![]() © 2008 Northern Trust Corporation Service Expertise Integrity Steven L. Fradkin Executive Vice President & Chief Financial Officer Merrill Lynch Banking & Financial Services Conference New York City November 13, 2008 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 developments 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. |
![]() Integrity Expertise Service 3 Agenda The Changing Landscape Commercial banks Investment banks Northern Trust Corporation Corporate Positioning and Financial Strength Corporate and Institutional Services Northern Trust Global Investments Personal Financial Services |
![]() © 2008 Northern Trust Corporation Service Expertise Integrity The Changing Landscape |
![]() Integrity Expertise Service 5 The Changing Landscape in U.S. Financial Services… Commercial Banks Consolidation has accelerated Business models are evolving Investment Banks Bear Stearns and Lehman Brothers failed Merrill Lynch acquired by Bank of America Goldman Sachs and Morgan Stanley change status to bank holding companies Significant Increase in Government / Regulatory Involvement |
![]() Integrity Expertise Service 6 …Much of Which Occurred over a Four Week Period 950 1100 1250 1400 Jan Feb Mar Apr May Jun Jul Aug Sept Oct S&P 500 9/7/08: U.S. Govt to support Fannie Mae & Freddie Mac 9/15/08: Lehman Brothers declares bankruptcy; Bank of America announces Merrill Lynch acquisition 9/16/08: U.S. Govt to support AIG 9/21/08: Goldman Sachs & Morgan Stanley to become bank holding companies 9/26/08: JPMorgan Chase announces Washington Mutual acquisition 10/3/08: Wells Fargo to acquire Wachovia |
![]() © 2008 Northern Trust Corporation Service Expertise Integrity Northern Trust Corporation |
![]() Integrity Expertise Service 8 Client-centric and Highly Focused 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 Sovereign Wealth Funds |
![]() Integrity Expertise Service 9 Resisting the Temptation to Change Our Business Model Credit Cards Retail Banking Consumer Lending Venture Capital Stock Transfer DC Record Keeping Investment Banking Sub-Prime Mortgage Underwriting Asset Backed Commercial Paper Conduits Private Equity Bridge Financing Discount Brokerage American Depositary Receipts Businesses Northern Trust is NOT in: |
![]() Integrity Expertise Service 10 Conservative Heritage High Quality Balance Sheet Securities Portfolio 9/30/08 Securities – Available for Sale U.S. Government $ 20 nm Obligations of States / Political Subdivisions 32 nm Government Sponsored Agency 9,869 74% Asset-Backed 1,800 13% Other 475 4% Total Securities – Available for Sale 12,195 91% Securities – Held to Maturity Obligations of States / Political Subdivisions 805 6% Government Sponsored Agency 37 nm Other 300 2% Total Securities – Held to Maturity 1,143 9% Trading Account 9 nm Total Securities $13,347 100% ($ Millions) Composition 90% of Northern Trust’s total securities portfolio composed of triple-A rated securities 86% of Asset-Backed Securities rated triple-A Exposure to subprime Asset- Backed securities relative to the overall portfolio minimal at less than 3% 62% of subprime Asset-Backed Securities rated triple-A Total gross unrealized losses on Available for Sale securities portfolio of only $200 million % of Total All data is as of September 30, 2008. Items may not total due to rounding. High Quality, Short Duration Securities Portfolio |
![]() Integrity Expertise Service 11 Conservative Heritage Diversified and High Quality Loan Portfolio 9/30/08 U.S. Residential Real Estate $ 10.0 33% Commercial 7.7 26% Commercial Real Estate 2.9 10% Personal 4.6 15% Other 1.7 6% Lease Financing 1.1 4% Total U.S. 28.1 94% Non-U.S. 1.7 6% Total Loans and Leases $ 29.9 100% ($ Billions) Relationship-based lending practices Nonperforming assets totaled $61.5 million – the increase from the prior quarter largely reflects the addition of only two loans Nonperforming assets represent only 0.21% of total outstanding loans Nonperforming loans are covered 3.3 times by current credit loss reserves 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 % of Total Composition All data is as of September 30, 2008. Items may not total due to rounding. Consistently Outstanding Credit Quality |
