Northern Trust Corporation (NTRS) is a leading provider of wealth management, asset servicing, asset management, and banking solutions, operating globally through its principal subsidiary, The Northern Trust Company, and various other subsidiaries **[0000073124-24-000073_ntrs-20231231.htm:6]**. The company is organized into two main client-focused reporting segments: Asset Servicing and Wealth Management. Northern Trust offers a range of services including custody, fund administration, investment operations outsourcing, trust, investment management, and philanthropic services, primarily targeting institutional investors and high-net-worth individuals **[0000073124-24-000073_ntrs-20231231.htm:6]** **[0000073124-24-000073_ntrs-20231231.htm:152]** **[0000073124-24-000073_ntrs-20231231.htm:7]**.

1. **Asset Servicing** - Provides a wide range of services including custody, fund administration, and investment operations outsourcing, primarily to institutional investors such as corporate and public retirement funds, foundations, and sovereign wealth funds.
2. **Wealth Management** - Targets high-net-worth individuals and families, offering services such as trust, investment management, custody, and philanthropic services, including customized services through the Global Family Office for ultra-high-net-worth individuals and family offices.

1ce558b183cc3e03b045d9aa97f872a152b81cfc139e02c15adcd701402f6cd3

| Metric (Unit) | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|---------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Asset Servicing Foreign Exchange Trading Income ($ million) | 65.4 **[0000073124-23-000018_q42022earningsreleaseex991.htm:3]** | 54.9 **[0000073124-23-000130_ntrs-20230331.htm:16]** | 52.0 **[0000073124-23-000159_ntrs-20230630.htm:25]** | 54.3 **[0000073124-23-000196_ntrs-20230930.htm:26]** | 49.0 **[0000073124-24-000017_q42023earningsreleaseex991.htm:2]** | 59.9 **[0000073124-24-000159_ntrs-20240331.htm:16]** | 62.2 **[0000073124-24-000206_ntrs-20240630.htm:25]** | 59.5 **[0000073124-24-000257_ntrs-20240930.htm:25]** |
| Asset Servicing Provision for Credit Losses ($ million) | 5.0 **[0000073124-23-000018_q42022earningsreleaseex991.htm:14]** | -2.9 **[0000073124-23-000130_ntrs-20230331.htm:17]** | -3.5 **[0000073124-23-000159_ntrs-20230630.htm:26]** | 3.1 **[0000073124-23-000196_ntrs-20230930.htm:27]** | 0.5 **[0000073124-24-000073_ntrs-20231231.htm:91]** | -5.8 **[0000073124-24-000159_ntrs-20240331.htm:16]** | 4.5 **[0000073124-24-000206_ntrs-20240630.htm:26]** | -0.6 **[0000073124-24-000257_ntrs-20240930.htm:26]** |
| Securities Lent with Indemnification ($ billion) | 130.3 **[0000073124-23-000049_ntrs-20221231.htm:224]** | 146.0 **[0000073124-23-000130_ntrs-20230331.htm:86]** | 143.8 **[0000073124-23-000159_ntrs-20230630.htm:103]** | 141.4 **[0000073124-23-000196_ntrs-20230930.htm:107]** | 140.5 **[0000073124-24-000073_ntrs-20231231.htm:224]** | 138.3 **[0000073124-24-000159_ntrs-20240331.htm:91]** | 135.5 **[0000073124-24-000206_ntrs-20240630.htm:108]** | 146.1 **[0000073124-24-000257_ntrs-20240930.htm:105]** |
| Unsettled Reverse Repurchase Agreements ($ billion) | 0.497 **[0000073124-23-000049_ntrs-20221231.htm:225]** | 4.8 **[0000073124-23-000130_ntrs-20230331.htm:87]** | 4.9 **[0000073124-23-000159_ntrs-20230630.htm:103]** | 19.1 **[0000073124-23-000196_ntrs-20230930.htm:108]** | 27.7 **[0000073124-24-000159_ntrs-20240331.htm:90]** | 16.4 **[0000073124-24-000159_ntrs-20240331.htm:91]** | 20.6 **[0000073124-24-000206_ntrs-20240630.htm:109]** | 11.5 **[0000073124-24-000257_ntrs-20240930.htm:104]** |
| Market Value of Equity Sensitivity to Interest Rate Changes Increase ($ million) | -472 **[0000073124-23-000049_ntrs-20221231.htm:134]** | -569 **[0000073124-23-000130_ntrs-20230331.htm:30]** | -622 **[0000073124-23-000159_ntrs-20230630.htm:42]** | -616 **[0000073124-23-000196_ntrs-20230930.htm:44]** | -360 **[0000073124-24-000073_ntrs-20231231.htm:133]** | -382 **[0000073124-24-000159_ntrs-20240331.htm:31]** | -383 **[0000073124-24-000206_ntrs-20240630.htm:43]** | -382 **[0000073124-24-000257_ntrs-20240930.htm:42]** |
| Market Value of Equity Sensitivity to Interest Rate Changes Increase 2 ($ million) | -965 **[0000073124-23-000049_ntrs-20221231.htm:134]** | -1,143 **[0000073124-23-000130_ntrs-20230331.htm:30]** | -1,294 **[0000073124-23-000159_ntrs-20230630.htm:42]** | -1,271 **[0000073124-23-000196_ntrs-20230930.htm:44]** | -817 **[0000073124-24-000073_ntrs-20231231.htm:133]** | -850 **[0000073124-24-000159_ntrs-20240331.htm:31]** | -850 **[0000073124-24-000206_ntrs-20240630.htm:43]** | -812 **[0000073124-24-000257_ntrs-20240930.htm:42]** |
| Market Value of Equity Sensitivity to Interest Rate Changes Decrease ($ million) | 596 **[0000073124-23-000049_ntrs-20221231.htm:134]** | 675 **[0000073124-23-000130_ntrs-20230331.htm:30]** | 686 **[0000073124-23-000159_ntrs-20230630.htm:42]** | 707 **[0000073124-23-000196_ntrs-20230930.htm:44]** | 430 **[0000073124-24-000073_ntrs-20231231.htm:133]** | 401 **[0000073124-24-000159_ntrs-20240331.htm:31]** | 396 **[0000073124-24-000206_ntrs-20240630.htm:43]** | 514 **[0000073124-24-000257_ntrs-20240930.htm:42]** |
| Market Value of Equity Sensitivity to Interest Rate Changes Decrease 2 ($ million) | 842 **[0000073124-23-000049_ntrs-20221231.htm:134]** | 962 **[0000073124-23-000130_ntrs-20230331.htm:30]** | 1,219 **[0000073124-23-000159_ntrs-20230630.htm:42]** | 1,306 **[0000073124-23-000196_ntrs-20230930.htm:44]** | 725 **[0000073124-24-000073_ntrs-20231231.htm:133]** | 622 **[0000073124-24-000159_ntrs-20240331.htm:31]** | 596 **[0000073124-24-000206_ntrs-20240630.htm:43]** | 924 **[0000073124-24-000257_ntrs-20240930.htm:42]** |
| Assets Under Custody/Administration ($ billion) | 13,604.0 **[0000073124-23-000018_q42022earningsreleaseex991.htm:14]** | 14,174.8 **[0000073124-23-000130_ntrs-20230331.htm:5]** | 14,478.9 **[0000073124-23-000159_ntrs-20230630.htm:5]** | 14,164.7 **[0000073124-23-000196_ntrs-20230930.htm:5]** | 15,404.9 **[0000073124-24-000017_q42023trendreport-wordrepo.htm:36]** | 16,472.5 **[0000073124-24-000132_q12024presentationmateri.htm:0]** | 16,567.4 **[0000073124-24-000203_q22024earningsreleaseex991.htm:11]** | 17,423.0 **[0000073124-24-000251_q32024presentationmateri.htm:0]** |
| Assets Under Custody ($ billion) | 10,604.6 **[0000073124-23-000018_q42022earningsreleaseex991.htm:14]** | 11,013.2 **[0000073124-23-000099_q12023presentationmateri.htm:0]** | 11,284.8 **[0000073124-23-000155_q22023presentationmateri.htm:0]** | 11,015.4 **[0000073124-23-000181_q32023earningsreleaseex991.htm:12]** | 11,916.5 **[0000073124-24-000017_q42023earningsreleaseex991.htm:1]** | 12,804.1 **[0000073124-24-000132_q12024presentationmateri.htm:0]** | 13,041.4 **[0000073124-24-000203_q22024earningsreleaseex991.htm:1]** | 13,794.8 **[0000073124-24-000251_q32024presentationmateri.htm:0]** |
| Assets Under Management ($ billion) | 1,249.5 **[0000073124-23-000018_q42022earningsreleaseex991.htm:1]** | 1,330.4 **[0000073124-23-000130_ntrs-20230331.htm:6]** | 1,365.8 **[0000073124-23-000155_q22023earningsreleaseex991.htm:1]** | 1,333.3 **[0000073124-23-000181_q32023earningsreleaseex991.htm:12]** | 1,434.5 **[0000073124-24-000017_q42023earningsreleaseex991.htm:1]** | 1,500.7 **[0000073124-24-000132_q12024earningsreleaseex991.htm:1]** | 1,526.7 **[0000073124-24-000203_q22024earningsreleaseex991.htm:1]** | 1,621.8 **[0000073124-24-000251_q32024earningsreleaseex991.htm:11]** |
| Custody and Fund Administration Fees ($ million) | 406.3 **[0000073124-23-000018_q4presentationmaterials.htm:1]** | 413.6 **[0000073124-23-000099_q12023earningsreleaseex991.htm:1]** | 427.4 **[0000073124-23-000155_q22023earningsreleaseex991.htm:1]** | 428.1 **[0000073124-23-000181_q32023earningsreleaseex991.htm:1]** | 420.4 **[0000073124-24-000017_q42023earningsreleaseex991.htm:1]** | 436.7 **[0000073124-24-000122_q12024earningsreleaseex991.htm:1]** | 445.9 **[0000073124-24-000206_ntrs-20240630.htm:4]** | 453.1 **[0000073124-24-000251_q32024earningsreleaseex991.htm:1]** |
| FDIC Insurance Premiums ($ million) | 17.8 **[0000073124-23-000049_ntrs-20221231.htm:207]** | 6.2 **[0000073124-23-000130_ntrs-20230331.htm:82]** | 6.6 **[0000073124-23-000159_ntrs-20230630.htm:99]** | 8.3 **[0000073124-23-000196_ntrs-20230930.htm:103]** | 84.6 **[0000073124-24-000073_ntrs-20231231.htm:210]** | 18.7 **[0000073124-24-000159_ntrs-20240331.htm:84]** | 9.8 **[0000073124-24-000206_ntrs-20240630.htm:102]** | 7.1 **[0000073124-24-000257_ntrs-20240930.htm:98]** |
| Foreign Exchange Trading Income ($ million) | 65.4 **[0000073124-23-000018_q42022earningsreleaseex991.htm:3]** | 53.0 **[0000073124-23-000130_ntrs-20230331.htm:7]** | 50.1 **[0000073124-23-000155_q22023earningsreleaseex991.htm:2]** | 51.8 **[0000073124-23-000196_ntrs-20230930.htm:7]** | 49.0 **[0000073124-24-000017_q42023earningsreleaseex991.htm:2]** | 57.0 **[0000073124-24-000132_q12024earningsreleaseex991.htm:2]** | 58.4 **[0000073124-24-000206_ntrs-20240630.htm:92]** | 54.1 **[0000073124-24-000257_ntrs-20240930.htm:88]** |

