Other Operating Expense Nine Months Ended September 30,
($ In Millions) 2017 2016 Change
Business Promotion $ 72.5
$ 67.2
$ 5.3
8 %
Staff Related 31.6
33.3
(1.7 ) (5 )
FDIC Insurance Premiums 26.1
22.8
3.3
15
Other Intangibles Amortization 7.0
6.3
0.7
12
Other Expenses 102.2
157.2
(55.0 ) (35 )
Total Other Operating Expense $ 239.4
$ 286.8
$ (47.4 ) (16 )%

Other operating expense in the prior-year period included a pre-tax charge in connection with an agreement to settle certain securities lending litigation of $46.5 million, charges related to contractual modifications associated with existing C&IS clients of $18.6 million, other personnel charges of $2.3 million. The decrease in other expenses due to these prior-year charges was partially offset

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

Noninterest Expense (continued)

byOther Operating Expense increased ~~expenses~~compared to the prior-year quarter primarily due to a $25.6 million charge related to the ~~Northern Trust-sponsored PGA TOUR golf tournament, charges associated with account servicing activities, and FDIC deposit protection expenses.~~write-off of an investment in a client capability.

Provision for Income Taxes

Income tax expense for the ~~nine~~three months ended ~~September~~June 30, ~~2017~~2023 was ~~$355.9~~$108.9 million, representing an effective tax rate of ~~29.7%. The provision for income taxes was $361.6~~24.7%, compared to $144.4 million ~~for~~in the ~~nine months ended September 30, 2016,~~prior-year quarter, representing an effective tax rate of ~~32.1%~~26.7%.

The effective tax rate decreased compared to the prior-year quarter primarily due to a lower net tax impact from international operations.

SIX-MONTH CONSOLIDATED RESULTS OF OPERATIONS

Overview of Financial Results

Net Income per diluted common share decreased in the current period to $3.07 from $3.63 in the comparable prior-year period. Net Income decreased $119.1 million, or 15%, to $666.4 million in the current period from $785.5 million in the prior-year period. Annualized return on average common equity was 12.4% in the current period and 14.9% in the prior-year period. The annualized return on average assets was 0.91% in the current period compared to 1.00% in the prior-year period.

Revenue for the six months ended June 30, 2023 increased $14.3 million from $3.49 billion in the prior-year period to $3.50 billion in the current period.

Trust, Investment and Other Servicing Fees decreased $151.9 million, or 7%, from $2.31 billion in the prior-year period to $2.16 billion in the current period, primarily driven by unfavorable lagged markets, asset outflows, and unfavorable currency translation, partially offset by lower money market fund fee waivers.

Other Noninterest Income decreased $36.8 million, or 11% from $335.9 million in the prior-year period to $299.1 million in the current period, primarily driven by lower Foreign Exchange Trading Income, partially offset by higher Other Operating Income.

Net Interest Income increased $203.0 million, or 24%, to $1.04 billion in the current period from $839.7 million in the prior-year period, primarily due to higher average interest rates, partially offset by lower average earning assets.

There was a $0.5 million release of credit reserves in the current period, as compared to a $6.5 million Provision for Credit Losses in the prior-year period. The release of credit reserves was primarily due to a decrease in the ~~provision~~collective basis reserve, driven by improvements in credit quality within the commercial and institutional portfolio, partially offset by growth in the size and duration of the CRE portfolio and expectations of higher economic stress in the CRE market, particularly office CRE. The reserve evaluated on a collective basis relates to pooled financial assets sharing similar risk characteristics.

Noninterest Expense increased $188.0 million, or 8%, from $2.43 billion in the prior-year period to $2.62 billion in the current period, primarily attributable to higher Compensation and Equipment and Software expense.

The Provision for Income Taxes for the six months ended June 30, 2023 totaled $218.3 million, representing an effective tax rate of 24.7%. The Provision for Income Taxes for the six months ended June 30, 2022 totaled $265.9 million, representing an effective tax rate of 25.3%. The effective tax rate decreased compared to the prior-year period primarily due to a decrease in pretax earnings and a higher level of tax benefits from tax-credit investments and tax-exempt income, partially offset by lower tax benefits from share-based compensation.

SIX-MONTH CONSOLIDATED RESULTS OF OPERATIONS (continued)

Trust, Investment and Other Servicing Fees

Northern Trust voluntarily waived $4.3 million of money market fund fees for the six months ended June 30, 2023 as compared to $59.3 million for the six months ended June 30, 2022.

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

TABLE 16: TRUST, INVESTMENT AND OTHER SERVICING FEES


	SIX MONTHS ENDED JUNE 30,
($ In Millions)	2023		2022		CHANGE
Asset Servicing Trust, Investment and Other Servicing Fees
Custody and Fund Administration	$	841.0	$	886.5	$	(45.5)	(5)	%
Investment Management	260.3		295.3		(35.0)		(12)
Securities Lending	40.6		40.4		0.2		1
Other	82.3		82.9		(0.6)		(1)
Total Asset Servicing Trust, Investment and Other Servicing Fees	$	1,224.2	$	1,305.1	$	(80.9)	(6)	%
Wealth Management Trust, Investment and Other Servicing Fees
Central	$	329.6	$	359.1	$	(29.5)	(8)	%
East	243.9		262.1		(18.2)		(7)
West	184.9		200.1		(15.2)		(8)
Global Family Office	177.3		185.4		(8.1)		(4)
Total Wealth Management Trust, Investment and Other Servicing Fees	$	935.7	$	1,006.7	$	(71.0)	(7)	%
Total Consolidated Trust, Investment and Other Servicing Fees	$	2,159.9	$	2,311.8	$	(151.9)	(7)	%

Asset Servicing

Custody and Fund Administration fees, the largest component of Asset Servicing fees, decreased primarily driven by unfavorable lagged markets. Investment Management fees decreased 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 primarily due to unfavorable lagged markets and product-related asset outflows, partially offset by lower money market fund fee waivers. Global Family Office fee income decreased primarily due to unfavorable lagged markets, partially offset by lower money market fund fee waivers.

SIX-MONTH CONSOLIDATED RESULTS OF OPERATIONS (continued)

Other Noninterest Income

The components of other noninterest income are provided in the following table.

TABLE 17: OTHER NONINTEREST INCOME


	SIX MONTHS ENDED JUNE 30,
($ In Millions)	2023		2022		CHANGE
Foreign Exchange Trading Income	$	103.1	$	158.5	$	(55.4)	(35)	%
Treasury Management Fees	16.3		21.7		(5.4)		(25)
Security Commissions and Trading Income	70.8		69.0		1.8		3
Other Operating Income	102.0		86.7		15.3		18
Investment Security Gains (Losses), net	6.9		—		6.9		N/M
Total Other Noninterest Income	$	299.1	$	335.9	$	(36.8)	(11)	%

N/M - Not meaningful

Foreign Exchange Trading Income decreased from the prior-year period, primarily due to lower 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.

Other Operating Income increased from the prior-year period, primarily driven by higher income associated with a market value increase in supplemental compensation plans, increased income related to a bank-owned life insurance program, higher non-trading foreign exchange income, and increased income from banking and credit-related services fees, partially offset by higher expenses related to existing swap agreements related to Visa Inc. Class B common shares. Please refer to Note 15—Other Operating Income to the consolidated financial statements provided in Item 1. Consolidated Financial Statements (unaudited) for further detail.

Investment Security Gains (Losses), net included a $6.9 million gain upon sale of certain available for sale debt securities in the current-year period. Please refer to Note 4—Securities to the consolidated financial statements provided in Item 1. Consolidated Financial Statements (unaudited) for additional details related to the sale of available for sale debt securities.

SIX-MONTH CONSOLIDATED RESULTS OF OPERATIONS (continued)

Net Interest Income

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

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


(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)	SIX MONTHS ENDED JUNE 30,
	2023						2022
($ In Millions)	INTEREST		AVERAGE BALANCE		AVERAGE RATE(7)		INTEREST		AVERAGE BALANCE		AVERAGE RATE(7)
Interest-Earning Assets
Federal Reserve and Other Central Bank Deposits	$	775.9	$	35,504.9	4.41	%	$	76.8	$	40,921.8	0.38	%
Interest-Bearing Due from and Deposits with Banks(1)	60.3		4,387.1		2.77		9.1		4,305.4		0.43
Federal Funds Sold	0.3		11.2		4.85		—		1.5		0.67
Securities Purchased under Agreements to Resell(2)	410.2		1,142.9		72.38		7.9		921.7		1.74
Debt Securities
Available for Sale	489.4		24,769.8		3.98		258.6		36,581.4		1.43
Held to Maturity	216.3		25,216.8		1.72		105.5		20,773.3		1.02
Trading Account	—		0.7		12.45		—		0.6		8.59
Total Debt Securities	705.7		49,987.3		2.85		364.1		57,355.3		1.28
Loans and Leases(3)	1,220.0		42,163.5		5.83		448.8		40,149.0		2.25
Other Interest-Earning Assets(4)	44.3		1,834.9		4.87		19.4		1,153.1		3.39
Total Interest-Earning Assets	3,216.7		135,031.8		4.80		926.1		144,807.8		1.29
Cash and Due from Banks and Other Central Bank Deposits(5)	—		1,819.3		—		—		2,304.4		—
Other Noninterest-Earning Assets	—		10,122.7		—		—		10,979.1		—
Total Assets	$	—	$	146,973.8	—	%	$	—	$	158,091.3	—	%
Average Source of Funds
Deposits
Savings, Money Market and Other	$	310.8	$	25,103.0	2.50	%	$	22.0	$	31,644.6	0.14	%
Savings Certificates and Other Time	53.6		2,700.0		4.00		2.2		817.1		0.54
Non-U.S. Offices — Interest-Bearing	833.7		62,227.7		2.70		(16.9)		66,038.3		(0.05)
Total Interest-Bearing Deposits	1,198.1		90,030.7		2.68		7.3		98,500.0		0.01
Federal Funds Purchased	127.7		5,371.4		4.79		2.8		464.0		1.22
Securities Sold under Agreements to Repurchase(2)	389.5		407.8		192.58		6.3		426.1		2.97
Other Borrowings(6)	291.5		11,730.6		5.01		11.5		3,940.2		0.59
Senior Notes	81.3		2,754.6		5.97		28.5		2,664.9		2.17
Long-Term Debt	59.6		2,068.0		5.81		12.2		1,112.3		2.20
Total Interest-Related Funds	2,147.7		112,363.1		3.85		68.6		107,107.5		0.13
Interest Rate Spread	—		—		0.95		—		—		1.16
Demand and Other Noninterest-Bearing Deposits	—		18,843.3		—		—		35,421.8		—
Other Noninterest-Bearing Liabilities	—		4,401.9		—		—		4,354.5		—
Stockholders’ Equity	—		11,365.5		—		—		11,207.5		—
Total Liabilities and Stockholders’ Equity	$	—	$	146,973.8	—	%	$	—	$	158,091.3	—	%
Net Interest Income/Margin (FTE Adjusted)	$	1,069.0	$	—	1.60	%	$	857.5	$	—	1.19	%
Net Interest Income/Margin (Unadjusted)	$	1,042.7	$	—	1.56	%	$	839.7	$	—	1.17	%

(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 $15.7 billion and $2.0 billion for the six months ended June 30, 2023 and 2022, respectively. Excluding the impact of netting for the six months ended June 30, 2023 and 2022, the average interest rate on Securities Purchased under Agreements to Resell would be approximately 4.92% and 0.55%, respectively. Excluding the impact of netting for the six months ended June 30, 2023 and 2022, the average interest rate on Securities Sold under Agreements to Repurchase would be approximately 4.88% and 0.53%, 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.

