Northern Trust Corp., the third-biggest independent U.S. custody bank, said first-quarter profit rose 11 percent, missing analysts' estimates as revenue grew more slowly than expected.

Net income increased to $178.5 million, or 75 cents a share, from $161.5 million, or 67 cents, a year earlier, the Chicago-based company said today in a statement. The shares fell as much as 4.8 percent, the most in more than a year, after the results fell short of the 77-cent average estimate of 15 analysts surveyed by Bloomberg.

"We surmise that the earnings and revenue misses will largely be mollified by the better expense trends and the recent downward action in the stock price," Luke Montgomery, a research analyst who covers asset managers at Sanford C. Bernstein & Co. in New York, said in a note to clients.

Assets at Northern Trust, which has about half of its client money in stocks, increased as the Standard & Poor's 500 Index of U.S. stocks gained 19 percent in the year through March 31. That has helped custody banks overcome continued low interest rates, which reduce the returns they make on lending and on their own investments. The U.S. Federal Reserve has held its benchmark interest rate at zero to 0.25 percent since December 2008 in an attempt to stimulate borrowing and economic growth.

The shares were down nearly 4 percent midday Tuesday, to $58.79.

Higher Assets

Assets under custody rose 15 percent from a year earlier to $5.75 trillion. The amount of money Northern Trust manages for investors increased 13 percent to $915 billion.

Higher assets helped boost non-interest revenue by 6 percent from a year earlier to $795 million. Non-interest expenses climbed 5 percent to $768 million.

Custody banks keep records, track performance and lend securities for institutional investors, including mutual funds, pension funds and hedge funds. Northern Trust also manages investments for individuals and institutions.

Northern Trust has fallen 3.6 percent this year, including reinvested dividends, compared with the 8 percent drop by the Standard & Poor's 18-company index of asset managers and custody banks.

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