BNY Mellon Reports First Quarter Loss of $0.23 Per Common Share; EPS of $0.50 Excluding the Previously Announced Charge Related to the Disallowance of Certain Tax Credits (a).
Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of
, April 17, 2013 /PRNewswire/ —
INVESTMENT MANAGEMENT AND PERFORMANCE FEES UP 10% YEAR-OVER-YEAR
* Assets under management up 9% year-over-year
* Record net long-term inflows of $40 billion in 1Q13
ASSET SERVICING FEES UP 3% YEAR-OVER-YEAR
AS PREVIOUSLY ANNOUNCED, BOARD APPROVED A COMMON STOCK DIVIDEND
INCREASE OF 15% AND THE
tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es
To buy (something) again.
The act of buying something that one previously sold or owned.
OF UP TO $1.35 BILLION OF COMMON
: BK) today reported a first quarter net loss
applicable to common shareholders of $266 million, or $0.23 per
tr.v. di·lut·ed, di·lut·ing, di·lutes
1. To make thinner or less concentrated by adding a liquid such as water.
2. To lessen the force, strength, purity, or brilliance of, especially by admixture.
common share, which included a previously announced charge of $854
million, or $0.73 per common share, related to the U.S. Tax Court’s
tr.v. dis·al·lowed, dis·al·low·ing, dis·al·lows
1. To refuse to allow:
of certain foreign tax credits. Excluding this charge, net
income applicable to common shareholders was $588 million and earnings
per diluted common share was $0.50. This compares with income of $619
million, or $0.52 per diluted common share, in the first quarter of 2012
and income of $622 million, or $0.53 per diluted common share, in the
fourth quarter of 2012.
“We remain focused on our key priorities: investing in our
businesses to drive organic growth and sustainable shareholder value;
controlling discretionary expenses; maintaining a strong balance sheet
and returning capital to shareholders,” said
chairman and chief executive officer of BNY Mellon.
“We are pleased to report our fourteenth consecutive quarter of
net long-term asset management flows, and continued growth in investment
services fees,” added Mr. Hassell. “Investments in our
Investment Management, Global
, something of value given or pledged as security for payment of a loan. Collateral consists usually of financial instruments, such as stocks, bonds, and negotiable paper, rather than physical goods, although
Services and Global Markets
businesses have positioned us well for future growth, and we remain on
track to deliver the savings from our operational excellence
“Finally, the earnings power and strength of our business model
allowed us to announce a capital plan that includes share repurchases of
up to $1.35 billion, a 16% increase from the prior year’s board
authorization, and a 15% increase in the quarterly dividend to 15
beginning in the second quarter,” concluded Mr.
First Quarter Results –
Please refer to the Quarterly Earnings Review for a detailed review of
* Assets under
and/or administration (“AUC/A”)
amounted to $26.3
at March 31, 2013, an increase of 2% compared
with the prior year and unchanged
1. Forming or characterized by a sequence, as of units or musical notes.
. The year-over-year
increase was driven by net new business and improved market values,
partially offset by the impact of changes in foreign currency rates.
Sequentially, improved market values were offset by the impact of
changes in foreign currency rates, while net new business was flat.
Assets under management (”
n.pr 1. in Ayurveda, the subtle, noiseless cosmic vibration in which consciousness existed in the beginning, before the elements appeared.
“) amounted to a record $1.4
trillion at March 31, 2013, an increase of 9% compared with the prior
year and 3% sequentially. Both increases primarily resulted from net new
business and higher market values. Long-term inflows totaled a record
$40 billion and short-term outflows totaled $13 billion for the first
quarter of 2013. Long-term inflows benefited from liability-driven
investments as well as equity and fixed income funds.
* Investment services fees totaled $1.7 billion, an increase of 1%
year-over-year and 4% sequentially. Both increases were primarily driven
by higher asset servicing revenue as a result of increased activity with
existing clients and improved market values. The year-over-year increase
also reflects higher treasury and clearing services revenue, partially
offset by lower issuer services and
sequential increase also reflects higher issuer and clearing services
* Investment management and performance fees were $822 million, an
increase of 10% year-over-year and a decrease of 4% sequentially. The
year-over-year increase was impacted by the acquisition of the remaining
50% interest in Meriten Investment Management (“Meriten”).
Excluding the Meriten acquisition, investment management and performance
fees increased 9% year-over-year driven by higher market values, net new
business and lower money market fee waivers. The sequential decrease
reflects seasonally lower performance fees and higher money market fee
waivers, partially offset by higher market values. Comparisons to both
prior periods were negatively impacted by the stronger U.S. dollar.
