Northern Trust Corporation · NASDAQ:NTRS
Northern Trust — Investor Day (May 2010)
59 slides from Northern Trust's investor day presentation, May 26, 2010
Slide 1: 2010 Investor Day: Welcome
EXHIBIT 99.1 Addressing Today's Challenges. Positioned for Tomorrow's Growth. 2010 INVESTOR DAY: Welcome Rick Waddell Chairman and Chief Executive Officer May 26, 2010 © 2010 Northern Trust Corporation
Slide 2: Forward Looking Statement
2010 INVESTOR DAY Forward Looking Statement This presentation may include forward-looking statements such as statements that relate to Northern Trust’s financial goals, capital adequacy, dividend policy, expansion and business development plans, risk management policies, anticipated expense levels a
Slide 3: Agenda
2010 INVESTOR DAY Agenda: Addressing Today’s Challenges. Positioned for Tomorrow’s Growth. Financial Overview Bill Morrison, EVP and Chief Financial Officer Personal Financial Services Sherry Barrat, President, PFS Corporate & Institutional Services Steve Fradkin, President, C&IS Northern Trust Glob
Slide 4: Client Centric, Highly Focused Business Model
2010 INVESTOR DAY Client Centric, Highly Focused Business Model Founded in 1889, Northern Trust Corporation is a global leader in asset management and asset servicing for institutional and personal clients. PFS: Leading advisor to affluent market $149 billion AUM CLIENTS $341 billion AUC C&IS: Leadi
Slide 5: Client Centric, Highly Focused Business Model
2010 INVESTOR DAY Client Centric, Highly Focused Business Model The strategic businesses that Northern Trust has focused on – consistently for many years – continue to offer compelling and attractive growth opportunities CLIENTS Outstanding client base Strong and supportive demographic trends Contin
Slide 6: Addressing Today's Challenges
2010 INVESTOR DAY Addressing Today’s Challenges Challenges created by the macroeconomic environment in recent years have served as headwinds to strong growth and financial performance. Fed Funds Effective Rate (%) GDP (%) 6 4 5 2 4 3 0 2 -2 1 0 -4 05 06 07 08 09 05 06 07 08 09 S&P 500 S&P/Case-Shill
Slide 7: Positioned for Tomorrow's Growth
2010 INVESTOR DAY Positioned for Tomorrow’s Growth While the environment continues to be challenging, Northern Trust will drive growth by successfully executing on our fundamental strategies in highly attractive businesses. Our Key Growth Initiatives are Driven by: Clients Innovation Geography Peopl
Slide 8: Financial Overview
Addressing Today's Challenges. Positioned for Tomorrow's Growth. Financial Overview Bill Morrison Executive Vice President and Chief Financial Officer May 26, 2010 © 2010 Northern Trust Corporation
Slide 9: Financial Overview Agenda
FINANCIAL OVERVIEW Agenda: Addressing Today’s Challenges. Positioned for Tomorrow’s Growth. Financial Performance Overview Outstanding Financial Strength Across Cycles Loan Portfolio Securities Portfolio Capital Implications of the Current Environment Trust, Investment & Other Servicing Fees Securit
Slide 10: Solid Performance in a Challenging Macroeconomic Environment
FINANCIAL OVERVIEW Solid Performance in a Challenging Macroeconomic Environment Operating Basis e.g. excluding VISA related items ($MM, except EPS) FY09* FY09* vs FY08* 1Q10 1Q10 vs 1Q09 Trust, Inv. & Other Servicing Fees $2,084 -2% $515 25% Foreign Exchange Trading Income $446 -28% $80 -39% Other N
Slide 11: Strong Asset Accumulation Across the Lost Decade
FINANCIAL OVERVIEW Strong Asset Accumulation Across the “Lost” Decade Assets Under Custody $BN Assets Under Management $BN CAGR 9% CAGR: 9% S&P 500 CAGR -1% S&P 500 CAGR -1% EAFE CAGR -3% C&IS CAGR 8% CAGR 5% S&P 500 CAGR -1% S&P 500 CAGR -1% PFS 11
Slide 12: Performance vs. Long-Term Strategic Targets
FINANCIAL OVERVIEW Performance vs. Long-Term Strategic Targets Long-term 2009 3-Year 5-Year 10-Year 15-Year Target Performance Performance Performance Performance Performance 16% - 18% Return on Equity 12.7% 15.1% 16.0% 16.7% 17.4% 8% - 10% Revenue Growth -8.0% 7.7% 10.5% 8.0% 9.3% 10% - 12% EPS Gro
Slide 13: Outstanding and Consistent Financial Strength Across Cycles
FINANCIAL OVERVIEW Outstanding and Consistent Financial Strength Across Cycles
Slide 14: Diversified and High Quality Loan Portfolio
FINANCIAL OVERVIEW Diversified and High Quality Loan Portfolio Loan Quality Notably Better $28 Billion Loan Portfolio $BN than Industry Averages Northern Trust Top 20 Peer Avg. All data is as of 3/31/10. NPAs = Nonperforming Assets. NCOs = Net Charge-offs 14
Slide 15: High Quality Securities Portfolio
