Northern Trust Corp. (NTRS, Financial) filed Quarterly Report for the period ended 2009-06-30.
Northern Trust Corp. is a multi-bank holding company with worldwide locations and is a provider of treasury management master trust custody retirement risk and performance international and investment management services for corporations large institutions and individuals. Northern Trust has earned distinction as a leading provider of personal fiduciary asset management personal and private banking and master trust/custody global custody and treasury management services. Northern Trust Corp. has a market cap of $13.97 billion; its shares were traded at around $58.54 with a P/E ratio of 24.7 and P/S ratio of 3.2. The dividend yield of Northern Trust Corp. stocks is 1.9%. Northern Trust Corp. had an annual average earning growth of 6.9% over the past 10 years. GuruFocus rated Northern Trust Corp. the business predictability rank of 2.5-star.
Consolidated revenues stated on a fully taxable equivalent (FTE) basis totaled $1.05 billion, down $49.0 million or 4% from last years second quarter revenues of $1.10 billion. Trust, investment and other servicing fees decreased 7% from last year to $601.4 million. Foreign exchange trading income was strong for the quarter and totaled $134.3 million, an increase of 6% from last years second quarter. Net interest income on an FTE basis totaled $260.1 million, an increase of 5%. Noninterest expenses totaled $502.7 million for the current quarter, down 22% or $140.6 million from last years second quarter noninterest expenses of $643.3 million.
C&IS assets under custody totaled $2.9 trillion at June 30, 2009, down 20% from a year ago, and included $1.6 trillion of global custody assets, 19% lower than a year ago. C&IS assets under management totaled $422.1 billion, a 31% decrease from the prior year. C&IS assets under management for the quarter included $101.0 billion of securities lending related collateral, a 58% decrease from the prior year quarter. Excluding securities lending collateral, C&IS assets under management totaled $321.1 billion as compared with $370.5 billion in the prior year quarter, a $49.4 billion, or 13% decrease. The above are in comparison to the previously noted twelve month declines in the S&P 500 and EAFE (USD) indices. As of the current quarter-end, C&IS managed assets were invested 41% in equities, 15% in fixed-income securities, and 44% in cash and other assets.
Average U.S. loans outstanding during the quarter totaled $28.0 billion, 12% higher than the $25.0 billion in last years second quarter. Residential real estate loans averaged $10.7 billion in the quarter, up 13% from the prior years second quarter, and represented 37% of the average loan and lease portfolio. Commercial loans averaged $7.7 billion, up 13% from $6.8 billion last year, while personal loans averaged $4.7 billion, up 14% from last years second quarter. Loans outside the U.S. decreased $803.4 million on average from the prior year quarter to $1.0 billion.
Northern Trust utilizes a diverse mix of funding sources. Total interest-bearing deposits averaged $41.1 billion, down 11% from the second quarter of 2008. Higher levels of U.S. office deposits were more than offset by a $9.8 billion or 27% decline in non-U.S. office deposits from last years second quarter. Domestic retail deposit levels increased $4.2 billion due primarily to higher levels of money market deposit accounts and savings certificates. The decline in non-U.S. office deposits resulted primarily from the strengthening of the U.S. dollar and the resulting impact on the translation of foreign-denominated deposit liabilities in our international business. Other interest-related funds averaged $10.2 billion in the quarter compared with $8.4 billion in last years second quarter. The balances within these classifications vary based on funding requirements and strategies, interest rate levels, changes in the volume of lower-cost deposit sources, and the availability of collateral to secure these borrowings. The increase in this funding category resulted primarily from higher levels of senior notes, overnight federal funds purchased and long-term debt. Noninterest-related funds utilized to fund earning assets averaged $14.3 billion compared with $8.3 billion in last years second quarter, resulting primarily from higher levels of U.S. office noninterest-bearing deposits and stockholders equity.
