Proving that there is money to be made even in choppy markets, both Bank of New York Co. and Northern Trust Corp., two banking companies heavily involved in the fee-based businesses of asset servicing and management, reported double-digit first-quarter profit gains.
Bank of New York on Monday reported a 14% jump in profits, to $384 million, and Northern Trust said its earnings rose 12%, to $127.2 million.
BANK OF NEW YORK
Income from its securities servicing business, depositary receipts, and corporate trust and global execution services helped fuel earnings growth last quarter, boosting earnings per share to 52 cents, in line with the consensus of analysts surveyed by First Call/Thomson Financial.
"Absent a further slowdown in the global markets, our 12% to 14% earnings-per-share growth remains compatible with the current market environment," Thomas A. Renyi, chairman and chief executive officer, said Monday in a prepared statement.
Bank of New York, with $77.1 billion of assets, said it was continuing to focus on boosting fee income, which grew 16%, to $858 million. Fees from securities servicing grew 23%, to $458 million, and private-client services and asset management fees rose 14%, to $79 million, from the first quarter of 2000.
Nonperforming assets rose 7.8% from the fourth quarter, to $208 million, on loans to a movie-theater chain and to a specialty chemical maker that sought protection from asbestos claims through a bankruptcy filing. The company would not release the names of its troubled borrowers.
Noninterest expenses rose 8.5% in the quarter, to $653 million, the company said.
"It's nice to see a company just come out as we expected on almost every line item," said Diana P. Yates, an analyst at A.G. Edwards & Sons. "As long as volumes hold out," the targeted growth is achievable, regardless of whether the market goes up or down, she said.
Bank of New York's stock gained 0.3%, or 15 cents a share, to end the day at $49.65.
The Chicago banking company credited its earnings growth in part to a 7% jump in revenues from trust fees, which grew to $305.2 million. Trust assets also grew from the year earlier, to $1.65 trillion, a 3% increase, but have declined 2% since Dec. 31 because of continued volatility in equity markets.
The company's earnings per share of 55 cents were 12% higher than the year earlier.
"Today's report is a most positive one," said vice chairman and chief financial officer Perry R. Pero in a conference call with investors. "We feel highly confident."
The $35 billion-asset company reported no new net chargeoffs during the year's first three months, compared to $200,000 during the same period last year. The company's reserves-to-loans ratio is 0.94%. Northern Trust's nonperforming assets grew to $112.7 million, compared with $78.5 million in the fourth quarter. It said a commercial loan to a manufacturing company that filed for Chapter 11 reorganization prompted the increase.
Northern Trust's stock price fell $2.21 a share, or 3.51%, to $60.72.