FINANCIAL OVERVIEW High Quality Securities Portfolio High quality, short duration securities portfolio Securities Portfolio $BN 90% invested in U.S. Treasury, government sponsored agency and triple-A rated securities Minimal level of unrealized losses due to long-term focus on conservative, high qua
Slide 16: Consistently Strong Capital Ratios
FINANCIAL OVERVIEW Consistently Strong Capital Ratios Capital ratios well above “well capitalized” guidelines High percentage of common equity Capital Ratios 3/31/09 3/31/10 Shareholders’ Equity $BN Tier 1 Capital 13.0% 13.4% Total Risk-Based 15.2% 15.5% Leverage 8.9% 8.9% Tier 1 Common Equity 9.6%
Slide 17: Financial Implications of the Current Environment
FINANCIAL OVERVIEW Financial Implications of the Current Environment
Slide 18: Trust, Investment and Other Servicing Fees
FINANCIAL OVERVIEW Trust, Investment and Other Servicing Fees 52% of FY2009 revenue Trust, Investment and Other Servicing Fees $MM Based generally on market (Excludes impact of mark to market fund) value of client assets, volume of transactions and fees for other services rendered EAFE S&P 500 Extre
Slide 19: Securities Lending Fees
FINANCIAL OVERVIEW Securities Lending Fees 4% of FY2009 revenue Securities Lending Fees $MM Affected by market values; (Excludes impact of mark-to-market fund) supply of securities to be lent; demand for securities (all of which drive volumes); and the interest rate spread earned on reinvested colla
Slide 20: Foreign Exchange Trading Income
FINANCIAL OVERVIEW Foreign Exchange Trading Income 12% of FY2009 revenue Foreign exchange Foreign Exchange Trading Income $MM services provided to clients as an integral part $616 of global custody service Global Custody Assets Credit crisis heightened market and currency $446 volatility in 2007-200
Slide 21: Net Interest Income
FINANCIAL OVERVIEW Net Interest Income 27% of FY2009 revenue Liability driven balance sheet Net Interest Income $MM fuels significant generation of deposits from institutional and personal clients Avg Fed Funds Rate Credit crisis has pressured net interest margin due to extremely low short-term inte
Slide 22: Loan Loss Provision
FINANCIAL OVERVIEW Loan Loss Provision Lending strategy focuses on personal and institutional clients who are looking to establish a Loan Loss Provision $MM full range of financial services with Northern Trust LLP to Avg. Loans Long-standing adherence to conservative lending standards Centralized cr
Slide 23: Key Takeaways
FINANCIAL OVERVIEW Key Takeaways Leadership positions in excellent client-focused businesses Attractive client, geographic and demographic growth opportunities Long track record of serving clients and successfully aggregating assets Distinctive balance sheet and capital strength Proven record of man
Slide 24: Personal Financial Services
Addressing Today's Challenges. Positioned for Tomorrow's Growth. Personal Financial Services Sherry Barrat President, PFS May 26, 2010 © 2010 Northern Trust Corporation
Slide 25: Personal Financial Services Agenda
PERSONAL FINANCIAL SERVICES Agenda: Addressing Today’s Challenges. Positioned for Tomorrow’s Growth. Strategic and Competitive Positioning Client Focus and Growth Initiatives Wealth Management Wealth Advisory Private Client Foundations & Institutions 25
Slide 26: Industry Leading Provider of Integrated Financial Solutions
PERSONAL FINANCIAL SERVICES Industry Leading Provider of Integrated Financial Solutions Our value proposition has never been stronger – the strength of our comprehensive array of solutions, and our focus on clients, technology and financial discipline will drive future growth. PRIVATE WEALTH CLIENT
Slide 27: Opportunities Abound
PERSONAL FINANCIAL SERVICES Opportunities Abound Trusted brand Clients need Investing in talent holistic advice and technology Outstanding financial strength Robust product offering Well positioned and enviable U.S. office network Not distracted Leveraging client segmentation Going global Serving Mo
Slide 28: Client Focus & Key Growth Initiatives
PERSONAL FINANCIAL SERVICES Client Focus & Key Growth Initiatives
Slide 29: Wealth Management
PERSONAL FINANCIAL SERVICES Wealth Management Positioned Strategically Growth Initiatives Serving family offices and families with complex global asset structures, generally Clients with $200+ million in investable assets Relationship expansion Serving 20% of Forbes 400 wealthiest families Asset man
Slide 30: Wealth Advisory
PERSONAL FINANCIAL SERVICES Wealth Advisory Positioned Strategically Growth Initiatives Serving individuals and families with Clients $10 - $200 million in investable assets Comprehensive financial advice Referrals from highly satisfied clients and solutions Executing team-based client strategies Se
