Earnings season is here once again. We're only a few days in, but we have already seen some impressive numbers from banking behemoths JPMorgan Chase, Wells Fargo, and Citigroup, with Bank of America preparing to release its earnings Wednesday morning. While these results are important to those of us who follow the banking sector, my interest lies in some of the smaller banks beyond the behemoths.

With that in mind, I turn my attention to another bank that will be reporting earnings Wednesday morning. Here are some things I will be watching when it comes to Bank of New York Mellon (NYSE:BK).

Recovery from last quarter
During the second quarter, BNY Mellon reported a 37% drop in net income, primarily the result of a one-time lawsuit settlement payment. With that mess hopefully behind them, the bank should meet analysts' expectations of $3.6 billion in revenue and $0.54 in earnings per share, especially if it can continue shoring up the balance sheet by clearing off nonperforming assets.

Being the best at what it does
Despite having the word "bank" in its name, BNY Mellon operates slightly different than the banks you and I use. Its primary focus is custodial services for other financial institutions, often acting as the intermediary between larger institutions performing massive financial transactions. Low interest rates hamper custodial banks in the short term, as interest revenue from these transactions is reduced.

Peer Northern Trust (NASDAQ:NTRS) cited the low interest rate environment as the reason for job cuts last year, but BNY Mellon should be well positioned when interest rates inevitably go up in the future. In the meantime, it is worthwhile to keep an eye on the net interest margin this quarter, which will hopefully show that the bank is at least maximizing the limited interest income it's receiving by borrowing at the lowest possible rate.

Other things to look for
Beyond the two things mentioned above, there are some smaller things that I don't really expect from this quarter's report. It would be nice to see a dividend increase, especially considering the size of NYB Mellon relative to its peers State Street Bank (NYSE:STT) and Northern Trust. This is especially true considering its dividend payout ratio is currently a paltry 28.6%, resulting in a yield around 2.3%. I'll also be taking a look to see if management decided to spend more on share buybacks, especially with just over $874 million left under its share repurchase agreement and after repurchasing 12.2 million shares last quarter.

Fool contributor Robert Eberhard has no positions in the stocks mentioned above. Follow him on Twitter, or click here to see his holdings and a short bio. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo. Motley Fool newsletter services recommend Wells Fargo. Try any of our Foolish newsletter services free for 30 days.

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