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BNY Mellon Reports Second Quarter Continuing EPS of $0.55 or $668 Million Vs. $0.23 or $267 Million in the Second Quarter of 2009

Jul 20, 2010

Securities Servicing Fees Up 6% Sequentially

$12 Billion of Net Long-Term Asset Inflows in 2Q10

Credit Quality Improvement Continues; Provision Down 43%; NPAs Down 12% Sequentially

Strong Capital Generation

NEW YORK, July 20, 2010 — The Bank of New York Mellon Corporation ("BNY Mellon") (NYSE: BK) today reported second quarter income from continuing operations applicable to common shareholders of $668 million, or $0.55 per common share, compared with $267 million, or $0.23 per common share, in the second quarter of 2009 and $601 million, or $0.49 per common share, in the first quarter of 2010.

"Our focus on winning new business and providing exceptional client service resulted in solid growth in securities servicing fees and continued long-term asset inflows for our asset and wealth management businesses.  Our conservative risk profile is reflected in our excellent credit quality and strong capital generation," said Robert P. Kelly, chairman and chief executive officer of BNY Mellon.

"We continue to invest in our businesses.  We just completed our Global Investment Servicing acquisition and expect to close on the acquisition of BHF's German asset servicing operation in August.  In addition, we received regulatory approval for the opening of our asset management joint venture in Shanghai, expanded our asset management licensing in Korea, and announced our agreement to acquire a wealth management firm in Toronto," added Mr. Kelly.

Second Quarter Results - Unless otherwise noted, all comments begin with the results of the second quarter of 2010 and are compared to the second quarter of 2009, all information is reported on a continuing operations basis and sequential growth rates are unannualized.  Please refer to the Quarterly Earnings Review for detailed business segment information.

    
    
    Total revenue
    -------------------------------------------------------------------------
                                                                    2Q10 vs.
    Reconciliation of total revenue                               -----------
    (dollar amounts in millions)    2Q10       1Q10       2Q09    2Q09   1Q10
    -------------------------------------------------------------------------
    Fee and other revenue – GAAP   $2,571     $2,549     $2,257
    Less:  Net securities 
            gains (losses)             13          7       (256)
    -------------------------------------------------------------------------
      Total fee revenue – GAAP      2,558      2,542      2,513     2%    1%
    Income from consolidated asset 
     management funds, net of 
     noncontrolling interests          32(a)      41(a)       -
    -------------------------------------------------------------------------
      Total fee revenue – Non-GAAP  2,590      2,583      2,513     3%    -%
    Net interest revenue – GAAP       722        765        700
    -------------------------------------------------------------------------
      Total revenue excluding net 
       securities gains (losses)
       – Non-GAAP                  $3,312(b)  $3,348(b)  $3,213     3%   (1)%
    -------------------------------------------------------------------------
    (a) Includes $29 million and $25 million previously reported as asset 
        and wealth management fee revenue and $3 million and $16 million
        previously reported as investment income in the second and first 
        quarters of 2010, respectively.
    (b) Total revenue on a GAAP basis was $3,358 million and $3,379 million
        in the second and first quarters of 2010 respectively.
  • Assets under custody and administration amounted to $21.8 trillion at June 30, 2010, an increase of 6% compared with the prior year and a decrease of 2% sequentially.  The year-over-year increase reflects higher market values and net new business.  The sequential decrease primarily reflects lower market values.  Assets under management, excluding securities lending assets, amounted to $1.0 trillion at June 30, 2010.  This represents an increase of 13% compared with the prior year and a 5% sequential decrease.  The year-over-year increase was primarily due to the acquisition of Insight Investment Management ("Insight") in the fourth quarter of 2009.  The sequential decrease primarily reflects lower market values.
  • Securities servicing fees totaled $1.267 billion, a decrease of 2% year-over-year and an increase of 6% sequentially.  An increase in asset servicing revenue, excluding securities lending fee revenue, compared with the second quarter of 2009, was partially offset by lower issuer and clearing services revenue which were negatively impacted by lower money market distribution fees.  Sequentially, issuer services, asset servicing and clearing services revenue improved reflecting new business, higher transaction volumes and seasonality.  Securities lending fee revenue totaled $46 million in the second quarter of 2010 compared with $97 million in the prior year period and $29 million sequentially.  The year-over-year decrease reflects narrower spreads and lower loan balances while the sequential increase primarily reflects seasonality.
  • Asset and wealth management fees were $676 million in the second quarter of 2010.  Adjusted for performance fees and income from consolidated asset management funds, net of noncontrolling interests, these fees totaled $686 million, an increase of 12% compared with the prior year period and a decrease of 1% sequentially (see page 11).  The year-over-year increase reflects improved market values, the Insight acquisition and the impact of new business, partially offset by higher fee waivers and a reduction in fees due to money market outflows.  Sequentially, the impact of new business was more than offset by lower market values.
  • Foreign exchange and other trading activities totaled $220 million compared with $237 million in the prior year period and $262 million in the first quarter of 2010.  In the second quarter of 2010, foreign exchange revenue totaled $244 million, an increase of 39% sequentially, driven by increased volatility.  The negative other trading revenue of $24 million in the second quarter of 2010 primarily relates to credit valuation adjustments ("CVA") on derivatives due to widening spreads and lower fixed income trading revenue.
  • Investment income and Other income totaled $145 million, increasing $92 million year-over-year, and was unchanged sequentially.  The year-over-year increase reflects positive foreign currency translations and lease residual gains, partially offset by lower seed capital revenue.
  • Net interest revenue (FTE) and the net interest margin were $727 million and 1.74% compared with $770 million and 1.89% sequentially.  These declines primarily reflect our credit strategy to reduce targeted loan exposure, as well as reducing the duration of placements.
  • Investment securities pre-tax net gains totaled $13 million compared to a pre-tax net loss of $256 million in the second quarter of 2009 and a $7 million pre-tax net gain in the first quarter of 2010.

