lehman sept06 presentation - northern trust · 8 lehman brothers 2006 financial services conference...

N O R T H E R N T R U S T C O R P O R A T I O N

Steven L. FradkinExecutive Vice President & Chief Financial Officer

Frederick H. WaddellPresident & Chief Operating Officer; President, C&IS

© 2006 Northern Trust Corporation northerntrust.com

September 12, 2006

Lehman Brothers2006 Financial Services Conference

2 Lehman Brothers 2006 Financial Services Conference

Forward Looking Statement

This presentation may include forward-looking statements such as statements that relate to Northern Trust’s financial goals, dividend policy, expansion and business development plans, anticipated expense levels and projected profit improvements, business prospects and positioning with respect to market, demographic and pricing trends, strategic initiatives, re-engineering and outsourcing activities, new business results and outlook, changes in securities market prices, credit quality including reserve levels, planned capital expenditures and technology spending, anticipated tax benefits and expenses, and the effects of any extraordinary events and various other matters (including developments in litigation and regulation involving Northern Trust and changes in accounting policies, standards and interpretations) on Northern Trust’s business and results. These statements speak of Northern Trust’s plans, goals, strategies, beliefs, and expectations, and refer to estimates or use similar terms. Actual results could differ materially from those indicated by these statements because the realization of those results is subject to many risks and uncertainties. Our 2005 financial annual report and periodic reports to the SEC contain information about specific factors that could cause actual results to differ, and you are urged to read them.


Consistent Strategy for GrowthClient-centric and Highly Focused

Northern TrustGlobal Investments

Asset Servicing

Banking

Corporate &Institutional

ServicesServing institutionalinvestors worldwide

PersonalFinancial Services

Serving affluent private clients in U.S. and Europe

Integrated Operations & Technology Platform

Assets Under Custody

$3.2 Trillion

Assets Under Management

$640 Billion

Bank Assets

$53 Billion

As of June 30, 2006


Trust, Inv. & Other Servicing FeesOther Non-Interest IncomeNet Interest Income

Total RevenuesNon-Interest Expenses

Net IncomeEarnings Per Share

Assets Under CustodyGlobal Custody Assets

Assets Under Management

First Half2006

% Growth2005 to 2006

2006 Results Reflect Excellent Performance

$895 Million$250 Million$390 Million$1.54 Billion$965 Million$331 Million

$1.49

$3.2 Trillion$1.44 Trillion

$640 Billion

+18%+27%+11%+17%+15%+14%+14%

+17%+33%

+9%


$0.6$0.8

$1.1$1.3

$1.5$1.6 $1.7

$1.5

$2.1

$2.6

$2.9

$3.1 $3.2

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 1Q06 2Q06

$106$130

$197$233

$292$326 $320

$303

$479

$572

$618$653 $640

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 1Q06 2Q06

Assets Under Custody($ Trillions)

Assets Under Management($ Billions)

12/31/95 - 6/30/06 CAGR: 17% 12/31/95 - 6/30/06 CAGR: 19%

Outstanding, Long-Term Growth in Client Assets

Acquired $75 BN Index Assets


Strategically Positioned for Growth and Profitability

NTGI TraditionalAsset Management

NTGI Fully Diversified, Global,Multi-Product Asset Manager

One Constant: Our Focus on Our Clients

Broad-based Orientation

From…

Tightly Focused on Core Businesses

To…

Product Orientation –Banking & Trust

Client Orientation – Asset Administration and Asset Management

PFS Chicago Presence PFS National Footprint

C&IS Domestic Business C&IS Global Enterprise


Personal Financial Services

7

Comprehensive, customized and innovative financial solutions for successful individuals, families, and their businesses.


