On the heels of disappointing fourth-quarter earnings that drove its stock down 5.7 percent Wednesday, Northern Trust Corp., Chicago’s biggest locally headquartered bank, said the recently announced hike on Illinois business taxes will reduce its profits by an estimated $4 million a year starting in 2012.
“If it doesn’t get vetoed, and we don’t think it will,” Northern Chief Financial Officer William Morrison said during an hour-long conference call to discuss fourth quarter results.
Northern said the 2011 hit will be an estimated $13.5 million, but that’s due to deferred tax adjustments. It told analysts that the hike would result in an expected $4 million hit in subsequent years.
Illinois’ corporate income tax rate recently rose to 7 percent from 4.8 percent.
Northern stock closed down 5.7 percent Wednesday, to $52.49 a share, on worse-than-expected results.
Citing persistent low interest rates that hurt its trust fees and net interest income, Northern earned 64 cents per share in the fourth quarter, down from 82 cents per share a year earlier.
Analysts expected Northern Trust to report a profit of 71 cents a share on revenue of $921.7 million in the most recent quarter, according to analysts surveyed by Thomson Reuters I/B/E/S. Revenue came in at $906.4 million, down from $950.2 million a year earlier.
More than half of the bank’s revenue comes from trust, investment and servicing fees. These fell to $504.6 million in the quarter, down 8 percent from a year ago, mainly due to lower securities lending revenue, Northern Trust said.
The bank said total assets under management were $643.6 billion as of Dec. 31, down 2 percent from the quarter ended Sept. 30. Total assets under custody were $4.08 trillion as of Dec. 31, up 4 percent from the quarter ended Sept. 30.
Associated Press contributed to this article.
byerak@tribune.com
Not gonna give a lot of sympathy for the banks.
If the bankers had not ripped off their clients this drastic a tax hike may not have been needed.
Besides if a 2.2% tax hike costs you 13.4 million then that means your profits are $630 million to begin with…
They have $4 Trillion dollars and are crying about $13.5 in taxes? greed…
If the morons in Springfield didn’t give the store away to the public unions for the last decade, they wouldn’t be in this mess. They passed a spending limit of 2% for each of the next for years. Not a spending cut, an increase. Northern Trust can move it’s headquarters just like Jimmy John’s will probably do and save a bundle on taxes. If you ran a company and the state wanted to take an ADDITIONAL $4mil, you’d look for alternatives too. Illinois should Declare Bankruptcy. This will make all union contracts null and void. Ban public workers from unions going forward. Discontinue defined benefit plans and offer 401k plans like the private sector. Eliminate COLA payments to retirees and cut payouts by 20% over four years. Require employees and retirees to contribute more out-of-pocket to their health insurance in line with the private sector.