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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 September 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
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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 [ ]
55,905,987 Shares - $1.66 2/3 Par Value
(Shares of Common Stock Outstanding on September 30, 1996)
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PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET NORTHERN TRUST CORPORATION
SEPTEMBER 30 December 31 September 30
------------ ----------- ------------
($ In Millions) 1996 1995 1995
- -------------------------------------------------------------------------------- ------------ ----------- ------------
ASSETS
Cash and Due from Banks $ 1,068.6 $ 1,308.9 $ 1,444.7
Money Market Assets
Federal Funds Sold and Securities Purchased under Agreements to Resell 1,026.8 162.1 247.2
Time Deposits with Banks 1,312.3 1,567.6 1,616.4
Other 39.3 54.5 11.9
- -------------------------------------------------------------------------------- ------------ ----------- ------------
Total 2,378.4 1,784.2 1,875.5
- -------------------------------------------------------------------------------- ------------ ----------- ------------
Securities (Fair value $5,847.2 at September 1996, $5,787.8 at December 1995 and
$5,885.3 at September 1995) 5,827.8 5,760.3 5,855.4
Loans and Leases (Net of unearned income of $111.6 at September 1996, $89.6 at
December 1995, and $81.0 at September 1995) 10,909.2 9,906.0 9,808.3
Reserve for Credit Losses (147.4) (147.1) (147.3)
Buildings and Equipment 288.8 281.5 280.0
Customers' Acceptance Liability 38.5 35.8 50.0
Trust Security Settlement Receivables 236.4 327.1 234.5
Other Assets 759.8 676.8 778.6
- -------------------------------------------------------------------------------- ------------ ----------- ------------
Total Assets $21,360.1 $19,933.5 $20,179.7
- -------------------------------------------------------------------------------- ------------ ----------- ------------
LIABILITIES
Deposits
Demand and Other Noninterest-Bearing $ 3,266.6 $ 2,853.1 $ 2,642.2
Savings and Money Market Deposits 3,711.0 3,385.3 3,102.1
Savings Certificates 2,035.7 2,158.8 2,106.1
Other Time 511.6 384.3 375.5
Foreign Offices - Demand 276.9 459.8 310.2
- Time 3,636.8 3,246.9 2,820.9
- -------------------------------------------------------------------------------- ------------ ----------- ------------
Total Deposits 13,438.6 12,488.2 11,357.0
Federal Funds Purchased 430.1 2,300.1 2,199.7
Securities Sold Under Agreements to Repurchase 738.2 1,858.7 1,277.2
Commercial Paper 153.0 146.7 145.6
Other Borrowings 3,976.6 875.9 2,805.6
Senior Notes 205.0 17.0 117.0
Notes Payable 432.0 334.6 341.1
Liability on Acceptances 38.5 35.8 50.0
Other Liabilities 431.3 423.9 475.9
- -------------------------------------------------------------------------------- ------------ ----------- ------------
Total Liabilities 19,843.3 18,480.9 18,769.1
- -------------------------------------------------------------------------------- ------------ ----------- ------------
STOCKHOLDERS' EQUITY
Preferred Stock 120.0 170.0 170.0
Common Stock - $1.66 2/3 Par Value 95.0 93.6 93.6
SEPTEMBER 1996 December 1995 September 1995
- --------------------------------------------------------------------------------
Shares authorized 140,000,000 140,000,000 140,000,000
Shares issued 56,979,688 56,158,064 56,158,064
Shares outstanding 55,905,987 55,664,412 55,466,443
Capital Surplus 327.8 306.1 308.2
Retained Earnings 1,064.1 928.8 888.4
Net Unrealized Gain (Loss) on Securities (0.2) 2.6 (2.7)
Common Stock Issuable - Performance Plan 10.4 14.7 16.5
Deferred Compensation - ESOP and Other (37.1) (39.4) (34.6)
Treasury Stock - (at cost, 1,073,701 shares at September 1996, 493,652 shares at
December 1995, and 691,621 shares at September 1995) (63.2) (23.8) (28.8)
- -------------------------------------------------------------------------------- ------------ ----------- ------------
Total Stockholders' Equity 1,516.8 1,452.6 1,410.6
- -------------------------------------------------------------------------------- ------------ ----------- ------------
Total Liabilities and Stockholders' Equity $21,360.1 $19,933.5 $20,179.7
- -------------------------------------------------------------------------------- ------------ ----------- ------------
2
CONSOLIDATED STATEMENT OF INCOME NORTHERN TRUST CORPORATION
Third Quarter Nine Months
Ended September 30 Ended September 30
------------------------------- ----------------------------------
($ 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 $ 5.0 $ 1.9 $ 12.2 $ 9.3
Time Deposits with Banks 20.0 22.4 63.7 69.9
Other .7 .2 2.3 .7
- ----------------------------------------------------------- ---------------- -------------- ----------------- ----------------
Total 25.7 24.5 78.2 79.9
- ----------------------------------------------------------- ---------------- -------------- ----------------- ----------------
Securities 87.3 99.0 272.6 273.2
Loans and Leases 176.9 162.3 510.1 465.0
- ----------------------------------------------------------- ---------------- -------------- ----------------- ----------------
Total Interest Income 289.9 285.8 860.9 818.1
- ----------------------------------------------------------- ---------------- -------------- ----------------- ----------------
Interest Expense
Deposits - Savings and Money Market Deposits 28.1 27.5 84.8 81.5
- Savings Certificates 29.5 32.6 89.7 87.7
- Other Time 7.2 8.6 21.8 23.0
- Foreign Offices 47.9 43.4 137.5 141.2
Federal Funds Purchased 22.5 29.9 73.7 62.1
Securities Sold under Agreements to Repurchase 25.8 26.6 79.9 75.7
Commercial Paper 1.9 2.1 5.8 6.4
Other Borrowings 18.9 17.8 50.4 44.2
Senior Notes 2.8 2.8 10.3 15.5
Notes Payable 6.5 5.1 19.3 14.9
- ----------------------------------------------------------- ---------------- -------------- ----------------- ----------------
Total Interest Expense 191.1 196.4 573.2 552.2
- ----------------------------------------------------------- ---------------- -------------- ----------------- ----------------
Net Interest Income 98.8 89.4 287.7 265.9
Provision for Credit Losses 2.5 2.0 11.5 5.0
- ----------------------------------------------------------- ---------------- -------------- ----------------- ----------------
Net Interest Income after Provision for Credit Losses 96.3 87.4 276.2 260.9
- ----------------------------------------------------------- ---------------- -------------- ----------------- ----------------
Noninterest Income
Trust Fees 147.7 127.3 440.3 371.4
