Still raking in profits from the burgeoning wealth of its customers, Northern Trust Corp. said Monday that third-quarter net income rose 18 percent, to a record $123.3 million.
The Chicago-based banking company–which specializes in money management–met analyst expectations with earnings of 53 cents per diluted share, powered by gains in fee-related income, which represents more than 70 percent of Northern’s revenue.
The company’s stock was unchanged Monday at $75.69 a share on the Nasdaq stock market.
Northern’s profitability is among the best in the industry, with return on equity of 22.1 percent and return on assets of 1.42 percent.
Analysts say the bank’s strong position is not likely to change, even if the economy continues to slow. Northern has become such a respected fixture in the wealth management industry that people will continue to put their money there.
“The demographic trends are intact for them, and they certainly continue to garner market share,” said Nancy Bush, an analyst with Prudential Securities in New York. “There is an increasing movement of wealth to managers that people really trust.”
Trust fees from Northern’s personal financial services business rose 31 percent, to $158.7 million in the third quarter. The increase stemmed from new business and equity markets that were higher than those of a year ago.
Each state where Northern had personal financial services offices recorded a trust fee gain of more than 24 percent, with Illinois, Arizona and Texas each increasing more than 30 percent.
Northern’s personal financial services business opened its first full-service office in Wisconsin during the quarter, bringing the number of states with such offices to 12. That’s up from five states at the end of 1997.
Trust fees from corporate and institutional clients were up 20 percent, to $146 million.
In the year-earlier quarter, Northern had net income of $104.2 million, or 45 cents per share.
For the nine months, Northern earned $359.6 million, or $1.54 per diluted share, an increase of 20 percent from $299 million, or $1.29 per share, a year ago.
In other earnings reports:
– Chicago-based Unicom Corp., in its final quarter before its merger with Philadelphia-based Peco Energy, said Monday that net income fell 41 percent in the third quarter.
The parent company of Commonwealth Edison reported net income of $164 million, or 93 cents a diluted share, compared with $280 million, or $1.28 a diluted share, a year earlier, when more shares were outstanding. Net income excludes after-tax merger-related costs of $21 million, or 12 cents per share, in the most recent period and a year-earlier after-tax unrealized loss of $17 million, or 8 cents a share, related to forward share repurchase. Excluding the one-time items, third-quarter operating earnings were $185 million, or $1.05 per share, compared with $297 million, or $1.36 per share, a year earlier.
The operating earnings easily beat the consensus analyst estimate of 87 cents a share, according to First Call/Thomson Financial. Unicom shares gained $2.19, or 4.1 percent, to $55.62 on the New York Stock Exchange.
Revenue rose 6.5 percent, to $2.22 billion from $2.08 billion.
For the nine months, Unicom reported that net income rose 7 percent, to $502 million, or $2.76 a diluted share, from $469 million, or $2.15 a diluted share, a year earlier. Excluding various one-time items, operating earnings were $523 million, or $2.88 per share, compared with $507 million, or $2.32 per share, a year earlier.
Revenue for the nine months rose 7.1 percent, to $5.69 billion from $5.31 billion.
Unicom attributed its earnings downturn in large part to purchase power arrangements entered into upon the sale of ComEd’s fossil stations in December 1999.
Unicom is awaiting Securities and Exchange Commission approval for its merger with Peco. The combined entity, to be based in Chicago, will be called Exelon Corp.
– W.W. Grainger Inc. of Lake Forest, which provides maintenance, repair and operating supplies to businesses and institutions, said its third-quarter net income rose 5 percent, to $48.1 million, or 51 cents per share.
Excluding a one-time pretax gain of $3.2 million, or 2 cents a share, on the sale of securities, third-quarter earnings per share were 49 cents. According to First Call/Thomson Financial, per-share earnings matched analyst expectations.
A year earlier, Grainger had net income of $45.7 million, or 49 cents per share. Sales increased 6 percent, to $1.24 billion.
Sales generated through the company’s Internet businesses reached $100 million for the quarter, up 233 percent from the 1999 third quarter. Grainger said it now estimates that total sales from all its Internet businesses in 2000 will be $350 million to $400 million.
The company, which in August completed a deal that combined its OrderZone.com with Works.com in exchange for an equity stake in Works.com, said it expects the incremental effect from the equity stake will lower earnings per share by 3 cents to 4 cents for the fourth quarter.
Grainger shares added $1.06, or 4.2 percent, to $26.56 on the NYSE.
For the nine months, Grainger had net income of $145 million, or $1.54 per share, down from $152.6 million, or $1.62 per share, a year earlier. Sales rose 8 percent, to $3.68 billion from $3.41 billion.
