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Bank of New York Mellon Corporation$52.46($.27)(.51%)

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 BNY Mellon Reports Fourth Quarter Earnings Of $637 Million Or $0.57 Per Common Share, Including: $0.11 per common share for the previously disclosed impairment charge related to a recent court decision, litigation and restructuring charges; Earnings per c
   Thursday, January 21, 2016 6:30:00 AM ET

GENERATED MORE THAN 300 BASIS POINTS OF POSITIVE OPERATING LEVERAGE YEAR-OVER-YEAR ON AN ADJUSTED BASIS (a)

-- Total revenue up 2% on an adjusted basis (a)

-- Net interest revenue up 7%

-- Total noninterest expense decreased 2% on an adjusted basis (a)

FULL-YEAR 2015 EARNINGS OF $3.1 BILLION OR $2.71 PER COMMON SHARE, OR $2.85 PER COMMON SHARE EXCLUDING NON-OPERATING ITEMS (b)

-- Generated more than 400 basis points of positive operating leverage in 2015 on an adjusted basis (b)

-- Earnings per common share up 19% in 2015 on an adjusted basis (b)

EXECUTING ON CAPITAL PLAN AND RETURN OF VALUE TO COMMON SHAREHOLDERS

-- Repurchased 10.1 million common shares for $431 million in the fourth quarter and 55.6 million common shares for $2.4 billion in full-year 2015



-- Adjusted return on tangible common equity of 19% in the fourth quarter and 21% in full-year 2015 (b)

ACQUIRING SILICON VALLEY WEALTH MANAGER, ATHERTON LANE ADVISERS, WITH $2.7 BILLION OF AUM

The Bank of New York Mellon Corporation ("BNY Mellon") (BK ) today reported fourth quarter net income applicable to common shareholders of $637 million, or $0.57 per diluted common share, or $755 million, or $0.68 per diluted common share, adjusted for the impairment charge related to a recent court decision, litigation and restructuring charges. In the fourth quarter of 2014, net income applicable to common shareholders was $209 million, or $0.18 per diluted common share, or $667 million, or $0.58 per diluted common share, adjusted for litigation and restructuring charges, offset by the benefit primarily related to a tax carryback claim. In the third quarter of 2015, net income applicable to common shareholders was $820 million, or $0.74 per diluted common share. (b)

"Our results in 2015 demonstrated that our strategic plan has positioned us well to perform in all operating environments. Even with geopolitical instability, emerging market weakness, higher regulatory compliance requirements and low interest rates, we executed on our strategic priorities and focused on what was within our control. For full-year 2015, our earnings per share increased by 19 percent on an adjusted basis as we generated more than 400 basis points of positive operating leverage and achieved a return on tangible common equity of 21 percent. Importantly, we are on track to achieve our three-year goals," Gerald L. Hassell, chairman and chief executive officer, said. (b)

"In the fourth quarter, we also generated strong positive operating leverage, mainly through our intense focus on our business improvement process, which is creating operating efficiencies for our clients and savings for our shareholders. As we look ahead to 2016, enhancing the client experience continues to be a priority, as we seek to strengthen service quality and productivity by leveraging our investments in industry-leading technologies," Mr. Hassell added.

"Our focus remains on relentlessly delivering value-added solutions, investment excellence and actionable, data-driven insights to our clients and strong returns to our shareholders. I want to thank our clients for their partnership and confidence in us as well as all our team members around the world for rising to the occasion to meet the heightened expectations of ourselves, our clients and our shareholders," Mr. Hassell concluded.

In 2015, net income applicable to common shareholders totaled $3.1 billion, or $2.71 per diluted common share, or $3.2 billion, or $2.85 per diluted common share, adjusted for the impairment charge related to a recent court decision, litigation and restructuring charges. In 2014, net income applicable to common shareholders totaled $2.5 billion, or $2.15 per diluted common share, or $2.8 billion, or $2.39 per diluted common share, adjusted for litigation and restructuring charges, the charge related to investment management funds, net of incentives, the gains on the sales of our investment in Wing Hang Bank and the One Wall Street building, and the benefit primarily related to a tax carryback claim.

(a) See pages 3-4 for the Non-GAAP adjustments and additional information. (b) See "Supplemental information - Explanation of GAAP and Non-GAAP financial measures" beginning on page 24 for the reconciliation of these Non-GAAP measures.

CONFERENCE CALL INFORMATION

Gerald L. Hassell, chairman and chief executive officer, and Thomas P. Gibbons, vice chairman and 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. EST on Jan. 21, 2016. This conference call and audio webcast will include forward-looking statements and may include other material information.

Investors and analysts wishing to access the conference call and audio webcast may do so by dialing (877) 397-0291 (U.S.) or (719) 325-2175 (International), and using the passcode: 619690, or by logging on to www.bnymellon.com. Earnings materials will be available at www.bnymellon.com beginning at approximately 6:30 a.m. EST on Jan. 21, 2016. Replays of the conference call and audio webcast will be available beginning Jan. 21, 2016 at approximately 2 p.m. EST through Feb. 21, 2016 by dialing (888) 203-1112 (U.S.) or (719) 457-0820 (International), and using the passcode: 2620345. The archived version of the conference call and audio webcast will also be available at www.bnymellon.com for the same time period.

FOURTH QUARTER 2015 FINANCIAL HIGHLIGHTS (a) (comparisons are 4Q15 vs. 4Q14 unless otherwise stated)

-- Earnings

                                                          Earnings per share        Net income applicable to common shareholders of The Bank of New York Mellon Corporation
(in millions, except per share amounts)                   4Q15      4Q14      Inc   4Q15                4Q14                Inc
GAAP results                                              $  0.57   $  0.18         $        637        $        209
Add:  Litigation and restructuring charges                0.01      0.53            12                  608
Impairment charge related to a recent court decision      0.10      N/A             106                 N/A
Less:  Benefit primarily related to a tax carryback claim N/A       0.13            N/A                 150
Non-GAAP results                                          $  0.68   $  0.58   17 %  $        755        $        667        13       %
N/A - Not applicable.

-- Total revenue was $3.7 billion, an increase of 1%, or 2% (Non-GAAP).

-- Investment services fees were flat reflecting growth in the Global Collateral Services and Broker-Dealer Services and higher securities lending revenue, offset by lost business in clearing services due to industry consolidations and the unfavorable impact of a stronger U.S. dollar.

-- Investment management and performance fees decreased 2%, or an increase of 1% on a constant currency basis (Non-GAAP), driven by lower money market fee waivers and higher performance fees, partially offset by net outflows and lower market values.

-- Foreign exchange revenue was flat reflecting lower volumes in standing instruction programs and lower volatility, offset by higher volumes in other trading programs and the impact of hedging activity for foreign currency placements.

-- Financing-related fees increased $8 million driven by higher fees related to secured intraday credit provided to dealers in connection with their tri-party repo activity.

-- Investment and other income increased $15 million driven by the higher other income related to termination fees in our clearing business and seed capital gains, partially offset by lower asset-related gains and lease residual gains.

-- Net interest revenue increased $48 million driven by higher yields, the shift out of cash into securities and loans and lower interest expense on deposits.

-- The provision for credit losses was $163 million reflecting the impairment charge related to a recent court decision.

-- Noninterest expense was $2.7 billion, a decrease of 24%, or 2% (Non-GAAP) excluding litigation and restructuring charges and amortization of intangible assets. Noninterest expense was lower in nearly all categories reflecting the favorable impact of a stronger U.S. dollar, offset by higher compensation and employee benefits expenses. The increase in compensation expenses primarily related to severance in support of our business improvement process. See page 10 for additional information.

-- Generated more than 300 basis points of positive operating leverage year-over-year on an adjusted basis (Non-GAAP).

-- Effective tax rate of 20.1%. The rate is approximately 3% lower primarily due to the impact of the impairment charge and a 2% benefit from a more favorable geographic mix of earnings and higher tax-exempt income.

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

-- AUC/A of $28.9 trillion, increased 1% reflecting net new business, partially offset by the unfavorable impact of a stronger U.S. dollar and lower market values.

-- Estimated new AUC/A wins in Asset Servicing of $49 billion in 4Q15.

-- AUM of $1.63 trillion, decreased 4% reflecting the unfavorable impact of a stronger U.S. dollar, net outflows and lower market values, partially offset by the January 2015 acquisition of Cutwater Asset Management.

-- Net long-term outflows of $11 billion in 4Q15 driven by index and equity investments offset by continued strength in liability-driven investments.

-- Net short-term inflows totaled $2 billion in 4Q15.

-- Capital

-- Repurchased 10.1 million common shares for $431 million in 4Q15 and 55.6 million common shares for $2.4 billion in full-year 2015.

-- Adjusted return on tangible common equity of 19% in 4Q15 and 21% in full-year 2015 (a).

(a) See "Supplemental information - Explanation of GAAP and Non-GAAP financial measures" beginning on page 24 for the reconciliation of Non-GAAP measures. Non-GAAP excludes net income (loss) attributable to noncontrolling interests of consolidated investment management funds, amortization of intangible assets, M&I, litigation and restructuring charges, the impairment charge related to a recent court decision and the benefit primarily related to a tax carryback claim, if applicable. Note: In the table above and throughout this document, sequential growth rates are unannualized.

FINANCIAL SUMMARY

(dollars in millions, except per share amounts; common shares in                                                                                                                            4Q15 vs.
thousands)
                                                                                                                      4Q15          3Q15          2Q15          1Q15          4Q14          3Q15      4Q14
Revenue:
Fee and other revenue                                                                                                 $    2,950    $    3,053    $    3,067    $    3,012    $    2,935    (3)%      1    %
Income (loss) from consolidated investment management funds                                                           16            (22)          40            52            42
Net interest revenue                                                                                                  760           759           779           728           712           --        7
Total revenue - GAAP                                                                                                  3,726         3,790         3,886         3,792         3,689         (2)       1
Less:  Net income (loss) attributable to noncontrolling interests related to consolidated investment management funds 5             (5)           37            31            24
Total revenue - Non-GAAP                                                                                              3,721         3,795         3,849         3,761         3,665         (2)       2
Provision for credit losses                                                                                           163           1             (6)           2             1
Expense:
Noninterest expense - GAAP                                                                                            2,692         2,680         2,727         2,700         3,524         --        (24)
Less:  Amortization of intangible assets                                                                              64            66            65            66            73
M&I, litigation and restructuring charges (recoveries)                                                                18            11            59            (3)           800
Total noninterest expense - Non-GAAP                                                                                  2,610         2,603         2,603         2,637         2,651         --        (2)
Income:
Income before income taxes                                                                                            871           1,109         1,165         1,090         164           (21)%     N/M
Provision (benefit) for income taxes                                                                                  175           282           276           280           (93)
Net income                                                                                                            $    696      $    827      $    889      $    810      $    257
Net (income) loss attributable to noncontrolling interests (a)                                                        (3)           6             (36)          (31)          (24)
Net income applicable to shareholders of The Bank of New York Mellon Corporation                                      693           833           853           779           233
Preferred stock dividends                                                                                             (56)          (13)          (23)          (13)          (24)
Net income applicable to common shareholders of The Bank of New York Mellon Corporation                               $    637      $    820      $    830      $    766      $    209
Operating leverage - Non-GAAP (b)                                                                                                                                                           (222) bps 308  bps
Key Metrics:
Pre-tax operating margin (c)                                                                                          23          % 29          % 30          % 29          % 4           %
Non-GAAP (c)                                                                                                          30          % 31          % 33          % 30          % 28          %
Return on common equity (annualized) (c)                                                                              7.1         % 9.1         % 9.4         % 8.8         % 2.2         %
Non-GAAP (c)                                                                                                          8.9         % 9.7         % 10.3        % 9.2         % 7.7         %
Return on tangible common equity (annualized) - Non-GAAP (c)                                                          16.2        % 20.8        % 21.5        % 20.3        % 5.9         %
Non-GAAP adjusted (c)                                                                                                 19.0        % 21.0        % 22.5        % 20.2        % 16.3        %
Fee revenue as a percentage of total revenue excluding net securities gains                                           79          % 80          % 79          % 79          % 79          %
Percentage of non-U.S. total revenue (d)                                                                              34          % 37          % 36          % 36          % 35          %
Average common shares and equivalents outstanding:
Basic                                                                                                                 1,088,880     1,098,003     1,113,790     1,118,602     1,120,672
Diluted                                                                                                               1,096,385     1,105,645     1,122,135     1,126,306     1,129,040
Period end:
Full-time employees                                                                                                   51,200        51,300        50,700        50,500        50,300
Book value per common share - GAAP (c)                                                                                $    32.69    $    32.59    $    32.28    $    31.89    $    32.09
Tangible book value per common share - Non-GAAP (c)                                                                   $    15.27    $    15.16    $    14.86    $    14.82    $    14.70
Cash dividends per common share                                                                                       $    0.17     $    0.17     $    0.17     $    0.17     $    0.17
Common dividend payout ratio                                                                                               30     %      23     %      23     %      25     %      94     %
Closing stock price per common share                                                                                  $    41.22    $    39.15    $    41.97    $    40.24    $    40.57
Market capitalization                                                                                                 $    44,738   $    42,789   $    46,441   $    45,130   $    45,366
Common shares outstanding                                                                                             1,085,343     1,092,953     1,106,518     1,121,512     1,118,228