Security Commissions and Trading Income 5.0 5.8 17.7 16.9
Other Operating Income 41.7 40.0 118.9 114.7
Investment Security Gains (Losses) (.1) .3 .3 .5
- ----------------------------------------------------------- ---------------- -------------- ----------------- ----------------
Total Noninterest Income 194.3 173.4 577.2 503.5
- ----------------------------------------------------------- ---------------- -------------- ----------------- ----------------
Income before Noninterest Expenses 290.6 260.8 853.4 764.4
- ----------------------------------------------------------- ---------------- -------------- ----------------- ----------------
Noninterest Expenses
Salaries 92.4 84.0 270.1 250.9
Pension and Other Employee Benefits 18.5 20.4 57.3 62.7
Occupancy Expense 16.3 15.6 47.7 45.1
Equipment Expense 13.9 12.0 41.3 36.6
Other Operating Expenses 50.2 43.5 150.5 135.4
- ----------------------------------------------------------- ---------------- -------------- ----------------- ----------------
Total Noninterest Expenses 191.3 175.5 566.9 530.7
- ----------------------------------------------------------- ---------------- -------------- ----------------- ----------------
Income before Income Taxes 99.3 85.3 286.5 233.7
Provision for Income Taxes 32.8 27.2 95.1 73.2
- ----------------------------------------------------------- ---------------- -------------- ----------------- ----------------
NET INCOME $ 66.5 $ 58.1 $ 191.4 $ 160.5
- ----------------------------------------------------------- ---------------- -------------- ----------------- ----------------
Net Income Applicable to Common Stock $ 65.3 $ 56.0 $ 187.7 $ 154.1
- ----------------------------------------------------------- ---------------- -------------- ----------------- ----------------
NET INCOME PER COMMON SHARE - PRIMARY $ 1.14 $ .99 $ 3.27 $ 2.74
- FULLY DILUTED 1.14 .98 3.25 2.71
- ----------------------------------------------------------- ---------------- -------------- ----------------- ----------------
Average Number of Common Shares Outstanding - Primary 57,268,590 56,686,283 57,400,539 56,249,528
- Fully Diluted 57,421,147 58,118,792 57,797,034 57,771,187
- ----------------------------------------------------------- ---------------- -------------- ----------------- ----------------
3
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY NORTHERN TRUST CORPORATION
Nine Months
Ended September 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 September 30 120.0 170.0
- --------------------------------------------------------- --------- ---------
Common Stock
Balance at January 1 93.6 90.6
Stock Issued - Incentive Plan and Awards - .3
Stock Issued in Acquisitions - 2.7
Conversion of Preferred Stock, Series E 1.4 -
- --------------------------------------------------------- --------- ---------
Balance at September 30 95.0 93.6
- --------------------------------------------------------- --------- ---------
Capital Surplus
Balance at January 1 306.1 302.2
Stock Issued - Incentive Plan and Awards (7.5) (.9)
Stock Issued in Acquisitions - 6.9
Conversion of Preferred Stock, Series E 29.2 -
- --------------------------------------------------------- --------- ---------
Balance at September 30 327.8 308.2
- --------------------------------------------------------- --------- ---------
Retained Earnings
Balance at January 1 928.8 762.7
Net Income 191.4 160.5
Dividends Declared on Common Stock (52.5) (43.2)
Dividends Declared on Preferred Stock (3.6) (6.7)
Pooled Affiliates - 15.1
- --------------------------------------------------------- --------- ---------
Balance at September 30 1,064.1 888.4
- --------------------------------------------------------- --------- ---------
Net Unrealized Gain (Loss) on Securities
Balance at January 1 2.6 (15.8)
Unrealized Gain (Loss), net (2.8) 13.1
- --------------------------------------------------------- --------- ---------
Balance at September 30 (.2) (2.7)
- --------------------------------------------------------- --------- ---------
Common Stock Issuable - Performance Plan
Balance at January 1 14.7 17.9
Stock Issuable, net of Stock Issued (4.3) (1.4)
- --------------------------------------------------------- --------- ---------
Balance at September 30 10.4 16.5
- --------------------------------------------------------- --------- ---------
Deferred Compensation - ESOP and Other
Balance at January 1 (39.4) (38.8)
Compensation Deferred (2.3) (1.4)
Compensation Amortized 4.6 5.6
- --------------------------------------------------------- --------- ---------
Balance at September 30 (37.1) (34.6)
- --------------------------------------------------------- --------- ---------
Treasury Stock
Balance at January 1 (23.8) (8.1)
Stock Options and Awards 36.3 15.4
Stock Purchased (94.9) (36.1)
Conversion of Preferred Stock, Series E 19.2 -
- --------------------------------------------------------- --------- ---------
Balance at September 30 (63.2) (28.8)
- --------------------------------------------------------- --------- ---------
Total Stockholders' Equity at September 30 $1,516.8 $1,410.6
- --------------------------------------------------------- --------- ---------
4
CONSOLIDATED STATEMENT OF CASH FLOWS NORTHERN TRUST CORPORATION
Nine Months
Ended September 30
-----------------------
(In Millions) 1996 1995
- --------------------------------------------------------------------------------------------------------- ----------- -----------
Cash Flows from Operating Activities:
Net Income $ 191.4 $ 160.5
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Provision for Credit Losses 11.5 5.0
Depreciation on Buildings and Equipment 35.7 32.2
Net (Increase) Decrease in Interest Receivable 12.7 (29.7)
Increase in Interest Payable 8.1 8.8
Amortization and Accretion of Securities and Unearned Income (76.0) (132.6)
Amortization of Software, Goodwill and Other Intangibles 32.8 27.5
Net (Increase) Decrease in Trading Account Securities 79.9 (53.2)
Other Noncash, net (89.0) (23.2)
- --------------------------------------------------------------------------------------------------------- ----------- -----------
Net Cash Provided by (Used in) Operating Activities 207.1 (4.7)
- --------------------------------------------------------------------------------------------------------- ----------- -----------
Cash Flows from Investing Activities:
Net (Increase) Decrease in Federal Funds Sold and Securities Purchased under Agreements to Resell (864.7) 542.9
Net Decrease in Time Deposits with Banks 255.3 248.3
Net (Increase) Decrease in Other Money Market Assets 15.2 (2.4)
Purchases of Securities-Held to Maturity (7,000.8) (625.4)
