July 20, 2010

BNY Mellon Boosts Earnings on Lower Clearing Income

Revenue from clearing services to broker-dealers and RIAs was $369 million in the most-recent period, down 8% from last year but up 1% from the first quarter.

The Bank of New York Mellon (BK) reported second-quarter income from continuing operations of $668 million, or $0.55 per share, compared with $267 million, or $0.23 per share, in the second quarter of 2009 and $601 million, or $0.49 per share, in the first quarter of 2010.

This beat analysts' EPS estimates by $0.01.

"Our focus on winning new business and providing exceptional client service resulted in solid growth in securities-servicing fees and continued long-term asset inflows for our asset and wealth management businesses," said Chairman and CEO Robert P. Kelly, in a press release.

The bank, which includes asset-custodian Pershing -- the host of the annual Pershing INSITE conference for RIAs, advisors and broker-dealers -- said that total assets under custody and administration were $21.8 trillion at June 30, 2010, an increase of 6% compared with the prior year and a decrease of 2% sequentially.

Total revenue for the company, excluding net securities gains and/or losses, was $3.34 billion in the second quarter.

Revenue from clearing services to broker-dealers and RIAs was $369 million in the most-recent period, down 8% from last year but up 1% from the first quarter.

Income from clearing services was $92 million, a year-over-year decline of 33% and a quarter-over-quarter drop of 12%.

The pre-tax margin for this business was 25%. The average number of active accounts in the second quarter was 4,896,000.

Company-wide assets under management, excluding securities-lending assets, amounted to $1.0 trillion -- a jump of 13% compared with the prior year and a 5% sequential drop.

The year-over-year increase, according to the company was primarily due to the acquisition of Insight Investment Management in the fourth quarter of 2009, while the sequential decrease primarily reflects lower market values.

Securities servicing fees were $1.267 billion, a decrease of 2% year-over-year and an increase of 6% sequentially.

Asset and wealth management fees were $676 million in the second quarter of 2010. After adjustments, this represented an increase of 12% compared with the prior year period and a decrease of 1% sequentially.

Foreign exchange and other trading activities totaled $220 million compared with $237 million in the prior year period and $262 million in the first quarter of 2010.

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