10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2004

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File No. 0-5965

NORTHERN TRUST CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	36-2723087
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
50 South LaSalle Street Chicago, Illinois	60675
(Address of principal executive offices)	(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  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).    Yes  x    No  ¨

220,388,521 Shares - $1.66 2/3 Par Value

(Shares of Common Stock Outstanding on March 31, 2004)

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEET	NORTHERN TRUST CORPORATION

($ In Millions Except Share Information)	March 31 2004			December 31 2003			March 31 2003
Assets
Cash and Due from Banks	$	1,417.4		$	1,595.9		$	1,355.7
Federal Funds Sold and Securities Purchased under Agreements to Resell		829.9			754.6			876.7
Time Deposits with Banks		9,565.7			8,767.7			6,438.7
Other Interest-Bearing		32.7			42.8			101.8
Securities
Available for Sale		7,541.8			8,422.4			6,559.4
Held to Maturity (Fair value - $1,138.7 at March 2004, $1,081.6 at December 2003, $1,035.4 at March 2003)		1,088.5			1,041.5			990.9
Trading Account		5.7			7.4			4.2
Total Securities		8,636.0			9,471.3			7,554.5
Loans and Leases
Commercial and Other		9,163.4			9,838.5			10,209.4
Residential Mortgages		7,910.2			7,975.3			7,767.3
Total Loans and Leases (Net of unearned income - $430.3 at March 2004, $435.7 at December 2003, $423.6 at March 2003)		17,073.6			17,813.8			17,976.7
Reserve for Credit Losses Assigned to Loans and Leases		(143.4	)		(149.2	)		(162.4	)
Buildings and Equipment		491.4			498.3			521.6
Customers’ Acceptance Liability		1.3			11.2			1.1
Trust Security Settlement Receivables		284.7			170.6			127.9
Other Assets		1,989.6			2,473.2			1,657.4
Total Assets	$	40,178.9		$	41,450.2		$	36,449.7
Liabilities
Deposits
Demand and Other Noninterest-Bearing	$	4,524.6		$	5,084.1		$	4,928.5
Savings and Money Market		7,698.6			7,102.6			6,963.6
Savings Certificates		1,490.6			1,524.5			1,758.4
Other Time		295.5			273.6			372.5
Foreign Offices - Demand		741.9			683.2			811.0
- Time		13,696.4			11,602.0			9,648.4
Total Deposits		28,447.6			26,270.0			24,482.4
Federal Funds Purchased		1,476.9			2,629.4			2,097.7
Securities Sold Under Agreements to Repurchase		1,590.5			1,827.8			1,249.1
Commercial Paper		145.0			142.3			131.8
Other Borrowings		2,092.5			3,677.0			2,443.8
Senior Notes		350.0			350.0			450.0
Long-Term Debt		864.5			864.7			965.6
Floating Rate Capital Debt		276.2			276.2			267.8
Liability on Acceptances		1.3			11.2			1.1
Other Liabilities		1,816.0			2,346.3			1,334.3
Total Liabilities		37,060.5			38,394.9			33,423.6
Stockholders’ Equity
Preferred Stock		—			—			120.0
Common Stock, $1.66 2/3 Par Value; Authorized 560,000,000 shares at March 2004, December 2003 and March 2003; Outstanding 220,388,521 shares at March 2004,     220,118,476 shares at December 2003 and 220,415,774 shares at March 2003		379.8			379.8			379.8
Retained Earnings		3,069.1			2,990.7			2,825.1
Accumulated Other Comprehensive Income		(11.7	)		(8.9	)		4.7
Common Stock Issuable - Stock Incentive Plans		72.4			88.6			99.3
Deferred Compensation		(34.3	)		(26.4	)		(42.3	)
Treasury Stock - (at cost, 7,533,003 shares at March 2004, 7,803,048 shares at December 2003, and 7,505,750 shares at March 2003)		(356.9	)		(368.5	)		(360.5	)
Total Stockholders’ Equity		3,118.4			3,055.3			3,026.1
Total Liabilities and Stockholders’ Equity	$	40,178.9		$	41,450.2		$	36,449.7

2

CONSOLIDATED STATEMENT OF INCOME NORTHERN TRUST CORPORATION

	First Quarter Ended March 31
($ In Millions Except Per Share Information)	2004			2003
Noninterest Income
Trust Fees	$	327.9		$	280.6
Foreign Exchange Trading Profits		41.4			20.7
Treasury Management Fees		23.0			24.0
Security Commissions and Trading Income		14.5			12.8
Other Operating Income		19.7			17.5
Investment Security Gains		—			—
Total Noninterest Income		426.5			355.6
Net Interest Income
Interest Income		254.4			274.6
Interest Expense		115.9			133.9
Net Interest Income		138.5			140.7
Provision for Credit Losses		(5.0	)		5.0
Net Interest Income after Provision for Credit Losses		143.5			135.7
Noninterest Expenses
Compensation		165.4			158.3
Employee Benefits		38.4			34.2
Occupancy Expense		30.7			28.0
Equipment Expense		20.1			22.4
Other Operating Expenses		122.9			106.6
Total Noninterest Expenses		377.5			349.5
Income from Continuing Operations before Income Taxes		192.5			141.8
Provision for Income Taxes		65.3			45.2
Income from Continuing Operations		127.2			96.6
Discontinued Operations
Income (Loss) from Discontinued Operations of NTRC		.5			(3.0	)
Income Tax Benefit (Expense)		(.2	)		1.1
Income (Loss) from Discontinued Operations		.3			(1.9	)
Net Income	$	127.5		$	94.7
Net Income Applicable to Common Stock	$	127.5		$	94.3
Per Common Share
Income from Continuing Operations
- Basic	$	.58		$	.44
- Diluted		.57			.43
Net Income
- Basic	$	.58		$	.43
- Diluted		.57			.42
Cash Dividends Declared		.19			.17
Average Number of Common Shares Outstanding - Basic		220,102,831			220,373,864
- Diluted		224,384,348			223,435,626

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME NORTHERN TRUST CORPORATION

	First Quarter Ended March 31
($ In Millions)	2004			2003
Net Income	$	127.5		$	94.7
Other Comprehensive Income (net of tax)
Net Unrealized Losses on Securities Available for Sale		(.1	)		(.1	)
Net Unrealized Losses on Cash Flow Hedge Designations		(2.3	)		(2.6	)
Foreign Currency Translation Adjustments		(.4	)		.3
Other Comprehensive Income		(2.8	)		(2.4	)
Comprehensive Income	$	124.7		$	92.3

3

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY - NORTHERN TRUST CORPORATION

	First Quarter Ended March 31
(In Millions)	2004			2003
Preferred Stock
Balance at January 1 and March 31	$	—		$	120.0
Common Stock
Balance at January 1 and March 31		379.8			379.8
Retained Earnings
Balance at January 1		2,990.7			2,775.3
Net Income		127.5			94.7
Dividend Declared - Common Stock		(41.9	)		(37.5	)
Dividends Declared - Preferred Stock		—			(.3	)
Stock Issued - Incentive Plan and Awards		(7.2	)		(7.1	)
Balance at March 31		3,069.1			2,825.1
Accumulated Other Comprehensive Income
Balance at January 1		(8.9	)		7.1
Other Comprehensive Income (Loss)		(2.8	)		(2.4	)
Balance at March 31		(11.7	)		4.7
Common Stock Issuable - Stock Incentive Plans
Balance at January 1		88.6			118.2
Stock Issuable, net of Stock Issued		(16.2	)		(18.9	)
Balance at March 31		72.4			99.3
Deferred Compensation
Balance at January 1		(26.4	)		(40.2	)
Compensation Deferred		(11.3	)		(7.1	)
Compensation Amortized		3.4			5.0
Balance at March 31		(34.3	)		(42.3	)
Treasury Stock
Balance at January 1		(368.5	)		(360.4	)
Stock Options and Awards		57.1			32.9
Stock Purchased		(45.5	)		(33.0	)
Balance at March 31		(356.9	)		(360.5	)
Total Stockholders’ Equity at March 31	$	3,118.4		$	3,026.1

4

CONSOLIDATED STATEMENT OF CASH FLOWS NORTHERN TRUST CORPORATION

	First Quarter Ended March 31
(In Millions)	2004			2003
Cash Flows from Operating Activities:
Net Income	$	127.5		$	94.7
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Provision for Credit Losses		(5.0	)		5.0
Depreciation on Buildings and Equipment		19.9			20.5
(Increase) Decrease in Receivables		14.7			(122.2	)
Decrease in Interest Payable		(8.2	)		(3.6	)
Amortization and Accretion of Securities and Unearned Income		(16.1	)		11.7
Amortization and Retirement of Computer Software		20.2			20.2
Amortization of Other Intangibles		2.4			2.3
Net Decrease in Trading Account Securities		1.7			3.5
Other Operating Activities, net		97.4			41.4
Net Cash Provided by Operating Activities		254.5			73.5
Cash Flows from Investing Activities:
Net (Increase) Decrease in Federal Funds Sold and Securities Purchased under Agreements to Resell		(75.3	)		88.1
Net (Increase) Decrease in Time Deposits with Banks		(798.0	)		1,829.5
Net (Increase) Decrease in Other Interest-Bearing Assets		10.1			(2.5	)
Purchases of Securities-Held to Maturity		(67.0	)		(120.8	)
Proceeds from Maturity and Redemption of Securities-Held to Maturity		26.5			21.0
Purchases of Securities-Available for Sale		(3,988.4	)		(7,279.9	)
Proceeds from Sale, Maturity and Redemption of Securities-Available for Sale		4,677.3			6,411.0
Net Decrease in Loans and Leases		741.6			56.1
Purchases of Buildings and Equipment		(13.7	)		(28.3	)
Purchases and Development of Computer Software		(22.4	)		(39.9	)
Net (Increase) Decrease in Trust Security Settlement Receivables		(114.1	)		480.6
Decrease in Cash Due to Acquisitions		—			(109.0	)
Other Investing Activities, net		55.1			26.1
Net Cash Provided by (Used in) Investing Activities		431.7			1,332.0
Cash Flows from Financing Activities:
Net Increase (Decrease) in Deposits		2,177.6			(1,579.7	)
Net Increase (Decrease) in Federal Funds Purchased		(1,152.5	)		425.2
Net Decrease in Securities Sold under Agreements to Repurchase		(237.3	)		(314.9	)
Net Increase (Decrease) in Commercial Paper		2.7			(11.8	)
Net Decrease in Short-Term Other Borrowings		(1,577.9	)		(1,581.4	)
Proceeds from Term Federal Funds Purchased		—			708.2
Repayments of Term Federal Funds Purchased		(6.6	)		(424.0	)
Proceeds from Senior Notes & Long-Term Debt		—			200.0
Repayments of Senior Notes & Long-Term Debt		(.2	)		(.2	)
Treasury Stock Purchased		(43.3	)		(32.3	)
Net Proceeds from Stock Options		15.4			1.1
Cash Dividend Paid on Common Stock		(41.8	)		(37.5	)
Cash Dividends Paid on Preferred Stock		—			(.4	)
Other Financing Activities, net		(.8	)		(74.3	)
Net Cash Provided by (Used in) Financing Activities		(864.7	)		(2,722.0	)
Decrease in Cash and Due from Banks		(178.5	)		(1,316.5	)
Cash and Due from Banks at Beginning of Year		1,595.9			2,672.2
Cash and Due from Banks at End of Period	$	1,417.4		$	1,355.7
Supplemental Disclosures of Cash Flow Information:
Interest Paid	$	124.1		$	137.5
Income Taxes Paid		18.3			16.2

5

Notes to Consolidated Financial Statements

1. Basis of Presentation - The consolidated financial statements include the accounts of Northern Trust Corporation (Corporation) and its subsidiaries (collectively, Northern Trust), all of which are wholly-owned. Significant intercompany balances and transactions have been eliminated. The consolidated financial statements, as of March 31, 2004 and 2003, have not been audited by the Corporation’s independent public accountants. In the opinion of management, all accounting entries and adjustments, including normal recurring accruals, necessary for a fair presentation of the financial position and the results of operations for the interim periods have been made. As discussed in Note 3 of this Report, as a result of its disposition on June 15, 2003, the operating results of Northern Trust Retirement Consulting, L.L.C. (NTRC) for all prior periods presented have been reclassified and shown as discontinued operations in the consolidated statement of income. Certain other 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 2003 Annual Report to Shareholders.

2. Recent Accounting Pronouncements - In December 2003, the Financial Accounting Standards Board (FASB) issued revised Interpretation No. 46 (FIN 46(R)), “Consolidation of Variable Interest Entities,” which replaced the original Interpretation No. 46 that had been issued in January 2003. FIN 46(R) clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. Such entities are termed variable interest entities. Application of FIN 46(R) by public entities for all variable interest entities is required in financial statements for periods ending after March 15, 2004. Northern Trust re-evaluated the revised requirements of variable interest accounting with the issuance of FIN 46(R) and determined that there was no change required in Northern Trust’s accounting treatment currently in place for its existing variable interest entities. Northern Trust will continue to monitor, evaluate, and apply authoritative guidance and interpretations relating to variable interest accounting as it is issued.

In March 2004, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 105 (SAB 105), “Application of Accounting Principles to Loan Commitments.” SAB 105 summarizes the Staff’s view that the fair value of recorded loan commitments that are required to follow derivative accounting under FASB Statement No. 133, should not consider the expected future cash flows related to the associated servicing of the loan. SAB 105 is required to be applied to loan commitments accounted for as derivatives that are entered into after March 31, 2004. The adoption of SAB 105 currently does not, and is not expected to have a material impact on Northern Trust’s consolidated financial position or results of operations.

6

Notes to Consolidated Financial Statements (continued)

3. Discontinued Operations - On June 15, 2003, Northern Trust completed the sale to Hewitt Associates of substantially all of the assets of NTRC. NTRC provided defined benefit, defined contribution and retiree health and welfare administrative services, including recordkeeping and customer service, and also provided retirement consulting and actuarial services, including plan design and communication. The operating results of the NTRC business for the current and all prior periods presented are reflected as discontinued operations in the Corporation’s consolidated statement of income and in the results of operations in the C&IS business unit. In the first quarter ended March 31, 2004, pre-tax income from discontinued operations of $.5 million was recorded primarily as a result of a change in the original estimates used to calculate the loss on the disposal of certain assets that were not transferred in the sale.

