Northern Trust Q1 Results Miss Estimates

(RTTNews) - Regional bank Northern Trust Corp. (NTRS) reported Tuesday a profit for the first quarter that increased 11 percent from last year, reflecting higher trust, investment and other servicing fees and revenue growth. However, both earnings per share and quarterly revenues missed analysts' expectations.

"Our first quarter 2014 results improved compared to a year ago with trust, investment and other servicing fees increasing 8%, total revenue increasing 7% and net income and earnings per share increasing 11 and 12%, respectively. We also experienced strong growth in client assets under custody and under management of 15% and 13%, respectively," Chairman and CEO Frederick Waddell said.

Chicago-based custodian bank reported net income of $181.4 million or $0.75 per share for the first quarter, higher than $164 million or $0.67 per share in the prior-year quarter, which included total $0.04 per share of write-off of certain fee receivables as well as restructuring and integration related charges.

On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $0.78 per share for the quarter. Analysts' estimates typically exclude one-time items.

Consolidated revenues for the quarter grew 7 percent to $1.04 billion from $976.40 million in the same quarter last year, but missed sixteen Wall Street analysts' consensus estimate of $1.07 billion.

Non-interest income, which represented 76 percent of revenue, grew 6 percent from last year to $794.8 million, primarily reflecting an 8 percent growth in trust, investment and other servicing fees, partially offset by lower foreign exchange trading income.

Net interest income on a fully taxable equivalent basis increased 9 percent to $245.7 million from last year, primarily due to higher levels of average earning assets, partially offset by a continued decline in net interest margin.

Net interest margin on a fully taxable equivalent basis declined to 1.12 percent from last year's 1.15 percent. Meanwhile, provision for credit losses declined to $3 million from last year's $5 million.

Total assets under custody increased 15 percent to $5.75 trillion, and assets under management grew 13 percent to $915.4 billion from last year.

"Northern Trust's financial strength is evidenced in our capital ratios, and we are pleased that the Federal Reserve did not object to the proposed capital actions contained in our 2014 Capital Plan, which provides us with the flexibility to return more capital to our stockholders in the year ahead," Waddell added.

Looking ahead, the company noted that it continues to focus on enhancing productivity and efficiency, while investing in people and technology to serve its growing businesses, expand its capabilities and continue to satisfy evolving regulatory requirements.

In Tuesday's regular trading session, NTRS is currently trading at $60.00, down $1.22 or 1.99% on a volume of 0.22 million shares. In the past 52-week period, the stock has been trading in a range of $51.90 to $67.17.