The recognized leader in providing sophisticated financial solutions to high net worth families.Target market: Individuals or families with $75+ million in investable assets

$1 Million $10 Million $75 Million

Delivering high-touch trust, investment management andbanking solutions to individuals through 84 offices in 18 states.Target market: Affluent individuals withat least $1 million in investable assets

Delivering comprehensive, investment solutionsthrough a multi-manager investment program.Target market: Individuals or families with$10 to $75 million in investable assets

Wealth Management

Wealth Advisory

PrivateClient

Client Investable Assets

Personal Financial ServicesIndustry Leader in Serving the Affluent Market

Largest Personal Trust Bank in U.S. .

SOURCE: SNL Financial


Arizona(8)

Florida(25)

Source: IXI, Claritas.

Personal Financial ServicesExtensive Reach in High Growth Target Market

84 Offices in 18 StatesOver 50% of millionaire market resides within a 45-minute drive of Northern Trust offices.

Illinois(18)

1.5

2.2

2005 2010

Projected MillionaireHousehold Growth(Within PFS Footprint, Millions)

Colorado(1)

Nevada(1)

Missouri(1)

Minnesota(1)

Washington(1)

Michigan(3)

Texas(7)

California(11)

New York (1)Connecticut (1)

Delaware (1)Ohio(1)

Georgia(1)

Massachusetts (1)Wisconsin(1)

50%Increase


Private Client Offices Serving the

Affluent Market

Northern Trust 84Mellon 61U.S. Trust 33JP Morgan Private Bank 22 Bernstein 18 Neuberger Berman 14Bessemer Trust 12

Los Altos, CA

New York, NY

Personal Financial ServicesLarge, Exclusively Focused Office Network

Source: Company Websites, June 2006

The Outstanding Private Bank– The Americas Award 2005“The Outstanding Private Bank”

- The Americas Award 2005


Full Service in Local Markets:

Leveraged from Chicago:Financial ConsultingReal Estate ManagementMinerals ManagementFamily Business ManagementSingle Stock Solutions

Investment ResearchInvestment PolicyMarketingCredit PolicyTax Services

Personal Financial ServicesDelivering Comprehensive Solutions … Locally

250+ Trust ProfessionalsComprehensive Trust Services

225+ Portfolio ManagersCustomized Investment Management Solutions

350+ Banking ProfessionalsComplete Array of Private and Commercial Banking Products


Personal Financial ServicesNational Marketing Strategy

Advertising

Client Communications

Educational Eventsand Seminars

Events and Sponsorships

Relationshipswith Centers of

Influence


$23

$65

$82

$101

$114$119 $119

$16

$61

$52

$38

$28

$65

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

$110

$120

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 1Q06 2Q06

Personal Financial ServicesSpotlight: Outstanding Growth in Wealth Management

Target Market: Families with $75+ million in investable assets Industry leading technologyAUC: $119.2 billionAUM: $23.5 billion22% of Forbes 400340 families

Wealth Management – Assets Under Custody$ Billions

12/31/95 to 6/30/06 % Change CAGR

Wealth Mgmt. AUC +644% +21%

S&P 500 +106% +7%

As of June 30, 2006


Personal Financial ServicesServing Our Clients – Growth Initiatives Underway

Client Intimacy

Trusted Advisor Leadership

Relationship Management Initiatives

Thought Leadership

ProductInnovation

Market Expansionand Penetration

New Clients

Existing Clients

New Offices

Client Advisors and Centers of Influence

Investment ManagementOpen ArchitectureReal Estate FundsManager of Manager Funds

Client-Facing TechnologyWealth PassportPrivate Passport


Corporate & Institutional Services

15

Global leader in helping manage the sophisticated financial needs of corporations, public entities, foundations, endowments, insurance companies and investment managers worldwide.


