Northern Trust : Fourth Quarter 2020 Presentation Slides

Northern Trust Corporation

.Fourth Quarter 2020

Quarterly Earnings Review

.

January 21, 2021

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EXECUTIVE SUMMARY

• Net income of $240.9 million, diluted earnings per common share of $1.12
• Return on average common equity of 8.8%
• The fourth quarter included:
• • $55.0 million pre-taxseverance-related charges (after-tax $41.2 million) in connection with a reduction in force expected to result in annualized run-rate savings of approximately $50 million on a net basis
  • $11.9 million pre-tax occupancy expense (after-tax $8.9 million) related to an early lease exit arising from a workplace real estate strategy
  • $26.8 million of tax expense related to the reversal of tax benefits previously recognized through earnings

Key Macroeconomic Factors
		4Q20 End of Period	Month Lag1	Quarter Lag2
		YoY	Seq	YoY	Seq	YoY	Seq
	S&P 500	16.3%	11.7%	12.0%	3.9%	13.0%	8.5%
	MSCI EAFE Local	(1.4)%	11.1%	(7.1)%	2.1%	(6.9)%	0.6%
	1 month Libor (Avg)	(165) Bps	(2) bps
	3 month Libor (Avg)	(171) bps	(3) bps
	EUR / USD	(8.3)%	(4.2)%
	GBP / USD	(3.1)%	(5.4)%

1. Month Lag YoY represents the average month-ends of Sep. 2020 - Nov. 2020 vs. Sep. 2019 - Nov. 2019. Month Lag Seq represents the average month-ends of Sep. 2020 - Nov. 2020 vs. Jun. 2020 - Aug 2020.
2. Quarter Lag YoY represents quarter-end Sep. 2020 vs. Sep. 2019. Quarter Lag Seq represents quarter-end Sep. 2020 vs. Jun. 2020.

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SUMMARY RESULTS & KEY METRICS

$ in millions (except EPS and as noted)

		% Change Vs.
	4Q 2020	4Q 2019	3Q 2020
Revenue (FTE1)	$1,532.6	(2)%	3%
Noninterest Expense	1,151.0	7%	5%
Provision for Credit Losses	(2.5)	N/M	N/M
Net Income	$240.9	(35)%	(18)%
Diluted Earnings per Share	$1.12	(34)%	(15)%
Return on Average Common Equity2	8.8%	14.8%	10.5%
Pre-Tax Margin1,2	25.1%	31.2%	26.6%
Expense to Trust Fee Ratio2	112%	108%	109%
Assets under Custody / Administration3 (in billions)	$14,533	+21%	+11%
Assets under Custody3 (in billions)	$11,263	+22%	+11%
Global Custody Assets3 (in billions)	$7,425	+26%	+14%
Assets under Management3 (in billions)	$1,405	+14%	+7%

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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TOTAL REVENUE

$ in millions

Total Revenue (FTE1)

			(2)%
$1,557	$1,596				+3%
$1,514	$1,493
$430	$416	$380	$336
$70	$87	$102	$91
$65	$89	$71	$62

$992 $1,004 $961 $1,004

$1,533

$345

$93 $69

$1,026

• Trust, Investment and Other Servicing Fees were up 3% year- over-year and 2% sequentially.
• Foreign Exchange Trading Income increased 6% year-over-year and 11% sequentially.
• Other Noninterest Income was up 32% year-over-year and 2% sequentially.
• Net Interest Income (FTE1) was down 20% year-over-year and up 3% sequentially.

4Q 2019	1Q 2020	2Q 2020	3Q 2020	4Q 2020
			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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