Bank of New York Mellon Corp. (BK) on Wednesday reported fourth-quarter 2010 profits of $0.55 per share, just missing analysts' expectations for earnings per share of $0.57. The bank's Pershing LLC unit for broker-dealers and advisors saw fee revenues rise an impressive 18%, though profits fell 16% for the year.
New York-based BNY Mellon reported income of $690 million versus $712 million, or $0.59 per common share, in the fourth quarter of 2009 and $625 million, or $0.51 per common share, in the third quarter of 2010. The stock's annual profits of $2.06 per share in 2010 showed a clear improvement over 2009's loss of $1.16 per share.
Total revenue stood at $3.8 billion, up 14% year over year and up 10% sequentially. Fee revenue totaled $2.97 billion, up 12% for the quarter and up 16% for the full year.
Assets under management (AUM) came to $1.17 trillion at Dec. 31, an increase of 5% compared with the prior year and 3% for the quarter. Both increases reflected improved market values and new business. In addition, the bank's asset management unit reported a 15% rise in fee revenues.
Pershing Fees Rise as Profits Fall
BNY Mellon's Pershing subsidiary—which providesclearing, financing and custody services for broker-dealers and registered investment advisors—saw a year-over-year 18% rise in total fee and other revenues, to $312 million compared with $264 million in the fourth quarter of 2009. However, profits for the unit were off 16% for the year, at $89 million in fourth-quarter 2009 versus $106 million in 2010.
"The year-over-year increase resulted from the impact of the Global Investment Servicing acquisition, strong growth in mutual fund assets and positions, higher market values and new business, including the first phase of the conversion of a large global wealth management firm," according to BNY Mellon's quarterly earnings review.
In 2010, BNY Mellon closed on an acquisition of PNC's Global Investment Servicing (GIS) business, which is a transfer agency but also houses Albridge Solutions, the data aggregation company. The acquisition adds approximately
$850 billion of funds under administration, nearly $460 billion of custody assets, and around 4,400 employees, based mostly in Philadelphia, Boston and Wilmington, Del.
However, Pershing's expenses increased 27% compared to 4Q09—largely due to the impact of the GIS acquisition.
