Northern Trust shares fell as much as 6% after the bank’s management dismissed recent reports of takeover talks and said it doesn’t intend to sell the company https://t.co/lBj8lNaetI ...

Core Insights - Northern Trust Corporation reported a net income of $421 million for Q2 2025, with earnings per share (EPS) of $2.13, reflecting a 20% increase excluding prior-year notables [4][40] - The company raised its return on average common equity (ROE) target to a range of 13%-15% from the previous 10%-15% [5][11] - Total revenue increased by 8% year over year, with favorable currency movements contributing approximately 90 basis points to revenue growth compared to the prior year [5][41] Financial Performance - Net interest income reached a record $615 million, up 7% sequentially and 16% year over year, although $10 million of this was attributed to nonrecurring FX swap activity [8][13] - Total expenses rose by 4.8% year over year, marking the lowest expense growth rate in the past six quarters when excluding notable items [6][52] - The asset servicing pretax margin increased over 10 points to 23.2%, with a 29% increase in pretax profit when excluding prior-year notables [6][47] Shareholder Returns - The company returned $486 million to shareholders, with a payout ratio of 117% and a board-approved 7% increase in the quarterly dividend [7][53] - Average deposits were $122 billion, up 6% sequentially, with interest-bearing deposits increasing by 7% [8][51] Growth Initiatives - The company reported approximately $2.5 billion raised in alternatives in the first half of 2025, with an additional $1 billion in advisory, reflecting a 66% year-over-year increase in alternatives advisory assets under advisement [9][25] - Northern Trust plans to launch 11 new fixed income ETFs in Q3 2025 to meet client demand for scalable exposures [10][31] - The firm is investing in new talent and leadership within Wealth Management to strengthen client coverage and accelerate new business generation [14][29] Strategic Focus - The "One Northern Trust" strategy emphasizes integration and momentum across its business segments, particularly in alternatives [11][20] - The company aims to centralize and automate core operational processes, leveraging AI and public blockchains to enhance client experience and internal productivity [16][22] - Management reaffirmed the company's commitment to independence, stating they have never entertained discussions regarding a sale [12][39]

Core Insights - Northern Trust Corporation (NTRS) reported $2 billion in revenue for Q2 2025, a year-over-year decline of 26.4%, while EPS increased to $2.13 from $1.78 a year ago, exceeding consensus estimates [1] - The revenue surpassed the Zacks Consensus Estimate of $1.97 billion, resulting in a surprise of +1.19%, and the EPS also showed a surprise of +2.4% against the consensus estimate of $2.08 [1] Financial Performance Metrics - Tier 1 Leverage Ratio was reported at 7.6%, slightly below the estimated 7.8% [4] - Net interest margin (FTE) remained stable at 1.7%, matching the average estimate [4] - Average Balance of Total earning assets was $145.82 billion, exceeding the estimated $139.18 billion [4] - Nonaccrual Loans and Leases amounted to $92.8 million, higher than the average estimate of $59.16 million [4] - Wealth Management Trust, Investment and Other Servicing Fees for Global Family Office reached $104.5 million, a +5.8% change year-over-year, slightly above the estimate of $104.02 million [4] - Total Wealth Management Trust, Investment and Other Servicing Fees were $539.3 million, reflecting a +4.6% year-over-year change, below the estimate of $548.23 million [4] - Asset Servicing Trust, Investment and Other Servicing Fees for Custody and Fund Administration were $469.2 million, a +5.2% change year-over-year, above the estimate of $464.2 million [4] - Total Asset Servicing Trust, Investment and Other Servicing Fees were reported at $691.8 million, a +6.3% year-over-year change, slightly above the estimate of $687.8 million [4] - Securities Lending fees were $20.2 million, a +22.4% year-over-year change, below the estimate of $21.34 million [4] - Other Asset Servicing Trust fees were $45.1 million, a +6.1% change year-over-year, below the estimate of $46.28 million [4] - Investment Management fees were $157.3 million, a +8% year-over-year change, slightly above the estimate of $156 million [4] - Net Interest Income (FTE Adjusted) was $615.2 million, exceeding the average estimate of $580.77 million [4] Stock Performance - Northern Trust shares returned +7.1% over the past month, outperforming the Zacks S&P 500 composite's +5.9% change [3] - The stock currently holds a Zacks Rank 1 (Strong Buy), indicating potential for outperformance in the near term [3]

