(Adds closing price, paragraph 6)
By Jonathan Stempel
NEW YORK, Oct 22 (Reuters) - Bank of New York Co. , the No. 11 U.S. bank, on Wednesday said third-quarter profit more than tripled, as it set aside substantially less money for bad loans.
The New York-based bank, which has $95.2 billion of assets, said net income rose to $260 million, or 34 cents per share, from $79 million, or 11 cents per share, a year earlier.
Operating profit per share totaled 42 cents, up 1 cent from the second quarter. On that basis, profit matched the average analyst forecast according to Reuters Research, a unit of Reuters Group Plc.
Bank of New York set aside $40 million to cover bad loans, down 82 percent from a year earlier, while net charge-offs, or loans on which the bank does not expect to be paid back, tumbled 71 percent to $47 million. Nonperforming assets, including bad loans, totaled $388 million.
"You can start looking at the bank again as a securities processor rather than as a credit-sensitive company," said Anton Schutz, who runs the $260 million Burnham Financial Services Fund and owns 158,000 Bank of New York shares. "A lot of people had gotten disgusted with the credit issues, but that seems to be turning."
Bank of New York shares closed on the New York Stock Exchange at $30.56, up 7 cents, after earlier rising to $31.60. The shares have risen 28 percent this year.
CHARGES
Third-quarter results included a charge of 6 cents per share related to a $110 million payment the bank made last month to General Motors Corp.'s finance arm to settle claims that the automaker paid too much for its commercial lending unit.
It also included a charge of 2 cents per share related to the bank's $2 billion all-cash purchase in May of the Pershing LLC securities clearinghouse from Credit Suisse Group Inc. unit Credit Suisse First Boston.
Year-earlier results included write-downs for credit losses and equity investments.
Chairman and Chief Executive Thomas Renyi expressed caution about the market environment.
"The capital markets recovery, while clearly apparent to us all, is not necessarily robust," he said in a conference call. "Recovery is uneven (and) slower and more gradual than one might believe by reading the headlines."
FEES RISE
The bank said noninterest income rose 67 percent to $1.06 billion, and noninterest expenses rose 47 percent to $1.04 billion. Pershing was a major factor in the increases.
Securities servicing fees rose 37 percent to a record $657 million, private client services and asset management fees rose 14 percent to $97 million, foreign exchange and trading income rose 88 percent to $92 million, and global payment services fees rose 8 percent to $80 million.
The bank said service charges and fees fell 1 percent to $89 million, and that it swung to a $9 million profit from securities sales from a year-earlier $188 million loss. Assets rose 18 percent.
Bank of New York said net interest income fell 3 percent from a year earlier to $416 million. Net interest margin, the difference between what the bank earns on loans and pays on deposits, fell to 1.87 percent from 1.95 percent in the second quarter and 2.32 percent a year earlier.