Magazine article American Banker

Mellon Wealth Line Delivers

Magazine article American Banker

Mellon Wealth Line Delivers

Article excerpt

Mellon Financial Corp.'s efforts to expand its wealth management business showed signs of paying off Wednesday, when it posted stronger-than-expected third-quarter profit growth.

The Pittsburgh company's top executives said that it will continue to invest in that business line.

Mellon said third-quarter earnings rose 14% from a year earlier, to $222 million, or 54 cents a share, beating the average of analysts' estimates by 2 cents, according to Thompson First Call.

Revenue rose 13%, to $1.17 billion, and assets under management jumped 20%, to $918 billion.

Robert Kelly, Mellon's chief executive officer, said during its quarterly earnings call that his company was not done allocating additional resources to wealth management.

"The problem is we have underinvested" in the business in previous years, Mr. Kelly said. "We are playing catch-up in terms of the number of salespeople we have, the technology, and the locations we are in. ... [We] have the proverbial pedal to the metal in terms of opening new offices, hiring salespeople, and improving our online systems capabilities."

There are "key locations that I'd like to be in that we are not in," he said. "The reality is most of our growth will be organic, and we will focus that way."

There is plenty of market speculation that Mellon is working toward making a significant acquisition, Mr. Kelly's comments about organic growth notwithstanding. Since he joined the company from Wachovia Corp. in February, Mellon has bought the Scottish investment company Walter Scott & Partners Ltd. That acquisition, which closed Oct. 2, added $28 billion of accounts.

Analysts say Mellon is also among the bidders for MFS Investment Management, a Boston unit of the Canadian insurer Sun Life Financial Inc. that has $170 billion of assets under management. …

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