I urge you to read our 2009 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.Let me turn the call over to Bill Morrison. William Morrison Thank you, Bev, and good morning, everyone. It's my pleasure to speak with you today about Northern Trust's fourth quarter earnings. Earlier this morning, Northern Trust announced fourth quarter net income of $157 million and reported earnings per share of $0.64. Our fourth quarter results include an expense credit of approximately $0.05 per share related to the 2008 IPO of Visa, which impacted all Visa-member banks. In our press release issued earlier today, we presented operating results which excludes this Visa-related item. We believe operating results provide the clearest indication of results and trends in our core businesses. Therefore, our commentary for the remainder of today's conference call will focus on operating results, which exclude only the Visa-related item. To that end, fourth quarter operating net income was $144 million and operating earnings per share equaled to $0.59. For the full year 2010, operating net income was $649 million and operating earnings per share equaled $2.65. As I'll discuss in more detail later, our fourth quarter and full year performance reflect the strong competitive positioning of Northern Trust in the markets where we compete. We continue to win new clients in both our Personal and our Institutional businesses, and believe that our client-centric business strategy and strong financial condition position Northern Trust well for growth. That said, extremely low interest rates continue to pressure several important and profitable revenue streams. Most notably, net interest income and trust investment and other servicing fees, and I'll touch on each of these later in the call. Before I review our fourth quarter performance, let me discuss the current market conditions that impact our results. Equity markets, as you know, improved for the second consecutive quarter with the S&P 500 and EAFE indices rising 10.2% and 5.2%, respectively, in the fourth quarter. You will recall that equity markets also improved in the third quarter, which is relevant to fees that we earned in C&IS custody and PFS wealth management, our businesses which use a quarter lag methodology in calculating some of their fees. Likewise, equity markets improved 10.1% in the fourth quarter, using the one-month lag methodology, which is relevant to fees that we earned in PFS, excluding wealth management.
The very low level of short-term interest rates, coupled with narrow short-term spreads, continued to have a negative impact on net interest income, some investment management fees and securities lending revenues. As you know, interest rates remained at extremely low levels through the fourth quarter. In the United States, overnight interest rates averaged only 19 basis points in the fourth quarter. Three month LIBOR averaged 29 basis points, a decrease of a significant 10 basis points sequentially.Short-term interest rates for the euro and sterling were also at low levels by historical standards, although short-term interest rates in the euro increased in the fourth quarter. With that background, let me review our fourth quarter results. Revenue in the fourth quarter equaled $906 million, down 5% compared to last year's fourth quarter and up 1% sequentially. Trust investment and other servicing fees are the largest component of our revenues, representing 56% of total revenues in the fourth quarter. Trust investment and other servicing fees of $505 million decreased 8% year-over-year and 3% sequentially. In our Institutional business, C&IS trust investment and other servicing fees totaled $269 million in the fourth quarter, down 18% year-over-year and 8% on a sequential quarter basis. C&IS fees include three primary categories: custody and fund administration, institutional asset management and securities lending. Before I move into a review of our C&IS fee trends, please recall that our third quarter C&IS custody and fund administration fees were increased and investment management fees were decreased by $4.3 million each as a result of a fee reclassification. You will want to be mindful of this third quarter reclassification as you evaluate our sequential quarter performance for these two categories. Read the rest of this transcript for free on seekingalpha.com