Form 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ ü ] Quarterly Report Pursuant To Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended June 30, 2010
or
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission File No. 000-52710
THE BANK OF NEW YORK MELLON CORPORATION
(Exact name of registrant as specified in its charter)
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| Delaware |
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13-2614959 |
(State or other jurisdiction of
incorporation or organization) |
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(I.R.S. Employer Identification No.) |
One Wall Street
New York, New York 10286
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code -- (212) 495-1784
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
ü No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes
ü No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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[ü ] |
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Accelerated filer [ ] |
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Non-accelerated filer |
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[ ] (Do not check if a smaller reporting company) |
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Smaller reporting company [ ] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes No ü
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
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| Class |
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Outstanding as of
June 30, 2010 |
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| Common Stock, $0.01 par value |
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1,214,041,681 |
THE BANK OF NEW YORK MELLON CORPORATION
SECOND QUARTER 2010 FORM 10-Q
TABLE OF CONTENTS
BNY Mellon 1
The Bank of New York Mellon Corporation
Consolidated Financial Highlights (unaudited)
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Quarter ended |
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Six months ended |
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| (dollar amounts in millions, except per share amounts
and unless otherwise noted) |
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June 30,
2010 |
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March 31,
2010 |
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June 30,
2009 |
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June 30,
2010 |
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June 30,
2009 |
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| Reported results applicable to common shareholders of The Bank of New York Mellon Corporation: |
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| Net income |
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$ |
658 |
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$ |
559 |
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$ |
176 |
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$ |
1,217 |
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$ |
498 |
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| Basic EPS |
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0.54 |
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0.46 |
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0.15 |
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1.00 |
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0.43 |
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| Diluted EPS |
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0.54 |
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0.46 |
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0.15 |
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1.00 |
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0.43 |
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| Results from continuing operations applicable to common shareholders of The Bank of New York Mellon
Corporation: |
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| Income from continuing operations |
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$ |
668 |
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$ |
601 |
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$ |
267 |
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$ |
1,269 |
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$ |
630 |
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| Basic EPS from continuing operations |
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0.55 |
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0.50 |
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0.23 |
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1.04 |
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0.54 |
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| Diluted EPS from continuing operations |
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0.55 |
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0.49 |
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0.23 |
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1.04 |
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0.54 |
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| Continuing operations: |
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| Fee and other revenue |
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$ |
2,571 |
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$ |
2,549 |
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$ |
2,257 |
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$ |
5,120 |
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$ |
4,393 |
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| Income of consolidated asset management funds |
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65 |
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65 |
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- |
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130 |
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- |
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| Net interest revenue |
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722 |
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765 |
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700 |
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1,487 |
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1,475 |
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| Total revenue |
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$ |
3,358 |
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$ |
3,379 |
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$ |
2,957 |
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$ |
6,737 |
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$ |
5,868 |
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| Return on common equity (annualized) (a)(b) |
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8.8 |
% |
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8.2 |
% |
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4.0 |
% |
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8.5 |
% |
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4.9 |
% |
| Non-GAAP adjusted (b) |
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9.5 |
% |
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10.6 |
% |
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6.6 |
% |
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10.0 |
% |
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8.6 |
% |
| Return on tangible common equity (annualized) – |
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| Non-GAAP (b) |
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25.8 |
% |
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25.8 |
% |
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18.4 |
% |
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25.7 |
% |
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23.2 |
% |
| Non-GAAP adjusted (b) |
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25.5 |
% |
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30.2 |
% |
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24.0 |
% |
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27.7 |
% |
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33.3 |
% |
| Fee and other revenue as a percent of total revenue |
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77 |
% |
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75 |
% |
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76 |
% |
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76 |
% |
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75 |
% |
| Annualized fee revenue per employee
(based on average headcount) (in thousands) |
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$ |
241 |
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$ |
244 |
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$ |
241 |
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$ |
243 |
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$ |
238 |
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| Percent of non-U.S. fee and net interest revenue including noncontrolling interests related to consolidated asset management
funds |
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35 |
% |
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34 |
% |
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31 |
% |
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35 |
% |
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30 |
% |
| Pre-tax operating margin (b) |
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30 |
% |
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26 |
% |
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17 |
% |
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28 |
% |
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18 |
% |
| Non-GAAP adjusted (b) |
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32 |
% |
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34 |
% |
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31 |
% |
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33 |
% |
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32 |
% |
| Net interest margin (FTE) |
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1.74 |
% |
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1.89 |
% |
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1.80 |
% |
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1.82 |
% |
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1.84 |
% (c) |
| Assets under management (“AUM”) at period end (in billions) |
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$ |
1,047 |
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$ |
1,105 |
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$ |
926 |
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$ |
1,047 |
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$ |
926 |
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| Assets under custody and administration (“AUC”) at period end (in trillions) |
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$ |
21.8 |
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$ |
22.4 |
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$ |
20.7 |
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$ |
21.8 |
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$ |
20.7 |
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| Equity securities |
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28 |
% |
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30 |
% |
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27 |
% |
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28 |
% |
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27 |
% |
| Fixed income securities |
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72 |
% |
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70 |
% |
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73 |
% |
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72 |
% |
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73 |
% |
| Cross-border assets at period end (in trillions) |
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$ |
8.3 |
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$ |
8.8 |
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$ |
7.8 |
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$ |
8.3 |
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$ |
7.8 |
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| Market value of securities on loan at period end (in billions) (d) |
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$ |
248 |
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$ |
253 |
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$ |
290 |
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$ |
248 |
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$ |
290 |
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| Average common shares and equivalents outstanding (in thousands): |
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| Basic |
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1,204,557 |
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1,202,533 |
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1,171,081 |
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1,203,554 |
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1,158,649 |
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| Diluted |
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1,208,830 |
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1,206,286 |
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1,174,466 |
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1,207,578 |
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1,160,620 |
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2 BNY Mellon
The Bank of New York Mellon Corporation
Consolidated Financial Highlights (unaudited) (continued)
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Quarter ended |
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Six months ended |
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| (dollar amounts in millions, except per share amounts
and unless otherwise noted) |
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June 30,
2010 |
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March 31,
2010 |
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June 30,
2009 |
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June 30,
2010 |
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June 30,
2009 |
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| Capital ratios (e): |
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| Tier 1 capital ratio |
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13.5 |
% |
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13.3 |
% |
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12.5 |
% |
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13.5 |
% |
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12.5 |
% |
| Total (Tier 1 plus Tier 2) capital ratio |
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17.2 |
% |
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17.2 |
% |
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16.0 |
% |
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17.2 |
% |
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16.0 |
% |
| Common shareholders’ equity to total assets ratio (b) |
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12.9 |
% |
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13.5 |
% |
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13.4 |
% |
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12.9 |
% |
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13.4 |
% |
| Tangible common shareholders’ equity to tangible assets of operations ratio – Non-GAAP (b) |
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6.3 |
% |
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6.1 |
% |
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4.8 |
% |
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6.3 |
% |
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4.8 |
% |
| Tier 1 common equity to risk-weighted assets ratio (b) |
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11.9 |
% |
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11.6 |
% |
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11.1 |
% |
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11.9 |
% |
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11.1 |
% |
| Return on average assets (annualized) (a) |
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1.17 |
% |
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1.09 |
% |
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0.52 |
% |
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1.13 |
% |
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0.60 |
% |
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| Selected average balances: |
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| Interest-earning assets |
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$ |
167,119 |
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$ |
163,429 |
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$ |
157,265 |
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$ |
165,285 |
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$ |
162,318 |
(f) |
| Assets of operations |
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$ |
216,801 |
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$ |
212,685 |
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$ |
208,533 |
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$ |
214,755 |
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$ |
214,294 |
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| Total assets |
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$ |
228,841 |
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$ |
225,415 |
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$ |
208,533 |
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$ |
227,138 |
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$ |
214,294 |
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| Interest-bearing deposits |
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$ |
99,963 |
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$ |
101,034 |
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$ |
98,896 |
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$ |
100,496 |
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$ |
100,430 |
(f) |
| Noninterest-bearing deposits |
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$ |
34,628 |
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$ |
33,330 |
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$ |
32,852 |
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$ |
33,983 |
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$ |
37,924 |
(f) |
| Total The Bank of New York Mellon Corporation shareholders’ equity |
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$ |
30,434 |
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$ |
29,715 |
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$ |
28,934 |
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$ |
30,076 |
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$ |
28,458 |
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| Other information at period end: |
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| Employees |
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42,700 |
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42,300 |
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41,800 |
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42,700 |
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41,800 |
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| Cash dividends per common share |
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$ |
0.09 |
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$ |
0.09 |
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$ |
0.09 |
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$ |
0.18 |
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$ |
0.33 |
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| Dividend yield (annualized) |
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1.5 |
% |
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1.2 |
% |
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1.2 |
% |
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1.5 |
% |
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2.3 |
% |
| Closing common stock price per common share |
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$ |
24.69 |
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$ |
30.88 |
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$ |
29.31 |
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$ |
24.69 |
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$ |
29.31 |
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| Market capitalization |
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$ |
29,975 |
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$ |
37,456 |
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$ |
35,255 |
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$ |
29,975 |
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$ |
35,255 |
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| Book value per common share (b) |
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$ |
25.04 |
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$ |
24.47 |
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$ |
22.68 |
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$ |
25.04 |
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$ |
22.68 |
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| Tangible book value per common share – Non-GAAP (b) |
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$ |
9.33 |
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$ |
8.69 |
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$ |
6.60 |
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$ |
9.33 |
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$ |
6.60 |
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| Common shares outstanding (in thousands) |
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1,214,042 |
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1,212,941 |
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1,202,828 |
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1,214,042 |
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1,202,828 |
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| (a) |
Return on common equity on a net income basis was 8.7% for the second quarter of 2010, 7.6% for the first quarter of 2010, 2.7% for the second quarter of 2009, 8.2%
for the first six months of 2010 and 3.9% for the first six months of 2009. Return on average assets on a net income basis was 1.15% for the second quarter of 2010, 1.01% for the first quarter of 2010, 0.34% for the second quarter of 2009, 1.08% for
the first six months of 2010 and 0.47% for the first six months of 2009. Return on average assets was calculated on a continuing operations basis even though the prior period balance sheets, in accordance with GAAP, have not been restated for
discontinued operations. |
| (b) |
See Supplemental Information beginning on page 50 for a calculation of these ratios. |
| (c) |
Calculated on a continuing operations basis, even though the prior period balance sheet in accordance with GAAP has not been restated for discontinued operations.
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| (d) |
Represents the total amount of securities on loan, both cash and non-cash, managed by the Asset Servicing segment. |
| (e) |
Includes discontinued operations. |
| (f) |
Excludes the impact of discontinued operations. |
BNY Mellon 3
Part I – Financial Information
Items 2. and 3. Management’s Discussion and Analysis of Financial Condition and Results of Operations; Quantitative and Qualitative
Disclosures about Market Risk
General
In this Quarterly Report on Form 10-Q, references to “our,” “we,” “us,” “BNY Mellon,” the “Company,”
and similar terms refer to The Bank of New York Mellon Corporation.
Certain business terms used in this document are defined in the glossary
included in our 2009 Annual Report on
Form 10-K.
The following should be read in conjunction with the Consolidated Financial Statements included in this report. Investors should also read the section
entitled “Forward-looking Statements.”
How we reported results
All information in this Quarterly Report on Form 10-Q is reported on a continuing operations basis, unless otherwise noted. For a description of
discontinued operations, see Note 4 to the Notes to Consolidated Financial Statements.
Throughout this Form 10-Q, certain measures,
which are noted, exclude certain items. BNY Mellon believes that these measures are useful to investors because they permit a focus on period-to-period comparisons, which relate to our ability to enhance revenues and limit expenses in circumstances
where such matters are within our control. We also present certain amounts on a fully taxable equivalent (“FTE”) basis. We believe that this presentation allows for comparison 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. See “Supplemental information – Explanation of Non-GAAP financial measures” beginning on page 50 for a reconciliation of financial
measures presented in accordance with GAAP to adjusted Non-GAAP financial measures.
In the first quarter of 2010, we adopted ASU 2009-16,
“Accounting for Transfers of Financial Assets” and ASU 2009-17, “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities.” For a discussion of ASU 2009-16 and ASU 2009-17, see Notes 2 and 13 in
the Notes to Consolidated Financial Statements.
