Northern Trust Corp. announced today that it will cut 200 jobs as the bank struggles to hit its minimum profitability goals even though assets have grown substantially.
Chicago's largest locally headquartered bank said the layoffs, along with other cost actions, would trim $25 million from its annual expenses. Executives said the cuts were coming from a wide array of operations within the bank and would take place over the coming year.
A spokesman didn't have immediate comment on whether and to what extent those cutbacks would hit Northern Trust's Chicago workforce. Northern Trust employs 15,100 worldwide, so the layoffs amount to slightly more than 1 percent of its employees.
The bank reported second quarter earnings of $182 million, or 75 cents per share. The per-share figure was down from 78 cents a year before and even with the 75 cents posted in the first quarter.
Northern Trust, however, recorded $42 million in pre-tax charges and writeoffs, with $28.5 million earmarked for severance. Excluding those, the bank posted earnings of 87 cents per share, higher than the Wall Street consensus estimate of 84 cents. Its return on equity excluding the one-time costs was 10.6 percent, exceeding the bank's minimum goal of 10 percent.
However, Northern Trust's return on equity with the charges included was just 9.2 percent.
The bank, which focuses on serving wealthy families and institutional investors, continues to show growth in its key business lines. Assets under custody just exceeded $6 trillion, up 4 percent from $5.75 trillion in the first quarter. Assets under management were $924 billion, up 1 percent from $915 billion in the first quarter.
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