Northern Trust

Northern Trust Corporation

File:Northern Trust Logo.png
Company type	Public (Nasdaq: NTRS)
Industry	Financial services
Founded	1889
Headquarters	Chicago, Illinois, USA
Key people	Frederick H. Waddell, President and CEO
Products	Private Banking, Wealth Management, & Investment Management
Revenue	N/A
Operating income	1,766,300,000 United States dollar (2022)
Net income	1,336,000,000 United States dollar (2022)
Total assets	116,700,000,000 United States dollar (2015)
Number of employees	10,000
Website	www.northerntrust.com

Northern Trust headquarters in Chicago, Illinois.

Northern Trust Corporation is an international financial services company headquartered in Chicago, Illinois, USA. It provides investment management, asset and fund administration, fiduciary and banking services through a network of 85 offices in 18 U.S. states and 12 international offices in North America, Europe and the Asia-Pacific region. As of December 31, 2009, Northern Trust Corporation had $82 billion in banking assets, $3.7 trillion in assets under custody and $627.2 billion in assets under management

History

Northern Trust was founded in 1889 by Byron Laflin Smith in a one-room office in the Rookery Building in Chicago's Loop, with a focus on providing trust and banking services for the city's prosperous citizens. Smith provided 40% of the bank's original capitalization of $1 million, and counted such businessmen and civic leaders as Marshall Field, Martin A. Ryerson, and Philip D. Armour among the original 27 shareholders. Intimately acquainted with the operations of the bank, these men would personally examine Northern's assets and records at each year's end.

Northern became the first bank in Chicago to advertise its services, first by direct mail and then by ads in the daily newspaper and Chicago City Directory. Smith reasoned that spending significant amounts of cash on newspaper advertising and becoming the first bank in the city to hire an advertising agency would help build confidence in Northern's conservative approach to banking.

Byron L. Smith died in March 1914 and his son, Solomon A. Smith, took over the reins of the bank. World War I started in August 1914, and stock and bond prices dropped markedly, even though the dollar gained in value against European currencies. When the United States finally entered the war in 1917, Northern acted as a depository for the Alien Property Custodian Act and held over $500 million in enemy assets. During and immediately after the war, Northern sold nearly $30 million in war bonds for the Liberty Bond and Victory Bond campaigns.

In October 1929, however, the flamboyant decade of the 1920s came to a sudden halt -- the stock market crash led to a spectacular drop in prices, employment and production. As these troubles swept across the country, one bank after another closed. Two days after his inauguration on March 6, 1933, Franklin D. Roosevelt closed all the banks in the United States. When they reopened a short time later, there was a great deal of uncertainty as to what might occur. Fortunately, the people in line outside the Northern bank offices were there to deposit money instead of withdraw it. Northern's bottom of page conservative policies had served it well during the 1920s.

By 1941 nearly half of all the bank's commercial accounts were drawn from outside the Chicago metropolitan area. During World War II, Northern once again took part in the government's war bond drives, and also provided loans for manufacturing war materials under special government programs. The war created more opportunities for the bank; all sectors of its business expanded, and by 1945 the Northern Trust had doubled in size.

The years after World War II brought even greater prosperity to the bank as it continued to expand its services. Still under the direction of Solomon Smith, management at the bank became more aware of electronic data processing and how this new technology could revolutionize the banking industry. During the 1950s, Northern was at the forefront of developing numerous automated banking services, including the first, fully-automated financial statements for trust clients.

When Solomon Smith died in 1963 and his son, Edward Byron Smith, assumed leadership of the bank, assets totaled more than $1 billion. Near the end of the decade, Northern became the first state-chartered bank from Illinois to open an office outside the United States.

Throughout the 1970s and 80s, Northern Trust acquired companies and expanded into Florida, Arizona, California and Texas.

When oil prices dropped suddenly in the early 1980s, many South American nations realized they could not pay off their enormous bank loans. Northern suffered uncharacteristically high losses. Aggressive management, loan reserves, and write-off enabled the bank to restore its asset quality.

When Edward Byron Smith retired in 1979, he was succeeded by E. Norman Staub, followed a few years later by Philip W. K. Sweet, and then by Weston Christopherson. When company veteran David W. Fox took over, he was only the seventh chief executive in the bank's existence. William A. Osborn was named president and chief operating officer in 1993 and became chairman and chief executive officer, in addition to president, in 1995. He stepped down as president in 2006 and as CEO on Jan. 1, 2008. Frederick H. "Rick" Waddell is the current president and CEO.

Northern Trust counts over 20% of the U.S.'s wealthiest families as its clients. It is also one of the largest global custodians in the world, serving the asset servicing needs of corporate and public retirement, foundations, endowment, fund managers, insurance companies and government funds.[1]

Services

Corporate and Institutional Services (C&IS)

C&IS is a global provider of asset servicing, asset management, and related services to corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, and government funds. C&IS also offers a commercial banking services, with emphasis on developing and supporting institutional relationships in large and mid-sized corporations, and financial institutions. Client relationships are managed principally through the Chicago, London, Singapore, and Toronto branch locations, with other operations or representative offices in New Jersey, Ireland, the Channel Islands, the Netherlands, China, and Australia. Asset servicing relationships managed by C&IS often include investment management, securities lending, transition management, and commission recapture services provided through Northern Trust Global Investments (NTGI). C&IS also provides related foreign exchange services in the U.S., U.K., Guernsey, and Singapore.