4. Securities - The following table summarizes the book and fair values of securities.

	March 31, 2004				December 31, 2003				March 31, 2003
(In Millions)	Book Value		Fair Value		Book Value		Fair Value		Book Value		Fair Value
Held to Maturity
U.S. Government	$	.5	$	.5	$	—	$	—	$	—	$	—
Obligations of States and Political Subdivisions		898.2		952.6		851.2		896.3		843.9		892.1
Federal Agency		9.9		9.9		10.2		10.2		9.3		9.3
Other		179.9		175.7		180.1		175.1		137.7		134.0
Subtotal		1,088.5		1,138.7		1,041.5		1,081.6		990.9		1,035.4
Available for Sale
U.S. Government		102.2		102.2		103.3		103.3		102.9		102.9
Obligations of States and Political Subdivisions		34.3		34.3		33.0		33.0		33.4		33.4
Federal Agency		6,831.7		6,831.7		7,756.2		7,756.2		5,892.1		5,892.1
Preferred Stock		64.1		64.1		79.1		79.1		80.8		80.8
Other		509.5		509.5		450.8		450.8		450.2		450.2
Subtotal		7,541.8		7,541.8		8,422.4		8,422.4		6,559.4		6,559.4
Trading Account		5.7		5.7		7.4		7.4		4.2		4.2
Total Securities	$	8,636.0	$	8,686.2	$	9,471.3	$	9,511.4	$	7,554.5	$	7,599.0

7

Notes to Consolidated Financial Statements (continued)

Reconciliation of Book Values to Fair Values of Securities Held to Maturity

	March 31, 2004
	Book Value		Gross Unrealized				Fair Value
(In Millions)			Gains		Losses
U.S. Government	$	.5	$	—	$	—	$	.5
Obligations of States and Political Subdivisions		898.2		54.9		.5		952.6
Federal Agency		9.9		.1		.1		9.9
Other		179.9		.3		4.5		175.7
Total	$	1,088.5	$	55.3	$	5.1	$	1,138.7

Reconciliation of Amortized Cost to Fair Values of Securities Available for Sale

	March 31, 2004
	Amortized Cost		Gross Unrealized				Fair Value
(In Millions)			Gains		Losses
U.S. Government	$	102.2	$	—	$	—	$	102.2
Obligations of States and Political Subdivisions		30.6		3.7		—		34.3
Federal Agency		6,822.4		9.3		—		6,831.7
Preferred Stock		64.1		—		—		64.1
Other		508.1		1.4		—		509.5
Total	$	7,527.4	$	14.4	$	—	$	7,541.8

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

(In Millions)	March 31, 2004			December 31, 2003			March 31, 2003
Domestic
Residential Real Estate	$	7,910.2		$	7,975.3		$	7,767.3
Commercial		3,243.6			3,405.3			3,973.9
Broker		28.9			7.0			147.1
Commercial Real Estate		1,237.7			1,297.1			1,200.4
Personal		2,485.6			2,699.9			2,415.4
Other		464.3			743.9			562.0
Lease Financing		1,211.0			1,228.0			1,242.4
Total Domestic		16,581.3			17,356.5			17,308.5
International		492.3			457.3			668.2
Total Loans and Leases	$	17,073.6		$	17,813.8		$	17,976.7
Reserve for Credit Losses Assigned to Loans and Leases		(143.4	)		(149.2	)		(162.4	)
Net Loans and Leases	$	16,930.2		$	17,664.6		$	17,814.3

At March 31, 2004, other domestic and international loans included $490.9 million of overnight trust-related advances, compared with $672.2 million at December 31, 2003 and $716.8 million at March 31, 2003.

8

Notes to Consolidated Financial Statements (continued)

At March 31, 2004, nonperforming loans and leases totaled $71.6 million. Included in this amount were loans with a recorded investment of $69.1 million (net of $14.8 million in charge-offs) which were also classified as impaired. A loan is impaired when, based on available information, 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 (net of $4.8 million in charge-offs) had no portion of the reserve for credit losses allocated to them while impaired loans totaling $64.0 million (net of $10.0 million in charge-offs) had an allocated reserve of $33.5 million. For the first quarter of 2004, the total recorded investment in impaired loans averaged $74.2 million. There was no interest income recorded on impaired loans for the quarter ended March 31, 2004.

At March 31, 2003, nonperforming loans and leases totaled $92.4 million and included $88.0 million (net of $10.9 million in charge-offs) of impaired loans. Of these impaired loans, $11.9 million (net of $4.8 million in charge-offs) had no portion of the reserve for credit losses allocated to them while $76.1 million (net of $6.1 million in charge-offs) had an allocated reserve of $33.5 million. Total recorded investment in impaired loans for the first quarter of 2003 averaged $89.9 million. There was $161 thousand of interest income recognized on such loans for the quarter ended March 31, 2003.

At March 31, 2004, residential real estate loans totaling $1.3 million were held for sale and carried at the lower of cost or market.

Loan commitments for residential real estate loans, which when funded will be held for sale with a notional amount of $3.8 million at March 31, 2004, are carried at fair value. All other loan commitments are carried at the amount of unamortized fees. At March 31, 2004, legally binding commitments to extend credit totaled $16.2 billion, compared with $16.5 billion at December 31, 2003 and $16.9 billion at March 31, 2003.

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

	First Quarter Ended March 31
(In Millions)	2004			2003
Balance at Beginning of Period	$	157.2		$	168.5
Charge-Offs		(4.1	)		(6.0	)
Recoveries		3.4			2.6
Net Charge-Offs		(.7	)		(3.4	)
Provision for Credit Losses		(5.0	)		5.0
Balance at End of Period	$	151.5		$	170.1
Reserve for Credit Losses Assigned to:
Loans and Leases	$	143.4		$	162.4
Unfunded Commitments, Standby Letters of Credit and Derivatives		8.1			7.7
Total Reserve for Credit Losses	$	151.5		$	170.1

9

Notes to Consolidated Financial Statements (continued)

The reserve for credit losses represents management’s estimate of probable inherent losses that 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 reserve 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, which depend upon internal credit ratings. These loss factors primarily include management’s judgment concerning the effect of the current 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 reserve based on factors that cannot be associated with a specific credit or loan category. 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 reserve reflects management’s attempt to ensure that the overall reserve appropriately reflects a margin for the imprecision inherent in the process of estimating probable credit losses.

7. Goodwill and Other Intangibles - Goodwill and other intangible assets are included in other assets in the consolidated balance sheet. The following table shows the changes in the carrying amount of goodwill, by business unit, for the first quarter ended March 31, 2004.

(In Millions)	Corporate and Institutional Services		Personal Financial Services		Total
Balance at December 31, 2003	$	141.7	$	55.1	$	196.8
Goodwill Acquired		—		—		—
Balance at March 31, 2004	$	141.7	$	55.1	$	196.8

10

Notes to Consolidated Financial Statements (continued)

The gross carrying amount and accumulated amortization of other intangible assets at March 31, 2004 and March 31, 2003, was as follows:

	First Quarter Ended March 31
	2004				2003
(In Millions)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Other Intangible Assets- Subject to Amortization	$	114.3	$	72.0	$	109.5	$	61.5

Other intangible assets consist primarily of the value of acquired customer relationships. Amortization expense related to other intangible assets totaled $2.4 million and $2.3 million for the quarters ended March 31, 2004 and 2003, respectively. Amortization for the remainder of 2004 and for the years 2005, 2006, 2007 and 2008 is estimated to be $7.2 million, $8.7 million, $8.4 million, $6.1 million and $4.2 million, respectively.

8. Accumulated Other Comprehensive Income - The following table summarizes the components of accumulated other comprehensive income at March 31, 2004 and 2003, and changes during the three-month periods then ended, presented on an after-tax basis.

	First Quarter Ended March 31, 2004
	Beginning Balance (Net of Tax)			Period Change						Ending Balance (Net of Tax)
(In Millions)				Pre-Tax Amount			Tax Effect
Unrealized Gains (Losses) on Securities Available for Sale	$	2.7		$	(.1	)	$	—		$	2.6
Less: Reclassification Adjustments		—			—			—			—
Net Unrealized Gains (Losses) on Securities Available for Sale		2.7			(.1	)		—			2.6
Unrealized Gains (Losses) on Cash Flow Hedge Designations		.3			(.2	)		.1			.2
Less: Reclassification Adjustments		—			3.5			(1.3	)		2.2
Net Unrealized Gains (Losses) on Cash Flow Hedge Designations		.3			(3.7	)		1.4			(2.0	)
Foreign Currency Translation Adjustments		.1			(.8	)		.4			(.3	)
Minimum Pension Liability		(12.0	)		—			—			(12.0	)
Accumulated Other Comprehensive Income	$	(8.9	)	$	(4.6	)	$	1.8		$	(11.7	)
	First Quarter Ended March 31, 2003
	Beginning Balance (Net of Tax)			Period Change						Ending Balance (Net of Tax)
(In Millions)				Pre-Tax Amount			Tax Effect
Unrealized Gains (Losses) on Securities Available for Sale	$	5.7		$	(.1	)	$	—		$	5.6
Less: Reclassification Adjustments		—			—			—			—
Net Unrealized Gains (Losses) on Securities Available for Sale		5.7			(.1	)		—			5.6
Unrealized Gains (Losses) on Cash Flow Hedge Designations		5.8			(3.9	)		1.5			3.4
Less: Reclassification Adjustments		—			.3			(.1	)		.2
Net Unrealized Gains (Losses) on Cash Flow Hedge Designations		5.8			(4.2	)		1.6			3.2
Foreign Currency Translation Adjustments		(.4	)		.5			(.2	)		(.1	)
Minimum Pension Liability		(4.0	)		—			—			(4.0	)
Accumulated Other Comprehensive Income	$	7.1		$	(3.8	)	$	1.4		$	4.7

11

Notes to Consolidated Financial Statements (continued)

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

	First Quarter Ended March 31
($ In Millions Except Per Share Information)	2004		2003
Basic Net Income Per Common Share
Average Number of Common Shares Outstanding		220,102,831		220,373,864
Reported Income from Continuing Operations	$	127.2	$	96.6
Less: Dividends on Preferred Stock		—		(.4	)
Income from Continuing Operations Applicable to Common Stock	$	127.2	$	96.2
Reported Basic Income from Continuing Operations Per Common Share	$	.58	$	.44
Income (Loss) from Discontinued Operations	$	.3	$	(1.9	)
Basic Income (Loss) from Discontinued Operations Per Common Share	$	—	$	(.01	)
Net Income Applicable to Common Stock	$	127.5	$	94.3
Basic Net Income Per Common Share	$	.58	$	.43
Diluted Net Income Per Common Share
Average Number of Common Shares Outstanding		220,102,831		220,373,864
Plus Dilutive Potential Common Shares:
Stock Options		3,278,296		1,808,123
Stock Incentive Plans *		1,003,221		1,253,639
Average Common and Potential Common Shares		224,384,348		223,435,626
Income from Continuing Operations Applicable to Common Stock	$	127.2	$	96.2
Reported Diluted Income from Continuing Operations Per Common Share	$	.57	$	.43
Income (Loss) from Discontinued Operations	$	.3	$	(1.9	)
Diluted Income (Loss) from Discontinued Operations Per Common Share	$	—	$	(.01	)
Net Income Applicable to Common Stock	$	127.5	$	94.3
Diluted Net Income Per Common Share	$	.57	$	.42

* Includes Dilutive Potential Common Shares related to restricted stock and stock unit awards subject to vesting requirements. Refer to Note 22, “Stock-Based Compensation Plans” on pages 82 through 84 of the Corporation’s 2003 Annual Report to Shareholders.

10. Other Charges - During the second quarter of 2003, Northern Trust implemented a number of strategic steps to reduce expenses and better position itself for improved profitability.

Changes in the other liabilities caption of consolidated balance sheet related to these actions were as follows:

(In Millions)	Severance			Office Space			Total
Liabilities:
Established in 2003	$	24.0		$	18.7		$	42.7
Cash Payments in 2003		(16.3	)		(1.2	)		(17.5	)
Balance at December 31, 2003		7.7			17.5			25.2
Established in 2004		—			1.2			1.2
Cash Payments in 2004		(2.0	)		(.7	)		(2.7	)
Balance at March 31, 2004	$	5.7		$	18.0		$	23.7

12

Notes to Consolidated Financial Statements (continued)

11. Pension and Other Postretirement Plans - The following tables set forth the net periodic pension cost of the domestic qualified and nonqualified pension benefit plans and the other postretirement plan for the quarters ending March 31, 2004 and 2003.

Components of Net Periodic Pension Expense	Qualified Plan						Nonqualified Plan
	First Quarter Ended March 31						First Quarter Ended March 31
(In Millions)	2004			2003			2004		2003
Service Cost	$	5.4		$	4.4		$	.5	$	.5
Interest Cost		5.8			5.0			.7		.7
Expected Return on Plan Assets		(8.1	)		(7.0	)		—		—
Amortization:
Net Loss		1.9			.6			.6		.6
Prior Service Cost (Benefit)		—			—			—		—
Net Periodic Pension Expense	$	5.0		$	3.0		$	1.8	$	1.8

Components of Net Periodic Postretirement Benefit Expense	First Quarter Ended March 31
(In Millions)	2004		2003
Service Cost	$	.4	$	.4
Interest Cost		.7		.7
Amortization:
Transition Obligation		.1		.1
Net Loss		.3		.2
Net Periodic Postretirement Benefit Expense	$	1.5	$	1.4

For the quarter ended March 31, 2004, Northern Trust made no contributions to its qualified pension plan. The nonqualified plan made benefit payments totaling $1.6 million for the quarter ended March 31, 2004 and these payments are estimated to be approximately $3.8 million for the entire year. The benefit payments for the postretirement health care plan for the quarter totaled $1.0 million and these payments are estimated to be approximately $3.7 million for all of 2004.

On April 10, 2004, the Pension Funding Equity Act of 2004 was signed into law. Based on this new law, the minimum contribution required to be made by Northern Trust to the qualified pension plan in 2004 is zero and the maximum deductible contribution is estimated to total approximately $54 million.

On December 8, 2003, a bill was signed into law that added a prescription drug benefit for Medicare-eligible retirees in 2006. Northern Trust anticipates that future benefit payments will be lower as a result of the new Medicare provision. The retiree medical obligations and costs do not reflect any impact of this legislation because Northern Trust is unable to conclude whether the benefits provided by the plan are actuarially equivalent to Medicare Part D under the Act until final regulations are issued.

13

Notes to Consolidated Financial Statements (continued)

12. Stock-Based Compensation Plans - The Northern Trust Corporation 2002 Stock Plan (2002 Plan) provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, stock awards, performance shares and stock units. As of March 31, 2004, shares available for future grant under the 2002 Plan totaled 11,098,964.

Statement of Financial Accounting Standards (SFAS) No. 123, “Accounting for Stock-Based Compensation,” establishes financial accounting and reporting standards for stock-based compensation plans. SFAS No. 123 allows two alternative accounting methods: (1) a fair-value-based method, or (2) an intrinsic-value-based method which is prescribed by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB No. 25) and related interpretations. Northern Trust has elected to account for its stock-based incentive plans and awards under APB No. 25, and has adopted the disclosure requirements of SFAS No. 123, as amended by SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure.”

Pro forma information regarding net income and earnings per share has been determined as if the Corporation had accounted for all stock-based compensation under the fair value method of SFAS No. 123. For purposes of estimating the fair value of the Corporation’s employee stock options at the grant date, a Black-Scholes option pricing model was used with the following weighted average assumptions for 2004 and 2003, respectively: risk-free interest rates of 3.13% and 3.94%; dividend yields of 2.53% and 2.08%; volatility factors of the expected market price of the Corporation’s common stock of 33.8% and 33.5%; and a weighted average expected life of the options of 5.5 years and 6.2 years.

The weighted average fair value of options granted in 2004 and 2003 was $13.66 per share and $10.38 per share, respectively. For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options’ six-month to four-year vesting periods.

The Corporation’s pro forma information follows.

