Today, the Bank of New York Mellon Corporation (NYSE:BK) reported its second quarter income from continuing operations applicable to common shareholders of $267 million, or $0.23 per common share, compared with $303 million, or $0.26 per common share, in the second quarter of 2008 and $363 million, or $0.31 per common share, in the first quarter of 2009.
“Overall, revenue has stabilized, we continue to gain market share, remain profitable, and have among the best capital levels in our industry. However, investment losses remain stubbornly high primarily due to continued deterioration in the residential housing market. We will continue to focus on maintaining exceptional client service levels and reducing risk and expenses,” said Robert P. Kelly, chairman and chief executive officer of The Bank of New York Mellon Corporation.
Net income applicable to common shareholders, including discontinued operations, totaled $176 million, or $0.15 per common share, in the second quarter of 2009, compared with $309 million, or $0.27 per common share in the second quarter of 2008 and $322 million, or $0.28 per common share in the first quarter of 2009.
Total revenue was $2.957 billion, comprised of $2.257 billion of fee and other revenue and $700 million of net interest revenue. Total revenue included a pre-tax charge for the write-down of investment securities ($256 million) in fee and other revenue.
Provision for credit losses totaled $61 million in the second quarter of 2009 compared with $13 million in the second quarter of 2008 and $59 million in the first quarter of 2009. During the second quarter of 2009, the total allowance for credit losses decreased $33 million as net charge-offs totaled $54 million and $40 million of the allowance for credit losses was transferred to discontinued operations.
Total non-interest expenses were $2.383 billion. This compares with total non-interest expense of $2.743 billion in the second quarter of 2008 and $2.280 billion in the first quarter of 2009.
The effective tax rate, on a continuing operations basis, was 2.2% in the second quarter of 2009. In the second quarter of 2009, the Company recognized $134 million of tax benefits primarily attributable to the final LILO/SILO tax settlement agreement at an amount less than originally recorded. Excluding the impact of the FDIC special assessment, M&I expenses, investment write-downs and the benefit of tax settlements recorded in the second quarter of 2009, the effective tax rate was 32.4% (Non-GAAP) in the second quarter of 2009.
Results in the second quarter of 2009 included an after-tax redemption charge of $196.5 million related to the repurchase of preferred stock issued to the U.S. Treasury as part of the TARP Capital Purchase Program and $39.8 million for the final dividend on the Series B preferred stock. The redemption premium/dividends and the FDIC special assessment decreased EPS by $0.23 per share in the second quarter of 2009.
The unrealized net of tax loss on our securities portfolio was $4.4 billion at June 30, 2009 compared with a net of tax loss of $4.5 billion at March 31, 2009. Further information on the investment portfolio is detailed in the Quarterly Earnings Review on page 9.
On June 30, 2009, the Company submitted to the U.S. Treasury notice of our intention to repurchase the warrant which we issued to the Treasury in connection with the TARP Capital Purchase Program. The Company and the Treasury are currently discussing the terms of the proposed repurchase of the warrant.