Oct. 21--Bank of New York Mellon yesterday posted a surprising loss of $2.5 billion in the third quarter after taking a massive charge to restructure its investment securities portfolio.

The loss, equal to $2.05 per share, compared with profits of $303 million, or 26 cents per share, in the same three months last year. In the second quarter this year, BNY Mellon earned $176 million, or 15 cents.

CEO Robert Kelly said the bank took advantage of a recent upturn in fixed income markets by selling off its riskiest investments and writing down the value of others. The moves would cut the risk of losses going forward, he said.

"We sold everything we thought was either overvalued or thought had further downside," Mr. Kelly said in a conference call with analysts.

The restructuring hit, mainly on mortgage-related securities and debt, amounted to roughly $3 billion, or $2.54 per share. Excluding that charge, and other one-time charges, BNY Mellon earned 54 cents per share for the period, slightly better than Wall Street estimates.

The bulk of BNY Mellon's business is providing asset and wealth management services to institutional, corporate and high-net worth clients. The company also does corporate lending, which, like at other banks, has been hurt by the soured economy.

The bank set aside $147 million to cover bad loans in the third quarter, up from $61 million in the second quarter and $30 million in the third quarter a year ago. Most of the troubles involved insurance and media loans. The provision should drop significantly in the fourth quarter, Mr. Kelly said.

"Overall we are very comfortable with our loan portfolio," he said.

BNY Mellon, formed in July 2007 when Bank of New York acquired Pittsburgh-based Mellon Financial Corp., said revenue, excluding securities losses, fell 14 percent from a year ago to $3.3 billion from $3.9 billion. Compared to the second quarter, revenue rose 4 percent.

BNY Mellon said it had 42,000 employees at the end of the third quarter, down from 42,900 a year earlier.

Locally, the headcount was 6,797.

That's an increase of 729 jobs since January 2007 when the company promised to boost local employment by 1,000 to 2,000 within three to five years.

The company trimmed 93 jobs in the Pittsburgh region in the first quarter to cut costs.

Patricia Sabatini can be reached at psabatini@post-gazette.com or 412-263-3066.

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