Statement Of Financial Position
Statement Of Financial Position Unclassified - Deposit Based Operations (USD $) | ||
In Millions | Dec. 31, 2009
| Dec. 31, 2008
|
ASSETS | ||
Cash and Due from Banks | 2491.8 | 2648.2 |
Federal Funds Sold and Securities Purchased under Agreements to Resell | 250 | 169 |
Time Deposits with Banks | 12905.2 | 16,721 |
Federal Reserve Deposits and Other Interest-Bearing | 14,973 | 9403.8 |
Securities | ||
Available for Sale | 17462.1 | 14414.4 |
Held to Maturity (Fair value - $1,185.7 in 2009 and $1,156.1 in 2008) | 1161.4 | 1154.1 |
Trading Account | 9.9 | 2.3 |
Total Securities | 18633.4 | 15570.8 |
Loans and Leases | ||
Commercial and Other | 16,998 | 20,374 |
Residential Mortgages | 10807.7 | 10381.4 |
Total Loans and Leases (Net of unearned income - $486.0 in 2009 and $539.5 in 2008) | 27805.7 | 30755.4 |
Reserve for Credit Losses Assigned to Loans and Leases | -309.2 | -229.1 |
Buildings and Equipment | 543.5 | 506.6 |
Client Security Settlement Receivables | 794.8 | 709.3 |
Goodwill | 401.6 | 389.4 |
Other Assets | 3651.7 | 5409.2 |
Total Assets | 82141.5 | 82053.6 |
Deposits | ||
Demand and Other Noninterest-Bearing | 9177.5 | 11823.6 |
Savings and Money Market | 15,044 | 9079.2 |
Savings Certificates | 2476.7 | 2606.8 |
Other Time | 1524.5 | 801.6 |
Non-U.S. Offices - Noninterest-Bearing | 2305.8 | 2855.7 |
- Interest-Bearing | 27752.8 | 35239.5 |
Total Deposits | 58281.3 | 62406.4 |
Federal Funds Purchased | 6649.8 | 1783.5 |
Securities Sold under Agreements to Repurchase | 1037.5 | 1529.1 |
Other Borrowings | 2078.3 | 736.7 |
Senior Notes | 1551.8 | 1052.6 |
Long-Term Debt | 2837.8 | 3293.4 |
Floating Rate Capital Debt | 276.8 | 276.7 |
Other Liabilities | 3116.1 | 4585.8 |
Total Liabilities | 75829.4 | 75664.2 |
STOCKHOLDERS' EQUITY | ||
Preferred Stock - Series B (Net of discount - $74.7) | 0 | 1501.3 |
Common Stock, $1.66 2/3 Par Value; Authorized 560,000,000 shares; Outstanding 241,679,942 shares in 2009 and 223,263,132 shares in 2008 | 408.6 | 379.8 |
Additional Paid-in Capital | 888.3 | 178.5 |
Retained Earnings | 5,576 | 5091.2 |
Accumulated Other Comprehensive Income | -361.6 | -494.9 |
Treasury Stock (at cost - 3,491,582 shares in 2009 and 4,658,392 shares in 2008) | -199.2 | -266.5 |
Total Stockholders' Equity | 6312.1 | 6389.4 |
Total Liabilities and Stockholders' Equity | 82141.5 | 82053.6 |
1_Statement Of Financial Positi
Statement Of Financial Position Unclassified - Deposit Based Operations (Parenthetical) (USD $) | ||
In Millions, except Share data | Dec. 31, 2009
| Dec. 31, 2008
|
Held to Maturity, Fair value | 1185.7 | 1156.1 |
Total Loans and Leases, unearned income | 486 | 539.5 |
Preferred Stock - Series B, discount | $0 | 74.7 |
Common Stock, Par Value | 1.6667 | 1.6667 |
Common Stock, Authorized | 560,000,000 | 560,000,000 |
Common Stock, Outstanding | 241,679,942 | 223,263,132 |
Treasury Stock, shares | 3,491,582 | 4,658,392 |
Statement Of Income Interest Ba
Statement Of Income Interest Based Revenue (USD $) | |||
In Millions, except Share data | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Noninterest Income | |||
Trust, Investment and Other Servicing Fees | 2083.8 | 2134.9 | 2077.6 |
Foreign Exchange Trading Income | 445.7 | 616.2 | 351.3 |
Security Commissions and Trading Income | 62.4 | 77 | 67.6 |
Treasury Management Fees | 81.8 | 72.8 | 65.3 |
Gain on Visa Share Redemption | 0 | 167.9 | 0 |
Other Operating Income | 136.8 | 186.9 | 95.3 |
Security Gains and (Losses), including Other-Than-Temporary-Impairment (OTTI) Losses, net | -90.1 | -56.3 | 6.5 |
Less: Noncredit-Related Unrealized Losses on Securities OTTI | 66.7 | 0 | 0 |
Total Investment Security Gains (Losses), net | -23.4 | -56.3 | 6.5 |
Total Noninterest Income | 2787.1 | 3199.4 | 2663.6 |
Net Interest Income | |||
Interest Income | 1,406 | 2478.5 | 2784.2 |
Interest Expense | 406.2 | 1399.4 | 1938.8 |
Net Interest Income | 999.8 | 1079.1 | 845.4 |
Provision for Credit Losses | 215 | 115 | 18 |
Net Interest Income after Provision for Credit Losses | 784.8 | 964.1 | 827.4 |
Noninterest Expenses | |||
Compensation | 1099.7 | 1133.1 | 1038.2 |
Employee Benefits | 242.1 | 223.4 | 234.9 |
Outside Services | 424.5 | 413.8 | 386.2 |
Equipment and Software Expense | 261.1 | 241.2 | 219.3 |
Occupancy Expense | 170.8 | 166.1 | 156.5 |
Visa Indemnification Charges | -17.8 | -76.1 | 150 |
Other Operating Expenses | 136.3 | 786.3 | 245.1 |
Total Noninterest Expenses | 2316.7 | 2887.8 | 2430.2 |
Income before Income Taxes | 1255.2 | 1275.7 | 1060.8 |
Provision for Income Taxes | 391 | 480.9 | 333.9 |
Net Income | 864.2 | 794.8 | 726.9 |
Net Income Applicable to Common Stock | 753.1 | 782.8 | 726.9 |
Per Common Share | |||
Net Income - Basic | 3.18 | 3.51 | 3.28 |
- Diluted | 3.16 | 3.47 | 3.23 |
Cash Dividends Declared | 1.12 | 1.12 | 1.03 |
Average Number of Common Shares Outstanding | |||
- Basic | 235,511,879 | 221,446,382 | 219,680,628 |
- Diluted | 236,416,029 | 224,053,430 | 223,079,180 |
Statement Of Other Comprehensiv
Statement Of Other Comprehensive Income (USD $) | |||
In Millions | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Net Income | 864.2 | 794.8 | 726.9 |
Cumulative Effect Adjustment from New Accounting Standard | -9.5 | 0 | 0 |
Other Comprehensive Income (Loss) (Net of tax and reclassifications) | |||
Net Unrealized Gains (Losses) on Securities Available for Sale | 180.7 | -184.2 | -33.2 |
Net Unrealized Gains (Losses) on Cash Flow Hedge Designations | -5.5 | -17.7 | -5.2 |
Foreign Currency Translation Adjustments | -1.5 | -8.4 | 2.7 |
Pension and Other Postretirement Benefit Adjustments | -30.9 | -194.3 | 94 |
Other Comprehensive Income (Loss) | 133.3 | -404.6 | 58.3 |
Comprehensive Income | 997.5 | 390.2 | 785.2 |
Statement Of Shareholders Equit
Statement Of Shareholders Equity And Other Comprehensive Income (USD $) | |||||||
In Millions | PREFERRED STOCK
| COMMON STOCK
| ADDITIONAL PAID-IN CAPITAL
| RETAINED EARNINGS
| ACCUMULATED OTHER COMPREHENSIVE INCOME
| TREASURY STOCK
| Total
|
Balance at January 1 at Dec. 31, 2006 | $0 | 379.8 | 30.9 | 4131.2 | -148.6 | -449.4 | |
April 1 Cumulative Effect of Applying FSP FAS 115-2 (ASC 320-10) | 0 | 0 | |||||
Common Stock Issuance | 0 | 0 | |||||
Preferred Stock Issuance, Series B | 0 | ||||||
Cumulative Effect of Applying FSP 13-2 (ASC 840-30) | -73.4 | ||||||
Issuance of Warrant to Purchase Common Stock | 0 | ||||||
Redemption of Preferred Stock, Series B | 0 | ||||||
Other Comprehensive Income (Loss) | 58.3 | 58.3 | |||||
Change in Measurement Date of Postretirement Plans | 0 | ||||||
Repurchase of Warrant to Purchase Common Stock | 0 | ||||||
Balance at January 1, as Adjusted | 4057.8 | ||||||
Stock Options and Awards | -45.3 | 262.6 | |||||
Net Income | 726.9 | 726.9 | |||||
Stock-Based Awards - Amortization | 38.4 | ||||||
Stock Purchased | -218.9 | ||||||
Dividends Declared - Common Stock | -228.5 | ||||||
Stock-Based Awards - Tax Benefits | 45.1 | ||||||
Dividends Declared - Preferred Stock | 0 | ||||||
Discount Accretion - Preferred Stock | 0 | 0 | |||||
Balance at December 31 at Dec. 31, 2007 | 0 | 379.8 | 69.1 | 4556.2 | -90.3 | -405.7 | 4509.1 |
April 1 Cumulative Effect of Applying FSP FAS 115-2 (ASC 320-10) | 0 | 0 | |||||
Common Stock Issuance | 0 | 0 | |||||
Preferred Stock Issuance, Series B | 1499.6 | ||||||
Cumulative Effect of Applying FSP 13-2 (ASC 840-30) | 0 | ||||||
Issuance of Warrant to Purchase Common Stock | 76.4 | ||||||
Redemption of Preferred Stock, Series B | 0 | ||||||
Other Comprehensive Income (Loss) | -404.6 | -404.6 | |||||
Change in Measurement Date of Postretirement Plans | -7.4 | ||||||
Repurchase of Warrant to Purchase Common Stock | 0 | ||||||
Balance at January 1, as Adjusted | 4548.8 | ||||||
Stock Options and Awards | -46.1 | 214.3 | |||||
Net Income | 794.8 | 794.8 | |||||
Stock-Based Awards - Amortization | 44.1 | ||||||
Stock Purchased | -75.1 | ||||||
Dividends Declared - Common Stock | -250.7 | ||||||
Stock-Based Awards - Tax Benefits | 35 | ||||||
Dividends Declared - Preferred Stock | 0 | ||||||
Discount Accretion - Preferred Stock | 1.7 | -1.7 | |||||
Balance at December 31 at Dec. 31, 2008 | 1501.3 | 379.8 | 178.5 | 5091.2 | -494.9 | -266.5 | 6389.4 |
April 1 Cumulative Effect of Applying FSP FAS 115-2 (ASC 320-10) | 9.5 | -9.5 | |||||
Common Stock Issuance | 28.8 | 805.3 | |||||
Preferred Stock Issuance, Series B | 0 | ||||||
Cumulative Effect of Applying FSP 13-2 (ASC 840-30) | 0 | ||||||
Issuance of Warrant to Purchase Common Stock | 0 | ||||||
Redemption of Preferred Stock, Series B | (1,576) | ||||||
Other Comprehensive Income (Loss) | 142.8 | 133.3 | |||||
Change in Measurement Date of Postretirement Plans | 0 | ||||||
Repurchase of Warrant to Purchase Common Stock | (87) | ||||||
Balance at January 1, as Adjusted | 5100.7 | ||||||
Stock Options and Awards | -39.1 | 81.1 | |||||
Net Income | 864.2 | 864.2 | |||||
Stock-Based Awards - Amortization | 26.4 | ||||||
Stock Purchased | -13.8 | ||||||
Dividends Declared - Common Stock | -267.6 | ||||||
Stock-Based Awards - Tax Benefits | 4.2 | ||||||
Dividends Declared - Preferred Stock | -46.6 | ||||||
Discount Accretion - Preferred Stock | 74.7 | -74.7 | |||||
Balance at December 31 at Dec. 31, 2009 | $0 | 408.6 | 888.3 | $5,576 | -361.6 | -199.2 | 6312.1 |
Statement Of Cash Flows Indirec
Statement Of Cash Flows Indirect Deposit Based Operations (USD $) | |||
In Millions | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net Income | 864.2 | 794.8 | 726.9 |
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | |||
Investment Security (Gains) Losses, net | 23.4 | 56.3 | -6.5 |
Amortization and Accretion of Securities and Unearned Income | -50.4 | -20.3 | -256.1 |
Provision for Credit Losses | 215 | 115 | 18 |
Depreciation on Buildings and Equipment | 95.7 | 87.6 | 84.8 |
Amortization of Computer Software | 131.8 | 115 | 105.7 |
Amortization of Intangibles | 16.2 | 17.8 | 20.9 |
Client Support Related Charges (Benefit) | -109.3 | 320.3 | 0 |
Capital Support Agreement Payments | -204.8 | 0 | 0 |
Increase (Decrease) in Accrued Income Taxes | 29.4 | (220) | -137.9 |
Qualified Pension Plan Contributions | (175) | (110) | 0 |
Visa Indemnification Charges (Benefit) | -17.8 | -76.1 | 150 |
Excess Tax Benefits from Stock Incentive Plans | -4.2 | (35) | -45.1 |
Deferred Income Tax Provision | 215.8 | -60.7 | -70.3 |
Net (Increase) Decrease in Trading Account Securities | -7.6 | 0.8 | 5.5 |
(Increase) Decrease in Receivables | 65.3 | 81.5 | -86.1 |
Increase (Decrease) in Interest Payable | -13.8 | (1) | 3.4 |
Other Operating Activities, net | -59.2 | -210.7 | 367.5 |
Net Cash Provided by Operating Activities | 1014.7 | 855.3 | 880.7 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Net (Increase) Decrease in Federal Funds Sold and Securities Purchased under Agreements to Resell | (81) | 3621.7 | (2,491) |
Net (Increase) Decrease in Time Deposits with Banks | 3815.8 | 4,539 | -5791.3 |
