Bank of New York Mellon
on Thursday posted a slide in year-over year and sequential profits, as the trust bank was hit by a big charge related to a federal court decision on taxes related to certain transactions.
The New York-based trust bank posted a profit of $302 million, or 26 cents a share, vs. $448 billion, or 62 cents a share in the year-ago period and $749 million, or 65 cents a share. The second quarter results were impacted by a $380 million after-tax charge related to sale-in, lease-out (SILO) transactions.
Excluding those charges, merger expenses and intangible amortization, the bank earned 74 cents a share, a penny under the consensus figure provided by Thomson Reuters.
The bank posted revenue of $3.41 billion, a decline of 3%. Excluding the SILO charge's impact on revenues, revenues came in at $3.80 billion, 12% growth from a year ago and just under the $3.83 billion expected by analysts.
"Our capital position remains strong and capital ratios strengthened materially versus the first quarter. Continuing EPS, excluding SILO and M&I expenses, increased modestly over the prior year," CEO Robert Kelly said in a company statement. "We continue to stay focused on executing on our growth strategies and integration activities."
The charge was prompted by a federal court decision against
that denied certain tax benefits for certain SILO and lease-in, lease-out transactions. Bank of New York Mellon expects to deposit funds with the Internal Revenue Service in the third quarter to offset interest earned through SILO transactions. That deposit will contribute to a 2-cents-a-share decrease to earnings in the second half of this year and in all of 2009, the bank said.
Bank of New York Mellon wrote down $152 million in securities tied to Alt-A mortgages, asset-backed securities and home equity lines of credit.
The bank's results come after rival trust banks
were on the rise this week after reporting solid second quarters.
Bank of New York shares were shedding 2.6% to $37.20 after the opening bell.
This article was written by a staff member of TheStreet.com.