Northern Trust Corporation

Good day and welcome to the Northern Trust Corporation fourth 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.

Thank you, Ruth, and good morning, everyone, and welcome to Northern Trust Corporation's fourth quarter 2023 earnings conference call. Joining me on our call this morning is Mike O'Grady, our Chairman and CEO of Jason Tyler, our chief financial officer, John Landers, our controller, and Grace Higgins from our investor relations team. Our fourth 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 January 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 February 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 13 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 fourth quarter 2023 earnings call. Similar to the last few years, 2023 presented a challenging operating environment. We experienced a combination of geopolitical instability, highly visible bank failures, and elevated inflation and interest rates. I would like to thank our teams across the company for their tireless efforts to serve our clients under these difficult circumstances. Turning to our numbers, our fourth quarter results capped off a solid year of progress towards driving improved long-term financial performance. On a year-over-year basis, reported fourth quarter revenue was $1.6 billion. expenses were $1.4 billion, and earnings per share were $0.52. Our performance in the quarter included the impact of $261 million in notable items. Adjusting for the notable items in both periods, fourth quarter revenue on a year-over-year basis was flat, with trust fees up 5% and expenses up 3%. We focused much of our efforts in 2023 on expense control. making various structural and governance changes to enable sustained long-term productivity improvements. Actions included disciplined headcount management, vendor consolidation, rationalization of our real estate footprint, and process automation. Although we brought our year-over-year expense growth down in each quarter this year, our expense growth in 2023 was still too high relative to our trust fee and revenue growth levels in recent years. As such, lowering the trajectory of our expense growth further remains a top priority this year as well. Turning to the businesses, our organic growth continued to be below historical levels, although we saw improvement throughout the year. Within wealth management, for the fourth quarter in the year, solid growth in client advisory fees was largely offset by product-level asset outflows. We continued to see ongoing strength in the higher wealth tiers above $50 million in client assets, where our expertise, track record, and industry leadership are significant differentiators. Our ability to harness the data and analytics from serving the wealthiest people in the world for more than 130 years, coupled with our holistic, advice-driven culture, sets us apart in the marketplace and will continue to be an important driver of our success. Drawing from our experience working with some of the most sophisticated families around the globe, next month, the Northern Trust Institute will publish its first book, Secrets of Enterprising Families. The book will provide a window into what works for ultra-high net worth families who have succeeded generation after generation, and what doesn't, to help other families gain important insights and unlock value. The book will be launched with a series of client and prospect events around the country, giving us a new channel to establish relationships and develop business. Finally, as a testament to our exceptional client service and expertise, in 2023, we were named Best Private Bank for Family Offices in the U.S. and Best Private Bank for Succession Planning in the U.S. by the Financial Times Group. Asset servicing generated solid new business growth in both the fourth quarter and full year, but this was largely offset by continuing asset outflows at the client level and generally lower transaction volumes and capital markets activities. We performed particularly well with asset owners in the Americas in the fourth quarter. Notable wins included the State of Nebraska Investment Council pension plan and Costco's retirement plan. We were also reappointed as asset servicing provider for the Healthcare of Ontario pension plan. Throughout the year, we also generated healthy momentum with asset managers in the UK and EMEA regions, where our solutions for alternatives and private credit were particularly well-received. We recently finalized terms with one of the world's largest private market firms, which will add significant scale to our alternatives division. This appointment is a testament to our ability to successfully compete for some of the largest and most complex mandates. Our asset servicing business received numerous awards in 2023 for its innovation and industry leadership, including Best Outsourcing Provider, by Waters, European Transfer Agent of the Year and Administrator of the Year by Funds Europe, Best Global Custodian for Asset Owners by Asian Investor. In Asset Management, following several quarters of client outflows, we generated positive overall inflows in the fourth quarter, including healthy growth and index equity, and our fourth consecutive quarter of positive liquidity inflows. We've seen particularly good momentum in our high-yield complex, with 93% of our taxable active funds outperforming their one-year benchmarks. Our alternatives funds have also continued to generate solid growth and remain an important driver of our fee revenue. As a result, our product launches during the year focus largely on alternatives capabilities. In closing, we enter 2024 with positive momentum, well-positioned to navigate the ongoing macroeconomic and market uncertainty. Our focus is squarely on accelerating profitable organic growth, maintaining our expense discipline, and driving greater resiliency and efficiency in our operating model. With that, I'll turn it over to Jason to review our financial performance. Jason?