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Core Insights - Northern Trust Corporation (NASDAQ: NTRS) has seen its shares increase by over 30% this year, driven by strong performance in custody and trust banking, supported by elevated markets and interest rates [1] Company Performance - The company has delivered strong results, which have contributed to its stock price appreciation [1] Market Context - The performance of Northern Trust is linked to favorable market conditions, including high market levels and interest rates [1]

Core Insights - Northern Trust Corporation (NASDAQ: NTRS) has seen its shares increase by over 30% this year, driven by strong performance in custody and trust banking, supported by elevated markets and interest rates [1] Company Performance - The company has delivered strong results, which have contributed to its stock performance [1] Market Context - The rise in Northern Trust's stock is attributed to favorable market conditions and higher interest rates [1]

Core Insights - Northern Trust Corporation (NTRS) reported revenue of $2.03 billion for the quarter ended September 2025, reflecting a year-over-year increase of 2.9% [1] - Earnings per share (EPS) for the quarter was $2.29, up from $1.96 in the same quarter last year, indicating a positive growth trend [1] - The reported revenue was slightly below the Zacks Consensus Estimate of $2.04 billion, resulting in a revenue surprise of -0.76%, while the EPS exceeded the consensus estimate of $2.26 by 1.33% [1] Financial Metrics - Tier 1 Leverage Ratio stood at 8%, surpassing the average estimate of 7.6% from four analysts [4] - Net interest margin (FTE) was reported at 1.7%, matching the average estimate from four analysts [4] - Average balance of total earning assets was $159.08 billion, exceeding the estimate of $143.48 billion from three analysts [4] - Nonaccrual loans and leases amounted to $78.8 million, higher than the estimated $63.84 million from two analysts [4] Wealth Management and Asset Servicing Fees - Wealth Management Trust, Investment and Other Servicing Fees for Global Family Office totaled $101.5 million, below the estimate of $109.98 million, with a year-over-year change of +0.7% [4] - Total Wealth Management Trust, Investment and Other Servicing Fees reached $558.6 million, compared to the estimate of $569.7 million, reflecting a year-over-year increase of +5.5% [4] - Asset Servicing Trust, Investment and Other Servicing Fees for Custody and Fund Administration was $482.7 million, slightly below the estimate of $493.16 million, with a year-over-year change of +6.5% [4] - Total Asset Servicing Trust, Investment and Other Servicing Fees amounted to $706.9 million, compared to the estimate of $726.04 million, showing a year-over-year increase of +6% [4] - Securities Lending fees were reported at $21.2 million, exceeding the estimate of $20.96 million, with a year-over-year change of +21.1% [4] - Other Asset Servicing Trust fees were $43.4 million, slightly below the estimate of $44.65 million, reflecting a year-over-year change of -1.1% [4] - Investment Management fees were $159.6 million, compared to the estimate of $167.27 million, indicating a year-over-year increase of +4.6% [4] - Net Interest Income (FTE Adjusted) was reported at $596.3 million, slightly below the average estimate of $599.04 million from four analysts [4] Stock Performance - Northern Trust shares have returned -1.5% over the past month, contrasting with the Zacks S&P 500 composite's +1.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - The company reported third quarter net income of USD 458 million and earnings per share of USD 2.29, with a return on average common equity of 14.8% [17] - Revenue increased by 6% year-over-year, while expenses rose by 4.7%, resulting in a pre-tax margin expansion of 200 basis points [19][25] - Year-to-date, the company returned 110% of earnings to shareholders, contributing to a 5% decrease in shares outstanding [5][25] Business Line Data and Key Metrics Changes - **Wealth Management**: Assets under management increased to USD 493 billion, up 11% year-over-year, with trust investment and other servicing fees rising to USD 559 million, a 5% increase [20] - **Asset Management**: The company launched 11 new ETF strategies, with liquidity remaining strong, reporting 11 consecutive quarters of positive flows [11][21] - **Asset Servicing**: Assets under custody and administration reached USD 17 trillion, reflecting a 4% year-over-year increase, with asset servicing fees totaling USD 707 million, a 6% increase [21][22] Market Data and Key Metrics Changes - The company experienced a 1% sequential increase in assets under custody and administration and a 5% year-over-year increase [18] - Average deposits were USD 116.7 billion, down 5% compared to the second quarter, reflecting typical seasonal patterns [24] Company Strategy and Development Direction - The company is focused on its "One Northern Trust" strategy, emphasizing organic growth and operational efficiency through AI and a client-centric operating model [5][8] - The Enterprise Growth Program is driving improvements in organic growth, particularly in private markets, with a focus on high-value client segments [6][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver strong financial performance despite potential economic challenges, emphasizing a disciplined execution of strategy [15][16] - The company anticipates continued growth in net interest income and expects operating expense growth to remain below 5% for the full year [26] Other Important Information - The company has embedded AI in over 150 use cases, enhancing efficiency and client service across various business lines [7][8] - The company is exploring opportunities in digital assets and tokenization, with a focus on enhancing operational efficiency and scalability [79] Q&A Session Summary Question: NII outlook and deposit trends - Management indicated that deposits performed in line with expectations and anticipated a slight pickup in Q4, with NII expected to grow mid to high single digits [31][32] Question: Challenges at the investment product level - Management noted pressure on index products due to asset allocation and pricing, and emphasized a focus on improving product performance and pricing [34][35] Question: AUCA growth and outflows - Management explained that AUCA growth was driven by specific clients, and outflows were due to restructuring rather than client losses [40][41] Question: Expense growth and operating leverage - Management reaffirmed commitment to keeping expense growth below 5% and highlighted ongoing efforts to improve productivity and efficiency [42][44] Question: Focus on profitability versus growth - Management confirmed a focus on profitability, allowing low-margin business to roll off while seeking accretive margins on new business [48][49] Question: AI's impact across business lines - Management stated that AI is enhancing efficiency across all areas, with specific applications in operations, technology, and client service [74][76] Question: Digital assets and stablecoin strategy - Management discussed the importance of innovation and regulation in the digital asset space, indicating a focus on tokenization rather than issuing a stablecoin [79][80]

