FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS

Overview

Net income was $161.8 million compared with reported net income of $385.2 million in the first quarter of last year. Net income per common share on a diluted basis for the first quarter was $.61 compared with net income per common share of $1.71 in the first quarter of 2008. Reported earnings for the prior year included a pre-tax non-operating benefit of $244.0 million ($.68 per common share net of tax) realized in connection with the March 2008 initial public offering of Visa Inc. (Visa) common stock. Operating earnings in the year ago period, which exclude the Visa benefits, were $231.7 million, or $1.03 per common share, as compared with $161.8 million of net income in the current period, or $.61 per common share.

The performance in the current quarter produced an annualized return on average common equity (ROE) of 10.88% versus 33.63% reported for the comparable quarter last year and an annualized return on average assets (ROA) of .85%, down from 2.28% last year.

Northern Trust is providing operating earnings in addition to its reported results prepared in accordance with generally accepted accounting principles in order to provide a clearer indication of the results and trends in Northern Trust's core businesses absent Visa related adjustments.

                                            Three Months Ended             Three Months Ended
                                              March 31, 2009                 March 31, 2008
                                                        Per Common                     Per Common
($ In Millions Except Per Share Data)      Amount          Share        Amount            Share
Reported Earnings                       $      161.8    $       .61   $     385.2      $      1.71
Visa Initial Public Offering
(net of $62.3 tax effect in 2008)                 -              -         (105.6 )           (.47 )
Visa Indemnification Accrual
(net of $28.2 tax effect in 2008)                 -              -          (47.9 )           (.21 )
Operating Earnings                      $      161.8    $       .61   $     231.7      $      1.03

Consolidated revenues stated on a fully taxable equivalent (FTE) basis totaled $904.2 million, down $73.9 million or 8% from last year's first quarter operating revenues of $978.1 million. Operating revenues for the previous year quarter exclude the $167.9 million gain recorded upon the redemption of Visa shares. Trust, investment and other servicing fees decreased 22% from last year to $410.7 million. Foreign exchange trading income and net interest income were each strong for the quarter, increasing 16% and 8%, respectively. Noninterest expenses totaled $593.5 million for the current quarter, down 3% or $17.9 million from last year's first quarter noninterest expenses of $611.4 million on an operating basis. Operating noninterest expenses for the previous year quarter exclude the $76.1 million benefit from the reversal of a Visa related indemnification accrual.

Noninterest income of $616.5 million for the quarter accounted for 68% of total taxable equivalent revenue. Trust, investment and other servicing fees represented 45% of total taxable equivalent revenue. The decrease in trust, investment and other servicing fees from the prior year quarter primarily reflects negative securities lending fees and significantly lower market valuations, partially offset by new business. Foreign exchange trading income results reflect currency volatility.

The components of noninterest income are provided below.

                                                        Three Months Ended
      Noninterest Income                                     March 31
      (In Millions)                                 2009      2008     % Change
      Trust, Investment and Other Servicing Fees   $ 410.7   $ 526.8        (22 )%
      Foreign Exchange Trading Income                131.1     113.2         16
      Security Commissions and Trading Income         16.8      17.8         (6 )
      Treasury Management Fees                        20.4      17.4         17
      Gain on Visa Share Redemption                     -      167.9         NM
      Other Operating Income                          37.1      31.8         17
      Investment Security Gains (Losses), net           .4       5.0        (93 )

      Total Noninterest Income                     $ 616.5   $ 879.9        (30 )%

Assets under custody totaled $2.8 trillion at March 31, 2009. This represents a decrease in assets under custody of 6% from December 31, 2008 and 29% from March 31, 2008. Assets under management totaled $522.3 billion, a 7% decrease from $558.8 billion at December 31, 2008 and a 33% decrease from $778.6 billion at March 31, 2008. The above are in comparison to the twelve month declines in the S&P 500 index of 40% and in the EAFE index (USD) of 49%. As of the current quarter-end, managed assets were invested 35% in equities, 19% in fixed-income securities, and 46% in cash and other assets.