Net (Increase) Decrease in Federal Reserve Deposits and Other Interest-Bearing Assets | -5569.2 | -9382.3 | 0.4 |
Purchases of Securities - Held to Maturity | -220.9 | (194) | (122) |
Proceeds from Maturity and Redemption of Securities - Held to Maturity | 219.2 | 188.9 | 93.4 |
Purchases of Securities - Available for Sale | (14,053) | (15,324) | -55043.7 |
Proceeds from Sale, Maturity and Redemption of Securities - Available for Sale | 11925.9 | 8267.1 | 58718.8 |
Net Increase (Decrease) in Loans and Leases | 2832.7 | -5422.8 | -2787.8 |
Purchases of Buildings and Equipment, net | -132.6 | -102.3 | -89.5 |
Purchases and Development of Computer Software | -181.6 | -205.7 | (164) |
Net Increase in Client Security Settlement Receivables | -85.5 | -146.2 | -223.8 |
Decrease in Cash Due to Acquisitions | 0 | -8.6 | 0 |
Other Investing Activities, net | -148.4 | (178) | 431.3 |
Net Cash Used in Investing Activities | -1678.6 | -14347.2 | -7469.2 |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Net Increase (Decrease) in Deposits | -4125.1 | 11193.3 | 7392.9 |
Net Increase (Decrease) in Federal Funds Purchased | 4866.3 | 317.7 | -1355.8 |
Net Decrease in Securities Sold under Agreements to Repurchase | -491.6 | -234.5 | -187.1 |
Net Increase (Decrease) in Short-Term Other Borrowings | 626.3 | -1809.1 | -894.1 |
Proceeds from Term Federal Funds Purchased | 17933.4 | 1989.9 | 247.5 |
Repayments of Term Federal Funds Purchased | -17217.4 | -1553.9 | -221.5 |
Proceeds from Senior Notes & Long-Term Debt | 500 | 1864.8 | 2034.9 |
Repayments of Senior Notes & Long-Term Debt | -422.4 | (867) | -1460.7 |
Treasury Stock Purchased | -10.7 | -68.3 | (213) |
Net Proceeds from Stock Options | 38.9 | 161.9 | 204.8 |
Excess Tax Benefits from Stock Incentive Plans | 4.2 | 35 | 45.1 |
Cash Dividends Paid on Common Stock | -260.3 | -247.7 | -219.5 |
Proceeds from Common Stock Issuance | 834.1 | 0 | 0 |
Cash Dividends Paid on Preferred Stock | -46.6 | 0 | 0 |
Redemption of Preferred Stock - Series B | (1,576) | 0 | 0 |
Repurchase of Warrant to Purchase Common Stock | (87) | 0 | 0 |
Proceeds from Preferred Stock - Series B and Warrant to Purchase Common Stock | 0 | 1,576 | 0 |
Other Financing Activities, net | -144.9 | 18 | 86.9 |
Net Cash Provided by Financing Activities | 421.2 | 12376.1 | 5460.4 |
Effect of Foreign Currency Exchange Rates on Cash | 86.3 | -157.6 | 88.7 |
Decrease in Cash and Due from Banks | -156.4 | -1273.4 | -1039.4 |
Cash and Due from Banks at Beginning of Year | 2648.2 | 3921.6 | 4,961 |
Cash and Due from Banks at End of Year | 2491.8 | 2648.2 | 3921.6 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||
Interest Paid | 420 | 1400.4 | 1882.7 |
Income Taxes Paid | 409.6 | 485.1 | $368 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Summary of Significant Accounting Policies | Note 1Summary of Significant Accounting Policies The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (GAAP) and reporting practices prescribed for the banking industry. A description of the more significant accounting policies follows: A. Basis of Presentation. The consolidated financial statements include the accounts of Northern Trust Corporation (Corporation) and its wholly-owned subsidiary, The Northern Trust Company (Bank), and their wholly-owned subsidiaries. Throughout the notes, the term Northern Trust refers to the Corporation and its subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. The consolidated statement of income includes results of acquired subsidiaries from the dates of acquisition. Events occurring subsequent to the date of the balance sheet have been evaluated for potential recognition or disclosure in the consolidated financial statements through February26, 2010, the date of the filing of the consolidated financial statements with the Securities and Exchange Commission. B. Nature of Operations. The Corporation is a financial holding company under the Gramm-Leach-Bliley Act. The Bank is an Illinois banking corporation headquartered in Chicago and the Corporations principal subsidiary. The Corporation conducts business in the United States (U.S.) and internationally through the Bank, a national bank subsidiary, a federal savings bank subsidiary, trust companies, and various other U.S. and non-U.S. subsidiaries. Northern Trust generates the majority of its revenues from its two primary business units: Corporate and Institutional Services (CIS) and Personal Financial Services (PFS).Investment management services and products are provided to CIS and PFS through a third business unit, Northern Trust Global Investments (NTGI). Operating and systems support for these business units is provided by a fourth business unit, Operations and Technology (OT). The CIS business unit provides asset servicing, asset management, and related services to corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, and government funds; a full range of commercial banking services to large and mid-sized corporations and financial institutions; and foreign exchange services. CIS client relationships are managed through the Bank and the Banks and the Corporations subsidiaries, including support from international locations in North America, Europe, the Asia-Pacific region and the Middle East. The PFS business unit provides personal trust, investment management, custody, and philanthropic services; financial consulting; wealth management and family office services; guardianship and estate administration; brokerage services; and private and business banking. PFS focuses on high net worth individuals and families, business owners, executives, professionals, retirees, and established privately-held businesses in its target markets. PFS services are delivered through a network of 79 offices in 18 U.S. states as well as offices in London and Guernsey. C. Use of E |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Recent Accounting Pronouncements | Note 2Recent Accounting Pronouncements In June 2009, the FASB issued Statement of Financial Accounting Standards (SFAS) No.166, Accounting for Transfers of Financial Assets amendment of FASB Statement No.140 (FASB Accounting Standards Codification (ASC) Topic 860, Transfers and Servicing). SFAS No.166 amends SFAS No.140 to improve the relevance and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and the transferors continuing involvement, if any, in transferred financial assets. Adoption of SFAS No.166 as of January1, 2010 did not impact Northern Trusts consolidated financial position or results of operations. In June 2009, the FASB issued SFAS No.167, Amendments to FASB Interpretation No.46(R) (FASB ASC Topic 810, Consolidations). SFAS No.167 significantly changes the criteria for determining whether the consolidation of a variable interest entity is required. SFAS No.167 also addresses the effect of changes required by SFAS No.166 on FASB Interpretation No.46(R), Consolidation of Variable Interest Entities (FASB ASC Topic 860, Transfers and Servicing), and concerns regarding the application of certain provisions of Interpretation No.46(R), including concerns that the accounting and disclosures under the Interpretation do not always provide timely and useful information about an entitys involvement in a variable interest entity. In February 2010, the FASB finalized a deferral of SFAS 167 for asset managers, allowing asset managers to continue applying existing consolidation accounting guidance to entities that are either money market funds or other funds that prepare financial statements in accordance with the AICPA Investment Company Guide (or having attributes similar to these entities). Adoption of SFAS No.167 as of January1, 2010 did not impact Northern Trusts consolidated financial position or results of operations. In January 2010, the FASB issued Accounting Standard Update (ASU) 2010-06, Improving Disclosures about Fair Value Measurements (ASU 2010-06). ASU 2010-06 requires new disclosures regarding transfers into or out of Level 1 and Level 2 and requires that an entity present separately information about Level 3 purchases, sales, issuances, and settlements. ASU 2010-06 also clarifies existing disclosure requirements regarding the level of disaggregation that an entity should provide in its fair value disclosures and the level of detail an entity should disclose about the valuation techniques and inputs used in its fair value measurements. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December15, 2009, except for the disclosures about purchases, sales, issuances, and settlements, which are effective for interim and annual reporting periods beginning after December15, 2010. Since ASU 2010-06 addresses financial statement disclosures only, adoptions of its provisions, effective January1, 2010 and 2011, will not impact Northern Trusts consolidated financial positi |
Securities
Securities | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Securities | Note 3 Securities Securities Available for Sale. The following tables summarize the amortized cost, fair values, and remaining maturities of securities available for sale. RECONCILIATION OF AMORTIZED COST TO FAIR VALUES OF SECURITIES AVAILABLE FOR SALE DECEMBER31, 2009 (In Millions) AMORTIZED COST GROSS UNREALIZED GAINS GROSS UNREALIZED LOSSES FAIR VALUE U.S. Government $ 74.0 $ $ $ 74.0 Obligations of States and Political Subdivisions 45.6 1.4 47.0 Government Sponsored Agency 12,278.9 58.9 12.4 12,325.4 Corporate Debt 2,820.2 7.7 5.8 2,822.1 Residential Mortgage-Backed 439.7 125.7 314.0 Other Asset-Backed 1,183.8 .5 3.0 1,181.3 Auction Rate 409.7 18.2 .2 427.7 Other 270.6 270.6 Total $ 17,522.5 $ 86.7 $ 147.1 $ 17,462.1 DECEMBER 31, 2008 (In Millions) AMORTIZED COST GROSS UNREALIZED GAINS GROSS UNREALIZED LOSSES FAIR VALUE U.S. Government $ 19.8 $ .1 $ $ 19.9 Obligations of States and Political Subdivisions 30.5 1.1 31.6 Government Sponsored Agency 11,256.4 37.7 32.7 11,261.4 Corporate Debt 743.7 .9 5.0 739.6 Residential Mortgage-Backed 638.3 1.7 200.7 439.3 Other Asset-Backed 1,241.0 107.7 1,133.3 Auction Rate 467.0 13.9 453.1 Other 336.2 336.2 Total $ 14,732.9 $ 41.5 $ 360.0 $ 14,414.4 REMAINING MATURITY OF SECURITIES AVAILABLE FOR SALE DECEMBER31, 2009 (In Millions) AMORTIZED COST FAIR VALUE Due in One Year or Less $ 7,106.8 $ 7,071.0 Due After One Year Through Five Years 9,623.1 9,611.9 Due After Five Years Through Ten Years 406.2 398.1 Due After Ten Years 386.4 381.1 Total $ 17,522.5 $ 17,462.1 Asset-backed and government sponsored agency mortgage-backed securities are included in the above table taking into account anticipated future prepayments. Auction Rate Securities Purchase Program. Although not obligated to do so, in 2008 Northern Trust initiated a program to purchase at par value certain illiquid auction rate securities held for clients under investment discretion or that were acquired by clients from Northern Trusts affiliated broker/dealer. A $54.6 million charge was recorded in 2008 within other operating expenses reflecting differences between the securities par values and estimated purchase date fair market values. Purchased securities were designated as available for sale and subsequent to their purchase are reported at fair value with unrealized gains and losses credited or charged, net of the tax effect, to AOCI. Federal Reserve and Federal Home Loan Bank Stock. Stock in Federal Reserve and Federal Home Loan Banks, included at cost within other securities availabl |