Financial Data and Key Metrics Changes - The company reported third quarter net income of $458 million and earnings per share of $2.29, with a return on average common equity of 14.8% [17] - Revenue increased by 6% year-over-year, while expenses rose by 4.7%, resulting in a pre-tax margin expansion of 200 basis points [19][25] - Year-to-date, the company returned 110% of earnings to shareholders, contributing to a 5% decrease in shares outstanding [5][25] Business Line Data and Key Metrics Changes - **Wealth Management**: Assets under management increased to $493 billion, up 11% year-over-year, with trust investment and other servicing fees rising 5% [20] - **Asset Management**: The business launched 11 new ETF strategies, with liquidity remaining strong, reporting its 11th consecutive quarter of positive flows [11][22] - **Asset Servicing**: Assets under custody and administration reached $17 trillion, reflecting a 4% year-over-year increase, with asset servicing fees totaling $707 million, up 6% [21][22] Market Data and Key Metrics Changes - The company experienced a 1% sequential increase in assets under custody and administration, and a 5% year-over-year increase [18] - The effective tax rate was 26.1%, up 70 basis points from the prior period due to higher tax impacts from international operations [19] Company Strategy and Development Direction - The company is focused on its "One Northern Trust" strategy, emphasizing organic growth and operational efficiency, particularly through AI integration across various business lines [5][8] - The Enterprise Growth Program is enhancing organic growth, especially in private markets, with a client-centric operating model yielding productivity gains [6][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver strong financial performance despite potential economic fluctuations, emphasizing a disciplined execution of strategy [15][16] - The company anticipates continued growth in net interest income and expects operating expense growth to remain below 5% for the full year [26] Other Important Information - The company has embedded AI in over 150 use cases, significantly improving efficiency and client service [7][8] - The company is exploring opportunities in digital assets and tokenization, focusing on enhancing its capabilities in these areas [79] Q&A Session Summary Question: NII outlook and deposit trends - Management indicated that deposits performed in line with expectations and projected a slight increase in Q4 deposits, with NII expected to grow mid to high single digits [31][32] Question: Challenges at the investment product level - Management noted pressure on index products due to asset allocation and pricing, and emphasized a focus on improving product performance and expanding alternative offerings [34][35] Question: AUCA growth and outflows - Management explained that AUCA growth was driven by specific clients, and outflows were due to restructuring rather than client losses [40][41] Question: Expense growth and operating leverage - Management reaffirmed commitment to keeping expense growth below 5% and highlighted ongoing efforts to improve operational efficiency [42][44] Question: AI's impact across business lines - Management stated that AI is enhancing efficiency across all areas, with specific applications in operations, technology, and client service [75][76] Question: Digital assets and stablecoin strategy - Management discussed the importance of innovation and regulation in the digital asset space, indicating a focus on tokenization rather than issuing a stablecoin [79][80]

