Northern Trust (NTRS)

Noninterest Expense

The components of noninterest expense are provided below.

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Noninterest Expense (continued)

The current quarter decrease in compensation and employee benefit expenses reflects reductions in performance-based compensation expense, partially offset by higher staff levels, annual salary increases, and higher defined benefit plan expenses and employment taxes. Staff on a full-time equivalent basis at March 31, 2009 totaled 12,200, up 8% from a year ago.

Expenses associated with outside services for the current quarter includes higher expenses for technical services, offset by lower expenses for investment manager sub-advisor services.

The remaining expense categories totaled $173.7 million, essentially unchanged from $174.0 million in the prior year quarter stated on an operating basis. Higher equipment and software related expenses and increased Federal Deposit Insurance Corporation insurance premiums were offset by lower charges associated with securities processing activities and business promotion.

Noninterest Expense

The components of noninterest expense are provided below.

The current quarter decrease in compensation and employee benefit expenses was driven by a $67.5 million decrease in performance-based compensation and certain defined contribution benefit expense and lower pension and other retirement related expense, offset in part by higher staff levels, annual salary increases, and higher employment taxes. Staff on a full-time equivalent basis at September 30, 2008 totaled 12,100, up 14% from a year ago.

The current quarter increase in outside services expense primarily reflects higher costs for legal services and technical and consulting services.

Noninterest expenses in the current quarter included the $30.0 million Visa indemnification charge. The increase in the other operating expenses component of noninterest expenses is primarily the result of the $561.5 million of client support-related charges. Absent these expenses, the remainder of the increase is the result of higher charges from account servicing activities and legal matters and higher business promotion expenses.

Noninterest Expense

The components of noninterest expense are provided below.

The current quarter increases in compensation and employee benefit expenses were driven by higher staff levels, higher performance-based compensation, annual salary increases, and higher employment taxes and health care costs. Staff on a full-time equivalent basis at June 30, 2008 totaled 11,797, up 15% from a year ago.

The current quarter increase in outside services expense reflects higher expenses for technical and consulting services.

Increases in the remaining noninterest expense categories are primarily the result of significantly higher charges from account servicing activities, increased business promotion expenses, and a valuation adjustment of the liability established in this year’s first quarter in connection with the previously disclosed Capital Support Agreements. An additional charge of $1.2 million was recorded in the current quarter to bring the Corporation’s contingent liability under the agreements to the June 30, 2008 estimated fair value of $9.9 million. As of June 30, 2008, no capital contributions have been made under the agreements. On July 15, 2008, the Corporation extended the termination dates of the Capital Support Agreements through February 28, 2009 with all other significant terms, including the maximum contribution limits, remaining unchanged.

Noninterest Expense

Noninterest expenses totaled $566.6 million for the quarter, up 19% from $477.0 million in the year-ago quarter and consisted of the following:

Compensation and employee benefit expenses totaled $316.6 million, up $48.4 million or 18% compared with last year. The current quarter increase was driven by higher staff levels, higher performance-based compensation, annual salary increases, and higher employment taxes. Staff on a full-time equivalent basis at September 30, 2007 totaled 10,600, up 11% from a year ago.

The expenses associated with outside services totaled $99.3 million, up $23.6 million or 31% from $75.7 million last year. The current quarter increase reflects volume driven growth in global subcustody and investment manager sub-advisor expenses, and higher expenses for technical and consulting services.

The remaining expense categories totaled $150.7 million, an increase of 13% or $17.6 million from last year. The increase is a result of charges related to securities processing activities and increased occupancy, hiring, and employee relocation expenses.

Noninterest Expense

Noninterest expenses totaled $555.3 million for the quarter, up 13% from $492.0 million in the year-ago quarter and consisted of the following:

Compensation and employee benefit expenses totaled $310.1 million, up $33.1 million or 12% compared with last year. The current quarter increase was driven by higher staff levels, annual salary increases, higher performance-based compensation, and increased employment taxes and health care costs. Staff on a full-time equivalent basis at June 30, 2007 totaled 10,248, up 10% from a year ago.

The expenses associated with outside services totaled $93.7 million, up $17.1 million or 22% from $76.6 million last year. The current quarter increase reflects volume driven growth in global subcustody and investment manager sub-advisor expenses, and higher expenses for technical and consulting services.

The remaining expense categories totaled $151.5 million, an increase of 9% or $13.1 million from last year. The increase is a result of higher equipment and software expense, which included a computer software write-down, and increased occupancy and advertising costs.

Noninterest Expense

Noninterest expenses totaled $525.9 million for the quarter, up 11% from $473.3 million in the year-ago quarter.