NORTHERN TRUST CORP (Form: 10-Q, Received: 11/12/1999 16:40:39)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 1999

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from__________________________ to __________________________

Commission File Number 0-5965

NORTHERN TRUST CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE

(State or other jurisdiction of
incorporation or organization)

36-2723087

(I.R.S. Employer
Identification No.)

50 SOUTH LA SALLE STREET
CHICAGO, ILLINOIS

(Address of principal executive offices)

60675

(Zip Code)

Registrant’s telephone number, including area code: (312) 630-6000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

111,296,874 Shares — $1.66 ² / 3 Par Value

(Shares of Common Stock Outstanding on September 30, 1999)

PART I —FINANCIAL INFORMATION

Item 1. Financial Statements

NORTHERN TRUST CORPORATION

CONSOLIDATED BALANCE SHEET

($ In Millions)	September 30 1999		December 31 1998		September 30 1998
Assets
Cash and Due from Banks	$ 1,775.2		$ 2,366.0		$ 1,105.2
Federal Funds Sold and Securities Purchased under Agreements to Resell	1,304.7		1,164.4		2,878.1
Time Deposits with Banks	4,343.2		3,264.7		2,448.4
Other Interest-Bearing	66.2		21.8		15.4
Securities
Available for Sale	8,740.0		5,375.2		5,994.0
Held to Maturity (Fair value— $729.9 at September 1999, $485.7 at December 1998, $479.7 at September 1998)	734.4		472.5		465.2
Trading Account	13.5		9.1		13.4

Total Securities	9,487.9		5,856.8		6,472.6

Loans and Leases
Commercial and Other	8,864.3		7,761.7		7,926.5
Residential Mortgages	6,184.8		5,885.2		5,674.3

Total Loans and Leases (Net of unearned income—$154.1 at September 1999, $224.3 at December 1998, $219.2 at September 1998)	15,049.1		13,646.9		13,600.8

Reserve for Credit Losses	(144.9	)	(146.8	)	(146.6	)
Buildings and Equipment	356.9		340.2		334.4
Customers’ Acceptance Liability	35.3		33.3		27.7
Trust Security Settlement Receivables	343.6		336.7		338.7
Other Assets	1,067.7		986.0		1,004.1

Total Assets	$33,684.9		$27,870.0		$28,078.8

Liabilities
Deposits
Demand and Other Noninterest-Bearing	$ 4,027.5		$ 3,927.5		$ 3,383.5
Savings and Money Market Deposits	5,239.8		4,614.7		4,391.0
Savings Certificates	2,180.3		2,175.0		2,189.3
Other Time	551.9		540.2		668.6
Foreign Offices—Demand	445.1		413.4		433.5
—Time	6,616.6		6,531.9		5,975.7

Total Deposits	19,061.2		18,202.7		17,041.6
Federal Funds Purchased	658.0		2,025.1		1,300.8
Securities Sold Under Agreements to Repurchase	2,269.4		2,114.9		1,011.3
Commercial Paper	139.0		148.1		119.5
Other Borrowings	6,710.4		1,099.2		4,513.6
Senior Notes	350.0		700.0		700.0
Long-Term Debt	659.1		458.2		462.7
Debt—Floating Rate Capital Securities	267.5		267.4		267.5
Liability on Acceptances	35.3		33.3		27.7
Other Liabilities	1,412.0		880.8		755.4

Total Liabilities	31,561.9		25,929.7		26,200.1

Stockholders ’ Equity
Preferred Stock	120.0		120.0		120.0
Common Stock, $1.66 ² / 3 Par Value; Authorized 280,000,000 shares at September 1999, December 1998 and September 1998; Outstanding 111,296,874 at September 1999, 111,214,740 at December 1998 and 111,045,729 at September 1998	189.9		189.9		189.9
Capital Surplus	191.1		212.9		217.8
Retained Earnings	1,798.3		1,582.9		1,519.4
Net Unrealized Loss on Securities Available for Sale	(3.0	)	(.6	)	(.7	)
Common Stock Issuable—Performance Plan	55.0		30.4		30.4
Deferred Compensation—ESOP and Other	(49.3	)	(44.3	)	(44.5	)
Treasury Stock —(at cost, 2,663,888 shares at September 1999, 2,746,022 shares at December 1998, and 2,915,033 shares at September 1998)	(179.0	)	(150.9	)	(153.6	)

Total Stockholders’ Equity	2,123.0		1,940.3		1,878.7

Total Liabilities and Stockholders’ Equity	$33,684.9		$27,870.0		$28,078.8

NORTHERN TRUST CORPORATION

CONSOLIDATED STATEMENT OF INCOME

($ In Millions Except Per Share Information)	Third Quarter Ended September 30		Nine Months Ended September 30
	1999	1998	1999	1998
Noninterest Income
Trust Fees	$ 242.4	$ 203.6	$ 703.1	$ 599.6
Foreign Exchange Trading Profits	25.0	23.6	79.5	74.8
Treasury Management Fees	15.8	17.6	51.2	50.9
Security Commissions and Trading Income	6.8	6.9	22.0	21.3
Other Operating Income	16.3	12.9	38.8	39.1
Investment Security Gains	.1	.1	.2	1.3

Total Noninterest Income	306.4	264.7	894.8	787.0

Net Interest Income
Interest Income	404.3	392.9	1,144.5	1,120.5
Interest Expense	276.0	274.9	764.0	769.7

Net Interest Income	128.3	118.0	380.5	350.8
Provision for Credit Losses	.5	1.0	6.0	8.0

Net Interest Income after Provision for Credit Losses	127.8	117.0	374.5	342.8

Noninterest Expenses
Compensation	144.7	126.3	420.3	373.2
Employee Benefits	24.7	23.0	75.3	69.3
Occupancy Expense	19.0	17.4	54.8	51.6
Equipment Expense	16.0	15.9	47.2	47.3
Other Operating Expenses	71.7	61.2	216.6	186.3

Total Noninterest Expenses	276.1	243.8	814.2	727.7

Income before Income Taxes	158.1	137.9	455.1	402.1
Provision for Income Taxes	53.9	47.7	156.1	139.8

Net Income	$ 104.2	$ 90.2	$ 299.0	$ 262.3

Net Income Applicable to Common Stock	$ 102.9	$ 89.0	$ 295.5	$ 258.6

Net Income Per Common Share—Basic	$ .93	$ .81	$ 2.67	$ 2.34
— Diluted	.90	.78	2.57	2.25

Average Number of Common Shares Outstanding—Basic	110,876,292	110,518,171	110,891,008	110,741,579
—Diluted	114,768,876	114,714,190	114,995,654	114,924,110

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(In Millions)	Third Quarter Ended September 30				Nine Months Ended September 30
	1999		1998		1999		1998
Net Income	$104.2		$90.2		$299.0		$ 262.3
Other Comprehensive Income (before tax)
Unrealized Losses on Securities Available for Sale
Unrealized Holding Losses Arising during the Period	(6.9	)	(1.6	)	(3.4	)	(3.4)
Less: Reclassification Adjustments for Gains Included in Net Income	(.1	)	—		(.2	)	(1.1)
Income Tax Benefit Related to Items of Other Comprehensive Income	2.5		.6		1.2		1.7

Other Comprehensive Income	(4.5	)	(1.0	)	(2.4	)	(2.8)

Comprehensive Income	$ 99.7		$89.2		$296.6		$ 259.5

NORTHERN TRUST CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS ’ EQUITY

(In Millions)	Nine Months Ended September 30
	1999		1998
Preferred Stock
Balance at January 1 and September 30	$ 120.0		$ 120.0

Common Stock
Balance at January 1 and September 30	189.9		189.9

Capital Surplus
Balance at January 1	212.9		225.5
Stock Issued— Incentive Plan and Awards	(21.8	)	(7.7	)

Balance at September 30	191.1		217.8

Retained Earnings
Balance at January 1	1,582.9		1,330.8
Net Income	299.0		262.3
Dividends Declared —Common Stock	(80.1	)	(70.1	)
Dividends Declared —Preferred Stock	(3.5	)	(3.6	)

Balance at September 30	1,798.3		1,519.4

Net Unrealized Gain (Loss) on Securities Available for Sale
Balance at January 1	(.6	)	2.1
Unrealized Loss, net	(2.4	)	(2.8	)

Balance at September 30	(3.0	)	(.7	)

Common Stock Issuable—Performance Plan
Balance at January 1	30.4		11.7
Stock Issuable, net of Stock Issued	24.6		18.7

Balance at September 30	55.0		30.4

Deferred Compensation—ESOP and Other
Balance at January 1	(44.3	)	(37.5	)
Compensation Deferred	(15.3	)	(16.7	)
Compensation Amortized	10.3		9.7

Balance at September 30	(49.3	)	(44.5	)

Treasury Stock
Balance at January 1	(150.9	)	(103.5	)
Stock Options and Awards	74.1		47.2
Stock Purchased	(102.2	)	(97.3	)

Balance at September 30	(179.0	)	(153.6	)

Total Stockholders’ Equity at September 30	$2,123.0		$1,878.7

NORTHERN TRUST CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

(In Millions)	Nine Months Ended September 30
	1999		1998
Cash Flows from Operating Activities:
Net Income	$ 299.0		$ 262.3
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Provision for Credit Losses	6.0		8.0
Depreciation on Buildings and Equipment	43.3		39.7
(Increase) Decrease in Interest Receivable	(9.5	)	1.2
Decrease in Interest Payable	(1.7	)	(9.8	)
Amortization and Accretion of Securities and Unearned Income	(229.9	)	(175.4	)
Amortization of Software, Goodwill and Other Intangibles	46.7		40.4
Net Increase in Trading Account Securities	(4.4	)	(4.6	)
Other Noncash, net	(67.9	)	38.1

Net Cash Provided by Operating Activities	81.6		199.9

Cash Flows from Investing Activities:
Net (Increase) Decrease in Federal Funds Sold and Securities Purchased under Agreements to Resell	(140.3	)	113.6
Net Increase in Time Deposits with Banks	(1,078.5	)	(165.2	)
Net (Increase) Decrease in Other Interest-Bearing Assets	(44.4	)	19.1
Purchases of Securities-Held to Maturity	(137.6	)	(180.9	)
Proceeds from Maturity and Redemption of Securities-Held to Maturity	115.5		173.8
Purchases of Securities-Available for Sale	(29,609.0	)	(81,697.8	)
Proceeds from Sale, Maturity and Redemption of Securities-Available for Sale	26,682.8		79,685.2
Net Increase in Loans and Leases	(1,341.0	)	(1,090.7	)
Purchases of Buildings and Equipment	(59.9	)	(57.7	)
Net Increase in Trust Security Settlement Receivables	(6.9	)	(47.3	)
Decrease in Cash Due to Acquisitions	—		(15.0	)
Other, net	2.4		(.9	)

Net Cash Used in Investing Activities	(5,616.9	)	(3,263.8	)

Cash Flows from Financing Activities:
Net Increase in Deposits	858.5		681.6
Net Increase (Decrease) in Federal Funds Purchased	(1,367.1	)	479.6
Net Increase (Decrease) in Securities Sold under Agreements to Repurchase	154.5		(128.4	)
Net Decrease in Commercial Paper	(9.1	)	(27.3	)
Net Increase in Short-Term Other Borrowings	5,582.5		1,155.0
Proceeds from Term Federal Funds Purchased	5,948.0		1,387.9
Repayments of Term Federal Funds Purchased	(5,919.3	)	(905.9	)
Proceeds from Senior Notes & Long-Term Debt	801.1		801.0
Repayments on Senior Notes & Long-Term Debt	(950.1	)	(862.8	)
Treasury Stock Purchased	(101.8	)	(96.6	)
Net Proceeds from Stock Options	19.0		12.1
Cash Dividends Paid on Common and Preferred Stock	(83.7	)	(73.9	)
Other, net	12.0		7.9

Net Cash Provided by Financing Activities	4,944.5		2,430.2

Decrease in Cash and Due from Banks	(590.8	)	(633.7	)
Cash and Due from Banks at Beginning of Year	2,366.0		1,738.9

Cash and Due from Banks at September 30	$ 1,775.2		$ 1,105.2

Schedule of Noncash Investing Activities:
Transfer of Securities from Available for Sale to Held to Maturity	$ 239.8		$ —
Supplemental Disclosures of Cash Flow Information:
Interest Paid	$ 765.7		$ 779.6
Income Taxes Paid	6.7		79.1

Notes to Consolidated Financial Statements

1. Basis of Presentation— The consolidated financial statements include the accounts of Northern Trust Corporation and its subsidiaries (Northern Trust), all of which are wholly-owned. Significant intercompany balances and transactions have been eliminated. The consolidated financial statements as of September 30, 1999 and 1998 have not been audited by independent public accountants. In the opinion of management, all adjustments necessary for a fair presentation of the financial position and the results of operations for the interim periods have been made. All such adjustments are of a normal recurring nature. Certain reclassifications have been made to prior periods’ consolidated financial statements to place them on a basis comparable with the current period’s consolidated financial statements. For a description of Northern Trust’s significant accounting policies, refer to Note 1 of the Notes to Consolidated Financial Statements in the 1998 Annual Report to Shareholders.

2. Securities— The following table summarizes the book and fair values of securities.

(In Millions)	September 30, 1999		December 31, 1998		September 30, 1998
	Book Value	Fair Value	Book Value	Fair Value	Book Value	Fair Value
Held to Maturity
U.S. Government	$ 55.2	$ 55.2	$ 55.3	$ 55.4	$ 55.2	$ 55.4
Obligations of States and Political Subdivisions	471.4	469.7	261.8	277.2	265.6	282.3
Federal Agency	.5	.4	3.0	3.0	5.0	5.1
Other	207.3	204.6	152.4	150.1	139.4	136.9

Subtotal	734.4	729.9	472.5	485.7	465.2	479.7

Available for Sale
U.S. Government	202.4	202.4	260.0	260.0	271.8	271.8
Obligations of States and Political Subdivisions	15.7	15.7	266.1	266.1	194.6	194.6
Federal Agency	8,350.0	8,350.0	4,695.4	4,695.4	5,389.9	5,389.9
Preferred Stock	106.5	106.5	135.4	135.4	118.6	118.6
Other	65.4	65.4	18.3	18.3	19.1	19.1

Subtotal	8,740.0	8,740.0	5,375.2	5,375.2	5,994.0	5,994.0

Trading Account	13.5	13.5	9.1	9.1	13.4	13.4

Total Securities	$9,487.9	$9,483.4	$5,856.8	$5,870.0	$6,472.6	$6,487.1

Reconciliation of Book Values to Fair Values of Securities Held to Maturity	September 30, 1999
	Book Value	Gross Unrealized		Fair Value
(In Millions)	Book Value	Gains	Losses	Fair Value
U.S. Government	$ 55.2	$—	$—	$ 55.2
Obligations of States and Political Subdivisions	471.4	5.7	7.4	469.7
Federal Agency	.5	—	.1	.4
Other	207.3	—	2.7	204.6

Total	$734.4	$ 5.7	$10.2	$729.9

Reconciliation of Amortized Cost to Fair Values of Securities Available for Sale	September 30, 1999
	Amortized Cost	Gross Unrealized		Fair Value
(In Millions)	Amortized Cost	Gains	Losses	Fair Value
U.S. Government	$ 202.5	$ .1	$ .2	$ 202.4
Obligations of States and Political Subdivisions	16.8	—	1.1	15.7
Federal Agency	8,355.3	—	5.3	8,350.0
Preferred Stock	106.5	.2	.2	106.5
Other	66.3	—	.9	65.4

Total	$8,747.4	$ .3	$7.7	$8,740.0

Unrealized gains and losses on off-balance sheet financial instruments used to hedge securities available for sale totaled $3.4 million and none, respectively, as of September 30, 1999. At September 30, 1999, stockholders’ equity included a charge of $3.0 million, net of tax, to recognize the depreciation on securities available for sale and the related hedges.

3. Pledged Assets— Securities and loans pledged to secure public and trust deposits, repurchase agreements and for other purposes as required or permitted by law were $11.8 billion on September 30, 1999, $5.6 billion on December 31, 1998 and $6.4 billion on September 30, 1998.

4. Contingent Liabilities— Standby letters of credit outstanding were $1.8 billion on September 30, 1999, $1.6 billion on December 31, 1998 and $1.6 billion on September 30, 1998.

5. Loans and Leases— Amounts outstanding in selected loan categories are shown below.

(In Millions)	September 30, 1999	December 31, 1998	September 30, 1998

Domestic
Residential Real Estate	$ 6,184.8	$ 5,885.2	$ 5,674.3
Commercial	4,477.6	3,937.9	3,987.9
Broker	141.8	147.6	100.1
Commercial Real Estate	735.1	677.1	624.2
Personal	1,506.0	1,463.4	1,366.7
Other	792.8	509.6	697.3
Lease Financing	618.1	528.3	452.7

Total Domestic	14,456.2	13,149.1	12,903.2
International	592.9	497.8	697.6

Total Loans and Leases	$15,049.1	$13,646.9	$13,600.8

At September 30, 1999, other domestic and international loans included $892.5 million of overnight trust-related advances primarily in connection with next day security settlements, compared with $592.6 million at December 31, 1998 and $879.1 million at September 30, 1998.

At September 30, 1999, nonperforming loans totaled $28.9 million. Included in this amount were loans with a recorded investment of $27.0 million which were also classified as impaired. A loan is impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans totaling $5.1 million had no portion of the reserve for credit losses allocated to them, while impaired loans totaling $21.9 million had an allocated reserve of $9.9 million. For the third quarter of 1999, the total recorded investment in impaired loans averaged $37.6 million. Total interest income recorded on impaired loans for the quarter ended September 30, 1999 was $29 thousand.

At September 30, 1998, nonperforming loans totaled $29.6 million and included $25.6 million of impaired loans. Of these impaired loans, $7.8 million had no reserve allocation while $17.8 million had an allocated reserve of $1.6 million. Total recorded investment in impaired loans for the third quarter of 1998 averaged $24.4 million with $25 thousand of interest income recognized on such loans.

6. Reserve for Credit Losses— Changes in the reserve for credit losses were as follows:

(In Millions)	Nine Months Ended September 30
	1999		1998
Balance at Beginning of Period	$146.8		$147.6
Charge-Offs
Commercial Real Estate	(.2	)	(.2	)
Other	(8.8	)	(10.6	)
International	—		—

Total Charge-Offs	(9.0	)	(10.8	)

Recoveries	1.1		1.6

Net Charge-Offs	(7.9	)	(9.2	)
Provision for Credit Losses	6.0		8.0
Reserve Related to Acquisitions	—		.2

Balance at End of Period	$144.9		$146.6

The reserve for credit losses represents management’s estimate of probable inherent losses which have occurred as of the date of the financial statements. The loan and lease portfolio and other credit exposures are regularly reviewed to evaluate the adequacy of the reserve for credit losses. In determining the level of the reserve, Northern Trust evaluates the reserve necessary for specific nonperforming loans and also estimates losses inherent in other credit exposures.

The result is a reserve with the following components:

Specific Reserve. The amount of specific reserves is determined through a loan-by-loan analysis of nonperforming loans that considers expected future cash flows, the value of collateral and other factors that may impact the borrower’s ability to pay.

Allocated Inherent Reserve. The amount of the allocated portion of the inherent loss reserve is based on loss factors assigned to Northern Trust’s credit exposures based on internal credit ratings. These loss factors are primarily based on management’s judgment concerning the effect of the business cycle on the creditworthiness of Northern Trust’ s borrowers, as well as historical charge-off experience.

Unallocated Inherent Reserve. Management determines the unallocated portion of the inherent loss reserve based on factors that cannot be associated with a specific credit or loan categories. These factors include management’s subjective evaluation of local and national economic and business conditions, portfolio concentration and changes in the character and size of the loan portfolio. The unallocated portion of the inherent loss reserve reflects management’s attempt to ensure that the overall reserve appropriately reflects a margin for the imprecision necessarily inherent in estimates of expected credit losses.

7. Net Income Per Common Share Computations— The computation of net income per common share is presented in the following table.

	Third Quarter Ended September 30				Nine Months Ended September 30
($ In Millions Except Per Share Information)	1999		1998		1999		1998
Basic Net Income Per Common Share:
Net Income	$104.2		$90.2		$299.0		$262.3
Less: Dividends on Preferred Stock	(1.3	)	(1.2	)	(3.5	)	(3.7	)

Net Income Applicable to Common Stock	$102.9		$89.0		$295.5		$258.6
Average Number of Common Shares Outstanding	110,876,292		110,518,171		110,891,008		110,741,579
Basic Net Income Per Common Share	$.93		$.81		$2.67		$2.34

Diluted Net Income Per Common Share:
Net Income Applicable to Common Stock	$102.9		$89.0		$295.5		$258.6

Average Number of Common Shares Outstanding	110,876,292		110,518,171		110,891,008		110,741,579
Plus Dilutive Potential Common Shares:
Stock Options	2,783,161		3,177,807		3,036,139		3,251,476
Performance Shares	735,524		666,301		708,732		597,784
Other	373,899		351,911		359,775		333,271

Average Common and Potential Common Shares	114,768,876		114,714,190		114,995,654		114,924,110
Diluted Net Income Per Common Share	$.90		$.78		$2.57		$2.25

8. Accounting Standards Pronouncements — On January 1, 1999, Northern Trust adopted Statement of Position 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use” (SOP 98-1). SOP 98-1 requires the capitalization of certain external and internal costs of computer software developed or obtained for internal use. Salary and benefit costs totaling $3.1 million and $9.6 million, were capitalized in the third quarter and nine months ended September 30, 1999, respectively, as a result of adopting SOP 98-1.

In June, 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 133 establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded on the balance sheet as either an asset or liability measured at its fair value. SFAS No. 133 requires that changes in the derivative’s fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative’s gains and losses to offset related results on the hedged item in the income statement, and requires that a company formally document, designate, and assess the effectiveness of transactions that receive hedge accounting.

In July 1999, FASB issued SFAS No. 137 which amended SFAS No. 133 by deferring the effective date by one year to January 1, 2001 from January 1, 2000. Although early adoption is permitted, Northern Trust plans to adopt the new statement on January 1, 2001.

The accounting requirements of this statement are complex and the Financial Accounting Standards Board is in the process of responding to several significant interpretation requests. Northern Trust has concluded that certain of its present hedge strategies, including those used to manage fixed interest rate risk in its loan portfolio, are not likely to qualify for the special accounting treatment contemplated by SFAS No. 133. Accordingly, management is evaluating various alternatives for managing interest rate risk which may include adjustments to hedge strategies, termination of certain swap contracts, sale of fixed rate assets and issuance of longer-term fixed rate liabilities. Management would expect to implement one or more of these alternatives prior to, or in connection with the adoption of SFAS No. 133. Until the interpretive issues referred to above are addressed and these alternatives fully evaluated by management, it is not possible to quantify the actual impact that this statement will have on the earnings and financial position of Northern Trust. Management does expect that a reduction in the use of interest rate swaps to manage interest rate risk could reduce net interest income by up to $3.0 million on an annualized basis.