The provision for credit losses decreased to $20 million in the second quarter of 2010 compared with $35 million in the first quarter of 2010.  During the second quarter of 2010, the total allowance for credit losses increased $7 million and net charge-offs totaled $13 million.  Nonperforming assets at June 30, 2010 totaled $406 million, a decrease of $53 million, or 12%, compared with March 31, 2010 primarily due to repayments.

    
    
    Total noninterest expense
    ----------------------------------------------------------------------
    Reconciliation of noninterest                                2Q10 vs.
     expense                                                  ------------
    (dollar amounts in millions)     2Q10    1Q10    2Q09     2Q09    1Q10
    ----------------------------------------------------------------------
    Noninterest expense – GAAP     $2,332  $2,460  $2,383     (2)%    (5)%
    Less: Special litigation 
           reserves                   N/A     164     N/A
          FDIC special assessment       -       -      61
          Restructuring charges       (15)      7       6
          M&I expenses                 14      26      59
          Amortization of 
           intangible assets           98      97     108
    ----------------------------------------------------------------------
    Total noninterest expense 
     excluding special litigation 
     reserves, FDIC special 
     assessment, restructuring 
     charges, M&I expenses and 
     intangible amortization – 
     Non-GAAP                      $2,235  $2,166  $2,149      4%      3%
    ----------------------------------------------------------------------
    N/A – Not applicable.
  • Total noninterest expense (excluding special litigation reserves, FDIC special assessment, restructuring charges, M&I expenses and intangible amortization) (Non-GAAP) increased 4% compared with the prior year period and 3% sequentially.  The increase compared with the prior year period was primarily driven by the impact of the Insight acquisition and higher incentive expenses.  The sequential increase reflects higher support agreement charges resulting from a quarterly change in the market value of Lehman securities, the impact of the annual merit increase which was effective in the second quarter of 2010 and the U.K. bonus tax.  Comparisons to both periods were also impacted by higher business development activity.

The effective tax rate was 30.2% in the second quarter of 2010.

The unrealized net of tax gain on our investment securities portfolio was $114 million at June 30, 2010 compared with an unrealized net of tax loss of $191 million at March 31, 2010.  The improvement in the valuation of the investment securities portfolio was due to tightening credit spreads and a decline in interest rates.

    
    
    -------------------------------------------------------------------------
    Capital ratios (a)                       June 30,   March 31,    June 30,
                                               2010        2010        2009
    -------------------------------------------------------------------------
    Tier 1 capital ratio                       13.5%       13.3%       12.5%
    Total (Tier 1 plus Tier 2) capital ratio   17.2        17.2        16.0
    Leverage capital ratio                      6.6         6.5         7.6
    Common shareholders' equity to total 
     assets ratio (b)                          12.9        13.5        13.4
    Tangible common shareholders' equity 
     to tangible assets of operations 
     ratio – Non-GAAP (b)                       6.3         6.1         4.8
    Tier 1 common equity to risk-weighted 
     assets ratio (b)                          11.8        11.6        11.1
    -------------------------------------------------------------------------
    (a) Includes discontinued operations.  Preliminary.
    (b) See the Supplemental information section beginning on page 10 for 
        a calculation of these ratios.

Declaration of quarterly dividend – On July 20, 2010, The Bank of New York Mellon Corporation declared a quarterly common stock dividend of $0.09 per common share.  This cash dividend is payable on Aug. 10, 2010 to shareholders of record as of the close of business on July 30, 2010.

BNY Mellon is a global financial services company focused on helping clients manage and service their financial assets, operating in 36 countries and serving more than 100 markets.  BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing superior asset management and wealth management, asset servicing, issuer services, clearing services and treasury services through a worldwide client-focused team.  It has $21.8 trillion in assets under custody and administration and $1.0 trillion in assets under management, services $11.6 trillion in outstanding debt and processes global payments averaging $1.5 trillion per day.  BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation.  Additional information is available at www.bnymellon.com.

Supplemental Financial Information

The Quarterly Earnings Review and supplemental financial trends for The Bank of New York Mellon Corporation have been updated through June 30, 2010 and are available at www.bnymellon.com (Investor Relations - Financial Reports).

Conference Call Data

Robert P. Kelly, chairman and chief executive officer; Gerald L. Hassell, president; and Thomas P. Gibbons, chief financial officer, along with other members of executive management from BNY Mellon, will host a conference call and simultaneous live audio webcast at 8:00 a.m. EDT on July 20, 2010.  This conference call and audio webcast will include forward-looking statements and may include other material information.  Persons wishing to access the conference call and audio webcast may do so by dialing (888) 677-5383 (U.S.) and (210) 838-9221 (International) Passcode: Earnings, or by logging on to www.bnymellon.com.  The Earnings Release, together with the Quarterly Earnings Review and supplemental Financial Trends, will be available at www.bnymellon.com beginning at approximately 6:30 a.m. EDT on July 20, 2010.  Replays of the conference call and audio webcast will be available beginning July 20, 2010 at approximately 2 p.m. EDT through Tuesday, Aug. 3, 2010 by dialing (866) 360-7726 (U.S.) or (203) 369-0178 (International). The archived version of the conference call and audio webcast will also be available at www.bnymellon.com for the same time period.

