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| 8-K - FORM 8-K - Bank of New York Mellon Corp | d705859d8k.htm |
 ANNUAL MEETING OF STOCKHOLDERS
April 8, 2014
Exhibit 99.1 |
 Cautionary Statement
1
A number of statements in our presentations, the accompanying slides and the responses to your
questions are “forward- looking statements.” These statements relate to,
among other things, The Bank of New York Mellon Corporation’s (the
“Corporation”) expectations regarding: Investment Management’s positioning for growth;
the Fed Funds Effective rate and impact of increases on our business; signs of an abatement in
Corporate Trust run-off, and positive growth; our strong capital position and return on
tangible equity; projected margin impacts of investment management initiatives; our ability to
perform well in stress scenarios and maintain our high payout ratios; our 2014 capital plan; expense control plans and
investing for organic growth; strengthening regulatory / compliance and risk management;
cross-business solutions; the benefits to having investment management and investment
services under one company; our business model’s ability to drive shareholder value;
possible gains relating to real estate sales; changes in technology and staffing; our growth
position; and statements regarding the Corporation's aspirations, as well as the Corporation’s
overall plans, strategies, goals, objectives, expectations, estimates, intentions, targets,
opportunities and initiatives. These forward-looking statements are based on assumptions
that involve risks and uncertainties and that are subject to change based on various important
factors (some of which are beyond the Corporation’s control). Actual results may
differ materially from those expressed or implied as a result of the factors described under “Forward
Looking Statements” and “Risk Factors” in the Corporation’s Annual Report on Form
10-K for the year ended December 31, 2013 (the “2013 Annual Report”), and in
other filings of the Corporation with the Securities and Exchange Commission (the
“SEC”). Such forward-looking statements speak only as of April 8, 2014, and the Corporation 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.
Non-GAAP Measures: In this presentation we may discuss some non-GAAP adjusted measures
in detailing the Corporation’s performance. We believe these measures are useful to
the investment community in analyzing the financial results and trends of ongoing
operations. We believe they facilitate comparisons with prior periods and reflect the
principal basis on which our management monitors financial performance. Additional disclosures
relating to non-GAAP adjusted measures are contained in the Corporation’s reports
filed with the SEC, including the 2013 Annual Report, available at
|
 2
* Securities transactions are effected, where required, only through registered
broker-dealers. Corporate Trust
Depositary Receipts
Global Markets
Asset Servicing
Global Collateral Services
Pershing
Wealth Management
Investment Management
Wealth Management
Investment Management
Global Collateral Services
Global Markets
Pershing
Corporate Trust
Global Collateral Services
Global Markets
OUR CLIENTS
CREATE
INVESTMENTS
MANAGE
INVESTMENTS
HOLD &
SERVICE
INVESTMENTS
TRADE, CLEAR
& SETTLE
INVESTMENTS *
ENABLE
ACCESS TO
INVESTMENTS
RESTRUCTURE
INVESTMENTS
The Investments Company for the World
Expertise Across the Investment Lifecycle
Broker-Dealer Services
Global Collateral Services
Global Markets
Pershing
Treasury Services |
 3
The Investments Company for the World
Global Market Leadership
Corporate
Trust
#1 Global corporate trust service provider
Treasury
Services
Top 5 in U.S.D. payments
Global Markets
Client driven trading
Global Collateral
Services
Leveraging the breadth of Investment
Services
Asset Servicing
Largest global custodian ranked by Assets
Under Custody / Administration
Alternative
Investment Services
#3 fund administrator
Broker-Dealer
Services
#1 (U.S.), growing globally
Pershing
#1 clearing firm U.S., U.K., Ireland, Australia
Depositary
Receipts
#1 in market share (~60%)
Asset
Management
Top 10 global asset manager
Consolidated Revenue of ~$15.0B and Pretax Income of ~$3.7B in 2013*
Investment Management
(46% non-U.S. revenue)
Investment Services
(35% non-U.S. revenue)
Wealth
Management
#7 U.S. wealth manager
Revenue: ~$10.2B
Pretax Income: ~$2.9B
Revenue: ~$4.0B
Pretax Income: ~$1.1B
* Consolidated revenue and pretax income include the Other segment.
Pretax
income
for
Investment
Services
and
Investment
Management
exclude
amortization
of
intangible
assets.
See
Appendix
for
revenue
and
pretax
income
reconciliation.
