<PAGE>
________________________________________________________________________________
________________________________________________________________________________
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
_______
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1994
OR
_______ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER 0-5965
NORTHERN TRUST CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-2723087
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
50 SOUTH LA SALLE STREET
CHICAGO, ILLINOIS 60675
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (312) 630-6000
____________________________
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
______ ______
54,162,085 SHARES - $1.66 2/3 PAR VALUE
(SHARES OF COMMON STOCK OUTSTANDING ON SEPTEMBER 30, 1994)
________________________________________________________________________________
________________________________________________________________________________
1
<PAGE>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEET Northern Trust Corporation
<TABLE>
<CAPTION>
SEPTEMBER 30 December 31 September 30
------------ ----------- ------------
($ In Millions) 1994 1993 1993
- ------------------------------------- ------------ ----------- ------------
<S> <C> <C> <C>
ASSETS
Cash and Due from Banks $ 1,309.9 $ 1,519.7 $ 698.7
Money Market Assets
Federal Funds Sold and Securities
Purchased under Agreements to Resell 193.1 577.8 707.0
Time Deposits with Banks 2,121.0 2,090.4 2,237.0
Other 111.5 72.3 77.5
- ------------------------------------- --------- --------- ---------
Total 2,425.6 2,740.5 3,021.5
- ------------------------------------- --------- --------- ---------
Securities (Fair value $5,517.6 at
September 1994, $4,093.5 at December
1993 and $4,079.3 at September 1993) 5,491.4 4,038.7 4,018.3
Loans and Leases (Net of unearned
income of $68.3 at September 1994,
$69.4 at December 1993 and $71.4 at
September 1993) 8,452.6 7,623.0 7,919.9
Reserve for Credit Losses (144.9) (145.5) (145.5)
Buildings and Equipment 271.8 291.9 288.5
Customers' Acceptance Liability 64.9 56.9 70.4
Trust Security Settlement Receivables 210.9 293.1 335.2
Other Assets 587.5 484.3 530.2
- ------------------------------------- --------- --------- ---------
Total Assets $18,669.7 $16,902.6 $16,737.2
- ------------------------------------- --------- --------- ---------
LIABILITIES
Deposits
Demand and Other Noninterest-Bearing $ 2,344.1 $ 2,464.7 $ 2,958.7
Savings and Money Market Deposits 3,142.8 3,387.6 3,450.7
Savings Certificates 1,279.7 1,111.3 1,137.3
Other Time 289.1 333.4 346.9
Foreign Offices -- Demand 509.4 297.1 148.8
-- Time 3,706.0 2,739.3 2,273.3
- ------------------------------------- --------- --------- ---------
Total Deposits 11,271.1 10,333.4 10,315.7
Federal Funds Purchased 1,102.3 1,215.8 713.7
Securities Sold under Agreements to
Repurchase 994.6 602.2 519.2
Commercial Paper 172.3 124.1 113.1
Other Borrowings 2,262.4 2,001.2 2,620.7
Senior Medium-Term Notes 807.0 817.0 667.0
Notes Payable (Qualifying for risk-
based capital, $168.8 at September
1994, $183.4 at December 1993 and
$183.4 at September 1993) 248.3 326.8 330.0
Liability on Acceptances 64.9 56.9 70.4
Other Liabilities 485.9 273.5 271.7
- ------------------------------------- --------- --------- ---------
Total Liabilities 17,408.8 15,750.9 15,621.5
- ------------------------------------- --------- --------- ---------
STOCKHOLDERS' EQUITY
Preferred Stock 170.0 170.0 170.0
Common Stock -- $1.66 2/3 Par Value 90.6 89.7 89.7
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1994 December 1993 September 1993
<S> <C> <C> <C>
---------------------------------------------------------------
Shares authorized 140,000,000 140,000,000 140,000,000
Shares issued 54,360,374 53,826,261 53,826,261
Shares outstanding 54,162,085 53,292,967 53,108,732
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Capital Surplus 302.2 303.0 301.9
Retained Earnings 738.8 631.9 602.0
Net Unrealized Loss on Securities
Available for Sale (12.9) (.4) (.3)
Translation Adjustments -- .6 .6
Common Stock Issuable -- Performance
Plan 20.2 11.8 14.0
Deferred Compensation -- ESOP and
Other (43.2) (43.5) (47.8)
Treasury Stock -- at cost, 198,289
shares at September 1994, 533,294
shares at December 1993 and 717,529
shares at September 1993 (4.8) (11.4) (14.4)
- ------------------------------------- --------- --------- ---------
Total Stockholders' Equity 1,260.9 1,151.7 1,115.7
- ------------------------------------- --------- --------- ---------
Total Liabilities and Stockholders'
Equity $18,669.7 $16,902.6 $16,737.2
- ------------------------------------- --------- --------- ---------
</TABLE>
2
<PAGE>
CONSOLIDATED STATEMENT OF INCOME Northern Trust Corporation
<TABLE>
<CAPTION>
THIRD QUARTER NINE MONTHS
($ In Millions Except Per Share ---------------------- ----------------------
Information) 1994 1993 1994 1993
- ------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest Income
Money Market Assets
Federal Funds Sold and
Securities Purchased under
Agreements to Resell $ 2.0 $ 1.6 $ 6.0 $ 4.6
Time Deposits with Banks 26.1 24.2 74.7 66.0
Other 1.7 .6 4.4 1.9
- ------------------------------- ---------- ---------- ---------- ----------
Total 29.8 26.4 85.1 72.5
- ------------------------------- ---------- ---------- ---------- ----------
Securities 62.1 43.2 161.1 132.0
Loans and Leases 129.6 111.4 359.5 325.0
- ------------------------------- ---------- ---------- ---------- ----------
Total Interest Income 221.5 181.0 605.7 529.5
- ------------------------------- ---------- ---------- ---------- ----------
Interest Expense
Deposits -- Savings and Money
Market Deposits 22.1 19.3 61.8 59.4
-- Savings Certificates 14.4 12.4 38.2 38.8
-- Other Time 5.5 3.7 12.9 12.2
-- Foreign Offices 38.2 22.8 92.4 67.2
Federal Funds Purchased 13.3 13.8 40.1 39.0
Securities Sold under
Agreements to Repurchase 19.8 4.8 39.5 13.6
Commercial Paper 1.7 .9 4.0 3.2
Other Borrowings 5.9 8.3 25.8 20.5
Senior Medium-Term Notes 9.5 5.4 23.5 13.3
Notes Payable 5.4 6.4 18.0 17.0
- ------------------------------- ---------- ---------- ---------- ----------
Total Interest Expense 135.8 97.8 356.2 284.2
- ------------------------------- ---------- ---------- ---------- ----------
Net Interest Income 85.7 83.2 249.5 245.3
