<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 JUNE 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 LASALLE 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___
54,060,987 SHARES - $1.66 2/3 PAR VALUE
(SHARES OF COMMON STOCK OUTSTANDING ON JUNE 30, 1994)
1
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEET Northern Trust Corporation
<TABLE>
<CAPTION>
JUNE 30 December 31 June 30
--------- ----------- ---------
(In Millions) 1994 1993 1993
- ------------------------------------------- --------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Cash and Due from Banks $ 1,119.4 $ 1,519.7 $ 854.3
Money Market Assets
Federal Funds Sold and Securities
Purchased under Agreements to Resell 325.6 577.8 166.1
Time Deposits with Banks 2,214.5 2,090.4 2,229.1
Other 168.3 72.3 69.4
- ------------------------------------------- --------- --------- ---------
Total 2,708.4 2,740.5 2,464.6
- ------------------------------------------- --------- --------- ---------
Securities (Fair value $4,755.8 at June
1994, $4,093.5 at December 1993 and
$4,571.1 at June 1993) 4,725.8 4,038.7 4,520.4
Loans and Leases (Net of unearned income of
$61.9 at June 1994, $69.4 at
December 1993 and $62.6 at June 1993) 8,572.4 7,623.0 7,344.9
Reserve for Credit Losses (144.9) (145.5) (145.5)
Buildings and Equipment 273.0 291.9 290.6
Customers' Acceptance Liability 70.0 56.9 95.5
Trust Security Settlement Receivables 407.4 293.1 366.5
Other Assets 707.9 484.3 497.5
- ------------------------------------------- --------- --------- ---------
Total Assets $18,439.4 $16,902.6 $16,288.8
- ------------------------------------------- --------- --------- ---------
LIABILITIES
Deposits
Demand and Other Noninterest-Bearing $ 2,663.6 $ 2,464.7 $ 2,555.7
Savings and Money Market Deposits 3,218.0 3,387.6 3,498.5
Savings Certificates 1,198.3 1,111.3 1,161.9
Other Time 312.9 333.4 387.3
Foreign Offices--Demand 457.9 297.1 63.7
--Time 3,441.6 2,739.3 2,204.3
- ------------------------------------------- --------- --------- ---------
Total Deposits 11,292.3 10,333.4 9,871.4
Federal Funds Purchased 921.4 1,215.8 1,003.4
Securities Sold under Agreements to
Repurchase 1,012.1 602.2 481.7
Commercial Paper 122.2 124.1 113.0
Other Borrowings 2,124.3 2,001.2 2,513.4
Senior Medium-Term Notes 807.0 817.0 567.0
Notes Payable (Qualifying for risk-based
capital, $168.8 at June 1994,
$183.4 at December 1993 and $198.4 at June
1993) 323.4 326.8 330.1
Liability on Acceptances 70.0 56.9 95.5
Other Liabilities 541.9 273.5 230.4
- ------------------------------------------- --------- --------- ---------
Total Liabilities 17,214.6 15,750.9 15,205.9
- ------------------------------------------- --------- --------- ---------
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>
JUNE 1994 December 1993 June 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 54,060,987 53,292,967 53,039,955
</TABLE>
<TABLE>
<S> <C> <C> <C>
Capital Surplus 302.7 303.0 301.9
Retained Earnings 704.7 631.9 570.6
Net Unrealized Loss on Securities Available
for Sale (12.2) (.4) (.3)
Translation Adjustments -- .6 .6
Common Stock Issuable -- Performance Plan 20.2 11.8 14.4
Deferred Compensation -- ESOP and Other (44.0) (43.5) (48.4)
Treasury Stock-at cost, 299,387 shares at
June 1994, 533,294 shares at December 1993
and 786,306 shares at June 1993 (7.2) (11.4) (15.6)
- ------------------------------------------- --------- --------- ---------
Total Stockholders' Equity 1,224.8 1,151.7 1,082.9
- ------------------------------------------- --------- --------- ---------
Total Liabilities and Stockholders' Equity $18,439.4 $16,902.6 $16,288.8
- ------------------------------------------- --------- --------- ---------
</TABLE>
2
<PAGE>
CONSOLIDATED STATEMENT OF INCOME Northern Trust Corporation
<TABLE>
<CAPTION>
SECOND QUARTER SIX MONTHS
---------------------- ---------------------
(In Millions) 1994 1993 1994 1993
- ------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest Income
Money Market Assets
Federal Funds Sold and
Securities Purchased under
Agreements to Resell $ 1.8 $ 1.1 $ 4.0 $ 3.0
Time Deposits with Banks 26.1 21.5 48.6 41.8
Other 1.7 .6 2.7 1.3
- ------------------------------- ---------- ---------- ---------- ----------
Total 29.6 23.2 55.3 46.1
- ------------------------------- ---------- ---------- ---------- ----------
Securities 51.3 46.0 99.0 88.8
Loans and Leases 119.1 108.6 229.9 213.6
- ------------------------------- ---------- ---------- ---------- ----------
Total Interest Income 200.0 177.8 384.2 348.5
- ------------------------------- ---------- ---------- ---------- ----------
Interest Expense
Deposits -- Savings and Money
Market Deposits 20.5 19.6 39.7 40.1
-- Savings Certificates 12.5 12.8 23.8 26.4
-- Other Time 4.3 4.6 7.4 8.5
-- Foreign Offices 30.9 21.4 54.2 44.4
Federal Funds Purchased 13.5 14.0 26.8 25.2
Securities Sold under
Agreements to Repurchase 10.4 5.1 19.7 8.8
Commercial Paper 1.3 1.1 2.3 2.3
Other Borrowings 10.8 6.8 19.9 12.2
Senior Medium-Term Notes 7.5 4.1 14.0 7.9
Notes Payable 6.4 5.8 12.6 10.6
- ------------------------------- ---------- ---------- ---------- ----------
Total Interest Expense 118.1 95.3 220.4 186.4
- ------------------------------- ---------- ---------- ---------- ----------
Net Interest Income 81.9 82.5 163.8 162.1
Provision for Credit Losses 1.0 6.0 4.0 12.0
- ------------------------------- ---------- ---------- ---------- ----------
Net Interest Income after
Provision for Credit Losses 80.9 76.5 159.8 150.1
- ------------------------------- ---------- ---------- ---------- ----------
Noninterest Income
Trust Fees 113.5 98.5 223.0 197.4
Security Commissions and
Trading Income 5.4 5.1 11.8 10.3
Other Operating Income 59.4 31.2 92.5 63.1
Investment Security Gains
(Losses) (.1) .1 0.1 1.7
- ------------------------------- ---------- ---------- ---------- ----------
Total Noninterest Income 178.2 134.9 327.4 272.5
- ------------------------------- ---------- ---------- ---------- ----------
