
|
||
Net change in seed capital investments
|
(23
|
)
|
|
(49
|
)
|
||
Purchases of premises and equipment/capitalized software
|
(722
|
)
|
|
(349
|
)
|
||
Acquisitions, net of cash
|
—
|
|
|
(38
|
)
|
||
Other, net
|
292
|
|
|
155
|
|
||
Net cash (used for) provided by investing activities
|
(13,428
|
)
|
|
25,696
|
|
||
Financing activities
|
|
|
|
||||
Change in deposits
|
10,812
|
|
|
(20,265
|
)
|
||
Change in federal funds purchased and securities sold under repurchase agreements
|
945
|
|
|
(7,391
|
)
|
||
Change in payables to customers and broker-dealers
|
626
|
|
|
(730
|
)
|
||
Change in other borrowed funds
|
196
|
|
|
551
|
|
||
Change in commercial paper
|
876
|
|
|
—
|
|
||
Net proceeds from the issuance of long-term debt
|
3,990
|
|
|
2,990
|
|
||
Repayments of long-term debt
|
(796
|
)
|
|
(1,450
|
)
|
||
Proceeds from the exercise of stock options
|
256
|
|
|
106
|
|
||
Issuance of common stock
|
14
|
|
|
13
|
|
||
Treasury stock acquired
|
(1,385
|
)
|
|
(1,086
|
)
|
||
Common cash dividends paid
|
(400
|
)
|
|
(370
|
)
|
||
Preferred cash dividends paid
|
(91
|
)
|
|
(61
|
)
|
||
Other, net
|
30
|
|
|
(13
|
)
|
||
Net cash provided by (used for) financing activities
|
15,073
|
|
|
(27,706
|
)
|
||
Effect of exchange rate changes on cash
|
113
|
|
|
(180
|
)
|
||
Change in cash and due from banks
|
|
|
|
||||
Change in cash and due from banks
|
(97
|
)
|
|
(728
|
)
|
||
Cash and due from banks at beginning of period
|
4,822
|
|
|
6,537
|
|
||
Cash and due from banks at end of period
|
$
|
4,725
|
|
|
$
|
5,809
|
|
Supplemental disclosures
|
|
|
|
||||
Interest paid
|
$
|
385
|
|
|
$
|
241
|
|
Income taxes paid
|
220
|
|
|
223
|
|
||
Income taxes refunded
|
2
|
|
|
26
|
|
The Bank of New York Mellon Corporation (and its subsidiaries)
|
|
The Bank of New York Mellon Corporation shareholders
|
Non-
redeemable
noncontrolling
interests of
consolidated
investment
management
funds
|
|
Total
permanent
equity
|
|
|
Redeemable
non-
controlling
interests/
temporary
equity
|
|
||||||||||||||||||||
(in millions, except per
share amount) |
Preferred stock
|
|
Common
stock
|
|
Additional
paid-in
capital
|
|
Retained
earnings
|
|
Accumulated
other comprehensive (loss) income, net of tax |
|
Treasury
stock
|
|
||||||||||||||||
Balance at Dec. 31, 2016
|
$
|
3,542
|
|
$
|
13
|
|
$
|
25,962
|
|
$
|
22,621
|
|
$
|
(3,765
|
)
|
$
|
(9,562
|
)
|
$
|
618
|
|
$
|
39,429
|
|
(a)
|
$
|
151
|
|
Shares issued to shareholders of noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
29
|
|
|||||||||
Redemption of subsidiary shares from noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(16
|
)
|
|||||||||
Other net changes in noncontrolling interests
|
—
|
|
—
|
|
(9
|
)
|
—
|
|
—
|
|
—
|
|
(296
|
)
|
(305
|
)
|
|
14
|
|
|||||||||
Net income (loss)
|
—
|
|
—
|
|
—
|
|
1,897
|
|
—
|
|
—
|
|
21
|
|
1,918
|
|
|
(5
|
)
|
|||||||||
Other comprehensive income
|
—
|
|
—
|
|
—
|
|
—
|
|
672
|
|
—
|
|
—
|
|
672
|
|
|
8
|
|
|||||||||
Dividends:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Common stock at $0.38 per share
|
—
|
|
—
|
|
—
|
|
(400
|
)
|
—
|
|
—
|
|
—
|
|
(400
|
)
|
|
—
|
|
|||||||||
Preferred stock
|
—
|
|
—
|
|
—
|
|
(91
|
)
|
—
|
|
—
|
|
—
|
|
(91
|
)
|
|
—
|
|
|||||||||
Repurchase of common stock
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,385
|
)
|
—
|
|
(1,385
|
)
|
|
—
|
|
|||||||||
Common stock issued under:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Employee benefit plans
|
—
|
|
—
|
|
15
|
|
—
|
|
—
|
|
—
|
|
—
|
|
15
|
|
|
—
|
|
|||||||||
Direct stock purchase and dividend reinvestment plan
|
—
|
|
—
|
|
10
|
|
—
|
|
—
|
|
—
|
|
—
|
|
10
|
|
|
—
|
|
|||||||||
Stock awards and options exercised
|
—
|
|
—
|
|
454
|
|
—
|
|
—
|
|
—
|
|
—
|
|
454
|
|
|
—
|
|
|||||||||
Balance at June 30, 2017
|
$
|
3,542
|
|
$
|
13
|
|
$
|
26,432
|
|
$
|
24,027
|
|
$
|
(3,093
|
)
|
$
|
(10,947
|
)
|
$
|
343
|
|
$
|
40,317
|
|
(a)
|
$
|
181
|
|
(a)
|
Includes total The Bank of New York Mellon Corporation common shareholders’ equity of
$35,269 million
at
Dec. 31, 2016
and
$36,432 million
at
June 30, 2017
.
|
Notes to Consolidated Financial Statements
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Securities at June 30, 2017
|
Gross
unrealized
|
|
||||||||||
|
Amortized cost
|
|
Fair
value
|
|
||||||||
(in millions)
|
Gains
|
|
Losses
|
|
||||||||
Available-for-sale:
|
|
|
|
|
||||||||
U.S. Treasury
|
$
|
15,046
|
|
$
|
247
|
|
$
|
124
|
|
$
|
15,169
|
|
U.S. government agencies
|
557
|
|
3
|
|
5
|
|
555
|
|
||||
State and political subdivisions
|
3,251
|
|
61
|
|
30
|
|
3,282
|
|
||||
Agency RMBS
|
24,045
|
|
137
|
|
282
|
|
23,900
|
|
||||
Non-agency RMBS
|
531
|
|
34
|
|
6
|
|
559
|
|
||||
Other RMBS
|
332
|
|
3
|
|
6
|
|
329
|
|
||||
Commercial MBS
|
816
|
|
9
|
|
7
|
|
818
|
|
||||
Agency commercial MBS
|
8,741
|
|
47
|
|
62
|
|
8,726
|
|
||||
CLOs
|
2,635
|
|
10
|
|
3
|
|
2,642
|
|
||||
Other asset-backed securities
|
1,326
|
|
5
|
|
1
|
|
1,330
|
|
||||
Foreign covered bonds
|
2,378
|
|
21
|
|
9
|
|
2,390
|
|
||||
Corporate bonds
|
1,309
|
|
20
|
|
11
|
|
1,318
|
|
||||
Sovereign debt/sovereign guaranteed
|
12,114
|
|
197
|
|
23
|
|
12,288
|
|
||||
Other debt securities
|
2,821
|
|
19
|
|
10
|
|
2,830
|
|
||||
Equity securities
|
2
|
|
1
|
|
—
|
|
3
|
|
||||
Money market funds
|
896
|
|
—
|
|
—
|
|
896
|
|
||||
Non-agency RMBS
(a)
|
948
|
|
293
|
|
2
|
|
1,239
|
|
||||
Total securities available-for-sale
(b)
|
$
|
77,748
|
|
$
|
1,107
|
|
$
|
581
|
|
$
|
78,274
|
|
Held-to-maturity:
|
|
|
|
|
||||||||
U.S. Treasury
|
$
|
10,371
|
|
$
|
24
|
|
$
|
31
|
|
$
|
10,364
|
|
U.S. government agencies
|
1,639
|
|
—
|
|
7
|
|
1,632
|
|
||||
State and political subdivisions
|
17
|
|
—
|
|
—
|
|
17
|
|
||||
Agency RMBS
|
25,784
|
|
88
|
|
228
|
|
25,644
|
|
||||
Non-agency RMBS
|
66
|
|
4
|
|
2
|
|
68
|
|
||||
Other RMBS
|
138
|
|
—
|
|
2
|
|
136
|
|
||||
Commercial MBS
|
7
|
|
—
|
|
—
|
|
7
|
|
||||
Agency commercial MBS
|
1,091
|
|
4
|
|
6
|
|
1,089
|
|
||||
Foreign covered bonds
|
80
|
|
1
|
|
—
|
|
81
|
|
||||
Sovereign debt/sovereign guaranteed
|
1,766
|
|
30
|
|
—
|
|
1,796
|
|
||||
Other debt securities
|
27
|
|
1
|
|
—
|
|
28
|
|
||||
Total securities held-to-maturity
|
$
|
40,986
|
|
$
|
152
|
|
$
|
276
|
|
$
|
40,862
|
|
Total securities
|
$
|
118,734
|
|
$
|
1,259
|
|
$
|
857
|
|
$
|
119,136
|
|
(a)
|
Previously included in the Grantor Trust. The Grantor Trust was dissolved in 2011.
|
(b)
|
Includes gross unrealized gains of
$55 million
and gross unrealized losses of
$168 million
recorded in accumulated other comprehensive income related to investment securities that were transferred from available-for-sale to held-to-maturity. The unrealized gains and losses are primarily related to Agency RMBS and will be amortized into net interest revenue over the contractual lives of the securities.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Securities at Dec. 31, 2016
|
Gross
unrealized |
|
|
|||||||||
|
Amortized cost
|
|
Fair
value
|
|
||||||||
(in millions)
|
Gains
|
|
Losses
|
|
||||||||
Available-for-sale:
|
|
|
|
|
||||||||
U.S. Treasury
|
$
|
14,373
|
|
$
|
115
|
|
$
|
181
|
|
$
|
14,307
|
|
U.S. government agencies
|
366
|
|
2
|
|
9
|
|
359
|
|
||||
State and political subdivisions
|
3,392
|
|
38
|
|
52
|
|
3,378
|
|
||||
Agency RMBS
|
22,929
|
|
148
|
|
341
|
|
22,736
|
|
||||
Non-agency RMBS
|
620
|
|
31
|
|
13
|
|
638
|
|
||||
Other RMBS
|
517
|
|
4
|
|
8
|
|
513
|
|
||||
Commercial MBS
|
931
|
|
8
|
|
11
|
|
928
|
|
||||
Agency commercial MBS
|
6,505
|
|
28
|
|
84
|
|
6,449
|
|
||||
CLOs
|
2,593
|
|
6
|
|
1
|
|
2,598
|
|
||||
Other asset-backed securities
|
1,729
|
|
4
|
|
6
|
|
1,727
|
|
||||
Foreign covered bonds
|
2,126
|
|
24
|
|
9
|
|
2,141
|
|
||||
Corporate bonds
|
1,391
|
|
22
|
|
17
|
|
1,396
|
|
||||
Sovereign debt/sovereign guaranteed
|
12,248
|
|
261
|
|
20
|
|
12,489
|
|
||||
Other debt securities
|
1,952
|
|
19
|
|
10
|
|
1,961
|
|
||||
Equity securities
|
2
|
|
1
|
|
—
|
|
3
|
|
||||
Money market funds
|
842
|
|
—
|
|
—
|
|
842
|
|
||||
Non-agency RMBS
(a)
|
1,080
|
|
286
|
|
9
|
|
1,357
|
|
||||
Total securities available-for-sale
(b)
|
$
|
73,596
|
|
$
|
997
|
|
$
|
771
|
|
$
|
73,822
|
|
Held-to-maturity:
|
|
|
|
|
||||||||
U.S. Treasury
|
$
|
11,117
|
|
$
|
22
|
|
$
|
41
|
|
$
|
11,098
|
|
U.S. government agencies
|
1,589
|
|
—
|
|
6
|
|
1,583
|
|
||||
State and political subdivisions
|
19
|
|
—
|
|
1
|
|
18
|
|
||||
Agency RMBS
|
25,221
|
|
57
|
|
299
|
|
24,979
|
|
||||
Non-agency RMBS
|
78
|
|
4
|
|
2
|
|
80
|
|
||||
Other RMBS
|
142
|
|
—
|
|
4
|
|
138
|
|
||||
Commercial MBS
|
7
|
|
—
|
|
—
|
|
7
|
|
||||
Agency commercial MBS
|
721
|
|
1
|
|
10
|
|
712
|
|
||||
Foreign covered bonds
|
74
|
|
1
|
|
—
|
|
75
|
|
||||
Sovereign debt/sovereign guaranteed
|
1,911
|
|
42
|
|
—
|
|
1,953
|
|
||||
Other debt securities
|
26
|
|
—
|
|
—
|
|
26
|
|
||||
Total securities held-to-maturity
|
$
|
40,905
|
|
$
|
127
|
|
$
|
363
|
|
$
|
40,669
|
|
Total securities
|
$
|
114,501
|
|
$
|
1,124
|
|
$
|
1,134
|
|
$
|
114,491
|
|
(a)
|
Previously included in the Grantor Trust. The Grantor Trust was dissolved in 2011.
|
(b)
|
Includes gross unrealized gains of
$62 million
and gross unrealized losses of
$190 million
recorded in accumulated other comprehensive income related to investment securities that were transferred from available-for-sale to held-to-maturity. The unrealized gains and losses are primarily related to Agency RMBS and will be amortized into net interest revenue over the contractual lives of the securities.
|
Net securities gains (losses)
|
|
|
|
||||||||||||
(in millions)
|
2Q17
|
|
1Q17
|
|
2Q16
|
|
YTD17
|
|
YTD16
|
|
|||||
Realized gross gains
|
$
|
3
|
|
$
|
11
|
|
$
|
23
|
|
$
|
14
|
|
$
|
45
|
|
Realized gross losses
|
(2
|
)
|
—
|
|
—
|
|
(2
|
)
|
—
|
|
|||||
Recognized gross impairments
|
(1
|
)
|
(1
|
)
|
(2
|
)
|
(2
|
)
|
(4
|
)
|
|||||
Total net securities gains
|
$
|
—
|
|
$
|
10
|
|
$
|
21
|
|
$
|
10
|
|
$
|
41
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Temporarily impaired securities at June 30, 2017
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
|||||||||||||||
(in millions)
|
Fair
value |
|
Unrealized
losses |
|
|
Fair
value |
|
Unrealized
losses |
|
|
Fair
value |
|
Unrealized
losses |
|
||||||
Available-for-sale:
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury
|
$
|
8,023
|
|
$
|
123
|
|
|
$
|
—
|
|
$
|
1
|
|
|
$
|
8,023
|
|
$
|
124
|
|
U.S. government agencies
|
286
|
|
5
|
|
|
—
|
|
—
|
|
|
286
|
|
5
|
|
||||||
State and political subdivisions
|
589
|
|
12
|
|
|
129
|
|
18
|
|
|
718
|
|
30
|
|
||||||
Agency RMBS
|
10,592
|
|
98
|
|
|
4,376
|
|
184
|
|
|
14,968
|
|
282
|
|
||||||
Non-agency RMBS
|
4
|
|
—
|
|
|
279
|
|
6
|
|
|
283
|
|
6
|
|
||||||
Other RMBS
|
—
|
|
—
|
|
|
95
|
|
6
|
|
|
95
|
|
6
|
|
||||||
Commercial MBS
|
249
|
|
5
|
|
|
81
|
|
2
|
|
|
330
|
|
7
|
|
||||||
Agency commercial MBS
|
3,422
|
|
55
|
|
|
540
|
|
7
|
|
|
3,962
|
|
62
|
|
||||||
CLOs
|
679
|
|
3
|
|
|
25
|
|
—
|
|
|
704
|
|
3
|
|
||||||
Other asset-backed securities
|
174
|
|
—
|
|
|
147
|
|
1
|
|
|
321
|
|
1
|
|
||||||
Corporate bonds
|
491
|
|
11
|
|
|
8
|
|
—
|
|
|
499
|
|
11
|
|
||||||
Sovereign debt/sovereign guaranteed
|
2,107
|
|
23
|
|
|
58
|
|
—
|
|
|
2,165
|
|
23
|
|
||||||
Non-agency RMBS
(a)
|
5
|
|
—
|
|
|
30
|
|
2
|
|
|
35
|
|
2
|
|
||||||
Other debt securities
|
1,226
|
|
10
|
|
|
25
|
|
—
|
|
|
1,251
|
|
10
|
|
||||||
Foreign covered bonds
|
1,143
|
|
9
|
|
|
—
|
|
—
|
|
|
1,143
|
|
9
|
|
||||||
Total securities available-for-sale
(b)
|
$
|
28,990
|
|
$
|
354
|
|
|
$
|
5,793
|
|
$
|
227
|
|
|
$
|
34,783
|
|
$
|
581
|
|
Held-to-maturity:
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury
|
$
|
7,533
|
|
$
|
31
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
7,533
|
|
$
|
31
|
|
U.S. government agencies
|
1,558
|
|
7
|
|
|
—
|
|
—
|
|
|
1,558
|
|
7
|
|
||||||
Agency RMBS
|
19,045
|
|
225
|
|
|
163
|
|
3
|
|
|
19,208
|
|
228
|
|
||||||
Non-agency RMBS
|
3
|
|
—
|
|
|
41
|
|
2
|
|
|
44
|
|
2
|
|
||||||
Agency Commercial MBS
|
572
|
|
6
|
|
|
—
|
|
—
|
|
|
572
|
|
6
|
|
||||||
Other RMBS
|
—
|
|
—
|
|
|
111
|
|
2
|
|
|
111
|
|
2
|
|
||||||
Total securities held-to-maturity
|
$
|
28,711
|
|
$
|
269
|
|
|
$
|
315
|
|
$
|
7
|
|
|
$
|
29,026
|
|
$
|
276
|
|
Total temporarily impaired securities
|
$
|
57,701
|
|
$
|
623
|
|
|
$
|
6,108
|
|
$
|
234
|
|
|
$
|
63,809
|
|
$
|
857
|
|
(a)
|
Previously included in the Grantor Trust. The Grantor Trust was dissolved in 2011.
