Bank Deposit Amount Reporting To Irs

Northern Trust Corporation Reports Fourth Quarter Net Income of $167.7 Million, Earnings Per Common Share of $0.69. Full Year Net Income of $687.3 Million, Earnings Per Common Share of $2.81.

CHICAGO — Northern Trust Corporation today reported fourth quarter
net income per common share of $0.69, up from $0.53 in the fourth
quarter of 2011 and down from $0.73 in the third quarter of 2012. Net
income was $167.7 million in the current quarter, up 29% from $130.2
million in the prior year fourth quarter, and down 6% from $178.8
million in the prior quarter. Return on equity was 8.8% in the current
quarter, compared to 7.2% in the prior year quarter and 9.6% in the
prior quarter.

Reported net income per common share for the full year was $2.81,
compared to the prior year’s $2.47 per common share. Net income for
2012 totaled $687.3 million compared to the prior year’s $603.6
million. Return on equity for the full year 2012 was 9.3%, compared with
8.6% for 2011.

Frederick H. Waddell, Chairman and Chief Executive Officer,
commented, “Fourth quarter and full year performance continued to
reflect solid core trust fee growth amidst a challenging operating
environment. We achieved strong new business success while also
completing the integration of two important acquisitions.

Throughout the year, we focused on the needs of our clients and on
improving the profitability and returns of our business. Our return on
equity of 9.3% in 2012 improved from 8.6% in 2011 and our capital
actions, including an increase in the quarterly dividend to $0.30 per
share and the repurchase of 3.5 million common shares, returned $449.8
million in capital to our shareholders.”

FOURTH QUARTER 2012 PERFORMANCE VS. FOURTH QUARTER 2011

Net income per common share in the fourth quarter of 2012 was $0.69
compared to $0.53 per common share in the fourth quarter of 2011. Net
income for the current quarter was $167.7 million, up $37.5 million, or
29%, from $130.2 million in the prior year quarter. The current quarter
includes restructuring and integration related charges of $8.2 million
($5.2 million after tax, or $0.02 per common share). The prior year
quarter included restructuring, acquisition and integration related
charges of $61.0 million ($39.8 million after tax, or $0.17 per common
share). Net income in the fourth quarter of 2011 benefitted from a
reduction of a liability related to potential losses from indemnified
litigation involving Visa, Inc. (Visa). The associated prior year
quarter pre-tax expense reduction totaled $13.0 million ($8.0 million
after tax, or $0.03 per common share).

Consolidated revenue of $969.7 million in the current quarter was up
$14.1 million, or 1%, from $955.6 million in the prior year quarter.
Noninterest income, which represented 76% of revenue, increased $51.7
million, or 8%, to $735.5 million from the prior year quarter’s
$683.8 million, primarily reflecting higher trust, investment and other
servicing fees, partially offset by lower foreign exchange trading
income. Net interest income for the quarter on a fully taxable
equivalent (FTE) basis decreased $37.6 million, or 13%, to $243.6
million compared to $281.2 million in the prior year quarter, primarily
due to lower average earning assets and a continued decline in the net
interest margin.

Trust, investment and other servicing fees were $622.6 million in
the current quarter, up $81.1 million, or 15%, from $541.5 million in
the prior year quarter. The increase primarily reflects strong new
business, the favorable impact of equity markets on fees, and lower
waived fees on money market mutual funds.

Assets under custody and assets under management are the primary
drivers of our trust, investment and other servicing fees. The following
table provides Northern Trust’s assets under custody and assets
under management by business segment.

Trust, investment and other servicing fees in Corporate &
Institutional Services (C&IS) increased $38.6 million, or 13%, to
$344.3 million in the current quarter from the prior year quarter’s
$305.7 million.

Custody and fund administration fees, the largest component of
C&IS fees, increased 9%, primarily reflecting new business and the
favorable impact of equity markets on fees. C&IS investment
management fees increased 22%, reflecting lower waived fees in money
market mutual funds, new business and the favorable impact of markets.
Money market mutual fund fee waivers in C&IS, attributable to
persistent low short-term interest rates, totaled $5.7 million in the
current quarter, compared to waived fees of $12.3 million in the prior
year quarter. Securities lending revenue increased 5%, primarily
reflecting higher spreads in the current quarter.

