On Wednesday, Northern Trust announced 2006 fourth-quarter earnings per share of $0.77 on net income of $170.8 million, a 15% increase over 2005 fourth-quarter results. (See our Fool by Numbers for all the vital statistics.) For the full year 2006, revenues increased 14% to $3.06 billion. 2006 net income rose 14% to a record $665 million. Return on shareholders' equity in 2006 was 17.6%, up from 15.3% in 2005.
Results from the gritty and glossy businesses were both strong. Nearly 60% of Northern Trust's total revenues come from servicing fees. Assets under custody, which grew 21% to a record $3.5 trillion in fourth-quarter 2006, drive these fees. Northern Trust's wealth management business grew its assets under management by 13% to $697 billion in fourth-quarter 2006. Northern Trust also earns nearly $800 million a year of revenue from managing its net interest margin. The firm's net interest margin fell by six basis points in fourth-quarter 2006 compared to 2005.
You don't need to be glossy and super-rich to own this stock. Northern Trust has resisted faddish business strategies, instead sticking to investment management, asset servicing, and cosseting the ultra-rich. Yet Northern Trust, along with its competitor State Street
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Fool contributor John Finneran writes and advises on increasing the financial value of technology. He is ranked 102 out of 20,286 in CAPS and does not own any of the shares mentioned. The Fool has a disclosure policy.