|
||||||||||||||||||||||||||
| SEC Info℠ | | | Home | | | Search | | | My Interests | | | Help | | | Sign In | | | Please Sign In | |||||||
|
||||||||||||||||||||||||||
As Of Filer Filing For·On·As Docs:Size 8/07/19 Bank of New York Mellon Corp 10-Q 6/30/19 137:36M |
Document/Exhibit Description Pages Size
1: 10-Q Quarterly Report HTML 5.54M
2: EX-10.1 2019 Form of Performance Share Unit Agreement HTML 116K
3: EX-10.2 2019 Form of Restricted Share Unit Agreement HTML 111K
4: EX-31.1 Section 302 CEO Certification HTML 43K
5: EX-31.2 Section 302 CFO Certification HTML 43K
6: EX-32.1 Section 906 CEO Certification HTML 38K
7: EX-32.2 Section 906 CFO Certification HTML 38K
14: R1 Document and Entity Information HTML 97K
15: R2 Consolidated Income Statement (Unaudited) HTML 189K
16: R3 Consolidated Income Statement (Unaudited) HTML 41K
(Parenthetical)
17: R4 Consolidated Comprehensive Income Statement HTML 103K
(Unaudited)
18: R5 Consolidated Balance Sheet (Unaudited) HTML 190K
19: R6 Consolidated Balance Sheet (Unaudited) HTML 67K
(Parenthetical)
20: R7 Consolidated Statement of Cash Flows HTML 181K
21: R8 Consolidated Statement of Changes in Equity HTML 154K
(Unaudited)
22: R9 Consolidated Statement of Changes in Equity HTML 39K
(Unaudited) (Parenthetical)
23: R10 Basis of presentation HTML 41K
24: R11 Accounting changes and new accounting guidance HTML 42K
25: R12 Acquisitions and dispositions HTML 43K
26: R13 Securities HTML 505K
27: R14 Loans and asset quality HTML 514K
28: R15 Leasing HTML 169K
29: R16 Goodwill and intangible assets HTML 142K
30: R17 Other assets HTML 110K
31: R18 Contract revenue HTML 222K
32: R19 Net interest revenue HTML 104K
33: R20 Employee benefit plans HTML 98K
34: R21 Income taxes HTML 43K
35: R22 Variable interest entities and securitization HTML 95K
36: R23 Preferred stock HTML 115K
37: R24 Other comprehensive income (Loss) HTML 200K
38: R25 Fair value measurement HTML 593K
39: R26 Fair value option HTML 64K
40: R27 Derivative instruments HTML 455K
41: R28 Commitments and contingent liabilities HTML 124K
42: R29 Lines of business HTML 218K
43: R30 Supplemental information to the Consolidated HTML 56K
Statement of Cash Flows
44: R31 Basis of presentation (Policies) HTML 65K
45: R32 Securities (Tables) HTML 503K
46: R33 Loans and asset quality (Tables) HTML 509K
47: R34 Leasing (Tables) HTML 119K
48: R35 Goodwill and intangible assets (Tables) HTML 144K
49: R36 Other assets (Tables) HTML 105K
50: R37 Contract revenue (Tables) HTML 203K
51: R38 Net interest revenue (Tables) HTML 104K
52: R39 Employee benefit plans (Tables) HTML 99K
53: R40 Variable interest entities and securitization HTML 98K
(Tables)
54: R41 Preferred stock (Tables) HTML 115K
55: R42 Other comprehensive income (Loss) (Tables) HTML 200K
56: R43 Fair value measurement (Tables) HTML 602K
57: R44 Fair value option (Tables) HTML 59K
58: R45 Derivative instruments (Tables) HTML 449K
59: R46 Commitments and contingent liabilities (Tables) HTML 86K
60: R47 Lines of business (Tables) HTML 210K
61: R48 Supplemental information to the Consolidated HTML 55K
Statement of Cash Flows (Tables)
62: R49 Accounting changes and new accounting guidance - HTML 51K
Narrative (Details)
63: R50 Acquisitions and dispositions (Details) HTML 56K
64: R51 Securities - Amortized Cost, Gross Unrealized HTML 133K
Gains and Losses and Fair Value (Details)
65: R52 Securities - Net Securities Gains (Losses) HTML 45K
(Details)
66: R53 Securities - Pre-Tax Net Securities Gains (Losses) HTML 52K
by Type (Details)
67: R54 Securities - Narrative (Details) HTML 38K
68: R55 Securities - Fair Value of Investments with HTML 166K
Continuous Unrealized Loss Position (Details)
69: R56 Securities - Maturity Distribution and Yield of HTML 155K
Investment Securities Portfolio (Details)
70: R57 Securities - Debt Securities Credit Losses Roll HTML 49K
Forward Recorded in Earnings (Details)
71: R58 Securities - Pledged assets (Details) HTML 65K
72: R59 Loans and asset quality - Loan Distribution and HTML 88K
Industry Concentrations (Details)
73: R60 Loans and asset quality - Loans Additional HTML 39K
Information (Details)
74: R61 Loans and asset quality - Allowance for Credit HTML 191K
Losses Activity (Details)
75: R62 Loans and asset quality - Nonperforming Assets HTML 52K
(Details)
76: R63 Loans and asset quality - Lost Interest (Details) HTML 39K
77: R64 Loans and asset quality - Information about HTML 86K
Impaired Loans (Details)
78: R65 Loans and asset quality - Information about Past HTML 70K
Due Loans (Details)
79: R66 Loans and asset quality - Troubled Debt HTML 41K
Restructuring (Details)
80: R67 Loans and asset quality - Credit Risk Profile by HTML 63K
Grade (Details)
81: R68 Loans and asset quality - Credit Risk Indicators HTML 86K
Narrative (Details)
82: R69 Leasing - Narrative (Details) HTML 41K
83: R70 Leasing - Balance Sheet Information (Details) HTML 58K
84: R71 Leasing - Components of Lease Expense (Details) HTML 55K
85: R72 Leasing - Cash Flow Information Related to Leases HTML 43K
(Details)
86: R73 Leasing - Maturities of Operating Leases Prior to HTML 56K
Adopting 2016-02 (Details)
87: R74 Leasing - Maturities of Operating and Finance HTML 76K
Leases After Adopting 2016-02 (Details)
88: R75 Goodwill and intangible assets - Goodwill HTML 53K
(Details)
89: R76 Other assets - Components of Other Assets HTML 73K
(Details)
90: R77 Goodwill and intangible assets - Intangible Assets HTML 57K
by Business Segment (Details)
91: R78 Other assets - Non-Readily Marketable Equity HTML 54K
Securities (Details)
92: R79 Goodwill and intangible assets - Intangible Assets HTML 73K
by Type (Details)
93: R80 Other assets - Qualified Affordable Housing HTML 59K
Project Investments (Details)
94: R81 Goodwill and intangible assets - Estimated Annual HTML 48K
Amortization Expense (Details)
95: R82 Other assets - Seed Capital and Private Equity HTML 64K
Investments (Details)
96: R83 Goodwill and intangible assets - Narrative HTML 50K
(Details)
97: R84 Contract revenue - Disaggregation of Contract HTML 124K
Revenues (Details)
98: R85 Contract revenue - Narrative (Details) HTML 75K
99: R86 Net interest revenue (Details) HTML 92K
100: R87 Employee benefit plans (Details) HTML 63K
101: R88 Income taxes - Narrative (Details) HTML 55K
102: R89 Variable interest entities and securitization - HTML 66K
Assets and Liabilities of VIEs (Details)
103: R90 Variable interest entities and securitization - HTML 50K
Non-consolidated VIEs (Details)
104: R91 Preferred stock - Narrative (Details) HTML 41K
105: R92 Preferred stock - Summary (Details) HTML 75K
106: R93 Preferred stock - Summary of Preferred Dividends HTML 60K
Paid (Details)
107: R94 Other comprehensive income (loss) - Components HTML 116K
(Details)
108: R95 Fair value measurement - Assets and Liabilities on HTML 315K
Recurring Basis (Details)
109: R96 Fair value measurement - Certain Items on HTML 210K
Recurring Basis (Details)
110: R97 Fair value measurement - Assets on Nonrecurring HTML 56K
Basis (Details)
111: R98 Fair value measurement - Financial Instruments HTML 105K
(Details)
112: R99 Fair value measurement - Derivatives (Details) HTML 56K
113: R100 Fair value option - Assets and Liabilities HTML 49K
(Details)
114: R101 Fair value option - Narrative (Details) HTML 39K
115: R102 Fair value option - Changes in Fair Value of Loans HTML 42K
and Long-term Debt (Details)
116: R103 Derivative instruments - Narrative (Details) HTML 116K
117: R104 Derivative instruments - Gains (Losses) Related to HTML 71K
Hedging Derivative Portfolio Recognized in the
Income Statement (Details)
118: R105 Derivative instruments - Impact of Hedging HTML 45K
Derivatives Used in Net Investment Hedging
Relationships (Details)
119: R106 Derivative instruments - Hedged Items in Fair HTML 60K
Value Hedging Relationships (Details)
120: R107 Derivative instruments - Impact of Derivative HTML 97K
Instruments on the Balance Sheet (Details)
121: R108 Derivative instruments - Revenue from Foreign HTML 47K
Exchange and Other Trading (Details)
122: R109 Derivative instruments - Contracts Falling under HTML 51K
Early Termination Provisions (Details)
123: R110 Derivative instruments - Offsetting (Details) HTML 235K
124: R111 Derivative instruments - Secured Borrowings HTML 95K
(Details)
125: R112 Commitments and contingent liabilities - Summary HTML 55K
of Off-Balance Sheet Credit Risks, Net of
Participations (Details)
126: R113 Commitments and contingent liabilities - Narrative HTML 99K
(Details)
127: R114 Commitments and contingent liabilities - Standby HTML 43K
Letters of Credits by Investment Grade (Details)
128: R115 Commitments and contingent liabilities - HTML 77K
Significant Industry Concentrations Related to
Credit Exposure (Details)
129: R116 Lines of business - Narrative (Details) HTML 37K
130: R117 Lines of business - Contribution of Segments to HTML 95K
Overall Profitability (Details)
131: R118 Supplemental information to the Consolidated HTML 58K
Statement of Cash Flows (Details)
132: R119 Supplemental information to the Consolidated HTML 43K
Statement of Cash Flows - Footnote (Details)
133: R9999 Uncategorized Items - form10-q2q19.htm HTML 42K
135: XML IDEA XML File -- Filing Summary XML 257K
13: XML XBRL Instance -- form10-q2q19_htm XML 13.25M
134: EXCEL IDEA Workbook of Financial Reports XLSX 203K
9: EX-101.CAL XBRL Calculations -- bk-20190630_cal XML 623K
10: EX-101.DEF XBRL Definitions -- bk-20190630_def XML 1.71M
11: EX-101.LAB XBRL Labels -- bk-20190630_lab XML 3.55M
12: EX-101.PRE XBRL Presentations -- bk-20190630_pre XML 2.30M
8: EX-101.SCH XBRL Schema -- bk-20190630 XSD 356K
136: JSON XBRL Instance as JSON Data -- MetaLinks 733± 1.13M
137: ZIP XBRL Zipped Folder -- 0001390777-19-000080-xbrl Zip 849K
| Document |
i Delaware | i 13-2614959 |
(State
or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Securities
registered pursuant to Section 12(b) of the Act: Title of each class | Trading symbol(s) | Name of each exchange on which registered |
i Common Stock, $0.01 par value | i BK | i New
York Stock Exchange |
i Depositary Shares, each representing 1/4,000th of a share of Series C Noncumulative Preferred Stock | i BK PrC | i New
York Stock Exchange |
i 6.244% Fixed-to-Floating Rate Normal Preferred Capital Securities of Mellon Capital IV | i BK/P | i New
York Stock Exchange |
(fully and unconditionally guaranteed by The Bank of New York Mellon Corporation) | ||
i Large
accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ | Smaller reporting company | i ☐ | |||
Emerging
growth company | i ☐ | |||||
Page | |
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: | |
Item
1. Financial Statements: | |
Page | |
Notes to Consolidated
Financial Statements: | |
Note 3—Acquisitions and
dispositions | |
Part II - Other Information | |
Signature | |
Quarter ended | Year-to-date | |||||||||||||||
(dollars
in millions, except per share amounts and unless otherwise noted) | ||||||||||||||||
Results applicable to common shareholders of The Bank of New York Mellon Corporation: | ||||||||||||||||
Net income | $ | 969 | $ | 910 | $ | 1,055 | $ | 1,879 | $ | 2,190 | ||||||
Basic
earnings per share | $ | 1.01 | $ | 0.94 | $ | 1.04 | $ | 1.95 | $ | 2.15 | ||||||
Diluted
earnings per share | $ | 1.01 | $ | 0.94 | $ | 1.03 | $ | 1.95 | $ | 2.14 | ||||||
Fee
and other revenue | $ | 3,112 | $ | 3,032 | $ | 3,210 | $ | 6,144 | $ | 6,480 | ||||||
Income
from consolidated investment management funds | 10 | 26 | 12 | 36 | 1 | |||||||||||
Net interest revenue | 802 | 841 | 916 | 1,643 | 1,835 | |||||||||||
Total
revenue | $ | 3,924 | $ | 3,899 | $ | 4,138 | $ | 7,823 | $ | 8,316 | ||||||
Return
on common equity (annualized) | 10.4 | % | 10.0 | % | 11.2 | % | 10.2 | % | 11.7 | % | ||||||
Return on tangible common equity (annualized)
– Non-GAAP (a) | 21.2 | % | 20.7 | % | 23.5 | % | 20.9 | % | 24.6 | % | ||||||
Return
on average assets (annualized) | 1.13 | % | 1.10 | % | 1.22 | % | 1.12 | % | 1.25 | % | ||||||
Fee
revenue as a percentage of total revenue | 79 | % | 78 | % | 78 | % | 78 | % | 78 | % | ||||||
Percentage
of non-U.S. total revenue | 36 | % | 36 | % | 37 | % | 36 | % | 37 | % | ||||||
Pre-tax
operating margin | 33 | % | 31 | % | 34 | % | 32 | % | 34 | % | ||||||
Net
interest margin | 1.12 | % | 1.20 | % | 1.26 | % | 1.16 | % | 1.24 | % | ||||||
Net interest margin on a fully taxable equivalent (“FTE”) basis –
Non-GAAP (b) | 1.12 | % | 1.20 | % | 1.26 | % | 1.16 | % | 1.25 | % | ||||||
Assets
under custody and/or administration (“AUC/A”) at period end (in trillions) (c) | $ | 35.5 | $ | 34.5 | $ | 33.6 | $ | 35.5 | $ | 33.6 | ||||||
Assets
under management (“AUM”) at period end (in billions) (d) | $ | 1,843 | $ | 1,841 | $ | 1,805 | $ | 1,843 | $ | 1,805 | ||||||
Market
value of securities on loan at period end (in billions) (e) | $ | 369 | $ | 377 | $ | 432 | $ | 369 | $ | 432 | ||||||
Average
common shares and equivalents outstanding (in thousands): | ||||||||||||||||
Basic | 951,281 | 962,397 | 1,010,179 | 956,887 | 1,013,507 | |||||||||||
Diluted | 953,928 | 965,960 | 1,014,357 | 959,957 | 1,018,020 | |||||||||||
Selected
average balances: | ||||||||||||||||
Interest-earning assets | $ | 287,417 | $ | 282,185 | $ | 292,086 | $ | 284,816 | $ | 297,050 | ||||||
Total
assets | $ | 342,384 | $ | 336,165 | $ | 346,328 | $ | 339,292 | $ | 352,219 | ||||||
Interest-bearing
deposits | $ | 167,545 | $ | 159,879 | $ | 152,799 | $ | 163,734 | $ | 154,244 | ||||||
Noninterest-bearing
deposits | $ | 52,956 | $ | 54,583 | $ | 64,768 | $ | 53,765 | $ | 67,869 | ||||||
Long-term
debt | $ | 27,681 | $ | 28,254 | $ | 28,349 | $ | 27,966 | $ | 28,378 | ||||||
Preferred
stock | $ | 3,542 | $ | 3,542 | $ | 3,542 | $ | 3,542 | $ | 3,542 | ||||||
Total
The Bank of New York Mellon Corporation common shareholders’ equity | $ | 37,487 | $ | 37,086 | $ | 37,750 | $ | 37,287 | $ | 37,672 | ||||||
Other
information at period end: | ||||||||||||||||
Cash dividends per common share | $ | 0.28 | $ | 0.28 | $ | 0.24 | $ | 0.56 | $ | 0.48 | ||||||
Common
dividend payout ratio | 28 | % | 30 | % | 23 | % | 29 | % | 22 | % | ||||||
Common dividend yield (annualized) | 2.5 | % | 2.3 | % | 1.8 | % | 2.6 | % | 1.8 | % | ||||||
Closing
stock price per common share | $ | 44.15 | $ | 50.43 | $ | 53.93 | $ | 44.15 | $ | 53.93 | ||||||
Market
capitalization | $ | 41,619 | $ | 48,288 | $ | 53,927 | $ | 41,619 | $ | 53,927 | ||||||
Book
value per common share | $ | 40.30 | $ | 39.36 | $ | 37.97 | $ | 40.30 | $ | 37.97 | ||||||
Tangible
book value per common share – Non-GAAP (a) | $ | 20.45 | $ | 19.74 | $ | 19.00 | $ | 20.45 | $ | 19.00 | ||||||
Full-time
employees | 49,100 | 49,800 | 52,000 | 49,100 | 52,000 | |||||||||||
Common shares outstanding (in thousands) | 942,662 | 957,517 | 999,945 | 942,662 | 999,945 | |||||||||||
Regulatory capital and other ratios | ||||||
Average liquidity coverage ratio (“LCR”) | 117 | % | 118 | % | 118 | % |
Regulatory
capital ratios: (f) | ||||||
Advanced: | ||||||
Common Equity Tier 1 (“CET1”) ratio | 11.1 | % | 11.1 | % | 10.7 | % |
Tier
1 capital ratio | 13.2 | 13.2 | 12.8 | |||
Total capital ratio | 14.0 | 14.0 | 13.6 | |||
Standardized: | ||||||
CET1
ratio | 12.4 | % | 12.0 | % | 11.7 | % |
Tier 1 capital ratio | 14.8 | 14.3 | 14.1 | |||
Total
capital ratio | 15.7 | 15.3 | 15.1 | |||
Tier 1 leverage ratio | 6.8 | % | 6.8 | % | 6.6 | % |
Supplementary
leverage ratio (“SLR”) | 6.3 | 6.3 | 6.0 | |||
BNY Mellon shareholders’ equity to total assets ratio | 10.9 | % | 11.9 | % | 11.2 | % |
BNY
Mellon common shareholders’ equity to total assets ratio | 10.0 | 10.9 | 10.2 | |||
(a) | Return on tangible common equity and tangible book value per common share, Non-GAAP measures, exclude goodwill and intangible assets, net of deferred tax liabilities. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures”
beginning on page 40 for the reconciliation of Non-GAAP measures. |
(b) | See “Average balances and interest rates” beginning on page 9 for a reconciliation of this Non-GAAP measure. |
(c) | Includes the AUC/A of CIBC Mellon Global Securities Services Company (“CIBC Mellon”), a joint venture with the Canadian Imperial Bank of Commerce, of $1.4 trillion at June 30,
2019, $1.3 trillion at March 31, 2019 and $1.4 trillion at June 30, 2018. |
(d) | Excludes securities lending cash management assets and assets managed in the Investment Services business. |
(e) | Represents
the total amount of securities on loan in our agency securities lending program managed by the Investment Services business. Excludes securities for which BNY Mellon acts as an agent on behalf of CIBC Mellon clients, which totaled $64 billion at June 30, 2019, $62 billion at March 31, 2019 and $70 billion at June 30, 2018. |
(f) | For
our CET1, Tier 1 capital and Total capital ratios, our effective capital ratios under U.S. capital rules are the lower of the ratios as calculated under the Standardized and Advanced Approaches. For additional information on our capital ratios, see “Capital” beginning on page 33. |
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 |
• | Total
revenue of $3.9 billion decreased 5% primarily reflecting: |
• | Fee revenue decreased 3% primarily reflecting cumulative AUM outflows since the second quarter of 2018, the unfavorable impact of a stronger U.S. dollar and lower foreign exchange and securities lending revenue, partially offset by higher fees in Issuer Services, growth in clearance volumes and collateral management, as well as higher client assets and volumes in Pershing. (See “Fee and other revenue” beginning on page 6.) |
• | Net
interest revenue decreased 12% as the higher yield on interest-earning assets was more than offset by higher deposit and funding costs, lower noninterest-bearing deposits and loan balances and the impact of hedging activities. The impact of hedging activities is offset in foreign exchange and other trading revenue. (See “Net interest revenue” on page 8.) |
• | Noninterest expense of $2.6 billion decreased 4%. Over 1% of the decrease was driven by the favorable impact of a stronger U.S. dollar. The remaining decrease primarily reflects lower staff expense
and decreases in most other expense categories, partially offset by continued investments in technology. (See “Noninterest expense” on page 11.) |
• | Effective tax rate of 20.5%. (See “Income taxes” on page 11.) |
• | CET1
ratio under the Advanced Approach was 11.1% at June 30, 2019, unchanged compared with March 31, 2019, reflecting capital generated through earnings and the unrealized gain in our investment securities portfolio, offset by capital deployed through common stock repurchases, dividends payments and higher risk-weighted assets (“RWA”). (See “Capital” beginning on page 33.) |
• | Repurchased 15.3 million common shares
for $750 million and paid $270 million in dividends to common shareholders in the second quarter of 2019. |
• | Total revenue decreased 3%. |
• | Income
before taxes decreased 8%. |
• | AUC/A of $35.5 trillion, increased 6%, primarily reflecting higher market values and net new business, partially offset by the unfavorable impact of a stronger U.S. dollar. |
• | Total revenue decreased 10%. |
• | Income
before taxes decreased 17%. |
• | AUM of $1.8 trillion increased 2%, primarily reflecting higher market values, partially offset by the unfavorable impact of a stronger U.S. dollar (principally versus the British pound) and net outflows. |
Fee and other
revenue | YTD19 | |||||||||||||||||||||
2Q19
vs. | vs. | |||||||||||||||||||||
(dollars in millions, unless otherwise noted) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | YTD19 | YTD18 | YTD18 | ||||||||||||||
Investment
services fees: | ||||||||||||||||||||||
Asset servicing fees (a) | $ | 1,141 | $ | 1,122 | $ | 1,157 | 2 | % | (1 | )% | $ | 2,263 | $ | 2,325 | (3 | )% | ||||||
Clearing
services fees (b) | 410 | 398 | 401 | 3 | 2 | 808 | 825 | (2 | ) | |||||||||||||
Issuer
services fees | 291 | 251 | 266 | 16 | 9 | 542 | 526 | 3 | ||||||||||||||
Treasury
services fees | 140 | 132 | 140 | 6 | — | 272 | 278 | (2 | ) | |||||||||||||
Total
investment services fees (b) | 1,982 | 1,903 | 1,964 | 4 | 1 | 3,885 | 3,954 | (2 | ) | |||||||||||||
Investment
management and performance fees (b) | 833 | 841 | 901 | (1 | ) | (8 | ) | 1,674 | 1,851 | (10 | ) | |||||||||||
Foreign
exchange and other trading revenue | 166 | 170 | 187 | (2 | ) | (11 | ) | 336 | 396 | (15 | ) | |||||||||||
Financing-related
fees | 50 | 51 | 53 | (2 | ) | (6 | ) | 101 | 105 | (4 | ) | |||||||||||
Distribution
and servicing | 31 | 31 | 34 | — | (9 | ) | 62 | 70 | (11 | ) | ||||||||||||
Investment
and other income | 43 | 35 | 70 | N/M | N/M | 78 | 152 | N/M | ||||||||||||||
Total
fee revenue | 3,105 | 3,031 | 3,209 | 2 | (3 | ) | 6,136 | 6,528 | (6) | |||||||||||||
Net
securities gains (losses) | 7 | 1 | 1 | N/M | N/M | 8 | (48 | ) | N/M | |||||||||||||
Total
fee and other revenue | $ | 3,112 | $ | 3,032 | $ | 3,210 | 3 | % | (3 | )% | $ | 6,144 | $ | 6,480 | (5 | )% | ||||||
Fee
revenue as a percentage of total revenue | 79 | % | 78 | % | 78 | % | 78 | % | 78 | % | ||||||||||||
AUC/A
at period end (in trillions) (c) | $ | 35.5 | $ | 34.5 | $ | 33.6 | 3 | % | 6 | % | $ | 35.5 | $ | 33.6 | 6 | % | ||||||
AUM
at period end (in billions) (d) | $ | 1,843 | $ | 1,841 | $ | 1,805 | — | % | 2 | % | $ | 1,843 | $ | 1,805 | 2 | % | ||||||
(a) | Asset
servicing fees include securities lending revenue of $44 million in the second quarter of 2019, $48 million in the first quarter of 2019, $60 million in the second quarter of 2018, $92 million in the first six months of 2019 and $115 million in the first six months of 2018. |
(b) | In
the first quarter of 2019, we reclassified certain platform-related fees to clearing services fees from investment management and performance fees. Prior periods have been reclassified. |
(c) | Includes the AUC/A of CIBC Mellon of $1.4 trillion at June 30, 2019, $1.3 trillion at March 31, 2019 and $1.4 trillion at June 30, 2018. |
(d) | Excludes
securities lending cash management assets and assets managed in the Investment Services business. |
• | Asset servicing fees decreased 1% compared with the second
quarter of 2018 and increased 2% compared with the first quarter of 2019. The decrease compared with the second quarter of 2018 primarily reflects lower securities lending revenue, lower client activity and the unfavorable |
• | Clearing
services fees increased 2% compared with the second quarter of 2018 and 3% compared with the first quarter of 2019. Both increases primarily reflect higher client assets and volumes. |
• | Issuer services fees increased 9% compared with the second quarter of 2018 and 16% compared with the first quarter of 2019. Both increases primarily reflect higher fees in Depositary Receipts and Corporate
Trust. |
• | Treasury services fees was unchanged compared with the second quarter of 2018 and increased 6% compared with the first quarter of 2019. The increase compared with the first quarter of 2019 primarily reflects higher payment volumes. |
Foreign
exchange and other trading revenue | |||||||||||||||
(in millions) | 2Q19 | 1Q19 | 2Q18 | YTD19 | YTD18 | ||||||||||
Foreign exchange | $ | 150 | $ | 160 | $ | 171 | $ | 310 | $ | 354 | |||||
Other
trading revenue | 16 | 10 | 16 | 26 | 42 | ||||||||||
Total foreign exchange and other trading revenue | $ | 166 | $ | 170 | $ | 187 | $ | 336 | $ | 396 | |||||
Investment
and other income | |||||||||||||||
(in millions) | 2Q19 | 1Q19 | 2Q18 | YTD19 | YTD18 | ||||||||||
Corporate/bank-owned life insurance | $ | 32 | $ | 30 | $ | 31 | $ | 62 | $ | 67 | |||||
Expense
reimbursements from joint venture | 19 | 19 | 19 | 38 | 35 | ||||||||||
Seed capital gains (a)(b) | 8 | 2 | 3 | 10 | 3 | ||||||||||
Asset-related
gains | 1 | 1 | 15 | 2 | 61 | ||||||||||
Other (loss) income (b) | (17 | ) | (17 | ) | 2 | (34 | ) | (14 | ) | ||||||
Total
investment and other income | $ | 43 | $ | 35 | $ | 70 | $ | 78 | $ | 152 | |||||
(a) | Excludes
seed capital gains related to consolidated investment management funds, which are reflected in operations of consolidated investment management funds. |
(b) | The first quarter 2019 amounts were adjusted to correct the classification of certain revenue between seed capital and other income. |
Net
interest revenue | YTD19 | |||||||||||||||||||||
2Q19
vs. | vs. | |||||||||||||||||||||
(dollars in millions) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | YTD19 | YTD18 | YTD18 | ||||||||||||||
Net
interest revenue | $ | 802 | $ | 841 | $ | 916 | (5 | )% | (12 | )% | $ | 1,643 | $ | 1,835 | (10 | )% | ||||||
Add:
Tax equivalent adjustment | 4 | 4 | 5 | N/M | N/M | 8 | 11 | N/M | ||||||||||||||
Net
interest revenue on a fully taxable equivalent basis (“FTE”) – Non-GAAP (a) | $ | 806 | $ | 845 | $ | 921 | (5 | )% | (12 | )% | $ | 1,651 | $ | 1,846 | (11 | )% | ||||||
Average
interest-earning assets | $ | 287,417 | $ | 282,185 | $ | 292,086 | 2 | % | (2 | )% | $ | 284,816 | $ | 297,050 | (4 | )% | ||||||
Net
interest margin | 1.12 | % | 1.20 | % | 1.26 | % | (8 | ) bps | (14 | ) bps | 1.16 | % | 1.24 | % | (8 | )
bps | ||||||
Net interest margin (FTE) – Non-GAAP (a) | 1.12 | % | 1.20 | % | 1.26 | % | (8 | ) bps | (14 | ) bps | 1.16 | % | 1.25 | % | (9 | )
bps | ||||||
(a) | Net interest revenue (FTE) – Non-GAAP and net interest margin (FTE) – Non-GAAP include the tax equivalent adjustments on tax-exempt income which allows for comparisons of amounts arising from both taxable and tax-exempt sources and is consistent with industry practice. The adjustment to an FTE basis has no impact on net income. |
Average
balances and interest rates | Quarter ended | |||||||||||||||||||||||||
(dollars in millions) | Average balance | Interest | Average rates | Average balance | Interest | Average rates | Average
balance | Interest | Average rates | |||||||||||||||||
Assets | ||||||||||||||||||||||||||
Interest-earning
assets: | ||||||||||||||||||||||||||
Interest-bearing deposits with the Federal Reserve and other central banks | $ | 61,756 | $ | 113 | 0.72 | % | $ | 63,583 | $ | 139 | 0.87 | % | $ | 69,676 | $ | 136 | 0.77 | % | ||||||||
Interest-bearing
deposits with banks (primarily foreign banks) | 13,666 | 64 | 1.87 | 13,857 | 63 | 1.85 | 15,748 | 56 | 1.41 | |||||||||||||||||
Federal
funds sold and securities purchased under resale agreements (a) | 38,038 | 568 | 5.99 | 28,968 | 474 | 6.63 | 28,051 | 230 | 3.29 | |||||||||||||||||
Margin
loans | 10,920 | 119 | 4.36 | 12,670 | 135 | 4.34 | 14,838 | 128 | 3.46 | |||||||||||||||||
Non-margin
loans: | ||||||||||||||||||||||||||
Domestic offices | 29,492 | 284 | 3.86 | 28,177 | 269 | 3.85 | 29,970 | 257 | 3.44 | |||||||||||||||||
Foreign
offices | 9,961 | 81 | 3.29 | 10,511 | 86 | 3.32 | 12,258 | 88 | 2.87 | |||||||||||||||||
Total
non-margin loans | 39,453 | 365 | 3.71 | 38,688 | 355 | 3.70 | 42,228 | 345 | 3.27 | |||||||||||||||||
Securities: | ||||||||||||||||||||||||||
U.S.
government obligations | 18,870 | 103 | 2.19 | 23,597 | 129 | 2.22 | 23,199 | 116 | 2.02 | |||||||||||||||||
U.S.
government agency obligations | 66,445 | 428 | 2.58 | 64,867 | 427 | 2.63 | 63,022 | 374 | 2.37 | |||||||||||||||||
State
and political subdivisions (b) | 1,735 | 13 | 2.89 | 2,206 | 15 | 2.71 | 2,677 | 18 | 2.75 | |||||||||||||||||
Other
securities (b) | 30,770 | 157 | 2.04 | 28,647 | 151 | 2.13 | 28,863 | 126 | 1.75 | |||||||||||||||||
Trading
securities (b) | 5,764 | 39 | 2.72 | 5,102 | 36 | 2.91 | 3,784 | 29 | 3.10 | |||||||||||||||||
Total
securities | 123,584 | 740 | 2.40 | 124,419 | 758 | 2.45 | 121,545 | 663 | 2.19 | |||||||||||||||||
Total
interest-earning assets | $ | 287,417 | $ | 1,969 | 2.74 | % | $ | 282,185 | $ | 1,924 | 2.75 | % | $ | 292,086 | $ | 1,558 | 2.14 | % | ||||||||
Noninterest-earnings
assets | 54,967 | 53,980 | 54,242 | |||||||||||||||||||||||
Total
assets | $ | 342,384 | $ | 336,165 | $ | 346,328 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||
Interest-bearing
liabilities: | ||||||||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||||||||
Domestic
offices | $ | 74,180 | $ | 251 | 1.36 | % | $ | 70,562 | $ | 224 | 1.29 | % | $ | 54,200 | $ | 105 | 0.78 | % | ||||||||
Foreign
offices | 93,365 | 181 | 0.78 | 89,317 | 167 | 0.76 | 98,599 | 68 | 0.28 | |||||||||||||||||
Total
interest-bearing deposits | 167,545 | 432 | 1.04 | 159,879 | 391 | 0.99 | 152,799 | 173 | 0.45 | |||||||||||||||||
Federal
funds purchased and securities sold under repurchase agreements (a) | 11,809 | 372 | 12.64 | 11,922 | 331 | 11.26 | 18,146 | 158 | 3.48 | |||||||||||||||||
Trading
liabilities | 1,735 | 11 | 2.47 | 1,305 | 7 | 2.25 | 1,198 | 7 | 2.43 | |||||||||||||||||
Other
borrowed funds | 2,455 | 20 | 3.36 | 3,305 | 24 | 2.87 | 2,399 | 14 | 2.40 | |||||||||||||||||
Commercial
paper | 2,957 | 18 | 2.43 | 1,377 | 8 | 2.44 | 3,869 | 21 | 2.13 | |||||||||||||||||
Payables
to customers and broker-dealers | 15,666 | 69 | 1.76 | 16,108 | 70 | 1.76 | 16,349 | 45 | 1.10 | |||||||||||||||||
Long-term
debt | 27,681 | 241 | 3.45 | 28,254 | 248 | 3.52 | 28,349 | 219 | 3.06 | |||||||||||||||||
Total
interest-bearing liabilities | $ | 229,848 | $ | 1,163 | 2.03 | % | $ | 222,150 | $ | 1,079 | 1.96 | % | $ | 223,109 | $ | 637 | 1.14 | % | ||||||||
Total
noninterest-bearing deposits | 52,956 | 54,583 | 64,768 | |||||||||||||||||||||||
Other
noninterest-bearing liabilities | 18,362 | 18,628 | 16,857 | |||||||||||||||||||||||
Total
liabilities | 301,166 | 295,361 | 304,734 | |||||||||||||||||||||||
Temporary
equity | ||||||||||||||||||||||||||
Redeemable noncontrolling interests | 53 | 70 | 184 | |||||||||||||||||||||||
Permanent
equity | ||||||||||||||||||||||||||
Total The Bank of New York Mellon Corporation shareholders’ equity | 41,029 | 40,628 | 41,292 | |||||||||||||||||||||||
Noncontrolling
interests | 136 | 106 | 118 | |||||||||||||||||||||||
Total
permanent equity | 41,165 | 40,734 | 41,410 | |||||||||||||||||||||||
Total
liabilities, temporary equity and permanent equity | $ | 342,384 | $ | 336,165 | $ | 346,328 | ||||||||||||||||||||
Net
interest revenue (FTE) – Non-GAAP | $ | 806 | $ | 845 | $ | 921 | ||||||||||||||||||||
Net
interest margin (FTE) – Non-GAAP | 1.12 | % | 1.20 | % | 1.26 | % | ||||||||||||||||||||
Less: Tax
equivalent adjustment (b) | 4 | 4 | 5 | |||||||||||||||||||||||
Net
interest revenue – GAAP | $ | 802 | $ | 841 | $ | 916 | ||||||||||||||||||||
Net
interest margin – GAAP | 1.12 | % | 1.20 | % | 1.26 | % | ||||||||||||||||||||
(a) | Includes
the average impact of offsetting under enforceable netting agreements of approximately $51 billion for the second quarter of 2019, $44 billion for the first quarter of 2019 and $18 billion for the second quarter of 2018. On a Non-GAAP basis, excluding the impact of offsetting, the yield on federal funds sold and securities purchased under resale agreements would have been 2.57% for the second quarter of 2019, 2.63% for the first quarter of 2019 and 2.01%
for the second quarter of 2018. On a Non-GAAP basis, excluding the impact of offsetting, the rate on federal funds purchased and securities sold under repurchase agreements would have been 2.39% for the second quarter of 2019, 2.40% for the first quarter of 2019 and 1.75% for the second quarter of 2018. We believe providing the rates excluding the impact of netting is useful to investors as it is more reflective of the actual rates earned and paid. |
(b) | Average
rates were calculated on an FTE basis, at tax rates of approximately 21%, and annualized. |
Average balances and interest rates | Year-to-date | ||||||||||||||||
(dollars in millions) | Average balance | Interest | Average rates | Average balance | Interest | Average
rates | |||||||||||
Assets | |||||||||||||||||
Interest-earning assets: | |||||||||||||||||
Interest-bearing
deposits with the Federal Reserve and other central banks | $ | 62,665 | $ | 252 | 0.80 | % | $ | 74,346 | $ | 262 | 0.70 | % | |||||
Interest-bearing
deposits with banks (primarily foreign banks) | 13,761 | 127 | 1.86 | 14,804 | 98 | 1.33 | |||||||||||
Federal
funds sold and securities purchased under resale agreements (a) | 33,528 | 1,042 | 6.26 | 27,978 | 400 | 2.88 | |||||||||||
Margin
loans | 11,790 | 254 | 4.35 | 15,254 | 243 | 3.21 | |||||||||||
Non-margin
loans: | |||||||||||||||||
Domestic offices | 28,838 | 553 | 3.85 | 30,191 | 485 | 3.23 | |||||||||||
Foreign
offices | 10,235 | 167 | 3.30 | 12,387 | 165 | 2.68 | |||||||||||
Total
non-margin loans | 39,073 | 720 | 3.71 | 42,578 | 650 | 3.07 | |||||||||||
Securities: | |||||||||||||||||
U.S.
