Good day everyone and welcome to the Northern Trust Corporation first quarter earnings conference 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 Ben and welcome to Northern Trust Corporation’s first quarter 2009 earnings conference call. Joining me on our call this morning are Steve Fradkin, Northern Trust Chief Financial Officers; Aileen Blake, Controller; and Preeti Sullivan from our Investor Relations team. For those of you who did not receive our first quarter earnings press release or financial trends report via email this morning, they’re both available on our website at www.northerntrust.com. In addition this April 21, call is being webcast live on www.northerntrust.com. The only authorized rebroadcast of this call is a replay that will be available through April 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 2008 annual report and our periodic report to the Securities & Exchange Commission for detailed information about factors that could affect actual results. Before I hand the call over to Steve, let me remind you that our results in last year’s first quarter, included a pre-tax non-operating benefit of $244 million or $0.68 per share, realized in connection with Visa’s March 2008 initial public offering. Our first quarter 2009 results do not include any items associated with Visa. In our press release issued today, we have provided operating earnings for the first quarter of 2008, which are exclusive of the Visa related item. We believe operating earnings provide a clear indication of the results and trends in our core businesses. Therefore when referencing a comparison with results achieved last year, we will focus on the operating results achieved in the first quarter of 2008, which exclude Visa related items. Thank you again for your time today. Let me turn the call over to Steve Fradkin.

Good morning everyone. Let me join Bev in welcoming all of you to Northern Trust’s first quarter 2009 earnings conference call. Earlier this morning, Northern Trust reported first quarter 2009 net income of $162 million. Net income after preferred dividends equaled $139 million, equal to $0.61 per common share. This compares with operating net income, which again excludes Visa related items, of $232 million earned in last year’s first quarter, equal to $1.03 per share. Dramatically lower equity markets and difficult fixed income market conditions adversely impacted our results in the first quarter. Visa environmental headwinds were offset in part by our continued success in attracting new clients; both personal and institutional, while expanding and retaining relationships with our existing clients. Not withstanding the environmental tumult and the impact is had on our current quarter results; we are very pleased with our overall competitive standing. Whether viewed from the perspective of financial strength and stability, product leadership and expertise, service or other dimension, our competitive position across many fronts is better than we can recall in sometime. To assist you in understanding our performance this quarter, we’ve organized today’s remarks into the following sections. First, I will review with you certain first quarter market conditions that impacted our performance. Second, I will review our financial performance focusing on those items that most impacted our results. Third, I will offer a few perspectives on the strong strategic and financial positioning of Northern Trust, against the backdrop of a very difficult economic environment; and finally, Bev and I will be pleased to answer your questions. Let me begin by providing you with a brief overview of the equity market conditions that weighed significantly on our results in the first quarter. As the audience on this call knows all too well, the equity…

(Operator Instructions) We’ll take our first question from Brian Foran with Goldman Sachs.

Good morning guys, how are you? I guess first on TARP potential repayment, do you expect or have you been given any guidance to return the funds without replacement or do you think that you may need to partly replace TARP with new equity or capital more broadly?

Well, I think recognizing this was not meant to be a source of permanent capital at Northern Trust, we have engaged with our regulators goal of repaying the TPG fund as soon as we prudently can and to that end, we are continuing within an iterative dialogue with the Fed as part of their process, so I really can’t comment beyond that. We’ll look through their process and we’ll see how that process moves forward.

Then on the mark-to-market SEC lending fund, I’m looking at the indices you referred to, I wasn’t sure if you were referring to the investment grade or high yield version of this Merrill index, but it looks like it’s flat to up a little bit in the second quarter. I realize a lot can happen between now and June 30, but is the message from your prepared remarks that eventually this stuff will settle out and if the quarter ended today, the mark-to-market SEC lending fund would not be an issue for the second quarter and might actually be a slight positive?

Brian, just to clarify, it is the investment grade index that we referred to here; just so you know that.