    
    
                      THE BANK OF NEW YORK MELLON CORPORATION
                                Financial Highlights
    
    --------------------------------------------------------------------------
    (dollar amounts in 
    millions, except              Quarter ended              Year to date
    per common share     ------------------------------   -------------------
    amounts and unless   June 30,  March 31,   June 30,   June 30,   June 30,
    otherwise noted)      2010       2010       2009       2010       2009
    --------------------------------------------------------------------------
    Continuing 
     operations
    Return on common 
     equity 
     (annualized) (a)      8.8%       8.2%       4.0%       8.5%       4.9%
      Non-GAAP 
       adjusted (a)        9.5%      10.6%       6.6%      10.0%       8.6%
    
    Return on tangible 
     common equity 
     (annualized) – 
     Non-GAAP (a)         25.8%      25.8%      18.4%      25.7%      23.2%
      Non-GAAP 
       adjusted (a)       25.5%      30.2%      24.0%      27.7%      33.3%
    
    Fee and other 
     revenue as a 
     percent of total 
     revenue                77%        75%        76%        76%        75%
    
    Annualized fee 
     revenue per 
     employee (based 
     on average 
     headcount) 
     (in thousands)       $241       $244       $241       $243       $238
    
    Percent of 
     non-U.S. fee 
     and net interest 
     revenue including 
     non-controlling 
     interests related 
     to consolidated 
     asset management 
     funds                  35%        34%        31%        35%        30%
    
    Pre-tax operating 
     margin (a)             30%        26%        17%        28%        18%
      Non-GAAP 
       adjusted (a)         32%        34%        31%        33%        32%
    
    Net interest 
     margin (FTE)         1.74%      1.89%      1.80%      1.82%      1.84%(b)
    
    Selected average 
     balances
    Interest-earning 
     assets           $167,119   $163,429   $157,265   $165,285   $162,318(c)
    Assets of 
     operations       $216,801   $212,685   $208,533   $214,755   $214,294
    Total assets      $228,841   $225,415   $208,533   $227,138   $214,294
    Interest-bearing 
     deposits          $99,963   $101,034    $98,896   $100,496   $100,430(c)
    Noninterest-
     bearing 
     deposits          $34,628    $33,330    $32,852    $33,983    $37,924(c)
    Total The Bank of 
     New York Mellon 
     Corporation 
     shareholders' 
     equity            $30,434    $29,715    $28,934    $30,076    $28,458
    
    Average common 
     shares and 
     equivalents 
     outstanding 
     (in thousands):
      Basic          1,204,557  1,202,533  1,171,081  1,203,554  1,158,649
      Diluted        1,208,830  1,206,286  1,174,466  1,207,578  1,160,620
    
    Period-end data
    Assets under 
     management 
     (in billions)      $1,047     $1,105       $926     $1,047       $926
    Assets under 
     custody and 
     administration 
     (in trillions)      $21.8      $22.4      $20.7      $21.8      $20.7
      Cross-border 
       assets 
       (in trillions)     $8.3       $8.8       $7.8       $8.3       $7.8
    Market value of 
     securities on 
     loan (in 
     billions) (d)        $248       $253       $290       $248       $290
    
    Employees           42,700     42,300     41,800     42,700     41,800
    
    Book value per 
     common share
     – GAAP (a)         $25.04     $24.47     $22.68     $25.04     $22.68
    Tangible book 
     value per 
     common share
     – Non-GAAP (a)      $9.33      $8.69      $6.60      $9.33      $6.60
    Cash dividends 
     per common 
     share               $0.09      $0.09      $0.09      $0.18      $0.33
    Closing common
     stock price 
     per common 
     share              $24.69     $30.88     $29.31     $24.69     $29.31
    Market 
     capitalization    $29,975    $37,456    $35,255    $29,975    $35,255
    --------------------------------------------------------------------------
    (a) See Supplemental information beginning on page 10 for a calculation
        of these ratios.
    (b) Calculated on a continuing operations basis, even though the 
        balance sheet, in accordance with GAAP, is not restated for 
        discontinued operations.
    (c) Excludes the impact of discontinued operations.
    (d) Represents the securities on loan, both cash and non-cash, managed
        by the Asset Servicing segment.
    
    
    
                       THE BANK OF NEW YORK MELLON CORPORATION
                       Condensed Consolidated Income Statement
    