9. Bank Subordinated Notes— On July 27, 1999, The Northern Trust Company (the Bank) issued $200 million of 7.10% fixed-rate subordinated notes due August 1, 2009 at a discount to yield 7.109%. Under the terms of the October 1999 offering circular, the Bank has the ability to offer up to an additional $300 million of subordinated notes and may offer senior notes from time to time, as long as there is never more than $3.7 billion outstanding at any time.

10. Acquisition— On May 15, 1998, Northern Trust Corporation completed the acquisition of Trustbank Financial Corp., parent company of Trust Bank of Colorado, for approximately $15 million in cash. The transaction was recorded under the purchase method of accounting. Included in the acquisition cost was $10.4 million of goodwill which is being amortized over fifteen years.

11. Business Segments

The tables on pages 17 and 18 reflecting the earnings contribution of Northern Trust’s business segments for the third quarter and nine months ended September 30, 1999 and 1998 are incorporated by reference.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

THIRD QUARTER EARNINGS HIGHLIGHTS

Net income increased 16% to a record $104.2 million from the $90.2 million earned in the third quarter of last year. Net income per common share on a diluted basis increased 15% to a record $.90 for the third quarter, up from $.78 earned a year ago. This earnings performance produced an annualized return on average common equity (ROE) of 20.85% versus 20.55% reported last year, and an annualized return on average assets (ROA) of 1.33% versus 1.30% in 1998. The quarter included nonrecurring revenues from a branch sale and the sale of some mortgage servicing rights amounting to $3.9 million, or approximately $.02 in earnings per share. Trust fees grew by 19% contributing significantly to the 13% increase in total revenues to $445.3 million.

The 15% earnings per share growth was well above Northern Trust’s minimum goal of 10%, the return on average common equity of 20.85% exceeded the 18–20% target range for the tenth consecutive quarter, and the productivity ratio of 161% exceeded the 160% target for this key measure.

Noninterest Income

Noninterest income increased 16% and totaled $306.4 million for the quarter, accounting for 69% of total taxable equivalent revenue. Trust fees of $242.4 million increased 19% or $38.8 million over the like period of 1998, and represented 79% of noninterest income and 54% of total taxable equivalent revenue. This fee growth was driven by strong new business and higher market values of trust assets administered. Trust assets under administration have grown 22% to $1.38 trillion since September 30, 1998 and 3% since June 30, 1999, as very strong new business was offset by declines in equity values during the third quarter. Trust assets under the management of Northern Trust grew 19% from the prior year and totaled $262.8 billion at September 30, 1999. At December 31, 1998, trust assets under administration totaled $1.26 trillion with $236.0 billion under management.

Trust fees are based on the market value of assets managed and administered, the volume of transactions, securities lending volume and spreads, and fees for other services rendered. Asset-based trust fees are typically determined on a sliding scale so that as the value of a client portfolio grows in size, Northern Trust receives a smaller percentage of the increasing value as trust fee income. In addition, certain accounts may be on a fixed annual fee. Therefore, market value or other changes in a portfolio ’s size do not typically have a proportionate impact on the level of trust fees. In addition, Corporate and Institutional Services (C&IS) trust relationships are increasingly priced to reflect earnings from activities such as custody-related deposits and foreign exchange trading which are not included in trust fees.

Trust fees from Personal Financial Services (PFS) increased 22% from the prior year level of $99.3 million and totaled $121.0 million for the third quarter. This performance reflects continued strong new business throughout Northern Trust ’s national PFS network and favorable equity markets through June 30, 1999, when market values used in calculating most personal trust fees for the third quarter were determined. All seven states in the PFS network recorded increases in trust fees of 15% or greater, with Florida, Arizona and Texas each up 24% or more. The Wealth Management Group also had excellent performance, with trust fees increasing 31%. Wealth Management now administers $43.7 billion for significant family asset pools worldwide, up 37% from last year.

Total personal trust assets under administration increased $26.9 billion from the prior year and $10.5 billion since December 31, 1998, and totaled $131.7 billion at September 30, 1999. Of the personal trust assets under administration, $81.4 billion is managed by Northern Trust compared to $65.0 billion one year ago and $73.4 billion at December 31, 1998. Net recurring PFS new business transitioned or expected to transition during 1999 was $48 million in annualized trust fees through September 30, 1999. In comparison, net recurring new business transitioned for all of 1998 was $40 million.

During the quarter the PFS office network expanded further with the opening of an office in the Northwestern Memorial Hospital in Chicago. In addition, PFS moved to a new and larger Oak Street facility built on the site of its prior office on Chicago ’s north side, allowing Northern Trust to provide a broader spectrum of trust and banking services to this key market.

In October 1999, Northern Trust and Northwestern Mutual Life Insurance Company entered into agreements by which the two companies will cooperate in offering trust services to Northwestern Mutual Life customers and in referring certain customers to each other. There are three principal aspects to the relationship, which has an initial term of three years from the date Northwestern Mutual commences operations for its start-up trust company, but not to extend beyond June 30, 2003, unless renewed. The first aspect is a service agreement whereby Northern Trust will provide administrative, systems, consulting and training support to the trust company that Northwestern Mutual plans to form. Second, Northern Trust will be the sole provider of special asset and investment management services to Northwestern Mutual’s new trust company. Third, a referral program will allow Northwestern Mutual agents to refer clients with complex financial needs directly to Northern Trust and will allow Northern Trust to refer its trust clients on a non-exclusive basis directly to Northwestern Mutual agents for life insurance services. The direct referral program from Northwestern Mutual to Northern Trust is scheduled to begin in three midwestern states before mid-2000, and is planned to gradually expand to many other geographic markets over the term of the agreements. The agreements also reflect Northern Trust’s commitment not to offer life insurance products during the term of the agreements.

Trust fees from Corporate & Institutional Services (C&IS) in the quarter increased 16% and totaled $121.4 million compared to $104.3 million in the year-ago quarter, reflecting strong new business. C&IS trust fees are derived from a full range of custody, investment and advisory services rendered to retirement and other asset pools of corporate and institutional clients worldwide, and all of these services contributed to the third quarter fee growth. Fees from asset management increased 34% to $40.5 million. Excellent new business results increased fees generated by Northern Trust Retirement Consulting, L.L.C., which were up 34%, to $12.1 million from last year’s third quarter. Custody fees increased to $41.3 million or 9% from the year-ago period while securities lending fees increased 2% to $20.5 million.

Total C&IS trust assets under administration increased to $1.25 trillion at September 30, 1999, up 22% from September 30, 1998 and 10% from December 31, 1998. Of the C&IS trust assets under administration, $181.4 billion is managed by Northern Trust, up 17% from September 30, 1998. Trust assets under administration included approximately $228 billion of global custody assets.

Net new C&IS business transitioned or expected to transition during 1999 was $73 million in annualized trust fees through September 30, 1999. In comparison, net new business transitioned for all of 1998 was $70 million. Approximately 70% of the net new business represents new services sold to existing clients. Year 2000 readiness planning by prospective new clients and Northern Trust may moderate new business sales during the remainder of 1999, as some clients may choose to defer until next year transitions between custodians. The business that is being sold now for transition in 2000 is not included in 1999 new business figures, but rather will be reported in next year’s numbers.

Foreign exchange trading profits were $25.0 million compared to $23.6 million in the third quarter of the prior year, benefiting from increased volatility in certain currencies, partially offset by slightly lower client transaction levels.

Total treasury management revenues from both fees and the computed value of compensating deposit balances increased 1% from the third quarter of 1998 to $24.6 million. The fee portion of these revenues accrued in the quarter was $15.8 million, down from $17.6 million in the comparable quarter last year.

Security commissions and trading income of $6.8 million were virtually unchanged from a year ago. This reflects a 6% increase in brokerage commissions at Northern Trust Securities, Inc., offset by the absence of futures commissions resulting from Northern Trust’s exit from the futures business in 1998. Other operating income was $16.3 million for the third quarter compared with $12.9 million in the same period of last year. Included in the current quarter is $3.9 million of nonrecurring income resulting from the sale of Northern Trust’s Harlem Avenue Branch on the northwest side of Chicago, reflecting a decision to better focus resources on targeted markets, and the sale of mortgage servicing rights on certain loans that were previously sold. The prior period included a $500 thousand gain from the sale of futures exchange memberships. Excluding these nonrecurring items, other operating income was essentially unchanged.

Net Interest Income

Net interest income for the quarter totaled $128.3 million, 9% higher than the $118.0 million reported in the third quarter of 1998. 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 off-balance sheet hedging activity. When net interest income is adjusted to a fully taxable equivalent (FTE) basis, yields on taxable, nontaxable and partially taxable assets are comparable, although the adjustment to a FTE basis has no impact on net income. Net interest income on a FTE basis for the quarter was $138.9 million, up 9% from the $127.7 million reported in 1998. The increase in net interest income reflects 12% growth in average earning asset levels and higher levels of noninterest-related funds. The net interest margin was 1.95% versus 2.01% reported in the year-ago quarter. The decline in the margin from a year ago is largely attributable to the growth in low risk, short-term securities and money market assets.

Earning assets for the third quarter averaged $28.2 billion, up 12% from the $25.2 billion average for the same quarter of 1998. The $3.0 billion growth in average earning assets was comprised of a $1.2 billion or 9% increase in loans and leases, a $514 million or 6% increase in securities and a $1.3 billion or 37% increase in money market assets.

The loan growth was concentrated within the domestic portfolio which increased $1.3 billion to average $14.1 billion, while international loans decreased by $100 million. Residential mortgage loans, which represent 42% of the total loan portfolio, increased $565 million or 10% to average $6.1 billion for the quarter. Commercial and industrial loans averaged $4.4 billion during the third quarter compared to $4.1 billion in the prior year quarter.

Funding for the growth in earning assets came from several sources. Total interest-bearing deposits averaged $14.4 billion, up 11% or $1.4 billion from the third quarter of 1998. This growth came principally from savings and money market deposits (up $644.3 million) and foreign office time deposits (up $921 million). The increase in foreign office time deposits resulted primarily from continued growth in global custody activity. Other interest-related funds grew 14% or $1.2 billion, resulting predominantly from higher levels of federal funds purchased, securities sold under agreements to repurchase, senior notes and subordinated debt, offset in part by lower levels of Treasury, tax and loan balances. Noninterest-related funds increased 9% to average $4.0 billion, due to growth in common stockholders’ equity, resulting from retained earnings, and higher levels of demand deposits.

Provision for Credit Losses

The provision for credit losses of $500 thousand in the third quarter compares to $1.0 million in the same quarter of 1998. For a discussion of the provision and reserve for credit losses, refer to the Asset Quality section starting on page 25.

Noninterest Expenses

Noninterest expenses totaled $276.1 million for the quarter, an increase of 13% or $32.3 million from the $243.8 million in the year-ago quarter. Over 60% of the increase in noninterest expenses related to salaries, incentives and employee benefits. The remaining expense growth reflects costs associated with technology investments, business promotion, and expansion of the PFS office network.

Compensation and employee benefits, which represent 61% of total noninterest expenses, increased to $169.4 million from $149.3 million in the year-ago quarter. The increase was primarily attributable to staff growth, merit increases and higher performance-based incentives. These increases were partially offset by some staff reductions resulting from the outsourcing of Northern Trust’s Illinois check processing activities at year-end 1998, as well as by the capitalization of salary costs associated with the development of software in accordance with SOP 98-1 (as described in Note 8). Staff levels on a net basis increased from one year ago to support growth initiatives and strong new business in both PFS and C&IS. Staff on a full-time equivalent basis at September 30, 1999 totaled 8,360, up 5% from 7,950 at September 30 of last year. Staff levels would have been approximately 9% higher than a year ago had the Corporation not outsourced the Illinois check processing function at year-end. Higher performance-based compensation is principally attributable to increased costs for incentive plans as a result of strong new business, investment performance and the impact of a higher stock price on stock-based compensation plans.

Net occupancy expense totaled $19.0 million, up 10% from $17.4 million in the third quarter of 1998, due primarily to the opening of additional PFS offices over the past twelve months and additional space leased to support business growth. The principal components of the increase were higher net rental costs, real estate taxes, utilities and building depreciation expense.

Equipment expense, comprised of depreciation, rental and maintenance costs, totaled $16.0 million, up 1% from the $15.9 million reported in the third quarter of 1998. Increases in depreciation of computer hardware, personal computers and office furniture were essentially offset by reductions in maintenance costs of computers and equipment as a result of outsourcing the Illinois check processing function.

Other operating expenses in the quarter totaled $71.7 million compared to $61.2 million last year. Professional services associated with the outsourcing of check processing increased other operating expenses by $4.0 million. Higher 1999 expense levels also reflect continued investment in technology, expansion of the PFS office network, and higher operating expenses necessary to support business growth. The expense categories most affected by these factors were business development, purchased professional services, postage and supplies and software amortization. Partially offsetting these increases, and reflected in other expenses, was a lower level of costs from processing errors incurred in servicing and managing financial assets and performing banking activities.

The components of other operating expenses were as follows:

	Third Quarter Ended September 30
(In Millions)	1999	1998
Business Development	$ 9.3	$ 8.1
Purchased Professional Services	27.4	20.6
Telecommunications	4.7	4.1
Postage and Supplies	6.5	5.3
Software Amortization	12.2	10.0
Goodwill and Other Intangibles Amortization	3.5	3.6
Other Expenses	8.1	9.5

Total Other Operating Expenses	$71.7	$61.2

Provision for Income Taxes

The provision for income taxes was $53.9 million for the third quarter compared with $47.7 million in the year-ago quarter. The higher tax provision in 1999 resulted primarily from the growth in taxable earnings for federal income tax purposes. The effective tax rate was 34.1% for 1999 and 34.6% for 1998.

BUSINESS SEGMENTS

The following table reflects the earnings contribution and average assets of Northern Trust’s business segments for the third quarter ended September 30, 1999 and 1998.

	Corporate and Institutional Services				Personal Financial Services				Treasury and Other				Consolidated
($ in Millions)	1999		1998		1999		1998		1999		1998		1999	1998
Noninterest Income
Trust Fees	$ 121.4		$ 104.3		$ 121.0		$ 99.3		$ —		$ —		$ 242.4	$ 203.6
Other	47.2		47.3		17.0		12.3		(.2	)	1.5		64.0	61.1
Net Interest Income after Provision for Credit Losses*	42.8		39.7		92.6		83.0		3.0		4.0		138.4	126.7
Noninterest Expenses	135.7		120.5		134.2		114.1		6.2		9.2		276.1	243.8

Income before Income Taxes*	75.7		70.8		96.4		80.5		(3.4	)	(3.7	)	168.7	147.6
Provision for Income Taxes*	29.4		27.8		36.7		31.9		(1.6	)	(2.3	)	64.5	57.4

Net Income	$ 46.3		$ 43.0		$ 59.7		$ 48.6		$ (1.8	)	$ (1.4	)	$ 104.2	$ 90.2

Percentage Net Income Contribution	44	%	48	%	57	%	54	%	(1	)%	(2	)%	100%	100	%

Average Assets	$13,821.2		$11,845.9		$11,591.9		$10,216.2		$5,681.7		$5,499.1		$31,094.8	$27,561.2

*Stated on a fully taxable equivalent basis (FTE). Total includes FTE adjustments of $10.6 million for 1999 and $9.7 million for 1998.

The following table reflects the earnings contribution and average assets of Northern Trust’s business segments for the nine months ended September 30, 1999 and 1998.

	Corporate and Institutional Services				Personal Financial Services				Treasury and Other				Consolidated
($ in Millions)	1999		1998		1999		1998		1999		1998		1999	1998
Noninterest Income
Trust Fees	$ 353.1		$ 310.6		$ 350.0		$ 289.0		$ —		$ —		$ 703.1	$ 599.6
Other	146.9		143.1		44.0		38.2		.8		6.1		191.7	187.4
Net Interest Income after Provision for Credit Losses*	123.1		108.2		272.1		247.0		8.0		14.7		403.2	369.9
Noninterest Expenses	393.1		364.2		394.5		332.8		26.6		30.7		814.2	727.7

Income before Income Taxes*	230.0		197.7		271.6		241.4		(17.8	)	(9.9	)	483.8	429.2
Provision for Income Taxes*	90.1		77.8		106.4		95.7		(11.7	)	(6.6	)	184.8	166.9

Net Income	$ 139.9		$ 119.9		$ 165.2		$ 145.7		$ (6.1	)	$ (3.3	)	$ 299.0	$ 262.3

Percentage Net Income Contribution	47	%	46	%	55	%	56	%	(2	)%	(2	)%	100%	100	%

Average Assets	$12,978.7		$11,403.7		$11,335.3		$9,933.7		$5,558.7		$5,381.4		$29,872.7	$26,718.8

*Stated on a fully taxable equivalent basis (FTE). Total includes FTE adjustments of $28.7 million for 1999 and $27.1 million for 1998.

Corporate and Institutional Services

C&IS net income for the quarter totaled $46.3 million, an 8% increase from the third quarter of 1998. Noninterest income increased 11% to $168.6 million in the third quarter of 1999 from $151.6 million in last year’s third quarter. Trust fees reflecting strong new business growth increased 16% to $121.4 million in the current quarter compared to $104.3 million in the year-ago quarter. Other income was virtually unchanged at $47.2 million from the prior year.

Net interest income after provision for credit losses stated on a FTE basis increased 8% to $42.8 million in the current quarter, from $39.7 million in last year’s third quarter. Contributing to the improvement was a 15% increase in average earning assets, offset in part by a higher provision for credit losses and a reduction in the net interest margin from 1.53% in last year’s third quarter to 1.46% in the current quarter.

Noninterest expenses were up 13% to $135.7 million in the current quarter due primarily to staff growth and increased expense allocations for product and operations support.

Personal Financial Services

PFS net income for the quarter increased 23% from a year ago to $59.7 million. Excluding $3.9 million in nonrecurring gains, PFS net income increased 18%. Noninterest income increased 24% to $138.0 million in the current quarter from $111.6 million in last year’s third quarter. The increase was due primarily to a 22% increase in trust fees which totaled $121.0 million in the current quarter, resulting from strong new business growth and favorable equity markets through June 30, 1999, when market values used in calculating most personal trust fees for the third quarter were determined. Other income increased 38% from $12.3 million in last year’s third quarter to $17.0 million in the current quarter. Included in the current quarter is $3.9 million of nonrecurring income resulting from the sale of Northern Trust’ s Harlem Avenue Branch on the northwest side of Chicago and the sale of mortgage servicing rights on certain loans that were previously sold. Excluding these nonrecurring items, other income increased 5% due principally to a 6% increase in brokerage commissions at Northern Trust Securities, Inc.

Net interest income after provision for credit losses stated on a FTE basis increased 12% to $92.6 million in the current quarter, due to a $1.2 billion increase in average loan volume and a 10% increase in deposits. Partially offsetting this increase was a reduction in the net interest margin from 3.40% last year to 3.35% in the current quarter.

Noninterest expenses increased 18% to $134.2 million in the current quarter from $114.1 million in last year’s third quarter. Approximately one-half of the increase related to salaries, incentives and employee benefits driven by staff growth and performance-based incentive plans, and approximately 40% of the increase resulted from higher expense allocations for product and operations support. In addition, business promotion costs increased 20% as PFS continued to expand its advertising and special client programs during the quarter.

Treasury and Other

The Treasury Department is responsible for managing the Bank’s wholesale funding, capital position and interest rate risk, as well as the portfolio of interest rate risk management instruments. It is also responsible for the investment portfolios of the Corporation and the Bank. “Other” corporate income and expenses represent items that are not allocated to the business units and generally represent certain nonrecurring items and certain executive level compensation. The third quarter results of Treasury and Other reflect a lower level of net interest income which was more than offset by lower levels of noninterest expense. In addition, the results for the third quarter of last year included a nonrecurring gain from the sale of futures exchange memberships.

YEAR 2000 PROJECT

Remediation Status. Earlier in 1999, Northern Trust completed Year 2000 renovation and validation for all mission critical information technology systems, including those provided by third parties. Northern Trust has used an inclusive definition of “mission critical” items in measuring and reporting its progress, with approximately 90% of Northern Trust’s core applications included in this category. Northern Trust has also completed the implementation stage, in which systems or applications are returned to production after the review of test results, for all of these systems. Also, Northern Trust has substantially completed Year 2000 work through the implementation stage for non-mission critical applications, including non-critical desktop software.

Northern Trust has completed one round of integration testing and is in the process of completing a final set of these tests. This testing is designed to verify that logically related systems work with each other while running on renovated versions of hardware and operating system software. Northern Trust also continues to use recently-developed, automated verification tools to determine whether any additional changes to already-renovated code are needed.

In addition to its Year 2000 work on systems and applications, Northern Trust, through its Business Issues Task Force, has coordinated a review of various infrastructure issues, such as checking elevators and heating, ventilation and air-conditioning equipment, some of which include embedded systems, to verify that the equipment will function in the Year 2000 or determine that remediation or alternate plans will be needed. The assessment, renovation, validation and implementation phases of this task have been completed for all of the mission critical equipment identified as needing renovation. Contingency plans have been developed for Northern Trust’s important locations, to allow critical functions to continue in the event of infrastructure problems.

Credit and Other Year 2000 Readiness Reviews. As part of its credit analysis process, Northern Trust has developed and implemented a project plan for assessing the Year 2000 readiness of its significant credit clients. Northern Trust completed its initial assessment of Year 2000 readiness for these clients in 1998, a second assessment in July 1999 and a third assessment in October and early November 1999. Northern Trust’s Year 2000 readiness review process is intended to identify clients with more than moderate Year 2000 risk so that these clients can be reviewed more closely and their progress more frequently monitored. The information received from clients through the date of this report, together with publicly-available information evaluated, has led Northern Trust to assign more than moderate Year 2000 risk ratings to credit clients with approximately $99 million in outstanding loans. The ratings reflect some client postponements in announced Year 2000 remediation deadlines or failure to meet previously-announced deadlines, which can result in a higher risk rating, as well as other issues identified in the readiness review, including issues relating to credit clients’ progress in contingency planning and use of third-party reviews.

Problems encountered by a borrower in developing or executing a Year 2000 strategy are considered as part of the overall credit risk assessment and affect the internal credit ratings assigned to various credit exposures. Year 2000-related credit concerns can affect the continuing assessment of clients ’ overall risk profiles in a manner that could result in additional credit loss provisions, if appropriate under generally accepted accounting principles. Reviews to date, however, have not identified any situations where management believes it probable that a loss has been incurred because of Year 2000 issues.

In addition, as part of its fiduciary activities, Northern Trust has implemented a plan for taking the Year 2000 issue into consideration in evaluating investment portfolios, and a plan to evaluate and deal with the Year 2000 issues presented by other types of property held in trust. Northern Trust has also contacted fiduciary and other clients to explain its Year 2000 Program and will continue these communications throughout the balance of the year.

Suppliers and other Third-Party Reviews. The Business Issues Task Force is monitoring programs to contact important vendors and suppliers to verify their Year 2000 readiness. Northern Trust has evaluated the risk posed by each supplier based on its criticality, its responses to inquiries about Year 2000 readiness and, where applicable, test results furnished. This evaluation is being used in the contingency planning process described later.

