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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2023~~March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-36609

NORTHERN TRUST CORPORATION

(Exact name of registrant as specified in its charter)


Delaware			36-2723087
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


50 South LaSalle Street		60603
Chicago,	Illinois	(Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code: (312) 630-6000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $1.66 2/3 Par Value	NTRS	The NASDAQ Stock Market LLC
Depositary Shares, each representing 1/1,000th interest in a share of Series E Non-Cumulative Perpetual Preferred Stock	NTRSO	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated filer	¨

Non-accelerated filer	¨	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

At ~~September 30, 2023, 207,036,370~~March 31, 2024, 204,591,724 shares of common stock, $1.66 2/3 par value, were outstanding.

NORTHERN TRUST CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER 30, 2023~~MARCH 31, 2024

TABLE OF CONTENTS



			Page
Consolidated Financial Highlights (unaudited)			1

Part I – Financial Information
Items 2 and 3: Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk			3
Item 1: Consolidated Financial Statements (unaudited)			3528
Consolidated Balance Sheets			3528
Consolidated Statements of Income			3629
Consolidated Statements of Comprehensive Income			3629
Consolidated Statements of Changes in Stockholders’ Equity			3730
Consolidated Statements of Cash Flows			3931
Notes to Consolidated Financial Statements			4032
Item 4: Controls and Procedures			8572

Part II – Other Information
Item 1: Legal Proceedings			8673
Item 1A: Risk Factors			8673
Item 2: Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities			8673
Item 3: Defaults Upon Senior Securities			8673
Item 4: Mine Safety Disclosures			8673
Item 5: Other Information			8673
Item 6: Exhibits			8774

Signatures			8875

CONSOLIDATED FINANCIAL HIGHLIGHTS

(UNAUDITED)


		THREE MONTHS ENDED SEPTEMBER 30,						NINE MONTHS ENDED SEPTEMBER 30,
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
CONDENSED INCOME STATEMENTS ($ In Millions)
CONDENSED INCOME STATEMENTS ($ In Millions)
CONDENSED INCOME STATEMENTS ($ In Millions)	CONDENSED INCOME STATEMENTS ($ In Millions)	2023		2022		% CHANGE(1)		2023		2022		% CHANGE(1)
Noninterest Income	Noninterest Income	$	1,270.3	$	1,241.8	2	%	$	3,729.3	$	3,889.5	(4)	%
Noninterest Income
Noninterest Income
Net Interest Income
Net Interest Income
Net Interest Income	Net Interest Income	456.2		513.0		(11)		1,498.9		1,352.7		11
Total Revenue	Total Revenue	1,726.5		1,754.8		(2)		5,228.2		5,242.2		—
Total Revenue
Total Revenue
Provision for Credit Losses
Provision for Credit Losses
Provision for Credit Losses	Provision for Credit Losses	14.0		0.5		N/M		13.5		7.0		93
Noninterest Expense	Noninterest Expense	1,278.2		1,229.8		4		3,895.7		3,659.3		6
Noninterest Expense
Noninterest Expense
Income before Income Taxes
Income before Income Taxes
Income before Income Taxes	Income before Income Taxes	434.3		524.5		(17)		1,319.0		1,575.9		(16)
Provision for Income Taxes	Provision for Income Taxes	106.5		129.7		(18)		324.8		395.6		(18)
Provision for Income Taxes
Provision for Income Taxes
Net Income	Net Income	$	327.8	$	394.8	(17)	%	$	994.2	$	1,180.3	(16)	%
Net Income
Net Income


PER COMMON SHARE	PER COMMON SHARE
PER COMMON SHARE
PER COMMON SHARE
Net Income — Basic
Net Income — Basic
Net Income — Basic	Net Income — Basic	$	1.49	$	1.80	(17)	%	$	4.56	$	5.44	(16)	%
— Diluted	— Diluted	1.49		1.80		(17)		4.56		5.43		(16)
— Diluted
— Diluted
Cash Dividends Declared Per Common Share
Cash Dividends Declared Per Common Share
Cash Dividends Declared Per Common Share	Cash Dividends Declared Per Common Share	0.75		0.75		—		2.25		2.15		5
Book Value — End of Period (EOP)	Book Value — End of Period (EOP)	52.95		48.68		9		52.95		48.68		9
Book Value — End of Period (EOP)
Book Value — End of Period (EOP)
Market Price — EOP	Market Price — EOP	69.48		85.56		(19)		69.48		85.56		(19)
Market Price — EOP
Market Price — EOP


SELECTED BALANCE SHEET DATA ($ In Millions)	SELECTED BALANCE SHEET DATA ($ In Millions)	SEPTEMBER 30, 2023		DECEMBER 31, 2022		% CHANGE(1)		SELECTED BALANCE SHEET DATA ($ In Millions)	MARCH 31, 2024		DECEMBER 31, 2023		% CHANGE(1)
End of Period:	End of Period:
Total Assets	Total Assets	$	146,330.6	$	155,036.7	(6)	%
Total Assets
Total Assets									$	156,111.0	$	150,783.1	4	%
Earning Assets	Earning Assets	134,055.9		142,484.7		(6)
Deposits	Deposits	110,165.9		123,932.1		(11)
Stockholders’ Equity	Stockholders’ Equity	11,847.2		11,259.5		5


		THREE MONTHS ENDED SEPTEMBER 30,						NINE MONTHS ENDED SEPTEMBER 30,
		2023		2022		% CHANGE(1)		2023		2022		% CHANGE(1)
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
		2024
		2024
		2024
Average Balances:
Average Balances:
Average Balances:	Average Balances:
Total Assets	Total Assets	$	140,201.6	$	146,402.2	(4)	%	$	144,691.6	$	154,152.1	(6)	%
Total Assets
Total Assets
Earning Assets
Earning Assets
Earning Assets	Earning Assets	128,254.4		132,146.5		(3)		132,747.8		140,540.9		(6)
Deposits	Deposits	101,763.1		118,488.1		(14)		106,477.7		128,720.7		(17)
Deposits
Deposits
Stockholders’ Equity	Stockholders’ Equity	11,536.6		10,935.6		5		11,423.2		11,115.8		3
Stockholders’ Equity
Stockholders’ Equity


CLIENT ASSETS ($ In Billions)	CLIENT ASSETS ($ In Billions)	SEPTEMBER 30, 2023		DECEMBER 31, 2022		% CHANGE(1)		CLIENT ASSETS ($ In Billions)	MARCH 31, 2024		DECEMBER 31, 2023		% CHANGE(1)
Assets Under Custody/Administration(2)	Assets Under Custody/Administration(2)	$	14,164.7	$	13,604.0	4	%	Assets Under Custody/Administration(2)	$	16,472.5	$	15,404.9	7	7	%
Assets Under Custody	Assets Under Custody	11,015.4		10,604.6		4
Assets Under Management	Assets Under Management	1,333.3		1,249.5		7

N/M - Not meaningful

(1) Percentage calculations are based on actual balances rather than the rounded amounts presented in the Consolidated Financial Highlights.

(2) For the purposes of disclosing Assets Under Custody/Administration, to the extent that both custody and administration services are provided, the value of the assets is included only once in this amount.

SELECTED RATIOS AND METRICS


		THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
		2023		2022		2023		2022
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
		2024
		2024
		2024
Financial Ratios:
Financial Ratios:
Financial Ratios:	Financial Ratios:
Return on Average Common Equity	Return on Average Common Equity	11.6	%	14.9	%	12.1	%	14.9	%
Return on Average Common Equity
Return on Average Common Equity
Return on Average Assets
Return on Average Assets
Return on Average Assets	Return on Average Assets	0.93		1.07		0.92		1.02
Dividend Payout Ratio	Dividend Payout Ratio	50.3		41.7		49.4		39.6
Dividend Payout Ratio
Dividend Payout Ratio
Net Interest Margin(1)	Net Interest Margin(1)	1.45		1.58		1.55		1.32
Net Interest Margin(1)
Net Interest Margin(1)


		SEPTEMBER 30, 2023				DECEMBER 31, 2022
		STANDARDIZED APPROACH		ADVANCED APPROACH		STANDARDIZED APPROACH		ADVANCED APPROACH		WELL-CAPITALIZED RATIOS		MINIMUM CAPITAL RATIOS
	MARCH 31, 2024
		STANDARDIZED APPROACH
		STANDARDIZED APPROACH
		STANDARDIZED APPROACH															ADVANCED APPROACH		STANDARDIZED APPROACH		ADVANCED APPROACH		WELL-CAPITALIZED RATIOS		MINIMUM CAPITAL RATIOS
Capital Ratios:	Capital Ratios:
Northern Trust Corporation	Northern Trust Corporation
Northern Trust Corporation
Northern Trust Corporation
Common Equity Tier 1 Capital
Common Equity Tier 1 Capital
Common Equity Tier 1 Capital	Common Equity Tier 1 Capital	11.4	%	13.2	%	10.8	%	11.5	%	N/A		4.5	%	11.4	%	13.5	%	11.4	%	13.4	%	N/A		4.5	%
Tier 1 Capital	Tier 1 Capital	12.4		14.3		11.8		12.5		6.0		6.0
Total Capital	Total Capital	14.5		16.5		13.9		14.5		10.0		8.0
Tier 1 Leverage	Tier 1 Leverage	7.9		7.9		7.1		7.1		N/A		4.0
Supplementary Leverage	Supplementary Leverage	N/A		8.4		N/A		7.9		N/A		3.0

The Northern Trust Company	The Northern Trust Company
The Northern Trust Company
The Northern Trust Company
Common Equity Tier 1 Capital
Common Equity Tier 1 Capital
Common Equity Tier 1 Capital	Common Equity Tier 1 Capital	12.3	%	14.5	%	11.6	%	12.4	%	6.5	%	4.5	%	11.9	%	14.2	%	12.2	%	14.6	%	6.5	%	4.5	%
Tier 1 Capital	Tier 1 Capital	12.3		14.5		11.6		12.4		8.0		6.0
Total Capital	Total Capital	14.2		16.4		13.5		14.2		10.0		8.0
Tier 1 Leverage	Tier 1 Leverage	7.8		7.8		6.9		6.9		5.0		4.0
Supplementary Leverage	Supplementary Leverage	N/A		8.3		N/A		7.7		3.0		3.0

(1) Net interest margin is presented on a fully taxable equivalent (FTE) basis, a non-generally accepted accounting principle (GAAP) financial measure that facilitates the analysis of asset yields. The net interest margin on a GAAP basis and a reconciliation of net interest income on a GAAP basis to net interest income on an FTE basis are presented in “Reconciliation to Fully Taxable Equivalent” within the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section.

PART I – FINANCIAL INFORMATION

Items 2. and 3. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures about Market Risk

The following is management’s discussion and analysis of the financial condition and results of operations (MD&A) of Northern Trust Corporation (Corporation) for the ~~third~~first quarter of ~~2023.~~2024. The following should be read in conjunction with the consolidated financial statements and related footnotes included in this report as well as the Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023. Investors also should read the section entitled “Forward-Looking Statements.”

Certain terms used in this report are defined in the Glossary included in our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

~~THIRD~~FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS

General

The Corporation is a leading provider of wealth management, asset servicing, asset management and banking solutions to corporations, institutions, families and individuals. The Corporation focuses on managing and servicing client assets through its two client-focused reporting segments: Asset Servicing and Wealth Management. Asset management and related services are provided to Asset Servicing and Wealth Management clients primarily by the Asset Management business. Except where the context requires otherwise, the terms “Northern Trust,” “we,” “us,” “our,” “its,” or similar terms mean the Corporation and its subsidiaries on a consolidated basis.

Overview of Financial Results

Net Income per diluted common share was ~~$1.49~~$0.96 in the current quarter and ~~$1.80~~$1.51 in the ~~third~~first quarter of ~~2022.~~2023. Net Income decreased ~~$67.0~~$119.9 million to ~~$327.8~~$214.7 million in the current quarter from ~~$394.8~~$334.6 million in the prior-year quarter. Annualized return on average common equity was ~~11.6%~~7.3% in the current quarter and ~~14.9%~~12.4% in the prior-year quarter. The annualized return on average assets was ~~0.93%~~0.60% in the current quarter as compared to ~~1.07%~~0.92% in the prior-year quarter. ~~The impacts of a tight labor market are reflected in our Compensation expense. Inflationary pressures were also reflected in higher Equipment and Software expense.~~

Revenue decreased ~~$28.3~~$97.8 million, or 2%6%, to ~~$1.73~~$1.65 billion in the current quarter from ~~$1.75~~$1.74 billion in the prior-year quarter. Trust, Investment and Other Servicing Fees increased ~~$33.2~~$79.3 million, or 3%7%, from ~~$1.08~~$1.06 billion in the prior-year quarter to ~~$1.11~~$1.14 billion in the current quarter, primarily due to ~~lagged~~ favorable markets and ~~favorable currency translation, partially offset by lower transaction volumes.~~new business. Other Noninterest Income (Loss) decreased ~~$4.7~~$174.0 million ~~or 3%,~~ from ~~$163.1~~$149.8 million in the prior-year quarter to ~~$158.4~~a loss of $24.2 million in the current quarter, primarily ~~reflecting lower Foreign Exchange Trading Income,~~due to the $189.4 million available for sale debt security loss reflected in Investment Security Gains (Losses) in the current quarter, partially offset by higher Other Operating Income. Net Interest Income decreased ~~$56.8~~$3.1 million, or ~~11%~~1%, to ~~$456.2~~$528.1 million in the current quarter as compared to ~~$513.0~~$531.2 million in the prior-year quarter, primarily due to ~~lower average earning assets.~~higher funding costs.

~~There~~In the current quarter, there was a ~~$14.0 million~~negative Provision for Credit Losses ~~in the current quarter,~~of $8.5 million, as compared to a ~~$0.5~~$15.0 million Provision for Credit Losses in the prior-year quarter. The negative provision in the current quarter resulted from decreases in both individual and collective reserves. For additional information, refer to the Provision for Credit Losses ~~in the current quarter was primarily due to an increase in the reserve evaluated on a collective basis, driven by a small number~~within “First Quarter Consolidated Results of large new loans and renewals and credit quality deterioration of certain commercial real estate (CRE) and commercial and institutional (C&I) loans, partially offset by a net improvement in the overall macroeconomic outlook.Operations” section.

Noninterest Expense increased ~~$48.4~~$79.1 million, or 4%6%, from ~~$1.23~~$1.29 billion in the prior-year quarter to ~~$1.28~~$1.36 billion in the current quarter, primarily attributable to higher Compensation and Equipment and Software ~~and Other Operating Expense.~~Expenses, as well as the $12.5 million FDIC special assessment recorded in the current quarter.

The Provision for Income Taxes in the current quarter totaled ~~$106.5~~$75.9 million, representing an effective tax rate of ~~24.5%~~26.1%. The Provision for Income Taxes in the prior-year quarter totaled ~~$129.7~~$109.4 million, representing an effective tax rate of ~~24.7%~~24.6%. ~~The effective tax rate decreased compared to the prior-year quarter primarily due to a lower state tax provision following the resolution of certain state matters.~~

FDIC Special Assessment

In ~~May~~November 2023, the Federal Deposit Insurance Corporation (FDIC) issued a ~~proposed~~final rule ~~that would impose~~to implement a special assessment to ~~recover the loss~~recoup losses to the ~~Deposit Insurance Fund arising from the protection of uninsured depositors of Silicon Valley Bank and Signature Bank~~deposit insurance fund associated with ~~their closures, and~~bank failures in the ~~systemic risk determination announced by the FDIC on March 12,~~first half of 2023. ~~While the timing and amount of any expense recognition are unknown until the proposed rule is finalized, if the FDIC final rule is issued as proposed, the estimated impact of~~In conjunction with the special assessment, to$84.6 million was recognized as an accrued liability and related expense in the fourth quarter of 2023. During the current quarter, the FDIC published revised estimated losses as well as expected recoveries from the related bank failures. As a result, Northern Trust recognized an additional cost of $12.5 million in the current quarter, recorded to Other Operating ~~Expense, would be approximately $80 million.~~Expense.

~~THIRD QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)~~

Trust, Investment and Other Servicing Fees

Trust, Investment and Other Servicing Fees are based primarily on the market value of assets held in custody, managed or serviced; the volume of transactions; securities lending volume and spreads; and fees for other services rendered. Certain market value calculations on which fees are based are performed on a monthly or quarterly basis in arrears.

~~Northern~~

FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Trust, ~~voluntarily waived $2.2 million of money market fund fees for the three months ended September 30, 2023~~Investment and ~~$2.6 million of money market fund fees for the three months ended September 30, 2022.~~Other Servicing Fees (continued)

The components of Trust, Investment and Other Servicing Fees are provided below.

TABLE 1: TRUST, INVESTMENT AND OTHER SERVICING FEES


		THREE MONTHS ENDED SEPTEMBER 30,
	THREE MONTHS ENDED MARCH 31,
($ In Millions)
($ In Millions)
($ In Millions)	($ In Millions)	2023		2022		CHANGE				2024			2023			CHANGE
Asset Servicing Trust, Investment and Other Servicing Fees	Asset Servicing Trust, Investment and Other Servicing Fees
Custody and Fund Administration
Custody and Fund Administration
Custody and Fund Administration	Custody and Fund Administration	$	428.1	$	407.3	$	20.8	5	%	$	436.7		$	413.6		$	23.1		6	6	%
Investment Management	Investment Management	137.1		136.0		1.1		1
Securities Lending	Securities Lending	20.4		21.7		(1.3)		(6)
Other	Other	40.4		38.2		2.2		6
Total Asset Servicing Trust, Investment and Other Servicing Fees	Total Asset Servicing Trust, Investment and Other Servicing Fees	$	626.0	$	603.2	$	22.8	4	%	Total Asset Servicing Trust, Investment and Other Servicing Fees		$	639.6		$	603.0		$	36.6		6	6	%
Wealth Management Trust, Investment and Other Servicing Fees	Wealth Management Trust, Investment and Other Servicing Fees
Central	Central	$	172.3	$	171.3	$	1.0	1	%
Central
Central												$	178.3		$	163.6		$	14.7		9		%
East	East	126.1		124.1		2.0		2
West	West	95.8		92.5		3.3		4
Global Family Office	Global Family Office	91.7		87.6		4.1		5
Total Wealth Management Trust, Investment and Other Servicing Fees	Total Wealth Management Trust, Investment and Other Servicing Fees	$	485.9	$	475.5	$	10.4	2	%	Total Wealth Management Trust, Investment and Other Servicing Fees		$	503.3		$	460.6		$	42.7		9	9	%
Total Consolidated Trust, Investment and Other Servicing Fees	Total Consolidated Trust, Investment and Other Servicing Fees	$	1,111.9	$	1,078.7	$	33.2	3	%	Total Consolidated Trust, Investment and Other Servicing Fees		$	1,142.9		$	1,063.6		$	79.3		7	7	%

Asset Servicing

Custody and Fund Administration fees, the largest component of Asset Servicing fees, are driven primarily by values of client assets under custody/administration (AUC/A), transaction volumes and the number of accounts. The asset values used to calculate these fees vary depending on the individual fee arrangements negotiated with each client. Custody fees related to asset values are client-specific and are priced based on month-end market values, quarter-end market values, or the average of month-end market values for the quarter. The fund administration fees that are asset-value-related are priced using month-end, quarter-end, or average daily balances. Investment Management fees are based generally on market values of client ~~assets under management~~AUM throughout the period. Typically, the asset values used to calculate fee revenue are based on a one-month or one-quarter lag. Securities Lending revenue is affected by market values; the demand for securities to be lent, which drives volumes; and the interest rate spread earned on the investment of cash deposited by investment firms as collateral for securities they have borrowed. The Other fee category in Asset Servicing includes such products as investment risk and analytical services, benefit payments, and other services. Revenue from these products is based generally on the volume of services provided or a fixed fee.

Custody and Fund Administration fees increased from the prior-year quarter, primarily due to ~~new business, favorable currency translation, and~~ favorable markets ~~partially offset by lower transaction volumes.~~and new business. Investment Management fees increased from the prior-year quarter, primarily due to favorable markets.

Wealth Management

Wealth Management fee income is calculated primarily based on market values and is impacted by both one-month and one-quarter lagged asset values. Fee income in the regions ~~(Central, East and West)~~ increased from the prior-year quarter, primarily due to ~~lagged~~ favorable ~~markets, partially offset by product-related asset outflows.~~markets. Global Family Office fee income increased from the prior-year quarter, primarily due to favorable markets and asset inflows.

~~THIRD QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)~~

~~Trust, Investment and Other Servicing Fees (continued)~~

Market Indices

The following tables present selected market indices and the percentage changes year-over-year to provide context regarding equity and fixed income market impacts on the Corporation’s results.

TABLE 2: EQUITY MARKET INDICES


		DAILY AVERAGES				PERIOD-END
		THREE MONTHS ENDED SEPTEMBER 30,				AS OF SEPTEMBER 30,
		2023	2022	CHANGE		2023	2022	CHANGE
	DAILY AVERAGES																		DAILY AVERAGES							PERIOD-END
	THREE MONTHS ENDED MARCH 31,																		THREE MONTHS ENDED MARCH 31,							AS OF MARCH 31,
	2024													2024			2023		CHANGE			2024			2023	CHANGE
S&P 500	S&P 500	4,458	3,977	12	%	4,288	3,586	20	%	S&P 500	4,989	3,998	3,998		25	25	%	5,254		4,109	4,109		28	28	%
MSCI EAFE (U.S. dollars)	MSCI EAFE (U.S. dollars)	2,113	1,848	14		2,031	1,661	22
MSCI EAFE (local currency)	MSCI EAFE (local currency)	1,346	1,217	11		1,331	1,137	17

FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Trust, Investment and Other Servicing Fees (continued)

TABLE 3: FIXED INCOME MARKET INDICES


		AS OF SEPTEMBER 30,
		2023	2022	CHANGE
	AS OF MARCH 31,													AS OF MARCH 31,
	2024									2024			2023	CHANGE
Barclays Capital U.S. Aggregate Bond Index	Barclays Capital U.S. Aggregate Bond Index	2,024	2,011	1	%	Barclays Capital U.S. Aggregate Bond Index	2,145	2,109	2,109		2	2	%
Barclays Capital Global Aggregate Bond Index	Barclays Capital Global Aggregate Bond Index	436	427	2

Client Assets

As noted above, AUC/A and assets under management are two of the primary drivers of our Trust, Investment and Other Servicing Fees. For the purposes of disclosing AUC/A, to the extent that both custody and administration services are provided, the value of the assets is included only once in this amount. The following table presents AUC/A by reporting segment.

TABLE 4: ASSETS UNDER CUSTODY / ADMINISTRATION BY REPORTING SEGMENT


		SEPTEMBER 30, 2023			JUNE 30, 2023		SEPTEMBER 30, 2022		CHANGE Q3-23/Q2-23		CHANGE Q3-23/Q3-22
	MARCH 31, 2024																MARCH 31, 2024		DECEMBER 31, 2023		MARCH 31, 2023			CHANGE Q1-24/Q4-23		CHANGE Q1-24/Q1-23
($ In Billions)			($ In Billions)		SEPTEMBER 30, 2023		JUNE 30, 2023		SEPTEMBER 30, 2022		CHANGE Q3-23/Q2-23		CHANGE Q3-23/Q3-22		($ In Billions)
Asset Servicing	Asset Servicing	Asset Servicing		$											15,385.4	$	14,362.6	$	13,221.5	7	7	%	16		%
Wealth Management	Wealth Management	958.5			995.4		868.0		(4)		10
Total Assets Under Custody / Administration	Total Assets Under Custody / Administration	$	14,164.7		$	14,478.9	$	12,822.0	(2)	%	10	%	Total Assets Under Custody / Administration	$	16,472.5	$	15,404.9	$	14,174.8	7	7	%	16		%

The following table presents Northern Trust’s assets under custody, a component of AUC/A, by reporting segment.

TABLE 5: ASSETS UNDER CUSTODY BY REPORTING SEGMENT


		SEPTEMBER 30, 2023			JUNE 30, 2023		SEPTEMBER 30, 2022		CHANGE Q3-23/Q2-23		CHANGE Q3-23/Q3-22
	MARCH 31, 2024																MARCH 31, 2024		DECEMBER 31, 2023		MARCH 31, 2023			CHANGE Q1-24/Q4-23		CHANGE Q1-24/Q1-23
($ In Billions)			($ In Billions)		SEPTEMBER 30, 2023		JUNE 30, 2023		SEPTEMBER 30, 2022		CHANGE Q3-23/Q2-23		CHANGE Q3-23/Q3-22		($ In Billions)
Asset Servicing	Asset Servicing	Asset Servicing		$											11,723.1	$	10,882.0	$	10,065.6	8	8	%	16		%
Wealth Management	Wealth Management	951.0			989.1		860.8		(4)		10
Total Assets Under Custody	Total Assets Under Custody	$	11,015.4		$	11,284.8	$	9,986.3	(2)	%	10	%	Total Assets Under Custody	$	12,804.1	$	11,916.5	$	11,013.2	7	7	%	16		%

Consolidated assets under custody ~~decreased~~increased from the prior quarter, primarily reflecting ~~unfavorable~~favorable markets and ~~unfavorable currency translation,~~client asset inflows, partially offset by ~~asset inflows.~~unfavorable currency translation. Consolidated assets under custody increased from the prior-year quarter, primarily reflecting the impact of favorable markets and favorable currency translation, ~~and favorable~~partially offset by client asset ~~inflows.~~outflows.

The following table presents the allocation of Northern Trust’s custodied assets by reporting segment.

TABLE 6: ALLOCATION OF ASSETS UNDER CUSTODY


		SEPTEMBER 30, 2023						JUNE 30, 2023						SEPTEMBER 30, 2022
		AS		WM		TOTAL		AS		WM		TOTAL		AS		WM		TOTAL
	MARCH 31, 2024																											MARCH 31, 2024						DECEMBER 31, 2023					MARCH 31, 2023
	AS																							AS		WM		TOTAL		AS		WM		TOTAL		AS		WM	TOTAL
Equities	Equities	46	%	58	%	47	%	46	%	60	%	47	%	43	%	55	%	44	%	Equities	47	%	61	%	48	%	46	%	60	%	47	%	45	%	58	%	46	%
Fixed Income Securities	Fixed Income Securities	33		13		31		33		13		31		35		15		33
Cash and Other Assets	Cash and Other Assets	19		29		21		19		27		21		20		30		21
Securities Lending Collateral	Securities Lending Collateral	2		—		1		2		—		1		2		—		2

The following table presents Northern Trust’s assets under custody by investment type.

TABLE 7: ASSETS UNDER CUSTODY BY INVESTMENT TYPE


($ In Billions)	MARCH 31, 2024		DECEMBER 31, 2023		MARCH 31, 2023		CHANGE Q1-24/Q4-23		CHANGE Q1-24/Q1-23
Equities	$	6,172.5	$	5,652.5	$	5,091.1	9	%	21	%
Fixed Income Securities	3,804.2		3,737.1		3,501.4		2		9
Cash and Other Assets	2,664.2		2,359.5		2,252.8		13		18
Securities Lending Collateral	163.2		167.4		167.9		(3)		(3)
Total Assets Under Custody	$	12,804.1	$	11,916.5	$	11,013.2	7	%	16	%

~~THIRD~~FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Trust, Investment and Other Servicing Fees (continued)

~~The following table presents Northern Trust’s assets under custody by investment type.~~

~~TABLE 7: ASSETS UNDER CUSTODY BY INVESTMENT TYPE~~
($ In Billions) SEPTEMBER 30, 2023 JUNE 30, 2023 SEPTEMBER 30, 2022 CHANGE Q3-23/Q2-23 CHANGE Q3-23/Q3-22
Equities $ 5,141.4 $ 5,328.7 $ 4,409.0 (4) % 17 %
Fixed Income Securities 3,445.0 3,524.7 3,288.7 (2) 5
Cash and Other Assets 2,267.0 2,262.6 2,126.5 — 7
Securities Lending Collateral 162.0 168.8 162.1 (4) —
Total Assets Under Custody $ 11,015.4 $ 11,284.8 $ 9,986.3 (2) % 10 %

The following table presents Northern Trust’s assets under management by reporting segment.

TABLE 8: ASSETS UNDER MANAGEMENT BY REPORTING SEGMENT


		SEPTEMBER 30, 2023			JUNE 30, 2023		SEPTEMBER 30, 2022		CHANGE Q3-23/Q2-23		CHANGE Q3-23/Q3-22
	MARCH 31, 2024																MARCH 31, 2024		DECEMBER 31, 2023		MARCH 31, 2023			CHANGE Q1-24/Q4-23		CHANGE Q1-24/Q1-23
($ In Billions)			($ In Billions)		SEPTEMBER 30, 2023		JUNE 30, 2023		SEPTEMBER 30, 2022		CHANGE Q3-23/Q2-23		CHANGE Q3-23/Q3-22		($ In Billions)
Asset Servicing	Asset Servicing	Asset Servicing		$											1,080.1	$	1,032.0	$	962.1	5	5	%	12		%
Wealth Management	Wealth Management	369.9			376.0		336.2		(2)		10
Total Assets Under Management	Total Assets Under Management	$	1,333.3		$	1,365.8	$	1,209.9	(2)	%	10	%	Total Assets Under Management	$	1,500.7	$	1,434.5	$	1,330.4	5	5	%	13		%

Consolidated assets under management ~~decreased~~increased compared to the prior quarter, primarily reflecting ~~unfavorable~~favorable markets ~~product-related outflows,~~ and ~~unfavorable currency translation.~~client asset inflows. Consolidated assets under management increased compared to the prior-year quarter, primarily reflecting the impact of favorable markets.

The following table presents the allocation of Northern Trust’s assets under management by reporting segment.

TABLE 9: ALLOCATION OF ASSETS UNDER MANAGEMENT


		SEPTEMBER 30, 2023						JUNE 30, 2023						SEPTEMBER 30, 2022
		AS		WM		TOTAL		AS		WM		TOTAL		AS		WM		TOTAL
	MARCH 31, 2024																											MARCH 31, 2024						DECEMBER 31, 2023					MARCH 31, 2023
	AS																							AS		WM		TOTAL		AS		WM		TOTAL		AS		WM	TOTAL
Equities	Equities	53	%	53	%	53	%	54	%	55	%	54	%	51	%	51	%	51	%	Equities	56	%	57	%	56	%	55	%	55	%	55	%	54	%	53	%	54	%
Fixed Income Securities	Fixed Income Securities	11		22		14		11		21		14		12		24		15
Cash and Other Assets	Cash and Other Assets	19		25		21		18		24		20		19		25		21
Securities Lending Collateral	Securities Lending Collateral	17		—		12		17		—		12		18		—		13

The following table presents Northern Trust’s assets under management by investment type.

TABLE 10: ASSETS UNDER MANAGEMENT BY INVESTMENT TYPE

($ In Billions) SEPTEMBER 30, 2023 JUNE 30, 2023 SEPTEMBER 30, 2022 CHANGE Q3-23/Q2-23 CHANGE Q3-23/Q3-22
Equities $ 706.5 $ 740.5 $ 615.1 (5) % 15 %
Fixed Income Securities 190.2 188.7 182.6 1 4
Cash and Other Assets 274.6 267.8 250.1 3 10
Securities Lending Collateral 162.0 168.8 162.1 (4) —
Total Assets Under Management $ 1,333.3 $ 1,365.8 $ 1,209.9 (2) % 10 %

~~THIRD QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)~~

~~Trust, Investment and Other Servicing Fees (continued)~~


($ In Billions)	MARCH 31, 2024		DECEMBER 31, 2023		MARCH 31, 2023		CHANGE Q1-24/Q4-23		CHANGE Q1-24/Q1-23
Equities	$	841.1	$	785.5	$	712.1	7	%	18	%
Fixed Income Securities	203.5		203.4		187.6		—		8
Cash and Other Assets	292.9		278.2		262.8		5		11
Securities Lending Collateral	163.2		167.4		167.9		(2)		(3)
Total Assets Under Management	$	1,500.7	$	1,434.5	$	1,330.4	5	%	13	%

The following table presents activity in consolidated assets under management by product.

TABLE 11: ACTIVITY IN CONSOLIDATED ASSETS UNDER MANAGEMENT BY PRODUCT


				THREE MONTHS ENDED
($ In Billions)				SEPTEMBER 30, 2023		JUNE 30, 2023		MARCH 31, 2023		DECEMBER 31, 2022		SEPTEMBER 30, 2022
			THREE MONTHS ENDED																	THREE MONTHS ENDED
(In Billions)														(In Billions)	MARCH 31, 2024	DECEMBER 31, 2023	SEPTEMBER 30, 2023	JUNE 30, 2023	MARCH 31, 2023
Beginning Balance of AUM	Beginning Balance of AUM			$	1,365.8	$	1,330.4	$	1,249.5	$	1,209.9	$	1,302.8
Inflows by Product	Inflows by Product
		Equities		49.5		44.8		52.1		37.7		39.5
		Fixed Income		15.0		11.2		14.4		11.6		12.3
		Cash and Other Assets		565.2		551.3		276.7		121.9		128.9
		Securities Lending Collateral		54.6		53.4		66.3		48.2		55.3
		Equities
		Equities
		Equities
	Fixed Income
	Cash and Other Assets
	Securities Lending Collateral
Total Inflows	Total Inflows			684.3		660.7		409.5		219.4		236.0
Outflows by Product	Outflows by Product
		Equities		(54.6)		(54.7)		(59.2)		(42.8)		(56.5)
		Fixed Income		(12.4)		(10.2)		(16.6)		(12.7)		(12.4)
		Cash and Other Assets		(559.5)		(529.7)		(264.0)		(128.5)		(152.2)
		Securities Lending Collateral		(61.4)		(52.5)		(46.7)		(62.0)		(62.5)
		Equities
		Equities
		Equities
	Fixed Income
	Cash and Other Assets
	Securities Lending Collateral
Total Outflows	Total Outflows			(687.9)		(647.1)		(386.5)		(246.0)		(283.6)
Net Inflows (Outflows)	Net Inflows (Outflows)			(3.6)		13.6		23.0		(26.6)		(47.6)
Market Performance, Currency & Other	Market Performance, Currency & Other
		Market Performance & Other		(24.1)		27.7		52.4		55.9		(35.1)
		Currency		(4.8)		(5.9)		5.5		10.3		(10.2)
		Market Performance & Other
		Market Performance & Other
		Market Performance & Other
	Currency
Total Market Performance, Currency & Other	Total Market Performance, Currency & Other			(28.9)		21.8		57.9		66.2		(45.3)
Ending Balance of AUM	Ending Balance of AUM			$	1,333.3	$	1,365.8	$	1,330.4	$	1,249.5	$	1,209.9

FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Other Noninterest Income

The components of Other Noninterest Income are provided below.

TABLE 12: OTHER NONINTEREST INCOME


		THREE MONTHS ENDED SEPTEMBER 30,
	THREE MONTHS ENDED MARCH 31,
($ In Millions)
($ In Millions)
($ In Millions)	($ In Millions)	2023		2022		CHANGE				2024		2023		CHANGE
Foreign Exchange Trading Income	Foreign Exchange Trading Income	$	51.8	$	64.7	$	(12.9)	(20)	%	Foreign Exchange Trading Income	$	57.0	$	53.0	$	4.0	8	8	%
Treasury Management Fees	Treasury Management Fees	7.5		9.3		(1.8)		(18)
Security Commissions and Trading Income	Security Commissions and Trading Income	30.9		32.1		(1.2)		(4)
Other Operating Income	Other Operating Income	68.2		57.3		10.9		19
Investment Security Gains (Losses), net	Investment Security Gains (Losses), net	—		(0.3)		0.3		N/M		Investment Security Gains (Losses), net	(189.4)		6.9	6.9	(196.3)	(196.3)	N/M	N/M
Total Other Noninterest Income	Total Other Noninterest Income	$	158.4	$	163.1	$	(4.7)	(3)	%	Total Other Noninterest Income	$	(24.2)	$	149.8	$	(174.0)	N/M	N/M

N/M - Not meaningful

Foreign Exchange Trading Income ~~decreased~~increased compared to the prior-year quarter primarily driven by ~~an unfavorable impact from foreign exchange swap activity and lower~~higher client volumes.

Other Operating Income increased compared to the prior-year quarter, primarily driven by higher income associated with a market value increase in supplemental compensation plans ~~higher banking~~ and ~~credit-related services fees, and income from valuation adjustments to~~lower expense associated with existing swap agreements related to Visa Inc. Class B common ~~shares, partially offset by lower non-trading foreign exchange income and lower miscellaneous income.~~shares.

Investment Security Gains (Losses), net reflects the $189.4 million available for sale debt security loss as compared to the $6.9 million gain on the sale of available for sale debt securities in the prior-year quarter, each arising from a repositioning of the portfolio.

~~THIRD QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)~~

Net Interest Income

Net Interest Income is defined as the total of Interest Income and amortized fees on earning assets, less Interest Expense on deposits and borrowed funds, adjusted for the impact of interest-related hedging activity. Earning assets—including Federal Funds Sold, Securities Purchased under Agreements to Resell, Interest-Bearing Due From and Deposits with Banks, Federal Reserve and Other Central Bank Deposits, Securities, Loans, and Other Interest-Earning Assets—are financed by a large base of interest-bearing ~~funds~~liabilities that include client deposits, short-term borrowings, Senior Notes and Long-Term Debt. Short-term borrowings include Federal Funds Purchased, Securities Sold Under Agreements to Repurchase, and Other Borrowings. Earning assets are also funded by ~~noninterest-related~~noninterest-bearing funds, which include demand deposits and stockholders’ equity. Net Interest Income is subject to variations in the level and mix of earning assets and interest-bearing funds and their relative sensitivity to interest rates. In addition, the levels of nonaccruing assets and client compensating deposit balances used to pay for services impact Net Interest Income.

Net interest margin is the difference between what we earn on our assets and what we pay for deposits and other sources of funding. The direction and level of interest rates are important factors in our earnings. Net interest margin is calculated by dividing annualized Net Interest Income by average interest-earning assets.

Net Interest Income stated on a fully taxable equivalent (FTE) basis is a non-generally accepted accounting principle (GAAP) financial measure that facilitates the analysis of asset yields. Management believes an FTE presentation provides a clearer indication of net interest margins for comparative purposes. When adjusted to an FTE basis, yields on taxable, nontaxable, and partially taxable assets are comparable; however, the adjustment to an FTE basis has no impact on Net Income. A reconciliation of Net Interest Income on a GAAP basis to Net Interest Income on an FTE basis is provided in “Reconciliation to Fully Taxable Equivalent” within this MD&A.

~~THIRD~~FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Net Interest Income (continued)

The following tables present an analysis of average daily balances and interest rates affecting Net Interest Income and an analysis of Net Interest Income changes.

TABLE 13: AVERAGE CONSOLIDATED BALANCE SHEETS WITH ANALYSIS OF NET INTEREST INCOME


(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)	(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)	THIRD QUARTER												(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)		FIRST QUARTER
		2023						2022								2024									2023
($ In Millions)	($ In Millions)	INTEREST		AVERAGE BALANCE		AVERAGE RATE(7)		INTEREST		AVERAGE BALANCE		AVERAGE RATE(7)		($ In Millions)		INTEREST			AVERAGE BALANCE			AVERAGE RATE(7)			INTEREST			AVERAGE BALANCE			AVERAGE RATE(7)
Interest-Earning Assets	Interest-Earning Assets
Federal Reserve and Other Central Bank Deposits	Federal Reserve and Other Central Bank Deposits	$	352.1	$	28,000.8	4.99	%	$	135.4	$	30,548.7	1.76	%
Federal Reserve and Other Central Bank Deposits
Federal Reserve and Other Central Bank Deposits																$	459.7		$	35,897.3		5.15		%	$	377.0		$	36,641.8		4.17		%
Interest-Bearing Due from and Deposits with Banks(1)	Interest-Bearing Due from and Deposits with Banks(1)	34.9		4,301.4		3.22		14.5		3,976.8		1.45
Federal Funds Sold	Federal Funds Sold	—		1.2		5.62		—		5.1		2.79
Securities Purchased under Agreements to Resell(2)	Securities Purchased under Agreements to Resell(2)	463.9		950.8		193.58		30.5		1,270.9		9.51
Debt Securities	Debt Securities
Available for Sale	Available for Sale	277.9		24,430.7		4.51		150.6		28,482.8		2.10
Available for Sale
Available for Sale
Held to Maturity	Held to Maturity	125.2		25,919.2		1.93		87.1		25,126.6		1.38
Trading Account	Trading Account	0.1		0.4		21.15		0.1		0.4		23.60
Total Debt Securities	Total Debt Securities	403.2		50,350.3		3.18		237.8		53,609.8		1.76
Loans and Leases(3)		665.5		42,210.4		6.26		380.9		41,466.4		3.64
Loans(3)
Other Interest-Earning Assets(4)	Other Interest-Earning Assets(4)	28.6		2,439.5		4.65		12.5		1,268.8		3.92
Total Interest-Earning Assets	Total Interest-Earning Assets	1,948.2		128,254.4		6.03		811.6		132,146.5		2.44
Cash and Due from Banks and Other Central Bank Deposits(5)	Cash and Due from Banks and Other Central Bank Deposits(5)	—		1,694.6		—		—		1,903.1		—
Other Noninterest-Earning Assets	Other Noninterest-Earning Assets	—		10,252.6		—		—		12,352.6		—
Total Assets	Total Assets	$	—	$	140,201.6	—	%	$	—	$	146,402.2	—	%	Total Assets		$	—		$	145,118.3		—	—	%	$	—		$	148,059.9		—	—	%
Average Source of Funds	Average Source of Funds
Deposits	Deposits
Deposits
Deposits
Savings, Money Market and Other
Savings, Money Market and Other
Savings, Money Market and Other	Savings, Money Market and Other	$	173.9	$	22,624.9	3.05	%	$	68.6	$	29,089.3	0.94	%	$	253.2		$	27,349.0		3.72	3.72	%	$	158.0		$	27,268.8		2.35	2.35	%
Savings Certificates and Other Time	Savings Certificates and Other Time	43.3		3,665.2		4.69		4.0		986.0		1.61
Non-U.S. Offices — Interest-Bearing	Non-U.S. Offices — Interest-Bearing	499.4		58,680.5		3.38		104.7		64,057.3		0.65
Total Interest-Bearing Deposits	Total Interest-Bearing Deposits	716.6		84,970.6		3.35		177.3		94,132.6		0.75
Federal Funds Purchased	Federal Funds Purchased	77.5		5,935.9		5.18		9.9		1,967.5		2.00
Securities Sold under Agreements to Repurchase(2)	Securities Sold under Agreements to Repurchase(2)	454.0		426.0		422.85		25.5		489.6		20.72
Other Borrowings(6)	Other Borrowings(6)	154.8		10,981.7		5.59		35.7		5,991.1		2.36
Senior Notes	Senior Notes	44.1		2,713.2		6.44		28.6		2,969.6		3.79
Long-Term Debt	Long-Term Debt	31.8		2,126.9		5.94		9.3		1,087.6		3.41

Total Interest-Related Funds		1,478.8		107,154.3		5.48		286.3		106,638.0		1.07
Total Interest-Bearing Liabilities
Total Interest-Bearing Liabilities
Total Interest-Bearing Liabilities
Interest Rate Spread	Interest Rate Spread	—		—		0.55		—		—		1.37
Demand and Other Noninterest-Bearing Deposits	Demand and Other Noninterest-Bearing Deposits	—		16,792.5		—		—		24,355.5		—
Other Noninterest-Bearing Liabilities	Other Noninterest-Bearing Liabilities	—		4,718.2		—		—		4,473.1		—
Stockholders’ Equity	Stockholders’ Equity	—		11,536.6		—		—		10,935.6		—
Total Liabilities and Stockholders’ Equity	Total Liabilities and Stockholders’ Equity	$	—	$	140,201.6	—	%	$	—	$	146,402.2	—	%	Total Liabilities and Stockholders’ Equity		$	—		$	145,118.3		—	—	%	$	—		$	148,059.9		—	—	%
Net Interest Income/Margin (FTE Adjusted)	Net Interest Income/Margin (FTE Adjusted)	$	469.4	$	—	1.45	%	$	525.3	$	—	1.58	%	Net Interest Income/Margin (FTE Adjusted)		$	535.4		$	—		1.61	1.61	%	$	544.4		$	—		1.62	1.62	%
Net Interest Income/Margin (Unadjusted)	Net Interest Income/Margin (Unadjusted)	$	456.2	$	—	1.41	%	$	513.0	$	—	1.54	%	Net Interest Income/Margin (Unadjusted)		$	528.1		$	—		1.59	1.59	%	$	531.2		$	—		1.58	1.58	%

(1)Interest-Bearing Due from and Deposits with Banks includes the interest-bearing component of Cash and Due from Banks and Interest-Bearing Deposits with Banks as presented on the consolidated balance sheets.

(2)Includes the impact of balance sheet netting under master netting arrangements of approximately ~~$33.5~~$60.2 billion and ~~$4.3~~$10.0 billion for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively. Excluding the impact of netting for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ the average interest rate on Securities Purchased under Agreements to Resell would be approximately ~~5.34%~~5.46% and ~~2.16%~~4.63%, respectively. Excluding the impact of netting for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ the average interest rate on Securities Sold under Agreements to Repurchase would be approximately ~~5.30%~~5.39% and ~~2.11%~~4.56%, respectively. Northern Trust nets securities sold under repurchase agreements against those purchased under resale agreements when there is a legally enforceable master netting agreement.

(3)Average balances include nonaccrual loans.

(4)Other Interest-Earning Assets include certain community development investments, collateral deposits with certain securities depositories and clearing houses, Federal Home Loan Bank and Federal Reserve stock, and money market investments which are classified in Other Assets on the consolidated balance sheets.

(5)Cash and Due from Banks and Other Central Bank Deposits includes the noninterest-bearing component of Federal Reserve and Other Central Bank Deposits on the consolidated balance sheets.

(6)Other Borrowings primarily includes advances from the Federal Home Loan Bank of Chicago.

(7)Rate calculations are based on actual balances rather than the rounded amounts presented in the average consolidated balance sheets with analysis of Net Interest Income.

~~THIRD~~FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Net Interest Income (continued)

TABLE 14: ANALYSIS OF NET INTEREST INCOME CHANGES DUE TO VOLUME AND RATE(1)


(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)	(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)	THREE MONTHS ENDED SEPTEMBER 30, 2023/2022						(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)	THREE MONTHS ENDED MARCH 31, 2024 VS. 2023
		CHANGE DUE TO
	CHANGE DUE TO
(In Millions)
(In Millions)
(In Millions)	(In Millions)	AVERAGE BALANCE		AVERAGE RATE		NET (DECREASE) INCREASE		AVERAGE BALANCE		AVERAGE RATE	NET (DECREASE) INCREASE
Increase (Decrease) in Net Interest Income (FTE)	Increase (Decrease) in Net Interest Income (FTE)
Federal Reserve and Other Central Bank Deposits	Federal Reserve and Other Central Bank Deposits	$	(3.7)	$	220.4	$	216.7
Federal Reserve and Other Central Bank Deposits
Federal Reserve and Other Central Bank Deposits
Interest-Bearing Due from and Deposits with Banks	Interest-Bearing Due from and Deposits with Banks	1.3		19.1		20.4

Federal Funds Sold
Securities Purchased under Agreements to Resell	Securities Purchased under Agreements to Resell	(9.6)		443.0		433.4
Debt Securities	Debt Securities
Available for Sale
Available for Sale
Available for Sale	Available for Sale	(18.5)		145.8		127.3
Held to Maturity	Held to Maturity	2.8		35.3		38.1

Total Debt Securities	Total Debt Securities	(15.7)		181.1		165.4
Loans and Leases		6.9		277.7		284.6
Total Debt Securities
Total Debt Securities
Loans
Other Interest-Earning Assets	Other Interest-Earning Assets	13.4		2.7		16.1
Total Interest Income	Total Interest Income	$	(7.4)	$	1,144.0	$	1,136.6

Interest-Bearing Deposits	Interest-Bearing Deposits
Interest-Bearing Deposits
Interest-Bearing Deposits
Savings, Money Market and Other
Savings, Money Market and Other
Savings, Money Market and Other	Savings, Money Market and Other	$	(18.4)	$	123.7	$	105.3
Savings Certificates and Other Time	Savings Certificates and Other Time	23.0		16.3		39.3
Non-U.S. Offices - Interest-Bearing	Non-U.S. Offices - Interest-Bearing	(46.5)		441.2		394.7
Total Interest-Bearing Deposits	Total Interest-Bearing Deposits	(41.9)		581.2		539.3
Federal Funds Purchased	Federal Funds Purchased	37.8		29.8		67.6
Securities Sold under Agreements to Repurchase	Securities Sold under Agreements to Repurchase	(3.7)		432.2		428.5
Other Borrowings	Other Borrowings	45.1		74.0		119.1
Senior Notes	Senior Notes	(2.6)		18.1		15.5
Long-Term Debt	Long-Term Debt	12.7		9.8		22.5

Total Interest Expense	Total Interest Expense	$	47.4	$	1,145.1	$	1,192.5
Total Interest Expense
Total Interest Expense
Increase (Decrease) in Net Interest Income (FTE)	Increase (Decrease) in Net Interest Income (FTE)	$	(54.8)	$	(1.1)	$	(55.9)

(1)Changes not due solely to average balance changes or rate changes are allocated proportionately to average balance and rate based on their relative absolute magnitudes.

Notes: Net Interest Income (FTE), a non-GAAP financial measure, includes adjustments to a fully taxable equivalent basis for loans, securities and other interest-earning assets. The adjustments are based on a federal income tax rate of 21.0%, where the rate is adjusted for applicable state income taxes, net of related federal tax benefit. Total taxable equivalent interest adjustments amounted to ~~$13.2~~$7.3 million and ~~$12.3~~$13.2 million for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively. A reconciliation of Net Interest Income and net interest margin on a GAAP basis to Net Interest Income and net interest margin on an FTE basis (each of which is a non-GAAP financial measure) is provided in “Reconciliation to Fully Taxable Equivalent” within this MD&A. Net interest margin is calculated by dividing annualized Net Interest Income by average interest-earning assets.

Interest ~~revenue~~Income on cash collateral positions is reported above in Interest-Bearing Due from and Deposits with Banks, Loans and in ~~Loans and Leases.~~Other Interest-Earning Assets. Interest Expense on cash collateral positions is reported above in Savings, Money Market and Other and in Non-U.S. Offices Interest-Bearing Deposits. ~~Related~~Where it can be net, related cash collateral received from and deposited with derivative counterparties is recorded net of the associated derivative contract in Other Assets and Other Liabilities, respectively.

Net Interest Income, stated on a FTE basis, decreased from the prior-year quarter, primarily due to ~~lower average earning assets.~~higher funding costs. Average earning assets decreased from the prior-year quarter, primarily due to lower ~~client deposits, partially offset by increased~~ borrowing activity.

The net interest margin on an FTE basis decreased from the prior-year quarter, primarily due to ~~an unfavorable~~higher funding ~~mix shift, partially offset by higher average interest rates.~~costs.

Federal Reserve and Other Central Bank Deposits averaged ~~$28.0~~$35.9 billion and decreased ~~$2.5~~$0.7 billion, or 8%2%, from ~~$30.5~~$36.6 billion in the prior-year quarter. Interest-Bearing Due from and Deposits with Banks averaged ~~$4.3~~$4.4 billion and increased ~~$0.3~~$0.2 billion, or 8%5%, from ~~$4.0~~$4.2 billion in the prior-year quarter.

Average Securities were $48.5 billion and decreased $1.9 billion, or 4%, from $50.4 billion in the prior-year quarter. Average Securities were $50.4 billion and decreased $3.2 billion, or 6%, from $53.6 billion in the prior-year quarter. Average Other Interest-Earning Assets include certain community development investments, collateral deposits with certain securities depositories and clearing houses, Federal Home Loan Bank stock, money market investments, and Federal Reserve stock of $904.6 million, $539.2 million, $385.7 million, $91.9 million, and $70.0 million, respectively, which are recorded in Other Assets on the consolidated balance sheets. Average taxable Securities were ~~$47.4~~$43.3 billion in the current quarter and ~~$50.9~~$47.4 billion in the prior-year quarter. Average nontaxable Securities, which represent securities that are primarily exempt from U.S. federal and state income taxes, were ~~$3.0~~$5.2 billion in the current quarter and ~~$2.7~~$3.0 billion in the prior-year quarter.

Securities Purchased under Agreements to Resell averaged $517.9 million and decreased $528.2 million, or 50%, from $1,046.1 million in the prior-year quarter, primarily due to a shift to investments in higher interest earning assets.

Loans ~~and Leases~~ averaged ~~$42.2~~$41.6 billion and ~~increased $0.7~~decreased $0.4 billion, or 2%1%, from ~~$41.5~~$42.0 billion in the prior-year quarter, primarily reflecting lower levels of commercial and institutional, non-U.S, private client, and residential real estate loans, partially offset by higher levels of commercial real estate ~~private client, and commercial~~loans. Commercial and institutional loans ~~partially offset by lower levels of non-U.S.,~~averaged $10.6 billion and ~~residential real estate loans. Commercial real estate loans averaged $5.0~~decreased $1.8 billion, ~~and~~or

109

~~THIRD~~FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Net Interest Income (continued)

~~increased $586.7 million, or 13%~~15%, from $4.4 billion for the prior-year quarter. Private client loans averaged $14.0 billion and increased $375.5 million, or 2.8%, from $13.6 billion for the prior-year quarter. Commercial and institutional loans averaged $12.4 billion and increased $39.3 million, or slightly, from $12.4 billion for the prior-year quarter. Non-U.S. loans averaged ~~$3.4~~$2.8 billion and decreased ~~$343.0~~$714.8 million, or 9%20%, from ~~$3.7~~$3.6 billion for the prior-year quarter. Private client loans averaged $13.4 billion and decreased $492.3 million, or 4%, from $13.9 billion for the prior-year quarter. Residential real estate loans averaged ~~$6.4~~$6.3 billion and decreased ~~$42.0~~$155.0 million, or 1%2%, from $6.4 billion for the prior-year quarter. Commercial real estate loans averaged $5.2 billion and increased $288.2 million, or 6%, from $4.9 billion for the prior-year quarter.

Average Other Interest-Earning Assets include collateral deposits with certain securities depositories and clearing houses, certain community development investments, Federal Home Loan Bank stock, Federal Reserve stock, and money market investments of $1,516.6 million, $878.8 million, $312.0 million, $70.0 million, and $64.7 million, respectively, which are recorded in Other Assets on the consolidated balance sheets.

Northern Trust utilizes a diverse mix of funding sources. Average Interest-Bearing Deposits ~~decreased $9.1~~increased $3.7 billion, or ~~10%~~4%, to an average of ~~$85.0~~$95.7 billion in the current quarter from ~~$94.1~~$92.0 billion in the prior-year quarter. Interest expense for Interest-Bearing Deposits in the current quarter was driven by higher interest rates. Average Non-U.S. Offices Interest-Bearing Deposits comprised 67% and 68% of total average Interest-Bearing Deposits for the three months ended March 31, 2024 and 2023, respectively. Other average ~~interest-related funding increased $9.7~~interest-bearing liabilities decreased $3.3 billion, or ~~77%~~17%, to an average of ~~$22.2~~$16.8 billion in the current quarter from ~~$12.5~~$20.1 billion in the prior-year quarter. The balances within short-term borrowing classifications vary based on funding requirements and strategies, interest rate levels, changes in the volume of lower-cost deposit sources, and the availability of collateral to secure these borrowings.

Interest expense for Interest-Bearing Deposits in the current quarter was driven by higher interest rates. Average Non-U.S. Offices Interest-Bearing Deposits comprised 69% and 68% of total average Interest-Bearing Deposits for the three months ended September 30, 2023 and 2022, respectively.

Provision for Credit Losses

~~There~~In the current quarter, there was a ~~$14.0 million~~negative Provision for Credit Losses ~~in the current quarter,~~of $8.5 million, as compared to a ~~$0.5~~$15.0 million Provision for Credit Losses in the prior-year quarter. The negative provision in the current quarter resulted from decreases in both individual and collective reserves. The decrease in individual reserves was driven by one Commercial and Institutional (C&I) loan that was charged-off in the current quarter. The decrease in collective reserve was primarily in the C&I portfolio, driven by improvement in the quality of the portfolio, and in the Commercial Real Estate (CRE) portfolio, driven by improved macroeconomic factors. The reserve evaluated on a collective basis relates to pooled financial assets sharing similar risk characteristics.

The Provision for Credit Losses in the prior-year quarter was primarily due to an increase in the reserve evaluated on a collective basis, driven by ~~a small number~~growth in the size and duration of ~~large new loans and renewals and credit quality deterioration of certain CRE and C&I loans,~~the commercial real estate portfolio, primarily in multi-family properties, partially offset by ~~a net~~ improvement ~~in the overall macroeconomic outlook. The reserve evaluated on a collective basis relates to pooled financial assets sharing similar risk characteristics.~~

~~The Provision for Credit Losses in the prior-year quarter was~~ ~~primarily due to an increase in the collective basis reserve, driven by a weaker macroeconomic outlook at the time, partially offset by improvements~~ in credit quality ~~mainly within~~for the ~~C&I portfolio.~~commercial and institutional segment.

Net ~~recoveries~~charge-offs in the current quarter were ~~$0.3~~$10.4 million, reflecting ~~$1.1~~$0.7 million of recoveries and ~~$0.8~~$11.1 million of charge-offs. The prior-year quarter included ~~$4.5~~$2.9 million of net charge-offs, reflecting ~~$0.9~~$1.1 million of recoveries and ~~$5.4~~$4.0 million of charge-offs.

For additional discussion of the allowance for credit losses, refer to the “Asset Quality” section in this MD&A.

Other Noninterest ~~Expense~~Income

The components of Other Noninterest ~~Expense~~Income are provided ~~in the following table.~~below.

TABLE ~~15:~~12: OTHER NONINTEREST ~~EXPENSE~~INCOME

THREE MONTHS ENDED SEPTEMBER 30,
($ In Millions) 2023 2022 CHANGE
Compensation $ 558.1 $ 553.3 $ 4.8 1 %
Employee Benefits 100.8 109.9 (9.1) (8)
Outside Services 229.6 220.9 8.7 4
Equipment and Software 232.5 212.4 20.1 9
Occupancy 58.7 51.3 7.4 14
Other Operating Expense 98.5 82.0 16.5 20
Total Noninterest Expense $ 1,278.2 $ 1,229.8 $ 48.4 4 %


	THREE MONTHS ENDED MARCH 31,
($ In Millions)	2024		2023		CHANGE
Foreign Exchange Trading Income	$	57.0	$	53.0	$	4.0	8	%
Treasury Management Fees	9.3		8.4		0.9		11
Security Commissions and Trading Income	37.9		34.7		3.2		9
Other Operating Income	61.0		46.8		14.2		30
Investment Security Gains (Losses), net	(189.4)		6.9		(196.3)		N/M
Total Other Noninterest Income	$	(24.2)	$	149.8	$	(174.0)	N/M

~~Compensation expense, the largest component of Noninterest Expense,~~N/M - Not meaningful

Foreign Exchange Trading Income increased compared to the prior-year quarter primarily driven by higher client volumes.

Net Interest Income

Net Interest Income is defined as the total of Interest Income and amortized fees on earning assets, less Interest Expense on deposits and borrowed funds, adjusted for the impact of interest-related hedging activity. Earning assets—including Federal Funds Sold, Securities Purchased under Agreements to Resell, Interest-Bearing Due From and Deposits with Banks, Federal Reserve and Other Central Bank Deposits, Securities, Loans, and Other Interest-Earning Assets—are financed by a large base of interest-bearing liabilities that include client deposits, short-term borrowings, Senior Notes and Long-Term Debt. Short-term borrowings include Federal Funds Purchased, Securities Sold Under Agreements to Repurchase, and Other Borrowings. Earning assets are also funded by noninterest-bearing funds, which include demand deposits and stockholders’ equity. Net Interest Income is subject to variations in the level and mix of earning assets and interest-bearing funds and their relative sensitivity to interest rates. In addition, the levels of nonaccruing assets and client compensating deposit balances used to pay for services impact Net Interest Income.

FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Net Interest Income (continued)

The following tables present an analysis of average daily balances and interest rates affecting Net Interest Income and an analysis of Net Interest Income changes.

