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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