	First Quarter Ended March 31
(In Millions Except per Share Information)	2004			2003
Net Income as Reported	$	127.5		$	94.7
Add: Stock-Based Employee Compensation Expense Included in Reported Net Income, Net of Tax		4.8			3.4
Deduct: Total Stock-Based Employee Compensation Expense Determined Under the Fair Value Method, Net of Tax		(13.0	)		(17.4	)
Pro Forma Net Income	$	119.3		$	80.7
Earnings Per Share as Reported:
Basic	$	.58		$	.43
Diluted		.57			.42
Pro Forma Earnings Per Share:
Basic	$	.54		$	.36
Diluted		.53			.36

14

Notes to Consolidated Financial Statements (continued)

13. Contingent Liabilities - Standby letters of credit obligate Northern Trust to meet certain financial obligations of its clients, if, under the contractual terms of the agreement, the clients are unable to do so. These instruments are primarily issued to support public and private financial commitments, including commercial paper, bond financing, initial margin requirements on futures exchanges and similar transactions. Certain standby letters of credit have been secured with cash deposits or participated to others. Northern Trust is obligated to meet the entire financial obligation of these agreements and in certain cases is able to recover the amounts paid through recourse against cash deposits or other participants. Standby letters of credit outstanding were $2.7 billion on March 31, 2004, $2.5 billion on December 31, 2003 and $2.7 billion on March 31, 2003. Northern Trust’s liability on the consolidated balance sheet for standby letters of credit, measured as the amount of unamortized fees on these instruments, totaled $4.2 million at March 31, 2004.

As part of securities custody activities and at the direction of trust clients, Northern Trust lends securities owned by clients to borrowers who are reviewed by the Credit Policy Credit Approval Committee. In connection with these activities, Northern Trust has issued certain indemnifications against loss resulting from the bankruptcy of the borrower of securities. The borrowing party is required to fully collateralize securities received with cash, marketable securities, or irrevocable standby letters of credit. As securities are loaned, collateral is maintained at a minimum of 100 percent of the fair value of the securities plus accrued interest. The collateral is revalued on a daily basis. The amount of securities loaned subject to indemnification was $92.4 billion at March 31, 2004, $74.0 billion at December 31, 2003 and $50.8 billion at March 31, 2003. Because of the requirement to fully collateralize securities borrowed, management believes that the exposure to credit loss from this activity is remote and there are no liabilities reflected on the consolidated balance sheet at March 31, 2004, December 31, 2003 or March 31, 2003, related to these indemnifications.

Because of the nature of its activities, Northern Trust is subject to pending and threatened legal actions that arise in the normal course of business. Management cannot estimate the specific possible loss or range of loss that may result from these proceedings since it is not possible to formulate a meaningful opinion as to the range of possible outcomes and plaintiffs’ ultimate damage claims. In the judgment of management, after consultation with legal counsel, none of the litigation to which the Corporation or any of its subsidiaries is a party, including the matters described below, will have a material effect, either individually or in the aggregate, on the Corporation’s consolidated financial position or results of operations.

15

Notes to Consolidated Financial Statements (continued)

One subsidiary of the Corporation has been named as a defendant in several Enron-related class action suits that have been consolidated under a single complaint in the Federal District Court for the Southern District of Texas (Houston). Individual participants in the employee pension benefit plans sponsored by Enron Corp. sued various corporate entities and individuals, including The Northern Trust Company (Bank) in its capacity as the former directed trustee of the Enron Corp. Savings Plan and former service-provider for the Enron Corp. Employee Stock Ownership Plan. The lawsuit makes claims, inter alia, for breach of fiduciary duty to the plan participants, and seeks equitable relief and monetary damages in an unspecified amount against the defendants. On September 30, 2003, the court denied the Bank’s motion to dismiss the complaint as a matter of law. In an Amended Consolidated Complaint filed on January 2, 2004, plaintiffs continue to assert claims against the Bank and other defendants under the Employee Retirement Income Security Act of 1974, seeking a finding that defendants are liable to restore to the benefit plans and the plaintiffs hundreds of millions of dollars of losses allegedly caused by defendants’ alleged breaches of fiduciary duty. The Corporation and the Bank will continue to defend this action vigorously. In June 2003, after conducting an extensive investigation, which included the Bank and NTRC, the U.S. Department of Labor (DOL) filed a civil action against numerous parties charging that they violated their obligations to the Enron plan participants. The DOL did not name any Northern Trust entity or employee as a defendant in its suit. In another matter, in November and December 2003, Enron as debtor-in-possession filed two lawsuits seeking to recover for its bankruptcy estate more than $1 billion it paid in the fall of 2001 to buy back its commercial paper. Enron claims that the money it paid to buy back its commercial paper approximately six weeks prior to its bankruptcy filing represented “preference” payments and “fraudulent transfers” that can be reversed with the money going back to Enron. Since the Bank sold approximately $197 million of this Enron commercial paper that it held for some of its clients, the Bank and those clients are among scores of defendants named in these complaints. The Corporation and the Bank will defend these actions vigorously. Based upon the information developed to date and recognizing that the outcome of complex litigation and related matters is uncertain, management believes that these matters will be resolved without material impact on the Corporation’s consolidated financial position or results of operations.

14. 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 $10.1 billion on March 31, 2004, $10.1 billion on December 31, 2003 and $8.5 billion on March 31, 2003. Included in the March 2004 pledged assets were securities available for sale of $1.4 billion, which were pledged as collateral for agreements to repurchase securities sold transactions. The secured parties to these transactions have the right to repledge or sell these securities.

16

Notes to Consolidated Financial Statements (continued)

Northern Trust is also permitted to repledge or sell collateral from agreements to resell securities purchased transactions. The total fair value of accepted collateral as of March 31, 2004, December 31, 2003 and March 31, 2003 was $693.9 million, $407.2 million and $354.2 million, respectively. The fair value of repledged collateral as of March 31, 2004, December 31, 2003 and March 31, 2003 was $50.5 million, $50.4 million and $8.0 million, respectively. Repledged collateral was used in other agreements to repurchase securities sold transactions.

15. Business Units - The table on page 23, reflecting the earnings contribution of Northern Trust’s business units for the first quarter ended March 31, 2004, is incorporated by reference.

17

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS

Overview

Net income per common share on a diluted basis was $.57 for the first quarter, an increase of 36% from $.42 per share earned a year ago. Net income increased 35% to $127.5 million from $94.7 million earned in the first quarter of last year. This performance produced an annualized return on average common equity (ROE) of 16.74% versus 13.32% reported for the comparable quarter last year and an annualized return on average assets (ROA) of 1.30% versus 1.03% in 2003.

As a result of its disposition in June 2003, the operating results of Northern Trust Retirement Consulting, L.L.C. (NTRC) for the first quarter and the prior period presented are shown as discontinued operations in Northern Trust’s consolidated statement of income.

Revenues from continuing operations of $578.2 million were up 14% from $509.1 million in last year’s first quarter, while expenses from continuing operations rose 8%. The quarterly performance was driven by record trust fees, increased foreign exchange trading profits and continued improvement in credit quality.

Noninterest Income

Noninterest income from continuing operations totaled $426.5 million for the quarter, up 20% from $355.6 million reported last year, and accounted for 74% of total taxable equivalent revenue. Trust fees were $327.9 million in the quarter, up 17% compared with $280.6 million in the first quarter of last year and represented 57% of total taxable equivalent revenue. The increase in trust fees resulted primarily from improved equity markets and net new business. The components of noninterest income for the first quarters of 2004 and 2003 are listed in the following table:

Noninterest Income	First Quarter Ended March 31
(In Millions)	2004		2003
Trust Fees	$	327.9	$	280.6
Foreign Exchange Trading Profits		41.4		20.7
Treasury Management Fees		23.0		24.0
Security Commissions and Trading Income		14.5		12.8
Other Operating Income		19.7		17.5
Total Noninterest Income	$	426.5	$	355.6

Assets under administration totaled a record $2.29 trillion at March 31, 2004. This represents an increase in assets under administration of 6% from December 31, 2003 and 44% from March 31, 2003. Assets under management also reached a new high and totaled $520.8 billion compared with $478.6 billion at December 31, 2003 and $365.3 billion at March 31, 2003.

18

Noninterest Income (continued)

Consolidated Trust Assets Under Administration (In Billions)	March 31, 2004		December 31, 2003		March 31, 2003
Corporate & Institutional	$	414.3	$	374.3	$	278.0
Personal		106.5		104.3		87.3
Total Managed Trust Assets		520.8		478.6		365.3
Corporate & Institutional		1,669.3		1,585.8		1,151.9
Personal		98.3		90.7		68.7
Total Non-Managed Trust Assets		1,767.6		1,676.5		1,220.6
Consolidated Trust Assets Under Administration	$	2,288.4	$	2,155.1	$	1,585.9

Trust fees are generally 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. Certain investment management fee arrangements also may provide for performance fees, which are based on client portfolio returns exceeding predetermined levels. In addition, Corporate & Institutional Services (C&IS) trust relationships are generally priced to reflect earnings from activities such as foreign exchange trading and custody-related deposits that are not included in trust fees.

Trust fees from Personal Financial Services (PFS) in the first quarter increased 12% and totaled $161.6 million compared with $144.4 million a year-ago. The increase in PFS trust fees resulted primarily from improved equity markets and net new business. Revenue growth was broad-based, with all states and the Wealth Management Group reporting year-over-year increases in trust fees. Personal trust assets under administration totaled $204.8 billion at March 31, 2004, compared with $195.0 billion at December 31, 2003 and $156.0 billion at March 31, 2003. Of the total assets under administration, $106.5 billion is managed by Northern Trust compared with $104.3 billion at December 31, 2003 and $87.3 billion one year ago. At March 31, 2004, 50% of personal assets under management were invested in equity securities compared with 39% one year ago. Net new recurring PFS trust business transitioned during the first quarter represents approximately $9 million in annualized fees.

Trust fees from C&IS in the quarter were up 22% to $166.3 million from $136.2 million in the year-ago quarter reflecting strong growth in all products and services, improved equity markets and net new business. Custody fees increased 23% to $65.3 million for the quarter, reflecting strong growth in global custody revenues, while fees from asset management grew 20% to $58.1 million. Securities lending fees totaled $27.9 million compared with $21.9 million in last year’s first quarter, reflecting higher volumes, partially offset by lower spreads earned on the investment of collateral.

19

Noninterest Income (continued)

C&IS assets under administration totaled $2.08 trillion at March 31, 2004 compared with $1.96 trillion at December 31, 2003 and $1.43 trillion at March 31, 2003. C&IS assets under management totaled $414.3 billion compared with $374.3 billion at December 31, 2003 and $278.0 billion at March 31, 2003. Assets under administration include $823.9 billion of global custody assets, an increase of 73% compared with $476.0 billion one year ago. At March 31, 2004, approximately 38% of assets under management were invested in equity securities compared with 35% one year ago. Net new recurring C&IS trust business transitioned during the first quarter represents approximately $18 million in annualized fees.

Foreign exchange trading profits were $41.4 million in the quarter compared with $20.7 million in the first quarter of last year. The improvement reflects increased volatility in major currencies throughout the quarter, including the euro and pound sterling and, toward quarter-end, the yen. In addition, a stronger economic climate versus the year-earlier period contributed to increased client activity. In the prior year, investment manager activity was negatively impacted by uncertainty leading up to the March 2003 invasion of Iraq. Treasury management fees in the quarter were $23.0 million compared with $24.0 million in the same quarter last year. Revenues from security commissions and trading income were $14.5 million, up 13% from the prior year. Other operating income, the components of which are listed below, was $19.7 million for the first quarter compared with $17.5 million in the same period last year.

Other Operating Income	First Quarter Ended March 31
(In Millions)	2004		2003
Loan Service Fees	$	5.7	$	6.2
Banking Service Fees		2.4		2.3
Other Income		11.6		9.0
Total Other Operating Income	$	19.7	$	17.5

Net Interest Income

Net interest income for the quarter totaled $138.5 million, 2% lower than the $140.7 million reported in the first quarter of 2003. Net interest income is defined as the total of interest income and amortized fees on earning assets, less interest expense on deposits and borrowed funds, adjusted for the impact of hedging 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 for the quarter, stated on a FTE basis, totaled $151.7 million compared with $153.5 million reported in the prior year quarter. The net interest margin decreased to 1.73% from 1.87% in the prior year due primarily to a decline in the average yield of the residential mortgage loan portfolio attributable to the prior year refinancing activity. Total average earning assets of $35.2 billion were 6% higher than a year ago with the increase concentrated in securities and money market assets. Securities increased 9% and averaged $8.0 billion with the increase concentrated primarily in short-term U.S. agency securities. Average money market assets increased 18% to $9.9 billion while average loans declined 2% to $17.3 billion.

20

Net Interest Income (continued)

Average domestic loans outstanding during the quarter, at $16.8 billion, were 2% below the $17.2 billion in the first quarter of last year, while average international loans increased $81 million from a year ago to $444 million. Residential mortgages averaged $7.9 billion in the quarter, up 2% from the prior year’s first quarter and represented 46% of the total average loan portfolio. Commercial and industrial loans averaged $3.4 billion, down 15% from $4.0 billion last year, while personal loans increased 4% to average $2.5 billion compared with $2.4 billion in last year’s first quarter.

Northern Trust utilizes a diverse mix of funding sources. Total interest-related deposits averaged $20.5 billion, up 11% from the first quarter of 2003. Foreign office time deposits increased $1.9 billion as a result of global custody activity, while retail deposit levels increased $273 million due primarily to higher balances in money market deposit accounts, offset in part by a reduction in savings certificates and nonpersonal time deposits. Other interest-related funds averaged $8.8 billion in the quarter compared with $9.4 billion in last year’s first quarter. The balances within these classifications vary based on funding requirements and strategies, interest rate levels, changes in the volume of lower-cost deposit sources, and the availability of collateral to secure these borrowings. Noninterest-related funds used to fund earning assets increased 6% from the prior year, averaging $5.8 billion.

Provision for Credit Losses

The reserve for credit losses was reduced by $5.7 million in the quarter reflecting a negative provision for credit losses of $5.0 million and net charge-offs of $.7 million. Last year the provision was $5.0 million and net charge-offs totaled $3.4 million. For a discussion of the provision and reserve for credit losses, refer to the “Asset Quality” section beginning on page 26.

Noninterest Expenses

Noninterest expenses from continuing operations totaled $377.5 million for the quarter, up 8% from $349.5 million in the year-ago quarter. The components of noninterest expenses and a discussion of significant changes in balances during 2004 are provided below.

Noninterest Expenses	First Quarter Ended March 31
(In Millions)	2004		2003
Compensation	$	165.4	$	158.3
Employee Benefits		38.4		34.2
Occupancy Expense		30.7		28.0
Equipment Expense		20.1		22.4
Other Operating Expenses		122.9		106.6
Total Noninterest Expenses	$	377.5	$	349.5

21

Noninterest Expenses (continued)

Compensation and employee benefit expenses totaled $203.8 million compared with $192.5 million last year. These expenses reflect annual salary increases, higher incentive compensation and increased pension and medical plan costs. These increases were partially offset by lower staffing levels. Staff on a full-time equivalent basis at March 31, 2004 totaled 7,994 compared with 8,683 a year ago. Staffing level declines were the result of the elimination of positions resulting from Northern Trust’s previously disclosed strategic business review, offset in part by increases relating to staffing for new offices, and other strategic initiatives.

Net occupancy expense totaled $30.7 million, up 10% from $28.0 million in the first quarter of 2003. The current quarter included $1.2 million in charges associated with revisions made to the estimated cost of reducing required office space. The remainder of the increase in occupancy expense was due primarily to higher net rental costs and building maintenance, partially offset by real estate tax refunds.

Equipment expense, comprised of depreciation, rental and maintenance costs totaled $20.1 million, down 10% from $22.4 million reported in the first quarter of 2003. The decrease was concentrated primarily in maintenance of computer hardware, data line lease costs and lower depreciation of computer hardware and personal computers.