Income before Noninterest
Expenses 259.1 211.4 487.2 422.6
- ------------------------------- ---------- ---------- ---------- ----------
Noninterest Expenses
Salaries 80.6 74.1 155.0 147.0
Pension and Other Employee
Benefits 19.0 17.1 38.1 34.1
Occupancy Expense 14.6 13.5 28.3 27.2
Equipment Expense 22.7 10.2 34.0 20.7
Other Operating Expenses 50.6 40.0 94.0 79.9
- ------------------------------- ---------- ---------- ---------- ----------
Total Noninterest Expenses 187.5 154.9 349.4 308.9
- ------------------------------- ---------- ---------- ---------- ----------
Income before Income Taxes 71.6 56.5 137.8 113.7
Provision for Income Taxes
(Includes related investment
security transactions tax
provision of none for the
second quarter of 1994 and $.1
in 1993, and for the six
months $.1 in 1994 and $.6 in
1993.) 22.9 14.9 43.7 31.9
- ------------------------------- ---------- ---------- ---------- ----------
NET INCOME $ 48.7 $ 41.6 $ 94.1 $ 81.8
- ------------------------------- ---------- ---------- ---------- ----------
Net Income Applicable to Common
Stock $ 46.9 $ 40.1 $ 90.7 $ 78.7
- ------------------------------- ---------- ---------- ---------- ----------
NET INCOME PER COMMON SHARE
-- PRIMARY $ .85 $ .73 $ 1.65 $ 1.44
-- FULLY DILUTED .85 .73 1.64 1.44
- ------------------------------- ---------- ---------- ---------- ----------
Average Number of Common Shares
Outstanding -- Primary 55,261,057 54,660,870 54,972,886 54,570,739
-- Fully Diluted 56,466,708 55,865,857 56,201,234 55,880,227
- ------------------------------- ---------- ---------- ---------- ----------
</TABLE>
3
<PAGE>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Northern Trust Corporation
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30
------------------
(In Millions) 1994 1993
- ---------------------------------------------------- -------- --------
<S> <C> <C>
PREFERRED STOCK
Balance at January 1 and June 30 $ 170.0 $ 170.0
- ---------------------------------------------------- -------- --------
COMMON STOCK
Balance at January 1 89.7 89.7
Pooled Affiliate--Stock Issued .9 --
- ---------------------------------------------------- -------- --------
Balance at June 30 90.6 89.7
- ---------------------------------------------------- -------- --------
CAPITAL SURPLUS
Balance at January 1 303.0 300.0
Stock Issued--Incentive Plan and Awards .1 1.9
Pooled Affiliate (.4) --
- ---------------------------------------------------- -------- --------
Balance at June 30 302.7 301.9
- ---------------------------------------------------- -------- --------
RETAINED EARNINGS
Balance at January 1 631.9 511.7
Net Income 94.1 81.8
Dividends Declared on Common Stock (23.6) (19.6)
Dividends Declared on Preferred Stock (3.1) (3.3)
Pooled Affiliate 5.4 --
- ---------------------------------------------------- -------- --------
Balance at June 30 704.7 570.6
- ---------------------------------------------------- -------- --------
NET UNREALIZED LOSS ON SECURITIES AVAILABLE FOR SALE
Balance at January 1 (.4) (1.3)
Unrealized Gain (Loss), net (11.8) 1.0
- ---------------------------------------------------- -------- --------
Balance at June 30 (12.2) (.3)
- ---------------------------------------------------- -------- --------
TRANSLATION ADJUSTMENTS
Balance at January 1 .6 .6
Sale of Foreign Investment (.6) --
- ---------------------------------------------------- -------- --------
Balance at June 30 -- .6
- ---------------------------------------------------- -------- --------
COMMON STOCK ISSUABLE--PERFORMANCE PLAN
Balance at January 1 11.8 8.1
Stock Issuable, net of Stock Issued 8.4 6.3
- ---------------------------------------------------- -------- --------
Balance at June 30 20.2 14.4
- ---------------------------------------------------- -------- --------
DEFERRED COMPENSATION--ESOP AND OTHER
Balance at January 1 (43.5) (49.5)
Compensation Deferred (5.3) (3.0)
Compensation Amortized 4.8 4.1
- ---------------------------------------------------- -------- --------
Balance at June 30 (44.0) (48.4)
- ---------------------------------------------------- -------- --------
TREASURY STOCK
Balance at January 1 (11.4) (18.8)
Stock Options and Awards 6.4 4.6
Stock Purchased (2.2) (1.4)
- ---------------------------------------------------- -------- --------
Balance at June 30 (7.2) (15.6)
- ---------------------------------------------------- -------- --------
TOTAL STOCKHOLDERS' EQUITY AT JUNE 30 $1,224.8 $1,082.9
- ---------------------------------------------------- -------- --------
</TABLE>
4
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS NORTHERN TRUST CORPORATION
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30
---------------------------
(In Millions) 1994 1993
- ----------------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 94.1 $ 81.8
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Provision for Credit Losses 4.0 12.0
Depreciation and Amortization 22.0 19.6
Increase in Interest Receivable (9.8) (15.2)
Increase (Decrease) in Interest Payable 1.5 (4.7)
Amortization and Accretion of Securities and Unearned Income 23.5 36.4
Gain on Sale of Foreign Investment (34.5) -
Net (Increase) Decrease in Trading Account Securities 20.4 (30.0)
Other Noncash, net 46.1 13.5
- ----------------------------------------------------------------------------------------- ------------ ------------
Net Cash Provided by Operating Activities 167.3 113.4
- ----------------------------------------------------------------------------------------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of Securities - Held to Maturity (221.4) (265.5)
Proceeds from Maturity and Redemption of Securities - Held to Maturity 503.4 126.8
Purchases of Securities - Available for Sale (3,769.3) (2,547.2)
Proceeds from Sale of Securities - Available for Sale 116.1 110.4
Proceeds from Maturity and Redemption of Securities -Available for Sale 2,613.7 1,227.5