(a) Primarily attributable to noncontrolling interests related to consolidated investment management funds. (b) Pre-tax operating leverage is the rate of increase in total revenue less the rate of increase in total noninterest expense. The year-over-year pre-tax operating leverage (Non-GAAP) was based on growth in total revenue, as adjusted (Non-GAAP), of 153 basis points, and a decrease in total noninterest expense, as adjusted (Non-GAAP), of 155 basis points. The sequential operating leverage (Non-GAAP) was based on decline in total revenue, as adjusted (Non-GAAP), of 195 basis points, and an increase in total noninterest expense, as adjusted (Non-GAAP), of 27 basis points. (c) Non-GAAP excludes the net income (loss) attributable to noncontrolling interests related to consolidated investment management funds, amortization of intangible assets, M&I, litigation and restructuring charges (recoveries), the impairment charge related to a recent court decision and the benefit primarily related to a tax carryback claim, if applicable. See "Supplemental information - Explanation of GAAP and Non-GAAP financial measures" beginning on page 24 for the reconciliation of Non-GAAP measures. (d) Includes fee revenue, net interest revenue and (loss) income from consolidated investment management funds, net of net loss (income) attributable to noncontrolling interests. N/M - Not meaningful.

CONSOLIDATED BUSINESS METRICS

Consolidated business metrics                                                                                                           4Q15 vs.
                                                                   4Q15             3Q15         2Q15         1Q15         4Q14         3Q15    4Q14
Changes in AUM (in billions): (a)
Beginning balance of AUM                                           $  1,625         $  1,700     $  1,717     $  1,686     $  1,620
Net inflows (outflows):
Long-term:
Equity                                                             (9)              (4)          (13)         (5)          (5)
Fixed income                                                       1                (3)          (2)          3            4
Index                                                              (16)             (10)         (9)          8            1
Liability-driven investments (b)                                   11               11           5            8            24
Alternative investments                                            2                1            3            1            2
Total long-term inflows (outflows)                                 (11)             (5)          (16)         15           26
Short term:
Cash                                                               2                (10)         (11)         1            6
Total net inflows (outflows)                                       (9)              (15)         (27)         16           32
Net market/currency impact/acquisition                             9                (60)         10           15           34
Ending balance of AUM                                              $  1,625     (c) $  1,625     $  1,700     $  1,717     $  1,686     --   %  (4)%
AUM at period end, by product type: (a)
Equity                                                             14         %     14         % 15         % 15         % 15         %
Fixed income                                                       13               13           13           12           12
Index                                                              20               20           21           22           21
Liability-driven investments (b)                                   32               32           30           30           30
Alternative investments                                            4                4            4            4            4
Cash                                                               17               17           17           17           18
Total AUM                                                          100        % (c) 100        % 100        % 100        % 100        %
Investment Management:
Average loans (in millions)                                        $  13,447        $  12,779    $  12,298    $  11,634    $  11,124    5    %  21    %
Average deposits (in millions)                                     $  15,497        $  15,282    $  14,638    $  15,217    $  14,602    1    %  6     %
Investment Services:
Average loans (in millions)                                        $  36,960        $  38,025    $  38,264    $  37,699    $  35,448    (3)%    4     %
Average deposits (in millions)                                     $  226,774       $  230,153   $  237,193   $  234,183   $  228,282   (1)%    (1)%
AUC/A at period end (in trillions) (d)                             $  28.9      (c) $  28.5      $  28.6      $  28.5      $  28.5      1    %  1     %
Market value of securities on loan at period end (in billions) (e) $  277           $  288       $  283       $  291       $  289       (4)%    (4)%
Asset servicing:
Estimated new business wins (AUC/A) (in billions)                  $  49        (c) $  84        $  933       $  125       $  168
Depositary Receipts:
Number of sponsored programs                                       1,145            1,176        1,206        1,258        1,279        (3)%    (10)%
Clearing services:
Global DARTS volume (in thousands)                                 230              246          242          261          242          (7)%    (5)%
Average active clearing accounts (U.S. platform) (in thousands)    5,959            6,107        6,046        5,979        5,900        (2)%    1     %
Average long-term mutual fund assets (U.S. platform)               $  437,260       $  447,287   $  466,195   $  456,954   $  450,305   (2)%    (3)%
(in millions)
Average investor margin loans (U.S. platform) (in millions)        $  11,575        $  11,806    $  11,890    $  11,232    $  10,711    (2)%    8     %
Broker-Dealer:
Average tri-party repo balances (in billions)                      $  2,153         $  2,142     $  2,174     $  2,153     $  2,101     1    %  2     %

(a) Excludes securities lending cash management assets and assets managed in the Investment Services business. In 3Q15, prior period AUM was restated to reflect the reclassification of Meriten from the Investment Management business to the Other segment. (b) Includes currency overlay assets under management. (c) Preliminary. (d) Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.0 trillion at Dec. 31, 2015 and Sept. 30, 2015 and $1.1 trillion at June 30, 2015, March 31, 2015 and Dec. 31, 2014. (e) Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $55 billion at Dec. 31, 2015, $61 billion at Sept. 30, 2015, $68 billion at June 30, 2015, $69 billion at March 31, 2015 and $65 billion at Dec. 31, 2014.

The following table presents key market metrics at period end and on an average basis.

Key market metrics                                                                                      4Q15 vs.
                                                      4Q15      3Q15      2Q15      1Q15      4Q14      3Q15     4Q14
S&P 500 Index (a)                                     2044      1920      2063      2068      2059      6    %   (1)%
S&P 500 Index - daily average                         2052      2027      2102      2064      2009      1        2
FTSE 100 Index (a)                                    6242      6062      6521      6773      6566      3        (5)
FTSE 100 Index - daily average                        6271      6399      6920      6793      6526      (2)      (4)
MSCI World Index (a)                                  1663      1582      1736      1741      1710      5        (3)
MSCI World Index - daily average                      1677      1691      1780      1726      1695      (1)      (1)
Barclays Capital Global Aggregate BondSM Index (a)(b) 342       346       342       348       357       (1)      (4)
NYSE and NASDAQ share volume (in billions)            198       206       185       187       198       (4)      --
JPMorgan G7 Volatility Index - daily average (c)      9.49      9.93      10.06     10.40     8.54      (4)      11
Average Fed Funds effective rate                      0.16    % 0.13    % 0.13    % 0.11    % 0.10    % 3    bps 6    bps
Foreign exchange rates vs. U.S. dollar:
British pound - average rate                          $  1.52   $  1.55   $  1.53   $  1.51   $  1.58   (2)%     (4)%
Euro - average rate                                   1.10      1.11      1.11      1.13      1.25      (1)      (12)

(a) Period end. (b) Unhedged in U.S. dollar terms. (c) The JPMorgan G7 Volatility Index is based on the implied volatility in 3-month currency options. bps - basis points.

FEE AND OTHER REVENUE

Fee and other revenue                                                                                     4Q15 vs.
(dollars in millions)                                   4Q15      3Q15      2Q15      1Q15      4Q14      3Q15  4Q14
Investment services fees:
Asset servicing (a)                                     $  1,032  $  1,057  $  1,060  $  1,038  $  1,019  (2)%  1%
Clearing services                                       339       345       347       344       347       (2)   (2)
Issuer services                                         199       313       234       232       193       (36)  3
Treasury services                                       137       137       144       137       145       --    (6)
Total investment services fees                          1,707     1,852     1,785     1,751     1,704     (8)   --
Investment management and performance fees              864       829       878       867       885       4     (2)
Foreign exchange and other trading revenue              173       179       187       229       151       (3)   15
Financing-related fees                                  51        71        58        40        43        (28)  19
Distribution and servicing                              41        41        39        41        43        --    (5)
Total fee revenue excluding investment and other income 2,836     2,972     2,947     2,928     2,826     (5)   --
Investment and other income                             93        59        104       60        78        58    19
Total fee revenue                                       2,929     3,031     3,051     2,988     2,904     (3)   1
Net securities gains                                    21        22        16        24        31        N/M   N/M
Total fee and other revenue                             $  2,950  $  3,053  $  3,067  $  3,012  $  2,935  (3)%  1%

(a) Asset servicing fees include securities lending revenue of $46 million in 4Q15, $38 million in 3Q15, $49 million in 2Q15 and $43 million in 1Q15 and $37 million in 4Q14. N/M -Not meaningful.

KEY POINTS

-- Asset servicing fees were $1.0 billion, an increase of 1% year-over-year and a decrease of 2% sequentially. The year-over-year increase primarily reflects growth in the Global Collateral Services and Broker-Dealer Services and higher securities lending revenue, partially offset by the unfavorable impact of a stronger U.S. dollar. The sequential decrease primarily reflects lower client activity.

-- Clearing services fees were $339 million, a decrease of 2% both year-over-year and sequentially. Both decreases primarily reflect lost business due to industry consolidations.

-- Issuer services fees were $199 million, an increase of 3% year-over-year and a decrease of 36% sequentially. The year-over-year increase primarily reflects net new business and lower money market fee waivers in Corporate Trust, partially offset by the unfavorable impact of a stronger U.S. dollar in Corporate Trust. The sequential decrease primarily reflects seasonality in Depositary Receipts.

-- Treasury services fees were $137 million, a decrease of 6% year-over-year and flat sequentially. The year-over-year decrease primarily reflects higher compensating balance credits provided to clients and lower volumes.

-- Investment management and performance fees were $864 million, a decrease of 2% year-over-year, or an increase of 1% on a constant currency basis (Non-GAAP). On a constant currency basis (Non-GAAP), investment management and performance fees primarily reflect lower money market fee waivers and higher performance fees, partially offset by net outflows and lower market values. Sequentially, investment management and performance fees increased 4% primarily reflecting higher performance fees, lower money market fee waivers and higher equity market values, partially offset by net outflows.