Securities Purchased Under Agre
Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase | Note 4 Securities Purchased Under Agreements toResell and Securities Sold Under Agreements to Repurchase Securities purchased under agreements to resell and securities sold under agreements to repurchase are recorded at the amounts at which the securities were acquired or sold plus accrued interest. To minimize any potential credit risk associated with these transactions, the fair value of the securities purchased or sold is continuously monitored, limits are set on exposure with counterparties, and the financial condition of counterparties is regularly assessed. It is Northern Trusts policy to take possession of securities purchased under agreements to resell. The following tables summarize information related to securities purchased under agreements to resell and securities sold under agreements to repurchase. SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL DECEMBER31 ($ In Millions) 2009 2008 Balance at December31 $ 227.4 $ 32.6 Average Balance During the Year 311.5 298.9 Average Interest Rate Earned During the Year .15 % 1.69 % Maximum Month-End Balance During the Year 579.7 590.4 SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE DECEMBER31 ($ In Millions) 2009 2008 Balance at December31 $ 1,037.5 $ 1,529.1 Average Balance During the Year 737.7 1,271.5 Average Interest Rate Paid During theYear .16 % 1.79 % Maximum Month-End Balance During theYear 1,037.5 2,635.7 |
Loans and Leases
Loans and Leases | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Loans and Leases | Note 5 Loans and Leases Amounts outstanding in selected categories are shown below. DECEMBER31 (In Millions) 2009 2008 U.S. Residential Real Estate $ 10,807.7 $ 10,381.4 Commercial 6,312.1 8,253.6 Commercial Real Estate 3,213.2 3,014.0 Personal 4,965.8 4,766.7 Other 774.0 1,404.2 Lease Financing, net 1,004.4 1,143.8 Total U.S. 27,077.2 28,963.7 Non-U.S. 728.5 1,791.7 Total Loans and Leases 27,805.7 30,755.4 Reserve for Credit Losses Assigned to Loans and Leases (309.2 ) (229.1 ) Net Loans and Leases $ 27,496.5 $ 30,526.3 Other U.S. loans and non-U.S. loans at December31, 2009 and 2008 included $1.0 billion and $1.9 billion of short duration advances, respectively, primarily related to the processing of custodied client investments. Residential real estate loans classified as held for sale totaled $4.2 million at December31, 2009 and $7.3 million at December31, 2008. The components of the net investment in direct finance and leveraged leases are as follows: DECEMBER31 (In Millions) 2009 2008 Direct Finance Leases: Lease Receivable $ 133.9 $ 134.2 Residual Value 138.7 133.2 Initial Direct Costs 1.0 .5 Unearned Income (38.9 ) (43.4 ) Investment in Direct Finance Leases $ 234.7 $ 224.5 Leveraged Leases: Net Rental Receivable $ 356.6 $ 621.4 Residual Value 743.4 717.1 Unearned Income (330.3 ) (419.2 ) Investment in Leveraged Leases 769.7 919.3 Lease Financing, net $ 1,004.4 $ 1,143.8 The following schedule reflects the future minimum lease payments to be received over the next five years under direct finance leases: (In Millions) FUTURE MINIMUM LEASE PAYMENTS 2010 $ 29.0 2011 25.3 2012 19.8 2013 14.9 2014 11.9 Concentrations of Credit Risk. The information on pages 55 and 56 in the section titled Residential Real Estate through the section titled Banks and Bank Holding Companies is incorporated herein by reference. NONPERFORMING ASSETS DECEMBER31 (In Millions) 2009 2008 Nonaccrual Loans U.S. $ 278.5 $ 96.7 Non-U.S. Total Nonaccrual Loans 278.5 96.7 Other Real Estate Owned 29.6 3.5 Total Nonperforming Assets 308.1 100.2 90 Day Past Due Loans Still Accruing 15.1 27.8 Impaired Loans with Reserves 94.5 31.5 Impaired Loans without Reserves* 133.6 54.1 Total Impaired Loans 228.1 85.6 Reserves for Impaired Loans 43.8 15.5 Average Balance of Impaired Loans during the Year 193.8 31.5 * When an impaired loans discounted cash |
Reserve for Credit Losses
Reserve for Credit Losses | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Reserve for Credit Losses | Note 6 Reserve for Credit Losses Changes in the reserve for credit losses were as follows: (In Millions) 2009 2008 2007 Balance at Beginning of Year $ 251.1 $ 160.2 $ 151.0 Charge-Offs (132.3 ) (25.7 ) (9.7 ) Recoveries 6.5 2.5 .9 Net Charge-Offs (125.8 ) (23.2 ) (8.8 ) Provision for Credit Losses 215.0 115.0 18.0 Effect of Foreign Exchange Rates .3 (.9 ) Balance at End of Year $ 340.6 $ 251.1 $ 160.2 Reserve for Credit Losses Assignedto: Loans and Leases $ 309.2 $ 229.1 $ 148.1 Unfunded Commitments and Standby Letters of Credit 31.4 22.0 12.1 Total Reserve for Credit Losses $ 340.6 $ 251.1 $ 160.2 |
Buildings and Equipment
Buildings and Equipment | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Buildings and Equipment | Note 7 Buildings and Equipment A summary of buildings and equipment is presented below. DECEMBER31, 2009 (In Millions) ORIGINAL COST ACCUMULATED DEPRECIATION NETBOOK VALUE Land and Improvements $ 41.7 $ .8 $ 40.9 Buildings 256.8 87.7 169.1 Equipment 359.0 185.6 173.4 Leasehold Improvements 205.8 88.3 117.5 Buildings Leased under Capital Leases 83.9 41.3 42.6 Total Buildings and Equipment $ 947.2 $ 403.7 $ 543.5 DECEMBER31, 2008 (In Millions) ORIGINAL COST ACCUMULATED DEPRECIATION NETBOOK VALUE Land and Improvements $ 40.9 $ .6 $ 40.3 Buildings 210.0 80.5 129.5 Equipment 356.6 175.5 181.1 Leasehold Improvements 186.4 75.8 110.6 Buildings Leased under Capital Leases 83.9 38.8 45.1 Total Buildings and Equipment $ 877.8 $ 371.2 $ 506.6 The charge for depreciation, which includes depreciation of assets recorded under capital leases, amounted to $95.7 million in 2009, $87.6 million in 2008, and $84.8 million in2007. |
Lease Commitments
Lease Commitments | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Lease Commitments | Note 8 Lease Commitments At December31, 2009, Northern Trust was obligated under a number of non-cancelable operating leases for buildings and equipment. Certain leases contain rent escalation clauses based on market indices or increases in real estate taxes and other operating expenses and renewal option clauses calling for increased rentals. There are no restrictions imposed by any lease agreement regarding the payment of dividends, debt financing or Northern Trust entering intofurther lease agreements. Minimum annual lease commitments as of December31, 2009 for all non-cancelable operating leases with a term of 1 year or more are as follows: (In Millions) FUTUREMINIMUM LEASE PAYMENTS 2010 $ 69.4 2011 65.4 2012 57.9 2013 52.4 2014 46.4 Later Years 394.9 Total Minimum Lease Payments $ 686.4 Net rental expense for operating leases included in occupancy expense amounted to $70.2 million in 2009, $67.6 million in 2008, and $75.3 million in 2007. One of the buildings and related land utilized for Chicago operations has been leased under an agreement that qualifies as a capital lease. The long-term financing for the property was provided by the Corporation and the Bank. In the event of sale or refinancing, the Bank would anticipate receiving all proceeds except for 58% of any proceeds in excess of the original project costs, which will be paid to the lessor. The following table reflects the future minimum lease payments required under capital leases, net of any payments received on the long-term financing, and the present value of net capital lease obligations at December31, 2009. (In Millions) FUTUREMINIMUM LEASEPAYMENTS,NET 2010 $ (38.3 ) 2011 7.7 2012 7.9 2013 8.1 2014 8.4 Later Years 39.2 Total Minimum Lease Payments, net 33.0 Less: Amount Representing Interest 25.2 Net Present Value under Capital Lease Obligations $ 7.8 Note: In 2007, the term of the capital lease for the Chicago operations center was extended. The minimum lease payments shown in the table above include an anticipated principal repayment in 2010 and the revised future minimum lease payments under the terms of the lease extension. |
Goodwill and Other Intangibles
Goodwill and Other Intangibles | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Goodwill and Other Intangibles | Note 9 Goodwill and Other Intangibles The changes in the carrying amount of goodwill for the years ended December31, 2009 and 2008 are as follows: (In Millions) CORPORATE AND INSTITUTIONAL SERVICES PERSONAL FINANCIAL SERVICES TOTAL Balance at December31, 2007 $ 365.0 $ 60.8 $ 425.8 Goodwill Acquired: Investment Management Company 6.6 6.6 Other Changes * (42.4 ) (.6 ) (43.0 ) Balance at December31, 2008 $ 322.6 $ 66.8 $ 389.4 Other Changes * 12.1 .1 12.2 Balance at December31, 2009 $ 334.7 $ 66.9 $ 401.6 * Includes the effect of foreign exchange rates on non-U.S. dollar denominated goodwill. Other intangible assets are included in other assets in the consolidated balance sheet. The gross carrying amount and accumulated amortization of other intangible assets as of December31, 2009 and 2008 are as follows: OTHER INTANGIBLE ASSETS-SUBJECT TO AMORTIZATION * DECEMBER 31 (In Millions) 2009 2008** Gross Carrying Amount $ 157.0 $ 153.4 Accumulated Amortization 96.3 80.2 Net Book Value $ 60.7 $ 73.2 * Includes the effect of foreign exchange rates on non-U.S. dollar denominated intangible assets. ** 2008 balances include an addition of $2.0 million related to the acquisition of an investment management company. Other intangible assets consist primarily of the value of acquired client relationships. Amortization expense related to other intangible assets was $16.2 million, $17.8 million, and $20.9 million for the years ended December31, 2009, 2008, and 2007, respectively. Amortization expense for the years 2010, 2011, 2012, 2013 and 2014 is estimated to be $14.6 million, $11.0 million, $10.8 million, $10.5 million, and $10.4 million, respectively. |
Senior Notes, Long-Term Debt, a