Net Decrease in Federal Funds Sold and Securities Purchased under Agreements to Resell 252.2 290.4
Net Increase in Time Deposits with Banks (124.1) (369.6)
Net (Increase) Decrease in Other Money Market Assets (92.1) 12.9
Net Increase in Loans and Leases (949.2) (417.6)
Purchases of Buildings and Equipment (22.1) (28.7)
Proceeds from Sale of Buildings and Equipment 9.3 1.1
Sale of Foreign Investment 58.1 -
Net (Increase) Decrease in Trust Security Settlement Receivables (114.3) 195.6
Other, net 11.1 3.6
- ----------------------------------------------------------------------------------------- ------------ ------------
Net Cash Used in Investing Activities (1,728.6) (1,660.3)
- ----------------------------------------------------------------------------------------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Increase (Decrease) in Demand and Other Noninterest-Bearing Deposits 359.7 (92.8)
Net Decrease in Savings and Money Market Deposits (169.6) (113.0)
Net Increase in Certificates of Deposit and Other Interest-Bearing Deposits 768.8 206.4
Net Increase in Federal Funds Purchased and Short-Term Other Borrowings 182.4 1,152.7
Proceeds from Other Borrowed Funds 2,647.7 725.7
Repayments of Other Borrowed Funds (2,591.7) (869.2)
Net Decrease in Commercial Paper (1.9) (14.0)
Proceeds from Senior Medium-Term Notes and Notes Payable 230.0 355.0
Repayments of Senior Medium-Term Notes and Notes Payable (243.4) (3.2)
Purchase of Treasury Stock 1.8 (.9)
Net Proceeds from Stock Options .4 2.4
Cash Dividends Paid on Common and Preferred Stock (26.4) (22.9)
Other, net 3.2 3.2
- ----------------------------------------------------------------------------------------- ------------ ------------
Net Cash Provided by Financing Activities 1,161.0 1,329.4
- ----------------------------------------------------------------------------------------- ------------ ------------
Decrease in Cash and Due from Banks (400.3) (217.5)
Cash and Due from Banks at Beginning of Year 1,519.7 1,071.8
- ----------------------------------------------------------------------------------------- ------------ ------------
CASH AND DUE FROM BANKS AT JUNE 30 $ 1,119.4 $ 854.3
- ----------------------------------------------------------------------------------------- ------------ ------------
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 $ 218.9 $ 191.1
Income Taxes Paid 23.5 19.6
- ----------------------------------------------------------------------------------------- ------------ ------------
</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 March 31, 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. 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 June 30, 1994, stockholders' equity
decreased by $12.2 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 related to
securities available for sale totaled $.2 million for the six months ended June
30, 1994. There were no realized gross losses during this period.
The following tables summarize the book and fair values of securities of the
Corporation.
<TABLE>
<CAPTION>
SECURITIES
June 30, 1994 December 31, 1993 June 30, 1993
----------------------------------------------------------
Fair Fair Fair
(In Millions) Book Value Book Value Book Value
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HELD TO MATURITY
U.S. Government............ $ 98.8 $ 98.6 $2,343.7 $2,345.6 $2,785.7 $2,788.2
Obligations of States and
Political Subdivisions... 461.3 491.6 493.5 546.9 500.9 550.8
Federal Agency............. - - 833.1 831.8 847.8 845.3
Other...................... 29.8 29.7 120.5 120.7 158.0 158.2
- ---------------------------------------------------------------------------------------
Subtotal................. 589.9 619.9 3,790.8 3,845.0 4,292.4 4,342.5
- ---------------------------------------------------------------------------------------
AVAILABLE FOR SALE*
U.S. Government............ 1,401.1 1,401.1 - - 70.5 70.9
Federal Agency............. 2,302.7 2,302.7 77.7 78.2 - -
Other...................... 375.3 375.3 133.9 134.0 125.9 126.1
- ---------------------------------------------------------------------------------------
Subtotal................. 4,079.1 4,079.1 211.6 212.2 196.4 197.0
- ---------------------------------------------------------------------------------------
TRADING ACCOUNT............ 56.8 56.8 36.3 36.3 31.6 31.6
- ---------------------------------------------------------------------------------------
TOTAL SECURITIES........... $4,725.8 $4,755.8 $4,038.7 $4,093.5 $4,520.4 $4,571.1
- ---------------------------------------------------------------------------------------
</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>
<TABLE>
<CAPTION>
June 30, 1994
----------------------------------
Gross Unrealized
Book ---------------- Fair
(In Millions) Value Gains Losses Value
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
Securities Held to Maturity
U.S. Government.............. $ 98.8 $ - $ .2 $ 98.6
Obligations of States and
Political Subdivisions...... 461.3 31.6 1.3 491.6
Other......................... 29.8 - .1 29.7
- --------------------------------------------------------------------
Total......................... $ 589.9 $31.6 $ 1.6 $ 619.9
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
June 30, 1994
---------------------------------------
Gross Unrealized
Amortized ---------------- Book/Fair
(In Millions) Cost Gains Losses Value
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Securities Available for Sale
U.S. Government.............. $1,415.1 $ .2 $14.2 $1,401.1
Federal Agency............... 2,304.2 1.5 3.0 2,302.7
Other........................ 379.6 .9 5.2 375.3
- ------------------------------------------------------------------------
Total......................... $4,098.9 $ 2.6 $22.4 $4,079.1
- ------------------------------------------------------------------------
</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 $4.1
billion on June 30, 1994, $3.6 billion on December 31, 1993 and $3.9 billion on
June 30, 1993.