TABLE 13: AVERAGE CONSOLIDATED BALANCE SHEETS WITH ANALYSIS OF NET INTEREST INCOME


(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)	FIRST QUARTER
	2024						2023
($ In Millions)	INTEREST		AVERAGE BALANCE		AVERAGE RATE(7)		INTEREST		AVERAGE BALANCE		AVERAGE RATE(7)
Interest-Earning Assets
Federal Reserve and Other Central Bank Deposits	$	459.7	$	35,897.3	5.15	%	$	377.0	$	36,641.8	4.17	%
Interest-Bearing Due from and Deposits with Banks(1)	34.6		4,418.0		3.15		28.2		4,198.7		2.72
Federal Funds Sold	—		0.5		5.64		0.2		19.7		4.79
Securities Purchased under Agreements to Resell(2)	823.9		517.9		639.92		125.9		1,046.1		48.80
Debt Securities
Available for Sale	323.2		24,049.6		5.41		234.7		25,030.4		3.80
Held to Maturity	123.8		24,498.9		2.02		103.8		25,382.2		1.64
Trading Account	—		—		—		—		1.3		7.63
Total Debt Securities	447.0		48,548.5		3.70		338.5		50,413.9		2.72
Loans(3)	655.8		41,586.9		6.34		579.5		41,959.4		5.60
Other Interest-Earning Assets(4)	31.9		2,847.7		4.51		19.3		1,677.8		4.67
Total Interest-Earning Assets	2,452.9		133,816.8		7.37		1,468.6		135,957.4		4.38
Cash and Due from Banks and Other Central Bank Deposits(5)	—		1,799.5		—		—		1,795.9		—
Other Noninterest-Earning Assets	—		9,502.0		—		—		10,306.6		—
Total Assets	$	—	$	145,118.3	—	%	$	—	$	148,059.9	—	%
Average Source of Funds
Deposits
Savings, Money Market and Other	$	253.2	$	27,349.0	3.72	%	$	158.0	$	27,268.8	2.35	%
Savings Certificates and Other Time	58.8		4,554.3		5.19		21.6		2,360.1		3.70
Non-U.S. Offices — Interest-Bearing	569.7		63,752.8		3.59		385.0		62,411.1		2.50
Total Interest-Bearing Deposits	881.7		95,656.1		3.71		564.6		92,040.0		2.49
Federal Funds Purchased	33.6		2,650.1		5.11		40.1		3,653.9		4.45
Securities Sold under Agreements to Repurchase(2)	813.9		490.1		667.86		116.1		347.1		135.62
Other Borrowings(6)	88.6		6,852.1		5.20		135.0		11,324.0		4.83
Senior Notes	44.1		2,748.7		6.45		39.2		2,748.1		5.79
Long-Term Debt	55.6		4,067.0		5.50		29.2		2,066.3		5.73

Total Interest-Bearing Liabilities	1,917.5		112,464.1		6.86		924.2		112,179.4		3.34
Interest Rate Spread	—		—		0.51		—		—		1.04
Demand and Other Noninterest-Bearing Deposits	—		16,706.5		—		—		20,145.6		—
Other Noninterest-Bearing Liabilities	—		4,164.0		—		—		4,453.4		—
Stockholders’ Equity	—		11,783.7		—		—		11,281.5		—
Total Liabilities and Stockholders’ Equity	$	—	$	145,118.3	—	%	$	—	$	148,059.9	—	%
Net Interest Income/Margin (FTE Adjusted)	$	535.4	$	—	1.61	%	$	544.4	$	—	1.62	%
Net Interest Income/Margin (Unadjusted)	$	528.1	$	—	1.59	%	$	531.2	$	—	1.58	%

(2)Includes the impact of balance sheet netting under master netting arrangements of approximately $60.2 billion and $10.0 billion for the three months ended March 31, 2024 and 2023, respectively. Excluding the impact of netting for the three months ended March 31, 2024 and 2023, the average interest rate on Securities Purchased under Agreements to Resell would be approximately 5.46% and 4.63%, respectively. Excluding the impact of netting for the three months ended March 31, 2024 and 2023, the average interest rate on Securities Sold under Agreements to Repurchase would be approximately 5.39% and 4.56%, respectively. Northern Trust nets securities sold under repurchase agreements against those purchased under resale agreements when there is a legally enforceable master netting agreement.

(3)Average balances include nonaccrual loans.

(5)Cash and Due from Banks and Other Central Bank Deposits includes the noninterest-bearing component of Federal Reserve and Other Central Bank Deposits on the consolidated balance sheets.

(6)Other Borrowings primarily includes advances from the Federal Home Loan Bank of Chicago.

(7)Rate calculations are based on actual balances rather than the rounded amounts presented in the average consolidated balance sheets with analysis of Net Interest Income.

FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Net Interest Income (continued)

TABLE 14: ANALYSIS OF NET INTEREST INCOME CHANGES DUE TO VOLUME AND RATE(1)


(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)	THREE MONTHS ENDED MARCH 31, 2024 VS. 2023
	CHANGE DUE TO
(In Millions)	AVERAGE BALANCE		AVERAGE RATE		NET (DECREASE) INCREASE
Increase (Decrease) in Net Interest Income (FTE)
Federal Reserve and Other Central Bank Deposits	$	(7.6)	$	90.3	$	82.7
Interest-Bearing Due from and Deposits with Banks	1.6		4.8		6.4
Federal Funds Sold	(0.2)		—		(0.2)
Securities Purchased under Agreements to Resell	(95.1)		793.1		698.0
Debt Securities
Available for Sale	(9.5)		98.0		88.5
Held to Maturity	(3.7)		23.7		20.0

Total Debt Securities	(13.2)		121.7		108.5
Loans	(4.9)		81.2		76.3
Other Interest-Earning Assets	13.2		(0.6)		12.6
Total Interest Income	$	(106.2)	$	1,090.5	$	984.3

Interest-Bearing Deposits
Savings, Money Market and Other	$	0.5	$	94.7	$	95.2
Savings Certificates and Other Time	26.0		11.2		37.2
Non-U.S. Offices - Interest-Bearing	8.6		176.1		184.7
Total Interest-Bearing Deposits	35.1		282.0		317.1
Federal Funds Purchased	(12.0)		5.5		(6.5)
Securities Sold under Agreements to Repurchase	66.3		631.5		697.8
Other Borrowings	(56.3)		9.9		(46.4)
Senior Notes	—		4.9		4.9
Long-Term Debt	27.6		(1.2)		26.4

Total Interest Expense	$	60.7	$	932.6	$	993.3
Increase (Decrease) in Net Interest Income (FTE)	$	(166.9)	$	157.9	$	(9.0)

(1)Changes not due solely to average balance changes or rate changes are allocated proportionately to average balance and rate based on their relative absolute magnitudes.

Notes: Net Interest Income (FTE), a non-GAAP financial measure, includes adjustments to a fully taxable equivalent basis for loans, securities and other interest-earning assets. The adjustments are based on a federal income tax rate of 21.0%, where the rate is adjusted for applicable state income taxes, net of related federal tax benefit. Total taxable equivalent interest adjustments amounted to $7.3 million and $13.2 million for the three months ended March 31, 2024 and 2023, respectively. A reconciliation of Net Interest Income and net interest margin on a GAAP basis to Net Interest Income and net interest margin on an FTE basis (each of which is a non-GAAP financial measure) is provided in “Reconciliation to Fully Taxable Equivalent” within this MD&A. Net interest margin is calculated by dividing annualized Net Interest Income by average interest-earning assets.

Interest Income on cash collateral positions is reported above in Interest-Bearing Due from and Deposits with Banks, Loans and in Other Interest-Earning Assets. Interest Expense on cash collateral positions is reported above in Savings, Money Market and Other and in Non-U.S. Offices Interest-Bearing Deposits. Where it can be net, related cash collateral received from and deposited with derivative counterparties is recorded net of the associated derivative contract in Other Assets and Other Liabilities, respectively.

Net Interest Income, stated on a FTE basis, decreased from the prior-year quarter, primarily due to higher ~~salary expense~~funding costs. Average earning assets decreased from the prior-year quarter, primarily due to lower borrowing activity.

The net interest margin on an FTE basis decreased from the prior-year quarter, primarily due to higher funding costs.

Federal Reserve and ~~unfavorable currency translation, partially offset by lower incentives.~~Other Central Bank Deposits averaged $35.9 billion and decreased $0.7 billion, or 2%, from $36.6 billion in the prior-year quarter. Interest-Bearing Due from and Deposits with Banks averaged $4.4 billion and increased $0.2 billion, or 5%, from $4.2 billion in the prior-year quarter.

~~Employee Benefits expense~~Average Securities were $48.5 billion and decreased ~~compared~~$1.9 billion, or 4%, from $50.4 billion in the prior-year quarter. Average taxable Securities were $43.3 billion in the current quarter and $47.4 billion in the prior-year quarter. Average nontaxable Securities, which represent securities that are primarily exempt from U.S. federal and state income taxes, were $5.2 billion in the current quarter and $3.0 billion in the prior-year quarter.

Securities Purchased under Agreements to Resell averaged $517.9 million and decreased $528.2 million, or 50%, from $1,046.1 million in the prior-year quarter, primarily due to a ~~$17.0 million pension settlement charge~~shift to investments in higher interest earning assets.

Loans averaged $41.6 billion and decreased $0.4 billion, or 1%, from $42.0 billion in the prior-year quarter, primarily reflecting lower levels of commercial and institutional, non-U.S, private client, and residential real estate loans, partially offset by ~~smaller increases across various other benefit-related expense lines.~~

~~Outside Services expense increased compared to the prior-year quarter, primarily due to~~ higher ~~technical services~~levels of commercial real estate loans. Commercial and ~~legal services, partially offset by lower consulting services.~~

~~Equipment~~institutional loans averaged $10.6 billion and Software expense increased compared to the prior-year quarter, primarily due to higher software amortization and higher software costs, partially offset by a nonrecurring $4.1 million credit associated with computer maintenance and rental expense.decreased $1.8 billion, or

119

~~THIRD~~FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

~~Noninterest Expense~~Net Interest Income (continued)

~~Occupancy expense increased compared to~~15%, from $12.4 billion for the prior-year ~~quarter, primarily due to a $3.0~~quarter. Non-U.S. loans averaged $2.8 billion and decreased $714.8 million, ~~charge related to early lease exits.~~

~~Other Operating Expense increased compared to~~or 20%, from $3.6 billion for the prior-year quarter. Private client loans averaged $13.4 billion and decreased $492.3 million, or 4%, from $13.9 billion for the prior-year quarter. Residential real estate loans averaged $6.3 billion and decreased $155.0 million, or 2%, from $6.4 billion for the prior-year quarter. Commercial real estate loans averaged $5.2 billion and increased $288.2 million, or 6%, from $4.9 billion for the prior-year quarter.

~~Provision for Income Taxes~~

~~Income tax expense~~68% of total average Interest-Bearing Deposits for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~was $106.5 million, representing~~respectively. Other average interest-bearing liabilities decreased $3.3 billion, or 17%, to an ~~effective tax rate~~average of ~~24.5%, compared to $129.7 million in the prior-year quarter, representing an effective tax rate of 24.7%.~~

~~The effective tax rate decreased compared to the prior-year quarter primarily due to a lower state tax provision following the resolution of certain state matters.~~

~~NINE-MONTH CONSOLIDATED RESULTS OF OPERATIONS~~

~~Overview of Financial Results~~

~~Net Income per diluted common share decreased~~$16.8 billion in the current ~~period to $4.56~~quarter from ~~$5.43 in the comparable prior-year period. Net Income decreased $186.1 million, or 16%, to $994.2 million in the current period from $1.18~~$20.1 billion in the prior-year ~~period. Annualized return~~quarter. The balances within short-term borrowing classifications vary based on ~~average common equity was 12.1%~~funding requirements and strategies, interest rate levels, changes in the ~~current period~~volume of lower-cost deposit sources, and ~~14.9% in~~ the ~~prior-year period. The annualized return on average assets was 0.92% in~~availability of collateral to secure these borrowings.

Provision for Credit Losses

In the current ~~period compared to 1.02% in the prior-year period.~~

Revenue for the nine months ended September 30, 2023 decreased $14.0 million from $5.24 billion in the prior-year period to $5.23 billion in the current period. Trust, Investment and Other Servicing Fees decreased $118.7 million, or 4%, from $3.39 billion in the prior-year period to $3.27 billion in the current period, primarily driven by asset outflows and unfavorable lagged markets, partially offset by lower money market fund fee waivers. Other Noninterest Income decreased $41.5 million, or 8%, from $499.0 million in the prior-year period to $457.5 million in the current period, primarily driven by lower Foreign Exchange Trading Income, partially offset by higher Other Operating Income. Net Interest Income increased $146.2 million, or 11%, to $1.50 billion in the current period from $1.35 billion in the prior-year period, primarily due to higher average interest rates, partially offset by lower average earning assets.

~~There~~quarter, there was a ~~$13.5 million~~negative Provision for Credit Losses ~~in the current period,~~of $8.5 million, as compared to a ~~$7.0~~$15.0 million Provision for Credit Losses in the prior-year ~~period.~~ quarter. The negative provision in the current quarter resulted from decreases in both individual and collective reserves. The decrease in individual reserves was driven by one Commercial and Institutional (C&I) loan that was charged-off in the current quarter. The decrease in collective reserve was primarily ~~due to an increase~~ in the ~~collective basis reserve,~~C&I portfolio, driven by ~~new loans and renewals in the CRE portfolio and expectations of higher economic stress in the CRE market, particularly office CRE, partially offset by a net~~ improvement in the ~~overall~~quality of the portfolio, and in the Commercial Real Estate (CRE) portfolio, driven by improved macroeconomic ~~outlook and lower loss projections for certain large C&I loans.~~factors. The reserve evaluated on a collective basis relates to pooled financial assets sharing similar risk characteristics.

Noninterest Expense increased $236.4 million, or 6%, from $3.66 billion in the prior-year period to $3.90 billion in the current period, primarily attributable to higher Compensation, Equipment and Software, and Other Operating Expense.

The Provision for Income Taxes for the nine months ended September 30, 2023 totaled $324.8 million, representing an effective tax rate of 24.6%. The Provision for Income Taxes for the nine months ended September 30, 2022 totaled $395.6 million, representing an effective tax rate of 25.1%. The effective tax rate decreased compared toCredit Losses in the prior-year ~~period~~quarter was primarily due to an increase in the reserve evaluated on a ~~decrease~~collective basis, driven by growth in ~~pretax earnings~~the size and ~~a higher level~~duration of ~~tax benefits from tax-credit investments and tax-exempt income,~~the commercial real estate portfolio, primarily in multi-family properties, partially offset by ~~lower tax benefits from share-based compensation.~~improvement in credit quality for the commercial and institutional segment.

~~NINE-MONTH CONSOLIDATED RESULTS OF OPERATIONS (continued)~~

~~Trust, Investment and Other Servicing Fees~~

~~Trust, Investment and Other Servicing Fees are based primarily on~~Net charge-offs in the market value of assets held in custody, managed or serviced; the volume of transactions; securities lending volume and spreads; and fees for other services rendered. Certain market value calculations on which fees are based are performed on a monthly or quarterly basis in arrears. Northern Trust voluntarily waived $6.5current quarter were $10.4 million, reflecting $0.7 million of ~~money market fund fees~~recoveries and $11.1 million of charge-offs. The prior-year quarter included $2.9 million of net charge-offs, reflecting $1.1 million of recoveries and $4.0 million of charge-offs.

For additional discussion of the allowance for credit losses, refer to the ~~nine months ended September 30, 2023 as compared to $61.9 million for the nine months ended September 30, 2022. The components of Trust, Investment and Other Servicing Fees are provided~~“Asset Quality” section in ~~the table below.~~

~~TABLE 16: TRUST, INVESTMENT AND OTHER SERVICING FEES~~

NINE MONTHS ENDED SEPTEMBER 30,
($ In Millions) 2023 2022 CHANGE
Asset Servicing Trust, Investment and Other Servicing Fees
Custody and Fund Administration $ 1,269.1 $ 1,293.8 $ (24.7) (2) %
Investment Management 397.4 431.3 (33.9) (8)
Securities Lending 61.0 62.1 (1.1) (2)
Other 122.7 121.1 1.6 1
Total Asset Servicing Trust, Investment and Other Servicing Fees $ 1,850.2 $ 1,908.3 $ (58.1) (3) %
Wealth Management Trust, Investment and Other Servicing Fees
Central $ 501.9 $ 530.4 $ (28.5) (5) %
East 370.0 386.2 (16.2) (4)
West 280.7 292.6 (11.9) (4)
Global Family Office 269.0 273.0 (4.0) (1)
Total Wealth Management Trust, Investment and Other Servicing Fees $ 1,421.6 $ 1,482.2 $ (60.6) (4) %
Total Consolidated Trust, Investment and Other Servicing Fees $ 3,271.8 $ 3,390.5 $ (118.7) (4) %

~~Asset Servicing~~

Custody and Fund Administration fees, the largest component of Asset Servicing fees, decreased from the prior-year period, primarily driven by unfavorable lagged markets. Investment Management fees decreased from the prior-year period, primarily due to asset outflows and unfavorable lagged markets, partially offset by lower money market fund fee waivers.

~~Wealth Management~~

Fee income in the regions (Central, East and West) decreased from the prior-year period, primarily due to product-related asset outflows and unfavorable lagged markets, partially offset by lower money market fund fee waivers. Global Family Office fee income decreased from the prior-year period, primarily due to unfavorable lagged markets, partially offset by lower money market fund fee waivers and asset inflows.this MD&A.

Other Noninterest Income

The components of ~~other noninterest income~~Other Noninterest Income are provided ~~in the following table.~~below.

TABLE ~~17:~~12: OTHER NONINTEREST INCOME


		NINE MONTHS ENDED SEPTEMBER 30,
	THREE MONTHS ENDED MARCH 31,
($ In Millions)
($ In Millions)
($ In Millions)	($ In Millions)	2023		2022		CHANGE				2024		2023		CHANGE
Foreign Exchange Trading Income	Foreign Exchange Trading Income	$	154.9	$	223.2	$	(68.3)	(31)	%	Foreign Exchange Trading Income	$	57.0	$	53.0	$	4.0	8	8	%
Treasury Management Fees	Treasury Management Fees	23.8		31.0		(7.2)		(23)
Security Commissions and Trading Income	Security Commissions and Trading Income	101.7		101.1		0.6		1
Other Operating Income	Other Operating Income	170.2		144.0		26.2		18
Investment Security Gains (Losses), net	Investment Security Gains (Losses), net	6.9		(0.3)		7.2		N/M		Investment Security Gains (Losses), net	(189.4)		6.9	6.9	(196.3)	(196.3)	N/M	N/M
Total Other Noninterest Income	Total Other Noninterest Income	$	457.5	$	499.0	$	(41.5)	(8)	%	Total Other Noninterest Income	$	(24.2)	$	149.8	$	(174.0)	N/M	N/M

N/M - Not meaningful

Foreign Exchange Trading Income ~~decreased from~~increased compared to the prior-year ~~period,~~quarter primarily ~~due to lower~~driven by higher client ~~volumes and an unfavorable impact from foreign exchange swap activity.~~

~~TreasuryManagementFees decreased from the prior-year period, primarily due to an increase in the earnings credit rate applied to client balances.~~volumes.

Other Operating Income increased ~~from~~compared to the prior-year ~~period,~~quarter, primarily driven by higher income associated with a market value increase in supplemental compensation plans and ~~increased income from banking and credit-related service fees.~~lower expense associated with existing swap agreements related to Visa Inc. Class B common shares.

Investment Security Gains (Losses), net ~~included a~~reflects the $189.4 million available for sale debt security loss as compared to the $6.9 million gain ~~upon~~on the sale of ~~certain~~ available for sale debt securities in the ~~current-year period.~~prior-year quarter, each arising from a repositioning of the portfolio.

Net Interest Income

Net Interest Income is defined as the total of Interest Income and amortized fees on earning assets, less Interest Expense on deposits and borrowed funds, adjusted for the impact of interest-related hedging activity. Earning assets—including Federal Funds Sold, Securities Purchased under Agreements to Resell, Interest-Bearing Due From and Deposits with Banks, Federal Reserve and Other Central Bank Deposits, Securities, Loans, and Other Interest-Earning Assets—are financed by a large base of interest-bearing liabilities that include client deposits, short-term borrowings, Senior Notes and Long-Term Debt. Short-term borrowings include Federal Funds Purchased, Securities Sold Under Agreements to Repurchase, and Other Borrowings. Earning assets are also funded by noninterest-bearing funds, which include demand deposits and stockholders’ equity. Net Interest Income is subject to variations in the level and mix of earning assets and interest-bearing funds and their relative sensitivity to interest rates. In addition, the levels of nonaccruing assets and client compensating deposit balances used to pay for services impact Net Interest Income.

137

~~NINE-MONTH~~FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Net Interest Income (continued)

The following tables present an analysis of average daily balances and interest ~~rate changes~~rates affecting Net Interest Income and an analysis of Net Interest Income changes.

TABLE ~~18:~~13: AVERAGE CONSOLIDATED BALANCE SHEETS WITH ANALYSIS OF NET INTEREST INCOME


(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)	(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)	NINE MONTHS ENDED SEPTEMBER 30,												(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)		FIRST QUARTER
		2023						2022								2024									2023
($ In Millions)	($ In Millions)	INTEREST		AVERAGE BALANCE		AVERAGE RATE(7)		INTEREST		AVERAGE BALANCE		AVERAGE RATE(7)		($ In Millions)		INTEREST			AVERAGE BALANCE			AVERAGE RATE(7)			INTEREST			AVERAGE BALANCE			AVERAGE RATE(7)
Interest-Earning Assets	Interest-Earning Assets
Federal Reserve and Other Central Bank Deposits	Federal Reserve and Other Central Bank Deposits	$	1,128.0	$	32,976.0	4.57	%	$	212.2	$	37,426.1	0.76	%
Federal Reserve and Other Central Bank Deposits
Federal Reserve and Other Central Bank Deposits																$	459.7		$	35,897.3		5.15		%	$	377.0		$	36,641.8		4.17		%
Interest-Bearing Due from and Deposits with Banks(1)	Interest-Bearing Due from and Deposits with Banks(1)	95.2		4,358.2		2.92		23.6		4,194.6		0.75
Federal Funds Sold	Federal Funds Sold	0.3		7.9		4.89		—		2.7		2.02
Securities Purchased under Agreements to Resell(2)	Securities Purchased under Agreements to Resell(2)	874.1		1,078.2		108.40		38.4		1,039.4		4.94
Debt Securities	Debt Securities
Available for Sale	Available for Sale	767.3		24,655.4		4.16		409.2		33,852.1		1.62
Available for Sale
Available for Sale
Held to Maturity	Held to Maturity	341.5		25,453.6		1.79		192.6		22,240.3		1.16
Trading Account	Trading Account	0.1		0.6		14.27		0.1		0.6		12.22
Total Debt Securities	Total Debt Securities	1,108.9		50,109.6		2.96		601.9		56,093.0		1.43
Loans and Leases(3)		1,885.5		42,179.2		5.98		829.7		40,593.0		2.73
Loans(3)
Other Interest-Earning Assets(4)	Other Interest-Earning Assets(4)	72.9		2,038.7		4.78		31.9		1,192.1		3.58
Total Interest-Earning Assets	Total Interest-Earning Assets	5,164.9		132,747.8		5.20		1,737.7		140,540.9		1.65
Cash and Due from Banks and Other Central Bank Deposits(5)	Cash and Due from Banks and Other Central Bank Deposits(5)	—		1,777.3		—		—		2,169.2		—
Other Noninterest-Earning Assets	Other Noninterest-Earning Assets	—		10,166.5		—		—		11,442.0		—
Total Assets	Total Assets	$	—	$	144,691.6	—	%	$	—	$	154,152.1	—	%	Total Assets		$	—		$	145,118.3		—	—	%	$	—		$	148,059.9		—	—	%
Average Source of Funds	Average Source of Funds
Deposits	Deposits
Deposits
Deposits
Savings, Money Market and Other
Savings, Money Market and Other
Savings, Money Market and Other	Savings, Money Market and Other	$	484.7	$	24,268.0	2.67	%	$	90.6	$	30,783.4	0.39	%	$	253.2		$	27,349.0		3.72	3.72	%	$	158.0		$	27,268.8		2.35	2.35	%
Savings Certificates and Other Time	Savings Certificates and Other Time	96.9		3,025.2		4.28		6.2		874.0		0.95
Non-U.S. Offices — Interest-Bearing	Non-U.S. Offices — Interest-Bearing	1,333.1		61,032.3		2.92		87.8		65,370.8		0.18
Total Interest-Bearing Deposits	Total Interest-Bearing Deposits	1,914.7		88,325.5		2.90		184.6		97,028.2		0.25
Federal Funds Purchased	Federal Funds Purchased	205.2		5,561.6		4.93		12.7		970.7		1.75
Securities Sold under Agreements to Repurchase(2)	Securities Sold under Agreements to Repurchase(2)	843.5		413.9		272.45		31.8		447.5		9.51
Other Borrowings(6)	Other Borrowings(6)	446.3		11,478.1		5.20		47.2		4,631.4		1.36
Senior Notes	Senior Notes	125.4		2,740.7		6.12		57.1		2,767.6		2.75
Long-Term Debt	Long-Term Debt	91.4		2,087.9		5.85		21.5		1,103.9		2.60
Total Interest-Related Funds		3,626.5		110,607.7		4.38		354.9		106,949.3		0.44

Total Interest-Bearing Liabilities
Total Interest-Bearing Liabilities
Total Interest-Bearing Liabilities
Interest Rate Spread	Interest Rate Spread	—		—		0.82		—		—		1.21
Demand and Other Noninterest-Bearing Deposits	Demand and Other Noninterest-Bearing Deposits	—		18,152.2		—		—		31,692.5		—
Other Noninterest-Bearing Liabilities	Other Noninterest-Bearing Liabilities	—		4,508.5		—		—		4,394.5		—
Stockholders’ Equity	Stockholders’ Equity	—		11,423.2		—		—		11,115.8		—
Total Liabilities and Stockholders’ Equity	Total Liabilities and Stockholders’ Equity	$	—	$	144,691.6	—	%	$	—	$	154,152.1	—	%	Total Liabilities and Stockholders’ Equity		$	—		$	145,118.3		—	—	%	$	—		$	148,059.9		—	—	%
Net Interest Income/Margin (FTE Adjusted)	Net Interest Income/Margin (FTE Adjusted)	$	1,538.4	$	—	1.55	%	$	1,382.8	$	—	1.32	%	Net Interest Income/Margin (FTE Adjusted)		$	535.4		$	—		1.61	1.61	%	$	544.4		$	—		1.62	1.62	%
Net Interest Income/Margin (Unadjusted)	Net Interest Income/Margin (Unadjusted)	$	1,498.9	$	—	1.51	%	$	1,352.7	$	—	1.29	%	Net Interest Income/Margin (Unadjusted)		$	528.1		$	—		1.59	1.59	%	$	531.2		$	—		1.58	1.58	%

(2)Includes the impact of balance sheet netting under master netting arrangements of approximately ~~$21.7~~$60.2 billion and ~~$2.8~~$10.0 billion for the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively. Excluding the impact of netting for the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ the average interest rate on Securities Purchased under Agreements to Resell would be approximately ~~5.13%~~5.46% and ~~1.35%~~4.63%, respectively. Excluding the impact of netting for the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ the average interest rate on Securities Sold under Agreements to Repurchase would be approximately ~~5.10%~~5.39% and ~~1.32%~~4.56%, respectively. Northern Trust nets securities sold under repurchase agreements against those purchased under resale agreements when there is a legally enforceable master netting agreement.

(3)Average balances include nonaccrual loans.

(5)Cash and Due from Banks and Other Central Bank Deposits includes the noninterest-bearing component of Federal Reserve and Other Central Bank Deposits on the consolidated balance sheets.

(6)Other Borrowings primarily includes advances from the Federal Home Loan Bank of Chicago.

(7)Rate calculations are based on actual balances rather than the rounded amounts presented in the average consolidated balance sheets with analysis of Net Interest Income.

~~NINE-MONTH~~FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Net Interest Income (continued)

TABLE ~~19:~~14: ANALYSIS OF NET INTEREST INCOME CHANGES DUE TO VOLUME AND RATE(1)


(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)	(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)	NINE MONTHS ENDED SEPTEMBER 30, 2023/2022						(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)	THREE MONTHS ENDED MARCH 31, 2024 VS. 2023
		CHANGE DUE TO
	CHANGE DUE TO
(In Millions)
(In Millions)
(In Millions)	(In Millions)	AVERAGE BALANCE		AVERAGE RATE		NET (DECREASE) INCREASE		AVERAGE BALANCE		AVERAGE RATE	NET (DECREASE) INCREASE
Increase (Decrease) in Net Interest Income (FTE)	Increase (Decrease) in Net Interest Income (FTE)
Federal Reserve and Other Central Bank Deposits
Federal Reserve and Other Central Bank Deposits
Federal Reserve and Other Central Bank Deposits	Federal Reserve and Other Central Bank Deposits	$	(94.4)	$	1,010.2	$	915.8
Interest-Bearing Due from and Deposits with Banks	Interest-Bearing Due from and Deposits with Banks	0.9		70.7		71.6
Federal Funds Sold	Federal Funds Sold	0.2		0.1		0.3
Securities Purchased under Agreements to Resell	Securities Purchased under Agreements to Resell	1.5		834.2		835.7
Debt Securities	Debt Securities
Available For Sale		(104.6)		462.7		358.1
Held To Maturity		31.4		117.5		148.9
Available for Sale
Available for Sale
Available for Sale
Held to Maturity

Total Debt Securities	Total Debt Securities	(73.2)		580.2		507.0
Loans and Leases		29.2		1,026.6		1,055.8
Total Debt Securities
Total Debt Securities
Loans
Other Interest-Earning Assets	Other Interest-Earning Assets	27.9		13.1		41.0
Total Interest Income	Total Interest Income	$	(107.9)	$	3,535.1	$	3,427.2

Interest-Bearing Deposits	Interest-Bearing Deposits
Interest-Bearing Deposits
Interest-Bearing Deposits
Savings, Money Market and Other
Savings, Money Market and Other
Savings, Money Market and Other	Savings, Money Market and Other	$	(165.1)	$	559.2	$	394.1
Savings Certificates and Other Time	Savings Certificates and Other Time	37.4		53.3		90.7
Non-U.S. Offices - Interest-Bearing	Non-U.S. Offices - Interest-Bearing	(6.2)		1,251.5		1,245.3
Total Interest-Bearing Deposits	Total Interest-Bearing Deposits	(133.9)		1,864.0		1,730.1
Federal Funds Purchased	Federal Funds Purchased	139.1		53.4		192.5
Securities Sold under Agreements to Repurchase	Securities Sold under Agreements to Repurchase	(2.6)		814.3		811.7
Other Borrowings	Other Borrowings	137.5		261.6		399.1
Senior Notes	Senior Notes	(0.6)		68.9		68.3
Long-Term Debt	Long-Term Debt	29.1		40.8		69.9

Total Interest Expense	Total Interest Expense	$	168.6	$	3,103.0	$	3,271.6
(Decrease) Increase in Net Interest Income (FTE)		$	(276.5)	$	432.1	$	155.6
Total Interest Expense
Total Interest Expense
Increase (Decrease) in Net Interest Income (FTE)

(1)Changes not due solely to average balance changes or rate changes are allocated proportionately to average balance and rate based on their relative absolute magnitudes.

Notes: Net Interest Income ~~(FTE Adjusted)~~(FTE), a non-GAAP financial measure, includes adjustments to a fully taxable equivalent basis for loans, securities and ~~securities.~~other interest-earning assets. The adjustments are based on a federal income tax rate of 21.0%, where the rate is adjusted for applicable state income taxes, net of related federal tax benefit. Total taxable equivalent interest adjustments amounted to ~~$39.5~~$7.3 million and ~~$30.1~~$13.2 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively. A reconciliation of Net Interest Income and net interest margin on a GAAP basis to Net Interest Income and net interest margin on an FTE basis (each of which is a non-GAAP financial measure) is provided in “Reconciliation to Fully Taxable Equivalent” within this MD&A. Net interest margin is calculated by dividing annualized ~~net interest income~~Net Interest Income by average interest-earning assets.

Interest ~~revenue~~Income on cash collateral positions is reported above ~~within~~in Interest-Bearing Due from and Deposits with Banks, ~~and within~~ Loans and ~~Leases.~~in Other Interest-Earning Assets. Interest ~~expense~~Expense on cash collateral positions is reported above ~~within~~in Savings, Money Market and Other and in Non-U.S. Offices Interest-Bearing Deposits. ~~Related~~Where it can be net, related cash collateral received from and deposited with derivative counterparties is recorded net of the associated derivative contract ~~within~~in Other Assets and Other Liabilities, respectively.

Net Interest Income, stated on ana FTE basis, ~~increased~~decreased from the prior-year ~~period,~~quarter, primarily due to higher ~~average interest rates, partially offset by lower average earning assets.~~funding costs. Average earning assets decreased from the prior-year ~~period,~~quarter, primarily due to lower ~~client deposits, partially offset by increased~~ borrowing activity.

The net interest margin on an FTE basis ~~increased~~decreased from the prior-year ~~period,~~quarter, primarily due to higher ~~average interest rates, partially offset by unfavorable~~ funding ~~mix shift.~~costs.

Federal Reserve and Other Central Bank Deposits averaged ~~$33.0~~$35.9 billion and decreased ~~$4.5~~$0.7 billion, or ~~12%~~2%, from ~~$37.4~~$36.6 billion in the prior-year ~~period. Average Securities were $50.1~~quarter. Interest-Bearing Due from and Deposits with Banks averaged $4.4 billion and ~~decreased $6.0~~increased $0.2 billion, or ~~11%~~5%, from ~~$56.1~~$4.2 billion in the prior-year ~~period.~~ quarter.

Average ~~Other Interest-Earning Assets include certain community development investments, Federal Home Loan Bank stock, collateral deposits with certain securities depositories~~Securities were $48.5 billion and ~~clearing houses, money market investments, and Federal Reserve stock of $902.8 million, $379.2 million, $358.5 million, $81.8 million and $70.0 million, respectively, which are recorded~~decreased $1.9 billion, or 4%, from $50.4 billion in ~~Other Assets on~~ the ~~consolidated balance sheets.~~prior-year quarter. Average taxable Securities were ~~$47.1~~$43.3 billion in the current ~~period~~quarter and ~~$53.5~~$47.4 billion in the prior-year ~~period.~~quarter. Average nontaxable Securities, which represent securities that are primarily exempt from U.S. federal and state income taxes, were $5.2 billion in the current quarter and $3.0 billion in the ~~current period~~prior-year quarter.

Securities Purchased under Agreements to Resell averaged $517.9 million and ~~$2.6~~decreased $528.2 million, or 50%, from $1,046.1 million in the prior-year quarter, primarily due to a shift to investments in higher interest earning assets.

Loans averaged $41.6 billion and decreased $0.4 billion, or 1%, from $42.0 billion in the prior-year ~~period. Interest-Bearing Due from~~quarter, primarily reflecting lower levels of commercial and ~~Deposits with Banks averaged $4.4 billion in the current period~~institutional, non-U.S, private client, and ~~$4.2 billion in the prior-year period.~~

~~Loans and leases averaged $42.2 billion and increased $1.7 billion, or 4%, from $40.6 billion in the prior-year period, primarily reflecting~~residential real estate loans, partially offset by higher levels of commercial real estate ~~commercial and institutional, non-U.S., residential real estate, and private client~~ loans. ~~Commercial real estate loans averaged $4.9 billion and increased $599.0 million, or 14%, from $4.3 billion for the prior-year period.~~ Commercial and institutional loans averaged ~~$12.6~~$10.6 billion and ~~increased $480.9 million,~~decreased $1.8 billion, or ~~4%, from $12.1~~

159

~~NINE-MONTH~~FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Net Interest Income (continued)

15%, from $12.4 billion for the prior-year ~~period.~~quarter. Non-U.S. loans averaged ~~$3.4~~$2.8 billion and ~~increased $117.2~~decreased $714.8 million, or 20%, from $3.6 billion for the prior-year quarter. Private client loans averaged $13.4 billion and decreased $492.3 million, or 4%, from ~~$3.3~~$13.9 billion for the prior-year ~~period.~~quarter. Residential real estate loans averaged ~~$6.4~~$6.3 billion and ~~increased $75.7~~decreased $155.0 million, or 1%2%, from ~~$6.3~~$6.4 billion for the prior-year ~~period. Private client~~quarter. Commercial real estate loans averaged ~~$13.9~~$5.2 billion and increased ~~$45.6~~$288.2 million, or 6%, from ~~$13.8~~$4.9 billion for the prior-year ~~period.~~quarter.

Northern Trust utilizes a diverse mix of funding sources. Average Interest-Bearing Deposits ~~decreased $8.7~~increased $3.7 billion, or 9%4%, to an average of ~~$88.3~~$95.7 billion in the current ~~period~~quarter from ~~$97.0~~$92.0 billion in the prior-year ~~period.~~quarter. Interest expense for Interest-Bearing Deposits in the current quarter was driven by higher interest rates. Average Non-U.S. Offices Interest-Bearing Deposits comprised 67% and 68% of total average Interest-Bearing Deposits for the three months ended March 31, 2024 and 2023, respectively. Other average ~~interest-related funding increased $12.4~~interest-bearing liabilities decreased $3.3 billion, or 17%, to an average of ~~$22.3~~$16.8 billion in the current ~~period~~quarter from ~~$9.9~~$20.1 billion in the prior-year ~~period.~~quarter. The balances within short-term borrowing classifications vary based on funding requirements and strategies, interest rate levels, changes in the volume of lower-cost deposit sources, and the availability of collateral to secure these borrowings.

Interest expense for Interest-Bearing Deposits in the current period was driven by higher interest rates. Average non-U.S. offices interest-bearing deposits comprised 69% and 67% of total average interest-bearing deposits for the nine months ended September 30, 2023 and 2022, respectively.

Provision for Credit Losses

~~There~~In the current quarter, there was a ~~$13.5~~negative Provision for Credit Losses of $8.5 million, as compared to a $15.0 million Provision for Credit Losses ~~for~~in the ~~nine months ended September 30, 2023, as compared to a $7.0 million~~prior-year quarter. The negative provision in the ~~prior-year perio~~d.current quarter resulted from decreases in both individual and collective reserves. The ~~provision~~decrease in individual reserves was driven by one Commercial and Institutional (C&I) loan that was charged-off in the current quarter. The decrease in collective reserve was primarily ~~due to an increase~~ in the ~~collective basis reserve,~~C&I portfolio, driven by ~~new loans and renewals in the CRE portfolio and expectations of higher economic stress in the CRE market, particularly office CRE, partially offset by a net~~ improvement in the ~~overall~~quality of the portfolio, and in the Commercial Real Estate (CRE) portfolio, driven by improved macroeconomic ~~outlook and lower loss projections for certain large C&I loans.~~factors. The reserve evaluated on a collective basis relates to pooled financial assets sharing similar risk characteristics.

The ~~provision~~Provision for Credit Losses in the prior-year ~~period~~quarter was primarily due to an increase in the reserve evaluated on a collective basis, ~~reserve,~~driven by growth in the size and duration of the commercial real estate portfolio, primarily in multi-family properties, partially offset by ~~net recoveries during the~~ ~~prior-year~~ ~~period. The increase in the collective basis reserve was driven by a weaker macroeconomic outlook at the time, partially offset by improvements~~improvement in credit quality ~~mainly within~~for the ~~C&I~~commercial and ~~CRE portfolios.~~institutional segment.

Net charge-offs in the ~~current-year period totaled $2.6~~current quarter were $10.4 million, ~~resulting from $5.6 million of charge-offs and $3.0~~reflecting $0.7 million of recoveries ~~compared to net recoveries of $4.2 million in the prior-year period resulting from $5.5~~and $11.1 million of ~~charge-offs and $9.7~~charge-offs. The prior-year quarter included $2.9 million of ~~recoveries.~~net charge-offs, reflecting $1.1 million of recoveries and $4.0 million of charge-offs.

For additional discussion of the allowance for credit losses, refer to the “Asset Quality” section in this MD&A.

~~Noninterest Expense~~Asset Servicing

~~The components of Noninterest Expense are provided in the following table.~~

~~TABLE 20: NONINTEREST EXPENSE~~

NINE MONTHS ENDED SEPTEMBER 30,
($ In Millions) 2023 2022 CHANGE
Compensation $ 1,757.8 $ 1,663.7 $ 94.1 6 %
Employee Benefits 303.2 333.8 (30.6) (9)
Outside Services 671.3 647.4 23.9 4
Equipment and Software 693.5 609.4 84.1 14
Occupancy 173.8 153.4 20.4 13
Other Operating Expense 296.1 251.6 44.5 18
Total Noninterest Expense $ 3,895.7 $ 3,659.3 $ 236.4 6 %

~~Compensation expense,~~Custody and Fund Administration fees, the largest component of ~~Noninterest Expense~~Asset Servicing fees, are driven primarily by values of client assets under custody/administration (AUC/A), transaction volumes and the number of accounts. The asset values used to calculate these fees vary depending on the individual fee arrangements negotiated with each client. Custody fees related to asset values are client-specific and are priced based on month-end market values, quarter-end market values, or the average of month-end market values for the quarter. The fund administration fees that are asset-value-related are priced using month-end, quarter-end, or average daily balances. Investment Management fees are based generally on market values of client AUM throughout the period. Typically, the asset values used to calculate fee revenue are based on a one-month or one-quarter lag. Securities Lending revenue is affected by market values; the demand for securities to be lent, which drives volumes; and the interest rate spread earned on the investment of cash deposited by investment firms as collateral for securities they have borrowed. The Other fee category in Asset Servicing includes such products as investment risk and analytical services, benefit payments, and other services. Revenue from these products is based generally on the volume of services provided or a fixed fee.

Custody and Fund Administration fees increased from the prior-year quarter, primarily due to favorable markets and new business. Investment Management fees increased from the prior-year quarter, primarily due to favorable markets.

Wealth Management

Wealth Management fee income is calculated primarily based on market values and is impacted by both one-month and one-quarter lagged asset values. Fee income in the regions increased from the prior-year quarter, primarily due to favorable markets. Global Family Office fee income increased from the prior-year quarter, primarily due to favorable markets and asset inflows.

Market Indices

The following tables present selected market indices and the percentage changes year-over-year to provide context regarding equity and fixed income market impacts on the Corporation’s results.

TABLE 2: EQUITY MARKET INDICES


	DAILY AVERAGES				PERIOD-END
	THREE MONTHS ENDED MARCH 31,				AS OF MARCH 31,
	2024	2023	CHANGE		2024	2023	CHANGE
S&P 500	4,989	3,998	25	%	5,254	4,109	28	%
MSCI EAFE (U.S. dollars)	2,262	2,059	10		2,347	2,093	12
MSCI EAFE (local currency)	1,447	1,301	11		1,519	1,315	16

FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Trust, Investment and Other Servicing Fees (continued)

TABLE 3: FIXED INCOME MARKET INDICES


	AS OF MARCH 31,
	2024	2023	CHANGE
Barclays Capital U.S. Aggregate Bond Index	2,145	2,109	2	%
Barclays Capital Global Aggregate Bond Index	462	459	1

Client Assets

TABLE 4: ASSETS UNDER CUSTODY / ADMINISTRATION BY REPORTING SEGMENT


	MARCH 31, 2024		DECEMBER 31, 2023		MARCH 31, 2023		CHANGE Q1-24/Q4-23		CHANGE Q1-24/Q1-23
($ In Billions)	MARCH 31, 2024		DECEMBER 31, 2023		MARCH 31, 2023		CHANGE Q1-24/Q4-23		CHANGE Q1-24/Q1-23
Asset Servicing	$	15,385.4	$	14,362.6	$	13,221.5	7	%	16	%
Wealth Management	1,087.1		1,042.3		953.3		4		14
Total Assets Under Custody / Administration	$	16,472.5	$	15,404.9	$	14,174.8	7	%	16	%

The following table presents Northern Trust’s assets under custody, a component of AUC/A, by reporting segment.

TABLE 5: ASSETS UNDER CUSTODY BY REPORTING SEGMENT


	MARCH 31, 2024		DECEMBER 31, 2023		MARCH 31, 2023		CHANGE Q1-24/Q4-23		CHANGE Q1-24/Q1-23
($ In Billions)	MARCH 31, 2024		DECEMBER 31, 2023		MARCH 31, 2023		CHANGE Q1-24/Q4-23		CHANGE Q1-24/Q1-23
Asset Servicing	$	11,723.1	$	10,882.0	$	10,065.6	8	%	16	%
Wealth Management	1,081.0		1,034.5		947.6		4		14
Total Assets Under Custody	$	12,804.1	$	11,916.5	$	11,013.2	7	%	16	%

Consolidated assets under custody increased from the prior quarter, primarily reflecting favorable markets and client asset inflows, partially offset by unfavorable currency translation. Consolidated assets under custody increased from the prior-year quarter, primarily reflecting the impact of favorable markets and favorable currency translation, partially offset by client asset outflows.

The following table presents the allocation of Northern Trust’s custodied assets by reporting segment.

TABLE 6: ALLOCATION OF ASSETS UNDER CUSTODY


	MARCH 31, 2024						DECEMBER 31, 2023						MARCH 31, 2023
	AS		WM		TOTAL		AS		WM		TOTAL		AS		WM		TOTAL
Equities	47	%	61	%	48	%	46	%	60	%	47	%	45	%	58	%	46	%
Fixed Income Securities	31		13		30		33		13		31		33		14		32
Cash and Other Assets	20		26		21		19		27		21		20		28		20
Securities Lending Collateral	2		—		1		2		—		1		2		—		2

The following table presents Northern Trust’s assets under custody by investment type.

TABLE 7: ASSETS UNDER CUSTODY BY INVESTMENT TYPE


($ In Billions)	MARCH 31, 2024		DECEMBER 31, 2023		MARCH 31, 2023		CHANGE Q1-24/Q4-23		CHANGE Q1-24/Q1-23
Equities	$	6,172.5	$	5,652.5	$	5,091.1	9	%	21	%
Fixed Income Securities	3,804.2		3,737.1		3,501.4		2		9
Cash and Other Assets	2,664.2		2,359.5		2,252.8		13		18
Securities Lending Collateral	163.2		167.4		167.9		(3)		(3)
Total Assets Under Custody	$	12,804.1	$	11,916.5	$	11,013.2	7	%	16	%

FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Trust, Investment and Other Servicing Fees (continued)

The following table presents Northern Trust’s assets under management by reporting segment.

TABLE 8: ASSETS UNDER MANAGEMENT BY REPORTING SEGMENT


	MARCH 31, 2024		DECEMBER 31, 2023		MARCH 31, 2023		CHANGE Q1-24/Q4-23		CHANGE Q1-24/Q1-23
($ In Billions)	MARCH 31, 2024		DECEMBER 31, 2023		MARCH 31, 2023		CHANGE Q1-24/Q4-23		CHANGE Q1-24/Q1-23
Asset Servicing	$	1,080.1	$	1,032.0	$	962.1	5	%	12	%
Wealth Management	420.6		402.5		368.3		5		14
Total Assets Under Management	$	1,500.7	$	1,434.5	$	1,330.4	5	%	13	%

Consolidated assets under management increased compared to the prior quarter, primarily reflecting favorable markets and client asset inflows. Consolidated assets under management increased compared to the prior-year ~~period,~~quarter, primarily ~~due to higher salary expense and $36.7 million~~reflecting the impact of ~~severance-related charges, partially offset~~favorable markets.

The following table presents the allocation of Northern Trust’s assets under management by ~~lower incentives.~~reporting segment.

~~Employee Benefits expense decreased compared to the prior-year period, primarily due to a U.S. Qualified Plan pension settlement charge~~TABLE 9: ALLOCATION OF ASSETS UNDER MANAGEMENT


	MARCH 31, 2024						DECEMBER 31, 2023						MARCH 31, 2023
	AS		WM		TOTAL		AS		WM		TOTAL		AS		WM		TOTAL
Equities	56	%	57	%	56	%	55	%	55	%	55	%	54	%	53	%	54	%
Fixed Income Securities	11		21		14		11		22		14		11		22		14
Cash and Other Assets	18		22		19		18		23		19		18		25		19
Securities Lending Collateral	15		—		11		16		—		12		17		—		13

The following table presents Northern Trust’s assets under management by investment type.

TABLE 10: ASSETS UNDER MANAGEMENT BY INVESTMENT TYPE


($ In Billions)	MARCH 31, 2024		DECEMBER 31, 2023		MARCH 31, 2023		CHANGE Q1-24/Q4-23		CHANGE Q1-24/Q1-23
Equities	$	841.1	$	785.5	$	712.1	7	%	18	%
Fixed Income Securities	203.5		203.4		187.6		—		8
Cash and Other Assets	292.9		278.2		262.8		5		11
Securities Lending Collateral	163.2		167.4		167.9		(2)		(3)
Total Assets Under Management	$	1,500.7	$	1,434.5	$	1,330.4	5	%	13	%

The following table presents activity in consolidated assets under management by product.

TABLE 11: ACTIVITY IN CONSOLIDATED ASSETS UNDER MANAGEMENT BY PRODUCT


		THREE MONTHS ENDED
(In Billions)		MARCH 31, 2024		DECEMBER 31, 2023		SEPTEMBER 30, 2023		JUNE 30, 2023		MARCH 31, 2023
Beginning Balance of AUM		$	1,434.5	$	1,249.5	$	1,365.8	$	1,330.4	$	1,249.5
Inflows by Product
	Equities	38.3		206.4		49.5		44.8		52.1
	Fixed Income	15.3		57.8		15.0		11.2		14.4
	Cash and Other Assets	629.5		2,012.5		565.2		551.3		276.7
	Securities Lending Collateral	75.8		238.3		54.6		53.4		66.3
Total Inflows		758.9		2,515.0		684.3		660.7		409.5
Outflows by Product
	Equities	(47.7)		(224.5)		(54.6)		(54.7)		(59.2)
	Fixed Income	(14.6)		(57.1)		(12.4)		(10.2)		(16.6)
	Cash and Other Assets	(605.0)		(1,970.3)		(559.5)		(529.7)		(264.0)
	Securities Lending Collateral	(80.0)		(219.2)		(61.4)		(52.5)		(46.7)
Total Outflows		(747.2)		(2,471.1)		(687.9)		(647.1)		(386.5)
Net Inflows (Outflows)		11.7		43.9		(3.6)		13.6		23.0
Market Performance, Currency & Other
	Market Performance & Other	58.8		133.8		(24.1)		27.7		52.4
	Currency	(4.2)		7.3		(4.8)		(5.9)		5.5
Total Market Performance, Currency & Other		54.6		141.1		(28.9)		21.8		57.9
Ending Balance of AUM		$	1,500.7	$	1,434.5	$	1,333.3	$	1,365.8	$	1,330.4

FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Other Noninterest Income

The components of ~~$37.3 million in the prior-year period, partially offset by higher payroll taxes.~~Other Noninterest Income are provided below.

~~Outside Services expense~~TABLE 12: OTHER NONINTEREST INCOME


	THREE MONTHS ENDED MARCH 31,
($ In Millions)	2024		2023		CHANGE
Foreign Exchange Trading Income	$	57.0	$	53.0	$	4.0	8	%
Treasury Management Fees	9.3		8.4		0.9		11
Security Commissions and Trading Income	37.9		34.7		3.2		9
Other Operating Income	61.0		46.8		14.2		30
Investment Security Gains (Losses), net	(189.4)		6.9		(196.3)		N/M
Total Other Noninterest Income	$	(24.2)	$	149.8	$	(174.0)	N/M

N/M - Not meaningful

Foreign Exchange Trading Income increased compared to the prior-year ~~period,~~quarter primarily ~~reflecting~~driven by higher ~~technical services and higher legal services, partially offset by lower consulting services and lower subcustodian expense.~~client volumes.

~~Equipment and Software expense~~Other Operating Income increased compared to the prior-year ~~period,~~quarter, primarily ~~due~~driven by higher income associated with a market value increase in supplemental compensation plans and lower expense associated with existing swap agreements related to ~~higher software amortization and higher software costs.~~Visa Inc. Class B common shares.

~~NINE-MONTH CONSOLIDATED RESULTS OF OPERATIONS (continued)~~

~~Noninterest Expense (continued)~~

~~Occupancy expense increased~~Investment Security Gains (Losses), net reflects the $189.4 million available for sale debt security loss as compared to the ~~prior-year period, primarily due to a $12.8~~$6.9 million ~~charge related to early lease exits.~~

~~Other Operating Expense increased compared to~~gain on the sale of available for sale debt securities in the prior-year ~~period, primarily due to~~quarter, each arising from a ~~$25.6 million charge related to~~repositioning of the ~~write-off of an investment in a client capability and higher supplemental compensation plan expense.~~portfolio.

~~Provision for~~Net Interest Income ~~Taxes~~

Net Interest Income ~~tax expense~~is defined as the total of Interest Income and amortized fees on earning assets, less Interest Expense on deposits and borrowed funds, adjusted for the ~~nine months ended September 30, 2023 was $324.8 million, representing an effective tax rate~~impact of ~~24.6%, compared~~interest-related hedging activity. Earning assets—including Federal Funds Sold, Securities Purchased under Agreements to ~~$395.6 million~~Resell, Interest-Bearing Due From and Deposits with Banks, Federal Reserve and Other Central Bank Deposits, Securities, Loans, and Other Interest-Earning Assets—are financed by a large base of interest-bearing liabilities that include client deposits, short-term borrowings, Senior Notes and Long-Term Debt. Short-term borrowings include Federal Funds Purchased, Securities Sold Under Agreements to Repurchase, and Other Borrowings. Earning assets are also funded by noninterest-bearing funds, which include demand deposits and stockholders’ equity. Net Interest Income is subject to variations in the level and mix of earning assets and interest-bearing funds and their relative sensitivity to interest rates. In addition, the levels of nonaccruing assets and client compensating deposit balances used to pay for services impact Net Interest Income.

Net interest margin is the ~~nine months ended September 30, 2022, representing an effective tax rate~~difference between what we earn on our assets and what we pay for deposits and other sources of ~~25.1%.~~

funding. The ~~effective tax rate decreased compared to the prior-year period primarily due to a decrease in pretax earnings~~direction and ~~a higher~~ level of ~~tax benefits from tax-credit investments and tax-exempt income, partially offset~~interest rates are important factors in our earnings. Net interest margin is calculated by ~~lower tax benefits from share-based compensation.~~dividing annualized Net Interest Income by average interest-earning assets.

~~REPORTING SEGMENTS~~

Northern Trust is organized around its two client-focused reporting segments: Asset Servicing and Wealth Management. Asset management and related services are provided to Asset Servicing and Wealth Management clients primarily by the Asset Management business. The revenue and expenses of Asset Management and certain other support functions are allocatedNet Interest Income stated on a fully ~~to Asset Servicing and Wealth Management.~~

~~Reporting segment financial information, presented on an internal management reporting~~taxable equivalent (FTE) basis is ~~determined by~~a non-generally accepted accounting ~~systems used to allocate revenue and expense to each segment, and incorporates processes for allocating assets, liabilities, equity and~~principle (GAAP) financial measure that facilitates the applicable interest income and expense utilizing a funds transfer pricing (FTP) methodology. Under the methodology, assets and liabilities receive a funding charge or credit that considers interest rate risk, liquidity risk, and other product characteristics on an instrument level. Additionally, segment information is presented on an FTE basis as managementanalysis of asset yields. Management believes an FTE presentation provides a clearer indication of net interest ~~income. The~~margins for comparative purposes. When adjusted to an FTE basis, yields on taxable, nontaxable, and partially taxable assets are comparable; however, the adjustment to an FTE basis has no impact on Net Income.

~~Revenues, expenses and average assets are allocated to Asset Servicing and Wealth Management, with the exception~~ A reconciliation of ~~non-recurring activities such as certain costs associated with acquisitions, divestitures, litigation, restructuring, and tax adjustments not directly attributable to a specific reporting segment.~~

Reporting segment results are subject to reclassification when organizational changes are made. The results are also subject to refinements in revenue and expense allocation methodologies, which are typically reflectedNet Interest Income on a ~~prospective basis.~~GAAP basis to Net Interest Income on an FTE basis is provided in “Reconciliation to Fully Taxable Equivalent” within this MD&A.

177

~~REPORTING SEGMENTS~~FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Net Interest Income (continued)

The following ~~table presents~~tables present an analysis of average daily balances and interest rates affecting Net Interest Income and an analysis of Net Interest Income changes.

TABLE 13: AVERAGE CONSOLIDATED BALANCE SHEETS WITH ANALYSIS OF NET INTEREST INCOME


(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)	FIRST QUARTER
	2024						2023
($ In Millions)	INTEREST		AVERAGE BALANCE		AVERAGE RATE(7)		INTEREST		AVERAGE BALANCE		AVERAGE RATE(7)
Interest-Earning Assets
Federal Reserve and Other Central Bank Deposits	$	459.7	$	35,897.3	5.15	%	$	377.0	$	36,641.8	4.17	%
Interest-Bearing Due from and Deposits with Banks(1)	34.6		4,418.0		3.15		28.2		4,198.7		2.72
Federal Funds Sold	—		0.5		5.64		0.2		19.7		4.79
Securities Purchased under Agreements to Resell(2)	823.9		517.9		639.92		125.9		1,046.1		48.80
Debt Securities
Available for Sale	323.2		24,049.6		5.41		234.7		25,030.4		3.80
Held to Maturity	123.8		24,498.9		2.02		103.8		25,382.2		1.64
Trading Account	—		—		—		—		1.3		7.63
Total Debt Securities	447.0		48,548.5		3.70		338.5		50,413.9		2.72
Loans(3)	655.8		41,586.9		6.34		579.5		41,959.4		5.60
Other Interest-Earning Assets(4)	31.9		2,847.7		4.51		19.3		1,677.8		4.67
Total Interest-Earning Assets	2,452.9		133,816.8		7.37		1,468.6		135,957.4		4.38
Cash and Due from Banks and Other Central Bank Deposits(5)	—		1,799.5		—		—		1,795.9		—
Other Noninterest-Earning Assets	—		9,502.0		—		—		10,306.6		—
Total Assets	$	—	$	145,118.3	—	%	$	—	$	148,059.9	—	%
Average Source of Funds
Deposits
Savings, Money Market and Other	$	253.2	$	27,349.0	3.72	%	$	158.0	$	27,268.8	2.35	%
Savings Certificates and Other Time	58.8		4,554.3		5.19		21.6		2,360.1		3.70
Non-U.S. Offices — Interest-Bearing	569.7		63,752.8		3.59		385.0		62,411.1		2.50
Total Interest-Bearing Deposits	881.7		95,656.1		3.71		564.6		92,040.0		2.49
Federal Funds Purchased	33.6		2,650.1		5.11		40.1		3,653.9		4.45
Securities Sold under Agreements to Repurchase(2)	813.9		490.1		667.86		116.1		347.1		135.62
Other Borrowings(6)	88.6		6,852.1		5.20		135.0		11,324.0		4.83
Senior Notes	44.1		2,748.7		6.45		39.2		2,748.1		5.79
Long-Term Debt	55.6		4,067.0		5.50		29.2		2,066.3		5.73

Total Interest-Bearing Liabilities	1,917.5		112,464.1		6.86		924.2		112,179.4		3.34
Interest Rate Spread	—		—		0.51		—		—		1.04
Demand and Other Noninterest-Bearing Deposits	—		16,706.5		—		—		20,145.6		—
Other Noninterest-Bearing Liabilities	—		4,164.0		—		—		4,453.4		—
Stockholders’ Equity	—		11,783.7		—		—		11,281.5		—
Total Liabilities and Stockholders’ Equity	$	—	$	145,118.3	—	%	$	—	$	148,059.9	—	%
Net Interest Income/Margin (FTE Adjusted)	$	535.4	$	—	1.61	%	$	544.4	$	—	1.62	%
Net Interest Income/Margin (Unadjusted)	$	528.1	$	—	1.59	%	$	531.2	$	—	1.58	%

(1)Interest-Bearing Due from and Deposits with Banks includes the ~~earnings contributions~~interest-bearing component of Cash and ~~average assets~~Due from Banks and Interest-Bearing Deposits with Banks as presented on the consolidated balance sheets.

(2)Includes the impact of ~~Northern Trust’s reporting segments~~balance sheet netting under master netting arrangements of approximately $60.2 billion and $10.0 billion for the ~~three-~~three months ended March 31, 2024 and ~~nine-month periods~~2023, respectively. Excluding the impact of netting for the three months ended ~~September 30,~~March 31, 2024 and 2023, the average interest rate on Securities Purchased under Agreements to Resell would be approximately 5.46% and ~~2022.~~4.63%, respectively. Excluding the impact of netting for the three months ended March 31, 2024 and 2023, the average interest rate on Securities Sold under Agreements to Repurchase would be approximately 5.39% and 4.56%, respectively. Northern Trust nets securities sold under repurchase agreements against those purchased under resale agreements when there is a legally enforceable master netting agreement.

~~TABLE 21: RESULTS OF REPORTING SEGMENTS~~(3)Average balances include nonaccrual loans.

($ In Millions) ASSET SERVICING WEALTH MANAGEMENT OTHER RECONCILING ITEMS TOTAL CONSOLIDATED
THREE MONTHS ENDED SEPTEMBER 30, 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Noninterest Income
Trust, Investment and Other Servicing Fees $ 626.0 $ 603.2 $ 485.9 $ 475.5 $ — $ — $ — $ — $ 1,111.9 $ 1,078.7
Foreign Exchange Trading Income (Loss) 54.3 63.7 (2.5) 1.0 — — — — 51.8 64.7
Other Noninterest Income (Loss) 66.1 62.5 38.1 37.0 2.4 (1.1) — — 106.6 98.4
Total Noninterest Income (Loss) 746.4 729.4 521.5 513.5 2.4 (1.1) — — 1,270.3 1,241.8
Net Interest Income 281.2 303.3 188.2 222.0 — — (13.2) (12.3) 456.2 513.0
Revenue 1,027.6 1,032.7 709.7 735.5 2.4 (1.1) (13.2) (12.3) 1,726.5 1,754.8
Provision for (Release of) Credit Losses 3.1 (5.1) 10.9 5.6 — — — — 14.0 0.5
Noninterest Expense 809.3 760.4 456.9 449.0 12.0 20.4 — — 1,278.2 1,229.8
Income before Income Taxes 215.2 277.4 241.9 280.9 (9.6) (21.5) (13.2) (12.3) 434.3 524.5
Provision for Income Taxes 54.3 67.7 67.7 79.6 (2.3) (5.3) (13.2) (12.3) 106.5 129.7
Net Income $ 160.9 $ 209.7 $ 174.2 $ 201.3 $ (7.3) $ (16.2) $ — $ — $ 327.8 $ 394.8
Percentage of Consolidated Net Income 49 % 53 % 53 % 51 % (2) % (4) % N/A N/A 100 % 100 %
Average Assets $ 108,656.7 $ 109,677.2 $ 31,544.9 $ 36,725.0 $ — $ — N/A N/A $ 140,201.6 $ 146,402.2
(4)Other Interest-Earning Assets include certain community development investments, collateral deposits with certain securities depositories and clearing houses, Federal Home Loan Bank and Federal Reserve stock, and money market investments which are classified in Other Assets on the consolidated balance sheets.