014232089e0a848f40ffffccf72483bfdbc69b9b6814ef5b40b41fef27ffbf7b

| Metric [USD Million] | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **Asset Servicing**  | 588.0  **[0000073124-23-000018_q42022earningsreleaseex991.htm:1]**  | 1,033.2  **[0000073124-23-000130_ntrs-20230331.htm:16]**  | 1,052.2  **[0000073124-23-000159_ntrs-20230630.htm:25]**  | 626.0  **[0000073124-23-000181_q32023earningsreleaseex991.htm:1]**  | 611.7    | 1,064.1  **[0000073124-24-000159_ntrs-20240331.htm:77]**  | 1,059.2  **[0000073124-24-000206_ntrs-20240630.htm:25]**  | 1,115.3  **[0000073124-24-000257_ntrs-20240930.htm:88]**  |
| **Wealth Management**| 454.1  **[0000073124-23-000018_q42022earningsreleaseex991.htm:1]**  | 725.3  **[0000073124-23-000130_ntrs-20230331.htm:16]**  | 728.9  **[0000073124-23-000159_ntrs-20230630.htm:25]**  | 485.9  **[0000073124-23-000181_q32023earningsreleaseex991.htm:1]**  | 478.3    | 780.5  **[0000073124-24-000159_ntrs-20240331.htm:77]**  | 787.3  **[0000073124-24-000206_ntrs-20240630.htm:25]**  | 807.8  **[0000073124-24-000257_ntrs-20240930.htm:88]**  |
| **Other**            | N/A     | N/A     | (24.0)  **[0000073124-23-000159_ntrs-20230630.htm:25]**  | N/A     | N/A     | (197.8)  **[0000073124-24-000159_ntrs-20240331.htm:77]**  | 875.9  **[0000073124-24-000206_ntrs-20240630.htm:25]**  | 52.5  **[0000073124-24-000257_ntrs-20240930.htm:88]**  |
| **Total Revenue**    | N/A     | 1,744.6  **[0000073124-23-000130_ntrs-20230331.htm:16]**  | 1,757.1  **[0000073124-23-000159_ntrs-20230630.htm:25]**  | 1,739.7  **[0000073124-23-000181_q32023presentationmateri.htm:0]**  | N/A     | 1,646.8  **[0000073124-24-000159_ntrs-20240331.htm:77]**  | 2,715.5  **[0000073124-24-000206_ntrs-20240630.htm:25]**  | 1,968.5  **[0000073124-24-000257_ntrs-20240930.htm:88]**  |

8217a3ab54f4fbd6d62adac0348bed61535f970b25c90b2ea2f26e385a8c5ac3

6e958f5b864a45608ea716e3db8d98c3d06ce95a6e256e63b7504b92b4ef9f89

1. Given that expense growth is expected to be over **6%** in 2024, exceeding your previous target of sub-**5%**, how do you plan to control expenses in 2025 to meet your commitment of sub-**5%** expense growth, especially with the recent management changes?  **[NTRS_3403365_16]** 
2. With significant management changes across key positions, including **CFO**, **COO**, **Head of Wealth**, **Head of Asset Servicing**, and **Head of Family Office** all changing at the same time, how will the new leadership team drive better organic growth, and what specific strategies will they implement differently from before?  **[NTRS_3403365_14]** 
3. Your **stock price has lost its premium versus trust bank peers** and trades below some competitors like **Morgan Stanley**; to what extent do you attribute this to business mix, environment, or execution, and what are your plans to address these challenges to improve shareholder value?  **[NTRS_3403365_14]** 
4. How should investors measure the success of the **One Northern Trust** strategy, and can you provide specific metrics or KPIs that we can monitor to assess the effectiveness of this initiative compared to your peers using similar programs?  **[NTRS_3403365_19]** 
5. Given the elevated level of capital returns through share buybacks, with about **one-third** of net income going to dividends and a **CET1 ratio** at the upper end of **12.5%**, is this level of capital return sustainable in the longer term, and how do you plan to balance capital returns with maintaining your capital ratios?  **[NTRS_3403365_25]** 

e4b4221c6d9cf7c4ee205d6f9a671da1cde8516af4b1d748de3358f292b70a93

Total Revenue [USD, Millions]

