Northern Trust Corporation .Fourth Quarter 2021 Quarterly Earnings Review January 20, 2022
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Northern Trust Corporation
Fourth Quarter 2021
.
Quarterly Earnings Review
.
January 20, 2022
northerntrust.com | © 2022 Northern Trust 1EXECUTIVE 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-tax severance-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.
northerntrust.com | © 2022 Northern Trust 2SUMMARY 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 northerntrust.com | © 2022 Northern Trust 3TOTAL REVENUE
$ in millions
Total Revenue (FTE1)
+9%
+2%
$1,677 Trust, Investment and Other
$1,645
$1,590 $1,589 Servicing Fees were up 8% year-
$1,533
over-year and flat sequentially.
$357 $371
$347 $344
$345 Foreign Exchange Trading Income
$110 $119
$101 $99 was up 12% year-over-year and
$93 $71 $66 $77
$69
$79 16% sequentially.
Other Noninterest Income was up
28% year-over-year and 8%
sequentially.
$1,064 $1,075 $1,111 $1,111
$1,026
Net Interest Income (FTE1) was up
7% year-over-year and 4%
sequentially.
4Q 2020 1Q 2021 2Q 2021 3Q 2021 4Q 2021
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 northerntrust.com | © 2022 Northern Trust 4TRUST, INVESTMENT & OTHER SERVICING FEES
$ in millions (except as noted) % Change Vs.
Trust, Investment & Other Servicing Fees 4Q 2021 4Q 2020 3Q 2021
C&IS Trust, Investment & Other Servicing Fees were
Custody & Fund Administration $457.7 +9% (1)% up 5% year-over-year and down 1% sequentially.
Investment Management 113.3 (9)% – Custody & fund administration fees increased year-over-
year primarily due to favorable markets and new
Securities Lending 18.8 +8% (6)% business, partially offset by lower transaction-based fees.
Sequentially, custody & fund administration fees
Other 35.3 +5% (2)% decreased primarily due to lower transaction-based fees
and currency translation, partially offset by favorable
Total Corporate & Institutional Services $625.1 +5% (1)% markets and new business.
Investment management fees decreased year-over-year
Central $181.4 +17% +1% primarily due to higher money market mutual fund fee
waivers, partially offset by new business and favorable
East 132.9 +15% +2% markets.
West 98.6 +15% +2% Wealth Management Trust, Investment & Other
Servicing Fees were up 13% year-over-year and 1%
Global Family Office (GFO) 73.0 (1)% (2)% sequentially.
Total Wealth Management $485.9 +13% +1% 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
Client Assets1 (in billions): mutual fund fee waivers. Sequentially, fees in the regions
increased primarily due to new business.
C&IS AUC/A $15,183 +11% +3%
Fees in GFO decreased year-over-year primarily due to
C&IS AUC $11,555 +11% +2% higher money market mutual fund fee waivers, partially
offset by favorable markets and new business.
Global Custody Assets $8,238 +11% +2% Sequentially, fees in GFO decreased primarily due to
higher money market mutual fund fee waivers.
C&IS AUM $1,191 +13% +3%
Money market mutual fund fee waivers totaled $50.9
Securities Lending Collateral $196 +5% (6)%
million in C&IS and $30.2 million in Wealth
Wealth Management AUC/A $1,066 +21% +9% Management in 4Q 2021.
Wealth Management AUC $1,058 +21% +10%
Wealth Management AUM $416 +20% +12%
1 Client assets for the current quarter are considered preliminary until the Form 10-K is filed with the Securities and
Exchange Commission. northerntrust.com | © 2022 Northern Trust 5NET INTEREST INCOME
Average Earning Assets
($ in billions)
$148.8
$140.6 $142.0 $144.0
Net Interest Income (FTE1) was up 7% year-over-
$131.2 year and 4% sequentially. Net interest margin
(FTE1) was 0.99%.
Average Earning Assets were up 13% year-over-
year and 3% sequentially.
Average Total Deposits were up 18% year-over-
year and 5% sequentially.
Net Interest Margin decreased 6 basis points from
the prior-year quarter primarily due to lower
1.05% average interest rates, partially offset by a favorable
1.00% 0.97% 0.98% 0.99% balance sheet volume and mix shift. Net Interest
Margin increased 1 basis point versus the prior
quarter primarily due to a favorable balance sheet
volume and mix shift.
4Q 2020 1Q 2021 2Q 2021 3Q 2021 4Q 2021
NII(FTE1) $ 345.1 $ 346.7 $ 343.9 $ 357.1 $370.6
in millions
Loans & Leases Deposits w/ Banks
Securities Fed Deposits & Other
NIM (FTE1)
1 Net interest income and net interest margin 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.
northerntrust.com | © 2022 Northern Trust 6NONINTEREST EXPENSE
$ in millions
Total Noninterest Expense
+2%
+4%
$1,151 $1,169
$1,118 $1,121 $1,129
$72 $79 Expenses totaled $1.2 billion in the fourth
$72 $68 $81 $52
$67 $51 $52 $54 quarter, up 2% year-over-year and 4%
$176 $177 $178 $185
$196 sequentially.
The year-over-year growth in expenses was
$208 $196 $218 $211 $224 driven by increases in equipment and software
related costs, other operating expense, outside
services, and employee benefits, partially offset
by favorability in occupancy and compensation.
$627 $622 $605 $618
The sequential expense performance was driven
$598
by increases in compensation and employee
benefits, outside services, and equipment and
software related costs, partially offset by
decreases in occupancy and other operating
4Q 2020 1Q 2021 2Q 2021 3Q 2021 4Q 2021 expense.
Compensation & Benefits Occupancy
Outside Services Other
Equipment & Software
Categories may not sum due to rounding.
northerntrust.com | © 2022 Northern Trust 7RESULTS & KEY METRICS: FULL YEAR 2021
$ in millions (except EPS and as noted)
The current year includes the following
% Change items:
Vs.
Pre-tax pension settlement related charges
FY 2021 FY 2020 of $27.8 million
Pre-tax severance related charges of $6.1
Revenue (FTE1) $6,500.1 +6% million in connection with a reduction in
Noninterest Expense 4,535.9 +4% force
Provision for Credit Losses (81.5) N/M $13 million pre-tax gain relating to property
sales
Net one-time tax benefits of $13.9 million
Net Income $1,545.3 +28% primarily relating to a lower net tax impact
from international operations
Diluted Earnings per Share $7.14 +31%
The prior year included the following
items:
Return on Equity2 13.9% 11.2%
Pre-tax severance-related charges of $55.0
million in connection with a reduction in
Pre-Tax Margin1,2 31.5% 27.1% force
Expense to Trust Fee Ratio2 104% 109% Pre-tax charge of $43.4 million related to a
corporate action processing error
Assets under Custody / Administration3 (in billions) $16,249 +12% Pre-tax occupancy charge of $11.9 million
related to an early lease exit arising from a
Assets under Custody3 (in billions) $12,612 +12% workplace real estate strategy
Global Custody Assets3 (in billions) $8,238 +11% Tax expense of $26.8 million related to the
reversal of tax benefits previously
Assets under Management3 (in billions) $1,607 +14%
recognized through earnings
1 Revenue and pre-tax margin stated on an FTE basis is a non-GAAP financial measure. A reconciliation of these measures to reported results 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.
northerntrust.com | © 2022 Northern Trust 8REVENUE AND EXPENSE: ANNUAL TRENDS
$ in millions
Total Revenue (FTE1) Total Noninterest Expense
$6,500 +6% $4,536 +4%
$6,106 $6,135 -% $4,348 +5%
$4,144 $299 -14%
$347 +5% $209 -9%
$1,418 -4% $330 $230 +8%
$1,478 -14% $213 $736
$1,711 +9%
$428 +15% $674 +10%
$612
$372 +27% $293 +1%
$292 $290 +16% $849
$251 +11%
$763 -1%
$775
+4% $4,361 +9%
$3,852 $3,995
$2,335 +5% $2,442 +5%
$2,214
2019 2020 2021 2019 2020 2021
Trust, Investment and Other Noninterest Compensation & Benefits Occupancy
Other Servicing Fees Income Outside Services Other
FX Trading Income Net Interest Income Equipment & Software
(FTE1)
1 Netinterest income and total revenue on an FTE basis are non-GAAP financial measures. A reconciliation of these measures to reported results prepared in accordance
with U.S. generally accepted accounting principles (GAAP) is included in the Appendix on page 12.
northerntrust.com | © 2022 Northern Trust 9CAPITAL
Northern Trust Corporation Capital Ratios Capital Return
Advanced Approach Declared $146.8 million in common stock
dividends and $4.7 million in preferred stock
Common Equity Tier 1 13.3% dividends in 4Q 2021.
Tier 1 14.4% Repurchased $1.8 million of common stock
in 4Q 2021.
Total 15.4%
Tier 1 Leverage 6.9%
Supplementary Leverage 8.2%
Standardized Approach
Common Equity Tier 1 12.1%
Tier 1 13.1%
Total 14.2%
Tier 1 Leverage 6.9%
Stress Capital Buffer requirement of 2.5%;
resulting in minimum Common Equity Tier 1
requirement of 7%.
As of December 31, 2021. Capital ratios for the current quarter are considered preliminary until the
Form 10-K is filed with the Securities and Exchange Commission. northerntrust.com | © 2022 Northern Trust 10Appendix
northerntrust.com | © 2022 Northern Trust 11RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
The following table presents a reconciliation of total revenue, net interest income, net interest margin and pre-tax margin
prepared in accordance with GAAP to such measures on a fully taxable equivalent (FTE) basis, which are non-GAAP
financial measures.
Management believes this presentation provides a clearer indication of these financial measures for comparative
purposes.
Revenue
4Q21 3Q21 2Q21 1Q21 4Q20 FY 2021 FY 2020
Reported $ 1,667.0 $ 1,633.8 $ 1,580.3 $ 1,583.4 $ 1,521.9 $ 6,464.5 $ 6,100.8
FTE Adj. $ 10.0 $ 10.7 $ 8.3 $ 6.6 $ 10.7 $ 35.6 $ 34.4
FTE $ 1,677.0 $ 1,644.5 $ 1,588.6 $ 1,590.0 $ 1,532.6 $ 6,500.1 $ 6,135.2
Net Interest Income
4Q21 3Q21 2Q21 1Q21 4Q20 FY 2021 FY 2020
Reported $ 360.6 $ 346.4 $ 335.6 $ 340.1 $ 334.4 $ 1,382.7 $ 1,443.2
FTE Adj. $ 10.0 $ 10.7 $ 8.3 $ 6.6 $ 10.7 $ 35.6 $ 34.4
FTE $ 370.6 $ 357.1 $ 343.9 $ 346.7 $ 345.1 $ 1,418.3 $ 1,477.6
NIM - Reported 0.96% 0.95% 0.95% 0.98% 1.01%
NIM - FTE 0.99% 0.98% 0.97% 1.00% 1.05%
Pre-Tax Margin
4Q21 3Q21 4Q20 FY 2021 FY 2020
Revenue - Reported $ 1,667.0 $ 1,633.8 $ 1,521.9 $ 6,464.5 $ 6,100.8
Pre-Tax Income - Reported $ 509.6 $ 518.1 $ 373.4 $ 2,010.1 $ 1,627.6
FTE Adj.* $ 10.0 $ 10.7 $ 10.7 $ 35.6 $ 34.4
Revenue - FTE $ 1,677.0 $ 1,644.5 $ 1,532.6 $ 6,500.1 $ 6,135.2
Pre-Tax Income - FTE $ 519.6 $ 528.8 $ 384.1 $ 2,045.7 $ 1,662.0
Pre-Tax Margin - Reported 30.6% 31.7% 24.5% 31.1% 26.7%
Pre-Tax Margin - FTE 31.0% 32.2% 25.1% 31.5% 27.1%
* FTE Adjustment applies to both revenue and pre-tax income
northerntrust.com | © 2022 Northern Trust 12FORWARD-LOOKING STATEMENTS
This presentation may include statements which constitute “forward-looking statements” within the
meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-
looking statements are identified typically by words or phrases such as “believe,” “expect,” “anticipate,”
“intend,” “estimate,” “project,” “likely,” “plan,” “goal,” “target,” “strategy,” and similar expressions or future
or conditional verbs such as “may,” “will,” “should,” “would,” and “could.” Forward-looking statements
include statements, other than those related to historical facts, that relate to Northern Trust’s financial
results and outlook, capital adequacy, dividend policy and share repurchase program, accounting
estimates and assumptions, credit quality including allowance levels, future pension plan contributions,
effective tax rate, anticipated expense levels, contingent liabilities, acquisitions, strategies, market and
industry trends, and expectations regarding the impact of accounting pronouncements and legislation.
Forward-looking statements also include statements, other than those related to historical facts, that
relate to the ongoing COVID-19 pandemic and its impact on global economic and market conditions
and Northern Trust’s business, financial condition, and results of operations. These statements are
based on Northern Trust’s current beliefs and expectations of future events or future results, and
involve risks and uncertainties that are difficult to predict and subject to change. These statements are
also based on assumptions about many important factors, including the factors discussed in Northern
Trust’s most recent annual report on Form 10-K and other filings with the U.S. Securities and Exchange
Commission, all of which are available on Northern Trust’s website. We caution you not to place undue
reliance on any forward-looking statement as actual results may differ materially from those expressed
or implied by forward-looking statements. Northern Trust assumes no obligation to update its forward-
looking statements.
This presentation should be reviewed together with Northern Trust Corporation’s
Fourth Quarter 2021 earnings press release, which is available at:
www.northerntrust.com/about-us/investor-relations
northerntrust.com | © 2022 Northern Trust 13You can also read
