SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 17, 1995
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Northern Trust Corporation
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-5965 36-2723087
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(Commission File Number) (IRS Employer Identification No.)
50 South La Salle Street
Chicago, Illinois 60675
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 630-6000
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Exhibit Index is located on page 4. <PAGE>
Item 5. Other Events
The information contained in the registrant's January 17,
1995 press release, reporting on the registrant's earnings for the
fourth quarter of 1994 and for its 1994 fiscal year, a copy of which
is filed as Exhibit 99 hereto, is incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(c) Exhibits:
Exhibit 99 January 17, 1995 Press Release
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SIGNATURE
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
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(Registrant)
Dated: January 17, 1995 By: /s/ Perry R. Pero
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Perry R. Pero
Senior Executive Vice President
and Chief Financial Officer
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EXHIBIT INDEX
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Number Description Page Number
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99 January 17, 1995 Press Release 5
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EXHIBIT 99
[NORTHERN TRUST CORPORATION LETTERHEAD]
PRESS RELEASE
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CONTACT: Laurie McMahon, Investor Relations
(312) 444-7811, or
Sue Rageas, Public Relations
(312) 444-4279
RELEASE #01412
FOR IMMEDIATE RELEASE
NORTHERN TRUST CORPORATION REPORTS RECORD 1994 EARNINGS
- -------------------------------------------------------
(CHICAGO, JANUARY 17, 1995) Northern Trust Corporation reported
record net income of $182.2 million for 1994, an increase of 9% from
the $167.9 million earned last year. Net income per common share
increased 7% to $3.16 from $2.95 in 1993. Return on common equity was
16.6%. For the fourth quarter, without a $5.9 million (after-tax)
non-cash, accounting charge to recognize an unusually large number of
pension eligible retiring employees, earnings would have been
$46.0 million. Fourth quarter net income, after this charge, was
$40.1 million or $.69 per common share compared with $43.3 million or
$.76 per common share last year.
David W. Fox, Chairman and Chief Executive Officer, commented,
"1994 marks the seventh consecutive year of record earnings. Also,
the common stock dividend was raised 18.2% to a new quarterly rate of
$.26 per share, marking the eighth consecutive year of dividend
increases. Excluding the second quarter gain on the sale of an
investment, noninterest income accounted for 62% of total revenues as
compared with 60% a year ago. Trust fees, which represent 75% of fee
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income, grew 12% to a record $453.4 million, continuing a
long-standing trend of double-digit growth. Total trust assets under
administration were $499.4 billion at year end, up $22.9 billion from
the prior year. We are well positioned in our key businesses and
continue to invest in the technology to support them. Our strategy
will focus on those businesses with the greatest growth and
profitability potential. We will also maintain our emphasis on
controlling costs and maximizing the benefits of our technology
investments."
PERFORMANCE HIGHLIGHTS - 1994
- -----------------------------
Trust fees from Corporate and Institutional Services grew 18%
over last year and totaled $230.1 million. This business includes a
full range of custody, investment and advisory services for corporate,
retirement and institutional assets worldwide. Annualized trust fees
from new business in 1994 exceeded $35 million, with about one-half
coming from current clients, reflecting our success in growing
relationships. Corporate and Institutional trust assets under
administration grew $21.5 billion over last year and now total
$448.0 billion, of which $51.6 billion is managed by Northern.
Global custody assets grew to approximately $65.2 billion with
related trust fees increasing significantly from last year.
Northern's global custody business is expanding rapidly as increased
cross-border investing by clients continues to fuel the high growth in
the volume of non-U.S. securities processed. Securities lending
revenues were also up sharply due primarily to the significant
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increase in international activity. As a result of this growth in
international markets, especially the East Asian region, the
Corporation plans to expand its presence overseas by opening an office
in Hong Kong. During the fourth quarter The Northern Trust Company of
Canada became the first non-Canadian financial institution to receive
full trust powers, which allows it to act as trustee for Canadian
clients.