4. CONTINGENT LIABILITIES - Standby letters of credit outstanding were $830.8
million on June 30, 1994, $827.4 million on December 31, 1993 and $714.3 million
on June 30, 1993.
5. LOANS AND LEASES - Selected loan categories in the Corporation's loan
portfolio are shown below.
<TABLE>
<CAPTION>
June 30 December 31 June 30
-------------------------------
(In Millions) 1994 1993 1993
- ------------------------------------------------------------
<S> <C> <C> <C>
Domestic
Commercial............... $2,674.1 $2,421.1 $2,477.7
Brokers.................. 349.5 249.4 263.2
Commercial Real Estate... 480.2 506.5 499.0
Residential Real Estate.. 3,161.7 2,883.3 2,597.9
Consumer................. 568.8 617.5 289.7
Other.................... 647.7 453.5 897.1
Lease Financing.......... 133.9 138.4 132.7
- ------------------------------------------------------------
Total Domestic............. 8,015.9 7,269.7 7,157.3
International.............. 556.5 353.3 187.6
- ------------------------------------------------------------
Total...................... $8,572.4 $7,623.0 $7,344.9
- ------------------------------------------------------------
</TABLE>
At June 30, 1994, other domestic and international loans include $582.8 million
and $216.2 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 $621.6 million and none,
respectively, at June 30, 1993.
7
<PAGE>
6. RESERVE FOR CREDIT LOSSES - Changes in the reserve for credit losses were
as follows.
Six Months
Ended June 30
-------------------
(In Millions) 1994 1993
- ----------------------------------------------------------
Balance at Beginning of Period $145.5 $145.5
Losses Charged to Reserve....... (7.3) (14.3)
Recoveries Credited to Reserve.. 2.7 2.3
- ----------------------------------------------------------
Net Losses Charged to Reserve.... (4.6) (12.0)
Provision for Credit Losses...... 4.0 12.0
- ----------------------------------------------------------
Balance at End of Period......... $144.9 $145.5
- ----------------------------------------------------------
7. ACQUISITIONS - The acquisition of Hazlehurst & Associates, Inc. was
completed on April 15, 1994. The acquisition, previously announced in December,
was effected through a merger in which Northern Trust Corporation issued 534,113
shares of its Common Stock. Hazlehurst & Associates, a retirement benefit plan
services company, is headquartered in Atlanta and has an office in Seattle. The
Corporation has accounted for the transaction as a pooling of interests,
although prior period financial statements are not being restated due to the
immateriality of the acquisition.
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 acquisition is expected
to close during the second half of 1994. The Corporation expects to account for
this transaction as a pooling-of-interests.
8
<PAGE>
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
SECOND QUARTER EARNINGS HIGHLIGHTS
Net income for the second quarter totaled a record $48.7 million, an increase of
17% over the $41.6 million reported in 1993. Net income per common share on a
fully diluted basis totaled $.85 up 16% from the $.73 reported in 1993. This
earnings performance produced an annualized return on average common equity of
18.1%, unchanged from last year and a return on average assets of 1.10% compared
with 1.06% in 1993. Record trust fees, a lower provision for credit losses as a
result of strong asset quality and the gain on the sale of the Corporation's 21%
interest in Banque Scandinave en Suisse (BSS) contributed favorably to the
second quarter's performance. Partially offsetting these positive factors were
lower net interest income and foreign exchange trading profits and the impact of
several nonrecurring expenses.
NONINTEREST INCOME
Noninterest income totaled $178.2 million for the quarter. Excluding the
effects of the $28.5 million gain on the BSS sale, noninterest income totaled
$149.7 million and accounted for 62% of total taxable equivalent revenue, an 11%
improvement from the $134.9 million earned in 1993. Trust fees accounted for
76% of noninterest income and 47% of total taxable equivalent revenue excluding
the BSS gain. Trust fees totaled $113.5 million, up $15.0 million or 15% from
$98.5 million in 1993. The acquisition of Hazlehurst & Associates in April of
1994 accounted for $2.5 million of the increase. Successful business
development efforts contributed significantly to the growth in fees, which
included both core and ancillary trust products, including domestic and global
custody, investment management, personal trustee and securities lending
services.
Compared with 1993, trust fees from Personal Financial Services (PFS) increased
6% to $55.9 million. The majority of growth in PFS trust fees was attributable
to subsidiaries located outside of Illinois, primarily Florida and California.
The Corporation expanded its presence within the Illinois market with the
opening of a full service trust and banking office in Highland Park, Illinois.
To broaden its existing relationships with individuals and to develop new ones,
the Corporation introduced the Northern Funds, a series of fourteen no-load
proprietary mutual funds, in April 1994. In addition to Illinois, it is
anticipated that by year-end 1994 this product will be available in the Florida,
California, Arizona and Texas markets.
9
<PAGE>
Corporate Financial Services (CFS), including fees earned by Hazlehurst, was up
25% to $57.6 million. The growth in CFS trust fees was primarily attributable
to strong new business and a higher level of cross-border investments. Also
contributing to the increase in trust fees was the growth in securities
lending fees which is attributable to a 34% increase in the volume of securities
out on loan. This growth was partially driven by the short-term nature of the
securities lending invested cash collateral pools which allows competitive rates
to be offered to borrowing brokers during periods of rising interest rates.
