Northern Trust(NTRS) - 2021 Q1 - Quarterly Report

Consolidated Financial Highlights (Unaudited) Northern Trust's Q1 2021 financial performance and position, highlighting net income growth and client assets Key Financial Performance (Q1 2021 vs Q1 2020) | Metric | Q1 2021 ($ Millions) | Q1 2020 ($ Millions) | % Change | | :-------------------------------- | :-------- | :-------- | :--------- | | Noninterest Income | 1,243.3 | 1,179.6 | 5% | | Net Interest Income | 340.1 | 408.1 | (17)% | | Total Revenue | 1,583.4 | 1,587.7 | — | | Provision for Credit Losses | (30.0) | 61.0 | N/M | | Noninterest Expense | 1,117.5 | 1,065.6 | 5% | | Net Income | 375.1 | 360.6 | 4% | | Net Income — Diluted (Per Share) | 1.70 | 1.55 | 9% | | Return on Average Common Equity | 13.7% | 13.4% | | | Net Interest Margin | 1.00% | 1.51% | | Selected Balance Sheet Data (March 31, 2021 vs Dec 31, 2020) | Metric | March 31, 2021 ($ Millions) | Dec 31, 2020 ($ Millions) | % Change | | :------------------------ | :-------------------------- | :-------------------------- | :--------- | | Total Assets | 163,924.1 | 170,003.9 | (4)% | | Deposits | 137,457.4 | 143,878.0 | (4)% | | Stockholders' Equity | 11,457.9 | 11,688.3 | (2)% | | Assets Under Custody/Administration ($ Billions) | 14,795.1 | 14,532.5 | 2% | | Assets Under Management ($ Billions) | 1,449.1 | 1,405.3 | 3% | - Northern Trust Corporation's Common Equity Tier 1 Capital ratio was 12.0% (Standardized Approach) and 12.8% (Advanced Approach) at March 31, 2021, exceeding the minimum capital ratio of 4.5%[10] Part I – Financial Information Management's Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures about Market Risk Detailed analysis of Northern Trust's Q1 2021 financial performance, covering revenue, expenses, credit quality, and capital General Business Overview Northern Trust provides wealth management, asset servicing, asset management, and banking solutions - Northern Trust is a leading provider of wealth management, asset servicing, asset management, and banking solutions[13] - The Corporation focuses on managing and servicing client assets through its two client-focused reporting segments: Corporate & Institutional Services (C&IS) and Wealth Management[13] COVID-19 Pandemic and Recent Events Northern Trust addressed Q1 2021 COVID-19 challenges: workforce health, client assistance, and community support - Northern Trust focused on the health and well-being of its workforce, meeting clients' needs, and supporting communities during the COVID-19 pandemic[14] - As of March 31, 2021, Northern Trust had outstanding loans totaling $213.9 million under the Paycheck Protection Program (PPP), with 219 loan forgiveness applications totaling $34.2 million fully forgiven[18] - Northern Trust provided $2.6 million in COVID-19 relief support and $110.5 million in low-cost funding to Community Development Financial Institutions (CDFIs) through March 31, 2021[21][22] Overview of Financial Results Northern Trust reported 4% net income growth and 9% diluted EPS increase in Q1 2021 Q1 2021 Financial Performance Overview | Metric | Q1 2021 ($ Millions) | Q1 2020 ($ Millions) | Change ($ Millions) | % Change | | :-------------------------------- | :-------- | :-------- | :---------- | :--------- | | Net Income | 375.1 | 360.6 | 14.5 | 4% | | Net Income — Diluted (Per Share) | 1.70 | 1.55 | 0.15 | 9% | | Total Revenue | 1,583.4 | 1,587.7 | (4.3) | — | | Trust, Investment and Other Servicing Fees | 1,063.7 | 1,003.6 | 60.1 | 6% | | Net Interest Income | 340.1 | 408.1 | (68.0) | (17)% | | Provision for Credit Losses | (30.0) | 61.0 | (91.0) | N/M | | Noninterest Expense | 1,117.5 | 1,065.6 | 51.9 | 5% | | Effective Tax Rate | 24.4% | 21.8% | | | - Annualized return on average common equity was 13.7% in Q1 2021, up from 13.4% in Q1 2020[24] Trust, Investment and Other Servicing Fees Trust, Investment and Other Servicing Fees increased 6% to $1.06 billion in Q1 2021 Trust, Investment and Other Servicing Fees (Q1 2021 vs Q1 2020) | Category | Q1 2021 ($ Millions) | Q1 2020 ($ Millions) | Change ($ Millions) | % Change | | :--------------------------------------- | :------------------- | :------------------- | :------------------ | :--------- | | C&IS Trust, Investment and Other Servicing Fees | 620.5 | 574.4 | 46.1 | 8% | | Wealth Management Trust, Investment and Other Servicing Fees | 443.2 | 429.2 | 14.0 | 3% | | Total Consolidated Fees | 1,063.7 | 1,003.6 | 60.1 | 6% | | Custody and Fund Administration (C&IS) | 446.0 | 394.9 | 51.1 | 13% | | Investment Management (C&IS) | 115.9 | 120.8 | (4.9) | (4)% | | Securities Lending (C&IS) | 18.2 | 23.4 | (5.2) | (22)% | - Northern Trust voluntarily waived $50.2 million of money market mutual fund fees for Q1 2021 due to the low-interest-rate environment[32] Client Assets (March 31, 2021 vs March 31, 2020) | Metric | March 31, 2021 ($ Billions) | March 31, 2020 ($ Billions) | % Change YoY | | :-------------------------------- | :-------------------------- | :-------------------------- | :----------- | | Assets Under Custody/Administration | 14,795.1 | 10,876.6 | 36% | | Assets Under Custody | 11,534.2 | 8,254.7 | 40% | | Assets Under Management | 1,449.1 | 1,119.3 | 29% | Other Noninterest Income Other Noninterest Income increased 2% to $179.6 million in Q1 2021, due to higher Other Operating Income Other Noninterest Income (Q1 2021 vs Q1 2020) | Category | Q1 2021 ($ Millions) | Q1 2020 ($ Millions) | Change ($ Millions) | % Change | | :-------------------------------- | :------------------- | :------------------- | :------------------ | :--------- | | Foreign Exchange Trading Income | 78.7 | 88.9 | (10.2) | (12)% | | Security Commissions and Trading Income | 34.8 | 41.7 | (6.9) | (17)% | | Other Operating Income | 54.9 | 34.4 | 20.5 | 60% | | Total Other Noninterest Income | 179.6 | 176.0 | 3.6 | 2% | - The increase in Other Operating Income was primarily due to higher miscellaneous income and a prior-year quarter market value adjustment for a seed capital investment[57] [Net Interest Income](index=11&type=section&