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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_____________to_____________
Commission File Number 0-5965
NORTHERN TRUST CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-2723087
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 SOUTH LA SALLE STREET
CHICAGO, ILLINOIS 60675
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312)630-6000
---------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]
56,272,053 Shares - $1.66 2/3 Par Value
(Shares of Common Stock Outstanding on June 30, 1996)
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEET NORTHERN TRUST CORPORATION
June 30 December 31 June 30
-------------- ------------ ------------
($ In Millions) 1996 1995 1995
- ----------------------------------------------------------------------- -------------- ------------ ------------
Assets
Cash and Due from Banks $ 1,232.9 $ 1,308.9 $ 1,092.8
Money Market Assets
Federal Funds Sold and Securities Purchased under Agreements to Resell 361.3 162.1 404.0
Time Deposits with Banks 1,905.4 1,567.6 1,654.5
Other 78.5 54.5 12.6
- ----------------------------------------------------------------------- -------------- ------------ ------------
Total 2,345.2 1,784.2 2,071.1
- ----------------------------------------------------------------------- -------------- ------------ ------------
Securities (Fair value $6,323.1 at June 1996, $5,787.8 at December 1995
and $5,656.0 at June 1995) 6,303.3 5,760.3 5,624.6
Loans and Leases (Net of unearned income of $91.1 at June 1996, $89.6
at December 1995, and $75.6 at June 1995) 10,405.2 9,906.0 9,421.8
Reserve for Credit Losses (147.4) (147.1) (145.9)
Buildings and Equipment 289.2 281.5 278.2
Customers' Acceptance Liability 34.0 35.8 47.1
Trust Security Settlement Receivables 382.8 327.1 287.0
Other Assets 906.0 676.8 624.4
- ----------------------------------------------------------------------- -------------- ------------ ------------
Total Assets $ 21,751.2 $ 19,933.5 $ 19,301.1
- ----------------------------------------------------------------------- -------------- ------------ ------------
Liabilities
Deposits
Demand and Other Noninterest-Bearing $ 2,892.6 $ 2,853.1 $ 2,543.5
Savings and Money Market Deposits 3,689.6 3,385.3 3,008.2
Savings Certificates 2,063.6 2,158.8 2,028.5
Other Time 456.7 384.3 367.0
Foreign Offices - Demand 382.4 459.8 327.8
- Time 3,782.9 3,246.9 2,972.3
- ----------------------------------------------------------------------- -------------- ------------ ------------
Total Deposits 13,267.8 12,488.2 11,247.3
Federal Funds Purchased 1,096.0 2,300.1 1,063.9
Securities Sold Under Agreements to Repurchase 1,699.0 1,858.7 1,066.3
Commercial Paper 144.2 146.7 147.3
Other Borrowings 3,077.2 875.9 3,415.9
Senior Notes 205.0 17.0 317.0
Notes Payable 332.1 334.6 241.1
Liability on Acceptances 34.0 35.8 47.1
Other Liabilities 402.2 423.9 364.9
- ----------------------------------------------------------------------- -------------- ------------ ------------
Total Liabilities 20,257.5 18,480.9 17,910.8
- ----------------------------------------------------------------------- -------------- ------------ ------------
Stockholders' Equity
Preferred Stock 120.0 170.0 170.0
Common Stock - $1.66 2/3 Par Value 95.0 93.6 93.4
June 1996 December 1995 June 1995
- -------------------------------------------------------------------
Shares authorized 140,000,000 140,000,000 140,000,000
Shares issued 56,979,579 56,158,064 56,035,628
Shares outstanding 56,272,053 55,664,412 55,870,628
Capital Surplus 329.5 306.1 307.2
Retained Earnings 1,016.4 928.8 847.0
Net Unrealized Gain (Loss) on Securities (1.1) 2.6 (2.1)
Common Stock Issuable - Performance Plan 10.4 14.7 16.7
Deferred Compensation - ESOP and Other (37.7) (39.4) (35.3)
Treasury Stock - (at cost, 707,526 shares at June 1996, 493,652 shares at
December 1995, and 165,000 shares at June 1995) (38.8) (23.8) (6.6)
- ----------------------------------------------------------------------- -------------- ------------ ------------
Total Stockholders' Equity 1,493.7 1,452.6 1,390.3
- ----------------------------------------------------------------------- -------------- ------------ ------------
Total Liabilities and Stockholders' Equity $ 21,751.2 $ 19,933.5 $ 19,301.1
- ----------------------------------------------------------------------- -------------- ------------ ------------
2
CONSOLIDATED STATEMENT OF INCOME NORTHERN TRUST CORPORATION
Second Quarter
Ended June 30 Six Months Ended June 30
---------------------------- ----------------------------
($ In Millions Except Per Share Information) 1996 1995 1996 1995
- ------------------------------------------------------------ ------------ ------------ ------------ ------------
Interest Income
Money Market Assets
Federal Funds Sold and Securities Purchased
under Agreements to Resell $ 3.4 $ 3.9 $ 7.2 $ 7.4
Time Deposits with Banks 20.9 20.8 43.7 47.5
Other .8 .3 1.6 .5
- ------------------------------------------------------------ ------------ ------------ ------------ ------------
Total 25.1 25.0 52.5 55.4
- ------------------------------------------------------------ ------------ ------------ ------------ ------------
Securities 91.7 89.1 185.3 174.2
Loans and Leases 169.3 157.0 333.2 302.7
- ------------------------------------------------------------ ------------ ------------ ------------ ------------
Total Interest Income 286.1 271.1 571.0 532.3
- ------------------------------------------------------------ ------------ ------------ ------------ ------------
Interest Expense
Deposits - Savings and Money Market Deposits 28.6 27.4 56.7 54.0
- Savings Certificates 29.3 30.6 60.2 55.1
- Other Time 6.2 8.0 14.6 14.4
- Foreign Offices 45.5 47.2 89.6 97.8
Federal Funds Purchased 22.5 16.1 51.2 32.2
Securities Sold under Agreements to Repurchase 28.0 25.0 54.1 49.1
Commercial Paper 2.0 2.2 3.9 4.3
Other Borrowings 18.7 15.9 31.5 26.4
Senior Notes 3.4 5.8 7.5 12.7
Notes Payable 6.4 4.9 12.8 9.8
- ------------------------------------------------------------ ------------ ------------ ------------ ------------
Total Interest Expense 190.6 183.1 382.1 355.8
- ------------------------------------------------------------ ------------ ------------ ------------ ------------
Net Interest Income 95.5 88.0 188.9 176.5
Provision for Credit Losses 4.0 1.5 9.0 3.0
- ------------------------------------------------------------ ------------ ------------ ------------ ------------
Net Interest Income after Provision for Credit Losses 91.5 86.5 179.9 173.5
- ------------------------------------------------------------ ------------ ------------ ------------ ------------
Noninterest Income
Trust Fees 148.7 123.3 292.6 244.1
Security Commissions and Trading Income 6.4 5.2 12.7 11.1
Other Operating Income 40.0 39.9 77.2 74.7
Investment Security Gains .1 .1 .4 .2