Personal Financial Services trust fees amounted to
$223.3 million, up $13.5 million from one year ago, with total
personal trust assets under administration at year-end of
$51.4 billion. Northern is the investment manager for $30.8 billion
of these assets. The strongest fee growth occurred in Northern's
Florida, suburban Chicago, Arizona and Texas subsidiaries. Wealth
Management fees, derived from serving high net worth families
throughout the U.S., increased 15%. Annualized recurring trust fees
from new business this year approximated a record $26 million.
During 1994, the Corporation's Florida subsidiary opened new
offices in Broward County and Venice and expanded other locations as
part of a plan to increase its presence in this high-growth market.
The Northern Trust Company opened a new branch in Highland Park,
Illinois, and in December began serving customers from a temporary
facility at another new branch on Chicago's south side. This brings
Northern's national network of Personal Financial Service offices to
45 locations. The Northern Funds, a new family of mutual funds for
which The Northern Trust Company is investment advisor, was introduced
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to serve our individual and personal trust clients. Assets in this
family of funds reached $2.3 billion at year-end.
Total revenue for the year was $1.0 billion. Excluding the
effect of the sale of the Corporation's equity interest in Banque
Scandinave en Suisse in the second quarter, revenues totaled
$972.9 million, up from $915.8 million a year ago. Treasury
management revenues from both fees and deposit balances improved
slightly from one year ago, while foreign exchange trading profits of
$35.9 million increased 11% from the prior year. Net interest income
stated on a fully taxable equivalent basis totaled $371.6 million, up
2% from $363.4 million reported last year. The net interest margin
declined to 2.36% from 2.65% a year ago, due primarily to lower
spreads on a higher volume of short-term liquid U.S. federal agency
securities and money market assets and lower loan-related fees
resulting from a reduced volume of residential mortgage refinancing
activity. Northern's balance sheet continues to remain highly liquid
with loans representing a relatively low 53% of average earning
assets.
Noninterest expenses totaled $700.5 million in 1994, up 12% from
the prior year. These expenses included several nonrecurring items:
a $9.6 million non-cash, pension charge; $13.6 million in charges
resulting from technology-related decisions, including the trade-in
and the sale and leaseback of mainframe computer equipment and a
write-down of older trust-related software; $4.2 million of overtime
back pay obligations; and a $3.5 million charge related to the cost of
a second quarter agreement between the Corporation and The Benchmark
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Funds, for which The Northern Trust Company is the investment advisor.
Excluding these items, noninterest expenses increased 7% over the
prior year. The majority of the increase was the result of continued
investment in technology and expansion of the personal trust office
network and global custody business. The growth in taxable earnings
resulted in a 20% increase in the federal and state income tax
provision to $79.3 million for the year.
Balance sheet assets averaged $17.9 billion for the year, 14%
over last year, while average common equity increased 17%. Average
loans grew 14%. Residential mortgages continued to register the
highest growth rate, increasing 21% from last year, and represent
38% of the total loan portfolio. Residential mortgage loans have
proven to be a key factor in expanding personal financial services
relationships into fiduciary and investment management services.
With respect to asset quality, Northern remains in a leadership
position. Nonperforming assets at December 31, 1994 of $30.0 million
were at the lowest level since March, 1989 and represented a low 0.3%
of total loans. The credit loss provision declined to $6.0 million
from $19.5 million, reflecting improved credit quality. Net
charge-offs declined to $6.7 million or .08% of average loans.
PERFORMANCE HIGHLIGHTS - FOURTH QUARTER 1994
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Reflecting the $5.9 million (after-tax) pension charge, net
income for the fourth quarter of 1994 was $40.1 million compared with
$43.3 million reported last year. Net income per common share was
$.69 versus $.76 in 1993.
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Total revenue for the quarter was $248.3 million versus $233.3
million a year ago. Trust fees totaled $114.6 million, up 9.5% from
the $104.7 million reported in 1993 and slightly lower than the third
quarter 1994 level of $115.8 million. Trust fees from Corporate and
Institutional Services increased 14% to $58.9 million from 1993 and
trust fees from Personal Financial Services amounted to $55.7 million,
up 5%. Foreign exchange trading profits totaled $10.1 million, 16%
higher than the $8.6 million reported last year. Net interest income
stated on a fully taxable equivalent basis totaled $97.8 million, up
6% from $92.6 million last year due primarily to a 16% increase in
average earning assets. Excluding mortgage loan refinancing fees
recognized in 1993, net interest income increased 9% from last year.