Other operating expenses in the quarter totaled $122.9 million compared with $106.6 million last year. The increase reflects expenses associated with operating risks related to servicing and managing financial assets, investments in technology that increased software amortization, higher insurance premiums and fees for global custody and asset management sub-advisor services. The first of these categories included an $11.6 million loss from securities processing activities related to a stock conversion offer that was not processed on a timely basis. These increases were partially offset by lower expenses from strategic initiatives implemented in 2003 to reduce operating costs. The components of other operating expenses were as follows:

Other Operating Expenses	First Quarter Ended March 31
(In Millions)	2004		2003
Outside Services Purchased	$	52.4	$	47.8
Software Amortization and Other Costs		26.5		25.5
Business Promotion		10.4		11.6
Other Intangibles Amortization		2.4		2.3
Other Expenses		31.2		19.4
Total Other Operating Expenses	$	122.9	$	106.6

22

Provision for Income Taxes

The provision for income taxes from continuing operations was $65.3 million for the first quarter compared with $45.2 million in the year-ago quarter. The higher tax provision in 2004 primarily reflects the impact of higher earnings. The effective income tax rate for the quarter was 33.9% compared with 31.9% in the first quarter of 2003. The increase in the Corporation’s effective income tax rate for the first quarter of 2004 is primarily attributable to the decrease in the Corporation’s federally tax-exempt income as a percentage of total income.

BUSINESS UNIT REPORTING

The following table reflects the earnings contribution and average assets of Northern Trust’s business units for the first quarter ended March 31, 2004 and 2003.

Results of Operations First Quarter	Corporate and Institutional Services						Personal Financial Services						Treasury and Other						Total Consolidated
($ In Millions)	2004			2003			2004			2003			2004			2003			2004			2003
Noninterest Income
Trust Fees	$	166.3		$	136.2		$	161.6		$	144.4		$	—		$	—		$	327.9		$	280.6
Other		72.2			51.2			24.3			23.3			2.1			.5			98.6			75.0
Net Interest Income *		41.4			39.7			109.6			109.4			.7			4.4			151.7			153.5
Provision for Credit Losses		(4.7	)		(2.6	)		(.3	)		7.6			—			—			(5.0	)		5.0
Noninterest Expenses		178.0			162.0			185.2			181.1			14.3			6.4			377.5			349.5
Income before Income Taxes*		106.6			67.7			110.6			88.4			(11.5	)		(1.5	)		205.7			154.6
Provision for Income Taxes*		41.5			26.5			42.9			34.6			(5.9	)		(3.1	)		78.5			58.0
Income from Continuing Operations	$	65.1		$	41.2		$	67.7		$	53.8		$	(5.6	)	$	1.6		$	127.2		$	96.6
Income (Loss) from Discontinued Operations		.3			(1.9	)		—			—			—			—			.3			(1.9	)
Net Income	$	65.4		$	39.3		$	67.7		$	53.8		$	(5.6	)	$	1.6		$	127.5		$	94.7
Percentage of Net Income Contribution		51	%		41	%		53	%		57	%		(4	)%		2	%		100	%		100	%
Average Assets	$	19,839.0		$	16,302.9		$	15,984.6		$	15,918.5		$	3,699.4		$	5,240.1		$	39,523.0		$	37,461.5

* Stated on a fully taxable equivalent basis (FTE). Total includes FTE adjustments of $13.2 million for 2004 and $12.8 million for 2003.

Note: Certain reclassifications have been made to 2003 financial information to conform to the current year presentation.

Corporate and Institutional Services

C&IS net income for the first quarter totaled $65.4 million, up 66% from $39.3 million reported in 2003. Included in the above are the operating results of NTRC that have been reclassified and shown as discontinued operations for all periods presented. NTRC reported net income of $.3 million in the current quarter compared with a net loss of $1.9 million in the first quarter of 2003. Noninterest income from continuing operations was $238.5 million, up 27% from $187.4 million in last year’s first quarter. Trust fees in the quarter were up 22% to $166.3 million from $136.2 million in the year-ago quarter reflecting strong growth in all products and services, improved equity markets and net new business. Custody fees increased 23% to $65.3 million for the quarter, reflecting strong growth in global custody revenues, while fees from asset management grew 20% to $58.1 million. Securities lending fees totaled $27.9 million compared with $21.9 million in last year’s first quarter, reflecting higher volumes, partially offset by lower spreads earned on the investment of collateral.

23

Corporate and Institutional Services (continued)

Other noninterest income was $72.2 million, up 41% from last year’s first quarter, primarily the result of higher foreign exchange trading profits resulting from continued volatility in the currency markets and increased client activity.

Net interest income stated on a FTE basis was $41.4 million, up 4% from $39.7 million in last year’s first quarter. Net interest income was positively impacted by a $2.9 billion or 20% increase in average earning assets. The increase was concentrated in short-term money market assets, offset in part by a $429 million reduction in average loans outstanding. The net interest margin fell to .97% for the current quarter from 1.13% in last year’s first quarter. Both the net interest spread and margin were negatively impacted by the increase in lower-rate money market assets and a decline in the earnings capacity of noninterest-related funds due to lower interest rates.

The negative $4.7 million provision for credit losses in the current quarter resulted from improved credit quality brought about by cash payments received on lower-rated loans that require higher reserve levels. Total noninterest expenses of C&IS, which include both the direct expenses of the business unit and indirect expense allocations from Northern Trust Global Investments (NTGI) and Worldwide Operations and Technology (WWOT) for product and operating support, increased 10% and totaled $178.0 million for the first quarter. The expense increase was primarily the result of the $11.6 million loss from security processing activities related to a stock conversion offer, in addition to increased compensation expense resulting from higher performance-based pay.

Personal Financial Services

PFS net income for the quarter was $67.7 million, 26% higher than the $53.8 million reported a year ago. Trust fees increased 12% and totaled $161.6 million in the current quarter compared with $144.4 million last year. The increase in PFS trust fees resulted primarily from improved equity markets and net new business. Revenue growth was broad-based, with all states and our Wealth Management Group reporting year-over-year increases in trust fees. Other operating income totaled $24.3 million compared with $23.3 million in the prior year quarter.

Net interest income stated on a FTE basis, was $109.6 million in the quarter compared with $109.4 million in the prior year’s first quarter. The results reflect a 2% increase in average loans, offset by a slight decrease in the net interest margin from 2.92% last year to 2.90% in the current quarter.

The negative $.3 million provision for credit losses, down from $7.6 million last year, is due primarily to the improved credit quality of certain commercial loans. Total noninterest expenses of PFS, which include both the direct expenses of the business unit and indirect expense allocations from NTGI and WWOT for product and operating support, increased slightly to $185.2 million in the quarter from $181.1 million in last year’s first quarter. Higher costs for legal and consulting services, increased occupancy expense resulting from the remodeling and expansion of existing locations, and higher allocations for product and operations support contributed to the overall increase in operating expenses.

24

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 investment portfolio. The ‘Other’ category of corporate income and noninterest expenses represents items that are not allocated to the business units and generally represent certain nonrecurring items and certain executive level compensation. Net interest income for the first quarter was $.7 million compared with $4.4 million in the year-ago quarter. The decline in net interest income resulted from the decrease in the net interest margin, due in large part to the continued decline in the yield on the residential mortgage loan portfolio resulting from refinancing activity over the past year. Noninterest expenses totaled $14.3 million for the quarter compared with $6.4 million in the year-ago period. The increase reflects costs associated with vacant office space and higher corporate-based executive level compensation plan expenses.

BALANCE SHEET

Total assets at March 31, 2004 were $40.2 billion and averaged $39.5 billion for the first quarter, compared with last year’s average of $37.5 billion. Loans and leases totaled $17.1 billion at March 31, 2004 and averaged $17.3 billion for the first quarter, compared with $18.0 billion at March 31, 2003 and $17.6 billion for the first quarter of last year. Securities totaled $8.6 billion at March 31, 2004 and averaged $8.0 billion for the quarter, compared with $7.6 billion at March 31, 2003 and $7.4 billion on average last year. Money market assets totaled $10.4 billion at March 31, 2004 and averaged $9.9 billion in the first quarter, up 18% from the year-ago quarter.

Common stockholders’ equity increased to $3.1 billion at March 31, 2004 and averaged $3.1 billion for the quarter, up 7% from last year’s first quarter average. The increase primarily reflects the retention of earnings offset in part by the repurchase of common stock pursuant to the Corporation’s share buyback program. During the quarter, the Corporation acquired 938,989 shares at a cost of $45.5 million. An additional 9.3 million shares are authorized for purchase after March 31, 2004 under the previously announced share buyback program.

Northern Trust’s risk-based capital ratios remained strong at 11.2% for tier 1 capital and 14.1% for total capital at March 31, 2004. These 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 first quarter average assets) of 8.0% at March 31, 2004, also exceeded the minimum regulatory requirement of 3%. The Bank’s risk-based capital ratios at March 31, 2004 were 9.0% for tier 1 capital, 12.5% for total capital and 6.3% for the leverage ratio. Each of Northern Trust’s other subsidiary banks had a ratio of 11.1% or higher for tier 1 capital, 11.6% or higher for total risk-based capital, and 8.2% or higher for the leverage ratio.

25

ASSET QUALITY

Nonperforming assets consist of nonaccrual loans and other real estate owned (OREO). Nonperforming assets at March 31, 2004 totaled $72.1 million, compared with $80.3 million at December 31, 2003 and $93.6 million at March 31, 2003. Domestic nonaccrual loans and leases, consisting primarily of commercial loans, totaled $71.6 million, or .43% of total domestic loans and leases at March 31, 2004, of which $40.5 million relates to two commercial clients that have exposure to asbestos-related claims. At December 31, 2003 and March 31, 2003, domestic nonaccrual loans and leases totaled $80.0 million and $92.4 million, respectively. The $8.4 million decrease in nonperforming loans during the quarter is the result of an additional $2.5 million in loans classified as nonaccrual, offset by $4.1 million in charge-offs and $6.8 million in net loan repayments.

The following table presents the outstanding amounts of nonaccrual 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 of loans delinquent 90 days or more and still accruing interest can fluctuate widely based on the timing of cash collections, renegotiations and renewals.

Nonperforming Assets and 90 Day Past Due Loans

(In Millions)	March 31, 2004		December 31, 2003		March 31, 2003
Nonaccrual Loans
Domestic
Residential Real Estate	$	4.0	$	4.5	$	4.4
Commercial		67.4		75.3		86.9
Commercial Real Estate		.1		.1		.5
Personal		.1		.1		.6
International		—		—		—
Total Nonaccrual Loans		71.6		80.0		92.4
Other Real Estate Owned		.5		.3		1.2
Total Nonperforming Assets	$	72.1	$	80.3	$	93.6
Total 90 Day Past Due Loans (still accruing)	$	14.1	$	21.0	$	19.5

Provision and Reserve for Credit Losses

The provision for credit losses is the charge against current earnings, determined through a disciplined credit risk management process, 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 reserve) 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 reserve).

Note 6 to the Consolidated Financial Statements includes a table that details the changes in the reserve for credit losses during the three-month periods ended March 31, 2004 and March 31, 2003 due to charge-offs, recoveries and the provision for credit losses during the respective periods. The following table shows (i) the specific reserve, (ii) the allocated portion of the inherent reserve and its components by loan category, and (iii) the unallocated portion of the inherent reserve at March 31, 2004, December 31, 2003 and March 31, 2003.

26

Provision and Reserve for Credit Losses (continued)

Allocation of the Reserve for Credit Losses

	March 31, 2004				December 31, 2003				March 31, 2003
($ in millions)	Reserve Amount		Percent of Loans to Total Loans		Reserve Amount		Percent of Loans to Total Loans		Reserve Amount		Percent of Loans to Total Loans
Specific Reserve	$	33.5	—	%	$	37.0	—	%	$	33.5	—	%
Allocated Inherent Reserve
Residential Real Estate		12.0	46			11.9	45			11.5	43
Commercial		54.9	19			60.9	19			80.1	23
Commercial Real Estate		16.9	7			16.8	7			15.6	7
Personal		5.1	15			5.2	15			4.5	13
Other		—	3			—	4			—	3
Lease Financing		4.3	7			4.3	7			4.8	7
International		1.6	3			1.6	3			.9	4
Total Allocated Inherent Reserve	$	94.8	100	%	$	100.7	100	%	$	117.4	100	%
Unallocated Inherent Reserve		23.2	—			19.5	—			19.2	—
Total Reserve	$	151.5	100	%	$	157.2	100	%	$	170.1	100	%
Reserve Assigned to:
Loans and Leases	$	143.4			$	149.2			$	162.4
Unfunded Commitments and Standby Letters of Credit		8.1				8.0				7.7
Total Reserve	$	151.5			$	157.2			$	170.1

Specific Reserve. At March 31, 2004, the specific component of the reserve stood at $33.5 million compared with $37.0 million at December 31, 2003. The $3.5 million decrease in specific reserves from December 31, 2003 is due primarily to principal repayments and the charge-off of a commercial loan, which had been reserved for in a prior period.

Allocated Inherent Reserve. The allocated inherent portion of the reserve totaled $94.8 million at March 31, 2004 compared with $100.7 million at December 31, 2003. This component of the reserve decreased by $5.9 million due primarily to the net reduction in the outstanding balance of lower-rated loans reflecting the receipt of principal repayments.

27

Provision and Reserve for Credit Losses (continued)

Unallocated Inherent Reserve. The unallocated portion of the inherent reserve is based on management’s review of overall factors affecting the determination of probable inherent losses, primarily in the commercial portfolio, which are not necessarily captured by the application of historical loss ratios. This portion of the reserve analysis involves the exercise of judgment and reflects considerations such as management’s view that the reserve should have a margin that recognizes the imprecision inherent in the process of estimating probable credit losses. Although credit quality and business conditions have shown signs of improvement, there continues to be uncertainty with regard to the breadth of the economic recovery as a result of continued weakness in the labor markets, high energy costs, governmental budget deficits, and the risk of increases in interest rates from current historically low levels. In light of these concerns, the unallocated inherent portion of the reserve was set at $23.2 million at March 31, 2004, compared with $19.5 million at December 31, 2003.

Other Factors. At March 31, 2004, the total amount of the two highest risk loan groupings, those rated “7” and “8” (based on Northern Trust’s internal rating scale, which closely parallels that of the banking regulators) was $184 million (of which $69.1 million was classified as impaired), down $29 million, or 14% from $213 million at December 31, 2003 when $78.7 million was impaired, and down from $270 million at March 31, 2003 when $87.9 million was impaired. The majority of the decrease from December 31, 2003 reflects the receipt of principal repayments and the partial charge-off of an impaired commercial loan.

Total Reserve. Management’s evaluation of the factors above resulted in a reserve for credit losses of $151.5 million at March 31, 2004. The reserve of $143.4 million assigned to loans and leases, as a percentage of total loans and leases, was .84% at March 31, 2004, unchanged from December 31, 2003.

Reserves assigned to unfunded loan commitments, standby letters of credit and derivative products, recorded as a liability on the consolidated balance sheet, totaled $8.1 million at March 31, 2004, an increase of $.1 million from December 31, 2003.

Provision. A negative provision of $5.0 million was recorded in the first quarter of 2004 compared with a $5.0 million provision in the prior year quarter. The $10.0 million decrease in the provision resulted from overall continued improvement in the credit quality of the loan portfolio.