I think as we said, Brian and I want to be very clear about this, it is not a perfect match, so it is not the benchmark index, but it is directionally consistent based on what we have seen. I think some of the differences to keep in mind as you sort of use that as a thought is that, the index has all securities maturing one year or longer, in our fund we have many maturities that are shorter. All the securities are investment grade and in our fund, some have dropped below investment grade. The index has all fixed bonds and we have almost all floating bonds and we’re less diversified than the index, but directionally I would say, yes, based on what we’ve seen, using that as a proxy at this point in time, you’d probably have a different outcome.

Brian, you are correct. If you do take a look at that index and how it has performed month to date in April, it has performed better than it did in some of the prior months. They were not far along into the quarter, but using that index as a proxy, you can see that from the data from the index.

Lastly if I could, I mean if deposits continue to kind of normalize, your agency NBS portfolio is fairly sizable and I would imagine is in a fairly decent unrealized gain position. Is that a source; I mean would you expect to sell some of that agency NBS as we move through the year to de-lever the assets out of the balance sheet or is the deposit shrinkage just kind of matching the normal asset maturities you would have anyway?

I don’t think we have any material change contemplated for our portfolio. So, no, there is nothing that I could point to that I could give you as guidance on a definitive shift.

Okay. Thank you.

You’re welcome.

Our next question comes from Mike Mayo with CLSA.

Good morning.

Hi, Mike.

I know you don’t try to add positive operating leverage on a quarter-to-quarter basis. I know linked quarter comparisons have problems, but when you look from the fourth to the first quarter, it looks like revenues were down more than expenses. So I guess my question is, what additional expense levers do you have? How much in fixed costs do you have relative to variable costs and just how you feel about generating positive operating leverage at a time when securities lending and spread revenues are going lower?

Well, one: remember that the fourth quarter was a very, very strong quarter, particularly on the FX side and remember that our first quarter we’re struggling with the mark on the mark-to-market fund. Net interest income was also extremely strong in the fourth quarter, so your starting point, at least in our view has to be that the comparison point is not a very normalized one. I think, Mike from our advantage point, we would argue that our expenses have been very well managed in the quarter; compensation, business promotion, etc, we handled very, very well. Recall that we had announced some actions in the fourth quarter of 2008; we took $19 million charge at that time to account for the reduction in force of about 450 people; and we have been progressing on those series of actions. We’re not done, but we have moved along very well. So, I think Mike, what we try and focus on is how is the core franchise and one of the things that we were very pleased with, is if you look at those core PFS and C&IS trust fees and you adjust for the markets; in our view you will see a very solid, very solid performance. The noise around that of Fed rate cuts and volatility in FX and step marks and securities lending fund mark-to-market, you’re going to get some gyrations there. So we don’t really try to manage operating leverage quarter-to-quarter. So we feel good about where we are but obviously if the revenue environment is going to be persistently difficult, we will continue to be aggressive in managing expenses as much as we can. I guess the last thought I have on that is, remember, we are in the enviable position of a growing franchise. We have more clients today than we had a quarter ago and we have more clients today than we had a year ago. What we have to wrestle with is the way in which we get paid for the services that we provide to those clients is declining as market values come down, but that we believe is a temporary thing, so we want to be judicious about how we manage expenses in that environment. So bottom line, we think we’ve done well, but we’ll continue to focus on it going forward. Mike Mayo – CLSA: Just a quick follow-up; it sounds like you’re controlling what you can control, but are the margins higher in FX and NAII and securities lending than the other areas or is it similar?

Well sure, with using foreign exchange as an example, we don’t have to add traders to our trading desk as foreign exchange trading profits go up. There is incentive expense that obviously goes up, but no, clearly those are high margin products. Again, they will move around quite a bit. We’ve had that in the past and I’m sure we will continue to have that in the future. What we’re trying to make sure we do is continue to grow that core franchise and sometimes we’ll have a little bit of positive noise around that with these variable streams and sometimes negative, but we want to keep our eye focused on the horizon and again each quarter matters, but I think we’ve done well to continue to build that franchise and manage our expenses within context around that. Mike Mayo – CLSA: Thank you.

