Bank of New York Mellon Corp. unexpectedly swung to a third-quarter loss on $4.8 billion of investment losses at the asset manager and securities adviser.
While Bank of New York Mellon, formed in July 2007 when Bank of New York acquired Mellon Financial Corp., managed to remain profitable last year, it has struggled in the past couple of quarters with investment write-downs and securities losses. The company is a "custodial bank," which generally holds investments and securities for other investors, but it has faced troubles related to secondary businesses.
Bank of New York posted a loss of $2.46 billion, or $2.05 a share, compared with earnings of $303 million, or 26 cents a share, a year earlier. The latest quarter's investment losses stemmed from the company's restructuring of its investment portfolio.
Its Tier 1 capital ratio, a key measure of financial strength, rose to 11.3% from 9.3% a year earlier but fell from 12.5% in the previous quarter. Its tangible common equity ratio, which measures how much of a bank's hard assets its common shareholders actually own, was 5.2%, up from 3.9% a year earlier and 4.8% in the previous quarter.
Assets under management were $966 billion, falling 9.5% from a year earlier. Net outflows during the quarter were $16 billion, mostly due to money market outflows.
The provision for credit losses nearly quadrupled from a year earlier to $147 million and more than doubled from the second quarter. Net charge-offs totaled $77 million, up 43% sequentially.
The bank's unrealized losses were $1 billion, falling 80% from the previous quarter because of the improvement in fixed income markets.
In June, it repaid the $3 billion it received from the Treasury's Troubled Asset Relief Program and in August repurchased the government's warrants to buy more shares.
Bank of New York shares were down 0.6% premarket at $27.05. The stock was down 3.9% this year through Monday.