Exhibit 99
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NEWS RELEASE
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Northern Trust Corporation
50 South LaSalle Street
Chicago, Illinois 60675
Contact: Bev Fleming, Investor Relations
(312) 444-7811 or
Katherine Sopranos, Public Relations
(312)444-4281 http://www.northerntrust.com
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FOR IMMEDIATE RELEASE
NORTHERN TRUST CORPORATION REPORTS 2003 FIRST QUARTER EARNINGS OF
$.42 PER SHARE.
(Chicago, April 15, 2003) Northern Trust Corporation reported net income per
common share of $.42 for the first quarter, compared with $.56 per share earned
a year ago. Net income totaled $94.7 million compared with $127.6 million
reported in the first quarter of last year. This performance resulted in a
return on average common equity of 13.32%.
William A. Osborn, Chairman and Chief Executive Officer, commented, "The
combined impact of the struggling global economy, sharp declines in equity
markets, and low interest rates have continued to negatively affect our
performance. Although the external environment is a difficult one - the S&P 500
declined 26% since last year - we continue to win significant new business,
reflecting the fundamental strengths of our franchise. Trust assets under
administration totaled $1.59 trillion and included managed assets of $365.3
billion at March 31, 2003.
We are undertaking several important strategic steps to both capitalize on
our strengths and to better position Northern for profitable growth. We continue
to invest in our core businesses, as evidenced by many activities currently
underway, including the recent acquisition of Deutsche Bank's passive asset
management business, the pending acquisition of Legacy South in Atlanta, our
planned mid-year entry into the Northeast with our first private client office
in New York City, the expansion of our international business and our continuing
investment in leading edge technology to support client needs.
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We also are performing an intensive review of our business and operations
in order to improve productivity. We have commenced a number of outsourcing and
re-engineering activities that will lead to better client service, efficiencies,
and cost reductions across several businesses. For example, as part of our
ongoing review of the positioning of our PFS offices, we are announcing today
that we are selling certain banking assets and leasehold interests of our
Higgins Road retail branch in Chicago. In addition, later this year we will
close our downtown Chicago Wacker Drive facility and transfer the accounts to
our main downtown bank location, and we just recently announced the outsourcing
of our mortgage processing operation. These efforts will allow us to focus our
resources in growth areas where we have a leadership position and clear
competitive advantages.
We remain confident that our highly focused and unique business profile,
strong client orientation and commitment to technology will continue to be the
foundation of our future success."
FIRST QUARTER PERFORMANCE HIGHLIGHTS
Revenues of $526.6 million were 6% below the $560.1 million reported in
last year's first quarter. Trust fees were $298.1 million in the quarter, down
8% compared with $323.0 million in the first quarter of last year. Trust fees
represented 57% of total first quarter revenues, and total fee-related income
represented 71% of total revenues. Trust assets under administration totaled
$1.59 trillion at March 31, 2003 and included $51.1 billion of assets from the
acquisition of passive asset management business. Additional assets from this
acquisition are expected to transition during the next quarter. Excluding this
acquisition, trust assets under administration increased 2% from December 31,
2002, but are 10% below the March 31, 2002 level. Including the acquisition,
trust assets under management totaled $364.9 billion compared with $302.5
billion at December 31, 2002 and $325.2 billion at March 31, 2002.
Trust fees from Personal Financial Services (PFS) in the quarter decreased
9% and totaled $144.3 million, compared with $159.0 million in the year-ago
quarter. The decline in PFS trust fees resulted from the continued decline in
the equity markets, partially offset by net new business. Personal trust assets
under administration totaled $155.6 billion at March 31, 2003,
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FIRST QUARTER PERFORMANCE HIGHLIGHTS (continued)
compared with $156.7 billion at December 31, 2002, and $173.4 billion at March
31, 2002. Of the total assets under administration, $87.3 billion is managed by
Northern Trust, compared with $87.7 billion at December 31, 2002 and $96.2
billion one year ago. Net new recurring PFS trust business transitioned during
the first quarter represents approximately $8 million in annualized fees.
The acquisition of Legacy South, the Atlanta-based private wealth
management firm, is expected to close in late April and our first New York PFS
office will open mid-year. With the expansion into these new markets, the PFS
office network will extend its reach to households in affluent markets in 14
states.
