Monday, March 02, 2009

Noble and Perhaps Unnecessary

Before we write any further, the editors at IB18 have been and currently are clients of Northern Trust, having held a checking account with the bank for nearly 10 years with hardly a complaint.

Nor do we take issue with them, like many politicians and pundits have in recent days, with their expenditures at their sponsored PGA event a couple weeks ago at Riviera Country Club.

Unlike many of their fellow financial institutions, now mired in the woes of having backed sub-prime mortgages, Northern Trust remained shrewd and was profitable in 2008, operating in the black with nearly $800 million in earnings and an EPS of $3.47. Still, the Trouble Asset Relief Program (TARP) gave them a piece of the $700 billion-dollar pie, $1.6 billion dollars worth to be exact, even though Northern Trust’s PGA sponsored-event was easily covered by it’s own assets and NOT the Feds.

Northern Trust has nothing to be ashamed of except poor timing. Sure, it would have been more prudent and politically correct to not throw lavish parties for their employees and clients. However, having taken over sponsorship of the event in 2007 (way before the Feds’ bailout on October 3, 2008), Northern Trust was on the hook and knew fully well that it could cover its responsibilities to the event and its attendees.

To it’s credit, Northern Trust realized the negative publicity it was receiving and has made amends by making the first of its quarterly repayments to the Feds in the amount of $19.7 million dollars

But it doesn’t take a genius (as I don’t profess to be one) that this event was done with THEIR dough, which they RIGHTFULLY EARNED.

And the Feds can go screw!!!

2 Comentários:

DeeDee said...

What the banks need are some more loyal customers like you....Northern is a strong institiution.....by the way, the Granats saw Tiger in his opening and closing event in Tucsonl.

Malcolm Milburn said...

The incident you bring up is utterly appalling. Arguably, Northern Trust did not even need the TARP money they received, and probably would be better off now without it. You are right, Northern Trust has nothing to be ashamed of except poor timing,” the media and critics within the Government should be ashamed for their lack of understanding of simple business practices. If one does not even take into account the penalties and broken relationships the bank would have suffered from pulling out of their sponsorship deal with the PGA Tour, the reasoning for keeping the tournament should still be crystal clear. A company like Northern Trust, that derives a large amount of its revenues from everyday individuals, like those that attend and watch golf tournaments on TV, needs to advertise. Truthfully, commercial banks offer nearly identical products. People choose one over another on perception and location. Northern Trust sponsors this golf tournament to reach people and build their business. Furthermore, it would have been a really bad signal to investors about the status of their business had they pulled out.

Additionally, any PGA tournament also boosts the economy of the area in which it is located. Whether fans are traveling to area and staying in local hotels to see Phil Mickelson play or just buying a few beers on the course, golf tournaments bring large revenues. By hosting their tournament, Northern Trust provided jobs to servers, parking attendants, coordinators, are all the other people involved in the production. Does the media understand this when the criticize Northern Trust for wasting taxpayer money on frivolity.

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