28

MARKET RISK MANAGEMENT

As described in the 2003 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, 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, 2003.

FACTORS AFFECTING FUTURE RESULTS

This report contains statements that may be considered forward-looking, such as the statements relating to Northern Trust’s financial goals, dividend policy, expansion and business development plans, anticipated expense levels and projected profit improvements, business prospects and positioning with respect to market and pricing trends, strategic initiatives, re-engineering and outsourcing activities, new business results and outlook, changes in securities market prices, credit quality including reserve levels, planned capital expenditures and technology spending, and the effects of any extraordinary events and various other matters (including developments in litigation and regulation involving Northern Trust and changes in accounting policies, standards and interpretations) on Northern Trust’s business and results. Forward-looking statements are typically identified by words or phrases, such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may increase,” “may fluctuate,” “plan,” “goal,” “strategy,” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” and “could.” Forward-looking statements are Northern Trust’s current estimates or expectations of future events or future results. Actual results could differ materially from the results indicated by these statements because the realization of those results is subject to many risks and uncertainties including:

• The future health of the U.S. and international economies and other economic factors (such as the pace of inflation/deflation and consumer confidence in the securities markets) that affect wealth creation, investment and savings patterns and Northern Trust’s interest rate risk and credit risk exposure;

• 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;

• Changes in foreign currency exchange rates that, as Northern Trust’s business grows globally, may impact Northern Trust’s level of revenue and expense and net income and the value of its investments in non-U.S. operations;

• U.S. and international economic factors that may impact Northern Trust’s interest rate risk, including the level of or change in interest rates, and credit risk exposure;

29

FACTORS AFFECTING FUTURE RESULTS (continued)

• Factors or conditions that may affect Northern Trust’s liquidity management objectives, including a decline in the confidence of potential debt and/or equity securities purchasers in the funds markets generally or in Northern Trust in particular or a change in Northern Trust’s credit ratings;

• The effects of any extraordinary events (such as terrorist events, war and the U.S. government’s response to those events), contagious disease outbreaks or epidemics (such as a SARS outbreak) or natural disasters;

• Changes in the level of cross-border investing by clients resulting from changing economic factors, political conditions or currency markets;

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

• The outcome, and implementation by U.S. and other regulators, of the New Basel Capital Accord being developed by the Basel Committee on Banking Supervision and its effect on the minimum regulatory capital requirements of the Corporation and its subsidiaries;

• Success in obtaining regulatory approvals when required;

• Changes in the nature of Northern Trust’s competition, including changes resulting from industry consolidation and the regulatory environment, as well as actions taken by particular competitors;

• Expansion or contraction of Northern Trust’s products, services, and targeted markets in response to strategic opportunities and changes in the nature of Northern Trust’s competition, coupled with changes in the level of investment or reinvestment in those products, services, and targeted markets, and the pricing of those products and services;

• 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, strategic alliance or otherwise, and generating a profit in those markets in a reasonable time;

• Northern Trust’s ability to continue to generate strong investment results for clients and continue to develop its array of investment products, internally or through acquisition, in a manner that meets client needs;

30

FACTORS AFFECTING FUTURE RESULTS (continued)

• Northern Trust’s ability to continue to fund and accomplish technological innovation, improve internal processes and controls, address operating and technology risks (including material systems interruptions, human errors or omissions, fraud, and breaches of internal controls), and attract and retain capable staff in order to address operating and technology challenges and increasing volume and complexity in many of its businesses;

• Northern Trust’s success in integrating recent and future acquisitions, strategic alliances and preferred provider arrangements and using the acquired businesses, completed alliances and preferred provider arrangements to execute its business strategy;

• The success of Northern Trust’s strategic initiatives and its re-engineering and outsourcing activities;

• The impact of divestiture or discontinuance of portions of Northern Trust’s businesses;

• The ability of each of Northern Trust’s principal businesses to maintain a product mix that achieves acceptable margins;

• Changes in tax laws or other legislation in the U.S. or other countries (including pension reform legislation) that could affect Northern Trust or clients of its personal and institutional asset administration businesses; and

• Risks and uncertainties inherent in the regulatory and litigation process (including risks associated with pending and threatened legal actions and proceedings and the potential effects of adverse publicity arising from the failure or perceived failure to comply with legal and regulatory requirements) that are evaluated within the context of current judicial decisions and legislative and regulatory interpretations, and with respect to which a trier of fact, either a judge or jury, could decide a case contrary to Northern Trust’s evaluation of the relevant facts or law, and a court or regulatory agency could act to change or modify existing law on a particular issue.

Some of these risks and uncertainties that may affect future results are discussed in more detail in the sections of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” captioned “Risk Management,” “Market Risk Management” and “Operational and Fiduciary Risk Management” in the 2003 Annual Report to Stockholders (pages 46-56) and in the sections of “Item 1—Business” of the 2003 Annual Report on Form 10-K captioned “Government Policies,” “Competition” and “Regulation and Supervision” (pages 7-14). All forward-looking statements included in this report are based upon information presently available, and Northern Trust assumes no obligation to update any forward-looking statements.

31

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.

CONSOLIDATED AVERAGE STATEMENT OF CONDITION WITH ANALYSIS OF NET INTEREST INCOME NORTHERN TRUST CORPORATION

	First Quarter
(Interest and rate on a fully taxable equivalent basis)	2004							2003
($ in Millions)	Interest		Average Balance			Rate		Interest		Average Balance			Rate
Average Earning Assets
Money Market Assets
Federal Funds Sold and Resell Agreements	$	2.4	$	872.4		1.13	%	$	1.9	$	589.2		1.32	%
Time Deposits with Banks		46.0		8,974.5		2.06			43.0		7,669.6		2.27
Other Interest-Bearing		.1		40.7		.58			.3		100.9		1.28
Total Money Market Assets		48.5		9,887.6		1.97			45.2		8,359.7		2.19
Securities
U.S. Government		.3		103.1		1.26			.6		103.3		2.47
Obligations of States and Political Subdivisions		15.9		886.2		7.17			15.0		809.8		7.43
Federal Agency		20.0		6,333.6		1.27			21.7		5,777.7		1.52
Other		7.2		712.6		4.08			6.8		692.8		4.01
Trading Account		—		3.8		3.21			.1		6.6		4.71
Total Securities		43.4		8,039.3		2.17			44.2		7,390.2		2.42
Loans and Leases		175.7		17,253.5		4.10			198.0		17,567.3		4.57
Total Earning Assets	$	267.6		35,180.4		3.06	%	$	287.4		33,317.2		3.50	%
Reserve for Credit Losses Assigned to Loans		—		(152.3	)	—			—		(161.8	)	—
Cash and Due from Banks		—		1,628.4		—			—		1,631.0		—
Other Assets		—		2,866.5		—			—		2,675.1		—
Total Assets		—	$	39,523.0		—			—	$	37,461.5		—
Average Source of Funds
Deposits
Savings and Money Market	$	11.7	$	7,132.6		.66	%	$	13.7	$	6,575.3		.84	%
Savings Certificates		9.1		1,517.9		2.40			12.9		1,802.7		2.91
Other Time		1.0		277.0		1.47			1.7		354.7		1.97
Foreign Offices Time		35.6		11,556.0		1.24			35.0		9,672.4		1.47
Total Deposits		57.4		20,483.5		1.13			63.3		18,405.1		1.39
Federal Funds Purchased		8.1		3,482.4		.93			11.6		3,936.5		1.20
Securities Sold under Agreements to Repurchase		3.9		1,685.3		.92			4.4		1,498.2		1.19
Commercial Paper		.4		143.1		1.05			.4		136.1		1.32
Other Borrowings		26.1		2,054.1		5.11			30.4		2,218.1		5.56
Senior Notes		5.1		350.0		5.89			7.8		450.0		6.92
Long-Term Debt		13.7		864.6		6.36			14.6		903.4		6.48
Floating Rate Capital Debt		1.2		276.2		1.67			1.4		267.8		2.04
Total Interest-Related Funds		115.9		29,339.2		1.59			133.9		27,815.2		1.95
Interest Rate Spread		—		—		1.47	%		—		—		1.55	%
Noninterest-Bearing Deposits		—		5,228.8		—			—		5,046.9		—
Other Liabilities		—		1,892.5		—			—		1,607.7		—
Stockholders’ Equity		—		3,062.5		—			—		2,991.7		—
Total Liabilities and Stockholders’ Equity		—	$	39,523.0		—			—	$	37,461.5		—
Net Interest Income/Margin (FTE Adjusted)	$	151.7		—		1.73	%	$	153.5		—		1.87	%
Net Interest Income/Margin (Unadjusted)	$	138.5		—		1.58	%	$	140.7		—		1.71	%

ANALYSIS OF NET INTEREST INCOME CHANGES DUE TO VOLUME AND RATE

	First Quarter 2004/2003
	Change Due To
(In Millions)	Average Balance		Rate			Total
Earning Assets (FTE)	$	6.8	$	(26.6	)	$	(19.8	)
Interest-Related Funds		—		(18.0	)		(18.0	)
Net Interest Income (FTE)	$	6.8	$	(8.6	)	$	(1.8	)

32

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 29 of this document.

Item 4. Controls and Procedures

The Corporation’s management, with the participation of the Corporation’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of Northern Trust’s “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report. Based on such evaluation, such officers have concluded that, as of the end of the period covered by this report, Northern Trust’s disclosure controls and procedures are effective in bringing to their attention on a timely basis material information relating to the Corporation (including its consolidated subsidiaries) required to be included in the Corporation’s periodic filings under the Exchange Act. Further, there have been no changes in the Corporation’s internal controls during the last fiscal quarter that have materially affected or that are reasonably likely to affect materially the Corporation’s internal controls over financial reporting.

33

PART II - OTHER INFORMATION

Item 2(e). Purchases of Equity Securities by the Issuer

Period	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly Announced Plan(2)	Remaining Number of Shares Authorized for Purchase Under the Plan
January 2004	100,313	$	48.8231	100,313
February 2004	692,676		48.1724	692,676
March 2004	146,000		49.4938	146,000
First Quarter	938,989		48.4474	938,989	9,256,514

(1) The numbers include shares purchased from employees in connection with equity plan transactions such as the surrender of shares to pay an option exercise price or tax withholding.

(2) The Corporation’s current stock buyback program announced, April 16, 2003, authorizes the purchase of up to 12.0 million shares of the Corporation’s common stock. The program has no fixed expiration date.

Item 4. Submission of Matters to a Vote of Security Holders.

The annual meeting of the stockholders of Northern Trust Corporation was held on April 20, 2004 for the purposes of (i) electing thirteen Directors to hold office until the next annual meeting of stockholders and (ii) ratifying the appointment of independent public accountants for the year 2004. Proxies for the meeting were solicited pursuant to Section 14(a) of the Securities Exchange Act of 1934 and there was no solicitation in opposition to management’s nominees. All of management’s nominees for Director as listed in the proxy statement were elected by the votes set forth below. As contemplated by the description of cumulative voting procedures in the Corporation’s Proxy Statement, votes withheld from some (but less than all) of the nominees were distributed by the proxies among nominees with respect to whom authority was not withheld. There were no broker non-votes with respect to any nominees.

NOMINEES	FOR	WITHHELD
Duane L. Burnham	192,164,889	5,361,647
Dolores E. Cross	200,194,743	5,361,647
Susan Crown	194,262,966	5,361,647
Robert S. Hamada	197,283,547	5,361,647
Robert A. Helman	144,701,525	5,361,647
Dipak C. Jain	199,014,229	5,361,647
Arthur L. Kelly	191,285,459	5,361,647
Robert C. McCormack	200,267,173	5,361,647
Edward J. Mooney	194,306,512	5,361,647
William A. Osborn	198,306,838	5,361,647
John W. Rowe	199,040,285	5,361,647
Harold B. Smith	193,633,233	5,361,647
William D. Smithburg	187,830,014	5,361,647

34

Item 4. Submission of Matters to a Vote of Security Holders (continued).

The appointment of KPMG LLP as independent public accountants of the Corporation for the year 2004 (the “Appointment”) was ratified. 192,612,538 votes were cast in favor of the resolution to ratify the Appointment, 2,937,332 votes were cast against it, 1,526,501 shares abstained from voting on the resolution, and there were no broker non-votes.

35

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

(3) Articles of Incorporation and By-laws:

(i) Amendment to By-laws and By-laws as amended to date

(10) Material Contracts

(i) Amendment dated February 17, 2004 to the Northern Trust Corporation 2002 Stock Plan

(ii) Amendment Number Ten dated March 29, 2004 to the Northern Trust Employee Stock Ownership Plan as amended and restated as of January 1, 2002

(iii) Third Amendment dated March 25, 2004 to the Northern Trust Corporation Supplemental Employee Stock Ownership Plan as amended and restated as of July 20, 1999

(iv) Fourth Amendment dated March 25, 2004 to the Northern Trust Corporation Supplemental Thrift-Incentive Plan as amended and restated as of July 20, 1999

(v) Fifth Amendment dated March 25, 2004 to the Northern Trust Corporation Supplemental Pension Plan as amended and restated as of July 20, 1999

(vi) First Amendment dated March 25, 2004 to the Northern Trust Corporation Severance Plan

(vii) Second Amendment dated March 25, 2004 to the Northern Trust Corporation Deferred Compensation Plan dated as of May 1, 1998

(31) Rule 13a-14(a)/15d-14(a) Certifications

(i) Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(ii) Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

36

Item 6. Exhibits and Reports on Form 8-K (continued)

(32) Section 1350 Certifications

(i) Certifications of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(99) Additional Exhibits

(i) Edited version of remarks delivered by William A. Osborn, Chairman and Chief Executive Officer, at the Annual Meeting of Stockholders of Northern Trust Corporation held on April 20, 2004.

(b) Reports on Form 8-K

In a report on Form 8-K furnished to the Securities and Exchange Commission on January 21, 2004, Northern Trust Corporation incorporated in Item 12 by reference its January 21, 2004 press release, reporting on its earnings for the fourth quarter of 2003 and its 2003 fiscal year. The press release, with summary financial information, was included pursuant to Item 7.

37

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.

	NORTHERN TRUST CORPORATION
	(Registrant)
Date: May 3, 2004	By:	/s/ Steven L. Fradkin
		Steven L. Fradkin
		Executive Vice President and Chief Financial Officer
Date: May 3, 2004	By:	/s/ Harry W. Short
		Harry W. Short
		Executive Vice President and Controller
		(Chief Accounting Officer)

38

EXHIBIT INDEX

The following exhibits have been filed with the Securities and Exchange Commission with Northern Trust Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2004. You may obtain copies of these exhibits from the SEC’s Internet site at http://www.sec.gov. Stockholders may also obtain copies of such exhibits by writing Rose A. Ellis, Secretary, Northern Trust Corporation, 50 South LaSalle Street, Chicago, Illinois 60675.