![]() Integrity Expertise Service 12 Credit Quality is notably better than peer averages in each category. * Peer group consists of the 20 largest U.S. Bank Holding Companies in terms of total balance sheet assets. September 30 data includes 17 banks for which the data is currently available. Source: SNL Financial Peer* Average NTRS 0.21% 317% 0.01% 1.97% 113% 1.52% Non-Performing Assets as a % of Loans Loan Loss Reserve as a % of Non-Performing Assets Net Charge-Offs to Average Loans As of September 30, 2008 Conservative Heritage Outstanding Credit Quality is a Differentiator th |
![]() Integrity Expertise Service 13 $3.9 $4.9 $2.1 $3.3 $3.1 $2.9 $2.7 $3.6 $4.5 $2.3 1999 2000 2001 2002 2003 2004 2005 2006 2007 3Q08 COMMON EQUITY ($ Billions) CAGR: +10% Northern Trust Corporation Tier 1 Capital Ratio 9.2% 6.0% Total Risk-Based Ratio 11.4% 10.0% Leverage Ratio 6.6% 5.0% “Well Capitalized” CAPITAL RATIOS 9/30/08 Guideline U.S. CAPITAL PURCHASE PROGRAM PARTICIPATION As announced on October 27, the Treasury intends to invest $1.5 billion in senior preferred stock and related warrants in Northern Trust In combination with our already strong capital position, the additional capital will allow us to maximize growth opportunities Conservative Heritage Outstanding Capital Strength |
![]() © 2008 Northern Trust Corporation Service Expertise Integrity Corporate & Institutional Services |
![]() Integrity Expertise Service 15 Corporate & Institutional Services 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 16 Corporate & Institutional Services Strategically Positioned 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 17 North America Europe, Middle East & Africa Asia Pacific Corporate & Institutional Services Market Opportunities Continue to Grow Total Market: $161 Trillion (1) Total Assets Under Custody Worldwide: $90 Trillion (2) (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 |
![]() © 2008 Northern Trust Corporation Service Expertise Integrity Northern Trust Global Investments |
![]() Integrity Expertise Service 19 Northern Trust Global Investments A Diversified, World Class Investment Manager $652.4 Billion Assets Under Management as of September 30, 2008 A Diversified Asset Manager $369 Billion (57%) Active $249 Billion (38%) Quantitative $34 Billion (5%) Manager of Managers Across Asset Classes Across Client Segments $511 Billion Institutional $141 Billion Personal Across Styles Equities $247 Billion (38%) Fixed Income $95 Billion (14%) Short Duration $298 Billion (46%) Other $12 Billion (2%) |
![]() Integrity Expertise Service 20 Northern Trust Global Investments Broad Array of Solutions for Personal and Institutional Clients Source: Pensions & Investments 2008 Special Report on Asset Managers, data as of December 31, 2007. *Multi-manager Ranking Source: Cerulli Associates, 2005 10 Largest Manager Worldwide Institutional Assets 5 Largest Manager U.S. Institutional Tax-Exempt Assets 3 Largest Manager Defined Benefit Assets 3 Largest Manager Multi-Manager - U.S. Institutional Assets* Markets Served Rankings 4 Largest Manager Passive Domestic Indexed Equity 3 Largest Manager Passive Domestic Indexed Bonds 3 Largest Manager Passive International Indexed Securities Investment Strategy th th rd rd rd rd th |
![]() © 2008 Northern Trust Corporation Service Expertise Integrity Personal Financial Services |
![]() Integrity Expertise Service 22 Why do Personal Clients Choose Northern Trust? Personal Financial Services (PFS) Key Differentiators Corporate Strength and Stability Experience and Brand Consistency Holistic Financial View and Expertise Service Experience and Client Segment Focus Wealth Management Group |
![]() Integrity Expertise Service 23 Why Do Personal Clients Choose Northern Trust? Corporate Strength and Stability Consistent and Focused Strategy High Quality, Short Duration Securities Portfolio Client Driven, High Quality Loan Portfolio Consistent Capital Strength Strong Credit Ratings Over the Long-Term |
![]() Integrity Expertise Service 24 Why Do Personal Clients Choose Northern Trust? Corporate Strength and Stability “With recent growth and expansion Northern Trust stands as a worldwide organization capable of serving the diverse needs of our customers. These individuals, corporations, other banks, and institutions look to us for expertise and guidance in handling their financial affairs.” “Northern Trust provides fiduciary, investment, financial consulting and banking services for individuals as well as credit, operating, trust and advisory services for corporations, domestic and international financial institutions, public bodies and not-for-profit organizations.” “Northern Trust provides superior financial services including fiduciary, banking, investment and financial consulting services for individuals as well as credit, operating, trust and advisory services for corporations, institutions and organizations.” “Northern Trust Corporation is a leading provider of asset servicing, asset management, fund administration, fiduciary and banking solutions for corporations, institutions and affluent individuals worldwide.” - Annual Report, 1990 - Annual Report, 2007 - Annual Report, 1975 - Annual Report, 1985 A Perspective on Consistency Note: Quotes are from Northern Trust Corporation’s Annual Reports in the years indicated. |