government obligations | 21,220 | 232 | 2.21 | 23,329 | 225 | 1.95 | |||||||||||
U.S.
government agency obligations | 65,660 | 855 | 2.60 | 62,998 | 724 | 2.30 | |||||||||||
State
and political subdivisions (b) | 1,969 | 28 | 2.80 | 2,776 | 37 | 2.68 | |||||||||||
Other
securities (b) | 29,715 | 308 | 2.08 | 29,005 | 249 | 1.72 | |||||||||||
Trading
securities (b) | 5,435 | 75 | 2.81 | 3,982 | 57 | 2.85 | |||||||||||
Total
securities | 123,999 | 1,498 | 2.42 | 122,090 | 1,292 | 2.12 | |||||||||||
Total
interest-earning assets | $ | 284,816 | $ | 3,893 | 2.75 | % | $ | 297,050 | $ | 2,945 | 1.99 | % | |||||
Noninterest-earnings
assets | 54,476 | 55,169 | |||||||||||||||
Total assets | $ | 339,292 | $ | 352,219 | |||||||||||||
Liabilities | |||||||||||||||||
Interest-bearing
liabilities: | |||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||
Domestic
offices | $ | 72,381 | $ | 475 | 1.32 | % | $ | 52,914 | $ | 176 | 0.67 | % | |||||
Foreign
offices | 91,353 | 348 | 0.77 | 101,330 | 114 | 0.23 | |||||||||||
Total
interest-bearing deposits | 163,734 | 823 | 1.01 | 154,244 | 290 | 0.38 | |||||||||||
Federal
funds purchased and securities sold under repurchase agreements (a) | 11,865 | 703 | 11.95 | 18,552 | 265 | 2.88 | |||||||||||
Trading
liabilities | 1,521 | 18 | 2.37 | 1,382 | 16 | 2.33 | |||||||||||
Other
borrowed funds | 2,878 | 44 | 3.08 | 2,260 | 23 | 2.06 | |||||||||||
Commercial
paper | 2,171 | 26 | 2.43 | 3,502 | 33 | 1.89 | |||||||||||
Payables
to customers and broker-dealers | 15,887 | 139 | 1.76 | 16,723 | 76 | 0.92 | |||||||||||
Long-term
debt | 27,966 | 489 | 3.48 | 28,378 | 396 | 2.78 | |||||||||||
Total
interest-bearing liabilities | $ | 226,022 | $ | 2,242 | 2.00 | % | $ | 225,041 | $ | 1,099 | 0.98 | % | |||||
Total
noninterest-bearing deposits | 53,765 | 67,869 | |||||||||||||||
Other noninterest-bearing liabilities | 18,494 | 17,710 | |||||||||||||||
Total
liabilities | 298,281 | 310,620 | |||||||||||||||
Temporary equity | |||||||||||||||||
Redeemable
noncontrolling interests | 65 | 188 | |||||||||||||||
Permanent equity | |||||||||||||||||
Total
The Bank of New York Mellon Corporation shareholders’ equity | 40,829 | 41,214 | |||||||||||||||
Noncontrolling interests | 117 | 197 | |||||||||||||||
Total
permanent equity | 40,946 | 41,411 | |||||||||||||||
Total liabilities, temporary equity and permanent equity | $ | 339,292 | $ | 352,219 | |||||||||||||
Net
interest revenue (FTE) – Non-GAAP | $ | 1,651 | $ | 1,846 | |||||||||||||
Net interest margin (FTE) – Non-GAAP | 1.16 | % | 1.25 | % | |||||||||||||
Less: Tax
equivalent adjustment (b) | 8 | 11 | |||||||||||||||
Net interest revenue – GAAP | $ | 1,643 | $ | 1,835 | |||||||||||||
Net
interest margin – GAAP | 1.16 | % | 1.24 | % | |||||||||||||
(a) | Includes the average impact of offsetting under enforceable netting agreements
of approximately $47 billion for the first six months of 2019 and $16 billion for the first six months of 2018. On a Non-GAAP basis, excluding the impact of offsetting, the yield on federal funds sold and securities purchased under resale agreements would have been 2.59% for the first six months of 2019 and 1.84% for the first six months of 2018. On a Non-GAAP basis, excluding the impact of offsetting, the rate on federal funds purchased and securities sold under repurchase agreements would have been 2.39% for the first
six months of 2019 and 1.55% for the first six months of 2018. We believe providing the rates excluding the impact of netting is useful to investors as it is more reflective of the actual rates earned and paid. |
(b) | Average rates were calculated on an FTE basis, at tax rates of approximately 21%, and annualized. |
Noninterest expense | YTD19 | |||||||||||||||||||||
2Q19
vs. | vs. | |||||||||||||||||||||
(dollars in millions) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | YTD19 | YTD18 | YTD18 | ||||||||||||||
Staff | $ | 1,421 | $ | 1,524 | $ | 1,489 | (7 | )% | (5 | )% | $ | 2,945 | $ | 3,065 | (4 | )% | ||||||
Professional,
legal and other purchased services | 337 | 325 | 328 | 4 | 3 | 662 | 619 | 7 | ||||||||||||||
Software
and equipment | 304 | 283 | 266 | 7 | 14 | 587 | 500 | 17 | ||||||||||||||
Net
occupancy | 138 | 137 | 156 | 1 | (12 | ) | 275 | 295 | (7 | ) | ||||||||||||
Sub-custodian
and clearing | 115 | 105 | 110 | 10 | 5 | 220 | 229 | (4 | ) | |||||||||||||
Distribution
and servicing | 94 | 91 | 106 | 3 | (11 | ) | 185 | 212 | (13 | ) | ||||||||||||
Business
development | 56 | 45 | 62 | 24 | (10 | ) | 101 | 113 | (11 | ) | ||||||||||||
Bank
assessment charges | 31 | 31 | 47 | — | (34 | ) | 62 | 99 | (37 | ) | ||||||||||||
Amortization
of intangible assets | 30 | 29 | 48 | 3 | (38 | ) | 59 | 97 | (39 | ) | ||||||||||||
Other | 121 | 129 | 135 | (6 | ) | (10 | ) | 250 | 257 | (3 | ) | |||||||||||
Total
noninterest expense | $ | 2,647 | $ | 2,699 | $ | 2,747 | (2 | )% | (4 | )% | $ | 5,346 | $ | 5,486 | (3 | )% | ||||||
Full-time
employees at period end | 49,100 | 49,800 | 52,000 | (1 | )% | (6 | )% | |||||||||||||||
YTD19 | ||||||||||||||||||||||||||||
(dollars
in millions unless otherwise noted) | 2Q19 vs. | vs. | ||||||||||||||||||||||||||
2Q19 | 1Q19 | 4Q18 | 3Q18 | 2Q18 | 1Q19 | 2Q18 | YTD19 | YTD18 | YTD18 | |||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||||
Investment
services fees: | ||||||||||||||||||||||||||||
Asset servicing fees (a) | $ | 1,120 | $ | 1,103 | $ | 1,106 | $ | 1,136 | $ | 1,135 | 2 | % | (1 | )% | $ | 2,223 | $ | 2,278 | (2 | )% | ||||||||
Clearing
services fees (b) | 411 | 398 | 398 | 393 | 400 | 3 | 3 | 809 | 824 | (2 | ) | |||||||||||||||||
Issuer
services fees | 291 | 251 | 286 | 288 | 265 | 16 | 10 | 542 | 525 | 3 | ||||||||||||||||||
Treasury
services fees | 140 | 132 | 139 | 136 | 140 | 6 | — | 272 | 278 | (2 | ) | |||||||||||||||||
Total
investment services fees (b) | 1,962 | 1,884 | 1,929 | 1,953 | 1,940 | 4 | 1 | 3,846 | 3,905 | (2 | ) | |||||||||||||||||
Foreign
exchange and other trading revenue | 153 | 157 | 163 | 161 | 172 | (3 | ) | (11 | ) | 310 | 341 | (9 | ) | |||||||||||||||
Other
(b)(c) | 112 | 113 | 121 | 116 | 121 | (1 | ) | (7 | ) | 225 | 237 | (5 | ) | |||||||||||||||
Total
fee and other revenue | 2,227 | 2,154 | 2,213 | 2,230 | 2,233 | 3 | — | 4,381 | 4,483 | (2 | ) | |||||||||||||||||
Net
interest revenue | 775 | 796 | 827 | 827 | 874 | (3 | ) | (11 | ) | 1,571 | 1,718 | (9 | ) | |||||||||||||||
Total
revenue | 3,002 | 2,950 | 3,040 | 3,057 | 3,107 | 2 | (3 | ) | 5,952 | 6,201 | (4 | ) | ||||||||||||||||
Provision
for credit losses | (4 | ) | 8 | 6 | 1 | 1 | N/M | N/M | 4 | (6 | ) | N/M | ||||||||||||||||
Noninterest
expense (excluding amortization of intangible assets) | 1,934 | 1,949 | 2,090 | 1,995 | 1,931 | (1 | ) | — | 3,883 | 3,844 | 1 | |||||||||||||||||
Amortization
of intangible assets | 20 | 20 | 22 | 35 | 36 | — | (44 | ) | 40 | 72 | (44 | ) | ||||||||||||||||
Total
noninterest expense | 1,954 | 1,969 | 2,112 | 2,030 | 1,967 | (1 | ) | (1 | ) | 3,923 | 3,916 | — | ||||||||||||||||
Income
before taxes | $ | 1,052 | $ | 973 | $ | 922 | $ | 1,026 | $ | 1,139 | 8 | % | (8 | )% | $ | 2,025 | $ | 2,291 | (12 | )% | ||||||||
Pre-tax
operating margin | 35 | % | 33 | % | 30 | % | 34 | % | 37 | % | 34 | % | 37 | % | ||||||||||||||
Securities
lending revenue | $ | 40 | $ | 44 | $ | 43 | $ | 52 | $ | 55 | (9 | )% | (27 | )% | $ | 84 | $ | 103 | (18 | )% | ||||||||
Total
revenue by line of business: | ||||||||||||||||||||||||||||
Asset
Servicing | $ | 1,391 | $ | 1,407 | $ | 1,435 | $ | 1,458 | $ | 1,520 | (1 | )% | (8 | )% | $ | 2,798 | $ | 3,039 | (8 | )% | ||||||||
Pershing | 564 | 554 | 558 | 558 | 558 | 2 | 1 | 1,118 | 1,139 | (2 | ) | |||||||||||||||||
Issuer
Services | 446 | 396 | 441 | 453 | 431 | 13 | 3 | 842 | 849 | (1 | ) | |||||||||||||||||
Treasury
Services | 317 | 317 | 328 | 324 | 329 | — | (4 | ) | 634 | 650 | (2 | ) | ||||||||||||||||
Clearance
and Collateral Management | 284 | 276 | 278 | 264 | 269 | 3 | 6 | 560 | 524 | 7 | ||||||||||||||||||
Total
revenue by line of business | $ | 3,002 | $ | 2,950 | $ | 3,040 | $ | 3,057 | $ | 3,107 | 2 | % | (3 | )% | $ | 5,952 | $ | 6,201 | (4 | )% | ||||||||
Metrics: | ||||||||||||||||||||||||||||
Average
loans | $ | 32,287 | $ | 33,171 | $ | 35,540 | $ | 35,044 | $ | 38,002 | (3 | )% | (15 | )% | $ | 32,726 | $ | 38,598 | (15 | )% | ||||||||
Average
deposits | $ | 201,146 | $ | 195,082 | $ | 203,416 | $ | 192,741 | $ | 203,064 | 3 | % | (1 | )% | $ | 198,131 | $ | 208,567 | (5 | )% | ||||||||
AUC/A
at period end (in trillions) (d) | $ | 35.5 | $ | 34.5 | $ | 33.1 | $ | 34.5 | $ | 33.6 | 3 | % | 6 | % | $ | 35.5 | $ | 33.6 | 6 | % | ||||||||
Market
value of securities on loan at period end (in billions) (e) | $ | 369 | $ | 377 | $ | 373 | $ | 415 | $ | 432 | (2 | )% | (15 | )% | $ | 369 | $ | 432 | (15 | )% | ||||||||
Pershing: | ||||||||||||||||||||||||||||
Average
active clearing accounts (U.S. platform) (in thousands) | 6,254 | 6,169 | 6,125 | 6,108 | 6,080 | 1 | % | 3 | % | |||||||||||||||||||
Average
long-term mutual fund assets (U.S. platform) | $ | 532,384 | $ | 507,606 | $ | 489,491 | $ | 527,336 | $ | 512,645 | 5 | % | 4 | % | ||||||||||||||
Average
investor margin loans (U.S. platform) | $ | 9,440 | $ | 10,093 | $ | 10,921 | $ | 10,696 | $ | 10,772 | (6 | )% | (12 | )% | ||||||||||||||
Clearance
and Collateral Management: | ||||||||||||||||||||||||||||
Average tri-party collateral management balances (in
billions) | $ | 3,400 | $ | 3,266 | $ | 3,181 | $ | 2,995 | $ | 2,801 | 4 | % | 21 | % | ||||||||||||||
(a) | Asset
servicing fees include the fees from the Clearance and Collateral Management business. |
(b) | In the first quarter of 2019, we reclassified certain platform-related fees to clearing services fees from investment management and performance fees. Prior periods have been reclassified. |
(c) | Other revenue includes investment management and performance fees, financing-related fees, distribution and servicing revenue and investment and other income. |
(d) | Includes
the AUC/A of CIBC Mellon of $1.4 trillion at June 30, 2019, $1.3 trillion at March 31, 2019, $1.2 trillion at Dec. 31, 2018 and $1.4 trillion at Sept. 30, 2018 and June 30, 2018. |
(e) | Represents
the total amount of securities on loan in our agency securities lending program managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $64 billion at June 30, 2019, $62 billion at March 31, 2019, $58 billion at Dec. 31, 2018, $69 billion at Sept. 30, 2018 and $70 billion
at June 30, 2018. |
• | We are the primary provider of U.S. government securities clearance and a provider of non-U.S. government securities clearance. |
• | We are a leading provider of tri-party collateral management services with an average
of $3.4 trillion serviced globally including approximately $2.5 trillion of the U.S. tri-party repo market. |
• | Our agency securities lending program is one of the largest lenders of U.S. and non-U.S. securities, servicing a lendable asset pool of approximately $4.1 trillion in 34 separate markets. |
YTD19 | ||||||||||||||||||||||||||||
2Q19
vs. | vs. | |||||||||||||||||||||||||||
(dollars in millions) | 2Q19 | 1Q19 | 4Q18 | 3Q18 | 2Q18 | 1Q19 | 2Q18 | YTD19 | YTD18 | YTD18 | ||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||||
Investment
management fees (a) | $ | 827 | $ | 806 | $ | 826 | $ | 879 | $ | 885 | 3 | % | (7 | )% | $ | 1,633 | $ | 1,783 | (8 | )% | ||||||||
Performance
fees | 2 | 31 | 54 | 30 | 12 | N/M | (83 | ) | 33 | 60 | (45 | ) | ||||||||||||||||
Investment
management and performance fees (b) | 829 | 837 | 880 | 909 | 897 | (1 | ) | (8 | ) | 1,666 | 1,843 | (10 | ) | |||||||||||||||
Distribution
and servicing | 44 | 45 | 45 | 47 | 48 | (2 | ) | (8 | ) | 89 | 98 | (9 | ) | |||||||||||||||
Other
(a) | (23 | ) | (18 | ) | (35 | ) | (18 | ) | (4 | ) | N/M | N/M | (41 | ) | 12 | N/M | ||||||||||||
Total
fee and other revenue (a) | 850 | 864 | 890 | 938 | 941 | (2 | ) | (10 | ) | 1,714 | 1,953 | (12 | ) | |||||||||||||||
Net
interest revenue | 67 | 75 | 73 | 77 | 77 | (11 | ) | (13 | ) | 142 | 153 | (7 | ) | |||||||||||||||
Total
revenue | 917 | 939 | 963 | 1,015 | 1,018 | (2 | ) | (10 | ) | 1,856 | 2,106 | (12 | ) | |||||||||||||||
Provision
for credit losses | (2 | ) | 1 | 1 | (2 | ) | 2 | N/M | N/M | (1 | ) | 4 | N/M | |||||||||||||||
Noninterest
expense (excluding amortization of intangible assets) | 645 | 660 | 702 | 688 | 685 | (2 | ) | (6 | ) | 1,305 | 1,377 | (5 | ) | |||||||||||||||
Amortization
of intangible assets | 9 | 9 | 13 | 13 | 12 | — | (25 | ) | 18 | 25 | (28 | ) | ||||||||||||||||
Total
noninterest expense | 654 | 669 | 715 | 701 | 697 | (2 | ) | (6 | ) | 1,323 | 1,402 | (6 | ) | |||||||||||||||
Income
before taxes | $ | 265 | $ | 269 | $ | 247 | $ | 316 | $ | 319 | (1 | )% | (17 | )% | $ | 534 | $ | 700 | (24 | )% | ||||||||
Pre-tax
operating margin | 29 | % | 29 | % | 26 | % | 31 | % | 31 | % | 29 | % | 33 | % | ||||||||||||||
Adjusted
pre-tax operating margin – Non-GAAP (c) | 32 | % | 32 | % | 29 | % | 35 | % | 35 | % | 32 | % | 37 | % | ||||||||||||||
Total
revenue by line of business: | ||||||||||||||||||||||||||||
Asset Management | $ | 618 | $ | 637 | $ | 660 | $ | 704 | $ | 702 | (3 | )% | (12 | )% | $ | 1,255 | $ | 1,472 | (15 | )% | ||||||||
Wealth
Management | 299 | 302 | 303 | 311 | 316 | (1 | ) | (5 | ) | 601 | 634 | (5 | ) | |||||||||||||||
Total
revenue by line of business | $ | 917 | $ | 939 | $ | 963 | $ | 1,015 | $ | 1,018 | (2 | )% | (10 | )% | $ | 1,856 | $ | 2,106 | (12 | )% | ||||||||
Average
balances: | ||||||||||||||||||||||||||||
Average loans | $ | 16,322 | $ | 16,403 | $ | 16,485 | $ | 16,763 | $ | 16,974 | — | % | (4 | )% | $ | 16,363 | $ | 16,926 | (3 | )% | ||||||||
Average
deposits | $ | 14,615 | $ | 15,815 | $ | 14,893 | $ | 14,634 | $ | 14,252 | (8 | )% | 3 | % | $ | 15,211 | $ | 13,810 | 10 | % | ||||||||
(a) | Total
fee and other revenue includes the impact of the consolidated investment management funds, net of noncontrolling interests. Additionally, other revenue includes asset servicing fees, treasury services fees, foreign exchange and other trading revenue and investment and other income. |
(b) | On a constant currency basis, investment management and performance fees decreased 6% (Non-GAAP) compared with the second quarter of 2018. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 40 for the reconciliation of this Non-GAAP measure. |
(c) | Net
of distribution and servicing expense. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 40 for the reconciliation of this Non-GAAP measure. |
AUM
trends | 2Q19 vs. | ||||||||||||||||||
(dollars in billions) | 2Q19 | 1Q19 | 4Q18 | 3Q18 | 2Q18 | 1Q19 | 2Q18 | ||||||||||||
AUM
at period end, by product type: (a) | |||||||||||||||||||
Equity | $ | 152 | $ | 149 | $ | 135 | $ | 167 | $ | 160 | 2 | % | (5 | )% | |||||
Fixed
income | 209 | 208 | 200 | 202 | 197 | — | 6 | ||||||||||||
Index
| 322 | 333 | 301 | 352 | 334 | (3 | ) | (4 | ) | ||||||||||
Liability-driven
investments | 709 | 709 | 659 | 652 | 663 | — | 7 | ||||||||||||
Multi-asset
and alternative investments | 184 | 178 | 167 | 184 | 181 | 3 | 2 | ||||||||||||
Cash | 267 | 264 | 260 | 271 | 270 | 1 | (1 | ) | |||||||||||
Total
AUM by product type | $ | 1,843 | $ | 1,841 | $ | 1,722 | $ | 1,828 | $ | 1,805 | — | % | 2 | % | |||||
Changes
in AUM: (a) | |||||||||||||||||||
Beginning balance of AUM | $ | 1,841 | $ | 1,722 | $ | 1,828 | $ | 1,805 | $ | 1,868 | |||||||||
Net
(outflows) inflows: | |||||||||||||||||||
Long-term strategies: | |||||||||||||||||||
Equity | (2 | ) | (4 | ) | (8 | ) | (2 | ) | (3 | ) | |||||||||
Fixed
income | (4 | ) | 3 | (1 | ) | 2 | (4 | ) | |||||||||||
Liability-driven investments | 1 | 5 | 14 | 16 | 2 | ||||||||||||||
Multi-asset
and alternative investments | 1 | (4 | ) | (2 | ) | 2 | (3 | ) | |||||||||||
Total
long-term active strategies (outflows) inflows | (4 | ) | — | 3 | 18 | (8 | ) | ||||||||||||
Index | (22 | ) | (2 | ) | (11 | ) | (3 | ) | (7 | ) | |||||||||
Total
long-term strategies (outflows) inflows | (26 | ) | (2 | ) | (8 | ) | 15 | (15 | ) | ||||||||||
Short-term
strategies: | |||||||||||||||||||
Cash | 2 | 2 | (10 | ) | — | (11 | ) | ||||||||||||
Total
net (outflows) inflows | (24 | ) | — | (18 | ) | 15 | (26 | ) | |||||||||||
Net
market impact | 42 | 103 | (69 | ) | 18 | 17 | |||||||||||||
Net
currency impact | (16 | ) | 16 | (19 | ) | (10 | ) | (53 | ) | ||||||||||
Divestiture/other | — | — | — | — | (1 | ) | |||||||||||||
Ending
balance of AUM | $ | 1,843 | $ | 1,841 | $ | 1,722 | $ | 1,828 | $ | 1,805 | — | % | 2 | % | |||||
Wealth
Management client assets (b) | $ | 257 | $ | 253 | $ | 239 | $ | 261 | $ | 254 | 2 | % | 1 | % | |||||
(in
millions) | 2Q19 | 1Q19 | 4Q18 | 3Q18 | 2Q18 | YTD19 | YTD18 | ||||||||||||||
Fee
revenue | $ | 34 | $ | 29 | $ | 29 | $ | 7 | $ | 40 | $ | 63 | $ | 97 | |||||||
Net
securities gains (losses) | 7 | 1 | — | — | 1 | 8 | (48 | ) | |||||||||||||
Total
fee and other revenue | 41 | 30 | 29 | 7 | 41 | 71 | 49 | ||||||||||||||
Net
interest (expense) | (40 | ) | (30 | ) | (15 | ) | (13 | ) | (35 | ) | (70 | ) | (36 | ) | |||||||
Total
revenue (loss) | 1 | — | 14 | (6 | ) | 6 | 1 | 13 | |||||||||||||
Provision
for credit losses | (2 | ) | (2 | ) | (7 | ) | (2 | ) | (6 | ) | (4 | ) | (6 | ) | |||||||
Noninterest
expense | 39 | 61 | 160 | 6 | 81 | 100 | 168 | ||||||||||||||
(Loss)
before taxes | $ | (36 | ) | $ | (59 | ) | $ | (139 | ) | $ | (10 | ) | $ | (69 | ) | $ | (95 | ) | $ | (149 | ) |
Average
loans and leases | $ | 1,764 | $ | 1,784 | $ | 1,809 | $ | 2,000 | $ | 2,090 | $ | 1,774 | $ | 2,308 | |||||||
Critical policy | Reference |
Allowance for loan losses and allowance for lending-related commitments | 2018 Annual Report, pages 24-25. |
Fair value of financial instruments and derivatives | 2018 Annual Report, pages
25-27. |
Goodwill and other intangibles | 2018 Annual Report, page 27. Also, see below. |
Litigation and regulatory contingencies | “Legal proceedings” in Note 19 of the Notes to Consolidated Financial Statements. |
Country risk exposure | Interest-bearing deposits | Investment
securities (b) | Total exposure | ||||||||||||||||||||
(in billions) | Central banks | Banks | Lending
(a) | Other (c) | |||||||||||||||||||
Top 10 country exposure: | |||||||||||||||||||||||
UK | $ | 14.1 | $ | 1.0 | $ | 2.4 | $ | 4.2 | $ | 2.0 | $ | 23.7 | |||||||||||
Germany | 18.0 | 0.5 | 0.7 | 3.0 | 0.2 | 22.4 | |||||||||||||||||
Japan | 14.2 | 0.8 | 0.2 | — | 0.1 | 15.3 | |||||||||||||||||
Belgium | 6.0 | 1.0 | 0.1 | 0.2 | — | 7.3 | |||||||||||||||||
Canada | — | 1.6 | 0.2 | 2.6 | 0.8 | 5.2 | |||||||||||||||||
China | — | 2.2 | 0.8 | — | 0.3 | 3.3 | |||||||||||||||||
France | — | 0.2 | — | 2.0 | 0.4 | 2.6 | |||||||||||||||||
Netherlands | — | — | 0.3 | 1.8 | 0.1 | 2.2 | |||||||||||||||||
Australia | — | 1.1 | 0.3 | 0.5 | 0.3 | 2.2 | |||||||||||||||||
Italy | — | 0.7 | — | 1.3 | — | 2.0 | |||||||||||||||||
Total
Top 10 country exposure | $ | 52.3 | $ | 9.1 | $ | 5.0 | $ | 15.6 | $ | 4.2 | $ | 86.2 | (d) | ||||||||||
Select
country exposure: | |||||||||||||||||||||||
Spain | $ | — | $ | 0.2 | $ | 0.1 | $ | 1.3 | $ | — | $ | 1.6 | |||||||||||
Brazil | — | — | 1.4 | 0.1 | 0.1 | 1.6 | |||||||||||||||||
Total
select country exposure | $ | — | $ | 0.2 | $ | 1.5 | $ | 1.4 | $ | 0.1 | $ | 3.2 | |||||||||||
(a) | Lending
includes loans, acceptances, issued letters of credit, net of participations, and lending-related commitments. |
(b) | Investment securities include both the available-for-sale and held-to-maturity portfolios. |
(c) | Other exposures include over-the-counter (“OTC”) derivative and securities financing transactions, net of collateral. |
(d) | The
top 10 country exposures comprise approximately 80% of our total non-U.S. exposure. |
Securities
portfolio | 2Q19 change in unrealized gain (loss) | Fair value as a % of amortized cost (a) | Unrealized gain
(loss) | Ratings (b) | ||||||||||||||||||||||||||
BB+ and lower | ||||||||||||||||||||||||||||||
(dollars in millions) | Fair value | Amortized cost | Fair value | AAA/ AA- | A+/ A- | BBB+/ BBB- | Not rated | |||||||||||||||||||||||
Agency
RMBS | $ | 50,872 | $ | 503 | $ | 52,816 | $ | 52,860 | 100 | % | $ | 44 | 100 | % | — | % | — | % | — | % | — | % | ||||||||
U.S.
