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Northern Trust Annual Report, Year Ended Dec 31, 1999

Filing Date
Filed March 14, 2000
Period End
December 31, 1999
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 14, 2000. Cited figures are marked; the original filing is the authoritative source.

Northern Trust Corporation (Delaware; Chicago, Illinois) reported record 1999 net income of $405.0 milliona, up 14.4% from $353.9 million in 1998, with diluted earnings per share of $1.74 (split-adjusted) versus $1.52 in 1998.

Noninterest income rose to $1,235.2 millionb from $1,071.6 million, led by trust fees of $974.2 million, which increased 19% from $816.3 million. Total trust assets under administration reached $1.54 trillion at December 31, 1999, up from $1.26 trillion, and the company describes 1999 as the twelfth consecutive year of record earnings. At year-end the company had consolidated total assets of $28,708.2 million and total stockholders' equity of $2,174.7 million.

Net interest income reached a record $518.8 millionc, up 9% from $477.2 million, although the net interest margin on a fully taxable equivalent basis declined to 2.05% from 2.08%. Noninterest expenses rose 13% to $1,125.0 million, and the productivity ratio was 159%. Credit quality remained sound: the provision for credit losses was $12.5 million, net charge-offs were $8.4 million, and nonaccrual loans were $59.3 million, or 0.39% of total loans, up from $30.5 million a year earlier.

The Tier 1 risk-based capital ratio was 9.9% and the leverage ratio was 7.1%, both well above regulatory minimums. The filing also flags a forward-looking item: management expects that the SFAS No. 133 derivatives standard, effective January 1, 2001, could reduce net interest income by up to $1.0 milliond annualized if swap usage is reduced. The company's financial statements and MD&A are incorporated by reference from its 1999 Annual Report to Stockholders (Exhibit 13), which is included with this filing.

02—Key points

Key Highlights

  1. Record 1999 net income of $405.0 million, up 14.4% from $353.9 million in 1998; diluted EPS of $1.74 versus $1.52 (adjusted for the two-for-one stock split in December 1999).
  2. Noninterest income totaled $1,235.2 million, up from $1,071.6 million, with trust fees of $974.2 million (up 19%) making up the largest share.
  3. Trust assets under administration reached $1.54 trillion at December 31, 1999, up from $1.26 trillion, with trust assets under management at $299.1 billion.
  4. Net interest income was a record $518.8 million, but the net interest margin (FTE) narrowed to 2.05% from 2.08%.
  5. Total assets were $28,708.2 million and stockholders' equity was $2,174.7 million at year-end 1999.
  6. Credit quality remained stable: net charge-offs were $8.4 million and the reserve for credit losses stood at $150.9 million, though nonaccrual loans rose to $59.3 million from $30.5 million.
  7. Capital ratios were strong, with a Tier 1 risk-based ratio of 9.9%, a total capital ratio of 13.7%, and a leverage ratio of 7.1%.

03—Questions

Frequently Asked Questions

  1. How did Northern Trust's earnings change in 1999?

    Net income rose 14.4% to a record $405.0 million from $353.9 million in 1998. Diluted earnings per share were $1.74, up from $1.52, after adjusting for the two-for-one stock split effected in December 1999. The company reported this as its twelfth consecutive year of record earnings.

  2. What drove growth in noninterest income?

    Trust fees were the main driver, increasing 19% to $974.2 million from $816.3 million. Trust assets under administration grew to $1.54 trillion, and trust assets under management rose 27% to $299.1 billion. Foreign exchange trading profits reached a record $107.7 million.

  3. Is the company's loan portfolio showing signs of stress?

    The filing reports that overall credit quality remained strong. Net charge-offs were $8.4 million and the provision for credit losses was $12.5 million. Nonaccrual loans rose to $59.3 million, or 0.39% of total loans, from $30.5 million the prior year, mainly due to two commercial credits that filed for Chapter 11 reorganization during the year.

  4. How well capitalized is Northern Trust?

    At December 31, 1999, the Tier 1 risk-based capital ratio was 9.9%, the total risk-based capital ratio was 13.7%, and the leverage ratio was 7.1%. These are well above the regulatory minimums of 4.0%, 8.0%, and 3.0%, respectively, and the company describes all of its capital ratios as well above the levels required for well-capitalized status.

  5. What risks or changes does management highlight for the future?

    The filing notes that the Gramm-Leach-Bliley Act could change the competitive landscape, and that the company has not yet elected to become a financial holding company. It also notes that SFAS No. 133, effective January 1, 2001, may force a reduction in interest rate swap use, which could reduce net interest income by up to $1.0 million annualized. Year 2000 costs were estimated at $35.9 million, and the company reports that no significant Year 2000 problems occurred.

04—Continue

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