Good day everyone and welcome to the Northern Trust Corporation forth quarter earnings call. Today’s call is being recorded. At this time I would like to turn the call over to the director of Investor Relations, Bev Fleming for opening remarks and introductions. Please go ahead.

Thank you Darren, and welcome to Northern Trust Corporation’s fourth quarter 2008 earnings conference call. Joining me on our call this morning are Steve Fradkin, Northern Trust’s Chief Financial Officer; Aileen Blake our Controller and Preeti Sullivan from our Investor Relations team. For those of you who did not receive our fourth quarter earnings press release or financial trends report via e-mail this morning, they are both available on our website at www.northerntrust.com. In addition this January 21, call is being webcast live on northerntrust.com. The only authorized rebroadcast of this call is the replay that will be available through January 28. Northern Trust disclaims any continuing accuracy of the information provided in this call after today. Now for our Safe Harbor statement. What we say during today’s conference call may include forward-looking statements, which are Northern Trust’s current estimates or expectations of future events or future results. Actual results of course could differ materially from those indicated by these statements because the realization of those results is subject to many risks and uncertainties. I urge you to read our 2007 financial Annual Report and our periodic reports to the Securities and Exchange Commission for detailed information about factors that could affect actual results. Thank you again for your time today. Let me now turn the call over to Steve Fradkin.

Good morning, everyone. Let me join Bev in welcoming all of you to Northern Trust’s fourth quarter 2008 earnings conference call. Earlier this morning Northern Trust reported fourth quarter 2008 net income of $342 million, equal to $1.47 per share. For the full year 2008, reported net income equaled $795 million or $3.47 per share. Included in our fourth quarter and full year 2008 results are impacts associated with our status of member bank in Visa U.S.A. Visa’s initial public offering and Visa shareholder impact associated with various identify litigation. As outlined in our earnings press release issued early this morning Northern Trust has provide operating earnings to you which are exclusive of the Visa related items. We believe operating earnings provide a clearer indication of the results and trends in our core businesses. Therefore, my commentary for the remainder of today’s conference call will focus on operating results exclusive of the Visa related matters. For the fourth quarter of 2008, Northern Trust achieved record operating earnings of $1.39 per share representing a very strong increase of 43% compared with the $0.97 per share reported in the fourth quarter of 2007. Operating net income also equaled a quarterly record of $323 million, an increase of 47% from 2007. For the full-year 2008, operating earnings per share equaled $2.79 per share, representing a decrease of 24% from $3.66 earned in 2007. Operating net income in 2008 equaled $641 million, down 22% from $821 million earned in 2007. Full-year 2008 operating earnings per share and net income moderated versus 2007, as a result of the client support charges taken in the third quarter of 2008. When just opposed against the extremely difficult industry and economic conditions that unfolded throughout 2008, and heightened in intensity beginning in September, we are very pleased to…

Your first question comes from Mike Mayo - Deutsche Bank.

Two questions, one on C&IS and one on PFS. C&IS, I guess non-US seemed to be a drag, whereas in the past it seemed to really help out a lot; assets under custody outside the U.S. down to 17%, foreign office time deposits down. I mean it’s no secret that non-US is kind of a trailing U.S. in the decline. Has that changed how you think about investments outside the U.S. or how you think about resource allocation or even acquisitions?

Not at all Mike. Remember, the phenomenon that you’re seeing there is in addition to the degradation in market values, assets under custody and so forth. You’re also seeing a significant degradation as we translate back to US dollars. So, really our C&IS business outside the United States continues to grow very nicely. Our deposits have grown nicely, though sequentially we’re a little softer in the non-US office time deposits, but no, it hasn’t changed a bit and I think that’s more the noise of the environment than the underlying business fundamental.

So let me switch to PFS. On the positive side, you are having enormous dislocation in some wealth management businesses. You have the Morgan Stanley, Smith Barney combination; you have the Merrill Lynch takeover. I know you’ve been advertising more, like with your golf tournament. How much do you plan to move down market? How much are you looking to ramp up your market share efforts even more? I mean, you said you had new business in 2008, that was the best since 2000, but it seems like the biggest dislocations are happening now?