During 1998, Northern Trust completed on-site, Year 2000 due diligence visits with subcustodians who account for most of Northern Trust’s global securities processing— approximately 95% as measured by market value of holdings and 88% as measured by current transaction volume. Northern Trust has conducted additional reviews by teleconference, and some of the on-site reviews in effect covered more than the location visited because the subcustodian reviewed acts for Northern Trust in several markets. Reviews conducted by at least one of these methods have covered approximately 99.9% of both transaction volume and market value of holdings. Second on-site visits to certain subcustodians were completed during the third quarter of 1999.

The great majority of these subcustodians appear to be making adequate progress, although Northern Trust earlier in the year transitioned its business to another subcustodian in one market as a result of concerns that included Year 2000 issues. Northern Trust is a member of the Steering Committee of Custody 2000, a working group within the Global 2000 Coordinating Group of major financial institutions around the world which is facilitating Year 2000 testing between global custodians and their subcustodians. Through its own efforts and through its participation in Custody 2000, Northern Trust has been able to test with, or has obtained or expects to obtain proxy testing information for, the subcustodians in its network other than those where the volume of transactions is so minimal that manual processing would be practical. Northern Trust will continue to monitor subcustodians’ Year 2000 work throughout the remainder of the year and develop contingency plans, which will include moving to another subcustodian where necessary and feasible.

Northern Trust also relies on entities such as the Federal Reserve System, Depository Trust Company, Participants Trust Company, Society for Worldwide Interbank Financial Telecommunications (SWIFT), and the Clearing House Interbank Payment Systems (CHIPS) in its securities processing and banking businesses. Testing with these organizations has been completed. Northern Trust has also participated in the securities industry-wide testing sponsored by the Securities Industry Association Asset Managers Forum and in other industry-sponsored tests focussed on securities lending and pricing.

Northern Trust also has tested directly or reviewed proxy test data for certain key dates in the next year with most other critical third party service providers, and will conduct additional tests in the fourth quarter.

Client Testing. Northern Trust has furnished a Client Testing Catalog to its corporate and institutional clients, describing plans for client testing, and has made available testing documentation, including internal test results, to clients. Northern Trust expects that most clients will be able to conduct an adequate review of Northern Trust’s Year 2000 readiness efforts by reviewing the test documentation provided. Northern Trust has also conducted some point-to-point testing with clients during the third quarter.

Contingency Planning. Although Northern Trust is attempting to monitor and validate the efforts of other parties, it cannot control the success of those efforts. It is also possible that there will be unanticipated problems with systems Northern Trust has renovated and tested. Northern Trust has not tried to predict the severity of the various malfunctions that may occur, alone or in combination with other external or internal problems. Instead, Northern Trust has developed contingency plans, where practical, to provide alternatives to deal with a variety of “threat scenarios.” These scenarios involve possible situations where an entity furnishing a critical product or service, or with which Northern Trust has another business relationship critical to its operations, experiences significant Year 2000 difficulties that may affect Northern Trust or where internal problems develop.

Contingency planning is now a principal focus of Northern Trust’s Year 2000 work. The contingency planning process has focused on Northern Trust’s critical functions, such as securities processing, investment and trading, wire transfer and automated clearing house operations, credit, cash services, fund accounting and servicing, mutual funds, investor services, check processing, financial reporting and balance sheet and liquidity management. In each area the process identified various Year 2000 failure scenarios that could threaten these functions, including power and telecommunications failures, and then identified, where practicable, alternative methods to perform the function or other strategies to mitigate the effect of the failure.

The basic Year 2000 contingency plans for these critical functions have been completed and reviewed. The plans were updated during the third quarter, and testing and refinement of the plans are expected to continue into the fourth quarter. These critical function contingency plans have also been and are being used in preparing and updating contingency plans for particular Northern Trust subsidiaries or locations, and by various business units as they revise their business continuity plans with the Year 2000 event in prospect.

Each critical function contingency plan is quite specific in its identification of particular threats and steps to mitigate those threats should they materialize. Common mitigating actions include advancing the processing of certain transactions where feasible so it is completed prior to year-end; making copies of key reports, year-end balances and data files to assure the availability of a reference point; developing alternative methods for communicating with clients, vendors and other Northern Trust offices in the event of telecommunications or other communications systems failure; close monitoring of processes and client behavior as year-end approaches to spot unusual developments and react to them early; developing alternative sources of information where feasible for key processes that depend upon pricing or other external data; developing manual work-around solutions where practical; and increasing hours or adding staff from other areas if certain areas experience unusually high demands. The plans also contemplate preparing to generate extra liquidity on Northern Trust’s balance sheet should that prove necessary; preparing to meet potential client demands for increased currency at year-end; and developing additional measures to prevent Year 2000-related frauds and address other security issues.

The Year 2000 contingency planning effort also builds on Northern Trust’s existing business continuity plans and recovery capabilities. These include or are expected to include the use of standby power generators for the Chicago data center and some other key locations; synchronous mirroring of data processed at the main data center in Chicago at a nearby back-up site, as well as a contract for remote hotsite recovery in the event of a regional problem; an alternative work site for certain critical functions should the Chicago operations center be unable to function; a redundant, alternate-site backup for wire transfer functions; and independent linkages with major securities depositories. In developing Year 2000 contingency plans for managing balance sheet and liquidity risk, Northern Trust is likewise building on existing plans for dealing with market or other developments that could create funding and liquidity issues. The Year 2000 contingency plans call for restructuring the shorter-term portion of the balance sheet to increase liquidity to the extent necessary as year-end approaches; developing alternate sources of funding to meet unusual needs should they occur; and positioning Northern Trust’s banking subsidiaries to be able to respond to unusual client demands near and over the year-end. In July, Northern Trust implemented one part of the contingency plan by issuing $200 million in subordinated debt of The Northern Trust Company to bolster its capital prior to year-end.

In order to provide as stable an environment as possible going into the new year, Northern Trust imposed a systems moratorium commencing September 20, 1999, after which no programming changes may be made without the specific approval of the head of Worldwide Technology and the Year 2000 Project Manager. Northern Trust is also developing event management plans for the period from late December 1999 through early January 2000, refining existing models for managing information flow, communication processes and decision-making. A Steering Committee consisting of the Corporation’s Management Committee and key Year 2000 Project Team members will be available to provide on-site strategic decisions and direction, and key staff members will be in critical offices over the Year 2000 weekend to monitor the rollover. Systems analysts and operations personnel will also be conducting systems and data validation throughout the Year 2000 weekend, and backup personnel in all key areas will be on standby in the event they are needed.

Expenses. The estimated total expense for Northern Trust’s Year 2000 renovation project is $35 million. This estimate includes the cost of purchasing licenses for software programming tools, the cost of the time of internal staff in Worldwide Technology, the cost of consultants and $6.0 million of accelerated purchases of equipment necessary to support contingency plans and Year 2000 testing. The estimate does not include the time that internal staff in user departments are devoting to testing programming changes and developing contingency plans, although these efforts are not believed to have added or expected to add significant incremental costs.

These Year 2000 costs have been and are expected to be expensed as incurred, except that the costs for equipment supporting contingency plans and testing is being amortized over its useful life in accordance with Northern Trust’s accounting policies. As of September 30, 1999, $32 million of the estimated $35 million of project costs have been incurred of which $4.5 million related to capitalized equipment purchases. $3.0 million of costs were incurred in the third quarter of 1999, of which $1.3 million related to capitalized equipment purchases. The remaining costs are expected to be incurred fairly evenly during the next four months. Of the total Worldwide Technology Group expenses (excluding depreciation and amortization) for 1997, 1998 and 1999, it is estimated that 12% to 14% will be for Year 2000 renovation costs, or less than 1.5% of Northern Trust’s anticipated aggregate noninterest expenses for those years. Although the priority given to Year 2000 work has resulted in extending the time for completing some other technology projects, these delays are not expected to have a material effect on Northern Trust’s business.

Potential Risks. Northern Trust recognizes the importance of successfully completing all aspects of the Year 2000 Project. Northern Trust data processing software and hardware provide essential support to virtually all of its businesses. Incomplete or defective Year 2000 renovation of the critical systems used by Northern Trust could have a materially adverse effect on its operations and financial performance, as could Year 2000 problems experienced by others on whom Northern Trust relies or with whom it otherwise does business. Because of the range of possible issues and the large number of variables involved, it is impossible to quantify the potential cost of problems should Northern Trust’s remediation efforts or the efforts of those with whom it does business not be successful and Northern Trust’s contingency plans fail to avoid or mitigate the resulting problems. The issue is of such magnitude, however, that these costs could be quite material. Failure to make satisfactory progress toward Year 2000 readiness or to take other agency-mandated steps could also result in action by state or federal regulators that could adversely affect Northern Trust’ s business.

NINE MONTHS EARNINGS HIGHLIGHTS

Net income per common share increased 14% to $2.57 for the nine-month period ended September 30, 1999, up from $2.25 last year. Net income also increased 14% to $299.0 million from $262.3 million in the year-ago period. The ROE increased to 20.71% from 20.58% last year, while the ROA improved to 1.34% from 1.31% in the same period last year.

Total revenues, stated on a FTE basis, increased 12% from 1998 levels. Trust fees totaled $703.1 million, up 17% from $599.6 million last year. Foreign exchange trading profits totaled $79.5 million, up 6% from last year’s performance. Treasury management revenues from both fees and the computed value of compensating deposit balances increased 3% to $74.0 million. The fee portion of these revenues accrued in the period totaled $51.2 million, up from $50.9 million in 1998. Security commissions and trading income totaled $22.0 million, up 3% from $21.3 million reported last year. Other operating income totaled $38.8 million in the period compared with $39.1 million in 1998. After adjusting for nonrecurring items in both years, other operating income declined 4% due primarily to lower levels of trust deposit-related fees.

Net interest income, stated on a FTE basis, totaled $409.2 million, up 8% from $377.9 million reported last year. The $6.0 million provision for credit losses was $2.0 million below the $8.0 million required in the same period of 1998. Net loan charge-offs totaled $7.9 million versus $9.2 million in the same period of last year. Noninterest expenses were up 12% and totaled $814.2 million compared to $727.7 million a year ago.

BALANCE SHEET

Total assets at September 30, 1999 were $33.7 billion and averaged $31.1 billion for the third quarter, up 13% from last year’s average of $27.6 billion. Due to continued strong credit demand, loans and leases grew to $15.0 billion at September 30, 1999, and averaged $14.6 billion for the quarter. This compares with $13.6 billion in total loans and leases at September 30, 1998 and $13.4 billion on average for the third quarter of last year. Securities totaled $9.5 billion at September 30, 1999 and averaged $8.9 billion for the third quarter compared to an average of $8.4 billion in the third quarter of 1998. The increase was primarily in short-term federal agency securities.

Driven by continued strong earnings growth, offset in part by stock repurchases under Northern Trust’s ongoing stock buyback program, common stockholders’ equity increased to $2.0 billion at September 30, 1999 and averaged $1.96 billion for the quarter, up 14% from the $1.72 billion average in last year’s third quarter. Total stockholders’ equity averaged $2.08 billion for the third quarter compared with $1.84 billion in 1998.

During the quarter, the Corporation acquired a total of 464,696 shares at a cost of $39.7 million. An additional 5.4 million shares may be purchased after September 30, 1999 under the current share buyback program.

Northern Trust Corporation’s risk-based capital ratios remained strong at 9.5% for tier 1 capital and 13.1% for total capital at September 30, 1999. These capital ratios are well above the minimum regulatory requirements of 4% for tier 1 and 8% for total risk-based capital ratios. The leverage ratio (tier 1 capital to third quarter average assets) of 7.0% at September 30, 1999, also exceeded the minimum regulatory requirement of 3%. Each of Northern Trust’s subsidiary banks had a ratio above 8.3% for tier 1 capital, 11.4% for total risk-based capital, and 6.0% for the leverage ratio.

ASSET QUALITY

Nonperforming assets consist of nonaccrual loans, restructured loans and other real estate owned (OREO). Nonperforming assets at September 30, 1999 totaled $30.3 million, compared with $35.2 million at December 31, 1998 and $31.2 million at September 30, 1998. Domestic nonaccrual loans and leases, consisting primarily of commercial loans, totaled $28.9 million, or .20% of total domestic loans and leases at September 30, 1999. At December 31, 1998 and September 30, 1998, domestic nonaccrual loans and leases totaled $30.5 million and $27.2 million, respectively.

The following table presents the outstanding amounts of nonaccrual loans and leases, restructured loans and OREO. Also shown are loans that have interest or principal payments that are delinquent 90 days or more and are still accruing interest. The balance in this category at any quarter end can fluctuate widely based on the timing of cash collections, renegotiations and renewals.

	September 30	June 30	December 31	September 30
	1999	1999	1998	1998
(In Millions)
Nonaccrual Loans
Domestic
Residential Real Estate	$ 5.3	$ 5.7	$ 5.2	$ 4.6
Commercial	21.2	35.3	21.8	18.4
Commercial Real Estate	1.7	2.2	2.9	3.4
Personal	.7	.9	.6	.8

Total Domestic	28.9	44.1	30.5	27.2
International	—	—	—	—

Total Nonaccrual Loans	28.9	44.1	30.5	27.2
Restructured Loans	—	—	2.4	2.4
Other Real Estate Owned	1.4	1.1	2.3	1.6

Total Nonperforming Assets	$30.3	$45.2	$35.2	$31.2

Total 90 Day Past Due Loans (still accruing)	$21.9	$19.6	$30.0	$35.4

Provision and Reserve for Credit Losses

The provision for credit losses is the charge against current earnings that is determined by management, through a disciplined credit review process, as the amount needed to maintain a reserve that is sufficient to absorb credit losses inherent in Northern Trust’s loan and lease portfolios and other credit undertakings. The reserve provides for probable losses that have been identified with specific borrower relationships (specific loss component) and for probable losses that are believed to be inherent in the loan and lease portfolios and other credit undertakings but that have not yet been specifically identified (inherent loss component).

Note 6 to the Consolidated Financial Statements includes a table that analyzes the reserve for credit losses at September 30, 1999 and identifies the charge-offs and recoveries and the provisions for credit losses during the nine-month period ended September 30, 1999. The following table shows (i) the specific portion of the reserve, (ii) the allocated portion of the inherent reserve and its components by loan category and (iii) the unallocated portion of the reserve at September 30, 1999, June 30, 1999, December 31, 1998, and September 30, 1998.

ALLOCATION OF THE RESERVE FOR CREDIT LOSSES

	September 30, 1999			June 30, 1999			December 31, 1998			September 30, 1998
	Reserve Amount	Percent of Loans to Total Loans		Reserve Amount	Percent of Loans to Total Loans		Reserve Amount	Percent of Loans to Total Loans		Reserve Amount	Percent of Loans to Total Loans
($ in millions)
Specific Reserves	$ 9.9	—	%	$ 17.3	—	%	$ 5.9	—	%	$ 3.0	—	%

Inherent Reserves
Residential Real Estate	12.5	41		12.6	41		11.0	43		12.3	42
Commercial	67.2	31		65.8	30		77.4	29		77.8	30
Commercial Real Estate	11.7	5		13.4	5		11.8	5		12.0	5
Personal	3.4	10		3.2	9		3.2	11		3.4	10
Other	—	5		—	5		—	5		—	5
Lease Financing	2.9	4		2.9	4		2.9	4		2.9	3
International	3.6	4		3.7	6		3.6	3		4.6	5
Unallocated	33.7	—		33.0	—		31.0	—		30.6	—

Total Inherent Reserve	$135.0	100	%	$134.6	100	%	$140.9	100	%	$143.6	100	%

Total Reserve	$144.9	100	%	$151.9	100	%	$146.8	100	%	$146.6	100	%

Specific Component of the Reserve. At September 30, 1999, the specific component of the reserve stood at $9.9 million, compared to $5.9 million at December 31, 1998 and $17.3 million at June 30, 1999. The decrease from June 30 relates primarily to a single commercial loan borrower that emerged from Chapter 11 reorganization proceedings during the quarter. The approval and implementation of the bankruptcy reorganization plan resulted in the receipt of a partial payment and confirmed the amount of the remaining loss with respect to this credit, which was taken as a charge against the specific reserve previously established for this loan.

Allocated Inherent Component of the Reserve. The allocated inherent portion of the reserve was essentially level between June 30 and September 30, 1999 reflecting the net effect of several factors. Improvement in the overall quality of the commercial real estate loan segment was offset by the impact of some weakening in the quality of certain commercial loans and moderate growth in the size of the overall portfolio, particularly in the Personal loan segment.

Unallocated Inherent Component of the Reserve. The unallocated portion of the inherent loss reserve is based on management’s review of overall factors affecting the determination of probable losses inherent in the portfolio, which may not be captured, or captured completely, by the mechanical application of historical loss ratios and other factors used in determining the allocated inherent reserve. This portion of the reserve analysis involves the exercise of judgment and reflects all appropriate considerations, including management ’s view that the reserve should have a margin that recognizes the imprecision inherent in the process of estimating expected credit losses. The unallocated inherent portion of the reserve was $33.7 million, a slight increase from June 30, 1999, reflecting management’s judgement that there has been little change in the quality of the loan portfolio during the quarter.

Other Factors. During the nine months ended September 30, 1999, there were no significant changes in concentration of credits that impacted asset quality. The total amount of the highest risk loans, those rated “6 ” to “8” (based on Northern’s internal rating scale which closely parallels that of the banking regulators), was $103 million at September 30, 1999 and $105 million at June 30, 1999, reflecting the reduction in one significant commercial loan, which was partially offset by some weakening in the quality of certain other commercial loans.

Overall Reserve. Management’s evaluation of the factors above resulted in a reserve for credit losses of $144.9 million at September 30, 1999 compared to $151.9 million at June 30, 1999. The decrease reflects the charge-off in one commercial loan. The inherent portion of the reserve increased only slightly since June 30, 1999, consistent with management’s assessment that there has been little change in the level of risk in Northern Trust’s credit exposures outside of loans for which specific allocations were made. The reserve as a percentage of total loans declined to .96% at September 30, 1999 from 1.01% at June 30, 1999.

Provision. The resulting provision for credit losses was $.5 million during the third quarter of 1999. Net charge-offs were $7.5 million for the period.

MARKET RISK MANAGEMENT

As described in the 1998 Annual Report to Shareholders, Northern Trust manages its interest rate risk through measurement techniques which include simulation of earnings, simulation of the economic value of equity, and gap analysis. Also, as part of its risk management activities, it regularly measures the risk of loss associated with foreign currency positions using a value at risk model.

Based on this continuing evaluation process, the Northern Trust’s interest rate risk position and the value at risk associated with the foreign exchange trading portfolio have not changed significantly since December 31, 1998.

FORWARD-LOOKING INFORMATION

This report contains statements that may be considered forward-looking, such as the discussion of Northern Trust’s financial goals, expansion and business development plans, business prospects and positioning with respect to market and pricing trends, new business results and outlook, credit quality, planned capital expenditures and technology spending, the completion and effectiveness of Year 2000 work, and the effect of various matters (including Year 2000 issues) on Northern Trust’s business. These statements speak of Northern Trust’s plans, goals, beliefs or expectations, refer to estimates or use similar terms. Those relating to Year 2000 matters also constitute Year 2000 readiness disclosures. Actual results could differ materially from the results indicated by these statements because the realization of those results is subject to many uncertainties including:

The future health of the U.S. and international economies and other economic factors that affect wealth creation, investment and savings patterns, and Northern Trust’s interest rate risk exposure and credit risk.

Changes in U.S. and worldwide securities markets, with respect to the market values of financial assets, the stability of particular securities markets and the level of volatility in certain markets such as foreign exchange.

Regulatory developments and changes in accounting requirements or interpretations in the U.S. and other countries where Northern Trust has significant business.

Changes in the nature of Northern Trust’s competition resulting from industry consolidation, regulatory change and other factors, as well as actions taken by particular competitors.

Northern Trust’s success in continuing to generate new business in its existing markets, as well as its success in identifying and penetrating targeted markets, through acquisition or otherwise, and generating a profit in those markets in a reasonable time.

Northern Trust’s ability to continue to fund and accomplish technological innovation, improve processes and controls and attract and retain capable staff, in order to deal with increasing volume and complexity in many of its businesses and technology challenges.

The accuracy and effectiveness of Northern Trust’s assessment of and work on issues such as those described under the caption “Year 2000 Project,” including its own systems remediation; its readiness review of its borrowers; its evaluation of the work of various other clients, vendors, counterparties and governmental or private entities on which Northern Trust’s business depends, or in which Northern Trust invests for itself or its clients; and its identification of and planning for various “threat scenarios” in Year 2000 contingency planning.

The potential impact on Northern Trust of changes in clients’ behavior as a result of clients’ own Year 2000 contingency planning or otherwise.

The impact of the euro on Northern Trust’s global custody business and foreign exchange trading results.

The ability of each of Northern Trust’s principal businesses to maintain a product mix that achieves satisfactory margins.

Changes in tax laws or other legislation that could affect Northern Trust’s personal and institutional asset administration businesses.

Some of these uncertainties that may affect future results are discussed in more detail in the section of “ Management’s Discussion and Analysis of Financial Condition and Results of Operations” captioned “Risk Management ” in the 1998 Annual Report to Stockholders (pp. 35–44) and in the sections of “Item 1—Business” of the 1998 Annual Report on Form 10-K captioned “Government Policies” , “Competition” and “Regulation and Supervision” (pp. 6–10). All forward-looking statements included in this document are based upon information presently available, and Northern Trust assumes no obligation to update any forward-looking statement.