Proceeds from Maturity and Redemption of Securities-Held to Maturity 7,041.3 703.6
Purchases of Securities-Available for Sale (27,307.1) (23,494.1)
Proceeds from Sale, Maturity and Redemption of Securities-Available for Sale 27,200.7 22,900.5
Net Increase in Loans and Leases (1,037.8) (1,131.3)
Net Purchases of Buildings and Equipment (43.0) (33.1)
Net Decrease in Trust Security Settlement Receivables 90.7 71.2
Other, net (15.8) 2.9
- --------------------------------------------------------------------------------------------------------- ----------- -----------
Net Cash Used in Investing Activities (1,666.0) (816.9)
- --------------------------------------------------------------------------------------------------------- ----------- -----------
Cash Flows from Financing Activities:
Net Increase (Decrease) in Deposits 950.4 (556.8)
Net Increase (Decrease) in Federal Funds Purchased (1,870.0) 1,227.7
Net Decrease in Securities Sold under Agreements to Repurchase (1,120.5) (939.7)
Net Increase in Commercial Paper 6.3 21.8
Net Increase in Short-Term Other Borrowings 3,163.1 2,019.9
Proceeds from Term Federal Funds Purchased 1,611.6 2,383.0
Repayments of Term Federal Funds Purchased (1,674.0) (2,675.3)
Proceeds from Senior Notes & Notes Payable 801.5 100.0
Repayments of Senior Notes & Notes Payable (516.1) (433.7)
Treasury Stock Purchased (90.5) (32.0)
Net Proceeds from Stock Options 8.4 5.1
Cash Dividends Paid on Common and Preferred Stock (56.0) (49.5)
Other, net 4.4 3.3
- --------------------------------------------------------------------------------------------------------- ----------- -----------
Net Cash Provided by Financing Activities 1,218.6 1,073.8
- --------------------------------------------------------------------------------------------------------- ----------- -----------
Net Increase (Decrease) in Cash and Due from Banks (240.3) 252.2
Cash and Due from Banks at Beginning of Year 1,308.9 1,192.5
- --------------------------------------------------------------------------------------------------------- ----------- -----------
Cash and Due from Banks at September 30 $ 1,068.6 $ 1,444.7
- --------------------------------------------------------------------------------------------------------- ----------- -----------
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 $ 565.1 $ 543.4
Income Taxes Paid 58.0 42.6
- --------------------------------------------------------------------------------------------------------- ----------- -----------
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
September 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. Certain reclassifications have been made to prior periods' consolidated
financial statements to place them on a basis comparable with the current
period's consolidated financial statements. 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:
September 30, 1996 December 31, 1995 September 30, 1995
-----------------------------------------------------------------
Book Fair Book Fair Book Fair
(In Millions) Value Value Value Value Value Value
- ----------------------------------------------------------------------------------------------
Held to Maturity
U.S. Government $ 121.9 $ 121.9 $ 116.1 $ 116.3 $ 102.0 $ 102.0
Obligations of States and
Political Subdivisions 330.1 349.5 366.9 394.0 435.7 465.7
Federal Agency 18.2 18.2 22.2 22.4 22.2 22.1
Other 30.4 30.4 29.9 29.9 30.3 30.3
- ----------------------------------------------------------------------------------------------
Subtotal 500.6 520.0 535.1 562.6 590.2 620.1
- ----------------------------------------------------------------------------------------------
Available for Sale
U.S. Government 1,146.7 1,146.7 1,667.7 1,667.7 1,512.0 1,512.0
Obligations of States and
Political Subdivisions 80.2 80.2 70.2 70.2 - -
Federal Agency 3,945.5 3,945.5 3,152.8 3,152.8 3,414.2 3,414.2
Preferred Stock 89.7 89.7 147.8 147.8 164.8 164.8
Other 56.1 56.1 97.8 97.8 117.0 117.0
- ----------------------------------------------------------------------------------------------
Subtotal 5,318.2 5,318.2 5,136.3 5,136.3 5,208.0 5,208.0
- ----------------------------------------------------------------------------------------------
Trading Account 9.0 9.0 88.9 88.9 57.2 57.2
- ----------------------------------------------------------------------------------------------
Total Securities $5,827.8 $5,847.2 $5,760.3 $5,787.8 $5,855.4 $5,885.3
- ----------------------------------------------------------------------------------------------
Reconciliation of Book Values to Fair Values of
Securities Held to Maturity September 30, 1996
- -------------------------------------------------------------------------------------------
Gross Unrealized
Book ---------------- Fair
(In Millions) Value Gains Losses Value
- -------------------------------------------------------------------------------------------
Held to Maturity
U.S. Government $ 121.9 $ .1 $ .1 $ 121.9
Obligations of States and
Political Subdivisions 330.1 19.7 .3 349.5
Federal Agency 18.2 .1 .1 18.2
Other 30.4 - - 30.4
- -------------------------------------------------------------------------------------------
Total $ 500.6 $ 19.9 $ .5 $ 520.0
- -------------------------------------------------------------------------------------------
6
Reconciliation of Amortized Cost to Fair Values of
Securities Available for Sale September 30, 1996
- --------------------------------------------------------------------------------------------------------
Amortized Gross Unrealized Fair
-----------------
(In Millions) Cost Gains Losses Value
- --------------------------------------------------------------------------------------------------------
Available for Sale
U.S. Government $1,147.5 $1.3 $2.1 $1,146.7
Obligations of States
and Political Subdivisions 79.3 2.2 1.3 80.2
Federal Agency 3,945.4 2.7 2.6 3,945.5
Preferred Stock 90.1 - .4 89.7
Other 56.3 1.0 1.2 56.1
- --------------------------------------------------------------------------------------------------------
Total $5,318.6 $7.2 $7.6 $5,318.2
- -----------------------------------------------------------------------------------------------------------
Unrealized gains and losses on off-balance sheet financial instruments used to
hedge available for sale securities totaled $2.9 million and $2.9 million,
respectively, as of September 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 September 30, 1996, stockholders'
equity included a charge of $.2 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 $6.4 billion on September 30, 1996, $3.9 billion on December 31,
1995 and $5.2 billion on September 30, 1995.