Exhibit Number	Description
(3)	Articles of Incorporation and By-laws:
	(i)	Amendment to By-laws and By-laws as amended to date
(10)	Material Contracts
	(i)	Amendment dated February 17, 2004 to the Northern Trust Corporation 2002 Stock Plan
	(ii)	Amendment Number Ten dated March 29, 2004 to the Northern Trust Employee Stock Ownership Plan as amended and restated as of January 1, 2002
	(iii)	Third Amendment dated March 25, 2004 to the Northern Trust Corporation Supplemental Employee Stock Ownership Plan as amended and restated as of July 20, 1999
	(iv)	Fourth Amendment dated March 25, 2004 to the Northern Trust Corporation Supplemental Thrift-Incentive Plan as amended and restated as of July 20, 1999
	(v)	Fifth Amendment dated March 25, 2004 to the Northern Trust Corporation Supplemental Pension Plan as amended and restated as of July 20, 1999
	(vi)	First Amendment dated March 25, 2004 to the Northern Trust Corporation Severance Plan
	(vii)	Second Amendment dated March 25, 2004 to the Northern Trust Corporation Deferred Compensation Plan dated as of May 1, 1998
(31)	Rule 13a-14(a)/15d-14(a) Certifications
	(i)	Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	(ii)	Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

39

EXHIBIT INDEX (continued)

(32	)	Section 1350 Certifications
		(i)	Certifications of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(99	)	Additional Exhibits
		(i)	Edited version of remarks delivered by William A. Osborn, Chairman and Chief Executive Officer, at the Annual Meeting of Stockholders of Northern Trust Corporation held on April 20, 2004.

40

EX-3.(I)

Exhibit 3(i)

Northern Trust Corporation

Amendments to By-laws Effective February 17, 2004

ARTICLE IV

THE AUDIT COMMITTEE

SECTION 4.1 The Audit Committee. An Audit Committee and its Chairman shall be appointed by the Board of Directors annually at its organization meeting. The Committee shall perform such functions, both for the Corporation and its subsidiaries on a consolidated basis and for such individual banking subsidiaries as the Board shall direct, as are set forth in an Audit Committee Charter adopted by the Board and conforming to the requirements of The Nasdaq Stock Market, Inc. (“Nasdaq”), the Sarbanes-Oxley Act of 2002 (the “Act”), and applicable regulatory authorities. The Committee shall consist of at least four Directors. The membership of the Committee shall meet the requirements of Nasdaq, the Act and applicable regulatory authorities, as set forth in the Audit Committee Charter. The Committee shall meet upon the call of its Chairman or any member of the Committee. A majority of the Committee’s members shall constitute a quorum, and the act of a majority of the members at which a quorum is present shall be the act of the Committee. In the event of a tie vote on any issue, the Chairman’s vote shall decide the issue. In the absence or disqualification of a member of the Committee, the members present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the Board who meets the Committee membership requirements set forth in the Audit Committee Charter to act at the meeting in the place of any such absent or disqualified member.

ARTICLE V

THE CORPORATE GOVERNANCE COMMITTEE

SECTION 5.1 The Corporate Governance Committee. A Corporate Governance Committee and its Chairman shall be appointed by the Board of Directors annually at its organization meeting. The Committee shall perform such functions as the Board shall direct, as are set forth in a Corporate Governance Committee Charter adopted by the Board and conforming to the requirements of Nasdaq and applicable regulatory authorities. The Committee shall consist of at least three Directors. The membership of the Committee shall meet the requirements of Nasdaq and applicable regulatory authorities, as set forth in the Corporate Governance Committee Charter. The Committee shall meet upon the call of its Chairman or any member of the Committee. A majority of the Committee’s members shall constitute a quorum, and the act of a majority of the members at which a quorum is present shall be the act of the Committee. In the event of a tie vote on any issue, the Chairman’s vote shall decide the issue. In the absence or disqualification of a member of the Committee, the members present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the Board who meets the Committee membership requirements set forth in the Corporate Governance Committee Charter 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 by the Board of Directors annually at its organization meeting. The Committee shall perform such functions as the Board shall direct, as are set forth in a Compensation and Benefits Committee Charter adopted by the Board and conforming to the requirements of Nasdaq and applicable regulatory authorities. The Committee shall consist of at least three Directors. The membership of the Committee shall meet the requirements of Nasdaq and applicable regulatory authorities, as set forth in the Compensation and Benefits Committee Charter. The Committee shall meet upon the call of its Chairman or any member of the Committee. A majority of the Committee’s members shall constitute a quorum, and the act of a majority of the members at which a quorum is present shall be the act of the Committee. In the event of a tie vote on any issue, the Chairman’s vote shall decide the issue. In the absence or disqualification of a member of the Committee, the members present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the Board who meets the Committee membership requirements set forth in the Compensation and Benefits Committee Charter to act at the meeting in the place of any such absent or disqualified member.

By-laws

of

Northern Trust Corporation

Chicago, Illinois

As Effective February 17, 2004

TABLE OF CONTENTS

		Page
ARTICLE I – THE STOCKHOLDERS		1
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 Elections	2
SECTION 1.6	Quorum	3
SECTION 1.7	Cumulative Voting Rights	3
SECTION 1.8	Proxies	3
SECTION 1.9	Voting by Ballot	4
SECTION 1.10	Voting Lists	4
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	5
ARTICLE II – THE BOARD OF DIRECTORS		6
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	7
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		9
SECTION 3.1	Number, Tenure and Quorum	9
SECTION 3.2	Powers	9
SECTION 3.3	Meetings	9

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TABLE OF CONTENTS

(continued)

		Page
SECTION 3.4	Records and Reports	9
ARTICLE IV – THE AUDIT COMMITTEE		9
SECTION 4.1	The Audit Committee	9
ARTICLE V – THE CORPORATE GOVERNANCE COMMITTEE		10
SECTION 5.1	The Corporate Governance Committee	10
ARTICLE VI – THE COMPENSATION AND BENEFITS COMMITTEE		10
SECTION 6.1	The Compensation and Benefits Committee	10
ARTICLE VII – THE BUSINESS RISK COMMITTEE		11
SECTION 7.1	The Business Risk Committee	11
ARTICLE VIII – THE BUSINESS STRATEGY COMMITTEE		11
SECTION 8.1	The Business Strategy Committee	11
ARTICLE IX – THE OFFICERS		12
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	12
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	13
SECTION 9.10	The Secretary	13
SECTION 9.11	Assistant Treasurers and Assistant Secretaries	13
SECTION 9.12	Salaries	14
ARTICLE X – CONTRACTS, LOANS, CHECKS AND DEPOSITS		14
SECTION 10.1	Contracts	14
SECTION 10.2	Loans	14
SECTION 10.3	Checks, Drafts, etc	14
SECTION 10.4	Deposits	14
SECTION 10.5	Power to Execute Proxies	14

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TABLE OF CONTENTS

(continued)

		Page
ARTICLE XI – CERTIFICATES FOR SHARES AND THEIR TRANSFER		14
SECTION 11.1	Certificates for Shares	14
SECTION 11.2	Transfers of Shares	15
ARTICLE XII – FISCAL YEAR		15
SECTION 12.1	Fiscal Year	15
ARTICLE XIII – SEAL		15
SECTION 13.1	Seal	15
ARTICLE XIV – WAIVER OF NOTICE		15
SECTION 14.1	Waiver of Notice	15
ARTICLE XV – INDEMNIFICATION		16
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	16
SECTION 15.4	Cooperation and Expenses	16
SECTION 15.5	Selection of Independent Counsel	17
SECTION 15.6	Time for Determination	17
SECTION 15.7	Failure To Make Determination; Remedies For Enforcement	17
SECTION 15.8	Appeal of Adverse Determination	18
SECTION 15.9	Burden of Proof	18
SECTION 15.10	Definition of “Disinterested Director”	18
SECTION 15.11	Definition of “Change of Control”	18
SECTION 15.12	Advancement of Expenses	19
SECTION 15.13	Personal Liability of Directors	19
ARTICLE XVI – AMENDMENTS		19
SECTION 16.1	Amendments	19

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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 1.2 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.

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.

(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 Elections. The Board of Directors or the Executive Committee of the Board of Directors of the Corporation shall appoint, in advance, one or more

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inspectors to act at each meeting of the stockholders of the 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. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. Without limiting the manner in which a stockholder may authorize another person or persons to act for such stockholder as proxy pursuant to the foregoing sentence, a stockholder may validly grant such authority by (a) executing a writing authorizing another person or persons to act for such stockholder as proxy, (b) authorizing another person or persons to act for such stockholder as proxy by transmitting or authorizing the transmission of a telegram, cablegram, or other means of electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that any such telegram, cablegram or other means of electronic transmission must either set forth or be

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submitted with information from which it can be determined that the telegram, cablegram or other electronic transmission was authorized by the stockholder, or (c) any other means permitted under the General Corporation Law of the State of Delaware.

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 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.

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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) 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.

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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.

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.

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.

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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 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.

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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 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.

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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 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 The Audit Committee. An Audit Committee and its Chairman shall be appointed by the Board of Directors annually at its organization meeting. The Committee shall perform such functions, both for the Corporation and its subsidiaries on a consolidated basis and for such individual banking subsidiaries as the Board shall direct, as are set forth in an

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Audit Committee Charter adopted by the Board and conforming to the requirements of The Nasdaq Stock Market, Inc. (“Nasdaq”), the Sarbanes-Oxley Act of 2002 (the “Act”), and applicable regulatory authorities. The Committee shall consist of at least four Directors. The membership of the Committee shall meet the requirements of Nasdaq, the Act and applicable regulatory authorities, as set forth in the Audit Committee Charter. The Committee shall meet upon the call of its Chairman or any member of the Committee. A majority of the Committee’s members shall constitute a quorum, and the act of a majority of the members at which a quorum is present shall be the act of the Committee. In the event of a tie vote on any issue, the Chairman’s vote shall decide the issue. In the absence or disqualification of a member of the Committee, the members present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the Board who meets the Committee membership requirements set forth in the Audit Committee Charter to act at the meeting in the place of any such absent or disqualified member.

ARTICLE V

THE CORPORATE GOVERNANCE COMMITTEE

SECTION 5.1 The Corporate Governance Committee. A Corporate Governance Committee and its Chairman shall be appointed by the Board of Directors annually at its organization meeting. The Committee shall perform such functions as the Board shall direct, as are set forth in a Corporate Governance Committee Charter adopted by the Board and conforming to the requirements of Nasdaq and applicable regulatory authorities. The Committee shall consist of at least three Directors. The membership of the Committee shall meet the requirements of Nasdaq and applicable regulatory authorities, as set forth in the Corporate Governance Committee Charter. The Committee shall meet upon the call of its Chairman or any member of the Committee. A majority of the Committee’s members shall constitute a quorum, and the act of a majority of the members at which a quorum is present shall be the act of the Committee. In the event of a tie vote on any issue, the Chairman’s vote shall decide the issue. In the absence or disqualification of a member of the Committee, the members present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the Board who meets the Committee membership requirements set forth in the Corporate Governance Committee Charter 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 by the Board of Directors annually at its organization meeting. The Committee shall perform such functions as the Board shall direct, as are set forth in a Compensation and Benefits Committee Charter adopted by the Board and conforming to the requirements of Nasdaq and applicable regulatory authorities. The Committee shall consist of at least three Directors. The membership of the Committee shall meet the requirements of Nasdaq and applicable regulatory authorities, as set forth in the Compensation and Benefits Committee Charter. The Committee shall meet upon the call of its Chairman or any

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member of the Committee. A majority of the Committee’s members shall constitute a quorum, and the act of a majority of the members at which a quorum is present shall be the act of the Committee. In the event of a tie vote on any issue, the Chairman’s vote shall decide the issue. In the absence or disqualification of a member of the Committee, the members present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the Board who meets the Committee membership requirements set forth in the Compensation and Benefits Committee Charter 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.

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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.

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.

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 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.

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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 President.

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.

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; and (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

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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.

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

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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,

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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.

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 of 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

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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 attorneys’ 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 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, stockholders 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

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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 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 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;

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(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 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 “Indemnitee” 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.

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EX-10.(I)

Exhibit 10(i)

AMENDMENT TO THE

NORTHERN TRUST CORPORATION 2002 STOCK PLAN

WHEREAS, Northern Trust Corporation (the “Corporation”) previously adopted the Northern Trust Corporation 2002 Stock Plan (the “Plan”); and

WHEREAS, the Board of Directors of the Corporation is authorized to amend the Plan and has authorized an amendment to the Plan, as described below;

NOW, THEREFORE, BE IT RESOLVED, that Section 18 of the Plan is hereby amended, effective as of February 17, 2004, to read as follows:

Section 18. Effective Date and Term of Plan.

(a) The Plan was adopted by the Board on February 19, 2002 and became effective as of April 16, 2002 upon approval by the Corporation’s stockholders at the 2002 annual meeting of stockholders.

(b) Notwithstanding anything to the contrary contained herein, no Awards shall be granted under the Plan on or after April 16, 2012.

This Amendment has been executed by the Corporation, by its duly authorized officer, as of this 17th day of February, 2004.

NORTHERN TRUST CORPORATION
By:	/s/ Timothy P. Moen
Name:	Timothy P. Moen
Title:	Executive Vice President

EX-10.(II)

Exhibit 10(ii)

AMENDMENT NUMBER TEN TO

NORTHERN TRUST EMPLOYEE STOCK OWNERSHIP PLAN

(As Amended and Restated Effective January 1, 2002)

WHEREAS, The Northern Trust Company (the “Company”) maintains the Northern Trust Employee Stock Ownership Plan, As Amended and Restated Effective January 1, 2002, (the “Plan”); and

WHEREAS, amendment of the Plan is now considered desirable;

NOW, THEREFORE, by virtue and in exercise of the amending power reserved to the Company under Section 13.1 of the Plan, and pursuant to the authority delegated to the undersigned officer by resolutions of the Board of Directors of the Company dated February 17, 2004, the Plan is hereby amended effective as of March 29, 2004 as follows:

1. To add the following immediately after the last sentence of section 2.1(i) of the Plan:

“Where appropriate, the term ‘Committee’ shall also mean any applicable subcommittee or duly authorized delegate of the Committee. Such duly authorized delegate may be an individual or an organization within the Company or the Committee, or may be an unrelated third party individual or organization.”

2. To add the following immediately after the last sentence of the first paragraph of section 2.1(m) of the plan:

“Base salary also includes any amounts paid to a Participant under any short-term disability benefit plan of the Company or a Participating Employer.”

3. To delete the second and third sentences of section 4.1 of the Plan in their entirety and to substitute the following therefor:

“Additional Employer Contributions under the Plan may be paid in an amount up to 3% of each Participant’s Compensation for such Plan Year if certain corporate performance goals established by the Compensation and Benefits Committee of the Board of Directors (or by the Board of Directors if the Compensation and Benefits Committee is unavailable or unable to act for any reason) with respect to this Plan, are met. The Compensation and Benefits Committee of the Board of Directors (or the Board of Directors if the Compensation and Benefits Committee is unavailable or unable to act for any reason) has the sole discretion to establish and change such performance goals on an annual basis and to determine whether such goals have been met.”

4. To delete the first sentence of section 4.2 of the Plan in its entirety and to substitute the following therefor:

“Employer Contributions may be paid to the Trust in cash or in shares of Company Stock, as determined by the Compensation and Benefits Committee of the Board of Directors (or by the Board of Directors if the Compensation and Benefits Committee is unavailable or unable to act for any reason).”

5. To delete the first sentence of section 9.5 of the Plan in its entirety and to substitute the following therefor:

“If a Member has no vested interest in his or her Account balance when his or her employment with the Company and all Affiliates terminates, such Member will be treated as having received a Deemed Cashout of the Member’s Account balance as of the last day of the month in which the Member’s employment terminated and the Member’s Account balance will be treated as a Forfeiture on such date.”