Security commissions and trading income increased 6% to $5.4 million, compared
with $5.1 million reported a year ago.
Other operating income amounted to $59.4 million, up 90%, from $31.2 million
reported in 1993. The increase resulted from a $28.5 million pretax gain on the
sale of BSS, net of approximately $6.0 million in ancillary and other sale-
related transition costs associated with the transfer of custody accounts from
BSS to the London Branch of The Northern Trust Company. While total treasury
management revenues, which include interest earned on compensating deposit
balances, increased 6% to $18.4 million from $17.3 million last year, the fee
portion of these revenues which are included in other income was down $1.2
million to $11.7 million. Foreign exchange trading profits were $6.2 million
compared with $7.1 million in 1993. Calls or sales of securities resulted in a
modest loss of $.1 million for the quarter compared with a modest gain of $.1
million in 1993.
NET INTEREST INCOME
Net interest income for the second quarter totaled $81.9 million, slightly lower
than the $82.5 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 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 second
quarter of 1994 totaled $90.1 million, down $1.3 million or 2% from the $91.4
million reported in 1993. The advantage of a 12% increase in average earning
assets was more than offset by a decline in the net interest margin to 2.33%
from 2.66% last year.
Earning assets for the second quarter averaged $15.5 billion, up 12% from the
$13.8 billion reported in 1993. The $1.7 billion growth in earning assets
reflects a 16% or $1.1 billion increase in average loans, a $461 million or 21%
growth in money market assets and a $123 million or 3% increase in average
securities.
10
<PAGE>
Loan volume averaged $8.3 billion for the quarter reflecting a $898 million or
13% increase in domestic lending. Domestic loan growth was supported by a large
increase in the residential mortgage portfolio, up $629 million. In addition,
overnight advances related to processing certain trust client investments
averaged $557 million, up $219 million from a year ago. Money market assets,
primarily time deposits with banks, averaged $2.6 billion compared with $2.1
billion for the second quarter of 1993. Securities for the quarter averaged
$4.6 billion versus $4.5 billion in 1993. Federal agency and marketable
securities increased $955 million from a year ago, while U.S. Government
securities decreased $827 million from the second quarter of 1993.
The $1.7 billion increase in earning assets was funded primarily by growth in
interest bearing deposits, senior medium-term notes, and net non interest
related funds. Interest-bearing deposits increased a net of $737 million,
principally from global custody deposit activity in London up $800 million.
Senior medium-term notes increased $296 million. Average net noninterest-
related funds increased $511 million, due to growth in stockholders' equity and
trust-related deposit activity. Total average stockholders' equity, supported
by continued strong earnings performance, increased $158 million or 15% from the
second quarter average of 1993.
The interest rate spread on earning assets declined to 1.75% from 2.20% last
year. The net interest margin also declined to 2.33% compared with 2.66% for
the second quarter of 1993. The lower interest rate spread was attributable to
higher funding costs due to the rapid increase in short-term interest rates in
the first half of the year coupled with lower fees recognized from residential
mortgage refinancings. Also contributing to the narrower margin was the lower
spread obtained from the higher volume of short-term government and agency
securities, money market assets and trust-related overnight advances. The
increase in the noninterest-related funds had a positive impact on net interest
income in the second quarter.
PROVISION FOR POSSIBLE CREDIT LOSSES
The provision for credit losses for the quarter totaled $1.0 million, a decrease
from $6.0 million reported in 1993. The decrease in the provision reflects the
reduction in the level of loan charge-offs and continued low level of
nonperforming loans. For a discussion of the provision and reserve for credit
losses, refer to page 15.
11
<PAGE>
NONINTEREST EXPENSES
Noninterest expense totaled $187.5 million for the quarter, up $32.6 million or
21% over the $154.9 million reported in 1993. A significant part of the
increase in expenses is the result of $13.6 million in charges resulting from
technology-related decisions which included the trade-in and the sale and
leaseback of mainframe computer equipment and a write-down of older trust-
related software. These strategic decisions, which will reduce depreciation and
amortization expenses over the next few years, are designed to eliminate future
residual value risk regarding these assets and are expected to improve system
flexibility and efficiency and decrease ongoing maintenance costs, with
increased productivity as the end result.
Noninterest expenses also include the cost of an agreement between the
Corporation and three money-market portfolios of the Benchmark Funds, for which
The Northern Trust Company is investment adviser. The agreement increases net
asset values and so preserves the investment flexibility necessary to maintain
competitive yields in the portfolios, which are used for cash management and
investment by The Northern Trust Company's institutional clients. Under the
agreement, the funds may sell to the Corporation in June 1995, at the higher of
cost or market value, certain floating rate Government agency securities whose
returns have lagged the recent sharp increase in short-term interest rates. The
cost of the agreement is $3.5 million. In addition, a review of the
Corporation's overtime pay policy resulted in a $3.0 million addition to salary
expense in the quarter for back pay obligations. Excluding the technology-
related and other nonrecurring charges just described and the impact of the
Hazlehurst acquisition, noninterest expenses increased 6% from the prior year.
This increase reflects higher salary and benefit costs, affiliate expansion,
increased Federal Deposit Insurance Corporation (FDIC) premiums and the
Corporation's continued investment in technology.
Salaries and employee benefits accounted for approximately 53% of the 1994 total
increase in noninterest expenses. Salary costs totaled $80.6 million, up $6.5
million or 9% from a year ago. Merit increases, the effect of the Hazlehurst
acquisition, and the $3.0 million overtime back pay obligations charge were the
principal components of the increase. Staff on a full time equivalent (FTE)
basis was basically unchanged from a year ago and averaged 6,356 versus 6,347 in
1993. Employee benefit costs for the year totaled $19.0 million, up 11% from
$17.1 million in 1993. The majority of the increase in benefit costs was
attributable to health care, retirement benefits and higher payroll taxes.