The following schedule should be read in conjunction with the Net Interest Income section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

NORTHERN TRUST CORPORATION

CONSOLIDATED ANALYSIS OF NET INTEREST INCOME

(Interest and rate on a taxable equivalent basis) ($ in Millions)	Third Quarter
	1999				1998
	Interest	Volume	Rate		Interest	Volume	Rate
Average Earning Assets
Money Market Assets
Federal Funds Sold and Resell Agreements	$ 11.7	$ 895.4	5.18	%	$ 14.1	$ 979.9	5.68	%
Time Deposits with Banks	40.3	3,727.9	4.29		36.0	2,392.8	5.97
Other Interest-Bearing	.3	26.1	4.13		.2	15.3	5.26

Total Money Market Assets	52.3	4,649.4	4.46		50.3	3,388.0	5.89

Securities
U.S. Government	3.5	271.6	5.16		5.2	339.3	5.97
Obligations of States and Political Subdivisions	10.3	489.9	8.36		9.9	443.0	8.92
Federal Agency	105.5	7,804.8	5.36		106.3	7,328.9	5.76
Other	5.6	331.0	6.75		4.2	269.6	6.37
Trading Account	.2	10.2	6.51		.3	12.5	6.42

Total Securities	125.1	8,907.5	5.57		125.9	8,393.3	5.95

Loans and Leases	237.5	14,620.5	6.45		226.4	13,428.4	6.69

Total Earning Assets	$414.9	$28,177.4	5.84	%	$402.6	$25,209.7	6.34	%

Average Source of Funds
Deposits
Savings and Money Market	$ 39.7	$ 4,877.0	3.23	%	$ 36.3	$ 4,232.7	3.41	%
Savings Certificates	28.6	2,152.4	5.28		30.9	2,149.2	5.70
Other Time	7.1	566.5	4.92		9.3	678.1	5.41
Foreign Offices Time	72.1	6,848.9	4.18		77.5	5,927.9	5.19

Total Deposits	147.5	14,444.8	4.05		154.0	12,987.9	4.71
Federal Funds Purchased	43.0	3,327.9	5.12		35.3	2,524.0	5.55
Securities Sold Under Agreements to Repurchase	33.9	2,655.4	5.07		26.5	1,907.4	5.50
Commercial Paper	1.8	138.8	5.17		2.1	148.9	5.60
Other Borrowings	28.7	2,235.8	5.09		39.4	2,854.5	5.48
Senior Notes	6.5	498.4	5.27		5.2	366.0	5.62
Long-Term Debt	10.5	602.3	6.96		8.0	462.5	6.95
Debt-Floating Rate Capital Securities	4.1	267.5	5.90		4.4	267.4	6.33

Total Interest-Related Funds	276.0	24,170.9	4.53		274.9	21,518.6	5.07

Interest Rate Spread	—	—	1.31	%	—	—	1.27	%

Noninterest-Related Funds	—	4,006.5	—		—	3,691.1	—

Total Source of Funds	$276.0	$28,177.4	3.89	%	$274.9	$25,209.7	4.33	%

Net Interest Income/Margin	$138.9	—	1.95	%	$127.7	—	2.01	%

ANALYSIS OF NET INTEREST INCOME CHANGES DUE TO VOLUME AND RATE

(In Millions)	Third Quarter 1999/98				Nine Months 1999/98
	Change Due To				Change Due To
	Volume	Rate		Total	Volume	Rate		Total
Earning Assets	$41.8	$(29.5	)	$12.3	$115.9	$(90.3	)	$25.6
Interest-Related Funds	29.8	(28.7	)	1.1	79.4	(85.1	)	(5.7	)

Net Interest Income	$12.0	$ (.8	)	$11.2	$ 36.5	$ (5.2	)	$31.3

Nine Months
1999				1998
Interest	Volume	Rate		Interest	Volume	Rate




$ 37.2	$ 1,000.7	4.97	%	$ 40.9	$ 968.0	5.65	%
114.0	3,370.8	4.52		101.2	2,419.3	5.59
2.0	56.2	4.79		1.9	37.4	6.74

153.2	4,427.7	4.63		144.0	3,424.7	5.62


12.0	296.7	5.40		17.6	390.7	6.01
30.3	501.2	8.07		28.4	424.6	8.93
274.0	7,070.4	5.18		285.7	6,636.5	5.76
14.9	300.9	6.63		13.1	255.2	6.89
.6	12.3	6.80		.6	11.2	6.70

331.8	8,181.5	5.42		345.4	7,718.2	5.98

688.2	14,325.6	6.42		658.2	13,090.6	6.72

$1,173.2	$26,934.8	5.82	%	$1,147.6	$24,233.5	6.33	%



$ 111.4	$ 4,754.8	3.13	%	$ 105.9	$ 4,230.7	3.35	%
86.3	2,167.4	5.33		91.6	2,133.5	5.74
22.5	614.4	4.89		23.3	574.3	5.42
196.4	6,233.9	4.21		210.3	5,556.3	5.06

416.6	13,770.5	4.04		431.1	12,494.8	4.61
123.1	3,365.9	4.89		101.8	2,466.1	5.52
81.0	2,230.8	4.86		60.5	1,472.5	5.49
5.2	139.0	5.00		6.2	147.4	5.61
76.5	2,099.9	4.87		106.6	2,657.9	5.36
23.5	627.7	5.00		27.0	637.5	5.64
26.4	506.9	6.95		23.7	440.1	7.19
11.7	267.5	5.75		12.8	267.4	6.29

764.0	23,008.2	4.44		769.7	20,583.7	5.00

—	—	1.38	%	—	—	1.33	%

—	3,926.6	—		—	3,649.8	—

$ 764.0	$26,934.8	3.79	%	$ 769.7	$24,233.5	4.25	%

$ 409.2	—	2.03	%	$ 377.9	—	2.08	%

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

The information called for by this item is incorporated herein by reference to “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Market Risk Management” on page 28 of this document.

PART II—OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit (3) Amendments to By-laws and By-laws as amended to date.

Exhibit (10) Material Contracts:

(i)

Amendment dated as of June 30, 1999 to Term Loan Agreement between the ESOP Trust and the Registrant dated June 28, 1996.

(ii)

Amendment dated as of July 20, 1999 to the Supplemental Employee Stock Ownership Plan for Employees of The Northern Trust Company as amended and restated as of April 30, 1996.

(iii)

Amendment dated as of July 20, 1999 to the Supplemental Thrift-Incentive Plan for Employees of The Northern Trust Company as amended and restated as of April 30, 1996.

(iv)

Amendment dated as of July 20, 1999 to Supplemental Pension Plan for Employees of The Northern Trust Company as amended and restated as of April 30, 1996.

(v)

Direction Letter dated August 27, 1999 and related Amendment dated August 31, 1999 to the Restated Trust Agreement dated June 18, 1996 between The Northern Trust Company and Harris Trust and Savings Bank (effective August 31, 1999, U.S. Trust Company, N.A. as successor trustee) regarding the Supplemental Employee Stock Ownership Plan for Employees of The Northern Trust Company, the Supplemental Thrift-Incentive Plan for employees of The Northern Trust Company and the Supplemental Pension Plan for Employees of The Northern Trust Company.

(vi)

Amendment dated August 31, 1999 to the Deferred Compensation Plans Trust Agreement dated as of May 11, 1998 between Northern Trust Corporation and Harris Trust and Savings Bank as Trustee (effective August 31, 1999, U.S. Trust Company, N.A. as successor trustee).

Exhibit (27) Financial Data Schedule.

(b) Reports on Form 8-K

In a report on Form 8-K, Northern Trust incorporated in Item 5 its July 19, 1999 press release, reporting on its earnings for the second quarter of 1999. The press release, with summary financial information, was filed pursuant to Item 7.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

N ORTHERN T RUST C ORPORATION

(Registrant)

Date: November 12, 1999

/ S / Perry R. Pero

By:

Perry R. Pero

Vice Chairman

and Chief Financial Officer

Date: November 12, 1999

/ S / Harry W. Short

By:

Harry W. Short

Executive Vice President and Controller

(Chief Accounting Officer)

EXHIBIT INDEX

The following exhibits have been filed herewith.

Exhibit Number		Description
(3)		Amendments to By-laws and By-laws as amended to date.

(10)		Material Contracts:

		(i) Amendment dated as of June 30, 1999 to Term Loan Agreement between the ESOP Trust and the Registrant dated June 28, 1996.

		(ii) Amendment dated as of July 20, 1999 to the Supplemental Employee Stock Ownership Plan for Employees of The Northern Trust Company as amended and restated as of April 30, 1996.

		(iii) Amendment dated as of July 20, 1999 to the Supplemental Thrift-Incentive Plan for Employees of The Northern Trust Company as amended and restated as of April 30, 1996.

		(iv) Amendment dated as of July 20, 1999 to Supplemental Pension Plan for Employees of The Northern Trust Company as amended and restated as of April 30, 1996.

		(v) Direction Letter dated August 27, 1999 and related Amendment dated August 31, 1999 to the Restated Trust Agreement dated June 18, 1996 between The Northern Trust Company and Harris Trust and Savings Bank (effective August 31, 1999, U.S. Trust Company, N.A. as successor trustee) regarding the Supplemental Employee Stock Ownership Plan for Employees of The Northern Trust Company, the Supplemental Thrift-Incentive Plan for employees of The Northern Trust Company and the Supplemental Pension Plan for Employees of The Northern Trust Company.

		(vi) Amendment dated August 31, 1999 to the Deferred Compensation Plans Trust Agreement dated as of May 11, 1998 between Northern Trust Corporation and Harris Trust and Savings Bank as Trustee (effective August 31, 1999, U.S. Trust Company, N.A. as successor trustee).

(27)		Financial Data Schedule.

Exhibit (3)

Resolution 9/21/99
Northern Trust Corporation

AMENDMENT TO CORPORATION BY-LAWS; CONFIRMATION OF PRIOR AUTHORITY

RESOLVED, that Section 1.2 of Article I of the By-laws of Northern Trust Corporation (the "Corporation") is hereby amended in its entirety to read as follows:

SECTION 1.2. Special Meetings. A special meeting of the stockholders may be called at any time by the Board of Directors, the Chairman of the Board or the President. At a special meeting of the stockholders, only such business shall be conducted as shall be specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors.

FURTHER RESOLVED, that Section 2.4 of Article II of the By-laws of the Corporation is hereby amended in its entirety to read as follows:

SECTION 2.4. Special Meetings; Notice. A special meeting of the Board of Directors may be called by or at the request of the Chairman of the Board, the President or a majority of the Directors then in office. The person or persons calling or requesting such meeting may fix the place, date and hour thereof.

Notice of the place, date, and hour of each special meeting, unless waived, shall be given to each Director either by mail not less than forty-eight
(48) hours before the date of the meeting, by telephone, facsimile or telegram on twenty-four (24) hours' notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. Such notice may be given by the Secretary or by the officer or Directors calling the meeting.

FURTHER RESOLVED, that Section 9.3 of Article IX of the By-laws of the Corporation is hereby amended in its entirety to read as follows:

Resolution 9/21/99
Northern Trust Corporation

designations, if any, as may be determined by the Board of Directors, a Secretary and a Treasurer and one or more Assistant Secretaries and Assistant Treasurers as may be determined by the Board of Directors, and such other officers as may from time to time be appointed by the Board of Directors. Any two or more offices may be held by the same person. The Chairman of the Board and the President shall be elected from among the Directors; the other officers may be appointed by the Board of Directors.

The officers of the Corporation shall be elected or appointed annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of stockholders. Vacancies or new offices may be filled at any time. Each officer shall hold office until a successor shall have been duly elected or appointed or until his or her death or until he or she shall resign or shall have been removed by the Board of Directors.

FURTHER RESOLVED, that Section 9.6 of Article IX of the By-laws of the Corporation is hereby amended in its entirety to read as follows:

SECTION 9.6. The Vice Chairmen. A Vice Chairman shall have such powers and perform such duties as are vested in or assigned to him or her by the Board of Directors, the Chairman, the President or these By-laws. In the absence or inability to act of the Chairman of the Board and the President, the Vice Chairman (or in the event there be more than one Vice Chairman, the Vice Chairmen in the order designated, or in the absence of any designation, then in the order of their election) shall perform the duties of the Chairman of the Board and the President and when so acting shall have all the powers of and be subject to all the restrictions upon the Chairman of the Board and the President.

FURTHER RESOLVED, that any Vice Chairman may exercise any authority previously conferred by resolution of the Board of Directors of the Corporation upon any Senior Executive Vice President of the Corporation.

By-laws

Northern Trust Corporation

Chicago, Illinois

As Effective September 21, 1999

TABLE OF CONTENTS

ARTICLE I-THE STOCKHOLDERS
     SECTION 1.1.    Annual Meeting..........................................  1
     SECTION 1.2.    Special Meetings........................................  1
     SECTION 1.3.    Notice of Meetings......................................  1
     SECTION 1.4.    Fixing Date of Record...................................  1
     SECTION 1.5.    Inspectors of Election..................................  2
     SECTION 1.6.    Quorum..................................................  3
     SECTION 1.7.    Cumulative Voting Rights................................  3
     SECTION 1.8.    Proxies.................................................  3
     SECTION 1.9.    Voting by Ballot........................................  3
     SECTION 1.10.   Voting Lists............................................  3
     SECTION 1.11.   Place of Meeting........................................  4
     SECTION 1.12.   Voting of Shares of Certain Holders.....................  4
     SECTION 1.13.   Nature of Business at Annual Meeting of Stockholders....  4

ARTICLE II-THE BOARD OF DIRECTORS
     SECTION 2.1.    General Powers..........................................  6
     SECTION 2.2.    Number, Tenure and Qualifications.......................  6
     SECTION 2.3.    Regular Meetings........................................  6
     SECTION 2.4.    Special Meetings; Notice................................  6
     SECTION 2.5.    Time of Notice..........................................  6
     SECTION 2.6.    Quorum..................................................  6
     SECTION 2.7.    Manner of Acting........................................  7
     SECTION 2.8.    Directors' Compensation.................................  7
     SECTION 2.9.    Vacancies...............................................  7
     SECTION 2.10.   Consent in Lieu of Meeting..............................  7
     SECTION 2.11.   Nomination of Directors.................................  7

ARTICLE III-THE EXECUTIVE COMMITTEE
     SECTION 3.1.    Number, Tenure and Quorum...............................  8
     SECTION 3.2.    Powers..................................................  9
     SECTION 3.3.    Meetings................................................  9
     SECTION 3.4.    Records and Reports.....................................  9

ARTICLE IV-THE AUDIT COMMITTEE
     SECTION 4.1.    Functions...............................................  9
     SECTION 4.2.    Composition............................................. 10
     SECTION 4.3.    Procedures.............................................. 10
     SECTION 4.4.    Counsel................................................. 10

ARTICLE V-THE CORPORATE GOVERNANCE COMMITTEE
     SECTION 5.1.    The Corporate Governance Committee...................... 10

ARTICLE VI-THE COMPENSATION AND BENEFITS COMMITTEE
     SECTION 6.1.    The Compensation and Benefits Committee................. 11

ARTICLE VII-THE BUSINESS RISK COMMITTEE
     SECTION 7.1.    The Business Risk Committee............................. 11

ARTICLE VIII-THE BUSINESS STRATEGY COMMITTEE
     SECTION 8.1.    The Business Strategy Committee..........................12

ARTICLE IX-THE OFFICERS
     SECTION 9.1.    Number and Term of Office................................12
     SECTION 9.2.    Removal..................................................12
     SECTION 9.3.    The Chairman of the Board................................12
     SECTION 9.4.    The President............................................12
     SECTION 9.5.    The Chief Executive Officer..............................13
     SECTION 9.6.    The Vice Chairmen........................................13
     SECTION 9.7.    The Executive Vice Presidents............................13
     SECTION 9.8.    The Vice Presidents......................................13
     SECTION 9.9.    The Treasurer............................................14
     SECTION 9.10.   The Secretary............................................14
     SECTION 9.11.   Assistant Treasurers and Assistant Secretaries...........14
     SECTION 9.12.   Salaries.................................................14

ARTICLE X-CONTRACTS, LOANS, CHECKS AND DEPOSITS
     SECTION 10.1.   Contracts................................................14
     SECTION 10.2.   Loans....................................................14
     SECTION 10.3.   Checks, Drafts, etc......................................15
     SECTION 10.4.   Deposits.................................................15
     SECTION 10.5.   Power to Execute Proxies.................................15

ARTICLE XI-CERTIFICATES FOR SHARES AND THEIR TRANSFER
     SECTION 11.1.   Certificates for Shares..................................15
     SECTION 11.2.   Transfers of Shares......................................15

ARTICLE XII-FISCAL YEAR
     SECTION 12.1.   Fiscal Year..............................................16

ARTICLE XIII-SEAL
     SECTION 13.1.   Seal.....................................................16

ARTICLE XIV-WAIVER OF NOTICE
     SECTION 14.1.   Waiver of Notice.........................................16

ARTICLE XV-INDEMNIFICATION
     SECTION 15.1.   Indemnification Request..................................16
     SECTION 15.2.   Determination of Indemnification Request.................16
     SECTION 15.3.   Presumption of Entitlement; Conclusive Effect of
                     Findings of Fact and Law; Other Procedures...............17
     SECTION 15.4.   Cooperation and Expenses.................................17
     SECTION 15.5.   Selection of Independent Counsel.........................17
     SECTION 15.6.   Time for Determination...................................18
     SECTION 15.7.   Failure To Make Determination; Remedies For Enforcement..18
     SECTION 15.8.   Appeal of Adverse Determination..........................18
     SECTION 15.9.   Burden of Proof..........................................18
     SECTION 15.10.  Definition of "Disinterested Director."..................19
     SECTION 15.11.  Definition of "Change of Control.".......................19

ARTICLE XV-INDEMNIFICATION (Continued)
     SECTION 15.12.  Advancement of Expenses..................................19
     SECTION 15.13.  Personal Liability of Directors..........................20

ARTICLE XVI-AMENDMENTS
     SECTION 16.1.   Amendments...............................................20

iii

ARTICLE
I

By-laws
of
Northern Trust Corporation
Chicago, Illinois

ARTICLE I
THE STOCKHOLDERS

SECTION 1.1. Annual Meeting. The annual meeting of stockholders shall be held on such date and at such time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which meeting the stockholders shall elect directors, and transact such other business as may properly be brought before the meeting.

SECTION 1.3. Notice of Meetings. Unless a different manner of giving notice is prescribed by statute, written or printed notice stating the place, day, and hour of the meeting, and in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not more than 50 days nor less than 10 days (or less than 20 days if a merger or consolidation of the Corporation, or a sale, lease or exchange of all or substantially all of the Corporation's property or assets, is to be acted upon at the meeting) before the date of the meeting either personally or by mail, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail with postage thereon prepaid addressed to the stockholder at the stockholder's address as it appears on the records of the Corporation.

SECTION 1.4. Fixing Date of Record.

(a) In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than 60 nor less than 10 days (or less than 20 days if a merger or consolidation of the Corporation, or a sale, lease or exchange of all or substantially all of the Corporation's property or assets, is to be acted upon at the meeting) before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the next day preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to an adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

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(b) In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within 10 days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within 10 days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by the Restated Certificate of Incorporation of the Corporation or by statute, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered in the manner required by law to the Corporation at its registered office in the State of Delaware or at its principal place of business or to an officer or agent of the Corporation having custody of the book in which proceedings of meetings of the Corporation's stockholders are recorded. Delivery made to the Corporation's registered office shall be by hand delivery or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by the Restated Certificate of Incorporation or by statute, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.

(c) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall not be more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

(d) Only those who shall be stockholders of record on the record date so fixed as aforesaid shall be entitled to such notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend or other distribution, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding the transfer of any stock on the books of the Corporation after the applicable record date.

SECTION 1.5. Inspectors of Election. The Board of Directors or the Executive Committee of the Board of Directors of the Corporation shall appoint, in advance, one or more inspectors to act at each meeting of the stockholders of the

ARTICLE
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Corporation. If no inspector has been appointed or one or more have been appointed but are unable or fail to act, the presiding officer of any meeting of the stockholders shall appoint one or more persons as inspectors for such meeting. Such inspectors shall ascertain the number of shares of stock of the Corporation outstanding and entitled to vote at the meeting and the voting power of each share; determine and report the number of shares represented at the meeting, based upon their determination of the validity and effect of proxies and ballots; count all votes and ballots and report the results; and do such other acts as are required by law or are proper to conduct the election and voting with impartiality and fairness to all the stockholders. Each report of an inspector shall be in writing and signed by him or her or a majority of them if there is more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof. The inspector or inspectors may appoint or retain other persons or entities to assist in performing their duties.

SECTION 1.6. Quorum. The holders of a majority of the outstanding shares of capital stock entitled to vote at the meeting, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the presiding officer at the meeting or the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed.

SECTION 1.7. Cumulative Voting Rights. At all elections of Directors of the Corporation, each stockholder entitled generally to vote for the election of Directors shall be entitled to as many votes as shall equal the number of votes which (except for this provision as to cumulative voting) the stockholder would be entitled to cast for the election of Directors with respect to the stockholder's shares of stock multiplied by the number of Directors to be elected, and the stockholder may cast all of such votes for a single Director or may distribute them among the number to be voted for, or for any two or more of them as the stockholder may see fit.

SECTION 1.8. Proxies. At all meetings of stockholders, a stockholder entitled to vote may vote either in person or by proxy executed in writing by the stockholder or by the stockholder's duly authorized attorney-in-fact. Such proxy shall be filed with the Secretary before or at the time of the meeting. No proxy shall be valid after 11 months from the date of its execution, unless otherwise provided in the proxy.

SECTION 1.9. Voting by Ballot. Voting in any election for Directors shall be by ballot.

SECTION 1.10. Voting Lists. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least 10 days before every meeting of

ARTICLE
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stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

SECTION 1.11. Place of Meeting. The Board of Directors may designate any place, either within or without the State of Delaware, as the place of meeting for any annual meeting or any special meeting called by the Board of Directors. If no designation is made, or if a special meeting is otherwise called, the place of meeting shall be the principal office of the Corporation in the City of Chicago.

SECTION 1.12. Voting of Shares of Certain Holders. Shares of capital stock of the Corporation standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent, or proxy as the by-laws of such corporation may prescribe, or, in the absence of such provision, as the Board of Directors of such corporation may determine.

Shares of capital stock of the Corporation standing in the name of a deceased person, a minor ward or an incompetent person, may be voted by his or her administrator, executor, court appointed guardian or conservator, either in person or by proxy without a transfer of such shares into the name of such administrator, executor, court appointed guardian or conservator. Shares of capital stock of the Corporation standing in the name of a trustee may be voted by the trustee, either in person or by proxy.

Shares of capital stock of the Corporation standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into the receiver's name if authority so to do be contained in an appropriate order of the court by which such receiver was appointed.

A stockholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred.

Shares of its own capital stock belonging to this Corporation shall not be voted, directly or indirectly, at any meeting and shall not be counted in determining the total number of outstanding shares at any given time, but shares of its own stock held by it in a fiduciary capacity may be voted and shall be counted in determining the total number of outstanding shares at any given time.

SECTION 1.13. Nature of Business at Annual Meeting of Stockholders. No business may be transacted at an annual meeting of stockholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto)

ARTICLE
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given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (c) otherwise properly brought before the annual meeting by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 1.13 and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this
Section 1.13.

In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than ninety (90) days nor more than one-hundred twenty (120) days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs.

To be in proper written form, a stockholder's notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of such stockholder, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

No business shall be conducted at the annual meeting of stockholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 1.13, provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 1.13 shall be deemed to preclude discussion by any stockholder of any such business. If the Chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

ARTICLE II
THE BOARD OF DIRECTORS

SECTION 2.1. General Powers. The business and affairs of the Corporation shall be managed by or under the direction of its Board of Directors.

SECTION 2.2. Number, Tenure and Qualifications. The Board of Directors of the Corporation shall consist of such number of Directors, not less than five nor more than 25, as shall be fixed from time to time by the Board of Directors. Each Director shall hold office until the next annual meeting of stockholders or until a successor is elected.

SECTION 2.3. Regular Meetings. A regular meeting of the Board of Directors shall be held at least once each quarter at such place, date and hour as the Board may appoint. Notice of each regular meeting, unless waived, shall be given in the same manner as is provided for notice of a special meeting.

Notice of the place, date, and hour of each special meeting, unless waived, shall be given to each Director either by mail not less than forty-eight (48) hours before the date of the meeting, by telephone, facsimile or telegram on twenty-four (24) hours' notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. Such notice may be given by the Secretary or by the officer or Directors calling the meeting.

SECTION 2.5. Time of Notice. If notice to a Director is given:

(a) in person, such notice shall be deemed to have been given when delivered;

(b) by mail, such notice shall be deemed to have been given when deposited in the United States mail, postage prepaid, addressed to the Director at such address as appears on the records of the Corporation for such Director;

(c) by telegram, cable or other similar means (not including mail) that provide written notice, such notice shall be deemed to have been given when delivered to any transmission company, with charges prepaid, addressed to the Director at such address as appears on the records of the Corporation for such Director; or

(d) by facsimile or by telephone, wireless or other means of voice transmission, such notice shall be deemed to have been given when transmitted to such number or call designation as appears on the records of the Corporation for such Director.

