Exhibit 99
NEWS RELEASE
Northern Trust Corporation
50 South LaSalle Street
Chicago, Illinois 60675
Contact: Bev Fleming, Investor Relations
(312) 444-7811 or
Katherine Sopranos, Public Relations
(312) 444-4281 http://www.northerntrust.com
FOR IMMEDIATE RELEASE
NORTHERN TRUST CORPORATION REPORTS 2003 SECOND QUARTER EARNINGS.
(Chicago, July 16, 2003) Northern Trust Corporation today reported net income
per common share of $.30 for the second quarter, compared with the $.56 per
share earned a year ago. Net income totaled $66.6 million, compared with $126.8
million in the second quarter of last year. This performance resulted in a
return on average common equity of 9.16%. The current quarter's results include
the previously announced $.14 per common share net charge relating to actions
taken in order to reduce operating costs and strategically position Northern
Trust for improved profitability.
William A. Osborn, Chairman and Chief Executive Officer, commented, "We
took several steps this quarter toward improving profitability and focusing our
resources on growth opportunities where we have clear competitive advantage and
can serve our clients best. When fully implemented over the next twelve months,
the profit improvement initiatives are expected to benefit pre-tax income by
approximately $70-75 million on an annual basis.
Assets under administration reached a new high and exceeded $1.8
trillion, up 11% from a year ago. Assets under management also were at a record
high of $423 billion, a 34% increase from June 30, 2002. These levels reflect
Northern Trust's continued success in winning new business and the impact of
recent acquisitions, as well as the improvements in the equity markets during
the quarter. We remain confident that our highly focused and unique business
profile, strong client orientation and commitment to industry leading technology
will continue to be the foundation of our future success."
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SECOND QUARTER PERFORMANCE HIGHLIGHTS
The following table details the $50.9 million net pre-tax charge
announced by Northern Trust on June 23, 2003, relating to the implementation in
the second quarter of 2003 of a number of strategic steps to reduce expenses and
better position the Corporation for improved profitability.
($ in Millions Except Per Share Data) (Charge)/Gain
-------------------------------------------------------------------------------- -------------
. Severance costs relating to the elimination of approximately 700 positions $(22.9)
. Reduction in office space leased and owned (16.1)
. Standardization, replacement and elimination of software (9.5)
. Loss on sale of Northern Trust Retirement Consulting, L.L.C. (20.2)
. Gain on sale of Higgins Road Retail Branch 17.8
------
Net Pre-Tax Earnings Impact $(50.9)
======
After-Tax Earnings Impact $(31.8)
======
Earnings Per Share Impact $(0.14)
======
As a result of the disposition of Northern Trust Retirement Consulting,
L.L.C. (NTRC), the operating results of NTRC for the second quarter and all
prior periods presented have been reclassified and shown as discontinued
operations in Northern Trust's consolidated income statement. In addition to the
$20.2 million loss on the sale, NTRC incurred a net loss from operations in the
current quarter prior to the transaction of $2.5 million ($.01 per share)
compared with net income of $0.9 million in the second quarter of 2002.
Revenues from continuing operations of $551.2 million were essentially
unchanged from the $552.6 million in revenues in last year's second quarter.
Trust fees were $293.9 million in the quarter, down 2% compared with $300.3
million in the second quarter of last year. Trust fees represented 53% of total
second quarter revenues, and total fee-related income represented 73% of total
revenues.
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SECOND QUARTER PERFORMANCE HIGHLIGHTS (continued)
Assets under administration totaled $1.83 trillion at June 30, 2003 and
included $73.5 billion of assets from the acquisitions of the passive asset
management business of Deutsche Bank A.G. and the Atlanta-based wealth
management firm, Legacy South. This compares with $1.50 trillion at December 31,
2002 and $1.65 trillion at June 30, 2002. Including the acquisitions, assets
under management totaled $423.4 billion compared with $302.5 billion at December
31, 2002 and $316.6 billion at June 30, 2002.
