![]() © 2008 Northern Trust Corporation INVESTOR DAY 2008 Principles That Endure Service Expertise Integrity Frederick H. Waddell President & Chief Executive Officer NORTHERN TRUST CORPORATION EXHIBIT 99.1 |
![]() Integrity Expertise Service 2 Forward Looking Statement This presentation may 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, demographic 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, anticipated tax benefits and expenses, and the effects of any extraordinary events and various other matters (including with respect to litigation, other contingent liabilities and obligations, 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, targets, 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 2007 financial 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. Northern Trust disclaims any continuing accuracy of the information provided in this presentation after today. |
![]() 3 Integrity Expertise Service Today’s Agenda Corporate Overview Frederick H. Waddell President & Chief Executive Officer Financial Overview Steven L. Fradkin Executive Vice President and Chief Financial Officer Personal Financial Services Sherry S. Barrat Co-President, PFS Corporate & Institutional Services Timothy J. Theriault President, C&IS Northern Trust Global Investments Stephen N. Potter President, NTGI Wrap-Up and Q&A Frederick H. Waddell President & Chief Executive Officer |
![]() © 2008 Northern Trust Corporation INVESTOR DAY 2008 Principles That Endure Service Expertise Integrity Northern Trust: Client-Centric and Highly Focused Principles That Endure |
![]() 5 Integrity Expertise Service Relationship Driven, Client-Centric Business Model Our Clients Worldwide Operations & Technology Government Agencies Taft-Hartley Foundations / Endowments / Healthcare Individuals Privately Held Businesses Pension Funds Large Corporations Investment Management Firms Insurance Companies Families Family Foundations Family Offices Personal Financial Services Corporate & Institutional Services Northern Trust Global Investments |
![]() 6 Integrity Expertise Service Client- Centric Enduring Principles and Strategies for Success Organic Growth Acquisition Strategy Focused on Expanding Geography or Capability Operating with a Single Global Platform Key Principles for Long-Term Growth: Attractive Client Markets Focused Capabilities Excellence in Execution Brand |
![]() © 2008 Northern Trust Corporation INVESTOR DAY 2008 Principles That Endure Service Expertise Integrity Personal Financial Services Principles That Endure |
![]() 8 Integrity Expertise Service Personal Financial Services Extensive Reach in High Growth Target Market 85 PFS Offices in 18 States Over 50% of the U.S. millionaire market resides within a 45-minute drive of Northern Trust offices. Arizona (8) Florida (25) Illinois (19) Illinois (19) Colorado (1) Colorado (1) Nevada (1) Nevada (1) Missouri (1) Missouri (1) Washington (1) Michigan (3) Texas (7) California (11) New York (1) Connecticut (1) Delaware (1) Georgia (1) Georgia (1) Massachusetts (1) Wisconsin (1) Wisconsin (1) Ohio (1) Ohio (1) Minnesota (1) Minnesota (1) Attractive Client Markets Projected Annual Household Growth Rates 2007 - 2012 by Household Asset Size 7.1% 11.3% 15.5% $1 - 5 MM $5 - 200 MM $200+ MM Source: Claritas |
![]() 9 Integrity Expertise Service Personal Financial Services Addressing Clients’ Complex Financial Goals Our integrated approach and comprehensive capabilities allow us to address all of our clients’ needs. Grow Assets Proprietary and Third-party Investment Managers Active Index Strategies Alternative Investments Manage Risk Asset Diversification Single-stock Concentration Hedging Strategies Stock Option Planning Tax Liability Management Tax Sensitive Investing Tax Loss Harvesting Investment Vehicle Selection Liquidity Management Deposit Services Custom Lending Short Term Cash Management Vehicles Building and Managing Wealth Protecting and Transferring Wealth Protect and Preserve Wealth Wealth Transfer Planning Customized Trust Solutions Transition Wealth Estate Settlement Services Guardianship Services Plan for Special Assets Family Business Manage Non-Financial Assets Creating a Legacy Reinforce Family Values Family Education Family Mission Statement Advanced Wealth Transfer Strategies Establish a Charitable Giving Tradition Implement a Tailored Philanthropic Strategy Balance Charitable Giving with the Financial Needs of the Family Ensure Tax-Efficiency of Philanthropic Vehicles Focused Capabilities |
![]() 10 Integrity Expertise Service Private Client Revenues As a Percentage of Total Company Revenues, Full Year 2007 Source: Company Fourth Quarter 2007 Earnings Release reports; *Merrill Lynch percentage based on 2006 data Northern Trust Wachovia Citigroup Wilmington Trust Bank of America JP Morgan Chase Merrill Lynch* Goldman Sachs Bank of NY Mellon Personal Financial Services Our Focus on the Affluent Market is Unmatched Excellence in Execution 35% 30% 16% 12% 10% 10% 9% 5% 42% |
![]() 11 Integrity Expertise Service Personal Trust Assets ($ Billions) Source: SNL Financial; As of December 31, 2007 2. 3. 4. 5. 6. 7. 8. 9. 10. The Largest Personal Trust Bank in the U.S. Northern Trust $205.3 1. Bank of America 127.5 JPMorgan Chase 84.5 Citigroup 69.9 Wachovia 61.9 Bank of NY Mellon 50.7 U.S. Bancorp 42.9 Wells Fargo 42.2 PNC Financial 35.3 SunTrust 27.3 Personal Financial Services Largest Personal Trust Provider in the U.S. Excellence in Execution |
![]() 12 Integrity Expertise Service Personal Financial Services What Really Matters to Our Clients Northern Trust’s holistic approach to wealth management addresses the full spectrum of our clients’ unique needs. Client- Centric Private Banking Asset Management Trust Services Financial Planning Philanthropic Services Retirement Planning Business Banking Brokerage CLIENT |
![]() 13 Integrity Expertise Service Personal Financial Services Key Strategies and Opportunities for Long-term Growth Attractive growth rates in target markets Expand share of wallet Enhance referral flow Sustain and leverage flight to quality Selective geographic expansion Client- Centric Attractive Client Markets Focused Capabilities Excellence in Execution Brand |