- ------------------------------------------------------------ ------------ ------------ ------------ ------------
Total Noninterest Income 195.2 168.5 382.9 330.1
- ------------------------------------------------------------ ------------ ------------ ------------ ------------
Income before Noninterest Expenses 286.7 255.0 562.8 503.6
- ------------------------------------------------------------ ------------ ------------ ------------ ------------
Noninterest Expenses
Salaries 90.0 84.4 177.7 166.9
Pension and Other Employee Benefits 18.4 20.8 38.8 42.3
Occupancy Expense 15.6 15.3 31.4 29.5
Equipment Expense 13.8 12.0 27.4 24.6
Other Operating Expenses 53.8 45.4 100.3 91.9
- ------------------------------------------------------------ ------------ ------------ ------------ ------------
Total Noninterest Expenses 191.6 177.9 375.6 355.2
- ------------------------------------------------------------ ------------ ------------ ------------ ------------
Income before Income Taxes 95.1 77.1 187.2 148.4
Provision for Income Taxes 31.7 24.0 62.3 46.0
- ------------------------------------------------------------ ------------ ------------ ------------ ------------
Net Income $ 63.4 $ 53.1 $ 124.9 $ 102.4
- ------------------------------------------------------------ ------------ ------------ ------------ ------------
Net Income Applicable to Common Stock $ 62.2 $ 50.9 $ 122.4 $ 98.1
- ------------------------------------------------------------ ------------ ------------ ------------ ------------
Net Income Per Common Share - Primary $ 1.08 $ .90 $ 2.13 $ 1.75
- Fully Diluted 1.08 .89 2.12 1.74
- ------------------------------------------------------------ ------------ ------------ ------------ ------------
Average Number of Common Shares Outstanding - Primary 57,444,717 56,878,030 57,467,827 56,027,938
- Fully Diluted 57,585,575 58,178,442 57,804,774 57,340,009
- ------------------------------------------------------------ ------------ ------------ ------------ ------------
3
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY NORTHERN TRUST CORPORATION
Six Months
Ended June 30
-----------------------
(In Millions) 1996 1995
- ---------------------------------------------------------------- ---------- ----------
Preferred Stock
Balance at January 1 $ 170.0 $ 170.0
Conversion of Preferred Stock, Series E (50.0) -
- ---------------------------------------------------------------- -----------------------
Balance at June 30 120.0 170.0
- ---------------------------------------------------------------- -----------------------
Common Stock
Balance at January 1 93.6 90.6
Stock Issued - Incentive Plan and Awards .1
Stock Issued in Acquisitions 2.7
Conversion of Preferred Stock, Series E 1.4 -
- ---------------------------------------------------------------- -----------------------
Balance at June 30 95.0 93.4
- ---------------------------------------------------------------- -----------------------
Capital Surplus
Balance at January 1 306.1 302.2
Stock Issued - Incentive Plan and Awards (5.8) (1.9)
Stock Issued in Acquisitions 6.9
Conversion of Preferred Stock, Series E 29.2 -
- ---------------------------------------------------------------- -----------------------
Balance at June 30 329.5 307.2
- ---------------------------------------------------------------- -----------------------
Retained Earnings
Balance at January 1 928.8 762.7
Net Income 124.9 102.4
Dividends Declared on Common Stock (35.0) (28.7)
Dividends Declared on Preferred Stock (2.3) (4.5)
Pooled Affiliates 15.1
- ---------------------------------------------------------------- -----------------------
Balance at June 30 1,016.4 847.0
- ---------------------------------------------------------------- -----------------------
Net Unrealized Gain (Loss) on Securities
Balance at January 1 2.6 (15.8)
Unrealized Gain (Loss), net (3.7) 13.7
- ---------------------------------------------------------------- -----------------------
Balance at June 30 (1.1) (2.1)
- ---------------------------------------------------------------- -----------------------
Common Stock Issuable - Performance Plan
Balance at January 1 14.7 17.9
Stock Issuable, net of Stock Issued (4.3) (1.2)
- ---------------------------------------------------------------- -----------------------
Balance at June 30 10.4 16.7
- ---------------------------------------------------------------- -----------------------
Deferred Compensation - ESOP and Other
Balance at January 1 (39.4) (38.8)
Compensation Deferred (1.9) (1.4)
Compensation Amortized 3.6 4.9
- ---------------------------------------------------------------- -----------------------
Balance at June 30 (37.7) (35.3)
- ---------------------------------------------------------------- -----------------------
Treasury Stock
Balance at January 1 (23.8) (8.1)
Stock Options and Awards 28.9 11.0
Stock Purchased (63.1) (9.5)
Conversion of Preferred Stock, Series E 19.2 -
- ---------------------------------------------------------------- -----------------------
Balance at June 30 (38.8) (6.6)
- ---------------------------------------------------------------- -----------------------
Total Stockholders' Equity at June 30 $1,493.7 $1,390.3
- ---------------------------------------------------------------- -----------------------
4
CONSOLIDATED STATEMENT OF CASH FLOWS NORTHERN TRUST CORPORATION
Six Months
Ended June 30
-----------------------
(In Millions) 1996 1995
- -------------------------------------------------------------------------- ------------ ----------
Cash Flows from Operating Activities:
Net Income $ 124.9 $ 102.4
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Provision for Credit Losses 9.0 3.0
Depreciation on Buildings and Equipment 23.7 21.3
Increase in Interest Receivable (7.9)
Increase in Interest Payable 3.0 9.7
Amortization and Accretion of Securities and Unearned Income (55.7) (88.6)
Amortization of Software, Goodwill and Other Intangibles 21.9 18.1
Net (Increase) Decrease in Trading Account Securities 85.6 (51.9)
Other Noncash, net (237.9) 2.6
- -------------------------------------------------------------------------- ------------ ----------
Net Cash Provided by (Used in) Operating Activities (25.5) 8.7
- -------------------------------------------------------------------------- ------------ ----------
Cash Flows from Investing Activities:
Net (Increase) Decrease in Federal Funds Sold and Securities Purchased under Agreements to Resell (199.2) 386.1
Net (Increase) Decrease in Time Deposits with Banks (337.8) 210.2
Net Increase in Other Money Market Assets (24.0) (3.1)
Purchases of Securities-Held to Maturity (6,400.3) (501.0)
Proceeds from Maturity and Redemption of Securities-Held to Maturity 6,434.7 594.3
Purchases of Securities-Available for Sale (20,273.3) (15,315.8)
Proceeds from Sale, Maturity and Redemption of Securities-Available for Sale 19,648.2 14,889.6
Net Increase in Loans and Leases (510.5) (737.3)