4. CONTINGENT LIABILITIES - Standby letters of credit outstanding were $1.4
billion on September 30, 1996, $1.0 billion on December 31, 1995 and $911.0
million on September 30, 1995.
5. LOANS AND LEASES - Amounts outstanding in selected loan categories are
shown below:
September 30 December 31 September 30
---------------------------------------
(In Millions) 1996 1995 1995
- --------------------------------------------------------------------
Domestic
Commercial $ 3,391.0 $3,202.1 $3,207.6
Residential Real Estate 4,454.3 3,896.4 3,750.6
Commercial Real Estate 597.7 512.6 505.4
Broker 276.9 304.0 225.0
Consumer 859.6 758.9 772.0
Other 539.6 625.5 706.4
Lease Financing 243.3 202.3 181.5
- --------------------------------------------------------------------
Total Domestic 10,362.4 9,501.8 9,348.5
International 546.8 404.2 459.8
- --------------------------------------------------------------------
Total Loans and Leases $10,909.2 $9,906.0 $9,808.3
- --------------------------------------------------------------------
7
At September 30, 1996, other domestic and international loans include $688.3
million of overnight trust-related advances in connection with next day security
settlements, compared with $810.4 million at December 31, 1995 and $946.9
million at September 30, 1995.
At September 30, 1996, nonperforming loans totaled $33.3 million. Included in
this amount were loans with a recorded investment of $29.7 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 $22.5 million had no portion of the reserve for credit
losses allocated to them, while $7.2 million had an allocated reserve of $.6
million. For the third quarter of 1996, the total recorded investment in
impaired loans averaged $32.6 million. Total interest income recorded on
impaired loans for the quarter ended September 30, 1996 was $28 thousand,
recognized principally on the cash-basis method of accounting.
At September 30, 1995, nonperforming loans totaled $33.6 million and included
$27.7 million of impaired loans. $24.5 million of these impaired loans had no
reserve allocation while $3.2 million had an allocated reserve of $.4 million.
Impaired loans for the third quarter of 1995 averaged $29.0 million with $149
thousand of interest income recognized principally on the cash-basis method of
accounting.
6. RESERVE FOR CREDIT LOSSES - Changes in the reserve for credit losses were
as follows:
Nine Months
Ended September 30
(In Millions) 1996 1995
- ---------------------------------------------------------------------------
Balance at Beginning of Period $147.1 $144.8
Charge-Offs (12.6) (7.8)
Recoveries 1.4 3.0
- ---------------------------------------------------------------------------
Net Charge-Offs (11.2) (4.8)
Provision for Credit Losses 11.5 5.0
Reserve Related to Acquisitions - 2.3
- ---------------------------------------------------------------------------
Balance at End of Period $147.4 $147.3
- ---------------------------------------------------------------------------
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 $79.0 million at September 30, 1996 and net
income totaled $1.6 million for the first nine months of the year. The agreement
is subject to the approval of Metroplex shareholders and to various regulatory
approvals. Federal Reserve Board and shareholder approvals have been received
and the transaction is expected to close in the fourth quarter of 1996.
8. NOTES PAYABLE - Under the terms of a September 12, 1996 Offering Circular,
The Northern Trust Company has the ability to offer from time to time up to $1.7
billion aggregate principal amount at any time outstanding of its senior bank
notes (less certain medium-term bank notes issued prior to April 1993 and still
outstanding), with maturities ranging from 30 days to 15 years and may offer up
to $300 million aggregate principal amount of its subordinated bank notes with
maturities ranging from 5 years to 15 years (less $100 million in subordinated
notes previously
8
sold). On September 24, 1996, The Northern Trust Company issued $100 million of
7.30% Subordinated Notes due 2006, priced to yield 7.38%. At September 30, 1996,
an additional $100 million of subordinated bank notes can be issued under the
terms of the Offering Circular.
9
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THIRD QUARTER EARNINGS HIGHLIGHTS
Net income for the third quarter totaled a record $66.5 million, an increase of
14% from the $58.1 million reported in the third quarter of 1995. Net income per
common share on a fully diluted basis increased 16% to $1.14 from $.98 in 1995.
This earnings performance produced an annualized return on average common equity
(ROE) of 18.93% versus 18.11% reported last year, and an annualized return on
average assets (ROA) of 1.26% versus 1.14% in 1995. Total revenues on a taxable
equivalent basis in the quarter increased 11% to $301.5 million with double-
digit growth in trust fees and treasury management fees, and net interest income
reached a record level, while noninterest expenses increased 9%.
NONINTEREST INCOME
Noninterest income increased 12% and totaled $194.3 million for the quarter,
accounting for 64% of total taxable equivalent revenue. Trust fees of $147.7
million increased 16% or $20.4 million over the like period of 1995, and now
represent 76% of noninterest income and 49% of total taxable equivalent revenue.
Fees generated by RCB International, Inc. (RCB), an October 31, 1995
acquisition, accounted for $6.9 million of the trust fee growth. Exclusive of
these fees, trust fees increased 11% compared to the third quarter of last year,
driven by new business, increased transaction volumes and higher market values
of trust assets administered. Trust assets under administration at September 30,
1996 increased 23% and totaled $722.7 billion compared to $585.4 billion a year
ago.
Trust fees from Corporate and Institutional Services (C&IS) increased $12.7
million to $74.1 million. Exclusive of the RCB contribution, C&IS trust fees
increased $5.8 million or 9% from the year-ago quarter. The increase in fees
reflects new business and strong revenue growth in securities lending,
investment management and retirement services. Custody fees increased 5% to
$31.0 million in the quarter. The increase in custody fees reflects net new
business partially offset by changing pricing structures that emphasize the
payment for base custody services through add-on products, such as securities
lending and foreign exchange. Securities lending fees totaled $12.2 million in
the quarter compared to $8.4 million a year ago, an increase of 45%. The growth
was driven by a 35% increase in volume and a 13% increase in the average spread
earned on the investment of the cash collateral. The investment management fee
increase was driven by new business and growth in customized products tailored
to client needs. Fees from retirement services generated by Hazlehurst &
Associates, Inc. increased primarily as a result of new business. C&IS trust
assets under administration grew 24% or $122.9 billion over last year and now
total $641.9 billion. Included in this asset base are assets
10
under the management of Northern Trust which total $77.1 billion, up 33% from a
year ago.