Trust fees from Personal Financial Services (PFS) in the quarter
decreased 5% and totaled $146.3 million, compared with $154.3 million in the
year-ago quarter. The decline in PFS trust fees resulted from the continued
decline in the equity markets during the first quarter, since a substantial
portion of PFS trust fees are based on the prior quarter-end asset values,
partially offset by net new business. Trust fees resulting from acquisitions
totaled $0.8 million for the quarter. Personal trust assets under administration
totaled $172.9 billion at June 30, 2003, compared with $156.7 billion at
December 31, 2002, and $163.4 billion at June 30, 2002. Of the total assets
under administration, $94.2 billion is managed by Northern Trust, compared with
$87.7 billion at December 31, 2002 and $91.8 billion one year ago. Net new
recurring PFS trust business transitioned during the first six months represents
approximately $18 million in annualized fees.
The acquisition of Legacy South, the Atlanta-based private wealth
management firm, by Northern Trust, FSB, closed in late April and Northern
Trust's first New York PFS office opened this month. With the expansion into
these new markets, the PFS office network reaches affluent markets in 14 states.
Trust fees from Corporate & Institutional Services (C&IS) in the
quarter increased 1% to $147.6 million from $146.0 million in the year-ago
quarter, and included approximately $5.3 million in fees resulting from the
acquisition of the passive asset management business. Securities lending fees
totaled $28.2 million compared with $33.4 million in last year's second
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SECOND QUARTER PERFORMANCE HIGHLIGHTS (continued)
quarter, reflecting reduced spreads earned on the investment of collateral
resulting from extremely low short-term interest rates, partially offset by
higher lending volumes experienced during the period. Fees from asset management
totaled $52.1 million, which include $4.0 million in investment management fees
relating to the acquired passive asset management business, compared with $46.4
million in the year-ago quarter. Custody fees totaled $54.0 million for the
quarter, compared with $54.5 million a year ago.
C&IS assets under administration totaled $1.66 trillion at June 30,
2003, compared with $1.35 trillion at December 31, 2002 and $1.49 trillion at
June 30, 2002. Of the C&IS assets under administration, $329.2 billion is
managed by Northern Trust, including $70.6 billion of passive assets acquired.
This compares with managed assets of $214.8 billion at December 31, 2002, and
$224.8 billion at June 30, 2002. Assets under administration include $589.2
billion of global custody assets, compared with $496.4 billion one year ago. Net
new recurring C&IS trust business transitioned during the first six months
represents approximately $32 million in annualized fees.
Foreign exchange trading profits were $32.8 million in the quarter
compared with $20.7 million in the first quarter of 2003 and $36.9 million in
the second quarter of last year. The improvement from the first quarter reflects
increased client volumes and greater market volatility in major currencies.
Treasury management fees in the quarter were $24.3 million, virtually
unchanged from the comparable quarter last year. Revenues from security
commissions and trading income were $15.0 million, up 54% from the prior year.
The increase reflects commissions from fixed income security trades and client
portfolio restructurings and transitions. Other operating income was $35.1
million for the second quarter compared with $18.2 million in the same period
last year. The current quarter included the $17.8 million gain from the sale of
the Higgins Road retail branch partially offset by $1.1 million in write-downs
of certain community development investments.
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SECOND QUARTER PERFORMANCE HIGHLIGHTS (continued)
Net interest income for the quarter, stated on a fully taxable
equivalent basis, totaled $150.1 million compared with $163.2 million reported
in the prior year quarter. Total average earning assets of $34.3 billion were 4%
higher than a year ago with the increase concentrated in securities. Average
money market assets decreased slightly while average loans were virtually
unchanged at $17.5 billion. The net interest margin decreased to 1.76% from
1.99% in the prior year due in large part to a decline in the yield on the
residential mortgage loan portfolio from refinancing activity.
The provision for credit losses was $7.5 million in the quarter, up
from $5.0 million in the same period last year due primarily to credit
weaknesses in two middle market loans. Net charge-offs in the quarter totaled
$4.9 million, down from $5.0 million a year ago. Nonperforming assets totaled
$107.9 million at June 30, 2003, compared with $94.6 million at December 31,
2002 and $110.6 million at June 30, 2002. Reserves available for credit losses
totaled $172.7 million and included $7.5 million allocated to loan commitments
and other off-balance sheet exposures. The remaining $165.2 million reserve
assigned to loans at June 30, 2003 represented a reserve to loan ratio of .92%,
compared with .84% a year ago. Nonaccrual loans of $107.5 million at quarter-end
represented .60% of total loans and were covered 1.5 times by the reserve.