You’re welcome.

We’ll take our next question from Howard Chen with Credit Suisse.

Good morning, Steve and Bev. Thanks for taking my questions. Steve, on the corporate initial services business, management’s always been consistent that being bigger is not necessarily better. Given the disruption in the overall operating environment, questions about capital adequacy weighing on competitors, how aggressive are you being with winning new business there and are you pleased with the pace of the market share gains so far on the C&IS side of the business?

Well, the first quarter new business was very good. It was the fourth best quarter for new business out of the last 13 quarters, last three years or so. I think we feel very, very good about our positioning. We are competing effectively globally. Clearly, and I think you’ve heard this from others, the capital strength dimension, for many years it’s always been about capability and price and service and reputation and it still is, but clearly capital strength, solidity and so forth have become bigger issues in the industry, but, well we’ve got some terrific competitors there and we have got a terrific set of capabilities, and we’re continuing to fire on all cylinders and compete effectively. So, from our advantage point there’s not a huge change in the story other than at least our perception would be that clients and prospects are more focused on capital strength and so forth than they had been prior to this crisis

Okay. Thanks and then my follow-up on credit quality for a minute, your charge-offs this quarter were really modest, but can you give some color on the meaningful up tick and the non-performing loans this quarter and your outlook for credit quality and provisioning as we pace through ‘09 and the credit cycle?

Well again, let me remind you, we have a $30 billion loan portfolio. That portfolio is up 14% year-over-year, so we have been growing right through this environment. We do continue to set aside more reserves, which just reflect the impact of the weak economic environment and I think you can anchor to any metric you want. It’s clearly tougher out there. From our advantage point, our credit quality remains very, very strong. Non-performing loans did increase to $168 million, but they represent 55 basis points of total loan and that’s about the industry average at the end of December and its gotten worse since then; was about four times worse than that. So, obviously we are not immune to the environment, but I think we feel very solid about our portfolio and if we think about our non-performers, that was really driven by about 10 loans and again, I don’t want to imply that there isn’t stress across the whole system, but the challenge that we always have is that our portfolio historically has been, so pristine that when you start comparing it, when you start seeing moves that they really show up in a big way. One other data point that might be interesting for you; our seven and eight rated loans, which are the lowest rated loans in our system, equaled about $538 million at quarter end and our previous peak of seven and eight which was September 30, 2002, equaled about $319 million. In the current quarter it is 1.77% of total loans and leases, which coincidentally is almost the exact same level, 1.78% from that peak in 2002.

Okay, thanks for all that color Steve and maybe just to follow-up on that and realizing it is a more modest risk for you versus traditional banks and peers, but with respect to those 10 loans, is there anything in common with respect to size or geographies amongst kind of the more troubled loans this quarter?

I think order of magnitude, about 70% of that relates to commercial and residential real estate and the remainder is really C&I type loans, but there is a real state dimension to it, but nothing beyond that.

Okay. Thanks so much for taking the questions.

You’re welcome.

Our next question comes from Tom McCrohan with Janney.

Hi, good morning. Steve, were there any specific institutional deals won during the quarter on the basis solely of capital levels?

No and there never would be. These are big sophisticated investors that are looking at lots of dimensions and a typical RFP in that business is hundreds of pages of responses to various questions. So, I would not want to anchor only to that, but clearly that’s a factor that is decisively more prominent than it’s ever been.

When you talk about feeling really good about the competitive position, is it more weighted towards the high net worth side or the institutional side?

