TO OUR SHAREHOLDERS
As BNY Mellon marked its milestone 225th year, the global economy was in the grip of the biggest downturn in 80 years. It was an extraordinarily challenging environment for the financial services industry and a year of transition for your company.

Although we have outperformed both our peer group and the S&P Financials since the beginning of the financial crisis, during 2009 our total shareholder return trailed both benchmarks and we reported a net loss for the year. The loss reflected write-downs on investment securities and actions we took to materially de-risk our balance sheet. These actions should benefit our performance going forward and, while prudent, the net loss was disappointing for a company focused on outperforming.

Financial institutions spent 2009 beginning the arduous process of stabilization, balance sheet cleanup, recapitalization and refocusing for the future. At BNY Mellon, we focused on three priorities that are critical to our long-term success: meeting the needs of our clients, reducing risk and managing expenses. Our progress in these areas in 2009 has helped position your company for the eventual economic recovery.

Specifically:
MEETING THE NEEDS OF OUR CLIENTS

• We stabilized revenue following a significant decline in revenue in the first quarter, and ended the year with marked improvement in several of our core businesses, particularly Asset Management.
• Won $1.2 trillion in new assets under custody in Asset Servicing.
• Further strengthened our asset management capabilities through improved fund investment performance and the acquisition of Insight Investment Management, a London-based specialist in liability-driven investment solutions, active fixed income and alternatives. We also acquired a 20 percent interest in Siguler Guff Asset Management, a multi-strategy private equity firm based in New York.
• Continued to build share in corporate trust, clearing, broker-dealer services and hedge fund servicing.
• Had 16 consecutive quarters of net positive client asset flows in Wealth Management.
• Outperformed our merger revenue synergy targets.
• Achieved No. 1 rankings in client satisfaction among our peers in the Global Investor and R&M global custody surveys and met our revenue retention target.

REDUCING RISK

• Sold or restructured $13.5 billion of lower-quality securities in our investment portfolio to materially de-risk our balance sheet.
• Reduced our credit exposure by $14.7 billion or 15 percent.
• Resolved the court case with Russia’s Federal Customs Service.
• Sold Mellon United National Bank, our Miami-based bank.

MANAGING EXPENSES

• Reduced operating expense by 17 percent through cost reduction programs and merger-related synergies.
• Exceeded merger expense synergy targets.
• Reduced incentive expense as a percentage of revenue for the second consecutive year.
• Took a $139 million restructuring charge in the fourth quarter to allow us to continue to drive efficiencies in future quarters.

In addition, we passed the U.S. government stress test and repaid the U.S. government’s $3 billion TARP investment — becoming one of the first banks to do so — providing American taxpayers with a very good return of 12 percent (annualized) on their investment.

We also raised $1.4 billion in new common equity, maintained strong capital ratios and continued to enjoy the highest debt ratings among all U.S. banks. In fact, we ended the year with materially stronger ...

Read Full Report: Bank of New York Mellon 2009 Annual Report

PDF format, 1MB, 162Pages.

BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE symbol: BK).

BNY Mellon is a global leader in providing a comprehensive array of services that enable institutions and individuals to manage and service their financial assets in more than 100 markets worldwide. We strive to be the global provider of choice for asset and wealth management and institutional services and be recognized for our broad and deep capabilities, superior client service and consistent outperformance versus peers.

Our global client base consists of financial institutions, corporations, government agencies, high-net-worth individuals, families, endowments and foundations and related entities. At Dec. 31, 2009, we had $22.3 trillion in assets under custody and administration and $1.1 trillion in assets under management, serviced $12.0 trillion in outstanding debt and, on average, processed $1.6 trillion of global payments per day.

BNY Mellon’s businesses benefit during periods of global growth in financial assets and concentration of wealth, and also benefit from the globalization of the investment process. Over the long term, our financial goals are focused on deploying capital to accelerate the long-term growth of our businesses and on achieving superior total returns to shareholders by generating first quartile earnings per share growth over time relative to a group of peer companies.

Key components of our strategy include: providing superior client service versus peers; strong investment performance (relative to investment benchmarks); above median revenue growth (relative to peer companies for each of our businesses); an increasing percentage of revenue and income derived from outside the U.S.; successful integration of acquisitions; competitive margins; and positive operating leverage. We have established Tier 1 capital as our principal capital measure and have established a targeted minimum ratio of Tier 1 capital to riskweighted assets of 10%.

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