|
(b)
|
Gross unrealized losses for 12 months or more of
$168 million
were recorded in accumulated other comprehensive income and related to investment securities that were transferred from available-for-sale to held-to-maturity. The unrealized losses are primarily related to Agency RMBS and will be amortized into net interest revenue over the contractual lives of the securities. There were
no
gross unrealized losses for less than 12 months.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Temporarily impaired securities at Dec. 31, 2016
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
|||||||||||||||
(in millions)
|
Fair
value
|
|
Unrealized
losses
|
|
|
Fair
value
|
|
Unrealized
losses
|
|
|
Fair
value
|
|
Unrealized
losses
|
|
||||||
Available-for-sale:
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury
|
$
|
8,489
|
|
$
|
181
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
8,489
|
|
$
|
181
|
|
U.S. government agencies
|
257
|
|
9
|
|
|
—
|
|
—
|
|
|
257
|
|
9
|
|
||||||
State and political subdivisions
|
1,058
|
|
33
|
|
|
131
|
|
19
|
|
|
1,189
|
|
52
|
|
||||||
Agency RMBS
|
14,766
|
|
141
|
|
|
1,673
|
|
200
|
|
|
16,439
|
|
341
|
|
||||||
Non-agency RMBS
|
21
|
|
—
|
|
|
332
|
|
13
|
|
|
353
|
|
13
|
|
||||||
Other RMBS
|
26
|
|
—
|
|
|
136
|
|
8
|
|
|
162
|
|
8
|
|
||||||
Commercial MBS
|
302
|
|
7
|
|
|
163
|
|
4
|
|
|
465
|
|
11
|
|
||||||
Agency commercial MBS
|
3,570
|
|
78
|
|
|
589
|
|
6
|
|
|
4,159
|
|
84
|
|
||||||
CLOs
|
443
|
|
1
|
|
|
404
|
|
—
|
|
|
847
|
|
1
|
|
||||||
Other asset-backed securities
|
276
|
|
1
|
|
|
357
|
|
5
|
|
|
633
|
|
6
|
|
||||||
Corporate bonds
|
594
|
|
16
|
|
|
7
|
|
1
|
|
|
601
|
|
17
|
|
||||||
Sovereign debt/sovereign guaranteed
|
1,521
|
|
20
|
|
|
63
|
|
—
|
|
|
1,584
|
|
20
|
|
||||||
Non-agency RMBS
(a)
|
25
|
|
—
|
|
|
47
|
|
9
|
|
|
72
|
|
9
|
|
||||||
Other debt securities
|
742
|
|
10
|
|
|
50
|
|
—
|
|
|
792
|
|
10
|
|
||||||
Foreign covered bonds
|
712
|
|
9
|
|
|
—
|
|
—
|
|
|
712
|
|
9
|
|
||||||
Total securities available-for-sale
(b)
|
$
|
32,802
|
|
$
|
506
|
|
|
$
|
3,952
|
|
$
|
265
|
|
|
$
|
36,754
|
|
$
|
771
|
|
Held-to-maturity:
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury
|
$
|
6,112
|
|
$
|
41
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
6,112
|
|
$
|
41
|
|
U.S. government agencies
|
1,533
|
|
6
|
|
|
—
|
|
—
|
|
|
1,533
|
|
6
|
|
||||||
State and political subdivisions
|
—
|
|
—
|
|
|
4
|
|
1
|
|
|
4
|
|
1
|
|
||||||
Agency RMBS
|
19,498
|
|
297
|
|
|
102
|
|
2
|
|
|
19,600
|
|
299
|
|
||||||
Non-agency RMBS
|
4
|
|
—
|
|
|
48
|
|
2
|
|
|
52
|
|
2
|
|
||||||
Agency commercial MBS
|
621
|
|
10
|
|
|
—
|
|
—
|
|
|
621
|
|
10
|
|
||||||
Other RMBS
|
15
|
|
—
|
|
|
123
|
|
4
|
|
|
138
|
|
4
|
|
||||||
Total securities held-to-maturity
|
$
|
27,783
|
|
$
|
354
|
|
|
$
|
277
|
|
$
|
9
|
|
|
$
|
28,060
|
|
$
|
363
|
|
Total temporarily impaired securities
|
$
|
60,585
|
|
$
|
860
|
|
|
$
|
4,229
|
|
$
|
274
|
|
|
$
|
64,814
|
|
$
|
1,134
|
|
(a)
|
Previously included in the Grantor Trust. The Grantor Trust was dissolved in 2011.
|
(b)
|
Includes gross unrealized losses for 12 months or more of
$190 million
recorded in accumulated other comprehensive income related to investment securities that were transferred from available-for-sale to held-to-maturity. The unrealized losses are primarily related to Agency RMBS and will be amortized into net interest revenue over the contractual lives of the securities. There were
no
gross unrealized losses for less than 12 months.
|
Maturity distribution and yield on investment securities at June 30, 2017
|
U.S. Treasury
|
|
U.S. government
agencies
|
|
State and political
subdivisions
|
|
Other bonds, notes and debentures
|
|
Mortgage/
asset-backed and
equity securities
|
|
|
||||||||||||||||||||||
(dollars in millions)
|
Amount
|
|
Yield
(a)
|
|
|
Amount
|
|
Yield
(a)
|
|
|
Amount
|
|
Yield
(a)
|
|
|
Amount
|
|
Yield
(a)
|
|
|
Amount
|
|
Yield
(a)
|
|
|
Total
|
|
||||||
Securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
One year or less
|
$
|
2,559
|
|
0.99
|
%
|
|
$
|
—
|
|
—
|
%
|
|
$
|
358
|
|
2.60
|
%
|
|
$
|
3,328
|
|
1.04
|
%
|
|
$
|
—
|
|
—
|
%
|
|
$
|
6,245
|
|
Over 1 through 5 years
|
4,830
|
|
1.65
|
|
|
129
|
|
1.29
|
|
|
1,663
|
|
2.99
|
|
|
12,471
|
|
1.00
|
|
|
—
|
|
—
|
|
|
19,093
|
|
||||||
Over 5 through 10 years
|
4,289
|
|
1.89
|
|
|
426
|
|
2.48
|
|
|
1,068
|
|
3.48
|
|
|
2,836
|
|
0.83
|
|
|
—
|
|
—
|
|
|
8,619
|
|
||||||
Over 10 years
|
3,491
|
|
3.11
|
|
|
—
|
|
—
|
|
|
193
|
|
2.14
|
|
|
191
|
|
1.64
|
|
|
—
|
|
—
|
|
|
3,875
|
|
||||||
Mortgage-backed securities
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
35,571
|
|
2.75
|
|
|
35,571
|
|
||||||
Asset-backed securities
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
3,972
|
|
2.19
|
|
|
3,972
|
|
||||||
Equity securities
(b)
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
899
|
|
—
|
|
|
899
|
|
||||||
Total
|
$
|
15,169
|
|
1.94
|
%
|
|
$
|
555
|
|
2.20
|
%
|
|
$
|
3,282
|
|
3.05
|
%
|
|
$
|
18,826
|
|
0.99
|
%
|
|
$
|
40,442
|
|
2.63
|
%
|
|
$
|
78,274
|
|
Securities held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
One year or less
|
$
|
5,328
|
|
0.95
|
%
|
|
$
|
550
|
|
0.91
|
%
|
|
$
|
—
|
|
—
|
%
|
|
$
|
801
|
|
0.61
|
%
|
|
$
|
—
|
|
—
|
%
|
|
$
|
6,679
|
|
Over 1 through 5 years
|
3,636
|
|
1.67
|
|
|
1,064
|
|
1.30
|
|
|
1
|
|
6.91
|
|
|
370
|
|
0.69
|
|
|
—
|
|
—
|
|
|
5,071
|
|
||||||
Over 5 through 10 years
|
1,407
|
|
1.92
|
|
|
25
|
|
2.25
|
|
|
2
|
|
6.84
|
|
|
702
|
|
0.71
|
|
|
—
|
|
—
|
|
|
2,136
|
|
||||||
Over 10 years
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
14
|
|
5.33
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
14
|
|
||||||
Mortgage-backed securities
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
27,086
|
|
2.78
|
|
|
27,086
|
|
||||||
Total
|
$
|
10,371
|
|
1.33
|
%
|
|
$
|
1,639
|
|
1.18
|
%
|
|
$
|
17
|
|
5.64
|
%
|
|
$
|
1,873
|
|
0.66
|
%
|
|
$
|
27,086
|
|
2.78
|
%
|
|
$
|
40,986
|
|
(a)
|
Yields are based upon the amortized cost of securities.
|
(b)
|
Includes money market funds.
|
Notes to Consolidated Financial Statements
(continued)
|
|
•
|
Default rate - the number of mortgage loans expected to go into default over the life of the transaction, which is driven by the roll rate of loans in each performance bucket that will ultimately migrate to default; and
|
•
|
Severity - the loss expected to be realized when a loan defaults.
|
Debt securities credit loss roll forward
|
|
|
||||
(in millions)
|
2Q17
|
|
2Q16
|
|
||
Beginning balance as of March 31
|
$
|
89
|
|
$
|
93
|
|
Add: Initial OTTI credit losses
|
—
|
|
—
|
|
||
Subsequent OTTI credit losses
|
1
|
|
2
|
|
||
Less: Realized losses for securities sold
|
5
|
|
4
|
|
||
Ending balance as of June 30
|
$
|
85
|
|
$
|
91
|
|
Debt securities credit loss roll forward
|
|
|
||||
(in millions)
|
YTD17
|
|
YTD16
|
|
||
Beginning balance as of Jan. 1
|
$
|
88
|
|
$
|
91
|
|
Add: Initial OTTI credit losses
|
—
|
|
—
|
|
||
Subsequent OTTI credit losses
|
2
|
|
4
|
|
||
Less: Realized losses for securities sold
|
5
|
|
4
|
|
||
Ending balance as of June 30
|
$
|
85
|
|
$
|
91
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Loans
|
June 30, 2017
|
|
Dec. 31, 2016
|
|
||
(in millions)
|
||||||
Domestic:
|
|
|
||||
Financial institutions
|
$
|
5,954
|
|
$
|
6,342
|
|
Commercial
|
2,580
|
|
2,286
|
|
||
Wealth management loans and mortgages
|
16,031
|
|
15,555
|
|
||
Commercial real estate
|
5,017
|
|
4,639
|
|
||
Lease financings
|
847
|
|
989
|
|
||
Other residential mortgages
|
780
|
|
854
|
|
||
Overdrafts
|
855
|
|
1,055
|
|
||
Other
|
1,122
|
|
1,202
|
|
||
Margin loans
|
13,973
|
|
17,503
|
|
||
Total domestic
|
47,159
|
|
50,425
|
|
||
Foreign:
|
|
|
||||
Financial institutions
|
7,267
|
|
8,347
|
|
||
Commercial
|
267
|
|
331
|
|
||
Wealth management loans and mortgages
|
111
|
|
99
|
|
||
Commercial real estate
|
14
|
|
15
|
|
||
Lease financings
|
527
|
|
736
|
|
||
Other (primarily overdrafts)
|
6,144
|
|
4,418
|
|
||
Margin loans
|
184
|
|
87
|
|
||
Total foreign
|
14,514
|
|
14,033
|
|
||
Total loans
(a)
|
$
|
61,673
|
|
$
|
64,458
|
|
(a)
|
Net of unearned income of
$424 million
at
June 30, 2017
and
$527 million
at
Dec. 31, 2016
primarily on domestic and foreign lease financings.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Allowance for credit losses activity for the quarter ended June 30, 2017
|
Wealth management loans and mortgages
|
|
Other
residential
mortgages
|
|
|
|
|
|
||||||||||||||||||||
(in millions)
|
Commercial
|
|
Commercial
real estate
|
|
Financial
institutions
|
|
Lease
financings
|
|
All
other
|
|
|
Foreign
|
|
Total
|
|
|||||||||||||
Beginning balance
|
$
|
82
|
|
$
|
73
|
|
$
|
23
|
|
$
|
10
|
|
$
|
26
|
|
$
|
25
|
|
$
|
—
|
|
|
$
|
37
|
|
$
|
276
|
|
Charge-offs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|||||||||
Recoveries
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
|
—
|
|
1
|
|
|||||||||
Net recoveries
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
|
—
|
|
1
|
|
|||||||||
Provision
|
(2
|
)
|
2
|
|
—
|
|
—
|
|
(1
|
)
|
(3
|
)
|
—
|
|
|
(3
|
)
|
(7
|
)
|
|||||||||
Ending balance
|
$
|
80
|
|
$
|
75
|
|
$
|
23
|
|
$
|
10
|
|
$
|
25
|
|
$
|
23
|
|
$
|
—
|
|
|
$
|
34
|
|
$
|
270
|
|
Allowance for:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Loan losses
|
$
|
26
|
|
$
|
55
|
|
$
|
7
|
|
$
|
10
|
|
$
|
21
|
|
$
|
23
|
|
$
|
—
|
|
|
$
|
23
|
|
$
|
165
|
|
Lending-related commitments
|
54
|
|
20
|
|
16
|
|
—
|
|
4
|
|
—
|
|
—
|
|
|
11
|
|
105
|
|
|||||||||
Individually evaluated for impairment:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Loan balance
|
$
|
—
|
|
$
|
—
|
|
$
|
2
|
|
$
|
—
|
|
$
|
7
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
9
|
|
Allowance for loan losses
|
—
|
|
—
|
|
2
|
|
—
|
|
3
|
|
—
|
|
—
|
|
|
—
|
|
5
|
|
|||||||||
Collectively evaluated for impairment:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Loan balance
|
$
|
2,580
|
|
$
|
5,017
|
|
$
|
5,952
|
|
$
|
847
|
|
$
|
16,024
|
|
$
|
780
|
|
$
|
15,950
|
|
(a)
|
$
|
14,514
|
|
$
|
61,664
|
|
Allowance for loan losses
|
26
|
|
55
|
|
5
|
|
10
|
|
18
|
|
23
|
|
—
|
|
|
23
|
|
160
|
|
(a)
|
Includes
$855 million
of domestic overdrafts,
$13,973 million
of margin loans and
$1,122 million
of other loans at
June 30, 2017
.
|
Allowance for credit losses activity for the quarter ended March 31, 2017
|
Wealth management loans and mortgages
|
|
Other
residential
mortgages
|
|
|
|
|
|
||||||||||||||||||||
(in millions)
|
Commercial
|
|
Commercial
real estate
|
|
Financial
institutions
|
|
Lease
financings
|
|
All
other
|
|
|
Foreign
|
|
Total
|
|
|||||||||||||
Beginning balance
|
$
|
82
|
|
$
|
73
|
|
$
|
26
|
|
$
|
13
|
|
$
|
23
|
|
$
|
28
|
|
$
|
—
|
|
|
$
|
36
|
|
$
|
281
|
|
Charge-offs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
—
|
|
|
—
|
|
(1
|
)
|
|||||||||
Recoveries
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
|
—
|
|
1
|
|
|||||||||
Net recoveries
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|||||||||
Provision
|
—
|
|
—
|
|
(3
|
)
|
(3
|
)
|
3
|
|
(3
|
)
|
—
|
|
|
1
|
|
(5
|
)
|
|||||||||
Ending balance
|
$
|
82
|
|
$
|
73
|
|
$
|
23
|
|
$
|
10
|
|
$
|
26
|
|
$
|
25
|
|
$
|
—
|
|
|
$
|
37
|
|
$
|
276
|
|
Allowance for:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Loan losses
|
$
|
24
|
|
$
|
54
|
|
$
|
5
|
|
$
|
10
|
|
$
|
22
|
|
$
|
25
|
|
$
|
—
|
|
|
$
|
24
|
|
$
|
164
|
|
Lending-related commitments
|
58
|
|
19
|
|
18
|
|
—
|
|
4
|
|
—
|
|
—
|
|
|
13
|
|
112
|
|
|||||||||
Individually evaluated for impairment:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Loan balance
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
5
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
5
|
|
Allowance for loan losses
|
—
|
|
—
|
|
—
|
|
—
|
|
3
|
|
—
|
|
—
|
|
|
—
|
|
3
|
|
|||||||||
Collectively evaluated for impairment:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Loan balance
|
$
|
2,543
|
|
$
|
4,698
|
|
$
|
5,387
|
|
$
|
846
|
|
$
|
15,904
|
|
$
|
817
|
|
$
|
17,873
|
|
(a)
|
$
|
12,795
|
|
$
|
60,863
|
|
Allowance for loan losses
|
24
|
|
54
|
|
5
|
|
10
|
|
19
|
|
25
|
|
—
|
|
|
24
|
|
161
|
|
(a)
|
Includes
$673 million
of domestic overdrafts,
$16,081 million
of margin loans and
$1,119 million
of other loans at
March 31, 2017
.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Allowance for credit losses activity for the quarter ended June 30, 2016
|
Wealth management loans and mortgages
|
|
Other
residential
mortgages
|
|
All
other
|
|
|
Foreign
|
|
Total
|
|
|||||||||||||||||
(in millions)
|
Commercial
|
|
Commercial
real estate
|
|
Financial
institutions
|
|
Lease
financings
|
|
|
|||||||||||||||||||
Beginning balance
|
$
|
88
|
|
$
|
62
|
|
$
|
32
|
|
$
|
16
|
|
$
|
18
|
|
$
|
32
|
|
$
|
—
|
|
|
$
|
39
|
|
$
|
287
|
|
Charge-offs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|||||||||
Recoveries
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
|
1
|
|
2
|
|
|||||||||
Net recoveries
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
|
1
|
|
2
|
|
|||||||||
Provision
|
2
|
|
1
|
|
(3
|
)
|
(2
|
)
|
—
|
|
(4
|
)
|
—
|
|
|
(3
|
)
|
(9
|
)
|
|||||||||
Ending balance
|
$
|
90
|
|
$
|
63
|
|
$
|
29
|
|
$
|
14
|
|
$
|
18
|
|
$
|
29
|
|
$
|
—
|
|
|
$
|
37
|
|
$
|
280
|
|
Allowance for:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Loan losses
|
$
|
25
|
|
$
|
43
|
|
$
|
9
|
|
$
|
14
|
|
$
|
15
|
|
$
|
29
|
|
$
|
—
|
|
|
$
|
23
|
|
$
|
158
|
|
Lending-related commitments
|
65
|
|
20
|
|
20
|
|
—
|
|
3
|
|
—
|
|
—
|
|
|
14
|
|
122
|
|
|||||||||
Individually evaluated for impairment:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Loan balance
|
$
|
—
|
|
$
|
2
|
|
$
|
171
|
|
$
|
4
|
|
$
|
8
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
185
|
|
Allowance for loan losses
|
—
|
|
1
|
|
—
|
|
2
|
|
1
|
|
—
|
|
—
|
|
|
—
|
|
4
|
|
|||||||||
Collectively evaluated for impairment:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Loan balance
|
$
|
2,377
|
|
$
|
4,222
|
|
$
|
6,690
|
|
$
|
1,023
|
|
$
|
14,437
|
|
$
|
945
|
|
$
|
20,842
|
|
(a)
|
$
|
13,474
|
|
$
|
64,010
|
|
Allowance for loan losses
|
25
|
|
42
|
|
9
|
|
12
|
|
14
|
|
29
|
|
—
|
|
|
23
|
|
154
|
|
(a)
|
Includes
$1,331 million
of domestic overdrafts,
$18,388 million
of margin loans and
$1,123 million
of other loans at
June 30, 2016
.