Financial Data and Key Metrics Changes - The company reported a net income of $421 million and earnings per share of $2.13, with a return on average common equity of 14.2% [29] - Revenue grew by 8% year-over-year, while expenses increased by 4.8%, resulting in a pretax margin improvement of 160 basis points [32] - Net interest income reached a record $615 million, up 7% sequentially and 16% year-over-year [30][39] Business Line Data and Key Metrics Changes - Asset Servicing fees totaled $692 million, reflecting a 6% increase year-over-year, with assets under custody and administration up 9% [34] - Wealth Management assets under management were $469 billion, up 12% year-over-year, with trust investment and other servicing fees increasing by 5% [36] - The Asset Servicing pretax profit nearly doubled year-over-year, with a pretax margin up more than 10 points to 23.2% [35] Market Data and Key Metrics Changes - The company’s assets under custody and administration were up 7% sequentially and 9% year-over-year [31] - Average deposits grew by 7% sequentially, contributing to the increase in net interest income [39] - The company reported strong transaction volumes in capital markets activities, which were up double digits over the prior year [33] Company Strategy and Development Direction - The "One Northern Trust" strategy focuses on optimizing growth, driving productivity, and strengthening resiliency while managing risk [10][11] - The company is expanding its alternatives investment platform and enhancing its wealth management offerings to meet evolving client needs [12][19] - Investments in AI tools are being accelerated to streamline processes and enhance decision-making [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving double-digit annual earnings per share growth and higher return on equity targets [26][27] - The company is committed to remaining independent and believes this strategy will provide the best returns for shareholders [27][70] - Management anticipates continued organic growth and improved margins, supported by a solid balance sheet [26][29] Other Important Information - The company returned $486 million to shareholders through dividends and share repurchases, reflecting a payout ratio of 117% [42] - The common equity Tier one ratio was reported at 12.2%, with capital levels remaining strong [41] - The company expects total operating expense growth to be below 5% for the full year [43] Q&A Session Summary Question: Inquiry about alternatives and fixed income ETFs - Management characterized the initiatives in alternatives as driven by client demand, with $2.5 billion raised in the first half of the year [51] - The upcoming fixed income ETFs are designed to meet specific client needs, including municipal securities and fixed income ladders [54] Question: Clarification on ROE target adjustment - The ROE target was adjusted to 13% to 15% due to consistent performance above the previous range and improved market conditions [61][62] Question: Discussion on mergers and acquisitions - Management emphasized a focus on organic growth but remains open to acquisitions that enhance the value proposition if they align strategically [70] Question: Considerations for buybacks - Buybacks are evaluated based on regulatory capital, earnings power, and overall financial health, not solely on stock price [74] Question: Scale and custody business - Management highlighted that scale does not necessarily equate to size, focusing on specific sectors and technology to achieve scale [83][84]

Financial Data and Key Metrics Changes - The company reported second quarter net income of $421 million and earnings per share of $2.13, with a return on average common equity of 14.2% [28] - Revenue grew by 8% year over year, while expenses increased by 4.8%, resulting in a pretax margin improvement of 160 basis points [31] - Net interest income reached a record $615 million, up 7% sequentially and 16% year over year [29][37] Business Line Data and Key Metrics Changes - The Asset Servicing business saw assets under custody and administration increase to $16.9 trillion, reflecting a 9% year-over-year increase [32] - Wealth Management assets under management rose to $469 billion, up 12% year over year, with trust investment and other servicing fees increasing by 5% [35] - The Asset Servicing pretax profit nearly doubled year over year, with a pretax margin up more than 10 points to 23.2% [34] Market Data and Key Metrics Changes - The company noted strong transaction volumes in capital markets activities, which were up double digits over the prior year [32] - Average deposits grew by 7% sequentially, contributing to the overall increase in net interest income [33][37] - The company experienced a favorable impact from currency movements on revenue growth, contributing approximately 90 basis points [29] Company Strategy and Development Direction - The "One Northern Trust" strategy focuses on optimizing growth, driving productivity, and strengthening resiliency while managing risk [6][8] - The company is leveraging AI tools to streamline processes and enhance decision-making, aiming for higher margins and better client experiences [9] - The firm is expanding its alternatives investment platform and has seen a record fundraising year, indicating a strong focus on private markets [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's trajectory, adjusting the return on equity target from 10-15% to 13-15% [25][26] - The company is committed to maintaining independence and believes this strategy will yield the best returns for shareholders [26][66] - Management highlighted the importance of executing their strategy effectively to continue delivering positive organic growth and operating leverage [28][31] Other Important Information - The company returned $486 million to shareholders through dividends and stock repurchases, reflecting a payout ratio of 117% [40] - The average earning assets increased by 6% on a linked quarter basis, driven by higher deposit levels [37] - The company is focused on maintaining a disciplined approach to cost management while investing in growth initiatives [21][24] Q&A Session Summary Question: Can you provide numbers on the alternatives initiatives and the new fixed income ETFs? - Management indicated that the alternatives initiatives raised approximately $2.5 billion in the first half, with an additional $1 billion from advisory services, highlighting strong client demand for private markets [49] Question: What is driving the decision to tighten the ROE range? - The tightening of the ROE range reflects the company's consistent performance above the previous target and confidence in the current capital framework [57][59] Question: Is there any scenario where M&A would make sense for the company? - Management emphasized a focus on organic growth but remains open to acquisitions that enhance their value proposition if they align with strategic goals [66][68] Question: How does the company plan to manage NII in a declining interest rate environment? - The company plans to reinvest securities rolling off its balance sheet and is focused on deposit pricing across various currencies to mitigate the impact of lower interest rates [97]