Northern Trust entered into an agreement on April 3, 2003 to sell certain
banking assets and leasehold interests of its Higgins Road, Chicago retail
branch to Illinois-based First Midwest Bancorp, Inc. The sale, subject to
regulatory approval, is expected to close in June 2003. The sales price is based
primarily on the level of deposits transferred and is expected to result in a
net gain that could range from $14 million to $17 million.
Trust fees from Corporate & Institutional Services (C&IS) in the quarter
included approximately $2.7 million in fees resulting from the January 31, 2003
acquisition of passive asset management business, and decreased 6% to $153.8
million from $164.0 million in the year-ago quarter. Approximately one-half of
the overall decline resulted from lower securities lending fees, which totaled
$21.9 million compared with $28.8 million in last year's first quarter,
reflecting lower volumes and reduced spreads earned on the investment of
collateral. Fees from asset management totaled $48.8 million, which include the
fees from the acquired passive asset management business, compared with $48.2
million in the year-ago quarter. Custody fees totaled $52.9 million for the
quarter, compared with $55.4 million a year ago. Northern Trust Retirement
Consulting, L.L.C. recorded fees of $17.5 million, compared with $19.5 million
in last year's first quarter.
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FIRST QUARTER PERFORMANCE HIGHLIGHTS (continued)
C&IS trust assets under administration totaled $1.43 trillion at March 31,
2003, compared with $1.35 trillion at December 31, 2002 and $1.53 trillion at
March 31, 2002. Of the C&IS trust assets under administration, $278.0 billion is
managed by Northern Trust, including $51.1 billion of trust assets acquired.
This compares with managed assets of $214.8 billion at December 31, 2002, and
$229.0 billion at March 31, 2002. Trust assets under administration include
$476.0 billion of global custody assets, compared with $470.4 billion one year
ago. Net new recurring C&IS trust business transitioned during the quarter
represents approximately $15 million in annualized fees.
Foreign exchange trading profits were $20.7 million in the quarter compared
with $24.3 million in the first quarter of last year. The current quarter
reflects lower client volumes.
Treasury management revenues, which, in addition to fees, include the fee
equivalent value of compensating deposit balances, were $29.9 million,
essentially unchanged from last year's first quarter. The fee portion of these
revenues in the quarter was $24.0 million, up 1% from $23.8 million in the
comparable quarter last year. Revenues from security commissions and trading
income were $12.8 million, up 29% from the prior year, while other operating
income was $17.5 million for the first quarter compared with $18.2 million in
the same period last year.
Net interest income for the quarter, stated on a fully taxable equivalent
basis, totaled $153.5 million compared with $160.9 million reported in the prior
year quarter. Total average earning assets of $33.3 billion were 2% lower than a
year ago with the decrease concentrated in money market assets. Average
securities increased slightly while loans declined 1% to average $17.6 billion.
The net interest margin decreased to 1.87% from 1.92% in the prior year due in
large part to a decline in the yield of the residential mortgage loan portfolio
due to the impact of refinancing activity.
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FIRST QUARTER PERFORMANCE HIGHLIGHTS (continued)
The provision for credit losses was $5.0 million in the quarter, unchanged
from the same period last year. Net charge-offs in the quarter totaled $3.4
million, down from $6.3 million a year ago. Nonperforming assets totaled $93.6
million at March 31, 2003, compared with $94.6 million at December 31, 2002 and
$118.7 million at March 31, 2002. Total reserves available for credit losses
totaled $170.1 million and included $7.7 million allocated to loan commitments
and other off-balance sheet exposures. The $162.4 million reserve assigned to
loans at March 31, 2003 represented a reserve to loan ratio of .90%, compared
with .86% a year ago. Nonaccrual loans of $92.4 million at quarter-end
represented .51% of total loans and were covered 1.8 times by the reserve.
Noninterest expenses totaled $370.0 million for the quarter, up 6% from
$350.3 million in the year-ago quarter. Included in the current quarter were
expenses totaling $4.7 million resulting from the acquisition of passive asset
management business.
Compensation and employee benefits represented 55% of total operating
expenses and totaled $204.4 million, up 3% from a year ago resulting primarily
from salary increases. Staff on a full-time equivalent basis at March 31, 2003
totaled 9,336, a net increase of 19 since year-end and included approximately 30
positions associated with the passive asset management business acquisition.
Other operating expenses included increased costs associated with software
amortization and the acquisition of passive asset management business.
BALANCE SHEET
Balance sheet assets averaged $37.5 billion for the quarter, down 1% from
last year's first quarter average of $37.7 billion. Money market assets averaged
$8.4 billion, down 7% from $9.0 billion last year, while the securities
portfolio averaged $7.4 billion, up slightly from last year. Loans and leases
averaged $17.6 billion for the quarter, down 1% from the prior year.