 Foreign exchange and other trading revenue
 (in millions)                                    4Q15   3Q15   2Q15   1Q15   4Q14
 Foreign exchange                                 $ 165  $ 180  $ 181  $ 217  $  165
 Other trading revenue (loss)                     8      (1)    6      12     (14)
 Total foreign exchange and other trading revenue $ 173  $ 179  $ 187  $ 229  $  151

Foreign exchange and other trading revenue totaled $173 million in 4Q15 compared with $151 million in 4Q14 and $179 million in 3Q15. In 4Q15, foreign exchange revenue totaled $165 million, flat year-over-year and a decrease of 8% sequentially. Year-over-year, lower volumes in standing instruction programs and lower volatility were offset by higher volumes in the other trading programs and the impact of hedging activity for foreign currency placements. The sequential decrease primarily reflects lower volumes and volatility and lower Depositary Receipts-related activity, partially offset by the impact of hedging activity for foreign currency placements.

Other trading revenue was $8 million in 4Q15, compared with an other trading loss of $14 million in 4Q14 and an other trading loss of $1 million in 3Q15. The year-over-year increase primarily reflects the losses on hedging activities within one of the Investment Management boutiques recorded in 4Q14.

-- Financing-related fees were $51 million in 4Q15 compared with $43 million in 4Q14 and $71 million in 3Q15. The year-over-year increase primarily reflects higher fees related to secured intraday credit provided to dealers in connection with their tri-party repo activity. The sequential decrease primarily reflects lower underwriting fees.

 Investment and other income
 (in millions)                             4Q15  3Q15  2Q15   1Q15  4Q14
 Corporate/bank-owned life insurance       $ 43  $ 32  $ 31   $ 33  $ 37
 Expense reimbursements from joint venture 16    16    17     14    15
 Seed capital gains (a)                    10    7     2      16    --
 Asset-related gains (losses)              5     (9)   1      3     20
 Private equity gains (losses)             --    1     3      (3)   1
 Equity investment (losses)                (2)   (6)   (7)    (4)   (5)
 Lease residual gains (losses)             (8)   --    54     (1)   5
 Other income                              29    18    3      2     5
 Total investment and other income         $ 93  $ 59  $ 104  $ 60  $ 78

(a) Excludes the gain (loss) on seed capital investments in consolidated investment management funds which are reflected in operations of consolidated investment management funds, net of noncontrolling interests. The gain (loss) on seed capital investments in consolidated investment management funds was $11 million in 4Q15, $(17) million in 3Q15, $3 million in 2Q15, $21 million in 1Q15 and $18 million in 4Q14.

Investment and other income was $93 million in 4Q15 compared with $78 million in 4Q14 and $59 million in 3Q15. The year-over-year increase primarily reflects higher other income related to termination fees in our clearing business and seed capital gains, partially offset by lower asset-related gains and lease residual losses. The sequential increase primarily reflects higher asset-related gains, income from corporate/bank owned life insurance and other income related to termination fees in our clearing business, partially offset by lease residual losses.

NET INTEREST REVENUE

Net interest revenue                                                                                                                                          4Q15 vs.
(dollars in millions)                                                                   4Q15          3Q15          2Q15          1Q15          4Q14          3Q15     4Q14
Net interest revenue (non-FTE)                                                          $   760       $   759       $   779       $   728       $   712       --   %   7%
Net interest revenue (FTE) - Non-GAAP                                                   774           773           794           743           726           --       7
Net interest margin (FTE)                                                               0.99        % 0.98        % 1.00        % 0.97        % 0.91        % 1    bps 8 bps
Selected average balances:
Cash/interbank investments                                                              $   128,328   $   130,090   $   125,626   $   123,647   $   140,599   (1)%     (9)%
Trading account securities                                                              2,786         2,737         3,253         3,046         3,922         2        (29)
Securities                                                                              119,532       121,188       128,641       123,476       117,243       (1)      2
Loans                                                                                   61,964        61,657        61,076        57,935        56,844        --       9
Interest-earning assets                                                                 312,610       315,672       318,596       308,104       318,608       (1)      (2)
Interest-bearing deposits                                                               160,334       169,753       170,716       159,520       163,149       (6)      (2)
Noninterest-bearing deposits                                                            85,878        85,046        84,890        89,592        85,330        1        1
Selected average yields/rates:
Cash/interbank investments                                                              0.32%         0.32%         0.34%         0.35%         0.31%
Trading account securities                                                              2.79          2.74          2.63          2.46          2.64
Securities                                                                              1.62          1.60          1.57          1.55          1.54
Loans                                                                                   1.54          1.56          1.51          1.55          1.58
Interest-earning assets                                                                 1.08          1.08          1.08          1.07          1.02
Interest-bearing deposits                                                               0.01          0.02          0.02          0.04          0.03
Average cash/interbank investments as a percentage of average interest-earning assets   41%           41%           39%           40%           44%
Average noninterest-bearing deposits as a percentage of average interest-earning assets 27%           27%           27%           29%           27%

FTE - fully taxable equivalent. bps - basis points.

KEY POINTS

-- Net interest revenue totaled $760 million in 4Q15, an increase of $48 million year-over year and $1 million sequentially. The year-over-year increase primarily reflects higher yields, the shift out of cash into securities and loans and lower interest expense on deposits. The sequential increase primarily reflects higher yields, offset by lower accretion.

NONINTEREST EXPENSE

Noninterest expense                                                                                                                                                                   4Q15 vs.
(dollars in millions)                                                                                                          4Q15       3Q15       2Q15       1Q15       4Q14       3Q15  4Q14
Staff:
Compensation                                                                                                                   $  927     $  905     $  877     $  871     $  893     2%    4%
Incentives                                                                                                                     315        326        349        425        319        (3)   (1)
Employee benefits                                                                                                              239        206        208        189        206        16    16
Total staff                                                                                                                    1,481      1,437      1,434      1,485      1,418      3     4
Professional, legal and other purchased services                                                                               328        301        299        302        390        9     (16)
Software and equipment                                                                                                         225        226        228        228        235        --    (4)
Net occupancy                                                                                                                  148        152        149        151        150        (3)   (1)
Distribution and servicing                                                                                                     92         95         96         98         102        (3)   (10)
Sub-custodian                                                                                                                  60         65         75         70         70         (8)   (14)
Business development                                                                                                           75         59         72         61         75         27    --
Other                                                                                                                          201        268        250        242        211        (25)  (5)
Amortization of intangible assets                                                                                              64         66         65         66         73         (3)   (12)
M&I, litigation and restructuring charges                                                                                      18         11         59         (3)        800        N/M   N/M
Total noninterest expense - GAAP                                                                                               $  2,692   $  2,680   $  2,727   $  2,700   $  3,524   --%   (24)%
Total staff expense as a percentage of total revenue                                                                           40       % 38       % 37       % 39       % 38       %
Memo:
Total noninterest expense excluding amortization of intangible assets and M&I, litigation and restructuring charges - Non-GAAP $  2,610   $  2,603   $  2,603   $  2,637   $  2,651   --%   (2)%

N/M -Not meaningful.

KEY POINTS

-- Total noninterest expense excluding amortization of intangible assets and M&I, litigation and restructuring charges (Non-GAAP) decreased 2% year-over-year and was flat sequentially.

-- The year-over-year decrease reflects lower expenses in all categories, except compensation and employee benefits expenses. The lower expenses primarily reflect the favorable impact of a stronger U.S. dollar and lower professional, legal and other purchased services and other expenses.

-- Compensation expense increased year-over-year primarily reflecting severance expense of approximately $55 million recorded in 4Q15 in ongoing support of our business improvement process.

-- Employee benefits expense increased as a result of an adjustment of approximately $30 million related to updated information received from an administrator of our health care benefits, partially offset by the impact of curtailing the U.S. pension plan.

-- Other expense decreased primarily reflecting approximately $35 million of adjustments to bank assessment charges, partially offset by higher asset-based taxes.

-- The sequential increase reflects higher staff expense primarily reflecting the factors mentioned above, and higher professional, legal and other purchased services and business development expenses, partially offset by lower other expense, as described above.

INVESTMENT SECURITIES PORTFOLIO

At Dec. 31, 2015, the fair value of our investment securities portfolio totaled $118.8 billion. The net unrealized pre-tax gain on our total securities portfolio was $357 million at Dec. 31, 2015 compared with $1.05 billion at Sept. 30, 2015. The decrease in the net unrealized pre-tax gain was primarily driven by the increase in interest rates. At Dec. 31, 2015, the fair value of the held-to-maturity securities totaled $43.2 billion and represented 36% of the fair value of the total investment securities portfolio.

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

Investment securities               Sept. 30, 2015    4Q15       Dec. 31, 2015                 Fair value          Unrealized        Ratings
portfolio                                             change in                                as a % of amortized gain (loss)
(dollars in millions)                                 unrealized                               cost (a)
                                                      gain (loss)
                                                                                                                                                       BB+
                                                                                                                                                       and
                                                                                                                                                       lower
                                    Fair                         Amortized    Fair                                                   AAA/   A+/  BBB+/ Not
                                    value                        cost         value                      AA-           AA-           AA-    A-   BBB-  rated
Agency RMBS                         $    49,850       $   (408)  $   49,585   $   49,464       100       %         $   (121)         100 %  -- % -- %  -- %  -- %
U.S. Treasury                       23,642            (193)      24,019       23,920           100                 (99)              100    --   --    --    --
Sovereign debt/sovereign guaranteed 17,674            5          16,574       16,708           101                 134               75     --   25    --    --
Non-agency RMBS (b)                 1,938             (36)       1,435        1,789            81                  354               --     1    1     90    8
Non-agency RMBS                     973               (4)        900          914              94                  14                7      5    18    69    1
European floating rate notes        1,634             2          1,369        1,345            98                  (24)              68     27   5     --    --
Commercial MBS                      5,730             (57)       5,868        5,826            99                  (42)              95     4    1     --    --
State and political subdivisions    4,334             1          3,988        4,065            102                 77                80     17   --    --    3
Foreign covered bonds               2,379             (9)        2,201        2,242            102                 41                100    --   --    --    --
Corporate bonds                     1,822             (8)        1,740        1,752            101                 12                21     66   13    --    --
CLO                                 2,291             (6)        2,363        2,351            99                  (12)              100    --   --    --    --
U.S. Government agencies            1,572             (10)       1,817        1,810            100                 (7)               100    --   --    --    --
Consumer ABS                        3,129             (7)        2,909        2,893            99                  (16)              100    --   --    --    --
Other (c)                           3,055             38         3,654        3,700            101                 46                45     --   51    --    4
Total investment securities         $    120,023  (d) $   (692)  $   118,422  $   118,779  (d) 100       %         $   357    (d)(e) 90  %  2  % 6  %  2  %  -- %

(a) Amortized cost before impairments. (b) These RMBS were included in the former Grantor Trust and were marked-to-market in 2009. We believe these RMBS would receive higher credit ratings if these ratings incorporated, as additional credit enhancements, the difference between the written-down amortized cost and the current face amount of each of these securities. (c) Includes commercial paper with a fair value of $1.5 billion and $1.9 billion and money market funds with a fair value of $770 million and $886 million at Sept. 30, 2015 and Dec. 31, 2015, respectively. (d) Includes net unrealized losses on derivatives hedging securities available-for-sale of $417 million at Sept. 30, 2015 and $292 million at Dec. 31, 2015. (e) Unrealized gains of $465 million at Dec. 31, 2015 related to available-for-sale securities.