Financial Data and Key Metrics Changes - In Q3 2025, the company reported net income of $458 million and earnings per share of $2.29, with a return on average common equity of 14.8% [15] - Revenue increased by 6% year-over-year, while expenses rose by 4.7%, leading to a pre-tax margin expansion of 200 basis points [17] - The company returned nearly 100% of its earnings to shareholders, contributing to a 5% decrease in shares outstanding [4][24] Business Line Data and Key Metrics Changes - Wealth Management assets under management reached $493 billion, up 11% year-over-year, with trust investment and servicing fees increasing by 5% [18] - Asset Servicing assets under custody and administration grew to $17 trillion, reflecting a 4% year-over-year increase, with Asset Servicing fees totaling $707 million, up 6% [19][20] - Asset Management launched 11 new ETF strategies, with liquidity remaining a standout area, reporting its 11th consecutive quarter of positive flows [10][12] Market Data and Key Metrics Changes - The company experienced a 1% sequential increase in assets under custody and administration and a 4% increase in assets under management compared to the previous year [16] - Average deposits were $116.7 billion, down 5% compared to the second quarter, reflecting typical seasonal patterns [23] - The effective tax rate was 26.1%, up 70 basis points from the prior period due to higher tax impacts from international operations [17] Company Strategy and Development Direction - The company is focused on its "One Northern Trust" strategy, emphasizing organic growth and operational efficiency through AI and a client-centric operating model [4][5] - The Enterprise Growth Program is driving improvements in organic growth, particularly in private markets, with a focus on enhancing productivity and efficiency [5][6] - The company aims to deliver consistent financial performance and create enduring value for stakeholders, regardless of the broader economic environment [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate challenges in the investment product level and emphasized a focus on profitability over top-line growth [31][44] - The company anticipates continued gradual improvement in margins and overall growth, with a disciplined approach to managing expenses [13][40] - Looking ahead, management expects operating expense growth to remain below 5% for the full year and mid to high single-digit growth in net interest income [25] Other Important Information - The company has embedded AI in over 150 use cases, enhancing efficiency and client service across various business lines [6][67] - The introduction of a feeder fund structure by 50 South Capital provides Wealth clients direct access to top-tier alternative managers, reflecting ongoing innovation in investment offerings [9][78] - The company received recognition as the Best Administrator Overall Service Award and Custodian of the Year, validating its leadership in the industry [12] Q&A Session Summary Question: NII outlook and deposit trends - Management indicated that deposits performed in line with expectations and anticipated a slight pickup in Q4, with NII growth projected to be mid to high single digits [27][30] Question: Challenges at the investment product level - Management noted pressure on index products due to asset allocation and pricing, and emphasized a focus on improving product performance and pricing [31][32] Question: AUCA growth and outflows - Management explained that AUCA growth was driven by individual clients, with some outflows attributed to restructuring rather than client losses [35][36] Question: Expense growth and operating leverage - Management reaffirmed commitment to keeping expense growth below 5% and highlighted ongoing efforts to improve productivity and efficiency [39][40] Question: AI's impact across business lines - Management stated that AI is enhancing efficiency across all areas of the company, with specific applications in operations, technology, and client service [63][68] Question: Stablecoin and digital assets strategy - Management discussed the focus on tokenization rather than issuing a stablecoin, emphasizing the importance of interoperability and client demand in the digital asset space [70][71]