The net interest margin declined to 2.38% compared with 2.61% in 1993
but improved slightly from the second and third quarters indicating
the Corporation is well positioned to manage rising interest rates.
Noninterest expenses totaled $184.9 million in the quarter, up
14% from the prior year, and included the special accounting charge
for record lump-sum distributions from our plans to pension eligible
employees who elected to retire during the quarter. Excluding the
pension charge, expenses totaled $175.3 million, up 8% from last year.
The increase in noninterest expenses was related to investments in
technology, higher overtime pay and agency clerical services, global
custody transaction fees and technical and consulting costs, offset by
lower legal services and incentive compensation. The tax provision
for the quarter also benefited from the recognition of $2.0 million in
federal income tax credits.
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NORTHERN TRUST CORPORATION
(Supplemental Consolidated Financial Information)
STATEMENT OF INCOME STATISTICS ($ IN MILLIONS)
<TABLE>
<CAPTION>
TWELVE MONTHS
1994 1993 % Change*
----------------------------
<S> <C> <C> <C>
Net Interest Income (Taxable Equivalent) $371.6 $363.4 2.2%
Less: Taxable Equivalent Adjustment 33.4 34.1 (2.3)
------- ------ ------
Net Interest Income 338.2 329.3 2.7
Provision for Credit Losses 6.0 19.5 (69.2)
Noninterest Income
Trust Fees 453.4 404.8 12.0
Treasury Management Fees 46.3 49.0 (5.4)
Foreign Exchange Trading Profits 35.9 32.4 10.7
Security Commissions & Trading 18.4 19.9 (7.5)
Other Operating 47.4 44.5 6.4
Gain on Sale of BSS Investment 28.5 0.0 N/M
Investment Security Transactions (0.1) 1.8 N/M
------- ------ ------
Total Noninterest Income 629.8 552.4 14.0
Noninterest Expenses
Salaries 316.6 293.4 7.9
Staff Benefits 74.8 68.1 9.8
Occupancy 57.4 55.3 3.8
Equipment 56.4 41.1 37.2
Other Operating 195.3 170.3 14.7
------- ------ ------
Total Noninterest Expenses 700.5 628.2 11.5
------- ------ ------
Income Before Taxes 261.5 234.0 11.8
Provision for Income Taxes 79.3 66.1 20.1
------- ------ ------
NET INCOME $182.2 $167.9 8.5%
======= ====== ======
Earnings Per Common Share
Primary $3.17 $2.96 7.2%
Fully Diluted 3.16 2.95 7.1
Return on Average Common Equity 16.57% 17.89%
Return on Average Assets 1.02 1.07
Common Dividends Declared per Share $0.92 $0.775 18.7%
Preferred Dividends (millions) 7.3 6.3 14.7
Average Common Shares Outstanding (000s)
Primary 55,144 54,590
Fully Diluted 56,352 55,849
</TABLE>
(N/M) Not Meaningful
(*) % Change calculation is based on actual balances as compared
with rounded amounts presented in Supplemental Consolidated
Financial Information
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NORTHERN TRUST CORPORATION
(Supplemental Consolidated Financial Information)
STATEMENT OF INCOME STATISTICS ($ IN MILLIONS)
<TABLE>
<CAPTION>
FOURTH QUARTER
1994 1993 % Change*
-------------------------------
<S> <C> <C> <C>
Net Interest Income (Taxable Equivalent) $97.8 $92.6 5.6%