Well, I think we have seen a steady marked improvement in PFS for many years as we came out of the bubble and clearly 2008 was a banner year and I think we definitely benefited from the dislocations and challenges that many experienced, but I think we’re also benefiting because our product set, our credibility, our stability, our investment performance on a relative basis was strong. So, we’re going to continue to try and capitalize on the position that we’ve got and in terms of advertising I don’t see any significant change. As you know, last year we started our sponsorship of the Northern Trust open. We’ll continue in doing that and we’re excited about the position that we’ve got and the differentiated profile that we think seems to be working in the personal market.

Do you think its right sized for the environment? Are you going to keep it at the current level to get market share?

I think its right sized for the environment and again it’s not all a question of just advertising, it’s a question of the effectiveness of our teams in getting out and talking to people and thus far the pipelines have been quite busy. So we’re comfortable with where we are on the advertising relative to PFS front.

And then last question, how much of the margin expansions do you think you might have to give back the next couple quarters or the FX gains or spread revenues generally? Do you want to give us any cautionary language about the first quarter, because it seems like some of those might not be sustainable.

Well as you know Mike, we give no guidance. Clearly you had on the net interest income you saw us and others benefit from dramatic rate cuts and rates at very low levels will present a different environment. FX volatility, who knows, we certainly wouldn’t have guessed. I think last year, as we finished 2007, we were saying, “Boy, that was a heck of a year on FX. So we ought to from a planning perspective be judicious in thinking about ‘08,” and that kind of shows you how effective our planning was. So, clearly there are a lot of moving parts, but I think what I would draw your attention to Mike is the balance in the business model and you saw that come to play this year. You look at what markets did to our trust fees, but having multiple streams going in different directions, the net interest income, foreign exchange and so forth really I think proved to be a very strong advantage to us this year and we hope that will be the case going forward.

Your next question comes from Nancy Bush - NAB Research LLC.

Just a quick question; you mentioned Bernie Madoff as one of the extraordinary circumstances I guess of last year. Have you been able to or have you seen an increase in PFS requests or inquiries since then? I mean is there anything you can sort of tie to that as being a pickup in new business?

I can’t Nancy, I can’t tie directly to Madoff, but I’d offer a couple of thoughts. One, just to be clear, we do have hedge fund programs and Bernie Madoff was not included in any of our funds. We’ve known as Madoff’s for many years and many have trumpeted or had trumpeted his success, but as I think all of you read there were numerous red flags from a due diligence standpoint that never allowed us to even consider him, frankly. Clearly, the Madoff challenge I think again plays well to our business model. We are far more transparent, we are highly regulated, we have a bigger balance sheet and so I think it is another contributing factor or example of a flight to quality. So I can’t prove that in any statistical sense, based on what we saw, but again I think it’s a terrible situation, but I think it again plays probably to our strength, if I had to net out whether it’s a positive or not.

Okay. The second one would be, Steve I’ve got to believe there are a whole lot of small asset management shops out there that having been battered for the past year are already to join up with a larger institution. Do you guys see your pace of acquisitions picking up in the next year or so? Are you getting more people knocking on the door and are you seeing opportunities with these small asset management places and in any regions particularly?

Well as you know, in 2008 we did make one acquisition on the PFS front in Cleveland to bolster our position there and if you think about what was happening in Ohio in financial services, we think that was probably well timed and a good acquisition for us. I’d say the pipeline of opportunities out there is stronger than we typically see and obviously price has degraded a lot, but I think we stand by our view which is that we have been a 120 year old organic growth company that has not been distracted by significant size acquisitions. You can never eliminate any possibilities, but its status quo at Northern Trust, so the shopping list is longer and there are certainly some interesting things to look at, but I don’t think we’re going change our stripes on that front.

Your next question from Glenn Schorr - UBS Glenn Schorr – UBS: Just if you can, it’s just less of a relevant conversation for you all, but I want to go through the numbers anyway. Can you talk about maybe period and goodwill and intangibles and any deferred tax liability that would get included in a TCE calculation?