Financial Data and Key Metrics Changes - The company reported a third quarter net income of $458 million and earnings per share of $2.29, with a return on average common equity of 14.8% [20] - Revenue increased by 6% year-over-year, while expenses rose by 4.7%, leading to a pre-tax margin expansion of 200 basis points [25][24] - The company returned nearly 100% of its earnings to shareholders, contributing to a 5% decrease in shares outstanding [6][20] Business Line Data and Key Metrics Changes - Wealth Management assets under management reached $493 billion, up 11% year-over-year, with trust investment and other servicing fees increasing by 5% [25] - Asset Servicing assets under custody and administration grew to $17 trillion, reflecting a 4% year-over-year increase, with asset servicing fees totaling $700 million, up 6% [29] - The Asset Management segment launched 11 new ETF strategies, with positive flows in ETFs and custom SMAs [12][29] Market Data and Key Metrics Changes - The company experienced a 1% sequential increase in assets under custody and administration, and a 4% sequential increase in assets under management [22][23] - The effective tax rate was 26.1%, up 70 basis points from the prior period due to higher tax impacts from international operations [24] Company Strategy and Development Direction - The company is focused on its "One Northern Trust" strategy, emphasizing organic growth and operational efficiency through AI and a client-centric operating model [5][6] - There is a strong emphasis on expanding alternative investment offerings and enhancing the wealth management value proposition [10][12] - The company aims to improve profitability in its Asset Servicing business by allowing non-core and underperforming business to roll off as contracts expire [16][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver strong financial performance despite potential economic challenges, highlighting a disciplined execution of strategy [18] - The company anticipates continued gradual improvement in margins and overall growth, with a focus on maintaining operating expense growth below 5% [35][60] - Management noted that AI is becoming a significant driver of innovation and efficiency across the organization [7][96] Other Important Information - The company reported a $17 million release of the credit reserve in the third quarter, reflecting changes in macroeconomic projections [24] - The company has returned over $1.3 billion to shareholders year-to-date, reflecting a 110% payout ratio [34] Q&A Session Summary Question: NII outlook and deposit trends - Management indicated that deposits performed in line with expectations and anticipated a slight pickup in deposits in Q4, with NII expected to grow mid to high single digits [38][39] Question: Challenges at the investment product level - Management elaborated on pressures in the index and asset allocation areas, noting actions to enhance product performance and pricing [42][44] Question: AUCA growth and outflows - Management explained that AUCA growth was driven by individual clients, with some outflows attributed to restructuring rather than client losses [51][52] Question: Expense growth and operating leverage - Management reaffirmed commitment to maintaining expense growth below 5% and emphasized ongoing efforts to bend the cost curve down [58][60] Question: Focus on profitability in asset servicing - Management confirmed a focus on profitability over top-line growth, allowing low-margin business to roll off while improving margins in new business [65][66] Question: AI's impact across different business lines - Management stated that AI is being utilized across all areas of the company, enhancing efficiency and service delivery [96][93] Question: Stablecoin and digital assets strategy - Management discussed the focus on tokenization rather than issuing a stablecoin, emphasizing the importance of interoperability and client demand [102][103]

Core Viewpoint - Northern Trust Corporation reported quarterly earnings of $2.29 per share, exceeding the Zacks Consensus Estimate of $2.26 per share, and showing an increase from $1.96 per share a year ago, indicating a positive earnings surprise of +1.33% [1] Financial Performance - The company posted revenues of $2.03 billion for the quarter ended September 2025, which was below the Zacks Consensus Estimate by 0.76%, but an increase from $1.97 billion year-over-year [2] - Over the last four quarters, Northern Trust has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [2] Stock Performance - Northern Trust shares have increased approximately 25.4% since the beginning of the year, outperforming the S&P 500's gain of 14.5% [3] - The current Zacks Rank for Northern Trust is 3 (Hold), indicating that shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.40 on revenues of $2.08 billion, and for the current fiscal year, it is $8.63 on revenues of $8.05 billion [7] - The estimate revisions trend for Northern Trust was mixed ahead of the earnings release, which could change following the recent report [6] Industry Context - The Banks - Major Regional industry, to which Northern Trust belongs, is currently in the top 22% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8]

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