Noninterest expenses from continuing operations totaled $412.5 million
for the quarter, up 19% from $346.4 million in the year-ago quarter. The current
quarter includes expenses resulting from severance costs ($22.9 million),
reduced office space needs ($16.1 million) and the standardization, replacement
and elimination of software ($9.5 million). Expenses resulting from the
acquisitions of passive asset management business and Legacy South were $7.2
million.
Compensation and employee benefit expenses totaled $211.7 million,
compared with $190.7 million last year, and included $19.5 million in
severance-related costs. The remainder of the increase from a year ago resulted
primarily from salary increases, partially offset by lower
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SECOND QUARTER PERFORMANCE HIGHLIGHTS (continued)
performance-based compensation. Staff on a full-time equivalent basis at June
30, 2003 totaled 8,239, compared with 9,336 at March 31, 2003 and 9,384 at June
30, 2002. Approximately 670 positions were eliminated as a result of the sales
of NTRC and Higgins branch assets. The remainder of the decrease related to
positions eliminated by the end of June 2003 as part of Northern Trust's
business review.
Other expense categories totaled $200.8 million, up from $155.7 million
last year. The current quarter included the costs associated with reduced office
space ($16.1 million), the standardization, replacement and elimination of
software ($9.5 million) and outplacement benefits ($3.4 million). The remainder
of the increase is primarily related to acquisitions, technology investments
that increased software amortization and equipment-related costs, business
promotion and other professional fees.
BALANCE SHEET
Balance sheet assets averaged $38.6 billion for the quarter, up 4% from
last year's second quarter average of $37.1 billion. Money market assets
averaged $8.6 billion, down slightly from $8.7 billion last year, while the
securities portfolio averaged $8.2 billion, up 23% from last year. The increase
in the securities portfolio was primarily in short-term U.S. agency securities.
Loans and leases averaged $17.5 billion for the quarter, virtually unchanged
from the prior year.
Residential mortgages increased $178 million, or 2%, to average $7.8
billion for the quarter, and represented 44% of the total average loan
portfolio. Commercial and industrial loans averaged $4.0 billion, down $319
million or 7% from a year ago, while personal loans increased $226 million or
10% to average $2.5 billion.
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BALANCE SHEET (continued)
Common stockholders' equity averaged a record $2.9 billion, up 6% from
last year's second quarter. The increase primarily reflects the retention of
earnings offset in part by the repurchase of common stock pursuant to the
Corporation's share buyback program. During the quarter, the Corporation
acquired approximately 39,000 shares at a cost of $1.4 million. An additional
12.0 million shares are authorized for purchase after June 30, 2003 under the
previously announced share buyback program. Also during the quarter, Northern
Trust completed the previously announced redemption of $120 million of its
auction rate preferred stock.
SIX-MONTH PERFORMANCE HIGHLIGHTS
Net income per common share of $.72 for the six-month period ended June
30, 2003, compared with the $1.12 per share earned a year ago. Net income
totaled $161.3 million, compared with $254.4 million reported last year. This
performance resulted in a return on average common equity of 11.21%. The current
year's results include the second quarter $.14 per common share net charge
relating to actions taken in order to reduce operating costs and strategically
position Northern Trust for improved profitability.
Revenues from continuing operations of $1.06 billion were down 3% from
the $1.09 billion last year. Trust fees were $574.5 million in the six-month
period, down 5% compared with $603.8 million in the same period of last year.
Trust fees represented 54% of total revenues, and total fee-related income
represented 71% of total revenues.
Trust fees from Personal Financial Services in the period decreased 7%
and totaled $290.6 million, compared with $313.3 million last year. The decline
in PFS trust fees resulted from the continued decline in the equity markets,
partially offset by net new business. Trust fees resulting from acquisitions
totaled $0.8 million for the period.