Slide 31: Private Client
PERSONAL FINANCIAL SERVICES Private Client Positioned Strategically Growth Initiatives Serving individuals and families with up to $10 million in investable assets Clients Delivering the Northern Trust client Client segmentation focus fuels: experience to the millionaire next door Improved client se
Slide 32: Foundations & Institutions
PERSONAL FINANCIAL SERVICES Foundations & Institutions Positioned Strategically Growth Initiatives Serving private and public foundations and endowments with $5 - $250 million Clients in investable assets Cross-marketing opportunities Leverages sophisticated C&IS and through board affiliations NTGI
Slide 33: A Coordinated Approach
PERSONAL FINANCIAL SERVICES A Coordinated Approach Northern Trust offices serve as portals for broader opportunities. University Foundation Senior Executive, National National Distribution Firm Distribution Firm $1.2 BN AUC C&IS Trustee, Family Foundation $61.4 MM AUM President, Trustee, University
Slide 34: Key Takeaways
PERSONAL FINANCIAL SERVICES Key Takeaways Trusted provider of investment-driven fiduciary and private banking services Excellent positioning to acquire, expand and retain client relationships Clients Extraordinary and growing client base Brand Talented Northern Trust partners focused on client servi
Slide 35: Corporate & Institutional Services
Addressing Today's Challenges. Positioned for Tomorrow's Growth. Corporate & Institutional Services Steve Fradkin President, C&IS May 26, 2010 © 2010 Northern Trust Corporation
Slide 36: Corporate & Institutional Services Agenda
CORPORATE & INSTITUTIONAL SERVICES Agenda: Addressing Today’s Challenges. Positioned for Tomorrow’s Growth. Strategic and Competitive Positioning Client Focus Creates Growth Opportunities Globalization Managing Risk Information Delivery Cost Reduction Client Case Study and Key Takeaways 36
Slide 37: Strategic and Competitive Positioning: Growth Opportunities
CORPORATE & INSTITUTIONAL SERVICES Strategic and Competitive Positioning: Growth Opportunities Continue to Be Significant C&IS provides a comprehensive array of asset servicing, administration, investment management and banking services to institutional investors of many types, all around the globe.
Slide 38: Client Focus Creates Growth Opportunities
CORPORATE & INSTITUTIONAL SERVICES Client Focus Creates Growth Opportunities
Slide 39: Globalization: Helping Clients Invest Globally
CORPORATE & INSTITUTIONAL SERVICES Globalization: Helping Clients Invest Globally and Manage Global Organizations Our clients face significant challenges managing global portfolios and organizations. Client Challenge Investing globally Managing increasingly global organizations Northern Trust Global
Slide 40: Managing Risk: Helping Clients Manage Risk
CORPORATE & INSTITUTIONAL SERVICES Managing Risk: Helping Clients Manage Risk The challenging environment is placing pressure on institutions to consider relationship exposure and other risk attributes associated with their investment programs. Client Challenge Identifying strong, secure, and reliab
Slide 41: Information Delivery
CORPORATE & INSTITUTIONAL SERVICES Information Delivery: More Information, More Granularity, More Constituents Investors demand more information and they face more information demands themselves. Client Challenge Multiple constituents demand increasingly customized data (Boards, committees, manageme
Slide 42: Cost Reduction
CORPORATE & INSTITUTIONAL SERVICES Cost Reduction: Economy Increases Pressure on Clients to Reduce Costs Market environment forces clients to continually seek new ways to reduce costs. Client Challenge Environment encouraging cost reduction and outsourcing Asset managers migrating to variable cost e
Slide 43: Client Testimonial
CORPORATE & INSTITUTIONAL SERVICES Client Testimonial Traditional pension plan evolving into a global asset manager Values Northern Trust solutions: Integrated global operating platform Risk management Robust Passport ® technology Reduce costs, grow revenue Strategic partnership to innovate and grow
Slide 44: Key Takeaways
CORPORATE & INSTITUTIONAL SERVICES Key Takeaways C&IS is an attractive business and Northern Trust has a uniquely client-centric competitive advantage Key Growth Initiatives: Helping clients solve their problems – globalization, Clients risk management, information management, cost reduction, or oth
Slide 45: Northern Trust Global Investments
