Now for our Safe Harbor statement. What we say during today's conference call may include forward-looking statements, which are Northern Trust's current estimates and expectations of future events or future results. Actual results, of course, could differ materially from those indicated by these statements because the realization of those results is subject to many risks and uncertainties. I urge you to read our 2011 annual report and our periodic reports to the Securities and Exchange Commission for detailed information about factors that could affect actual results.
Thank you again for joining us today, and let me turn the call over to Mike O'grady.
Michael G. O'grady
Good morning, everyone. Let me join Bev in welcoming you to the Northern Trust second quarter 2012 earnings conference call. Our second quarter results of earnings per share of $0.73 and a return on equity of 9.9% reflect continued progress on many fronts. Growth in trust, investment and other servicing fees was strong, driven by new business from both personal and institutional clients.Execution on our driving performance initiatives remains a critical priority, and we made further progress in the second quarter on both the revenue and expense side, and profitability improved with our pretax margin increasing to 27.7%. This performance was against the ongoing backdrop of a mixed operating environment.Equity markets were weak in the second quarter, following positive performance in each of the 2 preceding quarters. The S&P 500 was down 3%, and the IFA was down 7%. This weakness had a negative impact on the market value of client assets, as did the strengthening of the dollar. Assets under custody ended the second quarter at $4.6 trillion, down 1% sequentially but up 3% year-over-year, and assets under management ended at $704 billion, down 2% sequentially but up 3% year-over-year.Fees, overall, benefited from the prior quarter's positive market performance, given that some fees are calculated on the basis of month or quarter lag asset values. Foreign exchange volatility in volumes continue to be low, impacting our foreign exchange trading income. Interest rates remain low, placing continued pressure on our net interest margin and resulting in ongoing fee waivers on our money market funds, albeit lower in the second quarter than the first quarter.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV