3. Northern Trust
(NTRS - Get Report) of Chicago closed at $48.72 Friday, down 5% year-to-date.
The company was named in recent report by Rochdale Research analyst
as a good fit for an acquisitive
. Bove said "there is no company better suited for Credit Suisse than Northern Trust," adding that "management has no ability to withstand a takeover bid."
Northern Trust reported net income of $356.8 million or $1.46 a share for the first half of 2010, compared to net income to common shareholders of $364.9 million or $1.57 a share during the first half of 2009. Northern Trust fully repaid $1.6 billion in TARP money in June 2009. The year-over-year decline in earnings was attributed to lower net interest income in the low rate environment and reduced noninterest expenses during the first half of 2009 from capital support agreements.
ROE for the first half of 2010 was 10.98% and for the previous five years peaked at 17.57% in 2006, according to SNL Financial.
Total assets were $80 billion as of June 30. Since Northern Trust focuses on providing trust, asset servicing and other fee-based services, loans held for investment only make up about 35% of its total assets and credit quality has not been a problem. The company's tier 1 leverage ratio was 9.22% as of June 30, its total risk-based capital ratio was 15.88% and its tangible common equity ratio was 7.76%.
The shares trade for 1.9 times tangible book value according to SNL Financial. The forward P/E based on the consensus earnings estimate of $3.46 a share for 2011 was 14.1 and world drop to 11.6 based on the 2012 consensus earnings estimate of $4.21 a share.
Out of 19 analysts covering Northern Trust, nine have buy ratings while ten recommend investors hold the shares.