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MarketScreener Homepage  >  Equities  >  Nyse  >  Bank of New York Mellon Corporation (The)    BK

BANK OF NEW YORK MELLON CORPORATION (THE

(BK)
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BANK OF NEW YORK MELLON : s 2. and 3. Management's Discussion and Analysis of Financial Condition and Results of Operations; Quantitative and Qualitative Disclosures about Market Risk (form 10-Q)

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11/07/2019 | 06:57am EST

General


In this Quarterly Report on Form 10-Q, references to "our," "we," "us," "BNY
Mellon," the "Company" and similar terms refer to The Bank of New York Mellon
Corporation and its consolidated subsidiaries. The term "Parent" refers to The
Bank of New York Mellon Corporation but not its subsidiaries.

Certain business terms used in this report are defined in the Glossary included
in our Annual Report on Form 10-K for the year ended Dec. 31, 2018 ("2018 Annual
Report").

The following should be read in conjunction with the Consolidated Financial Statements included in this report. Investors should also read the section titled "Forward-looking Statements."

Overview


Established in 1784 by Alexander Hamilton, we were the first company listed on
the New York Stock Exchange (NYSE: BK). With a more than 230-year history, BNY
Mellon is a global company that manages and services assets for financial
institutions, corporations and individual investors in 35 countries.

BNY Mellon has two business segments, Investment Services and Investment
Management, which offer a comprehensive set of capabilities and deep expertise
across the investment lifecycle, enabling the Company to provide solutions to
buy-side and sell-side market participants, as well as leading institutional and
wealth management clients globally.

The diagram below presents our two business segments and lines of business, with the remaining operations in the Other segment.

                     [[Image Removed: businesses_3q19.jpg]]

Key third quarter 2019 events

Todd Gibbons named interim Chief Executive Officer; Joseph Echevarria named Non-Executive Chairman


In September 2019, Todd Gibbons was appointed interim Chief Executive Officer
and member of the Board of Directors of the Company. During Todd's career at BNY
Mellon, he has held leadership roles across risk, finance, client management and
many of our businesses. Most recently, Todd served as Vice Chairman and CEO of
Clearing, Markets and Client Management. Todd also served for nine years as BNY
Mellon's Chief Financial Officer. Joseph Echevarria, a member of BNY Mellon's
Board of Directors since February 2015 and Lead Independent Director, was
appointed Non-Executive Chairman of the Board.

Definitive agreement to sell interest in Promontory Interfinancial Network, LLC


In September 2019, MCDI (Holdings) LLC, a wholly-owned subsidiary of BNY Mellon,
along with the other holders of Promontory Interfinancial Network, LLC ("PIN"),
entered into a definitive agreement to sell their interests in PIN. The


4 BNY Mellon
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transaction is expected to close in the fourth quarter of 2019, subject to customary closing conditions. Upon the closing of the transaction, BNY Mellon expects an after tax gain of approximately $600 million.

Highlights of third quarter 2019 results


Net income applicable to common shareholders was $1.0 billion, or $1.07 per
diluted common share, in the third quarter of 2019. Net income applicable to
common shareholders was $1.08 billion, or $1.06 per diluted common share, in the
third quarter of 2018. The highlights below are based on the third quarter of
2019 compared with the third quarter of 2018, unless otherwise noted.

• Total revenue of $3.9 billion decreased 5%, primarily reflecting:

• Fee revenue decreased 1%, primarily reflecting the cumulative AUM outflows

since the third quarter of 2018, lower performance fees and the

unfavorable impact of a stronger U.S. dollar, partially offset by higher

fees in Issuer Services and Clearance and Collateral Management and higher

       client assets and volumes in Pershing. (See "Fee and other revenue"
       beginning on page 6.)

• Net interest revenue decreased 18%, primarily reflecting a lease-related

impairment of $70 million, higher interest-bearing deposit and funding

costs and lower noninterest-bearing deposit balances, partially offset by

the benefit of higher rates earned on interest-earning assets. The

lease-related impairment decreased net interest revenue 8%. (See "Net

interest revenue" on page 9.)

• Provision for credit losses was a credit of $16 million, due in part from the

sale of the loans related to a California utility company that had filed for

bankruptcy.

• Noninterest expense of $2.6 billion decreased 5%. Nearly all of the decrease

was driven by a reduction of previously established reserves for tax-related

exposure of certain investment management funds that we manage, net of staff

expense, and lower litigation expense. The remaining slight decrease

primarily reflects the continued investments in technology, which were more

than offset by lower other expenses and the




favorable impact of a stronger U.S. dollar. (See "Noninterest expense" on page
12.)
•   Effective tax rate of 19.1% compared with 16.5% in the third quarter of 2018,

which was impacted by adjustments to the provisional estimates for U.S. tax

legislation and other changes. (See "Income taxes" on page 12.)

Capital and liquidity

• CET1 ratio under the Advanced Approaches was 11.1% at Sept. 30, 2019 and

11.1% at June 30, 2019, reflecting capital deployed through common stock

repurchases and dividend payments, offset by capital generated through

earnings and lower risk-weighted assets ("RWA"). (See "Capital" beginning on

page 33.)

• Repurchased 21.3 million common shares for $981 million and paid $294 million

in dividends to common shareholders in the third quarter of 2019.

Highlights of our principal businesses


Investment Services
• Total revenue decreased slightly.


• Income before income taxes increased 7%, driven by lower litigation expense.

• AUC/A of $35.8 trillion, increased 4%, primarily reflecting higher market

values and net new business, partially offset by the unfavorable impact of a

   stronger U.S. dollar.



Investment Management
• Total revenue decreased 12%.


• Income before income taxes decreased 5%, having benefited from the net

reduction of reserves for tax-related exposure of certain investment

management funds.

• AUM of $1.9 trillion increased 3%, 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.


See "Review of businesses" and Note 20 of the Notes to Consolidated Financial Statements for additional information on our businesses.




                                                                    BNY Mellon 5
--------------------------------------------------------------------------------

Fee and other revenue


Fee and other revenue                                                                              YTD19
                                                                3Q19 vs.                              vs.
(dollars in millions, unless
otherwise noted)                  3Q19      2Q19      3Q18   2Q19    3Q18        YTD19     YTD18   YTD18
Investment services fees:
Asset servicing fees (a)       $ 1,152$ 1,141$ 1,157      1  %    -  %   $ 3,415$ 3,482      (2 )%
Clearing services fees (b)         419       410       393      2       7        1,227     1,218       1
Issuer services fees               324       291       287     11      13          866       813       7
Treasury services fees             140       140       137      -       2          412       415      (1 )
Total investment services fees
(b)                              2,035     1,982     1,974      3       3        5,920     5,928       -
Investment management and
performance fees (b)               832       833       912      -      (9 )      2,506     2,763      (9 )
Foreign exchange and other
trading revenue                    150       166       155    (10 )    (3 )        486       551     (12 )
Financing-related fees              49        50        52     (2 )    (6 )        150       157      (4 )
Distribution and servicing          33        31        34      6      (3 )         95       104      (9 )
Investment and other income         30        43        41     N/M     N/M         108       193     N/M
Total fee revenue                3,129     3,105     3,168      1      (1 )      9,265     9,696      (4 )
Net securities (losses) gains       (1 )       7         -     N/M     N/M  

7 (48 ) N/M Total fee and other revenue $ 3,128$ 3,112$ 3,168 1 % (1 )% $ 9,272$ 9,648 (4 )%


Fee revenue as a percentage of
total revenue                       81 %      79 %      78 %                        79 %      78 %

AUC/A at period end (in
trillions) (c)                 $  35.8$  35.5$  34.5      1  %    4  %   $  35.8$  34.5       4  %
AUM at period end (in
billions) (d)                  $ 1,881$ 1,843$ 1,828      2  %    3  %   $ 1,881$ 1,828       3  %

(a) Asset servicing fees include securities lending revenue of $43 million in the

third quarter of 2019, $44 million in the second quarter of 2019, $58 million

in the third quarter of 2018, $135 million in the first nine months of 2019

and $173 million in the first nine 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 Sept. 30, 2019,

June 30, 2019 and Sept. 30, 2018.

(d) Excludes securities lending cash management assets and assets managed in the

Investment Services business.

N/M - Not meaningful.



Fee and other revenue decreased 1% compared with the third quarter of 2018 and
increased 1% compared with the second quarter of 2019. The decrease compared
with the third quarter of 2018 primarily reflects lower investment management
and performance fees and investment and other income, partially offset by higher
issuer services and clearing services fees. The increase compared with the
second quarter of 2019 primarily reflects higher issuer services fees, partially
offset by lower foreign exchange and other trading revenue.

Investment services fees

Investment services fees were impacted by the following compared with the third quarter of 2018 and the second quarter of 2019:

• Asset servicing fees decreased slightly compared with the third quarter of

2018 and increased 1% compared with the second quarter of 2019. The slight

decrease compared with the third quarter of 2018 primarily reflects lower

client activity, securities lending revenue and the unfavorable




impact of a stronger U.S. dollar, partially offset by growth in clearance
volumes and collateral management from new business. The increase compared with
the second quarter of 2019 primarily reflects growth in clearance volumes and
collateral management from new business.
•   Clearing services fees increased 7% compared with the third quarter of 2018

and 2% compared with the second quarter of 2019, primarily reflecting growth

in client assets and accounts.

• Issuer services fees increased 13% compared with the third quarter of 2018

and 11% compared with the second quarter of 2019, primarily reflecting higher

Depositary Receipts revenue. The increase compared with the third quarter of

2018 also reflects higher volumes in Corporate Trust.

Treasury services fees increased 2% compared with the third quarter of 2018

and were unchanged compared with the second quarter of 2019. The increase

compared with the third quarter of 2018 primarily reflects higher payment

    volumes.




6 BNY Mellon

--------------------------------------------------------------------------------

See the "Investment Services business" in "Review of businesses" for additional details.

Investment management and performance fees


Investment management and performance fees decreased 9% compared with the third
quarter of 2018 and were essentially unchanged compared with the second quarter
of 2019. The decrease compared with the third quarter of 2018 primarily reflects
the impact of cumulative AUM outflows since the third quarter of 2018, lower
performance fees and the unfavorable impact of a stronger U.S. dollar
(principally versus the British pound), partially offset by higher market
values. On a constant currency basis (Non-GAAP), investment management and
performance fees decreased 7% compared with the third quarter of 2018.
Performance fees were $2 million in the third quarter of 2019, $30 million in
the third quarter of 2018 and $2 million in the second quarter of 2019.

AUM was $1.9 trillion at Sept. 30, 2019, an increase of 3% compared with Sept.
30, 2018, 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.

See the "Investment Management business" in "Review of businesses" for additional details regarding the drivers of investment management and performance fees, AUM and AUM flows.

Foreign exchange and other trading revenue


Foreign exchange and other trading revenue
(in millions)                                     3Q19   2Q19   3Q18   YTD19   YTD18
Foreign exchange                                 $ 129$ 150$ 150$  439$  504
Other trading revenue                               21     16      5     

47 47 Total foreign exchange and other trading revenue $ 150$ 166$ 155$ 486$ 551





Foreign exchange revenue is primarily driven by the volume of client
transactions and the spread realized on these transactions, both of which are
impacted by market volatility and the impact of foreign currency hedging
activities. In the third quarter of 2019, foreign exchange revenue totaled $129
million, a decrease of 14% compared with the third quarter of 2018 and second
quarter of 2019. Both decreases primarily reflect the impact of foreign currency
hedging activities and lower volumes. The decrease compared with the third
quarter of 2018 also reflects lower volatility. Foreign exchange revenue is
primarily reported in the Investment Services business and, to a lesser extent,
the Investment Management business and the Other segment.

Other trading revenue totaled $21 million in the third quarter of 2019 compared
with $5 million in the third quarter of 2018. The increase primarily reflects
derivative and fixed income trading gains, partially offset by the impact of
Investment Management hedging activities. Other trading revenue is reported in
all three business segments.



                                                                    BNY Mellon 7
--------------------------------------------------------------------------------

Investment and other income

The following table provides the components of investment and other income.


