|
|
Delaware
|
13-2614959
|
(State or other jurisdiction of
|
(I.R.S. Employer Identification No.)
|
incorporation or organization)
|
|
|
•
|
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 as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the SEC pursuant to Section 13(a) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), 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); Liquidity Coverage Ratio Disclosures; 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.
|
PART I
|
|
•
|
The Bank of New York Mellon, a New York state-chartered bank, which houses our Investment Services businesses, including Asset Servicing, Issuer Services, Treasury Services, Broker-Dealer Services, as well as the bank-advised business of Asset Management; and
|
•
|
BNY Mellon, National Association (“BNY Mellon, N.A.”), a national bank, which houses our Wealth Management business.
|
I.
|
Distribution of Assets, Liabilities and Stockholders’ Equity; Interest Rates and Interest Differential
|
A.
|
Book Value of Investments;
|
B.
|
Maturity Distribution and Yields of Investments; and
|
C.
|
Aggregate Book Value and Market Value of Investments Where Issuer Exceeds 10% of Stockholders’ Equity
|
A.
|
Types of Loans; and
|
B.
|
Maturities and Sensitivities of Loans to Changes in Interest Rates
|
C.
|
Risk Elements; and
|
D.
|
Other Interest-bearing Assets
|
PART II
|
|
PART III
|
|
Name
|
Age
|
Positions and offices
|
|
|
|
Bridget E. Engle
|
54
|
Ms. Engle has served as Senior Executive Vice President and Chief Information Officer of BNY Mellon since June 2017. From April 2015 to March 2017, Ms. Engle served as Bank of America Corporation’s Chief Information Officer for Global Commercial Banking and Markets Technology. From 2011 to April 2015, Ms. Engle was Bank of America’s Chief Information Officer for Consumer Banking.
|
|
|
|
|
|
|
Thomas P. (Todd) Gibbons
|
61
|
Mr. Gibbons has served as Vice Chairman and Chief Executive Officer of Clearing, Markets and Client Management of BNY Mellon since January 2018 and was Vice Chairman and Chief Financial Officer of BNY Mellon from July 2008 to January 2018.
|
|
|
|
|
|
|
Mitchell E. Harris
|
63
|
Mr. Harris has served as Senior Executive Vice President and Chief Executive Officer of Investment Management of BNY Mellon since February 2016 and was President of Investment Management from May 2011 to February 2016.
|
|
|
|
|
|
|
Monique R. Herena
|
47
|
Ms. Herena has served as Senior Executive Vice President and Chief Human Resources Officer of BNY Mellon since April 2014. From 2013 to April 2014, Ms. Herena served as Senior Vice President Human Resources and Chief Human Resources Officer Global Groups, Functions and Corporate for PepsiCo Inc.
|
|
|
|
|
|
|
Hani A. Kablawi
|
49
|
Mr. Kablawi has served as Senior Executive Vice President and Chairman of EMEA and Chief Executive Officer of Global Asset Servicing of BNY Mellon since January 2018 and was Chief Executive Officer of EMEA Investment Services from July 2016 to January 2018. Mr. Kablawi previously served as Chief Executive Officer of EMEA Asset Servicing from January 2012 to July 2016.
|
|
|
|
|
|
|
Name
|
Age
|
Positions and offices
|
Kurtis R. Kurimsky
|
44
|
Mr. Kurimsky has served as Vice President and Controller of BNY Mellon since July 2015 and was Acting Controller from February 2015 to July 2015. Mr. Kurimsky previously served as Deputy Controller of BNY Mellon from May 2014 to February 2015. From October 2006 to April 2014, Mr. Kurimsky served as a partner in the Financial Services Practice at KPMG LLP.
|
|
|
|
|
|
|
Francis (Frank) La Salla
|
54
|
Mr. La Salla has served as Senior Executive Vice President and Chief Executive Officer of Issuer Services of BNY Mellon since January 2018 and was Chief Executive Officer of Corporate Trust from May 2017 to January 2018. Mr. La Salla previously served as Chief Executive Officer of Global Structured Products and Alternative Investment Services from March 2014 to May 2017. From May 2003 to March 2014, Mr. La Salla was Managing Director at Pershing LLC, a wholly-owned subsidiary of BNY Mellon, where he was Co-Head of Global Client Relationships and Head of Trading Services.
|
|
|
|
|
|
|
J. Kevin McCarthy
|
53
|
Mr. McCarthy has served as Senior Executive Vice President and General Counsel of BNY Mellon since April 2014 and was Senior Deputy General Counsel, with oversight of the legal teams supporting BNY Mellon’s Litigation, Enforcement, Employment Law, Asset Servicing and corporate center functions, from August 2013 to April 2014. From September 2010 to August 2013, Mr. McCarthy served as Deputy General Counsel for the Litigation, Enforcement and Employment Law functions at BNY Mellon.
|
|
|
|
|
|
|
Michael P. Santomassimo
|
42
|
Mr. Santomassimo has served as Senior Executive Vice President and Chief Financial Officer of BNY Mellon since January 2018 and was Chief Financial Officer of Investment Services from July 2016 to January 2018. Mr. Santomassimo served as Chief Financial Officer, Banking, at JPMorgan Chase & Co., which included Investment Banking (Advisory and Equity and Debt Capital Markets) as well as Treasury Services from December 2013 to June 2016 and Chief Financial Officer, Technology & Operations, for the same division at JPMorgan Chase & Co. from December 2012 to December 2013.
|
|
|
|
|
|
|
Charles W. Scharf
|
52
|
Mr. Scharf has served as a director and Chief Executive Officer of BNY Mellon since July 2017. In January 2018, Mr. Scharf became Chairman of BNY Mellon. From October 2012 through December 2016, Mr. Scharf served as director and Chief Executive Officer of Visa Inc.
|
|
|
|
|
|
|
Douglas H. Shulman
|
50
|
Mr. Shulman has served as Senior Executive Vice President and Head of Client Service Delivery since September 2014. From December 2013 to September 2014, Mr. Shulman served as a Senior Advisor at McKinsey & Co. and was a Senior Fellow at Harvard’s Kennedy School Center for Business and Government from 2013 to 2014.
|
|
|
|
|
|
|
James S. Wiener
|
50
|
Mr. Wiener has served as Senior Executive Vice President and Chief Risk Officer of BNY Mellon since November 2014. Mr. Wiener served as a senior partner at Oliver Wyman Group from 2003 to November 2014.
|
|
|
|
|
|
|
PART IV
|
|
(a)
|
The financial statements, schedules and exhibits required for this Form 10-K are incorporated by reference as indicated in the following index. Page numbers refer to pages of the Annual Report for Items (1) and (2) Financial Statements and Schedules.
|
(1)(2)
|
Financial Statements and Schedules
|
Page No.
|
|
|
|
|
Consolidated Income Statement
|
134-135
|
|
Consolidated Comprehensive Income Statement
|
136
|
|
Consolidated Balance Sheet
|
137
|
|
Consolidated Statement of Cash Flows
|
138
|
|
Consolidated Statement of Changes in Equity
|
139-140
|
|
Notes to Consolidated Financial Statements
|
141-210
|
|
Report of Independent Registered Public Accounting Firm
|
211
|
|
|
|
|
Selected Quarterly Data (unaudited)
|
123
|
|
|
|
(3)
|
Exhibits
|
|
|
See (b) below.
|
|
(b)
|
The exhibits listed on the Index to Exhibits on pages
14 through 22
hereof are incorporated by reference or filed or furnished herewith in response to this Item.
|
(c)
|
Other Financial Data
|
INDEX TO EXHIBITS
|
|
Exhibit
|
|
Description
|
|
Method of Filing
|
|
|
|
|
|
|
|
3.1
|
|
Restated Certificate of Incorporation of The Bank of New York Mellon Corporation.
|
|
|
|
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.
|
|
|
|
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.
|
|
|
|
3.4
|
|
Certificate of Designations of The Bank of New York Mellon Corporation with respect to Series D Noncumulative Perpetual Preferred Stock, dated May 16, 2013.
|
|
||
3.5
|
|
Certificate of Designations of The Bank of New York Mellon Corporation with respect to Series E Noncumulative Perpetual Preferred Stock, dated April 27, 2015.
|
|
||
3.6
|
|
Certificate of Designations of The Bank of New York Mellon Corporation with respect to Series F Noncumulative Perpetual Preferred Stock, dated July 29, 2016.
|
|
||
3.7
|
|
Amended and Restated By-Laws of The Bank of New York Mellon Corporation, as amended and restated on July 10, 2007 and subsequently amended on April 14, 2009, Aug. 11, 2009, Feb. 9, 2010, July 2, 2010, Oct. 12, 2010, Oct. 8, 2013, March 5, 2015, Oct. 13, 2015 and Feb. 12, 2018.
|
|
INDEX TO EXHIBITS
(continued)
|
|
Exhibit
|
|
Description
|
|
Method of Filing
|
|
|
|
|
|
|
|
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 Dec. 31, 2017. The Company hereby agrees to furnish to the Commission, upon request, a copy of any such instrument.
|
|
N/A
|
10.1
|
*
|
The Bank of New York Company, Inc. Excess Contribution Plan as amended through July 10, 1990.
|
|
Previously filed as Exhibit 10(b) to The Bank of New York Company, Inc.’s Annual Report on Form 10-K (File No. 001-06152) for the year ended Dec. 31, 1990, and incorporated herein by reference.
|
|
10.2
|
*
|
Amendments dated Feb. 23, 1994 and Nov. 9, 1993 to The Bank of New York Company, Inc. Excess Contribution Plan.
|
|
|
|
10.3
|
*
|
Amendment to The Bank of New York Company, Inc. Excess Contribution Plan dated as of Nov. 1, 1995.
|
|
||
10.4
|
*
|
Amendment to The Bank of New York Company, Inc. Excess Contribution Plan dated as of Nov. 12, 2002.
|
|
||
10.5
|
*
|
Amendment to The Bank of New York Company, Inc. Excess Contribution Plan dated as of Oct. 9, 2006.
|
|
||
10.6
|
*
|
The Bank of New York Company, Inc. Excess Benefit Plan as amended through Dec. 8, 1992.
|
|
Previously filed as Exhibit 10(d) to The Bank of New York Company, Inc.’s Annual Report on Form 10-K (File No. 001-06152) for the year ended Dec. 31, 1992, and incorporated herein by reference.
|
|
10.7
|
*
|
Amendment dated as of Aug. 11, 1994 to The Bank of New York Company, Inc. Excess Benefit Plan.
|
|
||
10.8
|
*
|
Amendment dated as of Nov. 1, 1995 to The Bank of New York Company, Inc. Excess Benefit Plan.
|
|
INDEX TO EXHIBITS
(continued)
|
|
Exhibit
|
|
Description
|
|
Method of Filing
|
|
|
|
|
|
|
|
10.9
|
*
|
Amendment dated as of July 1, 1996 to The Bank of New York Company, Inc. Excess Benefit Plan.
|
|
||
10.10
|
*
|
The Bank of New York Company, Inc. 2003 Long-Term Incentive Plan.
|
|
|
|
10.11
|
*
|
Amendment dated as of Dec. 28, 2005 to the 2003 Long-Term Incentive Plan of The Bank of New York Company, Inc.
|
|
||
10.12
|
*
|
Amendment dated as of Oct. 9, 2006 to the 2003 Long-Term Incentive Plan of The Bank of New York Company, Inc.
|
|
||
10.13
|
*
|
Amendment dated as of Feb. 21, 2008 to the 2003 Long-Term Incentive Plan of The Bank of New York Company, Inc.
|
|
||
10.14
|
*
|
The Bank of New York Company, Inc. Supplemental Executive Retirement Plan.
|
|
Previously filed as Exhibit 10(n) to The Bank of New York Company, Inc.’s Annual Report on Form 10-K (File No. 001-06152) for the year ended Dec. 31, 1992, and incorporated herein by reference.
|
|
10.15
|
*
|
Amendment dated as of March 9, 1993 to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan.
|
|
||
10.16
|
*
|
Amendment dated as of Oct. 11, 1994 to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan.
|
|
||
10.17
|
*
|
Amendment dated as of July 1, 1996 to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan.
|
|
||
10.18
|
*
|
Amendment dated as of Nov. 12, 1996 to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan.
|
|
INDEX TO EXHIBITS
(continued)
|
|
Exhibit
|
|
Description
|
|
Method of Filing
|
|
|
|
|
|
|
|
10.19
|
*
|
Amendment dated as of July 11, 2000 to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan.
|
|
||
10.20
|
*
|
Amendment dated as of Feb. 13, 2001 to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan.
|
|
||
10.21
|
*
|
Amendment dated as of Jan. 1, 2006 to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan.
|
|
||
10.22
|
*
|
Deferred Compensation Plan for Non-Employee Directors of The Bank of New York Company, Inc.
|
|
||
10.23
|
*
|
Amendment dated as of Nov. 8, 1994 to Deferred Compensation Plan for Non-Employee Directors of The Bank of New York Company, Inc.
|
|
||
10.24
|
*
|
Amendment dated Feb. 11, 1997 to Deferred Compensation Plan for Non-Employee Directors of The Bank of New York Company, Inc.
|
|
||
10.25
|
*
|
Amendment to Deferred Compensation Plan for Non-Employee Directors of The Bank of New York Company, Inc. dated as of July 11, 2000.
|
|
||
10.26
|
*
|
Amendment dated as of Nov. 12, 2002 to Deferred Compensation Plan for Non-Employee Directors of The Bank of New York Company, Inc.
|
|
||
10.27
|
*
|
Form of Stock Option Agreement under The Bank of New York Company, Inc.’s 2003 Long-Term Incentive Plan.
|
|
INDEX TO EXHIBITS
(continued)
|
|
Exhibit
|
|
Description
|
|
Method of Filing
|
|
|
|
|
|
|
|
10.28
|
*
|
Mellon Financial Corporation Director Equity Plan (2006).
|
|
|
|
10.29
|
*
|
The Bank of New York Mellon Corporation Deferred Compensation Plan for Directors, effective Jan. 1, 2008.
|
|
||
10.30
|
*
|
Description regarding team equity incentive awards, replacement equity awards and special stock option award to executives named therein.
|
|
|
|
10.31
|
|
|
Lease dated as of Dec. 29, 2004, between 500 Grant Street Associates Limited Partnership and The Bank of New York Mellon with respect to BNY Mellon Center.
|
|
|
10.32
|
*
|
The Bank of New York Mellon Corporation Deferred Compensation Plan for Employees.
|
|
||
10.33
|
*
|
Form of 2008 Stock Option Agreement between The Bank of New York Mellon Corporation and Gerald L. Hassell.
|
|
|
|
10.34
|
*
|
Form of Long Term Incentive Plan Deferred Stock Unit Agreement for Directors of The Bank of New York Corporation.
|
|
|
|
10.35
|
*
|
Amendment to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan, dated as of Jan. 1, 2009.
|
|
||
10.36
|
*
|
Amendment to The Bank of New York Company, Inc. Amended and Restated 2003 Long-Term Incentive Plan, dated as of Jan. 1, 2009.
|
|
||
10.37
|
*
|
Amendment to The Bank of New York Company, Inc. Excess Benefit Plan, dated as of Jan. 1, 2009.
|
|
||
10.38
|
*
|
Amendment to The Bank of New York Company, Inc. Excess Contribution Plan, dated as of Jan. 1, 2009.
|
|
INDEX TO EXHIBITS
(continued)
|
|
Exhibit
|
|
Description
|
|
Method of Filing
|
|
|
|
|
|
|
|
10.39
|
*
|
The Bank of New York Mellon Corporation Policy Regarding Shareholder Approval of Future Senior Officers Severance Arrangements, adopted July 12, 2010.
|
|
|
|
10.40
|
*
|
Form of Executive Stock Option Agreement.
|
|
||
10.41
|
*
|
2011 Form of Executive Stock Option Agreement.
|
|
|
|
10.42
|
*
|
The Bank of New York Mellon Corporation Long-Term Incentive Plan.
|
|
|
|
10.43
|
*
|
Amended and Restated Long-Term Incentive Plan of The Bank of New York Mellon Corporation.
|
|
||
10.44
|
*
|
Form of Restricted Stock Unit Agreement under the Amended and Restated Long-Term Incentive Plan of The Bank of New York Mellon Corporation.
|
|
||
10.45
|
*
|
Form of Performance Share Unit Agreement under the Amended and Restated Long-Term Incentive Plan of The Bank of New York Mellon Corporation.
|
|
||
10.46
|
*
|
The Bank of New York Mellon Corporation
Executive Incentive Compensation Plan.
|
|
||
10.47
|
*
|
2012 Form of Nonstatutory Stock Option Agreement.
|
|
||
10.48
|
*
|
The Bank of New York Mellon Corporation Defined Contribution IRC 401(a)(17) Plan.
|
|
INDEX TO EXHIBITS
(continued)
|
|
Exhibit
|
|
Description
|
|
Method of Filing
|
|
|
|
|
|
|
|
10.49
|
|
Lease agreement by and between The Bank of New York Mellon and WFP Tower Co. L.P., dated June 25, 2014.
|
|
||
10.50
|
*
|
Amendment to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan, dated as of Dec. 31, 2014.
|
|
||
10.51
|
*
|
2015 Form of Performance Share Unit Agreement.
|
|
||
10.52
|
*
|
2015 Form of Restricted Share Unit Agreement.
|
|
||
10.53
|
*
|
The Bank of New York Mellon Corporation Defined Contribution IRC 401(a)(17) Plan (as amended and restated).
|
|
||
10.54
|
*
|
Amendment dated as of Dec. 14, 2015 to The Bank of New York Company, Inc. Excess Benefit Plan.
|
|
||
10.55
|
*
|
The Bank of New York Mellon Corporation Executive Severance Plan (as amended effective Feb. 19, 2016).
|
|
|
|
10.56
|
*
|
The Bank of New York Mellon Corporation 2016 Executive Incentive Compensation Plan.
|
|
||
10.57
|
*
|
Form of Amended and Restated Indemnification Agreement with Directors of The Bank of New York Mellon Corporation.
|
|
||
10.58
|
*
|
Form of Amended and Restated Indemnification Agreement with Executive Officers of The Bank of New York Mellon Corporation.
|
|
||
10.59
|
*
|
The Bank of New York Mellon Corporation Executive Severance Plan, as amended.
|
|
INDEX TO EXHIBITS
(continued)
|
|
Exhibit
|
|
Description
|
|
Method of Filing
|
|
|
|
|
|
|
|
10.60
|
*
|
2016 Form of Restricted Share Unit Agreement.
|
|
||
10.61
|
*
|
2016 Form of Performance Share Unit Agreement.
|
|
||
10.62
|
*
|
Letter Agreement, dated July 13, 2017, between The Bank of New York Mellon Corporation and Charles W. Scharf.
|
|
||
10.63
|
*
|
2017 Form of Performance Share Unit Agreement.
|
|
||
10.64
|
*
|
2017 Form of Restricted Share Unit Agreement.
|
|
||
10.65
|
*
|
The Bank of New York Mellon Corporation Executive Severance Plan, as amended on Feb. 12, 2018.
|
|
||
12.1
|
|
|
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.
|
|
|
13.1
|
|
|
All portions of The Bank of New York Mellon Corporation 2017 Annual Report to Shareholders that are incorporated herein by reference. The remaining portions are furnished for the information of the SEC and are not “filed” as part of this filing.
|
|
|
21.1
|
|
|
Primary subsidiaries of the Company.
|
|
|
23.1
|
|
|
Consent of KPMG LLP.
|
|
|
24.1
|
|
|
Power of Attorney.
|
|
|
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.
|
|
INDEX TO EXHIBITS
(continued)
|
|
Exhibit
|
|
Description
|
|
Method of Filing
|
|
|
|
|
|
|
|
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.
|
|
|
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.
|
|
|
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.
|
|
|
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.
|
|
* Management contract or compensatory plan arrangement.
|
|
The Bank of New York Mellon Corporation
|
|
|
|
|
|
By:
|
/s/ Charles W. Scharf
|
|
|
Charles W. Scharf
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
|
|
DATED: February 28, 2018
|
|
Signature
|
|
|
Capacities
|
|
|
|
|
|
By:
|
/s/ Charles W. Scharf
|
|
|
Director and Principal Executive Officer
|
|
Charles W. Scharf
|
|
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Michael P. Santomassimo
|
|
|
Principal Financial Officer
|
|
Michael P. Santomassimo
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Kurtis R. Kurimsky
|
|
|
Principal Accounting Officer
|
|
Kurtis R. Kurimsky
|
|
|
|
|
Corporate Controller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Linda Z. Cook; Joseph J. Echevarria; Edward P. Garden; Jeffrey A. Goldstein; John M. Hinshaw; Edmund F. Kelly; John A. Luke, Jr.; Jennifer B. Morgan; Mark A. Nordenberg; Elizabeth E. Robinson; Samuel C. Scott III
|
|
|
Directors
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Craig T. Beazer
|
|
|
DATED: February 28, 2018
|
|
Craig T. Beazer
|
|
|
|
|
Attorney-in-fact
|
|
|
|
|
Year ended Dec. 31,
|
||||||||||||||
(dollar amounts in millions)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
|||||
Earnings
|
|
|
|
|
|
||||||||||
Income before income taxes
|
$
|
4,610
|
|
$
|
4,725
|
|
$
|
4,235
|
|
$
|
3,563
|
|
$
|
3,777
|
|
Net (income) attributable to noncontrolling interests
|
(24
|
)
|
(1
|
)
|
(64
|
)
|
(84
|
)
|
(81
|
)
|
|||||
Income before income taxes attributable to shareholders of The Bank of New York Mellon Corporation
|
4,586
|
|
4,724
|
|
4,171
|
|
3,479
|
|
3,696
|
|
|||||
Fixed charges, excluding interest on deposits
|
1,007
|
|
521
|
|
373
|
|
380
|
|
349
|
|
|||||
Income from income taxes and fixed charges, excluding interest on deposits applicable to the shareholders of The Bank of New York Mellon Corporation
|
5,593
|
|
5,245
|
|
4,544
|
|
3,859
|
|
4,045
|
|
|||||
Interest on deposits
|
162
|
|
16
|
|
37
|
|
83
|
|
105
|
|
|||||
Income before income taxes and fixed charges, including interest on deposits applicable to shareholders of The Bank of New York Mellon Corporation
|
$
|
5,755
|
|
$
|
5,261
|
|
$
|
4,581
|
|
$
|
3,942
|
|
$
|
4,150
|
|
Fixed charges
|
|
|
|
|
|
||||||||||
Interest expense, excluding interest on deposits
|
$
|
912
|
|
$
|
421
|
|
$
|
263
|
|
$
|
271
|
|
$
|
238
|
|
One-third net rental expense
(a)
|
95
|
|
100
|
|
110
|
|
109
|
|
111
|
|
|||||
Total fixed charges, excluding interest on deposits
|
1,007
|
|
521
|
|
373
|
|
380
|
|
349
|
|
|||||
Interest on deposits
|
162
|
|
16
|
|
37
|
|
83
|
|
105
|
|
|||||
Total fixed charges, including interests on deposits
|
$
|
1,169
|
|
$
|
537
|
|
$
|
410
|
|
$
|
463
|
|
$
|
454
|
|
Preferred stock dividends
(b)
|
$
|
175
|
|
$
|
122
|
|
$
|
105
|
|
$
|
73
|
|
$
|
64
|
|
Total fixed charges and preferred stock dividends, excluding interest on deposits
|
$
|
1,182
|
|
$
|
643
|
|
$
|
478
|
|
$
|
453
|
|
$
|
413
|
|
Total fixed charges and preferred stock dividends, including interest on deposits
|
$
|
1,344
|
|
$
|
659
|
|
$
|
515
|
|
$
|
536
|
|
$
|
518
|
|
|
|
|
|
|
|
||||||||||
Earnings to fixed charges ratios
|
|
|
|
|
|
||||||||||
Excluding interest on deposits
|
5.55
|
|
10.07
|
|
12.18
|
|
10.16
|
|
11.59
|
|
|||||
Including interest on deposits
|
4.92
|
|
9.80
|
|
11.17
|
|
8.51
|
|
9.14
|
|
|||||
|
|
|
|
|
|
||||||||||
Earnings to fixed charges and preferred stock dividends ratios
(b)
|
|
|
|
|
|
||||||||||
Excluding interest on deposits
|
4.73
|
|
8.16
|
|
9.51
|
|
8.52
|
|
9.79
|
|
|||||
Including interest on deposits
|
4.28
|
|
7.98
|
|
8.90
|
|
7.35
|
|
8.01
|
|
(a)
|
The proportion deemed representative of the interest factor.
|
(b)
|
Dividends paid in all periods presented include the Series A, Series C and Series D preferred stock. Dividends paid in 2017, 2016 and 2015 also include the Series E preferred stock, which was issued in 2015. Dividends paid in 2017 also include the Series F preferred stock, which was issued in 2016.
|
|
|
Page
|
|
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations:
|
|
Results of Operations:
|
|
Key 2017 and subsequent events
|
|
|
|
Acronyms
|
|
The Bank of New York Mellon Corporation (and its subsidiaries)
|
|
Financial Summary
|
|
(dollar amounts in millions, except per common share
amounts and unless otherwise noted)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
|||||
Year ended Dec. 31,
|
|
|
|
|
|
|
|||||||||
Fee and other revenue
|
$
|
12,165
|
|
$
|
12,073
|
|
$
|
12,082
|
|
$
|
12,649
|
|
$
|
11,856
|
|
Income from consolidated investment management funds
|
70
|
|
26
|
|
86
|
|
163
|
|
183
|
|
|||||
Net interest revenue
|
3,308
|
|
3,138
|
|
3,026
|
|
2,880
|
|
3,009
|
|
|||||
Total revenue
|
15,543
|
|
15,237
|
|
15,194
|
|
15,692
|
|
15,048
|
|
|||||
Provision for credit losses
|
(24
|
)
|
(11
|
)
|
160
|
|
(48
|
)
|
(35
|
)
|
|||||
Noninterest expense
|
10,957
|
|
10,523
|
|
10,799
|
|
12,177
|
|
11,306
|
|
|||||
Income before income taxes
|
4,610
|
|
4,725
|
|
4,235
|
|
3,563
|
|
3,777
|
|
|||||
Provision for income taxes
|
496
|
|
1,177
|
|
1,013
|
|
912
|
|
1,592
|
|
|||||
Net income
|
4,114
|
|
3,548
|
|
3,222
|
|
2,651
|
|
2,185
|
|
|||||
Net (income) attributable to noncontrolling interests
(a)
|
(24
|
)
|
(1
|
)
|
(64
|
)
|
(84
|
)
|
(81
|
)
|
|||||
Net income applicable to shareholders of The Bank of New York Mellon Corporation
|
4,090
|
|
3,547
|
|
3,158
|
|
2,567
|
|
2,104
|
|
|||||
Preferred stock dividends
|
(175
|
)
|
(122
|
)
|
(105
|
)
|
(73
|
)
|
(64
|
)
|
|||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation
|
$
|
3,915
|
|
$
|
3,425
|
|
$
|
3,053
|
|
$
|
2,494
|
|
$
|
2,040
|
|
Earnings per share applicable to common shareholders of The Bank of New York Mellon Corporation:
|
|
|
|
|
|
||||||||||
Basic
|
$
|
3.74
|
|
$
|
3.16
|
|
$
|
2.73
|
|
$
|
2.17
|
|
$
|
1.74
|
|
Diluted
|
$
|
3.72
|
|
$
|
3.15
|
|
$
|
2.71
|
|
$
|
2.15
|
|
$
|
1.73
|
|
Average common shares and equivalents outstanding of The Bank of New York Mellon Corporation
(in thousands)
:
|
|
|
|
|
|
||||||||||
Basic
|
1,034,281
|
|
1,066,286
|
|
1,104,719
|
|
1,129,897
|
|
1,150,689
|
|
|||||
Diluted
|
1,040,290
|
|
1,072,013
|
|
1,112,511
|
|
1,137,480
|
|
1,154,441
|
|
|||||
At Dec. 31
|
|
|
|
|
|
||||||||||
Interest-earning assets
|
$
|
316,261
|
|
$
|
280,332
|
|
$
|
338,955
|
|
$
|
317,646
|
|
$
|
305,169
|
|
Assets of operations
|
371,027
|
|
332,238
|
|
392,379
|
|
376,021
|
|
363,244
|
|
|||||
Total assets
|
371,758
|
|
333,469
|
|
393,780
|
|
385,303
|
|
374,516
|
|
|||||
Deposits
|
244,322
|
|
221,490
|
|
279,610
|
|
265,869
|
|
261,129
|
|
|||||
Long-term debt
|
27,979
|
|
24,463
|
|
21,547
|
|
20,264
|
|
19,864
|
|
|||||
Preferred stock
|
3,542
|
|
3,542
|
|
2,552
|
|
1,562
|
|
1,562
|
|
|||||
Total The Bank of New York Mellon Corporation common shareholders’ equity
|
37,709
|
|
35,269
|
|
35,485
|
|
35,879
|
|
35,935
|
|
|||||
At Dec. 31
|
|
|
|
|
|
||||||||||
Assets under management
(in billions) (b)
|
$
|
1,893
|
|
$
|
1,648
|
|
$
|
1,625
|
|
$
|
1,686
|
|
$
|
1,557
|
|
Assets under custody and/or administration
(in trillions) (c)
|
33.3
|
|
29.9
|
|
28.9
|
|
28.5
|
|
27.6
|
|
|||||
Market value of securities on loan
(in billions) (d)
|
408
|
|
296
|
|
277
|
|
289
|
|
235
|
|
|||||
Return on common equity
(e)
|
10.8
|
%
|
9.6
|
%
|
8.6
|
%
|
6.8
|
%
|
5.9
|
%
|
|||||
Adjusted return on common equity – Non-GAAP
(e)(f)
|
11.4
|
|
10.2
|
|
9.5
|
|
8.1
|
|
8.3
|
|
|||||
Return on tangible common equity – Non-GAAP
(e)(f)(g)
|
23.9
|
|
21.2
|
|
19.7
|
|
16.0
|
|
15.3
|
|
|||||
Adjusted return on tangible common equity – Non-GAAP
(e)(f)(g)
|
24.4
|
|
21.4
|
|
20.7
|
|
17.6
|
|
19.7
|
|
|||||
Return on average assets
|
1.14
|
|
0.96
|
|
0.82
|
|
0.67
|
|
0.60
|
|
|||||
Pre-tax operating margin
(e)
|
30
|
|
31
|
|
28
|
|
23
|
|
25
|
|
|||||
Adjusted pre-tax operating margin – Non-GAAP
(e)(f)
|
32
|
|
33
|
|
31
|
|
28
|
|
28
|
|
|||||
Fee revenue as a percentage of total revenue
|
78
|
|
79
|
|
79
|
|
80
|
|
78
|
|
|||||
Percentage of non-U.S. total revenue
|
36
|
|
34
|
|
36
|
|
38
|
|
37
|
|
|||||
Net interest margin
|
1.14
|
|
1.03
|
|
0.96
|
|
0.95
|
|
1.10
|
|
(a)
|
Primarily attributable to noncontrolling interests related to consolidated investment management funds.
|
(b)
|
Excludes securities lending cash management assets and assets managed in the Investment Services business.
|
(c)
|
Includes the assets under custody and/or administration of CIBC Mellon Global Securities Services Company (“CIBC Mellon”), a joint venture with the Canadian Imperial Bank of Commerce, of
$1.3 trillion
at
Dec. 31, 2017
,
$1.2 trillion
at
Dec. 31, 2016
,
$1.0 trillion
at
Dec. 31, 2015
,
$1.1 trillion
at
Dec. 31, 2014
and
$1.2 trillion
at
Dec. 31, 2013
.
|
(d)
|
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
$71 billion
at
Dec. 31, 2017
,
$63 billion
at
Dec. 31, 2016
,
$55 billion
at
Dec. 31, 2015
,
$65 billion
at
Dec. 31, 2014
and
$62 billion
at
Dec. 31, 2013
.
|
(e)
|
See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page
118
for the reconciliation of Non-GAAP measures.
|
(f)
|
Non-GAAP information for all periods presented excludes net income attributable to noncontrolling interests of consolidated investment management funds, amortization of intangible assets and merger and integration (“M&I”), litigation and restructuring charges. Non-GAAP information for 2016 and 2015 also excludes the (recovery) impairment charge related to the loan to Sentinel Management Group, Inc. (“Sentinel”). Non-GAAP information for 2014 also excludes the gains on the sales of our equity investment in Wing Hang Bank Limited (“Wing Hang”) and our One Wall Street building, the charge related to investment management funds, net of incentives, and the benefit primarily related to a tax carryback claim. Non-GAAP information for 2013 also excludes the charge related to investment management funds, net of incentives and the net charge related to the disallowance of certain foreign tax credits.
|
(g)
|
Tangible common equity – Non-GAAP for all periods presented excludes goodwill and intangible assets, net of deferred tax liabilities, which, at Dec. 31, 2017, have been remeasured at the lower statutory corporate tax rate.
|
The Bank of New York Mellon Corporation (and its subsidiaries)
|
|
Financial Summary
(continued)
|
|
(dollar amounts in millions, except per common share
amounts and unless otherwise noted)
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
|||||
Cash dividends per common share
|
$
|
0.86
|
|
|
$
|
0.72
|
|
|
$
|
0.68
|
|
|
$
|
0.66
|
|
|
$
|
0.58
|
|
|
Common dividend payout ratio
|
23
|
%
|
|
23
|
%
|
|
25
|
%
|
|
31
|
%
|
(a)
|
34
|
%
|
(a)
|
|||||
Common dividend yield
|
1.6
|
%
|
|
1.5
|
%
|
|
1.6
|
%
|
|
1.6
|
%
|
|
1.7
|
%
|
|
|||||
Closing stock price per common share
|
$
|
53.86
|
|
|
$
|
47.38
|
|
|
$
|
41.22
|
|
|
$
|
40.57
|
|
|
$
|
34.94
|
|
|
Market capitalization
(in billions)
|
$
|
54.6
|
|
|
$
|
49.6
|
|
|
$
|
44.7
|
|
|
$
|
45.4
|
|
|
$
|
39.9
|
|
|
Book value per common share
(b)
|
$
|
37.21
|
|
|
$
|
33.67
|
|
|
$
|
32.69
|
|
|
$
|
32.09
|
|
|
$
|
31.46
|
|
|
Tangible book value per common share – Non-GAAP
(b)(c)
|
$
|
18.24
|
|
|
$
|
16.19
|
|
|
$
|
15.27
|
|
|
$
|
14.70
|
|
|
$
|
13.95
|
|
|
Full-time employees
|
52,500
|
|
|
52,000
|
|
|
51,200
|
|
|
50,300
|
|
|
51,100
|
|
|
|||||
Year-end common shares outstanding
(in thousands)
|
1,013,442
|
|
|
1,047,488
|
|
|
1,085,343
|
|
|
1,118,228
|
|
|
1,142,250
|
|
|
|||||
Average total equity to average total assets
|
11.7
|
%
|
|
10.7
|
%
|
|
10.2
|
%
|
|
10.2
|
%
|
|
10.6
|
%
|
|
|||||
Capital ratios at Dec. 31,
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated regulatory capital ratios:
(d)(e)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Standardized:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
CET1 ratio
|
11.9
|
%
|
|
12.3
|
%
|
|
11.5
|
%
|
|
15.0
|
%
|
|
14.5
|
%
|
|
|||||
Tier 1 capital ratio
|
14.2
|
|
|
14.5
|
|
|
13.1
|
|
|
16.3
|
|
|
16.2
|
|
|
|||||
Total (Tier 1 plus Tier 2) capital ratio
|
15.1
|
|
|
15.2
|
|
|
13.5
|
|
|
16.9
|
|
|
17.0
|
|
|
|||||
Advanced:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
CET1 ratio
|
10.7
|
|
|
10.6
|
|
|
10.8
|
|
|
11.2
|
|
|
N/A
|
|
||||||
Tier 1 capital ratio
|
12.7
|
|
|
12.6
|
|
|
12.3
|
|
|
12.2
|
|
|
N/A
|
|
||||||
Total (Tier 1 plus Tier 2) capital ratio
|
13.4
|
|
|
13.0
|
|
|
12.5
|
|
|
12.5
|
|
|
N/A
|
|
||||||
Leverage capital ratio
(e)
|
6.6
|
|
|
6.6
|
|
|
6.0
|
|
|
5.6
|
|
|
5.4
|
|
|
|||||
Supplementary leverage ratio
(e)
|
6.1
|
|
|
6.0
|
|
|
5.4
|
|
|
N/A
|
|
N/A
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
BNY Mellon shareholders’ equity to total assets ratio
|
11.1
|
|
|
11.6
|
|
|
9.7
|
|
|
9.7
|
|
|
10.0
|
|
|
|||||
BNY Mellon common shareholders’ equity to total assets ratio
|
10.1
|
|
|
10.6
|
|
|
9.0
|
|
|
9.3
|
|
|
9.6
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Selected regulatory capital ratios - fully phased-in – Non-GAAP
(f)
:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Estimated CET1 ratio
(d)
:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Standardized Approach
|
11.5
|
|
|
11.3
|
|
|
10.2
|
|
|
10.6
|
|
|
10.6
|
|
|
|||||
Advanced Approach
|
10.3
|
|
|
9.7
|
|
|
9.5
|
|
|
9.8
|
|
|
11.3
|
|
|
|||||
Estimated SLR
|
5.9
|
|
|
5.6
|
|
|
4.9
|
|
|
4.4
|
|
|
N/A
|
|
(a)
|
The common dividend payout ratio was 25% for 2014 after adjusting for increased litigation expense, and 26% for 2013 after adjusting for the net impact of the U.S. Tax Court’s decisions regarding certain foreign tax credits.
|
(b)
|
See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page
118
for the reconciliation of Non-GAAP measures.
|
(c)
|
Tangible book value – Non-GAAP for all periods presented excludes goodwill and intangible assets, net of deferred tax liabilities, which, at Dec. 31, 2017, have been remeasured at the lower statutory corporate tax rate.
|
(d)
|
Risk-based capital ratios at Dec. 31, 2014 and Dec. 31, 2013 do not reflect the adoption of accounting guidance related to Consolidations (ASU 2015-02). At Dec. 31, 2014, risk-based capital ratios include the net impact of the total consolidated assets of certain consolidated investment management funds in risk-weighted assets (“RWAs”). These assets were not included in the Dec. 31, 2013 risk-based ratios. The leverage capital ratio was not impacted.
|
(e)
|
At Dec. 31, 2017, Dec. 31, 2016, Dec. 31, 2015 and Dec. 31, 2014, the Common Equity Tier 1 (“CET1”), Tier 1 and Total risk-based consolidated regulatory capital ratios are based on Basel III components of capital, as phased-in, and credit risk asset risk-weightings using the U.S. capital rules’ advanced approaches framework (the “Advanced Approach”). The leverage capital ratio is based on Basel III’s definition of Tier 1 capital, as phased-in, and quarterly average assets. The Supplementary Leverage Ratio (“SLR”) is based on Tier 1 capital, as phased-in, and quarterly average assets and certain off-balance sheet exposures. The capital ratios at Dec. 31, 2013 are based on Basel I rules (including Basel I Tier 1 common in the case of the CET1 ratio). For additional information on these ratios, see “Capital” beginning on page
53
.
|
(f)
|
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
53
.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Results of Operations
|
Results of Operations
(continued)
|
|
Results of Operations
(continued)
|
|
Results of Operations
(continued)
|
|
•
|
AUC/A totaled a record
$33.3 trillion
at
Dec. 31, 2017
compared with
$29.9 trillion
at
Dec. 31, 2016
. The 11% increase primarily reflects higher market values, the favorable impact of a weaker U.S. dollar and net new business. (See “Investment Services business” beginning on page
22
.)
|
•
|
AUM totaled a record
$1.9 trillion
at
Dec. 31, 2017
compared with
$1.6 trillion
at
Dec. 31, 2016
. The
15%
increase primarily reflects higher market values, the favorable impact of a weaker U.S. dollar (principally versus the British pound) and net inflows. AUM excludes securities lending cash management assets and assets managed in the Investment Services business. (See “Investment Management business” beginning on page
18
.)
|
•
|
Investment services fees totaled
$7.5 billion
in
2017
, an increase of
3%
compared with
$7.2 billion
in
2016
, primarily reflecting higher money market fees, equity market values and net new business, including growth in collateral management, partially offset by lost business and lower volumes in certain Depositary Receipts programs. (See “Investment Services business” beginning on page
22
.)
|
•
|
Investment management and performance fees totaled
$3.6 billion
in
2017
compared with
$3.4 billion
in
2016
, an increase of
7%
, primarily reflecting 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). On a constant currency basis (Non-GAAP), investment management and performance fees increased
8%
compared with 2016. (See “Investment Management business” beginning on page
18
.)
|
•
|
Foreign exchange and other trading revenue totaled
$668 million
in
2017
compared with
$701 million
in
2016
. Foreign exchange revenue totaled
$638 million
in
2017
, a decrease of
7%
compared with
$687 million
in
2016
.
The decrease in foreign exchange revenue primarily reflects lower volatility, partially offset by
higher
|
•
|
Net interest revenue totaled
$3.3 billion
in
2017
compared with
$3.1 billion
in
2016
, an increase of
5%
. The increase primarily reflects higher interest rates, partially offset by lower interest-earning assets driven by lower average deposits. Net interest margin was
1.14%
in
2017
compared with
1.03%
in
2016
. Net interest margin (FTE) - Non-GAAP was
1.15%
in
2017
compared with
1.05%
in
2016
. The increase in the net interest margin primarily reflects higher yields on interest-earning assets, partially offset by higher rates paid on interest-bearing liabilities. (See “Net interest revenue” beginning on page
12
.)
|
•
|
The provision for credit losses was a credit of
$24 million
in
2017
and a credit of
$11 million
in
2016
. (See “Asset quality and allowance for credit losses” beginning on page
43
.)
|
•
|
Noninterest expense totaled
$11.0 billion
in
2017
compared with
$10.5 billion
in
2016
. The
4%
increase primarily reflects higher staff, software and professional, legal and other purchased services expenses. (See “Noninterest expense” beginning on page
15
.)
|
•
|
The provision for income taxes was
$496 million
(
10.8%
effective tax rate) in
2017
, including the estimated tax benefit of $710 million recorded in the fourth quarter of 2017 related to U.S. tax legislation. (See “Income taxes” on page
16
.)
|
•
|
The net unrealized pre-tax loss on our total investment securities portfolio was
$85 million
at
Dec. 31, 2017
, compared with a pre-tax loss of $221 million at
Dec. 31, 2016
, including the impact of related hedges. The decrease in net unrealized pre-tax loss was primarily driven by a decline in long-term interest rates. (See “Investment securities” beginning on page
36
.)
|
•
|
Our CET1 ratio calculated under the Advanced Approach was
10.7%
at
Dec. 31, 2017
and
10.6%
at
Dec. 31, 2016
.
The increase primarily reflects CET1 generation, partially offset by the additional phase-in requirements under the U.S. capital rules that became effective Jan. 1, 2017 and the impact of U.S. tax legislation.
(See “Capital” beginning on page
53
.)
|
•
|
Our estimated CET1 ratio calculated under the Advanced Approach on a fully phased-in basis (Non-GAAP) was
10.3%
at
Dec. 31, 2017
and
9.7%
at
Dec. 31, 2016
. The increase primarily
|
Results of Operations
(continued)
|
|
•
|
Investment services fees totaled
$7.2 billion
in
2016
, an increase of
2%
compared with
$7.1 billion
in
2015
, primarily reflecting higher money market fees and securities lending revenue, partially offset by the unfavorable impact of lost business on clearing services fees, the unfavorable impact of a stronger U.S. dollar and the downsizing of the UK transfer agency business.
|
•
|
Investment management and performance fees totaled
$3.35 billion
in
2016
compared with
$3.44 billion
in
2015
, a decrease of
3%
, due to the unfavorable impact of a stronger U.S. dollar (principally versus the British pound), net outflows of AUM and lower performance fees, partially offset by higher market values and money market fees.
|
•
|
Foreign exchange and other trading revenue totaled
$701 million
in
2016
compared with
$768 million
in
2015
. Foreign exchange revenue totaled $687 million in
2016
, a decrease of 8%, compared with $743 million in
2015
. The decrease in foreign exchange revenue primarily reflects the impact of clients migrating to lower margin products and lower volumes.
|
•
|
The provision for credit losses was a credit of
$11 million
in
2016
compared with a provision of
$160 million
in
2015
. The provision in 2015 was primarily driven by an impairment charge related to a court decision regarding Sentinel.
|
•
|
Noninterest expense totaled
$10.5 billion
in
2016
compared with
$10.8 billion
in
2015
. The
|
•
|
The provision for income taxes was
$1.2 billion
(
24.9%
effective tax rate) in
2016
.
|
•
|
Investment services fees totaled
$7.1 billion
primarily reflecting higher asset servicing fees, reflecting growth in collateral, broker-dealer and other asset servicing, and higher clearing services fees, primarily driven by higher mutual fund fees, partially offset by lower treasury services fees.
|
•
|
Investment management and performance fees totaled
$3.4 billion
, primarily reflecting the July 2015 sale of Meriten Investment Management GmbH (“Meriten”) and lower performance fees, partially offset by the impact of the January 2015 acquisition of Cutwater Asset Management (“Cutwater”) and strategic initiatives and higher money market fees and equity market values.
|
•
|
Foreign exchange and other trading revenue totaled
$768 million
primarily reflecting lower volumes in standing instruction programs, which were more than offset by higher volumes in the other trading programs, higher volatility and the impact of hedging activity for foreign currency placements.
|
•
|
The provision for credit losses was $160 million, primarily driven by an impairment charge related to a court decision involving Sentinel.
|
•
|
Noninterest expense totaled
$10.8 billion
primarily reflecting lower expenses in nearly all categories, except distribution and servicing and software expenses.
|
•
|
The provision for income taxes was
$1.0 billion
(
23.9%
effective tax rate) in
2015
.
|
Results of Operations
(continued)
|
|
Fee and other revenue
|
|
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
vs.
|
|
vs.
|
|
||||||
(dollars in millions, unless otherwise noted)
|
2017
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|||
Investment services fees:
|
|
|
|
|
|
||||||||
Asset servicing
(a)
|
$
|
4,383
|
|
$
|
4,244
|
|
$
|
4,187
|
|
3
|
%
|
1
|
%
|
Clearing services
|
1,553
|
|
1,404
|
|
1,375
|
|
11
|
|
2
|
|
|||
Issuer services
|
977
|
|
1,026
|
|
978
|
|
(5
|
)
|
5
|
|
|||
Treasury services
|
557
|
|
547
|
|
555
|
|
2
|
|
(1
|
)
|
|||
Total investment services fees
|
7,470
|
|
7,221
|
|
7,095
|
|
3
|
|
2
|
|
|||
Investment management and performance fees
|
3,584
|
|
3,350
|
|
3,438
|
|
7
|
|
(3
|
)
|
|||
Foreign exchange and other trading revenue
|
668
|
|
701
|
|
768
|
|
(5
|
)
|
(9
|
)
|
|||
Financing-related fees
|
216
|
|
219
|
|
220
|
|
(1
|
)
|
—
|
|
|||
Distribution and servicing
|
160
|
|
166
|
|
162
|
|
(4
|
)
|
2
|
|
|||
Investment and other income
|
64
|
|
341
|
|
316
|
|
N/M
|
N/M
|
|||||
Total fee revenue
|
12,162
|
|
11,998
|
|
11,999
|
|
1
|
|
—
|
|
|||
Net securities gains
|
3
|
|
75
|
|
83
|
|
N/M
|
N/M
|
|||||
Total fee and other revenue
|
$
|
12,165
|
|
$
|
12,073
|
|
$
|
12,082
|
|
1
|
%
|
—
|
%
|
|
|
|
|
|
|
||||||||
Fee revenue as a percentage of total revenue
|
78
|
%
|
79
|
%
|
79
|
%
|
|
|
|||||
|
|
|
|
|
|
||||||||
AUM at period end
(in billions) (b)
|
$
|
1,893
|
|
$
|
1,648
|
|
$
|
1,625
|
|
15
|
%
|
1
|
%
|
AUC/A at period end
(in trillions) (c)
|
$
|
33.3
|
|
$
|
29.9
|
|
$
|
28.9
|
|
11
|
%
|
3
|
%
|
(a)
|
Asset servicing fees include securities lending revenue of
$195 million
in
2017
,
$207 million
in
2016
and
$176 million
in
2015
.
|
(b)
|
Excludes securities lending cash management assets and assets managed in the Investment Services business.
|
(c)
|
Includes the AUC/A of CIBC Mellon of
$1.3 trillion
at
Dec. 31, 2017
,
$1.2 trillion
at
Dec. 31, 2016
and
$1.0 trillion
at
Dec. 31, 2015
.
|
•
|
Asset servicing fees increased
3%
, primarily reflecting
higher equity market values, net new business, including growth in collateral management, and higher money market fees, partially offset by the downsizing of the UK transfer agency business.
|
•
|
Clearing services fees increased
11%
, primarily driven by
higher money market fees and growth in long-term mutual fund assets.
|
•
|
Issuer services fees decreased
5%
, primarily reflecting
lost business
and lower volumes from weaker cross-border settlement activity in Depositary Receipts.
|
•
|
Treasury services fees increased
2%
, primarily reflecting
higher payment volumes, partially offset by higher compensating balance credits provided to clients, which reduces fee revenue and increases net interest revenue.
|
Results of Operations
(continued)
|
|
Foreign exchange and other trading revenue
|
|
||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Foreign exchange
|
$
|
638
|
|
$
|
687
|
|
$
|
743
|
|
Other trading revenue
|
30
|
|
14
|
|
25
|
|
|||
Total foreign exchange and other trading revenue
|
$
|
668
|
|
$
|
701
|
|
$
|
768
|
|
Investment and other income
|
|
||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Corporate/bank-owned life insurance
|
$
|
153
|
|
$
|
149
|
|
$
|
139
|
|
Expense reimbursements from joint venture
|
64
|
|
67
|
|
63
|
|
|||
Lease-related gains
|
56
|
|
38
|
|
45
|
|
|||
Equity investment income (loss)
|
37
|
|
(10
|
)
|
(19
|
)
|
|||
Seed capital gains
(a)
|
32
|
|
44
|
|
35
|
|
|||
Asset-related (losses) gains
|
(1
|
)
|
10
|
|
—
|
|
|||
Other (loss) income
|
(277
|
)
|
43
|
|
53
|
|
|||
Total investment and other income
|
$
|
64
|
|
$
|
341
|
|
$
|
316
|
|
(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, and were
$37 million
in
2017
,
$16 million
in
2016
and
$18 million
in
2015
.
|
Results of Operations
(continued)
|
|
Results of Operations
(continued)
|
|
Net interest revenue
|
|
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
vs.
|
|
vs.
|
|
||||||
(dollars in millions)
|
2017
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|||
Net interest revenue
|
$
|
3,308
|
|
$
|
3,138
|
|
$
|
3,026
|
|
5
|
%
|
4
|
%
|
Tax equivalent adjustment
|
47
|
|
51
|
|
58
|
|
N/M
|
N/M
|
|||||
Net interest revenue (FTE) – Non-GAAP
(a)
|
$
|
3,355
|
|
$
|
3,189
|
|
$
|
3,084
|
|
5
|
%
|
3
|
%
|
|
|
|
|
|
|
||||||||
Average interest-earning assets
|
$
|
290,522
|
|
$
|
303,379
|
|
$
|
313,763
|
|
(4
|
)%
|
(3
|
)%
|
|
|
|
|
|
|
||||||||
Net interest margin
|
1.14
|
%
|
1.03
|
%
|
0.96
|
%
|
11
|
bps
|
7
|
bps
|
|||
Net interest margin (FTE) – Non-GAAP
(a)
|
1.15
|
%
|
1.05
|
%
|
0.98
|
%
|
10
|
bps
|
7
|
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.
|
Results of Operations
(continued)
|
|
Average balances and interest rates
|
2017
|
|||||||||
(dollar amounts in millions, presented on an FTE basis)
|
Average balance
|
|
|
Interest
|
|
|
Average rates
|
|
||
Assets
|
|
|
|
|
|
|||||
Interest-earning assets:
|
|
|
|
|
|
|||||
Interest-bearing deposits with banks (primarily foreign banks)
|
$
|
14,879
|
|
|
$
|
120
|
|
|
0.80
|
%
|
Interest-bearing deposits held at the Federal Reserve and other central banks
|
70,213
|
|
|
319
|
|
|
0.45
|
|
||
Federal funds sold and securities purchased under resale agreements
|
27,192
|
|
|
423
|
|
|
1.55
|
|
||
Margin loans
|
14,500
|
|
|
343
|
|
|
2.36
|
|
||
Non-margin loans:
|
|
|
|
|
|
|||||
Domestic offices:
|
|
|
|
|
|
|||||
Consumer
|
9,548
|
|
|
298
|
|
|
3.12
|
|
||
Commercial
|
20,976
|
|
|
521
|
|
|
2.49
|
|
||
Foreign offices
|
12,915
|
|
|
258
|
|
|
2.00
|
|
||
Total non-margin loans
|
43,439
|
|
|
1,077
|
|
(a)
|
2.48
|
|
||
Securities:
|
|
|
|
|
|
|||||
U.S. government obligations
|
25,674
|
|
|
425
|
|
|
1.66
|
|
||
U.S. government agency obligations
|
60,268
|
|
|
1,195
|
|
|
1.98
|
|
||
State and political subdivisions
|
3,226
|
|
|
100
|
|
|
3.09
|
|
||
Other securities:
|
|
|
|
|
|
|||||
Domestic offices
|
9,141
|
|
|
215
|
|
|
2.35
|
|
||
Foreign offices
|
19,541
|
|
|
150
|
|
|
0.77
|
|
||
Total other securities
|
28,682
|
|
|
365
|
|
|
1.27
|
|
||
Trading securities (primarily domestic)
|
2,449
|
|
|
62
|
|
|
2.54
|
|
||
Total securities
|
120,299
|
|
|
2,147
|
|
|
1.79
|
|
||
Total interest-earning assets
|
$
|
290,522
|
|
|
$
|
4,429
|
|
|
1.52
|
%
|
Noninterest-earning assets
|
53,326
|
|
|
|
|
|
||||
Total assets
|
$
|
343,848
|
|
|
|
|
|
|||
Liabilities
|
|
|
|
|
|
|||||
Interest-bearing liabilities:
|
|
|
|
|
|
|||||
Interest-bearing deposits:
|
|
|
|
|
|
|||||
Domestic offices:
|
|
|
|
|
|
|||||
Money market rate accounts
|
$
|
7,510
|
|
|
$
|
4
|
|
|
0.06
|
%
|
Savings
|
932
|
|
|
7
|
|
|
0.79
|
|
||
Demand deposits
|
5,892
|
|
|
14
|
|
|
0.24
|
|
||
Time deposits
|
32,574
|
|
|
82
|
|
|
0.25
|
|
||
Total domestic offices
|
46,908
|
|
|
107
|
|
|
0.23
|
|
||
Foreign offices:
|
|
|
|
|
|
|||||
Banks
|
13,185
|
|
|
62
|
|
|
0.47
|
|
||
Government and official institutions
|
5,880
|
|
|
9
|
|
|
0.16
|
|
||
Other
|
77,150
|
|
|
(16
|
)
|
|
(0.02
|
)
|
||
Total foreign offices
|
96,215
|
|
|
55
|
|
|
0.06
|
|
||
Total interest-bearing deposits
|
143,123
|
|
|
162
|
|
|
0.11
|
|
||
Federal funds purchased and securities sold under repurchase agreements
|
19,653
|
|
|
225
|
|
|
1.14
|
|
||
Trading liabilities
|
1,243
|
|
|
7
|
|
|
0.57
|
|
||
Other borrowed funds:
|
|
|
|
|
|
|||||
Domestic offices
|
1,113
|
|
|
21
|
|
|
1.86
|
|
||
Foreign offices
|
803
|
|
|
5
|
|
|
0.67
|
|
||
Total other borrowed funds
|
1,916
|
|
|
26
|
|
|
1.36
|
|
||
Commercial paper
|
2,630
|
|
|
29
|
|
|
1.08
|
|
||
Payables to customers and broker-dealers
|
18,984
|
|
|
64
|
|
|
0.34
|
|
||
Long-term debt
|
27,424
|
|
|
561
|
|
|
2.05
|
|
||
Total interest-bearing liabilities
|
$
|
214,973
|
|
|
$
|
1,074
|
|
|
0.50
|
%
|
Total noninterest-bearing deposits
|
71,664
|
|
|
|
|
|
||||
Other noninterest-bearing liabilities
|
16,932
|
|
|
|
|
|
||||
Total liabilities
|
303,569
|
|
|
|
|
|
||||
Temporary equity
|
|
|
|
|
|
|||||
Redeemable noncontrolling interests
|
180
|
|
|
|
|
|
||||
Permanent equity
|
|
|
|
|
|
|||||
Total BNY Mellon shareholders’ equity
|
39,687
|
|
|
|
|
|
||||
Noncontrolling interests
|
412
|
|
|
|
|
|
||||
Total permanent equity
|
40,099
|
|
|
|
|
|
||||
Total liabilities, temporary equity and permanent equity
|
$
|
343,848
|
|
|
|
|
|
|||
Net interest revenue (FTE)
–
Non-GAAP
|
|
|
$
|
3,355
|
|
|
|
|||
Net interest margin (FTE)
–
Non-GAAP
|
|
|
|
|
1.15
|
%
|
||||
Less: Tax equivalent adjustment
(b)
|
|
|
47
|
|
|
|
||||
Net interest revenue
|
|
|
$
|
3,308
|
|
|
|
|||
Net interest margin
|
|
|
|
|
1.14
|
%
|
||||
Percentage of assets attributable to foreign offices
(c)
|
30
|
%
|
|
|
|
|
||||
Percentage of liabilities attributable to foreign offices
(c)
|
35
|
|
|
|
|
|
(a)
|
Includes fees of
$9 million
in
2017
. Non-accrual loans are included in average loans; the associated income, which was recognized on a cash basis, is included in interest income.
|
(b)
|
The tax equivalent adjustment relates to tax-exempt securities, primarily state and political subdivisions, based on the U.S. federal statutory tax rate of 35%, adjusted for applicable state income taxes, net of the related federal tax benefit.
|
(c)
|
Includes the Cayman Islands branch office.
|
Results of Operations
(continued)
|
|
Average balances and interest rates
(continued)
|
2016
|
|
2015
|
||||||||||||||||||
(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)
|
$
|
14,704
|
|
|
$
|
104
|
|
|
0.70
|
%
|
|
$
|
20,531
|
|
|
$
|
104
|
|
|
0.51
|
%
|
Interest-bearing deposits held at the Federal Reserve and other central banks
|
80,593
|
|
|
198
|
|
|
0.25
|
|
|
83,029
|
|
|
170
|
|
|
0.20
|
|
||||
Federal funds sold and securities purchased under resale agreements
|
25,767
|
|
|
233
|
|
|
0.91
|
|
|
23,384
|
|
|
147
|
|
|
0.63
|
|
||||
Margin loans
|
18,201
|
|
|
265
|
|
|
1.46
|
|
|
19,917
|
|
|
207
|
|
|
1.04
|
|
||||
Non-margin loans:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Domestic offices:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Consumer
|
8,483
|
|
|
259
|
|
|
3.05
|
|
|
7,145
|
|
|
217
|
|
|
3.03
|
|
||||
Commercial
|
21,820
|
|
|
417
|
|
|
1.91
|
|
|
19,647
|
|
|
346
|
|
|
1.76
|
|
||||
Foreign offices
|
13,177
|
|
|
197
|
|
|
1.50
|
|
|
13,963
|
|
|
164
|
|
|
1.18
|
|
||||
Total non-margin loans
|
43,480
|
|
|
873
|
|
(a)
|
2.01
|
|
|
40,755
|
|
|
727
|
|
(a)
|
1.78
|
|
||||
Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government obligations
|
25,074
|
|
|
378
|
|
|
1.51
|
|
|
25,904
|
|
|
378
|
|
|
1.46
|
|
||||
U.S. government agency obligations
|
56,384
|
|
|
986
|
|
|
1.75
|
|
|
55,044
|
|
|
967
|
|
|
1.76
|
|
||||
State and political subdivisions
|
3,703
|
|
|
110
|
|
|
2.96
|
|
|
4,712
|
|
|
128
|
|
|
2.73
|
|
||||
Other securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Domestic offices
|
12,326
|
|
|
210
|
|
|
1.71
|
|
|
14,644
|
|
|
302
|
|
|
2.06
|
|
||||
Foreign offices
|
20,664
|
|
|
206
|
|
|
1.00
|
|
|
22,889
|
|
|
176
|
|
|
0.77
|
|
||||
Total other securities
|
32,990
|
|
|
416
|
|
|
1.26
|
|
|
37,533
|
|
|
478
|
|
|
1.27
|
|
||||
Trading securities (primarily domestic)
|
2,483
|
|
|
63
|
|
|
2.56
|
|
|
2,954
|
|
|
78
|
|
|
2.65
|
|
||||
Total securities
|
120,634
|
|
|
1,953
|
|
|
1.62
|
|
|
126,147
|
|
|
2,029
|
|
|
1.61
|
|
||||
Total interest-earning assets
|
$
|
303,379
|
|
|
$
|
3,626
|
|
|
1.20
|
%
|
|
$
|
313,763
|
|
|
$
|
3,384
|
|
|
1.08
|
%
|
Noninterest-earning assets
|
55,098
|
|
|
|
|
|
|
58,424
|
|
|
|
|
|
||||||||
Total assets
|
$
|
358,477
|
|
|
|
|
|
|
$
|
372,187
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest-bearing deposits:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Domestic offices:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Money market rate accounts
|
$
|
7,780
|
|
|
$
|
4
|
|
|
0.06
|
%
|
|
$
|
7,272
|
|
|
$
|
6
|
|
|
0.08
|
%
|
Savings
|
1,191
|
|
|
4
|
|
|
0.37
|
|
|
1,312
|
|
|
4
|
|
|
0.28
|
|
||||
Demand deposits
|
2,520
|
|
|
7
|
|
|
0.28
|
|
|
2,792
|
|
|
6
|
|
|
0.23
|
|
||||
Time deposits
|
43,056
|
|
|
26
|
|
|
0.06
|
|
|
44,162
|
|
|
14
|
|
|
0.03
|
|
||||
Total domestic office
|
54,547
|
|
|
41
|
|
|
0.08
|
|
|
55,538
|
|
|
30
|
|
|
0.06
|
|
||||
Foreign offices:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Banks
|
13,130
|
|
|
12
|
|
|
0.09
|
|
|
16,626
|
|
|
10
|
|
|
0.06
|
|
||||
Government and official institutions
|
4,159
|
|
|
—
|
|
|
0.01
|
|
|
5,591
|
|
|
—
|
|
|
—
|
|
||||
Other
|
85,110
|
|
|
(37
|
)
|
|
(0.04
|
)
|
|
87,341
|
|
|
(3
|
)
|
|
—
|
|
||||
Total foreign offices
|
102,399
|
|
|
(25
|
)
|
|
(0.02
|
)
|
|
109,558
|
|
|
7
|
|
|
0.01
|
|
||||
Total interest-bearing deposits
|
156,946
|
|
|
16
|
|
|
0.01
|
|
|
165,096
|
|
|
37
|
|
|
0.02
|
|
||||
Federal funds purchased and securities sold under repurchase agreements
|
14,489
|
|
|
36
|
|
|
0.25
|
|
|
16,452
|
|
|
(6
|
)
|
|
(0.04
|
)
|
||||
Trading liabilities
|
711
|
|
|
6
|
|
|
0.89
|
|
|
634
|
|
|
9
|
|
|
1.39
|
|
||||
Other borrowed funds:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Domestic offices
|
93
|
|
|
4
|
|
|
4.15
|
|
|
162
|
|
|
4
|
|
|
2.77
|
|
||||
Foreign offices
|
753
|
|
|
4
|
|
|
0.51
|
|
|
652
|
|
|
5
|
|
|
0.71
|
|
||||
Total other borrowed funds
|
846
|
|
|
8
|
|
|
0.91
|
|
|
814
|
|
|
9
|
|
|
1.12
|
|
||||
Commercial paper
|
1,337
|
|
|
5
|
|
|
0.37
|
|
|
1,549
|
|
|
2
|
|
|
0.10
|
|
||||
Payables to customers and broker-dealers
|
16,925
|
|
|
12
|
|
|
0.07
|
|
|
11,649
|
|
|
7
|
|
|
0.06
|
|
||||
Long-term debt
|
23,334
|
|
|
354
|
|
|
1.52
|
|
|
20,832
|
|
|
242
|
|
|
1.16
|
|
||||
Total interest-bearing liabilities
|
$
|
214,588
|
|
|
$
|
437
|
|
|
0.20
|
%
|
|
$
|
217,026
|
|
|
$
|
300
|
|
|
0.14
|
%
|
Total noninterest-bearing deposits
|
82,712
|
|
|
|
|
|
|
86,338
|
|
|
|
|
|
||||||||
Other noninterest-bearing liabilities
|
21,928
|
|
|
|
|
|
|
29,959
|
|
|
|
|
|
||||||||
Total liabilities
|
319,228
|
|
|
|
|
|
|
333,323
|
|
|
|
|
|
||||||||
Temporary equity
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Redeemable noncontrolling interests
|
182
|
|
|
|
|
|
|
240
|
|
|
|
|
|
||||||||
Permanent equity
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total BNY Mellon shareholders’ equity
|
38,489
|
|
|
|
|
|
|
37,812
|
|
|
|
|
|
||||||||
Noncontrolling interests
|
578
|
|
|
|
|
|
|
812
|
|
|
|
|
|
||||||||
Total permanent equity
|
39,067
|
|
|
|
|
|
|
38,624
|
|
|
|
|
|
||||||||
Total liabilities, temporary equity and permanent equity
|
$
|
358,477
|
|
|
|
|
|
|
$
|
372,187
|
|
|
|
|
|
||||||
Net interest revenue (FTE)
–
Non-GAAP
|
|
|
$
|
3,189
|
|
|
|
|
|
|
$
|
3,084
|
|
|
|
||||||
Net interest margin (FTE)
–
Non-GAAP
|
|
|
|
|
1.05
|
%
|
|
|
|
|
|
0.98
|
%
|
||||||||
Less: Tax equivalent adjustment
(b)
|
|
|
51
|
|
|
|
|
|
|
58
|
|
|
|
||||||||
Net interest revenue
|
|
|
$
|
3,138
|
|
|
|
|
|
|
$
|
3,026
|
|
|
|
||||||
Net interest margin
|
|
|
|
|
1.03
|
%
|
|
|
|
|
|
0.96
|
%
|
||||||||
Percentage of assets attributable to foreign offices
(c)
|
29
|
%
|
|
|
|
|
|
30
|
%
|
|
|
|
|
||||||||
Percentage of liabilities attributable to foreign offices
(c)
|
36
|
|
|
|
|
|
|
37
|
|
|
|
|
|
(a)
|
Includes fees of
$10 million
in
2016
and
$21 million
in
2015
. Non-accrual loans are included in the average loans; the associated income, which was recognized on a cash basis, is included in interest income.
|
(b)
|
The tax equivalent adjustment relates to tax-exempt securities, primarily state and political subdivisions, based on the U.S. federal statutory tax rate of 35%, adjusted for applicable state income taxes, net of the related federal tax benefit.
|
(c)
|
Includes the Cayman Islands branch office.
|
Results of Operations
(continued)
|
|
Noninterest expense
|
|
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
vs.
|
|
vs.
|
|
||||||
(dollars in millions)
|
2017
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|||
Staff
|
$
|
5,972
|
|
$
|
5,733
|
|
$
|
5,837
|
|
4
|
%
|
(2
|
)%
|
Professional, legal and other purchased services
|
1,274
|
|
1,185
|
|
1,230
|
|
8
|
|
(4
|
)
|
|||
Software
|
744
|
|
647
|
|
627
|
|
15
|
|
3
|
|
|||
Net occupancy
|
569
|
|
590
|
|
600
|
|
(4
|
)
|
(2
|
)
|
|||
Distribution and servicing
|
419
|
|
405
|
|
381
|
|
3
|
|
6
|
|
|||
Sub-custodian
|
250
|
|
245
|
|
270
|
|
2
|
|
(9
|
)
|
|||
Furniture and equipment
|
241
|
|
247
|
|
280
|
|
(2
|
)
|
(12
|
)
|
|||
Business development
|
229
|
|
245
|
|
267
|
|
(7
|
)
|
(8
|
)
|
|||
Bank assessment charges
|
220
|
|
219
|
|
157
|
|
—
|
|
39
|
|
|||
Other
|
724
|
|
721
|
|
804
|
|
—
|
|
(10
|
)
|
|||
Amortization of intangible assets
|
209
|
|
237
|
|
261
|
|
(12
|
)
|
(9
|
)
|
|||
M&I, litigation and restructuring charges
|
106
|
|
49
|
|
85
|
|
N/M
|
N/M
|
|||||
Total noninterest expense
|
$
|
10,957
|
|
$
|
10,523
|
|
$
|
10,799
|
|
4
|
%
|
(3
|
)%
|
|
|
|
|
|
|
||||||||
Staff expense as a percentage of total revenue
|
38
|
%
|
38
|
%
|
38
|
%
|
|
|
|||||
|
|
|
|
|
|
||||||||
Full-time employees at period end
|
52,500
|
|
52,000
|
|
51,200
|
|
1
|
%
|
2
|
%
|
|||
|
|
|
|
|
|
||||||||
Memo:
|
|
|
|
|
|
||||||||
Adjusted total noninterest expense excluding amortization of intangible assets and M&I, litigation and restructuring charges – Non-GAAP
|
$
|
10,642
|
|
$
|
10,237
|
|
$
|
10,453
|
|
4
|
%
|
(2
|
)%
|
•
|
compensation expense, which includes:
|
•
|
incentive expense, which includes:
|
•
|
employee benefit expense, primarily payroll taxes, medical benefits, retirement benefits and pension expense.
|
Results of Operations
(continued)
|
|
Results of Operations
(continued)
|
|
Key market metrics
|
|
|
|
Increase (Decrease)
|
|||||||||
|
|
|
|
2017 vs.
|
|
2016 vs.
|
|
||||||
|
2017
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|||
Standard & Poor’s (“S&P”) 500 Index
(a)
|
2674
|
|
2239
|
|
2044
|
|
19
|
%
|
10
|
%
|
|||
S&P 500 Index – daily average
|
2449
|
|
2095
|
|
2061
|
|
17
|
|
2
|
|
|||
FTSE 100 Index
(a)
|
7688
|
|
7143
|
|
6242
|
|
8
|
|
14
|
|
|||
FTSE 100 Index – daily average
|
7380
|
|
6474
|
|
6590
|
|
14
|
|
(2
|
)
|
|||
MSCI EAFE
(a)
|
2051
|
|
1684
|
|
1716
|
|
22
|
|
(2
|
)
|
|||
MSCI EAFE – daily average
|
1887
|
|
1645
|
|
1810
|
|
15
|
|
(9
|
)
|
|||
Barclays Capital Global Aggregate Bond
SM
Index
(a)(b)
|
485
|
|
451
|
|
442
|
|
8
|
|
2
|
|
|||
NYSE and NASDAQ share volume
(in billions)
|
752
|
|
797
|
|
776
|
|
(6
|
)
|
3
|
|
|||
JPMorgan G7 Volatility Index – daily average
(c)
|
8.41
|
|
10.54
|
|
9.97
|
|
(20
|
)
|
6
|
|
|||
Average interest on excess reserves paid by the Federal Reserve
|
1.10
|
%
|
0.51
|
%
|
0.26
|
%
|
59
|
bps
|
25
|
bps
|
|||
|
|
|
|
|
|
||||||||
Foreign exchange rates vs. U.S. dollar:
|
|
|
|
|
|
||||||||
British pound
(a)
|
$
|
1.35
|
|
$
|
1.23
|
|
$
|
1.48
|
|
10
|
%
|
(17
|
) %
|
British pound – average rate
|
1.29
|
|
1.35
|
|
1.53
|
|
(4
|
)
|
(12
|
)
|
|||
Euro
(a)
|
1.20
|
|
1.05
|
|
1.09
|
|
14
|
|
(4
|
)
|
|||
Euro – average rate
|
1.14
|
|
1.11
|
|
1.11
|
|
3
|
|
—
|
|
(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.
|
Results of Operations
(continued)
|
|
|
|
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
vs.
|
|
vs.
|
|
||||||
(dollars in millions)
|
2017
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|||
Revenue:
|
|
|
|
|
|
||||||||
Investment management fees:
|
|
|
|
|
|
||||||||
Mutual funds
|
$
|
1,286
|
|
$
|
1,210
|
|
$
|
1,208
|
|
6
|
%
|
—
|
%
|
Institutional clients
|
1,455
|
|
1,380
|
|
1,425
|
|
5
|
|
(3
|
)
|
|||
Wealth management
|
687
|
|
642
|
|
630
|
|
7
|
|
2
|
|
|||
Investment management fees
(a)
|
3,428
|
|
3,232
|
|
3,263
|
|
6
|
|
(1
|
)
|
|||
Performance fees
|
94
|
|
60
|
|
97
|
|
57
|
|
(38
|
)
|
|||
Investment management and performance fees
|
3,522
|
|
3,292
|
|
3,360
|
|
7
|
|
(2
|
)
|
|||
Distribution and servicing
|
207
|
|
192
|
|
152
|
|
8
|
|
26
|
|
|||
Other
(a)
|
(61
|
)
|
(60
|
)
|
75
|
|
N/M
|
|
N/M
|
|
|||
Total fee and other revenue
(a)
|
3,668
|
|
3,424
|
|
3,587
|
|
7
|
|
(5
|
)
|
|||
Net interest revenue
|
329
|
|
327
|
|
319
|
|
1
|
|
3
|
|
|||
Total revenue
|
3,997
|
|
3,751
|
|
3,906
|
|
7
|
|
(4
|
)
|
|||
Provision for credit losses
|
2
|
|
6
|
|
(1
|
)
|
N/M
|
|
N/M
|
|
|||
Noninterest expense (ex. amortization of intangible assets)
|
2,794
|
|
2,696
|
|
2,762
|
|
4
|
|
(2
|
)
|
|||
Amortization of intangible assets
|
60
|
|
82
|
|
97
|
|
(27
|
)
|
(15
|
)
|
|||
Total noninterest expense
|
2,854
|
|
2,778
|
|
2,859
|
|
3
|
|
(3
|
)
|
|||
Income before taxes
|
$
|
1,141
|
|
$
|
967
|
|
$
|
1,048
|
|
18
|
%
|
(8
|
)%
|
Income before taxes (ex. amortization of intangible assets)
–
Non-GAAP
|
$
|
1,201
|
|
$
|
1,049
|
|
$
|
1,145
|
|
14
|
%
|
(8
|
)%
|
|
|
|
|
|
|
||||||||
Pre-tax operating margin
|
29
|
%
|
26
|
%
|
27
|
%
|
|
|
|||||
Adjusted pre-tax operating margin
–
Non-GAAP
(b)
|
34
|
%
|
32
|
%
|
32
|
%
|
|
|
|||||
|
|
|
|
|
|
||||||||
Average balances:
|
|
|
|
|
|
||||||||
Average loans
|
$
|
16,565
|
|
$
|
15,015
|
|
$
|
12,545
|
|
10
|
%
|
20
|
%
|
Average deposits
|
$
|
13,615
|
|
$
|
15,650
|
|
$
|
15,160
|
|
(13
|
)%
|
3
|
%
|
(a)
|
Total fee and other revenue includes the impact of the consolidated investment management funds, net of noncontrolling interests.
See page
121
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
118
for the reconciliation of this Non-GAAP measure.
|
Results of Operations
(continued)
|
|
AUM trends
(a)(b)
|
|
|
|
|
|
||||||||||
(dollars in billions)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
|||||
AUM at period end, by product type:
(b)
|
|
|
|
|
|
||||||||||
Equity
|
$
|
161
|
|
$
|
153
|
|
$
|
160
|
|
$
|
183
|
|
$
|
196
|
|
Fixed income
|
206
|
|
186
|
|
196
|
|
193
|
|
187
|
|
|||||
Index
|
350
|
|
312
|
|
319
|
|
351
|
|
318
|
|
|||||
Liability-driven investments
(c)
|
667
|
|
554
|
|
511
|
|
501
|
|
403
|
|
|||||
Multi-asset and alternative investments
|
214
|
|
181
|
|
167
|
|
167
|
|
162
|
|
|||||
Cash
|
295
|
|
262
|
|
272
|
|
291
|
|
291
|
|
|||||
Total AUM
|
$
|
1,893
|
|
$
|
1,648
|
|
$
|
1,625
|
|
$
|
1,686
|
|
$
|
1,557
|
|
|
|
|
|
|
|
||||||||||
AUM at period end, by client type:
|
|
|
|
|
|
||||||||||
Institutional
|
$
|
1,346
|
|
$
|
1,182
|
|
$
|
1,127
|
|
$
|
1,164
|
|
$
|
1,047
|
|
Mutual funds
|
453
|
|
381
|
|
420
|
|
438
|
|
426
|
|
|||||
Private client
|
94
|
|
85
|
|
78
|
|
84
|
|
84
|
|
|||||
Total AUM
|
$
|
1,893
|
|
$
|
1,648
|
|
$
|
1,625
|
|
$
|
1,686
|
|
$
|
1,557
|
|
|
|
|
|
|
|
||||||||||
Changes in AUM:
(b)
|
|
|
|
|
|
||||||||||
Beginning balance of AUM
|
$
|
1,648
|
|
$
|
1,625
|
|
$
|
1,686
|
|
$
|
1,557
|
|
$
|
1,349
|
|
Net inflows (outflows):
|
|
|
|
|
|
||||||||||
Long-term strategies:
|
|
|
|
|
|
||||||||||
Equity
|
(14
|
)
|
(15
|
)
|
(31
|
)
|
(9
|
)
|
1
|
|
|||||
Fixed income
|
6
|
|
(5
|
)
|
(1
|
)
|
3
|
|
12
|
|
|||||
Liability-driven investments
(c)
|
50
|
|
26
|
|
35
|
|
46
|
|
65
|
|
|||||
Multi-asset and alternative investments
|
8
|
|
12
|
|
9
|
|
2
|
|
2
|
|
|||||
Total long-term active strategies inflows
|
50
|
|
18
|
|
12
|
|
42
|
|
80
|
|
|||||
Index
|
(17
|
)
|
(32
|
)
|
(29
|
)
|
5
|
|
18
|
|
|||||
Total long-term strategies inflows (outflows)
|
33
|
|
(14
|
)
|
(17
|
)
|
47
|
|
98
|
|
|||||
Short-term strategies:
|
|
|
|
|
|
||||||||||
Cash
|
30
|
|
(9
|
)
|
(18
|
)
|
1
|
|
5
|
|
|||||
Total net inflows (outflows)
|
63
|
|
(23
|
)
|
(35
|
)
|
48
|
|
103
|
|
|||||
Net market impact/other
|
106
|
|
181
|
|
(8
|
)
|
122
|
|
94
|
|
|||||
Net currency impact
|
76
|
|
(137
|
)
|
(36
|
)
|
(41
|
)
|
11
|
|
|||||
Acquisition
|
—
|
|
2
|
|
18
|
|
—
|
|
—
|
|
|||||
Ending balance of AUM
|
$
|
1,893
|
|
$
|
1,648
|
|
$
|
1,625
|
|
$
|
1,686
|
|
$
|
1,557
|
|
(a)
|
Excludes securities lending cash management assets and assets managed in the Investment Services business.
|
(b)
|
In 2017, the AUM in our Wealth Management business and our multi-asset strategies has been reclassified into multi-asset and alternative investments. This reclassification does not change total AUM. All prior periods have been restated.
|
(c)
|
Includes currency overlay AUM.
|
Results of Operations
(continued)
|
|
•
|
the beginning level of AUM;
|
•
|
the net flows of new assets during the period resulting from new business wins and existing client enrichments, reduced by the loss of clients and withdrawals; and
|
•
|
the impact of market price appreciation or depreciation, acquisitions or divestitures and foreign exchange rates.
|
Results of Operations
(continued)
|
|
Results of Operations
(continued)
|
|
|
|
|
|
2017
|
|
2016
|
|
||||||
(dollar amounts in millions, unless otherwise noted)
|
|
|
|
vs.
|
|
vs.
|
|
||||||
2017
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
||||
Revenue:
|
|
|
|
|
|
||||||||
Investment services fees:
|
|
|
|
|
|
||||||||
Asset servicing
|
$
|
4,286
|
|
$
|
4,141
|
|
$
|
4,098
|
|
4
|
%
|
1
|
%
|
Clearing services
|
1,549
|
|
1,399
|
|
1,370
|
|
11
|
|
2
|
|
|||
Issuer services
|
975
|
|
1,024
|
|
976
|
|
(5
|
)
|
5
|
|
|||
Treasury services
|
555
|
|
541
|
|
546
|
|
3
|
|
(1
|
)
|
|||
Total investment services fees
|
7,365
|
|
7,105
|
|
6,990
|
|
4
|
|
2
|
|
|||
Foreign exchange and other trading revenue
|
620
|
|
663
|
|
722
|
|
(6
|
)
|
(8
|
)
|
|||
Other
(a)
|
542
|
|
531
|
|
465
|
|
2
|
|
14
|
|
|||
Total fee and other revenue
|
8,527
|
|
8,299
|
|
8,177
|
|
3
|
|
1
|
|
|||
Net interest revenue
|
3,058
|
|
2,797
|
|
2,622
|
|
9
|
|
7
|
|
|||
Total revenue
|
11,585
|
|
11,096
|
|
10,799
|
|
4
|
|
3
|
|
|||
Provision for credit losses
|
(7
|
)
|
8
|
|
28
|
|
N/M
|
N/M
|
|||||
Noninterest expense (ex. amortization of intangible assets)
|
7,598
|
|
7,187
|
|
7,340
|
|
6
|
|
(2
|
)
|
|||
Amortization of intangible assets
|
149
|
|
155
|
|
162
|
|
(4
|
)
|
(4
|
)
|
|||
Total noninterest expense
|
7,747
|
|
7,342
|
|
7,502
|
|
6
|
|
(2
|
)
|
|||
Income before taxes
|
$
|
3,845
|
|
$
|
3,746
|
|
$
|
3,269
|
|
3
|
%
|
15
|
%
|
Income before taxes (ex. amortization of intangible assets)
–
Non-GAAP
|
$
|
3,994
|
|
$
|
3,901
|
|
$
|
3,431
|
|
2
|
%
|
14
|
%
|
|
|
|
|
|
|
||||||||
Pre-tax operating margin
|
33
|
%
|
34
|
%
|
30
|
%
|
|
|
|
||||
Adjusted pre-tax operating margin (ex. provision for credit losses and amortization of intangible assets)
–
Non-GAAP
|
34
|
%
|
35
|
%
|
32
|
%
|
|
|
|
||||
|
|
|
|
|
|
||||||||
Investment services fees as a percentage of noninterest expense (ex. amortization of intangible assets)
|
97
|
%
|
99
|
%
|
95
|
%
|
|
|
|
||||
|
|
|
|
|
|
|
|||||||
Securities lending revenue
|
$
|
168
|
|
$
|
170
|
|
$
|
153
|
|
(1
|
)%
|
11
|
%
|
|
|
|
|
|
|
||||||||
Metrics:
|
|
|
|
|
|
||||||||
Average loans
|
$
|
40,142
|
|
$
|
44,740
|
|
$
|
45,743
|
|
(10
|
)%
|
(2
|
)%
|
Average deposits
|
$
|
200,235
|
|
$
|
217,882
|
|
$
|
233,833
|
|
(8
|
)%
|
(7
|
)%
|
|
|
|
|
|
|
|
|||||||
AUC/A at period end
(in trillions) (b)
|
$
|
33.3
|
|
$
|
29.9
|
|
$
|
28.9
|
|
11
|
%
|
3
|
%
|
Market value of securities on loan at period end
(in billions) (c)
|
$
|
408
|
|
$
|
296
|
|
$
|
277
|
|
38
|
%
|
7
|
%
|
|
|
|
|
|
|
|
|||||||
Asset servicing:
|
|
|
|
|
|
|
|||||||
Estimated new business wins (AUC/A)
(in billions)
|
$
|
1,002
|
|
$
|
498
|
|
$
|
1,191
|
|
|
|
||
|
|
|
|
|
|
||||||||
Clearing services:
|
|
|
|
|
|
||||||||
Average active clearing accounts (U.S. platform) (
in thousands)
|
6,137
|
|
5,949
|
|
6,023
|
|
3
|
%
|
(1
|
)%
|
|||
Average long-term mutual fund assets (U.S. platform)
|
$
|
487,845
|
|
$
|
431,937
|
|
$
|
451,924
|
|
13
|
%
|
(4
|
)%
|
Average investor margin loans (U.S. platform)
|
$
|
9,810
|
|
$
|
10,772
|
|
$
|
11,627
|
|
(9
|
)%
|
(7
|
)%
|
|
|
|
|
|
|
||||||||
Depositary Receipts:
|
|
|
|
|
|
||||||||
Number of sponsored programs
|
886
|
|
1,062
|
|
1,145
|
|
(17
|
)%
|
(7
|
)%
|
|||
|
|
|
|
|
|
||||||||
Broker-Dealer:
|
|
|
|
|
|
||||||||
Average tri-party repo balances (
in billions)
|
$
|
2,502
|
|
$
|
2,183
|
|
$
|
2,156
|
|
15
|
%
|
1
|
%
|
(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
$1.3 trillion
at
Dec. 31, 2017
,
$1.2 trillion
at
Dec. 31, 2016
and
$1.0 trillion
at
Dec. 31, 2015
.