Mike, I don’t have that handy. We’re in such a very different I think position than some of the others, but we can follow-up on that off-line. Glenn Schorr – UBS: No problem.

Glen in both cases if you wanted to do an estimate, you certainly could use the figures we disclosed at the end of the third quarter, which for goodwill was 400 and some millions and for intangibles with 84 I think. I don’t know what the deferred tax items were off the top of my head, but I don’t think any of them would have changed materially from the end of the third quarter. Of course, all of this will be disclosed in our annual report when we file it. Glenn Schorr – UBS: No worries. Did you mention the actual -- I apologize if I missed it; the actual business wins during the quarter?

We did. In C&IS we just mentioned a couple, the Swiss National Bank. Glenn Schorr – UBS: But not the aggregate side.

No, we did not. Glenn Schorr – UBS: And then how about could we trouble you for the size of the mark-to-market investment fund and the size where it was at the end of last quarter?

The mark-to-market in the fourth quarter was $44 million. Glenn Schorr – UBS: But not the mark, I want to total size.

The fund associated with securities lending was about $8 billion at the end of the year. Glenn Schorr – UBS: That’s about the same size, right?

Exactly. It was a little bit higher than that, about nine at the end of September. Glenn Schorr – UBS: And with that going down is that some clients pulling down or leaving?

That has not been a significant factor thus far. We really have not seen that. Glenn Schorr – UBS: Then maybe a question for sec lending in general or maybe not, even outside the mark-to-market fund. I’m assuming your sec lending NAV is like everybody else’s and it’s below the buck, because how could it not be just given the nature of that business and what happened in the credit markets. How do we think about that? Is there a systemic issue? Are clients okay with assets in kind or how big of a deal is this brewing right now on the client side?

Well, let me give you a couple of thoughts. At the end of December, the aggregate net asset value of our unregistered cash pools was about $60 billion. So, these are the unregistered constant dollar funds and that $60 billion represents about 55% of our total securities lending collateral. Glenn Schorr – UBS: So this is the commingled?

That’s correct.

Exactly right and the NAVs for us ranged from 0.975 to $1. This Glen was an issue we started talking about last quarter and obviously we took some pain to deal with it. So, I think last quarter when we talked about this, we tried to say this is about much more than one individual security, the broad degradation was causing problems here. So we’re comfortable with our NAVs where they are, but there are issues there.

Glen, I think it’s important to stress a point that Steve just made though. Recall that in the third quarter, we did declare, we formally declared a collateral decision fee on five of those funds and the reason for doing that was to bring the NASDAQ up to $1. So, there was a formal action that we did take last quarter that I think is important to remind people of. Glenn Schorr – UBS: I remember that. Given your capital base, you could even consider competitive advantage to be able to step up for the clients, so to speak. I just don’t know for the industry wide, if everybody’s pools are below, how much stress that puts on the lender.

Well, we did step up and support our clients last quarter and that was part of the client support charges that we took in the third quarter.

That was a $167 million figure last quarter. Glenn Schorr – UBS: Right I’m with you. Then last one. Once again I apologize, I’m keeping in perspective, but NTAs are up a reasonable amount on a percentage basis, so if you at the trend line that’s going up, at the same time the trend line on the reserve coverage is going down to the last five quarters. It’s still 2.4 times, but the two arrows are moving in different directions. Where about is your comfort zone on that coverage and if NTAs keep rising up, I guess it’s natural to assume that the reserve will continue to build.

Right, I mean remember our starting point is always difficult. Our credit quality metrics have been so strong that anything that happens to us is perhaps blown up a little bit, but I think if you think about it, we continue to set as our loan portfolio continues to grow and grow significantly. Loan growth in the fourth quarter, end of period was up 21% year-over-year and 3% quarter over quarter. So, we’re comfortable with our credit metrics, though clearly we’re concerned about the environment and the headlines that we’re seeing, but when we look at our portfolio today we still feel comfortable with where we are.