Overview
BNY Mellon is a global leader in providing a comprehensive array of services that enable institutions and individuals to manage and service their
financial assets, operating in 36 countries and serving more than 100 markets worldwide. We strive to be the global provider of choice for asset and wealth management and institutional services and be recognized for our broad and deep capabilities,
superior client service and consistent outperformance versus peers. Our global client base consists of financial institutions, corporations, government agencies, high-net-worth individuals, families, endowments and foundations and related entities.
At June 30, 2010, we had $21.8 trillion in assets under custody and administration and $1.0 trillion in assets under management, serviced $11.6 trillion in outstanding debt and, on average, we process $1.5 trillion of global payments per day.
BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE symbol: BK).
BNY Mellon’s businesses benefit during
periods of global growth in financial assets and concentration of wealth, and also benefit from the globalization of the investment process. Over the long term, our financial goals are focused on deploying capital to accelerate the long-term growth
of our businesses and on achieving superior total returns to shareholders by generating first quartile earnings per share growth over time relative to a group of peer companies.
Key components of our strategy include: providing superior client service versus peers; strong investment performance (relative to investment
benchmarks); above median revenue growth (relative to peer companies for each of our businesses); an increasing percentage of revenue and income derived from outside the U.S.; successful integration of acquisitions; competitive margins; and positive
operating leverage. We have established Tier 1 capital as our principal capital measure and have established a targeted ratio of Tier 1 capital to risk-weighted assets of 10%.
4 BNY Mellon
Second quarter 2010 and subsequent events
Equity offering and forward sale agreement
In June 2010, BNY Mellon priced 25.9 million common shares in an underwritten public offering, at $27.00 per common share, for a total of $700
million. In connection with this offering, BNY Mellon entered into a forward sale agreement with a forward purchaser, who borrowed and sold to the public through the underwriters shares of the Company’s common stock. The Company will not
receive any proceeds from the sale of its common stock until settlement of the forward sale agreement, which is expected to occur in the third quarter of 2010. The Company intends to use any proceeds that it receives upon settlement of the forward
sale agreement to fund the acquisition of Global Investment Servicing, Inc. or for general corporate purposes.
Acquisition of Global
Investment Servicing, Inc.
On July 1, 2010, BNY Mellon acquired Global Investment Servicing, Inc. (“GIS”) for cash of $2.31
billion. GIS provides a comprehensive suite of products which includes subaccounting, fund accounting/administration, custody, managed account services and alternative investment services. GIS is based in Wilmington, Delaware and has approximately
4,500 employees in locations across the U.S. and Europe.
At June 30, 2010, GIS had approximately $719 billion in assets under
administration, including $449 billion in assets under custody. GIS will be included in the Institutional Services sector for reporting purposes. The transaction is expected to be accretive to earnings in 2010.
Approximately $3.9 billion of deposits related to GIS are expected to transition to BNY Mellon over the next eighteen months. Beginning in the third
quarter of 2010 and until the transition is complete, we will receive net economic value payments for these deposits.
Acquisition of BHF
Asset Servicing GmbH
On Aug. 2, 2010, BNY Mellon completed the acquisition of BHF Asset Servicing GmbH (“BAS”) for cash of
EUR253 million (US$330 million). This
transaction included the purchase of Frankfurter Service Kapitalanlage – Gesellschaft mbH (“FSKAG”), a wholly-owned fund administration affiliate.
BAS and FSKAG will become part of BNY Mellon’s Asset Servicing segment. The combined business offers a full range of tailored solutions for
investment companies, financial institutions and institutional investors in Germany with EUR569 billion (US$744 billion) in assets under custody and administration and depotbanking volume of EUR122 billion (US$159 billion). The transaction is
expected to be accretive to earnings in 2010.
Asset Management joint venture in Shanghai
In July 2010, the China Securities Regulatory Commission authorized BNY Mellon and Western Securities to establish a joint venture fund management company
in China. The new company, BNY Mellon Western Fund Management Company Limited, will be owned by BNY Mellon (49%) and Western Securities (51%).
BNY Mellon Western Fund Management will initially manage domestic Chinese securities in a range of local retail fund products. BNY Mellon Western Fund
Management will also focus on leveraging distribution within the Chinese banking and securities sectors.
Agreement to acquire I(3)
Advisors
On June 18, 2010, BNY Mellon announced an agreement to acquire I(3) Advisors of Toronto, an independent wealth advisory
company with more than C$3.5 billion in assets under advisement. This will be BNY Mellon’s first wealth management acquisition in Canada, and is another step in the international expansion of our wealth management business. The combined
business will offer clients broader global asset management opportunities, increased access to alternative investment opportunities, enhanced technology and reporting capabilities and expanded banking and wealth planning services. The transaction is
expected to close in the third quarter of 2010, subject to regulatory approvals.
Asset Management license in Korea
In June 2010, BNY Mellon received approval from Korea’s Financial Services Commission for a
BNY Mellon 5
Discretionary Investment Management (“DIM”) license. The DIM license allows BNY Mellon to contract for discretionary investment management services with local financial institutions and
professional investors.
Creation of a Futures and Derivates Clearing Company
In June 2010, BNY Mellon Clearing, LLC (“BNY Mellon Clearing”), our wholly-owned subsidiary, became a futures commission merchant registered
with the Commodity Futures Trading Commission and a member of the National Futures Association. BNY Mellon Clearing will clear futures and derivatives trades on behalf of institutional clients as well as BNY Mellon’s internal derivatives
clearing activity. We anticipate that BNY Mellon Clearing will become a clearing member on major exchanges and central clearinghouses on a global basis to support clients’ trading activities.
Highlights of second quarter 2010 results
We reported income from continuing operations applicable to the common shareholders of BNY Mellon of $668 million, or $0.55 per diluted common
share, in the second quarter of 2010 compared with $601 million, or $0.49 per diluted common share, in the first quarter of 2010 and $267 million, or $0.23 per diluted common share, in the second quarter of 2009.
Net income applicable to common shareholders, including discontinued operations, totaled $658 million, or $0.54 per diluted common share, in the second
quarter of 2010, compared with $559 million, or $0.46 per diluted common share, in the first quarter of 2010 and $176 million, or $0.15 per diluted common share, in the second quarter of 2009.
Highlights for the second quarter of 2010 include:
| • |
|
Assets under custody and administration (“AUC”) totaled $21.8 trillion at June 30, 2010 compared with $20.7 trillion at June 30,
2009 and $22.4 trillion at March 31, 2010. The year-over-year increase reflects higher market values and net new business. The sequential decrease primarily reflects lower market value. (See the Institutional Services sector on page 25).
|
| • |
|
Assets under management (“AUM”), excluding securities lending assets, totaled $1.0 trillion at June 30, 2010 compared with $926 billion
at |
| |
|
June 30, 2009 and $1.1 trillion at March 31, 2010. The year-over-year increase was primarily due to the acquisition of Insight Investment Management (“Insight”) in the fourth
quarter of 2009. The sequential decrease primarily reflects lower market values. (See the Asset and Wealth Management sector on page 20). |
| • |
|
Securities servicing revenue totaled $1.267 billion in the second quarter of 2010 compared with $1.293 billion in the second quarter of 2009. An
increase in asset servicing revenue, excluding securities lending fee revenue, was partially offset by lower issuer and clearing services revenue, which were negatively impacted by lower money market distribution fees. (See the Institutional
Services sector on page 25). |
| • |
|
Securities lending fee revenue totaled $46 million in the second quarter of 2010 compared with $97 million in the prior year period. The decrease
reflects narrower spreads and lower loan balances. Securities lending assets totaled $248 billion at June 30, 2010 compared with $253 billion at March 31, 2010 and $290 billion at June 30, 2009. (See the Institutional Services sector
on page 25). |
| • |
|
Asset and wealth management fees, including performance fees, totaled $676 million in the second quarter of 2010 compared with $637 million in the
second quarter of 2009. The increase reflects improved market values, the Insight acquisition in the fourth quarter of 2009, and the impact of new business, partially offset by higher fee waivers and a reduction in fees due to money market outflows.
(See the Asset Management and Wealth Management segments beginning on page 21). |
| • |
|
Foreign exchange and other trading activities revenue totaled $220 million in the second quarter of 2010 compared with $237 million in the second
quarter of 2009. The decrease primarily reflects credit valuation adjustments (“CVA”) on derivatives due to widening spreads and lower fixed income trading revenue, partially offset by improvement in the credit derivative portfolio which
was impacted by tighter credit spreads in the second quarter of 2009 and increased volatility in the foreign currency markets. (See Fee and other revenue beginning on page 8). |
| • |
|
Investment income and other revenue totaled $145 million in the second quarter of 2010 compared with $53 million in the second quarter of 2009. The
increase reflects positive foreign currency translations and lease residual gains, partially offset by lower seed capital revenue. (See Fee and other revenue beginning on page 8).
|
6 BNY Mellon
| • |
|
Net interest revenue totaled $722 million in the second quarter of 2010 compared with $700 million in the second quarter of 2009. The increase reflects
a higher yield on the restructured investment securities portfolio and a higher level of average interest-earning assets, partially offset by narrowing spreads and a reduction in the duration of placements. The net interest margin (FTE) for the
second quarter of 2010 was 1.74% compared with 1.80% in the second quarter of 2009. (See Net interest revenue beginning on page 11). |
| • |
|
The provision for credit losses was $20 million in the second quarter of 2010 compared with $61 million in the second quarter of 2009. The decrease in
the provision primarily reflects a decrease in higher risk-rated loans and nonperforming loans. (See Asset quality and allowance for credit losses beginning on page 38). |
| • |
|
Noninterest expense totaled $2.3 billion in the second quarter of 2010 compared with $2.4 billion in the second quarter of 2009. The decrease was
primarily driven by the FDIC special assessment recorded in the second
|
| |
|
quarter of 2009 and lower merger and integration (“M&I”) expenses, partially offset by the impact of the Insight acquisition and higher incentive expenses. (See Noninterest expense
beginning on page 14). |
| • |
|
Unrealized net of tax gains on our total investment securities portfolio were $114 million at June 30, 2010 compared with an unrealized net of tax
loss of $191 million at March 31, 2010. The improvement in the valuation of the investment securities portfolio was due to tightening credit spreads and a decline in interest rates. (See Consolidated balance sheet review beginning on page 33).
|
| • |
|
The Tier 1 capital ratio was 13.5% at June 30, 2010 compared with 13.3% at March 31, 2010. The increase reflects earnings retention,
partially offset by higher risk-weighted assets. (See Capital beginning on page 45). |
| • |
|
Nonperforming assets totaled $406 million at June 30, 2010, a decrease of $53 million, or 12%, compared with March 31, 2010, primarily due to
repayments. (See Asset quality and allowance for credit losses beginning on page 38). |
BNY Mellon 7
Fee and other revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fee and other revenue |
|
|
|
|
|
|
|
|
|
|
2Q10 vs. |
|
|
|
|
Year-to-date |
|
|
YTD10
vs.