6. To insert the following immediately after the phrase “section 9.1, 9.2 or 9.3” in section 9.7(b)(1) of the Plan:

“, or who is described in section 9.4 and would be entitled to an allocation under section 7.1 at the next Anniversary Date,”

7. To delete section 13.1 of the Plan in its entirety and to substitute the following therefor:

“13.1 Amendment

The Company reserves the right at any time and from time to time either retroactively or prospectively:

(a) to make material amendments to the Plan (including any extraordinary amendment related to an acquisition or divestiture by the Company, a Participating Employer or other Affiliate), by action of the Compensation and Benefits Committee of the Board of Directors (or by action of the Board of Directors, if the Compensation and Benefits Committee is unavailable or unable to act for any reason);

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(b) to make (i) non-material or administrative amendments to the Plan (including any amendment pursuant to guidelines established by the Compensation and Benefits Committee of the Board of Directors related to an acquisition or divestiture by the Company, a Participating Employer or other Affiliate) or (ii) any amendment to the Plan deemed required, authorized or desirable under applicable statutes, regulations or rulings, by action of either the Chairman and Chief Executive Officer of the Company or the Executive Vice President and Human Resources Department Head of the Company (or either of their duly-authorized designees);

provided, however, that no amendment under (a) or (b) above shall authorize or permit any part of the corpus or income of the Trust to be used for, or diverted to, purposes other than for the exclusive benefit of the Members and their Beneficiaries, or to deprive any of them of any funds then held for his or her Account.”

8. To delete the first sentence of section 13.2 of the Plan in its entirety and to substitute the following therefor:

“The Company reserves the right at any time and from time to time to terminate the Plan in whole or in part as of any Valuation Date by action of the Compensation and Benefits Committee of the Board of Directors (or by action of the Board of Directors, if the Compensation and Benefits Committee is unavailable or unable to act for any reason).”

9. To delete section 13.3(b) of the Plan in its entirety and to substitute the following therefor:

“(b) resolutions of the Compensation and Benefits Committee of the Board of Directors (or of the Board of Directors, if the Compensation and Benefits Committee is unavailable or unable to act for any reason) or of any new or successor employer of the affected Members shall authorize such transfer of assets; and, in the case of the new or successor employer of the affected Members, its resolutions shall include an assumption of liabilities with respect to such Members’ inclusion in the new employer’s plan; and”

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10. To delete the last sentence of Section 13.3 of the Plan in its entirety and to substitute the following therefor:

“In the event a portion of the business of the Company or any Affiliate is sold or discontinued, the Compensation and Benefits Committee of the Board of Directors (or the Board of Directors, if the Compensation and Benefits Committee is unavailable or unable to act for any reason) in its discretion may direct that all Members who are employed by the new owner of that portion of the business shall become fully vested in their Unvested Portion.”

11. To delete the first, second, third and fourth sentences of Section 14.1 of the Plan in their entirety and to substitute the following therefor:

“Any Affiliate which desires to become a Participating Employer under the Plan may elect, with the consent of the Compensation and Benefits Committee of the Board of Directors (or of the Board of Directors if the Compensation and Benefits Committee is unavailable or unable to act for any reason), to become a party to the Plan and the related Trust by adopting the Plan for the benefit of its eligible Employees, effective as of the date specified in such adoption. The adoption resolution or decision may contain such specific changes and variations in Plan or Trust terms and provisions applicable to such Participating Employer and its Employees as may be acceptable to the Compensation and Benefits Committee of the Board of Directors (or to the Board of Directors if the Compensation and Benefits Committee is unavailable or unable to act for any reason) and the Trustee. However, the sole, exclusive right of any other amendment of whatever kind or extent to the Plan is reserved in accordance with Section 13.1 of the Plan. Specific changes and variations in the Plan or Thrift Trust terms and provisions as adopted by the Participating Employer in its adoption resolution may be made in accordance with Section 13.1 of the Plan without the consent of such Participating Employer.”

12. To delete the first sentence of Section 14.2 of the Plan in its entirety and to substitute the following therefor:

“Any Participating Employer may withdraw from the Plan and Trust after giving notice to the Compensation and Benefits Committee of the Board of Directors (or to the Board of Directors if the Compensation and Benefits Committee is unavailable or unable to act for any reason), provided the Compensation and Benefits Committee of the Board of Directors (or the Board of Directors if the Compensation and Benefits Committee is unavailable or unable to act for any reason) consents to such withdrawal.”

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13. To delete paragraph (ii) in the third paragraph of section 16.1 of the Plan and to substitute the following therefor:

“(ii) subject to section 9.9, to defer distribution of such interest in accordance with section 9.7(b).”

14. To add the following as new section 16.12 of the Plan:

“16.12 Electronic or Telephonic Notices

Any election, notice, direction or other such action required or permitted to be made in writing under the Plan may also be made electronically, telephonically or otherwise, to the extent then permitted by applicable law and the administrative rules prescribed by the Committee.”

IN WITNESS WHEREOF, the Company has caused this amendment to be executed on its behalf this 29^th of March, 2004 effective such 29^th of March, 2004.

THE NORTHERN TRUST COMPANY
By:	/s/ Martin J. Joyce, Jr.
Name:	Martin J. Joyce, Jr.
Title:	Senior Vice President

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EX-10.(III)

Exhibit 10(iii)

THIRD AMENDMENT

OF THE

NORTHERN TRUST CORPORATION

SUPPLEMENTAL EMPLOYEE STOCK OWNERSHIP PLAN

WHEREAS, the Northern Trust Corporation (the “Corporation”) sponsors the Northern Trust Corporation Supplemental Employee Stock Ownership Plan, as amended and restated effective as of July 20, 1999, (the “Plan”); and

WHEREAS, pursuant to Section 7.1 of the Plan, the Corporation has the right to amend the Plan when the Corporation deems such amendment to be advisable; and

WHEREAS, the Corporation deems it advisable to amend the Plan;

NOW, THEREFORE, the Plan is hereby amended as follows:

1. To add the following as new Section 6.3 of the Plan:

“6.3 Terms Include Authorized Delegates

Where appropriate, the term ‘Company’, ‘Corporation’, ‘Committee’ or ‘EBIC’ as used in this Plan shall also include any applicable subcommittee or any duly authorized delegate of the Company, the Corporation, the Committee or EBIC, as the case may be. Such duly authorized delegate may be an individual or an organization within the Company, the Corporation, the Committee or EBIC, or may be an unrelated third party individual or organization.”

2. To delete the second sentence of Section 7.1 of the Plan in its entirety and to substitute the following therefor:

“(a) Any such termination shall be made by action of the Compensation and Benefits Committee of the Board (or by action of the Board if the Compensation and Benefits Committee is unavailable or unable to act for any reason) and shall be effective as of the date set forth in such resolution.

(b) Any such amendment shall be made in accordance with the following:

(i) material amendments to the Plan (including any extraordinary amendment related to an acquisition or divestiture by the Company) shall be made by action of the Compensation and Benefits Committee

of the Board (or by action of the Board, if the Compensation and Benefits Committee is unavailable or unable to act for any reason); and

(ii) (a) non-material or administrative amendments to the Plan (including any amendment pursuant to guidelines established by the Compensation and Benefits Committee of the Board related to an acquisition or divestiture by the Company) or (b) any amendment to the Plan deemed required, authorized or desirable under applicable statutes, regulations or rulings, shall be made by action of either the Chairman and Chief Executive Officer of the Corporation or the Executive Vice President and Human Resources Department Head of the Corporation (or either of their duly authorized designees).”

3. To delete the next-to-last sentence in Section 7.1 in its entirety and to substitute the following therefor:

“Notwithstanding the foregoing, (i) for a period of two years after the date of an occurrence of a Change in Control or (ii) in the event of a Potential Change in Control and for a period of six (6) months following the Potential Change in Control, neither the Compensation and Benefits Committee of the Board nor the Board may terminate or amend this Plan and neither the Chairman and Chief Executive Officer of the Corporation nor the Executive Vice President and Human Resources Department Head of the Corporation (or either of their designees) may amend this Plan in a manner that adversely affects the rights of any Participant of the Plan.”

IN WITNESS WHEREOF, the Corporation has caused this amendment to be executed on its behalf this 25^th of March, 2004 effective such 25^th of March, 2004.

NORTHERN TRUST CORPORATION
By:	/s/ Timothy P. Moen
Name:	Timothy P. Moen
Title:	Executive Vice President

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EX-10.(IV)

Exhibit 10(iv)

FOURTH AMENDMENT

OF THE

NORTHERN TRUST CORPORATION

SUPPLEMENTAL THRIFT-INCENTIVE PLAN

WHEREAS, the Northern Trust Corporation (the “Corporation”) sponsors the Northern Trust Corporation Supplemental Thrift-Incentive Plan, as amended and restated effective as of July 20, 1999, (the “Plan”); and

WHEREAS, pursuant to Section 7.1 of the Plan, the Corporation has the right to amend the Plan when the Corporation deems such amendment to be advisable; and

WHEREAS, the Corporation deems it advisable to amend the Plan;

NOW, THEREFORE, the Plan is hereby amended as follows:

1. To add the following as new Section 6.3 of the Plan:

“6.3 Terms Include Authorized Delegates

Where appropriate, the term ‘Company’, ‘Corporation’, ‘Committee’ or ‘EBIC’ as used in this Plan shall also include any applicable subcommittee or any duly authorized delegate of the Company, the Corporation, the Committee or EBIC, as the case may be. Such duly authorized delegate may be an individual or an organization within the Company, the Corporation, the Committee or EBIC, or may be an unrelated third party individual or organization.”

2. To delete the second sentence of Section 7.1 of the Plan in its entirety and to substitute the following therefor:

“(a) Any such termination shall be made by action of the Compensation and Benefits Committee of the Board (or by action of the Board if the Compensation and Benefits Committee is unavailable or unable to act for any reason) and shall be effective as of the date set forth in such resolution.

(b) Any such amendment shall be made in accordance with the following:

(i) material amendments to the Plan (including any extraordinary amendment related to an acquisition or divestiture by the Company) shall be made by action of the Compensation and Benefits Committee

of the Board (or by action of the Board, if the Compensation and Benefits Committee is unavailable or unable to act for any reason); and

(ii) (a) non-material or administrative amendments to the Plan (including any amendment pursuant to guidelines established by the Compensation and Benefits Committee of the Board related to an acquisition or divestiture by the Company) or (b) any amendment to the Plan deemed required, authorized or desirable under applicable statutes, regulations or rulings, shall be made by action of either the Chairman and Chief Executive Officer of the Corporation or the Executive Vice President and Human Resources Department Head of the Corporation (or either of their duly authorized designees).”

3. To delete the next-to-last sentence in Section 7.1 in its entirety and to substitute the following therefor:

“Notwithstanding the foregoing, (i) for a period of two years after the date of an occurrence of a Change in Control or (ii) in the event of a Potential Change in Control and for a period of six (6) months following the Potential Change in Control, neither the Compensation and Benefits Committee of the Board nor the Board may terminate or amend this Plan and neither the Chairman and Chief Executive Officer of the Corporation nor the Executive Vice President and Human Resources Department Head of the Corporation (or either of their designees) may amend this Plan in a manner that adversely affects the rights of any Participant of the Plan.”

IN WITNESS WHEREOF, the Corporation has caused this amendment to be executed on its behalf this 25^th of March, 2004 effective such 25^th of March, 2004.

NORTHERN TRUST CORPORATION
By:	/s/ Timothy P. Moen
Name:	Timothy P. Moen
Title:	Executive Vice President

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EX-10.(V)

Exhibit 10(v)

FIFTH AMENDMENT

OF THE

NORTHERN TRUST CORPORATION

SUPPLEMENTAL PENSION PLAN

WHEREAS, the Northern Trust Corporation (the “Corporation”) sponsors the Northern Trust Corporation Supplemental Pension Plan, as amended and restated effective as of July 20, 1999, (the “Plan”); and

WHEREAS, pursuant to Section 6.1 of the Plan, the Corporation has the right to amend the Plan when the Corporation deems such amendment to be advisable; and

WHEREAS, the Corporation deems it advisable to amend the Plan;

NOW, THEREFORE, the Plan is hereby amended as follows:

1. To add the following as new Section 5.3 of the Plan:

“5.3 Terms Include Authorized Delegates

Where appropriate, the term ‘Company’, ‘Corporation’, ‘Committee’ or ‘EBIC’ as used in this Plan shall also include any applicable subcommittee or any duly authorized delegate of the Company, the Corporation, the Committee or EBIC, as the case may be. Such duly authorized delegate may be an individual or an organization within the Company, the Corporation, the Committee or EBIC, or may be an unrelated third party individual or organization.”

2. To delete the second sentence of Section 6.1 of the Plan in its entirety and to substitute the following therefor:

“(a) Any such termination shall be made by action of the Compensation and Benefits Committee of the Board (or by action of the Board if the Compensation and Benefits Committee is unavailable or unable to act for any reason) and shall be effective as of the date set forth in such resolution.

(b) Any such amendment shall be made in accordance with the following:

(i) material amendments to the Plan (including any extraordinary amendment related to an acquisition or divestiture by the Company) shall be made by action of the Compensation and Benefits Committee of the Board (or by action of the Board, if the Compensation and Benefits Committee is unavailable or unable to act for any reason); and

(ii) (a) non-material or administrative amendments to the Plan (including any amendment pursuant to guidelines established by the Compensation and Benefits Committee of the Board related to an acquisition or divestiture by the Company) or (b) any amendment to the Plan deemed required, authorized or desirable under applicable statutes, regulations or rulings, shall be made by action of either the Chairman and Chief Executive Officer of the Corporation or the Executive Vice President and Human Resources Department Head of the Corporation (or either of their duly authorized designees).”

3. To delete the next-to-last sentence in Section 6.1 in its entirety and to substitute the following therefor:

“Notwithstanding the foregoing, (i) for a period of two years after the date of an occurrence of a Change in Control or (ii) in the event of a Potential Change in Control and for a period of six (6) months following the Potential Change in Control, neither the Compensation and Benefits Committee of the Board nor the Board may terminate or amend this Plan and neither the Chairman and Chief Executive Officer of the Corporation nor the Executive Vice President and Human Resources Department Head of the Corporation (or either of their designees) may amend this Plan in a manner that adversely affects the rights of any Participant of the Plan.”

IN WITNESS WHEREOF, the Corporation has caused this amendment to be executed on its behalf this 25^th of March, 2004 effective such 25^th of March, 2004.

NORTHERN TRUST CORPORATION
By:	/s/ Timothy P. Moen
Name:	Timothy P. Moen
Title:	Executive Vice President

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EX-10.(VI)

Exhibit 10(vi)

FIRST AMENDMENT

OF THE

NORTHERN TRUST CORPORATION

SEVERANCE PLAN

WHEREAS, the Northern Trust Corporation (the “Corporation”) maintains the Northern Trust Corporation Severance Plan (the “Plan”); and

WHEREAS, amendment of the Plan is now considered desirable;

NOW, THEREFORE, by virtue and in exercise of the amending power reserved to the Corporation under Section 6.1 of the Plan, the Plan is hereby amended as follows:

1. To insert the following after the term “Administrator” where that term first appears in the second sentence of Section 5.1 of the Plan:

“(including the Committee with respect to appeals of adverse benefit determinations or denied claims under Section 5.6 and with respect to other responsibilities or duties delegated to the Committee under the Plan and/or by action of the Corporation, the Company, an Employer or the Administrator).”