I think from our advantage point Tom, it’s really both sides. We continue to fit in a very good spot. With the core businesses growing well, we’ve been very focused. Whether you look at us from a capability perspective, a brand perspective, the new business momentum, the capital strength, we think we’re in a good spot. If you look at the competitive landscape and I’m talking about both PFS and C&IS today, versus 18 months ago and you think about where it’s going to be tomorrow, there are a bunch of firms particularly in the personal business that are gone and there are a bunch of firms that are I guess I would say going to be on a very different competitive footing over the long-term, based on some of the challenges that they’ve had. So we think that our performance and strength has been very good. We think the competitive environment is not only difference today, but likely will be different particularly on the personal side going forward and across a variety of fronts we think that works to our advantage.

That makes sense and just had a question regarding repaying TARP money and how it plays into the dividend. You have strong capital levels and no need to cut the dividend, but obviously as you know some of your peers have reduced their dividend somewhat due to their desire to repay back TARP money. So, are you considering any changes to your dividend policy? Under what circumstances would you consider kind of reducing the dividend going forward?

Well, we have not cut our dividend and I have nothing to announce, and that would of course be a decision of our Board of Directors, but we have not done anything and I have no change that I can comment on.

Okay and one last question concerning credit quality. A big portion of your loan portfolio is the residential mortgages. Can you talk a little bit about and give some granularity and color on the Florida real estate related loans. We have some clients I’m sure that have vacation homes in that and that market has been under a lot of stress, so is there anything you can provide like loan to value; any type of expectations of how these residential loans in Florida might migrate going forward into other risk categories would be really helpful.

Sure. Our residential real estate portfolio at March 31 was about $10.6 billion, Tom. That represented approximately 35% of our total $30 billion loan and lease portfolio. Now, remember as you think about that portfolio, our approach is this is residential lending to our high network clients and it’s concentrated in the geographic markets where we have offices; so the Midwest, Chicago area, Florida, Arizona, California, Texas and so forth. We’re primarily a jumbo mortgage lender and we retain those loans on our balance sheet. I guess the other thought that I would have is that we maintain a very conservative policies on loan to value, typically 70% on a first mortgage and 80% on equity credit lines and we’re not underwriting any sub-prime loans. So our portfolio continues to hold up well. Again, we can’t be immune and if there is a challenge in the broader system, we’ll certainly feel some of it, but I’d say we are very, very differentiated from the typical bank on this front, Tom.

Tom, if you want to take a look, if you want to dig deeper into the performance, particularly our Florida franchise which you mentioned, keep in mind that we do file call reports for each of our legal entity banks and Northern Trust NA would be the legal entity bank that would file its call report that would encompass the Florida franchise. There’s other states in there as well including Arizona, so if you wanted to do a comparison by geography, I would recommend that maybe you take a look at the call report. Of course the first quarter call report hasn’t been filed yet but you certainly can look at the fourth quarter.

Would that have loan to value information in it?

No, I don’t think you would be able to find other loan to values anywhere.

Okay, alright. Thanks.

You could get NTAs to loans and charge-offs and again in Florida, we would still look very, very good relative to any industry metric that you would find.

Great. Thanks very much.

You’re welcome.

Our next question comes from Ken Usdin with Banc of America Securities.

Hi, Steve and Bev; a question about the SEC lending business and just two quick things on it. First of all, the cumulative losses and the mark-to-market; I should say the liquidity marks are now about $350 million. Has anything changed with regards to the potential recovery of all of that? Meaning, I know it’s a time issue and a market-based directional issue, but is there anything changed as far as those being liquidity marks as opposed to anything credit related?

No, there’s no change.

Okay. So over time if things improve that’s still fully recoverable as markets improve?

Yes. That is correct.

Okay and then secondly on the securities lending business, obviously your collateral balances have continued to decline as you indicated and as shown in the trends package, but can you give a little discussion as far as your view on; we talked about how that business is going through secular change. Have you seen any semblances of people stopping, kind of the starting to come back into the programs as far as your clients are concerned and have you and in accordance with also adding new business on the C&I side. C&IS side, is that also coming with it; SEC lending mandates are coming with new custody mandates as they used to?

