01—Abstract
Summary
Summary of the 10-Q filed August 1, 2024. Cited figures are marked; the original filing is the authoritative source.
Northern Trust Corporation reported second-quarter 2024 net income of $896.1 milliona, or $4.34 per diluted common share, compared with $331.8 million, or $1.56 per diluted share, in the prior-year quarter.
Total revenue rose $958.4 millionb, or 55%, to $2.72 billion, driven largely by an $878.4 million net gain related to the Visa transactions recorded in Other Operating Income. Excluding that gain, the filing shows Trust, Investment and Other Servicing Fees up $69.8 million, or 6%, to $1.17 billion on favorable markets and new business, and Net Interest Income up $11.4 million, or 2%, to $522.9 million on higher client deposits, partially offset by higher funding costs. Noninterest Expense increased $202.0 million, or 15%, to $1.53 billion, including $182.2 million of restructuring charges and other notable items such as $85.2 million of severance-related charges, a $70 million charitable commitment to the Northern Trust Foundation, and a legal settlement.
Net interest margin on an FTE basis was 1.57% in both periods. For the six months ended June 30, 2024, net income was $1.11 billionc, up $444.4 million, or 67%, and the company repurchased $382.8 million of common stock. Balance sheet growth was driven by deposits, which rose to $122.99 billion from $116.16 billion at December 31, 2023, while loans declined to $42.14 billion from $47.62 billion.
Stockholders' equity reached $12.66 billiond. Common Equity Tier 1 capital ratio under the standardized approach was 12.6% at June 30, 2024, and Assets Under Custody/Administration grew to $16.57 trillion, up 14% from June 30, 2023, while Assets Under Management reached $1.53 trillion.
02—Key points
Key Highlights
- Net income of $896.1 million ($4.34 diluted EPS) for Q2 2024, up 170% from $331.8 million in Q2 2023
- Total revenue of $2.72 billion, up 55%, including an $878.4 million net gain related to the Visa transactions
- Noninterest expense rose 15% to $1.53 billion, including $182.2 million of restructuring charges and other notable items
- Trust, Investment and Other Servicing Fees increased 6% to $1.17 billion on favorable markets and new business
- Total deposits rose to $122.99 billion from $116.16 billion at December 31, 2023; loans declined to $42.14 billion from $47.62 billion
- Assets Under Custody/Administration reached $16.57 trillion (up 8% from December 31, 2023) and Assets Under Management reached $1.53 trillion
- Common Equity Tier 1 capital ratio (standardized approach) of 12.6% at June 30, 2024, with the Corporation and The Northern Trust Company both exceeding well-capitalized requirements
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed August 1, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $1.17B$1.10B | +6.4% |
| Net Income | $896.10M$331.80M | +170.1% |
| EPS (Basic) | $4.35$1.56 | +178.8% |
| EPS (Diluted) | $4.34$1.56 | +178.2% |
| Shares Outstanding (Basic) | 203.31M207.64M | −2.1% |
| Shares Outstanding (Diluted) | 203.74M207.82M | −2.0% |
05—Questions
Frequently Asked Questions
What drove the large increase in second-quarter 2024 net income?
The filing attributes the increase primarily to the $878.4 million net gain related to the Visa transactions recorded in Other Operating Income. Net income rose $564.3 million to $896.1 million from $331.8 million in the prior-year quarter, partly offset by higher noninterest expense.
What non-recurring items affected noninterest expense this quarter?
Noninterest expense included $182.2 million of restructuring charges and other notable items, including $85.2 million of severance-related charges, a $70 million charitable commitment to the Northern Trust Foundation, higher software amortization acceleration and dispositions, and a legal settlement.
How did core fee and interest income perform excluding the Visa gain?
Trust, Investment and Other Servicing Fees increased $69.8 million, or 6%, to $1.17 billion, primarily due to favorable markets and new business. Net Interest Income increased $11.4 million, or 2%, to $522.9 million, primarily due to higher client deposits, partially offset by higher funding costs.
What was the company's capital position at June 30, 2024?
The Corporation's Common Equity Tier 1 capital ratio was 12.6% under the standardized approach and 13.9% under the advanced approach. Tier 1 Leverage was 8.0%. The filing states the capital ratios of Northern Trust Corporation and The Northern Trust Company exceeded well-capitalized requirements, and the 2024 stress test resulted in a stress capital buffer of 2.5%.
What did the filing say about the Visa transactions?
The company sold Visa Class C common shares for a $607.0 million realized gain and recorded $286.8 million of unrealized mark-to-market gains on remaining Visa Class C shares. It also received 2.1 million Visa Class B-2 shares with a carryover basis of zero, which the filing estimated at about $860.4 million based on the June 30, 2024 Visa Class A closing price.
06—Continue