![]() © 2008 Northern Trust Corporation INVESTOR DAY 2008 Principles That Endure Service Expertise Integrity Corporate & Institutional Services Principles That Endure |
![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() ![]() 15 Integrity Expertise Service North America Europe, Middle East & Africa Asia Pacific Corporate & Institutional Services Market Opportunities Continue to Grow Total Market: $161 Trillion Total Assets Under Custody Worldwide: $90 Trillion (1) McKinsey & Company – Mapping the Global Capital Market, Fourth Annual Report, January 2008; Excludes $6 trillion of South American assets (2) YE 2007 competitor earnings releases & The Greensted Report, Fall 2007 – Top 10 custodians $60 Trillion $60 Trillion $41 Trillion $56 Trillion U.S. $4 Trillion Canada $10 Trillion U.K. $43 Trillion Western Europe $7 Trillion Other $19 Trillion Japan $14 Trillion Emerging Asia $8 Trillion Other Attractive Client Markets (2) (1) |
![]() 16 Integrity Expertise Service Corporate & Institutional Services Continuum of Solutions for Complex Needs Focused Capabilities Asset Administration Asset Processing Asset Reporting Asset Enhancement Asset Management |
![]() 17 Integrity Expertise Service Corporate & Institutional Services Continuum of Solutions for Complex Needs Businesses we are NOT in: Investment Banking Sub-Prime Mortgage Underwriting Asset Backed Commercial Paper Conduits Private Equity Bridge Financing American Depository Receipts Venture Capital Stock Transfer DC Record Keeping Focused Capabilities Asset Administration Asset Processing Asset Reporting Asset Enhancement Asset Management |
![]() 18 Integrity Expertise Service Corporate & Institutional Services Strong Presence in Target Institutional Segments Source: Pensions and Investments 21 January 2008 (US Pensions), 24 December 2007 (Foundations & Endowments), 28 May 2007 (Asset Managers); Pension Funds and Their Advisors, 2007 (UK Funds); Money Market Directory, 2007 (Healthcare Funds); Lipper Fitzrovia Dublin Fund Encyclopaedia, Administrators, 2006/2007; Lipper Fitzrovia Guernsey Fund Encyclopaedia, Administrators, 2006/2007. Fund Administration Serves 27% of the Top 200 Asset Managers in the world #1 Provider of Offshore Private Equity Fund Administration services in Europe Fund Administrator for more funds in Ireland and Guernsey than any other provider Pension Plans 100 U.S. Corporate Plans 40% 200 U.S. Funds 40% 200 U.K. Funds 29% Northern Serves Of the Top Public Funds / Taft-Hartley Northern Serves Of the Top 25 Taft-Hartley Funds 40% 100 U.S. Public Funds 37% U.K. Local Authority 30% Foundations, Endowments, and Healthcare 50 U.S. Foundations 30% 50 U.S. Endowments 26% 50 U.S. Healthcare Funds 36% Northern Serves Of the Top Excellence in Execution |
![]() 19 Integrity Expertise Service Corporate & Institutional Services Clients Drive Our Solutions and Product Offerings Pension Plans Public Funds Asset Managers Foundations & Endowments Client Needs / Industry Trends Corporate & Institutional Services Asset Administration Asset Processing Asset Management Asset Enhancement Products and Solutions: Asset Reporting Client- Centric |
![]() 20 Integrity Expertise Service Corporate & Institutional Services Key Strategies and Opportunities for Long-term Growth Competing and winning around the world Complexity drives innovation Broad array of solutions Unique global operating model Extending industry leading technology platform Attractive Client Markets Focused Capabilities Excellence in Execution Brand Client- Centric |
![]() © 2008 Northern Trust Corporation INVESTOR DAY 2008 Principles That Endure Service Expertise Integrity Northern Trust Global Investments Principles That Endure |
![]() 22 Integrity Expertise Service Northern Trust Global Investments An Attractive Growth Opportunity “In some respects, the asset management business is the envy of the financial services sector in view of its high margins, healthy returns, limited credit risk, generally low capital requirements, and solid cash flow. “Because of the industry’s margin and ROE premiums to most other financial service businesses, as well as its limited capital and credit risk, the group trades at a premium valuation, – UBS Investment Research, December 2005 Attractive Client Markets which we expect to continue.” |
![]() 23 Integrity Expertise Service $62 BN (43%) $36 BN (24%) $40 BN (27%) Personal Financial Services $146.0 Billion Equities Fixed Income Short Duration Other $8 BN (6%) By Asset Class as of March 31, 2008 Northern Trust Global Investments Providing Investment Solutions to Target Clients $221 BN (35%) $62 BN (10%) $267 BN (42%) Corporate & Institutional Services $632.6 Billion Other $3 BN (<1%) $80 BN (13%) Equities Fixed Income Short Duration Securities Lending Focused Capabilities |
![]() 24 Integrity Expertise Service Northern Trust Global Investments Top Tier Investment Manager Source: Pensions & Investments 2007 Special Report on Asset Managers, data as of December 31, 2006. Multi-manager Ranking Source: Cerulli Associates, 2005 8 th Largest Manager Worldwide Institutional Assets 5 th Largest Manager U.S. Institutional Tax-Exempt Assets 4 th Largest Manager Defined Benefit Assets 3 rd Largest Manager Multi-Manager - U.S. Institutional Assets Markets Served Rankings 3 rd Largest Manager Passive Domestic Indexed Equity 3 rd Largest Manager Passive Domestic Indexed Bonds 3 rd Largest Manager Passive International Indexed Securities Investment Strategy Excellence in Execution |
![]() 25 Integrity Expertise Service $59 $73 $92 $98 $94 $88 $104 $110 $117 $135 $148 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 $138 $160 $201 $228 $226 $215 $374 $462 $501 $563 $609 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Northern Trust Global Investments Significant Success in Growing Client Assets PFS Assets Under Management ($ Billions) C&IS Assets Under Management ($ Billions) AUM 10-Year CAGR: 10% S&P500 10-Year CAGR: 4% AUM 10-Year CAGR: 16% S&P500 10-Year CAGR: 4% Acquired $75 BN Index Assets S&P500 S&P500 Excellence in Execution |
