Bank of New York Mellon Corp
For the period ended Mar 31, 2024. Filed May 3, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 3, 2024
Extracted filing text, with the paragraph anchors used by the comparison.
See the whole filing, with its images and exhibitsContents
Supplemental information – Explanation of GAAP
Supplemental information– Explanation of GAAP and Non-GAAP financial measures
BNY Mellon has included in this Form 10-Q 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 – Non-GAAP 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 – Non-GAAP is additional useful information because it presents the level of tangible assets in relation to shares of common stock outstanding.
BNY Mellon has also included revenue measures excluding notable items, including the reduction in the fair value of a contingent consideration receivable related to a prior year divestiture and disposal losses. Expense measures, excluding notable items, including the FDIC special assessment, severance expense and litigation reserves, are also presented. Litigation reserves represent accruals for loss contingencies that are both probable and reasonably estimable, but exclude standard business-related legal fees. Net income applicable to common shareholders of The Bank of New York Mellon Corporation, diluted earnings per share, return on common equity, return on tangible common equity and pre-tax operating
margin, excluding the notable items mentioned above, are also provided. These measures are provided to permit investors to view the financial measures on a basis consistent with how management views the businesses.
The presentation of the growth rates of investment management and performance fees on a constant currency basis permits investors to assess the significance of changes in foreign currency exchange rates. Growth rates on a constant currency basis were determined by applying the current period foreign currency exchange rates to the prior period revenue. We believe that this presentation, as a supplement to GAAP information, gives investors a clearer picture of the related revenue results without the variability caused by fluctuations in foreign currency exchange rates.
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 segment, 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 segment relative to industry competitors.
BNY Mellon 41
| Reconciliation of Non-GAAP measures, excluding notable items | 1Q24 vs. | ||||
|---|---|---|---|---|---|
| (dollars in millions, except per share amounts) | 1Q24 | 4Q23 | 1Q23 | 4Q23 | 1Q23 |
| Total revenue – GAAP | $4,527 | $4,358 | $4,415 | 4% | 3% |
| Less: Reduction in the fair value of a contingent consideration receivable related to a prior year divestiture (a) | — | (144) | — | ||
| Disposal (losses) (a) | — | (6) | (1) | ||
| Adjusted total revenue – Non-GAAP | $4,527 | $4,508 | $4,416 | —% | 3% |
| Noninterest expense – GAAP | $3,176 | $3,995 | $3,100 | (21)% | 2% |
| Less: Severance (b) | 36 | 200 | — | ||
| Litigation reserves (b) | 2 | 47 | 6 | ||
| FDIC special assessment (b) | — | 632 | — | ||
| Adjusted noninterest expense – Non-GAAP | $3,138 | $3,116 | $3,094 | 1% | 1% |
| Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP | $953 | $162 | $911 | 488% | 5% |
| Less: Reduction in the fair value of a contingent consideration receivable related to a prior year divestiture (a) | — | (144) | — | ||
| Disposal (losses) (a) | — | (5) | — | ||
| Severance (b) | (27) | (153) | — | ||
| Litigation reserves (b) | (2) | (47) | (4) | ||
| FDIC special assessment (b) | — | (482) | — | ||
| Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation – Non-GAAP | $982 | $993 | $915 | (1)% | 7% |
| Diluted earnings per common share – GAAP | $1.25 | $0.21 | $1.13 | 495% | 11% |
| Less: Reduction in the fair value of a contingent consideration receivable related to a prior year divestiture (a) | — | (0.19) | — | ||
| Disposal (losses) (a) | — | (0.01) | — | ||
| Severance (b) | (0.04) | (0.20) | — | ||
| Litigation reserves (b) | — | (0.06) | (0.01) | ||
| FDIC special assessment (b) | — | (0.62) | — | ||
| Total diluted earnings per common share impact of notable items | (0.04) | (1.08) | (0.01) | ||
| Adjusted diluted earnings per common share – Non-GAAP | $1.29 | $1.29 | $1.13(c) | —% | 14% |
(a) Reflected in Investment and other revenue.
