In an effort to improve strategic growth opportunities, Northern Trust Corporation’s (NTRS) has announced a number of leadership changes, which will be effective March 1.
The President of the Personal Financial Services business unit at Northern Trust, Sherry Barrat, will become the Vice Chairman and be responsible for promoting and developing Northern Trust’s relationship with select clients and prospects around the world.
The current President of Operations and Technology, Jana Schreuder, is named the President of Personal Financial Services, while the Executive Vice President and Head of Corporate Risk Management, Joyce St. Clair, is named the President of Operations and Technology.
The Executive Vice President and Head of Business Practices & Market Segments in Personal Financial Services, Jeff Cohodes, is the new Head of Corporate Risk Management. He will join Barrat, Schreuder and St. Clair as a member of the corporation’s management group. With this, the executive members in Northern Trust’s group increases to 10.
Last month, Northern Trust released its fourth quarter and full year financial results. However, the results lagged the Zacks Consensus Estimate. The fourth quarter earnings of 64 cents per share, below the Zacks Consensus Estimate of 71 cents per share, resulted from the low interest rate environment.
Both net interest income and trust fees dropped from the prior-year period. For full year 2010, Northern Trust reported earnings of $2.74 per share, which was a nickel below the Zacks Consensus Estimate.
However, in the fourth quarter of 2010, earnings per share benefited from the reduction of an indemnification liability related to Visa Inc. (V). The related pre-tax expense reduction summed up to $20.3 million ($12.9 million after tax or 5 cents per share).
Our Take
We believe the leadership changes will augment Northern Trust’s top line in the upcoming quarters. Going forward, we expect increased asset management and servicing fees based on anticipated improvement in equity markets and higher volumes.
The company is also poised to benefit from the growth in client network. However, low interest rates continue to restrain earnings, affecting net interest income and securities lending fees. Moreover, the Dodd-Frank Act will ring in numerous regulatory changes over the next several years, which might act as a deterrent to the company’s fundamentals.
Northern Trust currently retains its Zacks #4 rank, which translates to a short-term “Sell” rating.
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