![]() 26 Integrity Expertise Service Northern Trust Global Investments Clients Drive Our Solutions and Product Offerings Personal Clients Institutional Clients Client Needs / Industry Trends Northern Trust Global Investments Client- Centric Active Quantitative Manager of Managers Products and Solutions: Northern Trust Global Investments |
![]() 27 Integrity Expertise Service Client- Centric Client- Centric Attractive Client Markets Focused Capabilities Excellence in Execution Brand Northern Trust Global Investments Key Strategies and Opportunities for Long-term Growth Aligned and focused on serving personal and institutional clients Leveraging strengths in quantitative, manager of managers and fixed income investments Building through global growth Delivering investment excellence |
![]() 28 Integrity Expertise Service Alternative Communications One Voice, One Message via Multiple Channels Brand Client Communications Advertising Regional Messages Products Philanthropy Sponsorships & Events Client Segmentation Worldwide Crises Funding Worldwide Crises Funding |
![]() © 2008 Northern Trust Corporation INVESTOR DAY 2008 Principles That Endure Service Expertise Integrity Frederick H. Waddell President & Chief Executive Officer NORTHERN TRUST CORPORATION |
![]() © 2008 Northern Trust Corporation INVESTOR DAY 2008 Principles That Endure Service Expertise Integrity Steven L. Fradkin Executive Vice President & Chief Financial Officer Financial Overview & Perspectives |
![]() Integrity Expertise Service 31 Today’s Agenda Financial Overview & Perspectives Strong Performance Over the Long-Term Financial Overview Financial Perspectives in Focus Current Topics of Interest |
![]() © 2008 Northern Trust Corporation INVESTOR DAY 2008 Principles That Endure Service Expertise Integrity Strong Financial Performance Over the Long-Term Principles That Endure |
![]() Integrity Expertise Service 33 20 Years of History: Economic Shocks & Cycles 1998: LTCM collapse; Russian debt default; Global currency crisis 2000: Y2K financial infrastructure scare; Start of 2-year stock bear market 2001: 9/11 attack; Invasion of Afghanistan 2002: Accounting scandals: Enron, Worldcom, Tyco, & Global Crossing 9/30/87 S&P 500: 321.83 2003: Second Persian Gulf War (Iraq) 2004-05: Disastrous hurricane seasons 2004-07: Oil spike from $30 to $90 per barrel 3/31/08 S&P 500: 1322.70 10/19/87: Black Monday: S&P 500 declines 20% 1989: Commercial Real Estate Bubble bursting 1990-1991: Recession 1991: Persian Gulf War (Kuwait) 1993: Orange County bankruptcy crisis 1994: Fed rate squeeze and bond bear market 1995: Mexican & Latin American debt crises 1991: Soviet Union collapse 2007: Subprime mortgage market collapse & debt market liquidity crunch 2008: Bear Stearns bailout |
![]() Integrity Expertise Service 34 20 Years of History: Interest Rate Environment |
![]() Integrity Expertise Service 35 20 Years of History: Successfully Navigated by Northern Trust |
![]() © 2008 Northern Trust Corporation INVESTOR DAY 2008 Principles That Endure Service Expertise Integrity Financial Overview Principles That Endure |
![]() Integrity Expertise Service 37 NTRS: Record Financial Performance in 2007 Trust, Inv. & Other Servicing Fees Other Non-Interest Income Net Interest Income Total Revenues Non-Interest Expenses* Net Income* Earnings Per Share* % Growth 2006 to 2007 $2,078 Million $600 Million $894 Million $3,572 Million $2,280 Million $821 Million $3.66 +16% +26% +13% +17% +17% +23% +22% Assets Under Custody Global Custody Assets Assets Under Management $4.1 Trillion $2.1 Trillion $757 Billion +17% +23% +9% Fiscal Year 2007 *Excludes Visa-related items. Please see Northern Trust's 2007 Financial Annual Report and Form 10-K for reported results prepared in accordance with generally accepted accounting principles. |
![]() Integrity Expertise Service 38 Year-to-Date 3/31/08 NTRS: Excellent Financial Performance Continued in 1Q08 Trust, Inv. & Other Servicing Fees Other Non-Interest Income* Net Interest Income Total Revenues* Non-Interest Expenses* Net Income* Earnings Per Share* % Growth 2007 to 2008 $527 Million $185 Million $266 Million $978 Million $611 Million $232 Million $1.03 +8% +54% +24% +19% +16% +24% +23% Assets Under Custody Global Custody Assets Assets Under Management $4.0 Trillion $2.0 Trillion $779 Billion +6% +12% +3% *Excludes Visa-related items. Please see Northern Trust's Form 10-Q for the first quarter of 2008 for reported results prepared in accordance with generally accepted accounting principles. |
![]() Integrity Expertise Service 39 Long-Term, Strategic Financial Targets Met in 2007 Revenue Growth 8% - 10% Positive Operating Leverage EPS Growth 10% - 12% Return on Equity 16% - 18% Annual Target Full Year 2004 8.6% +3.4 26.0% 16.1% Full Year 2005 15.5% +2.3 16.0% 17.0% Full Year 2006 13.9% +1.2 13.6% 17.6% Full Year 2007* 16.7% +0.2 22.0% 19.7% *Excludes Visa-related items. Please see Northern Trust's 2007 Financial Annual Report and Form 10-K for reported results prepared in accordance with generally accepted accounting principles. |
![]() Integrity Expertise Service 40 Strong Growth in Client Assets… …in stark contrast to equity markets. $0.0 $1.1 $2.2 $3.3 $4.4 2003 2004 2005 2006 2007 1Q08 Assets Under Custody $4.0 Trillion $0.0 $0.5 $1.0 $1.5 $2.0 2003 2004 2005 2006 2007 1Q08 Global Custody Assets $2.0 Trillion $0 $200 $400 $600 $800 2003 2004 2005 2006 2007 1Q08 Assets Under Management $779 Billion CAGR +21% (12/31/02 – 3/31/08) CAGR +32% (12/31/02 – 3/31/08) CAGR +20% (12/31/02 – 3/31/08) 5 Year CAGR: Dow Jones S&P 500 NASDAQ EAFE +8% +8% +11% +15% |
![]() Integrity Expertise Service 41 Trust, Investment & Other Servicing Fees… $1,330 $1,559 $1,792 $2,078 $1,189 2003 2004 2005 2006 2007 …continue to dominate revenue profile. Consolidated Trust, Investment & Other Servicing Fees ($ Millions) % of Total Revenues 55% 57% 58% 59% 58% |