|
Allowance for credit losses activity for the six months ended June 30, 2017
|
Wealth management loans and mortgages
|
|
Other
residential mortgages |
|
All
other |
|
Foreign
|
|
Total
|
|
|||||||||||||||||
(in millions)
|
Commercial
|
|
Commercial
real estate |
|
Financial
institutions |
|
Lease
financings |
|
|||||||||||||||||||
Beginning balance
|
$
|
82
|
|
$
|
73
|
|
$
|
26
|
|
$
|
13
|
|
$
|
23
|
|
$
|
28
|
|
$
|
—
|
|
$
|
36
|
|
$
|
281
|
|
Charge-offs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
—
|
|
—
|
|
(1
|
)
|
|||||||||
Recoveries
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2
|
|
—
|
|
—
|
|
2
|
|
|||||||||
Net recoveries
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
—
|
|
1
|
|
|||||||||
Provision
|
(2
|
)
|
2
|
|
(3
|
)
|
(3
|
)
|
2
|
|
(6
|
)
|
—
|
|
(2
|
)
|
(12
|
)
|
|||||||||
Ending balance
|
$
|
80
|
|
$
|
75
|
|
$
|
23
|
|
$
|
10
|
|
$
|
25
|
|
$
|
23
|
|
$
|
—
|
|
$
|
34
|
|
$
|
270
|
|
Allowance for credit losses activity for the six months ended June 30, 2016
|
Wealth management loans and mortgages
|
|
Other
residential mortgages |
|
All
other |
|
Foreign
|
|
Total
|
|
|||||||||||||||||
(in millions)
|
Commercial
|
|
Commercial
real estate |
|
Financial
institutions |
|
Lease
financings |
|
|||||||||||||||||||
Beginning balance
|
$
|
82
|
|
$
|
59
|
|
$
|
31
|
|
$
|
15
|
|
$
|
19
|
|
$
|
34
|
|
$
|
—
|
|
$
|
35
|
|
$
|
275
|
|
Charge-offs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Recoveries
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3
|
|
—
|
|
1
|
|
4
|
|
|||||||||
Net recoveries
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3
|
|
—
|
|
1
|
|
4
|
|
|||||||||
Provision
|
8
|
|
4
|
|
(2
|
)
|
(1
|
)
|
(1
|
)
|
(8
|
)
|
—
|
|
1
|
|
1
|
|
|||||||||
Ending balance
|
$
|
90
|
|
$
|
63
|
|
$
|
29
|
|
$
|
14
|
|
$
|
18
|
|
$
|
29
|
|
$
|
—
|
|
$
|
37
|
|
$
|
280
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Nonperforming assets
(in millions)
|
June 30, 2017
|
|
Dec. 31, 2016
|
|
|||
Nonperforming loans:
|
|
|
|||||
Other residential mortgages
|
$
|
84
|
|
$
|
91
|
|
|
Wealth management loans and mortgages
|
10
|
|
8
|
|
|||
Financial institutions
|
2
|
|
—
|
|
|||
Lease financings
|
—
|
|
4
|
|
|||
Total nonperforming loans
|
96
|
|
103
|
|
|||
Other assets owned
|
4
|
|
4
|
|
|||
Total nonperforming assets
|
$
|
100
|
|
$
|
107
|
|
Lost interest
|
|
|
|
|
|
||||||||||
(in millions)
|
2Q17
|
|
1Q17
|
|
2Q16
|
|
YTD17
|
|
YTD16
|
|
|||||
Amount by which interest income recognized on nonperforming loans exceeded reversals
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Amount by which interest income would have increased if nonperforming loans at period end had been performing for the entire period
|
$
|
1
|
|
$
|
1
|
|
$
|
1
|
|
$
|
3
|
|
$
|
3
|
|
Impaired loans
|
2Q17
|
1Q17
|
2Q16
|
|
YTD17
|
YTD16
|
|||||||||||||||||||||||||
(in millions)
|
Average
recorded
investment
|
|
Interest
income recognized |
|
Average
recorded
investment
|
|
Interest
income
recognized
|
|
Average
recorded investment |
|
Interest
income recognized |
|
|
Average
recorded investment |
|
Interest
income recognized |
|
Average
recorded investment |
|
Interest
income recognized |
|
||||||||||
Impaired loans with an allowance:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Commercial real estate
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1
|
|
$
|
—
|
|
Financial institutions
|
1
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
1
|
|
—
|
|
—
|
|
—
|
|
||||||||||
Wealth management loans and mortgages
|
3
|
|
—
|
|
3
|
|
—
|
|
6
|
|
—
|
|
|
3
|
|
—
|
|
6
|
|
—
|
|
||||||||||
Lease financings
|
—
|
|
—
|
|
2
|
|
—
|
|
4
|
|
—
|
|
|
1
|
|
—
|
|
3
|
|
—
|
|
||||||||||
Total impaired loans with an allowance
|
4
|
|
—
|
|
5
|
|
—
|
|
11
|
|
—
|
|
|
5
|
|
—
|
|
10
|
|
—
|
|
||||||||||
Impaired loans without an allowance
:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Commercial real estate
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
|
—
|
|
—
|
|
1
|
|
—
|
|
||||||||||
Financial institutions
|
—
|
|
—
|
|
—
|
|
—
|
|
171
|
|
—
|
|
|
—
|
|
—
|
|
171
|
|
—
|
|
||||||||||
Wealth management loans and mortgages
|
3
|
|
—
|
|
2
|
|
—
|
|
2
|
|
—
|
|
|
2
|
|
—
|
|
2
|
|
—
|
|
||||||||||
Total impaired
loans without an allowance
(a)
|
3
|
|
—
|
|
2
|
|
—
|
|
174
|
|
—
|
|
|
2
|
|
—
|
|
174
|
|
—
|
|
||||||||||
Total impaired loans
|
$
|
7
|
|
$
|
—
|
|
$
|
7
|
|
$
|
—
|
|
$
|
185
|
|
$
|
—
|
|
|
$
|
7
|
|
$
|
—
|
|
$
|
184
|
|
$
|
—
|
|
(a)
|
When the discounted cash flows, collateral value or market price equals or exceeds the carrying value of the loan, then the loan does not require an allowance under the accounting standard related to impaired loans.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Impaired loans
|
June 30, 2017
|
|
Dec. 31, 2016
|
||||||||||||||||
(in millions)
|
Recorded
investment
|
|
Unpaid
principal
balance
|
|
Related
allowance
(a)
|
|
|
Recorded
investment
|
|
Unpaid
principal
balance
|
|
Related
allowance
(a)
|
|
||||||
Impaired loans with an allowance:
|
|
|
|
|
|
|
|
||||||||||||
Commercial real estate
|
$
|
—
|
|
$
|
3
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
3
|
|
$
|
—
|
|
Financial institutions
|
2
|
|
2
|
|
2
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Wealth management loans and mortgages
|
3
|
|
3
|
|
3
|
|
|
3
|
|
3
|
|
3
|
|
||||||
Lease financings
|
—
|
|
—
|
|
—
|
|
|
4
|
|
4
|
|
2
|
|
||||||
Total impaired loans with an allowance
|
5
|
|
8
|
|
5
|
|
|
7
|
|
10
|
|
5
|
|
||||||
Impaired loans without an allowance
:
|
|
|
|
|
|
|
|
||||||||||||
Wealth management loans and mortgages
|
4
|
|
4
|
|
N/A
|
|
|
2
|
|
2
|
|
N/A
|
|
||||||
Total impaired loans without an allowance
(b)
|
4
|
|
4
|
|
N/A
|
|
|
2
|
|
2
|
|
N/A
|
|
||||||
Total impaired loans
(c)
|
$
|
9
|
|
$
|
12
|
|
$
|
5
|
|
|
$
|
9
|
|
$
|
12
|
|
$
|
5
|
|
(a)
|
The allowance for impaired loans is included in the allowance for loan losses.
|
(b)
|
When the discounted cash flows, collateral value or market price equals or exceeds the carrying value of the loan, then the loan does not require an allowance under the accounting standard related to impaired loans.
|
(c)
|
Excludes an aggregate of less than
$1 million
of impaired loans in amounts individually less than
$1 million
at both
June 30, 2017
and
Dec. 31, 2016
, respectively. The allowance for loan losses associated with these loans totaled less than
$1 million
at both
June 30, 2017
and
Dec. 31, 2016
, respectively.
|
Past due loans and still accruing interest
|
June 30, 2017
|
|
Dec. 31, 2016
|
||||||||||||||||||||||
|
Days past due
|
Total
past due
|
|
|
Days past due
|
Total
past due
|
|
||||||||||||||||||
(in millions)
|
30-59
|
|
60-89
|
|
≥90
|
|
30-59
|
|
60-89
|
|
≥90
|
|
|||||||||||||
Other residential mortgages
|
$
|
19
|
|
$
|
3
|
|
$
|
3
|
|
$
|
25
|
|
|
$
|
20
|
|
$
|
6
|
|
$
|
7
|
|
$
|
33
|
|
Wealth management loans and mortgages
|
18
|
|
2
|
|
1
|
|
21
|
|
|
21
|
|
2
|
|
—
|
|
23
|
|
||||||||
Commercial real estate
|
7
|
|
12
|
|
—
|
|
19
|
|
|
78
|
|
—
|
|
—
|
|
78
|
|
||||||||
Financial institutions
|
—
|
|
—
|
|
—
|
|
—
|
|
|
1
|
|
27
|
|
—
|
|
28
|
|
||||||||
Total past due loans
|
$
|
44
|
|
$
|
17
|
|
$
|
4
|
|
$
|
65
|
|
|
$
|
120
|
|
$
|
35
|
|
$
|
7
|
|
$
|
162
|
|
TDRs
|
2Q17
|
|
1Q17
|
|
2Q16
|
|||||||||||||||||||||||||||
|
|
Outstanding
recorded investment
|
|
|
Outstanding
recorded investment
|
|
|
Outstanding
recorded investment
|
||||||||||||||||||||||||
(dollars in millions)
|
Number of
contracts
|
|
Pre-modification
|
|
Post-modification
|
|
|
Number of contracts
|
|
Pre-modification
|
|
Post-modification
|
|
|
Number of contracts
|
|
Pre-modification
|
|
Post-modification
|
|
||||||||||||
Other residential mortgages
|
16
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
6
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
23
|
|
|
$
|
4
|
|
|
$
|
5
|
|
Wealth management loans and mortgages
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total TDRs
|
16
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
7
|
|
|
$
|
6
|
|
|
$
|
6
|
|
|
23
|
|
|
$
|
4
|
|
|
$
|
5
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Commercial loan portfolio – Credit risk profile
by creditworthiness category
|
Commercial
|
|
Commercial real estate
|
|
Financial institutions
|
|||||||||||||||
June 30,
2017 |
|
Dec. 31, 2016
|
|
|
June 30,
2017 |
|
Dec. 31, 2016
|
|
|
June 30,
2017 |
|
Dec. 31, 2016
|
|
|||||||
(in millions)
|
|
|
||||||||||||||||||
Investment grade
|
$
|
2,698
|
|
$
|
2,397
|
|
|
$
|
4,305
|
|
$
|
3,823
|
|
|
$
|
10,241
|
|
$
|
11,459
|
|
Non-investment grade
|
149
|
|
220
|
|
|
726
|
|
831
|
|
|
2,980
|
|
3,230
|
|
||||||
Total
|
$
|
2,847
|
|
$
|
2,617
|
|
|
$
|
5,031
|
|
$
|
4,654
|
|
|
$
|
13,221
|
|
$
|
14,689
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Goodwill by business
(in millions)
|
Investment
Management |
|
Investment
Services |
|
Other
|
|
Consolidated
|
|
||||
Balance at Dec. 31, 2016
|
$
|
9,000
|
|
$
|
8,269
|
|
$
|
47
|
|
$
|
17,316
|
|
Foreign currency translation
|
69
|
|
72
|
|
—
|
|
141
|
|
||||
Balance at June 30, 2017
|
$
|
9,069
|
|
$
|
8,341
|
|
$
|
47
|
|
$
|
17,457
|
|
Goodwill by business
(in millions)
|
Investment
Management |
|
Investment
Services |
|
Other
|
|
Consolidated
|
|
||||
Balance at Dec. 31, 2015
|
$
|
9,207
|
|
$
|
8,366
|
|
$
|
45
|
|
$
|
17,618
|
|
Acquisitions
|
29
|
|
—
|
|
—
|
|
29
|
|
||||
Foreign currency translation
|
(121
|
)
|
(25
|
)
|
—
|
|
(146
|
)
|
||||
Other
(a)
|
2
|
|
(4
|
)
|
2
|
|
—
|
|
||||
Balance at June 30, 2016
|
$
|
9,117
|
|
$
|
8,337
|
|
$
|
47
|
|
$
|
17,501
|
|
(a)
|
Other changes in goodwill include purchase price adjustments and certain other reclassifications.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Intangible assets – net carrying amount by business
(in millions) |
Investment
Management |
|
Investment
Services |
|
Other
|
|
Consolidated
|
|
||||
Balance at Dec. 31, 2016
|
$
|
1,717
|
|
$
|
1,032
|
|
$
|
849
|
|
$
|
3,598
|
|
Amortization
|
(30
|
)
|
(75
|
)
|
—
|
|
(105
|
)
|
||||
Foreign currency translation
|
10
|
|
3
|
|
—
|
|
13
|
|
||||
Balance at June 30, 2017
|
$
|
1,697
|
|
$
|
960
|
|
$
|
849
|
|
$
|
3,506
|
|
Intangible assets – net carrying amount by business
(in millions) |
Investment
Management |
|
Investment
Services |
|
Other
|
|
Consolidated
|
|
||||
Balance at Dec. 31, 2015
|
$
|
1,807
|
|
$
|
1,186
|
|
$
|
849
|
|
$
|
3,842
|
|
Acquisitions
|
30
|
|
2
|
|
—
|
|
32
|
|
||||
Amortization
|
(38
|
)
|
(78
|
)
|
—
|
|
(116
|
)
|
||||
Foreign currency translation
|
(21
|
)
|
1
|
|
—
|
|
(20
|
)
|
||||
Balance at June 30, 2016
|
$
|
1,778
|
|
$
|
1,111
|
|
$
|
849
|
|
$
|
3,738
|
|
Intangible assets
|
June 30, 2017
|
|
Dec. 31, 2016
|
|||||||||||||||||
(in millions)
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
carrying
amount
|
|
Remaining
weighted-
average
amortization
period
|
|
Gross
carrying amount |
|
Accumulated
amortization |
|
Net
carrying
amount
|
|
||||||
Subject to amortization:
(a)
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships—Investment Management
|
$
|
1,456
|
|
$
|
(1,179
|
)
|
$
|
277
|
|
11 years
|
|
$
|
1,439
|
|
$
|
(1,136
|
)
|
$
|
303
|
|
Customer contracts—Investment Services
|
2,252
|
|
(1,665
|
)
|
587
|
|
10 years
|
|
2,249
|
|
(1,590
|
)
|
659
|
|
||||||
Other
|
25
|
|
(22
|
)
|
3
|
|
2 years
|
|
37
|
|
(33
|
)
|
4
|
|
||||||
Total subject to amortization
|
3,733
|
|
(2,866
|
)
|
867
|
|
10 years
|
|
3,725
|
|
(2,759
|
)
|
966
|
|
||||||
Not subject to amortization:
(b)
|
|
|
|
|
|
|
|
|
||||||||||||
Trade name
|
1,349
|
|
N/A
|
|
1,349
|
|
N/A
|
|
1,348
|
|
N/A
|
|
1,348
|
|
||||||
Customer relationships
|
1,290
|
|
N/A
|
|
1,290
|
|
N/A
|
|
1,284
|
|
N/A
|
|
1,284
|
|
||||||
Total not subject to amortization
|
2,639
|
|
N/A
|
|
2,639
|
|
N/A
|
|
2,632
|
|
N/A
|
|
2,632
|
|
||||||
Total intangible assets
|
$
|
6,372
|
|
$
|
(2,866
|
)
|
$
|
3,506
|
|
N/A
|
|
$
|
6,357
|
|
$
|
(2,759
|
)
|
$
|
3,598
|
|
(a)
|
Excludes fully amortized intangible assets.