SIX-MONTH CONSOLIDATED RESULTS OF OPERATIONS (continued)

Net Interest Income (continued)

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


(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)	SIX MONTHS ENDED JUNE 30, 2023/2022
	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	$	(55.8)	$	754.9	$	699.1
Interest-Bearing Due from and Deposits with Banks	0.2		51.0		51.2
Federal Funds Sold	—		0.3		0.3
Securities Purchased under Agreements to Resell	2.4		399.9		402.3
Debt Securities
Available For Sale	(80.9)		311.7		230.8
Held To Maturity	26.5		84.3		110.8
Trading Account	—		—		—
Total Debt Securities	(54.4)		396.0		341.6
Loans and Leases	19.3		751.9		771.2
Other Interest-Earning Assets	14.4		10.5		24.9
Total Interest Income	$	(73.9)	$	2,364.5	$	2,290.6

Interest-Bearing Deposits
Savings, Money Market and Other	$	(10.4)	$	299.2	$	288.8
Savings Certificates and Other Time	8.5		42.9		51.4
Non-U.S. Offices - Interest-Bearing	(6.0)		856.6		850.6
Total Interest-Bearing Deposits	(7.9)		1,198.7		1,190.8
Federal Funds Purchased	97.8		27.1		124.9
Securities Sold under Agreements to Repurchase	(0.3)		383.5		383.2
Other Borrowings	58.5		221.5		280.0
Senior Notes	1.0		51.8		52.8
Long-Term Debt	16.3		31.1		47.4

Total Interest Expense	$	165.4	$	1,913.7	$	2,079.1
(Decrease) Increase in Net Interest Income (FTE)	$	(239.3)	$	450.8	$	211.5

(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), a non-GAAP financial measure, includes adjustments to a fully taxable equivalent basis for loans and securities. 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 $26.3 million and $17.8 million for the six months ended June 30, 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 on cash collateral positions is reported above within Interest-Bearing Due from and Deposits with Banks and within Loans and Leases. Interest expense on cash collateral positions is reported above within Non-U.S. Offices Interest-Bearing Deposits. Related cash collateral received from and deposited with derivative counterparties is recorded net of the associated derivative contract within Other Assets and Other Liabilities, respectively.

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

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

Federal Reserve and Other Central Bank Deposits averaged $35.5 billion and decreased $5.4 billion, or 13%, from $40.9 billion in the prior-year period. Average Securities were $50.0 billion and decreased $7.4 billion, or 13%, from $57.4 billion in the prior-year period and include certain community development investments, Federal Home Loan Bank stock, collateral deposits with certain securities depositories and clearing houses, money market investments, and Federal Reserve stock of $901.9 million, $375.9 million, $266.6 million, $76.6 million and $70.0 million, respectively, which are recorded in Other Assets on the consolidated balance sheets. Average taxable Securities were $47.0 billion in the current period and $54.8 billion in the prior-year period. Average nontaxable Securities, which represent securities that are primarily exempt from U.S. federal and state income taxes, were $3.0 billion in the current period and $2.6 billion in the prior-year period. Interest-Bearing Due from and Deposits with Banks averaged $4.4 billion in the current period and $4.3 billion in the prior-year period.

Loans and leases averaged $42.2 billion and increased $2.1 billion, or 5%, from $40.1 billion in the prior-year period, primarily reflecting higher levels of commercial and institutional, commercial real estate, residential real estate, and non-U.S. loans, partially offset by lower levels of private client loans. Commercial and institutional loans averaged $12.7 billion and increased $705.3 million, or 6%, from $12.0 billion for the prior-year period. Commercial real estate loans averaged $4.9 billion and

SIX-MONTH CONSOLIDATED RESULTS OF OPERATIONS (continued)

Net Interest Income (continued)

increased $605.3 million, or 14%, from $4.3 billion for the prior-year period. Residential real estate loans averaged $6.4 billion and increased $135.6 million, or 2%, from $6.3 billion for the prior-year period. Non-U.S. loans averaged $3.5 billion and increased $97.6 million or 3% from $3.4 billion for the prior-year period. Private client loans averaged $13.8 billion and decreased $122.0 million, or 1%, from $14.0 billion for the prior-year period.

Northern Trust utilizes a diverse mix of funding sources. Average Interest-Bearing Deposits decreased $8.5 billion, or 9%, to an average of $90.0 billion in the current period from $98.5 billion in the prior-year period. Other Average Interest-Related Funds increased $13.7 billion, or 159%, to an average of $22.3 billion in the current period from $8.6 billion in the prior-year period. 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 six months ended June 30, 2023 and 2022, respectively.

Provision for Credit Losses

There was a $0.5 million release of credit reserves for the six months ended June 30, 2023, as compared to a $6.5 million provision in the prior-year period. The release of credit reserves was primarily due to a decrease in the collective basis reserve, driven by improvements in credit quality within the commercial and institutional portfolio, partially offset by growth in the size and duration of the CRE portfolio and expectations of higher economic stress in the CRE market, particularly office CRE. The reserve evaluated on a collective basis relates to pooled financial assets sharing similar risk characteristics.

The provision in the prior-year period was primarily due to an increase in the ~~Federal~~reserve evaluated on a collective basis and ~~State research~~an increase in the reserve evaluated on an individual basis for two commercial borrowers, partially offset by net recoveries during the prior-year period. The increase in the collective basis reserve was primarily driven by market conditions at the time and a higher risk of recession as compared to the previous period, partially offset by improvements in credit quality mainly within the commercial real estate and commercial and institutional portfolios.

Net charge-offs in the current-year period totaled $2.9 million resulting from $4.8 million of charge-offs and $1.9 million of recoveries, compared to net recoveries of $8.7 million in the prior-year period resulting from $0.1 million of charge-offs and $8.8 million of recoveries.

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 20: NONINTEREST EXPENSE


	SIX MONTHS ENDED JUNE 30,
($ In Millions)	2023		2022		CHANGE
Compensation	$	1,199.7	$	1,110.4	$	89.3	8	%
Employee Benefits	202.4		223.9		(21.5)		(10)
Outside Services	441.7		426.5		15.2		4
Equipment and Software	461.0		397.0		64.0		16
Occupancy	115.1		102.1		13.0		13
Other Operating Expense	197.6		169.6		28.0		17
Total Noninterest Expense	$	2,617.5	$	2,429.5	$	188.0	8	%

Compensation expense, the largest component of Noninterest Expense increased compared to the prior-year period, primarily due to higher salary expense and $36.7 million of severance-related charges, partially offset by lower incentives.

Employee Benefits expense decreased compared to the prior-year period, primarily due to a U.S. Qualified Plan pension settlement charge of $20.3 million in the prior-year period.

Outside Services expense increased compared to the prior-year period, primarily reflecting higher technical services, partially offset by lower subcustodian expense and third-party advisory fees.

Equipment and Software expense increased compared to the prior-year period, primarily due to higher amortization as well as higher software costs driven by continued technology investments.

SIX-MONTH CONSOLIDATED RESULTS OF OPERATIONS (continued)

Noninterest Expense (continued)

Occupancy expense increased compared to the prior-year period, primarily due to a $9.8 million charge during the first quarter related to early lease exits.

Other Operating Expense increased compared to the prior-year period, primarily due to a $25.6 million charge related to the write-off of an investment in a client capability.

Provision for Income Taxes

Income tax ~~credits~~expense for the six months ended June 30, 2023 was $218.3 million, representing an effective tax rate of ~~$17.6~~24.7%, compared to $265.9 million ~~recognized~~for the six months ended June 30, 2022, representing an effective tax rate of 25.3%.

The effective tax rate decreased compared to the prior-year period primarily due to a decrease in pretax earnings and a higher level of tax benefits from tax-credit investments and tax-exempt income, partially offset by lower tax benefits from share-based compensation.

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 allocated fully to Asset Servicing and Wealth Management.

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 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 reflected on a prospective basis.

REPORTING SEGMENTS (continued)

The following table presents the earnings contributions and average assets of Northern Trust’s reporting segments for the three- and six-month periods ended June 30, 2023 and 2022.

TABLE 21: RESULTS OF REPORTING SEGMENTS


($ In Millions)	ASSET SERVICING						WEALTH MANAGEMENT						OTHER						RECONCILING ITEMS				TOTAL CONSOLIDATED
THREE MONTHS ENDED JUNE 30,	2023			2022			2023			2022			2023			2022			2023		2022		2023			2022
Noninterest Income
Trust, Investment and Other Servicing Fees	$	621.2		$	642.8		$	475.1		$	500.6		$	—		$	—		$	—	$	—	$	1,096.3		$	1,143.4
Foreign Exchange Trading Income (Loss)	52.0			74.8			(1.9)			2.8			—			—			—		—		50.1			77.6
Other Noninterest Income	69.7			61.8			40.4			32.8			(10.9)			(5.6)			—		—		99.2			89.0
Total Noninterest Income	742.9			779.4			513.6			536.2			(10.9)			(5.6)			—		—		1,245.6			1,310.0
Net Interest Income	309.3			255.1			215.3			214.7			—			—			(13.1)		(11.1)		511.5			458.7
Revenue	1,052.2			1,034.5			728.9			750.9			(10.9)			(5.6)			(13.1)		(11.1)		1,757.1			1,768.7
(Release of) Provision for Credit Losses	(3.5)			0.5			(12.0)			4.0			—			—			—		—		(15.5)			4.5
Noninterest Expense	849.4			751.1			476.3			439.1			6.2			33.4			—		—		1,331.9			1,223.6
Income before Income Taxes	206.3			282.9			264.6			307.8			(17.1)			(39.0)			(13.1)		(11.1)		440.7			540.6
Provision for Income Taxes	52.6			74.5			73.7			90.7			(4.3)			(9.7)			(13.1)		(11.1)		108.9			144.4
Net Income	$	153.7		$	208.4		$	190.9		$	217.1		$	(12.8)		$	(29.3)		$	—	$	—	$	331.8		$	396.2
Percentage of Consolidated Net Income	46		%	53		%	58		%	54		%	(4)		%	(7)		%	N/A		N/A		100		%	100		%
Average Assets	$	111,029.9		$	117,047.6		$	34,869.7		$	37,036.5		$	—		$	—		N/A		N/A		$	145,899.6		$	154,084.1