($ In Millions) ASSET SERVICING WEALTH MANAGEMENT OTHER RECONCILING ITEMS TOTAL CONSOLIDATED
NINE MONTHS ENDED SEPTEMBER 30, 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Noninterest Income
Trust, Investment and Other Servicing Fees $ 1,850.2 $ 1,908.4 $ 1,421.6 $ 1,482.1 $ — $ — $ — $ — $ 3,271.8 $ 3,390.5
Foreign Exchange Trading Income (Loss) 161.2 215.9 (6.3) 7.3 — — — — 154.9 223.2
Other Noninterest Income (Loss) 199.0 185.4 112.8 101.6 (9.2) (11.2) — — 302.6 275.8
Total Noninterest Income (Loss) 2,210.4 2,309.7 1,528.1 1,591.0 (9.2) (11.2) — — 3,729.3 3,889.5
Net Interest Income 902.6 748.5 635.8 634.3 — — (39.5) (30.1) 1,498.9 1,352.7
Revenue 3,113.0 3,058.2 2,163.9 2,225.3 (9.2) (11.2) (39.5) (30.1) 5,228.2 5,242.2
Provision for (Release of) Credit Losses (3.3) 3.8 16.8 3.2 — — — — 13.5 7.0
Noninterest Expense 2,459.7 2,269.4 1,402.4 1,333.2 33.6 56.7 — — 3,895.7 3,659.3
Income before Income Taxes 656.6 785.0 744.7 888.9 (42.8) (67.9) (39.5) (30.1) 1,319.0 1,575.9
Provision for Income Taxes 167.4 194.0 207.5 248.6 (10.6) (16.9) (39.5) (30.1) 324.8 395.6
Net Income $ 489.2 $ 591.0 $ 537.2 $ 640.3 $ (32.2) $ (51.0) $ — $ — $ 994.2 $ 1,180.3
Percentage of Consolidated Net Income 49 % 50 % 54 % 54 % (3) % (4) % N/A N/A 100 % 100 %
Average Assets $ 110,380.4 $ 117,251.0 $ 34,311.2 $ 36,901.1 $ — $ — N/A N/A $ 144,691.6 $ 154,152.1
~~Note: Segment results~~(5)Cash and Due from Banks and Other Central Bank Deposits includes the noninterest-bearing component of Federal Reserve and Other Central Bank Deposits on the consolidated balance sheets.

(6)Other Borrowings primarily includes advances from the Federal Home Loan Bank of Chicago.

(7)Rate calculations are ~~stated~~based on ~~an FTE basis. The FTE adjustments are eliminated~~actual balances rather than the rounded amounts presented in the ~~reconciling items column~~average consolidated balance sheets with ~~the Corporation’s total consolidated financial results stated on a GAAP basis. The adjustment to an FTE basis has no impact on~~analysis of Net Interest Income.

188

~~REPORTING SEGMENTS~~FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Net Interest Income (continued)

TABLE 14: ANALYSIS OF NET INTEREST INCOME CHANGES DUE TO VOLUME AND RATE(1)


(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)	THREE MONTHS ENDED MARCH 31, 2024 VS. 2023
	CHANGE DUE TO
(In Millions)	AVERAGE BALANCE		AVERAGE RATE		NET (DECREASE) INCREASE
Increase (Decrease) in Net Interest Income (FTE)
Federal Reserve and Other Central Bank Deposits	$	(7.6)	$	90.3	$	82.7
Interest-Bearing Due from and Deposits with Banks	1.6		4.8		6.4
Federal Funds Sold	(0.2)		—		(0.2)
Securities Purchased under Agreements to Resell	(95.1)		793.1		698.0
Debt Securities
Available for Sale	(9.5)		98.0		88.5
Held to Maturity	(3.7)		23.7		20.0

Total Debt Securities	(13.2)		121.7		108.5
Loans	(4.9)		81.2		76.3
Other Interest-Earning Assets	13.2		(0.6)		12.6
Total Interest Income	$	(106.2)	$	1,090.5	$	984.3

Interest-Bearing Deposits
Savings, Money Market and Other	$	0.5	$	94.7	$	95.2
Savings Certificates and Other Time	26.0		11.2		37.2
Non-U.S. Offices - Interest-Bearing	8.6		176.1		184.7
Total Interest-Bearing Deposits	35.1		282.0		317.1
Federal Funds Purchased	(12.0)		5.5		(6.5)
Securities Sold under Agreements to Repurchase	66.3		631.5		697.8
Other Borrowings	(56.3)		9.9		(46.4)
Senior Notes	—		4.9		4.9
Long-Term Debt	27.6		(1.2)		26.4

Total Interest Expense	$	60.7	$	932.6	$	993.3
Increase (Decrease) in Net Interest Income (FTE)	$	(166.9)	$	157.9	$	(9.0)

(1)Changes not due solely to average balance changes or rate changes are allocated proportionately to average balance and rate based on their relative absolute magnitudes.

Notes: Net Interest Income (FTE), a non-GAAP financial measure, includes adjustments to a fully taxable equivalent basis for loans, securities and other interest-earning assets. The adjustments are based on a federal income tax rate of 21.0%, where the rate is adjusted for applicable state income taxes, net of related federal tax benefit. Total taxable equivalent interest adjustments amounted to $7.3 million and $13.2 million for the three months ended March 31, 2024 and 2023, respectively. A reconciliation of Net Interest Income and net interest margin on a GAAP basis to Net Interest Income and net interest margin on an FTE basis (each of which is a non-GAAP financial measure) is provided in “Reconciliation to Fully Taxable Equivalent” within this MD&A. Net interest margin is calculated by dividing annualized Net Interest Income by average interest-earning assets.

Net Interest Income, stated on a FTE basis, decreased from the prior-year quarter, primarily due to higher funding costs. Average earning assets decreased from the prior-year quarter, primarily due to lower borrowing activity.

The net interest margin on an FTE basis decreased from the prior-year quarter, primarily due to higher funding costs.

Federal Reserve and Other Central Bank Deposits averaged $35.9 billion and decreased $0.7 billion, or 2%, from $36.6 billion in the prior-year quarter. Interest-Bearing Due from and Deposits with Banks averaged $4.4 billion and increased $0.2 billion, or 5%, from $4.2 billion in the prior-year quarter.

Average Securities were $48.5 billion and decreased $1.9 billion, or 4%, from $50.4 billion in the prior-year quarter. Average taxable Securities were $43.3 billion in the current quarter and $47.4 billion in the prior-year quarter. Average nontaxable Securities, which represent securities that are primarily exempt from U.S. federal and state income taxes, were $5.2 billion in the current quarter and $3.0 billion in the prior-year quarter.

Loans averaged $41.6 billion and decreased $0.4 billion, or 1%, from $42.0 billion in the prior-year quarter, primarily reflecting lower levels of commercial and institutional, non-U.S, private client, and residential real estate loans, partially offset by higher levels of commercial real estate loans. Commercial and institutional loans averaged $10.6 billion and decreased $1.8 billion, or

FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Net Interest Income (continued)

15%, from $12.4 billion for the prior-year quarter. Non-U.S. loans averaged $2.8 billion and decreased $714.8 million, or 20%, from $3.6 billion for the prior-year quarter. Private client loans averaged $13.4 billion and decreased $492.3 million, or 4%, from $13.9 billion for the prior-year quarter. Residential real estate loans averaged $6.3 billion and decreased $155.0 million, or 2%, from $6.4 billion for the prior-year quarter. Commercial real estate loans averaged $5.2 billion and increased $288.2 million, or 6%, from $4.9 billion for the prior-year quarter.

Northern Trust utilizes a diverse mix of funding sources. Average Interest-Bearing Deposits increased $3.7 billion, or 4%, to an average of $95.7 billion in the current quarter from $92.0 billion in the prior-year quarter. Interest expense for Interest-Bearing Deposits in the current quarter was driven by higher interest rates. Average Non-U.S. Offices Interest-Bearing Deposits comprised 67% and 68% of total average Interest-Bearing Deposits for the three months ended March 31, 2024 and 2023, respectively. Other average interest-bearing liabilities decreased $3.3 billion, or 17%, to an average of $16.8 billion in the current quarter from $20.1 billion in the prior-year quarter. The balances within short-term borrowing classifications vary based on funding requirements and strategies, interest rate levels, changes in the volume of lower-cost deposit sources, and the availability of collateral to secure these borrowings.

Provision for Credit Losses

In the current quarter, there was a negative Provision for Credit Losses of $8.5 million, as compared to a $15.0 million Provision for Credit Losses in the prior-year quarter. The negative provision in the current quarter resulted from decreases in both individual and collective reserves. The decrease in individual reserves was driven by one Commercial and Institutional (C&I) loan that was charged-off in the current quarter. The decrease in collective reserve was primarily in the C&I portfolio, driven by improvement in the quality of the portfolio, and in the Commercial Real Estate (CRE) portfolio, driven by improved macroeconomic factors. The reserve evaluated on a collective basis relates to pooled financial assets sharing similar risk characteristics.

The Provision for Credit Losses in the prior-year quarter was primarily due to an increase in the reserve evaluated on a collective basis, driven by growth in the size and duration of the commercial real estate portfolio, primarily in multi-family properties, partially offset by improvement in credit quality for the commercial and institutional segment.

Net charge-offs in the current quarter were $10.4 million, reflecting $0.7 million of recoveries and $11.1 million of charge-offs. The prior-year quarter included $2.9 million of net charge-offs, reflecting $1.1 million of recoveries and $4.0 million of charge-offs.

For additional discussion of the allowance for credit losses, refer to the “Asset Quality” section in this MD&A.

Asset Servicing

Custody and Fund Administration fees, the largest component of Asset Servicing ~~Net Income~~fees, are driven primarily by values of client assets under custody/administration (AUC/A), transaction volumes and the number of accounts. The asset values used to calculate these fees vary depending on the individual fee arrangements negotiated with each client. Custody fees related to asset values are client-specific and are priced based on month-end market values, quarter-end market values, or the average of month-end market values for the quarter. The fund administration fees that are asset-value-related are priced using month-end, quarter-end, or average daily balances. Investment Management fees are based generally on market values of client AUM throughout the period. Typically, the asset values used to calculate fee revenue are based on a one-month or one-quarter lag. Securities Lending revenue is affected by market values; the demand for securities to be lent, which drives volumes; and the interest rate spread earned on the investment of cash deposited by investment firms as collateral for securities they have borrowed. The Other fee category in Asset Servicing includes such products as investment risk and analytical services, benefit payments, and other services. Revenue from these products is based generally on the volume of services provided or a fixed fee.

Wealth Management

Market Indices

The following tables present selected market indices and the percentage changes year-over-year to provide context regarding equity and fixed income market impacts on the Corporation’s results.

TABLE 2: EQUITY MARKET INDICES


	DAILY AVERAGES				PERIOD-END
	THREE MONTHS ENDED MARCH 31,				AS OF MARCH 31,
	2024	2023	CHANGE		2024	2023	CHANGE
S&P 500	4,989	3,998	25	%	5,254	4,109	28	%
MSCI EAFE (U.S. dollars)	2,262	2,059	10		2,347	2,093	12
MSCI EAFE (local currency)	1,447	1,301	11		1,519	1,315	16

FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Trust, Investment and Other Servicing Fees (continued)

TABLE 3: FIXED INCOME MARKET INDICES


	AS OF MARCH 31,
	2024	2023	CHANGE
Barclays Capital U.S. Aggregate Bond Index	2,145	2,109	2	%
Barclays Capital Global Aggregate Bond Index	462	459	1

Client Assets

TABLE 4: ASSETS UNDER CUSTODY / ADMINISTRATION BY REPORTING SEGMENT


	MARCH 31, 2024		DECEMBER 31, 2023		MARCH 31, 2023		CHANGE Q1-24/Q4-23		CHANGE Q1-24/Q1-23
($ In Billions)	MARCH 31, 2024		DECEMBER 31, 2023		MARCH 31, 2023		CHANGE Q1-24/Q4-23		CHANGE Q1-24/Q1-23
Asset Servicing	$	15,385.4	$	14,362.6	$	13,221.5	7	%	16	%
Wealth Management	1,087.1		1,042.3		953.3		4		14
Total Assets Under Custody / Administration	$	16,472.5	$	15,404.9	$	14,174.8	7	%	16	%

The following table presents Northern Trust’s assets under custody, a component of AUC/A, by reporting segment.

TABLE 5: ASSETS UNDER CUSTODY BY REPORTING SEGMENT


	MARCH 31, 2024		DECEMBER 31, 2023		MARCH 31, 2023		CHANGE Q1-24/Q4-23		CHANGE Q1-24/Q1-23
($ In Billions)	MARCH 31, 2024		DECEMBER 31, 2023		MARCH 31, 2023		CHANGE Q1-24/Q4-23		CHANGE Q1-24/Q1-23
Asset Servicing	$	11,723.1	$	10,882.0	$	10,065.6	8	%	16	%
Wealth Management	1,081.0		1,034.5		947.6		4		14
Total Assets Under Custody	$	12,804.1	$	11,916.5	$	11,013.2	7	%	16	%

Consolidated assets under custody increased from the prior quarter, ~~ended September 30, 2023, Net Income decreased $48.8 million, or 23%,~~primarily reflecting favorable markets and client asset inflows, partially offset by unfavorable currency translation. Consolidated assets under custody increased from the prior-year quarter, primarily reflecting ~~higher Noninterest Expense.~~the impact of favorable markets and favorable currency translation, partially offset by client asset outflows.

~~For~~The following table presents the ~~nine months ended September 30, 2023, Net Income decreased $101.8 million, or 17%, from the prior-year period, primarily reflecting higher Noninterest Expense and lower~~ allocation of Northern Trust’s custodied assets by reporting segment.

TABLE 6: ALLOCATION OF ASSETS UNDER CUSTODY


	MARCH 31, 2024						DECEMBER 31, 2023						MARCH 31, 2023
	AS		WM		TOTAL		AS		WM		TOTAL		AS		WM		TOTAL
Equities	47	%	61	%	48	%	46	%	60	%	47	%	45	%	58	%	46	%
Fixed Income Securities	31		13		30		33		13		31		33		14		32
Cash and Other Assets	20		26		21		19		27		21		20		28		20
Securities Lending Collateral	2		—		1		2		—		1		2		—		2

The following table presents Northern Trust’s assets under custody by investment type.

TABLE 7: ASSETS UNDER CUSTODY BY INVESTMENT TYPE


($ In Billions)	MARCH 31, 2024		DECEMBER 31, 2023		MARCH 31, 2023		CHANGE Q1-24/Q4-23		CHANGE Q1-24/Q1-23
Equities	$	6,172.5	$	5,652.5	$	5,091.1	9	%	21	%
Fixed Income Securities	3,804.2		3,737.1		3,501.4		2		9
Cash and Other Assets	2,664.2		2,359.5		2,252.8		13		18
Securities Lending Collateral	163.2		167.4		167.9		(3)		(3)
Total Assets Under Custody	$	12,804.1	$	11,916.5	$	11,013.2	7	%	16	%

FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Trust, Investment and Other Servicing Fees (continued)

The following table presents Northern Trust’s assets under management by reporting segment.

TABLE 8: ASSETS UNDER MANAGEMENT BY REPORTING SEGMENT


	MARCH 31, 2024		DECEMBER 31, 2023		MARCH 31, 2023		CHANGE Q1-24/Q4-23		CHANGE Q1-24/Q1-23
($ In Billions)	MARCH 31, 2024		DECEMBER 31, 2023		MARCH 31, 2023		CHANGE Q1-24/Q4-23		CHANGE Q1-24/Q1-23
Asset Servicing	$	1,080.1	$	1,032.0	$	962.1	5	%	12	%
Wealth Management	420.6		402.5		368.3		5		14
Total Assets Under Management	$	1,500.7	$	1,434.5	$	1,330.4	5	%	13	%

Consolidated assets under management increased compared to the prior quarter, primarily reflecting favorable markets and client asset inflows. Consolidated assets under management increased compared to the prior-year quarter, primarily reflecting the impact of favorable markets.

The following table presents the allocation of Northern Trust’s assets under management by reporting segment.

TABLE 9: ALLOCATION OF ASSETS UNDER MANAGEMENT


	MARCH 31, 2024						DECEMBER 31, 2023						MARCH 31, 2023
	AS		WM		TOTAL		AS		WM		TOTAL		AS		WM		TOTAL
Equities	56	%	57	%	56	%	55	%	55	%	55	%	54	%	53	%	54	%
Fixed Income Securities	11		21		14		11		22		14		11		22		14
Cash and Other Assets	18		22		19		18		23		19		18		25		19
Securities Lending Collateral	15		—		11		16		—		12		17		—		13

The following table presents Northern Trust’s assets under management by investment type.

TABLE 10: ASSETS UNDER MANAGEMENT BY INVESTMENT TYPE


($ In Billions)	MARCH 31, 2024		DECEMBER 31, 2023		MARCH 31, 2023		CHANGE Q1-24/Q4-23		CHANGE Q1-24/Q1-23
Equities	$	841.1	$	785.5	$	712.1	7	%	18	%
Fixed Income Securities	203.5		203.4		187.6		—		8
Cash and Other Assets	292.9		278.2		262.8		5		11
Securities Lending Collateral	163.2		167.4		167.9		(2)		(3)
Total Assets Under Management	$	1,500.7	$	1,434.5	$	1,330.4	5	%	13	%

The following table presents activity in consolidated assets under management by product.

TABLE 11: ACTIVITY IN CONSOLIDATED ASSETS UNDER MANAGEMENT BY PRODUCT


		THREE MONTHS ENDED
(In Billions)		MARCH 31, 2024		DECEMBER 31, 2023		SEPTEMBER 30, 2023		JUNE 30, 2023		MARCH 31, 2023
Beginning Balance of AUM		$	1,434.5	$	1,249.5	$	1,365.8	$	1,330.4	$	1,249.5
Inflows by Product
	Equities	38.3		206.4		49.5		44.8		52.1
	Fixed Income	15.3		57.8		15.0		11.2		14.4
	Cash and Other Assets	629.5		2,012.5		565.2		551.3		276.7
	Securities Lending Collateral	75.8		238.3		54.6		53.4		66.3
Total Inflows		758.9		2,515.0		684.3		660.7		409.5
Outflows by Product
	Equities	(47.7)		(224.5)		(54.6)		(54.7)		(59.2)
	Fixed Income	(14.6)		(57.1)		(12.4)		(10.2)		(16.6)
	Cash and Other Assets	(605.0)		(1,970.3)		(559.5)		(529.7)		(264.0)
	Securities Lending Collateral	(80.0)		(219.2)		(61.4)		(52.5)		(46.7)
Total Outflows		(747.2)		(2,471.1)		(687.9)		(647.1)		(386.5)
Net Inflows (Outflows)		11.7		43.9		(3.6)		13.6		23.0
Market Performance, Currency & Other
	Market Performance & Other	58.8		133.8		(24.1)		27.7		52.4
	Currency	(4.2)		7.3		(4.8)		(5.9)		5.5
Total Market Performance, Currency & Other		54.6		141.1		(28.9)		21.8		57.9
Ending Balance of AUM		$	1,500.7	$	1,434.5	$	1,333.3	$	1,365.8	$	1,330.4

FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Other Noninterest Income

The components of Other Noninterest Income are provided below.

TABLE 12: OTHER NONINTEREST INCOME


	THREE MONTHS ENDED MARCH 31,
($ In Millions)	2024		2023		CHANGE
Foreign Exchange Trading Income	$	57.0	$	53.0	$	4.0	8	%
Treasury Management Fees	9.3		8.4		0.9		11
Security Commissions and Trading Income	37.9		34.7		3.2		9
Other Operating Income	61.0		46.8		14.2		30
Investment Security Gains (Losses), net	(189.4)		6.9		(196.3)		N/M
Total Other Noninterest Income	$	(24.2)	$	149.8	$	(174.0)	N/M

N/M - Not meaningful

Foreign Exchange Trading Income increased compared to the prior-year quarter primarily driven by higher client volumes.

Net Interest Income

Net Interest Income is defined as the total of Interest Income and amortized fees on earning assets, less Interest Expense on deposits and borrowed funds, adjusted for the impact of interest-related hedging activity. Earning assets—including Federal Funds Sold, Securities Purchased under Agreements to Resell, Interest-Bearing Due From and Deposits with Banks, Federal Reserve and Other Central Bank Deposits, Securities, Loans, and Other Interest-Earning Assets—are financed by a large base of interest-bearing liabilities that include client deposits, short-term borrowings, Senior Notes and Long-Term Debt. Short-term borrowings include Federal Funds Purchased, Securities Sold Under Agreements to Repurchase, and Other Borrowings. Earning assets are also funded by noninterest-bearing funds, which include demand deposits and stockholders’ equity. Net Interest Income is subject to variations in the level and mix of earning assets and interest-bearing funds and their relative sensitivity to interest rates. In addition, the levels of nonaccruing assets and client compensating deposit balances used to pay for services impact Net Interest Income.

FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Net Interest Income (continued)

The following tables present an analysis of average daily balances and interest rates affecting Net Interest Income and an analysis of Net Interest Income changes.

TABLE 13: AVERAGE CONSOLIDATED BALANCE SHEETS WITH ANALYSIS OF NET INTEREST INCOME


(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)	FIRST QUARTER
	2024						2023
($ In Millions)	INTEREST		AVERAGE BALANCE		AVERAGE RATE(7)		INTEREST		AVERAGE BALANCE		AVERAGE RATE(7)
Interest-Earning Assets
Federal Reserve and Other Central Bank Deposits	$	459.7	$	35,897.3	5.15	%	$	377.0	$	36,641.8	4.17	%
Interest-Bearing Due from and Deposits with Banks(1)	34.6		4,418.0		3.15		28.2		4,198.7		2.72
Federal Funds Sold	—		0.5		5.64		0.2		19.7		4.79
Securities Purchased under Agreements to Resell(2)	823.9		517.9		639.92		125.9		1,046.1		48.80
Debt Securities
Available for Sale	323.2		24,049.6		5.41		234.7		25,030.4		3.80
Held to Maturity	123.8		24,498.9		2.02		103.8		25,382.2		1.64
Trading Account	—		—		—		—		1.3		7.63
Total Debt Securities	447.0		48,548.5		3.70		338.5		50,413.9		2.72
Loans(3)	655.8		41,586.9		6.34		579.5		41,959.4		5.60
Other Interest-Earning Assets(4)	31.9		2,847.7		4.51		19.3		1,677.8		4.67
Total Interest-Earning Assets	2,452.9		133,816.8		7.37		1,468.6		135,957.4		4.38
Cash and Due from Banks and Other Central Bank Deposits(5)	—		1,799.5		—		—		1,795.9		—
Other Noninterest-Earning Assets	—		9,502.0		—		—		10,306.6		—
Total Assets	$	—	$	145,118.3	—	%	$	—	$	148,059.9	—	%
Average Source of Funds
Deposits
Savings, Money Market and Other	$	253.2	$	27,349.0	3.72	%	$	158.0	$	27,268.8	2.35	%
Savings Certificates and Other Time	58.8		4,554.3		5.19		21.6		2,360.1		3.70
Non-U.S. Offices — Interest-Bearing	569.7		63,752.8		3.59		385.0		62,411.1		2.50
Total Interest-Bearing Deposits	881.7		95,656.1		3.71		564.6		92,040.0		2.49
Federal Funds Purchased	33.6		2,650.1		5.11		40.1		3,653.9		4.45
Securities Sold under Agreements to Repurchase(2)	813.9		490.1		667.86		116.1		347.1		135.62
Other Borrowings(6)	88.6		6,852.1		5.20		135.0		11,324.0		4.83
Senior Notes	44.1		2,748.7		6.45		39.2		2,748.1		5.79
Long-Term Debt	55.6		4,067.0		5.50		29.2		2,066.3		5.73

Total Interest-Bearing Liabilities	1,917.5		112,464.1		6.86		924.2		112,179.4		3.34
Interest Rate Spread	—		—		0.51		—		—		1.04
Demand and Other Noninterest-Bearing Deposits	—		16,706.5		—		—		20,145.6		—
Other Noninterest-Bearing Liabilities	—		4,164.0		—		—		4,453.4		—
Stockholders’ Equity	—		11,783.7		—		—		11,281.5		—
Total Liabilities and Stockholders’ Equity	$	—	$	145,118.3	—	%	$	—	$	148,059.9	—	%
Net Interest Income/Margin (FTE Adjusted)	$	535.4	$	—	1.61	%	$	544.4	$	—	1.62	%
Net Interest Income/Margin (Unadjusted)	$	528.1	$	—	1.59	%	$	531.2	$	—	1.58	%

(3)Average balances include nonaccrual loans.

(5)Cash and Due from Banks and Other Central Bank Deposits includes the noninterest-bearing component of Federal Reserve and Other Central Bank Deposits on the consolidated balance sheets.

(6)Other Borrowings primarily includes advances from the Federal Home Loan Bank of Chicago.

(7)Rate calculations are based on actual balances rather than the rounded amounts presented in the average consolidated balance sheets with analysis of Net Interest Income.

FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Net Interest Income (continued)

TABLE 14: ANALYSIS OF NET INTEREST INCOME CHANGES DUE TO VOLUME AND RATE(1)


(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)	THREE MONTHS ENDED MARCH 31, 2024 VS. 2023
	CHANGE DUE TO
(In Millions)	AVERAGE BALANCE		AVERAGE RATE		NET (DECREASE) INCREASE
Increase (Decrease) in Net Interest Income (FTE)
Federal Reserve and Other Central Bank Deposits	$	(7.6)	$	90.3	$	82.7
Interest-Bearing Due from and Deposits with Banks	1.6		4.8		6.4
Federal Funds Sold	(0.2)		—		(0.2)
Securities Purchased under Agreements to Resell	(95.1)		793.1		698.0
Debt Securities
Available for Sale	(9.5)		98.0		88.5
Held to Maturity	(3.7)		23.7		20.0

Total Debt Securities	(13.2)		121.7		108.5
Loans	(4.9)		81.2		76.3
Other Interest-Earning Assets	13.2		(0.6)		12.6
Total Interest Income	$	(106.2)	$	1,090.5	$	984.3

Interest-Bearing Deposits
Savings, Money Market and Other	$	0.5	$	94.7	$	95.2
Savings Certificates and Other Time	26.0		11.2		37.2
Non-U.S. Offices - Interest-Bearing	8.6		176.1		184.7
Total Interest-Bearing Deposits	35.1		282.0		317.1
Federal Funds Purchased	(12.0)		5.5		(6.5)
Securities Sold under Agreements to Repurchase	66.3		631.5		697.8
Other Borrowings	(56.3)		9.9		(46.4)
Senior Notes	—		4.9		4.9
Long-Term Debt	27.6		(1.2)		26.4

Total Interest Expense	$	60.7	$	932.6	$	993.3
Increase (Decrease) in Net Interest Income (FTE)	$	(166.9)	$	157.9	$	(9.0)

(1)Changes not due solely to average balance changes or rate changes are allocated proportionately to average balance and rate based on their relative absolute magnitudes.

Notes: Net Interest Income (FTE), a non-GAAP financial measure, includes adjustments to a fully taxable equivalent basis for loans, securities and other interest-earning assets. The adjustments are based on a federal income tax rate of 21.0%, where the rate is adjusted for applicable state income taxes, net of related federal tax benefit. Total taxable equivalent interest adjustments amounted to $7.3 million and $13.2 million for the three months ended March 31, 2024 and 2023, respectively. A reconciliation of Net Interest Income and net interest margin on a GAAP basis to Net Interest Income and net interest margin on an FTE basis (each of which is a non-GAAP financial measure) is provided in “Reconciliation to Fully Taxable Equivalent” within this MD&A. Net interest margin is calculated by dividing annualized Net Interest Income by average interest-earning assets.

The net interest margin on an FTE basis decreased from the prior-year quarter, primarily due to higher funding costs.

Loans averaged $41.6 billion and decreased $0.4 billion, or 1%, from $42.0 billion in the prior-year quarter, primarily reflecting lower levels of commercial and institutional, non-U.S, private client, and residential real estate loans, partially offset by higher levels of commercial real estate loans. Commercial and institutional loans averaged $10.6 billion and decreased $1.8 billion, or

FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Net Interest Income (continued)

Provision for Credit Losses

For additional discussion of the allowance for credit losses, refer to the “Asset Quality” section in this MD&A.

Noninterest Expense

The components of Noninterest Expense are provided in the following table.

TABLE 15: NONINTEREST EXPENSE


	THREE MONTHS ENDED MARCH 31,
($ In Millions)	2024		2023		CHANGE
Compensation	$	627.1	$	595.2	$	31.9	5	%
Employee Benefits	101.1		101.0		0.1		—
Outside Services	229.3		210.8		18.5		9
Equipment and Software	252.7		231.7		21.0		9
Occupancy	54.1		61.3		(7.2)		(12)
Other Operating Expense	100.4		85.6		14.8		17
Total Noninterest Expense	$	1,364.7	$	1,285.6	$	79.1	6	%

Compensation expense, the largest component of Noninterest Expense, increased compared to the prior-year quarter, primarily due to higher salary expenses and higher incentives.

Outside Services expense increased compared to the prior-year quarter, primarily due to higher technical services and consulting fees, partially offset by lower subcustodian expense.

Equipment and Software expense increased compared to the prior-year quarter, primarily due to higher software amortization, partially offset by lower equipment depreciation.

FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS (continued)

Noninterest Expense (continued)

Occupancy expense decreased compared to the prior-year quarter, primarily due to a $9.8 million charge related to early lease exits recorded in the first quarter of 2023.

Other Operating Expense increased compared to the prior-year quarter, primarily due to the $12.5 million FDIC special assessment in the current quarter, partially offset by the impact of reclassifying certain investment amortization to the Provision for Income Taxes from Other Operating Expense in accordance with a new accounting standard.

Provision for Income Taxes

Income tax expense for the three months ended March 31, 2024 was $75.9 million, representing an effective tax rate of 26.1%, compared to $109.4 million in the prior-year quarter, representing an effective tax rate of 24.6%.

The effective tax rate increased compared to the prior-year quarter primarily due to a higher net tax impact from international operations and lower net tax benefits from tax-credit investments, including the impact of reclassifying certain investment amortization to the Provision for Income Taxes from Other Operating Expense in accordance with a new accounting standard.

REPORTING SEGMENTS

Reporting segment financial information, presented on an internal management-reporting basis, is determined by accounting systems used to allocate revenue and expense to each segment, and incorporates processes for allocating assets, liabilities, equity and the applicable interest income and expense utilizing a funds transfer pricing (FTP) methodology. Under the methodology, assets and liabilities receive a funding charge or credit that considers interest rate risk, liquidity risk, and other product characteristics on an instrument level. Additionally, segment information is presented on an FTE basis as management believes an FTE presentation provides a clearer indication of net interest income. The adjustment to an FTE basis has no impact on Net Income.

Revenues, expenses and average assets are allocated to Asset Servicing and Wealth Management, with the exception of non-recurring activities such as certain corporate transactions and costs incurred associated with acquisitions, divestitures, litigation, restructuring, and tax adjustments not directly attributable to a specific reporting segment, which are reported within the Other segment.

Effective January 2024, Northern Trust implemented certain enhancements to its FTP methodology, impacting the allocation of Net Interest Income to the Asset Servicing and Wealth Management segments. As a result, the approximate impact on the Asset Servicing and Wealth Management segments was a $31 million decrease and a $31 million increase in Net Interest Income, respectively, for the three months ended March 31, 2024. Prior-period segment results have not been revised to reflect this methodology change.

REPORTING SEGMENTS (continued)

The following table presents the earnings contributions and average assets of Northern Trust’s reporting segments for the three month periods ended March 31, 2024 and 2023.

TABLE 16: RESULTS OF REPORTING SEGMENTS


($ In Millions)	ASSET SERVICING					WEALTH MANAGEMENT					OTHER					RECONCILING ITEMS				TOTAL CONSOLIDATED
THREE MONTHS ENDED MARCH 31,	2024		2023			2024		2023			2024		2023			2024		2023		2024			2023
Noninterest Income
Trust, Investment and Other Servicing Fees	$	639.6	$	603.0		$	503.3	$	460.6		$	—	$	—		$	—	$	—	$	1,142.9		$	1,063.6
Foreign Exchange Trading Income (Loss)	59.9		54.9			(2.9)		(1.9)			—		—			—		—		57.0			53.0
Other Noninterest Income (Loss)	70.8		63.2			38.5		34.3			(190.5)		(0.7)			—		—		(81.2)			96.8
Total Noninterest Income (Loss)	770.3		721.1			538.9		493.0			(190.5)		(0.7)			—		—		1,118.7			1,213.4
Net Interest Income	293.8		312.1			241.6		232.3			—		—			(7.3)		(13.2)		528.1			531.2
Revenue	1,064.1		1,033.2			780.5		725.3			(190.5)		(0.7)			(7.3)		(13.2)		1,646.8			1,744.6
Provision for Credit Losses	(5.8)		(2.9)			(1.7)		17.9			(1.0)		—			—		—		(8.5)			15.0
Noninterest Expense	852.7		801.0			491.7		469.2			20.3		15.4			—		—		1,364.7			1,285.6
Income before Income Taxes	217.2		235.1			290.5		238.2			(209.8)		(16.1)			(7.3)		(13.2)		290.6			444.0
Provision for Income Taxes	56.6		60.5			81.4		66.1			(54.8)		(4.0)			(7.3)		(13.2)		75.9			109.4
Net Income	$	160.6	$	174.6		$	209.1	$	172.1		$	(155.0)	$	(12.1)		$	—	$	—	$	214.7		$	334.6
Percentage of Consolidated Net Income	N/M		52		%	N/M		52		%	N/M		(4)		%	N/A		N/A		100		%	100		%
Average Assets	$	106,955.0	$	111,215.3		$	38,163.3	$	36,844.6		$	—	$	—		N/A		N/A		$	145,118.3		$	148,059.9

N/M - Not meaningful

Note: Segment results are stated on an FTE basis. The FTE adjustments are eliminated in the reconciling items column with the Corporation’s total consolidated financial results stated on a GAAP basis. The adjustment to an FTE basis has no impact on Net Income.

Asset Servicing

Asset Servicing Trust, Investment and Other Servicing Fees

For an explanation of Asset Servicing Trust, Investment and Other Servicing Fees, please see the “Trust, Investment and Other Servicing Fees” section within the Consolidated Results of Operations section of the MD&A.

Asset Servicing Foreign Exchange Trading Income

For the ~~three and nine months~~quarter ended ~~September 30, 2023,~~March 31, 2024, Foreign Exchange Trading Income ~~decreased $9.4~~increased $5.0 million, or ~~15%~~9%, from the prior-year quarter, ~~and decreased $54.7 million, or 25%, from the prior-year period, respectively, in each case~~ primarily driven by ~~lower~~higher client ~~volumes and an unfavorable impact from foreign exchange swap activity within Treasury.~~volumes.

Asset Servicing Other Noninterest Income

For the quarter ended ~~September 30, 2023,~~March 31, 2024, Other Noninterest Income increased ~~$3.6~~$7.6 million, or 6%12%, from the prior-year quarter, primarily due to higher ~~Other Operating Income.~~

~~For the nine months ended September 30, 2023, Other Noninterest Income increased $13.6 million, or 7%, from the prior-year period, primarily due to~~brokerage related revenue and higher income allocations.

Asset Servicing Net Interest Income

For the quarter ended ~~September 30, 2023,~~March 31, 2024, Net Interest Income stated on an FTE basis decreased ~~$22.1~~$18.3 million, or 7%6%, from the prior-year quarter, primarily due to ~~higher funding costs and lower deposit balances.~~

~~For~~ the ~~nine months ended September 30, 2023, Net Interest Income stated on an FTE basis increased $154.1 million, or 21%, from the prior-year period, primarily due to higher average interest rates.~~

~~Average earning assets increased $1.1 billion, or 1%, to $99.5 billion~~change in ~~the current quarter from $98.4 billion~~reporting segment allocation methodology beginning in ~~the prior-year quarter, primarily due to increased borrowing activity.~~2024 noted above. Average earning assets decreased ~~$5.3~~$5.6 billion, or 5%~~, to $101.2 billion for the nine months ended September 30, 2023 from $106.5 billion in the prior-year period, primarily due to lower client deposits, partially offset by increased borrowing activity.~~.

Asset Servicing Provision for Credit Losses

For the quarter ended ~~September 30, 2023,~~March 31, 2024, there was a ~~$3.1 million~~negative Provision for Credit Losses of $5.8 million compared to a ~~$5.1~~$2.9 million release of credit reserves in the prior-year quarter. The provision was primarily due to an increase in the reserve evaluated on a collective basis, driven by a small number of large new loans and renewals and credit quality deterioration of certain C&I loans, partially offset by a net improvement in the overall macroeconomic outlook.

~~For the nine months ended September 30, 2023, there was a $3.3 million release of credit reserves compared to a $3.8 million~~negative Provision for Credit Losses in the prior-year ~~period.~~quarter. The ~~release~~decrease of credit reserves ~~was primarily due to a~~in the current quarter resulted from decreases in both collective and individual reserves. The decrease in ~~the~~collective reserve ~~evaluated on a collective basis,~~was driven by ~~a net improvement~~ improved macroeconomic factors and portfolio quality. The decrease in individual reserves was driven by one loan that was moved back to the ~~overall macroeconomic outlook and lower loss projections for certain large C&I loans.~~collective reserve.

Asset Servicing Noninterest Expense

For the ~~three and nine months~~quarter ended ~~September 30, 2023,~~March 31, 2024, Noninterest Expense, which includes the direct expense of the reporting segment, indirect expense allocations for product and operating support and indirect expense allocations for certain corporate support services, increased ~~$48.9~~$51.7 million, or 6%, from the prior-year quarter ~~and increased $190.3 million, or 8%, from the prior-year period,~~ ~~in each case~~ primarily due to higher expense allocations.

REPORTING SEGMENTS (continued)

Wealth Management

Wealth Management Net Income

For the quarter ended ~~September 30, 2023,~~March 31, 2024, Net Income ~~decreased $27.1~~increased $37.0 million, or ~~13%~~21%, from the prior-year quarter, primarily due to ~~lower Net Interest Income.~~

~~For the nine months ended September 30, 2023, Net Income decreased $103.1 million, or 16%, from the prior-year period, primarily reflecting~~ higher ~~Noninterest Expense and lower~~ Trust, Investment and Other Servicing Fees and higher Net Interest Income, partially offset by ~~a lower Provision for Income Taxes.~~

~~REPORTING SEGMENTS (continued)~~

~~Wealth Management (continued)~~

higher Noninterest Expense.

Wealth Management Trust, Investment and Other Servicing Fees

For an explanation of Wealth Management Trust, Investment and Other Servicing Fees, please see the “Trust, Investment and Other Servicing Fees” section within the Consolidated Results of Operations section of the MD&A.

Wealth Management ~~Foreign Exchange Trading~~Other Noninterest Income

For the quarter ended ~~September 30, 2023, Foreign Exchange Trading~~March 31, 2024, Other Noninterest Income ~~decreased $3.5~~increased $4.2 million, or 12%, from the prior-year quarter, ~~primarily driven by lower client volumes and an unfavorable impact from foreign exchange swap activity within Treasury.~~

~~For the nine months ended September 30, 2023, Foreign Exchange Trading Income decreased $13.6 million from the prior-year period, primarily driven by allocations.~~

~~Wealth Management Other Noninterest Income~~

~~For the nine months ended September 30, 2023, Other Noninterest Income increased $11.2 million, or 11%, from the prior-year period,~~ primarily due to higher income allocations.

Wealth Management Net Interest Income

For the quarter ended ~~September 30, 2023,~~March 31, 2024, Net Interest Income stated on an FTE basis ~~decreased $33.8~~increased $9.3 million, or ~~15%~~4%, from the prior-year quarter, primarily due to ~~higher funding costs~~the change in reporting segment allocation methodology beginning in 2024 and ~~lower~~higher average earning assets.

Average earning assets ~~decreased $5.0~~increased $3.4 billion, or ~~15%~~10%, to $28.7 billion in the current quarter from $33.7 billion in the prior-year quarter and decreased $2.5 billion, or 7%, to $31.6 billion for the nine months ended September 30, 2023 from $34.0 billion in the prior-year period. Average earning assets decreased in Wealth Management for the three and nine months ended September 30, 2023 primarily due to ~~lower~~higher client deposits.

Wealth Management Provision for Credit Losses

For the quarter ended ~~September 30, 2023,~~March 31, 2024, there was a ~~$10.9 million~~negative Provision for Credit Losses of $1.7 million compared to a ~~$5.6~~$17.9 million Provision for Credit Losses in the prior-year quarter. The ~~provision reflected an increase~~decrease of credit reserves in the ~~reserve evaluated on a~~current quarter resulted from decreases in both individual and collective ~~basis,~~reserves. The decrease in individual reserves was driven by ~~expectations of higher economic stress~~one Commercial and Institutional (C&I) loan that was charged-off in the ~~CRE market and a small number of large new loans and renewals.~~

~~For the nine months ended September 30, 2023, there was a $16.8 million Provision for Credit Losses compared to a $3.2 million Provision for Credit Losses~~current quarter. The decrease in the ~~prior-year period. The provision~~collective reserve was primarily in the Commercial Real Estate (CRE) portfolio, driven by an increase in the reserve evaluated on a collective basis, primarily due to new loans and renewals in the CRE portfolio and expectations of higher economic stress in the CRE market, partially offset by a net improvement in the overallimproved macroeconomic ~~outlook and lower loss projections for certain large C&I loans.~~factors.

Wealth Management Noninterest Expense

For the quarter ended ~~September 30, 2023,~~March 31, 2024, Noninterest Expense, which includes the direct expenses of the reporting segment, indirect expense allocations for product and operating support and indirect expense allocations for certain corporate support services, increased ~~$7.9 million, or 2%, from the prior-year quarter and increased $69.2~~$22.5 million, or 5%, from the prior-year ~~period, in each case~~quarter primarily reflecting higher indirect expense allocations.

Other

Other—Noninterest Income

For the quarter ended ~~September 30, 2023,~~March 31, 2024, Other Noninterest Income ~~increased $3.5~~decreased $189.8 million from the prior-year quarter, primarily due to ~~higher income~~the loss on sale of available for ~~existing swap agreements related to Visa Inc. Class B common shares.~~sale debt securities arising from a repositioning of the portfolio.

Other—Noninterest Expense

For the quarter ended ~~September 30, 2023,~~March 31, 2024, Other Noninterest Expense ~~decreased $8.4~~increased $4.9 million, or ~~41%~~32%, from the prior-year quarter, primarily due to ~~a $17.0~~the $12.5 million ~~pension settlement charge in the prior-year quarter,~~FDIC special assessment, partially offset by ~~higher non-allocated occupancy expense primarily arising from early lease exits.~~

For the nine months ended September 30, 2023, Other Noninterest Expense decreased $23.1 million, or 41%, from the prior-year period, primarily due to a $37.3 million pension settlement charge in the prior-year period and other miscellaneous expense in the prior-year period, partially offset by higherlower non-allocated occupancy expense primarily arising from early lease exits.

2013

CONSOLIDATED BALANCE SHEETS

The following tables summarize selected consolidated balance sheet information.

TABLE ~~22:~~17: SELECT CONSOLIDATED BALANCE SHEET INFORMATION


($ In Billions)	($ In Billions)	SEPTEMBER 30, 2023		DECEMBER 31, 2022		CHANGE				($ In Billions)		MARCH 31, 2024			DECEMBER 31, 2023			CHANGE
Assets	Assets
Federal Reserve and Other Central Bank Deposits
Federal Reserve and Other Central Bank Deposits
Federal Reserve and Other Central Bank Deposits	Federal Reserve and Other Central Bank Deposits	$	32.3	$	40.0	$	(7.7)	(19)	%	$	40.3		$	34.3		$	6.0		17	17	%
Interest-Bearing Due from and Deposits with Banks(1)	Interest-Bearing Due from and Deposits with Banks(1)	5.2		4.9		0.3		6
Securities Purchased under Agreements to Resell	Securities Purchased under Agreements to Resell	0.4		1.1		(0.7)		(64)
Total Debt Securities	Total Debt Securities	49.3		51.8		(2.5)		(5)
Loans	Loans	43.6		42.9		0.7		2
Other Interest-Earning Assets(2)	Other Interest-Earning Assets(2)	3.3		1.8		1.5		89
Total Earning Assets	Total Earning Assets	134.1		142.5		(8.4)		(6)
Total Assets	Total Assets	146.3		155.0		(8.7)		(6)
Liabilities and Stockholders' Equity	Liabilities and Stockholders' Equity
Total Interest-Bearing Deposits	Total Interest-Bearing Deposits	89.2		98.6		(9.4)		(9)
Total Interest-Bearing Deposits
Total Interest-Bearing Deposits
Demand and Other Noninterest-Bearing Deposits	Demand and Other Noninterest-Bearing Deposits	20.9		25.3		(4.4)		(17)
Federal Funds Purchased	Federal Funds Purchased	5.5		1.9		3.6		N/M		Federal Funds Purchased		2.6			3.0	3.0		(0.4)	(0.4)		(15)	(15)
Securities Sold under Agreements to Repurchase	Securities Sold under Agreements to Repurchase	0.5		0.6		(0.1)		(4)
Other Borrowings(3)	Other Borrowings(3)	6.9		7.6		(0.7)		(10)
Total Stockholders’ Equity	Total Stockholders’ Equity	11.8		11.3		0.5		5

(1) Interest-Bearing Due from and Deposits with Banks includes the interest-bearing component of Cash and Due from Banks and Interest-Bearing Deposits with Banks as presented on the consolidated balance sheets.

(2) Other Interest-Earning Assets includes certain community development investments, collateral deposits with certain securities depositories and clearing houses, Federal Home Loan Bank and Federal Reserve stock, and money market investments which are classified in Other Assets on the consolidated balance sheets.

(3) Other Borrowings primarily includes advances from the Federal Home Loan Bank of Chicago.

~~N/M - Not meaningful~~

TABLE ~~23:~~18: SELECT AVERAGE CONSOLIDATED BALANCE SHEET INFORMATION


		THREE MONTHS ENDED SEPTEMBER 30,								NINE MONTHS ENDED SEPTEMBER 30,
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
($ In Billions)
($ In Billions)
($ In Billions)	($ In Billions)	2023		2022		CHANGE				2023		2022		CHANGE
Assets	Assets
Assets
Assets
Federal Reserve and Other Central Bank Deposits
Federal Reserve and Other Central Bank Deposits
Federal Reserve and Other Central Bank Deposits	Federal Reserve and Other Central Bank Deposits	$	28.0	$	30.5	$	(2.5)	(8)	%	$	33.0	$	37.4	$	(4.4)	(12)	%
Interest-Bearing Due from and Deposits with Banks(1)	Interest-Bearing Due from and Deposits with Banks(1)	4.3		4.0		0.3		8		4.4		4.2		0.2		4
Interest-Bearing Due from and Deposits with Banks(1)
Interest-Bearing Due from and Deposits with Banks(1)
Securities Purchased under Agreements to Resell
Securities Purchased under Agreements to Resell
Securities Purchased under Agreements to Resell	Securities Purchased under Agreements to Resell	1.0		1.3		(0.3)		(25)		1.1		1.0		0.1		4
Total Debt Securities	Total Debt Securities	50.4		53.6		(3.2)		(6)		50.1		56.1		(6.0)		(11)
Loans and Leases		42.2		41.5		0.7		2		42.2		40.5		1.7		4
Total Debt Securities
Total Debt Securities
Loans
Loans
Loans
Other Interest-Earning Assets(2)
Other Interest-Earning Assets(2)
Other Interest-Earning Assets(2)	Other Interest-Earning Assets(2)	2.4		1.3		1.1		92		2.0		1.3		0.7		71
Total Earning Assets	Total Earning Assets	128.3		132.2		(3.9)		(3)		132.8		140.5		(7.7)		(6)
Total Earning Assets
Total Earning Assets
Total Assets
Total Assets
Total Assets	Total Assets	140.2		146.4		(6.2)		(4)		144.7		154.2		(9.5)		(6)
Liabilities and Stockholders' Equity	Liabilities and Stockholders' Equity
Liabilities and Stockholders' Equity
Liabilities and Stockholders' Equity
Total Interest-Bearing Deposits
Total Interest-Bearing Deposits
Total Interest-Bearing Deposits	Total Interest-Bearing Deposits	85.0		94.1		(9.1)		(10)		88.3		97.0		(8.7)		(9)
Demand and Other Noninterest-Bearing Deposits	Demand and Other Noninterest-Bearing Deposits	16.8		24.4		(7.6)		(31)		18.2		31.7		(13.5)		(43)
Demand and Other Noninterest-Bearing Deposits
Demand and Other Noninterest-Bearing Deposits
Federal Funds Purchased
Federal Funds Purchased
Federal Funds Purchased	Federal Funds Purchased	5.9		2.0		3.9		N/M		5.6		1.0		4.6		N/M
Securities Sold under Agreements to Repurchase	Securities Sold under Agreements to Repurchase	0.4		0.5		(0.1)		(13)		0.4		0.4		—		(8)
Securities Sold under Agreements to Repurchase
Securities Sold under Agreements to Repurchase
Other Borrowings(3)
Other Borrowings(3)
Other Borrowings(3)	Other Borrowings(3)	11.0		6.0		5.0		83		11.5		4.6		6.9		148
Total Stockholders’ Equity	Total Stockholders’ Equity	11.5		10.9		0.6		5		11.4		11.1		0.3		3
Total Stockholders’ Equity
Total Stockholders’ Equity

(1) Interest-Bearing Due from and Deposits with Banks includes the interest-bearing component of Cash and Due from Banks and Interest-Bearing Deposits with Banks as presented on the consolidated balance sheets.

(3) Other Borrowings primarily includes advances from the Federal Home Loan Bank of Chicago.

~~N/M - Not meaningful~~

Average balances are considered to be a better measure of balance sheet trends, as period-end balances can be impacted by the timing of deposit and withdrawal activity involving large client balances. Average earning assets decreased from the prior-year quarter, ~~and prior-year period,~~ primarily due to lower ~~client deposits, partially offset by higher~~ borrowing activity.

CONSOLIDATED BALANCE SHEETS (continued)

Select Earning Assets. Average securities decreased from the prior-year quarter, ~~and prior-year period,~~ reflecting the impact of repositioning and reinvesting in short-term securities that will mature usually in one year or less. For additional discussion

~~CONSOLIDATED BALANCE SHEETS (continued)~~

relating to the securities portfolio, refer to the “Asset Quality” section in this MD&A and to Note 4—Securities to the consolidated financial statements provided in Item 1. Consolidated Financial Statements (unaudited).

Client Deposits. Average Interest-Bearing Deposits ~~and~~increased from the prior-year quarter primarily due to an increase in client balances as a result of strategic pricing actions. Demand and Other Noninterest-Bearing Deposits decreased from the prior-year quarter ~~and prior-year period~~ as clients migrated into higher yielding products.

Short-Term Borrowings. Short-term borrowings includes Federal Funds Purchased, Securities Sold under Agreements to Repurchase, and Other Borrowings. The ~~increase~~decrease in average Other Borrowings from the prior-year quarter ~~and prior-year period~~ was primarily due to strategic utilization of balance sheet capacity.

Stockholders’ Equity. During the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, the Corporation declared cash dividends totaling ~~$157.6 million and $474.0~~$153.4 million to common stockholders, and cash dividends totaling $16.2 million ~~and $37.1 million~~ to preferred stockholders, respectively. During the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, the Corporation declared cash dividends totaling ~~$158.4 million and $454.2~~$158.6 million to common stockholders, and cash dividends totaling $16.2 million ~~and $37.1 million~~ to preferred ~~stockholders, respectively.~~stockholders.

For the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, the Corporation repurchased ~~14,738 and 2,426,793~~1,647,526 shares of common stock, ~~respectively,~~ at a total cost of ~~$1.1~~$132.0 million ($~~77.39 average price per share) and $201.3 million ($82.95~~80.11 average price per share), ~~respectively,~~ including ~~14,738 and356,145shares, respectively, withheld to satisfy tax withholding obligations related to share-based compensation.~~

For the three and nine months ended September 30, 2022, the Corporation repurchased 11,080 and 309,334 shares of common stock, respectively, at a total cost of $1.2 million ($96.43 average price per share) and $35.2 million ($113.89 average price per share), respectively, all of which were373,623 shares withheld to satisfy tax withholding obligations related to share-based compensation.

For the three months ended March 31, 2023, the Corporation repurchased 1,050,227 shares of common stock, at a total cost of $100.9 million ($96.04 average price per share), including 326,811 shares withheld to satisfy tax withholding obligations related to share-based compensation.

ASSET QUALITY

Securities Portfolio

Northern Trust maintains a high quality debt securities portfolio. Debt securities not explicitly rated were grouped where possible under the credit rating of the issuer of the security. The following tables provide the fair value of available for sale (AFS) debt securities and amortized cost of held to maturity (HTM) debt securities by credit rating.

TABLE ~~24:~~19: FAIR VALUE OF AVAILABLE FOR SALE DEBT SECURITIES BY CREDIT RATING


		SEPTEMBER 30, 2023
	MARCH 31, 2024																																MARCH 31, 2024
($ In Millions)	($ In Millions)	AAA			AA			A			BBB			NOT RATED			TOTAL			($ In Millions)	AAA		AA		A		BBB		NOT RATED		TOTAL
U.S. Government	U.S. Government	$	2,879.4		$	—		$	—		$	—		$	—		$	2,879.4
Obligations of States and Political Subdivisions	Obligations of States and Political Subdivisions	36.1			246.0			—			—			—			282.1
Government Sponsored Agency	Government Sponsored Agency	11,656.8			—			—			—			—			11,656.8
Non-U.S. Government	Non-U.S. Government	246.9			—			—			—			—			246.9
Corporate Debt	Corporate Debt	82.6			82.3			202.2			—			13.8			380.9
Covered Bonds	Covered Bonds	259.6			—			20.8			—			—			280.4
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	2,289.0			403.0			267.8			—			—			2,959.8
Other Asset-Backed	Other Asset-Backed	4,771.5			—			—			—			—			4,771.5
Commercial Mortgage-Backed	Commercial Mortgage-Backed	884.3			—			—			—			—			884.3
Total	Total	$	23,106.2		$	731.3		$	490.8		$	—		$	13.8		$	24,342.1
Percent of Total	Percent of Total	95		%	3		%	2		%	—		%	—		%	100		%	Percent of Total	96	%	3	%	1	%	—	%	—	%	100	%

2215

ASSET QUALITY (continued)

Securities Portfolio (continued)


		DECEMBER 31, 2022
	DECEMBER 31, 2023																																DECEMBER 31, 2023
($ In Millions)	($ In Millions)	AAA			AA			A			BBB			NOT RATED			TOTAL			($ In Millions)	AAA		AA		A		BBB		NOT RATED		TOTAL
U.S. Government	U.S. Government	$	2,747.4		$	—		$	—		$	—		$	—		$	2,747.4
Obligations of States and Political Subdivisions	Obligations of States and Political Subdivisions	136.4			651.2			—			—			—			787.6
Government Sponsored Agency	Government Sponsored Agency	11,545.2			—			—			—			—			11,545.2
Non-U.S. Government	Non-U.S. Government	360.0			—			—			—			—			360.0
Corporate Debt	Corporate Debt	302.5			462.6			938.7			19.6			24.2			1,747.6
Covered Bonds	Covered Bonds	367.0			—			21.7			—			—			388.7
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	1,816.3			451.5			211.6			—			—			2,479.4
Other Asset-Backed	Other Asset-Backed	5,256.2			—			—			—			—			5,256.2
Commercial Mortgage-Backed	Commercial Mortgage-Backed	1,387.8			—			—			—			—			1,387.8
Total	Total	$	23,918.8		$	1,565.3		$	1,172.0		$	19.6		$	24.2		$	26,699.9
Percent of Total	Percent of Total	90		%	6		%	4		%	—		%	—		%	100		%	Percent of Total	95	%	3	%	2	%	—	%	—	%	100	%

As of both ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the less than 1% of AFS debt securities not rated by Moody’s Investors Service, Inc. (Moody’s), S&P Global Ratings (S&P Global) or Fitch Ratings, Inc. (Fitch Ratings) consisted of corporate debt securities.

TABLE ~~25:~~20: AMORTIZED COST OF HELD TO MATURITY DEBT SECURITIES BY CREDIT RATING


		SEPTEMBER 30, 2023
	MARCH 31, 2024																																MARCH 31, 2024
($ In Millions)	($ In Millions)	AAA			AA			A			BBB			NOT RATED			TOTAL			($ In Millions)	AAA		AA		A		BBB		NOT RATED		TOTAL

Obligations of States and Political Subdivisions
Obligations of States and Political Subdivisions
Obligations of States and Political Subdivisions	Obligations of States and Political Subdivisions	$	918.0		$	1,659.7		$	—		$	—		$	—		$	2,577.7
Government Sponsored Agency	Government Sponsored Agency	9,159.9			—			—			—			—			9,159.9
Non-U.S. Government	Non-U.S. Government	894.1			879.0			1,619.7			319.0			—			3,711.8
Corporate Debt	Corporate Debt	2.2			299.2			337.7			—			—			639.1
Covered Bonds	Covered Bonds	2,116.9			—			—			—			—			2,116.9
Certificates of Deposit	Certificates of Deposit	367.4			—			—			—			38.0			405.4
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	4,162.6			1,251.3			28.8			1.1			—			5,443.8
Other Asset-Backed	Other Asset-Backed	246.6			—			—			—			—			246.6
Commercial Mortgage-Backed	Commercial Mortgage-Backed	37.6			—			—			—			—			37.6
Other	Other	56.0			—			—			—			525.6			581.6
Total	Total	$	17,961.3		$	4,089.2		$	1,986.2		$	320.1		$	563.6		$	24,920.4
Percent of Total	Percent of Total	72		%	17		%	8		%	1		%	2		%	100		%	Percent of Total	75	%	16	%	5	%	1	%	3	%	100	%


		DECEMBER 31, 2022
(In Millions)		AAA			AA			A			BBB			NOT RATED			TOTAL
	DECEMBER 31, 2023																																DECEMBER 31, 2023
($ In Millions)																				($ In Millions)	AAA		AA		A		BBB		NOT RATED		TOTAL
U.S. Government	U.S. Government	$	50.0		$	—		$	—		$	—		$	—		$	50.0
Obligations of States and Political Subdivisions	Obligations of States and Political Subdivisions	926.8			1,638.5			—			—			—			2,565.3
Government Sponsored Agency	Government Sponsored Agency	9,407.7			—			—			—			—			9,407.7
Non-U.S. Government	Non-U.S. Government	762.2			926.5			1,223.0			322.3			—			3,234.0
Corporate Debt	Corporate Debt	2.1			305.7			405.5			—			—			713.3
Covered Bonds	Covered Bonds	2,530.3			—			—			—			—			2,530.3
Certificates of Deposit	Certificates of Deposit	—			—			—			—			35.9			35.9
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	4,171.3			1,502.0			28.9			1.1			—			5,703.3
Other Asset-Backed	Other Asset-Backed	263.7			—			—			—			—			263.7
Commercial Mortgage-Backed
Other	Other	65.8			—			—			—			466.8			532.6
Total	Total	$	18,179.9		$	4,372.7		$	1,657.4		$	323.4		$	502.7		$	25,036.1
Percent of Total	Percent of Total	73		%	17		%	7		%	1		%	2		%	100		%	Percent of Total	70	%	16	%	11	%	1	%	2	%	100	%

As of ~~both September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the 3% and 2%, respectively, of HTM debt securities not rated by Moody’s, S&P Global or Fitch Ratings consisted of certificates of deposit with a remaining life of less than six months, as well as investments purchased by Northern Trust to fulfill its obligations under the Community Reinvestment Act (CRA). Northern Trust fulfills its obligations under the CRA by making qualified investments for purposes of supporting institutions and programs that benefit low-to-moderate income communities within Northern Trust’s market area.

Net unrealized losses within the investment securities portfolio totaled $3.4 billion and $3.2 billion at September 30, 2023 and December 31, 2022, respectively. Net unrealized losses as of September 30, 2023 were comprised of $12.0 million and $3.4

2316

ASSET QUALITY (continued)

Securities Portfolio (continued)

Net unrealized losses within the investment securities portfolio totaled $2.2 billion and $2.3 billion at March 31, 2024 and December 31, 2023, respectively. Net unrealized losses as of March 31, 2024 were comprised of $35.3 million and $2.2 billion of gross unrealized gains and losses, respectively. Net unrealized losses as of December 31, ~~2022~~2023 were comprised of ~~$9.1~~$20.1 million and ~~$3.2~~$2.3 billion of gross unrealized gains and losses, respectively. ~~$913.1~~$332.7 million of the ~~$3.4~~$2.2 billion gross unrealized losses relate to AFS debt securities as of ~~September 30, 2023,~~March 31, 2024, and ~~$1.1 billion~~$582.4 million of the ~~$3.2~~$2.3 billion gross unrealized losses relate to AFS debt securities as of December 31, ~~2022.~~2023.

As of ~~September 30, 2023,~~March 31, 2024, the ~~$24.3~~$25.6 billion AFS debt securities portfolio had unrealized losses, excluding securities with an allowance for credit losses, of ~~$338.1~~$163.0 million, ~~$195.6~~$55.6 million, and ~~$140.4~~$31.0 million related to government-sponsored agency securities, ~~other asset-backed and~~ sub-sovereign, supranational and non-U.S. agency bonds and other asset-backed, respectively, which are primarily attributable to higher intermediate rates. As of December 31, ~~2022,~~2023, the ~~$26.7~~$23.1 billion AFS debt securities portfolio had unrealized losses, excluding securities with an allowance for credit losses, of ~~$351.6~~$200.3 million, ~~$288.1~~$105.8 million, and ~~$157.6~~$100.0 million related to government sponsored agency, ~~other asset-backed, and sub-sovereign,~~ supranational and non-U.S. agency bonds, and other asset-backed, respectively, which were primarily attributable to ~~changes in overall market interest rates~~to lower yields and ~~credit spreads since their purchase.~~tighter spreads.

~~As of December 31, 2022,~~In January 2024, the Corporation ~~intended to sell~~sold certain AFS debt securities that were in an unrealized loss position. The ~~securities were written down to their fair value of $2.1 billion with a $213.0~~$189.4 million loss is recognized in Investment Security Gains (Losses), net on the consolidated statements of income for the period ended March 31, 2024. In November 2023, the Corporation sold certain AFS debt securities that were in an unrealized loss position. The $176.4 million loss is recognized in Investment Security Gains (Losses), net on the consolidated statements of income for the period ended December 31, 2022. In January 2023, the securities were subsequently sold resulting in an incremental $6.9 million gain upon sale as compared to the fair value recorded on the consolidated balance sheets at December 31, 2022.2023.

As of ~~September 30, 2023,~~March 31, 2024, the ~~$24.9~~$23.5 billion HTM debt securities portfolio had unrealized losses of ~~$1.4~~$1.1 billion and ~~$400.3~~$289.4 million related to government-sponsored agency securities and sub-sovereign, supranational and non-U.S. agency bonds, respectively, which are primarily attributable to higher intermediate rates. As of December 31, ~~2022,~~2023, the ~~$25.0~~$26.2 billion HTM debt securities portfolio had an unrealized loss of ~~$1.1~~$1.0 billion and ~~$436.1~~$294.9 million related to government-sponsored agency and sub-sovereign, supranational and non-U.S. agency bonds, respectively, which ~~were~~are primarily attributable to ~~changes in overall market interest rates~~lower yields and ~~credit spreads since their purchase.~~tighter spreads.