|
(b)
|
Intangible assets not subject to amortization have an indefinite life.
|
For the year ended
Dec. 31, |
Estimated amortization expense
(in millions)
|
|
||
2017
|
|
$
|
209
|
|
2018
|
|
179
|
|
|
2019
|
|
108
|
|
|
2020
|
|
98
|
|
|
2021
|
|
75
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Other assets
|
June 30, 2017
|
|
Dec. 31, 2016
|
|
||
(in millions)
|
||||||
Accounts receivable
|
$
|
6,707
|
|
$
|
4,060
|
|
Corporate/bank-owned life insurance
|
4,804
|
|
4,789
|
|
||
Fails to deliver
|
3,547
|
|
1,732
|
|
||
Software
|
1,480
|
|
1,451
|
|
||
Renewable energy investments
|
1,245
|
|
1,282
|
|
||
Income taxes receivable
|
1,081
|
|
1,172
|
|
||
Equity in a joint venture and other investments
|
1,066
|
|
1,063
|
|
||
Qualified affordable housing project investments
|
982
|
|
914
|
|
||
Prepaid pension assets
|
913
|
|
836
|
|
||
Prepaid expenses
|
550
|
|
438
|
|
||
Federal Reserve Bank stock
|
472
|
|
466
|
|
||
Fair value of hedging derivatives
|
423
|
|
784
|
|
||
Seed capital
|
315
|
|
395
|
|
||
Due from customers on acceptances
|
276
|
|
340
|
|
||
Private equity
|
47
|
|
43
|
|
||
Other
(a)
|
1,092
|
|
1,189
|
|
||
Total other assets
|
$
|
25,000
|
|
$
|
20,954
|
|
(a)
|
At June 30, 2017, other assets include
$8 million
of Federal Home Loan Bank stock, at cost.
|
(a)
|
Other funds include various hedge funds, leveraged loans and structured credit funds. Redemption notice periods vary by fund.
|
(b)
|
Private equity investments primarily include Volcker Rule-compliant investments in SBICs that invest in various sectors of the economy. Private equity investments do not have redemption rights. Distributions from such investments will be received as the underlying investments in the private equity investments are liquidated.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Net interest revenue
|
Quarter ended
|
|
Year-to-date
|
|||||||||||||
|
June 30, 2017
|
|
March 31, 2017
|
|
June 30, 2016
|
|
|
June 30, 2017
|
|
June 30, 2016
|
|
|||||
(in millions)
|
|
|||||||||||||||
Interest revenue
|
|
|
|
|
|
|
||||||||||
Non-margin loans
|
$
|
272
|
|
$
|
245
|
|
$
|
214
|
|
|
$
|
517
|
|
$
|
419
|
|
Margin loans
|
87
|
|
75
|
|
64
|
|
|
162
|
|
127
|
|
|||||
Securities:
|
|
|
|
|
|
|
||||||||||
Taxable
|
476
|
|
461
|
|
429
|
|
|
937
|
|
873
|
|
|||||
Exempt from federal income taxes
|
16
|
|
17
|
|
18
|
|
|
33
|
|
36
|
|
|||||
Total securities
|
492
|
|
478
|
|
447
|
|
|
970
|
|
909
|
|
|||||
Deposits with banks
|
27
|
|
22
|
|
24
|
|
|
49
|
|
50
|
|
|||||
Deposits with the Federal Reserve and other central banks
|
71
|
|
57
|
|
72
|
|
|
128
|
|
133
|
|
|||||
Federal funds sold and securities purchased under resale agreements
|
86
|
|
67
|
|
56
|
|
|
153
|
|
105
|
|
|||||
Trading assets
|
17
|
|
16
|
|
13
|
|
|
33
|
|
30
|
|
|||||
Total interest revenue
|
1,052
|
|
960
|
|
890
|
|
|
2,012
|
|
1,773
|
|
|||||
Interest expense
|
|
|
|
|
|
|
||||||||||
Deposits
|
32
|
|
9
|
|
12
|
|
|
41
|
|
27
|
|
|||||
Federal funds purchased and securities sold under repurchase agreements
|
38
|
|
24
|
|
13
|
|
|
62
|
|
22
|
|
|||||
Trading liabilities
|
2
|
|
2
|
|
1
|
|
|
4
|
|
3
|
|
|||||
Other borrowed funds
|
4
|
|
2
|
|
2
|
|
|
6
|
|
4
|
|
|||||
Commercial paper
|
5
|
|
5
|
|
4
|
|
|
10
|
|
4
|
|
|||||
Customer payables
|
16
|
|
7
|
|
2
|
|
|
23
|
|
6
|
|
|||||
Long-term debt
|
129
|
|
119
|
|
89
|
|
|
248
|
|
174
|
|
|||||
Total interest expense
|
226
|
|
168
|
|
123
|
|
|
394
|
|
240
|
|
|||||
Net interest revenue
|
826
|
|
792
|
|
767
|
|
|
1,618
|
|
1,533
|
|
|||||
Provision for credit losses
|
(7
|
)
|
(5
|
)
|
(9
|
)
|
|
(12
|
)
|
1
|
|
|||||
Net interest revenue after provision for credit losses
|
$
|
833
|
|
$
|
797
|
|
$
|
776
|
|
|
$
|
1,630
|
|
$
|
1,532
|
|
Net periodic benefit (credit) cost
|
Quarter ended
|
||||||||||||||||||||||||||||
June 30, 2017
|
|
March 31, 2017
|
|
June 30, 2016
|
|||||||||||||||||||||||||
(in millions)
|
Domestic pension benefits
|
|
Foreign pension benefits
|
|
Health care benefits
|
|
|
Domestic pension benefits
|
|
Foreign pension benefits
|
|
Health care benefits
|
|
|
Domestic pension benefits
|
|
Foreign pension benefits
|
|
Health care benefits
|
|
|||||||||
Service cost
|
$
|
—
|
|
$
|
7
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
7
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
8
|
|
$
|
1
|
|
Interest cost
|
45
|
|
8
|
|
2
|
|
|
45
|
|
8
|
|
2
|
|
|
45
|
|
9
|
|
2
|
|
|||||||||
Expected return on assets
|
(81
|
)
|
(12
|
)
|
(2
|
)
|
|
(81
|
)
|
(12
|
)
|
(2
|
)
|
|
(82
|
)
|
(13
|
)
|
(2
|
)
|
|||||||||
Other
|
17
|
|
9
|
|
(1
|
)
|
|
17
|
|
9
|
|
(1
|
)
|
|
17
|
|
5
|
|
(1
|
)
|
|||||||||
Net periodic benefit (credit) cost
|
$
|
(19
|
)
|
$
|
12
|
|
$
|
(1
|
)
|
|
$
|
(19
|
)
|
$
|
12
|
|
$
|
(1
|
)
|
|
$
|
(20
|
)
|
$
|
9
|
|
$
|
—
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Net periodic benefit (credit) cost
|
|
Year-to-date
|
|
|
|||||||||||||||
|
June 30, 2017
|
|
June 30, 2016
|
||||||||||||||||
(in millions)
|
Domestic pension benefits
|
|
Foreign pension benefits
|
|
Health care benefits
|
|
|
Domestic pension benefits
|
|
Foreign pension benefits
|
|
Health care benefits
|
|
||||||
Service cost
|
$
|
—
|
|
$
|
14
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
16
|
|
$
|
2
|
|
Interest cost
|
90
|
|
16
|
|
4
|
|
|
90
|
|
18
|
|
4
|
|
||||||
Expected return on assets
|
(162
|
)
|
(24
|
)
|
(4
|
)
|
|
(164
|
)
|
(26
|
)
|
(4
|
)
|
||||||
Other
|
34
|
|
18
|
|
(2
|
)
|
|
35
|
|
9
|
|
(2
|
)
|
||||||
Net periodic benefit (credit) cost
|
$
|
(38
|
)
|
$
|
24
|
|
$
|
(2
|
)
|
|
$
|
(39
|
)
|
$
|
17
|
|
$
|
—
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
(a)
|
Includes voting model entities (“VMEs”) with assets of
$120 million
, liabilities of
$1 million
and nonredeemable noncontrolling interests of
$29 million
.
|
(a)
|
Includes VMEs with assets of
$114 million
, liabilities of
$3 million
and nonredeemable noncontrolling interests of
$25 million
.
|
Non-consolidated VIEs at June 30, 2017
|
|||||||||
(in millions)
|
Assets
|
|
Liabilities
|
|
Maximum loss exposure
|
|
|||
Other
|
$
|
2,542
|
|
$
|
414
|
|
$
|
2,956
|
|
Non-consolidated VIEs at Dec. 31, 2016
|
|||||||||
(in millions)
|
Assets
|
|
Liabilities
|
|
Maximum loss exposure
|
|
|||
Other
|
$
|
2,442
|
|
$
|
369
|
|
$
|
2,811
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Preferred stock summary
(a)
|
Total shares issued and outstanding
|
|
Carrying value
(b)
|
|||||||||
|
|
(in millions)
|
||||||||||
|
Per annum dividend rate
|
June 30, 2017
|
|
Dec. 31, 2016
|
|
June 30, 2017
|
|
Dec. 31, 2016
|
|
|||
Series A
|
Greater of (i) three-month LIBOR plus 0.565% for the related distribution period; or (ii) 4.000%
|
5,001
|
|
5,001
|
|
|
$
|
500
|
|
$
|
500
|
|
Series C
|
5.2%
|
5,825
|
|
5,825
|
|
|
568
|
|
568
|
|
||
Series D
|
4.50% to but excluding June 20, 2023, then a floating rate equal to the three-month LIBOR plus 2.46%
|
5,000
|
|
5,000
|
|
|
494
|
|
494
|
|
||
Series E
|
4.95% to and including June 20, 2020, then a floating rate equal to the three-month LIBOR plus 3.42%
|
10,000
|
|
10,000
|
|
|
990
|
|
990
|
|
||
Series F
|
4.625% to and including Sept. 20, 2026, then a floating rate equal to the three-month LIBOR plus 3.131%
|
10,000
|
|
10,000
|
|
|
990
|
|
990
|
|
||
Total
|
35,826
|
|
35,826
|
|
|
$
|
3,542
|
|
$
|
3,542
|
|
(a)
|
All outstanding preferred stock is noncumulative perpetual preferred stock with a liquidation preference of $100,000 per share.
|
(b)
|
The carrying value of the Series C, Series D, Series E and Series F preferred stock is recorded net of issuance costs.
|
•
|
$1,022.22
per share on the Series A Preferred Stock (equivalent to
$10.2222
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);
|
•
|
$2,250.00
per share on the Series D Preferred Stock (equivalent to
$22.5000
per depositary share, each representing a 1/100th interest in a share of the Series D Preferred Stock); and
|
•
|
$2,475.00
per share on the Series E Preferred Stock (equivalent to
$24.7500
per depositary share, each representing a 1/100th interest in a share of the Series E Preferred Stock).
|
Notes to Consolidated Financial Statements
(continued)
|
|
Components of other comprehensive income (loss)
|
Quarter ended
|
||||||||||||||||||||||||||||
June 30, 2017
|
|
March 31, 2017
|
|
June 30, 2016
|
|||||||||||||||||||||||||
(in millions)
|
Pre-tax
amount
|
|
Tax
(expense)
benefit
|
|
After-tax
amount
|
|
|
Pre-tax
amount
|
|
Tax
(expense)
benefit
|
|
After-tax
amount
|
|
|
Pre-tax
amount
|
|
Tax
(expense)
benefit
|
|
After-tax
amount
|
|
|||||||||
Foreign currency translation:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Foreign currency translation adjustments arising during the period
(a)
|
$
|
249
|
|
$
|
81
|
|
$
|
330
|
|
|
$
|
96
|
|
$
|
29
|
|
$
|
125
|
|
|
$
|
(164
|
)
|
$
|
(120
|
)
|
$
|
(284
|
)
|
Total foreign currency translation
|
249
|
|
81
|
|
330
|
|
|
96
|
|
29
|
|
125
|
|
|
(164
|
)
|
(120
|
)
|
(284
|
)
|
|||||||||
Unrealized gain (loss) on assets available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Unrealized gain (loss) arising during period
|
146
|
|
(55
|
)
|
91
|
|
|
164
|
|
(70
|
)
|
94
|
|
|
182
|
|
(65
|
)
|
117
|
|
|||||||||
Reclassification adjustment
(b)
|
—
|
|
(1
|
)
|
(1
|
)
|
|
(10
|
)
|
4
|
|
(6
|
)
|
|
(21
|
)
|
8
|
|
(13
|
)
|
|||||||||
Net unrealized gain (loss) on assets available-for-sale
|
146
|
|
(56
|
)
|
90
|
|
|
154
|
|
(66
|
)
|
88
|
|
|
161
|
|
(57
|
)
|
104
|
|
|||||||||
Defined benefit plans:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net gain (loss) arising during the period
|
—
|
|
—
|
|
—
|
|
|
3
|
|
(1
|
)
|
2
|
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost
(b)
|
24
|
|
(8
|
)
|
16
|
|
|
25
|
|
(7
|
)
|
18
|
|
|
21
|
|
(7
|
)
|
14
|
|
|||||||||
Total defined benefit plans
|
24
|
|
(8
|
)
|
16
|
|
|
28
|
|
(8
|
)
|
20
|
|
|
21
|
|
(7
|
)
|
14
|
|
|||||||||
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Unrealized hedge gain (loss) arising during period
|
(8
|
)
|
4
|
|
(4
|
)
|
|
14
|
|
(5
|
)
|
9
|
|
|
(10
|
)
|
4
|
|
(6
|
)
|
|||||||||
Reclassification adjustment
(b)
|
9
|
|
(4
|
)
|
5
|
|
|
1
|
|
—
|
|
1
|
|
|
(4
|
)
|
1
|
|
(3
|
)
|
|||||||||
Net unrealized gain (loss) on cash flow hedges
|
1
|
|
—
|
|
1
|
|
|
15
|
|
(5
|
)
|
10
|
|
|
(14
|
)
|
5
|
|
(9
|
)
|
|||||||||
Total other comprehensive income (loss)
|
$
|
420
|
|
$
|
17
|
|
$
|
437
|
|
|
$
|
293
|
|
$
|
(50
|
)
|
$
|
243
|
|
|
$
|
4
|
|
$
|
(179
|
)
|
$
|
(175
|
)
|
(a)
|
Includes the impact of hedges of net investments in foreign subsidiaries. See Note 16 for additional information.
|
(b)
|
The reclassification adjustment related to the unrealized gain (loss) on assets available-for-sale is recorded as net securities gains on the Consolidated Income Statement. The amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost is recorded as staff expense on the Consolidated Income Statement. See Note 16 of the Notes to Consolidated Financial Statements for the location of the reclassification adjustment related to cash flow hedges on the Consolidated Income Statement.
|
Components of other comprehensive income (loss)
|
Year-to-date
|
||||||||||||||||||
|
June 30, 2017
|
|
June 30, 2016
|
||||||||||||||||
(in millions)
|
Pre-tax
amount
|
|
Tax
(expense)
benefit
|
|
After-tax
amount
|
|
|
Pre-tax
amount
|
|
Tax
(expense)
benefit
|
|
After-tax
amount
|
|
||||||
Foreign currency translation:
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency translation adjustments arising during the period
(a)
|
$
|
345
|
|
$
|
110
|
|
$
|
455
|
|
|
$
|
(119
|
)
|
$
|
(128
|
)
|
$
|
(247
|
)
|
Total foreign currency translation
|
345
|
|
110
|
|
455
|
|
|
(119
|
)
|
(128
|
)
|
(247
|
)
|
||||||
Unrealized gain (loss) on assets available-for-sale:
|
|
|
|
|
|
|
|
||||||||||||
Unrealized gain (loss) arising during period
|
310
|
|
(125
|
)
|
185
|
|
|
425
|
|
(145
|
)
|
280
|
|
||||||
Reclassification adjustment
(b)
|
(10
|
)
|
3
|
|
(7
|
)
|
|
(41
|
)
|
13
|
|
(28
|
)
|
||||||
Net unrealized gain (loss) on assets available-for-sale
|
300
|
|
(122
|
)
|
178
|
|
|
384
|
|
(132
|
)
|
252
|
|
||||||
Defined benefit plans:
|
|
|
|
|
|
|
|
||||||||||||
Net gain (loss) arising during the period
|
3
|
|
(1
|
)
|
2
|
|
|
3
|
|
(1
|
)
|
2
|
|
||||||
Amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost
(b)
|
49
|
|
(15
|
)
|
34
|
|
|
43
|
|
(14
|
)
|
29
|
|
||||||
Total defined benefit plans
|
52
|
|
(16
|
)
|
36
|
|
|
46
|
|
(15
|
)
|
31
|
|
||||||
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
|
|
||||||||||||
Unrealized hedge gain (loss) arising during period
|
6
|
|
(1
|
)
|
5
|
|
|
(91
|
)
|
31
|
|
(60
|
)
|
||||||
Reclassification adjustment
(b)
|
10
|
|
(4
|
)
|
6
|
|
|
82
|
|
(28
|
)
|
54
|
|
||||||
Net unrealized gain (loss) on cash flow hedges
|
16
|
|
(5
|
)
|
11
|
|
|
(9
|
)
|
3
|
|
(6
|
)
|
||||||
Total other comprehensive income (loss)
|
$
|
713
|
|
$
|
(33
|
)
|
$
|
680
|
|
|
$
|
302
|
|
$
|
(272
|
)
|
$
|
30
|
|
(a)
|
Includes the impact of hedges of net investments in foreign subsidiaries. See Note 16 for additional information.