        Assets Under Custody            March 31,     December 31,    March 31,
        (In Billions)                      2009           2008           2008
        Corporate & Institutional       $  2,559.3   $      2,719.2   $  3,659.9
        Personal                             281.7            288.3        322.2

        Total Assets Under Custody      $  2,841.0   $      3,007.5   $  3,982.1

        Assets Under Management         March 31,     December 31,    March 31,
        (In Billions)                      2009           2008           2008
        Corporate & Institutional       $    392.0   $        426.4   $    632.6
        Personal                             130.3            132.4        146.0

        Total Assets Under Management   $    522.3   $        558.8   $    778.6

Trust, investment and other servicing fees are generally based on the market value of assets managed, custodied, and administered, the volume of transactions, securities lending volume and spreads, and fees for other services rendered. Certain market value calculations are performed on a monthly or quarterly basis in arrears. Certain investment

management fee arrangements also may provide for performance fees, which are based on client portfolio returns exceeding predetermined levels. Securities lending fees are also impacted by Northern Trust's share of unrealized investment gains and losses in one investment fund used in our securities lending activities, accounted for at fair value. In addition, Corporate & Institutional Services (C&IS) client relationships are generally priced to reflect earnings from activities such as foreign exchange trading and custody-related deposits that are not included in trust, investment and other servicing fees. Based on analysis of historical trends and current asset and product mix, management estimates that a 10% rise or fall in overall equity markets would cause a corresponding increase or decrease in trust, investment and other servicing fees of approximately 4% and total revenues of approximately 2%.

Trust, investment and other servicing fees from C&IS in the quarter decreased 31% from the year-ago quarter to $207.0 million, reflecting negative securities lending fees and significantly lower market valuations, partially offset by new business. The largest component of C&IS fees is custody and fund administration fees, which decreased 22% to $136.3 million, driven primarily by declines in the equity markets. Securities lending fees totaled a negative $7.9 million compared with $31.9 million in the first quarter last year, reflecting reduced volumes and lower spreads on the investment of cash collateral. Asset valuation losses in one mark-to-market investment fund used in our securities lending activities also reduced fees by approximately $52 million in the current quarter compared with a reduction of approximately $98 million in the prior year quarter. Fees from asset management in the quarter totaled $60.4 million, down 19%, reflecting lower market valuations.

C&IS assets under custody totaled $2.6 trillion at March 31, 2009, down 30% from a year ago, and included $1.4 trillion of global custody assets, 33% lower than a year ago. C&IS assets under management totaled $392.0 billion, a 38% decrease from the prior year. C&IS assets under management for the quarter included $95.2 billion of securities lending related collateral, a 64% decrease from the prior year quarter. Excluding securities lending collateral, C&IS assets under management totaled $296.8 billion as compared with $365.2 billion in the prior year quarter, a $68.4 billion, or 19%, decrease The above are in comparison to the previously noted twelve month declines in the S&P 500 and EAFE (USD) indices. As of the current quarter-end, C&IS managed assets were invested 37% in equities, 16% in fixed-income securities, and 47% in cash and other assets.

Trust, investment and other servicing fees from Personal Financial Services (PFS) in the quarter decreased 11% and totaled $203.7 million compared with $228.4 million a year ago. The decrease in PFS fees resulted primarily from significantly lower market valuations, offset in part by new business. PFS assets under custody totaled $281.7 billion at March 31, 2009, a 13% decrease from $322.2 billion in the prior year quarter. PFS assets under management totaled $130.3 billion, an 11% decrease from $146.0 billion last year. These are in comparison to the twelve month declines in the S&P 500 and EAFE (USD) indices noted above. As of the current quarter-end, PFS managed assets were invested 28% in equities, 29% in fixed-income securities, and 43% in cash and other assets.

Noninterest Income (continued)

The components of other operating income are provided below.