NONPERFORMING ASSETS

Nonperforming assets                                  Dec.31,   Sept. 30,   Dec. 31,
(dollars in millions)                                 2015      2015        2014
Loans:
Financial institutions                                $  171    $   --      $  --
Other residential mortgages                           102       103         112
Wealth management loans and mortgages                 11        12          12
Commercial real estate                                2         1           1
Total nonperforming loans                             286       116         125
Other assets owned                                    6         7           3
Total nonperforming assets (a)                        $  292    $   123     $  128
Nonperforming assets ratio                            0.46   %  0.20    %   0.22   %
Allowance for loan losses/nonperforming loans         54.9      156.0       152.8
Total allowance for credit losses/nonperforming loans 96.2      241.4       224.0

(a) Loans of consolidated investment management funds are not part of BNY Mellon’s loan portfolio. Included in the loans of consolidated investment management funds are nonperforming loans of $53 million at Dec. 31, 2014. These loans are recorded at fair value and therefore do not impact the provision for credit losses and allowance for loan losses, and accordingly are excluded from the nonperforming assets table above. In 2Q15, BNY Mellon adopted the new accounting guidance included in ASU 2015-02, Consolidations. As a result, we deconsolidated substantially all of the loans of consolidated investment management funds retroactively to Jan. 1, 2015.

Nonperforming assets were $292 million at Dec. 31, 2015, an increase of $169 million compared with $123 million at Sept. 30, 2015. The increase in nonperforming loans in the financial institutions portfolio is related to a recent court decision.

ALLOWANCE FOR CREDIT LOSSES, PROVISION AND NET CHARGE-OFFS

Allowance for credit losses, provision and net charge-offs Dec. 31,Sept. 30,Dec. 31,
(in millions)                                              2015    2015     2014
Allowance for credit losses - beginning of period          $  280  $   278  $  288
Provision for credit losses                                163     1        1
Net (charge-offs) recoveries:
Financial institutions                                     (170)   --       1
Other residential mortgages                                2       1        --
Commercial                                                 --      --       (8)
Commercial real estate                                     --      --       (2)
Net (charge-offs) recoveries                               (168)   1        (9)
Allowance for credit losses - end of period                $  275  $   280  $  280
Allowance for loan losses                                  $  157  $   181  $  191
Allowance for lending-related commitments                  118     99       89

The allowance for credit losses was $275 million at Dec. 31, 2015, a decrease of $5 million compared with $280 million at Sept. 30, 2015. Net charge-offs were $168 million in 4Q15, primarily reflecting the impairment charge related to a recent court decision recorded in the financial institutions portfolio.

CAPITAL AND LIQUIDITY

The common equity Tier 1 ("CET1"), Tier 1 and Total risk-based regulatory capital ratios in the first section of the table below are based on Basel III components of capital, as phased-in, and credit risk asset risk-weightings using the U.S. capital rules’ advanced approaches framework (the "Advanced Approach") as the related risk-weighted assets ("RWA") were higher when calculated under the Advanced Approach at Dec. 31, 2015, Sept. 30, 2015 and Dec. 31, 2014. Our risk-based capital adequacy is determined using the higher of RWA determined using the Advanced Approach and the U.S. capital rules’ standardized approach (the "Standardized Approach"). The leverage capital ratios are based on Basel III components of capital, as phased-in and quarterly average total assets. Our consolidated capital ratios are shown in the following table.

Capital ratios                                                                                        Dec. 31,  Sept. 30, 2015 Dec. 31, 2014
                                                                                                      2015
Consolidated regulatory capital ratios: (a)(b)
CET1 ratio                                                                                            10.8 %    10.5    %      11.2   %
Tier 1 capital ratio                                                                                  12.3      11.9           12.2
Total (Tier 1 plus Tier 2) capital ratio                                                              12.5      12.2           12.5
Leverage capital ratio                                                                                5.9       5.9            5.6
BNY Mellon shareholders’ equity to total assets ratio - GAAP (c)                                      9.7       10.1           9.7
BNY Mellon common shareholders’ equity to total assets ratio - GAAP (c)                               9.0       9.4            9.3
BNY Mellon tangible common shareholders’ equity to tangible assets of operations ratio - Non-GAAP (c) 6.5       6.2            6.5
Selected regulatory capital ratios - fully phased-in - Non-GAAP: (a)
Estimated CET1 ratio:
Standardized Approach                                                                                 10.3      9.9            10.6
Advanced Approach                                                                                     9.5       9.3            9.8
Estimated supplementary leverage ratio ("SLR") (d)                                                    4.9       4.8            4.4

(a) Regulatory capital ratios for Dec. 31, 2015 are preliminary. (b) At Dec. 31, 2015 and Sept. 30, 2015, the CET1, Tier 1 and Total risk-based consolidated regulatory capital ratios determined under the transitional Basel III Standardized Approach were 11.6%, 13.2% and 13.6%, and 11.2%, 12.7%, and 13.1%, respectively. At Dec. 31, 2014, the CET1, Tier 1 and Total risk-based consolidated regulatory capital ratios determined under the transitional Standardized Approach were 15.0%, 16.3% and 16.9%, and were calculated based on Basel III components of capital, as phased-in, and asset risk-weightings using Basel I-based requirements. (c) See "Supplemental information - Explanation of GAAP and Non-GAAP financial measures" beginning on page 24 for a reconciliation of these ratios. (d) The estimated SLR on a fully phased-in basis (Non-GAAP) for our largest bank subsidiary, The Bank of New York Mellon, was 4.8% at Dec. 31, 2015 and 4.6% at Sept. 30, 2015.

Estimated Basel III CET1 generation presented on a fully phased-in basis - Non-GAAP - preliminary
(in millions)                                                                                     4Q15
Estimated fully phased-in Basel III CET1 - Non-GAAP - Beginning of period                         $  16,077
Net income applicable to common shareholders of The Bank of New York Mellon Corporation - GAAP    637
Goodwill and intangible assets, net of related deferred tax liabilities                           139
Gross Basel III CET1 generated                                                                    776
Capital deployed:
Dividends                                                                                         (188)
Common stock repurchased                                                                          (431)
Total capital deployed                                                                            (619)
Other comprehensive (loss)                                                                        (245)
Additional paid-in capital (a)                                                                    94
Other                                                                                             (1)
Total other deductions                                                                            (152)
Net Basel III CET1 generated                                                                      5
Estimated fully phased-in Basel III CET1 - Non-GAAP - End of period                               $  16,082

(a) Primarily related to stock awards, the exercise of stock options and stock issued for employee benefit plans.

The table presented below compares the fully phased-in Basel III capital components and ratios to those capital components and ratios determined on a phased-in basis (referred to as the "Transitional Approach").

Basel III capital components and ratios at Dec. 31, 2015 - preliminary Fully phased-      Transitional
                                                                       in Basel III -     Approach (a)
                                                                       Non-GAAP
(dollars in millions)
CET1:
Common shareholders’ equity                                            $    35,485        $    36,067
Goodwill and intangible assets                                         (18,911)           (17,295)
Net pension fund assets                                                (116)              (46)
Equity method investments                                              (347)              (296)
Deferred tax assets                                                    (20)               (8)
Other                                                                  (9)                (5)
Total CET1                                                             16,082             18,417
Other Tier 1 capital:
Preferred stock                                                        2,552              2,552
Trust preferred securities                                             --                 74
Disallowed deferred tax assets                                         --                 (12)
Net pension fund assets                                                --                 (70)
Other                                                                  (22)               (25)
Total Tier 1 capital                                                   18,612             20,936
Tier 2 capital:
Trust preferred securities                                             --                 222
Subordinated debt                                                      149                149
Allowance for credit losses                                            275                275
Other                                                                  (12)               (12)
Total Tier 2 capital - Standardized Approach                           412                634
Excess of expected credit losses                                       19                 19
Less: Allowance for credit losses                                      275                275
Total Tier 2 capital - Advanced Approach                               $    156           $    378
Total capital:
Standardized Approach                                                  $    19,024        $    21,570
Advanced Approach                                                      $    18,768        $    21,314
Risk-weighted assets:
Standardized Approach                                                  $    156,428       $    158,273
Advanced Approach                                                      $    168,703       $    170,578
Standardized Approach:
Estimated Basel III CET1 ratio                                         10.3         %     11.6         %
Tier 1 capital ratio                                                   11.9               13.2
Total (Tier 1 plus Tier 2) capital ratio                               12.2               13.6
Advanced Approach:
Estimated Basel III CET1 ratio                                         9.5          %     10.8         %
Tier 1 capital ratio                                                   11.0               12.3
Total (Tier 1 plus Tier 2) capital ratio                               11.1               12.5

(a) Reflects transitional adjustments to CET1, Tier 1 capital and Tier 2 capital required in 2015 under the U.S. capital rules.

BNY Mellon has presented its estimated fully phased-in Basel III CET1 and other risk-based capital ratios and SLR based on its interpretation of the U.S. capital rules, which are being gradually phased-in over a multi-year period, and on the application of such rules to BNY Mellon’s businesses as currently conducted. Management views the estimated fully phased-in Basel III CET1 and other risk-based capital ratios and SLR as key measures in monitoring BNY Mellon’s capital position and progress against future regulatory capital standards. Additionally, the presentation of the estimated fully phased-in Basel III CET1 and other risk-based capital ratios and SLR are intended to allow investors to compare these ratios with estimates presented by other companies. The estimated fully phased-in Basel III CET1 and other risk-based capital ratios for certain periods assume certain regulatory approvals. The U.S. capital rules require approval by banking regulators of certain models used as part of RWA calculations. If these models are not approved, the estimated fully phased-in Basel III CET1 and other risk-based capital ratios would likely be adversely impacted.

RWA at Dec. 31, 2014, for credit risk under the estimated fully phased-in Advanced Approach, reflects the use of a simple value-at-risk methodology for repo-style transactions (including agented indemnified securities lending transactions), eligible margin loans, and similar transactions. The estimated fully phased-in Advanced Approach RWA at Dec. 31, 2015 and Sept. 30, 2015 no longer assumes the use of this methodology.

Our capital and liquidity ratios are necessarily subject to, among other things, BNY Mellon’s further review of applicable rules, anticipated compliance with all necessary enhancements to model calibration, approval by regulators of certain models used as part of RWA calculations, other refinements, further implementation guidance from regulators, market practices and standards and any changes BNY Mellon may make to its businesses. Consequently, our capital and liquidity ratios remain subject to ongoing review and revision and may change based on these factors.

Supplementary Leverage Ratio ("SLR")

The following table presents the components of our estimated SLR using fully phased-in Basel III components of capital.

Estimated fully phased-in SLR - Non-GAAP (a)                                        Dec. 31,       (b) Sept. 30,           Dec. 31,
(dollars in millions)                                                               2015               2015                2014
Total estimated fully phased-in Basel III CET1 - Non-GAAP                           $   16,082         $   16,077          $   15,931
Additional Tier 1 capital                                                           2,530              2,528               1,550
Total Tier 1 capital                                                                $   18,612         $   18,605          $   17,481
Total leverage exposure:
Quarterly average total assets                                                      $   368,590        $   373,453         $   385,232
Less: Amounts deducted from Tier 1 capital                                          19,403             19,532              19,947
Total on-balance sheet assets, as adjusted                                          349,187            353,921             365,285
Off-balance sheet exposures:
Potential future exposure for derivatives contracts (plus certain other items)      7,358              8,358               11,376
Repo-style transaction exposures included in SLR                                    440                362                 302
Credit-equivalent amount of other off-balance sheet exposures (less SLR exclusions) 26,224             27,482              21,850
Total off-balance sheet exposures                                                   34,022             36,202              33,528
Total leverage exposure                                                             $   383,209        $   390,123         $   398,813
Estimated fully phased-in SLR - Non-GAAP                                            4.9         %  (c) 4.8         %   (c) 4.4         %

(a) The estimated fully phased-in SLR (Non-GAAP) is based on our interpretation of the U.S. capital rules. When the SLR is fully phased-in, we expect to maintain an SLR of over 5%. The minimum required SLR is 3% and there is a 2% buffer, in addition to the minimum, that is applicable to U.S. G-SIBs. (b) Dec. 31, 2015 information is preliminary. (c) The estimated SLR on a fully phased-in basis (Non-GAAP) for our largest bank subsidiary, The Bank of New York Mellon, was 4.8% at Dec. 31, 2015 and 4.6% at Sept. 30, 2015. At Dec. 31, 2015 and Sept. 30, 2015, total Tier 1 capital was $15,142 million and $14,882 million, respectively, and total leverage exposure was $316,268 million and $322,531 million, respectively, for The Bank of New York Mellon.