12
<PAGE>
Net occupancy expenses totaled $14.6 million, up 8% or $1.1 million from $13.5
million in 1993, reflecting higher building operating costs which include costs
associated with expansion in Florida and Texas.
Equipment expense totaled $22.7 million up from $10.2 million in 1993 primarily
due to $11.2 million of nonrecurring expenses resulting from the trade-in and
the sale and leaseback of mainframe computer equipment. In addition, the
ongoing expansion of computer equipment resulted in higher depreciation and
related costs.
Other operating expenses totaled $50.6 million, an increase of $10.6 million
from $40.0 million reported last year, which included $5.9 million of
nonrecurring expenses related to the agreement with The Benchmark Funds and the
write-down of older trust-related software. Also contributing to the expense
increase were higher technical and consulting services, computer software-
related expenses, FDIC premiums, and transaction-based depository fees.
PROVISION FOR INCOME TAXES
The income tax provision for the quarter totaled $22.9 million compared with
$14.9 million in 1993. The higher provision in 1994 resulted from growth in
taxable earnings for federal and state income tax purposes, and the increase in
the federal tax rate from 34% to 35%. The effective tax rate for the quarter
was 32% versus 26% in 1993.
SIX MONTHS EARNINGS HIGHLIGHTS
Net income totaled $94.1 million for the first six months ended June 30, 1994
compared with $81.8 million last year, an increase of 15%. On a fully diluted
basis, net income per common share was $1.64, up 14% from the $1.44 earned last
year. The ROE and ROA for the first six months were 18.0% and 1.08%,
respectively, compared with a ROE of 18.3% and a ROA of 1.07% in 1993.
Noninterest income increased 20% to $327.4 million from $272.5 million one year
ago. Excluding the BSS gain of $28.5 million the year-to-year increase was
$26.4 million or 10%. Noninterest income, net of the BSS gain, comprised over
62% of total taxable equivalent revenue for the first six months, reflecting
the continuing diversification of the Corporation's revenue sources. Including
Hazlehurst & Associates, trust fees totaled $223.0 million up 13% from $197.4
million reported last year. Security commissions and trading income totaled
$11.8 million, increasing 14% from the $10.3 million earned last year. Other
operating income, including the BSS gain, totaled $92.5 million compared with
the $63.1 million reported last year. The 1994
13
<PAGE>
results for other operating income included foreign exchange trading profits of
$16.2 million compared with $14.3 million a year ago and $.1 million of gains
recorded from the sales of mortgage loans compared with $4.1 million in 1993.
Investment security transactions produced net gains of $.1 million versus $1.7
million last year.
Net interest income on a fully taxable equivalent basis amounted to $179.9
million, up slightly from $179.0 million last year. The provision for credit
losses decreased to $4.0 million from $12.0 million last year. Net loan charge-
offs likewise declined to $4.6 million from $12.0 million in 1993. Noninterest
expenses totaled $349.4 million, up 13% from $308.9 million in 1993. Exclusive
of nonrecurring charges reflected in the second quarter results, and the impact
of the Hazlehurst acquisition, total noninterest expenses increased 6% from 1993
levels.
BALANCE SHEET
Total assets as of June 30, 1994 were $18.4 billion and averaged $17.5 billion
for the first six months, up 14% from last year's average of $15.4 billion.
With increased lending activity, loans and leases totaled $8.6 billion at June
30, 1994 and averaged $8.1 billion for the first six months, an increase of 15%
from the average of $7.1 billion last year. Driven by continued strong earnings
growth, common stockholders equity increased 16% and totaled $1.055 billion at
June 30, 1994, versus $912.9 million at June 30,1993. Total stockholders'
equity increased commensurately and totaled $1.2 billion at June 30, 1994
compared with $1.1 billion at June 30, 1993. The Corporation's risk-based
capital ratios remained strong at 8.8% for tier 1 and 12.3% for total capital
at June 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 second quarter average assets) of 6.1% at June 30, 1994, also
exceeded the regulatory requirements of 3%.
ASSET QUALITY
Nonperforming assets consist of nonaccrual loans and leases, restructured loans,
and other real estate owned (OREO). Nonperforming assets at June 30, 1994
totaled $39.6 million compared with $37.0 million at December 31, 1993 and $65.0
million at June 30, 1993. Domestic nonaccrual loans and leases, consisting
primarily of commercial loans, totaled $34.5 million, or .43% of total domestic
loans and leases at June 30, 1994. Included in this total are commercial real
estate loans of $8.1 million. At December 31, 1993 and June 30, 1993, domestic
nonaccrual loans totaled $26.0 million and $42.8 million, respectively.
14
<PAGE>
OREO is comprised of commercial and residential real estate properties acquired
in partial or total satisfaction of problem loans. At June 30, 1994, OREO
assets, net of reserve, totaled $3.8 million, compared with a net of $9.7
million at December 31, 1993, and $20.3 million at June 30, 1993. The majority
of the OREO assets are commercial real estate properties. Presented below are
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.
<TABLE>
<CAPTION>
NONPERFORMING ASSETS AND 90 DAY PAST DUE LOANS AND LEASES
June 30 March 31 Dec. 31 June 30
------- -------- ------- -------
(In Millions) 1994 1994 1993 1993
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nonaccrual Loans
Domestic.......................... $34.5 $38.7 $26.0 $42.8
International..................... 1.3 1.3 1.3 1.9
- -------------------------------------------------------------------------
Total Nonaccrual Loans............ 35.8 40.0 27.3 44.7
OREO, net.......................... 3.8 5.8 9.7 20.3
- -------------------------------------------------------------------------
Total Nonperforming Assets......... $39.6 $45.8 $37.0 $65.0
- -------------------------------------------------------------------------
Total 90 Day Past Due Loans
(still accruing).................. $31.1 $19.1 $22.8 $20.7
- -------------------------------------------------------------------------
</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 typically intended to cover loan and lease losses, it is
considered a general reserve that is available to cover all credit-related
exposures.