YTD09 |
|
| (dollars in millions, unless otherwise noted) |
|
2Q10 |
|
|
1Q10 |
|
|
2Q09 |
|
|
2Q09 |
|
|
1Q10 |
|
|
|
|
2010 |
|
|
2009 |
|
|
| Securities servicing fees: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Asset servicing |
|
$ |
622 |
|
|
$ |
608 |
|
|
$ |
574 |
|
|
8 |
% |
|
2 |
% |
|
|
|
$ |
1,230 |
|
|
$ |
1,093 |
|
|
13 |
% |
| Securities lending revenue |
|
|
46 |
|
|
|
29 |
|
|
|
97 |
|
|
(53 |
) |
|
59 |
|
|
|
|
|
75 |
|
|
|
187 |
|
|
(60 |
) |
| Issuer services |
|
|
354 |
|
|
|
333 |
|
|
|
372 |
|
|
(5 |
) |
|
6 |
|
|
|
|
|
687 |
|
|
|
736 |
|
|
(7 |
) |
| Clearing services |
|
|
245 |
|
|
|
230 |
|
|
|
250 |
|
|
(2 |
) |
|
7 |
|
|
|
|
|
475 |
|
|
|
503 |
|
|
(6 |
) |
| Total securities servicing fees |
|
|
1,267 |
|
|
|
1,200 |
|
|
|
1,293 |
|
|
(2 |
) |
|
6 |
|
|
|
|
|
2,467 |
|
|
|
2,519 |
|
|
(2 |
) |
| Asset and wealth management fees |
|
|
676 |
|
|
|
678 |
|
|
|
637 |
|
|
6 |
|
|
- |
|
|
|
|
|
1,354 |
|
|
|
1,253 |
|
|
8 |
|
| Foreign exchange and other trading activities |
|
|
220 |
|
|
|
262 |
|
|
|
237 |
|
|
(7 |
) |
|
(16 |
) |
|
|
|
|
482 |
|
|
|
544 |
|
|
(11 |
) |
| Treasury services |
|
|
125 |
|
|
|
131 |
|
|
|
132 |
|
|
(5 |
) |
|
(5 |
) |
|
|
|
|
256 |
|
|
|
257 |
|
|
- |
|
| Distribution and servicing |
|
|
77 |
|
|
|
76 |
|
|
|
107 |
|
|
(28 |
) |
|
1 |
|
|
|
|
|
153 |
|
|
|
218 |
|
|
(30 |
) |
| Financing-related fees |
|
|
48 |
|
|
|
50 |
|
|
|
54 |
|
|
(11 |
) |
|
(4 |
) |
|
|
|
|
98 |
|
|
|
102 |
|
|
(4 |
) |
| Investment income |
|
|
72 |
|
|
|
108 |
|
|
|
44 |
|
|
64 |
|
|
(33 |
) |
|
|
|
|
180 |
|
|
|
27 |
|
|
N/M |
|
| Other |
|
|
73 |
|
|
|
37 |
|
|
|
9 |
|
|
N/M |
|
|
N/M |
|
|
|
|
|
110 |
|
|
|
24 |
|
|
N/M |
|
| Total fee revenue – GAAP |
|
$ |
2,558 |
|
|
$ |
2,542 |
|
|
$ |
2,513 |
|
|
2 |
% |
|
1 |
% |
|
|
|
$ |
5,100 |
|
|
$ |
4,944 |
|
|
3 |
% |
| Income of consolidated asset management funds, net of noncontrolling
interests |
|
|
32 |
(a) |
|
|
41 |
(a) |
|
|
- |
|
|
N/M |
|
|
(22 |
) |
|
|
|
|
73 |
(a) |
|
|
- |
|
|
N/M |
|
| Total fee revenue – Non-GAAP |
|
$ |
2,590 |
|
|
$ |
2,583 |
|
|
$ |
2,513 |
|
|
3 |
% |
|
- |
% |
|
|
|
$ |
5,173 |
|
|
$ |
4,944 |
|
|
5 |
% |
| Net securities gains (losses) |
|
|
13 |
|
|
|
7 |
|
|
|
(256 |
) |
|
N/M |
|
|
N/M |
|
|
|
|
|
20 |
|
|
|
(551 |
) |
|
N/M |
|
| Total fee and other revenue – Non-GAAP (b) |
|
$ |
2,603 |
|
|
$ |
2,590 |
|
|
$ |
2,257 |
|
|
15 |
% |
|
1 |
% |
|
|
|
$ |
5,193 |
|
|
$ |
4,393 |
|
|
18 |
% |
| Fee and other revenue as a percent of total revenue |
|
|
77 |
% |
|
|
75 |
% |
|
|
76 |
% |
|
|
|
|
|
|
|
|
|
|
76 |
% |
|
|
75 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Market value of AUM at period end (in billions) |
|
$ |
1,047 |
|
|
$ |
1,105 |
|
|
$ |
926 |
|
|
13 |
% |
|
(5 |
)% |
|
|
|
$ |
1,047 |
|
|
$ |
926 |
|
|
13 |
% |
| Market value of AUC and administration at period end (in
trillions) |
|
$ |
21.8 |
|
|
$ |
22.4 |
|
|
$ |
20.7 |
|
|
6 |
% |
|
(2 |
)% |
|
|
|
$ |
21.8 |
|
|
$ |
20.7 |
|
|
6 |
% |
| (a) |
As a result of adopting ASC 810 at March 31, 2010, we were required to segregate income from consolidated asset management funds of $65 million in the second
quarter of 2010, $65 million in the first quarter of 2010 and $130 million in the first six months of 2010, and net income attributable to noncontrolling interests of $33 million, $24 million and $57 million, respectively, on the income statement.
Prior to the adoption of ASC 810, the net of these income statement line items of $32 million in the second quarter of 2010, $41 million in the first quarter of 2010, and $73 million in the first six months of 2010, respectively, was included in
asset and wealth management fees ($29 million, $25 million and $54 million, respectively) and investment income ($3 million, $16 million and $19 million, respectively). |
| (b) |
Total fee and other revenue on a GAAP basis was $2,571 million for the second quarter of 2010, $2,549 million for the first quarter of 2010, $2,257 million for the
second quarter of 2009, $5,120 million for the first six months of 2010 and $4,393 million for the first six months of 2009. |
Fee revenue
The results of many of our businesses are influenced by client and market activities that vary by quarter.
Fee revenue increased 2% versus the year-ago quarter primarily due to increases in asset servicing revenue, asset and wealth management fees and other
revenue, partially offset by decreases in securities lending revenue and foreign exchange and other trading activities. Sequentially, fee revenue increased 1% (unannualized) reflecting higher securities servicing fees and other revenue partially
offset by lower foreign exchange and other trading revenue and investment income.
Securities servicing fees
Securities servicing fees were impacted by the following, compared with the second quarter of 2009 and first quarter of 2010:
| • |
|
Asset servicing fees – Year-over-year results reflect higher market values and new business. The increase sequentially primarily reflects new
business and higher transaction volumes. |
| • |
|
Securities lending revenue – The decrease year-over-year reflects narrower spreads and lower loan balances while the sequential increase reflects
seasonality. |
| • |
|
Issuer services fees – The decrease year-over-year reflects lower Corporate Trust fee revenue resulting from decreased activity in the global debt
markets and lower money market related |
8 BNY Mellon
| |
distribution fees, partially offset by higher Depositary Receipts revenue reflecting higher issuance and service fees. The sequential increase resulted from seasonality in Depositary Receipts and
Shareowner Services, partially offset by lower Corporate Trust fee revenue. |
| • |
|
Clearing services fees – Year-over-year results reflect lower money market related distribution fees. The sequential increase reflects higher
transaction fee volumes and higher money market fund fees. |
See the “Institutional Services sector” in
“Business segments review” for additional details.
Asset and wealth management fees
Asset and wealth management fees increased 6% year-over-year and were unchanged sequentially. Excluding performance fees and income from consolidated
asset management funds, net of noncontrolling interests, asset and wealth management fees increased 12% compared with the second quarter of 2009 and decreased 1% (unannualized) sequentially. The year-over-year increase reflects improved market
values, the Insight acquisition and the impact of new business, partially offset by higher fee waivers and a reduction in fees due to money market outflows. Sequentially, the impact of new business was more than offset by lower market values.
Total AUM for the Asset and Wealth Management sector were $1.0 trillion at June 30, 2010 compared with $1.1 trillion at March 31,
2010 and $926 billion at June 30, 2009. The increase compared with June 30, 2009 was primarily due to the Insight acquisition in the fourth quarter of 2009. The sequential decrease primarily reflects lower market values. The S&P 500
Index was 1031 at June 30, 2010 compared with 1169 at March 31, 2010 (a 12% decrease) and 919 at June 30, 2009 (a 12% increase).
See the “Asset and Wealth Management sector” in “Business segments review” for additional details regarding the drivers of asset and
wealth management fees.
Foreign exchange and other trading activities
Foreign exchange and other trading activities revenue, which is primarily reported in the Asset Servicing segment, was $220 million in the second quarter
of 2010, a decrease of 7% compared with the second quarter of 2009, and a decrease of 16%
(unannualized) compared with the first quarter of 2010. In the second quarter of 2010, foreign exchange revenue totaled $244 million, an increase of 39% sequentially, driven by increased
volatility. The negative other trading revenue of $24 million in the second quarter of 2010 primarily related to credit valuation adjustments (“CVA”) on derivatives due to widening spreads and lower fixed income trading revenue.
Treasury services
Treasury
services fees, which are primarily reported in the Treasury Services segment, include fees related to funds transfer, cash management and liquidity management. Treasury services fees decreased $7 million compared with the second quarter of 2009 and
$6 million compared with the first quarter of 2010. The decreases compared with both prior periods primarily resulted from lower volumes.
Distribution and servicing fees
Distribution and servicing fees earned from mutual funds are primarily based on average assets in the funds and the sales of funds that we manage or
administer and are primarily reported in the Asset Management segment. These fees, which include 12b-1 fees, fluctuate with the overall level of net sales, the relative mix of sales between share classes and the funds’ market values.
Distribution and servicing fee revenue decreased $30 million compared with the second quarter of 2009 and increased $1 million compared with
the first quarter of 2010. The year-over-year decrease primarily reflects lower money market related fees. The impact of distribution and servicing fees on income in any one period can be more than offset by distribution and servicing expense paid
to other financial intermediaries to cover their cost for distribution and servicing of mutual funds. Distribution and servicing expense is recorded as noninterest expense on the income statement.
Financing-related fees
Financing-related fees, which are primarily reported in the Treasury Services segment, include capital markets fees, loan commitment fees and
credit-related trade fees. Financing-related fees decreased $6 million compared with the second quarter of 2009 and $2 million sequentially. The decreases were driven by lower capital markets fees.
BNY Mellon 9
Investment income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Investment income |
|
|
|
|
|
|
|
|
|
Year-to-date
|
|
| (in millions) |
|
2Q10 |
|
|
1Q10 |
|
2Q09 |
|
|
2010 |
|
|
2009 |
|
| Corporate/bank-owned life insurance |
|
$ |
37 |
|
|
$ |
36 |
|
$ |
31 |
|
|
$ |
73 |
|
|
$ |
72 |
|
| Lease residual gains |
|
|
14 |
|
|
|
52 |
|
|
(10 |
) |
|
|
66 |
|
|
|
16 |
|
| Equity investment income (loss) |
|
|
20 |
|
|
|
12 |
|
|
13 |
|
|
|
32 |
|
|
|
(41 |
) |
| Private equity gains (losses) |
|
|
6 |
|
|
|
5 |
|
|
(9 |
) |
|
|
11 |
|
|
|
(29 |
) |
| Seed capital gains (losses) |
|
|
(5 |
) |
|
|
3 |
|
|
19 |
|
|
|
(2 |
) |
|
|
9 |
|
| Total investment income |
|
$ |
72 |
|
|
$ |
108 |
|
$ |
44 |
|
|
$ |
180 |
|
|
$ |
27 |
|
Investment income, which is primarily reported in the Other and Asset Management segments, includes income from insurance contracts, lease residual gains
and losses, gains and losses on seed capital investments and private equity investments, and equity investment income (loss). The increase, compared with the second quarter of 2009, primarily reflects higher lease residual and private equity
investment gains partially offset by lower seed capital revenue. The decrease, compared to the first quarter of 2010, primarily reflects lower lease residual gains.
Other revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other revenue |
|
|
|
|
|
|
|
|
Year-to-date
|
|
| (in millions) |
|
2Q10 |
|
1Q10 |
|
2Q09 |
|
|
2010 |
|
2009 |
|
| Expense reimbursements from joint ventures |
|
$ |
8 |
|
$ |
10 |
|
$ |
7 |
|
|
$ |
18 |
|
$ |
15 |
|
| Asset-related gains |
|
|
3 |
|
|
3 |
|
|
16 |
|
|
|
6 |
|
|
22 |
|
| Other income (loss) |
|
|
62 |
|
|
24 |
|
|
(14 |
) |
|
|
86 |
|
|
(13 |
) |
| Total other revenue |
|
$ |
73 |
|
$ |
37 |
|
$ |
9 |
|
|
$ |
110 |
|
$ |
24 |
|
Other revenue includes asset-related gains, expense reimbursements from joint ventures and other income (loss). Asset-related gains include loan, real
estate and other asset dispositions. Expense reimbursements from joint ventures relate to expenses incurred by BNY Mellon on behalf of joint ventures. Other income (loss) primarily includes foreign currency translation, other investments and various
miscellaneous revenues.
Total other revenue increased in the second quarter of 2010 compared with the second quarter of 2009 and the first
quarter of 2010 primarily due to positive foreign currency translations.
Net investment securities gains (losses)
Net securities gains totaled $13 million in the second quarter of 2010, compared with net losses of $256
million in the second quarter of 2009 and net gains of $7 million in the first quarter of 2010.