Senior Notes, Long-Term Debt, and Line of Credit | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Senior Notes, Long-Term Debt, and Line of Credit | Note 10 Senior Notes, Long-Term Debt, and LineofCredit Senior Notes. A summary of senior notes outstanding at December31 is presented below. ($ In Millions) RATE 2009 2008 Corporation-Senior Notes (a)(d) Fixed Rate Due Aug. 2011 (f) 5.30 % $ 249.7 $ 249.5 Fixed Rate Due Nov.2012(g)(j) 5.20 215.3 220.1 FixedRateDueAug.2013(h)(j) 5.50 425.5 437.2 FixedRateDueMay2014 (d) 4.63 500.0 Bank-Senior Note (a)(d) Floating Rate Sterling Denominated Due March2010 .71 161.3 145.8 Total Senior Notes $ 1,551.8 $ 1,052.6 Long-Term Debt. A summary of long-term debt outstanding at December31 is presented below. ($ In Millions) 2009 2008 Bank-Subordinated Debt (a)(d) 7.10% Notes due Aug. 2009 (b) $ $ 200.0 6.30% Notes due March 2011 (b) 150.0 150.0 4.60% Notes due Feb. 2013 (b) 200.0 200.0 5.85% Notes due Nov. 2017 (b)(j) 219.5 241.2 6.50% Notes due Aug. 2018 (b)(i)(j) 321.7 356.6 5.375% Sterling Denominated Notes due March 2015 (e) 241.3 217.9 Total Bank-Subordinated Debt 1,132.5 1,365.7 Federal Home Loan Bank Borrowings One Year or Less (Average Rate at Year End 6.53% in 2009; 6.27% in 2008) 165.0 180.0 One to Three Years (Average Rate at Year End 4.46% in 2009; 4.73% in 2008) 1,096.4 629.6 Three to Five Years (Average Rate at Year End 4.08% in 2009; 4.46% in 2008) 335.0 872.0 Five to Ten Years (Average Rate at Year End 6.38% in 2009; 5.25% in 2008) 101.1 236.1 Total Federal Home Loan Bank Borrowings 1,697.5 1,917.7 Capital Lease Obligations (c) 7.8 10.0 Total Long-Term Debt $ 2,837.8 $ 3,293.4 Long-Term Debt Qualifying as Risk-Based Capital $ 892.0 $ 938.7 (a) Not redeemable prior to maturity. (b) Under the terms of its current Offering Circular dated August5, 2008, the Bank has the ability to offer from time to time its senior bank notes in an aggregate principal amount of up to $4.5 billion at any one time outstanding and up to an additional $500 million of subordinated notes. Each senior note will mature from 30 days to fifteen years, and each subordinated note will mature from five years to fifteen years, following its date of original issuance. Each note will mature on such date as selected by the initial purchaser and agreed to by the Bank. (c) Refer to Note 8. (d) Debt issue costs are recorded as an asset and amortized on a straight-line basis over the life of the Note. (e) Notes issued at a discount of .484%. (f) Notes issued at a discount of .035%. (g) Notes issued at a discount of .044%. (h) Notes issued at a discount of .09%. (i) Notes issued at a discount of .02%. (j) Interest-rate swap contracts were entered into to modify the interest expense on these senior and subordinated notes from fixed rates to floating rates. The swaps are recorded as fair value hedges and at |
Floating Rate Capital Debt
Floating Rate Capital Debt | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Floating Rate Capital Debt | Note 11 Floating Rate Capital Debt In January 1997, the Corporation issued $150 million of Floating Rate Capital Securities, Series A, through a statutory business trust wholly-owned by the Corporation (NTC Capital I). In April 1997, the Corporation also issued, through a separate wholly-owned statutory business trust (NTC Capital II), $120 million of Floating Rate Capital Securities, Series B. The sole assets of the trusts are Subordinated Debentures of Northern Trust Corporation that have the same interest rates and maturity dates as the corresponding distribution rates and redemption dates of the Floating Rate Capital Securities. The Series A Securities were issued at a discount to yield 60.5 basis points above the three-month London Interbank Offered Rate (LIBOR) and are due January15, 2027. The Series B Securities were issued at a discount to yield 67.9 basis points above the three-month LIBOR and are due April15, 2027. Both Series A and B Securities qualify as tier1 capital for regulatory purposes. NTC CapitalI and NTC Capital II are considered variable interest entities under GAAP. However, as the Corporation has determined that it is not the primary beneficiary of the trusts, they are not consolidated by the Corporation. The Corporation has fully, irrevocably and unconditionally guaranteed all payments due on the Series A and B Securities. The holders of the Series A and B Securities are entitled to receive preferential cumulative cash distributions quarterly in arrears (based on the liquidation amount of $1,000 per Security) at an interest rate equal to the rate on the corresponding Subordinated Debentures. The interest rate on the Series A and Series B securities is equal to three-month LIBOR plus 0.52% and 0.59%, respectively. Subject to certain exceptions, the Corporation has the right to defer payment of interest on the Subordinated Debentures at any time or from time to time for a period not exceeding 20 consecutive quarterly periods provided that no extension period may extend beyond the stated maturity date. If interest is deferred on the Subordinated Debentures, distributions on the Series A and B Securities will also be deferred and the Corporation will not be permitted, subject to certain exceptions, to pay or declare any cash distributions with respect to the Corporations capital stock or debt securities that rank the same as or junior to the Subordinated Debentures, until all past due distributions are paid. The Subordinated Debentures are unsecured and subordinated to substantially all of the Corporations existing indebtedness. The Corporation has the right to redeem the Series A and Series B Subordinated Debentures, in whole or in part, at a price equal to the principal amount plus accrued and unpaid interest. The following table summarizes the book values ofthe outstanding Subordinated Debentures as of December31, 2009 and 2008: DECEMBER31 (In Millions) 2009 2008 NTC Capital I Subordinated Debentures due January15, 2027 $ 153.8 $ 153.7 NTC Capital II Subordinated Debentures due April15, 2027 123.0 123.0 Total Subordinated Debentures $ 27 |
Stockholders' Equity
Stockholders' Equity | |
1/1/2009 - 12/31/2009
USD / shares | |
Stockholders' Equity | Note 12 Stockholders Equity Preferred Stock. The Corporation is authorized to issue 10,000,000 shares of preferred stock without par value. The Board of Directors of the Corporation is authorized to fix the particular preferences, rights, qualifications and restrictions for each series of preferred stock issued. There was no preferred stock outstanding at December31, 2009. At December31, 2008, 1,576,000 shares of the Corporations Fixed Rate Cumulative Perpetual Preferred Stock, Series B were outstanding. Common Stock. On May1, 2009, Northern Trust issued 17,250,000 shares of common stock of the Corporation with a par value of $1.66 2/3per share. The Corporations current share buyback program authorization was increased to 12.0million shares in October 2006. Under this program, the Corporation may purchase an additional 7.3million shares after December31, 2009. The repurchased shares would be used for general purposes of the Corporation, including management of the Corporations capital level and the issuance of shares under stock option and other incentive plans of the Corporation. The average price paid per share for common stock repurchased in 2009, 2008, and 2007 was $55.05, $68.68, and $67.10, respectively. An analysis of changes in the number of shares of common stock outstanding follows: 2009 2008 2007 Balance at January1 223,263,132 220,608,834 218,700,956 Common Stock Issuance 17,250,000 Incentive Plan and Awards 479,359 296,621 128,095 Stock Options Exercised 938,249 3,450,608 5,042,322 Treasury Stock Purchased (250,798 ) (1,092,931 ) (3,262,539 ) Balance at December31 241,679,942 223,263,132 220,608,834 U.S. Treasury Capital Purchase Program. On November14, 2008, in connection with the Corporations participation in the U.S. Department of the Treasurys (U.S. Treasury) Troubled Asset Relief Programs Capital Purchase Program (Capital Purchase Program), the Corporation issued 1,576,000shares of Series B Preferred Stock and a warrant forthe purchase of the Corporations common stock to theU.S. Treasury for total proceeds of $1,576.0 million. Theproceeds received were allocated between the preferred stock and the warrant based on their relative fair values, whichresulted in the recording of a discount on the preferred stock upon issuance that reflected the value allocated to the warrant. On June17, 2009, Northern Trust repaid in full the $1,576.0 million preferred share investment made by the U.S. Treasury under the Capital Purchase Program. On August26, 2009, Northern Trust repurchased the warrant for $87 million, completing the Corporations participation in the Capital Purchase Program. Series B Preferred Stock. The Series B Preferred Stock was without par value and had a liquidation preference of $1,000 per share. Cumulative dividends on the Series B Preferred Stock accrued on the liquidation preference at a rate of 5%per annum for the first five years, and at a rate of 9%per annum thereafter, but would be paid only if, as and when declared by the Corporations Board of Directors. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Accumulated Other Comprehensive Income | Note 13 Accumulated Other Comprehensive Income The following table summarizes the components of accumulated other comprehensive income at December31, 2009, 2008, and 2007, and changes during the years then ended. PERIOD CHANGE (In Millions) BEGINNING BALANCE (NETOFTAX) BEFORE TAX AMOUNT TAXEFFECT ENDING BALANCE (NETOFTAX) DECEMBER31, 2009 Cumulative Effect of Applying FSP FAS 115-2 (ASC 320-10) $ $ (15.0 ) $ 5.5 $ (9.5 ) Noncredit-Related Unrealized Losses on Securities OTTI (66.4 ) 24.4 (42.0 ) Other Unrealized Gains (Losses) on Securities Available for Sale, net (212.9 ) 374.7 (137.5 ) 24.3 Less: Reclassification Adjustments (22.9 ) 8.4 (14.5 ) Net Unrealized Gains (Losses) on Securities Available for Sale (212.9 ) 285.4 (104.7 ) (32.2 ) Unrealized Gains (Losses) on Cash Flow Hedge Designations (20.7 ) 8.2 (3.0 ) (15.5 ) Less: Reclassification Adjustments 16.9 (6.2 ) 10.7 Net Unrealized Gains (Losses) on Cash Flow Hedge Designations (20.7 ) (8.7 ) 3.2 (26.2 ) Foreign Currency Translation Adjustments 12.8 (38.1 ) 36.6 11.3 Pension and Other Postretirement Benefit Adjustments Net Actuarial (Loss) Gain (266.5 ) (46.1 ) 2.1 (310.5 ) Prior Service (Cost) Benefit (6.4 ) 18.6 (6.7 ) 5.5 Transition Obligation (1.2 ) 1.9 (.7 ) Total Pension and Other Postretirement Benefit Adjustments (274.1 ) (25.6 ) (5.3 ) (305.0 ) Accumulated Other Comprehensive Income $ (494.9 ) $ 198.0 $ (64.7 ) $ (361.6 ) DECEMBER31, 2008 Unrealized Gains (Losses) on Securities Available for Sale $ (28.7 ) $ (348.9 ) $ 129.1 $ (248.5 ) Less: Reclassification Adjustments (56.3 ) 20.7 (35.6 ) Net Unrealized Gains (Losses) on Securities Available for Sale (28.7 ) (292.6 ) 108.4 (212.9 ) Unrealized Gains (Losses) on Cash Flow Hedge Designations (3.0 ) (9.7 ) 3.6 (9.1 ) Less: Reclassification Adjustments 18.5 (6.9 ) 11.6 Net Unrealized Gains (Losses) on Cash Flow Hedge Designations (3.0 ) (28.2 ) 10.5 (20.7 ) Foreign Currency Translation Adjustments 21.2 91.9 (100.3 ) 12.8 Pension and Other Postretirement Benefit Adjustments Net Actuarial (Loss) Gain (71.0 ) (310.1 ) 114.6 (266.5 ) Prior Service Cost (7.1 ) 1.4 (.7 ) (6.4 ) Transition Obligation (1.7 ) .8 (.3 ) (1.2 |
Net Income Per Common Share Com