Liquidity Coverage Ratio ("LCR")

The U.S. LCR rules became effective Jan. 1, 2015 and require BNY Mellon to meet an LCR of 80%, increasing annually by 10% increments until fully phased-in on Jan. 1, 2017, at which time we will be required to meet an LCR of 100%. Our estimated LCR on a consolidated basis is compliant with the fully phased-in requirements of the U.S. LCR as of Dec. 31, 2015 based on our current understanding of the U.S. LCR rules.

INVESTMENT MANAGEMENT provides investment management services to institutional and retail investors, as well as investment management, wealth and estate planning and private banking solutions to high net worth individuals and families, and foundations and endowments.

(dollars in millions, unless otherwise noted)                                                                             4Q15 vs.
                                                            4Q15            3Q15        2Q15        1Q15       4Q14       3Q15    4Q14
Revenue:
Investment management fees:
Mutual funds                                                $  294          $  301      $  312      $ 301      $ 306      (2)%    (4)%
Institutional clients                                       350             347         363         365        364        1       (4)
Wealth management                                           155             156         160         159        157        (1)     (1)
Investment management fees                                  799             804         835         825        827        (1)     (3)
Performance fees                                            55              7           20          15         40         N/M     38
Investment management and performance fees                  854             811         855         840        867        5       (1)
Distribution and servicing                                  39              37          38          38         39         5       --
Other (a)                                                   25              (2)         20          45         6          N/M     N/M
Total fee and other revenue (a)                             918             846         913         923        912        9       1
Net interest revenue                                        84              83          78          74         69         1       22
Total revenue                                               1,002           929         991         997        981        8       2
Noninterest expense (ex. amortization of intangible assets) 691             668         703         710        716        3       (3)
Income before taxes (ex. amortization of intangible assets) 311             261         288         287        265        19      17
Amortization of intangible assets                           24              24          25          24         29         --      (17)
Income before taxes                                         $  287          $  237      $  263      $ 263      $ 236      21   %  22   %
Pre-tax operating margin                                    29        %     26        % 27        % 26       % 24       %
Adjusted pre-tax operating margin (b)                       36        %     34        % 34        % 34       % 33       %
Changes in AUM (in billions): (c)
Beginning balance of AUM                                    $  1,625        $  1,700    $  1,717    $ 1,686    $ 1,620
Net inflows (outflows):
Long-term:
Equity                                                      (9)             (4)         (13)        (5)        (5)
Fixed income                                                1               (3)         (2)         3          4
Index                                                       (16)            (10)        (9)         8          1
Liability-driven investments (d)                            11              11          5           8          24
Alternative investments                                     2               1           3           1          2
Total long-term inflows (outflows)                          (11)            (5)         (16)        15         26
Short term:
Cash                                                        2               (10)        (11)        1          6
Total net inflows (outflows)                                (9)             (15)        (27)        16         32
Net market/currency impact/acquisition                      9               (60)        10          15         34
Ending balance of AUM                                       $  1,625    (e) $  1,625    $  1,700    $ 1,717    $ 1,686    --   %  (4)%
AUM at period end, by product type: (c)
Equity                                                      14        %     14        % 15        % 15       % 15       %
Fixed income                                                13              13          13          12         12
Index                                                       20              20          21          22         21
Liability-driven investments (d)                            32              32          30          30         30
Alternative investments                                     4               4           4           4          4
Cash                                                        17              17          17          17         18
Total AUM                                                   100       % (e) 100       % 100       % 100      % 100      %
Average balances:
Average loans                                               $  13,447       $  12,779   $  12,298   $ 11,634   $ 11,124   5    %  21   %
Average deposits                                            $  15,497       $  15,282   $  14,638   $ 15,217   $ 14,602   1    %  6    %

(a) Total fee and other revenue includes the impact of the consolidated investment management funds, net of noncontrolling interests. See "Supplemental information - Explanation of GAAP and Non-GAAP financial measures" beginning on page 24 for the reconciliation of Non-GAAP measures. Additionally, other revenue includes asset servicing, treasury services, foreign exchange and other trading revenue and investment and other income. (b) Excludes the net negative impact of money market fee waivers, amortization of intangible assets and is net of distribution and servicing expense. See "Supplemental information - Explanation of GAAP and Non-GAAP financial measures" beginning on page 24 for the reconciliation of this Non-GAAP measure. (c) Excludes securities lending cash management assets and assets managed in the Investment Services business. In 3Q15, prior period AUM was restated to reflect the reclassification of Meriten from the Investment Management business to the Other segment. (d) Includes currency overlay assets under management. (e) Preliminary. N/M - Not meaningful.

INVESTMENT MANAGEMENT KEY POINTS

-- Assets under management were $1.63 trillion at Dec. 31, 2015, a decrease of 4% year-over-year and flat sequentially. Both comparisons reflect the unfavorable impact of a stronger U.S. dollar. The year-over-year decrease also reflects net outflows and lower market values, partially offset by the January 2015 acquisition of Cutwater Asset Management. Sequentially, higher market values were partially offset by net outflows.

-- Net long-term outflows of $11 billion in 4Q15 driven by index and equity investments offset by continued strength in liability-driven investments.

-- Net short-term inflows were $2 billion in 4Q15.

-- Income before taxes excluding amortization of intangible assets totaled $311 million in 4Q15, an increase of 17% year-over-year and 19% sequentially.

-- Total revenue was $1.0 billion, an increase of 2% year-over-year and 8% sequentially. Both increases primarily reflect seasonally higher performance fees and seed capital gains. The year-over-year increase also reflects higher net interest revenue and higher other trading revenue related to losses on hedging activities within a boutique recorded in 4Q14, partially offset by the unfavorable impact of a stronger U.S. dollar.

-- 42% non-U.S. revenue in 4Q15 vs. 43% in 4Q14.

-- Investment management fees were $799 million, a decrease of 3% year-over-year, or flat on a constant currency basis (Non-GAAP). On a constant currency basis (Non-GAAP), investment management fees primarily reflect net outflows and lower market values, offset by lower money market fee waivers and the impact of strategic initiatives. Sequentially, investment management fees decreased 1% primarily reflecting net outflows, partially offset by lower money market fee waivers and higher equity market values.

-- Performance fees were $55 million in 4Q15 compared with $40 million in 4Q14 and $7 million in 3Q15. The sequential increase was driven by seasonality.

-- Other revenue was $25 million in 4Q15 compared with $6 million in 4Q14 and other losses of $2 million in 3Q15. Both increases primarily reflect higher seed capital gains. The year-over-year comparison also reflects higher other trading revenue related to losses on hedging activities within a boutique recorded in 4Q14.

-- Net interest revenue increased 22% year-over-year and 1% sequentially. Both increases primarily reflect record high average loans and deposits and higher internal crediting rates for deposits.

-- Average loans increased 21% year-over-year and 5% sequentially; average deposits increased 6% year-over-year and 1% sequentially.

-- Total noninterest expense (excluding amortization of intangible assets) decreased 3% year-over-year and increased 3% sequentially. The year-over-year decrease primarily reflects the favorable impact of a stronger U.S. dollar, lower incentives and distribution and servicing expenses and the business improvement process, partially offset by strategic initiatives. The sequential increase primarily reflects higher incentive expense driven by seasonally higher performance fees.

-- BNY Mellon has signed a definitive agreement to acquire the assets of Menlo Park, CA-based Atherton Lane Advisers, LLC. With approximately $2.7 billion in assets under management, Atherton is one of Silicon Valley’s premier independent investment managers serving approximately 700 high net-worth clients.

INVESTMENT SERVICES provides global custody and related services, broker-dealer services, global collateral services, corporate trust, depositary receipt and clearing services as well as global payment/working capital solutions to global financial institutions.

(dollars in millions, unless otherwise noted)                                                                                            4Q15 vs.
                                                                    4Q15             3Q15         2Q15         1Q15         4Q14         3Q15     4Q14
Revenue:
Investment services fees:
Asset servicing                                                     $  1,005         $  1,031     $  1,035     $  1,013     $  992       (3)%     1     %
Clearing services                                                   337              345          346          342          346          (2)      (3)
Issuer services                                                     199              312          234          231          193          (36)     3
Treasury services                                                   135              135          141          135          142          --       (5)
Total investment services fees                                      1,676            1,823        1,756        1,721        1,673        (8)      --
Foreign exchange and other trading revenue                          148              177          179          209          165          (16)     (10)
Other (a)                                                           102              87           85           63           70           17       46
Total fee and other revenue                                         1,926            2,087        2,020        1,993        1,908        (8)      1
Net interest revenue                                                632              628          636          599          573          1        10
Total revenue                                                       2,558            2,715        2,656        2,592        2,481        (6)      3
Noninterest expense (ex. amortization of intangible assets)         1,765            1,822        1,840        1,794        2,509        (3)      (30)
Income (loss) before taxes (ex. amortization of intangible assets)  793              893          816          798          (28)         (11)     N/M
Amortization of intangible assets                                   40               41           40           41           43           (2)      (7)
Income (loss) before taxes                                          $  753           $  852       $  776       $  757       $  (71)      (12)%    N/M
Pre-tax operating margin                                            29         %     31         % 29         % 29         % (3)%
Pre-tax operating margin (ex. amortization of intangible assets)    31         %     33         % 31         % 31         % (1)%
Investment services fees as a percentage of noninterest expense (b) 96         %     101        % 98         % 96         % 93         %
Securities lending revenue                                          $  36            $  30        $  40        $  34        $  28        20    %  29    %
Metrics:
Average loans                                                       $  36,960        $  38,025    $  38,264    $  37,699    $  35,448    (3)%     4     %
Average deposits                                                    $  226,774       $  230,153   $  237,193   $  234,183   $  228,282   (1)%     (1)%
AUC/A at period end (in trillions) (c)                              $  28.9      (d) $  28.5      $  28.6      $  28.5      $  28.5      1     %  1     %
Market value of securities on loan at period end                    $  277           $  288       $  283       $  291       $  289       (4)%     (4)%
(in billions) (e)
Asset servicing:
Estimated new business wins (AUC/A) (in billions)                   $  49        (d) $  84        $  933       $  125       $  168
Depositary Receipts:
Number of sponsored programs                                        1,145            1,176        1,206        1,258        1,279        (3)%     (10)%
Clearing services:
Global DARTS volume (in thousands)                                  230              246          242          261          242          (7)%     (5)%
Average active clearing accounts (U.S. platform)                    5,959            6,107        6,046        5,979        5,900        (2)%     1     %
(in thousands)
Average long-term mutual fund assets (U.S. platform)                $  437,260       $  447,287   $  466,195   $  456,954   $  450,305   (2)%     (3)%
Average investor margin loans (U.S. platform)                       $  11,575        $  11,806    $  11,890    $  11,232    $  10,711    (2)%     8     %
Broker-Dealer:
Average tri-party repo balances (in billions)                       $  2,153         $  2,142     $  2,174     $  2,153     $  2,101     1     %  2     %

(a) Other revenue includes investment management fees, financing-related fees, distribution and servicing revenue and investment and other income. (b) Noninterest expense excludes amortization of intangible assets and litigation expense. (c) Includes the AUC/A of CIBC Mellon of $1.0 trillion at Dec. 31, 2015 and Sept. 30, 2015 and $1.1 trillion at June 30, 2015, March 31, 2015 and Dec. 31, 2014. (d) Preliminary. (e) Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $55 billion at Dec. 31, 2015, $61 billion at Sept. 30, 2015, $68 billion at June 30, 2015, $69 billion at March 31, 2015 and $65 billion at Dec. 31, 2014. N/M - Not meaningful.