And one thing that I would point out is that we are now have had seven consecutive quarters where we have provided for more than we have charged off. So, we have clearly felt the need to be building over the course of many quarters, not just this last quarter.

Your next question comes from James Mitchell - Buckingham Research.

Maybe just a quick; going back to the deposit base, you guys kind of held steady sequentially, but you had a nice mix shift into non-interest bearing deposits from interest bearing. Can you maybe speak to what drove that trend and how we should think about the deposit base going forward? You seem to get a little bit less sort of hot money so to speak? Do you think the deposit levels are some what sustainable and how do you think about the mix?

Well, just let me put a little perspective around it. Savings deposits were up 22% year-over-year or about $2 billion. So, they were 11.7 billion and sequentially they increased about 14% or $1.4 billion. On the non-US time deposits, those recalled are the deposits really tied to our global custody business. Year-over-year end of period they were up 14% or $4 billion to reach $35 billion and sequentially non-US time deposits decreased by $5.8 billion or 14%. I think, as you look at the non-US office time deposits, half our sequential quarter decline relates to the stronger dollar, so again it’s a translation. The balance really relates to just normal custody quotes. We have clients moving in and out and kind of where we land is where we are.

Right, but you think a lot of that, most part is pretty sticky, plus or minus.

I think, it’s hard to say, but yes we’ve had. This has been client driven. I would say we’re clearly seeing flight safety and quality in both our personal and institutional business and in this environment with all that’s going on I think it will move around a bit, but we’ve clearly been the beneficiary on average over time.

Right, okay and then maybe jumping to the securities lending portfolio, the mark-to-market portfolio, just I’ve had difficulty trying to determine the drivers of that. If you look at 74% is in corporate notes and a good chunk of that is highly rated corporate notes. If you look in the fourth quarter, most highly rated corporate notes were pricing was flat to improving. So, the decline in the assets obviously or seemingly seems to be coming from the other 26%; I guess the asset-back side. Is that a fair statement and is there any more detail you can give us and please do give us a little bit more visibility on how to predict the mark-to-market moves?

I think that’s a fair statement, though I don’t think could I gives you any more and I definitely don’t think I could predict the mark-to-market moves, though I wish we could.

No, I understand. That I just meant helping us track it, not for you to predict it, but by giving us better asset detail, but do you think my conclusions are at least relatively close to the mark?

I think the only thing you can do is kind of look at us historically quarter-to-quarter to see what those marks have been and compare those marks to spread widening or tightening it with higher quality fixed income and that’s probably the best indicator you are going to get.

Right and just there’s been very little correlation there, just so you know. It seems more tied to non-GSE related; ABS seems to be the biggest driver so.

Jim, I’m going to remember here, but I actually thought that did you a pretty good job of estimating this quarter, didn’t you.

I did, but I have to admit it was a bit more finger in the air than I’d like to admit, but I appreciate that. Alright, well thanks. Could you at least comment is there a duration difference between the corporate and the ABS, so we can kind of get a sense of when probably the more impaired or lower priced assets mature?

We have that.

Well, actually I do. Yes, the corporate notes have a weighted average maturity of 1.3 years and the asset backs are over three.

Your next question comes from Tom McCrohan - Janney Montgomery.

I just want to circle back on credit quality. If you didn’t have the two loans this quarter that migrated to MPA status, would your quarterly provision have been materially lower?

Well, I don’t know that I want to comment on that and I just don’t have that data in front of me, but I think Tom what I would say is that as is our normal case, from our advantage point, the quality of the loan portfolio is high; it has deteriorated clearly consistent with the environment; we’ve seen a significant increase in our seven and eight rated loans; so we are not immune or our clients I should say, not immune to the stresses of the environment. So, we are seeing that, but again we start from a very, I think it would be fair to say, pristine base.

I was just trying to get a read on the quarterly position level for next year and I can’t really tell from your comments if I’m under estimating what the position’s going to be for next year. Is $60 million in your mind a sufficient run rate going forward or do you think this was somewhat of an elevated quarter because of the NPAs?

