Northern Trust Corporation .Second Quarter 2021 Quarterly Earnings Review July 21, 2021
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Northern Trust Corporation
Second Quarter 2021
.
Quarterly Earnings Review
.
July 21, 2021
northerntrust.com | © 2021 Northern Trust 1EXECUTIVE SUMMARY
Net income of $368.1 million, diluted earnings per common share of $1.72
Return on average common equity of 13.7%
The current quarter included a $17.6 million pre-tax pension settlement charge
Key Macroeconomic Factors
2Q21 End of Period Month Lag1 Quarter Lag2
YoY Seq YoY Seq YoY Seq
S&P 500 38.6% 8.2% 44.7% 9.5% 53.7% 5.8%
MSCI EAFE Local 24.3% 4.0% 29.5% 7.9% 33.7% 6.9%
1 month Libor (Avg) (25) bps (2) bps
3 month Libor (Avg) (45) bps (5) bps
EUR / USD (5.3)% (0.9%)
GBP / USD (10.6)% (0.1)%
1 Month Lag YoY represents the average month-ends of Mar. 2021 – May 2021 vs. Mar. 2020 – May 2020. Month Lag Seq represents the average month-ends of Mar. 2021 – May
2021 vs. Dec. 2020 – Feb. 2021.
2 Quarter Lag YoY represents quarter-end Mar. 2021 vs. Mar. 2020. Quarter Lag Seq represents quarter-end Mar. 2021 vs. Dec. 2020.
northerntrust.com | © 2021 Northern Trust 2SUMMARY RESULTS & KEY METRICS
$ in millions (except EPS and as noted)
% Change Vs.
2Q 2021 2Q 2020 1Q 2021
Revenue (FTE1) $1,588.6 5% -%
Noninterest Expense 1,120.8 8% -%
Provision for Credit Losses (27.0) N/M N/M
Net Income $368.1 18% (2)%
Diluted Earnings per Share $1.72 18% 1%
Return on Average Common Equity2 13.7% 12.2% 13.7%
Pre-Tax Margin1,2 31.1% 27.1% 31.6%
Expense to Trust Fee Ratio2 104% 108% 105%
Assets under Custody / Administration3 (in billions) $15,727 +30% +6%
Assets under Custody3 (in billions) $12,229 +32% +6%
Global Custody Assets3 (in billions) $8,063 +38% +7%
Assets under Management3 (in billions) $1,539 +22% +6%
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 10.
2 Actual numbers for all periods, not % change.
3 Client assets for the current quarter are considered preliminary until the Form 10-Q is filed with the Securities and Exchange Commission.
N/M - Not meaningful northerntrust.com | © 2021 Northern Trust 3TOTAL REVENUE
$ in millions
Total Revenue (FTE1)
+5%
0%
$1,590 $1,589
Trust, Investment and Other
$1,514 $1,493
$1,533 Servicing Fees were up 12% year-
over-year and 1% sequentially.
$347 $344
$380 $336 $345
Foreign Exchange Trading Income
$101 $99
$91 $93
$79 $71 decreased 1% year-over-year and
$102 $69
$71
$62 10% sequentially.
Other Noninterest Income was
down 3% year-over-year and 2%
$1,075
sequentially.
$1,004 $1,026 $1,064
$961
Net Interest Income (FTE1) was
down 9% year-over-year and 1%
sequentially.
2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 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 10.
2 Other Noninterest Income includes Security Commissions and Trading Income, Treasury Management Fees, Other Operating Income, and Investment Security Gains
(Losses), net northerntrust.com | © 2021 Northern Trust 4TRUST, INVESTMENT & OTHER SERVICING FEES
$ in millions (except as noted) % Change Vs.
Trust, Investment & Other Servicing Fees 2Q 2021 2Q 2020 1Q 2021
C&IS Trust, Investment & Other Servicing Fees were
Custody & Fund Administration $454.9 +21% +2% up 8% year-over-year and down 1% sequentially.
Investment Management 100.7 (22)% (13)% Custody & fund administration fees increased year-over-
year primarily due to favorable markets, new business,
Securities Lending 19.5 (29)% +7% and favorable currency translation. Sequentially, custody
& fund administration fees increased primarily due to
Other 36.4 +6% (10)% favorable markets and new business.
Total Corporate & Institutional Services $611.5 +8% (1)% Investment management fees decreased year-over-year
primarily due to higher money market mutual fund fee
waivers, partially offset by favorable markets.
Central $174.3 +23% +6% Sequentially, investment management fees decreased
primarily due to higher money market mutual fund fee
East 127.2 +22% +7% waivers, partially offset by new business and favorable
markets.
West 93.8 +17% +3%
Securities lending fees decreased year-over-year
Global Family Office 68.6 (1)% (1)% primarily due to lower spreads, partially offset by higher
volumes.
Total Wealth Management $463.9 +17% +5%
Other fees decreased sequentially primarily due to prior
quarter fees associated with seasonal benefit payment
Client Assets1 (in billions): services.
C&IS AUC/A $14,754 +30% +6% Wealth Management Trust, Investment & Other
Servicing Fees were up 17% year-over-year and 5%
C&IS AUC $11,261 +32% +6% sequentially.
Global Custody Assets $8,063 +38% +7% The regions (Central, East and West) increased year-
over-year and sequentially primarily due to favorable
C&IS AUM $1,168 +22% +7% markets and new business, partially offset by higher
money market mutual fund fee waivers.
Securities Lending Collateral $199 +20% (1)%
Money market mutual fund fee waivers totaled $50.0
Wealth Management AUC/A $973 +30% +6% million in C&IS and $29.2 million in Wealth
Wealth Management AUC $968 +29% +6% Management in 2Q 2021.
Wealth Management AUM $371 +22% +4%
1 Client assets for the current quarter are considered preliminary until the Form 10-Q is filed with the Securities and
Exchange Commission. northerntrust.com | © 2021 Northern Trust 5NET INTEREST INCOME
Average Earning Assets
($ in billions)
$140.6 $142.0
$129.4 $131.2 Net Interest Income (FTE1) was down 9% year-
$125.2 over-year and 1% sequentially. Net interest margin
(FTE1) was 0.97%.
Average Earning Assets were up 13% year-over-
year and 1% sequentially.
Average Total Deposits were up 15% year-over-
year and 1% sequentially.
Net Interest Margin decreased 25 basis points
1.22%
versus the prior-year quarter primarily due to lower
1.05% average interest rates. Net Interest Margin
1.03% 1.00% 0.97% decreased 3 basis points versus the prior quarter
primarily due to lower average interest rates,
partially offset by a balance sheet mix shift.
2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021
NII(FTE1) $379.8 $336.5 $345.1 $346.7 $343.9
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 10.
northerntrust.com | © 2021 Northern Trust 6NONINTEREST EXPENSE
$ in millions
Total Noninterest Expense
+8%
0%
$1,151
$1,095 $1,118 $1,121
$1,037 $72
$72 $68 Expenses totaled $1.1 billion in the second
$127 $67 $51 $52 quarter, up 8% year-over-year and flat
$86
$60 $52 $176 $177 $178 sequentially.
$164 $171 The year-over-year growth in expenses was
$208 $196 $218 primarily driven by increases in compensation
$176 $186 and benefits, outside services, and equipment &
software related costs, partially offset by
favorability in other operating expenses and
occupancy.
$627 $622 $605
$551 $559 The sequential expense performance was
primarily driven by increases in outside services
and employee benefits, offset by decreases in
compensation and other operating expenses.
2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021
Compensation & Benefits Occupancy
Outside Services Other
Equipment & Software
Categories may not sum due to rounding.
northerntrust.com | © 2021 Northern Trust 7CAPITAL
Northern Trust Corporation Capital Ratios Capital Return
Advanced Approach Declared $148.1 million in common stock
dividends and $4.7 million in preferred stock
Common Equity Tier 1 13.1% dividends.
Tier 1 14.2% Repurchased $30.2 million of common stock
in 2Q 2021.
Total 15.5%
Tier 1 Leverage 7.1%
Supplementary Leverage 8.2%
Standardized Approach
Common Equity Tier 1 12.0%
Tier 1 13.1%
Total 14.5%
Tier 1 Leverage 7.1%
Stress Capital Buffer requirement of 2.5%;
resulting in minimum Common Equity Tier 1
requirement of 7%.
As of June 30, 2021. Capital ratios for the current quarter are considered preliminary until the Form
10-Q is filed with the Securities and Exchange Commission. northerntrust.com | © 2021 Northern Trust 8Appendix
northerntrust.com | © 2021 Northern Trust 9RECONCILIATION 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
2Q21 1Q21 4Q20 3Q20 2Q20
Reported $ 1,580.3 $ 1,583.4 $ 1,521.9 $ 1,485.1 $ 1,506.1
FTE Adj. $ 8.3 $ 6.6 $ 10.7 $ 7.9 $ 7.7
FTE $ 1,588.6 $ 1,590.0 $ 1,532.6 $ 1,493.0 $ 1,513.8
Net Interest Income
2Q21 1Q21 4Q20 3Q20 2Q20
Reported $ 335.6 $ 340.1 $ 334.4 $ 328.6 $ 372.1
FTE Adj. $ 8.3 $ 6.6 $ 10.7 $ 7.9 $ 7.7
FTE $ 343.9 $ 346.7 $ 345.1 $ 336.5 $ 379.8
NIM - Reported 0.95% 0.98% 1.01% 1.01% 1.20%
NIM - FTE 0.97% 1.00% 1.05% 1.03% 1.22%
Pre-Tax Margin
2Q21 1Q21 2Q20
Revenue - Reported $ 1,580.3 $ 1,583.4 $ 1,506.1
Pre-Tax Income - Reported $ 486.5 $ 495.9 $ 403.2
FTE Adj.* $ 8.3 $ 6.6 $ 7.7
Revenue - FTE $ 1,588.6 $ 1,590.0 $ 1,513.8
Pre-Tax Income - FTE $ 494.8 $ 502.5 $ 410.9
Pre-Tax Margin - Reported 30.8% 31.3% 26.8%
Pre-Tax Margin - FTE 31.1% 31.6% 27.1%
* FTE Adjustment applies to both revenue and pre-tax income
northerntrust.com | © 2021 Northern Trust 10FORWARD-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
Second Quarter 2021 earnings press release, which is available at:
www.northerntrust.com/about-us/investor-relations
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