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Northern Trust (NTRS) 4Q Earnings Jump 29 Pct, Yet Miss Estimates

 January 16, 2013 09:09 AM

(By Balaseshan) Northern Trust Corp. (NASDAQ: NTRS) reported a 29% jump in quarterly earnings on solid core trust fee growth and expense management amidst a challenging operating environment. However, results missed Street's expectations.

Earnings for the fourth quarter were $167.7 million or $0.69 per share, up from $130.2 million or $0.53 per share last year. The latest quarter results included restructuring and integration related charges of $5.2 million after tax, or $0.02 per share.

Consolidated revenue increased 1% to $969.7 million, on higher trust, investment and other servicing fees

[Related -Stocks Close Mixed Amid Earnings; Hewlett-Packard (HPQ) Rises]

Analysts, on average, polled by Thomson Reuters had expected a profit of $0.75 per share on revenue of $985.1 million for the fourth quarter.

Net interest income on a fully taxable equivalent (FTE) basis decreased 13% to $243.6 million., primarily due to lower average earning assets and a continued decline in the net interest margin.

Average earning assets for the quarter declined 5% to $82.9 billion, primarily reflecting lower Federal Reserve deposits.

Net interest margin declined to 1.17% from 1.28% on a fully taxable equivalent basis, primarily reflecting lower yields on earning assets, partially offset by a higher percentage of funding from non-interest-bearing sources.

Non-interest income, which represented 76% of revenue, increased 8% to $735.5 million, primarily reflecting higher trust, investment and other servicing fees, partially offset by lower foreign exchange trading income.

[Related -Northern Trust (NTRS) Posts In-Line Q1 Earnings]

Trust, investment and other servicing fees grew 15% to $622.6 million, primarily reflecting strong new business, the favorable impact of equity markets on fees, and lower waived fees on money market mutual funds. Assets under custody and assets under management are the primary drivers of its trust, investment and other servicing fees.

Return on average common equity was 8.83% in the current quarter, compared to 7.18% in the prior year. Assets under management increased 14% to $758.9 billion, while total assets under custody rose 13% to $4.8 trillion.

Total stockholders' equity rose 5% to $7.6 billion, primarily reflects earnings partially offset by dividend declarations and the repurchase of common stock pursuant to its share buyback program.

NTRS closed Tuesday's regular session up 0.55% at $52.81. The stock has been trading between $40.64 and $53.50 for the past 52 weeks.

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