Q1 2009 Earning Report of Northern Trust Corporation
1. Financial Trends
First Quarter 2009
April 21, 2009
Please direct inquiries to:
Bev Fleming
Senior Vice President, Director of Investor Relations
(312) 444-7811 or beverly_fleming@ntrs.com
Preeti Sullivan
Vice President, Investor Relations
(312) 630-0862 or preeti_sullivan@ntrs.com
The historical financial results and trends reflected in this report are not indicative of future financial results and trends for
Northern Trust Corporation. This report should be read in conjunction with the Corporation's First Quarter 2009 earnings
press release, 2008 Annual Report to Shareholders, and periodic reports to the Securities and Exchange Commission, all of
which contain additional information about factors that could affect the Corporation's future financial results and trends.
The Corporation assumes no obligation to update this report.
2. Northern Trust Corporation
FINANCIAL SUMMARY - Reported Results
First Quarter 2009
2008 2009
2004 2005 2006 2007 2008 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Profitability
$505.6 $584.4 $665.4 $726.9 $794.8 NET INCOME/(LOSS) (in millions) $385.2 $215.6 ($148.3) $342.3 $161.8
$505.6 $584.4 $665.4 $726.9 $782.8 NET INCOME/(LOSS) TO COMMON $385.2 $215.6 ($148.3) $330.3 $138.8
$2.28 $2.66 $3.03 $3.28 $3.51 Basic EPS $1.73 $0.97 ($0.66) $1.47 $0.62
$2.26 $2.63 $2.99 $3.23 $3.47 Diluted EPS $1.71 $0.96 ($0.66) $1.47 $0.61
26% 16% 14% 8% 7% Growth over Previous Year 106% 4% -171% 167% -64%
16.07% 17.01% 17.57% 17.46% 15.98% Return on Common Equity 33.36% 17.75% -11.62% 26.15% 10.88%
1.22% 1.27% 1.25% 1.20% 1.09% Return on Assets 2.28% 1.22% -0.80% 1.72% 0.85%
34.8% 35.3% 35.6% 31.5% 30.6% Profit Margin (pre-tax) 51.5% 40.3% -25.6% 46.5% 28.3%
21.7% 21.8% 21.7% 20.4% 18.4% Profit Margin (after-tax) 33.6% 19.7% -15.8% 29.8% 17.9%
73.3% 72.7% 73.6% 74.6% 73.9% Noninterest Income to Total Revenues 76.8% 77.3% 71.7% 69.7% 68.2%
57.2% 58.1% 58.5% 58.2% 49.3% Trust Fees to Total Revenue 46.0% 59.0% 50.6% 42.5% 45.4%
Capital Ratios:
Risk-Based Capital Ratios:
11.0% 9.7% 9.8% 9.7% 13.1% Tier 1 9.5% 9.8% 9.2% 13.1% 13.0%
13.3% 12.3% 11.9% 11.9% 15.4% Total 11.4% 11.7% 11.4% 15.4% 15.2%
7.6% 7.1% 6.7% 6.8% 8.5% Leverage Ratio (to avg. assets) 6.9% 6.9% 6.6% 8.5% 8.9%
6.8% 5.8% 5.7% 6.0% 5.5% Tangible Common Equity Ratio 5.5% 6.0% 5.5% 5.5% 5.9%
10.6% 11.5% 12.1% 12.0% 10.9% Internal Capital Generation Rate 28.2% 12.7% NM 21.2% 6.0%
Stock Price / Dividend Ratios:
$0.780 $0.860 $0.940 $1.030 $1.120 Per Share Dividend $0.280 $0.280 $0.280 $0.280 $0.280
34% 32% 31% 31% 32% Dividend Payout Ratio 16% 29% NM 19% 45%
$48.58 $51.82 $60.69 $76.58 $52.14 Stock Price at EOP $66.47 $68.57 $72.20 $52.14 $59.82
21.5 19.7 20.3 23.7 15.0 Stock Price Multiple of Earnings 16.2 16.5 28.3 15.0 25.1