Cost of Goods Sold (COGS) [USD, Millions]

SG&A [USD, Millions]

R&D [USD, Millions]

D&A [USD, Millions]

Interest Expense [USD, Millions]

Operating Income (EBIT) [USD, Millions]

Net Income [USD, Millions]

EPS - Basic [USD, Units]

EPS - Diluted [USD, Units]

bd0e6fe07bcde77dfb8340fc423f2d0fcf07fd05bd74c9dd88cb02b172313554

### Q3 2024 Earnings Call
- **Issued Period:** Q3 2024
- **Guided Period:** Q4 2024
- **Guidance:**
  1. **Operating Expenses:** Expected to be up approximately **2%** relative to the third quarter  **[NTRS_3403365_4]** .
  2. **Net Interest Income (NII):** Indicated potential headwinds due to rate cuts, with NII elevated by approximately **$10 million to $15 million** due to certain items in Q3, which might normalize in Q4  **[NTRS_3403365_3]** **[NTRS_3403365_10]** .
  3. **Expense Growth for 2025:** Commitment to keep expense growth below **5%**  **[NTRS_3403365_16]** .

### Q2 2024 Earnings Call
- **Issued Period:** Q2 2024
- **Guided Period:** Q3 2024
- **Guidance:**
  1. **Expenses:** Sequential expense growth expected to be up approximately **1%** in Q3  **[NTRS_3393404_4]** . Full-year expense growth expected in the **6%** range for the first half  **[NTRS_3393404_19]** .
  2. **Net Interest Income (NII):** Expected to be **flat** in Q3, considering seasonal decline in balances  **[NTRS_3393404_8]** **[NTRS_3393404_27]** .
  3. **Fee Revenue:** No specific guidance, but a client exit would reduce trust fees by a few million dollars in Q3  **[NTRS_3393404_28]** .
  4. **Operating Leverage:** Anticipated fee operating leverage in the second half, with potential total operating leverage in Q4  **[NTRS_3393404_19]** .
  5. **Equipment and Software Expenses:** Expected to range between **$270 million to $275 million**  **[NTRS_3393404_4]** .

### Q1 2024 Earnings Call
- **Issued Period:** Q1 2024
- **Guided Period:** Q2 2024
- **Guidance:**
  1. **Net Interest Income (NII):** Expected **3% to 5%** sequential decline in Q2  **[NTRS_3379864_5]** .
  2. **Compensation Expense:** Expected to decrease by **$35 million to $40 million** sequentially in Q2  **[NTRS_3379864_16]** .
  3. **Outside Services:** Anticipated to increase by **$10 million to $15 million** sequentially  **[NTRS_3379864_16]** .
  4. **Equipment and Software:** Expected to increase by **$10 million to $15 million** sequentially  **[NTRS_3379864_16]** .
  5. **Deposits:** Noted potential decrease due to tax payments  **[NTRS_3379864_5]** .
  6. **Capital and Share Repurchase:** Anticipated upward impact on share repurchase trajectory  **[NTRS_3379864_11]** .

### Q4 2023 Earnings Call
- **Issued Period:** Q4 2023
- **Guided Period:** Q1 2024
- **Guidance:**
  1. **Net Interest Income (NII):** Expected to be in the range of **$480 million to $500 million**  **[NTRS_3370401_6]** .
  2. **Compensation Expense:** Base pay adjustments expected to be approximately **$65 million** in 2024, with a sequential increase of **$50 million to $55 million** in Q1  **[NTRS_3370401_7]** .
  3. **Operating Expenses:** Anticipated **3% increase** above 2023 levels  **[NTRS_3370401_7]** .
  4. **Net Interest Income Incremental Impact:** Expected **$30 million** incremental per quarter in 2024  **[NTRS_3370401_6]** .
  5. **Expense Growth Rate:** Expected to be lower than **4.8%** growth rate in 2023  **[NTRS_3370401_13]** .

777dd4d45f3f6024f5eb643ec18c8499adab3fdd2a65b046afab5ec97c4fb992

ceee253c2b6e6aa6f71d3352c1406e5034ff639ca1d0dc797b90ffd0915aba08

Adjustments for Non-Cash Items [USD, Millions]

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from / Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

eb1ba7f2fe4d2a7dbef144e881ab87423b7ee353ad7494e951b946b818aa46c9

be8e6ec19768adcdbf70244cb9397181d9b948e246c6c6af8cf9ab388f22b5c5

- Northern Trust is implementing efficiency improvements through organizational changes, including the creation of a Chief Operating Officer role, **leading to greater centralization, standardization, and automation** in operations. This is expected to result in **improved margins and scalability**, while maintaining their **high service quality** standards.  **[NTRS_3413125_11]**
- The company is focusing on **higher-margin business** in its Asset Servicing segment by being selective in bids and concentrating on less resource-intensive opportunities. They have seen **better pricing conditions** in the market and anticipate that this strategy will **benefit margins over the next 12 to 18 months**.  **[NTRS_3413125_20]**
- Northern Trust is enhancing collaboration between its Asset Management and Wealth Management businesses, aiming to **increase penetration of Northern Trust managed products** within its wealth management channel. This includes providing **more ETFs** and tailoring offerings to ultra-high-net-worth clients, which is expected to drive **revenue growth**.  **[NTRS_3413125_19]**

c863ea858542a3489034b48398629dcbbf76047d023e7319d732af44e27eaacf

- **Subdued Asset Growth Relative to Peers:** Despite citing strong performance, **Northern Trust experienced more subdued growth in assets under management (AUM) and assets under custody (AUC) relative to peers in Q4 2024**. Currency movements accounted for **80% of the sequential decline**, and exposure to lower-performing markets like fixed income contributed to weaker growth. This raises concerns about the company's ability to match peer growth levels.  **[NTRS_3413125_21]**
- **Potential Negative Impact from Anticipated Rate Cuts:** Management anticipates **"a certain number of rate cuts, at least a couple this year in the U.S."**, which could negatively impact net interest income (NII). They acknowledged that **"if there are less rate cuts, that's better"**, suggesting that expected rate cuts may pressure NII growth and profitability.  **[NTRS_3413125_13]**
- **Uncertainty Around Sustainability of Deposit Growth:** The company reported a **7% growth in noninterest-bearing deposits** during the quarter, which is higher than in other quarters. However, management indicated that **"there's some seasonality to that number"**, suggesting the growth may not be sustainable. This raises concerns about the stability of deposit growth, potentially affecting liquidity and NII.  **[NTRS_3413125_7]**

317e450c6d3e5dcd396c77ec4978965a91f905d83c33da6fd6d108a805fedeca

1. **Expense Growth Guidance**  
   **Q:** Is the 5% expense growth target for 2025 still reasonable?  
   **A:** David Fox confirmed strong conviction in maintaining expense growth at **5% or below** for 2025, emphasizing the need to drive the expense curve down to build a resilient business model.  **[NTRS_3413125_9]** 

2. **ROE Targets Ambition**  
   **Q:** Are the ROE targets ambitious enough given growth?  
   **A:** Michael O'Grady explained they aim for higher returns on capital while balancing growth. They're targeting the **top half of the 10–15% ROE range**, seeking an optimal combination rather than maximizing ROE at the expense of growth.  **[NTRS_3413125_10]** 

3. **NII Guidance & Deposits**  
   **Q:** Is the growth in noninterest-bearing deposits sustainable?  
   **A:** David Fox noted that **noninterest-bearing deposits increased over $1 billion**, likely higher due to seasonality but consistent with past patterns. They focus on liquidity management and have made pricing adjustments across multiple currencies.  **[NTRS_3413125_7]** 