Tom, I’m so sorry, but as you know we don’t provide any type of forward-looking guidance, so we’re not in a position to be able to give you an answer to that question.

Okay. Just a clarification on the dividend associated with the preferred equity that was $12 million this quarter; is that the amount that we should be modeling for going forward or is there anything unusual included in the $12 million this quarter for just the first quarter of that equity issuance?

Tom, I don’t have the data in front of me, but I think it’s pro rata in accordance with when we actually got the TARP money. So, it’s less than the full quarter.

Absolutely, we received the money on November 15.

Mid-November’ish.

So, that would definitely be a pro rata number Tom.

And that number should just be equal to -- what’s the interest on that only 5%? Do you have the coupon on it?

We’ll have to take you off-line to confirm the numbers Tom.

Your next question comes from Ken Houston - Banc of America.

Just one follow-up on the provision question; you obviously grew loans again very strong this quarter by about $2.5 billion. So, just wondering as you do think about your reserve builds and going forward, can you help us think about how this quarter’s provision was broken out between loan growth versus internal credit migration?

No, I don’t have a specific answer for you Ken. I think again we’ve seen significant growth and significant opportunity. Clearly there is degradation in overall quality, but I don’t think I want to go beyond that.

Okay and this might be a 10-K question, but any color on whether the seven and eight movements reflect kind of the same direction of NPAs?

Yes, they do Ken and we can go ahead and give that to you; bear with me while I find it.

Seven and eight equaled $401 million at year end, which was up from $260 million at September 30 and up from $63 million a year ago.

Well, the $550 million is the maximum number.

And our cumulative today with the roughly $10 million credit this quarter, the cumulative would be $314 million.

So the difference is a difference between 550 and 314?

Correct.

Theoretically, yes.

Theoretically understood, okay it’s right. That’s all I’m asking is the if, if, if number and my last question is, are there any issues or are you having any issues within your money market mutual funds as far as fee waivers or profitability issues if given where rates are at all?

Well, it’s certainly something that given the low rates we’ll want to keep a close eye on, but it was not a material effect in the fourth quarter.

Your next question comes from David Schneider - Axiom International.

Just a quick question; you commented that the one cyclical portfolio was about $9 billion at the end of the third quarter and then about $8 billion. Is that all just due to some asset value deterioration over there, some client flows involved and that some people coming out of the program, some people going in, kind of how that’s moving around?

No, I don’t think there was any material client flow either way to the best of my knowledge. So, that’s asset related.

Your next question comes from Murali Gopal - KBW.

Just a couple of quick questions; in terms of the lease structuring initiative that you’re announcing, $50 million to $60 million annualized cost saves that you expect; have any of those saves already in Q4 and if not what’s your expectation in terms of when that’s likely to be fully feast in?

None of those saves are in Q4. We announced the charge in the fourth quarter, but the initiative that we’re undertaking will be proceeding over the course of 2009.

Okay and in terms of the two new additions to the non-performing loans, could you give us an idea what type of loans these were?

Murali, one of them is a residential mortgage in the Southeast and the other is our commercial real estate transaction here in Illinois.

Great and lastly if I may, can you give me an idea in terms of when I look at the asset side of your balance sheet, just in terms of how long before you expect the assets to kind of re-price and catch up in terms of the Fed rate cuts and what’s the lag you gently have in terms of the re-pricing between your liabilities and your assets?

That’s a really hard question for us to answer. The one is certainly the loan portfolio; I wouldn’t, know where to begin with giving you that metric, but the securities portfolio, if this helps you at all, is about two months in terms of interest rate changes.

It appears there are no further questions at this time. Mr. Fradkin, I’d like to turn the conference back over to you for any additional or closing remarks.

Okay. Thank you, Darren. Let me again thank everyone for joining us for this fourth quarter 2008 earnings conference call and we will look forward to updating you on our first quarter results on April 21. Have a great day.

This concludes today’s conference. We thank you for your participation. You may now disconnect. Have a wonderful day.