What drove the decline in earnings compared with the prior-year quarter?

Net income fell to $214.7 million from $334.6 million in the first quarter of 2023. The filing cites a $189.4 million pre-tax loss on available-for-sale debt securities sold in a portfolio repositioning, compared with a $6.9 million gain a year earlier, and higher funding costs that reduced net interest income. Total revenue on a fully taxable equivalent basis was 6% lower year over year.

How did fee revenue and client assets perform?

Trust, investment and other servicing fees were $1,142.9 million, up 5% sequentially and 7% from the prior-year quarter, primarily due to favorable markets. Assets under custody/administration rose 7% sequentially to $16,472.5 billion and assets under management rose 5% to $1,500.7 billion, as stated in the filing.

What were the one-time items affecting the quarter?

The quarter included a $189.4 million pre-tax loss on available-for-sale debt securities sold in a repositioning, which was $141.5 million after tax, and a $12.5 million pre-tax increase in the FDIC special assessment, which was $9.3 million after tax.

How strong is the company's capital position?

The filing states that capital ratios for Northern Trust Corporation and The Northern Trust Company remained above the well-capitalized requirements at March 31, 2024. For the Corporation, the standardized Common Equity Tier 1 ratio was 11.4% and the advanced approach ratio was 13.5%, with the Tier 1 leverage ratio at 7.8%. These figures are preliminary until the Form 10-Q is filed.

Why was this Form 8-K/A filed?

The amendment was filed solely to include the missing signature of the Executive Vice President and Chief Financial Officer on the original Form 8-K filed April 16, 2024. The filing states that no other changes were made to the original Form 8-K or its exhibits.

NTRS/NTRSO 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K/A filed April 17, 2024. Cited figures are marked; the original filing is the authoritative source.

Northern Trust Corporation reported first quarter 2024 net income of $214.7 million^a, or $0.96 per diluted common share, compared with $113.1 million ($0.52 per share) in the fourth quarter of 2023 and $334.6 million ($1.51 per share) in the first quarter of 2023.

The results were materially affected by a $189.4 million^b pre-tax loss on available-for-sale debt securities sold in a portfolio repositioning, which reduced after-tax earnings by $141.5 million, and a $12.5 million pre-tax increase in the FDIC special assessment. Total revenue on a fully taxable equivalent basis was $1,654.1 million, up 6% sequentially and down 6% from the prior-year quarter. Trust, investment and other servicing fees rose to $1,142.9 million, up 5% sequentially and 7% year over year, supported mainly by favorable markets.

Noninterest expense was $1,364.7 million^c, down 2% sequentially. Net interest income on a fully taxable equivalent basis increased 7% sequentially to $535.4 million, with the net interest margin at 1.61%, reflecting higher deposit levels and interest rates. Assets under custody/administration reached $16.47 trillion and assets under management $1.50 trillion at March 31, 2024, and the Corporation returned about $285.4 million to common shareholders through dividends and share repurchases.

Capital ratios remained above well-capitalized thresholds. This Form 8-K/A was filed solely to add the missing signature of the Chief Financial Officer and otherwise repeats the original April 16, 2024 filing, which furnished the earnings press release, presentation materials and financial trends report as Exhibits 99.1 through 99.3.

02—Key points

Key Highlights

Net income of $214.7 million, or $0.96 per diluted share, versus $113.1 million ($0.52) in Q4 2023 and $334.6 million ($1.51) in Q1 2023.
A $189.4 million pre-tax investment security loss from a portfolio repositioning reduced after-tax earnings by $141.5 million.
Trust, investment and other servicing fees of $1,142.9 million rose 5% sequentially and 7% year over year, driven primarily by favorable markets.
Net interest income (FTE) increased 7% sequentially to $535.4 million, with net interest margin (FTE) at 1.61%, up from 1.59%.
Assets under custody/administration of $16,472.5 billion-equivalent figure of $16.47 trillion and assets under management of $1,500.7 billion ($1.50 trillion) at March 31, 2024.
Noninterest expense of $1,364.7 million declined 2% sequentially, while end-of-period full-time equivalent employees were 23,000.
Shareholder returns totaled approximately $285.4 million in the quarter, including $153.4 million in common dividends and $132.0 million in share repurchases.

03—Questions

Frequently Asked Questions

What drove the decline in earnings compared with the prior-year quarter?
Net income fell to $214.7 million from $334.6 million in the first quarter of 2023. The filing cites a $189.4 million pre-tax loss on available-for-sale debt securities sold in a portfolio repositioning, compared with a $6.9 million gain a year earlier, and higher funding costs that reduced net interest income. Total revenue on a fully taxable equivalent basis was 6% lower year over year.
How did fee revenue and client assets perform?
Trust, investment and other servicing fees were $1,142.9 million, up 5% sequentially and 7% from the prior-year quarter, primarily due to favorable markets. Assets under custody/administration rose 7% sequentially to $16,472.5 billion and assets under management rose 5% to $1,500.7 billion, as stated in the filing.
What were the one-time items affecting the quarter?
The quarter included a $189.4 million pre-tax loss on available-for-sale debt securities sold in a repositioning, which was $141.5 million after tax, and a $12.5 million pre-tax increase in the FDIC special assessment, which was $9.3 million after tax.
How strong is the company's capital position?
The filing states that capital ratios for Northern Trust Corporation and The Northern Trust Company remained above the well-capitalized requirements at March 31, 2024. For the Corporation, the standardized Common Equity Tier 1 ratio was 11.4% and the advanced approach ratio was 13.5%, with the Tier 1 leverage ratio at 7.8%. These figures are preliminary until the Form 10-Q is filed.
Why was this Form 8-K/A filed?
The amendment was filed solely to include the missing signature of the Executive Vice President and Chief Financial Officer on the original Form 8-K filed April 16, 2024. The filing states that no other changes were made to the original Form 8-K or its exhibits.

04—Continue

← View all 8-K filings