                                                             Three Months Ended
    Other Operating Income                                        March 31
    (In Millions)                                       2009       2008      % Change
    Loan Service Fees                                  $  9.5     $  5.9           61 %
    Banking Service Fees                                 11.9        9.1           31
    Non-Trading Foreign Exchange Gains (Losses), net     (1.3 )      (.8 )         63
    Credit Default Swaps Gains (Losses), net              2.8        4.9          (43 )
    Gains on Sale of Leased Equipment                     7.8         .3           NM
    Other Income                                          6.4       12.4          (48 )

    Total Other Operating Income                       $ 37.1     $ 31.8           17 %

An investment security gain of $4.9 million was recognized in the previous year quarter from the sale of the CME Group Inc. stock acquired in connection with the demutualization and subsequent merger of the Chicago Mercantile Exchange and the Chicago Board of Trade.

Net Interest Income

Net interest income for the quarter totaled $277.1 million, 9% higher than the $253.5 million reported in the first quarter of 2008. Net interest income is defined as the total of interest income and amortized fees on earning assets, less interest expense on deposits and borrowed funds, adjusted for the impact of hedging activities. When net interest income is adjusted to an FTE basis, yields on taxable, nontaxable and partially taxable assets are comparable, although the adjustment to an FTE basis has no impact on net income. Net interest income for the quarter, stated on an FTE basis, totaled $287.7 million, up 8% from $266.1 million reported in the prior year first quarter.

The increase in net interest income primarily reflects a higher level of average earning assets, partially offset by a decrease in the net interest margin. Average earning assets of $69.4 billion were 16% higher than a year ago, driven by growth in securities and loans. Loans and leases averaged $29.7 billion, up 20% from the first quarter of last year. The securities portfolio averaged $16.8 billion, up 63% from last year, primarily reflecting an increase in the average balance of government sponsored agency securities. Money market assets averaged $22.9 billion for the quarter, a decrease of 7% from the prior year. The net interest margin equaled 1.68%, down from 1.79% in the prior year quarter, reflecting the diminished value of noninterest-related funding sources resulting from the significant interest rate cuts over the past year.

Average U.S. loans outstanding during the quarter totaled $28.4 billion, 22% higher than the $23.2 billion in last year's first quarter. Residential real estate loans averaged $10.5 billion in the quarter, up 14% from the prior year's first quarter, and represented 35% of the average loan and lease portfolio. Commercial loans averaged $8.2 billion, up 39% from $5.9 billion last year, while personal loans averaged $4.7 billion, up 27% from last year's first quarter. Loans outside the U.S. decreased $242.9 million on average from the prior year quarter to $1.3 billion.

Northern Trust utilizes a diverse mix of funding sources. Total interest-bearing deposits averaged $43.7 billion, down slightly from the first quarter of 2008. Higher levels of U.S. office deposits were offset by a $3.5 billion or 10% decline in non-U.S. office deposits from last year's first quarter. Domestic retail deposit levels increased $2.8 billion due primarily to higher levels of money market deposit accounts and savings certificates. The decline in non-U.S. office deposits resulted primarily from the strengthening of the U.S. dollar and the resulting impact on the translation of foreign-denominated deposit liabilities in our international business. Other interest-related funds averaged $11.2 billion in the quarter compared with $7.4 billion in last year's first quarter. The balances within these classifications vary based on funding requirements and strategies, interest rate levels, changes in the volume of lower-cost deposit sources, and the availability of collateral to secure these borrowings. The increase in this funding category resulted primarily from higher levels of overnight federal funds purchased and long-term debt.
Noninterest-related funds utilized to fund earning assets averaged $14.5 billion compared with $8.1 billion in last year's first quarter, resulting primarily from higher levels of U.S. office noninterest-bearing deposits and stockholders' equity.

Provision for Credit Losses

The provision for credit losses was $55.0 million in the first quarter compared with $20.0 million in the prior year quarter. The current quarter provision primarily reflects the continued weakness in the broader economic environment. The reserve for credit losses at March 31, 2009 was $303.3 million compared with $251.1 million at December 31, 2008 and $177.8 million at March 31, 2008. For a discussion of the provision and reserve for credit losses, refer to the "Asset Quality" section below.

Noninterest Expense

The components of noninterest expense are provided below.