The 1994 second quarter provision for credit losses was $1.0 million, compared
with $6.0 million in 1993. Net charge-offs totaled $1.7 million in the second
quarter of 1994 versus net charge-offs of $6.0 million last year. The reserve
for credit losses was $144.9 million equal to 1.69% of outstanding loans at June
30, 1994. This compares with $145.5 million or 1.91% of outstanding loans at
December 31, 1993 and $145.5 million or 1.98% of outstanding loans at March 31,
1993. The lower reserve to outstanding loans ratio at June 30, 1994 is
attributable to loan growth primarily in low-risk residential lending.
15
<PAGE>
The Corporation believes that the current expansion of the domestic economy is
likely to continue through 1994, although not all segments of the economy will
participate equally in the expansion. Even though the Corporation continues to
monitor closely several credits in segments of the economy that continue to show
weakness, 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.
16
<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>
SECOND QUARTER
--------------------------------------------------
(Interest and rate on a 1994 1993
taxable equivalent basis) ------------------------ ------------------------
(Amounts 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 $ 1.8 $ 167.3 4.16% $ 1.1 $ 130.7 3.29%
Time Deposits with Banks 26.1 2,277.3 4.60 21.5 1,949.7 4.42
Other 1.7 165.5 4.12 .6 68.9 3.49
- -------------------------- ------ --------- ----- ------ --------- -----
Total Money Market Assets 29.6 2,610.1 4.54 23.2 2,149.3 4.32
- -------------------------- ------ --------- ----- ------ --------- -----
Securities
U.S. Government 20.8 2,026.4 4.11 27.8 2,853.1 3.91
Obligations of States and
Political Subdivisions 13.4 469.4 11.44 14.7 502.4 11.66
Federal Agency 17.9 1,635.0 4.38 7.3 781.5 3.76
Other 5.2 401.2 5.18 3.5 300.3 4.76
Trading Account 1.2 59.4 8.05 .6 30.8 7.63
- -------------------------- ------ --------- ----- ------ --------- -----
Total Securities 58.5 4,591.4 5.10 53.9 4,468.1 4.84
- -------------------------- ------ --------- ----- ------ --------- -----
Loans and Leases 120.1 8,271.6 5.83 109.6 7,151.8 6.15
- -------------------------- ------ --------- ----- ------ --------- -----
Total Earning Assets $208.2 $15,473.1 5.39% $186.7 $13,769.2 5.44%
- -------------------------- ------ --------- ----- ------ --------- -----
AVERAGE SOURCE OF FUNDS
Deposits
Savings and Money Market
Deposits $ 20.5 $ 3,454.0 2.38% $ 19.6 $ 3,404.9 2.31%
Savings Certificates 12.5 1,154.1 4.33 12.8 1,190.2 4.34
Other Time 4.3 416.8 4.20 4.6 492.9 3.73
Foreign Offices Time 30.9 3,065.2 4.04 21.4 2,265.3 3.79
- -------------------------- ------ --------- ----- ------ --------- -----
Total Deposits 68.2 8,090.1 3.38 58.4 7,353.3 3.19
Federal Funds Purchased 13.5 1,395.3 3.89 14.0 1,861.8 3.00
Repurchase Agreements 10.4 1,089.2 3.83 5.1 686.3 3.00
Commercial Paper 1.3 130.5 3.96 1.1 125.4 3.27
Other Borrowings 10.8 1,176.2 3.67 6.8 986.6 2.80
Senior Medium-Term Notes 7.5 803.4 3.74 4.1 507.9 3.23
Notes Payable 6.4 326.7 7.72 5.8 296.9 7.87
- -------------------------- ------ --------- ----- ------ --------- -----
Total Interest-Related
Funds 118.1 13,011.4 3.64 95.3 11,818.2 3.24
- -------------------------- ------ --------- ----- ------ --------- -----
Interest Rate Spread -- -- 1.75% -- -- 2.20%
- -------------------------- ------ --------- ----- ------ --------- -----
Noninterest-Related Funds -- 2,461.7 -- -- 1,951.0 --
- -------------------------- ------ --------- ----- ------ --------- -----
Total Source of Funds $118.1 $15,473.1 3.06% $ 95.3 $13,769.2 2.78%
- -------------------------- ------ --------- ----- ------ --------- -----
NET INTEREST INCOME/MARGIN $ 90.1 -- 2.33% $ 91.4 -- 2.66%
- -------------------------- ------ --------- ----- ------ --------- -----
</TABLE>
ANALYSIS OF NET INTEREST INCOME CHANGES DUE TO VOLUME AND RATE
<TABLE>
<CAPTION>
SECOND QUARTER
1994/93 SIX 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 $23.6 $ (2.1) $21.5 $50.0 $(15.1) $34.9
Interest-Related Funds 12.4 10.4 22.8 28.8 5.2 34.0
- ---------------------- ----- ------ ----- ----- ------ -----
Net Interest Income $11.2 $(12.5) $(1.3) $21.2 $(20.3) $ .9
- ---------------------- ----- ------ ----- ----- ------ -----
</TABLE>
Note: 1993 second quarter and six months taxable equivalent interest income
were adjusted by $.3 million and $.6 million, respectively, to reflect the
effect of the change in the federal tax rate from 34% to 35%.
