ntrs_citigroup_jan_28_09

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ntrs_citigroup_jan_28_09

  1. 1. NORTHERN TRUST CORPORATION Service Expertise Integrity Frederick H. Waddell President & Chief Executive Officer Citigroup 2009 Financial Services Conference New York City January 28, 2009 © 2009 Northern Trust Corporation
  2. 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. Service Expertise Integrity 2
  3. 3. 2008: Significant and Rapid Change in Financial Services S&P 500 – Full Year 2008 9/15/08: Lehman 1500 Brothers declares 3/16/08: With U.S. Govt bankruptcy; 9/7/08: U.S. Govt to support, Bear Stearns 12/11/08: Bank of America support Fannie acquired by JPMorgan Chase Bernard announces Merrill Mae & Freddie Mac Madoff Lynch acquisition arrested 9/16/08: U.S. Govt and 1350 to support AIG charged with 10/19/08: ING criminal 4/1/08: UBS receives Dutch securities CEO steps Govt support fraud down; $37B in cumulative 1200 10/24/08: PNC writedowns 9/21/08: Goldman Sachs & Morgan announces Stanley to become bank holding cos. National City 9/26/08: JPMorgan Chase announces acquisition • Acceleration in Washington Mutual acquisition consolidation 11/24/08: U.S. Govt 1050 10/3/08: Wells Fargo to acquire Wachovia to support • Significant increase Citigroup 10/4/08: Dutch Govt purchases Fortis in government and regulatory oversight 10/13/08: RBS (UK) 900 10/14/08: U.S. Govt • Fundamental effectively announces it will buy nationalized changes in business preferred equity stakes in U.S. banks under the models Troubled Asset Relief Program 750 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Service Expertise Integrity 3
  4. 4. Northern Trust’s Fundamentals Remain Sound Strategic Positioning Service Expertise Integrity Corporate and Institutional Services Northern Trust Global Investments Personal Financial Services Financial Strength & Stability Earnings Power High Quality Balance Sheet Capital Strength Service Expertise Integrity 4
  5. 5. Strategic Positioning Northern Trust Service Expertise Integrity Corporation © 2009 Northern Trust Corporation
  6. 6. Client-centric and Highly Focused Business Model Our Clients Government Pension Funds Families Individuals Agencies Large Corporations Family Privately Taft-Hartley Foundations Held Investment Businesses Foundations / Management Firms Family Offices Endowments / Insurance Companies Healthcare Sovereign Wealth Funds Personal Corporate & Financial Institutional Services Services Northern Trust Global Investments Worldwide Operations & Technology Service Expertise Integrity 6
  7. 7. Resisting the Temptation to Change Our Business Model Businesses Northern Trust is NOT in: Credit Cards Investment Banking Retail Banking Sub-Prime Mortgage Underwriting Consumer Lending Asset Backed Commercial Paper Conduits Venture Capital Private Equity Bridge Financing Stock Transfer Discount Brokerage DC Record Keeping American Depositary Receipts Service Expertise Integrity 7
  8. 8. Strategic Positioning Personal Financial Service Expertise Integrity Services © 2009 Northern Trust Corporation
  9. 9. Personal Financial Services Extensive Reach in Affluent 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. Washington (1) Minnesota Minnesota Michigan (1) (1) (3) Massachusetts (1) Wisconsin Wisconsin (1) (1) Connecticut (1) New York (1) Nevada Illinois Illinois Ohio Ohio Delaware (1) (1) (19) (19) (1) (1) Colorado Colorado Missouri Missouri (1) (1) (1) (1) California (11) Georgia Georgia (1) (1) Arizona (8) Texas Florida (7) (25) Service Expertise Integrity 9
  10. 10. Personal Financial Services Integrated Approach and Comprehensive Capabilities Building and Protecting and Creating a Legacy Managing Wealth Transferring Wealth Grow Assets Protect and Preserve Wealth Reinforce Family Values Proprietary and Third-party Wealth Transfer Planning Family Education Investment Managers Customized Trust Solutions Family Mission Statement Active Index Strategies Advanced Wealth Transfer Transition Wealth Alternative Investments Strategies Estate Settlement Services Manage Risk Establish a Charitable Guardianship Services Asset Diversification Giving Tradition Single-stock Concentration Plan for Special Assets Implement a Tailored Hedging Strategies Philanthropic Strategy Family Business Stock Option Planning Balance Charitable Giving with Manage Non-Financial Assets the Financial Needs of the Family Tax Liability Management Ensure Tax-Efficiency of Tax Sensitive Investing Philanthropic Vehicles Tax Loss Harvesting Investment Vehicle Selection Liquidity Management Deposit Services Custom Lending Short Term Cash Management Vehicles Service Expertise Integrity 10