Treasury | 19,545 | 82 | 18,272 | 18,284 | 100 | 12 | 100 | — | — | — | — | |||||||||||||||||||
Sovereign
debt/sovereign guaranteed (c) | 12,811 | 32 | 13,007 | 13,146 | 101 | 139 | 76 | 3 | 20 | 1 | — | |||||||||||||||||||
Agency
commercial mortgage-backed securities (“MBS”) | 10,800 | 56 | 10,678 | 10,689 | 100 | 11 | 100 | — | — | — | — | |||||||||||||||||||
Supranational | 3,541 | 13 | 3,903 | 3,925 | 101 | 22 | 100 | — | — | — | — | |||||||||||||||||||
U.S.
government agencies | 3,556 | 8 | 3,861 | 3,866 | 100 | 5 | 100 | — | — | — | — | |||||||||||||||||||
CLOs | 3,373 | 9 | 3,665 | 3,649 | 100 | (16 | ) | 98 | — | — | 1 | 1 | ||||||||||||||||||
Foreign
covered bonds (d) | 3,053 | 12 | 3,465 | 3,479 | 100 | 14 | 100 | — | — | — | — | |||||||||||||||||||
Other
asset-backed securities (“ABS”) | 2,037 | 6 | 2,466 | 2,470 | 100 | 4 | 100 | — | — | — | — | |||||||||||||||||||
Non-agency
commercial MBS | 1,476 | 30 | 1,968 | 1,993 | 101 | 25 | 98 | 2 | — | — | — | |||||||||||||||||||
Non-agency
RMBS (e) | 1,354 | (1 | ) | 1,090 | 1,314 | 121 | 224 | 13 | 12 | 5 | 44 | 26 | ||||||||||||||||||
State
and political subdivisions | 2,183 | 10 | 1,270 | 1,297 | 102 | 27 | 72 | 27 | — | — | 1 | |||||||||||||||||||
Corporate
bonds | 903 | 13 | 889 | 905 | 102 | 16 | 16 | 69 | 15 | — | — | |||||||||||||||||||
Other | 1,476 | 1 | 1,671 | 1,674 | 100 | 3 | 89 | 7 | — | — | 4 | |||||||||||||||||||
Total
securities | $ | 116,980 | (f) | $ | 774 | $ | 119,021 | $ | 119,551 | (f) | 100 | % | $ | 530 | (f)(g) | 95 | % | 2 | % | 2 | % | 1 | % | — | % | |||||
(a) | Amortized
cost reflects historical impairments. |
(b) | Represents ratings by Standard & Poor’s (“S&P”) or the equivalent. |
(c) | Primarily consists of exposure to UK, Germany, France, Spain, Italy and the Netherlands. |
(d) | Primarily consists of exposure to Canada, UK, Australia and Sweden. |
(e) | Includes
RMBS that were included in the former Grantor Trust of $791 million at March 31, 2019 and $753 million at June 30, 2019. |
(f) | Includes net unrealized losses on derivatives hedging securities available-for-sale of $252 million at March 31, 2019 and $737 million at
June 30, 2019. |
(g) | Unrealized gains of $384 million at June 30, 2019 related to available-for-sale securities, net of hedges. |
Net premium amortization and discount accretion of securities (a) | |||||||||||||||
(dollars
in millions) | 2Q19 | 1Q19 | 4Q18 | 3Q18 | 2Q18 | ||||||||||
Amortizable purchase premium (net of discount) relating to securities: | |||||||||||||||
Balance
at period end | $ | 1,315 | $ | 1,388 | $ | 1,429 | $ | 1,536 | $ | 1,642 | |||||
Estimated
average life remaining at period end (in years) | 4.5 | 4.8 | 5.0 | 5.2 | 5.3 | ||||||||||
Amortization | $ | 91 | $ | 78 | $ | 92 | $ | 108 | $ | 115 | |||||
Accretable
discount related to the prior restructuring of the securities portfolio: | |||||||||||||||
Balance at period end | $ | 181 | $ | 193 | $ | 207 | $ | 224 | $ | 239 | |||||
Estimated
average life remaining at period end (in years) | 6.3 | 6.3 | 6.3 | 6.3 | 6.3 | ||||||||||
Accretion | $ | 13 | $ | 16 | $ | 17 | $ | 20 | $ | 24 | |||||
(a) | Amortization
of purchase premium decreases net interest revenue while accretion of discount increases net interest revenue. Both were recorded on a level yield basis. |
Total
exposure – consolidated | |||||||||||||||||||
(in billions) | Loans | Unfunded commitments | Total exposure | Loans | Unfunded commitments | Total exposure | |||||||||||||
Non-margin
loans: | |||||||||||||||||||
Financial institutions | $ | 11.5 | $ | 35.6 | $ | 47.1 | $ | 11.6 | $ | 34.0 | $ | 45.6 | |||||||
Commercial | 1.7 | 13.6 | 15.3 | 2.1 | 15.2 | 17.3 | |||||||||||||
Subtotal
institutional | 13.2 | 49.2 | 62.4 | 13.7 | 49.2 | 62.9 | |||||||||||||
Wealth
management loans and mortgages | 15.7 | 0.8 | 16.5 | 16.0 | 0.8 | 16.8 | |||||||||||||
Commercial
real estate | 5.2 | 3.6 | 8.8 | 4.8 | 3.5 | 8.3 | |||||||||||||
Lease
financings | 1.2 | — | 1.2 | 1.3 | — | 1.3 | |||||||||||||
Other
residential mortgages | 0.6 | — | 0.6 | 0.6 | — | 0.6 | |||||||||||||
Overdrafts | 4.7 | — | 4.7 | 5.5 | — | 5.5 | |||||||||||||
Other | 1.2 | — | 1.2 | 1.2 | — | 1.2 | |||||||||||||
Subtotal
non-margin loans | 41.8 | 53.6 | 95.4 | 43.1 | 53.5 | 96.6 | |||||||||||||
Margin
loans | 10.6 | 0.1 | 10.7 | 13.5 | 0.1 | 13.6 | |||||||||||||
Total | $ | 52.4 | $ | 53.7 | $ | 106.1 | $ | 56.6 | $ | 53.6 | $ | 110.2 | |||||||
Financial
institutions portfolio exposure (dollars in billions) | |||||||||||||||||||||||
Loans | Unfunded commitments | Total exposure | % Inv. grade | % due <1
yr. | Loans | Unfunded commitments | Total exposure | ||||||||||||||||
Securities industry | $ | 2.5 | $ | 24.3 | $ | 26.8 | 99 | % | 92 | % | $ | 3.1 | $ | 22.5 | $ | 25.6 | |||||||
Asset
managers | 1.4 | 6.7 | 8.1 | 98 | 81 | 1.3 | 6.1 | 7.4 | |||||||||||||||
Banks | 6.5 | 1.0 | 7.5 | 76 | 98 | 6.3 | 1.6 | 7.9 | |||||||||||||||
Insurance | 0.1 | 2.4 | 2.5 | 100 | 10 | 0.1 | 2.5 | 2.6 | |||||||||||||||
Government | 0.1 | 0.3 | 0.4 | 100 | 16 | 0.1 | 0.5 | 0.6 | |||||||||||||||
Other | 0.9 | 0.9 | 1.8 | 86 | 56 | 0.7 | 0.8 | 1.5 | |||||||||||||||
Total | $ | 11.5 | $ | 35.6 | $ | 47.1 | 95 | % | 85 | % | $ | 11.6 | $ | 34.0 | $ | 45.6 | |||||||
Commercial
portfolio exposure | |||||||||||||||||||||||
(dollars in billions) | Loans | Unfunded commitments | Total exposure | % Inv. grade | % due <1
yr. | Loans | Unfunded commitments | Total exposure | |||||||||||||||
Manufacturing | $ | 0.7 | $ | 4.7 | $ | 5.4 | 94 | % | 7 | % | $ | 0.8 | $ | 5.1 | $ | 5.9 | |||||||
Services
and other | 0.7 | 3.9 | 4.6 | 96 | 16 | 0.7 | 4.8 | 5.5 | |||||||||||||||
Energy
and utilities | 0.3 | 3.8 | 4.1 | 95 | 7 | 0.5 | 4.1 | 4.6 | |||||||||||||||
Media
and telecom | — | 1.2 | 1.2 | 93 | 8 | 0.1 | 1.2 | 1.3 | |||||||||||||||
Total | $ | 1.7 | $ | 13.6 | $ | 15.3 | 95 | % | 10 | % | $ | 2.1 | $ | 15.2 | $ | 17.3 | |||||||
Percentage of the portfolios that are investment grade | ||||||||||
Quarter ended | ||||||||||
Financial institutions | 95 | % | 94 | % | 95 | % | 94 | % | 94 | % |
Commercial | 95 | % | 95 | % | 95 | % | 95 | % | 96 | % |
Allowance
for credit losses activity | ||||||||||||
(dollars
in millions) | ||||||||||||
Non-margin loans | $ | 41,794 | $ | 41,176 | $ | 43,080 | $ | 42,719 | ||||
Margin
loans | 10,602 | 12,311 | 13,484 | 15,057 | ||||||||
Total loans | $ | 52,396 | $ | 53,487 | $ | 56,564 | $ | 57,776 | ||||
Beginning
balance of allowance for credit losses | $ | 248 | $ | 252 | $ | 251 | $ | 256 | ||||
Provision for credit losses | (8 | ) | 7 | — | (3 | ) | ||||||
Net
recoveries (charge-offs): | ||||||||||||
Other residential mortgages | 2 | — | — | 1 | ||||||||
Wealth
management loans and mortgages | (1 | ) | — | — | — | |||||||
Commercial | — | (11 | ) | — | — | |||||||
Foreign | — | — | 1 | — | ||||||||
Net
recoveries (charge-offs) | 1 | (11 | ) | 1 | 1 | |||||||
Ending balance of allowance for credit losses | $ | 241 | $ | 248 | $ | 252 | $ | 254 | ||||
Allowance
for loan losses | $ | 146 | $ | 146 | $ | 146 | $ | 145 | ||||
Allowance for lending-related commitments | 95 | 102 | 106 | 109 | ||||||||
Allowance
for loan losses as a percentage of total loans | 0.28 | % | 0.27 | % | 0.26 | % | 0.25 | % | ||||
Allowance for loan losses as a percentage of non-margin loans | 0.35 | 0.35 | 0.34 | 0.34 | ||||||||
Total
allowance for credit losses as a percentage of total loans | 0.46 | 0.46 | 0.45 | 0.44 | ||||||||
Total allowance for credit losses as a percentage of non-margin loans | 0.58 | 0.60 | 0.58 | 0.59 | ||||||||
Allocation
of allowance | |||||||||
Commercial | 32 | % | 33 | % | 32 | % | 30 | % | |
Commercial
real estate | 30 | 30 | 30 | 29 | |||||
Foreign | 13 | 12 | 13 | 13 | |||||
Financial
institutions | 9 | 9 | 9 | 10 | |||||
Wealth management (a) | 8 | 8 | 8 | 9 | |||||
Other
residential mortgages | 6 | 6 | 6 | 7 | |||||
Lease financing | 2 | 2 | 2 | 2 | |||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | |
(a) | Includes
the allowance for wealth management mortgages. |
Nonperforming
assets | ||||||
(dollars in millions) | ||||||
Nonperforming loans: | ||||||
Commercial | $ | 96 | $ | — | ||
Other
residential mortgages | 65 | 67 | ||||
Wealth management loans and mortgages | 23 | 9 | ||||
Total nonperforming loans | 184 | 76 | ||||
Other
assets owned | 2 | 3 | ||||
Total nonperforming assets (a) | $ | 186 | $ | 79 | ||
Nonperforming assets ratio | 0.35 | % | 0.14 | % | ||
Nonperforming
assets ratio, excluding margin loans | 0.45 | 0.18 | ||||
Allowance for loan losses/nonperforming loans | 79.3 | 192.1 | ||||
Allowance for loan losses/nonperforming assets | 78.5 | 184.8 | ||||
Total
allowance for credit losses/nonperforming loans | 131.0 | 331.6 | ||||
Total allowance for credit losses/nonperforming assets | 129.6 | 319.0 | ||||
(a) | In
the second quarter 2019, we refined the application of our nonperforming assets policy for first lien residential mortgage loans greater than 90 days delinquent that resulted in a $12 million increase in nonperforming assets. |
Nonperforming assets activity | ||||||
(in millions) | ||||||
Balance at beginning of quarter | $ | 174 | $ | 81 | ||
Additions | 17 | 4 | ||||
Return
to accrual status | — | (1 | ) | |||
Charge-offs | 1 | (1 | ) | |||
Paydowns/sales | (6 | ) | (4 | ) | ||
Balance
at end of quarter | $ | 186 | $ | 79 | ||
Federal
funds purchased and securities sold under repurchase agreements | |||||||||
Quarter ended | |||||||||
(dollars in millions) | |||||||||
Maximum
month-end balance during the quarter | $ | 12,127 | $ | 12,113 | $ | 14,138 | |||
Average daily balance (a) | $ | 11,809 | $ | 11,922 | $ | 18,146 | |||
Weighted-average
rate during the quarter (a) | 12.64 | % | 11.26 | % | 3.48 | % | |||
Ending balance (b) | $ | 11,757 | $ | 11,761 | $ | 13,200 | |||
Weighted-average
rate at period end (b) | 14.43 | % | 9.82 | % | 4.24 | % | |||
(a) | Includes the average impact of offsetting under enforceable netting agreements of $50,710 million for the second quarter of 2019, $44,091
million for the first quarter of 2019 and $17,975 million for the second quarter of 2018. On a Non-GAAP basis, excluding the impact of offsetting, the weighted-average rates would have been 2.39% for the second quarter of 2019, 2.40% for the first quarter of 2019 and 1.75% for the second quarter of 2018. We believe providing the rates excluding the impact of netting is useful to investors as it is more reflective of the actual rates paid. |
(b) | Includes
the impact of offsetting under enforceable netting agreements of $78,433 million at June 30, 2019, $47,461 million at March 31, 2019 and $36,766 million at June 30, 2018. |
Payables to customers and broker-dealers | |||||||||
Quarter ended | |||||||||
(dollars in millions) | |||||||||
Maximum month-end balance during the quarter | $ | 19,149 | $ | 20,343 | $ | 20,349 | |||
Average
daily balance (a) | $ | 18,679 | $ | 19,291 | $ | 19,402 | |||
Weighted-average rate during the quarter (a) | 1.76 | % | 1.76 | % | 1.10 | % | |||
Ending
balance | $ | 18,946 | $ | 19,310 | $ | 19,123 | |||
Weighted-average rate at period end | 1.73 | % | 1.75 | % | 1.08 | % | |||
(a) | The
weighted-average rate is calculated based on, and is applied to, the average interest-bearing payables to customers and broker-dealers, which were $15,666 million in the second quarter of 2019, $16,108 million in the first quarter of 2019 and $16,349 million in the second quarter of 2018. |
Commercial paper | Quarter ended | ||||||||
(dollars in millions) | |||||||||
Maximum month-end balance during the quarter | $ | 8,894 | $ | 4,601 | $ | 4,470 | |||
Average
daily balance | $ | 2,957 | $ | 1,377 | $ | 3,869 | |||
Weighted-average rate during the quarter | 2.43 | % | 2.44 | % | 2.13 | % | |||
Ending
balance | $ | 8,894 | $ | 2,773 | $ | 2,508 | |||
Weighted-average rate at period end | 2.35 | % | 2.40 | % | 2.24 | % | |||
Other borrowed funds | Quarter
ended | ||||||||
(dollars in millions) | |||||||||
Maximum month-end balance during the quarter | $ | 2,732 | $ | 3,969 | $ | 3,053 | |||
Average
daily balance | $ | 2,455 | $ | 3,305 | $ | 2,399 | |||
Weighted-average rate during the quarter | 3.36 | % | 2.87 | % | 2.40 | % | |||
Ending
balance | $ | 1,921 | $ | 3,932 | $ | 3,053 | |||
Weighted-average rate at period end | 3.84 | % | 3.31 | % | 2.53 | % | |||
Available funds | Average | ||||||||||||||
(dollars in millions) | 2Q19 | 1Q19 | 2Q18 | ||||||||||||
Cash and due from banks | $ | 5,556 | $ | 5,864 | $ | 5,083 | $ | 4,853 | $ | 4,916 | |||||
Interest-bearing
deposits with the Federal Reserve and other central banks | 69,700 | 67,988 | 61,756 | 63,583 | 69,676 | ||||||||||
Interest-bearing deposits with banks | 15,491 | 14,148 | 13,666 | 13,857 | 15,748 | ||||||||||
Federal
funds sold and securities purchased under resale agreements | 61,201 | 46,795 | 38,038 | 28,968 | 28,051 | ||||||||||
Total available funds | $ | 151,948 | $ | 134,795 | $ | 118,543 | $ | 111,261 | $ | 118,391 | |||||
Total
available funds as a percentage of total assets | 40 | % | 37 | % | 35 | % | 33 | % | 34 | % | |||||
Credit
ratings at June 30, 2019 | |||||||
Moody’s | S&P | Fitch | DBRS | ||||
Parent: | |||||||
Long-term
senior debt | A1 | A | AA- | AA (low) | |||
Subordinated debt | A2 | A- | A+ | A
(high) | |||
Preferred stock | Baa1 | BBB | BBB | A (low) | |||
Outlook - Parent | Stable | Stable | Stable | Stable | |||
The
Bank of New York Mellon: | |||||||
Long-term senior debt | Aa2 | AA- | AA | AA | |||
Subordinated
debt | NR | A | NR | NR | |||
Long-term deposits | Aa1 | AA- | AA+ | AA | |||
Short-term
deposits | P1 | A-1+ | F1+ | R-1 (high) | |||
Commercial paper | P1 | A-1+ | F1+ | R-1
(high) | |||
BNY Mellon, N.A.: | |||||||
Long-term
senior debt | Aa2 | (a) | AA- | AA | (a) | AA | |
Long-term deposits | Aa1 | AA- | AA+ | AA | |||
Short-term
deposits | P1 | A-1+ | F1+ | R-1 (high) | |||
Outlook
- Banks | Stable | Stable | Stable | Stable | |||
(a) | Represents senior debt issuer default rating. |
Consolidated
HQLA and LCR | |||
(dollars in billions) | |||
Securities (a) | $ | 134 | |
Cash (b) | 63 | ||
Total
consolidated HQLA (c) | $ | 197 | |
Total consolidated HQLA - average (c) | $ | 166 | |
Average LCR | 117 | % | |
(a) | Primarily
includes securities of U.S. government-sponsored enterprises, U.S. Treasury, sovereign securities, U.S. agency and investment-grade corporate debt. |
(b) | Primarily includes cash on deposit with central banks. |
(c) | Consolidated HQLA presented before adjustments. After haircuts and the impact of trapped liquidity, consolidated HQLA totaled $153 billion at June 30, 2019 and averaged
$118 billion for the second quarter of 2019. |
Capital
data (dollars in millions, except per share amounts; common shares in thousands) | |||||||||
Average common equity to average assets | 10.9 | % | 11.0 | % | 11.2 | % | |||
At
period end: | |||||||||
BNY Mellon shareholders’ equity to total assets ratio | 10.9 | % | 11.9 | % | 11.2 | % | |||
BNY Mellon common shareholders’ equity to total assets ratio | 10.0 | % | 10.9 | % | 10.2 | % | |||
Total
BNY Mellon shareholders’ equity | $ | 41,533 | $ | 41,225 | $ | 40,638 | |||
Total BNY Mellon common shareholders’ equity (a) | $ | 37,991 | $ | 37,683 | $ | 37,096 | |||
BNY
Mellon tangible common shareholders’ equity – Non-GAAP (a) | $ | 19,275 | $ | 18,896 | $ | 18,290 | |||
Book value per common share (a) | $ | 40.30 | $ | 39.36 | $ | 38.63 | |||
Tangible
book value per common share – Non-GAAP (a) | $ | 20.45 | $ | 19.74 | $ | 19.04 | |||
Closing stock price per common share | $ | 44.15 | $ | 50.43 | $ | 47.07 | |||
Market
capitalization | $ | 41,619 | $ | 48,288 | $ | 45,207 | |||
Common shares outstanding | 942,662 | 957,517 | 960,426 | ||||||
Cash
dividends per common share | $ | 0.28 | $ | 0.28 | $ | 0.28 | |||
Common dividend payout ratio | 28 | % | 30 | % | 33 | % | |||
Common
dividend yield (annualized) | 2.5 | % | 2.3 | % | 2.4 | % | |||
(a) | See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 40 for a reconciliation of GAAP to Non-GAAP. |
Consolidated
and largest bank subsidiary regulatory capital ratios | ||||||||||||||
Well capitalized | Minimum
required | Capital ratios | Capital ratios | Capital ratios | ||||||||||
(a) | ||||||||||||||
Consolidated
regulatory capital ratios: (b) | ||||||||||||||
Advanced Approach: | ||||||||||||||
CET1
ratio | N/A | (c) | 8.5 | % | 11.1 | % | 11.1 | % | 10.7 | % | ||||
Tier
1 capital ratio | 6 | % | 10 | 13.2 | 13.2 | 12.8 | ||||||||
Total
capital ratio | 10 | % | 12 | 14.0 | 14.0 | 13.6 | ||||||||
Standardized
Approach: | ||||||||||||||
CET1 ratio | N/A | (c) | 8.5 | % | 12.4 | % | 12.0 | % | 11.7 | % | ||||
Tier
1 capital ratio | 6 | % | 10 | 14.8 | 14.3 | 14.1 | ||||||||
Total
capital ratio | 10 | % | 12 | 15.7 | 15.3 | 15.1 | ||||||||
Tier
1 leverage ratio | N/A | (c) | 4 | 6.8 | 6.8 | 6.6 | ||||||||
SLR
(d) | N/A | (c) | 5 | 6.3 | 6.3 | 6.0 | ||||||||
The
Bank of New York Mellon regulatory capital ratios: (b) | ||||||||||||||
Advanced Approach: | ||||||||||||||
CET1
ratio | 6.5 | % | 7 | % | 14.2 | % | 14.2 | % | 14.0 | % | ||||
Tier
1 capital ratio | 8 | 8.5 | 14.2 | 14.4 | 14.3 | |||||||||
Total
capital ratio | 10 | 10.5 | 14.2 | 14.9 | 14.7 | |||||||||
Tier
1 leverage ratio | 5 | 4 | 7.3 | 7.6 | 7.6 | |||||||||
SLR
(d) | 6 | 3 | 6.7 | 6.9 | 6.8 | |||||||||
(a) | Minimum
requirements for June 30, 2019 include minimum thresholds plus currently applicable buffers. |
(b) | For our CET1, Tier 1 capital and Total capital ratios, our effective capital ratios under U.S. capital rules are the lower of the ratios as calculated under the Standardized and Advanced Approaches. The Tier 1 leverage ratio is based on Tier 1 capital and quarterly average total assets. The fully phased-in U.S. G-SIB surcharge of 1.5% is subject to change. The countercyclical capital buffer is currently set to 0%. |
(c) | The
Federal Reserve’s regulations do not establish well capitalized thresholds for these measures for BHCs. |
(d) | The SLR is based on Tier 1 capital and total leverage exposure, which includes certain off-balance sheet exposures. |
Capital components and risk-weighted
assets | |||||||||
(in millions) | |||||||||
CET1: | |||||||||
Common
shareholders’ equity | $ | 37,991 | $ | 37,683 | $ | 37,096 | |||
Adjustments for: | |||||||||
Goodwill
and intangible assets (a) | (18,716 | ) | (18,787 | ) | (18,806 | ) | |||
Net pension fund assets | (331 | ) | (334 | ) | (320 | ) | |||
Equity
method investments | (358 | ) | (357 | ) | (361 | ) | |||
Deferred tax assets | (45 | ) | (43 | ) | (42 | ) | |||
Other | (7 | ) | (6 | ) | — | ||||
Total
CET1 | 18,534 | 18,156 | 17,567 | ||||||
Other Tier 1 capital: | |||||||||
Preferred stock | 3,542 | 3,542 | 3,542 | ||||||
Other | (61 | ) | (59 | ) | (65 | ) | |||
Total
Tier 1 capital | $ | 22,015 | $ | 21,639 | $ | 21,044 | |||
Tier 2 capital: | |||||||||
Subordinated
debt | $ | 1,250 | $ | 1,250 | $ | 1,250 | |||
Allowance for credit losses | 241 | 248 | 252 | ||||||
Other | (6 | ) | (1 | ) | (10 | ) | |||
Total
Tier 2 capital – Standardized Approach | 1,485 | 1,497 | 1,492 | ||||||
Excess of expected credit losses | 41 | 53 | 65 | ||||||
Less:
Allowance for credit losses | 241 | 248 | 252 | ||||||
Total Tier 2 capital – Advanced Approach | $ | 1,285 | $ | 1,302 | $ | 1,305 | |||
Total
capital: | |||||||||
Standardized Approach | $ | 23,500 | $ | 23,136 | $ | 22,536 | |||
Advanced
Approach | $ | 23,300 | $ | 22,941 | $ | 22,349 | |||
Risk-weighted
assets: | |||||||||
Standardized Approach | $ | 149,226 | $ | 151,101 | $ | 149,618 | |||
Advanced
Approach: | |||||||||
Credit Risk | $ | 94,304 | $ | 92,798 | $ | 92,917 | |||
Market
Risk | 3,241 | 3,507 | 3,454 | ||||||
Operational Risk | 69,025 | 67,313 | 68,300 | ||||||
Total
Advanced Approach | $ | 166,570 | $ | 163,618 | $ | 164,671 | |||
Average
assets for Tier 1 leverage ratio | $ | 322,879 | $ | 316,586 | $ | 319,007 | |||
Total leverage exposure for SLR | $ | 350,747 | $ | 344,829 | $ | 347,943 | |||
(a) | Reduced
by deferred tax liabilities associated with intangible assets and tax deductible goodwill. |
CET1 generation | 2Q19 | ||
(in millions) | |||
CET1
– Beginning of period | $ | 18,156 | |
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | 969 | ||
Goodwill and intangible assets, net of related deferred tax liabilities | 71 | ||
Gross CET1 generated | 1,040 | ||
Capital
deployed: | |||
Common stock dividend payments | (270 | ) | |
Common stock repurchases | (750 | ) | |
Total capital deployed | (1,020 | ) | |
Other comprehensive income: | |||
Foreign
currency translation | 10 | ||
Unrealized gain on assets available-for-sale | 282 | ||
Defined benefit plans | 10 | ||
Total other comprehensive income | 302 | ||
Additional
paid-in capital (a) | 57 | ||
Other additions (deductions): | |||
Net pension fund assets | 3 | ||
Deferred tax assets | (2 | ) | |
Embedded goodwill | (1 | ) | |
Other | (1 | ) | |
Total
other deductions | (1 | ) | |
Net CET1 generated | 378 | ||
CET1 – End of period | $ | 18,534 | |
(a) | Primarily related to stock
awards, the exercise of stock options and stock issued for employee benefit plans. |
Sensitivity of consolidated capital ratios at June
30, 2019 | ||||
Increase or decrease of | ||||
(in basis points) | $100 million in common equity | $1 billion in RWA, quarterly average assets or total leverage exposure | ||
CET1: | ||||
Standardized
Approach | 7 | bps | 8 | bps |
Advanced Approach | 6 | 7 | ||
Tier
1 capital: | ||||
Standardized Approach | 7 | 10 | ||
Advanced Approach | 6 | 8 | ||
Total
capital: | ||||
Standardized Approach | 7 | 11 | ||
Advanced Approach | 6 | 8 | ||
Tier
1 leverage | 3 | 2 | ||
SLR | 3 | 2 | ||
As a % of RWAs (a) | As a % of total
leverage exposure | |
Eligible external TLAC ratios | Regulatory minimum of 18% plus a buffer (b) equal to the sum of 2.5%, the method 1 G-SIB surcharge (currently 1%), and the countercyclical capital buffer, if any | Regulatory minimum of 7.5% plus a buffer (c) equal to 2% |
Eligible external LTD ratios | Regulatory minimum of 6% plus the greater of the method 1 or method 2 G-SIB surcharge (currently 1.5%) | 4.5% |
(c) | Buffer to be met using only Tier 1 capital. |
TLAC
and LTD ratios | ||||||
Minimum required | Minimum ratios with buffers | |||||
Ratios | ||||||
Eligible external TLAC: | ||||||
As
a percentage of RWA | 18.0 | % | 21.5 | % | 26.6 | % |
As a percentage of total leverage exposure | 7.5 | % | 9.5 | % | 12.6 | % |
Eligible
external LTD: | ||||||
As a percentage of RWA | 7.5 | % | N/A | 11.9 | % | |
As a percentage of total leverage exposure | 4.5 | % | N/A | 5.6 | % | |
• | VaR does not estimate potential losses over longer time horizons where moves may be extreme; |
• | VaR does not take account of potential variability of market liquidity; and |
• | Previous moves in market risk factors may not produce
accurate predictions of all future market moves. |
VaR (a) | 2Q19 | |||||||||||
(in millions) | Average | Minimum | Maximum | |||||||||
Interest rate | $ | 4.2 | $ | 3.3 | $ | 5.2 | $ | 3.8 | ||||
Foreign
exchange | 2.7 | 1.9 | 4.2 | 2.3 | ||||||||
Equity | 0.8 | 0.6 | 0.9 | 0.7 | ||||||||
Credit | 0.8 | 0.5 | 1.2 | 0.9 | ||||||||
Diversification | (3.2 | ) | N/M | N/M | (3.2 | ) | ||||||
Overall
portfolio | 5.3 | 4.0 | 6.9 | 4.5 | ||||||||
VaR (a) | 1Q19 | |||||||||||
(in millions) | Average | Minimum | Maximum | |||||||||
Interest rate | $ | 4.0 | $ | 3.2 | $ | 5.3 | $ | 4.2 | ||||
Foreign
exchange | 3.8 | 2.8 | 6.4 | 3.9 | ||||||||
Equity | 0.7 | 0.6 | 1.1 | 0.9 | ||||||||
Credit | 0.6 | 0.4 | 1.0 | 0.7 | ||||||||
Diversification | (2.9 | ) | N/M | N/M | (3.5 | ) | ||||||
Overall
portfolio | 6.2 | 4.6 | 9.5 | 6.2 | ||||||||
VaR (a) | 2Q18 | |||||||||||
(in millions) | Average | Minimum | Maximum | |||||||||
Interest rate | $ | 4.0 | $ | 3.3 | $ | 5.2 | $ | 3.5 | ||||
Foreign
exchange | 3.7 | 2.9 | 5.7 | 3.5 | ||||||||
Equity | 0.7 | 0.5 | 1.0 | 0.5 | ||||||||
Credit | 0.8 | 0.6 | 1.0 | 1.0 | ||||||||
Diversification | (3.9 | ) | N/M | N/M | (3.9 | ) | ||||||
Overall
portfolio | 5.3 | 4.3 | 7.0 | 4.6 | ||||||||
VaR (a) | YTD19 | ||||||||
(in
millions) | Average | Minimum | Maximum | ||||||
Interest rate | $ | 4.1 | $ | 3.2 | $ | 5.3 | |||
Foreign
exchange | 3.3 | 1.9 | 6.4 | ||||||
Equity | 0.7 | 0.6 | 1.1 | ||||||
Credit | 0.7 | 0.4 | 1.2 | ||||||
Diversification | (3.1 | ) | N/M | N/M | |||||
Overall
portfolio | 5.7 | 4.0 | 9.5 | ||||||
VaR (a) | YTD18 | ||||||||
(in
millions) | Average | Minimum | Maximum | ||||||
Interest rate | $ | 4.2 | $ | 3.3 | $ | 5.5 | |||
Foreign
exchange | 4.5 | 2.9 | 8.3 | ||||||
Equity | 0.8 | 0.5 | 1.2 | ||||||
Credit | 1.1 | 0.6 | 2.6 | ||||||
Diversification | (4.7 | ) | N/M | N/M | |||||
Overall
portfolio | 5.9 | 4.3 | 10.4 | ||||||
(a) | VaR exposure does not include the impact of the Company’s consolidated investment management funds and seed capital investments. |
Distribution
of trading revenue (loss) (a) | |||||||||||
Quarter ended | |||||||||||
(dollars in millions) | |||||||||||
Revenue range: | Number of days | ||||||||||
Less than $(2.5) | — | 1 | 1 | — | 1 | ||||||
$(2.5)
– $0 | 4 | 5 | 7 | 6 | 3 | ||||||
$0 – $2.5 | 30 | 22 | 17 | 30 | 21 | ||||||
$2.5
– $5.0 | 23 | 23 | 24 | 20 | 30 | ||||||
More than $5.0 | 7 | 10 | 13 | 7 | 9 | ||||||
(a) | Trading
revenue (loss) includes realized and unrealized gains and losses primarily related to spot and forward foreign exchange transactions, derivatives and securities trades for our customers and excludes any associated commissions, underwriting fees and net interest revenue. |
Foreign exchange and other trading counterparty risk rating profile (a) | ||||||||||
Quarter
ended | ||||||||||
Rating: | ||||||||||
AAA to AA- | 54 | % | 49 | % | 50 | % | 48 | % | 37 | % |
A+
to A- | 26 | 28 | 28 | 30 | 41 | |||||
BBB+ to BBB- | 17 | 20 | 18 | 19 | 18 | |||||
BB+
and lower (b) | 3 | 3 | 4 | 3 | 4 | |||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
(a) | Represents
credit rating agency equivalent of internal credit ratings. |
(b) | Non-investment grade. |
Estimated
changes in net interest revenue (in millions) | |||||||||
Up 200 bps parallel rate ramp vs. baseline (a) | $ | 380 | $ | 410 | $ | 372 | |||
Up
100 bps parallel rate ramp vs. baseline (a) | 200 | 208 | 183 | ||||||
Down 100 bps parallel rate ramp vs. baseline (a) | (179 | ) | (91 | ) | (70 | ) | |||
Long-term
up 50 bps, short-term unchanged (b) | 171 | 149 | 72 | ||||||
Long-term down 50 bps, short-term unchanged (b) | (192 | ) | (178 | ) | (89 | ) | |||
(a) | In
the parallel rate ramp, both short-term and long-term rates move in four equal quarterly increments. |
(b) | Long-term is equal to or greater than one year. |
Return on common equity and tangible common equity reconciliation | |||||||||||||||
(dollars
in millions) | 2Q19 | 1Q19 | 2Q18 | YTD19 | YTD18 | ||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP | $ | 969 | $ | 910 | $ | 1,055 | $ | 1,879 | $ | 2,190 | |||||
Add:
Amortization of intangible assets | 30 | 29 | 48 | 59 | 97 | ||||||||||
Less: Tax impact of amortization of intangible assets | 7 | 7 | 11 | 14 | 23 | ||||||||||
Adjusted
net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets – Non-GAAP | $ | 992 | $ | 932 | $ | 1,092 | $ | 1,924 | $ | 2,264 | |||||
Average
common shareholders’ equity | $ | 37,487 | $ | 37,086 | $ | 37,750 | $ | 37,287 | $ | 37,672 | |||||
Less: Average
goodwill | 17,343 | 17,376 | 17,505 | 17,360 | 17,543 | ||||||||||
Average intangible assets | 3,178 | 3,209 | 3,341 | 3,193 | 3,369 | ||||||||||
Add: Deferred
tax liability – tax deductible goodwill | 1,094 | 1,083 | 1,054 | 1,094 | 1,054 | ||||||||||
Deferred tax liability – intangible assets | 687 | 690 | 709 | 687 | 709 | ||||||||||
Average
tangible common shareholders’ equity – Non-GAAP | $ | 18,747 | $ | 18,274 | $ | 18,667 | $ | 18,515 | $ | 18,523 | |||||
Return
on common equity (annualized) – GAAP | 10.4 | % | 10.0 | % | 11.2 | % | 10.2 | % | 11.7 | % | |||||
Return on tangible common equity (annualized) –
Non-GAAP | 21.2 | % | 20.7 | % | 23.5 | % | 20.9 | % | 24.6 | % | |||||
Book value and tangible book value per common share reconciliation | ||||||||||||
(dollars in millions, except common shares) | ||||||||||||
BNY Mellon shareholders’ equity at period end – GAAP | $ | 41,533 | $ | 41,225 | $ | 40,638 | $ | 41,505 | ||||
Less: Preferred
stock | 3,542 | 3,542 | 3,542 | 3,542 | ||||||||
BNY Mellon common shareholders’ equity at period end – GAAP | 37,991 | 37,683 | 37,096 | 37,963 | ||||||||
Less: Goodwill | 17,337 | 17,367 | 17,350 | 17,418 | ||||||||
Intangible
assets | 3,160 | 3,193 | 3,220 | 3,308 | ||||||||
Add: Deferred tax liability – tax deductible goodwill | 1,094 | 1,083 | 1,072 | 1,054 | ||||||||
Deferred
tax liability – intangible assets | 687 | 690 | 692 | 709 | ||||||||
BNY Mellon tangible common shareholders’ equity at period end – Non-GAAP | $ | 19,275 | $ | 18,896 | $ | 18,290 | $ | 19,000 | ||||
Period-end
common shares outstanding (in thousands) | 942,662 | 957,517 | 960,426 | 999,945 | ||||||||
Book
value per common share – GAAP | $ | 40.30 | $ | 39.36 | $ | 38.63 | $ | 37.97 | ||||
Tangible book value per common share – Non-GAAP | $ | 20.45 | $ | 19.74 | $ | 19.04 | $ | 19.00 | ||||
Constant currency reconciliation – Consolidated | 2Q19 vs. | |||||||
(dollars in millions) | 2Q19 | 2Q18 | 2Q18 | |||||
Investment
management and performance fees (a) | $ | 833 | $ | 901 | (8 | )% | ||
Impact of changes in foreign currency exchange rates | — | (16 | ) | |||||
Adjusted
investment management and performance fees – Non-GAAP | $ | 833 | $ | 885 | (6 | )% | ||
(a) | In the first quarter of 2019, we reclassified certain platform-related fees to clearing services fees from investment management and
performance fees. Prior periods have been reclassified. |
Constant currency reconciliation – Investment Management
business | 2Q19 vs. | |||||||
(dollars in millions) | 2Q19 | 2Q18 | 2Q18 | |||||
Investment management and performance fees | $ | 829 | $ | 897 | (8 | )% | ||
Impact
of changes in foreign currency exchange rates | — | (16 | ) | |||||
Adjusted investment management and performance fees – Non-GAAP | $ | 829 | $ | 881 | (6 | )% | ||
Pre-tax operating margin reconciliation - Investment Management business | |||||||||||||||||||||
(dollars
in millions) | 2Q19 | 1Q19 | 4Q18 | 3Q18 | 2Q18 | YTD19 | YTD18 | ||||||||||||||
Income
before income taxes – GAAP | $ | 265 | $ | 269 | $ | 247 | $ | 316 | $ | 319 | $ | 534 | $ | 700 | |||||||
Total
revenue – GAAP | $ | 917 | $ | 939 | $ | 963 | $ | 1,015 | $ | 1,018 | $ | 1,856 | $ | 2,106 | |||||||
Less: Distribution
and servicing expense | 94 | 91 | 95 | 99 | 103 | 185 | 213 | ||||||||||||||
Adjusted
total revenue, net of distribution and servicing expense – Non-GAAP | $ | 823 | $ | 848 | $ | 868 | $ | 916 | $ | 915 | $ | 1,671 | $ | 1,893 | |||||||
Pre-tax
operating margin – GAAP (a) | 29 | % | 29 | % | 26 | % | 31 | % | 31 | % | 29 | % | 33 | % | |||||||