|
(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
$71 billion
at
Dec. 31, 2017
,
$63 billion
at
Dec. 31, 2016
and
$55 billion
at
Dec. 31, 2015
.
|
Results of Operations
(continued)
|
|
•
|
We are the primary provider of U.S. government securities clearance and a provider of non-U.S. government securities clearance. We provide services to settle securities transactions in approximately 100 markets.
|
•
|
We are a leading provider of tri-party repo collateral management services with approximately $2.5 trillion serviced globally including
approximately $1.7 trillion of the U.S. tri-party repo market.
|
•
|
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 $3.4 trillion in 34 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
886
sponsored American and global depositary receipts programs at
Dec. 31, 2017
, acting in partnership with leading companies from 58 countries.
|
Results of Operations
(continued)
|
|
•
|
Asset servicing fees (custody, fund services, broker-dealer services, securities finance, collateral management and liquidity services) were
$4.3 billion
compared with
$4.1 billion
in
2016
. The increase compared with
2016
primarily reflects
higher equity market values, net new business, including growth in collateral management, and higher money market fees, partially offset by the downsizing of the UK transfer agency business.
|
•
|
Clearing services fees were
$1.5 billion
compared with
$1.4 billion
in
2016
. The increase compared with
2016
was primarily driven by
higher money market fees and growth in long-term mutual fund assets.
|
•
|
Issuer services fees (Depositary Receipts and Corporate Trust) were
$975 million
compared with
$1.0 billion
in
2016
. The decrease compared with
2016
primarily reflects
lost business
and lower volumes from weaker cross-border settlement activity in Depositary Receipts.
|
•
|
Treasury services fees (global payments, trade finance and cash management) were
$555 million
compared with
$541 million
in
2016
primarily reflecting
higher payment volumes, partially offset by higher compensating balance credits provided to clients, which reduces fee revenue and increases net interest revenue.
|
Results of Operations
(continued)
|
|
|
|
|
|
||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Revenue:
|
|
|
|
||||||
Fee and other revenue
|
$
|
7
|
|
$
|
366
|
|
$
|
336
|
|
Net interest (expense) revenue
|
(79
|
)
|
14
|
|
85
|
|
|||
Total revenue
|
(72
|
)
|
380
|
|
421
|
|
|||
Provision for credit losses
|
(19
|
)
|
(25
|
)
|
133
|
|
|||
Noninterest expense (ex. amortization of intangible assets and M&I and restructuring charges (recoveries))
|
345
|
|
390
|
|
434
|
|
|||
Amortization of intangible assets
|
—
|
|
—
|
|
2
|
|
|||
M&I and restructuring charges (recoveries)
|
2
|
|
4
|
|
(2
|
)
|
|||
Total noninterest expense
|
347
|
|
394
|
|
434
|
|
|||
(Loss) income before taxes
|
$
|
(400
|
)
|
$
|
11
|
|
$
|
(146
|
)
|
(Loss) income before taxes (ex. amortization of intangible assets, M&I and restructuring charges (recoveries))
–
Non-GAAP
|
$
|
(398
|
)
|
$
|
15
|
|
$
|
(146
|
)
|
|
|
|
|
||||||
Average loans and leases
|
$
|
1,232
|
|
$
|
1,926
|
|
$
|
2,384
|
|
•
|
the leasing portfolio;
|
•
|
corporate treasury activities, including our investment securities portfolio;
|
•
|
derivatives and other trading activity;
|
•
|
corporate and bank-owned life insurance;
|
•
|
renewable energy investments; and
|
•
|
business exits.
|
•
|
net interest revenue and lease-related gains (losses) from leasing operations;
|
•
|
net interest revenue from corporate treasury activity;
|
•
|
fee and other revenue from corporate and bank- owned life insurance and business exits; and
|
Results of Operations
(continued)
|
|
•
|
gains (losses) associated with investment securities and other assets, including renewable energy.
|
•
|
M&I expenses and corporate-level restructuring charges;
|
•
|
direct expenses supporting leasing, investing, and funding activities; and
|
•
|
expenses not directly attributable to the Investment Management and Investment Services operations.
|
Results of Operations
(continued)
|
|
Foreign exchange rates
vs. U.S. dollar
|
2017
|
|
2016
|
|
2015
|
|
|||
Spot rate (at Dec. 31):
|
|
|
|
||||||
British pound
|
$
|
1.3532
|
|
$
|
1.2323
|
|
$
|
1.4799
|
|
Euro
|
1.2009
|
|
1.0538
|
|
1.0883
|
|
|||
Yearly average rate:
|
|
|
|
||||||
British pound
|
$
|
1.2885
|
|
$
|
1.3548
|
|
$
|
1.5282
|
|
Euro
|
1.1390
|
|
1.1065
|
|
1.1100
|
|
Results of Operations
(continued)
|
|
Cross-border outstandings
|
Banks and other financial institutions
(a)
|
|
|
Public sector
|
|
|
Commercial, industrial
and other
|
|
|
Total
cross-border
outstandings
(b)
|
|
|||||||
(in millions)
|
|
|
|
|||||||||||||||
2017:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Germany**
|
|
$
|
1,530
|
|
|
$
|
1,344
|
|
|
|
$
|
600
|
|
|
|
$
|
3,474
|
|
Canada**
|
|
2,256
|
|
|
1
|
|
|
|
1,170
|
|
|
|
3,427
|
|
||||
France**
|
|
295
|
|
|
2,519
|
|
|
|
130
|
|
|
|
2,944
|
|
||||
2016:
|
|
|
|
|
|
|
|
|
|
|
||||||||
France*
|
|
$
|
1,662
|
|
|
$
|
2,559
|
|
|
|
$
|
109
|
|
|
|
$
|
4,330
|
|
Germany*
|
|
2,398
|
|
|
1,408
|
|
|
|
357
|
|
|
|
4,163
|
|
||||
Canada*
|
|
2,199
|
|
|
1
|
|
|
|
1,211
|
|
|
|
3,411
|
|
||||
United Kingdom**
|
|
1,325
|
|
|
1,584
|
|
|
|
405
|
|
|
|
3,314
|
|
||||
2015:
|
|
|
|
|
|
|
|
|
|
|
||||||||
United Kingdom*
|
|
$
|
1,732
|
|
|
$
|
569
|
|
|
|
$
|
2,265
|
|
|
|
$
|
4,566
|
|
France*
|
|
968
|
|
|
2,855
|
|
|
|
120
|
|
|
|
3,943
|
|
||||
Germany**
|
|
1,882
|
|
|
1,666
|
|
|
|
363
|
|
|
|
3,911
|
|
(a)
|
Primarily short-term interest-bearing deposits with banks. Also includes global trade finance loans.
|
(b)
|
Excludes assets of consolidated investment management funds.
|
Results of Operations
(continued)
|
|
•
|
an allowance for impaired credits of $1 million or greater;
|
•
|
an allowance for higher risk-rated credits and pass-rated credits; and
|
•
|
an allowance for residential mortgage loans.
|
Results of Operations
(continued)
|
|
•
|
Ratio of nonperforming loans to total non-margin loans;
|
•
|
Ratio of criticized assets to total loans and lending-related commitments;
|
•
|
Borrower concentration; and
|
•
|
Significant concentrations in high-risk industries and countries.
|
Results of Operations
(continued)
|
|
Results of Operations
(continued)
|
|
Results of Operations
(continued)
|
|
Results of Operations
(continued)
|
|
(dollars in millions,
except per share
amounts)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
||||
Domestic plans:
|
|
|
|
|
||||||||
Long-term rate of return on plan assets
|
6.625
|
%
|
6.625
|
%
|
7.00
|
%
|
7.25
|
%
|
||||
Discount rate
(a)
|
3.97
|
%
|
4.35
|
%
|
4.48
|
%
|
4.13
|
%
|
||||
Market-related value of plan assets
(b)
|
$
|
5,238
|
|
$
|
5,026
|
|
$
|
4,830
|
|
$
|
4,696
|
|
ESOP stock price
(b)
|
$
|
52.80
|
|
$
|
44.19
|
|
$
|
41.66
|
|
$
|
39.18
|
|
Net U.S. pension credit (expense)
|
N/A
|
|
$
|
76
|
|
$
|
77
|
|
$
|
52
|
|
|
All other net pension credit (expense)
|
N/A
|
|
(49
|
)
|
(33
|
)
|
(42
|
)
|
||||
Total net pension credit (expense)
|
N/A
|
|
$
|
27
|
|
$
|
44
|
|
$
|
10
|
|
(a)
|
As a result of the amendment to the U.S. pension plans, liabilities for 2015 were re-measured as of Jan. 29, 2015 at a discount rate of 3.73%.
|
(b)
|
Market-related value of plan assets and ESOP stock price are for the beginning of the plan year. See “Summary of significant accounting and reporting policies” in Note 1 of the Notes to Consolidated Financial Statements. The market-related value of plan assets was $4,713 million as of the Jan. 29, 2015 re-measurement.
|
Results of Operations
(continued)
|
|
Pension expense
|
||||||||||||||||
(dollar amounts in millions, except per share amounts)
|
Increase in
pension expense
|
|
(Decrease) in
pension expense
|
|
||||||||||||
Long-term rate of return on plan assets
|
(100
|
)
|
bps
|
(50
|
)
|
bps
|
50
|
|
bps
|
100
|
|
bps
|
||||
Change in pension expense
|
$
|
64
|
|
|
$
|
32
|
|
|
$
|
(32
|
)
|
|
$
|
(64
|
)
|
|
Discount rate
|
(50
|
)
|
bps
|
(25
|
)
|
bps
|
25
|
|
bps
|
50
|
|
bps
|
||||
Change in pension expense
|
$
|
29
|
|
|
$
|
14
|
|
|
$
|
(13
|
)
|
|
$
|
(25
|
)
|
|
Market-related value of plan assets
|
(20
|
)
|
%
|
(10
|
)
|
%
|
10
|
|
%
|
20
|
|
%
|
||||
Change in pension expense
|
$
|
187
|
|
|
$
|
93
|
|
|
$
|
(93
|
)
|
|
$
|
(169
|
)
|
|
ESOP share price
|
$
|
(10
|
)
|
|
$
|
(5
|
)
|
|
$
|
5
|
|
|
$
|
10
|
|
|
Change in pension expense
|
$
|
5
|
|
|
$
|
3
|
|
|
$
|
(3
|
)
|
|
$
|
(5
|
)
|
|
Results of Operations
(continued)
|
|
Investment securities
portfolio
(dollars in millions)
|
Dec. 31, 2016
|
|
|
2017
change in
unrealized
gain (loss)
|
|
Dec. 31, 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
|
$
|
47,715
|
|
|
$
|
(29
|
)
|
$
|
50,210
|
|
$
|
49,746
|
|
|
99
|
%
|
$
|
(464
|
)
|
|
100
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
U.S. Treasury
|
25,244
|
|
|
143
|
|
24,951
|
|
24,848
|
|
|
100
|
|
(103
|
)
|
|
100
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Sovereign debt/sovereign guaranteed
(c)
|
14,373
|
|
|
(84
|
)
|
13,998
|
|
14,128
|
|
|
101
|
|
130
|
|
|
72
|
|
6
|
|
21
|
|
1
|
|
—
|
|
|||||
Non-agency RMBS
(d)
|
1,357
|
|
|
3
|
|
811
|
|
1,091
|
|
|
85
|
|
280
|
|
|
—
|
|
1
|
|
3
|
|
85
|
|
11
|
|
|||||
Non-agency RMBS
|
718
|
|
|
18
|
|
511
|
|
549
|
|
|
98
|
|
38
|
|
|
7
|
|
4
|
|
21
|
|
67
|
|
1
|
|
|||||
European floating rate
notes
(e)
|
706
|
|
|
7
|
|
275
|
|
271
|
|
|
97
|
|
(4
|
)
|
|
49
|
|
51
|
|
—
|
|
—
|
|
—
|
|
|||||
Commercial MBS
|
8,037
|
|
|
38
|
|
11,425
|
|
11,394
|
|
|
100
|
|
(31
|
)
|
|
99
|
|
1
|
|
—
|
|
—
|
|
—
|
|
|||||
State and political subdivisions
|
3,396
|
|
|
22
|
|
2,966
|
|
2,973
|
|
|
100
|
|
7
|
|
|
80
|
|
17
|
|
—
|
|
—
|
|
3
|
|
|||||
Foreign covered bonds
(f)
|
2,216
|
|
|
(5
|
)
|
2,604
|
|
2,615
|
|
|
100
|
|
11
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Corporate bonds
|
1,396
|
|
|
1
|
|
1,249
|
|
1,255
|
|
|
101
|
|
6
|
|
|
17
|
|
69
|
|
14
|
|
—
|
|
—
|
|
|||||
CLOs
|
2,598
|
|
|
6
|
|
2,898
|
|
2,909
|
|
|
100
|
|
11
|
|
|
98
|
|
—
|
|
—
|
|
1
|
|
1
|
|
|||||
U.S. government agencies
|
1,964
|
|
|
24
|
|
2,570
|
|
2,603
|
|
|
101
|
|
33
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Consumer ABS
|
1,727
|
|
|
5
|
|
1,040
|
|
1,043
|
|
|
100
|
|
3
|
|
|
93
|
|
—
|
|
5
|
|
2
|
|
—
|
|
|||||
Other
(g)
|
2,833
|
|
|
(13
|
)
|
4,485
|
|
4,483
|
|
|
100
|
|
(2
|
)
|
|
82
|
|
16
|
|
—
|
|
—
|
|
2
|
|
|||||
Total investment securities
|
$
|
114,280
|
|
(h)
|
$
|
136
|
|
$
|
119,993
|
|
$
|
119,908
|
|
(h)
|
99
|
%
|
$
|
(85
|
)
|
(h)(i)
|
93
|
%
|
3
|
%
|
3
|
%
|
1
|
%
|
—
|
%
|
(a)
|
Amortized cost before impairments.
|
(b)
|
Represents ratings by S&P or the equivalent.
|
(c)
|
Primarily consists of exposure to UK, France, Germany, Spain, Italy and the Netherlands.
|
(d)
|
These RMBS were included in the former Grantor Trust and their amortized cost was written down to fair value 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, Australia, the Netherlands and Norway.
|
(g)
|
Includes commercial paper with a fair value of
$401 million
and
$700 million
and money market funds with a fair value of
$842 million
and
$963 million
at
Dec. 31, 2016
and
Dec. 31, 2017
, respectively.
|
(h)
|
Includes net unrealized losses on derivatives hedging securities available-for-sale of
$211 million
at
Dec. 31, 2016
and
$147 million
at
Dec. 31, 2017
.
|
(i)
|
Unrealized gains of
$230 million
at
Dec. 31, 2017
related to available-for-sale securities, net of hedges.
|
Results of Operations
(continued)
|
|
Net premium amortization and discount accretion of investment securities
(a)
|
|
|
|
||||||
(dollars in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Amortizable purchase premium (net of discount) relating to investment securities:
|
|
|
|
||||||
Balance at period end
|
$
|
1,987
|
|
$
|
2,188
|
|
$
|
2,319
|
|
Estimated average life remaining at period end
(in years)
|
5.0
|
|
4.9
|
|
4.7
|
|
|||
Amortization
|
$
|
547
|
|
$
|
641
|
|
$
|
693
|
|
Accretable discount related to the prior restructuring of the investment securities portfolio:
|
|
|
|
||||||
Balance at period end
|
$
|
274
|
|
$
|
315
|
|
$
|
355
|
|
Estimated average life remaining at period end
(in years)
|
6.3
|
|
6.2
|
|
6.1
|
|
|||
Accretion
|
$
|
100
|
|
$
|
102
|
|
$
|
126
|
|
(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)
|
Forty-nine percent
of these securities are in the AAA to AA- ratings category.
|
Results of Operations
(continued)
|
|
Equity investments
|
Dec. 31,
|
|||||
(in millions)
|
2017
|
|
2016
|
|
||
Renewable energy investments
|
$
|
1,368
|
|
$
|
1,282
|
|
Equity in a joint venture and other investments:
|
|
|
||||
CIBC Mellon
|
580
|
|
509
|
|
||
Siguler Guff
|
246
|
|
256
|
|
||
ConvergEx
|
—
|
|
76
|
|
||
Other equity investments
|
257
|
|
222
|
|
||
Total equity in a joint venture and other investments
|
$
|
1,083
|
|
$
|
1,063
|
|
Qualified affordable housing project investments
|
1,014
|
|
914
|
|
||
Federal Reserve Bank stock
|
477
|
|
466
|
|
||
Seed capital
|
288
|
|
395
|
|
||
Federal Home Loan Bank stock
|
82
|
|
—
|
|
||
Private equity investments
(a)
|
55
|
|
43
|
|
||
Total equity investments
|
$
|
4,367
|
|
$
|
4,163
|
|
(a)
|
Represents investments in small business investment companies (“SBICs”), which are compliant with the Volcker Rule.
|
Total exposure – consolidated
|
Dec. 31, 2017
|
|
Dec. 31, 2016
|
||||||||||||||||
(in billions)
|
Loans
|
|
Unfunded
commitments
|
|
Total
exposure
|
|
|
Loans
|
|
Unfunded
commitments
|
|
Total
exposure
|
|
||||||
Non-margin loans:
|
|
|
|
|
|
|
|
||||||||||||
Financial institutions
|
$
|
13.1
|
|
$
|
32.5
|
|
$
|
45.6
|
|
|
$
|
14.7
|
|
$
|
33.7
|
|
$
|
48.4
|
|
Commercial
|
2.9
|
|
18.0
|
|
20.9
|
|
|
2.6
|
|
17.5
|
|
20.1
|
|
||||||
Subtotal institutional
|
16.0
|
|
50.5
|
|
66.5
|
|
|
17.3
|
|
51.2
|
|
68.5
|
|
||||||
Wealth management loans and mortgages
|
16.5
|
|
1.1
|
|
17.6
|
|
|
15.6
|
|
1.3
|
|
16.9
|
|
||||||
Commercial real estate
|
4.9
|
|
3.5
|
|
8.4
|
|
|
4.7
|
|
3.2
|
|
7.9
|
|
||||||
Lease financings
|
1.3
|
|
—
|
|
1.3
|
|
|
1.7
|
|
—
|
|
1.7
|
|
||||||
Other residential mortgages
|
0.7
|
|
—
|
|
0.7
|
|
|
0.9
|
|
—
|
|
0.9
|
|
||||||
Overdrafts
|
5.1
|
|
—
|
|
5.1
|
|
|
5.5
|
|
—
|
|
5.5
|
|
||||||
Other
|
1.2
|
|
—
|
|
1.2
|
|
|
1.2
|
|
—
|
|
1.2
|
|
||||||
Subtotal non-margin loans
|
45.7
|
|
55.1
|
|
100.8
|
|
|
46.9
|
|
55.7
|
|
102.6
|
|
||||||
Margin loans
|
15.8
|
|
—
|
|
15.8
|
|
|
17.6
|
|
0.1
|
|
17.7
|
|
||||||
Total
|
$
|
61.5
|
|
$
|
55.1
|
|
$
|
116.6
|
|
|
$
|
64.5
|
|
$
|
55.8
|
|
$
|
120.3
|
|
Results of Operations
(continued)
|
|
Financial institutions
portfolio exposure
(dollar amounts in billions)
|
Dec. 31, 2017
|
|
Dec. 31, 2016
|
||||||||||||||||||||
Loans
|
|
Unfunded
commitments
|
|
Total
exposure
|
|
% Inv.
grade
|
|
% due
<1 yr.
|
|
|
Loans
|
|
Unfunded
commitments
|
|
Total
exposure
|
|
|||||||
Securities industry
|
$
|
3.6
|
|
$
|
19.2
|
|
$
|
22.8
|
|
98
|
%
|
99
|
%
|
|
$
|
3.8
|
|
$
|
19.2
|
|
$
|
23.0
|
|
Banks
|
7.0
|
|
1.2
|
|
8.2
|
|
68
|
|
96
|
|
|
7.9
|
|
2.0
|
|
9.9
|
|
||||||
Asset managers
|
1.4
|
|
6.4
|
|
7.8
|
|
99
|
|
87
|
|
|
1.5
|
|
6.2
|
|
7.7
|
|
||||||
Insurance
|
0.1
|
|
3.5
|
|
3.6
|
|
99
|
|
15
|
|
|
0.1
|
|
3.8
|
|
3.9
|
|
||||||
Government
|
0.1
|
|
0.9
|
|
1.0
|
|
91
|
|
36
|
|
|
0.1
|
|
0.9
|
|
1.0
|
|
||||||
Other
|
0.9
|
|
1.3
|
|
2.2
|
|
98
|
|
66
|
|
|
1.3
|
|
1.6
|
|
2.9
|
|
||||||
Total
|
$
|
13.1
|
|
$
|
32.5
|
|
$
|
45.6
|
|
93
|
%
|
87
|
%
|
|
$
|
14.7
|
|
$
|
33.7
|
|
$
|
48.4
|
|
Results of Operations
(continued)
|
|
Commercial portfolio exposure
|
Dec. 31, 2017
|
|
Dec. 31, 2016
|
||||||||||||||||||||
(dollar amounts in billions)
|
Loans
|
|
Unfunded
commitments
|
|
Total
exposure
|
|
% Inv.
grade
|
|
% due
<1 yr.
|
|
|
Loans
|
|
Unfunded
commitments
|
|
Total
exposure
|
|
||||||
Manufacturing
|
$
|
1.3
|
|
$
|
6.1
|
|
$
|
7.4
|
|
94
|
%
|
21
|
%
|
|
$
|
1.1
|
|
$
|
6.7
|
|
$
|
7.8
|
|
Services and other
|
0.9
|
|
6.0
|
|
6.9
|
|
96
|
|
25
|
|
|
0.6
|
|
4.3
|
|
4.9
|
|
||||||
Energy and utilities
|
0.7
|
|
4.4
|
|
5.1
|
|
95
|
|
9
|
|
|
0.6
|
|
4.7
|
|
5.3
|
|
||||||
Media and telecom
|
—
|
|
1.5
|
|
1.5
|
|
95
|
|
15
|
|
|
0.3
|
|
1.8
|
|
2.1
|
|
||||||
Total
|
$
|
2.9
|
|
$
|
18.0
|
|
$
|
20.9
|
|
95
|
%
|
19
|
%
|
|
$
|
2.6
|
|
$
|
17.5
|
|
$
|
20.1
|
|
Percentage of the portfolios that are investment grade
|
Dec. 31,
|
|||||
2017
|
|
2016
|
|
2015
|
|
|
Financial institutions
|
93
|
%
|
92
|
%
|
96
|
%
|
Commercial
|
95
|
%
|
94
|
%
|
94
|
%
|
Results of Operations
(continued)
|
|
•
|
46% of the counterparties were A, or better;
|
•
|
50% were BBB; and
|
•
|
4% were non-investment grade.
|
Results of Operations
(continued)
|
|
Loans by category – at year-end
|
Dec. 31,
|
||||||||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
|||||
Domestic:
|
|
|
|
|
|
||||||||||
Commercial
|
$
|
2,744
|
|
$
|
2,286
|
|
$
|
2,115
|
|
$
|
1,390
|
|
$
|
1,534
|
|
Commercial real estate
|
4,900
|
|
4,639
|
|
3,899
|
|
2,524
|
|
2,001
|
|
|||||
Financial institutions
|
5,568
|
|
6,342
|
|
6,640
|
|
5,603
|
|
4,511
|
|
|||||
Lease financings
|
772
|
|
989
|
|
1,007
|
|
1,282
|
|
1,322
|
|
|||||
Wealth management loans and mortgages
|
16,420
|
|
15,555
|
|
13,247
|
|
11,095
|
|
9,743
|
|
|||||
Other residential mortgages
|
708
|
|
854
|
|
1,055
|
|
1,222
|
|
1,385
|
|
|||||
Overdrafts
|
963
|
|
1,055
|
|
911
|
|
1,348
|
|
1,314
|
|
|||||
Other
|
1,131
|
|
1,202
|
|
1,137
|
|
1,113
|
|
768
|
|
|||||
Margin loans
|
15,689
|
|
17,503
|
|
19,340
|
|
20,034
|
|
15,652
|
|
|||||
Total domestic
|
48,895
|
|
50,425
|
|
49,351
|
|
45,611
|
|
38,230
|
|
|||||
Foreign:
|
|
|
|
|
|
||||||||||
Commercial
|
167
|
|
331
|
|
227
|
|
252
|
|
113
|
|
|||||
Commercial real estate
|
—
|
|
15
|
|
46
|
|
6
|
|
9
|
|
|||||
Financial institutions
|
7,483
|
|
8,347
|
|
9,259
|
|
7,716
|
|
9,848
|
|
|||||
Lease financings
|
527
|
|
736
|
|
850
|
|
889
|
|
945
|
|
|||||
Wealth management loans and mortgages
|
108
|
|
99
|
|
100
|
|
89
|
|
75
|
|
|||||
Other (primarily overdrafts)
|
4,264
|
|
4,418
|
|
3,637
|
|
4,569
|
|
2,437
|
|
|||||
Margin loans
|
96
|
|
87
|
|
233
|
|
—
|
|
—
|
|
|||||
Total foreign
|
12,645
|
|
14,033
|
|
14,352
|
|
13,521
|
|
13,427
|
|
|||||
Total loans
(a)
|
$
|
61,540
|
|
$
|
64,458
|
|
$
|
63,703
|
|
$
|
59,132
|
|
$
|
51,657
|
|
(a)
|
Net of unearned income of $394 million at Dec. 31, 2017, $527 million at Dec. 31, 2016, $674 million at Dec. 31, 2015, $866 million at Dec. 31, 2014 and $1,020 million at Dec. 31, 2013, primarily on domestic and foreign lease financings.
|
(a)
|
Excludes loans collateralized by residential properties, lease financings and wealth management loans and mortgages.
|
(b)
|
Variable rate loans due after one year totaled $7.2 billion and fixed rate loans totaled $62 million.
|
Results of Operations
(continued)
|
|
Allowance for credit losses activity
(dollar amounts in millions)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
|||||
Margin loans
|
$
|
15,785
|
|
$
|
17,590
|
|
$
|
19,573
|
|
$
|
20,034
|
|
$
|
15,652
|
|
Non-margin loans
|
45,755
|
|
46,868
|
|
43,708
|
|
39,077
|
|
36,005
|
|
|||||
Total loans
|
$
|
61,540
|
|
$
|
64,458
|
|
$
|
63,281
|
|
$
|
59,111
|
|
$
|
51,657
|
|
Average loans outstanding
|
57,939
|
|
61,681
|
|
60,672
|
|
54,210
|
|
48,316
|
|
|||||
Balance, Jan. 1
|
|
|
|
|
|
||||||||||
Domestic
|
$
|
245
|
|
$
|
240
|
|
$
|
236
|
|
$
|
288
|
|
$
|
339
|
|
Foreign
|
36
|
|
35
|
|
44
|
|
56
|
|
48
|
|
|||||
Total allowance at Jan. 1
|
281
|
|
275
|
|
280
|
|
344
|
|
387
|
|
|||||
Charge-offs:
|
|
|
|
|
|
||||||||||
Commercial
|
—
|
|
—
|
|
—
|
|
(12
|
)
|
(4
|
)
|
|||||
Commercial real estate
|
—
|
|
—
|
|
—
|
|
(2
|
)
|
(1
|
)
|
|||||
Financial institutions
|
—
|
|
—
|
|
(170
|
)
|
—
|
|
—
|
|
|||||
Wealth management loans and mortgages
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
(1
|
)
|
|||||
Other residential mortgages
|
(1
|
)
|
(2
|
)
|
(2
|
)
|
(2
|
)
|
(8
|
)
|
|||||
Foreign
|
—
|
|
—
|
|
—
|
|
(3
|
)
|
(3
|
)
|
|||||
Total charge-offs
|
(1
|
)
|
(2
|
)
|
(172
|
)
|
(20
|
)
|
(17
|
)
|
|||||
Recoveries:
|
|
|
|
|
|
||||||||||
Commercial
|
—
|
|
—
|
|
—
|
|
1
|
|
1
|
|
|||||
Financial institutions
|
—
|
|
13
|
|
1
|
|
1
|
|
4
|
|
|||||
Other residential mortgages
|
5
|
|
5
|
|
6
|
|
2
|
|
4
|
|
|||||
Foreign
|
—
|
|
1
|
|
—
|
|
—
|
|
—
|
|
|||||
Total recoveries
|
5
|
|
19
|
|
7
|
|
4
|
|
9
|
|
|||||
Net recoveries (charge-offs)
|
4
|
|
17
|
|
(165
|
)
|
(16
|
)
|
(8
|
)
|
|||||
Provision for credit losses
|
(24
|
)
|
(11
|
)
|
160
|
|
(48
|
)
|
(35
|
)
|
|||||
Balance, Dec. 31,
|
|
|
|
|
|
||||||||||
Domestic
|
226
|
|
245
|
|
240
|
|
236
|
|
288
|
|
|||||
Foreign
|
35
|
|
36
|
|
35
|
|
44
|
|
56
|
|
|||||
Total allowance, Dec. 31,
|
$
|
261
|
|
$
|
281
|
|
$
|
275
|
|
$
|
280
|
|
$
|
344
|
|
Allowance for loan losses
|
$
|
159
|
|
$
|
169
|
|
$
|
157
|
|
$
|
191
|
|
$
|
210
|
|
Allowance for lending-related commitments
|
102
|
|
112
|
|
118
|
|
89
|
|
134
|
|
|||||
Net (recoveries) charge-offs to average loans outstanding
|
(0.01
|
)%
|
(0.03
|
)%
|
0.27
|
%
|
0.03
|
%
|
0.02
|
%
|
|||||
Net (recoveries) charge-offs to total allowance for credit losses
|
(1.53
|
)
|
(6.05
|
)
|
60.00
|
|
5.71
|
|
2.33
|
|
|||||
Allowance for loan losses as a percentage of total loans
|
0.26
|
|
0.26
|
|
0.25
|
|
0.32
|
|
0.41
|
|
|||||
Allowance for loan losses as a percentage of non-margin loans
|
0.35
|
|
0.36
|
|
0.36
|
|
0.49
|
|
0.58
|
|
|||||
Total allowance for credit losses as a percentage of total loans
|
0.42
|
|
0.44
|
|
0.43
|
|
0.47
|
|
0.67
|
|
|||||
Total allowance for credit losses as a percentage of non-margin loans
|
0.57
|
|
0.60
|
|
0.63
|
|
0.72
|
|
0.96
|
|
Results of Operations
(continued)
|
|
Allocation of allowance
|
Dec. 31,
|
|||||||||
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
|
Commercial
|
30
|
%
|
29
|
%
|
30
|
%
|
21
|
%
|
24
|
%
|
Commercial real estate
|
29
|
|
26
|
|
22
|
|
18
|
|
12
|
|
Foreign
|
13
|
|
13
|
|
13
|
|
16
|
|
16
|
|
Financial institutions
|
9
|
|
9
|
|
11
|
|
11
|
|
14
|
|
Other residential mortgages
|
8
|
|
10
|
|
12
|
|
14
|
|
16
|
|
Wealth management
(a)
|
8
|
|
8
|
|
7
|
|
8
|
|
7
|
|
Lease financing
|
3
|
|
5
|
|
5
|
|
12
|
|
11
|
|
Total
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
(a)
|
Includes the allowance for wealth management mortgages.
|
Nonperforming assets
|
Dec. 31,
|
||||||||||||||
(dollars in millions)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
|||||
Nonperforming loans:
|
|
|
|
|
|
||||||||||
Other residential mortgages
|
$
|
78
|
|
$
|
91
|
|
$
|
102
|
|
$
|
112
|
|
$
|
117
|
|
Wealth management loans and mortgages
|
7
|
|
8
|
|
11
|
|
12
|
|
11
|
|
|||||
Commercial real estate
|
1
|
|
—
|
|
2
|
|
1
|
|
4
|
|
|||||
Lease financings
|
—
|
|
4
|
|
—
|
|
—
|
|
—
|
|
|||||
Financial institutions
|
—
|
|
—
|
|
171
|
|
—
|
|
—
|
|
|||||
Commercial
|
—
|
|
—
|
|
—
|
|
—
|
|
15
|
|
|||||
Foreign
|
—
|
|
—
|
|
—
|
|
—
|
|
6
|
|
|||||
Total nonperforming loans
|
86
|
|
103
|
|
286
|
|
125
|
|
153
|
|
|||||
Other assets owned
|
4
|
|
4
|
|
6
|
|
3
|
|
3
|
|
|||||
Total nonperforming assets
(a)
|
$
|
90
|
|
$
|
107
|
|
$
|
292
|
|
$
|
128
|
|
$
|
156
|
|
Nonperforming assets ratio
|
0.15
|
%
|
0.17
|
%
|
0.46
|
%
|
0.22
|
%
|
0.30
|
%
|
|||||
Nonperforming assets ratio, excluding margin loans
|
0.20
|
|
0.23
|
|
0.67
|
|
0.33
|
|
0.43
|
|
|||||
Allowance for loan losses/nonperforming loans
|
184.9
|
|
164.1
|
|
54.9
|
|
152.8
|
|
137.3
|
|
|||||
Allowance for loan losses/nonperforming assets
|
176.7
|
|
157.9
|
|
53.8
|
|
149.2
|
|
134.6
|
|
|||||
Total allowance for credit losses/nonperforming loans
|
303.5
|
|
272.8
|
|
96.2
|
|
224.0
|
|
224.8
|
|
|||||
Total allowance for credit losses/nonperforming assets
|
290.0
|
|
262.6
|
|
94.2
|
|
218.8
|
|
220.5
|
|
(a)
|
Loans of consolidated investment management funds are not part of BNY Mellon’s loan portfolio. Included in the loans of consolidated investment management funds are nonperforming loans of $53 million at Dec. 31, 2014 and $16 million at Dec. 31, 2013. These loans are recorded at fair value and therefore do not impact the provision for credit losses and allowance for loan losses, and accordingly are excluded from the nonperforming assets table above. In the second quarter of 2015, BNY Mellon adopted the accounting guidance included in Accounting Standards Update (“ASU”) 2015-02, Consolidations. As a result, we deconsolidated substantially all of the loans of consolidated investment management funds retrospectively to Jan. 1, 2015.
|
Results of Operations
(continued)
|
|
Nonperforming assets activity
|
Dec. 31, 2017
|
|
Dec. 31, 2016
|
|
||
(in millions)
|
||||||
Balance at beginning of year
|
$
|
107
|
|
$
|
292
|
|
Additions
|
12
|
|
20
|
|
||
Return to accrual status
|
(5
|
)
|
(2
|
)
|
||
Charge-offs
|
(1
|
)
|
(1
|
)
|
||
Paydowns/sales
|
(23
|
)
|
(202
|
)
|
||
Balance at end of year
|
$
|
90
|
|
$
|
107
|
|
Results of Operations
(continued)
|
|
Federal funds purchased and securities sold under
repurchase agreements |
|||||||||
(dollars in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Maximum month-end balance during the year
|
$
|
21,850
|
|
$
|
25,995
|
|
$
|
30,160
|
|
Average daily balance
|
$
|
19,653
|
|
$
|
14,489
|
|
$
|
16,452
|
|
Weighted-average rate during the year
|
1.14
|
%
|
0.25
|
%
|
(0.04
|
)%
|
|||
Ending balance at Dec. 31
|
$
|
15,163
|
|
$
|
9,989
|
|
$
|
15,002
|
|
Weighted-average rate at Dec. 31
|
2.33
|
%
|
0.38
|
%
|
0.10
|
%
|
Payables to customers and broker-dealers
|
|
||||||||
(dollars in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Maximum month-end balance during the year
|
$
|
21,621
|
|
$
|
22,327
|
|
$
|
23,027
|
|
Average daily balance
(a)
|
$
|
21,142
|
|
$
|
21,149
|
|
$
|
22,062
|
|
Weighted-average rate during the year
(a)
|
0.34
|
%
|
0.07
|
%
|
0.06
|
%
|
|||
Ending balance at Dec. 31
|
$
|
20,184
|
|
$
|
20,987
|
|
$
|
21,900
|
|
Weighted-average rate at Dec. 31
|
0.56
|
%
|
0.09
|
%
|
0.07
|
%
|
(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
$18,984 million
in
2017
,
$16,925 million
in
2016
and
$11,649 million
in
2015
.
|
(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
$17,868 million
in the
fourth quarter of 2017
,
$18,516 million
in the
third quarter of 2017
and
$17,091 million
in the
fourth quarter of 2016
.
|
Commercial paper
|
|
||||||||
(dollars in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Maximum month-end balance during the year
|
$
|
4,714
|
|
$
|
4,950
|
|
$
|
4,849
|
|
Average daily balance
|
$
|
2,630
|
|
$
|
1,337
|
|
$
|
1,549
|
|
Weighted-average rate during the year
|
1.08
|
%
|
0.37
|
%
|
0.10
|
%
|
|||
Ending balance at Dec. 31
|
$
|
3,075
|
|
$
|
—
|
|
$
|
—
|
|
Weighted-average rate at Dec. 31
|
1.27
|
%
|
—
|
%
|
—
|
%
|
Commercial paper
|
Quarter ended
|
||||||||
(dollars in millions)
|
Dec. 31, 2017
|
|
Sept. 30, 2017
|
|
Dec. 31, 2016
|
|
|||
Maximum month-end balance during the quarter
|
$
|
4,714
|
|
$
|
4,277
|
|
$
|
1,239
|
|
Average daily balance
|
$
|
3,391
|
|
$
|
2,736
|
|
$
|
383
|
|
Weighted-average rate during the quarter
|
1.23
|
%
|
1.15
|
%
|
0.34
|
%
|
|||
Ending balance
|
$
|
3,075
|
|
$
|
2,501
|
|
$
|
—
|
|
Weighted-average rate at period end
|
1.27
|
%
|
1.18
|
%
|
—
|
%
|
Results of Operations
(continued)
|
|
Other borrowed funds
|
|
||||||||
(dollars in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Maximum month-end balance during the year
|
$
|
3,955
|
|
$
|
1,280
|
|
$
|
1,151
|
|
Average daily balance
|
$
|
1,916
|
|
$
|
846
|
|
$
|
814
|
|
Weighted-average rate during the year
|
1.36
|
%
|
0.91
|
%
|
1.12
|
%
|
|||
Ending balance at Dec. 31
|
$
|
3,028
|
|
$
|
754
|
|
$
|
523
|
|
Weighted-average rate at Dec. 31
|
1.48
|
%
|
0.89
|
%
|
0.97
|
%
|
Other borrowed funds
|
Quarter ended
|
||||||||
(dollars in millions)
|
Dec. 31, 2017
|
|
Sept. 30, 2017
|
|
Dec. 31, 2016
|
|
|||
Maximum month-end balance during the quarter
|
$
|
3,955
|
|
$
|
3,353
|
|
$
|
1,280
|
|
Average daily balance
|
$
|
3,421
|
|
$
|
2,197
|
|
$
|
903
|
|
Weighted-average rate during the quarter
|
1.46
|
%
|
1.38
|
%
|
0.95
|
%
|
|||
Ending balance
|
$
|
3,028
|
|
$
|
3,353
|
|
$
|
754
|
|
Weighted-average rate at period end
|
1.48
|
%
|
1.56
|
%
|
0.89
|
%
|
Results of Operations
(continued)
|
|
Available and liquid funds
|
Dec. 31, 2017
|
|
Dec. 31, 2016
|
|
Average
|
||||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||||||||
Available funds:
|
|
|
|
|
|
||||||||||
Liquid funds:
|
|
|
|
|
|
||||||||||
Interest-bearing deposits with banks
|
$
|
11,979
|
|
$
|
15,086
|
|
$
|
14,879
|
|
$
|
14,704
|
|
$
|
20,531
|
|
Federal funds sold and securities purchased under resale agreements
|
28,135
|
|
25,801
|
|
27,192
|
|
25,767
|
|
23,384
|
|
|||||
Total liquid funds
|
40,114
|
|
40,887
|
|
42,071
|
|
40,471
|
|
43,915
|
|
|||||
Cash and due from banks
|
5,382
|
|
4,822
|
|
5,039
|
|
4,308
|
|
6,180
|
|
|||||
Interest-bearing deposits with the Federal Reserve and other central banks
|
91,510
|
|
58,041
|
|
70,213
|
|
80,593
|
|
83,029
|
|
|||||
Total available funds
|
$
|
137,006
|
|
$
|
103,750
|
|
$
|
117,323
|
|
$
|
125,372
|
|
$
|
133,124
|
|
Total available funds as a percentage of total assets
|
37
|
%
|
31
|
%
|
34
|
%
|
35
|
%
|
36
|
%
|
Results of Operations
(continued)
|
|
Results of Operations
(continued)
|
|
Credit ratings at Dec. 31, 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.
|
Debt issuances
|
|
||
(in millions)
|
2017
|
|
|
Senior notes:
|
|
||
2.60% senior notes due 2022
|
$
|
1,250
|
|
2.661% senior notes due 2023
|
1,000
|
|
|
3.25% senior notes due 2027
|
750
|
|
|
3.442% senior notes due 2028
|
1,000
|
|
|
Senior subordinated notes:
|
|
||
3.30% senior subordinated notes due 2029
|
750
|
|
|
Total debt issuances
|
$
|
4,750
|
|
Results of Operations
(continued)
|
|
Consolidated HQLA and LCR
|
Dec. 31, 2017
|
|
|
(dollars in billions)
|
|||
Securities
(a)
|
$
|
107
|
|
Cash
(b)
|
86
|
|
|
Total consolidated HQLA
(c)
|
$
|
193
|
|
|
|
||
Total consolidated HQLA - average
(c)
|
$
|
170
|
|
Average LCR
|
118
|
%
|
(a)
|
Primarily includes U.S. Treasury, U.S. agency, sovereign securities, securities of U.S. government-sponsored enterprises and investment-grade corporate debt.
|
(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
$154 billion
at
Dec. 31, 2017
and averaged
$130 billion
for the
fourth quarter of 2017
.
|
Results of Operations
(continued)
|
|
Contractual obligations at Dec. 31, 2017
|
|
Payments due by period
|
|||||||||||||
(in millions)
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
3-5 years
|
|
Over
5 years
|
|
|||||
Deposits without a stated maturity
|
$
|
122,373
|
|
$
|
122,373
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Term deposits
|
40,021
|
|
40,019
|
|
2
|
|
—
|
|
—
|
|
|||||
Federal funds purchased and securities sold under repurchase agreements
|
15,163
|
|
15,163
|
|
—
|
|
—
|
|
—
|
|
|||||
Payables to customers and broker-dealers
|
20,184
|
|
20,184
|
|
—
|
|
—
|
|
—
|
|
|||||
Other borrowed funds
(a)
|
3,028
|
|
3,026
|
|
2
|
|
—
|
|
—
|
|
|||||
Long-term debt
(b)
|
31,403
|
|
4,385
|
|
9,388
|
|
6,260
|
|
11,370
|
|
|||||
Unfunded pension and post-retirement benefits
|
292
|
|
48
|
|
63
|
|
55
|
|
126
|
|
|||||
Investment commitments
(c)
|
486
|
|
200
|
|
226
|
|
43
|
|
17
|
|
|||||
Repatriation tax
|
723
|
|
27
|
|
112
|
|
112
|
|
472
|
|
|||||
Total contractual obligations
|
$
|
233,673
|
|
$
|
205,425
|
|
$
|
9,793
|
|
$
|
6,470
|
|
$
|
11,985
|
|
(a)
|
Includes capital leases.