Any meeting of the Board of Directors shall be a legal meeting without any notice having been given if all the Directors are present at the meeting, and no notice of a meeting shall be required to be given to any Director who attends such meetings.

SECTION 2.6. Quorum. A majority of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, provided that if less than a majority of the Directors are present at said meeting, a

ARTICLE
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majority of the Directors present may adjourn the meeting from time to time without further notice.

SECTION 2.7. Manner of Acting. The act of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, except on additions, amendments, repeal or any changes whatsoever in the By-laws or the adoption of new By-laws, when the affirmative votes of at least a majority of the members of the Board shall be necessary for the adoption of such changes.

A director may participate in a meeting of the Board of Directors or any committee thereof by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at such meetings.

SECTION 2.8. Directors' Compensation. The Directors shall receive such compensation as may be fixed by the Board for services to the Corporation.

SECTION 2.9. Vacancies. If vacancies occur in the Board of Directors caused by death, resignation, retirement, disqualification or removal from office of any Director or Directors, or otherwise, or if any new Directorship is created by any increase in the authorized number of Directors, a majority of the surviving or remaining Directors then in office, though less than a quorum, may choose a successor or successors, or fill the newly created Directorship, and the Directors so chosen shall hold office until the next annual meeting of stockholders or until their successors are elected.

SECTION 2.10. Consent in Lieu of Meeting. Unless otherwise restricted by the Restated Certificate of Incorporation or these By-laws, any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting if all members of the Board or committee thereof, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of the proceedings of the Board or committee.

SECTION 2.11. Nomination of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be otherwise provided in the Restated Certificate of Incorporation with respect to the right of holders of preferred stock of the Corporation to nominate and elect a specified number of directors in certain circumstances. Nominations of persons for election to the Board of Directors may be made at any annual meeting of stockholders (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.11 and on the record date for the determination of stockholders entitled to vote at such meeting and (ii) who complies with the notice procedures set forth in this Section 2.11.

In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less

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than ninety (90) days nor more than one-hundred twenty (120) days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs.

To be in proper written form, a stockholder's notice to the Secretary must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by the person and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.

No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section
2.11. If the Chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.

ARTICLE III
THE EXECUTIVE COMMITTEE

SECTION 3.1. Number, Tenure and Quorum. The Directors shall each year appoint no less than five Directors, one of whom shall be the Chairman of the Board and one of whom shall be the President if the President is designated the Chief Executive Officer, who shall constitute and be called the Executive Committee. Each

ARTICLE III

Director so appointed shall act as a member of the Committee until another is appointed and acts in the Director's place. The Chairman of the Board shall preside at meetings of the Committee. In the absence or disqualification of a member of the Committee, the members thereof present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. In the absence or inability to act of the Chairman of the Board, or upon the request of the Chairman, the President, if the President is a member of the Committee, or a member elected by the Committee shall preside at meetings of the Committee.

A majority of the members of the Executive Committee shall constitute a quorum for the transaction of business.

SECTION 3.2. Powers. The Executive Committee may, while the Board of Directors is not in session, exercise all or any of the powers of the Board of Directors; except that the Executive Committee shall not have the power or authority of the Board of Directors in reference to amending the Restated Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the By-laws of the Corporation, or declaring a dividend or authorizing the issuance of stock.

SECTION 3.3. Meetings. Meetings of the Executive Committee shall be held at the office of the Corporation, or elsewhere, and at such time as they may appoint, but the Committee shall at all times be subject to the call of the Chairman of the Board or any member of the Committee.

SECTION 3.4. Records and Reports. The Executive Committee, through the Secretary or any Assistant Secretary, shall keep books of separate minutes and report all its action at every regular meeting of the Board of Directors, or as often as may be required by the Board.

ARTICLE IV

THE AUDIT COMMITTEE

SECTION 4.1. Functions. An Audit Committee shall be appointed each year by the Board of Directors. The Committee shall perform the following functions for the Corporation and its subsidiaries on a consolidated basis and for such individual banking subsidiaries as the Board shall direct:

(a) Reviewing with management and the independent public accountant the reports issued with respect to the annual financial statements, the internal control structure and procedures for financial reporting and compliance with laws and regulations and the basis for such reports.

(b) Reviewing with management and the independent public accountant the scope of services required by the annual audit, significant accounting policies, and audit conclusions regarding significant accounting estimates.

ARTICLE IV

(c) Reviewing with management and the independent public accountant their assessments of the adequacy of internal controls, and the resolution of identified material weaknesses and reportable conditions in internal controls over financial reporting, including the prevention or detection of management override or compromise of the internal control system.

(d) Reviewing with management and the independent public accountant compliance with those laws and regulations with respect to which management and the independent public accountant are required to report.

(e) Discussing with management the selection and termination of the independent public accountant and any significant disagreements between the independent public accountant and management.

(f) Reviewing the internal audit program and results of examinations.

(g) Reviewing the program of the Chief Compliance Officer and the compliance function generally.

(h) Reviewing the results of regulatory examinations.

(i) Reviewing such other matters as the Committee deems appropriate.

SECTION 4.2. Composition. The Committee shall consist of no less than four Directors. All of the members of the Committee shall, in the judgment of the Board of Directors, be independent of management of the Corporation and its subsidiaries and shall meet other applicable regulatory requirements.

SECTION 4.3. Procedures. The Committee shall be appointed annually at the organization meeting of the Board of Directors and at the same time a Chairman shall be appointed. The Committee shall meet upon the call of the Chairman or any member of the Committee, and a majority of the Committee's members shall constitute a quorum. In the absence or disqualification of a member of the Committee, the members thereof present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another qualified member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

SECTION 4.4. Counsel. The Committee may, in order to assist it in the performance of its functions, engage counsel of its choosing without the approval of the engagement by the Board of Directors or management and may direct the proper officers of the Corporation to pay the reasonable fees and expenses of any such counsel.

ARTICLE V

THE CORPORATE GOVERNANCE COMMITTEE

SECTION 5.1. The Corporate Governance Committee. A Corporate Governance Committee and its Chairman shall be appointed each year by the Board of Directors to review and advise the Board of Directors with respect to the structure and functioning of the Board and its interaction with the Corporation's management and stockholders; review and advise the Board of Directors with respect to the struc-

ARTICLE
V

ture and membership of its Committees; and to receive recommendations for, and to review, study and evaluate the qualifications of all candidates for senior management succession and for nomination to the Board of Directors. The Committee shall report to the Board its conclusions with respect to such candidates and its recommendations for nominees for election or reelection or appointment to fill vacancies in the Board and as officers of the Corporation. The Committee shall consist of no less than four Directors, a majority of whom shall constitute a quorum, and shall meet upon the call of its Chairman or any member of the Committee. In the absence or disqualification of a member of the Committee, the members thereof present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

ARTICLE VI

THE COMPENSATION AND BENEFITS COMMITTEE

SECTION 6.1. The Compensation and Benefits Committee. A Compensation and Benefits Committee and its Chairman shall be appointed each year by the Board of Directors to study, review and make recommendations to the Board with respect to the salary policy for the Corporation, the compensation of senior officers and the development of and amendment to incentive and benefit plans. The Committee shall consist of no less than three Directors, none of whom shall be an active officer of the Corporation. The Committee shall meet upon the call of the Chairman or any member of the Committee, and a majority of the Committee's members shall constitute a quorum. In the absence or disqualification of a member of the Committee, the members thereof present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

ARTICLE VII

THE BUSINESS RISK COMMITTEE

SECTION 7.1. The Business Risk Committee. A Business Risk Committee and its Chairman shall be appointed to review with management risks inherent in the businesses of the Corporation and its subsidiaries involving the extension of credit, the management of assets and liabilities, the provision of fiduciary services and the control processes with respect to these risks, including matters related to credit risk, market and liquidity risk and fiduciary risk and such other related matters as may from time to time be deemed appropriate by the Committee. The Committee shall consist of no less than four Directors, a majority of whom shall not be active officers of the Corporation. The Committee shall meet upon the call of the Chairman or any member of the Committee, and a majority of the Committee's members shall constitute a quorum. In the absence or disqualification of a member of the Committee, the members thereof present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

ARTICLE VIII

THE BUSINESS STRATEGY COMMITTEE

SECTION 8.1. The Business Strategy Committee. A Business Strategy Committee and its Chairman shall be appointed each year by the Board of Directors to review the policies, strategies and performance of the various business units of the Corporation and such other related matters as may from time to time be deemed appropriate by the Committee. The Committee shall consist of no less than four Directors, a majority of whom shall not be active officers of the Corporation. The Committee shall meet upon the call of the Chairman or any member of the Committee, and a majority of the Committee's members shall constitute a quorum. In the absence or disqualification of a member of the Committee, the members thereof present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

ARTICLE IX

THE OFFICERS

SECTION 9.1. Number and Term of Office. The officers of the Corporation shall be a Chairman of the Board and a President, one of whom shall be designated Chief Executive Officer by the Board of Directors, and may also include one or more Vice Chairmen, one or more Executive Vice Presidents (any of whom may be designated a Senior Executive Vice President), such additional Vice Presidents with such designations, if any, as may be determined by the Board of Directors, a Secretary and a Treasurer and one or more Assistant Secretaries and Assistant Treasurers as may be determined by the Board of Directors, and such other officers as may from time to time be appointed by the Board of Directors. Any two or more offices may be held by the same person. The Chairman of the Board and the President shall be elected from among the Directors; the other officers may be appointed by the Board of Directors.

SECTION 9.2. Removal. An officer may be removed by the Board of Directors whenever in its judgment the best interests of the Corporation would be served thereby.

SECTION 9.3. The Chairman of the Board. The Chairman of the Board shall have such powers as are vested in him or her by the Board of Directors, by law or by these By-laws. The Chairman shall preside at the meetings of the stockholders, of the Board of Directors, and of the Executive Committee.

SECTION 9.4. The President. The President shall have the powers and duties vested in him or her by the Board of Directors, by law or by these By-laws. In the

ARTICLE
IX

absence or inability to act of the Chairman of the Board, or upon the request of the Chairman of the Board, the President shall preside at meetings of the stockholders and of the Board of Directors and shall have and exercise all of the powers and duties of the Chairman of the Board.

SECTION 9.5. The Chief Executive Officer. The Chief Executive Officer of the Corporation shall have, subject to the supervision and direction of the Board of Directors or of the Executive Committee, general supervision of the business, property and affairs of the Corporation and the powers vested in him or her by the Board of Directors, by law or by these By-laws or which usually attach or pertain to such office. Except in those instances in which the authority to execute is expressly delegated to another officer or agent of the Corporation or a different mode of execution is expressly prescribed by the Board of Directors, the Chief Executive Officer may execute for the Corporation any contracts, deeds, mortgages, bonds, or other instruments which the Board of Directors has authorized, and the Chief Executive Officer may (without previous authorization by the Board of Directors) execute such contracts and other instruments as the conduct of the Corporation's business in its ordinary course requires.

SECTION 9.7. The Executive Vice Presidents. In the absence of the Chairman of the Board, the President and the Vice Chairmen or in the event of their inability or refusal to act, the Executive Vice President (or in the event there be more than one Executive Vice President, the Executive Vice Presidents in the order designated, or in the absence of any designation, then in the order of their election) shall perform the duties of the Chairman of the Board, of the President, and of the Vice Chairmen and when so acting, shall have all the powers of and be subject to all the restrictions upon the Chairman of the Board, the President and the Vice Chairmen. Any Executive Vice President may sign, with the Secretary or any Assistant Secretary, certificates for shares of the Corporation; and shall perform such other duties as from time to time may be assigned to him or her by the Chairman of the Board, the President, a Vice Chairman, the Board of Directors, or these By-laws.

SECTION 9.8. The Vice Presidents. The Vice Presidents shall perform such duties as may be assigned to them from time to time by the Chairman of the Board, the President, the Vice Chairmen, or the Board of Directors, or these By-laws. Any Vice President may sign, with the Secretary or an Assistant Secretary, certificates for shares of the Corporation.

ARTICLE
IX

SECTION 9.9. The Treasurer. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his or her duties in such sum and with such surety or sureties as the Board of Directors shall determine. The Treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the Corporation; receive and give receipts for moneys due and payable to the Corporation from any source whatsoever, and deposit all such moneys in the name of the Corporation in such banks, trust companies or other depositaries as shall be selected in accordance with the provisions of Article X of these By-laws; (b) in general perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him or her by the Chairman of the Board, the President, a Vice Chairman, the Board of Directors, or these By-laws.

SECTION 9.10. The Secretary. The Secretary shall have the custody of the corporate seal and the Secretary or any Assistant Secretary shall affix the same to all instruments or papers requiring the seal of the Corporation. The Secretary, or in his or her absence, any Assistant Secretary, shall see that proper notices are sent of the meetings of the stockholders, the Board of Directors and the Executive Committee, and shall see that all proper notices are given, as required by these By-laws. The Secretary or any Assistant Secretary shall keep the minutes of all meetings of stockholders and Directors and all committees which may request their services.

SECTION 9.11. Assistant Treasurers and Assistant Secretaries. The Assistant Treasurers shall respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries as thereunto authorized by the Board of Directors may sign with the Chairman of the Board, the President, a Vice Chairman, or an Executive Vice President certificates for shares of the Corporation, the issue of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers and Assistant Secretaries, in general, shall perform such duties as shall be assigned to them by the Treasurer or the Secretary, respectively, or by the Chairman of the Board, the President, a Vice Chairman, the Board of Directors, or these By-laws.

SECTION 9.12. Salaries. The salaries of the officers shall be fixed from time to time by the Board of Directors and no officer shall be prevented from receiving such salary by reason of the fact that the officer is also a director of the Corporation.

ARTICLE X

CONTRACTS, LOANS, CHECKS AND DEPOSITS

SECTION 10.1. Contracts. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances.

SECTION 10.2. Loans. No loans shall be contracted on behalf of the Corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances.

ARTICLE
X

SECTION 10.3. Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation, shall be signed by such officer or officers, agent or agents of the Corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors.

SECTION 10.4. Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositaries as the Board of Directors may select.

SECTION 10.5. Power to Execute Proxies. The Chairman of the Board, the President, a Vice Chairman, or any Executive Vice President may execute proxies on behalf of the Corporation with respect to the voting of any shares of stock owned by the Corporation.

ARTICLE XI

CERTIFICATES FOR SHARES AND THEIR TRANSFER

SECTION 11.1. Certificates for Shares. Certificates representing shares of the Corporation shall be in such form as may be determined by the Board of Directors. Such certificates shall be signed by the Chairman of the Board, the President, a Vice Chairman, an Executive Vice President or a Vice President and by the Secretary or an Assistant Secretary and shall be sealed with the seal of the Corporation. The seal may be a facsimile. If a stock certificate is countersigned (i) by a transfer agent other than the Corporation or its employee, or (ii) by a registrar other than the Corporation or its employee, any other signature on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue. All certificates for shares shall be consecutively numbered or otherwise identified. The name of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the books of the Corporation.

All certificates surrendered to the Corporation for transfer shall be cancelled and no new certificates shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except that in case of a lost, destroyed or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the Corporation as the Board of Directors may prescribe.

SECTION 11.2. Transfers of Shares. Transfers of shares of the Corporation shall be made only on the books of the Corporation by the holder of record thereof or by the holder's legal representative, who shall furnish proper evidence of authority to transfer, or by the holder's attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the Corporation, and on surrender for cancellation of the certificate for such shares. The person in whose name shares stand on the books of the Corporation shall be deemed the owner thereof for all purposes as regards the Corporation.

ARTICLE XII

FISCAL YEAR

SECTION 12.1. Fiscal Year. The fiscal year of the Corporation shall begin on the first day of January in each year and end on the last day of December in each year.

ARTICLE XIII

SEAL

SECTION 13.1. Seal. The Board of Directors shall provide a corporate seal which shall be in the form of a circle and shall have inscribed thereon the name of the Corporation.

ARTICLE XIV

WAIVER OF NOTICE

SECTION 14.1. Waiver of Notice. Whenever any notice whatever is required to be given under the provisions of these By-laws or under the provisions of the Restated Certificate of Incorporation or under the provisions of the General Corporation Law of Delaware, waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Attendance of any person at a meeting for which any notice whatever is required to be given under the provisions of these By-laws, the Restated Certificate of Incorporation or the General Corporation Law of Delaware shall constitute a waiver of notice of such meeting, except when the person attends for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

ARTICLE XV

INDEMNIFICATION

SECTION 15.1. Indemnification Request. A director, officer or other person (the "Indemnitee") who seeks indemnification (other than advancement of expenses pursuant to Section 15.12 hereof), in respect of amounts paid or owing as expenses, judgments, fines, or in settlement, shall submit a written request for indemnification (the "Indemnification Request") to the Board of Directors of the Corporation by delivering or mailing the same, registered or certified mail, to the Board of Directors c/o the Secretary of the Corporation at the Corporation's principal executive offices. If mailed, the Indemnification Request shall be deemed made 48 hours after depositing the same in the United States mail addressed as aforesaid.

SECTION 15.2. Determination of Indemnification Request. The determination of the Indemnitee's entitlement to indemnification as set forth in the Indemnification Request shall be made in the specific case, at the expense of the Corporation, as set forth in paragraph 5 of Article Eighth of the Restated Certificate of Incorporation. However, in the event a Change of Control (as hereinafter defined) shall have occurred, such determination shall be made by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the Indemnitee.

ARTICLE
XV

SECTION 15.3. Presumption of Entitlement; Conclusive Effect of Findings of Fact and Law; Other Procedures. The termination with respect to the Indemnitee of any action, suit or proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not of itself adversely affect the right of the Indemnitee to indemnification or create a presumption that the Indemnitee did not meet the standard of conduct required by Article Eighth of the Restated Certificate of Incorporation for indemnification. If the Indemnitee is a person referred to in paragraphs 1, 2 or 3 Article Eighth of the Restated Certificate of Incorporation, the Indemnitee shall be presumed to have met the required standard of conduct but only to the extent not contrary to any final findings of fact or law made in any action, suit or proceeding to which the Indemnitee is or was a party and for which indemnification is requested. The person, persons or entity making the determination of the Indemnitee's entitlement to indemnification shall be entitled to rely upon all such findings of fact and law made known to such person, persons or entity. Such person, persons or entity may consider such other matters as they or it deem appropriate, shall not be required to receive or hear evidence, oral presentations, briefs or other submission, shall not be required to hold hearings, and shall not otherwise be subject to any rules of evidence or procedure applicable to judicial or other proceedings.

SECTION 15.4. Cooperation and Expenses. The Indemnitee shall cooperate with the person, persons or entity making the determination with respect to the Indemnitee's entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request, any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to the Indemnitee and reasonably necessary to such determination. Any costs or expenses (including attorney's fees and disbursements) reasonably incurred by the Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Corporation irrespective of the determination as to the Indemnitee's entitlement to indemnification.

SECTION 15.5. Selection of Independent Counsel. If a determination of the Indemnitee's entitlement to indemnification is to be made by Independent Counsel, the Independent Counsel shall be selected as provided in this Section
15.5. If a Change of Control shall not have occurred, Independent Counsel shall be selected by a majority vote of a quorum of the Board of Directors consisting of Disinterested Directors. If a Change of Control shall have occurred, or if a quorum shall decline or fail to select Independent Counsel within five business days after having directed, pursuant to paragraph 5(b) of Article Eighth of the Restated Certificate of Incorporation, the determination of the Indemnitee's entitlement to indemnification to be submitted to Independent Counsel, then Independent Counsel shall be selected by the law firm regularly or most frequently engaged by the Corporation during the preceding three years for representation or counseling in connection with general corporate matters. In any event, Independent Counsel shall be selected from among those Chicago, Illinois, or Delaware law firms having a significant and continuous practice in the field of corporate law but excluding any firm that: (i) has, within the preceding three years represented the Corporation, the Indemnitee or affiliates of

ARTICLE
XV

either in any significant matter; (ii) has, within the preceding three years, represented any other party in any significant judicial or other proceeding against or in opposition to the Corporation, the Indemnitee or any affiliate of either; (iii) had any involvement of any significant nature in or with respect to the claim for which indemnification is requested; or (iv) has any other material conflict of interest in being engaged as Independent Counsel.

SECTION 15.6. Time for Determination. The determination of the Indemnitee's entitlement to indemnification shall be made within 60 days after such Indemnitee shall have submitted all such additional information, if any, as shall have been reasonably requested during the 30-day period following the initial submission of the Indemnification Request to the Board of Directors pursuant to Section 15.1 hereof. The foregoing notwithstanding, in the event that the claim with respect to which indemnification is requested is the subject of a judicial, government or other proceeding, the Board of Directors, stock holders or Independent Counsel, as the case may be, may defer their determination until 60 days after any such proceeding shall have been finally adjudicated or terminated (by settlement or otherwise) and all periods for appeal, rehearing or reinstitution of such proceeding (whether in a different forum or otherwise) have expired.

SECTION 15.7. Failure To Make Determination; Remedies For Enforcement. If a determination of the Indemnitee's entitlement to indemnification shall not be made within the period specified in these By-laws, unless due to a material failure of the Indemnitee to comply with his or her obligations under Section 15.4 hereof, then the Indemnitee shall be entitled to indemnification to the extent and in the manner set forth in the Indemnification Request. The Indemnitee may only enforce his or her rights to indemnification, whether pursuant to a determination that the Indemnitee is entitled to indemnification or pursuant to this Section 15.7, in any judicial proceeding brought, at the election of the Indemnitee, in any court having jurisdiction within the State of Delaware, the State of Illinois, or the state in which the Corporation shall then have its principal executive offices. The Indemnitee shall be entitled to all expenses actually and reasonably incurred by him or her in connection with the successful enforcement of the Indemnitee's right to indemnification.

SECTION 15.8. Appeal of Adverse Determination. In the event that a determination shall be made that the Indemnitee is not entitled to indemnification, in whole or in part, the Indemnitee may only institute an action in any court having jurisdiction within the State of Delaware, the State of Illinois, or the state in which the Corporation shall have its principal executive offices to establish the Indemnitee's right to indemnification. Any such proceeding shall be conducted in all respects as a de novo determination on the merits and any such prior determination made pursuant to these By-laws that the Indemnitee is not entitled to indemnification shall not constitute a presumption that the Indemnitee is not entitled to indemnification.

SECTION 15.9. Burden of Proof. In any judicial proceeding regarding the Indemnitee's right or entitlement to indemnification or advancement of expenses, the Corporation shall have the burden of proving that any Indemnitee who is a person referred to in paragraphs 1, 2 or 3 of Article Eighth of the Restated Certificate of

ARTICLE XV

Incorporation is not entitled to indemnification or advancement of expenses as the case may be, subject, however, to principles of res judicata and collateral estoppel relating to prior judicial proceedings to which the Indemnitee is or was a party. In cases in which the Indemnitee is not a person referred to in paragraphs 1, 2 or 3 of Article Eighth of the Restated Certificate of Incorporation, the Indemnitee shall have the burden of proving he or she is entitled to indemnification or the advancement of expenses.