![]() Integrity Expertise Service 42 A Hallmark of Northern Trust: Positive Operating Leverage* +1% +6% +4% +1% +1% +0% +1% +2% -5% -3% +2% +2% +1% +0% +0% +0% +0% +5% +2% -2% 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 We have achieved positive or neutral operating leverage in 17 of the last 20 years. Note: Calculations prior to 1999 based on actual reported results. 1999-2005 calculations restated for sale of NTRC business and exclude certain nonrecurring revenue and expense items in 2003 and 2004. 2007 excludes the 4Q07 VISA charge. *Revenue Growth less Expense Growth |
![]() Integrity Expertise Service 43 A Hallmark of Northern Trust: Positive Operating Leverage* +1% +6% +4% +1% +1% +0% +1% +2% -5% -3% +2% +2% +1% +0% +0% +0% +0% +5% +2% -2% 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 We have achieved positive or neutral operating leverage in 17 of the last 20 years… through various market and interest rate environments. +12% +27% -7% +26% +5% +7% -2% +34% +20% +31% +27% +20% -10% -13% -23% +26% +9% +3% +14% +4% S&P 500 7.6% 9.2% 8.1% 5.7% 3.5% 3.0% 4.2% 5.8% 5.3% 5.5% 5.4% 5.0% 6.2% 3.9% 1.7% 1.1% 1.4% 3.2% 5.0% 5.0% Avg. Fed Funds Note: Calculations prior to 1999 based on actual reported results. 1999-2005 calculations restated for sale of NTRC business and exclude certain nonrecurring revenue and expense items in 2003 and 2004. 2007 excludes the 4Q07 VISA charge. *Revenue Growth less Expense Growth |
![]() Integrity Expertise Service 44 Financial Perspectives in Focus Net Interest Income Credit Quality Capital Management Business Unit Financial Performance |
![]() Integrity Expertise Service 45 $471 $513 $557 $622 $648 $651 $603 $621 $735 $810 $908 $150 $250 $350 $450 $550 $650 $750 $850 $950 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 0% 3% 6% 9% 12% …through various interest rate cycles. Average Annual Fed Funds Rate Focus on Net Interest Income Strong Growth in Net Interest Income… 21.6 24.6 27.2 30.7 32.0 33.6 34.8 37.0 40.5 46.0 53.4 Avg. Earning Assets ($BN) |
![]() Integrity Expertise Service 46 Focus on Credit Quality Outstanding Credit Quality Relative to Peer Banks Consistent top-tier credit quality rankings. Notably better than peer averages in each category. Peer* Average NTRS 0.13% 463% 0.04% 1.18% 168% 1.01% Non-Performing Assets as a % of Loans Loan Loss Reserve as a % of Non-Performing Assets Net Charge-Offs to Average Loans As of March 31, 2008 *Peer group consists of the 20 largest U.S. Bank Holding Companies in terms of total balance sheet assets. Source: SNL Financial |
![]() Integrity Expertise Service 47 $4.8 $3.3 $4.5 $3.9 $1.6 $2.9 $2.7 $2.3 $2.1 $3.1 $3.6 $1.8 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1Q08 End-of-Period Common Equity ($ Billions) 10-Year Compound Annual Growth Rate: 11% First Quarter 2008 was the 80 consecutive quarter (or 20 years) of increasing common equity. Focus on Capital Management Strong and Conservative Capital Management th |
![]() Integrity Expertise Service 48 11.0% 9.7% 9.8% 9.7% 11.1% 2003 2004 2005 2006 2007 Strong Capital Ratios Consistently Exceed Regulatory “Well Capitalized” Guidelines. 14.0% 13.3% 12.3% 11.9% 11.9% 2003 2004 2005 2006 2007 6.8% 6.7% 7.1% 7.6% 7.6% 2003 2004 2005 2006 2007 Tier 1 Capital Ratio Well Capitalized Guideline = 6% Leverage Ratio Well Capitalized Guideline = 5% Focus on Capital Management Strong and Conservative Capital Management Total Risk Based Ratio Well Capitalized Guideline = 10% |
![]() Integrity Expertise Service 49 Focus on Business Unit Financials PFS Income Statement Trust, Inv. & Other Servicing Fees Other Non-Interest Income Net Interest Income Total Revenues Non-Interest Expenses Provision for Credit Losses Income Before Income Tax Provision for Income Tax Net Income % Growth 2006 to 2007 $898 Million $99 Million $514 Million $1,511 Million $944 Million $14 Million $554 Million $215 Million $339 Million +15% +3% +3% +10% +10% +129% +8% +8% +8% Fiscal Year 2007 |
![]() Integrity Expertise Service 50 ($ Millions) Focus on Business Unit Financials PFS Trust, Investment & Other Servicing Fees $650 $708 $779 $898 $599 2003 2004 2005 2006 2007 5-YEAR CAGR +8% |
![]() Integrity Expertise Service 51 Focus on Business Unit Financials C&IS Income Statement Trust, Inv. & Other Servicing Fees Other Non-Interest Income Net Interest Income Total Revenues Non-Interest Expenses Provision for Credit Losses Income Before Income Tax Provision for Income Tax Net Income % Growth 2006 to 2007 $1,180 Million $477 Million $409 Million $2,066 Million $1,224 Million $5 Million $837 Million $311 Million $526 Million +17% +32% +30% +22% +20% -50% +27% +16% +34% Fiscal Year 2007 |
![]() Integrity Expertise Service 52 Focus on Business Unit Financials C&IS Trust, Investment & Other Servicing Fees $680 $852 $1,012 $1,180 $590 2003 2004 2005 2006 2007 5-YEAR CAGR +16% ($ Millions) |
![]() Integrity Expertise Service 53 Focus on Business Unit Financials C&IS and PFS – A Balanced Mix Full Year 2007 Pre-Tax Profit Margin After-Tax Profit Margin Total Revenues ($ Millions) Net Income ($ Millions) $1,511 $2,066 $339 $526 36.7% 40.5% 22.4% 25.5% PFS C&IS |
![]() © 2008 Northern Trust Corporation INVESTOR DAY 2008 Principles That Endure Service Expertise Integrity Current Topics of Interest Principles That Endure |
![]() Integrity Expertise Service 55 Current Topics of Interest Conservative Securities Portfolio 3/31/08 Securities – Available for Sale U.S. Government $ 20.3 nm Obligations of States / Political Subdivisions 33.0 nm Government Sponsored Agency 7,856.0 70% Asset-Backed 1,779.3 16% Other 388.5 3% Total Securities – Available for Sale 10,077.1 89% Securities – Held to Maturity Obligations of States / Political Subdivisions 852.9 8% Government Sponsored Agency 12.8 nm Other 310.3 3% Total Securities – Held to Maturity 1,176.0 11% Other 11.4 nm Total Securities $11,264.5 100% ($ Millions) Composition 92% of Northern Trust’s total securities portfolio was composed of triple-A rated securities 95% of Asset Backed Securities rated triple-A Exposure to subprime Asset Backed Securities relative to the overall portfolio was minimal at less than 4% 90% of subprime Asset Backed Securities rated triple-A Total gross unrealized losses on the securities portfolio were $159 million High Quality Portfolio % of Total All data is as of March 31, 2008 |
