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Northern Trust

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This article is about the financial services company. For the golf tournament in New York, see The Northern Trust.
Northern Trust Corporation
Company typePublic Limited Company
Nasdaq: NTRS
S&P 500 Index component
IndustryFinancial services
FoundedAugust 12, 1889; 135 years ago (1889-08-12)
FounderByron Laflin Smith
HeadquartersChicago, Illinois, U.S.
Key people
Michael G. O'Grady, Chairman and CEO
ProductsConsumer Banking, Corporate Banking, Insurance, Investment Banking, Client valuations, Asset Servicing, Private Banking, Private Equity, Wealth Management, Credit Cards, Financial Analysis
RevenueIncrease $6.59 billion (2021)
1,766,300,000 United States dollar (2022) Edit this on Wikidata
Increase $1.46 billion (2021)
AUMDecrease US$1.3 trillion (March 31, 2023)
Total assetsIncrease US$14.2 trillion (March 31, 2023)[1]
Total equityIncrease $11.13 billion (2021)
Number of employees
35,000 (2023)
Websitewww.northerntrust.com
Footnotes / references
[2]

Northern Trust Corporation is an American financial services company headquartered in Chicago, Illinois that caters to corporations, institutional investors, and ultra high net worth individuals. Northern Trust is one of the largest banking institutions in the United States and one of the oldest banks in continuous operation. As of June 30, 2022, it had $1.7 trillion in assets under management and $17 trillion in assets under custody. Northern Trust Corporation is incorporated in Delaware.[3]

The company has offices in 20 US states and locations across 23 countries in Canada, Europe, the Middle East, and the Asia-Pacific region. It is ranked 486th on the Fortune 1000 as of February 2019.[4]

Current operations

Asset servicing

Asset Servicing is a global provider of custodian bank, fund administration, investment operations outsourcing, investment management, investment risk and analytical services, employee benefits services, securities lending, foreign exchange market, treasury management, brokerage firm services, transition management services, banking, and cash management services to corporate and public pension funds, foundations, financial endowments, fund managers, insurance companies, sovereign wealth funds, and other institutional investors.[2] At the end of May 2020, Northern Trust Corporation entered into a strategic alliance with BlackRock. This alliance entails working with BlackRock on its platform called Aladdin with mutual clients.[5]

Wealth management

Over 20% of the wealthiest families in the United States are clients of the company's wealth management division. It provides personal trust, investment management, custodian bank, and philanthropic services, financial consulting, guardianship and estate administration, qualified retirement plans and private and business banking. Wealth Management focuses on high-net-worth individuals and families, business owners, executives, professionals, retirees, and established privately held businesses in its target markets with assets typically exceeding $75 million. Wealth Management services are delivered through a network of 85 offices in 18 U.S. states as well as offices in London, Guernsey, and Abu Dhabi.[2]

Northern Trust Asset Management (NTAM)

Northern Trust Asset Management provides investment management services. It offers both active management and passive management strategies for equity and fixed income investing, as well as alternative asset classes such as private equity and hedge funds and multi-manager products and services.[citation needed]

History

Northern Trust Building in Milwaukee

Northern Trust was founded in 1889 by Byron Laflin Smith in a one-room office in the Rookery Building in The Loop, Chicago, with a focus on providing trust and banking services for the city's prosperous citizens. It opened on August 12, 1889 with 7 accounts and $137,981.25 in deposits.[6] Smith provided 40% of the bank's original capitalization of $1 million,[7] and the original 27 shareholders included such businessmen and civic leaders as Marshall Field, Martin A. Ryerson, and Philip D. Armour.[citation needed]

The company's headquarters building at 50 South LaSalle Street in the Financial District of Chicago dates from 1905 and was designed by Frost and Granger.[8] The structure opened with five stories, but is designed to accommodate additional floors. However, when the bank needed additional space in 1965, it opted to construct a new 14-story building in the international style to the west and selected Cesar Pelli as its architect.[9]