Investment and other income
(in millions)                              3Q19    2Q19    3Q18    YTD19    

YTD18

Corporate/bank-owned life insurance $ 33$ 32$ 36$ 95$ 103 Expense reimbursements from joint venture 21 19 17 59

   52
Seed capital gains (a)                        -       8       8       10       11
Asset-related gains                           2       1       7        4       68
Other (loss)                                (26 )   (17 )   (27 )    (60 ) 

(41 ) Total investment and other income $ 30$ 43$ 41$ 108$ 193

(a) Excludes seed capital gains related to consolidated investment management

    funds, which are reflected in operations of consolidated investment
    management funds.




Investment and other income decreased compared with the third quarter of 2018
and the second quarter of 2019. The decrease compared with the third quarter of
2018 primarily reflects lower seed capital gains and asset-related gains. The
decrease compared with the second quarter of 2019 primarily reflects lower other
income and seed capital gains.


Year-to-date 2019 compared with year-to-date 2018


Fee and other revenue decreased 4% compared with the first nine months of 2018,
primarily reflecting lower investment management and performance fees,
investment and other income, asset servicing fees and foreign exchange and other
trading revenue, partially offset by securities losses recorded in the first
nine months of 2018 and an increase in issuer services fees. The 9% decrease in
investment management and performance fees primarily reflects the impact of
cumulative AUM outflows, the unfavorable impact of a stronger U.S. dollar
(principally versus the British pound) and lower performance fees, partially
offset by higher market values. The decrease in investment and other income
primarily reflects lower asset-related gains, which included the gain on the
sale of CenterSquare and gains on equity investments both recorded in the first
quarter of 2018. The 2% decrease in asset servicing fees primarily reflects
lower client activity, the unfavorable impact of a stronger U.S. dollar and
lower securities lending revenue, partially offset by growth in clearance
volumes and collateral management and higher equity markets. The 12% decrease in
foreign exchange and other trading revenue primarily reflects lower volumes and
volatility and the impact of Investment Management hedging activities, partially
offset by derivative and fixed income trading gains and the impact of foreign
currency hedging activities. Net securities losses in the first nine months of
2018 were driven by sales of debt securities. The 7% increase in issuer services
fees primarily reflects higher fees in Depositary Receipts and volumes in
Corporate Trust.



8 BNY Mellon

--------------------------------------------------------------------------------

Net interest revenue

Net interest revenue                                                                                            YTD19
                                                                     3Q19 vs.                                       vs.
(dollars in millions)          3Q19        2Q19        3Q18    2Q19        3Q18             YTD19       YTD18   YTD18
Net interest revenue      $     730$     802$     891      (9 )%      (18 )%      $   2,373$   2,726     (13 )%
Add: Tax equivalent
adjustment                        3           4           5       N/M         N/M              11          16       N/M
Net interest revenue
(FTE) - Non-GAAP (a)      $     733$     806$     896      (9 )%      (18 )%      $   2,384$   2,742     (13 )%

Average interest-earning
assets                    $ 294,154$ 287,417$ 279,218       2  %      

5 % $ 287,964$ 291,040 (1 )%

Net interest margin            0.99 %      1.12 %      1.27 %   (13 ) bps   (28 ) bps        1.10 %      1.25 %   (15 ) bps
Net interest margin (FTE)
-
Non-GAAP (a)                   1.00 %      1.12 %      1.28 %   (12 ) bps   (28 ) bps        1.11 %      1.26 %   (15 ) 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.


N/M - Not meaningful.
bps - basis points.


Net interest revenue decreased 18% compared with the third quarter of 2018 and
9% compared with the second quarter of 2019. The decrease compared with the
third quarter of 2018 primarily reflects the lease-related impairment of $70
million, higher interest-bearing deposit and funding costs and lower
noninterest-bearing deposit balances, partially offset by the benefit of higher
rates earned on interest-earning assets. The lease-related impairment decreased
net interest revenue 8% compared with the third quarter of 2018. The decrease
compared with the second quarter of 2019 was primarily driven by the
lease-related impairment. Lower deposit and funding costs and the impact of
hedging were largely offset by the impact of lower rates on interest-earning
assets. The impact of hedging activities is offset in foreign exchange and other
trading revenue.

Net interest margin decreased 28 basis points compared with the third quarter of
2018 and 13 basis points compared with the second quarter of 2019. The
lease-related impairment decreased the net interest margin for the third quarter
of 2019 by 10 basis points. The remaining decrease compared with the third
quarter of 2018 primarily reflects higher deposit rates and interest-earning
assets, partially offset by higher asset yields.

Average non-U.S. dollar deposits comprised approximately 30% of our average total deposits in the third quarter of 2019. Approximately 40% of the average non-U.S. dollar deposits in the third quarter of 2019 were euro-denominated.

Net interest revenue in future quarters will depend on the level and mix of client deposits, deposit rates, as well as the level and shape of the yield curve, which may result in lower yields on interest-earning assets.

Year-to-date 2019 compared with year-to-date 2018


Net interest revenue decreased 13% compared with the first nine months of 2018,
primarily driven by higher yields on interest-earning assets, which were more
than offset by the higher deposit and funding costs, lower noninterest-bearing
deposits and loan balances, the lease-related impairment and the impact of
hedging activities. The impact of hedging activities is offset in foreign
exchange and other trading revenue. The decrease in the net interest margin
primarily reflects higher deposit rates and the lease-related impairment,
partially offset by higher asset yields.



                                                                    BNY Mellon 9
--------------------------------------------------------------------------------

Average balances and interest rates                                                     Quarter ended
                                                Sept. 30, 2019                           June 30, 2019                        Sept. 30, 2018
(dollars in millions; average rates     Average                Average           Average                Average        Average                Average
annualized)                             balance     Interest     rates           balance     Interest     rates        balance     Interest     rates
Assets
Interest-earning assets:
Interest-bearing deposits with the
Federal Reserve and other central
banks                                 $  60,030$      102      0.67 %    

$ 61,756$ 113 0.72 % $ 61,216$ 125 0.80 % Interest-bearing deposits with banks (primarily foreign banks)

                15,324           73      1.89            13,666           64      1.87         14,691           59      1.58
Federal funds sold and securities
purchased under resale agreements (a)    40,816          660      6.42            38,038          568      5.99         26,738          281      4.18
Margin loans                             10,303          104      4.02            10,920          119      4.36         13,738          129      3.74
Non-margin loans:
Domestic offices                         29,285          202      2.75   (b)      29,492          284      3.86         28,628          258      3.59
Foreign offices                          11,247           85      2.97             9,961           81      3.29         11,441           86      2.98
Total non-margin loans                   40,532          287      2.81   (b)      39,453          365      3.71         40,069          344      3.42
Securities:
U.S. government obligations              19,315          103      2.11     

18,870 103 2.19 24,423 129 2.09 U.S. government agency obligations 67,235 418 2.49

66,445 428 2.58 64,612 384 2.40 State and political subdivisions (c) 1,217

            9      3.05             1,735           13      2.89          2,453           18      2.77
Other securities (c)                     33,729          148      1.75            30,770          157      2.04         27,017          138      1.98
Trading securities (c)                    5,653           41      2.80             5,764           39      2.72          4,261           32      3.05
Total securities (c)                    127,149          719      2.25     

123,584 740 2.40 122,766 701 2.28 Total interest-earning assets (c) $ 294,154$ 1,945 2.63 % (b) $ 287,417$ 1,969 2.74 % $ 279,218$ 1,639 2.33 % Noninterest-earnings assets

              56,525                                   54,967                                53,123
Total assets                          $ 350,679$ 342,384$  332,341

Liabilities

Interest-bearing liabilities:
Interest-bearing deposits:
Domestic offices                      $  82,663$      267      1.28 %       $  74,180$      251      1.36 %   $   57,942$      142      0.97 %
Foreign offices                          94,738          170      0.71            93,365          181      0.78         90,694           95      0.42

Total interest-bearing deposits 177,401 437 0.98

      167,545          432      1.04        148,636          237      0.63
Federal funds purchased and
securities sold under repurchase
agreements (a)                           13,432          443     13.08            11,809          372     12.64         14,199          190      5.33
Trading liabilities                       1,371            8      2.33             1,735           11      2.47          1,150            7      2.32
Other borrowed funds                      1,148           10      3.24             2,455           20      3.36          2,747           16      2.33
Commercial paper                          3,796           22      2.26             2,957           18      2.43          3,102           16      2.10
Payables to customers and
broker-dealers                           15,440           59      1.52            15,666           69      1.76         16,252           51      1.23
Long-term debt                           28,386          233      3.24     

27,681 241 3.45 28,074 226 3.17 Total interest-bearing liabilities $ 240,974$ 1,212 1.99 %

$ 229,848$ 1,163 2.03 % $ 214,160$ 743 1.37 % Total noninterest-bearing deposits 49,027

                                   52,956                                60,677
Other noninterest-bearing liabilities    19,280                                   18,362                                15,660
Total liabilities                       309,281                                  301,166                               290,497
Temporary equity
Redeemable noncontrolling interests          64                                       53                                   193
Permanent equity
Total The Bank of New York Mellon
Corporation shareholders' equity         41,139                                   41,029                                41,578
Noncontrolling interests                    195                                      136                                    73
Total permanent equity                   41,334                                   41,165                                41,651
Total liabilities, temporary equity
and permanent equity                  $ 350,679$ 342,384$  332,341
Net interest revenue (FTE) - Non-GAAP             $      733$      806$      896
Net interest margin (FTE) - Non-GAAP                              1.00 % (b)                               1.12 %                                1.28 %
Less: Tax equivalent adjustment (c)                        3                                        4                                     5
Net interest revenue - GAAP                       $      730$      802$      891
Net interest margin - GAAP                                        0.99 % (b)                               1.12 %                                1.27 %

(a) Includes the average impact of offsetting under enforceable netting

agreements of approximately $68 billion for the third quarter of 2019, $51

billion for the second quarter of 2019 and $26 billion for the third 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 2.42% for the third quarter of 2019, 2.57% for the second quarter

of 2019 and 2.12% for the third 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 2.17% for the

third quarter of 2019, 2.39% for the second quarter of 2019 and 1.88% for the

third 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) Includes the impact of the lease-related impairment of $70 million. On a

Non-GAAP basis, excluding the lease-related impairment, the yield on

non-margin loans in domestic offices would have been 3.70%, the yield on

total non-margin loans would have been 3.50%, the yield on total

interest-earning assets would have been 2.72% and the net interest margin and

the net interest margin (FTE) - Non-GAAP would have been 1.09%. We believe

providing the rates excluding the lease-related impairment is useful to

investors as it is more reflective of the actual rates earned.

(c) Average rates were calculated on an FTE basis, at tax rates of approximately

    21%.




