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TheStreet Open House

Bank of New York Mellon Misses on Operating EPS

Updated with additional information.

NEW YORK (TheStreet) -- Bank of New York Mellon (BK) on Wednesday reported continuing growth of assets under management and servicing fees, but also reported a preannounced net loss and missed the consensus estimate for first-quarter operating earnings.

The company reported a first-quarter net loss applicable to shareholders of $253 million, or 23 cents a share, compared to earnings of $646 million, or 53 cents a share in the fourth quarter, and $617 million, or 52 cents a share, in the first quarter of 2012.

Excluding a previously announced $854 million charge for disallowed tax credits, first-quarter operating earnings were $588 million, or 50 cents a share, missing the consensus estimate of 52 cents, among analysts polled by Thomson Reuters.

Total adjusted revenue was $3.597 billion in the first quarter, declining from $3.606 the previous quarter and $3.635 billion a year earlier. Investment servicing fees increased to $1.651 billion in the first quarter from $1.595 billion in the fourth quarter, and $1.633 billion in the first quarter of 2012.

First-quarter investment management and performance fees totaled $822 million, declining from $853 million the previous quarter, but increasing from $745 million a year earlier.

Adjusted noninterest expense totaled $2.7 billion in the first quarter, increasing from $2.68 billion in the fourth quarter, and $2.55 billion in the first quarter of 2012.

The company's assets under management increased 3% sequentially and 9% year-over-year, to $1.4 trillion as of March 31. Assets under custody or administration were unchanged from the previous quarter, but grew 2% year-over-year to $26.3 trillion.

Bank of New York Mellon's shares closed at $27.76 Tuesday, returning 9% this year, following a 32% return during 2012. The shares trade for 2.2 times their reported March 31 tangible book value of $12.47, and for 10.8 times the consensus 2014 EPS estimate of $2.58. The consensus 2013 EPS estimate is $2.28.

The company previous raised its quarterly dividend to 15 cents a share, for a yield of 1.04%, based on Tuesday's closing price. Bank of New York Mellon in March announced that it had been approved by the Federal Reserve for up to $1.35 billion in share buybacks through the first quarter of 2014.

BK ChartBK data by YCharts

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.

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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 TheStreet.com 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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