4. **Headcount Reduction & Service Quality**  
   **Q:** How can you reduce headcount without hurting service quality?  
   **A:** Michael O'Grady highlighted restructuring by creating a COO role to centralize operations, achieving greater efficiency through **centralization, standardization, and automation**, while maintaining high service quality. Investments in technology enhance scalability.  **[NTRS_3413125_11]** 

5. **Alternatives Growth Plans**  
   **Q:** Are alternative investments accelerating, and what's the plan?  
   **A:** Michael O'Grady stated they are expanding alternative investment solutions across businesses. Through **50 South Capital**, they raised over **$1 billion**. Plans include offering more options, training portfolio managers in private capital alternatives, and growing services in rapidly expanding European markets.  **[NTRS_3413125_8]** 

6. **Global Family Office Growth**  
   **Q:** How should we view revenue growth in the Global Family Office?  
   **A:** David Fox reported that the Global Family Office had its strongest year with **very high single-digit organic growth** and a **5% increase in assets under management in Q4**. The pipeline for 2025 looks more robust than in 2024.  **[NTRS_3413125_12]** 

89eb7ffc94508d82ada97d5691507bec2f396bf6f8fe2a3a30f10f5e34968396

0e57eba7468d6062f0e5b71f7218024ca0fd76227d8ae5c540d9e85a23d1568e

42a8989a0ba5880e436d3b2879d4dd9ed27a4d6d7118b69a45fcfe0326b6e5b7

- Other custodial banks
- Investment counseling firms
- Deposit-taking institutions
- Asset management firms
- Benefits consultants
- Trust companies
- Investment banking firms
- Insurance companies
- Financial technology companies, including software providers and data services firms  **[0000073124-24-000073_ntrs-20231231.htm:8]** **[0000073124-24-000073_ntrs-20231231.htm:58]** 

0c9e965c495fdeeb55a6c456676add103c84caf8fbbbbb9bb47b66f91348ca7d

Asset Servicing Foreign Exchange Trading Income ($ million)

Asset Servicing Provision for Credit Losses ($ million)

Securities Lent with Indemnification ($ billion)

Unsettled Reverse Repurchase Agreements ($ billion)

Market Value of Equity Sensitivity to Interest Rate Changes Increase ($ million)

Market Value of Equity Sensitivity to Interest Rate Changes Increase 2 ($ million)

Market Value of Equity Sensitivity to Interest Rate Changes Decrease ($ million)

Market Value of Equity Sensitivity to Interest Rate Changes Decrease 2 ($ million)

Assets Under Custody/Administration ($ billion)

Assets Under Custody ($ billion)

Assets Under Management ($ billion)

Custody and Fund Administration Fees ($ million)

FDIC Insurance Premiums ($ million)

Foreign Exchange Trading Income ($ million)

9e065e7fe7de575754445bd365577b7e17ea6af7cbe24bea97b1061a591b0132

| Name                  | Position                                           | Start Date          | Short Bio                                                                                                                                                                                                                       |
|-----------------------|----------------------------------------------------|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Michael G. O’Grady    | Chairman of the Board, CEO, and President          | 2011                | Michael G. O’Grady joined Northern Trust in **2011**. He has served as **Chairman of the Board since 2019**, as **CEO since 2018**, and as **President since 2017**. Previously, he was EVP and President of Corporate & Institutional Services  **[0000073124-24-000073_ntrs-20231231.htm:72]** **[0001193125-24-060814_d117431ddef14a.htm:9]** . |
| Peter B. Cherecwich   | Executive Vice President and President of Asset Servicing | 2007                | Peter B. Cherecwich joined Northern Trust in **2007**. He has served as EVP and President of Asset Servicing since **2017**. Previously, he was President of Global Fund Services and COO of Corporate & Institutional Services  **[0000073124-24-000073_ntrs-20231231.htm:72]** . |
| Daniel E. Gamba       | Executive Vice President and President of Asset Management | April 2023          | Daniel E. Gamba joined Northern Trust in **April 2023**. Before joining, he spent over two decades at Blackrock, Inc., serving in various roles including Co-Head of Fundamental Equities  **[0000073124-24-000073_ntrs-20231231.htm:72]** .                                   |
| Steven L. Fradkin     | Executive Vice President and President of Wealth Management | 1985                | Steven L. Fradkin joined Northern Trust in **1985**. He has served as EVP and President of Wealth Management since **2014**. Previously, he was President of Corporate & Institutional Services and CFO  **[0000073124-24-000073_ntrs-20231231.htm:72]** .                      |
| Mark C. Gossett       | Executive Vice President and Chief Risk Officer    | 1983                | Mark C. Gossett joined Northern Trust in **1983**. He has served as EVP and Chief Risk Officer since **2020**. Previously, he was Chief Credit Officer and Head of Market and Liquidity Risk  **[0000073124-24-000073_ntrs-20231231.htm:72]** .                                 |
| Jane B. Karpinski     | Executive Vice President and Global Head of Regulatory Affairs | December 2023       | Jane B. Karpinski joined Northern Trust in **2006**. She has served as EVP since **2016** and was appointed Global Head of Regulatory Affairs in **December 2023**. Previously, she was Chief Audit Executive  **[0000073124-24-000073_ntrs-20231231.htm:72]** .                |
| John P. Landers       | Senior Vice President and Controller               | December 2023       | John P. Landers joined Northern Trust in **2003**. He has served as SVP and Controller since **December 2023**. Previously, he was Chief Productivity Officer and CFO of Asset Servicing  **[0000073124-24-000073_ntrs-20231231.htm:72]** .                                    |
| Susan C. Levy         | Executive Vice President and General Counsel       | 2014                | Susan C. Levy joined Northern Trust in **2014**. She has served as EVP and General Counsel since then. Previously, she was Corporate Secretary and Managing Partner at Jenner & Block  **[0000073124-24-000073_ntrs-20231231.htm:72]** **[0000073124-23-000049_ntrs-20221231.htm:70]** .                                     |
| Teresa A. Parker      | Executive Vice President and President of EMEA     | 1982                | Teresa A. Parker joined Northern Trust in **1982**. She has served as EVP and President of EMEA since **2017**. Previously, she was COO of Corporate & Institutional Services  **[0000073124-24-000073_ntrs-20231231.htm:73]** **[0000073124-23-000049_ntrs-20221231.htm:70]** .                                            |
| Thomas A. South       | Executive Vice President and Chief Information Officer | 1999                | Thomas A. South joined Northern Trust in **1999**. He has served as EVP and CIO since **2018**. Previously, he was Chief Business Architect and COO of Operations & Technology  **[0000073124-24-000073_ntrs-20231231.htm:73]** .                                              |
| Alexandria Taylor     | Executive Vice President and Chief Human Resources Officer | October 2022        | Alexandria Taylor joined Northern Trust in **October 2022**. Previously, she spent nearly two decades at Bank of America, where she was head of HR for corporate, institutional, and wealth management businesses  **[0000073124-23-000049_ntrs-20221231.htm:71]** **[0001193125-23-072579_d448230ddef14a.htm:46]** .         |
| Jason J. Tyler        | Executive Vice President and Chief Financial Officer | 2011                | Jason J. Tyler joined Northern Trust in **2011**. He has served as EVP and CFO since **2020**. Previously, he was CFO of Wealth Management and Global Head of Asset Management's Institutional Group  **[0000073124-24-000073_ntrs-20231231.htm:73]** **[0000073124-23-000049_ntrs-20221231.htm:71]** .                      |
| Peter B. Cherecwich   | Chief Operating Officer                            | October 1, 2024     | Peter B. Cherecwich became the Chief Operating Officer at Northern Trust on **October 1, 2024**. He has served in various roles, including President of Asset Servicing  **[0000073124-24-000073_ntrs-20231231.htm:72]** **[0001193125-24-216672_d868217d8k.htm:1]** .                                                 |
| Teresa A. Parker      | President – Asset Servicing                        | October 1, 2024     | Teresa A. Parker became President – Asset Servicing on **October 1, 2024**. She has served as EVP and President of EMEA since 2017  **[0000073124-24-000073_ntrs-20231231.htm:73]** **[0001193125-24-216672_d868217d8k.htm:1]** .                                                                                      |
| Steven L. Fradkin     | Vice Chairman                                      | October 1, 2024     | Steven L. Fradkin was appointed as Vice Chairman effective **October 1, 2024**. He has served in various leadership roles, including EVP and President of Wealth Management  **[0000073124-24-000073_ntrs-20231231.htm:72]** **[0001193125-24-216672_d868217d8k.htm:1]** .                                              |
| Jason J. Tyler        | President – Wealth Management                      | October 1, 2024     | Jason J. Tyler assumed the role of President – Wealth Management on **October 1, 2024**. He has served as EVP and CFO since 2020  **[0000073124-24-000073_ntrs-20231231.htm:73]** **[0001193125-24-216672_d868217d8k.htm:1]** .                                                                                        |
| David W. Fox, Jr.     | Chief Financial Officer                            | October 1, 2024     | David W. Fox, Jr. became the CFO of Northern Trust Corporation on **October 1, 2024**. Previously, he was President of the Global Family & Private Investment Offices Group  **[0001193125-24-216672_d868217d8k.htm:1]** **[0001193125-24-216672_d868217dex991.htm:0]** .                                              |