In March 1914, Byron Laflin Smith died and his son, Solomon Albert Smith, took over the bank.[10]

The company's conservative policies served it well during the 1920s and the company's assets actually grew during the Great Depression, while many other banks suffered from bank failure.[11][6]

By 1941, nearly half of all the bank's commercial accounts were drawn from outside the Chicago metropolitan area. During World War II, the company took part in the government's war bond drives and provided loans for manufacturing war materials under special government programs. The war created more opportunities for the bank; all sectors of its business expanded.[6]

During the 1950s, Northern Trust spent heavily to develop automated banking services, including the first fully automated financial statements for trust clients.[6]

In October 1963, Solomon A. Smith died. Solomon Byron Smith became chairman of the executive committee and his brother, Edward Byron Smith, became chairman.[12]

In 1986, the bank acquired First Lake Forest Corporation for $61 million in cash.[13]

Edward Byron Smith retired as chief executive officer in 1979.[14] He was succeeded by E. Norman "Bud" Staub.[15] A few years later, Philip W. K. Sweet took over but he resigned in 1984.[16]

In 1984, Weston Christopherson, former CEO of Jewel, took the helm. He is credited with guiding the bank through a difficult period when sour loans to Latin American countries were hurting profits. When oil prices dropped suddenly in the early 1980s, many South American nations realized they could not repay their enormous bank loans. The bank suffered uncharacteristically high losses. Aggressive management, loan reserves, and write-offs enabled the bank to restore its asset quality. During Christopherson's six years at Northern Trust, profits rose from $34 million to $113 million.[17] At the time of his retirement in 1990, the company was the 11th most profitable of the 100 largest banks in the United States.[18]

In 1990, company veteran David W. Fox became the seventh CEO of the company.[19]

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.[20][21]

In July 2005, Northern Trust and Enron reached a $365 million settlement[22] with 20,000 employees of Enron after the energy company's collapse (see Enron scandal). Northern Trust had managed the 401k plan for Enron's employeees, who alleged mismanagement and breach of fiduciary duty. The initial settlement was reduced a year later to $32.5 million in an agreement approved by Federal judge Melinda Harmon, with Northern Trust neither admitting nor denying wrongdoing.[23]

Osborn stepped down as president in 2006 and as CEO on January 1, 2008.[20][21] Frederick H. "Rick" Waddell then became chairman and CEO.[24]

During his tenure, Waddell was able to guide the bank through the financial crisis. In 2009 Northern Trust was one of 3 banks able to gain large profits. Other than M&T Bank, Northern Trust was the only bank in the S&P 500 Index not to lower its dividend during the financial crisis of 2007–2008.[25]

In November 2008, the United States Department of the Treasury invested $1.5 billion in the company as part of the Troubled Asset Relief Program and in June 2009, the company repurchased the investment from the Treasury.[26] The company had been criticized for heavy spending on parties during a 2009 golf tournament that it sponsored, after receiving government funds.[27]

The company strives to give approximately 1.5% of its pre-tax profits to charities every year. In the 10 years preceding 2014, the company gave over $120 million in support of non-profit organizations.[28]

The company currently sponsors The Northern Trust, a PGA TOUR event that is the first event in the FedEx Cup playoffs. From 2008 through 2017, Northern Trust sponsored the Northern Trust Open in Los Angeles, also a PGA TOUR event.