Provision for Credit Losses 1.0 5.0 5.0 17.0
- ------------------------------- ---------- ---------- ---------- ----------
Net Interest Income after
Provision for Credit Losses 84.7 78.2 244.5 228.3
- ------------------------------- ---------- ---------- ---------- ----------
Noninterest Income
Trust Fees 115.8 102.7 338.8 300.1
Security Commissions and
Trading Income 3.7 4.4 15.5 14.7
Other Operating Income 32.6 32.1 125.1 95.2
Investment Security Gains
(Losses) (.2) -- (0.1) 1.7
- ------------------------------- ---------- ---------- ---------- ----------
Total Noninterest Income 151.9 139.2 479.3 411.7
- ------------------------------- ---------- ---------- ---------- ----------
Income before Noninterest
Expenses 236.6 217.4 723.8 640.0
- ------------------------------- ---------- ---------- ---------- ----------
Noninterest Expenses
Salaries 80.6 72.5 235.6 219.5
Pension and Other Employee
Benefits 18.1 16.6 56.2 50.7
Occupancy Expense 14.4 13.6 42.7 40.8
Equipment Expense 10.8 10.1 44.8 30.8
Other Operating Expenses 42.3 44.9 136.3 124.8
- ------------------------------- ---------- ---------- ---------- ----------
Total Noninterest Expenses 166.2 157.7 515.6 466.6
- ------------------------------- ---------- ---------- ---------- ----------
Income before Income Taxes 70.4 59.7 208.2 173.4
Provision for Income Taxes
(Includes related investment
security transactions tax
benefit of $.1 for the third
quarter of 1994 versus none in
1993, and none for the nine
months in 1994 versus a
provision of $.6 in 1993) 22.4 16.9 66.1 48.8
- ------------------------------- ---------- ---------- ---------- ----------
NET INCOME $ 48.0 $ 42.8 $142.1 $124.6
- ------------------------------- ---------- ---------- ---------- ----------
Net Income Applicable to Common
Stock $ 46.2 $ 41.2 $136.9 $119.9
- ------------------------------- ---------- ---------- ---------- ----------
NET INCOME PER COMMON SHARE
-- PRIMARY $ .83 $ .75 $ 2.48 $ 2.20
-- FULLY DILUTED .83 .75 2.47 2.19
- ------------------------------- ---------- ---------- ---------- ----------
Average Number of Common Shares
Outstanding -- Primary 55,334,790 54,575,105 55,095,368 54,572,715
-- Fully Diluted 56,539,610 55,786,689 56,304,643 55,849,569
- ------------------------------- ---------- ---------- ---------- ----------
</TABLE>
3
<PAGE>
Northern Trust Corporation
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30
------------------
($ In Millions) 1994 1993
- ---------------------------------------------------- -------- --------
<S> <C> <C>
PREFERRED STOCK
Balance at January 1 and September 30 $ 170.0 $ 170.0
- ---------------------------------------------------- -------- --------
COMMON STOCK
Balance at January 1 89.7 89.7
Pooled Affiliate -- Stock Issued .9 --
- ---------------------------------------------------- -------- --------
Balance at September 30 90.6 89.7
- ---------------------------------------------------- -------- --------
CAPITAL SURPLUS
Balance at January 1 303.0 300.0
Stock Issued -- Incentive Plan and Awards (.4) 1.9
Pooled Affiliate (.4) --
- ---------------------------------------------------- -------- --------
Balance at September 30 302.2 301.9
- ---------------------------------------------------- -------- --------
RETAINED EARNINGS
Balance at January 1 631.9 511.7
Net Income 142.1 124.6
Dividends Declared on Common Stock (35.6) (29.4)
Dividends Declared on Preferred Stock (5.0) (4.9)
Pooled Affiliate 5.4 --
- ---------------------------------------------------- -------- --------
Balance at September 30 738.8 602.0
- ---------------------------------------------------- -------- --------
NET UNREALIZED LOSS ON SECURITIES AVAILABLE FOR SALE
Balance at January 1 (.4) (1.3)
Unrealized Gain (Loss), net (12.5) 1.0
- ---------------------------------------------------- -------- --------
Balance at September 30 (12.9) (.3)
- ---------------------------------------------------- -------- --------
TRANSLATION ADJUSTMENTS
Balance at January 1 .6 .6
Sale of Foreign Investment (.6) --
- ---------------------------------------------------- -------- --------
Balance at September 30 -- .6
- ---------------------------------------------------- -------- --------
COMMON STOCK ISSUABLE -- PERFORMANCE PLAN
Balance at January 1 11.8 8.1
Stock Issuable, net of Stock Issued 8.4 5.9
- ---------------------------------------------------- -------- --------
Balance at September 30 20.2 14.0
- ---------------------------------------------------- -------- --------
DEFERRED COMPENSATION -- ESOP AND OTHER
Balance at January 1 (43.5) (49.5)
Compensation Deferred (5.3) (3.1)
Compensation Amortized 5.6 4.8
- ---------------------------------------------------- -------- --------
Balance at September 30 (43.2) (47.8)
- ---------------------------------------------------- -------- --------
TREASURY STOCK
Balance at January 1 (11.4) (18.8)
Stock Options and Awards 9.0 6.1
Stock Purchased (2.4) (1.7)
- ---------------------------------------------------- -------- --------
Balance at September 30 (4.8) (14.4)
- ---------------------------------------------------- -------- --------
TOTAL STOCKHOLDERS' EQUITY AT SEPTEMBER 30 $1,260.9 $1,115.7
- ---------------------------------------------------- -------- --------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS NORTHERN TRUST CORPORATION
NINE MONTHS
ENDED SEPTEMBER 30
-------------------------------
(In Millions) 1994 1993
- ---------------------------------------------------------------------------------- ---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 142.1 $ 124.6
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Provision for Credit Losses 5.0 17.0
Depreciation and Amortization 16.1 29.3
Decrease (Increase) in Interest Receivable 14.8 (17.1)
Increase (Decrease) in Interest Payable 5.8 (2.7)
Amortization and Accretion of Securities and Unearned Income 8.4 63.7
Gain on Sale of Foreign Investment (34.5) -
Net (Increase) Decrease in Trading Account Securities 17.1 (28.8)
Other Noncash, net 89.2 21.1
- ---------------------------------------------------------------------------------- ---------- ----------
Net Cash Provided by Operating Activities 264.0 207.1
- ---------------------------------------------------------------------------------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of Securities - Held to Maturity (344.3) (275.3)