The following table details investment securities gains (losses) by type of security. See “Consolidated balance sheet review” for further
information on the investment securities portfolio.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net securities gains (losses) |
|
|
|
|
|
|
|
|
Year-to-date
|
|
| (in millions) |
|
2Q10 |
|
|
1Q10 |
|
|
2Q09 |
|
|
2010 |
|
|
2009 |
|
| Alt-A RMBS |
|
$ |
(6 |
) |
|
$ |
(7 |
) |
|
$ |
(114 |
) |
|
$ |
(13 |
) |
|
$ |
(239 |
) |
| Prime RMBS |
|
|
- |
|
|
|
- |
|
|
|
(9 |
) |
|
|
- |
|
|
|
(12 |
) |
| Home equity lines of credit |
|
|
- |
|
|
|
- |
|
|
|
(4 |
) |
|
|
- |
|
|
|
(22 |
) |
| European floating rate notes |
|
|
- |
|
|
|
- |
|
|
|
(66 |
) |
|
|
- |
|
|
|
(70 |
) |
| Credit cards |
|
|
- |
|
|
|
- |
|
|
|
(26 |
) |
|
|
- |
|
|
|
(28 |
) |
| Other |
|
|
19 |
|
|
|
14 |
|
|
|
(37 |
) |
|
|
33 |
|
|
|
(180 |
) |
| Net securities gains (losses) |
|
$ |
13 |
|
|
$ |
7 |
|
|
$ |
(256 |
) |
|
$ |
20 |
|
|
$ |
(551 |
) |
Year-to-date 2010 compared with year-to-date 2009
Fee and other revenue for the first six months of 2010 totaled $5.2 billion compared with $4.4 billion in the first six months of 2009. The increase
primarily reflects net securities losses reported in 2009, as well as increased investment income, asset servicing fees, asset and wealth management fees and other revenue during the first six months of 2010 offset in part by lower securities
lending revenue, distribution and servicing fees, foreign exchange and other trading revenue and issuer and clearing services fees during the first six months of 2010.
Net securities gains were $20 million for the first six months of 2010 compared with a net loss of $551 million for the first six months of 2009. The net
securities losses in 2009 primarily resulted from deterioration in the credit quality of residential mortgage-backed securities. The increase in asset servicing fees reflects higher market values and net new business during the first six months of
2010. The increase in asset and wealth management fees in the first six months of 2010 reflects improved equity values, the Insight acquisition and the impact of long-term inflows, partially offset by a reduction in fees due to money market outflows
and higher fee waivers. The decrease in securities lending revenue in the first six months of 2010 primarily reflects narrower spreads and lower loan balances. The decrease in foreign exchange and other trading revenue in the first six months of
2010 was driven by the CVA on derivatives due to widening credit spreads and lower fixed income trading revenue. The decrease in issuer and clearing services fees in the first six months of 2010 primarily reflects lower money market related
distribution fees.
10 BNY Mellon
Operations of consolidated asset management funds
On Jan. 1, 2010, we adopted ASC 810. See Notes 2 and 13 in the Notes to Consolidated Financial Statements for additional information. Adoption of this new
standard resulted in an increase in consolidated total assets on our balance sheet at June 30, 2010 of $13.4 billion, or an increase of approximately 6% from Dec. 31, 2009.
We also separately disclosed the following on the income statement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from consolidated asset management funds,
net of noncontrolling interests |
|
Year-to-date
|
| (in millions) |
|
2Q10 |
|
1Q10 |
|
2Q09 |
|
|
|
2010 |
|
2009 |
| Operations of consolidated asset management funds |
|
$ |
65 |
|
$ |
65 |
|
$ |
- |
|
|
|
$ |
130 |
|
$ |
- |
| Noncontrolling interest of consolidated asset management funds |
|
|
33 |
|
|
24 |
|
|
- |
|
|
|
|
57 |
|
|
- |
| Income from consolidated asset management funds, net of noncontrolling
interests |
|
$ |
32 |
|
$ |
41 |
|
$ |
- |
|
|
|
$ |
73 |
|
$ |
- |
These line items were previously disclosed on the income statement as:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Year-to-date
|
| (in millions) |
|
2Q10 |
|
1Q10 |
|
2Q09 |
|
|
|
2010 |
|
2009 |
| Asset and wealth management revenue |
|
$ |
29 |
|
$ |
25 |
|
$ |
- |
|
|
|
$ |
54 |
|
$ |
- |
| Investment income |
|
|
3 |
|
|
16 |
|
|
- |
|
|
|
|
19 |
|
|
- |
| Total |
|
$ |
32 |
|
$ |
41 |
|
$ |
- |
|
|
|
$ |
73 |
|
$ |
- |
Net interest
revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest revenue |
|
|
|
|
|
|
|
|
|
|
2Q10 vs. |
|
|
|
|
Year-to-date |
|
|
YTD10
vs.
YTD09 |
|
| (dollars in millions) |
|
2Q10 |
|
|
1Q10 |
|
|
2Q09 |
|
|
2Q09 |
|
|
1Q10 |
|
|
|
|
2010 |
|
|
2009 |
|
|
| Net interest revenue (non-FTE) |
|
$ |
722 |
|
|
$ |
765 |
|
|
$ |
700 |
|
|
3 |
% |
|
(6 |
)% |
|
|
|
$ |
1,487 |
|
|
$ |
1,475 |
|
|
1 |
% |
| Tax equivalent adjustment |
|
|
5 |
|
|
|
5 |
|
|
|
4 |
|
|
N/M |
|
|
N/M |
|
|
|
|
|
10 |
|
|
|
8 |
|
|
N/M |
|
| Net interest revenue (FTE) – Non-GAAP |
|
$ |
727 |
|
|
$ |
770 |
|
|
$ |
704 |
|
|
3 |
% |
|
(6 |
)% |
|
|
|
$ |
1,497 |
|
|
$ |
1,483 |
|
|
1 |
% |
| Average interest-earning assets |
|
$ |
167,119 |
|
|
$ |
163,429 |
|
|
$ |
157,265 |
|
|
6 |
% |
|
2 |
% |
|
|
|
$ |
165,285 |
|
|
$ |
162,318 |
(a) |
|
2 |
% |
| Net interest margin (FTE) |
|
|
1.74 |
% |
|
|
1.89 |
% |
|
|
1.80 |
% |
|
(6 |
)bps |
|
(15 |
)bps |
|
|
|
|
1.82 |
% |
|
|
1.84 |
%(b) |
|
(2 |
)bps |
| (a) |
Excludes the impact of discontinued operations. |
| (b) |
Calculated on a continuing operations basis, even though the prior period balance sheet, in accordance with GAAP has not been restated for discontinued operations.
|
Net interest revenue on an FTE basis totaled $727 million in the second quarter of 2010 compared with $704
million in the second quarter of 2009 and $770 million in the first quarter of 2010.
The increase in net interest revenue compared with the
second quarter of 2009 principally reflects a higher yield on the restructured investment securities portfolio and a higher level of average interest-earning assets, partially offset by narrowing spreads and a reduction in the duration of
placements. The decrease in net interest revenue compared with the first quarter of 2010 primarily reflects our credit strategy to reduce targeted loan exposure, as well as reducing the duration of placements, partially offset by a higher level of
average interest-earning assets.
The net interest margin was 1.74% in the second quarter of 2010 compared with 1.80% in the second
quarter of 2009 and 1.89% in the first quarter of 2010. The decrease compared with the second quarter of 2009 reflects a higher yield on the restructured investment securities portfolio which was
more than offset by narrowing spreads and our credit strategy to reduce targeted loan exposure, as well as a reduction in the duration of placements. The sequential decrease reflects our credit strategy to reduce targeted loan exposure as well as
reducing the duration of placements.
Year-to-date 2010 compared with year-to-date 2009
Net interest revenue on an FTE basis totaled $1.5 billion in the first six months of 2010, an increase of 1% compared with the first six months of 2009.
The increase primarily reflects the higher yield on the restructured investment securities portfolio and higher hedging gains, partially offset by narrowing
BNY Mellon 11
spreads and a reduction in the duration of placements. The net interest margin was 1.82% in the first six months of 2010, compared with 1.84% in the first six months of 2009. Lower
spreads more than offset the higher yield on the restructured investment securities portfolio.
Average balances
and interest rates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average balances and interest rates (a) |
|
Quarter ended |
|
| |
|
June 30, 2010 |
|
|
March 31, 2010 |
|
|
June 30, 2009 |
|
| (dollar amounts in millions) |
|
Average
balance |
|
|
Average
rates |
|
|
Average
balance |
|
|
Average
rates |
|
|
Average
balance |
|
|
Average
rates |
|
| Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest-bearing deposits with banks (primarily foreign banks) |
|
$ |
50,741 |
|
|
1.01 |
% |
|
$ |
55,800 |
|
|
1.03 |
% |
|
$ |
56,917 |
|
|
1.18 |
% |
| Interest-bearing deposits held at the Federal Reserve and other central banks |
|
|
18,280 |
|
|
0.34 |
|
|
|
12,129 |
|
|
0.33 |
|
|
|
6,338 |
|
|
0.37 |
|
| Federal funds sold and securities under resale agreements |
|
|
4,652 |
|
|
0.66 |
|
|
|
3,859 |
|
|
0.71 |
|
|
|
2,899 |
|
|
1.29 |
|
| Margin loans |
|
|
5,786 |
|
|
1.49 |
|
|
|
5,241 |
|
|
1.49 |
|
|
|
4,134 |
|
|
1.62 |
|
| Non-margin loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic offices |
|
|
20,750 |
|
|
2.89 |
|
|
|
19,510 |
|
|
3.12 |
|
|
|
20,740 |
|
|
3.18 |
|
| Foreign offices |
|
|
10,128 |
|
|
1.53 |
|
|
|
9,463 |
|
|
1.62 |
|
|
|
12,155 |
|
|
2.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total non-margin loans |
|
|
30,878 |
|
|
2.45 |
|
|
|
28,973 |
|
|
2.63 |
|
|
|
32,895 |
|
|
2.82 |
|
| Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.S. government obligations |
|
|
6,162 |
|
|
1.46 |
|
|
|
6,600 |
|
|
1.40 |
|
|
|
1,679 |
|
|
1.67 |
|
| U.S. government agency obligations |
|
|