During the quarter, Northern Trust was named preferred provider of master trust
and domestic institutional custody services for current clients of First Chicago
NBD Corporation as it exits that business, positioning Northern Trust well to
pursue these relationships. To more effectively serve existing and new Michigan-
based master trust and institutional custody clients, Northern Trust announced
plans to open an office in Detroit, Michigan. The transition of those First
Chicago NBD clients who select Northern Trust is expected to begin in the fourth
quarter and be completed during the second quarter of 1997.
C&IS trust fees in the third quarter were 21% higher than a year ago, but $2.3
million or 3% below this year's second quarter. The sequential quarter
comparison was affected by the fact that a much higher proportion of new 1996
C&IS trust business was transitioned and began earning fees in the second
quarter than in the third quarter. The second quarter also benefited from a
number of other factors, including securities lending fees that were $2.0
million higher. Unusually strong demand for certain government and international
equity securities, and a higher spread on securities lending cash collateral,
contributed to second quarter securities lending revenues. Higher consulting
revenues in the second quarter and non-recurring items also affected the
sequential quarter comparison.
Trust fees from Personal Financial Services (PFS) increased 12% from the prior
year level of $65.9 million and totaled $73.6 million for the third 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 trust assets administered. During the third quarter of
1996, newly constructed Illinois facilities in Winnetka and on Chicago's South
Side opened for business, enhancing Northern Trust's service delivery to these
existing markets. At September 30, 1996, Northern Trust's network of PFS offices
totaled 55 locations throughout Illinois, Florida, California, Arizona and
Texas. Trust fees generated from the four states outside of Illinois now
comprise approximately one-half of total PFS trust fees. Total personal trust
assets under administration increased $14.4 billion from the prior year and
totaled $80.8 billion at September 30, 1996, with $47.2 billion under
management.
Security commissions and trading income totaled $5.0 million compared with $5.8
million reported in the third quarter of 1995. The decrease was due to reduced
commission revenues at Northern Futures Corporation brought about by lower trade
volume.
Other operating income totaled $41.7 million in the quarter, compared to $40.0
million in the third quarter of 1995. The principal items included in other
operating income are foreign exchange trading profits and treasury management
fees. Foreign exchange trading profits of $15.1 million were strong but fell
short of the record $16.2 million
11
realized in last year's third quarter. Foreign exchange trading profits are
impacted by the level of cross-border investment activity of Master
Trust/Custody clients and by market volatility. Northern Trust's success in
capturing custody-related foreign exchange, even in periods of lower volatility,
has enabled it to meet competitive pressures on base custody fees. The fee
component of treasury management revenues rose 12% to $13.9 million compared to
the prior year quarter. Total treasury management revenues, including both fees
and the computed value of compensating deposit balances, were $21.8 million,
representing a 14% increase from the third 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.
Other operating income in the third quarter of 1996 included fees from the
renegotiation of a cash management services contract and gains recorded from the
disposition of securities received in a prior year loan restructuring. In
addition, other operating income reflects the elimination of float-related
compensation resulting from the Depository Trust Company's first quarter 1996
conversion to a same-day settlement basis for security transactions.
NET INTEREST INCOME
Net interest income for the third quarter totaled a record $98.8 million, 10%
higher than the $89.4 million reported in the third 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 third quarter was $107.2 million, up 8% from the $98.9 million reported
in 1995. The increase in net interest income reflects higher levels of earning
assets, growth in noninterest-related funds, and an improvement in the net
interest margin to 2.26% from 2.21% reported in the third quarter of 1995.
Earning assets for the third quarter averaged $18.9 billion, up 6% from the
$17.8 billion average for the third quarter of 1995. The $1.1 billion growth in
average earning assets reflected a 13% or $1.2 billion increase in average
loans, partially offset by a $.4 billion decline in average security holdings.
Money market assets totaled $2.1 billion on average for the quarter, up 20% from
the like period of 1995.
The loan growth was concentrated in the domestic portfolio while international
loans declined slightly from the prior year. Residential mortgages increased 19%
to average $4.4 billion and now comprise 41% of the total average loan
portfolio. Commercial and industrial loans averaged $3.4 billion during the
third quarter of 1996 compared to $3.1
12
billion last year. The securities portfolio declined 6% to average $6.3 billion
primarily due to a reduction in short-term federal agency securities.
Funding for the growth in earning assets came from several sources. Total
interest-bearing deposits averaged $10.2 billion, up $785 million from the third
quarter of 1995. This growth came principally from foreign office time deposits
(up $702 million) and savings and money market deposits (up $222 million),
partially offset by a decline in savings certificates and other time deposits.
Short-term funds were also raised utilizing 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 $199
million and averaged $2.9 billion due in large part to growth in common
stockholders' equity. Common stockholders' equity increased $145 million or 12%
and averaged $1.37 billion due primarily to growth in retained earnings and the
conversion of Series E Preferred Stock in January, 1996, offset in part by the
repurchase of common stock pursuant to Northern Trust's 4 million share buyback
program. The remaining increase in noninterest-related funds was concentrated in
foreign demand and trust-related deposits.
The net interest margin increased from 2.21% in last year's third quarter to
2.26% in the current quarter, due primarily to the 13% increase in average loan
volume, the reduced holdings of low margin agency securities and the higher
level of noninterest-related funding sources.
PROVISION FOR CREDIT LOSSES
The provision for credit losses of $2.5 million was up from $2.0 million
reported in the third 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 $191.3 million for the quarter, up $15.8 million or
9% from $175.5 million in the third quarter of 1995. Operating expenses of RCB
and Tanglewood Bancshares, both acquired in the second half of 1995, accounted
for approximately $6.9 million of the increase over last year. Without these
incremental costs, expense growth would have been 5%. The increase in
noninterest expenses also reflects the support necessary for higher levels of
trust new business, increased treasury management and global custody volumes,
investments in technology and continuing PFS office expansion. These increases
were partially offset by lower expenses related to pension settlement charges
for retiring officers and lower benefit costs.
