Service Expertise Integrity © 2009 Northern Trust Corporation William A. Osborn Chairman NORTHERN TRUST CORPORATION 2009 Annual Meeting of Stockholders April 21, 2009 EXHIBIT 99.1 |
Service Expertise Integrity © 2009 Northern Trust Corporation Frederick H. Waddell President & Chief Executive Officer April 21, 2009 NORTHERN TRUST CORPORATION 2009 Annual Meeting of Stockholders |
Integrity Expertise Service 3 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 2008 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. |
4 Integrity Expertise Service Agenda Northern Trust: Client Centric and Highly Focused A Challenging Macroeconomic Environment Financial Strength & Stability: Financial Performance Highlights Balance Sheet Highlights Stock Price Performance Concluding Thoughts Question & Answer Session |
© 2009 Northern Trust Corporation Service Expertise Integrity The Northern Trust Advantage: Client Centric and Highly Focused |
6 Integrity Expertise Service A Client-centric and Highly Focused Business Model Our Clients 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 |
7 Integrity Expertise Service Credit Cards Retail Banking Consumer Finance Venture Capital Stock Transfer Investment Banking Sub-Prime Mortgage Underwriting Asset Backed Commercial Paper Conduits Discount Brokerage American Depositary Receipts A Client-centric and Highly Focused Business Model While we do adjust our actions to align with prevailing conditions, Northern Trust has resisted the temptation to change our business or risk profile to capitalize on temporarily shifting cycles. Businesses Northern Trust is NOT in: |
8 Integrity Expertise Service Network of over 80 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) Massachusetts (1) Personal Financial Services Extensive Reach in Affluent Market |
9 Integrity Expertise Service 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 17 Locations Worldwide Trade Settlement in 90+ Markets Clients in 41 Countries |
10 Integrity Expertise Service Northern Trust Global Investments Diversified, World Class Investment Manager $522.3 Billion Assets Under Management as of March 31, 2009 A Diversified Asset Manager $290 Billion (56%) Active $206 Billion (39%) Quantitative $26 Billion (5%) Manager of Managers Across Asset Classes Across Client Segments $392 Billion Institutional $130 Billion Personal Across Styles Equities $182 Billion (35%) Fixed Income $100 Billion (19%) Short Duration $228 Billion (44%) Other $12 Billion (2%) |
© 2009 Northern Trust Corporation Service Expertise Integrity A Challenging Macroeconomic Environment |
12 Integrity Expertise Service 2008: The Changing Landscape in Financial Services 750 900 1050 1200 1350 1500 S&P 500 – Full Year 2008 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 3/16/08: With U.S. Govt support, Bear Stearns acquired by JPMorgan Chase 11/24/08: U.S. Govt to support Citigroup 10/14/08: U.S. Govt announces it will buy preferred equity stakes in U.S. banks under the Troubled Asset Relief Program Dramatic tumult resulting in acceleration in commercial and investment bank consolidation and significant increase in government involvement. 10/24/08: PNC announces National City acquisition 10/4/08: Dutch Govt purchases Fortis 10/13/08: RBS (UK) effectively nationalized 10/19/08: ING receives Dutch Govt support 4/1/08: UBS CEO steps down; $37B in cumulative writedowns 9/21/08: Goldman Sachs & Morgan Stanley to become bank holding cos. 9/26/08: JPMorgan Chase announces Washington Mutual acquisition 10/3/08: Wells Fargo to acquire Wachovia 12/11/08: Bernard Madoff arrested and charged with criminal securities fraud Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec |
13 Integrity Expertise Service 2008: U.S. Treasury, Federal Reserve and FDIC Actions 750 900 1050 1200 1350 1500 S&P 500 – Full Year 2008 9/19/08: ABCP Money Market Fund Liquidity Facility 9/19/08: Temporary Guaranty Program for Money Market Funds 3/11/08: Term Securities Lending Facility 10/14/08: Capital Purchase Program 10/14/08: Temporary Liquidity Guarantee Program: Debt Guarantees & Transaction Account Guarantees 10/21/08: Money Market Investor Funding Facility 10/7/08: Commercial Paper Funding Facility 3/16/08: Primary Dealer Credit Facility 10/3/08: FDIC temporarily raises deposit insurance limit to $250,000 10/6/08: Federal Reserve will pay interest on required and excess reserves 9/28/08: Troubled Asset Relief Program 11/25/08: Term Asset-Backed Securities Loan Facility; GSE Purchases Government actions were designed to promote, enhance and improve liquidity, in addition to promoting stability and restoring confidence in financial markets. Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec |
14 Integrity Expertise Service -38.5% -45.1% -31.3% -40.4% -42.1% -40.7% -41.2% -49.0% -52.4% -65.2% -42.7% -48.3% Weak Global Equity Market Environment Source: Haver Analytics Index Performance - Full Year 2008 S&P 500 US$ EAFE DAX NIKKEI 225 HANG SENG FTSE 100 CAC 40 |
Service Expertise Integrity © 2009 Northern Trust Corporation Financial Strength & Stability Financial Performance Highlights |
Integrity Expertise Service 16 Northern Trust: A Solid Year Considering the Environment % Growth 2008 vs 2007 Full Year 2008 Trust, Inv. & Other Servicing Fees Other Noninterest Income Net Interest Income Total Revenues Noninterest Expenses Net Income Earnings Per Share $2,135 Million $1,065 Million $1,129 Million $4,328 Million $2,888 Million $795 Million $3.47 +3% +82% +24% +21% +19% +9% +7% *Operating basis excludes the impact of all VISA related items. Operating* Net Income Operating* Earnings Per Share $641 Million $2.79 -22% -24% Assets Under Custody Global Custody Assets Assets Under Management $3.0 Trillion $1.4 Trillion $559 Billion -27% -32% -26% |
Integrity Expertise Service 17 First Quarter 2009 Highlights Trust, Inv. & Other Svcing Fees Other Noninterest Income Net Interest Income Total Revenues Noninterest Expenses Net Income Earnings Per Common Share % Change 1Q09 vs 1Q08 $411 Million $206 Million $288 Million $904 Million $594 Million $162 Million $0.61 -22% +11% +8% -8% -3% -30% -41% First Quarter 2009 Note: Comparison excludes the impact of the First Quarter 2008 VISA item. Trust Fees: Continue to be affected by equity market declines and fixed income market dislocation Expenses: Well controlled Assets Under Custody Global Custody Assets Assets Under Management $2.8 Trillion $1.4 Trillion $522 Billion -29% -33% -33% Client Assets: Declined less than market indices: S&P 500 -40% Intl EAFE -49% |
Integrity Expertise Service 18 Change in Client Assets Better Than Challenging Markets Assets Under Custody $2.8 Trillion -6% -29% +5% Global Custody Assets $1.4 Trillion -5% -33% +11% Assets Under Management $522 Billion -7% -33% 0.1% Assets at 5 Year March 31, 2009 Last Qtr Last Yr CAGR % Change Vs. Equity Market Indices: S&P 500 -12% -40% -7% US$ EAFE (international index) -16% -49% -5% Whether considered on a quarterly, annual or 5-year basis, our asset accumulation rates consistently outperform the market. |
Service Expertise Integrity © 2009 Northern Trust Corporation Financial Strength & Stability Balance Sheet Highlights |
Integrity Expertise Service 20 * Peer group consists of the 20 largest U.S. Bank Holding Companies in terms of total balance sheet assets. Source: SNL Financial Outstanding Credit Quality Credit Quality is notably better than peer averages in each category. Non-Performing Assets as a % of Loans Net Charge-Offs to Average Loans Loan Loss Reserve as a % of Non-Performing Assets 166% 119% 1.53% 0.04% Northern Trust as of 3/31/09 Peer Group* Average as of 12/31/08 0.57% 2.13% |