The remaining expense categories totaled $50.8 million, compared to $168.4 million in the prior year second quarter. The current quarter reflects a $130.1 million expense reduction, included within other operating expenses, associated with a valuation adjustment of the liability established in connection with the previously disclosed Capital Support Agreements with certain Northern Trust investment vehicles (Funds). This compares with a valuation related expense increase of $1.2 million recorded in the second quarter of last year. During the current quarter, as a part of the restructuring and final settlement related to an investment vehicle held by eight of the nine Funds then covered by Capital Support Agreements, Northern Trust made cash payments totaling $66.7 million which further reduced the liability associated with Capital Support Agreements. As a result of the completion of this investment vehicles restructuring and the related support payments, seven of the nine Capital Support Agreements were terminated during the quarter, reducing the aggregate maximum remaining exposure from $550.0 million to $200.2 million. The remaining two Capital Support Agreements expire on November 6, 2009. Excluding the capital support agreement valuation adjustments, the increase in the current quarter totaled $13.7 million and primarily reflects a $29.0 million increase in Federal Deposit Insurance Corporation (FDIC) insurance premiums, including a June 30, 2009 special assessment of $20.2 million. The current quarter also reflects higher software related expenses. These increases were partially offset by lower charges associated with account servicing activities and reduced business promotion expenses.
Read the The complete ReportNTRS is in the portfolios of Bruce Sherman of Private Capital Management, Ken Heebner of CAPITAL GROWTH MANAGEMENT LP, John Rogers of ARIEL CAPITAL MANAGEMENT LLC, Tom Gayner of Markel Gayner Asset Management Corp, Kenneth Fisher of Fisher Asset Management, LLC, Kenneth Fisher of Fisher Asset Management, LLC, John Keeley of Keeley Fund Management, Dodge & Cox.
Northern Trust Corp. is a multi-bank holding company with worldwide locations and is a provider of treasury management master trust custody retirement risk and performance international and investment management services for corporations large institutions and individuals. Northern Trust has earned distinction as a leading provider of personal fiduciary asset management personal and private banking and master trust/custody global custody and treasury management services. Northern Trust Corp. has a market cap of $13.97 billion; its shares were traded at around $58.54 with a P/E ratio of 24.7 and P/S ratio of 3.2. The dividend yield of Northern Trust Corp. stocks is 1.9%. Northern Trust Corp. had an annual average earning growth of 6.9% over the past 10 years. GuruFocus rated Northern Trust Corp. the business predictability rank of 2.5-star.
Highlight of Business Operations:
Net income was $314.2 million compared with net income of $215.6 million in the second quarter of last year. Net income per common share on a diluted basis for the second quarter was $.95 compared with net income per common share of $.96 in the second quarter of 2008. The current quarters earnings per share were reduced by $.37 in connection with Northern Trusts participation in the U.S. Department of the Treasurys Capital Purchase Program. The reduction was comprised of $68.6 million, or $.29 per share, attributable to the acceleration of the remaining difference between the carrying value of the preferred shares and their liquidation preference recognized upon the repayment in full of the $1.576 billion preferred share investment made by the U.S. Department of the Treasury under the Capital Purchase Program, and $19.5 million, or $.08 per share, attributable to dividends on the preferred shares that were recorded in the current quarter through the redemption date. The prior year quarters results included non-cash accounting charges of $87.3 million, or $.39 per common share, associated with lease transactions.Consolidated revenues stated on a fully taxable equivalent (FTE) basis totaled $1.05 billion, down $49.0 million or 4% from last years second quarter revenues of $1.10 billion. Trust, investment and other servicing fees decreased 7% from last year to $601.4 million. Foreign exchange trading income was strong for the quarter and totaled $134.3 million, an increase of 6% from last years second quarter. Net interest income on an FTE basis totaled $260.1 million, an increase of 5%. Noninterest expenses totaled $502.7 million for the current quarter, down 22% or $140.6 million from last years second quarter noninterest expenses of $643.3 million.