Net Income Per Common Share Computations | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Net Income Per Common Share Computations | Note 14 Net Income Per Common Share Computations The computation of net income per common share is presented below. (In Millions Except Share Information) 2009 2008 2007 Basic Net Income Per Common Share Average Number of Common Shares Outstanding 235,511,879 221,446,382 219,680,628 Net Income $ 864.2 $ 794.8 $ 726.9 Less: Dividends on Preferred Stock (111.1 ) (12.0 ) Net Income Applicable to Common Stock 753.1 782.8 726.9 Less: Earnings Allocated to Participating Securities 5.3 6.3 6.0 Earnings Allocated to Common Shares Outstanding 747.8 776.5 720.9 Basic Net Income Per Common Share 3.18 3.51 3.28 Diluted Net Income Per Common Share Average Number of Common Shares Outstanding 235,511,879 221,446,382 219,680,628 Plus Stock Option Dilution 904,150 2,607,048 3,398,552 Average Common and Potential Common Shares 236,416,029 224,053,430 223,079,180 Earnings Allocated to Common and Potential Common Shares $ 747.8 $ 776.5 $ 720.9 Diluted Net Income Per Common Share 3.16 3.47 3.23 Note: Common stock equivalents totaling 7,146,701, 3,431,701, and 3,748,499 for the years ended December31, 2009, 2008, and 2007, respectively, were not included in the computation of diluted earnings per share because their inclusion would have been antidilutive. |
Net Interest Income
Net Interest Income | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Net Interest Income | Note 15 Net Interest Income The components of net interest income were as follows: (In Millions) 2009 2008 2007 Interest Income Loans and Leases $ 942.2 $ 1,187.2 $ 1,308.3 Securities Taxable 208.4 320.7 591.5 Non-Taxable 33.5 35.9 38.9 Time Deposits with Banks 209.6 888.2 776.7 Federal Funds Sold and Securities Purchased under Agreements to Resell and Other 12.3 46.5 68.8 Total Interest Income 1,406.0 2,478.5 2,784.2 Interest Expense Deposits 207.0 1,116.0 1,563.4 Federal Funds Purchased 5.7 32.2 79.9 Securities Sold under Agreements to Repurchase 1.1 22.7 80.1 Other Borrowings 4.2 22.5 31.5 Senior Notes 44.0 44.3 26.7 Long-Term Debt 139.9 150.1 141.0 Floating Rate Capital Debt 4.3 11.6 16.2 Total Interest Expense 406.2 1,399.4 1,938.8 Net Interest Income $ 999.8 $ 1,079.1 $ 845.4 |
Other Operating Income
Other Operating Income | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Other Operating Income | Note 16 Other Operating Income The components of other operating income were as follows: (In Millions) 2009 2008 2007 Banking Service Fees $ 53.1 $ 39.4 $ 35.7 Loan Service Fees 52.1 30.0 16.5 Non-Trading Foreign Exchange Gains (Losses) (1.4 ) 36.1 2.1 Credit Default Swap Gains (Losses) (4.6 ) 35.4 4.8 Loss on Sale of Non-U.S. Subsidiary (4.1 ) Other Income 37.6 46.0 40.3 Total Other Operating Income $ 136.8 $ 186.9 $ 95.3 |
Other Operating Expenses
Other Operating Expenses | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Other Operating Expenses | Note 17 Other Operating Expenses The components of other operating expenses were as follows: (In Millions) 2009 2008 2007 Business Promotion $ 66.6 $ 87.8 $ 77.0 FDIC Insurance Premiums 54.1 5.6 1.8 Staff Related 31.3 38.1 35.9 Other Intangibles Amortization 16.2 17.8 20.9 Capital Support Agreements (109.3 ) 314.1 Securities Lending Client Support 167.6 Auction Rate Securities Purchase Program 54.6 Other Expenses 77.4 100.7 109.5 Total Other Operating Expenses $ 136.3 $ 786.3 $ 245.1 |
Visa Membership
Visa Membership | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Visa Membership | Note 18 Visa Membership In October 2007, Northern Trust, as a member of Visa U.S.A. Inc. (Visa U.S.A.), received shares of restricted stock in Visa, Inc. (Visa) as a result of its participation in the global restructuring of Visa U.S.A., Visa Canada Association, and Visa International Service Association in preparation for an initial public offering by Visa. In connection with Visas initial public offering in March 2008, a portion of the shares of Visa common stock held by Northern Trust was redeemed pursuant to a mandatory redemption. The proceeds of the redemption totaled $167.9 million and were recorded as a gain in the first quarter of 2008. The remaining Visa shares held by Northern Trust are recorded at their original cost basis of zero. These shares have restrictions as to their sale or transfer and the ultimate realization of their value is subject to future adjustments based on the resolution of outstanding indemnified litigation. Northern Trust, as a member bank of Visa U.S.A., and in conjunction with other member banks, is obligated to share in losses resulting from certain indemnified litigation involving Visa. A member bank such as Northern Trust is also required to recognize the contingent obligation to indemnify Visa under Visas bylaws (as those bylaws were modified at the time of the Visa restructuring on October3, 2007), for potential losses arising from the other indemnified litigation that has not yet settled at its estimated fair value in accordance with GAAP. Northern Trust is not a party to this litigation and does not have access to any specific, non-public information concerning the matters that are the subject of the indemnification obligations. During 2007, Northern Trust recorded charges and corresponding liabilities of $150 million relating to Visa indemnified litigation. In March 2008, Visa placed a portion of the proceeds from its initial public offering into an escrow account to fund the settlements of, or judgments in, the indemnified litigation. Northern Trust recorded $76.1 million, its proportionate share of the escrow account balance, in the first quarter of 2008 as an offset to the indemnification liabilities and related charges recorded in the fourth quarter of 2007, reducing the net indemnification liability to $73.9 million. In the third quarter of 2008, in consideration of Visas announced settlement of the litigation involving Discover Financial Services, Northern Trust recorded a charge of $30.0 million to increase the Visa indemnification liability. In the fourth quarter of 2008, Northern Trust fully reversed the $30.0 million charge recorded in the third quarter as Visa funded its litigation escrow account to cover the amount of the settlement. In the third quarter of 2009, Visa deposited additional funds in its litigation escrow account and Northern Trust recorded its proportionate share of the deposit, $17.8 million, as a reduction to the Visa related indemnification liability and related charges. The funding by Visa of its escrow account in 2008 and 2009 resulted in reductions of the future realization of the value of the outstanding shares held by Northern Trust and other Visa |
Income Taxes
Income Taxes | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Income Taxes | Note 19 Income Taxes The following table reconciles the total provision for income taxes recorded in the consolidated statement of income with the amounts computed at the statutory federal tax rate of 35%. (In Millions) 2009 2008 2007 Tax at Statutory Rate $ 439.3 $ 446.5 $ 371.3 Tax Exempt Income (11.9 ) (12.4 ) (12.3 ) Leveraged Lease Adjustments (4.8 ) 61.3 Foreign Tax Rate Differential (20.9 ) (47.8 ) (18.4 ) State Taxes, net 9.8 18.3 6.2 Other (20.5 ) 15.0 (12.9 ) Provision for Income Taxes $ 391.0 $ 480.9 $ 333.9 The Corporation files income tax returns in the U.S. federal, various state, and foreign jurisdictions. The Corporation is no longer subject to income tax examinations by U.S. federal, state, or local, or by non-U.S. tax authorities for years before 1997. Included in other liabilities within the consolidated balance sheet at December31, 2009 and 2008 were $88.9 million and $334.9 million of unrecognized tax benefits, respectively. If recognized, 2009 and 2008 net income would have increased by $20.1 million and $47.9 million, respectively, resulting in a decrease of those years effective income tax rates. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: (In Millions) 2009 2008 Balance at January1 $ 334.9 $ 237.0 Additions for Tax Positions Taken in Current Year 7.7 Additions for Tax Positions Taken in Prior Years .6 91.3 Reductions for Tax Positions Taken in Prior Years (246.1 ) (.7 ) Reductions Resulting from Expiration of Statutes (.5 ) (.4 ) Balance at December31 $ 88.9 $ 334.9 As part of its audit of federal tax returns filed from 1997-2004, the Internal Revenue Service (IRS) challenged the Corporations tax position with respect to certain structured leasing transactions and proposed to disallow certain tax deductions and assess related interest and penalties. In September 2009, the Corporation reached a settlement agreement with the IRS with respect to certain of these transactions, resulting in the acceleration of $88.6 million in tax payments to the IRS. The acceleration of tax payments did not affect net income. The Corporation anticipates that the IRS will continue to disallow deductions relating to the remaining challenged leases and possibly include other lease transactions with similar characteristics as part of its audit of tax returns filed after 2004. The Corporation believes that these transactions are valid leases for U.S. tax purposes and that its tax treatment of these transactions is appropriate based on its interpretation of the tax regulations and legal precedents; a court or other judicial authority, however, could disagree. The Corporation believes it has appropriate reserves to cover its tax liabilities, including liabilities related to structured leasing transactions, and related interest and penalties. The Corporat |
Employee Benefits