HTM debt securities consist of securities that management intends to, and Northern Trust has the ability to, hold until maturity.

For additional information relating to the securities portfolio, refer to Note 4—Securities to the consolidated financial statements provided in Item 1. Consolidated Financial Statements (unaudited).

Securities purchased under agreements to resell and securities sold under agreements to repurchase are accounted for as collateralized financings and recorded at the amounts at which the securities were acquired or sold plus accrued interest. To minimize potential credit risk associated with these transactions, the fair value of the securities purchased or sold is monitored, limits are set on exposure with counterparties, and the financial condition of counterparties is regularly assessed. It is Northern Trust’s policy to take possession, either directly or via third-party custodians, of securities purchased under agreements to resell. Securities sold under agreements to repurchase are held by the counterparty until their repurchase.

For additional information relating to the securities sold under agreements to repurchase, refer to Note 22—Securities Sold Under Agreements to Repurchase to the consolidated financial statements provided in Item 1. Consolidated Financial Statements (unaudited).

Nonaccrual Loans and Other Real Estate Owned

Nonaccrual assets consist of nonaccrual loans and other real estate owned (OREO). OREO is comprised of commercial and residential properties acquired in partial or total satisfaction of loans.

The following table provides the amounts of nonaccrual loans, by loan segment and class, and of OREO that were outstanding at the dates shown, as well as the balance of loans that were delinquent 90 days or more and still accruing interest. Loans that are delinquent 90 days or more and still accruing interest can fluctuate widely based on the timing of cash collections, renegotiation and renewals.

2417

ASSET QUALITY (continued)

Nonaccrual Loans and Other Real Estate Owned (continued)

TABLE ~~26:~~21: NONACCRUAL ASSETS


		SEPTEMBER 30, 2023					DECEMBER 31, 2022
	MARCH 31, 2024																					MARCH 31, 2024				DECEMBER 31, 2023
($ In Millions)	($ In Millions)	AMOUNT			% OF NONACCRUAL LOANS TO TOTAL NONACCRUAL LOANS		AMOUNT			% OF NONACCRUAL LOANS TO TOTAL NONACCRUAL LOANS		($ In Millions)		AMOUNT			% OF NONACCRUAL LOANS TO TOTAL NONACCRUAL LOANS			AMOUNT			% OF NONACCRUAL LOANS TO TOTAL NONACCRUAL LOANS
Nonaccrual Loans	Nonaccrual Loans
Commercial	Commercial
Commercial
Commercial
Commercial and Institutional
Commercial and Institutional
Commercial and Institutional	Commercial and Institutional	$	16.3		24	%	$	17.4		38	%	$	7.6		21	21	%	$	16.3		26	26	%
Commercial Real Estate	Commercial Real Estate	3.2			4		10.2			22

Total Commercial	Total Commercial	$	19.5		28	%	$	27.6		60	%
Total Commercial
Total Commercial														$	13.3		36		%	$	16.3		26		%
Personal	Personal
Private Client
Private Client
Private Client	Private Client	$	19.8		29	%	$	—		—	%	$	2.0		5	5	%	$	20.3		32	32	%
Residential Real Estate	Residential Real Estate	29.5			43		18.3			40
Total Personal	Total Personal	$	49.3		72	%	$	18.3		40	%	Total Personal		$	23.7		64	64	%	$	47.3		74	74	%
Total Nonaccrual Loans	Total Nonaccrual Loans	68.8					45.9
Other Real Estate Owned	Other Real Estate Owned	0.3					—
Other Real Estate Owned
Other Real Estate Owned
Total Nonaccrual Assets
Total Nonaccrual Assets
Total Nonaccrual Assets	Total Nonaccrual Assets	$	69.1				$	45.9
90 Day Past Due Loans Still Accruing	90 Day Past Due Loans Still Accruing	$	36.2				$	54.2
90 Day Past Due Loans Still Accruing
90 Day Past Due Loans Still Accruing
Nonaccrual Loans to Total Loans
Nonaccrual Loans to Total Loans
Nonaccrual Loans to Total Loans	Nonaccrual Loans to Total Loans	0.16		%			0.11		%
Allowance for Credit Losses Assigned to Loans to Nonaccrual Loans	Allowance for Credit Losses Assigned to Loans to Nonaccrual Loans	2.4		x			3.1		x
Allowance for Credit Losses Assigned to Loans to Nonaccrual Loans
Allowance for Credit Losses Assigned to Loans to Nonaccrual Loans

Nonaccrual assets of ~~$69.1~~$37.0 million as of ~~September 30, 2023 increased $23.2~~March 31, 2024 decreased $28.1 million, or ~~51%~~43%, from December 31, ~~2022,~~2023, primarily due to ~~the addition of eight new nonaccrual loans, partially offset by~~ a ~~commercial real estate upgrade~~private client loan payoff and a commercial ~~real estate~~and institutional loan charge-off. ~~The eight new nonaccrual loans were composed of five residential real estate, two private client, and one commercial real estate loan.~~ In addition to the negative impact on Net Interest Income and the risk of credit losses, nonaccrual assets also increase operating costs due to the expense associated with collection efforts. Changes in the level of nonaccrual assets may be indicative of changes in the credit quality of one or more loan classes. Changes in credit quality impact the allowance for credit losses through the resultant adjustment of the allowance evaluated on an individual basis and the quantitative and qualitative factors used in the determination of the allowance evaluated on a collective basis within the allowance for credit losses.

Northern Trust’s credit policies do not allow for the origination of loan types generally considered to be high risk in nature, such as option adjustable rate mortgage loans, subprime loans, loans with initial “teaser” rates and loans with excessively high loan-to-value ratios. Residential real estate loans consist of first lien mortgages and equity credit lines, which generally require a loan-to-collateral value of no more than 65% to 80% at inception. Appraisals of supporting collateral for residential real estate loans are obtained at loan origination and upon refinancing or default or when otherwise considered warranted. Residential real estate collateral appraisals are performed and reviewed by independent third parties.

The commercial real estate portfolio consists of commercial mortgages and construction, acquisition and development loans extended primarily to experienced investors well known to Northern Trust. Underwriting standards generally reflect conservative loan-to-value ratios and debt service coverage requirements. Recourse to owners through guarantees also is commonly required. For additional information relating to the loans portfolio, refer to Note 5—Loans to the consolidated financial statements provided in Item 1. Consolidated Financial Statements (unaudited).

Allowance for Credit Losses

The allowance for credit losses—which represents management’s best estimate of lifetime expected credit losses related to various portfolios subject to credit risk, off-balance-sheet credit exposure, and specific borrower relationships—is determined by management through a disciplined credit review process. Northern Trust measures expected credit losses of financial assets with similar risk characteristics on a collective basis. A financial asset is measured individually if it does not share similar risk characteristics with other financial assets and the related allowance is determined through an individual evaluation.

Management’s estimates utilized in establishing an appropriate level of allowance for credit losses are not dependent on any single assumption. In determining an appropriate allowance level, management evaluates numerous variables, many of which are interrelated or dependent on other assumptions and estimates, and takes into consideration past events, current conditions and reasonable and supportable forecasts. The results of the credit reserve estimation methodology are reviewed quarterly by Northern Trust’s Credit Loss Reserve Committee, which receives input from ~~Credit~~Financial Risk Management, Treasury, Corporate Finance, the Economic Research Department, and each of Northern Trust’s reporting ~~segments.~~business units.

2518

ASSET QUALITY (continued)

Allowance for Credit Losses (continued)

As of ~~September 30,~~March 31, 2024, the Allowance for Credit Losses related to loans, undrawn loan commitments and standby letters of credit, HTM debt securities, and other financial assets, was $162.4 million, $25.2 million, $12.4 million, and $1.0 million, respectively. As of December 31, 2023, the Allowance for Credit Losses related to loans, undrawn loan commitments and standby letters of credit, HTM debt securities, and other financial assets, was ~~$166.8~~$178.7 million, ~~$28.3~~$26.9 million, ~~$14.9~~$12.7 million, and $1.1 million, respectively. As of December 31, 2022, the Allowance for Credit Losses related to loans, undrawn loan commitments and standby letters of credit, HTM debt securities, and other financial assets, was $144.3 million, $38.5 million, $16.0 million, and $0.8$0.9 million, respectively. There was a ~~$0.7~~$0.5 million and ~~$1.3~~$1.2 million allowance for credit losses related to AFS debt securities as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively. For additional information relating to the allowance for credit losses and the changes in the allowance for credit losses during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and March 31, 2023 ~~and September 30, 2022~~ due to charge-offs, recoveries and provisions for credit losses, refer to Note 6—Allowance for Credit Losses to the consolidated financial statements provided in Item 1. Consolidated Financial Statements (unaudited).

The table provides the allowance evaluated on an individual and collective basis for the loan portfolio by segment and class.

TABLE ~~27:~~22: ALLOCATION OF THE ALLOWANCE FOR CREDIT LOSSES FOR LOANS


		SEPTEMBER 30, 2023					DECEMBER 31, 2022
	MARCH 31, 2024																			MARCH 31, 2024				DECEMBER 31, 2023
($ In Millions)	($ In Millions)	ALLOWANCE AMOUNT			PERCENT OF LOANS TO TOTAL LOANS		ALLOWANCE AMOUNT			PERCENT OF LOANS TO TOTAL LOANS		($ In Millions)	ALLOWANCE AMOUNT		PERCENT OF LOANS TO TOTAL LOANS			ALLOWANCE AMOUNT			PERCENT OF LOANS TO TOTAL LOANS
Evaluated on an Individual Basis	Evaluated on an Individual Basis	$	10.3		—	%	$	10.4		—	%	Evaluated on an Individual Basis	$	2.5	—	—	%	$	13.4		—	—	%
Evaluated on a Collective Basis	Evaluated on a Collective Basis
Commercial	Commercial
Commercial
Commercial
Commercial and Institutional
Commercial and Institutional
Commercial and Institutional	Commercial and Institutional	50.5			28		57.0			29
Commercial Real Estate	Commercial Real Estate	102.5			12		76.5			11
Non-U.S.	Non-U.S.	1.6			6		8.3			7
Other	Other	—			5		0.3			3
Total Commercial	Total Commercial	154.6			51		142.1			50
Personal	Personal
Private Client	Private Client	11.2			32		11.2			33
Private Client
Private Client
Residential Real Estate	Residential Real Estate	18.3			14		18.0			15
Non-U.S.	Non-U.S.	0.7			1		1.1			1
Other	Other	—			2		—			1
Total Personal	Total Personal	30.2			49		30.3			50
Total Allowance Evaluated on a Collective Basis	Total Allowance Evaluated on a Collective Basis	$	184.8				$	172.4
Total Allowance for Credit Losses	Total Allowance for Credit Losses	$	195.1				$	182.8
Total Allowance for Credit Losses
Total Allowance for Credit Losses
Allowance Assigned to
Allowance Assigned to
Allowance Assigned to	Allowance Assigned to
Loans	Loans	$	166.8				$	144.3
Loans
Loans
Undrawn Commitments and Standby Letters of Credit
Undrawn Commitments and Standby Letters of Credit
Undrawn Commitments and Standby Letters of Credit	Undrawn Commitments and Standby Letters of Credit	28.3					38.5
Total Allowance for Credit Losses	Total Allowance for Credit Losses	$	195.1				$	182.8
Total Allowance for Credit Losses
Total Allowance for Credit Losses
Allowance Assigned to Loans to Total Loans	Allowance Assigned to Loans to Total Loans	0.38		%			0.34		%
Allowance Assigned to Loans to Total Loans
Allowance Assigned to Loans to Total Loans

Commercial Real Estate Loans

The table below provides additional detail regarding commercial real estate loan types.

TABLE ~~28:~~23: COMMERCIAL REAL ESTATE LOANS


(In Millions)	(In Millions)	SEPTEMBER 30, 2023		DECEMBER 31, 2022
(In Millions)
(In Millions)						MARCH 31, 2024	DECEMBER 31, 2023
Commercial Mortgages	Commercial Mortgages
Apartment/ Multi-family
Apartment/ Multi-family
Apartment/ Multi-family	Apartment/ Multi-family	$	1,623.0	$	1,392.7
Office	Office	1,016.9		1,054.0
Industrial/ Warehouse	Industrial/ Warehouse	668.6		596.2
Retail	Retail	623.0		572.2
Other	Other	582.1		548.0
Total Commercial Mortgages	Total Commercial Mortgages	4,513.6		4,163.1
Construction, Acquisition and Development Loans	Construction, Acquisition and Development Loans	549.5		609.9
Total Commercial Real Estate Loans	Total Commercial Real Estate Loans	$	5,063.1	$	4,773.0

For an overall discussion on the loan portfolio and on the allowance, refer to Note 5—Loans and Note 6—Allowance for Credit Losses to the consolidated financial statements provided in Item 1. Consolidated Financial Statements (unaudited).

2619

STATEMENTS OF CASH FLOWS

The following discusses the statement of cash flow activities for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023.

TABLE ~~29:~~24: CASH FLOW ACTIVITY SUMMARY


			NINE MONTHS ENDED SEPTEMBER 30,
		THREE MONTHS ENDED MARCH 31,								THREE MONTHS ENDED MARCH 31,
(In Millions)	(In Millions)		2023		2022		(In Millions)	2024	2023
Net cash provided by (used in):	Net cash provided by (used in):
Operating activities
Operating activities
Operating activities	Operating activities		$	(177.6)	$	(1,759.6)
Investing activities	Investing activities		9,647.1		21,773.5
Financing activities	Financing activities		(8,890.7)		(18,156.8)
Effect of Foreign Currency Exchange Rates on Cash	Effect of Foreign Currency Exchange Rates on Cash		(277.3)		(421.1)
Change in Cash and Due from Banks	Change in Cash and Due from Banks		$	301.5	$	1,436.0

Operating Activities

Net cash used in operating activities of ~~$177.6 million~~$1.5 billion for the ~~nine~~three months ended ~~September 30,~~March 31, 2024, was primarily attributable to higher net collateral deposited with derivative counterparties, net changes in other operating activities, pension plan contributions, partially offset by higher investment security losses.

Net cash used in operating activities of $164.9 million for the three months ended March 31, 2023, was primarily attributable to higher net collateral deposited with derivative counterparties and an increase in receivables, partially offset by period earnings, net changes in other operating activities, and ~~an increase in interest payable.~~the impact of lower non-cash charges such as amortization and depreciation.

Investing Activities

Net cash used in ~~operating~~investing activities of ~~$1.8~~$4.8 billion for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2024, was primarily attributable to ~~higher~~increased levels of Federal Reserve and other central bank deposits and net ~~collateral deposited with derivative counterparties,~~purchases of AFS debt securities partially offset by ~~period earnings.~~net proceeds of HTM debt securities.

~~Investing Activities~~

Net cash provided by investing activities of ~~$9.6~~$4.9 billion for the ~~nine~~three months ended ~~September 30,~~March 31, 2023, was primarily attributable to net proceeds associated with AFS and HTM debt securities, and decreased levels of Federal Reserve and other central bank deposits.

Financing Activities

Net cash provided by ~~investing~~financing activities of ~~$21.8~~$6.9 billion for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2024, was primarily attributable to the increased levels of total deposits, partially offset by decreased levels of ~~Federal Reserve and other central bank deposits and net proceeds from HTM debt securities, partially offset by higher levels of loans.~~federal funds purchased.

~~Financing Activities~~

Net cash used in financing activities of ~~$8.9~~$4.6 billion for the ~~nine~~three months ended ~~September 30,~~March 31, 2023, was primarily attributable to the de~~creased~~decreased levels of total ~~deposits,~~deposits, partially offset by increased levels of short-term other borrowings and federal funds ~~purchased and proceeds from long-term debt.~~purchased. The decrease in total deposits was primarily attributable to lower levels of savings, money market and other interest-bearing ~~deposits and lower levels of non-U.S. office interest-bearing~~ deposits.

Net cash used in financing activities of $18.2 billion for the nine months ended September 30, 2022, was primarily attributable to the decreased levels of total deposits, partially offset by increased levels of federal funds purchased and short-term other borrowings. The decrease in total deposits was primarily attributable to lower levels of non-U.S. office noninterest-bearing and interest-bearing deposits.

2720

CAPITAL RATIOS

The capital ratios of Northern Trust Corporation and its principal subsidiary, The Northern Trust Company, remained strong at ~~September 30, 2023,~~March 31, 2024, exceeding the requirements for classification as “well-capitalized” under applicable U.S. regulatory requirements.

Northern Trust is a Category II institution as defined by the Federal Reserve Board which requires us to adhere to ~~stringent~~regulatory capital standards. In adhering to these standards, Northern Trust engages in a range of reporting and activities with regulators to affirm our financial strength and stability, including but not limited to, capital adequacy reporting that deducts any unrealized losses related to AFS securities from reported capital, and stringent, annual company-run and supervisory stress testing in the form of Comprehensive Capital Analysis and Review (CCAR) exercises, which confirms our ability to remain solvent under severely adverse market conditions.

The results of the 2023 Dodd-Frank Act Stress Test (DFAST), published by the Federal Reserve Board on June 28, 2023, resulted in Northern Trust’s stress capital buffer and effective Common Equity Tier 1 capital ratio minimum requirement remaining constant at 2.5% and 7.0%, respectively, for the annual capital plan cycle beginning on October 1, 2023 through September 30, 2024.

On July 27, 2023, the U.S. banking regulators issued ~~a notice of proposed rulemaking, known as~~the Basel III ~~endgame,~~Endgame Proposal, which would change how risk-based capital requirements are determined for banking organizations including Northern Trust. The ~~proposed rule~~proposal would eliminate the existing advanced approach methodologies for determining ~~risk weighted~~risk-weighted assets (RWA) and replace it with a new expanded ~~risk based~~risk-based approach. The new requirements would be phased in over a ~~three year~~three-year period beginning July 1, 2025. ~~The Corporation is evaluating the impact~~Based on our current understanding of the proposed rule, we estimate that, if the expanded risk-based approach had applied on a fully phased-in basis, and in the absence of taking any actions to mitigate its impact, our ~~regulatory capital requirements.~~expanded risk-based approach RWAs would have been approximately 5% to 15% higher than our actual standardized approach RWAs.

The table below provides capital ratios, as well as the required minimum capital ratios, for Northern Trust Corporation and The Northern Trust Company determined by Basel III phased-in requirements.

TABLE ~~30:~~25: REGULATORY CAPITAL RATIOS


Capital Ratios — Northern Trust Corporation	Capital Ratios — Northern Trust Corporation	SEPTEMBER 30, 2023				JUNE 30, 2023				SEPTEMBER 30, 2022
		STANDARDIZED APPROACH		ADVANCED APPROACH		STANDARDIZED APPROACH		ADVANCED APPROACH		STANDARDIZED APPROACH		ADVANCED APPROACH		WELL-CAPITALIZED RATIOS	MINIMUM CAPITAL RATIOS
STANDARDIZED APPROACH
STANDARDIZED APPROACH
STANDARDIZED APPROACH
STANDARDIZED APPROACH
STANDARDIZED APPROACH																		ADVANCED APPROACH		STANDARDIZED APPROACH		ADVANCED APPROACH		STANDARDIZED APPROACH		ADVANCED APPROACH		WELL-CAPITALIZED RATIOS		MINIMUM CAPITAL RATIOS
Common Equity Tier 1 Capital	Common Equity Tier 1 Capital	11.4	%	13.2	%	11.3	%	13.0	%	10.1	%	11.4	%	N/A	4.5	%	Common Equity Tier 1 Capital	11.4	%	13.5	%	11.4	%	13.4	%	11.3	%	11.7	%	N/A	4.5	%
Tier 1 Capital	Tier 1 Capital	12.4		14.3		12.3		14.1		11.1		12.5		6.0	6.0
Total Capital	Total Capital	14.5		16.5		14.4		16.3		12.2		13.5		10.0	8.0
Tier 1 Leverage	Tier 1 Leverage	7.9		7.9		7.4		7.4		7.0		7.0		N/A	4.0
Supplementary Leverage	Supplementary Leverage	N/A		8.4		N/A		8.3		N/A		7.7		N/A	3.0


Capital Ratios — The Northern Trust Company	Capital Ratios — The Northern Trust Company	SEPTEMBER 30, 2023				JUNE 30, 2023				SEPTEMBER 30, 2022
		STANDARDIZED APPROACH		ADVANCED APPROACH		STANDARDIZED APPROACH		ADVANCED APPROACH		STANDARDIZED APPROACH		ADVANCED APPROACH		WELL-CAPITALIZED RATIOS		MINIMUM CAPITAL RATIOS
STANDARDIZED APPROACH
STANDARDIZED APPROACH
STANDARDIZED APPROACH
STANDARDIZED APPROACH
STANDARDIZED APPROACH																			ADVANCED APPROACH		STANDARDIZED APPROACH		ADVANCED APPROACH		STANDARDIZED APPROACH		ADVANCED APPROACH		WELL-CAPITALIZED RATIOS		MINIMUM CAPITAL RATIOS
Common Equity Tier 1 Capital	Common Equity Tier 1 Capital	12.3	%	14.5	%	12.1	%	14.3	%	10.7	%	12.2	%	6.5	%	4.5	%	Common Equity Tier 1 Capital	11.9	%	14.2	%	12.2	%	14.6	%	12.3	%	12.9	%	6.5	%	4.5	%
Tier 1 Capital	Tier 1 Capital	12.3		14.5		12.1		14.3		10.7		12.2		8.0		6.0
Total Capital	Total Capital	14.2		16.4		13.9		16.2		11.6		13.0		10.0		8.0
Tier 1 Leverage	Tier 1 Leverage	7.8		7.8		7.4		7.4		6.7		6.7		5.0		4.0
Supplementary Leverage	Supplementary Leverage	N/A		8.3		N/A		8.2		N/A		7.4		3.0		3.0

2821

RECENT ACCOUNTING PRONOUNCEMENTS AND DEVELOPMENTS

In ~~March~~November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. ~~2023-02, “Investments—Equity Method~~2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (ASU 2023-07). ASU 2023-07 significantly expands disclosures about a public entity’s reportable segments, primarily through more frequent and ~~Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using~~enhanced disclosures about significant segment expenses. ASU 2023-07 does not change how a public entity identifies its operating segments, aggregates those operating segments or applies the ~~Proportional Amortization Method—a consensus of the Emerging Issues Task Force” (ASU 2023-02). The amendments in~~quantitative thresholds to determine its reportable segments. ASU 2023-02 permit reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the income tax credits and other income tax benefits received and recognizes the net amortization and income tax credits and other income tax benefits in the income statement as a component of income tax expense (benefit). In addition, ASU 2023-02 requires specific disclosures that must be applied to all investments that generate income tax credits and other income tax benefits from a tax credit program for which the entity has elected to apply the proportional amortization method in accordance with Subtopic 323-740. ASU 2023-022023-07 is effective for ~~interim and~~ annual periods beginning after December 15, 2023, ~~although early~~and interim periods within annual periods beginning after December 15, 2024. Early adoption is permitted. Upon adoption, the impact of ASU ~~2023-02~~2023-07 will be limited to certain enhancements within the notes to the consolidated financial statements and therefore is not expected to have ~~a significant~~an impact on Northern Trust’s consolidated balance sheets or consolidated statements of income.

In ~~August~~December 2023, the FASB issued ASU No. ~~2023-05, “Business Combinations—Joint Venture Formations (Subtopic 805-60)~~2023-09, “Income Taxes (Topic 740): ~~Recognition and Initial Measurement”~~Improvements to Income Tax Disclosures” (ASU ~~2023-05)~~2023-09). ASU ~~2023-05 addresses the accounting for contributions made to a joint venture~~2023-09 enhances disclosures by ~~requiring all contributions received by the joint venture to be measured at fair value upon its formation. Prior~~further disaggregating existing annual income tax disclosures related to the ~~issuance of~~effective tax rate reconciliation and income taxes paid. ASU ~~2023-05, U.S. GAAP did not contain specific guidance on how a joint venture should recognize contributions received. ASU 2023-05~~2023-09 is effective for ~~interim~~annual periods beginning after December 15, 2024, although early adoption is permitted. Upon adoption, the impact of ASU 2023-09 will be limited to certain enhancements within the notes to the consolidated financial statements and therefore is not expected to have an impact on Northern Trust’s consolidated balance sheets or consolidated statements of income.

In March 2024, the FASB issued ASU No. 2024-01, “Compensation—Stock Compensation (Topic 718): Scope Applications of Profits Interests and Similar Awards” (ASU 2024-01). ASU 2024-01 adds an example to Topic 718 which illustrates how to apply the scope guidance to determine whether profits interests and similar awards should be accounted for as share-based payment arrangements under Topic 718 or under other U.S. GAAP. ASU 2024-01 is effective for annual periods beginning after December 15, 2024, although early adoption is permitted. Upon adoption, ASU ~~2025-03~~2024-01 is not expected to have ~~a significant~~an impact on Northern Trust’s consolidated balance sheets or consolidated statements of income.

RISK MANAGEMENT

Liquidity Risk

Liquidity risk is the risk of not being able to raise sufficient funds or maintain collateral to meet balance sheet and contingent liability cash flow obligations when due, because of firm-specific or market-wide stress events. Northern Trust is a Category II institution as defined by the Federal Reserve Board which requires us to adhere to the same ~~stringent~~regulatory liquidity standards as ~~Category I institutions.~~U.S. global systemically important bank holding companies (GSIBs). In adhering to these standards, Northern Trust engages in a range of reporting and activities with regulators to affirm our financial strength and stability, including but not limited to, daily Liquidity Coverage Ratio and Net Stable Funding Ratio calculations to regulators.

We maintain a highly liquid balance sheet consisting principally of cash held at the Federal Reserve and other central banks, money market assets, and short-term investment securities, which were ~~60%~~61% and ~~63%~~59% of total assets as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively. ~~83%~~86% and ~~81%~~82% of Northern Trust’s securities portfolio is composed of U.S. Treasury, government sponsored agency and triple-A rated securities as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

Market Risk

There are two types of market risk, interest rate risk associated with the banking book and trading risk. Interest rate risk associated with the banking book is the potential for movements in interest rates to cause changes in Net Interest Income and the market value of equity, including Accumulated Other Comprehensive Income (Loss) from the AFS debt securities portfolio. Trading risk is the potential for movements in market variables such as foreign exchange and interest rates to cause changes in the value of trading positions.

Northern Trust uses two primary measurement techniques to manage interest rate risk: Net Interest Income (NII) sensitivity and Market Value of Equity (MVE) sensitivity. NII sensitivity provides management with a short-term view of the impact of interest rate changes on NII. MVE sensitivity provides management with a long-term view of interest rate changes on MVE based on the period-end balance sheet. Higher interest rates may impact the fair value of AFS debt securities which in turn affects Accumulated Other Comprehensive Income (Loss), which can impact regulatory capital ratios.

As part of its risk management activities, Northern Trust also measures daily the risk of loss associated with all non-U.S. currency positions using a Value-at-Risk (VaR) model and applying the historical simulation methodology. The following information about Northern Trust’s management of market risk should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

RISK MANAGEMENT (continued)

Market Risk (continued)

NII Sensitivity — The modeling of NII sensitivity incorporates on-balance-sheet positions, as well as derivative financial instruments (principally interest rate swaps) that are used to manage interest rate risk. Northern Trust uses market implied forward interest rates as the base case and measures the sensitivity (i.e., change) of a static balance sheet to changes in interest rates. Stress testing of interest rates is performed to include such scenarios as immediate parallel shocks to rates, nonparallel (i.e., twist) changes to yield curves that result in their becoming steeper or flatter, and changes to the relationship among the yield curves (i.e., basis risk).

~~RISK MANAGEMENT (continued)~~

~~Market Risk (continued)~~

The NII sensitivity analysis incorporates certain critical assumptions such as interest rates and client behaviors under changing rate environments. These assumptions are based on a combination of historical analysis and future expected pricing behavior. The simulation cannot precisely estimate NII sensitivity given uncertainty in the assumptions. The following key assumptions are incorporated into the simulation:

▪the balance sheet size and mix remains constant over the simulation horizon with maturing assets and liabilities replaced with instruments with similar terms as those that are maturing, with the exception of certain nonmaturity deposits that are considered short-term in nature and therefore receive a more conservative interest-bearing treatment;

▪prepayments on mortgage loans and securities collateralized by mortgages are projected under each rate scenario using a third-party mortgage analytics system that incorporates market prepayment assumptions;

▪cash flows for structured securities are estimated using a third-party vendor in conjunction with the prepayments provided by the third-party mortgage analytics vendor;

▪nonmaturity deposit pricing is projected based on Northern Trust’s actual historical patterns and management judgment, depending upon the availability of historical data and current pricing strategies/or judgment; and

▪new business rates are based on current spreads to market indices.

The following table shows the estimated NII impact over the next twelve months of 100 and 200 basis point ramps upward and ~~100 basis point ramp~~ downward ~~movements~~ in interest rates relative to forward rates as of ~~September 30, 2023~~March 31, 2024 and ~~September 30, 2022. A 200 basis point ramp downward movement in interest rate relative to forward rate is also provided as of September 30,~~March 31, 2023. Each rate movement is assumed to occur gradually over a one-year period. Given the low level of interest rates at the time and assumed interest rate floors as rates approach zero, the 200 basis point ramp downward movement in interest rate relative to forward rate as of September 30, 2022 would not provide meaningful results and is therefore not provided.

TABLE ~~31:~~26: NET INTEREST INCOME SENSITIVITY

INCREASE (DECREASE) ESTIMATED IMPACT ON NEXT TWELVE MONTHS OF NET INTEREST INCOME

($ In Millions)

SEPTEMBER 30, 2023

SEPTEMBER 30, 2022

(In Millions)

MARCH 31, 2024

MARCH 31, 2023

Increase in Interest Rates Above Market Implied Forward Rates

100 Basis Points

(29)

200 Basis Points

(63)

128

Decrease in Interest Rates Below Market Implied Forward Rates

100 Basis Points

(70)

100 Basis Points

200 Basis Points

N/M

The NII sensitivity analysis does not incorporate certain management actions that may be used to mitigate adverse effects of actual interest rate movement. For that reason and others, the estimated impacts do not reflect the likely actual results but serve as estimates of interest rate risk. NII sensitivity is not comparable to actual results disclosed elsewhere or directly predictive of future values of other measures provided.

MVE Sensitivity — MVE is defined as the present value of assets minus the present value of liabilities, net of the value of financial derivatives that are used to manage the interest rate risk of balance sheet items. The MVE looks at the whole balance sheet, which includes AFS debt securities, HTM debt securities, money market accounts, deposits, loans and wholesale borrowings. The potential effect of interest rate changes on MVE is derived from the impact of such changes on projected future cash flows and the present value of these cash flows and is then compared to the established limit. Northern Trust uses current market rates (and the future rates implied by these market rates) as the base case and measures MVE sensitivity under various rate scenarios. Stress testing of interest rates is performed to include such scenarios as immediate parallel shocks to rates, nonparallel (i.e., twist) changes to yield curves that result in their becoming steeper or flatter, and changes to the relationship among the yield curves (i.e., basis risk).

The MVE sensitivity analysis incorporates certain critical assumptions such as interest rates and client behaviors under changing rate environments. These assumptions are based on a combination of historical analysis and future expected pricing behavior. The simulation cannot precisely estimate MVE sensitivity given uncertainty in the assumptions. Many of the assumptions that apply to NII sensitivity also apply to MVE sensitivity simulations, with the following separate key assumptions incorporated into the MVE simulation:

▪the present value of nonmaturity deposits ~~are~~is estimated using dynamic decay methodologies or estimated remaining lives, which are based on a combination of Northern Trust’s actual historical runoff patterns and management

RISK MANAGEMENT (continued)

Market Risk (continued)

judgment—some balances are assumed to be core and have longer lives while other balances are assumed to be temporary and have comparatively shorter lives;

~~RISK MANAGEMENT (continued)~~

~~Market Risk (continued)~~

▪the present values of most ~~noninterest-related~~noninterest-bearing balances (such as receivables, equipment, and payables) are the same as their book values; and

▪Monte Carlo simulation is used to generate forward interest rate paths.

The following table shows the estimated impact on MVE of 100 and 200 basis point shocks up and ~~a 100 and 200 basis point shock~~ down from current market implied forward rates at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023. Each rate movement is assumed to occur gradually over a one-year period.

TABLE ~~32:~~27: MARKET VALUE OF EQUITY SENSITIVITY

INCREASE (DECREASE) ESTIMATED IMPACT ON MARKET VALUE OF EQUITY

($ In Millions)

SEPTEMBER 30, 2023

DECEMBER 31, 2022

(In Millions)

MARCH 31, 2024

DECEMBER 31, 2023

Increase in Interest Rates Above Market Implied Forward Rates

100 Basis Points

(616)

(472)

200 Basis Points

(1,271)

(965)

Decrease in Interest Rates Below Market Implied Forward Rates

100 Basis Points

707

596

100 Basis Points

200 Basis Points

1,306

842

The MVE simulations do not incorporate certain management actions that may be used to mitigate adverse effects of actual interest rate movements. For that reason and others, the estimated impacts do not reflect the likely actual results but serve as estimates of interest rate risk. MVE sensitivity is not comparable to actual results disclosed elsewhere or directly predictive of future values of other measures provided.

Value-At-Risk (VaR) — Northern Trust measures daily the risk of loss associated with trading positions using a VaR model and applying the historical simulation methodology. This statistical model provides estimates, based on high confidence levels, of the potential loss in value that might be incurred if an adverse shift in foreign exchange rates and interest rates were to occur over a small number of days. The model incorporates foreign currency and interest rate volatilities and correlations in price movements among the currencies and interest rates. VaR is computed for each trading desk and for the global portfolio.

Northern Trust monitors several variations of the VaR measures to meet specific regulatory and internal management needs. Variations include different methodologies (historical simulation, Monte Carlo simulation and Taylor approximation), horizons of one day and ten days, confidence levels of 95% and 99%, subcomponent VaRs using only foreign exchange (FX) drivers, only interest rate (IR) drivers, and only volatility drivers, and look-back periods of one year, two years, and four years. Those alternative measures provide management an array of corroborating metrics and alternative perspectives on Northern Trust’s market risks.

The following table presents the levels of total regulatory VaR and its subcomponents for global foreign exchange (GFX) in the periods indicated below, based on the historical simulation methodology, a 99% confidence level, a one-day horizon and equally weighted volatility. The total VaR for GFX is typically less than the sum of its two subcomponents due to diversification benefits derived from the two subcomponents.

TABLE ~~33:~~28: GLOBAL FOREIGN CURRENCY VALUE-AT-RISK


($ In Millions)		TOTAL VaR (FX AND IR DRIVERS)						FX VaR (FX DRIVERS ONLY)						IR VaR (IR DRIVERS ONLY)
(In Millions)																				(In Millions)	TOTAL VaR (FX AND IR DRIVERS)			FX VaR (FX DRIVERS ONLY)			IR VaR (IR DRIVERS ONLY)
THREE MONTHS ENDED	THREE MONTHS ENDED	SEPTEMBER 30, 2023		JUNE 30, 2023		SEPTEMBER 30, 2022		SEPTEMBER 30, 2023		JUNE 30, 2023		SEPTEMBER 30, 2022		SEPTEMBER 30, 2023		JUNE 30, 2023		SEPTEMBER 30, 2022		THREE MONTHS ENDED	MARCH 31, 2024	DECEMBER 31, 2023	MARCH 31, 2023	MARCH 31, 2024	DECEMBER 31, 2023	MARCH 31, 2023	MARCH 31, 2024	DECEMBER 31, 2023	MARCH 31, 2023
High	High	$	0.5	$	0.7	$	0.2	$	0.7	$	0.7	$	0.2	$	0.4	$	0.3	$	0.1
Low	Low	0.1		0.1		0.1		0.1		—		—		0.1		—		—
Average	Average	0.2		0.2		0.1		0.2		0.2		0.1		0.1		0.1		0.1
Quarter-End	Quarter-End	0.1		0.3		0.1		0.1		0.4		0.1		0.1		0.2		0.1

For the GFX portfolio, the daily high, low, average, and quarter-end VaR values were all less than ~~$0.6~~$1.8 million for the quarter ended ~~September 30, 2023.~~March 31, 2024. During the three months ended ~~September 30, 2023,~~March 31, 2024, Northern Trust did not incur an actual GFX trading loss in excess of the daily GFX VaR estimate.

RISK MANAGEMENT (continued)

Market Risk (continued)

VaR measures for interest rate derivatives (IRDs), historically immaterial, became temporarily inflated during the second quarter of 2023 as a result of transitions of IRD contracts from London Interbank Offered Rate (LIBOR) to Secured Overnight Finance Rate (SOFR) referencing. Although they remained elevated relative to historical levels, the risk measures declined in the third quarter of 2023. For the IRD portfolio, the daily high, low, average, and quarter-end VaR values were all less than ~~$0.7~~$0.5 million for the quarter ended ~~September 30, 2023.~~

March 31,

~~RISK MANAGEMENT (continued)~~

~~Market Risk (continued)~~

2024.

Foreign currency balances arise not from executing trades but rather in the course of regular business operations, namely from non-U.S.-dollar-denominated revenues and expenses accruing onto the Corporation’s balance sheet. No longer hedged as of the third quarter of 2023, the balances are considered trading positions for regulatory purposes. For foreign currency balances, the daily high, low, average, and quarter-end VaR values were all less than ~~$1.3~~$2.1 million for the quarter ended ~~September 30, 2023.~~March 31, 2024.

Reconciliation to Fully Taxable Equivalent

The following table presents a reconciliation of Interest Income, Net Interest Income, net interest margin, and total revenue prepared in accordance with GAAP to such measures on an FTE basis, which are non-GAAP financial measures. Net interest margin is calculated by dividing annualized Net Interest Income by average interest-earning assets. Management believes this presentation provides a clearer indication of these financial measures for comparative purposes. When adjusted to an FTE basis, yields on taxable, nontaxable and partially taxable assets are comparable; however, the adjustment to an FTE basis has no impact on Net Income.

TABLE ~~34:~~29: RECONCILIATION TO FULLY TAXABLE EQUIVALENT


		THREE MONTHS ENDED SEPTEMBER 30,						NINE MONTHS ENDED SEPTEMBER 30,
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
($ In Millions)
($ In Millions)
($ In Millions)	($ In Millions)	2023			2022			2023			2022
Net Interest Income	Net Interest Income
Net Interest Income
Net Interest Income
Interest Income - GAAP
Interest Income - GAAP
Interest Income - GAAP	Interest Income - GAAP	$	1,935.0		$	799.3		$	5,125.4		$	1,707.6
Add: FTE Adjustment	Add: FTE Adjustment	13.2			12.3			39.5			30.1
Add: FTE Adjustment
Add: FTE Adjustment
Interest Income (FTE) - Non-GAAP
Interest Income (FTE) - Non-GAAP
Interest Income (FTE) - Non-GAAP	Interest Income (FTE) - Non-GAAP	$	1,948.2		$	811.6		$	5,164.9		$	1,737.7

Net Interest Income - GAAP	Net Interest Income - GAAP	$	456.2		$	513.0		$	1,498.9		$	1,352.7

Net Interest Income - GAAP

Net Interest Income - GAAP
Add: FTE Adjustment
Add: FTE Adjustment
Add: FTE Adjustment	Add: FTE Adjustment	13.2			12.3			39.5			30.1
Net Interest Income (FTE) - Non-GAAP	Net Interest Income (FTE) - Non-GAAP	$	469.4		$	525.3		$	1,538.4		$	1,382.8
Net Interest Income (FTE) - Non-GAAP
Net Interest Income (FTE) - Non-GAAP



Net Interest Margin - GAAP	Net Interest Margin - GAAP	1.41		%	1.54		%	1.51		%	1.29		%
Net Interest Margin - GAAP
Net Interest Margin - GAAP
Net Interest Margin (FTE) - Non-GAAP
Net Interest Margin (FTE) - Non-GAAP
Net Interest Margin (FTE) - Non-GAAP	Net Interest Margin (FTE) - Non-GAAP	1.45		%	1.58		%	1.55		%	1.32		%

Total Revenue	Total Revenue

Total Revenue

Total Revenue
Total Revenue - GAAP
Total Revenue - GAAP
Total Revenue - GAAP	Total Revenue - GAAP	$	1,726.5		$	1,754.8		$	5,228.2		$	5,242.2
Add: FTE Adjustment	Add: FTE Adjustment	13.2			12.3			39.5			30.1
Add: FTE Adjustment
Add: FTE Adjustment
Total Revenue (FTE) - Non-GAAP	Total Revenue (FTE) - Non-GAAP	$	1,739.7		$	1,767.1		$	5,267.7		$	5,272.3
Total Revenue (FTE) - Non-GAAP
Total Revenue (FTE) - Non-GAAP

3225

FORWARD-LOOKING STATEMENTS

This report may include statements which constitute “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified typically by words or phrases such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “likely,” “plan,” “goal,” “target,” “strategy,” and similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would,” and “could.” Forward-looking statements include statements, other than those related to historical facts, that relate to Northern Trust’s financial results and outlook; capital adequacy; dividend policy and share repurchase program; accounting estimates and assumptions; credit quality including allowance levels; future pension plan contributions; effective tax rate; anticipated expense levels; contingent liabilities; acquisitions; strategies; market and industry trends; and expectations regarding the impact of accounting pronouncements and legislation. These statements are based on Northern Trust’s current beliefs and expectations of future events or future results, and involve risks and uncertainties that are difficult to predict and subject to change. These statements are also based on assumptions about many important factors, including:

•financial market disruptions or economic recession in the ~~United States~~U.S. or other countries across the globe resulting from any of a number of factors;

•volatility or changes in financial markets, including debt and equity markets, that impact the value, liquidity, or credit ratings of financial assets in general, or financial assets held in particular investment funds or client portfolios, including those funds, portfolios, and other financial assets with respect to which Northern Trust has taken, or may in the future take, actions to provide asset value stability or additional liquidity;

•the impact of equity markets on fee revenue;

•changes in interest rates or in the monetary or other policies of various regulatory authorities or central banks;

•Northern Trust’s success in controlling the costs and expenses of its business operations and the impacts of any broader inflationary environment thereon;

•~~FDIC assessments to recover losses to the Deposit Insurance Fund in connection with bank closures;~~

•a decline in the value of securities held in Northern Trust’s investment portfolio, the liquidity and pricing of which may be negatively impacted by periods of economic turmoil and financial market disruptions;

•Northern Trust’s ability to address operating risks, including those related to cybersecurity, data privacy and security, human errors or omissions, pricing or valuation of securities, fraud, operational resilience (including systems performance), failure to maintain sustainable business practices, and breakdowns in processes or internal controls;

•Northern Trust's success in responding to and investing in changes and advancements in technology;

•geopolitical risks, risks related to global climate change and the risks of extraordinary events such as pandemics, natural disasters, terrorist events and war (including the continuing military ~~conflict~~conflicts involving Ukraine and the Russian Federation and Israel and Hamas and other evolving events in the Middle East), and the responses of the ~~United States~~U.S. and other countries to those events;

•unexpected deposit outflows;

•the effectiveness of Northern Trust’s management of its human capital, including its success in recruiting and retaining necessary and diverse personnel to support business growth and expansion and maintain sufficient expertise to support increasingly complex products and services;

•changes in the legal, regulatory and enforcement framework and oversight applicable to financial institutions, including Northern Trust;

•~~the downgrade of U.S. government-issued and other securities;~~

•changes in foreign exchange trading client volumes and volatility in foreign currency exchange rates, changes in the valuation of the U.S. dollar relative to other currencies in which Northern Trust records revenue or accrues expenses, and Northern Trust’s success in assessing and mitigating the risks arising from all such changes and volatility;

•a significant downgrade of any of Northern Trust’s debt ratings;

•the health and soundness of the financial institutions and other counterparties with which Northern Trust conducts business;

•uncertainties inherent in the complex and subjective judgments required to assess credit risk and establish appropriate allowances therefor;

•~~the transition away from the London Interbank Offered Rate (LIBOR) or changes in the calculation of alternative interest rate benchmarks;~~

•~~the pace and extent of continued globalization of investment activity and growth in worldwide financial assets;~~

•increased costs of compliance and other risks associated with changes in regulation, the current regulatory environment, and areas of increased regulatory emphasis and oversight in the ~~United States~~U.S. and other countries, such as anti-money laundering, anti-bribery, and data ~~privacy;~~privacy and security;

•failure to satisfy regulatory standards or to obtain regulatory approvals when required, including for the use and distribution of capital;

•Northern Trust’s success in continuing to enhance its risk management practices and controls and managing risks inherent in its businesses, including credit risk, operational risk, market and liquidity risk, fiduciary risk, compliance risk and strategic risk;

•risks and uncertainties inherent in the litigation and regulatory process, including the possibility that losses may be in excess of Northern Trust’s recorded liability and estimated range of possible loss for litigation exposures;

•the risk of damage to Northern Trust’s reputation which may undermine the confidence of clients, counterparties, rating agencies, and stockholders;

•the downgrade of U.S. government-issued and other securities;

FORWARD-LOOKING STATEMENTS (continued)

•changes in tax laws, accounting requirements or interpretations and other legislation in the ~~United States~~U.S. or other countries that could affect Northern Trust or its clients;

•the pace and extent of continued globalization of investment activity and growth in worldwide financial assets;

•changes in the nature and activities of Northern Trust’s competition;

~~FORWARD-LOOKING STATEMENTS (continued)~~

•Northern Trust’s success in maintaining existing business and continuing to generate new business in existing and targeted markets and its ability to deploy deposits in a profitable manner consistent with its liquidity requirements;

•Northern Trust’s ability to address the complex needs of a global client base and manage compliance with legal, tax, regulatory and other requirements;

•Northern Trust’s ability to maintain a product mix that achieves acceptable margins;

•Northern Trust’s ability to continue to generate investment results that satisfy clients and to develop an array of investment products;

•uncertainties inherent in Northern Trust’s assumptions concerning its pension plan, including discount rates and expected contributions, returns and payouts;

•risks associated with being a holding company, including Northern Trust’s dependence on dividends from its principal subsidiary;

•~~the risk of damage to Northern Trust’s reputation which may undermine the confidence of clients, counterparties, rating agencies, and stockholders;~~ and

•other factors identified elsewhere in the Corporation’s Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, including those factors described in Item 1A, “Risk Factors,” and other filings with the SEC, all of which are available on Northern Trust’s website.

Actual results may differ materially from those expressed or implied by forward-looking statements. The information contained herein is current only as of the date of that information. All forward-looking statements included in this document are based upon information presently available, and Northern Trust assumes no obligation to update its forward-looking statements.

3427

Item 1. Consolidated Financial Statements (unaudited)


CONSOLIDATED BALANCE SHEETS (UNAUDITED)			NORTHERN TRUST CORPORATION


(In Millions Except Share Information)	(In Millions Except Share Information)	SEPTEMBER 30, 2023		DECEMBER 31, 2022		(In Millions Except Share Information)	MARCH 31, 2024	DECEMBER 31, 2023

ASSETS	ASSETS
ASSETS
ASSETS
Cash and Due from Banks
Cash and Due from Banks
Cash and Due from Banks	Cash and Due from Banks	$	4,955.7	$	4,654.2
Federal Reserve and Other Central Bank Deposits	Federal Reserve and Other Central Bank Deposits	32,316.8		40,030.4
Interest-Bearing Deposits with Banks	Interest-Bearing Deposits with Banks	2,122.5		1,941.1
Federal Funds Sold		—		32.0

Securities Purchased under Agreements to Resell
Securities Purchased under Agreements to Resell
Securities Purchased under Agreements to Resell	Securities Purchased under Agreements to Resell	384.3		1,070.3
Debt Securities	Debt Securities
Available for Sale (Amortized cost of $25,246.1 and $27,760.0)		24,342.1		26,699.9
Held to Maturity (Fair value of $22,449.7 and $22,879.3)		24,920.4		25,036.1
Trading Account		0.1		95.2
Available for Sale (Amortized cost of $25,941.9 and $23,659.0)
Available for Sale (Amortized cost of $25,941.9 and $23,659.0)
Available for Sale (Amortized cost of $25,941.9 and $23,659.0)
Held to Maturity (Fair value of $21,641.4 and $24,473.0)

Total Debt Securities
Total Debt Securities
Total Debt Securities	Total Debt Securities	49,262.6		51,831.2
Loans	Loans
Commercial	Commercial	21,987.3		21,635.6
Commercial
Commercial
Personal	Personal	21,589.7		21,257.7
Total Loans (Net of unearned income of $5.9 and $9.0)		43,577.0		42,893.3
Total Loans (Net of unearned income of $6.6 and $5.9)
Allowance for Credit Losses	Allowance for Credit Losses	(182.7)		(161.1)
Buildings and Equipment	Buildings and Equipment	465.0		500.5
Client Security Settlement Receivables	Client Security Settlement Receivables	147.6		1,698.3
Goodwill	Goodwill	692.8		691.3
Other Assets	Other Assets	12,589.0		9,855.2
Total Assets	Total Assets	$	146,330.6	$	155,036.7
LIABILITIES	LIABILITIES
Deposits	Deposits
Deposits
Deposits
Demand and Other Noninterest-Bearing
Demand and Other Noninterest-Bearing
Demand and Other Noninterest-Bearing	Demand and Other Noninterest-Bearing	$	12,925.1	$	16,582.7
Savings, Money Market and Other Interest-Bearing	Savings, Money Market and Other Interest-Bearing	24,362.6		31,128.6
Savings Certificates and Other Time	Savings Certificates and Other Time	4,038.6		1,981.3
Non U.S. Offices — Noninterest-Bearing	Non U.S. Offices — Noninterest-Bearing	8,012.7		8,757.6
— Interest-Bearing	— Interest-Bearing	60,826.9		65,481.9
Total Deposits	Total Deposits	110,165.9		123,932.1
Federal Funds Purchased	Federal Funds Purchased	5,539.3		1,896.9
Securities Sold Under Agreements to Repurchase	Securities Sold Under Agreements to Repurchase	545.9		567.2
Other Borrowings	Other Borrowings	6,870.9		7,592.3
Senior Notes	Senior Notes	2,688.9		2,724.2
Long-Term Debt	Long-Term Debt	4,060.7		2,066.2
Other Liabilities	Other Liabilities	4,611.8		4,998.3
Total Liabilities	Total Liabilities	134,483.4		143,777.2
STOCKHOLDERS' EQUITY	STOCKHOLDERS' EQUITY
Preferred Stock, No Par Value; Authorized 10,000,000 shares:	Preferred Stock, No Par Value; Authorized 10,000,000 shares:
Series D, outstanding shares of 5,000		493.5		493.5
Series E, outstanding shares of 16,000		391.4		391.4
Preferred Stock, No Par Value; Authorized 10,000,000 shares:
Preferred Stock, No Par Value; Authorized 10,000,000 shares:
Series D, authorized and outstanding shares of 5,000
Series D, authorized and outstanding shares of 5,000
Series D, authorized and outstanding shares of 5,000
Series E, authorized and outstanding shares of 16,000
Common Stock, $1.66 2/3 Par Value; Authorized 560,000,000 shares;	Common Stock, $1.66 2/3 Par Value; Authorized 560,000,000 shares;
Outstanding shares of 207,036,370 and 208,428,309		408.6		408.6
Outstanding shares of 204,591,724 and 205,126,224
Outstanding shares of 204,591,724 and 205,126,224
Outstanding shares of 204,591,724 and 205,126,224
Additional Paid-In Capital	Additional Paid-In Capital	993.1		983.5
Retained Earnings	Retained Earnings	14,281.6		13,798.5
Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss	(1,363.4)		(1,569.2)
Treasury Stock (38,135,154 and 36,743,215 shares, at cost)		(3,357.6)		(3,246.8)
Treasury Stock (40,579,800 and 40,045,300 shares, at cost)
Total Stockholders’ Equity	Total Stockholders’ Equity	11,847.2		11,259.5
Total Liabilities and Stockholders’ Equity	Total Liabilities and Stockholders’ Equity	$	146,330.6	$	155,036.7

See accompanying notes to the consolidated financial statements.

3528


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)			NORTHERN TRUST CORPORATION


		THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
(In Millions Except Share Information)
(In Millions Except Share Information)
(In Millions Except Share Information)	(In Millions Except Share Information)	2023		2022		2023		2022
Noninterest Income	Noninterest Income
Noninterest Income
Noninterest Income
Trust, Investment and Other Servicing Fees
Trust, Investment and Other Servicing Fees
Trust, Investment and Other Servicing Fees	Trust, Investment and Other Servicing Fees	$	1,111.9	$	1,078.7	$	3,271.8	$	3,390.5
Foreign Exchange Trading Income	Foreign Exchange Trading Income	51.8		64.7		154.9		223.2
Foreign Exchange Trading Income
Foreign Exchange Trading Income
Treasury Management Fees
Treasury Management Fees
Treasury Management Fees	Treasury Management Fees	7.5		9.3		23.8		31.0
Security Commissions and Trading Income	Security Commissions and Trading Income	30.9		32.1		101.7		101.1
Security Commissions and Trading Income
Security Commissions and Trading Income
Other Operating Income
Other Operating Income
Other Operating Income	Other Operating Income	68.2		57.3		170.2		144.0
Investment Security Gains (Losses), net	Investment Security Gains (Losses), net	—		(0.3)		6.9		(0.3)
Investment Security Gains (Losses), net
Investment Security Gains (Losses), net
Total Noninterest Income
Total Noninterest Income
Total Noninterest Income	Total Noninterest Income	1,270.3		1,241.8		3,729.3		3,889.5
Net Interest Income	Net Interest Income
Net Interest Income
Net Interest Income
Interest Income
Interest Income
Interest Income	Interest Income	1,935.0		799.3		5,125.4		1,707.6
Interest Expense	Interest Expense	1,478.8		286.3		3,626.5		354.9
Interest Expense
Interest Expense
Net Interest Income
Net Interest Income
Net Interest Income	Net Interest Income	456.2		513.0		1,498.9		1,352.7
Provision for Credit Losses	Provision for Credit Losses	14.0		0.5		13.5		7.0
Provision for Credit Losses
Provision for Credit Losses
Net Interest Income after Provision for Credit Losses
Net Interest Income after Provision for Credit Losses
Net Interest Income after Provision for Credit Losses	Net Interest Income after Provision for Credit Losses	442.2		512.5		1,485.4		1,345.7
Noninterest Expense	Noninterest Expense
Noninterest Expense
Noninterest Expense
Compensation
Compensation
Compensation	Compensation	558.1		553.3		1,757.8		1,663.7
Employee Benefits	Employee Benefits	100.8		109.9		303.2		333.8
Employee Benefits
Employee Benefits
Outside Services
Outside Services
Outside Services	Outside Services	229.6		220.9		671.3		647.4
Equipment and Software	Equipment and Software	232.5		212.4		693.5		609.4
Equipment and Software
Equipment and Software
Occupancy
Occupancy
Occupancy	Occupancy	58.7		51.3		173.8		153.4
Other Operating Expense	Other Operating Expense	98.5		82.0		296.1		251.6
Other Operating Expense
Other Operating Expense
Total Noninterest Expense
Total Noninterest Expense
Total Noninterest Expense	Total Noninterest Expense	1,278.2		1,229.8		3,895.7		3,659.3
Income before Income Taxes	Income before Income Taxes	434.3		524.5		1,319.0		1,575.9
Income before Income Taxes
Income before Income Taxes
Provision for Income Taxes
Provision for Income Taxes
Provision for Income Taxes	Provision for Income Taxes	106.5		129.7		324.8		395.6
Net Income	Net Income	$	327.8	$	394.8	$	994.2	$	1,180.3
Net Income
Net Income
Preferred Stock Dividends
Preferred Stock Dividends
Preferred Stock Dividends	Preferred Stock Dividends	16.2		16.2		37.1		37.1
Net Income Applicable to Common Stock	Net Income Applicable to Common Stock	$	311.6	$	378.6	$	957.1	$	1,143.2
Net Income Applicable to Common Stock
Net Income Applicable to Common Stock
Per Common Share
Per Common Share
Per Common Share	Per Common Share
Net Income – Basic	Net Income – Basic	$	1.49	$	1.80	$	4.56	$	5.44
Net Income – Basic
Net Income – Basic
– Diluted
– Diluted
– Diluted	– Diluted	1.49		1.80		4.56		5.43
Average Number of Common Shares Outstanding	Average Number of Common Shares Outstanding
Average Number of Common Shares Outstanding
Average Number of Common Shares Outstanding
– Basic
– Basic
– Basic	– Basic	207,021,554		208,400,135		207,611,420		208,271,070
– Diluted	– Diluted	207,252,992		208,888,572		207,927,720		208,858,976
– Diluted
– Diluted

CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (UNAUDITED) NORTHERN TRUST CORPORATION
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
(In Millions) 2023 2022 2023 2022
Net Income $ 327.8 $ 394.8 $ 994.2 $ 1,180.3
Other Comprehensive Income (Loss) (Net of Tax and Reclassifications)
Net Unrealized Gains (Losses) on Available for Sale Debt Securities 32.3 (272.2) 170.5 (1,674.0)
Net Unrealized Gains (Losses) on Cash Flow Hedges (0.4) 2.1 (1.1) 5.1
Net Foreign Currency Adjustments 9.6 20.2 34.2 2.6
Net Pension and Other Postretirement Benefit Adjustments 1.0 (24.5) 2.2 (83.1)
Other Comprehensive Income (Loss) 42.5 (274.4) 205.8 (1,749.4)
Comprehensive Income (Loss) $ 370.3 $ 120.4 $ 1,200.0 $ (569.1)


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)			NORTHERN TRUST CORPORATION



	THREE MONTHS ENDED MARCH 31,
(In Millions)	2024		2023
Net Income	$	214.7	$	334.6
Other Comprehensive Income (Loss) (Net of Tax and Reclassifications)
Net Unrealized Gains (Losses) on Available for Sale Debt Securities	213.4		180.2
Net Unrealized Gains (Losses) on Cash Flow Hedges	(0.7)		(0.1)
Net Foreign Currency Adjustments	4.6		22.7
Net Pension and Other Postretirement Benefit Adjustments	3.0		0.2
Other Comprehensive Income (Loss)	220.3		203.0
Comprehensive Income (Loss)	$	435.0	$	537.6

See accompanying notes to the consolidated financial statements.

3629


CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)			NORTHERN TRUST CORPORATION


		NINE MONTHS ENDED SEPTEMBER 30, 2023
	THREE MONTHS ENDED MARCH 31, 2024																							THREE MONTHS ENDED MARCH 31, 2024
(In Millions Except Per Share Information)	(In Millions Except Per Share Information)	PREFERRED STOCK		COMMON STOCK		ADDITIONAL PAID-IN CAPITAL		RETAINED EARNINGS		ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)		TREASURY STOCK		TOTAL		(In Millions Except Per Share Information)	PREFERRED STOCK	COMMON STOCK	ADDITIONAL PAID-IN CAPITAL	RETAINED EARNINGS	ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)	TREASURY STOCK	TOTAL
Balance at December 31, 2022		$	884.9	$	408.6	$	983.5	$	13,798.5	$	(1,569.2)	$	(3,246.8)	$	11,259.5
Balance at December 31, 2023
Net Income	Net Income	—		—		—		334.6		—		—		334.6
Other Comprehensive Income (Loss) (Net of Tax and Reclassifications)	Other Comprehensive Income (Loss) (Net of Tax and Reclassifications)	—		—		—		—		203.0		—		203.0
Dividends Declared:	Dividends Declared:
Common Stock, $0.75 per share	Common Stock, $0.75 per share	—		—		—		(158.6)		—		—		(158.6)
Preferred Stock		—		—		—		(16.2)		—		—		(16.2)
Stock Awards and Options Exercised		—		—		(19.0)		—		—		85.4		66.4
Stock Purchased		—		—		—		—		—		(100.9)		(100.9)
Balance at March 31, 2023		$	884.9	$	408.6	$	964.5	$	13,958.3	$	(1,366.2)	$	(3,262.3)	$	11,587.8
Net Income		—		—		—		331.8		—		—		331.8
Other Comprehensive Income (Loss) (Net of Tax and Reclassifications)		—		—		—		—		(39.7)		—		(39.7)
Dividends Declared:
Common Stock, $0.75 per share	Common Stock, $0.75 per share	—		—		—		(157.8)		—		—		(157.8)
Preferred Stock		—		—		—		(4.7)		—		—		(4.7)
Stock Awards and Options Exercised		—		—		15.5		—		—		2.1		17.6
Stock Purchased		—		—		—		—		—		(99.3)		(99.3)
Balance at June 30, 2023		$	884.9	$	408.6	$	980.0	$	14,127.6	$	(1,405.9)	$	(3,359.5)	$	11,635.7
Net Income		—		—		—		327.8		—		—		327.8
Other Comprehensive Income (Loss) (Net of Tax and Reclassifications)		—		—		—		—		42.5		—		42.5
Dividends Declared:
Common Stock, $0.75 per share	Common Stock, $0.75 per share	—		—		—		(157.6)		—		—		(157.6)
Preferred Stock	Preferred Stock	—		—		—		(16.2)		—		—		(16.2)
Stock Awards and Options Exercised	Stock Awards and Options Exercised	—		—		13.1		—		—		4.1		17.2
Stock Purchased	Stock Purchased	—		—		—		—		—		(1.1)		(1.1)
Excise Tax on Share Repurchases	Excise Tax on Share Repurchases	—		—		—		—		—		(1.1)		$	(1.1)
Balance at September 30, 2023		$	884.9	$	408.6	$	993.1	$	14,281.6	$	(1,363.4)	$	(3,357.6)	$	11,847.2
Balance at March 31, 2024

See accompanying notes to the consolidated financial statements.