Trust, investment and other servicing fees in Personal Financial
Services (PFS) totaled $278.3 million in the current quarter, increasing
$42.5 million, or 18%, from $235.8 million in the prior year quarter.
The increase in the current quarter primarily reflects the favorable
impact of markets on fees, strong new business, revised fee structures,
and lower waived fees in money market mutual funds. Money market mutual
fund fee waivers in PFS totaled $9.6 million in the current quarter
compared with $21.3 million in the prior year quarter.

Foreign exchange trading income totaled $40.8 million, down $30.9
million, or 43%, compared with $71.7 million in the prior year quarter.
The current quarter decrease is attributable to reduced currency market
volatility.

Other operating income totaled $35.7 million in the current quarter,
down 6% from $37.7 million in the prior year quarter.

Net interest income for the quarter on an FTE basis totaled $243.6
million, down $37.6 million, or 13%, compared to $281.2 million in the
prior year quarter. The decrease reflects lower average earning assets
and a continued decline in the net interest margin to 1.17% from 1.28%
in the prior year quarter. Average earning assets for the quarter were
$82.9 billion, down $4.3 billion, or 5%, from $87.2 billion in the prior
year quarter, primarily reflecting decreased Federal Reserve deposits.
The current quarter decline in the net interest margin primarily
reflects lower yields on earning assets, partially offset by a higher
percentage of funding from noninterest-bearing sources. Net interest
income in the prior year quarter included $7.0 million of income
attributable to a settlement with the Internal Revenue Service (IRS)
regarding the tax treatment for certain leveraged leasing transactions.
Absent this leasing related adjustment, the prior year net interest
margin would have been 1.25%.

The provision for credit losses was $5.0 million in the current
quarter and $12.5 million in the prior year quarter. Net charge-offs
totaled $5.4 million for the current quarter resulting from $16.1
million of charge-offs and $10.7 million of recoveries, compared to
$18.2 million of net charge-offs in the prior year quarter resulting
from $28.8 million of charge-offs and $10.6 million of recoveries.
Nonperforming loans and leases decreased $38.9 million, or 13%, from the
prior year quarter. Residential real estate loans and commercial real
estate loans accounted for 69% and 22%, respectively, of total
nonperforming loans at December 31, 2012.

The table below provides information regarding nonperforming assets,
the allowance for credit losses, and associated ratios.

Noninterest expense totaled $741.5 million in the current quarter
compared to $771.7 million in the prior year quarter. The current
quarter includes restructuring and integration related charges of $8.2
million ($5.2 million after tax, or $0.02 per common share). The prior
year quarter included restructuring, acquisition and integration related
charges of $61.0 million ($39.8 million after tax, or $0.17 per common
share). Excluding the current quarter and prior year quarter charges,
and the prior year quarter’s Visa benefit of $13.0 million,
noninterest expense increased $9.6 million, or 1%.

Compensation expense, the largest component of noninterest expense,
equaled $316.3 million, down $25.6 million, or 7%, compared to $341.9
million in the prior year quarter. The prior year quarter included $28.6
million of severance related accruals recorded in connection with
initiatives to reduce staff expense levels, while the current quarter
includes $1.3 million of net reductions in severance related accruals.
Excluding the severance related items, compensation expense in the
current quarter increased by $4.3 million, or 1%. Staff on a full-time
equivalent basis at December 31, 2012 totaled approximately 14,200, up
1% from a year ago.

Employee benefit expense equaled $63.9 million, down $5.6 million,
or 8%, compared to $69.5 million in the prior year quarter. The prior
year quarter included $4.0 million of severance related accruals.

Expense associated with outside services totaled $140.7 million,
down $13.5 million, or 9%, from $154.2 million in the prior year
quarter. The current and prior year quarter include $2.6 million and
$10.2 million of restructuring and integration charges, respectively.
Excluding the current and prior year quarter restructuring and
integration charges, outside services expense decreased $5.9 million, or
4%, primarily reflecting lower manager of manager advisory fees and
decreased expense associated with legal and technical services.

Equipment and software expense totaled $90.5 million, a decrease of
5% from $95.3 million in the prior year quarter. The prior year quarter
included $10.9 million of restructuring charges related to software
write-offs. The current quarter includes higher levels of software
amortization and related software support costs from the continued
investment in technology related assets.

Occupancy expense equaled $46.2 million, a decrease of 7% from $49.6
million in the prior year quarter. The current and prior year quarter
include $3.0 million and $6.3 million, respectively, of restructuring
charges related to reductions in office space.