SECTION 15.10. Definition of "Disinterested Director." A Disinterested Director shall mean any director who: (i) was not a party to the claim or proceeding with respect to which indemnification is requested; (ii) has not submitted an Indemnification Request or a request for advancement of expenses on his or her own behalf that has not been finally resolved; or (iii) does not have any direct and material financial or other personal interest in the determination of the Indemnification Request.

SECTION 15.11. Definition of "Change of Control." A Change of Control shall be deemed to have occurred on the earliest of:

(a) The receipt by the Corporation of a Schedule 13D or other statement filed under Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), indicating that any entity, person, or group has acquired beneficial ownership, as that term is defined in Rule 13d-3 under the Exchange Act, of more than 30% of the outstanding capital stock of the Corporation entitled to vote for the election of directors ("voting stock");

(b) The commencement by an entity, person, or group (other than the Corporation or a subsidiary of the Corporation) of a tender offer or an exchange offer for more than 20% of the outstanding voting stock of the Corporation;

(c) The effective time of (i) a merger or consolidation of the Corporation with one or more other corporations as a result of which the holders of the outstanding voting stock of the Corporation immediately prior to such merger or consolidation hold less than 80% of the voting stock of the surviving or resulting corporation, or (ii) a transfer of substantially all of the property of the Corporation other than to an entity of which the Corporation owns at least 80% of the voting stock; or

(d) The election to the Board of Directors of the Corporation, without the recommendation or approval of the incumbent Board of Directors of the Corporation, of the lesser of (i) three directors or (ii) directors constituting a majority of the number of directors of the Corporation then in office.

SECTION 15.12. Advancement of Expenses. Expenses as may be incurred by a person referred to in paragraphs 1, 2 or 3 of Article Eighth of the Restated Certificate of Incorporation in defending a civil or criminal action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized in such Article Eighth. Such expenses as may be incurred by other employees and agents may be so paid on such terms and conditions, if any, as the Board of Directors deems appropriate. For purposes of the

ARTICLE XV

foregoing, a determination that a person referred to in paragraphs 1, 2 or 3 of Article Eighth of the Restated Certificate of Incorporation is not entitled to be indemnified by the Corporation shall be made in the manner hereinbefore provided for the determination of an Indemnification Request; provided, however, that the Board of Directors may initiate such determination whenever it shall deem the same to be appropriate. In connection with such determination, such person shall be subject to all requirements of these By-laws imposed on an "Idemnitee" in respect of a determination made pursuant to Section 15.2 hereof.

SECTION 15.13. Personal Liability of Directors. No director of the Corporation shall be personally liable to any person seeking indemnification or advancement of expenses for any determination, act or omission in connection therewith.

ARTICLE XVI
AMENDMENTS

SECTION 16.1. Amendments. These By-laws may be altered, amended or repealed and new By-laws may be adopted at any meeting of the Board of Directors of the Corporation by the affirmative vote of a majority of the members of the Board. These By-laws may also be amended or repealed, or new By-laws may be adopted, by action taken by the stockholders of the Corporation.

STATE OF ILLINOIS)

ss.

COUNTY OF COOK)

____________________________________, being duly sworn states that he or she is an Assistant Secretary of Northern Trust Corporation, that he or she is the keeper of its records and seal, that he or she certifies that he or she has compared the foregoing copy with the By-laws of Northern Trust Corporation now in force, as they appear in the record books of said Corporation in his or her custody, and that the same is a complete, true and exact copy of said By-laws.

IN WITNESS WHEREOF ___________________ has hereunto set his or her hand and seal of said The Northern Trust Company this ____________ day of ___________________, ______.

Assistant Secretary

Subscribed and sworn to before me this _____ day of ____________, ______

Notary Public

Exhibit (10)(i)

AMENDMENT OF
THE TERM LOAN AGREEMENT

THIS AMENDMENT OF THE TERM LOAN AGREEMENT (the "Amendment") dated as of
June 30, 1999 between (i) the NORTHERN TRUST EMPLOYEE STOCK OWNERSHIP TRUST (the "Issuer"), a trust (the "Trust") established under a trust agreement dated January 26, 1989 as amended between The Northern Trust Company (the "Company") and U.S. Trust Company of California, N.A., as successor trustee (the "Trustee") to implement and form a part of the NORTHERN TRUST EMPLOYEE STOCK OWNERSHIP PLAN (the "Plan"), and (ii) NORTHERN TRUST CORPORATION, a Delaware corporation (the "Lender").

W I T N E S S E T H:

WHEREAS, the Lender and the Issuer entered into the Term Loan Agreement dated June 28, 1996 (the "Term Loan Agreement"); and

WHEREAS, pursuant to the terms and conditions of the Term Loan Agreement the Lender agreed to lend to the Issuer, and the Issuer agreed to borrow from the Lender, the New Loans (as defined in the Term Loan Agreement); and

WHEREAS, the Issuer is obligated to repay the outstanding principal amount of the New Loans, plus accrued interest in accordance with the payment terms and on the dates provided in Schedule II to the Term Loan Agreement; and

WHEREAS, the Schedule II to the Term Loan Agreement currently provides that the Issuer will make semi-annual payments of principal and accrued interest on the New Loans commencing on June 30, 1999 and continuing through December 31, 2001; and

WHEREAS, in order to simplify the administration of the Plan and to comply with certain requirements imposed by the U.K. Inland Revenue Service, the Lender and the Issuer have agreed to amend of the Term Loan Agreement to provide for annual repayments of principal and accrued interest on the New Loans.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, the parties hereto intending legally to be bound do hereby agree as follows:

1. Effective as of June 30, 1999, Schedule II to the Term Loan Agreement is hereby amended as follows:

INSTALLMENTS

New Loan Due Date          Amount
-----------------          ------
December 31, 1999        $4,564,388
December 29, 2000        $4,917,858
December 31, 2001        $5,286,179

2. Effective as of June 30, 1999, the second sentence of Section II 5 of the Term Loan Agreement is hereby amended as follows:

"Prior to maturity, interest shall be payable annually on December 31 in each year, commencing December 31, 1999, and at maturity."

3. Effective as of June 30, 1999, the first sentence of the second paragraph of the Note issued pursuant to the Term Loan Agreement is hereby amended as follows:

"The Issuer further promises to pay interest on the principal amount from time to time remaining unpaid hereon at the rate of 7.52% per annum from the date hereof until maturity, payable annually on December 31 in each year, commencing December 31, 1999, and at maturity."

4. The Trustee on behalf of the Issuer hereby agrees to inscribe a legend on the Note providing that the Note is subject to this Amendment of the Term Loan Agreement.

5. With the exception of the amendment of Schedule II, all other provisions of the Term Loan Agreement and the Note are incorporated herein by reference without any change or modification.

6. All capitalized terms not otherwise defined herein shall have the meaning attributed to them in the Term Loan Agreement.

7. This Amendment may be executed in any number of and by different parties hereto on separate counterparts, all of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same Amendment. Any signature delivered by a party by facsimile transmission shall be deemed to be an original signature hereto.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties have caused this Amendment of the Term Loan Agreement to be duly executed and delivered by their respective representatives thereunto duly authorized as the date first hereinbefore appearing.

NORTHERN TRUST EMPLOYEE
STOCK OWNERSHIP TRUST

By: U.S. Trust Company of California,
N.A., not individually, but solely
as Trustee of the Northern Trust
Employee Stock Ownership Trust

/s/ Dennis Kunisaki
    -------------------------

Its: Senior Vice President
     ------------------------

NORTHERN TRUST CORPORATION

By: /s/ Perry R. Pero
    -----------------------------

Its: Senior Executive Vice President

     ----------------------------------

Exhibit (10) (ii)

RESTATED NORTHERN TRUST CORPORATION
SUPPLEMENTAL EMPLOYEE STOCK OWNERSHIP PLAN

The Supplemental Employee Stock Ownership Plan for Employees of The Northern Trust Company (the "Plan"), was initially adopted effective September 1, 1989, restated effective September 1, 1989, again restated effective February 19, 1991 and further amended and restated effective January 1, 1996 and May 1, 1996 (the "Restated Supplemental ESOP"). Effective as of July 20, 1999, the assets and obligations of the Restated Supplemental ESOP were transferred by The Northern Trust Company to its parent corporation, Northern Trust Corporation and from and after such date the Northern Trust Corporation became the sponsor of the Restated Supplemental Employee Stock Ownership Plan. The Northern Trust Company now desires to further amend and restate the Restated Supplemental ESOP to reflect the transfer of the assets and obligations thereof to Northern Trust Corporation and certain other changes.

Accordingly, effective July 20, 1999, The Northern Trust Company hereby further amends and restates the Restated Supplemental ESOP, which shall now be designated as the "Northern Trust Corporation Supplemental Employee Stock Ownership Plan," pursuant to the terms and provisions set forth below:

ARTICLE I
DEFINITIONS

Wherever used herein the following terms shall have the meanings hereinafter set forth:

1.1 "Beneficiary" means any person eligible to receive a death benefit under the Plan as designated by the Participant, in the event of death of the Participant.

1.2 "Board" means the Board of Directors of the Corporation.

1.3 "Change-in-Control" means the earliest to occur of:

(b) The commencement by any entity, person, or group (other than the Corporation or a subsidiary of the Corporation) of a tender offer or an exchange offer for more than 20% of the outstanding voting stock of the Corporation;

(c) The effective time of (i) a merger or consolidation of the Corporation with one or more other corporations as a result of which the holders of the outstanding voting stock of the Corporation immediately prior to such merger or consolidation hold less than 60% of the voting stock of the surviving or resulting corporation, or (ii) a transfer of substantially all of the property of the Corporation other than to an entity of which the Corporation owns at least 80% of the voting stock; or

(d) The election to the Board, without the recommendation or approval of the incumbent Board, of the lesser of (i) three directors or (ii) directors constituting a majority of the number of directors of the Corporation then in office.

1.4 "Code" means the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder.

1.5 "Committee" means the Employee Benefit Administrative Committee of the Company, as constituted from time to time, which has the responsibility for administering the Qualified Plan.

1.6 "Company" means The Northern Trust Company, an Illinois banking corporation, and such of its subsidiaries and affiliates of the Corporation as shall, with the consent of the Board, adopt the Plan.

1.7 "Company Stock" means any qualifying employer security within the meaning of Section 4975(e)(8) of the Code and Section 407(d)(l) of the Employee Retirement Income Security Act of 1974 and regulations thereunder.

1.8 "Corporation" means Northern Trust Corporation, a Delaware corporation, and to the extent provided in Section 8.8 below, any successor corporation or other entity resulting from a merger or consolidation into or with the Corporation, or a transfer of sale of substantially all of the assets of the Corporation.

1.9 "EBIC" means the Employee Benefit Investment Committee of the Company, as constituted from time to time, which has responsibility for overseeing the investment of the assets attributable to the Plan.

1.10 "Participant" means any employee of the Company who is a participant under the Qualified Plan as described in Section 2.1 of the Plan and with respect to whom contributions may be made under the Plan.

1.11 "Plan" means the Restated Supplemental Employee Stock Ownership Plan, of Northern Trust Corporation, as amended from time to time.

1.12 "Plan Year" means the calendar year or any other twelve consecutive month period that may be designated by the Company as the fiscal year of the Qualified Plan; provided, however, that the first Plan Year shall be the four consecutive month period commencing on September 1, 1989 and ending on December 31, 1989.

1.13 "Qualified Plan" means the Northern Trust Company Employee Stock Ownership Plan, as amended and restated effective January 1, 1989, and as further amended from time to each, and each predecessor, successor or replacement employee stock ownership plan.

1.14 "Qualified Plan Company Stock Account" means the account established for a Participant under the Qualified Plan and known as the Company Stock Account.

1.15 "Qualified Thrift-Incentive Plan" means The Northern Trust Company Thrift- Incentive Plan as amended and restated effective January 1, 1989, and each predecessor, successor or replacement employees' cash or deferred arrangement.

1.16 "Section 415 Limits" means the limit imposed by Section 415 of the Code, or any successor section, on aggregate annual additions in any Plan Year to the accounts of a Participant under the Qualified Plan and The Northern Trust Company Thrift-Incentive Plan, and the limits imposed by Section 415(c) (6) of the Code, or any successor section, on the Plan.

1.17 "Supplemental ESOP Account" means the account maintained under the Plan for each Participant who receives Supplemental ESOP Allocations under the Plan.

1.18 "Supplemental ESOP Allocation" means the amount allocated for the benefit of a Participant under and in accordance with the terms of Section 3.1 of the Plan in any Plan Year.

1.19 "Supplemental Matching Contribution Account" means the account maintained under the Supplemental Thrift-Incentive Plan for a Participant that is credited with Supplemental Matching Contributions contributed under such plan.

1.20 Except as otherwise expressly provided herein, all words and phrases in the Qualified Plan shall have the same meaning in the Plan.

ARTICLE II
ELIGIBILITY

2.1 Participant. An employee of the Company who is eligible in any Plan Year to receive an allocation of Company Stock to his Company Stock Account under the Qualified Plan, the total amount of which is reduced by reason of the application of the limitation on contributions imposed by Section 401(a)(17), or
Section 415 of the Code, as in effect on any date for allocation of such shares, or as in effect at any time thereafter, on the Qualified Plan, shall be a Participant in the Plan for such Plan Year.

ARTICLE III
SUPPLEMENTAL ALLOCATIONS

3.1 Supplemental ESOP Allocations. The Supplemental ESOP Allocation to be made for the benefit of a Participant for any Plan Year shall be an amount equal to
(i) the closing price of a share of Company Stock on the NASDAQ Stock Market on the last trading day of such Plan Year, times, (ii) the difference between (a) and (b) below:

(a) The number of shares of Company Stock that would have been allocated to the Qualified Plan Company Stock Account of the Participant for the Plan Year, without giving effect to the Section 415 Limits or to the limitations imposed by Section 40l (a) (17) of the Code on the Qualified Plan;

LESS

(b) The number of shares of Company Stock actually allocated to the Qualified Plan Company Stock Account of the Participant for the Plan Year.

Supplemental ESOP Allocations made for the benefit of a Participant for any Plan Year shall be allocated to a Supplemental ESOP Account maintained under the Plan in the name of such Participant as of the last day of such Plan Year.

3.2 Vesting. Each Participant shall vest in the balance of his Supplemental ESOP Account in accordance with the vesting schedule set forth in the Qualified Plan applicable to the undistributed balance of his Qualified Plan Company Stock Account. Notwithstanding the preceding sentence or any other provision of the Plan, each Participant shall immediately become fully vested in the adjusted balance of his Supplemental ESOP Account in the event of a Change-in-Control.

ARTICLE IV
INVESTMENT OF SUPPLEMENTAL ALLOCATIONS

4.1 Investments. The Corporation may cause amounts allocated hereunder to the Supplemental ESOP Accounts of Participants to be contributed to a trust ("Trust") designated for such purpose by the Corporation. Amounts allocated hereunder to the Supplemental ESOP Account of a Participant shall be invested in the same manner as such Participant has elected under the Northern Trust Corporation Supplemental Thrift-Incentive Plan. EBIC shall from time to time determine the investment media to which such elections shall apply.

ARTICLE V
DISTRIBUTIONS

5.1 Distribution. (a) In the event that the Participant's employment with the Company terminates for any reason, the Participant shall receive on the last day of the calendar month following the month in which such termination occurs, a lump sum distribution, in cash, equal to the vested adjusted balance of the Participant's Supplemental ESOP Account, including gains or losses attributable to investments made pursuant to Section 4.1, determined as of the last day of the calendar month in which such termination occurs. Notwithstanding the foregoing, if a Participant is entitled to receive a Supplemental ESOP Allocation for the Plan Year in which he terminated employment, such Supplemental ESOP Allocation and any gains or losses attributable thereto shall be distributed to or with respect to the Participant upon completion of the first valuation following the posting of such Supplemental ESOP Allocation to his Supplemental ESOP Account.

Any nonvested portion of a Participant's Supplemental ESOP Account shall be forfeited and retained by the Corporation.

(b) The amount to be paid from the Supplemental ESOP Account in the year of the Participant's termination shall be limited to an amount which will not cause the total amount of compensation received from the Company to exceed the maximum amount deductible by the

Company under Code Section 162(m). Amounts not paid as a result of the above limitation shall be paid in subsequent years, to the extent permissible under the above limitation.

(c) If a Participant dies before a complete distribution of his Supplemental ESOP Account has been made to him, the vested adjusted balance of such Participant's Supplemental ESOP Account, including gains or losses attributable to investments made pursuant to Section 4.1, determined as of the last day of the calendar month in which the Participant's employment with the Company terminated, shall be distributed in one lump sum, in cash, to the Beneficiary last designated by the Participant in a writing delivered to the Committee prior to his death. If a Participant has not designated a Beneficiary, or if no designated Beneficiary is living on the date of distribution, the vested adjusted balance of such Participant's Supplemental ESOP Account, shall be distributed in one lump sum, in cash, to those persons entitled to receive distributions of the Participant's accounts under the Qualified Plan.

ARTICLE VI
ADMINISTRATION OF THE PLAN

6.1 Administration by the Committee. Except as otherwise provided in Section 4.1, the Committee shall be responsible for the general operation and administration of the Plan and for carrying out the provisions thereof. The Committee shall have discretion to interpret and construe the provisions of the Plan.

6.2 General Powers of Administration. All provisions set forth in the Qualified Plan with respect to the administrative powers and duties of the Committee, expenses of administration, and procedures for filing claims shall also be applicable with respect to the Plan. The Committee and the EBIC shall be entitled to rely conclusively upon all tables, valuations, certificates, opinions and reports furnished by any actuary, accountant, controller, counsel or other person employed or engaged by the Committee or the EBIC with respect to the Plan.

ARTICLE VII
AMENDMENT OR TERMINATION

7.1 Amendment or Termination. The Corporation intends the Plan to be permanent but reserves the right to amend or terminate the Plan when, in the sole discretion of the Corporation, such amendment or termination is advisable. Any such amendment or termination shall be made pursuant to a resolution of the Board and shall be effective as of the date set forth in such resolution.

7.2 Effect of Amendment or Termination. No amendment or termination of the Plan shall directly or indirectly reduce the balance of any Supplemental ESOP Account held hereunder as of the effective date of such amendment or termination. Upon termination of the Plan, distribution of amounts in a Participant's Supplemental ESOP Account shall be made to him or his Beneficiary in the manner and at the time described in Section 5.1 of the Plan. No additional Supplemental ESOP Allocations shall be made to the Supplemental ESOP Account of any Participant after termination of the Plan.

ARTICLE VIII
GENERAL PROVISIONS

8.1 Participant's Rights Unsecured. If and to the extent amounts allocated hereunder to the Supplemental ESOP Accounts of Participants are contributed to the Trust described in Section 4.1, benefits under the Plan shall be payable pursuant to the Trust Agreement. Pursuant to the Trust Agreement, all assets held thereunder shall remain subject to the general creditors of the Corporation and the Company. The Plan at all times shall be entirely unfunded and, except as otherwise set forth herein, no provision shall at any time be made with respect to segregating any assets of the Corporation or the Company for payment of any benefits hereunder. No Participant, Beneficiary or any other person shall have any interest in any particular assets of the Corporation or the Company by reason of the right to receive a benefit under the Plan and Trust Agreement and any such Participant, Beneficiary or other person shall have only the rights of a general unsecured creditor of the Corporation and the Company with respect to any rights under the Plan and Trust Agreement.

8.2 General Conditions. Except as otherwise expressly provided herein, all terms and conditions of the Qualified Plan applicable to allocations of Company Stock under the Qualified Plan shall also be applicable to a Supplemental ESOP Allocation made hereunder. Any allocation of Company Stock or dividends to be made under the Qualified Plan shall be made solely in accordance with the terms and conditions of the Qualified Plan and nothing in this Plan shall operate or be construed in any way to modify, amend or affect the terms and provisions of the Qualified Plan.

8.3 No Guaranty of Benefits. Nothing contained in the Plan shall constitute a guaranty by the Corporation or the Company or any other person or entity that the assets of the Corporation or the Company will be sufficient to pay any benefit hereunder.

8.4 No Enlargement of Employee Rights. No Participant shall have any right to receive a distribution under the Plan except in accordance with the terms of the Plan. Establishment of the Plan shall not be construed to give any Participant the right to be retained in the service of the Corporation or the Company.

8.5 Spendthrift Provision. No interest of any person or entity in, or right to receive a distribution under, the Plan shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind; nor may such interest or right to receive a distribution be taken, either voluntarily or involuntarily, for the satisfaction of the debts of, or other obligations or claims against, such person or entity, including claims for alimony, support, separate maintenance and claims in bankruptcy proceedings.

8.6 Applicable Law. The Plan shall be construed and administered under the laws of the State of Illinois to the extent not inconsistent with the Employee Retirement Income Security Act of 1974, as amended.

8.7 Incapacity of Recipient. If any benefit under the Plan shall be payable to a minor or a person not adjudicated incompetent but who, by reason of illness or mental or physical disability, is, in the opinion of the Committee, unable to properly manage his affairs, such benefit shall be paid in such of the following ways as the Committee deems best: (a) to the person directly; (b) in the case of a minor, to a custodian under any Uniform Gift to Minors Act for the person; or (c)

to the person's spouse, adult child or blood relative. Any benefit so paid shall be a complete discharge of any liability of the Corporation, the Company and Plan therefor.

8.8 Successors. The Plan shall not be automatically terminated by a transfer or sale of assets of the Corporation or by the merger or consolidation of the Corporation into or with any other corporation or other entity, but the Plan shall be continued after such sale, merger or consolidation only if and to the extent that the transferee, purchaser or successor entity agrees to continue the Plan. In the event that the Plan is not continued by the transferee, purchaser or successor entity, then the Plan shall terminate subject to the provisions of
Section 7.2.

8.9 Unclaimed Benefit. Each Participant shall keep the Committee informed of his current address and the current address of his designated Beneficiary. None of the Corporation, the Company or the Committee shall be obligated to search for the whereabouts of any person. If the location of a Participant is not made known to the Committee within three (3) years after the date on which distribution of the Participant's Supplemental ESOP Account may first be made, distribution may be made as though the Participant had died at the end of the three-year period. If, within one additional year after such three-year period has elapsed, or within three years after the actual death of a Participant, none of the Corporation, the Company or the Committee is able to locate any designated Beneficiary of the Participant, then neither the Corporation nor the Company shall have no further obligation to pay any benefit hereunder to such Participant or designated Beneficiary and such benefit shall be forfeited; provided, however, that if the Participant or designated Beneficiary makes a valid claim for any benefit that has been so forfeited, the forfeited benefit shall be reinstated.

8.10 Limitations on Liability. Notwithstanding any of the preceding provisions of the Plan, none of the Corporation, the Company, any member of the Committee, any member of EBIC, or any individual acting as an employee or agent of the Corporation, the Company, the Committee or EBIC shall be liable to any Participant, former Participant, Beneficiary or any other person for any claim, loss, liability or expense incurred in connection with the Plan.

8.11 Gender; Headings. Words in the masculine gender shall include the feminine and the singular shall include the plural, and vice versa, unless qualified by the context. Any headings used herein are included for ease of reference only, and are not to be construed so as to alter the terms hereof.

