Bank of New York Mellon – Monitor Closely<\/span><\/strong><\/span><\/h1>\n

 <\/p>\n

 <\/p>\n

On 01\/12\/2018 (four and a quarter years ago) the stock was selling in the market at $58.42 per share. Today, 04\/30\/22, the stock is selling below $43 per share. Here are the comparatives.<\/span><\/p>\n

\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0Market\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0Annual\u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0 \u00a0 \u00a0\u00a0 \u00a0 \u00a0 \u00a0Per Share\u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0Book\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0Common Equity<\/strong>
\nDate<\/span>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0Price<\/span>\u00a0 \u00a0 \u00a0 Revenue<\/span>\u00a0 \u00a0Expenses<\/span>\u00a0 \u00a0Earnings<\/span>\u00a0 Dividends<\/span>\u00a0 \u00a0 Loans<\/span>\u00a0 \u00a0Securities<\/span>\u00a0 \u00a0Value\/SH<\/span>\u00a0 Tangible\/SH<\/span>\u00a0 \u00a0 Employees<\/span>\u00a0 \u00a0 \u00a0 Tier 1 Ratio<\/span>\u00a0\u00a0 \u00a0 \u00a0 \u00a0Deposits<\/span>\u00a0<\/strong>
\n01\/18\/2017\u00a0 \u00a0$58.42\u00a0 \u00a0 $15.5 B\u00a0 \u00a0 \u00a0 $11.0 B\u00a0 \u00a0 \u00a0 \u00a0 $3.72\u00a0 \u00a0 \u00a0 \u00a0 \u00a0$.96\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $57.9 B\u00a0 \u00a0$120.3 B\u00a0 \u00a0 \u00a0 \u00a0 $37.21\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $18.24\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a052,500\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a010.7%\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $244.3 B
\n01\/22\/2021\u00a0 \u00a0$41.93\u00a0 \u00a0 $15.8 B\u00a0 \u00a0 \u00a0 $11.0 B\u00a0 \u00a0 \u00a0 \u00a0 $3.83\u00a0 \u00a0 \u00a0 \u00a0$1.24\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $56.5 B\u00a0 \u00a0$156.4 B\u00a0 \u00a0 \u00a0 \u00a0 $46.53\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $25.44\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a048,500\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a013.1%\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0$341.5 B
\n04\/29\/2022\u00a0 \u00a0$42.06\u00a0 \u00a0 $15.9 B\u00a0 \u00a0 \u00a0 $11.7 B\u00a0 \u00a0 \u00a0 \u00a0 $4.04\u00a0 \u00a0 \u00a0 \u00a0$1.33\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $68.1 B\u00a0 \u00a0$153.4 B\u00a0 \u00a0 \u00a0 \u00a0 $45.76\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $22.76\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a049,600\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a010.1%\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0$345.6 B
\n*04\/26\/22 Data reflects the four most recent quarters combined.<\/span><\/p>\n

Bank of New York Mellon’s revenue will be impacted by the Russia-Ukraine war. In general, about $400 Million per year in fees are assessed for transaction activity tied to Russia. Adjusted for related costs, this will impact the bottom line around eight to ten cents per share per year for the foreseeable future. In addition, Bank of New York Mellon’s asset management fees are 73% of the total revenue recorded. In effect, if the market as a whole is performing poorly, the revenue stream tied to gains in the market is affected too. Total fees for asset management services is down $50 Million from the prior quarter. To add more pressure, the fair value of the bank’s securities portfolio fell $6.6 Billion reflecting the overall market as a whole.\u00a0<\/span><\/p>\n

Overall, Bank of New York Mellon<\/span><\/strong><\/a> is in good financial condition and even with the adjustment for a reduction in revenue tied to Russian transactions, the bank will regain market value once the entire market shifts towards a positive position in comparison to the various index values on 12\/31\/21. However, the current market price is still too high to warrant a ‘Buy’. Intrinsic value<\/span><\/strong><\/a> is set at $42 per share and given the additional risk associated with securities valuation and the impact reduced fees will have in the short-term related to earned amounts from Russian activity, a 9% discount is warranted. Thus, a ‘Buy’ price is now set at $38 per share.\u00a0<\/span><\/p>\n

Therefore, value investors should be on the lookout for any sudden or slow market price decrease for Bank of New York Mellon. Sell price is tentatively set at $53 per share to net $52 per share after transaction fees. It is expected to take upwards of two years to recover to the $53 per share market price. Net earnings will approximate $13 per share on a $39 per share investment ($1 transaction fee involved at the buy point). If it does take two years, absolute return, including dividends earned during this two year period, will approximate 40.15% and the annual return rate is slightly greater than 18%. Any quicker return time frame accelerates the annual return. As an example, if the market price recovers to $53 per share in 15 months, the average annual return improves to almost 30%. At $38 per share for a ‘Buy’ and any recovery period in less than two years makes Bank of New York Mellon a solid value investment. Act on Knowledge. <\/strong><\/span><\/p>\n