		NINE MONTHS ENDED SEPTEMBER 30, 2022
	THREE MONTHS ENDED MARCH 31, 2023																							THREE MONTHS ENDED MARCH 31, 2023
(In Millions Except Per Share Information)	(In Millions Except Per Share Information)	PREFERRED STOCK		COMMON STOCK		ADDITIONAL PAID-IN CAPITAL		RETAINED EARNINGS		ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)		TREASURY STOCK		TOTAL		(In Millions Except Per Share Information)	PREFERRED STOCK	COMMON STOCK	ADDITIONAL PAID-IN CAPITAL	RETAINED EARNINGS	ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)	TREASURY STOCK	TOTAL
Balance at December 31, 2021		$	884.9	$	408.6	$	939.3	$	13,117.3	$	(35.6)	$	(3,297.7)	$	12,016.8
Net Income		—		—		—		389.3		—		—		389.3
Other Comprehensive Income (Loss) (Net of Tax and Reclassifications)		—		—		—		—		(871.4)		—		(871.4)
Dividends Declared:
Common Stock, $0.70 per share		—		—		—		(147.8)		—		—		(147.8)
Preferred Stock		—		—		—		(16.2)		—		—		(16.2)
Stock Awards and Options Exercised		—		—		(7.6)		—		—		80.5		72.9
Stock Purchased		—		—		—		—		—		(33.8)		(33.8)
Balance at March 31, 2022		$	884.9	$	408.6	$	931.7	$	13,342.6	$	(907.0)	$	(3,251.0)	$	11,409.8
Net Income		—		—		—		396.2		—		—		396.2
Other Comprehensive Income (Loss) (Net of Tax and Reclassifications)		—		—		—		—		(603.6)		—		(603.6)
Dividends Declared:
Common Stock, $0.70 per share		—		—		—		(148.0)		—		—		(148.0)
Preferred Stock		—		—		—		(4.7)		—		—		(4.7)
Stock Awards and Options Exercised		—		—		19.4		—		—		0.9		20.3
Stock Purchased		—		—		—		—		—		(0.3)		(0.3)
Balance at June 30, 2022		$	884.9	$	408.6	$	951.1	$	13,586.1	$	(1,510.6)	$	(3,250.4)	$	11,069.7
Balance at December 31, 2022
Net Income	Net Income	—		—		—		394.8		—		—		394.8
Other Comprehensive Income (Loss) (Net of Tax and Reclassifications)	Other Comprehensive Income (Loss) (Net of Tax and Reclassifications)	—		—		—		—		(274.4)		—		(274.4)
Dividends Declared:	Dividends Declared:	—		—		—		—		—		—
Common Stock, $0.75 per share	Common Stock, $0.75 per share	—		—		—		(158.4)		—		—		(158.4)
Common Stock, $0.75 per share
Common Stock, $0.75 per share
Preferred Stock	Preferred Stock	—		—		—		(16.2)		—		—		(16.2)
Stock Awards and Options Exercised	Stock Awards and Options Exercised	—		—		12.5		—		—		3.6		16.1
Stock Purchased	Stock Purchased	—		—				—		—		(1.2)		(1.2)
Balance at September 30, 2022		$	884.9	$	408.6	$	963.6	$	13,806.3	$	(1,785.0)	$	(3,248.0)	$	11,030.4
Balance at March 31, 2023

See accompanying notes to the consolidated financial statements.

3830


CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)			NORTHERN TRUST CORPORATION


		NINE MONTHS ENDED SEPTEMBER 30,
	THREE MONTHS ENDED MARCH 31,								THREE MONTHS ENDED MARCH 31,
(In Millions)	(In Millions)	2023		2022		(In Millions)	2024	2023
CASH FLOWS FROM OPERATING ACTIVITIES	CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	Net Income	$	994.2	$	1,180.3
Net Income
Net Income
Adjustments to Reconcile Net Income to Net Cash Used in Operating Activities	Adjustments to Reconcile Net Income to Net Cash Used in Operating Activities
Investment Security Gains		(6.9)		0.3
Investment Security Losses/(Gains)
Investment Security Losses/(Gains)
Investment Security Losses/(Gains)
Amortization and Accretion of Securities and Unearned Income, net	Amortization and Accretion of Securities and Unearned Income, net	5.8		51.5
Provision for Credit Losses	Provision for Credit Losses	13.5		7.0
Depreciation and Amortization	Depreciation and Amortization	465.6		405.4
Pension Plan Contributions	Pension Plan Contributions	(16.5)		(20.7)
Change in Receivables	Change in Receivables	(200.3)		(107.8)
Change in Interest Payable	Change in Interest Payable	88.8		92.6
Change in Collateral With Derivative Counterparties, net	Change in Collateral With Derivative Counterparties, net	(1,857.5)		(3,089.5)
Other Operating Activities, net	Other Operating Activities, net	335.7		(278.7)
Net Cash Used in Operating Activities	Net Cash Used in Operating Activities	(177.6)		(1,759.6)
CASH FLOWS FROM INVESTING ACTIVITIES	CASH FLOWS FROM INVESTING ACTIVITIES
Change in Federal Funds Sold		(32.0)		(30.1)

Change in Securities Purchased under Agreements to Resell

Change in Securities Purchased under Agreements to Resell

Change in Securities Purchased under Agreements to Resell	Change in Securities Purchased under Agreements to Resell	717.5		(550.6)
Change in Interest-Bearing Deposits with Banks	Change in Interest-Bearing Deposits with Banks	(203.0)		193.7
Net Change in Federal Reserve and Other Central Bank Deposits	Net Change in Federal Reserve and Other Central Bank Deposits	7,760.3		22,777.0
Purchases of Held to Maturity Debt Securities	Purchases of Held to Maturity Debt Securities	(25,821.1)		(27,309.4)
Proceeds from the Maturity and Redemption of Held to Maturity Debt Securities	Proceeds from the Maturity and Redemption of Held to Maturity Debt Securities	25,872.9		31,071.5
Purchases of Available for Sale Debt Securities	Purchases of Available for Sale Debt Securities	(4,412.0)		(3,777.9)
Proceeds from the Maturity and Sales of Available for Sale Debt Securities	Proceeds from the Maturity and Sales of Available for Sale Debt Securities	6,912.5		5,524.9
Change in Loans	Change in Loans	(681.6)		(3,607.7)
Purchases of Buildings and Equipment	Purchases of Buildings and Equipment	(52.7)		(70.7)
Purchases and Development of Computer Software	Purchases and Development of Computer Software	(412.8)		(425.2)
Change in Client Security Settlement Receivables	Change in Client Security Settlement Receivables	1,555.0		(1,170.3)
Bank-Owned Life Insurance Policy Premiums		—		(500.0)

Other Investing Activities, net	Other Investing Activities, net	(1,555.9)		(351.7)
Net Cash Provided by Investing Activities		9,647.1		21,773.5
Other Investing Activities, net
Other Investing Activities, net
Net Cash (Used in) / Provided by Investing Activities
CASH FLOWS FROM FINANCING ACTIVITIES	CASH FLOWS FROM FINANCING ACTIVITIES
Change in Deposits
Change in Deposits
Change in Deposits	Change in Deposits	(13,089.4)		(26,117.2)
Change in Federal Funds Purchased	Change in Federal Funds Purchased	3,642.4		4,364.6
Change in Securities Sold under Agreements to Repurchase	Change in Securities Sold under Agreements to Repurchase	(21.3)		29.4
Change in Short-Term Other Borrowings	Change in Short-Term Other Borrowings	(717.4)		3,565.8
Proceeds from Long Term Debt		2,000.0		—
Proceeds from Senior Notes		—		995.4
Repayments of Senior Notes		—		(500.0)

Treasury Stock Purchased

Treasury Stock Purchased

Treasury Stock Purchased	Treasury Stock Purchased	(201.3)		(35.3)
Net Proceeds from Stock Options	Net Proceeds from Stock Options	1.9		3.4
Cash Dividends Paid on Common Stock	Cash Dividends Paid on Common Stock	(467.3)		(437.5)
Cash Dividends Paid on Preferred Stock	Cash Dividends Paid on Preferred Stock	(37.1)		(25.6)
Other Financing Activities, net	Other Financing Activities, net	(1.2)		0.2
Net Cash Used in Financing Activities		(8,890.7)		(18,156.8)
Net Cash Provided by / (Used in) Financing Activities
Effect of Foreign Currency Exchange Rates on Cash	Effect of Foreign Currency Exchange Rates on Cash	(277.3)		(421.1)
Change in Cash and Due from Banks	Change in Cash and Due from Banks	301.5		1,436.0
Cash and Due from Banks at Beginning of Period	Cash and Due from Banks at Beginning of Period	4,654.2		3,056.8
Cash and Due from Banks at End of Period	Cash and Due from Banks at End of Period	$	4,955.7	$	4,492.8
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION	SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest Paid	Interest Paid	$	3,536.9	$	263.4
Interest Paid
Interest Paid
Income Taxes Paid	Income Taxes Paid	211.1		295.3
Transfers from Loans to OREO		0.2		—
Transfers from Available for Sale Debt Securities to Held to Maturity Debt Securities		—		6,623.3
Reclassification of certain cash collateral received from Other Operating Activities to Deposits (1)

(1) Beginning January 1, 2024, Northern Trust reclassified certain cash collateral received from Other Liabilities to Deposits on the consolidated statement of financial condition. Prior periods have not been restated.

See accompanying notes to the consolidated financial statements.

3931

Notes to Consolidated Financial Statements (unaudited)

Note 1 – Basis of Presentation

The consolidated financial statements include the accounts of Northern Trust Corporation (Corporation) and its wholly-owned subsidiary, The Northern Trust Company (Bank), and various other wholly-owned subsidiaries of the Corporation and Bank. Throughout the notes to the consolidated financial statements, the term “Northern Trust” refers to the Corporation and its subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. The consolidated financial statements, as of and for the periods ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ have not been audited by the Corporation’s independent registered public accounting firm. In the opinion of management, all accounting entries and adjustments, including normal recurring accruals, necessary for a fair presentation of the financial position and the results of operations for the interim periods have been made. The accounting and financial reporting policies of Northern Trust conform to U.S. generally accepted accounting principles (GAAP) and reporting practices prescribed for the banking industry. For a description of Northern Trust’s significant accounting policies, refer to Note 1—Summary of Significant Accounting Policies included under Item 8. Financial Statements and Supplementary Data in the Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

Note 2 – Recent Accounting Pronouncements

On January 1, ~~2023,~~2024, Northern Trust adopted Accounting Standards Update (ASU) No. ~~2022-01, “Derivatives~~2023-02, “Investments—Equity Method and ~~Hedging~~Joint Ventures (Topic ~~815)~~323): ~~Fair Value Hedging—Portfolio Layer Method”~~Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method—a consensus of the Emerging Issues Task Force” (ASU ~~2022-01)~~2023-02). The amendments in ASU ~~2022-01 expand~~2023-02 allow entities to elect the ~~current last-of-layer hedging model from a single-layer~~proportional amortization method to ~~allow multiple hedged layers~~account for tax equity investments if certain conditions are met regardless of the tax credit program from which the income tax credits are received. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the income tax credits and other income tax benefits received and recognizes the net amortization and income tax credits and other income tax benefits in the income statement as a ~~single closed portfolio. To reflect that expansion, the last-of-layer method is renamed the portfolio layer method.~~component of income tax expense (benefit). In addition, ASU ~~2022-01 (1) expands~~2023-02 requires specific disclosures that must be applied to all investments that generate income tax credits and other income tax benefits for which the ~~scope of~~entity has elected to apply the ~~portfolio layer~~proportional amortization method ~~to include non-prepayable assets, (2) specifies eligible hedging instruments~~ in a single-layer hedge, (3) provides additional guidance on the accounting for and disclosure of hedge basis adjustments under the portfolio layer method, and (4) specifies how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio.accordance with Subtopic 323-740. Upon adoption of ASU ~~2022-01, there was no impact to Northern Trust’s consolidated balance sheets or consolidated statements of income.~~

On January 1, 2023, Northern Trust adopted ASU No. 2022-02, “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures” (ASU 2022-02). The amendments in ASU 2022-02 eliminate the accounting guidance for troubled debt restructurings (TDRs) for creditors that have adopted the current expected credit losses accounting standard while enhancing disclosure requirements for certain loan refinancings and restructurings made to borrowers experiencing financial difficulty. In addition, ASU 2022-02 requires that a public business entity disclose current-period gross charge-offs by year of origination for financing receivables and net investment in leases. Upon adoption of ASU 2022-02,2023-02, there was no significant impact to Northern Trust’s consolidated balance sheets or consolidated statements of income. Please refer to Note ~~5—Loans~~19—Variable Interest Entities for further information.

On January 1, ~~2023,~~2024, Northern Trust adopted ASU No. ~~2022-04, “Liabilities—Supplier Finance Programs~~2022-03, “Fair Value Measurement (Topic ~~405-50)~~820): ~~Disclosure~~Fair Value Measurement of ~~Supplier Finance Program Obligations”~~Equity Securities Subject to Contractual Sale Restrictions” (ASU ~~2022-04)~~2022-03). The amendments in ASU ~~2022-04 enhance the transparency about the use of supplier finance programs for investors or other allocators of capital. Specifically, ASU 2022-04 requires~~2022-03 clarify that a ~~buyer~~contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. ASU 2022-03 also clarifies that an entity cannot, as a ~~supplier finance program disclose sufficient qualitative~~separate unit of account, recognize and ~~quantitative~~measure a contractual sale restriction. Additionally, ASU 2022-03 introduces new disclosure requirements to provide investors with information about contractual sale restrictions including the ~~program to allow a user~~nature and remaining duration of ~~financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude.~~these restrictions. Upon adoption of ASU ~~2022-04,~~2022-03, there was no impact to Northern Trust’s consolidated balance sheets or consolidated statements of income.

4032

Notes to Consolidated Financial Statements (unaudited) (continued)

Note 3 – Fair Value Measurements

Fair Value Hierarchy. The following describes the hierarchy of valuation inputs (Levels 1, 2, and 3) used to measure fair value and the primary valuation methodologies used by Northern Trust for financial instruments measured at fair value on a recurring basis. Observable inputs reflect market data obtained from sources independent of the reporting entity; unobservable inputs reflect the entity’s own assumptions about how market participants would value an asset or liability based on the best information available. GAAP requires an entity measuring fair value to maximize the use of observable inputs and minimize the use of unobservable inputs and establishes a fair value hierarchy of inputs. Financial instruments are categorized within the hierarchy based on the lowest level input that is significant to their valuation. No transfers into or out of Level 3 occurred during the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 or the year ended December 31, ~~2022.~~2023.

Level 1 — Quoted, active market prices for identical assets or liabilities.

Northern Trust’s Level 1 assets are comprised primarily of available for sale (AFS) investments in U.S. Treasury securities.

Level 2 — Observable inputs other than Level 1 prices, such as quoted active market prices for similar assets or liabilities, quoted prices for identical or similar assets in inactive markets, and model-derived valuations in which all significant inputs are observable in active markets.

Northern Trust’s Level 2 assets include AFS and certain trading account debt securities, the fair values of which are determined predominantly by external pricing vendors. Prices received from vendors are compared to other vendor and third-party prices. If a security price obtained from a pricing vendor is determined to exceed predetermined tolerance levels that are assigned based on an asset type’s characteristics, the exception is researched and, if the price is not able to be validated, an alternate pricing vendor is utilized, consistent with Northern Trust’s pricing source hierarchy. As of ~~September 30, 2023,~~March 31, 2024, Northern Trust’s AFS debt securities portfolio included ~~1,009~~910 Level 2 debt securities with an aggregate market value of ~~$21.5~~$19.5 billion. Substantially all were valued by external pricing vendors. As of December 31, ~~2022,~~2023, Northern Trust’s AFS debt securities portfolio included ~~1,163~~929 Level 2 debt securities with an aggregate market value of ~~$24.0~~$19.5 billion. All ~~1,163~~929 debt securities were valued by external pricing vendors.

Level 2 assets and liabilities also include derivative contracts which are valued internally using widely accepted income-based models that incorporate inputs readily observable in actively quoted markets and reflect the contractual terms of the contracts. Observable inputs include foreign exchange rates and interest rates for foreign exchange contracts; interest rates for interest rate swap contracts and forward contracts; and interest rates and volatility inputs for interest rate option contracts. Northern Trust evaluates the impact of counterparty credit risk and its own credit risk on the valuation of its derivative instruments. Factors considered include the likelihood of default by Northern Trust and its counterparties, the remaining maturities of the instruments, net exposures after giving effect to master netting arrangements or similar agreements, available collateral, and other credit enhancements in determining the appropriate fair value of derivative instruments. The resulting valuation adjustments have not been considered material.

Level 3 — Valuation techniques in which one or more significant inputs are unobservable in the marketplace.

Northern Trust’s Level 3 liabilities consist of swaps that Northern Trust entered into with the purchaser of 1.1 million and 1.0 million shares of Visa Inc. Class B common stock (Visa Class B common shares) previously held by Northern Trust and sold in June 2016 and 2015, respectively. Pursuant to the swaps, Northern Trust retains the risks associated with the ultimate conversion of the Visa Class B common shares into shares of Visa Inc. Class A common stock (Visa Class A common shares), such that the counterparty will be compensated for any dilutive adjustments to the conversion ratio and Northern Trust will be compensated for any anti-dilutive adjustments to the ratio. The swaps also require periodic payments from Northern Trust to the counterparty calculated by reference to the market price of Visa Class A common shares and a fixed rate of interest. The fair value of the swaps is determined using a discounted cash flow methodology. The significant unobservable inputs used in the fair value measurement are Northern Trust’s own assumptions about estimated changes in the conversion rate of the Visa Class B common shares into Visa Class A common shares, the date on which such conversion is expected to occur and the estimated growth rate of the Visa Class A common share price. See “Visa Class B Common Shares” under Note 20—Commitments and Contingent Liabilities for further information.

Northern Trust believes its valuation methods for its assets and liabilities carried at fair value are appropriate; however, the use of different methodologies or assumptions, particularly as applied to Level 3 assets and liabilities, could have a material effect on the computation of their estimated fair values.

The following table presents the fair values of Northern Trust’s Level 3 liabilities as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, as well as the valuation techniques, significant unobservable inputs, and quantitative information used to develop significant unobservable inputs for such liabilities as of such dates.

4133

Notes to Consolidated Financial Statements (unaudited) (continued)

TABLE ~~35:~~30: LEVEL 3 SIGNIFICANT UNOBSERVABLE INPUTS

SEPTEMBER 30, 2023

MARCH 31, 2024

FINANCIAL INSTRUMENT

FAIR VALUE

VALUATION TECHNIQUE

UNOBSERVABLE INPUTS

INPUT VALUES

WEIGHTED-AVERAGE INPUT VALUES(1)

FAIR VALUE

VALUATION TECHNIQUE

UNOBSERVABLE INPUTS

INPUT VALUES

WEIGHTED-AVERAGE INPUT VALUES(1)

Swaps Related to Sale of Certain Visa Class B Common Shares

td8.9 million

Discounted Cash Flow

Conversion Rate

1.59x

Swaps Related to Sale of Certain Visa Class B Common Shares

td1.0 million

Discounted Cash Flow

Conversion Rate

1.59x

Visa Class A Appreciation

10.15%

Visa Class A Appreciation

9.22%

Expected Duration

30 months

16 months

Expected Duration

24 months

10 months

(1) Weighted average of expected duration based on scenario probability.

DECEMBER 31, 2022

DECEMBER 31, 2023

FINANCIAL INSTRUMENT

FAIR VALUE

VALUATION TECHNIQUE

UNOBSERVABLE INPUTS

INPUT VALUES

WEIGHTED-AVERAGE INPUT VALUES(1)

FAIR VALUE

VALUATION TECHNIQUE

UNOBSERVABLE INPUTS

INPUT VALUES

WEIGHTED-AVERAGE INPUT VALUES(1)

Swaps Related to Sale of Certain Visa Class B Common Shares

$34.8 million

Discounted Cash Flow

Conversion Rate

1.60x

Swaps Related to Sale of Certain Visa Class B Common Shares

td5.4 million

Discounted Cash Flow

Conversion Rate

1.59x

Visa Class A Appreciation

8.53%

Visa Class A Appreciation

10.49%

Expected Duration

33 months

20 months

Expected Duration

27 months

13 months

(1) Weighted average of expected duration based on scenario probability.

The following table presents assets and liabilities measured at fair value on a recurring basis as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, segregated by fair value hierarchy level.

TABLE ~~36:~~31: RECURRING BASIS HIERARCHY LEVELING


		SEPTEMBER 30, 2023
	MARCH 31, 2024																	MARCH 31, 2024
(In Millions)	(In Millions)	LEVEL 1		LEVEL 2		LEVEL 3		NETTING		ASSETS/LIABILITIES AT FAIR VALUE		(In Millions)	LEVEL 1	LEVEL 2	LEVEL 3	NETTING	ASSETS/LIABILITIES AT FAIR VALUE
Debt Securities	Debt Securities
Available for Sale	Available for Sale
Available for Sale
Available for Sale
U.S. Government
U.S. Government
U.S. Government	U.S. Government	$	2,879.4	$	—	$	—	$	—	$	2,879.4
Obligations of States and Political Subdivisions	Obligations of States and Political Subdivisions	—		282.1		—		—		282.1
Government Sponsored Agency	Government Sponsored Agency	—		11,656.8		—		—		11,656.8
Non-U.S. Government	Non-U.S. Government	—		246.9		—		—		246.9
Corporate Debt	Corporate Debt	—		380.9		—		—		380.9
Covered Bonds	Covered Bonds	—		280.4		—		—		280.4
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	—		2,959.8		—		—		2,959.8
Other Asset-Backed	Other Asset-Backed	—		4,771.5		—		—		4,771.5
Commercial Mortgage-Backed	Commercial Mortgage-Backed	—		884.3		—		—		884.3
Total Available for Sale		2,879.4		21,462.7		—		—		24,342.1
Trading Account		—		0.1		—		—		0.1
Total Available for Sale and Trading Debt Securities		2,879.4		21,462.8		—		—		24,342.2

Total Available for Sale Debt Securities

Total Available for Sale Debt Securities

Total Available for Sale Debt Securities
Other Assets	Other Assets
Money Market Investment
Money Market Investment
Money Market Investment	Money Market Investment	95.0		—		—		—		95.0
Derivative Assets	Derivative Assets
Foreign Exchange Contracts	Foreign Exchange Contracts	—		3,049.1		—		(1,266.6)		1,782.5
Foreign Exchange Contracts
Foreign Exchange Contracts
Interest Rate Contracts	Interest Rate Contracts	—		363.9		—		(286.5)		77.4
Other Financial Derivatives		—		—		—		—		—

Total Derivative Assets
Total Derivative Assets
Total Derivative Assets	Total Derivative Assets	—		3,413.0		—		(1,553.1)		1,859.9
Other Liabilities	Other Liabilities
Derivative Liabilities	Derivative Liabilities
Derivative Liabilities
Derivative Liabilities
Foreign Exchange Contracts
Foreign Exchange Contracts
Foreign Exchange Contracts	Foreign Exchange Contracts	—		2,820.2		—		(2,380.6)		439.6
Interest Rate Contracts	Interest Rate Contracts	—		467.3		—		(2.1)		465.2
Other Financial Derivatives(1)	Other Financial Derivatives(1)	—		—		28.9		(27.2)		1.7
Total Derivative Liabilities	Total Derivative Liabilities	$	—	$	3,287.5	$	28.9	$	(2,409.9)	$	906.5

Note: Northern Trust has elected to net derivative assets and liabilities when legally enforceable master netting arrangements or similar agreements exist between Northern Trust and the counterparty. As of ~~September 30, 2023,~~March 31, 2024, derivative assets and liabilities shown above also include reductions of ~~$287.0~~$181.0 million and ~~$1.1 billion,~~$336.9 million, respectively, as a result of cash collateral received from and deposited with derivative counterparties.

~~(1)This line consists of swaps related to the sale of certain Visa Class B common shares.~~

4234

Notes to Consolidated Financial Statements (unaudited) (continued)


		DECEMBER 31, 2022
	DECEMBER 31, 2023
(In Millions)
(In Millions)
(In Millions)	(In Millions)	LEVEL 1		LEVEL 2		LEVEL 3		NETTING		ASSETS/LIABILITIES AT FAIR VALUE
Debt Securities	Debt Securities
Debt Securities
Debt Securities
Available for Sale
Available for Sale
Available for Sale	Available for Sale
U.S. Government	U.S. Government	$	2,747.4	$	—	$	—	$	—	$	2,747.4
U.S. Government
U.S. Government
Obligations of States and Political Subdivisions
Obligations of States and Political Subdivisions
Obligations of States and Political Subdivisions	Obligations of States and Political Subdivisions	—		787.6		—		—		787.6
Government Sponsored Agency	Government Sponsored Agency	—		11,545.2		—		—		11,545.2
Government Sponsored Agency
Government Sponsored Agency
Non-U.S. Government
Non-U.S. Government
Non-U.S. Government	Non-U.S. Government	—		360.0		—		—		360.0
Corporate Debt	Corporate Debt	—		1,747.6		—		—		1,747.6
Corporate Debt
Corporate Debt
Covered Bonds
Covered Bonds
Covered Bonds	Covered Bonds	—		388.7		—		—		388.7
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	—		2,479.4		—		—		2,479.4
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds
Other Asset-Backed
Other Asset-Backed
Other Asset-Backed	Other Asset-Backed	—		5,256.2		—		—		5,256.2
Commercial Mortgage-Backed	Commercial Mortgage-Backed	—		1,387.8		—		—		1,387.8
Commercial Mortgage-Backed
Commercial Mortgage-Backed
Total Available for Sale
Total Available for Sale
Total Available for Sale	Total Available for Sale	2,747.4		23,952.5		—		—		26,699.9
Trading Account	Trading Account	95.0		0.2		—		—		95.2
Total Available for Sale and Trading Debt Securities		2,842.4		23,952.7		—		—		26,795.1
Trading Account
Trading Account
Total Available for Sale Debt Securities
Total Available for Sale Debt Securities
Total Available for Sale Debt Securities
Other Assets	Other Assets
Other Assets
Other Assets
Money Market Investment
Money Market Investment
Money Market Investment
Derivative Assets
Derivative Assets
Derivative Assets	Derivative Assets
Foreign Exchange Contracts	Foreign Exchange Contracts	—		3,510.1		—		(2,666.4)		843.7
Foreign Exchange Contracts
Foreign Exchange Contracts
Interest Rate Contracts
Interest Rate Contracts
Interest Rate Contracts

Total Derivative Assets

Total Derivative Assets

Total Derivative Assets
Other Liabilities
Other Liabilities
Other Liabilities
Derivative Liabilities
Derivative Liabilities
Derivative Liabilities
Foreign Exchange Contracts
Foreign Exchange Contracts
Foreign Exchange Contracts
Interest Rate Contracts
Interest Rate Contracts
Interest Rate Contracts	Interest Rate Contracts	—		222.0		—		(144.3)		77.7
Other Financial Derivatives(1)	Other Financial Derivatives(1)	—		0.3		—		—		0.3
Total Derivative Assets		—		3,732.4		—		(2,810.7)		921.7
Other Liabilities
Derivative Liabilities
Foreign Exchange Contracts		—		3,187.5		—		(1,826.7)		1,360.8
Interest Rate Contracts		—		431.8		—		(5.9)		425.9
Other Financial Derivatives(2)		—		—		34.8		(33.3)		1.5
Other Financial Derivatives(1)
Other Financial Derivatives(1)
Total Derivative Liabilities	Total Derivative Liabilities	$	—	$	3,619.3	$	34.8	$	(1,865.9)	$	1,788.2
Total Derivative Liabilities
Total Derivative Liabilities

Note: Northern Trust has elected to net derivative assets and liabilities when legally enforceable master netting arrangements or similar agreements exist between Northern Trust and the counterparty. As of December 31, ~~2022,~~2023, derivative assets and liabilities shown above also include reductions of ~~$1.1 billion~~$2,093.8 million and ~~$195.3~~$1,172.5 million, respectively, as a result of cash collateral received from and deposited with derivative counterparties.

(1) ~~This line consists of total return swap contracts.~~

~~(2)~~ ~~This line consists~~Consists of swaps related to the sale of certain Visa Class B common shares.

The following table presents the changes in Level 3 liabilities for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023.

TABLE ~~37:~~32: CHANGES IN LEVEL 3 LIABILITIES


(In Millions)	(In Millions)	SWAPS RELATED TO SALE OF CERTAIN VISA CLASS B COMMON SHARES				(In Millions)	SWAPS RELATED TO SALE OF CERTAIN VISA CLASS B COMMON SHARES
THREE MONTHS ENDED SEPTEMBER 30,		2023		2022
Fair Value at July 1		$	36.4	$	31.1
THREE MONTHS ENDED MARCH 31,						THREE MONTHS ENDED MARCH 31,	2024	2023
Fair Value at January 1
Total (Gains) Losses:	Total (Gains) Losses:
Included in Earnings(1)
Included in Earnings(1)
Included in Earnings(1)	Included in Earnings(1)	(2.4)		1.1
Purchases, Issues, Sales, and Settlements	Purchases, Issues, Sales, and Settlements
Settlements	Settlements	(5.1)		(4.6)
Fair Value at September 30		$	28.9	$	27.6
Settlements
Settlements
Fair Value at March 31

(1) (Gains) losses are recorded in Other Operating Income on the consolidated statements of income.
NINE MONTHS ENDED SEPTEMBER 30, 2023 2022
Fair Value at January 1 $ 34.8 $ 37.5
Total (Gains) Losses:
Included in Earnings(1)
16.1 11.2
Purchases, Issues, Sales, and Settlements
Settlements (22.0) (21.1)
Fair Value at September 30 $ 28.9 $ 27.6

~~(1)~~ ~~(Gains) losses are recorded in Other Operating Income on the consolidated statements of income.~~

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

Carrying values of assets and liabilities that are not measured at fair value on a recurring basis may be adjusted to fair value in periods subsequent to their initial recognition, for example, to record an impairment of an asset. GAAP requires entities to separately disclose these subsequent fair value measurements and to classify them under the fair value hierarchy.

Assets measured at fair value on a nonrecurring basis at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, all of which were categorized as Level 3 under the fair value hierarchy, were comprised of nonaccrual loans whose values were based on real estate and other available collateral, and of other real estate owned (OREO) properties.

Fair values of real estate loan collateral were estimated using a market approach typically supported by third-party valuations and property-specific fees and taxes. The fair values of real estate loan collateral ~~were~~are subject to adjustments to reflect management’s judgment as to realizable value. The fair value ~~and consisted~~ of collateral-dependent nonaccrual loans totaled $0.1 million at

Notes to Consolidated Financial Statements (unaudited) (continued)

March 31, 2024. Due to immateriality, management did not apply a discount factor to the balance as of ~~20.0% with a weighted average based on~~March 31, 2024. Collateral-dependent nonaccrual loans that have been adjusted to fair ~~values~~value totaled $43.3 million at December 31, 2023. Management adjustments consisted of ~~20.0%, and~~ a range of discount factors from ~~15.0%~~0.0% to 20.0% with a weighted average of ~~17.2%,~~2.0% as of ~~September 30, 2023 and~~ December 31, ~~2022, respectively.~~2023. Other loan collateral, which typically consists of accounts receivable, inventory and equipment, is valued using a market approach adjusted for asset-specific characteristics and in limited instances third-party valuations are used. OREO assets are carried at the lower of cost or fair value less estimated costs to sell, with fair value typically based on third-party appraisals.

~~Collateral-dependent nonaccrual loans that have been adjusted to fair value totaled $3.8 million and $6.6 million at September 30, 2023 and December 31, 2022, respectively.~~

The following table presents the fair values of Northern Trust’s Level 3 assets that were measured at fair value on a nonrecurring basis as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, as well as the valuation technique, significant unobservable inputs and quantitative information used to develop the significant unobservable inputs for such assets as of such dates.

TABLE ~~38:~~33: LEVEL 3 NONRECURRING BASIS SIGNIFICANT UNOBSERVABLE INPUTS

SEPTEMBER 30, 2023
FINANCIAL INSTRUMENT
FAIR VALUE(1)
VALUATION TECHNIQUE UNOBSERVABLE INPUTS INPUT VALUES WEIGHTED-AVERAGE INPUT VALUES
Loans $3.8 million Market Approach
Discount factor applied to real estate collateral-dependent loans to reflect realizable value
20.0% 20.0%

MARCH 31, 2024

FINANCIAL INSTRUMENT

FAIR VALUE(1)

VALUATION TECHNIQUE

UNOBSERVABLE INPUTS

INPUT VALUES

WEIGHTED-AVERAGE INPUT VALUES

Loans

$0.1 million

Market Approach

Discount factor applied to real estate collateral-dependentloans to reflect realizable value

N/A

(1) Includes real estate collateral-dependent loans and other collateral-dependent loans.

DECEMBER 31, 2022

DECEMBER 31, 2023

FINANCIAL INSTRUMENT

FAIR VALUE(1)

VALUATION TECHNIQUE

UNOBSERVABLE INPUTS

INPUT VALUES

WEIGHTED-AVERAGE INPUT VALUES

FAIR VALUE(1)

VALUATION TECHNIQUE

UNOBSERVABLE INPUTS

INPUT VALUES

WEIGHTED-AVERAGE INPUT VALUES

Loans

$6.6 million

Market Approach

Discount factor applied to real estate collateral-dependent loans to reflect realizable value

15.0

20.0%

17.2%

Loans

$43.3 million

Market Approach

Discount factor applied to real estate collateral-dependent loans to reflect realizable value

0.0

20.0%

2.0%

(1) Includes real estate collateral-dependent loans and other collateral-dependent loans.

4436

Notes to Consolidated Financial Statements (unaudited) (continued)

The following tables present the book value and estimated fair value, including the fair value hierarchy level, of Northern Trust’s financial instruments that are not measured at fair value on the consolidated balance sheets as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023. The following tables exclude those items measured at fair value on a recurring basis.

TABLE ~~39:~~34: FAIR VALUE OF FINANCIAL INSTRUMENTS


		SEPTEMBER 30, 2023
	MARCH 31, 2024																		MARCH 31, 2024
						ESTIMATED FAIR VALUE										ESTIMATED FAIR VALUE
(In Millions)	(In Millions)	BOOK VALUE		TOTAL ESTIMATED FAIR VALUE		LEVEL 1		LEVEL 2		LEVEL 3		(In Millions)	BOOK VALUE	TOTAL ESTIMATED FAIR VALUE	LEVEL 1		LEVEL 2	LEVEL 3
FINANCIAL ASSETS	FINANCIAL ASSETS
Cash and Due from Banks
Cash and Due from Banks
Cash and Due from Banks	Cash and Due from Banks	$	4,955.7	$	4,955.7	$	4,955.7	$	—	$	—
Federal Reserve and Other Central Bank Deposits	Federal Reserve and Other Central Bank Deposits	32,316.8		32,316.8		—		32,316.8		—
Interest-Bearing Deposits with Banks	Interest-Bearing Deposits with Banks	2,122.5		2,122.5		—		2,122.5		—

Securities Purchased under Agreements to Resell	Securities Purchased under Agreements to Resell	384.3		384.3		—		384.3		—
Securities Purchased under Agreements to Resell
Securities Purchased under Agreements to Resell
Debt Securities - Held to Maturity	Debt Securities - Held to Maturity	24,920.4		22,449.7		—		22,449.7		—
Loans	Loans
Held for Investment	Held for Investment	43,410.2		43,384.4		—		—		43,384.4
Held for Investment
Held for Investment

Other Assets
Other Assets
Other Assets	Other Assets	1,502.1		1,485.4		89.4		1,396.0		—
FINANCIAL LIABILITIES	FINANCIAL LIABILITIES
Deposits	Deposits
Demand, Noninterest-Bearing, Savings, Money Market and Other Interest-Bearing		$	45,300.4	$	45,300.4	$	45,300.4	$	—	$	—
Savings Certificates and Other Time		4,038.6		4,070.4		—		4,070.4		—
Non U.S. Offices Interest-Bearing		60,826.9		60,826.9		—		60,826.9		—
Deposits
Deposits
Federal Funds Purchased	Federal Funds Purchased	5,539.3		5,539.3		—		5,539.3		—
Securities Sold Under Agreements to Repurchase	Securities Sold Under Agreements to Repurchase	545.9		545.9		—		545.9		—
Other Borrowings	Other Borrowings	6,870.9		6,888.1		—		6,888.1		—
Senior Notes	Senior Notes	2,688.9		2,646.6		—		2,646.6		—
Long-Term Debt	Long-Term Debt	4,060.7		4,026.1		—		4,026.1		—
Unfunded Commitments	Unfunded Commitments	205.5		205.5		—		205.5		—
Other Liabilities	Other Liabilities	89.5		89.5		—		—		89.5


		DECEMBER 31, 2023
		DECEMBER 31, 2023
		DECEMBER 31, 2023

		DECEMBER 31, 2022
						ESTIMATED FAIR VALUE
(In Millions)	(In Millions)	BOOK VALUE		TOTAL ESTIMATED FAIR VALUE		LEVEL 1		LEVEL 2		LEVEL 3
(In Millions)
(In Millions)
FINANCIAL ASSETS
FINANCIAL ASSETS
FINANCIAL ASSETS	FINANCIAL ASSETS
Cash and Due from Banks	Cash and Due from Banks	$	4,654.2	$	4,654.2	$	4,654.2	$	—	$	—
Cash and Due from Banks
Cash and Due from Banks
Federal Reserve and Other Central Bank Deposits
Federal Reserve and Other Central Bank Deposits
Federal Reserve and Other Central Bank Deposits	Federal Reserve and Other Central Bank Deposits	40,030.4		40,030.4		—		40,030.4		—
Interest-Bearing Deposits with Banks	Interest-Bearing Deposits with Banks	1,941.1		1,941.1		—		1,941.1		—
Federal Funds Sold		32.0		32.0		—		32.0		—
Interest-Bearing Deposits with Banks
Interest-Bearing Deposits with Banks

Securities Purchased under Agreements to Resell

Securities Purchased under Agreements to Resell

Securities Purchased under Agreements to Resell	Securities Purchased under Agreements to Resell	1,070.3		1,070.3		—		1,070.3		—
Debt Securities - Held to Maturity	Debt Securities - Held to Maturity	25,036.1		22,879.3		50.0		22,829.3		—
Debt Securities - Held to Maturity
Debt Securities - Held to Maturity
Loans
Loans
Loans	Loans
Held for Investment	Held for Investment	42,749.0		42,636.5		—		—		42,636.5
Held for Investment
Held for Investment
Other Assets
Other Assets
Other Assets	Other Assets	1,476.9		1,460.4		94.7		1,365.7		—
FINANCIAL LIABILITIES	FINANCIAL LIABILITIES
FINANCIAL LIABILITIES
FINANCIAL LIABILITIES
Deposits	Deposits
Demand, Noninterest-Bearing, Savings, Money Market and Other Interest-Bearing		$	56,468.9	$	56,468.9	$	56,468.9	$	—	$	—
Savings Certificates and Other Time		1,981.3		1,976.1		—		1,976.1		—
Non U.S. Offices Interest-Bearing		65,481.9		65,481.9		—		65,481.9		—
Deposits
Deposits
Federal Funds Purchased
Federal Funds Purchased
Federal Funds Purchased	Federal Funds Purchased	1,896.9		1,896.9		—		1,896.9		—
Securities Sold Under Agreements to Repurchase	Securities Sold Under Agreements to Repurchase	567.2		567.2		—		567.2		—
Securities Sold Under Agreements to Repurchase
Securities Sold Under Agreements to Repurchase
Other Borrowings
Other Borrowings
Other Borrowings	Other Borrowings	7,592.3		7,592.8		—		7,592.8		—
Senior Notes	Senior Notes	2,724.2		2,729.8		—		2,729.8		—
Senior Notes
Senior Notes
Long-Term Debt
Long-Term Debt
Long-Term Debt	Long-Term Debt	2,066.2		2,110.7		—		2,110.7		—
Unfunded Commitments	Unfunded Commitments	218.9		218.9		—		218.9		—
Unfunded Commitments
Unfunded Commitments
Other Liabilities	Other Liabilities	73.2		73.2		—		—		73.2
Other Liabilities
Other Liabilities

4537

Notes to Consolidated Financial Statements (unaudited) (continued)

Note 4 – Securities

Available for Sale Debt Securities. The following tables provide the amortized cost and fair values as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, and remaining maturities of AFS debt securities as of ~~September 30, 2023.~~March 31, 2024.

TABLE ~~40:~~35: RECONCILIATION OF AMORTIZED COST TO FAIR VALUE OF AVAILABLE FOR SALE DEBT SECURITIES


		SEPTEMBER 30, 2023
	MARCH 31, 2024														MARCH 31, 2024
(In Millions)	(In Millions)	AMORTIZED COST		GROSS UNREALIZED GAINS		GROSS UNREALIZED LOSSES		FAIR VALUE		(In Millions)	AMORTIZED COST	GROSS UNREALIZED GAINS	GROSS UNREALIZED LOSSES	FAIR VALUE
U.S. Government	U.S. Government	$	2,981.2	$	—	$	101.8	$	2,879.4
Obligations of States and Political Subdivisions	Obligations of States and Political Subdivisions	301.5		—		19.4		282.1
Government Sponsored Agency	Government Sponsored Agency	11,988.1		6.8		338.1		11,656.8
Non-U.S. Government	Non-U.S. Government	271.0		—		24.1		246.9
Corporate Debt	Corporate Debt	397.9		0.1		17.1		380.9
Covered Bonds	Covered Bonds	292.2		0.1		11.9		280.4
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	3,099.2		1.0		140.4		2,959.8
Other Asset-Backed	Other Asset-Backed	4,966.1		1.0		195.6		4,771.5
Commercial Mortgage-Backed	Commercial Mortgage-Backed	948.9		0.1		64.7		884.3
Total	Total	$	25,246.1	$	9.1	$	913.1	$	24,342.1


		DECEMBER 31, 2022
	DECEMBER 31, 2023														DECEMBER 31, 2023
(In Millions)	(In Millions)	AMORTIZED COST		GROSS UNREALIZED GAINS		GROSS UNREALIZED LOSSES		FAIR VALUE		(In Millions)	AMORTIZED COST	GROSS UNREALIZED GAINS	GROSS UNREALIZED LOSSES	FAIR VALUE
U.S. Government	U.S. Government	$	2,837.7	$	2.5	$	92.8	$	2,747.4
Obligations of States and Political Subdivisions	Obligations of States and Political Subdivisions	817.8		—		30.2		787.6
Government Sponsored Agency	Government Sponsored Agency	11,892.5		4.3		351.6		11,545.2
Non-U.S. Government	Non-U.S. Government	387.6		—		27.6		360.0
Corporate Debt	Corporate Debt	1,774.3		0.2		26.9		1,747.6
Covered Bonds	Covered Bonds	403.1		0.3		14.7		388.7
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	2,645.8		0.3		166.7		2,479.4
Other Asset-Backed	Other Asset-Backed	5,544.3		—		288.1		5,256.2
Commercial Mortgage-Backed	Commercial Mortgage-Backed	1,456.9		0.1		69.2		1,387.8
Total	Total	$	27,760.0	$	7.7	$	1,067.8	$	26,699.9

TABLE ~~41:~~36: REMAINING MATURITY OF AVAILABLE FOR SALE DEBT SECURITIES


SEPTEMBER 30, 2023		ONE YEAR OR LESS				ONE TO FIVE YEARS				FIVE TO TEN YEARS				OVER TEN YEARS				TOTAL
MARCH 31, 2024																						MARCH 31, 2024	ONE YEAR OR LESS		ONE TO FIVE YEARS		FIVE TO TEN YEARS		OVER TEN YEARS		TOTAL
(In Millions)	(In Millions)	AMORTIZED COST		FAIR VALUE		AMORTIZED COST		FAIR VALUE		AMORTIZED COST		FAIR VALUE		AMORTIZED COST		FAIR VALUE		AMORTIZED COST		FAIR VALUE		(In Millions)	AMORTIZED COST	FAIR VALUE	AMORTIZED COST	FAIR VALUE	AMORTIZED COST	FAIR VALUE	AMORTIZED COST	FAIR VALUE	AMORTIZED COST	FAIR VALUE
U.S. Government	U.S. Government	$	297.3	$	296.4	$	2,683.9	$	2,583.0	$	—	$	—	$	—	$	—	$	2,981.2	$	2,879.4
Obligations of States and Political Subdivisions	Obligations of States and Political Subdivisions	—		—		109.1		102.8		192.4		179.3		—		—		301.5		282.1
Government Sponsored Agency	Government Sponsored Agency	2,294.8		2,250.7		5,259.3		5,113.8		3,481.1		3,389.9		952.9		902.4		11,988.1		11,656.8
Non-U.S. Government	Non-U.S. Government	—		—		271.0		246.9		—		—		—		—		271.0		246.9
Corporate Debt	Corporate Debt	150.4		148.2		230.9		218.8		16.6		13.9		—		—		397.9		380.9
Covered Bonds	Covered Bonds	141.6		140.1		150.6		140.3		—		—		—		—		292.2		280.4
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	569.8		563.0		2,465.3		2,347.1		64.1		49.7		—		—		3,099.2		2,959.8
Other Asset-Backed	Other Asset-Backed	731.5		711.3		3,985.4		3,815.4		248.9		244.5		0.3		0.3		4,966.1		4,771.5
Commercial Mortgage-Backed	Commercial Mortgage-Backed	38.8		36.7		765.8		729.2		144.3		118.4		—		—		948.9		884.3
Total	Total	$	4,224.2	$	4,146.4	$	15,921.3	$	15,297.3	$	4,147.4	$	3,995.7	$	953.2	$	902.7	$	25,246.1	$	24,342.1

Note: Mortgage-backed and asset-backed securities are included in the above table taking into account anticipated future prepayments.

4638

Notes to Consolidated Financial Statements (unaudited) (continued)

Available for Sale Debt Securities with Unrealized Losses. The following table provides information regarding AFS debt securities with no credit losses reported that had been in a continuous unrealized loss position for less than twelve months and for twelve months or longer as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

TABLE ~~42:~~37: AVAILABLE FOR SALE DEBT SECURITIES IN UNREALIZED LOSS POSITION WITH NO CREDIT LOSSES REPORTED


SEPTEMBER 30, 2023		LESS THAN 12 MONTHS				12 MONTHS OR LONGER				TOTAL
MARCH 31, 2024														MARCH 31, 2024	LESS THAN 12 MONTHS		12 MONTHS OR LONGER		TOTAL
(In Millions)	(In Millions)	FAIR VALUE		UNREALIZED LOSSES		FAIR VALUE		UNREALIZED LOSSES		FAIR VALUE		UNREALIZED LOSSES		(In Millions)	FAIR VALUE	UNREALIZED LOSSES	FAIR VALUE	UNREALIZED LOSSES	FAIR VALUE	UNREALIZED LOSSES
U.S. Government	U.S. Government	$	1,551.0	$	12.1	$	1,183.0	$	89.7	$	2,734.0	$	101.8
Obligations of States and Political Subdivisions	Obligations of States and Political Subdivisions	—		—		282.1		19.4		282.1		19.4
Government Sponsored Agency	Government Sponsored Agency	2,855.0		18.1		7,865.9		320.0		10,720.9		338.1
Non-U.S. Government	Non-U.S. Government	—		—		246.9		24.1		246.9		24.1
Corporate Debt	Corporate Debt	12.4		0.3		229.9		9.9		242.3		10.2
Covered Bonds	Covered Bonds	—		—		214.8		11.9		214.8		11.9
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	302.6		1.9		1,898.2		138.5		2,200.8		140.4
Other Asset-Backed	Other Asset-Backed	—		—		4,561.6		195.6		4,561.6		195.6
Commercial Mortgage-Backed	Commercial Mortgage-Backed	—		—		856.7		64.7		856.7		64.7
Total	Total	$	4,721.0	$	32.4	$	17,339.1	$	873.8	$	22,060.1	$	906.2

Note: ~~Three~~Two corporate debt AFS securities with a fair value of ~~$81.5~~$80.1 million and unrealized losses of ~~$6.9~~$4.7 million have been excluded from the table above as these AFS securities have a ~~$0.7~~$0.5 million allowance for credit losses reported as of ~~September 30, 2023.~~March 31, 2024. Refer to the discussion further below and Note 6—Allowance for Credit Losses for further information.


DECEMBER 31, 2022		LESS THAN 12 MONTHS				12 MONTHS OR LONGER				TOTAL
DECEMBER 31, 2023														DECEMBER 31, 2023	LESS THAN 12 MONTHS		12 MONTHS OR LONGER		TOTAL
(In Millions)	(In Millions)	FAIR VALUE		UNREALIZED LOSSES		FAIR VALUE		UNREALIZED LOSSES		FAIR VALUE		UNREALIZED LOSSES		(In Millions)	FAIR VALUE	UNREALIZED LOSSES	FAIR VALUE	UNREALIZED LOSSES	FAIR VALUE	UNREALIZED LOSSES
U.S. Government	U.S. Government	$	1,123.6	$	64.1	$	343.1	$	28.7	$	1,466.7	$	92.8
Obligations of States and Political Subdivisions	Obligations of States and Political Subdivisions	160.0		16.8		120.6		13.4		280.6		30.2
Government Sponsored Agency	Government Sponsored Agency	7,631.4		262.1		2,737.7		89.5		10,369.1		351.6
Non-U.S. Government	Non-U.S. Government	235.4		17.3		124.6		10.3		360.0		27.6
Corporate Debt	Corporate Debt	427.3		14.6		130.3		2.8		557.6		17.4
Covered Bonds	Covered Bonds	238.0		13.5		42.8		1.2		280.8		14.7
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	1,305.4		74.4		807.1		83.2		2,112.5		157.6
Other Asset-Backed	Other Asset-Backed	3,873.4		217.5		1,247.6		70.6		5,121.0		288.1
Commercial Mortgage-Backed	Commercial Mortgage-Backed	670.9		47.4		215.6		21.8		886.5		69.2
Total	Total	$	15,665.4	$	727.7	$	5,769.4	$	321.5	$	21,434.8	$	1,049.2

Note: Three corporate debt AFS securities with a fair value of ~~$93.8~~$98.4 million and unrealized losses of ~~$9.5~~$5.9 million and one sub-sovereign, supranational and non-U.S. agency bonds AFS security with a fair value of ~~$68.3~~$71.0 million and unrealized loss of ~~$9.1~~$8.2 million have been excluded from the table above as these AFS securities have a ~~$1.3~~$1.2 million allowance for credit losses reported as of December 31, ~~2022.~~2023. Refer to the discussion further below and Note 6—Allowance for Credit Losses for further information.

As of ~~September 30, 2023, 1,044~~March 31, 2024, 784 AFS debt securities with a combined fair value of ~~$22.1~~$13.5 billion were in an unrealized loss position without an allowance for credit losses, with their unrealized losses totaling ~~$906.2~~$328.0 million. As of ~~September 30, 2023,~~March 31, 2024, unrealized losses related to AFS debt securities of ~~$338.1~~$163.0 million, ~~$195.6~~$55.6 million, and ~~$140.4~~$31.0 million related to government-sponsored agency securities, ~~other asset-backed and~~ sub-sovereign, supranational and non-U.S. agency bonds and other asset-backed, respectively, which are primarily attributable to higher intermediate rates.

As of December 31, ~~2022, 1,030~~2023, 898 AFS debt securities with a combined fair value of ~~$21.4~~$19.4 billion were in an unrealized loss position without an allowance for credit losses, with their unrealized losses totaling ~~$1.0 billion.~~$568.3 million. As of December 31, ~~2022,~~2023, unrealized losses related to AFS debt securities of ~~$351.6~~$200.3 million, ~~$288.1~~$105.8 million, and ~~$157.6~~$100.0 million related to government-sponsored agency, ~~other asset-backed, and~~ sub-sovereign, supranational and non-U.S. agency bonds, and other asset-backed, respectively, which are primarily attributable to ~~changes in overall market interest rates~~lower yields and ~~credit spreads since their purchase.~~tighter spreads.

~~As of December 31, 2022, the Corporation intended~~

Notes to sell certain AFS debt securities that were in an unrealized loss position. The securities were written down to their fair value of $2.1 billion with a $213.0 million loss recognized in Investment Security Gains (Losses), net on the consolidated statements of income for the period ended December 31, 2022. In January 2023, the securities were subsequently sold resulting in an incremental $6.9 million gain upon sale as compared to the fair value recorded on the consolidated balance sheets at December 31, 2022.Consolidated Financial Statements (unaudited) (continued)

AFS debt securities impairment reviews are conducted quarterly to identify and evaluate securities that have indications of possible credit losses. A determination as to whether a security’s decline in market value is related to credit impairment takes into consideration numerous factors and the relative significance of any single factor can vary by security. Factors Northern

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

Trust considers in determining whether impairment is credit-related include, but are not limited to, the severity of the impairment; the cause of the ~~impairment and~~impairment; the financial condition and near-term prospects of the issuer; activity in the market of the issuer, which may indicate adverse credit conditions; Northern Trust’s intent regarding the sale of the security as of the balance sheet date; and the likelihood that Northern Trust will not be required to sell the security for a period of time sufficient to allow for the recovery of the security’s amortized cost basis. For each security meeting the requirements of Northern Trust’s internal screening process, an extensive review is conducted to determine if a credit loss has occurred. In January 2024, the Corporation sold certain AFS debt securities that were in an unrealized loss position. The $189.4 million loss is recognized in Investment Security Gains (Losses), net on the consolidated statements of income for the period ended March 31, 2024. In November 2023, the Corporation sold certain AFS debt securities that were in an unrealized loss position. The $176.4 million loss is recognized in Investment Security Gains (Losses), net on the consolidated statements of income for the period ended December 31, 2023.

There was a ~~$0.6~~$0.7 million ~~release of credit reserves~~negative Provision for ~~AFS securities for both the three and nine months ended September 30, 2023. There was a $0.9 million release of credit reserves and an $0.8 million provision for credit losses~~Credit Losses for AFS securities for the three ~~and nine~~ months ended ~~September 30, 2022, respectively.~~March 31, 2024. There was a ~~$0.7~~$0.5 million Provision for Credit Losses for AFS securities for the three months ended March 31, 2023. There was a $0.5 million allowance for credit losses for AFS securities as of ~~September 30, 2023~~March 31, 2024 which was ~~primarily~~related to corporate debt securities and ~~$1.3~~$1.2 million allowance for credit losses for AFS securities as of December 31, ~~2022.~~2023, which was related to corporate debt securities and non-U.S. agency bonds. The process for identifying credit losses for AFS securities is based on the best estimate of cash flows to be collected from the security, discounted using the security’s effective interest rate. If the present value of the expected cash flows is found to be less than the current amortized cost of the security, an allowance for credit losses is generally recorded equal to the difference between the two amounts, limited to the amount the amortized cost basis exceeds the fair value of the security. For additional information, please refer to Note 6— Allowance for Credit Losses.

Held to Maturity Debt Securities. Held to maturity (HTM) debt securities consist of securities that management intends to, and Northern Trust has the ability to, hold until maturity. The following tables provide the amortized cost and fair values as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, and remaining maturities of HTM debt securities as of ~~September 30, 2023.~~March 31, 2024.

TABLE ~~43:~~38: RECONCILIATION OF AMORTIZED COST TO FAIR VALUE OF HELD TO MATURITY DEBT SECURITIES

SEPTEMBER 30, 2023
(In Millions) AMORTIZED
COST GROSS UNREALIZED GAINS GROSS UNREALIZED LOSSES FAIR
VALUE
Obligations of States and Political Subdivisions $ 2,577.7 $ — $ 177.9 $ 2,399.8
Government Sponsored Agency 9,159.9 — 1,405.6 7,754.3
Non-U.S. Government 3,711.8 0.1 126.6 3,585.3
Corporate Debt 639.1 — 38.0 601.1
Covered Bonds 2,116.9 0.4 142.0 1,975.3
Certificates of Deposit 405.4 0.1 — 405.5
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds 5,443.8 1.3 400.3 5,044.8
Other Asset-Backed 246.6 1.0 0.2 247.4
Commercial Mortgage-Backed 37.6 — 0.7 36.9
Other 581.6 — 182.3 399.3
Total $ 24,920.4 $ 2.9 $ 2,473.6 $ 22,449.7
DECEMBER 31, 2022
(In Millions) AMORTIZED
COST GROSS UNREALIZED GAINS GROSS UNREALIZED LOSSES FAIR
VALUE
U.S. Government $ 50.0 $ — $ — $ 50.0
Obligations of States and Political Subdivisions 2,565.3 — 149.8 2,415.5
Government Sponsored Agency 9,407.7 — 1,076.0 8,331.7
Non-U.S. Government 3,234.0 0.1 133.8 3,100.3
Corporate Debt 713.3 — 45.4 667.9
Covered Bonds 2,530.3 0.3 158.7 2,371.9
Certificates of Deposit 35.9 — — 35.9
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds 5,703.3 1.0 436.1 5,268.2
Other Asset-Backed 263.7 — 1.0 262.7
Other 532.6 — 157.4 375.2
Total $ 25,036.1 $ 1.4 $ 2,158.2 $ 22,879.3


	MARCH 31, 2024
(In Millions)	AMORTIZED COST		GROSS UNREALIZED GAINS		GROSS UNREALIZED LOSSES		FAIR VALUE

Obligations of States and Political Subdivisions	$	2,571.6	$	0.3	$	89.5	$	2,482.4
Government Sponsored Agency	9,223.3		1.6		1,099.2		8,125.7
Non-U.S. Government	2,742.1		0.1		92.3		2,649.9
Corporate Debt	610.3		—		24.7		585.6
Covered Bonds	2,110.3		0.7		103.8		2,007.2
Certificates of Deposit	403.2		—		0.2		403.0
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	5,024.5		1.6		289.4		4,736.7
Other Asset-Backed	193.7		1.3		0.2		194.8
Commercial Mortgage-Backed	37.6		—		0.3		37.3
Other	581.3		—		162.5		418.8
Total	$	23,497.9	$	5.6	$	1,862.1	$	21,641.4


	DECEMBER 31, 2023
(In Millions)	AMORTIZED COST		GROSS UNREALIZED GAINS		GROSS UNREALIZED LOSSES		FAIR VALUE

Obligations of States and Political Subdivisions	2,563.9		0.5		72.4		2,492.0
Government Sponsored Agency	9,355.3		2.3		1,012.4		8,345.2
Non-U.S. Government	4,789.1		0.2		90.7		4,698.6
Corporate Debt	646.1		—		28.2		617.9
Covered Bonds	2,208.6		0.3		108.3		2,100.6
Certificates of Deposit	585.1		—		0.7		584.4
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	5,245.5		3.2		294.9		4,953.8
Other Asset-Backed	214.2		0.4		0.2		214.4
Commercial Mortgage-Backed	37.6		—		0.8		36.8
Other	576.3		—		147.0		429.3
Total	$	26,221.7	$	6.9	$	1,755.6	$	24,473.0

Notes to Consolidated Financial Statements (unaudited) (continued)

As of ~~September 30, 2023,~~March 31, 2024, the ~~$24.9~~$23.5 billion HTM debt securities portfolio had unrealized losses of ~~$1.4~~$1.1 billion and ~~$400.3~~$289.4 million related to government-sponsored agency and sub-sovereign, supranational and non-U.S. agency bonds, respectively, which are primarily attributable to higher intermediate rates. As of December 31, ~~2022,~~2023, the ~~$25.0~~$26.2 billion HTM debt securities portfolio had unrealized losses of ~~$1.1~~$1.0 billion and ~~$436.1~~$294.9 million related to government-sponsored agency and sub-sovereign, supranational and non-U.S. agency bonds, respectively, which are primarily attributable to ~~changes in overall market interest rates~~lower yields and ~~credit spreads since their purchase.~~

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

tighter spreads.

TABLE ~~44:~~39: REMAINING MATURITY OF HELD TO MATURITY DEBT SECURITIES


SEPTEMBER 30, 2023		ONE YEAR OR LESS				ONE TO FIVE YEARS				FIVE TO TEN YEARS				OVER TEN YEARS				TOTAL
MARCH 31, 2024																						MARCH 31, 2024	ONE YEAR OR LESS		ONE TO FIVE YEARS		FIVE TO TEN YEARS		OVER TEN YEARS		TOTAL
(In Millions)	(In Millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		(In Millions)	Amortized Cost	Fair Value	Amortized Cost	Fair Value	Amortized Cost	Fair Value	Amortized Cost	Fair Value	Amortized Cost	Fair Value

Obligations of States and Political Subdivisions
Obligations of States and Political Subdivisions
Obligations of States and Political Subdivisions	Obligations of States and Political Subdivisions	$	58.1	$	56.9	$	988.1	$	941.6	$	1,187.1	$	1,095.1	$	344.4	$	306.2	$	2,577.7	$	2,399.8
Government Sponsored Agency	Government Sponsored Agency	859.7		727.6		3,105.8		2,649.4		3,408.4		2,901.4		1,786.0		1,475.9		9,159.9		7,754.3
Non-U.S. Government	Non-U.S. Government	2,341.3		2,337.5		1,338.1		1,221.1		32.4		26.7		—		—		3,711.8		3,585.3
Corporate Debt	Corporate Debt	96.2		94.6		528.0		494.6		14.9		11.9		—		—		639.1		601.1
Covered Bonds	Covered Bonds	135.5		132.6		1,678.3		1,582.7		303.1		260.0		—		—		2,116.9		1,975.3
Certificates of Deposit	Certificates of Deposit	405.4		405.5		—		—		—		—		—		—		405.4		405.5
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	817.0		810.2		4,604.4		4,216.8		22.4		17.8		—		—		5,443.8		5,044.8
Other Asset-Backed	Other Asset-Backed	43.8		43.7		93.0		93.2		109.8		110.5		—		—		246.6		247.4
Commercial Mortgage-Backed	Commercial Mortgage-Backed	—		—		37.6		36.9		—		—		—		—		37.6		36.9
Other	Other	34.9		33.6		338.9		292.8		29.8		21.0		178.0		51.9		581.6		399.3
Total	Total	$	4,791.9	$	4,642.2	$	12,712.2	$	11,529.1	$	5,107.9	$	4,444.4	$	2,308.4	$	1,834.0	$	24,920.4	$	22,449.7

Note: Mortgage-backed and asset-backed securities are included in the above table taking into account anticipated future prepayments.

Credit Quality Indicators. The following table provides the amortized cost of HTM debt securities by credit rating.

