Northern Trust has reported second quarter net income up at $314.2 million compared with $215.6 million reported in the second quarter of 2008.

"We are pleased with our performance in the quarter, reported CEO and president Frederick Waddell. "Client assets under custody and management, which represent an important component of our business, increased 13% and 7%, respectively, during the quarter," he said

Improved market conditions favourably impacted securities lending revenues and reduced obligations under capital support agreements with some Northern Trust investment vehicles.

In the second quarter, Northern Trust completed a public offering of common stock, raising $834.5 million and issued $500 million of senior notes. It also completed the redemption of $1.576 billion in preferred shares while maintaining an exceptionally strong capital position, including a tier 1 capital ratio of 12.6% and a tier 1 common equity ratio of 12.1%, as of June 30, 2009."

Net income per common share for the second quarter was slightly down at $0.95 compared with $0.96 per share reported in the second quarter of 2008. The current quarter's earnings per share were reduced by $0.37 in connection with Northern Trust's participation in the US Treasury's capital purchase programme.

The reduction comprised $68.6 million, or $0.29 a share, attributable to the acceleration of the remaining difference between the carrying value of the preferred shares and their liquidation preference recognized upon the repayment in full of the $1.576 billion preferred share investment made by the treasury under the programme, and $19.5 million, or $0.08 a share, attributable to dividends on the preferred shares that were recorded in the current quarter through the redemption date.

The 2008 second quarter's results included non-cash accounting charges of $87.3 million, or $.39 per common share, associated with lease transactions.

In the second quarter consolidated revenues totalled $1.05 billion, down 4% from the same period in 2008. Trust, investment and other servicing fees fell 7% from 2008 to $601.4 million and represented 58% of second quarter revenues.

Foreign exchange trading income was strong for the quarter, totalling $134.3 million, an increase of 6% from the same period in 2008.

Net interest income totalled $260.1 million, an increase of 5%. Total fee-related income fell 7% to $785 million representing 75% of revenues.

Trust, investment and other servicing fees from corporate and institutional services (C&IS) dropped 4% from the 2008 period to $390.9 million, reflecting significantly lower market valuations, partially offset by securities lending results and new business.

The largest component of C&IS fees is custody and fund administration fees, which decreased 19% to $140.5 million, driven primarily by declines in the equity markets.

Securities lending fees totalled $172.5 million compared with $149.9 million in the second quarter 2008.

The 2009 second quarter included a positive mark-to-market adjustment of approximately $129 million relating to prior period unrealized asset valuation losses recorded in one mark-to-market investment fund used in our securities lending activities. This compares with a positive mark-to-market adjustment of previous unrealized asset valuation losses of approximately $25 million in the prior year quarter.

Excluding the impact of the mark-to-market adjustments, the current quarter decrease in securities lending fees reflects significantly reduced volumes.

Fees from asset management in the quarter totalled $61.1 million, down 15%. This reflected lower market valuations.

Trust, investment and other servicing fees from personal financial services (PFS) in the quarter dropped 11% to total $210.5 million compared with $235.9 million a year ago. The decrease in PFS fees resulted from significantly lower market valuations, offset in part by strong new business.

Northern Trust's total assets under custody were $3.2 trillion and total managed assets were $558.9 billion. C&IS assets under custody totalled $2.9 trillion, down 20% from a year ago, and included $1.6 trillion of global custody assets, 19% lower than a year ago.

C&IS assets under management (AUM) totalled $422.1 billion, a 31% decrease from the prior year. C&IS AUM for the quarter included $101.0 billion of securities lending related collateral, a 58% decrease from the prior year quarter.

Excluding securities lending collateral, C&IS assets under management totalled $321.1 billion compared with $370.5 billion in the prior year quarter, a $49.4 billion or 13% decrease. PFS assets under custody totalled $300.2 billion, an 8% decrease from $325.9 billion in the 2008 second quarter.

PFS AUM totalled $136.8 billion, a 4% fall from $142.8 billion in 2008.

Net income per common share of $1.57 was reported for the six months ended June 30, 2009 compared with operating earnings per common share of $1.98 reported in the same 2008 period. The current period's net income of $476.0 million compares to operating earnings of $447.3 million in the prior year period and resulted in a return on average common equity of 13.34% and a return on average assets of 1.27%.