|
(b)
|
Includes interest.
|
(c)
|
Includes Community Reinvestment Act commitments.
|
Results of Operations
(continued)
|
|
Other commitments at Dec. 31, 2017
|
|
Amount of commitment expiration per period
|
|||||||||||||
(in millions)
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
3-5 years
|
|
Over
5 years
|
|
|||||
Securities lending indemnifications
(a)
|
$
|
432,084
|
|
$
|
432,084
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Lending commitments
|
51,467
|
|
30,068
|
|
8,997
|
|
12,205
|
|
197
|
|
|||||
Standby letters of credit
|
3,531
|
|
2,482
|
|
666
|
|
383
|
|
—
|
|
|||||
Operating leases
|
2,018
|
|
292
|
|
541
|
|
431
|
|
754
|
|
|||||
Purchase obligations
(b)
|
1,395
|
|
740
|
|
394
|
|
169
|
|
92
|
|
|||||
Commercial letters of credit
|
122
|
|
122
|
|
—
|
|
—
|
|
—
|
|
|||||
Private equity commitments
(c)
|
42
|
|
6
|
|
28
|
|
8
|
|
—
|
|
|||||
Total commitments
|
$
|
490,659
|
|
$
|
465,794
|
|
$
|
10,626
|
|
$
|
13,196
|
|
$
|
1,043
|
|
(a)
|
Excludes the indemnifications for securities booked at BNY Mellon beginning in late 2013 resulting from the CIBC Mellon joint venture, which totaled
$69 billion
at Dec. 31, 2017.
|
(b)
|
Purchase obligations are defined as agreements to purchase goods or services that are enforceable and legally binding and specify all significant terms.
|
(c)
|
Related to SBIC investments, which are compliant with the Volcker Rule.
|
Capital data
(dollar amounts in millions except per share amounts; common shares in thousands)
|
2017
|
|
2016
|
|
||
At period end:
|
|
|
||||
BNY Mellon shareholders’ equity to total assets ratio
|
11.1
|
%
|
11.6
|
%
|
||
BNY Mellon common shareholders’ equity to total assets ratio
|
10.1
|
%
|
10.6
|
%
|
||
Total BNY Mellon shareholders’ equity
|
$
|
41,251
|
|
$
|
38,811
|
|
Total BNY Mellon common shareholders’ equity
|
$
|
37,709
|
|
$
|
35,269
|
|
BNY Mellon tangible common shareholders’ equity – Non-GAAP
(a)
|
$
|
18,486
|
|
$
|
16,957
|
|
Book value per common share
(a)
|
$
|
37.21
|
|
$
|
33.67
|
|
Tangible book value per common share – Non-GAAP
(a)
|
$
|
18.24
|
|
$
|
16.19
|
|
Closing stock price per common share
|
$
|
53.86
|
|
$
|
47.38
|
|
Market capitalization
|
$
|
54,584
|
|
$
|
49,630
|
|
Common shares outstanding
|
1,013,442
|
|
1,047,488
|
|
||
|
|
|
||||
Full-year:
|
|
|
||||
Average common equity to average assets
|
10.5
|
%
|
9.9
|
%
|
||
Cash dividends per common share
|
$
|
0.86
|
|
$
|
0.72
|
|
Common dividend payout ratio
|
23
|
%
|
23
|
%
|
||
Common dividend yield
|
1.6
|
%
|
1.5
|
%
|
(a)
|
See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page
118
for a reconciliation of GAAP to Non-GAAP.
|
Results of Operations
(continued)
|
|
Results of Operations
(continued)
|
|
Consolidated and largest bank subsidiary regulatory capital ratios
|
Dec. 31, 2017
|
|
|
||||||||
Well capitalized
|
|
|
Minimum
required |
|
|
Capital
ratios
|
|
|
Dec. 31, 2016
|
|
|
|
(a)
|
|
|||||||||
Consolidated regulatory capital ratios
:
(b)
|
|
|
|
|
|
|
|
||||
Standardized Approach:
|
|
|
|
|
|
|
|
||||
CET1 ratio
|
N/A
|
|
(c)
|
6.5
|
%
|
|
11.9
|
%
|
|
12.3
|
%
|
Tier 1 capital ratio
|
6
|
%
|
|
8
|
|
|
14.2
|
|
|
14.5
|
|
Total (Tier 1 plus Tier 2) capital ratio
|
10
|
|
|
10
|
|
|
15.1
|
|
|
15.2
|
|
Advanced Approach:
|
|
|
|
|
|
|
|
||||
CET1 ratio
|
N/A
|
|
(c)
|
6.5
|
%
|
|
10.7
|
%
|
|
10.6
|
%
|
Tier 1 capital ratio
|
6
|
%
|
|
8
|
|
|
12.7
|
|
|
12.6
|
|
Total (Tier 1 plus Tier 2) capital ratio
|
10
|
|
|
10
|
|
|
13.4
|
|
|
13.0
|
|
Leverage capital ratio
(b)
|
N/A
|
|
(c)
|
4
|
|
|
6.6
|
|
|
6.6
|
|
SLR
(d)
|
5
|
|
(c)(e)
|
3
|
|
|
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
|
%
|
|
11.3
|
%
|
Advanced Approach
|
8.5
|
|
(e)
|
6.5
|
|
|
10.3
|
|
|
9.7
|
|
Estimated SLR
|
5
|
|
(e)
|
3
|
|
|
5.9
|
|
|
5.6
|
|
|
|
|
|
|
|
|
|
||||
The Bank of New York Mellon regulatory capital ratios
:
(b)
|
|
|
|
|
|
|
|
||||
Advanced Approach:
|
|
|
|
|
|
|
|
||||
CET1 ratio
|
6.5
|
%
|
|
5.75
|
%
|
|
14.1
|
%
|
|
13.6
|
%
|
Tier 1 capital ratio
|
8
|
|
|
7.25
|
|
|
14.4
|
|
|
13.9
|
|
Total (Tier 1 plus Tier 2) capital ratio
|
10
|
|
|
9.25
|
|
|
14.7
|
|
|
14.2
|
|
Leverage capital ratio
|
5
|
|
|
4
|
|
|
7.6
|
|
|
7.2
|
|
SLR
(d)
|
6
|
|
|
3
|
|
|
6.9
|
|
|
6.5
|
|
|
|
|
|
|
|
|
|
||||
Selected regulatory capital ratios – fully phased-in – Non-GAAP
:
|
|
|
|
|
|
|
|
||||
Estimated SLR
|
6
|
%
|
|
3
|
%
|
|
6.7
|
%
|
|
6.1
|
%
|
(a)
|
Minimum requirements for Dec. 31, 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 BHCs.
|
(d)
|
SLR became a binding measure on Jan. 1, 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
57
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.
|
Results of Operations
(continued)
|
|
Results of Operations
(continued)
|
|
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
|
Year ended Dec. 31, 2017
|
|||||
(in millions)
|
Transitional
Approach
(a)
|
|
Fully
phased-in
–
Non-GAAP
(b)
|
|
||
CET1 – Beginning of period
|
$
|
18,093
|
|
$
|
16,490
|
|
Net income applicable to common shareholders of The Bank of New York Mellon Corporation
|
3,915
|
|
3,915
|
|
||
Goodwill and intangible assets, net of related deferred tax liabilities
|
(1,370
|
)
|
(911
|
)
|
||
Gross CET1 generated
|
2,545
|
|
3,004
|
|
||
Capital deployed:
|
|
|
||||
Common stock dividends
|
(901
|
)
|
(901
|
)
|
||
Common stock repurchased
|
(2,686
|
)
|
(2,686
|
)
|
||
Total capital deployed
|
(3,587
|
)
|
(3,587
|
)
|
||
Other comprehensive income:
|
|
|
||||
Foreign currency translation
|
838
|
|
838
|
|
||
Unrealized loss on assets available-for-sale
|
127
|
|
151
|
|
||
Defined benefit plans
|
59
|
|
410
|
|
||
Unrealized gain on cash flow hedges
|
9
|
|
9
|
|
||
Total other comprehensive income
|
1,033
|
|
1,408
|
|
||
Additional paid-in capital
(c)
|
703
|
|
703
|
|
||
Other additions (deductions):
|
|
|
||||
Net pension fund assets
|
(114
|
)
|
(121
|
)
|
||
Deferred tax assets
|
(14
|
)
|
(9
|
)
|
||
Embedded goodwill
|
(59
|
)
|
(43
|
)
|
||
Other
|
(7
|
)
|
(7
|
)
|
||
Total other deductions
|
(194
|
)
|
(180
|
)
|
||
Net CET1 generated
|
500
|
|
1,348
|
|
||
CET1 – End of period
|
$
|
18,593
|
|
$
|
17,838
|
|
(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.
|
Results of Operations
(continued)
|
|
Capital components and ratios
|
Dec. 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)
|
|
||||
CET1:
|
|
|
|
|
|
||||||||
Common shareholders’ equity
|
$
|
37,859
|
|
$
|
37,709
|
|
|
$
|
35,794
|
|
$
|
35,269
|
|
Goodwill and intangible assets
|
(18,684
|
)
|
(19,223
|
)
|
|
(17,314
|
)
|
(18,312
|
)
|
||||
Net pension fund assets
|
(169
|
)
|
(211
|
)
|
|
(55
|
)
|
(90
|
)
|
||||
Equity method investments
|
(372
|
)
|
(387
|
)
|
|
(313
|
)
|
(344
|
)
|
||||
Deferred tax assets
|
(33
|
)
|
(41
|
)
|
|
(19
|
)
|
(32
|
)
|
||||
Other
|
(8
|
)
|
(9
|
)
|
|
—
|
|
(1
|
)
|
||||
Total CET1
|
18,593
|
|
17,838
|
|
|
18,093
|
|
16,490
|
|
||||
Other Tier 1 capital:
|
|
|
|
|
|
||||||||
Preferred stock
|
3,542
|
|
3,542
|
|
|
3,542
|
|
3,542
|
|
||||
Deferred tax assets
|
(8
|
)
|
—
|
|
|
(13
|
)
|
—
|
|
||||
Net pension fund assets
|
(42
|
)
|
—
|
|
|
(36
|
)
|
—
|
|
||||
Other
|
(41
|
)
|
(41
|
)
|
|
(121
|
)
|
(121
|
)
|
||||
Total Tier 1 capital
|
$
|
22,044
|
|
$
|
21,339
|
|
|
$
|
21,465
|
|
$
|
19,911
|
|
Tier 2 capital:
|
|
|
|
|
|
||||||||
Subordinated debt
|
$
|
1,250
|
|
$
|
1,250
|
|
|
$
|
550
|
|
$
|
550
|
|
Allowance for credit losses
|
261
|
|
261
|
|
|
281
|
|
281
|
|
||||
Trust preferred securities
|
—
|
|
—
|
|
|
148
|
|
—
|
|
||||
Other
|
(12
|
)
|
(12
|
)
|
|
(12
|
)
|
(11
|
)
|
||||
Total Tier 2 capital – Standardized Approach
|
1,499
|
|
1,499
|
|
|
967
|
|
820
|
|
||||
Excess of expected credit losses
|
31
|
|
31
|
|
|
50
|
|
50
|
|
||||
Less: Allowance for credit losses
|
261
|
|
261
|
|
|
281
|
|
281
|
|
||||
Total Tier 2 capital – Advanced Approach
|
$
|
1,269
|
|
$
|
1,269
|
|
|
$
|
736
|
|
$
|
589
|
|
Total capital:
|
|
|
|
|
|
||||||||
Standardized Approach
|
$
|
23,543
|
|
$
|
22,838
|
|
|
$
|
22,432
|
|
$
|
20,731
|
|
Advanced Approach
|
$
|
23,313
|
|
$
|
22,608
|
|
|
$
|
22,201
|
|
$
|
20,500
|
|
|
|
|
|
|
|
||||||||
Risk-weighted assets:
|
|
|
|
|
|
||||||||
Standardized Approach
|
$
|
155,621
|
|
$
|
155,324
|
|
|
$
|
147,671
|
|
$
|
146,475
|
|
Advanced Approach:
|
|
|
|
|
|
||||||||
Credit Risk
|
$
|
101,681
|
|
$
|
101,366
|
|
|
$
|
97,659
|
|
$
|
96,391
|
|
Market Risk
|
3,657
|
|
3,657
|
|
|
2,836
|
|
2,836
|
|
||||
Operational Risk
|
68,688
|
|
68,688
|
|
|
70,000
|
|
70,000
|
|
||||
Total Advanced Approach
|
$
|
174,026
|
|
$
|
173,711
|
|
|
$
|
170,495
|
|
$
|
169,227
|
|
|
|
|
|
|
|
||||||||
Standardized Approach:
|
|
|
|
|
|
||||||||
CET1 ratio
|
11.9
|
%
|
11.5
|
%
|
|
12.3
|
%
|
11.3
|
%
|
||||
Tier 1 capital ratio
|
14.2
|
|
13.7
|
|
|
14.5
|
|
13.6
|
|
||||
Total (Tier 1 plus Tier 2) capital ratio
|
15.1
|
|
14.7
|
|
|
15.2
|
|
14.2
|
|
||||
Advanced Approach:
|
|
|
|
|
|
||||||||
CET1 ratio
|
10.7
|
%
|
10.3
|
%
|
|
10.6
|
%
|
9.7
|
%
|
||||
Tier 1 capital ratio
|
12.7
|
|
12.3
|
|
|
12.6
|
|
11.8
|
|
||||
Total (Tier 1 plus Tier 2) capital ratio
|
13.4
|
|
13.0
|
|
|
13.0
|
|
12.1
|
|
||||
|
|
|
|
|
|
||||||||
Average assets for leverage capital purposes
|
$
|
331,600
|
|
|
|
$
|
326,809
|
|
|
||||
Total leverage exposure for SLR purposes
|
|
$
|
360,543
|
|
|
|
$
|
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.
|
Results of Operations
(continued)
|
|
Results of Operations
(continued)
|
|
SLR
|
Dec. 31, 2017
|
|
Dec. 31, 2016
|
||||||||||
(dollars in millions)
|
Transitional basis
|
|
Fully
phased-in – Non-GAAP
(a)
|
|
|
Transitional basis
|
|
Fully
phased-in –
Non-GAAP
(a)
|
|
||||
Consolidated:
|
|
|
|
|
|
||||||||
Total Tier 1 capital
|
$
|
22,044
|
|
$
|
21,339
|
|
|
$
|
21,465
|
|
$
|
19,911
|
|
|
|
|
|
|
|
||||||||
Total leverage exposure:
|
|
|
|
|
|
||||||||
Quarterly average total assets
|
$
|
350,786
|
|
$
|
350,786
|
|
|
$
|
344,142
|
|
$
|
344,142
|
|
Less: Amounts deducted from Tier 1 capital
|
19,186
|
|
19,892
|
|
|
17,333
|
|
18,887
|
|
||||
Total on-balance sheet assets, as adjusted
|
331,600
|
|
330,894
|
|
|
326,809
|
|
325,255
|
|
||||
Off-balance sheet exposures:
|
|
|
|
|
|
||||||||
Potential future exposure for derivative contracts (plus certain other items)
|
6,603
|
|
6,603
|
|
|
6,021
|
|
6,021
|
|
||||
Repo-style transaction exposures
|
1,086
|
|
1,086
|
|
|
533
|
|
533
|
|
||||
Credit-equivalent amount of other off-balance sheet exposures (less SLR exclusions)
|
21,960
|
|
21,960
|
|
|
23,274
|
|
23,274
|
|
||||
Total off-balance sheet exposures
|
29,649
|
|
29,649
|
|
|
29,828
|
|
29,828
|
|
||||
Total leverage exposure
|
$
|
361,249
|
|
$
|
360,543
|
|
|
$
|
356,637
|
|
$
|
355,083
|
|
|
|
|
|
|
|
||||||||
SLR – Consolidated
(b)
|
6.1
|
%
|
5.9
|
%
|
|
6.0
|
%
|
5.6
|
%
|
||||
|
|
|
|
|
|
||||||||
The Bank of New York Mellon, our largest bank subsidiary:
|
|
|
|
|
|
||||||||
Tier 1 capital
|
$
|
20,478
|
|
$
|
19,768
|
|
|
$
|
19,011
|
|
$
|
17,708
|
|
Total leverage exposure
|
$
|
296,510
|
|
$
|
296,224
|
|
|
$
|
291,022
|
|
$
|
290,230
|
|
|
|
|
|
|
|
||||||||
SLR – The Bank of New York Mellon
(b)
|
6.9
|
%
|
6.7
|
%
|
|
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. 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.”
|
Share repurchases - fourth 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 Dec. 31, 2017
|
|
|
|||||
(dollars in millions, except per share information; common shares in thousands)
|
Total shares
repurchased |
|
|
Average price
per share |
|
|
|
|||||||
October 2017
|
5,306
|
|
|
$
|
52.60
|
|
|
5,306
|
|
|
$
|
1,671
|
|
|
November 2017
|
4,758
|
|
|
52.63
|
|
|
4,758
|
|
|
1,421
|
|
|
||
December 2017
|
2,316
|
|
|
52.61
|
|
|
2,316
|
|
|
1,299
|
|
|
||
Fourth quarter of 2017
(a)
|
12,380
|
|
|
$
|
52.61
|
|
|
12,380
|
|
|
$
|
1,299
|
|
(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
$52.61
.
|
(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.
|
Results of Operations
(continued)
|
|
•
|
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)
|
2017
|
Dec. 31, 2017
|
|
|||||||||
(in millions)
|
Average
|
|
Minimum
|
|
Maximum
|
|
||||||
Interest rate
|
$
|
3.6
|
|
$
|
2.4
|
|
$
|
4.9
|
|
$
|
4.4
|
|
Foreign exchange
|
4.1
|
|
2.6
|
|
8.6
|
|
8.6
|
|
||||
Equity
|
0.5
|
|
0.1
|
|
1.1
|
|
0.8
|
|
||||
Credit
|
1.1
|
|
0.5
|
|
1.7
|
|
1.3
|
|
||||
Diversification
|
(5.0
|
)
|
N/M
|
|
N/M
|
|
(5.2
|
)
|
||||
Overall portfolio
|
4.3
|
|
3.2
|
|
9.9
|
|
9.9
|
|
(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)
|
2016
|
Dec. 31, 2016
|
|
|||||||||
(in millions)
|
Average
|
|
Minimum
|
|
Maximum
|
|
||||||
Interest rate
|
$
|
6.3
|
|
$
|
4.3
|
|
$
|
8.9
|
|
$
|
5.5
|
|
Foreign exchange
|
2.9
|
|
1.2
|
|
11.1
|
|
2.8
|
|
||||
Equity
|
0.6
|
|
0.3
|
|
0.8
|
|
0.4
|
|
||||
Credit
|
0.3
|
|
0.2
|
|
0.4
|
|
0.3
|
|
||||
Diversification
|
(4.2
|
)
|
N/M
|
|
N/M
|
|
(3.7
|
)
|
||||
Overall portfolio
|
5.9
|
|
4.3
|
|
7.7
|
|
5.3
|
|
(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.
|
Results of Operations
(continued)
|
|
Distribution of trading revenue (loss)
(a)
|
Quarter ended
|
|||||||||
(dollars in millions)
|
Dec. 31, 2017
|
|
Sept. 30, 2017
|
|
June 30,
2017 |
|
March 31,
2017 |
|
Dec. 31, 2016
|
|
Revenue range:
|
Number of days
|
|||||||||
Less than $(2.5)
|
2
|
|
—
|
|
—
|
|
—
|
|
—
|
|
$(2.5) – $0
|
4
|
|
1
|
|
2
|
|
1
|
|
3
|
|
$0 – $2.5
|
23
|
|
29
|
|
31
|
|
31
|
|
28
|
|
$2.5 – $5.0
|
22
|
|
29
|
|
27
|
|
26
|
|
23
|
|
More than $5.0
|
11
|
|
4
|
|
4
|
|
4
|
|
7
|
|
(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.
|
Results of Operations
(continued)
|
|
Foreign exchange and other trading counterparty risk rating profile
(a)
|
Quarter ended
|
|||||||||
|
Dec. 31, 2017
|
|
Sept. 30, 2017
|
|
June 30,
2017 |
|
March 31,
2017 |
|
Dec. 31, 2016
|
|
Rating:
|
|
|
|
|
|
|||||
AAA to AA-
|
44
|
%
|
41
|
%
|
44
|
%
|
43
|
%
|
35
|
%
|
A+ to A-
|
31
|
|
30
|
|
27
|
|
36
|
|
39
|
|
BBB+ to BBB-
|
20
|
|
24
|
|
22
|
|
17
|
|
22
|
|
Non-investment grade (BB+ and lower)
|
5
|
|
5
|
|
7
|
|
4
|
|
4
|
|
Total
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
(a)
|
Represents credit rating agency equivalent of internal credit ratings.
|
Results of Operations
(continued)
|
|
Estimated changes in net interest revenue
(in millions) |
Dec. 31, 2017
|
|
Sept. 30, 2017
|
|
Dec. 31, 2016
|
|
|||
Up 200 bps parallel rate ramp vs. baseline
(a)
|
$
|
(151
|
)
|
$
|
(2
|
)
|
$
|
6
|
|
Up 100 bps parallel rate ramp vs. baseline
(a)
|
17
|
|
112
|
|
145
|
|
|||
Long-term up 50 bps, short-term unchanged
(b)
|
105
|
|
113
|
|
81
|
|
|||
Long-term down 50 bps, short-term unchanged
(b)
|
(122
|
)
|
(129
|
)
|
(88
|
)
|
(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.
|
•
|
Global economic uncertainty;
|
•
|
Our ratings relative to other financial institutions’ ratings; and
|
•
|
Regulatory reform.
|
Risk Management
|
|
Type of risk
|
Description
|
Operational
|
The risk of loss resulting from inadequate or failed internal processes, human factors and systems, breaches of technology and information systems, or from external events. Also includes fiduciary risk, reputational risk, and litigation risk.
|
Market
|
The risk of loss due to adverse changes in the financial markets. Our market risks are primarily interest rate, foreign exchange, and equity risk. Market risk particularly impacts our exposures that are fair valued such as the securities portfolio, trading book, and equity investments.
|
Credit
|
The risk of loss if any of our borrowers or other counterparties were to default on their obligations to us. Credit risk is resident in the majority of our assets, but primarily concentrated in the loan and securities books, as well as off-balance sheet exposures such as lending commitments, letters of credit, and securities lending indemnifications.
|
Liquidity
|
The risk that BNY Mellon cannot meet its cash and collateral obligations at a reasonable cost for both expected and unexpected cash flows, without adversely affecting daily operations or financial conditions. Liquidity risk can arise from cash flow mismatches, market constraints from the inability to convert assets to cash, the inability to raise cash in the markets, deposit run-off, or contingent liquidity events.
|
Strategic
|
The risk that BNY Mellon doesn’t effectively manage and protect the firm’s market positioning and stability. This includes risks associated with the inability to maintain a strong understanding of clients’ needs, provide suitable product offerings that are financially viable and fit within the firm’s operating model and adapt to transformational change in the industry.
|
Risk Management
(continued)
|
|
•
|
Board Oversight and Governance – The Risk Committee of the Board oversees our operational risk management strategy in addition to overseeing our strategic management of credit and market risk. The Risk Committee meets
|
Risk Management
(continued)
|
|
•
|
Accountability of Businesses – Business managers are responsible for maintaining an effective system of internal controls commensurate with their risk profiles and in accordance with BNY Mellon policies and procedures.
|
•
|
Corporate Operational Risk Management is responsible for developing risk management policies and tools for assessing, measuring, monitoring and managing operational risk for BNY Mellon. The primary objectives of Corporate Operational Risk Management are to promote effective risk management, identify emerging risks, create incentives for generating continuous improvement in controls and to optimize capital.
|
•
|
The Technology Risk Group is responsible for developing policies, methods and tools for identifying, assessing, measuring, monitoring and governing information and technology risk for BNY Mellon. Technology Risk partners with the businesses to help maintain and protect the confidentiality, integrity and availability of the portfolio reviews.
|
Risk Management
(continued)
|
|
Risk Management
(continued)
|
|
Risk Management
(continued)
|
|
Economic capital required at Dec. 31, 2017
|
|
||
(in millions)
|
|||
Credit
|
$
|
4,387
|
|
Market
|
4,090
|
|
|
Operational
|
4,867
|
|
|
Other
(a)
|
695
|
|
|
Economic capital required - consolidated
|
$
|
14,039
|
|
CET1
|
$
|
18,593
|
|
Capital cushion
|
$
|
4,554
|
|
(a)
|
Includes interest rate risk, reputational risk and diversification benefit.
|
Supervision and Regulation
|
|
Supervision and Regulation
(continued)
|
|
Supervision and Regulation
(continued)
|
|
Supervision and Regulation
(continued)
|
|
Supervision and Regulation
(continued)
|
|
Supervision and Regulation
(continued)
|
|
Supervision and Regulation
(continued)
|
|
Supervision and Regulation
(continued)
|
|
Supervision and Regulation
(continued)
|
|
Supervision and Regulation
(continued)
|
|
•
|
Transfer any of the depository institution’s assets and liabilities to a new obligor, including a newly formed “bridge” bank without the approval of the depository institution’s creditors;
|
•
|
Enforce the terms of the depository institution’s contracts pursuant to their terms without regard to any provisions triggered by the appointment of the FDIC in that capacity; or
|
•
|
Repudiate or disaffirm any contract or lease to which the depository institution is a party, the performance of which is determined by the FDIC to be burdensome and the disaffirmance or repudiation of which is determined by the FDIC to promote the orderly administration of the depository institution.
|
Supervision and Regulation
(continued)
|
|
Supervision and Regulation
(continued)
|
|
Supervision and Regulation
(continued)
|
|
Supervision and Regulation
(continued)
|
|
Supervision and Regulation
(continued)
|
|
Supervision and Regulation
(continued)
|
|
Supervision and Regulation
(continued)
|
|
Risk Factors
|
|
Risk Factors
(continued)
|
|
Risk Factors
(continued)
|
|
Risk Factors
(continued)
|
|
Risk Factors
(continued)
|
|
Risk Factors
(continued)
|
|
Risk Factors
(continued)
|
|
Risk Factors
(continued)
|
|
Risk Factors
(continued)
|
|
Risk Factors
(continued)
|
|
Risk Factors
(continued)
|
|
Risk Factors
(continued)
|
|
•
|
Geopolitical tension and economic instability in countries around the world can at times increase the demand for low-risk investments, particularly in U.S. Treasuries and the dollar. A “flight to safety” has historically increased BNY Mellon’s balance sheet, which has negatively impacted, and could continue to negatively impact, our leverage-based regulatory capital measures. A sustained “flight to safety” has historically triggered a decline in trading, capital markets and cross-border activity. Declining volumes in these activities would likely decrease our revenue, which would negatively impact our results of operations, financial condition and, if sustained in the long term, our business.
|
•
|
The fees earned by our Investment Management business are higher as assets under management and/or investment performance increase. Those fees are also impacted by the composition of the assets under management, with higher fees for some asset categories as compared to others. Uncertain and volatile capital markets could result in reductions in assets under management because of investors’ decisions to withdraw assets or from simple declines in the value of assets under management as markets decline. At Dec. 31, 2017, we estimate that a 5% change in global equity markets, spread evenly throughout the year, would impact fee revenue by less than 1% and diluted earnings per common share by
$0.03 to $0.05
.
|
•
|
Market conditions resulting in lower transaction volumes could have an adverse effect on the revenues and profitability of certain of our businesses such as clearing, settlement, payments and trading.
|
•
|
Uncertain and volatile capital markets, particularly declines, could reduce the value of our investments in securities, including pension and other post-retirement plan assets.
|
•
|
Derivative instruments we hold to hedge and manage exposure to market risks including interest rate risk, equity price risk, foreign currency risk and credit risk associated with our products and businesses might not perform as intended or expected, resulting in higher realized losses and unforeseen stresses on liquidity. Our derivative-based hedging strategies also rely on the performance of counterparties to such derivatives. These counterparties may fail to perform for various reasons resulting in losses on under-collateralized positions.
|
•
|
Continuing relative weakness in oil prices, or a decline, may continue to negatively impact capital markets and may impact the ability of certain of our clients, including oil and gas exploration and production companies and sovereign funds in oil-exporting countries, to continue using our services or repay outstanding loans. Increased defaults among oil and gas exploration and production companies may also negatively impact the high-yield market and our high-yield funds.
|
Risk Factors
(continued)
|
|
•
|
Market volatility could produce downward pressure on our stock price and credit availability without regard to our underlying financial strength.
|
•
|
The process we use to estimate our projected credit losses and to ascertain the fair value of securities held by us is subject to uncertainty in that it requires use of statistical models and difficult, subjective and complex judgments, including forecasts of economic conditions and how these conditions might impair the ability of our borrowers and others to meet their obligations. In uncertain and volatile capital markets, our ability to estimate our projected credit losses may be impaired, which could adversely affect our overall profitability and results of operations.
|
Risk Factors
(continued)
|
|
•
|
less liquidity in bonds and fixed-income funds in the case of a sharp rise in interest rates resulting in lower performance, yield and fees;
|
•
|
increased number of delinquencies, bankruptcies or defaults and more nonperforming assets and net charge-offs,
as borrowers may have more difficulty making higher interest payments
;
|
•
|
difficulty in modeling predicted deposit levels and depositor behavior, which could impact our ability to manage liquidity and capital;
|
•
|
decreases in deposit levels and higher redemptions from our fixed-income funds or separate accounts, as clients move funds into investments with higher rates of return;
|
•
|
decreases in stable deposit levels, which may result in further pressure on our LCR measure;
|
•
|
a decline in our risk-based capital ratios;
|
•
|
reduction in accumulated other comprehensive income (“OCI”) in our shareholders’ equity and therefore our tangible common equity due to the impact of rising long term rates on our available-for-sale securities in our investment portfolio; or
|
•
|
higher funding costs.
|
Risk Factors
(continued)
|
|
Risk Factors
(continued)
|
|
Risk Factors
(continued)
|
|
Risk Factors
(continued)
|
|
Risk Factors
(continued)
|
|
Risk Factors
(continued)
|
|
Risk Factors
(continued)
|
|
Risk Factors
(continued)
|
|
Risk Factors
(continued)
|
|
Risk Factors
(continued)
|
|
Risk Factors
(continued)
|
|
Risk Factors
(continued)
|
|
Recent Accounting Developments
|
|
Recent Accounting Developments
(continued)
|
|
Recent Accounting Developments
(continued)
|
|
Business Continuity
|
|
Supplemental Information (unaudited)
|
|
Supplemental Information
(unaudited)
(continued)
|
|
Pre-tax operating margin
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|||||
(dollars in millions)
|
|||||||||||||||||||
Income before income taxes – GAAP
|
$
|
4,610
|
|
|
$
|
4,725
|
|
|
$
|
4,235
|
|
|
$
|
3,563
|
|
|
$
|
3,777
|
|
Less: Net income attributable to noncontrolling interests of consolidated investment management funds
|
33
|
|
|
10
|
|
|
68
|
|
|
84
|
|
|
80
|
|
|||||
Gain on the sale of our equity investment in Wing Hang
|
—
|
|
|
—
|
|
|
—
|
|
|
490
|
|
|
—
|
|
|||||
Gain on the sale of our One Wall Street building
|
—
|
|
|
—
|
|
|
—
|
|
|
346
|
|
|
—
|
|
|||||
Add: Amortization of intangible assets
|
209
|
|
|
237
|
|
|
261
|
|
|
298
|
|
|
342
|
|
|||||
M&I, litigation and restructuring charges
|
106
|
|
|
49
|
|
|
85
|
|
|
1,130
|
|
|
70
|
|
|||||
(Recovery) impairment charge related to Sentinel
|
—
|
|
|
(13
|
)
|
|
170
|
|
|
—
|
|
|
—
|
|
|||||
Charge related to investment management funds, net of incentives
|
—
|
|
|
—
|
|
|
—
|
|
|
104
|
|
|
12
|
|
|||||
Income before income taxes, as adjusted – Non-GAAP
(a)
|
$
|
4,892
|
|
|
$
|
4,988
|
|
|
$
|
4,683
|
|
|
$
|
4,175
|
|
|
$
|
4,121
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fee and other revenue – GAAP
|
$
|
12,165
|
|
|
$
|
12,073
|
|
|
$
|
12,082
|
|
|
$
|
12,649
|
|
|
$
|
11,856
|
|
Income from consolidated investment management funds – GAAP
|
70
|
|
|
26
|
|
|
86
|
|
|
163
|
|
|
183
|
|
|||||
Net interest revenue – GAAP
|
3,308
|
|
|
3,138
|
|
|
3,026
|
|
|
2,880
|
|
|
3,009
|
|
|||||
Total revenue – GAAP
|
15,543
|
|
|
15,237
|
|
|
15,194
|
|
|
15,692
|
|
|
15,048
|
|
|||||
Less: Net income attributable to noncontrolling interests of consolidated investment management funds
|
33
|
|
|
10
|
|
|
68
|
|
|
84
|
|
|
80
|
|
|||||
Gain on the sale of our equity investment in Wing Hang
|
—
|
|
|
—
|
|
|
—
|
|
|
490
|
|
|
—
|
|
|||||
Gain on the sale of our One Wall Street building
|
—
|
|
|
—
|
|
|
—
|
|
|
346
|
|
|
—
|
|
|||||
Total revenue, as adjusted – Non-GAAP
(a)
|
$
|
15,510
|
|
|
$
|
15,227
|
|
|
$
|
15,126
|
|
|
$
|
14,772
|
|
|
$
|
14,968
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Pre-tax operating margin – GAAP
(b)
|
30
|
%
|
(c)
|
31
|
%
|
(c)
|
28
|
%
|
(c)
|
23
|
%
|
|
25
|
%
|
|||||
Adjusted pre-tax operating margin – Non-GAAP
(a)(b)
|
32
|
%
|
(c)
|
33
|
%
|
(c)
|
31
|
%
|
(c)
|
28
|
%
|
|
28
|
%
|
(a)
|
Non-GAAP information 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. Non-GAAP information for 2016 and 2015 also excludes the (recovery) impairment charge related to the Sentinel loan. Non-GAAP information for 2014 also excludes the gains on the sales of our equity investment in Wing Hang and our One Wall Street building. Non-GAAP information for 2014 and 2013 also excludes the charge related to investment management funds, net of incentives.
|
(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
$375 million
for
2017
,
$317 million
for
2016
and $
242 million
for
2015
and would increase our pre-tax operating margin by approximately
1.7
% for
2017
,
1.4
% for
2016
and
1.1
% for
2015
.
|
Book value per common share
|
Dec. 31,
|
||||||||||||||
(dollars in millions, unless otherwise noted)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
|||||
BNY Mellon shareholders’ equity at year end – GAAP
|
$
|
41,251
|
|
$
|
38,811
|
|
$
|
38,037
|
|
$
|
37,441
|
|
$
|
37,497
|
|
Less: Preferred stock
|
3,542
|
|
3,542
|
|
2,552
|
|
1,562
|
|
1,562
|
|
|||||
BNY Mellon common shareholders’ equity at year end – GAAP
|
37,709
|
|
35,269
|
|
35,485
|
|
35,879
|
|
35,935
|
|
|||||
Less: Goodwill
|
17,564
|
|
17,316
|
|
17,618
|
|
17,869
|
|
18,073
|
|
|||||
Intangible assets
|
3,411
|
|
3,598
|
|
3,842
|
|
4,127
|
|
4,452
|
|
|||||
Add: Deferred tax liability – tax deductible goodwill
(a)
|
1,034
|
|
1,497
|
|
1,401
|
|
1,340
|
|
1,302
|
|
|||||
Deferred tax liability – intangible assets
(a)
|
718
|
|
1,105
|
|
1,148
|
|
1,216
|
|
1,222
|
|
|||||
BNY Mellon tangible common shareholders’ equity at year
end – Non-GAAP
|
$
|
18,486
|
|
$
|
16,957
|
|
$
|
16,574
|
|
$
|
16,439
|
|
$
|
15,934
|
|
|
|
|
|
|
|
||||||||||
Year-end common shares outstanding
(in thousands)
|
1,013,442
|
|
1,047,488
|
|
1,085,343
|
|
1,118,228
|
|
1,142,250
|
|
|||||
|
|
|
|
|
|
||||||||||
Book value per common share – GAAP
|
$
|
37.21
|
|
$
|
33.67
|
|
$
|
32.69
|
|
$
|
32.09
|
|
$
|
31.46
|
|
Tangible book value per common share – Non-GAAP
|
$
|
18.24
|
|
$
|
16.19
|
|
$
|
15.27
|
|
$
|
14.70
|
|
$
|
13.95
|
|
(a)
|
Deferred tax liabilities are based on fully phased-in Basel III capital rules. Deferred tax liabilities at Dec. 31, 2017 have been remeasured at the lower statutory corporate tax rate.
|
Supplemental Information
(unaudited)
(continued)
|
|
Return on common equity and tangible common equity
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
|||||
(dollars in millions)
|
|||||||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP
|
$
|
3,915
|
|
$
|
3,425
|
|
$
|
3,053
|
|
$
|
2,494
|
|
$
|
2,040
|
|
Add: Amortization of intangible assets
|
209
|
|
237
|
|
261
|
|
298
|
|
342
|
|
|||||
Less: Tax impact of amortization of intangible assets
|
72
|
|
81
|
|
89
|
|
104
|
|
122
|
|
|||||
Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation excluding amortization of intangible assets – Non-GAAP
|
4,052
|
|
3,581
|
|
3,225
|
|
2,688
|
|
2,260
|
|
|||||
Add: M&I, litigation and restructuring charges
|
106
|
|
49
|
|
85
|
|
1,130
|
|
70
|
|
|||||
(Recovery) impairment charge related to Sentinel
|
—
|
|
(13
|
)
|
170
|
|
—
|
|
—
|
|
|||||
Tax impact of gain on the sale of our equity investment in Wing Hang
|
—
|
|
—
|
|
—
|
|
175
|
|
—
|
|
|||||
Tax impact of the gain on the sale of our One Wall Street building
|
—
|
|
—
|
|
—
|
|
142
|
|
—
|
|
|||||
Charge related to investment management funds, net of incentives
|
—
|
|
—
|
|
—
|
|
104
|
|
12
|
|
|||||
Net charge related to the disallowance of certain foreign tax credits
|
—
|
|
—
|
|
—
|
|
—
|
|
593
|
|
|||||
Less: Tax impact of M&I, litigation and restructuring charges
|
20
|
|
16
|
|
29
|
|
270
|
|
25
|
|
|||||
Tax impact of (recovery) impairment charge related to Sentinel
|
—
|
|
(5
|
)
|
64
|
|
—
|
|
—
|
|
|||||
Gain on the sale of our equity investment in Wing Hang
|
—
|
|
—
|
|
—
|
|
490
|
|
—
|
|
|||||
Gain on the sale of our One Wall Street building
|
—
|
|
—
|
|
—
|
|
346
|
|
—
|
|
|||||
Tax impact of charge related to investment management funds, net of incentives
|
—
|
|
—
|
|
—
|
|
23
|
|
3
|
|
|||||
Benefit primarily related to a tax carryback claim
|
—
|
|
—
|
|
—
|
|
150
|
|
—
|
|
|||||
Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, as adjusted – Non-GAAP
(a)
|
$
|
4,138
|
|
$
|
3,606
|
|
$
|
3,387
|
|
$
|
2,960
|
|
$
|
2,907
|
|
|
|
|
|
|
|
||||||||||
Average common shareholders’ equity
|
$
|
36,145
|
|
$
|
35,504
|
|
$
|
35,564
|
|
$
|
36,618
|
|
$
|
34,832
|
|
Less: Average goodwill
|
17,441
|
|
17,497
|
|
17,731
|
|
18,063
|
|
17,988
|
|
|||||
Average intangible assets
|
3,508
|
|
3,737
|
|
3,992
|
|
4,305
|
|
4,619
|
|
|||||
Add: Deferred tax liability – tax deductible goodwill
(b)
|
1,034
|
|
1,497
|
|
1,401
|
|
1,340
|
|
1,302
|
|
|||||
Deferred tax liability – intangible assets
(b)
|
718
|
|
1,105
|
|
1,148
|
|
1,216
|
|
1,222
|
|
|||||
Average tangible common shareholders’ equity – Non-GAAP
|
$
|
16,948
|
|
$
|
16,872
|
|
$
|
16,390
|
|
$
|
16,806
|
|
$
|
14,749
|
|
|
|
|
|
|
|
||||||||||
Return on common shareholders’ equity – GAAP
|
10.8
|
%
|
9.6
|
%
|
8.6
|
%
|
6.8
|
%
|
5.9
|
%
|
|||||
Adjusted return on common shareholders’ equity – Non-GAAP
(a)
|
11.4
|
%
|
10.2
|
%
|
9.5
|
%
|
8.1
|
%
|
8.3
|
%
|
|||||
|
|
|
|
|
|
||||||||||
Return on tangible common shareholders’ equity – Non-GAAP
|
23.9
|
%
|
21.2
|
%
|
19.7
|
%
|
16.0
|
%
|
15.3
|
%
|
|||||
Adjusted return on tangible common shareholders’ equity – Non-GAAP
(a)
|
24.4
|
%
|
21.4
|
%
|
20.7
|
%
|
17.6
|
%
|
19.7
|
%
|
(a)
|
Non-GAAP information for all periods presented excludes the amortization of intangible assets and M&I, litigation and restructuring charges. Non-GAAP information for 2016 and 2015 also excludes the (recovery) impairment charge related to the Sentinel loan. Non-GAAP information for 2014 also excludes the gains on the sales of our equity investment in Wing Hang and our One Wall Street building, the charge related to investment management funds, net of incentives, and the benefit primarily related to a tax carryback claim. Non-GAAP information for 2013 also excludes the charge related to investment management funds, net of incentives and the net charge related to the disallowance of certain foreign tax credits.
|
(b)
|
Deferred tax liabilities are based on fully phased-in Basel III capital rules. Deferred tax liabilities at Dec. 31, 2017 have been remeasured at the lower statutory corporate tax rate.
|
Supplemental Information
(unaudited)
(continued)
|
|
Investment management and performance fees – Consolidated
|
|
|
2017 vs.
