Northern Trust Earnings

Beat on Revenues and by .16 a share. http://finance.yahoo.com/marketupdate/inplay

northern trust bank still looks good on the charts

In a traditional reversal, NTRS has a bullish price objective of $85. This bank has held up real well even in a terrible environment. Look for this to continue, as their customers haven't been as affected by the recent downturn.

Solid investment

This bank has done very well even in the current conditions. Still seems to be the best placed going forward with respect to the banks. Look for expansion, and increasing earnings as they are linked to higher income individuals. Big profits from their financial management team as the market recovers.

The One Bank Stock Holding Up

To say that the current financial environment in the United States is bad would be a large overstatement. Many of the biggest names have been pommeled as write downs have been seen in the mortgage market. Everywhere you turn there is a different view of how to fix the problem, and a with every fix there are hundreds of dissenters saying why the idea won't work. The truth is there is no real fix for this problem, as much of what was done in most cases was under the letter of the law, although immoral. This environment has created many to rethink their retirement plans and in some cases bankrupted people that have done nothing wrong. With the credit markets just starting to thaw, it looks as though the financials could be close to the end of their movement downward. When combing through the financials, it is very important to find buys that are not currently affected by the mortgage mess. Many of which will have great balance sheets going forward and benefit from upcoming rate cuts and continual liquidity flowing from the Fed on the cheap to be used. Much of this cheap cash along with better accounting rules to write of losses associated with buying troubled companies, will able financials avoiding this mess to swoop in and make large purchases for growth going forward. Northern Trust may be just one of those companies. Their large exposure to businesses and affluent individuals seems to have insulated them from the crisis. As of the second quarter of 2008, we have seen a challenging environment for many of the companies in the S&P500. Northern Trust saw record revenues up 27% for the quarter year over year. Their net income was up 46%, which was another record for the same time frame. Their EPS has grown at a double digit rate for 14 quarters. Credit quality has improved substantially year over year. 92% of their securities are rated triple-A. Last quarter they had no securities or leveraged loan write downs. They have continued to and as of last quarter continued to meet all long term financial targets. Many of which they are blowing away with 27.3% revenue growth vs long term goal of 8%-10%. Their goal of positive operating leverage came in at 11.5, EPS growth of 46.7% was above their range of 10%-12% and return on equity of 24.8% vs. 16%-18%. Their asset accumulation rates outperform consistently, with $4 trillion in assets under custody, $2 trillion global custody assets, $751 billion assets under management. At the end of 2002 they were the 19th largest bank in the US, and as of June of 2007 were the 15th largest. They are now the tenth largest. If all of this doesn't get your attention, they have a very conservative business model. Last year 74% of all revenues were from non-interest income. If we are to compare North Trust to the equity markets, they fair well in down times. If the markets rise or fall 10%, this stock will have a corresponding increase or decrease of 2%. 91% of asset backed securities are triple-A. Sub-rime asset backed securities are less than 2% of their portfolio. 79% of earning assets and 75% of interest bearing deposit liabilities mature within one year of June 2008. According to SNL financial, the top 20 banks have a more difficult environment with respect credit quality when compared to Northern. The peer average had a 1.47% non-performing assets as a percentage of loans, 168% loan loss reserve as a percentage of non-performing assets, and 1.43% net charge offs to average loans. Northern compares .12%, 501%, and .07% respectively. They have also increased their common equity every quarter since 1988. By sticking with their plan no matter the change in the market, they have provided consistency to their shareholders. This is why their credit rating has been an AA- for over twenty years which was upgraded to AA in May of this year. They have managed this by not providing investment banking, sub-prime mortgage underwriting, credit cards or venture capital. Going forward, Northern will continue to have large exposure to the affluent. They have marketed their name well enough to continue growth in this area. They seem to be the name brand the rich are most comfortable using. This branding has afforded them the luxury of being conservative and using a capital preservation strategy. They currently have 85 offices in 18 states and these locations are within a 45 minute drive from 50% of all the US millionaires. When looking at company private client revenues, 42% come from the affluent. When comparing to their competitors Merrill Lynch is the closest at 35%, followed by Wilmington Trust at 30% and Citigroup at 16%. Personal financial services have seen assets under management grow 9% per year since 1997 and assets under custody at 12% per year over the same time frame. Corporate and institutional services have seen assets under custody increase 13% per year since 1997 and global custody assets by 28% per year. With respect to global investments, client assets under management have grown 14% per year since 1997. Northern Trust's ideals and strategies have worked for a long time and that is why they have had success. They are not one of the banks that let down their investors and will be rewarded in the coming years. They will continue to push growth in attractive areas and should have little difficulty as their name precedes them. This should make them an excellent investment as they continue to execute.