Other operating expense equaled $83.9 million, up $9.7 million, or
13%, from $74.2 million in the prior year quarter. The current quarter
includes restructuring and integration related charges of $3.3 million,
higher staff related and business promotion expense, and increases
within various other miscellaneous categories of other operating
expense.

Income tax expense was $55.5 million in the current quarter,
representing an effective tax rate of 24.9%, and $41.2 million in the
prior year quarter, representing an effective tax rate of 24.1%. These
compare to full-year effective tax rates of 30.7% and 31.7% for 2012 and
2011, respectively. The current quarter includes an $11.7 million tax
benefit attributable to a refund from the IRS in connection with the
resolution of certain leveraged lease related matters. The prior year
quarter included adjustments to the Corporation’s intercompany
service allocation methodology, the favorable resolution of certain
federal and state tax matters, and reductions in state tax reserves.

FOURTH QUARTER 2012 PERFORMANCE VS. THIRD QUARTER 2012

Net income per common share was $0.69 in the current quarter,
compared with $0.73 in the third quarter of 2012. Net income for the
current quarter totaled $167.7 million, down $11.1 million, or 6% from
$178.8 million in the prior quarter.

Consolidated revenue of $969.7 million for the current quarter was
down slightly from $972.5 million in the prior quarter. Noninterest
income increased $8.6 million, or 1%, to $735.5 million from the prior
quarter’s $726.9 million, primarily reflecting higher trust,
investment and other servicing fees, partially offset by lower other
operating income and foreign exchange trading income. Net interest
income for the current quarter on an FTE basis decreased $13.3 million,
or 5%, to $243.6 million from $256.9 million in the prior quarter,
primarily due to lower average earning assets and a continued decline in
the net interest margin.

Trust, investment and other servicing fees totaled $622.6 million in
the current quarter, up $20.7 million, or 3%, from $601.9 million in the
prior quarter. C&IS trust, investment and other servicing fees
totaled $344.3 million in the current quarter, up from $334.4 million in
the prior quarter.

C&IS custody and fund administration fees increased 5%,
primarily reflecting the favorable impact of equity markets on fees and
new business. Investment management fees increased 1%, primarily
reflecting new business. Money market fee waivers, attributable to the
low short-term interest rates, totaled $5.7 million in C&IS in the
current quarter compared to $6.5 million in the prior quarter.
Securities lending revenue decreased 15%, primarily reflecting lower
spreads and lower volumes in the current quarter.

PFS trust, investment and other servicing fees were $278.3 million,
up $10.8 million, or 4%, from $267.5 million in the prior quarter,
primarily reflecting the favorable impact of equity markets on fees and
new business. Money market mutual fund fee waivers in PFS totaled $9.6
million in the current quarter compared to $10.3 million in the prior
quarter.

Foreign exchange trading income decreased 7% to $40.8 million
compared to $44.0 million in the prior quarter. The current quarter
decrease is attributable to reduced currency market volatility.

Other operating income in the current quarter totaled $35.7 million,
down $10.9 million, or 24%, from $46.6 million in the prior quarter. The
prior quarter included a $5.3 million gain on foreign exchange contracts
related to hedges of certain investments in foreign currency denominated
subsidiaries. The current quarter includes lower income on employee
benefit related assets held in trust by the Corporation and lower
leasing related income.

Net interest income on an FTE basis in the current quarter totaled
$243.6 million, down $13.3 million, or 5%, compared to $256.9 million in
the prior quarter. The decrease reflects lower average earning assets
and a continued decline in the net interest margin. Average earning
assets totaled $82.9 billion in the current quarter, down $1.6 billion,
or 2%, compared to $84.5 billion in the prior quarter. The net interest
margin decreased to 1.17% in the current quarter from 1.21% in the prior
quarter. The prior quarter net interest income included a $5.1 million
adjustment related to the amortization of premiums on certain investment
securities. Absent this adjustment, the net interest margin would have
been 1.19%. The current quarter net interest margin reflects lower
yields on earning assets.