10 BNY Mellon

--------------------------------------------------------------------------------


Average balances and interest rates                                       

Year-to-date

                                                    Sept. 30, 2019                            Sept. 30, 2018
(dollars in millions; average rates          Average                Average            Average                Average
annualized)                                  balance     Interest     rates            balance     Interest     rates

Assets

Interest-earning assets:
Interest-bearing deposits with the
Federal Reserve and other central banks   $   61,777$      354      0.75 %       $   69,921$      387      0.73 %
Interest-bearing deposits with banks
(primarily foreign banks)                     14,288          200      1.87             14,766          157      1.42
Federal funds sold and securities
purchased under resale agreements (a)         35,984        1,702      6.32             27,560          681      3.31
Margin loans                                  11,289          358      4.25             14,743          372      3.38
Non-margin loans:
Domestic offices                              28,989          755      3.48   (b)       29,664          743      3.35
Foreign offices                               10,576          252      3.18             12,068          251      2.78
Total non-margin loans                        39,565        1,007      3.40   (b)       41,732          994      3.18
Securities:
U.S. government obligations                   20,578          335      2.17             23,698          354      2.00
U.S. government agency obligations            66,191        1,273      2.56             63,702        1,108      2.32
State and political subdivisions (c)           1,716           37      2.86              2,667           55      2.71
Other securities (c)                          31,068          456      1.96             28,175          387      1.83
Trading securities (c)                         5,508          116      2.80              4,076           89      2.92
Total securities (c)                         125,061        2,217      2.37            122,318        1,993      2.17
Total interest-earning assets (c)         $  287,964$    5,838      2.71 % (b)   $  291,040$    4,584      2.10 %
Noninterest-earnings assets                   55,165                                    54,480
Total assets                              $  343,129$  345,520
Liabilities
Interest-bearing liabilities:
Interest-bearing deposits:
Domestic offices                          $   75,846$      742      1.31 %       $   54,608$      318      0.78 %
Foreign offices                               92,493          518      0.75             97,746          209      0.29
Total interest-bearing deposits              168,339        1,260      1.00            152,354          527      0.46
Federal funds purchased and securities
sold under repurchase agreements (a)          12,393        1,146     12.36             17,085          455      3.56
Trading liabilities                            1,470           26      2.36              1,304           23      2.33
Other borrowed funds                           2,295           54      3.11              2,424           39      2.16
Commercial paper                               2,718           48      2.35              3,367           49      1.96

Payables to customers and broker-dealers 15,736 198 1.68

             16,564          127      1.02
Long-term debt                                28,108          722      3.40             28,275          622      2.90

Total interest-bearing liabilities $ 231,059$ 3,454 1.99 % $ 221,373$ 1,842 1.11 % Total noninterest-bearing deposits

            52,168                                    65,446
Other noninterest-bearing liabilities         18,760                                    17,019
Total liabilities                            301,987                                   303,838
Temporary equity
Redeemable noncontrolling interests               65                                       190
Permanent equity
Total The Bank of New York Mellon
Corporation shareholders' equity              40,934                                    41,337
Noncontrolling interests                         143                                       155
Total permanent equity                        41,077                                    41,492
Total liabilities, temporary equity and
permanent equity                          $  343,129$  345,520
Net interest revenue (FTE) - Non-GAAP                  $    2,384$    2,742
Net interest margin (FTE) - Non-GAAP                                   1.11 % (b)                                1.26 %
Less: Tax equivalent adjustment (b)                            11                                        16
Net interest revenue - GAAP                            $    2,373$    2,726
Net interest margin - GAAP                                             1.10 % (b)                                1.25 %


(a) Includes the average impact of offsetting under enforceable netting

agreements of approximately $54 billion for the first nine months of 2019 and

$19 billion for the first nine 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 2.52% for the first nine

months of 2019 and 1.94% for the first nine 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

2.30% for the first nine months of 2019 and 1.67% for the first nine 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) Includes the impact of the lease-related impairment of $70 million. On a

Non-GAAP basis, excluding the lease-related impairment, the yield on

non-margin loans in domestic offices would have been 3.80%, the yield on

total non-margin loans would have been 3.64%, the yield on total

interest-earning assets would have been 2.74%, the net interest margin would

have been 1.13% and the net interest margin (FTE) - Non-GAAP would have been

1.14%. We believe providing the rates excluding the lease-related impairment

is useful to investors as it is more reflective of the actual rates earned.



(c) Average rates were calculated on an FTE basis, at tax rates of approximately
    21%.





                                                                   BNY Mellon 11
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Noninterest expense

Noninterest expense                                                                                YTD19
                                                                3Q19 vs.                              vs.
(dollars in millions)             3Q19      2Q19      3Q18   2Q19    3Q18        YTD19     YTD18   YTD18
Staff                          $ 1,479$ 1,421$ 1,478      4  %    -  %   $ 4,424$ 4,543      (3 )%
Professional, legal and other
purchased services                 316       337       332     (6 )    (5 )        978       951       3
Software and equipment             309       304       262      2      18          896       762      18
Net occupancy                      138       138       139      -      (1 )        413       434      (5 )
Sub-custodian and clearing         111       115       106     (3 )     5          331       335      (1 )
Distribution and servicing          97        94        99      3      (2 )        282       311      (9 )
Business development                47        56        51    (16 )    (8 )        148       164     (10 )
Bank assessment charges             31        31        49      -     (37 )         93       148     (37 )
Amortization of intangible
assets                              30        30        48      -     (38 )         89       145     (39 )
Other                               32       121       174    (74 )   (82 ) 

282 431 (35 ) Total noninterest expense $ 2,590$ 2,647$ 2,738 (2 )% (5 )% $ 7,936$ 8,224 (4 )%


Full-time employees at period
end                             48,700    49,100    52,000     (1 )%   (6 )%




Total noninterest expense decreased 5% compared with the third quarter of 2018
and 2% compared with the second quarter of 2019. Both decreases primarily
reflect a reduction of previously established reserves for tax-related exposure
of certain investment management funds that we manage, net of staff expense. The
decrease compared with the third quarter of 2018 also reflects lower litigation
and other expenses and the favorable impact of a stronger U.S. dollar, partially
offset by continued investments in technology. The investments in technology are
included in staff, professional, legal and other purchased services, and
software and equipment expenses. The decrease compared with the second quarter
of 2019 also reflects lower professional, legal and other purchased services
expense, partially offset by higher staff expense.

Our investments in technology infrastructure and platforms are expected to
continue at recent levels. As a result, we expect to incur higher
technology-related expenses in 2019 than in 2018. This increase is expected to
be mostly offset by decreases in other expenses as we continue to manage overall
expenses.

As we continue to streamline and optimize the Company, we may take the
opportunity to accelerate actions, including severance (recorded in noninterest
expense) and a small repositioning of the securities portfolio (recorded in fee
and other revenue), which could result in lower pre-tax earnings in the fourth
quarter in the range of $100 million to $200 million.


Year-to-date 2019 compared with year-to-date 2018


Noninterest expense decreased 4% compared with the first nine months of 2018.
The decrease primarily reflects the favorable impact of a stronger U.S. dollar,
lower staff expense, a reduction of previously established reserves for
tax-related exposure of certain investment management funds that we manage and
decreases in most other expense categories, partially offset by continued
investments in technology.

Income taxes


The provision for income tax was $246 million (19.1% effective tax rate) in the
third quarter of 2019, $220 million (16.5% effective tax rate) in the third
quarter of 2018 and $264 million (20.5% effective tax rate) in the second
quarter of 2019. The effective rate for the third quarter of 2018 was impacted
by adjustments to the provisional estimates for U.S. tax legislation and other
changes. For additional information, see Note 12 of the Notes to Consolidated
Financial Statements.



12 BNY Mellon
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Review of businesses

We have an internal information system that produces performance data along product and service lines for our two principal businesses, Investment Services and Investment Management, and the Other segment.

Business accounting principles


Our business data has been determined on an internal management basis of
accounting, rather than the generally accepted accounting principles used for
consolidated financial reporting. These measurement principles are designed so
that reported results of the businesses will track their economic performance.

For information on the accounting principles of our businesses, see Note 20 of
the Notes to Consolidated Financial Statements. For information on the primary
products and services in each line of business, the primary types of revenue by
business and how our businesses are presented and analyzed, see Note 23 of the
Notes to Consolidated Financial Statements in our 2018 Annual Report.

Business results are subject to reclassification when organizational changes are
made. There were no significant organizational changes in the third quarter of
2019. The results are also subject to refinements in revenue and expense
allocation methodologies, which are typically reflected on a prospective basis.

The results of our businesses may be influenced by client and other activities
that vary by quarter. In the first quarter, staff expense typically increases
reflecting the vesting of long-term stock awards for retirement-eligible
employees. In the third quarter, volume-related fees may decline due to reduced
client activity. In the third quarter, staff expense typically

increases, reflecting the annual employee merit increase. In the fourth quarter,
we typically incur higher business development and marketing expenses. In our
Investment Management business, performance fees are typically higher in the
fourth and first quarters, as those quarters represent the end of the
measurement period for many of the performance fee-eligible relationships.

The results of our businesses may also be impacted by the translation of
financial results denominated in foreign currencies to the U.S. dollar. We are
primarily impacted by activities denominated in the British pound and the euro.
On a consolidated basis and in our Investment Services business, we typically
have more foreign currency-denominated expenses than revenues. However, our
Investment Management business typically has more foreign currency-denominated
revenues than expenses. Overall, currency fluctuations impact the year-over-year
growth rate in the Investment Management business more than the Investment
Services business. However, currency fluctuations, in isolation, are not
expected to significantly impact net income on a consolidated basis.

Fee revenue in Investment Management, and to a lesser extent in Investment
Services, is impacted by the value of market indices. At Sept. 30, 2019, we
estimate that a 5% change in global equity markets, spread evenly throughout the
year, would impact fee revenue by less than 1% and diluted earnings per common
share by $0.03 to $0.05.

See Note 20 of the Notes to Consolidated Financial Statements for the consolidating schedules which show the contribution of our businesses to our overall profitability.




                                                                   BNY Mellon 13
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Investment Services business

                                                                                                                              YTD19
(dollars in millions,                                                                  3Q19 vs.                                  vs.

unless otherwise noted) 3Q19 2Q19 1Q19 4Q18

 3Q18   2Q19    3Q18          YTD19       YTD18   YTD18
Revenue:
Investment services
fees:
Asset servicing fees
(a)                     $   1,132$   1,120$   1,103$   1,106   $  
1,136      1  %    -  %   $   3,355$   3,414      (2 )%
Clearing services fees
(b)                           419         411         398         398         393      2       7          1,228       1,217       1
Issuer services fees          324         291         251         286         288     11      13            866         813       7
Treasury services fees        139         140         132         139         136     (1 )     2            411         414      (1 )
Total investment
services fees (b)           2,014       1,962       1,884       1,929       1,953      3       3          5,860       5,858       -
Foreign exchange and
other trading revenue         160         153         157         163         161      5      (1 )          470         502      (6 )
Other (b)(c)                  117         112         113         121         116      4       1            342         353      (3 )
Total fee and other
revenue                     2,291       2,227       2,154       2,213       

2,230 3 3 6,672 6,713 (1 ) Net interest revenue 753 775 796 827

827 (3 ) (9 ) 2,324 2,545 (9 ) Total revenue

               3,044       3,002       2,950       3,040       3,057      1       -          8,996       9,258      (3 )
Provision for credit
losses                        (15 )        (4 )         8           6           1     N/M     N/M           (11 )        (5 )   N/M
Noninterest expense
(excluding amortization
of intangible assets)       1,944       1,934       1,949       2,090       1,995      1      (3 )        5,827       5,839       -
Amortization of
intangible assets              21          20          20          22          35      5     (40 )           61         107     (43 )
Total noninterest
expense                     1,965       1,954       1,969       2,112       

2,030 1 (3 ) 5,888 5,946 (1 ) Income before income taxes

                   $   1,094$   1,052$     973$     922$   1,026      4  %    7  %   $   3,119$   3,317      (6 )%

Pre-tax operating
margin                         36 %        35 %        33 %        30 %        34 %                          35 %        36 %

Securities lending      $      39$      40$      44$      43$      52$     123$     155
revenue                                                                               (3 )%  (25 )%                             (21 )%

Total revenue by line
of business:
Asset Servicing         $   1,405$   1,391$   1,407$   1,435$   1,458      1  %   (4 )%   $   4,203$   4,497      (7 )%
Pershing                      568         564         554         558         558      1       2          1,686       1,697      (1 )
Issuer Services               466         446         396         441         453      4       3          1,308       1,302       -
Treasury Services             312         317         317         328         324     (2 )    (4 )          946         974      (3 )
Clearance and
Collateral Management         293         284         276         278         264      3      11            853         788       8
Total revenue by line
of business             $   3,044$   3,002$   2,950$   3,040$   3,057      1  %    -  %   $   8,996$   9,258      (3 )%

Metrics:
Average loans           $  32,758$  32,287$  33,171$  35,540$  35,044      1  %   (7 )%   $  32,737$  37,400     (12 )%
Average deposits        $ 208,044$ 201,146$ 195,082$ 203,416$ 192,741      3  %    8  %   $ 201,472$ 203,233      (1 )%

AUC/A at period end (in
trillions) (d)          $    35.8$    35.5$    34.5$    33.1$    34.5      1  %    4  %
Market value of
securities on loan at
period end (in
billions) (e)           $     362$     369$     377$     373$     415     (2 )%  (13 )%

Pershing:
Average active clearing
accounts (U.S.
platform) (in
thousands)                  6,283       6,254       6,169       6,125       6,108      -  %    3  %
Average long-term
mutual fund assets
(U.S. platform)         $ 547,522$ 532,384$ 507,606$ 489,491$ 527,336      3  %    4  %
Average investor margin
loans (U.S. platform)   $   9,222$   9,440$  10,093$  10,921$  10,696     (2 )%  (14 )%

Clearance and
Collateral Management:
Average tri-party
collateral management
balances (in billions)  $   3,550$   3,400$   3,266$   3,181$   2,995      4  %   19  %

(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 Sept. 30, 2019 and 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.