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BALANCE SHEET (continued)
Residential mortgages increased $318 million, or 4%, to average $7.8
billion for the quarter, and represented 44% of the total loan portfolio.
Commercial and industrial loans averaged $4.0 billion, down $630 million or 14%
from a year ago, while personal loans increased $302 million or 14% to average
$2.4 billion.
Common stockholders' equity averaged a record $2.87 billion, up 8% from
last year's first quarter. The increase primarily reflects the retention of
earnings offset in part by the repurchase of common stock pursuant to the
Corporation's share buyback program. During the quarter, the Corporation
acquired a total of 1.0 million shares at a cost of $33.1 million. An additional
546 thousand shares are authorized for purchase after March 31, 2003 under the
previously announced share buyback program.
FORWARD-LOOKING STATEMENTS
This news release may be deemed to include forward-looking statements, such
as statements that relate to Northern Trust's financial goals, dividend policy,
expansion and business development plans, business prospects and positioning
with respect to market and pricing trends, strategic initiatives, re-engineering
and outsourcing activities, new business results and outlook, changes in
securities market prices, credit quality including reserve levels, planned
capital expenditures and technology spending, and the effect of extraordinary
events and various other matters (including changes in accounting standards and
interpretations) on Northern Trust's business and results. Forward-looking
statements are typically identified by words or phrases, such as "believe,"
"expect," "anticipate," "intent," "estimate," "may increase," "may fluctuate,"
and similar expressions or future or conditional verbs such as "will," "should,"
"would," and "could." Forward-looking statements are Northern Trust's current
estimates or expectations of future events or future results. Actual results
could differ materially from those indicated by these statements because the
realization of those results is subject to many risks and uncertainties.
Northern Trust Corporation's 2002 Annual Report to Shareholders, including the
section of Management's Discussion and Analysis captioned "Factors Affecting
Future Results," and periodic reports to the Securities and Exchange Commission
contain
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FORWARD-LOOKING STATEMENTS (continued)
additional information about factors that could affect actual results, including
certain economic, interest rate, market and credit risks, competitive
conditions, changes in U.S. and worldwide securities markets, Northern Trust's
success in executing various parts of its business plans, operating and
technology risks, including material systems interruptions or errors, risks
associated with regulatory changes, and uncertainties inherent in the litigation
process. All forward-looking statements included in this news release are based
on information available at the time of the release, and Northern Trust
Corporation assumes no obligation to update any forward-looking statement.
WEBCAST OF FIRST QUARTER EARNINGS CONFERENCE CALL
Northern Trust's first quarter earnings conference call will be webcast
live on Tuesday, April 15, 2003. The Internet webcast opens the call to all
investors, allowing them to listen to the Chief Financial Officer's comments.
The live call will be conducted at 9 a.m. CDT and is accessible on Northern
Trust's web site at:
http://www.northerntrust.com/aboutus/news/financial_releases.html
The only authorized rebroadcasts of the live call will be available on Northern
Trust's web site from 2:00 p.m. CDT on April 15, 2003 through 6:00 p.m. on April
22, 2003. Participants will need Windows Media/tm/ software, which can be
downloaded free through Northern's web site. This earnings release can also be
accessed at the above web address.