Salaries and benefits, which represent 58% of total noninterest expenses,
increased to $110.9 million from $104.4 million in the year-ago quarter. Cost
savings from changes
13
in several benefit plans effective January 1, 1996 helped moderate the
increase. The principal items contributing to the increase were merit
increases, incentive compensation, and staff additions resulting from 1995
acquisitions and to support Northern Trust's growing trust activities and
office expansion. The incentive compensation expense increase reflects the
impact of Northern Trust's higher common stock price as well as new
business development and investment management results. Staff on a full-
time equivalent basis at September 30, 1996 totaled 6,754, up 3% from 6,531
at the end of 1995.
Net occupancy expense totaled $16.3 million, up 4% from $15.6 million in
the third quarter of 1995, due in part to acquisitions and the opening of
new offices. The principal components of the increase were higher real
estate taxes, building maintenance costs, and amortization and depreciation
of leasehold improvements and buildings, offset in part by lower utility
costs.
Equipment expense, which includes depreciation, rental and maintenance
costs, totaled $13.9 million, up $1.9 million or 16% from the third 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 $50.2 million compared to
$43.5 million last year. Other operating expenses were impacted by the
addition of $3.2 million in professional service fees paid to RCB's network
of investment managers, higher costs associated with legal disputes, and
increased levels of transaction-based depository fees, software
amortization, and amortization expense of goodwill and other intangibles.
The components of other operating expenses were as follows:
Third Quarter
Ended September 30
--------------------
(In Millions) 1996 1995
----- -----
Purchased Professional Services $14.3 $ 8.8
Depository Fees 5.6 3.8
Telecommunications 2.8 2.6
Business Development 5.7 4.5
Postage and Supplies 5.0 5.0
FDIC Premium -- (.4)
Software Amortization 8.5 7.6
Goodwill and Other Intangibles 2.4 1.9
Amortization
Pension Settlement Charge .1 3.9
Other Expense 5.8 5.8
----- -----
Total Other Operating Expenses $50.2 $43.5
===== =====
14
PROVISION FOR INCOME TAXES
The provision for income taxes was $32.8 million for the third quarter
compared with $27.2 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 32% in
1995.
NINE MONTHS EARNINGS HIGHLIGHTS
Net income totaled $191.4 million for the nine months ended September 30,
1996 compared to $160.5 million last year, an increase of 19%. On a fully
diluted basis, net income per common share increased 20% to $3.25. The ROE
for the nine month period was 18.59% versus 17.37% one year ago, while the
ROA improved to 1.22% from 1.12% in the same period of last year.
Noninterest income increased 15% to $577.2 million from $503.5 million in
the like period of 1995. Noninterest income comprised 65% of total taxable
equivalent revenue. Trust fees totaled $440.3 million, up 19% from $371.4
million last year. Security commissions and trading income totaled $17.7
million, up $.8 million or 5% from the $16.9 million earned last year.
Foreign exchange trading profits totaled $42.7 million, essentially
unchanged from last year's record performance. The fee portion of treasury
management revenues totaled $41.4 million, up 12% from the $36.9 million
reported in 1995. Total treasury management revenues, which, in addition
to fees, include the computed value of compensating deposit balances,
increased 11% and totaled $64.3 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
$313.5 million, up 6% from the $294.5 million in the like period of 1995.
The provision for credit losses increased $6.5 million to $11.5 million in
1996. Net loan charge-offs increased to $11.2 million from $4.8 million in
the prior year. Noninterest expenses were up 7% and totaled $566.9 million
compared to $530.7 million in 1995. Excluding $23.1 million of operating
expenses of the businesses acquired in 1995 and the $7.8 million reduction
in FDIC insurance premiums compared to the previous year, expense growth
would have been 4%.
BALANCE SHEET
Total assets at September 30, 1996 were $21.4 billion and averaged $21.0
billion for the first nine months, up 10% from last year's average of $19.1
billion. Due to increased lending activity, in addition to the July 31,
1995 acquisition of Tanglewood Bank, loans
15
and leases grew to $10.9 billion at September 30, 1996, and averaged $10.2
billion for the first nine months. This compares with $9.8 billion in total
loans at September 30, 1995 and $9.0 billion on average for the first nine
months of last year.
Driven primarily by continued strong earnings growth and the first quarter
1996 conversion of the Series E convertible preferred stock, offset in part
by Northern Trust's stock buyback program, common stockholders' equity
increased 14% to average $1.35 billion for the first nine months, versus
$1.19 billion last year. Total stockholders' equity averaged $1.47 billion
compared with $1.36 billion in 1995.
During the quarter, Northern Trust Corporation acquired 498,625 of its own
shares at a total cost of $31.8 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 1,655,142 leaving an
additional 617,920 shares remaining to be acquired under this program. The
Northern Trust Company successfully completed a $100 million subordinated
bank note offering during the quarter, adding tier 2 capital at favorable
rates. Northern Trust's risk-based capital ratios remained strong at 8.4%
for tier 1 and 12.3% for total capital at September 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 third quarter average assets) of 6.3% at September 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 September 30, 1996
totaled $37.7 million, compared with $33.7 million at December 31, 1995 and
$35.4 million at September 30, 1995. Nonaccrual and restructured loans and
leases, consisting primarily of commercial loans, totaled $33.3 million, or
.31% of total loans and leases at September 30, 1996. Included in this
total are commercial real estate loans of $25.5 million. At December 31,
1995 and September 30, 1995, nonaccrual and restructured loans and leases
totaled $31.9 million and $33.6 million, respectively.
The following Nonperforming Asset table presents the outstanding amounts of
nonaccrual loans and leases, restructured loans and OREO. Also shown are
loans 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.
16
Nonperforming Assets and 90 Day Past Due Loans and Leases
September 30 June 30 December 31 September 30
(In Millions) 1996 1996 1995 1995
- -------------------------------------------------------------------------------------
Nonaccrual Loans and Leases
Domestic $30.7 $36.2 $29.0 $30.4
International - - .2 .4
- -------------------------------------------------------------------------------------
Total Nonaccrual Loans and Leases 30.7 36.2 29.2 30.8
Restructured Loans 2.6 2.7 2.7 2.8
OREO 4.4 1.6 1.8 1.8
Total Nonperforming Assets $37.7 $40.5 $33.7 $35.4
- -------------------------------------------------------------------------------------
Total 90 Day Past Due Loans
(still accruing) $21.1 $14.6 $22.0 $21.5
- -------------------------------------------------------------------------------------
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.