INVESTMENT SERVICES KEY POINTS

-- Income before taxes excluding amortization of intangible assets totaled $793 million in 4Q15.

-- The pre-tax operating margin excluding amortization of intangible assets was 31% in 4Q15 and the investment services fees as a percentage of noninterest expense was 96% in 4Q15, reflecting the continued focus on the business improvement process to drive operating leverage.

-- Investment services fees were $1.7 billion, flat year-over-year and a decrease of 8% sequentially.

-- Asset servicing fees (global custody, broker-dealer services and global collateral services) were $1.01 billion in 4Q15 compared with $992 million in 4Q14 and $1.03 billion in 3Q15. The year-over-year increase primarily reflects growth in the Global Collateral Services and Broker-Dealer Services and higher securities lending revenue, partially offset by the unfavorable impact of a stronger U.S. dollar. The sequential decrease primarily reflects lower client activity.

-- Estimated new business wins (AUC/A) in Asset Servicing of $49 billion in 4Q15.

-- Clearing services fees were $337 million in 4Q15 compared with $346 million in 4Q14 and $345 million in 3Q15. Both decreases primarily reflect lost business due to industry consolidations.

-- Issuer services fees (Corporate Trust and Depositary Receipts) were $199 million in 4Q15 compared with $193 million in 4Q14 and $312 million in 3Q15. The year-over-year increase primarily reflects net new business and lower money market fee waivers in Corporate Trust, partially offset by the unfavorable impact of a stronger U.S. dollar in Corporate Trust. The sequential decrease primarily reflects seasonality in Depositary Receipts.

-- Treasury services fees were $135 million in 4Q15 compared with $142 million in 4Q14 and $135 million in 3Q15. The year-over-year decrease primarily reflects higher compensating balance credits provided to clients and lower volumes.

-- Foreign exchange and other trading revenue was $148 million in 4Q15 compared with $165 million in 4Q14 and $177 million in 3Q15. The year-over-year decrease primarily reflects lower volumes in standing instruction programs and lower volatility, partially offset by higher volumes in other trading programs. The sequential decrease primarily reflects lower volumes and volatility and lower Depositary Receipts-related activity.

-- Other revenue was $102 million in 4Q15 compared with $70 million in 4Q14 and $87 million in 3Q15. Both increases primarily relate to termination fees in our clearing services business.

-- Net interest revenue was $632 million in 4Q15 compared with $573 million in 4Q14 and $628 million in 3Q15. Both increases primarily reflect higher internal crediting rates for deposits, partially offset by lower average deposits.

-- Noninterest expense (excluding amortization of intangible assets) was $1.77 billion in 4Q15 compared with $2.51 billion in 4Q14 and $1.82 billion in 3Q15. The year-over-year decrease primarily reflects lower litigation and consulting expenses, an adjustment to bank assessment charges and the favorable impact of a stronger U.S. dollar, partially offset by higher staff expense. The sequential decrease primarily reflects an adjustment to bank assessment charges, partially offset by higher staff expense.

OTHER SEGMENT primarily includes credit-related activities, leasing operations, corporate treasury activities, global markets and institutional banking services, business exits, M&I expenses and other corporate revenue and expense items.

(dollars in millions)                                                                                          4Q15       3Q15      2Q15      1Q15     4Q14
Revenue:
Fee and other revenue                                                                                          $  117     $ 103     $ 137     $ 117    $  133
Net interest revenue                                                                                           44         48        65        55       70
Total revenue                                                                                                  161        151       202       172      203
Provision for credit losses                                                                                    163        1         (6)       2        1
Noninterest expense (ex. amortization of intangible assets, M&I and restructuring charges (recoveries))        174        125       110       134      226
(Loss) income before taxes (ex. amortization of intangible assets, M&I and restructuring charges (recoveries)) (176)      25        98        36       (24)
Amortization of intangible assets                                                                              --         1         --        1        1
M&I and restructuring charges (recoveries)                                                                     (4)        (2)       8         (4)      --
(Loss) income before taxes                                                                                     $  (172)   $ 26      $ 90      $ 39     $  (25)
Average loans and leases                                                                                       $  11,557  $ 10,853  $ 10,514  $ 8,602  $  10,272

KEY POINTS

-- Total fee and other revenue decreased $16 million compared with 4Q14 and increased $14 million compared with 3Q15. The year-over-year decrease primarily reflects lower asset-related gains, lease residual gains, the impact of the July 2015 sale of Meriten Investment Management GmbH and lower securities gains, partially offset by the impact of hedging activity for foreign currency placements. The sequential increase primarily reflects higher asset-related gains, income from corporate/bank-owned life insurance and the impact of hedging activity for foreign currency placements, partially offset by lower underwriting fees.

-- Net interest revenue decreased $26 million compared with 4Q14 and $4 million compared with 3Q15. Both decreases primarily reflect higher internal crediting rates to the businesses for deposits, partially offset by higher average loans and leases.

-- The provision for credit losses was $163 million in 4Q15 reflecting the impairment charge related to a recent court decision.

-- Noninterest expense, excluding amortization of intangible assets, M&I and restructuring charges (recoveries), decreased $52 million compared with 4Q14 and increased $49 million compared with 3Q15. Both comparisons were impacted by higher employee benefits expense primarily reflecting updated information received from an administrator of our health care benefits. The year-over-year decrease primarily reflects lower litigation and the impact of curtailing the U.S. pension plan. The sequential increase also reflects higher professional, legal and other purchased services.

THE BANK OF NEW YORK MELLON CORPORATION Condensed Consolidated Income Statement

(in millions)                                                                                                                                                            Quarter ended                   Year-to-date
                                                                                                                                                                         Dec. 31,  Sept. 30,  Dec. 31,   Dec. 31,   Dec. 31,
                                                                                                                                                                         2015      2015       2014       2015       2014
Fee and other revenue
Investment services fees:
Asset servicing                                                                                                                                                          $  1,032  $   1,057  $  1,019   $   4,187  $   4,075
Clearing services                                                                                                                                                        339       345        347        1,375      1,335
Issuer services                                                                                                                                                          199       313        193        978        968
Treasury services                                                                                                                                                        137       137        145        555        564
Total investment services fees                                                                                                                                           1,707     1,852      1,704      7,095      6,942
Investment management and performance fees                                                                                                                               864       829        885        3,438      3,492
Foreign exchange and other trading revenue                                                                                                                               173       179        151        768        570
Financing-related fees                                                                                                                                                   51        71         43         220        169
Distribution and servicing                                                                                                                                               41        41         43         162        173
Investment and other income                                                                                                                                              93        59         78         316        1,212
Total fee revenue                                                                                                                                                        2,929     3,031      2,904      11,999     12,558
Net securities gains                                                                                                                                                     21        22         31         83         91
Total fee and other revenue                                                                                                                                              2,950     3,053      2,935      12,082     12,649
Operations of consolidated investment management funds
Investment income (loss)                                                                                                                                                 19        (6)        101        115        503
Interest of investment management fund note holders                                                                                                                      3         16         59         29         340
Income (loss) from consolidated investment management funds                                                                                                              16        (22)       42         86         163
Net interest revenue
Interest revenue                                                                                                                                                         834       838        802        3,326      3,234
Interest expense                                                                                                                                                         74        79         90         300        354
Net interest revenue                                                                                                                                                     760       759        712        3,026      2,880
Provision for credit losses                                                                                                                                              163       1          1          160        (48)
Net interest revenue after provision for credit losses                                                                                                                   597       758        711        2,866      2,928
Noninterest expense
Staff                                                                                                                                                                    1,481     1,437      1,418      5,837      5,845
Professional, legal and other purchased services                                                                                                                         328       301        390        1,230      1,339
Software and equipment                                                                                                                                                   225       226        235        907        942
Net occupancy                                                                                                                                                            148       152        150        600        610
Distribution and servicing                                                                                                                                               92        95         102        381        428
Sub-custodian                                                                                                                                                            60        65         70         270        286
Business development                                                                                                                                                     75        59         75         267        268
Other                                                                                                                                                                    201       268        211        961        1,031
Amortization of intangible assets                                                                                                                                        64        66         73         261        298
Merger and integration, litigation and restructuring charges                                                                                                             18        11         800        85         1,130
Total noninterest expense                                                                                                                                                2,692     2,680      3,524      10,799     12,177
Income
Income before income taxes                                                                                                                                               871       1,109      164        4,235      3,563
Provision for income taxes                                                                                                                                               175       282        (93)       1,013      912
Net income                                                                                                                                                               696       827        257        3,222      2,651
Net (income) loss attributable to noncontrolling interests (includes $(5), $5, $(24), $(68) and $(84) related to consolidated investment management funds, respectively) (3)       6          (24)       (64)       (84)
Net income applicable to shareholders of The Bank of New York Mellon Corporation                                                                                         693       833        233        3,158      2,567
Preferred stock dividends                                                                                                                                                (56)      (13)       (24)       (105)      (73)
Net income applicable to common shareholders of The Bank of New York Mellon Corporation                                                                                  $  637    $   820    $  209     $   3,053  $   2,494

THE BANK OF NEW YORK MELLON CORPORATION Condensed Consolidated Income Statement - continued

Net income applicable to common shareholders of The Bank of                                                                                                                               Quarter ended                               Year-to-date
New York Mellon Corporation used for the earnings per
share calculation
(in millions)
                                                                                                                                                                                          Dec. 31, 2015 Sept. 30, 2015 Dec. 31, 2014  Dec. 31, 2015 Dec. 31, 2014
Net income applicable to common shareholders of The Bank of New York Mellon Corporation                                                                                                   $    637      $    820       $    209       $    3,053    $    2,494
Less:  Earnings allocated to participating securities                                                                                                                                     9             6              4              43            43
Net income applicable to the common shareholders of The Bank of New York Mellon Corporation after required adjustments for the calculation of basic and diluted earnings per common share $    628      $    814       $    205       $    3,010    $    2,451
Average common shares and equivalents outstanding of The Bank Quarter ended                               Year-to-date
of New York Mellon Corporation
(in thousands)
                                                              Dec. 31, 2015 Sept. 30, 2015 Dec. 31, 2014  Dec. 31, 2015 Dec. 31, 2014
Basic                                                         1,088,880     1,098,003      1,120,672      1,104,719     1,129,897
Diluted                                                       1,096,385     1,105,645      1,129,040      1,112,511     1,137,480
Earnings per share applicable to the common shareholders of The Quarter ended                               Year-to-date
Bank of New York Mellon Corporation
(in dollars)
                                                                Dec. 31, 2015 Sept. 30, 2015 Dec. 31, 2014  Dec. 31, 2015 Dec. 31, 2014
Basic                                                           $    0.58     $    0.74      $    0.18      $    2.73     $    2.17
Diluted                                                         $    0.57     $    0.74      $    0.18      $    2.71     $    2.15