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NORTHERN TRUST CORPORATION Page 1
(Supplemental Consolidated Financial Information)
STATEMENT OF INCOME STATISTICS
($ In Millions Except Per Share Data) FIRST QUARTER
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2003 2002 % Change (*)
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Noninterest Income
Trust Fees $298.1 $323.0 (8)%
Foreign Exchange Trading Profits 20.7 24.3 (15)
Treasury Management Fees 24.0 23.8 1
Security Commissions & Trading Income 12.8 9.9 29
Other Operating Income 17.5 18.2 (4)
Investment Security Transactions - - -
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Total Noninterest Income 373.1 399.2 (7)
Interest Income (Taxable Equivalent) 287.4 326.7 (12)
Interest Expense 133.9 165.8 (19)
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Net Interest Income (Taxable Equivalent) 153.5 160.9 (5)
Total Revenue (Taxable Equivalent) 526.6 560.1 (6)
Noninterest Expenses
Compensation 168.4 162.5 4
Employee Benefits 36.0 35.8 1
Occupancy Expense 29.3 26.0 12
Equipment Expense 23.5 22.6 4
Other Operating Expenses 112.8 103.4 9
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Total Noninterest Expenses 370.0 350.3 6
Provision for Credit Losses 5.0 5.0 -
Taxable Equivalent Adjustment 12.8 11.7 9
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Income before Income Taxes 138.8 193.1 (28)
Provision for Income Taxes 44.1 65.5 (33)
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NET INCOME $94.7 $127.6 (26)%
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Net Income Per Common Share
Basic $0.43 $0.58 (26)%
Diluted 0.42 0.56 (25)
Return on Average Common Equity 13.32% 19.42%
Average Common Equity $2,871.7 $2,653.3 8%
Return on Average Assets 1.03% 1.37%
Common Dividend Declared per Share $0.17 $0.17 - %
Preferred Dividends (millions) 0.4 0.5 (17)
Average Common Shares Outstanding (000s)
Basic 220,374 220,854
Diluted 223,436 227,373
Common Shares Outstanding (EOP) 220,416 221,714
(*) Percentage change calculations are based on actual balances rather than the
rounded amounts presented in Supplemental Consolidated Financial
Information.
Note: Certain reclassifications have been made to the prior period's financial
statements to place them on a basis comparable with the current period's
financial statements.
NORTHERN TRUST CORPORATION Page 2
(Supplemental Consolidated Financial Information)
BALANCE SHEET ($ IN MILLIONS)
MARCH 31
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2003 2002 % Change(*)
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Assets
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Money Market Assets $ 7,417.2 $ 7,662.6 (3) %
Securities
U.S. Government 102.9 157.1 (35)
Federal Agency and Other 6,570.1 8,249.6 (20)
Municipal 877.3 574.3 53
Trading Account 4.2 9.7 (56)
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Total Securities 7,554.5 8,990.7 (16)
Loans and Leases 17,976.7 17,845.5 1
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Total Earning Assets 32,948.4 34,498.8 (4)
Reserve for Credit Losses Assigned to Loans (162.4) (153.3) 6
Cash and Due from Banks 1,355.7 1,534.8 (12)
Trust Security Settlement Receivables 127.9 200.8 (36)
Buildings and Equipment 521.6 493.7 6
Other Nonearning Assets 1,658.5 1,393.8 19
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Total Assets $36,449.7 $37,968.6 (4)%
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Liabilities and Stockholders' Equity
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Interest-Bearing Deposits
Savings $ 8,722.0 $7,841.4 11 %
Other Time 372.5 331.8 12
Foreign Office Time 9,648.4 9,071.0 6
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Total Interest-Bearing Deposits 18,742.9 17,244.2 9
Borrowed Funds 5,922.4 10,500.8 (44)
Senior Notes and Long-Term Debt 1,683.4 1,484.3 13
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Total Interest-Related Funds 26,348.7 29,229.3 (10)
Demand & Other Noninterest-Bearing Deposits 5,739.5 4,702.6 22
Other Liabilities 1,335.4 1,205.0 11
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Total Liabilities 33,423.6 35,136.9 (5)
Common Equity 2,906.1 2,711.7 7
Preferred Equity 120.0 120.0 -
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Total Liabilities and Stockholders' Equity $36,449.7 $37,968.6 (4)%
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NORTHERN TRUST CORPORATION Page 3
(Supplemental Consolidated Financial Information)
AVERAGE BALANCE SHEET ($ IN MILLIONS)
FIRST QUARTER
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2003 2002 % Change(*)