Proceeds from Maturity and Redemption of Securities - Held to Maturity 374.5 281.2
Purchases of Securities - Available for Sale (6,839.5) (3,008.6)
Proceeds from Sale of Securities - Available for Sale 298.3 126.8
Proceeds from Maturity and Redemption of Securities - Available for Sale 5,011.2 2,010.4
Net Decrease (Increase) in Federal Funds Sold and Securities Purchased 384.7 (250.5)
under Agreements to Resell
Net Increase in Time Deposits with Banks (30.6) (377.5)
Net (Increase) Decrease in Other Money Market Assets (35.5) 4.8
Net Increase in Loans and Leases (837.2) (1,007.0)
Purchases of Buildings and Equipment (31.4) (35.2)
Proceeds from Sale of Buildings and Equipment 25.7 -
Sale of Foreign Investment 58.1 -
Net Decrease in Trust Security Settlement Receivables 82.2 226.9
Other, net 10.5 4.6
- ---------------------------------------------------------------------------------- ---------- ----------
Net Cash Used in Investing Activities (1,873.3) (2,299.4)
- ---------------------------------------------------------------------------------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Increase in Demand and Other Noninterest-Bearing Deposits 91.7 395.3
Net Decrease in Savings and Money Market Deposits (244.8) (160.8)
Net Increase in Certificates of Deposit and Other Interest-Bearing Deposits 1,090.8 210.4
Net Increase in Federal Funds Purchased and Short-Term Other Borrowings 540.2 1,004.7
Proceeds from Other Borrowed Funds 3,113.6 917.2
Repayments of Other Borrowed Funds (3,113.7) (1,057.6)
Net Increase (Decrease) in Commercial Paper 48.2 (13.9)
Proceeds from Senior Medium-Term Notes and Notes Payable 330.0 455.0
Repayments of Senior Medium-Term Notes and Notes Payable (418.5) (3.2)
Redemption (Purchase) of Treasury Stock 2.9 (.9)
Net Proceeds from Stock Options .4 3.0
Cash Dividends Paid on Common and Preferred Stock (40.2) (34.3)
Other, net (1.1) 4.3
- ---------------------------------------------------------------------------------- ---------- ----------
Net Cash Provided by Financing Activities 1,399.5 1,719.2
- ---------------------------------------------------------------------------------- ---------- ----------
Decrease in Cash and Due from Banks (209.8) (373.1)
Cash and Due from Banks at Beginning of Year 1,519.7 1,071.8
- ---------------------------------------------------------------------------------- ---------- ----------
CASH AND DUE FROM BANKS AT SEPTEMBER 30 $ 1,309.9 $ 698.7
- ---------------------------------------------------------------------------------- ---------- ----------
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Acquisition of Affiliate for Stock, net $ 6.4 $ -
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest Paid on Deposits, Short-Term Borrowings and Notes Payable $ 350.5 $ 287.0
Income Taxes Paid 34.5 30.6
- ---------------------------------------------------------------------------------- ---------- ----------
</TABLE>
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION - The consolidated financial statements include
the accounts of Northern Trust Corporation and its subsidiaries, all of which
are wholly owned. Significant intercompany balances and transactions have been
eliminated. The financial statements as of September 30, 1994 and 1993 have
not been audited by independent public accountants. In the opinion of
management, all adjustments necessary for a fair presentation of the financial
position and the results of operations for the interim periods have been made.
All such adjustments are of a normal recurring nature. For a description of
significant accounting principles of the Corporation, see the Notes to Financial
Statements in the 1993 Annual Report to Stockholders.
2. SECURITIES - The Corporation adopted Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," effective January 1, 1994. Under SFAS No. 115, debt and equity
securities not intended to be held to maturity and not held for trading are
classified as "available for sale". Such securities are reported at fair value
with both unrealized gains and losses credited or charged, net of tax effect,
directly to stockholders' equity. As of September 30, 1994, stockholders'
equity decreased by $12.8 million, net of tax, to recognize the depreciation on
securities available for sale.
Realized gains and losses on securities available for sale are determined on a
specific identification basis and are reported in the consolidated statement of
income as investment security gains and losses. Realized gross gains and losses
related to securities available for sale totaled $.2 million and $.3 million,
respectively, for the nine months ended September 30, 1994.
The following table summarizes the book and fair values of securities of the
Corporation.
<TABLE>
<CAPTION>
September 30, 1994 December 31, 1993 September 30, 1993
-------------------- -------------------- --------------------
Book Fair Book Fair Book Fair
($ In Millions) Value Value Value Value Value Value
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Held to Maturity
U.S. Government $ 105.5 $ 105.4 $2,343.7 $2,345.6 $2,520.5 $2,526.2
Obligations of States and Political Subdivisions 455.1 481.4 493.5 546.9 502.1 559.9
Federal Agency - - 833.1 831.8 689.5 687.0
Other 29.9 29.9 120.5 120.7 145.1 145.0
-------- -------- -------- -------- -------- --------
Subtotal 590.5 616.7 3,790.8 3,845.0 3,857.2 3,918.1
-------- -------- -------- -------- -------- --------
Available for Sale*
U.S. Government 861.3 861.3 - - - -
Federal Agency 3,611.8 3,611.8 77.7 78.2 - -
Other 367.8 367.8 133.9 134.0 130.7 130.8
-------- -------- -------- -------- -------- --------
Subtotal 4,840.9 4,840.9 211.6 212.2 130.7 130.8
-------- -------- -------- -------- -------- --------
Trading Account 60.0 60.0 36.3 36.3 30.4 30.4
-------- -------- -------- -------- -------- --------
Total Securities $5,491.4 $5,517.6 $4,038.7 $4,093.5 $4,018.3 $4,079.3
-------- -------- -------- -------- -------- --------
</TABLE>
*Prior to 1994, securities shown as available for sale were classified as held
for sale and carried at the lower of cost or fair value.
6
<PAGE>
The following table provides a breakdown of gross unrealized holding gains and
losses by major security type.
