How did Northern Trust perform financially in 1993?

Northern Trust reported record net income of $167.9 million for 1993, up 12% from $149.5 million in 1992. Fully diluted earnings per common share rose to $2.95 from $2.64. Return on average common stockholders' equity was 17.9%, compared with 18.7% in 1992.

What drove growth in noninterest income?

Noninterest income totaled $552.4 million, up from $509.4 million in 1992. Trust fees, which were $404.8 million, were the largest component, and the company cited growth in Master Trust/Master Custody services and personal trust business. Other operating income also rose to $125.9 million, with record foreign exchange trading profits of $32.4 million.

Why did the net interest margin decline?

The net interest margin fell to 2.65% from 2.96%. The filing attributes this to a substantial increase in short-term U.S. Government securities, reinvestment of maturities into lower-yielding assets, and increased nonearning trust-related overnight advances, partly offset by higher fees from residential mortgage refinancings.

What regulatory matter is disclosed in the filing?

In late November 1993, the U.S. Department of Justice informed the Corporation that it is investigating the mortgage lending practices of the Bank and three other Illinois banking subsidiaries, as part of its responsibility to investigate possible discrimination under the Equal Credit Opportunity Act and the Fair Housing Act. The Corporation said it intends to cooperate fully.

What pending transactions could affect future results?

Northern Trust agreed to acquire Hazlehurst & Associates, Inc. for $22.5 million in common stock and Beach One Financial Services, Inc. for $56.2 million in common stock, both expected to close in 1994 and accounted for as poolings of interests. In March 1994 it also agreed to sell its 21% interest in Banque Scandinave en Suisse to SEB, which would produce an estimated pretax gain of approximately $33 million.

NTRS/NTRSO 10-K FY1993 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed March 15, 1994. Cited figures are marked; the original filing is the authoritative source.

Northern Trust Corporation, a Delaware bank holding company headquartered in Chicago, reported record 1993 net income of $167.9 million^a, up 12% from $149.5 million in 1992, with fully diluted earnings per common share of $2.95 versus $2.64.

Total consolidated assets were approximately $16.9 billion^b at December 31, 1993, and stockholders' equity was $1.2 billion. Trust fees exceeded $400 million for the first time, reaching $404.8 million, and trust assets under administration grew 16% to $476.5 billion. The company describes itself as one of only eight major U.S. bank holding companies generating more revenue from fee-based services than from net interest income.

Net interest income was a record $329.3 million^c, up 6%, though the net interest margin declined to 2.65% from 2.96% as the interest rate spread narrowed amid falling rates and growth in lower-yielding short-term U.S. Government securities. The provision for credit losses fell to $19.5 million from $29.5 million, and nonperforming loans were $27.3 million, or .36% of total loans. Noninterest expenses rose 7% to $628.2 million.

Pending acquisitions of Hazlehurst & Associates ($22.5 million^d in stock) and Beach One Financial Services ($56.2 million in stock), both expected to be accounted for as poolings of interests, are expected to close in 1994. The company also agreed in March 1994 to sell its 21% interest in Banque Scandinave en Suisse, which would produce a pretax gain of approximately $33 million.

The filing also discloses that the U.S. Department of Justice is investigating the mortgage lending practices of the Bank and three other Illinois banking subsidiaries under fair lending laws, and the company intends to cooperate fully. Capital ratios remained well above regulatory minimums, with a Tier 1 risk-based ratio of 9.3% and a total risk-based ratio of 13.4%.

02—Key points

Key Highlights

Record 1993 net income of $167.9 million, up 12% from $149.5 million in 1992; fully diluted EPS of $2.95 versus $2.64.
Trust fees surpassed $400 million for the first time, reaching $404.8 million, up 10% from $368.4 million; trust assets under administration reached $476.5 billion, up 16%.
Net interest income reached a record $329.3 million, up 6%, but the net interest margin fell to 2.65% from 2.96%.
Provision for credit losses declined to $19.5 million from $29.5 million; nonperforming loans were $27.3 million, or .36% of total loans.
Total assets of approximately $16.9 billion and stockholders' equity of $1.2 billion at December 31, 1993.
Pending acquisitions of Hazlehurst & Associates and Beach One Financial Services, both expected to close in 1994 and be accounted for as poolings of interests; agreement to sell 21% stake in Banque Scandinave en Suisse with a pretax gain of approximately $33 million.
U.S. Department of Justice investigating mortgage lending practices of the Bank and three other Illinois banking subsidiaries; the company intends to cooperate fully.

03—Questions

Frequently Asked Questions

How did Northern Trust perform financially in 1993?
Northern Trust reported record net income of $167.9 million for 1993, up 12% from $149.5 million in 1992. Fully diluted earnings per common share rose to $2.95 from $2.64. Return on average common stockholders' equity was 17.9%, compared with 18.7% in 1992.
What drove growth in noninterest income?
Noninterest income totaled $552.4 million, up from $509.4 million in 1992. Trust fees, which were $404.8 million, were the largest component, and the company cited growth in Master Trust/Master Custody services and personal trust business. Other operating income also rose to $125.9 million, with record foreign exchange trading profits of $32.4 million.
Why did the net interest margin decline?
The net interest margin fell to 2.65% from 2.96%. The filing attributes this to a substantial increase in short-term U.S. Government securities, reinvestment of maturities into lower-yielding assets, and increased nonearning trust-related overnight advances, partly offset by higher fees from residential mortgage refinancings.
What regulatory matter is disclosed in the filing?
In late November 1993, the U.S. Department of Justice informed the Corporation that it is investigating the mortgage lending practices of the Bank and three other Illinois banking subsidiaries, as part of its responsibility to investigate possible discrimination under the Equal Credit Opportunity Act and the Fair Housing Act. The Corporation said it intends to cooperate fully.
What pending transactions could affect future results?
Northern Trust agreed to acquire Hazlehurst & Associates, Inc. for $22.5 million in common stock and Beach One Financial Services, Inc. for $56.2 million in common stock, both expected to close in 1994 and accounted for as poolings of interests. In March 1994 it also agreed to sell its 21% interest in Banque Scandinave en Suisse to SEB, which would produce an estimated pretax gain of approximately $33 million.

04—Continue

← View all 10-K filings