|
|
||||
(dollars in millions)
|
2017
|
|
2016
|
|
2016
|
|
||
Investment management and performance fees – GAAP
|
$
|
3,584
|
|
$
|
3,350
|
|
7
|
%
|
Impact of changes in foreign currency exchange rates
|
—
|
|
(29
|
)
|
|
|||
Investment management and performance fees, as adjusted – Non-GAAP
|
$
|
3,584
|
|
$
|
3,321
|
|
8
|
%
|
Investment management fees - Investment Management business
|
|
|
2017 vs.
|
|
||||
(dollars in millions)
|
2017
|
|
2016
|
|
2016
|
|
||
Investment management fees – GAAP
|
$
|
3,428
|
|
$
|
3,232
|
|
6
|
%
|
Impact of changes in foreign currency exchange rates
|
—
|
|
(28
|
)
|
|
|||
Investment management fees, as adjusted – Non-GAAP
|
$
|
3,428
|
|
$
|
3,204
|
|
7
|
%
|
Pre-tax operating margin - Investment Management business
|
|
|
|||||||
(dollars in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Income before income taxes – GAAP
|
$
|
1,141
|
|
$
|
967
|
|
$
|
1,048
|
|
Add: Amortization of intangible assets
|
60
|
|
82
|
|
97
|
|
|||
Provision for credit losses
|
2
|
|
6
|
|
(1
|
)
|
|||
Adjusted income before income taxes, excluding amortization of intangible assets and provision for credit losses – Non-GAAP
|
$
|
1,203
|
|
$
|
1,055
|
|
$
|
1,144
|
|
|
|
|
|
||||||
Total revenue – GAAP
|
$
|
3,997
|
|
$
|
3,751
|
|
$
|
3,906
|
|
Less:
Distribution and servicing expense
|
422
|
|
404
|
|
378
|
|
|||
Adjusted total revenue, net of distribution and servicing expense – Non-GAAP
|
$
|
3,575
|
|
$
|
3,347
|
|
$
|
3,528
|
|
|
|
|
|
||||||
Pre-tax operating margin – GAAP
(a)
|
29
|
%
|
26
|
%
|
27
|
%
|
|||
Adjusted pre-tax operating margin, excluding amortization of intangible assets, provision for credit losses and distribution and servicing expense – Non-GAAP
(a)
|
34
|
%
|
32
|
%
|
32
|
%
|
(a)
|
Income before taxes divided by total revenue.
|
Supplemental Information
(unaudited)
(continued)
|
|
Rate/volume analysis
(a)
|
2017 over (under) 2016
|
|
2016 over (under) 2015
|
||||||||||||||||
|
Due to change in
|
|
|
Due to change in
|
|
||||||||||||||
(dollar amounts in millions, presented on an FTE basis)
|
Average
balance
|
|
Average
rate
|
|
Net
change
|
|
|
Average
balance
|
|
Average
rate
|
|
Net
change
|
|
||||||
Interest revenue
|
|
|
|
|
|
|
|
||||||||||||
Interest-earning assets:
|
|
|
|
|
|
|
|
||||||||||||
Interest-bearing deposits with banks (primarily foreign banks)
|
$
|
1
|
|
$
|
15
|
|
$
|
16
|
|
|
$
|
(34
|
)
|
$
|
34
|
|
$
|
—
|
|
Interest-bearing deposits with the Federal Reserve and other central banks
|
(28
|
)
|
149
|
|
121
|
|
|
(5
|
)
|
33
|
|
28
|
|
||||||
Federal funds sold and securities purchased under resale agreements
|
14
|
|
176
|
|
190
|
|
|
16
|
|
70
|
|
86
|
|
||||||
Margin loans
|
(62
|
)
|
140
|
|
78
|
|
|
(19
|
)
|
77
|
|
58
|
|
||||||
Non-margin loans:
|
|
|
|
|
|
|
|
||||||||||||
Domestic offices:
|
|
|
|
|
|
|
|
||||||||||||
Consumer
|
33
|
|
6
|
|
39
|
|
|
41
|
|
1
|
|
42
|
|
||||||
Commercial
|
(17
|
)
|
121
|
|
104
|
|
|
40
|
|
31
|
|
71
|
|
||||||
Foreign offices
|
(4
|
)
|
65
|
|
61
|
|
|
(10
|
)
|
43
|
|
33
|
|
||||||
Total non-margin loans
|
12
|
|
192
|
|
204
|
|
|
71
|
|
75
|
|
146
|
|
||||||
Securities:
|
|
|
|
|
|
|
|
||||||||||||
U.S. government obligations
|
9
|
|
38
|
|
47
|
|
|
(13
|
)
|
13
|
|
—
|
|
||||||
U.S. government agency obligations
|
71
|
|
138
|
|
209
|
|
|
23
|
|
(4
|
)
|
19
|
|
||||||
State and political subdivisions - tax exempt
|
(15
|
)
|
5
|
|
(10
|
)
|
|
(28
|
)
|
10
|
|
(18
|
)
|
||||||
Other securities:
|
|
|
|
|
|
|
|
||||||||||||
Domestic offices
|
(62
|
)
|
67
|
|
5
|
|
|
(44
|
)
|
(48
|
)
|
(92
|
)
|
||||||
Foreign offices
|
(11
|
)
|
(45
|
)
|
(56
|
)
|
|
(18
|
)
|
48
|
|
30
|
|
||||||
Total other securities
|
(73
|
)
|
22
|
|
(51
|
)
|
|
(62
|
)
|
—
|
|
(62
|
)
|
||||||
Trading securities (primarily domestic)
|
(1
|
)
|
—
|
|
(1
|
)
|
|
(12
|
)
|
(3
|
)
|
(15
|
)
|
||||||
Total securities
|
(9
|
)
|
203
|
|
194
|
|
|
(92
|
)
|
16
|
|
(76
|
)
|
||||||
Total interest revenue
|
$
|
(72
|
)
|
$
|
875
|
|
$
|
803
|
|
|
$
|
(63
|
)
|
$
|
305
|
|
$
|
242
|
|
Interest expense
|
|
|
|
|
|
|
|
||||||||||||
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
||||||||||||
Interest-bearing deposits:
|
|
|
|
|
|
|
|
||||||||||||
Domestic offices:
|
|
|
|
|
|
|
|
||||||||||||
Money market rate accounts
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
(2
|
)
|
$
|
(2
|
)
|
Savings
|
(1
|
)
|
4
|
|
3
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Demand deposits
|
8
|
|
(1
|
)
|
7
|
|
|
—
|
|
1
|
|
1
|
|
||||||
Time deposits
|
(8
|
)
|
64
|
|
56
|
|
|
—
|
|
12
|
|
12
|
|
||||||
Total domestic offices
|
(1
|
)
|
67
|
|
66
|
|
|
—
|
|
11
|
|
11
|
|
||||||
Foreign offices:
|
|
|
|
|
|
|
|
||||||||||||
Banks
|
—
|
|
50
|
|
50
|
|
|
(2
|
)
|
4
|
|
2
|
|
||||||
Government and official institutions
|
—
|
|
9
|
|
9
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Other
|
3
|
|
18
|
|
21
|
|
|
—
|
|
(34
|
)
|
(34
|
)
|
||||||
Total foreign offices
|
3
|
|
77
|
|
80
|
|
|
(2
|
)
|
(30
|
)
|
(32
|
)
|
||||||
Total interest-bearing deposits
|
2
|
|
144
|
|
146
|
|
|
(2
|
)
|
(19
|
)
|
(21
|
)
|
||||||
Federal funds purchased and securities sold under repurchase agreements
|
17
|
|
172
|
|
189
|
|
|
—
|
|
42
|
|
42
|
|
||||||
Trading liabilities
|
4
|
|
(3
|
)
|
1
|
|
|
1
|
|
(4
|
)
|
(3
|
)
|
||||||
Other borrowed funds:
|
|
|
|
|
|
|
|
||||||||||||
Domestic offices
|
20
|
|
(3
|
)
|
17
|
|
|
(2
|
)
|
2
|
|
—
|
|
||||||
Foreign offices
|
—
|
|
1
|
|
1
|
|
|
1
|
|
(2
|
)
|
(1
|
)
|
||||||
Total other borrowed funds
|
20
|
|
(2
|
)
|
18
|
|
|
(1
|
)
|
—
|
|
(1
|
)
|
||||||
Commercial paper
|
8
|
|
16
|
|
24
|
|
|
—
|
|
3
|
|
3
|
|
||||||
Payables to customers and broker-dealers
|
2
|
|
50
|
|
52
|
|
|
4
|
|
1
|
|
5
|
|
||||||
Long-term debt
|
69
|
|
138
|
|
207
|
|
|
32
|
|
80
|
|
112
|
|
||||||
Total interest expense
|
$
|
122
|
|
$
|
515
|
|
$
|
637
|
|
|
$
|
34
|
|
$
|
103
|
|
$
|
137
|
|
Changes in net interest revenue
|
$
|
(194
|
)
|
$
|
360
|
|
$
|
166
|
|
|
$
|
(97
|
)
|
$
|
202
|
|
$
|
105
|
|
(a)
|
Changes which are solely due to balance changes or rate changes are allocated to such categories on the basis of the respective percentage changes in average balances and average rates. Changes in interest revenue or interest expense arising from the combination of rate and volume variances are allocated proportionately to rate and volume based on their relative absolute magnitudes.
|
Selected Quarterly Data (unaudited)
|
|
Selected Quarterly Data
|
Quarter ended
|
||||||||||||||||||||||||
(dollar amounts in millions,
except per share amounts)
|
2017
|
|
2016
|
||||||||||||||||||||||
Dec. 31
|
|
Sept. 30
|
|
June 30
|
|
March 31
|
|
|
Dec. 31
|
|
Sept. 30
|
|
June 30
|
|
March 31
|
|
|||||||||
Consolidated income statement
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total fee and other revenue
|
$
|
2,860
|
|
$
|
3,167
|
|
$
|
3,120
|
|
$
|
3,018
|
|
|
$
|
2,954
|
|
$
|
3,150
|
|
$
|
2,999
|
|
$
|
2,970
|
|
Income (loss) from consolidated investment management funds
|
17
|
|
10
|
|
10
|
|
33
|
|
|
5
|
|
17
|
|
10
|
|
(6
|
)
|
||||||||
Net interest revenue
|
851
|
|
839
|
|
826
|
|
792
|
|
|
831
|
|
774
|
|
767
|
|
766
|
|
||||||||
Total revenue
|
3,728
|
|
4,016
|
|
3,956
|
|
3,843
|
|
|
3,790
|
|
3,941
|
|
3,776
|
|
3,730
|
|
||||||||
Provision for credit losses
|
(6
|
)
|
(6
|
)
|
(7
|
)
|
(5
|
)
|
|
7
|
|
(19
|
)
|
(9
|
)
|
10
|
|
||||||||
Noninterest expense
|
3,006
|
|
2,654
|
|
2,655
|
|
2,642
|
|
|
2,631
|
|
2,643
|
|
2,620
|
|
2,629
|
|
||||||||
Income before taxes
|
728
|
|
1,368
|
|
1,308
|
|
1,206
|
|
|
1,152
|
|
1,317
|
|
1,165
|
|
1,091
|
|
||||||||
(Benefit) provision for income taxes
|
(453
|
)
|
348
|
|
332
|
|
269
|
|
|
280
|
|
324
|
|
290
|
|
283
|
|
||||||||
Net income
|
1,181
|
|
1,020
|
|
976
|
|
937
|
|
|
872
|
|
993
|
|
875
|
|
808
|
|
||||||||
Net (income) loss attributable to noncontrolling interests
|
(6
|
)
|
(2
|
)
|
(1
|
)
|
(15
|
)
|
|
(2
|
)
|
(6
|
)
|
(2
|
)
|
9
|
|
||||||||
Net income applicable to shareholders of The Bank of New York Mellon Corporation
|
1,175
|
|
1,018
|
|
975
|
|
922
|
|
|
870
|
|
987
|
|
873
|
|
817
|
|
||||||||
Preferred stock dividends
|
(49
|
)
|
(35
|
)
|
(49
|
)
|
(42
|
)
|
|
(48
|
)
|
(13
|
)
|
(48
|
)
|
(13
|
)
|
||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation
|
$
|
1,126
|
|
$
|
983
|
|
$
|
926
|
|
$
|
880
|
|
|
$
|
822
|
|
$
|
974
|
|
$
|
825
|
|
$
|
804
|
|
Basic earnings per common share
|
$
|
1.09
|
|
$
|
0.94
|
|
$
|
0.88
|
|
$
|
0.83
|
|
|
$
|
0.77
|
|
$
|
0.90
|
|
$
|
0.76
|
|
$
|
0.73
|
|
Diluted earnings per common share
|
1.08
|
|
0.94
|
|
0.88
|
|
0.83
|
|
|
0.77
|
|
0.90
|
|
0.75
|
|
0.73
|
|
||||||||
Average balances
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest-bearing deposits with banks
|
$
|
89,029
|
|
$
|
86,329
|
|
$
|
84,148
|
|
$
|
80,757
|
|
|
$
|
77,119
|
|
$
|
88,168
|
|
$
|
112,182
|
|
$
|
104,001
|
|
Securities
|
120,225
|
|
119,089
|
|
117,227
|
|
114,786
|
|
|
117,660
|
|
118,405
|
|
118,002
|
|
118,538
|
|
||||||||
Trading securities
|
2,723
|
|
2,359
|
|
2,455
|
|
2,254
|
|
|
2,288
|
|
2,176
|
|
2,152
|
|
3,320
|
|
||||||||
Loans
|
56,772
|
|
55,944
|
|
58,793
|
|
60,312
|
|
|
63,647
|
|
61,578
|
|
60,284
|
|
61,196
|
|
||||||||
Total interest-earning assets
|
297,166
|
|
291,841
|
|
289,496
|
|
283,421
|
|
|
287,947
|
|
296,703
|
|
318,433
|
|
310,678
|
|
||||||||
Assets of operations
|
350,129
|
|
344,966
|
|
341,607
|
|
335,080
|
|
|
343,138
|
|
350,190
|
|
372,974
|
|
363,245
|
|
||||||||
Total assets
|
350,786
|
|
345,709
|
|
342,515
|
|
336,200
|
|
|
344,142
|
|
351,230
|
|
374,220
|
|
364,554
|
|
||||||||
Deposits
|
216,874
|
|
212,658
|
|
216,222
|
|
213,375
|
|
|
227,948
|
|
236,728
|
|
249,155
|
|
244,961
|
|
||||||||
Long-term debt
|
28,245
|
|
28,138
|
|
27,398
|
|
25,882
|
|
|
24,986
|
|
23,930
|
|
22,838
|
|
21,556
|
|
||||||||
Preferred stock
|
3,542
|
|
3,542
|
|
3,542
|
|
3,542
|
|
|
3,542
|
|
3,284
|
|
2,552
|
|
2,552
|
|
||||||||
Total The Bank of New York Mellon Corporation common shareholders’ equity
|
36,952
|
|
36,780
|
|
35,862
|
|
34,965
|
|
|
35,171
|
|
35,767
|
|
35,827
|
|
35,252
|
|
||||||||
Net interest margin
|
1.14
|
%
|
1.15
|
%
|
1.14
|
%
|
1.13
|
%
|
|
1.16
|
%
|
1.05
|
%
|
0.97
|
%
|
0.99
|
%
|
||||||||
Annualized return on common equity
(a)
|
12.1
|
%
|
10.6
|
%
|
10.4
|
%
|
10.2
|
%
|
|
9.3
|
%
|
10.8
|
%
|
9.3
|
%
|
9.2
|
%
|
||||||||
Pre-tax operating margin
|
20
|
%
|
34
|
%
|
33
|
%
|
31
|
%
|
|
30
|
%
|
33
|
%
|
31
|
%
|
29
|
%
|
||||||||
Common stock data
(a)
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Market price per share range:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
High
|
$
|
55.40
|
|
$
|
54.59
|
|
$
|
51.59
|
|
$
|
48.96
|
|
|
$
|
49.54
|
|
$
|
42.02
|
|
$
|
42.61
|
|
$
|
40.29
|
|
Low
|
50.53
|
|
50.15
|
|
45.89
|
|
43.85
|
|
|
38.68
|
|
36.50
|
|
35.44
|
|
32.20
|
|
||||||||
Average
|
53.27
|
|
52.48
|
|
47.83
|
|
46.77
|
|
|
45.10
|
|
39.94
|
|
39.78
|
|
36.26
|
|
||||||||
Period end close
|
53.86
|
|
53.02
|
|
51.02
|
|
47.23
|
|
|
47.38
|
|
39.88
|
|
38.85
|
|
36.83
|
|
||||||||
Cash dividends per common share
|
0.24
|
|
0.24
|
|
0.19
|
|
0.19
|
|
|
0.19
|
|
0.19
|
|
0.17
|
|
0.17
|
|
||||||||
Market capitalization
(b)
|
54,584
|
|
54,294
|
|
52,712
|
|
49,113
|
|
|
49,630
|
|
42,167
|
|
41,479
|
|
39,669
|
|
(a)
|
At
Dec. 31, 2017
, there were
29,472
shareholders registered with our stock transfer agent, compared with
28,015
at
Dec. 31, 2016
and
29,136
at
Dec. 31, 2015
. In addition, there were
45,015
of BNY Mellon’s current and former employees at
Dec. 31, 2017
who participate in BNY Mellon’s 401(k) Retirement Savings Plan. All shares of BNY Mellon’s common stock held by the Plan for its participants are registered in the name of The Bank of New York Mellon Corporation, as trustee.
|
(b)
|
At period end.
|
Forward-looking Statements
|
|
Forward-looking Statements
(continued)
|
|
Acronyms
|
|
ABS
|
Asset-backed security
|
APAC
|
Asia-Pacific region
|
ASC
|
Accounting Standards Codification
|
ASU
|
Accounting Standards Update
|
AUC/A
|
Assets under custody and/or administration
|
AUM
|
Assets under management
|
BCBS
|
Basel Committee on Banking Supervision
|
BHCs
|
Bank holding companies
|
bps
|
basis points
|
CCAR
|
Comprehensive Capital Analysis and Review
|
CD
|
Certificates of deposit
|
CET1
|
Common Equity Tier 1 capital
|
CFTC
|
Commodity Futures Trading Commission
|
CLO
|
Collateralized loan obligation
|
CVA
|
Credit valuation adjustment
|
DVA
|
Debit valuation adjustment
|
EMEA
|
Europe, the Middle East and Africa
|
ERISA
|
Employee Retirement Income Security Act of 1974
|
ESOP
|
Employee Stock Ownership Plan
|
EVE
|
Economic Value of Equity
|
FASB
|
Financial Accounting Standards Board
|
FCA
|
Financial Conduct Authority
|
FDIC
|
Federal Deposit Insurance Corporation
|
FHC
|
Financial holding company
|
FINRA
|
Financial Industry Regulatory Authority, Inc.
|
FTE
|
Fully taxable equivalent
|
GAAP
|
Generally accepted accounting principles
|
G-SIBs
|
Global systemically important banks
|
HQLA
|
High-quality liquid assets
|
IHC
|
Intermediate Holding Company
|
LIBOR
|
London Interbank Offered Rate
|
|
|
LCR
|
Liquidity coverage ratio
|
LTD
|
External eligible long-term debt
|
M&I
|
Merger and integration
|
MBS
|
Mortgage-backed security
|
MMF
|
Money market funds
|
N/A
|
Not applicable or Not available
|
NAV
|
Net asset value
|
N/M
|
Not meaningful
|
NSFR
|
Net stable funding ratio
|
NYSE
|
New York Stock Exchange
|
OCC
|
Office of the Comptroller of the Currency
|
OCI
|
Other comprehensive income
|
OTC
|
Over-the-counter
|
OTTI
|
Other-than-temporary impairment
|
PRA
|
Prudential Regulation Authority
|
PSUs
|
Performance units
|
REIT
|
Real estate investment trust
|
RMBS
|
Residential mortgage-backed security
|
RSUs
|
Restricted stock units
|
RWAs
|
Risk-weighted assets
|
S&P
|
Standard & Poor’s
|
SBIC
|
Small Business Investment Company
|
SBLC
|
Standby letters of credit
|
SEC
|
Securities and Exchange Commission
|
SIFIs
|
Systemically important financial institutions
|
SLR
|
Supplementary Leverage Ratio
|
TDR
|
Troubled debt restructuring
|
TLAC
|
Total loss-absorbing capacity
|
VaR
|
Value-at-risk
|
VIE
|
Variable interest entity
|
VME
|
Voting model entity
|
Glossary
|
|
Glossary
(continued)
|
|
Glossary
(continued)
|
|
Glossary
(continued)
|
|
Report of Management on Internal Control Over Financial Reporting
|
|
Report of Independent Registered Public Accounting Firm
|
|
Report of Independent Registered Public Accounting Firm
(continued)
|
|
Item 1. Financial Statements
|
|
The Bank of New York Mellon Corporation (and its subsidiaries)
|
|
|
Year ended Dec. 31,
|
||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Fee and other revenue
|
|
|
|
||||||
Investment services fees:
|
|
|
|
||||||
Asset servicing
|
$
|
4,383
|
|
$
|
4,244
|
|
$
|
4,187
|
|
Clearing services
|
1,553
|
|
1,404
|
|
1,375
|
|
|||
Issuer services
|
977
|
|
1,026
|
|
978
|
|
|||
Treasury services
|
557
|
|
547
|
|
555
|
|
|||
Total investment services fees
|
7,470
|
|
7,221
|
|
7,095
|
|
|||
Investment management and performance fees
|
3,584
|
|
3,350
|
|
3,438
|
|
|||
Foreign exchange and other trading revenue
|
668
|
|
701
|
|
768
|
|
|||
Financing-related fees
|
216
|
|
219
|
|
220
|
|
|||
Distribution and servicing
|
160
|
|
166
|
|
162
|
|
|||
Investment and other income
|
64
|
|
341
|
|
316
|
|
|||
Total fee revenue
|
12,162
|
|
11,998
|
|
11,999
|
|
|||
Net securities gains — including other-than-temporary impairment
|
6
|
|
79
|
|
82
|
|
|||
Noncredit-related portion of other-than-temporary impairment (recognized in other comprehensive income)
|
3
|
|
4
|
|
(1
|
)
|
|||
Net securities gains
|
3
|
|
75
|
|
83
|
|
|||
Total fee and other revenue
|
12,165
|
|
12,073
|
|
12,082
|
|
|||
Operations of consolidated investment management funds
|
|
|
|
||||||
Investment income
|
74
|
|
35
|
|
115
|
|
|||
Interest of investment management fund note holders
|
4
|
|
9
|
|
29
|
|
|||
Income from consolidated investment management funds
|
70
|
|
26
|
|
86
|
|
|||
Net interest revenue
|
|
|
|
||||||
Interest revenue
|
4,382
|
|
3,575
|
|
3,326
|
|
|||
Interest expense
|
1,074
|
|
437
|
|
300
|
|
|||
Net interest revenue
|
3,308
|
|
3,138
|
|
3,026
|
|
|||
Total revenue
|
15,543
|
|
15,237
|
|
15,194
|
|
|||
Provision for credit losses
|
(24
|
)
|
(11
|
)
|
160
|
|
|||
Noninterest expense
|
|
|
|
||||||
Staff
|
5,972
|
|
5,733
|
|
5,837
|
|
|||
Professional, legal and other purchased services
|
1,274
|
|
1,185
|
|
1,230
|
|
|||
Software
|
744
|
|
647
|
|
627
|
|
|||
Net occupancy
|
569
|
|
590
|
|
600
|
|
|||
Distribution and servicing
|
419
|
|
405
|
|
381
|
|
|||
Sub-custodian
|
250
|
|
245
|
|
270
|
|
|||
Furniture and equipment
|
241
|
|
247
|
|
280
|
|
|||
Business development
|
229
|
|
245
|
|
267
|
|
|||
Bank assessment charges
|
220
|
|
219
|
|
157
|
|
|||
Other
|
724
|
|
721
|
|
804
|
|
|||
Amortization of intangible assets
|
209
|
|
237
|
|
261
|
|
|||
Merger and integration, litigation and restructuring charges
|
106
|
|
49
|
|
85
|
|
|||
Total noninterest expense
|
10,957
|
|
10,523
|
|
10,799
|
|
|||
Income
|
|
|
|
||||||
Income before income taxes
|
4,610
|
|
4,725
|
|
4,235
|
|
|||
Provision for income taxes
|
496
|
|
1,177
|
|
1,013
|
|
|||
Net income
|
4,114
|
|
3,548
|
|
3,222
|
|
|||
Net (income) attributable to noncontrolling interests (includes $(33), $(10) and $(68) related to consolidated investment management funds, respectively)
|
(24
|
)
|
(1
|
)
|
(64
|
)
|
|||
Net income applicable to shareholders of The Bank of New York Mellon Corporation
|
4,090
|
|
3,547
|
|
3,158
|
|
|||
Preferred stock dividends
|
(175
|
)
|
(122
|
)
|
(105
|
)
|
|||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation
|
$
|
3,915
|
|
$
|
3,425
|
|
$
|
3,053
|
|
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
|
|
||||||||
Year ended Dec. 31,
|
|||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation
|
$
|
3,915
|
|
$
|
3,425
|
|
$
|
3,053
|
|
Less: Earnings allocated to participating securities
(a)
|
43
|
|
52
|
|
43
|
|
|||
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
|
$
|
3,872
|
|
$
|
3,373
|
|
$
|
3,010
|
|
Average common shares and equivalents outstanding of The Bank of New York Mellon Corporation
(a)
|
|
|||||
Year ended Dec. 31,
|
||||||
(in thousands)
|
2017
|
|
2016
|
|
2015
|
|
Basic
|
1,034,281
|
|
1,066,286
|
|
1,104,719
|
|
Common stock equivalents
|
13,030
|
|
15,672
|
|
17,290
|
|
Less: Participating securities
|
(7,021
|
)
|
(9,945
|
)
|
(9,498
|
)
|
Diluted
|
1,040,290
|
|
1,072,013
|
|
1,112,511
|
|
|
|
|
|
|||
Anti-dilutive securities
(b)
|
12,383
|
|
31,695
|
|
28,736
|
|
(a)
|
Beginning in the third quarter of 2017, vested stock awards to retirement eligible employees are included in common shares outstanding for earnings per share purposes. This change resulted in a de minimis increase to both average basic and average diluted shares outstanding.
|
(b)
|
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.
|
(c)
|
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)
|
|
Year ended Dec. 31,
|
||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Net income
|
$
|
4,114
|
|
$
|
3,548
|
|
$
|
3,222
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
||||||
Foreign currency translation adjustments
|
853
|
|
(850
|
)
|
(599
|
)
|
|||
Unrealized gain (loss) on assets available-for-sale:
|
|
|
|
||||||
Unrealized gain (loss) arising during the period
|
153
|
|
(242
|
)
|
(363
|
)
|
|||
Reclassification adjustment
|
(3
|
)
|
(49
|
)
|
(52
|
)
|
|||
Total unrealized gain (loss) on assets available-for-sale
|
150
|
|
(291
|
)
|
(415
|
)
|
|||
Defined benefit plans:
|
|
|
|
||||||
Net gain (loss) arising during the period
|
342
|
|
(108
|
)
|
(65
|
)
|
|||
Foreign exchange adjustment
|
1
|
|
—
|
|
—
|
|
|||
Amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost
|
68
|
|
57
|
|
69
|
|
|||
Total defined benefit plans
|
411
|
|
(51
|
)
|
4
|
|
|||
Net unrealized gain (loss) on cash flow hedges
|
9
|
|
(4
|
)
|
8
|
|
|||
Total other comprehensive income (loss), net of tax
(a)
|
1,423
|
|
(1,196
|
)
|
(1,002
|
)
|
|||
Total comprehensive income
|
5,537
|
|
2,352
|
|
2,220
|
|
|||
Net (income) loss attributable to noncontrolling interests
|
(24
|
)
|
(1
|
)
|
(64
|
)
|
|||
Other comprehensive (income) loss attributable to noncontrolling interests
|
(15
|
)
|
31
|
|
36
|
|
|||
Comprehensive income applicable to shareholders of The Bank of New York Mellon Corporation
|
$
|
5,498
|
|
$
|
2,382
|
|
$
|
2,192
|
|
(a)
|
Other comprehensive income (loss) attributable to The Bank of New York Mellon Corporation shareholders was
$1,408 million
for the
year ended Dec. 31, 2017
,
$(1,165) million
for the
year ended Dec. 31, 2016
and
$(966) million
for the
year ended Dec. 31, 2015
.
|
The Bank of New York Mellon Corporation (and its subsidiaries)
|
|
Dec. 31,
|
|||||
(dollars in millions, except per share amounts)
|
2017
|
|
2016
|
|
||
Assets
|
|
|
||||
Cash and due from:
|
|
|
||||
Banks
|
$
|
5,382
|
|
$
|
4,822
|
|
Interest-bearing deposits with the Federal Reserve and other central banks
|
91,510
|
|
58,041
|
|
||
Interest-bearing deposits with banks
|
11,979
|
|
15,086
|
|
||
Federal funds sold and securities purchased under resale agreements
|
28,135
|
|
25,801
|
|
||
Securities:
|
|
|
|
|||
Held-to-maturity (fair value of $40,512 and $40,669)
|
40,827
|
|
40,905
|
|
||
Available-for-sale
|
79,543
|
|
73,822
|
|
||
Total securities
|
120,370
|
|
114,727
|
|
||
Trading assets
|
6,022
|
|
5,733
|
|
||
Loans
|
61,540
|
|
64,458
|
|
||
Allowance for loan losses
|
(159
|
)
|
(169
|
)
|
||
Net loans
|
61,381
|
|
64,289
|
|
||
Premises and equipment
|
1,634
|
|
1,303
|
|
||
Accrued interest receivable
|
610
|
|
568
|
|
||
Goodwill
|
17,564
|
|
17,316
|
|
||
Intangible assets
|
3,411
|
|
3,598
|
|
||
Other assets (includes $791 and $1,339, at fair value)
|
23,029
|
|
20,954
|
|
||
Subtotal assets of operations
|
371,027
|
|
332,238
|
|
||
Assets of consolidated investment management funds, at fair value
|
731
|
|
1,231
|
|
||
Total assets
|
$
|
371,758
|
|
$
|
333,469
|
|
Liabilities
|
|
|
|
|||
Deposits:
|
|
|
|
|||
Noninterest-bearing (principally U.S. offices)
|
$
|
82,716
|
|
$
|
78,342
|
|
Interest-bearing deposits in U.S. offices
|
52,294
|
|
52,049
|
|
||
Interest-bearing deposits in non-U.S. offices
|
109,312
|
|
91,099
|
|
||
Total deposits
|
244,322
|
|
221,490
|
|
||
Federal funds purchased and securities sold under repurchase agreements
|
15,163
|
|
9,989
|
|
||
Trading liabilities
|
3,984
|
|
4,389
|
|
||
Payables to customers and broker-dealers
|
20,184
|
|
20,987
|
|
||
Commercial paper
|
3,075
|
|
—
|
|
||
Other borrowed funds
|
3,028
|
|
754
|
|
||
Accrued taxes and other expenses
|
6,225
|
|
5,867
|
|
||
Other liabilities (including allowance for lending-related commitments of $102 and $112, also includes $800 and $597, at fair value)
|
6,050
|
|
5,635
|
|
||
Long-term debt (includes $367 and $363, at fair value)
|
27,979
|
|
24,463
|
|
||
Subtotal liabilities of operations
|
330,010
|
|
293,574
|
|
||
Liabilities of consolidated investment management funds, at fair value
|
2
|
|
315
|
|
||
Total liabilities
|
330,012
|
|
293,889
|
|
||
Temporary equity
|
|
|
|
|||
Redeemable noncontrolling interests
|
179
|
|
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 1,354,163,581 and 1,333,706,427 shares
|
14
|
|
13
|
|
||
Additional paid-in capital
|
26,665
|
|
25,962
|
|
||
Retained earnings
|
25,635
|
|
22,621
|
|
||
Accumulated other comprehensive loss, net of tax
|
(2,357
|
)
|
(3,765
|
)
|
||
Less: Treasury stock of 340,721,136 and 286,218,126 common shares, at cost
|
(12,248
|
)
|
(9,562
|
)
|
||
Total The Bank of New York Mellon Corporation shareholders’ equity
|
41,251
|
|
38,811
|
|
||
Nonredeemable noncontrolling interests of consolidated investment management funds
|
316
|
|
618
|
|
||
Total permanent equity
|
41,567
|
|
39,429
|
|
||
Total liabilities, temporary equity and permanent equity
|
$
|
371,758
|
|
$
|
333,469
|
|
The Bank of New York Mellon Corporation (and its subsidiaries)
|
|
Year ended Dec. 31,
|
||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Operating activities
|
|
|
|
||||||
Net income
|
$
|
4,114
|
|
$
|
3,548
|
|
$
|
3,222
|
|
Net (income) loss attributable to noncontrolling interests
|
(24
|
)
|
(1
|
)
|
(64
|
)
|
|||
Net income applicable to shareholders of The Bank of New York Mellon Corporation
|
4,090
|
|
3,547
|
|
3,158
|
|
|||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||||
Provision for credit losses
|
(24
|
)
|
(11
|
)
|
160
|
|
|||
Pension plan contributions
|
(114
|
)
|
(108
|
)
|
(70
|
)
|
|||
Depreciation and amortization
|
1,474
|
|
1,502
|
|
1,457
|
|
|||
Deferred tax expense (benefit)
|
133
|
|
(126
|
)
|
47
|
|
|||
Net securities (gains)
|
(3
|
)
|
(75
|
)
|
(83
|
)
|
|||
Change in trading assets and liabilities
|
(694
|
)
|
1,522
|
|
(414
|
)
|
|||
Originations of loans held-for-sale
|
—
|
|
(350
|
)
|
(1,106
|
)
|
|||
Proceeds from the sales of loans originated for sale
|
—
|
|
831
|
|
725
|
|
|||
Change in accruals and other, net
|
(221
|
)
|
(486
|
)
|
253
|
|
|||
Net cash provided by operating activities
|
4,641
|
|
6,246
|
|
4,127
|
|
|||
Investing activities
|
|
|
|
||||||
Change in interest-bearing deposits with banks
|
3,830
|
|
(327
|
)
|
4,225
|
|
|||
Change in interest-bearing deposits with the Federal Reserve and other central banks
|
(29,613
|
)
|
53,347
|
|
(16,521
|
)
|
|||
Purchases of securities held-to-maturity
|
(8,329
|
)
|
(6,673
|
)
|
(16,060
|
)
|
|||
Paydowns of securities held-to-maturity
|
4,448
|
|
4,907
|
|
3,698
|
|
|||
Maturities of securities held-to-maturity
|
3,992
|
|
3,738
|
|
1,222
|
|
|||
Purchases of securities available-for-sale
|
(26,151
|
)
|
(27,470
|
)
|
(33,785
|
)
|
|||
Sales of securities available-for-sale
|
6,001
|
|
7,580
|
|
19,016
|
|
|||
Paydowns of securities available-for-sale
|
9,129
|
|
8,826
|
|
8,776
|
|
|||
Maturities of securities available-for-sale
|
6,319
|
|
11,347
|
|
14,689
|
|
|||
Net change in loans
|
2,794
|
|
(1,483
|
)
|
(4,615
|
)
|
|||
Sales of loans and other real estate
|
392
|
|
173
|
|
362
|
|
|||
Change in federal funds sold and securities purchased under resale agreements
|
(2,334
|
)
|
(1,407
|
)
|
(4,071
|
)
|
|||
Net change in seed capital investments
|
(124
|
)
|
(114
|
)
|
287
|
|
|||
Purchases of premises and equipment/capitalized software
|
(1,197
|
)
|
(825
|
)
|
(601
|
)
|
|||
Proceeds from the sale of premises and equipment
|
—
|
|
65
|
|
—
|
|
|||
Acquisitions, net of cash
|
—
|
|
(38
|
)
|
(9
|
)
|
|||
Dispositions, net of cash
|
—
|
|
1
|
|
17
|
|
|||
Other, net
|
(207
|
)
|
(444
|
)
|
3,583
|
|
|||
Net cash (used for) provided by investing activities
|
(31,050
|
)
|
51,203
|
|
(19,787
|
)
|
|||
Financing activities
|
|
|
|
||||||
Change in deposits
|
17,069
|
|
(54,738
|
)
|
11,890
|
|
|||
Change in federal funds purchased and securities sold under repurchase agreements
|
5,174
|
|
(5,013
|
)
|
3,533
|
|
|||
Change in payables to customers and broker-dealers
|
(813
|
)
|
(911
|
)
|
719
|
|
|||
Change in other borrowed funds
|
1,852
|
|
225
|
|
(394
|
)
|
|||
Change in commercial paper
|
3,075
|
|
—
|
|
—
|
|
|||
Net proceeds from the issuance of long-term debt
|
4,738
|
|
6,229
|
|
4,986
|
|
|||
Repayments of long-term debt
|
(1,046
|
)
|
(2,953
|
)
|
(3,659
|
)
|
|||
Proceeds from the exercise of stock options
|
431
|
|
438
|
|
326
|
|
|||
Issuance of common stock
|
34
|
|
27
|
|
26
|
|
|||
Issuance of preferred stock
|
—
|
|
990
|
|
990
|
|
|||
Treasury stock acquired
|
(2,686
|
)
|
(2,398
|
)
|
(2,355
|
)
|
|||
Common cash dividends paid
|
(901
|
)
|
(778
|
)
|
(760
|
)
|
|||
Preferred cash dividends paid
|
(175
|
)
|
(122
|
)
|
(105
|
)
|
|||
Other, net
|
28
|
|
(46
|
)
|
(12
|
)
|
|||
Net cash provided by (used for) financing activities
|
26,780
|
|
(59,050
|
)
|
15,185
|
|
|||
Effect of exchange rate changes on cash
|
189
|
|
(114
|
)
|
42
|
|
|||
Change in cash and due from banks
|
|
|
|
||||||
Change in cash and due from banks
|
560
|
|
(1,715
|
)
|
(433
|
)
|
|||
Cash and due from banks at beginning of period
|
4,822
|
|
6,537
|
|
6,970
|
|
|||
Cash and due from banks at end of period
|
$
|
5,382
|
|
$
|
4,822
|
|
$
|
6,537
|
|
Supplemental disclosures
|
|
|
|
||||||
Interest paid
|
$
|
1,033
|
|
$
|
406
|
|
$
|
295
|
|
Income taxes paid
|
498
|
|
1,010
|
|
1,015
|
|
|||
Income taxes refunded
|
20
|
|
307
|
|
901
|
|
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
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
56
|
|
|||||||||
Redemption of subsidiary shares from noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(70
|
)
|
|||||||||
Other net changes in noncontrolling interests
|
—
|
|
—
|
|
(35
|
)
|
—
|
|
—
|
|
—
|
|
(335
|
)
|
(370
|
)
|
|
36
|
|
|||||||||
Net income (loss)
|
—
|
|
—
|
|
—
|
|
4,090
|
|
—
|
|
—
|
|
33
|
|
4,123
|
|
|
(9
|
)
|
|||||||||
Other comprehensive income
|
—
|
|
—
|
|
—
|
|
—
|
|
1,408
|
|
—
|
|
—
|
|
1,408
|
|
|
15
|
|
|||||||||
Dividends:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Common stock at $0.86 per
share |
—
|
|
—
|
|
—
|
|
(901
|
)
|
—
|
|
—
|
|
—
|
|
(901
|
)
|
|
—
|
|
|||||||||
Preferred stock
|
—
|
|
—
|
|
—
|
|
(175
|
)
|
—
|
|
—
|
|
—
|
|
(175
|
)
|
|
—
|
|
|||||||||
Repurchase of common stock
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(2,686
|
)
|
—
|
|
(2,686
|
)
|
|
—
|
|
|||||||||
Common stock issued under:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Employee benefit plans
|
—
|
|
—
|
|
28
|
|
—
|
|
—
|
|
—
|
|
—
|
|
28
|
|
|
—
|
|
|||||||||
Direct stock purchase and dividend reinvestment plan
|
—
|
|
—
|
|
26
|
|
—
|
|
—
|
|
—
|
|
—
|
|
26
|
|
|
—
|
|
|||||||||
Stock awards and options exercised
|
—
|
|
1
|
|
684
|
|
—
|
|
—
|
|
—
|
|
—
|
|
685
|
|
|
—
|
|
|||||||||
Balance at Dec. 31, 2017
|
$
|
3,542
|
|
$
|
14
|
|
$
|
26,665
|
|
$
|
25,635
|
|
$
|
(2,357
|
)
|
$
|
(12,248
|
)
|
$
|
316
|
|
$
|
41,567
|
|
(a)
|
$
|
179
|
|
(a)
|
Includes total The Bank of New York Mellon Corporation common shareholders’ equity of
$35,269 million
at
Dec. 31, 2016
and
$37,709 million
at
Dec. 31, 2017
.
|
|
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 amounts) |
Preferred stock
|
|
Common
stock |
|
Additional
paid-in capital |
|
Retained
earnings |
|
Accumulated
other comprehensive (loss) income, net of tax |
|
Treasury
stock |
|
||||||||||||||||
Balance at Dec. 31, 2015
|
$
|
2,552
|
|
$
|
13
|
|
$
|
25,262
|
|
$
|
19,974
|
|
$
|
(2,600
|
)
|
$
|
(7,164
|
)
|
$
|
738
|
|
$
|
38,775
|
|
(a)
|
$
|
200
|
|
Shares issued to shareholders of noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
55
|
|
|||||||||
Redemption of subsidiary shares from noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(102
|
)
|
|||||||||
Other net changes in noncontrolling interests
|
—
|
|
—
|
|
(24
|
)
|
—
|
|
—
|
|
—
|
|
(130
|
)
|
(154
|
)
|
|
38
|
|
|||||||||
Net income (loss)
|
—
|
|
—
|
|
—
|
|
3,547
|
|
—
|
|
—
|
|
10
|
|
3,557
|
|
|
(9
|
)
|
|||||||||
Other comprehensive (loss)
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,165
|
)
|
—
|
|
—
|
|
(1,165
|
)
|
|
(31
|
)
|
|||||||||
Dividends:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Common stock at $0.72 per
share |
—
|
|
—
|
|
—
|
|
(778
|
)
|
—
|
|
—
|
|
—
|
|
(778
|
)
|
|
—
|
|
|||||||||
Preferred stock
|
—
|
|
—
|
|
—
|
|
(122
|
)
|
—
|
|
—
|
|
—
|
|
(122
|
)
|
|
—
|
|
|||||||||
Repurchase of common stock
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(2,398
|
)
|
—
|
|
(2,398
|
)
|
|
—
|
|
|||||||||
Common stock issued under:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Employee benefit plans
|
—
|
|
—
|
|
27
|
|
—
|
|
—
|
|
—
|
|
—
|
|
27
|
|
|
—
|
|
|||||||||
Direct stock purchase and dividend reinvestment plan
|
—
|
|
—
|
|
21
|
|
—
|
|
—
|
|
—
|
|
—
|
|
21
|
|
|
—
|
|
|||||||||
Preferred stock issued
|
990
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
990
|
|
|
—
|
|
|||||||||
Stock awards and options exercised
|
—
|
|
—
|
|
676
|
|
—
|
|
—
|
|
—
|
|
—
|
|
676
|
|
|
—
|
|
|||||||||
Balance at Dec. 31, 2016
|
$
|
3,542
|
|
$
|
13
|
|
$
|
25,962
|
|
$
|
22,621
|
|
$
|
(3,765
|
)
|
$
|
(9,562
|
)
|
$
|
618
|
|
$
|
39,429
|
|
(a)
|
$
|
151
|
|
(a)
|
Includes total The Bank of New York Mellon Corporation common shareholders’ equity of
$35,485 million
at
Dec. 31, 2015
and
$35,269 million
at
Dec. 31, 2016
.