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SIX-MONTH PERFORMANCE HIGHLIGHTS (continued)
Trust fees from Corporate & Institutional Services (C&IS) decreased 2%
to $283.9 million from $290.5 million in the year-ago period, and included
approximately $8.5 million in fees resulting from the acquisition of the passive
asset management business. Securities lending fees totaled $50.1 million
compared with $62.2 million last year, reflecting reduced spreads earned on the
investment of collateral resulting from low short-term interest rates, partially
offset by higher lending volumes. Fees from asset management totaled $100.9
million, which include $6.7 million in investment management fees relating to
the acquired passive asset management business, compared with $94.6 million in
the year-ago period. Custody fees totaled $106.9 million for the first six
months, compared with $109.9 million a year ago.
Foreign exchange trading profits were $53.5 million in the period
compared with $61.2 million in the first six months of last year. Treasury
management fees in the period were $48.3 million, up 1% from the comparable
period last year. Revenues from security commissions and trading income were
$27.8 million, up 42% from the prior year. The increase reflects commissions
from fixed income security trades and client portfolio restructurings and
transitions. Other operating income was $52.6 million for the period compared
with $36.4 million in the same period last year. The current year included the
$17.8 million gain from the sale of the Higgins Road retail branch.
Net interest income for the six months, stated on a fully taxable
equivalent basis, totaled $303.6 million compared with $324.1 million reported
in the prior year period. Total average earning assets of $33.8 billion were 1%
higher than a year ago with the increase concentrated in securities. Average
money market assets decreased 4% while average loans were virtually unchanged at
$17.6 billion. The net interest margin decreased to 1.81% from 1.95% in the
prior year due in large part to a decline in the yield on the residential
mortgage loan portfolio due to the impact of refinancing activity.
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SIX-MONTH PERFORMANCE HIGHLIGHTS (continued)
The $12.5 million provision for credit losses was $2.5 million higher
than the $10.0 million required in 2002. Net charge-offs totaled $8.3 million
and represented .10% of average loans compared with $11.3 million or .13% of
average loans in the first six months of 2002.
Noninterest expenses from continuing operations totaled $762.0 million
for the period, up 12% from $678.8 million a year-ago. The current period
includes the previously discussed severance, office space and software charges
which totaled $48.5 million. Expenses resulting from the acquisitions of the
passive asset management business and Legacy South were $11.6 million.
Compensation and employee benefits represented 53% of total operating
expenses and totaled $404.2 million, compared with $378.6 million last year, and
included $19.5 million in severance-related costs. The remainder of the increase
from a year ago resulted primarily from salary increases, partially offset by
lower performance-based compensation.
Other expense categories totaled $357.8 million, up from $300.2 million
last year. The current period includes the previously discussed office space,
software and outplacement benefit charges, which totaled $29.0 million. The
remainder of the increase is primarily related to acquisitions, technology
investments that increased software amortization and equipment-related costs,
business promotion and other professional fees.
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FORWARD-LOOKING STATEMENTS
This news release may be deemed to include forward-looking statements,
such as statements that relate to Northern Trust's financial goals, dividend
policy, expansion and business development plans, projected profit improvements,
business prospects and positioning with respect to market and pricing trends,
strategic initiatives, re-engineering and outsourcing activities, new business
results and outlook, changes in securities market prices, credit quality
including reserve levels, planned capital expenditures and technology spending,
and the effect of extraordinary events and various other matters (including
changes in accounting standards and interpretations) on Northern Trust's
business and results. Forward-looking statements are typically identified by
words or phrases, such as "believe," "expect," "anticipate," "intent,"
"estimate," "may increase," "may fluctuate," and similar expressions or future
or conditional verbs such as "will," "should," "would," and "could."
Forward-looking statements are Northern Trust's current estimates or
expectations of future events or future results. Actual results could differ
materially from those indicated by these statements because the realization of
those results is subject to many risks and uncertainties. Northern Trust
Corporation's 2002 Annual Report to Shareholders, including the section of
Management's Discussion and Analysis captioned "Factors Affecting Future
Results," and periodic reports to the Securities and Exchange Commission contain
additional information about factors that could affect actual results, including
certain economic, interest rate, market and credit risks, competitive
conditions, changes in U.S. and worldwide securities markets, Northern Trust's
success in executing various parts of its business plans, the impact of the
divestiture or discontinuance of portions of Northern Trust's business,
operating and technology risks, including material systems interruptions and
human errors or omissions, risks associated with regulatory changes, and
uncertainties inherent in the litigation process. All forward-looking statements
included in this news release are based on information available at the time of
the release, and Northern Trust Corporation assumes no obligation to update any
forward-looking statement.