19,629 |
|
|
3.48 |
|
|
|
19,429 |
|
|
3.58 |
|
|
|
14,748 |
|
|
3.74 |
|
| State and political subdivisions |
|
|
638 |
|
|
6.56 |
|
|
|
670 |
|
|
6.37 |
|
|
|
710 |
|
|
6.92 |
|
| Other securities |
|
|
27,601 |
|
|
4.14 |
|
|
|
28,653 |
|
|
4.20 |
|
|
|
34,766 |
|
|
2.85 |
|
| Trading securities |
|
|
2,752 |
|
|
2.62 |
|
|
|
2,075 |
|
|
2.49 |
|
|
|
2,179 |
|
|
2.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total securities |
|
|
56,782 |
|
|
3.58 |
|
|
|
57,427 |
|
|
3.63 |
|
|
|
54,082 |
|
|
3.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total interest-earning assets |
|
|
167,119 |
|
|
2.08 |
% |
|
|
163,429 |
|
|
2.18 |
% |
|
|
157,265 |
|
|
2.16 |
% |
| Allowance for loan losses |
|
|
(517 |
) |
|
|
|
|
|
(502 |
) |
|
|
|
|
|
(426 |
) |
|
|
|
| Cash and due from banks |
|
|
3,673 |
|
|
|
|
|
|
3,514 |
|
|
|
|
|
|
3,412 |
|
|
|
|
| Other assets |
|
|
46,266 |
|
|
|
|
|
|
45,346 |
|
|
|
|
|
|
45,975 |
|
|
|
|
| Assets of discontinued operations |
|
|
260 |
|
|
|
|
|
|
898 |
|
|
|
|
|
|
2,307 |
|
|
|
|
| Assets of consolidated asset management funds |
|
|
12,040 |
|
|
|
|
|
|
12,730 |
|
|
|
|
|
|
- |
|
|
|
|
| Total assets |
|
$ |
228,841 |
|
|
|
|
|
$ |
225,415 |
|
|
|
|
|
$ |
208,533 |
|
|
|
|
| Liabilities and equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Money market rate accounts |
|
$ |
24,279 |
|
|
0.10 |
% |
|
$ |
21,741 |
|
|
0.09 |
% |
|
$ |
19,037 |
|
|
0.10 |
% |
| Savings |
|
|
1,389 |
|
|
0.27 |
|
|
|
1,372 |
|
|
0.27 |
|
|
|
1,070 |
|
|
0.44 |
|
| Certificates of deposit of $100,000 & over |
|
|
332 |
|
|
0.16 |
|
|
|
648 |
|
|
0.25 |
|
|
|
942 |
|
|
1.00 |
|
| Other time deposits |
|
|
5,902 |
|
|
0.26 |
|
|
|
5,224 |
|
|
0.30 |
|
|
|
4,190 |
|
|
0.48 |
|
| Foreign offices |
|
|
68,061 |
|
|
0.19 |
|
|
|
72,049 |
|
|
0.16 |
|
|
|
73,657 |
|
|
0.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total interest-bearing deposits |
|
|
99,963 |
|
|
0.17 |
|
|
|
101,034 |
|
|
0.16 |
|
|
|
98,896 |
|
|
0.16 |
|
| Federal funds purchased and securities sold under repurchase agreements |
|
|
4,441 |
|
|
0.19 |
|
|
|
3,697 |
|
|
0.07 |
|
|
|
2,485 |
|
|
(0.46 |
) |
| Other borrowed funds |
|
|
4,223 |
|
|
2.08 |
|
|
|
2,805 |
|
|
1.97 |
|
|
|
2,756 |
|
|
1.04 |
|
| Payables to customers and broker-dealers |
|
|
6,596 |
|
|
0.09 |
|
|
|
6,372 |
|
|
0.08 |
|
|
|
4,901 |
|
|
0.13 |
|
| Long-term debt |
|
|
16,462 |
|
|
1.75 |
|
|
|
16,808 |
|
|
1.50 |
|
|
|
16,793 |
|
|
2.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total interest-bearing liabilities |
|
|
131,685 |
|
|
0.43 |
% |
|
|
130,716 |
|
|
0.36 |
% |
|
|
125,831 |
|
|
0.46 |
% |
| Total noninterest-bearing deposits |
|
|
34,628 |
|
|
|
|
|
|
33,330 |
|
|
|
|
|
|
32,852 |
|
|
|
|
| Other liabilities |
|
|
20,042 |
|
|
|
|
|
|
18,420 |
|
|
|
|
|
|
18,578 |
|
|
|
|
| Liabilities of discontinued operations |
|
|
260 |
|
|
|
|
|
|
898 |
|
|
|
|
|
|
2,307 |
|
|
|
|
| Liabilities and obligations of consolidated asset management funds |
|
|
11,046 |
|
|
|
|
|
|
11,540 |
|
|
|
|
|
|
- |
|
|
|
|
| Total liabilities |
|
|
197,661 |
|
|
|
|
|
|
194,904 |
|
|
|
|
|
|
179,568 |
|
|
|
|
| Total BNY Mellon shareholders’ equity |
|
|
30,434 |
|
|
|
|
|
|
29,715 |
|
|
|
|
|
|
28,934 |
|
|
|
|
| Noncontrolling interest |
|
|
58 |
|
|
|
|
|
|
26 |
|
|
|
|
|
|
31 |
|
|
|
|
| Noncontrolling interests of consolidated asset management funds |
|
|
688 |
|
|
|
|
|
|
770 |
|
|
|
|
|
|
- |
|
|
|
|
| Total equity |
|
|
31,180 |
|
|
|
|
|
|
30,511 |
|
|
|
|
|
|
28,965 |
|
|
|
|
| Total liabilities and equity |
|
$ |
228,841 |
|
|
|
|
|
$ |
225,415 |
|
|
|
|
|
$ |
208,533 |
|
|
|
|
| Net interest margin – Taxable equivalent basis |
|
|
|
|
|
1.74 |
% |
|
|
|
|
|
1.89 |
% |
|
|
|
|
|
1.80 |
% |
| (a) |
Presented on a continuing operations basis even though the balance sheet is not restated for discontinued operations. |
| Note: |
Interest and average rates were calculated on a taxable equivalent basis, at tax rates approximating 35%, using dollar amounts in thousands and actual number of days
in the year. |
12 BNY Mellon
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average balances and interest rates (a) |
|
Six months ended |
|
| |
|
June 30, 2010 |
|
|
June 30, 2009 |
|
| (dollar amounts in millions) |
|
Average
balance |
|
|
Average
rates |
|
|
Average
balance |
|
|
Average
rates |
|
| Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest-bearing deposits with banks (primarily foreign banks) |
|
$ |
53,256 |
|
|
1.02 |
% |
|
$ |
56,711 |
|
|
1.37 |
% |
| Interest-bearing deposits held at the Federal Reserve and other central banks |
|
|
15,222 |
|
|
0.33 |
|
|
|
14,719 |
|
|
0.37 |
|
| Other short-term investments – U.S. government-backed commercial paper |
|
|
- |
|
|
- |
|
|
|
631 |
|
|
3.15 |
|
| Federal funds sold and securities under resale agreements |
|
|
4,258 |
|
|
0.68 |
|
|
|
2,606 |
|
|
1.08 |
|
| Margin loans |
|
|
5,515 |
|
|
1.49 |
|
|
|
4,177 |
|
|
1.62 |
|
| Non-margin loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic offices |
|
|
20,134 |
|
|
3.02 |
|
|
|
21,183 |
|
|
3.04 |
|
| Foreign offices |
|
|
9,797 |
|
|
1.58 |
|
|
|
12,629 |
|
|
2.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total non-margin loans |
|
|
29,931 |
|
|
2.54 |
|
|
|
33,812 |
|
|
2.80 |
|
| Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.S. government obligations |
|
|
6,380 |
|
|
1.43 |
|
|
|
1,236 |
|
|
1.93 |
|
| U.S. government agency obligations |
|
|
19,530 |
|
|
3.53 |
|
|
|
13,413 |
|
|
3.74 |
|
| State and political subdivisions |
|
|
654 |
|
|
6.49 |
|
|
|
738 |
|
|
6.81 |
|
| Other securities |
|
|
28,124 |
|
|
4.17 |
|
|
|
32,320 |
|
|
3.59 |
|
| Trading securities |
|
|
2,415 |
|
|
2.57 |
|
|
|
1,955 |
|
|
2.66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total securities |
|
|
57,103 |
|
|
3.60 |
|
|
|
49,662 |
|
|
3.61 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total interest-earning assets |
|
|
165,285 |
|
|
2.13 |
% |
|
|
162,318 |
|
|
2.27 |
% |
| Allowance for loan losses |
|
|
(509 |
) |
|
|
|
|
|
(402 |
) |
|
|
|
| Cash and due from banks |
|
|
3,594 |
|
|
|
|
|
|
4,114 |
|
|
|
|
| Other assets |
|
|
45,808 |
|
|
|
|
|
|
45,928 |
|
|
|
|
| Assets of discontinued operations |
|
|
577 |
|
|
|
|
|
|
2,336 |
|
|
|
|
| Assets of consolidated asset management funds |
|
|
12,383 |
|
|
|
|
|
|
- |
|
|
|
|
| Total assets |
|
$ |
227,138 |
|
|
|
|
|
$ |
214,294 |
|
|
|
|
| Liabilities and equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Money market rate accounts |
|
$ |
23,017 |
|
|
0.10 |
% |
|
$ |
18,802 |
|
|
0.10 |
% |
| Savings |
|
|
1,380 |
|
|
0.27 |
|
|
|
1,117 |
|
|
0.53 |
|
| Certificates of deposit of $100,000 & over |
|
|
489 |
|
|
0.22 |
|
|
|
1,208 |
|
|
1.07 |
|
| Other time deposits |
|
|
5,566 |
|
|
0.28 |
|
|
|
4,878 |
|
|
0.52 |
|
| Foreign offices |
|
|
70,044 |
|
|
0.18 |
|
|
|
74,425 |
|
|
0.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total interest-bearing deposits |
|
|
100,496 |
|
|
0.16 |
|
|
|
100,430 |
|
|
0.23 |
|
| Federal funds purchased and securities sold under repurchase agreements |
|
|
4,071 |
|
|
0.14 |
|
|
|
2,164 |
|
|
(0.23 |
) |
| Other borrowed funds |
|
|
3,518 |
|
|
2.03 |
|
|
|
3,268 |
|
|
1.34 |
|
| Borrowings from Federal Reserve related to asset-backed commercial paper |
|
|
- |
|
|
- |
|
|
|
631 |
|
|
2.25 |
|
| Payables to customers and broker-dealers |
|
|
6,485 |
|
|
0.08 |
|
|
|
4,352 |
|
|
0.16 |
|
| Long-term debt |
|
|
16,634 |
|
|
1.63 |
|
|
|
16,147 |
|
|
2.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total interest-bearing liabilities |
|
|
131,204 |
|
|
0.39 |
% |
|
|
126,992 |
|
|
0.55 |
% |
| Total noninterest-bearing deposits |
|
|
33,983 |
|
|
|
|
|
|
37,924 |
|
|
|
|
| Other liabilities |
|
|
19,236 |
|
|
|
|
|
|
18,551 |
|
|
|
|
| Liabilities of discontinued operations |
|
|
577 |
|
|
|
|
|
|
2,336 |
|
|
|
|
| Liabilities and obligations of consolidated asset management funds |
|
|
11,291 |
|
|
|
|
|
|
- |
|
|
|
|
| Total liabilities |
|
|
196,291 |
|
|
|
|
|
|
185,803 |
|
|
|
|
| Total BNY Mellon shareholders’ equity |
|
|
30,076 |
|
|
|
|
|
|
28,458 |
|
|
|
|
| Noncontrolling interest |
|
|
42 |
|
|
|
|
|
|
33 |
|
|
|
|
| Noncontrolling interests of consolidated asset management funds |
|
|
729 |
|
|
|
|
|
|
- |
|
|
|
|
| Total equity |
|
|
30,847 |
|
|
|
|
|
|
28,491 |
|
|
|
|
| Total liabilities and equity |
|
$ |
227,138 |
|
|
|
|
|
$ |
214,294 |
|
|
|
|
| Net interest margin – Taxable equivalent basis |
|
|
|
|
|
1.82 |
% |
|
|
|
|
|
1.84 |
% |
| (a) |
Presented on a continuing operations basis even though the balance sheet is not restated for discontinued operations. |
| Note: |
Interest and average rates were calculated on a taxable equivalent basis, at tax rates approximating 35%, using dollar amounts in thousands and actual number of days
in the year. |
BNY Mellon 13
Noninterest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noninterest expense
(dollars in millions) |
|
|
|
|
|
|
|
|
|
|
2Q10 vs. |
|
|
Year-to-date |
|
|
YTD10
vs.
YTD09 |
|
| |
2Q10 |
|
|
1Q10 |
|
|
2Q09 |
|
|
2Q09 |
|
|
1Q10 |
|
|
2010 |
|
|
2009 |
|
|
| Staff: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Compensation |
|
$ |
763 |
|
|
$ |
753 |
|
|
$ |
740 |
|
|
3 |
% |
|
1 |
% |
|
$ |
1,516 |
|
|
$ |
1,472 |
|
|
3 |
% |
| Incentives |
|
|
272 |
|
|
|
284 |
|
|
|
241 |
|
|
13 |
|
|
(4 |
) |
|
|
556 |
|
|
|
488 |
|
|
14 |
|
| Employee benefits |
|
|
199 |
|
|
|
183 |
|
|
|
172 |
|
|
16 |
|
|
9 |
|
|
|
382 |
|
|
|
362 |
|
|
6 |
|
| Total staff |
|
|
1,234 |
|
|
|
1,220 |
|
|
|
1,153 |
|
|
7 |
|
|
1 |
|
|
|
2,454 |
|
|
|
2,322 |
|
|
6 |
|
| Professional, legal and other purchased services |
|
|
256 |
|
|
|
241 |
|
|
|
237 |
|
|
8 |
|
|
6 |
|
|
|
497 |
|
|
|
474 |
|
|
5 |
|
| Net occupancy |
|
|
143 |
|
|
|
137 |
|
|
|
142 |
|
|
1 |
|
|
4 |
|
|
|
280 |
|
|
|
281 |
|
|
- |
|
| Distribution and servicing |
|
|
106 |
|
|
|
109 |
|
|
|
106 |
|
|
- |
|
|
(3 |
) |
|
|
215 |
|
|
|
213 |
|
|
1 |
|
| Software |
|
|
91 |
|
|
|
94 |
|
|
|
93 |
|
|
(2 |
) |
|
(3 |
) |
|
|
185 |
|
|
|
174 |
|
|
6 |
|
| Furniture and equipment |
|
|
71 |
|
|
|
75 |
|
|
|
76 |
|
|
(7 |
) |
|
(5 |
) |
|
|
146 |
|
|
|
153 |
|
|
(5 |
) |
| Sub-custodian |
|
|
65 |
|
|
|
52 |
|
|
|
60 |
|
|
8 |
|
|
25 |
|
|
|
117 |
|
|
|
99 |
|
|
18 |
|
| Business development |
|
|
68 |
|
|
|
52 |
|
|
|
49 |
|
|
39 |
|
|
31 |
|
|
|
120 |
|
|
|
93 |
|
|
29 |
|
| Other |
|
|
201 |
|
|
|
186 |
|
|
|
233 |
|
|
(14 |
) |
|
8 |
|
|
|
387 |
|
|
|
435 |
|
|
(11 |
) |
| Subtotal |
|
|
2,235 |
|
|
|
2,166 |
|
|
|
2,149 |
|
|
4 |
|
|
3 |
|
|
|
4,401 |
|
|
|
4,244 |
|
|
4 |
|
| Special litigation reserves |
|
|
N/A |
|
|
|
164 |
|
|
|
N/A |
|
|
N/M |
|
|
N/M |
|
|
|
164 |
|
|
|
N/A |
|
|
N/M |
|
| FDIC special assessment |
|
|
- |
|
|
|
- |
|
|
|
61 |
|
|
N/M |
|
|
- |
|
|
|
- |
|
|
|
61 |
|
|
N/M |
|
| Amortization of intangible assets |
|
|
98 |
|
|
|
97 |
|
|
|
108 |
|
|
(9 |
) |
|
1 |
|
|
|
195 |
|
|
|
215 |
|
|
(9 |
) |
| Restructuring charges |
|
|
(15 |
) |
|
|
7 |
|
|
|
6 |
|
|
N/M |
|
|
N/M |
|
|
|
(8 |
) |
|
|
16 |
|
|
N/M |
|
| M&I expenses |
|
|
14 |
|
|
|
26 |
|
|
|
59 |
|
|
(76 |
) |
|
(46 |
) |
|
|
40 |
|
|
|
127 |
|
|
(69 |
) |
| Total noninterest expense |
|
$ |
2,332 |
|
|
$ |
2,460 |
|
|
$ |
2,383 |
|
|
(2 |
)% |
|
(5 |
)% |
|
$ |
4,792 |
|
|
$ |
4,663 |
|
|
3 |
% |
| Total staff expense as a percent of total revenue |
|
|
37 |
% |
|
|
36 |
% |
|
|
39 |
% (a) |
|
|
|
|
|
|
|
|
36 |
% |
|
|
40 |
% |
|
|
|
| Employees at period end |
|
|
42,700 |
|
|
|
42,300 |
|
|
|
41,800 |
|
|
2 |
% |
|
1 |
% |
|
|
42,700 |
|
|
|
41,800 |
|
|
2 |
% |
| (a) |
Total staff expense as a percentage of total revenue excluding net securities gains (losses) was 36% in the second quarter of 2009. |
Total noninterest expense decreased $51 million compared with the second quarter of 2009 and $128 million
compared with the first quarter of 2010. Results for the second quarter of 2009 include the FDIC special assessment. Results for the first quarter of 2010 include a charge for special litigation reserves. Excluding special litigation reserves, the
FDIC special assessment, intangible amortization, restructuring charges and M&I expense, noninterest expense increased $86 million year-over-year and $69 million sequentially. The year-over-year increase was driven by the impact of the Insight
acquisition, as well as higher incentive expense and business development activity. The sequential increase primarily reflects higher support agreement charges, the impact of the annual merit increase, the U.K. bonus tax and higher business
development activity.
Staff expense
Given our mix of fee-based businesses, which are staffed with high quality professionals, staff expense comprised 55% of total noninterest expense,
excluding special litigation reserves, FDIC special
assessment, amortization of intangible assets, restructuring charges and M&I expenses.
The increase in staff expense compared with the second quarter of 2009 reflects the impact of the Insight acquisition and higher incentives primarily in
the Asset Management segment. The sequential increase in staff expense reflects the annual merit increase which was effective in the second quarter of 2010. Both increases also include the U.K. bonus tax that was recorded in the second quarter of
2010.
Non-staff expense
Non-staff expense includes certain expenses that vary with the levels of business activity and levels of expensed business investments, fixed
infrastructure costs and expenses associated with corporate activities related to technology, compliance, productivity initiatives and corporate development.
Non-staff expense, excluding special litigation reserves, FDIC special assessment, amortization of intangible assets, restructuring charges and M&I
expenses, totaled $1.0 billion in the second quarter of 2010 compared with $996 million in the second
14 BNY Mellon
quarter of 2009 and $946 million in the first quarter of 2010. The increase compared with the second quarter of 2009 primarily reflects the impact of the Insight acquisition and higher business
development activity, higher professional, legal and other purchased services, partially offset by lower other expense. The increase compared with the first quarter of 2010 reflects higher support agreement charges resulting from a quarterly change
in the market value of Lehman securities, higher professional, legal and other purchased services and higher business development activity.
Given the severity of the economic downturn, the financial services industry has seen an increase in the level of legal activity. As a result, we
anticipate litigation costs for the remainder of 2010 to exceed historic trend levels. For additional information on litigation matters, see Note 18 of the Notes to Consolidated Financial Statements.
For additional information on restructuring charges, see Note 11 of the Notes to Consolidated Financial Statements.
In the second quarter of 2010, we incurred $14 million of M&I expenses primarily related to the mergers with Mellon Financial Corporation and the
integration of Global Investment Servicing.
Year-to-date 2010 compared with year-to-date 2009
Noninterest expense in the first six months of 2010 increased $129 million, or 3%, compared with the first six months of 2009. The increase primarily
reflects the special litigation reserves, the impact of the Insight acquisition, higher incentives, professional, legal and other purchased services and business development activity, partially offset by the FDIC special assessment in the second
quarter of 2009, as well as lower M&I expenses and a recovery of restructuring charges.
Income taxes
The effective tax rate on a continuing operations basis for the second quarter of 2010 was 30.2%, compared with 2.2% in the second quarter of 2009 and
29.1% in the first quarter of 2010. Excluding the impact of tax benefits, the FDIC special assessment, M&I expenses and net securities losses, the effective tax rate was 32.4% in the second quarter of 2009. Excluding the impact of special
litigation reserves, restructuring charges and M&I
expenses, the effective tax rate was 31.0% in the first quarter of 2010.
We expect the
effective tax rate to be approximately 30-31% for the third quarter of 2010.
Business segments review
We have an internal information system that produces performance data for our seven business segments along product and service lines.
Business segments accounting principles
Our segment data has been determined on an internal management basis of accounting, rather than the generally accepted accounting principles used for
consolidated financial reporting. These measurement principles are designed so that reported results of the segments will track their economic performance.
Segment results are subject to reclassification whenever improvements are made in the measurement principles or when organizational changes are made.
The accounting policies of the business segments are the same as those described in Note 1 to the Consolidated Financial Statements in BNY
Mellon’s 2009 Annual Report on Form 10-K. In addition, client deposits serve as the primary funding source for our investment securities portfolio and we typically allocate all interest revenue to the businesses generating the deposits.
Accordingly, the higher yield related to the restructured investment securities portfolio has been included in the segment results.
The
operations of acquired businesses are integrated with the existing business segments soon after acquisitions are completed. As a result of the integration of staff support functions, management of customer relationships, operating processes and the
financial impact of funding acquisitions, we cannot precisely determine the impact of acquisitions on income before taxes and therefore do not report it.
For additional information on the primary types of revenue by business segment and how our business segments are presented and analyzed, see the Business
segments review and Note 28 in BNY Mellon’s 2009 Annual Report on Form 10-K.
BNY Mellon 15
Business segment information is reported on a continuing operations basis for all periods presented. See
Note 4 to the Notes to Consolidated Financial Statements for a discussion of discontinued operations.
Our business segments continued to face
a challenging operating environment in the second quarter of 2010. Year-over-year higher market values and new business benefited the Asset and Wealth management segments, while a continued low level of debt issuances in the global markets and a
lower level of corporate actions negatively impacted results in Issuer Services. Results in Asset Servicing benefited from higher market values and new business but were negatively impacted by lower foreign currency volatility as well as narrower
spreads and lower loan balances in securities lending. Money market fee waivers also continue to suppress results in Asset Management, Issuer and Clearing Services. On a sequential basis, new business, higher transaction volumes and seasonally
higher Depositary Receipts were primarily offset by
lower market values. Compared with the second quarter of 2009, net interest revenue increased in nearly all segments driven by the higher yield related to the restructured investment securities
portfolio and a higher level of interest-earning assets. Sequentially, net interest revenue decreased in the Institutional Services sector reflecting our credit strategy to reduce targeted loan exposure, as well as lower spreads.
Net securities gains (losses) are recorded in the Other segment. Noninterest expense increased in nearly every segment compared with both the second
quarter of 2009 and the first quarter of 2010 primarily due to the impact of the annual merit increase which was effective in the second quarter of 2010 and higher business development activity. In addition, year-over-year results in the Asset
Management segment were impacted by the Insight acquisition. Year-over-year and sequential results in the Asset Servicing segment were impacted by increases in support agreement charges due to a decrease in the market value of Lehman securities.
The table below presents the value of certain market indices at period end and on an average basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Market indices |
|
|
|
|
|
|
|
|
|
|
|
2Q10 vs. |
|
|
Year-to-date |
|
YTD10
vs.
YTD09 |
|
| |
|
2Q09 |
|
3Q09 |
|
4Q09 |
|
1Q10 |
|
2Q10 |
|
2Q09 |
|
|
1Q10 |
|
|
2010 |
|
2009 |
|
| S&P 500 Index (a) |
|
919 |
|
1057 |
|
1115 |
|
1169 |
|
1031 |
|
12 |
% |
|
(12 |
)% |
|
1031 |
|
919 |
|
12 |
% |
| S&P 500 Index – daily average |
|
891 |
|
995 |
|
1088 |
|
1123 |
|
1135 |
|
27 |
|
|
1 |
|
|
1129 |
|
851 |
|
33 |
|
| FTSE 100 Index (a) |
|
4249 |
|
5134 |
|
5413 |
|
5680 |
|
4917 |
|
16 |
|
|
(13 |
) |
|
4917 |
|
4249 |
|
16 |
|
| FTSE 100 Index – daily average |
|
4258 |
|
4708 |
|
5235 |
|
5431 |
|
5361 |
|
26 |
|
|
(1 |
) |
|
5394 |
|
4149 |
|
30 |
|
| NASDAQ Composite Index (a) |
|
1835 |
|
2122 |
|
2269 |
|
2398 |
|
2109 |
|
15 |
|
|
(12 |
) |
|
2109 |
|
1835 |
|
15 |
|
| Lehman Brothers Aggregate Bondsm Index
(a) |
|
280 |
|
304 |
|
301 |
|
300 |
|
299 |
|
7 |
|
|
- |
|
|
299 |
|
280 |
|
7 |
|
| MSCI EAFE® Index (a) |
|
1307 |
|
1553 |
|
1581 |
|
1584 |
|
1348 |
|
3 |
|
|
(15 |
) |
|
1348 |
|
1307 |
|
3 |
|
| NYSE Share Volume (in billions) |
|
151 |
|
126 |
|
112 |
|
103 |
|
140 |
|
(7 |
) |
|
36 |
|
|
243 |
|
312 |
|
(22 |
) |
| NASDAQ Share Volume (in billions) |
|
152 |
|
144 |
|
131 |
|
143 |
|
159 |
|
5 |
|
|
11 |
|
|
302 |
|
288 |
|
5 |
|
Average daily U.S. fixed-income trading volume was up 2% sequentially and 7% year-over-year. Total debt
issuances were down 36% sequentially and 32% year-over-year.
The period end S&P 500 Index decreased 12% sequentially and increased 12%
year-over-year. The period end FTSE 100 Index decreased 13% sequentially and increased 16% year-over-year. On a daily average basis, the S&P 500 Index increased 1% sequentially and 27% year-over-year and the FTSE 100 Index decreased 1%
sequentially and increased 26% year-over-year. The period end NASDAQ Composite Index decreased 12% sequentially and increased 15% year-over-year.
The changes in the value of market indices impact fee revenue in the Asset and Wealth Management segments
and our securities servicing businesses.
At June 30, 2010, using the S&P 500 Index as a proxy for the equity markets, we estimate
that a 100 point change in the value of the S&P 500 Index, sustained for one year, would impact fee revenue by approximately 1-2% and fully diluted earnings per common share on a continuing operations basis by $0.06-$0.07.
The following consolidating schedules show the contribution of our segments to our overall profitability.