On October 2, 2017, Northern Trust acquired UBS Asset Management's fund administration servicing units in Switzerland and Luxembourg.[29]

Effective January 1, 2018, Michael O'Grady became chief executive officer of the company.[30] He also assumed the chairmanship on January 23, 2019.[31]

References

  1. ^ "Assets Under Custody (AUC) or Assets Under Administration (AUA)". www.northerntrust.com.
  2. ^ a b c "Northern Trust Corporation 2017 Form 10-K Annual Report". U.S. Securities and Exchange Commission.
  3. ^ "10-K". Securities and Exchange Commission. Retrieved 20 April 2021.
  4. ^ "Northern Trust". Fortune. Retrieved 2019-02-14.
  5. ^ "Northern Trust and BlackRock Form Strategic Alliance on Data and Aladdin". Sovereign Wealth Fund Institute. Retrieved 2020-06-13.
  6. ^ a b c d "Gallery: Northern Trust celebrates 125 years in Chicago". Crain's Chicago Business. August 12, 2014.
  7. ^ "Our Defining Moments".
  8. ^ "Northern Trust Company Building". Chicago Architecture Info.
  9. ^ "Northern Trust Bank Annex". Emporis. Archived from the original on February 9, 2019. Retrieved February 6, 2019.
  10. ^ "Byron Laflin Smith Dead; Chicago Banker Succumbs to Heart Disease". The New York Times. March 23, 1914.
  11. ^ "Business: Loop Flurry". Time. July 4, 1932.
  12. ^ "Solomon Byron Smith, Retired Bank Official". Chicago Tribune. October 10, 1986.
  13. ^ "Northern Trust". The New York Times. August 9, 1986.
  14. ^ Potter, Will (July 2, 2002). "Edward Byron Smith, 93". Chicago Tribune.
  15. ^ Jensen, Trevor (January 26, 2007). "E. Norman "Bud" Staub: 1916 - 2007". Chicago Tribune.
  16. ^ Salpukas, Agis (April 18, 1984). "Chief to Step Down At Northern Trust". The New York Times.
  17. ^ "Northern Trust CEO Weston R. Christopherson". Chicago Tribune. June 1, 1994.
  18. ^ "Weston Christopherson, Life Trustee". University of Chicago Chronicle. Vol. 13, no. 20. June 9, 1994.
  19. ^ Daniels, Steve (April 5, 2012). "David Fox Jr. joins Northern Trust". Crain's Chicago Business.
  20. ^ a b Yue, Lorene (July 21, 2009). "Northern Trust's Osborn to retire". Crain's Chicago Business.
  21. ^ a b Yerak, Becky (November 15, 2009). "William Osborn's 39-year career at Northern Trust Corp. comes to an end". Chicago Tribune.
  22. ^ Shulz, Ellen (May 14, 2004). "Enron Settles With Employees Who Lost Retirement Money". The Wall Street Journal. New York City. Retrieved 2020-01-11.
  23. ^ Fowler, Tom (July 26, 2006). "Judge approves $37.5 million Enron 401(k) settlement". The Houston Chronicle. Retrieved 11 January 2020.
  24. ^ Daniels, Steve (November 20, 2008). "Northern Trust CEO elected to Chicago Fed board". Crain's Chicago Business.
  25. ^ Engren, John (February 20, 2012). "M&T Bank's Bob Wilmers is Too Sharp to Fail". Institutional Investor.
  26. ^ Daniels, Steve (June 17, 2009). "Northern Trust repays TARP $1.58B". Crain's Chicago Business.
  27. ^ Weitzman, Hal (December 30, 2009). "Northern Trust says the party is over". Financial Times. London. Archived from the original on 2022-12-11.
  28. ^ Ochs, Alyssa (August 4, 2014). "Getting to Know Deborah Liverett and Northern Trust Grantmaking". Inside Philanthropy.
  29. ^ "Northern Trust Completes Strategic Acquisition of UBS Asset Management's Fund Services Units in Luxembourg and Switzerland" (Press release). Northern Trust. October 2, 2017 – via Business Wire.
  30. ^ Cahill, Joe (October 20, 2017). "Northern Trust's biggest asset: dependability". Crain's Chicago Business.
  31. ^ Baert, Rick (November 13, 2018). "Northern Trust names new chairman". Pensions & Investments. Retrieved 2021-09-29.
  • Business data for Northern Trust:
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