The 1996 third quarter provision for credit losses was $2.5 million, compared
with $2.0 million in the third quarter of 1995. Net charge-offs totaled $2.5
million in the third quarter of 1996, versus $1.8 million last year. The reserve
for credit losses was $147.4 million or 1.35% of outstanding loans at September
30, 1996. This compares with $147.1 million or 1.49% of outstanding loans at
December 31, 1995 and $147.3 million or 1.50% of outstanding loans at September
30, 1995. The lower reserve to outstanding loans ratio at September 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 $147.4
million at September 30, 1996, essentially unchanged from December 31, 1995 and
September 30, 1995.
Management continues to monitor closely several credits, but the overall quality
of the loan portfolio remains sound and the reserve for credit losses is
adequate to cover credit-related uncertainties as they exist today. Established
credit review procedures ensure that close attention is given to commercial real
estate-related loans and other commercial loans, as well as other credit
exposures that might be adversely affected by significant increases in interest
rates or unexpected downturns in segments of the economies of the United States
or other countries.
17
THIS PAGE INTENTIONALLY LEFT BLANK
18
The following schedule should be read in conjunction with the Net Interest
Income section of Management's Discussion and Analysis of Financial Condition
and Results of Operations.
CONSOLIDATED ANALYSIS OF NET INTEREST INCOME
Third Quarter
-------------------------------------------------------------
(Interest and rate on a taxable equivalent basis) 1996 1995
----------------------------- ----------------------------
($ in Millions) Interest Volume Rate Interest Volume Rate
- ----------------------------------------------------- -------- ------ --------- -------- -------- ------
Average Earning Assets
Money Market Assets
Federal Funds Sold and Securities Purchased
under Agreements to Resell $ 5.0 $ 356.6 5.49% $ 1.9 $ 125.7 6.04%
Time Deposits with Banks 20.0 1,676.6 4.75 22.4 1,604.2 5.53
Other .7 49.4 6.07 .2 9.9 8.76
- ----------------------------------------------------- ------- --------- ----- ------- --------- -----
Total Money Market Assets 25.7 2,082.6 4.91 24.5 1,739.8 5.59
- ----------------------------------------------------- ------- --------- ----- ------- --------- -----
Securities
U.S. Government 22.3 1,525.0 5.83 20.1 1,339.6 5.94
Obligations of States and Political Subdivisions 10.1 409.8 9.84 11.5 433.1 10.61
Federal Agency 58.9 4,118.4 5.69 69.8 4,499.3 6.16
Other 3.0 198.6 6.00 5.2 341.6 6.09
Trading Account .1 5.3 7.14 1.1 63.7 7.02
- ----------------------------------------------------- ------- --------- ----- ------- --------- -----
Total Securities 94.4 6,257.1 6.00 107.7 6,677.3 6.41
- ----------------------------------------------------- ------- --------- ----- ------- --------- -----
Loans and Leases 178.2 10,533.9 6.73 163.1 9,356.9 6.91
- ----------------------------------------------------- ------- --------- ----- ------- --------- -----
Total Earning Assets $ 298.3 $18,873.6 6.29% $ 295.3 $17,774.0 6.59%
- ----------------------------------------------------- ------- --------- ----- ------- --------- -----
Average Source of Funds
Deposits
Savings and Money Market Deposits $ 28.1 $ 3,548.8 3.15% $ 27.5 $ 3,327.0 3.28%
Savings Certificates 29.5 2,047.6 5.73 32.6 2,124.7 6.09
Other Time 7.2 523.0 5.43 8.6 584.8 5.82
Foreign Offices Time 47.9 4,040.6 4.71 43.4 3,338.4 5.15
- ----------------------------------------------------- ------- --------- ----- ------- --------- -----
Total Deposits 112.7 10,160.0 4.41 112.1 9,374.9 4.74
Federal Funds Purchased 22.5 1,695.9 5.28 29.9 2,047.1 5.80
Securities Sold Under Agreements to Repurchase 25.8 1,972.7 5.20 26.6 1,830.6 5.76
Commercial Paper 1.9 145.0 5.38 2.1 147.5 5.86
Other Borrowings 18.9 1,503.4 5.01 17.8 1,292.0 5.47
Senior Notes 2.8 205.0 5.48 2.8 174.6 6.44
Notes Payable 6.5 339.7 7.58 5.1 254.1 7.90
- ----------------------------------------------------- ------- --------- ----- ------- --------- -----
Total Interest-Related Funds 191.1 16,021.7 4.75 196.4 15,120.8 5.15
- ----------------------------------------------------- ------- --------- ----- ------- --------- -----
Interest Rate Spread - - 1.54% - - 1.44%
- ----------------------------------------------------- ------- --------- ----- ------- --------- -----
Noninterest-Related Funds - 2,851.9 - - 2,653.2 -
- ----------------------------------------------------- ------- --------- ----- ------- --------- -----
Total Source of Funds $ 191.1 $18,873.6 4.03% $ 196.4 $17,774.0 4.38%
- ----------------------------------------------------- ------- --------- ----- ------- --------- -----
Net Interest Income/Margin $ 107.2 - 2.26% $ 98.9 - 2.21%
- ----------------------------------------------------- ------- --------- ----- ------- --------- -----
ANALYSIS OF NET INTEREST INCOME CHANGES
DUE TO VOLUME AND RATE
Third Quarter 1996/95 Nine Months 1996/95
----------------------------- ----------------------------
Change Due To Change Due To
------------------- ------------------
(In Millions) Volume Rate Total Volume Rate Total
- ----------------------------------------------------- ------------------- ----- ------------------ -----
Earning Assets $ 18.6 $ (15.6) $ 3.0 $ 87.2 $ (47.2) $40.0
Interest-Related Funds 10.0 (15.3) (5.3) 60.0 (39.0) 21.0
- ----------------------------------------------------- ------- --------- ----- ------- --------- -----