* Foreign exchange and other trading revenue totaled $161 million
compared with $191 million in the first quarter of 2012 and $139 million
in the fourth quarter of 2012. In the first quarter of 2013, foreign
exchange revenue totaled $149 million, an increase of 10% year-over-year
and 41% sequentially. The year-over-year increase primarily reflects
higher volumes, partially offset by a decrease in
, while the
sequential increase primarily reflects increased volatility and higher
volumes. Other trading revenue was $12 million in the first quarter of
2013 compared with $55 million in first quarter of 2012 and $33 million
in the fourth quarter of 2012. Other trading revenue was lower
principally due to losses on interest rate hedges and lower fixed income
* Investment and other income totaled $72 million compared with $139
million in the first quarter of 2012 and $116 million in the fourth
quarter of 2012. Both decreases reflect lower leasing gains and lower
foreign currency remeasurement. Additionally, the year-over-year
decrease includes lower seed capital gains and the sequential decrease
includes lower net gains on loans held for sale retained from a
previously divested bank subsidiary.
* Net interest revenue and the net interest margin (
FTE Fund for Theological Education
) were $719
million and 1.11% compared with $765 million and 1.32% in the first
quarter of 2012 and $725 million and 1.09% in the fourth quarter of
2012. The year-over-year decrease in net interest revenue was primarily
driven by lower
, lower yields on the
securities and the elimination of interest on European Central Bank
deposits, partially offset by a change in the mix of
higher average interest-earning assets driven by higher deposit levels.
The sequential decrease primarily reflects a lower number of days in the
first quarter of 2013. The decrease in net interest margin (FTE)
compared with the first quarter of 2012 primarily reflects higher
average interest-earning assets driven by higher deposits levels, lower
reinvestment yields, lower accretion and the elimination of interest on
European Central Bank deposits.
* The net unrealized pre-tax gain on our total investment securities
portfolio was $2.2 billion at March 31, 2013 compared with $2.4 billion
at Dec. 31, 2012. The decrease in the net unrealized pre-tax gain was
primarily driven by an increase in market interest rates and $48 million
of net realized securities gains in the first quarter of 2013. The low
rate environment creates the opportunity for us to realize gains as we
rebalance and manage the duration risk of the investment securities
portfolio. Gains realized on these sales should be considered along with
net interest revenue when evaluating our overall results. In the first
quarter of 2013, combined net interest revenue and net securities gains
totaled $767 million, compared with $805 million in the first quarter of
2012 and $775 million in the fourth quarter of 2012.
The provision for credit losses was a credit of $24 million in the
first quarter of 2013.
1. Almost exact or correct:
half of the credit was driven by a
broad improvement in the credit quality of the loan portfolio and half
related to a reduction in our
/qual·i·ta·tive/ () pertaining to quality. Cf. quantitative.
pertaining to observations of a categorical nature, e.g. breed, sex.
allowance. The provision for
credit losses was $5 million in the first quarter of 2012 and a credit
of $61 million in the fourth quarter of 2012.
Total noninterest expense
* Total noninterest expense increased 6% year-over-year and 1%
sequentially excluding amortization of intangible assets, M&I,
litigation and restructuring (Non-GAAP). Both increases were primarily
driven by a provision for administrative errors in certain offshore
tax-exempt funds and higher pension expense. The year-over-year increase
also resulted from the cost of generating certain tax credits, higher
software and net occupancy expense and the impact of the Meriten
acquisition. The sequential increase also reflects higher incentive
expense due to the
change in the velocity of a body with respect to time. Since velocity is a vector quantity, involving both magnitude and direction, acceleration is also a vector. In order to produce an acceleration, a force must be applied to the body.
of long-term stock awards
for retirement eligible employees, partially offset by lower
professional, legal and other purchased services, as well as lower
compensation expense and business development expenses.
The provision for income taxes totaled $1.0 billion and includes the
$854 million charge related to the disallowance of certain foreign tax
credits. Excluding this charge, the effective tax rate on an operating
basis – Non-GAAP was 24% in the first quarter of 2013.
Dividends (common)- As previously
tr.v. dis·closed, dis·clos·ing, dis·clos·es
1. To expose to view, as by removing a cover; uncover.
2. To make known (something heretofore kept secret).
on April 9, 2013, The
Bank of New York Mellon Corporation announced a 15% increase in the
quarterly common stock dividend, from $0.13 per share to $0.15 per
share. This cash dividend is payable on May 7, 2013 to shareholders of
record as of the close of business on April 29, 2013.