($ In Millions)	ASSET SERVICING						WEALTH MANAGEMENT						OTHER						RECONCILING ITEMS				TOTAL CONSOLIDATED
SIX MONTHS ENDED JUNE 30,	2023			2022			2023			2022			2023			2022			2023		2022		2023			2022
Noninterest Income
Trust, Investment and Other Servicing Fees	$	1,224.2		$	1,305.2		$	935.7		$	1,006.6		$	—		$	—		$	—	$	—	$	2,159.9		$	2,311.8
Foreign Exchange Trading Income (Loss)	106.9			152.2			(3.8)			6.3			—			—			—		—		103.1			158.5
Other Noninterest Income	132.9			122.9			74.7			64.6			(11.6)			(10.1)			—		—		196.0			177.4
Total Noninterest Income	1,464.0			1,580.3			1,006.6			1,077.5			(11.6)			(10.1)			—		—		2,459.0			2,647.7
Net Interest Income	621.4			445.2			447.6			412.3			—			—			(26.3)		(17.8)		1,042.7			839.7
Revenue	2,085.4			2,025.5			1,454.2			1,489.8			(11.6)			(10.1)			(26.3)		(17.8)		3,501.7			3,487.4
(Release of) Provision for Credit Losses	(6.4)			8.9			5.9			(2.4)			—			—			—		—		(0.5)			6.5
Noninterest Expense	1,650.4			1,509.0			945.5			884.2			21.6			36.3			—		—		2,617.5			2,429.5
Income before Income Taxes	441.4			507.6			502.8			608.0			(33.2)			(46.4)			(26.3)		(17.8)		884.7			1,051.4
Provision for Income Taxes	113.1			126.3			139.8			169.0			(8.3)			(11.6)			(26.3)		(17.8)		218.3			265.9
Net Income	$	328.3		$	381.3		$	363.0		$	439.0		$	(24.9)		$	(34.8)		$	—	$	—	$	666.4		$	785.5
Percentage of Consolidated Net Income	49		%	49		%	55		%	55		%	(4)		%	(4)		%	N/A		N/A		100		%	100		%
Average Assets	$	111,143.6		$	121,114.2		$	35,830.2		$	36,977.1		$	—		$	—		N/A		N/A		$	146,973.8		$	158,091.3

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 Net Income

For the quarter ended June 30, 2023, Net Income decreased $54.7 million, or 26%, from the prior-year quarter, primarily reflecting higher Noninterest Expense, partially offset by higher Net Interest Income.

For the six months ended June 30, 2023, Net Income, decreased $53.0 million, or 14%, from the prior-year period, primarily reflecting higher Noninterest Expense and lower Trust, Investment and Other Servicing Fees, partially offset by higher Net Interest Income.

REPORTING SEGMENTS (continued)

Asset Servicing (continued)

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 six months ended June 30, 2023, Foreign Exchange Trading Income decreased $22.8 million, or 30%, from the prior-year quarter and decreased $45.3 million, or 30%, from the prior-year period, primarily driven by lower client volumes and an unfavorable impact from foreign exchange swap activity.

Asset Servicing Other Noninterest Income

For the quarter ended June 30, 2023, Other Noninterest Income increased $7.9 million, or 13%, from the prior-year quarter, primarily due to higher Other Operating Income.

For the six months ended June 30, 2023, Other Noninterest Income increased $10.0 million, or 8%, from the prior-year period, primarily due to higher allocations, including in Other Operating Income.

Asset Servicing Net Interest Income

For the quarter ended June 30, 2023, Net Interest Income stated on an FTE basis increased $54.2 million, or 21%, from the prior-year quarter. For the six months ended June 30, 2023, Net Interest Income stated on an FTE basis increased $176.2 million, or 40%, from the prior-year period. The increase for the three and six months ended June 30, 2023 primarily reflected higher average interest rates.

Average earning assets decreased $4.0 billion, or 4%, to $101.8 billion in the current ~~period~~quarter from $105.8 billion in the prior-year quarter and decreased $8.3 billion, or 8%, to $101.9 billion for the six months ended June 30, 2023 from $110.2 billion in the prior-year period. Average earning assets decreased in Asset Servicing for the three and six months ended June 30, 2023 primarily due to lower client deposits, partially offset by increased short-term borrowing activity.

Asset Servicing Provision for Credit Losses

For the ~~completion~~three and six months ended June 30, 2023, there was a $3.5 million and a $6.4 million release of credit reserves, respectively, compared to a ~~recent study~~$0.5 million and a $8.9 million Provision for Credit Losses for the three and six months ended June 30, 2022, respectively.

The release of credit reserves for the three and six months ended June 30, 2023 was primarily due to a decrease in the reserve evaluated on a collective basis, primarily driven by improved credit quality of certain commercial and institutional loans. The reserve evaluated on a collective basis relates to pooled financial assets sharing similar characteristics.

Asset Servicing Noninterest Expense

For the three and six months ended June 30, 2023, Noninterest Expense, which includes the direct expense of the ~~Corporation’s technology spend between 2013~~reporting segment, indirect expense allocations for product and ~~2016, as well as~~operating support and indirect expense allocations for certain corporate support services, increased $98.3 million, or 13%, from the prior-year quarter and increased $141.4 million, or 9%, from the prior-year period,primarily due to higher expense allocations, Compensation, Other Operating Expense, and Outside Services.

Wealth Management

Wealth Management Net Income

For the quarter ended June 30, 2023, Net Income decreased $26.2 million, or 12%, from the prior-year quarter primarily due to higher Noninterest Expense and lower Trust, Investment and Other Servicing Fees, partially offset by a lower Provision for Income Taxes and a release of credit reserves compared to a Provision for Credit Losses in the prior-year quarter.

For the six months ended June 30, 2023, Net Income decreased $76.0 million, or 17%, from the prior-year period, primarily reflecting lower Trust, Investment and Other Servicing Fees and higher Noninterest Expense, partially offset by higher Net Interest Income and a lower Provision for Income Taxes.

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 Other Noninterest Income

For the quarter ended June 30, 2023, Other Noninterest Income increased $7.6 million, or 23%, from the prior-year quarter primarily due to higher Other Operating Income.

For the six months ended June 30, 2023, Other Noninterest Income increased $10.1 million, or 16%, from the prior-year period, primarily due to higher income ~~tax benefit derived~~allocations and Other Operating Income.

REPORTING SEGMENTS (continued)

Wealth Management (continued)

Wealth Management Net Interest Income

For the quarter ended June 30, 2023, Net Interest Income stated on an FTE basis increased $0.6 million from the prior-year quarter. For the six months ended June 30, 2023, Net Interest Income stated on an FTE basis increased ~~vesting of restricted stock units~~$35.3 million, or 9%, from the prior-year period. The increase for the three and ~~stock option exercises~~six months ended June 30, 2023, primarily reflected higher average interest rates.

Average earning assets decreased $1.8 billion, or 5%, to $32.3 billion in the current ~~period~~quarter from $34.1 billion in the prior-year quarter and decreased $1.4 billion, or 4%, to $33.2 billion for the six months ended June 30, 2023 from $34.6 billion in the prior-year period. Average earning assets decreased in Wealth Management for the three and six months ended June 30, 2023 primarily due to lower client deposits, partially offset by higher average lending activity.

Wealth Management Provision for Credit Losses

For the three and six months ended June 30, 2023, there was a $12.0 million release of credit reserves and a $5.9 million Provision for Credit Losses, respectively, compared to a $4.0 million Provision for Credit Losses and a $2.4 million release of credit reserves for the three and six months ended June 30, 2022, respectively.

The release of credit reserves for the three months ended June 30, 2023 reflected a decrease in the reserve evaluated on a collective basis, which relates to pooled financial assets sharing similar risk characteristics. The decrease in the collective basis reserve was primarily due to improved credit quality in certain commercial and institutional and certain CRE loans, partially offset by expectations of higher economic stress in the CRE market, particularly office CRE.

The Provision for Credit Losses for the six months ended June 30, 2023 was primarily due to an increase in the reserve evaluated on a collective basis, primarily due to growth in the size and duration of the CRE portfolio and expectations of higher economic stress in the CRE market, particularly office CRE, partially offset by improved credit quality for certain commercial and institutional and certain CRE loans.

Wealth Management Noninterest Expense

For the quarter ended June 30, 2023, 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 $37.2 million, or 8%, from the prior-year quarter, primarily reflecting higher expense allocations and Other Operating Expense. For the six months ended June 30, 2023, Noninterest Expense increased $61.3 million, or 7%, from the prior-year period, primarily reflecting higher expense allocations, Compensation, and Other Operating Expense.

Other

Other—Noninterest Income

For the quarter ended June 30, 2023, Other Noninterest Income decreased $5.3 million, or 95%, primarily due to higher expenses for existing swap agreements related to Visa Inc. Class B common shares.

Other—Noninterest Expense

For the quarter ended June 30, 2023, Other Noninterest Expense decreased $27.2 million, or 81%, primarily due to a $20.3 million pension settlement charge in the prior-year quarter.

For the six months ended June 30, 2023, Other Noninterest Expense decreased $14.7 million, or 40%, from the prior-year period, primarily due to a $20.3 million pension settlement charge in the prior-year period and other miscellaneous expense in the prior-year period, partially offset by ~~increased income before income taxes and a $4.3 million charge related to an increase in the Illinois state deferred income tax reserve resulting~~higher non-allocated occupancy expense primarily arising from an increase in the Illinois income tax rate. The provision for income tax expense for the nine months ended September 30, 2017 and September 30, 2016 includes a benefit of $25.9 million and $12.3 million, respectively, related to excess tax benefits resulting from the vesting of restricted stock units and stock option exercises.early lease exits.

CONSOLIDATED BALANCE SHEETS

~~Total assets were $131.4 billion~~The following tables summarize selected consolidated balance sheet information.