|
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 amounts)
|
Preferred stock
|
|
Common
stock
|
|
Additional
paid-in
capital
|
|
Retained
earnings
|
|
Accumulated
other
comprehensive
income (loss),
net of tax
|
|
Treasury
stock
|
|
||||||||||||||||
Balance at Dec. 31, 2014
|
$
|
1,562
|
|
$
|
13
|
|
$
|
24,626
|
|
$
|
17,683
|
|
$
|
(1,634
|
)
|
$
|
(4,809
|
)
|
$
|
1,033
|
|
$
|
38,474
|
|
(a)
|
$
|
229
|
|
Adjustment for the cumulative effect of applying ASU 2015-02 for the consolidation of a legal entity
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
602
|
|
602
|
|
|
—
|
|
|||||||||
Adjustment for the cumulative effect of applying ASU 2015-02 for the deconsolidation of a legal entity
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(866
|
)
|
(866
|
)
|
|
—
|
|
|||||||||
Adjusted balance at Jan. 1, 2015
|
1,562
|
|
13
|
|
24,626
|
|
17,683
|
|
(1,634
|
)
|
(4,809
|
)
|
769
|
|
38,210
|
|
|
229
|
|
|||||||||
Shares issued to shareholders of noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
48
|
|
|||||||||
Redemption of subsidiary shares from noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(92
|
)
|
|||||||||
Other net changes in noncontrolling interests
|
—
|
|
—
|
|
(26
|
)
|
—
|
|
—
|
|
—
|
|
(73
|
)
|
(99
|
)
|
|
29
|
|
|||||||||
Net income
|
—
|
|
—
|
|
—
|
|
3,158
|
|
—
|
|
—
|
|
68
|
|
3,226
|
|
|
(4
|
)
|
|||||||||
Other comprehensive (loss)
|
—
|
|
—
|
|
—
|
|
—
|
|
(966
|
)
|
—
|
|
(26
|
)
|
(992
|
)
|
|
(10
|
)
|
|||||||||
Dividends:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Common stock at $0.68 per
share |
—
|
|
—
|
|
—
|
|
(762
|
)
|
—
|
|
—
|
|
—
|
|
(762
|
)
|
|
—
|
|
|||||||||
Preferred stock
|
—
|
|
—
|
|
—
|
|
(105
|
)
|
—
|
|
—
|
|
—
|
|
(105
|
)
|
|
—
|
|
|||||||||
Repurchase of common stock
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(2,355
|
)
|
—
|
|
(2,355
|
)
|
|
—
|
|
|||||||||
Common stock issued under:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Employee benefit plans
|
—
|
|
—
|
|
25
|
|
—
|
|
—
|
|
—
|
|
—
|
|
25
|
|
|
—
|
|
|||||||||
Direct stock purchase and dividend reinvestment plan
|
—
|
|
—
|
|
21
|
|
—
|
|
—
|
|
—
|
|
—
|
|
21
|
|
|
—
|
|
|||||||||
Preferred stock issued
|
990
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
990
|
|
|
—
|
|
|||||||||
Stock awards and options exercised
|
—
|
|
—
|
|
616
|
|
—
|
|
—
|
|
—
|
|
—
|
|
616
|
|
|
—
|
|
|||||||||
Balance at Dec. 31, 2015
|
$
|
2,552
|
|
$
|
13
|
|
$
|
25,262
|
|
$
|
19,974
|
|
$
|
(2,600
|
)
|
$
|
(7,164
|
)
|
$
|
738
|
|
$
|
38,775
|
|
(a)
|
$
|
200
|
|
(a)
|
Includes total The Bank of New York Mellon Corporation common shareholders’ equity of
$35,879 million
at
Dec. 31, 2014
and
$35,485 million
at
Dec. 31, 2015
.
|
Notes to Consolidated Financial Statements
|
|
•
|
investment management;
|
•
|
custody;
|
•
|
foreign exchange;
|
•
|
fund services;
|
•
|
broker-dealer services;
|
•
|
securities finance;
|
•
|
collateral and liquidity services;
|
•
|
clearing services
|
•
|
depositary receipts;
|
•
|
corporate trust;
|
•
|
global payments;
|
•
|
trade finance; and
|
•
|
cash management.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Equity method investments at Dec. 31, 2017
|
||||||
(dollars in millions)
|
Percentage ownership
|
|
Book value
|
|
||
CIBC Mellon
|
50.0
|
%
|
|
$
|
580
|
|
Siguler Guff
|
20.0
|
%
|
|
$
|
246
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
•
|
do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support; or
|
•
|
lack one or more of the following characteristics of a controlling financial interest:
|
•
|
the power, through voting rights or similar rights, to direct the activities of an entity that most significantly impact the entity’s economic performance;
|
•
|
the obligation to absorb the expected losses of the entity; and
|
•
|
the right to receive the expected residual returns of the entity.
|
•
|
The length of time and the extent to which the fair value has been less than the amortized cost basis;
|
•
|
Whether management has an intent to sell the security;
|
•
|
Whether the decline in fair value is attributable to specific adverse conditions affecting a particular investment;
|
Notes to Consolidated Financial Statements
(continued)
|
|
•
|
Whether the decline in fair value is attributable to specific conditions, such as conditions in an industry or in a geographic area;
|
•
|
Whether a debt security has been downgraded by a rating agency;
|
•
|
Whether a debt security exhibits cash flow deterioration; and
|
•
|
For each non-agency RMBS, we compare the remaining credit enhancement that protects the individual security from losses against the projected losses of principal and/or interest expected to come from the underlying mortgage collateral, to determine whether such credit losses might directly impact the relevant security.
|
Notes to Consolidated Financial Statements
(continued)
|
|
•
|
an allowance for impaired credits of
$1 million
or greater;
|
•
|
an allowance for higher risk-rated credits and pass-rated credits; and
|
•
|
an allowance for residential mortgage loans.
|
Notes to Consolidated Financial Statements
(continued)
|
|
•
|
Nonperforming loans to total non-margin loans;
|
•
|
Criticized assets to total loans and lending-related commitments;
|
•
|
Borrower concentration; and
|
•
|
Significant concentrations in high risk industries and countries.
|
•
|
U.S. non-investment grade default rate;
|
•
|
Unemployment rate; and
|
•
|
Change in real gross domestic product.
|
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)
|
|
Securities at Dec. 31, 2017
|
Gross
unrealized
|
|
||||||||||
|
Amortized cost
|
|
Fair
value
|
|
||||||||
(in millions)
|
Gains
|
|
Losses
|
|
||||||||
Available-for-sale:
|
|
|
|
|
||||||||
U.S. Treasury
|
$
|
15,159
|
|
$
|
264
|
|
$
|
160
|
|
$
|
15,263
|
|
U.S. government agencies
|
917
|
|
1
|
|
10
|
|
908
|
|
||||
State and political subdivisions
|
2,949
|
|
31
|
|
23
|
|
2,957
|
|
||||
Agency RMBS
|
24,002
|
|
108
|
|
291
|
|
23,819
|
|
||||
Non-agency RMBS
|
454
|
|
36
|
|
3
|
|
487
|
|
||||
Other RMBS
|
152
|
|
3
|
|
6
|
|
149
|
|
||||
Commercial MBS
|
1,360
|
|
6
|
|
6
|
|
1,360
|
|
||||
Agency commercial MBS
|
8,793
|
|
36
|
|
67
|
|
8,762
|
|
||||
CLOs
|
2,898
|
|
12
|
|
1
|
|
2,909
|
|
||||
Other asset-backed securities
|
1,040
|
|
3
|
|
—
|
|
1,043
|
|
||||
Foreign covered bonds
|
2,520
|
|
18
|
|
9
|
|
2,529
|
|
||||
Corporate bonds
|
1,249
|
|
17
|
|
11
|
|
1,255
|
|
||||
Sovereign debt/sovereign guaranteed
|
12,405
|
|
175
|
|
23
|
|
12,557
|
|
||||
Other debt securities
|
3,494
|
|
9
|
|
12
|
|
3,491
|
|
||||
Money market funds
|
963
|
|
—
|
|
—
|
|
963
|
|
||||
Non-agency RMBS
(a)
|
811
|
|
281
|
|
1
|
|
1,091
|
|
||||
Total securities available-for-sale
(b)
|
$
|
79,166
|
|
$
|
1,000
|
|
$
|
623
|
|
$
|
79,543
|
|
Held-to-maturity:
|
|
|
|
|
||||||||
U.S. Treasury
|
$
|
9,792
|
|
$
|
6
|
|
$
|
56
|
|
$
|
9,742
|
|
U.S. government agencies
|
1,653
|
|
—
|
|
12
|
|
1,641
|
|
||||
State and political subdivisions
|
17
|
|
—
|
|
1
|
|
16
|
|
||||
Agency RMBS
|
26,208
|
|
51
|
|
332
|
|
25,927
|
|
||||
Non-agency RMBS
|
57
|
|
5
|
|
—
|
|
62
|
|
||||
Other RMBS
|
65
|
|
—
|
|
1
|
|
64
|
|
||||
Commercial MBS
|
6
|
|
—
|
|
—
|
|
6
|
|
||||
Agency commercial MBS
|
1,324
|
|
2
|
|
9
|
|
1,317
|
|
||||
Foreign covered bonds
|
84
|
|
2
|
|
—
|
|
86
|
|
||||
Sovereign debt/sovereign guaranteed
|
1,593
|
|
30
|
|
—
|
|
1,623
|
|
||||
Other debt securities
|
28
|
|
—
|
|
—
|
|
28
|
|
||||
Total securities held-to-maturity
|
$
|
40,827
|
|
$
|
96
|
|
$
|
411
|
|
$
|
40,512
|
|
Total securities
|
$
|
119,993
|
|
$
|
1,096
|
|
$
|
1,034
|
|
$
|
120,055
|
|
(a)
|
Previously included in the Grantor Trust. The Grantor Trust was dissolved in 2011.
|
(b)
|
Includes gross unrealized gains of
$50 million
and gross unrealized losses of
$144 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.
|
Securities at Dec. 31, 2015
|
Gross
unrealized |
|
||||||||||
|
Amortized cost
|
|
Fair
value
|
|
||||||||
(in millions)
|
Gains
|
|
Losses
|
|
||||||||
Available-for-sale:
|
|
|
|
|
||||||||
U.S. Treasury
|
$
|
12,693
|
|
$
|
175
|
|
$
|
36
|
|
$
|
12,832
|
|
U.S. government agencies
|
386
|
|
2
|
|
1
|
|
387
|
|
||||
State and political subdivisions
|
3,968
|
|
91
|
|
13
|
|
4,046
|
|
||||
Agency RMBS
|
23,549
|
|
239
|
|
287
|
|
23,501
|
|
||||
Non-agency RMBS
|
782
|
|
31
|
|
20
|
|
793
|
|
||||
Other RMBS
|
1,072
|
|
10
|
|
21
|
|
1,061
|
|
||||
Commercial MBS
|
1,400
|
|
8
|
|
16
|
|
1,392
|
|
||||
Agency commercial MBS
|
4,031
|
|
24
|
|
35
|
|
4,020
|
|
||||
CLOs
|
2,363
|
|
1
|
|
13
|
|
2,351
|
|
||||
Other asset-backed securities
|
2,909
|
|
1
|
|
17
|
|
2,893
|
|
||||
Foreign covered bonds
|
2,125
|
|
46
|
|
3
|
|
2,168
|
|
||||
Corporate bonds
|
1,740
|
|
26
|
|
14
|
|
1,752
|
|
||||
Sovereign debt/sovereign guaranteed
|
13,036
|
|
211
|
|
30
|
|
13,217
|
|
||||
Other debt securities
|
2,732
|
|
46
|
|
3
|
|
2,775
|
|
||||
Equity securities
|
3
|
|
1
|
|
—
|
|
4
|
|
||||
Money market funds
|
886
|
|
—
|
|
—
|
|
886
|
|
||||
Non-agency RMBS
(a)
|
1,435
|
|
362
|
|
8
|
|
1,789
|
|
||||
Total securities available-for-sale
(b)
|
$
|
75,110
|
|
$
|
1,274
|
|
$
|
517
|
|
$
|
75,867
|
|
Held-to-maturity:
|
|
|
|
|
||||||||
U.S. Treasury
|
$
|
11,326
|
|
$
|
25
|
|
$
|
51
|
|
$
|
11,300
|
|
U.S. government agencies
|
1,431
|
|
—
|
|
6
|
|
1,425
|
|
||||
State and political subdivisions
|
20
|
|
—
|
|
1
|
|
19
|
|
||||
Agency RMBS
|
26,036
|
|
134
|
|
205
|
|
25,965
|
|
||||
Non-agency RMBS
|
118
|
|
5
|
|
2
|
|
121
|
|
||||
Other RMBS
|
224
|
|
1
|
|
10
|
|
215
|
|
||||
Commercial MBS
|
9
|
|
—
|
|
—
|
|
9
|
|
||||
Agency commercial MBS
|
503
|
|
—
|
|
9
|
|
494
|
|
||||
Foreign covered bonds
|
76
|
|
—
|
|
—
|
|
76
|
|
||||
Sovereign debt/sovereign guaranteed
|
3,538
|
|
22
|
|
11
|
|
3,549
|
|
||||
Other debt securities
|
31
|
|
—
|
|
—
|
|
31
|
|
||||
Total securities held-to-maturity
|
$
|
43,312
|
|
$
|
187
|
|
$
|
295
|
|
$
|
43,204
|
|
Total securities
|
$
|
118,422
|
|
$
|
1,461
|
|
$
|
812
|
|
$
|
119,071
|
|
(a)
|
Previously included in the Grantor Trust. The Grantor Trust was dissolved in 2011.
|
(b)
|
Includes gross unrealized gains of
$84 million
and gross unrealized losses of
$248 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)
|
|
Net securities gains (losses)
|
|
|
|
||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Realized gross gains
|
$
|
47
|
|
$
|
86
|
|
$
|
90
|
|
Realized gross losses
|
(40
|
)
|
(4
|
)
|
(2
|
)
|
|||
Recognized gross impairments
|
(4
|
)
|
(7
|
)
|
(5
|
)
|
|||
Total net securities gains
|
$
|
3
|
|
$
|
75
|
|
$
|
83
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Temporarily impaired securities at Dec. 31, 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
|
$
|
7,429
|
|
$
|
131
|
|
|
$
|
2,175
|
|
$
|
29
|
|
|
$
|
9,604
|
|
$
|
160
|
|
U.S. government agencies
|
588
|
|
6
|
|
|
160
|
|
4
|
|
|
748
|
|
10
|
|
||||||
State and political subdivisions
|
732
|
|
3
|
|
|
518
|
|
20
|
|
|
1,250
|
|
23
|
|
||||||
Agency RMBS
|
8,567
|
|
66
|
|
|
5,834
|
|
225
|
|
|
14,401
|
|
291
|
|
||||||
Non-agency RMBS
|
13
|
|
—
|
|
|
137
|
|
3
|
|
|
150
|
|
3
|
|
||||||
Other RMBS
|
71
|
|
4
|
|
|
45
|
|
2
|
|
|
116
|
|
6
|
|
||||||
Commercial MBS
|
476
|
|
3
|
|
|
122
|
|
3
|
|
|
598
|
|
6
|
|
||||||
Agency commercial MBS
|
3,077
|
|
28
|
|
|
1,332
|
|
39
|
|
|
4,409
|
|
67
|
|
||||||
CLOs
|
260
|
|
1
|
|
|
—
|
|
—
|
|
|
260
|
|
1
|
|
||||||
Foreign covered bonds
|
953
|
|
7
|
|
|
116
|
|
2
|
|
|
1,069
|
|
9
|
|
||||||
Corporate bonds
|
274
|
|
2
|
|
|
288
|
|
9
|
|
|
562
|
|
11
|
|
||||||
Sovereign debt/sovereign guaranteed
|
1,880
|
|
12
|
|
|
559
|
|
11
|
|
|
2,439
|
|
23
|
|
||||||
Other debt securities
|
1,855
|
|
7
|
|
|
368
|
|
5
|
|
|
2,223
|
|
12
|
|
||||||
Non-agency RMBS
(a)
|
7
|
|
—
|
|
|
12
|
|
1
|
|
|
19
|
|
1
|
|
||||||
Total securities available-for-sale
(b)
|
$
|
26,182
|
|
$
|
270
|
|
|
$
|
11,666
|
|
$
|
353
|
|
|
$
|
37,848
|
|
$
|
623
|
|
Held-to-maturity:
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury
|
$
|
6,389
|
|
$
|
41
|
|
|
$
|
2,909
|
|
$
|
15
|
|
|
$
|
9,298
|
|
$
|
56
|
|
U.S. government agencies
|
791
|
|
4
|
|
|
850
|
|
8
|
|
|
1,641
|
|
12
|
|
||||||
State and political subdivisions
|
—
|
|
—
|
|
|
4
|
|
1
|
|
|
4
|
|
1
|
|
||||||
Agency RMBS
|
9,458
|
|
81
|
|
|
12,305
|
|
251
|
|
|
21,763
|
|
332
|
|
||||||
Other RMBS
|
—
|
|
—
|
|
|
50
|
|
1
|
|
|
50
|
|
1
|
|
||||||
Agency commercial MBS
|
737
|
|
7
|
|
|
60
|
|
2
|
|
|
797
|
|
9
|
|
||||||
Total securities held-to-maturity
|
$
|
17,375
|
|
$
|
133
|
|
|
$
|
16,178
|
|
$
|
278
|
|
|
$
|
33,553
|
|
$
|
411
|
|
Total temporarily impaired securities
|
$
|
43,557
|
|
$
|
403
|
|
|
$
|
27,844
|
|
$
|
631
|
|
|
$
|
71,401
|
|
$
|
1,034
|
|
(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
$144 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.
|
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
|
|
||||||
Foreign covered bonds
|
712
|
|
9
|
|
|
—
|
|
—
|
|
|
712
|
|
9
|
|
||||||
Corporate bonds
|
594
|
|
16
|
|
|
7
|
|
1
|
|
|
601
|
|
17
|
|
||||||
Sovereign debt/sovereign guaranteed
|
1,521
|
|
20
|
|
|
63
|
|
—
|
|
|
1,584
|
|
20
|
|
||||||
Other debt securities
|
742
|
|
10
|
|
|
50
|
|
—
|
|
|
792
|
|
10
|
|
||||||
Non-agency RMBS
(a)
|
25
|
|
—
|
|
|
47
|
|
9
|
|
|
72
|
|
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
|
|
||||||
Other RMBS
|
15
|
|
—
|
|
|
123
|
|
4
|
|
|
138
|
|
4
|
|
||||||
Agency commercial MBS
|
621
|
|
10
|
|
|
—
|
|
—
|
|
|
621
|
|
10
|
|
||||||
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 Dec. 31, 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
|
$
|
1,862
|
|
1.05
|
%
|
|
$
|
—
|
|
—
|
%
|
|
$
|
395
|
|
2.54
|
%
|
|
$
|
4,524
|
|
1.00
|
%
|
|
$
|
—
|
|
—
|
%
|
|
$
|
6,781
|
|
Over 1 through 5 years
|
7,048
|
|
1.75
|
|
|
263
|
|
1.75
|
|
|
1,567
|
|
3.20
|
|
|
12,414
|
|
0.99
|
|
|
—
|
|
—
|
|
|
21,292
|
|
||||||
Over 5 through 10 years
|
2,809
|
|
2.03
|
|
|
645
|
|
2.51
|
|
|
793
|
|
3.22
|
|
|
2,693
|
|
0.81
|
|
|
—
|
|
—
|
|
|
6,940
|
|
||||||
Over 10 years
|
3,544
|
|
3.11
|
|
|
—
|
|
—
|
|
|
202
|
|
2.55
|
|
|
201
|
|
1.64
|
|
|
—
|
|
—
|
|
|
3,947
|
|
||||||
Mortgage-backed securities
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
35,668
|
|
2.88
|
|
|
35,668
|
|
||||||
Asset-backed securities
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
3,952
|
|
2.41
|
|
|
3,952
|
|
||||||
Equity securities
(b)
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
963
|
|
—
|
|
|
963
|
|
||||||
Total
|
$
|
15,263
|
|
2.03
|
%
|
|
$
|
908
|
|
2.29
|
%
|
|
$
|
2,957
|
|
3.07
|
%
|
|
$
|
19,832
|
|
0.98
|
%
|
|
$
|
40,583
|
|
2.77
|
%
|
|
$
|
79,543
|
|
Securities held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
One year or less
|
$
|
5,064
|
|
0.97
|
%
|
|
$
|
531
|
|
1.07
|
%
|
|
$
|
—
|
|
—
|
%
|
|
$
|
710
|
|
0.60
|
%
|
|
$
|
—
|
|
—
|
%
|
|
$
|
6,305
|
|
Over 1 through 5 years
|
3,321
|
|
1.71
|
|
|
1,122
|
|
1.62
|
|
|
2
|
|
6.89
|
|
|
457
|
|
0.46
|
|
|
—
|
|
—
|
|
|
4,902
|
|
||||||
Over 5 through 10 years
|
1,407
|
|
1.92
|
|
|
—
|
|
—
|
|
|
1
|
|
6.84
|
|
|
538
|
|
0.85
|
|
|
—
|
|
—
|
|
|
1,946
|
|
||||||
Over 10 years
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
14
|
|
5.32
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
14
|
|
||||||
Mortgage-backed securities
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
27,660
|
|
2.80
|
|
|
27,660
|
|
||||||
Total
|
$
|
9,792
|
|
1.36
|
%
|
|
$
|
1,653
|
|
1.45
|
%
|
|
$
|
17
|
|
5.63
|
%
|
|
$
|
1,705
|
|
0.64
|
%
|
|
$
|
27,660
|
|
2.80
|
%
|
|
$
|
40,827
|
|
(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)
|
2017
|
|
2016
|
|
||
Beginning balance as of Jan. 1
|
$
|
88
|
|
$
|
91
|
|
Add: Initial OTTI credit losses
|
—
|
|
—
|
|
||
Subsequent OTTI credit losses
|
4
|
|
7
|
|
||
Less: Realized losses for securities sold
|
8
|
|
10
|
|
||
Ending balance as of Dec. 31
|
$
|
84
|
|
$
|
88
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Loans
|
Dec. 31,
|
|||||
(in millions)
|
2017
|
|
2016
|
|
||
Domestic:
|
|
|
||||
Commercial
|
$
|
2,744
|
|
$
|
2,286
|
|
Commercial real estate
|
4,900
|
|
4,639
|
|
||
Financial institutions
|
5,568
|
|
6,342
|
|
||
Lease financings
|
772
|
|
989
|
|
||
Wealth management loans and mortgages
|
16,420
|
|
15,555
|
|
||
Other residential mortgages
|
708
|
|
854
|
|
||
Overdrafts
|
963
|
|
1,055
|
|
||
Other
|
1,131
|
|
1,202
|
|
||
Margin loans
|
15,689
|
|
17,503
|
|
||
Total domestic
|
48,895
|
|
50,425
|
|
||
Foreign:
|
|
|
||||
Commercial
|
167
|
|
331
|
|
||
Commercial real estate
|
—
|
|
15
|
|
||
Financial institutions
|
7,483
|
|
8,347
|
|
||
Lease financings
|
527
|
|
736
|
|
||
Wealth management loans and mortgages
|
108
|
|
99
|
|
||
Other (primarily overdrafts)
|
4,264
|
|
4,418
|
|
||
Margin loans
|
96
|
|
87
|
|
||
Total foreign
|
12,645
|
|
14,033
|
|
||
Total loans
(a)
|
$
|
61,540
|
|
$
|
64,458
|
|
(a)
|
Net of unearned income of
$394 million
at
Dec. 31, 2017
and
$527 million
at
Dec. 31, 2016
primarily related to domestic and foreign lease financings.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Allowance for credit losses activity for the year ended Dec. 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
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
5
|
|
—
|
|
|
—
|
|
5
|
|
|||||||||
Net recoveries
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4
|
|
—
|
|
|
—
|
|
4
|
|
|||||||||
Provision
|
(5
|
)
|
3
|
|
(3
|
)
|
(5
|
)
|
(1
|
)
|
(12
|
)
|
—
|
|
|
(1
|
)
|
(24
|
)
|
|||||||||
Ending balance
|
$
|
77
|
|
$
|
76
|
|
$
|
23
|
|
$
|
8
|
|
$
|
22
|
|
$
|
20
|
|
$
|
—
|
|
|
$
|
35
|
|
$
|
261
|
|
Allowance for:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Loan losses
|
$
|
24
|
|
$
|
58
|
|
$
|
7
|
|
$
|
8
|
|
$
|
18
|
|
$
|
20
|
|
$
|
—
|
|
|
$
|
24
|
|
$
|
159
|
|
Lending-related commitments
|
53
|
|
18
|
|
16
|
|
—
|
|
4
|
|
—
|
|
—
|
|
|
11
|
|
102
|
|
|||||||||
Individually evaluated for impairment:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Loan balance
|
$
|
—
|
|
$
|
—
|
|
$
|
1
|
|
$
|
—
|
|
$
|
5
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
6
|
|
Allowance for loan losses
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
—
|
|
|
—
|
|
1
|
|
|||||||||
Collectively evaluated for impairment:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Loan balance
|
$
|
2,744
|
|
$
|
4,900
|
|
$
|
5,567
|
|
$
|
772
|
|
$
|
16,415
|
|
$
|
708
|
|
$
|
17,783
|
|
(a)
|
$
|
12,645
|
|
$
|
61,534
|
|
Allowance for loan losses
|
24
|
|
58
|
|
7
|
|
8
|
|
17
|
|
20
|
|
—
|
|
|
24
|
|
158
|
|
(a)
|
Includes
$963 million
of domestic overdrafts,
$15,689 million
of margin loans and
$1,131 million
of other loans at
Dec. 31, 2017
.
|
Allowance for credit losses activity for the year ended Dec. 31, 2016
|
|
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
|
|
$
|
59
|
|
$
|
31
|
|
$
|
15
|
|
$
|
19
|
|
$
|
34
|
|
$
|
—
|
|
|
$
|
35
|
|
$
|
275
|
|
Charge-offs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(2
|
)
|
—
|
|
|
—
|
|
(2
|
)
|
|||||||||
Recoveries
|
—
|
|
—
|
|
13
|
|
—
|
|
—
|
|
5
|
|
—
|
|
|
1
|
|
19
|
|
|||||||||
Net recoveries
|
—
|
|
—
|
|
13
|
|
—
|
|
—
|
|
3
|
|
—
|
|
|
1
|
|
17
|
|
|||||||||
Provision
|
—
|
|
14
|
|
(18
|
)
|
(2
|
)
|
4
|
|
(9
|
)
|
—
|
|
|
—
|
|
(11
|
)
|
|||||||||
Ending balance
|
$
|
82
|
|
$
|
73
|
|
$
|
26
|
|
$
|
13
|
|
$
|
23
|
|
$
|
28
|
|
$
|
—
|
|
|
$
|
36
|
|
$
|
281
|
|
Allowance for:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Loan losses
|
$
|
25
|
|
$
|
52
|
|
$
|
8
|
|
$
|
13
|
|
$
|
19
|
|
$
|
28
|
|
$
|
—
|
|
|
$
|
24
|
|
$
|
169
|
|
Lending-related commitments
|
57
|
|
21
|
|
18
|
|
—
|
|
4
|
|
—
|
|
—
|
|
|
12
|
|
112
|
|
|||||||||
Individually evaluated for impairment:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Loan balance
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
4
|
|
$
|
5
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
9
|
|
Allowance for loan losses
|
—
|
|
—
|
|
—
|
|
2
|
|
3
|
|
—
|
|
—
|
|
|
—
|
|
5
|
|
|||||||||
Collectively evaluated for impairment:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Loan balance
|
$
|
2,286
|
|
$
|
4,639
|
|
$
|
6,342
|
|
$
|
985
|
|
$
|
15,550
|
|
$
|
854
|
|
$
|
19,760
|
|
(a)
|
$
|
14,033
|
|
$
|
64,449
|
|
Allowance for loan losses
|
25
|
|
52
|
|
8
|
|
11
|
|
16
|
|
28
|
|
—
|
|
|
24
|
|
164
|
|
(a)
|
Includes
$1,055 million
of domestic overdrafts,
$17,503 million
of margin loans and
$1,202 million
of other loans at
Dec. 31, 2016
.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Allowance for credit losses activity for the year ended Dec. 31, 2015
|
|
Wealth management loans and mortgages
|
|
Other
residential
mortgages
|
|
All
other
|
|
|
Foreign
|
|
Total
|
|
||||||||||||||||
(in millions)
|
Commercial
|
|
Commercial
real estate
|
|
Financial
institutions
|
|
Lease
financings
|
|
|
|||||||||||||||||||
Beginning balance
|
$
|
60
|
|
$
|
50
|
|
$
|
31
|
|
$
|
32
|
|
$
|
22
|
|
$
|
41
|
|
$
|
—
|
|
|
$
|
44
|
|
$
|
280
|
|
Charge-offs
|
—
|
|
—
|
|
(170
|
)
|
—
|
|
—
|
|
(2
|
)
|
—
|
|
|
—
|
|
(172
|
)
|
|||||||||
Recoveries
|
—
|
|
—
|
|
1
|
|
—
|
|
—
|
|
6
|
|
—
|
|
|
—
|
|
7
|
|
|||||||||
Net (charge-offs) recoveries
|
—
|
|
—
|
|
(169
|
)
|
—
|
|
—
|
|
4
|
|
—
|
|
|
—
|
|
(165
|
)
|
|||||||||
Provision
|
22
|
|
9
|
|
169
|
|
(17
|
)
|
(3
|
)
|
(11
|
)
|
—
|
|
|
(9
|
)
|
160
|
|
|||||||||
Ending balance
|
$
|
82
|
|
$
|
59
|
|
$
|
31
|
|
$
|
15
|
|
$
|
19
|
|
$
|
34
|
|
$
|
—
|
|
|
$
|
35
|
|
$
|
275
|
|
Allowance for:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Loan losses
|
$
|
24
|
|
$
|
37
|
|
$
|
9
|
|
$
|
15
|
|
$
|
15
|
|
$
|
34
|
|
$
|
—
|
|
|
$
|
23
|
|
$
|
157
|
|
Lending-related commitments
|
58
|
|
22
|
|
22
|
|
—
|
|
4
|
|
—
|
|
—
|
|
|
12
|
|
118
|
|
|||||||||
Individually evaluated for impairment:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Loan balance
|
$
|
—
|
|
$
|
1
|
|
$
|
171
|
|
$
|
—
|
|
$
|
8
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
180
|
|
Allowance for loan losses
|
—
|
|
1
|
|
—
|
|
—
|
|
1
|
|
—
|
|
—
|
|
|
—
|
|
2
|
|
|||||||||
Collectively evaluated for impairment:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Loan balance
|
$
|
2,115
|
|
$
|
3,496
|
|
$
|
6,469
|
|
$
|
1,007
|
|
$
|
13,239
|
|
$
|
1,035
|
|
$
|
21,388
|
|
(a)
|
$
|
14,352
|
|
$
|
63,101
|
|
Allowance for loan losses
|
24
|
|
36
|
|
9
|
|
15
|
|
14
|
|
34
|
|
—
|
|
|
23
|
|
155
|
|
(a)
|
Includes
$911 million
of domestic overdrafts,
$19,340 million
of margin loans and
$1,137 million
of other loans at Dec. 31, 2015.
|
Nonperforming assets
(in millions)
|
Dec. 31,
|
|||||
2017
|
|
2016
|
|
|||
Nonperforming loans:
|
|
|
||||
Other residential mortgages
|
$
|
78
|
|
$
|
91
|
|
Wealth management loans and mortgages
|
7
|
|
8
|
|
||
Commercial real estate
|
1
|
|
—
|
|
||
Lease financings
|
—
|
|
4
|
|
||
Total nonperforming loans
|
86
|
|
103
|
|
||
Other assets owned
|
4
|
|
4
|
|
||
Total nonperforming assets
|
$
|
90
|
|
$
|
107
|
|
Lost interest
|
|
|
|
||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Amount by which interest income recognized on nonperforming loans exceeded reversals
|
|
|
|
||||||
Total
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Foreign
|
—
|
|
—
|
|
—
|
|
|||
Amount by which interest income would have increased if nonperforming loans at year-end had been performing for the entire year
|
|
|
|
||||||
Total
|
$
|
5
|
|
$
|
6
|
|
$
|
6
|
|
Foreign
|
—
|
|
—
|
|
—
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Impaired loans
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
(in millions)
|
Average
recorded investment |
|
Interest
income recognized |
|
|
Average
recorded investment |
|
Interest
income recognized |
|
|
Average
recorded investment |
|
Interest
income recognized |
|
||||||
Impaired loans with an allowance:
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial real estate
|
$
|
—
|
|
$
|
—
|
|
|
$
|
1
|
|
$
|
—
|
|
|
$
|
1
|
|
$
|
—
|
|
Financial institutions
|
1
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
||||||
Wealth management loans and mortgages
|
2
|
|
—
|
|
|
5
|
|
—
|
|
|
6
|
|
—
|
|
||||||
Lease financings
|
1
|
|
—
|
|
|
3
|
|
—
|
|
|
—
|
|
—
|
|
||||||
Total impaired loans with an allowance
|
4
|
|
—
|
|
|
9
|
|
—
|
|
|
7
|
|
—
|
|
||||||
Impaired loans without an allowance:
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial real estate
|
—
|
|
—
|
|
|
1
|
|
—
|
|
|
—
|
|
—
|
|
||||||
Financial institutions
|
—
|
|
—
|
|
|
102
|
|
—
|
|
|
—
|
|
—
|
|
||||||
Wealth management loans and mortgages
|
3
|
|
—
|
|
|
2
|
|
—
|
|
|
2
|
|
—
|
|
||||||
Total impaired loans without an allowance
(a)
|
3
|
|
—
|
|
|
105
|
|
—
|
|
|
2
|
|
—
|
|
||||||
Total impaired loans
|
$
|
7
|
|
$
|
—
|
|
|
$
|
114
|
|
$
|
—
|
|
|
$
|
9
|
|
$
|
—
|
|
(a)
|
When the discounted cash flows, collateral value or market price equals or exceeds the carrying value of the loan, then the loan does not require an allowance under the accounting standard related to impaired loans.
|
Impaired loans
|
Dec. 31, 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
|
1
|
|
1
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Wealth management loans and mortgages
|
1
|
|
1
|
|
1
|
|
|
3
|
|
3
|
|
3
|
|
||||||
Lease financings
|
—
|
|
—
|
|
—
|
|
|
4
|
|
4
|
|
2
|
|
||||||
Total impaired loans with an allowance
|
2
|
|
5
|
|
1
|
|
|
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)
|
$
|
6
|
|
$
|
9
|
|
$
|
1
|
|
|
$
|
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
Dec. 31, 2017
and
Dec. 31, 2016
, respectively. The allowance for loan losses associated with these loans totaled less than
$1 million
at both
Dec. 31, 2017
and
Dec. 31, 2016
, respectively.
|
Past due loans and still accruing interest
|
Dec. 31, 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
|
|
|||||||||||||
Commercial real estate
|
$
|
44
|
|
$
|
—
|
|
$
|
—
|
|
$
|
44
|
|
|
$
|
78
|
|
$
|
—
|
|
$
|
—
|
|
$
|
78
|
|
Wealth management loans and mortgages
|
39
|
|
5
|
|
—
|
|
44
|
|
|
21
|
|
2
|
|
—
|
|
23
|
|
||||||||
Other residential mortgages
|
18
|
|
5
|
|
5
|
|
28
|
|
|
20
|
|
6
|
|
7
|
|
33
|
|
||||||||
Financial institutions
|
1
|
|
—
|
|
—
|
|
1
|
|
|
1
|
|
27
|
|
—
|
|
28
|
|
||||||||
Total past due loans
|
$
|
102
|
|
$
|
10
|
|
$
|
5
|
|
$
|
117
|
|
|
$
|
120
|
|
$
|
35
|
|
$
|
7
|
|
$
|
162
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
TDRs
|
2017
|
|
2016
|
||||||||||||||||||
|
|
Outstanding
recorded investment
|
|
|
Outstanding
recorded investment
|
||||||||||||||||
(dollars in millions)
|
Number of
contracts
|
|
Pre-modification
|
|
Post-modification
|
|
|
Number of contracts
|
|
Pre-modification
|
|
Post-modification
|
|
||||||||
Other residential mortgages
|
50
|
|
|
$
|
13
|
|
|
$
|
14
|
|
|
70
|
|
|
$
|
14
|
|
|
$
|
16
|
|
Wealth management loans and mortgages
|
2
|
|
|
6
|
|
|
6
|
|
|
2
|
|
|
—
|
|
|
—
|
|
||||
Total TDRs
|
52
|
|
|
$
|
19
|
|
|
$
|
20
|
|
|
72
|
|
|
$
|
14
|
|
|
$
|
16
|
|
Commercial loan portfolio – Credit risk profile
by creditworthiness category
|
Commercial
|
|
Commercial real estate
|
|
Financial institutions
|
|||||||||||||||
Dec. 31, 2017
|
|
Dec. 31, 2016
|
|
|
Dec. 31, 2017
|
|
Dec. 31, 2016
|
|
|
Dec. 31, 2017
|
|
Dec. 31, 2016
|
|
|||||||
(in millions)
|
|
|
||||||||||||||||||
Investment grade
|
$
|
2,685
|
|
$
|
2,397
|
|
|
$
|
4,277
|
|
$
|
3,823
|
|
|
$
|
10,021
|
|
$
|
11,459
|
|
Non-investment grade
|
226
|
|
220
|
|
|
623
|
|
831
|
|
|
3,030
|
|
3,230
|
|
||||||
Total
|
$
|
2,911
|
|
$
|
2,617
|
|
|
$
|
4,900
|
|
$
|
4,654
|
|
|
$
|
13,051
|
|
$
|
14,689
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Wealth management loans and mortgages – Credit risk
profile by internally assigned grade
|
||||||
(in millions)
|
Dec. 31, 2017
|
|
Dec. 31, 2016
|
|
||
Wealth management loans:
|
|
|
||||
Investment grade
|
$
|
7,042
|
|
$
|
7,127
|
|
Non-investment grade
|
185
|
|
260
|
|
||
Wealth management mortgages
|
9,301
|
|
8,267
|
|
||
Total
|
$
|
16,528
|
|
$
|
15,654
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Goodwill by business
(in millions)
|
Investment
Management |
|
|
Investment
Services |
|
(a)
|
Other
|
|
(a)
|
Consolidated
|
|
||||
Balance at Dec. 31, 2015
|
$
|
9,207
|
|
|
$
|
8,366
|
|
|
$
|
45
|
|
|
$
|
17,618
|
|
Acquisition (dispositions)
|
29
|
|
|
(2
|
)
|
|
—
|
|
|
27
|
|
||||
Foreign currency translation
|
(238
|
)
|
|
(91
|
)
|
|
—
|
|
|
(329
|
)
|
||||
Other
(b)
|
2
|
|
|
(4
|
)
|
|
2
|
|
|
—
|
|
||||
Balance at Dec. 31, 2016
|
$
|
9,000
|
|
|
$
|
8,269
|
|
|
$
|
47
|
|
|
$
|
17,316
|
|
Foreign currency translation
|
128
|
|
|
120
|
|
|
—
|
|
|
248
|
|
||||
Balance at Dec. 31, 2017
|
$
|
9,128
|
|
|
$
|
8,389
|
|
|
$
|
47
|
|
|
$
|
17,564
|
|
(a)
|
Includes the reclassification of goodwill associated with credit-related activities from the Other segment to Investment Services in 2016.
|
(b)
|
Other changes in goodwill include purchase price adjustments and certain other reclassifications.
|
Intangible assets – net carrying amount by business
(in millions)
|
Investment
Management |
|
|
Investment
Services |
|
|
Other
|
|
|
Consolidated
|
|
||||
Balance at Dec. 31, 2015
|
$
|
1,807
|
|
|
$
|
1,186
|
|
|
$
|
849
|
|
|
$
|
3,842
|
|
Acquisitions
|
30
|
|
|
2
|
|
|
—
|
|
|
32
|
|
||||
Amortization
(a)
|
(82
|
)
|
|
(155
|
)
|
|
—
|
|
|
(237
|
)
|
||||
Foreign currency translation
|
(38
|
)
|
|
(1
|
)
|
|
—
|
|
|
(39
|
)
|
||||
Balance at Dec. 31, 2016
|
$
|
1,717
|
|
|
$
|
1,032
|
|
|
$
|
849
|
|
|
$
|
3,598
|
|
Amortization
|
(60
|
)
|
|
(149
|
)
|
|
—
|
|
|
(209
|
)
|
||||
Foreign currency translation
|
17
|
|
|
5
|
|
|
—
|
|
|
22
|
|
||||
Balance at Dec. 31, 2017
|
$
|
1,674
|
|
|
$
|
888
|
|
|
$
|
849
|
|
|
$
|
3,411
|
|
(a)
|
Includes
$6 million
of impairment charges related to the write-down of intangible assets in the Investment Management business, to their respective fair values.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Intangible assets
|
Dec. 31, 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
|
$
|
1,262
|
|
$
|
(1,015
|
)
|
$
|
247
|
|
11 years
|
|
$
|
1,439
|
|
$
|
(1,136
|
)
|
$
|
303
|
|
Customer contracts—Investment Services
|
2,260
|
|
(1,744
|
)
|
516
|
|
10 years
|
|
2,249
|
|
(1,590
|
)
|
659
|
|
||||||
Other
|
42
|
|
(23
|
)
|
19
|
|
5 years
|
|
37
|
|
(33
|
)
|
4
|
|
||||||
Total subject to amortization
|
3,564
|
|
(2,782
|
)
|
782
|
|
10 years
|
|
3,725
|
|
(2,759
|
)
|
966
|
|
||||||
Not subject to amortization:
(b)
|
|
|
|
|
|
|
|
|
||||||||||||
Tradenames
|
1,334
|
|
N/A
|
|
1,334
|
|
N/A
|
|
1,348
|
|
N/A
|
|
1,348
|
|
||||||
Customer relationships
|
1,295
|
|
N/A
|
|
1,295
|
|
N/A
|
|
1,284
|
|
N/A
|
|
1,284
|
|
||||||
Total not subject to amortization
|
2,629
|
|
N/A
|
|
2,629
|
|
N/A
|
|
2,632
|
|
N/A
|
|
2,632
|
|
||||||
Total intangible assets
|
$
|
6,193
|
|
$
|
(2,782
|
)
|
$
|
3,411
|
|
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)
|
|
||
2018
|
|
$
|
180
|
|
2019
|
|
116
|
|
|
2020
|
|
102
|
|
|
2021
|
|
79
|
|
|
2022
|
|
60
|
|
Other assets
|
Dec. 31,
|
|||||
(in millions)
|
2017
|
|
2016
|
|
||
Corporate/bank-owned life insurance
|
$
|
4,857
|
|
$
|
4,789
|
|
Accounts receivable
|
4,590
|
|
4,060
|
|
||
Fails to deliver
|
2,817
|
|
1,732
|
|
||
Income taxes receivable
|
1,533
|
|
1,172
|
|
||
Software
|
1,499
|
|
1,451
|
|
||
Prepaid pension assets
|
1,416
|
|
836
|
|
||
Renewable energy investments
|
1,368
|
|
1,282
|
|
||
Equity in a joint venture and other investments
|
1,083
|
|
1,063
|
|
||
Qualified affordable housing project investments
|
1,014
|
|
914
|
|
||
Federal Reserve Bank stock
|
477
|
|
466
|
|
||
Prepaid expense
|
395
|
|
438
|
|
||
Fair value of hedging derivatives
|
323
|
|
784
|
|
||
Due from customers on acceptances
|
319
|
|
340
|
|
||
Seed capital
|
288
|
|
395
|
|
||
Other
(a)
|
1,050
|
|
1,232
|
|
||
Total other assets
|
$
|
23,029
|
|
$
|
20,954
|
|
(a)
|
At
Dec. 31, 2017
, other assets include
$82 million
of Federal Home Loan Bank stock, at cost.