a69e4d75a8dbb5b371b24cb1d1b1ce22637d154cb59ae2bc08a7f6e61f02da6f

| Program Details          | Program 1       |
|--------------------------|-----------------|
| Approval Date            | October 2021  **[0000073124-24-000257_ntrs-20240930.htm:90]**  |
| End Date/Duration        | No expiration date  **[0000073124-24-000257_ntrs-20240930.htm:124]**  |
| Total additional amount  | 25 million shares  **[0000073124-24-000257_ntrs-20240930.htm:124]**  |
| Remaining authorization amount | 13,300,150 shares (as of 2024-12-21)  **[0000073124-24-000257_ntrs-20240930.htm:124]**  |
| Details                  | Manage capital levels and use repurchased shares for general purposes, including stock option and incentive plans  **[0000073124-24-000073_ntrs-20231231.htm:65]** **[0000073124-24-000073_ntrs-20231231.htm:203]** **[0000073124-23-000049_ntrs-20221231.htm:201]** **[0000073124-23-000049_ntrs-20221231.htm:65]** **[0000073124-24-000206_ntrs-20240630.htm:94]** **[0000073124-23-000196_ntrs-20230930.htm:96]** **[0000073124-23-000159_ntrs-20230630.htm:92]** **[0000073124-24-000257_ntrs-20240930.htm:90]** **[0000073124-24-000257_ntrs-20240930.htm:124]** **[0000073124-24-000159_ntrs-20240331.htm:109]**  |

2ca1f7910a3ae5212737323611b78207d03e24c0ba2e15c71e9f7ec63528e905

Non-U.S. Operations

U.S. Operations

Total Revenue

347b3e6abcf8da12286093c29d7c6c8173318981d88ca39b7d1a84193a64eeba

**Quarterly guidance for Q1 2025:**
- **Net Interest Income (NII)**: $555 million to $575 million  **[NTRS_3413125_6]**  (no prior guidance)

**Annual guidance for FY 2025:**
- **Expense Growth**: at or below 5%  **[NTRS_3413125_5]**  (no change from prior guidance below 5%  **[NTRS_3403365_16]** )  
- **Net Interest Income (NII)**: increase by low single digits  **[NTRS_3413125_6]**  (no prior guidance)  
- **Expense to Trust Fee Ratio**: 105% to 110%  **[NTRS_3413125_3]**  (no prior guidance)  
- **Pretax Margins**: above 30%  **[NTRS_3413125_3]**  (no prior guidance)  
- **Return on Equity (ROE)**: upper half of 10% to 15%  **[NTRS_3413125_3]**  (no prior guidance)  
- **Earnings Per Share (EPS) Growth**: double-digit  **[NTRS_3413125_3]**  (no prior guidance)  
- **Capital Return to Shareholders**: meaningful capital return  **[NTRS_3413125_3]**  (no prior guidance)  

ad89109e4508477665a5146373072d6bfbfd08c57b5f0f32d40a77dc42a731e0

Despite Q4 AUM & AUC lagging peers—80% of the drop was currency-driven—Northern Trust targets improved margins via a new COO role, standardized ops, and a 5% or lower expense growth cap for 2025. Portfolio managers should watch for rate-cut impacts on NII.

530968ac2b74f8b0e090065a329303ac4e8c274c60236d2331fc9046aa8463c5

| Name       | Start Date | End Date | Reason for Change |
|------------|------------|----------|-------------------|
| KPMG LLP   | 2002  **[0000073124-24-000073_ntrs-20231231.htm:145]**    | Present  | Current auditor   |

5f24b41524af1be1e065082ac8c11bd16d0f30374b1b21cd49252bd52470636a

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

- Total Revenue: $1,970.1 million (+**27.5%** YoY)  **[0000073124-25-000023_q42024earningsreleaseex991.htm:0]** **[0000073124-25-000023_q42024trendreport-wordrepo.htm:8]** **[0000073124-25-000023_q42024trendreport-wordrepo.htm:6]** **[0000073124-25-000023_q42024earningsreleaseex991.htm:7]**  (vs. $1,545.3 million in Q4 2023  **[0000073124-24-000073_ntrs-20231231.htm:247]** )  
- Net Income: $455.4 million (+**302%** YoY)  **[0000073124-25-000023_q42024earningsreleaseex991.htm:0]** **[0000073124-25-000023_q42024trendreport-wordrepo.htm:8]** **[0000073124-25-000023_q42024trendreport-wordrepo.htm:6]** **[0000073124-25-000023_q42024earningsreleaseex991.htm:7]**  (vs. $113.1 million in Q4 2023  **[0000073124-24-000073_ntrs-20231231.htm:147]** )  
- Diluted EPS: $2.26 (+**335%** YoY)  **[0000073124-25-000023_q42024earningsreleaseex991.htm:0]** **[0000073124-25-000023_q42024trendreport-wordrepo.htm:8]** **[0000073124-25-000023_q42024trendreport-wordrepo.htm:6]** **[0000073124-25-000023_q42024earningsreleaseex991.htm:7]**  (vs. $0.52 in Q4 2023  **[0000073124-24-000073_ntrs-20231231.htm:147]** )  

0d3bc37a4bf1d395c24109731536fa94f5836f2289b086679dcacc3fef217e67

8e11ba6373fc7c883b27aa9eca46c6c490737e4f6d3ae5ca3f6ba3a558891d48

4d574192ed747cd810a02079627498bf4b493c9c66a5a2a4ff798b57b0e5e318

1. **Expense Growth Outlook**  
   **Q:** How will expense growth be managed going forward?  
   **A:** Management acknowledges that expense growth is exceeding targets, currently running above **6%** this year.  **[NTRS_3403365_11]**  They are committed to driving expense growth down, aiming for a rate below **5%** in 2025.  **[NTRS_3403365_16]**  Organizational changes, including centralizing operations and focusing on operational efficiencies, are expected to help reduce expenses  **[NTRS_3403365_16]** **[NTRS_3403365_27]** . Investments in technology and resiliency will continue but may taper off late next year.  **[NTRS_3403365_7]** 

2. **Net Interest Income Guidance**  
   **Q:** Will NII continue to grow from current levels?  
   **A:** Despite positive NII results this quarter, management anticipates a slight decline in NII in the fourth quarter due to expected rate cuts  **[NTRS_3403365_9]** **[NTRS_3403365_10]** . NII is expected to be in the range of **$550 to $560 million** in Q4, slightly down from **$569 million** this quarter  **[NTRS_3403365_9]** **[NTRS_3403365_10]** .