TABLE 22: SELECT CONSOLIDATED BALANCE SHEET INFORMATION


($ In Billions)	JUNE 30, 2023		DECEMBER 31, 2022		CHANGE
Assets
Federal Reserve and Other Central Bank Deposits	$	42.7	$	40.0	$	2.7	7	%
Interest-Bearing Due from and Deposits with Banks(1)	4.6		4.9		(0.3)		(6)
Securities Purchased under Agreements to Resell	1.2		1.1		0.1		15
Total Debt Securities	50.3		51.8		(1.5)		(3)
Loans	43.5		42.9		0.6		2
Other Interest-Earning Assets(2)	2.7		1.8		0.9		52
Total Earning Assets	145.0		142.5		2.5		2
Total Assets	156.8		155.0		1.8		1
Liabilities and Stockholders' Equity
Total Interest-Bearing Deposits	91.9		98.6		(6.7)		(7)
Demand and Other Noninterest-Bearing Deposits	21.3		25.3		(4.0)		(16)
Federal Funds Purchased	9.3		1.9		7.4		N/M
Securities Sold under Agreements to Repurchase	1.0		0.6		0.4		74
Other Borrowings(3)	12.4		7.6		4.8		63
Total Stockholders’ Equity	11.6		11.3		0.3		3

(1) Interest-Bearing Due from and ~~$123.9 billion at September 30, 2017~~Deposits with Banks includes the interest-bearing component of Cash and ~~December 31, 2016, respectively,~~Due from Banks and ~~averaged $121.2 billion~~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 ~~current quarter compared~~consolidated balance sheets.

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

N/M - Not meaningful

TABLE 23: SELECT AVERAGE CONSOLIDATED BALANCE SHEET INFORMATION


	THREE MONTHS ENDED JUNE 30,								SIX MONTHS ENDED JUNE 30,
($ In Billions)	2023		2022		CHANGE				2023		2022		CHANGE
Assets
Federal Reserve and Other Central Bank Deposits	$	34.4	$	36.7	$	(2.3)	(6)	%	$	35.5	$	40.9	$	(5.4)	(13)	%
Interest-Bearing Due from and Deposits with Banks(1)	4.6		4.2		0.4		8		4.4		4.3		0.1		2
Securities Purchased under Agreements to Resell	1.2		1.1		0.1		8		1.1		0.9		0.2		24
Total Debt Securities	49.6		55.9		(6.3)		(11)		50.0		57.4		(7.4)		(13)
Loans and Leases	42.4		40.8		1.6		4		42.2		40.2		2.0		5
Other Interest-Earning Assets(2)	1.9		1.2		0.7		71		1.8		1.1		0.7		59
Total Earning Assets	134.1		139.9		(5.8)		(4)		135.0		144.8		(9.8)		(7)
Total Assets	145.9		154.1		(8.2)		(5)		147.0		158.1		(11.1)		(7)
Liabilities and Stockholders' Equity
Total Interest-Bearing Deposits	88.0		95.7		(7.7)		(8)		90.0		98.5		(8.5)		(9)
Demand and Other Noninterest-Bearing Deposits	17.6		33.7		(16.1)		(48)		18.8		35.4		(16.6)		(47)
Federal Funds Purchased	7.1		0.9		6.2		N/M		5.4		0.5		4.9		N/M
Securities Sold under Agreements to Repurchase	0.5		0.6		(0.1)		(22)		0.4		0.4		—		(4)
Other Borrowings(3)	12.1		4.2		7.9		190		11.7		3.9		7.8		198
Total Stockholders’ Equity	11.4		10.9		0.5		5		11.4		11.2		0.2		1

(1) Interest-Bearing Due from and Deposits with ~~$116.4 billion~~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 ~~quarter ended September 30, 2016.~~ 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. ~~Loans~~Average earning assets decreased from the prior-year quarter and ~~leases totaled $33.3 billion~~prior-year period, primarily due to lower client deposits, partially offset by higher short-term borrowing activity.

Select Earning Assets. Average securities decreased from the prior-year quarter and ~~$33.8 billion at September 30, 2017~~prior-year period, reflecting the impact of repositioning and ~~December 31, 2016, respectively,~~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 ~~averaged $33.5 billion in the current quarter, down 1% from $33.9 billion in the quarter ended September 30, 2016.~~ to Note 4—Securities ~~inclusive of Federal Reserve stock, Federal Home Loan Bank stock, and certain community development investments, which are classified in other assets in~~to the consolidated ~~balance sheets, totaled $45.2 billion~~financial statements provided in Item 1. Consolidated Financial Statements (unaudited).

Client Deposits. AverageInterest-Bearing Deposits and ~~$44.9 billion at September 30, 2017~~Demand and ~~December 31, 2016, respectively,~~Other Noninterest-Bearing Deposits decreased from the prior-year quarter and ~~averaged $44.7 billion~~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 in average Other Borrowings from the prior-year quarter and prior-year period was primarily due to borrowings executed to manage regulatory liquidity ratios and as part of an overall net interest income strategy, based on the spread earned on these borrowings.

Stockholders’ Equity. The increase in average Stockholders’ Equity for the current quarter ~~up 3% from $43.3 billion in the quarter ended September 30, 2016. In aggregate, the categories of federal funds sold and securities purchased under agreements~~was primarily due to resell, interest-bearing due from and deposits with banks, and Federal Reserve and other central bank deposits totaled $44.0 billion and $36.7 billion at September 30, 2017 and December 31, 2016, respectively, and averaged $34.3 billion in the current quarter, up 12% from $30.7 billion in the quarter ended September 30, 2016, primarily reflecting increased Federal Reserve and other central bank deposits, partially offset by decreased interest-bearing due from and deposits with banks. Interest-bearing client deposits at September 30, 2017 and December 31, 2016, totaled $79.5 billion and $71.5 billion, respectively, and averaged $75.4 billion in the current quarter compared to $67.9 billion in the quarter ended September 30, 2016. Noninterest-bearing client deposits at September 30, 2017 and December 31, 2016 totaled $26.3 billion and $30.2 billion, respectively, and averaged $21.7 billion in the current quarter, down 16% from $25.8 billion in the quarter ended September 30, 2016.

Total stockholders’ equity at September 30, 2017, was $10.2 billion compared to $9.8 billion at December 31, 2016, and averaged $10.0 billion for the current quarter, up 9% from $9.2 billion for the quarter ended September 30, 2016.higher Retained Earnings. The increase in average ~~stockholders’ equity compared to~~Stockholders’ Equity for the ~~prior-year quarter~~current-year period was primarily attributable to ~~earnings and the issuance of preferred stock,~~higher Retained Earnings, partially offset by ~~the repurchase of common stock pursuant~~changes in Accumulated Other Comprehensive Loss relative to the ~~Corporation’s share repurchase program and dividend declarations.~~prior-year period.

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, the Corporation declared cash dividends totaling ~~$97.3~~$157.8 million and ~~$275.7~~$316.4 million to common stockholders, and cash dividends totaling ~~$17.3~~$4.7 million and ~~$43.9~~$20.9 million to preferred stockholders, respectively. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, the Corporation declared cash dividends totaling $148.0 million and $295.8 million to common stockholders, and cash dividends totaling $4.7 million and $20.9 million to preferred stockholders, respectively.

For the three and six months ended June 30, 2023, the Corporation repurchased ~~1,411,696~~1,361,828 and 2,412,055 shares of common stock, ~~including 43,871 shares withheld related to share-based compensation,~~respectively, at a total cost of ~~$124.8~~$99.3 million ($~~88.43~~72.91 average price per share) and ~~3,983,690~~$200.2 million ($82.98 average price per share), respectively, including 14,596 and341,407shares, respectively, withheld to satisfy tax withholding obligations related to share-based compensation.

For the three and six months ended June 30, 2022, the Corporation repurchased 2,844 and 298,254 shares of common stock, ~~including 459,082 shares withheld related to share-based compensation,~~respectively, at a total cost of ~~$352.5~~$0.3 million ($~~88.50~~110.36 average price per share) and $34.1 million ($114.54 average price per share), ~~respectively.~~respectively, all of which were shares withheld to satisfy tax withholding obligations related to share-based compensation.

~~Table of Contents~~

~~CAPITAL RATIOS~~

The capital ratios of Northern Trust and its principal subsidiary, The Northern Trust Company, remained strong at September 30, 2017, exceeding the minimum requirements for classification as “well-capitalized” under applicable U.S. regulatory requirements.

~~The table below provides capital ratios for Northern Trust Corporation and The Northern Trust Company determined by Basel III phased in requirements.~~

~~Table 23: Regulatory Capital Ratios~~

Capital Ratios — Northern Trust Corporation September 30, 2017 June 30, 2017 September 30, 2016
Advanced
Approach

Standardized
Approach

Advanced
Approach

Standardized
Approach

Advanced
Approach

Standardized
Approach
Common Equity Tier 1 13.3 % 12.3 % 13.2 % 12.3 % 11.8 % 11.2 %
Tier 1 14.6 % 13.4 % 14.5 % 13.5 % 13.1 % 12.3 %
Total 16.4 % 15.4 % 16.5 % 15.6 % 14.5 % 14.0 %
Tier 1 Leverage 8.0 % 8.0 % 8.1 % 8.1 % 7.9 % 7.9 %
Supplementary Leverage 6.9 % N/A
7.0 % N/A
6.6 % N/A

Capital Ratios — The Northern Trust Company September 30, 2017 June 30, 2017 September 30, 2016
Advanced
Approach

Standardized
Approach

Advanced
Approach

Standardized
Approach

Advanced
Approach

Standardized
Approach
Common Equity Tier 1 13.5 % 12.2 % 13.3 % 12.1 % 12.0 % 11.1 %
Tier 1 13.5 % 12.2 % 13.3 % 12.1 % 12.0 % 11.1 %
Total 15.1 % 13.9 % 14.9 % 13.9 % 13.6 % 12.9 %
Tier 1 Leverage 7.2 % 7.2 % 7.2 % 7.2 % 7.0 % 7.0 %
Supplementary Leverage 6.2 % N/A
6.2 % N/A
5.9 % N/A

~~STATEMENTS OF CASH FLOWS~~

Net cash provided by operating activities of $869.7 million for the nine months ended September 30, 2017, was primarily attributable to period earnings, net collateral deposited with derivative counterparties, and the impact of non-cash charges such as amortization of computer software, partially offset by net changes in other operating activities primarily due to a decrease in accounts payable. For the nine months ended September 30, 2016, net cash provided by operating activities of $671.5 million was primarily attributable to period earnings, partially offset by net collateral deposited with counterparties.

Net cash used in investing activities of $6.0 billion for the nine months ended September 30, 2017, was primarily attributable to increased levels of Federal Reserve and other central bank deposits and interest-bearing deposits with banks, offset by lower levels of loans and leases as well as net proceeds from sale, maturity and redemption of securities available for sale. For the nine months ended September 30, 2016, net cash used in investing activities of $5.3 billion was primarily attributable to net purchases of securities available for sale and held to maturity, partially offset by a reduction in interest-bearing deposits with banks and Federal Reserve and other central bank deposits.