Net Purchases of Buildings and Equipment (31.4) (20.2)
Net (Increase) Decrease in Trust Security Settlement Receivables (55.7) 18.7
Other, net (13.4) 2.4
- -------------------------------------------------------------------------- ------------ ----------
Net Cash Used in Investing Activities (1,762.7) (476.1)
- -------------------------------------------------------------------------- ------------ ----------
Cash Flows from Financing Activities:
Net Increase (Decrease) in Deposits 779.6 (666.5)
Net Increase (Decrease) in Federal Funds Purchased (1,204.1) 91.9
Net Decrease in Securities Sold under Agreement to Repurchase (159.7) (1,150.6)
Net Increase (Decrease) in Commercial Paper (2.5) 23.5
Net Increase in Short-Term Other Borrowings 2,358.2 2,346.0
Proceeds from Term Federal Funds Purchased 1,340.9 1,341.3
Repayments of Term Federal Funds Purchased (1,497.8) (1,349.3)
Proceeds from Senior Notes & Notes Payable 701.5 -
Repayments of Senior Notes & Notes Payable (516.0) (233.7)
Treasury Stock Purchased (58.8) (8.5)
Net Proceeds from Stock Options 5.2 1.7
Cash Dividends Paid on Common and Preferred Stock (37.3) (32.7)
Other, net 3.0 4.6
- -------------------------------------------------------------------------- ------------ ----------
Net Cash Provided by Financing Activities 1,712.2 367.7
- -------------------------------------------------------------------------- ------------ ----------
Decrease in Cash and Due from Banks (76.0) (99.7)
Cash and Due from Banks at Beginning of Year 1,308.9 1,192.5
- -------------------------------------------------------------------------- ------------ ----------
Cash and Due from Banks at June 30 $ 1,232.9 $ 1,092.8
- -------------------------------------------------------------------------- ------------ ----------
Schedule of Noncash Investing and Financing Activities:
Conversion of Preferred Stock, Series E to Common Stock $ 49.7 $ -
Acquisition of Affiliate for Stock 24.7
Supplemental Disclosures of Cash Flow Information:
Interest Paid on Deposits and Short- and Long-Term Borrowings $ 379.1 $ 345.7
Income Taxes Paid 34.9 31.3
- -------------------------------------------------------------------------- ------------ ----------
5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION - The consolidated financial statements include
the accounts of Northern Trust Corporation and its subsidiaries ("Northern
Trust"), all of which are wholly owned. Significant intercompany balances and
transactions have been eliminated. The consolidated financial statements as of
June 30, 1996 and 1995 have not been audited by independent public accountants.
In the opinion of management, all adjustments necessary for a fair presentation
of the financial position and the results of operations for the interim periods
have been made. All such adjustments are of a normal recurring nature. For a
description of Northern Trust's significant accounting principles, refer to the
Notes to Consolidated Financial Statements in the 1995 Annual Report to
Stockholders.
2. SECURITIES - The following table summarizes the book and fair values of
securities.
June 30, 1996 December 31, 1995 June 30, 1995
-------------------------------------------------------------------
Book Fair Book Fair Book Fair
(In Millions) Value Value Value Value Value Value
- ------------------------------------------------------------------------------------------------
Held to Maturity
U.S. Government $ 114.2 $ 114.1 $ 116.1 $ 116.3 $ 88.1 $ 88.2
Obligations of States and
Political Subdivisions 341.3 361.2 366.9 394.0 434.7 466.2
Federal Agency 18.2 18.2 22.2 22.4 22.7 22.6
Other 30.4 30.4 29.9 29.9 29.2 29.1
- ------------------------------------------------------------------------------------------------
Subtotal 504.1 523.9 535.1 562.6 574.7 606.1
- ------------------------------------------------------------------------------------------------
Available for Sale
U.S. Government 1,763.9 1,763.9 1,667.7 1,667.7 729.3 729.3
Obligations of States and
Political Subdivisions 79.5 79.5 70.2 70.2 - -
Federal Agency 3,779.9 3,779.9 3,152.8 3,152.8 3,936.4 3,936.4
Preferred Stock 110.7 110.7 147.8 147.8 188.0 188.0
Other 61.9 61.9 97.8 97.8 140.3 140.3
- ------------------------------------------------------------------------------------------------
Subtotal 5,795.9 5,795.9 5,136.3 5,136.3 4,994.0 4,994.0
- ------------------------------------------------------------------------------------------------
Trading Account 3.3 3.3 88.9 88.9 55.9 55.9
- ------------------------------------------------------------------------------------------------
Total Securities $6,303.3 $6,323.1 $5,760.3 $5,787.8 $5,624.6 $5,656.0
- ------------------------------------------------------------------------------------------------
Reconciliation of Book Values to Fair Values of
Securities Held to Maturity June 30, 1996
- ------------------------------------------------------------------------------------------------
Gross Unrealized
Book ---------------- Fair
(In Millions) Value Gains Losses Value
- -----------------------------------------------------------------------------------------------
Held to Maturity
U.S. Government $114.2 $ - $ .1 $114.1
Obligations of States and
Political Subdivisions 341.3 20.3 .4 361.2
Federal Agency 18.2 .1 .1 18.2
Other 30.4 - - 30.4
- ----------------------------------------------------------------------------------------------
Total $504.1 $20.4 $ .6 $523.9
- ----------------------------------------------------------------------------------------------
6
Reconciliation of Amortized Cost to Fair Values of
Securities Available for Sale June 30, 1996
- ------------------------------------------------------------------------------------------------
Gross Unrealized
Amortized ---------------- Fair
(In Millions) Cost Gains Losses Value
- ------------------------------------------------------------------------------------------------
Available for Sale
U.S. Government $1,766.1 $ 1.7 $ 3.9 $1,763.9
Obligations of States and
Political Subdivisions 79.3 1.9 1.7 79.5
Federal Agency 3,780.0 2.6 2.7 3,779.9
Preferred Stock 111.0 - .3 110.7
Other 62.7 .8 1.6 61.9
- ------------------------------------------------------------------------------------------------
Total $5,799.1 $ 7.0 $10.2 $5,795.9
- ------------------------------------------------------------------------------------------------
Unrealized gains and losses on off-balance sheet financial instruments used to
hedge available for sale securities totaled $4.6 million and $3.1 million,
respectively, as of June 30, 1996. Unrealized gains on these hedges are
reported as other assets in the consolidated balance sheet; unrealized losses
are reported as other liabilities. As of June 30, 1996, stockholders' equity
included a charge of $1.1 million, net of tax, to recognize the depreciation on
securities available for sale and the related hedges.