<TABLE>
<CAPTION>
September 30, 1994
---------------------------------
Gross
Unrealized
Book ------------- Fair
($ In Millions) Value Gains Losses Value
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Securities Held to Maturity
U.S. Government $105.5 $ - $ .1 $105.4
Obligations of States and
Political Subdivisions 455.1 27.8 1.5 481.4
Other 29.9 - - 29.9
- -------------------------------------------------------------------------
Total Securities Held to Maturity $590.5 $27.8 $1.6 $616.7
- -------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
September 30, 1994
---------------------------------
Gross
Unrealized Book/
Amortized ------------- Fair
($ In Millions) Cost Gains Losses Value
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Securities Available for Sale
U.S. Government $ 876.0 $ - $14.7 $ 861.3
Federal Agency 3,614.0 .9 3.1 3,611.8
Other 371.7 .9 4.8 367.8
- -------------------------------------------------------------------------
Total Securities Available for Sale $4,861.7 $1.8 $22.6 $4,840.9
- -------------------------------------------------------------------------
</TABLE>
3. PLEDGED ASSETS - Securities and loans pledged to secure public and
trust deposits and for other purposes as required or permitted by law were $4.8
billion on September 30, 1994, $3.6 billion on December 31, 1993 and $4.3
billion on September 30, 1993.
4. CONTINGENT LIABILITIES - Standby letters of credit outstanding were
$833.4 million on September 30, 1994, $827.4 million on December 31, 1993 and
$756.4 million on September 30, 1993.
5. LOANS AND LEASES - Selected loan categories in the Corporation's loan
portfolio are shown below:
<TABLE>
<CAPTION>
September 30 December 31 September 30
------------------------------------------
($ In Millions) 1994 1993 1993
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic
Commercial $2,672.7 $2,421.1 $2,473.2
Brokers 356.8 249.4 413.8
Commercial Real Estate 472.7 506.5 521.8
Residential Real Estate 3,244.9 2,883.3 2,760.0
Consumer 622.5 617.5 524.6
Other 452.2 453.5 771.8
Lease Financing 148.1 138.4 138.4
- --------------------------------------------------------------------------
Total Domestic 7,969.9 7,269.7 7,603.6
International 482.7 353.3 316.3
- --------------------------------------------------------------------------
Total $8,452.6 $7,623.0 $7,919.9
- --------------------------------------------------------------------------
</TABLE>
At September 30, 1994, other domestic and international loans include $402.6
million and $192.3 million, respectively, of overnight trust-related advances in
connection with next day security settlements, compared with $375.6 million and
$66.6 million, respectively, at December 31, 1993 and $742.2 million and $32.3
million, respectively, at September 30, 1993.
7
<PAGE>
6. RESERVE FOR CREDIT LOSSES - Changes in the reserve for credit losses were
as follows:
<TABLE>
<CAPTION>
Nine Months
Ended September 30
-----------------------
($ In Millions) 1994 1993
<S> <C> <C>
- -------------------------------------------------------------------------------
Balance at Beginning of Period $145.5 $145.5
Losses Charged to Reserve (8.8) (19.7)
Recoveries Credited to Reserve 3.2 2.7
- -------------------------------------------------------------------------------
Net Losses Charged to Reserve (5.6) (17.0)
Provision for Credit Losses 5.0 17.0
- -------------------------------------------------------------------------------
Balance at End of Period $144.9 $145.5
- -------------------------------------------------------------------------------
</TABLE>
7. ACQUISITIONS - In December 1993, the Corporation entered into a
definitive agreement to acquire Beach One Financial Services, Inc., parent
company of The Beach Bank of Vero Beach (Florida). The acquisition agreement
calls for Beach One shareholders to receive Northern Trust Corporation Common
Stock aggregating $56.2 million. The agreement is subject to the approval of
Beach One's shareholders and to various regulatory approvals and other legal
requirements. The Corporation expects to account for this transaction as a
pooling-of-interests. The Corporation and Beach One have extended until
December 31, 1994 the date after which either party may terminate the agreement
if the acquisition has not by then been completed. The Corporation has been
informed that consideration of its application to acquire Beach One by the
Federal Reserve Board has been deferred pending, among other matters, completion
of the Community Reinvestment Act examination of The Northern Trust Company and
consideration of certain information submitted by the Corporation in connection
with that examination.
8
<PAGE>
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 $48.0 million, an increase of
12% from the $42.8 million reported in 1993. Net income per common share on a
fully diluted basis increased 10% to $.83 from $.75 in 1993. This earnings
performance produced an annualized return on average common equity of 17.0%
(ROE) versus 17.7% reported last year and a return on average assets (ROA) of
1.05%, unchanged from 1993. Record trust fees, a lower provision for credit
losses as a result of strong asset quality, improved net interest income and the
limited growth in noninterest expenses contributed to the third quarter's
performance. Partially offsetting these positive factors were lower security
commissions and trading income.
NONINTEREST INCOME
Noninterest income totaled $151.9 million for the quarter, accounting for 62% of
total taxable equivalent revenue, a 9% improvement from the $139.2 million
earned in 1993. Trust fees, which represent 76% of noninterest income and 47%
of total taxable equivalent revenue, grew 13% or $13.1 million over last year to
$115.8 million. Fees generated by Hazlehurst & Associates, acquired in the
second quarter of 1994, accounted for $4.0 million of the increase. The balance
of the increase was largely attributable to successful business development
efforts. Global custody, investment management, and securities lending services
contributed significantly to the growth in trust fees. Total trust assets under
administration at quarter-end were $494.8 billion, up $32.2 billion from one
year ago.
Trust fees from Corporate Financial Services (CFS) were up 21% to $59.9 million.
Excluding Hazlehurst and Associates, fees grew 13% over last year with the
growth concentrated within the global custody and securities lending products.
Global custody fees totaled $13.4 million, up 44% from last year, as new and
existing clients continue to increase the volume of cross-border investing. The
initial, successful transition of global custody assets from Banque Scandinave
en Suisse (BSS) to the London Branch also favorably impacted the growth in
global custody fees. Domestic and international lending fees, up 52% over last
year, reflect the increased earnings on cash collateral along with a 16%
increase in the volume of securities loaned. In addition, the short-term nature
of these cash collateral pools has allowed for favorable fund management during
a period of rising interest rates. CFS trust assets under administration grew
$31.1 billion over last year and now total $444.6 billion, of which $46.9
billion is managed by the Corporation.
Compared with 1993, trust fees from Personal Financial Services (PFS) increased
6% to $55.9 million with all geographic markets contributing to the increase.
