Northern Trust Corporation · NASDAQ:NTRS

Northern Trust — BancAnalysts Association of Boston 27th Annual Fall Conference (November 2008)

34 slides from Northern Trust's conference presentation, Nov 5, 2008

  1. Slide 1: Building A New American Banking Paradigm

    EXHIBIT 99.1 NORTHERN TRUST Service Expertise Integrity CORPORATION Steven L. Fradkin Executive Vice President & Chief Financial Officer BancAnalysts Association of Boston 27th Annual Fall Conference “Building A New American Banking Paradigm” November 6, 2008 © 2008 Northern Trust Corporation

  2. Slide 2: Forward Looking Statement

    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 posit

  3. Slide 3: Today's Agenda: Building a New American Banking Paradigm

    Today’s Agenda: “Building a New American Banking Paradigm” ¾ The Changing Landscape ƒ Commercial banks ƒ Investment banks ¾ The Business Model of Northern Trust ƒ Attractive demographic markets ƒ Focused strategy ƒ Significant expertise ƒ Organic growth ƒ Conservative heritage 3 Service Expertise In

  4. Slide 4: The Changing Landscape

    The Changing Service Expertise Integrity Landscape © 2008 Northern Trust Corporation

  5. Slide 5: The Changing Landscape in U.S. Financial Services

    The Changing Landscape in U.S. Financial Services… ¾ Commercial Banks ƒ Consolidation has accelerated ƒ Business models are evolving ¾ Investment Banks ƒ Bear Stearns and Lehman Brothers failed ƒ Merrill Lynch acquired by Bank of America ƒ Goldman Sachs and Morgan Stanley change status to bank holdi

  6. Slide 6: Much of Which Occurred over a Four Week Period

    …Much of Which Occurred over a Four Week Period S&P 500 9/7/08: U.S. Govt to support Fannie Mae & Freddie Mac 9/15/08: Lehman Brothers declares 1400 bankruptcy; Bank of America announces Merrill Lynch acquisition 9/16/08: U.S. Govt to support AIG 1250 9/21/08: Goldman Sachs & Morgan Stanley to becom

  7. Slide 7: The Business Model of Northern Trust

    The Business Model Service Expertise Integrity of Northern Trust © 2008 Northern Trust Corporation

  8. Slide 8: Client-centric and Highly Focused Business Model

    Client-centric and Highly Focused Business Model Our Clients Pension Funds Government Families Individuals Agencies Large Corporations Family Privately Taft-Hartley Foundations Held Investment Businesses Management Firms Foundations / Family Offices Endowments / Insurance Companies Healthcare Corpor

  9. Slide 9: Resisting the Temptation to Change Our Business Model

    Resisting the Temptation to Change Our Business Model Businesses Northern Trust is NOT in: ƒ Investment Banking ƒ Credit Cards ƒ Sub-Prime Mortgage Underwriting ƒ Retail Banking ƒ Asset Backed Commercial Paper Conduits ƒ Consumer Lending ƒ Private Equity Bridge Financing ƒ Venture Capital ƒ Discount

  10. Slide 10: Extensive Reach in High Growth Affluent Market

    Personal Financial Services Extensive Reach in High Growth Affluent Market 85 PFS Offices in 18 States Projected Annual Over 50% of the U.S. millionaire market resides Household Growth Rates within a 45-minute drive of Northern Trust offices. 2007 - 2012 by Household Asset Size Washington (1) 15.5%

  11. Slide 11: Significant Expertise Allows Us to Address Clients' Needs

    Personal Financial Services Significant Expertise Allows Us to Address Clients’ Needs 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 ‹ Propriet

  12. Slide 12: Market Opportunities Continue to Grow

    Corporate & Institutional Services Market Opportunities Continue to Grow Total Market: $161 Trillion(1) Total Assets Under Custody Worldwide: $90 Trillion(2) Europe, North America Middle East & Africa Asia Pacific $60 Trillion $60 Trillion $41 Trillion Canada U.K. $10 Trillion $4 Trillion Japan West

  13. Slide 13: Full Array of Capabilities

    Corporate & Institutional Services Full Array of Capabilities… … to meet the needs of sophisticated institutional investors. „ Active „ Manager of managers Asset „ Quantitative „ Hedge funds Management „ Investment outsourcing „ Private equity „ Liability driven investing „ Transition management Ass