C&IS assets under custody totaled $2.9 trillion at June 30, 2009, down 20% from a year ago, and included $1.6 trillion of global custody assets, 19% lower than a year ago. C&IS assets under management totaled $422.1 billion, a 31% decrease from the prior year. C&IS assets under management for the quarter included $101.0 billion of securities lending related collateral, a 58% decrease from the prior year quarter. Excluding securities lending collateral, C&IS assets under management totaled $321.1 billion as compared with $370.5 billion in the prior year quarter, a $49.4 billion, or 13% decrease. The above are in comparison to the previously noted twelve month declines in the S&P 500 and EAFE (USD) indices. As of the current quarter-end, C&IS managed assets were invested 41% in equities, 15% in fixed-income securities, and 44% in cash and other assets.
Average U.S. loans outstanding during the quarter totaled $28.0 billion, 12% higher than the $25.0 billion in last years second quarter. Residential real estate loans averaged $10.7 billion in the quarter, up 13% from the prior years second quarter, and represented 37% of the average loan and lease portfolio. Commercial loans averaged $7.7 billion, up 13% from $6.8 billion last year, while personal loans averaged $4.7 billion, up 14% from last years second quarter. Loans outside the U.S. decreased $803.4 million on average from the prior year quarter to $1.0 billion.
Northern Trust utilizes a diverse mix of funding sources. Total interest-bearing deposits averaged $41.1 billion, down 11% from the second quarter of 2008. Higher levels of U.S. office deposits were more than offset by a $9.8 billion or 27% decline in non-U.S. office deposits from last years second quarter. Domestic retail deposit levels increased $4.2 billion due primarily to higher levels of money market deposit accounts and savings certificates. The decline in non-U.S. office deposits resulted primarily from the strengthening of the U.S. dollar and the resulting impact on the translation of foreign-denominated deposit liabilities in our international business. Other interest-related funds averaged $10.2 billion in the quarter compared with $8.4 billion in last years second quarter. The balances within these classifications vary based on funding requirements and strategies, interest rate levels, changes in the volume of lower-cost deposit sources, and the availability of collateral to secure these borrowings. The increase in this funding category resulted primarily from higher levels of senior notes, overnight federal funds purchased and long-term debt. Noninterest-related funds utilized to fund earning assets averaged $14.3 billion compared with $8.3 billion in last years second quarter, resulting primarily from higher levels of U.S. office noninterest-bearing deposits and stockholders equity.
The remaining expense categories totaled $50.8 million, compared to $168.4 million in the prior year second quarter. The current quarter reflects a $130.1 million expense reduction, included within other operating expenses, associated with a valuation adjustment of the liability established in connection with the previously disclosed Capital Support Agreements with certain Northern Trust investment vehicles (Funds). This compares with a valuation related expense increase of $1.2 million recorded in the second quarter of last year. During the current quarter, as a part of the restructuring and final settlement related to an investment vehicle held by eight of the nine Funds then covered by Capital Support Agreements, Northern Trust made cash payments totaling $66.7 million which further reduced the liability associated with Capital Support Agreements. As a result of the completion of this investment vehicles restructuring and the related support payments, seven of the nine Capital Support Agreements were terminated during the quarter, reducing the aggregate maximum remaining exposure from $550.0 million to $200.2 million. The remaining two Capital Support Agreements expire on November 6, 2009. Excluding the capital support agreement valuation adjustments, the increase in the current quarter totaled $13.7 million and primarily reflects a $29.0 million increase in Federal Deposit Insurance Corporation (FDIC) insurance premiums, including a June 30, 2009 special assessment of $20.2 million. The current quarter also reflects higher software related expenses. These increases were partially offset by lower charges associated with account servicing activities and reduced business promotion expenses.
Read the The complete ReportNTRS is in the portfolios of Bruce Sherman of Private Capital Management, Ken Heebner of CAPITAL GROWTH MANAGEMENT LP, John Rogers of ARIEL CAPITAL MANAGEMENT LLC, Tom Gayner of Markel Gayner Asset Management Corp, Kenneth Fisher of Fisher Asset Management, LLC, Kenneth Fisher of Fisher Asset Management, LLC, John Keeley of Keeley Fund Management, Dodge & Cox.