Net Interest Income $ 8.6 $ (.3) $ 8.3 $ 27.2 $ (8.2) $19.0
- ----------------------------------------------------- ------- --------- ----- ------- --------- -----
19
NORTHERN TRUST CORPORATION
Nine Months
- -----------------------------------------------------------------------
1996 1995
- -------------------------------- ----------------------------------
Interest Volume Rate Interest Volume Rate
- -------- --------- ---- -------- --------- ----
$ 12.2 $ 293.0 5.55 % $ 9.3 $ 205.4 6.09 %
63.7 1,699.9 5.01 69.9 1,647.2 5.67
2.3 52.5 5.97 .7 12.7 7.07
- -------- --------- ---- ------- --------- -----
78.2 2,045.4 5.11 79.9 1,865.3 5.73
- -------- --------- ---- ------- --------- -----
81.7 1,909.7 5.71 45.9 1,083.8 5.65
31.0 417.1 9.90 36.0 442.1 10.87
171.6 4,017.1 5.71 197.4 4,166.7 6.33
10.3 229.4 5.99 17.1 366.7 6.23
.4 8.0 7.36 2.6 49.3 7.14
- -------- --------- ---- ------- --------- -----
295.0 6,581.3 5.99 299.0 6,108.6 6.54
- -------- --------- ---- ------- --------- -----
513.5 10,164.0 6.75 467.8 8,958.5 6.98
- -------- --------- ---- ------- --------- -----
$ 886.7 $18,790.7 6.30 % $ 846.7 $16,932.4 6.68 %
- -------- --------- ---- ------- --------- -----
$ 84.8 $ 3,595.2 3.15 % $ 81.5 $ 3,293.3 3.31 %
89.7 2,070.4 5.79 87.7 1,949.2 6.02
21.8 532.3 5.46 23.0 527.4 5.82
137.5 3,809.2 4.82 141.2 3,607.6 5.23
- -------- --------- ---- ------- --------- -----
333.8 10,007.1 4.46 333.4 9,377.5 4.75
73.7 1,851.8 5.32 62.1 1,416.2 5.86
79.9 2,034.1 5.24 75.7 1,731.8 5.84
5.8 143.9 5.40 6.4 145.9 5.89
50.4 1,333.2 5.05 44.2 1,089.1 5.43
10.3 257.8 5.31 15.5 340.2 6.05
19.3 336.8 7.63 14.9 247.9 8.02
- -------- --------- ---- ------- --------- -----
573.2 15,964.7 4.80 552.2 14,348.6 5.14
- -------- --------- ---- ------- --------- -----
- - 1.50 % - - 1.54 %
- -------- --------- ---- ------- --------- -----
- 2,826.0 - - 2,583.8 -
- -------- --------- ---- ------- --------- -----
$ 573.2 $18,790.7 4.07 % $ 552.2 $16,932.4 4.36 %
- -------- --------- ---- ------- --------- -----
$ 313.5 - 2.23 % $ 294.5 - 2.32 %
- -------- --------- ---- ------- --------- -----
20
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a.) Exhibits
--------
Exhibit (10) (i) Restated Northern Trust Employee Stock Ownership
Plan, dated January 1, 1989 as amended to date
(ii) Amended Trust Agreement between The Northern
Trust Company and Citizens and Southern Trust
Company (Georgia), N.A. (predecessor of
NationsBank) dated January 26, 1989
(iii) Restatement of Supplemental Employee Trust
Agreement between The Northern Trust Company and
Harris Trust & Savings Bank regarding the
Supplemental Employee Stock Ownership Plan for
Employees of The Northern Trust Company, the
Supplemental Thrift-Incentive Plan for Employees
of The Northern Trust Company and the
Supplemental Pension Plan for Employees of The
Northern Trust Company
(iv) Supplemental Employee Stock Ownership Plan for
Employees of The Northern Trust Company as
amended and restated
(v) Supplemental Thrift-Incentive Plan for Employees
of The Northern Trust Company as amended and
restated
(vi) Supplemental Pension Plan for Employees of The
Northern Trust Company as amended and restated
(vii) Amendment to the Northern Trust Corporation
Amended Incentive Stock Plan
(viii) Amendment to the Northern Trust Corporation
Amended 1992 Incentive Stock Plan
Exhibit (11) Computation of Per Share Earnings
Exhibit (27) Financial Data Schedule
21
(b.) Reports on Form 8-K
-------------------
In a report on Form 8-K dated July 16, 1996, Northern Trust
incorporated by reference in Item 5 its July 15, 1996 press release,
reporting on its earnings for second quarter and six months of 1996.
The press release, with summary financial information, was filed
pursuant to Item 7.
22
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: November 13, 1996 By: Perry R. Pero
-------------------------------------
Perry R. Pero
Senior Executive Vice President
and Chief Financial Officer
Date: November 13, 1996 By: Harry W. Short
------------------------------------
Harry W. Short
Senior Vice President and Controller
(Chief Accounting Officer)
23
EXHIBIT INDEX
-------------
The following exhibits have been filed herewith:
Exhibit
Number Description
------- -----------
(10) (i) Restated Northern Trust Employee Stock Ownership
Plan, dated January 1, 1989 as amended to date
(ii) Amended Trust Agreement between The Northern Trust
Company and Citizens and Southern Trust Company
(Georgia), N.A. (predecessor of NationsBank) dated
January 26, 1989
(iii) Restatement of Supplemental Employee Trust Agreement
between The Northern Trust Company and Harris Trust &
Savings Bank regarding the Supplemental Employee Stock
Ownership Plan for Employees of The Northern Trust
Company, the Supplemental Thrift-Incentive Plan for
Employees of The Northern Trust Company and the
Supplemental Pension Plan for Employees of The Northern
Trust Company
(iv) Supplemental Employee Stock Ownership Plan for Employees
of The Northern Trust Company as amended and restated
(v) Supplemental Thrift-Incentive Plan for Employees of The
Northern Trust Company as amended and restated
(vi) Supplemental Pension Plan for Employees of The Northern
Trust Company as amended and restated
(vii) Amendment to the Northern Trust Corporation Amended
Incentive Stock Plan
(viii) Amendment to the Northern Trust Corporation Amended 1992
Incentive Stock Plan
(11) Computation of Per Share Earnings
(27) Financial Data Schedule
24