Northern Trust Corp. said Tuesday that its first-quarter net income fell 58%, partly by comparison with a large, one-time gain a year earlier.
The Chicago banking company and asset manager also said it was continuing talks with the Federal Reserve about repaying the $1.6 billion it got from the Treasury Department's Troubled Asset Relief Program. Many companies, especially smaller banks, have been looking to pay back the money because of government restrictions on companies that take the Tarp funds.
The $69.4 billion-asset company has been scrambling since Lehman Brothers' demise last September when a competing money market fund, the Reserve Primary Fund, saw its asset value fall below $1 a share, the first time in 14 years that a money fund had "broken the buck." The fund's failure roiled money markets, to which Northern Trust has considerable exposure.
Chief executive Frederick Waddell said the company's results where hurt by "dramatically lower equity markets," though the company saw strong growth in its client business.
Northern Trust, which serves affluent people and institutions, reported net income of $161.8 million, or 61 cents a share, down from $385.2 million, or $1.71 a share, a year earlier. Last year's results included a $244 million gain in connection with the March 2008 initial public offering of Visa Inc. stock.
Revenue fell 21%, to $904.2 million. Analysts surveyed by Thomson Reuters estimated earnings of 96 cents and revenue of $1.03 billion, on average.
Northern Trust's return on equity, a key measure of profitability, was 10.88%, down from 33.63% a year earlier. The company's tangible common equity ratio, which measures how much of a bank's hard assets its common shareholders actually own, was 5.9%, up from 5.5% a year earlier.
Northern Trust has been raising cash, including selling $1.5 billion of preferred stock to the federal government and cutting jobs. It has $522.3 billion of client assets under management and $2.8 trillion under custody.