![]() Integrity Expertise Service 56 Current Topics of Interest Diversified and High Quality Loan Portfolio 3/31/08 U.S. Residential Real Estate $ 9.3 35% Commercial 6.4 24% Commercial Real Estate 2.4 9% Personal 3.8 14% Other 1.6 6% Lease Financing 1.1 4% Total U.S. 24.7 92% Non-U.S. 2.1 8% Total Loans and Leases $ 26.8 100% ($ Billions) Relationship-based lending practices Nonperforming assets totaled $35.7 million, down nearly 4% from the year-ago quarter Nonperforming assets represent only 0.13% of total outstanding loans, an improvement from 0.17% in the year ago quarter Nonperforming assets are covered 4.6 times by current credit loss reserves as compared to 3.7 times in the year ago quarter Northern Trust does not: Underwrite mortgage loans to sub-prime borrowers Lend directly to hedge funds Provide bridge financing to private equity deals Offer an off-balance sheet commercial paper conduit for client liquidity Top-Tier Credit Quality % of Total Composition All data is as of March 31, 2008 |
![]() Integrity Expertise Service 57 Current Topics of Interest Capital Support Agreements for Cash Funds Executed on February 21, 2008 Though not obligated to do so, Northern Trust entered into Capital Support Agreements (“CSA”) with an aggregate maximum contribution of $229 million, largely for the benefit of our clients. The CSAs expire no later than July 31, 2008 The CSAs support eight cash funds which invest in the recently downgraded Whistlejacket and White Pine SIVs (collectively known as “Whistlejacket”). Capital support will be provided to any affected cash fund which disposes of Whistlejacket at a loss and, as a result, breaches a designated minimum NAV. The capital contribution will, up to the extent of the disposition loss, restore the NAV to the minimum threshold level, generally 99.5%. In the event the entire $229 million in capital support is utilized, Northern Trust Corporation’s capital ratios would decline by approximately 20 to 30 basis points – a marginal decrease. As of March 31, 2008, no capital contributions have been made under the agreements. The estimated fair value of the agreements was $8.7 million as of March 31, 2008. |
![]() Integrity Expertise Service 58 Current Topics of Interest Securities Lending Quarterly Fees ($ Millions) First Quarter $ 45.6 (6%) Second Quarter 73.4 21% Third Quarter 33.0 (19%) Fourth Quarter 55.1 32% Total $ 207.1 8% First Quarter $ 31.9 (30%) Actual Y-o-Y Growth Actual 2007 2008 |
![]() Integrity Expertise Service 59 Current Topics of Interest Securities Lending First Quarter $ 45.6 (6%) Second Quarter 73.4 21% Third Quarter 33.0 (19%) $ 69.0 70% Fourth Quarter 55.1 32% 101.1 142% Total $ 207.1 8% $ 289.1 51% First Quarter $ 31.9 (30%) $ 124.9 174% Actual Y-o-Y Growth Proforma* Y-o-Y Growth *Reflects securities lending fees on a proforma basis for each period had clients chosen our most commonly used collateral pool instead of the marked-to-market portfolio. Proforma* Actual 2007 2008 Quarterly Fees ($ Millions) |
![]() Integrity Expertise Service 60 Key Takeaways Northern Trust: Business model centered around clients with real needs Strong and differentiated financial positioning Conservatively managed, while generating high performance results A focused and disciplined business model, across cycles Financial success achieved for clients, investors and other constituents through principles that endure |
![]() © 2008 Northern Trust Corporation INVESTOR DAY 2008 Principles That Endure Service Expertise Integrity Steven L. Fradkin Executive Vice President & Chief Financial Officer Financial Overview & Perspectives |
![]() © 2008 Northern Trust Corporation INVESTOR DAY 2008 Principles That Endure Service Expertise Integrity Sherry S. Barrat Co-President, PFS Personal Financial Services |
![]() Integrity Expertise Service 63 Key Strategic Priorities Personal Financial Services Leveraging Our Renowned Client Service Culture Offering Comprehensive and Holistic Solutions to Clients in Target Segments Strategies and Opportunities for Continued Growth |
![]() Integrity Expertise Service 64 PFS Is the 119-Year Heritage of Northern Trust Corporation Industry leader in wealth management. Renowned for exceptional client service. Serving high growth market Attractively positioned office footprint Integrated client service teams Largest personal trust bank Highest levels of client satisfaction 85 PFS Offices in 18 States Arizona (8) Florida (25) Illinois (19) Illinois (19) Colorado (1) Colorado (1) Nevada (1) Nevada (1) Missouri (1) Missouri (1) Washington (1) Michigan (3) Texas (7) California (11) New York (1) Connecticut (1) Delaware (1) Georgia (1) Georgia (1) Massachusetts (1) Wisconsin (1) Wisconsin (1) Ohio (1) Ohio (1) Minnesota (1) Minnesota (1) |
![]() Integrity Expertise Service 65 In Recent Years, PFS Client-Centric Initiatives… …have focused on building comprehensive investment and advisory solutions. The recognized leader in providing sophisticated financial solutions to the world’s wealthiest families. Wealth Management Delivering trust, investment management and banking solutions to individuals through 85 offices in 18 states. Private Client $1 MM $10 MM $75 MM Wealth Advisory Delivering comprehensive, advice-driven financial solutions through a multi- manager program. Holistic Solutions |
![]() Integrity Expertise Service 66 Today, Delivering a Comprehensive Array… …of solutions across the risk spectrum to meet the investment needs of clients. 2008 PFS Portfolio Allocation Total AUM: $146 Billion (1Q 2008) Active and Structured Munis Active Taxable High Yield Munis High Yield Taxable Laddered Portfolios Global Fixed Income Large-Cap Growth Large-Cap Core Large-Cap Value Mid-Cap Small-Cap Equity Cash Traditional Cash Enhanced Cash International ETFs Tax-Managed Index Enhanced Index International Index Fixed Income Alternatives Hedge Funds Private Equity Global Sustainability Index Multi-Manager Funds External Managers (SMAs) Single Stock Risk Management Commodities Real Estate |