(based on trailing 4 quarters of diluted EPS)
$15.04 $16.51 $18.03 $20.44 $21.89 Book Value Per Share $21.62 $22.46 $21.68 $21.89 $22.44
Note: Current and prior period per common share amounts reflect Northern Trust's adoption on January 1, 2009 of the Financial Accounting Standards Board FSP EITF 03-06-1
quot;Determing Whether Instruments Granted in Share-Based Payment Transactions are Participating Securitiesquot;. PAGE 1
3. Northern Trust Corporation
FINANCIAL SUMMARY - Operating Results
First Quarter 2009
2008 2009
2004 2005 2006 2007* 2008 1st Qtr** 2nd Qtr 3rd Qtr*** 4th Qtr**** 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Profitability
$505.6 $584.4 $665.4 $821.1 $641.3 NET INCOME/(LOSS) (in millions) $231.7 $215.6 ($129.4) $323.3 $161.8
$505.6 $584.4 $665.4 $821.1 $629.3 NET INCOME/(LOSS) TO COMMON $231.7 $215.6 ($129.4) $311.3 $138.8
$2.28 $2.66 $3.03 $3.71 $2.82 Basic EPS $1.04 $0.97 ($0.58) $1.39 $0.62
$2.26 $2.63 $2.99 $3.65 $2.79 Diluted EPS $1.03 $0.96 ($0.58) $1.38 $0.61
26% 16% 14% 22% -24% Growth over Previous Year 23% 5% -163% 42% -41%
16.07% 17.01% 17.57% 19.72% 12.89% Return on Common Equity 19.85% 17.96% -10.26% 24.86% 10.94%
1.22% 1.27% 1.25% 1.36% 0.88% Return on Assets 1.37% 1.22% -0.70% 1.62% 0.85%
34.8% 35.3% 35.6% 35.7% 26.0% Profit Margin (pre-tax) 35.4% 40.3% -22.4% 43.9% 28.3%
21.7% 21.8% 21.7% 23.0% 15.4% Profit Margin (after-tax) 23.7% 19.7% -13.8% 28.1% 17.9%
73.3% 72.7% 73.6% 74.6% 72.9% Noninterest Income to Total Revenues 72.8% 77.3% 71.7% 69.7% 68.2%
57.2% 58.1% 58.5% 58.2% 51.3% Trust Fees to Total Revenue 53.9% 59.0% 50.6% 42.5% 45.4%
Capital Ratios:
Risk-Based Capital Ratios:
11.0% 9.7% 9.8% 9.9% 13.0% Tier 1 9.4% 9.7% 9.1% 13.0% 12.9%
13.3% 12.3% 11.9% 12.1% 15.2% Total 11.2% 11.6% 11.4% 15.2% 15.1%
7.6% 7.1% 6.7% 6.9% 8.4% Leverage Ratio (to avg. assets) 6.8% 6.8% 6.6% 8.4% 8.9%
10.6% 11.5% 12.1% 14.2% 7.8% Internal Capital Generation Rate 14.6% 12.8% NM 19.9% 6.0%
Stock Price / Dividend Ratios:
$0.780 $0.860 $0.940 $1.030 $1.120 Per Share Dividend $0.280 $0.280 $0.280 $0.280 $0.280
34% 32% 31% 28% 40% Dividend Payout Ratio 27% 29% NM 20% 45%
$48.58 $51.82 $60.69 $76.58 $52.14 Stock Price at EOP $66.47 $68.57 $72.20 $52.14 $59.82
21.5 19.7 20.3 20.8 18.7 Stock Price Multiple of Earnings 17.3 17.6 30.3 18.7 25.3
(based on trailing 4 quarters of diluted EPS)
$15.04 $16.51 $18.03 $20.87 $21.63 Book Value Per Share $20.92 $22.19 $21.50 $21.63 $22.18
* Operating results for the full year 2007 exclude the impact of the $150 million of Visa indemnification charges.
** Operating results for the 1st quarter 2008 exclude the impact of the $167.9 million of VISA gain and $76.1 million reduction of the VISA related indemnification reserves.