3. **Organizational Changes Impact**  
   **Q:** How will recent leadership changes affect operations?  
   **A:** The organizational changes align with the strategy to strengthen the foundation, optimize growth, and drive productivity.  **[NTRS_3403365_8]**  A new COO role has been created to enhance operational excellence and scalable growth.  **[NTRS_3403365_8]**  These changes are expected to improve operational efficiency without significantly increasing expenses  **[NTRS_3403365_8]** **[NTRS_3403365_16]** .

4. **Capital Return Plans**  
   **Q:** Will elevated share buybacks continue?  
   **A:** The company has been stepping up buybacks, supported by a strong capital position with a CET1 ratio of **12.6%**.  **[NTRS_3403365_26]**  Management expects buybacks to remain elevated but will be thoughtful in their approach, potentially allowing the CET1 ratio to modestly decline as they monetize additional Visa shares over the next year or two  **[NTRS_3403365_25]** **[NTRS_3403365_26]** .

5. **Wealth Management Growth**  
   **Q:** What are the targets for Wealth Management growth?  
   **A:** Management aims for organic growth in Wealth Management of **2.5% to 3%**, higher than in recent years  **[NTRS_3403365_22]** **[NTRS_3403365_29]** . They plan to invest more aggressively at the upper end of the market, leveraging their strengths with ultra-high-net-worth clients  **[NTRS_3403365_18]** **[NTRS_3403365_22]** .

6. **Asset Sensitivity Position**  
   **Q:** Is the balance sheet asset-sensitive?  
   **A:** The company currently has a slight asset sensitivity due to actions taken over the past couple of years.  **[NTRS_3403365_21]**  With the securities portfolio shortened, NII will be influenced by changes in interest rates, facing potential headwinds if rates decline  **[NTRS_3403365_20]** **[NTRS_3403365_21]** .

7. **Deposit Trends and Costs**  
   **Q:** How are deposit trends affecting NII?  
   **A:** The underlying nature of deposits has improved, with more attractively priced deposits replacing thinly priced ones.  **[NTRS_3403365_9]**  Deposit levels have been stable, and the company did not experience the typical seasonal decline.  **[NTRS_3403365_9]** 

8. **Loan Growth Outlook**  
   **Q:** What is the outlook for loan growth?  
   **A:** Loan balances decreased this quarter, but management does not see this as a strategic trend.  **[NTRS_3403365_17]**  They are not actively trying to grow or shrink the loan book; loan growth will align with growth in the overall client franchise, particularly in Wealth Management.  **[NTRS_3403365_17]** 

9. **Hamilton Lane Partnership**  
   **Q:** What is the significance of the Hamilton Lane collaboration?  
   **A:** The partnership with Hamilton Lane enhances their asset servicing business by providing better data and analytics on private investments for large institutional clients.  **[NTRS_3403365_18]**  This addresses clients' increasing allocations to private markets and alternatives.  **[NTRS_3403365_18]** 

10. **One Northern Trust Strategy**  
    **Q:** How is the One Northern Trust initiative measured?  
    **A:** Success is measured by increased collaboration across businesses, leading to higher organic growth rates.  **[NTRS_3403365_19]**  The strategy involves breaking down silos and delivering comprehensive solutions to clients, ultimately reflected in financial performance.  **[NTRS_3403365_19]** 

a07d73d9e75a150afd0e295db1d8d26b96923ebdfe2e2b1359882e1b9ea97505

1. **Net Interest Income Outlook**  
   **Q:** What is your NII outlook for Q3 and impact of rate cuts?  
   **A:** Jason Tyler stated that they expect third quarter NII to be relatively flat, as a slight seasonal decline in balances should be offset by positive impacts of reinvestment spread and day count improvements.  **[NTRS_3393404_8]**  He mentioned that even with potential Fed rate cuts of **25 to 50 basis points**, they should be able to pass along those declines in lower deposit yields without material spread degradation.  **[NTRS_3393404_26]** 

2. **Expense Management and Cost Savings**  
   **Q:** How will the restructuring charge affect future expenses?  
   **A:** Jason Tyler explained that the **$200 million** restructuring charge, mainly due to severance, will lead to permanent salary reductions equal to about half the severance amount, resulting in approximately **$40 million** in annual salary savings.  **[NTRS_3393404_14]** **[NTRS_3393404_15]**  While they plan to reinvest about half of the savings, this action positions them for better expense trajectory management in the future.  **[NTRS_3393404_15]** 

3. **Wealth Management Deposit Costs**  
   **Q:** Are you increasing wealth deposit rates to match competitors?  
   **A:** Jason Tyler noted that their wealth clients already have the option to sweep into money market funds yielding in the **5%** range.  **[NTRS_3393404_11]** **[NTRS_3393404_12]**  Their rates are already at market levels, and although they monitor competitive actions, they currently do not plan significant changes.  **[NTRS_3393404_19]** **[NTRS_3393404_30]** 

4. **Asset Servicing Strategy**  
   **Q:** How is your asset servicing business positioning today?  
   **A:** Michael O'Grady stated that they are focusing on more profitable growth by being selective and disciplined on pricing.  **[NTRS_3393404_16]**  They are prioritizing opportunities where they can offer differentiated services, like front office solutions, leading to higher margins.  **[NTRS_3393404_16]** 

5. **Monetization of Visa Shares**  
   **Q:** What are your plans for the remaining Visa shares?  
   **A:** Jason Tyler explained that after completing the final sale of the current tranche in August, they will still have half of the entire pool of Visa shares left to convert and monetize in the future.  **[NTRS_3393404_6]**  He mentioned that the proceeds provide several hundred million dollars, with about half of the after-tax proceeds available for share buybacks.  **[NTRS_3393404_23]** 

6. **Full-Year Expense Growth**  
   **Q:** Can you achieve less than 5% expense growth this year?  
   **A:** Jason Tyler indicated that achieving 5% expense growth is unlikely this year due to elevated markets and accelerated resiliency investments, placing first-half growth in the **6%** range.  **[NTRS_3393404_18]**  However, he reaffirmed their long-term target of **5% or less** expense growth.  **[NTRS_3393404_18]** 

7. **Severance Charge Details**  
   **Q:** When will the severance savings impact compensation expenses?  
   **A:** Jason Tyler mentioned that many actions have already been taken, and the program will unfold over **18 months**, gradually reducing compensation expenses during this period.  **[NTRS_3393404_22]** 

8. **Deposit Betas and Rate Cuts**  
   **Q:** How will deposit betas behave with potential Fed rate cuts?  
   **A:** Jason Tyler stated that at current elevated rate levels, deposit betas are high, and they expect to pass on rate cuts to their clients, aligning deposit rates with central bank movements.  **[NTRS_3393404_17]** **[NTRS_3393404_26]**  He confirmed that they passed on the full **25 basis point** ECB rate cut to deposit rates.  **[NTRS_3393404_26]** 

9. **Impact of Client Exit on Fee Revenue**  
   **Q:** How will client exits affect fee revenue?  
   **A:** Jason Tyler noted that a known client exit reduced trust fees by a few million dollars this quarter, with a similar impact expected next quarter, totaling approximately **$10 million** reduction on a quarterly trust fee base over **$600 million**.  **[NTRS_3393404_9]** 

