2. Today’s Agenda
Financial Overview & Perspectives
Strong Performance Over the
Long-Term
Financial Overview
Financial Perspectives in Focus
Current Topics of Interest
Service Expertise Integrity
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8. NTRS: Record Financial Performance in 2007
Fiscal Year % Growth
2007 2006 to 2007
Trust, Inv. & Other Servicing Fees $2,078 Million +16%
Other Non-Interest Income $600 Million +26%
Net Interest Income $894 Million +13%
Total Revenues $3,572 Million +17%
Non-Interest Expenses* $2,280 Million +17%
Net Income* $821 Million +23%
Earnings Per Share* $3.66 +22%
Assets Under Custody $4.1 Trillion +17%
Global Custody Assets $2.1 Trillion +23%
Assets Under Management $757 Billion +9%
*Excludes Visa-related items. Please see Northern Trust's 2007 Financial Annual Report and Form
10-K for reported results prepared in accordance with generally accepted accounting principles.
Service Expertise Integrity
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9. NTRS: Excellent Financial Performance Continued in 1Q08
Year-to-Date % Growth
3/31/08 2007 to 2008
Trust, Inv. & Other Servicing Fees $527 Million +8%
Other Non-Interest Income* $185 Million +54%
Net Interest Income $266 Million +24%
Total Revenues* $978 Million +19%
Non-Interest Expenses* $611 Million +16%
Net Income* $232 Million +24%
Earnings Per Share* $1.03 +23%
Assets Under Custody $4.0 Trillion +6%
Global Custody Assets $2.0 Trillion +12%
Assets Under Management $779 Billion +3%
*Excludes Visa-related items. Please see Northern Trust's Form 10-Q for the first quarter of
2008 for reported results prepared in accordance with generally accepted accounting principles.
Service Expertise Integrity
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10. Long-Term, Strategic Financial Targets Met in 2007
Full Year
Full Year
Full Year Full Year
Annual Target 2007*
2005
2004 2006
Revenue Growth
16.7%
15.5%
8.6% 13.9%
8% - 10%
Positive
+0.2
+2.3
+3.4 +1.2
Operating Leverage
EPS Growth
22.0%
16.0%
26.0% 13.6%
10% - 12%
Return on Equity
19.7%
17.0%
16.1% 17.6%
16% - 18%
*Excludes Visa-related items. Please see Northern Trust's 2007 Financial Annual Report and Form
10-K for reported results prepared in accordance with generally accepted accounting principles.
Service Expertise Integrity
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12. Trust, Investment & Other Servicing Fees…
…continue to dominate revenue profile.
$2,078
Consolidated Trust, Investment
& Other Servicing Fees
($ Millions)
$1,792
$1,559
$1,330
$1,189
2003 2004 2005 2006 2007
% of Total
55% 57% 58% 59% 58%
Revenues
Service Expertise Integrity
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13. A Hallmark of Northern Trust: Positive Operating Leverage*
We have achieved positive or neutral operating leverage in 17 of the
last 20 years.
+6%
+5%
+4%
+2% +2% +2%
+2%
+1% +1% +1% +1% +1%
+0%
+0%
+0% +0%
+0%
-2%
-3%
-5%
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Note: Calculations prior to 1999 based on actual reported results. 1999-2005 calculations restated for sale of NTRC business
and exclude certain nonrecurring revenue and expense items in 2003 and 2004. 2007 excludes the 4Q07 VISA charge.
*Revenue Growth less Expense Growth
Service Expertise Integrity
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14. A Hallmark of Northern Trust: Positive Operating Leverage*
We have achieved positive or neutral operating leverage in 17 of the
last 20 years… through various market and interest rate environments.
+6%
+5%
+4%
+2% +2% +2%
+2%
+1% +1% +1% +1% +1%
+0%
+0%
+0% +0%
+0%
-2%
-3%
-5%
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
S&P +12% +27% -7% +26% +5% +7% -2% +34% +20% +31% +27% +20% -10% -13% -23% +26% +9% +3% +14% +4%
500
Avg.
Fed 7.6% 9.2% 8.1% 5.7% 3.5% 3.0% 4.2% 5.8% 5.3% 5.5% 5.4% 5.0% 6.2% 3.9% 1.7% 1.1% 1.4% 3.2% 5.0% 5.0%
Funds
Note: Calculations prior to 1999 based on actual reported results. 1999-2005 calculations restated for sale of NTRC business
and exclude certain nonrecurring revenue and expense items in 2003 and 2004. 2007 excludes the 4Q07 VISA charge.