  11. 11. Personal Financial Services Spotlight: Wealth Management Group Wealth Management Group – Assets Under Custody ($ Billions) Industry Leading Provider to the World’s $195 Wealthiest Families: ~410 family relationships in 15 countries $168 $160 Average relationship size = $400+ million 20% of Forbes 400 Richest Americans WMG AUC CAGR 1998-2008 = 16% $114 S&P 500 CAGR 1998-2008 = -3% $101 $82 $65 $65 $61 $52 $38 S&P 500 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Service Expertise Integrity 11
  12. 12. Strategic Positioning Corporate & Service Expertise Integrity Institutional Services © 2009 Northern Trust Corporation
  13. 13. Corporate & Institutional Services Vast World of Opportunities Total Market: $189 Trillion(1) Total Assets Under Custody Worldwide: $89 Trillion(2) Europe, Asia Pacific North America Middle East & Africa $50 Trillion $66 Trillion $73 Trillion U.K. Canada $11 Trillion Japan $5 Trillion $20 Trillion Western Europe U.S. $52 Trillion $61 Trillion Emerging Asia $22 Trillion Other Other $10 Trillion $8 Trillion (1) McKinsey & Company – Mapping Global Capital Markets, Fifth Annual Report, October 2008; Excludes $7 trillion of South American and Other Rest of World assets (2) The Greensted Report, Fall 2008 – Top 9 custodians; Data as of June 2008. Service Expertise Integrity 13
  14. 14. Corporate & Institutional Services Full Array of Solutions for Sophisticated Institutional Investors Active Manager of managers Asset Quantitative Hedge funds Management Investment outsourcing Private equity Liability driven investing Transition management Asset Cross-border pooling Securities lending Enhancement Trade execution Foreign exchange Cash management Commission management Investment accounting Risk monitoring and reporting Asset Reporting Reporting and valuation Trade execution analysis Performance analytics Data warehouse Fund accounting Trustee Asset Administration Transfer agency Investment operations outsourcing Corporate secretarial Safekeeping Income collection Asset Processing Settlement Corporate actions Derivatives processing Tax reclamation Service Expertise Integrity 14
  15. 15. Corporate & Institutional Services Strategically Positioned in Three Dynamic Regions Europe, North America Asia Pacific Middle East & Africa Chicago Amsterdam London Dublin Limerick Beijing Guernsey Luxembourg Tokyo Jersey Toronto Hong Kong Bangalore Abu Dhabi Singapore Melbourne Service Expertise Integrity 15
  16. 16. Corporate & Institutional Services Spotlight: Pursuing Mandates Across Multiple Markets Finland UAE Germany Switzerland Canada Japan India Norway Sweden Luxembourg United Kingdom China Ireland France Thailand Guernsey U.S.A. and Jersey South Korea Bermuda Macau Netherlands Cayman Islands Taiwan Philippines Brunei Malaysia Puerto Rico Guam Tunisia Hong Kong Singapore Indonesia New ~50% of AUC is ~50% of AUC is Zealand Global Global Chile ~46% of Net ~46% of Net Kuwait Qatar Australia Income is non- Income is non- Bahrain U.S. Saudi Arabia U.S. ~30% of Staff ~30% of Staff is non-U.S. is non-U.S. Service Expertise Integrity 16
  17. 17. Strategic Positioning Northern Trust Global Service Expertise Integrity Investments © 2009 Northern Trust Corporation
  18. 18. Northern Trust Global Investments A Diversified, World Class Investment Manager $575.5 Billion Assets Under Management as of December 31, 2008 A Diversified Asset Manager Across Asset Classes Across Client Segments Across Styles Short Personal Duration $132 Billion Active $245 Billion Equities $328 Billion Quantitative (43%) $198 Billion Institutional (57%) $219 Billion (34%) $443 Billion (38%) Other Manager of Managers $12 Billion Fixed Income $120 Billion $29 Billion (2%) (21%) (5%) Service Expertise Integrity 18
  19. 19. Northern Trust Global Investments Broad Array of Solutions for Personal and Institutional Clients Rankings Markets 15th Largest Manager Worldwide Institutional Assets Served 5th Largest Manager U.S. Institutional Tax-Exempt Assets 3rd Largest Manager Defined Benefit Assets1 9th Largest Manager Manager of Managers Program2 Investment 4th Largest Manager Indexed Domestic Equity Strategy 4th Largest Manager Indexed Domestic Fixed Income 4th Largest Manager Indexed International Equity 3rd Largest Manager Indexed International Fixed Income Source: Pensions & Investments December 22, 2008 Data Book 1Pensions & Investments 2007 Special Report on Asset Managers 2Pensions & Investments December 24, 2007 Data Book Service Expertise Integrity 19