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Assets
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Money Market Assets $ 8,359.7 $ 8,962.4 (7) %
Securities
U.S. Government 103.3 157.7 (35)
Federal Agency and Other 6,470.5 6,600.0 (2)
Municipal 809.8 561.0 44
Trading Account 6.6 10.1 (34)
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Total Securities 7,390.2 7,328.8 1
Loans and Leases 17,567.3 17,673.8 (1)
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Total Earning Assets 33,317.2 33,965.0 (2)
Reserve for Credit Losses Assigned to Loans (161.8) (153.9) 5
Nonearning Assets 4,306.1 3,874.2 11
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Total Assets $37,461.5 $37,685.3 (1) %
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Liabilities and Stockholders' Equity
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Interest-Bearing Deposits
Savings $ 8,378.0 $8,193.4 2 %
Other Time 354.7 381.6 (7)
Foreign Office Time 9,672.4 9,170.6 5
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Total Interest-Bearing Deposits 18,405.1 17,745.6 4
Borrowed Funds 7,788.9 9,349.1 (17)
Senior Notes and Long-Term Debt 1,621.2 1,484.3 9
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Total Interest-Related Funds 27,815.2 28,579.0 (3)
Demand & Other Noninterest-Bearing Deposits 5,046.9 5,180.0 (3)
Other Liabilities 1,607.7 1,153.0 39
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Total Liabilities 34,469.8 34,912.0 (1)
Common Equity 2,871.7 2,653.3 8
Preferred Equity 120.0 120.0 --
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Total Liabilities and Stockholders' Equity $37,461.5 $37,685.3 (1) %
========= ========= ===
NORTHERN TRUST CORPORATION Page 4
(Supplemental Consolidated Financial Information)
QUARTERLY TREND DATA
- --------------------- 2003 2002
($ In Millions Except Per Share Data) Quarter Quarters
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First Fourth Third Second First
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Net Income Summary
Trust Fees $298.1 $293.0 $298.0 $319.1 $323.0
Other Noninterest Income 75.0 65.9 72.5 89.1 76.2
Net Interest Income (Taxable Equivalent) 153.5 164.3 162.1 163.2 160.9
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Total Revenue (Taxable Equivalent) 526.6 523.2 532.6 571.4 560.1
Provision for Credit Losses 5.0 7.5 20.0 5.0 5.0
Noninterest Expenses 370.0 360.9 357.2 363.7 350.3
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Pretax Income (Taxable Equivalent) 151.6 154.8 155.4 202.7 204.8
Taxable Equivalent Adjustment 12.8 12.9 12.2 11.9 11.7
Provision for Income Taxes 44.1 45.6 46.8 64.0 65.5
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Net Income $94.7 $96.3 $96.4 $126.8 $127.6
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Per Common Share
Net Income - Basic $0.43 $0.43 $0.44 $0.57 $0.58
- Diluted 0.42 0.43 0.43 0.56 0.56
Dividend Declared 0.17 0.17 0.17 0.17 0.17
Book Value (EOP) 13.18 13.04 12.79 12.60 12.23
Market Value (EOP) 30.45 35.05 37.72 44.06 60.11
Ratios
Return on Average Common Equity 13.32% 13.43% 13.69% 18.57% 19.42%
Return on Average Assets 1.03 0.98 1.05 1.37 1.37
Net Interest Margin 1.87 1.85 1.98 1.99 1.92
Productivity Ratio 142% 145% 149% 157% 160%
Risk-based Capital Ratios
Tier 1 11.1% 11.1% 10.9% 10.8% 11.0%
Total (Tier 1 + Tier 2) 15.0 14.1 13.9 13.9 14.3
Leverage 7.9 7.8 8.2 8.0 7.6
Trust Assets ($ in Billions) - EOP
Corporate $1,429.9 $1,346.9 $1,285.8 $1,487.9 $1,529.8
Personal 156.0 156.7 150.7 163.4 173.4
-------- --------- -------- -------- --------
Total Trust Assets $1,585.9 $1,503.6 $1,436.5 $1,651.3 $1,703.2
======== ======== ======== ======== ========
Memo: Managed Assets $365.3 $302.5 $293.2 $316.6 $325.2
Asset Quality ($ in Millions) - EOP
Nonaccrual Loans $92.4 $93.4 $106.5 $109.7 $117.9
Other Real Estate Owned (OREO) 1.2 1.2 1.1 0.9 0.8
-------- --------- -------- -------- --------
Total Nonperforming Assets $93.6 $94.6 $107.6 $110.6 $118.7
======== ======== ======== ======== ========
Nonperforming Assets / Loans & OREO 0.52% 0.52% 0.60% 0.61% 0.67%
Gross Charge-offs $6.0 $11.2 $13.5 $5.4 $6.5
Gross Recoveries 2.6 3.8 1.6 0.4 0.2
-------- --------- -------- -------- --------
Net Charge-offs $3.4 $7.4 $11.9 $5.0 $6.3
======== ======== ======== ======== ========
Net Charge-offs (Annualized) to Average Loans 0.08% 0.17% 0.27% 0.11% 0.14%
Reserve for Credit Losses Assigned to Loans $162.4 $161.1 $160.3 $153.3 $153.3
Reserve to Nonaccrual Loans 176% 172% 151% 140% 130%
Reserve for Other Credit-Related Exposures $7.7 $7.4 $8.1 $7.0 $7.0