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. Let me turn the call over to Mike O'grady. Michael G. O'grady Good morning, everyone. Let me join Bev and welcome you to Northern Trust First Quarter 2012 Earnings Conference Call. During today's call, I'll review our first quarter financial performance and provide an update on the Driving Performance initiative we introduced last quarter. Before we get into the details, I'd like to make a few overview comments on the quarter. Our first quarter results of earnings per share of $0.66 and a return on equity of 9% reflect progress across a number of fronts against the backdrop of a mixed operating environment. New business was strong, including success with both personal and institutional clients. For example, our Institutional business announced custody wins with UnitedHealth Group and BJC Healthcare as well as another ETF from Source. And just last week, we announced the excellent momentum we are seeing in the hedge fund administration space, which I'll discuss in more detail later in the call. In our Personal business, we continue to see strong growth across all regions. Equity markets improved for the second quarter in a row. This had a positive impact on the market value of client assets and on our fees where they're calculated on the basis of current period, month-lagged or quarter-lagged asset values. Assets under custody ended the first quarter at a record $4.6 trillion, up 6% year-over-year and 8% sequentially, and assets under management ended at $716 billion, up 8% year-over-year and sequentially.
Volatility trended lower in the first quarter, resulting in reduced level of foreign exchange trading income. The low level of interest rates continue to pressure net interest income and has also resulted in fee waivers on our money market funds, remaining at high levels, albeit lower in the first quarter than the prior quarter.The U.S. economy's slow recovery continues, which can be seen in the improving credit quality of our loan portfolio. With nonperforming assets declining for the third quarter in a row, our loan loss provision decreased to $5 million. Execution on our driving performance initiative is off to a strong start for the year on both the revenue and expense fronts. This corporate-wide effort, which began at the end of 2011, focuses on improving our productivity, profitability and returns in order to deliver greater value to our clients and shareholders. Let's move to Page 2 and discuss the financial highlights of the first quarter. Net income of $161 million and earnings per share of $0.66 both increased approximately 7% year-over-year and 24% sequentially. Our return on equity of 9% was better than last quarter and one year ago, but still below our historical returns and our future aspirations. The year-over-year comparisons for both revenues and expenses were impacted by the inclusion of the Bank of Ireland Securities Services and Omnium acquisitions, which closed in June and July of 2011, respectively. The year-over-year comparison was also favorably impacted by higher trust, investment and other servicing fees, higher net interest income and a lower loan loss provision. These favorable factors were partially offset in revenues by reduced foreign exchange trading income and expenses by higher compensation employee benefit and equipment and software expenses. The sequential quarter comparison was favorably impacted by higher trust, investment and other servicing fees, a lower loan loss provision and lower expenses in general, offset partially by reduced net interest income and foreign exchange trading income.
I'd like to highlight 2 additional items which impact the comparison between periods. First, we recorded $3.9 million in restructuring and integration charges during the first quarter. Recall that in the fourth quarter of 2011, we recorded $61 million in restructuring, acquisition and integration charges. There's a schedule of the components of these charges in the appendix. Second, there were no Visa-related adjustments in the first quarter. However, our results in the first and fourth quarters of last year included expense credits related to Visa of $10 million and $13 million respectively.Read the rest of this transcript for free on seekingalpha.com