Bank of New York Co. stock fell 13% Monday after the company reported second-quarter earnings that fell short of estimates and warned that market volatility could hamper profits for the rest of the year.

Profits rose 8% from a year earlier, to $385 million, but at 52 cents per share missed analyst estimates by a penny. Servicing fees fell 3.6% quarter over quarter to $508 million.

Also reporting Monday, Fifth Third Bancorp of Cincinnati said net income had tumbled 48%, to $128.7 million, because of a $255 million charge related to its purchase during the quarter of Old Kent Financial. However, Fifth Third managed to meet analyst predictions of 58 cents in per-share earnings.


The company said that income from its corporate trust, securities lending, broker-dealer, and global liquidity services were all boosted by active fixed-income markets. But Bank of New York was cautious in its near-term outlook.

“A continuation of these current market conditions would provide for earnings growth more in line with that of the current quarter,” said Thomas A. Renyi, chairman and chief executive officer, in a written statement Monday.

Nonperforming assets grew 17.8% from the first quarter, to $245 million, mainly because of a loan to a customer in the apparel industry and two loans to emerging telecommunications companies, Bank of New York said. It said it expects further pressure on nonperforming assets, and pointed to such telecommunications credits as potential problems. The bank’s stock closed at $43.00.


Citing increased fee income and improved credit quality, the company said operating earnings totaled $338.2 million, 14% more than in last year’s second quarter.

However, Fifth Third took a $255 million charge related to its acquisition of Old Kent, and reminded analysts in a conference call Monday that more charges from that deal are expected.

Fifth Third integrated Old Kent’s Chicago offices during the quarter. Executives expect future charges stemming from the conversion of Old Kent’s Michigan operations, including it headquarters and back-office functions in Grand Rapids, and the completion of a rationalization of Old Kent’s mortgage business.

In an interview, George A. Schaefer Jr., Fifth Third’s president and chief executive officer, said its employees were the reason that revenue rose during a challenging period of converting Old Kent operations. “When people are focused, people really do better,” he said.

In a conference call earlier he said a stock option plan had helped. “We did issue stock options earlier this year at around $50,” Mr. Schaefer said. “That is an extremely strong cultural motivating factor.”

Fifth Third’s stock fell 3.85% Monday, to $60.42.

Nonperforming assets of $184 million were up 13% from a year earlier but 17% below those of the first quarter.

Jennifer Thompson, an analyst with Putnam Lovell Securities in New York, commended Fifth Third for its growth and the reduction in nonpeformers. She also praised the gradual way it was integrating Old Kent.

“They’re taking their time,” she said.


The Chicago company exceeded analysts’ expectations with per-share earnings 1 cent above the consensus estimate, according to Thomson Financial/First Call.

Northern Trust, which specializes in trust and wealth management, reported profits of $131.3 million, 7% more than a year earlier. The per-share figure rose 4 cents, to 57 cents.

Revenue increased 5% percent. Northern Trust stock fell 5.5% Mondayto $61.01.

— Alissa Schmelkin, Niamh Ring, and Patrick Reilly

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.