Sure. Well, as we’ve talked about, I think, remember the big drop here has been driven by market value decline and to some extent by borrower demand. It has not been driven heavily by client exit, though there certainly has been some or client pause. I think Ken, what we’re seeing is there was certainly a sense that I’m giving you anecdotal, I’m cautious about leaping from the anecdotal to the definitive trend, but we absolutely saw some clients going back in and as we had talked about in prior quarters. We thought this might be a pendulum effect where with the disruption everyone starts focusing on it and pausing and also you have leverage coming out of the system and the demand is less. There was anecdotal evidence that we maybe seeing a shift as I say. Whatever, a quarter ago we weren’t seeing clients come in; this quarter we did see some clients come in and certainly it is a part of new business wins as well. So, when I refer to the clients coming in, these were existing clients who had paused but decided to step back in addition to new business wins with securities lending. So, very difficult to call the bottom and I certainly don’t want to do that, but anecdotally it is feeling better.

Okay. My second question just relates to balance sheet mix on the liability side and you had spoken to the kind of normalization and we have seen it in some of those non-U.S. time deposits. There were even into this quarter, huge growth that you had in both the demand and non-interest bearing funds. I was just wondering if you could give some color on whether that’s just a natural mix shift or is that a purposeful re-shifting that you have made from an asset liability management perspective and what implications has that had for margin?

Remember, our balance sheet is client driven and we have a lot of slow, particularly on the institutional side that can move around on us as large sovereign wealth funds and other clients are redeploying or sitting on the side lines. So, I don’t think there’s been any strategic shift on our part. I would say we are more managing as we go. We’ve been a, generally speaking a recipient of flight to quality on the personal side as deposits have moved up and on the institutional side on average over time that’s moved up a lot, but it can gyrate quarter-to-quarter based on client decisions. I don’t think there is anything more to it than that.

Okay. So, the shift from the non-U.S. into some of these other categories, does that have either a permanent or a cyclical effect on the margin at all?

Generally not. I would say the margins overall are consistent from category-to-category. So, again we try to stay very short and very well matched in each currency, so I don’t think there is a material effect there.

Okay great; thanks a lot, Steve.

You’re welcome.

Our next question comes from Phil Keaton with Galyon. Phil Keaton – Galyon: Hi, thanks. Could you give us any color on the type and size of loans that have driven the 14% year-over-year growth and given the economy and class seven, eight migration, will you look to build the reserve to non-recoverable accrual coverage back above two? Thanks.

I’d say the growth in the loan portfolio, year-over-year, has been pretty much across the board; commercial, residential, personal, so I would say on that front it’s been pretty consistent across the board. In terms of the reserve build, we continue to assess both on a loan-by-loan and an environmental perspective and we don’t have a target per say; we’re just continuing to make our assessment of the environment. I think clearly in the first quarter we felt that the environment was more difficult and we reacted accordingly, but no, we don’t have a target per say to get to. Phil Keaton – Galyon: Thank you.

You’re welcome.

Our next question comes from James Mitchell with Buckingham Research Group.

Hi, good morning.

Hi, Jim.

Most of my questions were asked and answered, but I just maybe have a follow-up question on the margin. What’s your sense; do you feel like most of the narrowing of short term interest rates, the spreads and the narrowing of that has kind of washed through the system and you kind of bounced along here at the bottom or do you feel there is still some catch up as we go through the next couple of quarters from the lower rate environment? How should we think about the margin?

While we typically say there is kind of a one month. When the Fed moves we typically will see a little bit of noise up or down on a one month basis. So I think we’re certainly closer to where we have normally been. Remember that net interest income in the fourth quarter, you had rate cuts and you had a lot of balance movement, but I think this feels more normal to us.

Alright and maybe one last question on the foreign time deposits and maybe I just didn’t hear it well enough. What has been driving the pretty steep decline there? Obviously, it’s customer driven, but is it just people, customers taking on more and risk after flight to safety or do you have a sense what’s been driving the decline?

No, I think it’s difficult to give you any real color. Again, just to put it in perspective, we’re working with some of the largest institutional investors in the world and there are times where they can just put $5 billion in or $5 billion out, which will be impactful to us as they redeploy, as they hire managers, as they fire managers and I don’t know if Bev has anything to add.

Well, the only other thing that I would add Jim, I think Ken got to this earlier, is that with deposits rates being just so low, we do believe that some of our clients have chosen to hold their pass in demand deposits, but now enjoy full insurance coverage. So I think there’s been a bit of a shift there from the interest bearing to the non-interest bearing.

Which isn’t so bad for you?

The value of those non-interest-bearing funds are obviously not what they were; affecting the margin as well.

Exactly. Okay, thanks a lot.

You’re welcome.

Our next question comes from Betsy Graseck with Morgan Stanley.

Thanks. Just a quick question on how you’re thinking about the securities portfolio. I know it’s a fairly short duration and you’ve been very conservative in your investment strategy. Would you see anything in the market that would suggest that you might be a little bit more risk taking going forward or would you stick with the very conservative bias that you have in that portfolio. Then just to follow-up on how you’re thinking about the gains that you might have in there and is there any interest that you might have in recognizing gains in your securities portfolios ahead of when they mature?

Well, I think Betsy, what I would say is that, we are rock solid, that’s just the way we think about this and it’s a little bit of a tail wagging the dog. We do not think about our securities portfolio in an adventuresome way at all and never have and don’t today, and I am not suggesting that you’re asking if we’d go over the edge here, but we really view that as a client driven portfolio based on the activities of our clients. So now we want to keep it short, we want to keep it very high quality. That’s not the core franchise of our business, the core franchise of our business is the personal and institutional clients that we serve, and so we’re not entertaining a change there at all, and similarly I don’t think we’d do anything different with the gains either.

Then separately on securities lending, when we were in earlier, the last quarter I think you were talking a little bit about opportunities to increase choice for the client, the securities lending client. How far along are you with that and is that at all driving the pipeline?

My sense Betsy would be, it’s less about choice and when I say choice I mean custom funds versus collateral reinvestment vehicles, but I think more about this phenomenon that you had a lot of clients that did very well in securities lending for a very long time and never saw any form of problem. When the market seized up and did some unprecedented things, there were hiccups and it is an industry wide, not just specific to Northern Trust. Naturally, when you have that you pause, you pull back, you question, you clarify, you try and re-understand, and I think what we’ve seen, and again I don’t know if we’re at the bottom or not, but certainly the anecdotal evidence suggested that there were a number of clients, who having done that and reassessed it and understanding what the opportunities were and how to manage those risks decided to drop this. So I think it is less about the vehicles that we offered and more about the risk reward trade-off and clients feeling that that was appropriate and they wanted to grab some of that.

Okay. Thank you.

You’re welcome.

We will take our last question from Gerard Cassidy with RBC.

Hi, guys.

Hi, Gerard.

I jumped on and off the call, so I apologize if you have address this, but if General Motors and Chrysler do file bankruptcy, I know a lot of people expect that. Do you see them talking to your loan guys on the frontline that that could lead to greater credit deterioration of suppliers and that whole distribution chain that they have that would possibly affect your credit quality going forward?

I think General Motors and Chrysler are very large organizations and their financial health would clearly have down stream effects to others. So it would be hard for me to conceive of a scenario where they go bankrupt and there is no ripple effect, but we continue to assess the environment, including the automotive sector, as we do our reserving and I think we feel comfortable with where we are relative to them.

Thank you.

You’re welcome. There are any further questions, Ben?

No we have no further questions at this time.

Okay, well let me again thank you for joining Northern Trust first quarter 2009 conference call and we’ll look forward to updating you on our second quarter financial results on July 22. Have a great day.

This does conclude today’s conference. Thank you for joining us and have a wonderful day.