  14. Slide 14: Strategically Positioned in Three Dynamic Regions

    Corporate & Institutional Services Strategically Positioned in Three Dynamic Regions Europe, North America Middle East & Africa Asia Pacific Chicago London Amsterdam Dublin Limerick Beijing Guernsey Luxembourg Tokyo Jersey Toronto Hong Kong Bangalore Abu Dhabi Singapore Melbourne 14 Service Expertis

  15. Slide 15: A Diversified, World Class Investment Manager

    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 Across Asset Classes Across Client Segments Across Styles Equities Short $274 Billion Personal Duration (36%) $298 Billion $141

  16. Slide 16: Broad Array of Solutions for Personal and Institutional Clients

    Northern Trust Global Investments Broad Array of Solutions for Personal and Institutional Clients Rankings Markets „ 10th Largest Manager Worldwide Institutional Assets Served „ 5th Largest Manager U.S. Institutional Tax-Exempt Assets „ 3rd Largest Manager Defined Benefit Assets „ 3rd Largest Manage

  17. Slide 17: High Quality Balance Sheet Securities Portfolio

    Conservative Heritage High Quality Balance Sheet Securities Portfolio Composition % of „ 90% of Northern Trust’s total ($ Millions) 9/30/08 Total securities portfolio composed of triple-A rated securities Securities – Available for Sale U.S. Government $ 20 nm „ 86% of Asset-Backed Securities Obliga

  18. Slide 18: Diversified and High Quality Loan Portfolio

    Conservative Heritage Diversified and High Quality Loan Portfolio „ Relationship-based lending practices „ Nonperforming assets totaled $61.5 million Composition % of – the increase from the prior quarter ($ Billions) 9/30/08 Total largely reflects the addition of only two loans U.S. „ Nonperforming

  19. Slide 19: Outstanding Credit Quality is a Differentiator

    Outstanding Credit Quality is a Differentiator Credit Quality is notably better than peer averages in each category. Peer* As of September 30, 2008 NTRS Average Non-Performing Assets 0.21% 1.97% as a % of Loans Loan Loss Reserve as a 317% 113% % of Non-Performing Assets Net Charge-Offs to Average Lo

  20. Slide 20: Outstanding Capital Strength

    Outstanding Capital Strength “Well Capitalized” CAPITAL RATIOS 9/30/08 Guideline COMMON EQUITY ($ Billions) CAGR: +10% Northern Trust Corporation $4.9 Tier 1 Capital Ratio 9.2% 6.0% $4.5 Total Risk-Based Ratio 11.4% 10.0% $3.9 Leverage Ratio 6.6% 5.0% $3.6 $3.3 $3.1 U.S. CAPITAL PURCHASE PROGRAM PAR

  21. Slide 21: The Business Model of Northern Trust: Another Perspective

    The Business Model Service Expertise Integrity of Northern Trust: Another Perspective © 2008 Northern Trust Corporation

  22. Slide 22: How Important is Asset Allocation to Performance?

    How Important is Asset Allocation to Performance? 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 S&P 500 Private Equity Real Estate Real Estate Int’l Bond Small Cap Real Estate Private Equity Real Estate Int'l Equity 28.6% 70.8% 26.4% 13.9% 22.1% 47.3% 31.6% 22.6% 35.0% 11.6% Highest Int'l Equity

  23. Slide 23: Asset Allocation versus Stock Selection: The Origins

    Asset Allocation versus Stock Selection: The Origins “The Determinants of Portfolio Performance” Brinson, Hood and Beebower, 1986. Study Examined how asset allocation choices affected 91 large pension plan returns. Conclusion Most of the variation (94%) in returns is explained by policies of asset m

  24. Slide 24: Financial Services Industry: Asset Allocation Choices

    Financial Services Industry: Asset Allocation Choices Segments within the Financial Services Industry ¾ Asset Management Firms ¾ Online Brokerages ¾ Banks and Thrifts ¾ P&C – Multi Line ¾ Capital Markets Firms ¾ P&C – Personal Lines ¾ Commercial Finance ¾ Private Banks ¾ Consumer Lending ¾ Processor