                                                      Three Months
            Noninterest Expenses                     Ended March 31
            (In Millions)                     2009      2008       % Change
            Compensation                     $ 258.3   $ 286.2          (10 )%
            Employee Benefits                   65.8      57.3           15
            Outside Services                    95.7      93.9            2
            Equipment and Software Expense      61.7      54.2           14
            Occupancy Expense                   41.8      41.4            1
            Visa Indemnification Charges          -      (76.1 )         NM
            Other Operating Expenses            70.2      78.4          (11 )

            Total Noninterest Expenses       $ 593.5   $ 535.3           11 %

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.

Other Operating Expenses

The components of other operating expenses are provided below.



                                                     Three Months
             Other Operating Expenses               Ended March 31
             (In Millions)                     2009     2008    % Change
             Business Promotion               $ 24.2   $ 31.4        (23 )%
             Other Intangibles Amortization      3.9      4.9        (20 )
             Capital Support Agreements          8.3      8.7         (5 )
             Other Expenses                     33.8     33.4          1

             Total Other Operating Expenses   $ 70.2   $ 78.4        (11 )%

Provision for Income Taxes

The provision for income taxes was $83.3 million in the current quarter resulting in an effective tax rate of 34.0%. The prior year quarter provision for income taxes was $192.9 million, representing an effective tax rate of 33.4%.

The following tables reflect the earnings contribution and average assets of Northern Trust's business units for the three month periods ended March 31, 2009 and 2008. Business unit financial information, presented on an internal management-reporting basis, is determined by accounting systems that are used to allocate revenue and expenses related to each segment, and which incorporate processes for allocating assets, liabilities, and equity, and the applicable interest income and expense.

Three Months Ended                          Corporate and               Personal Financial
March 31,                              Institutional Services                Services                 Treasury and Other           Total Consolidated
($ In Millions)                          2009            2008           2009           2008          2009           2008           2009           2008
Noninterest Income
Trust, Investment and Other
Servicing Fees                       $      207.0     $    298.4     $    203.7     $    228.4     $      -       $      -      $    410.7     $    526.8
Gain on Visa Redemption                        -              -              -              -             -           167.9             -           167.9
Other                                       169.7          146.6           32.5           28.6           3.6           10.0          205.8          185.2
Net Interest Income (FTE) *                 146.9          134.1          132.1          121.4           8.7           10.6          287.7          266.1

Revenues (FTE) *                            523.6          579.1          368.3          378.4          12.3          188.5          904.2        1,146.0
Provision for Credit Losses                  13.6            5.0           41.4           15.0            -              -            55.0           20.0
Visa Indemnification Charges                   -              -              -              -             -           (76.1 )           -           (76.1 )
Noninterest Expenses                        327.6          326.1          252.6          247.8          13.3           37.5          593.5          611.4

Income before Income Taxes *                182.4          248.0           74.3          115.6          (1.0 )        227.1          255.7          590.7
Provision for Income Taxes *                 63.3           75.7           28.4           44.0           2.2           85.8           93.9          205.5

Net Income                           $      119.1     $    172.3     $     45.9     $     71.6     $    (3.2 )    $   141.3     $    161.8          385.2

Percentage of Consolidated
Net Income                                     74 %           45 %           28 %           18 %          (2 )%          37 %          100 %          100 %

Average Assets                       $   46,082.1     $ 46,178.9     $ 21,347.3     $ 20,852.1     $ 9,926.1      $ 1,061.4     $ 77,355.5     $ 68,092.4

* Stated on a fully taxable equivalent basis (FTE). Total consolidated includes FTE adjustments of $10.6 million for 2009 and $12.6 million for 2008.

