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Bank of New York Mellon: Financial Winner

Bank of New York Mellon's shares have now returned 14% year-to-date, following a 33% decline during 2011.

BK Chart BK data by YCharts

The shares are trading for 1.9 times their reported June 30 tangible book value of $11.47, and for nine times the consensus 2013 earnings estimate of $2.41, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $2.06.

Jefferies analyst Ken Usdin rates Bank of New York Mellon a "Hold," with a $26 price target, and said in an Aug. 2 report discussing trust banks' efficiency initiatives that the company's "efficiency plan was slightly incremental ($1mm benefit to pre-tax income) in 2Q," which "was a positive surprise, as management had previously indicated that the program would be a net drag on profitability for the balance of the year as program costs overcome gross saves.

Bank of New York Mellon expects between $160 million and $170 million in cost reductions during 2013. Usdin said that through the second quarter, the company had incurred $28 million in expenses tied to the efficiency plan, leaving "over $90mm of program costs to book in the second half."

Usdin estimates that Bank of New York Mellon will earn $2.00 a share for all of 2012, followed by EPS of $2.40 in 2013.

Interested in more on Bank of New York Mellon? See TheStreet Ratings' report card for this stock.


-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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