Northern Trust reported third-quarter net income of $642.9 million, down 19% from $792.2 million in the second quarter but up 40% from $457.6 million a year earlier. Diluted earnings per share were $3.40, compared with $4.23 in the prior quarter and $2.29 in the third quarter of 2025.
Revenue fell sequentially as the quarter did not include the unusually large second-quarter Visa-related gain. Total revenue on a fully taxable equivalent basis was $2.30 billion, down 15% from $2.71 billion in the second quarter, but up 13% from $2.03 billion a year ago. Trust, investment and other servicing fees rose to $1.37 billion from $1.35 billion in the second quarter and $1.27 billion a year earlier. Net interest income was $679.1 million, down slightly from $683.1 million in the second quarter but up 14% from $596.3 million a year ago.
Other noninterest income dropped to $250.0 million from $673.0 million in the second quarter, but was up from $169.1 million a year earlier. The quarter included a $34.0 million gain on the sale of the guardianship services business and a $14.7 million gain tied to Visa exchange participation. In the second quarter, other noninterest income had included a $525.4 million Visa gain and a $73.9 million loss on securities sales.
Noninterest expense declined to $1.49 billion from $1.64 billion in the prior quarter, but was up from $1.42 billion a year earlier. Compensation and benefits fell to $761.1 million from $868.0 million, while equipment and software expense dropped to $319.9 million from $378.5 million. Outside services rose to $252.1 million from $246.3 million, and other operating expense increased to $106.3 million from $92.3 million.
Pretax income was $796.5 million, down from $1.06 billion in the second quarter but up from $619.5 million a year ago. The effective tax rate fell to 19.3% from 25.6% in the prior quarter and 26.1% in the year-ago quarter.
On the balance sheet, average assets were $159.24 billion, down from $163.58 billion in the second quarter but above $151.04 billion a year earlier. Average earning assets were $147.58 billion, down from $151.29 billion in the second quarter but up from $139.34 billion a year ago. Net interest margin improved to 1.83% from 1.81% in the second quarter and 1.70% a year earlier.
Client assets also remained higher than a year ago. Assets under custody/administration totaled $19.90 trillion, down slightly from $20.00 trillion in the second quarter but up from $18.25 trillion a year earlier. Assets under custody were $15.80 trillion, versus $15.94 trillion in the prior quarter and $14.44 trillion a year ago. Assets under management were $1.96 trillion, compared with $1.97 trillion in the second quarter and $1.77 trillion a year earlier.
Segment pretax income rose year over year in both major businesses. Asset servicing pretax income increased to $405.2 million from $323.3 million in the second quarter and $294.4 million a year earlier. Wealth management pretax income rose to $391.6 million from $333.5 million in the second quarter and $342.4 million a year earlier.
Northern Trust returned $514.2 million to common shareholders during the quarter through dividends and share repurchases. As a result of these announcements, the company's shares have moved 0.6% on the market, and are now trading at a price of $165.44. If you want to know more, read the company's complete 8-K report here.