Fee growth was especially strong in the Corporation's Florida, Arizona, Texas
and suburban Chicago markets which
9
<PAGE>
registered a combined 13% increase in fees. The Corporation's Wealth Management
Group, which provides very wealthy families with highly sophisticated security
custody and reporting, asset management and banking services on a nationwide
basis, also experienced strong growth. PFS trust assets under administration
grew $1.1 billion to $50.2 billion of which $30.8 billion is managed by
Northern.
Security commissions and trading income totaled $3.7 million, compared with $4.4
million reported one year ago. The decline in income resulted from a lower
level of client transaction activity in the fixed income markets during the
quarter.
Other operating income amounted to $32.6 million, up 2%, from $32.1 million
reported in 1993. Treasury management revenues, which include interest earned on
compensating deposit balances, remained unchanged at $18.8 million. The fee
portion of these revenues which is included in other operating income was down
$.8 million to $11.4 million. Foreign exchange trading profits of $9.6 million
were up sharply from the second quarter, essentially matching last year's very
strong performance. Calls or sales of securities resulted in a modest loss of
$.2 million for the quarter.
NET INTEREST INCOME
Net interest income for the third quarter totaled $85.7 million, 3% higher than
the $83.2 million reported in 1993. 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. When net interest income is adjusted to a fully
taxable equivalent (FTE) basis, yields on taxable, nontaxable and partially
taxable assets are comparable. Net interest income on a FTE basis for the third
quarter of 1994 totaled $93.9 million, up $2.1 million or 2% from the $91.8
million reported in 1993. The advantage of a 13% increase in average earning
assets was partially offset by a decline in the net interest margin to 2.33%
from 2.56% last year.
Earning assets for the third quarter averaged $16.0 billion, up 13% from the
$14.2 billion reported in 1993. The $1.8 billion growth in earning assets
reflects a 13% or $1.0 billion increase in average loans, a $1.0 billion or 24%
growth in average securities and a $165 million or 6% decrease in average money
market assets.
Loan volume averaged $8.4 billion, an increase of $1.0 billion from 1993,
reflecting a $774 million or 11% growth in domestic lending, supported by a
large increase in the residential mortgage portfolio, up $521 million. In
addition, domestic and international overnight advances related to processing
certain trust client investments averaged $566 million, up $204 million from a
year ago. Securities for the quarter averaged $5.1 billion versus $4.1 billion
in 1993. Federal agency and marketable securities increased $2.4 billion from a
year ago, while U.S. Government securities decreased $1.4 billion from the third
quarter of 1993. Money market assets, primarily time deposits with banks,
averaged $2.4 billion compared with $2.6 billion for the third quarter of 1993.
10
<PAGE>
The $1.8 billion increase in earning assets was funded primarily by growth in
interest-bearing deposits and net noninterest-related funds. Interest-bearing
deposits increased a net of $1.2 billion, principally from global custody
deposit activity in London, up $554 million, and $338 million in other foreign
time deposits. Average net noninterest-related funds increased $555 million due
to growth in trust-related deposit activity and stockholders' equity. Total
average stockholders' equity, supported by continued strong earnings
performance, increased $154 million or 14% from the third quarter average of
1993.
The interest rate spread on earning assets declined to 1.67% from 2.09% last
year. The net interest margin also declined to 2.33% compared with 2.56% for
the third quarter of 1993. The net interest margin decline in the quarter was
due primarily to lower spreads on a higher volume of liquid short-term assets,
primarily U.S. federal agency securities, coupled with a lower volume of
residential mortgage refinancings. Interest rate spreads were negatively
impacted by the rapid increase in short-term interest rates in the first half of
1994. Northern's balance sheet has a large proportion of highly liquid assets,
while loans represent a relatively low 53% of average earning assets.
PROVISION FOR POSSIBLE CREDIT LOSSES
The provision for credit losses for the quarter totaled $1.0 million, a decrease
from $5.0 million reported in 1993. The decrease in the provision reflects the
reduction in the level of net loan charge-offs and continued low level of
nonperforming loans. For a discussion of the provision and reserve for credit
losses, refer to page 14.
NONINTEREST EXPENSES
Noninterest expenses totaled $166.2 million for the quarter, up $8.5 million or
5% over the $157.7 million reported in 1993. The limited increase was achieved
despite the inclusion of $3.4 million of expenses from Hazlehurst & Associates,
which was acquired during 1994. Other areas of expense increase included
continued investment in technology and expansion of the personal trust and
banking office network and global custody business, offset by lower costs from
processing errors incurred in servicing and managing financial assets.
Salaries and employee benefits accounted for 59% of total noninterest expenses,
versus 56% one year ago. Salary costs totaled $80.6 million, up $8.1 million or
11% from a year ago. Merit increases, the effect of the added staff related to
the Hazlehurst acquisition during 1994 and higher overtime and temporary staff
costs were the principal components of the increase. Staff on a full time
equivalent basis, including 148 positions at Hazlehurst & Associates, increased
by 2.2% from a year ago and averaged 6,500 versus 6,363 in 1993. Employee
benefit costs for the quarter totaled $18.1 million, up 9% from $16.6 million in
1993. The majority of the increase in benefit costs was attributable to health
care, retirement benefits and higher payroll taxes.
11
<PAGE>
Net occupancy expenses totaled $14.4 million, up 6% or $.8 million from $13.6
million in 1993, reflecting higher building operating costs which include
expenses associated with expansion in Florida, Texas and the added occupancy
costs from Hazlehurst & Associates.
Equipment expense totaled $10.8 million up from $10.1 million in 1993, due
primarily to the ongoing expansion of computer equipment, mainly to support
trust business expansion.
Other operating expenses totaled $42.3 million, a decrease of $2.6 million from
$44.9 million reported last year. Higher levels of technical and consulting
services, computer software-related expenses, and transaction-based depository
fees were offset by a $4.3 million decline in costs from processing errors, in
addition to declines in other real estate owned carrying costs, legal services,
and Federal Deposit Insurance Corporation premiums.
PROVISION FOR INCOME TAXES
The income tax provision for the quarter totaled $22.4 million compared with
$16.9 million in 1993. The higher provision in 1994 resulted from growth in
taxable earnings for federal and state income tax purposes. The growth in
taxable earnings also raised the effective tax rate for the quarter to 32% from
28% in 1993.
NINE MONTHS EARNINGS HIGHLIGHTS
Net income totaled $142.1 million for the first nine months ended September 30,
1994 compared with $124.6 million last year, an increase of 14%. On a fully
diluted basis, net income per common share was $2.47, up 13% from the $2.19
earned last year. The ROE for the first nine months was 17.6% versus 18.1% one
year ago, while the ROA was 1.07% unchanged from 1993.