IN WITNESS WHEREOF, The Northern Trust Company has caused this amendment and restatement of the Plan to be signed by its duly authorized officer as of the 20th day of July, 1999.

THE NORTHERN TRUST COMPANY

By: /s/ Martin J. Joyce, Jr.
    --------------------------

Northern Trust Corporation, by its duly authorized officer, hereby consents to
and accepts its obligations under this amendment and restatement of the Plan as
of the 20th day of July, 1999.

NORTHERN TRUST CORPORATION

By: /s/ Pery R. Pero
    --------------------------

Exhibit (10)(iii)

RESTATED NORTHERN TRUST CORPORATION
SUPPLEMENTAL THRIFT-INCENTIVE PLAN

The Northern Trust Company Supplemental Plan was adopted on September 16, 1975 and amended through December 16, 1986. The portions of that plan that pertained to The Northern Trust Company Thrift-Incentive Plan were amended and restated by the Restated Supplemental Thrift-Incentive Plan for Employees of The Northern Trust Company, initially adopted effective September 1, 1989, as restated effective September 1, 1989 and as further amended and restated effective January 1, 1996 and May 1, 1996 (the "Restated Supplemental Thrift-Incentive Plan"). Effective as of July 20, 1999, the assets and obligations of the Restated Supplemental Thrift-Incentive Plan, were transferred by The Northern Trust Company to its parent corporation, Northern Trust Corporation and from and after such date the Northern Trust Corporation became the sponsor of the Restated Supplemental Thrift-Incentive Plan. The Northern Trust Company now desires to further amend and restate the Restated Supplemental Thrift-Incentive Plan to reflect the transfer of the assets and obligations thereof to Northern Trust Corporation and certain other changes.

Accordingly, effective July 20, 1999, The Northern Trust Company hereby further amends and restates the Restated Supplemental Thrift-Incentive Plan, which shall now be designated the "Northern Trust Corporation Supplemental Thrift-Incentive Plan," pursuant to the terms and conditions set forth below:

ARTICLE I
DEFINITIONS

Wherever used herein the following terms shall have the meanings hereinafter set forth:

1.1 "Beneficiary" means any person eligible to receive a death benefit under the Plan as designated by the Participant, in the event of death of the Participant.

1.2 "Board" means the Board of Directors of the Corporation.

1.3 "Change-in-Control" means the earliest to occur of:

(c) The effective time of (i) a merger or consolidation of the Corporation with one or more other corporations as a result of which the holders of the outstanding voting stock of the Corporation immediately prior to such merger or consolidation hold less than 60% of the voting stock of the surviving or resulting corporation, or (ii) a transfer of substantially all of the property of the Corporation other than to an entity of which the Corporation owns at least 80% of the voting stock; or

1.4 "Code" means the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder.

1.5 "Committee" means the Employee Benefit Administrative Committee of the Company, as constituted from time to time, which has the responsibility for administering the Qualified Plan.

1.6 "Company" means The Northern Trust Company, an Illinois banking corporation, and such subsidiaries and affiliates of the Corporation as shall, with the consent of the Board, adopt the Plan.

1.7 "Corporation" means Northern Trust Corporation, a Delaware corporation, and, to the extent provided in Section 8.8 below, any successor corporation or other entity resulting from a merger or consolidation into or with the Corporation or a transfer or sale of substantially all of the assets of the Corporation.

1.8 "Deferral Distribution Date" means the date for distribution of a Participant's Supplemental Before-Tax Deposits as irrevocably set forth in each of his Supplemental Before-Tax Deposit Agreements.

1.10 "Participant" means an employee of the Company who is a participant under the Qualified Plan as described in Section 2.1 of the Plan and by whom or with respect to whom contributions may be under the Plan.

1.11 "Plan" means the Restated Northern Trust Corporation Supplemental Thrift- Incentive Plans as amended from time to time.

1.12 "Plan Year" means the calendar year or other twelve-consecutive-month period that may be designated by the Company as the fiscal year of the Qualified Plan, provided, however, that the first Plan Year shall be the four-consecutive- month period commencing on September 1, 1989 and ending on December 31, 1989.

1.13 "Qualified Plan" means The Northern Trust Company Thrift-Incentive Plan as amended and restated effective January 1, 1989, and as further amended from time to time, and each predecessor, successor or replacement employees' cash or deferred arrangement.

1.14 "Qualified Plan Matching Contribution" means the total of all matching contributions made by the Company for the benefit of a Participant under and in accordance with the terms of the Qualified Plan in any Plan Year.

1.15 "Qualified Plan Matching Contribution Account" means the account established for a Participant under the Qualified Plan and known as the Matching Contribution Account.

1.16 "Qualified Plan Before-Tax Deposit" means the total of all salary reduction contributions made by the Company as authorized by a Participant under and in accordance with the terms of the Qualified Plan in any Plan Year.

1.17 "Qualified Plan Before-Tax Deposit Account" means the account established for a Participant under the Qualified Plan and known as the Before-Tax Deposit Account.

1.18 "Supplemental Account" means either or both of the Supplemental Before-Tax Deposit Account and the Supplemental Matching Contribution Account.

1.19 "Supplemental ESOP Allocation" means the amount allocated for the benefit of a Participant under and in accordance with the terms of Section 3.1 of the Supplemental ESOP Plan in any Plan Year.

1.20 "Supplemental Matching Contribution" means the matching contribution made by the Corporation for the benefit of a Participant under and in accordance with the terms of the Plan in any Plan Year.

1.21 "Supplemental Matching Contribution Account" means the account maintained under the Plan for a Participant that is credited with Supplemental Matching Contributions contributed under the Plan.

1.22 "Supplemental Before-Tax Deposit" means the salary reduction contribution made for the benefit of a Participant under and in accordance with the terms of the Plan in any Plan Year.

1.23 "Supplemental Before-Tax Deposit Account" means the account maintained under the Plan for a Participant that is credited with Supplemental Before-Tax Deposits contributed under the Plan.

1.24 Except as otherwise expressly provided herein, all words and phrases in the Qualified Plan shall have the same meaning in the Plan.

ARTICLE II
ELIGIBILITY

2.1 (a) Conditions for Participation. An employee of the Company: (i) who is eligible to participate in the Qualified Plan on the first day of a Plan Year and (ii) whose Salary (as defined in the Qualified Plan), determined as of November 30 of the prior Plan Year, exceeds the compensation limitation under
Section 401(a)(17) of the Code for such prior Plan Year, shall be eligible to make salary deferrals under the Plan for such Plan Year as soon as he has reached the

Code Section 401(a)(17) limitation. However, if the compensation limit for the Plan Year for which participation is being determined is known by November 30 of such prior Plan Year, participation will be based upon such limit.

In the event an employee of the Company who is ineligible to participate in the Plan on the first day of a Plan Year either because he was not eligible for the Qualified Plan on the first day of the Plan Year, or because his Salary did not exceed the Code Section 401(a)(17) limitation for the prior Plan Year, subsequently becomes eligible for the Qualified Plan or has his Salary increased and becomes ineligible to make contributions to the Qualified Plan because his Salary exceeds the compensation limit set forth in Code Section 401(a)(17), such employee shall become eligible to participate in the Plan for purposes of Supplemental Matching Contributions only as of the date he is no longer eligible to make contributions to the Qualified Plan as a result of the above limitation. Such Supplemental Matching Contributions shall be based on the employee's rate of contribution to the Qualified Plan at the time his contributions ceased.

(b) Participant Elections. An employee who meets the eligibility requirements on November 30 for Plan participation in the following Plan Year will be allowed to elect (i) to decline participation in the Plan, or (ii) to begin contributions to the Plan once he is no longer able to contribute to the Qualified Plan because he has reached the limitations of Code Section 401 (a)(17).

ARTICLE III

SUPPLEMENTAL CONTRIBUTIONS

3.1 Supplemental Before-Tax Deposit. The Supplemental Before-Tax Deposit authorized by a Participant for any Plan Year shall be applied only to Salary in excess of Code Section 401(a)(17) limitations, in any amount equal to at least one percent (1%), but not to exceed twelve percent (12%).

The Supplemental Before-Tax Deposit made for the benefit of a Participant for any Plan Year shall be allocated to a Supplemental Before-Tax Deposit Account maintained under the Plan in the name of such Participant on or before the last day of such Plan Year.

3.2 Supplemental Before-Tax Deposit Agreement. As a condition of making a Supplemental Before-Tax Deposit for the benefit of a Participant pursuant to
Section 3.1 for any Plan Year, the Participant must execute a Supplemental Before-Tax Deposit Agreement, in such form as the Committee in its discretion shall determine, on which the Participant shall elect to have his Salary for such Plan Year reduced, and a Supplemental Before-Tax Deposit made on his behalf, on Salary in excess of the Code Section 401 (a)(17) limitations, in any amount equal to at least one percent (1%) of his Salary, or any multiple thereof, but not to exceed twelve percent (12%).

An Agreement that is effective for any Plan Year shall be executed and delivered to the Committee by the specified date before the beginning of that Year and shall be irrevocable for that Year and for subsequent Plan Years unless and until revoked or revised by a Participant by written instrument delivered to the Committee prior to the beginning of the Plan Year in which such revocation or revision is to be effective.

3.3 Supplemental Matching Contributions. The Supplemental Matching Contribution to be made by the Corporation on behalf of a Participant for any Plan Year who
(i) is a Participant at the beginning of a Plan Year eligible to make salary deferrals after reaching the Code Section 401(a)(17) limitations, who actually makes salary deferrals or (ii) during the Plan Year becomes a Participant eligible to participate for purposes of Supplemental Matching Contributions only, shall be made in accordance with the matching contribution formula and provisions set forth in the Qualified Plan.

Supplemental Matching Contributions made for the benefit of a Participant for any Plan Year shall be allocated to a Supplemental Matching Contribution Account maintained under the Plan in the name of such Participant as of the last day of such Plan Year.

3.4 Vesting of Benefits. Each Participant shall at all times be fully vested in the adjusted balance of his Supplemental Before-Tax Deposit Account. Each Participant shall vest in the adjusted balance of his Supplemental Matching Contribution Account in accordance with the vesting schedule applicable to his Qualified Plan Matching Contribution Account set forth in the Qualified Plan. Notwithstanding the preceding sentence or any other provision of the Plan, each Participant shall become fully vested in the adjusted balance of his Supplemental Matching Contribution Account on the effective date of a Change-in- Control.

ARTICLE IV
INVESTMENT OF SUPPLEMENTAL CONTRIBUTIONS

4.1 Investments. The Corporation may cause amounts allocated hereunder to the Supplemental Accounts of Participants to be contributed to a trust ("Trust") designated for such purpose by the Corporation. Amounts allocated hereunder to the Supplemental Account of a Participant shall be subject to such procedures relating to investment elections as the Committee may from time to time establish. EBIC shall from time to time determine the investment media to which such elections shall apply.

A Participant shall be entitled to change investment elections applicable to his Supplemental Account, or to direct transfers of amounts in his Supplemental Account among the investment funds available under the Trust Agreement, provided that such directions shall also apply to his Supplemental ESOP Allocation. Such changes can be made monthly by written request or such other frequency as the Committee shall determine.

4.2 Corporation Securities. Notwithstanding anything to the contrary contained herein, in no event shall amounts allocated to the Supplemental Account of a Participant be invested directly in stock or other securities of the Corporation; provided, however, that nothing contained herein shall prohibit investment of amounts allocated to the Supplemental Account of any Participant in a mutual fund portfolio in which no more than five percent of the total fair market value of the assets of such portfolio are invested in stock or other securities of the Corporation.

ARTICLE V
DISTRIBUTIONS

5.1 Distribution. (a) Subject to Section 8.2, all amounts allocated to a Participant's Supplemental Before-Tax Deposit Account, including gains and losses attributable to investments made pursuant to Section 4.1, shall be distributed to or with respect to the Participant in one lump sum as of the first to occur of (a) the Deferral Distribution Date irrevocably set forth in the related Supplemental Before-Tax Deposit Agreement or (b) the last day of the calendar month following the month in which the Participant's employment with the Company terminates for any reason, including death. The vested adjusted balance of a Participant's Supplemental Matching Contribution Account, including gains and losses attributable to investments made pursuant to Section 4.1, shall be distributed to or with respect to a Participant as of the last day of the calendar month following the month in which the Participant's employment with the Company terminates for any reason, including death. Notwithstanding the foregoing, if a Participant is entitled to receive a Supplemental Matching Contribution for the Plan Year in which he terminated employment, such Supplemental Matching Contribution and any gains or losses attributable thereto shall be distributed to or with respect to the Participant upon completion of the first valuation following the posting of such Supplemental Matching Contribution to his Supplemental Matching Contribution Account.

Any unvested amounts credited to a Participant's Supplemental Matching Contribution Account shall be forfeited and retained by the Corporation.

(b) The annual amount to be paid from the Supplemental Account of a Participant shall be limited to an amount which will not cause the total amount of compensation received from the Company to exceed the maximum amount deductible by the Company under Code Section 162(m). Amounts not paid as a result of the above limitation shall be paid in subsequent years, to the extent permissible under the above limitation.

(c) If a Participant dies before a complete distribution of his Supplemental Before Tax Deposit Account or his Supplemental Matching Contribution Account has been made to him, such amounts shall be distributed to the Beneficiary designated by the Participant in a writing last delivered to the Committee prior to his death. If a Participant has not designated a Beneficiary, or if no designated Beneficiary is living on the date of distribution, such amounts shall be distributed to those persons entitled to receive distributions of the Participant's accounts under the Qualified Plan.

ARTICLE VI
ADMINISTRATION OF THE PLAN

and the EBIC shall be entitled to rely conclusively upon all tables, valuations, certificates, opinions and reports furnished by any actuary, accountant, controller, counsel or other person employed or engaged by the Committee or the EBIC with respect to the Plan.

ARTICLE VII
AMENDMENT OR TERMINATION

7.2 Effect of Amendment or Termination. No amendment or termination of the Plan shall directly or indirectly reduce the balance of any Supplemental Account held hereunder as of the effective date of such amendment or termination. Upon termination of the Plan, distribution of amounts in a Participant's Supplemental Account shall be made to him or his Beneficiary in the manner and at the time described in Section 5.1 of the Plan. No additional credits of Supplemental Before-Tax Deposits or Supplemental Matching Contributions shall be made to the Supplemental Account of a Participant after termination of the Plan, but gains and losses attributable to investments made pursuant to Section 4.1 shall continue to be credited to such Supplemental Account until the balance of such Account has been fully distributed to the Participant or his Beneficiary.

ARTICLE VIII
GENERAL PROVISIONS

8.1 Participant's Rights Unsecured. If and to the extent amounts allocated hereunder to the Supplemental Accounts of Participants are contributed to the Trust described in Section 4.1, benefits under the Plan shall be payable pursuant to the Trust Agreement. Pursuant to the Trust Agreement, all assets held thereunder shall remain subject to the general creditors of the Corporation and the Company. The Plan at all times shall be entirely unfunded and, except as otherwise set forth herein, no provision shall at any time be made with respect to segregating any assets of the Corporation or the Company for payment of any benefits hereunder. No Participant, Beneficiary or any other person shall have any interest in any particular assets of the Corporation or the Company by reason of the right to receive a benefit under the Plan and Trust Agreement and any such Participant, Beneficiary or other person shall have only the rights of a general unsecured creditor of the Corporation and the Company with respect to any rights under the Plan and Trust Agreement.

8.2 General Conditions. Except as otherwise expressly provided herein, all terms and conditions of the Qualified Plan applicable to a Qualified Plan Before-Tax Deposit or a Qualified Plan Matching Contribution shall also be applicable to a Supplemental Before-Tax Deposit or a Supplemental Matching Contribution to be made hereunder. Any Qualified Plan Before-Tax Deposit or Qualified Plan Matching Contribution, or any other contributions to be made under the Qualified Plan, shall be made solely in accordance with the terms and conditions of the

Qualified Plan and nothing in this Plan shall operate or be construed in any way to modify, amend or affect the terms and provisions of the Qualified Plan.

8.3 No Guaranty of Benefits. Nothing contained in the Plan shall constitute a guaranty by the Corporation, the Company or any other person or entity that the assets of the Corporation or the Company will be sufficient to pay any benefit hereunder.

8.4 No Enlargement of Employee Rights. No Participant shall have any right to receive a distribution of contributions made under the Plan except in accordance with the terms of the Plan. Establishment of the Plan shall not be construed to give any Participant the right to be retained in the service of the Corporation or the Company.

8.8 Successors. The Plan shall not be automatically terminated by a transfer or sale of assets of the Corporation, or by the merger or consolidation of the Corporation into or with any other corporation or other entity, but the Plan shall be continued after such sale, merger or consolidation only if and to the extent that the transferee, purchaser or successor entity agrees to continue the Plan. In the event that the Plan is not continued by the transferee, purchaser or successor entity, then the Plan shall terminate subject to the provisions of
Section 7.2.

8.9 Unclaimed Benefit. Each Participant shall keep the Committee informed of his current address and the current address of his designated Beneficiary. None of the Corporation, the Company or the Committee shall be obligated to search for the whereabouts of any person. If the location of a Participant is not made known to the Committee within three (3) years after the date on which distribution of the Participant's Supplemental Before-Tax Deposit Account and Supplemental Matching Contribution Account may first be made, distribution may be made as though the Participant had died at the end of the three-year period. If, within one additional year after such three-year period has elapsed, or within three years after the actual death of a Participant, none of the Corporation, the Company nor the Committee is able to locate any designated Beneficiary of the Participant, then neither the Corporation nor the Company shall have any further obligation to pay any benefit hereunder to such Participant or designated

Beneficiary and such benefit shall be forfeited; provided, however, that if the Participant or designated Beneficiary makes a valid claim for any benefit that has been so forfeited, the forfeited benefit shall be reinstated.

8.10 Limitations on Liability. Notwithstanding any of the preceding provisions of the Plan, none of the Corporation, the Company, any member of the Committee, any member of EBIC, or any individual acting as an employee or agent of the Corporation, the Company, the Committee or EBIC, shall be liable to any Participant, former Participant, Beneficiary or any other person for any claim, loss, liability or expense incurred in connection with the Plan.

IN WITNESS WHEREOF, The Northern Trust Company has caused this amendment and restatement of the Plan to be signed by its duly authorized officer as of the 20th day of July, 1999.

THE NORTHERN TRUST COMPANY

By: /s/ Martin J. Joyce, Jr.
   -----------------------------------

Northern Trust Corporation, by its duly authorized officer, hereby consents to, and accepts its obligations under, this amendment and restatement of the Plan as of the 20th day of July, 1999.

NORTHERN TRUST CORPORATION

By: /s/ Perry R. Pero

    -----------------------

Exhibit (10) (iv)

RESTATED NORTHERN TRUST CORPORATION
SUPPLEMENTAL PENSION PLAN

The Northern Trust Company Supplemental Plan was adopted on September 16, 1975 and amended through December 16, 1986. The portions of that plan that pertained to The Northern Trust Company Pension Plan were amended and restated by The Restated Supplemental Pension Plan for Employees of The Northern Trust Company, initially adopted effective September 1, 1989, restated effective September 1, 1989, further amended and restated effective January 1, 1996 and May 1, 1996 and further amended effective May 1, 1998 ("the Restated Supplemental Pension Plan"). Effective as of July 20, 1999, the assets and obligations of the Restated Supplemental Pension Plan were transferred by The Northern Trust Company to its parent corporation, Northern Trust Corporation and from and after such date the Northern Trust Corporation became the sponsor of the Restated Supplemental Pension Plan. The Northern Trust Company now desires to further amend and restate the Restated Supplemental Pension Plan to reflect the transfer of assets and obligations thereof to Northern Trust Corporation and certain other changes.

Accordingly, effective July 20, 1999, The Northern Trust Company hereby further amends and restates the Restated Supplemental Pension Plan, which shall now be designated as the "Northern Trust Corporation Supplemental Pension Plan," pursuant to the terms and conditions set forth below:

ARTICLE I
DEFINITIONS

Wherever used herein the following terms shall have the meanings hereinafter set forth:

1.1 "Beneficiary" means (i) a Spouse or, (ii) if the participant had fifteen or more years of credited service under the Qualified Plan and dies without a Spouse but with Eligible Child(ren) as defined in the Qualified Plan, such Participant's Eligible Child(ren).

1.2 "Board" means the Board of Directors of the Corporation.

1.3 "Code" means the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder.

1.4 "Change-in-Control" means the earliest to occur of:

(c) The effective time of (i) a merger or consolidation of the Corporation with one or more other corporations as a result of which the holders of the outstanding voting stock of the Corporation immediately prior to such merger or consolidation hold less than 60% of the voting stock of the surviving or resulting corporation, or (ii) a transfer of substantially all of the property of the Corporation other than to an entity of which the Corporation owns at least 80% of the voting stock; or

1.5 "Committee" means the Employee Benefit Administrative Committee of the Company, as constituted from time to time, which has the responsibility for administering the Qualified Plan.

1.7 "Corporation" means Northern Trust Corporation, a Delaware corporation, and, to the extent provided in Section 7.8 below, any successor corporation or other entity resulting from a merger or consolidation into or with the Company or a transfer or sale of substantially all of the assets of the Company.

1.8 "EBIC" means the Employee Benefit Investment Committee of the Company, as constituted from time to time, which has responsibility for overseeing the investment of the assets attributable to the Plan.

1.9 "Modified Pension Benefit" means the Qualified Plan Pension Benefit, with the following modifications:

(a) Code Section 401(a)(17) and Section 415 restrictions shall be disregarded;

(b) Any amounts of performance-based incentive compensation under the Northern Trust Corporation Annual Performance Plan and the Northern Trust Corporation Management Performance Plan, the receipt of which is deferred under the Northern Trust Corporation Deferred Compensation Plan, will be taken into account as Compensation as if such amounts were not so deferred; and

(c) Any amounts of base salary and bonus, the receipt of which is deferred because of Internal Code Section 162(m) limitations under the Northern Trust Corporation Annual Performance Plan, shall be included as Compensation as if such amounts were not so deferred.

1.10 "Modified Survivor Benefit" means the Qualified Plan Survivor Benefit, with the following modifications:

(a) Code Section 401(a)(17) and Section 415 restrictions shall be disregarded;

1.11 "Participant" means any employee of the Company who is a participant under the Qualified Plan as described in section 2.1 of the Plan and to whom or with respect to whom a benefit is payable under the Plan.

1.12 "Payment Entitlement Date" means either (i) the first of the month following termination in the case of a Participant eligible for a benefit under section 5.4 of the Qualified Plan or, (ii) the day following termination in the case of a Participant eligible for a benefit under Sections 5.1, 5.2, or 5.3 of the Qualified Plan.

1.13 "Payment Date" means, with respect to a Participant who is retirement eligible under the Qualified Plan, the last business day of the month next following the month in which the Participant's employment with the Corporation and its affiliates terminates. With respect to a Vested Terminated participant as defined in the Qualified Plan, "Payment Date" means the last day of the third calendar month following the calendar month in which the Participant terminates employment.

1.14 "Plan" means the Restated Northern Trust Corporation Supplemental Pension Plan, as amended from time to time.

