NEW YORK (AP) _ U.S. Trust Company of New York plans to end most of its commercial lending and will seek to sell the bulk of its business loan portfolio, U.S. Trust said Monday.

The company stated it would try to sell loans totaling about $275 million , and was withdrawing from commercial and industrial lending and from commercial real estate loans.

Daniel P. Davison, the company's chairman and chief executive, said the withdrawal was an attempt to improve U.S. Trust's operating margins and its return on equity. Davison said U.S. Trust would continue offering corporate banking services to financial institutions and clients in the securities industry, which offer better margins.

He said although the company's commercial banking business had grown profitably since its formation in the early 1960s, ''with changing times we have come to realize that its current modest profitability, prospects and inherent risk no longer make it an activity consistent with our strategic objectives and the markets we best serve.''

Under its Private Banking operations the company offers investment, trust, estate and banking services for wealthy individuals and institutions. It will continue lending money for real estate and for commercial enterprises to its Private Banking clients, Davison said.

U.S. Trust had assets totaling about $2.88 billion as of June 30.

For the second quarter ended June 30 the company had a profit of $7.4 million, or 73 cents a share, up from $7.04 million, or 71 cents a share, a year earlier.