*** Operating results for the 3rd quarter of 2008 exclude the impact of the $30 million of Visa indemnification charges.
**** Operating results for the 4th quarter of 2008 exclude the impact of the $30 million benefit from the reversal of the third quarter Visa settlement accrual due to its funding by Visa through
an escrow account. PAGE 1A
4. Northern Trust Corporation
INCOME STATEMENT - Reported Results
($ in Millions except EPS information)
FIRST QUARTER CHANGE
$
2009 2008 %
C&IS Trust, Inv. & Other Servicing Fees $207.0 $298.4 ($91.4) -31%
PFS Trust, Inv. & Other Servicing Fees 203.7 228.4 (24.7) -11%
Total Fees 410.7 526.8 (116.1) -22%
Foreign Exchange Trading Income 131.1 113.2 17.9 16%
Treasury Management Fees 20.4 17.4 3.0 17%
Security Commissions & Trading Income 16.8 17.8 (1.0) -6%
Gain on Visa Share Redemption - 167.9 - NM
Other Operating Income 37.1 31.8 5.3 17%
Investment Security Transactions 0.4 5.0 (4.6) -93%
Total Noninterest Income 616.5 879.9 (263.4) -30%
Interest Income - FTE 404.4 689.7 (285.3) -41%
Less: Interest Expense 116.7 423.6 (306.9) -72%
Net Interest Income - FTE 287.7 266.1 21.6 8%
Total Revenues (FTE) 904.2 1,146.0 (241.8) -21%
Compensation 258.3 286.2 (27.9) -10%
Employee Benefits 65.8 57.3 8.5 15%
Outside Services 95.7 93.9 1.8 2%
Equipment and Software Expense 61.7 54.2 7.5 14%
Occupancy Expense 41.8 41.4 0.4 1%
Visa Indemnification Charges - (76.1) 76.1 NM
Other Operating Expense 70.2 78.4 (8.2) -11%
Total Noninterest Expense 593.5 535.3 58.2 11%
Provision for Credit Losses 55.0 20.0 35.0 175%
Pre-Tax Income/(Loss) (FTE) 255.7 590.7 (335.0) -57%
Provision (Benefit) for Income Taxes 83.3 192.9 (109.6) -57%
Taxable Equivalent Adjustment 10.6 12.6 (2.0) -16%
Total Taxes (FTE) 93.9 205.5 (111.6) -54%
Net Income/(Loss) $161.8 $385.2 ($223.4) -58%
EPS - Basic $0.62 $1.73 ($1.11) -64%
EPS - Diluted $0.61 $1.71 ($1.10) -64%
EOP Shares Outstanding (000s) 223,669 220,136 3,533 2%
Average Basic Shares (000s) 223,357 220,320 3,037 1%
Average Diluted Shares (000s) 224,401 223,529 872 -
PAGE 2
5. Northern Trust Corporation
INCOME STATEMENT - Operating Results
($ in Millions except EPS information)
FIRST QUARTER CHANGE
$
2009 2008* %
C&IS Trust, Inv. & Other Servicing Fees $207.0 $298.4 ($91.4) -31%
PFS Trust, Inv. & Other Servicing Fees 203.7 228.4 (24.7) -11%
Total Fees 410.7 526.8 (116.1) -22%
Foreign Exchange Trading Income 131.1 113.2 17.9 16%
Treasury Management Fees 20.4 17.4 3.0 17%
Security Commissions & Trading Income 16.8 17.8 (1.0) -6%
Other Operating Income 37.1 31.8 5.3 17%
Investment Security Transactions 0.4 5.0 (4.6) -93%
Total Noninterest Income 616.5 712.0 (95.5) -13%
Interest Income - FTE 404.4 689.7 (285.3) -41%
Less: Interest Expense 116.7 423.6 (306.9) -72%
Net Interest Income - FTE 287.7 266.1 21.6 8%
Total Revenues (FTE) 904.2 978.1 (73.9) -8%
Compensation 258.3 286.2 (27.9) -10%
Employee Benefits 65.8 57.3 8.5 15%
Outside Services 95.7 93.9 1.8 2%
Equipment and Software Expense 61.7 54.2 7.5 14%
Occupancy Expense 41.8 41.4 0.4 1%
Other Operating Expense 70.2 78.4 (8.2) -11%
Total Noninterest Expense 593.5 611.4 (17.9) -3%
Provision for Credit Losses 55.0 20.0 35.0 175%
Pre-Tax Income/(Loss) (FTE) 255.7 346.7 (91.0) -26%
Provision (Benefit) for Income Taxes 83.3 102.4 (19.1) -19%
Taxable Equivalent Adjustment 10.6 12.6 (2.0) -16%
Total Taxes (FTE) 93.9 115.0 (21.1) -18%
Net Income/(Loss) $161.8 $231.7 ($69.9) -30%
EPS - Basic $0.62 $1.04 ($0.42) -40%
EPS - Diluted $0.61 $1.03 ($0.42) -41%
EOP Shares Outstanding (000s) 223,669 220,136 3,533 2%
Average Basic Shares (000s) 223,357 220,320 3,037 1%
Average Diluted Shares (000s) 224,401 223,529 872 -
* Operating results for the first quarter 2008 exclude the impact of the $167.9 million of VISA gain and $76.1 million
reduction of the VISA related indemnification reserves.
PAGE 2A