(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 $66 billion at Sept. 30, 2019, $64 billion at June 30,

2019, $62 billion at March 31, 2019, $58 billion at Dec. 31, 2018 and $69

billion at Sept. 30, 2018.


N/M - Not meaningful.


14 BNY Mellon
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Business description


BNY Mellon Investment Services provides business services and technology
solutions to entities including financial institutions, corporations,
foundations and endowments, public funds and government agencies. Our lines of
business include: Asset Servicing, Pershing, Issuer Services, Treasury Services
and Clearance and Collateral Management.

We are one of the leading global investment services providers with $35.8 trillion of AUC/A at Sept. 30, 2019.

• 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 $3.6 trillion serviced globally including approximately $2.6

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

$4.0 trillion in 34 separate markets.




The Asset Servicing business provides a comprehensive suite of solutions. As one
of the largest global custody and fund accounting providers and a trusted
partner, we offer services for the safekeeping of assets in capital markets
globally as well as alternative investment and structured product strategies. We
provide custody and foreign exchange services, support exchange-traded funds and
unit investment trusts and provide our clients outsourcing capabilities. We
deliver securities lending and financing solutions on both an agency and
principal basis. Our market leading liquidity services portal enables cash
investments for institutional clients and includes fund research and analytics.

Pershing provides clearing, custody, business and technology solutions, delivering dependable operational support to financial organizations globally.


The Issuer Services business includes Corporate Trust and Depositary Receipts.
Our Corporate Trust business delivers a full range of issuer and related
investor services, including trustee, paying agency, fiduciary, escrow and other
financial

services. We are a leading provider to the debt capital markets, providing
customized and market-driven solutions to investors, bondholders and lenders.
Our Depositary Receipts business drives global investing by providing servicing
and value-added solutions that enable, facilitate and enhance cross-border
trading, clearing, settlement and ownership. We are one of the largest providers
of depositary receipts services in the world, partnering with leading companies
from more than 50 countries.

Our Treasury Services business provides global payments, liquidity management and trade finance services for financial institutions, corporations and the public sector.


Our Clearance and Collateral Management business clears and settles equity and
fixed-income transactions globally and serves as custodian for tri-party repo
collateral worldwide. Our collateral services include collateral management,
administration and segregation. We offer innovative solutions and industry
expertise which help financial institutions and institutional investors with
their liquidity, financing, risk and balance sheet challenges.

Review of financial results


AUC/A increased 4% compared with Sept. 30, 2018 to $35.8 trillion, primarily
reflecting higher market values and net new business, partially offset by the
unfavorable impact of a stronger U.S. dollar. AUC/A consisted of 34% equity
securities and 66% fixed-income securities at Sept. 30, 2019 and 37% equity
securities and 63% fixed-income securities at Sept. 30, 2018.

Total revenue of $3.0 billion decreased slightly compared with the third quarter
of 2018 and increased 1% compared with the second quarter of 2019. The drivers
of total revenue by line of business are indicated below.

Asset Servicing revenue of $1.4 billion decreased 4% compared with the third
quarter of 2018 and increased 1% compared with the second quarter of 2019. The
decrease compared with the third quarter of 2018 primarily reflects lower client
activity, securities lending revenue and net interest revenue and the
unfavorable impact of a stronger U.S. dollar. The increase compared with the
second quarter of


                                                                   BNY Mellon 15
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2019 primarily reflects higher foreign exchange and other trading revenue.


Pershing revenue of $568 million increased 2% compared with the third quarter of
2018 and 1% compared with the second quarter of 2019. Both increases primarily
reflect growth in client assets and accounts. The increase compared with the
third quarter of 2018 was partially offset by lower net interest revenue.

Issuer Services revenue of $466 million increased 3% compared with the third
quarter of 2018 and 4% compared with the second quarter of 2019. Both increases
primarily reflect higher Depositary Receipts revenue, partially offset by lower
net interest revenue in Corporate Trust. The increase compared with the third
quarter of 2018 also reflects higher volumes in Corporate Trust.

Treasury Services revenue of $312 million decreased 4% compared with the third
quarter of 2018 and 2% compared with the second quarter of 2019. The decreases
primarily reflect lower net interest revenue.

Clearance and Collateral Management revenue of $293 million increased 11%
compared with the third quarter of 2018 and 3% compared with the second quarter
of 2019. Both increases primarily reflect growth in clearance volumes and
collateral management from new business. The increase compared with the third
quarter of 2018 was partially offset by lower net interest revenue.

Market and regulatory trends are driving investable assets toward lower fee
asset management products at reduced margins for our clients. These dynamics are
also negatively impacting our investment services fees. However, at the same
time, these trends are providing additional outsourcing opportunities as clients
and other market participants seek to comply with new regulations and reduce
their operating costs.


Noninterest expense of $2.0 billion decreased 3% compared with the third quarter
of 2018 and increased 1% compared with the second quarter of 2019. The decrease
compared with the third quarter of 2018 was primarily driven by lower litigation
and staff expenses. The increase compared with the second quarter of 2019
primarily reflects higher staff expense.

Year-to-date 2019 compared with year-to-date 2018


Total revenue of $9.0 billion decreased 3% compared with the first nine months
of 2018. Asset Servicing revenue of $4.2 billion decreased 7%, primarily
reflecting lower net interest revenue, client activity and foreign exchange and
other trading and securities lending revenue and the unfavorable impact of a
stronger U.S. dollar. Pershing revenue of $1.7 billion decreased 1%, primarily
reflecting previously disclosed lost business and lower net interest revenue,
partially offset by growth in client assets and accounts. Issuer Services
revenue of $1.3 billion increased slightly, primarily reflecting higher volumes
in Corporate Trust and higher Depositary Receipts revenue, partially offset by
lower net interest revenue in Corporate Trust. Treasury Services revenue of $946
million decreased 3%, primarily reflecting lower net interest revenue. Clearance
and Collateral Management revenue of $853 million increased 8%, primarily
reflecting growth in collateral management and clearance volumes, partially
offset by lower net interest revenue.

Noninterest expense of $5.9 billion decreased 1% compared with the first nine
months of 2018 primarily reflecting lower staff and litigation expenses, lower
bank assessment charges and the favorable impact of a stronger U.S. dollar,
partially offset by higher investments in technology.



16 BNY Mellon
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Investment Management business

                                                                                                                      YTD19
                                                                                 3Q19 vs.                                vs.
(dollars in millions)      3Q19       2Q19       1Q19       4Q18       3Q18   2Q19    3Q18         YTD19      YTD18   YTD18
Revenue:
Investment management
fees (a)               $    826$    827$    806$    826$    879      -  %   (6 )%   $  2,459$  2,662      (8 )%
Performance fees              2          2         31         54         30    N/M     (93 )          35         90     (61 )
Investment management
and performance fees
(b)                         828        829        837        880        909      -      (9 )       2,494      2,752      (9 )
Distribution and
servicing                    45         44         45         45         47      2      (4 )         134        145      (8 )
Other (a)                   (40 )      (23 )      (18 )      (35 )      (18 )  N/M     N/M           (81 )       (6 )   N/M
Total fee and other
revenue (a)                 833        850        864        890        938     (2 )   (11 )       2,547      2,891     (12 )
Net interest revenue         57         67         75         73         77    (15 )   (26 )         199        230     (13 )
Total revenue               890        917        939        963      1,015     (3 )   (12 )       2,746      3,121     (12 )
Provision for credit
losses                        -         (2 )        1          1         (2 )  N/M     N/M            (1 )        2     N/M
Noninterest expense
(excluding
amortization of
intangible assets)          580        645        660        702        688    (10 )   (16 )       1,885      2,065      (9 )
Amortization of
intangible assets            10          9          9         13         13     11     (23 )          28         38     (26 )
Total noninterest
expense                     590        654        669        715        701    (10 )   (16 )       1,913      2,103      (9 )
Income before income
taxes                  $    300$    265$    269$    247$    316     13  %   (5 )%   $    834$  1,016     (18 )%

Pre-tax operating
margin                       34 %       29 %       29 %       26 %       31 %                         30 %       33 %
Adjusted pre-tax
operating margin -
Non-GAAP (c)                 38 %       32 %       32 %       29 %       35 %                         34 %       36 %

Total revenue by line
of business:
Asset Management       $    605$    618$    637$    660$    704     (2 )%  (14 )%   $  1,860$  2,176     (15 )%
Wealth Management           285        299        302        303        311     (5 )    (8 )         886        945      (6 )
Total revenue by line
of business            $    890$    917$    939$    963$  1,015     (3 )%  (12 )%   $  2,746$  3,121     (12 )%

Average balances:
Average loans          $ 16,260$ 16,322$ 16,403$ 16,485$ 16,763      -  %   (3 )%   $ 16,328$ 16,871      (3 )%
Average deposits       $ 14,083$ 14,615$ 15,815$ 14,893$ 14,634     (4 )%   (4 )%   $ 14,831$ 14,088       5  %

(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 7% (Non-GAAP) compared with the third 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.


N/M - Not meaningful.



                                                                   BNY Mellon 17
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AUM trends                                                                                3Q19 vs.
(dollars in billions)                   3Q19      2Q19      1Q19      4Q18      3Q18   2Q19    3Q18
AUM at period end, by product type:
(a)
Equity                               $   147$   152$   149$   135$   167     (3 )%  (12 )%
Fixed income                             211       209       208       200       202      1       4
Index                                    321       322       333       301       352      -      (9 )
Liability-driven investments             742       709       709       659       652      5      14
Multi-asset and alternative
investments                              182       184       178       167       184     (1 )    (1 )
Cash                                     278       267       264       260       271      4       3
Total AUM by product type            $ 1,881$ 1,843$ 1,841$ 1,722

$ 1,828 2 % 3 %


Changes in AUM: (a)
Beginning balance of AUM             $ 1,843$ 1,841$ 1,722$ 1,828$ 1,805
Net inflows (outflows):
Long-term strategies:
Equity                                    (4 )      (2 )      (4 )      (8 )      (2 )
Fixed income                               2        (4 )       3        (1 )       2
Liability-driven investments              (4 )       1         5        14  

16

Multi-asset and alternative
investments                               (1 )       1        (4 )      (2 )       2
Total long-term active strategies
(outflows) inflows                        (7 )      (4 )       -         3        18
Index                                     (3 )     (22 )      (2 )     (11 )      (3 )
Total long-term strategies
(outflows) inflows                       (10 )     (26 )      (2 )      (8 )      15
Short-term strategies:
Cash                                      11         2         2       (10 )       -
Total net inflows (outflows)               1       (24 )       -       (18 )      15
Net market impact                         66        42       103       (69 )      18
Net currency impact                      (29 )     (16 )      16       (19 )     (10 )
Ending balance of AUM                $ 1,881$ 1,843$ 1,841$ 1,722$ 1,828      2  %    3  %

Wealth Management client assets (b) $ 259$ 257$ 253$ 239

$ 261 1 % (1 )%



(a)  Excludes securities lending cash management assets and assets managed in
the Investment Services business.
(b)  Includes AUM and AUC/A in the Wealth Management business.


Business description


Our Investment Management business consists of two lines of business, Asset
Management and Wealth Management. The Asset Management business offers
diversified investment management strategies and distribution of investment
products. The Wealth Management business provides investment management,
custody, wealth and estate planning and private banking services. See pages 18
and 19 of our 2018 Annual Report for additional information on our Investment
Management business.

Review of financial results

AUM increased 3% compared with Sept. 30, 2018 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.

Net long-term strategy outflows were $10 billion in the third quarter of 2019, primarily resulting from outflows of liability-driven investments and equity

funds. Short-term strategy inflows were $11 billion in the third quarter of 2019. Market and regulatory trends have resulted in increased demand for lower fee asset management products and for performance-based fees.

Total revenue of $890 million decreased 12% compared with the third quarter of 2018 and 3% compared with the second quarter of 2019.


Asset Management revenue of $605 million decreased 14% compared with the third
quarter of 2018 and 2% compared with the second quarter of 2019. The decrease
compared with the third quarter of 2018 primarily reflects the cumulative AUM
outflows since the third quarter of 2018, lower performance fees, the impact of
hedging activities and the unfavorable impact of a stronger U.S. dollar
(principally versus the British pound), partially offset by higher market
values. The decrease compared with the second quarter of 2019 primarily reflects
the impact of hedging activities and the unfavorable


18 BNY Mellon
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impact of a stronger U.S. dollar, partially offset by higher market values.