|
(b)
|
The reclassification adjustment related to the unrealized gain (loss) on assets available-for-sale is recorded as net securities gains on the Consolidated Income Statement. The amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost is recorded as staff expense on the Consolidated Income Statement. See Note 16 of the Notes to Consolidated Financial Statements for the location of the reclassification adjustment related to cash flow hedges on the Consolidated Income Statement.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Assets measured at fair value on a recurring basis at June 30, 2017
|
Total carrying
value |
|
|||||||||||||
(dollar amounts in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting
(a)
|
|
|||||||
Available-for-sale securities:
|
|
|
|
|
|
||||||||||
U.S. Treasury
|
$
|
15,169
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
15,169
|
|
U.S. government agencies
|
—
|
|
555
|
|
—
|
|
—
|
|
555
|
|
|||||
Sovereign debt/sovereign guaranteed
|
72
|
|
12,216
|
|
—
|
|
—
|
|
12,288
|
|
|||||
State and political subdivisions
|
—
|
|
3,282
|
|
—
|
|
—
|
|
3,282
|
|
|||||
Agency RMBS
|
—
|
|
23,900
|
|
—
|
|
—
|
|
23,900
|
|
|||||
Non-agency RMBS
|
—
|
|
559
|
|
—
|
|
—
|
|
559
|
|
|||||
Other RMBS
|
—
|
|
329
|
|
—
|
|
—
|
|
329
|
|
|||||
Commercial MBS
|
—
|
|
818
|
|
—
|
|
—
|
|
818
|
|
|||||
Agency commercial MBS
|
—
|
|
8,726
|
|
—
|
|
—
|
|
8,726
|
|
|||||
CLOs
|
—
|
|
2,642
|
|
—
|
|
—
|
|
2,642
|
|
|||||
Other asset-backed securities
|
—
|
|
1,330
|
|
—
|
|
—
|
|
1,330
|
|
|||||
Equity securities
|
3
|
|
—
|
|
—
|
|
—
|
|
3
|
|
|||||
Money market funds
(b)
|
896
|
|
—
|
|
—
|
|
—
|
|
896
|
|
|||||
Corporate bonds
|
—
|
|
1,318
|
|
—
|
|
—
|
|
1,318
|
|
|||||
Other debt securities
|
—
|
|
2,830
|
|
—
|
|
—
|
|
2,830
|
|
|||||
Foreign covered bonds
|
2,154
|
|
236
|
|
—
|
|
—
|
|
2,390
|
|
|||||
Non-agency RMBS
(c)
|
—
|
|
1,239
|
|
—
|
|
—
|
|
1,239
|
|
|||||
Total available-for-sale securities
|
18,294
|
|
59,980
|
|
—
|
|
—
|
|
78,274
|
|
|||||
Trading assets:
|
|
|
|
|
|
||||||||||
Debt and equity instruments
(b)
|
718
|
|
1,505
|
|
—
|
|
—
|
|
2,223
|
|
|||||
Derivative assets not designated as hedging:
|
|
|
|
|
|
||||||||||
Interest rate
|
4
|
|
6,912
|
|
—
|
|
(5,481
|
)
|
1,435
|
|
|||||
Foreign exchange
|
—
|
|
4,464
|
|
—
|
|
(2,862
|
)
|
1,602
|
|
|||||
Equity and other contracts
|
—
|
|
64
|
|
—
|
|
(45
|
)
|
19
|
|
|||||
Total derivative assets not designated as hedging
|
4
|
|
11,440
|
|
—
|
|
(8,388
|
)
|
3,056
|
|
|||||
Total trading assets
|
722
|
|
12,945
|
|
—
|
|
(8,388
|
)
|
5,279
|
|
|||||
Other assets:
|
|
|
|
|
|
||||||||||
Derivative assets designated as hedging:
|
|
|
|
|
|
||||||||||
Interest rate
|
—
|
|
389
|
|
—
|
|
—
|
|
389
|
|
|||||
Foreign exchange
|
—
|
|
34
|
|
—
|
|
—
|
|
34
|
|
|||||
Total derivative assets designated as hedging
|
—
|
|
423
|
|
—
|
|
—
|
|
423
|
|
|||||
Other assets
(d)
|
247
|
|
80
|
|
—
|
|
—
|
|
327
|
|
|||||
Other assets measured at net asset value
(d)
|
|
|
|
|
161
|
|
|||||||||
Total other assets
|
247
|
|
503
|
|
—
|
|
—
|
|
911
|
|
|||||
Subtotal assets of operations at fair value
|
19,263
|
|
73,428
|
|
—
|
|
(8,388
|
)
|
84,464
|
|
|||||
Percentage of assets prior to netting
|
21
|
%
|
79
|
%
|
—
|
%
|
|
|
|||||||
Assets of consolidated investment management funds
|
337
|
|
365
|
|
—
|
|
—
|
|
702
|
|
|||||
Total assets
|
$
|
19,600
|
|
$
|
73,793
|
|
$
|
—
|
|
$
|
(8,388
|
)
|
$
|
85,166
|
|
Percentage of assets prior to netting
|
21
|
%
|
79
|
%
|
—
|
%
|
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Liabilities measured at fair value on a recurring basis at June 30, 2017
|
Total carrying
value |
|
|||||||||||||
(dollar amounts in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting
(a)
|
|
|||||||
Trading liabilities:
|
|
|
|
|
|
||||||||||
Debt and equity instruments
|
$
|
752
|
|
$
|
201
|
|
$
|
—
|
|
$
|
—
|
|
$
|
953
|
|
Derivative liabilities not designated as hedging:
|
|
|
|
|
|
||||||||||
Interest rate
|
5
|
|
6,873
|
|
—
|
|
(5,794
|
)
|
1,084
|
|
|||||
Foreign exchange
|
—
|
|
4,554
|
|
—
|
|
(2,545
|
)
|
2,009
|
|
|||||
Equity and other contracts
|
—
|
|
126
|
|
—
|
|
(72
|
)
|
54
|
|
|||||
Total derivative liabilities not designated as hedging
|
5
|
|
11,553
|
|
—
|
|
(8,411
|
)
|
3,147
|
|
|||||
Total trading liabilities
|
757
|
|
11,754
|
|
—
|
|
(8,411
|
)
|
4,100
|
|
|||||
Long-term debt
(b)
|
—
|
|
368
|
|
—
|
|
—
|
|
368
|
|
|||||
Other liabilities
–
derivative liabilities designated as hedging:
|
|
|
|
|
|
||||||||||
Interest rate
|
—
|
|
518
|
|
—
|
|
—
|
|
518
|
|
|||||
Foreign exchange
|
—
|
|
297
|
|
—
|
|
—
|
|
297
|
|
|||||
Total other liabilities – derivative liabilities designated as hedging
|
—
|
|
815
|
|
—
|
|
—
|
|
815
|
|
|||||
Subtotal liabilities of operations at fair value
|
757
|
|
12,937
|
|
—
|
|
(8,411
|
)
|
5,283
|
|
|||||
Percentage of liabilities prior to netting
|
6
|
%
|
94
|
%
|
—
|
%
|
|
|
|||||||
Liabilities of consolidated investment management funds
|
1
|
|
21
|
|
—
|
|
—
|
|
22
|
|
|||||
Total liabilities
|
$
|
758
|
|
$
|
12,958
|
|
$
|
—
|
|
$
|
(8,411
|
)
|
$
|
5,305
|
|
Percentage of liabilities prior to netting
|
6
|
%
|
94
|
%
|
—
|
%
|
|
|
(a)
|
ASC 815, Derivatives and Hedging, permits the netting of derivative receivables and derivative payables under legally enforceable master netting agreements and permits the netting of cash collateral. Netting is applicable to derivatives not designated as hedging instruments included in trading assets or trading liabilities, and derivatives designated as hedging instruments included in other assets or other liabilities. Netting is allocated to the derivative products based on the net fair value of each product.
|
(b)
|
Includes certain interests in securitizations.
|
(c)
|
Previously included in the Grantor Trust. The Grantor Trust was dissolved in 2011.
|
(d)
|
Includes private equity investments and seed capital.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Assets measured at fair value on a recurring basis at Dec. 31, 2016
|
Total carrying
value
|
|
|||||||||||||
(dollar amounts in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting
(a)
|
|
|||||||
Available-for-sale securities:
|
|
|
|
|
|
||||||||||
U.S. Treasury
|
$
|
14,307
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
14,307
|
|
U.S. government agencies
|
—
|
|
359
|
|
—
|
|
—
|
|
359
|
|
|||||
Sovereign debt/sovereign guaranteed
|
66
|
|
12,423
|
|
—
|
|
—
|
|
12,489
|
|
|||||
State and political subdivisions
|
—
|
|
3,378
|
|
—
|
|
—
|
|
3,378
|
|
|||||
Agency RMBS
|
—
|
|
22,736
|
|
—
|
|
—
|
|
22,736
|
|
|||||
Non-agency RMBS
|
—
|
|
638
|
|
—
|
|
—
|
|
638
|
|
|||||
Other RMBS
|
—
|
|
513
|
|
—
|
|
—
|
|
513
|
|
|||||
Commercial MBS
|
—
|
|
928
|
|
—
|
|
—
|
|
928
|
|
|||||
Agency commercial MBS
|
—
|
|
6,449
|
|
—
|
|
—
|
|
6,449
|
|
|||||
CLOs
|
—
|
|
2,598
|
|
—
|
|
—
|
|
2,598
|
|
|||||
Other asset-backed securities
|
—
|
|
1,727
|
|
—
|
|
—
|
|
1,727
|
|
|||||
Equity securities
|
3
|
|
—
|
|
—
|
|
—
|
|
3
|
|
|||||
Money market funds
(b)
|
842
|
|
—
|
|
—
|
|
—
|
|
842
|
|
|||||
Corporate bonds
|
—
|
|
1,396
|
|
—
|
|
—
|
|
1,396
|
|
|||||
Other debt securities
|
—
|
|
1,961
|
|
—
|
|
—
|
|
1,961
|
|
|||||
Foreign covered bonds
|
1,876
|
|
265
|
|
—
|
|
—
|
|
2,141
|
|
|||||
Non-agency RMBS
(c)
|
—
|
|
1,357
|
|
—
|
|
—
|
|
1,357
|
|
|||||
Total available-for-sale securities
|
17,094
|
|
56,728
|
|
—
|
|
—
|
|
73,822
|
|
|||||
Trading assets:
|
|
|
|
|
|
||||||||||
Debt and equity instruments
(b)
|
240
|
|
2,013
|
|
—
|
|
—
|
|
2,253
|
|
|||||
Derivative assets not designated as hedging:
|
|
|
|
|
|
||||||||||
Interest rate
|
4
|
|
7,583
|
|
—
|
|
(6,047
|
)
|
1,540
|
|
|||||
Foreign exchange
|
—
|
|
6,104
|
|
—
|
|
(4,172
|
)
|
1,932
|
|
|||||
Equity and other contracts
|
—
|
|
46
|
|
—
|
|
(38
|
)
|
8
|
|
|||||
Total derivative assets not designated as hedging
|
4
|
|
13,733
|
|
—
|
|
(10,257
|
)
|
3,480
|
|
|||||
Total trading assets
|
244
|
|
15,746
|
|
—
|
|
(10,257
|
)
|
5,733
|
|
|||||
Other assets
:
|
|
|
|
|
|
||||||||||
Derivative assets designated as hedging:
|
|
|
|
|
|
||||||||||
Interest rate
|
—
|
|
415
|
|
—
|
|
—
|
|
415
|
|
|||||
Foreign exchange
|
—
|
|
369
|
|
—
|
|
—
|
|
369
|
|
|||||
Total derivative assets designated as hedging
|
—
|
|
784
|
|
—
|
|
—
|
|
784
|
|
|||||
Other assets
(d)
|
268
|
|
73
|
|
—
|
|
—
|
|
341
|
|
|||||
Other assets measured at net asset value
(d)
|
|
|
|
|
214
|
|
|||||||||
Total other assets
|
268
|
|
857
|
|
—
|
|
—
|
|
1,339
|
|
|||||
Subtotal assets of operations at fair value
|
17,606
|
|
73,331
|
|
—
|
|
(10,257
|
)
|
80,894
|
|
|||||
Percentage of assets prior to netting
|
19
|
%
|
81
|
%
|
—
|
%
|
|
|
|||||||
Assets of consolidated investment management funds
|
464
|
|
767
|
|
—
|
|
—
|
|
1,231
|
|
|||||
Total assets
|
$
|
18,070
|
|
$
|
74,098
|
|
$
|
—
|
|
$
|
(10,257
|
)
|
$
|
82,125
|
|
Percentage of assets prior to netting
|
20
|
%
|
80
|
%
|
—
|
%
|
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Liabilities measured at fair value on a recurring basis at Dec. 31, 2016
|
Total carrying
value
|
|
|||||||||||||
(dollar amounts in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting
(a)
|
|
|||||||
Trading liabilities:
|
|
|
|
|
|
||||||||||
Debt and equity instruments
|
$
|
349
|
|
$
|
236
|
|
$
|
—
|
|
$
|
—
|
|
$
|
585
|
|
Derivative liabilities not designated as hedging:
|
|
|
|
|
|
||||||||||
Interest rate
|
4
|
|
7,629
|
|
—
|
|
(6,634
|
)
|
999
|
|
|||||
Foreign exchange
|
—
|
|
6,103
|
|
—
|
|
(3,363
|
)
|
2,740
|
|
|||||
Equity and other contracts
|
—
|
|
115
|
|
—
|
|
(50
|
)
|
65
|
|
|||||
Total derivative liabilities not designated as hedging
|
4
|
|
13,847
|
|
—
|
|
(10,047
|
)
|
3,804
|
|
|||||
Total trading liabilities
|
353
|
|
14,083
|
|
—
|
|
(10,047
|
)
|
4,389
|
|
|||||
Long-term debt (
b
)
|
—
|
|
363
|
|
—
|
|
—
|
|
363
|
|
|||||
Other liabilities
–
derivative liabilities designated as hedging:
|
|
|
|
|
|
||||||||||
Interest rate
|
—
|
|
545
|
|
—
|
|
—
|
|
545
|
|
|||||
Foreign exchange
|
—
|
|
52
|
|
—
|
|
—
|
|
52
|
|
|||||
Total other liabilities – derivative liabilities designated as hedging
|
—
|
|
597
|
|
—
|
|
—
|
|
597
|
|
|||||
Subtotal liabilities of operations at fair value
|
353
|
|
15,043
|
|
—
|
|
(10,047
|
)
|
5,349
|
|
|||||
Percentage of liabilities prior to netting
|
2
|
%
|
98
|
%
|
—
|
%
|
|
|
|||||||
Liabilities of consolidated investment management funds
|
3
|
|
312
|
|
—
|
|
—
|
|
315
|
|
|||||
Total liabilities
|
$
|
356
|
|
$
|
15,355
|
|
$
|
—
|
|
$
|
(10,047
|
)
|
$
|
5,664
|
|
Percentage of liabilities prior to netting
|
2
|
%
|
98
|
%
|
—
|
%
|
|
|
(a)
|
ASC 815, Derivatives and Hedging, permits the netting of derivative receivables and derivative payables under legally enforceable master netting agreements and permits the netting of cash collateral. Netting is applicable to derivatives not designated as hedging instruments included in trading assets or trading liabilities, and derivatives designated as hedging instruments included in other assets or other liabilities. Netting is allocated to the derivative products based on the net fair value of each product.
|
(b)
|
Includes certain interests in securitizations.
|
(c)
|
Previously included in the Grantor Trust. The Grantor Trust was dissolved in 2011.
