Northern Trust Corporation

Good day and welcome to the Northern Trust Corporation third quarter 2023 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jennifer Child, Director of Investor Relations. Please go ahead, ma'am.

Thank you, Melissa, and good morning, everyone, and welcome to Northern Trust Corporation's third quarter 2023 earnings conference call. Joining me on our call this morning is Michael Grady, our Chairman and CEO, Jason Tyler, our Chief Financial Officer, Lauren Allnutt, our controller, and Grace Higgins from our investor relations team. Our third 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 October 18th 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 November 18th. 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 12 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 third quarter 2023 earnings call. Our results for the third quarter reflect solid execution against the challenging phase of this interest rate cycle, particularly as rates appear close to be peaking. Third quarter deposit levels were generally in line with seasonal expectations, but funding costs were significantly higher, putting pressure on net interest income. We're focusing primarily on those areas of the business that are most under our control, namely trust fees and expenses. In those two areas, we're pleased with our performance. Trust fee revenue was up both sequentially and year-over-year. Expenses were well controlled, and we improved our capital position. Our wealth management business grew trust fees on both a sequential and year-over-year basis. We saw ongoing strength in the higher wealth tiers and within our global family office segment, where momentum outside the U.S. continues to be brisk. Families with large and complex trust structures continue to be an area where we excel. Activity with business owners also remains robust. Helping them optimize their complex personal affairs while they attend to growing their businesses is a consistent theme. We're also seeing early success with various new marketing approaches and referral sources. In particular, during the third quarter, we had healthy new business generation with clients with assets over $50 million. In asset management, we saw positive flows into our institutional money market platform for the third consecutive quarter. Relative to benchmarks, our tax-advantaged equity product performance remained strong within the quarter, cementing its one-, three-, and five-year track record of outperformance. Importantly, two recent large asset servicing wins contain asset management mandates for indexed fixed income and outsourced investment solutions, reinforcing our combined strength as one norther. Within asset servicing, we had good momentum in core custody and fund administration, and our pipeline remained solidly within historical levels. Our front office solutions is resonating particularly well across regions and different client types. One notable front office solutions win in the third quarter was the $32 billion Abu Dhabi pension fund. Our ability to provide a comprehensive view across public and private assets was cited as a key differentiator. Importantly, we were also selected to provide global custody, liquidity management, performance and risk analytics, and portfolio optimization. We also had good success in the U.S. asset owner space where we continue to take share. In closing, we enter the fourth quarter on solid footing. Our balance sheet continues to be very strong with ample capital and liquidity, and our credit quality remains excellent. New business momentum is healthy, and our pipeline is robust. Expense growth has declined each quarter this year, and I'm confident it will continue to build on this discipline. We're well positioned to navigate the current uncertain environment, including the proposed regulatory changes related to capital and long-term debt, and generate value for our stakeholders. I'll now turn the call over to Jason.