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Goldman Sachs: Earnings Home Run Winner

Northern Trust reported fourth-quarter earnings allocated to common and potential common shares of $165.2 million, or 69 cents a share, missing the consensus estimate of a 74-cent profit. Earnings declined from $176.0 million, or 73 cents a share, in the third quarter, but increased from $128.6 million, or 53 cents a share, in the fourth quarter of 2011.

The sequential earnings decline mainly reflected an increase in noninterest expense to $741.5 million in the fourth quarter from $696.4 million in the third quarter, mainly reflecting "increased business promotion expense, higher charges related to account servicing activities, higher staff related expense, and the restructuring and integration related charges of $3.3 million." The year-over-year earnings improvement reflected an 18% increase in trust, investments and other servicing fees in the company's Personal Financial Services unit, to $278.3 million, as well as fourth-quarter 2011 restructuring, acquisition and integration charges of $61 million.

Usdin also rates Northern Trust a "Hold," with a $47 price target, saying that "as reported, the EPS run-rate of ~$2.80 is 15% below 2013 consensus ($3.30/ share), which exposes NTRS to negative estimate revisions."

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-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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