16 BNY Mellon
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the quarter ended
June 30, 2010
(dollar amounts in millions) |
|
Asset
Management |
|
|
Wealth
Management |
|
|
Total
Asset and
Wealth
Management
Sector |
|
|
Asset
Servicing |
|
|
Issuer
Services |
|
|
Clearing
Services |
|
|
Treasury
Services |
|
|
Total
Institutional
Services
Sector |
|
|
Other
Segment |
|
|
Total
continuing
operations |
|
| Fee and other revenue |
|
$ |
637 |
(a) |
|
$ |
147 |
|
|
$ |
784 |
|
|
$ |
906 |
|
|
$ |
380 |
|
|
$ |
276 |
|
|
$ |
196 |
|
|
$ |
1,758 |
|
|
$ |
61 |
|
|
$ |
2,603 |
(a) |
| Net interest revenue |
|
|
1 |
|
|
|
56 |
|
|
|
57 |
|
|
|
216 |
|
|
|
216 |
|
|
|
93 |
|
|
|
161 |
|
|
|
686 |
|
|
|
(21 |
) |
|
|
722 |
|
| Total revenue |
|
|
638 |
|
|
|
203 |
|
|
|
841 |
|
|
|
1,122 |
|
|
|
596 |
|
|
|
369 |
|
|
|
357 |
|
|
|
2,444 |
|
|
|
40 |
|
|
|
3,325 |
|
| Provision for credit losses |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
20 |
|
|
|
20 |
|
| Noninterest expense |
|
|
517 |
|
|
|
154 |
|
|
|
671 |
|
|
|
786 |
|
|
|
339 |
|
|
|
277 |
|
|
|
193 |
|
|
|
1,595 |
|
|
|
66 |
|
|
|
2,332 |
|
| Income before taxes |
|
$ |
121 |
(a) |
|
$ |
49 |
|
|
$ |
170 |
|
|
$ |
336 |
|
|
$ |
257 |
|
|
$ |
92 |
|
|
$ |
164 |
|
|
$ |
849 |
|
|
$ |
(46 |
) |
|
$ |
973 |
(a) |
| Pre-tax operating margin (b) |
|
|
19 |
% |
|
|
24 |
% |
|
|
20 |
% |
|
|
30 |
% |
|
|
43 |
% |
|
|
25 |
% |
|
|
46 |
% |
|
|
35 |
% |
|
|
N/M |
|
|
|
29 |
% |
| Average assets |
|
$ |
24,895 |
|
|
$ |
10,399 |
|
|
$ |
35,294 |
|
|
$ |
62,940 |
|
|
$ |
48,938 |
|
|
$ |
21,550 |
|
|
$ |
26,485 |
|
|
$ |
159,913 |
|
|
$ |
33,374 |
|
|
$ |
228,581 |
(c) |
| Excluding intangible amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noninterest expense |
|
$ |
467 |
|
|
$ |
145 |
|
|
$ |
612 |
|
|
$ |
781 |
|
|
$ |
318 |
|
|
$ |
270 |
|
|
$ |
188 |
|
|
$ |
1,557 |
|
|
$ |
65 |
|
|
$ |
2,234 |
|
| Income before taxes |
|
|
171 |
|
|
|
58 |
|
|
|
229 |
|
|
|
341 |
|
|
|
278 |
|
|
|
99 |
|
|
|
169 |
|
|
|
887 |
|
|
|
(45 |
) |
|
|
1,071 |
|
| Pre-tax operating margin (b) |
|
|
27 |
% |
|
|
28 |
% |
|
|
27 |
% |
|
|
30 |
% |
|
|
47 |
% |
|
|
27 |
% |
|
|
47 |
% |
|
|
36 |
% |
|
|
N/M |
|
|
|
32 |
% |
| (a) |
Total fee and other revenue and income before taxes for the second quarter of 2010 includes income from consolidated asset management funds of $65 million net of
income attributable to noncontrolling interests of $33 million. The net of these income statement line items of $32 million is included above in fee and other revenue. |
| (b) |
Income before taxes divided by total revenue. |
| (c) |
Including average assets of discontinued operations of $260 million for the second quarter of 2010, consolidated average assets were $228,841 million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the quarter ended
March 31, 2010 (dollar
amounts in millions) |
|
Asset
Management |
|
|
Wealth
Management |
|
|
Total
Asset and
Wealth
Management
Sector |
|
|
Asset
Servicing |
|
|
Issuer
Services |
|
|
Clearing
Services |
|
|
Treasury
Services |
|
|
Total
Institutional
Services
Sector |
|
|
Other
Segment |
|
|
Total
continuing
operations |
|
| Fee and other revenue |
|
$ |
649 |
(a) |
|
$ |
146 |
|
|
$ |
795 |
|
|
$ |
798 |
|
|
$ |
358 |
|
|
$ |
271 |
|
|
$ |
225 |
|
|
$ |
1,652 |
|
|
$ |
143 |
|
|
$ |
2,590 |
(a) |
| Net interest revenue |
|
|
- |
|
|
|
55 |
|
|
|
55 |
|
|
|
210 |
|
|
|
252 |
|
|
|
95 |
|
|
|
176 |
|
|
|
733 |
|
|
|
(23 |
) |
|
|
765 |
|
| Total revenue |
|
|
649 |
|
|
|
201 |
|
|
|
850 |
|
|
|
1,008 |
|
|
|
610 |
|
|
|
366 |
|
|
|
401 |
|
|
|
2,385 |
|
|
|
120 |
|
|
|
3,355 |
|
| Provision for credit losses |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
35 |
|
|
|
35 |
|
| Noninterest expense |
|
|
503 |
|
|
|
145 |
|
|
|
648 |
|
|
|
723 |
|
|
|
324 |
|
|
|
261 |
|
|
|
188 |
|
|
|
1,496 |
|
|
|
316 |
|
|
|
2,460 |
|
| Income before taxes |
|
$ |
146 |
(a) |
|
$ |
56 |
|
|
$ |
202 |
|
|
$ |
285 |
|
|
$ |
286 |
|
|
$ |
105 |
|
|
$ |
213 |
|
|
$ |
889 |
|
|
$ |
(231 |
) |
|
$ |
860 |
(a) |
| Pre-tax operating margin (b) |
|
|
23 |
% |
|
|
28 |
% |
|
|
24 |
% |
|
|
28 |
% |
|
|
47 |
% |
|
|
29 |
% |
|
|
53 |
% |
|
|
37 |
% |
|
|
N/M |
|
|
|
26 |
% |
| Average assets |
|
$ |
25,187 |
|
|
$ |
9,722 |
|
|
$ |
34,909 |
|
|
$ |
59,704 |
|
|
$ |
52,838 |
|
|
$ |
20,338 |
|
|
$ |
26,716 |
|
|
$ |
159,596 |
|
|
$ |
30,012 |
|
|
$ |
224,517 |
(c) |
| Excluding intangible amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noninterest expense |
|
$ |
453 |
|
|
$ |
136 |
|
|
$ |
589 |
|
|
$ |
717 |
|
|
$ |
304 |
|
|
$ |
255 |
|
|
$ |
182 |
|
|
$ |
1,458 |
|
|
$ |
316 |
|
|
$ |
2,363 |
|
| Income before taxes |
|
|
196 |
|
|
|
65 |
|
|
|
261 |
|
|
|
291 |
|
|
|
306 |
|
|
|
111 |
|
|
|
219 |
|
|
|
927 |
|
|
|
(231 |
) |
|
|
957 |
|
| Pre-tax operating margin (b) |
|
|
30 |
% |
|
|
32 |
% |
|
|
31 |
% |
|
|
29 |
% |
|
|
50 |
% |
|
|
30 |
% |
|
|
55 |
% |
|
|
39 |
% |
|
|
N/M |
|
|
|
29 |
% |
| (a) |
Total fee and other revenue and income before taxes for the first quarter of 2010 includes income from consolidated asset management funds of $65 million net of
income attributable to noncontrolling interests of $24 million. The net of these income statement line items of $41 million is included above in fee and other revenue. |
| (b) |
Income before taxes divided by total revenue. |
| (c) |
Including average assets of discontinued operations of $898 million for the first quarter of 2010, consolidated average assets were $225,415 million.
|
BNY Mellon 17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the quarter ended Dec. 31, 2009 |
|
|
Total Asset
and Wealth
Management
Sector |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Institutional
Services
Sector |
|
|
|
|
|
|
|
| (dollar amounts in millions) |
|
Asset
Management |
|
|
Wealth
Management |
|
|
|
Asset
Servicing |
|
|
Issuer
Services |
|
|
Clearing
Services |
|
|
Treasury
Services |
|
|
|
Other
Segment |
|
|
Total
continuing
operations |
|
| Fee and other revenue |
|
$ |
680 |
|
|
$ |
151 |
|
|
$ |
831 |
|
|
$ |
816 |
|
|
$ |
410 |
|
|
$ |
264 |
|
|
$ |
222 |
|
|
$ |
1,712 |
|
|
$ |
52 |
|
|
$ |
2,595 |
|
| Net interest revenue |
|
|
3 |
|
|
|
46 |
|
|
|
49 |
|
|
|
205 |
|
|
|
203 |
|
|
|
90 |
|
|
|
148 |
|
|
|
646 |
|
|
|
29 |
|
|
|
724 |
|
| Total revenue |
|
|
683 |
|
|
|
197 |
|
|
|
880 |
|
|
|
1,021 |
|
|
|
613 |
|
|
|
354 |
|
|
|
370 |
|
|
|
2,358 |
|
|
|
81 |
|
|
|
3,319 |
|
| Provision for credit losses |
|
|
- |
|
|
|
1 |
|
|
|
1 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
64 |
|
|
|
65 |
|
| Noninterest expense |
|
|
521 |
|
|
|
149 |
|
|
|
670 |
|
|
|
789 |
|
|
|
338 |
|
|
|
248 |
|
|
|
193 |
|
|
|
1,568 |
|
|
|
344 |
|
|
|
2,582 |
|
| Income before taxes |
|
$ |
162 |
|
|
$ |
47 |
|
|
$ |
209 |
|
|
$ |
232 |
|
|
$ |
275 |
|
|
$ |
106 |
|
|
$ |
177 |
|
|
$ |
790 |
|
|
$ |
(327 |
) |
|
$ |
672 |
|
| Pre-tax operating margin (a) |
|
|
24 |
% |
|
|
24 |
% |
|
|
24 |
% |
|
|
23 |
% |
|
|
45 |
% |
|
|
30 |
% |
|
|
48 |
% |
|
|
34 |
% |
|
|
N/M |
|
|
|
20 |
% |
| Average assets |
|
$ |
12,859 |
|
|
$ |
9,246 |
|
|
$ |
22,105 |
|
|
$ |
59,980 |
|
|
$ |
52,028 |
|
|
$ |
20,365 |
|
|
$ |
26,275 |
|
|
$ |
158,648 |
|
|
$ |
31,459 |
|
|
$ |
212,212 |
(b) |
| Excluding intangible amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noninterest expense |
|
$ |
465 |
|
|
$ |
138 |
|
|
$ |
603 |
|
|
$ |
783 |
|
|
$ |
318 |
|
|
$ |
241 |
|
|
$ |
187 |
|
|
$ |
1,529 |
|
|
$ |
343 |
|
|
$ |
2,475 |
|
| Income before taxes |
|
|
218 |
|
|
|
58 |
|
|
|
276 |
|
|
|
238 |
|
|
|
295 |
|
|
|
113 |
|
|
|
183 |
|
|
|
829 |
|
|
|
(326 |
) |
|
|
779 |
|
| Pre-tax operating margin (a) |
|
|
32 |
% |
|
|
29 |
% |
|
|
31 |
% |
|
|
23 |
% |
|
|
48 |
% |
|
|
32 |
% |
|
|
50 |
% |
|
|
35 |
% |
|
|
N/M |
|
|
|
23 |
% |
| (a) |
Income before taxes divided by total revenue. |
| (b) |
Including average assets of discontinued operations of $1,993 million for the fourth quarter of 2009, consolidated average assets were $214,205 million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the quarter ended Sept. 30, 2009 |
|
|
Total Asset
and Wealth
Management
Sector |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Institutional
Services
Sector |
|
|
|
|
|
|
|
| (dollar amounts in millions) |
|
Asset
Management |
|
|
Wealth
Management |
|
|
|
Asset
Servicing |
|
|
Issuer
Services |
|
|
Clearing
Services |
|
|
Treasury
Services |
|
|
|
Other
Segment |
|
|
Total
continuing
operations |
|
| Fee and other revenue |
|
$ |
592 |
|
|
$ |
146 |
|
|
$ |
738 |
|
|
$ |
845 |
|
|
$ |
389 |
|
|
$ |
291 |
|
|
$ |
206 |
|
|
$ |
1,731 |
|
|
$ |
(4,685 |
) |
|
$ |
(2,216 |
) |
| Net interest revenue |
|
|
7 |
|
|
|
49 |
|
|
|
56 |
|
|
|
229 |
|
|
|
180 |
|
|
|
81 |
|
|
|
149 |
|
|
|
639 |
|
|
|
21 |
|
|
|
716 |
|
| Total revenue |
|
|
599 |
|
|
|
195 |
|
|
|
794 |
|
|
|
1,074 |
|
|
|
569 |
|
|
|
372 |
|
|
|
355 |
|
|
|
2,370 |
|
|
|
(4,664 |
) |
|
|
(1,500 |
) |
| Provision for credit losses |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
147 |
|
|
|
147 |
|
| Noninterest expense |
|
|
500 |
|
|
|
147 |
|
|
|
647 |
|
|
|
735 |
|
|
|
324 |
|
|
|
251 |
|
|
|
186 |
|
|
|
1,496 |
|
|
|
175 |
|
|
|
2,318 |
|
| Income before taxes |
|
$ |
99 |
|
|
$ |
48 |
|
|
$ |
147 |
|
|
$ |
339 |
|
|
$ |
245 |
|
|
$ |
121 |
|
|
$ |
169 |
|
|
$ |
874 |
|
|
$ |
(4,986 |
) |
|
$ |
(3,965 |
) |
| Pre-tax operating margin (a) |
|
|
16 |
% |
|
|
25 |
% |
|
|
19 |
% |
|
|
32 |
% |
|
|
43 |
% |
|
|
33 |
% |
|
|
48 |
% |
|
|
37 |
% |
|
|
N/M |
|
|
|
N/M |
|
| Average assets |
|
$ |
12,424 |
|
|
$ |
9,122 |
|
|
$ |
21,546 |
|
|
$ |
59,914 |
|
|
$ |
47,975 |
|
|
$ |
17,827 |
|
|
$ |
24,223 |
|
|
$ |
149,939 |
|
|
$ |
32,224 |
|
|
$ |
203,709 |
(b) |
| Excluding intangible amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noninterest expense |
|
$ |
447 |
|
|
$ |
135 |
|
|
$ |
582 |
|
|
$ |
729 |
|
|
$ |
304 |
|
|
$ |
245 |
|
|
$ |
180 |
|
|
$ |
1,458 |
|
|
$ |
174 |
|
|
$ |
2,214 |
|
| Income before taxes |
|
|
152 |
|
|
|
60 |
|
|
|
212 |
|
|
|
345 |
|
|
|
265 |
|
|
|
127 |
|
|
|
175 |
|
|
|
912 |
|
|
|
(4,985 |
) |
|
|
(3,861 |
) |
| Pre-tax operating margin (a) |
|
|
25 |
% |
|
|
31 |
% |
|
|
27 |
% |
|
|
32 |
% |
|
|
47 |
% |
|
|
34 |
% |
|
|
49 |
% |
|
|
38 |
% |
|
|
N/M |
|
|
|
N/M |
|
| (a) |
Income before taxes divided by total revenue. |
| (b) |
Including average assets of discontinued operations of $2,077 million for the third quarter of 2009, consolidated average assets were $205,786 million.