Noninterest income increased 16% to $479.3 million from $411.7 million one year
ago. Excluding the gain of $28.5 million on the sale of the Corporation's 21%
interest in BSS recorded in the second quarter of 1994, the year-to-year
increase was $39.1 million or 9%. Noninterest income, net of the BSS gain,
comprised 62% of total taxable equivalent revenue for the first nine months,
reflecting the increasing importance of fee diversification in the Corporation's
revenue sources. Including Hazlehurst & Associates, trust fees totaled $338.8
million up 13% from $300.1 million reported last year. Security commissions and
trading income totaled $15.5 million, increasing 5% from the $14.7 million
earned last year. Other operating income, including the BSS gain, totaled
$125.1 million compared with the $95.2 million reported last year. The 1994
results for other operating income included foreign exchange trading profits of
$25.8 million compared with $23.8 million one year ago and a gain of $.3 million
recorded from the sales of mortgage loans compared with $4.6 million in 1993.
Investment security transactions produced net losses of $.1 million versus net
gains of $1.7 million last year.
12
<PAGE>
Net interest income on a fully taxable equivalent basis amounted to $273.8
million, up 1% from $270.8 million last year. The provision for credit losses
decreased to $5.0 million from $17.0 million last year. Net loan charge-offs
likewise declined to $5.6 million from $17.0 million in 1993. Noninterest
expenses totaled $515.6 million, up 11% from $466.6 million in 1993. Exclusive
of nonrecurring charges for the first nine months and the added expenses from
Hazlehurst & Associates acquisition, total noninterest expenses increased 6%
from 1993 levels.
BALANCE SHEET
Total assets as of September 30, 1994 were $18.7 billion and averaged $17.7
billion for the first nine months, up 14% from last year's average of $15.6
billion. With increased lending activity, loans and leases totaled $8.5 billion
at September 30, 1994 and averaged $8.2 billion for the first nine months, an
increase of 14% from the average of $7.2 billion last year. Driven by continued
strong earnings growth, common stockholders equity increased 15% and totaled
$1.091 billion at September 30, 1994, versus $945.7 million at September 30,
1993. Total stockholders' equity increased commensurately and totaled $1.26
billion at September 30, 1994 compared with $1.12 billion at September 30, 1993.
The Corporation's risk-based capital ratios remained strong at 9.1% for tier 1
and 12.6% for total capital at September 30, 1994. These ratios substantially
exceeded the regulatory capital guidelines of 4% for tier 1 and 8% for total
capital. The leverage ratio (tier 1 capital to third quarter average assets) of
6.2% at September 30, 1994, also exceeded the regulatory requirement of 3%.
ASSET QUALITY
Nonperforming assets consist of nonaccrual loans and leases, restructured loans,
and other real estate owned (OREO). Nonperforming assets at September 30, 1994
totaled $39.2 million compared with $37.0 million at December 31, 1993 and
$48.5 million at September 30, 1993. Domestic nonaccrual loans and leases,
consisting primarily of commercial loans, totaled $ 34.3 million, or .43% of
total domestic loans and leases at September 30, 1994. Included in this total
are commercial real estate loans of $9.8 million. At December 31, 1993 and
September 30, 1993, domestic nonaccrual loans totaled $26.0 million and $29.3
million, respectively.
The following table presents the outstanding amounts of nonaccrual loans and
leases and OREO. OREO is presented net of the related reserve. Also shown are
loans that have interest or principal payments that are delinquent 90 days or
more and are still accruing interest. The balance in this category at any
quarter end can fluctuate widely based on the timing of cash collections,
renegotiations and renewals.
13
<PAGE>
Nonperforming Assets and 90 Day Past Due Loans and Leases
<TABLE>
<CAPTION>
September 30 June 30 December 31 September 30
------------ ------- ----------- ------------
($ In Millions) 1994 1994 1993 1993
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nonaccrual Loans
Domestic $34.3 $34.5 $26.0 $29.3
International 1.3 1.3 1.3 1.3
- ------------------------------------------------------------------------
Total Nonaccrual Loans 35.6 35.8 27.3 30.6
OREO, net 3.6 3.8 9.7 17.9
- ------------------------------------------------------------------------
Total Nonperforming Assets $39.2 $39.6 $37.0 $48.5
- ------------------------------------------------------------------------
Total 90 Day Past Due Loans
(still accruing) $23.9 $31.1 $22.8 $29.2
- ------------------------------------------------------------------------
</TABLE>
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 Corporation's loan
and lease portfolios and other credit undertakings. While the largest portion
of this reserve is intended to cover loan and lease losses, it is considered a
general reserve that is available to cover all credit-related exposures.
The 1994 third quarter provision for credit losses was $1.0 million, compared
with $5.0 million in 1993. Net charge-offs totaled $1.0 million in the third
quarter of 1994 versus net charge-offs of $5.0 million last year. The reserve
for credit losses was $144.9 million equal to 1.71% of outstanding loans at
September 30, 1994. This compares with $145.5 million or 1.91% of outstanding
loans at December 31, 1993 and $145.5 million or 1.84% of outstanding loans at
September 30, 1993. The lower reserve to outstanding loans ratio at September
30, 1994 is primarily attributable to loan growth in low-risk residential
lending.
The Corporation believes that the current expansion of the domestic economy is
likely to continue into 1995, although not all segments of the economy will
participate equally in the expansion. The Corporation continues to monitor
closely several credits, but the overall quality of its loan portfolio remains
sound and the reserve for credit losses is adequate to cover credit-related
uncertainties as they exist today. Established credit review procedures ensure
that close attention is given to commercial real estate-related loans and other
commercial loans, as well as other credit exposures that might be adversely
affected by significant increases in interest rates or an unexpected downturn in
segments of the economies of the United States or other countries.