Wealth Management revenue of $285 million decreased 8% compared with the third
quarter of 2018 and 5% compared with the second quarter of 2019. Both decreases
primarily reflect lower net interest revenue, partially offset by higher market
values.

Revenue generated in the Investment Management business included 39% from non-U.S. sources in the third quarter of 2019, compared with 42% in the third quarter of 2018 and 38% in the second quarter of 2019.


Noninterest expense of $590 million decreased 16% compared with the third
quarter of 2018 and 10% compared with the second quarter of 2019. Both decreases
primarily reflect the net reduction of the reserves for tax-related exposure of
certain investment management funds and the favorable impact of a stronger U.S.
dollar. The decrease compared with the third quarter of 2018 also reflects lower
staff expense. The decrease compared to the

second quarter of 2019 was partially offset by higher distribution and servicing expenses.

Year-to date 2019 compared with year-to-date 2018


Total revenue of $2.7 billion decreased 12% compared with the first nine months
of 2018. Asset Management revenue of $1.9 billion decreased 15%, primarily
reflecting the cumulative AUM outflows, the impact of divestitures, the
unfavorable impact of a stronger U.S. dollar (principally versus the British
pound), the impact of hedging activities and lower performance fees, partially
offset by higher market values. Wealth management revenue of $886 million
decreased 6%, reflecting lower net interest revenue and fees.

Noninterest expense of $1.9 billion decreased 9% compared with the first nine
months of 2018, primarily reflecting the net reduction of the reserves for
tax-related exposure of certain investment management funds, lower staff
expense, the favorable impact of a stronger U.S. dollar (principally versus the
British pound) and lower distribution and servicing expenses.


Other segment


(in millions)                    3Q19      2Q19      1Q19      4Q18      3Q18     YTD19     YTD18
Fee revenue                   $     5$    34$    29$    29$     7$    68$   104
Net securities (losses) gains      (1 )       7         1         -         -         7       (48 )
Total fee and other revenue         4        41        30        29         7        75        56
Net interest (expense)            (80 )     (40 )     (30 )     (15 )     (13 )    (150 )     (49 )
Total (loss) revenue              (76 )       1         -        14        (6 )     (75 )       7
Provision for credit losses        (1 )      (2 )      (2 )      (7 )      (2 )      (5 )      (8 )
Noninterest expense                35        39        61       160         6       135       174
(Loss) before income taxes    $  (110 )$   (36 )$   (59 )$  (139 )$   (10 )$  (205 )$  (159 )

Average loans and leases      $ 1,817$ 1,764$ 1,784$ 1,809$ 2,000$ 1,789$ 2,204

See page 20 of our 2018 Annual Report for additional information on the Other segment.


Review of financial results

Fee revenue, net securities (losses) gains and net interest expense include corporate treasury and other investment activity, including hedging activity which offsets between fee revenue and net interest expense. Total revenue decreased and net interest expense increased compared with both the third quarter of

2018 and second quarter of 2019, primarily reflecting the lease-related impairment and corporate treasury activity.

Noninterest expense increased compared with the third quarter of 2018, primarily reflecting higher staff expense.




                                                                   BNY Mellon 19
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Year-to date 2019 compared with year-to-date 2018


Losses before income taxes increased $46 million compared with the first nine
months of 2018. Total revenue decreased $82 million, primarily reflecting the
lease-related impairment, corporate treasury activity and lower asset-related
gains, partially offset by net securities losses recorded in the first nine
months of 2018. Noninterest expense decreased $39 million, primarily reflecting
lower staff expense.

Critical accounting estimates

Our significant accounting policies are described in Note 1 of the Notes to
Consolidated Financial Statements in our 2018 Annual Report. Our critical
accounting estimates are those related to the allowance for loan losses and
allowance for lending-related commitments, fair value of financial instruments
and derivatives, goodwill and other intangibles and litigation and regulatory
contingencies, as referenced below.

Critical accounting estimates        Reference
Allowance for loan losses and        2018 Annual Report, pages 24-25.
allowance for lending-related
commitments
Fair value of financial instruments  2018 Annual Report, pages 25-27.
and derivatives
Goodwill and other intangibles       2018 Annual Report, page 27. Also, see the
                                     Quarterly Report on Form 10-Q for the
                                     quarter ended June 30, 2019, page 19.
Litigation and regulatory            "Legal proceedings" in Note 19 of the Notes
contingencies                        to Consolidated Financial Statements.



Consolidated balance sheet review


One of our key risk management objectives is to maintain a balance sheet that
remains strong throughout market cycles to meet the expectations of our major
stakeholders, including our shareholders, clients, creditors and regulators.

We also seek to undertake overall liquidity risk, including intraday liquidity
risk, that stays within our risk appetite. The objective of our balance sheet
management strategy is to maintain a balance sheet that is characterized by
strong liquidity and asset quality, ready access to external funding sources at
competitive rates and a strong capital structure that supports our risk-taking
activities and is adequate to

absorb potential losses. In managing the balance sheet, appropriate consideration is given to balancing the competing needs of maintaining sufficient levels of liquidity and complying with applicable regulations and supervisory expectations while optimizing profitability.


At Sept. 30, 2019, total assets were $373 billion, compared with $363 billion at
Dec. 31, 2018. The increase in total assets was primarily driven by higher
interest-bearing deposits with the Federal Reserve and other central banks and
trading assets. Deposits totaled $250 billion at Sept. 30, 2019, compared with
$239 billion at Dec. 31, 2018. The increase reflects higher interest-bearing
deposits in both U.S. and non-U.S. offices, partially offset by lower
noninterest-bearing deposits principally in U.S. offices. Total interest-bearing
deposits as a percentage of total interest-earning assets were 62% at Sept. 30,
2019 and 54% at Dec. 31, 2018.

At Sept. 30, 2019, available funds totaled $140 billion which include cash and
due from banks, interest-bearing deposits with the Federal Reserve and other
central banks, interest-bearing deposits with banks and federal funds sold and
securities purchased under resale agreements. This compares with available funds
of $135 billion at Dec. 31, 2018. Total available funds as a percentage of total
assets were 37% at both Sept. 30, 2019 and Dec. 31, 2018. For additional
information on our liquid funds and available funds, see "Liquidity and
dividends."

Securities were $122.3 billion, or 33% of total assets, at Sept. 30, 2019,
compared with $119.8 billion, or 33% of total assets, at Dec. 31, 2018. The
increase primarily reflects additional investments in sovereign debt/sovereign
guaranteed, agency residential mortgage-backed securities ("RMBS"), an increase
in the net unrealized pre-tax gain, partially offset by net maturities and sales
of U.S.Treasury and state and political subdivision securities. For additional
information on our securities portfolio, see "Securities" and Note 4 of the
Notes to Consolidated Financial Statements.

Loans were $55 billion, or 15% of total assets, at Sept. 30, 2019, compared with
$57 billion, or 16% of total assets, at Dec. 31, 2018. The decrease was
primarily driven by lower margin loans, partially offset by higher loans to
financial institutions. For additional information on our loan portfolio, see
"Loans" and Note 5 of the Notes to Consolidated Financial Statements.


20 BNY Mellon
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Long-term debt totaled $28 billion at Sept. 30, 2019 and $29 billion at Dec. 31, 2018. The decrease reflects maturities of $4.3 billion, partially offset by issuances and an increase in the fair value of hedged long-term debt. For additional information on long-term debt, see "Liquidity and dividends."


The Bank of New York Mellon Corporation total shareholders' equity increased to
$41.1 billion from $40.6 billion at Dec. 31, 2018. For additional information on
our capital, see "Capital."

Country risk exposure

The following table presents BNY Mellon's top 10 exposures by country (excluding the U.S.) as of Sept.

30, 2019, as well as certain countries with higher risk profiles, and is presented on an internal risk management basis. We monitor our exposure to these and other countries as part of our internal country risk management process.


The country risk exposure below reflects the Company's risk to an immediate
default of the counterparty or obligor based on the country of residence of the
entity which incurs the liability. If there is credit risk mitigation, the
country of residence of the entity providing the risk mitigation is the country
of risk. The country of risk for investment securities is generally based on the
domicile of the issuer of the security.

Country risk exposure       Interest-bearing deposits                               Investment
(in billions)             Central banks             Banks       Lending (a)     securities (b)       Other (c)       Total exposure
Top 10 country
exposure:
UK                     $           11.3         $     0.5     $         2.0     $          5.0     $       2.2     $           21.0
Germany                            11.9               0.5               0.6                3.3             0.2                 16.5
Japan                              15.3               0.5               0.1                0.1             0.2                 16.2
Belgium                             5.7               0.8               0.1                0.1               -                  6.7
Canada                                -               2.1               0.3                2.6             0.9                  5.9
China                                 -               2.3               1.7                  -             0.3                  4.3
France                                -                 -                 -                2.1             0.8                  2.9
Luxembourg                          0.1               0.1               0.7                  -             1.9                  2.8
Australia                             -               1.5               0.4                0.4             0.3                  2.6
Netherlands                           -               0.3               0.3                1.8             0.1                  2.5
Total Top 10 country
exposure               $           44.3         $     8.6     $         6.2     $         15.4     $       6.9     $           81.4   (d)

Select country
exposure:
Italy                  $            0.1         $     0.4     $           -     $          1.4     $         -     $            1.9
Brazil                                -                 -               1.5                0.1             0.1                  1.7
Total select country
exposure               $            0.1         $     0.4     $         1.5     $          1.5     $       0.1     $            3.6

(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.




Our largest country risk exposure, based on our internal country risk management
process at Sept. 30, 2019, was to the UK, which is planning to withdraw from the
European Union ("EU"). On Oct. 28, 2019, EU leaders and the UK government agreed
to extend the period during which the EU and UK could agree on the terms of the
UK's departure from the EU. Under the terms of the agreement, Brexit will occur
on the earlier of the first day of the month following ratification of the
revised Withdrawal Agreement by the UK Parliament and the EU Parliament, or Feb.
1, 2020. We continue to make preparations for the withdrawal. For additional
information, see "Risk Factors - 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." in our 2018 Annual Report.


Events in recent years have resulted in increased focus on Italy and Brazil. The
country risk exposure to Italy primarily consists of investment grade sovereign
debt. The country risk exposure to Brazil is primarily short-term trade finance
loans extended to large financial institutions. We also have operations in
Brazil providing investment services and investment management services.



                                                                   BNY Mellon 21
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Securities


In the discussion of our securities portfolio, we have included certain credit
ratings information because the information can indicate the degree of credit
risk

to which we are exposed. Significant changes in ratings classifications for our
securities portfolio could indicate increased credit risk for us and could be
accompanied by a reduction in the fair value of our securities portfolio.

The following table shows the distribution of our total securities portfolio.

Securities
portfolio
                                                                                           Fair                                     Ratings (b)
                                                  3Q19                                    value
                     June 30, 2019           change in        Sept. 30, 2019          as a % of                                                BB+
(dollars in                   Fair          unrealized    Amortized        Fair       amortized      Unrealized           AAA/   A+/   BBB+/   and    Not
millions)                    value         gain (loss)         cost       value        cost (a)     gain (loss)           AA-    A-    BBB-   lower  rated
Agency RMBS        $        52,860       $         199   $   53,011$  53,254             100 % $         243           100 %   - %     - %    - %    - %
U.S. Treasury               18,284                  32       18,497      18,541             100              44           100     -       -      -      -
Sovereign
debt/sovereign
guaranteed (c)              13,146                  26       13,767      13,932             101             165            76     4      19      1      -
Agency commercial
mortgage-backed
securities ("MBS")          10,689                  86       10,501      10,598             101              97           100     -       -      -      -
Supranational                3,925                  14        4,077       4,113             101              36           100     -       -      -      -
CLOs                         3,649                   2        3,882       3,868             100             (14 )          99     -       -      1      -
Foreign covered
bonds (d)                    3,479                   5        3,651       3,670             101              19           100     -       -      -      -
U.S. government
agencies                     3,866                  31        3,308       3,344             101              36           100     -       -      -      -
Other asset-backed
securities ("ABS")           2,470                   3        2,477       2,484             100               7           100     -       -      -      -
Non-agency
commercial MBS               1,993                  18        2,207       2,250             102              43            98     2       -      -      -
Foreign government
agencies (e)                 1,599                   8        2,175       2,183             100               8            95     5       -      -      -
Non-agency RMBS
(f)                          1,314                 (12 )      1,089       1,301             120             212            19    11       5     41     24
State and
political
subdivisions                 1,297                  (2 )      1,175       1,200             102              25            70    29       -      -      1
Corporate bonds                905                   5          858        
879             103              21            16    68      16      -      -
Other                           75                   -           71          74             104               3             -     -       -      -    100
Total securities   $       119,551   (g) $         415   $  120,746$ 121,691   (g)       101 % $         945   (g)(h)   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, France, Germany, Spain, Italy and the

Netherlands.