Dividends (preferred)- As previously disclosed on April 9, 2013, The
Bank of New York Mellon Corporation also
v. de·clared, de·clar·ing, de·clares
1. To make known formally or officially. See Synonyms at announce.
2. To state emphatically or authoritatively; affirm.
dividends for the
dividend period ending in June 2013 of $1,022.22 per share on the Series
$100,000 per share (the “Series A Preferred Stock”)(equivalent
to approximately $10.22 per Normal Preferred Capital Security of Mellon
Capital IV, referred to below, each representing 1/100[sup.th] interest
in a share of Series A Preferred Stock), and $1,300.00 per share on the
Series C Noncumulative Perpetual Preferred Stock, liquidation preference
$100,000 per share (the “Series C Preferred Stock”)(equivalent
to approximately $0.33 per
share, each representing a
1/4,000th interest in a share of the Series C Preferred Stock), payable
on June 20, 2013 to holders of record as of the close of business on
June 5, 2013. All of the outstanding shares of the Series A Preferred
Stock are owned by Mellon Capital IV, which will pass through the June
dividend on the Series A Preferred Stock on a
Being in due proportion; proportional.
tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates
To make proportionate.
basis to the
holders of record, as of the close of business on June 5, 2013, of its
Normal Preferred Capital Securities. All of the outstanding shares of
the Series C Preferred Stock are held by the depositary of the
depositary shares, which will pass through the June dividend on the
Series C Preferred Stock on a proportionate basis to the holders of
record, as of the close of business on June 5, 2013, of the depositary
BNY Mellon is a global investments company dedicated to helping its
clients manage and service their
investment lifecycle. Whether providing
institutions, corporations or individual investors, BNY Mellon delivers
informed investment management and investment services in 36 countries
and more than 100 markets. As of March 31, 2013, BNY Mellon had $26.3
trillion in assets under custody and/or administration, and $1.4
trillion in assets under management. BNY Mellon can act as a single
point of contact for clients looking to create, trade, hold, manage,
service, distribute or restructure investments. BNY Mellon is the
corporate brand of The Bank of New York Mellon Corporation. Additional
information is available on www.bnymellon.com, or follow us on
Supplemental Financial Information
The Quarterly Earnings Review and Supplemental Financial Trends for
The Bank of New York Mellon Corporation have been updated through March
31, 2013 and are available at www.bnymellon.com(
Conference Call Data
Gerald L. Hassell, chairman and chief executive officer and Thomas
, vice chairman and chief financial officer, along with other
members of executive management from BNY Mellon, will host a conference
call and simultaneous live audio webcast at 8:00 a.m.
Eastern Daylight Time
Eastern Daylight Time
n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York
on April 17,
2013. This conference call and audio webcast will include
forward-looking statements and may include other material
Persons wishing to access the conference call and audio webcast may
do so by dialing (888) 677-5383 (U.S.) and (773) 799-3611
(International), and using the passcode: Earnings, or by logging on to
www.bnymellon.com. The Earnings Release, together with the Quarterly
Earnings Review and Supplemental Financial Trends, will be available at
www.bnymellon.com beginning at approximately 6:30 a.m. EDT on April 17,
2013. Replays of the conference call and audio webcast will be available
beginning April 17, 2013 at approximately 2 p.m. EDT through May 1, 2013
by dialing (800) 947-5189 (U.S.) or (203) 369-3554 (International). The
archived version of the conference call and audio webcast will also be
available at www.bnymellon.com for the same time period.
reclassifications have been made to prior periods
to place them on a basis comparable with the current period
The following table presents our Basel I Tier 1 common equity
Supplemental information – Explanation of Non-GAAP financial
BNY Mellon has included in this Earnings Release certain Non-GAAP
financial measures based upon Tier 1 common equity and tangible common
shareholders’ equity. BNY Mellon believes that the ratio of Tier 1
common equity to risk-weighted assets and the ratio of tangible common
shareholders’ equity to tangible assets of operations are measures
of capital strength that provide additional useful information to
investors, supplementing the Tier 1 and Total capital ratios which are
tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates
1. To control or direct according to rule, principle, or law.
authorities. The ratio of Basel I Tier 1 common
equity to risk-weighted assets excludes preferred stock and trust
preferred securities from the
Epidemiology The upper part of a fraction
of the ratio. Unlike the Basel I
Tier 1 and Total capital ratios, the tangible common shareholders’
equity ratio fully incorporates those changes in investment securities
valuations which are reflected in total shareholders’ equity. In
addition, this ratio is expressed as a percentage of the actual book
value of assets, as
v. op·posed, op·pos·ing, op·pos·es
1. To be in contention or conflict with:
to a percentage of a risk-based reduced
value established in
with regulatory requirements, although
BNY Mellon in its calculation has excluded certain assets which are
given a zero percent risk-weighting for regulatory purposes. Further,
BNY Mellon believes that the return on tangible common equity measure,
which excludes goodwill and intangible assets net of deferred tax
liabilities, is a useful additional measure for investors because it
presents a measure of BNY Mellon’s performance in reference to
those assets which are productive in generating income. BNY Mellon has
provided a measure of tangible book value per share, which it believes
provides additional useful information as to the level of such assets in
relation to shares of common stock outstanding. BNY Mellon has presented
its estimated Basel III Tier 1 common equity ratio on a basis that is
representative of how it currently understands the Basel III rules.
