NTRS » Topics » Credit Risks

This excerpt taken from the NTRS 10-K filed Feb 27, 2009.

Credit Risks

A number of Northern Trust’s product offerings involve credit risk, which is the risk that other parties will not fulfill their financial obligations to us. These product offerings include loans, leases and other lending commitments.

 

 

We may not evaluate accurately the prospects for repayment when we extend credit, or our reserves for credit losses may not be adequate, so that our earnings are reduced by losses or the need to make additional provisions for credit losses. We evaluate credit commitments before we make them and then allow for and reserve against credit risks based on our assessment of the credit losses inherent in our loan portfolio, including unfunded credit commitments. This process requires us to make difficult and complex judgments. Challenges associated with our credit risk assessments include identifying the proper factors to be used in assessment and accurately estimating the impacts of those factors. Reserves that prove to be inadequate can directly and negatively affect earnings.

 

 

Weakened economic conditions can result in losses or the need for additional provisions, both of which reduce our earnings. Credit risk levels and our earnings can also be affected by the strength of the economy in general and in the particular locales in which we extend credit, a deterioration in credit quality or a reduced demand for credit and adverse changes in the financial performance or condition of our borrowers which could impact the borrowers’ abilities to repay outstanding loans. See the section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” captioned “Provision and Reserve for Credit Losses” in the 2008 Annual Report to Stockholders (pages 53 - 55).

These excerpts taken from the NTRS 10-K filed Feb 28, 2008.

Credit Risks

A number of Northern Trust’s product offerings involve credit risk, including loans, leases, and other lending commitments. We allow for and reserve against credit risks based on our assessment of credit losses inherent in our loan portfolio (including unfunded credit commitments). This process requires us to make difficult, subjective, and complex judgments. Challenges associated with our credit risk assessments include identifying the proper factors to be used in assessment and accurately estimating the impacts of those factors. Credit risk levels can also be affected by the strength of the economy in general and in the particular locales in which we extend credit, a deterioration in credit quality or a reduced

 

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demand for credit and adverse changes in the financial performance or condition of borrowers which could impact the borrowers’ ability to repay outstanding loans. See the section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” captioned “Provision and Reserve for Credit Losses” in the 2007 Financial Annual Report to Stockholders (pages 30—32).

Credit Risks

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">A number of Northern Trust’s product offerings involve credit risk, including loans, leases, and other lending commitments. We allow for and reserve
against credit risks based on our assessment of credit losses inherent in our loan portfolio (including unfunded credit commitments). This process requires us to make difficult, subjective, and complex judgments. Challenges associated with our
credit risk assessments include identifying the proper factors to be used in assessment and accurately estimating the impacts of those factors. Credit risk levels can also be affected by the strength of the economy in general and in the particular
locales in which we extend credit, a deterioration in credit quality or a reduced

 


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demand for credit and adverse changes in the financial performance or condition of borrowers which could impact the borrowers’ ability to repay
outstanding loans. See the section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” captioned “Provision and Reserve for Credit Losses” in the 2007 Financial Annual Report to
Stockholders (pages 30—32).

This excerpt taken from the NTRS 10-K filed Feb 28, 2007.

Credit Risks

A number of Northern Trust’s product offerings involve credit risk, including loans, leases, and other lending commitments. We allow for and reserve against credit risks based on our assessment of credit losses inherent in our loan portfolio (including unfunded credit commitments). This process requires us to make difficult, subjective, and complex judgments. Challenges associated with our credit risk assessments include identifying the proper factors to be used in assessment and accurately estimating the impacts of those factors. Credit risk levels can also be affected by the strength of the economy in general and in the particular locales in which we extend credit, a deterioration in credit quality or a reduced demand for credit and adverse changes in the financial performance or condition of borrowers which could impact the

 

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borrowers’ ability to repay outstanding loans. See the section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” captioned “Provision for Credit Losses” in the 2006 Financial Annual Report to Stockholders (pages 26 — 28).

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