The Bank of New York Mellon Corporation (NYSE: BK) today reported:

KEY DRIVERS (comparisons are 3Q20 vs. 3Q19, unless otherwise stated)

• Total revenue decreased less than 1% primarily reflecting:
  • Fee revenue decreased 1% primarily reflecting higher money market fee waivers, partially offset by higher client activity and balances in Pershing and Asset Servicing, higher market values and the favorable impact of a weaker U.S. dollar.
  • Net interest revenue decreased 4%. The decrease would have been 8% larger due to the impact of the 3Q19 lease-related impairment of $70 million. The decrease primarily reflects lower interest rates on interest-earning assets, partially offset by the benefit of lower deposit and funding rates, higher deposits, securities portfolio and loan balances.
• Provision for credit losses of $9 million reflects a fairly consistent macroeconomic outlook compared with 2Q20.
• Noninterest expense increased 4%, 3% of which was due to the impact of 3Q19 net reduction of reserves for tax-related exposure of certain investment management funds. The remainder of the increase primarily reflects continued investments in technology, higher professional, legal and other purchased services expense and the unfavorable impact of a weaker U.S. dollar, partially offset by lower staff and business development (travel and marketing) expenses.
• Effective tax rate of 18.4%.

Assets under custody and/or administration ("AUC/A") and Assets under management ("AUM")

• AUC/A of $38.6 trillion, increased 8%, primarily reflecting higher market values, net new business, higher client inflows and the favorable impact of a weaker U.S. dollar.
• AUM of $2.0 trillion, increased 9%, primarily reflecting higher market values, the favorable impact of a weaker U.S. dollar (principally versus the British pound) and net inflows.

Capital and liquidity

• Open market share repurchases temporarily suspended for 3Q20 and 4Q20 for CCAR banks.
• Paid $279 million in dividends to common shareholders.
• Return on common equity ("ROE") of 9%; Return on tangible common equity ("ROTCE") of 17% (a).
• Common Equity Tier 1 ("CET1") ratio – 13.0%.
• Tier 1 leverage ratio – 6.5%.
• Supplementary leverage ratio ("SLR") – 8.5% (b).
• Average liquidity coverage ratio ("LCR") – 111%.
• Total Loss Absorbing Capacity ("TLAC") ratios exceed minimum requirements.

KEY DRIVERS

• The drivers of the total revenue variances by line of business are indicated below.
  • Asset Servicing - The year-over-year decrease primarily reflects lower interest rates, partially offset by higher client deposits and client volumes. The sequential decrease primarily reflects lower foreign exchange volumes, lower net interest revenue, a one-time fee recorded in 2Q20 and lower securities lending revenue driven by tighter spreads.
  • Pershing - The year-over-year decrease primarily reflects the impact of rate-driven money market fee waivers, partially offset by higher money market balances. The sequential decrease primarily reflects lower clearing volumes and higher rate-driven money market fee waivers.
  • Issuer Services - The year-over-year decrease primarily reflects lower Depositary Receipts revenue. The sequential increase primarily reflects seasonally higher Depositary Receipts revenue, partially offset by lower net interest revenue.
  • Treasury Services - The year-over-year increase primarily reflects higher client deposits and money market balances. The sequential decrease reflects lower net interest revenue, partially offset by higher payment volumes.
  • Clearance and Collateral Management - The year-over-year decrease primarily reflects lower investment income due to the 4Q19 sale of an equity investment. The sequential decrease primarily reflects lower clearance volumes and net interest revenue.
• Noninterest expense increased year-over-year primarily driven by continued investments in technology. Sequentially, noninterest expense increased primarily reflecting higher staff expense and the unfavorable impact of a weaker U.S. dollar.

KEY DRIVERS

• The drivers of the total revenue variances by line of business are indicated below.
  • Investment Management - The year-over-year increase primarily reflects the impact of hedging activities in 3Q19, higher market values, the favorable impact of a weaker U.S. dollar and higher performance fees, partially offset by the impact of money market fee waivers. The sequential increase primarily reflects higher market values and the favorable impact of a weaker U.S. dollar, partially offset by lower seed capital gains, net of hedges.
  • Wealth Management - The year-over-year decrease primarily reflects lower net interest revenue. Both comparisons reflect higher market values offset by a shift to lower fee investment products.
• Noninterest expense increased year-over-year primarily reflecting the net reduction of the reserves for tax-related exposure for certain investment management funds in 3Q19.

OTHER SEGMENT primarily includes leasing operations, certain corporate treasury activities, derivatives, business exits and other corporate revenue and expense items.

KEY DRIVERS

• Fee revenue, net securities gains and net interest expense include corporate treasury and other investment activity, including hedging activity which offsets between fee revenue and net interest expense. Fee revenue increased year-over-year primarily reflecting higher corporate treasury activity and equity investment income. The sequential decrease in fee revenue primarily reflects lower corporate treasury activity and equity investment income. Net interest expense decreased year-over-year primarily reflecting the lease-related impairment of $70 million recorded in 3Q19 and corporate treasury activity. The sequential decrease in net interest expense primarily reflects corporate treasury activity.
• Noninterest expense decreased year-over-year and sequentially primarily reflecting lower staff expense.

MONEY MARKET FEE WAIVERS

The following table presents the impact of money market fee waivers on our consolidated fee revenue, net of distribution and servicing expense. A majority of the money market fee waivers were driven by low short-term interest rates.

SUPPLEMENTAL INFORMATION – EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES

BNY Mellon has included in this Earnings Release certain Non-GAAP financial measures on a tangible basis as a supplement to GAAP information, which exclude goodwill and intangible assets, net of deferred tax liabilities. We believe that the return on tangible common equity is additional useful information for investors because it presents a measure of those assets that can generate income, and the tangible book value per common share is additional useful information because it presents the level of tangible assets in relation to shares of common stock outstanding.

Net interest revenue, on a fully taxable equivalent ("FTE") basis – Non-GAAP and net interest margin (FTE) – Non-GAAP and other FTE measures include the tax equivalent adjustments on tax-exempt income which allows for the comparison of amounts arising from both taxable and tax-exempt sources and is consistent with industry practice. The adjustment to an FTE basis has no impact on net income.

BNY Mellon has also included the adjusted pre-tax operating margin – Non-GAAP, which is the pre-tax operating margin for the Investment and Wealth Management business net of distribution and servicing expense that was passed to third parties who distribute or service our managed funds. We believe that this measure is useful when evaluating the performance of the Investment and Wealth Management business relative to industry competitors.

For the reconciliations of these Non-GAAP measures, see "Supplemental Information - Explanation of GAAP and Non-GAAP Financial Measures" in the Financial Supplement available at www.bnymellon.com.

ABOUT BNY MELLON

BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment and wealth management and investment services in 35 countries. As of Sept. 30, 2020, BNY Mellon had $38.6 trillion in assets under custody and/or administration, and $2.0 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 (NYSE: BK). Additional information is available on www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.