Rankings reflect BNY Mellon’s size in the markets in which it operates and are based on internal
data as well as BNY Mellon’s knowledge of those markets. For
additional
details
regarding
these
rankings,
see
Appendix
and
/
or
pages
25-26
of
our
Annual
Report
for
the
year
ended
December
31,
2013,
available
at |
 Growth
Year-over-Year
Pretax Income
+12%
Net income (16%)
Investment
Management
Fees
1
+7%
AUM +14%
Net AUM inflows of $100 billion
Investment Services Fees
+4%
AUC/A +$1.3 trillion (+5%)
Estimated new AUC/A wins of $639 billion
Net Interest Revenue
+1%
Mix of interest-earning assets, lower funding
costs and higher interest-earning assets offset by
lower yields
Operating Expenses
0%
Lower litigation provision, offset by higher core
expenses in support of fee growth and increasing
regulatory / risk / compliance costs
2013 Highlights
4
2013
Total Shareholder Return
39%
Return on Tangible Common
Equity
2
20%
Share Repurchases
$1B
83% total payout ratio
Repurchased ~3% of shares outstanding
Quarterly Dividend Increase
15%
1
Includes Performance fees.
2
Represents a non-GAAP adjusted measure. See Appendix for reconciliation.
Additional disclosure regarding this measure and other non-GAAP adjusted measures
are
available
in
the
Corporation’s
reports
filed
with
the
SEC,
including
our
2013
Annual
Report,
available
at
+9% (excluding disallowance of certain tax
credits)
2
www.bnymellon.com/investorrelations. |
 A
Look at 2013 – Solid Pretax Income Growth Despite Factors Unique to BNY
Mellon Pretax Income +12%
5
Corporate Trust
Pretax Income
($millions)
rates rise by 50 bps²
Rapid Recovery of Fee
Waivers With Rising
Short-Term Interest Rates
Increase in Interest Rates (bps)
•
Pretax decline partially driven by
structured debt run-off
•
Structured debt run-off expected
to abate in the next 18 to 24
months
Combined pretax margin
dilution of ~260 bps from
2009 to 2013
1 Excludes the impact of intangible amortization and money market fee
waivers.
2
Assumes
no
change
in
client
behavior.
$897
$542
0
250
500
750
1,000
2009
2013
0%
20%
40%
60%
80%
100%
0
25
50
75
100
1
~70% of fee waivers
(pretax) recovered if
Money Market
Fee Waivers Pretax Trend
($millions)
($201)
($402)
-500
-300
-100
2009
2013 |
 Provides Financial
Flexibility… Strong Capital Position and Returns
(At 12/31/13)
Basel III Tier 1 Common
(Non-GAAP)¹
10.6%
11.3%
6
2011
2012
2013
2014 CCAR
Plan
Share Repurchases²
$873MM or 36MM shares
(3% of shares outstanding)
$1.1B or 51MM shares
(4% of shares outstanding)
$1B or 35MM shares
(3% of shares outstanding)
$1.74B
(4% of shares outstanding) ³
Quarterly Dividend Increase
+44%
+0%
+15%
+13%
Payout Ratio
58%
73%
83%
93%
4
Well Positioned
for Stress Scenarios
Strong Capital Generation Provides Financial Flexibility
1
Represents a non-GAAP adjusted measure. See Appendix for a reconciliation. Additional
disclosure regarding this measure and other non-GAAP adjusted measures are available in
the Corporation’s reports filed with the SEC, including our 2013 Annual Report, available at
www.bnymellon.com/investorrelations.
SOURCE:
Federal
Reserve
–
Dodd-Frank
Act
Stress
Test
(DFAST)
2014:
Supervisory Stress Test Methodology and Results
See Appendix for additional detail.
Least
Impact
Most
Impact
2 Percent of outstanding shares repurchased is based on shares outstanding at the beginning (January
1) of each year, respectively. 3 Assumes shares repurchased at closing stock price of $35.27 (on
4/2/14) and total common shares outstanding of 1,142MM at 1/1/14. 4 Ratio
calculated
using
Full
Year
2014
First
Call
consensus
net
income
estimates
as
a
benchmark.
Advanced
Standardized
20%
0%
2%
4%
6%
8%
HSBC
ZB
SC
BAC
JPM
BMO
BBVA
MTB
STT
RF
ALLY
FITB
PNC
STI
BK
AXP
Impact of DFAST Stress Test
on Basel I Tier 1 Common
Ratio
Return on Tangible Common
Equity
(Non-GAAP)¹ |
 Investing in Our Franchise
7
Investing for Organic Growth
Investment Services
•
Outsourcing platform
•
Global Collateral Services
•
Global / Capital Markets expansion
•
Enterprise payment hub
Investment Management
~$73MM increase
in BDS expenses
(2011-2013)
Projected
Margin Impact (%)
0.2
(0.7)
(1.1)
(0.3)
0.5
1.5+
2.0+
Projected Margin Impact of
Investment Management Initiatives
Upside Case
Projected Case
NOTE: Illustrative scenario based on current estimates.