Employee Benefits | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Employee Benefits | Note 20 Employee Benefits The Corporation and certain of its subsidiaries provide various benefit programs, including defined benefit pension, postretirement health care, and defined contribution plans. A description of each major plan and related disclosures are provided below. In 2008, Northern Trust adopted revised measurement date provisions under GAAP and has subsequently valued pension and postretirement benefit assets and liabilities at December31 versus a September30 measurement date used in 2007 and prior years. An adjustment totaling $7.4 million was made to the January1, 2008 balance of retained earnings to effect this change. There was no income statement impact. Actuarial gains and losses arising in the 15 month period between September30, 2007 and December31, 2008 were recorded in AOCI in 2008. Pension. A noncontributory qualified defined benefit pension plan covers substantially all U.S. employees of Northern Trust. Employees of various European subsidiaries participate in local defined benefit plans, although those plans were closed in prior years to new participants. Northern Trust also maintains a noncontributory supplemental pension plan for participants whose retirement benefit payments under the U.S. plan are expected to exceed the limits imposed by federal tax law. Northern Trust has a nonqualified trust, referred to as a Rabbi Trust, used to hold assets designated for the funding of benefits in excess of those permitted in certain of its qualified retirement plans. This arrangement offers participants a degree of assurance for payment of benefits in excess of those permitted in the related qualified plans. As the Rabbi Trust assets remain subject to the claims of creditors and are not the property of the employees, they are accounted for as corporate assets and are included in other assets in the consolidated balance sheet. Total assets in the Rabbi Trust related to the nonqualified pension plan at December31, 2009 and 2008 amounted to $44.1 million and $45.2 million, respectively. The following tables set forth the status, amounts included in AOCI, and the net periodic pension expense of the U.S. plan, non-U.S. plans, and supplemental plan for 2009 and 2008. Prior service costs are being amortized on a straight-line basis over 9 years for the U.S. plan and 8 years for the supplemental plan. PLAN STATUS U.S.PLAN NON-U.S.PLANS SUPPLEMENTALPLAN ($ In Millions) 2009 2008 2009 2008 2009 2008 Accumulated Benefit Obligation $ 554.0 $ 484.8 $ 100.9 $ 75.9 $ 74.5 $ 56.8 Projected Benefit 642.0 558.8 134.4 91.0 85.9 68.5 Plan Assets at Fair Value 821.9 586.2 113.7 87.9 Funded Status at December31 $ 179.9 $ 27.4 $ (20.7 ) $ (3.1 ) $ (85.9 ) $ (68.5 ) Weighted-Average Assumptions: Discount Rates 6.00 |
Stock-Based Compensation Plans
Stock-Based Compensation Plans | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Stock-Based Compensation Plans | Note 21Stock-Based Compensation Plans Northern Trust recognizes as compensation expense the grant-date fair value of stock options and other equity based compensation granted to employees within the income statement using a fair value-based method. Total compensation expense for share-based payment arrangements was as follows: FORTHEYEARENDED DECEMBER31, (In Millions) 2009 2008 2007 Stock Options $ 27.9 $ 19.3 $ 17.8 Stock and Stock Unit Awards 19.7 15.0 14.2 Performance Stock Units (22.2 ) 8.3 12.1 Total Share-Based Compensation Expense $ 25.4 $ 42.6 $ 44.1 Tax Benefits Recognized $ 9.3 $ 15.8 $ 16.5 As of December31, 2009, there was $73.4 million of unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Corporations stock-based compensation plans. That cost is expected to be recognized as expense over a weighted-average period of approximately 3 years. Share-based compensation expense in 2009 includes the reversal of accruals related to performance stock units granted in 2007 and 2008 which are not expected to vest. The Amended and Restated Northern Trust Corporation 2002 Stock Plan (the Plan) is administered by the Compensation and Benefits Committee (Committee) of the Board of Directors. All employees of the Corporation and its subsidiaries and all directors of the Corporation are eligible to receive awards under the Plan. The Plan provides for the grant of stock options, stock appreciation rights, stock awards, stock units and performance shares. As detailed below, grants are outstanding under both the Plan and The Northern Trust Corporation Amended 1992 Incentive Stock Plan (1992 Plan), a predecessor plan. The total number of shares of the Corporations common stock authorized for issuance under the Plan is 40,000,000. As of December31, 2009, shares available for future grant under the Plan totaled 18,392,165. The following describes Northern Trusts share-based payment arrangements and applies to awards under the Plan and the 1992 Plan, as applicable. Stock Options. Stock options consist of options to purchase common stock at prices not less than 100% of the fair market value thereof on the date the options are granted. Options have a maximum ten-year life and generally vest and become exercisable in one to four years after the date of grant. In addition, all options may become exercisable upon a change of control as defined in the Plan or the 1992 Plan. All options terminate at such time as determined by the Committee and as provided in the terms and conditions of the respective option grants. The weighted-average assumptions used for options granted during the years ended December31 are as follows: 2009 2008 2007 Expected Term (in Years) 6.8 6.3 5.9 Dividend Yield 3.51 % 2.48 % 2.50 % Expected Volatility 40.7 27.1 28.3 Risk Free Interest Rate 2.46 3.16 4.67 The expected term of the options represents the period of ti |
Cash-Based Compensation Plans
Cash-Based Compensation Plans | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Cash-Based Compensation Plans | Note 22Cash-Based Compensation Plans Various incentive plans provide for cash incentives and bonuses to selected employees based upon accomplishment ofcorporate net income objectives, business unit goals, andindividual performance. The estimated contributions to theseplans are charged to compensation expense and totaled $168.9 million in 2009, $155.8 million in 2008, and $192.5 million in 2007. |
Contingent Liabilities
Contingent Liabilities | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Contingent Liabilities | Note 23Contingent Liabilities In the normal course of business, the Corporation and its subsidiaries are routinely defendants in or parties to a number of pending and threatened legal actions, including, but not limited to, actions brought on behalf of various claimants or classes of claimants, regulatory matters, employment matters, and challenges from tax authorities regarding the amount of taxes due. In certain of these actions and proceedings, claims for substantial monetary damages or adjustments to recorded tax liabilities are asserted. In view of the inherent difficulty of predicting the outcome of such matters, particularly matters that will be decided by a jury and actions that seek very large damages based on novel and complex damage and liability legal theories or that involve a large number of parties, the Corporation cannot state with confidence the eventual outcome of these matters or the timing of their ultimate resolution, or estimate the possible loss or range of loss associated with them; however, based on current knowledge and after consultation with legal counsel, management does not believe that judgments or settlements in excess of amounts already reserved, if any, arising from pending or threatened legal actions, regulatory matters, employment matters, or challenges from tax authorities, either individually or in the aggregate, would have a material adverse effect on the consolidated financial position or liquidity of the Corporation, although they could have a material adverse effect on operating results for a particular period. A number of participants in our securities lending program, which is associated with the Corporations asset servicing business, have commenced either individual lawsuits or putative class actions in which they claim, among other things, that we failed to exercise prudence in the investment management of the collateral received from the borrowers of the securities, resulting in losses that they seek to recover. The cases assert various contractual, statutory and common law claims, including claims for breach of fiduciary duty under common law and under ERISA. As discussed in further detail in Note 18 Visa Membership, Northern Trust, as a member bank of Visa U.S.A., and in conjunction with other member banks, is obligated to share in losses resulting from certain indemnified litigation involving Visa. The estimated fair value of the net Visa indemnification liability, recorded within other liabilities in the consolidated balance sheet, was $56.1 million at December31, 2009 and $73.9 million at December31, 2008. |
Derivative Financial Instrument
Derivative Financial Instruments | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Derivative Financial Instruments | Note 24Derivative Financial Instruments Northern Trust is a party to various derivative financial instruments that are used in the normal course of business to meet the needs of its clients; as part of its trading activity for its own account; and as part of its risk management activities. These instruments include foreign exchange contracts, interest rate contracts, and credit default swap contracts. Northern Trusts primary risks associated with these instruments is the possibility that interest rates, foreign exchange rates, or credit spreads could change in an unanticipated manner, resulting in higher costs or a loss in the underlying value of the instrument. These risks are mitigated by establishing limits, monitoring the level of actual positions taken against such established limits, and monitoring the level of any interest rate sensitivity gaps created by such positions. When establishing position limits, market liquidity and volatility, as well as experience in each market, are all taken into account. The estimated credit risk associated with these instruments relates to the failure of the counterparty to pay based on the contractual terms of the agreement, and is generally limited to the unrealized market value gains on these instruments. The amount of credit risk will increase or decrease during the lives of the instruments as interest rates, foreign exchange rates, or credit spreads fluctuate. This risk is controlled by limiting such activity to an approved list of counterparties and by subjecting such activity to the same credit and quality controls as are followed in lending and investment activities. Credit Support Annex agreements are currently in place with several counterparties which mitigate the aforementioned credit risk associated with derivative activity conducted with those counterparties by requiring that significant net unrealized market value gains be supported by collateral placed with Northern Trust. Northern Trust also enters into master netting agreements with many of its derivative counterparties. Certain of these agreements contain credit-risk-related contingent features in which the counterparty has the option to declare Northern Trust in default and accelerate cash settlement of net derivative liabilities with the counterparty in the event Northern Trusts credit rating falls below specified levels. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a liability position on December31, 2009, was $505.6 million. Northern Trust has posted collateral of $168.7 million against these liabilities resulting in a net maximum amount of termination payments that could have been required at December31, 2009 of $336.9 million. Accelerated settlement due to such events would not affect net income and would not have a material effect on the consolidated financial position or liquidity of Northern Trust. Foreign Exchange Contracts are agreements to exchange specific amounts of currencies at a future date, at a specified rate of exchange. Foreign exchange contracts are entered into primarily to meet the foreign exchange needs of clients. Foreign exc |