3. PLEDGED ASSETS - Securities and loans pledged to secure public and trust
deposits, repurchase agreements and for other purposes as required or permitted
by law were $6.3 billion on June 30, 1996, $3.9 billion on December 31, 1995 and
$5.2 billion on June 30, 1995.
4. CONTINGENT LIABILITIES - Standby letters of credit outstanding were $1.3
billion on June 30, 1996, $1.0 billion on December 31, 1995 and $848.0 million
on June 30, 1995.
5. LOANS AND LEASES - Amounts outstanding in selected loan categories are
shown below:
June 30 December 31 June 30
-------------------------------------------------------
(In Millions) 1996 1995 1995
- ----------------------------------------------------------------------------------------------
Domestic
Commercial $ 3,293.8 $3,202.1 $3,185.6
Residential Real Estate 4,300.8 3,896.4 3,550.2
Commercial Real Estate 577.9 512.6 471.1
Broker 284.2 304.0 241.8
Consumer 803.4 758.9 734.2
Other 468.0 625.5 673.3
Lease Financing 209.3 202.3 163.4
- ----------------------------------------------------------------------------------------------
Total Domestic 9,937.4 9,501.8 9,019.6
International 467.8 404.2 402.2
- ----------------------------------------------------------------------------------------------
Total Loans and Leases $10,405.2 $9,906.0 $9,421.8
- ----------------------------------------------------------------------------------------------
7
At June 30, 1996, other domestic and international loans include $588.6 million
of overnight trust-related advances in connection with next day security
settlements, compared with $810.4 million at December 31, 1995 and $842.1
million at June 30, 1995.
At June 30, 1996, nonperforming loans totaled $38.9 million. Included in this
amount were loans with a recorded investment of $35.4 million which were also
classified as impaired. A loan is impaired when, based on current information
and events, it is probable that a creditor will be unable to collect all amounts
due according to the contractual terms of the loan agreement. Impaired loans
totaling $14.6 million had no portion of the reserve for credit losses allocated
to them, while $20.8 million had an allocated reserve of $1.0 million. For the
second quarter of 1996, the total recorded investment in impaired loans averaged
$27.8 million. Total interest income recorded on impaired loans for the quarter
ended June 30, 1996 was $166 thousand, recognized principally on the cash-basis
method of accounting.
At June 30, 1995, nonperforming loans totaled $33.3 million and included $30.0
million of impaired loans. $26.0 million of these impaired loans had no reserve
allocation while $4.0 million had an allocated reserve of $.7 million. Impaired
loans for the second quarter of 1995 averaged $26.4 million with $230 thousand
of interest income recognized principally on the cash-basis method.
6. RESERVE FOR CREDIT LOSSES - Changes in the reserve for credit losses were as
follows:
Six Months Ended June 30
- ------------------------------------------------------------------
(In Millions) 1996 1995
- ------------------------------------------------------------------
Balance at Beginning of Period $147.1 $144.8
Charge-Offs (9.8) (5.6)
Recoveries 1.1 2.6
- ------------------------------------------------------------------
Net Charge-Offs (8.7) (3.0)
- ------------------------------------------------------------------
Provision for Credit Losses 9.0 3.0
Reserve Related to Acquisition - 1.1
- -----------------------------------------------------------------
Balance at End of Period $147.4 $145.9
- -----------------------------------------------------------------
7. ACQUISITIONS - In August 1996, Northern Trust Corporation entered into a
definitive agreement to acquire Metroplex Bancshares, Inc., parent company of
Bent Tree National Bank in Dallas, Texas for approximately $14.6 million in
cash. Bent Tree's assets totaled $80.4 million at June 30, 1996 and net income
totaled $1.1 million for the first six months of the year. The agreement is
subject to the approval of Metroplex shareholders and to various regulatory
approvals, and is expected to close in the the fourth quarter of 1996.
8
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
SECOND QUARTER EARNINGS HIGHLIGHTS
Net income for the second quarter totaled a record $63.4 million, an increase of
19% from the $53.1 million reported in the second quarter of 1995. Net income
per common share on a fully diluted basis increased 21% to $1.08 from $.89 in
1995. This earnings performance produced an annualized return on average common
equity (ROE) of 18.47% versus 17.09% reported last year, and an annualized
return on average assets (ROA) of 1.21% versus 1.13% in 1995. Total revenues on
a taxable equivalent basis in the quarter increased 13% to $299.5 million with
trust fees and net interest income at record levels, while noninterest expenses
increased 8%.
NONINTEREST INCOME
Noninterest income increased 16% and totaled $195.2 million for the quarter,
accounting for 65% of total taxable equivalent revenue. Trust fees of $148.7
million increased 21% or $25.4 million over the like period of 1995, and now
represent 76% of noninterest income and 50% of total taxable equivalent revenue.
Fees generated by RCB International, Inc. (RCB), an October 31, 1995
acquisition, accounted for $6.5 million of the trust fee growth. Exclusive of
these fees, trust fees increased 15% compared to the second quarter of last
year, driven by record new business, increased transaction volumes and higher
market values of trust assets. Trust assets under administration at June 30,
1996 increased 26% and totaled $692.9 billion compared to $549.3 billion a year
ago.
Trust fees from Corporate and Institutional Services (C&IS) increased $17.2
million to $76.4 million. Exclusive of the RCB contribution, C&IS trust fees
increased $10.7 million or 18% from the year-ago quarter. The increase in fees
reflects substantial new business, record securities lending results and strong
revenue growth in global custody, investment management and retirement services.
Net new business sold in the first half of the year has been strong and is
equivalent to all of the new business sold in 1995. The transition of this new
business sold to date is expected to continue through the third quarter of 1996.
Custody fees increased $3.4 million or 13% and totaled $30.4 million for the
quarter. The growth was particularly strong in global custody which was driven
by increased transaction-based fees and new business. Domestic securities
lending fees, up 63% versus last year, reflect a 46% increase in the volume of
securities loaned as well as a modest increase in the spread earned from the
investment of the cash collateral. International securities lending fees
increased 62% during the quarter, driven by a 58% increase in the volume of
securities loaned and an improved spread earned on the investment of the cash
collateral. Fees from retirement services generated by Hazlehurst & Associates,
Inc. increased 19%, principally from new business. Investment management fees
increased 41% driven by new business and growth in customized products tailored
to client needs.