    -------------------------------------------------------------------------
                                    Quarter ended             Year to date
                            -----------------------------  ------------------
                            June 30,  March 31,  June 30,  June 30,  June 30,
    (in millions)             2010      2010      2009      2010      2009
    -------------------------------------------------------------------------
    Fee and other revenue
    Securities servicing 
     fees:
      Asset servicing         $668      $637      $671    $1,305    $1,280
      Issuer services          354       333       372       687       736
      Clearing services        245       230       250       475       503
    -------------------------------------------------------------------------
        Total securities 
         servicing fees      1,267     1,200     1,293     2,467     2,519
    Asset and wealth 
     management fees           676       678       637     1,354     1,253
    Foreign exchange and 
     other trading 
     activities                220       262       237       482       544
    Treasury services          125       131       132       256       257
    Distribution and 
     servicing                  77        76       107       153       218
    Financing-related fees      48        50        54        98       102
    Investment income           72       108        44       180        27
    Other                       73        37         9       110        24
    -------------------------------------------------------------------------
        Total fee revenue    2,558     2,542     2,513     5,100     4,944
    Net securities 
     gains (losses)             13         7      (256)        20     (551)
    -------------------------------------------------------------------------
        Total fee and 
         other revenue       2,571     2,549     2,257     5,120     4,393
    Operations of 
     consolidated asset 
     management funds
    Investment income          188       155         -       343         -
    Interest of asset 
     management fund 
     note holders              123        90         -       213         -
        Income of 
         consolidated 
         asset management 
         funds                  65        65         -       130         -
    Net interest revenue
    Interest revenue           862       883       845     1,745     1,824
    Interest expense           140       118       145       258       349
    -------------------------------------------------------------------------
        Net interest revenue   722       765       700     1,487     1,475
    Provision for credit 
     losses                     20        35        61        55       120
    -------------------------------------------------------------------------
        Net interest revenue 
         after provision for 
         credit losses         702       730       639     1,432     1,355
    Noninterest expense
    Staff                    1,234     1,220     1,153     2,454     2,322
    Professional, legal and 
     other purchased 
     services                  256       241       237       497       474
    Net occupancy              143       137       142       280       281
    Distribution and 
     servicing                 106       109       106       215       213
    Software                    91        94        93       185       174
    Furniture and equipment     71        75        76       146       153
    Business development        68        52        49       120        93
    Sub-custodian               65        52        60       117        99
    Other                      201       350       294       551       496
    -------------------------------------------------------------------------
        Subtotal             2,235     2,330     2,210     4,565     4,305
    Amortization of 
     intangible assets          98        97       108       195       215
    Restructuring charges      (15)        7         6        (8)       16
    Merger and integration 
     expenses                   14        26        59        40       127
    -------------------------------------------------------------------------
        Total noninterest 
         expense            $2,332    $2,460    $2,383    $4,792    $4,663
    -------------------------------------------------------------------------
    Income
    Income from continuing 
     operations before 
     income taxes            1,006       884       513     1,890     1,085
    Provision for income 
     taxes                     304       258        12       562       173
    -------------------------------------------------------------------------
        Income from 
         continuing 
         operations            702       626       501     1,328       912
    Discontinued operations:
      Loss from discontinued 
       operations              (16)      (70)     (144)      (86)     (209)
      Benefit for income 
       taxes                    (6)      (28)      (53)      (34)      (77)
    -------------------------------------------------------------------------
        Loss from 
         discontinued 
         operations, net of 
         tax                   (10)      (42)      (91)      (52)     (132)
    -------------------------------------------------------------------------
        Net income             692       584       410     1,276       780
    Net (income) loss 
     attributable to 
     noncontrolling interests  (34)(a)   (25)(a)     2       (59)(a)     1
    Redemption charge and 
     preferred dividends         -         -      (236)        -      (283)
    -------------------------------------------------------------------------
        Net income applicable 
         to common 
         shareholders of The 
         Bank of New York 
         Mellon Corporation   $658      $559      $176    $1,217      $498
    -------------------------------------------------------------------------
    (a) Includes $33 million for the second quarter of 2010, $24 million 
        for the first quarter of 2010 and $57 million for the first six 
        months of 2010, related to consolidated asset management funds.
    
    
    
                      THE BANK OF NEW YORK MELLON CORPORATION
               Condensed Consolidated Income Statement - continued
    
    --------------------------------------------------------------------------
    Earnings per common share 
    applicable to the common 
    shareholders of The Bank         Quarter ended            Year to date
    of New York Mellon       -----------------------------  ------------------
    Corporation (a)          June 30,  March 31,  June 30,  June 30,  June 30,
    (in dollars)               2010       2010      2009      2010      2009
    --------------------------------------------------------------------------
    Basic:
      Net income from 
       continuing operations  $0.55      $0.50     $0.23     $1.04     $0.54
      Net loss from 
       discontinued 
       operations             (0.01)     (0.04)    (0.08)    (0.04)    (0.11)
    --------------------------------------------------------------------------
        Net income 
         applicable to 
         common stock         $0.54      $0.46     $0.15     $1.00     $0.43
    --------------------------------------------------------------------------
    Diluted:
      Net income from 
       continuing operations  $0.55      $0.49     $0.23     $1.04     $0.54
      Net loss from 
       discontinued 
       operations             (0.01)     (0.03)    (0.08)    (0.04)    (0.11)
    --------------------------------------------------------------------------
        Net income 
         applicable to 
         common stock         $0.54      $0.46     $0.15     $1.00     $0.43
    --------------------------------------------------------------------------
    (a) Basic and diluted earnings per share under the two-class method 
        were calculated after deducting earnings allocated to 
        participating securities of $2 million in the second quarter of 
        2009, $5 million in the first quarter of 2010, $7 million in the 
        second quarter of 2010, $12 million in the first six months of 
        2010 and $5 million in the first six months of 2009.
    
    
    
    --------------------------------------------------------------------------
    Reconciliation of net 
    income from continuing 
    operations applicable to 
    the common shareholders           Quarter ended            Year to date
    of The Bank of New York  -----------------------------  ------------------
    Mellon Corporation       June 30,  March 31,  June 30,  June 30,  June 30,
    (in millions)              2010       2010      2009      2010      2009
    --------------------------------------------------------------------------
    Net income from 
     continuing operations     $702       $626      $501    $1,328      $912
    Net (income) loss 
     attributable to 
     noncontrolling interests   (34)       (25)        2       (59)        1
    Redemption charge and 
     preferred dividends          -          -      (236)        -      (283)
    --------------------------------------------------------------------------
      Net income from 
       continuing operations 
       applicable to common
       shareholders of The 
       Bank of New York 
       Mellon Corporation       668        601       267     1,269       630
    Net loss from 
     discontinued operations    (10)       (42)      (91)      (52)     (132)
    --------------------------------------------------------------------------
      Net income applicable 
       to the common 
       shareholders of The 
       Bank of New York 
       Mellon Corporation      $658       $559      $176    $1,217      $498
    --------------------------------------------------------------------------
    
    
    
                      THE BANK OF NEW YORK MELLON CORPORATION
                              Consolidated Balance Sheet
    