2. To add the following as new Section 5.8 of the Plan:

“5.8 Terms Include Authorized Delegates

Where appropriate, the term ‘Company’, ‘Corporation’, ‘Committee’, ‘Employer’ or ‘Administrator’ as used in this Plan shall also include any applicable subcommittee or any duly authorized delegate of the Company, the Corporation, the Committee, the Employer or the Administrator, as the case may be. Such duly authorized delegate may be an individual or an organization within the Company, the Corporation, the Committee, the Employer or the Administrator, or may be an unrelated third party individual or organization.”

3. To add the following at the end of Section 6.1 of the Plan:

“(a) Any termination shall be made by action of the Compensation and Benefits Committee of the Board of Directors of the Corporation (the “Board”) (or by action of the Board if the Compensation and Benefits Committee is unavailable or unable to act for any reason) and shall be effective as of the date set forth in such resolution.

(b) Any amendment shall be made in accordance with the following:

(i) material amendments to the Plan (including any extraordinary amendment related to an acquisition or divestiture by the Company or the Corporation) shall be made by action of the Compensation and Benefits Committee of the Board (or by action of the Board, if the Compensation and Benefits Committee is unavailable or unable to act for any reason); and

(ii) (a) non-material or administrative amendments to the Plan (including any amendment pursuant to guidelines established by the Compensation and Benefits Committee of the Board related to an acquisition or divestiture by the Company or the Corporation) or (b) any amendment to the Plan deemed required, authorized or desirable under applicable statutes, regulations or rulings, shall be made by action of either the Chairman and Chief Executive Officer of the Corporation or the Executive Vice President and Human Resources Department Head of the Corporation (or either of their duly authorized designees).”

IN WITNESS WHEREOF, the Corporation has caused this amendment to be executed on its behalf this 25^th of March, 2004 effective such 25^th of March, 2004.

NORTHERN TRUST CORPORATION
By:	/s/ Timothy P. Moen
Name:	Timothy P. Moen
Title:	Executive Vice President

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EX-10.(VII)

Exhibit 10(vii)

SECOND AMENDMENT

TO THE

NORTHERN TRUST CORPORATION

DEFERRED COMPENSATION PLAN

WHEREAS, the Northern Trust Corporation (the “Company”) has adopted the Northern Trust Corporation Deferred Compensation Plan (the “Plan”) for the purpose of providing deferred compensation to a select group of management or highly compensated employees of the Company, effective as of May 1, 1998; and

WHEREAS, pursuant to Section 7.1 of the Plan, the Company has the right to amend the Plan when, in the sole discretion of the Company, such amendment is advisable; and

WHEREAS, the Company deems it advisable to amend the Plan.

NOW, THEREFORE, the Plan is hereby amended as follows:

1. To delete the phrase “consistent with the Board resolutions establishing the Plan” from Section 4.1 of the Plan and to substitute the following therefor:

“consistent with resolutions or actions of the Board or the Compensation and Benefits Committee of the Board establishing the Plan.”

2. To add the following after the second sentence of Section 6.1 of the Plan:

“Where appropriate, the term ‘Company’ or ‘Committee’ as used in this Plan shall also include any applicable subcommittee or any duly authorized delegate of the Company or the Committee, as the case may be. Such duly authorized delegate may be an individual or an organization within the Company or the Committee, or may be an unrelated third party individual or organization.”

3. To delete the phrase “all related orders or resolutions of the Board” from Section 6.3 of the Plan and to substitute the following therefor:

“all related orders, resolutions or actions of the Board, the Compensation and Benefits Committee of the Board, the Chairman and Chief Executive Officer of the Company or the Executive Vice President and Human Resources Department Head of the Company (or the duly authorized designee of either of the latter two individuals).”

4. To delete the second sentence of Section 7.1 of the Plan in its entirety and to substitute the following therefor:

“(a) Any such termination shall be made by action of the Compensation and Benefits Committee of the Board (or by action of the Board if the Compensation and Benefits Committee is unavailable or unable to act for any reason) and shall be effective as of the date set forth in such resolution.

(b) Any such amendment shall be made in accordance with the following:

(i) material amendments to the Plan shall be made by action of the Compensation and Benefits Committee of the Board (or by action of the Board, if the Compensation and Benefits Committee is unavailable or unable to act for any reason); and

(ii) (a) non-material or administrative amendments to the Plan or (b) any amendment to the Plan deemed required, authorized or desirable under applicable statutes, regulations or rulings, shall be made by action of either the Chairman and Chief Executive Officer of the Company or the Executive Vice President and Human Resources Department Head of the Company (or either of their duly authorized designees).”

IN WITNESS WHEREOF, the Corporation has caused this amendment to be executed on its behalf this 25^th of March, 2004 effective such 25^th of March, 2004.

NORTHERN TRUST CORPORATION
By:	/s/ Timothy P. Moen
Name:	Timothy P. Moen
Title:	Executive Vice President

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EX-31.(I)

Exhibit 31(i)

Certification of CEO Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, William A. Osborn, Chief Executive Officer, certify that:

1. I have reviewed this report on Form 10-Q for the quarterly period ending March 31, 2004 of Northern Trust Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 3, 2004

/s/ William A. Osborn

William A. Osborn

Chief Executive Officer

EX-31.(II)

Exhibit 31(ii)

Certification of CFO Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Steven L. Fradkin, Chief Financial Officer, certify that:

1. I have reviewed this report on Form 10-Q for the quarterly period ending March 31, 2004 of Northern Trust Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 3, 2004

/s/ Steven L. Fradkin

Steven L. Fradkin

Chief Financial Officer

EX-32.(I)

Exhibit 32(i)

Certifications of CEO and CFO Pursuant to

18 U.S.C. Section 1350, as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Northern Trust Corporation (the “Corporation”) on Form 10-Q for the period ending March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), William A. Osborn, as Chief Executive Officer of the Corporation, and Steven L. Fradkin, as Chief Financial Officer of the Corporation, each hereby certifies, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ William A. Osborn

William A. Osborn

Chief Executive Officer

May 3, 2004

/s/ Steven L. Fradkin

Steven L. Fradkin

Chief Financial Officer

May 3, 2004

This certification accompanies the Report pursuant to section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by Northern Trust Corporation for purposes of section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by section 906 has been provided to Northern Trust Corporation and will be retained by Northern Trust Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99

Exhibit 99(i)

EDITED VERSION OF REMARKS DELIVERED BY

MR. WILLIAM A. OSBORN AT THE ANNUAL MEETING

OF STOCKHOLDERS OF NORTHERN TRUST

CORPORATION HELD APRIL 20, 2004

OVERVIEW

While the votes are being counted, I’d like to give you a brief report on Northern Trust’s performance last year and in the first quarter of 2004, and talk about some of our plans going forward.

As many of you know, 2003 was a year of change and progress for Northern Trust. Coming out of the 3-year, unprecedented bear market, we undertook a comprehensive strategic review in the first half of 2003 to evaluate each of our businesses and refocus our resources for future profitability. Several of our exciting growth businesses saw stepped up investments, including the opening of PFS offices in Manhattan, Stamford, Connecticut and Atlanta, Georgia, and a planned C&IS office in Luxembourg. And, we completed the most sizable acquisition in our history of the passive asset management business of Deutsche Bank, which places us as the third largest institutional index manager in the world. At the same time, we identified several businesses which did not meet our long-term strategic goals. We sold our Atlanta-based retirement consulting business to Hewitt Associates and sold or closed several non-strategic PFS offices. Coincident with those moves, we reduced our annual expense base by $75 million through reductions in staff, space and other initiatives. All of these changes have successfully positioned us for future profitability and growth.

Northern Trust remains a financial services firm focused on serving the needs of a targeted client set: affluent individuals in the U.S. and institutional clients worldwide. We ended 2003 with record assets under administration up 43% from the prior year to $2.2 trillion and managed assets that were up 58% from the prior year to $479 billion. Our revenues, as many of you know, are more fee-based than other financial services organizations with 72% of revenue being fee-related and 28% being from net interest income.

Our three strategic financial goals remain unchanged, with annual targets of 18-20% for ROE, 10% or greater for EPS growth, and a 160% productivity ratio. Our performance in 2003 reflects the charges taken to reduce staff, space and eliminate redundant software. 2003 was clearly a year of financial disappointment, but also reflected a year of changes to better position us for future growth.

Our first quarter results released this morning indicate the progress we’ve made as a result of the improved market environment, continued strong new business wins and the strategic initiatives undertaken in 2003. Assets under administration reached a new record high of $2.3 trillion, which is up 44%. Assets under management were up 43% to $521 billion. Revenue growth was very strong and led to a 35% increase in net income. Truly, this was a terrific quarter for us.

The latter half of 2003 and the first quarter of this year show us making good progress toward once again achieving our three strategic financial goals. In particular, we achieved our EPS growth target with excellent recent quarterly performance, off of the depressed base in the prior year. We’re pleased to have turned the corner with these improved quarterly results.

Let me spend a few minutes giving you a quick review of the businesses we are in and why we are so excited to be competing in these vibrant markets. Northern Trust is a leading provider of global financial solutions for the investment management, asset administration, fiduciary and banking needs of corporations, institutions and affluent individuals.

We are focused on administering and managing client assets in two target markets: affluent individuals in the U.S. and institutional investors worldwide. Both of these client-focused business units are supported by our leading edge technology unit and our world class investment organization. The fact that we leverage our investment and technology capabilities across both client bases is unique in our industry.

PERSONAL FINANCIAL SERVICES

Our Personal Financial Services business unit serves affluent individuals and families, delivering high touch trust, asset management and private banking services through our 82 office network. This business is the 115-year heritage of Northern Trust dating back to our founding in 1889.

This private client business is broken into three components:

• Our core private banking, personal trust business is delivered to clients through our 82 office, 15 state network. Our target market here is households with at least $1 million in investable assets.

• Our second segment is called Wealth Advisory Services. In this business, we target individuals or families with $25 to $75 million in wealth and offer a comprehensive suite of financial advisory services in an open architecture environment.

• Our third segment is the Wealth Management Group. This highly focused component of PFS targets and serves ultra-high net worth families with at least $75 million in investable assets. We serve over 275 families in this group and enjoy an industry leading 20% share of the Forbes 400 richest people in America.

In 1997, we began an expansion effort to increase our footprint nationally, with a goal of reaching 40-45% of the affluent household market by 2005. Last year, we arrived on the east coast with new offices in Manhattan and Stamford, Connecticut. With the opening of a new office in Boston later this year we will reach our 40% goal.

Our investment in full-service private client offices is unlike anything you will find at any other financial services provider. Our offices are attractive, high-end, exclusive private banking facilities. We offer the full range of private client services locally. We have more than 225 portfolio managers, more than 250 trust professionals and more than 350 banking professionals local in the markets we serve. No one else has that kind of reach at the local level.

CORPORATE & INSTITUTIONAL SERVICES

In our institutional business, we provide trust, custody, investment management and advisory services to corporations and institutions around the world. Our clients are public and private retirement plans, foundations, endowments, global fund managers and other asset pools such as governmental entities.

C&IS provides a series of sophisticated services to our target clients, meeting their very complex needs. We gather assets via our core domestic and global custody capabilities and provide an extensive range of value-added services as well. As a custodian, we are a key component of our clients’ information and risk management needs. And of course, we provide asset management services to our institutional clients across a broad range of asset classes and products.

As you can see from this slide, Northern Trust has outstanding market positioning in the C&IS business. Last year, Northern Trust was voted ‘Custodian of the Year’ for the fourth year running by ‘Professional Pensions’ - one of the UK’s leading industry publications. This morning I received an email informing me that we have received the award for the fifth year in a row. They have had the award for five years, and we have won it all five years against all the other global custodians. Northern Trust was ranked the #1 European securities lending provider by International Custody & Fund Administration magazine and the #1 securities lending house in Asia by FinanceAsia magazine. And, demonstrating the staying power of our competitive positioning, Global Investor magazine named us the #2 custodian worldwide based on a 30-year ranking of top providers.

NORTHERN TRUST GLOBAL INVESTMENTS

At March 31st, we managed $521 billion in client assets. As I said before, that was up 43% from a year earlier. We are ranked as the 13th largest worldwide asset manager, the seventh largest manager of institutional assets, and the third largest institutional index manager.

As I mentioned before, our acquisition of Deutsche Bank’s global index business has brought us the significant benefits we had planned:

• First, we now have the scale and prominent positioning as the #3 institutional index manager to win new mandates in the marketplace. In 2003, we won new mandates totaling $40 billion in assets.

• Second, a large and growing passive business adds to securities lending volumes. Our securities lending collateral volumes at year-end were approximately $8 billion higher than they would have been without the larger index base.

• Third, being a large and prominent index manager creates competitive advantages for our growing transition management business.

• Finally, this acquisition has created wonderful cross-sell opportunities. In 2003, we converted 12 acquired passive clients to custody clients.

We made this acquisition for a number of strategic reasons, and we are indeed realizing each of those benefits.

SUMMARY

We have a number of exciting growth strategies underway across all of our businesses at Northern Trust:

• In PFS, we have significant opportunity to expand our market share in our existing 82 office network and we are working on a number of strategies and products to do more for our existing client base. We continue to evaluate and move into new markets, both geographic and demographic.

• In C&IS, the international arena presents many exciting new opportunities for us, including the global fund manager market, as does the expanded client opportunity that comes with new product innovation.

• In our investment business, we are leveraging our #3 ranking in the institutional index business with both existing and new clients. We’re also doing more in the direct sales channel and also emphasizing our excellent alternatives and manager-of-managers capabilities.

Across the board, the growth strategies that we are executing on in 2004 bode well for our future prospects.

STOCK PERFORMANCE

The performance of Northern Trust’s common stock in 2003 was encouraging and reflects the improving external environment, our focused strategies and the efforts we undertook during the year to position the company for improved profitability. Our share price finished the year up 32%. When viewed over the longer term, our performance has also been quite strong. The compound annual growth rate of Northern Trust’s stock for the 10-year period ending December 31, 2003 was 17%, compared with 14% for the KBW50 Bank Index and 9% for the S&P 500.

CLOSING

As I conclude, let me remind you that this presentation may have included forward-looking statements like those described in the projected slide.

Our 2003 annual report and periodic reports to the SEC contain information about specific factors that could cause actual results to differ from these statements, and you are urged to read them.

In closing, I would like to thank our employees for their hard work and dedication. They were truly at their best in 2003. They rose to the challenge of delivering exceptional service during a year of dramatic change.

I would also like to thank our clients for their confidence and trust in choosing Northern Trust and I would like to thank our Board of Directors for their advice, counsel and support.

We continue to be very optimistic about your company. Given the strong support of our clients, staff and directors, we look forward to the future with confidence.

I’d now be happy to answer any questions you may have.

* * * *

Mr. Osborn’s above remarks may be deemed to include forward-looking statements such as statements that relate to Northern Trust’s financial goals, dividend policy, expansion and business development plans, anticipated expense levels and projected profit improvements, business prospects and positioning with respect to market and pricing trends, strategic initiatives, re-engineering and outsourcing activities, new business results and outlook, changes in securities market prices, credit quality including reserve levels, planned capital expenditures and technology spending, and the effects of any extraordinary events and various other matters (including developments in litigation and regulation involving Northern Trust and changes in accounting policies, standards and interpretations) on Northern Trust’s business and results. These statements speak of Northern Trust’s plans, goals, strategies, beliefs, and expectations, and refer to estimates or use similar terms. Actual results could differ materially from those indicated by these statements because the realization of those results is subject to many risks and uncertainties. Our 2003 annual report and periodic reports to the SEC contain information about specific factors that could cause actual results to differ, and you are urged to read them.