1.15 "Qualified Plan" means The Northern Trust Company Pension Plan as amended and restated effective January 1, 1989, and as further amended from time to time, and each predecessor, successor or replacement employees' pension plan.

1.16 "Qualified Plan Pension Benefit" means the aggregate pension benefit payable to a Participant pursuant to the Qualified Plan by reason of his termination of employment with the Company and all affiliates.

1.17 "Qualified Plan Survivor Benefit" means the aggregate survivor benefit payable to a Beneficiary of a Participant pursuant to Section 6.1 of the Qualified Plan in the event of death of the Participant at any time prior to the Participant's Payment Entitlement Date under the Qualified Plan.

1.18 "Spouse" means the person to whom the Participant was married on the date of his death.

1.19 "Supplemental Pension Benefit" means the lump sum benefit payable to a Participant pursuant to the Plan by reason of his termination of employment with the Company and all affiliates for any reason.

1.20 "Supplemental Survivor Benefit" means the lump sum benefit payable to the Beneficiary of a Participant pursuant to the Plan.

1.21 Except as otherwise expressly provided herein, all words and phrases in the Qualified Plan shall have the same meaning in the Plan.

ARTICLE II
ELIGIBILITY

2.1 Participant. An employee of the Company who is eligible in any Plan Year to receive a Qualified Plan Pension Benefit, the amount of which is reduced by reason of the application of the limitations on benefits imposed by either or both of Section 401 (a) (17) and Section 415 of the Code on the Qualified Plan, shall be a Participant and shall be eligible to receive a Supplemental Pension Benefit for such Plan Year.

ARTICLE III
SUPPLEMENTAL PENSION BENEFIT

3.1 Amount. The Supplemental Pension Benefit payable to an eligible Participant shall be calculated as follows:

(a) In the event the Participant elects an immediate lump sum distribution under the Qualified Plan, such amount shall be the difference between (i) the lump sum value of the Participant's Modified Pension Benefit and (ii) the lump sum value of the Participant's Qualified Plan Pension Benefit.

(b) In the event the Participant elects an immediate annuity under the Qualified Plan, such amount shall be the lump sum value of the difference between (i) the monthly amount of the Participant's Modified Pension Benefit and (ii) the monthly amount of the Participant's Qualified Pension Benefit.

3.2 Vesting of Benefit. Each Participant shall vest in his Supplemental Pension Benefit in accordance with the vesting schedule applicable to his Qualified Plan Pension Benefit set forth in the Qualified Plan. Notwithstanding the preceding sentence or any other provision of the Plan, each Participant shall become fully vested in his Supplemental Pension Benefit on the effective date of a Change-in- Control.

3.3 Form of Benefit. The Supplemental Pension Benefit of a Participant whose employment with the Company and all affiliates terminates for any reason shall be paid in a single lump sum, which shall be equal to the amount calculated pursuant to Section 3.1 above, as determined by the same actuarial adjustments as those specified in the Qualified Plan with respect to determination of the amount of the Qualified Plan Pension Benefit or Qualified Plan Survivor Benefit.

3.4 Commencement of Benefit. Payment to a Participant of his Supplemental Pension Benefit shall be made on his Payment Date. If such Benefit is paid prior to the Participant's Normal Retirement Date, it shall be adjusted to reflect such early payment as determined by the same early retirement adjustment factors as are specified in the Qualified Plan with respect to the adjustment of the Qualified Plan Pension Benefit for early commencement.

3.5 Grandfather Provision. Notwithstanding anything to the contrary contained herein, any Participant who commenced receiving payment of a Supplemental Pension Benefit hereunder in the form of an annuity prior to September 1, 1989, pursuant to the terms of the Plan on the date payment of such Benefit commenced, shall continue to receive such payments from and after September 1, 1989 in the form of such annuity.

ARTICLE IV
SUPPLEMENTAL SURVIVOR BENEFIT

4.1 Amount. If a Participant dies prior to termination of employment under circumstances in which a Qualified Plan Survivor Benefit is payable to his Beneficiary, then a Supplemental Survivor Benefit is payable to his Beneficiary as hereinafter provided. The amount of the Supplemental Survivor Benefit payable to a Participant's Beneficiary shall be the lump sum value of the difference between (i) the monthly amount of the Beneficiary's Modified Survivor Benefit and (ii) the monthly amount of the Beneficiary's Qualified Plan Survivor Benefit.

4.2 Form and Commencement of Benefit. If a Supplemental Survivor Benefit shall be payable hereunder, such Benefit shall be payable in one lump sum payment, to be made according to the schedule for payment of a Qualified Plan Survivor Benefit as though it had commenced immediately.

4.3 Grandfather Provision. Notwithstanding anything to the contrary contained herein, any Beneficiary who commenced receiving payment of a Supplemental Survivor Benefit hereunder in the form of an annuity prior to January 1, 1995, pursuant to the terms of the Plan on the date payment of such Benefit commenced, shall continue to receive such payments from and after January l, l995 in the form of such annuity.

ARTICLE V
ADMINISTRATION OF THE PLAN

5.1 Administration by the Committee. Except as otherwise provided in Section 7.1, the Committee shall be responsible for the general operation and administration of the Plan and for carrying out the provisions thereof. The Committee shall have discretion to interpret and construe the provisions of the Plan.

5.2 General Powers of Administration. All provisions set forth in the Qualified Plan with respect to the administrative powers and duties of the Committee, expenses of administration, and procedures for filing claims shall also be applicable with respect to the Plan. The Committee and the EBIC shall be entitled to rely conclusively upon all tables, valuations, certificates,

opinions and reports furnished by any actuary, accountant, controller, counsel or other person employed or engaged by the Committee or the EBIC with respect to the Plan.

ARTICLE VI
AMENDMENT OR TERMINATION

6.1 Amendment or Termination. The Corporation intends the Plan to be permanent but reserves the right to amend or terminate the Plan when, in the sole discretion of the Corporation, such amendment or termination is advisable. Any such amendment or termination shall be made pursuant to a resolution of the Board and shall be effective as of the date set forth in such resolution.

6.2 Effect of Amendment or Termination. No amendment or termination of the Plan shall directly or indirectly deprive any current or former Participant or Beneficiary of all or any portion of any Supplemental Pension Benefit or Supplemental Survivor Benefit, payment of which has commenced prior to the effective date of such amendment or termination, or that would be payable if the Participant terminated employment for any reason, including death on such effective date.

ARTICLE VII
GENERAL PROVISIONS

7.1 Funding. The Corporation may cause amounts to fund the benefits under the Plan to be contributed to a trust ("Trust") designated for such purpose by the Corporation. Amounts contributed pursuant to the Trust shall be invested as the EBIC determines is appropriate. If and to the extent amounts are contributed to the Trust hereunder, benefits under the Plan shall be payable pursuant to the Trust. Pursuant to the Trust, all assets held thereunder shall remain subject to the general creditors of the Corporation and the Company. The Plan at all times shall be entirely unfunded and, except as otherwise set forth herein, no provision shall at any time be made with respect to segregating any assets of the Corporation or the Company for payment of any benefits hereunder. No Participant, Beneficiary or any other person shall have any interest in any particular assets of the Corporation or the Company by reason of the right to receive a benefit under the Plan and Trust Agreement and any such Participant, Beneficiary or other person shall have only the rights of a general unsecured creditor of the Corporation and the Company with respect to any rights under the Plan and Trust Agreement.

7.2 General Conditions. Except as otherwise expressly provided herein, all terms and conditions of the Qualified Plan applicable to a Qualified Plan Pension Benefit or a Qualified Plan Survivor Benefit shall also be applicable to a Supplemental Pension Benefit or a Supplemental Survivor Benefit payable hereunder. Any Qualified Plan Pension Benefit or Qualified Plan Survivor Benefit, or any other benefit payable under the Qualified Plan, shall be paid solely in accordance with the terms and conditions of the Qualified Plan and nothing in the Plan shall operate or be construed in any way to modify, amend or affect the terms and provisions of the Qualified Plan.

7.3 No Guaranty of Benefits. Nothing contained in the Plan shall constitute a guaranty by the Corporation, the Company or any other entity or person that the assets of the Corporation or the Company will be sufficient to pay any benefit hereunder.

7.4 No Enlargement of Employee Rights. No Participant or Beneficiary shall have any right to a benefit under the Plan except in accordance with the terms of the Plan. Establishment of the Plan shall not be construed to give any Participant the right to be retained in the service of the Corporation or the Company.

7.5 Spendthrift Provision. No interest of any person or entity in, or right to receive a distribution under, the Plan shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind; nor may such interest or right to receive a distribution be taken, either voluntarily or involuntarily, for the satisfaction of the debts of, or other obligations or claims against, such person or entity, including claims for alimony, support, separate maintenance and claims in bankruptcy proceedings.

7.6 Applicable Law. The Plan shall be construed and administered under the laws of the State of Illinois to the extent not inconsistent with the Employee Retirement Income Security Act of 1974, as amended.

7.7 Incapacity of Recipient. If any benefit under the Plan shall be payable to a minor or a person not adjudicated incompetent but who, by reason of illness or mental or physical disability, is, in the opinion of the Committee, unable to properly manage his affairs, such benefit shall be paid in such of the following ways as the Committee deems best: (a) to the person directly; (b) in the case of a minor, to a custodian under any Uniform Gift to Minors Act for the person; or
(c) to the person's spouse, adult child or blood relative. Any benefit so paid shall be a complete discharge of any liability of the Corporation, the Company and Plan therefor.

7.8 Successors. The Plan shall not be automatically terminated by a transfer or sale of assets of the Corporation or by the merger or consolidation of the Corporation into or with any other corporation or other entity, but the Plan shall be continued after such sale, merger or consolidation only if and to the extent that the transferee, purchaser or successor entity agrees to continue the Plan. In the event that the Plan is not continued by the transferee, purchaser or successor entity, then the Plan shall terminate subject to the provisions of
Section 6.2.

7.9 Unclaimed Benefit. Each Participant shall keep the Committee informed of his current address and the current address of his Beneficiary. None of the Corporation, the Company or the Committee shall be obligated to search for the whereabouts of any person. If the location of a Participant is not made known to the Committee within three (3) years after the date on which payment of the Participant's Supplemental Pension Benefit may first be made, payment may be made as though the Participant had died at the end of the three-year period. If, within one additional year after such three-year period has elapsed, or within three years after the actual death of a Participant, none of the Corporation, the Company or the Committee is able to locate any Beneficiary of the Participant, then neither the Corporation nor the Company shall have any further obligation to pay any benefit hereunder to such Participant or Beneficiary and such benefit shall be forfeited; provided, however, that if the Participant or Beneficiary makes a valid claim for any benefit that has been so forfeited, the forfeited benefit shall be reinstated.

7.10 Limitations on Liability. Notwithstanding any of the preceding provisions of the Plan, none of the Corporation, the Company, any member of the Committee or any member of EBIC, or any individual acting as an employee or agent of the Corporation, the Company, the Committee or EBIC, shall be liable to any Participant, former Participant, Beneficiary or any other person for any claim, loss, liability or expense incurred in connection with the Plan.

7.11 Gender; Headings. Words in the masculine gender shall include the feminine and the singular shall include the plural, and vice versa, unless qualified by the context. Any headings used herein are included for ease of reference only, and are not to be construed so as to alter the terms hereof.

IN WITNESS WHEREOF, The Northern Trust Company has caused this amendment and restatement of the Plan to be signed by its duly authorized officer as of the 20th day of July, 1999.

THE NORTHERN TRUST COMPANY

By: /s/ Martin J. Joyce, Jr.
    ------------------------

Northern Trust Corporation, by its duly authorized officer, hereby consents to, and accepts its obligations under, this amendment and restatement of the Plan as of the 20th day of July, 1999.

NORTHERN TRUST CORPORATION

By: /s/ Perry R. Pero

    ------------------------

Exhibit (10)(v)

August 27, 1999

Dennis M. Kunisaki
Vice President
U.S. Trust Company of California, N.A.
515 South Flower Street, Suite 2800
Los Angeles, CA 90071-2291

Subject: Direction Re: Merger of Rabbi Trusts

Dear Dennis:

Pursuant to Section 8(h) of both the Restated Supplemental Employee Trust Agreement, as amended, and Deferred Compensation Plans Agreement, as amended, under which trusts you are successor trustee effective August 31, 1999, on behalf of The Northern Trust Company and Northern Trust Corporation, the respective grantors under the trusts, I direct you (i) to merge the assets of the Supplemental Employee Trust with the assets of the Deferred Compensation Plans Trust by transferring the assets of the Supplemental Employee Trust to the Deferred Compensation Plans Trust, the merged assets to be administered under the Deferred Compensation Trust and (ii) to terminate the Supplemental Employee Trust, all effective September 1, 1999.

Sincerely,

/s/ Kimberly A. Soppi
--------------------
Kimberly A. Soppi
Retirement Plans Manager
Second Vice President

cc: Mary Jamieson, Northern Trust/HR Benefits Mark Nero, Northern Trust/Legal

AMENDMENT TO THE RESTATED
SUPPLEMENTAL EMPLOYEE TRUST AGREEMENT

Pursuant to Section 12(a) of the Trust Agreement dated June 18, 1996 ("Trust") established by The Northern Trust Company ("Company"), Company and U.S. Trust Company, National Association, as successor trustee ("Trustee"), hereby amend the Trust as follows:

1. By substituting "60" for "30" in each of the places it occurs in the second sentence of Section 7.

2. By adding the following two sentences to Section 7:

"The Trustee shall maintain a separate account with respect to each Plan reflecting the contributions applicable to such Plan, earnings thereon, distributions to participants in such Plan and their beneficiaries, and payment of administrative expenses applicable to such Plan. The assets applicable to each Plan shall be used solely to provide benefits to the participants in such Plan and their beneficiaries, and to pay administrative expenses applicable to such Plan."

3. By adding the following new paragraph (g) to Section 8:

(g) The Company shall indemnify and hold the Trustee harmless from and against all loss or liability (including expenses and reasonable attorneys' fees), to which it may be subject by reason of its execution of its duties under this Trust, or by reason of any acts taken in good faith in accordance with any directions, or acts omitted in good faith due to absence of directions, from the Company or a participant unless, and only to the extent, such loss or liability is due to the Trustee's negligence or willful misconduct.

4. By adding the following new paragraph (h) to Section 8:

(h) At the direction of Company, Trustee shall have the authority to merge at any time all the Trust assets with the assets of any other trust held by the same Trustee for the benefit of the same beneficiaries or beneficiaries of other deferred compensation plans established by Company or its affiliates and upon substantially the same terms and conditions as those set forth herein and, at the Company's direction, either to administer the merged assets as a single trust hereunder or transfer the Trust property to that other trust, to be administered under the instrument governing that other trust, and thereafter to terminate the Trust hereunder as a separate entity. Notwithstanding the preceding sentence, the assets attributable to the interest of a beneficiary under any such deferred compensation plan held under the trust with which this Trust is merged, as determined immediately after the merger, shall not, as a result of the merger, be less than the assets attributable to the interest of such beneficiary under the trust immediately prior to the effective date of the merger.

5. By adding the following sentence to Section 11:

"No successor Trustee shall be personally liable for any act or omission of any predecessor."

IN WITNESS WHEREOF, Company and Trustee have caused this amendment to be executed by their respective officers thereunto duly authorized on this 31st day of August, 1999.

THE NORTHERN TRUST COMPANY

By: /s/ Martin J. Joyce, Jr.
   --------------------------------
Its: Senior Vice President
     ------------------------------

U.S. TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee

By: /s/     Dennis Kunisaki
   --------------------------------

Its: Senior Vice President

     ------------------------------

Exhibit (10)(vi)

AMENDMENT TO THE DEFERRED
COMPENSATION PLANS TRUST AGREEMENT

Pursuant to Section 12(a) of the Deferred Compensation Plans Trust Agreement dated May 11, 1998 ("Trust") established by Northern Trust Corporation ("Company"), Company and U. S. Trust Company, National Association, as successor trustee ("Trustee"), hereby amend the Trust as follows:

1. By substituting the following for the first whereas clause preceding
Section 1:

"WHEREAS, Company has adopted the non-qualified deferred compensation plans as listed in Appendix A (hereinafter individually and collectively referred to as "Plan") for the benefit of employees of the Company and of its subsidiaries ("Subsidiary" or "Subsidiaries");"

2. By substituting the following for the second whereas clause preceding
Section 1:

"WHEREAS, Company wishes to establish a trust (hereinafter called "Trust") and to contribute Trust assets that shall be held therein, subject to the claims of the creditors of Company or a Subsidiary, and in the event of that entity's insolvency, as herein defined, until paid to Plan participants and their beneficiaries in such manner and at such times as specified in the Plan;"

3. By substituting the following for Section 1(d):

(d) The principal of the Trust, and any earnings thereon, shall be held separate and apart from other funds of Company and shall be used exclusively for the uses and purposes of Plan participants and general creditors of Company and its Subsidiaries as herein set forth. Plan participants and their beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plans and this Trust Agreement shall be mere unsecured contractual rights of Plan participants and their beneficiaries against Company. Any assets held by the Trust will be subject to the claims of the general creditors of Company and its Subsidiaries under federal and state law in the event of Insolvency, as defined in Section 3(a) herein.

4. By inserting "or a Subsidiary" between "Company" and "Is" in the heading of Section 3 and by substituting the following for paragraphs (a) and
(b) of Section 3:

(a) In the event that Company or a Subsidiary is Insolvent, Trustee shall cease payment of benefits to Plan participants who are the employees of Company or such Subsidiary, as the case may be, and their beneficiaries. Company or such Subsidiary shall be considered "Insolvent" for purposes of this Trust Agreement if (i) Company or such Subsidiary is unable to pay its debts as they become due, or (ii) Company or such Subsidiary is subject to a pending proceeding as a debtor under the United States Bankruptcy Code.

(b) At all times during the continuance of the Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust shall be subject to claims of general creditors of Company and its Subsidiaries under federal and state law as set forth below.

(1) The Board of Directors and the Chief Executive Officer of Company shall have the duty to inform Trustee in writing of Company's or a Subsidiary's insolvency. If a person claiming to be a creditor of Company or a Subsidiary alleges in writing to Trustee that Company or such Subsidiary has become Insolvent, Trustee shall determine whether Company or such Subsidiary is Insolvent and, pending such determination, Trustee shall discontinue payment of benefits to Plan participants, who are employees of the entity alleged to be Insolvent, or their beneficiaries.

(2) Unless Trustee has actual knowledge of Company's or a Subsidiary's insolvency, or has received notice from Company, such Subsidiary or a person claiming to be a creditor of either, alleging that Company or such Subsidiary is Insolvent, Trustee shall have no duty to inquire whether Company or such Subsidiary is Insolvent. Trustee may in all events rely on such evidence concerning Company's or such Subsidiary's solvency as may be furnished to Trustee and that provides Trustee with a reasonable basis for making a determination concerning Company's or such Subsidiary's insolvency.

(3) If at any time Trustee has determined that Company or a Subsidiary is Insolvent, Trustee shall discontinue payments to Plan participants who are employees of the Insolvent entity, or their beneficiaries, and shall hold the assets allocable to the employees of the Insolvent entity in a separate sub-account of the Trust for the benefit of the general creditors of the Insolvent entity. Nothing in this Trust Agreement shall in any way diminish any rights of Plan participants or their beneficiaries to pursue their right as general creditors of Company with respect to benefits due under the Plans or otherwise.

(4) Trustee shall resume the payment of benefits to Plan participants or their beneficiaries in accordance with Section 2 of this Trust Agreement only after Trustee has determined that Company or a Subsidiary is not Insolvent (or is no longer Insolvent).

5. By substituting "60" for "30" in each of the places it occurs in the second sentence of Section 7.

6. By adding the following two sentences to Section 7:

7. By adding the following new paragraph (g) to Section 8:

8. By adding the following new paragraph (h) to Section 8:

(h) At the direction of Company, Trustee shall have the authority to merge at any time all the Trust assets with the assets of any other trust held by the same Trustee for the benefit of the same beneficiaries or beneficiaries of other deferred compensation plans established by Company or its Subsidiaries and upon substantially the same terms and conditions as those set forth herein and, at the Company's direction, either to administer the merged assets as a single trust hereunder or transfer the Trust property to that other trust, to be administered under the instrument governing that other trust, and thereafter to terminate the Trust hereunder as a separate entity. Notwithstanding the preceding sentence, the assets attributable to the interest of a beneficiary under any such deferred compensation plan held under the trust with which this Trust is merged, as determined immediately after the merger, shall not, as a result of the merger, be less than the assets attributable to the interest of such beneficiary under the trust immediately prior to the effective date of the merger.

9. By adding the following sentence to Section 11:

"No successor Trustee shall be personally liable for any act or omission of any predecessor."

IN WITNESS WHEREOF, Company and Trustee have caused this amendment to be executed by their respective officers thereunto duly authorized on this 31st day of August, 1999.

NORTHERN TRUST CORPORATION

By: /s/ Perry R. Pero
   ------------------------------------

Its:  Senior Executive Vice President
    -----------------------------------

U. S. TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee

By:  /s/Dennis Kunisaki
   ------------------------------------
Its: Senior Vice President

    -----------------------------------

ARTICLE 9

This schedule contains summary financial information extracted from the Consolidated Balance Sheet and the Consolidated Statement of Income and is qualified in its entirety by reference to such financial statements.

MULTIPLIER: 1,000


PERIOD TYPE	9 MOS
FISCAL YEAR END	DEC 31 1999
PERIOD START	JAN 01 1999
PERIOD END	SEP 30 1999
CASH	1,775,199
INT BEARING DEPOSITS	4,359,360
FED FUNDS SOLD	1,354,735
TRADING ASSETS	13,539
INVESTMENTS HELD FOR SALE	8,740,016
INVESTMENTS CARRYING	734,365
INVESTMENTS MARKET	729,869
LOANS	15,049,125
ALLOWANCE	144,923
TOTAL ASSETS	33,684,926
DEPOSITS	19,061,249
SHORT TERM	9,386,610
LIABILITIES OTHER	1,797,361
LONG TERM	1,316,763
PREFERRED MANDATORY	0
PREFERRED	120,000
COMMON	189,935
OTHER SE	1,813,008
TOTAL LIABILITIES AND EQUITY	33,684,926
INTEREST LOAN	686,798
INTEREST INVEST	304,018
INTEREST OTHER	153,775
INTEREST TOTAL	1,144,591
INTEREST DEPOSIT	416,608
INTEREST EXPENSE	764,046
INTEREST INCOME NET	380,545
LOAN LOSSES	6,000
SECURITIES GAINS	217
EXPENSE OTHER	814,198
INCOME PRETAX	455,149
INCOME PRE EXTRAORDINARY	299,058
EXTRAORDINARY	0
CHANGES	0
NET INCOME	299,058
EPS BASIC	2.67
EPS DILUTED	2.57
YIELD ACTUAL	2.03
LOANS NON	28,897
LOANS PAST	21,947
LOANS TROUBLED	0
LOANS PROBLEM	0
ALLOWANCE OPEN	146,839
CHARGE OFFS	8,986
RECOVERIES	1,069
ALLOWANCE CLOSE	144,923
ALLOWANCE DOMESTIC	107,774
ALLOWANCE FOREIGN	3,581
ALLOWANCE UNALLOCATED	33,568