Less: Taxable Equivalent Adjustment 9.1 8.6 4.3
------- ------- -------
Net Interest Income 88.7 84.0 5.7
Provision for Credit Losses 1.0 2.5 (60.0)
Noninterest Income
Trust Fees 114.6 104.7 9.5
Treasury Management Fees 11.2 12.2 (7.6)
Foreign Exchange Trading Profits 10.1 8.6 16.4
Security Commissions & Trading 2.9 5.2 (44.6)
Other Operating 11.7 9.9 17.4
Investment Security Transactions 0.0 0.1 N/M
------- ------- -------
Total Noninterest Income 150.5 140.7 6.9
Noninterest Expenses
Salaries 81.0 73.9 9.6
Staff Benefits 18.6 17.4 6.8
Occupancy 14.7 14.5 1.0
Equipment 11.6 10.3 12.8
Other Operating 59.0 45.5 29.6
------- ------- -------
Total Noninterest Expenses 184.9 161.6 14.3
------- ------- -------
Income Before Taxes 53.3 60.6 (11.9)
Provision for Income Taxes 13.2 17.3 (22.9)
------- ------- -------
NET INCOME $40.1 $43.3 (7.4)%
======= ======= =======
Earnings Per Common Share
Primary $0.69 $0.76 (9.7)%
Fully Diluted 0.69 0.76 (9.7)
Return on Average Common Equity 13.62% 17.35%
Return on Average Assets 0.87 1.08
Common Dividend Declared per Share $0.26 0.22 18.2%
Preferred Dividends (millions) 2.0 1.6 26.8
Average Common Shares Outstanding (000s)
Primary 55,288 54,640
Fully Diluted 56,493 55,845
</TABLE>
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NORTHERN TRUST CORPORATION
(Supplemental Consolidated Financial Information)
BALANCE SHEET ($ IN MILLIONS)
<TABLE>
<CAPTION>
DECEMBER 31
1994 1993 % Change*
<S> <C> <C> <C>
Assets -------------------------------
Money Market Assets $2,651.2 $2,740.5 (3.3)%
Securities 5,053.1 4,038.7 25.1
Loans and Leases 8,590.6 7,623.0 12.7
---------- ---------- -------
Total Earning Assets 16,294.9 14,402.2 13.1
Reserve for Credit Losses (144.8) (145.5) (0.4)
Other Nonearning Assets 2,411.5 2,645.9 (8.9)
---------- ---------- -------
Total Assets $18,561.6 $16,902.6 9.8%
========== ========== =======
Liabilities and Equity
Total Interest-Bearing Deposits $8,904.3 $7,571.6 17.6%
Borrowed Funds 4,146.3 3,943.3 5.1
Notes Payable (incl. Medium-Term Notes) 791.8 1,143.8 (30.8)
---------- ---------- -------
Total Interest-Related Funds 13,842.4 12,658.7 9.4
Demand & Other Noninterest-Bearing 2,830.1 2,761.8 2.5
Other Liabilities 608.4 330.4 84.1
---------- ---------- -------
Total Liabilities 17,280.9 15,750.9 9.7
Common Equity 1,110.7 981.7 13.1
Preferred Equity 170.0 170.0 UNCH
---------- ---------- -------
Total Liabilities and Equity $18,561.6 $16,902.6 9.8%
========== ========== =======
</TABLE>
AVERAGE BALANCE SHEET ($ IN MILLIONS)
<TABLE>
<CAPTION>
TWELVE MONTHS
1994 1993 % Change*
<S> <C> <C> <C>
Assets -------------------------------
Money Market Assets $2,420.2 $2,201.6 9.9%
Securities 5,000.9 4,232.0 18.2
Loans and Leases 8,316.1 7,297.1 14.0
---------- ---------- -------
Total Earning Assets 15,737.2 13,730.7 14.6
Reserve for Credit Losses (145.2) (145.5) (0.2)
Other Nonearning Assets 2,293.8 2,115.0 8.4
---------- ---------- -------
Total Assets $17,885.8 $15,700.2 13.9%
========== ========== =======
Liabilities and Equity