The provision for credit losses totaled $5.0 million and $10.0
million in the current quarter and prior quarter, respectively. Net
charge-offs totaled $5.4 million for the current quarter resulting from
$16.1 million of charge-offs and $10.7 million of recoveries, compared
to $11.9 million of net charge-offs in the prior quarter resulting from
$16.3 million of charge-offs and $4.4 million of recoveries.
Nonperforming loans and leases decreased $14.2 million, or 5%, as
compared to the prior quarter. Residential real estate and commercial
real estate loans accounted for 69% and 22%, respectively, of total
nonperforming loans at December 31, 2012.

Noninterest expense totaled $741.5 million in the current quarter,
an increase of $45.1 million, or 6%, from $696.4 million in the prior
quarter. The current quarter and prior quarter, respectively, include
restructuring and integration related charges of $8.2 million and
restructuring, acquisition and integration related charges of $2.9
million.

Compensation expense totaled $316.3 million for the current quarter,
relatively unchanged from $315.7 million in the prior quarter, while
employee benefit expense totaled $63.9 million for the current quarter,
up 4% from $61.3 million in the prior quarter.

Expense for outside services totaled $140.7 million, an increase of
$14.1 million, or 11%, compared to $126.6 million in the prior quarter.
The current quarter increase primarily reflects higher expense for
technical, sub-custodian, consulting, and legal services.

Equipment and software expense totaled $90.5 million in the current
quarter, up 5% from $86.0 million in the prior quarter.

Other operating expense totaled $83.9 million, an increase of $20.9
million, or 33%, from the prior quarter’s $63.0 million. The
current quarter increase primarily reflects increased business promotion
expense, higher charges related to account servicing activities, higher
staff related expense, and the restructuring and integration related
charges of $3.3 million.

Total income tax expense was $55.5 million for the current quarter,
representing an effective tax rate of 24.9%. Income tax expense was
$87.3 million in the prior quarter, representing an effective tax rate
of 32.8%. The current quarter includes the $11.7 million tax benefit
attributable to a refund from the IRS in connection with the resolution
of certain leveraged lease related matters.

FULL YEAR 2012 PERFORMANCE VS. FULL YEAR 2011

Reported net income per common share for the full year was $2.81,
compared to the prior full year’s $2.47 per common share. Net
income for 2012 totaled $687.3 million compared to the prior year’s
$603.6 million. The current and prior year include restructuring,
acquisition and integration related charges of $18.6 million ($12.0
million after tax, or $0.05 per common share) and $91.6 million ($59.8
million after tax, or $0.25 per common share), respectively. Net income
in 2011 benefited from reductions totaling $23.1 million ($14.4 million
after tax, or $0.06 per common share) of a liability related to
potential losses from indemnified litigation involving Visa.

The performance in 2012 produced an annualized return on equity of
9.3% compared to 8.6% in 2011. The annualized return on average assets
was 0.7% in both 2012 and in 2011.

Consolidated revenue totaled $3.90 billion in 2012, an increase of
$126.2 million, or 3%, from $3.77 billion in the prior year. Noninterest
income increased $145.0 million, or 5%, to $2.91 billion from
2011’s $2.76 billion, primarily reflecting higher trust, investment
and other servicing fees, partially offset by lower foreign exchange
trading income. Trust, investment and other servicing fees in 2012
reflect the full year impact of acquisitions completed in June and July
of 2011.

Net interest income on an FTE basis in 2012 totaled $1.03 billion, a
decrease of $18.2 million, or 2%, compared to $1.05 billion in 2012,
primarily due to a decline in the net interest margin.

Noninterest expense totaled $2.88 billion in 2012, up $47.6 million,
or 2%, from $2.83 billion in the prior year. Excluding the current and
prior year restructuring, acquisition and integration related charges of
$18.6 million and $91.6 million, respectively, and the prior year Visa
benefits, noninterest expense increased $97.5 million, or 4%, primarily
reflecting higher equipment and software expense and the full period
impact of operating costs attributable to the acquisitions completed in
2011.

STOCKHOLDERS’ EQUITY

Total stockholders’ equity averaged $7.6 billion, up 5% from
the prior year quarter’s average of $7.2 billion. The increase
primarily reflects earnings, partially offset by dividend declarations
and the repurchase of common stock pursuant to the Corporation’s
share buyback program. During the quarter ended December 31, 2012, the
Corporation repurchased 1,319,927 shares at a cost of $62.9 million
($47.62 average price per share). Under our capital plan, which was
reviewed without objection by the Federal Reserve in March of 2012, the
Corporation may repurchase up to $77.1 million of common stock after
December 31, 2012 through March of 2013. The Corporation is authorized
to purchase up to 6.8 million additional shares after December 31, 2012
under its current common stock repurchase authorization.