14
<PAGE>
The following schedule should be read in conjunction with the Net Interest
Income section of Management's Discussion and Analysis of Financial Condition
and Results of Operations:
CONSOLIDATED ANALYSIS OF NET INTEREST INCOME
<TABLE>
<CAPTION>
THIRD QUARTER
--------------------------------------------------
(Interest and rate on a 1994 1993
taxable equivalent basis) ------------------------ ------------------------
($ In Millions) INTEREST VOLUME RATE Interest Volume Rate
- -------------------------- -------- --------- ----- -------- --------- -----
<S> <C> <C> <C> <C> <C> <C>
AVERAGE EARNING ASSETS
Money Market Assets
Federal Funds Sold and
Repurchase Agreements $ 2.0 $ 177.8 4.65% $ 1.6 $ 192.8 3.21%
Time Deposits with Banks 26.1 2,107.6 4.90 24.2 2,320.1 4.14
Other 1.7 139.6 4.88 .6 77.0 3.41
- -------------------------- ------ --------- ----- ------ --------- -----
Total Money Market Assets 29.8 2,425.0 4.88 26.4 2,589.9 4.05
- -------------------------- ------ --------- ----- ------ --------- -----
Securities
U.S. Government 13.5 1,172.3 4.59 25.1 2,579.2 3.85
Obligations of States and
Political Subdivisions 12.6 454.9 11.04 14.4 501.0 11.51
Federal Agency 36.8 3,054.8 4.79 7.4 771.7 3.84
Other 5.3 403.2 5.23 3.3 268.3 4.78
Trading Account 1.2 55.5 8.01 .6 32.2 7.42
- -------------------------- ------ --------- ----- ------ --------- -----
Total Securities 69.4 5,140.7 5.37 50.8 4,152.4 4.86
- -------------------------- ------ --------- ----- ------ --------- -----
Loans and Leases 130.5 8,434.9 6.14 112.4 7,474.5 5.97
- -------------------------- ------ --------- ----- ------ --------- -----
Total Earning Assets $229.7 $16,000.6 5.70% $189.6 $14,216.8 5.29%
- -------------------------- ------ --------- ----- ------ --------- -----
AVERAGE SOURCE OF FUNDS
Deposits
Savings and Money Market
Deposits $ 22.1 $ 3,391.6 2.58% $ 19.3 $ 3,396.6 2.26%
Savings Certificates 14.4 1,232.0 4.66 12.4 1,153.9 4.25
Other Time 5.5 469.5 4.59 3.7 388.3 3.84
Foreign Offices Time 38.2 3,576.9 4.24 22.8 2,561.5 3.54
- -------------------------- ------ --------- ----- ------ --------- -----
Total Deposits 80.2 8,670.0 3.67 58.2 7,500.3 3.08
Federal Funds Purchased 13.3 1,163.7 4.54 13.8 1,792.9 3.05
Repurchase Agreements 19.8 1,779.5 4.41 4.8 629.4 3.00
Commercial Paper 1.7 153.5 4.59 .9 119.2 3.16
Other Borrowings 5.9 536.3 4.40 8.3 1,126.4 2.92
Senior Medium-Term Notes 9.5 801.6 4.69 5.4 650.7 3.31
Notes Payable 5.4 273.6 7.91 6.4 330.1 7.66
- -------------------------- ------ --------- ----- ------ --------- -----
Total Interest-Related
Funds 135.8 13,378.2 4.03 97.8 12,149.0 3.20
- -------------------------- ------ --------- ----- ------ --------- -----
Interest Rate Spread -- -- 1.67% -- -- 2.09%
- -------------------------- ------ --------- ----- ------ --------- -----
Noninterest-Related Funds -- 2,622.4 -- -- 2,067.8 --
- -------------------------- ------ --------- ----- ------ --------- -----
Total Source of Funds $135.8 $16,000.6 3.37% $ 97.8 $14,216.8 2.73%
- -------------------------- ------ --------- ----- ------ --------- -----
NET INTEREST INCOME/MARGIN $ 93.9 -- 2.33% $ 91.8 -- 2.56%
- -------------------------- ------ --------- ----- ------ --------- -----
</TABLE>
ANALYSIS OF NET INTEREST INCOME CHANGES DUE TO VOLUME AND RATE
<TABLE>
<CAPTION>
THIRD QUARTER 1994/93 NINE MONTHS 1994/93
--------------------- --------------------
CHANGE DUE TO CHANGE DUE TO
------------- -------------
($ In Millions) VOLUME RATE TOTAL VOLUME RATE TOTAL
- ---------------------- ------ ----- ----- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
Earning Assets $26.7 $13.4 $40.1 $76.7 $ (1.7) $75.0
Interest-Related Funds 14.8 23.2 38.0 43.6 28.4 72.0
- ---------------------- ----- ----- ----- ----- ------ -----
Net Interest Income $11.9 $(9.8) $ 2.1 $33.1 $(30.1) $ 3.0
- ---------------------- ----- ----- ----- ----- ------ -----
</TABLE>
Note: 1993 third quarter and nine months taxable equivalent interest income
were adjusted by $.3 million and $.9 million, respectively, to reflect the
effect of the change in the federal tax rate from 34% to 35%.
15
<PAGE>
Northern Trust Corporation
<TABLE>
<CAPTION>
NINE MONTHS
- -------------------------------------------------------
1994 1993
- ------------------------- --------------------------
INTEREST VOLUME RATE Interest Volume Rate
- -------- -------- ----- -------- --------- ----
<S> <C> <C> <C> <C> <C>
$ 6.0 $ 197.7 4.07% $ 4.6 $ 188.1 3.27%
74.7 2,154.4 4.63 66.0 1,951.4 4.52
4.4 140.1 4.22 1.9 75.7 3.53
- -------- --------- ----- ------ --------- -----
85.1 2,492.2 4.57 72.5 2,215.2 4.38
- -------- --------- ----- ------ --------- -----
61.9 2,052.9 4.03 77.0 2,644.8 3.89
39.9 469.4 11.32 43.8 503.1 11.61
63.3 1,882.7 4.50 21.5 739.0 3.90
14.2 372.3 5.08 10.7 289.8 4.92
3.3 55.2 7.90 1.6 28.3 7.58
- -------- --------- ----- ------ --------- -----
182.6 4,832.5 5.05 154.6 4,205.0 4.91
- -------- --------- ----- ------ --------- -----
362.3 8,214.2 5.90 327.9 7,197.1 6.09
- -------- --------- ----- ------ --------- -----
$630.0 $15,538.9 5.42% $555.0 $13,617.3 5.45%
- -------- --------- ----- ------ --------- -----
$ 61.8 $ 3,436.2 2.40% $ 59.4 $ 3,432.4 2.31%
38.2 1,162.4 4.40 38.8 1,190.8 4.35
12.9 399.8 4.30 12.2 422.1 3.87
92.4 3,105.3 3.98 67.2 2,327.7 3.86
- -------- --------- ----- ------ --------- -----
205.3 8,103.7 3.39 177.6 7,373.0 3.22
40.1 1,408.7 3.81 39.0 1,720.6 3.03
39.5 1,349.8 3.91 13.6 603.7 3.01
4.0 135.9 3.98 3.2 131.3 3.27
25.8 980.6 3.52 20.5 964.2 2.85
23.5 785.7 3.98 13.3 542.0 3.29
18.0 308.8 7.81 17.0 287.1 7.90
- -------- --------- ----- ------ --------- -----
356.2 13,073.2 3.64 284.2 11,621.9 3.27
- -------- --------- ----- ------ --------- -----
-- -- 1.78% -- -- 2.18%
- -------- --------- ----- ------ --------- -----
-- 2,465.7 -- -- 1,995.4 --
- -------- --------- ----- ------ --------- -----
$356.2 $15,538.9 3.06% $284.2 $13,617.3 2.79%
- -------- --------- ----- ------ --------- -----
$273.8 -- 2.36% $270.8 -- 2.66%
- -------- --------- ----- ------ --------- -----
</TABLE>
16
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 10-K
(a.) Exhibits
--------
Exhibit (11) Computation of Per Share Earnings
Exhibit (27) Financial Data Schedule
(b.) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed for the three months ended
September 30, 1994.