9
C&IS trust assets under administration grew 27% or $131.3 billion over last year
and now total $616.2 billion. C&IS trust assets under the management of Northern
Trust total $74.8 billion, up 43% from a year ago.
Trust fees from Personal Financial Services (PFS) increased 13% from the prior
year level of $64.1 million and totaled $72.3 million for the second quarter,
reflecting strong growth throughout Northern Trust's five-state network of PFS
offices. PFS trust fee growth resulted primarily from new business and higher
market values of the assets administered. Net new recurring business sold
through the first six months is up 25% from the year-ago period. During the
second quarter of 1996, Northern Trust expanded its distribution capabilities
for personal trust and private banking services with the opening of new offices
in Sun City West, Arizona, Stuart, Florida and Barrington, Illinois. At June 30,
1996, Northern Trust's network of PFS offices totaled 55 locations throughout
Illinois, Florida, California, Arizona and Texas. Trust fees from the four
states outside of Illinois now comprise about one-half of total PFS trust fees.
Total personal trust assets under administration increased $12.3 billion from
the prior year and totaled $76.7 billion at June 30, 1996, with $45.1 billion
under management.
Security commissions and trading income totaled $6.4 million compared with $5.2
million reported in the second quarter of 1995 due to higher brokerage
commission revenue at Northern Trust Securities, Inc. This increase resulted
primarily from a higher volume of trading activity by individual investors.
Other operating income totaled $40.0 million in the quarter, essentially
unchanged from the like quarter of 1995. The principal items included in other
operating income are foreign exchange trading profits and treasury management
fees. Foreign exchange trading profits were $15.1 million, an increase of 20%
from the first quarter of 1996 but down 3% from the strong performance in the
second quarter of 1995. Foreign exchange trading profits, generated in both
Chicago and London, are impacted by the level of cross-border investment
activities of Master Trust/Master Custody clients and market volatility. The fee
component of treasury management revenues rose 20% to $14.5 million compared to
the prior year. Total treasury management revenues, including both fees and the
computed value of compensating deposit balances, were $22.0 million,
representing a 13% increase from the second quarter of 1995. The compensating
deposit balances contributed to the increase in net interest income. The
improvement in treasury management revenues resulted from new business growth in
both paper- and electronic-based products. The year to year comparison of
treasury management revenues was also impacted by a $.7 million decrease in the
amount of FDIC insurance premiums that were passed through to clients in 1995
and included in treasury management results. Other operating income in the
second quarter of 1995 benefited by $1.3 million in gains from the sale of lease
residuals compared to nominal gains in the current quarter. In addition, other
operating income in the quarter reflected the elimination of float-related
compensation as a result of the Depository Trust Company's first quarter 1996
conversion to a same-day settlement basis for security transactions.
10
NET INTEREST INCOME
Net interest income for the second quarter totaled a record $95.5 million, 9%
higher than the $88.0 million reported in the second quarter of 1995. Net
interest income is defined as the total of interest income and amortized fees on
earning assets, less interest expense on deposits and borrowed funds, adjusted
for the impact of off-balance sheet hedging activity. When net interest income
is adjusted to a fully taxable equivalent (FTE) basis, yields on taxable,
nontaxable and partially taxable assets are comparable, although the adjustment
to a FTE basis has no impact on net income. Net interest income on a FTE basis
for the second quarter was $104.3 million, up 7% from the $97.5 million reported
in 1995. The increase in net interest income reflects growth in noninterest-
related funds and higher levels of earning assets, primarily in residential
mortgages, commercial and industrial loans and short-term U.S. Government and
federal agency securities. These factors were partially offset by a decline in
the net interest margin to 2.22% from 2.35% reported in the second quarter of
1995.
Earning assets for the second quarter averaged $18.9 billion, up 14% from the
$16.7 billion average for the second quarter of 1995. The $2.2 billion growth in
average earning assets reflected a 13% or $1.2 billion increase in average
loans, and a $.8 billion or 14% growth in average security holdings. Money
market assets totaled $2.0 billion on average for the quarter, up 13% from the
like period of 1995.
The loan growth was concentrated primarily in the domestic portfolio.
Residential mortgages increased 20% to average $4.2 billion and now comprise 41%
of the total average loan portfolio. Commercial and industrial loans averaged
$3.3 billion during the second quarter of 1996 compared to $3.1 billion last
year. Securities for the quarter increased $.8 billion on average to $6.7
billion, due primarily to a 21% increase in short-term U.S. Government and
federal agency securities.
Funding for the growth in earning assets came from several sources. Total
interest-bearing deposits averaged $10.0 billion, up $575 million from the
second quarter of 1995. This growth came principally from savings and money
market deposits (up $371 million), and foreign office time deposits (up $228
million). Short-term funds were also raised utilizing federal funds purchased,
repurchase agreements, and other borrowings. The growth in other borrowings was
concentrated primarily in higher treasury tax and loan account balances.
Noninterest-related funds increased $257 million and averaged $2.8 billion due
in large part to growth in common stockholders' equity. Common stockholders'
equity increased $159 million or 13% and averaged $1.35 billion due primarily to
growth in retained earnings. The remaining increase in noninterest-related funds
was concentrated in foreign demand and trust-related deposits. The net interest
margin decreased 13 basis points to 2.22% compared with 2.35% last year due
primarily to lower spreads earned on the higher volume of U.S. Government and
federal agency securities.
11
PROVISION FOR CREDIT LOSSES
The provision for credit losses of $4.0 million was up $2.5 million from the low
level reported in the second quarter of 1995. For a discussion of the provision
and reserve for credit losses, refer to the Asset Quality section.
NONINTEREST EXPENSES
Noninterest expenses totaled $191.6 million for the quarter, up $13.7 million or
8% from $177.9 million in the second quarter of 1995. Operating expenses of the
two businesses acquired in the second half of 1995 accounted for approximately
$7.5 million of this increase, while the reduction in FDIC insurance premiums
during the second half of 1995 lowered expenses by $4.2 million. Expenses for
the current quarter were adversely affected by $4.1 million in costs
attributable to errors in the processing of three transactions by the capital
structures unit of global custody operations. Excluding the increases
attributable to acquisitions and these processing costs and the decline due to
lower FDIC premiums, expense growth would have been 4%. The increase in
noninterest expenses also reflects the support necessary for higher levels of
trust new business and treasury management and global custody volumes, as well
as costs associated with PFS office expansion.
