Northern Trust Q2 Adj Profit Tops View, Revenues Match

(RTTNews) - Regional bank Northern Trust Corp. (NTRS) reported Wednesday a profit for the second quarter that decreased five percent from last year, hurt by charges and write-offs as well as higher noninterest expense. However, adjusted earnings per share topped analysts' expectations, while quarterly revenues matched their estimates.

"Our business continued to expand in the second quarter as trust, investment and other servicing fees, which represent 65% of revenue, increased 8% compared to last year and assets under custody and under management increased 20% and 15%, respectively," Chairman and CEO Frederick Waddell said in a statement.

Chicago-based custodian bank reported net income allocated to common and potential common shares of $178.8 million or $0.75 per share for the second quarter, lower than $187.0 million or $0.78 per share in the prior-year quarter.

The results for the latest quarter include pre-tax charges and write-offs totaling $42.3 million. Excluding these items, adjusted net income for the quarter was $209.8 million and $0.87 per share.

On average, 19 analysts polled by Thomson Reuters expected the company to report earnings of $0.84 per share for the quarter. Analysts' estimates typically exclude one-time items.

Consolidated revenues for the quarter grew 6 percent to $1.08 billion from $1.02 billion in the same quarter last year, and matched sixteen Wall Street analysts' consensus estimate.

Non-interest income, which represented 77 percent of revenues, increased 4 percent from last year to $835.1 million, primarily reflecting an 8 percent growth in trust, investment and other servicing fees to $706.9 million, partially offset by lower foreign exchange trading income.

Net interest income on a fully taxable equivalent basis increased 11 percent to $253.4 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 1.06 percent from last year's 1.10 percent. Meanwhile, there were no provision for credit losses this quarter, compared to last year's $5 million.

Noninterest expense for the quarter increased 11 percent to $811.0 million, primarily reflecting higher compensation, equipment and software and outside services expense.

Total assets under custody increased 20 percent to $6.00 trillion, and assets under management grew 15 percent to $924.4 billion from last year.

"The growth of our business, coupled with a focus on sustainable improvements, will allow us to improve our financial performance and the positioning of our business," Waddell added.

In Wednesday's regular trading session, NTRS is currently trading at $64.38, down $0.10 or 0.16% on a volume of 0.39 million shares.