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WEBCAST OF SECOND QUARTER EARNINGS CONFERENCE CALL
Northern Trust's second quarter earnings conference call will be
webcast live on July 16, 2003. The Internet webcast opens the call to all
investors, allowing them to listen to the Chief Financial Officer's comments.
The live call will be conducted at 11:00 a.m. CDT and is accessible on Northern
Trust's web site at:
http://www.northerntrust.com/aboutus/news/financial_releases.html
The only authorized rebroadcasts of the live call will be available on Northern
Trust's web site from 2:00 p.m. CDT on July 16, 2003 through 6:00 p.m. on July
23, 2003. Participants will need Windows Mediatm software, which can be
downloaded free through Northern's web site. This earnings release can also be
accessed at the above web address.
/ / /
NORTHERN TRUST CORPORATION Page 1
(Supplemental Consolidated Financial Information)
STATEMENT OF INCOME STATISTICS
- ------------------------------
($ In Millions Except Per Share Data) SECOND QUARTER
- -------------------------------------- --------------------------------------------
2003 2002 % Change (*)
--------------------------------------------
Noninterest Income
Trust Fees $ 293.9 $ 300.3 (2)%
Foreign Exchange Trading Profits 32.8 36.9 (11)
Treasury Management Fees 24.3 24.2 -
Security Commissions & Trading Income 15.0 9.7 54
Other Operating Income 35.1 18.2 93
Investment Security Transactions - 0.1 -
---------- ---------- -----------
Total Noninterest Income 401.1 389.4 3
Interest Income (Taxable Equivalent) 283.3 323.0 (12)
Interest Expense 133.2 159.8 (17)
---------- ---------- -----------
Net Interest Income (Taxable Equivalent) 150.1 163.2 (8)
Total Revenue (Taxable Equivalent) 551.2 552.6 -
Noninterest Expenses
Compensation 177.4 158.6 12
Employee Benefits 34.3 32.1 7
Occupancy Expense 45.2 24.8 82
Equipment Expense 22.7 21.6 5
Other Operating Expenses 132.9 109.3 22
---------- ---------- -----------
Total Noninterest Expenses 412.5 346.4 19
Provision for Credit Losses 7.5 5.0 50
Taxable Equivalent Adjustment 13.1 11.9 10
---------- ---------- -----------
Income from Continuing Operations before Income Taxes 118.1 189.3 (38)
Provision for Income Taxes 36.7 63.4 (42)
---------- ---------- -----------
Income from Continuing Operations 81.4 125.9 (35)
---------- ---------- -----------
Income (Loss) from Operations of Discontinued NTRC (4.1) 1.5 -
Loss on Disposal of NTRC (20.2) - -
Income Tax Benefit (Expense) 9.5 (0.6) -
---------- ---------- -----------
Net Income (Loss) from Discontinued Operations (14.8) 0.9 -
---------- ---------- -----------
NET INCOME $ 66.6 $ 126.8 (48)%
=========== ========== ===========
Per Common Share
Income from Continuing Operations
Basic $ 0.37 $ 0.57 (35)%
Diluted 0.36 0.55 (35)
Net Income
Basic $ 0.30 $ 0.57 (47)%
Diluted 0.30 0.56 (46)
Return on Average Common Equity 9.16% 18.57%
Average Common Equity $ 2,903.2 $ 2,727.3 6 %
Return on Average Assets 0.69% 1.37%
Common Dividend Declared per Share $ 0.17 $ 0.17 - %
Preferred Dividends (millions) 0.3 0.6 (50)
Average Common Shares Outstanding (000s)
Basic 220,297 220,864
Diluted 223,846 226,552
Common Shares Outstanding (EOP) 220,780 221,667
----------
(*) Percentage change calculations are based on actual balances rather than the
rounded amounts presented in Supplemental Consolidated Financial
Information.