  25. Slide 25: Financial Services Industry: Asset Allocation Choices

    Financial Services Industry: Asset Allocation Choices Which financial services industry segments have the best long-term performance and valuation? valuation 16.0 Processors Online Brokerages 14.0 Northern Trust Trust Banks 12.0 Asset Management Firms Private Banks Insurance Brokers 10.0 10 Yr Banks

  26. Slide 26: Performance Metrics in Financial Services: Revenue Growth

    Performance Metrics in Financial Services: Revenue Growth 10-Year Historical Average Annual Revenue Growth 38.5% 24.2% 23.1% 21.2% 16.5% 14.6% 13.6% 13.2% 11.2% 10.2% 9.6% 9.6% 9.0% 8.0% 7.8% Asset Mgt Firms P&C - Multi Line Reinsurance Private Banks Processors Trust Banks Capital Mkts Firms P&C - P

  27. Slide 27: Performance Metrics in Financial Services: Pre-Tax Margin

    Performance Metrics in Financial Services: Pre-Tax Margin 10-Year Historical Average Annual Pre-Tax Margin 40.0% 34.7% 34.7% 33.5% 33.5% 30.2% 27.4% 24.8% 17.5% 14.5% 14.2% 12.5% 12.5% 12.0% 10.8% Asset Mgt Firms P&C - Multi Line Banks & Thrifts Private Banks Trust Banks Capital Mkts Firms Commercia

  28. Slide 28: Performance Metrics in Financial Services: Return on Equity

    Performance Metrics in Financial Services: Return on Equity 10-Year Historical Average Annual Return on Equity 25.1% 20.7% 18.5% 17.2% 16.8% 16.8% 16.5% 16.5% 15.1% 14.7% 10.5% 9.9% 9.8% 9.7% 8.8% Asset Mgt Firms P&C - Multi Line Trust Banks Processors Capital Mkts Firms P&C - Personal Lines Banks &

  29. Slide 29: Financial Services: Ranking Based on Performance Measures

    Financial Services: Ranking Based on Performance Measures Assigning a score to each of the three “Performance Measures” and then averaging the scores results in the following ranking by segment: segment 1. Consumer Lending 9. Capital Markets Firms 2. Asset Management Firms 10. Banks and Thrifts 3. P

  30. Slide 30: Valuation Metric: Price to Earnings Ratio

    Processors 30 22.6 Online Brokerages 22.5 Trust Banks Asset Mgt Firms 19.3 17.3 Sources: Factset & SNL Financial Private Banks 15.9 Insurance Brokers 15.8 Banks & Thrifts 13.5 Capital Mkts Firms 12.5 Money Center Banks 12.1 P&C - Personal Lines 11.8 Valuation Metric: Price to Earnings Ratio Life & H

  31. Slide 31: Top Right Quadrant: Best Performing Financial Services Segments

    Top Right Quadrant: Best Performing Financial Services Segments Average Performance Score (1) vs. Average Price to Earnings Ratio (2) 16.0 Processors Online Brokerages 14.0 Northern Trust Trust Banks 12.0 Asset Management Firms Private Banks Insurance Brokers 10.0 10 Yr Banks and Thrifts Average For

  32. Slide 32: Northern Trust: Long-term, Strategic Asset Allocation

    Northern Trust: Long-term, Strategic Asset Allocation Average Performance Score (1) vs. Average Price to Earnings Ratio (2) 16.0 Processors Online Brokerages 14.0 Northern Trust Trust Banks 12.0 Asset Management Firms Private Banks Insurance Brokers 10.0 10 Yr Banks and Thrifts Average Forward 8.0 C

  33. Slide 33: Concluding Thoughts

    Concluding Thoughts Northern Trust’s Business Model - Choices Matter 9 Attractive Demographic Markets 9 Focused and Conservative Strategy 9 Significant Expertise 9 Organic Growth 9 Consistent Leadership and Philosophy 33 Service Expertise Integrity

  34. Slide 34: Northern Trust Corporation

    NORTHERN TRUST Service Expertise Integrity CORPORATION Steven L. Fradkin Executive Vice President & Chief Financial Officer BancAnalysts Association of Boston 27th Annual Fall Conference “Building A New American Banking Paradigm” November 6, 2008 © 2008 Northern Trust Corporation

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