Salaries and benefits, which represent 57% of total noninterest expenses,
increased to $108.4 million from $105.2 million in the year-ago quarter. The
principal items contributing to the change were merit increases, incentive
compensation, and staff additions resulting from 1995 acquisitions and to
support Northern Trust's growing trust activities. These increases were
partially offset by a decline in staff levels in other areas and cost savings
from changes in several benefit plans effective January 1, 1996. Staff on a
full-time equivalent basis at June 30, 1996 totaled 6,698, up 3% from 6,531 at
the end of 1995.
Net occupancy expense totaled $15.6 million, up 2% from $15.3 million in the
second quarter of 1995, due in part to acquisitions and the opening of new
offices. The principal components of the increase were higher rent, real estate
taxes, and amortization and depreciation of leasehold improvements and
buildings, offset in part by lower levels of lease operating and building
maintenance costs.
Equipment expense, which includes depreciation, rental and maintenance costs,
totaled $13.8 million, up $1.8 million or 15% from the second quarter of 1995.
The principal components of the increase were higher levels of computer
equipment depreciation, maintenance and rental expenses.
Other operating expenses in the quarter totaled $53.8 million compared to $45.4
million last year. The $4.2 million reduction in FDIC insurance which took
effect in the second half of 1995 was offset by the $4.1 million in costs
attributable to processing errors within
12
global custody operations. Other operating expenses were also impacted by the
addition of professional service fees paid to RCB's network of investment
managers, and higher levels of software amortization, transaction-based
depository fees, and amortization expense of goodwill and other intangibles.
The components of other operating expenses were as follows:
Quarter Ended June 30
---------------------
(In Millions) 1996 1995
---- ----
Business Development $ 6.7 $ 6.1
Purchased Professional Services 18.3 14.0
Telecommunications 3.0 2.8
Postage and Supplies 5.3 5.3
FDIC Premium -- 4.2
Software Amortization 8.6 7.4
Goodwill and Other Intangibles Amortization
Amortization 2.4 1.6
Other Expense 9.5 4.0
_____ _____
Total Other Operating Expenses $53.8 $45.4
----- -----
PROVISION FOR INCOME TAXES
The provision for income taxes was $31.7 million for the second quarter compared
with $24.0 million in the year-ago quarter. The higher tax provision in 1996
resulted from the growth in taxable earnings for both federal and state income
tax purposes and a decline in tax-exempt income from the prior year. The
effective tax rate was 33% for 1996 versus 31% in 1995.
SIX MONTHS EARNINGS HIGHLIGHTS
Net income totaled $124.9 million for the six months ended June 30, 1996
compared to $102.4 million last year, an increase of 22%. On a fully diluted
basis, net income per common share also increased 22% to $2.12. The ROE for the
six month period was 18.41% versus 16.97% one year ago, while the ROA improved
to 1.20% from 1.11% in the same period of last year.
Noninterest income increased 16% to $382.9 million from $330.1 million in the
like period of 1995. Noninterest income comprised 65% of total taxable
equivalent revenue. Trust fees totaled $292.6 million, up 20% from $244.1
million last year. Security commissions and trading income totaled $12.7
million, up $1.6 million or 15% from the $11.1 million earned last year. Foreign
exchange trading profits were at record levels and totaled $27.6 million. The
fee portion of treasury management revenues totaled $27.5 million, up 12% from
the $24.4 million reported in 1995. Total treasury management revenues, which,
in addition to fees, include the computed value of compensating deposit
balances, increased
13
10% and totaled $42.5 million. These compensating deposit balances also
contributed to the improvement in net interest income.
Net interest income stated on a fully taxable equivalent basis totaled $206.3
million, up 5% from the $195.6 million in the like period of 1995. The provision
for credit losses increased $6.0 million to $9.0 million in 1996. Net loan
charge-offs increased to $8.7 million from $3.0 million in the prior year.
Noninterest expenses totaled $375.6 million, up 6% from $355.2 million in 1995.
BALANCE SHEET
Total assets at June 30, 1996 were $21.8 billion and averaged $20.9 billion for
the first six months, up 13% from last year's average of $18.6 billion. Due to
increased lending activity, in addition to the July 31, 1995 acquisition of
Tanglewood Bank, loans and leases grew to $10.4 billion at June 30, 1996, and
averaged $10.0 billion for the first six months. This compares with $9.4 billion
in total loans at June 30, 1995 and $8.8 billion on average for the first six
months of last year.
Driven primarily by continued strong earnings growth and the first quarter 1996
conversion of the Series E convertible preferred stock, common stockholders'
equity increased 15% to average $1.34 billion for the first six months, versus
$1.17 billion last year. Total stockholders' equity averaged $1.47 billion
compared with $1.34 billion in 1995.
During the quarter, the Northern Trust Corporation acquired 590,211 of its own
shares at a total cost of $32.6 million pursuant to the 4 million share buyback
program authorized by the Board of Directors in 1994. This brought the total
number of shares acquired in 1996 to 1,156,517 leaving an additional 1.1 million
shares remaining to be acquired under this program. Northern Trust's risk-based
capital ratios remained strong at 8.4% for tier 1 and 11.7% for total capital at
June 30, 1996. These capital ratios are well above the minimum regulatory
requirements of 4% for tier 1 and 8% for total risk-based capital ratios. The
leverage ratio (tier 1 capital to second quarter average assets) of 6.2% at June
30, 1996, also exceeded the regulatory requirement of 3%.
ASSET QUALITY
Nonperforming assets consist of nonaccrual loans, restructured loans and other
real estate owned (OREO). Nonperforming assets at June 30, 1996 totaled $40.5
million, compared with $33.7 million at December 31, 1995 and $34.5 million at
June 30, 1995. Nonaccrual and restructured loans and leases, consisting
primarily of commercial loans, totaled $38.9 million, or .37% of total loans and
leases at June 30, 1996. Included in this total are commercial real estate loans
of $29.0 million. At December 31, 1995 and June 30, 1995, nonaccrual and
restructured loans and leases totaled $31.9 million and $33.3 million,
respectively.
14
The following Nonperforming Asset table presents the outstanding amounts of
nonaccrual loans and leases, restructured loans and OREO. Also shown are
loans that have interest or principal payments that are delinquent 90 days
or more and are still accruing interest. The balance in this category at
any quarter end can fluctuate widely based on the timing of cash
collections, renegotiations and renewals.
