Wednesday, Northern Trust Corp. (NTRS) said its second-quarter profit grew 4% as trust, investment and other servicing fees drove revenues. In addition, the company's adjusted earnings results topped Wall Street expectations sending its shares over 8% in the intra-day trading.
The Chicago, Illinois-based company posted second-quarter net income of $215.6 million or $0.96 per share compared to $206.9 million or $0.92 per share in the same quarter last year. On a sequential basis, net income declined from $385.2 million or $1.71 per share reported in the first-quarter of 2008.
The latest quarter's results include accounting charges of $87.3 million, or $0.39 per common share, associated with the way the company paid taxes on certain lease transactions. Before accounting charges, the company would have earned $1.35 per share, topping analysts' consensus estimate of $1.05 per share.
Net interest income was up 19% at $248.8 million compared to $209.0 million in the prior year. Total non-interest income came in at $845.3 million from $673.4 million last year.
The reserve for credit losses at the quarter-end stood at $183.1 million, an increase of $5.3 million from the March 31, 2008 balance. The provision for credit losses was $10.0 million in the latest quarter, higher than $4.0 million recorded year-ago. The latest quarter's provision primarily reflects loan growth and the continued weakness in the broader economic environment. Net charge-offs totaled $4.7 million, up from $2.3 million in the same quarter last year.
Non-performing loans totaled $30.1 million at June 30, compared to $26.8 million in the same period last year. Non-performing loans of $30.1 million at quarter-end represented 0.10% of total loans and leases.
Trust, investment and other servicing fees grew 21% in the second quarter to $645.1 million and represented 59% of revenues. Meanwhile, total fee-related income advanced 26% to $845.3 million and represented 77% of revenues.
Trust, investment and other servicing fees from Corporate & Institutional Services, or C&IS, improved 32% to $409.2 million. Trust, investment and other servicing fees from Personal Financial Services, or PFS, increased 5% to $235.9 million, driven by strong new business coupled with the Wealth Management Group reporting year-over-year increases in fees.
For the first-half, Northern Trust posted net income of $600.8 million or $2.67 per share, up from $393.6 million or $1.76 per share in the first half of 2007.
Among others in the industry, the Boston, Massachusetts-based State Street Corp. (STT) reported net income for the second quarter of $548 million or $1.35 per share, compared to $366 million or $1.07 per share for the year-ago quarter.
Northern Trust stock is currently up $5.46 or 8.13% and currently trading at $72.65. In the past 52-weeks, the stock has been trading between $58.73 and $83.17.
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