|
Notes to Consolidated Financial Statements
(continued)
|
|
(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, which have a life of 10 years, are liquidated.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Net interest revenue
|
Year ended Dec. 31,
|
||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Interest revenue
|
|
|
|
||||||
Non-margin loans
|
$
|
1,077
|
|
$
|
873
|
|
$
|
727
|
|
Margin loans
|
343
|
|
265
|
|
207
|
|
|||
Securities:
|
|
|
|
||||||
Taxable
|
1,977
|
|
1,772
|
|
1,813
|
|
|||
Exempt from federal income taxes
|
64
|
|
70
|
|
82
|
|
|||
Total securities
|
2,041
|
|
1,842
|
|
1,895
|
|
|||
Deposits with banks
|
120
|
|
104
|
|
104
|
|
|||
Deposits with the Federal Reserve and other central banks
|
319
|
|
198
|
|
170
|
|
|||
Federal funds sold and securities purchased under resale agreements
|
423
|
|
233
|
|
147
|
|
|||
Trading assets
|
59
|
|
60
|
|
76
|
|
|||
Total interest revenue
|
4,382
|
|
3,575
|
|
3,326
|
|
|||
Interest expense
|
|
|
|
||||||
Deposits in domestic offices
|
107
|
|
41
|
|
30
|
|
|||
Deposits in foreign offices
|
55
|
|
(25
|
)
|
7
|
|
|||
Federal funds purchased and securities sold under repurchase agreements
|
225
|
|
36
|
|
(6
|
)
|
|||
Trading liabilities
|
7
|
|
6
|
|
9
|
|
|||
Other borrowed funds
|
26
|
|
8
|
|
9
|
|
|||
Commercial paper
|
29
|
|
5
|
|
2
|
|
|||
Customer payables
|
64
|
|
12
|
|
7
|
|
|||
Long-term debt
|
561
|
|
354
|
|
242
|
|
|||
Total interest expense
|
1,074
|
|
437
|
|
300
|
|
|||
Net interest revenue
|
3,308
|
|
3,138
|
|
3,026
|
|
|||
Provision for credit losses
|
(24
|
)
|
(11
|
)
|
160
|
|
|||
Net interest revenue after provision for credit losses
|
$
|
3,332
|
|
$
|
3,149
|
|
$
|
2,866
|
|
Provision for income taxes
|
Year ended Dec. 31,
|
||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Current taxes (benefits):
|
|
|
|
||||||
Federal
|
$
|
(99
|
)
|
$
|
823
|
|
$
|
551
|
|
Foreign
|
388
|
|
327
|
|
306
|
|
|||
State and local
|
74
|
|
153
|
|
109
|
|
|||
Total current tax expense
|
363
|
|
1,303
|
|
966
|
|
|||
Deferred tax expense (benefit):
|
|
|
|
||||||
Federal
|
36
|
|
(75
|
)
|
114
|
|
|||
Foreign
|
14
|
|
(14
|
)
|
(1
|
)
|
|||
State and local
|
83
|
|
(37
|
)
|
(66
|
)
|
|||
Total deferred tax expense (benefit)
|
133
|
|
(126
|
)
|
47
|
|
|||
Provision for income taxes
|
$
|
496
|
|
$
|
1,177
|
|
$
|
1,013
|
|
Income tax (benefit) expense
|
2017
|
|
|
(estimated in millions)
|
|||
Remeasurement of net deferred tax liabilities
|
$
|
(1,472
|
)
|
Repatriation tax
|
723
|
|
|
Other items
|
39
|
|
|
Net income tax (benefit)
|
$
|
(710
|
)
|
Income before taxes
|
Year ended Dec. 31,
|
||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Domestic
|
$
|
2,699
|
|
$
|
3,147
|
|
$
|
2,698
|
|
Foreign
|
1,911
|
|
1,578
|
|
1,537
|
|
|||
Income before taxes
|
$
|
4,610
|
|
$
|
4,725
|
|
$
|
4,235
|
|
Net deferred tax liability
|
Dec. 31,
|
|||||
(in millions)
|
2017
|
|
2016
|
|
||
Depreciation and amortization
|
$
|
1,960
|
|
$
|
2,694
|
|
Repatriation
|
617
|
|
—
|
|
||
Lease financings
|
151
|
|
391
|
|
||
Pension obligation
|
283
|
|
184
|
|
||
Renewable energy investment
|
278
|
|
179
|
|
||
Equity investments
|
65
|
|
104
|
|
||
Employee benefits
|
(287
|
)
|
(471
|
)
|
||
Reserves not deducted for tax
|
(103
|
)
|
(136
|
)
|
||
Credit losses on loans
|
(55
|
)
|
(100
|
)
|
||
Securities valuation
|
11
|
|
(55
|
)
|
||
Other assets
|
(85
|
)
|
(101
|
)
|
||
Other liabilities
|
186
|
|
162
|
|
||
Net deferred tax liability
|
$
|
3,021
|
|
$
|
2,851
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Effective tax rate
|
Year ended Dec. 31,
|
|||||
|
2017
|
|
2016
|
|
2015
|
|
Federal rate
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
State and local income taxes, net of federal income tax benefit
|
1.8
|
|
1.6
|
|
0.6
|
|
Foreign operations
|
(4.2
|
)
|
(5.6
|
)
|
(6.6
|
)
|
Tax credits
|
(3.7
|
)
|
(2.2
|
)
|
(1.4
|
)
|
Tax-exempt income
|
(1.9
|
)
|
(1.8
|
)
|
(2.5
|
)
|
Leverage lease adjustment
|
(1.4
|
)
|
(0.9
|
)
|
(1.3
|
)
|
Stock compensation
|
(1.1
|
)
|
—
|
|
—
|
|
U.S. tax legislation
|
(13.3
|
)
|
—
|
|
—
|
|
Other – net
|
(0.4
|
)
|
(1.2
|
)
|
0.1
|
|
Effective tax rate
|
10.8
|
%
|
24.9
|
%
|
23.9
|
%
|
Unrecognized tax positions
|
|
|
|
||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Beginning balance at Jan. 1, – gross
|
$
|
146
|
|
$
|
649
|
|
$
|
669
|
|
Prior period tax positions:
|
|
|
|
||||||
Increases
|
20
|
|
8
|
|
13
|
|
|||
Decreases
|
(4
|
)
|
(40
|
)
|
(21
|
)
|
|||
Current period tax positions
|
10
|
|
16
|
|
14
|
|
|||
Settlements
|
(44
|
)
|
(477
|
)
|
(26
|
)
|
|||
Statute expiration
|
—
|
|
(10
|
)
|
—
|
|
|||
Ending balance at Dec. 31, – gross
|
$
|
128
|
|
$
|
146
|
|
$
|
649
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Long-term debt
|
Dec. 31, 2017
|
|
Dec. 31, 2016
|
||||||||
(in millions)
|
Rate
|
Maturity
|
Amount
|
|
|
Rate
|
|
Amount
|
|
||
Senior debt:
|
|
|
|
|
|
|
|||||
Fixed rate
|
1.30 - 5.45%
|
2018 - 2028
|
$
|
23,329
|
|
|
1.30 - 5.94%
|
|
$
|
20,005
|
|
Floating rate
|
1.49 - 2.74%
|
2018 - 2038
|
2,829
|
|
|
0.80 - 2.05%
|
|
2,828
|
|
||
Subordinated debt
(a)
|
3.00 - 7.50%
|
2018 - 2029
|
1,821
|
|
|
3.00 - 7.50%
|
|
1,383
|
|
||
Junior subordinated debentures
(b)
|
N/A
|
N/A
|
—
|
|
|
1.87
|
%
|
247
|
|
||
Total
|
|
|
$
|
27,979
|
|
|
|
$
|
24,463
|
|
(a)
|
Fixed rate.
|
(b)
|
Floating rate at
Dec. 31, 2016
.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Consolidated investments
|
|
|
|
|
|
||||||||||||||||
|
Dec. 31, 2017
|
|
Dec. 31, 2016
|
||||||||||||||||||
(in millions)
|
Investment
Management
funds
|
Securitization
|
|
Total
consolidated
investments
|
|
|
Investment
Management
funds
|
Securitization
|
|
Total
consolidated
investments
|
|
||||||||||
Securities - Available-for-sale
|
$
|
—
|
|
|
$
|
400
|
|
$
|
400
|
|
|
$
|
—
|
|
|
$
|
400
|
|
$
|
400
|
|
Trading assets
|
516
|
|
|
—
|
|
516
|
|
|
979
|
|
|
—
|
|
979
|
|
||||||
Other assets
|
215
|
|
|
—
|
|
215
|
|
|
252
|
|
|
—
|
|
252
|
|
||||||
Total assets
|
$
|
731
|
|
(a)
|
$
|
400
|
|
$
|
1,131
|
|
|
$
|
1,231
|
|
(b)
|
$
|
400
|
|
$
|
1,631
|
|
Trading liabilities
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
282
|
|
|
$
|
—
|
|
$
|
282
|
|
Other liabilities
|
2
|
|
|
367
|
|
369
|
|
|
33
|
|
|
363
|
|
396
|
|
||||||
Total liabilities
|
$
|
2
|
|
(a)
|
$
|
367
|
|
$
|
369
|
|
|
$
|
315
|
|
(b)
|
$
|
363
|
|
$
|
678
|
|
Nonredeemable noncontrolling interests
|
$
|
316
|
|
(a)
|
$
|
—
|
|
$
|
316
|
|
|
$
|
618
|
|
(b)
|
$
|
—
|
|
$
|
618
|
|
(a)
|
Includes VMEs with assets of
$84 million
, liabilities of
$1 million
and nonredeemable noncontrolling interests of
$1 million
.
|
(b)
|
Includes VMEs with assets of
$114 million
, liabilities of
$3 million
and nonredeemable noncontrolling interests of
$25 million
.
|
Non-consolidated VIEs
|
|
|
|
|
|||||||||||||||
|
Dec. 31, 2017
|
|
Dec. 31, 2016
|
||||||||||||||||
(in millions)
|
Assets
|
|
Liabilities
|
|
Maximum loss exposure
|
|
|
Assets
|
|
Liabilities
|
|
Maximum loss exposure
|
|
||||||
Securities - Available-for-sale
(a)
|
$
|
203
|
|
$
|
—
|
|
$
|
203
|
|
|
$
|
42
|
|
$
|
—
|
|
$
|
42
|
|
Other
|
2,592
|
|
486
|
|
3,078
|
|
|
2,400
|
|
369
|
|
2,769
|
|
(a)
|
Investments in the Company’s sponsored CLOs.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Preferred stock summary
(a)
|
Total shares issued and outstanding
|
|
Carrying value
(b)
|
|||||||||
|
|
(in millions)
|
||||||||||
|
Per annum dividend rate
|
Dec. 31, 2017
|
|
Dec. 31, 2016
|
|
Dec. 31, 2017
|
|
Dec. 31, 2016
|
|
|||
Series A
(c)
|
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.
|
(c)
|
Series A preferred stock is the sole asset of Mellon Capital IV, a Delaware statutory trust owned by BNY Mellon Capital IV.
|
•
|
$1,011.11
per share on the Series A Preferred Stock (equivalent to
$10.1111
per Normal Preferred Capital Security of Mellon Capital IV, each representing a 1/100th interest in a share of the Series A Preferred Stock);
|
Notes to Consolidated Financial Statements
(continued)
|
|
•
|
$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).
|
Consolidated and largest bank subsidiary regulatory capital ratios
(a)
|
Dec. 31,
|
|||
2017
|
|
2016
|
|
|
Consolidated regulatory capital
ratios:
|
|
|
||
CET1
|
10.7
|
%
|
10.6
|
%
|
Tier 1 capital ratio
|
12.7
|
|
12.6
|
|
Total (Tier 1 plus Tier 2) capital ratio
|
13.4
|
|
13.0
|
|
Leverage capital ratio
|
6.6
|
|
6.6
|
|
|
|
|
||
The Bank of New York Mellon regulatory capital ratios:
|
|
|
||
CET1
|
14.1
|
%
|
13.6
|
%
|
Tier 1 capital ratio
|
14.4
|
|
13.9
|
|
Total (Tier 1 plus Tier 2) capital ratio
|
14.7
|
|
14.2
|
|
Leverage capital ratio
|
7.6
|
|
7.2
|
|
(a)
|
For our CET1, Tier 1 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. For BNY Mellon to qualify as “well capitalized,” its Tier 1 and Total (Tier 1 plus Tier 2) capital ratios must be at least
6%
and
10%
, respectively. For The Bank of New York Mellon, our largest bank subsidiary, to qualify as “well capitalized,” its CET1, Tier 1, Total and leverage capital ratios must be at least
6.5%
,
8%
,
10%
and
5%
, respectively.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Components of transitional capital
(a)
(in millions)
|
Dec. 31,
|
|||||
2017
|
|
2016
|
|
|||
CET1:
|
|
|
||||
Common shareholders’ equity
|
$
|
37,859
|
|
$
|
35,794
|
|
Goodwill and intangible assets
|
(18,684
|
)
|
(17,314
|
)
|
||
Net pension fund assets
|
(169
|
)
|
(55
|
)
|
||
Equity method investments
|
(372
|
)
|
(313
|
)
|
||
Deferred tax assets
|
(33
|
)
|
(19
|
)
|
||
Other
|
(8
|
)
|
—
|
|
||
Total CET1
|
18,593
|
|
18,093
|
|
||
Other Tier 1 capital:
|
|
|
||||
Preferred stock
|
3,542
|
|
3,542
|
|
||
Disallowed deferred tax assets
|
(8
|
)
|
(13
|
)
|
||
Net pension fund assets
|
(42
|
)
|
(36
|
)
|
||
Other
|
(41
|
)
|
(121
|
)
|
||
Total Tier 1 capital
|
$
|
22,044
|
|
$
|
21,465
|
|
|
|
|
||||
Tier 2 capital:
|
|
|
||||
Subordinated debt
|
$
|
1,250
|
|
$
|
550
|
|
Allowance for credit losses
|
261
|
|
281
|
|
||
Trust preferred securities
|
—
|
|
148
|
|
||
Other
|
(12
|
)
|
(12
|
)
|
||
Total Tier 2 capital – Standardized Approach
|
1,499
|
|
967
|
|
||
Excess of expected credit losses
|
31
|
|
50
|
|
||
Less: Allowance for credit losses
|
261
|
|
281
|
|
||
Total Tier 2 capital – Advanced Approach
|
$
|
1,269
|
|
$
|
736
|
|
|
|
|
||||
Total capital:
|
|
|
||||
Standardized Approach
|
$
|
23,543
|
|
$
|
22,432
|
|
Advanced Approach
|
$
|
23,313
|
|
$
|
22,201
|
|
|
|
|
||||
Risk-weighted assets:
|
|
|
||||
Standardized Approach
|
$
|
155,621
|
|
$
|
147,671
|
|
Advanced Approach:
|
|
|
||||
Credit Risk
|
$
|
101,681
|
|
$
|
97,659
|
|
Market Risk
|
3,657
|
|
2,836
|
|
||
Operational Risk
|
68,688
|
|
70,000
|
|
||
Total Advanced Approach
|
$
|
174,026
|
|
$
|
170,495
|
|
|
|
|
||||
Average assets for leverage capital purposes
|
$
|
331,600
|
|
$
|
326,809
|
|
(a)
|
Reflects transitional adjustments to CET1, Tier 1 capital and Tier 2 capital required in 2017 and 2016 under the U.S. capital rules.
|
(a)
|
Based on minimum required standards, with applicable buffers.
|
(b)
|
Based on well capitalized standards.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Components of other comprehensive income (loss)
|
Year ended Dec. 31,
|
||||||||||||||||||||||||||||
2017
|
|
2016
|
|
2015
|
|||||||||||||||||||||||||
(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)
|
$
|
659
|
|
$
|
194
|
|
$
|
853
|
|
|
$
|
(518
|
)
|
$
|
(332
|
)
|
$
|
(850
|
)
|
|
$
|
(518
|
)
|
$
|
(81
|
)
|
$
|
(599
|
)
|
Total foreign currency translation
|
659
|
|
194
|
|
853
|
|
|
(518
|
)
|
(332
|
)
|
(850
|
)
|
|
(518
|
)
|
(81
|
)
|
(599
|
)
|
|||||||||
Unrealized gain (loss) on assets available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Unrealized gain (loss) arising during period
|
237
|
|
(84
|
)
|
153
|
|
|
(388
|
)
|
146
|
|
(242
|
)
|
|
(535
|
)
|
172
|
|
(363
|
)
|
|||||||||
Reclassification adjustment
(b)
|
(3
|
)
|
—
|
|
(3
|
)
|
|
(75
|
)
|
26
|
|
(49
|
)
|
|
(83
|
)
|
31
|
|
(52
|
)
|
|||||||||
Net unrealized gain (loss) on assets available-for-sale
|
234
|
|
(84
|
)
|
150
|
|
|
(463
|
)
|
172
|
|
(291
|
)
|
|
(618
|
)
|
203
|
|
(415
|
)
|
|||||||||
Defined benefit plans:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net gain (loss) arising during the period
|
454
|
|
(112
|
)
|
342
|
|
|
(151
|
)
|
43
|
|
(108
|
)
|
|
(105
|
)
|
40
|
|
(65
|
)
|
|||||||||
Foreign exchange adjustment
|
1
|
|
—
|
|
1
|
|
|
(1
|
)
|
1
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost
(b)
|
100
|
|
(32
|
)
|
68
|
|
|
88
|
|
(31
|
)
|
57
|
|
|
104
|
|
(35
|
)
|
69
|
|
|||||||||
Total defined benefit plans
|
555
|
|
(144
|
)
|
411
|
|
|
(64
|
)
|
13
|
|
(51
|
)
|
|
(1
|
)
|
5
|
|
4
|
|
|||||||||
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Unrealized hedge gain (loss) arising during period
|
33
|
|
(9
|
)
|
24
|
|
|
(52
|
)
|
18
|
|
(34
|
)
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Reclassification adjustment
(b)
|
(20
|
)
|
5
|
|
(15
|
)
|
|
45
|
|
(15
|
)
|
30
|
|
|
11
|
|
(3
|
)
|
8
|
|
|||||||||
Net unrealized gain (loss) on cash flow hedges
|
13
|
|
(4
|
)
|
9
|
|
|
(7
|
)
|
3
|
|
(4
|
)
|
|
11
|
|
(3
|
)
|
8
|
|
|||||||||
Total other comprehensive income (loss)
|
$
|
1,461
|
|
$
|
(38
|
)
|
$
|
1,423
|
|
|
$
|
(1,052
|
)
|
$
|
(144
|
)
|
$
|
(1,196
|
)
|
|
$
|
(1,126
|
)
|
$
|
124
|
|
$
|
(1,002
|
)
|
(a)
|
Includes the impact of hedges of net investments in foreign subsidiaries. See Note 21 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)
|
|
Stock option activity
|
Shares subject
to option
|
|
Weighted-average
exercise price
|
|
Weighted-average remaining contractual term
(in years)
|
|
Balance at Dec. 31, 2016
|
21,241,568
|
|
$
|
32.57
|
|
2.8
|
Granted
|
—
|
|
—
|
|
|
|
Exercised
|
(11,778,373
|
)
|
36.66
|
|
|
|
Canceled/Expired
|
(161,055
|
)
|
39.10
|
|
|
|
Balance at Dec. 31, 2017
|
9,302,140
|
|
$
|
27.27
|
|
2.7
|
Vested and expected to vest at Dec. 31, 2017
|
9,302,140
|
|
27.27
|
|
2.7
|
|
Exercisable at Dec. 31, 2017
|
9,302,140
|
|
27.27
|
|
2.7
|
(a)
|
At
Dec. 31, 2016
and Dec. 31,
2015
,
21,241,568
and
33,703,283
options were exercisable at a weighted-average price per common share of
$32.57
and
$34.27
, respectively.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Non-vested PSU, restricted stock and RSU activity
|
Number of
shares
|
|
Weighted-
average
fair value
|
|
|
Non-vested PSUs, restricted stock and RSUs at Dec. 31, 2016
|
17,995,515
|
|
$
|
35.98
|
|
Granted
|
6,725,625
|
|
48.71
|
|
|
Vested
|
(7,510,459
|
)
|
34.39
|
|
|
Forfeited
|
(479,349
|
)
|
38.79
|
|
|
Non-vested PSUs, restricted stock and RSUs at Dec. 31, 2017
|
16,731,332
|
|
$
|
42.42
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
|
Pension Benefits
|
|
Healthcare Benefits
|
||||||||||||||||||||||||
|
Domestic
|
|
Foreign
|
|
Domestic
|
|
Foreign
|
||||||||||||||||||||
(dollar amounts in millions)
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
||||||||
Weighted-average assumptions used to determine benefit obligations
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Discount rate
|
3.97
|
%
|
4.35
|
%
|
|
2.45
|
%
|
2.53
|
%
|
|
3.97
|
%
|
4.35
|
%
|
|
2.50
|
%
|
2.60
|
%
|
||||||||
Rate of compensation increase
|
N/A
|
|
N/A
|
|
|
3.02
|
|
3.60
|
|
|
3.00
|
|
3.00
|
|
|
N/A
|
|
N/A
|
|
||||||||
Change in benefit obligation
(a)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Benefit obligation at beginning of period
|
$
|
(4,274
|
)
|
$
|
(4,177
|
)
|
|
$
|
(1,248
|
)
|
$
|
(1,147
|
)
|
|
$
|
(169
|
)
|
$
|
(184
|
)
|
|
$
|
(2
|
)
|
$
|
(4
|
)
|
Service cost
|
—
|
|
—
|
|
|
(31
|
)
|
(29
|
)
|
|
(1
|
)
|
(1
|
)
|
|
—
|
|
—
|
|
||||||||
Interest cost
|
(180
|
)
|
(182
|
)
|
|
(33
|
)
|
(36
|
)
|
|
(7
|
)
|
(8
|
)
|
|
—
|
|
—
|
|
||||||||
Employee contributions
|
—
|
|
—
|
|
|
(1
|
)
|
(1
|
)
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
||||||||
Actuarial (loss) gain
|
(165
|
)
|
(106
|
)
|
|
88
|
|
(221
|
)
|
|
(10
|
)
|
9
|
|
|
(1
|
)
|
1
|
|
||||||||
Benefits paid
|
214
|
|
191
|
|
|
31
|
|
23
|
|
|
12
|
|
15
|
|
|
—
|
|
—
|
|
||||||||
Foreign exchange adjustment
|
N/A
|
|
N/A
|
|
|
(128
|
)
|
163
|
|
|
N/A
|
|
N/A
|
|
|
(1
|
)
|
1
|
|
||||||||
Benefit obligation at end of period
|
(4,405
|
)
|
(4,274
|
)
|
|
(1,322
|
)
|
(1,248
|
)
|
|
(175
|
)
|
(169
|
)
|
|
(4
|
)
|
(2
|
)
|
||||||||
Change in fair value of plan assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fair value at beginning of period
|
4,906
|
|
4,689
|
|
|
1,090
|
|
1,014
|
|
|
97
|
|
92
|
|
|
—
|
|
—
|
|
||||||||
Actual return on plan assets
|
783
|
|
387
|
|
|
128
|
|
162
|
|
|
10
|
|
5
|
|
|
—
|
|
—
|
|
||||||||
Employer contributions
|
21
|
|
21
|
|
|
93
|
|
87
|
|
|
12
|
|
15
|
|
|
—
|
|
—
|
|
||||||||
Employee contributions
|
—
|
|
—
|
|
|
1
|
|
1
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
||||||||
Benefit payments
|
(214
|
)
|
(191
|
)
|
|
(31
|
)
|
(23
|
)
|
|
(12
|
)
|
(15
|
)
|
|
—
|
|
—
|
|
||||||||
Foreign exchange adjustment
|
N/A
|
|
N/A
|
|
|
112
|
|
(151
|
)
|
|
N/A
|
|
N/A
|
|
|
—
|
|
—
|
|
||||||||
Fair value at end of period
|
5,496
|
|
4,906
|
|
|
1,393
|
|
1,090
|
|
|
107
|
|
97
|
|
|
—
|
|
—
|
|
||||||||
Funded status at end of period
|
$
|
1,091
|
|
$
|
632
|
|
|
$
|
71
|
|
$
|
(158
|
)
|
|
$
|
(68
|
)
|
$
|
(72
|
)
|
|
$
|
(4
|
)
|
$
|
(2
|
)
|
Amounts recognized in accumulated other comprehensive (income) loss consist of:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net loss (gain)
|
$
|
1,294
|
|
$
|
1,656
|
|
|
$
|
255
|
|
$
|
461
|
|
|
$
|
97
|
|
$
|
96
|
|
|
$
|
(1
|
)
|
$
|
(2
|
)
|
Prior service cost (credit)
|
—
|
|
—
|
|
|
1
|
|
—
|
|
|
(49
|
)
|
(59
|
)
|
|
—
|
|
—
|
|
||||||||
Total (before tax effects)
|
$
|
1,294
|
|
$
|
1,656
|
|
|
$
|
256
|
|
$
|
461
|
|
|
$
|
48
|
|
$
|
37
|
|
|
$
|
(1
|
)
|
$
|
(2
|
)
|
(a)
|
The benefit obligation for pension benefits is the projected benefit obligation, and for healthcare benefits, it is the accumulated benefit obligation.
|
Net periodic benefit cost (credit)
|
Pension Benefits
|
|
Healthcare Benefits
|
|||||||||||||||||||||||||||||||||||||
|
Domestic
|
|
Foreign
|
|
Domestic
|
|
Foreign
|
|||||||||||||||||||||||||||||||||
(dollar amounts in millions)
|
2017
|
|
2016
|
|
2015
|
|
(a)
|
|
2017
|
|
2016
|
|
2015
|
|
|
2017
|
|
2016
|
|
2015
|
|
|
2017
|
|
2016
|
|
2015
|
|
||||||||||||
Weighted-average assumptions as of Jan. 1:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Market-related value of plan assets
|
$
|
5,026
|
|
$
|
4,830
|
|
$
|
4,696
|
|
|
|
$
|
994
|
|
$
|
994
|
|
$
|
959
|
|
|
$
|
102
|
|
$
|
97
|
|
$
|
92
|
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|||
Discount rate
|
4.35
|
%
|
4.48
|
%
|
4.13
|
%
|
|
|
2.53
|
%
|
3.45
|
%
|
3.33
|
%
|
|
4.35
|
%
|
4.48
|
%
|
4.13
|
%
|
|
2.60
|
%
|
3.60
|
%
|
3.10
|
%
|
||||||||||||
Expected rate of return on plan assets
|
6.625
|
|
7.00
|
|
7.25
|
|
|
|
4.61
|
|
5.35
|
|
5.25
|
|
|
6.625
|
|
7.00
|
|
7.25
|
|
|
N/A
|
|
N/A
|
|
N/A
|
|
||||||||||||
Rate of compensation increase
|
N/A
|
|
N/A
|
|
3.00
|
|
|
|
3.60
|
|
3.51
|
|
3.29
|
|
|
3.00
|
|
3.00
|
|
3.00
|
|
|
N/A
|
|
N/A
|
|
N/A
|
|
||||||||||||
Components of net periodic benefit cost (credit):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Service cost
|
$
|
—
|
|
$
|
—
|
|
$
|
30
|
|
|
|
$
|
31
|
|
$
|
29
|
|
$
|
32
|
|
|
$
|
1
|
|
$
|
1
|
|
$
|
1
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Interest cost
|
180
|
|
182
|
|
170
|
|
|
|
33
|
|
36
|
|
38
|
|
|
7
|
|
8
|
|
8
|
|
|
—
|
|
—
|
|
—
|
|
||||||||||||
Expected return on assets
|
(325
|
)
|
(330
|
)
|
(333
|
)
|
|
|
(50
|
)
|
(51
|
)
|
(51
|
)
|
|
(7
|
)
|
(7
|
)
|
(6
|
)
|
|
—
|
|
—
|
|
—
|
|
||||||||||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Prior service (credit) cost
|
—
|
|
—
|
|
(1
|
)
|
|
|
—
|
|
1
|
|
—
|
|
|
(10
|
)
|
(10
|
)
|
(10
|
)
|
|
—
|
|
—
|
|
—
|
|
||||||||||||
Net actuarial loss
|
67
|
|
69
|
|
111
|
|
|
|
35
|
|
17
|
|
23
|
|
|
6
|
|
8
|
|
10
|
|
|
—
|
|
—
|
|
—
|
|
||||||||||||
Settlement loss
|
2
|
|
2
|
|
1
|
|
|
|
—
|
|
1
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
||||||||||||
Curtailment (gain)
|
—
|
|
—
|
|
(30
|
)
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
||||||||||||
Net periodic benefit cost (credit)
|
$
|
(76
|
)
|
$
|
(77
|
)
|
$
|
(52
|
)
|
|
|
$
|
49
|
|
$
|
33
|
|
$
|
42
|
|
|
$
|
(3
|
)
|
$
|
—
|
|
$
|
3
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
(a)
|
As a result of the amendment to the U.S. pension plans, liabilities were re-measured as of Jan. 29, 2015 at a discount rate of
3.73%
and the market-related value of plan assets was
$4,713 million
at Jan. 29, 2015.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Changes in other comprehensive (income) loss in 2017
|
Pension Benefits
|
|
Healthcare Benefits
|
||||||||||
(in millions)
|
Domestic
|
|
Foreign
|
|
|
Domestic
|
|
Foreign
|
|
||||
Net loss (gain) arising during period
|
$
|
(293
|
)
|
$
|
(169
|
)
|
|
$
|
7
|
|
$
|
1
|
|
Recognition of prior years’ net (loss)
|
(69
|
)
|
(35
|
)
|
|
(6
|
)
|
—
|
|
||||
Recognition of prior years’ service (cost) credit
|
—
|
|
—
|
|
|
10
|
|
—
|
|
||||
Foreign exchange adjustment
|
N/A
|
|
(1
|
)
|
|
N/A
|
|
—
|
|
||||
Total recognized in other comprehensive (income) loss (before tax effects)
|
$
|
(362
|
)
|
$
|
(205
|
)
|
|
$
|
11
|
|
$
|
1
|
|
|
Domestic
|
|
Foreign
|
||||||||||
(in millions)
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
||||
Pension benefits:
|
|
|
|
|
|
||||||||
Prepaid benefit cost
|
$
|
1,282
|
|
$
|
836
|
|
|
$
|
134
|
|
$
|
—
|
|
Accrued benefit cost
|
(191
|
)
|
(204
|
)
|
|
(63
|
)
|
(158
|
)
|
||||
Total pension benefits
|
$
|
1,091
|
|
$
|
632
|
|
|
$
|
71
|
|
$
|
(158
|
)
|
Healthcare benefits:
|
|
|
|
|
|
||||||||
Accrued benefit cost
|
$
|
(68
|
)
|
$
|
(72
|
)
|
|
$
|
(4
|
)
|
$
|
(4
|
)
|
Total healthcare benefits
|
$
|
(68
|
)
|
$
|
(72
|
)
|
|
$
|
(4
|
)
|
$
|
(4
|
)
|
Plans with obligations in
excess of plan assets
|
Domestic
|
|
Foreign
|
||||||||||
(in millions)
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
||||
Projected benefit obligation
|
$
|
191
|
|
$
|
224
|
|
|
$
|
68
|
|
$
|
149
|
|
Accumulated benefit obligation
|
191
|
|
224
|
|
|
61
|
|
142
|
|
||||
Fair value of plan assets
|
—
|
|
20
|
|
|
25
|
|
76
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Asset allocations
|
Domestic
|
|
Foreign
|
||||||
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
Equities
|
63
|
%
|
58
|
%
|
|
51
|
%
|
52
|
%
|
Fixed income
|
33
|
|
36
|
|
|
33
|
|
29
|
|
Private equities
|
1
|
|
1
|
|
|
—
|
|
—
|
|
Alternative investment
|
2
|
|
3
|
|
|
9
|
|
3
|
|
Real estate
|
—
|
|
—
|
|
|
4
|
|
4
|
|
Cash
|
1
|
|
2
|
|
|
3
|
|
12
|
|
Total pension benefits
|
100
|
%
|
100
|
%
|
|
100
|
%
|
100
|
%
|
Notes to Consolidated Financial Statements
(continued)
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
(a)
|
Funds of funds include multi-strategy hedge funds that utilize investment strategies that invest over both long-term investment and short-term investment horizons.
|
(b)
|
Venture capital and partnership interests do not have redemption rights. Distributions from such funds will be received as the underlying investments are liquidated.
|
(c)
|
Property funds include funds invested in regional real estate vehicles that hold direct interest in real estate properties.
|
(d)
|
Other contracts include assets invested in pooled accounts at insurance companies that are privately valued by the asset manager.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
|
Year ended Dec. 31,
|
||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Dividends from bank subsidiaries
|
$
|
1,405
|
|
$
|
125
|
|
$
|
145
|
|
Dividends from nonbank subsidiaries
|
382
|
|
798
|
|
207
|
|
|||
Interest revenue from bank subsidiaries
|
25
|
|
70
|
|
68
|
|
|||
Interest revenue from nonbank subsidiaries
|
171
|
|
121
|
|
91
|
|
|||
Gain on securities held for sale
|
—
|
|
—
|
|
3
|
|
|||
Other revenue
|
67
|
|
39
|
|
25
|
|
|||
Total revenue
|
2,050
|
|
1,153
|
|
539
|
|
|||
Interest (including, $73, $88, $69, to subsidiaries, respectively)
|
663
|
|
427
|
|
288
|
|
|||
Other expense
|
254
|
|
262
|
|
64
|
|
|||
Total expense
|
917
|
|
689
|
|
352
|
|
|||
Income before income taxes and equity in undistributed net income of subsidiaries
|
1,133
|
|
464
|
|
187
|
|
|||
(Benefit) for income taxes
|
(526
|
)
|
(333
|
)
|
(98
|
)
|
|||
Equity in undistributed net income:
|
|
|
|
||||||
Bank subsidiaries
|
1,524
|
|
2,474
|
|
2,004
|
|
|||
Nonbank subsidiaries
|
907
|
|
276
|
|
869
|
|
|||
Net income
|
4,090
|
|
3,547
|
|
3,158
|
|
|||
Preferred stock dividends
|
(175
|
)
|
(122
|
)
|
(105
|
)
|
|||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation
|
$
|
3,915
|
|
$
|
3,425
|
|
$
|
3,053
|
|
|
Dec. 31,
|
|||||
(in millions)
|
2017
|
|
2016
|
|
||
Assets:
|
|
|
||||
Cash and due from banks
|
$
|
1,301
|
|
$
|
9,117
|
|
Securities
|
40
|
|
1,693
|
|
||
Loans, net of allowance
|
—
|
|
7
|
|
||
Investment in and advances to subsidiaries and associated companies:
|
|
|
||||
Banks
|
32,967
|
|
32,771
|
|
||
Other
|
37,660
|
|
26,630
|
|
||
Subtotal
|
70,627
|
|
59,401
|
|
||
Corporate-owned life insurance
|
756
|
|
744
|
|
||
Other assets
|
1,135
|
|
885
|
|
||
Total assets
|
$
|
73,859
|
|
$
|
71,847
|
|
Liabilities:
|
|
|
||||
Deferred compensation
|
$
|
476
|
|
$
|
464
|
|
Affiliate borrowings
|
3,177
|
|
7,107
|
|
||
Other liabilities
|
1,373
|
|
1,445
|
|
||
Long-term debt
|
27,582
|
|
24,020
|
|
||
Total liabilities
|
32,608
|
|
33,036
|
|
||
Shareholders’ equity
|
41,251
|
|
38,811
|
|
||
Total liabilities and shareholders’ equity
|
$
|
73,859
|
|
$
|
71,847
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
|
Year ended Dec. 31,
|
||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Operating activities:
|
|
|
|
||||||
Net income
|
$
|
4,090
|
|
$
|
3,547
|
|
$
|
3,158
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
||||||
Equity in undistributed net (income) of subsidiaries
|
(2,431
|
)
|
(2,750
|
)
|
(2,873
|
)
|
|||
Change in accrued interest receivable
|
(6
|
)
|
2
|
|
(4
|
)
|
|||
Change in accrued interest payable
|
42
|
|
4
|
|
15
|
|
|||
Change in taxes payable
(a)
|
(600
|
)
|
452
|
|
132
|
|
|||
Other, net
|
38
|
|
(31
|
)
|
66
|
|
|||
Net cash provided by operating activities
|
1,133
|
|
1,224
|
|
494
|
|
|||
Investing activities:
|
|
|
|
||||||
Purchases of securities
|
(991
|
)
|
(1,739
|
)
|
—
|
|
|||
Proceeds from sales of securities
|
2,729
|
|
—
|
|
3
|
|
|||
Change in loans
|
7
|
|
13
|
|
56
|
|
|||
Acquisitions of, investments in, and advances to subsidiaries
(b)
|
(7,208
|
)
|
(317
|
)
|
(358
|
)
|
|||
Other, net
|
—
|
|
—
|
|
14
|
|
|||
Net cash (used for) investing activities
|
(5,463
|
)
|
(2,043
|
)
|
(285
|
)
|
|||
Financing activities:
|
|
|
|
||||||
Proceeds from issuance of long-term debt
|
4,738
|
|
6,229
|
|
4,986
|
|
|||
Repayments of long-term debt
|
(997
|
)
|
(2,700
|
)
|
(3,650
|
)
|
|||
Change in advances from subsidiaries
|
(3,930
|
)
|
(1,136
|
)
|
2,123
|
|
|||
Issuance of common stock
|
465
|
|
465
|
|
352
|
|
|||
Treasury stock acquired
|
(2,686
|
)
|
(2,398
|
)
|
(2,355
|
)
|
|||
Issuance of preferred stock
|
—
|
|
990
|
|
990
|
|
|||
Cash dividends paid
|
(1,076
|
)
|
(900
|
)
|
(865
|
)
|
|||
Tax benefit realized on share-based payment awards
|
—
|
|
3
|
|
76
|
|
|||
Net cash (used for) provided by financing activities
|
(3,486
|
)
|
553
|
|
1,657
|
|
|||
Change in cash and due from banks
|
(7,816
|
)
|
(266
|
)
|
1,866
|
|
|||
Cash and due from banks at beginning of year
|
9,117
|
|
9,383
|
|
7,517
|
|
|||
Cash and due from banks at end of year
|
$
|
1,301
|
|
$
|
9,117
|
|
$
|
9,383
|
|
Supplemental disclosures
|
|
|
|
||||||
Interest paid
|
$
|
705
|
|
$
|
409
|
|
$
|
302
|
|
Income taxes paid
|
61
|
|
1
|
|
158
|
|
|||
Income taxes refunded
|
15
|
|
12
|
|
103
|
|
(a)
|
Includes payments received from subsidiaries for taxes of
$189 million
in
2017
,
$189 million
in
2016
and
$24 million
in
2015
.