Adjusted
pre-tax operating margin, net of distribution and servicing expense – Non-GAAP (a) | 32 | % | 32 | % | 29 | % | 35 | % | 35 | % | 32 | % | 37 | % | |||||||
(a) | Income
before taxes divided by total revenue. |
• | Evaluating
and monitoring the impacts across our businesses, including transactions, products and services. |
• | Identifying and evaluating the scope of existing financial instruments and contracts that may be affected, the extent to which those financial instruments and contracts already contain appropriate fallback language or would require termination or amendment and any resulting economic and regulatory impact. |
• | Identifying
and evaluating the impact of the transition on our balance sheet, net interest revenue, capital and hedging activities as well as interest rate risk and liquidity risk. |
• | Identifying and evaluating contracts and financial instruments that require us, as the lender, calculation agent or otherwise, to assign the fallback or successor rate to IBOR-linked products. |
• | Identifying funds we manage or advise that invest in instruments
referencing IBORs and the impact of the transition on the functioning, liquidity and value of these investments. |
• | Implementing information technology systems, models and analytics to prepare for a smooth transition to alternative reference rates. |
• | All of our SEC filings, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to these reports, as well as proxy statements and SEC Forms 3, 4 and 5; |
• | Financial statements and footnotes prepared using eXtensible
Business Reporting Language (“XBRL”); |
• | Our earnings materials and selected management conference calls and presentations; |
• | Other regulatory disclosures, including: Pillar 3 Disclosures (and Market Risk Disclosure contained therein); Liquidity Coverage Ratio Disclosures; Federal Financial Institutions Examination Council - Consolidated Reports of Condition and Income for a Bank With Domestic and Foreign Offices; Consolidated Financial Statements for Bank Holding Companies; and the Dodd-Frank Act Stress Test Results
for BNY Mellon and The Bank of New York Mellon; and |
• | Our Corporate Governance Guidelines, Amended and Restated By-laws, Directors’ Code of Conduct and the Charters of the Audit, Finance, Corporate Governance, Nominating and Social Responsibility, Human Resources and Compensation, Risk and Technology Committees of our Board of Directors. |
Quarter
ended | Year-to-date | |||||||||||||||
(in millions) | ||||||||||||||||
Fee and other revenue | ||||||||||||||||
Investment services fees: | ||||||||||||||||
Asset
servicing fees | $ | i 1,141 | $ | i 1,122 | $ | i 1,157 | $ | i 2,263 | $ | i 2,325 | ||||||
Clearing
services fees (a) | i 410 | i 398 | i 401 | i 808 | i 825 | |||||||||||
Issuer
services fees | i 291 | i 251 | i 266 | i 542 | i 526 | |||||||||||
Treasury
services fees | i 140 | i 132 | i 140 | i 272 | i 278 | |||||||||||
Total
investment services fees (a) | i 1,982 | i 1,903 | i 1,964 | i 3,885 | i 3,954 | |||||||||||
Investment
management and performance fees (a) | i 833 | i 841 | i 901 | i 1,674 | i 1,851 | |||||||||||
Foreign
exchange and other trading revenue | i 166 | i 170 | i 187 | i 336 | i 396 | |||||||||||
Financing-related
fees | i 50 | i 51 | i 53 | i 101 | i 105 | |||||||||||
Distribution
and servicing | i 31 | i 31 | i 34 | i 62 | i 70 | |||||||||||
Investment
and other income | i 43 | i 35 | i 70 | i 78 | i 152 | |||||||||||
Total
fee revenue | i 3,105 | i 3,031 | i 3,209 | i 6,136 | i 6,528 | |||||||||||
Net
securities gains (losses) — including other-than-temporary impairment | i 8 | i 1 | i 1 | i 9 | ( i 48 | ) | ||||||||||
Noncredit-related
portion of other-than-temporary impairment (recognized in other comprehensive income) | i 1 | i — | i — | i 1 | i — | |||||||||||
Net
securities gains (losses) | i 7 | i 1 | i 1 | i 8 | ( i 48 | ) | ||||||||||
Total
fee and other revenue | i 3,112 | i 3,032 | i 3,210 | i 6,144 | i 6,480 | |||||||||||
Operations
of consolidated investment management funds | ||||||||||||||||
Investment income | i 10 | i 26 | i 13 | i 36 | i 2 | |||||||||||
Interest
of investment management fund note holders | i — | i — | i 1 | i — | i 1 | |||||||||||
Income
from consolidated investment management funds | i 10 | i 26 | i 12 | i 36 | i 1 | |||||||||||
Net
interest revenue | ||||||||||||||||
Interest revenue | i 1,965 | i 1,920 | i 1,553 | i 3,885 | i 2,934 | |||||||||||
Interest
expense | i 1,163 | i 1,079 | i 637 | i 2,242 | i 1,099 | |||||||||||
Net
interest revenue | i 802 | i 841 | i 916 | i 1,643 | i 1,835 | |||||||||||
Total
revenue | i 3,924 | i 3,899 | i 4,138 | i 7,823 | i 8,316 | |||||||||||
Provision
for credit losses | ( i 8 | ) | i 7 | ( i 3 | ) | ( i 1 | ) | ( i 8 | ) | |||||||
Noninterest
expense | ||||||||||||||||
Staff | i 1,421 | i 1,524 | i 1,489 | i 2,945 | i 3,065 | |||||||||||
Professional,
legal and other purchased services | i 337 | i 325 | i 328 | i 662 | i 619 | |||||||||||
Software
and equipment | i 304 | i 283 | i 266 | i 587 | i 500 | |||||||||||
Net
occupancy | i 138 | i 137 | i 156 | i 275 | i 295 | |||||||||||
Sub-custodian
and clearing | i 115 | i 105 | i 110 | i 220 | i 229 | |||||||||||
Distribution
and servicing | i 94 | i 91 | i 106 | i 185 | i 212 | |||||||||||
Business
development | i 56 | i 45 | i 62 | i 101 | i 113 | |||||||||||
Bank
assessment charges | i 31 | i 31 | i 47 | i 62 | i 99 | |||||||||||
Amortization
of intangible assets | i 30 | i 29 | i 48 | i 59 | i 97 | |||||||||||
Other | i 121 | i 129 | i 135 | i 250 | i 257 | |||||||||||
Total
noninterest expense | i 2,647 | i 2,699 | i 2,747 | i 5,346 | i 5,486 | |||||||||||
Income | ||||||||||||||||
Income
before income taxes | i 1,285 | i 1,193 | i 1,394 | i 2,478 | i 2,838 | |||||||||||
Provision
for income taxes | i 264 | i 237 | i 286 | i 501 | i 568 | |||||||||||
Net
income | i 1,021 | i 956 | i 1,108 | i 1,977 | i 2,270 | |||||||||||
Net
(income) loss attributable to noncontrolling interests (includes $(4), $(10), $(7), $(14) and $4 related to consolidated investment management funds, respectively) | ( i 4 | ) | ( i 10 | ) | ( i 5 | ) | ( i 14 | ) | i 4 | |||||||
Net
income applicable to shareholders of The Bank of New York Mellon Corporation | i 1,017 | i 946 | i 1,103 | i 1,963 | i 2,274 | |||||||||||
Preferred
stock dividends | ( i 48 | ) | ( i 36 | ) | ( i 48 | ) | ( i 84 | ) | ( i 84 | ) | ||||||
Net
income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | i 969 | $ | i 910 | $ | i 1,055 | $ | i 1,879 | $ | i 2,190 | ||||||
(a) | In
the first quarter of 2019, we reclassified certain platform-related fees to clearing services fees from investment management and performance fees. Prior periods have been reclassified. |
The Bank of New York Mellon Corporation (and its subsidiaries) |
Net
income applicable to common shareholders of The Bank of New York Mellon Corporation used for the earnings per share calculation | Quarter ended | Year-to-date | ||||||||||||||
(in millions) | ||||||||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | i 969 | $ | i 910 | $ | i 1,055 | $ | i 1,879 | $ | i 2,190 | ||||||
Less:
Earnings allocated to participating securities | i 4 | i 5 | i 7 | i 9 | i 15 | |||||||||||
Net
income applicable to common shareholders of The Bank of New York Mellon Corporation after required adjustment for the calculation of basic and diluted earnings per common share | $ | i 965 | $ | i 905 | $ | i 1,048 | $ | i 1,870 | $ | i 2,175 | ||||||
Average
common shares and equivalents outstanding of The Bank of New York Mellon Corporation | Quarter ended | Year-to-date | |||||||||
(in thousands) | |||||||||||
Basic | i 951,281 | i 962,397 | i 1,010,179 | i 956,887 | i 1,013,507 | ||||||
Common
stock equivalents | i 3,891 | i 6,071 | i 6,451 | i 4,894 | i 7,277 | ||||||
Less:
Participating securities | ( i 1,244 | ) | ( i 2,508 | ) | ( i 2,273 | ) | ( i 1,824 | ) | ( i 2,764 | ) | |
Diluted | i 953,928 | i 965,960 | i 1,014,357 | i 959,957 | i 1,018,020 | ||||||
Anti-dilutive
securities (a) | i 3,999 | i 5,550 | i 7,208 | i 4,704 | i 7,203 | ||||||
(a) | Represents
stock options, restricted stock, restricted stock units and participating securities outstanding but not included in the computation of diluted average common shares because their effect would be anti-dilutive. |
Earnings per share applicable to common shareholders of The Bank of New York Mellon Corporation | Quarter
ended | Year-to-date | ||||||||||||||
(in dollars) | ||||||||||||||||
Basic | $ | i 1.01 | $ | i 0.94 | $ | i 1.04 | $ | i 1.95 | $ | i 2.15 | ||||||
Diluted | $ | i 1.01 | $ | i 0.94 | $ | i 1.03 | $ | i 1.95 | $ | i 2.14 | ||||||
The Bank of New York Mellon Corporation (and its subsidiaries) |
Quarter
ended | Year-to-date | |||||||||||||||
(in millions) | ||||||||||||||||
Net income | $ | i 1,021 | $ | i 956 | $ | i 1,108 | $ | i 1,977 | $ | i 2,270 | ||||||
Other
comprehensive income (loss), net of tax: | ||||||||||||||||
Foreign currency translation adjustments | i 10 | i 29 | ( i 400 | ) | i 39 | ( i 156 | ) | |||||||||
Unrealized
gain (loss) on assets available-for-sale: | ||||||||||||||||
Unrealized gain (loss) arising during the period | i 287 | i 239 | ( i 64 | ) | i 526 | ( i 339 | ) | |||||||||
Reclassification
adjustment | ( i 5 | ) | ( i 1 | ) | i — | ( i 6 | ) | i 37 | ||||||||
Total
unrealized gain (loss) on assets available-for-sale | i 282 | i 238 | ( i 64 | ) | i 520 | ( i 302 | ) | |||||||||
Defined
benefit plans: | ||||||||||||||||
Net (loss) arising during the period | i — | ( i 9 | ) | i — | ( i 9 | ) | i — | |||||||||
Amortization
of prior service credit, net loss and initial obligation included in net periodic benefit cost | i 10 | i 10 | i 16 | i 20 | i 33 | |||||||||||
Total
defined benefit plans | i 10 | i 1 | i 16 | i 11 | i 33 | |||||||||||
Net
unrealized gain (loss) on cash flow hedges | i — | i 5 | ( i 14 | ) | i 5 | ( i 16 | ) | |||||||||
Total
other comprehensive income (loss), net of tax (a) | i 302 | i 273 | ( i 462 | ) | i 575 | ( i 441 | ) | |||||||||
Total
comprehensive income | i 1,323 | i 1,229 | i 646 | i 2,552 | i 1,829 | |||||||||||
Net
(income) loss attributable to noncontrolling interests | ( i 4 | ) | ( i 10 | ) | ( i 5 | ) | ( i 14 | ) | i 4 | |||||||
Other
comprehensive (income) loss attributable to noncontrolling interests | i — | ( i 2 | ) | i 10 | ( i 2 | ) | i 5 | |||||||||
Comprehensive
income applicable to shareholders of The Bank of New York Mellon Corporation | $ | i 1,319 | $ | i 1,217 | $ | i 651 | $ | i 2,536 | $ | i 1,838 | ||||||
(a) | Other
comprehensive income (loss) attributable to The Bank of New York Mellon Corporation shareholders was $ i 302 million for the quarter ended June 30, 2019, $ i 271
million for the quarter ended March 31, 2019, $( i 452) million for the quarter ended June 30, 2018, $ i 573
million for the six months ended June 30, 2019 and $( i 436) million for the six months ended June 30, 2018. |
The Bank of New York Mellon Corporation (and its subsidiaries) |
(dollars in millions, except per share amounts) | ||||||
Assets | ||||||
Cash and due from banks | $ | i 5,556 | $ | i 5,864 | ||
Interest-bearing
deposits with the Federal Reserve and other central banks | i 69,700 | i 67,988 | ||||
Interest-bearing
deposits with banks ($2,036 and $2,394 is restricted) | i 15,491 | i 14,148 | ||||
Federal
funds sold and securities purchased under resale agreements | i 61,201 | i 46,795 | ||||
Securities: | ||||||
Held-to-maturity
(fair value of $34,695 and $33,302) | i 34,549 | i 33,982 | ||||
Available-for-sale | i 85,593 | i 85,809 | ||||
Total
securities | i 120,142 | i 119,791 | ||||
Trading
assets | i 8,629 | i 7,035 | ||||
Loans | i 52,396 | i 56,564 | ||||
Allowance
for loan losses | ( i 146 | ) | ( i 146 | ) | ||
Net
loans | i 52,250 | i 56,418 | ||||
Premises
and equipment | i 2,970 | i 1,832 | ||||
Accrued
interest receivable | i 658 | i 671 | ||||
Goodwill | i 17,337 | i 17,350 | ||||
Intangible
assets | i 3,160 | i 3,220 | ||||
Other
assets (includes $591 and $742, at fair value) | i 23,737 | i 21,298 | ||||
Subtotal
assets of operations | i 380,831 | i 362,410 | ||||
Assets
of consolidated investment management funds, at fair value | i 337 | i 463 | ||||
Total
assets | $ | i 381,168 | $ | i 362,873 | ||
Liabilities | ||||||
Deposits: | ||||||
Noninterest-bearing
(principally U.S. offices) | $ | i 58,255 | $ | i 70,783 | ||
Interest-bearing
deposits in U.S. offices | i 88,395 | i 74,904 | ||||
Interest-bearing
deposits in non-U.S. offices | i 106,227 | i 93,091 | ||||
Total
deposits | i 252,877 | i 238,778 | ||||
Federal
funds purchased and securities sold under repurchase agreements | i 11,757 | i 14,243 | ||||
Trading
liabilities | i 3,768 | i 3,479 | ||||
Payables
to customers and broker-dealers | i 18,946 | i 19,731 | ||||
Commercial
paper | i 8,894 | i 1,939 | ||||
Other
borrowed funds | i 1,921 | i 3,227 | ||||
Accrued
taxes and other expenses | i 5,045 | i 5,669 | ||||
Other
liabilities (including allowance for lending-related commitments of $95 and $106, also includes $335 and $88, at fair value) | i 7,916 | i 5,774 | ||||
Long-term
debt (includes $383 and $371, at fair value) | i 28,203 | i 29,163 | ||||
Subtotal
liabilities of operations | i 339,327 | i 322,003 | ||||
Liabilities
of consolidated investment management funds, at fair value | i 6 | i 2 | ||||
Total
liabilities | i 339,333 | i 322,005 | ||||
Temporary
equity | ||||||
Redeemable noncontrolling interests | i 136 | i 129 | ||||
Permanent
equity | ||||||
Preferred stock – par value $0.01 per share; authorized 100,000,000 shares; issued 35,826 and 35,826 shares | i 3,542 | i 3,542 | ||||
Common
stock – par value $0.01 per share; authorized 3,500,000,000 shares; issued 1,372,971,577 and 1,364,877,915 shares | i 14 | i 14 | ||||
Additional
paid-in capital | i 27,406 | i 27,118 | ||||
Retained
earnings | i 30,081 | i 28,652 | ||||
Accumulated
other comprehensive loss, net of tax | ( i 2,688 | ) | ( i 3,171 | ) | ||
Less:
Treasury stock of 430,309,550 and 404,452,246 common shares, at cost | ( i 16,822 | ) | ( i 15,517 | ) | ||
Total
The Bank of New York Mellon Corporation shareholders’ equity | i 41,533 | i 40,638 | ||||
Nonredeemable
noncontrolling interests of consolidated investment management funds | i 166 | i 101 | ||||
Total
permanent equity | i 41,699 | i 40,739 | ||||
Total
liabilities, temporary equity and permanent equity | $ | i 381,168 | $ | i 362,873 | ||
The Bank of New York Mellon Corporation (and its subsidiaries) |
Six
months ended June 30, | ||||||
(in millions) | 2019 | 2018 | ||||
Operating activities | ||||||
Net income | $ | i 1,977 | $ | i 2,270 | ||
Net
(income) loss attributable to noncontrolling interests | ( i 14 | ) | i 4 | |||
Net
income applicable to shareholders of The Bank of New York Mellon Corporation | i 1,963 | i 2,274 | ||||
Adjustments
to reconcile net income to net cash (used for) provided by operating activities: | ||||||
Provision for credit losses | ( i 1 | ) | ( i 8 | ) | ||
Pension
plan contributions | ( i 22 | ) | ( i 19 | ) | ||
Depreciation
and amortization | i 635 | i 677 | ||||
Deferred
tax (benefit) | ( i 110 | ) | ( i 230 | ) | ||
Net
securities (gains) losses | ( i 8 | ) | i 48 | |||
Change
in trading assets and liabilities | ( i 1,306 | ) | ( i 462 | ) | ||
Change
in accruals and other, net | ( i 3,665 | ) | ( i 712 | ) | ||
Net
cash (used for) provided by operating activities | ( i 2,514 | ) | i 1,568 | |||
Investing
activities | ||||||
Change in interest-bearing deposits with banks | ( i 1,618 | ) | ( i 4,592 | ) | ||
Change
in interest-bearing deposits with the Federal Reserve and other central banks | ( i 1,714 | ) | i 15,583 | |||
Purchases
of securities held-to-maturity | ( i 3,739 | ) | ( i 2,944 | ) | ||
Paydowns
of securities held-to-maturity | i 2,078 | i 2,099 | ||||
Maturities
of securities held-to-maturity | i 1,380 | i 5,535 | ||||
Purchases
of securities available-for-sale | ( i 21,503 | ) | ( i 17,550 | ) | ||
Sales
of securities available-for-sale | i 6,346 | i 4,867 | ||||
Paydowns
of securities available-for-sale | i 3,226 | i 3,871 | ||||
Maturities
of securities available-for-sale | i 14,143 | i 3,767 | ||||
Net
change in loans | i 4,116 | i 3,699 | ||||
Sales
of loans and other real estate | i 52 | i 6 | ||||
Change
in federal funds sold and securities purchased under resale agreements | ( i 14,401 | ) | i 1,638 | |||
Net
change in seed capital investments | i 25 | i 15 | ||||
Purchases
of premises and equipment/capitalized software | ( i 717 | ) | ( i 505 | ) | ||
Dispositions,
net of cash | i — | i 84 | ||||
Other,
net | i 940 | ( i 359 | ) | |||
Net
cash (used for) provided by investing activities | ( i 11,386 | ) | i 15,214 | |||
Financing
activities | ||||||
Change in deposits | i 14,255 | ( i 12,270 | ) | |||
Change
in federal funds purchased and securities sold under repurchase agreements | ( i 2,486 | ) | ( i 1,963 | ) | ||
Change
in payables to customers and broker-dealers | ( i 778 | ) | ( i 1,051 | ) | ||
Change
in other borrowed funds | ( i 1,328 | ) | ( i 5 | ) | ||
Change
in commercial paper | i 6,955 | ( i 567 | ) | |||
Net
proceeds from the issuance of long-term debt | i 1,248 | i 2,991 | ||||
Repayments
of long-term debt | ( i 2,750 | ) | ( i 2,200 | ) | ||
Proceeds
from the exercise of stock options | i 35 | i 70 | ||||
Issuance
of common stock | i 16 | i 20 | ||||
Treasury
stock acquired | ( i 1,305 | ) | ( i 1,295 | ) | ||
Common
cash dividends paid | ( i 540 | ) | ( i 491 | ) | ||
Preferred
cash dividends paid | ( i 84 | ) | ( i 84 | ) | ||
Other,
net | i 7 | i 10 | ||||
Net
cash provided by (used for) financing activities | i 13,245 | ( i 16,835 | ) | |||
Effect
of exchange rate changes on cash | ( i 11 | ) | ( i 60 | ) | ||
Change
in cash and due from banks and restricted cash | ||||||
Change in cash and due from banks and restricted cash | ( i 666 | ) | ( i 113 | ) | ||
Cash
and due from banks and restricted cash at beginning of period | i 8,258 | i 7,133 | ||||
Cash
and due from banks and restricted cash at end of period | $ | i 7,592 | $ | i 7,020 | ||
Cash
and due from banks and restricted cash: | ||||||
Cash and due from banks at end of period (unrestricted cash) | $ | i 5,556 | $ | i 5,361 | ||
Restricted
cash at end of period | i 2,036 | i 1,659 | ||||
Cash
and due from banks and restricted cash at end of period | $ | i 7,592 | $ | i 7,020 | ||
Supplemental
disclosures | ||||||
Interest paid | $ | i 2,238 | $ | i 1,046 | ||
Income
taxes paid | i 461 | i 436 | ||||
Income
taxes refunded | i 347 | i 57 | ||||
The Bank of New York Mellon Corporation (and its subsidiaries) |
The Bank of New York Mellon Corporation
shareholders | Non-redeemable noncontrolling interests of consolidated investment management funds | Total permanent equity | Redeemable non- controlling interests/ temporary equity | |||||||||||||||||||||||||
(in millions, except per share amount) | Preferred
stock | Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive (loss), net of tax | Treasury stock | ||||||||||||||||||||||
Balance
at March 31, 2019 | $ | i 3,542 | $ | i 14 | $ | i 27,349 | $ | i 29,382 | $ | ( i 2,990 | ) | $ | ( i 16,072 | ) | $ | i 122 | $ | i 41,347 | (a) | $ | i 122 | |||||||
Shares
issued to shareholders of noncontrolling interests | — | — | — | — | — | — | — | — | i 16 | |||||||||||||||||||
Other
net changes in noncontrolling interests | — | — | i 2 | — | — | — | i 40 | i 42 | ( i 2 | ) | ||||||||||||||||||
Net
income | — | — | — | i 1,017 | — | — | i 4 | i 1,021 | — | |||||||||||||||||||
Other
comprehensive income | — | — | — | — | i 302 | — | — | i 302 | i — | |||||||||||||||||||
Dividends: | ||||||||||||||||||||||||||||
Common
stock at $0.28 per share | — | — | — | ( i 270 | ) | — | — | — | ( i 270 | ) | — | |||||||||||||||||
Preferred
stock | — | — | — | ( i 48 | ) | — | — | — | ( i 48 | ) | — | |||||||||||||||||
Repurchase
of common stock | — | — | — | — | — | ( i 750 | ) | — | ( i 750 | ) | — | |||||||||||||||||
Common
stock issued under: | ||||||||||||||||||||||||||||
Employee benefit plans | — | — | i 6 | — | — | — | — | i 6 | — | |||||||||||||||||||
Stock
awards and options exercised | — | — | i 49 | — | — | — | — | i 49 | — | |||||||||||||||||||
Balance
at June 30, 2019 | $ | i 3,542 | $ | i 14 | $ | i 27,406 | $ | i 30,081 | $ | ( i 2,688 | ) | $ | ( i 16,822 | ) | $ | i 166 | $ | i 41,699 | (a) | $ | i 136 | |||||||
(a) | Includes
total The Bank of New York Mellon Corporation common shareholders’ equity of $ i 37,683 million at March 31, 2019 and $ i 37,991
million at June 30, 2019. |
The Bank of New York Mellon Corporation
shareholders | Non-redeemable noncontrolling interests of consolidated investment management funds | Total permanent equity | Redeemable non- controlling interests/ temporary equity | |||||||||||||||||||||||||
(in millions, except per share amount) | Preferred
stock | Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive (loss), net of tax | Treasury stock | ||||||||||||||||||||||
Balance
at Dec. 31, 2018 | $ | i 3,542 | $ | i 14 | $ | i 27,118 | $ | i 28,652 | $ | ( i 3,171 | ) | $ | ( i 15,517 | ) | $ | i 101 | $ | i 40,739 | (a) | $ | i 129 | |||||||
Reclassification
of certain tax effects related to adopting ASU 2018-02 | — | — | — | i 90 | ( i 90 | ) | — | — | — | — | ||||||||||||||||||
Adjusted
balance at Jan. 1, 2019 | i 3,542 | i 14 | i 27,118 | i 28,742 | ( i 3,261 | ) | ( i 15,517 | ) | i 101 | i 40,739 | i 129 | |||||||||||||||||
Shares
issued to shareholders of noncontrolling interests | — | — | — | — | — | — | — | — | i 20 | |||||||||||||||||||
Redemption
of subsidiary shares from noncontrolling interests | — | — | — | — | — | — | — | — | ( i 7 | ) | ||||||||||||||||||
Other
net changes in noncontrolling interests | — | — | i 19 | — | — | — | i 11 | i 30 | ( i 22 | ) | ||||||||||||||||||
Net
income | — | — | — | i 946 | — | — | i 10 | i 956 | — | |||||||||||||||||||
Other
comprehensive income | — | — | — | — | i 271 | — | — | i 271 | i 2 | |||||||||||||||||||
Dividends: | ||||||||||||||||||||||||||||
Common
stock at $0.28 per share | — | — | — | ( i 270 | ) | — | — | — | ( i 270 | ) | — | |||||||||||||||||
Preferred
stock | — | — | — | ( i 36 | ) | — | — | — | ( i 36 | ) | — | |||||||||||||||||
Repurchase
of common stock | — | — | — | — | — | ( i 555 | ) | — | ( i 555 | ) | — | |||||||||||||||||
Common
stock issued under: | ||||||||||||||||||||||||||||
Employee benefit plans | — | — | i 10 | — | — | — | — | i 10 | — | |||||||||||||||||||
Direct
stock purchase and dividend reinvestment plan | — | — | i 11 | — | — | — | — | i 11 | — | |||||||||||||||||||
Stock
awards and options exercised | — | — | i 191 | — | — | — | — | i 191 | — | |||||||||||||||||||
Balance
at March 31, 2019 | $ | i 3,542 | $ | i 14 | $ | i 27,349 | $ | i 29,382 | $ | ( i 2,990 | ) | $ | ( i 16,072 | ) | $ | i 122 | $ | i 41,347 | (a) | $ | i 122 | |||||||
(a) | Includes
total The Bank of New York Mellon Corporation common shareholders’ equity of $ i 37,096 million at Dec. 31, 2018 and $ i 37,683
million at March 31, 2019. |
The Bank of New York Mellon Corporation (and its subsidiaries) |
The Bank of New York Mellon Corporation
shareholders | Non-redeemable noncontrolling interests of consolidated investment management funds | Total permanent equity | Redeemable non- controlling interests/ temporary equity | |||||||||||||||||||||||||
(in millions, except per share amount) | Preferred
stock | Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive (loss), net of tax | Treasury stock | ||||||||||||||||||||||
Balance
at March 31, 2018 | $ | i 3,542 | $ | i 14 | $ | i 26,911 | $ | i 26,496 | $ | ( i 2,343 | ) | $ | ( i 12,892 | ) | $ | i 212 | $ | i 41,940 | (a) | $ | i 184 | |||||||
Shares
issued to shareholders of noncontrolling interests | — | — | — | — | — | — | — | — | i 17 | |||||||||||||||||||
Other
net changes in noncontrolling interests | — | — | ( i 2 | ) | — | — | — | ( i 167 | ) | ( i 169 | ) | i — | ||||||||||||||||
Net
income (loss) | — | — | — | i 1,103 | — | — | i 7 | i 1,110 | ( i 2 | ) | ||||||||||||||||||
Other
comprehensive (loss) | — | — | — | — | ( i 452 | ) | — | — | ( i 452 | ) | ( i 10 | ) | ||||||||||||||||
Dividends: | ||||||||||||||||||||||||||||
Common
stock at $0.24 per share | — | — | — | ( i 245 | ) | — | — | — | ( i 245 | ) | — | |||||||||||||||||
Preferred
stock | — | — | — | ( i 48 | ) | — | — | — | ( i 48 | ) | — | |||||||||||||||||
Repurchase
of common stock | — | — | — | — | — | ( i 651 | ) | — | ( i 651 | ) | — | |||||||||||||||||
Common
stock issued under: | ||||||||||||||||||||||||||||
Employee benefit plans | — | — | i 7 | — | — | — | — | i 7 | — | |||||||||||||||||||
Direct
stock purchase and dividend reinvestment plan | — | — | i 7 | — | — | — | — | i 7 | — | |||||||||||||||||||
Stock
awards and options exercised | — | — | i 58 | — | — | — | — | i 58 | — | |||||||||||||||||||
Balance
at June 30, 2018 | $ | i 3,542 | $ | i 14 | $ | i 26,981 | $ | i 27,306 | $ | ( i 2,795 | ) | $ | ( i 13,543 | ) | $ | i 52 | $ | i 41,557 | (a) | $ | i 189 | |||||||
(a) | Includes
total The Bank of New York Mellon Corporation common shareholders’ equity of $ i 38,186 million at March 31, 2018 and $ i 37,963
million at June 30, 2018. |
The Bank of New York Mellon Corporation
shareholders | Non- redeemable noncontrolling interests of consolidated investment management funds | Total permanent equity | Redeemable non- controlling interests/ temporary equity | |||||||||||||||||||||||||
(in millions, except per share amount) | Preferred
stock | Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive (loss), net of tax | Treasury stock | ||||||||||||||||||||||
Balance
at Dec. 31, 2018 | $ | i 3,542 | $ | i 14 | $ | i 27,118 | $ | i 28,652 | $ | ( i 3,171 | ) | $ | ( i 15,517 | ) | $ | i 101 | $ | i 40,739 | (a) | $ | i 129 | |||||||
Reclassification
of certain tax effects related to adopting ASU 2018-02 | — | — | — | i 90 | ( i 90 | ) | — | — | — | — | ||||||||||||||||||
Adjusted
balance at Jan. 1, 2019 | i 3,542 | i 14 | i 27,118 | i 28,742 | ( i 3,261 | ) | ( i 15,517 | ) | i 101 | i 40,739 | i 129 | |||||||||||||||||
Shares
issued to shareholders of noncontrolling interests | — | — | — | — | — | — | — | — | i 36 | |||||||||||||||||||
Redemption
of subsidiary shares from noncontrolling interests | — | — | — | — | — | — | — | — | ( i 7 | ) | ||||||||||||||||||
Other
net changes in noncontrolling interests | — | — | i 21 | — | — | — | i 51 | i 72 | ( i 24 | ) | ||||||||||||||||||
Net
income | — | — | — | i 1,963 | — | — | i 14 | i 1,977 | — | |||||||||||||||||||
Other
comprehensive income | — | — | — | — | i 573 | — | — | i 573 | i 2 | |||||||||||||||||||
Dividends: | ||||||||||||||||||||||||||||
Common
stock at $0.56 per share | — | — | — | ( i 540 | ) | — | — | — | ( i 540 | ) | — | |||||||||||||||||
Preferred
stock | — | — | — | ( i 84 | ) | — | — | — | ( i 84 | ) | — | |||||||||||||||||
Repurchase
of common stock | — | — | — | — | — | ( i 1,305 | ) | — | ( i 1,305 | ) | — | |||||||||||||||||
Common
stock issued under: | ||||||||||||||||||||||||||||
Employee benefit plans | — | — | i 16 | — | — | — | — | i 16 | — | |||||||||||||||||||
Direct
stock purchase and dividend reinvestment plan | — | — | i 11 | — | — | — | — | i 11 | — | |||||||||||||||||||
Stock
awards and options exercised | — | — | i 240 | — | — | — | — | i 240 | — | |||||||||||||||||||
Balance
at June 30, 2019 | $ | i 3,542 | $ | i 14 | $ | i 27,406 | $ | i 30,081 | $ | ( i 2,688 | ) | $ | ( i 16,822 | ) | $ | i 166 | $ | i 41,699 | (a) | $ | i 136 | |||||||
(a) | Includes
total The Bank of New York Mellon Corporation common shareholders’ equity of $ i 37,096 million at Dec. 31, 2018 and $ i 37,991
million at June 30, 2019. |
The Bank of New York Mellon Corporation (and its subsidiaries) |
The Bank of New York Mellon Corporation
shareholders | Non-redeemable noncontrolling interests of consolidated investment management funds | Total permanent equity | Redeemable non- controlling interests/ temporary equity | |||||||||||||||||||||||||
(in millions, except per share amount) | Preferred
stock | Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive (loss) income, net of tax | Treasury stock | ||||||||||||||||||||||
Balance
at Dec. 31, 2017 | $ | i 3,542 | $ | i 14 | $ | i 26,665 | $ | i 25,635 | $ | ( i 2,357 | ) | $ | ( i 12,248 | ) | $ | i 316 | $ | i 41,567 | (a) | $ | i 179 | |||||||
Adjustment
for the cumulative effect of applying ASU 2014-09 for contract revenue | — | — | — | ( i 55 | ) | — | — | — | ( i 55 | ) | — | |||||||||||||||||
Adjustment
for the cumulative effect of applying ASU 2017-12 for derivatives and hedging | — | — | — | i 27 | ( i 2 | ) | — | — | i 25 | — | ||||||||||||||||||
Adjusted
balance at Jan. 1, 2018 | i 3,542 | i 14 | i 26,665 | i 25,607 | ( i 2,359 | ) | ( i 12,248 | ) | i 316 | i 41,537 | i 179 | |||||||||||||||||
Shares
issued to shareholders of noncontrolling interests | — | — | — | — | — | — | — | — | i 34 | |||||||||||||||||||
Redemption
of subsidiary shares from noncontrolling interests | — | — | — | — | — | — | — | — | ( i 32 | ) | ||||||||||||||||||
Other
net changes in noncontrolling interests | — | — | ( i 13 | ) | — | — | — | ( i 260 | ) | ( i 273 | ) | i 13 | ||||||||||||||||
Net
income (loss) | — | — | — | i 2,274 | — | — | ( i 4 | ) | i 2,270 | — | ||||||||||||||||||
Other
comprehensive (loss) | — | — | — | — | ( i 436 | ) | — | — | ( i 436 | ) | ( i 5 | ) | ||||||||||||||||
Dividends: | ||||||||||||||||||||||||||||
Common
stock at $0.48 per share | — | — | — | ( i 491 | ) | — | — | — | ( i 491 | ) | — | |||||||||||||||||
Preferred
stock | — | — | — | ( i 84 | ) | — | — | — | ( i 84 | ) | — | |||||||||||||||||
Repurchase
of common stock | — | — | — | — | — | ( i 1,295 | ) | — | ( i 1,295 | ) | — | |||||||||||||||||
Common
stock issued under: | ||||||||||||||||||||||||||||
Employee benefit plans | — | — | i 17 | — | — | — | — | i 17 | — | |||||||||||||||||||
Direct
stock purchase and dividend reinvestment plan | — | — | i 16 | — | — | — | — | i 16 | — | |||||||||||||||||||
Stock
awards and options exercised | — | — | i 296 | — | — | — | — | i 296 | — | |||||||||||||||||||
Balance
at June 30, 2018 | $ | i 3,542 | $ | i 14 | $ | i 26,981 | $ | i 27,306 | $ | ( i 2,795 | ) | $ | ( i 13,543 | ) | $ | i 52 | $ | i 41,557 | (a) | $ | i 189 | |||||||
(a) | Includes
total The Bank of New York Mellon Corporation common shareholders’ equity of $ i 37,709 million at Dec. 31, 2017 and $ i 37,963
million at June 30, 2018. |
Notes to Consolidated Financial Statements |
Notes to Consolidated Financial Statements (continued) |
Securities at June 30, 2019 | Gross unrealized | |||||||||||
Amortized
cost | Fair value | |||||||||||
(in millions) | Gains | Losses | ||||||||||
Available-for-sale: | ||||||||||||
Agency
RMBS | $ | i 26,225 | $ | i 145 | $ | i 166 | $ | i 26,204 | ||||
U.S.
