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Northern Trust Annual Report, Year Ended Dec 31, 1998

Filing Date
Filed March 16, 1999
Period End
December 31, 1998
Securities
NTRSNTRSO
In the record · 2016–202610-K1110-Q338-K118

NTRS filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 118 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Feb ’19Feb ’19
  2. FY2020 annual report10-K · Feb ’21Feb ’21
  3. Leadership change8-K · Sep ’25Sep ’25

01—Abstract

Summary

Summary of the 10-K filed March 16, 1999. Cited figures are marked; the original filing is the authoritative source.

Northern Trust Corporation, a Chicago-based bank holding company, reported record 1998 net income of $353.9 milliona, up 14.4% from $309.4 million in 1997, with a return on average common stockholders' equity of 20.5% compared with 20.2% in 1997.

Consolidated total assets were approximately $27.9 billionb at December 31, 1998, and stockholders' equity was $1.94 billion. Management described 1998 as the eleventh consecutive year of record earnings. Trust fees rose 18% to $816.3 million, and trust assets under administration reached $1.26 trillion.

Net interest income was a record $477.2 millionc, up 9%, although the net interest margin declined to 2.08% from 2.18%. The company's profile is driven by fee income: noninterest income was $1.1 billion in 1998 and represented 68% of total taxable equivalent revenue. Corporate and Institutional Services (C&IS) produced net income of $162.1 million, and Personal Financial Services (PFS) produced $191.8 million.

Noninterest expenses rose 12% to $997.1 milliond, and the productivity ratio reached a record 159%. Credit quality remained strong, with nonperforming assets of $35.2 million and net charge-offs of $10.0 million against a provision of $9.0 million. The Tangible Tier 1 Leverage Ratio was 6.9%, and the Board increased the quarterly common dividend 14.3% to $.24 per share.

The filing also addresses Year 2000 remediation, with an estimated total project cost of $35 million, of which $21.6 million had been incurred by year-end 1998. The company expected foreign exchange profits to fall by approximately 10% as a result of the euro conversion. Under the Interest Rate Risk simulation, a 100 basis point rise in rates would reduce 1999 pre-tax income by $9.0 million, while a 100 basis point decline would increase it by $6.9 million.

02—Key points

Key Highlights

  1. Record 1998 net income of $353.9 million, up 14.4% from $309.4 million in 1997; return on average common equity of 20.5%.
  2. Trust fees increased 18% to $816.3 million; trust assets under administration reached $1.26 trillion at December 31, 1998.
  3. Net interest income was a record $477.2 million, up 9%, but the net interest margin declined to 2.08% from 2.18%.
  4. Total assets were approximately $27.9 billion and stockholders' equity was $1.94 billion at year-end 1998.
  5. Asset quality remained strong, with nonperforming assets of $35.2 million and a provision for credit losses of $9.0 million.
  6. Quarterly common dividend was raised 14.3% to $.24 per share in November 1998, the twelfth consecutive annual increase.
  7. Year 2000 renovation project estimated at $35 million total, with $21.6 million incurred by December 31, 1998.

03—Questions

Frequently Asked Questions

  1. How profitable was Northern Trust in 1998 and how did earnings compare with prior years?

    Net income for 1998 was a record $353.9 million, up 14.4% from $309.4 million in 1997 and $258.8 million in 1996. Diluted earnings per share were $3.04, compared with $2.66 in 1997. The filing describes 1998 as the eleventh consecutive year of record earnings.

  2. What is driving Northern Trust's revenue?

    Fee income is the main driver. Noninterest income was $1.1 billion in 1998 and accounted for 68% of total taxable equivalent revenue. Trust fees of $816.3 million accounted for 76% of total noninterest income, and trust fees rose 18% over 1997.

  3. How strong is the company's capital position?

    At December 31, 1998, the Tier 1 risk-based capital ratio was 9.8% and the total risk-based capital ratio was 13.1%, both well above regulatory minimums. The Tangible Tier 1 Leverage Ratio was 6.9%. Common stockholders' equity was $1.82 billion, and the company repurchased 1,626,213 shares during 1998.

  4. What risks does the filing identify for the coming year?

    The filing cites a 10% expected reduction in foreign exchange profits from the euro conversion and Year 2000 remediation risks, which could be materially adverse if remediation efforts or those of third parties are unsuccessful. Interest rate sensitivity analysis shows a 100 basis point rise in rates would reduce 1999 pre-tax income by $9.0 million.

04—Continue

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