(d) Primarily consists of exposure to Canada, UK, Australia and Sweden.

(e) Primarily consists of exposure to Germany, the Netherlands and Sweden.

(f) Includes RMBS that were included in the former Grantor Trust of $753 million

at June 30, 2019 and $689 million at Sept. 30, 2019.

(g) Includes net unrealized losses on derivatives hedging securities

available-for-sale of $737 million at June 30, 2019 and $963 million at Sept.

30, 2019.

(h) Unrealized gains of $631 million at Sept. 30, 2019 related to

    available-for-sale securities, net of hedges.




The fair value of our securities portfolio, including related hedges, was $121.7
billion at Sept. 30, 2019, compared with $119.2 billion at Dec. 31, 2018. The
increase primarily reflects additional investments in sovereign debt/sovereign
guaranteed, agency RMBS, and an increase in the net unrealized pre-tax gain, as
well as additional investments in nearly all other types of securities,
partially offset by net maturities and sales of U.S.Treasury and state and
political subdivision securities.

At Sept. 30, 2019, the total securities portfolio had a net unrealized gain of
$945 million, compared with a net unrealized loss of $907 million at Dec. 31,
2018, including the impact of related hedges. The increase

in the net unrealized pre-tax gain was primarily driven by lower market interest rates.


The unrealized gain (after-tax) on our available-for-sale securities portfolio,
net of hedges, included in accumulated other comprehensive income ("OCI") was
$473 million at Sept. 30, 2019, compared with an unrealized loss (after-tax) of
$167 million at Dec. 31, 2018.

At Sept. 30, 2019, 95% of the securities in our portfolio were rated AAA/AA-, unchanged when compared with Dec. 31, 2018.

See Note 4 of the Notes to Consolidated Financial Statements for the pre-tax net securities (losses) gains



22 BNY Mellon
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by security type. See Note 16 of the Notes to Consolidated Financial Statements for details of securities by level in the fair value hierarchy.


The following table presents the amortizable purchase premium (net of discount)
related to the securities portfolio and accretable discount related to the 2009
restructuring of the securities portfolio.

Net premium amortization and discount
accretion of securities (a)
(dollars in millions)                           3Q19      2Q19      1Q19      4Q18      3Q18
Amortizable purchase premium (net of
discount) relating to securities:
Balance at period end                        $ 1,308$ 1,315$ 1,388$ 1,429$ 1,536
Estimated average life remaining at period
end (in years)                                   4.2       4.5       4.8       5.0       5.2
Amortization                                 $    95$    91$    78$    92$   108
Accretable discount related to the prior
restructuring of the securities portfolio:
Balance at period end                        $   171$   181$   193$   207$   224
Estimated average life remaining at period
end (in years)                                   6.3       6.3       6.3       6.3       6.3
Accretion                                    $    13$    13$    16$    17$    20

(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.






Loans

Total exposure -
consolidated                             Sept. 30, 2019                            Dec. 31, 2018
                                             Unfunded        Total                    Unfunded        Total
(in billions)                   Loans     commitments     exposure       Loans     commitments     exposure
Non-margin loans:
Financial institutions       $   13.4$        34.9$     48.3$  11.6$        34.0$     45.6
Commercial                        1.7            13.2         14.9         2.1            15.2         17.3
Subtotal institutional           15.1            48.1         63.2        13.7            49.2         62.9
Wealth management loans and
mortgages                        15.9             0.8         16.7        16.0             0.8         16.8
Commercial real estate            5.3             3.9          9.2         4.8             3.5          8.3
Lease financings                  1.1               -          1.1         1.3               -          1.3
Other residential mortgages       0.5               -          0.5         0.6               -          0.6
Overdrafts                        5.3               -          5.3         5.5               -          5.5
Other                             1.2               -          1.2         1.2               -          1.2
Subtotal non-margin loans        44.4            52.8         97.2        43.1            53.5         96.6
Margin loans                     10.5             0.1         10.6        13.5             0.1         13.6
Total                        $   54.9$        52.9$    107.8$  56.6$        53.6$    110.2





At Sept. 30, 2019, total exposures of $107.8 billion decreased 2% compared with
Dec. 31, 2018, primarily reflecting lower margin loans and commercial exposure,
partially offset by higher financial institutions exposure.

Our financial institutions and commercial portfolios comprise our largest
concentrated risk. These portfolios comprised 59% of our total exposure at Sept.
30, 2019 and 57% at Dec. 31, 2018. Additionally, most of our overdrafts relate
to financial institutions.



                                                                   BNY Mellon 23
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Financial institutions

The financial institutions portfolio is shown below.



Financial institutions                       Sept. 30, 2019                                    Dec. 31, 2018
portfolio exposure                     Unfunded        Total   % Inv.    % due                   Unfunded        Total
(dollars in billions)     Loans     commitments     exposure    grade   <1 yr.      Loans     commitments     exposure
Securities industry      $  3.2$        23.4$     26.6      100 %     94 %   $  3.1$        22.5$     25.6
Banks                       7.9             1.2          9.1       80       97        6.3             1.6          7.9
Asset managers              1.3             6.7          8.0       98       81        1.3             6.1          7.4
Insurance                   0.1             2.5          2.6      100       14        0.1             2.5          2.6
Government                  0.1             0.3          0.4      100       16        0.1             0.5          0.6
Other                       0.8             0.8          1.6       96       60        0.7             0.8          1.5
Total                    $ 13.4$        34.9$     48.3       95 %     86 %   $ 11.6$        34.0$     45.6





The financial institutions portfolio exposure was $48.3 billion at Sept. 30,
2019, an increase of 6% from Dec. 31, 2018, primarily reflecting higher exposure
in the banks, securities industry and asset managers portfolios.

Financial institution exposures are high-quality, with 95% of the exposures
meeting the investment grade equivalent criteria of our internal credit rating
classification at Sept. 30, 2019. Each customer is assigned an internal credit
rating, which is mapped to an equivalent external rating agency grade based upon
a number of dimensions, which are continually evaluated and may change over
time. For ratings of non-U.S. counterparties, our internal credit rating is
generally capped at a rating equivalent to the sovereign rating of the country
where the counterparty resides, regardless of the internal credit rating
assigned to the counterparty or the underlying collateral.

In addition, 82% of the financial institutions exposure is secured. For example,
securities industry clients and asset managers often borrow against marketable
securities held in custody.

The exposure to financial institutions is generally short-term with 86% of the exposures expiring within one year. At Sept. 30, 2019, 61% of the exposure to


financial institutions expires within 90 days, compared with 16% at June 30,
2019. Secured intraday credit facilities represent nearly half of the exposure
in the financial institutions portfolio and are reviewed and reapproved
annually.

At Sept. 30, 2019, the secured intraday credit provided to dealers in connection
with their tri-party repo activity totaled $20.6 billion and are included in the
securities industry portfolio. Dealers secure the outstanding intraday credit
with high-quality liquid collateral having a market value in excess of the
amount of the outstanding credit.

Our bank exposure primarily relates to our global trade finance. These exposures
are short-term in nature, with 97% due in less than one year. The investment
grade percentage of our bank exposure was 80% at Sept. 30, 2019, compared with
77% at Dec. 31, 2018. Our non-investment grade exposures are primarily in
Brazil. These loans are primarily trade finance loans.

The asset manager portfolio exposure was high-quality, with 98% of the exposures
meeting our investment grade equivalent ratings criteria as of Sept. 30, 2019.
These exposures are generally short-term liquidity facilities, with the majority
to regulated mutual funds.



24 BNY Mellon
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Commercial

The commercial portfolio is presented below.


Commercial portfolio exposure                      Sept. 30, 2019                                    Dec. 31, 2018
                                             Unfunded        Total   % Inv.    % due                    Unfunded        Total
(dollars in billions)           Loans     commitments     exposure    grade   <1 yr.       Loans     commitments     exposure
Manufacturing                 $   0.8   $         4.7   $      5.5       92 %     12 %   $   0.8   $         5.1   $      5.9
Services and other                0.7             3.7          4.4       97       17         0.7             4.8          5.5
Energy and utilities              0.2             3.8          4.0       98        4         0.5             4.1          4.6
Media and telecom                   -             1.0          1.0       92        -         0.1             1.2          1.3
Total                         $   1.7$        13.2$     14.9       95 %     11 %   $   2.1$        15.2$     17.3

The commercial portfolio exposure was $14.9 billion at Sept. 30, 2019, a decrease of 14% from Dec. 31, 2018, reflecting lower exposure in all the portfolios.


Utilities-related exposure represents approximately 75% of the energy and
utilities portfolio at Sept. 30, 2019. The exposure in the energy and utilities
portfolio, which includes exposure to refining, exploration and production
companies and integrated companies, was 98% investment grade at Sept. 30, 2019,
and 88% at Dec. 31, 2018. In the third quarter of 2019, we sold the remaining
exposure related to a California utility company that had filed for bankruptcy
of approximately $100 million.

Our credit strategy is to focus on investment grade clients that are active users of our non-credit services. The following table summarizes the percentage of the financial institutions and commercial portfolio exposures that are investment grade.

Percentage of the portfolios that are investment grade

                                                  Quarter ended
                                      June 30,      March 31,
                 Sept. 30, 2019           2019           2019   Dec. 31, 2018   Sept. 30, 2018
Financial
institutions                 95 %           95 %           94 %            95 %             94 %
Commercial                   95 %           95 %           95 %            95 %             95 %



Wealth management loans and mortgages


Our wealth management exposure was $16.7 billion at Sept. 30, 2019, compared
with $16.8 billion at Dec. 31, 2018. Wealth management loans and mortgages
primarily consist of loans to high-net-worth individuals, which are secured by
marketable securities and/or residential property. Wealth management mortgages
are primarily interest-only, adjustable-rate mortgages with a weighted-average

loan-to-value ratio of 62% at origination. Less than 1% of the mortgages were past due at Sept. 30, 2019.

At Sept. 30, 2019, the wealth management mortgage portfolio consisted of the following geographic concentrations: California - 23%; New York - 18%; Massachusetts - 10%; Florida - 8%; and other - 41%.

Commercial real estate


Our commercial real estate exposure totaled $9.2 billion at Sept. 30, 2019,
compared with $8.3 billion at Dec. 31, 2018. Our income-producing commercial
real estate facilities are focused on experienced owners and are structured with
moderate leverage based on existing cash flows. Our commercial real estate
lending activities also include construction and renovation facilities. Our
client base consists of experienced developers and long-term holders of real
estate assets. Loans are approved on the basis of existing or projected cash
flows and supported by appraisals and knowledge of local market conditions.
Development loans are structured with moderate leverage, and in many instances,
involve some level of recourse to the developer.

At Sept. 30, 2019, 65% of our commercial real estate portfolio was secured. The
secured portfolio is diverse by project type, with 45% secured by residential
buildings, 39% secured by office buildings, 8% secured by retail properties and
8% secured by other categories. Approximately 96% of the unsecured portfolio
consists of real estate investment trusts ("REITs") and real estate operating
companies, which are both predominantly investment grade.

At Sept. 30, 2019, our commercial real estate portfolio consisted of the
following concentrations:


                                                                   BNY Mellon 25
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New York metro - 46%; REITs and real estate operating companies - 33%; and other - 21%.


Lease financings

The leasing portfolio exposure totaled $1.1 billion at Sept. 30, 2019 and $1.3
billion at Dec. 31, 2018 and consisted of exposures backed by well-diversified
assets, including large-ticket transportation equipment, the largest consisting
of passenger and freight train cars. In the third quarter of 2019, we recorded a
lease-related impairment of $70 million. At Sept. 30, 2019, approximately 98% of
the leasing portfolio exposure was investment grade, or investment grade
equivalent.