Note: Certain reclassifications have been made to the prior period's financial
statements to place them on a basis comparable with the current period's
financial statements.
NORTHERN TRUST CORPORATION Page 2
(Supplemental Consolidated Financial Information)
STATEMENT OF INCOME STATISTICS
- --------------------------------------
($ In Millions Except Per Share Data) SIX MONTHS
- -------------------------------------- --------------------------------------------------
2003 2002 % Change (*)
--------------------------------------------------
Noninterest Income
Trust Fees $ 574.5 $ 603.8 (5)%
Foreign Exchange Trading Profits 53.5 61.2 (13)
Treasury Management Fees 48.3 48.0 1
Security Commissions & Trading Income 27.8 19.6 42
Other Operating Income 52.6 36.4 45
Investment Security Transactions - 0.1 -
------------ ------------ ------------
Total Noninterest Income 756.7 769.1 (2)
Interest Income (Taxable Equivalent) 570.7 649.7 (12)
Interest Expense 267.1 325.6 (18)
------------ ------------ ------------
Net Interest Income (Taxable Equivalent) 303.6 324.1 (6)
Total Revenue (Taxable Equivalent) 1,060.3 1,093.2 (3)
Noninterest Expenses
Compensation 335.7 312.4 7
Employee Benefits 68.5 66.2 3
Occupancy Expense 73.2 49.6 48
Equipment Expense 45.1 43.1 5
Other Operating Expenses 239.5 207.5 15
------------ ------------ ------------
Total Noninterest Expenses 762.0 678.8 12
Provision for Credit Losses 12.5 10.0 25
Taxable Equivalent Adjustment 25.9 23.6 10
------------ ------------ ------------
Income from Continuing Operations before Income Taxes 259.9 380.8 (32)
Provision for Income Taxes 81.9 128.3 (36)
------------ ------------ ------------
Income from Continuing Operations 178.0 252.5 (29)
------------ ------------ ------------
Income (Loss) from Operations of Discontinued NTRC (7.1) 3.1 -
Loss on Disposal of NTRC (20.2) - -
Income Tax Benefit (Expense) 10.6 (1.2) -
------------ ------------ ------------
Net Income (Loss) from Discontinued Operations (16.7) 1.9 -
------------ ------------ ------------
NET INCOME $ 161.3 $ 254.4 (37)%
============ ============ ============
Per Common Share
Income from Continuing Operations
Basic $ 0.80 $ 1.14 (30)%
Diluted 0.79 1.11 (29)
Net Income
Basic $ 0.73 $ 1.15 (37)%
Diluted 0.72 1.12 (36)
Return on Average Common Equity 11.21 % 18.99 %
Average Common Equity $2,887.6 $ 2,690.5 7 %
Return on Average Assets 0.86 % 1.37 %
Common Dividends Declared per Share $ 0.34 $ 0.34 - %
Preferred Dividends (millions) 0.7 1.1 (34)
Average Common Shares Outstanding (000s)
Basic 220,335 220,859
Diluted 223,642 226,960
Common Shares Outstanding (EOP) 220,780 221,667
------------
NORTHERN TRUST CORPORATION Page 3
(Supplemental Consolidated Financial Information)
BALANCE SHEET ($ IN MILLIONS)
- ----------------------------
JUNE 30
-------------------------------------------
2003 2002 % Change (*)
-------------------------------------------
Assets
- ------
Money Market Assets $ 8,568.1 $ 7,732.6 11%
Securities
U.S. Government 104.5 159.6 (35)
Federal Agency and Other 6,807.6 5,695.6 20
Municipal 877.3 637.5 38
Trading Account 10.7 13.2 (19)
----------- ----------- -------
Total Securities 7,800.1 6,505.9 20
Loans and Leases 17,956.2 18,273.8 (2)
----------- ----------- -------