Integrity Expertise Service 21 High Quality Securities Portfolio All data is as of March 31, 2009. *Available for Sale Securities. **Held to Maturity Securities $17.8B SECURITIES PORTFOLIO 90% of total securities rated triple-A Total net unrealized losses (pretax) of only $240 million (preliminary) Government Sponsored Agency* $13.4B / 75% Other* / $1.8B / 10% Obligations of States / Political Subdivisions** $0.8B / 4% Asset-Backed* $1.5B / 9% Well diversified 76% rated triple-A Subprime asset-backed total < 2% of total portfolio 18% of subprime asset-backed rated triple-A Other** / $0.4B / 2% |
Integrity Expertise Service 22 Outstanding Capital Strength TOTAL EQUITY ($ Billions) CAGR: +13% U.S. CAPITAL PURCHASE PROGRAM PARTICIPATION On November 14, the U.S. Treasury invested $1.576 billion in senior preferred stock and related warrants in Northern Trust In combination with our already strong capital position, the additional capital allows us to support clients and maximize growth opportunities. In addition, we continue to support high quality loan growth in line with our existing strategies. Tier 1 Capital 9.6% 13.0% 6.0% Total Risk-Based 11.5% 15.2% 10.0% Leverage 6.9% 8.9% 5.0% Tangible Common Equity 5.6% 5.9% -- “Well Capitalized” CAPITAL RATIOS 3/31/08 3/31/09 Guideline $4.5 $6.5 $2.3 $3.6 $3.3 $3.1 $2.9 $3.9 $6.4 $2.7 2000 2001 2002 2003 2004 2005 2006 2007 2008 1Q09 |
Service Expertise Integrity © 2009 Northern Trust Corporation Stock Price Performance |
24 Integrity Expertise Service Challenging Environment for Bank Stocks in 2008 -67% -2% -11% -21% -25% -28% -30% -32% -33% -42% -64% -66% -66% -49% -52% -53% -54% -77% -85% -89% Full Year 2008 Average (excl. NTRS): -48% S&P 500: -39% |
25 Integrity Expertise Service Bank Stock Price Performance: Recent History June 30, 2007 through March 31, 2009 -87% -7% -32% -45% -51% -55% -56% -58% -58% -59% -84% -86% -86% -60% -69% -73% -77% -88% -93% -95% Average (excl. NTRS): -69% S&P 500: -47% Note: Legacy Bank of New York used for Bank of NY Mellon’s June 30, 2007 stock price. |
26 Integrity Expertise Service Value Retained Market Capitalization: Value Retained Market Values (US$BN) as of March 31, 2009 Market Values (US$BN) as of June 30, 2007 14 13 95% of Value Retained Northern Trust Value Retained *6/30/07 market value for Bank of NY Mellon reflects that of legacy Bank of New York plus legacy Mellon. **6/30/07 market value for PNC Bank reflects that of legacy PNC Bank plus legacy National City. Source: Bloomberg and Northern Trust Market Research. JP Morgan 166 60% 100 Bank of NY Mellon* 50 65% 33 State Street 23 13 58% HSBC 213 46% 97 Credit Suisse 75 47% 35 BNP Paribas 102 36% 37 Société Générale 79 27% 22 Deutsche Bank 71 33% 23 UBS AG 142 19% 27 Barclays 90 20% 18 RBS 109 18% 20 Citigroup 254 14 5% 13 PNC Bank** 30% 44 Goldman Sachs 94 52% 49 Crédit Agricole 62 39% 24 Morgan Stanley 89 25 28% |
Service Expertise Integrity © 2009 Northern Trust Corporation Concluding Thoughts |
28 Integrity Expertise Service Experienced, Dedicated Management Team Northern Trust Industry Rick Waddell - President & CEO 34 Years 34 Years Sherry Barrat - President – PFS 19 Years 39 Years Steve Fradkin - EVP & Chief Financial Officer 24 Years 24 Years Tim Moen - EVP – Human Resources & Admin. 8 Years 34 Years Bill Morrison - President – PFS 13 Years 36 Years Steve Potter - President – NTGI 27 Years 27 Years Joyce St. Clair - EVP – Corporate Risk Mgt. 17 Years 28 Years Jana Schreuder - President – WWOT 29 Years 29 Years Tim Theriault - President – C&IS 25 Years 27 Years Kelly Welsh - EVP & General Counsel 9 Years 31 Years |
29 Integrity Expertise Service 120 Years of Stewardship and Success Success achieved for our clients, our people and our shareholders through Principles that Endure Principles that Endure Integrity Expertise Service |
Service Expertise Integrity © 2009 Northern Trust Corporation Frederick H. Waddell President & Chief Executive Officer William A. Osborn Chairman NORTHERN TRUST CORPORATION 2009 Annual Meeting of Stockholders |