TABLE ~~45:~~40: AMORTIZED COST OF HELD TO MATURITY DEBT SECURITIES BY CREDIT RATING


	MARCH 31, 2024																																MARCH 31, 2024
($ In Millions)																				($ In Millions)	AAA		AA		A		BBB		NOT RATED		TOTAL
		SEPTEMBER 30, 2023
(In Millions)		AAA			AA			A			BBB			NOT RATED			TOTAL

Obligations of States and Political Subdivisions
Obligations of States and Political Subdivisions
Obligations of States and Political Subdivisions	Obligations of States and Political Subdivisions	$	918.0		$	1,659.7		$	—		$	—		$	—		$	2,577.7
Government Sponsored Agency	Government Sponsored Agency	9,159.9			—			—			—			—			9,159.9
Non-U.S. Government	Non-U.S. Government	894.1			879.0			1,619.7			319.0			—			3,711.8
Corporate Debt	Corporate Debt	2.2			299.2			337.7			—			—			639.1
Covered Bonds	Covered Bonds	2,116.9			—			—			—			—			2,116.9
Certificates of Deposit	Certificates of Deposit	367.4			—			—			—			38.0			405.4
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	4,162.6			1,251.3			28.8			1.1			—			5,443.8
Other Asset-Backed	Other Asset-Backed	246.6			—			—			—			—			246.6
Commercial Mortgage-Backed	Commercial Mortgage-Backed	37.6			—			—			—			—			37.6
Other	Other	56.0			—			—			—			525.6			581.6
Total	Total	$	17,961.3		$	4,089.2		$	1,986.2		$	320.1		$	563.6		$	24,920.4
Percent of Total	Percent of Total	72		%	17		%	8		%	1		%	2		%	100		%	Percent of Total	75	%	16	%	5	%	1	%	3	%	100	%

DECEMBER 31, 2022
(In Millions) AAA AA A BBB NOT RATED TOTAL
U.S. Government $ 50.0 $ — $ — $ — $ — $ 50.0
Obligations of States and Political Subdivisions 926.8 1,638.5 — — — 2,565.3
Government Sponsored Agency 9,407.7 — — — — 9,407.7
Non-U.S. Government 762.2 926.5 1,223.0 322.3 — 3,234.0
Corporate Debt 2.1 305.7 405.5 — — 713.3
Covered Bonds 2,530.3 — — — — 2,530.3
Certificates of Deposit — — — — 35.9 35.9
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds 4,171.3 1,502.0 28.9 1.1 — 5,703.3
Other Asset-Backed 263.7 — — — — 263.7
Other 65.8 — — — 466.8 532.6
Total $ 18,179.9 $ 4,372.7 $ 1,657.4 $ 323.4 $ 502.7 $ 25,036.1
Percent of Total 73 % 17 % 7 % 1 % 2 % 100 %

Notes to Consolidated Financial Statements (unaudited) (continued)


	DECEMBER 31, 2023
($ In Millions)	AAA			AA			A			BBB			NOT RATED			TOTAL
U.S. Government	$	—		$	—		$	—		$	—		$	—		$	—
Obligations of States and Political Subdivisions	954.7			1,609.0			—			—			0.2			2,563.9
Government Sponsored Agency	9,355.3			—			—			—			—			9,355.3
Non-U.S. Government	813.3			1,179.6			2,463.3			332.9			—			4,789.1
Corporate Debt	2.1			302.6			341.4			—			—			646.1
Covered Bonds	2,208.6			—			—			—			—			2,208.6
Certificates of Deposit	545.9			—			—			—			39.2			585.1
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	4,047.9			1,166.5			30.0			1.1			—			5,245.5
Other Asset-Backed	214.2			—			—			—			—			214.2
Commercial Mortgage-Backed	37.6			—			—			—			—			37.6
Other	54.8			—			—			—			521.5			576.3
Total	$	18,234.4		$	4,257.7		$	2,834.7		$	334.0		$	560.9		$	26,221.7
Percent of Total	70		%	16		%	11		%	1		%	2		%	100		%

Credit quality indicators are metrics that provide information regarding the relative credit risk of debt securities. Northern Trust maintains a high quality debt securities portfolio, with 96% and 97% of the HTM portfolio at ~~both September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023, respectively, comprised of securities rated A or higher. The remaining HTM debt securities portfolio was comprised of 1% rated BBB at both ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 and 3% and 2% ~~was~~which were not rated by Moody’s, S&P Global, or Fitch

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

Ratings at ~~both September 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023, respectively. Securities not explicitly rated were grouped where possible under the credit rating of the issuer of the security.

Investment Security Gains and Losses. Proceeds of ~~$17.1 million~~$2.0 billion from the sale of debt securities resulted in an ~~immaterial~~ investment security ~~gain~~loss of $189.4 million for the three months ended ~~September 30, 2023.~~March 31, 2024. The loss was comprised of $56.6 million in other asset-backed securities, $48.2 million in sub-sovereign, supranational and non-U.S. agency bonds, $34.8 million in U.S. government securities, $23.0 million in government-sponsored agency securities, $22.6 million in commercial mortgage-backed securities, and $4.2 million in covered bonds. Proceeds of ~~$2.2~~$2.1 billion from the sale of debt securities resulted in investment security gains of $6.9 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2023. ~~Proceeds~~The gain was comprised of ~~$100.2~~a $9.8 million ~~from the sale~~gain in obligations of states and political subdivisions, offset by losses of $1.2 million in corporate debt, ~~securities resulted~~$0.9 million in ~~an investment security loss of $0.3~~commercial mortgage-backed, and $0.8 million ~~for the three and nine months ended September 30, 2022.~~in other asset-backed securities.

Note 5 – Loans

Amounts outstanding for Loans, by segment and class, are shown in the following table.

TABLE ~~46:~~41: LOANS


(In Millions)	(In Millions)	SEPTEMBER 30, 2023		DECEMBER 31, 2022		(In Millions)	MARCH 31, 2024	DECEMBER 31, 2023
Commercial	Commercial
Commercial and Institutional(1)
Commercial and Institutional(1)
Commercial and Institutional(1)	Commercial and Institutional(1)	$	12,061.3	$	12,415.0
Commercial Real Estate	Commercial Real Estate	5,063.1		4,773.0
Non-U.S.(1)	Non-U.S.(1)	2,857.8		3,131.1

Other	Other	2,005.1		1,316.5
Other
Other
Total Commercial	Total Commercial	21,987.3		21,635.6
Personal	Personal
Private Client
Private Client
Private Client	Private Client	14,068.6		14,119.0
Residential Real Estate	Residential Real Estate	6,285.8		6,413.5
Non-U.S.	Non-U.S.	432.6		510.0
Other	Other	802.7		215.2
Total Personal	Total Personal	21,589.7		21,257.7
Total Loans	Total Loans	$	43,577.0	$	42,893.3

(1) Commercial and institutional and commercial-non-U.S. combined include ~~$4.8~~$5.1 billion and ~~$5.6~~$4.5 billion of private equity capital call finance loans at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

Residential real estate loans consist of traditional first lien mortgages and equity credit lines that generally require a loan-to-collateral value of no more than 65% to 80% at inception. Northern Trust’s equity credit line products generally have draw periods of up to 10 years and a balloon payment of any outstanding balance is due at maturity. Payments are interest-only with variable interest rates. Northern Trust does not offer equity credit lines that include an option to convert the outstanding balance to an amortizing payment loan. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, equity credit lines totaled ~~$228.1~~$229.9 million and ~~$248.6~~

Notes to Consolidated Financial Statements (unaudited) (continued)

$228.7 million, respectively, and equity credit lines for which first liens were held by Northern Trust represented ~~97%~~98% and ~~98%~~96% of the total equity credit lines as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

Included within the commercial-other, commercial-non-U.S., and personal-other classes are short-duration advances primarily related to the processing of custodied client investments, totaling ~~$4.2~~$9.0 billion and ~~$2.9~~$8.4 billion at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively. Demand deposit overdrafts reclassified as loan balances, primarily in personal-other, totaled ~~$4.5~~$10.7 million and ~~$24.4~~$12.1 million at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

~~There were no loans classified as held for sale at September 30, 2023 or December 31, 2022.~~ Loans classified as held for sale are recorded at the lower of cost or fair value. There were no loans ~~sold~~classified as held for ~~the three and nine months ended September 30, 2023, respectively, and~~sale at March 31, 2024 or December 31, 2023. There were no loans sold for the three months ended ~~September 30, 2022. There were $11.2 million loans sold for the nine months ended September 30, 2022, which were comprised of residential real estate~~March 31, 2024 and ~~commercial and institutional loans.~~

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

March 31, 2023.

Credit Quality Indicators. Credit quality indicators are statistics, measurements or other metrics that provide information regarding the relative credit risk of loans. Northern Trust ~~utilizes~~uses a variety of credit quality indicators to assess the credit risk of loans at the segment, class, and individual credit exposure levels.

As part of its credit process, Northern Trust utilizes an internal borrower risk rating system to support identification, approval, and monitoring of credit risk. Borrower risk ratings are used in credit underwriting and management reporting. Risk ratings are used for ranking the credit risk of borrowers and ~~the~~their probability of their default. Each borrower is rated using one of a number of ratings models, which consider both quantitative and qualitative factors. The ratings models vary among classes of loans in order to capture the unique risk characteristics inherent within each particular type of credit exposure. Provided below are the more significant performance indicator attributes considered within Northern Trust’s borrower rating models, by loan class.

•Commercial and Institutional: leverage, profit margin, liquidity, asset size and capital levels;

•Commercial Real Estate: debt service coverage, loan-to-value ratio, leasing status and guarantor support;

•Commercial-Other: leverage, profit margin, liquidity, asset size and capital levels;

•Non-U.S.: leverage, profit margin, liquidity, return on assets and capital levels;

•Residential Real Estate: payment history, credit bureau scores and loan-to-value ratio;

•Private Client: cash-flow-to-debt and net worth ratios, leverage and liquidity; and

•Personal-Other: cash-flow-to-debt and net worth ratios.

While the criteria vary by model, the objective is for the borrower ratings to be consistent in both the measurement and ranking of risk. Each model is calibrated to a master rating scale to support this consistency. Ratings for borrowers not in default range from “1” for the strongest credits to “7” for the weakest non-defaulted credits. Ratings of “8” or “9” are used for defaulted borrowers. Borrower risk ratings are monitored and are revised when events or circumstances indicate a change is required. Risk ratings are generally validated at least annually.

Loan segment and class balances as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 are provided in the following table, segregated by borrower ratings into “1 to 3,” “4 to 5” and “6 to 9” (watch list and nonaccrual status) categories by year of origination at amortized cost basis. Loans that are held for investment are reported at the principal amount outstanding, net of unearned income.

5143

Notes to Consolidated Financial Statements (unaudited) (continued)

TABLE ~~47:~~42: CREDIT QUALITY INDICATOR AT AMORTIZED COST BASIS BY ORIGINATION YEAR


September 30, 2023		TERM LOANS												REVOLVING LOANS		REVOLVING LOANS CONVERTED TO TERM LOANS
March 31, 2024
(In Millions)
(In Millions)
(In Millions)	(In Millions)	2023		2022		2021		2020		2019		PRIOR				REVOLVING LOANS		REVOLVING LOANS CONVERTED TO TERM LOANS		TOTAL	2024	2023	2022	2021	2020	PRIOR	TOTAL
Commercial	Commercial
Commercial and Institutional	Commercial and Institutional
Commercial and Institutional
Commercial and Institutional
Risk Rating:	Risk Rating:
Risk Rating:
Risk Rating:
1 to 3 Category
1 to 3 Category
1 to 3 Category	1 to 3 Category	$	355.1	$	539.8	$	874.3	$	95.9	$	148.3	$	417.6	$	5,148.5	$	16.0	$	7,595.5
4 to 5 Category	4 to 5 Category	689.9		818.7		669.7		147.6		125.0		180.4		1,549.0		75.3		4,255.6
6 to 9 Category	6 to 9 Category	13.9		71.1		69.3		12.2		0.1		1.7		41.5		0.4		210.2
Total Commercial and Institutional	Total Commercial and Institutional	1,058.9		1,429.6		1,613.3		255.7		273.4		599.7		6,739.0		91.7		12,061.3

C&I Gross Charge-offs
Commercial Real Estate	Commercial Real Estate
Risk Rating:	Risk Rating:
Risk Rating:
Risk Rating:
1 to 3 Category
1 to 3 Category
1 to 3 Category	1 to 3 Category	334.2		331.8		183.5		19.1		40.8		45.9		47.7		0.5		1,003.5
4 to 5 Category	4 to 5 Category	1,360.9		1,260.2		541.7		228.7		254.9		136.7		202.7		7.4		3,993.2
6 to 9 Category	6 to 9 Category	16.2		3.3		21.6		—		8.2		14.6		2.5		—		66.4
Total Commercial Real Estate	Total Commercial Real Estate	1,711.3		1,595.3		746.8		247.8		303.9		197.2		252.9		7.9		5,063.1
Commercial Real Estate Gross Charge-offs	Commercial Real Estate Gross Charge-offs	—		(4.5)		—		—		—		—		—		—		(4.5)
Non-U.S.	Non-U.S.
Risk Rating:	Risk Rating:
Risk Rating:
Risk Rating:
1 to 3 Category
1 to 3 Category
1 to 3 Category	1 to 3 Category	842.6		—		43.9		65.4		35.8		3.2		823.5		—		1,814.4
4 to 5 Category	4 to 5 Category	689.6		0.8		—		—		23.1		180.2		88.7		—		982.4
6 to 9 Category	6 to 9 Category	46.5		14.5		—		—		—		—		—		—		61.0
Total Non-U.S.	Total Non-U.S.	1,578.7		15.3		43.9		65.4		58.9		183.4		912.2		—		2,857.8

Other	Other

Other

Other
Risk Rating:	Risk Rating:
Risk Rating:
Risk Rating:
1 to 3 Category
1 to 3 Category
1 to 3 Category	1 to 3 Category	1,190.9		—		—		—		—		—		—		—		1,190.9
4 to 5 Category	4 to 5 Category	814.2		—		—		—		—		—		—		—		814.2
Total Other	Total Other	2,005.1		—		—		—		—		—		—		—		2,005.1

Other Gross Charge-offs
Total Commercial	Total Commercial	6,354.0		3,040.2		2,404.0		568.9		636.2		980.3		7,904.1		99.6		21,987.3
Commercial Gross Charge-offs	Commercial Gross Charge-offs	—		(4.5)		—		—		—		—		—		—		(4.5)
Personal	Personal
Private Client	Private Client
Private Client
Private Client
Risk Rating:	Risk Rating:
Risk Rating:
Risk Rating:
1 to 3 Category
1 to 3 Category
1 to 3 Category	1 to 3 Category	326.5		218.2		44.4		70.0		15.1		25.0		5,723.2		172.8		6,595.2
4 to 5 Category	4 to 5 Category	305.3		467.8		686.6		99.9		155.4		165.7		5,115.6		429.5		7,425.8
6 to 9 Category	6 to 9 Category	18.3		4.4		—		—		—		17.8		7.1		—		47.6
Total Private Client	Total Private Client	650.1		690.4		731.0		169.9		170.5		208.5		10,845.9		602.3		14,068.6

Residential Real Estate	Residential Real Estate
Residential Real Estate
Residential Real Estate
Risk Rating:	Risk Rating:
Risk Rating:
Risk Rating:
1 to 3 Category
1 to 3 Category
1 to 3 Category	1 to 3 Category	198.7		536.2		565.4		405.1		154.2		729.2		229.2		—		2,818.0
4 to 5 Category	4 to 5 Category	115.1		644.7		682.6		672.1		273.7		863.7		142.9		—		3,394.8
6 to 9 Category	6 to 9 Category	—		17.5		5.5		2.2		11.0		33.8		3.0		—		73.0
Total Residential Real Estate	Total Residential Real Estate	313.8		1,198.4		1,253.5		1,079.4		438.9		1,626.7		375.1		—		6,285.8
Residential Real Estate Gross Write-offs		(0.8)		—		—		—		—		(0.3)		—		—		(1.1)
Residential Real Estate Gross Charge-offs
Non-U.S.	Non-U.S.
Risk Rating:	Risk Rating:
Risk Rating:
Risk Rating:
1 to 3 Category
1 to 3 Category
1 to 3 Category	1 to 3 Category	16.1		3.7		0.6		—		—		5.5		54.0		—		79.9
4 to 5 Category	4 to 5 Category	9.0		20.7		39.4		—		18.8		8.3		249.0		7.5		352.7

6 to 9 Category
Total Non-U.S.	Total Non-U.S.	25.1		24.4		40.0		—		18.8		13.8		303.0		7.5		432.6

Other	Other
Other
Other
Risk Rating:	Risk Rating:
Risk Rating:
Risk Rating:
1 to 3 Category
1 to 3 Category
1 to 3 Category	1 to 3 Category	90.5		—		—		—		—		—		—		—		90.5
4 to 5 Category	4 to 5 Category	712.2		—		—		—		—		—		—		—		712.2

Total Other	Total Other	802.7		—		—		—		—		—		—		—		802.7
Total Other
Total Other

Total Personal
Total Personal
Total Personal	Total Personal	1,791.7		1,913.2		2,024.5		1,249.3		628.2		1,849.0		11,524.0		609.8		21,589.7
Personal Gross Charge-offs	Personal Gross Charge-offs	(0.8)		—		—		—		—		(0.3)		—		—		(1.1)
Total Loans	Total Loans	$	8,145.7	$	4,953.4	$	4,428.5	$	1,818.2	$	1,264.4	$	2,829.3	$	19,428.1	$	709.4	$	43,577.0
Total Loans Gross Charge-offs		$	(0.8)	$	(4.5)	$	—	$	—	$	—	$	(0.3)	$	—	$	—	$	(5.6)
Total Loans Gross Charge-offs (1)

(1) There was $4 million of charge-offs for the three months ended March 31, 2023.

5244

Notes to Consolidated Financial Statements (unaudited) (continued)

December 31, 2022 TERM LOANS REVOLVING LOANS REVOLVING LOANS CONVERTED TO TERM LOANS
(In Millions) 2022 2021 2020 2019 2018 PRIOR TOTAL
Commercial
Commercial and Institutional
Risk Rating:
1 to 3 Category $ 753.3 $ 1,087.5 $ 209.8 $ 159.3 $ 45.9 $ 511.3 $ 6,032.8 $ 17.7 $ 8,817.6
4 to 5 Category 744.1 740.6 300.8 191.1 151.4 174.7 1,102.3 32.9 3,437.9
6 to 9 Category 50.8 30.5 — 13.7 — — 64.5 — 159.5
Total Commercial and Institutional 1,548.2 1,858.6 510.6 364.1 197.3 686.0 7,199.6 50.6 12,415.0
Commercial Real Estate
Risk Rating:
1 to 3 Category 318.7 227.4 123.6 123.5 39.8 39.1 113.4 3.0 988.5
4 to 5 Category 968.5 1,040.0 637.8 447.3 153.0 256.9 181.5 17.5 3,702.5
6 to 9 Category 7.7 22.7 — 49.1 — — 2.5 — 82.0
Total Commercial Real Estate 1,294.9 1,290.1 761.4 619.9 192.8 296.0 297.4 20.5 4,773.0
Non-U.S.
Risk Rating:
1 to 3 Category 991.9 46.2 109.6 14.8 — 6.5 1,158.3 — 2,327.3
4 to 5 Category 459.0 — — — — 214.9 89.5 1.8 765.2
6 to 9 Category 0.1 — — 23.1 — — 15.4 — 38.6
Total Non-U.S. 1,451.0 46.2 109.6 37.9 — 221.4 1,263.2 1.8 3,131.1
Other
Risk Rating:
1 to 3 Category 993.9 — — — — — — — 993.9
4 to 5 Category 322.6 — — — — — — — 322.6
Total Other 1,316.5 — — — — — — — 1,316.5
Total Commercial 5,610.6 3,194.9 1,381.6 1,021.9 390.1 1,203.4 8,760.2 72.9 21,635.6
Personal
Private Client
Risk Rating:
1 to 3 Category 395.5 159.9 50.5 313.6 13.4 18.5 5,352.5 28.2 6,332.1
4 to 5 Category 430.3 755.1 192.4 191.3 38.7 160.0 5,728.6 267.2 7,763.6
6 to 9 Category 0.9 — 0.1 — 18.6 — 3.7 — 23.3
Total Private Client 826.7 915.0 243.0 504.9 70.7 178.5 11,084.8 295.4 14,119.0
Residential Real Estate
Risk Rating:
1 to 3 Category 871.6 666.7 567.7 168.1 102.9 750.8 128.4 7.9 3,264.1
4 to 5 Category 354.3 656.7 597.6 290.0 170.9 838.2 180.4 1.0 3,089.1
6 to 9 Category — 6.8 1.5 1.1 3.7 35.9 11.3 — 60.3
Total Residential Real Estate 1,225.9 1,330.2 1,166.8 459.2 277.5 1,624.9 320.1 8.9 6,413.5
Non-U.S.
Risk Rating:
1 to 3 Category 3.0 3.7 — — 4.6 2.3 124.6 — 138.2
4 to 5 Category 24.2 40.3 — 21.3 3.2 2.9 272.0 7.8 371.7
6 to 9 Category — — — — — 0.1 — — 0.1
Total Non-U.S. 27.2 44.0 — 21.3 7.8 5.3 396.6 7.8 510.0
Other
Risk Rating:
1 to 3 Category 190.8 — — — — — — — 190.8
4 to 5 Category 24.4 — — — — — — — 24.4
Total Other 215.2 — — — — — — — 215.2
Total Personal 2,295.0 2,289.2 1,409.8 985.4 356.0 1,808.7 11,801.5 312.1 21,257.7
Total Loans $ 7,905.6 $ 5,484.1 $ 2,791.4 $ 2,007.3 $ 746.1 $ 3,012.1 $ 20,561.7 $ 385.0 $ 42,893.3

Loans in the “1 to 3” category are expected to exhibit minimal to modest probabilities of default and are characterized by borrowers having the strongest financial qualities, including above average financial flexibility, cash flows and capital levels. Borrowers assigned these ratings are anticipated to experience very little to moderate financial pressure in adverse down-cycle scenarios. As a result of these characteristics, borrowers within this category exhibit a minimal to modest likelihood of loss.

Loans in the “4 to 5” category are expected to exhibit moderate to acceptable probabilities of default and are characterized by borrowers with less financial flexibility than those in the “1 to 3” category. Cash flows and capital levels are generally sufficient to allow for borrowers to meet current requirements, but have fewer financial resources to manage through economic downturns. As a result of these characteristics, borrowers within this category exhibit a moderate likelihood of loss.


December 31, 2023	TERM LOANS												REVOLVING LOANS		REVOLVING LOANS CONVERTED TO TERM LOANS
(In Millions)	2023		2022		2021		2020		2019		PRIOR						TOTAL
Commercial
Commercial and Institutional
Risk Rating:
1 to 3 Category	$	443.9	$	534.1	$	668.3	$	78.1	$	137.2	$	409.9	$	4,909.8	$	15.0	$	7,196.3
4 to 5 Category	801.4		790.9		729.5		138.7		120.5		178.7		1,332.4		72.0		4,164.1
6 to 9 Category	13.8		70.0		60.8		12.0		0.1		1.7		34.7		1.8		194.9
Total Commercial and Institutional	1,259.1		1,395.0		1,458.6		228.8		257.8		590.3		6,276.9		88.8		11,555.3
Commercial Real Estate
Risk Rating:
1 to 3 Category	403.6		389.9		159.1		23.9		37.8		44.8		51.0		—		1,110.1
4 to 5 Category	1,513.5		1,208.8		521.0		218.4		252.8		96.0		136.3		7.9		3,954.7
6 to 9 Category	16.1		—		30.5		—		8.2		14.6		—		—		69.4
Total Commercial Real Estate	1,933.2		1,598.7		710.6		242.3		298.8		155.4		187.3		7.9		5,134.2
CRE Gross Charge-offs	(0.7)		(4.4)		—		—		—		—		—		—		(5.1)
Non-U.S.
Risk Rating:
1 to 3 Category	487.9		—		43.2		65.2		34.2		3.3		760.0		—		1,393.8
4 to 5 Category	974.7		0.8		—		—		—		150.0		243.4		—		1,368.9
6 to 9 Category	1.5		14.3		—		—		—		—		—		—		15.8
Total Non-U.S.	1,464.1		15.1		43.2		65.2		34.2		153.3		1,003.4		—		2,778.5
Other
Risk Rating:
1 to 3 Category	4,313.2		—		—		—		—		—		—		—		4,313.2
4 to 5 Category	1,631.6		—		—		—		—		—		—		—		1,631.6
Total Other	5,944.8		—		—		—		—		—		—		—		5,944.8
Other Gross Charge-offs	(0.6)		—		—		—		—		—		—		—		(0.6)
Total Commercial	10,601.2		3,008.8		2,212.4		536.3		590.8		899.0		7,467.6		96.7		25,412.8
Commercial Gross Charge-offs	(1.3)		(4.4)		—		—		—		—		—		—		(5.7)
Personal
Private Client
Risk Rating:
1 to 3 Category	504.7		140.8		52.3		67.5		8.7		134.7		5,320.9		168.1		6,397.7
4 to 5 Category	290.1		488.2		655.1		100.9		158.8		44.7		5,721.5		447.8		7,907.1
6 to 9 Category	23.6		0.3		—		—		—		18.3		13.0		—		55.2
Total Private Client	818.4		629.3		707.4		168.4		167.5		197.7		11,055.4		615.9		14,360.0
Residential Real Estate
Risk Rating:
1 to 3 Category	278.7		464.0		500.6		373.3		142.4		722.4		219.8		—		2,701.2
4 to 5 Category	191.6		694.9		717.4		686.7		290.0		805.3		170.3		—		3,556.2
6 to 9 Category	—		10.9		—		0.7		1.6		43.6		12.9		—		69.7
Total Residential Real Estate	470.3		1,169.8		1,218.0		1,060.7		434.0		1,571.3		403.0		—		6,327.1
RRE Gross Charge-offs	(0.8)		—		—		—		—		(1.0)		—		—		(1.8)
Non-U.S.
Risk Rating:
1 to 3 Category	15.5		—		0.6		—		—		4.6		71.4		—		92.1
4 to 5 Category	12.7		16.0		39.2		—		16.4		8.9		236.1		7.4		336.7
6 to 9 Category	—		—		—		—		—		—		—		—		—
Total Non-U.S.	28.2		16.0		39.8		—		16.4		13.5		307.5		7.4		428.8
Other
Risk Rating:
1 to 3 Category	461.7		—		—		—		—		—		—		—		461.7
4 to 5 Category	626.6		—		—		—		—		—		—		—		626.6
Total Other	1,088.3		—		—		—		—		—		—		—		1,088.3
Total Personal	2,405.2		1,815.1		1,965.2		1,229.1		617.9		1,782.5		11,765.9		623.3		22,204.2
Personal Gross Charge-Offs	$	(0.8)	$	—	$	—	$	—	$	—	$	(1.0)	$	—	$	—	$	(1.8)
Total Loans	13,006.4		4,823.9		4,177.6		1,765.4		1,208.7		2,681.5		19,233.5		720.0		47,617.0
Total Loans Gross Charge-Offs	$	(2.1)	$	(4.4)	$	—	$	—	$	—	$	(1.0)	$	—	$	—	$	(7.5)

5345

Notes to Consolidated Financial Statements (unaudited) (continued)

Loans in the watch list category have elevated credit risk profiles that are monitored through internal watch lists, and consist of credits with borrower ratings of “6 to 9.” These credits, which include all nonaccrual credits, are expected to exhibit probabilities of default, elevated risk of default, or are currently in default. Borrowers associated with these risk profiles that are not currently in default have limited financial flexibility. Cash flows and capital levels range from acceptable to potentially insufficient to meet current requirements, particularly in adverse down cycle scenarios. As a result of these characteristics, borrowers in this category exhibit an elevated to probable likelihood of loss.

Past Due Status. Past due status is based on the length of time from the contractual due date a principal or interest payment has been past due. For disclosure purposes, loans that are 29 days past due or less are reported as current.

The following table provides balances and delinquency status of accrual and nonaccrual loans by segment and class, as well as the other real estate owned and nonaccrual asset balances, as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

TABLE ~~48:~~43: DELINQUENCY STATUS


		ACCRUAL														NONACCRUAL WITH NO ALLOWANCE
	ACCRUAL																							ACCRUAL				NONACCRUAL WITH NO ALLOWANCE
(In Millions)	(In Millions)	CURRENT		30 – 59 DAYS PAST DUE		60 – 89 DAYS PAST DUE		90 DAYS OR MORE PAST DUE		TOTAL ACCRUAL		NONACCRUAL		TOTAL LOANS				NONACCRUAL WITH NO ALLOWANCE	(In Millions)	CURRENT	30 – 59 DAYS PAST DUE	60 – 89 DAYS PAST DUE	90 DAYS OR MORE PAST DUE		TOTAL ACCRUAL	NONACCRUAL	TOTAL LOANS
September 30, 2023
March 31, 2024
Commercial	Commercial
Commercial
Commercial
Commercial and Institutional
Commercial and Institutional
Commercial and Institutional	Commercial and Institutional	$	12,032.4	$	7.9	$	1.6	$	3.1	$	12,045.0	$	16.3	$	12,061.3	$	6.9
Commercial Real Estate	Commercial Real Estate	5,059.9		—		—		—		5,059.9		3.2		5,063.1		3.2
Non-U.S.	Non-U.S.	2,854.8		3.0		—		—		2,857.8		—		2,857.8		—

Other	Other	2,005.1		—		—		—		2,005.1		—		2,005.1		—
Other
Other
Total Commercial	Total Commercial	21,952.2		10.9		1.6		3.1		21,967.8		19.5		21,987.3		10.1
Personal	Personal
Private Client
Private Client
Private Client	Private Client	13,911.3		91.0		13.4		33.1		14,048.8		19.8		14,068.6		17.8
Residential Real Estate	Residential Real Estate	6,254.9		—		1.4		—		6,256.3		29.5		6,285.8		28.1
Non-U.S.	Non-U.S.	432.6		—		—		—		432.6		—		432.6		—
Other	Other	802.7		—		—		—		802.7		—		802.7		—
Total Personal	Total Personal	21,401.5		91.0		14.8		33.1		21,540.4		49.3		21,589.7		45.9
Total Loans	Total Loans	$	43,353.7	$	101.9	$	16.4	$	36.2	$	43,508.2	$	68.8	$	43,577.0	$	56.0
		Other Real Estate Owned										$	0.3
		Total Nonaccrual Assets										$	69.1
	Other Real Estate Owned
		Total Nonaccrual Assets
		Total Nonaccrual Assets
		Total Nonaccrual Assets

ACCRUAL NONACCRUAL WITH NO ALLOWANCE
(In Millions) CURRENT 30 – 59 DAYS
PAST DUE 60 – 89 DAYS
PAST DUE 90 DAYS
OR MORE
PAST DUE TOTAL ACCRUAL NONACCRUAL TOTAL LOANS
December 31, 2022
Commercial
Commercial and Institutional $ 12,353.7 $ 40.2 $ 3.0 $ 0.7 $ 12,397.6 $ 17.4 $ 12,415.0 $ 4.4
Commercial Real Estate 4,761.5 1.3 — — 4,762.8 10.2 4,773.0 6.2
Non-U.S. 3,131.1 — — — 3,131.1 — 3,131.1 —
Other 1,316.5 — — — 1,316.5 — 1,316.5 —
Total Commercial 21,562.8 41.5 3.0 0.7 21,608.0 27.6 21,635.6 10.6
Personal
Private Client 13,843.5 192.3 29.9 53.3 14,119.0 — 14,119.0 —
Residential Real Estate 6,373.2 9.6 12.3 0.1 6,395.2 18.3 6,413.5 18.3
Non-U.S 509.9 — — 0.1 510.0 — 510.0 —
Other 215.2 — — — 215.2 — 215.2 —
Total Personal 20,941.8 201.9 42.2 53.5 21,239.4 18.3 21,257.7 18.3
Total Loans $ 42,504.6 $ 243.4 $ 45.2 $ 54.2 $ 42,847.4 $ 45.9 $ 42,893.3 $ 28.9
Other Real Estate Owned $ —
Total Nonaccrual Assets $ 45.9

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~


	ACCRUAL														NONACCRUAL WITH NO ALLOWANCE
(In Millions)	CURRENT		30 – 59 DAYS PAST DUE		60 – 89 DAYS PAST DUE		90 DAYS OR MORE PAST DUE		TOTAL ACCRUAL		NONACCRUAL		TOTAL LOANS
December 31, 2023
Commercial
Commercial and Institutional	$	11,374.6	$	163.7	$	0.7	$	—	$	11,539.0	$	16.3	$	11,555.3	$	4.1
Commercial Real Estate	5,123.7		4.4		6.1		—		5,134.2		—		5,134.2		—
Non-U.S.	2,778.5		—		—		—		2,778.5		—		2,778.5		—
Other	5,944.8		—		—		—		5,944.8		—		5,944.8		—
Total Commercial	25,221.6		168.1		6.8		—		25,396.5		16.3		25,412.8		4.1
Personal
Private Client	14,240.0		63.9		24.8		11.0		14,339.7		20.3		14,360.0		18.3
Residential Real Estate	6,283.0		7.5		0.5		9.1		6,300.1		27.0		6,327.1		27.0
Non-U.S	428.2		—		0.6		—		428.8		—		428.8		—
Other	1,088.3		—		—		—		1,088.3		—		1,088.3		—
Total Personal	22,039.5		71.4		25.9		20.1		22,156.9		47.3		22,204.2		45.3
Total Loans	$	47,261.1	$	239.5	$	32.7	$	20.1	$	47,553.4	$	63.6	$	47,617.0	$	49.4
	Other Real Estate Owned										$	1.5
	Total Nonaccrual Assets										$	65.1

Interest income that would have been recorded for nonaccrual loans in accordance with their original terms was ~~$0.9 million and $2.3~~$0.7 million for the three ~~and nine~~ months ended ~~September 30, 2023, respectively,~~March 31, 2024 and ~~$1.1 million and $3.2 million for the three and nine months ended September 30, 2022, respectively.~~2023.

Northern Trust may obtain physical possession of real estate via foreclosure on an in-substance repossession. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, Northern Trust held foreclosed real estate properties with an immaterial carrying value as a result of obtaining physical possession. In addition, as of ~~both September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, Northern Trust had loans with a carrying value of ~~$1.1~~$3.7 million and $3.5 million, respectively, for which formal foreclosure proceedings were in process.

Notes to Consolidated Financial Statements (unaudited) (continued)

Loan Modifications to Borrowers Experiencing Financial Difficulty ~~(After the Adoption of Accounting Standards Update No. 2022-02)~~

For borrowers experiencing financial difficulties, Northern Trust may provide payment relief by modifying the terms of the

original loan. Loan modifications to borrowers experiencing financial difficulty involve primarily ~~the~~ extensions of term,

deferrals of principal and interest, interest rate concessions, and other modifications or a combination thereof. Northern Trust

considers payment deferrals of less than 90 days as insignificant, absent any material modifications to other loan terms.

The following table shows the amortized cost basis of loan modifications provided to financially distressed borrowers that impacted the respective cash flows of the underlying loans as of ~~September 30,~~March 31, 2024 and March 31, 2023, disaggregated by relevant class of financing receivable and type of modification provided.

TABLE ~~49:~~44: LOAN MODIFICATIONS MADE TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY


			THREE MONTHS ENDED MARCH 31, 2024
			THREE MONTHS ENDED MARCH 31, 2024
			THREE MONTHS ENDED MARCH 31, 2024
($ In Millions)
($ In Millions)
($ In Millions)
Commercial
Commercial
Commercial

			THREE MONTHS ENDED SEPTEMBER 30, 2023				NINE MONTHS ENDED SEPTEMBER 30, 2023
(in $ million)		LOAN MODIFICATION DETAIL	AMORTIZED COST BASIS		% OF TOTAL SEGMENT		AMORTIZED COST BASIS			% OF TOTAL SEGMENT
Commercial

Commercial and Institutional		Extension of term	$	16.7	0.14	%	$	16.7		0.14	%
Commercial Real Estate		Combination of principal and/or interest deferral and extension of term	—		—		—		(1)	—

Total Commercial

Total Commercial

Total Commercial	Total Commercial		16.7		0.08		16.7			0.08
Personal	Personal
Personal
Personal

Residential Real Estate

Residential Real Estate

Residential Real Estate	Residential Real Estate	Principal and/or interest deferral	0.1		—		3.2			0.05
Residential Real Estate	Residential Real Estate	Combination of principal and/or interest deferral and extension of term	4.7		0.08		4.7			0.08
Residential Real Estate
Residential Real Estate
Private Client
Private Client
Private Client	Private Client	Extension of term	—		—		—		(1)	—

Total Personal	Total Personal		4.8		0.02		7.9			0.04

Total Personal

Total Personal
Total Loans	Total Loans		$	21.5	0.05	%	$	24.6		0.06	%
Total Loans
Total Loans

~~(1)~~ Included are financially distressed modifications of $32.5 million (combinations of principal and/or interest deferral and term extensions) for the commercial real estate portfolio and $0.2 million (term extensions) for the private client portfolio for which the respective loans had no amortized cost basis as of the end of the respective period. The $32.5 million loan was fully repaid during the second quarter of 2023.

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty.

TABLE ~~50:~~45: FINANCIAL EFFECT OF MODIFICATIONS MADE TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY

THREE MONTHS ENDED ~~SEPTEMBER 30,~~MARCH 31, 2024

THREE MONTHS ENDED MARCH 31, 2023

~~NINE MONTHS ENDED SEPTEMBER 30, 2023~~

FINANCIAL EFFECT

PRINCIPAL AND INTEREST DEFERRAL

~~Commercial~~Personal

~~Commercial~~Residential Real Estate

—

Northern Trust provided a weighted average of ~~6 months payment deferrals to borrowers for total deferred principal and interest of $32.5 million.~~

~~Personal~~

~~Residential Real Estate~~

~~Northern Trust provided a weighted average of 9 months~~180 days payment deferrals to borrowers for immaterial principal and interest deferral amounts. These payments are, in general, due at the end of the deferral period.

~~Northern Trust provided a weighted average of 9 months payment deferrals to borrowers for immaterial principal and interest deferral amounts.~~

TERM EXTENSION

~~Commercial~~

~~Commercial and Institutional~~

~~Northern Trust provided weighted average term extensions of 12 months.~~

~~Commercial Real Estate~~

—

~~Northern Trust provided weighted average term extensions of 6 months.~~

Personal

Residential Real Estate

Northern Trust provided weighted average term extensions of 914 months.

—

Private Client

Northern Trust provided weighted average term extensions of 922 months.

~~Private Client~~

—

~~Northern Trust provided weighted average term extensions of 60 months.~~

The effectiveness of Northern Trust’s modification efforts is measured by the loans’ respective past due status under the modified terms as of the end of the period. ~~All of~~Of the loans that were modified ~~since~~in the ~~adoption of ASU 2022-02 as of January 1, 2023,~~last 12 months, and were not performing in accordance with their modified terms and ~~were not~~ considered past due for purposes of these disclosures as of ~~September 30,~~March 31, 2024, there were $0.5 million 30-89 days past due and $7.8 million 90 days and greater past due. Given that principal and interest were deferred under the modified terms for all financially distressed modifications processed in the first quarter of 2023, none of the modified loans were considered past-due as of March 31, 2023. ~~During the current period,~~As of three months ended March 31, 2024, Northern Trust ~~did not recognize any charge-offs~~charged-off $8.2 million related to modifications to borrowers experiencing financial difficulty that had been ~~processed~~modified in the last 12 months. There were no defaults and related charge-offs since the adoption of the ASU ~~2022-02. For~~2022-02 as of January 1, 2023 through the ~~nine~~three months ended ~~September 30, 2023, Northern Trust charged off $0.7 million related to these modifications.~~March 31, 2023.

There were no undrawn loan commitments or standby letters of credit issued to financially distressed borrowers for which Northern Trust has modified the payment terms of the loans as of ~~September 30, 2023.~~March 31, 2024 and December 31, 2023, respectively.

The expected credit loss for nonaccrual loans including loan modifications to borrowers experiencing financial difficulty is measured based on either the expected future cash flows, the value of collateral, or other factors that may impact the borrower’s ability to pay. If the discounted cash flow method is utilized, the credit loss is measured based upon the present value of expected future cash flows, discounted at the effective interest rate based on the post-modification contractual rate. If a loan’s

Notes to Consolidated Financial Statements (unaudited) (continued)

contractual interest rate varies based on subsequent changes in an independent factor, such as an index or rate, the loan’s effective interest rate is calculated based on the factor as it changes over the life of the loan. Northern Trust elected not to project changes in the factor for purposes of estimating expected future cash flows. Further, Northern Trust elected not to adjust the effective interest rate for prepayments. If the loan is collateral dependent, the expected loss is measured based on the fair value of the collateral at the reporting date. If the loan valuation is less than the recorded value of the loan, either an allowance is established or a charge-off is recorded for the difference. The nature and extent of further deterioration in credit quality, including a subsequent default, is considered in the determination of an appropriate level of allowance for credit losses for all loan modifications to borrowers experiencing financial difficulty.

~~Troubled Debt Restructurings (Prior to the Adoption of Accounting Standards Update No. 2022-02)~~

Prior to January 1, 2023, a loan that has been modified as a concession by Northern Trust or a bankruptcy court resulting from the debtor’s financial difficulties is referred to as a troubled debt restructuring (TDR). All TDRs are reported starting in the calendar year of their restructuring. In subsequent years, a TDR may cease being reported if the loan was modified at a market rate and has performed according to the modified terms for at least six payment periods. A loan that has been modified at a below market rate will return to accrual status if it satisfies the six-payment-period performance requirement.

The expected credit loss is measured based upon the present value of expected future cash flows, discounted at the effective interest rate based on the original contractual rate. If a loan’s contractual interest rate varies based on subsequent changes in an independent factor, such as an index or rate, the loan’s effective interest rate is calculated based on the factor as it changes over the life of the loan. Northern Trust elected not to project changes in the factor for purposes of estimating expected future cash flows. Further, Northern Trust elected not to adjust the effective interest rate for prepayments. If the loan is collateral dependent, the expected loss is measured based on the fair value of the collateral at the reporting date.

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

If the loan valuation is less than the recorded value of the loan, either an allowance is established or a charge-off is recorded for the difference. Smaller balance (individually less than $1 million) homogeneous loans are collectively evaluated. Northern Trust’s accounting policies for material nonaccrual loans is consistent across all classes of loans.

All loans with TDR modifications are evaluated for additional expected credit losses. The nature and extent of further deterioration in credit quality, including a subsequent default, is considered in the determination of an appropriate level of allowance for credit losses.

~~Included within nonaccrual loans were $35.3 million of nonaccrual TDRs, and $39.7 million of accrual TDRs as of December 31, 2022~~
~~. There were $0.2 million of aggregate undrawn loan commitments and standby letters of credit at~~ ~~December 31, 2022,~~ ~~issued to borrowers with TDR modifications of loans.~~

TDR modifications involve extensions of term, deferrals of principal, interest rate concessions, and other modifications. Other modifications typically reflect other nonstandard terms which Northern Trust would not offer in non-troubled situations. ~~The following table provides, by segment and class, the number of TDR modifications of loans entered into during the~~ ~~three and nine~~ ~~months ended September 30, 2022, and the recorded investments and unpaid principal balances as of September 30, 2022.~~

~~TABLE 51: TROUBLED DEBT RESTRUCTURINGS~~

THREE MONTHS ENDED SEPTEMBER 30, 2022 NINE MONTHS ENDED SEPTEMBER 30, 2022
($ In Millions) LOAN MODIFICATION DETAIL NUMBER OF
LOANS AND
LEASES RECORDED
INVESTMENT UNPAID
PRINCIPAL
BALANCE NUMBER OF
LOANS AND
LEASES RECORDED
INVESTMENT UNPAID
PRINCIPAL
BALANCE
Commercial
Commercial and Institutional Interest rate concession, extension of term and other modification 1 $ 0.1 $ 0.1 2 $ 0.6 $ 0.6
Commercial Real Estate Interest rate concession and other modification 1 31.6 32.5 1 31.6 32.5
Total Commercial 2 31.7 32.6 3 32.2 33.1
Personal
Residential Real Estate Interest rate concession, deferrals of principal, extension of term and other modification 1 0.1 0.1 3 0.2 0.2
Total Personal 1 0.1 0.1 3 0.2 0.2
Total Loans and Leases 3 $ 31.8 $ 32.7 6 $ 32.4 $ 33.3

~~Note: Period-end balances reflect all pay downs and charge-offs during the year.~~

There were no residential real estate loan TDR modifications during the twelve months ended June 30, 2022, which subsequently had a payment default during the three and nine months ended September 30, 2022.

Note 6 – Allowance for Credit Losses

Allowance and Provision for Credit Losses. The allowance for credit losses—which represents management’s best estimate of lifetime expected credit losses related to various portfolios subject to credit risk, off-balance-sheet credit exposures, and specific borrower relationships—is determined by management through a disciplined credit review process. Northern Trust measures expected credit losses of financial assets with similar risk characteristics on a collective basis. A financial asset is measured individually if it does not share similar risk characteristics with other financial assets and the related allowance is determined through an individual evaluation.

The results of the credit reserve estimation methodology are reviewed quarterly by Northern Trust’s Credit Loss Reserve Committee, which receives input from ~~Credit~~Financial Risk Management, Treasury, Corporate Finance, the Economic Research Department, and each of Northern Trust’s reporting ~~segments.~~business units. The Credit Loss Reserve Committee determines the probability weights applied to each forecast approved by Northern Trust’s Macroeconomic Scenario Development Committee, and also reviews and approves qualitative adjustments to the collective allowance in line with Northern Trust’s qualitative adjustment framework.

The Provision for Credit Losses on the consolidated statements of income represents the change in the Allowance for Credit Losses on the consolidated balance sheets after accounting for net charge-offs or recoveries and is the charge to current period earnings. It represents the amount needed to maintain the Allowance for Credit Losses on the consolidated balance sheets at an

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

appropriate level to absorb lifetime expected credit losses related to financial assets in scope. Actual losses may vary from current estimates and the amount of the Provision for Credit Losses may be either greater or less than actual net charge-offs.

The following table provides information regarding changes in the total allowance for credit losses during the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023.

TABLE ~~52:~~46: CHANGES IN THE ALLOWANCE FOR CREDIT LOSSES


		THREE MONTHS ENDED SEPTEMBER 30, 2023
	THREE MONTHS ENDED MARCH 31, 2024																	THREE MONTHS ENDED MARCH 31, 2024
(In Millions)	(In Millions)	LOANS		UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT		HELD TO MATURITY DEBT SECURITIES		OTHER FINANCIAL ASSETS		TOTAL		(In Millions)	LOANS	UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT	HELD TO MATURITY DEBT SECURITIES	OTHER FINANCIAL ASSETS	TOTAL
Balance at Beginning of Period	Balance at Beginning of Period	$	152.5	$	26.0	$	16.7	$	1.0	$	196.2
Charge-Offs	Charge-Offs	(0.8)		—		—		—		(0.8)
Recoveries	Recoveries	1.1		—		—		—		1.1
Net Recoveries (Charge-Offs)	Net Recoveries (Charge-Offs)	0.3		—		—		—		0.3
Provision for (Release of) Credit Losses(1)		14.0		2.3		(1.8)		0.1		14.6
Provision for Credit Losses(1)
Balance at End of Period	Balance at End of Period	$	166.8	$	28.3	$	14.9	$	1.1	$	211.1

(1) The table excludes a ~~release~~negative provision for credit losses of ~~credit reserves of $0.6~~$0.7 million for the three months ended ~~September 30, 2023~~March 31, 2024 for AFS debt securities. See further detail in Note 4—Securities.

NINE MONTHS ENDED SEPTEMBER 30, 2023
(In Millions) LOANS UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT HELD TO MATURITY DEBT SECURITIES OTHER FINANCIAL ASSETS TOTAL
Balance at Beginning of Period $ 144.3 $ 38.5 $ 16.0 $ 0.8 $ 199.6
Charge-Offs (5.6) — — — (5.6)
Recoveries 3.0 — — — 3.0
Net Recoveries (Charge-Offs) (2.6) — — — (2.6)
Provision for (Release of) Credit Losses(1)
25.1 (10.2) (1.1) 0.3 14.1
Balance at End of Period $ 166.8 $ 28.3 $ 14.9 $ 1.1 $ 211.1

Notes to Consolidated Financial Statements (unaudited) (continued)


	THREE MONTHS ENDED MARCH 31, 2023
(In Millions)	LOANS AND LEASES		UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT		HELD TO MATURITY DEBT SECURITIES		OTHER FINANCIAL ASSETS		TOTAL
Balance at Beginning of Period	$	144.3	$	38.5	$	16.0	$	0.8	$	199.6
Charge-Offs	(4.0)		—		—		—		(4.0)
Recoveries	1.1		—		—		—		1.1
Net Recoveries (Charge-Offs)	(2.9)		—		—		—		(2.9)
Provision for Credit Losses(1)	18.5		(4.2)		—		0.2		14.5
Balance at End of Period	$	159.9	$	34.3	$	16.0	$	1.0	$	211.2

(1) The table excludes a ~~release~~provision for credit losses of ~~credit reserves of $0.6~~$0.5 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 for AFS debt securities. See further detail in Note 4—Securities.

THREE MONTHS ENDED SEPTEMBER 30, 2022
(In Millions) LOANS AND LEASES UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT HELD TO MATURITY DEBT SECURITIES OTHER FINANCIAL ASSETS TOTAL
Balance at Beginning of Period $ 138.2 $ 43.5 $ 15.4 $ 1.1 $ 198.2
Charge-Offs (5.4) — — — (5.4)
Recoveries 0.9 — — — 0.9
Net Recoveries (Charge-Offs) (4.5) — — — (4.5)
Provision for (Release of) Credit Losses(1)
5.0 (2.8) (0.4) (0.4) 1.4
Balance at End of Period $ 138.7 $ 40.7 $ 15.0 $ 0.7 $ 195.1

~~(1)~~ ~~The table excludes a release~~Excluding the impact of ~~credit reserves of $0.9 million for~~ the ~~three months ended September 30, 2022 for AFS debt securities. See further detail in Note 4—Securities.~~

NINE MONTHS ENDED SEPTEMBER 30, 2022
(In Millions) LOANS AND LEASES UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT HELD TO MATURITY DEBT SECURITIES OTHER FINANCIAL ASSETS TOTAL
Balance at Beginning of Period $ 138.4 $ 34.1 $ 11.2 $ 1.0 $ 184.7
Charge-Offs (5.5) — — — (5.5)
Recoveries 9.7 — — — 9.7
Net Recoveries (Charge-Offs) 4.2 — — — 4.2
Provision for (Release of) Credit Losses(1)
(3.9) 6.6 3.8 (0.3) 6.2
Balance at End of Period $ 138.7 $ 40.7 $ 15.0 $ 0.7 $ 195.1

~~(1)~~ ~~The table excludes a~~negative provision ~~for credit losses of $0.8 million for the nine months ended September 30, 2022 for AFS debt securities. See further detail in Note 4—Securities.~~

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

~~The Provision for Credit Losses, excluding the release of credit reserves~~ for available for sale debt securities, there was ~~$14.6~~a negative Provision for Credit Losses of $7.8 million in the current quarter, as compared to a ~~$1.4~~$14.5 million provision in the prior-year quarter. The negative provision resulted from decreases in both individual and collective reserves. The decrease in individual reserves was driven by one Commercial and Institutional (C&I) loan that was charged-off in the current quarter. The decrease in collective reserve was primarily ~~due to an increase~~ in the ~~reserve evaluated on a collective basis,~~C&I portfolio, driven by ~~a small number of large new loans and renewals and credit quality deterioration of certain commercial real estate (CRE) and commercial and institutional (C&I) loans, partially offset by a net~~ improvement in the ~~overall~~quality of the portfolio, and in the Commercial Real Estate (CRE) portfolio, driven by improved macroeconomic ~~outlook.~~factors. The reserve evaluated on a collective basis relates to pooled financial assets sharing similar risk characteristics.

There were net ~~recoveries~~charge-offs of ~~$0.3~~$10.4 million during the three months ended ~~September 30, 2023,~~March 31, 2024, as compared to net charge-offs of ~~$4.5~~$2.9 million for the three months ended ~~September 30, 2022.~~March 31, 2023. For further detail, please see the Allowance for the Loan Portfolio and the Allowance for Held to Maturity Debt Securities Portfolio sections below.

The Provision for Credit Losses, excluding the release of credit reserves for available for sale debt securities, was $14.1 million for the nine months ended September 30, 2023, as compared to a $6.2 million provision in the prior-year period. The provision was primarily due to an increase in the collective basis reserve, driven by new loans and renewals in the CRE portfolio and expectations of higher economic stress in the CRE market, particularly office CRE, partially offset by a net improvement in the overall macroeconomic outlook and lower loss projections for certain large C&I loans. The reserve evaluated on a collective basis relates to pooled financial assets sharing similar risk characteristics. There were net charge-offs of $2.6 million during the nine months ended September 30, 2023, as compared to net recoveries of $4.2 million during the nine months ended September 30, 2022. For further detail, please see the Allowance for the Loan Portfolio and the Allowance for Held to Maturity Debt Securities Portfolio sections below.

The portion of the allowance assigned to loans, HTM debt securities, and other financial assets is presented as a contra asset in Allowance for Credit Losses on the consolidated balance sheets. The portion of the allowance assigned to undrawn loan commitments and standby letters of credit is reported in Other Liabilities on the consolidated balance sheets. For credit exposure and the associated allowance related to fee receivables, please refer to Note 13—Revenue from Contracts with Clients. For information related to the allowance for AFS debt securities, please refer to Note 4—Securities. For all other financial assets recognized at amortized cost, which include Cash and Due from Banks, Other Central Bank Deposits, Interest Bearing Deposits with Banks, and Other Assets, please refer to the Allowance for Other Financial Assets section within this footnote.

Forecasting and Reversion. Estimating expected lifetime credit losses requires the consideration of the effect of future economic conditions. Northern Trust employs multiple scenarios over a reasonable and supportable period (currently two years) to project future conditions. Key variables determined to be relevant for projecting credit losses on the portfolios in scope include macroeconomic factors, such as corporate profits, unemployment, disposable income, and real estate price indices, as well as financial market factors such as ~~equity prices,~~market volatility and credit spreads. For periods beyond the reasonable and supportable period, Northern Trust reverts to its own historical loss experiences on a straight-line basis over four quarters. The primary forecast in the current quarter reflects an outlook of ~~continued slow but~~ steady growth, with inflation and labor markets stabilizing and interest rates ~~continuing to stabilize.~~falling. Recognizing the uncertainty in the primary forecast, an alternative scenario is also considered, which reflects a recession that incorporates the experiences of a wider set of historical economic cycles.

Contractual Term. Northern Trust estimates expected credit losses over the contractual term of the financial assets adjusted for prepayments, unless prepayments are not relevant to specific portfolios or sub-portfolios. Extension and renewal options are typically not considered since it is not Northern Trust’s practice to enter into arrangements where the borrower has the unconditional option to renew, or a conditional extension option whereby the conditions are beyond Northern Trust’s control.

5949

Notes to Consolidated Financial Statements (unaudited) (continued)

Allowance for the Loan Portfolio. The following table provides information regarding changes in the total allowance for credit losses related to loans, including undrawn loan commitments and standby letters of credit, by segment during the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023.

TABLE ~~53:~~47: CHANGES IN THE ALLOWANCE FOR CREDIT LOSSES RELATED TO LOANS


		THREE MONTHS ENDED SEPTEMBER 30, 2023
		LOANS						UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT
	THREE MONTHS ENDED MARCH 31, 2024																					THREE MONTHS ENDED MARCH 31, 2024
	LOANS																		LOANS			UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT
(In Millions)	(In Millions)	COMMERCIAL		PERSONAL		TOTAL		COMMERCIAL		PERSONAL		TOTAL		(In Millions)	COMMERCIAL	PERSONAL	TOTAL	COMMERCIAL		PERSONAL	TOTAL
Balance at Beginning of Period	Balance at Beginning of Period	$	124.0	$	28.5	$	152.5	$	23.3	$	2.7	$	26.0
Charge-Offs	Charge-Offs	(0.5)		(0.3)		(0.8)		—		—		—
Recoveries	Recoveries	—		1.1		1.1		—		—		—
Net Recoveries (Charge-Offs)	Net Recoveries (Charge-Offs)	(0.5)		0.8		0.3		—		—		—
Provision for (Release of) Credit Losses		13.9		0.1		14.0		2.2		0.1		2.3
Provision for Credit Losses
Balance at End of Period	Balance at End of Period	$	137.4	$	29.4	$	166.8	$	25.5	$	2.8	$	28.3

NINE MONTHS ENDED SEPTEMBER 30, 2023
LOANS UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT
(In Millions) COMMERCIAL PERSONAL TOTAL COMMERCIAL PERSONAL TOTAL
Balance at Beginning of Period $ 116.2 $ 28.1 $ 144.3 $ 36.3 $ 2.2 $ 38.5
Charge-Offs (4.5) (1.1) (5.6) — — —
Recoveries 0.1 2.9 3.0 — — —
Net Recoveries (Charge-Offs) (4.4) 1.8 (2.6) — — —
Provision for (Release of) Credit Losses 25.6 (0.5) 25.1 (10.8) 0.6 (10.2)
Balance at End of Period $ 137.4 $ 29.4 $ 166.8 $ 25.5 $ 2.8 $ 28.3


		THREE MONTHS ENDED SEPTEMBER 30, 2022
		LOANS AND LEASES						UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT
	THREE MONTHS ENDED MARCH 31, 2023																					THREE MONTHS ENDED MARCH 31, 2023
	LOANS AND LEASES																		LOANS AND LEASES			UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT
(In Millions)	(In Millions)	COMMERCIAL		PERSONAL		TOTAL		COMMERCIAL		PERSONAL		TOTAL		(In Millions)	COMMERCIAL	PERSONAL	TOTAL	COMMERCIAL		PERSONAL	TOTAL
Balance at Beginning of Period	Balance at Beginning of Period	$	102.5	$	35.7	$	138.2	$	40.3	$	3.2	$	43.5
Charge-Offs	Charge-Offs	(4.9)		(0.5)		(5.4)		—		—		—
Recoveries	Recoveries	0.3		0.6		0.9		—		—		—
Net Recoveries (Charge-Offs)	Net Recoveries (Charge-Offs)	(4.6)		0.1		(4.5)		—		—		—
Provision for (Release of) Credit Losses		2.7		2.3		5.0		(2.8)		—		(2.8)
Provision for Credit Losses
Balance at End of Period	Balance at End of Period	$	100.6	$	38.1	$	138.7	$	37.5	$	3.2	$	40.7

NINE MONTHS ENDED SEPTEMBER 30, 2022
LOANS AND LEASES UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT
(In Millions) COMMERCIAL PERSONAL TOTAL COMMERCIAL PERSONAL TOTAL
Balance at Beginning of Period $ 105.6 $ 32.8 $ 138.4 $ 31.4 $ 2.7 $ 34.1
Charge-Offs (4.9) (0.6) (5.5) — — —
Recoveries 2.7 7.0 9.7 — — —
Net Recoveries (Charge-Offs) (2.2) 6.4 4.2 — — —
Provision for (Release of) Credit Losses (2.8) (1.1) (3.9) 6.1 0.5 6.6
Balance at End of Period $ 100.6 $ 38.1 $ 138.7 $ 37.5 $ 3.2 $ 40.7

Allowance Related to Credit Exposure Evaluated on a Collective Basis. Expected credit losses are measured on a collective basis as long as the financial assets included in the respective pool share similar risk characteristics. If financial assets are deemed to not share similar risk characteristics, an individual assessment is warranted.

The allowance estimation methodology for the collective assessment is ~~primarily~~ based on ~~internally developed loss~~ data~~specific to~~ representative of the ~~Northern Trust~~Corporation’s financial asset portfolio from a historical observation period that includes both expansionary and recessionary periods. The estimation methodology and the related qualitative adjustment framework segregate the loan portfolio into ~~homogenous~~homogeneous segments based on similar risk characteristics or risk monitoring methods.

Northern Trust utilizes a quantitative probability of default/loss given default approach for the calculation of its credit allowance on a collective basis. For each of the different parameters, specific credit models or qualitative estimation

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

methodologies for the individual loan segments were developed. For each segment, the probability of defaultand the loss given default are applied to the exposure at default for each projected quarter to determine the quantitative component of the allowance. The quantitative allowance is then reviewed within the qualitative adjustment framework, through which management applies judgment by assessing internal risk factors, potential limitations in the quantitative methodology, and environmental factors that are not fully contemplated in the forecast to compute an adjustment to the quantitative allowance for each segment and class of the loan portfolio.

Allowance Related to Credit Exposure Evaluated on an Individual Basis. The individual allowance is determined through an individual evaluation of loans and lending-related commitments that have defaulted, generally those with borrower ratings of 8 and 9, that isare based on expected future cash flows, the value of collateral, and other factors that may impact the borrower’s ability to pay. For defaulted loans for which the amount of allowance, if any, is determined based on the value of the underlying real estate collateral, third-party appraisals are typically obtained and utilized by management. These appraisals are generally less than twelve months old and are subject to adjustments to reflect management’s judgment as to the realizable value of the collateral.