(b) Severance is reflected in Staff expense, Litigation reserves in Other expense, and FDIC special assessment in Bank assessment charges, respectively.
(c) Does not foot due to rounding.
The following table presents the reconciliation of the pre-tax operating margin.
| Pre-tax operating margin reconciliation | |||
|---|---|---|---|
| (dollars in millions) | 1Q24 | 4Q23 | 1Q23 |
| Income before taxes – GAAP | $1,324 | $279 | $1,288 |
| Impact of notable items (a) | (38) | (1,029) | (7) |
| Adjusted income before taxes, excluding notable items – Non-GAAP | $1,362 | $1,308 | $1,295 |
| Total revenue – GAAP | $4,527 | $4,358 | $4,415 |
| Impact of notable items (a) | — | (150) | (1) |
| Adjusted total revenue, excluding notable items – Non-GAAP | $4,527 | $4,508 | $4,416 |
| Pre-tax operating margin – GAAP (b) | 29% | 6% | 29% |
| Adjusted pre-tax operating margin – Non-GAAP (b) | 30% | 29% | 29% |
(a) See above for details of notable items and line items impacted.
(b) Income before taxes divided by total revenue.
42 BNY Mellon
The following table presents the reconciliation of the return on common equity and tangible common equity.
| Return on common equity and tangible common equity reconciliation | 1Q24 | 4Q23 | 1Q23 |
|---|---|---|---|
| (dollars in millions) | |||
| Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP | $953 | $162 | $911 |
| Add: Amortization of intangible assets | 12 | 14 | 14 |
| Less: Tax impact of amortization of intangible assets | 3 | 4 | 3 |
| Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets – Non-GAAP | 962 | 172 | 922 |
| Impact of notable items (a) | (29) | (831) | (4) |
| Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets and notable items – Non-GAAP | $991 | $1,003 | $926 |
| Average common shareholders’ equity | $35,905 | $36,050 | $35,483 |
| Less: Average goodwill | 16,238 | 16,199 | 16,160 |
| Average intangible assets | 2,848 | 2,858 | 2,899 |
| Add: Deferred tax liability – tax deductible goodwill | 1,209 | 1,205 | 1,187 |
| Deferred tax liability – intangible assets | 655 | 657 | 660 |
| Average tangible common shareholders’ equity – Non-GAAP | $18,683 | $18,855 | $18,271 |
| Return on common equity – GAAP (b) | 10.7% | 1.8% | 10.4% |
| Adjusted return on common equity – Non-GAAP (b) | 11.0% | 10.9% | 10.5% |
| Return on tangible common equity – Non-GAAP (b) | 20.7% | 3.6% | 20.5% |
| Adjusted return on tangible common equity – Non-GAAP (b) | 21.3% | 21.1% | 20.6% |
(a) See page 42 for details of notable items and line items impacted.
(b) Returns are annualized.
The following table presents the reconciliation of book value and tangible book value per common share.
| Book value and tangible book value per common share reconciliation | March 31, 2024 | Dec. 31, 2023 | March 31, 2023 |
|---|---|---|---|
| (dollars in millions, except per share amounts and unless otherwise noted) | |||
| The Bank of New York Mellon Corporation shareholders’ equity at period end – GAAP | $40,569 | $40,770 | $40,519 |
| Less: Preferred stock | 4,343 | 4,343 | 4,838 |
| The Bank of New York Mellon Corporation common shareholders’ equity at period end – GAAP | 36,226 | 36,427 | 35,681 |
| Less: Goodwill | 16,228 | 16,261 | 16,192 |
| Intangible assets | 2,839 | 2,854 | 2,890 |
| Add: Deferred tax liability – tax deductible goodwill | 1,209 | 1,205 | 1,187 |
| Deferred tax liability – intangible assets | 655 | 657 | 660 |
| The Bank of New York Mellon Corporation tangible common shareholders’ equity at period end – Non-GAAP | $19,023 | $19,174 | $18,446 |
| Period-end common shares outstanding (in thousands) | 747,816 | 759,344 | 789,134 |
| Book value per common share – GAAP | $48.44 | $47.97 | $45.22 |
| Tangible book value per common share – Non-GAAP | $25.44 | $25.25 | $23.38 |
The following table presents the impact of changes in foreign currency exchange rates on our consolidated investment management and performance fees.