Total Earning Assets 34,324.4 32,512.3 6
Reserve for Credit Losses Assigned to Loans (165.2) (153.3) 8
Cash and Due from Banks 2,340.1 2,369.9 (1)
Trust Security Settlement Receivables 176.0 771.6 (77)
Buildings and Equipment 508.9 497.3 2
Other Nonearning Assets 1,886.8 1,803.6 5
----------- ----------- -------
Total Assets $ 39,071.0 $ 37,801.4 3%
=========== =========== =======
Liabilities and Stockholders' Equity
- ------------------------------------
Interest-Bearing Deposits
Savings $ 8,569.0 $ 8,005.2 7%
Other Time 305.9 343.2 (11)
Foreign Office Time 10,302.7 8,902.7 16
----------- ----------- -------
Total Interest-Bearing Deposits 19,177.6 17,251.1 11
Borrowed Funds 7,702.4 8,806.5 (13)
Senior Notes and Long-Term Debt 1,583.2 1,484.1 7
----------- ----------- -------
Total Interest-Related Funds 28,463.2 27,541.7 3
Demand & Other Noninterest-Bearing Deposits 6,121.7 5,672.4 8
Other Liabilities 1,540.0 1,674.0 (8)
----------- ----------- -------
Total Liabilities 36,124.9 34,888.1 4
Common Equity 2,946.1 2,793.3 5
Preferred Equity - 120.0 -
----------- ----------- -------
Total Liabilities and Stockholders' Equity $ 39,071.0 $ 37,801.4 3%
----------- =========== =======
NORTHERN TRUST CORPORATION Page 4
(Supplemental Consolidated Financial Information)
AVERAGE BALANCE SHEET ($ IN MILLIONS)
- -------------------------------------
SECOND QUARTER
------------------------------------------------------
2003 2002 % Change (*)
------------------------------------------------------
Assets
- ------
Money Market Assets $ 8,597.8 $ 8,728.2 (1)%
Securities
U.S. Government 109.5 165.6 (34)
Federal Agency and Other 7,164.6 5,858.7 22
Municipal 872.1 602.8 45
Trading Account 7.5 9.2 (19)
--------------- -------------- ------------
Total Securities 8,153.7 6,636.3 23
Loans and Leases 17,546.7 17,607.2 -
--------------- -------------- ------------
Total Earning Assets 34,298.2 32,971.7 4
Reserve for Credit Losses Assigned to Loans (163.8) (153.3) 7
Nonearning Assets 4,426.7 4,267.4 4
--------------- -------------- ------------
Total Assets $38,561.1 $37,085.8 4 %
=============== ============== ============
Liabilities and Stockholders' Equity
- ------------------------------------
Interest-Bearing Deposits
Savings $ 8,366.2 $ 7,952.4 5 %
Other Time 327.6 385.7 (15)
Foreign Office Time 10,341.0 9,361.5 10
--------------- -------------- ------------
Total Interest-Bearing Deposits 19,034.8 17,699.6 8
Borrowed Funds 8,416.8 8,636.2 (3)
Senior Notes and Long-Term Debt 1,616.2 1,484.1 9
--------------- -------------- ------------
Total Interest-Related Funds 29,067.8 27,819.9 4
Demand & Other Noninterest-Bearing Deposits 4,942.0 5,180.5 (5)
Other Liabilities 1,572.9 1,238.1 27
--------------- -------------- ------------
Total Liabilities 35,582.7 34,238.5 4
Common Equity 2,903.2 2,727.3 6
Preferred Equity 75.2 120.0 (37)
--------------- -------------- ------------
Total Liabilities and Stockholders' Equity $38,561.1 $37,085.8 4 %
=============== ============== ============
NORTHERN TRUST CORPORATION Page 5
(Supplemental Consolidated Financial Information)
QUARTERLY TREND DATA
- --------------------- 2003 2002
($ In Millions Except Per Share Data) Quarters Quarters