  20. 20. Northern Trust Global Investments Spotlight: Manager of Managers Expertise Providing Advice-Based Capabilities and Solutions More than Assets Under 225 managers Management: worldwide Pioneer of 12/31/02 - $12.4B manager-of-managers 12/31/08 - $28.6B programs (1979) CAGR 16% Northern Trust Global Advisors Global locations: Investment • Stamford, CT professionals and research staff of 100 • Chicago Offerings include: • London • Total Plan Outsourcing • Toronto • Emerging and Minority Managers • Private Equity Fund-of-Funds Program • Hedge Fund-of-Funds Program Service Expertise Integrity 20
  21. 21. Financial Strength Service Expertise Integrity and Stability © 2009 Northern Trust Corporation
  22. 22. Strong Financial Performance in Last Two Fiscal Years Full Year Full Year 2008 2007 $2,078 Million Trust, Inv. & Other Servicing Fees $2,135 Million $586 Million Other Non-Interest Income $897 Million $908 Million Net Interest Income $1,129 Million $3,572 Million Total Revenues $4,160 Million $2,280 Million Non-Interest Expenses $2,964 Million $821 Million Net Income $641 Million $3.66 Earnings Per Share $2.79 $4.1 Trillion Assets Under Custody $3.0 Trillion $2.1 Trillion Global Custody Assets $1.4 Trillion $757 Billion Assets Under Management $575 Billion Note: Excludes the impact of the VISA-related items incurred in 2007 and 2008. Service Expertise Integrity 22
  23. 23. High Quality, Short Duration Securities Portfolio $15.6B SECURITIES PORTFOLIO 90% of total securities rated triple-A Total net unrealized losses of only $348 million* AFS Asset-Backed $1.6B / 10% Well diversified 85% rated triple-A Subprime asset-backed total < 2% of total portfolio AFS Government 69% of subprime asset-backed Sponsored Agency rated triple-A $10.9B / 70% AFS Other / $2.0B / 13% HTM Other / $0.3B / 2% HTM Obligations of States / Political Subdivisions $0.8B / 5% All data is as of December 31, 2008. *Preliminary; pre-tax Service Expertise Integrity 23
  24. 24. Diversified and High Quality Loan Portfolio $31B LOAN PORTFOLIO Relationship-based lending practices ($ in Billions) Nonperforming assets represent only Non-U.S. Leases 0.33% of total outstanding loans $1.8 $1.1 5.8% 3.7% Other Nonperforming loans are covered Residential Real $1.4 2.4 times by current credit loss reserves Estate 4.6% $10.4 33.8% Personal Northern Trust does not: $4.8 15.5% Underwrite mortgage loans to sub-prime borrowers Commercial Real Estate Lend directly to hedge funds Commercial $3.0 $8.3 9.8% Provide bridge financing to 26.8% private equity deals Offer an off-balance sheet commercial paper conduit for client liquidity All data is as of December 31, 2008. Service Expertise Integrity 24
  25. 25. Credit Quality is Notably Better Than Peer Averages As of December 31, 2008 Non-Performing Assets 0.33% as a % of Loans 1.87% Loan Loss Reserve as a 229% % of Non-Performing Assets 132% Net Charge-Offs to 0.22% Average Loans 1.51% Northern Trust Peer Group* Average *Peer group consists of the 20 largest U.S. Bank Holding Companies in terms of total balance sheet assets. Peer group averages as of September 30, 2008. Source: SNL Financial Service Expertise Integrity 25
  26. 26. Outstanding Capital Strength “Well Capitalized” CAPITAL RATIOS 12/31/08 Guideline TOTAL EQUITY ($ Billions) CAGR: +13% Northern Trust Corporation $6.4 Tier 1 Capital Ratio 13.1% 6.0% Total Risk-Based Ratio 15.4% 10.0% Leverage Ratio 8.5% 5.0% $4.5 $3.9 U.S. CAPITAL PURCHASE PROGRAM PARTICIPATION $3.6 $3.3 On November 14, the Treasury invested $1.5 $2.9 $3.1 billion in senior preferred stock and related $2.7 warrants in Northern Trust $2.3 $2.1 In combination with our already strong capital position, the additional capital allows us to support clients and maximize growth 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 opportunities. In addition, we will continue to support high quality loan growth in line with our existing strategies. Note: 2008 capital ratios are preliminary and subject to revision. Service Expertise Integrity 26
  27. 27. Opportunities for Growth and Success Remain Plentiful Serving the Personal complex needs of Financial Services affluent clients Serving institutional Corporate & investors worldwide Institutional Services Managing personal Northern and institutional Trust Global Investments client assets Service Expertise Integrity 27
  28. 28. NORTHERN TRUST CORPORATION Service Expertise Integrity Frederick H. Waddell President & Chief Executive Officer Citigroup 2009 Financial Services Conference New York City January 28, 2009 © 2009 Northern Trust Corporation

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