Core Viewpoint - Northern Trust Corporation (NTRS) reported quarterly earnings of $2.13 per share, exceeding the Zacks Consensus Estimate of $2.08 per share, and showing an increase from $1.78 per share a year ago, indicating a positive earnings surprise of +2.40% [1] Financial Performance - The company achieved revenues of $2 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.19%, although this is a decrease from year-ago revenues of $2.72 billion [2] - Over the last four quarters, Northern Trust has consistently surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Stock Performance - Northern Trust shares have increased approximately 23.4% since the beginning of the year, significantly outperforming the S&P 500's gain of 7.3% [3] - The stock currently holds a Zacks Rank 1 (Strong Buy), indicating expectations for continued outperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.15 on revenues of $2 billion, while the estimate for the current fiscal year is $8.26 on revenues of $7.91 billion [7] - The trend of estimate revisions for Northern Trust was favorable ahead of the earnings release, suggesting potential for positive stock movement [6] Industry Context - The Banks - Major Regional industry, to which Northern Trust belongs, is currently ranked in the top 11% of over 250 Zacks industries, indicating a strong industry outlook [8]

Financial Performance - Revenue reached $20026 million, a decrease of 26% compared to the second quarter of 2024[22] - Net income was $4213 million, down 53% from the same period last year[22] - Diluted earnings per share were $213, a decrease of 51% compared to the second quarter of 2024[22] - Assets under Custody/Administration (AUC/A) increased to $180683 trillion, a 9% increase year-over-year[22] - Assets Under Management (AUM) reached $16977 trillion, an 11% increase compared to the second quarter of 2024[22] - Expense to Trust Fee Ratio was 115%[22] Business Segment Highlights - Asset Servicing AUC/A reached $168649 trillion, a 9% increase year-over-year[29] - Wealth Management AUC/A was $12034 trillion, a 10% increase compared to the second quarter of 2024[33] - Asset Management AUM totaled $17 trillion[4, 11] Strategic Initiatives - The company aims for total expense growth of less than 5% in 2025[19] - Wealth Management saw international market revenue increase by over 20%, comprising approximately 15% of total Global Family Office revenue[9] - Asset Management reported fundraising up 60% compared to fiscal year 2024[11]