Net cash provided by financing activities of $4.8 billion for the nine months ended September 30, 2017, was primarily attributable to increased levels of total deposits, federal funds purchased, short-term other borrowings, and the proceeds from the issuance of fixed-to-floating rate subordinated notes, partially offset by the repurchase of common stock pursuant to the Corporation’s share repurchase program, and cash dividends paid to common and preferred stockholders. The increase in total deposits was attributable to higher levels of interest-bearing and non-interest bearing non-U.S. office client deposits. For the nine months ended September 30, 2016, net cash provided by financing activities of $2.8 billion was primarily attributable to higher levels of total deposits and the issuance of the Series D preferred stock, partially offset by the repurchase of common stock pursuant to the Corporation’s share repurchase program and cash dividends paid to common stockholders. The increase in total deposits was attributable to higher levels of demand and other noninterest-bearing client deposits.

~~Table of Contents~~

ASSET QUALITY

Securities Portfolio

Northern Trust maintains a high quality debt securities ~~portfolio, with 81%~~portfolio. Debt securities not explicitly rated were grouped where possible under the credit rating of the ~~combined~~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: FAIR VALUE OF AVAILABLE FOR SALE DEBT SECURITIES BY CREDIT RATING


	JUNE 30, 2023
($ In Millions)	AAA			AA			A			BBB			NOT RATED			TOTAL
U.S. Government	$	2,843.9		$	—		$	—		$	—		$	—		$	2,843.9
Obligations of States and Political Subdivisions	88.4			200.8			—			—			—			289.2
Government Sponsored Agency	11,349.0			—			—			—			—			11,349.0
Non-U.S. Government	251.5			—			—			—			—			251.5
Corporate Debt	89.9			114.3			239.1			—			17.6			460.9
Covered Bonds	319.8			—			21.2			—			—			341.0
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	2,203.0			447.2			267.8			—			—			2,918.0
Other Asset-Backed	4,909.6			—			—			—			—			4,909.6
Commercial Mortgage-Backed	901.3			—			—			—			—			901.3
Total	$	22,956.4		$	762.3		$	528.1		$	—		$	17.6		$	24,264.4
Percent of Total	95		%	3		%	2		%	—		%	—		%	100		%

ASSET QUALITY (continued)

Securities Portfolio (continued)


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

As of both June 30, 2023 and ~~trading account portfolios at September 30, 2017, composed~~December 31, 2022, the less than 1% of ~~U.S. Treasury and government sponsored agency~~AFS debt securities ~~and triple-A~~not rated corporate notes, asset-backed securities, covered bonds, sub-sovereign, supranational, sovereign and non-U.S. agency bonds, commercial mortgage-backed securities and obligations of states and political subdivisions. The remaining portfolio was comprisedby Moody’s Investors Service, Inc. (Moody’s), S&P Global Ratings (S&P Global) or Fitch Ratings, Inc. (Fitch Ratings) consisted of corporate ~~notes, asset-backed~~debt securities.

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


	JUNE 30, 2023
($ In Millions)	AAA			AA			A			BBB			NOT RATED			TOTAL

Obligations of States and Political Subdivisions	$	932.1		$	1,640.9		$	—		$	—		$	—		$	2,573.0
Government Sponsored Agency	9,354.2			—			—			—			—			9,354.2
Non-U.S. Government	1,249.5			886.3			1,522.4			329.1			—			3,987.3
Corporate Debt	2.2			308.7			359.0			—			—			669.9
Covered Bonds	2,278.7			—			—			—			—			2,278.7
Certificates of Deposit	555.0			—			—			—			33.2			588.2
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	4,322.0			1,292.9			29.8			1.1			—			5,645.8
Other Asset-Backed	288.0			—			—			—			—			288.0
Commercial Mortgage-Backed	37.6			—			—			—			—			37.6
Other	64.1			—			—			—			519.5			583.6
Total	$	19,083.4		$	4,128.8		$	1,911.2		$	330.2		$	552.7		$	26,006.3
Percent of Total	74		%	16		%	7		%	1		%	2		%	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		%

As of both June 30, 2023 and December 31, 2022, the 2% of HTM debt securities ~~negotiable~~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 ~~states~~supporting institutions and political subdivisions, auction rate securities and other securities, of which as a percentage of the total securities portfolio, 10% was rated double-A, 3% was rated below double-A, and 6% was not rated by Standard and Poor’s or Moody’s Investors Service (primarily negotiable certificates of deposits of banks and non-U.S. sovereign securities whose long term ratings are at least A).programs that benefit low-to-moderate income communities within Northern Trust’s market area.

Net unrealized losses within the investment securities portfolio totaled ~~$56.4 million~~$3.2 billion at ~~September~~both June 30, ~~2017, compared to net unrealized losses of $68.1 million as of~~2023 and December 31, ~~2016.~~2022. Net unrealized losses as of ~~September~~both June 30, ~~2017~~2023 and December 31, 2022 were comprised of ~~$103.3~~$9.1 million and ~~$159.7 million~~$3.2 billion of

ASSET QUALITY (continued)

Securities Portfolio (continued)

gross unrealized gains and losses, respectively. Of$931.3 million of the $3.2 billion gross unrealized losses onrelate to AFS debt securities ~~at September~~as of June 30, ~~2017,~~2023, and $1.1 billion of the ~~largest component was $61.7~~$3.2 billion gross unrealized losses relate to AFS debt securities as of December 31, 2022.

As of June 30, 2023, the $24.3 billion AFS debt securities portfolio had unrealized losses of $311.3 million, $226.2 million, and $142.6 million related to government-sponsored agency securities, other asset-backed and sub-sovereign, supranational and non-U.S. agency bonds respectively, which are primarily attributable to changes in overall market interest rates. As of December 31, 2022, the $26.7 billion AFS debt securities portfolio had unrealized losses of $351.6 million, $288.1 million, and $157.6 million related to government sponsored agency, ~~securities~~other asset-backed, and sub-sovereign, supranational and non-U.S. agency bonds, respectively, which were primarily attributable to changes in overall market interest rates and credit spreads since their purchase. ~~$37.3~~

As of December 31, 2022, the Corporation intended 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.

As of June 30, 2023, the $26.0 billion HTM debt securities portfolio had unrealized losses ~~in securities classified as “other”~~of $1.1 billion and $491.8 million related to government-sponsored agency securities and sub-sovereign, supranational and non-U.S. agency bonds, respectively, which are primarily ~~purchased at a premium or par by~~attributable to changes in overall market interest rates. As of December 31, 2022, the $25.0 billion HTM debt securities portfolio had an unrealized loss of $1.1 billion and $436.1 million related to government-sponsored agency and sub-sovereign, supranational and non-U.S. agency bonds, respectively, which were primarily attributable to changes in overall market interest rates and credit spreads since their purchase.

HTM debt securities consist of securities that management intends to, and Northern Trust has the ability to, fulfill its obligation under the Community Reinvestment Act (CRA). Unrealized losses on these CRA-related securities were attributable to yields that were below market rates for the purpose of supporting institutions and programs that benefit low- to moderate-income communities within Northern Trust’s market area. Also, $16.6 million of the unrealized losses related to corporate debt securities, primarily reflecting widened credit spreads and higher market rates since purchase. As of September 30, 2017, 37% of the corporate debt portfolio was backed by guarantees provided by U.S. and non-U.S. governmental entities.hold until maturity.

For ~~the nine months ended September 30, 2017, charges of $0.1 million were recorded~~additional information relating to the ~~other-than-temporary impairment (OTTI) of certain CRA eligible securities. There were $2.4 million OTTI losses for~~securities portfolio, refer to Note 4—Securities to the ~~nine months ended September 30, 2016. Northern Trust has evaluated all securities with unrealized losses for possible OTTI~~consolidated financial statements provided in ~~accordance with GAAP and Northern Trust’s security impairment review policy.~~Item 1. Consolidated Financial Statements (unaudited).

~~Northern Trust participates in the repurchase agreement market as a relatively low cost alternative for short-term funding.~~ 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).

~~Nonperforming~~

Nonaccrual Loans ~~and Leases~~ and Other Real Estate Owned

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

~~Table of Contents~~

~~ASSET QUALITY (continued)~~

~~Nonperforming Loans and Leases and Other Real Estate Owned (continued)~~

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

~~Effective for the period ended~~

ASSET QUALITY (continued)

Nonaccrual Loans and Other Real Estate Owned (continued)

TABLE 26: NONACCRUAL ASSETS


	JUNE 30, 2023					DECEMBER 31, 2022
($ In Millions)	AMOUNT			% OF NONACCRUAL LOANS TO TOTAL NONACCRUAL LOANS		AMOUNT			% OF NONACCRUAL LOANS TO TOTAL NONACCRUAL LOANS
Nonaccrual Loans
Commercial
Commercial and Institutional	$	16.4		35	%	$	17.4		38	%
Commercial Real Estate	3.8			8		10.2			22

Total Commercial	$	20.2		43	%	$	27.6		60	%
Personal
Private Client	$	2.0		4	%	$	—		—	%
Residential Real Estate	24.9			53		18.3			40
Total Personal	$	26.9		57	%	$	18.3		40	%
Total Nonaccrual Loans	47.1					45.9
Other Real Estate Owned	0.3					—
Total Nonaccrual Assets	$	47.4				$	45.9
90 Day Past Due Loans Still Accruing	$	15.2				$	54.2
Nonaccrual Loans to Total Loans	0.11		%			0.11		%
Allowance for Credit Losses Assigned to Loans to Nonaccrual Loans	3.2		x			3.1		x

Nonaccrual assets of $47.4 million as of June 30, ~~2017,~~2023 increased slightly from December 31, 2022, primarily due to the ~~Corporation implemented~~addition of six new nonaccrual loans, partially offset by a ~~change in the classification~~commercial real estate upgrade and a commercial real estate charge-off. The six new nonaccrual loans were composed of certain nonperforming loans and leases to enhance the consistency of its reporting across various regulatory regimes. As a result, prior-period balances below have been adjusted to conform with current-period presentation. These adjustments generally reflect reclassification of nonperforming loans and leases from thethree residential real estate, one commercial and institutional, ~~class to the residential real estate class. There was no impact on total nonperforming loans~~one private client and ~~leases previously reported.~~

~~Table 24: Nonperforming Assets~~

($ In Millions) September 30, 2017 June 30, 2017 September 30, 2016
Nonperforming Loans and Leases
Commercial
Commercial and Institutional $ 8.8
$ 21.6
$ 36.7
Commercial Real Estate 8.3
8.6
11.8
Total Commercial 17.1
30.2
48.5
Personal
Residential Real Estate 120.1
128.7
122.6
Private Client 0.1
0.1
2.2
Total Personal 120.2
128.8
124.8
Total Nonperforming Loans and Leases 137.3
159.0
173.3
Other Real Estate Owned 8.2
7.7
7.7
Total Nonperforming Assets 145.5
166.7
181.0
90 Day Past Due Loans Still Accruing $ 8.7
$ 64.6
$ 12.5
Nonperforming Loans and Leases to Total Loans and Leases 0.41 % 0.47 % 0.52 %
Coverage of Loan and Lease Allowance to
Nonperforming Loans and Leases
1.1 x 1.0 x 1.1 x

~~Nonperforming assets of $145.5 million as of September 30, 2017, primarily reflected decreases within the commercial and institutional and~~one commercial real estate ~~portfolios as a result of payments and charge-offs, partially offset by new nonperforming assets as compared to the prior year.~~loan. In addition to the negative impact on ~~net interest income~~Net Interest Income and the risk of credit losses, ~~nonperforming~~nonaccrual assets also increase operating costs due to the expense associated with collection efforts. Changes in the level of ~~nonperforming~~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 ~~specific~~ allowance evaluated on an individual basis and of the quantitative and qualitative factors used in the determination of the ~~inherent~~ allowance ~~levels~~evaluated on a collective basis within the allowance for credit losses.

