Northern Trust CEO Dismisses Sale Rumors Amid Strong Q2 Results

Northern Trust CEO Mike O'Grady has denied talks of a sale, saying the company has never entertained discussions with any financial institution and has no intention of selling. The statement follows a strong second-quarter profit that beat estimates, with assets under custody and administration climbing 9% to $18.1 trillion. Shares were down 3%, attributed to the CEO's denial of a sale.

Northern Trust CEO Mike O’Grady has dismissed reports of discussions regarding the potential sale of the company, stating that Northern Trust has never entertained such talks and has no intention of selling. This assertion comes following a robust second-quarter performance that exceeded analyst expectations.

During a call following Northern Trust’s second-quarter earnings report, O’Grady firmly stated, “Contrary to recent speculation, during my tenure as CEO, we have never entertained discussions regarding the sale of the company with any financial institution, nor do we intend to” [1]. The bank reported a 9% increase in assets under custody and administration, reaching $18.1 trillion as of June 30.

Despite the strong financial results, Northern Trust’s stock price initially dipped by 3% in the first hour of trading on Wednesday. Analysts attributed this decline to the CEO’s denial of a sale, as well as the ongoing discussion about the pros and cons of independence. However, by Thursday morning, the stock had rebounded to $128.39, above its pre-call price [1].

Senator Elizabeth Warren, D-MA, recently warned BNY CEO Robin Vince that buying Northern Trust would be “presumptively illegal” based on BNY’s size, raising serious antitrust concerns and presenting risks to financial stability [1]. The potential merger would significantly increase consolidation in the custodial services market, as measured by the Herfindahl-Hirschman Index (HHI), by roughly 400 points.

Investors and analysts have shown varied reactions to Northern Trust’s latest developments. Wolfe Research upgraded the stock from Underperform to Peerperform, citing a more constructive outlook and the company’s commitment to independence [2]. This upgrade was supported by Northern Trust’s impressive 48.1% return over the past year and six analysts revising their earnings estimates upward.

Analysts from Keefe, Bruyette & Woods, Wells Fargo, and Barclays have also revised their price targets following the earnings announcement, reflecting a mix of optimism and caution. These developments highlight the ongoing interest in Northern Trust’s future and its strategic direction [3].

References:
[1] https://finance.yahoo.com/news/northern-trust-ceo-dismisses-reports-113853941.html
[2] https://za.investing.com/news/analyst-ratings/wolfe-research-upgrades-northern-trust-stock-rating-on-improved-outlook-93CH-3802220
[3] https://www.benzinga.com/analyst-stock-ratings/price-target/25/07/46611697/these-analysts-revise-their-forecasts-on-northern-trust-following-q2-earnings