1 Represents increase in the business unit servicing Tri-Party /
Clearance. BDS
=
Broker-Dealer
Services
•
Investing to strengthen regulatory / risk /
compliance / staff and systems
•
Tri-Party Reform
•
Broker-Dealer Clearance
-2.0%
0.0%
2.0%
4.0%
2012
2013
2014
2015
2016
2017
2018
Regulatory / Risk Management
Investment Services
•
Enhanced
distribution to retail investors •
Wealth Management expansion
•
APAC
Strategy
–
developing
local
capabilities
•
Expanding investment offerings
1 |
 Investment Management & Investment Services
Benefits of Combination
8
Investment Management
Investment Capabilities
Deepen Client
Relationships
Collaboration Provides
Additional Growth
Opportunities
•
Investment Management has
been a highly successful
contributor to earnings
•
Minimal balance sheet usage
•
Positive to BNY Mellon’s credit
ratings and stress test
performance --
diverse revenue
streams and fee-generating
business
•
Corporate brand and excellent
credit ratings are attractive to
large, sophisticated investors
•
Strong long-term growth
potential
•
Global Partnered Sales
Investment Management &
Investment Services
•
Leverage Pershing platform for
Investment Management product
distribution
Investment Management &
Investment Services
•
Increased money market
distribution
Investment Management &
Investment Services
•
Asia Separately Managed
Accounts platform
Pershing & Investment
Management
•
Brokerage and Bank Services
Pershing & Wealth
Management
•
Intermediary Private Banking
solution
Pershing & Wealth
Management
•
Liability-Driven Investments (LDI)
•
Index and money market products
Net Asset Flows
(2011-2013)
$141B
$57B
$32B
($30B)
$5B
~$205B
Strong financial position of Holding
Company parent is attractive to client
base
Attractive asset classes for Investment
Services’
clients
LDI
Index
Active
Alternative
Money
Market |
 Focused on Expense Control and Operating Leverage
9
Bending the Cost Curve
Technology
•
Getting more out of existing spend
Managing
Real Estate
•
Consolidating
our
space
–
net
reduction
of
~700,000 square feet in New York City
Consolidating
Platforms
•
Custody: three platforms to one
•
Fund accounting: five platforms to three
Re-engineering
•
Rationalizing client-coverage teams
•
Insourcing application developers |
 Driving Shareholder Value
Actively realigning the business model for the new regulatory
environment
Bending the cost curve and driving positive operating leverage
Generating 20%+ returns on tangible capital, enabling:
Dividend increases
Share repurchases
Investments in our businesses
10
Positioned for Growth |
 |
 APPENDIX |
 Reconciliation Schedule
Business
-
Revenue
and
Pretax
Income
* Totals exclude
the
Other
segment.
Pretax
metrics
exclude
the
impact
of
intangible
amortization.
INVESTMENT SERVICES
INVESTMENT MANAGEMENT
TOTAL
INVESTMENT SERVICES
REVENUE
$ MILLION
INVESTMENT MANAGEMENT
TOTAL
2,515
953
718
1Q13
249
PRETAX INCOME
$ MILLION
2,604
985
778
2Q13
311
2,566
987
800
3Q13
290
2,469
1,061
650
4Q13
292
10,154
3,986
2,946
2013
14,140
1,142
4,088
13 |
 14
Reconciliation Schedule
Return on Tangible Common Equity and Net Income
Net Income ($millions)
(Ex. Intangible Amortization)
2013
Net income –
continuing operations
$2,047
Intangible amortization –
after-tax
220
M&I, litigation and restructuring
45
Net charge related to the disallowance of
certain tax credits
593
Adjusted Net Income
1
$2,905
($millions)
Average
Tangible
Common
Shareholders’
Equity
2013
Average
Common
Shareholders’
Equity
$34,832
Average Goodwill
(17,988)
Average Intangible Assets
(4,619)
Deferred
Tax
Liability
–
tax
deductible
goodwill
1,302
Deferred
Tax
Liability
–
non-tax
deductible
intangible assets
1,222
Average
Tangible
Common
Shareholders’
Equity
$14,749
Return
on
Tangible
Common
Equity
1
19.7%
1
Represents a non-GAAP adjusted measure. Additional disclosure regarding this
and other non-GAAP adjusted measures is available in the Corporation’s
reports
filed
with
the
SEC,
including
our
Annual
Report
for
the
year
ended
December
31,
2013,
available
at
www.bnymellon.com/investorrelations.