Treasury | i 13,805 | i 424 | i 32 | i 14,197 | ||||||||
Sovereign
debt/sovereign guaranteed | i 12,184 | i 161 | i 3 | i 12,342 | ||||||||
Agency
commercial MBS | i 9,499 | i 194 | i 15 | i 9,678 | ||||||||
Supranational | i 3,878 | i 38 | i 2 | i 3,914 | ||||||||
CLOs | i 3,665 | i 1 | i 17 | i 3,649 | ||||||||
Foreign
covered bonds | i 3,385 | i 17 | i 4 | i 3,398 | ||||||||
U.S.
government agencies | i 2,585 | i 65 | i — | i 2,650 | ||||||||
Other
ABS | i 2,466 | i 8 | i 4 | i 2,470 | ||||||||
Non-agency
commercial MBS | i 1,968 | i 38 | i 1 | i 2,005 | ||||||||
State
and political subdivisions | i 1,253 | i 28 | i 1 | i 1,280 | ||||||||
Non-agency
RMBS (a) | i 999 | i 230 | i 8 | i 1,221 | ||||||||
Corporate
bonds | i 889 | i 19 | i 3 | i 905 | ||||||||
Other
debt securities | i 1,671 | i 9 | i — | i 1,680 | ||||||||
Total
securities available-for-sale (b) | $ | i 84,472 | $ | i 1,377 | $ | i 256 | $ | i 85,593 | ||||
Held-to-maturity: | ||||||||||||
Agency
RMBS | $ | i 26,591 | $ | i 195 | $ | i 127 | $ | i 26,659 | ||||
U.S.
Treasury | i 4,467 | i 24 | i 9 | i 4,482 | ||||||||
U.S.
government agencies | i 1,276 | i 1 | i 1 | i 1,276 | ||||||||
Agency
commercial MBS | i 1,179 | i 22 | i 1 | i 1,200 | ||||||||
Sovereign
debt/sovereign guaranteed | i 823 | i 39 | i — | i 862 | ||||||||
Non-agency
RMBS | i 91 | i 4 | i 2 | i 93 | ||||||||
Foreign
covered bonds | i 80 | i 1 | i — | i 81 | ||||||||
Supranational | i 25 | i — | i — | i 25 | ||||||||
State
and political subdivisions | i 17 | i — | i — | i 17 | ||||||||
Total
securities held-to-maturity | $ | i 34,549 | $ | i 286 | $ | i 140 | $ | i 34,695 | ||||
Total
securities | $ | i 119,021 | $ | i 1,663 | $ | i 396 | $ | i 120,288 | ||||
(a) | Includes
$ i 753 million that was included in the former Grantor Trust. |
(b) | Includes gross
unrealized gains of $ i 36 million and gross unrealized losses of $ i 76
million recorded in accumulated other comprehensive income related to securities that were transferred from available-for-sale to held-to-maturity. The unrealized gains and losses are primarily related to Agency RMBS and will be amortized into net interest revenue over the contractual lives of the securities. |
Notes to Consolidated Financial Statements (continued) |
Securities
at Dec. 31, 2018 | Gross unrealized | |||||||||||
Amortized cost | Fair value | |||||||||||
(in millions) | Gains | Losses | ||||||||||
Available-for-sale: | ||||||||||||
Agency
RMBS | $ | i 25,594 | $ | i 83 | $ | i 369 | $ | i 25,308 | ||||
U.S.
Treasury | i 20,190 | i 96 | i 210 | i 20,076 | ||||||||
Sovereign
debt/sovereign guaranteed | i 10,663 | i 108 | i 21 | i 10,750 | ||||||||
Agency
commercial MBS | i 9,836 | i 16 | i 161 | i 9,691 | ||||||||
CLOs | i 3,410 | i — | i 46 | i 3,364 | ||||||||
Supranational | i 2,985 | i 7 | i 8 | i 2,984 | ||||||||
Foreign
covered bonds | i 2,890 | i 7 | i 19 | i 2,878 | ||||||||
State
and political subdivisions | i 2,251 | i 18 | i 22 | i 2,247 | ||||||||
Other
ABS | i 1,776 | i 1 | i 4 | i 1,773 | ||||||||
U.S.
government agencies | i 1,676 | i 5 | i 24 | i 1,657 | ||||||||
Non-agency
commercial MBS | i 1,491 | i 1 | i 28 | i 1,464 | ||||||||
Non-agency
RMBS (a) | i 1,095 | i 241 | i 11 | i 1,325 | ||||||||
Corporate
bonds | i 1,074 | i 6 | i 26 | i 1,054 | ||||||||
Other
debt securities | i 1,236 | i 6 | i 4 | i 1,238 | ||||||||
Total
securities available-for-sale (b) | $ | i 86,167 | $ | i 595 | $ | i 953 | $ | i 85,809 | ||||
Held-to-maturity: | ||||||||||||
Agency
RMBS | $ | i 25,507 | $ | i 32 | $ | i 632 | $ | i 24,907 | ||||
U.S.
Treasury | i 4,727 | i 3 | i 77 | i 4,653 | ||||||||
U.S.
government agencies | i 1,497 | i — | i 10 | i 1,487 | ||||||||
Agency
commercial MBS | i 1,195 | i — | i 26 | i 1,169 | ||||||||
Sovereign
debt/sovereign guaranteed | i 833 | i 26 | i — | i 859 | ||||||||
Non-agency
RMBS | i 100 | i 4 | i 2 | i 102 | ||||||||
Foreign
covered bonds | i 80 | i 1 | i — | i 81 | ||||||||
Supranational | i 26 | i 1 | i — | i 27 | ||||||||
State
and political subdivisions | i 17 | i — | i — | i 17 | ||||||||
Total
securities held-to-maturity | $ | i 33,982 | $ | i 67 | $ | i 747 | $ | i 33,302 | ||||
Total
securities | $ | i 120,149 | $ | i 662 | $ | i 1,700 | $ | i 119,111 | ||||
(a) | Includes
$ i 832 million that was included in the former Grantor Trust. |
(b) | Includes gross
unrealized gains of $ i 39 million and gross unrealized losses of $ i 87
million recorded in accumulated other comprehensive income related to securities that were transferred from available-for-sale to held-to-maturity. The unrealized gains and losses are primarily related to Agency RMBS and will be amortized into net interest revenue over the contractual lives of the securities. |
Net
securities gains (losses) | |||||||||||||||
(in millions) | 2Q19 | 1Q19 | 2Q18 | YTD19 | YTD18 | ||||||||||
Realized
gross gains | $ | i 12 | $ | i 5 | $ | i 2 | $ | i 17 | $ | i 4 | |||||
Realized
gross losses | ( i 5 | ) | ( i 4 | ) | ( i 1 | ) | ( i 9 | ) | ( i 52 | ) | |||||
Recognized
gross impairments | i — | i — | i — | i — | i — | ||||||||||
Total
net securities gains (losses) | $ | i 7 | $ | i 1 | $ | i 1 | $ | i 8 | $ | ( i 48 | ) | ||||
Net securities gains (losses) | |||||||||||||||
(in millions) | 2Q19 | 1Q19 | 2Q18 | YTD19 | YTD18 | ||||||||||
U.S.
Treasury | $ | i 3 | $ | i 1 | $ | i — | $ | i 4 | $ | ( i 4 | ) | ||||
Sovereign
debt/sovereign guaranteed | i 2 | i 1 | i — | i 3 | i — | ||||||||||
State
and political subdivisions | i 2 | i — | i 1 | i 2 | ( i 1 | ) | |||||||||
Agency
RMBS | i — | i — | i — | i — | ( i 42 | ) | |||||||||
Other | i — | ( i 1 | ) | i — | ( i 1 | ) | ( i 1 | ) | |||||||
Total
net securities gains (losses) | $ | i 7 | $ | i 1 | $ | i 1 | $ | i 8 | $ | ( i 48 | ) | ||||
Notes
to Consolidated Financial Statements (continued) |
Temporarily
impaired securities at June 30, 2019 | Less than 12 months | 12 months or more | Total | |||||||||||||||||
Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | |||||||||||||||
(in
millions) | ||||||||||||||||||||
Available-for-sale: | ||||||||||||||||||||
Agency RMBS | $ | i 9,070 | $ | i 31 | $ | i 7,410 | $ | i 135 | $ | i 16,480 | $ | i 166 | ||||||||
U.S.
Treasury | i 74 | i 1 | i 2,961 | i 31 | i 3,035 | i 32 | ||||||||||||||
Sovereign
debt/sovereign guaranteed | i 1,680 | i 1 | i 738 | i 2 | i 2,418 | i 3 | ||||||||||||||
Agency
commercial MBS | i 2,353 | i 6 | i 1,030 | i 9 | i 3,383 | i 15 | ||||||||||||||
Supranational | i 814 | i 1 | i 206 | i 1 | i 1,020 | i 2 | ||||||||||||||
CLOs | i 1,346 | i 4 | i 1,134 | i 13 | i 2,480 | i 17 | ||||||||||||||
Foreign
covered bonds | i 568 | i 1 | i 707 | i 3 | i 1,275 | i 4 | ||||||||||||||
Other
ABS | i 1,053 | i 4 | i 31 | i — | i 1,084 | i 4 | ||||||||||||||
Non-agency
commercial MBS | i 414 | i 1 | i 38 | i — | i 452 | i 1 | ||||||||||||||
State
and political subdivisions | i — | i — | i 116 | i 1 | i 116 | i 1 | ||||||||||||||
Non-agency
RMBS (a) | i 26 | i — | i 121 | i 8 | i 147 | i 8 | ||||||||||||||
Corporate
bonds | i 26 | i — | i 238 | i 3 | i 264 | i 3 | ||||||||||||||
Total
securities available-for-sale (b) | $ | i 17,424 | $ | i 50 | $ | i 14,730 | $ | i 206 | $ | i 32,154 | $ | i 256 | ||||||||
Held-to-maturity: | ||||||||||||||||||||
Agency
RMBS | $ | i 623 | $ | i 1 | $ | i 12,922 | $ | i 126 | $ | i 13,545 | $ | i 127 | ||||||||
U.S.
Treasury | i — | i — | i 2,066 | i 9 | i 2,066 | i 9 | ||||||||||||||
U.S.
government agencies | i 50 | i — | i 407 | i 1 | i 457 | i 1 | ||||||||||||||
Agency
commercial MBS | i — | i — | i 57 | i 1 | i 57 | i 1 | ||||||||||||||
Non-agency
RMBS | i 7 | i — | i 42 | i 2 | i 49 | i 2 | ||||||||||||||
Total
securities held-to-maturity | $ | i 680 | $ | i 1 | $ | i 15,494 | $ | i 139 | $ | i 16,174 | $ | i 140 | ||||||||
Total
temporarily impaired securities | $ | i 18,104 | $ | i 51 | $ | i 30,224 | $ | i 345 | $ | i 48,328 | $ | i 396 | ||||||||
(a) | Includes
$ i 6 million of securities with an unrealized loss of less than $ i 1
million for less than 12 months and $ i 3 million of securities with an unrealized loss of less than $ i 1
million for 12 months or more that were included in the former Grantor Trust. |
(b) | Includes gross unrealized losses of $ i 76
million for 12 months or more recorded in accumulated other comprehensive income related to securities that were transferred from available-for-sale to held-to-maturity. The unrealized losses are primarily related to Agency RMBS and will be amortized into net interest revenue over the contractual lives of the securities. There were i no
gross unrealized losses for less than 12 months. |
Notes to Consolidated Financial Statements (continued) |
Temporarily
impaired securities at Dec. 31, 2018 | Less than 12 months | 12 months or more | Total | |||||||||||||||||
(in millions) | Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | ||||||||||||||
Available-for-sale: | ||||||||||||||||||||
Agency
RMBS | $ | i 6,678 | $ | i 30 | $ | i 9,250 | $ | i 339 | $ | i 15,928 | $ | i 369 | ||||||||
U.S.
Treasury | i 6,126 | i 23 | i 6,880 | i 187 | i 13,006 | i 210 | ||||||||||||||
Sovereign
debt/sovereign guaranteed | i 2,185 | i 8 | i 988 | i 13 | i 3,173 | i 21 | ||||||||||||||
Agency
commercial MBS | i 4,505 | i 50 | i 3,082 | i 111 | i 7,587 | i 161 | ||||||||||||||
CLOs | i 3,280 | i 46 | i 2 | i — | i 3,282 | i 46 | ||||||||||||||
Supranational | i 974 | i 2 | i 481 | i 6 | i 1,455 | i 8 | ||||||||||||||
Foreign
covered bonds | i 1,058 | i 7 | i 736 | i 12 | i 1,794 | i 19 | ||||||||||||||
State
and political subdivisions | i 316 | i 1 | i 668 | i 21 | i 984 | i 22 | ||||||||||||||
Other
ABS | i 1,289 | i 4 | i 23 | i — | i 1,312 | i 4 | ||||||||||||||
U.S.
government agencies | i 513 | i 4 | i 673 | i 20 | i 1,186 | i 24 | ||||||||||||||
Non-agency
commercial MBS | i 1,015 | i 14 | i 362 | i 14 | i 1,377 | i 28 | ||||||||||||||
Non-agency
RMBS (a) | i 94 | i 1 | i 157 | i 10 | i 251 | i 11 | ||||||||||||||
Corporate
bonds | i 685 | i 24 | i 50 | i 2 | i 735 | i 26 | ||||||||||||||
Other
debt securities | i 397 | i 1 | i 256 | i 3 | i 653 | i 4 | ||||||||||||||
Total
securities available-for-sale (b) | $ | i 29,115 | $ | i 215 | $ | i 23,608 | $ | i 738 | $ | i 52,723 | $ | i 953 | ||||||||
Held-to-maturity: | ||||||||||||||||||||
Agency
RMBS | $ | i 4,602 | $ | i 56 | $ | i 17,107 | $ | i 576 | $ | i 21,709 | $ | i 632 | ||||||||
U.S.
Treasury | i 157 | i 2 | i 4,343 | i 75 | i 4,500 | i 77 | ||||||||||||||
U.S.
government agencies | i — | i — | i 1,111 | i 10 | i 1,111 | i 10 | ||||||||||||||
Agency
commercial MBS | i 477 | i 7 | i 654 | i 19 | i 1,131 | i 26 | ||||||||||||||
Non-agency
RMBS | i 22 | i 1 | i 31 | i 1 | i 53 | i 2 | ||||||||||||||
Total
securities held-to-maturity | $ | i 5,258 | $ | i 66 | $ | i 23,246 | $ | i 681 | $ | i 28,504 | $ | i 747 | ||||||||
Total
temporarily impaired securities | $ | i 34,373 | $ | i 281 | $ | i 46,854 | $ | i 1,419 | $ | i 81,227 | $ | i 1,700 | ||||||||
(a) | Includes
$ i 22 million of securities with an unrealized loss of less than $ i 1
million for less than 12 months and $ i 3 million of securities with an unrealized loss of less than $ i 1
million for 12 months or more that were included in the former Grantor Trust. |
(b) | Includes gross unrealized losses of $ i 87
million for 12 months or more recorded in accumulated other comprehensive income related to securities that were transferred from available-for-sale to held-to-maturity. The unrealized losses are primarily related to Agency RMBS and will be amortized into net interest revenue over the contractual lives of the securities. There were i no
gross unrealized losses for less than 12 months. |
Maturity
distribution and yields on securities at June 30, 2019 | U.S. Treasury | U.S. government agencies | State and political subdivisions | Other bonds, notes and debentures | Mortgage/ asset-backed | ||||||||||||||||||||||||||||
(dollars in millions) | Amount | Yield (a) | Amount | Yield (a) | Amount | Yield (a) | Amount | Yield (a) | Amount | Yield (a) | Total | ||||||||||||||||||||||
Securities
available-for-sale: | |||||||||||||||||||||||||||||||||
One
year or less | $ | i 3,152 | i 2.59 | % | $ | i 80 | i 2.28 | % | $ | i 189 | i 2.97 | % | $ | i 7,148 | i 1.32 | % | $ | — | — | % | $ | i 10,569 | |||||||||||
Over
1 through 5 years | i 5,057 | i 1.81 | i 991 | i 2.68 | i 849 | i 3.16 | i 12,999 | i 1.34 | — | — | i 19,896 | ||||||||||||||||||||||
Over
5 through 10 years | i 3,283 | i 2.31 | i 1,579 | i 2.81 | i 130 | i 3.05 | i 1,883 | i 0.84 | — | — | i 6,875 | ||||||||||||||||||||||
Over
10 years | i 2,705 | i 3.11 | i — | i — | i 112 | i 2.96 | i 209 | i 1.78 | — | — | i 3,026 | ||||||||||||||||||||||
Mortgage-backed
securities | — | — | — | — | — | — | — | — | i 39,108 | i 3.18 | i 39,108 | ||||||||||||||||||||||
Asset-backed
securities | — | — | — | — | — | — | — | — | i 6,119 | i 3.33 | i 6,119 | ||||||||||||||||||||||
Total | $ | i 14,197 | i 2.35 | % | $ | i 2,650 | i 2.74 | % | $ | i 1,280 | i 3.10 | % | $ | i 22,239 | i 1.30 | % | $ | i 45,227 | i 3.20 | % | $ | i 85,593 | |||||||||||
Securities
held-to-maturity: | |||||||||||||||||||||||||||||||||
One
year or less | $ | i 1,556 | i 1.48 | % | $ | i 333 | i 1.31 | % | $ | i — | i — | % | $ | i 82 | i 0.64 | % | $ | — | — | % | $ | i 1,971 | |||||||||||
Over
1 through 5 years | i 2,600 | i 1.96 | i 759 | i 2.33 | i 3 | i 5.68 | i 487 | i 0.57 | — | — | i 3,849 | ||||||||||||||||||||||
Over
5 through 10 years | i 311 | i 2.18 | i 172 | i 2.89 | i — | i — | i 359 | i 0.81 | — | — | i 842 | ||||||||||||||||||||||
Over
10 years | i — | i — | i 12 | i 3.25 | i 14 | i 4.76 | i — | i — | — | — | i 26 | ||||||||||||||||||||||
Mortgage-backed
securities | — | — | — | — | — | — | — | — | i 27,861 | i 2.98 | i 27,861 | ||||||||||||||||||||||
Total | $ | i 4,467 | i 1.81 | % | $ | i 1,276 | i 2.15 | % | $ | i 17 | i 4.93 | % | $ | i 928 | i 0.67 | % | $ | i 27,861 | i 2.98 | % | $ | i 34,549 | |||||||||||
(a) | Yields
are based upon the amortized cost of securities. |
Notes to Consolidated Financial Statements (continued) |
Debt securities credit loss roll forward | ||||||
(in millions) | 2Q19 | 2Q18 | ||||
Beginning
balance as of March 31 | $ | i 77 | $ | i 80 | ||
Add:
Initial OTTI credit losses | i — | i — | ||||
Subsequent
OTTI credit losses | i — | i — | ||||
Less:
Realized losses for securities sold | i — | i 1 | ||||
Ending
balance as of June 30 | $ | i 77 | $ | i 79 | ||
Debt
securities credit loss roll forward | ||||||
(in millions) | YTD19 | YTD18 | ||||
Beginning balance as of Dec. 31 | $ | i 78 | $ | i 84 | ||
Add:
Initial OTTI credit losses | i — | i — | ||||
Subsequent
OTTI credit losses | i — | i — | ||||
Less:
Realized losses for securities sold | i 1 | i 5 | ||||
Ending
balance as of June 30 | $ | i 77 | $ | i 79 | ||
Notes to Consolidated Financial Statements (continued) |
Loans | ||||||
(in millions) | ||||||
Domestic: | ||||||
Commercial | $ | i 1,452 | $ | i 1,949 | ||
Commercial
real estate | i 5,192 | i 4,787 | ||||
Financial
institutions | i 4,574 | i 5,091 | ||||
Lease
financings | i 662 | i 706 | ||||
Wealth
management loans and mortgages | i 15,579 | i 15,843 | ||||
Other
residential mortgages | i 549 | i 594 | ||||
Overdrafts | i 1,575 | i 1,550 | ||||
Other | i 1,122 | i 1,181 | ||||
Margin
loans | i 10,152 | i 13,343 | ||||
Total
domestic | i 40,857 | i 45,044 | ||||
Foreign: | ||||||
Commercial | i 285 | i 183 | ||||
Commercial
real estate | i 7 | i — | ||||
Financial
institutions | i 6,948 | i 6,492 | ||||
Lease
financings | i 563 | i 551 | ||||
Wealth
management loans and mortgages | i 90 | i 122 | ||||
Other
(primarily overdrafts) | i 3,196 | i 4,031 | ||||
Margin
loans | i 450 | i 141 | ||||
Total
foreign | i 11,539 | i 11,520 | ||||
Total
loans (a) | $ | i 52,396 | $ | i 56,564 | ||
(a) | Net
of unearned income of $ i 340 million at June 30, 2019 and $ i 358
million at Dec. 31, 2018 primarily related to domestic and foreign lease financings. |
Notes
to Consolidated Financial Statements (continued) |
Allowance
for credit losses activity for the quarter ended June 30, 2019 | Wealth management loans and mortgages | Other residential mortgages | ||||||||||||||||||||||||||
(in millions) | Commercial | Commercial real
estate | Financial institutions | Lease financings | All other | Foreign | Total | |||||||||||||||||||||
Beginning
balance | $ | i 82 | $ | i 74 | $ | i 23 | $ | i 4 | $ | i 21 | $ | i 15 | $ | i — | $ | i 29 | $ | i 248 | ||||||||||
Charge-offs | i — | i — | i — | i — | ( i 1 | ) | i — | i — | i — | ( i 1 | ) | |||||||||||||||||
Recoveries | i — | i — | i — | i — | i — | i 2 | i — | i — | i 2 | |||||||||||||||||||
Net
(charge-offs) recoveries | i — | i — | i — | i — | ( i 1 | ) | i 2 | i — | i — | i 1 | ||||||||||||||||||
Provision | ( i 5 | ) | ( i 2 | ) | ( i 2 | ) | i — | i — | ( i 3 | ) | i — | i 4 | ( i 8 | ) | ||||||||||||||
Ending
balance | $ | i 77 | $ | i 72 | $ | i 21 | $ | i 4 | $ | i 20 | $ | i 14 | $ | i — | $ | i 33 | $ | i 241 | ||||||||||
Allowance
for: | ||||||||||||||||||||||||||||
Loan losses | $ | i 23 | $ | i 57 | $ | i 8 | $ | i 4 | $ | i 17 | $ | i 14 | $ | i — | $ | i 23 | $ | i 146 | ||||||||||
Lending-related
commitments | i 54 | i 15 | i 13 | i — | i 3 | i — | i — | i 10 | i 95 | |||||||||||||||||||
Individually
evaluated for impairment: | ||||||||||||||||||||||||||||
Loan balance | $ | i 96 | $ | i — | $ | i — | $ | i — | $ | i 16 | $ | i — | $ | i — | $ | i — | $ | i 112 | ||||||||||
Allowance
for loan losses | i 10 | i — | i — | i — | i — | i — | i — | i — | i 10 | |||||||||||||||||||
Collectively
evaluated for impairment: | ||||||||||||||||||||||||||||
Loan balance | $ | i 1,356 | $ | i 5,192 | $ | i 4,574 | $ | i 662 | $ | i 15,563 | $ | i 549 | $ | i 12,849 | (a) | $ | i 11,539 | $ | i 52,284 | |||||||||
Allowance
for loan losses | i 13 | i 57 | i 8 | i 4 | i 17 | i 14 | i — | i 23 | i 136 | |||||||||||||||||||
(a) | Includes
$ i 1,575 million of domestic overdrafts, $ i 10,152
million of margin loans and $ i 1,122 million of other loans at June 30, 2019. |
Allowance
for credit losses activity for the quarter ended March 31, 2019 | Wealth management loans and mortgages | Other residential mortgages | ||||||||||||||||||||||||||
(in millions) | Commercial | Commercial real
estate | Financial institutions | Lease financings | All other | Foreign | Total | |||||||||||||||||||||
Beginning
balance | $ | i 81 | $ | i 75 | $ | i 22 | $ | i 5 | $ | i 21 | $ | i 16 | $ | i — | $ | i 32 | $ | i 252 | ||||||||||
Charge-offs | ( i 11 | ) | i — | i — | i — | i — | i — | i — | i — | ( i 11 | ) | |||||||||||||||||
Recoveries | i — | i — | i — | i — | i — | i — | i — | i — | i — | |||||||||||||||||||
Net
charge-offs | ( i 11 | ) | i — | i — | i — | i — | i — | i — | i — | ( i 11 | ) | |||||||||||||||||
Provision | i 12 | ( i 1 | ) | i 1 | ( i 1 | ) | i — | ( i 1 | ) | i — | ( i 3 | ) | i 7 | |||||||||||||||
Ending
balance | $ | i 82 | $ | i 74 | $ | i 23 | $ | i 4 | $ | i 21 | $ | i 15 | $ | i — | $ | i 29 | $ | i 248 | ||||||||||
Allowance
for: | ||||||||||||||||||||||||||||
Loan losses | $ | i 24 | $ | i 56 | $ | i 10 | $ | i 4 | $ | i 18 | $ | i 15 | $ | i — | $ | i 19 | $ | i 146 | ||||||||||
Lending-related
commitments | i 58 | i 18 | i 13 | i — | i 3 | i — | i — | i 10 | i 102 | |||||||||||||||||||
Individually
evaluated for impairment: | ||||||||||||||||||||||||||||
Loan balance | $ | i 96 | $ | i — | $ | i — | $ | i — | $ | i 4 | $ | i — | $ | i — | $ | i — | $ | i 100 | ||||||||||
Allowance
for loan losses | i 10 | i — | i — | i — | i — | i — | i — | i — | i 10 | |||||||||||||||||||
Collectively
evaluated for impairment: | ||||||||||||||||||||||||||||
Loan balance | $ | i 1,626 | $ | i 4,921 | $ | i 4,652 | $ | i 653 | $ | i 15,724 | $ | i 574 | $ | i 13,913 | (a) | $ | i 11,324 | $ | i 53,387 | |||||||||
Allowance
for loan losses | i 14 | i 56 | i 10 | i 4 | i 18 | i 15 | i — | i 19 | i 136 | |||||||||||||||||||
(a) | Includes
$ i 654 million of domestic overdrafts, $ i 12,107
million of margin loans and $ i 1,152 million of other loans at March 31, 2019. |
Notes to Consolidated Financial Statements (continued) |
Allowance
for credit losses activity for the quarter ended June 30, 2018 | Wealth management loans and mortgages | Other residential mortgages | All other | Foreign | Total | |||||||||||||||||||||||
(in
millions) | Commercial | Commercial real estate | Financial institutions | Lease financings | ||||||||||||||||||||||||
Beginning balance | $ | i 75 | $ | i 75 | $ | i 22 | $ | i 7 | $ | i 23 | $ | i 19 | $ | i — | $ | i 35 | $ | i 256 | ||||||||||
Charge-offs | i — | i — | i — | i — | i — | i — | i — | i — | i — | |||||||||||||||||||
Recoveries | i — | i — | i — | i — | i — | i 1 | i — | i — | i 1 | |||||||||||||||||||
Net
recoveries | i — | i — | i — | i — | i — | i 1 | i — | i — | i 1 | |||||||||||||||||||
Provision | i 1 | ( i 1 | ) | i 2 | ( i 1 | ) | i — | ( i 2 | ) | i — | ( i 2 | ) | ( i 3 | ) | ||||||||||||||
Ending
balance | $ | i 76 | $ | i 74 | $ | i 24 | $ | i 6 | $ | i 23 | $ | i 18 | $ | i — | $ | i 33 | $ | i 254 | ||||||||||
Allowance
for: | ||||||||||||||||||||||||||||
Loan losses | $ | i 17 | $ | i 55 | $ | i 8 | $ | i 6 | $ | i 19 | $ | i 18 | $ | i — | $ | i 22 | $ | i 145 | ||||||||||
Lending-related
commitments | i 59 | i 19 | i 16 | i — | i 4 | i — | i — | i 11 | i 109 | |||||||||||||||||||
Individually
evaluated for impairment: | ||||||||||||||||||||||||||||
Loan balance | $ | i — | $ | i — | $ | i — | $ | i — | $ | i 5 | $ | i — | $ | i — | $ | i — | $ | i 5 | ||||||||||
Allowance
for loan losses | i — | i — | i — | i — | i — | i — | i — | i — | i — | |||||||||||||||||||
Collectively
evaluated for impairment: | ||||||||||||||||||||||||||||
Loan balance | $ | i 2,117 | $ | i 4,974 | $ | i 5,526 | $ | i 758 | $ | i 16,186 | $ | i 653 | $ | i 17,173 | (a) | $ | i 10,384 | $ | i 57,771 | |||||||||
Allowance
for loan losses | i 17 | i 55 | i 8 | i 6 | i 19 | i 18 | i — | i 22 | i 145 | |||||||||||||||||||
(a) | Includes
$ i 1,090 million of domestic overdrafts, $ i 14,914
million of margin loans and $ i 1,169 million of other loans at June 30, 2018. |
Allowance
for credit losses activity for the six months ended June 30, 2019 | Wealth management loans and mortgages | Other residential mortgages | All other | Foreign | Total | ||||||||||||||||||||||
(in
millions) | Commercial | Commercial real estate | Financial institutions | Lease financings | |||||||||||||||||||||||
Beginning balance | $ | i 81 | $ | i 75 | $ | i 22 | $ | i 5 | $ | i 21 | $ | i 16 | $ | i — | $ | i 32 | $ | i 252 | |||||||||
Charge-offs | ( i 11 | ) | i — | i — | i — | ( i 1 | ) | i — | i — | i — | ( i 12 | ) | |||||||||||||||
Recoveries | i — | i — | i — | i — | i — | i 2 | i — | i — | i 2 | ||||||||||||||||||
Net
(charge-offs) recoveries | ( i 11 | ) | i — | i — | i — | ( i 1 | ) | i 2 | i — | i — | ( i 10 | ) | |||||||||||||||
Provision | i 7 | ( i 3 | ) | ( i 1 | ) | ( i 1 | ) | i — | ( i 4 | ) | i — | i 1 | ( i 1 | ) | |||||||||||||
Ending
balance | $ | i 77 | $ | i 72 | $ | i 21 | $ | i 4 | $ | i 20 | $ | i 14 | $ | i — | $ | i 33 | $ | i 241 | |||||||||
Allowance
for credit losses activity for the six months ended June 30, 2018 | Wealth management loans and mortgages | Other residential mortgages | All other | Foreign | Total | ||||||||||||||||||||||
(in
millions) | Commercial | Commercial real estate | Financial institutions | Lease financings | |||||||||||||||||||||||
Beginning balance | $ | i 77 | $ | i 76 | $ | i 23 | $ | i 8 | $ | i 22 | $ | i 20 | $ | i — | $ | i 35 | $ | i 261 | |||||||||
Charge-offs | i — | i — | i — | i — | i — | i — | i — | i — | i — | ||||||||||||||||||
Recoveries | i — | i — | i — | i — | i — | i 1 | i — | i — | i 1 | ||||||||||||||||||
Net
recoveries | i — | i — | i — | i — | i — | i 1 | i — | i — | i 1 | ||||||||||||||||||
Provision | ( i 1 | ) | ( i 2 | ) | i 1 | ( i 2 | ) | i 1 | ( i 3 | ) | i — | ( i 2 | ) | ( i 8 | ) | ||||||||||||
Ending
balance | $ | i 76 | $ | i 74 | $ | i 24 | $ | i 6 | $ | i 23 | $ | i 18 | $ | i — | $ | i 33 | $ | i 254 | |||||||||
Notes to Consolidated Financial Statements (continued) |
Nonperforming assets (in millions) | |||||||
Nonperforming
loans: | |||||||
Commercial | $ | i 96 | $ | i — | |||
Other
residential mortgages | i 65 | i 67 | |||||
Wealth
management loans and mortgages | i 23 | i 9 | |||||
Total
nonperforming loans | i 184 | i 76 | |||||
Other
assets owned | i 2 | i 3 | |||||
Total
nonperforming assets (a) | $ | i 186 | $ | i 79 | |||
(a) | In
the second quarter of 2019, we refined the application of our nonperforming assets policy for first lien residential mortgage loans greater than 90 days delinquent that resulted in a $ i 12 million increase in nonperforming assets. |
Impaired loans | 2Q19 | 1Q19 | 2Q18 | YTD19 | YTD18 | |||||||||||||||||||||||||
(in
millions) | Average recorded investment | Interest revenue recognized | Average recorded investment | Interest revenue recognized | Average recorded investment | Interest revenue recognized | Average
recorded investment | Interest revenue recognized | Average recorded investment | Interest revenue recognized | ||||||||||||||||||||
Impaired loans with an allowance: | ||||||||||||||||||||||||||||||
Commercial | $ | i 96 | $ | i — | $ | i 48 | $ | i — | $ | i — | $ | i — | $ | i 64 | $ | i — | $ | i — | $ | i — | ||||||||||
Wealth
management loans and mortgages | i — | i — | i — | i — | i 1 | i — | i — | i — | i 1 | i — | ||||||||||||||||||||
Total
impaired loans with an allowance | i 96 | i — | i 48 | i — | i 1 | i — | i 64 | i — | i 1 | i — | ||||||||||||||||||||
Impaired
loans without an allowance: (a) | ||||||||||||||||||||||||||||||
Wealth management loans and mortgages | i 10 | i — | i 4 | i — | i 4 | i — | i 8 | i — | i 4 | i — | ||||||||||||||||||||
Total
impaired loans | $ | i 106 | $ | i — | $ | i 52 | $ | i — | $ | i 5 | $ | i — | $ | i 72 | $ | i — | $ | i 5 | $ | i — | ||||||||||
(a) | When
the discounted cash flows, collateral value or market price equals or exceeds the carrying value of the loan, then the loan does not require an allowance under the accounting standard related to impaired loans. |
Notes to Consolidated Financial Statements (continued) |
Impaired
loans | |||||||||||||||||||
(in millions) | Recorded investment | Unpaid principal balance | Related allowance (a) | Recorded investment | Unpaid principal balance | Related allowance (a) | |||||||||||||
Impaired
loans with an allowance: | |||||||||||||||||||
Commercial | $ | i 96 | $ | i 96 | $ | i 10 | $ | i — | $ | i — | $ | i — | |||||||
Impaired
loans without an allowance: (b) | |||||||||||||||||||
Wealth management loans and mortgages | i 16 | i 16 | N/A | i 4 | i 4 | N/A | |||||||||||||
Total
impaired loans (c) | $ | i 112 | $ | i 112 | $ | i 10 | $ | i 4 | $ | i 4 | $ | i — | |||||||
(a) | The
allowance for impaired loans is included in the allowance for loan losses. |
(b) | When the discounted cash flows, collateral value or market price equals or exceeds the carrying value of the loan, then the loan does not require an allowance under the accounting standard related to impaired loans. |
(c) | Excludes an aggregate of less than $ i 1
million of impaired loans in amounts individually less than $1 million at both June 30, 2019 and Dec. 31, 2018, respectively. The allowance for loan losses associated with these loans totaled less than $1 million at both June 30, 2019 and Dec. 31, 2018, respectively. |
Past
due loans and still accruing interest | |||||||||||||||||||||||||
Days past due | Total past due | Days past due | Total past due | ||||||||||||||||||||||
(in
millions) | 30-59 | 60-89 | ≥90 | 30-59 | 60-89 | ≥90 | |||||||||||||||||||
Wealth
management loans and mortgages | $ | i 19 | $ | i 2 | $ | i — | $ | i 21 | $ | i 22 | $ | i 1 | $ | i 5 | $ | i 28 | |||||||||
Other
residential mortgages | i 11 | i 1 | i — | i 12 | i 12 | i 6 | i 7 | i 25 | |||||||||||||||||
Financial
institutions | i 10 | i — | i — | i 10 | i 3 | i 3 | i — | i 6 | |||||||||||||||||
Commercial
real estate | i 9 | i — | i — | i 9 | i 1 | i — | i — | i 1 | |||||||||||||||||
Total
past due loans | $ | i 49 | $ | i 3 | $ | i — | $ | i 52 | $ | i 38 | $ | i 10 | $ | i 12 | $ | i 60 | |||||||||
Commercial loan portfolio – Credit risk profile by creditworthiness category | Commercial | Commercial real estate | Financial institutions | |||||||||||||||||
(in millions) | ||||||||||||||||||||
Investment grade | $ | i 1,555 | $ | i 2,036 | $ | i 4,577 | $ | i 4,184 | $ | i 9,338 | $ | i 9,586 | ||||||||
Non-investment
grade | i 182 | i 96 | i 622 | i 603 | i 2,184 | i 1,997 | ||||||||||||||
Total | $ | i 1,737 | $ | i 2,132 | $ | i 5,199 | $ | i 4,787 | $ | i 11,522 | $ | i 11,583 | ||||||||
Notes to Consolidated Financial Statements (continued) |
Wealth management loans and mortgages – Credit
risk profile by internally assigned grade | ||||||
(in millions) | ||||||
Wealth management loans: | ||||||
Investment