    -----------------------------------------------------------------------
    (dollar amounts in millions,                 June 30,          Dec. 31,
    except per share amounts)                      2010              2009
    -----------------------------------------------------------------------
    Assets
    Cash and due from:
      Banks                                      $3,569            $3,732
      Interest-bearing deposits with the 
       Federal Reserve and other central banks   21,579             7,362
    Interest-bearing deposits with banks         53,396            56,302
    Federal funds sold and securities 
     purchased under resale agreements            4,453             3,535
    Securities:
      Held-to-maturity (fair value of 
       $3,698 and $4,240)                         3,742             4,417
      Available-for-sale (June 30, 2010 
       includes $580 previously securitized)     49,834            51,632
    -----------------------------------------------------------------------
        Total securities                         53,576            56,049
    Trading assets                                7,393             6,001
    Loans                                        37,147            36,689
    Allowance for loan losses                      (542)             (503)
    -----------------------------------------------------------------------
        Net loans                                36,605            36,186
    Premises and equipment                        1,548             1,602
    Accrued interest receivable                     524               639
    Goodwill                                     16,106            16,249
    Intangible assets                             5,354             5,588
    Other assets                                 17,988            16,737
    Assets of discontinued operations               342             2,242
    -----------------------------------------------------------------------
        Subtotal assets of operations           222,433           212,224
    Assets of consolidated asset 
     management funds, at fair value:
      Securities available-for-sale                   5                 -
      Trading assets                                543                 -
      Loans                                      12,070                 -
      Other assets                                  642                 -
    -----------------------------------------------------------------------
        Subtotal assets of consolidated 
         asset management funds, at fair value   13,260                 -
    -----------------------------------------------------------------------
          Total assets                         $235,693          $212,224
    -----------------------------------------------------------------------
    Liabilities
    Deposits:
      Noninterest-bearing (principally 
       domestic offices)                        $42,185           $33,477
      Interest-bearing deposits in 
       domestic offices                          32,994            32,944
      Interest-bearing deposits in 
       foreign offices                           68,488            68,629
    -----------------------------------------------------------------------
        Total deposits                          143,667           135,050
    Federal funds purchased and securities 
     sold under repurchase agreements             2,712             3,348
    Trading liabilities                           8,323             6,396
    Payables to customers and broker-dealers     10,200            10,721
    Commercial paper                                  7                12
    Other borrowed funds                          2,013               477
    Accrued taxes and other expenses              4,645             4,484
    Other liabilities (including allowance 
     for lending related commitments of 
     $103 and $125)                               3,995             3,891
    Long-term debt                               16,754            17,234
    Liabilities of discontinued operations            -             1,608
    -----------------------------------------------------------------------
        Subtotal liabilities of operations      192,316           183,221
    Liabilities and obligations of 
     consolidated asset management funds, 
     at fair value                               12,272                 -
    -----------------------------------------------------------------------
          Total liabilities                     204,588           183,221
    -----------------------------------------------------------------------
    Equity 
    Common stock-par value $0.01 per common 
     share; authorized 3,500,000,000 common 
     shares; issued 1,215,948,532 and 
     1,208,861,641 common shares                     12                12
    Additional paid-in capital                   22,073            21,917
    Retained earnings                             9,875             8,912
    Accumulated other comprehensive loss, 
     net of tax                                  (1,509)           (1,835)
    Less:  Treasury stock of 1,906,851 
            and 1,026,927 common shares, 
            at cost                                 (55)              (29)
    -----------------------------------------------------------------------
      Total The Bank of New York Mellon 
       Corporation shareholders' equity          30,396            28,977
    Noncontrolling interests                         43                26
    Noncontrolling interests of consolidated 
     asset management funds                         666                 -
    -----------------------------------------------------------------------
        Total equity                             31,105            29,003
    -----------------------------------------------------------------------
        Total liabilities and equity           $235,693          $212,224
    -----------------------------------------------------------------------
    
    
    
    Nonperforming assets
    
    ------------------------------------------------------------------------
    Nonperforming assets                    June 30,   March 31,    June 30,
    (dollar amounts in millions)              2010        2010        2009
    ------------------------------------------------------------------------
    Loans:
      Other residential mortgages             $229        $204        $163
      Wealth management                         62          58          63
      Commercial real estate                    49          50          63
      Commercial                                40          40          43
      Financial institutions                    20         102          39
      Foreign                                    -           -           1
    ------------------------------------------------------------------------
        Total nonperforming loans              400         454         372
    Other assets owned                           6           5           6
    ------------------------------------------------------------------------
        Total nonperforming assets            $406(a)     $459(a)     $378
    ------------------------------------------------------------------------
    Nonperforming loans ratio                  1.1%        1.4%        1.0%
    Allowance for loan losses/
     nonperforming loans                     135.5       114.5       116.7
    Total allowance for credit losses/
     nonperforming loans                     161.3       140.5       141.4
    ------------------------------------------------------------------------
    (a) The adoption of SFAS No. 167 (ASC 810) resulted in BNY Mellon 
        consolidating loans of consolidated asset management funds of 
        $12.1 billion at June 30, 2010 and $11.3 billion at March 31, 
        2010.  Included in these loans are $131 million and $150 million 
        of nonperforming loans, respectively.  These loans are not part 
        of BNY Mellon's loan portfolio.  As a result, the nonperforming 
        loans of consolidated asset management funds are excluded from 
        the nonperforming assets of BNY Mellon.  These loans are recorded
        at fair value and therefore do not impact the provision for credit 
        losses and allowance for loan losses.
    

Nonperforming assets decreased $53 million compared with March 31, 2010.  The decrease primarily resulted from repayments by financial institutions, partially offset by the addition of other residential mortgages.

Discontinued operations

On Jan. 15, 2010, BNY Mellon sold Mellon United National Bank ("MUNB"), its national bank subsidiary located in Florida.  We have applied discontinued operations accounting to this business.  The income statements for all periods in this Earnings Release are presented on a continuing operations basis.  This business, which was previously reported in the Other segment, no longer fit our strategic focus on our asset management and securities servicing businesses.  In the second quarter of 2010, we recorded an after-tax loss on discontinued operations of $10 million primarily reflecting lower of cost or market write-downs on the retained loans held for sale.