The following table provides information regarding the recorded investments in loans and the allowance for credit losses for loans and undrawn loan commitments and standby letters of credit by segment as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

Notes to Consolidated Financial Statements (unaudited) (continued)

TABLE ~~54:~~48: RECORDED INVESTMENTS IN LOANS


		SEPTEMBER 30, 2023						DECEMBER 31, 2022
	MARCH 31, 2024																		MARCH 31, 2024			DECEMBER 31, 2023
(In Millions)	(In Millions)	COMMERCIAL		PERSONAL		TOTAL		COMMERCIAL		PERSONAL		TOTAL		(In Millions)	COMMERCIAL	PERSONAL	TOTAL	COMMERCIAL		PERSONAL	TOTAL
Loans	Loans
Evaluated on an Individual Basis
Evaluated on an Individual Basis
Evaluated on an Individual Basis	Evaluated on an Individual Basis	$	27.4	$	67.3	$	94.7	$	63.0	$	46.1	$	109.1
Evaluated on a Collective Basis	Evaluated on a Collective Basis	21,959.9		21,522.4		43,482.3		21,572.6		21,211.6		42,784.2
Total Loans	Total Loans	21,987.3		21,589.7		43,577.0		21,635.6		21,257.7		42,893.3
Allowance for Credit Losses on Loans	Allowance for Credit Losses on Loans
Evaluated on an Individual Basis	Evaluated on an Individual Basis	8.3		2.0		10.3		10.4		—		10.4
Evaluated on an Individual Basis
Evaluated on an Individual Basis
Evaluated on a Collective Basis	Evaluated on a Collective Basis	129.1		27.4		156.5		105.8		28.1		133.9
Allowance Assigned to Loans	Allowance Assigned to Loans	137.4		29.4		166.8		116.2		28.1		144.3
Allowance for Undrawn Loan Commitments and Standby Letters of Credit	Allowance for Undrawn Loan Commitments and Standby Letters of Credit
Evaluated on an Individual Basis		—		—		—		—		—		—

Evaluated on a Collective Basis

Evaluated on a Collective Basis

Evaluated on a Collective Basis	Evaluated on a Collective Basis	25.5		2.8		28.3		36.3		2.2		38.5
Allowance Assigned to Undrawn Loan Commitments and Standby Letters of Credit	Allowance Assigned to Undrawn Loan Commitments and Standby Letters of Credit	25.5		2.8		28.3		36.3		2.2		38.5
Total Allowance Assigned to Loans and Undrawn Loan Commitments and Standby Letters of Credit	Total Allowance Assigned to Loans and Undrawn Loan Commitments and Standby Letters of Credit	$	162.9	$	32.2	$	195.1	$	152.5	$	30.3	$	182.8

Northern Trust analyzes its exposure to credit losses from both on-balance-sheet and off-balance-sheet activity using a consistent methodology for the quantitative framework as well as the qualitative framework. For purposes of estimating the allowance for credit losses for undrawn loan commitments and standby letters of credit, the exposure at default includes an estimated drawdown of unused credit based on credit utilization factors, resulting in a proportionate amount of expected credit losses.

Allowance for Held to Maturity Debt Securities Portfolio. The following table provides information regarding changes in the total allowance for credit losses for HTM debt securities during the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023.

TABLE ~~55:~~49: CHANGES IN THE ALLOWANCE FOR CREDIT LOSSES RELATED TO HELD TO MATURITY DEBT SECURITIES


		THREE MONTHS ENDED SEPTEMBER 30, 2023
	THREE MONTHS ENDED MARCH 31, 2024																							THREE MONTHS ENDED MARCH 31, 2024
(In Millions)	(In Millions)	CORPORATE DEBT		NON-U.S. GOVERNMENT		SUB-SOVEREIGN, SUPRANATIONAL, AND NON-U.S. AGENCY BONDS		OBLIGATIONS OF STATES AND POLITICAL SUBDIVISIONS(1)		COVERED BONDS		OTHER		TOTAL		(In Millions)	CORPORATE DEBT	NON-U.S. GOVERNMENT	SUB-SOVEREIGN, SUPRANATIONAL, AND NON-U.S. AGENCY BONDS	OBLIGATIONS OF STATES AND POLITICAL SUBDIVISIONS(1)	COVERED BONDS	OTHER	TOTAL
Balance at Beginning of Period	Balance at Beginning of Period	$	1.4	$	5.4	$	3.4	$	1.3	$	0.1	$	5.1	$	16.7
Provision for (Release of) Credit Losses		(0.1)		(0.8)		(0.5)		(0.1)		—		(0.3)		(1.8)
Provision for Credit Losses
Balance at End of Period	Balance at End of Period	$	1.3	$	4.6	$	2.9	$	1.2	$	0.1	$	4.8	$	14.9

(1) The allowance for Obligations of States and Political Subdivisions is related to (non pre-refunded) municipal securities that do not fall under Northern Trust’s zero-loss assumption.

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~


		NINE MONTHS ENDED SEPTEMBER 30, 2023
	THREE MONTHS ENDED MARCH 31, 2023																							THREE MONTHS ENDED MARCH 31, 2023
(In Millions)	(In Millions)	CORPORATE DEBT		NON-U.S. GOVERNMENT		SUB-SOVEREIGN, SUPRANATIONAL, AND NON-U.S. AGENCY BONDS		OBLIGATIONS OF STATES AND POLITICAL SUBDIVISIONS(1)		COVERED BONDS		OTHER		TOTAL		(In Millions)	CORPORATE DEBT	NON-U.S. GOVERNMENT	SUB-SOVEREIGN, SUPRANATIONAL, AND NON-U.S. AGENCY BONDS	OBLIGATIONS OF STATES AND POLITICAL SUBDIVISIONS	COVERED BONDS	OTHER	TOTAL
Balance at Beginning of Period	Balance at Beginning of Period	$	1.9	$	3.6	$	4.0	$	1.5	$	0.1	$	4.9	$	16.0
Provision for (Release of) Credit Losses		(0.6)		1.0		(1.1)		(0.3)		—		(0.1)		(1.1)
Provision for Credit Losses
Balance at End of Period	Balance at End of Period	$	1.3	$	4.6	$	2.9	$	1.2	$	0.1	$	4.8	$	14.9

~~(1)~~ ~~The allowance for Obligations of States and Political Subdivisions is related to (non pre-refunded) municipal securities that do not fall under Northern Trust’s zero-loss assumption.~~

THREE MONTHS ENDED SEPTEMBER 30, 2022
(In Millions) CORPORATE DEBT NON-U.S. GOVERNMENT SUB-SOVEREIGN, SUPRANATIONAL, AND NON-U.S. AGENCY BONDS OBLIGATIONS OF STATES AND POLITICAL SUBDIVISIONS COVERED BONDS OTHER TOTAL
Balance at Beginning of Period $ 1.8 $ 3.8 $ 4.8 $ — $ 0.1 $ 4.9 $ 15.4
Provision for (Release of) Credit Losses (0.3) (0.7) (1.0) — — 1.6 (0.4)
Balance at End of Period $ 1.5 $ 3.1 $ 3.8 $ — $ 0.1 $ 6.5 $ 15.0

NINE MONTHS ENDED SEPTEMBER 30, 2022
(In Millions) CORPORATE DEBT NON-U.S. GOVERNMENT SUB-SOVEREIGN, SUPRANATIONAL, AND NON-U.S. AGENCY BONDS OBLIGATIONS OF STATES AND POLITICAL SUBDIVISIONS COVERED BONDS OTHER TOTAL
Balance at Beginning of Period $ 1.4 $ 1.9 $ 3.0 $ — $ 0.1 $ 4.8 $ 11.2
Provision for (Release of) Credit Losses 0.1 1.2 0.8 — — 1.7 3.8
Balance at End of Period $ 1.5 $ 3.1 $ 3.8 $ — $ 0.1 $ 6.5 $ 15.0

HTM debt securities classified as U.S. government, government sponsored agency, and certain securities classified as obligations of states and political subdivisions are considered to be guarantees of the U.S. government or an agency of the U.S. government and, therefore, an allowance for credit losses is not estimated for such investments as the expected probability of non-payment of the amortized cost basis is zero.

HTM debt securities classified as “other asset-backed securities” represent pools of underlying receivables from which the cash flows are used to pay the bonds that vary in seniority. Utilizing a qualitative estimation approach, the allowance for other asset-backed securities is assessed by evaluating underlying pool performance based on delinquency rates and available credit support.

HTM debt securities classified as “other” relate to investments purchased by Northern Trust to fulfill its obligations under the Community Reinvestment Act (CRA). Northern Trust fulfills its obligations under the CRA by making qualified investments

Notes to Consolidated Financial Statements (unaudited) (continued)

for purposes of supporting institutions and programs that benefit low-to-moderate income communities within Northern Trust’s market area. The allowance for CRA investments is assessed using a qualitative estimation approach primarily based on internal historical performance experience and default history of the underlying CRA portfolios to determine a quantitative component of the allowance.

The allowance estimation methodology for all other HTM debt securities is developed using a combination of external and internal data. The estimation methodology groups securities with shared characteristics for which the probability of default and the loss given default are applied to the total exposure at default to determine a quantitative component of the allowance.

Allowance for Other Financial Assets. The allowance for Other Financial Assets consists of the allowance for Due from Banks, Other Central Bank Deposits, Interest Bearing Deposits with Banks, and Other Assets. The Other Assets category includes other miscellaneous credit exposures reported in Other Assets on the consolidated balance sheets. The allowance estimation methodology for Other Financial Assets primarily utilizes a similar approach as the one used for the HTM debt securities portfolio. It consists of a combination of externally and internally developed loss data, adjusted for the appropriate contractual term. Northern Trust’s portfolio of Other Financial Assets is composed mostly of institutions within the “1 to 3” internal borrower rating category and is expected to exhibit minimal to modest likelihood of loss. The Allowance for Credit Losses related to Other Financial Assets was ~~$1.1~~$1.0 million and ~~$0.8~~$0.9 million as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

Accrued Interest. Accrued interest balances are reported within Other Assets on the consolidated balance sheets. Northern Trust elected not to measure an allowance for credit losses for accrued interest receivables related to its loan and securities portfolio as its policy is to write-off uncollectible accrued interest receivable balances in a timely manner. Accrued interest is written off by reversing interest income during the ~~quarter~~period the financial asset is moved from an accrual to a nonaccrual status.

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

The following table provides the amount of accrued interest excluded from the amortized cost basis of the following portfolios.

TABLE ~~56:~~50: ACCRUED INTEREST


(In Millions)	(In Millions)	SEPTEMBER 30, 2023		DECEMBER 31, 2022		(In Millions)	MARCH 31, 2024	DECEMBER 31, 2023
Loans	Loans	$	249.4	$	203.1
Debt Securities	Debt Securities
Held to Maturity	Held to Maturity	82.7		63.2
Held to Maturity
Held to Maturity
Available for Sale	Available for Sale	138.0		147.1
Other Financial Assets	Other Financial Assets	58.4		43.8
Total	Total	$	528.5	$	457.2

The amount of accrued interest reversed through interest income for loans was immaterial for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ and there was no accrued interest reversed through interest income related to any other financial assets for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023.

Note 7 – Pledged Assets, Accepted Collateral and Restricted Assets

Pledged Assets. For our liquidity management strategy, we may pledge loans and/or securities to various financial market utilities to allow for client payment, clearing and settlement processing as part of our custody services. We may pledge loans or securities to Central Banks, Federal Home Loan Bank (FHLB) of Chicago and third parties for various purposes, for example: securing public and trust deposits, repurchase agreements, ~~and~~ borrowings and derivative ~~settlements.~~contracts.

As of March 31, 2024 and December 31, 2023, respectively, $1.4 billion and $1.1 billion of collateral we pledge, related to loans and/or securities, is eligible to be repledged or sold by the secured party. The following table presents the carrying value of Northern Trust's pledged assets by type.

TABLE ~~57:~~51: TYPE OF PLEDGED ASSETS


(In Billions)	(In Billions)	SEPTEMBER 30, 2023		DECEMBER 31, 2022		(In Billions)	MARCH 31, 2024	DECEMBER 31, 2023
Debt Securities(1)	Debt Securities(1)	$	27.8	$	31.4
Loans(2)	Loans(2)	11.2		11.8
Total Pledged Assets	Total Pledged Assets	$	39.0	$	43.2

(1) Debt securities are comprised of held to maturity and available for sale securities.

(2) Loans pledged at the FHLB of Chicago and the Federal Reserve Bank of Chicago.

~~Within pledged assets, there was collateral required which totaled $13.1 billion and $8.7 billion at September 30, 2023 and December 31, 2022, respectively.~~

~~The following table presents the AFS debt securities pledged as collateral that are included in pledged assets.~~

~~TABLE 58: FAIR VALUE OF AVAILABLE FOR SALE DEBT SECURITIES INCLUDED IN PLEDGED ASSETS~~

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE DERIVATIVE CONTRACTS
(In Millions) SEPTEMBER 30, 2023 DECEMBER 31, 2022 SEPTEMBER 30, 2023 DECEMBER 31, 2022
Debt Securities
Available for Sale $ 540.7 $ 464.7 $ 15.6 $ 34.7

The secured parties to these transactions have the right to repledge or sell the securities as it relates to $540.7 million and $464.7 million of the pledged collateral as of September 30, 2023 and December 31, 2022, respectively.

Accepted Collateral. Northern Trust accepts financial assets as collateral that it may, in some instances, be permitted to repledge or sell. The collateral is generally obtained under certain reverse repurchase agreements and derivative contracts.

The following table presents the fair value of securities accepted as collateral.

Notes to Consolidated Financial Statements (unaudited) (continued)

TABLE ~~59:~~52: ACCEPTED COLLATERAL

(In Millions)

SEPTEMBER 30, 2023

DECEMBER 31, 2022

(In Millions)

MARCH 31, 2024

DECEMBER 31, 2023

Collateral that may be repledged or sold

Reverse repurchase agreements(1)(2)

49,972.7

12,119.4

Reverse repurchase agreements(1)(2)

Derivative contracts

14.3

5.0

Collateral that may not be repledged or sold

Reverse repurchase agreements

—

450.0

Reverse repurchase agreements

Total Collateral Accepted

49,987.0

12,574.4

(1) The fair value of securities collateral that was repledged or sold totaled ~~$49.6~~$65.7 billion and ~~$11.5~~$62.0 billion at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

(2) This includes collateral accepted as related to the sponsored member program. Refer to Note 20—Commitments and Contingent Liabilities for further information.

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

Restricted Assets. Certain cash may be restricted in terms of usage or withdrawal. As a result of the continuing military conflict involving Ukraine and the Russian Federation and related sanctions and legal restrictions in place, cash balances denominated in Russian rubles received for the benefit of certain clients in our Asset Servicing business are subject to distribution restrictions. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, these balances totaled ~~$642.8~~$818.9 million and ~~$330.4~~$722.2 million, respectively, and are reported in Cash and Due from Banks on the consolidated balance sheets.

At ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, Northern Trust held cash of ~~$553.6~~$563.4 million and ~~$574.2~~$575.2 million, respectively, to meet non-U.S. reserve requirements. As a result of the economic environment arising from the COVID-19 pandemic, the Federal Reserve reduced the U.S. reserve requirement to zero percent on March 26, 2020. There were no average deposits required to meet Federal Reserve Bank reserve requirements for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022.~~respectively.

Note 8 – Goodwill and Other Intangibles

Goodwill. Changes by reporting segment in the carrying amount of Goodwill for the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, including the effect of foreign exchange rates on non-U.S. dollar denominated balances, were as follows.

TABLE ~~60:~~53: GOODWILL


(In Millions)	(In Millions)	ASSET SERVICING		WEALTH MANAGEMENT		TOTAL		(In Millions)	ASSET SERVICING	WEALTH MANAGEMENT	TOTAL
Balance at December 31, 2022		$	611.0	$	80.3	$	691.3
Balance at December 31, 2023

Foreign Exchange Rates	Foreign Exchange Rates	1.5		—		1.5
Balance at September 30, 2023		$	612.5	$	80.3	$	692.8
Foreign Exchange Rates
Foreign Exchange Rates
Balance at March 31, 2024

Other Intangible Assets Subject to Amortization. The gross carrying amount and accumulated amortization of other intangible assets subject to amortization as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 were as follows.

TABLE ~~61:~~54: OTHER INTANGIBLE ASSETS


(In Millions)	(In Millions)	SEPTEMBER 30, 2023		DECEMBER 31, 2022		(In Millions)	MARCH 31, 2024	DECEMBER 31, 2023
Gross Carrying Amount	Gross Carrying Amount	$	128.7	$	197.9
Less: Accumulated Amortization	Less: Accumulated Amortization	58.4		120.3
Net Book Value	Net Book Value	$	70.3	$	77.6

Other intangible assets consist primarily of the value of acquired client relationships and are included within Other Assets on the consolidated balance sheets. Amortization expense related to other intangible assets totaled $2.3 million ~~and $7.0 million~~ for the three ~~and nine~~ months ended ~~September 30, 2023, respectively~~March 31, 2024 and ~~$2.2 million and $7.1 million for the three and nine months ended September 30, 2022, respectively.~~March 31, 2023. Amortization for the remainder of ~~2023~~2024 and for the years ~~2024,~~ 2025, 2026, 2027, and ~~2027~~2028 is estimated to be ~~$2.3~~$6.9 million, ~~$9.0~~$8.6 million, ~~$8.5~~$8.3 million, ~~$8.1~~$8.0 million, and ~~$7.9~~$7.4 million, respectively.

Capitalized Software. The gross carrying amount and accumulated amortization of capitalized software as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 were as follows.

TABLE ~~62:~~55: CAPITALIZED SOFTWARE


(In Millions)	(In Millions)	SEPTEMBER 30, 2023		DECEMBER 31, 2022		(In Millions)	MARCH 31, 2024	DECEMBER 31, 2023
Gross Carrying Amount	Gross Carrying Amount	$	3,896.1	$	3,479.3
Less: Accumulated Amortization	Less: Accumulated Amortization	1,881.6		1,517.4
Net Book Value	Net Book Value	$	2,014.5	$	1,961.9

Notes to Consolidated Financial Statements (unaudited) (continued)

Capitalized software, which is included in Other Assets on the consolidated balance sheets, consists primarily of purchased software, software licenses, and allowable internal costs, including compensation relating to software developed for internal use. Fees paid for the use of software licenses that are not hosted by Northern Trust are expensed as incurred. Amortization expense, which is included in Equipment and Software on the consolidated statements of income, totaled ~~$126.7~~$140.4 million and ~~$370.8~~$121.3 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and March 31, 2023, ~~respectively, and $111.1 million and $317.0 million for the three and nine months ended September 30, 2022,~~ respectively.

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

Note 9 – Reporting Segments

Reporting segment financial information, presented on an internal ~~management reporting~~management-reporting basis, is determined by accounting systems used to allocate revenue and expense to each segment, and incorporates processes for allocating assets, liabilities, equity and the applicable interest income and expense utilizing a funds transfer pricing (FTP) methodology. Under the methodology, assets and liabilities receive a funding charge or credit that considers interest rate risk, liquidity risk, and other product characteristics on an instrument level. Additionally, segment information is presented on an ~~fully taxable equivalent (FTE)~~FTE basis as management believes an FTE presentation provides a clearer indication of net interest income. The adjustment to an FTE basis has no impact on Net Income.

6554

Notes to Consolidated Financial Statements (unaudited) (continued)

The following table presents the earnings contributions and average assets of Northern Trust’s reporting segments for the ~~three- and nine-month~~three-month periods ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023.

TABLE ~~63:~~56: RESULTS OF REPORTING SEGMENTS


($ In Millions)	($ In Millions)	ASSET SERVICING						WEALTH MANAGEMENT						OTHER						RECONCILING ITEMS				TOTAL CONSOLIDATED						($ In Millions)	ASSET SERVICING			WEALTH MANAGEMENT			OTHER			RECONCILING ITEMS		TOTAL CONSOLIDATED
NINE MONTHS ENDED SEPTEMBER 30,		2023			2022			2023			2022			2023			2022			2023		2022		2023			2022
THREE MONTHS ENDED MARCH 31,																														THREE MONTHS ENDED MARCH 31,	2024	2023		2024	2023		2024	2023		2024	2023	2024		2023
Noninterest Income	Noninterest Income
Trust, Investment and Other Servicing Fees
Trust, Investment and Other Servicing Fees
Trust, Investment and Other Servicing Fees	Trust, Investment and Other Servicing Fees	$	1,850.2		$	1,908.4		$	1,421.6		$	1,482.1		$	—		$	—		$	—	$	—	$	3,271.8		$	3,390.5
Foreign Exchange Trading Income (Loss)	Foreign Exchange Trading Income (Loss)	161.2			215.9			(6.3)			7.3			—			—			—		—		154.9			223.2
Other Noninterest Income (Loss)	Other Noninterest Income (Loss)	199.0			185.4			112.8			101.6			(9.2)			(11.2)			—		—		302.6			275.8
Total Noninterest Income (Loss)	Total Noninterest Income (Loss)	2,210.4			2,309.7			1,528.1			1,591.0			(9.2)			(11.2)			—		—		3,729.3			3,889.5
Net Interest Income	Net Interest Income	902.6			748.5			635.8			634.3			—			—			(39.5)		(30.1)		1,498.9			1,352.7
Revenue	Revenue	3,113.0			3,058.2			2,163.9			2,225.3			(9.2)			(11.2)			(39.5)		(30.1)		5,228.2			5,242.2
Provision for (Release of) Credit Losses		(3.3)			3.8			16.8			3.2			—			—			—		—		13.5			7.0
Provision for Credit Losses
Noninterest Expense	Noninterest Expense	2,459.7			2,269.4			1,402.4			1,333.2			33.6			56.7			—		—		3,895.7			3,659.3
Income before Income Taxes	Income before Income Taxes	656.6			785.0			744.7			888.9			(42.8)			(67.9)			(39.5)		(30.1)		1,319.0			1,575.9
Provision for Income Taxes	Provision for Income Taxes	167.4			194.0			207.5			248.6			(10.6)			(16.9)			(39.5)		(30.1)		324.8			395.6
Net Income	Net Income	$	489.2		$	591.0		$	537.2		$	640.3		$	(32.2)		$	(51.0)		$	—	$	—	$	994.2		$	1,180.3
Percentage of Consolidated Net Income	Percentage of Consolidated Net Income	49		%	50		%	54		%	54		%	(3)		%	(4)		%	N/A		N/A		100		%	100		%	Percentage of Consolidated Net Income	N/M	52	%	N/M	52	%	N/M	(4)	%	N/A	N/A	100	%	100	%
Average Assets	Average Assets	$	110,380.4		$	117,251.0		$	34,311.2		$	36,901.1		$	—		$	—		N/A		N/A		$	144,691.6		$	154,152.1

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

Note 10 – Stockholders’ Equity

Preferred Stock. The Corporation is authorized to issue ~~10.0~~10 million shares of preferred stock without par value. The Board of Directors is authorized to fix the particular designations, preferences and relative, participating, optional and other special rights and qualifications, limitations or restrictions for each series of preferred stock issued.

As of ~~September 30, 2023,~~March 31, 2024, 5,000 shares of Series D Non-Cumulative Perpetual Preferred Stock (Series D Preferred Stock) and 16,000 shares of Series E Non-Cumulative Perpetual Preferred Stock (Series E Preferred Stock) were outstanding.

Series D Preferred Stock. As of ~~September 30, 2023,~~March 31, 2024, the Corporation had issued and outstanding 500,000 depositary shares, each representing a 1/100th ownership interest in a share of Series D Preferred Stock, issued in August 2016. Equity related to Series D Preferred Stock as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 was $493.5 million. Shares of the Series D Preferred Stock have no par value and a liquidation preference of $100,000 (equivalent to $1,000 per depositary share).

Dividends on the Series D Preferred Stock, which are not mandatory, accrue and are payable on the liquidation preference amount, on a non-cumulative basis, at a rate per annum equal to (i) 4.60% from the original issue date of the Series D Preferred Stock to but excluding October 1, 2026; and (ii) a floating rate equal to the three-month CME Term Secured Overnight Finance Rate (SOFR), as administered by CME Group Benchmark Administration, Ltd., plus a statutory spread adjustment of 0.26161% (as set forth in the final rule to implement the LIBOR Act) plus 3.202% from and including October 1, 2026. Fixed rate dividends are payable in arrears on the first day of April and October of each year, through and including October 1, 2026, and floating rate dividends will be payable in arrears on the first day of January, April, July and October of each year, commencing on January 1, 2027. On ~~July 18, 2023,~~January 17, 2024, the Corporation declared a cash dividend of $2,300.00 per share of Series D Preferred Stock payable on ~~October~~April 1, ~~2023,~~2024, to stockholders of record as of ~~September~~March 15, ~~2023.~~2024.

Series E Preferred Stock. As of ~~September 30, 2023,~~March 31, 2024, the Corporation had issued and outstanding ~~16.0~~16 million depositary shares, each representing 1/1,000th ownership interest in a share of Series E Preferred Stock, issued in November 2019. Equity related to Series E Preferred Stock as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 was $391.4 million. Shares of the Series E Preferred Stock have no par value and a liquidation preference of $25,000 (equivalent to $25 per depositary share).

Dividends on the Series E Preferred Stock, which are not mandatory, will accrue and be payable on the liquidation preference amount, on a non-cumulative basis, quarterly in arrears on the first day of January, April, July and October of each year, at a

Notes to Consolidated Financial Statements (unaudited) (continued)

rate per annum equal to 4.70%. On ~~July 18, 2023,~~January 17, 2024, the Corporation declared a cash dividend of $293.75 per share of Series E Preferred Stock payable on ~~October~~April 1, ~~2023,~~2024, to stockholders of record as of ~~September~~March 15, ~~2023.~~2024.

Common Stock. The Corporation’s current stock repurchase authorization to repurchase up to ~~25.0~~25 million shares was approved by the Board of Directors in October 2021. Shares are repurchased by the Corporation to, among other things, manage the Corporation’s capital levels. Repurchased shares are used for general purposes, including the issuance of shares under stock option and other incentive plans. The repurchase authorization approved by the Board of Directors has no expiration date. For the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, the Corporation repurchased ~~14,738 and 2,426,793~~1,647,526 shares of common stock, ~~respectively,~~ at a total cost of ~~$1.1~~$132.0 million ($~~77.39 average price per share) and $201.3 million ($82.95~~80.11 average price per share), ~~respectively,~~ including ~~14,738 and 356,145~~373,623 shares ~~respectively,~~ withheld to satisfy tax withholding obligations related to share-based compensation. For the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, the Corporation repurchased ~~11,080 and 309,334~~1,050,227 shares of common stock, ~~respectively,~~ at a total cost of ~~$1.2~~$100.9 million ($~~96.43 average price per share) and $35.2 million ($113.89~~96.04 average prices per share), ~~respectively, all of which were~~including 326,811 shares withheld to satisfy tax withholding obligations related to share-based compensation.

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

Note 11 – Accumulated Other Comprehensive Income (Loss)

The following tables summarize the components of Accumulated Other Comprehensive Income (Loss) (AOCI) at ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ and changes during the three ~~and nine~~ months then ended.

TABLE ~~64:~~57: SUMMARY OF CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

THREE MONTHS ENDED SEPTEMBER 30, 2023
(In Millions)
NET UNREALIZED GAINS (LOSSES) ON AVAILABLE FOR SALE DEBT SECURITIES(1)
NET UNREALIZED GAINS (LOSSES) ON CASH FLOW HEDGES NET FOREIGN CURRENCY ADJUSTMENT NET PENSION AND OTHER POSTRETIREMENT BENEFIT ADJUSTMENTS TOTAL
Balance at June 30, 2023 $ (1,229.4) $ 0.5 $ 189.2 $ (366.2) $ (1,405.9)
Net Change 32.3 (0.4) 9.6 1.0 42.5
Balance at September 30, 2023 $ (1,197.1) $ 0.1 $ 198.8 $ (365.2) $ (1,363.4)

~~(1)~~ ~~Includes net unrealized gains (losses) on debt securities transferred from AFS to HTM. Refer to Note 4—Securities for further information.~~

NINE MONTHS ENDED SEPTEMBER 30, 2023
(In Millions)
NET UNREALIZED GAINS (LOSSES) ON AVAILABLE FOR SALE DEBT SECURITIES(1)
NET UNREALIZED GAINS (LOSSES) ON CASH FLOW HEDGES NET FOREIGN CURRENCY ADJUSTMENT NET PENSION AND OTHER POSTRETIREMENT BENEFIT ADJUSTMENTS TOTAL
Balance at December 31, 2022 $ (1,367.6) $ 1.2 $ 164.6 $ (367.4) $ (1,569.2)
Net Change 170.5 (1.1) 34.2 2.2 205.8
Balance at September 30, 2023 $ (1,197.1) $ 0.1 $ 198.8 $ (365.2) $ (1,363.4)

~~(1)~~ ~~Includes net unrealized gains (losses) on debt securities transferred from AFS to HTM. Refer to Note 4—Securities for further information.~~

THREE MONTHS ENDED SEPTEMBER 30, 2022
(In Millions)
NET UNREALIZED GAINS (LOSSES) ON AVAILABLE FOR SALE DEBT SECURITIES(1)
NET UNREALIZED GAINS (LOSSES) ON CASH FLOW HEDGES NET FOREIGN CURRENCY ADJUSTMENT NET PENSION AND OTHER POSTRETIREMENT BENEFIT ADJUSTMENTS TOTAL
Balance at June 30, 2022 $ (1,294.7) $ 0.6 $ 137.6 $ (354.1) $ (1,510.6)
Net Change (272.2) 2.1 20.2 (24.5) (274.4)
Balance at September 30, 2022 $ (1,566.9) $ 2.7 $ 157.8 $ (378.6) $ (1,785.0)

~~(1)~~ ~~Includes net unrealized gains (losses) on debt securities transferred from AFS to HTM. Refer to Note 4—Securities for further information.~~


	THREE MONTHS ENDED MARCH 31, 2024
(In Millions)	NET UNREALIZED GAINS (LOSSES) ON AVAILABLE FOR SALE DEBT SECURITIES		NET UNREALIZED GAINS (LOSSES) ON CASH FLOW HEDGES		NET FOREIGN CURRENCY ADJUSTMENT		NET PENSION AND OTHER POSTRETIREMENT BENEFIT ADJUSTMENTS		TOTAL
Balance at December 31, 2023	$	(923.9)	$	0.8	$	203.6	$	(418.4)	$	(1,137.9)
Net Change	213.4		(0.7)		4.6		3.0		220.3
Balance at March 31, 2024	$	(710.5)	$	0.1	$	208.2	$	(415.4)	$	(917.6)

NINE MONTHS ENDED SEPTEMBER 30, 2022
(In Millions)
NET UNREALIZED GAINS (LOSSES) ON AVAILABLE FOR SALE DEBT SECURITIES(1)
NET UNREALIZED GAINS (LOSSES) ON CASH FLOW HEDGES NET FOREIGN CURRENCY ADJUSTMENT NET PENSION AND OTHER POSTRETIREMENT BENEFIT ADJUSTMENTS TOTAL
Balance at December 31, 2021 $ 107.1 $ (2.4) $ 155.2 $ (295.5) $ (35.6)
Net Change (1,674.0) 5.1 2.6 (83.1) (1,749.4)
Balance at September 30, 2022 $ (1,566.9) $ 2.7 $ 157.8 $ (378.6) $ (1,785.0)


	THREE MONTHS ENDED MARCH 31, 2023
(In Millions)	NET UNREALIZED GAINS (LOSSES) ON AVAILABLE FOR SALE DEBT SECURITIES		NET UNREALIZED GAINS (LOSSES) ON CASH FLOW HEDGES		NET FOREIGN CURRENCY ADJUSTMENT		NET PENSION AND OTHER POSTRETIREMENT BENEFIT ADJUSTMENTS		TOTAL
Balance at December 31, 2022	$	(1,367.6)	$	1.2	$	164.6	$	(367.4)	$	(1,569.2)
Net Change	180.2		(0.1)		22.7		0.2		203.0
Balance at March 31, 2023	$	(1,187.4)	$	1.1	$	187.3	$	(367.2)	$	(1,366.2)

~~(1)~~
~~Includes net unrealized gains (losses) on debt securities transferred from AFS to HTM. Refer to Note 4—Securities for further information.~~

6856

Notes to Consolidated Financial Statements (unaudited) (continued)

TABLE ~~65:~~58: DETAILS OF CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)


THREE MONTHS ENDED SEPTEMBER 30,		2023						2022
THREE MONTHS ENDED MARCH 31,														THREE MONTHS ENDED MARCH 31,	2024			2023
(In Millions)	(In Millions)	PRE-TAX		TAX		AFTER TAX		PRE-TAX		TAX		AFTER TAX		(In Millions)	PRE-TAX	TAX	AFTER TAX	PRE-TAX	TAX	AFTER TAX
Unrealized Gains (Losses) on Available for Sale Debt Securities	Unrealized Gains (Losses) on Available for Sale Debt Securities
Unrealized Gains (Losses) on Available for Sale Debt Securities	Unrealized Gains (Losses) on Available for Sale Debt Securities	$	18.0	$	(5.6)	$	12.4	$	(385.6)	$	97.5	$	(288.1)
Unrealized Gains (Losses) on Available for Sale Debt Securities
Unrealized Gains (Losses) on Available for Sale Debt Securities
Reclassification Adjustments for (Gains) Losses Included in Net Income:	Reclassification Adjustments for (Gains) Losses Included in Net Income:
Interest Income on Debt Securities(1)
Interest Income on Debt Securities(1)
Interest Income on Debt Securities(1)	Interest Income on Debt Securities(1)	26.7		(6.8)		19.9		21.0		(5.3)		15.7
Net (Gains) Losses on Debt Securities(2)	Net (Gains) Losses on Debt Securities(2)	—		—		—		0.3		(0.1)		0.2
Net Change	Net Change	$	44.7	$	(12.4)	$	32.3	$	(364.3)	$	92.1	$	(272.2)
Unrealized Gains (Losses) on Cash Flow Hedges	Unrealized Gains (Losses) on Cash Flow Hedges
Foreign Exchange Contracts	Foreign Exchange Contracts	$	14.3	$	(3.6)	$	10.7	$	2.2	$	(0.6)	$	1.6
Foreign Exchange Contracts
Foreign Exchange Contracts
Reclassification Adjustment for (Gains) Losses Included in Net Income(3)	Reclassification Adjustment for (Gains) Losses Included in Net Income(3)	(14.9)		3.8		(11.1)		0.6		(0.1)		0.5
Net Change	Net Change	$	(0.6)	$	0.2	$	(0.4)	$	2.8	$	(0.7)	$	2.1
Foreign Currency Adjustments	Foreign Currency Adjustments
Foreign Currency Translation Adjustments
Foreign Currency Translation Adjustments
Foreign Currency Translation Adjustments	Foreign Currency Translation Adjustments	$	(89.2)	$	1.7	$	(87.5)	$	(168.1)	$	3.9	$	(164.2)
Long-Term Intra-Entity Foreign Currency Transaction Gains (Losses)	Long-Term Intra-Entity Foreign Currency Transaction Gains (Losses)	(0.2)		0.1		(0.1)		(2.0)		0.5		(1.5)
Net Investment Hedge Gains (Losses)	Net Investment Hedge Gains (Losses)	129.9		(32.7)		97.2		248.4		(62.5)		185.9
Net Change	Net Change	$	40.5	$	(30.9)	$	9.6	$	78.3	$	(58.1)	$	20.2
Pension and Other Postretirement Benefit Adjustments	Pension and Other Postretirement Benefit Adjustments
Net Actuarial Gains (Losses)	Net Actuarial Gains (Losses)	$	(0.2)	$	—	$	(0.2)	$	(51.6)	$	13.0	$	(38.6)
Net Actuarial Gains (Losses)
Net Actuarial Gains (Losses)
Reclassification Adjustment for (Gains) Losses Included in Net Income(4)	Reclassification Adjustment for (Gains) Losses Included in Net Income(4)
Amortization of Net Actuarial Loss	Amortization of Net Actuarial Loss	1.6		(0.4)		1.2		1.9		(0.4)		1.5
Amortization of Prior Service Cost (Credit)		—		—		—		(0.2)		0.1		(0.1)
Settlement Loss		—		—		—		17.0		(4.3)		12.7
Amortization of Net Actuarial Loss
Amortization of Net Actuarial Loss

Net Change

Net Change

Net Change	Net Change	$	1.4	$	(0.4)	$	1.0	$	(32.9)	$	8.4	$	(24.5)
Total Net Change	Total Net Change	$	86.0	$	(43.5)	$	42.5	$	(316.1)	$	41.7	$	(274.4)

NINE MONTHS ENDED SEPTEMBER 30, 2023 2022
(In Millions) PRE-TAX TAX AFTER TAX PRE-TAX TAX AFTER TAX
Unrealized Gains (Losses) on Available for Sale Debt Securities
Unrealized Gains (Losses) on Available for Sale Debt Securities $ 158.6 $ (42.0) $ 116.6 $ (2,288.3) $ 587.4 $ (1,700.9)
Reclassification Adjustments for (Gains) Losses Included in Net Income:
Interest Income on Debt Securities(1)
79.0 (19.9) 59.1 35.7 (9.0) 26.7
Net (Gains) Losses on Debt Securities(2)
(6.9) 1.7 (5.2) 0.3 (0.1) 0.2
Net Change $ 230.7 $ (60.2) $ 170.5 $ (2,252.3) $ 578.3 $ (1,674.0)
Unrealized Gains (Losses) on Cash Flow Hedges
Foreign Exchange Contracts $ 16.2 $ (4.1) $ 12.1 $ 3.0 $ (0.8) $ 2.2
Reclassification Adjustment for (Gains) Losses Included in Net Income(3)
(17.7) 4.5 (13.2) 3.8 (0.9) 2.9
Net Change $ (1.5) $ 0.4 $ (1.1) $ 6.8 $ (1.7) $ 5.1
Foreign Currency Adjustments
Foreign Currency Translation Adjustments $ (15.7) $ 1.2 $ (14.5) $ (382.1) $ 4.5 $ (377.6)
Long-Term Intra-Entity Foreign Currency Transaction Gains (Losses) (1.8) 0.5 (1.3) (3.8) 1.0 (2.8)
Net Investment Hedge Gains (Losses) 66.8 (16.8) 50.0 512.1 (129.1) 383.0
Net Change $ 49.3 $ (15.1) $ 34.2 $ 126.2 $ (123.6) $ 2.6
Pension and Other Postretirement Benefit Adjustments
Net Actuarial Gains (Losses) $ (1.5) $ 0.1 $ (1.4) $ (165.2) $ 41.2 $ (124.0)
Reclassification Adjustment for (Gains) Losses Included in Net Income(4)
Amortization of Net Actuarial Loss 4.8 (1.2) 3.6 17.1 (4.2) 12.9
Amortization of Prior Service Cost (Credit) — — — (0.7) 0.2 (0.5)
Settlement Loss — — — 38.0 (9.5) 28.5
Net Change $ 3.3 $ (1.1) $ 2.2 $ (110.8) $ 27.7 $ (83.1)
Total Net Change $ 281.8 $ (76.0) $ 205.8 $ (2,230.1) $ 480.7 $ (1,749.4)

(1) The before-tax reclassification adjustment is related to the unrealized gains (losses) amortization on AFS debt securities that were transferred to HTM debt securities during the second quarter of 2021 and third quarter of 2022. ~~Refer to Note 4—Securities for further information.~~

(2) The net gains (losses) on AFS debt securities before-tax reclassification adjustment is recorded in Investment Security Gains (Losses), net on the consolidated statements of income.

(3) See Note 21—Derivative Financial Instruments for the location of the reclassification adjustment related to cash flow hedges.

(4) The pension and other postretirement benefit before-tax reclassification adjustment is recorded in Employee Benefits expense on the consolidated statements of income.

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

Note 12 – Net Income Per Common Share

The computations of net income per common share are presented in the following table.

TABLE ~~66:~~59: NET INCOME PER COMMON SHARE


		THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
($ In Millions Except Per Common Share Information)
($ In Millions Except Per Common Share Information)
($ In Millions Except Per Common Share Information)	($ In Millions Except Per Common Share Information)	2023		2022		2023		2022
Basic Net Income Per Common Share	Basic Net Income Per Common Share
Basic Net Income Per Common Share
Basic Net Income Per Common Share
Average Number of Common Shares Outstanding
Average Number of Common Shares Outstanding
Average Number of Common Shares Outstanding	Average Number of Common Shares Outstanding	207,021,554		208,400,135		207,611,420		208,271,070
Net Income	Net Income	$	327.8	$	394.8	$	994.2	$	1,180.3
Net Income
Net Income
Less: Dividends on Preferred Stock
Less: Dividends on Preferred Stock
Less: Dividends on Preferred Stock	Less: Dividends on Preferred Stock	16.2		16.2		37.1		37.1
Net Income Applicable to Common Stock	Net Income Applicable to Common Stock	311.6		378.6		957.1		1,143.2
Net Income Applicable to Common Stock
Net Income Applicable to Common Stock
Less: Earnings Allocated to Participating Securities
Less: Earnings Allocated to Participating Securities
Less: Earnings Allocated to Participating Securities	Less: Earnings Allocated to Participating Securities	3.1		3.2		9.7		9.5
Earnings Allocated to Common Shares Outstanding	Earnings Allocated to Common Shares Outstanding	308.5		375.4		947.4		1,133.7
Earnings Allocated to Common Shares Outstanding
Earnings Allocated to Common Shares Outstanding
Basic Net Income Per Common Share
Basic Net Income Per Common Share
Basic Net Income Per Common Share	Basic Net Income Per Common Share	$	1.49	$	1.80	$	4.56	$	5.44
Diluted Net Income Per Common Share	Diluted Net Income Per Common Share
Diluted Net Income Per Common Share
Diluted Net Income Per Common Share
Average Number of Common Shares Outstanding
Average Number of Common Shares Outstanding
Average Number of Common Shares Outstanding	Average Number of Common Shares Outstanding	207,021,554		208,400,135		207,611,420		208,271,070
Plus: Dilutive Effect of Share-based Compensation	Plus: Dilutive Effect of Share-based Compensation	231,438		488,437		316,300		587,906
Plus: Dilutive Effect of Share-based Compensation
Plus: Dilutive Effect of Share-based Compensation
Average Common and Potential Common Shares
Average Common and Potential Common Shares
Average Common and Potential Common Shares	Average Common and Potential Common Shares	207,252,992		208,888,572		207,927,720		208,858,976
Earnings Allocated to Common and Potential Common Shares	Earnings Allocated to Common and Potential Common Shares	$	308.5	$	375.4	$	947.3	$	1,133.7
Earnings Allocated to Common and Potential Common Shares
Earnings Allocated to Common and Potential Common Shares
Diluted Net Income Per Common Share	Diluted Net Income Per Common Share	1.49		1.80		4.56		5.43
Diluted Net Income Per Common Share
Diluted Net Income Per Common Share

Note: ~~Common~~For the three months ended March 31, 2024, there were de minimis common stock equivalents ~~of 48,596 and 129,239 for the three and nine months ended September 30, 2023, respectively, were not included in~~excluded from the computation of diluted net income per common share because their inclusion would have been antidilutive. For the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, there were no common stock equivalents excluded in the computation of diluted net income per share.

Note 13 – Revenue from Contracts with Clients

Trust, Investment, and Other Servicing Fees. Custody and Fund Administration income is comprised of revenues received from our core asset servicing business for providing custody, fund administration, and middle-office-related services, primarily

Notes to Consolidated Financial Statements (unaudited) (continued)

to Asset Servicing clients. Investment Management and Advisory income contains revenue received from providing asset management and related services to Wealth Management and Asset Servicing clients and to Northern Trust sponsored funds. Securities Lending income represents revenues generated from securities lending arrangements that Northern Trust enters into as agent, mainly with Asset Servicing clients. Other income largely consists of revenues received from providing employee benefit, investment risk and analytic and other services to Asset Servicing and Wealth Management clients.

Other Noninterest Income. Treasury Management income represents revenues received from providing cash and liquidity management services to Asset Servicing and Wealth Management clients. The portion of Security Commissions and Trading Income that relates to revenue from contracts with clients is primarily comprised of commissions earned from providing securities brokerage services to Wealth Management and Asset Servicing clients. The portion of Other Operating Income that relates to revenue from contracts with clients is mainly comprised of service fees for banking-related services provided to Wealth Management and Asset Servicing clients.

Performance Obligations. Clients are typically charged monthly or quarterly in arrears based on the fee arrangement agreed to with each client; payment terms will vary depending on the client and services offered.

Substantially all revenues generated from contracts with clients for asset servicing, asset management, securities lending, treasury management and banking-related services are recognized on an accrual basis, over the period in which services are provided. The nature of Northern Trust’s performance obligations is to provide a series of distinct services in which the customer simultaneously receives and consumes the benefits of the promised services as they are performed. Fee arrangements are mainly comprised of variable amounts based on market value of client assets managed and serviced, transaction volumes, number of accounts, and securities lending volume and spreads. Revenue is recognized using the output method in an amount that reflects the consideration to which Northern Trust expects to be entitled in exchange for providing each month or quarter of service. For contracts with multiple performance obligations, revenue is allocated to each performance obligation based on the price agreed to with the client, representing its relative standalone selling price.

Security brokerage revenue is primarily represented by securities commissions received in exchange for providing trade execution related services. Control is transferred at a point in time, on the trade date of the transaction, and fees are typically variable based on transaction volumes and security types.

Northern Trust’s contracts with its clients are typically open-ended arrangements and are therefore considered to have an original duration of less than one year. Northern Trust has elected the practical expedient to not disclose the value of remaining performance obligations for contracts with an original expected duration of one year or less.

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

The following table presents revenues disaggregated by major revenue source.

TABLE ~~67:~~60: REVENUE DISAGGREGATION


		THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
(In Millions)
(In Millions)
(In Millions)	(In Millions)	2023		2022		2023		2022
Noninterest Income	Noninterest Income
Noninterest Income
Noninterest Income
Trust, Investment and Other Servicing Fees
Trust, Investment and Other Servicing Fees
Trust, Investment and Other Servicing Fees	Trust, Investment and Other Servicing Fees
Custody and Fund Administration	Custody and Fund Administration	$	459.0	$	435.0	$	1,358.7	$	1,383.4
Custody and Fund Administration
Custody and Fund Administration
Investment Management and Advisory
Investment Management and Advisory
Investment Management and Advisory	Investment Management and Advisory	574.1		565.3		1,673.4		1,765.8
Securities Lending	Securities Lending	20.7		21.7		61.3		62.2
Securities Lending
Securities Lending
Other
Other
Other	Other	58.1		56.7		178.4		179.1
Total Trust, Investment and Other Servicing Fees	Total Trust, Investment and Other Servicing Fees	$	1,111.9	$	1,078.7	$	3,271.8	$	3,390.5
Total Trust, Investment and Other Servicing Fees
Total Trust, Investment and Other Servicing Fees
Other Noninterest Income
Other Noninterest Income
Other Noninterest Income	Other Noninterest Income
Foreign Exchange Trading Income	Foreign Exchange Trading Income	$	51.8	$	64.7	$	154.9	$	223.2
Foreign Exchange Trading Income
Foreign Exchange Trading Income
Treasury Management Fees
Treasury Management Fees
Treasury Management Fees	Treasury Management Fees	7.5		9.3		23.8		31.0
Security Commissions and Trading Income	Security Commissions and Trading Income	30.9		32.1		101.7		101.1
Security Commissions and Trading Income
Security Commissions and Trading Income
Other Operating Income
Other Operating Income
Other Operating Income	Other Operating Income	68.2		57.3		170.2		144.0
Investment Security Gains (Losses), net	Investment Security Gains (Losses), net	—		(0.3)		6.9		(0.3)
Investment Security Gains (Losses), net
Investment Security Gains (Losses), net
Total Other Noninterest Income
Total Other Noninterest Income
Total Other Noninterest Income	Total Other Noninterest Income	$	158.4	$	163.1	$	457.5	$	499.0
Total Noninterest Income	Total Noninterest Income	$	1,270.3	$	1,241.8	$	3,729.3	$	3,889.5
Total Noninterest Income
Total Noninterest Income

On the consolidated statements of income, Trust, Investment and Other Servicing Fees and Treasury Management Fees represent revenue from contracts with clients. For the three months ended ~~September 30,~~March 31, 2024, revenue from contracts with clients also includes $33.7 million of the $37.9 million total Security Commissions and Trading Income and $9.3 million of the $61.0 million total Other Operating Income.

Notes to Consolidated Financial Statements (unaudited) (continued)

For the three months ended March 31, 2023, revenue from contracts with clients also includes ~~$27.4~~$29.9 million of the ~~$30.9~~$34.7 million total Security Commissions and Trading Income and ~~$11.2~~$9.1 million of the $68.2 million total Other Operating Income. For the nine months ended September 30, 2023, revenue from contracts with clients also includes $86.3 million of the $101.7 million total Security Commissions and Trading Income and $30.5 million of the $170.2 million total Other Operating Income.

For the three months ended September 30, 2022, revenue from contracts with clients also includes $27.5 million of the $32.1 million total Security Commissions and Trading Income and $8.9 million of the $57.3 million total Other Operating Income. For the nine months ended September 30, 2022, revenue from contracts with clients also includes $86.4 million of the $101.1 million total Security Commissions and Trading Income and $28.3 million of the $144.0$46.8 million total Other Operating Income.

Receivables Balances. The table below represents receivables balances from contracts with clients, which are included in Other Assets on the consolidated balance sheets, at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

TABLE ~~68:~~61: CLIENT RECEIVABLES


(In Millions)	(In Millions)	SEPTEMBER 30, 2023		DECEMBER 31, 2022		(In Millions)	MARCH 31, 2024	DECEMBER 31, 2023
Trust Fees Receivable, net(1)	Trust Fees Receivable, net(1)	$	903.0	$	882.5
Other	Other	57.4		55.4
Total Client Receivables	Total Client Receivables	$	960.4	$	937.9

(1) Trust Fees Receivable is net of a ~~$14.6~~$14.8 million and ~~$13.5~~$15.9 million fee receivable allowance as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

Note 14 – Net Interest Income

The components of Net Interest Income were as follows.

TABLE ~~69:~~62: NET INTEREST INCOME


		THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
(In Millions)
(In Millions)
(In Millions)	(In Millions)	2023		2022		2023		2022
Interest Income	Interest Income
Interest Income
Interest Income
Federal Reserve and Other Central Bank Deposits
Federal Reserve and Other Central Bank Deposits
Federal Reserve and Other Central Bank Deposits	Federal Reserve and Other Central Bank Deposits	$	352.1	$	135.4	$	1,128.0	$	212.2
Interest-Bearing Due from and Deposits with Banks(1)	Interest-Bearing Due from and Deposits with Banks(1)	34.9		14.5		95.2		23.6
Interest-Bearing Due from and Deposits with Banks(1)
Interest-Bearing Due from and Deposits with Banks(1)
Federal Funds Sold
Federal Funds Sold
Federal Funds Sold	Federal Funds Sold	—		—		0.3		—
Securities Purchased under Agreements to Resell	Securities Purchased under Agreements to Resell	463.9		30.5		874.1		38.4
Securities Purchased under Agreements to Resell
Securities Purchased under Agreements to Resell
Securities — Taxable
Securities — Taxable
Securities — Taxable	Securities — Taxable	402.4		237.0		1,106.5		599.7
— Nontaxable(2)	— Nontaxable(2)	0.3		0.4		1.0		1.1
Loans and Leases		664.2		379.8		1,881.6		827.4
— Nontaxable(2)
— Nontaxable(2)
Loans
Loans
Loans
Other Interest-Earning Assets(3)
Other Interest-Earning Assets(3)
Other Interest-Earning Assets(3)	Other Interest-Earning Assets(3)	17.2		1.7		38.7		5.2
Total Interest Income	Total Interest Income	$	1,935.0	$	799.3	$	5,125.4	$	1,707.6
Total Interest Income
Total Interest Income
Interest Expense
Interest Expense
Interest Expense	Interest Expense
Deposits	Deposits	$	716.6	$	177.3	$	1,914.7	$	184.6
Deposits
Deposits
Federal Funds Purchased
Federal Funds Purchased
Federal Funds Purchased	Federal Funds Purchased	77.5		9.9		205.2		12.7
Securities Sold Under Agreements to Repurchase	Securities Sold Under Agreements to Repurchase	454.0		25.5		843.5		31.8
Securities Sold Under Agreements to Repurchase
Securities Sold Under Agreements to Repurchase
Other Borrowings
Other Borrowings
Other Borrowings	Other Borrowings	154.8		35.7		446.3		47.2
Senior Notes	Senior Notes	44.1		28.6		125.4		57.1
Senior Notes
Senior Notes
Long-Term Debt
Long-Term Debt
Long-Term Debt	Long-Term Debt	31.8		9.3		91.4		21.5
Total Interest Expense	Total Interest Expense	$	1,478.8	$	286.3	$	3,626.5	$	354.9
Total Interest Expense
Total Interest Expense
Net Interest Income	Net Interest Income	$	456.2	$	513.0	$	1,498.9	$	1,352.7
Net Interest Income
Net Interest Income

(1) Interest-Bearing Due from and Deposits with Banks includes the interest-bearing component of Cash and Due from Banks and Interest-Bearing Deposits with Banks as presented on the consolidated balance sheets.

(2) Non-taxable Securities represent securities that are exempt from U.S. federal income taxes.

(3) Other Interest-Earning Assets include certain community development investments, collateral deposits with certain securities depositories and clearing houses, Federal Home Loan Bank and Federal Reserve stock, and money market investments which are classified in Other Assets on the consolidated balance sheets.

Note 15 – Other Operating Income

The components of Other Operating Income were as follows.

TABLE ~~70:~~63: OTHER OPERATING INCOME


		THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
(In Millions)
(In Millions)
(In Millions)	(In Millions)	2023		2022		2023		2022
Loan Service Fees	Loan Service Fees	$	21.2	$	17.8	$	61.3	$	52.6
Loan Service Fees
Loan Service Fees
Banking Service Fees
Banking Service Fees
Banking Service Fees	Banking Service Fees	15.0		12.2		40.8		37.8
Bank Owned Life Insurance	Bank Owned Life Insurance	17.3		17.3		51.0		44.0
Bank Owned Life Insurance
Bank Owned Life Insurance
Other Income(1)
Other Income(1)
Other Income(1)	Other Income(1)	14.7		10.0		17.1		9.6
Total Other Operating Income	Total Other Operating Income	$	68.2	$	57.3	$	170.2	$	144.0
Total Other Operating Income
Total Other Operating Income

(1) Other Income includes the mark-to-market gain or loss on derivative swap activity primarily related to the sale of certain Visa Class B common shares.

Notes to Consolidated Financial Statements (unaudited) (continued)

Note 16 – Other Operating Expense

The components of Other Operating Expense were as follows.

TABLE ~~71:~~64: OTHER OPERATING EXPENSE


		THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
($ In Millions)		2023		2022		2023		2022
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
In Millions)
In Millions)
In Millions)
Business Promotion
Business Promotion
Business Promotion	Business Promotion	$	16.2	$	20.1	$	53.5	$	49.0
Staff Related	Staff Related	11.0		7.8		27.7		16.9
FDIC Insurance Premiums		8.3		3.7		21.1		14.1
Staff Related
Staff Related
FDIC Insurance Premiums(1)
FDIC Insurance Premiums(1)
FDIC Insurance Premiums(1)
Charitable Contributions
Charitable Contributions
Charitable Contributions	Charitable Contributions	3.8		5.0		11.3		12.1
Other Expenses	Other Expenses	59.2		45.4		182.5		159.5
Other Expenses
Other Expenses
Total Other Operating Expense	Total Other Operating Expense	$	98.5	$	82.0	$	296.1	$	251.6
Total Other Operating Expense
Total Other Operating Expense

(1) FDIC Insurance Premiums include an additional FDIC Special Assessment of $12.5 million for the three months ended March 31, 2024. Refer to Note 20—Commitments and Contingent Liabilities for further information.

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

Note 17 – Pension

The following table sets forth the net periodic pension expense for Northern Trust’s U.S. Qualified Plan, Non-U.S. Pension Plans, and U.S. Non-Qualified Plan for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023.

TABLE ~~72:~~65: NET PERIODIC PENSION EXPENSE (BENEFIT)


U.S. QUALIFIED PLAN	U.S. QUALIFIED PLAN	THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
U.S. QUALIFIED PLAN
U.S. QUALIFIED PLAN
(In Millions)
(In Millions)
(In Millions)	(In Millions)	2023		2022		2023		2022
Service Cost	Service Cost	$	11.5	$	11.1	$	34.5	$	37.5
Service Cost
Service Cost
Interest Cost
Interest Cost
Interest Cost	Interest Cost	13.5		12.5		40.5		33.1
Expected Return on Plan Assets	Expected Return on Plan Assets	(25.3)		(21.9)		(75.9)		(62.3)
Expected Return on Plan Assets
Expected Return on Plan Assets
Amortization
Amortization
Amortization	Amortization
Net Actuarial Loss	Net Actuarial Loss	0.4		—		1.2		11.4
Prior Service Cost (Credit)		—		—		—		(0.1)
Net Actuarial Loss
Net Actuarial Loss
Net Periodic Pension Expense	Net Periodic Pension Expense	$	0.1	$	1.7	$	0.3	$	19.6
Settlement Expense		—		17.0		—		37.3
Total Pension Expense		$	0.1	$	18.7	$	0.3	$	56.9
Net Periodic Pension Expense
Net Periodic Pension Expense


NON-U.S. PENSION PLANS	NON-U.S. PENSION PLANS	THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
NON-U.S. PENSION PLANS
NON-U.S. PENSION PLANS
(In Millions)
(In Millions)
(In Millions)	(In Millions)	2023		2022		2023		2022
Service Cost	Service Cost	$	0.4	$	0.4	$	1.1	$	1.3
Service Cost
Service Cost
Interest Cost
Interest Cost
Interest Cost	Interest Cost	1.2		0.6		3.6		1.9
Expected Return on Plan Assets	Expected Return on Plan Assets	(1.6)		(0.7)		(4.7)		(2.2)
Expected Return on Plan Assets
Expected Return on Plan Assets
Amortization	Amortization
Net Actuarial (Gain) Loss		(0.1)		0.2		(0.3)		0.6
Net Periodic Pension (Benefit) Expense		$	(0.1)	$	0.5	$	(0.3)	$	1.6
Settlement Expense		—		—		—		0.7
Total Pension (Benefit) Expense		$	(0.1)	$	0.5	$	(0.3)	$	2.3
Amortization
Amortization
Net Actuarial (Gain)
Net Actuarial (Gain)
Net Actuarial (Gain)
Net Periodic Pension (Benefit)
Net Periodic Pension (Benefit)
Net Periodic Pension (Benefit)


U.S. NON-QUALIFIED PLAN	U.S. NON-QUALIFIED PLAN	THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
U.S. NON-QUALIFIED PLAN
U.S. NON-QUALIFIED PLAN
(In Millions)
(In Millions)
(In Millions)	(In Millions)	2023		2022		2023		2022
Service Cost	Service Cost	$	1.2	$	1.4	$	3.6	$	4.2
Service Cost
Service Cost
Interest Cost
Interest Cost
Interest Cost	Interest Cost	1.3		1.0		3.9		3.0
Amortization	Amortization
Amortization
Amortization
Net Actuarial Loss
Net Actuarial Loss
Net Actuarial Loss	Net Actuarial Loss	1.3		1.8		3.9		5.4
Net Periodic Pension Expense	Net Periodic Pension Expense	$	3.8	$	4.2	$	11.4	$	12.6
Net Periodic Pension Expense
Net Periodic Pension Expense

The components of net periodic pension expense are recorded in Employee Benefits expense on the consolidated statements of income.

There were $200.0 million of contributions to the U.S. Qualified Plan during the three months ended March 31, 2024. There were no contributions to the U.S. Qualified Plan during the ~~nine~~three months ended ~~September 30, 2023 and 2022, and $16.5~~March 31, 2023. There were $8.0 million and ~~$20.7~~$16.5 million of contributions to the U.S. Non-Qualified Plan during the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively.

7360

Notes to Consolidated Financial Statements (unaudited) (continued)

Note 18 – Share-Based Compensation Plans

The Northern Trust Corporation 2017 Long-Term Incentive Plan provides for the grant of non-qualified and incentive stock options; tandem and free-standing stock appreciation rights; stock awards in the form of restricted stock, restricted stock units and other stock awards; and performance awards.

Restricted stock unit and performance stock unit grants continue to vest in accordance with the original terms of the award if the applicable employee retires after satisfying applicable age and service requirements.

The Corporation granted 1,086,910 stock units awards with a total grant-date fair value of $86.0 million during the three months ended March 31, 2024, compared to 1,029,713 stock units awards with a total grant-date fair value of $95.9 million during the three months ended March 31, 2023. Compensation expense for the three months ended March 31, 2024 included $28.8 million attributable to restricted stock units granted to retirement-eligible employees that were expensed in their entirety on the date of grant, compared to $31.4 million in the prior-year quarter.

The Corporation granted 262,557 performance stock units with a total grant-date fair value of $21.0 million during the three months ended March 31, 2024, compared to 219,314 performance stock units with a total grant-date fair value of $20.6 million during the three months ended March 31, 2023. Compensation expense for the three months ended March 31, 2024 included $12.8 million attributable to performance stock units granted to retirement-eligible employees that were expensed in their entirety on the date of grant, compared to $14.2 million in the prior-year quarter.

Restricted stock unit award compensation expense for the three months ended March 31, 2024 and 2023 included $4.5 million and $4.2 million, respectively, attributable to restricted stock units vested in full and expensed in their entirety upon date of grant.

Total compensation expense for share-based payment arrangements and the associated tax impacts were as follows for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023.

TABLE ~~73:~~66: TOTAL COMPENSATION EXPENSE FOR SHARE-BASED PAYMENT ARRANGEMENTS


		THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
		THREE MONTHS ENDED MARCH 31,
(In Millions)
(In Millions)
(In Millions)	(In Millions)	2023		2022		2023		2022
Restricted Stock Unit Awards	Restricted Stock Unit Awards	$	14.7	$	13.9	$	80.5	$	83.4
Restricted Stock Unit Awards
Restricted Stock Unit Awards
Performance Stock Units
Performance Stock Units
Performance Stock Units	Performance Stock Units	1.8		0.9		17.8		21.4
Total Share-Based Compensation Expense	Total Share-Based Compensation Expense	16.5		14.8		98.3		104.8
Total Share-Based Compensation Expense
Total Share-Based Compensation Expense
Tax Benefits Recognized	Tax Benefits Recognized	$	4.2	$	3.7	$	24.7	$	26.3
Tax Benefits Recognized
Tax Benefits Recognized

Note 19 – Variable Interest Entities

Northern Trust is involved with various entities in the normal course of business that are deemed to be variable interest entities (VIEs). VIEs are defined within GAAP as entities which either (1) lack sufficient equity at risk to permit the entity to finance its activities without additional subordinated financial support, (2) have equity investors that lack attributes typical of an equity investor, such as the ability to make significant decisions through voting rights affecting the entity’s operations, or the obligation to absorb expected losses or the right to receive residual returns of the entity, or (3) are structured with voting rights that are disproportionate to the equity investor’s obligation to absorb losses or right to receive returns, and substantially all of the activities are conducted on behalf of the holder of the equity investment at risk with disproportionately few voting rights. Investors that finance a VIE through debt or equity interests are variable interest holders in the entity and the variable interest holder, if any, that has both the power to direct the activities that most significantly impact the entity’s economic performance and, through its variable interest, the obligation to absorb losses or the right to receive returns that could potentially be significant to the entity is deemed to be the VIE’s primary beneficiary and is required to consolidate the VIE.