grade | $ | i 6,673 | $ | i 6,901 | ||
Non-investment
grade | i 161 | i 106 | ||||
Wealth
management mortgages | i 8,835 | i 8,958 | ||||
Total | $ | i 15,669 | $ | i 15,965 | ||
Notes to Consolidated Financial Statements (continued) |
Balance
sheet information | |||||||||
(dollar in millions) | Operating leases | Finance leases | Total | ||||||
Right-of-use assets (a) | $ | i 1,160 | $ | i 21 | $ | i 1,181 | |||
Lease
liability (b) | $ | i 1,358 | $ | i 10 | $ | i 1,368 | |||
Weighted
average: | |||||||||
Remaining lease term | i 8.3 years | i 3.3
years | |||||||
Discount rate (annualized) | i 3.17 | % | i 2.78 | % | |||||
(a) | Included
in premises and equipment on the consolidated balance sheet. |
(b) | Operating lease liabilities are included in other liabilities and finance lease liabilities are included in other borrowed funds, both on the consolidated balance sheet. |
Lease expense | Quarter ended | Year-to-date | |||||||
(in millions) | |||||||||
Operating lease expense | $ | i 63 | $ | i 132 | |||||
Variable
lease expense | i 10 | i 19 | |||||||
Sublease
income | ( i 8 | ) | ( i 16 | ) | |||||
Finance
lease expense: | |||||||||
Amortization of right-of-use assets | i 2 | i 4 | |||||||
Interest
on lease liabilities | i — | i — | |||||||
Total
finance lease expense | $ | i 2 | $ | i 4 | |||||
Total
lease expense | $ | i 67 | $ | i 139 | |||||
Cash flow information | Six months ended | |||
(in millions) | ||||
Cash paid for amounts included in measurement
of liabilities: | ||||
Operating cash flows from finance leases | $ | i — | ||
Operating
cash flows from operating leases | $ | i 134 | ||
Financing cash flows from finance leases | $ | i 12 | ||
Notes to Consolidated Financial Statements (continued) |
Maturities of lease liabilities | Operating leases | ||
(in millions) | |||
For the year ended Dec. 31, | |||
2019 | $ | i 264 | |
2020 | i 244 | ||
2021 | i 211 | ||
2022 | i 172 | ||
2023 | i 136 | ||
2024
and thereafter | i 432 | ||
Total | $ | i 1,459 | |
Maturities of lease liabilities | Operating leases | Finance leases | ||||
(in
millions) | ||||||
For the year ended Dec. 31, | ||||||
2019 (excluding six months ended June 30, 2019) | $ | i 148 | $ | i 9 | ||
2020 | i 271 | i 1 | ||||
2021 | i 215 | i — | ||||
2022 | i 175 | i — | ||||
2023 | i 137 | i — | ||||
2024
and thereafter | i 600 | i — | ||||
Total
lease payments | i 1,546 | i 10 | ||||
Less:
Imputed interest | ( i 188 | ) | i — | |||
Total | $ | i 1,358 | $ | i 10 | ||
Goodwill
by business (in millions) | Investment Services | Investment Management | Other | Consolidated | ||||||||
Balance at Dec. 31, 2018 | $ | i 8,333 | $ | i 8,970 | $ | i 47 | $ | i 17,350 | ||||
Foreign
currency translation | ( i 6 | ) | ( i 7 | ) | i — | ( i 13 | ) | |||||
Balance
at June 30, 2019 | $ | i 8,327 | $ | i 8,963 | $ | i 47 | $ | i 17,337 | ||||
Goodwill
by business (in millions) | Investment Services | Investment Management | Other | Consolidated | ||||||||
Balance at Dec. 31, 2017 | $ | i 8,389 | $ | i 9,128 | $ | i 47 | $ | i 17,564 | ||||
Dispositions | i — | ( i 65 | ) | i — | ( i 65 | ) | ||||||
Foreign
currency translation | ( i 31 | ) | ( i 50 | ) | i — | ( i 81 | ) | |||||
Balance
at June 30, 2018 | $ | i 8,358 | $ | i 9,013 | $ | i 47 | $ | i 17,418 | ||||
Intangible
assets – net carrying amount by business (in millions) | Investment Services | Investment Management | Other | Consolidated | ||||||||
Balance at Dec. 31, 2018 | $ | i 758 | $ | i 1,613 | $ | i 849 | $ | i 3,220 | ||||
Amortization | ( i 41 | ) | ( i 18 | ) | i — | ( i 59 | ) | |||||
Foreign
currency translation | i — | ( i 1 | ) | i — | ( i 1 | ) | ||||||
Balance
at June 30, 2019 | $ | i 717 | $ | i 1,594 | $ | i 849 | $ | i 3,160 | ||||
Notes to Consolidated Financial Statements (continued) |
Intangible assets – net carrying amount by
business (in millions) | Investment Services | Investment Management | Other | Consolidated | ||||||||
Balance at Dec. 31, 2017 | $ | i 888 | $ | i 1,674 | $ | i 849 | $ | i 3,411 | ||||
Amortization | ( i 72 | ) | ( i 25 | ) | i — | ( i 97 | ) | |||||
Foreign
currency translation | ( i 1 | ) | ( i 5 | ) | i — | ( i 6 | ) | |||||
Balance
at June 30, 2018 | $ | i 815 | $ | i 1,644 | $ | i 849 | $ | i 3,308 | ||||
Intangible assets | ||||||||||||||||||||
(in millions) | Gross carrying amount | Accumulated amortization | Net carrying amount | Remaining weighted- average amortization period | Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||||||||
Subject
to amortization: (a) | ||||||||||||||||||||
Customer contracts—Investment Services | $ | i 1,573 | $ | ( i 1,227 | ) | $ | i 346 | 10
years | $ | i 1,572 | $ | ( i 1,186 | ) | $ | i 386 | |||||
Customer
relationships—Investment Management | i 898 | ( i 714 | ) | i 184 | 11
years | i 899 | ( i 699 | ) | i 200 | |||||||||||
Other | i 65 | ( i 14 | ) | i 51 | 14
years | i 26 | ( i 12 | ) | i 14 | |||||||||||
Total
subject to amortization | i 2,536 | ( i 1,955 | ) | i 581 | 11
years | i 2,497 | ( i 1,897 | ) | i 600 | |||||||||||
Not
subject to amortization: (b) | ||||||||||||||||||||
Tradenames | i 1,292 | N/A | i 1,292 | N/A | i 1,332 | N/A | i 1,332 | |||||||||||||
Customer
relationships | i 1,287 | N/A | i 1,287 | N/A | i 1,288 | N/A | i 1,288 | |||||||||||||
Total
not subject to amortization | i 2,579 | N/A | i 2,579 | N/A | i 2,620 | N/A | i 2,620 | |||||||||||||
Total
intangible assets | $ | i 5,115 | $ | ( i 1,955 | ) | $ | i 3,160 | N/A | $ | i 5,117 | $ | ( i 1,897 | ) | $ | i 3,220 | |||||
(a) | Excludes
fully amortized intangible assets. |
(b) | Intangible assets not subject to amortization have an indefinite life. |
For the year ended Dec. 31, | Estimated amortization expense (in millions) | |||
2019 | $ | i 117 | ||
2020 | i 104 | |||
2021 | i 81 | |||
2022 | i 63 | |||
2023 | i 52 | |||
Notes to Consolidated Financial Statements (continued) |
Other assets | ||||||
(in millions) | ||||||
Corporate/bank-owned life insurance | $ | i 4,970 | $ | i 4,937 | ||
Accounts
receivable | i 4,322 | i 3,692 | ||||
Fails
to deliver | i 4,057 | i 2,274 | ||||
Software | i 1,710 | i 1,652 | ||||
Prepaid
pension assets | i 1,444 | i 1,357 | ||||
Renewable
energy investments | i 1,201 | i 1,264 | ||||
Equity
in a joint venture and other investments | i 1,156 | i 1,064 | ||||
Qualified
affordable housing project investments | i 1,068 | i 999 | ||||
Income
taxes receivable | i 743 | i 1,125 | ||||
Prepaid
expense | i 539 | i 385 | ||||
Federal
Reserve Bank stock | i 463 | i 484 | ||||
Seed
capital | i 217 | i 224 | ||||
Fair
value of hedging derivatives | i 156 | i 289 | ||||
Other
(a) | i 1,691 | i 1,552 | ||||
Total
other assets | $ | i 23,737 | $ | i 21,298 | ||
(a) | At
June 30, 2019 and Dec. 31, 2018, other assets include $ i 73 million and $ i 111
million, respectively, of Federal Home Loan Bank stock, at cost. |
Non-readily
marketable equity securities | Life-to-date | |||||||||||||||||
(in millions) | 2Q19 | 1Q19 | 2Q18 | YTD19 | YTD18 | |||||||||||||
Upward
adjustments | $ | i 2 | $ | i — | $ | i 5 | $ | i 2 | $ | i 25 | $ | i 30 | ||||||
Downward
adjustments | ( i 1 | ) | i — | i — | ( i 1 | ) | i — | ( i 2 | ) | |||||||||
Net
adjustments | $ | i 1 | $ | i — | $ | i 5 | $ | i 1 | $ | i 25 | $ | i 28 | ||||||
Notes
to Consolidated Financial Statements (continued) |
Investments valued using NAV | |||||||||||||||||||
(dollars in millions) | Fair value | Unfunded commitments | Redemption frequency | Redemption notice period | Fair value | Unfunded commitments | Redemption frequency | Redemption notice period | |||||||||||
Seed
capital | $ | i 60 | $ | i — | i Daily-quarterly | 1-90 days | $ | i 54 | $ | i — | i Daily-quarterly | 1-90 days | |||||||
Private
equity investments (SBICs) (a) | i 81 | i 54 | N/A | N/A | i 74 | i 41 | N/A | N/A | |||||||||||
Other
(b) | i 37 | i — | i Daily-quarterly | 1-95 days | i 87 | i — | i Daily-quarterly | 1-95 days | |||||||||||
Total | $ | i 178 | $ | i 54 | $ | i 215 | $ | i 41 | |||||||||||
(a) | Private
equity investments include Volcker Rule-compliant investments in SBICs that invest in various sectors of the economy. Private equity investments do not have redemption rights. Distributions from such investments will be received as the underlying investments in the private equity investments, which have a life of 10 years, are liquidated. |
(b) | Primarily relates to investments in funds that relate to deferred compensation arrangements with employees. |
Notes to Consolidated Financial Statements (continued) |
Disaggregation
of contract revenue by business segment (a) | ||||||||||||||||||||||||||||||||||||||
Quarter
ended | ||||||||||||||||||||||||||||||||||||||
(in millions) | IS | IM | Other | Total | IS | IM | Other | Total | IS | IM | Other | Total | ||||||||||||||||||||||||||
Fee
revenue - contract revenue: | ||||||||||||||||||||||||||||||||||||||
Investment
services fees: | ||||||||||||||||||||||||||||||||||||||
Asset
servicing fees | $ | i 1,089 | $ | i 20 | $ | i — | $ | i 1,109 | $ | i 1,073 | $ | i 20 | $ | i — | $ | i 1,093 | $ | i 1,098 | $ | i 21 | $ | i 1 | $ | i 1,120 | ||||||||||||||
Clearing
services fees (b) | i 411 | i — | ( i 1 | ) | i 410 | i 398 | i — | i — | i 398 | i 401 | i — | i — | i 401 | |||||||||||||||||||||||||
Issuer
services fees | i 291 | i — | i — | i 291 | i 251 | i — | i — | i 251 | i 265 | i — | i — | i 265 | ||||||||||||||||||||||||||
Treasury
services fees | i 140 | i 1 | i — | i 141 | i 132 | i — | i — | i 132 | i 140 | i 1 | i — | i 141 | ||||||||||||||||||||||||||
Total
investment services fees (b) | i 1,931 | i 21 | ( i 1 | ) | i 1,951 | i 1,854 | i 20 | i — | i 1,874 | i 1,904 | i 22 | i 1 | i 1,927 | |||||||||||||||||||||||||
Investment
management and performance fees (b) | i 4 | i 829 | i — | i 833 | i 4 | i 837 | i — | i 841 | i 5 | i 893 | i — | i 898 | ||||||||||||||||||||||||||
Financing-related
fees | i 16 | i — | i 1 | i 17 | i 17 | i — | i — | i 17 | i 15 | i — | i — | i 15 | ||||||||||||||||||||||||||
Distribution
and servicing | ( i 13 | ) | i 44 | i — | i 31 | ( i 14 | ) | i 45 | i — | i 31 | ( i 14 | ) | i 48 | i — | i 34 | |||||||||||||||||||||||
Investment
and other income | i 69 | ( i 48 | ) | i — | i 21 | i 69 | ( i 49 | ) | i — | i 20 | i 69 | ( i 50 | ) | i 1 | i 20 | |||||||||||||||||||||||
Total
fee revenue - contract revenue | i 2,007 | i 846 | i — | i 2,853 | i 1,930 | i 853 | i — | i 2,783 | i 1,979 | i 913 | i 2 | i 2,894 | ||||||||||||||||||||||||||
Fee
and other revenue - not in scope of ASC 606 (c)(d) | i 220 | i 4 | i 41 | i 265 | i 224 | i 11 | i 30 | i 265 | i 254 | i 28 | i 39 | i 321 | ||||||||||||||||||||||||||
Total
fee and other revenue | $ | i 2,227 | $ | i 850 | $ | i 41 | $ | i 3,118 | $ | i 2,154 | $ | i 864 | $ | i 30 | $ | i 3,048 | $ | i 2,233 | $ | i 941 | $ | i 41 | $ | i 3,215 | ||||||||||||||
(a) | Business
segment data has been determined on an internal management basis of accounting, rather than the generally accepted accounting principles used for consolidated financial reporting. |
(b) | In the first quarter of 2019, we reclassified certain platform-related fees to clearing services fees from investment management and performance fees. Prior periods have been reclassified. |
(c) | Primarily includes foreign exchange and other trading revenue, financing-related fees, asset servicing fees, investment and other income and
net securities gains (losses), all of which are accounted for using other accounting guidance. |
(d) | The Investment Management business includes income from consolidated investment management funds, net of noncontrolling interests, of $ i 6 million
in the second quarter of 2019, $ i 16 million in the first quarter of 2019 and $ i 5
million in the second quarter of 2018. |
Disaggregation
of contract revenue by business segment (a) | |||||||||||||||||||||||||
Year-to-date | |||||||||||||||||||||||||
(in millions) | IS | IM | Other | Total | IS | IM | Other | Total | |||||||||||||||||
Fee
revenue - contract revenue: | |||||||||||||||||||||||||
Investment services fees: | |||||||||||||||||||||||||
Asset
servicing fees | $ | i 2,162 | $ | i 40 | $ | i — | $ | i 2,202 | $ | i 2,215 | $ | i 46 | $ | i 1 | $ | i 2,262 | |||||||||
Clearing
services fees (b) | i 809 | i — | ( i 1 | ) | i 808 | i 824 | i — | i 1 | i 825 | ||||||||||||||||
Issuer
services fees | i 542 | i — | i — | i 542 | i 525 | i — | i — | i 525 | |||||||||||||||||
Treasury
services fees | i 272 | i 1 | i — | i 273 | i 278 | i 1 | i — | i 279 | |||||||||||||||||
Total
investment services fees (b) | i 3,785 | i 41 | ( i 1 | ) | i 3,825 | i 3,842 | i 47 | i 2 | i 3,891 | ||||||||||||||||
Investment
management and performance fees (b) | i 8 | i 1,666 | i — | i 1,674 | i 9 | i 1,835 | i — | i 1,844 | |||||||||||||||||
Financing-related
fees | i 33 | i — | i 1 | i 34 | i 32 | i — | i — | i 32 | |||||||||||||||||
Distribution
and servicing | ( i 27 | ) | i 89 | i — | i 62 | ( i 28 | ) | i 98 | i — | i 70 | |||||||||||||||
Investment
and other income | i 138 | ( i 97 | ) | i — | i 41 | i 138 | ( i 101 | ) | i 1 | i 38 | |||||||||||||||
Total
fee revenue - contract revenue | i 3,937 | i 1,699 | i — | i 5,636 | i 3,993 | i 1,879 | i 3 | i 5,875 | |||||||||||||||||
Fee
and other revenue - not in scope of ASC 606 (c)(d) | i 444 | i 15 | i 71 | i 530 | i 490 | i 74 | i 46 | i 610 | |||||||||||||||||
Total
fee and other revenue | $ | i 4,381 | $ | i 1,714 | $ | i 71 | $ | i 6,166 | $ | i 4,483 | $ | i 1,953 | $ | i 49 | $ | i 6,485 | |||||||||
(a) | Business
segment data has been determined on an internal management basis of accounting, rather than the generally accepted accounting principles used for consolidated financial reporting. |
(b) | In the first quarter of 2019, we reclassified certain platform-related fees to clearing services fees from investment management and performance fees. Prior periods have been reclassified. |
(c) | Primarily includes foreign exchange and other trading revenue, financing-related fees, asset servicing fees, investment and other income and
net securities gains (losses), all of which are accounted for using other accounting guidance. |
(d) | The Investment Management business includes income from consolidated investment management funds, net of noncontrolling interests, of $ i 22 million
in the first six months of 2019 and $ i 5 million in the first six months of 2018. |
Notes to Consolidated Financial Statements (continued) |
Notes to Consolidated Financial Statements (continued) |
Net interest revenue | Quarter ended | Year-to-date | ||||||||||||||
(in millions) | ||||||||||||||||
Interest
revenue | ||||||||||||||||
Deposits with the Federal Reserve and other central banks | $ | i 113 | $ | i 139 | $ | i 136 | $ | i 252 | $ | i 262 | ||||||
Deposits
with banks | i 64 | i 63 | i 56 | i 127 | i 98 | |||||||||||
Federal
funds sold and securities purchased under resale agreements | i 568 | i 474 | i 230 | i 1,042 | i 400 | |||||||||||
Margin
loans | i 119 | i 135 | i 128 | i 254 | i 243 | |||||||||||
Non-margin
loans | i 365 | i 355 | i 345 | i 720 | i 650 | |||||||||||
Securities: | ||||||||||||||||
Taxable | i 687 | i 706 | i 615 | i 1,393 | i 1,196 | |||||||||||
Exempt
from federal income taxes | i 10 | i 12 | i 14 | i 22 | i 29 | |||||||||||
Total
securities | i 697 | i 718 | i 629 | i 1,415 | i 1,225 | |||||||||||
Trading
securities | i 39 | i 36 | i 29 | i 75 | i 56 | |||||||||||
Total
interest revenue | i 1,965 | i 1,920 | i 1,553 | i 3,885 | i 2,934 | |||||||||||
Interest
expense | ||||||||||||||||
Deposits | i 432 | i 391 | i 173 | i 823 | i 290 | |||||||||||
Federal
funds purchased and securities sold under repurchase agreements | i 372 | i 331 | i 158 | i 703 | i 265 | |||||||||||
Trading
liabilities | i 11 | i 7 | i 7 | i 18 | i 16 | |||||||||||
Other
borrowed funds | i 20 | i 24 | i 14 | i 44 | i 23 | |||||||||||
Commercial
paper | i 18 | i 8 | i 21 | i 26 | i 33 | |||||||||||
Customer
payables | i 69 | i 70 | i 45 | i 139 | i 76 | |||||||||||
Long-term
debt | i 241 | i 248 | i 219 | i 489 | i 396 | |||||||||||
Total
interest expense | i 1,163 | i 1,079 | i 637 | i 2,242 | i 1,099 | |||||||||||
Net
interest revenue | i 802 | i 841 | i 916 | i 1,643 | i 1,835 | |||||||||||
Provision
for credit losses | ( i 8 | ) | i 7 | ( i 3 | ) | ( i 1 | ) | ( i 8 | ) | |||||||
Net
interest revenue after provision for credit losses | $ | i 810 | $ | i 834 | $ | i 919 | $ | i 1,644 | $ | i 1,843 | ||||||
Net
periodic benefit (credit) cost | Quarter ended | ||||||||||||||||||||||||||||
(in millions) | Domestic pension benefits | Foreign
pension benefits | Health care benefits | Domestic pension benefits | Foreign pension benefits | Health care benefits | Domestic pension
benefits | Foreign pension benefits | Health care benefits | ||||||||||||||||||||
Service cost | $ | i — | $ | i 3 | $ | i — | $ | i — | $ | i 3 | $ | i — | $ | i — | $ | i 7 | $ | i — | |||||||||||
Interest
cost | i 45 | i 8 | i 1 | i 44 | i 8 | i 2 | i 42 | i 8 | i 2 | ||||||||||||||||||||
Expected
return on assets | ( i 84 | ) | ( i 12 | ) | ( i 2 | ) | ( i 84 | ) | ( i 11 | ) | ( i 2 | ) | ( i 85 | ) | ( i 14 | ) | ( i 2 | ) | |||||||||||
Other | i 13 | i 1 | i — | i 13 | i — | ( i 1 | ) | i 17 | i 6 | i — | |||||||||||||||||||
Net
periodic benefit (credit) cost | $ | ( i 26 | ) | $ | i — | $ | ( i 1 | ) | $ | ( i 27 | ) | $ | i — | $ | ( i 1 | ) | $ | ( i 26 | ) | $ | i 7 | $ | i — | ||||||
Notes to Consolidated Financial Statements (continued) |
Net
periodic benefit (credit) cost | Year-to-date | ||||||||||||||||||
(in millions) | Domestic pension benefits | Foreign pension benefits | Health
care benefits | Domestic pension benefits | Foreign pension benefits | Health care benefits | |||||||||||||
Service cost | $ | i — | $ | i 6 | $ | i — | $ | i — | $ | i 14 | $ | i — | |||||||
Interest
cost | i 89 | i 16 | i 3 | i 85 | i 16 | i 4 | |||||||||||||
Expected
return on assets | ( i 168 | ) | ( i 23 | ) | ( i 4 | ) | ( i 170 | ) | ( i 29 | ) | ( i 4 | ) | |||||||
Other | i 26 | i 1 | ( i 1 | ) | i 34 | i 12 | ( i 1 | ) | |||||||||||
Net
periodic benefit (credit) cost | $ | ( i 53 | ) | $ | i — | $ | ( i 2 | ) | $ | ( i 51 | ) | $ | i 13 | $ | ( i 1 | ) | |||
Notes
to Consolidated Financial Statements (continued) |
Consolidated investments | |||||||||||||||||||||
(in millions) | Investment Management funds | Securitization | Total consolidated investments | Investment Management funds | Securitization | Total consolidated investments | |||||||||||||||
Trading
assets | $ | i 314 | $ | i 400 | $ | i 714 | $ | i 243 | $ | i 400 | $ | i 643 | |||||||||
Other
assets | i 23 | i — | i 23 | i 220 | i — | i 220 | |||||||||||||||
Total
assets | $ | i 337 | (a) | $ | i 400 | $ | i 737 | $ | i 463 | (b) | $ | i 400 | $ | i 863 | |||||||
Other
liabilities | $ | i 6 | $ | i 383 | $ | i 389 | $ | i 2 | $ | i 371 | $ | i 373 | |||||||||
Total
liabilities | $ | i 6 | (a) | $ | i 383 | $ | i 389 | $ | i 2 | (b) | $ | i 371 | $ | i 373 | |||||||
Nonredeemable
noncontrolling interests | $ | i 166 | (a) | $ | i — | $ | i 166 | $ | i 101 | (b) | $ | i — | $ | i 101 | |||||||
(a) | Includes
voting model entities (“VMEs”) with assets of $ i 74 million, liabilities of $ i 4
million and nonredeemable noncontrolling interests of less than $ i 1 million. |
(b) | Includes VMEs with assets of $ i 253
million, liabilities of $ i 2 million and nonredeemable noncontrolling interests of less than $ i 1
million. |
Non-consolidated
VIEs | |||||||||||||||||||
(in millions) | Assets | Liabilities | Maximum
loss exposure | Assets | Liabilities | Maximum loss exposure | |||||||||||||
Securities - Available-for-sale (a) | $ | i 214 | $ | i — | $ | i 214 | $ | i 214 | $ | i — | $ | i 214 | |||||||
Other | i 2,496 | i 500 | i 2,996 | i 2,450 | i 479 | i 2,929 | |||||||||||||
(a) | Includes
investments in the Company’s sponsored CLOs. |
Preferred stock summary (a) | Total shares issued and outstanding | Carrying
value (b) | ||||||||||
(in millions) | ||||||||||||
Per annum dividend rate | ||||||||||||
Series A | i Greater
of (i) three-month LIBOR plus 0.565% for the related distribution period; or (ii) 4.000% | i 5,001 | i 5,001 | $ | i 500 | $ | i 500 | |||||
Series
C | i 5.2% | i 5,825 | i 5,825 | i 568 | i 568 | |||||||
Series
D | i 4.50% to but excluding June 20, 2023, then a floating rate equal to the three-month LIBOR plus 2.46% | i 5,000 | i 5,000 | i 494 | i 494 | |||||||
Series
E | i 4.95% to and including June 20, 2020, then a floating rate equal to the three-month LIBOR plus 3.42% | i 10,000 | i 10,000 | i 990 | i 990 | |||||||
Series
F | i 4.625% to and including Sept. 20, 2026, then a floating rate equal to the three-month LIBOR plus 3.131% | i 10,000 | i 10,000 | i 990 | i 990 | |||||||
Total | i 35,826 | i 35,826 | $ | i 3,542 | $ | i 3,542 | ||||||
(a) | All
outstanding preferred stock is noncumulative perpetual preferred stock with a liquidation preference of $100,000 per share. |
(b) | The carrying value of the Series C, Series D, Series E and Series F preferred stock is recorded net of issuance costs. |
Notes to Consolidated Financial Statements (continued) |
Preferred
dividends paid | ||||||||||||||||||||||||||||||||||||||
(dollars in millions, except
per share amounts) | Depositary shares per share | 2Q19 | 1Q19 | 2Q18 | YTD19 | YTD18 | ||||||||||||||||||||||||||||||||
Per
share | Total dividend | Per share | Total dividend | Per share | Total dividend | Per
share | Total dividend | Per share | Total dividend | |||||||||||||||||||||||||||||
Series A | 100 | (a) | $ | i 1,022.22 | $ | i 5 | $ | i 1,000.00 | $ | i 5 | $ | i 1,022.22 | $ | i 5 | $ | i 2,022.22 | $ | i 10 | $ | i 2,022.22 | $ | i 10 | ||||||||||||||||
Series
C | 4,000 | i 1,300.00 | i 7 | i 1,300.00 | i 8 | i 1,300.00 | i 7 | i 2,600.00 | i 15 | i 2,600.00 | i 15 | |||||||||||||||||||||||||||
Series
D | 100 | i 2,250.00 | i 11 | N/A | i — | i 2,250.00 | i 11 | i 2,250.00 | i 11 | i 2,250.00 | i 11 | |||||||||||||||||||||||||||
Series
E | 100 | i 2,475.00 | i 25 | N/A | i — | i 2,475.00 | i 25 | i 2,475.00 | i 25 | i 2,475.00 | i 25 | |||||||||||||||||||||||||||
Series
F | 100 | N/A | i — | i 2,312.50 | i 23 | N/A | i — | i 2,312.50 | i 23 | i 2,312.50 | i 23 | |||||||||||||||||||||||||||
Total | $ | i 48 | $ | i 36 | $ | i 48 | $ | i 84 | $ | i 84 | ||||||||||||||||||||||||||||
(a) | Represents
Normal Preferred Capital Securities. |
Components
of other comprehensive income (loss) | Quarter ended | ||||||||||||||||||||||||||||
(in millions) | Pre-tax amount | Tax (expense) benefit | After-tax amount | Pre-tax amount | Tax (expense) benefit | After-tax amount | Pre-tax amount | Tax (expense) benefit | After-tax amount | ||||||||||||||||||||
Foreign
currency translation: | |||||||||||||||||||||||||||||
Foreign currency translation adjustments arising during the period (a) | $ | i 29 | $ | ( i 19 | ) | $ | i 10 | $ | i 27 | $ | i 2 | $ | i 29 | $ | ( i 302 | ) | $ | ( i 98 | ) | $ | ( i 400 | ) | |||||||
Total
foreign currency translation | i 29 | ( i 19 | ) | i 10 | i 27 | i 2 | i 29 | ( i 302 | ) | ( i 98 | ) | ( i 400 | ) | ||||||||||||||||
Unrealized
gain (loss) on assets available-for-sale: | |||||||||||||||||||||||||||||
Unrealized gain (loss) arising during period | i 384 | ( i 97 | ) | i 287 | i 322 | ( i 83 | ) | i 239 | ( i 103 | ) | i 39 | ( i 64 | ) | ||||||||||||||||
Reclassification
adjustment (b) | ( i 7 | ) | i 2 | ( i 5 | ) | ( i 1 | ) | i — | ( i 1 | ) | ( i 1 | ) | i 1 | i — | |||||||||||||||
Net
unrealized gain (loss) on assets available-for-sale | i 377 | ( i 95 | ) | i 282 | i 321 | ( i 83 | ) | i 238 | ( i 104 | ) | i 40 | ( i 64 | ) | ||||||||||||||||
Defined
benefit plans: | |||||||||||||||||||||||||||||
Net (loss) gain arising during the period | i — | i — | i — | ( i 11 | ) | i 2 | ( i 9 | ) | i — | i — | i — | ||||||||||||||||||
Amortization
of prior service credit, net loss and initial obligation included in net periodic benefit cost (b) | i 12 | ( i 2 | ) | i 10 | i 13 | ( i 3 | ) | i 10 | i 22 | ( i 6 | ) | i 16 | |||||||||||||||||
Total
defined benefit plans | i 12 | ( i 2 | ) | i 10 | i 2 | ( i 1 | ) | i 1 | i 22 | ( i 6 | ) | i 16 | |||||||||||||||||
Unrealized
gain (loss) on cash flow hedges: | |||||||||||||||||||||||||||||
Unrealized hedge gain (loss) arising during period | i 2 | ( i 2 | ) | i — | i 6 | ( i 4 | ) | i 2 | ( i 17 | ) | i 3 | ( i 14 | ) | ||||||||||||||||
Reclassification
of net loss (gain) to net income: | |||||||||||||||||||||||||||||
FX contracts
- other revenue | i — | i — | i — | i — | i — | i — | i 1 | i — | i 1 | ||||||||||||||||||||
FX
contracts - staff expense | i — | i — | i — | i 1 | i 2 | i 3 | ( i 2 | ) | i 1 | ( i 1 | ) | ||||||||||||||||||
Total
reclassifications to net income (b) | i — | i — | i — | i 1 | i 2 | i 3 | ( i 1 | ) | i 1 | i — | |||||||||||||||||||
Net
unrealized gain (loss) on cash flow hedges | i 2 | ( i 2 | ) | i — | i 7 | ( i 2 | ) | i 5 | ( i 18 | ) | i 4 | ( i 14 | ) | ||||||||||||||||
Total
other comprehensive income (loss) | $ | i 420 | $ | ( i 118 | ) | $ | i 302 | $ | i 357 | $ | ( i 84 | ) | $ | i 273 | $ | ( i 402 | ) | $ | ( i 60 | ) | $ | ( i 462 | ) | ||||||
(a) | Includes
the impact of hedges of net investments in foreign subsidiaries. See Note 18 for additional information. |
(b) | The reclassification adjustment related to the unrealized gain (loss) on assets available-for-sale is recorded as net securities gains on the consolidated income statement. The amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost is recorded as staff expense on the consolidated income statement. See Note 18 for the location of the reclassification adjustment related to cash flow hedges on the consolidated income statement. |
Notes to Consolidated Financial Statements (continued) |
Components
of other comprehensive income (loss) | Year-to-date | ||||||||||||||||||
(in millions) | Pre-tax amount | Tax (expense) benefit | After-tax amount | Pre-tax amount | Tax (expense) benefit | After-tax amount | |||||||||||||
Foreign
currency translation: | |||||||||||||||||||
Foreign currency translation adjustments arising during the period (a) | $ | i 56 | $ | ( i 17 | ) | $ | i 39 | $ | ( i 101 | ) | $ | ( i 55 | ) | $ | ( i 156 | ) | |||
Total
foreign currency translation | i 56 | ( i 17 | ) | i 39 | ( i 101 | ) | ( i 55 | ) | ( i 156 | ) | |||||||||
Unrealized
gain (loss) on assets available-for-sale: | |||||||||||||||||||
Unrealized gain (loss) arising during period | i 706 | ( i 180 | ) | i 526 | ( i 445 | ) | i 106 | ( i 339 | ) | ||||||||||
Reclassification
adjustment (b) | ( i 8 | ) | i 2 | ( i 6 | ) | i 48 | ( i 11 | ) | i 37 | ||||||||||
Net
unrealized gain (loss) on assets available-for-sale | i 698 | ( i 178 | ) | i 520 | ( i 397 | ) | i 95 | ( i 302 | ) | ||||||||||
Defined
benefit plans: | |||||||||||||||||||
Net gain (loss) arising during the period | ( i 11 | ) | i 2 | ( i 9 | ) | i — | i — | i — | |||||||||||
Amortization
of prior service credit, net loss and initial obligation included in net periodic benefit cost (b) | i 25 | ( i 5 | ) | i 20 | i 44 | ( i 11 | ) | i 33 | |||||||||||
Total
defined benefit plans | i 14 | ( i 3 | ) | i 11 | i 44 | ( i 11 | ) | i 33 | |||||||||||
Unrealized
gain (loss) on cash flow hedges: | |||||||||||||||||||
Unrealized hedge gain (loss) arising during period | i 8 | ( i 6 | ) | i 2 | ( i 10 | ) | i 2 | ( i 8 | ) | ||||||||||
Reclassification
of net loss (gain) to net income: | |||||||||||||||||||
FX contracts - other revenue | i — | i — | i — | ( i 3 | ) | i 1 | ( i 2 | ) | |||||||||||
FX
contracts - staff expense | i 1 | i 2 | i 3 | ( i 8 | ) | i 2 | ( i 6 | ) | |||||||||||
Total
reclassifications to net income (b) | i 1 | i 2 | i 3 | ( i 11 | ) | i 3 | ( i 8 | ) | |||||||||||
Net
unrealized gain (loss) on cash flow hedges | i 9 | ( i 4 | ) | i 5 | ( i 21 | ) | i 5 | ( i 16 | ) | ||||||||||
Total
other comprehensive income (loss) | $ | i 777 | $ | ( i 202 | ) | $ | i 575 | $ | ( i 475 | ) | $ | i 34 | $ | ( i 441 | ) | ||||
(a) | Includes
the impact of hedges of net investments in foreign subsidiaries. See Note 18 for additional information. |
(b) | The reclassification adjustment related to the unrealized gain (loss) on assets available-for-sale is recorded as net securities gains on the consolidated income statement. The amortization of prior service credit, net loss and initial obligation included in net periodic benefit cost is recorded as staff expense on the consolidated income statement. See Note 18 of the Notes to Consolidated Financial Statements for the location of the reclassification adjustment related to cash flow hedges on the consolidated income statement. |
Notes to Consolidated Financial Statements (continued) |
Assets
measured at fair value on a recurring basis at June 30, 2019 | Total carrying value | ||||||||||||||
(dollars in millions) | Level 1 | Level 2 | Level 3 | Netting (a) | |||||||||||
Available-for-sale
securities: | |||||||||||||||
Agency RMBS | $ | i — | $ | i 26,204 | $ | i — | $ | — | $ | i 26,204 | |||||
U.S.