17
<PAGE>
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 9, 1994 By: PERRY R. PERO
---------------------------------
PERRY R. PERO
Senior Executive Vice President
and Chief Financial Officer
Date: November 9, 1994 By: HARRY W. SHORT
---------------------------------
HARRY W. SHORT
Senior Vice President and Controller
(Chief Accounting Officer)
18
<PAGE>
EXHIBIT INDEX
The following exhibits are filed herewith or are incorporated herein by
reference.
Exhibit Number Description
- -------------- -----------
(11) Computation of Per Share Earnings
(27) Financial Data Schedule
19
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER (11)
TO 9/30/94 FORM 10-Q
NORTHERN TRUST CORPORATION
COMPUTATION OF PER SHARE EARNINGS
Third Quarter Ended September 30 Nine Months Ended September 30
-------------------------------------- ---------------------------------
1994 1993 1994 1993
---------------- ---------------- -------------- --------------
<S> <C> <C> <C> <C>
Computations Required by
- ------------------------
Regulation S-K
- --------------
Primary Earnings Per Share
- ---------------------------
Net Income Applicable to
Common Shares $46,138,483 $41,172,564 $136,870,925 $119,856,600
=========== =========== ============ ============
Weighted Average Number of Common
and Common Equivalent Shares Outstanding
Common Shares 54,107,073 53,071,671 53,772,565 52,977,358
Dilutive Effect of Common
Equivalent Shares (A)
Stock Options 803,157 1,118,061 925,444 1,212,384
Long Term Performance Stock Plan 413,744 383,768 388,436 381,629
Other 10,816 1,605 8,923 1,344
----------- ----------- ------------ ------------
55,334,790 54,575,105 55,095,368 54,572,715
=========== =========== ============ ============
Net Income Per Common and
Common Equivalent Share $0.83 $0.75 $2.48 $2.20
=========== =========== ============ ============
</TABLE>
(A) Determined by application of the treasury stock method.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER (11)
TO 9/30/94 FORM 10-Q
NORTHERN TRUST CORPORATION
COMPUTATION OF PER SHARE EARNINGS
Third Quarter Ended September 30 Nine Months Ended September 30
-------------------------------- ----------------------------------
1994 1993 1994 1993
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Computations Required By
- ------------------------
Regulation S-K
- --------------
Fully Diluted Earnings Per Share
- --------------------------------
Net Income Applicable to
Common Shares $46,138,483 $41,172,564 $136,870,925 $119,856,600
Add Back: Dividend on Series E Convertible
Preferred Stock 798,422 789,741 2,343,750 2,347,949
----------- ----------- ------------ ------------
$46,936,905 $41,962,305 $139,214,675 $122,204,549
=========== =========== ============ ============
Weighted Average Number of Common
and Common Equivalent Shares Outstanding
Common Shares 54,107,073 53,071,671 53,772,565 52,977,358
Dilutive Effect of Common
Equivalent Shares (A)
Stock Options 803,157 1,123,915 929,245 1,273,057
Long Term Performance Stock Plan 413,744 384,493 388,964 392,704
Other 10,816 1,790 9,049 1,630
Other Potentially Dilutive Securities
Equivalent Shares Assuming Conversion of
Series E Convertible Preferred Stock 1,204,820 1,204,820 1,204,820 1,204,820
----------- ----------- ------------ ------------
56,539,610 55,786,689 56,304,643 55,849,569
=========== =========== ============ ============
Net Income Per Common and
Common Equivalent Share $0.83 $0.75 $2.47 $2.19
=========== =========== ============ ============
</TABLE>
(A) Determined by application of the treasury stock method.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND> This schedule contains summary financial information extracted from
the Consolidated Statement of Condition and the Consolidated Statement of
Income and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<EXCHANGE-RATE> 1
<CASH> 1,309,934
<INT-BEARING-DEPOSITS> 2,121,014
<FED-FUNDS-SOLD> 193,122
<TRADING-ASSETS> 60,015
<INVESTMENTS-HELD-FOR-SALE> 4,840,953
<INVESTMENTS-CARRYING> 590,487
<INVESTMENTS-MARKET> 616,632
<LOANS> 8,452,580
<ALLOWANCE> 144,933
<TOTAL-ASSETS> 18,669,731
<DEPOSITS> 11,271,076
<SHORT-TERM> 5,211,615
<LIABILITIES-OTHER> 550,746
<LONG-TERM> 375,350
<COMMON> 90,601
0
170,000
<OTHER-SE> 1,000,343
<TOTAL-LIABILITIES-AND-EQUITY> 18,669,731
<INTEREST-LOAN> 359,559
<INTEREST-INVEST> 160,374
<INTEREST-OTHER> 85,806
<INTEREST-TOTAL> 605,739
<INTEREST-DEPOSIT> 205,258
<INTEREST-EXPENSE> 356,254
<INTEREST-INCOME-NET> 249,485
<LOAN-LOSSES> 5,000
<SECURITIES-GAINS> (128)
<EXPENSE-OTHER> 515,638
<INCOME-PRETAX> 208,163
<INCOME-PRE-EXTRAORDINARY> 142,100
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 142,100
<EPS-PRIMARY> 2.48
<EPS-DILUTED> 2.47
<YIELD-ACTUAL> 2.04
<LOANS-NON> 35,643
<LOANS-PAST> 23,852
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 145,538
<CHARGE-OFFS> (8,807)
<RECOVERIES> 3,202
<ALLOWANCE-CLOSE> 144,933
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
