Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Marty Mosby - FTN Equity Capital.
Marty Mosby - FTN Equity Capital
One of the things that I’ve been seeing or pick up on the trust banks is having good asset growth, since that for northern, we’ve got 11% growth in assets under custody and 9% growth assets under management, but if you look at the fee structure, we really lost 1% quarter-over-quarter if you take out the securities lending kind of mark-to-market adjustment, and look at CI&S & PFS.
Those two together, you had about a 1% decline, we also had a 30% decline in FX. So I was trying to put the correlation between the asset growth that we had, which we expected with the market evaluation improvement, and the lack of fee income growth that we were seeing on the other side?
Bill Morrison
Well, I think if you break it down a little bit and look at the components of our trust fee income, you’ve got a little bit of a mixed story, but if you look at C&IS custody and fund administration fees those look to be doing pretty much what you would expect. In the C&IS investment management fee category, we’re a little bit below where we would expect to be and that really is the result of two principal drivers.
One, we’ve seen lower average short duration assets in C&IS investment management and secondly, we’ve seen a mix shift away from equity assets into lower fee products. If you move over to the PFS side of the business, the shortfall versus what we and you would expect is principally driven by these labors that we talked about during the presentation on our money market funds and that crosses all three of the categories, both categories of PFS trust fees and that is wealth management and non-wealth management fees, but that’s the issue.
Marty Mosby - FTN Equity Capital
The other thing I was just going to ask is, you kind of looked at the run rate and the operating earnings you had at $0.72 where you have taken off the Visa benefit, we also had a benefit from the tax and also the mark-to-market and the securities lending. So those would be at normally favorable. If you looked at that, we had some decline quarter-to-quarter over just what I would call kind of the core earnings and I just wanted to hear what you had to say about that. Thanks.
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