What happened
Shares of the investment management and custodian bank Northern Trust (NTRS 2.10%) traded roughly 8.5% lower as of 10:36 a.m. ET today after the bank reported earnings results for the first quarter of the year.
So what
Northern Trust reported diluted earnings per common share of $1.51 on total revenue of nearly $1.76 billion in the quarter. Earnings were in line with analyst estimates, while revenue missed slightly.
In the quarter, the bank saw its largest revenue source -- trust, investment, and other servicing fees -- fall 9% year over year, although this line item was up 2% from the sequential quarter. Total assets under custody and administration rose 4% from the sequential quarter but were still down 9% year over year.
"Our results for the quarter reflect year-over-year revenue growth of 2% and a return on common equity of 12.4%. Expense growth moderated compared to the previous quarter as we balanced spending discipline against investments to drive future growth," CEO Michael O'Grady said in an earnings statement.
Now what
Northern Trust is certainly dealing with industry headwinds right now such as higher funding costs and a more difficult environment for wealth management.
However, the bank has a very liquid balance sheet and net interest income held up pretty well given the difficult funding environment. Furthermore, Northern Trust now has an annual dividend yield of 3.74%, so while near-term pressure may remain I am not overly concerned by this earnings report.