Total Interest-Bearing Deposits $8,312.9 $7,446.1 11.6%
Borrowed Funds 3,797.6 3,357.3 13.1
Notes Payable (incl. Medium-Term Notes) 1,075.4 852.0 26.2
---------- ---------- -------
Total Interest-Related Funds 13,185.9 11,655.4 13.1
Demand & Other Noninterest-Bearing 2,954.2 2,620.2 12.7
Other Liabilities 520.2 351.5 48.0
---------- ---------- -------
Total Liabilities 16,660.3 14,627.1 13.9
Common Equity 1,055.5 903.1 16.9
Preferred Equity 170.0 170.0 UNCH
---------- ---------- -------
Total Liabilities and Equity $17,885.8 $15,700.2 13.9%
========== ========== =======
</TABLE>
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NORTHERN TRUST CORPORATION
(Supplemental Consolidated Financial Information)
Quarterly Trend Data ($ In Millions)
<TABLE>
<CAPTION>
1994 Quarters 1993
---------------------------------- Quarter
Fourth Third Second First Fourth
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Income Summary
Trust Fees $114.6 $115.8 $113.5 $109.5 $104.7
Other Noninterest Income 35.9 36.1 64.7 39.7 36.0
Net Interest Income (Taxable
Equivalent) 97.8 93.9 90.1 89.8 92.6
------- ------- ------- ------- -------
Total Revenue (Taxable
Equivalent) 248.3 245.8 268.3 239.0 233.3
Provision for Credit Losses 1.0 1.0 1.0 3.0 2.5
Noninterest Expenses 184.9 166.2 187.5 161.9 161.6
------- ------- ------- ------- -------
Pretax Income (Taxable
Equivalent) 62.4 78.6 79.8 74.1 69.2
Taxable Equivalent Adjustment 9.1 8.2 8.2 7.9 8.6
Provision for Income Taxes 13.2 22.4 22.9 20.8 17.3
------- ------- ------- ------- -------
Net Income $40.1 $48.0 $48.7 $45.4 $43.3
======= ======= ======= ======= =======
Per Common Share
Earnings: Primary $0.69 $0.83 $0.85 $0.80 $0.76
Fully Diluted 0.69 0.83 0.85 0.80 0.76
Dividend Declared 0.26 0.22 0.22 0.22 0.22
Book Value (EOP) 20.54 20.14 19.51 19.00 18.42
Market Value (EOP) 35.00 37.19 41.25 41.50 39.625
Ratios
Return on Common Equity 13.62% 17.02% 18.06% 17.86% 17.35%
Return on Average Assets 0.87 1.05 1.10 1.06 1.08
Net Interest Margin 2.38 2.33 2.33 2.41 2.61
Risk-based Capital Ratios:
Tier 1 9.0 9.1 8.8 8.9 9.3
Total (Tier 1 + Tier 2) 12.4 12.6 12.3 12.7 13.4
Leverage 6.2 6.2 6.1 6.0 6.2
Trust Assets ($ Billions) - EOP
Corporate $448.0 $444.6 $431.9 $430.0 $426.5
Personal 51.4 50.2 49.2 49.7 50.0
------- ------- ------- ------- -------
Total Trust Assets $499.4 $494.8 $481.1 $479.7 $476.5
======= ======= ======= ======= =======
Memo: Managed Assets 82.4 77.7 78.5 76.0 77.1
Asset Quality ($ Millions) - EOP
Nonaccrual Loans $27.8 $35.6 $35.8 $40.0 $27.3
Other Real Estate Owned (OREO) 2.2 3.6 3.8 5.8 9.7
------- ------- ------- ------- -------
Total Nonperforming Assets $30.0 $39.2 $39.6 $45.8 $37.0
======= ======= ======= ======= =======
Nonperforming Assets/
Loans & OREO 0.35% 0.46% 0.46% 0.57% 0.49%
Net Chargeoffs $1.1 $1.0 $1.7 $2.9 $2.5
Net Chargeoffs to Avg Loans
(Annualized) 0.05% 0.05% 0.08% 0.15% 0.13%
Reserve for Credit Losses $144.8 $144.9 $144.9 $145.6 $145.5
Reserve to Nonaccrual Loans 521% 407% 405% 364% 533%
</TABLE>
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