Fund Services

Fund AccountingInvestment OperationsOutsourcingPooling

Hedge Fund AdministrationPrivate Equity AdministrationProperty Administration

Asset ServicingSafekeepingSettlement

Income CollectionCorporate Actions

Information Services

RiskManagement

AssetManagement

CashActivePassiveSecurities Lending

Manager of ManagersForeign ExchangeTransition ManagementCommission Management

AccountingReportingValuation

Attribution AnalysisValue at RiskCross-Border Pension Pooling

Rates of ReturnMultinational HQ Reporting

Compliance MonitoringMarket Event Analytics

Corporate & Institutional ServicesBroad Suite of Products for Institutional Clients


Corporate & Institutional ServicesPositioned Globally for Growth

Chicago(Corporate

Headquarters)

Toronto LondonNew York

Positioned to serve clients locally and capitalize on global opportunities.

LuxembourgAmsterdamIsle of Man

Dublin Guernsey

Jersey

Singapore

Beijing

Tokyo

Bangalore

Hong Kong

Trade Settlementin 90 Markets

15 LocationsWorldwide

Clients in40 Countries


28%

30%

36%

32%

30%

28%

31%

37%

34%

0% 25% 50% 75% 100%

Top 200 US Pension Plans

Top 100 US Corporate Plans

Top 100 US Public Funds

Top 50 US Endowments

Top 50 US Foundations

Top 50 US Healthcare Funds

Top 25 Taft Hartley Plans

UK Local Authority Plans

Top 200 UK Pension Plans

Source: Pensions and Investments 23 January 2006, 26 December 2005, and 30 May 2005; IPE Top 1000 Supplement, September 2005; and S&P Directory of Tax-Exempt Organizations, 2005.

Percent Served by Northern Trust

Corporate & Institutional ServicesStrong Position in Target Institutional Segments


European Pension Fund Custodian of the YearInternational Custody And Fund Administration

3rd Consecutive Year (February 2006)

One of Two Custodians to Qualify In Each RegionR&M Survey (March 2006)

Custodian of the YearGlobal Pensions 2006 Awards (January 2006)

Best Global Custodian – BillionairesGlobal Investor Global Custody Survey (May 2006)

Best Sole CustodianGlobal Investor Global Custody Survey (May 2006)

Best Global Custodian in AsiaGlobal Investor Global Custody Survey (May 2006)

Corporate & Institutional ServicesIndustry Leadership Acknowledged


$108

$471

$727

$965

$1,240

$1,375$1,439

$85

$385$312

$200$149

$452

$0

$250

$500

$750

$1,000

$1,250

$1,500

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 1Q06 2Q06

Corporate & Institutional ServicesSpotlight: Outstanding International Growth

Global Custody Assets$ Billions

12/31/95 to 6/30/06 % Change CAGR

Global Custody Assets +1,593% +31%

S&P 500 +106% +7%

EAFE +61% +5%

15% 15% 15% 18% 23% 26% 30% 35% 38% 41% 46% 48% 49%% of C&IS Total AUC


Corporate & Institutional ServicesServing Our Clients – Growth Initiatives Underway

Product Extension

Fund Services to Pension Clients

Cross-Border Pooling to Investment Managers

Investment Operations Outsourcing to In-house Managers

ProductInnovation

ExpandGeographic Reach

Europe

Asia Pacific

The Middle East

Canada

Cross-Border Pooling

Investment Risk and Analytical Services

Passport Product Suite

Alternative Assets and Securities Servicing


Northern Trust Global Investments

22

Global, multi-asset class investment managerproviding private and institutional clients with comprehensive, value-added investment solutions.