![]() Integrity Expertise Service 67 Significant Growth in Client Use of Expanded Solutions NTGI proprietary External managers Expanded Solutions AUM: $43 Billion 2008 PFS Portfolio Allocation Total AUM: $146 Billion (1Q 2008) |
![]() Integrity Expertise Service 68 Holistic Approach to Wealth Management… …addresses the full spectrum of our clients’ unique needs. Private Banking Asset Management Trust Services Financial Planning Philanthropic Services Retirement Planning Business Banking Brokerage CLIENT |
![]() Integrity Expertise Service 69 Today, PFS Client-Centric Initiatives… …are focused on further strengthening our client service culture. The recognized leader in providing sophisticated financial solutions to the world’s wealthiest families. Wealth Management Delivering trust, investment management and banking solutions to individuals through Private Client Wealth Advisory Delivering comprehensive, advice-driven financial solutions through an integrated team of specialists. Integrated Teams Holistic Solutions integrated team of specialists. $1 MM $5 MM $5 MM $200 MM $200 MM integrated teams. |
![]() Integrity Expertise Service 70 Deepen single-service relationships Utilize expanded product array to support client objectives and expand share of wallet Further increase engagement with clients through integrated teams Private Client Services Heritage and Foundational Client Base Private Client Services Revenues 58% Growth Initiatives and Opportunities Private Client Services Wealth Management Revenues Wealth Advisory Revenues |
![]() Integrity Expertise Service 71 Utilize team structure and expertise to broaden client relationships Continue to expand investment solutions Lead with advice by incorporating financial planning, philanthropic and fiduciary services, and open architecture investment consulting Wealth Advisory Services Offering Sophisticated Advice to Clients with Complex Needs Growth Initiatives and Opportunities Wealth Advisory Services 30% Wealth Management Revenues Wealth Advisory Revenues Private Client Services Revenues |
![]() Integrity Expertise Service 72 Effectively introduce asset management solutions to existing client base Expand international clientele from European base in London Wealth Management Group Further Leverage Industry Leadership in Serving the World’s Wealthiest Families 400 family relationships in 15 countries Average relationship size: $470+ million Serving 20% of Forbes 400 Richest Americans AUC: $189 billion AUM: $30 billion AUC CAGR: 21% (1997 – 1Q 08) 12% Wealth Management Revenues Wealth Advisory Revenues Growth Initiatives Wealth Management Group Private Client Services Revenues |
![]() Integrity Expertise Service 73 $200 MM Family Advisory Services Introducing a new offering to families who desire the services of a family office. Delivering comprehensive, advice-driven financial solutions through an integrated team of specialists. Delivering high-touch trust, investment management and banking solutions to individuals through integrated teams. Private Client $5 MM $1 MM Wealth Advisory Wealth Management The recognized leader in providing sophisticated financial solutions to the world’s wealthiest families. Integrated Teams Holistic Solutions Serving as clients’ family office, providing sophisticated investment advisory, asset servicing, and family services. Family Advisory $50 MM $200 MM |
![]() Integrity Expertise Service 74 Personal Financial Services Summary and Q&A Client- Centric Client- Centric Attractive Client Markets Focused Capabilities Excellence in Execution Brand Key Strategies and Opportunities for Long-term Growth Attractive growth rates in target markets Broaden breadth of relationships Enhance referral flow Sustain and leverage flight to quality Selective geographic expansion |
![]() © 2008 Northern Trust Corporation INVESTOR DAY 2008 Principles That Endure Service Expertise Integrity Sherry S. Barrat Co-President, PFS Personal Financial Services |
![]() © 2008 Northern Trust Corporation INVESTOR DAY 2008 Principles That Endure Service Expertise Integrity Timothy J. Theriault President, C&IS Corporate & Institutional Services |
![]() Integrity Expertise Service 77 Key Strategic Priorities Competing and winning around the world Complexity drives innovation Broad array of solutions Unique global operating model Extending industry leading technology platform Corporate & Institutional Services |
![]() Integrity Expertise Service 78 Strategically Positioned to Succeed in Three Dynamic Regions North America Europe, Middle East & Africa Asia Pacific Abu Dhabi Dublin Toronto London Limerick Amsterdam Luxembourg Guernsey Melbourne Singapore Hong Kong Bangalore Beijing Tokyo Jersey Chicago |
![]() Integrity Expertise Service 79 Singapore Luxembourg Hong Kong Australia Switzerland Sweden Qatar Malaysia Germany Norway Bahrain Tunisia Kuwait UAE South Korea Macau Thailand Finland Ireland Cayman Islands Saudi Arabia United Kingdom Guernsey and Jersey New Zealand Taiwan U.S.A. Canada Netherlands China Puerto Rico Philippines Guam Actively Pursuing Mandates Across Multiple Markets |
![]() Integrity Expertise Service 80 Delaware Public Employees’ Retirement System Vervoer (Netherlands) $9 Billion Abu Dhabi Retirement Pensions & Benefits Fund China’s National Social Security Fund Hospitals of Ontario Pension Plan New Zealand Superannuation Fund $8 Billion Insight Investment (UK) Outsourcing $190 Billion $6.5 Billion $ Multi-Billion $20 Billion East Riding of Yorkshire Council (UK) $4 Billion Generation Investment Management (UK) Outsourcing SBZ (Netherlands) $3 Billion Australian Government Future Fund $42 Billion Employees’ Retirement System of Hawaii $11 Billion State of Tennessee $29 Billion Los Angeles Employees’ Retirement System $12 Billion Brevan Howard Macro Limited (UK) Hedge Fund Administration Qualified Domestic Institutional Investors (China) Strathclyde Pension Fund (UK) $20 Billion Success in Regions and Target Segments Around the World |