|
(d)
|
Includes private equity investments and seed capital.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Details of certain items measured at fair value
on a recurring basis
|
June 30, 2017
|
|
Dec. 31, 2016
|
||||||||||||||||||||||
Total
carrying
value
(a)
|
|
|
Ratings
|
|
Total
carrying value
(a)
|
|
|
Ratings
|
|||||||||||||||||
AAA/
AA-
|
|
A+/
A-
|
|
BBB+/
BBB-
|
|
BB+ and
lower
|
|
|
|
AAA/
AA-
|
|
A+/
A-
|
|
BBB+/
BBB-
|
|
BB+ and
lower
|
|
||||||||
(dollar amounts in millions)
|
|
||||||||||||||||||||||||
Non-agency RMBS, originated in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2007
|
$
|
49
|
|
|
—
|
%
|
—
|
%
|
—
|
%
|
100
|
%
|
|
$
|
58
|
|
|
—
|
%
|
—
|
%
|
—
|
%
|
100
|
%
|
2006
|
88
|
|
|
—
|
|
—
|
|
—
|
|
100
|
|
|
98
|
|
|
—
|
|
—
|
|
—
|
|
100
|
|
||
2005
|
161
|
|
|
22
|
|
3
|
|
7
|
|
68
|
|
|
180
|
|
|
23
|
|
5
|
|
9
|
|
63
|
|
||
2004 and earlier
|
261
|
|
|
4
|
|
3
|
|
26
|
|
67
|
|
|
302
|
|
|
5
|
|
3
|
|
24
|
|
68
|
|
||
Total non-agency RMBS
|
$
|
559
|
|
|
8
|
%
|
2
|
%
|
14
|
%
|
76
|
%
|
|
$
|
638
|
|
|
9
|
%
|
3
|
%
|
14
|
%
|
74
|
%
|
Commercial MBS - Domestic, originated in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2009-2017
|
$
|
733
|
|
|
87
|
%
|
13
|
%
|
—
|
%
|
—
|
%
|
|
$
|
674
|
|
|
84
|
%
|
16
|
%
|
—
|
%
|
—
|
%
|
2008
|
11
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
|
14
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
||
2007
|
24
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
|
190
|
|
|
71
|
|
29
|
|
—
|
|
—
|
|
||
2006
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
3
|
|
|
7
|
|
93
|
|
—
|
|
—
|
|
||
Total commercial MBS - Domestic
|
$
|
768
|
|
|
87
|
%
|
13
|
%
|
—
|
%
|
—
|
%
|
|
$
|
881
|
|
|
81
|
%
|
19
|
%
|
—
|
%
|
—
|
%
|
Foreign covered bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Canada
|
$
|
1,556
|
|
|
100
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
|
$
|
1,320
|
|
|
100
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
Netherlands
|
172
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
|
160
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
||
United Kingdom
|
131
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
|
280
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
||
Other
|
531
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
|
381
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
||
Total foreign covered bonds
|
$
|
2,390
|
|
|
100
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
|
$
|
2,141
|
|
|
100
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
European floating rate notes - available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United Kingdom
|
$
|
299
|
|
|
88
|
%
|
12
|
%
|
—
|
%
|
—
|
%
|
|
$
|
379
|
|
|
90
|
%
|
10
|
%
|
—
|
%
|
—
|
%
|
Netherlands
|
81
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
|
125
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
||
Ireland
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
58
|
|
|
—
|
|
—
|
|
100
|
|
—
|
|
||
Total European floating rate notes - available-for-sale
|
$
|
380
|
|
|
90
|
%
|
10
|
%
|
—
|
%
|
—
|
%
|
|
$
|
562
|
|
|
83
|
%
|
7
|
%
|
10
|
%
|
—
|
%
|
Sovereign debt/sovereign guaranteed:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United Kingdom
|
$
|
2,853
|
|
|
100
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
|
$
|
3,209
|
|
|
100
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
France
|
2,378
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
|
1,998
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
||
Spain
|
1,656
|
|
|
—
|
|
—
|
|
100
|
|
—
|
|
|
1,749
|
|
|
—
|
|
—
|
|
100
|
|
—
|
|
||
Germany
|
1,542
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
|
1,347
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
||
Italy
|
1,018
|
|
|
—
|
|
—
|
|
100
|
|
—
|
|
|
1,130
|
|
|
—
|
|
—
|
|
100
|
|
—
|
|
||
Netherlands
|
981
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
|
1,061
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
||
Ireland
|
807
|
|
|
—
|
|
100
|
|
—
|
|
—
|
|
|
736
|
|
|
—
|
|
100
|
|
—
|
|
—
|
|
||
Belgium
|
785
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
|
1,005
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
||
Other
(b)
|
268
|
|
|
49
|
|
—
|
|
—
|
|
51
|
|
|
254
|
|
|
71
|
|
—
|
|
—
|
|
29
|
|
||
Total sovereign debt/sovereign guaranteed
|
$
|
12,288
|
|
|
70
|
%
|
7
|
%
|
22
|
%
|
1
|
%
|
|
$
|
12,489
|
|
|
70
|
%
|
6
|
%
|
23
|
%
|
1
|
%
|
Non-agency RMBS
(c)
, originated in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2007
|
$
|
354
|
|
|
—
|
%
|
—
|
%
|
—
|
%
|
100
|
%
|
|
$
|
387
|
|
|
—
|
%
|
—
|
%
|
—
|
%
|
100
|
%
|
2006
|
360
|
|
|
—
|
|
—
|
|
—
|
|
100
|
|
|
391
|
|
|
—
|
|
—
|
|
—
|
|
100
|
|
||
2005
|
400
|
|
|
1
|
|
1
|
|
1
|
|
97
|
|
|
437
|
|
|
—
|
|
2
|
|
1
|
|
97
|
|
||
2004 and earlier
|
125
|
|
|
2
|
|
2
|
|
24
|
|
72
|
|
|
142
|
|
|
2
|
|
2
|
|
17
|
|
79
|
|
||
Total non-agency RMBS
(c)
|
$
|
1,239
|
|
|
—
|
%
|
1
|
%
|
3
|
%
|
96
|
%
|
|
$
|
1,357
|
|
|
—
|
%
|
1
|
%
|
2
|
%
|
97
|
%
|
(a)
|
At
June 30, 2017
and
Dec. 31, 2016
, foreign covered bonds and sovereign debt were included in Level 1 and Level 2 in the valuation hierarchy. All other assets in the table are Level 2 assets in the valuation hierarchy.
|
(b)
|
Included noninvestment grade sovereign debt related to Brazil of
$136 million
at
June 30, 2017
and
$73 million
at
Dec. 31, 2016
.
|
(c)
|
Previously included in the Grantor Trust. The Grantor Trust was dissolved in 2011.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Fair value measurements for assets using significant unobservable inputs
|
Loans
|
|||||
(in millions)
|
2Q16
|
|
YTD16
|
|
||
Fair value at the beginning of the period
|
$
|
69
|
|
$
|
—
|
|
Transfers into Level 3
|
—
|
|
19
|
|
||
Total gains for the period included in earnings
(a)
|
—
|
|
2
|
|
||
Purchases and sales:
|
|
|
||||
Purchases
|
65
|
|
113
|
|
||
Sales
|
(33
|
)
|
(33
|
)
|
||
Fair value at June 30, 2016
|
$
|
101
|
|
$
|
101
|
|
Change in unrealized gains for the period included in earnings for assets held at the end of the reporting period
|
$
|
—
|
|
$
|
2
|
|
(a)
|
Reported in investment and other income.
|
Assets measured at fair value on a nonrecurring basis at June 30, 2017
|
Total carrying
value
|
|
||||||||||
(in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
||||||
Loans
(a)
|
$
|
—
|
|
$
|
79
|
|
$
|
7
|
|
$
|
86
|
|
Other assets
(b)
|
—
|
|
4
|
|
2
|
|
6
|
|
||||
Total assets at fair value on a nonrecurring basis
|
$
|
—
|
|
$
|
83
|
|
$
|
9
|
|
$
|
92
|
|
Assets measured at fair value on a nonrecurring basis at Dec. 31, 2016
|
Total carrying
value
|
|
||||||||||
(in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
||||||
Loans
(a)
|
$
|
—
|
|
$
|
84
|
|
$
|
7
|
|
$
|
91
|
|
Other assets
(b)
|
—
|
|
4
|
|
—
|
|
4
|
|
||||
Total assets at fair value on a nonrecurring basis
|
$
|
—
|
|
$
|
88
|
|
$
|
7
|
|
$
|
95
|
|
(a)
|
During the quarters ended
June 30, 2017
and
Dec. 31, 2016
, the fair value of these loans decreased less than
$1 million
and
$1 million
, respectively, based on the fair value of the underlying collateral based on guidance in ASC 310, Receivables, with an offset to the allowance for credit losses.
|
(b)
|
Includes other assets received in satisfaction of debt.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Summary of financial instruments
|
June 30, 2017
|
||||||||||||||
(in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
estimated
fair value
|
|
Carrying
amount
|
|
|||||
Assets:
|
|
|
|
|
|
||||||||||
Interest-bearing deposits with the Federal Reserve and other central banks
|
$
|
—
|
|
$
|
74,130
|
|
$
|
—
|
|
$
|
74,130
|
|
$
|
74,130
|
|
Interest-bearing deposits with banks
|
—
|
|
13,601
|
|
—
|
|
13,601
|
|
13,601
|
|
|||||
Federal funds sold and securities purchased under resale agreements
|
—
|
|
27,440
|
|
—
|
|
27,440
|
|
27,440
|
|
|||||
Securities held-to-maturity
|
10,445
|
|
30,417
|
|
—
|
|
40,862
|
|
40,986
|
|
|||||
Loans
(a)
|
—
|
|
60,360
|
|
—
|
|
60,360
|
|
60,134
|
|
|||||
Other financial assets
|
4,725
|
|
1,122
|
|
—
|
|
5,847
|
|
5,847
|
|
|||||
Total
|
$
|
15,170
|
|
$
|
207,070
|
|
$
|
—
|
|
$
|
222,240
|
|
$
|
222,138
|
|
Liabilities:
|
|
|
|
|
|
||||||||||
Noninterest-bearing deposits
|
$
|
—
|
|
$
|
89,063
|
|
$
|
—
|
|
$
|
89,063
|
|
$
|
89,063
|
|
Interest-bearing deposits
|
—
|
|
144,896
|
|
—
|
|
144,896
|
|
146,614
|
|
|||||
Federal funds purchased and securities sold under repurchase agreements
|
—
|
|
10,934
|
|
—
|
|
10,934
|
|
10,934
|
|
|||||
Payables to customers and broker-dealers
|
—
|
|
21,622
|
|
—
|
|
21,622
|
|
21,622
|
|
|||||
Commercial paper
|
—
|
|
876
|
|
—
|
|
876
|
|
876
|
|
|||||
Borrowings
|
—
|
|
1,553
|
|
—
|
|
1,553
|
|
1,553
|
|
|||||
Long-term debt
|
—
|
|
27,601
|
|
—
|
|
27,601
|
|
27,331
|
|
|||||
Total
|
$
|
—
|
|
$
|
296,545
|
|
$
|
—
|
|
$
|
296,545
|
|
$
|
297,993
|
|
(a)
|
Does not include the leasing portfolio.
|
Summary of financial instruments
|
Dec. 31, 2016
|
||||||||||||||
(in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total estimated
fair value |
|
Carrying
amount |
|
|||||
Assets:
|
|
|
|
|
|
||||||||||
Interest-bearing deposits with the Federal Reserve and other central banks
|
$
|
—
|
|
$
|
58,041
|
|
$
|
—
|
|
$
|
58,041
|
|
$
|
58,041
|
|
Interest-bearing deposits with banks
|
—
|
|
15,091
|
|
—
|
|
15,091
|
|
15,086
|
|
|||||
Federal funds sold and securities purchased under resale agreements
|
—
|
|
25,801
|
|
—
|
|
25,801
|
|
25,801
|
|
|||||
Securities held-to-maturity
|
11,173
|
|
29,496
|
|
—
|
|
40,669
|
|
40,905
|
|
|||||
Loans
(a)
|
—
|
|
62,829
|
|
—
|
|
62,829
|
|
62,564
|
|
|||||
Other financial assets
|
4,822
|
|
1,112
|
|
—
|
|
5,934
|
|
5,934
|
|
|||||
Total
|
$
|
15,995
|
|
$
|
192,370
|
|
$
|
—
|
|
$
|
208,365
|
|
$
|
208,331
|
|
Liabilities:
|
|
|
|
|
|
||||||||||
Noninterest-bearing deposits
|
$
|
—
|
|
$
|
78,342
|
|
$
|
—
|
|
$
|
78,342
|
|
$
|
78,342
|
|
Interest-bearing deposits
|
—
|
|
141,418
|
|
—
|
|
141,418
|
|
143,148
|
|
|||||
Federal funds purchased and securities sold under repurchase agreements
|
—
|
|
9,989
|
|
—
|
|
9,989
|
|
9,989
|
|
|||||
Payables to customers and broker-dealers
|
—
|
|
20,987
|
|
—
|
|
20,987
|
|
20,987
|
|
|||||
Borrowings
|
—
|
|
960
|
|
—
|
|
960
|
|
960
|
|
|||||
Long-term debt
|
—
|
|
24,184
|
|
—
|
|
24,184
|
|
24,100
|
|
|||||
Total
|
$
|
—
|
|
$
|
275,880
|
|
$
|
—
|
|
$
|
275,880
|
|
$
|
277,526
|
|
(a)
|
Does not include the leasing portfolio.
|
Hedged financial instruments
|
Carrying
amount
|
|
Notional amount of hedge
|
|
|
|
||||||
|
Unrealized
|
|||||||||||
(in millions)
|
Gain
|
|
(Loss)
|
|
||||||||
June 30, 2017
|
|
|
|
|
||||||||
Securities available-for-sale
|
$
|
12,159
|
|
$
|
12,064
|
|
$
|
53
|
|
$
|
(354
|
)
|
Long-term debt
|
23,543
|
|
23,450
|
|
336
|
|
(164
|
)
|
||||
Dec. 31, 2016
|
|
|||||||||||
Securities available-for-sale
|
$
|
9,184
|
|
$
|
9,233
|
|
$
|
83
|
|
$
|
(342
|
)
|
Long-term debt
|
20,511
|
|
20,450
|
|
330
|
|
(203
|
)
|
Notes to Consolidated Financial Statements
(continued)
|
|
Assets and liabilities of consolidated investment management funds, at fair value
|
||||||
|
June 30, 2017
|
|
Dec. 31, 2016
|
|
||
(in millions)
|
||||||
Assets of consolidated investment management funds:
|
|
|
||||
Trading assets
|
$
|
537
|
|
$
|
979
|
|
Other assets
|
165
|
|
252
|
|
||
Total assets of consolidated investment management funds
|
$
|
702
|
|
$
|
1,231
|
|
Liabilities of consolidated investment management funds:
|
|
|
||||
Trading liabilities
|
$
|
—
|
|
$
|
282
|
|
Other liabilities
|
22
|
|
33
|
|
||
Total liabilities of consolidated investment management funds
|
$
|
22
|
|
$
|
315
|
|
(a)
|
The changes in fair value of the loans and long-term debt are approximately offset by economic hedges included in foreign exchange and other trading revenue.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Ineffectiveness
|
Six months ended
|
|||||
(in millions)
|
June 30, 2017
|
|
June 30, 2016
|
|
||
Fair value hedges of securities
|
$
|
(13.4
|
)
|
$
|
(2.2
|
)
|
Fair value hedges of long-term debt
|
2.0
|
|
(20.3
|
)
|
||
Cash flow hedges
|
—
|
|
—
|
|
||
Other
(a)
|
—
|
|
—
|
|
||
Total
|
$
|
(11.4
|
)
|
$
|
(22.5
|
)
|
(a)
|
Includes ineffectiveness recorded on foreign exchange hedges.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Impact of derivative instruments on the balance sheet
|
Notional value
|
|
Asset derivatives
fair value
|
|
Liability derivatives
fair value
|
|||||||||||||||
(in millions)
|
June 30, 2017
|
|
Dec. 31, 2016
|
|
|
June 30, 2017
|
|
Dec. 31, 2016
|
|
|
June 30, 2017
|
|
Dec. 31, 2016
|
|
||||||
Derivatives designated as hedging instruments:
(a)
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate contracts
|
$
|
35,514
|
|
$
|
29,683
|
|
|
$
|
389
|
|
$
|
415
|
|
|
$
|
518
|
|
$
|
545
|
|
Foreign exchange contracts
|
7,868
|
|
7,796
|
|
|
34
|
|
369
|
|
|
297
|
|
52
|
|
||||||
Total derivatives designated as hedging instruments
|
|
|
|
$
|
423
|
|
$
|
784
|
|
|
$
|
815
|
|
$
|
597
|
|
||||
Derivatives not designated as hedging instruments:
(b)
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate contracts
|
$
|
284,037
|
|
$
|
325,412
|
|
|
$
|
6,916
|
|
$
|
7,587
|
|
|
$
|
6,878
|
|
$
|
7,633
|
|
Foreign exchange contracts
|
599,580
|
|
530,729
|
|
|
4,464
|
|
6,104
|
|
|
4,554
|
|
6,103
|
|
||||||
Equity contracts
|
1,348
|
|
1,167
|
|
|
64
|
|
46
|
|
|
123
|
|
112
|
|
||||||
Credit contracts
|
160
|
|
160
|
|
|
—
|
|
—
|
|
|
3
|
|
3
|
|
||||||
Total derivatives not designated as hedging instruments
|
|
|
|
$
|
11,444
|
|
$
|
13,737
|
|
|
$
|
11,558
|
|
$
|
13,851
|
|
||||
Total derivatives fair value
(c)
|
|
|
|
$
|
11,867
|
|
$
|
14,521
|
|
|
$
|
12,373
|
|
$
|
14,448
|
|
||||
Effect of master netting agreements
(d)
|
|
|
|
(8,388
|
)
|
(10,257
|
)
|
|
(8,411
|
)
|
(10,047
|
)
|
||||||||
Fair value after effect of master netting agreements
|
|
|
|
$
|
3,479
|
|
$
|
4,264
|
|
|
$
|
3,962
|
|
$
|
4,401
|
|
(a)
|
The fair value of asset derivatives and liability derivatives designated as hedging instruments is recorded as other assets and other liabilities, respectively, on the balance sheet.
|
(b)
|
The fair value of asset derivatives and liability derivatives not designated as hedging instruments is recorded as trading assets and trading liabilities, respectively, on the balance sheet.
|
(c)
|
Fair values are on a gross basis, before consideration of master netting agreements, as required by ASC 815, Derivatives and Hedging.