Off-Balance Sheet Financial Ins
Off-Balance Sheet Financial Instruments | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Off-Balance Sheet Financial Instruments | Note 25 Off-Balance Sheet Financial Instruments Commitments and Letters of Credit. Northern Trust, in the normal course of business, enters into various types of commitments and issues letters of credit to meet the liquidity and credit enhancement needs of its clients. The contractual amounts of these instruments represent the potential credit exposure should the instrument be fully drawn upon and the client default. To control the credit risk associated with entering into commitments and issuing letters of credit, Northern Trust subjects such activities to the same credit quality and monitoring controls as its lending activities. Commitments and letters of credit consist of the following: Legally Binding Commitments to Extend Credit generally have fixed expiration dates or other termination clauses. Since a significant portion of the commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future loans or liquidity requirements. Commercial Letters of Credit are instruments issued by Northern Trust on behalf of its clients that authorize a third party (the beneficiary) to draw drafts up to a stipulated amount under the specified terms and conditions of the agreement. Commercial letters of credit are issued primarily to facilitate international trade. Standby Letters of Credit obligate Northern Trust to meet certain financial obligations of its clients, if, under the contractual terms of the agreement, the clients are unable to do so. These instruments are primarily issued to support public and private financial commitments, including commercial paper, bond financing, initial margin requirements on futures exchanges, and similar transactions. Certain standby letters of credit have been secured with cash deposits or participated to others. Northern Trust is obligated to meet the entire financial obligation of these agreements and in certain cases is able to recover the amounts paid through recourse against cash deposits or other participants. The following table shows the contractual amounts of commitments and letters of credit. COMMITMENTS AND LETTERS OF CREDIT DECEMBER31 (In Millions) 2009 2008 Legally Binding Commitments to Extend Credit* $ 25,651.8 $ 25,356.3 Commercial Letters of Credit 31.2 36.7 Standby Letters of Credit: Corporate 1,191.9 1,136.2 Industrial Revenue 2,536.7 2,080.7 Other 1,070.2 808.1 Total Standby Letters of Credit** $ 4,798.8 $ 4,025.0 * These amounts exclude $1.6 billion and $1.7 billion of commitments participated to others at December31, 2009 and 2008, respectively. ** These amounts include $618.7 million and $378.1 million of standby letters of credit secured by cash deposits or participated to others as of December31, 2009 and 2008, respectively. The weighted average maturity of standby letters of credit was 21 months at December31, 2009 and 25 months at December31, 2008. Other Off-Balance Sheet Financial Instruments. As part of securities custody activities and at the direction of c |
Variable Interest Entities
Variable Interest Entities | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Variable Interest Entities | Note 26 Variable Interest Entities A variable interest entity (VIE) is defined under GAAP as an entity which either has total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support or whose equity investors lack the characteristics of a controlling financial interest (such as the ability to make significant decisions through voting rights or the right to receive the expected residual returns of the entity and the obligation to absorb the expected losses of the entity). Investors that finance a VIE through debt or equity interests, or other counterparties that provide other forms of support, such as guarantees, subordinated fee arrangements, or certain types of derivative contracts, are variable interest holders in the entity. GAAP requires an entity to disclose its maximum exposure to loss where it has significant variable interests in an unconsolidated VIE. GAAP does not define significant and, as such, judgment is required. The variable interest holder, if any, that will absorb a majority of the entitys expected losses, receive a majority of the entitys expected residual returns, or both, is deemed to be the primary beneficiary of the VIE and is required to consolidate the VIE. Assessments of variable interests are based on expected losses and residual returns, which consider various scenarios on a probability-weighted basis. Northern Trust acts as investment advisor to Registered Investment Companies, Undertakings for the Collective Investment of Transferable Securities and other unregistered short-term investment pools in which various clients of Northern Trust are investors. Although not obligated to do so, in 2008 the Corporation entered into Capital Support Agreements (CSAs) with certain of these entities (Funds) which held notes, asset backed securities, and other instruments whose values had been adversely impacted by widening risk premiums and liquidity spreads and significant rating agency downgrades. The Corporation entered into the CSAs to assist the Funds in maintaining net asset values of $1.00 in order to provide financial stability to the Funds and investors in the Funds. The CSAs also allowed the registered funds to hold assets that had fallen to below investment grade, thus avoiding a forced sale in an inactive market. The estimated fair value of the Corporations contingent liability under the agreements as of December31, 2008 was $314.1 million and was recorded within other liabilities in the consolidated balance sheet. As of December31, 2009, no liability existed as all CSAs had expired in connection with the final settlements of covered securities. During 2009, final cash payments totaling $204.8 million were made under the CSAs and reductions of other operating expenses totaling $109.3 million were recorded to reflect the difference between the actual cash payments made and the liability as of December31, 2008. Under GAAP, the Funds are considered VIEs and the CSAs reflected Northern Trusts implicit variable interest in the credit risk of the affected Funds. Implicit interests are required to be considered when determinin |
Pledged and Restricted Assets
Pledged and Restricted Assets | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Pledged and Restricted Assets | Note 27 Pledged and Restricted Assets Certain of Northern Trusts subsidiaries, as required or permitted by law, pledge assets to secure public and trust deposits, repurchase agreements, FHLB borrowings, and for other purposes. On December31, 2009, securities and loans totaling $24.1 billion ($13.9 billion of government sponsored agency and other securities, $769.2 million of obligations of states and political subdivisions, and $9.4 billion of loans), were pledged. Collateral required for these purposes totaled $5.1 billion. Included in the total pledged assets are available for sale securities with a total fair value of $1.0 billion which were pledged as collateral for agreements to repurchase securities sold transactions. The secured parties to these transactions have the right to repledge or sell these securities. Northern Trust is permitted to repledge or sell collateral accepted from agreements to resell securities purchased transactions. The total fair value of accepted collateral as of December31, 2009 and 2008 was $227.9 million and $32.4 million, respectively. There was no repledged or sold collateral as of December31, 2009 or 2008. Deposits maintained to meet Federal Reserve Bank reserve requirements averaged $448.7 million in 2009 and $148.5 million in 2008. |
Restrictions on Subsidiary Divi
Restrictions on Subsidiary Dividends and Loans or Advances | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Restrictions on Subsidiary Dividends and Loans or Advances | Note 28Restrictions on Subsidiary Dividends and Loans or Advances Provisions of state and federal banking laws restrict the amount of dividends that can be paid to the Corporation by its banking subsidiaries. Under applicable state and federal laws, no dividends may be paid in an amount greater than the net or undivided profits (as defined) then onhand, subject to other applicable provisions of law. In addition, prior approval from the relevant federal banking regulator is required if dividends declared by any of the Corporations banking subsidiaries in any calendar year will exceed its net profits for that year, combined with its retained net profits for the preceding two years. Based on these regulations, the Corporations banking subsidiaries, without regulatory approval, could declare dividends during 2010 equal to their 2010 eligible net profits (as defined) plus $1,312.1 million. The ability of each banking subsidiary to pay dividends to the Corporation may be further restricted as a result of regulatory policies and guidelines relating to dividend payments and capital adequacy. State and federal laws limit the transfer of funds by a banking subsidiary to the Corporation and certain of its affiliates in the form of loans or extensions of credit, investments or purchases of assets. Transfers of this kind to the Corporation or a nonbanking subsidiary by a banking subsidiary are each limited to 10% of the banking subsidiarys capital and surplus with respect to each affiliate and to 20% in the aggregate, and are also subject to certain collateral requirements. These transactions, as well as other transactions between a banking subsidiary and the Corporation or its affiliates, must also be on terms substantially the same as, or at least as favorable as, those prevailing at the time for comparable transactions with non-affiliated companies or, in the absence of comparable transactions, on terms, or under circumstances, including credit standards, that would be offered to, or would apply to, non-affiliated companies. |
Fair Value Measurements