Tax credit structures. Northern Trust holds tax-advantaged investments in unconsolidated entities that own and operate affordable housing and ~~other community development projects.~~projects through the new markets tax credit program. These entities, which are limited partnerships and similar entities, are primarily VIEs and are designed to generate a return primarily through the realization of tax credits and other tax benefits, such as tax deductions from operating losses of the investments. Northern Trust invests as a limited partner/investor member and lacks both the power to direct the entities’ most significant activities and the obligation to absorb losses or right to receive benefits that could potentially be significant to the entities. Northern Trust is not required to consolidate these entities as it does not have a controlling financial interest and thus is not the primary beneficiary.

Northern Trust’s maximum exposure to loss as a result of its involvement with these entities is limited to the carrying amounts of its investments, including any undrawn commitments. Northern Trust’s funding requirements are limited to its invested capital and undrawn commitments for future equity contributions. Northern Trust has no exposure to loss from liquidity arrangements and no obligation to purchase assets of these entities.

Notes to Consolidated Financial Statements (unaudited) (continued)

Northern Trust’s investments in these unconsolidated entities and related unfunded commitments are reported in Other Assets and Other Liabilities, respectively, on the consolidated balance sheets.

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

TABLE ~~74:~~67: SUMMARY OF UNCONSOLIDATED TAX CREDIT STRUCTURES


(In Millions)	(In Millions)	SEPTEMBER 30, 2023		DECEMBER 31, 2022		(In Millions)	MARCH 31, 2024	DECEMBER 31, 2023
Investment Carrying Amount	Investment Carrying Amount
Affordable Housing	Affordable Housing	$	640.1	$	635.9
Other Community Development		254.4		268.4
Affordable Housing
Affordable Housing
New Markets
Total Investment Carrying Amount(1)	Total Investment Carrying Amount(1)	$	894.5	$	904.3

Unfunded Commitments	Unfunded Commitments
Unfunded Commitments
Unfunded Commitments
Affordable Housing	Affordable Housing	$	205.5	$	218.9
Other Community Development		—		—
Affordable Housing
Affordable Housing
New Markets
Total Unfunded Commitments(2)	Total Unfunded Commitments(2)	$	205.5	$	218.9

(1) As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022, $861.2~~2023, $835.7 million and ~~$867.2~~$857.0 million are VIEs, respectively.

(2) As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022, $198.5~~2023, $156.6 million and ~~$210.1~~$172.0 million relate to undrawn commitments on VIEs, respectively.

~~Tax~~Upon adoption of ASU 2023-02 on January 1, 2024, Northern Trust elected to account for qualifying new markets tax credit investments under the proportional amortization method. Prior to the adoption of ASU 2023-02, Northern Trust accounted for qualifying affordable housing investments under the proportional amortization method and continues to do so subsequent to the adoption of ASU 2023-02. Under the proportional amortization method, the carrying amount of the investment is amortized in proportion to the income tax credits and other income tax benefits ~~attributable~~received in the current period as compared to the total income tax credits and income tax benefits expected to be received over the life of the investment. Income tax credits and other income tax benefits and amortization expense associated with unconsolidated tax credit structures ~~totaled $28.5 million and $26.1 million~~are primarily reported in the Provision for Income Tax on the ~~three months ended September 30, 2023 and 2022, respectively, and $85.1 million and $74.5 million~~consolidated statement of income.

Northern Trust adopted ASU 2023-02 on a modified retrospective basis. As a result, amortization expense related to new markets tax credit investments is reported in the Provision for ~~the nine months ended September 30, 2023, and 2022, respectively.~~Income Tax beginning January 1, 2024. Prior to January 1, 2024, amortization expense related to new markets tax credit investments was previously reported in Other Operating Expense. Refer to Note 2—Recent Accounting Pronouncements for additional information.

TABLE 68: INCOME TAX CREDITS AND OTHER TAX BENEFITS AND AMORTIZATION EXPENSE ASSOCIATED WITH TAX CREDIT STRUCTURES


(In Millions)	MARCH 31, 2024		MARCH 31, 2023
Income Tax Credits and Other Income Tax Benefits
Affordable Housing	$	21.7	$	22.4
New Markets	5.0		5.9
Total Income Tax Credits and Other Income Tax Benefits	$	26.7	$	28.3

Amortization Expense
Affordable Housing	$	19.5	$	19.8
New Markets	4.4		4.7
Total Amortization Expense	$	23.9	$	24.5

Investment funds. Northern Trust acts as asset manager for various funds in which clients of Northern Trust are investors. As an asset manager of funds, Northern Trust earns a competitively priced fee that is based on assets managed and varies with each fund’s investment objective. Based on its analysis, Northern Trust has determined that it is not the primary beneficiary of these VIEs under GAAP.

Some of the funds for which Northern Trust acts as asset manager comply or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds and, therefore, the funds are exempt from the consolidation requirements in ASC 810-10. Northern Trust voluntarily waived ~~$2.2~~$2.3 million and ~~$2.6~~$2.0 million of money market fund fees for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively, related to ~~certain competitive factors, and $6.5 million and $61.9 million for the nine months ended September 30, 2023, and 2022, respectively, related to the low interest rate environment at the time and~~ certain competitive factors. Northern Trust does not have any contractual obligations to provide financial support to the funds. Any potential future support of the funds will be at the discretion of Northern Trust after an evaluation of the specific facts and circumstances.

Periodically, Northern Trust makes seed capital investments to certain funds. As of ~~September 30,~~March 31, 2024 and December 31, 2023, Northern Trust had no seed capital investments and no unfunded commitments related to seed capital investments. As of December 31, 2022, Northern Trust had $19.9 million of investments valued using net asset value per share and included in Other Assets and had no unfunded commitments related to seed capital investments.

7562

Notes to Consolidated Financial Statements (unaudited) (continued)

Note 20 – Commitments and Contingent Liabilities

Off-Balance Sheet Financial Instruments, Guarantees and Other Commitments. Northern Trust, in the normal course of business, enters into various types of commitments and issues letters of credit to meet the liquidity and credit enhancement needs of its clients. The contractual amounts of these instruments represent the maximum potential credit exposure should the instrument be fully drawn upon and the client default. To control the credit risk associated with entering into commitments and issuing letters of credit, Northern Trust subjects such activities to the same credit quality and monitoring controls as its lending activities. Northern Trust does not believe the total contractual amount of these instruments to be representative of its future credit exposure or funding requirements.

The following table provides details of Northern Trust's off-balance sheet financial instruments as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

TABLE ~~75:~~69: SUMMARY OF OFF-BALANCE SHEET FINANCIAL INSTRUMENTS


		SEPTEMBER 30, 2023						DECEMBER 31, 2022
($ In Millions)		ONE YEAR AND LESS		OVER ONE YEAR		TOTAL		ONE YEAR AND LESS		OVER ONE YEAR		TOTAL
	MARCH 31, 2024																		MARCH 31, 2024			DECEMBER 31, 2023
(In Millions)														(In Millions)	ONE YEAR AND LESS	OVER ONE YEAR	TOTAL	ONE YEAR AND LESS		OVER ONE YEAR	TOTAL
Undrawn Commitments(1)	Undrawn Commitments(1)	$	12,409.2	$	18,452.1	$	30,861.3	$	13,639.2	$	17,321.4	$	30,960.6
Standby Letters of Credit and Financial Guarantees(2)(3)	Standby Letters of Credit and Financial Guarantees(2)(3)	62,939.0		375.8		63,314.8		17,553.0		409.9		17,962.9
Commercial Letters of Credit	Commercial Letters of Credit	24.5		1.3		25.8		25.4		1.3		26.7
Securities Lent with Indemnification	Securities Lent with Indemnification	141,392.4		—		141,392.4		130,311.0		—		130,311.0
Unsettled Reverse Repurchase Agreements	Unsettled Reverse Repurchase Agreements	19,127.3		—		19,127.3		496.8		—		496.8
Total Off-Balance Sheet Financial Instruments	Total Off-Balance Sheet Financial Instruments	$	235,892.4	$	18,829.2	$	254,721.6	$	162,025.4	$	17,732.6	$	179,758.0

(1) These amounts exclude ~~$222.5~~$259.1 million and ~~$266.6~~$222.2 million of commitments participated to others at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

(2) These amounts include ~~$33.4~~$41.0 million and ~~$35.1~~$39.1 million of standby letters of credit secured by cash deposits or participated to others as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

(3) These amounts include a ~~$61.4~~$89.3 billion and ~~$16.3~~$84.6 billion guarantee to the Fixed Income Clearing Corporation (FICC) under the sponsored member program, without taking into consideration the related collateral, as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively. Northern Trust became a sponsored member during the third quarter of 2021.

Undrawn Commitments generally have fixed expiration dates or other termination clauses. Since a significant portion of the commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future loans or liquidity requirements.

Standby Letters of Credit obligate Northern Trust to meet certain financial obligations of its clients, if, under the contractual terms of the agreement, the clients are unable to do so. These instruments are primarily issued to support public and private financial commitments, including commercial paper, bond financing, initial margin requirements on futures exchanges and similar transactions. Northern Trust is obligated to meet the entire financial obligation of these agreements and in certain cases is able to recover the amounts paid through recourse against collateral received or other participants. Since the vast majority of the standby letters of credit are never drawn, the total standby letters of credit amount does not necessarily represent future loans or liquidity requirements.

Financial Guarantees are issued by Northern Trust to guarantee the performance of a client to a third party under certain arrangements.

Commercial Letters of Credit are instruments issued by Northern Trust on behalf of its clients that authorize a third party (the beneficiary) to draw drafts up to a stipulated amount under the specified terms and conditions of the agreement and other similar instruments. Commercial letters of credit are issued primarily to facilitate international trade.

Securities Lent with Indemnification involves Northern Trust lending securities owned by clients to borrowers who are reviewed and approved by the Northern Trust Capital Markets Credit Committee, as part of its securities custody activities and at the direction of its clients. In connection with these activities, Northern Trust has issued indemnifications to certain clients against certain losses that are a direct result of a borrower’s failure to return securities when due, should the value of such securities exceed the value of the collateral required to be posted. Borrowers are required to collateralize fully securities received with cash or marketable securities. As securities are loaned, collateral is maintained at a minimum of 100% of the fair value of the securities plus accrued interest. The collateral is revalued on a daily basis. The amount of securities loaned as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 subject to indemnification was ~~$141.4~~$138.3 billion and ~~$130.3~~$140.5 billion, respectively. Because of the credit quality of the borrowers and the requirement to fully collateralize securities borrowed, management believes that the exposure to credit loss from this activity is not significant and no liability was recorded as of ~~September 30, 2023~~March 31, 2024 or December 31, ~~2022,~~2023, related to these indemnifications.

Unsettled Repurchase and Reverse Repurchase Agreements. Northern Trust enters into repurchase agreements and reverse repurchase agreements which may settle at a future date. In repurchase agreements, Northern Trust receives cash from and provides securities as collateral to a counterparty. In reverse repurchase agreements, Northern Trust advances cash to and receives securities as collateral from a counterparty. These transactions are recorded on the consolidated balance sheets on the

Notes to Consolidated Financial Statements (unaudited) (continued)

settlement date. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, there were ~~$19.1~~$16.4 billion and ~~$496.8 million~~$27.7 billion unsettled reverse repurchase agreements, respectively, and no unsettled repurchase agreements.

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

Sponsored Member Program. Northern Trust is an approved Government Securities Division (GSD) netting and sponsoring member in the FICC sponsored member program, through which Northern Trust submits eligible repurchase and reverse repurchase transactions in U.S. government securities between Northern Trust and its sponsored member clients for novation and clearing. Northern Trust may sponsor clients to clear their eligible repurchase transactions with the FICC. As a sponsoring member, Northern Trust guarantees to the FICC the prompt and full payment and performance of its sponsored member clients’ respective obligations under the FICC GSD’s rules. To mitigate Northern Trust’s credit exposure under this guarantee, Northern Trust obtains a security interest in its sponsored member clients’ collateral. See Note 23—Offsetting of Assets and Liabilities for additional information on Northern Trust’s repurchase and reverse repurchase agreements.

Clearing and Settlement Organizations. The Bank is a participating member of various cash, securities and foreign exchange clearing and settlement organizations. It participates in these organizations on behalf of its clients and on its own behalf as a result of its own activities. A wide variety of cash and securities transactions are settled through these organizations, including those involving U.S. Treasuries, obligations of states and political subdivisions, asset-backed securities, commercial paper, dollar placements, and securities issued by the Government National Mortgage Association.

Certain of these industry clearing and settlement exchanges require their members to guarantee their obligations and liabilities and/or to provide liquidity support in the event other members do not honor their obligations as stipulated in each clearing organization’s membership agreement. Exposure related to these agreements varies, primarily as a result of fluctuations in the volume of transactions cleared through the organizations. At ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, Northern Trust has not recorded any material liabilities under these arrangements as Northern Trust believes the likelihood that a clearing or settlement exchange (of which Northern Trust is a member) would become insolvent is remote. Controls related to these clearing transactions are closely monitored by management to protect the assets of Northern Trust and its clients.

FDIC Special Assessment. In ~~May~~November 2023, the Federal Deposit Insurance Corporation (FDIC) issued a ~~proposed~~final rule ~~that would impose~~to implement a special assessment to ~~recover the loss~~recoup losses to the ~~Deposit Insurance Fund arising from the protection of uninsured depositors of Silicon Valley Bank and Signature Bank~~deposit insurance fund associated with ~~their closures, and~~bank failures in the ~~systemic risk determination announced by the FDIC on March 12,~~first half of 2023. ~~While the timing and amount of any expense recognition are unknown until the proposed rule is finalized, if the FDIC final rule is issued as proposed, the estimated impact of~~In conjunction with the special assessment, to$84.6 million was recognized as an accrued liability and related expense in the fourth quarter of 2023. During the current quarter, the FDIC published revised estimated losses as well as estimated recoveries from the related bank failures As a result, Northern Trust ~~recognized~~estimated an additional cost of $12.5 million in the current quarter, recorded to Other Operating ~~Expense, would be approximately $80 million.~~Expense.

Legal Proceedings. In the normal course of business, the Corporation and its subsidiaries are routinely defendants in or parties to pending and threatened legal actions, and are subject to regulatory examinations, information-gathering requests, investigations, and proceedings, both formal and informal. In certain legal actions, claims for substantial monetary damages are asserted. In regulatory matters, claims for disgorgement, restitution, penalties and/or other remedial actions or sanctions may be sought.

Based on current knowledge, after consultation with legal counsel and after taking into account current accruals, management does not believe that losses, fines or penalties, if any, arising from pending litigation or threatened legal actions or regulatory matters either individually or in the aggregate, after giving effect to applicable reserves and insurance coverage will have a material adverse effect on the consolidated financial position or liquidity of the Corporation, although such matters could have a material adverse effect on the Corporation’s operating results for a particular period.

Under GAAP, (i) an event is “probable” if the “future event or events are likely to occur”; (ii) an event is “reasonably possible” if “the chance of the future event or events occurring is more than remote but less than likely”; and (iii) an event is “remote” if “the chance of the future event or events occurring is slight.”

The outcome of litigation and regulatory matters is inherently difficult to predict and/or the range of loss often cannot be reasonably estimated, particularly for matters that (i) will be decided by a jury, (ii) are in early stages, (iii) involve uncertainty as to the likelihood of a class being certified or the ultimate size of the class, (iv) are subject to appeals or motions, (v) involve significant factual issues to be resolved, including with respect to the amount of damages, (vi) do not specify the amount of damages sought or (vii) seek very large damages based on novel and complex damage and liability legal theories. Accordingly, the Corporation cannot reasonably estimate the eventual outcome of these pending matters, the timing of their ultimate resolution or what the eventual loss, fines or penalties, if any, related to each pending matter will be.

In accordance with applicable accounting guidance, the Corporation records accruals for litigation and regulatory matters when those matters present loss contingencies that are both probable and reasonably estimable. When loss contingencies are not both probable and reasonably estimable, the Corporation does not record accruals. No material accruals have been recorded for pending litigation or threatened legal actions or regulatory matters.

For a limited number of matters for which a loss is reasonably possible in future periods, whether in excess of an accrued liability or where there is no accrued liability, the Corporation is able to estimate a range of possible loss. As of ~~September 30, 2023,~~March 31,

Notes to Consolidated Financial Statements (unaudited) (continued)

2024, the Corporation has estimated the range of reasonably possible loss for these matters to be from zero to approximately $25 million in the aggregate. The Corporation’s estimate with respect to the aggregate range of reasonably possible loss is

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

based upon currently available information and is subject to significant judgment and a variety of assumptions and known and unknown uncertainties. The matters underlying the estimated range will change from time to time, and actual results may vary significantly from the current estimate.

In certain other pending matters, there may be a range of reasonably possible loss (including reasonably possible loss in excess of amounts accrued) that cannot be reasonably estimated for the reasons described above. Such matters are not included in the estimated range of reasonably possible loss discussed above.

In 2015, Northern Trust Fiduciary Services (Guernsey) Limited (NTFS), an indirect subsidiary of the Corporation, was charged by a French investigating magistrate judge with complicity in estate tax fraud in connection with the administration of two trusts for which it serves as trustee. Charges also were brought against a number of other persons and entities related to this matter. In 2017, a French court found no estate tax fraud had occurred and NTFS and all other persons and entities charged were acquitted. The Public Prosecutor’s Office of France appealed the court decision and in June 2018 a French appellate court issued its opinion on the matter, acquitting all persons and entities charged, including NTFS. In January 2021, the Cour de Cassation, the highest court in France, reversed the June 2018 appellate court ruling, requiring a re-trial at the appellate court level. This re-trial concluded in October ~~2023 and~~2023. On March 5, 2024 the appellate court ~~is expected~~rendered a judgment against all defendants, including NTFS. NTFS was ordered to ~~render its verdict~~pay a fine of €187,500 in ~~March 2024. As trustee,~~conjunction with the judgment. In addition, the court ordered that certain of those convicted in relation to tax fraud or aiding and abetting tax fraud, including NTFS, are jointly and severally liable for any allegedly unpaid estate taxes owing, plus penalties and interest. NTFS provided no tax advice and ~~had no involvement~~was not involved in the preparation or filing of the challenged estate tax ~~filings.~~filings in this case. Further, NTFS believes it acted in accordance with all applicable laws and fully complied with its fiduciary duties. Accordingly, NTFS filed an appeal of the judgment on March 5, 2024. Under applicable law, upon the filing by NTFS of its appeal, the judgment, as well as its effects (including the fine and joint and several liability) will be stayed pending the outcome of the appeal.

Visa Class B Common Shares. Northern Trust, as a member of Visa U.S.A. Inc. (Visa U.S.A.) and in connection with the 2007 restructuring of Visa U.S.A. and its affiliates and the 2008 initial public offering of Visa Inc. (Visa), received certain Visa Class B common shares. The Visa Class B common shares are subject to certain transfer restrictions until the final resolution of certain litigation related to interchange fees involving Visa (the covered litigation), at which time the shares are convertible into Visa Class A common shares based on a conversion rate dependent upon the ultimate cost of resolving the covered litigation. Since 2018, Visa has deposited an additional $2.8 billion into an escrow account previously established with respect to the covered litigation. As a result of the additional contributions to the escrow account, the rate at which Visa Class B common shares will convert into Visa Class A common shares was ~~reduced.~~reduced to 1.5875 as of March 31, 2024.

In September 2018, Visa reached a proposed class settlement agreement covering damage claims but not injunctive relief claims regarding the covered litigation. In December 2019, the district court granted final approval for the proposed class settlement agreement. In March 2023, the Second Circuit Court of Appeals affirmed the district court’s approval of the class settlement agreement. Certain merchants have opted out of the class settlement and are pursuing claims ~~separately, while other merchants have appealed~~separately. In March 2024, Visa announced it reached a settlement agreement covering injunctive relief claims regarding the ~~approval order granted by the district court.~~covered litigation, this settlement is subject to court approval. The ultimate resolution of the covered litigation, the timing for removal of the selling restrictions on the Visa Class B common shares and the rate at which such shares will ultimately convert into Visa Class A common shares are uncertain.

On ~~September 13, 2023,~~April 8, 2024, Visa ~~announced that it is engaging in discussions with~~commenced an offer to exchange outstanding shares of its stockholders regarding potential amendments to its Certificate of Incorporation that would authorize Visa to conduct a potential exchange offer program that would have the effect of releasing the transfer restrictions on portions of Class B common ~~shares. If adopted,~~stock (Exchange Offer). Under the ~~potential amendments would allow~~Exchange Offer, Visa Class B common shareholders ~~to participate in a potential exchange offer program that would allow them~~have the option to tender some or all of their Class B common shares and in return receive shares of a newly issued series of Visa Class B common shares with a value equal to half the value of the tendered shares and Visa Class C common shares with value equal to the other half of the tendered shares. The newly issued series of Visa Class B common shares ~~would be~~are subject to the same transfer and convertibility restrictions as the currently outstanding Visa Class B common shares. The Visa Class C common shares will automatically be converted at the then applicable conversion rate into shares of Visa Class A common stock if transferred to a person other than a Visa member or an affiliate of a Visa member. One third of the Visa Class C common shares received ~~would be convertible into Visa Class A common shares at a fixed conversion~~are transferable within the first 45 days following the ~~potential~~accepted exchange, up to two-thirds ~~would be convertible~~are transferable within the first 90 days, and all such shares ~~would be convertible~~are transferable after 90 days. After the initial ~~potential~~ exchange offer, Visa ~~could,~~can, at its discretion, conduct up to three successive potential exchange offers, in each case, if more than 12 months have passed since the previous exchange offer and after a further 50% reduction of interchange fees at issue in the unresolved claims for damages in the covered litigation. ~~To become effective,~~Northern Trust has submitted its election to participate in the ~~potential amendments to Visa’s Certificate of Incorporation necessary to facilitate the exchange offer program described must first be approved by holders of a majority~~Exchange Offer and is tendering all of the ~~outstanding Visa~~ Class A, B ~~and C common~~ shares ~~each voting as a separate class, following formal proposal by Visa’s board of directors.~~that it currently holds.

In June 2016 and 2015, Northern Trust recorded a $123.1 million and $99.9 million net gain on the sale of 1.1 million and 1.0 million of its Visa Class B common shares, respectively. These sales do not affect Northern Trust’s risk related to the impact of the covered litigation on the rate at which such shares will ultimately convert into Visa Class A common shares. Northern Trust continued to hold approximately 4.1 million Visa Class B common shares, which are recorded at their original cost basis of ~~zero, as of September 30, 2023 and December 31, 2022.~~

7865

Notes to Consolidated Financial Statements (unaudited) (continued)

zero, as of March 31, 2024 and December 31, 2023. Based upon the March 28, 2024, closing price of $279.08 for a Visa Class A common share, the estimated value of Northern Trust’s Visa Class B shares was approximately $1.8 billion at the current conversion rate of Visa Class B to Visa Class A common shares. The estimated value does not represent fair value given the shares’ limited transferability.

Note 21 – Derivative Financial Instruments

Northern Trust is a party to various derivative financial instruments that are used in the normal course of business to meet the needs of its clients, as part of its trading activity for its own account and as part of its risk management activities. These instruments may include foreign exchange contracts, interest rate contracts, total return swap contracts, and swaps related to the sale of certain Visa Class B common shares.

Foreign exchange contracts are agreements to exchange specific amounts of currencies at a future date, at a specified rate of exchange. Foreign exchange contracts are entered into primarily to meet the foreign exchange needs of clients. Foreign exchange contracts are also used for trading and risk management purposes. For risk management purposes, Northern Trust uses foreign exchange contracts to reduce its exposure to changes in foreign exchange rates relating to certain forecasted non-functional-currency-denominated revenue and expenditure transactions, foreign-currency-denominated assets and liabilities, including debt securities, and net investments in non-U.S. affiliates.

Interest rate contracts include swap and option contracts. Interest rate swap contracts involve the exchange of fixed and floating rate interest payment obligations without the exchange of the underlying principal amounts. Northern Trust enters into interest rate swap contracts with its clients and also may utilize such contracts to reduce or eliminate the exposure to changes in the cash flows or fair value of hedged assets or liabilities due to changes in interest rates. Interest rate option contracts may include caps, floors, collars and swaptions, and provide for the transfer or reduction of interest rate risk, typically in exchange for a fee. Northern Trust enters into option contracts primarily as a seller of interest rate protection to clients. Northern Trust receives a fee at the outset of the agreement for the assumption of the risk of an unfavorable change in interest rates. This assumed interest rate risk is then mitigated by entering into an offsetting position with an outside counterparty. Northern Trust may also purchase or enter into option contracts for risk management purposes including to reduce the exposure to changes in the cash flows of hedged assets due to changes in interest rates.

The following table shows the notional and fair values of all derivative financial instruments as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

TABLE ~~76:~~70: NOTIONAL AND FAIR VALUES OF DERIVATIVE FINANCIAL INSTRUMENTS


		SEPTEMBER 30, 2023						DECEMBER 31, 2022
		NOTIONAL VALUE		FAIR VALUE				NOTIONAL VALUE		FAIR VALUE
	MARCH 31, 2024																	MARCH 31, 2024					DECEMBER 31, 2023
	NOTIONAL VALUE																			NOTIONAL VALUE	FAIR VALUE			NOTIONAL VALUE	FAIR VALUE
(In Millions)			(In Millions)	NOTIONAL VALUE		ASSET(1)				LIABILITY(2)		NOTIONAL VALUE		ASSET(1)		LIABILITY(2)	(In Millions)		ASSET(1)		LIABILITY(2)	ASSET(1)			LIABILITY(2)
Derivatives Designated as Hedging under GAAP	Derivatives Designated as Hedging under GAAP
Interest Rate Contracts	Interest Rate Contracts
Interest Rate Contracts
Interest Rate Contracts
Fair Value Hedges
Fair Value Hedges
Fair Value Hedges	Fair Value Hedges	$	5,566.1			$	82.8	$	43.2	$	4,622.0	$	58.5	$	32.7

Foreign Exchange Contracts	Foreign Exchange Contracts
Foreign Exchange Contracts
Foreign Exchange Contracts
Cash Flow Hedges
Cash Flow Hedges
Cash Flow Hedges	Cash Flow Hedges	934.4		50.5		—		150.9		7.4		5.7
Net Investment Hedges	Net Investment Hedges	3,820.0		126.8		1.2		3,765.0		283.5		12.7
Total Derivatives Designated as Hedging under GAAP	Total Derivatives Designated as Hedging under GAAP	$	10,320.5	$	260.1	$	44.4	$	8,537.9	$	349.4	$	51.1
Derivatives Not Designated as Hedging under GAAP	Derivatives Not Designated as Hedging under GAAP
Non-Designated Risk Management Derivatives	Non-Designated Risk Management Derivatives
Non-Designated Risk Management Derivatives
Non-Designated Risk Management Derivatives
Foreign Exchange Contracts
Foreign Exchange Contracts
Foreign Exchange Contracts	Foreign Exchange Contracts	$	50.5	$	0.7	$	0.1	$	55.9	$	0.1	$	0.1
Other Financial Derivatives(3)	Other Financial Derivatives(3)	768.1		—		28.9		717.7		0.3		34.8
Total Non-Designated Risk Management Derivatives	Total Non-Designated Risk Management Derivatives	$	818.6	$	0.7	$	29.0	$	773.6	$	0.4	$	34.9
Client-Related and Trading Derivatives	Client-Related and Trading Derivatives
Foreign Exchange Contracts
Foreign Exchange Contracts
Foreign Exchange Contracts	Foreign Exchange Contracts	$	311,789.1	$	2,871.1	$	2,818.9	$	288,994.6	$	3,219.1	$	3,169.0
Interest Rate Contracts	Interest Rate Contracts	12,080.7		281.1		424.1		12,378.2		163.5		399.1
Total Client-Related and Trading Derivatives	Total Client-Related and Trading Derivatives	$	323,869.8	$	3,152.2	$	3,243.0	$	301,372.8	$	3,382.6	$	3,568.1
Total Derivatives Not Designated as Hedging under GAAP	Total Derivatives Not Designated as Hedging under GAAP	$	324,688.4	$	3,152.9	$	3,272.0	$	302,146.4	$	3,383.0	$	3,603.0
Total Gross Derivatives	Total Gross Derivatives	$	335,008.9	$	3,413.0	$	3,316.4	$	310,684.3	$	3,732.4	$	3,654.1
Less: Netting(4)	Less: Netting(4)			1,553.1		2,409.9				2,810.7		1,865.9
Total Derivative Financial Instruments	Total Derivative Financial Instruments			$	1,859.9	$	906.5			$	921.7	$	1,788.2

(1) Derivative assets are reported in Other Assets on the consolidated balance sheets.

(2) Derivative liabilities are reported in Other Liabilities on the consolidated balance sheets.

(3) ~~This line includes~~Includes swaps related to sales of certain Visa Class B common ~~shares and total return swap contracts.~~shares.

Notes to Consolidated Financial Statements (unaudited) (continued)

(4) See further detail in Note 23—Offsetting of Assets and Liabilities.

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

Notional amounts of derivative financial instruments do not represent credit risk and are not recorded in the consolidated balance sheets. They are used merely to express the volume of this activity. Northern Trust’s credit-related risk of loss is limited to the positive fair value of the derivative instrument, net of any collateral received, which is significantly less than the notional amount.

All derivative financial instruments, whether designated as hedges or not, are recorded on the consolidated balance sheets at fair value within Other Assets or Other Liabilities. Northern Trust has elected to net derivative assets and liabilities when legally enforceable master netting arrangements or similar agreements exist between Northern Trust and the counterparty.

Hedging Derivative Instruments Designated under GAAP. Northern Trust uses derivative instruments to hedge its exposure to foreign currency, interest rate, and equity price. Certain hedging relationships are formally designated and qualify for hedge accounting under GAAP as fair value, cash flow or net investment hedges. Other derivatives that are entered into for risk management purposes as economic hedges are not formally designated as hedges and changes in fair value are recognized currently in Other Operating Income within the consolidated statements of income (see below section “Derivative Instruments Not Designated as Hedging under GAAP”).

In order to qualify for hedge accounting, a formal assessment is performed on a calendar-quarter basis to verify that derivatives used in designated hedging transactions continue to be highly effective in offsetting the changes in fair value or cash flows of the hedged item. If a derivative ceases to be highly effective, matures, is sold or is terminated, or if a hedged forecasted transaction is no longer probable of occurring, hedge accounting is terminated and the derivative is treated as if it were a trading instrument.

Fair Value Hedges. Derivatives are designated as fair value hedges to limit Northern Trust’s exposure to changes in the fair value of assets and liabilities due to movements in interest rates. Northern Trust ~~enters~~may enter into interest rate swaps to hedge changes in fair value of AFS debt securities and long-term subordinated debt and senior notes. Northern Trust applied the “shortcut” method of accounting, available under GAAP, which assumes there is perfect effectiveness in a hedge, for all of its fair value hedges during the ~~three- and nine-month~~three month periods ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023. Changes in the fair value of the derivative instrument and changes in the fair value of the hedged asset or liability attributable to the hedged risk are recognized currently in earnings within the same income statement line item.

Cash Flow Hedges. Derivatives are also designated as cash flow hedges in order to minimize the variability in cash flows of earning assets or forecasted transactions caused by movements in interest or foreign exchange rates. Northern Trust ~~enters~~may enter into foreign exchange contracts to hedge changes in cash flows due to movements in foreign exchange rates of forecasted foreign- currency-denominated transactions and foreign-currency-denominated debt securities. As of September 30, 2023, foreign exchange contracts to hedge changes in cash flows due to movements in foreign exchange rates of forecasted foreign-currency-denominated transactions were no longer designated as hedging. Northern Trust may also ~~enters~~enter into interest rate contracts to hedge changes in cash flows due to movements in interest rates of AFS debt securities. The change in fair value of cash flow hedging derivative instruments are recorded in AOCI and reclassified to earnings when the hedged forecasted transaction impacts earnings within the same income statement line item.

There were no material gains or losses reclassified into earnings during the ~~three- and nine-month~~three month periods ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ as a result of the discontinuance of forecasted transactions that were no longer probable of occurring. It is estimated that net gains of ~~$50.5~~$4.0 million will be reclassified into Net Income within the next twelve months relating to cash flow hedges of foreign-currency-denominated debt securities. As of ~~September 30, 2023,~~ ~~four~~ ~~months~~March 31, 2024, one month was the maximum length of time over which the exposure to variability in future cash flows of forecasted foreign-currency-denominated debt securities was being hedged.

8067

Notes to Consolidated Financial Statements (unaudited) (continued)

The following tables provide fair value and cash flow hedge derivative gains and losses recognized in income during the ~~three- and nine-month~~three month periods ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023.

TABLE ~~77:~~71: LOCATION AND AMOUNT OF FAIR VALUE AND CASH FLOW HEDGE DERIVATIVE GAINS AND LOSSES RECORDED IN INCOME


(In Millions)	(In Millions)	INTEREST INCOME				INTEREST EXPENSE				OTHER OPERATING INCOME				(In Millions)	INTEREST INCOME		INTEREST EXPENSE		OTHER OPERATING INCOME
THREE MONTHS ENDED SEPTEMBER 30,		2023		2022		2023		2022		2023		2022
THREE MONTHS ENDED MARCH 31,														THREE MONTHS ENDED MARCH 31,	2024	2023	2024	2023	2024	2023
Total amounts on the consolidated statements of income	Total amounts on the consolidated statements of income	$	1,935.0	$	799.3	$	1,478.8	$	286.3	$	68.2	$	57.3
Gains (Losses) on fair value hedges recognized on	Gains (Losses) on fair value hedges recognized on
Interest Rate Contracts	Interest Rate Contracts
Interest Rate Contracts
Interest Rate Contracts
Recognized on derivatives
Recognized on derivatives
Recognized on derivatives	Recognized on derivatives	14.1		32.3		(41.8)		(119.9)		—		—
Recognized on hedged items	Recognized on hedged items	(14.1)		(32.3)		41.8		119.9		—		—
Amounts related to interest settlements on derivatives	Amounts related to interest settlements on derivatives	11.1		(4.0)		(24.9)		(6.9)		—		—
Total gains (losses) recognized on fair value hedges	Total gains (losses) recognized on fair value hedges	$	11.1	$	(4.0)	$	(24.9)	$	(6.9)	$	—	$	—
Gains (Losses) on cash flow hedges recognized on	Gains (Losses) on cash flow hedges recognized on
Foreign Exchange Contracts	Foreign Exchange Contracts
Foreign Exchange Contracts
Foreign Exchange Contracts
Net gains (losses) reclassified from AOCI to net income
Net gains (losses) reclassified from AOCI to net income
Net gains (losses) reclassified from AOCI to net income	Net gains (losses) reclassified from AOCI to net income	$	14.6	$	—	$	—	$	—	$	0.3	$	(0.6)
Total gains (losses) reclassified from AOCI to net income on cash flow hedges	Total gains (losses) reclassified from AOCI to net income on cash flow hedges	$	14.6	$	—	$	—	$	—	$	0.3	$	(0.6)

(In Millions) INTEREST INCOME INTEREST EXPENSE OTHER OPERATING INCOME
NINE MONTHS ENDED SEPTEMBER 30, 2023 2022 2023 2022 2023 2022
Total amounts on the consolidated statements of income $ 5,125.4 $ 1,707.6 $ 3,626.5 $ 354.9 $ 170.2 $ 144.0
Gains (Losses) on fair value hedges recognized on
Interest Rate Contracts
Recognized on derivatives 0.6 90.0 (42.5) (373.6) — —
Recognized on hedged items (0.6) (90.0) 42.5 373.6 — —
Amounts related to interest settlements on derivatives 34.7 (13.3) (65.9) 18.0 — —
Total gains (losses) recognized on fair value hedges $ 34.7 $ (13.3) $ (65.9) $ 18.0 $ — $ —
Gains (Losses) on cash flow hedges recognized on
Foreign Exchange Contracts
Net gains (losses) reclassified from AOCI to net income $ 15.8 $ 0.6 $ — $ — $ 1.9 $ (4.4)
Total gains (losses) reclassified from AOCI to net income on cash flow hedges $ 15.8 $ 0.6 $ — $ — $ 1.9 $ (4.4)

The following table provides the impact of fair value hedge accounting on the carrying value of the designated hedged items as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

TABLE ~~78:~~72: HEDGED ITEMS IN FAIR VALUE HEDGES

SEPTEMBER 30, 2023

DECEMBER 31, 2022

MARCH 31, 2024

DECEMBER 31, 2023

(In Millions)

CARRYING VALUE OF THE HEDGED ITEMS

CUMULATIVE HEDGE ACCOUNTING BASIS ADJUSTMENT(1)(3)

CARRYING VALUE OF THE HEDGED ITEMS

CUMULATIVE HEDGE ACCOUNTING BASIS ADJUSTMENT(2)(3)

(In Millions)

CARRYING VALUE OF THE HEDGED ITEMS

CUMULATIVE HEDGE ACCOUNTING BASIS ADJUSTMENT(1)(3)

CARRYING VALUE OF THE HEDGED ITEMS

CUMULATIVE HEDGE ACCOUNTING BASIS ADJUSTMENT(2)(3)

Available for Sale Debt Securities(4)

2,631.6

(55.7)

1,820.8

(60.2)

Senior Notes and Long-Term Subordinated Debt

2,407.6

(336.5)

2,746.2

(294.0)

(1) The cumulative hedge accounting basis adjustment includes ~~$2.2~~$2.1 million related to discontinued hedging relationships of AFS debt securities ~~as of September 30, 2023. There are no amounts~~and $25.6 million related to discontinued hedging relationships in the cumulative hedge accounting basis adjustment of senior notes and long-term debt as of ~~September 30, 2023.~~March 31, 2024.

(2) The cumulative hedge accounting basis adjustment includes ~~$7.3~~$2.2 million related to discontinued hedging relationships of AFS debt securities ~~as of December 31, 2022. There were no amounts~~and $29.6 million related to discontinued hedging relationships in the cumulative hedge accounting basis adjustment of senior notes and long-term debt as of December 31, ~~2022.~~2023.

(3) Positive (negative) amounts related to AFS securities represent cumulative fair value hedge basis adjustments that will reduce (increase) net interest income in future periods. Positive (negative) amounts related to Senior Notes and Long-Term Subordinated Debt represent cumulative fair value hedge basis adjustments that will increase (reduce) net interest income in future periods.

(4) Carrying value represents amortized cost.

Net Investment Hedges. Certain foreign exchange contracts are designated as net investment hedges to minimize Northern Trust’s exposure to variability in the foreign currency translation of net investments in non-U.S. branches and subsidiaries. Net investment hedge gains of ~~$129.9~~$81.3 million and ~~$248.4~~losses of $32.5 million were recognized in AOCI related to foreign exchange contracts for the three months ended ~~September 30,~~March 31, 2024 and 2023, and 2022, respectively. Net investment hedge gains of $66.8 million and $512.1 million were recognized in AOCI related to foreign exchange contracts for the nine months ended September 30, 2023 and 2022, respectively.

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

Derivative Instruments Not Designated as Hedging under GAAP. Northern Trust’s derivative instruments that are not designated as hedging under GAAP include derivatives for purposes of client-related and trading activities, as well as other risk management purposes. These activities consist principally of providing foreign exchange services to clients in connection with Northern Trust’s global custody business. However, in the normal course of business, Northern Trust also engages in trading of currencies for its own account.

Non-designated risk management derivatives may include foreign exchange contracts entered into to manage the foreign currency risk of non-U.S.-dollar-denominated assets and liabilities, the net investment in certain non-U.S. affiliates, commercial loans and forecasted foreign-currency-denominated transactions. Swaps related to sales of certain Visa Class B common shares were entered into pursuant to which Northern Trust retains the risks associated with the ultimate conversion of the Visa Class B common shares into Visa Class A common shares. Total return swaps are entered into to manage the equity price risk associated with certain investments.

Changes in the fair value of derivative instruments not designated as hedges under GAAP are recognized currently in income. The following table provides the location and amount of gains and losses recorded in the consolidated statements of income for the three and ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ for derivative instruments not designated as hedges under GAAP.

Notes to Consolidated Financial Statements (unaudited) (continued)

TABLE ~~79:~~73: LOCATION AND AMOUNT OF GAINS AND LOSSES RECORDED IN INCOME FOR DERIVATIVES NOT DESIGNATED AS HEDGING UNDER GAAP


(In Millions)	(In Millions)	DERIVATIVE GAINS (LOSSES) LOCATION RECOGNIZED IN INCOME	AMOUNT OF DERIVATIVE GAINS (LOSSES) RECOGNIZED IN INCOME
			THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
			2023		2022		2023		2022		(In Millions)	DERIVATIVE GAINS (LOSSES) LOCATION RECOGNIZED IN INCOME	AMOUNT OF DERIVATIVE GAINS (LOSSES) RECOGNIZED IN INCOME
THREE MONTHS ENDED MARCH 31,
2024
2024
2024
Non-designated risk management derivatives
Non-designated risk management derivatives
Non-designated risk management derivatives	Non-designated risk management derivatives
Foreign Exchange Contracts	Foreign Exchange Contracts	Other Operating Income	$	1.4	$	(0.6)	$	2.9	$	(2.0)
Foreign Exchange Contracts
Foreign Exchange Contracts
Other Financial Derivatives(1)
Other Financial Derivatives(1)
Other Financial Derivatives(1)	Other Financial Derivatives(1)	Other Operating Income	2.4		0.7		(18.3)		(9.4)
Gains (Losses) from non-designated risk management derivatives	Gains (Losses) from non-designated risk management derivatives		$	3.8	$	0.1	$	(15.4)	$	(11.4)
Gains (Losses) from non-designated risk management derivatives
Gains (Losses) from non-designated risk management derivatives
Client-related and trading derivatives
Client-related and trading derivatives
Client-related and trading derivatives	Client-related and trading derivatives
Foreign Exchange Contracts	Foreign Exchange Contracts	Foreign Exchange Trading Income	$	51.8	$	64.7	$	154.9	$	223.2
Foreign Exchange Contracts
Foreign Exchange Contracts
Interest Rate Contracts
Interest Rate Contracts
Interest Rate Contracts	Interest Rate Contracts	Security Commissions and Trading Income	1.2		2.9		8.1		7.1
Gains from client-related and trading derivatives	Gains from client-related and trading derivatives		$	53.0	$	67.6	$	163.0	$	230.3
Gains from client-related and trading derivatives
Gains from client-related and trading derivatives
Total gains from derivatives not designated as hedging under GAAP	Total gains from derivatives not designated as hedging under GAAP		$	56.8	$	67.7	$	147.6	$	218.9
Total gains from derivatives not designated as hedging under GAAP
Total gains from derivatives not designated as hedging under GAAP

(1) ~~This line includes~~Includes swaps related to the sale of certain Visa Class B common ~~shares and total return swap contracts.~~shares.

Note 22 – Securities Sold Under Agreements to Repurchase

Securities sold under agreements to repurchase are accounted for as collateralized financings and recorded at the amounts at which the securities were sold plus accrued interest. To minimize any potential credit risk associated with these transactions, the fair value of the securities sold is monitored, limits are set on exposure with counterparties, and the financial condition of counterparties is regularly assessed. Securities sold under agreements to repurchase are either directly held by, or pledged to the counterparty until the repurchase. Northern Trust nets securities sold under repurchase agreements against those purchased under resale agreements when there is a legally enforceable master netting ~~agreement~~arrangement and the other conditions to net are met.

The following table provides information regarding repurchase agreements that are accounted for as secured borrowings as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

TABLE ~~80:~~74: REPURCHASE AGREEMENTS ACCOUNTED FOR AS SECURED BORROWINGS

REMAINING CONTRACTUAL MATURITY OF THE AGREEMENTS

SEPTEMBER 30, 2023

DECEMBER 31, 2022

($ In Millions)

OVERNIGHT AND CONTINUOUS

REMAINING CONTRACTUAL MATURITY OF THE AGREEMENTS

MARCH 31, 2024

DECEMBER 31, 2023

(In Millions)

OVERNIGHT AND CONTINUOUS

U.S. Treasury and Agency Securities

545.9

567.2

Total Borrowings

545.9

567.2

Net Amount of Recognized Liabilities for Repurchase Agreements in Note 23

545.9

567.2

8269

Notes to Consolidated Financial Statements (unaudited) (continued)

Note 23 – Offsetting of Assets and Liabilities

The following table provides information regarding the offsetting of derivative assets and securities purchased under agreements to resell within the consolidated balance sheets as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

TABLE ~~81:~~75: OFFSETTING OF DERIVATIVE ASSETS AND SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL


		SEPTEMBER 30, 2023
	MARCH 31, 2024																	MARCH 31, 2024
(In Millions)	(In Millions)	GROSS RECOGNIZED ASSETS		GROSS AMOUNTS OFFSET IN THE BALANCE SHEET(3)		NET AMOUNTS PRESENTED IN THE BALANCE SHEET		GROSS AMOUNTS NOT OFFSET IN THE BALANCE SHEET(4)		NET AMOUNT(5)		(In Millions)	GROSS RECOGNIZED ASSETS	GROSS AMOUNTS OFFSET IN THE BALANCE SHEET(3)	NET AMOUNTS PRESENTED IN THE BALANCE SHEET	GROSS AMOUNTS NOT OFFSET IN THE BALANCE SHEET(4)	NET AMOUNT(5)
Derivative Assets(1)	Derivative Assets(1)
Foreign Exchange Contracts Over the Counter (OTC)	Foreign Exchange Contracts Over the Counter (OTC)	$	2,106.8	$	1,266.6	$	840.2	$	14.3	$	825.9
Foreign Exchange Contracts Over the Counter (OTC)
Foreign Exchange Contracts Over the Counter (OTC)
Interest Rate Swaps OTC	Interest Rate Swaps OTC	363.9		286.5		77.4		—		77.4
Interest Rate Swaps Exchange Cleared
Total Derivatives Subject to a Master Netting Arrangement	Total Derivatives Subject to a Master Netting Arrangement	2,470.7		1,553.1		917.6		14.3		903.3
Total Derivatives Not Subject to a Master Netting Arrangement	Total Derivatives Not Subject to a Master Netting Arrangement	942.3		—		942.3		—		942.3
Total Derivatives	Total Derivatives	3,413.0		1,553.1		1,859.9		14.3		1,845.6
Securities Purchased under Agreements to Resell(2)	Securities Purchased under Agreements to Resell(2)	$	50,143.2	$	49,758.9	$	384.3	$	384.3	$	—


		DECEMBER 31, 2022
	DECEMBER 31, 2023																	DECEMBER 31, 2023
(In Millions)	(In Millions)	GROSS RECOGNIZED ASSETS		GROSS AMOUNTS OFFSET IN THE BALANCE SHEET(3)		NET AMOUNTS PRESENTED IN THE BALANCE SHEET		GROSS AMOUNTS NOT OFFSET IN THE BALANCE SHEET(4)		NET AMOUNT(5)		(In Millions)	GROSS RECOGNIZED ASSETS	GROSS AMOUNTS OFFSET IN THE BALANCE SHEET(3)	NET AMOUNTS PRESENTED IN THE BALANCE SHEET	GROSS AMOUNTS NOT OFFSET IN THE BALANCE SHEET(4)	NET AMOUNT(5)
Derivative Assets(1)	Derivative Assets(1)
Foreign Exchange Contracts OTC	Foreign Exchange Contracts OTC	$	2,928.9	$	2,666.4	$	262.5	$	5.0	$	257.5
Foreign Exchange Contracts OTC
Foreign Exchange Contracts OTC
Interest Rate Swaps OTC	Interest Rate Swaps OTC	217.6		144.3		73.3		—		73.3
Interest Rate Swaps Exchange Cleared	Interest Rate Swaps Exchange Cleared	4.4		—		4.4		—		4.4
Other Financial Derivative		0.3		—		0.3		—		0.3

Total Derivatives Subject to a Master Netting Arrangement
Total Derivatives Subject to a Master Netting Arrangement
Total Derivatives Subject to a Master Netting Arrangement	Total Derivatives Subject to a Master Netting Arrangement	3,151.2		2,810.7		340.5		5.0		335.5
Total Derivatives Not Subject to a Master Netting Arrangement	Total Derivatives Not Subject to a Master Netting Arrangement	581.2		—		581.2		—		581.2
Total Derivatives	Total Derivatives	3,732.4		2,810.7		921.7		5.0		916.7
Securities Purchased under Agreements to Resell(2)	Securities Purchased under Agreements to Resell(2)	$	12,494.2	$	11,423.9	$	1,070.3	$	1,070.3	$	—

(1)Derivative assets are reported in Other Assets on the consolidated balance sheets. Other Assets (excluding derivative assets) totaled ~~$10.7~~$10.2 billion and ~~$8.9~~$10.3 billion as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

(2)Offsetting of Securities Purchased under Agreements to Resell primarily relates to our involvement in the FICC.

(3)Including cash collateral received from counterparties.

(4)Including financial assets accepted as collateral which are received from counterparties.

(5)Northern Trust did not possess any cash collateral that was not offset in the consolidated balance sheets that could have been used to offset the net amounts presented in the consolidated balance sheets as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

8370

Notes to Consolidated Financial Statements (unaudited) (continued)

The following table provides information regarding the offsetting of derivative liabilities and securities sold under agreements to repurchase within the consolidated balance sheets as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

TABLE ~~82:~~76: OFFSETTING OF DERIVATIVE LIABILITIES AND SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE


		SEPTEMBER 30, 2023
	MARCH 31, 2024																	MARCH 31, 2024
(In Millions)	(In Millions)	GROSS RECOGNIZED LIABILITIES		GROSS AMOUNTS OFFSET IN THE BALANCE SHEET(3)		NET AMOUNTS PRESENTED IN THE BALANCE SHEET		GROSS AMOUNTS NOT OFFSET IN THE BALANCE SHEET(4)		NET AMOUNT(5)		(In Millions)	GROSS RECOGNIZED LIABILITIES	GROSS AMOUNTS OFFSET IN THE BALANCE SHEET(3)	NET AMOUNTS PRESENTED IN THE BALANCE SHEET	GROSS AMOUNTS NOT OFFSET IN THE BALANCE SHEET(4)	NET AMOUNT(5)
Derivative Liabilities(1)	Derivative Liabilities(1)
Foreign Exchange Contracts OTC	Foreign Exchange Contracts OTC	$	2,527.7	$	2,380.6	$	147.1	$	—	$	147.1
Foreign Exchange Contracts OTC
Foreign Exchange Contracts OTC
Interest Rate Swaps OTC	Interest Rate Swaps OTC	467.3		2.1		465.2		—		465.2

Interest Rate Swaps Exchange Cleared
Other Financial Derivatives	Other Financial Derivatives	28.9		27.2		1.7		—		1.7
Total Derivatives Subject to a Master Netting Arrangement	Total Derivatives Subject to a Master Netting Arrangement	3,023.9		2,409.9		614.0		—		614.0
Total Derivatives Not Subject to a Master Netting Arrangement	Total Derivatives Not Subject to a Master Netting Arrangement	292.5		—		292.5		—		292.5
Total Derivatives	Total Derivatives	3,316.4		2,409.9		906.5		—		906.5
Securities Sold under Agreements to Repurchase(2)	Securities Sold under Agreements to Repurchase(2)	$	50,304.8	$	49,758.9	$	545.9	$	545.9	$	—


		DECEMBER 31, 2022
	DECEMBER 31, 2023																	DECEMBER 31, 2023
(In Millions)	(In Millions)	GROSS RECOGNIZED LIABILITIES		GROSS AMOUNTS OFFSET IN THE BALANCE SHEET(3)		NET AMOUNTS PRESENTED IN THE BALANCE SHEET		GROSS AMOUNTS NOT OFFSET IN THE BALANCE SHEET(4)		NET AMOUNT(5)		(In Millions)	GROSS RECOGNIZED LIABILITIES	GROSS AMOUNTS OFFSET IN THE BALANCE SHEET(3)	NET AMOUNTS PRESENTED IN THE BALANCE SHEET	GROSS AMOUNTS NOT OFFSET IN THE BALANCE SHEET(4)	NET AMOUNT(5)
Derivative Liabilities(1)	Derivative Liabilities(1)
Foreign Exchange Contracts OTC
Foreign Exchange Contracts OTC
Foreign Exchange Contracts OTC	Foreign Exchange Contracts OTC	$	2,082.3	$	1,826.7	$	255.6	$	—	$	255.6
Interest Rate Swaps OTC	Interest Rate Swaps OTC	426.5		5.9		420.6		—		420.6
Interest Rate Swaps Exchange Cleared	Interest Rate Swaps Exchange Cleared	5.3		—		5.3		—		5.3
Other Financial Derivatives	Other Financial Derivatives	34.8		33.3		1.5		—		1.5
Total Derivatives Subject to a Master Netting Arrangement	Total Derivatives Subject to a Master Netting Arrangement	2,548.9		1,865.9		683.0		—		683.0
Total Derivatives Not Subject to a Master Netting Arrangement	Total Derivatives Not Subject to a Master Netting Arrangement	1,105.2		—		1,105.2		—		1,105.2
Total Derivatives	Total Derivatives	3,654.1		1,865.9		1,788.2		—		1,788.2
Securities Sold under Agreements to Repurchase(2)	Securities Sold under Agreements to Repurchase(2)	$	11,991.1	$	11,423.9	$	567.2	$	567.2	$	—

(1)Derivative liabilities are reported in Other Liabilities on the consolidated balance sheets. Other Liabilities (excluding derivative liabilities) totaled ~~$3.7~~$2.9 billion and ~~$3.2~~$4.0 billion as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

(2)Offsetting of Securities Sold under Agreements to Repurchase primarily relates to our involvement in the FICC.

(3)Including cash collateral deposited with counterparties.

(4)Including financial assets accepted as collateral which are deposited with counterparties.

(5)Northern Trust did not place any cash collateral with counterparties that was not offset in the consolidated balance sheets that could have been used to offset the net amounts presented in the consolidated balance sheets as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

All of Northern Trust’s securities sold under agreements to repurchase (repurchase agreements) and securities purchased under agreements to resell (reverse repurchase agreements) involve the transfer of financial assets in exchange for cash subject to a right and obligation to repurchase those assets for an agreed upon amount. In the event of a repurchase failure, the cash or financial assets are available for offset. All of Northern Trust’s repurchase agreements and reverse repurchase agreements are subject to a master netting arrangement, which sets forth the rights and obligations for repurchase and offset. Under the master netting arrangement, Northern Trust is entitled to offset receivables from and collateral placed with a single counterparty against obligations owed to that counterparty. In addition, collateral held by Northern Trust can be offset against receivables from that counterparty. Northern Trust has elected to net securities sold under repurchase agreements against those purchased under resale agreements ~~and derivative assets and liabilities~~ when ~~legally enforceable master netting arrangements or similar agreements exist between Northern Trust and~~ the ~~counterparty.~~GAAP requirements to net are met.

Derivative asset and liability positions with a single counterparty can be offset against each other in cases where legally enforceable master netting arrangements or similar agreements exist. Derivative assets and liabilities can be further offset by cash collateral received from, and deposited with, the transacting counterparty. The basis for this view is that, upon termination of transactions subject to a master netting arrangement or similar agreement, the individual derivative receivables do not represent resources to which general creditors have rights and individual derivative payables do not represent claims that are equivalent to the claims of general creditors. Northern Trust has elected to net derivative assets and liabilities when legally enforceable master netting arrangements or similar agreements exist between Northern Trust and the counterparty.

Credit risk associated with derivative instruments relates to the failure of the counterparty and the failure of Northern Trust to pay based on the contractual terms of the agreement, and is generally limited to the unrealized fair value gains and losses on

Notes to Consolidated Financial Statements (unaudited) (continued)

these instruments, net of any collateral received or deposited. The amount of credit risk will increase or decrease during the

~~Notes to Consolidated Financial Statements (unaudited) (continued)~~

lives of the instruments as interest rates, foreign exchange rates, or equity prices fluctuate. Northern Trust’s risk is controlled by limiting such activity to an approved list of counterparties and by subjecting such activity to the same credit and quality controls as are followed in lending and investment activities. Credit support annexes and other similar agreements are currently in place with a number of Northern Trust’s counterparties which mitigate the aforementioned credit risk associated with derivative activity conducted with those counterparties by requiring that significant net unrealized fair value gains be supported by collateral placed with Northern Trust.

Additional cash collateral received from and deposited with derivative counterparties totaling ~~$67.7~~$78.3 million and ~~$473.4~~$60.5 million, respectively, as of ~~September 30, 2023,~~March 31, 2024, and ~~$131.8~~$373.1 million and ~~$26.3~~$21.3 million, respectively, as of December 31, ~~2022,~~2023, was not offset against derivative assets and liabilities in the consolidated balance sheets as the amounts exceeded the net derivative positions with those counterparties.

Certain master netting arrangements Northern Trust enters into with derivative counterparties contain credit-risk-related contingent features in which the counterparty has the option to declare Northern Trust in default and accelerate cash settlement of net derivative liabilities with the counterparty in the event Northern Trust’s credit rating falls below specified levels. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a liability position was ~~$592.2~~$92.7 million and ~~$190.9 million~~$1.2 billion at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively. Cash collateral amounts deposited with derivative counterparties on those dates included ~~$548.9~~$75.3 million and ~~$55.1 million,~~$1.1 billion, respectively, posted against these liabilities, resulting in a net maximum amount of termination payments that could have been required at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, of ~~$43.3~~$17.4 million and ~~$135.8~~$52.2 million, respectively. Accelerated settlement of these liabilities would not have a material effect on the consolidated financial position or liquidity of Northern Trust.

Item 4. Controls and Procedures

As of ~~September 30, 2023,~~March 31, 2024, the Corporation’s management, with the participation of the Corporation’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Corporation’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)), that are designed to ensure that information required to be disclosed by the Corporation in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. Based on such evaluation, such officers have concluded that, as of ~~September 30, 2023,~~March 31, 2024, the Corporation’s disclosure controls and procedures are effective.

There have been no changes in the Corporation’s internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15 and 15d-15 under the Exchange Act during the last fiscal quarter that have materially affected, or that are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

8572

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

The information presented under the caption “Legal Proceedings” in Note 20—Commitments and Contingent Liabilities included under Part I, Item 1 of this Form 10-Q is incorporated herein by reference.

Item 1A. Risk Factors

Refer to “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, for a discussion of risks identified as being most significant to Northern Trust.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

(c) The following table shows certain information relating to the Corporation’s purchases of common stock for the three months ended ~~September 30, 2023.~~March 31, 2024.

TABLE ~~83:~~77: REPURCHASES OF COMMON STOCK

~~PERIOD~~

~~TOTAL NUMBER OF SHARES PURCHASED~~

~~AVERAGE PRICE PAID PER SHARE~~

~~TOTAL NUMBER OF SHARES PURCHASED AS PART OF A PUBLICLY ANNOUNCED PLAN~~

~~MAXIMUM NUMBER OF SHARES THAT MAY YET BE PURCHASED UNDER THE PLAN~~

~~July 1 - 31, 2023~~

—

~~22,929,352~~

~~August 1 - 31, 2023~~

—

~~22,929,352~~

~~September 1 - 30, 2023~~

—

~~22,929,352~~

~~Total (Third Quarter)~~

—

~~22,929,352~~


PERIOD	TOTAL NUMBER OF SHARES PURCHASED	AVERAGE PRICE PAID PER SHARE		TOTAL NUMBER OF SHARES PURCHASED AS PART OF A PUBLICLY ANNOUNCED PLAN	MAXIMUM NUMBER OF SHARES THAT MAY YET BE PURCHASED UNDER THE PLAN
January 1 - 31, 2024	298,692	$	81.01	298,692	20,694,760
February 1 - 29, 2024	954,871	79.38		954,871	19,739,889
March 1 - 31, 2024	—	—		—	19,739,889
Total (First Quarter)	1,253,563	$	79.77	1,253,563	19,739,889

On October 19, 2021, the Corporation announced a share repurchase program under which the Corporation’s Board of Directors authorized the Corporation to repurchase up to 25.0 million shares of the Corporation’s common stock. The repurchase authorization approved by the Board of Directors has no expiration date, thus the Corporation retains the ability to repurchase when circumstances warrant and applicable regulation permits. Please refer to Note 10—Stockholders’ Equity to the consolidated financial statements provided in Item 1. Consolidated Financial Statements (unaudited).

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the three months ended ~~September 30, 2023,~~March 31, 2024, none of our directors or officers (as defined in Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934, as amended) adopted, terminated or modified a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).

8673

Item 6. Exhibits


Exhibit Number			Description

4.1			Certain instruments defining the rights of the holders of long-term debt of the Corporation and certain of its subsidiaries, none of which authorize a total amount of indebtedness in excess of 10% of the total assets of the Corporation and its subsidiaries on a consolidated basis, have not been filed as exhibits. The Corporation hereby agrees to furnish a copy of any of these agreements to the SEC upon request.

10.1			Form of 2024 Performance Stock Unit Award Terms and Conditions

10.2			Form of 2024 Stock Unit Award Terms and Conditions

10.3			Northern Trust Corporation Deferred Compensation Plan, as amended and restated effective as of January 1, 2024 (incorporated herein by reference to Exhibit 10.5 to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2023).

10.4			Northern Partners Incentive Plan, as amended and restated on ~~July 17, 2023~~January 16, 2024 (incorporated herein by reference to Exhibit 10.16 to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2023).

31.1			Rule 13a-14(a)/15d-14(a) Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2			Rule 13a-14(a)/15d-14(a) Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32			Certifications of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101			Includes the following financial and related information from Northern Trust’s Quarterly Report on Form 10-Q as of and for the quarter ended ~~September 30, 2023,~~March 31, 2024, formatted in Inline Extensible Business Reporting Language (iXBRL): (1) the Consolidated Balance Sheets, (2) the Consolidated Statements of Income, (3) the Consolidated Statements of Comprehensive Income, (4) the Consolidated Statements of Changes in Stockholders’ Equity, (5) the Consolidated Statements of Cash Flows, and (6) Notes to Consolidated Financial Statements.

104			The cover page from this Quarterly Report on Form 10-Q, formatted in Inline XBRL.

8774

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		NORTHERN TRUST CORPORATION
		(Registrant)

Date:	~~October 31, 2023~~April 23, 2024	By:	/s/ Jason J. Tyler
			Jason J. Tyler Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)

Date:	~~October 31, 2023~~April 23, 2024	By:	/s/ ~~Lauren Allnutt~~John P. Landers
			~~Lauren Allnutt~~John P. Landers ~~Executive~~Senior Vice President and Controller (Principal Accounting Officer)

8875