|
(d)
|
Effect of master netting agreements includes cash collateral received and paid of
$831 million
and
$854 million
, respectively, at
June 30, 2017
, and
$1,119 million
and
$909 million
, respectively, at
Dec. 31, 2016
.
|
Derivatives in cash flow hedging
relationships
|
Gain or (loss) recognized
in accumulated
OCI on derivatives (effective portion)
|
|
Location of gain or
(loss) reclassified
from accumulated
OCI into income
(effective portion)
|
|
Gain or (loss) reclassified
from accumulated
OCI into income
(effective portion)
|
|
Location of gain or
(loss) recognized in
income on derivatives
(ineffective portion and
amount excluded from
effectiveness testing)
|
|
Gain or (loss) recognized in income on derivatives (ineffectiveness portion and amount excluded from effectiveness testing)
|
||||||||||||||||||||||||
2Q17
|
|
1Q17
|
|
2Q16
|
|
|
|
2Q17
|
|
1Q17
|
|
2Q16
|
|
|
|
2Q17
|
|
1Q17
|
|
2Q16
|
|
||||||||||||
FX contracts
|
$
|
—
|
|
$
|
—
|
|
$
|
(15
|
)
|
|
Net interest revenue
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(15
|
)
|
|
Net interest revenue
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
FX contracts
|
(1
|
)
|
—
|
|
—
|
|
|
Other revenue
|
|
—
|
|
—
|
|
—
|
|
|
Other revenue
|
|
—
|
|
—
|
|
—
|
|
|||||||||
FX contracts
|
—
|
|
3
|
|
19
|
|
|
Trading revenue
|
|
—
|
|
3
|
|
19
|
|
|
Trading revenue
|
|
—
|
|
—
|
|
—
|
|
|||||||||
FX contracts
|
(7
|
)
|
11
|
|
(14
|
)
|
|
Salary expense
|
|
(9
|
)
|
(4
|
)
|
—
|
|
|
Salary expense
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Total
|
$
|
(8
|
)
|
$
|
14
|
|
$
|
(10
|
)
|
|
|
|
$
|
(9
|
)
|
$
|
(1
|
)
|
$
|
4
|
|
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Derivatives in net
investment hedging
relationships
|
Gain or (loss) recognized in accumulated OCI
on derivatives
(effective portion)
|
|
Location of gain or
(loss) reclassified
from accumulated
OCI into income
(effective portion)
|
|
Gain or (loss) reclassified
from accumulated
OCI into income
(effective portion)
|
|
Location of gain or
(loss) recognized in
income on derivatives
(ineffective portion and
amount excluded from
effectiveness testing)
|
|
Gain or (loss) recognized
in income on derivatives
(ineffectiveness portion and amount excluded from
effectiveness testing)
|
||||||||||||||||||||||||
2Q17
|
|
1Q17
|
|
2Q16
|
|
|
|
2Q17
|
|
1Q17
|
|
2Q16
|
|
|
|
2Q17
|
|
1Q17
|
|
2Q16
|
|
||||||||||||
FX contracts
|
$
|
(274
|
)
|
$
|
(96
|
)
|
$
|
331
|
|
|
Net interest revenue
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
Other revenue
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Derivatives in cash flow hedging
relationships
|
Gain or (loss) recognized
in accumulated
OCI on derivatives(effective portion)
|
|
Location of gain or
(loss) reclassified
from accumulated
OCI into income
(effective portion)
|
|
Gain or (loss) reclassified
from accumulated
OCI into income
(effective portion)
|
|
Location of gain or
(loss) recognized in
income on derivatives
(ineffective portion and
amount excluded from
effectiveness testing)
|
|
Gain or (loss) recognized in income on derivatives
(ineffectiveness portion and amount excluded from effectiveness testing)
|
|||||||||||||||
YTD17
|
|
YTD16
|
|
|
|
YTD17
|
|
YTD16
|
|
|
|
YTD17
|
|
YTD16
|
|
|||||||||
FX contracts
|
$
|
—
|
|
$
|
(9
|
)
|
|
Net interest revenue
|
|
$
|
—
|
|
$
|
(10
|
)
|
|
Net interest revenue
|
|
$
|
—
|
|
$
|
—
|
|
FX contracts
|
(1
|
)
|
—
|
|
|
Other revenue
|
|
—
|
|
—
|
|
|
Other revenue
|
|
—
|
|
—
|
|
||||||
FX contracts
|
3
|
|
(70
|
)
|
|
Trading revenue
|
|
3
|
|
(70
|
)
|
|
Trading revenue
|
|
—
|
|
—
|
|
||||||
FX contracts
|
4
|
|
(12
|
)
|
|
Salary expense
|
|
(13
|
)
|
(2
|
)
|
|
Salary expense
|
|
—
|
|
—
|
|
||||||
Total
|
$
|
6
|
|
$
|
(91
|
)
|
|
|
|
$
|
(10
|
)
|
$
|
(82
|
)
|
|
|
|
$
|
—
|
|
$
|
—
|
|
Derivatives in net
investment hedging
relationships
|
Gain or (loss) recognized in accumulated OCI
on derivatives
(effective portion)
|
|
Location of gain or
(loss) reclassified
from accumulated
OCI into income
(effective portion)
|
|
Gain or (loss) reclassified
from accumulated
OCI into income
(effective portion)
|
|
Location of gain or
(loss) recognized in
income on derivative
(ineffective portion and
amount excluded from
effectiveness testing)
|
|
Gain or (loss)
recognized in income on
derivatives
(ineffectiveness portion and amount excluded from
effectiveness testing)
|
|||||||||||||||
YTD17
|
|
YTD16
|
|
|
|
YTD17
|
|
YTD16
|
|
|
|
YTD17
|
|
YTD16
|
|
|||||||||
FX contracts
|
$
|
(370
|
)
|
$
|
273
|
|
|
Net interest revenue
|
|
$
|
—
|
|
$
|
—
|
|
|
Other revenue
|
|
$
|
—
|
|
$
|
—
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Foreign exchange and other trading revenue
|
|||||||||||||||
|
|
|
|
|
|
||||||||||
(in millions)
|
2Q17
|
|
1Q17
|
|
2Q16
|
|
YTD17
|
|
YTD16
|
|
|||||
Foreign exchange
|
$
|
151
|
|
$
|
154
|
|
$
|
166
|
|
$
|
305
|
|
$
|
337
|
|
Other trading revenue
|
14
|
|
10
|
|
16
|
|
24
|
|
20
|
|
|||||
Total foreign exchange and other trading revenue
|
$
|
165
|
|
$
|
164
|
|
$
|
182
|
|
$
|
329
|
|
$
|
357
|
|
If The Bank of New York Mellon’s rating was changed to (Moody’s/S&P)
|
Potential close-out exposures (fair value)
(a)
|
|
||
A3/A-
|
|
$
|
128
|
million
|
Baa2/BBB
|
|
$
|
816
|
million
|
Ba1/BB+
|
|
$
|
2,042
|
million
|
(a)
|
The amounts represent potential total close-out values if The Bank of New York Mellon’s rating were to immediately drop to the indicated levels.
|
Notes to Consolidated Financial Statements
(continued)
|
|
(a)
|
Includes the effect of netting agreements and net cash collateral received. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions.
|
(b)
|
Offsetting of reverse repurchase agreements relates to our involvement in the Fixed Income Clearing Corporation, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system.
|
(a)
|
Includes the effect of netting agreements and net cash collateral received. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions.
|
(b)
|
Offsetting of reverse repurchase agreements relates to our involvement in the Fixed Income Clearing Corporation, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Offsetting of derivative liabilities and financial liabilities at June 30, 2017
|
Net liabilities recognized on the balance sheet
|
|
|
|
|
||||||||||||||
|
Gross liabilities recognized
|
|
Gross amounts offset in the balance sheet
|
|
|
Gross amounts not offset in the balance sheet
|
|
||||||||||||
(in millions)
|
(a)
|
Financial instruments
|
|
Cash collateral pledged
|
|
Net amount
|
|
||||||||||||
Derivatives subject to netting arrangements:
|
|
|
|
|
|
|
|
||||||||||||
Interest rate contracts
|
$
|
7,318
|
|
$
|
5,794
|
|
|
$
|
1,524
|
|
$
|
1,510
|
|
$
|
—
|
|
$
|
14
|
|
Foreign exchange contracts
|
4,080
|
|
2,545
|
|
|
1,535
|
|
163
|
|
—
|
|
1,372
|
|
||||||
Equity and other contracts
|
120
|
|
72
|
|
|
48
|
|
48
|
|
—
|
|
—
|
|
||||||
Total derivatives subject to netting arrangements
|
11,518
|
|
8,411
|
|
|
3,107
|
|
1,721
|
|
—
|
|
1,386
|
|
||||||
Total derivatives not subject to netting arrangements
|
855
|
|
—
|
|
|
855
|
|
—
|
|
—
|
|
855
|
|
||||||
Total derivatives
|
12,373
|
|
8,411
|
|
|
3,962
|
|
1,721
|
|
—
|
|
2,241
|
|
||||||
Repurchase agreements
|
14,455
|
|
5,885
|
|
(b)
|
8,570
|
|
8,568
|
|
—
|
|
2
|
|
||||||
Securities lending
|
1,672
|
|
—
|
|
|
1,672
|
|
1,579
|
|
—
|
|
93
|
|
||||||
Total
|
$
|
28,500
|
|
$
|
14,296
|
|
|
$
|
14,204
|
|
$
|
11,868
|
|
$
|
—
|
|
$
|
2,336
|
|
(a)
|
Includes the effect of netting agreements and net cash collateral paid. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions.
|
(b)
|
Offsetting of repurchase agreements relates to our involvement in the Fixed Income Clearing Corporation, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system.
|
(a)
|
Includes the effect of netting agreements and net cash collateral paid. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions.
|
(b)
|
Offsetting of repurchase agreements relates to our involvement in the Fixed Income Clearing Corporation, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Financial institutions
portfolio exposure
(in billions)
|
June 30, 2017
|
||||||||
Loans
|
|
Unfunded
commitments
|
|
Total
exposure
|
|
||||
Securities industry
|
$
|
3.4
|
|
$
|
19.4
|
|
$
|
22.8
|
|
Banks
|
6.7
|
|
1.9
|
|
8.6
|
|
|||
Asset managers
|
1.8
|
|
6.2
|
|
8.0
|
|
|||
Insurance
|
0.2
|
|
3.3
|
|
3.5
|
|
|||
Government
|
—
|
|
0.9
|
|
0.9
|
|
|||
Other
|
1.1
|
|
1.3
|
|
2.4
|
|
|||
Total
|
$
|
13.2
|
|
$
|
33.0
|
|
$
|
46.2
|
|
Commercial portfolio
exposure
(in billions)
|
June 30, 2017
|
||||||||
Loans
|
|
Unfunded
commitments
|
|
Total
exposure
|
|
||||
Manufacturing
|
$
|
1.4
|
|
$
|
6.2
|
|
$
|
7.6
|
|
Energy and utilities
|
0.6
|
|
4.7
|
|
5.3
|
|
|||
Services and other
|
0.7
|
|
4.4
|
|
5.1
|
|
|||
Media and telecom
|
0.2
|
|
1.7
|
|
1.9
|
|
|||
Total
|
$
|
2.9
|
|
$
|
17.0
|
|
$
|
19.9
|
|
Off-balance sheet credit risks
|
June 30, 2017
|
|
Dec. 31, 2016
|
|
||
(in millions)
|
||||||
Lending commitments
|
$
|
50,736
|
|
$
|
51,270
|
|
Standby letters of credit
(a)
|
3,812
|
|
4,185
|
|
||
Commercial letters of credit
|
293
|
|
339
|
|
||
Securities lending indemnifications
(b)
|
358,837
|
|
317,690
|
|
(a)
|
Net of participations totaling
$671 million
at
June 30, 2017
and
$662 million
at
Dec. 31, 2016
.
|
(b)
|
Excludes the
indemnification for securities for which BNY Mellon acts as an agent on behalf of CIBC Mellon clients
, which totaled
$65 billion
at
June 30, 2017
and
$61 billion
at
Dec. 31, 2016
.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Standby letters of credit
|
June 30, 2017
|
|
Dec. 31, 2016
|
|
|
||||
Investment grade
|
86
|
%
|
89
|
%
|
Non-investment grade
|
14
|
%
|
11
|
%
|
Notes to Consolidated Financial Statements
(continued)
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Business
|
Primary types of revenue
|
Investment Management
|
•
Investment management and performance fees from:
Mutual funds
Institutional clients
Private clients
High net worth individuals and families, endowments and foundations and related entities
•
Distribution and servicing fees
•
Other revenue from seed capital investments
|
Investment Services
|
•
Asset servicing fees, including custody fees, fund services, broker-dealer services, securities finance and collateral and liquidity services
•
Issuer services fees, including Depositary Receipts and Corporate Trust
•
Clearing services fees
•
Treasury services fees, including global payments, trade finance and cash management
•
Foreign exchange revenue
•
Financing-related fees and net interest revenue from credit-related activities
|
Other segment
|
•
Net interest revenue and lease-related gains (losses) from leasing operations
•
Gain (loss) on securities and net interest revenue from corporate treasury activity
•
Other trading revenue from derivatives and other trading activity
•
Results of business exits
|
•
|
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
|
•
|
Net interest revenue is allocated to businesses based on the yields on the assets and liabilities generated by each business. We employ a funds transfer pricing system that matches funds with the specific assets and liabilities of each business based on their interest sensitivity and maturity characteristics.
|
•
|
The provision for credit losses associated with the respective credit portfolios is reflected in each business segment.
|
Notes to Consolidated Financial Statements
(continued)
|
|
•
|
Incentive expense related to restricted stock is 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.
|
•
|
Restructuring charges relate to corporate-level initiatives and were therefore recorded 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.
|
For the quarter ended June 30, 2017
|
Investment
Management |
|
|
Investment
Services |
|
|
Other
|
|
|
Consolidated
|
|
|
||||
(dollar amounts in millions)
|
||||||||||||||||
Fee and other revenue
|
$
|
899
|
|
(a)
|
$
|
2,115
|
|
|
$
|
113
|
|
|
$
|
3,127
|
|
(a)
|
Net interest revenue (expense)
|
87
|
|
|
761
|
|
|
(22
|
)
|
|
826
|
|
|
||||
Total revenue
|
986
|
|
(a)
|
2,876
|
|
|
91
|
|
|
3,953
|
|
(a)
|
||||
Provision for credit losses
|
—
|
|
|
(3
|
)
|
|
(4
|
)
|
|
(7
|
)
|
|
||||
Noninterest expense
|
698
|
|
|
1,927
|
|
|
28
|
|
|
2,653
|
|
(b)
|
||||
Income before taxes
|
$
|
288
|
|
(a)
|
$
|
952
|
|
|
$
|
67
|
|
|
$
|
1,307
|
|
(a)(b)
|
Pre-tax operating margin
(c)
|
29
|
%
|
|
33
|
%
|
|
N/M
|
|
|
33
|
%
|
|
||||
Average assets
|
$
|
31,355
|
|
|
$
|
254,724
|
|
|
$
|
56,436
|
|
|
$
|
342,515
|
|
|
(a)
|
Both fee and other revenue and total revenue include the net income from consolidated investment management funds of
$7 million
representing
$10 million
of income and noncontrolling interests of
$3 million
.