Financial Performance - Net income for Q2 2025 was $421.3 million, showing a 7.4% increase from Q1 2025[4] - Basic earnings per share (EPS) for Q2 2025 was $2.14, compared to $2.27 in Q1 2025, reflecting a decrease of 5.7%[4] - Return on average common equity for Q2 2025 was 14.2%, up from 13.0% in Q1 2025[4] - Total revenue for the first half of 2025 was $2,759.3 million, a decrease of 17% compared to $3,311.3 million in 2024[6] - Net income for the second quarter of 2025 was $813.3 million, down 27% from $1,110.8 million in the same period of 2024[6] - Earnings per share (EPS) for the second quarter of 2025 were $4.05, a decline of 24% compared to $5.30 in 2024[6] - Total noninterest income decreased by 37% to $1,387.4 million in the second quarter of 2025 from $2,192.6 million in 2024[6] - Total revenue (FTE) for 2023 was $6,831.0 million, an increase from $6,806.8 million in 2022, with a projected growth to $8,322.2 million in 2024[8] - Net Income for 2023 was $1,107.3 million, compared to $1,336.0 million in 2022, with an expected increase to $2,031.1 million in 2024[8] - Earnings Per Share - Basic for 2023 was $5.09, with a forecasted rise to $9.80 in 2024[8] Revenue and Income Composition - Noninterest income as a percentage of total revenue was 70.5% in Q2 2025, compared to 70.8% in Q1 2025[4] - Trust fees as a percentage of total revenue were 61.5% in Q2 2025, down from 62.4% in Q1 2025[4] - The profit margin (pre-tax) for 2023 was 21.1%, down from 26.7% in 2022[10] - Income before income taxes for 2023 was $871.0 million, compared to $1,083.2 million in 2022, reflecting a decrease of approximately 19.6%[10] - The average profit margin for wealth management in 2023 was 37.8%, down from 39.7% in 2022[10] Expenses and Costs - Total noninterest expense for the second quarter of 2025 was $1,416.6 million, an 8% decrease from $1,533.9 million in 2024[6] - Compensation expenses for the first half of 2025 were $1,259.2 million, a 3% decrease from $1,292.3 million in 2024[6] - Total Noninterest Expense for 2023 was $5,284.2 million, an increase from $4,982.9 million in 2022, with a forecast of $5,633.9 million in 2024[8] Assets and Liabilities - Total assets for 2023 were reported at $2,461.9 million, a slight decrease from $2,496.3 million in 2022[10] - Total liabilities increased to $137,658.1 million in 2023 from $131,152.4 million in 2022, reflecting a growth of approximately 4.3%[15] - Total stockholders' equity reached $12,604.0 million in 2023, up from $11,496.8 million in 2022, indicating a growth of about 9.7%[15] - Total earning assets for 2023 were $145,822.0 million, an increase from $138,007.9 million in 2022, representing a growth of about 5.5%[15] Credit and Loans - Provision for credit losses was $17.5 million in the second quarter of 2025, compared to a negative provision of $(0.5) million in 2024[6] - Average loans for 2023 were $6,272.6 million, a decrease from $7,208.0 million in 2022[10] - The allowance for credit losses was reported at $(174.9) million for 2023, compared to $(172.8) million in 2022, indicating a slight increase in provisions[15] Market and Growth Strategies - The company plans to expand its market presence by entering new geographic regions, targeting a growth rate of AA% in the upcoming fiscal year[16] - Northern Trust Corporation has invested in new technology initiatives, allocating $BB million towards digital transformation projects aimed at enhancing customer experience[16] - The firm anticipates a revenue increase of CC% for the next quarter, driven by strong demand in its wealth management segment[16] - The company expects continued growth in total assets under management, projecting an increase to $1,697.7 billion by Q4 2024[25] Interest Income and Rates - Net Interest Income (FTE Adjusted) is a non-GAAP financial measure, with a net interest margin of 7.29% for 2024, up from 5.64% in 2023[20] - The average interest rate on Loans and Leases was 6.34% in Q1 2024, compared to 5.97% in Q4 2023[21] - The net interest margin for Q4 2023 was 1.71%, an increase from 1.68% in Q3 2023[21] Digital Engagement and User Metrics - Northern Trust Corporation reported an increase in user data engagement, with a YY% rise in active users on its digital platforms[16]

Analyst’s Disclosure:I/we have a beneficial long position in the shares of NTRS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Nothing contained in this message is an offer or solicitation to buy or sell any security/investment, and is for informational purposes only. T ...

Core Viewpoint - Analysts expect Northern Trust Corporation (NTRS) to report quarterly earnings of $2.08 per share, reflecting a year-over-year increase of 16.9%, while revenues are projected to decline by 27% to $1.98 billion [1] Earnings Estimates - Over the last 30 days, the consensus EPS estimate has been revised upward by 4.6%, indicating a collective reassessment by analysts [2] - Revisions to earnings projections are crucial for predicting investor behavior and are linked to short-term stock price performance [3] Revenue and Key Metrics Projections - Analysts project 'Wealth Management Trust, Investment and Other Servicing Fees- Global Family Office' to reach $104.02 million, a 5.3% increase year-over-year [5] - The total estimate for 'Wealth Management Trust, Investment and Other Servicing Fees' is $548.23 million, reflecting a 6.4% increase from the previous year [5] - 'Asset Servicing Trust, Investment and Other Servicing Fees- Custody and Fund Administration' is expected to be $464.20 million, up 4.1% year-over-year [6] - The total for 'Asset Servicing Trust, Investment and Other Servicing Fees' is projected at $687.80 million, indicating a 5.7% increase [6] - 'Asset Servicing Trust, Investment and Other Servicing Fees- Securities Lending' is estimated at $21.34 million, a significant increase of 29.3% year-over-year [7] - 'Asset Servicing Trust, Investment and Other Servicing Fees- Investment Management' is forecasted to reach $156.00 million, reflecting a 7.1% increase [8] Financial Ratios and Income Estimates - The 'Tier 1 Leverage Ratio' is expected to be 7.8%, down from 8.0% a year ago [8] - 'Average Balance-Total earning assets' is projected at $139.18 billion, compared to $135.40 billion in the previous year [8] - The consensus estimate for 'Nonaccrual Loans and Leases' stands at $59.16 million, up from $38.50 million year-over-year [9] - 'Net Interest Income - FTE Adjusted' is expected to be $580.77 million, compared to $529.80 million in the same quarter last year [9] - 'Total Noninterest Income' is projected to reach $1.40 billion, down from $2.19 billion in the same quarter of the previous year [10] Stock Performance - Over the past month, Northern Trust shares have increased by 14.4%, outperforming the Zacks S&P 500 composite's 5.4% change [11] - Based on its Zacks Rank 1 (Strong Buy), NTRS is expected to outperform the overall market in the upcoming period [11]