Fair Value Measurements | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Fair Value Measurements | Note 29Fair Value Measurements Fair value under GAAP is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. GAAP establishes a hierarchy of valuation inputs based on the extent to which the inputs are observable in the marketplace. Fair Value Hierarchy. The following describes the hierarchy of valuation inputs (Levels 1, 2, and 3) used to measure fair value and the primary valuation methodologies used by Northern Trust for financial instruments measured at fair value on a recurring basis. Observable inputs reflect market data obtained from sources independent of the reporting entity; unobservable inputs reflect the entitys own assumptions about how market participants would value an asset or liability based on the best information available. The standard requires an entity measuring fair value to maximize the use of observable inputs and minimize the use of unobservable inputs and establishes a fair value hierarchy of inputs. Financial instruments are categorized within the hierarchy based on the lowest level input that is significant to their valuation. Level 1 Quoted, active market prices for identical assets or liabilities. Northern Trusts Level 1 assets and liabilities include available for sale investments in U.S. treasury securities, seed investments for the development of managed fund products consisting of common stock and securities sold but not yet purchased, and U.S. treasury securities held to fund employee benefit and deferred compensation obligations. Level 2 Observable inputs other than Level 1 prices, such as quoted active market prices for similar assets or liabilities, quoted prices for identical or similar assets in inactive markets, and model-derived valuations in which all significant inputs are observable in active markets. Northern Trusts Level 2 assets include available for sale and trading account investments in government sponsored agency securities, asset-backed securities, obligations of states and political subdivisions, corporate debt securities, and non-U.S. government securities, the fair values of which are modeled by external pricing vendors or, in limited cases, modeled internally, using a discounted cash flow approach that incorporates current market yield curves and assumptions regarding anticipated prepayments and defaults. Level 2 assets and liabilities also include derivative contracts such as foreign exchange, interest rate, and credit default swap contracts that are valued using widely accepted models that incorporate inputs readily observable in actively quoted markets and do not require significant judgment. Inputs to these models reflect the contractual terms of the contracts and, based on the type of instrument, can include foreign exchange rates, interest rates, credit spreads, and volatility inputs. Northern Trust evaluated the impact of counterparty credit risk and its own credit risk on the valuation of its derivative instruments. Factors considered included the l |
Business Units and Related Info
Business Units and Related Information | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Business Units and Related Information | Note 30 Business Units and Related Information Information regarding the Corporations major business units is contained in the Results of Operations tables included in the section titled Business Unit Reporting beginning on page 32 and is incorporated herein by reference. Northern Trusts international activities are centered in the global custody, treasury activities, foreign exchange, asset servicing, asset management, and commercial banking businesses. The operations of Northern Trust are managed on a business unit basis and include components of both U.S and non-U.S. source income and assets. Non-U.S. source income and assets are not separately identified in Northern Trusts internal management reporting system. However, Northern Trust is required to disclose non-U.S. activities based on the domicile of the customer. Due to the complex and integrated nature of Northern Trusts activities, it is impossible to segregate with precision revenues, expenses and assets between U.S. and non-U.S. domiciled customers. Therefore, certain subjective estimates and assumptions have been made to allocate revenues, expenses and assets between U.S. and non-U.S. operations. For purposes of this disclosure, all foreign exchange trading income has been allocated to non-U.S. operations. Interest expense is allocated to non-U.S. operations based on specifically matched or pooled funding. Allocations of indirect noninterest expenses related to non-U.S. activities are not significant, but when made, are based on various methods such as time, space, and number of employees. The table below summarizes international performance based on the allocation process described above without regard to guarantors or the location of collateral. The U.S. performance includes the impacts of benefits totaling $17.8 million recorded in 2009 with regards to a reduction in the Visa indemnification liability, $244.0 million recorded in 2008 in connection with Visas initial public offering and $150 million of pre-tax charges recorded in 2007 for accruals related to certain indemnifications of Visa, as discussed in further detail in Note 18 Visa Membership. DISTRIBUTION OF TOTAL ASSETS AND OPERATING PERFORMANCE (In Millions) TOTAL ASSETS TOTAL REVENUE* INCOMEBEFORE INCOME TAXES NETINCOME 2009 Non-U.S. $ 19,253.2 $ 1,086.9 $ 445.4 $ 305.8 U.S. 62,888.3 2,700.0 809.8 558.4 Total $ 82,141.5 $ 3,786.9 $ 1,255.2 $ 864.2 2008 Non-U.S. $ 24,433.0 $ 1,598.6 $ 842.2 $ 534.9 U.S. 57,620.6 2,679.9 433.5 259.9 Total $ 82,053.6 $ 4,278.5 $ 1,275.7 $ 794.8 2007 Non-U.S. $ 25,209.9 $ 1,183.5 $ 577.5 $ 378.4 U.S. 42,401.3 2,325.5 483.3 348.5 Total $ 67,611.2 $ 3,509.0 $ 1,060.8 $ 726.9 * Revenue is comprised of net interest income and noninterest income. |
Regulatory Capital Requirements
Regulatory Capital Requirements | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Regulatory Capital Requirements | Note 31 Regulatory Capital Requirements Northern Trust and its U.S. subsidiary banks are subject to various regulatory capital requirements administered by the federal bank regulatory authorities. Under these requirements, banks must maintain specific ratios of total and tier 1 capital to risk-weighted assets and of tier 1 capital to average quarterly assets in order to beclassified as well capitalized. The regulatory capital requirements impose certain restrictions upon banks that meet minimum capital requirements but are not well capitalized and obligate the federal bank regulatory authorities to take prompt corrective action with respect to banks that do not maintain such minimum ratios. Such prompt corrective action could have a direct material effect on a banks financial statements. As of December31, 2009, each of Northern Trusts U.S. subsidiary banks had capital ratios above the level required for classification as a well capitalized institution and had not received any regulatory notification of a lower classification. Additionally, Northern Trusts subsidiary banks located outside the U.S. are subject to regulatory capital requirements in the jurisdictions in which they operate. As of December31, 2009, each of Northern Trusts non-U.S. banking subsidiaries had capital ratios above their specified minimum requirements. There are no conditions or events since December31, 2009 that management believes have adversely affected the capital categorization of any Northern Trust subsidiary bank. The table below summarizes the risk-based capital amounts and ratios for Northern Trust and for each of its U.S. subsidiary banks whose net income for 2009 or 2008 exceeded 10% of the consolidated total. ACTUAL MINIMUM TO QUALIFY AS WELL CAPITALIZED ($ In Millions) AMOUNT RATIO AMOUNT RATIO AS OF DECEMBER31, 2009 Total Capital to Risk-Weighted Assets Consolidated $ 7,711 15.8 % $ 4,878 10.0 % The Northern Trust Company 6,044 16.1 3,751 10.0 Northern Trust, NA 1,170 11.0 1,061 10.0 Tier 1 Capital to Risk-Weighted Assets Consolidated 6,522 13.4 2,927 6.0 The Northern Trust Company 4,756 12.7 2,250 6.0 Northern Trust, NA 1,010 9.5 637 6.0 Tier 1 Capital (to Fourth Quarter Average Assets) Consolidated 6,522 8.8 3,725 5.0 The Northern Trust Company 4,756 7.7 3,073 5.0 Northern Trust, NA 1,010 8.2 615 5.0 AS OF DECEMBER31, 2008 Total Capital to Risk-Weighted Assets Consolidated $ 7,869 15.4 % $ 5,125 10.0 % The Northern Trust Company 5,673 14.1 4,034 10.0 Northern Trust, NA 1,109 10.9 1,020 10.0 Tier 1 Capital to Risk-Weighted Assets Consolidated 6,703 13.1 3,075 6.0 The Northern Trust Company 4,385 10.9 2,421 6.0 Northern Trust, NA 976 9.6 612 6.0 Tier 1 Capital (to Fourth Quarter Avera |
Northern Trust Corporation
Northern Trust Corporation (Corporation only) | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Northern Trust Corporation (Corporation only) | Note 32 Northern Trust Corporation (Corporation only) Condensed financial information is presented below. Investments in wholly-owned subsidiaries are carried on the equity method of accounting. CONDENSED BALANCE SHEET DECEMBER31 (In Millions) 2009 2008 ASSETS Cash on Deposit with Subsidiary Bank $ 6.5 $ 22.5 Time Deposits with Subsidiary Banks 1,484.0 1,216.0 Securities 10.1 410.1 Advances to Wholly-Owned Subsidiaries Banks 285.0 285.0 Nonbank 5.0 5.0 Investments in Wholly-Owned Subsidiaries Banks 5,959.9 5,408.6 Nonbank 128.7 111.5 Buildings and Equipment 3.4 3.4 Other Assets 371.9 658.0 Total Assets $ 8,254.5 $ 8,120.1 LIABILITIES Long-Term Debt $ 1,390.5 $ 906.8 Floating Rate Capital Debt 276.8 276.7 Other Liabilities 275.1 547.2 Total Liabilities 1,942.4 1,730.7 STOCKHOLDERS EQUITY Preferred Stock Series B (Net of discount of $74.7 in 2008) 1,501.3 Common Stock 408.6 379.8 Additional Paid-in Capital 888.3 178.5 Retained Earnings 5,576.0 5,091.2 Accumulated Other Comprehensive Income (361.6 ) (494.9 ) Treasury Stock (199.2 ) (266.5 ) Total Stockholders Equity 6,312.1 6,389.4 Total Liabilities and Stockholders Equity $ 8,254.5 $ 8,120.1 CONDENSED STATEMENT OF INCOME FORTHEYEARENDED DECEMBER31 (In Millions) 2009 2008 2007 OPERATING INCOME Dividends Bank Subsidiaries $ 410.0 $ 30.0 $ 308.0 Nonbank Subsidiaries 25.6 56.4 65.9 Intercompany Interest and Other Charges 10.1 39.3 17.2 Interest and Other Income 13.7 (13.2 ) 6.5 Total Operating Income 459.4 112.5 397.6 OPERATING EXPENSES Interest Expense 45.7 39.1 31.8 Other Operating Expenses (93.2 ) 367.8 13.2 Total Operating Expenses (47.5 ) 406.9 45.0 Income (Loss) before Income Taxes and Equity in Undistributed Net Income of Subsidiaries 506.9 (294.4 ) 352.6 Benefit (Expense) for Income Taxes (25.0 ) 160.2 18.3 Income (Loss) before Equity in Undistributed Net Income of Subsidiaries 481.9 (134.2 ) 370.9 Equity in Undistributed Net Income of Subsidiaries Banks 364.7 918.7 364.5 Nonbank 17.6 10.3 (8.5 ) Net Income $ 864.2 $ 794.8 $ 726.9 Net Income Applicable to Common Stock $ 753.1 $ 782.8 $ 726.9 CONDENSED STATEMENT OF CASH FLOWS FORTHEYEARENDED DECEMBER31 (I |
Document Information
Document Information | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Document Type | 10-K |
Amendment Flag | false |
Document Period End Date | 2009-12-31 |
Entity Information
Entity Information (USD $) | |||
12 Months Ended
Dec. 31, 2009 | Feb. 24, 2010
| Jun. 30, 2009
| |
Trading Symbol | NTRS | ||
Entity Registrant Name | NORTHERN TRUST CORP | ||
Entity Central Index Key | 0000073124 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 241,804,518 | ||
Entity Public Float | $12,239,497,407 |