Addressing Today's Challenges. Positioned for Tomorrow's Growth. Northern Trust Global Investments Steve Potter Bob Browne President, NTGI EVP, Chief Investment Officer May 26, 2010 © 2010 Northern Trust Corporation
Slide 46: NTGI Agenda
NORTHERN TRUST GLOBAL INVESTMENTS Agenda: Addressing Today’s Challenges. Positioned for Tomorrow’s Growth. Strategic and Competitive Positioning Client Focus and Growth Initiatives Institutional Clients Personal Clients 46
Slide 47: Providing Customized Investment Solutions
NORTHERN TRUST GLOBAL INVESTMENTS Providing Customized Investment Solutions Focused on global index management, short and long duration fixed income, and access to active management via manager of manager and proprietary strategies. Equities Fixed Income Alternatives Products Active Global Index Man
Slide 48: Strong Growth Achieved Across Cycles
NORTHERN TRUST GLOBAL INVESTMENTS Strong Growth Achieved Across Cycles Strategic initiatives will continue to fuel growth by effectively providing customized investment solutions to target clients. Assets Under Management $BN Key Growth Initiatives: Clients Innovation Geography People Acquisitions 4
Slide 49: Client Focus & Key Growth Initiatives
NORTHERN TRUST GLOBAL INVESTMENTS Client Focus & Key Growth Initiatives Bob Browne EVP, Chief Investment Officer
Slide 50: Serving Both Institutional and Personal Clients
NORTHERN TRUST GLOBAL INVESTMENTS Serving Both Institutional and Personal Clients Northern Trust is in a unique position to provide holistic advice to clients given our multi-faceted role as custodian, transition manager, liquidity manager, beta provider, alpha identifier and program manager. Total
Slide 51: Asset Management for Institutional Clients
NORTHERN TRUST GLOBAL INVESTMENTS Asset Management for Institutional Clients The separation of alpha and beta underpins our investment approach for institutional clients. Total Institutional Assets Under Management: $498 BN Beta / Fixed Income Alpha Proprietary Open-architecture and capabilities pro
Slide 52: Beta / Fixed Income Strategies for Institutional Clients
NORTHERN TRUST GLOBAL INVESTMENTS Beta / Fixed Income Strategies for Institutional Clients Intelligent indexing and conservative fixed income strategies drive our beta strategies. Beta / Fixed Income Growth Initiatives Institutional Assets Under Management: $462 BN Clients Transition management Fixe
Slide 53: Alpha Strategies for Institutional Clients
NORTHERN TRUST GLOBAL INVESTMENTS Alpha Strategies for Institutional Clients Managing the total risk solution, we provide access to alpha producers and offer proprietary alpha strategies. Growth Initiatives Alpha Institutional Assets Under Management: Clients $36 BN Alternatives through fund of fund
Slide 54: Asset Management for Personal Clients
NORTHERN TRUST GLOBAL INVESTMENTS Asset Management for Personal Clients The preeminent investment manager for high net worth individuals and families. Total Personal Assets Under Management: $149 BN Fixed Income Active Index $49 Manager of Managers Short Duration $36 $11 $53 Equity Other Active Hedg
Slide 55: Tactical Asset Allocation: Downside Protection, Upside Participation
NORTHERN TRUST GLOBAL INVESTMENTS Tactical Asset Allocation for Personal Clients: Downside Protection, Upside Participation Source: NTGI Investment Policy Committee, Bloomberg. Left axis represents % allocation to “risk assets” as defined in right legend. 55
Slide 56: Asset Management for Personal Clients
NORTHERN TRUST GLOBAL INVESTMENTS Asset Management for Personal Clients The preeminent investment manager for high net worth individuals and families. Total Personal Assets Under Management: Growth Initiatives $149 BN Clients Fixed Income Active Continue to increase share of wallet: Index Communicat
Slide 57: Key Takeaways
NORTHERN TRUST GLOBAL INVESTMENTS Key Takeaways Naturally involved in multiple asset management activities Focus on global index management, short and long duration fixed income, manager of managers, and investment management for high net worth individuals and families Scale exists in many areas – g
Slide 58: 2010 Investor Day: Q&A
Addressing Today's Challenges. Positioned for Tomorrow's Growth. 2010 INVESTOR DAY: Q&A Rick Waddell Chairman and Chief Executive Officer May 26, 2010 © 2010 Northern Trust Corporation
Slide 59: 2010 Investor Day: Thank You
Addressing Today's Challenges. Positioned for Tomorrow's Growth. 2010 INVESTOR DAY: Thank You Rick Waddell Chairman and Chief Executive Officer May 26, 2010 © 2010 Northern Trust Corporation