Consolidated net income applicable to common shareholders, including discontinued operations

Net income applicable to common shareholders, including discontinued operations, totaled $658 million, or $0.54 per common share, in the second quarter of 2010 compared with $176 million, or $0.15 per common share, in the second quarter of 2009 and $559 million, or $0.46 per common share, in the first quarter of 2010.

Regulatory Reform

In July 2010, Congress enacted regulatory reform legislation known as the Dodd-Frank Wall Street Reform and Consumer Protection Act, which the President is expected to sign into law on July 21, 2010. This new law broadly affects the financial services industry by establishing a framework for systemic risk oversight, creating a resolution authority, mandating higher capital and liquidity requirements, requiring banks to pay increased fees to regulatory agencies and containing numerous other provisions aimed at strengthening the sound operation of the financial services sector.  Many aspects of the law are subject to further rulemaking and will take effect over several years, making it difficult to anticipate the overall financial impact to BNY Mellon or across the industry.

Supplemental information – Explanation of Non-GAAP financial measures

BNY Mellon has included in this release certain Non-GAAP financial measures based upon tangible common shareholders' equity.  BNY Mellon believes that the ratio of tangible common shareholders' equity to tangible total assets of operations is a measure of capital strength that provides additional useful information to investors supplementing the Tier 1 capital ratio which is utilized by regulatory authorities.  Unlike the Tier 1 capital ratio, the tangible common shareholders' equity ratio fully incorporates those changes in investment securities valuations which are reflected in total shareholders' equity.  In addition, this ratio is expressed as a percentage of the actual book value of assets, as opposed to a percentage of a risk-based reduced value established in accordance with regulatory requirements, although BNY Mellon in its calculation has excluded certain assets which are given a zero percent risk-weighting for regulatory purposes.  This ratio is also informative to investors in BNY Mellon's common stock because, unlike the Tier 1 capital ratio, it excludes trust preferred securities issued by BNY Mellon.  Further, BNY Mellon believes that the return on tangible common equity measure, which excludes goodwill and intangible assets net of deferred tax liabilities, is a useful additional measure for investors because it presents a measure of BNY Mellon's performance in reference to those assets which are productive in generating income.  

BNY Mellon has provided a measure of tangible book value per share, which it believes provides additional useful information as to the level of such assets in relation to shares of common stock outstanding.  BNY Mellon has presented revenue measures which exclude the effect of net securities gains (losses) and noncontrolling interests related to consolidated asset management funds and expense measures which exclude special litigation reserves taken in the first quarter of 2010, restructuring charges, M&I expenses, the FDIC special assessment and intangible amortization expenses; and measures which utilize net income excluding tax items such as benefit of tax settlement.  Return on equity measures and operating margin measures which exclude some or all of these items are also presented.  BNY Mellon believes that these measures are useful to investors because they permit a focus on period to period comparisons which relate to the ability of BNY Mellon to enhance revenues and limit expenses in circumstances where such matters are within BNY Mellon's control.  The excluded items in general relate to situations where accounting rules require certain ongoing charges as a result of prior transactions, or where valuation or other accounting/regulatory requirements require charges unrelated to operational initiatives.  M&I expenses primarily relate to the merger with Mellon Financial Corporation in 2007.  M&I expenses generally continue for approximately three years after the transaction, and can vary on a year-to-year basis depending on the stage of the integration.  BNY Mellon believes that the exclusion of M&I expenses provides investors with a focus on BNY Mellon's business as it would appear on a consolidated going-forward basis, after such M&I expenses have ceased, typically after approximately three years.  Future periods will not reflect such M&I expenses, and thus may be more easily compared to our current results if M&I expenses are excluded.  With regards to the exclusion of net securities gains (losses), BNY Mellon's primary businesses are Asset and Wealth Management and Institutional Services.  The management of these sectors is evaluated on the basis of the ability of these businesses to generate fee and net interest revenue and to control expenses, and not on the results of BNY Mellon's investment securities portfolio.  Management of the investment securities portfolio is a shared service contained in the Other segment.  The primary objective of the investment securities portfolio is to generate net interest revenue from the liquidity generated by BNY Mellon's processing businesses.  BNY Mellon does not generally originate or trade the securities in the investment securities portfolio.  The presentation of financial measures excluding special litigation reserves taken in the first quarter of 2010 provides investors with the ability to view performance metrics on the basis that management views results.  The presentation of income of consolidated asset management funds, net of noncontrolling interests related to the consolidation of certain asset management funds, permits investors to view revenue on a basis consistent with prior periods.  BNY Mellon believes that these presentations, as a supplement to GAAP information, gives investors a clearer picture of the results of its primary businesses.  Restructuring charges relate to migrating positions to global growth centers and the elimination of certain positions.  Excluding the benefit of tax settlements permits investors to calculate the tax impact of BNY Mellon's primary businesses.  

In this Earnings Release, certain amounts are presented on an FTE basis.  We believe that this presentation provides comparability of amounts arising from both taxable and tax exempt sources, and is consistent with industry practice.  The adjustment to an FTE basis has no impact on net income.  

Each of these measures as described above is used by management to monitor financial performance, both on a company-wide and business segment basis.