THE BANK OF NEW YORK MELLON CORPORATION Consolidated Balance Sheet

(dollars in millions, except per share amounts)                                                                                         Dec. 31,     Sept. 30,    Dec. 31,
                                                                                                                                        2015         2015         2014
Assets
Cash and due from:
Banks                                                                                                                                   $   6,537    $   8,234    $   6,970
Interest-bearing deposits with the Federal Reserve and other central banks                                                              113,203      82,426       96,682
Interest-bearing deposits with banks                                                                                                    15,146       20,002       19,495
Federal funds sold and securities purchased under resale agreements                                                                     24,373       28,901       20,302
Securities:
Held-to-maturity (fair value of $43,204, $43,758 and $21,127)                                                                           43,312       43,423       20,933
Available-for-sale                                                                                                                      75,867       76,682       98,330
Total securities                                                                                                                        119,179      120,105      119,263
Trading assets                                                                                                                          7,368        6,645        9,881
Loans                                                                                                                                   63,703       63,309       59,132
Allowance for loan losses                                                                                                               (157)        (181)        (191)
Net loans                                                                                                                               63,546       63,128       58,941
Premises and equipment                                                                                                                  1,379        1,361        1,394
Accrued interest receivable                                                                                                             562          530          607
Goodwill                                                                                                                                17,618       17,679       17,869
Intangible assets                                                                                                                       3,842        3,914        4,127
Other assets                                                                                                                            19,626       22,149       20,490
Subtotal assets of operations                                                                                                           392,379      375,074      376,021
Assets of consolidated investment management funds, at fair value:
Trading assets                                                                                                                          1,228        2,087        8,678
Other assets                                                                                                                            173          210          604
Subtotal assets of consolidated investment management funds, at fair value                                                              1,401        2,297        9,282
Total assets                                                                                                                            $   393,780  $   377,371  $   385,303
Liabilities
Deposits:
Noninterest-bearing (principally U.S. offices)                                                                                          $   96,277   $   101,111  $   104,240
Interest-bearing deposits in U.S. offices                                                                                               51,704       54,073       53,236
Interest-bearing deposits in Non-U.S. offices                                                                                           131,629      111,584      108,393
Total deposits                                                                                                                          279,610      266,768      265,869
Federal funds purchased and securities sold under repurchase agreements                                                                 15,002       8,824        11,469
Trading liabilities                                                                                                                     4,501        4,756        7,434
Payables to customers and broker-dealers                                                                                                21,900       22,236       21,181
Other borrowed funds                                                                                                                    523          648          786
Accrued taxes and other expenses                                                                                                        5,986        6,457        6,903
Other liabilities (includes allowance for lending-related commitments of $118, $99 and $89)                                             5,490        5,890        5,025
Long-term debt                                                                                                                          21,547       21,430       20,264
Subtotal liabilities of operations                                                                                                      354,559      337,009      338,931
Liabilities of consolidated investment management funds, at fair value:
Trading liabilities                                                                                                                     229          1,072        7,660
Other liabilities                                                                                                                       17           91           9
Subtotal liabilities of consolidated investment management funds, at fair value                                                         246          1,163        7,669
Total liabilities                                                                                                                       354,805      338,172      346,600
Temporary equity
Redeemable noncontrolling interests                                                                                                     200          247          229
Permanent equity
Preferred stock - par value $0.01 per share; authorized 100,000,000 shares; issued 25,826, 25,826 and 15,826 shares                     2,552        2,552        1,562
Common stock - par value $0.01 per share; authorized 3,500,000,000 shares; issued 1,312,941,113, 1,310,436,554 and 1,290,222,821 shares 13           13           13
Additional paid-in capital                                                                                                              25,262       25,168       24,626
Retained earnings                                                                                                                       19,974       19,525       17,683
Accumulated other comprehensive loss, net of tax                                                                                        (2,600)      (2,355)      (1,634)
Less:  Treasury stock of 227,598,128, 217,483,962 and 171,995,262 common shares, at cost                                                (7,164)      (6,733)      (4,809)
Total The Bank of New York Mellon Corporation shareholders’ equity                                                                      38,037       38,170       37,441
Nonredeemable noncontrolling interests of consolidated investment management funds                                                      738          782          1,033
Total permanent equity                                                                                                                  38,775       38,952       38,474
Total liabilities, temporary equity and permanent equity                                                                                $   393,780  $   377,371  $   385,303

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

BNY Mellon has included in this Earnings Release certain Non-GAAP financial measures based on fully phased-in Basel III CET1 and other risk-based capital ratios, SLR and tangible common shareholders’ equity. BNY Mellon believes that the Basel III CET1 and other risk-based capital ratios on a fully phased-in basis, the SLR on a fully phased-in basis and the ratio of tangible common shareholders’ equity to tangible assets of operations are measures of capital strength that provide additional useful information to investors, supplementing the capital ratios which are, or were, required by regulatory authorities. The tangible common shareholders’ equity ratio includes 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 reconciliation has excluded certain assets which are given a zero percent risk-weighting for regulatory purposes and the assets of consolidated investment management funds to which BNY Mellon has limited economic exposure. 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 those assets that can generate income. BNY Mellon has provided a measure of tangible book value per common share, which it believes provides additional useful information as to the level of tangible assets in relation to shares of common stock outstanding.

BNY Mellon has presented revenue measures which exclude the effect of noncontrolling interests related to consolidated investment management funds, a gain on the sale of our investment in Wing Hang and a gain on the sale of the One Wall Street building; and expense measures which exclude M&I expenses, litigation charges, restructuring charges and amortization of intangible assets. Earnings per share, return on equity measures and operating margin measures, which exclude some or all of these items, as well as the impairment charge related to a recent court decision, are also presented. Earnings per share and return on equity measures also exclude the benefit primarily related to a tax carryback claim. Operating margin measures may also exclude amortization of intangible assets and the net negative impact of money market fee waivers, net of distribution and servicing expense. 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 certain charges as a result of prior transactions. M&I expenses primarily relate to acquisitions and generally continue for approximately three years after the transaction. Litigation charges represent accruals for loss contingencies that are both probable and reasonably estimable, but exclude standard business-related legal fees. Restructuring charges relate to our streamlining actions, Operational Excellence Initiatives and migrating positions to Global Delivery Centers. Excluding these charges mentioned above permits investors to view expenses on a basis consistent with how management views the business.

The presentation of revenue growth on a constant currency basis permits investors to assess the significance of changes in foreign currency exchange rates. Growth rates on a constant currency basis were determined by applying the current period foreign currency exchange rates to the prior period revenue. BNY Mellon believes that this presentation, as a supplement to GAAP information, gives investors a clearer picture of the related revenue results without the variability caused by fluctuations in foreign currency exchange rates.

The presentation of income from consolidated investment management funds, net of net income attributable to noncontrolling interests related to the consolidation of certain investment management funds permits investors to view revenue on a basis consistent with how management views the business. BNY Mellon believes that these presentations, as a supplement to GAAP information, give investors a clearer picture of the results of its primary businesses.

In this Earnings Release, the net interest margin is 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 on a business-level basis.

Reconciliation of net income and diluted EPS - GAAP to Non-GAAP                                    Net income         Diluted EPS
(in millions, except per common share amounts)                                                     YTD15    YTD14     YTD15    YTD14        Inc
Net income applicable to common shareholders of The Bank of New York Mellon                        $ 3,053  $ 2,494   $  2.71  $  2.15
Corporation - GAAP
Less:  Gain on the sale of our investment in Wing Hang Bank                                        N/A      315       N/A      0.27
Gain on the sale of the One Wall Street building                                                   N/A      204       N/A      0.18
Benefit primarily related to a tax carryback claim                                                 N/A      150       N/A      0.13
Add:   Litigation and restructuring charges                                                        56       860       0.05     0.74
Impairment charge related to a recent court decision                                               106      N/A       0.09     N/A
Charge related to investment management funds, net of incentives                                   N/A      81        N/A      0.07
Net income applicable to common shareholders of The Bank of New York Mellon Corporation - Non-GAAP $ 3,215  $ 2,766   $  2.85  $  2.39  (a) 19 %

(a) Does not foot due to rounding. N/A - Not applicable.

The following table presents the reconciliation of the pre-tax operating margin ratio.

Reconciliation of income before income taxes - pre-tax
operating margin
(dollars in millions)                                                                                         4Q15           3Q15           2Q15           1Q15           4Q14
Income before income taxes - GAAP                                                                             $  871         $  1,109       $  1,165       $  1,090       $  164
Less:  Net income (loss) attributable to noncontrolling interests of consolidated investment management funds 5              (5)            37             31             24
Add:  Amortization of intangible assets                                                                       64             66             65             66             73
M&I, litigation and restructuring charges (recoveries)                                                        18             11             59             (3)            800
Impairment charge related to a recent court decision                                                          170            --             --             --             --
Income before income taxes, as adjusted - Non-GAAP (a)                                                        $  1,118       $  1,191       $  1,252       $  1,122       $  1,013
Fee and other revenue - GAAP                                                                                  $  2,950       $  3,053       $  3,067       $  3,012       $  2,935
Income (loss) from consolidated investment management funds - GAAP                                            16             (22)           40             52             42
Net interest revenue - GAAP                                                                                   760            759            779            728            712
Total revenue - GAAP                                                                                          3,726          3,790          3,886          3,792          3,689
Less:  Net income (loss) attributable to noncontrolling interests of consolidated investment management funds 5              (5)            37             31             24
Total revenue, as adjusted - Non-GAAP (a)                                                                     $  3,721       $  3,795       $  3,849       $  3,761       $  3,665
Pre-tax operating margin (b)                                                                                  23       % (c) 29       % (c) 30       % (c) 29       % (c) 4        %
Pre-tax operating margin - Non-GAAP (a)(b)                                                                    30       % (c) 31       % (c) 33       % (c) 30       % (c) 28       %

(a) Non-GAAP excludes net income (loss) attributable to noncontrolling interests of consolidated investment management funds, amortization of intangible assets, M&I, litigation and restructuring charges (recoveries), and the impairment charge related to a recent court decision, if applicable. (b) Income before taxes divided by total revenue. (c) Our GAAP earnings include tax-advantaged investments such as low income housing, renewable energy, bank-owned life insurance and tax-exempt securities. The benefits of these investments are primarily reflected in tax expense. If reported on a tax-equivalent basis these investments would increase revenue and income before taxes by $73 million for 4Q15, $53 million for 3Q15, $52 million for 2Q15 and $64 million for 1Q15 and would increase our pre-tax operating margin by approximately 1.5% for 4Q15, 1.0% for 3Q15, 0.9% for 2Q15 and 1.2% for 1Q15.

Pre-tax operating leverage                                                                                                         YTD15 vs.
(dollars in millions)                                                                                         YTD15     YTD14      YTD14
Total revenue - GAAP                                                                                          $ 15,194  $  15,692
Less:  Net income (loss) attributable to noncontrolling interests of consolidated investment management funds 68        84
Gain on the sale of our investment in Wing Hang Bank                                                          --        490
Gain on the sale of the One Wall Street building                                                              --        346
Total revenue, as adjusted - Non-GAAP                                                                         $ 15,126  $  14,772  2.40   %
Total noninterest expense - GAAP                                                                              $ 10,799  $  12,177
Less:  Amortization of intangible assets                                                                      261       298
M&I, litigation and restructuring charges                                                                     85        1,130
Charge related to investment management funds, net of incentives                                              --        104
Total noninterest expense, as adjusted - Non-GAAP                                                             $ 10,453  $  10,645  (1.80) %
Pre-tax operating leverage, as adjusted - Non-GAAP (a)(b)                                                                          420    bps

(a) Pre-tax operating leverage is the rate of increase in total revenue less the rate of increase in total noninterest expense. (b) Non-GAAP excludes the gains on the sales of our investment in Wing Hang Bank and the One Wall Street building, amortization of intangible assets, M&I, litigation and restructuring charges and the charge related to investment management funds, net of incentives, if applicable.

The following table presents the reconciliation of the returns on common equity and tangible common equity.

