Custodian banks State Street Corp. (STT) and Northern Trust Corp. (NTRS) and financial holding company U.S. Bancorp (USB) reported mixed results for the first quarter. State Street's profit declined from last year and missed analysts' estimates, hurt by higher expenses and lower servicing fees. U.S. Bancorp earnings topped estimates, while Northern Trust's matched - both reflecting higher net revenues and a lower provision for credit losses.
State Street's net income available to shareholders fell 9 percent to $417 million or $0.85 per share partly due to acquisition and restructuring costs as well as litigation-related settlement costs.
Operating earnings, which excluded items, also fell 5 percent to $0.84 per share, missing the average estimate of 22 analysts polled by Thomson Reuters by 3 cents. Analysts' estimates typically exclude special items.
Total revenues grew 3 percent to $2.42 billion, beating analysts' estimate of $2.33 billion. The growth was despite a 2 percent decline in its majority revenue share of servicing fees reflecting weakness in non-US markets and changes in asset mix, partly offset by impact of improved equity markets and net new business wins. Net interest revenue grew 11.2 percent.
Total expenses rose 7 percent mainly due to higher compensation and employee benefits costs. The company did not record provision for credit losses in the quarter.
State Street's CEO Joseph Hooley said, "During the first quarter our core business momentum in asset servicing and asset management improved, compared to the second half of last year. Our success in winning new business is reflected in solid growth in both fee and total revenue."
Northern Trust's net income increased to $161.2 million or $0.66 per share, matching analysts' estimates, compared to last year's $151 million or $0.61 per share. Total revenue grew 8 percent to $965.4 million partly due to acquisitions, but missed the Street estimate of $974 million.
Chairman and CEO Frederick Waddell said, "Our performance in the first quarter reflects strong new business, higher equity markets and disciplined expense management."
Noninterest income, which represented 73 percent of revenue, increased 7 percent, and net interest income on a fully taxable equivalent basis increased 9 percent. Provisions for credit losses were reduced by 67 percent in the quarter to $5 million.
U.S. Bancorp's net income applicable to shareholders, meanwhile, grew 28 percent to $1.29 billion and earnings per share were up 28.8 percent to $0.67, beating analysts' estimate of $0.64 per share.
Total net revenue on a taxable-equivalent basis increased 9 percent to $4.93 billion despite the negative impact of recent legislative and regulatory changes, while analysts estimated revenues of $4.78 billion.
Provision for credit losses declined 36.3 percent to $481 million. CEO Richard Davis said, "The slow, but steady, economic recovery contributed to the continued improvement in our credit quality this quarter. ... the trend in our delinquencies and criticized assets gives us confidence that there is more improvement to come."
In pre-market activity, State Street shares are currently trading at $43.95, up $0.27 or 0.62 percent and USB shares are at $31.27, up $0.11 or 0.35 percent.
Northern Trust shares closed Monday's trading at $46.16.
by RTT Staff Writer
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