![]() Integrity Expertise Service 81 Complexity Drives Innovation With over 50% of client assets cross-border, our expertise in the global investment arena drives us to anticipate change and predict future trends. Industry dynamics… Evolving Retirement Trends Ahead of the curve – Global retirement solutions span all disciplines …play to Northern Trust’s strengths Globalization of Asset Allocations 24 / 7 processing, regional hubs, local servicing “centers of excellence” Outsourcing Non-Core Activities Service solutions designed to facilitate client growth and improve efficiency Risk And Regulatory Influences Tools, technology and intellect to measure, monitor and manage risk Product Complexity Global insights drive industry leading solutions - ERISA pooling Credit Market Disruption “Flight to quality” as market rewards financial performance, strength, stability Emergence of Sovereign Wealth Proven expertise and conservative business approach ensures a cultural fit Convergence of Investment Styles End to end full service solutions across asset classes |
![]() Integrity Expertise Service 82 Asset Servicing Solutions Full array of capabilities to meet the needs of sophisticated institutional investors. Fund accounting Transfer agency Corporate secretarial Trustee Investment operations outsourcing Safekeeping Settlement Derivatives processing Income collection Corporate actions Tax reclamation Active Quantitative Investment outsourcing Liability driven investing Manager of managers Hedge funds Private equity Transition management Investment accounting Reporting and valuation Performance analytics Risk monitoring and reporting Trade execution analysis Data warehouse Cross-border pooling Trade execution Cash management Securities lending Foreign exchange Commission management Asset Administration Asset Processing Asset Reporting Asset Enhancement Asset Management |
![]() Integrity Expertise Service 83 A Single Global Operating Model 19:00 Bangalore Singapore 09:00 Central Daylight Time Chicago 03:00 Dublin Limerick London Guernsey Platform delivers all services… from trade capture to investment operations outsourcing Organic growth and development of technology... back, middle and front office Unaffected by large-scale acquisitions… no need for technology integration Unique in the industry… A single operating platform across ALL regions, ALL clients, ALL constituencies. |
![]() Integrity Expertise Service 84 Outstanding Growth in Client Assets Strong historical performance sets a high bar for the future. $1.9 $2.3 $2.7 $3.3 $3.8 2003 2004 2005 2006 2007 C&IS Assets Under Custody Global Custody Assets C&IS Assets Under Management CAGR +19% $0.7 $1.0 $1.2 $1.7 $2.0 2003 2004 2005 2006 2007 CAGR +29% $374 $462 $501 $563 $609 2003 2004 2005 2006 2007 ($ Trillions) ($ Trillions) ($ Billions) CAGR +13% S&P 500 CAGR: +7% S&P 500 CAGR: +7% EAFE CAGR: +15% |
![]() Integrity Expertise Service 85 $1.0 $1.1 $1.4 $1.7 $2.1 2003 2004 2005 2006 2007 $176 $278 $318 $392 $526 2003 2004 2005 2006 2007 42% 39% 37% 40% 33% 2003 2004 2005 2006 2007 Excellent Top-line and Bottom-line Growth… CAGR +20% CAGR +31% …and industry-leading profit margins. *2007 Competitors’ average margin computed using the following: Bank of NY Mellon – Asset Servicing; Citigroup – Markets & Banking (Transaction Services only); JPMorgan Chase – Treasury & Security Services; State Street – total company. 2006 Competitors’ average margin computed using the similar relevant business segments and included legacy Mellon. Competitors’ Average Margin* 31% 28% C&IS Revenues C&IS Net Income C&IS Pre-Tax Margin ($ Billions) ($ Millions) |
![]() Integrity Expertise Service 86 Strategic Growth Initiatives Thinking globally, acting locally. Foundational Strength for Growth Growth Momentum Continues A Region of Vast Opportunity North America Europe, Middle East & Africa Asia Pacific Develop onshore fund administration service Enhance capabilities for asset manager servicing Expand local presence Globalize retirement market products and solutions Open in new markets and jurisdictions Deliver best in class alternative asset solutions Build out integrated investment and administration solutions |
![]() Integrity Expertise Service 87 Corporate & Institutional Services Summary and Q&A Client- Centric Client- Centric Attractive Client Markets Focused Capabilities Excellence in Execution Brand Key Strategies and Opportunities for Long-term Growth Competing and winning around the world Complexity drives innovation Broad array of solutions Unique global operating model Extending industry leading technology platform |
![]() © 2008 Northern Trust Corporation INVESTOR DAY 2008 Principles That Endure Service Expertise Integrity Timothy J. Theriault President, C&IS Corporate & Institutional Services |
![]() © 2008 Northern Trust Corporation INVESTOR DAY 2008 Principles That Endure Service Expertise Integrity Stephen N. Potter President, NTGI Northern Trust Global Investments |
![]() Integrity Expertise Service 90 Key Strategic Priorities Aligned and focused on serving personal and institutional clients Leveraging strengths in quantitative, manager of managers and fixed income investments Building the business through global growth Delivering investment excellence Northern Trust Global Investments |
![]() Integrity Expertise Service 91 Strong Growth in Assets Under Management Demonstrated ability to grow assets under management across target client segments. $87.7 $104.3 $110.4 $117.2 $134.7 $146.0 $214.8 $374.3 $461.5 $500.7 $562.5 $608.9 $632.6 $148.3 $0 $100 $200 $300 $400 $500 $600 $700 $800 2002 2003 2004 2005 2006 2007 3/31/2008 Institutional Personal CAGR 20% 23% 10% $ BN $478.6 $571.9 $617.9 $697.2 $757.2 $778.6 $302.5 Note: Acquired $75 BN in index assets from Deutsche Bank in 2003; Excluding this $75 BN in assets, the proforma total AUM CAGR is 17% and the proforma Institutional AUM CAGR is 20% Total Institutional Personal |
