quarter profits up 7%, to $284 million, it reported Monday. Earnings per share of 73 cents beat Wall Street's expectations by a penny. Fee revenues jumped 22%, to $553 million, fueled by a 24% rise in revenues from securities processing, to $230 million. Many analysts said Bank of New York's niche as one of the nation's three largest providers of processing services to pension funds, mutual fund companies, and securities firms helps it report regular earnings gains. "Their mix of businesses provides them with more consistent earnings," said Bradley Ball, an analyst at Credit Suisse First Boston. "The best defense is a strong offense." Securities processing, which supplied 41% of fee revenues and 24% of revenues during the quarter, also helps shield $59.4 billion-asset Bank of New York from being forced to seek a merger partner, a scenario many peers its size have faced in recent months, analysts said. Many recently announced mergers, including last week's $30 billion agreement between Banc One Corp. and First Chicago NBD Corp., have been driven by the desire for scale, analysts said. Bank of New York has already achieved that in its niche, analysts said. "In securities processing, they have scale," said Lawrence Cohn, an analyst at Ryan, Beck & Co. "They are as much of an 800-pound gorilla as anyone." Bank of New York has been aggressively building its securities processing business both internally and by acquisition. Last year it bought the processing and custody portfolios of several large banks, including the global custody business of J.P. Morgan & Co. In December the New York bank was the focus of rumors that it was in talks to acquire Mellon Bank Corp. in Pittsburgh, another of the nation's top three processors. That rumor has cooled in recent weeks, analysts said. In addition to gains in processing fees, Bank of New York's trading revenues, including foreign exchange, shot up 70% from last year's first quarter, to $46 million. The bank attributed the rise to strong markets and the expansion of its global client base. Other components of fee revenue grew on strong market conditions, as well, the bank said. Bank of New York recorded a threefold gain on securities sales, to $28 million. Trust and investment fees rose 16%, to $50 million. The quarter's results included a $29 million pretax gain on the sale of the bank's historic headquarters at 48 Wall St. in Manhattan. Bank of New York has also been quitting businesses that did not meet its profitability goals. Last year it sold its credit card portfolio to Chase Manhattan Corp., posting a $177 million gain in the fourth quarter. Because of the loss of loans associated with that sale, net interest income fell 19% in the first quarter, to $404 million. The provision for loan losses dropped to $5 million from $60 million in last year's first quarter. Net chargeoffs were $5 million compared with $92 million a year ago. Both declines were attributed to the sale of the credit card portfolio. Expenses rose 4.7%, to $467 million, including $8 million for costs associated with year-2000 upgrading.