- ------------------------------------- ------------------------- -------------------------------------
Second First Fourth Third Second
------------------------- -------------------------------------
Net Income Summary
- ------------------
Trust Fees $ 293.9 $ 280.6 $ 275.8 $ 281.4 $ 300.3
Other Noninterest Income 107.2 75.0 65.9 72.5 89.1
Net Interest Income (Taxable Equivalent) 150.1 153.5 164.3 162.1 163.2
------------ ---------- ---------- ---------- -----------
Total Revenue (Taxable Equivalent) 551.2 509.1 506.0 516.0 552.6
Provision for Credit Losses 7.5 5.0 7.5 20.0 5.0
Noninterest Expenses 412.5 349.5 342.3 338.9 346.4
------------ ---------- ---------- ---------- -----------
Pretax Income (Taxable Equivalent) 131.2 154.6 156.2 157.1 201.2
Taxable Equivalent Adjustment 13.1 12.8 12.9 12.2 11.9
Provision for Income Taxes 36.7 45.2 46.1 47.5 63.4
------------ ---------- ---------- ---------- -----------
Income from Continuing Operations 81.4 96.6 97.2 97.4 125.9
Discontinued Operations/Loss on Sale of NTRC (14.8) (1.9) (0.9) (1.0) 0.9
------------ ---------- ---------- ---------- -----------
Net Income $ 66.6 $ 94.7 $ 96.3 $ 96.4 $ 126.8
============ ========== ========== ========== ===========
Per Common Share
- ----------------
Net Income - Basic $ 0.30 $ 0.43 $ 0.43 $ 0.44 $ 0.57
- Diluted 0.30 0.42 0.43 0.43 0.56
Dividend Declared 0.17 0.17 0.17 0.17 0.17
Book Value (EOP) 13.34 13.18 13.04 12.79 12.60
Market Value (EOP) 41.60 30.45 35.05 37.72 44.06
Ratios
- ------
Return on Average Common Equity 9.16 % 13.32 % 13.43 % 13.69 % 18.57 %
Return on Average Assets 0.69 1.03 0.98 1.05 1.37
Net Interest Margin 1.76 1.87 1.85 1.98 1.99
Productivity Ratio - Continuing Operations 134 % 146 % 148 % 152 % 160 %
Risk-based Capital Ratios
Tier 1 11.0 % 11.1 % 11.1 % 10.9 % 10.8 %
Total (Tier 1 + Tier 2) 14.2 15.0 14.1 13.9 13.9
Leverage 7.8 7.9 7.8 8.2 8.0
Trust Assets ($ in Billions) - EOP
- ----------------------------------
Corporate $1,657.0 $1,429.9 $1,346.9 $1,285.8 $1,487.9
Personal 172.9 156.0 156.7 150.7 163.4
------------ ---------- ---------- ---------- -----------
Total Trust Assets $1,829.9 $1,585.9 $1,503.6 $1,436.5 $1,651.3
============ ========== ========== ========== ===========
Memo: Managed Assets $ 423.4 $ 365.3 $ 302.5 $ 293.2 $ 316.6
Asset Quality ($ in Millions) - EOP
- -----------------------------------
Nonaccrual Loans $ 107.5 $ 92.4 $ 93.4 $ 106.5 $ 109.7
Other Real Estate Owned (OREO) 0.4 1.2 1.2 1.1 0.9
------------ ---------- ---------- ---------- -----------
Total Nonperforming Assets $ 107.9 $ 93.6 $ 94.6 $ 107.6 $ 110.6
============ ========== ========== ========== ===========
Nonperforming Assets / Loans & OREO 0.60 % 0.52 % 0.52 % 0.60 % 0.61 %
Gross Charge-offs $ 5.4 $ 6.0 $ 11.2 $ 13.5 $ 5.4
Gross Recoveries 0.5 2.6 3.8 1.6 0.4
------------ ---------- ---------- ---------- -----------
Net Charge-offs $ 4.9 $ 3.4 $ 7.4 $ 11.9 $ 5.0
============ ========== ========== ========== ===========
Net Charge-offs (Annualized) to Average Loans 0.11 % 0.08 % 0.17 % 0.27 % 0.11 %
Reserve for Credit Losses Assigned to Loans $ 165.2 $ 162.4 $ 161.1 $ 160.3 $ 153.3
Reserve to Nonaccrual Loans 154 % 176 % 172 % 151 % 140 %
Reserve for Other Credit-Related Exposures $ 7.5 $ 7.7 $ 7.4 $ 8.1 $ 7.0