Net Income ($millions)
2013
2012
Net
income
–
continuing
operations
$2,047
$2,427
Net charge related to the
disallowance of certain tax credits
593
-
Adjusted Net Income
1
$2,640
$2,427
Adjusted Net Income
8.8% |
 Dodd-Frank Act Stress Test
Impact on Tier 1 Common Equity Ratio
Bank Holding Company
Ticker/
Identifier
Tier 1 Common Ratio (%)
Stress
Impact
Actual Q3
2013
Ending
Minimum
American Express Company
AXP
12.8
14.0
12.1
0.7
BNY Mellon
BK
14.1
16.1
13.1
1.0
BB&T Corporation
BBT
9.4
8.4
8.4
1.0
SunTrust Banks
STI
9.9
9.0
8.8
1.1
U.S. Bancorp
USB
9.3
8.3
8.2
1.1
PNC Financial Services Group
PNC
10.3
9.0
9.0
1.3
Northern Trust Corporation
NTRS
13.1
11.7
11.7
1.4
Discover Financial Services
DFS
14.7
13.7
13.2
1.5
Fifth Third Bancorp
FITB
9.9
8.4
8.4
1.5
Ally Financial
ALLY
7.9
6.3
6.3
1.6
KeyCorp
KEY
11.2
9.3
9.2
2.0
Regions Financial Corporation
RF
11.0
9.0
8.9
2.1
Comerica Incorporated
COM
10.7
8.6
8.6
2.1
State Street Corporation
STT
15.5
14.7
13.3
2.2
Wells Fargo & Company
WFC
10.6
8.2
8.2
2.4
M&T Bank Corporation
MTB
9.1
6.2
6.2
2.9
UnionBanCal Corporation
UNB
11.1
8.1
8.1
3.0
BBVA Compass Bancshares
BBVA
11.6
8.5
8.5
3.1
RBS Citizens Financial Group
RBS
13.9
10.7
10.7
3.2
BMO Financial Corp.
BMO
10.8
7.6
7.6
3.2
Huntington Bancshares Incorporated
HBAN
10.9
7.4
7.4
3.5
JPMorgan Chase & Co.
JPM
10.5
6.7
6.3
4.2
Capital One Financial Corporation
COF
12.7
7.8
7.8
4.9
Bank of America Corporation
BAC
11.1
6.0
5.9
5.2
Citigroup
C
12.7
7.2
7.2
5.5
Santander Holdings USA
SC
13.7
7.3
7.3
6.4
Morgan Stanley
MS
12.6
7.6
6.1
6.5
Zions Bancorporation
ZB
10.5
3.6
3.6
6.9
Goldman Sachs Group
GS
14.2
9.2
6.9
7.3
HSBC North America Holdings
HSBC
14.7
6.6
6.6
8.1
SOURCE:
Federal
Reserve
–
Dodd-Frank
Act Stress Test (DFAST)
2014: Supervisory Stress Test
Methodology and Results
15 |
 Asset Servicing:
Largest global custodian ranked by
Assets Under Custody and / or Administration
Source:
Globalcustody.net,
2013,
data
as
of
June
30,
2013
or
as
otherwise
noted by relevant ranked entity.
Broker-Dealer Services: #1 (U.S.), growing globally
Alternative Investment Services: #3 fund administrator
Based on single manager funds and funds of hedge fund assets under
administration combined.
Corporate Trust: #1 Global Corporate Trust Service Provider
Source:
Thomson Reuters and Dealogic, first quarter, 2013
Depositary Receipts:
#1 in market share (~60%)
Leader in sponsored global depositary receipts programs
Source:
BNY
Mellon.
Data
as
of
December
31,
2013
Pershing: #1 U.S. clearing firm
Pershing LLC., ranked by number of broker-dealer customers
Source: Investment News, 2012
Treasury Services:
Top 5 in USD payments
Fifth largest participant in CHIPS funds transfer volume
Fifth largest Fedwire payment processor
Source:
CHIPS
High
Volume
Customer
Report,
June
2013
and
Fedwire
High
Volume Customer Report, June 2013
Asset Management
Eighth largest global asset manager
Source: Pensions & Investments, November 2013
Wealth Management
Seventh largest U.S. wealth manager
Source: Barron’s, Sept 2013
Disclosures
16
Source:
Federal
Reserve
Bank
of
New
York
-
Fedwire
Securities High Volume Customer Report, March 2013
Leading provider of U.S. Government Securities clearance services
Source:
HFMWeek
20th Biannual AuA Survey -
June 2013 |