Treasury | i 14,197 | i — | i — | — | i 14,197 | ||||||||||
Sovereign
debt/sovereign guaranteed | i 7,818 | i 4,524 | i — | — | i 12,342 | ||||||||||
Agency
commercial MBS | i — | i 9,678 | i — | — | i 9,678 | ||||||||||
Supranational | i — | i 3,914 | i — | — | i 3,914 | ||||||||||
CLOs | i — | i 3,649 | i — | — | i 3,649 | ||||||||||
Foreign
covered bonds | i — | i 3,398 | i — | — | i 3,398 | ||||||||||
U.S.
government agencies | i — | i 2,650 | i — | — | i 2,650 | ||||||||||
Other
ABS | i — | i 2,470 | i — | — | i 2,470 | ||||||||||
Non-agency
commercial MBS | i — | i 2,005 | i — | — | i 2,005 | ||||||||||
State
and political subdivisions | i — | i 1,280 | i — | — | i 1,280 | ||||||||||
Non-agency
RMBS (b) | i — | i 1,221 | i — | — | i 1,221 | ||||||||||
Corporate
bonds | i — | i 905 | i — | — | i 905 | ||||||||||
Other
debt securities | i — | i 1,680 | i — | — | i 1,680 | ||||||||||
Total
available-for-sale securities | i 22,015 | i 63,578 | i — | — | i 85,593 | ||||||||||
Trading
assets: | |||||||||||||||
Debt instruments | i 1,529 | i 2,260 | i — | — | i 3,789 | ||||||||||
Equity
instruments (c) | i 2,011 | i — | i — | — | i 2,011 | ||||||||||
Derivative
assets not designated as hedging: | |||||||||||||||
Interest rate | i 14 | i 4,254 | i — | ( i 2,347 | ) | i 1,921 | |||||||||
Foreign
exchange | i — | i 4,083 | i — | ( i 3,213 | ) | i 870 | |||||||||
Equity
and other contracts | i — | i 46 | i — | ( i 8 | ) | i 38 | |||||||||
Total
derivative assets not designated as hedging | i 14 | i 8,383 | i — | ( i 5,568 | ) | i 2,829 | |||||||||
Total
trading assets | i 3,554 | i 10,643 | i — | ( i 5,568 | ) | i 8,629 | |||||||||
Other
assets: | |||||||||||||||
Derivative assets designated as hedging: | |||||||||||||||
Foreign exchange | i — | i 156 | i — | — | i 156 | ||||||||||
Total
derivative assets designated as hedging | i — | i 156 | i — | — | i 156 | ||||||||||
Other
assets (d) | i 94 | i 163 | i — | — | i 257 | ||||||||||
Assets
measured at NAV (d) | i 178 | ||||||||||||||
Subtotal
assets of operations at fair value | i 25,663 | i 74,540 | i — | ( i 5,568 | ) | i 94,813 | |||||||||
Percentage
of assets of operations prior to netting | i 26 | % | i 74 | % | i — | % | |||||||||
Assets
of consolidated investment management funds | i 305 | i 32 | i — | — | i 337 | ||||||||||
Total
assets | $ | i 25,968 | $ | i 74,572 | $ | i — | $ | ( i 5,568 | ) | $ | i 95,150 | ||||
Percentage
of total assets prior to netting | i 26 | % | i 74 | % | i — | % | |||||||||
Notes to Consolidated Financial Statements (continued) |
Liabilities
measured at fair value on a recurring basis at June 30, 2019 | Total carrying value | ||||||||||||||
(dollars in millions) | Level 1 | Level 2 | Level 3 | Netting (a) | |||||||||||
Trading
liabilities: | |||||||||||||||
Debt instruments | $ | i 1,173 | $ | i 212 | $ | i — | $ | — | $ | i 1,385 | |||||
Equity
instruments | i 96 | i — | i — | — | i 96 | ||||||||||
Derivative
liabilities not designated as hedging: | |||||||||||||||
Interest rate | i 25 | i 3,600 | i — | ( i 2,637 | ) | i 988 | |||||||||
Foreign
exchange | i — | i 3,952 | i — | ( i 2,660 | ) | i 1,292 | |||||||||
Equity
and other contracts | i 3 | i 4 | i — | i — | i 7 | ||||||||||
Total
derivative liabilities not designated as hedging | i 28 | i 7,556 | i — | ( i 5,297 | ) | i 2,287 | |||||||||
Total
trading liabilities | i 1,297 | i 7,768 | i — | ( i 5,297 | ) | i 3,768 | |||||||||
Long-term
debt (c) | i — | i 383 | i — | — | i 383 | ||||||||||
Other
liabilities – derivative liabilities designated as hedging: | |||||||||||||||
Interest rate | i — | i 311 | i — | — | i 311 | ||||||||||
Foreign
exchange | i — | i 24 | i — | — | i 24 | ||||||||||
Total
other liabilities – derivative liabilities designated as hedging | i — | i 335 | i — | — | i 335 | ||||||||||
Subtotal
liabilities of operations at fair value | i 1,297 | i 8,486 | i — | ( i 5,297 | ) | i 4,486 | |||||||||
Percentage
of liabilities of operations prior to netting | i 13 | % | i 87 | % | i — | % | |||||||||
Liabilities
of consolidated investment management funds | i 1 | i 5 | i — | i — | i 6 | ||||||||||
Total
liabilities | $ | i 1,298 | $ | i 8,491 | $ | i — | $ | ( i 5,297 | ) | $ | i 4,492 | ||||
Percentage
of total liabilities prior to netting | i 13 | % | i 87 | % | i — | % | |||||||||
(a) | ASC
815, Derivatives and Hedging, permits the netting of derivative receivables and derivative payables under legally enforceable master netting agreements and permits the netting of cash collateral. Netting is applicable to derivatives not designated as hedging instruments included in trading assets or trading liabilities and derivatives designated as hedging instruments included in other assets or other liabilities. Netting is allocated to the derivative products based on the net fair value of each product. |
(b) | Includes $ i 753
million in Level 2 that was included in the former Grantor Trust. |
(c) | Includes certain interests in securitizations. |
(d) | Includes seed capital, private equity investments and other assets. |
Notes
to Consolidated Financial Statements (continued) |
Assets measured at fair value on a recurring basis at Dec. 31, 2018 | Total carrying value | ||||||||||||||
(dollars
in millions) | Level 1 | Level 2 | Level 3 | Netting (a) | |||||||||||
Available-for-sale securities: | |||||||||||||||
Agency
RMBS | $ | i — | $ | i 25,308 | $ | i — | $ | — | $ | i 25,308 | |||||
U.S.
Treasury | i 20,076 | i — | i — | — | i 20,076 | ||||||||||
Sovereign
debt/sovereign guaranteed | i 6,613 | i 4,137 | i — | — | i 10,750 | ||||||||||
Agency
commercial MBS | i — | i 9,691 | i — | — | i 9,691 | ||||||||||
CLOs | i — | i 3,364 | i — | — | i 3,364 | ||||||||||
Supranational | i — | i 2,984 | i — | — | i 2,984 | ||||||||||
Foreign
covered bonds | i — | i 2,878 | i — | — | i 2,878 | ||||||||||
State
and political subdivisions | i — | i 2,247 | i — | — | i 2,247 | ||||||||||
Other
ABS | i — | i 1,773 | i — | — | i 1,773 | ||||||||||
U.S.
government agencies | i — | i 1,657 | i — | — | i 1,657 | ||||||||||
Non-agency
commercial MBS | i — | i 1,464 | i — | — | i 1,464 | ||||||||||
Non-agency
RMBS (b) | i — | i 1,325 | i — | — | i 1,325 | ||||||||||
Corporate
bonds | i — | i 1,054 | i — | — | i 1,054 | ||||||||||
Other
debt securities | i — | i 1,238 | i — | — | i 1,238 | ||||||||||
Total
available-for-sale securities | i 26,689 | i 59,120 | i — | — | i 85,809 | ||||||||||
Trading
assets: | |||||||||||||||
Debt instruments | i 801 | i 2,594 | i — | — | i 3,395 | ||||||||||
Equity
instruments (c) | i 1,114 | i — | i — | — | i 1,114 | ||||||||||
Derivative
assets not designated as hedging: | |||||||||||||||
Interest rate | i 7 | i 3,583 | i — | ( i 2,202 | ) | i 1,388 | |||||||||
Foreign
exchange | i — | i 4,807 | i — | ( i 3,724 | ) | i 1,083 | |||||||||
Equity
and other contracts | i 9 | i 59 | i — | ( i 13 | ) | i 55 | |||||||||
Total
derivative assets not designated as hedging | i 16 | i 8,449 | i — | ( i 5,939 | ) | i 2,526 | |||||||||
Total
trading assets | i 1,931 | i 11,043 | i — | ( i 5,939 | ) | i 7,035 | |||||||||
Other
assets: | |||||||||||||||
Derivative assets designated as hedging: | |||||||||||||||
Interest
rate | i — | i 23 | i — | — | i 23 | ||||||||||
Foreign
exchange | i — | i 266 | i — | — | i 266 | ||||||||||
Total
derivative assets designated as hedging | i — | i 289 | i — | — | i 289 | ||||||||||
Other
assets (d) | i 68 | i 170 | i — | — | i 238 | ||||||||||
Assets
measured at NAV (d) | i 215 | ||||||||||||||
Subtotal
assets of operations at fair value | i 28,688 | i 70,622 | i — | ( i 5,939 | ) | i 93,586 | |||||||||
Percentage
of assets of operations prior to netting | i 29 | % | i 71 | % | i — | % | |||||||||
Assets
of consolidated investment management funds | i 210 | i 253 | i — | — | i 463 | ||||||||||
Total
assets | $ | i 28,898 | $ | i 70,875 | $ | i — | $ | ( i 5,939 | ) | $ | i 94,049 | ||||
Percentage
of total assets prior to netting | i 29 | % | i 71 | % | i — | % | |||||||||
Notes to Consolidated Financial Statements (continued) |
Liabilities
measured at fair value on a recurring basis at Dec. 31, 2018 | Total carrying value | ||||||||||||||
(dollars in millions) | Level 1 | Level 2 | Level 3 | Netting (a) | |||||||||||
Trading
liabilities: | |||||||||||||||
Debt instruments | $ | i 1,006 | $ | i 118 | $ | i — | $ | — | $ | i 1,124 | |||||
Equity
instruments | i 75 | i — | i — | — | i 75 | ||||||||||
Derivative
liabilities not designated as hedging: | |||||||||||||||
Interest rate | i 12 | i 3,104 | i — | ( i 2,508 | ) | i 608 | |||||||||
Foreign
exchange | i — | i 5,215 | i — | ( i 3,626 | ) | i 1,589 | |||||||||
Equity
and other contracts | i 1 | i 118 | i — | ( i 36 | ) | i 83 | |||||||||
Total
derivative liabilities not designated as hedging | i 13 | i 8,437 | i — | ( i 6,170 | ) | i 2,280 | |||||||||
Total
trading liabilities | i 1,094 | i 8,555 | i — | ( i 6,170 | ) | i 3,479 | |||||||||
Long-term
debt (c) | i — | i 371 | i — | — | i 371 | ||||||||||
Other
liabilities – derivative liabilities designated as hedging: | |||||||||||||||
Interest rate | i — | i 74 | i — | — | i 74 | ||||||||||
Foreign
exchange | i — | i 14 | i — | — | i 14 | ||||||||||
Total
other liabilities – derivative liabilities designated as hedging | i — | i 88 | i — | — | i 88 | ||||||||||
Subtotal
liabilities of operations at fair value | i 1,094 | i 9,014 | i — | ( i 6,170 | ) | i 3,938 | |||||||||
Percentage
of liabilities of operations prior to netting | i 11 | % | i 89 | % | i — | % | |||||||||
Liabilities
of consolidated investment management funds | i 2 | i — | i — | — | i 2 | ||||||||||
Total
liabilities | $ | i 1,096 | $ | i 9,014 | $ | i — | $ | ( i 6,170 | ) | $ | i 3,940 | ||||
Percentage
of total liabilities prior to netting | i 11 | % | i 89 | % | i — | % | |||||||||
(a) | ASC
815, Derivatives and Hedging, permits the netting of derivative receivables and derivative payables under legally enforceable master netting agreements and permits the netting of cash collateral. Netting is applicable to derivatives not designated as hedging instruments included in trading assets or trading liabilities and derivatives designated as hedging instruments included in other assets or other liabilities. Netting is allocated to the derivative products based on the net fair value of each product. |
(b) | Includes $ i 832
million in Level 2 that was included in the former Grantor Trust. |
(c) | Includes certain interests in securitizations. |
(d) | Includes seed capital, private equity investments and other assets. |
Notes
to Consolidated Financial Statements (continued) |
Details
of certain available-for-sale securities measured at fair value on a recurring basis | |||||||||||||||||||||||||
Total carrying value | Ratings (a) | Total carrying
value | Ratings (a) | ||||||||||||||||||||||
AAA/ AA- | A+/ A- | BBB+/ BBB- | BB+ and lower | AAA/ AA- | A+/ A- | BBB+/ BBB- | BB+ and lower | ||||||||||||||||||
(dollars
in millions) | (b) | (b) | |||||||||||||||||||||||
Non-agency RMBS (c), originated in: | |||||||||||||||||||||||||
2007-2019 | $ | i 311 | i 23 | % | i 2 | % | i 3 | % | i 72 | % | $ | i 315 | i 15 | % | i 2 | % | i 3 | % | i 80 | % | |||||
2006 | i 330 | i — | i 19 | i 1 | i 80 | i 363 | i — | i 19 | i — | i 81 | |||||||||||||||
2005 | i 356 | i 8 | i 1 | i 8 | i 83 | i 396 | i 9 | i 1 | i 7 | i 83 | |||||||||||||||
2004
and earlier | i 224 | i 16 | i 23 | i 11 | i 50 | i 251 | i 16 | i 24 | i 11 | i 49 | |||||||||||||||
Total
non-agency RMBS | $ | i 1,221 | i 11 | % | i 10 | % | i 5 | % | i 74 | % | $ | i 1,325 | i 9 | % | i 11 | % | i 5 | % | i 75 | % | |||||
Non-agency
commercial MBS originated in 2009-2019 | $ | i 2,005 | i 98 | % | i 2 | % | i — | % | i — | % | $ | i 1,464 | i 96 | % | i 4 | % | i — | % | i — | % | |||||
Foreign
covered bonds: | |||||||||||||||||||||||||
Canada | $ | i 1,639 | i 100 | % | i — | % | i — | % | i — | % | $ | i 1,524 | i 100 | % | i — | % | i — | % | i — | % | |||||
United
Kingdom | i 798 | i 100 | i — | i — | i — | i 529 | i 100 | i — | i — | i — | |||||||||||||||
Australia | i 414 | i 100 | i — | i — | i — | i 333 | i 100 | i — | i — | i — | |||||||||||||||
Sweden | i 274 | i 100 | i — | i — | i — | i 187 | i 100 | i — | i — | i — | |||||||||||||||
Other | i 273 | i 100 | i — | i — | i — | i 305 | i 100 | i — | i — | i — | |||||||||||||||
Total
foreign covered bonds | $ | i 3,398 | i 100 | % | i — | % | i — | % | i — | % | $ | i 2,878 | i 100 | % | i — | % | i — | % | i — | % | |||||
Sovereign
debt/sovereign guaranteed: | |||||||||||||||||||||||||
United
Kingdom | $ | i 3,133 | i 100 | % | i — | % | i — | % | i — | % | $ | i 2,153 | i 100 | % | i — | % | i — | % | i — | % | |||||
Germany | i 2,198 | i 100 | i — | i — | i — | i 1,826 | i 100 | i — | i — | i — | |||||||||||||||
France | i 1,424 | i 100 | i — | i — | i — | i 1,548 | i 100 | i — | i — | i — | |||||||||||||||
Spain | i 1,309 | i — | i 2 | i 98 | i — | i 1,365 | i — | i — | i 100 | i — | |||||||||||||||
Italy | i 1,302 | i — | i — | i 100 | i — | i 939 | i — | i — | i 100 | i — | |||||||||||||||
Netherlands | i 811 | i 100 | i — | i — | i — | i 875 | i 100 | i — | i — | i — | |||||||||||||||
Hong
Kong | i 504 | i 100 | i — | i — | i — | i 450 | i 100 | i — | i — | i — | |||||||||||||||
Canada | i 485 | i 100 | i — | i — | i — | i 378 | i 100 | i — | i — | i — | |||||||||||||||
Singapore | i 443 | i 100 | i — | i — | i — | i 165 | i 100 | i — | i — | i — | |||||||||||||||
Ireland | i 368 | i — | i 100 | i — | i — | i 625 | i — | i 100 | i — | i — | |||||||||||||||
Other
(d) | i 365 | i 68 | i 1 | i — | i 31 | i 426 | i 75 | i — | i — | i 25 | |||||||||||||||
Total
sovereign debt/sovereign guaranteed | $ | i 12,342 | i 75 | % | i 3 | % | i 21 | % | i 1 | % | $ | i 10,750 | i 72 | % | i 6 | % | i 21 | % | i 1 | % | |||||
(a) | Represents
ratings by S&P or the equivalent. |
(b) | At June 30, 2019 and Dec. 31, 2018, sovereign debt/sovereign guaranteed securities were included in Level 1 and Level 2 in the valuation hierarchy. All other assets in the table are Level 2 assets in the valuation hierarchy. |
(c) | Includes $ i 753
million at June 30, 2019 and $ i 832 million at Dec. 31, 2018
that were included in the former Grantor Trust. |
(d) | Includes non-investment grade sovereign debt/sovereign guaranteed securities related to Brazil of $ i 113
million at June 30, 2019 and $ i 107 million at Dec. 31, 2018. |
Assets
measured at fair value on a nonrecurring basis | |||||||||||||||||||||||||
Total carrying value | Total carrying value | ||||||||||||||||||||||||
(in
millions) | Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
Loans
(a) | $ | i — | $ | i 58 | $ | i 4 | $ | i 62 | $ | i — | $ | i 64 | $ | i 4 | $ | i 68 | |||||||||
Other
assets (b) | i — | i 63 | i — | i 63 | i — | i 57 | i — | i 57 | |||||||||||||||||
Total
assets at fair value on a nonrecurring basis | $ | i — | $ | i 121 | $ | i 4 | $ | i 125 | $ | i — | $ | i 121 | $ | i 4 | $ | i 125 | |||||||||
(a) | The
fair value of these loans decreased less than $ i 1 million in the quarters ended June 30, 2019 and Dec. 31, 2018, based on the fair value of the underlying collateral, as
required by guidance in ASC 310, Receivables, with an offset to the allowance for credit losses. |
(b) | Includes non-readily marketable equity securities carried at cost with upward or downward adjustments and other assets received in satisfaction of debt. |
Notes
to Consolidated Financial Statements (continued) |
Summary of financial instruments | |||||||||||||||
(in
millions) | Level 1 | Level 2 | Level 3 | Total estimated fair value | Carrying amount | ||||||||||
Assets: | |||||||||||||||
Interest-bearing
deposits with the Federal Reserve and other central banks | $ | i — | $ | i 69,700 | $ | i — | $ | i 69,700 | $ | i 69,700 | |||||
Interest-bearing
deposits with banks | i — | i 15,515 | i — | i 15,515 | i 15,491 | ||||||||||
Federal
funds sold and securities purchased under resale agreements | i — | i 61,201 | i — | i 61,201 | i 61,201 | ||||||||||
Securities
held-to-maturity | i 5,344 | i 29,351 | i — | i 34,695 | i 34,549 | ||||||||||
Loans
(a) | i — | i 51,425 | i — | i 51,425 | i 51,025 | ||||||||||
Other
financial assets | i 5,556 | i 1,316 | i — | i 6,872 | i 6,872 | ||||||||||
Total | $ | i 10,900 | $ | i 228,508 | $ | i — | $ | i 239,408 | $ | i 238,838 | |||||
Liabilities: | |||||||||||||||
Noninterest-bearing
deposits | $ | i — | $ | i 58,255 | $ | i — | $ | i 58,255 | $ | i 58,255 | |||||
Interest-bearing
deposits | i — | i 193,698 | i — | i 193,698 | i 194,622 | ||||||||||
Federal
funds purchased and securities sold under repurchase agreements | i — | i 11,757 | i — | i 11,757 | i 11,757 | ||||||||||
Payables
to customers and broker-dealers | i — | i 18,946 | i — | i 18,946 | i 18,946 | ||||||||||
Commercial
paper | i — | i 8,894 | i — | i 8,894 | i 8,894 | ||||||||||
Borrowings | i — | i 2,283 | i — | i 2,283 | i 2,283 | ||||||||||
Long-term
debt | i — | i 28,365 | i — | i 28,365 | i 27,820 | ||||||||||
Total | $ | i — | $ | i 322,198 | $ | i — | $ | i 322,198 | $ | i 322,577 | |||||
(a) | Does
not include the leasing portfolio. |
Summary of financial instruments | |||||||||||||||
(in millions) | Level 1 | Level
2 | Level 3 | Total estimated fair value | Carrying amount | ||||||||||
Assets: | |||||||||||||||
Interest-bearing
deposits with the Federal Reserve and other central banks | $ | i — | $ | i 67,988 | $ | i — | $ | i 67,988 | $ | i 67,988 | |||||
Interest-bearing
deposits with banks | i — | i 14,168 | i — | i 14,168 | i 14,148 | ||||||||||
Federal
funds sold and securities purchased under resale agreements | i — | i 46,795 | i — | i 46,795 | i 46,795 | ||||||||||
Securities
held-to-maturity | i 5,512 | i 27,790 | i — | i 33,302 | i 33,982 | ||||||||||
Loans
(a) | i — | i 55,142 | i — | i 55,142 | i 55,161 | ||||||||||
Other
financial assets | i 5,864 | i 1,383 | i — | i 7,247 | i 7,247 | ||||||||||
Total | $ | i 11,376 | $ | i 213,266 | $ | i — | $ | i 224,642 | $ | i 225,321 | |||||
Liabilities: | |||||||||||||||
Noninterest-bearing
deposits | $ | i — | $ | i 70,783 | $ | i — | $ | i 70,783 | $ | i 70,783 | |||||
Interest-bearing
deposits | i — | i 165,914 | i — | i 165,914 | i 167,995 | ||||||||||
Federal
funds purchased and securities sold under repurchase agreements | i — | i 14,243 | i — | i 14,243 | i 14,243 | ||||||||||
Payables
to customers and broker-dealers | i — | i 19,731 | i — | i 19,731 | i 19,731 | ||||||||||
Commercial
paper | i — | i 1,939 | i — | i 1,939 | i 1,939 | ||||||||||
Borrowings | i — | i 3,584 | i — | i 3,584 | i 3,584 | ||||||||||
Long-term
debt | i — | i 28,347 | i — | i 28,347 | i 28,792 | ||||||||||
Total | $ | i — | $ | i 304,541 | $ | i — | $ | i 304,541 | $ | i 307,067 | |||||
(a) | Does
not include the leasing portfolio. |
Notes to Consolidated Financial Statements (continued) |
Hedged financial instruments | Carrying amount | Notional
amount of hedge | ||||||||||
Unrealized (a) | ||||||||||||
(in millions) | Gain | (Loss) | ||||||||||
Securities
available-for-sale (b) | $ | i 18,347 | $ | i 18,283 | $ | i — | $ | ( i 311 | ) | |||
Long-term
debt | i 15,344 | i 15,050 | i — | i — | ||||||||
Securities available-for-sale (b) | $ | i 19,349 | $ | i 19,437 | $ | i 24 | $ | ( i 74 | ) | |||
Long-term
debt | i 16,147 | i 16,600 | i — | i — | ||||||||
(a) | Unrealized
gain/loss amounts reflect the fact that certain of the derivatives are cleared and settled through central clearing counterparties where cash collateral received and paid is deemed a settlement of the derivative. |
(b) | Includes foreign exchange fair value hedges with carrying values of $ i 145
million and $ i 148 million, notional amounts of $ i 145
million and $ i 147 million and an unrealized gain of less than $ i 1
million and $ i 1 million at June 30, 2019 and Dec. 31, 2018, respectively. |
Assets and liabilities of consolidated investment management funds, at fair value | ||||||
(in millions) | ||||||
Assets of consolidated investment management funds: | ||||||
Trading assets | $ | i 314 | $ | i 243 | ||
Other
assets | i 23 | i 220 | ||||
Total
assets of consolidated investment management funds | $ | i 337 | $ | i 463 | ||
Liabilities
of consolidated investment management funds: | ||||||
Other liabilities | $ | i 6 | $ | i 2 | ||
Total
liabilities of consolidated investment management funds | $ | i 6 | $ | i 2 | ||
Foreign
exchange and other trading revenue (a) | |||||||||||||||
(in millions) | 2Q19 | 1Q19 | 2Q18 | YTD19 | YTD18 | ||||||||||
Long-term
debt | $ | ( i 7 | ) | $ | ( i 5 | ) | $ | i — | $ | ( i 12 | ) | $ | i 4 | ||
(a) | The
changes in fair value are approximately offset by an economic hedge included in foreign exchange and other trading revenue. |
Notes
to Consolidated Financial Statements (continued) |
Notes to Consolidated Financial Statements (continued) |
Income statement impact of fair value and cash flow hedges | ||||||||||||||||
(in
millions) | Location of gains (losses) | 2Q19 | 1Q19 | 2Q18 | YTD19 | YTD18 | ||||||||||
Interest
rate fair value hedges of available-for-sale securities | ||||||||||||||||
Derivative | Interest revenue | $ | ( i 486 | ) | $ | ( i 383 | ) | $ | i 136 | $ | ( i 869 | ) | $ | i 533 | ||
Hedged
item | Interest revenue | i 480 | i 376 | ( i 133 | ) | i 856 | ( i 516 | ) | ||||||||
Interest
rate fair value hedges of long-term debt | ||||||||||||||||
Derivative | Interest expense | i 300 | i 185 | ( i 131 | ) | i 485 | ( i 509 | ) | ||||||||
Hedged
item | Interest expense | ( i 298 | ) | ( i 184 | ) | i 129 | ( i 482 | ) | i 506 | |||||||
Foreign
exchange fair value hedges of available-for-sale securities | ||||||||||||||||
Derivative (a) | Other revenue | ( i 5 | ) | i 6 | i — | i 1 | i — | |||||||||
Hedged
item | Other revenue | i 5 | ( i 5 | ) | i — | i — | i — | |||||||||
Cash
flow hedges of forecasted FX exposures | ||||||||||||||||
(Loss) gain reclassified from OCI into income | Other revenue | i — | i — | ( i 1 | ) | i — | i 3 | |||||||||
(Loss)
gain reclassified from OCI into income | Staff expense | i — | ( i 1 | ) | i 2 | ( i 1 | ) | i 8 | ||||||||
(Loss)
gain recognized in the consolidated income statement due to fair value and cash flow hedging relationships (b) | $ | ( i 4 | ) | $ | ( i 6 | ) | $ | i 2 | $ | ( i 10 | ) | $ | i 25 | |||
(a) | Includes
a de minimis gain in the second quarter of 2019 and a gain of $ i 1 million in the first quarter of 2019 and first six months of 2019 associated
with the amortization of the excluded component. At June 30, 2019 and Dec. 31, 2018, the remaining accumulated OCI balance associated with the excluded component was de minimis. |
(b) | Includes a (loss) on cash flow hedges of long-term debt of less than $( i 1)
million in the second quarter of 2019, first quarter of 2019 and first six months of 2019. |
Impact
of derivative instruments used in net investment hedging relationships in the income statement | ||||||||||||||||||||||||||||||||
(in millions) | Gain or (loss) recognized in accumulated OCI on derivatives | Gain or (loss) reclassified from accumulated OCI into income | ||||||||||||||||||||||||||||||
Derivatives
in net investment hedging relationships | Location of gain or (loss) reclassified from accumulated OCI into income | |||||||||||||||||||||||||||||||
2Q19 | 1Q19 | 2Q18 | YTD19 | YTD18 | 2Q19 | 1Q19 | 2Q18 | YTD19 | YTD18 | |||||||||||||||||||||||
FX
contracts | $ | i 76 | $ | ( i 6 | ) | $ | i 429 | $ | i 70 | $ | i 271 | Net interest revenue | $ | i — | $ | i — | $ | i — | $ | i — | $ | i — | ||||||||||
Hedged items in fair value hedging relationships | Carrying amount of hedged asset or liability | Hedge accounting basis adjustment increase
(decrease) (a) | |||||||||||
(in millions) | |||||||||||||
Available-for-sale securities (b) | $ | i 18,202 | $ | i 19,201 | $ | i 692 | $ | ( i 125 | ) | ||||
Long-term
debt | $ | i 14,344 | $ | i 16,147 | $ | i 72 | $ | ( i 453 | ) | ||||
(a) | Includes
$ i 38 million and $- million of basis adjustment decreases on discontinued hedges associated with available-for-sale securities at June 30, 2019 and
Dec. 31, 2018, respectively, and $ i 242 million and $ i 284
million of basis adjustment decreases on discontinued hedges associated with long-term debt at June 30, 2019 and Dec. 31, 2018, respectively. |
(b) | Excludes hedged items where only foreign currency risk is the designated hedged risk, as the basis adjustments related to foreign currency hedges will not reverse through the consolidated income statement in future periods. The carrying amount excluded for available-for-sale securities was $ i 145
million at June 30, 2019 and $ i 148 million
at Dec. 31, 2018. |
Notes to Consolidated Financial Statements (continued) |
Impact
of derivative instruments on the balance sheet | Notional value | Asset derivatives fair value | Liability derivatives fair value | |||||||||||||||||
(in millions) | ||||||||||||||||||||
Derivatives designated as hedging instruments: (a)(b) | ||||||||||||||||||||
Interest
rate contracts | $ | i 33,188 | $ | i 35,890 | $ | i — | $ | i 23 | $ | i 311 | $ | i 74 | ||||||||
Foreign
exchange contracts | i 7,693 | i 6,330 | i 156 | i 266 | i 24 | i 14 | ||||||||||||||
Total
derivatives designated as hedging instruments | $ | i 156 | $ | i 289 | $ | i 335 | $ | i 88 | ||||||||||||
Derivatives
not designated as hedging instruments: (b)(c) | ||||||||||||||||||||
Interest rate contracts | $ | i 302,029 | $ | i 248,534 | $ | i 4,268 | $ | i 3,590 | $ | i 3,625 | $ | i 3,116 | ||||||||
Foreign
exchange contracts | i 850,236 | i 831,730 | i 4,083 | i 4,807 | i 3,952 | i 5,215 | ||||||||||||||
Equity
contracts | i 1,573 | i 927 | i 46 | i 68 | i 4 | i 118 | ||||||||||||||
Credit
contracts | i 165 | i 150 | i — | i — | i 3 | i 1 | ||||||||||||||
Total
derivatives not designated as hedging instruments | $ | i 8,397 | $ | i 8,465 | $ | i 7,584 | $ | i 8,450 | ||||||||||||
Total
derivatives fair value (d) | $ | i 8,553 | $ | i 8,754 | $ | i 7,919 | $ | i 8,538 | ||||||||||||
Effect
of master netting agreements (e) | ( i 5,568 | ) | ( i 5,939 | ) | ( i 5,297 | ) | ( i 6,170 | ) | ||||||||||||
Fair
value after effect of master netting agreements | $ | i 2,985 | $ | i 2,815 | $ | i 2,622 | $ | i 2,368 | ||||||||||||
(a) | The
fair value of asset derivatives and liability derivatives designated as hedging instruments is recorded as other assets and other liabilities, respectively, on the consolidated balance sheet. |
(b) | For derivative transactions settled at clearing organizations, cash collateral exchanged is deemed a settlement of the derivative each day. The settlement reduces the gross fair value of derivative assets and liabilities and a corresponding decrease in the effect of master netting agreements, with no impact to the consolidated balance sheet. |
(c) | The
fair value of asset derivatives and liability derivatives not designated as hedging instruments is recorded as trading assets and trading liabilities, respectively, on the consolidated balance sheet. |
(d) | Fair values are on a gross basis, before consideration of master netting agreements, as required by ASC 815, Derivatives and Hedging. |
(e) | Effect
of master netting agreements includes cash collateral received and paid of $ i 836 million and $ i 565
million, respectively, at June 30, 2019, and $ i 809 million and $ i 1,040
million, respectively, at Dec. 31, 2018. |
Foreign exchange and other trading revenue | |||||||||||||||
(in millions) | 2Q19 | 1Q19 | 2Q18 | YTD19 | YTD18 | ||||||||||
Foreign
exchange | $ | i 150 | $ | i 160 | $ | i 171 | $ | i 310 | $ | i 354 | |||||
Other
trading revenue | i 16 | i 10 | i 16 | i 26 | i 42 | ||||||||||
Total
foreign exchange and other trading revenue | $ | i 166 | $ | i 170 | $ | i 187 | $ | i 336 | $ | i 396 | |||||
Notes to Consolidated Financial Statements (continued) |
(in
millions) | ||||||
Aggregate fair value of OTC derivatives in net liability positions (a) | $ | i 3,296 | $ | i 2,877 | ||
Collateral
posted | $ | i 3,443 | $ | i 2,801 | ||
(a) | Before
consideration of cash collateral. |
Potential
close-out exposures (fair value) (a) | ||||||
(in millions) | ||||||
If The Bank of New York Mellon’s rating changed to: (b) | ||||||
A3/A- | $ | i 8 | $ | i 15 | ||
Baa2/BBB | $ | i 358 | $ | i 116 | ||
Ba1/BB+ | $ | i 1,493 | $ | i 1,041 | ||
(a) | The
amounts represent potential total close-out values if The Bank of New York Mellon’s long-term issuer rating were to immediately drop to the indicated levels, and do not reflect collateral posted. |
(b) | Represents rating by Moody’s/S&P. |
Notes to Consolidated Financial Statements (continued) |
Offsetting of derivative
assets and financial assets at June 30, 2019 | |||||||||||||||||||
Gross assets recognized | Gross amounts offset in the balance sheet | Net
assets recognized in the balance sheet | Gross amounts not offset in the balance sheet | ||||||||||||||||
(in millions) | (a) | Financial instruments | Cash collateral received | Net amount | |||||||||||||||
Derivatives
subject to netting arrangements: | |||||||||||||||||||
Interest rate contracts | $ | i 2,963 | $ | i 2,347 | $ | i 616 | $ | i 181 | $ | i — | $ | i 435 | |||||||
Foreign
exchange contracts | i 3,729 | i 3,213 | i 516 | i 10 | i — | i 506 | |||||||||||||
Equity
and other contracts | i 33 | i 8 | i 25 | i — | i — | i 25 | |||||||||||||
Total
derivatives subject to netting arrangements | i 6,725 | i 5,568 | i 1,157 | i 191 | i — | i 966 | |||||||||||||
Total
derivatives not subject to netting arrangements | i 1,828 | — | i 1,828 | — | — | i 1,828 | |||||||||||||
Total
derivatives | i 8,553 | i 5,568 | i 2,985 | i 191 | i — | i 2,794 | |||||||||||||
Reverse
repurchase agreements | i 127,691 | i 78,433 | (b) | i 49,258 | i 49,245 | i — | i 13 | ||||||||||||
Securities
borrowing | i 11,943 | — | i 11,943 | i 11,618 | — | i 325 | |||||||||||||
Total | $ | i 148,187 | $ | i 84,001 | $ | i 64,186 | $ | i 61,054 | $ | i — | $ | i 3,132 | |||||||
(a) | Includes
the effect of netting agreements and net cash collateral received. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions. |
(b) | Offsetting of reverse repurchase agreements relates to our involvement in the FICC, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system. |