Return on common equity and tangible common equity
(dollars in millions)                                                                                                                          4Q15         3Q15         2Q15         1Q15         4Q14         YTD15
Net income applicable to common shareholders of The Bank of New York Mellon Corporation - GAAP                                                 $   637      $   820      $   830      $   766      $   209      $   3,053
Add:  Amortization of intangible assets, net of tax                                                                                            42           43           44           43           47           172
Net income applicable to common shareholders of The Bank of New York Mellon Corporation excluding amortization of intangible assets - Non-GAAP 679          863          874          809          256          3,225
Less:  Benefit primarily related to a tax carryback claim                                                                                      --           --           --           --           150          --
Add:  M&I, litigation and restructuring charges (recoveries)                                                                                   12           8            38           (2)          608          56
Impairment charge related to a recent court decision                                                                                           106          --           --           --           --           106
Net income applicable to common shareholders of The Bank of New York Mellon Corporation, as adjusted - Non-GAAP (a)                            $   797      $   871      $   912      $   807      $   714      $   3,387
Average common shareholders’ equity                                                                                                            $   35,664   $   35,588   $   35,516   $   35,486   $   36,859   $   35,564
Less:  Average goodwill                                                                                                                        17,673       17,742       17,752       17,756       17,924       17,731
Average intangible assets                                                                                                                      3,887        3,962        4,031        4,088        4,174        3,992
Add:  Deferred tax liability - tax deductible goodwill (b)                                                                                     1,401        1,379        1,351        1,362        1,340        1,401
Deferred tax liability - intangible assets (b)                                                                                                 1,148        1,164        1,179        1,200        1,216        1,148
Average tangible common shareholders’ equity - Non-GAAP                                                                                        $   16,653   $   16,427   $   16,263   $   16,204   $   17,317   $   16,390
Return on common equity - GAAP (c)                                                                                                             7.1        % 9.1        % 9.4        % 8.8        % 2.2        % 8.6        %
Return on common equity - Non-GAAP (a)(c)                                                                                                      8.9        % 9.7        % 10.3       % 9.2        % 7.7        % 9.5        %
Return on tangible common equity - Non-GAAP (c)                                                                                                16.2       % 20.8       % 21.5       % 20.3       % 5.9        % 19.7       %
Return on tangible common equity - Non-GAAP adjusted (a)(c)                                                                                    19.0       % 21.0       % 22.5       % 20.2       % 16.3       % 20.7       %

(a) Non-GAAP excludes amortization of intangible assets, net of tax, the benefit primarily related to a tax carryback claim, M&I, litigation and restructuring charges (recoveries) and the impairment charge related to a recent court decision, if applicable. (b) Deferred tax liabilities are based on fully phased-in Basel III rules. (c) Annualized.

The following table presents the reconciliation of the equity to assets ratio and book value per common share.

Equity to assets and book value per common share                                                  Dec. 31,        Sept. 30,        June 30,        March 31,        Dec. 31,
                                                                                                  2015            2015             2015            2015             2014
(dollars in millions, unless otherwise noted)
BNY Mellon shareholders’ equity at period end - GAAP                                              $    38,037     $    38,170      $    38,270     $    37,328      $    37,441
Less:  Preferred stock                                                                            2,552           2,552            2,552           1,562            1,562
BNY Mellon common shareholders’ equity at period end - GAAP                                       35,485          35,618           35,718          35,766           35,879
Less:  Goodwill                                                                                   17,618          17,679           17,807          17,663           17,869
Intangible assets                                                                                 3,842           3,914            4,000           4,047            4,127
Add:  Deferred tax liability - tax deductible goodwill (a)                                        1,401           1,379            1,351           1,362            1,340
Deferred tax liability - intangible assets (a)                                                    1,148           1,164            1,179           1,200            1,216
BNY Mellon tangible common shareholders’ equity at period end - Non-GAAP                          $    16,574     $    16,568      $    16,441     $    16,618      $    16,439
Total assets at period end - GAAP                                                                 $    393,780    $    377,371     $    395,254    $    392,337     $    385,303
Less:  Assets of consolidated investment management funds                                         1,401           2,297            2,231           1,681            9,282
Subtotal assets of operations - Non-GAAP                                                          392,379         375,074          393,023         390,656          376,021
Less:  Goodwill                                                                                   17,618          17,679           17,807          17,663           17,869
Intangible assets                                                                                 3,842           3,914            4,000           4,047            4,127
Cash on deposit with the Federal Reserve and other central banks (b)                              116,211         86,426           106,628         93,044           99,901
Tangible total assets of operations at period end - Non-GAAP                                      $    254,708    $    267,055     $    264,588    $    275,902     $    254,124
BNY Mellon shareholders’ equity to total assets ratio - GAAP                                      9.7          %  10.1         %   9.7          %  9.5          %   9.7          %
BNY Mellon common shareholders’ equity to total assets ratio - GAAP                               9.0          %  9.4          %   9.0          %  9.1          %   9.3          %
BNY Mellon tangible common shareholders’ equity to tangible assets of operations ratio - Non-GAAP 6.5          %  6.2          %   6.2          %  6.0          %   6.5          %
Period-end common shares outstanding (in thousands)                                               1,085,343       1,092,953        1,106,518       1,121,512        1,118,228
Book value per common share - GAAP                                                                $    32.69      $    32.59       $    32.28      $    31.89       $    32.09
Tangible book value per common share - Non-GAAP                                                   $    15.27      $    15.16       $    14.86      $    14.82       $    14.70

(a) Deferred tax liabilities are based on fully phased-in Basel III rules. (b) Assigned a zero percent risk-weighting by the regulators.

The following table presents income from consolidated investment management funds, net of noncontrolling interests.

Income from consolidated investment management funds, net of noncontrolling interests
(in millions)                                                                                                 4Q15                  3Q15                    2Q15  1Q15  4Q14
Income (loss) from consolidated investment management funds                                                   $                 16  $                 (22)  $ 40  $ 52  $ 42
Less:  Net income (loss) attributable to noncontrolling interests of consolidated investment management funds 5                     (5)                     37    31    24
Income (loss) from consolidated investment management funds, net of noncontrolling interests                  $                 11  $                 (17)  $ 3   $ 21  $ 18

The following table presents the impact of changes in foreign currency exchange rates on our consolidated investment management and performance fees.

Investment management and performance fees - Consolidated                         4Q15 vs.
(dollars in millions)                                              4Q15   4Q14    4Q14
Investment management and performance fees - GAAP                  $ 864  885     (2)%
Impact of changes in foreign currency exchange rates               --     (27)
Investment management and performance fees, as adjusted - Non-GAAP $ 864  $  858  1    %

The following table presents the revenue line items in the Investment Management business impacted by the consolidated investment management funds.

Income (loss) from consolidated investment management funds, net of
noncontrolling interests - Investment Management business
(in millions)                                                                                4Q15  3Q15     2Q15 1Q15  4Q14
Investment management fees                                                                   $ 7   $  3     $ 4  $ 1   $ 15
Other (Investment income (loss))                                                             4     (20)     (1)  20    3
Income (loss) from consolidated investment management funds, net of noncontrolling interests $ 11  $  (17)  $ 3  $ 21  $ 18

The following table presents the impact of changes in foreign currency exchange rates on investment management fees reported in the Investment Management segment.

Investment management fees - Investment Management business                4Q15 vs.
(dollars in millions)                                       4Q15   4Q14    4Q14
Investment management fees - GAAP                           $ 799  $  827  (3)  %
Impact of changes in foreign currency exchange rates        --     (24)
Investment management fees, as adjusted - Non-GAAP          $ 799  $  803  --   %

The following table presents the reconciliation of the pre-tax operating margin for the Investment Management business.

Pre-tax operating margin - Investment Management business
(dollars in millions)                                                                                                                                       4Q15      3Q15    2Q15    1Q15    4Q14
Income before income taxes - GAAP                                                                                                                           $ 287     $ 237   $ 263   $ 263   $ 236
Add:  Amortization of intangible assets                                                                                                                     24        24      25      24      29
Money market fee waivers                                                                                                                                    23        28      29      33      33
Income before income taxes excluding amortization of intangible assets and money market fee waivers - Non-GAAP                                              $ 334     $ 289   $ 317   $ 320   $ 298
Total revenue - GAAP                                                                                                                                        $ 1,002   $ 929   $ 991   $ 997   $ 981
Less:  Distribution and servicing expense                                                                                                                   92        94      95      97      101
Money market fee waivers benefiting distribution and servicing expense                                                                                      27        35      37      38      37
Add:  Money market fee waivers impacting total revenue                                                                                                      50        63      66      71      70
Total revenue net of distribution and servicing expense                                                                                                     $ 933     $ 863   $ 925   $ 933   $ 913
and excluding money market fee waivers - Non-GAAP
Pre-tax operating margin (a)                                                                                                                                29      % 26    % 27    % 26    % 24    %
Pre-tax operating margin excluding amortization of intangible assets, money market fee waivers and net of distribution and servicing expense - Non-GAAP (a) 36      % 34    % 34    % 34    % 33    %

(a) Income before taxes divided by total revenue.

DIVIDENDS

Common - On Jan. 21, 2016, The Bank of New York Mellon Corporation declared a quarterly common stock dividend of $0.17 per common share. This cash dividend is payable on Feb. 12, 2016 to shareholders of record as of the close of business on Feb. 2, 2016.

Preferred - On Jan. 21, 2016, The Bank of New York Mellon Corporation also declared the following dividends for the noncumulative perpetual preferred stock, liquidation preference $100,000 per share, for the dividend period ending in March 2016, in each case payable on March 21, 2016 to holders of record as of the close of business on March 5, 2016:

-- $1,011.11 per share on the Series A Preferred Stock (equivalent to $10.1111 per Normal Preferred Capital Security of Mellon Capital IV, each representing a 1/100th interest in a share of the Series A Preferred Stock); and

-- $1,300.00 per share on the Series C Preferred Stock (equivalent to $0.3250 per depositary share, each representing a 1/4,000th interest in a share of the Series C Preferred Stock).

BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 35 countries and more than 100 markets. As of Dec. 31, 2015, BNY Mellon had $28.9 trillion in assets under custody and/or administration, and $1.6 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (BK ). Additional information is available on www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.

CAUTIONARY STATEMENT

A number of statements (i) in this Earnings Release, (ii) in our presentations and (iii) in the responses to questions on our conference call discussing our quarterly results and other public events may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 including our estimated capital ratios and expectations relating to those ratios, preliminary business metrics and statements regarding our acquisition of Atherton, enhancing the client experience, our focus on delivering value-added solutions, investment excellence and actionable, data-driven insights, capital plans, strategic priorities and our business improvement process. These statements may be expressed in a variety of ways, including the use of future or present tense language. Words such as "estimate", "forecast", "project", "anticipate", "target", "expect", "intend", "continue", "seek", "believe", "plan", "goal", "could", "should", "may", "will", "strategy", "opportunities", "trends" and words of similar meaning signify forward-looking statements. 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). Actual results may differ materially from those expressed or implied as a result of these risks and uncertainties, including, but not limited to, the risk factors and other uncertainties set forth in BNY Mellon’s Annual Report on Form 10-K for the year ended Dec. 31, 2014 and BNY Mellon’s other filings with the Securities and Exchange Commission. All forward-looking statements in this Earnings Release speak only as of Jan. 21, 2016, 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.

Contacts:

MEDIA:Kevin Heine(212) 635-1590kevin.heine@bnymellon.com

ANALYSTS:Valerie Haertel(212) 635-8529valerie.haertel@bnymellon.com

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/bny-mellon-reports-fourth-quarter-earnings-of-637-million-or-057-per-common-share-including-011-per-common-share-for-the-previously-disclosed-impairment-charge-related-to-a-recent-court-decision-litigation-and-restructurin-300207738.html

SOURCE BNY Mellon

http://rt.prnewswire.com/rt.gif?NewsItemId=NY02701&Transmission_Id=201601210630PR_NEWS_USPR_____NY02701&DateId=20160121



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