Northern Trust Gets It Right (NTRS)

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Northern Trust Corporation (NASDAQ: NTRS) is indicated higher after the trust bank and depository institution managed to show that some banks can beat earnings and still post positive earnings.

Northern Trust posted a 43% gain in earnings from operations to $1.39EPS, beating Thomson Reuters consensus estimates of $0.92 EPS.  Ifyou include total earnings, those net numbers were $1.47 EPS, upfrom $0.55 net EPS for the same period a year ago.  The firm’sconsolidated revenue increased about 23%, or $211.2 million, to $1.15billion, which also is above the $968 million consensus estimate.

The company’s  2008 results showed a 7% growth at $3.47 EPS for the fiscal year.

If you are curious as to why, there was a flight to quality and thesize of its custody and fiduciary assets speak for themselves.Northern Trust’s total assets under custody were $3.0 trillion, and itstotal managed assets were $575.5 billion. C&IS assets under custody were $2.7 trillion, down 28% from a year ago; and thatnumber included $1.4 trillion of global custody assets, 32% lower thana year ago.

The bank is not totally immune to the woes of the world.  It had a$251.1 million credit loss reserve as of December 31, 2008.  It alsotook some $44.4 million in charges on asset-backed securities and put aprovision for credit losses in Q4 at $60 million with total charge-offsat $15.8 million.

Shares are trading up 10% at $48.68 with about 45 minutes to go beforethe open.  Its 52-week trading range is $33.88 to $88.92.  Some banksstill seem to get it right.

Jon C. Ogg
January 21, 2009