Mellon (MEL) beat first-quarter earnings expectations Tuesday, posting a 22% rise in investment management fees and a 29% gain in institutional trust and custody fees.

The Pittsburgh-based asset manager made $202 million, or 49 cents a share, from continuing operations for the quarter ended March 31. That's down from the year-ago $305 million, or 73 cents a share.

Latest-quarter income from continuing operation included 3 cents per share in costs tied to payments, awards and benefits payable to former CEO Martin McGuinn, who left Jan. 31. Excluding those costs, the latest-quarter profit was 52 cents a share, 3 cents ahead of the analyst consensus estimate.

Income from continuing operations last year included a pre-tax gain of $197 million from the sale of the remaining interest in Shinsei Bank together with other expenses of $15 million, which netted to 28 cents per share. Excluding these amounts, earnings per share from continuing operations rose 18% from a year ago.

Revenue dropped to $1.27 billion from $1.3 billion a year earlier, in line with the $1.22 billion Thomson Financial estimate.

"We continued to enjoy excellent growth in the profitability of our Asset Management and Asset Servicing businesses, as pre-tax income in these sectors on a combined basis increased 23% compared to the first quarter of 2005, driven by new client wins, strong investment performance and relatively strong capital markets," said CEO Robert P. Kelly. "Our first quarter results demonstrate the core strength of our focus on Asset Management and Asset Servicing, as these businesses represented 81% of our revenue and, excluding the impact of the $19 million charge, 89% of our pre-tax profit. Our goal is to deliver more consistent earnings growth by improving our operating margins, while maintaining excellent investment and operating performance for our clients."