Income before taxes is net of noncontrolling interests of
$3 million
.
|
(b)
|
Noninterest expense includes a loss attributable to noncontrolling interest of
$2 million
related to other consolidated subsidiaries.
|
(c)
|
Income before taxes divided by total revenue.
|
Notes to Consolidated Financial Statements
(continued)
|
|
For the quarter ended March 31, 2017
|
Investment
Management
|
|
|
Investment
Services
|
|
|
Other
|
|
|
Consolidated
|
|
|
||||
(dollar amounts in millions)
|
||||||||||||||||
Fee and other revenue
|
$
|
877
|
|
(a)
|
$
|
2,084
|
|
|
$
|
72
|
|
|
$
|
3,033
|
|
(a)
|
Net interest revenue (expense)
|
86
|
|
|
707
|
|
|
(1
|
)
|
|
792
|
|
|
||||
Total revenue
|
963
|
|
(a)
|
2,791
|
|
|
71
|
|
|
3,825
|
|
(a)
|
||||
Provision for credit losses
|
3
|
|
|
—
|
|
|
(8
|
)
|
|
(5
|
)
|
|
||||
Noninterest expense
|
683
|
|
|
1,849
|
|
|
107
|
|
|
2,639
|
|
(b)
|
||||
Income (loss) before taxes
|
$
|
277
|
|
(a)
|
$
|
942
|
|
|
$
|
(28
|
)
|
|
$
|
1,191
|
|
(a)(b)
|
Pre-tax operating margin
(c)
|
29
|
%
|
|
34
|
%
|
|
N/M
|
|
|
31
|
%
|
|
||||
Average assets
|
$
|
31,067
|
|
|
$
|
251,027
|
|
|
$
|
54,106
|
|
|
$
|
336,200
|
|
|
(a)
|
Both fee and other revenue and total revenue include the net income from consolidated investment management funds of $
15 million
, representing
$33
million of income and noncontrolling interests of
$18
million. Income before taxes is net of noncontrolling interests of
$18
million.
|
(b)
|
Noninterest expense includes a loss attributable to noncontrolling interest of $
3 million
related to other consolidated subsidiaries.
|
(c)
|
Income before taxes divided by total revenue.
|
For the quarter ended June 30, 2016
|
Investment
Management |
|
|
Investment
Services |
|
|
Other
|
|
|
Consolidated
|
|
|
||||
(dollar amounts in millions)
|
||||||||||||||||
Fee and other revenue
|
$
|
856
|
|
(a)
|
$
|
2,054
|
|
|
$
|
95
|
|
|
$
|
3,005
|
|
(a)
|
Net interest revenue (expense)
|
82
|
|
|
690
|
|
|
(5
|
)
|
|
767
|
|
|
||||
Total revenue
|
938
|
|
(a)
|
2,744
|
|
|
90
|
|
|
3,772
|
|
(a)
|
||||
Provision for credit losses
|
1
|
|
|
(7
|
)
|
|
(3
|
)
|
|
(9
|
)
|
|
||||
Noninterest expense
|
703
|
|
|
1,859
|
|
|
56
|
|
|
2,618
|
|
(b)
|
||||
Income before taxes
|
$
|
234
|
|
(a)
|
$
|
892
|
|
|
$
|
37
|
|
|
$
|
1,163
|
|
(a)(b)
|
Pre-tax operating margin
(c)
|
25
|
%
|
|
33
|
%
|
|
N/M
|
|
|
31
|
%
|
|
||||
Average assets
|
$
|
30,229
|
|
|
$
|
277,225
|
|
|
$
|
66,766
|
|
|
$
|
374,220
|
|
|
(a)
|
Both fee and other revenue and total revenue include net income from consolidated investment management funds of $
6 million
, representing
$10
million of income and noncontrolling interests of
$4
million. Income before taxes is net of noncontrolling interests of
$4
million.
|
(b)
|
Noninterest expense includes a loss attributable to noncontrolling interest of $
2 million
related to other consolidated subsidiaries.
|
(c)
|
Income before taxes divided by total revenue.
|
For the six months ended June 30, 2017
|
Investment
Management |
|
|
Investment
Services |
|
|
Other
|
|
|
Consolidated
|
|
|
||||
(dollar amounts in millions)
|
||||||||||||||||
Fee and other revenue
|
$
|
1,776
|
|
(a)
|
$
|
4,199
|
|
|
$
|
185
|
|
|
$
|
6,160
|
|
(a)
|
Net interest revenue (expense)
|
173
|
|
|
1,468
|
|
|
(23
|
)
|
|
1,618
|
|
|
||||
Total revenue
|
1,949
|
|
(a)
|
5,667
|
|
|
162
|
|
|
7,778
|
|
(a)
|
||||
Provision for credit losses
|
3
|
|
|
(3
|
)
|
|
(12
|
)
|
|
(12
|
)
|
|
||||
Noninterest expense
|
1,381
|
|
|
3,776
|
|
|
135
|
|
|
5,292
|
|
(b)
|
||||
Income before taxes
|
$
|
565
|
|
(a)
|
$
|
1,894
|
|
|
$
|
39
|
|
|
$
|
2,498
|
|
(a)(b)
|
Pre-tax operating margin
(c)
|
29
|
%
|
|
33
|
%
|
|
N/M
|
|
|
32
|
%
|
|
||||
Average assets
|
$
|
31,212
|
|
|
$
|
253,031
|
|
|
$
|
55,132
|
|
|
$
|
339,375
|
|
|
(a)
|
Both total fee and other revenue and total revenue include net income from consolidated investment management funds of
$22 million
, representing
$43 million
of income and noncontrolling interests of
$21 million
. Income before taxes is net of noncontrolling interests of
$21 million
.
|
(b)
|
Noninterest expense includes a loss attributable to noncontrolling interest of
$5 million
related to other consolidated subsidiaries.
|
(c)
|
Income before taxes divided by total revenue.
|
Notes to Consolidated Financial Statements
(continued)
|
|
For the six months ended June 30, 2016
|
Investment
Management |
|
|
Investment
Services |
|
|
Other
|
|
|
Consolidated
|
|
|
||||
(dollar amounts in millions)
|
||||||||||||||||
Fee and other revenue
|
$
|
1,668
|
|
(a)
|
$
|
4,084
|
|
|
$
|
224
|
|
|
$
|
5,976
|
|
(a)
|
Net interest revenue (expense)
|
165
|
|
|
1,369
|
|
|
(1
|
)
|
|
1,533
|
|
|
||||
Total revenue
|
1,833
|
|
(a)
|
5,453
|
|
|
223
|
|
|
7,509
|
|
(a)
|
||||
Provision for credit losses
|
—
|
|
|
7
|
|
|
(6
|
)
|
|
1
|
|
|
||||
Noninterest expense
|
1,382
|
|
|
3,667
|
|
|
196
|
|
|
5,245
|
|
(b)
|
||||
Income before taxes
|
$
|
451
|
|
(a)
|
$
|
1,779
|
|
|
$
|
33
|
|
|
$
|
2,263
|
|
(a)(b)
|
Pre-tax operating margin
(c)
|
25
|
%
|
|
33
|
%
|
|
N/M
|
|
|
30
|
%
|
|
||||
Average assets
|
$
|
29,874
|
|
|
$
|
275,257
|
|
|
$
|
64,256
|
|
|
$
|
369,387
|
|
|
(a)
|
Both total fee and other revenue and total revenue include net income from consolidated investment management funds of
$7 million
, representing
$4 million
of income and a loss attributable to noncontrolling interests of
$3 million
. Income before taxes is net of a loss attributable to noncontrolling interests of
$3 million
.
|
(b)
|
Noninterest expense includes a loss attributable to noncontrolling interest of
$4 million
related to other consolidated subsidiaries.
|
(c)
|
Income before taxes divided by total revenue.
|
Noncash investing and financing transactions
|
Six months ended June 30,
|
||||||
(in millions)
|
2017
|
|
|
2016
|
|
||
Transfers from loans to other assets for other real estate owned (“OREO”)
|
$
|
2
|
|
|
$
|
3
|
|
Change in assets of consolidated VIEs
|
529
|
|
|
318
|
|
||
Change in liabilities of consolidated VIEs
|
293
|
|
|
9
|
|
||
Change in nonredeemable noncontrolling interests of consolidated investment management funds
|
275
|
|
|
172
|
|
||
Securities purchased not settled
|
853
|
|
|
940
|
|
||
Securities sales not settled
|
1
|
|
|
332
|
|
||
Held-to-maturity securities transferred to available-for-sale
|
—
|
|
|
10
|
|
||
Premises and equipment/capitalized software funded by capital lease obligations
|
345
|
|
|
4
|
|
Item 4. Controls and Procedures
|
|
Forward-looking Statements
|
|
Forward-looking Statements
(continued)
|
|
Part II - Other Information
|
|
Part II - Other Information
(continued)
|
|
Part II - Other Information
(continued)
|
|
(c)
|
The following table discloses repurchases of our common stock made in the
second quarter of 2017
. All of the Company’s preferred stock outstanding has preference over the Company’s common stock with respect to the payment of dividends.
|
Share repurchases - second quarter of 2017
|
|
|
|
|
Total shares repurchased as part of a publicly announced plan or program
|
|
Maximum approximate dollar value of shares that may yet be purchased under the publicly announced plans or programs at June 30, 2017
|
|
|
|||||
(dollars in millions, except per share information; common shares in thousands)
|
Total shares
repurchased |
|
|
Average price
per share |
|
|
|
|||||||
April 2017
|
5,267
|
|
|
$
|
47.54
|
|
|
5,267
|
|
|
$
|
264
|
|
|
May 2017
|
927
|
|
|
47.10
|
|
|
927
|
|
|
220
|
|
|
||
June 2017
|
4,461
|
|
|
47.50
|
|
|
4,461
|
|
|
8
|
|
|
||
Second quarter of 2017
(a)
|
10,655
|
|
|
$
|
47.48
|
|
|
10,655
|
|
|
2,600
|
|
(b)
|
(a)
|
Includes
35 thousand
shares repurchased at a purchase price of
$2 million
from employees, primarily in connection with the employees’ payment of taxes upon the vesting of restricted stock. The average price per share of open market purchases was
$47.49
.
|
(b)
|
Represents the maximum value of the shares authorized to be repurchased through the second quarter of 2018, including employee benefit plan repurchases, in connection with the Federal Reserve’s non-objection to our 2017 capital plan.
|
|
THE BANK OF NEW YORK MELLON CORPORATION
|
|
(Registrant)
|
|
|
|
|
Date: August 3, 2017
|
By:
|
|
/s/ Kurtis R. Kurimsky
|
|
|
|
Kurtis R. Kurimsky
|
|
|
|
Corporate Controller
|
|
|
|
(Duly Authorized Officer and
|
|
|
|
Principal Accounting Officer of
|
|
|
|
the Registrant)
|
Index to Exhibits
|
|
Exhibit No.
|
|
Description
|
|
Method of Filing
|
3.1
|
|
Restated Certificate of Incorporation of The Bank of New York Mellon Corporation.
|
|
Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 000-52710) as filed with the Commission on July 2, 2007, and incorporated herein by reference.
|
3.2
|
|
Certificate of Designations of The Bank of New York Mellon Corporation with respect to Series A Noncumulative Preferred Stock, dated June 15, 2007.
|
|
Previously filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 000-52710) as filed with the Commission on July 5, 2007, and incorporated herein by reference.
|
3.3
|
|
Certificate of Designations of The Bank of New York Mellon Corporation with respect to Series C Noncumulative Perpetual Preferred Stock, dated Sept. 13, 2012.
|
|
Previously filed as Exhibit 3.2 to the Company’s Registration Statement on Form 8A12B (File No. 001-35651) as filed with the Commission on Sept. 14, 2012, and incorporated herein by reference.
|
3.4
|
|
Certificate of Designations of The Bank of New York Mellon Corporation with respect to the Series D Noncumulative Perpetual Preferred Stock, dated May 16, 2013.
|
|
Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-35651) as filed with the Commission on May 16, 2013, and incorporated herein by reference.
|
3.5
|
|
Certificate of Designations of The Bank of New York Mellon Corporation with respect to the Series E Noncumulative Perpetual Preferred Stock, dated April 27, 2015.
|
|
Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-35651) as filed with the Commission on April 28, 2015, and incorporated herein by reference.
|
3.6
|
|
Certificate of Designations of The Bank of New York Mellon Corporation with respect to the Series F Noncumulative Perpetual Preferred Stock, dated July 29, 2016.
|
|
Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-35651) as filed with the Commission on Aug. 1, 2016, and incorporated herein by reference.
|
3.7
|
|
Amended and Restated By-Laws of The Bank of New York Mellon Corporation, as amended and restated on Oct. 13, 2015.
|
|
Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-35651) as filed with the Commission on Oct. 19, 2015, and incorporated herein by reference.
|
4.1
|
|
None of the instruments defining the rights of holders of long-term debt of the Parent or any of its subsidiaries represented long-term debt in excess of 10% of the total assets of the Company as of June 30, 2017. The Company hereby agrees to furnish to the Commission, upon request, a copy of any such instrument.
|
|
N/A
|
Index to Exhibits
(continued)
|
|
Exhibit No.
|
|
Description
|
|
Method of Filing
|
10.1
|
*
|
Letter Agreement, dated July 13, 2017, between The Bank of New York Mellon Corporation and Charles W. Scharf.
|
|
Previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-35651) as filed with the Commission on July 17, 2017, and incorporated herein by reference.
|
10.2
|
*
|
2017 Form of Performance Share Unit Agreement.
|
|
Filed herewith.
|
10.3
|
*
|
2017 Form of Restricted Share Unit Agreement.
|
|
Filed herewith.
|
12.1
|
|
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.
|
|
Filed herewith.
|
31.1
|
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Filed herewith.
|
31.2
|
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Filed herewith.
|
32.1
|
|
Certification of the Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Furnished herewith.
|
32.2
|
|
Certification of the Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Furnished herewith.
|
101.INS
|
|
XBRL Instance Document.
|
|
Filed herewith.
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
Filed herewith.
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
Filed herewith.
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
Filed herewith.
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
Filed herewith.
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
Filed herewith.
|
•
|
Did the Grantee’s score/rating reflect poor risk behavior by the Grantee in a prior year?
|
•
|
Did the Grantee receive an award in that year?
|
•
|
Financial Impact: How much did/will the issue cost the Company?
|
•
|
Reputational Impact: How much of a regulatory impact did/will it have on the Company?
|
Criteria
|
Metric
|
None
|
Low
|
Medium
|
High
|
Financial Impact
|
|
|
|
|
|
Reputational Impact
|
|
|
|
|
|
Criteria
|
None
|
Indirect
|
Direct
|
The Grantee’s role
& responsibility |
|
|
|
•
|
Did the Grantee’s score/rating reflect poor risk behavior by the Grantee in a prior year?
|
•
|
Did the Grantee receive an award in that year?
|
•
|
Financial Impact: How much did/will the issue cost the Company?
|
•
|
Reputational Impact: How much of a regulatory impact did/will it have on the Company?
|
Criteria
|
Metric
|
None
|
Low
|
Medium
|
High
|
Financial Impact
|
|
|
|
|
|
Reputational Impact
|
|
|
|
|
|
Criteria
|
None
|
Indirect
|
Direct
|
The Grantee’s role
& responsibility |
|
|
|
|
Quarter ended
|
|
Year-to-date
|
|||||||||||||
(dollar amounts in millions)
|
June 30,
2017 |
|
March 31,
2017 |
|
June 30,
2016 |
|
|
June 30,
2017 |
|
June 30,
2016 |
|
|||||
Earnings
|
|
|
|
|
|
|
||||||||||
Income before income taxes
|
$
|
1,308
|
|
$
|
1,206
|
|
$
|
1,165
|
|
|
$
|
2,514
|
|
$
|
2,256
|
|
Net (income) loss attributable to noncontrolling interests
|
(1
|
)
|
(15
|
)
|
(2
|
)
|
|
(16
|
)
|
7
|
|
|||||
Income before income taxes attributable to shareholders of The Bank of New York Mellon Corporation
|
1,307
|
|
1,191
|
|
1,163
|
|
|
2,498
|
|
2,263
|
|
|||||
Fixed charges, excluding interest on deposits
|
217
|
|
183
|
|
136
|
|
|
400
|
|
264
|
|
|||||
Income before income taxes and fixed charges, excluding interest on deposits applicable to the shareholders of The Bank of New York Mellon Corporation
|
1,524
|
|
1,374
|
|
1,299
|
|
|
2,898
|
|
2,527
|
|
|||||
Interest on deposits
|
32
|
|
9
|
|
12
|
|
|
41
|
|
27
|
|
|||||
Income before income taxes and fixed charges, including interest on deposits applicable to shareholders of The Bank of New York Mellon Corporation
|
$
|
1,556
|
|
$
|
1,383
|
|
$
|
1,311
|
|
|
$
|
2,939
|
|
$
|
2,554
|
|
Fixed charges
|
|
|
|
|
|
|
||||||||||
Interest expense, excluding interest on deposits
|
$
|
194
|
|
$
|
159
|
|
$
|
111
|
|
|
$
|
353
|
|
$
|
213
|
|
One-third net rental expense
(a)
|
23
|
|
24
|
|
25
|
|
|
47
|
|
51
|
|
|||||
Total fixed charges, excluding interest on deposits
|
217
|
|
183
|
|
136
|
|
|
400
|
|
264
|
|
|||||
Interest on deposits
|
32
|
|
9
|
|
12
|
|
|
41
|
|
27
|
|
|||||
Total fixed charges, including interests on deposits
|
$
|
249
|
|
$
|
192
|
|
$
|
148
|
|
|
$
|
441
|
|
$
|
291
|
|
Preferred stock dividends
|
$
|
49
|
|
$
|
42
|
|
$
|
48
|
|
|
$
|
91
|
|
$
|
61
|
|
|
|
|
|
|
|
|
||||||||||
Total fixed charges and preferred stock dividends, excluding interest on deposits
|
$
|
266
|
|
$
|
225
|
|
$
|
184
|
|
|
$
|
491
|
|
$
|
325
|
|
Total fixed charges and preferred stock dividends, including interest on deposits
|
$
|
298
|
|
$
|
234
|
|
$
|
196
|
|
|
$
|
532
|
|
$
|
352
|
|
|
|
|
|
|
|
|
||||||||||
Earnings to fixed charges ratios
|
|
|
|
|
|
|
||||||||||
Excluding interest on deposits
|
7.02
|
|
7.51
|
|
9.55
|
|
|
7.25
|
|
9.57
|
|
|||||
Including interest on deposits
|
6.25
|
|
7.20
|
|
8.86
|
|
|
6.66
|
|
8.78
|
|
|||||
|
|
|
|
|
|
|
||||||||||
Earnings to fixed charges and preferred stock dividends ratios
|
|
|
|
|
|
|
||||||||||
Excluding interest on deposits
|
5.73
|
|
6.11
|
|
7.06
|
|
|
5.90
|
|
7.78
|
|
|||||
Including interest on deposits
|
5.22
|
|
5.91
|
|
6.69
|
|
|
5.52
|
|
7.26
|
|
(a)
|
The proportion deemed representative of the interest factor.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of The Bank of New York Mellon Corporation (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Charles W. Scharf
|
|
Name: Charles W. Scharf
|
|
Title: Chief Executive Officer
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of The Bank of New York Mellon Corporation (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Thomas P. Gibbons
|
|
Name: Thomas P. Gibbons
|
|
Title: Chief Financial Officer
|
|
Dated: August 3, 2017
|
|
/s/ Charles W. Scharf
|
|
|
|
|
Name:
|
Charles W. Scharf
|
|
|
|
Title:
|
Chief Executive Officer
|
|
Dated: August 3, 2017
|
|
/s/ Thomas P. Gibbons
|
|
|
|
|
Name:
|
Thomas P. Gibbons
|
|
|
|
Title:
|
Chief Financial Officer
|
|