|
18 BNY Mellon
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the quarter ended
June 30, 2009 |
|
|
|
|
|
Total Asset
and Wealth
Management
Sector |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Institutional
Services
Sector |
|
|
|
|
|
|
|
| (dollar amounts
in millions) |
|
Asset
Management |
|
|
Wealth
Management |
|
|
|
Asset
Servicing |
|
|
Issuer
Services |
|
|
Clearing
Services |
|
|
Treasury
Services |
|
|
|
Other
Segment |
|
|
Total
continuing
operations |
|
| Fee and other revenue |
|
$ |
529 |
|
|
$ |
140 |
|
|
$ |
669 |
|
|
$ |
904 |
|
|
$ |
413 |
|
|
$ |
314 |
|
|
$ |
180 |
|
|
$ |
1,811 |
|
|
$ |
(223 |
) |
|
$ |
2,257 |
|
| Net interest revenue |
|
|
7 |
|
|
|
49 |
|
|
|
56 |
|
|
|
211 |
|
|
|
185 |
|
|
|
87 |
|
|
|
157 |
|
|
|
640 |
|
|
|
4 |
|
|
|
700 |
|
| Total revenue |
|
|
536 |
|
|
|
189 |
|
|
|
725 |
|
|
|
1,115 |
|
|
|
598 |
|
|
|
401 |
|
|
|
337 |
|
|
|
2,451 |
|
|
|
(219 |
) |
|
|
2,957 |
|
| Provision for credit losses |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
61 |
|
|
|
61 |
|
| Noninterest expense |
|
|
474 |
|
|
|
147 |
|
|
|
621 |
|
|
|
715 |
|
|
|
325 |
|
|
|
263 |
|
|
|
198 |
|
|
|
1,501 |
|
|
|
261 |
|
|
|
2,383 |
|
| Income before taxes |
|
$ |
62 |
|
|
$ |
42 |
|
|
$ |
104 |
|
|
$ |
400 |
|
|
$ |
273 |
|
|
$ |
138 |
|
|
$ |
139 |
|
|
$ |
950 |
|
|
$ |
(541 |
) |
|
$ |
513 |
|
| Pre-tax operating margin (a) |
|
|
12 |
% |
|
|
22 |
% |
|
|
14 |
% |
|
|
36 |
% |
|
|
46 |
% |
|
|
34 |
% |
|
|
41 |
% |
|
|
39 |
% |
|
|
N/M |
|
|
|
17 |
% |
| Average assets |
|
$ |
12,404 |
|
|
$ |
9,131 |
|
|
$ |
21,535 |
|
|
$ |
58,339 |
|
|
$ |
52,161 |
|
|
$ |
17,014 |
|
|
$ |
24,764 |
|
|
$ |
152,278 |
|
|
$ |
32,413 |
|
|
$ |
206,226 |
(b) |
| Excluding intangible amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noninterest expense |
|
$ |
419 |
|
|
$ |
136 |
|
|
$ |
555 |
|
|
$ |
706 |
|
|
$ |
305 |
|
|
$ |
256 |
|
|
$ |
191 |
|
|
$ |
1,458 |
|
|
$ |
262 |
|
|
$ |
2,275 |
|
| Income before taxes |
|
|
117 |
|
|
|
53 |
|
|
|
170 |
|
|
|
409 |
|
|
|
293 |
|
|
|
145 |
|
|
|
146 |
|
|
|
993 |
|
|
|
(542 |
) |
|
|
621 |
|
| Pre-tax operating margin (a) |
|
|
22 |
% |
|
|
28 |
% |
|
|
23 |
% |
|
|
37 |
% |
|
|
49 |
% |
|
|
36 |
% |
|
|
43 |
% |
|
|
41 |
% |
|
|
N/M |
|
|
|
21 |
% |
| (a) |
Income before taxes divided by total revenue. |
| (b) |
Including average assets of discontinued operations of $2,307 million for the second quarter of 2009, consolidated average assets were $208,533 million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the six months ended
June 30, 2010 |
|
|
|
|
|
Total Asset
and Wealth
Management
Sector |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Institutional
Services
Sector |
|
|
|
|
|
|
|
| (dollar amounts
in millions) |
|
Asset
Management |
|
|
Wealth
Management |
|
|
|
Asset
Servicing |
|
|
Issuer
Services |
|
|
Clearing
Services |
|
|
Treasury
Services |
|
|
|
Other
Segment |
|
|
Total
continuing
operations |
|
| Fee and other revenue |
|
$ |
1,286 |
(a) |
|
$ |
293 |
|
|
$ |
1,579 |
|
|
$ |
1,704 |
|
|
$ |
738 |
|
|
$ |
547 |
|
|
$ |
421 |
|
|
$ |
3,410 |
|
|
$ |
204 |
|
|
$ |
5,193 |
(a) |
| Net interest revenue |
|
|
1 |
|
|
|
111 |
|
|
|
112 |
|
|
|
426 |
|
|
|
468 |
|
|
|
188 |
|
|
|
337 |
|
|
|
1,419 |
|
|
|
(44 |
) |
|
|
1,487 |
|
| Total revenue |
|
|
1,287 |
|
|
|
404 |
|
|
|
1,691 |
|
|
|
2,130 |
|
|
|
1,206 |
|
|
|
735 |
|
|
|
758 |
|
|
|
4,829 |
|
|
|
160 |
|
|
|
6,680 |
|
| Provision for credit losses |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
55 |
|
|
|
55 |
|
| Noninterest expense |
|
|
1,020 |
|
|
|
299 |
|
|
|
1,319 |
|
|
|
1,509 |
|
|
|
663 |
|
|
|
538 |
|
|
|
381 |
|
|
|
3,091 |
|
|
|
382 |
|
|
|
4,792 |
|
| Income before taxes |
|
$ |
267 |
(a) |
|
$ |
105 |
|
|
$ |
372 |
|
|
$ |
621 |
|
|
$ |
543 |
|
|
$ |
197 |
|
|
$ |
377 |
|
|
$ |
1,738 |
|
|
$ |
(277 |
) |
|
$ |
1,833 |
(a) |
| Pre-tax operating margin (b) |
|
|
21 |
% |
|
|
26 |
% |
|
|
22 |
% |
|
|
29 |
% |
|
|
45 |
% |
|
|
27 |
% |
|
|
50 |
% |
|
|
36 |
% |
|
|
N/M |
|
|
|
27 |
% |
| Average assets |
|
$ |
25,040 |
|
|
$ |
10,063 |
|
|
$ |
35,103 |
|
|
$ |
61,331 |
|
|
$ |
50,877 |
|
|
$ |
20,947 |
|
|
$ |
26,600 |
|
|
$ |
159,755 |
|
|
$ |
31,703 |
|
|
$ |
226,561 |
(c) |
| Excluding intangible amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noninterest expense |
|
$ |
920 |
|
|
$ |
281 |
|
|
$ |
1,201 |
|
|
$ |
1,498 |
|
|
$ |
622 |
|
|
$ |
525 |
|
|
$ |
370 |
|
|
$ |
3,015 |
|
|
$ |
381 |
|
|
$ |
4,597 |
|
| Income before taxes |
|
|
367 |
|
|
|
123 |
|
|
|
490 |
|
|
|
632 |
|
|
|
584 |
|
|
|
210 |
|
|
|
388 |
|
|
|
1,814 |
|
|
|
(276 |
) |
|
|
2,028 |
|
| Pre-tax operating margin (b) |
|
|
28 |
% |
|
|
30 |
% |
|
|
29 |
% |
|
|
30 |
% |
|
|
48 |
% |
|
|
29 |
% |
|
|
51 |
% |
|
|
38 |
% |
|
|
N/M |
|
|
|
30 |
% |
| (a) |
Total fee and other revenue and income before taxes for the first six months of 2010 includes income from consolidated asset management funds of $130 million net of
income attributable to noncontrolling interests of $57 million. The net of these income statement line items of $73 million is included above in fee and other revenue. |
| (b) |
Income before taxes divided by total revenue. |
| (c) |
Including average assets of discontinued operations of $577 million for the six months ended June 30, 2010, consolidated average assets were $227,138 million.
|
BNY Mellon 19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the six months ended June 30, 2009 |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (dollar amounts
in millions) |
|
Asset
Management |
|
|
Wealth
Management |
|
|
Asset and
Wealth
Management
Sector |
|
|
Asset
Servicing |
|
|
Issuer
Services |
|
|
Clearing
Services |
|
|
Treasury
Services |
|
|
Total
Institutional
Services
Sector |
|
|
Other
Segment |
|
|
Total
continuing
operations |
|
| Fee and other revenue |
|
$ |
1,008 |
|
|
$ |
281 |
|
|
$ |
1,289 |
|
|
$ |
1,745 |
|
|
$ |
818 |
|
|
$ |
635 |
|
|
$ |
407 |
|
|
$ |
3,605 |
|
|
$ |
(501 |
) |
|
$ |
4,393 |
|
| Net interest revenue |
|
|
22 |
|
|
|
99 |
|
|
|
121 |
|
|
|
460 |
|
|
|
385 |
|
|
|
169 |
|
|
|
316 |
|
|
|
1,330 |
|
|
|
24 |
|
|
|
1,475 |
|
| Total revenue |
|
|
1,030 |
|
|
|
380 |
|
|
|
1,410 |
|
|
|
2,205 |
|
|
|
1,203 |
|
|
|
804 |
|
|
|
723 |
|
|
|
4,935 |
|
|
|
(477 |
) |
|
|
5,868 |
|
| Provision for credit losses |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|