*Revenue Growth less Expense Growth
Service Expertise Integrity
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15. Financial Perspectives in Focus
Net Interest Income
Credit Quality
Capital Management
Business Unit Financial Performance
Service Expertise Integrity
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16. Focus on Net Interest Income
Strong Growth in Net Interest Income…
…through various interest rate cycles.
$950 12%
$908
$850 $810
$735
$750 9%
$651
$648
$622 $621
$650
$603
$557
$550 6%
$513
$471
$450
$350 3%
Average Annual
Fed Funds Rate
$250
$150 0%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Avg. Earning
Assets ($BN) 21.6 24.6 27.2 30.7 32.0 33.6 34.8 37.0 40.5 46.0 53.4
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17. Focus on Credit Quality
Outstanding Credit Quality Relative to Peer Banks
Consistent top-tier credit quality rankings.
Notably better than peer averages in each category.
Peer*
NTRS Average
As of March 31, 2008
Non-Performing Assets 1.18%
0.13%
as a % of Loans
Loan Loss Reserve as a
168%
463%
% of Non-Performing Assets
Net Charge-Offs to
Average Loans 1.01%
0.04%
*Peer group consists of the 20 largest U.S. Bank Holding Companies in terms
of total balance sheet assets. Source: SNL Financial
Service Expertise Integrity
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18. Focus on Capital Management
Strong and Conservative Capital Management
First Quarter 2008 was the 80th consecutive quarter
(or 20 years) of increasing common equity.
$4.8
End-of-Period Common Equity ($ Billions) $4.5
10-Year Compound Annual Growth Rate: 11%
$3.9
$3.6
$3.3
$3.1
$2.9
$2.7
$2.3
$2.1
$1.8
$1.6
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1Q08
Service Expertise Integrity
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19. Focus on Capital Management
Strong and Conservative Capital Management
Strong Capital Ratios Consistently Exceed
Regulatory “Well Capitalized” Guidelines.
Tier 1 Capital Ratio Total Risk Based Ratio Leverage Ratio
Well Capitalized Guideline = 6% Well Capitalized Guideline = 10% Well Capitalized Guideline = 5%
14.0%
13.3%
12.3%
11.9% 11.9%
11.1% 11.0%
9.8%
9.7% 9.7%
7.6% 7.6%
7.1% 6.8%
6.7%
2003 2004 2005 2006 2007
2003 2004 2005 2006 2007
2003 2004 2005 2006 2007
Service Expertise Integrity
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20. Focus on Business Unit Financials
PFS Income Statement
Fiscal Year % Growth
2007 2006 to 2007
Trust, Inv. & Other Servicing Fees $898 Million +15%
Other Non-Interest Income $99 Million +3%
Net Interest Income $514 Million +3%
Total Revenues $1,511 Million +10%
Non-Interest Expenses $944 Million +10%
Provision for Credit Losses $14 Million +129%
Income Before Income Tax $554 Million +8%
Provision for Income Tax $215 Million +8%
Net Income $339 Million +8%
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21. Focus on Business Unit Financials
PFS Trust, Investment & Other Servicing Fees
($ Millions)
$898
$779
$708
$650
$599
2003 2004 2005 2006 2007
5-YEAR CAGR +8%
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22. Focus on Business Unit Financials
C&IS Income Statement
Fiscal Year % Growth
2007 2006 to 2007
Trust, Inv. & Other Servicing Fees $1,180 Million +17%
Other Non-Interest Income $477 Million +32%
Net Interest Income $409 Million +30%
Total Revenues $2,066 Million +22%
Non-Interest Expenses $1,224 Million +20%
Provision for Credit Losses $5 Million -50%
Income Before Income Tax $837 Million +27%
Provision for Income Tax $311 Million +16%
Net Income $526 Million +34%
Service Expertise Integrity
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23. Focus on Business Unit Financials
C&IS Trust, Investment & Other Servicing Fees
($ Millions)
$1,180
$1,012
$852
$680
$590
2003 2004 2005 2006 2007
5-YEAR CAGR +16%
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24. Focus on Business Unit Financials
C&IS and PFS – A Balanced Mix
Full Year 2007
PFS C&IS
$2,066
$526
40.5%
36.7%
$1,511
$339
25.5%
22.4%
Total Revenues Net Income Pre-Tax After-Tax
($ Millions) ($ Millions) Profit Margin Profit Margin
Service Expertise Integrity
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26. Current Topics of Interest
Conservative Securities Portfolio
High Quality Portfolio
Composition % of
($ Millions)
92% of Northern Trust’s total Total
3/31/08
securities portfolio was composed
Securities – Available for Sale
of triple-A rated securities
U.S. Government $ 20.3 nm
95% of Asset Backed Securities Obligations of States / Political Subdivisions 33.0 nm
rated triple-A Government Sponsored Agency 7,856.0 70%
Asset-Backed 1,779.3 16%
Exposure to subprime Asset
Backed securities relative to the Other 388.5 3%
overall portfolio was minimal at Total Securities – Available for Sale 10,077.1 89%
less than 4%
Securities – Held to Maturity
90% of subprime Asset-Backed Obligations of States / Political Subdivisions 852.9 8%
Securities rated triple-A Government Sponsored Agency 12.8 nm
Other 310.3 3%
Total gross unrealized losses on
the securities portfolio were Total Securities – Held to Maturity 1,176.0 11%
$159 million Other 11.4 nm
Total Securities $11,264.5 100%
All data is as of March 31, 2008
Service Expertise Integrity
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27. Current Topics of Interest
Diversified and High Quality Loan Portfolio
Top-Tier Credit Quality
Relationship-based lending practices
Nonperforming assets totaled $35.7
million, down nearly 4% from the year-ago Composition % of
quarter ($ Billions) 3/31/08 Total
Nonperforming assets represent only
U.S.
