Financial Data and Key Metrics Changes - In Q4 2025, net income was $466 million, with earnings per share (EPS) of $2.42, and return on average common equity was 15.4% [18] - Trust fees grew by 7%, net interest income (NII) increased by 14%, and revenue was up 9% year-over-year, excluding notable items [5][21] - For the full year, revenue rose by 7%, expenses grew by 5%, resulting in a pre-tax margin of 30% and a 14.8% return on equity [5][29] Business Line Data and Key Metrics Changes - Wealth Management saw assets under management (AUM) reach $507 billion, up 13% year-over-year, with trust fees increasing by 6% [22] - Asset Servicing reported assets under custody and administration of $17.4 trillion, reflecting an 11% year-over-year increase, with fees totaling $730 million, an 8% increase [24] - Asset Management maintained strong liquidity flows, with AUM in liquidity reaching nearly $340 billion, marking the 12th consecutive quarter of positive flows [14][15] Market Data and Key Metrics Changes - The company experienced favorable currency movements, positively impacting revenue growth by approximately 90 basis points [18] - The effective tax rate increased to 26.5%, primarily due to higher tax impacts from international operations [19] Company Strategy and Development Direction - The company is focused on its "One Northern Trust" strategy, aiming for optimized growth, productivity improvements, and enhanced resiliency [5][9] - Significant investments in AI-driven automation and operational efficiency are expected to drive productivity savings and support future growth [9][10] - The company plans to enhance its Wealth Management and Asset Servicing businesses, particularly in the ultra-high net worth segment and capital markets [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving medium-term financial targets, citing strong market conditions and effective execution of strategic initiatives [5][17] - The company anticipates continued positive operating leverage and aims to return over 100% of earnings to shareholders [31] - Management acknowledged the need to adapt to changing market conditions while maintaining flexibility in expense management [31] Other Important Information - The company returned $1.9 billion to shareholders in 2025, including a record $1.3 billion in share repurchases [6][30] - The company aims to maintain a pre-tax margin of 33% and a return on equity in the mid-teens as part of its financial targets [17] Q&A Session Summary Question: Can you speak to your conviction in driving change across the organization? - Management expressed high conviction in the ongoing changes across the company, noting early signs of financial results from these efforts [34][35] Question: What drove the lower cost on the interest-bearing side? - Management indicated that the growth in non-interest-bearing deposits was influenced by seasonal factors and cash stockpiling due to the government shutdown [36][38] Question: What does the fee growth outlook look like for 2026? - Management expects mid-single-digit revenue growth for 2026, driven by strong performance in the Global Family Office segment and family office solutions [43][45] Question: How does the company view potential acquisitions in Asset Management? - Management remains focused on organic growth but is open to acquisitions that align with their strategy, particularly in alternatives and distribution [49][50] Question: What is the outlook for the expense-to-trust-fee ratio? - Management confirmed that they consider the expense-to-trust-fee ratio when pricing new business and continuously assess client profitability [62][64] Question: How sustainable is the NII growth outlook? - Management believes they can maintain a stable net interest margin (NIM) in the 170s for 2026, with various levers available to optimize the balance sheet [66]