Other residential mortgages


The other residential mortgages portfolio primarily consists of 1-4 family
residential mortgage loans and totaled $520 million at Sept. 30, 2019 and $594
million at Dec. 31, 2018. Included in this portfolio at Sept. 30, 2019 were $102
million of mortgage loans purchased in 2005, 2006 and the first quarter of 2007,
of which 11% of the serviced loan balance was at least 60 days delinquent.

Overdrafts

Overdrafts primarily relate to custody and securities clearance clients and are generally repaid within two business days.

Other loans

Other loans primarily include loans to consumers that are fully collateralized with equities, mutual funds and fixed-income securities.

Margin loans


Margin loan exposure of $10.6 billion at Sept. 30, 2019 and $13.6 billion at
Dec. 31, 2018 was collateralized with marketable securities. Borrowers are
required to maintain a daily collateral margin in excess of 100% of the value of
the loan. Margin loans included $1.1 billion at Sept. 30, 2019 and $2.6 billion
at Dec. 31, 2018 related to a term loan program that offers fully collateralized
loans to broker-dealers. The decrease in margin loans was primarily driven by
lower client demand.

Asset quality and allowance for credit losses


Our credit strategy is to focus on investment grade clients who are active users
of our non-credit services. Our primary exposure to the credit risk of a
customer consists of funded loans, unfunded contractual commitments to lend,
standby letters of credit ("SBLC") and overdrafts associated with our custody
and securities clearance businesses.

The following table details changes in our allowance for credit losses.


Allowance for credit losses activity                Sept. 30,    June 30,    Dec. 31,   Sept. 30,
(dollars in millions)                                    2019        2019        2018        2018
Non-margin loans                                    $  44,417$  41,794$  43,080$  40,519
Margin loans                                           10,464      10,602      13,484      13,468
Total loans                                         $  54,881$  52,396$  56,564$  53,987
Beginning balance of allowance for credit losses    $     241$     248$     251$     254
Provision for credit losses                               (16 )        (8 )         -          (3 )
Net (charge-offs) recoveries:
Commercial                                                 (1 )         -           -           -
Wealth management loans and mortgages                       -          (1 )         -           -
Other residential mortgages                                 -           2           -           -
Foreign                                                     -           -           1           -
Net (charge-offs) recoveries                               (1 )         1           1           -

Ending balance of allowance for credit losses $ 224$ 241$ 252$ 251 Allowance for loan losses

                           $     127$     146$     146$     140
Allowance for lending-related commitments                  97          95   

106 111 Allowance for loan losses as a percentage of total loans

                                                    0.23 %      0.28 %      0.26 %      0.26 %
Allowance for loan losses as a percentage of
non-margin loans                                         0.29        0.35        0.34        0.35
Total allowance for credit losses as a percentage
of total loans                                           0.41        0.46        0.45        0.46
Total allowance for credit losses as a percentage
of non-margin loans                                      0.50        0.58        0.58        0.62





26 BNY Mellon
--------------------------------------------------------------------------------

The allowance for credit losses decreased $28 million compared with Dec. 31, 2018, primarily reflecting the sale of the remaining exposure related to a California utility company that had filed for bankruptcy and lower lending-related commitments.


The provision for credit losses was a credit of $16 million in the third quarter
2019 due in part from the sale of the remaining exposure related to a California
utility company that had filed for bankruptcy. The provision for credit losses
was a credit of $8 million in the second quarter of 2019 driven by lower credit
exposure, and a credit of $3 million in the third quarter of 2018.

We had $10.5 billion of secured margin loans on our balance sheet at Sept. 30,
2019 compared with $13.5 billion at Dec. 31, 2018 and Sept. 30, 2018. We have
rarely suffered a loss on these types of loans and do not allocate any of our
allowance for credit losses to them. As a result, we believe that the ratio of
total allowance for credit losses as a percentage of non-margin loans is a more
appropriate metric to measure the adequacy of the reserve.

The allowance for loan losses and allowance for lending-related commitments
represent management's estimate of losses inherent in our credit portfolio. This
evaluation process is subject to numerous estimates and judgments. To the extent
actual results differ from forecasts or management's judgment, the allowance for
credit losses may be greater or less than future charge-offs.

Based on an evaluation of the allowance for credit losses as discussed in "Critical accounting estimates" and Note 1 of the Notes to Consolidated Financial Statements, both in our 2018 Annual Report, we have allocated our allowance for credit losses as presented below.


  Allocation of allowance
                                   Sept. 30, 2019   June 30, 2019   Dec. 31, 2018   Sept. 30, 2018
  Commercial real estate                       35 %            30 %            30 %             29 %
  Commercial                                   27              32              32               30
  Foreign                                      13              13              13               13
  Financial institutions                        9               9               9               10
  Wealth management (a)                         9               8               8                9
  Other residential mortgages                   6               6               6                7
  Lease financings                              1               2               2                2
  Total                                       100 %           100 %           100 %            100 %

(a) Includes the allowance for wealth management mortgages.

The allocation of the allowance for credit losses is inherently judgmental, and the entire allowance for credit losses is available to absorb credit losses regardless of the nature of the losses.


The credit rating assigned to each credit is a significant variable in
determining the allowance. If each credit were rated one grade better, the
allowance would have decreased by $55 million, while if each credit were rated
one grade worse, the allowance would have increased by $91 million. Similarly,
if the loss given default were one rating worse, the allowance would have
increased by $52 million, while if the loss given default were one rating
better, the allowance would have decreased by $55 million. For impaired credits,
if the net carrying value of the loans was 10% higher or lower, the allowance
would have decreased or increased by less than $1 million, respectively.

Nonperforming assets

The table below presents our nonperforming assets.

Nonperforming assets                                                           Dec. 31, 2018
(dollars in millions)                                     Sept. 30, 2019
Nonperforming loans:
Other residential mortgages                            $              62   $              67
Wealth management loans and mortgages                                 24                   9
Total nonperforming loans                                             86                  76
Other assets owned                                                     2                   3
Total nonperforming assets                             $              88   $              79
Nonperforming assets ratio                                          0.16 %              0.14 %
Nonperforming assets ratio, excluding margin loans                  0.20                0.18
Allowance for loan losses/nonperforming loans                      147.7               192.1
Allowance for loan losses/nonperforming assets                     144.3               184.8
Total allowance for credit losses/nonperforming loans              260.5               331.6
Total allowance for credit losses/nonperforming assets             254.5               319.0



Nonperforming assets increased $9 million compared with Dec. 31, 2018, primarily
reflecting the second quarter 2019 refinement of the application of our
nonperforming assets policy for first lien residential mortgage loans greater
than 90 days delinquent.

Deposits

Total deposits were $249.7 billion at Sept. 30, 2019, an increase of 5%, compared with $238.8 billion at Dec. 31, 2018. The increase reflects higher interest-bearing deposits in both U.S. and non-U.S. offices,



                                                                   BNY Mellon 27
--------------------------------------------------------------------------------

partially offset by lower noninterest-bearing deposits principally in U.S. offices.


Noninterest-bearing deposits were $55.5 billion at Sept. 30, 2019 compared with
$70.8 billion at Dec. 31, 2018. Interest-bearing deposits were $194.2 billion at
Sept. 30, 2019 compared with $168.0 billion at Dec. 31, 2018.

Short-term borrowings


We fund ourselves primarily through deposits and, to a lesser extent, other
short-term borrowings and long-term debt. Short-term borrowings consist of
federal funds purchased and securities sold under repurchase agreements,
payables to customers and broker-dealers, commercial paper and other borrowed
funds. Certain other borrowings, for example, securities sold under repurchase
agreements, require the delivery of securities as collateral.

Information related to federal funds purchased and securities sold under repurchase agreements is presented below.

Federal funds purchased and securities sold under repurchase agreements

                                                          Quarter ended
(dollars in millions)                    Sept. 30, 2019     June 30, 2019    Sept. 30, 2018
Maximum month-end balance during the
quarter                              $           16,967   $        12,127$        13,020
Average daily balance (a)            $           13,432   $        11,809$        14,199
Weighted-average rate during the
quarter (a)                                       13.08 %           12.64 %            5.33 %
Ending balance (b)                   $           11,796   $        11,757$        10,158
Weighted-average rate at period end
(b)                                               11.70 %           14.43 %            7.33 %


(a) Includes the average impact of offsetting under enforceable netting

agreements of $67,519 million for the third quarter of 2019, $50,710 million

for the second quarter of 2019 and $25,922 million for the third quarter of

2018. On a Non-GAAP basis, excluding the impact of offsetting, the

weighted-average rates would have been 2.17% for the third quarter of 2019,

2.39% for the second quarter of 2019 and 1.88% for the third 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

    $60,094 million at Sept. 30, 2019, $78,433 million at June 30, 2019 and
    $58,540 million at Sept. 30, 2018.




Fluctuations of federal funds purchased and securities sold under repurchase
agreements between periods reflect changes in overnight borrowing opportunities.
The fluctuations in the weighted-average rates

compared with June 30, 2019 and Sept. 30, 2018, primarily reflect repurchase
agreement activity with the Fixed Income Clearing Corporation ("FICC"), where we
record interest expense gross, but the ending and average balances reflect the
impact of offsetting under enforceable netting agreements. This activity
primarily relates to government securities collateralized resale and repurchase
agreements executed with clients that are novated to and settle with the FICC.

Information related to payables to customers and broker-dealers is presented below.

Payables to customers and broker-dealers

                                                         Quarter ended
(dollars in millions)                  Sept. 30, 2019     June 30, 2019    Sept. 30, 2018
Maximum month-end balance during the
quarter                              $         19,103   $        19,149   $ 

19,232

Average daily balance (a)            $         18,619   $        18,679   $ 

19,073

Weighted-average rate during the
quarter (a)                                      1.52 %            1.76 %            1.23 %
Ending balance                       $         18,364   $        18,946   $ 

18,683

Weighted-average rate at period end              1.34 %            1.73 %   

1.30 %

(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

$15,440 million in the third quarter of 2019, $15,666 million in the second

    quarter of 2019 and $16,252 million in the third quarter of 2018.



Payables to customers and broker-dealers represent funds awaiting re-investment and short sale proceeds payable on demand. Payables to customers and broker-dealers are driven by customer trading activity and market volatility.

Information related to commercial paper is presented below.


Commercial paper                                          Quarter ended
(dollars in millions)                   Sept. 30, 2019      June 30, 2019     Sept. 30, 2018
Maximum month-end balance during
the quarter                         $            5,692   $          8,894   $          4,422
Average daily balance               $            3,796   $          2,957   $          3,102
Weighted-average rate during the
quarter                                           2.26 %             2.43 %             2.10 %
Ending balance                      $            3,538   $          8,894   $            735
Weighted-average rate at period end               1.88 %             2.35 %             2.06 %



The Bank of New York Mellon issues commercial paper that matures within 397 days from date of issue



28 BNY Mellon
--------------------------------------------------------------------------------

and is not redeemable prior to maturity or subject to voluntary prepayment. The fluctuations in the commercial paper balances, compared with prior periods, primarily reflect funding of investments in short-term assets.

Information related to other borrowed funds is presented below.


Other borrowed funds                                       Quarter ended
(dollars in millions)                   Sept. 30, 2019      June 30, 2019     Sept. 30, 2018
Maximum month-end balance during the
quarter                              $           1,358   $          2,732   $          3,269
Average daily balance                $           1,148   $          2,455   $          2,747
Weighted-average rate during the
quarter                                           3.24 %             3.36 %             2.33 %
Ending balance                       $             820   $          1,921   $          2,934
Weighted-average rate at period end               3.16 %             3.84 %             2.48 %




Other borrowed funds primarily include borrowings from the Federal Home Loan
Bank ("FHLB"), overdrafts of sub-custodian account balances in our Investment
Services businesses, finance lease liabilities and borrowings under lines of
credit by our Pershing subsidiaries. Overdrafts typically relate to timing
differences for settlements. The decrease in other borrowed funds, compared with
prior periods, primarily reflects a decrease in borrowings from the FHLB.

