Northern Trust : Q4 Presentation Slides

Northern Trust Corporation

.Fourth Quarter 2021

Quarterly Earnings Review

.

January 20, 2022

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1

EXECUTIVE SUMMARY

• Net income of $406.4 million, diluted earnings per common share of $1.91
• Return on average common equity of 14.5%
• The current quarter included:
• • $6.1 million pre-taxseverance-related charges
  • $3.4 million pre-tax pension settlement related charge
  • $13.0 million pre-tax gain relating to property sales
  • Net one-time tax benefits of $13.9 million primarily relating to a lower net tax impact from international operations

Key Macroeconomic Factors
		4Q21 End of Period	Month Lag1	Quarter Lag2
		YoY	Seq	YoY	Seq	YoY	Seq
	S&P 500	26.9%	10.6%	31.5%	2.0%	28.1%	0.2%
	MSCI EAFE Local	16.1%	3.6%	23.2%	0.3%	24.4%	0.7%
	1 month Libor (Avg)	(5) bps	- bps
	3 month Libor (Avg)	(5) bps	5 bps
	EUR / USD	7.6%	1.9%
	GBP / USD	0.9%	(0.5)%

1. Month Lag YoY represents the average month-ends of Sept. 2021 - Nov. 2021 vs. Sept. 2020 - Nov. 2020. Month Lag Seq represents the average month-ends of Sept. 2021 - Nov. 2021 vs. Jun. 2021 - Aug. 2021.
2. Quarter Lag YoY represents quarter-end Sept. 2021 vs. Sept. 2020. Quarter Lag Seq represents quarter-end Sept. 2021 vs. Jun. 2021.

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2

SUMMARY RESULTS & KEY METRICS

$ in millions (except EPS and as noted)

		% Change Vs.
	4Q 2021	4Q 2020	3Q 2021
Revenue (FTE1)	$1,677.0	9%	2%
Noninterest Expense	1,168.9	2%	4%
Provision for Credit Losses	(11.5)	N/M	N/M
Net Income	$406.4	69%	3%
Diluted Earnings per Share	$1.91	70%	6%
Return on Average Common Equity2	14.5%	8.8%	13.7%
Pre-Tax Margin1,2	31.0%	25.1%	32.2%
Expense to Trust Fee Ratio2	105%	112%	102%
Assets under Custody / Administration3 (in billions)	$16,249	+12%	+3%
Assets under Custody3 (in billions)	$12,612	+12%	+3%
Global Custody Assets3 (in billions)	$8,238	+11%	+2%
Assets under Management3 (in billions)	$1,607	+14%	+5%

1. Revenue and pre-tax margin stated on a fully taxable equivalent (FTE) basis are non-GAAP financial measures. A reconciliation to reported revenue and reported pre-tax margin prepared in accordance with U.S. generally accepted accounting principles (GAAP) is included in the Appendix on page 12.
2. Actual numbers for all periods, not % change.
3. Client assets for the current quarter are considered preliminary until the Form 10-K is filed with the Securities and Exchange Commission.

N/M - Not meaningful

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3

TOTAL REVENUE

$ in millions

Total Revenue (FTE1)

			+9%
	$1,590			$1,645	+2%	$1,677
$1,533	$1,589
$345	$347	$344	$357	$371
				$119
	$101	$99	$110
$93	$66	$77
$79	$71
$69

$1,026

$1,064

$1,075

$1,111

$1,111

4Q 2020

1Q 2021

2Q 2021

3Q 2021

4Q 2021

• Trust, Investment and Other Servicing Fees were up 8% year- over-year and flat sequentially.
• Foreign Exchange Trading Income was up 12% year-over-year and 16% sequentially.
• Other Noninterest Income was up 28% year-over-year and 8% sequentially.
• Net Interest Income (FTE1) was up 7% year-over-year and 4% sequentially.

Trust, Investment and		Other Noninterest
Other Servicing Fees		Income2
FX Trading Income		Net Interest Income
		(FTE1)

Categories may not sum due to rounding.

1. Net interest income and total revenue stated on an FTE basis are non-GAAP financial measures. A reconciliation of these measures to reported results prepared in accordance with U.S. GAAP is included in the Appendix on page 12.
2. Other Noninterest Income includes Security Commissions and Trading Income, Treasury Management Fees, Other Operating Income, and Investment Security Gains

(Losses), net

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4

TRUST, INVESTMENT & OTHER SERVICING FEES

$ in millions (except as noted)		% Change Vs.
Trust, Investment & Other Servicing Fees	4Q 2021	4Q 2020	3Q 2021
Custody & Fund Administration	$457.7	+9%	(1)%
Investment Management	113.3	(9)%	-
Securities Lending	18.8	+8%	(6)%
Other	35.3	+5%	(2)%
Total Corporate & Institutional Services	$625.1	+5%	(1)%
Central	$181.4	+17%	+1%
East	132.9	+15%	+2%
West	98.6	+15%	+2%
Global Family Office (GFO)	73.0	(1)%	(2)%
Total Wealth Management	$485.9	+13%	+1%
Client Assets1 (in billions):
C&IS AUC/A	$15,183	+11%	+3%
C&IS AUC	$11,555	+11%	+2%
Global Custody Assets	$8,238	+11%	+2%
C&IS AUM	$1,191	+13%	+3%
Securities Lending Collateral	$196	+5%	(6)%
Wealth Management AUC/A	$1,066	+21%	+9%
Wealth Management AUC	$1,058	+21%	+10%
Wealth Management AUM	$416	+20%	+12%

• C&IS Trust, Investment & Other Servicing Fees were up 5% year-over-year and down 1% sequentially.
• • Custody & fund administration fees increased year-over- year primarily due to favorable markets and new business, partially offset by lower transaction-based fees. Sequentially, custody & fund administration fees decreased primarily due to lower transaction-based fees and currency translation, partially offset by favorable markets and new business.
  • Investment management fees decreased year-over-year primarily due to higher money market mutual fund fee waivers, partially offset by new business and favorable markets.
• Wealth Management Trust, Investment & Other Servicing Fees were up 13% year-over-year and 1% sequentially.
• • Fees in the regions (Central, East and West) increased year-over-year primarily due to favorable markets and new business, partially offset by higher money market mutual fund fee waivers. Sequentially, fees in the regions increased primarily due to new business.
  • Fees in GFO decreased year-over-year primarily due to higher money market mutual fund fee waivers, partially offset by favorable markets and new business.
    Sequentially, fees in GFO decreased primarily due to higher money market mutual fund fee waivers.
• Money market mutual fund fee waivers totaled $50.9 million in C&IS and $30.2 million in Wealth Management in 4Q 2021.

1 Client assets for the current quarter are considered preliminary until the Form 10-K is filed with the Securities and	northerntrust.com | © 2022 NorthernTrust	5
Exchange Commission.