As reflected in the table below, the risk-based capital ratios of
Northern Trust and its principal subsidiary bank, The Northern Trust
Company, remained strong at December 31, 2012, with all ratios exceeding
the regulatory requirements for classification as a “well
capitalized” institution established by U.S. banking regulators of
6%, 10%, and 5%, respectively.

The following table provides the Corporation’s ratios of tier 1
capital and tier 1 common equity to risk-weighted assets, as well as a
reconciliation of tier 1 capital calculated in accordance with
applicable regulatory requirements and GAAP to tier 1 common equity.

Northern Trust is providing the tier 1 common equity ratio, a
non-GAAP financial measure, in addition to its capital ratios prepared
in accordance with regulatory requirements and GAAP as it is a measure
that Northern Trust and investors use to assess capital adequacy.

RECONCILIATION OF REPORTED NET INTEREST INCOME TO FULLY TAXABLE
EQUIVALENT

Net interest income stated on an FTE basis is a non-GAAP financial
measure that facilitates the analysis of asset yields. Management
believes an FTE presentation provides a clearer indication of net
interest margins for comparative purposes. When adjusted to an FTE
basis, yields on taxable, nontaxable, and partially taxable assets are
comparable; however, the adjustment to an FTE basis has no impact on net
income. The tables below present a reconciliation of interest income and
net interest income prepared in accordance with GAAP to interest income
and net interest income on an FTE basis.

FORWARD-LOOKING STATEMENTS

This news release may be deemed to include forward-looking
statements, such as statements that relate to Northern Trust’s
financial goals, capital adequacy, dividend policy, expansion and
business development plans, risk management policies, anticipated
expense levels and projected profit improvements, business prospects and
positioning with respect to market, demographic and pricing trends,
strategic initiatives, re-engineering and outsourcing activities, new
business results and outlook, changes in securities market prices,
credit quality including allowance levels, planned capital expenditures
and technology spending, anticipated tax benefits and expenses, and the
effects of anyextraordinary events and various other matters (including
developments with respect to litigation, other contingent liabilities
and obligations, and regulation involving Northern Trust and changes in
accounting policies, standards and interpretations) on Northern
Trust’s business and results. Forward-looking statements are
typically identified by words or phrases, such as “believe,”
“expect,” “anticipate,” “intend,”
“estimate,” “may increase,” “may
fluctuate,” “plan,” “goal,” “target,”
“strategy,” and similar expressions or future or conditional
verbs such as “may,” “will,” “should,”
“would,” and “could.” Forward-looking statements are
Northern Trust’s current estimates or expectations of future events
or future results. Actual results could differ materially from those
indicated by these statements because the realization of those results
is subject to many risks and uncertainties. Northern Trust
Corporation’s 2011 Financial Annual Report to Shareholders,
including the section of Management’s Discussion and Analysis
captioned “Factors Affecting Future Results,” and periodic
reports to the Securities and Exchange Commission, including the section
captioned “Risk Factors,” contain additional information about
factors that could affect actual results, including: economic, market,
and monetary policy risks; operational risks; investment performance,
fiduciary, and asset servicing risks; credit risks; liquidity risks;
holding company risks; regulation risks; litigation risks; tax and
accounting risks; strategic and competitive risks; and reputation risks.
All forward-looking statements included in this news release are based
on information available at the time of the release, and Northern Trust
Corporation assumes no obligation to update any forward-looking
statement.

WEBCAST OF FOURTH QUARTER EARNINGS CONFERENCE CALL

Northern Trust’s fourth quarter earnings conference call will
be webcast live on January 16, 2013. The Internet webcast opens the call
to all investors, allowing them to listen to the Chief Financial
Officer’s comments. The live call will be conducted at 11:00 a.m.
CT and is accessible on Northern Trust’s web site at:

http://www.northerntrust.com/financialreleases

The only authorized rebroadcast of the live call will be available
on Northern Trust’s web site from 2:00 p.m. CT on January 16, 2013,
for approximately four weeks. Participants will need Windows Media(tm)
or Adobe Flash software, which can be downloaded free through Northern
Trust’s web site. This earnings release can also be accessed at the
above web address.