Northern Trust Global InvestmentsWorld Class Investment Manager

$243 Billion(38%)

$107 Bn(17%)

$283 Billion(44%)

$396 Billion(62%)

Active

$212 Billion(33%)

Quantitative

$32 Billion(5%)

Manager of Managers

A Diversified Asset Manager

Across Asset Classes Across Client Segments

$640 BillionAssets Under Management as of June 30, 2006

Equities

FixedIncome

ShortDuration

$517 BillionInstitutional

$123 BillionPersonal

Across Styles

Other$7 Billion

(1%)


Northern Trust Global InvestmentsBroad Array of Proprietary & Open Architecture Capabilities

Active, quantitative and manager of manager businesses provide a unique mix of investment solutions for both personal and institutional clients

EquitiesLarge CapMid CapSmall CapInternationalTax Advantaged

Fixed IncomeCoreInternationalMunicipalsCashEnhanced CashHigh Yield

AlternativesPrivate EquityHedge FundsEmerging MarketsEmerging / Minority

ProprietaryQuantitativeStrategies

Manager ofManager

Strategies

ProprietaryActive

Strategies

Investment Services

Securities LendingTransition Management

Commission ManagementSecurities Brokerage


Northern Trust Global InvestmentsIndustry Has Rewarded Our Efforts

10th Largest Asset Manager WorldwidePensions & Investments (May 2006)

3rd Largest U.S. Institutional Index Manager

P&I (May 2006)

4th Largest Manager U.S. Institutional Tax-exempt Assets

P&I (May 2006)

Winner: U.S. Equity (Passive) Global Investor Magazine -

Awards for Investment Excellence (April 2006)

Winner: Multi-ManagerGlobal Investor Magazine -

Awards for Investment Excellence (April 2006)

Rated #1 Global Securities LenderInternational Securities Finance

(September 2005)


$106$130

$197$233

$292$326 $320 $303

$479

$572$618

$653 $640

$0

$100

$200

$300

$400

$500

$600

$700

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 1Q06 2Q06

Assets Under Management$ Billions

12/31/95 to 6/30/06 CAGR

Northern Trust 19%S&P 500 7%

Northern Trust Global InvestmentsSpotlight: Consistent Growth in Assets Under Management

Acquired $75 BN Index Assets


Northern Trust Global InvestmentsServing Our Clients – Growth Initiatives Underway

Global Distribution

Expanding Through:

Development of Distribution Relationships Outside the U.S.

Increased Presence of Third Party Platforms

Client Intimacy Product Array

Continued Investmentin Products:

Liability Driven Investment Solutions

Investment Program Solutions

Enhanced and Quant Active Strategies

Delivering Client-centricInvestment Solutions:

Personal Investment Solutions

Institutional Investment Solutions


“Northern Trust’s vision of personal financial services is founded onattractive demographics in our targeted market segments. Over the next ten years, the Corporation expects to experience steady growth in these locations and to expand into new markets …”

“During [the next ten year] time frame, Northern Trust’s core businesses are expected to build significant market shares, expand into new geographic locations and attain unrivaled quality in the delivery of our products and services.”

Northern Trust CorporationLooking Back… Positioning for Future Growth

Northern Trust Corporation 1990 Annual Report:

“Our Master Trust and global custody business will grow significantly as clients take advantage of worldwide securities markets which become increasingly more efficient.”


Northern Trust CorporationLooking Ahead… Positioned for Growth in Attractive Markets

84 Offices in 18 States

Within Close Proximity to Over 50% of Target Affluent Market

Ever Expanding Breadth of Products and Services Delivered Locally

35 Offices in 5 States

Offices Followed Clients

Limited Banking and Trust Products

PFS

C&IS

12 Offices Outside the U.S.

49% of C&IS AUC are Global

Leveraging Leading Technology Platform

2 Global Locations

7% of C&IS AUC were Global

Early Development of Technology Platform

$640 Billion in Assets Under Management

Broad Range of Investment Solutions

Client-Focused Delivery

$58 Billion in Assets Under Management

Limited Product Array

1990 Today

NTGI


Steven L. FradkinExecutive Vice President & Chief Financial Officer

Frederick H. WaddellPresident & Chief Operating Officer; President, C&IS

© 2006 Northern Trust Corporation northerntrust.com

September 12, 2006

Lehman Brothers2006 Financial Services Conference

lehman sept06 presentation - northern trust · 8 lehman brothers 2006 financial services conference...

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