    
    
    ----------------------------------------------------------------------
    Asset and wealth                                          2Q10 vs.
    management fee revenue                                 --------------
    (dollars in millions)    2Q10      1Q10      2Q09      1Q10      2Q09
    ----------------------------------------------------------------------
    Asset and wealth 
     management fee revenue  $676      $678      $637         -%        6%
    Less:  Performance fees    19        13        26
    Add:  Revenue from 
           consolidated 
           asset management 
           funds, net of 
           noncontrolling 
           interests           29        25         -
    ----------------------------------------------------------------------
      Asset and wealth 
       management fee 
       revenue excluding
       performance fees      $686      $690      $611        (1)%      12%
    ----------------------------------------------------------------------
    
    
    
    ---------------------------------------------------------------------
    Income from consolidated asset management funds, net of 
    noncontrolling interests
    (in millions)                                  2Q10              1Q10
    ---------------------------------------------------------------------
    Operations of consolidated asset management 
     funds                                          $65               $65
    Noncontrolling interests of consolidated 
     asset management funds                          33                24
    ---------------------------------------------------------------------
      Income from consolidated asset management 
       funds, net of noncontrolling interests       $32               $41
    ---------------------------------------------------------------------
    
    
    
    ------------------------------------------------------------------------
    Asset servicing revenue
    (in millions)                               2Q10        1Q10        2Q09
    ------------------------------------------------------------------------
    Asset servicing revenue                     $668        $637        $671
    Less:  Securities lending fee revenue         46          29          97
    ------------------------------------------------------------------------
      Asset servicing revenue excluding 
       securities lending fee revenue           $622        $608        $574
    ------------------------------------------------------------------------
    
    
    
    -------------------------------------------------------------------------
    Reconciliation of income (loss) from continuing operations before 
    income taxes – pre-tax operating margin
    (dollars in millions)      2Q10      1Q10      2Q09     YTD10     YTD09
    -------------------------------------------------------------------------
    Income (loss) from 
     continuing operations 
     before income 
     taxes – GAAP             $1,006      $884      $513    $1,890    $1,085
    Less:  Net securities 
            gains (losses)        13         7      (256)       20      (551)
           Noncontrolling 
            interests of 
            consolidated 
            asset 
            management funds      33        24         -        57         -
    Add:  Special litigation 
           reserves              N/A       164       N/A       164       N/A
          FDIC special 
           assessment              -         -        61         -        61
          Restructuring 
           charges               (15)        7         6        (8)       16
          M&I expenses            14        26        59        40       127
          Intangible 
           amortization           98        97       108       195       215
    -------------------------------------------------------------------------
    Income (loss) from 
     continuing operations 
     before income taxes 
     excluding net securities 
     gains (losses), 
     noncontrolling interests
     of consolidated asset 
     management funds, special 
     litigation reserves, FDIC 
     special assessment, 
     restructuring charges, 
     M&I expenses and 
     intangible amortization 
     – Non-GAAP               $1,057    $1,147    $1,003    $2,204    $2,055
    
    Fee and other revenue
     – GAAP                   $2,571    $2,549    $2,257    $5,120    $4,393
    Income of consolidated 
     asset management 
     funds – GAAP                 65        65         -       130         -
    Net interest revenue
     – GAAP                      722       765       700     1,487     1,475
    -------------------------------------------------------------------------
      Total revenue – GAAP     3,358     3,379     2,957     6,737     5,868
      Less:  Net securities 
              gains (losses)      13         7      (256)       20      (551)
             Noncontrolling 
              interests of 
              consolidated 
              asset 
              management 
              funds               33        24         -        57         -
    -------------------------------------------------------------------------
      Total revenue excluding 
       net securities gains 
       (losses) and
       noncontrolling 
       interests of 
       consolidated asset 
       management
       funds – Non-GAAP       $3,312    $3,348    $3,213    $6,660    $6,419
    
    Pre-tax operating 
     margin (a)                   30%       26%       17%       28%       18%
    Pre-tax operating 
     margin excluding net 
     securities gains 
     (losses), 
     noncontrolling 
     interests of 
     consolidated asset 
     management funds, 
     special litigation 
     reserves, FDIC 
     special assessment, 
     restructuring charges, 
     M&I expenses and 
     intangible 
     amortization –
     Non-GAAP (a)                 32%       34%       31%       33%       32%
    -------------------------------------------------------------------------
    (a) Income (loss) before taxes divided by total revenue.
    N/A – Not applicable.
    
    
    
    --------------------------------------------------------------------------
    Return on common equity and tangible common equity – continuing operations
    (dollars in millions)      2Q10      1Q10      2Q09     YTD10     YTD09
    --------------------------------------------------------------------------
    Net income applicable to 
     common shareholders of 
     The Bank of New York 
     Mellon Corporation 
     - GAAP                    $658      $559      $176    $1,217      $498
    Less:  Discontinued 
            operations 
            income (loss),
            net of tax          (10)      (42)      (91)      (52)     (132)
    --------------------------------------------------------------------------
      Net income from 
       continuing operations 
       applicable to common 
       shareholders of The 
       Bank of New York 
       Mellon Corporation       668       601       267     1,269       630
    Add:  Intangible 
           amortization          60        62        67       122       133
    --------------------------------------------------------------------------
      Net income from 
       continuing operations
       applicable to common 
       shareholders of The 
       Bank of New York 
       Mellon Corporation 
       excluding intangible 
       amortization – 
       Non-GAAP                 728       663       334     1,391       763
    Less:  Net securities 
            gains (losses)        8         5      (161)       13      (344)
    Add:  Special litigation
           reserves             N/A        98       N/A        98       N/A
          FDIC special 
           assessment             -         -        36         -        36
          Restructuring 
           charges               (9)        5         4        (4)       11
          M&I expenses            9        16        36        25        77
          Benefit of tax 
           settlements            -         -      (134)        -      (134)
    --------------------------------------------------------------------------
    Net income from 
     continuing operations 
     excluding intangible 
     amortization, net 
     securities gains 
     (losses), special 
     litigation reserves, 
     FDIC special assessment, 
     restructuring charges, 
     M&I expenses and benefit 
     of tax settlements – 
     Non-GAAP                  $720      $777      $437    $1,497    $1,097
    