0.13% of total outstanding loans, an
Residential Real Estate $ 9.3 35%
improvement from 0.17% in the year
ago quarter Commercial 6.4 24%
Commercial Real Estate 2.4 9%
Nonperforming assets are covered
4.6 times by current credit loss reserves Personal 3.8 14%
as compared to 3.7 times in the year Other 1.6 6%
ago quarter
Lease Financing 1.1 4%
Northern Trust does not:
Total U.S. 24.7 92%
Underwrite mortgage loans to Non-U.S. 2.1 8%
sub-prime borrowers
Total Loans and Leases $ 26.8 100%
Lend directly to hedge funds
Provide bridge financing to
private equity deals
Offer an off-balance sheet commercial
paper conduit for client liquidity
All data is as of March 31, 2008
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28. Current Topics of Interest
Capital Support Agreements for Cash Funds
Executed on February 21, 2008
Though not obligated to do so, Northern Trust entered into Capital Support
Agreements (“CSA”) with an aggregate maximum contribution of $229 million,
largely for the benefit of our clients.
The CSAs expire no later than July 31, 2008
The CSAs support eight cash funds which invest in the recently downgraded
Whistlejacket and White Pine SIVs (collectively known as “Whistlejacket”).
Capital support will be provided to any affected cash fund which disposes of
Whistlejacket at a loss and, as a result, breaches a designated minimum NAV.
The capital contribution will, up to the extent of the disposition loss, restore the
NAV to the minimum threshold level, generally 99.5%.
In the event the entire $229 million in capital support is utilized, Northern Trust
Corporation’s capital ratios would decline by approximately 20 to 30 basis points –
a marginal decrease.
As of March 31, 2008, no capital contributions have been made under the agreements.
The estimated fair value of the agreements was $8.7 million as of March 31, 2008.
Service Expertise Integrity
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29. Current Topics of Interest
Securities Lending
Quarterly Fees ($ Millions)
Actual
2007 Actual Y-o-Y Growth
First Quarter $ 45.6 (6%)
Second Quarter 73.4 21%
Third Quarter 33.0 (19%)
Fourth Quarter 55.1 32%
Total $ 207.1 8%
2008
First Quarter $ 31.9 (30%)
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30. Current Topics of Interest
Securities Lending
Quarterly Fees ($ Millions)
Proforma*
Actual
2007 Actual Y-o-Y Growth Proforma* Y-o-Y Growth
First Quarter $ 45.6 (6%)
Second Quarter 73.4 21%
Third Quarter 33.0 (19%) $ 69.0 70%
Fourth Quarter 55.1 32% 101.1 142%
Total $ 207.1 8% $ 289.1 51%
2008
First Quarter $ 31.9 (30%) $ 124.9 174%
*Reflects securities lending fees on a proforma
basis for each period had clients chosen our
most commonly used collateral pool instead of
the marked-to-market portfolio.
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31. Key Takeaways
Northern Trust:
Business model centered around
clients with real needs
Strong and differentiated
financial positioning
Conservatively managed, while
generating high performance results
A focused and disciplined business
model, across cycles
Financial success achieved for clients,
investors and other constituents
through principles that endure
Service Expertise Integrity
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