10. **Capital Return and Regulatory Outlook**  
    **Q:** Will Visa proceeds fund increased share buybacks?  
    **A:** Jason Tyler explained that the Visa proceeds position them well to continue elevated share buybacks over time, but they will proceed deliberately, considering capital ratios and regulatory requirements, including upcoming Basel changes.  **[NTRS_3393404_23]** 

f52758522b627afe4a686c7678b2416fa1fff4de5b47069d49e9a22bc503ad2e

- **Expenses exceeded the target growth rate**, with expenses growing above the **5% goal** in the first quarter, and the company is working hard to reduce them but faces challenges due to market impacts.  **[NTRS_3379864_8]**
- There is **pressure on fee rates** across businesses, impacting revenue growth, particularly in areas with lower yields such as the family office business.  **[NTRS_3379864_20]**
- **Deposits may decline** due to macroeconomic factors like quantitative tightening, creating uncertainty in predicting financial results and potentially impacting net interest income.  **[NTRS_3379864_13]**

ba125a8549fd1f0a8cf7d73778b19c05c70d0e0d2e7424f3a0e1de66067cad9b

- **Strong capital position enables Northern Trust to plan elevated share repurchases, utilizing several hundred million dollars from the Visa share sale proceeds.**  **[NTRS_3393404_26]**
- **Expense management initiatives, including a severance program over 18 months, are enhancing efficiency and positioning the company well for next year.**  **[NTRS_3393404_24]** **[NTRS_3393404_25]**
- **Despite a $10 million fee reduction due to a client loss, the overall business is performing well with good activity levels and a strong pipeline, indicating resilience and positive growth prospects.**  **[NTRS_3393404_28]**

dc0b0e0b3f7607af9d17c517de8d8571037e00f74487ffff48bd6c26c82afcfb

- **Northern Trust's Global Family Office (GFO) segment experienced a significant deceleration in growth rate compared to previous years, indicating potential challenges in sustaining growth in this key business area.**  **[NTRS_3370401_26]**
- **Management acknowledges that predicting net interest income (NII) is challenging due to variable market conditions, indicating uncertainties in future NII performance.**  **[NTRS_3370401_24]**
- **In 2023, Northern Trust experienced strained and lower-than-historical levels of organic growth due to client activity and asset management outflows, impacting wealth management and asset servicing segments.**  **[NTRS_3370401_21]**

208018640b5e76d5f4a96ff57102fb172cf820622e118a451eb7f5427713b27d

1. **Net Interest Income Outlook**  
   **Q:** Will NII decline before stabilizing due to deposit pressures and rate cuts?  
   **A:** Management acknowledged that NII might decrease in the second quarter before stabilizing later in the year due to deposit pricing pressures and looming rate cuts. They noted that deposit volumes and client behavior are hard to predict ( **[NTRS_3370401_8]** ).

2. **Deposit Stability Amid Fed QT**  
   **Q:** How will deposits trend as the Fed's QT progresses and RRP is exhausted?  
   **A:** Management expects deposit flows to be influenced by the ongoing Fed QT and client reactions to changing rates. They noted that as the RRP declines, deposits have shown resiliency, but client behavior could shift as rates decrease from **5%** to **3%** ( **[NTRS_3370401_10]** ).

3. **Asset Sensitivity to Rate Cuts**  
   **Q:** How sensitive is the asset side to rate movements as rate cuts approach?  
   **A:** Approximately **75%** of loans are rate-sensitive, and about **one-third** of the securities portfolio is floating rate. The duration of the securities portfolio is around **1.8 years**, with a weighted average maturity under **4 years**, indicating significant sensitivity to rate changes ( **[NTRS_3370401_11]** ).

4. **Duration Positioning Strategy**  
   **Q:** Will you consider extending duration to lock in higher yields as rates fall?  
   **A:** Management is contemplating extending duration to hedge against a dramatic reduction in rates. While they have shortened duration recently, they recognize the need to adjust their strategy as the rate environment changes ( **[NTRS_3370401_12]** ).

5. **Expense Growth Outlook**  
   **Q:** Is expense growth expected to be lower than 2023's **~5%**?  
   **A:** Yes, management aims for 2024 expense growth to be lower than the approximately **4.8%** in 2023. They are working from a base of **$5.1 billion** in expenses and plan to use productivity improvements to offset increases, including a **3%** uplift from base pay and software costs already in the 2024 base ( **[NTRS_3370401_13]** ,  **[NTRS_3370401_14]** ,  **[NTRS_3370401_15]** ).

6. **Capital Levels and Buybacks**  
   **Q:** With high CET1 ratios, is there room to increase buybacks?  
   **A:** Management acknowledged room for additional stock repurchases, given their CET1 ratio of **11.4%**. They are considering capital deployment options but remain cautious due to uncertainties like the Basel III endgame ( **[NTRS_3370401_17]** ).

7. **Organic Growth Prospects**  
   **Q:** What are your expectations for organic growth this year?  
   **A:** Management is optimistic about organic growth, citing improved inflows in asset management and a strategic focus on scalable growth across wealth management and asset servicing. They aim to drive profitable organic growth by emphasizing scalable business areas and collaborative client approaches ( **[NTRS_3370401_21]** ).

8. **Deposit Pricing Pressure**  
   **Q:** What's driving further pressure on deposit costs?  
   **A:** Deposit pricing pressure is due to lags in pricing agreements and adjustments made in the fourth quarter that will impact the first quarter. Management is committed to retaining client deposits and anticipates higher costs in the near term ( **[NTRS_3370401_22]** ).

9. **Noninterest-Bearing Deposits**  
   **Q:** Can noninterest-bearing deposits stabilize at current levels?  
   **A:** Management observed that certain client channels for noninterest-bearing deposits have flattened and performed better than others. While not declaring a plateau, they noted improved trends in wealth management deposits and aim to maintain these levels ( **[NTRS_3370401_15]** ,  **[NTRS_3370401_16]** ).

10. **Alternative Asset Servicing Opportunities**  
    **Q:** How are you positioning in the alternative asset servicing space?  
    **A:** Management views private markets as a major opportunity and recently won a significant mandate from a large private markets firm. They are investing in capabilities and global footprint to grow in this area ( **[NTRS_3370401_16]** ).

11. **Visa Class B Shares**  
    **Q:** What's the plan for disposing of Visa Class B shares and its impact?  
    **A:** Pending a shareholder vote, they may monetize half of their over **4 million** Visa B shares, worth approximately **$1.7 billion**. They consider this a non-strategic asset and are evaluating options, which could impact capital and buyback plans ( **[NTRS_3370401_18]** ).

12. **Incremental NII from Securities Sales**  
    **Q:** What's the NII benefit from recent securities portfolio repositioning?  
    **A:** The November repositioning is expected to contribute about **$15 million per quarter**, and the January repositioning another **$15 million per quarter** to NII ( **[NTRS_3370401_19]** ).

13. **Expense Priorities**  
    **Q:** What takes precedence—expense-to-fee ratio or absolute expense growth?  
    **A:** Management prioritizes improving the expense-to-trust-fee ratio, aiming to drive it back into their target range. They focus on scalable growth and disciplined expense management to achieve this ( **[NTRS_3370401_23]** ).

14. **NII Sensitivity to Fed Rate Cuts**  
    **Q:** How would varying Fed rate cut scenarios affect NII?  
    **A:** NII impact depends on their ability to maintain spreads amid client deposit behaviors, which are difficult to predict. They indicated flexibility to adapt to different rate cut scenarios but emphasized uncertainty ( **[NTRS_3370401_24]** ).

15. **Custody Fee Trends**  
    **Q:** Are custody fee declines due to risk-off or pricing pressure?  
    **A:** The approximately **5%** year-over-year decline in custody fees is attributed to lower transaction volumes and asset levels rather than pricing pressure. Management sees pricing as relatively stable and notes positive net new business ( **[NTRS_3370401_25]** ).