Northern Trust’s ~~underwriting standards~~credit policies do not allow for the origination of loan types generally considered to be high risk in nature, such as option adjustable rate ~~mortgages,~~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 ~~values~~value of no more than 65% to 80% at inception. ~~Revaluations~~Appraisals of supporting collateral for residential real estate loans are obtained at loan origination and upon refinancing or default or when otherwise considered warranted. ~~Collateral revaluations for mortgages~~Residential real estate collateral appraisals are performed and reviewed by independent third parties.

The commercial real estate ~~class~~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 ~~borrowers~~owners through guarantees also is ~~also~~ 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).

~~Table of Contents~~

~~ASSET QUALITY (continued)~~

~~Provision and~~ Allowance for Credit Losses

The ~~provision~~allowance for credit losses—which represents management’s best estimate of lifetime expected credit losses ~~is the charge~~related to ~~current-period earnings that~~ 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, to be the amount needed to maintain the allowance for~~process. Northern Trust measures expected credit losses ~~at an appropriate level to absorb probable credit losses that have been identified~~of financial assets with ~~specific borrower relationships (specific loss component)~~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 ~~for probable losses that are believed to be inherent in~~ the loan and lease portfolios, undrawn commitments and standby letters of credit (inherent loss component). Control processes and analyses employed to evaluate the appropriateness of the allowance for credit losses are reviewed on at least an annual basis and modified as necessary.

~~The amount of specific~~related allowance is determined through an individual ~~evaluation~~evaluation.

Management’s estimates utilized in establishing an appropriate level of ~~loans~~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 ~~lending-related commitments considered impaired that is based on expected future cash flows, collateral value~~estimates, and ~~other factors that may impact the borrower’s ability to pay.~~takes into consideration past events, current conditions and reasonable and supportable forecasts. The ~~inherent component~~results of the ~~allowance addresses exposure relating~~credit reserve estimation methodology are reviewed quarterly by Northern Trust’s Credit Loss Reserve Committee, which receives input from Credit Risk Management, Treasury, Corporate Finance, the Economic Research Department, and each of Northern Trust’s reporting segments.

ASSET QUALITY (continued)

Allowance for Credit Losses (continued)

As of June 30, 2023, the Allowance for Credit Losses related to ~~probable but unidentified credit-related losses. The inherent component of the allowance also covers the credit exposure associated with~~loans, undrawn loan commitments and standby letters of ~~credit. To estimate~~credit, HTM debt securities, and other financial assets, was $152.5 million, $26.0 million, $16.7 million, and $1.0 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 million, respectively. There was a $1.3 million allowance for credit losses related to AFS debt securities as of both June 30, 2023 and December 31, 2022. For additional information relating to the allowance for credit losses ~~on these instruments, management uses conversion rates to determine the estimated amount that will be drawn~~ and ~~assigns an allowance factor determined in accordance with the methodology utilized for outstanding loans.~~

The provision for credit losses was a credit of $7.0 million in the current quarter, compared to a credit of $3.0 million in the prior-year quarter. Net recoveries were $1.6 million, resulting from $5.1 million of recoveries and $3.5 million of charge-offs, compared to $0.8 million of net recoveries in the prior-year quarter, resulting from $3.8 million of recoveries and $3.0 million of charge-offs. Residential real estate loans accounted for 88% and 71% of total nonperforming loans and leases at September 30, 2017 and 2016, respectively.

~~Note 7 to the consolidated financial statements includes a table that details~~ the changes in the allowance for credit losses during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~June 30, 2022 due to charge-offs, recoveries and provisions for credit ~~losses.~~

~~Table of Contents~~

~~ASSET QUALITY (continued)~~

~~Provision and~~ losses, refer to Note 6—Allowance for Credit Losses ~~(continued)~~

to the consolidated financial statements provided in Item 1. Consolidated Financial Statements (unaudited).

The ~~following~~ table ~~shows the specific portion of~~provides the allowance evaluated on an individual and collective basis for the ~~inherent portion of the allowance and its components~~loan portfolio by ~~loan and lease~~ segment and class.

~~Table 25: Allocation of~~TABLE 27: ALLOCATION OF THE ALLOWANCE FOR CREDIT LOSSES FOR LOANS


	JUNE 30, 2023					DECEMBER 31, 2022
($ In Millions)	ALLOWANCE AMOUNT			PERCENT OF LOANS TO TOTAL LOANS		ALLOWANCE AMOUNT			PERCENT OF LOANS TO TOTAL LOANS
Evaluated on an Individual Basis	$	11.0		—	%	$	10.4		—	%
Evaluated on a Collective Basis
Commercial
Commercial and Institutional	47.1			28		57.0			29
Commercial Real Estate	88.6			11		76.5			11
Non-U.S.	2.6			7		8.3			7
Other	—			5		0.3			3
Total Commercial	138.3			51		142.1			50
Personal
Private Client	10.4			32		11.2			33
Residential Real Estate	17.9			15		18.0			15
Non-U.S.	0.9			1		1.1			1
Other	—			1		—			1
Total Personal	29.2			49		30.3			50
Total Allowance Evaluated on a Collective Basis	$	167.5				$	172.4
Total Allowance for Credit Losses	$	178.5				$	182.8
Allowance Assigned to
Loans	$	152.5				$	144.3
Undrawn Commitments and Standby Letters of Credit	26.0					38.5
Total Allowance for Credit Losses	$	178.5				$	182.8
Allowance Assigned to Loans to Total Loans	0.35		%			0.34		%

Commercial Real Estate Loans

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

TABLE 28: COMMERCIAL REAL ESTATE LOANS



(In Millions)	JUNE 30, 2023		DECEMBER 31, 2022
Commercial Mortgages
Apartment/ Multi-family	$	1,531.1	$	1,392.7
Office	1,023.6		1,054.0
Industrial/ Warehouse	609.6		596.2
Retail	607.0		572.2
Other	610.2		548.0
Total Commercial Mortgages	4,381.5		4,163.1
Construction, Acquisition and Development Loans	658.6		609.9
Total Commercial Real Estate Loans	$	5,040.1	$	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).

September 30, 2017 June 30, 2017 September 30, 2016
($ In Millions)
Allowance
Amount

Percent of
Loans to
Total
Loans

Allowance
Amount

Percent of
Loans to
Total
Loans

Allowance
Amount

Percent of
Loans to
Total
Loans
Specific Allowance $ 8.6
— % $ 8.7
— % $ 9.1
— %
Allocated Inherent Allowance
Commercial
Commercial and Institutional 33.4
28
33.7
27
35.9
27
Commercial Real Estate 53.6
11
58.7
11
72.1
12
Lease Financing, net 0.3
1
—
1
0.4
1
Non-U.S. —
5
—
6
—
4
Other 1.1
1
1.1
1
—
1
Total Commercial 88.4
46
93.5
46
108.4
45
Personal
Residential Real Estate 64.2
22
63.8
23
85.3
25
Private Client 9.9
32
10.7
31
19.8
30
Other 2.3
—
2.1
—
2.3
—
Total Personal 76.4
54
76.6
54
107.4
55
Total Allocated Inherent Allowance $ 164.8
100 % $ 170.1
100 % $ 215.8
100 %
Total Allowance for Credit Losses $ 173.4
$ 178.8
$ 224.9

Allowance Assigned to
Loans and Leases $ 150.3
$ 153.8
$ 191.0

Undrawn Commitments and Standby Letters of Credit 23.1
25.0
33.9

Total Allowance for Credit Losses $ 173.4
$ 178.8
$ 224.9

Allowance Assigned to Loans and Leases to Total Loans and Leases 0.45 % 0.46 % 0.57 %

STATEMENTS OF CASH FLOWS

The following discusses the statement of cash flow activities for the six months ended June 30, 2023 and 2022.

TABLE 29: CASH FLOW ACTIVITY SUMMARY


	SIX MONTHS ENDED JUNE 30,
(In Millions)	2023		2022
Net cash provided by (used in):
Operating activities	$	(264.3)	$	(863.9)
Investing activities	(431.4)		25,225.8
Financing activities	1,071.7		(22,060.4)
Effect of Foreign Currency Exchange Rates on Cash	(132.5)		(238.5)
Change in Cash and Due from Banks	$	243.5	$	2,063.0

Operating Activities

Net cash used in operating activities of $264.3 million for the six months ended June 30, 2023, was primarily attributable to higher net collateral deposited with derivative counterparties, partially offset by period earnings and the impact of higher non-cash charges such as amortization and depreciation.

Net cash used in operating activities of $863.9 million for the six months ended June 30, 2022, was primarily attributable to higher net collateral deposited with derivative counterparties, partially offset by period earnings, the impact of higher non-cash charges such as amortization and depreciation, change in receivables and net changes in other operating activities.

Investing Activities

Net cash used in investing activities of $431.4 million for the six months ended June 30, 2023, was primarily attributable to increased levels of Federal Reserve and other central bank deposits and other net investing activities, partially offset by net proceeds associated with AFS debt securities.

Net cash provided by investing activities of $25.2 billion for the six months ended June 30, 2022, was primarily attributable to decreased levels of Federal Reserve and other central bank deposits.

Financing Activities

Net cash provided by financing activities of $1.1 billion for the six months ended June 30, 2023, was primarily attributable to increased levels of federal funds purchased and short-term other borrowings, partially offset by the decreased levels of total deposits. The decrease in total deposits was primarily attributable to lower levels of savings, money market and other interest-bearing deposits, and demand and other noninterest-bearing deposits.

Net cash used in financing activities of $22.1 billion for the six months ended June 30, 2022, was primarily attributable to the decreased levels of total deposits. The decrease in total deposits was primarily attributable to lower levels of non-U.S. office noninterest-bearing and interest-bearing deposits as well as savings, money market and other interest-bearing deposits.