![]() Integrity Expertise Service 25 We have a 119-year heritage — we have been Northern Trust since 1889 and are undiluted by mergers and acquisitions. The growth that we have achieved through the years has been overwhelmingly sourced organically. 1889 to 2008 Why Do Personal Clients Choose Northern Trust? Experience and Brand Consistency We have been Northern Trust since 1889… |
![]() Integrity Expertise Service 26 + + + = OPPORTUNITIES FOR: …In stark contrast to our consistently changing competitors. Why Do Personal Clients Choose Northern Trust? Experience and Brand Consistency + + |
![]() Integrity Expertise Service 27 Integrated approach and comprehensive capabilities holistically address 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 Why Do Personal Clients Choose Northern Trust? Holistic Financial View and Expertise |
![]() Integrity Expertise Service 28 Full Service in Local Markets National Practices Credit Policy Family Business Management Financial Consulting Investment Research Investment Policy Marketing Minerals Management Real Estate Management Single Stock Solutions Tax Services 250+ Trust Professionals Why Do Personal Clients Choose Northern Trust? Holistic Financial View and Expertise 225+ Portfolio Managers 375+ Banking Professionals Leveraging national centers of expertise to deliver solutions locally. Comprehensive Trust Services Customized Investment Management Solutions Complete Array of Private and Commercial Banking Products |
![]() Integrity Expertise Service 29 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) Wisconsin (1) Wisconsin (1) Ohio (1) Ohio (1) Minnesota (1) Minnesota (1) Projected Annual Household Growth Rates 2007 - 2012 by Household Asset Size 7.1% 11.3% 15.5% $1 - 5 MM $5 - 200 MM $200+ MM Source: Claritas Massachusetts (1) Extensive reach in affluent market. Why Do Personal Clients Choose Northern Trust? Service Experience and Client Segment Focus |
![]() Integrity Expertise Service 30 Personal Trust Assets ($ Billions) Source: SNL Financial; As of June 30, 2008 2. 3. 4. 5. 6. 7. 8. 9. 10. The Largest Personal Trust Provider in the U.S. Northern Trust $206.8 1. Bank of America 122.7 JPMorgan Chase 76.3 Citigroup 64.7 Wachovia 55.1 Bank of NY Mellon 46.9 U.S. Bancorp 39.8 Wells Fargo 38.9 PNC Financial 32.0 SunTrust 24.8 Why Do Personal Clients Choose Northern Trust? Service Experience and Client Segment Focus |
![]() Integrity Expertise Service 31 Wealth Management Group – Assets Under Custody ($ Billions) $183 $195 $160 $114 $101 $38 $28 $65 $65 $61 $52 $82 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 3Q08 Industry Leading Provider to the World’s Wealthiest Families: ~400 family relationships in 15 countries Average relationship size = $450+ million 20% of Forbes 400 Richest Americans WMG AUC CAGR 1997-3Q08 = 19% S&P 500 CAGR 1997-3Q08 = 2% Why Do Personal Clients Choose Northern Trust? Wealth Management Group |
![]() Integrity Expertise Service 32 Personal Financial Services Strong New Business Offsetting 2008 Market Headwinds PFS Trust, Investment & Servicing Fees* PFS Total Revenue* PFS Assets Under Custody PFS Assets Under Management S&P 500 9/30/08 vs 9/30/07 +4.4% +3.9% -4.6% -4.0% -20.7% *Year-to-Date 9/30/08 vs Year-to-Date 9/30/07 **Year-to-Date 9/30/08 vs Year-to-Date 9/30/00 Strongest Level of Net New Business Since 2000** |
![]() Integrity Expertise Service 33 Concluding Thoughts Attractive Demographic Markets Focused and Conservative Strategy Significant Expertise Organic Growth Consistent Leadership and Philosophy Northern Trust’s Business Model |
![]() © 2008 Northern Trust Corporation Service Expertise Integrity Steven L. Fradkin Executive Vice President & Chief Financial Officer Merrill Lynch Banking & Financial Services Conference New York City November 13, 2008 NORTHERN TRUST CORPORATION |