Nonperforming Assets and 90 Day Past Due Loans and Leases
June 30 March 31 December 31 June 30
(In Millions) 1996 1996 1995 1995
- ------------------------------------------------------------------------------------------------------------------
Nonaccrual Loans and Leases
Domestic $36.2 $27.9 $29.0 $29.8
International - - .2 .7
- ------------------------------------------------------------------------------------------------------------------
Total Nonaccrual Loans and Leases 36.2 27.9 29.2 30.5
Restructured Loans 2.7 2.7 2.7 2.8
OREO 1.6 1.5 1.8 1.2
- ------------------------------------------------------------------------------------------------------------------
Total Nonperforming Assets $40.5 $32.1 $33.7 $34.5
- ------------------------------------------------------------------------------------------------------------------
Total 90 Day Past Due Loans
(still accruing) $14.6 $36.9 $22.0 $14.1
- ------------------------------------------------------------------------------------------------------------------
PROVISION AND RESERVE FOR CREDIT LOSSES. The provision for credit losses
is the charge against current earnings that is determined by management
through a disciplined credit review process as the amount needed to
maintain a reserve that is sufficient to absorb credit losses inherent in
the loan and lease portfolios and other credit undertakings. While the
largest portion of this reserve is intended to cover loan and lease losses,
it is considered a general reserve that is available to cover all credit-
related exposures.
The 1996 second quarter provision for credit losses was $4.0 million,
compared with $1.5 million in the second quarter of 1995. Net charge-offs
totaled $3.8 million in the second quarter of 1996, versus $1.4 million
last year. The reserve for credit losses was $147.4 million or 1.42% of
outstanding loans at June 30, 1996. This compares with $147.1 million or
1.49% of outstanding loans at December 31, 1995 and $145.9 million or 1.55%
of outstanding loans at June 30, 1995. The lower reserve to outstanding
loans ratio at June 30, 1996 is attributable to loan growth, a significant
portion of which is in low-risk residential mortgage lending.
The overall credit quality of the domestic portfolio has remained good as
evidenced by the low level of nonperforming loans and relatively moderate
level of net charge-offs. Management's assessment of the current U.S.
economy and the financial condition of certain clients facing financial
difficulties together with the types of loans creating portfolio growth
were primary factors impacting management's decision to maintain the
reserve for credit losses at $147.4 million at June 30, 1996, essentially
unchanged from
15
December 31, 1995 and slightly higher than June 30, 1995. Although difficult to
predict, management presently expects that the provision for credit losses for
the balance of 1996 will be somewhat above the very low level experienced in the
comparable period of 1995.
Management continues to monitor closely several credits, but the overall quality
of its loan portfolio remains sound and the reserve for credit losses is
adequate to cover credit-related uncertainties as they exist today. Established
credit review procedures ensure that close attention is given to commercial real
estate-related loans and other commercial loans, as well as other credit
exposures that might be adversely affected by significant increases in interest
rates or unexpected downturns in segments of the economies of the United States
or other countries.
16
The following schedule should be read in conjunction with the Net Interest
Income section of Management's Discussion and Analysis of Financial Condition
and Results of Operations.
CONSOLIDATED ANALYSIS OF NET INTEREST INCOME
Second Quarter
-------------------------------------------------------------------
(Interest and rate on a taxable equivalent basis) 1996 1995
---------------------------------- -----------------------------
($ in Millions) Interest Volume Rate Interest Volume Rate
- ----------------------------------------------------- ---------- ------------ ------ -------- ---------- ------
Average Earning Assets
Money Market Assets
Federal Funds Sold and Securities Purchased
under Agreements to Resell $ 3.4 $ 254.4 5.51% $ 3.9 $ 258.2 6.21%
Time Deposits with Banks 20.9 1,678.2 4.99 20.8 1,483.8 5.62
Other .8 54.6 5.80 .3 13.9 6.68
- ----------------------------------------------------- ------ --------- ----- ------ --------- -----
Total Money Market Assets 25.1 1,987.2 5.08 25.0 1,755.9 5.72
- ----------------------------------------------------- ------ --------- ----- ------ --------- -----
Securities
U.S. Government 29.8 2,123.9 5.64 12.8 915.4 5.59
Obligations of States and Political Subdivisions 10.4 419.7 9.88 12.0 440.4 10.95
Federal Agency 55.5 3,975.4 5.62 65.9 4,115.6 6.42
Other 3.4 227.6 5.93 5.9 376.8 6.25
Trading Account .1 9.1 7.60 1.0 57.5 6.77
- ----------------------------------------------------- ------ --------- ----- ------ --------- -----
Total Securities 99.2 6,755.7 5.90 97.6 5,905.7 6.62
- ----------------------------------------------------- ------ --------- ----- ------ --------- -----
Loans and Leases 170.6 10,176.7 6.74 158.0 8,973.7 7.06
- ----------------------------------------------------- ------ --------- ----- ------ --------- -----
Total Earning Assets $294.9 $18,919.6 6.27% $280.6 $16,635.3 6.76%
- ----------------------------------------------------- ------ --------- ----- ------ --------- -----
Average Source of Funds
Deposits
Savings and Money Market Deposits $ 28.6 $ 3,659.6 3.14% $ 27.4 $ 3,289.0 3.34%
Savings Certificates 29.3 2,053.6 5.75 30.6 2,000.9 6.12
Other Time 6.2 462.6 5.40 8.0 539.5 5.95
Foreign Offices Time 45.5 3,807.2 4.81 47.2 3,579.0 5.30
- ----------------------------------------------------- ------ --------- ----- ------ --------- -----
Total Deposits 109.6 9,983.0 4.42 113.2 9,408.4 4.83
Federal Funds Purchased 22.5 1,717.9 5.27 16.1 1,068.6 6.04
Securities Sold Under Agreements to Repurchase 28.0 2,153.1 5.23 25.0 1,666.5 6.02
Commercial Paper 2.0 142.9 5.38 2.2 146.3 5.96
Other Borrowings 18.7 1,516.3 4.97 15.9 1,162.1 5.51
Senior Notes 3.4 254.5 5.26 5.8 379.7 6.04
Notes Payable 6.4 335.9 7.67 4.9 244.7 8.04
- ----------------------------------------------------- ------ --------- ----- ------ --------- -----
Total Interest-Related Funds 190.6 16,103.6 4.76 183.1 14,076.3 5.22