| Constant currency reconciliation – Consolidated · 1Q24 vs. | |||
|---|---|---|---|
| (dollars in millions) | 1Q24 | 1Q23 | 1Q23 |
| Investment management and performance fees – GAAP | $776 | $776 | —% |
| Impact of changes in foreign currency exchange rates | — | 5 | |
| Adjusted investment management and performance fees – Non-GAAP | $776 | $781 | (1)% |
BNY Mellon 43
The following table presents the impact of changes in foreign currency exchange rates on investment management and performance fees reported in the Investment and Wealth Management business segment.
| Constant currency reconciliation – Investment and Wealth Management business segment · 1Q24 vs. | |||
|---|---|---|---|
| (dollars in millions) | 1Q24 | 1Q23 | 1Q23 |
| Investment management and performance fees – GAAP | $778 | $777 | —% |
| Impact of changes in foreign currency exchange rates | — | 5 | |
| Adjusted investment management and performance fees – Non-GAAP | $778 | $782 | (1)% |
The following table presents the reconciliations of income before income taxes, total revenue and the pre-tax operating margin for the Investment and Wealth Management business segment.
| Reconciliation of Non-GAAP measures, excluding notable items – Investment and Wealth Management business segment · 1Q24 vs. | ||||
|---|---|---|---|---|
| (dollars in millions) · 1Q24 · 4Q23 · 4Q23 | ||||
| Income (loss) before income taxes – GAAP | $107 | $(4) | N/M | |
| Impact of notable items (a) | (4) | (156) | ||
| Adjusted income before income taxes – Non-GAAP | $111 | $152 | (27)% | |
| Total revenue – GAAP | $846 | $679 | 25% | |
| Impact of notable items (a) | — | (144) | ||
| Adjusted total revenue – Non-GAAP | $846 | $823 | 3% | |
| Less: Distribution and servicing expense | 89 | |||
| Adjusted total revenue excluding notable items, net of distribution and servicing expense – Non-GAAP | $734 | |||
| Pre-tax operating margin – GAAP (b) | (1)% | |||
| Adjusted pre-tax operating margin, net of distribution and servicing expense – Non-GAAP (b) | (1)% | |||
| Adjusted pre-tax operating margin, net of distribution and servicing expense and excluding notable items – Non-GAAP (b) | 21% | |||
(a) See page 42 for details of notable items and line items impacted. Notable items in the first quarter of 2024 include severance expense. Notable items in the fourth quarter of 2023 include the reduction in the fair value of a contingent consideration receivable related to a prior year divestiture (reflected in investment and other revenue) and severance expense.
(b) Income before income taxes divided by total revenue.
N/M - Not meaningful.
| Pre-tax operating margin reconciliation – Investment and Wealth Management business segment | ||||
|---|---|---|---|---|
| (dollars in millions) | 1Q24 | 3Q23 | 2Q23 | 1Q23 |
| Income before income taxes – GAAP | $107 | $164 | $130 | $93 |
| Total revenue – GAAP | $846 | $830 | $816 | $830 |
| Less: Distribution and servicing expense | 96 | 87 | 93 | 86 |
| Adjusted total revenue, net of distribution and servicing expense – Non-GAAP | $750 | $743 | $723 | $744 |
| Pre-tax operating margin – GAAP (a) | 13% | 20% | 16% | 11% |
| Adjusted pre-tax operating margin, net of distribution and servicing expense – Non-GAAP (a) | 14% | 22% | 18% | 13% |
(a) Income before income taxes divided by total revenue.
44 BNY Mellon
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.