17
<PAGE>
Northern Trust Corporation
<TABLE>
<CAPTION>
SIX MONTHS
- ----------------------------------------------------------
1994 1993
- -------------------------------- ------------------------
INTEREST VOLUME RATE Interest Volume Rate
- ---------------- --------- ----- -------- --------- -----
<S> <C> <C> <C> <C> <C>
$ 4.0 $ 207.9 3.82% $ 3.0 $ 185.7 3.30%
48.6 2,178.1 4.50 41.8 1,763.9 4.77
2.7 140.4 3.89 1.3 75.1 3.59
- --------------- --------- ----- ------ --------- -----
55.3 2,526.4 4.41 46.1 2,024.7 4.59
- --------------- --------- ----- ------ --------- -----
48.4 2,500.5 3.90 51.9 2,678.1 3.91
27.3 476.8 11.46 29.4 504.2 11.65
26.5 1,286.9 4.14 14.1 722.4 3.93
8.9 356.6 5.00 7.4 300.7 4.99
2.1 55.1 7.85 1.0 26.4 7.68
- --------------- --------- ----- ------ --------- -----
113.2 4,675.9 4.87 103.8 4,231.8 4.94
- --------------- --------- ----- ------ --------- -----
231.8 8,102.0 5.77 215.5 7,056.1 6.16
- --------------- --------- ----- ------ --------- -----
$ 400.3 $15,304.3 5.27% $365.4 $13,312.6 5.53%
- --------------- --------- ----- ------ --------- -----
$ 39.7 $ 3,458.9 2.31% $ 40.1 $ 3,450.6 2.34%
23.8 1,127.1 4.25 26.4 1,209.6 4.41
7.4 364.3 4.11 8.5 439.3 3.88
54.2 2,865.6 3.81 44.4 2,208.8 4.05
- --------------- --------- ----- ------ --------- -----
125.1 7,815.9 3.23 119.4 7,308.3 3.29
26.8 1,533.3 3.53 25.2 1,683.8 3.02
19.7 1,131.4 3.51 8.8 590.6 3.02
2.3 127.0 3.61 2.3 137.5 3.32
19.9 1,206.4 3.33 12.2 881.7 2.80
14.0 777.6 3.60 7.9 486.8 3.28
12.6 326.7 7.76 10.6 265.2 8.05
- --------------- --------- ----- ------ --------- -----
220.4 12,918.3 3.44 186.4 11,353.9 3.31
- --------------- --------- ----- ------ --------- -----
-- -- 1.83% -- -- 2.22%
- --------------- --------- ----- ------ --------- -----
-- 2,386.0 -- -- 1,958.7 --
- --------------- --------- ----- ------ --------- -----
$ 220.4 $15,304.3 2.90% $186.4 $13,312.6 2.82%
- --------------- --------- ----- ------ --------- -----
$ 179.9 -- 2.37% $179.0 -- 2.71%
- --------------- --------- ----- ------ --------- -----
</TABLE>
18
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a.) Exhibits
--------
Exhibit (11) Computation of Per Share Earnings
(b.) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed for the three months ended June 30,
1994.
19
<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: August 11, 1994 By: PERRY R. PERO
------------------------------------
PERRY R. PERO
Senior Executive Vice President
and Chief Financial Officer
Date: August 11, 1994 By: JOHN H. ROBINSON
------------------------------------
JOHN H. ROBINSON
Senior Vice President and Controller
(Chief Accounting Officer)
20
<PAGE>
EXHIBIT INDEX
-------------
The following Exhibits are filed herewith or are incorporated herein by
reference.
Exhibit
Number Description
- ------ -----------
(11) Computation of Per Share Earnings
21
<PAGE>
EXHIBIT NUMBER (11)
TO 6/30/94 FORM 10-Q
NORTHERN TRUST CORPORATION
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Second Quarter Ended June 30 Six Months Ended June 30
----------------------------- --------------------------
1994 1993 1994 1993
-------------- ------------- ------------ -----------
Computations Required by
- ------------------------
Regulation S-K
- --------------
Primary Earnings Per Share
- --------------------------
<S> <C> <C> <C> <C>
Net Income Applicable to
Common Shares $46,968,577 $40,031,235 $90,732,442 $78,684,036
=========== =========== =========== ===========
Weighted Average Number of
Common and Common Equivalent
Shares Outstanding
Common Shares 53,878,250 52,987,990 53,602,539 52,929,420
Dilutive Effect of Common
Equivalent Shares (A)
Stock Options 979,076 1,275,662 986,587 1,259,545
Long Term Performance
Stock Plan 393,575 395,763 375,782 380,560
Other 10,156 1,455 7,978 1,214
----------- ----------- ----------- -----------
55,261,057 54,660,870 54,972,886 54,570,739
=========== =========== =========== ===========
Net Income Per Common and
Common Equivalent Share $0.85 $0.73 $1.65 $1.44
=========== =========== =========== ===========
</TABLE>
(A) Determined by application of the treasury stock method.
22
<PAGE>
EXHIBIT NUMBER (11)
TO 6/30/94 FORM 10-Q
NORTHERN TRUST CORPORATION
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Second Quarter Ended June 30 Six Months Ended June 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 $46,968,577 $40,031,235 $90,732,442 $78,684,036
Add Back: Dividend on Series E
Convertible Preferred Stock 768,277 794,129 1,545,328 1,558,208
----------- ----------- ----------- -----------
$47,736,854 $40,825,364 $92,277,770 $80,242,244
=========== =========== =========== ===========
Weighted Average Number of
Common and Common Equivalent
Shares Outstanding
Common Shares 53,878,250 52,987,990 53,602,539 52,929,420
Dilutive Effect of Common
Equivalent Shares (A)
Stock Options 979,907 1,275,662 1,009,134 1,347,629
Long Term Performance
Stock Plan 393,575 395,763 376,574 396,809
Other 10,156 1,622 8,167 1,549
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
------------ ----------- ----------- -----------
56,466,708 55,865,857 56,201,234 55,880,227
============ =========== =========== ===========
Net Income Per Common and
Common Equivalent Share $0.85 $0.73 $1.64 $1.44
=========== =========== =========== ===========
</TABLE>
(A) Determined by application of the treasury stock method.
23
