Bear Stearns Cos. Inc.'s (BSC) profit rose 4 percent in the first quarter amid a busy and volatile stock market, the brokerage said Wednesday, surpassing Wall Street's expectations.

For the quarter ending Feb. 28, Bear Stearns earned $394 million, or $2.64 per share, up from $373 million, or $2.57 per share in the first quarter of 2004. The profit figures were adjusted for required preferred dividend requirements and a special stock plan.

Revenues for the quarter were $1.84 billion, up from $1.73 billion a year ago.

Analysts surveyed by Thomson First Call had predicted earnings of $2.34 per share on revenues of $1.71 billion.

Chairman and Chief Executive James Cayne (search) credited growth in the company's global clearing services division, which provides stock trading and brokerage services to institutional investors, and strong results from its wealth management division for the gains.

However, investors were concerned about meager growth in Bear Stearns' fixed-income business and a dropoff in merger and acquisition advisory fees during the latest dealmaking boom. Shares of Bear Stearns fell $3.38, or 3.2 percent, to $102.65 on the New York Stock Exchange (search).

Revenues from global clearning rose 20 percent to $270 million for the quarter, while wealth management revenues, stemming from Bear Stearn's own asset management and brokerage businesses, rose 11 percent to $169 million.

Institutional equity trading saw a 7 percent increase in revenues, while fixed income net revenues were up narrowly from a year ago. The company said its mortgage business was down year-over-year.

Despite a strong quarter for mergers and acquisitions, the company's underwriting and investment banking division recorded only a 2.3 percent increase in revenues. Revenues from underwriting new stock offerings fell, though bond underwriting improved, said Sam Molinaro, Bear Stearns' chief financial officer. Fees from advising on merger deals declined, and the company said its backlog of unfinished deals has shrunk as well.