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Actionable news in NTRS: Northern Trust Corporation,

Northern Trust Corporation Reports QUARTER NET INCOME

The following excerpt is from the company's SEC filing.

$241.8

MILLION, EARNINGS PER COMMON SHARE OF

EARNINGS PER COMMON SHARE INCREASED

OVER THE PRIOR-YEAR QUARTER

RETURN ON AVERAGE COMMON EQUITY OF

CHICAGO

APRIL 19, 2016

— Northern Trust Corporation today reported

quarter net income per diluted common share of

, compared to

in the

quarter of

fourth

. Net income was

$241.8 million

$230.7 million

in the prior-year quarter and

$239.3 million

in the prior quarter. Return on average common equity was

“Northern Trust perform ed well in the first quarter of 2016, despite the volatile market environment and heightened global economic uncertainty. Total revenue grew

, with strong growth in net interest income and steady growth in trust, investment and other servicing fees, partially offset by lower foreign exchange trading income. Expenses increased

, as we continued to invest in people, technology and regulatory initiatives to support our growing business. Our return on equity was

, within our target range of 10-15%,” said Frederick H. Waddell, Chairman and Chief Executive Officer.

FIRST QUARTER 2016 PERFORMANCE VS. FIRST QUARTER 2015

Net income per diluted common share was

, up from

. Net income was

in the prior-year quarter.

Revenue of

$1.19 billion

$55.5 million

, from

$1.13 billion

in the prior-year quarter, primarily reflecting higher net interest income and trust, investment and other servicing fees, partially offset by lower foreign exchange trading income.

Trust, investment and other servicing fees were

$748.2 million

$20.7 million

$727.5 million

in the prior-year quarter, primarily reflecting net new business and lower money market fee waivers, partially offset by the unfavorable impact of equity markets and movements in foreign exchange rates.

Assets under custody/administration (AUC/A) and assets under management are the primary drivers of the Corporation’s trust, investment and other servicing fees. Assets under custody/administration totaled

$7.93 trillion

March 31, 2016

. The following table presents the Corporation’s assets under custody, a component of AUC/A, and assets under management by reporting segment.

($ In Billions)

% Change Q1-16/Q1-15

Assets Under Custody

Corporate & Institutional Services

5,700.3

5,566.2

Wealth Management

Total Assets Under Custody

6,211.4

6,090.8

Assets Under Management

Total Assets Under Management

FIRST QUARTER 2016 PERFORMANCE VS. FIRST QUARTER 2015 (continued)

Corporate & Institutional Services (C&IS) trust, investment and other servicing fees increased

$26.1 million

, to $

433.4 million

from the prior-year quarter’s

$407.3 million

($ In Millions)

Q1 2016

Q1 2015

Change Q1 2016 from Q1 2015

C&IS Trust, Investment and Other Servicing Fees

Custody and Fund Administration

Investment Management

Securities Lending

Custody and fund administration fees, the largest component of C&IS fees, increased

, driven by new business, partially offset by the unfavorable impact of equity markets and movements in foreign exchange rates. Investment management fees increased

$12.7 million

, or

due to lower money market mutual fund fee waivers. Money market mutual fund fee waivers in C&IS totaled

$1.7 million

in the current quarter compared to

$15.2 million

in the prior-year quarter. Securities lending increased

, primarily due to higher spreads, partially offset by lower volumes. Other fees increased

, primarily due to new business related to investment risk and analytical services and increased other ancillary services.

Wealth Management trust, investment and other servicing fees totaled

$314.8 million

, decreasing

$5.4 million

$320.2 million

Wealth Management Trust, Investment and Other Servicing Fees

Central

Global Family Office

The decrease in Wealth Management fees across the regions was primarily attributable to the impact of unfavorable equity markets and lower fee revenue from equity mutual funds, partially offset by lower money market mutual fund fee waivers. The increase in Global Family Office fees was primarily attributable to new business and lower money market mutual fund fee waivers. Money market mutual fund fee waivers in Wealth Management totaled

$6.0 million

$17.7 million

Foreign exchange trading income totaled

$60.5 million

, down

$11.1 million

, compared with

$71.6 million

in the prior-year quarter. The decrease generally reflects lower client volumes as compared to the prior-year quarter.

Net interest income on an FTE basis totaled

$314.0 million

$47.2 million

$266.8 million

in the prior-year quarter. The increase was primarily the result of an increase in earning assets and a higher net interest margin. Earning assets for the quarter averaged

$104.6 billion

$5.9 billion

$98.7 billion

in the prior-year quarter, primarily resulting from higher levels of securities and loans. Earning asset growth was funded primarily by a higher level of demand deposits. The net interest margin on an FTE basis increased to

in the prior-year quarter, primarily reflecting higher yields on earning assets.

The provision for credit losses was

$2.0 million

in the current quarter. A provision credit of

$4.5 million

was recorded in the prior-year quarter. Net charge-offs in the current quarter were

, resulting from charge-offs of

$5.3 million

and recoveries of

$2.6 million

. The prior-year quarter included

$4.6 million

of net charge-offs, resulting from

$7.5 million

of charge-offs and

$2.9 million

of recoveries. Nonperforming assets decreased

as compared to the prior-year quarter.

The table below provides information regarding nonperforming assets, the allowance for credit losses and associated ratios.

December 31,

Nonperforming Assets

Nonperforming Loans and Leases

Other Real Estate Owned

Total Nonperforming Assets

Allowance for Credit Losses

Allowance for Credit Losses Assigned to:

Undrawn Loan Commitments and Standby Letters of credit

Total Allowance for Credit Losses

Ratios

Nonperforming Loans and Leases to Total Loans and Leases

Allowance for Credit Losses Assigned to Loans and Leases to Total Loans and Leases

Allowance for Credit Losses Assigned to Loans and Leases to Nonperforming Loans and Leases

Noninterest expense totaled

$828.8 million

in the current quarter, up

$39.8 million

$789.0 million

in the prior-year quarter. The increase was primarily attributable to higher compensation and outside services expenses.

Compensation expense, the largest component of noninterest expense, totaled

$378.8 million

$24.5 million

$354.3 million

in the prior-year quarter. The increase primarily reflects higher staff levels and base pay adjustments. Staff on a full-time equivalent basis at

totaled approximately

16,300

from a year ago.

Employee benefit expense totaled

$70.6 million

in the current quarter, down

$72.9 million

in the prior-year...


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