![]() Integrity Expertise Service 92 A World Class Investment Manager Assets Under Management: $778.6 Billion (As of March 31, 2008) $457 Billion Active $281 Billion Quantitative $41 Billion Manager of Managers …Investment Styles …Asset Classes Fixed Income $98 Billion Other $11 Billion $633 Billion Personal …Client Segments Institutional $146 Billion Diversified Across… Short Duration $387 Billion Equities $283 Billion |
![]() Integrity Expertise Service 93 Well Positioned to Serve Target Client Segments Personal Clients $146 BN Institutional Clients $633 BN Single Strategies Bundled Solutions Client Intimacy Northern Trust’s strong position in the personal and institutional markets provides the opportunity to build and deliver investment solutions for clients in both target markets. |
![]() Integrity Expertise Service 94 Offering a Broad Array of Solutions to Target Clients Client Intimacy With a strong presence in asset classes across the investment spectrum, Northern Trust offers clients investment capabilities that meet their objectives. Personal Clients $146 BN Institutional Clients $633 BN Single Strategies Bundled Solutions Cash & Short Duration Fixed Income Active Equity Quantitative Manager of Managers |
![]() Integrity Expertise Service 95 Proprietary and Open Architecture Offerings Client Intimacy Open Architecture Northern Trust delivers products, both in-house and through open architecture, providing access to best in class capabilities. Personal Clients $146 BN Institutional Clients $633 BN Single Strategies Bundled Solutions Cash & Short Duration Fixed Income Active Equity Quantitative Manager of Managers |
![]() Integrity Expertise Service 96 A Full Array of Proprietary and External Investment Solutions Equities Large-Cap Mid-Cap Small-Cap International Tax Advantaged Fixed Income Core International Municipals Cash Enhanced Cash High Yield Alternatives Private Equity Hedge Funds Emerging Markets Emerging / Minority Investment Services Securities Lending Transition Management Commission Recapture Proprietary Active Strategies Proprietary Quantitative Strategies Manager of Manager Strategies Securities Brokerage Investment Plan Outsourcing Northern Trust is the only asset management firm that operates – with scale – across active, passive and manager of manager disciplines. |
![]() Integrity Expertise Service 97 Growth will be led by client specific solutions harnessing both proprietary and open architecture capabilities. Support the PFS platform Best in class investments through open architecture Increase access to alternative capabilities Continue to build a wide array of proprietary beta and alpha generating capabilities Leverage the quantitative platform Tax advantaged investments Exchange traded funds Structured capabilities Provide strong consulting and advisory services Building Future Growth Personal Market Distribution Growth Initiatives 1Q 2008 Personal Market Distribution $146.0 Billion 2002 – 1Q08 Personal Market Distribution CAGR: 10.2% Total Assets Under Management: $778.6 Billion (3/31/08) |
![]() Integrity Expertise Service 98 Alignment with C&IS in the institutional market provides clients with access to leading asset servicing and asset management capabilities. Strong market segment and geographic alignment with C&IS Building on our strong base of cash and short duration capabilities Expanding our quantitative investment distribution Providing expertise in transition management Investment Program Solutions Expanding distribution in the upper middle market segment Incorporating liability driven investment capabilities Building on multi-national pooling Leverage our global footprint to accelerate growth outside the U.S. Building Future Growth Institutional Market Distribution 1Q 2008 Institutional Market Distribution $632.6 Billion 2002 – 1Q08 Institutional Market Distribution CAGR: 22.8% Total Assets Under Management: $778.6 Billion (3/31/08) Growth Initiatives |
![]() Integrity Expertise Service 99 Positioned for Global Growth Netherlands United Kingdom United States (85 PFS Offices) Japan RBS/ Mitsubishi/ Resona Trust Ireland Pensco Hong Kong Nordics Nordea Singapore China France Groupama Northern Trust Offices Institutional Distribution Agreements Thailand Bangkok Bank Canada Scotia McLeod United States Investment Only (10 Distributors) Extensive presence through our worldwide client base and distribution relationships. Taiwan New York Melbourne Abu Dhabi |
![]() Integrity Expertise Service 100 Delivering Performance In Line with Client Objectives Three Year Product AUM Relative Return U.S. $39 BN +12 basis points Non-U.S. $13 BN -2 basis points Index – Fixed Income Three Year Product AUM Relative Return Municipal $10 BN +12 basis points High Yield $2 BN +7 basis points Core $1 BN -49 basis points Active – Fixed Income Three Year Product AUM Relative Return Cash Mgt. $124 BN +3 basis points Enhanced Cash $22 BN +31 basis points Active – Cash Three Year Product AUM Relative Return U.S Equity $138 BN +4 basis points Non-U.S. Equity $45 BN +2 basis points Tax Advantaged $11 BN +14 basis points Index – Equity Three Year Product AUM Relative Return Value $4 BN -177 basis points Intl. Equity $3 BN +131 basis points Manager of Manager $3 BN +217 basis points* *Less than 3 year track record in some cases Active – Equity Performance data as of 12/31/07 |
![]() Integrity Expertise Service 101 Northern Trust Global Investments Summary and Q&A Client- Centric Client- Centric Attractive Client Markets Focused Capabilities Excellence in Execution Brand Key Strategies and Opportunities for Long-term Growth Aligned and focused on serving personal and institutional clients Leveraging strengths in quantitative, manager of managers and fixed income investments Building the business through global growth Delivering investment excellence |
![]() © 2008 Northern Trust Corporation INVESTOR DAY 2008 Principles That Endure Service Expertise Integrity Stephen N. Potter President, NTGI Northern Trust Global Investments |
![]() © 2008 Northern Trust Corporation INVESTOR DAY 2008 Principles That Endure Service Expertise Integrity Frederick H. Waddell President & Chief Executive Officer Closing Remarks Q&A |