Corporate and Institutional Services

C&IS net income for the quarter was $119.1 million, down 31% compared with net income of $172.3 million in the first quarter of 2008. Noninterest income was $376.7 million, down 15% from $445.0 million in last year's first quarter. Trust, investment and other servicing fees from C&IS in the quarter decreased 31% from the year-ago quarter to $207.0 million, reflecting negative securities lending fees and significantly lower market valuations, partially offset by new business. The largest component of C&IS fees is custody and fund administration fees, which decreased 22% to $136.3 million, driven primarily by declines in the equity markets. Securities lending fees totaled a negative $7.9 million compared with $31.9 million in the first quarter last year, reflecting reduced volumes and lower spreads on the investment of cash collateral. Asset valuation losses in one mark-to-market investment fund used in our securities lending activities also reduced fees by approximately $52 million in the current quarter compared with a reduction of approximately $98 million in the prior year quarter. Fees from asset management in the quarter totaled $60.4 million, down 19%, reflecting lower market

valuations. Other noninterest income was $169.7 million compared with $146.6 million in last year's first quarter. Foreign exchange trading income equaled $129.2 million, up 15% from last year's first quarter, reflecting currency volatility. The current quarter included $7.8 million in gains from the sale of leased equipment.

Net interest income stated on an FTE basis was $146.9 million, up 10% from $134.1 million in last year's first quarter. Earning assets averaged $41.4 billion for the quarter compared with $42.2 billion in the first quarter of last year. Average loans outstanding increased $4.5 billion, offset by lower levels of money market assets. The net interest margin equaled 1.44% compared with 1.28% reported in the prior year quarter.

A provision for credit losses of $13.6 million was recorded in the current quarter compared with a provision of $5.0 million recorded in the prior year first quarter. The provision for the current quarter primarily reflects continued weakness in the broader economic environment. Total noninterest expenses of C&IS, which includes the direct expenses of the business unit, indirect expense allocations from Northern Trust Global Investments (NTGI) and Operations and Technology (O&T) for product and operating support, and indirect expense allocations for certain corporate support services, totaled $327.6 million compared with $326.1 million for the first quarter of last year.

Personal Financial Services

PFS net income for the current quarter was $45.9 million, down 36% from $71.6 million reported a year ago. Noninterest income was $236.2 million, down 8% from $257.0 million in last year's first quarter. Trust, investment and other servicing fees in the quarter decreased 11% and totaled $203.7 million compared with $228.4 million a year ago. The decrease in PFS fees resulted primarily from significantly lower market valuations. Other noninterest income totaled $32.5 million compared with $28.6 million in the prior year quarter.

Net interest income stated on an FTE basis was $132.1 million in the current quarter compared with $121.4 million in the prior year's first quarter. The change primarily reflects growth in average earning assets, concentrated in the loan portfolio, and an improvement in the net interest margin. The net interest margin increased to 2.55% in the current quarter from 2.41% last year.

A provision for credit losses of $41.4 million was recorded in the current quarter compared with a provision of $15.0 million recorded in the prior year first quarter. The provision for the current quarter primarily reflects the continued weakness in the broader economic environment. Total noninterest expenses of PFS, which includes the direct expenses of the business unit, indirect expense allocations from NTGI and O&T for product and operating support, and indirect expense allocations for certain corporate support services, totaled $252.6 million compared with $247.8 million for the first quarter of last year, an increase of $4.8 million, or 2%. The increase resulted from higher charges for indirect expense allocations, annual salary increases and employee benefit charges, partially offset by decreases in performance-based compensation and business promotion.

Treasury and Other

Treasury and Other includes income and expense associated with the wholesale funding activities and the investment portfolios of the Corporation and its principal subsidiary, The Northern Trust Company (Bank), and certain corporate-based expenses, executive level compensation, and nonrecurring items not allocated to the business units. Treasury and Other Support Services for the prior year quarter included the $167.9 million gain recorded upon the redemption of Visa shares and the $76.1 million reduction of the Visa related indemnification accrual. Net interest income in the current quarter was $8.7 million, as compared to $10.6 million in the prior year quarter. Average assets increased $8.9 billion from the prior quarter. Net interest income for the current quarter declined from the prior year quarter, despite significantly higher asset levels, as a result of the unprecedented low interest rate environment. Treasury and Other assets are invested primarily in short-term securities and money market assets and are funded by short-term borrowings and noninterest-bearing deposits. The results reflect the diminished value of noninterest-bearing funding sources resulting from the significant interest rate cuts over the past year. Other noninterest income for the first quarter was $3.6 million compared with $10.0 million in the year-ago quarter. The prior year . . .