    Average common 
     shareholders' equity   $30,434   $29,715   $26,566   $30,076   $25,881
    Less:  Average 
            goodwill         16,073    16,143    15,989    16,108    15,913
           Average 
            intangible 
            assets            5,421     5,513     5,673     5,466     5,713
    Add:  Deferred tax 
           liability – tax 
           deductible 
           goodwill             746       720       643       746       643
          Deferred tax 
           liability – 
           non-tax 
           deductible 
           intangible 
           assets             1,649     1,660     1,743     1,649     1,743
    --------------------------------------------------------------------------
    Average tangible common 
     shareholders' equity 
     – Non-GAAP             $11,335   $10,439    $7,290   $10,897    $6,641
    
    Return on common 
     equity– GAAP (a)           8.8%      8.2%      4.0%      8.5%      4.9%
    Return on common equity 
     excluding intangible 
     amortization, net 
     securities gains 
     (losses), special 
     litigation reserves, 
     FDIC special 
     assessment, 
     restructuring charges, 
     M&I expenses and 
     benefit of tax 
     settlements – 
     Non-GAAP (a)               9.5%     10.6%      6.6%     10.0%      8.6%
    
    Return on tangible 
     common equity – 
     Non-GAAP (a)              25.8%     25.8%     18.4%     25.7%     23.2%
    Return on tangible 
     common equity excluding 
     net securities gains 
     (losses), special 
     litigation reserves, 
     FDIC special assessment, 
     restructuring charges, 
     M&I expenses and benefit 
     of tax settlements 
     – Non-GAAP (a)            25.5%     30.2%     24.0%     27.7%     33.3%
    --------------------------------------------------------------------------
    (a) Annualized.
    N/A – Not applicable.
    
    
    
    --------------------------------------------------------------------------
    Equity to assets and book 
    value per common share 
    (dollars in millions,                     June 30,   March 31,    June 30,
    unless otherwise noted)                     2010        2010        2009
    --------------------------------------------------------------------------
    Common shareholders' equity at 
     period end - GAAP                       $30,396     $29,683     $27,276
    Less:  Goodwill                           16,106      16,077      16,040
           Intangible assets                   5,354       5,449       5,677
    Add:  Deferred tax liability – tax 
           deductible goodwill                   746         720         643
          Deferred tax liability – 
           non-tax deductible intangible 
           assets                              1,649       1,660       1,743
    --------------------------------------------------------------------------
    Tangible common shareholders' equity 
     at period end – Non-GAAP                $11,331     $10,537      $7,945
    
    Total assets at period end - GAAP       $235,693    $220,551    $203,012
    Less:  Assets of consolidated asset 
            management funds                  13,260      12,568           -
    --------------------------------------------------------------------------
      Total assets of operations –
       Non-GAAP                              222,433     207,983     203,012
    Less:  Goodwill                           16,106      16,077      16,040
           Intangible assets                   5,354       5,449       5,677
           Cash on deposit with the Federal
            Reserve and other central 
            banks (a)                         21,548      14,709      16,458
    --------------------------------------------------------------------------
    Tangible total assets of operations at
     period end – Non-GAAP                  $179,425    $171,748    $164,837
    
    Common shareholders' equity to total 
     assets – GAAP                              12.9%       13.5%       13.4%
    Tangible common shareholders' equity to
     tangible total assets of operations –
     Non-GAAP                                    6.3%        6.1%        4.8%
    
    Period end common shares outstanding
     (in thousands)                        1,214,042   1,212,941   1,202,828
    
    Book value per common share               $25.04      $24.47      $22.68
    Tangible book value per common 
     share – Non-GAAP                          $9.33       $8.69       $6.60
    --------------------------------------------------------------------------
    (a) Assigned a zero percent risk weighting by the regulators.
    
    
    
    -------------------------------------------------------------------------
    Calculation of Tier 1 common equity 
    to risk-weighted assets ratio (a)        June 30,   March 31,    June 30,
    (dollars in millions)                      2010        2010        2009
    -------------------------------------------------------------------------
    Total Tier 1 capital                    $13,857     $13,426     $15,044
    Less:  Trust preferred securities         1,663       1,667       1,691
    -------------------------------------------------------------------------
    Total Tier 1 common equity              $12,194     $11,759     $13,353
    
    Total risk-weighted assets             $102,969    $101,197    $120,566
    
    Tier 1 common equity to risk-weighted
     assets ratio                              11.8%       11.6%       11.1%
    -------------------------------------------------------------------------
    (a) On a regulatory basis.

Cautionary Statement

The information presented in this Earnings Release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements, which may be expressed in a variety of ways, including the use of future or present tense language, relate to, among other things, expectations with respect to the economic outlook, reinvestment in our businesses, intended acquisitions and joint ventures, including the expected impact on earnings and the timing of anticipated closing, and our preliminary assessment of the impact of regulatory reform legislation.  These statements and other forward-looking statements contained in other public disclosures of The Bank of New York Mellon Corporation which make reference to the cautionary factors described in this earnings release, are based upon current beliefs and expectations and are subject to significant risks and uncertainties (some of which are beyond BNY Mellon's control).  Factors that could cause BNY Mellon's results to differ materially from those described in the forward-looking statements can be found in the risk factors set forth in BNY Mellon's Annual Report on Form 10-K for the year ended Dec. 31, 2009 and BNY Mellon's other filings with the Securities and Exchange Commission.  All forward-looking statements in this earnings release speak only as of July 20, 2010 and BNY Mellon undertakes no obligation to update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events.