By Victoria Stilwell Bank of New York Mellon Corp.'s (BK) second-quarter profit fell 37% as the trust bank saw a litigation-related charge weigh down its bottom line and revenue decreased. Trust banks act as custodians and servicers for corporations and Wall Street, leaving results heavily tied to market actions. Bank of New York Mellon, like other financial firms, recently has been pressured by historically low interest rates and soft trading volumes. Bank of New York Mellon earlier this month said it would take a $350 million pretax charge in the second quarter, mostly to settle a lawsuit by investors who accused the bank of putting them in a risky debt security that collapsed during the financial crisis. The settlement concerns the late-2008 collapse of a $27 billion structured investment vehicle called Sigma Finance Corp. For the second quarter, Bank of New York Mellon posted earnings of $466 million, or 39 cents a share, down from year-earlier earnings of $735 million, or 59 cents a share. The most-recent quarter included a litigation-related charge of $212 million, or 18 cents a share. Revenue fell 6.1% to $3.62 billion. Analysts surveyed by Thomson Reuters recently expected per-share profit of 53 cents on revenue of $3.62 billion. Total fee revenue fell 7.7% to $2.78 billion. The provision for credit losses was a credit of $19 million, mostly resulting from a decline in the expected loss related to a broker-dealer customer that filed for bankruptcy as well as improvements in the mortgage portfolio. There was a $5 million provision in the first quarter and no provision a year ago. Assets under management, excluding securities lending assets, rose 2% to $1.3 trillion as of the end of the quarter, while assets under custody and administration increased 3% to $27.1 trillion. Rival trust bank State Street Corp. (STT) on Tuesday reported its second-quarter earnings fell 4.5% as the company posted higher costs for one-time items and lower revenue. J.P. Morgan Chase & Co. (JPM) last week posted better-than-expected results at its trust business, which was viewed as a positive sign for trust banks such as Bank of New York Mellon, State Street and Northern Trust Corp. (NTRS), which is expected to report second-quarter financial results later Wednesday. Shares closed Tuesday at $21.72 and were inactive in premarket trade. The stock is up 9.1% so far this year. Write to Victoria Stilwell at Victoria.Stilwell@dowjones.com Subscribe to WSJ: http://online.wsj.com?mod=djnwires