Liquidity and dividends


BNY Mellon defines liquidity as the ability of the Parent and its subsidiaries
to access funding or convert assets to cash quickly and efficiently, or to roll
over or issue new debt, especially during periods of market stress, at a
reasonable cost, and in order to meet its short-term (up to one year)
obligations. Funding liquidity risk is the risk that BNY Mellon cannot meet its
cash and collateral obligations at a reasonable cost for both expected and
unexpected cash flow and collateral needs without adversely affecting daily
operations or our financial condition.

Funding liquidity risk can arise from funding mismatches, market constraints
from the inability to convert assets into cash, the inability to hold or raise
cash, low overnight deposits, deposit run-off or contingent liquidity events.

We also manage liquidity risk on an intraday basis. Intraday liquidity risk is
the risk that BNY Mellon cannot access funds during the business day to make
payments or settle immediate obligations, usually in real time. Intraday
liquidity risk can arise from timing mismatches, market constraints from the
inability to convert assets into cash, the inability to raise cash intraday, low
overnight deposits and/or adverse stress events.

Changes in economic conditions or exposure to credit, market, operational, legal
and reputational risks also can affect BNY Mellon's liquidity risk profile and
are considered in our liquidity risk framework.

The Parent's policy is to have access to sufficient unencumbered cash and cash
equivalents at each quarter-end to cover forecasted debt redemptions, net
interest payments and net tax payments for the following 18-month period, and to
provide sufficient collateral to satisfy transactions subject to Section 23A of
the Federal Reserve Act.

As of Sept. 30, 2019, the Parent was in compliance with this policy. For additional information on our liquidity policy, see "Risk Management - Liquidity risk" in our 2018 Annual Report.


We define available funds for internal liquidity management purposes as cash and
due from banks, interest-bearing deposits with the Federal Reserve and other
central banks, interest-bearing deposits with banks and federal funds sold and
securities purchased under resale agreements. The following table presents our
total available funds at period end and on an average basis.

Available funds                               Sept. 30,                                   Average
(dollars in millions)                              2019     Dec. 31, 2018        3Q19        2Q19        3Q18
Cash and due from banks                      $    6,718   $         5,864   $   5,250$   5,083$   5,000
Interest-bearing deposits with the Federal
Reserve and other central banks                  73,811            67,988      60,030      61,756      61,216
Interest-bearing deposits with banks             15,417            14,148      15,324      13,666      14,691
Federal funds sold and securities purchased
under resale agreements                          43,723            46,795      40,816      38,038      26,738
Total available funds                        $  139,669$       134,795$ 121,420$ 118,543$ 107,645
Total available funds as a percentage of
total assets                                         37 %              37 %        35 %        35 %        32 %





                                                                   BNY Mellon 29
--------------------------------------------------------------------------------

Total available funds were $139.7 billion at Sept. 30, 2019, compared with
$134.8 billion at Dec. 31, 2018. The increase was primarily due to higher
interest-bearing deposits with the Federal Reserve and other central banks and
interest-bearing deposits with banks, partially offset by lower federal funds
sold and securities purchased under resale agreements.

Average non-core sources of funds, such as federal funds purchased and
securities sold under repurchase agreements, trading liabilities, commercial
paper and other borrowed funds, were $18.9 billion for the nine months ended
Sept. 30, 2019 and $24.2 billion for the nine months ended Sept. 30, 2018. The
decrease was primarily due to lower federal funds purchased and securities sold
under repurchase agreements.

Average foreign deposits, primarily from our European-based Investment Services
businesses, were $92.5 billion for the nine months ended Sept. 30, 2019,
compared with $97.7 billion for the nine months ended Sept. 30, 2018. The
decrease primarily reflects client activity. Average interest-bearing domestic
deposits were $75.8 billion for the nine months ended Sept. 30, 2019 and $54.6
billion for the nine months ended Sept. 30, 2018. The increase primarily
reflects an increase in demand and time deposits.

Average payables to customers and broker-dealers were $15.7 billion for the nine
months ended Sept. 30, 2019 and $16.6 billion for the nine months ended Sept.
30, 2018. Payables to customers and broker-dealers are driven by customer
trading activity and market volatility.

Average long-term debt was $28.1 billion for the nine months ended Sept. 30, 2019 and $28.3 billion for the nine months ended Sept. 30, 2018.


Average noninterest-bearing deposits decreased to $52.2 billion for the nine
months ended Sept. 30, 2019 from $65.4 billion for the nine months ended Sept.
30, 2018, primarily reflecting client activity.

A significant reduction in our Investment Services business would reduce our
access to deposits. See "Asset/liability management" for additional factors that
could impact our deposit balances.

Sources of liquidity


The Parent's three major sources of liquidity are access to the debt and equity
markets, dividends from its subsidiaries, and cash on hand and cash otherwise
made available in business-as-usual circumstances to the Parent through a
committed credit facility with our intermediate holding company ("IHC").

Our ability to access the capital markets on favorable terms, or at all, is partially dependent on our credit ratings, which are as follows:

Credit ratings at Sept. 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       Positive

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       Positive

(a) Represents senior debt issuer default rating.


NR - Not rated.



30 BNY Mellon
--------------------------------------------------------------------------------

In November 2019, DBRS upgraded the Parent's long-term senior debt rating to AA,
the subordinated debt rating to AA (low) and the preferred stock rating to A.
DBRS also upgraded The Bank of New York Mellon and BNY Mellon, N.A.'s long-term
senior debt rating to AA (high) and long-term deposits to AA (high). The
short-term ratings of the Parent, The Bank of New York Mellon and BNY Mellon
N.A. were confirmed.

Long-term debt totaled $27.9 billion at Sept. 30, 2019 and $29.2 billion at Dec.
31, 2018. The decrease reflects maturities of $4.3 billion, partially offset by
issuances of $2.3 billion and an increase in the fair value of hedged long-term
debt. No long-term debt will mature in the fourth quarter of 2019.

The Parent issued $1 billion of fixed rate senior notes maturing in 2022 at an
annual interest rate of 1.950% in August 2019, and $750 million of fixed rate
senior notes maturing in 2024 at an annual interest rate of 2.100% in October
2019.

The Bank of New York Mellon may issue notes and certificates of deposit ("CDs").
At Sept. 30, 2019 and Dec. 31, 2018, $2.0 billion and $2.8 billion,
respectively, of CDs were outstanding. At Sept. 30, 2019 and Dec. 31, 2018, $2.3
billion and $1.0 billion, respectively, of notes were outstanding.

The Bank of New York Mellon also issues commercial paper that matures within 397
days from date of issue and is not redeemable prior to maturity or subject to
voluntary prepayment. The average commercial paper outstanding was $2.7 billion
for the nine months ended Sept. 30, 2019 and $3.4 billion for the nine months
ended Sept. 30, 2018. Commercial paper outstanding was $3.5 billion at Sept. 30,
2019 and $1.9 billion at Dec. 31, 2018.

Subsequent to Sept. 30, 2019, our U.S. bank subsidiaries could declare dividends
to the Parent of approximately $1.2 billion, without the need for a regulatory
waiver. In addition, at Sept. 30, 2019, non-bank subsidiaries of the Parent had
liquid assets of approximately $1.6 billion. Restrictions on our ability to
obtain funds from our subsidiaries are discussed in more detail in "Supervision
and Regulation - Capital Planning and Stress Testing - Payment of Dividends,
Stock Repurchases and Other Capital Distributions" and in Note 18 of the Notes
to Consolidated Financial Statements in our 2018 Annual Report.

Pershing LLC has uncommitted lines of credit in place for liquidity purposes
which are guaranteed by the Parent. Pershing LLC has three separate uncommitted
lines of credit amounting to $750 million in aggregate. There were no borrowings
under these lines in the third quarter of 2019. Pershing Limited, an indirect
UK-based subsidiary of BNY Mellon, has three separate uncommitted lines of
credit amounting to $350 million in aggregate. Average borrowings under these
lines were $1 million, in aggregate, in the third quarter of 2019.

The double leverage ratio is the ratio of our equity investment in subsidiaries
divided by our consolidated Parent company equity, which includes our
noncumulative perpetual preferred stock. In short, the double leverage ratio
measures the extent to which equity in subsidiaries is financed by Parent
company debt. As the double leverage ratio increases, this can reflect greater
demands on a company's cash flows in order to service interest payments and debt
maturities. BNY Mellon's double leverage ratio is managed in a range considering
the high level of unencumbered available liquid assets held in its principal
subsidiaries (such as central bank deposit placements and government
securities), the Company's cash generating fee-based business model, with fee
revenue representing 81% of total revenue in the third quarter of 2019, and the
dividend capacity of our banking subsidiaries. Our double leverage ratio was
118.1% at Sept. 30, 2019 and 117.7% at Dec. 31, 2018, and within the range
targeted by management.

Uses of funds

The Parent's major uses of funds are payment of dividends, repurchases of common stock, principal and interest payments on its borrowings, acquisitions and additional investments in its subsidiaries.

In August 2019, a quarterly cash dividend of $0.31 per common share was paid to common shareholders. Our common stock dividend payout ratio was 29% for the first nine months of 2019.

In the third quarter of 2019, we repurchased 21.3 million common shares at an average price of $46.11 per common share for a total cost of $981 million.




                                                                   BNY Mellon 31
--------------------------------------------------------------------------------

Liquidity coverage ratio


U.S. regulators have established an LCR that requires certain banking
organizations, including BNY Mellon, to maintain a minimum amount of
unencumbered high-quality liquid assets ("HQLA") sufficient to withstand the net
cash outflow under a hypothetical standardized acute liquidity stress scenario
for a 30-day time horizon.

The following table presents BNY Mellon's consolidated HQLA at Sept. 30, 2019, and the average HQLA and average LCR for the third quarter of 2019.

Consolidated HQLA and LCR
(dollars in billions)                   Sept. 30, 2019
Securities (a)                        $            119
Cash (b)                                            67
Total consolidated HQLA (c)           $            186

Total consolidated HQLA - average (c) $            168
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 $142 billion at Sept. 30,

    2019 and averaged $125 billion for the third quarter of 2019.




BNY Mellon and each of our affected domestic bank subsidiaries were compliant
with the U.S. LCR requirements of at least 100% throughout the third quarter of
2019.

Statement of cash flows

The following summarizes the activity reflected on the consolidated statement of
cash flows. While this information may be helpful to highlight certain macro
trends and business strategies, the cash flow analysis may not be as relevant
when analyzing changes in our net earnings and net assets. We believe that in
addition to the traditional cash flow analysis, the discussion related to
liquidity and dividends and asset/liability management herein may provide more
useful context in evaluating our liquidity position and related activity.


Net cash provided by operating activities was $2.6 billion in the nine months
ended Sept. 30, 2019, compared with $2.8 billion in the nine months ended Sept.
30, 2018. In the nine months ended Sept. 30, 2019 and nine months ended Sept.
30, 2018, cash flows provided by operations primarily resulted from earnings,
partially offset by changes in trading activities.

Net cash used for investing activities was $5.2 billion in the nine months ended
Sept. 30, 2019, compared with net cash provided by investing activities of $18.0
billion in the nine months ended Sept. 30, 2018. In the nine months ended Sept.
30, 2019, net cash used for investing activities primarily reflects changes in
interest-bearing deposits with the Federal Reserve and other central banks,
partially offset by change in federal funds sold and securities purchased under
resale agreements. In the nine months ended Sept. 30, 2018, net cash provided by
investing activities primarily reflects changes in interest-bearing deposits
with the Federal Reserve and other central banks and changes in loans, partially
offset by changes in interest-bearing deposits with banks.

Net cash provided by financing activities was $3.5 billion in the nine months
ended Sept. 30, 2019, compared with net cash used for financing activities of
$21.6 billion in the nine months ended Sept. 30, 2018. In the nine months ended
Sept. 30, 2019, net cash provided by financing activities primarily reflects
changes in deposits and net proceeds from the issuance of long-term debt,
partially offset by repayments of long-term debt, changes in federal funds
purchased and securities sold under repurchase agreements, changes in other
borrowed funds and common stock repurchases. In the nine months ended Sept. 30,
2018, net cash used for financing activities primarily reflects changes in
deposits, changes in federal funds purchased and securities sold under
repurchase agreements, repayments of long-term debt, a change in commercial
paper and common stock repurchases, partially offset by net proceeds from the
issuance of long-term debt.

© Edgar Online, source Glimpses

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