- ----------------------------------------------------- ------ --------- ----- ------ --------- -----
Interest Rate Spread - - 1.51% - - 1.54%
- ----------------------------------------------------- ------ --------- ----- ------ --------- -----
Noninterest-Related Funds - 2,816.0 - - 2,559.0 -
- ----------------------------------------------------- ------ --------- ------ ------ --------- -----
Total Source of Funds $190.6 $18,919.6 4.05% $183.1 $16,635.3 4.41%
- ----------------------------------------------------- ------ --------- ----- ------ --------- -----
Net Interest Income/Margin $104.3 - 2.22% $ 97.5 - 2.35%
- ----------------------------------------------------- ------ --------- ----- ------ -------- -----
ANALYSIS OF NET INTEREST INCOME CHANGES
DUE TO VOLUME AND RATE
Second Quarter 1996/95 Six Months 1996/95
--------------------------------- -----------------------------
Change Due To Change Due To
----------------------- --------------------
(In Millions) Volume Rate Total Volume Rate Total
- ----------------------------------------------------- --------- ------------ ------ -------- --------- ------
Earning Assets $ 34.3 $ (20.0) $14.3 $ 68.6 $ (31.6) $37.0
Interest-Related Funds 24.6 (17.1) 7.5 50.0 (23.7) 26.3
- ----------------------------------------------------- ------ --------- ----- ------- -------- -----
Net Interest Income $ 9.7 $ (2.9) $ 6.8 $ 18.6 $ (7.9) $10.7
- ----------------------------------------------------- ------ --------- ----- ------- -------- -----
17
NORTHERN TRUST CORPORATION
Six Months
- -------------------------------------------------------------------
1996 1995
- ---------------------------------- -----------------------------
Interest Volume Rate Interest Volume Rate
- --------- ------------ ------ -------- --------- ------
$ 7.2 $ 260.8 5.59% $ 7.4 $ 245.9 6.11%
43.7 1,711.7 5.13 47.5 1,669.1 5.74
1.6 54.0 5.93 .5 14.1 6.47
- --------- ------------ ------ -------- --------- ------
52.5 2,026.5 5.21 55.4 1,929.1 5.79
- --------- ------------ ------ -------- --------- ------
59.4 2,104.2 5.67 25.8 953.7 5.45
20.9 420.9 9.94 24.5 446.7 11.00
112.7 3,966.0 5.71 127.6 3,997.6 6.44
7.3 245.0 5.98 11.9 379.5 6.30
.3 9.3 7.42 1.5 42.0 7.22
- --------- ------------ ------ -------- --------- ------
200.6 6,745.4 5.98 191.3 5,819.5 6.62
- --------- ------------ ------ -------- --------- ------
335.3 9,977.0 6.76 304.7 8,756.0 7.02
- --------- ------------ ------ -------- --------- ------
$588.4 $18,748.9 6.31% $551.4 $16,504.6 6.74%
- --------- ------------ ------ -------- --------- ------
$ 56.7 $ 3,618.6 3.15% $ 54.0 $ 3,276.1 3.32%
60.2 2,081.9 5.82 55.1 1,860.0 5.97
14.6 537.0 5.47 14.4 498.3 5.82
89.6 3,692.3 4.88 97.8 3,744.5 5.27
- --------- ------------ ------ -------- --------- ------
221.1 9,929.8 4.48 221.3 9,378.9 4.76
51.2 1,930.7 5.34 32.2 1,095.4 5.92
54.1 2,065.1 5.27 49.1 1,681.6 5.89
3.9 143.3 5.42 4.3 145.1 5.90
31.5 1,247.2 5.08 26.4 986.0 5.41
7.5 284.4 5.25 12.7 424.4 5.97
12.8 335.4 7.65 9.8 244.8 8.09
- --------- ------------ ------ -------- --------- ------
382.1 15,935.9 4.82 355.8 13,956.2 5.14
- --------- ------------ ------ -------- --------- ------
- - 1.49% - - 1.60%
- --------- ------------ ------ -------- --------- ------
- 2,813.0 - - 2,548.4 -
- --------- ------------ ------ -------- --------- ------
$382.1 $18,748.9 4.10% $355.8 $16,504.6 4.35%
- --------- ------------ ------ -------- --------- ------
$206.3 - 2.21% $195.6 - 2.39%
- --------- ------------ ------ -------- --------- ------
18
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a.) Exhibits
--------
Exhibit (10) (i) Form of Employment Security Agreement dated
March 1, 1996 entered or to be entered into
between Northern Trust Corporation and each of
7 officers - as amended.
(ii) Form of Employment Security Agreement dated
May 21, 1996 entered or to be entered into
between Northern Trust Corporation and each of
30 officers - supersedes Form of Agreement
dated March 23, 1986.
(iii) Form of Employment Security Agreement dated
May 21, 1996 entered or to be entered into
between Northern Trust Corporation and each of
8 officers.
(iv) Form of Employment Security Agreement dated
May 21, 1996 entered or to be entered into
between Northern Trust Corporation and each of
16 officers -supersedes Form of Agreement
dated March 23, 1986.
(v) Implementation Agreement dated June 26, 1996
between the Registrant, The Northern Trust
Company, the ESOP Trust and NationsBank
(South) N.A. as Trustee.
(vi) Term Loan Agreement between the ESOP Trust
and the Registrant dated June 28, 1996.
Exhibit (11) Computation of Per Share Earnings
Exhibit (27) Financial Data Schedule
(b.) Reports on Form 8-K
-------------------
In a report on Form 8-K dated April 17, 1996, Northern Trust
incorporated by reference in Item 5 its April 16, 1996 press
release, reporting on its earnings for first quarter of 1996. The
press release, with summary financial information, was filed
pursuant to Item 7.
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NORTHERN TRUST CORPORATION
--------------------------
(Registrant)
Date: August 12, 1996 By: Perry R. Pero
-----------------
Perry R. Pero
Senior Executive Vice President
and Chief Financial Officer
Date: August 12, 1996 By: Harry W. Short
------------------
Harry W. Short
Senior Vice President and Controller
(Chief Accounting Officer)
20
EXHIBIT INDEX
-------------
The following exhibits have been filed herewith:
Exhibit
Number Description
- ------ -----------
(10) (i) Form of Employment Security Agreement dated March 1, 1996
entered or to be entered into between Northern Trust Corporation
and each of 7 officers - as amended.
(ii) Form of Employment Security Agreement dated May 21, 1996 entered
or to be entered into between Northern Trust Corporation and
each of 30 officers - supersedes Form of Agreement dated March
23, 1986.
(iii) Form of Employment Security Agreement dated May 21, 1996 entered
or to be entered into between Northern Trust Corporation and
each of 8 officers.
(iv) Form of Employment Security Agreement dated May 21, 1996 entered
or to be entered into between Northern Trust Corporation and
each of 16 officers -supersedes Form of Agreement dated March
23, 1986.
(v) Implementation Agreement dated June 26, 1996 between the
Registrant, The Northern Trust Company, the ESOP Trust and
NationsBank (South) N.A. as Trustee.
(vi) Term Loan Agreement between the ESOP Trust and the Registrant
dated June 28, 1996.
(11) Computation of Per Share Earnings
(27) Financial Data Schedule
21