Northern Trust Corporation

Good day and welcome to the Northern Trust's second quarter 2022 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jennifer Child. Please go ahead.

Thank you, Kevin. Good morning, everyone, and welcome to Northern Trust Corporation's second quarter 2022 earnings conference call. Joining me on our call this morning are Mike O'Grady, our Chairman and CEO, Jason Tyler, our Chief Financial Officer, Lauren Alnutt, our controller, and Mark Betty and Briar Rose from our investor relations team. Our second quarter earnings press release and financial trends report are both available on our website at northerntrust.com. Also on our website, you will find our quarterly earnings review presentation, which we will use to guide today's conference call. This July 20th call is being webcast live on northerntrust.com. The only authorized rebroadcast of this call is the replay that will be made available on our website through August 17th. Northern Trust disclaims any continuing accuracy of the information provided in this call after today. Please refer to our safe harbor statement regarding forward-looking statements on page 11 of the accompanying presentation, which will apply to our commentary on this call. During today's question and answer session, please limit your initial query to one question and one related follow-up. This will allow us to move through the queue and enable as many people as possible the opportunity to ask questions as time permits. Thank you again for joining us today. Let me turn the call over to Mike O'Grady.

Thank you, Jennifer. Let me join in welcoming you to our second quarter 2022 earnings call. We generated solid results in what turned out to be a more volatile and uncertain market and macroeconomic backdrop than we've experienced in some time. New business momentum continued to be strong, and our capital position remains robust. Revenue increased 12%, EPS grew 8%, and we delivered a return on average common equity of 15.7%. Second quarter results benefited significantly from higher interest rates and the elimination of money market fee waivers related to low rates. The weaker equity and fixed income markets began to impact our fees and client levels, and due to the lag in our billing cycle, this impact will continue in the third quarter. We saw a 7% sequential decline in average deposits. However, these were largely non-operational in nature. Our clients continue to see us as a valuable partner for the liquidity needs. Our expenses increased 9% compared to the prior year, reflecting inflationary impacts across our cost base, particularly within our compensation and equipment and software lines. Despite this inflationary pressure, we achieved three points of positive operating leverage in the second quarter. In wealth management, we continue to see healthy levels of engagement with new and existing clients. Growth within our global family office was particularly strong. In asset management, consistent positive flows into our FlexShares ETF complex helped to partially offset equity market headwinds and broad-based liquidity outflows in our institutional channel. At $21 billion, our FlexShares assets under management were up 13% year-over-year. We also saw strong growth in our alternatives offerings in the quarter. Notably, we were recognized by Asia Asset Management's 2022 Best of the Best Awards as the winner of the Best ESG Manager in Asia, Best Factor Investing Manager in APAC, as well as the Best Application of ESG. Our asset servicing business continued to see positive new business momentum, and the pipeline remains robust. Notable wins announced in the quarter, including Wilmington Trust and UK-based International Biotech Trust. Our integrated trading solutions capability continues to be an area of strength. We also continue to see strong interest in our investment data science product suite. In closing, as we navigate these volatile and uncertain times, we remain laser-focused on serving our clients, generating profitable long-term growth, and delivering value to our stakeholders. Before turning it over to Jason to review our financial results in greater detail, I would like to note that we plan to publish our 2021 sustainability report in the next few days. I'm very proud of the progress we've made in our sustainability journey and serving as a force for change. Highlights for the report include our commitment to be net zero by 2050, a summary of our community support initiatives, and the launch of a more holistic business diversity program. I'll now turn the call over to Jason.