Management views the Basel III Tier 1 common equity ratio as a key
measure in monitoring BNY Mellon’s capital position. Additionally,
the presentation of the Basel III Tier 1 common equity ratio allows
investors to compare BNY Mellon’s Basel III Tier 1 common equity
ratio with estimates presented by other companies.
BNY Mellon has presented revenue measures which exclude the effect
of noncontrolling interests related to consolidated investment
management funds; expense measures which exclude M&I expenses,
litigation charges, restructuring charges and amortization of intangible
assets; as well as earnings per share and the provision for income taxes
which exclude the charge related to the disallowance of certain foreign
tax credits; and investment management fees excluding the impact of the
acquisition of Meriten. Return on equity measures and operating margin
measures, which exclude some or all of these items, are also presented.
BNY Mellon believes that these measures are useful to investors because
they permit a focus on period-to-period comparisons which relate to the
ability of BNY Mellon to enhance revenues and limit expenses in
where such matters are within BNY Mellon’s control.
The excluded items in general relate to certain ongoing charges as a
result of prior transactions or where we have incurred charges. M&I
expenses primarily relate to the acquisitions of Global Investment
1, 2010 and
BHF British Heart Foundation
BHF Buffered Hydrofluoric Acid
BHF Bangladesh Hockey Federation
BHF Black Hole Finder
on Aug. 2, 2010.
M&I expenses generally continue for approximately three years after
the transaction and can vary on a year-to-year basis depending on the
stage of the integration. BNY Mellon believes that the
1. a shutting out or elimination.
2. surgical isolation of a part, as of a segment of intestine, without removal from the body.
M&I expenses provides investors with a focus on BNY Mellon’s
business as it would appear on a consolidated going-forward basis, after
such M&I expenses have ceased. Future periods will not reflect such
M&I expenses, and thus may be more easily compared with our current
results if M&I expenses are excluded. Litigation charges represent
that are both
1. Possible to estimate:
2. Deserving of esteem; admirable:
, but exclude standard business-related legal fees.
Restructuring charges relate to our operational excellence initiatives
and migrating positions to global delivery centers. Excluding these
charges permits investors to view expenses on a basis consistent with
how management views the business.
In this Earnings Release, the net interest margin is presented on an
FTE basis. We believe that this presentation provides comparability 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.
Each of these measures as described above is used by management to
monitor financial performance, both on a company-wide and business-level
The following table presents a reconciliation of earnings per common
share and net income.
The following table presents the calculation of the return on common
equity and the return on tangible common equity.
The following table presents the calculation of the pre-tax
operating margin ratio.
The following table presents investment management and performance
fees excluding the impact of the Meriten acquisition.
The following table presents the calculation of the effective tax
The following table presents the calculation of the equity to assets
ratio and book value per common share.
The following table presents the calculation of our Basel I Tier 1
common equity ratio – Non-GAAP.
The following table presents the calculation of our estimated Basel
III Tier 1 common equity ratio.
The information presented in this Earnings Release may contain
forward-looking statements within the meaning of the
Litigation Reform Act
of 1995 including our estimated capital ratios and
Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM.
and statements made regarding our key
priorities, operational excellence initiatives, investments in our
businesses and the opportunity for us to realize gains in our investment
securities portfolio. These statements, which may be expressed in a
variety of ways, include the use of future or
The verb tense expressing action in the present time, as in She writes; she is writing.
Noun 1. present tense – a verb tense that expresses actions or states at the time of speaking
These statements and other forward-looking statements contained in other
public disclosures of BNY Mellon which make reference to the cautionary
factors described in this Earnings Release, are based upon current
beliefs and expectations and are subject to significant risks and
uncertainties (some of which are beyond BNY Mellon’s control).
Factors that could cause BNY Mellon’s results to differ materially
from those described in the forward-looking statements can be found in
the risk factors set forth in BNY Mellon’s Annual Report on Form
10-K for the year ended Dec. 31, 2012 and its other filings with the
Securities and Exchange Commission. All forward-looking statements in
this Earnings Release speak only as of April 17, 2013 and BNY Mellon
undertakes no obligation to update any forward-looking statement to
reflect events or circumstances after that date or to reflect the
occurrence of unanticipated events.
SOURCE The Bank of New York Mellon Corporation