Magazine article American Banker

Bank of N.Y. Falls Short; Fifth Third Hits the Mark

Magazine article American Banker

Bank of N.Y. Falls Short; Fifth Third Hits the Mark

Article excerpt

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. …

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