|
(b)
|
Includes
$10,296 million
of cash outflows, net of
$3,088 million
of cash inflows in 2017.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Assets measured at fair value on a recurring basis at Dec. 31, 2017
|
Total carrying
value |
|
|||||||||||||
(dollar amounts in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting
(a)
|
|
|||||||
Available-for-sale securities:
|
|
|
|
|
|
||||||||||
U.S. Treasury
|
$
|
15,263
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
15,263
|
|
U.S. government agencies
|
—
|
|
908
|
|
—
|
|
—
|
|
908
|
|
|||||
Sovereign debt/sovereign guaranteed
|
9,919
|
|
2,638
|
|
—
|
|
—
|
|
12,557
|
|
|||||
State and political subdivisions
|
—
|
|
2,957
|
|
—
|
|
—
|
|
2,957
|
|
|||||
Agency RMBS
|
—
|
|
23,819
|
|
—
|
|
—
|
|
23,819
|
|
|||||
Non-agency RMBS
|
—
|
|
487
|
|
—
|
|
—
|
|
487
|
|
|||||
Other RMBS
|
—
|
|
149
|
|
—
|
|
—
|
|
149
|
|
|||||
Commercial MBS
|
—
|
|
1,360
|
|
—
|
|
—
|
|
1,360
|
|
|||||
Agency commercial MBS
|
—
|
|
8,762
|
|
—
|
|
—
|
|
8,762
|
|
|||||
CLOs
|
—
|
|
2,909
|
|
—
|
|
—
|
|
2,909
|
|
|||||
Other asset-backed securities
|
—
|
|
1,043
|
|
—
|
|
—
|
|
1,043
|
|
|||||
Money market funds
(b)
|
963
|
|
—
|
|
—
|
|
—
|
|
963
|
|
|||||
Corporate bonds
|
—
|
|
1,255
|
|
—
|
|
—
|
|
1,255
|
|
|||||
Other debt securities
|
—
|
|
3,491
|
|
—
|
|
—
|
|
3,491
|
|
|||||
Foreign covered bonds
|
—
|
|
2,529
|
|
—
|
|
—
|
|
2,529
|
|
|||||
Non-agency RMBS
(c)
|
—
|
|
1,091
|
|
—
|
|
—
|
|
1,091
|
|
|||||
Total available-for-sale securities
|
26,145
|
|
53,398
|
|
—
|
|
—
|
|
79,543
|
|
|||||
Trading assets:
|
|
|
|
|
|
||||||||||
Debt and equity instruments
(b)
|
1,344
|
|
1,910
|
|
—
|
|
—
|
|
3,254
|
|
|||||
Derivative assets not designated as hedging:
|
|
|
|
|
|
||||||||||
Interest rate
|
9
|
|
6,430
|
|
—
|
|
(5,075
|
)
|
1,364
|
|
|||||
Foreign exchange
|
—
|
|
5,104
|
|
—
|
|
(3,720
|
)
|
1,384
|
|
|||||
Equity and other contracts
|
—
|
|
70
|
|
—
|
|
(50
|
)
|
20
|
|
|||||
Total derivative assets not designated as hedging
|
9
|
|
11,604
|
|
—
|
|
(8,845
|
)
|
2,768
|
|
|||||
Total trading assets
|
1,353
|
|
13,514
|
|
—
|
|
(8,845
|
)
|
6,022
|
|
|||||
Other assets:
|
|
|
|
|
|
||||||||||
Derivative assets designated as hedging:
|
|
|
|
|
|
||||||||||
Interest rate
|
—
|
|
278
|
|
—
|
|
—
|
|
278
|
|
|||||
Foreign exchange
|
—
|
|
45
|
|
—
|
|
—
|
|
45
|
|
|||||
Total derivative assets designated as hedging
|
—
|
|
323
|
|
—
|
|
—
|
|
323
|
|
|||||
Other assets
(d)
|
144
|
|
170
|
|
—
|
|
—
|
|
314
|
|
|||||
Other assets measured at NAV
(d)
|
|
|
|
|
154
|
|
|||||||||
Total other assets
|
144
|
|
493
|
|
—
|
|
—
|
|
791
|
|
|||||
Subtotal assets of operations at fair value
|
27,642
|
|
67,405
|
|
—
|
|
(8,845
|
)
|
86,356
|
|
|||||
Percentage of assets of operations prior to netting
|
29
|
%
|
71
|
%
|
—
|
%
|
|
|
|||||||
Assets of consolidated investment management funds
|
322
|
|
409
|
|
—
|
|
—
|
|
731
|
|
|||||
Total assets
|
$
|
27,964
|
|
$
|
67,814
|
|
$
|
—
|
|
$
|
(8,845
|
)
|
$
|
87,087
|
|
Percentage of total assets prior to netting
|
29
|
%
|
71
|
%
|
—
|
%
|
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Liabilities measured at fair value on a recurring basis at Dec. 31, 2017
|
Total carrying
value |
|
|||||||||||||
(dollar amounts in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting
(a)
|
|
|||||||
Trading liabilities:
|
|
|
|
|
|
||||||||||
Debt and equity instruments
|
$
|
1,128
|
|
$
|
80
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,208
|
|
Derivative liabilities not designated as hedging:
|
|
|
|
|
|
||||||||||
Interest rate
|
4
|
|
6,349
|
|
—
|
|
(5,495
|
)
|
858
|
|
|||||
Foreign exchange
|
—
|
|
5,067
|
|
—
|
|
(3,221
|
)
|
1,846
|
|
|||||
Equity and other contracts
|
—
|
|
153
|
|
—
|
|
(81
|
)
|
72
|
|
|||||
Total derivative liabilities not designated as hedging
|
4
|
|
11,569
|
|
—
|
|
(8,797
|
)
|
2,776
|
|
|||||
Total trading liabilities
|
1,132
|
|
11,649
|
|
—
|
|
(8,797
|
)
|
3,984
|
|
|||||
Long-term debt
(b)
|
—
|
|
367
|
|
—
|
|
—
|
|
367
|
|
|||||
Other liabilities
–
derivative liabilities designated as hedging:
|
|
|
|
|
|
||||||||||
Interest rate
|
—
|
|
534
|
|
—
|
|
—
|
|
534
|
|
|||||
Foreign exchange
|
—
|
|
266
|
|
—
|
|
—
|
|
266
|
|
|||||
Total other liabilities – derivative liabilities designated as hedging
|
—
|
|
800
|
|
—
|
|
—
|
|
800
|
|
|||||
Subtotal liabilities of operations at fair value
|
1,132
|
|
12,816
|
|
—
|
|
(8,797
|
)
|
5,151
|
|
|||||
Percentage of liabilities of operations prior to netting
|
8
|
%
|
92
|
%
|
—
|
%
|
|
|
|||||||
Liabilities of consolidated investment management funds
|
1
|
|
1
|
|
—
|
|
—
|
|
2
|
|
|||||
Total liabilities
|
$
|
1,133
|
|
$
|
12,817
|
|
$
|
—
|
|
$
|
(8,797
|
)
|
$
|
5,153
|
|
Percentage of total liabilities prior to netting
|
8
|
%
|
92
|
%
|
—
|
%
|
|
|
(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 NAV
(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 of operations 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 total 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 of operations 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 total 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
|
Dec. 31, 2017
|
|
Dec. 31, 2016
|
||||||||||||||||||||||
Total
carrying
value
(b)
|
|
|
Ratings
(a)
|
|
Total
carrying value
(b)
|
|
|
Ratings
(a)
|
|||||||||||||||||
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
|
$
|
40
|
|
|
—
|
%
|
—
|
%
|
—
|
%
|
100
|
%
|
|
$
|
58
|
|
|
—
|
%
|
—
|
%
|
—
|
%
|
100
|
%
|
2006
|
81
|
|
|
—
|
|
—
|
|
—
|
|
100
|
|
|
98
|
|
|
—
|
|
—
|
|
—
|
|
100
|
|
||
2005
|
142
|
|
|
19
|
|
3
|
|
17
|
|
61
|
|
|
180
|
|
|
23
|
|
5
|
|
9
|
|
63
|
|
||
2004 and earlier
|
224
|
|
|
4
|
|
3
|
|
34
|
|
59
|
|
|
302
|
|
|
5
|
|
3
|
|
24
|
|
68
|
|
||
Total non-agency RMBS
|
$
|
487
|
|
|
7
|
%
|
2
|
%
|
21
|
%
|
70
|
%
|
|
$
|
638
|
|
|
9
|
%
|
3
|
%
|
14
|
%
|
74
|
%
|
Commercial MBS - Domestic, originated in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2009-2017
|
$
|
1,309
|
|
|
94
|
%
|
6
|
%
|
—
|
%
|
—
|
%
|
|
$
|
674
|
|
|
84
|
%
|
16
|
%
|
—
|
%
|
—
|
%
|
2008
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
14
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
||
2007
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
190
|
|
|
71
|
|
29
|
|
—
|
|
—
|
|
||
2006
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
3
|
|
|
7
|
|
93
|
|
—
|
|
—
|
|
||
Total commercial MBS - Domestic
|
$
|
1,309
|
|
|
94
|
%
|
6
|
%
|
—
|
%
|
—
|
%
|
|
$
|
881
|
|
|
81
|
%
|
19
|
%
|
—
|
%
|
—
|
%
|
Foreign covered bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Canada
|
$
|
1,659
|
|
|
100
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
|
$
|
1,320
|
|
|
100
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
Australia
|
265
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
|
40
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
||
Netherlands
|
178
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
|
160
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
||
United Kingdom
|
103
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
|
280
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
||
Other
|
324
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
|
341
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
||
Total foreign covered bonds
|
$
|
2,529
|
|
|
100
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
|
$
|
2,141
|
|
|
100
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
European floating rate notes - available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United Kingdom
|
$
|
130
|
|
|
81
|
%
|
19
|
%
|
—
|
%
|
—
|
%
|
|
$
|
379
|
|
|
90
|
%
|
10
|
%
|
—
|
%
|
—
|
%
|
Netherlands
|
71
|
|
|
—
|
|
100
|
|
—
|
|
—
|
|
|
125
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
||
Ireland
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
58
|
|
|
—
|
|
—
|
|
100
|
|
—
|
|
||
Total European floating rate notes - available-for-sale
|
$
|
201
|
|
|
53
|
%
|
47
|
%
|
—
|
%
|
—
|
%
|
|
$
|
562
|
|
|
83
|
%
|
7
|
%
|
10
|
%
|
—
|
%
|
Sovereign debt/sovereign guaranteed:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United Kingdom
|
$
|
3,052
|
|
|
100
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
|
$
|
3,209
|
|
|
100
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
France
|
2,046
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
|
1,998
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
||
Spain
|
1,635
|
|
|
—
|
|
—
|
|
100
|
|
—
|
|
|
1,749
|
|
|
—
|
|
—
|
|
100
|
|
—
|
|
||
Germany
|
1,586
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
|
1,347
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
||
Italy
|
1,292
|
|
|
—
|
|
—
|
|
100
|
|
—
|
|
|
1,130
|
|
|
—
|
|
—
|
|
100
|
|
—
|
|
||
Netherlands
|
1,027
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
|
1,061
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
||
Ireland
|
843
|
|
|
—
|
|
100
|
|
—
|
|
—
|
|
|
736
|
|
|
—
|
|
100
|
|
—
|
|
—
|
|
||
Belgium
|
803
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
|
1,005
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
||
Other
(c)
|
273
|
|
|
50
|
|
—
|
|
—
|
|
50
|
|
|
254
|
|
|
71
|
|
—
|
|
—
|
|
29
|
|
||
Total sovereign debt/sovereign guaranteed
|
$
|
12,557
|
|
|
69
|
%
|
7
|
%
|
23
|
%
|
1
|
%
|
|
$
|
12,489
|
|
|
70
|
%
|
6
|
%
|
23
|
%
|
1
|
%
|
Non-agency RMBS
(d)
, originated in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2007
|
$
|
311
|
|
|
—
|
%
|
—
|
%
|
—
|
%
|
100
|
%
|
|
$
|
387
|
|
|
—
|
%
|
—
|
%
|
—
|
%
|
100
|
%
|
2006
|
306
|
|
|
—
|
|
—
|
|
—
|
|
100
|
|
|
391
|
|
|
—
|
|
—
|
|
—
|
|
100
|
|
||
2005
|
365
|
|
|
1
|
|
1
|
|
1
|
|
97
|
|
|
437
|
|
|
—
|
|
2
|
|
1
|
|
97
|
|
||
2004 and earlier
|
109
|
|
|
2
|
|
2
|
|
23
|
|
73
|
|
|
142
|
|
|
2
|
|
2
|
|
17
|
|
79
|
|
||
Total non-agency RMBS
(d)
|
$
|
1,091
|
|
|
—
|
%
|
1
|
%
|
3
|
%
|
96
|
%
|
|
$
|
1,357
|
|
|
—
|
%
|
1
|
%
|
2
|
%
|
97
|
%
|
(a)
|
Represents ratings by S&P or the equivalent.
|
(b)
|
At
Dec. 31, 2017
and
Dec. 31, 2016
, foreign covered bonds and sovereign debt/sovereign guaranteed securities 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.
|
(c)
|
Includes non-investment grade sovereign debt/sovereign guaranteed securities related to Brazil of
$136 million
at
Dec. 31, 2017
and
$73 million
at
Dec. 31, 2016
.
|
(d)
|
Previously included in the Grantor Trust. The Grantor Trust was dissolved in 2011.
|
Notes to Consolidated Financial Statements
(continued)
|
|
(a)
|
Reported in investment and other income.
|
Assets measured at fair value on a nonrecurring basis at Dec. 31, 2017
|
Total
carrying
value
|
|
||||||||||
|
|
|
|
|||||||||
(in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
||||||
Loans
(a)
|
$
|
—
|
|
$
|
73
|
|
$
|
6
|
|
$
|
79
|
|
Other assets
(b)
|
—
|
|
4
|
|
—
|
|
4
|
|
||||
Total assets at fair value on a nonrecurring basis
|
$
|
—
|
|
$
|
77
|
|
$
|
6
|
|
$
|
83
|
|
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 years ended
Dec. 31, 2017
and
Dec. 31, 2016
, the fair value of these loans decreased
$1 million
and
$2 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)
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Summary of financial instruments
|
Dec. 31, 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
|
$
|
—
|
|
$
|
91,510
|
|
$
|
—
|
|
$
|
91,510
|
|
$
|
91,510
|
|
Interest-bearing deposits with banks
|
—
|
|
11,982
|
|
—
|
|
11,982
|
|
11,979
|
|
|||||
Federal funds sold and securities purchased under resale agreements
|
—
|
|
28,135
|
|
—
|
|
28,135
|
|
28,135
|
|
|||||
Securities held-to-maturity
|
11,365
|
|
29,147
|
|
—
|
|
40,512
|
|
40,827
|
|
|||||
Loans
(a)
|
—
|
|
60,219
|
|
—
|
|
60,219
|
|
60,082
|
|
|||||
Other financial assets
|
5,382
|
|
1,244
|
|
—
|
|
6,626
|
|
6,626
|
|
|||||
Total
|
$
|
16,747
|
|
$
|
222,237
|
|
$
|
—
|
|
$
|
238,984
|
|
$
|
239,159
|
|
Liabilities:
|
|
|
|
|
|
||||||||||
Noninterest-bearing deposits
|
$
|
—
|
|
$
|
82,716
|
|
$
|
—
|
|
$
|
82,716
|
|
$
|
82,716
|
|
Interest-bearing deposits
|
—
|
|
160,042
|
|
—
|
|
160,042
|
|
161,606
|
|
|||||
Federal funds purchased and securities sold under repurchase agreements
|
—
|
|
15,163
|
|
—
|
|
15,163
|
|
15,163
|
|
|||||
Payables to customers and broker-dealers
|
—
|
|
20,184
|
|
—
|
|
20,184
|
|
20,184
|
|
|||||
Commercial paper
|
—
|
|
3,075
|
|
—
|
|
3,075
|
|
3,075
|
|
|||||
Borrowings
|
—
|
|
2,931
|
|
—
|
|
2,931
|
|
2,931
|
|
|||||
Long-term debt
|
—
|
|
27,789
|
|
—
|
|
27,789
|
|
27,612
|
|
|||||
Total
|
$
|
—
|
|
$
|
311,900
|
|
$
|
—
|
|
$
|
311,900
|
|
$
|
313,287
|
|
(a)
|
Does not include the leasing portfolio.
|
Notes to Consolidated Financial Statements
(continued)
|
|
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)
|
|
||||||||
Dec. 31, 2017
|
|
|
|
|
||||||||
Securities available-for-sale
|
$
|
12,307
|
|
$
|
12,365
|
|
$
|
102
|
|
$
|
(301
|
)
|
Long-term debt
|
23,821
|
|
23,950
|
|
175
|
|
(233
|
)
|
||||
Dec. 31, 2016
|
|
|||||||||||
Securities available-for-sale
|
$
|
9,184
|
|
$
|
9,233
|
|
$
|
83
|
|
$
|
(342
|
)
|
Long-term debt
|
20,511
|
|
20,450
|
|
330
|
|
(203
|
)
|
Assets and liabilities of consolidated investment management funds, at fair value
|
||||||
|
Dec. 31,
|
|||||
(in millions)
|
2017
|
|
2016
|
|
||
Assets of consolidated investment management funds:
|
|
|
||||
Trading assets
|
$
|
516
|
|
$
|
979
|
|
Other assets
|
215
|
|
252
|
|
||
Total assets of consolidated investment management funds
|
$
|
731
|
|
$
|
1,231
|
|
Liabilities of consolidated investment management funds:
|
|
|
||||
Trading liabilities
|
$
|
—
|
|
$
|
282
|
|
Other liabilities
|
2
|
|
33
|
|
||
Total liabilities of consolidated investment management funds
|
$
|
2
|
|
$
|
315
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
(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.
|
Off-balance sheet credit risks
|
Dec. 31,
|
|||||
(in millions)
|
2017
|
|
2016
|
|
||
Lending commitments
|
$
|
51,467
|
|
$
|
51,270
|
|
Standby letters of credit
(a)
|
3,531
|
|
4,185
|
|
||
Commercial letters of credit
|
122
|
|
339
|
|
||
Securities lending indemnifications
(b)(c)
|
432,084
|
|
317,690
|
|
(a)
|
Net of participations totaling
$672 million
at
Dec. 31, 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
$69 billion
at
Dec. 31, 2017
and
$61 billion
at
Dec. 31, 2016
.
|
(c)
|
Includes cash collateral, invested in indemnified repurchase agreements, held by us as securities lending agent of
$33 billion
at
Dec. 31, 2017
and
$28 billion
at
Dec. 31, 2016
.
|
Notes to Consolidated Financial Statements
(continued)
|
|
Financial institutions
portfolio exposure
(in billions)
|
Dec. 31, 2017
|
||||||||
Loans
|
|
Unfunded
commitments
|
|
Total
exposure
|
|
||||
Securities industry
|
$
|
3.6
|
|
$
|
19.2
|
|
$
|
22.8
|
|
Banks
|
7.0
|
|
1.2
|
|
8.2
|
|
|||
Asset managers
|
1.4
|
|
6.4
|
|
7.8
|
|
|||
Insurance
|
0.1
|
|
3.5
|
|
3.6
|
|
|||
Government
|
0.1
|
|
0.9
|
|
1.0
|
|
|||
Other
|
0.9
|
|
1.3
|
|
2.2
|
|
|||
Total
|
$
|
13.1
|
|
$
|
32.5
|
|
$
|
45.6
|
|
Commercial portfolio
exposure
(in billions)
|
Dec. 31, 2017
|
||||||||
Loans
|
|
Unfunded
commitments
|
|
Total
exposure
|
|
||||
Manufacturing
|
$
|
1.3
|
|
$
|
6.1
|
|
$
|
7.4
|
|
Services and other
|
0.9
|
|
6.0
|
|
6.9
|
|
|||
Energy and utilities
|
0.7
|
|
4.4
|
|
5.1
|
|
|||
Media and telecom
|
—
|
|
1.5
|
|
1.5
|
|
|||
Total
|
$
|
2.9
|
|
$
|
18.0
|
|
$
|
20.9
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Ineffectiveness
|
Year ended Dec. 31,
|
||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Fair value hedges of securities
|
$
|
(14.8
|
)
|
$
|
(0.5
|
)
|
$
|
4.1
|
|
Fair value hedges of long-term debt
|
(6.7
|
)
|
(3.1
|
)
|
(6.3
|
)
|
|||
Cash flow hedges
|
6.0
|
|
—
|
|
—
|
|
|||
Other
(a)
|
—
|
|
—
|
|
—
|
|
|||
Total
|
$
|
(15.5
|
)
|
$
|
(3.6
|
)
|
$
|
(2.2
|
)
|
(a)
|
Includes ineffectiveness recorded on net investment 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)
|
Dec. 31, 2017
|
|
Dec. 31, 2016
|
|
|
Dec. 31, 2017
|
|
Dec. 31, 2016
|
|
|
Dec. 31, 2017
|
|
Dec. 31, 2016
|
|
||||||
Derivatives designated as hedging instruments:
(a)
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate contracts
|
$
|
36,315
|
|
$
|
29,683
|
|
|
$
|
278
|
|
$
|
415
|
|
|
$
|
534
|
|
$
|
545
|
|
Foreign exchange contracts
|
8,923
|
|
7,796
|
|
|
45
|
|
369
|
|
|
266
|
|
52
|
|
||||||
Total derivatives designated as hedging instruments
|
|
|
|
$
|
323
|
|
$
|
784
|
|
|
$
|
800
|
|
$
|
597
|
|
||||
Derivatives not designated as hedging instruments:
(b)
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate contracts
|
$
|
267,485
|
|
$
|
325,412
|
|
|
$
|
6,439
|
|
$
|
7,587
|
|
|
$
|
6,353
|
|
$
|
7,633
|
|
Foreign exchange contracts
|
767,999
|
|
530,729
|
|
|
5,104
|
|
6,104
|
|
|
5,067
|
|
6,103
|
|
||||||
Equity contracts
|
1,698
|
|
1,167
|
|
|
70
|
|
46
|
|
|
149
|
|
112
|
|
||||||
Credit contracts
|
180
|
|
160
|
|
|
—
|
|
—
|
|
|
4
|
|
3
|
|
||||||
Total derivatives not designated as hedging instruments
|
|
|
|
$
|
11,613
|
|
$
|
13,737
|
|
|
$
|
11,573
|
|
$
|
13,851
|
|
||||
Total derivatives fair value
(c)
|
|
|
|
$
|
11,936
|
|
$
|
14,521
|
|
|
$
|
12,373
|
|
$
|
14,448
|
|
||||
Effect of master netting agreements
(d)
|
|
|
|
(8,845
|
)
|
(10,257
|
)
|
|
(8,797
|
)
|
(10,047
|
)
|
||||||||
Fair value after effect of master netting agreements
|
|
|
|
$
|
3,091
|
|
$
|
4,264
|
|
|
$
|
3,576
|
|
$
|
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
$925 million
and
$877 million
, respectively, at
Dec. 31, 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)
Year ended Dec. 31,
|
|
Location of gain or
(loss) reclassified
from accumulated
OCI into income
(effective portion)
|
|
Gain or (loss) reclassified
from accumulated
OCI into income
(effective portion)
Year ended Dec. 31,
|
|
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)
Year ended Dec. 31,
|
||||||||||||||||||||||||
2017
|
|
2016
|
|
2015
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
||||||||||||
FX contracts
|
$
|
—
|
|
$
|
(18
|
)
|
$
|
(1
|
)
|
|
Net interest revenue
|
|
$
|
—
|
|
$
|
(18
|
)
|
$
|
(1
|
)
|
|
Net interest revenue
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
FX contracts
|
2
|
|
—
|
|
—
|
|
|
Other revenue
|
|
2
|
|
—
|
|
—
|
|
|
Other revenue
|
|
6
|
|
—
|
|
—
|
|
|||||||||
FX contracts
|
1
|
|
(16
|
)
|
9
|
|
|
Trading revenue
|
|
2
|
|
(16
|
)
|
9
|
|
|
Trading revenue
|
|
—
|
|
—
|
|
—
|
|
|||||||||
FX contracts
|
30
|
|
(18
|
)
|
(8
|
)
|
|
Salary expense
|
|
10
|
|
(11
|
)
|
(19
|
)
|
|
Salary expense
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Total
|
$
|
33
|
|
$
|
(52
|
)
|
$
|
—
|
|
|
|
|
$
|
14
|
|
$
|
(45
|
)
|
$
|
(11
|
)
|
|
|
|
$
|
6
|
|
$
|
—
|
|
$
|
—
|
|
Derivatives in
net investment
hedging
relationships
|
Gain or (loss)
recognized in
accumulated OCI
on derivatives
(effective portion)
Year ended Dec. 31,
|
|
Location of gain or
(loss) reclassified
from accumulated
OCI into income
(effective portion)
|
|
Gain or (loss) reclassified
from accumulated
OCI into income
(effective portion)
Year ended Dec. 31,
|
|
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)
Year ended Dec. 31,
|
||||||||||||||||||||||||
2017
|
|
2016
|
|
2015
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
||||||||||||
FX contracts
|
$
|
(625
|
)
|
$
|
652
|
|
$
|
474
|
|
|
Net interest revenue
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1
|
|
|
Other revenue
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
Foreign exchange and other trading revenue
|
Year ended Dec. 31,
|
||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Foreign exchange
|
$
|
638
|
|
$
|
687
|
|
$
|
743
|
|
Other trading revenue
|
30
|
|
14
|
|
25
|
|
|||
Total foreign exchange and other trading revenue
|
$
|
668
|
|
$
|
701
|
|
$
|
768
|
|
Notes to Consolidated Financial Statements
(continued)
|
|
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-
|
|
$
|
92
|
million
|
Baa2/BBB
|
|
$
|
748
|
million
|
Ba1/BB+
|
|
$
|
2,007
|
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.
|
(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 Dec. 31, 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
|
$
|
6,810
|
|
$
|
5,495
|
|
|
$
|
1,315
|
|
$
|
1,222
|
|
$
|
—
|
|
$
|
93
|
|
Foreign exchange contracts
|
4,765
|
|
3,221
|
|
|
1,544
|
|
177
|
|
—
|
|
1,367
|
|
||||||
Equity and other contracts
|
143
|
|
81
|
|
|
62
|
|
58
|
|
—
|
|
4
|
|
||||||
Total derivatives subject to netting arrangements
|
11,718
|
|
8,797
|
|
|
2,921
|
|
1,457
|
|
—
|
|
1,464
|
|
||||||
Total derivatives not subject to netting arrangements
|
655
|
|
—
|
|
|
655
|
|
—
|
|
—
|
|
655
|
|
||||||
Total derivatives
|
12,373
|
|
8,797
|
|
|
3,576
|
|
1,457
|
|
—
|
|
2,119
|
|
||||||
Repurchase agreements
|
33,908
|
|
25,848
|
|
(b)
|
8,060
|
|
8,059
|
|
—
|
|
1
|
|
||||||
Securities lending
|
2,186
|
|
—
|
|
|
2,186
|
|
2,091
|
|
—
|
|
95
|
|
||||||
Total
|
$
|
48,467
|
|
$
|
34,645
|
|
|
$
|
13,822
|
|
$
|
11,607
|
|
$
|
—
|
|
$
|
2,215
|
|
(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)
|
|
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 with clients using custody products is included in Investment Services.
|
•
|
Net interest revenue is allocated to businesses based on the yields on the assets and liabilities generated by each business. We employ a funds transfer pricing system that matches funds with the specific assets and liabilities of each business based on their interest sensitivity and maturity characteristics.
|
•
|
The provision for credit losses associated with the respective credit portfolios is reflected in each business segment.
|
•
|
Incentives 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.
|
Notes to Consolidated Financial Statements
(continued)
|
|
For the year ended Dec. 31, 2017
|
Investment
Management |
|
|
Investment
Services |
|
|
Other
|
|
|
Consolidated
|
|
|
||||
(dollar amounts in millions)
|
||||||||||||||||
Fee and other revenue
|
$
|
3,668
|
|
(a)
|
$
|
8,527
|
|
|
$
|
7
|
|
|
$
|
12,202
|
|
(a)
|
Net interest revenue (expense)
|
329
|
|
|
3,058
|
|
|
(79
|
)
|
|
3,308
|
|
|
||||
Total revenue
|
3,997
|
|
(a)
|
11,585
|
|
|
(72
|
)
|
|
15,510
|
|
(a)
|
||||
Provision for credit losses
|
2
|
|
|
(7
|
)
|
|
(19
|
)
|
|
(24
|
)
|
|
||||
Noninterest expense
|
2,854
|
|
|
7,747
|
|
|
347
|
|
|
10,948
|
|
(b)
|
||||
Income before taxes
|
$
|
1,141
|
|
(a)
|
$
|
3,845
|
|
|
$
|
(400
|
)
|
|
$
|
4,586
|
|
(a)(b)
|
Pre-tax operating margin
(c)
|
29
|
%
|
|
33
|
%
|
|
N/M
|
|
|
30
|
%
|
|
||||
Average assets
|
$
|
31,450
|
|
|
$
|
254,646
|
|
|
$
|
57,752
|
|
|
$
|
343,848
|
|
|
(a)
|
Both total fee and other revenue and total revenue include net income from consolidated investment management funds of
$37 million
, representing
$70 million
of income and noncontrolling interests of
$33 million
. Income before taxes is net of noncontrolling interests of
$33 million
.
|
(b)
|
Noninterest expense includes a loss attributable to noncontrolling interest of
$9 million
related to other consolidated subsidiaries.
|
(c)
|
Income before taxes divided by total revenue.
|
For the year ended Dec. 31, 2016
|
Investment
Management |
|
|
Investment
Services |
|
|
Other
|
|
|
Consolidated
|
|
|
||||
(dollar amounts in millions)
|
||||||||||||||||
Fee and other revenue
|
$
|
3,424
|
|
(a)
|
$
|
8,299
|
|
|
$
|
366
|
|
|
$
|
12,089
|
|
(a)
|
Net interest revenue
|
327
|
|
|
2,797
|
|
|
14
|
|
|
3,138
|
|
|
||||
Total revenue
|
3,751
|
|
(a)
|
11,096
|
|
|
380
|
|
|
15,227
|
|
(a)
|
||||
Provision for credit losses
|
6
|
|
|
8
|
|
|
(25
|
)
|
|
(11
|
)
|
|
||||
Noninterest expense
|
2,778
|
|
|
7,342
|
|
|
394
|
|
|
10,514
|
|
(b)
|
||||
Income before taxes
|
$
|
967
|
|
(a)
|
$
|
3,746
|
|
|
$
|
11
|
|
|
$
|
4,724
|
|
(a)(b)
|
Pre-tax operating margin
(c)
|
26
|
%
|
|
34
|
%
|
|
N/M
|
|
|
31
|
%
|
|
||||
Average assets
|
$
|
30,169
|
|
|
$
|
273,808
|
|
|
$
|
54,500
|
|
|
$
|
358,477
|
|
|
(a)
|
Both total fee and other revenue and total revenue include net income from consolidated investment management funds of
$16 million
, representing
$26 million
of income and noncontrolling interests of
$10 million
. Income before taxes is net of noncontrolling interests of
$10 million
.
|
(b)
|
Noninterest expense includes a loss attributable to noncontrolling interest of
$9 million
related to other consolidated subsidiaries.
|
(c)
|
Income before taxes divided by total revenue.
|
For the year ended Dec. 31, 2015
|
Investment
Management |
|
|
Investment
Services |
|
|
Other
|
|
|
Consolidated
|
|
|
||||
(dollar amounts in millions)
|
||||||||||||||||
Fee and other revenue
|
$
|
3,587
|
|
(a)
|
$
|
8,177
|
|
|
$
|
336
|
|
|
$
|
12,100
|
|
(a)
|
Net interest revenue
|
319
|
|
|
2,622
|
|
|
85
|
|
|
3,026
|
|
|
||||
Total revenue
|
3,906
|
|
(a)
|
10,799
|
|
|
421
|
|
|
15,126
|
|
(a)
|
||||
Provision for credit losses
|
(1
|
)
|
|
28
|
|
|
133
|
|
|
160
|
|
|
||||
Noninterest expense
|
2,859
|
|
|
7,502
|
|
|
434
|
|
|
10,795
|
|
(b)
|
||||
Income before taxes
|
$
|
1,048
|
|
(a)
|
$
|
3,269
|
|
|
$
|
(146
|
)
|
|
$
|
4,171
|
|
(a)(b)
|
Pre-tax operating margin
(c)
|
27
|
%
|
|
30
|
%
|
|
N/M
|
|
|
28
|
%
|
|
||||
Average assets
|
$
|
30,928
|
|
|
$
|
286,617
|
|
|
$
|
54,642
|
|
|
$
|
372,187
|
|
|
(a)
|
Both total fee and other revenue and total revenue include net income from consolidated investment management funds of
$18 million
, representing
$86 million
of income and noncontrolling interests of
$68 million
. Income before taxes is net of noncontrolling interests of
$68 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.
|
Notes to Consolidated Financial Statements
(continued)
|
|
•
|
Income from international operations is determined after internal allocations for interest revenue, taxes, expenses and provision for credit losses.
|
•
|
Expense charges to international operations include those directly incurred in connection with such activities, as well as an allocable share of general support and overhead charges.
|
International operations
|
International
|
Total
International
|
|
Total
Domestic
|
|
|
||||||||||||||
(in millions)
|
EMEA
|
|
|
APAC
|
|
Other
|
|
Total
|
|
|||||||||||
2017
|
|
|
|
|
|
|
|
|
||||||||||||
|
Total assets at period end
(a)
|
$
|
88,490
|
|
(b)
|
$
|
20,676
|
|
$
|
1,737
|
|
$
|
110,903
|
|
$
|
260,855
|
|
$
|
371,758
|
|
|
Total revenue
|
3,982
|
|
(b)
|
997
|
|
610
|
|
5,589
|
|
9,954
|
|
15,543
|
|
||||||
|
Income before income taxes
|
1,497
|
|
|
538
|
|
296
|
|
2,331
|
|
2,279
|
|
4,610
|
|
||||||
|
Net income
|
1,186
|
|
|
426
|
|
234
|
|
1,846
|
|
2,268
|
|
4,114
|
|
||||||
2016
|
|
|
|
|
|
|
|
|
||||||||||||
|
Total assets at period end
(a)
|
$
|
73,303
|
|
(b)
|
$
|
18,074
|
|
$
|
1,350
|
|
$
|
92,727
|
|
$
|
240,742
|
|
$
|
333,469
|
|
|
Total revenue
|
3,744
|
|
(b)
|
922
|
|
549
|
|
5,215
|
|
10,022
|
|
15,237
|
|
||||||
|
Income before income taxes
|
1,263
|
|
|
485
|
|
286
|
|
2,034
|
|
2,691
|
|
4,725
|
|
||||||
|
Net income
|
1,013
|
|
|
389
|
|
229
|
|
1,631
|
|
1,917
|
|
3,548
|
|
||||||
2015
|
|
|
|
|
|
|
|
|
||||||||||||
|
Total assets at period end
(a)
|
$
|
76,679
|
|
(b)
|
$
|
17,829
|
|
$
|
1,176
|
|
$
|
95,684
|
|
$
|
298,096
|
|
$
|
393,780
|
|
|
Total revenue
|
3,932
|
|
(b)
|
904
|
|
577
|
|
5,413
|
|
9,781
|
|
15,194
|
|
||||||
|
Income before income taxes
|
1,436
|
|
|
451
|
|
269
|
|
2,156
|
|
2,079
|
|
4,235
|
|
||||||
|
Net income
|
1,163
|
|
|
365
|
|
218
|
|
1,746
|
|
1,476
|
|
3,222
|
|
(a)
|
Total assets include long-lived assets, which are not considered by management to be significant in relation to total assets. Long-lived assets are primarily located in the United States.
|
(b)
|
Includes revenue of approximately
$2.4 billion
,
$2.2 billion
and
$2.3 billion
and assets of approximately
$32.9 billion
,
$29.6 billion
and
$33.2 billion
in 2017, 2016 and 2015, respectively, of international operations domiciled in the UK, which is
15%
,
14%
and
15%
of total revenue and
9%
,
9%
and
8%
of total assets, respectively.
|
Non-cash investing and financing transactions
|
Year ended Dec. 31,
|
||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Transfers from loans to other assets for other real estate owned (“OREO”)
|
$
|
3
|
|
$
|
4
|
|
$
|
7
|
|
Change in assets of consolidated VIEs
|
500
|
|
170
|
|
7,881
|
|
|||
Change in liabilities of consolidated VIEs
|
313
|
|
69
|
|
7,423
|
|
|||
Change in nonredeemable noncontrolling interests of consolidated investment management funds
|
302
|
|
120
|
|
295
|
|
|||
Securities purchased not settled
|
112
|
|
75
|
|
—
|
|
|||
Securities sales not settled
|
587
|
|
—
|
|
11
|
|
|||
Securities matured not settled
|
70
|
|
—
|
|
—
|
|
|||
Available-for-sale securities transferred to held-to-maturity
|
—
|
|
—
|
|
11,602
|
|
|||
Held-to-maturity securities transferred to available-for-sale
|
74
|
|
10
|
|
—
|
|
|||
Premises and equipment/capitalized software funded by capital lease obligations
|
347
|
|
13
|
|
49
|
|
Report of Independent Registered Public Accounting Firm
|
|
Directors, Executive Committee and Other Executive Officers
|
|
*
|
Designated as an Executive Officer.
|
Performance Graph
|
|
Cumulative shareholder returns
(a)
|
Dec. 31,
|
||||||||||||||||||||||
(in dollars)
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
||||||
The Bank of New York Mellon Corporation
|
$
|
100.0
|
|
|
$
|
138.7
|
|
|
$
|
164.0
|
|
|
$
|
169.4
|
|
|
$
|
198.3
|
|
|
$
|
229.4
|
|
S&P 500 Financial Index
|
100.0
|
|
|
135.6
|
|
|
156.3
|
|
|
153.9
|
|
|
188.9
|
|
|
230.9
|
|
||||||
S&P 500 Index
|
100.0
|
|
|
132.4
|
|
|
150.5
|
|
|
152.6
|
|
|
170.8
|
|
|
208.1
|
|
||||||
Peer Group
|
100.0
|
|
|
142.6
|
|
|
164.6
|
|
|
164.3
|
|
|
198.7
|
|
|
240.7
|
|
(a)
|
Returns are weighted by market capitalization at the beginning of the measurement period.
|
Peer Group
|
|
|
BlackRock, Inc.
The Charles Schwab Corporation Franklin Resources, Inc. JPMorgan Chase & Co. |
Morgan Stanley
Northern Trust Corporation
The PNC Financial Services Group, Inc. Prudential Financial, Inc. |
State Street Corporation
U.S. Bancorp Wells Fargo & Company |
The following are primary subsidiaries of The Bank of New York Mellon Corporation as of Dec. 31, 2017 and the states or jurisdictions in which they are organized. The names of particular subsidiaries have been omitted because, considered in the aggregate as a single subsidiary, they would not constitute, as of Dec. 31, 2017, a “significant subsidiary” as that term is defined in Rule 1-02(w) of Regulation S-X under the Securities Exchange Act of 1934, as amended.
|
•
|
BNY Capital Funding LLC – State of Organization: Delaware
|
•
|
BNY Capital Markets Holdings, Inc. – State of Incorporation: New York
|
•
|
BNY Capital Resources Corporation – State of Incorporation: New York
|
•
|
BNY International Financing Corporation – Incorporation: United States
|
•
|
BNY Markets Limited – Incorporation: England
|
•
|
BNY Mellon IHC, LLC - State or Organization: Delaware
|
•
|
BNY Mellon Capital Markets, LLC – State of Organization: Delaware
|
•
|
BNY Mellon Fund Managers Limited – Incorporation: England
|
•
|
BNY Mellon Global Management Limited – Incorporation: Ireland
|
•
|
BNY Mellon Asset Management Japan Limited – Incorporation: Japan
|
•
|
BNY Mellon International Asset Management Group Limited – Incorporation: England
|
•
|
BNY Mellon International Asset Management (Holdings) Limited – Incorporation: England and Wales
|
•
|
BNY Mellon International Asset Management (Holdings) No. 1 Limited – Incorporation: England and Wales
|
•
|
BNY Mellon Investment Management (APAC) Holdings Limited – Incorporation: England
|
•
|
BNY Mellon Investment Management APAC LP – Incorporation: England and Wales
|
•
|
BNY Mellon Investment Management Cayman Ltd. – Incorporation: Cayman Islands
|
•
|
BNY Mellon Investment Management EMEA Limited – Incorporation: England
|
•
|
BNY Mellon Investment Management Europe Holdings Limited – Incorporation: England
|
•
|
BNY Mellon Investment Management (Europe) Limited – Incorporation: England
|
•
|
BNY Mellon Investment Management (Jersey) Limited – Incorporation: Jersey
|
•
|
BNY Mellon Investment Management Holdings LLC – State or Organization: Delaware
|
•
|
BNY Mellon Investment Servicing (US) Inc. – State of Incorporation: Massachusetts
|
•
|
BNY Mellon, National Association – Incorporation: United States
|
•
|
BNY Mellon Securities Services (Ireland) Limited – Incorporation: Ireland
|
•
|
BNY Mellon Trust Company (Ireland) Limited – Incorporation: Ireland
|
•
|
BNY Mellon US Services Holdings LLC – State of Organization: Delaware
|
•
|
Insight Investment Management (Global) Limited – Incorporation: England
|
•
|
Insight Investment Management (Ireland) Limited – Incorporation: Ireland
|
•
|
Insight Investment Management Limited – Incorporation: England
|
•
|
MBC Investments Corporation – State of Incorporation: Delaware
|
•
|
Mellon Canada Holding Company – Incorporation: Canada
|
•
|
Mellon Overseas Investment Corporation – Incorporation: United States
|
•
|
PAS Holdings LLC – State of Organization: Delaware
|
•
|
Pershing Advisor Solutions LLC – State of Organization: Delaware
|
•
|
Pershing Group LLC – State of Organization: Delaware
|
•
|
Pershing Holdings (UK) Limited – Incorporation: England
|
•
|
Pershing Limited – Incorporation: England
|
•
|
Pershing LLC – State of Organization: Delaware
|
•
|
Pershing Securities Limited – Incorporation: England
|
•
|
The Bank of New York Mellon – State of Organization: New York
|
•
|
The Bank of New York Mellon (International) Limited – Incorporation: England
|
•
|
The Bank of New York Mellon SA/NV – Incorporation: Belgium
|
•
|
The Dreyfus Corporation – State of Incorporation: New York
|
•
|
Walter Scott & Partners Limited – Incorporation: Scotland
|
Form
|
Registration Statement
|
Filer
|
S-8
|
333-198152
|
The Bank of New York Mellon Corporation
|
S-8
|
333-174342
|
The Bank of New York Mellon Corporation
|
S-8
|
333-171258
|
The Bank of New York Mellon Corporation
|
S-8
|
333-150324
|
The Bank of New York Mellon Corporation
|
S-8
|
333-150323
|
The Bank of New York Mellon Corporation
|
S-8
|
333-149473
|
The Bank of New York Mellon Corporation
|
S-8
|
333-144216
|
The Bank of New York Mellon Corporation
|
S-3
|
333-209450
|
The Bank of New York Mellon Corporation
|
S-3
|
333-211248
|
The Bank of New York Mellon Corporation
|
/s/ Linda Z. Cook
|
|
/s/ John A. Luke, Jr.
|
|
Linda Z. Cook, Director
|
|
John A. Luke, Jr., Director
|
|
|
|
|
|
/s/ Joseph J. Echevarria
|
|
/s/ Jennifer B. Morgan
|
|
Joseph J. Echevarria, Director
|
|
Jennifer B. Morgan, Director
|
|
|
|
|
|
/s/ Edward P. Garden
|
|
/s/ Mark A. Nordenberg
|
|
Edward P. Garden, Director
|
|
Mark A. Nordenberg, Director
|
|
|
|
|
|
/s/ Jeffrey A. Goldstein
|
|
/s/ Elizabeth E. Robinson
|
|
Jeffrey A. Goldstein, Director
|
|
Elizabeth E. Robinson, Director
|
|
|
|
|
|
/s/ John M. Hinshaw
|
|
/s/ Samuel C. Scott III
|
|
John M. Hinshaw, Director
|
|
Samuel C. Scott III, Director
|
|
|
|
|
|
/s/ Edmund F. Kelly
|
|
|
|
Edmund F. Kelly, Director
|
|
|
|
1.
|
I have reviewed this annual report on Form 10-K 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 annual report on Form 10-K 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/ Michael P. Santomassimo
|
|
Name: Michael P. Santomassimo
|
|
Title: Chief Financial Officer
|
|
Dated: February 28, 2018
|
|
/s/ Charles W. Scharf
|
|
|
|
|
Name:
|
Charles W. Scharf
|
|
|
|
Title:
|
Chief Executive Officer
|
|
Dated: February 28, 2018
|
|
/s/ Michael P. Santomassimo
|
|
|
|
|
Name:
|
Michael P. Santomassimo
|
|
|
|
Title:
|
Chief Financial Officer
|
|