16. **Wealth Management and Global Family Office**  
    **Q:** Any changes or growth areas in Wealth Management, especially GFO?  
    **A:** While Global Family Office growth decelerated due to its inherently spiky nature, they have invested heavily in technology and client offerings, positioning them for future growth in wealth management ( **[NTRS_3370401_26]** ).

0dd64fd4ce9ba1acebaedbdaf645ba1bd0dd45ec219a447a9337dd2346fcdb22

- **Northern Trust is experiencing strong organic growth in its wealth management and asset servicing businesses**, particularly in high-margin segments like ultra-high net worth clients and family office services.  **[NTRS_3379864_10]**
- **The company has robust capital levels and is considering increasing share repurchases**, especially with the anticipated proceeds from Visa coming online, which will enhance shareholder returns.  **[NTRS_3379864_11]** **[NTRS_3379864_18]**
- **Management is focused on controlling expenses and improving efficiency**, aiming for expense growth below **5%** and positive fee operating leverage, which will enhance profitability.  **[NTRS_3379864_8]** **[NTRS_3379864_15]**

ba56df73eb7c69ec9315516e2d0e24ec4b9cf77d112a0525461bc6df8c259080

- NTRS sees **significant growth opportunities** in the **alternatives and private markets asset servicing business**, highlighted by a recent **major mandate win with one of the world's largest private market firms**, demonstrating their competitive capabilities and positioning in this expanding market.  **[NTRS_3370401_16]**
- The company is optimistic about **improved organic growth prospects**, due to **positive inflows into asset management** and a strategic focus on **more scalable business segments**, combined with a collaborative "**One Northern Trust**" approach enhancing cross-business opportunities.  **[NTRS_3370401_21]**
- NTRS continues to **invest heavily** in their **Wealth Management**, especially in the **Global Family Office segment**, with **industry-leading technology innovations** like their cloud-enabled **Wealth Passport platform**, enhancing client interactions and positioning them optimistically for future growth over the next few years.  **[NTRS_3370401_26]**

501cda6d912e9257def150f9cac2915db3d67f653a16b0fe308309ecc9e60fa4

- **Northern Trust's "One Northern Trust" strategy** is enhancing collaboration across businesses, aiming to drive **higher organic growth rates** by providing integrated solutions to clients ** **[NTRS_3403365_19]** **[NTRS_3403365_12]** **.
- The company is **investing aggressively at the upper end** of the market, particularly in **ultra high net worth clients**, expecting to achieve **better incremental profitability and shareholder value** ** **[NTRS_3403365_18]** **[NTRS_3403365_29]** **.
- Northern Trust has achieved significant client wins, such as the **expanded relationship with Artemis**, providing **comprehensive services including execution, custody, fund administration, and more**, demonstrating their ability to secure **more profitable growth** **[NTRS_3403365_12]**.

2dbed98b31803b03ffbaf31db6c916a765eced4ecd597bb5e4d18cc838bc3610

- The company's stock has lost its premium valuation compared to peers, raising concerns about its business mix, execution, and overall strategy.  **[NTRS_3403365_14]**
- Significant management turnover, with multiple leadership changes occurring simultaneously, could lead to execution risks and uncertainty in implementing growth strategies.  **[NTRS_3403365_14]** **[NTRS_3403365_28]**
- Lack of clear, externally measurable metrics to assess the success of the **One Northern Trust** strategy makes it difficult for investors to gauge progress and effectiveness.  **[NTRS_3403365_19]**

44dfa87a0d536bdbf6673c37e7c019b727effe3a1472e11448e484998e84fc4c

1. **NII Guidance and Deposits**  
   **Q:** Why is NII expected to decline 3%-5% in Q2?  
   **A:** NII is projected to decrease due to anticipated lower deposit levels resulting from tax payments and clients moving funds out of deposits. While deposits increased to **$124 billion** at the end of Q1, they have declined in the first weeks of Q2, and the bank may already be at a peak for the quarter. The Visa proceeds will be parked in cash but will not significantly lift NII in the short run.  **[NTRS_3379864_5]** 

2. **Capital Deployment and Share Buybacks**  
   **Q:** How will you use excess capital and Visa proceeds?  
   **A:** With strong capital levels and the receipt of Visa proceeds, which will enhance capital by approximately **$700 million**, the bank anticipates an upward impact on share repurchases. While being prudent and patient, there is a bias toward increasing share buybacks, aligning with their capital framework.  **[NTRS_3379864_11]** **[NTRS_3379864_14]** **[NTRS_3379864_18]** 

3. **Expense Management**  
   **Q:** What is your outlook on expense control?  
   **A:** The goal is to keep expense growth at **5% or below** for the year. Compensation expense is expected to decrease by **35%-40%** sequentially in Q2, while outside services and equipment and software expenses are each expected to increase by **10%-15%**. The firm is working hard to find efficiencies and productivity to manage expenses despite market-driven cost increases.  **[NTRS_3379864_7]** **[NTRS_3379864_8]** **[NTRS_3379864_15]** 

4. **Duration of Securities Portfolio**  
   **Q:** Will you extend duration in the securities portfolio?  
   **A:** The bank is considering modestly extending the duration of its securities portfolio from its current position of less than **1 year**, depending on economic conditions. However, deposits have shown shorter duration than anticipated, so they plan to remain shorter relative to historical levels to manage risk.  **[NTRS_3379864_12]** 

5. **Deposit Trends and Stability**  
   **Q:** Do you expect deposit levels to stabilize?  
   **A:** Deposit levels have been difficult to predict, but non-interest-bearing deposits have flattened and now represent about **15%** of total deposits. While there may be continued pressures due to quantitative tightening and client movements into other products, the expectation is that deposit levels may start to settle around current levels.  **[NTRS_3379864_13]** **[NTRS_3379864_19]** 

6. **Impact of Rate Cuts on NII**  
   **Q:** How would Fed rate cuts affect NII?  
   **A:** The impact of potential Fed rate cuts on NII is difficult to predict due to uncertainties in deposit betas and client behaviors. In previous cycles, deposit betas were very low at the start of rate increases and very high at the end, making future impacts on NII uncertain.  **[NTRS_3379864_17]** 

7. **Wealth Management Growth**  
   **Q:** What is the outlook for wealth management growth?  
   **A:** The bank expects continued organic growth in wealth management, particularly in advisory fees and the family office business, which is growing at a higher rate. Strength is also seen in ultra-high-net-worth segments and asset servicing, with growth being relatively broad-based across regions and products.  **[NTRS_3379864_10]** 

8. **Securities Repositioning**  
   **Q:** Will there be further securities repositioning?  
   **A:** It is unlikely that further significant repositioning of the securities portfolio will occur. The bank has already addressed low-yielding securities, and additional repositioning would have less impact under the current yield curve and economic environment.  **[NTRS_3379864_18]** 

9. **Fee Rate Pressure**  
   **Q:** What drove fee rate pressure this quarter?  
   **A:** Fee rates are influenced by business mix and client activities. Only a portion of the business is tied to asset levels, and variations arise due to shifts in product segments and client behaviors, so focusing solely on fee rates may not accurately reflect performance.  **[NTRS_3379864_20]** 

10. **Flow of Client Assets**  
    **Q:** How are client assets moving between cash and fee-generating products?  
    **A:** Cash has been a positive area, with substantial growth not only in deposits but also in the money market mutual fund complex, which is up meaningfully both sequentially and year-over-year. Overall liquidity and cash positions have significantly contributed to the strength of the quarter.  **[NTRS_3379864_10]** 

3cc4b907f58a1f0815f992e6983749a93dcb9f4ac683a194769652260baafdd5

Northern Trust Corp (NTRS)

Financials