Personal Financial Services (PFS)

PFS provides personal trust, investment management, custody, and philanthropic services; financial consulting; guardianship and estate administration; qualified retirement plans; and private and business banking. PFS focuses on high net worth individuals and families, business owners, executives, professionals, retirees, and established privately-held businesses in its target markets. PFS also includes the Wealth Management Group, which provides customized products and services to meet the financial needs of individuals and family offices in the United States and throughout the world with assets typically exceeding $75 million.

PFS services are delivered through a network of 85 offices in 18 U.S. states as well as offices in London and Guernsey.

Northern Trust Global Investments (NTGI)

NTGI, through various subsidiaries of the Corporation, provides a broad range of investment management and related services and other products to U.S. and non-U.S. clients of C&IS and PFS. Clients include institutional and individual separately managed accounts, bank common and collective funds, registered investment companies, non-U.S. collective investment funds and unregistered private investment funds. NTGI offers both active and passive equity and fixed income portfolio management, as well as alternative asset classes (such as private equity and hedge funds of funds) and multimanager products and services. NTGI’s activities also include brokerage, securities lending, transition management, and related services. NTGI’s business operates internationally through subsidiaries, alliances, and distribution arrangements.

Businesses/Other Subsidiaries

The Corporation's principal subsidiary is The Northern Trust Company. The Corporation also owns two investment management subsidiaries, Northern Trust Investments, N.A. and Northern Trust Global Advisors, Inc.

Locations

Northern Trust’s global locations include: Abu Dhabi, Amsterdam, Bangalore, Beijing, Dublin, Guernsey, Hong Kong, Isle of Man, Jersey, Limerick, London, Melbourne, Singapore, Stockholm, India,Tokyo and Toronto. Within the United States, locations include Illinois, Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New York, Ohio, Texas, Washington and Wisconsin.

Sponsorships

Northern Trust is the sponsor of the Northern Trust Open, a PGA Tour event that has generated more than $50 million for philanthropic causes in Southern California.

Northern Trust Open - At a Glance
When: February 16 - 22, 2009
Where: Riviera Country Club, Pacific Palisades, California
Contact: (800) 752-OPEN (6736)
Purse: $6,300,000
Winning Share: $1,134,000
Yards: 7,298
2008 Champion: Phil Mickelson
2009 Champion: Phil Mickelson
2010 Champion: Steve Stricker
Broadcast: The Golf Channel, CBS and the PGA Tour Network on Sirius XM Satellite Radio (Channel 146)

Controversy

Northern Trust was cited by the media for improperly spending hundreds of thousands of dollars for company-sponsored parties, live concerts by the Chicago band, Earth Wind and Fire and musician Sheryl Crow, Tiffany gift bag giveaways for the ladies, and many other festivities for the Northern Trust Open, a PGA Tour event held near Los Angeles in February 2009. These activities were held weeks after the bank was essentially forced to take $1.6 billion from the US government as part the bailout program. The company responded that the expenses were part of a long-standing commitment.

Community Initiatives

Northern Trust strives to give approximately 1.5% of its pre-tax profits to charities every year. In 2007, Northern Trust’s global philanthropy program awarded $17.5 million dollars, a 13.7% increase over 2006, and $223,000 worth of in-kind gifts were donated. Northern Trust’s not-for-profit partners include:

• Canossaville Children’s Home (Singapore)
• Guernsey Women’s Refuge (United Kingdom)
• International Red Cross
• Irish Heart Foundation (Ireland)
• Jewish Federation (United States)
• National Conservancy (United States)
• The Salvation Army (United States)
• The Samaritans (United Kingdom)
• Special Olympics (United States/Asia)
• United Negro College Fund (UNCF) (United States)
• United Way (United States)

Awards/Acquisitions

Recent awards include:

• FORTUNE Magazine's Most Admired Companies
• BusinessWeek 50 - a list of best in class companies
• Computerworld's list of best places to work in IT
• 100 Best Companies for Working Mothers by Working Mother Magazine (16th consecutive year)
• Ranked No. 1 Foreign Exchange Provider in Asia Pacific in annual Global Investor poll, June 2008
• Ranked No. 1 in Overall Sole Custodian by Global Investor Global Custody Survey 2008
• Ranked No. 7 out of Top 25 Public Banking Performers by the ABA Banking Journal, May 2008
• Ranked 34 on Barron’s “America’s 500 Best Companies” list
• Recent new business wins within its corporate and institutional services business unit include the State of Tennessee's $29.3 billion mandate
• $51 billion Australia Future Fund
• $3 billion Dutch government insurance program
• $11.5 billion New Zealand Superannuation Fund, and the El Paso Fireman and Policemen's Pension Fund

Further reading

Fox, David W., The Northern Trust Company Celebrating 100 Years "Northern Trust Opts to Build, Not Buy," ABA Bank Journal, March 1990

The Wall Street Journal (2/28/09), "Golf Journal: No Entertaining, Please-It's Golf" The outcry over Northern Trust's tournament sponsorship shows the chill threatening golf and business"

Golf World (2/27/09), "An Inconvenient Truth"

External links

• Northern Trust Website
• Northern Trust Careers
• Northern Trust Press Releases
• Northern Trust 2006 Annual Report
• Interview with Stephen Potter, President, Northern Trust Global Investments