Offsetting
of derivative assets and financial assets at Dec. 31, 2018 | |||||||||||||||||||
Gross assets recognized | Gross amounts offset in the balance sheet | Net
assets recognized in the balance sheet | Gross amounts not offset in the balance sheet | ||||||||||||||||
(in millions) | (a) | Financial instruments | Cash collateral received | Net amount | |||||||||||||||
Derivatives
subject to netting arrangements: | |||||||||||||||||||
Interest rate contracts | $ | i 2,654 | $ | i 2,202 | $ | i 452 | $ | i 133 | $ | i — | $ | i 319 | |||||||
Foreign
exchange contracts | i 4,409 | i 3,724 | i 685 | i 70 | i — | i 615 | |||||||||||||
Equity
and other contracts | i 38 | i 13 | i 25 | i — | i — | i 25 | |||||||||||||
Total
derivatives subject to netting arrangements | i 7,101 | i 5,939 | i 1,162 | i 203 | i — | i 959 | |||||||||||||
Total
derivatives not subject to netting arrangements | i 1,653 | — | i 1,653 | — | — | i 1,653 | |||||||||||||
Total
derivatives | i 8,754 | i 5,939 | i 2,815 | i 203 | i — | i 2,612 | |||||||||||||
Reverse
repurchase agreements | i 112,245 | i 76,040 | (b) | i 36,205 | i 36,205 | i — | i — | ||||||||||||
Securities
borrowing | i 10,588 | — | i 10,588 | i 10,286 | — | i 302 | |||||||||||||
Total | $ | i 131,587 | $ | i 81,979 | $ | i 49,608 | $ | i 46,694 | $ | i — | $ | i 2,914 | |||||||
(a) | Includes
the effect of netting agreements and net cash collateral received. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions. |
(b) | Offsetting of reverse repurchase agreements relates to our involvement in the FICC, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system. |
Notes to Consolidated Financial Statements (continued) |
Offsetting
of derivative liabilities and financial liabilities at June 30, 2019 | Net liabilities recognized in the balance sheet | ||||||||||||||||||
Gross liabilities recognized | Gross amounts offset in the balance sheet | Gross
amounts not offset in the balance sheet | |||||||||||||||||
(in millions) | (a) | Financial instruments | Cash collateral pledged | Net amount | |||||||||||||||
Derivatives subject to netting arrangements: | |||||||||||||||||||
Interest
rate contracts | $ | i 3,885 | $ | i 2,637 | $ | i 1,248 | $ | i 1,187 | $ | i — | $ | i 61 | |||||||
Foreign
exchange contracts | i 3,475 | i 2,660 | i 815 | i 139 | i — | i 676 | |||||||||||||
Equity
and other contracts | i 4 | i — | i 4 | i — | i — | i 4 | |||||||||||||
Total
derivatives subject to netting arrangements | i 7,364 | i 5,297 | i 2,067 | i 1,326 | i — | i 741 | |||||||||||||
Total
derivatives not subject to netting arrangements | i 555 | — | i 555 | — | — | i 555 | |||||||||||||
Total
derivatives | i 7,919 | i 5,297 | i 2,622 | i 1,326 | i — | i 1,296 | |||||||||||||
Repurchase
agreements | i 87,308 | i 78,433 | (b) | i 8,875 | i 8,875 | i — | i — | ||||||||||||
Securities
lending | i 871 | — | i 871 | i 840 | — | i 31 | |||||||||||||
Total | $ | i 96,098 | $ | i 83,730 | $ | i 12,368 | $ | i 11,041 | $ | i — | $ | i 1,327 | |||||||
(a) | Includes
the effect of netting agreements and net cash collateral paid. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions. |
(b) | Offsetting of repurchase agreements relates to our involvement in the FICC, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system. |
Offsetting
of derivative liabilities and financial liabilities at Dec. 31, 2018 | Net liabilities recognized in the balance sheet | ||||||||||||||||||
Gross liabilities recognized | Gross
amounts offset in the balance sheet | Gross amounts not offset in the balance sheet | |||||||||||||||||
(in millions) | (a) | Financial instruments | Cash collateral pledged | Net amount | |||||||||||||||
Derivatives
subject to netting arrangements: | |||||||||||||||||||
Interest rate contracts | $ | i 3,144 | $ | i 2,508 | $ | i 636 | $ | i 547 | $ | i — | $ | i 89 | |||||||
Foreign
exchange contracts | i 4,747 | i 3,626 | i 1,121 | i 187 | i — | i 934 | |||||||||||||
Equity
and other contracts | i 75 | i 36 | i 39 | i 37 | i — | i 2 | |||||||||||||
Total
derivatives subject to netting arrangements | i 7,966 | i 6,170 | i 1,796 | i 771 | i — | i 1,025 | |||||||||||||
Total
derivatives not subject to netting arrangements | i 572 | — | i 572 | — | — | i 572 | |||||||||||||
Total
derivatives | i 8,538 | i 6,170 | i 2,368 | i 771 | i — | i 1,597 | |||||||||||||
Repurchase
agreements | i 84,665 | i 76,040 | (b) | i 8,625 | i 8,625 | i — | i — | ||||||||||||
Securities
lending | i 997 | — | i 997 | i 937 | — | i 60 | |||||||||||||
Total | $ | i 94,200 | $ | i 82,210 | $ | i 11,990 | $ | i 10,333 | $ | i — | $ | i 1,657 | |||||||
(a) | Includes
the effect of netting agreements and net cash collateral paid. The offset related to the OTC derivatives was allocated to the various types of derivatives based on the net positions. |
(b) | Offsetting of repurchase agreements relates to our involvement in the FICC, where we settle government securities transactions on a net basis for payment and delivery through the Fedwire system. |
Notes to Consolidated Financial Statements (continued) |
Repurchase
agreements and securities lending transactions accounted for as secured borrowings | |||||||||||||||||||||||||
Remaining contractual maturity | Total | Remaining
contractual maturity | Total | ||||||||||||||||||||||
(in millions) | Overnight and continuous | Up to 30 days | 30 days or more | Overnight and continuous | Up
to 30 days | 30 days or more | |||||||||||||||||||
Repurchase agreements: | |||||||||||||||||||||||||
U.S.
Treasury | $ | i 80,367 | $ | i — | $ | i — | $ | i 80,367 | $ | i 76,822 | $ | i — | $ | i — | $ | i 76,822 | |||||||||
U.S.
government agencies | i 826 | i — | i — | i 826 | i 759 | i — | i — | i 759 | |||||||||||||||||
Agency
RMBS | i 2,205 | i — | i — | i 2,205 | i 3,184 | i — | i 4 | i 3,188 | |||||||||||||||||
Corporate
bonds | i 335 | i — | i 1,485 | i 1,820 | i 416 | i — | i 1,413 | i 1,829 | |||||||||||||||||
Other
debt securities | i 284 | i — | i 931 | i 1,215 | i 271 | i — | i 1,106 | i 1,377 | |||||||||||||||||
Equity
securities | i 241 | i — | i 634 | i 875 | i 163 | i — | i 527 | i 690 | |||||||||||||||||
Total
| $ | i 84,258 | $ | i — | $ | i 3,050 | $ | i 87,308 | $ | i 81,615 | $ | i — | $ | i 3,050 | $ | i 84,665 | |||||||||
Securities
lending: | |||||||||||||||||||||||||
U.S. government agencies | $ | i 30 | $ | i — | $ | i — | $ | i 30 | $ | i 7 | $ | i — | $ | i — | $ | i 7 | |||||||||
Other
debt securities | i 200 | i — | i — | i 200 | i 294 | i — | i — | i 294 | |||||||||||||||||
Equity
securities | i 641 | i — | i — | i 641 | i 696 | i — | i — | i 696 | |||||||||||||||||
Total
| $ | i 871 | $ | i — | $ | i — | $ | i 871 | $ | i 997 | $ | i — | $ | i — | $ | i 997 | |||||||||
Total
borrowings | $ | i 85,129 | $ | i — | $ | i 3,050 | $ | i 88,179 | $ | i 82,612 | $ | i — | $ | i 3,050 | $ | i 85,662 | |||||||||
Off-balance
sheet credit risks | ||||||
(in millions) | ||||||
Lending commitments | $ | i 51,191 | $ | i 50,631 | ||
Standby
letters of credit (a) | i 2,465 | i 2,817 | ||||
Commercial
letters of credit | i 60 | i 165 | ||||
Securities
lending indemnifications (b)(c) | i 406,180 | i 401,504 | ||||
(a) | Net
of participations totaling $ i 162 million at June 30, 2019 and $ i 163
million at Dec. 31, 2018. |
(b) | Excludes the indemnification for securities for which BNY Mellon acts as an agent on behalf of CIBC Mellon clients, which totaled $ i 62
billion at June 30, 2019 and $ i 56 billion at Dec. 31, 2018. |
(c) | Includes
cash collateral, invested in indemnified repurchase agreements, held by us as securities lending agent of $ i 45 billion at June 30, 2019 and $ i 35
billion at Dec. 31, 2018. |
Notes to Consolidated Financial Statements (continued) |
Standby letters of credit | ||||
Investment grade | i 90 | % | i 89 | % |
Non-investment
grade | i 10 | % | i 11 | % |
Notes to Consolidated Financial Statements (continued) |
Financial
institutions portfolio exposure (in billions) | |||||||||
Loans | Unfunded commitments | Total exposure | |||||||
Securities industry | $ | i 2.5 | $ | i 24.3 | $ | i 26.8 | |||
Asset
managers | i 1.4 | i 6.7 | i 8.1 | ||||||
Banks | i 6.5 | i 1.0 | i 7.5 | ||||||
Insurance | i 0.1 | i 2.4 | i 2.5 | ||||||
Government | i 0.1 | i 0.3 | i 0.4 | ||||||
Other | i 0.9 | i 0.9 | i 1.8 | ||||||
Total | $ | i 11.5 | $ | i 35.6 | $ | i 47.1 | |||
Commercial
portfolio exposure (in billions) | |||||||||
Loans | Unfunded commitments | Total exposure | |||||||
Manufacturing | $ | i 0.7 | $ | i 4.7 | $ | i 5.4 | |||
Services
and other | i 0.7 | i 3.9 | i 4.6 | ||||||
Energy
and utilities | i 0.3 | i 3.8 | i 4.1 | ||||||
Media
and telecom | i — | i 1.2 | i 1.2 | ||||||
Total | $ | i 1.7 | $ | i 13.6 | $ | i 15.3 | |||
Notes
to Consolidated Financial Statements (continued) |
Notes to Consolidated Financial Statements (continued) |
Notes to Consolidated Financial Statements (continued) |
• | Revenue
amounts reflect fee and other revenue generated by each business. Fee and other revenue transferred between businesses under revenue transfer agreements is included within other revenue in each business. |
• | Revenues and expenses associated with specific client bases are included in those businesses. For example, foreign exchange activity associated with clients using custody products is included in Investment Services. |
• | Net interest revenue is allocated to businesses based on the yields on the assets and liabilities
generated by each business. We employ a funds transfer pricing system that matches funds with the specific assets and liabilities of each business based on their interest sensitivity and maturity characteristics. |
• | The provision for credit losses associated with the respective credit portfolios is reflected in each business segment. |
• | Incentives expense related to restricted stock is allocated to the businesses. |
• | Support
and other indirect expenses are allocated to businesses based on internally developed methodologies. |
Notes to Consolidated Financial Statements (continued) |
• | Recurring
FDIC expense is allocated to the businesses based on average deposits generated within each business. |
• | Litigation expense is generally recorded in the business in which the charge occurs. |
• | Management of the securities portfolio is a shared service contained in the Other segment. As a result, gains and losses associated with the valuation of the securities portfolio are included in the Other segment. |
• | Client
deposits serve as the primary funding source for our securities portfolio. We typically |
• | Balance sheet assets and liabilities and their related income or expense are specifically assigned to each business. Businesses with a net liability position have been allocated assets. |
• | Goodwill
and intangible assets are reflected within individual businesses. |
For
the quarter ended June 30, 2019 | Investment Services | Investment Management | Other | Consolidated | ||||||||||||
(dollars
in millions) | ||||||||||||||||
Total fee and other revenue | $ | i 2,227 | $ | i 850 | (a) | $ | i 41 | $ | i 3,118 | (a) | ||||||
Net
interest revenue (expense) | i 775 | i 67 | ( i 40 | ) | i 802 | |||||||||||
Total
revenue | i 3,002 | i 917 | (a) | i 1 | i 3,920 | (a) | ||||||||||
Provision
for credit losses | ( i 4 | ) | ( i 2 | ) | ( i 2 | ) | ( i 8 | ) | ||||||||
Noninterest
expense | i 1,954 | i 654 | i 39 | i 2,647 | ||||||||||||
Income
(loss) before taxes | $ | i 1,052 | $ | i 265 | (a) | $ | ( i 36 | ) | $ | i 1,281 | (a) | |||||
Pre-tax
operating margin (b) | i 35 | % | i 29 | % | N/M | i 33 | % | |||||||||
Average
assets | $ | i 264,639 | $ | i 30,709 | $ | i 47,036 | $ | i 342,384 | ||||||||
(a) | Both
total fee and other revenue and total revenue include net income from consolidated investment management funds of $ i 6 million, representing $ i 10
million of income and noncontrolling interests of $ i 4 million. Income before taxes is net of noncontrolling interests of $ i 4
million. |
(b) | Income before taxes divided by total revenue. |
For
the quarter ended March 31, 2019 | Investment Services | Investment Management | Other | Consolidated | ||||||||||||
(dollars
in millions) | ||||||||||||||||
Total fee and other revenue | $ | i 2,154 | $ | i 864 | (a) | $ | i 30 | $ | i 3,048 | (a) | ||||||
Net
interest revenue (expense) | i 796 | i 75 | ( i 30 | ) | i 841 | |||||||||||
Total
revenue | i 2,950 | i 939 | (a) | i — | i 3,889 | (a) | ||||||||||
Provision
for credit losses | i 8 | i 1 | ( i 2 | ) | i 7 | |||||||||||
Noninterest
expense | i 1,969 | i 669 | i 61 | i 2,699 | ||||||||||||
Income
(loss) before taxes | $ | i 973 | $ | i 269 | (a) | $ | ( i 59 | ) | $ | i 1,183 | (a) | |||||
Pre-tax
operating margin (b) | i 33 | % | i 29 | % | N/M | i 31 | % | |||||||||
Average
assets | $ | i 255,891 | $ | i 31,857 | $ | i 48,417 | $ | i 336,165 | ||||||||
(a) | Both
total fee and other revenue and total revenue include net income from consolidated investment management funds of $ i 16 million, representing $ i 26
million of income and noncontrolling interests of $ i 10 million. Income before taxes is net of noncontrolling interests of $ i 10
million. |
(b) | Income before taxes divided by total revenue. |
Notes
to Consolidated Financial Statements (continued) |
For the quarter ended June 30, 2018 | Investment Services | Investment Management | Other | Consolidated | ||||||||||||
(dollars
in millions) | ||||||||||||||||
Total fee and other revenue | $ | i 2,233 | $ | i 941 | (a) | $ | i 41 | $ | i 3,215 | (a) | ||||||
Net
interest revenue (expense) | i 874 | i 77 | ( i 35 | ) | i 916 | |||||||||||
Total
revenue | i 3,107 | i 1,018 | (a) | i 6 | i 4,131 | (a) | ||||||||||
Provision
for credit losses | i 1 | i 2 | ( i 6 | ) | ( i 3 | ) | ||||||||||
Noninterest
expense | i 1,967 | i 697 | i 81 | i 2,745 | (b) | |||||||||||
Income
(loss) before taxes | $ | i 1,139 | $ | i 319 | (a) | $ | ( i 69 | ) | $ | i 1,389 | (a)(b) | |||||
Pre-tax
operating margin (c) | i 37 | % | i 31 | % | N/M | i 34 | % | |||||||||
Average
assets | $ | i 264,387 | $ | i 31,504 | $ | i 50,437 | $ | i 346,328 | ||||||||
(a) | Both
total fee and other revenue and total revenue include net income from consolidated investment management funds of $ i 5 million, representing $ i 12
million of income and noncontrolling interests of $ i 7 million. Income before taxes is net of noncontrolling interests of $ i 7
million. |
(b) | Noninterest expense includes a loss attributable to noncontrolling interests of $ i 2 million related to other consolidated subsidiaries. |
(c) | Income
before taxes divided by total revenue. |
For the six months ended June 30, 2019 | Investment Services | Investment Management | Other | Consolidated | ||||||||||||
(dollars
in millions) | ||||||||||||||||
Total fee and other revenue | $ | i 4,381 | $ | i 1,714 | (a) | $ | i 71 | $ | i 6,166 | (a) | ||||||
Net
interest revenue (expense) | i 1,571 | i 142 | ( i 70 | ) | i 1,643 | |||||||||||
Total
revenue | i 5,952 | i 1,856 | (a) | i 1 | i 7,809 | (a) | ||||||||||
Provision
for credit losses | i 4 | ( i 1 | ) | ( i 4 | ) | ( i 1 | ) | |||||||||
Noninterest
expense | i 3,923 | i 1,323 | i 100 | i 5,346 | ||||||||||||
Income
(loss) before taxes | $ | i 2,025 | $ | i 534 | (a) | $ | ( i 95 | ) | $ | i 2,464 | (a) | |||||
Pre-tax
operating margin (b) | i 34 | % | i 29 | % | N/M | i 32 | % | |||||||||
Average
assets | $ | i 260,290 | $ | i 30,926 | $ | i 48,076 | $ | i 339,292 | ||||||||
(a) | Both
total fee and other revenue and total revenue include net income from consolidated investment management funds of $ i 22 million, representing $ i 36
million of income and noncontrolling interests of $ i 14 million. Income before taxes is net of noncontrolling interests of $ i 14
million. |
(b) | Income before taxes divided by total revenue. |
For
the six months ended June 30, 2018 | Investment Services | Investment Management | Other | Consolidated | ||||||||||||
(dollars
in millions) | ||||||||||||||||
Total fee and other revenue | $ | i 4,483 | $ | i 1,953 | (a) | $ | i 49 | $ | i 6,485 | (a) | ||||||
Net
interest revenue (expense) | i 1,718 | i 153 | ( i 36 | ) | i 1,835 | |||||||||||
Total
revenue | i 6,201 | i 2,106 | (a) | i 13 | i 8,320 | (a) | ||||||||||
Provision
for credit losses | ( i 6 | ) | i 4 | ( i 6 | ) | ( i 8 | ) | |||||||||
Noninterest
expense | i 3,916 | i 1,402 | i 168 | i 5,486 | ||||||||||||
Income
(loss) before taxes | $ | i 2,291 | $ | i 700 | (a) | $ | ( i 149 | ) | $ | i 2,842 | (a) | |||||
Pre-tax
operating margin (b) | i 37 | % | i 33 | % | N/M | i 34 | % | |||||||||
Average
assets | $ | i 271,203 | $ | i 31,732 | $ | i 49,284 | $ | i 352,219 | ||||||||
(a) | Both
total fee and other revenue and total revenue include net income from consolidated investment management funds of $ i 5 million, representing $ i 1
million of income and a loss attributable to noncontrolling interests of $ i 4 million. Income before taxes is net of a loss attributable to noncontrolling interests of $ i 4
million. |
(b) | Income before taxes divided by total revenue. |
Notes
to Consolidated Financial Statements (continued) |
Non-cash investing and financing transactions | Six months ended June 30, | ||||||
(in millions) | 2019 | 2018 | |||||
Transfers
from loans to other assets for other real estate owned | $ | i — | $ | i 2 | |||
Change
in assets of consolidated investment management funds | i 76 | i 303 | |||||
Change
in liabilities of consolidated investment management funds | i 4 | i 1 | |||||
Change
in nonredeemable noncontrolling interests of consolidated investment management funds | i 65 | i 264 | |||||
Securities
purchased not settled | i 1,113 | i 400 | |||||
Securities
matured not settled | i 10 | i 25 | |||||
Available-for-sale
securities transferred to trading assets | i — | i 963 | |||||
Held-to-maturity
securities transferred to available-for-sale | i — | i 1,087 | |||||
Premises
and equipment/capitalized software funded by financing lease obligations | i 14 | i 15 | |||||
Premises
and equipment/operating lease obligations | i 1,272 | (a) | i — | ||||
(a) | Includes
$ i 1,244 million related to the adoption of ASU 2016-02, Leases, and $ i 28
million related to new or modified leases. |
Item 4. Controls and Procedures |
Forward-looking
Statements |
• | a communications or technology disruption or failure that results in a loss of information, delays our ability to access information or impacts
our ability to provide services to our clients may materially adversely affect our business, financial condition and results of operations; |
• | a cybersecurity incident, or a failure to protect our computer systems, networks and information and our clients’ information against cybersecurity threats, could result in the theft, loss, unauthorized access to, disclosure, use or alteration of information, system or network failures, or loss of access to information; any |
• | our
business may be materially adversely affected by operational risk; |
• | our risk management framework may not be effective in mitigating risk and reducing the potential for losses; |
• | we are subject to extensive government rulemaking, regulation and supervision; these rules and regulations have, and in the future may, compel us to change how we manage our businesses, which could have a material adverse effect on our business, financial condition and results of operations; in addition, these rules and regulations have increased
our compliance and operational risk and costs; |
• | regulatory or enforcement actions or litigation could materially adversely affect our results of operations or harm our businesses or reputation; |
• | our businesses may be negatively affected by adverse events, publicity, government scrutiny or other reputational harm; |
• | failure
to satisfy regulatory standards, including “well capitalized” and “well managed” status or capital adequacy and liquidity rules more generally, could result in limitations on our activities and adversely affect our business and financial condition; |
• | a failure or circumvention of our controls and procedures could have a material adverse effect on our business, reputation, results of operations and financial condition; |
• | the application of our Title I preferred resolution strategy or resolution under the
Title II orderly liquidation authority could adversely affect the Parent’s liquidity and financial condition and the Parent’s security holders; |
• | if our resolution plan is determined not to be credible or not to facilitate an orderly resolution under the U.S. Bankruptcy Code, our business, reputation, results of operations and financial condition could be materially negatively impacted; |
• | acts of terrorism, impacts from climate change, natural disasters, pandemics, global conflicts and other geopolitical events may
have a negative impact on our business and operations; |
• | we are dependent on fee-based business for a substantial majority of our revenue and our fee-based revenues could be adversely affected by slowing in market activity, weak financial markets, underperformance and/or negative |
Forward-looking Statements (continued) |
• | weakness and volatility in financial markets and the economy generally may materially adversely affect our business, results of operations and financial condition; |
• | transitions away from, or changes in the calculation of, LIBOR and other benchmark rates could adversely impact our business and results of operations; |
• | the
United Kingdom’s referendum decision to leave the EU has had and may continue to have negative effects on global economic conditions, global financial markets, and our business and results of operations; |
• | changes in interest rates and yield curves could have a material adverse effect on our profitability; |
• | we may experience write-downs of securities that we own and other losses related to volatile and illiquid market conditions, reducing our earnings and impacting our financial condition; |
• | our
FX revenue may be adversely affected by decreases in market volatility and the cross-border investment activity of our clients; |
• | the failure or perceived weakness of any of our significant counterparties, many of whom are major financial institutions and sovereign entities, and our assumption of credit and counterparty risk, could expose us to loss and adversely affect our business; |
• | our business, financial condition and results of operations could be adversely affected if we do not effectively manage our liquidity;
|
• | we could incur losses if our allowance for credit losses, including loan and lending-related commitments reserves, is inadequate; |
• | any material reduction in our credit ratings or the credit ratings of our principal bank subsidiaries, The Bank of New York Mellon or BNY Mellon, N.A., could increase the cost of funding and borrowing to us and our rated subsidiaries
and have a material adverse effect on our results of operations and financial condition and on the value of the securities we issue; |
• | new lines of business, new products and services or transformational or strategic project initiatives may subject us to additional risks, and the failure to implement these initiatives could affect our results of operations; |
• | we are subject to competition in all aspects of our business, which could negatively affect our ability to maintain
or increase our profitability; |
• | our business may be adversely affected if we are unable to attract and retain employees; |
• | our strategic transactions present risks and uncertainties and could have an adverse effect on our business, results of operations and financial condition; |
• | tax law changes
or challenges to our tax positions with respect to historical transactions may adversely affect our net income, effective tax rate and our overall results of operations and financial condition; |
• | our ability to return capital to shareholders is subject to the discretion of our Board of Directors and may be limited by U.S. banking laws and regulations, including those governing capital and the approval of our capital plan, applicable provisions of Delaware law or our failure to pay full and timely dividends on our preferred stock; |
• | the
Parent is a non-operating holding company, and as a result, is dependent on dividends from its subsidiaries and extensions of credit from its IHC to meet its obligations, including with respect to its securities, and to provide funds for share repurchases and payment of dividends to its stockholders; and |
• | changes in accounting standards governing the preparation of our financial statements and future events could have a material impact on our reported financial condition, results of operations, cash flows and other financial data. |
Part II - Other Information |
(c) | The following table discloses repurchases of our common stock made in the second quarter of 2019. All of the
Company’s preferred stock outstanding has preference over the Company’s common stock with respect to the payment of dividends. |
Share
repurchases - second quarter of 2019 | Total shares repurchased as part of a publicly announced plan or program | Maximum approximate dollar value of shares that may yet be purchased under the publicly announced plans or programs at June
30, 2019 | ||||||||||||
(dollars in millions, except per share information; common shares in thousands) | Total shares repurchased | Average price per share | ||||||||||||
April 2019 | 10,531 | $ | 48.69 | 10,531 | $ | 243 | ||||||||
May
2019 | 4,441 | 49.99 | 4,441 | 21 | ||||||||||
June 2019 | 361 | 44.46 | 361 | 5 | ||||||||||
Second
quarter of 2019 (a) | 15,333 | $ | 48.97 | 15,333 | $ | 3,940 | (b) | |||||||
(a) | Includes
59 thousand shares repurchased at a purchase price of $3 million from employees, primarily in connection with the employees’ payment of taxes upon the vesting of restricted stock. The average price per share of open market purchases was $48.96. |
(b) | Represents the maximum value of the shares authorized to be repurchased through the second quarter of 2020, including employee benefit plan repurchases. |
Exhibit No. | Description | Method of Filing | ||
3.1 | Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 000-52710) as filed with the Commission on July 2, 2007, and incorporated herein by reference. | |||
3.2 | Previously filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 000-52710) as filed with the Commission on July 5, 2007, and incorporated herein by reference. | |||
3.3 | Previously filed as Exhibit 3.2 to the Company’s Registration Statement on Form 8A12B (File No. 001-35651) as filed with the Commission on Sept. 14, 2012, and incorporated herein by reference. | |||
3.4 | Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-35651) as filed with the Commission on May 16, 2013, and incorporated herein by reference. | |||
3.5 | Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-35651) as filed with the Commission on April 28, 2015, and incorporated herein by reference. | |||
3.6 | Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-35651) as filed with the Commission on Aug. 1, 2016, and incorporated herein by reference. | |||
3.7 | Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-35651) as filed with the Commission on April 10, 2019, and incorporated herein by reference. | |||
3.8 | Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-35651) as filed with the Commission on Feb. 13, 2018, and incorporated herein by reference. | |||
Index
to Exhibits (continued) |
Exhibit No. | Description | Method of Filing | ||
4.1 | None
of the instruments defining the rights of holders of long-term debt of the Parent or any of its subsidiaries represented long-term debt in excess of 10% of the total assets of the Company as of June 30, 2019. The Company hereby agrees to furnish to the Commission, upon request, a copy of any such instrument. | N/A | ||
10.1 | * | |||
10.2 | * | |||
31.1 | ||||
31.2 | ||||
32.1 | Furnished herewith. | |||
32.2 | Furnished herewith. | |||
101.INS | Inline
XBRL Instance Document. | The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. | ||
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |||
101.CAL | Inline XBRL Taxonomy Extension Calculation
Linkbase Document. | |||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||
104 | The cover page of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, formatted in inline XBRL. | The
cover page interactive data file does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. | ||
THE
BANK OF NEW YORK MELLON CORPORATION | |
(Registrant) | |
Date: August 7, 2019 | By: | ||
Corporate Controller | |||
(Duly
Authorized Officer and | |||
Principal Accounting Officer of | |||
| This ‘10-Q’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 9/20/26 | ||||
| 6/20/23 | ||||
| 6/20/20 | ||||
| 1/1/20 | ||||
| 12/31/19 | 10-K, 11-K, 13F-HR | |||
| 8/9/19 | 4 | |||
| Filed on: | 8/7/19 | |||
| For Period end: | 6/30/19 | 13F-HR | ||
| 6/27/19 | 8-K | |||
| 4/10/19 | 8-K, SC 13G/A | |||
| 3/31/19 | 10-Q, 13F-HR | |||
| 3/21/19 | ||||
| 3/8/19 | DEF 14A | |||
| 1/1/19 | ||||
| 12/31/18 | 10-K, 11-K, 13F-HR | |||
| 9/30/18 | 10-Q, 13F-HR | |||
| 7/12/18 | ||||
| 6/30/18 | 10-Q, 13F-HR, 13F-HR/A | |||
| 6/29/18 | ||||
| 4/18/18 | ||||
| 3/31/18 | 10-Q, 13F-HR | |||
| 2/13/18 | 4, 8-K | |||
| 1/16/18 | ||||
| 1/2/18 | ||||
| 1/1/18 | 3 | |||
| 12/31/17 | 10-K, 11-K, 13F-HR, 5 | |||
| 3/20/17 | ||||
| 12/31/16 | 10-K, 11-K, 13F-HR, 5, 8-K | |||
| 8/1/16 | 13F-HR, 8-K | |||
| 6/2/16 | ||||
| 2/4/16 | SC 13G/A | |||
| 12/17/15 | ||||
| 12/14/15 | ||||
| 4/28/15 | 4, 8-K | |||
| 3/12/15 | SC 13D | |||
| 8/22/14 | ||||
| 6/18/14 | ||||
| 5/16/13 | 8-K | |||
| 9/14/12 | 4, 424B3, 8-A12B | |||
| 7/5/07 | 4, 8-K | |||
| 7/2/07 | 4, 424B2, 424B3, 8-K, 8-K12G3, S-3ASR | |||
| List all Filings | ||||
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 2/27/23 Bank of New York Mellon Corp. 10-K 12/31/22 180:45M 2/25/22 Bank of New York Mellon Corp. 10-K 12/31/21 183:46M 2/25/21 Bank of New York Mellon Corp. 10-K 12/31/20 185:44M |