~~Table~~

CAPITAL RATIOS

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

~~MARKET~~ Northern Trust is a Category II institution as defined by the Federal Reserve Board which requires us to adhere to stringent 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.

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: REGULATORY CAPITAL RATIOS


Capital Ratios — Northern Trust Corporation	JUNE 30, 2023				MARCH 31, 2023				JUNE 30, 2022
	STANDARDIZED APPROACH		ADVANCED APPROACH		STANDARDIZED APPROACH		ADVANCED APPROACH		STANDARDIZED APPROACH		ADVANCED APPROACH		WELL-CAPITALIZED RATIOS	MINIMUM CAPITAL RATIOS
Common Equity Tier 1 Capital	11.3	%	13.0	%	11.3	%	11.7	%	10.5	%	11.6	%	N/A	4.5	%
Tier 1 Capital	12.3		14.1		12.3		12.7		11.5		12.7		6.0	6.0
Total Capital	14.4		16.3		14.4		14.7		12.6		13.7		10.0	8.0
Tier 1 Leverage	7.4		7.4		7.3		7.3		6.7		6.7		N/A	4.0
Supplementary Leverage	N/A		8.3		N/A		8.3		N/A		7.6		N/A	3.0


Capital Ratios — The Northern Trust Company	JUNE 30, 2023				MARCH 31, 2023				JUNE 30, 2022
	STANDARDIZED APPROACH		ADVANCED APPROACH		STANDARDIZED APPROACH		ADVANCED APPROACH		STANDARDIZED APPROACH		ADVANCED APPROACH		WELL-CAPITALIZED RATIOS		MINIMUM CAPITAL RATIOS
Common Equity Tier 1 Capital	12.1	%	14.3	%	12.3	%	12.9	%	11.0	%	12.3	%	6.5	%	4.5	%
Tier 1 Capital	12.1		14.3		12.3		12.9		11.0		12.3		8.0		6.0
Total Capital	13.9		16.2		14.2		14.6		11.9		13.1		10.0		8.0
Tier 1 Leverage	7.4		7.4		7.3		7.3		6.3		6.3		5.0		4.0
Supplementary Leverage	N/A		8.2		N/A		8.3		N/A		7.2		3.0		3.0

RECENT ACCOUNTING PRONOUNCEMENTS AND DEVELOPMENTS

In March 2023, the Financial Accounting Standards Board (FASB) issued ASU No. 2023-02, “Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method—a consensus of the Emerging Issues Task Force” (ASU 2023-02). The amendments in 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 2023-02 is effective for interim and annual periods beginning after December 15, 2023, although early adoption is permitted. Northern Trust is currently assessing the impacts of adoption of ASU 2023-02 on the consolidated financial condition and results of operations.

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 liquidity standards as Category I institutions. 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 64% and 63% of total assets as of June 30, 2023 and December 31, 2022, respectively. 84% and 81% of Northern Trust’s securities portfolio is composed of U.S. Treasury, government sponsored agency and triple-A rated securities as of June 30, 2023 and December 31, 2022, 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~~Net Interest Income and the market value of ~~equity.~~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. ~~Simulation of~~ NII sensitivity provides management with a short-term view of the impact of interest rate changes on NII. ~~Simulation of~~ MVE sensitivity provides management with a long-term view of interest rate changes on MVE ~~as of~~based on the period-end balance sheet. ~~Both simulation models use the same initial market~~Higher interest rates ~~and product balances.~~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 ~~regularly~~ measures daily the risk of loss associated with ~~foreign~~all non-U.S. currency positions using a Value-at-Risk (VaR) ~~model.~~model and applying the historical simulation methodology. The following information about Northern Trust’s management of market risk should be read in conjunction with ~~the~~our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022.

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).

The NII sensitivity analysis incorporates certain critical assumptions such as interest rates ~~balance sheet changes,~~ 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; therefore, there could be a change in NII sensitivity to the extent that actual behavior differs from that assumed.~~assumptions. The following key assumptions are incorporated into the simulation:

▪

the balance sheet size and mix generally 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 products such as securities (the assumed reinvestment of which is determined by management’s strategies); non-maturity deposits, of which some recent increases are assumed to be temporary in nature; and long-term fixed rate borrowings, which upon maturity are replaced with overnight wholesale instruments;


▪	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;~~


▪	non-maturity deposit pricing and lives are projected based on Northern Trust’s actual historical patterns and management judgment, depending upon the availability of historical data and current pricing strategies; and


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

▪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;

RISK MANAGEMENT (continued)

Market Risk (continued)

▪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.~~rates as of June 30, 2023 and June 30, 2022. A 200 basis point ramp downward movement in interest rate relative to forward rate is also provided as of June 30, 2023. Each rate movement is assumed to occur gradually over a one-year period. Given the low level of interest rates at the ~~simulation of NII for~~time and assumed interest rate floors as rates ~~100 and~~approach zero, the 200 basis ~~points lower~~point ramp downward movement in interest rate relative to forward rate as of June 30, 2022 would not provide meaningful ~~results.~~results and is therefore not provided.

~~Table 26: Net Interest Income Sensitivity~~TABLE 31: NET INTEREST INCOME SENSITIVITY


INCREASE (DECREASE) ESTIMATED IMPACT ON NEXT TWELVE MONTHS OF NET INTEREST INCOME			INCREASE (DECREASE) ESTIMATED IMPACT ON NEXT TWELVE MONTHS OF NET INTEREST INCOME
($ In Millions)	Increase/(Decrease) Estimated Impact on Next Twelve Months of Net Interest Income		($ In Millions)	JUNE 30, 2023		JUNE 30, 2022
Increase in Interest Rates Above Market-Implied Forward Rates
Increase in Interest Rates Above Market Implied Forward Rates			Increase in Interest Rates Above Market Implied Forward Rates
100 Basis Points	$	21	100 Basis Points	$	(40)	$	60
200 Basis Points	38		200 Basis Points	(84)		110
Decrease in Interest Rates Below Market Implied Forward Rates			Decrease in Interest Rates Below Market Implied Forward Rates
100 Basis Points			100 Basis Points	$	37	$	(7)
200 Basis Points			200 Basis Points	58		N/M

~~Table of Contents~~



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

Nine Months Ended September 30,
(In Millions) 2017 2016
Preferred Stock
Series C, Balance at January 1 and September 30 $ 388.5
$ 388.5
Series D, Balance at January 1 and September 30 $ 493.5
$ 493.5
Balance at September 30 882.0
882.0
Common Stock
Balance at January 1 and September 30 408.6
408.6
Additional Paid-in Capital
Balance at January 1 1,035.8
1,072.3
Treasury Stock Transactions — Stock Options and Awards (104.8 ) (91.8 )
Stock Options and Awards — Amortization 106.5
67.1
Stock Options and Awards — Tax Benefit —
(9.0 )
Balance at September 30 1,037.5
1,038.6
Retained Earnings
Balance at January 1 8,908.4
8,242.8
Net Income 842.4
766.0
Dividends Declared — Common Stock (275.7 ) (255.1 )
Dividends Declared — Preferred Stock (43.9 ) (17.6 )
Balance at September 30 9,431.2
8,736.1
Accumulated Other Comprehensive Income (Loss)
Balance at January 1 (370.0 ) (372.7 )
Net Unrealized Gains on Securities Available for Sale 18.7
94.3
Net Unrealized Gains (Losses) on Cash Flow Hedges (4.9 ) 6.6
Foreign Currency Translation Adjustments 10.5
0.7
Pension and Other Postretirement Benefit Adjustments 10.6
11.4
Balance at September 30 (335.1 ) (259.7 )
Treasury Stock
Balance at January 1 (1,094.4 ) (1,033.6 )
Stock Options and Awards 187.9
153.9
Stock Purchased (352.5 ) (346.1 )
Balance at September 30 (1,259.0 ) (1,225.8 )
Total Stockholders’ Equity at September 30 $ 10,165.2
$ 9,579.8


	SIX MONTHS ENDED JUNE 30, 2023
(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
Net Income	—		—		—		334.6		—		—		334.6
Other Comprehensive Income (Loss) (Net of Tax and Reclassifications)	—		—		—		—		203.0		—		203.0
Dividends Declared:
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	—		—		—		(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

See accompanying notes to the consolidated financial statements.

~~Table of Contents~~



~~CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)~~			~~NORTHERN TRUST CORPORATION~~

Nine Months Ended September 30,
(In Millions) 2017 2016
Cash Flows from Operating Activities:
Net Income $ 842.4
$ 766.0
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Investment Security Losses, net 1.1
1.9
Amortization and Accretion of Securities and Unearned Income, net 88.6
65.6
Provision for Credit Losses (15.0 ) (4.0 )
Depreciation on Buildings and Equipment 73.8
66.8
Amortization of Computer Software 230.4
203.6
Amortization of Intangibles 7.0
6.3
Pension Plan Contributions (11.5 ) (9.1 )
Change in Receivables (135.1 ) (80.5 )
Change in Interest Payable 16.5
0.7
Change in Collateral With Derivative Counterparties, net 534.8
(330.1 )
Other Operating Activities, net (763.3 ) (15.7 )
Net Cash Provided by Operating Activities 869.7
671.5
Cash Flows from Investing Activities:
Net Change in Federal Funds Sold and Securities Purchased under Agreements to Resell 336.3
(445.2 )
Change in Interest-Bearing Deposits with Banks (535.6 ) 1,136.3
Net Change in Federal Reserve and Other Central Bank Deposits (6,472.3 ) 789.7
Purchases of Securities — Held to Maturity (7,346.3 ) (5,757.3 )
Proceeds from Maturity and Redemption of Securities — Held to Maturity 7,180.1
1,991.6
Purchases of Securities — Available for Sale (6,937.6 ) (11,081.1 )
Proceeds from Sale, Maturity and Redemption of Securities — Available for Sale 7,607.7
7,548.0
Change in Loans and Leases 710.7
(239.3 )
Purchases of Buildings and Equipment (63.7 ) (58.0 )
Purchases and Development of Computer Software (288.2 ) (250.4 )
Change in Client Security Settlement Receivables (220.4 ) 173.8
Acquisition of a Subsidiary, Net of Cash Received —
(16.9 )
Other Investing Activities, net 63.6
956.1
Net Cash Used in Investing Activities (5,965.7 ) (5,252.7 )
Cash Flows from Financing Activities:
Change in Deposits 2,082.4
3,149.2
Change in Federal Funds Purchased 1,937.3
27.0
Change in Securities Sold under Agreements to Repurchase 50.4
(244.8 )
Change in Short-Term Other Borrowings 966.4
(41.9 )
Proceeds from Senior Notes and Long-Term Debt 350.0
—
Repayments of Senior Notes and Long-Term Debt (7.0 ) (4.2 )
Proceeds from Issuance of Preferred Stock - Series D —
493.5
Treasury Stock Purchased (352.5 ) (346.1 )
Net Proceeds from Stock Options 83.1
62.0
Cash Dividends Paid on Common Stock (261.2 ) (246.9 )
Cash Dividends Paid on Preferred Stock (32.4 ) (17.6 )
Other Financing Activities, net 0.1
(8.7 )
Net Cash Provided by Financing Activities 4,816.6
2,821.5
Effect of Foreign Currency Exchange Rates on Cash 210.3
233.9
Decrease in Cash and Due from Banks (69.1 )
(1,525.8 )
Cash and Due from Banks at Beginning of Year 5,332.0
6,418.5
Cash and Due from Banks at End of Period $ 5,262.9
$ 4,892.7
Supplemental Disclosures of Cash Flow Information:
Interest Paid $ 215.2
$ 134.1
Income Taxes Paid 348.9
596.9
Transfers from Loans to OREO 7.2
12.0


	SIX MONTHS ENDED JUNE 30, 2022
(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

See accompanying notes to the consolidated financial statements.


CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)			NORTHERN TRUST CORPORATION


	SIX MONTHS ENDED JUNE 30,
(In Millions)	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	666.4	$	785.5
Adjustments to Reconcile Net Income to Net Cash Used in Operating Activities
Investment Security Gains	(6.9)		—
Amortization and Accretion of Securities and Unearned Income, net	4.3		34.4
Provision for Credit Losses	(0.5)		6.5
Depreciation and Amortization	308.1		264.5
Pension Plan Contributions	(16.5)		(20.7)
Change in Receivables	72.3		192.2
Change in Interest Payable	44.0		25.7
Change in Collateral With Derivative Counterparties, net	(1,215.5)		(2,314.2)
Other Operating Activities, net	(120.0)		162.2
Net Cash Used in Operating Activities	(264.3)		(863.9)
CASH FLOWS FROM INVESTING ACTIVITIES
Change in Federal Funds Sold	(32.0)		(10.0)
Change in Securities Purchased under Agreements to Resell	(106.5)		(503.1)
Change in Interest-Bearing Deposits with Banks	480.1		(645.9)
Net Change in Federal Reserve and Other Central Bank Deposits	(2,239.9)		25,295.1
Purchases of Held to Maturity Debt Securities	(18,715.2)		(21,034.6)
Proceeds from the Maturity and Redemption of Held to Maturity Debt Securities	18,076.7		23,282.6
Purchases of Available for Sale Debt Securities	(2,336.0)		(2,741.1)
Proceeds from the Maturity and Sales of Available for Sale Debt Securities	4,938.7		3,646.9
Change in Loans	(643.2)		(763.9)
Purchases of Buildings and Equipment	(31.6)		(47.2)
Purchases and Development of Computer Software	(268.9)		(270.0)
Change in Client Security Settlement Receivables	1,269.6		(372.5)
Bank-Owned Life Insurance Policy Premiums	—		(500.0)
Other Investing Activities, net	(823.2)		(110.5)
Net Cash (Used in) Provided by Investing Activities	(431.4)		25,225.8
CASH FLOWS FROM FINANCING ACTIVITIES
Change in Deposits	(11,053.6)		(23,291.2)
Change in Federal Funds Purchased	7,447.6		389.0
Change in Securities Sold under Agreements to Repurchase	420.8		267.5
Change in Short-Term Other Borrowings	4,788.4		(77.4)
Proceeds from Senior Notes	—		995.4
Treasury Stock Purchased	(200.2)		(34.1)
Net Proceeds from Stock Options	1.6		2.6
Cash Dividends Paid on Common Stock	(311.9)		(291.5)
Cash Dividends Paid on Preferred Stock	(20.9)		(20.9)
Other Financing Activities, net	(0.1)		0.2
Net Cash Provided by (Used in) Financing Activities	1,071.7		(22,060.4)
Effect of Foreign Currency Exchange Rates on Cash	(132.5)		(238.5)
Change in Cash and Due from Banks	243.5		2,063.0
Cash and Due from Banks at Beginning of Period	4,654.2		3,056.8
Cash and Due from Banks at End of Period	$	4,897.7	$	5,119.8
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest Paid	$	2,103.1	$	44.2
Income Taxes Paid	109.8		164.1
Transfers from Loans to OREO	0.2		0.1

See accompanying notes to the consolidated financial statements.

~~Table of Contents~~

Notes to Consolidated Financial Statements (unaudited)

Note 1 – Basis of Presentation

The consolidated financial statements include the accounts of Northern Trust Corporation ~~(the Corporation)~~(Corporation) and its wholly-owned subsidiary, The Northern Trust Company ~~(the Bank)~~(Bank), and various other wholly-owned subsidiaries of the Corporation and ~~the~~ 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~~June 30, ~~2017~~2023 and ~~2016,~~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 byfor the banking industry. The consolidated statements of income include results of acquired subsidiaries from the dates of acquisition. Certain amounts in prior periods have been reclassified to conform with the current year’s presentation. For a description of Northern Trust’s significant accounting policies, refer to Note 11—Summary of ~~the Notes to Consolidated~~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, ~~2016.~~2022.

Note 2 –Recent Accounting Pronouncements

On January 1, ~~2017, the Corporation~~2023, Northern Trust adopted ~~ASU 2016-05,~~Accounting Standard Update (ASU) No. 2022-01, “Derivatives and Hedging (Topic 815): ~~Effects~~Fair Value Hedging—Portfolio Layer Method” (ASU 2022-01). The amendments in ASU 2022-01 expand the current last-of-layer hedging model from a single-layer method to allow multiple hedged layers of ~~Derivative Contract Novations on Existing Hedge Accounting Relationships (a consensus~~a single closed portfolio. To reflect that expansion, the last-of-layer method is renamed the portfolio layer method. In addition, ASU 2022-01 (1) expands the scope of the ~~Emerging Issues Task Force)” (ASU 2016-05). ASU 2016-05 clarifies that~~portfolio layer method to include non-prepayable assets, (2) specifies eligible hedging instruments in a ~~change~~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 counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815, does not, in and of itself, require dedesignation of that hedging relationship provided all other hedge accounting criteria continue to be met.closed portfolio. Upon adoption of ASU ~~2016-05, the Corporation did not dedesignate any hedging relationships due to change in counterparty and therefore~~2022-01, there was no impact to ~~its~~Northern Trust’s consolidated ~~financial condition~~balance sheets or ~~results~~consolidated statements of ~~operations.~~income.

On January 1, ~~2017, the Corporation~~2023, Northern Trust adopted ASU ~~2016-06, “Derivatives~~No. 2022-02, “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and ~~Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments (a consensus of the Emerging Issues Task Force)”~~Vintage Disclosures” (ASU ~~2016-06)~~2022-02). The amendments in ASU ~~2016-06 clarify what steps are required when assessing whether~~2022-02 eliminate the ~~economic characteristics~~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 ~~risks~~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 ~~call (put) options are clearly~~origination for financing receivables and ~~closely related~~net investment in leases. Upon adoption of ASU 2022-02, there was no significant impact to ~~the economic characteristics and risks~~Northern Trust’s consolidated balance sheets or consolidated statements of ~~their debt hosts, which is one~~income. Please refer to Note 5—Loans for further information.

On January 1, 2023, Northern Trust adopted ASU No. 2022-04, “Liabilities—Supplier Finance Programs (Topic 405-50): Disclosure of ~~the criteria for bifurcating an embedded derivative.~~Supplier Finance Program Obligations” (ASU 2022-04). The ~~Corporation currently applies the approach for analyzing potential embedded derivative instruments in debt instruments detailed~~amendments in ASU ~~2016-06~~2022-04 enhance the transparency about the use of supplier finance programs for investors or other allocators of capital. Specifically, ASU 2022-04 requires that a buyer in a supplier finance program disclose sufficient qualitative and ~~therefore upon~~quantitative information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. Upon adoption of ASU 2022-04, there was no impact to ~~its~~Northern Trust’s consolidated ~~financial condition~~balance sheets or ~~results~~consolidated statements of ~~operations.~~income.

~~On January 1, 2017, the Corporation adopted ASU 2016-07, “Investments - Equity Method and Joint Ventures (Topic 323), Simplifying the Transition~~

Notes to the Equity Method of Accounting” (ASU 2016-07), which requires that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Upon adoption of ASU 2016-07, the Corporation did not hold an interest in an investee that subsequently qualified for the use of the equity method and therefore there was no impact to the Corporation’s consolidated financial condition or results of operations.Consolidated Financial Statements (unaudited) (continued)

On January 1, 2017, the Corporation adopted ASU 2016-17, “Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control” (ASU 2016-17). Under ASU 2016-17, a single decision maker evaluating whether it is the primary beneficiary of a variable interest entity will consider its indirect interests held by related parties that are under common control on a proportionate basis. Upon adoption of ASU 2016-17, there was no impact to the Corporation’s consolidated financial condition or results of operations.

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. ~~Northern Trust’s policy is to recognize~~No transfers into ~~and transfers~~or out of ~~fair value levels as of the end of the reporting period in which the transfer occurred. No transfers between fair value levels~~Level 3 occurred during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 or the year ended December 31, ~~2016.~~2022.

~~Table of Contents~~

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

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~~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 ~~available for sale~~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 ~~pre-determined~~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~~June 30, ~~2017,~~2023, Northern Trust’s ~~available for sale~~AFS debt securities portfolio included ~~1,428~~1,013 Level 2 debt securities with an aggregate market value of ~~$28.1~~$21.4 billion. All ~~1,428~~1,013 debt securities were valued by external pricing vendors. As of December 31, ~~2016,~~2022, Northern Trust’s ~~available for sale~~AFS debt securities portfolio included ~~1,409~~1,163 Level 2 debt securities with an aggregate market value of ~~$28.1~~$24.0 billion. All ~~1,409~~1,163 debt securities were valued by ~~external pricing vendors. Trading account securities, which totaled $0.8 million and $0.3 million as of September 30, 2017 and December 31, 2016, respectively, were all valued using~~ 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 assets consist of auction rate securities purchased in 2008 from Northern Trust clients. To estimate the fair value of auction rate securities, Northern Trust uses external pricing vendors that incorporate transaction details and market- based inputs such as past auction results, trades and bids. The significant unobservable inputs used in the fair value measurement are the prices of the securities supported by little market activity and for which trading is limited.

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 ~~19 — “Contingent Liabilities”~~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.

~~Table of Contents~~

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

The following table presents the fair values of Northern Trust’s Level 3 liabilities as of June 30, 2023 and December 31, 2022, as well as the valuation techniques, significant unobservable inputs, and quantitative information used to develop significant unobservable inputs for ~~Northern Trust’s Level 3 assets and~~such liabilities as of ~~September 30, 2017 and December 31, 2016.~~

~~Table 30: Level 3 Significant Unobservable Inputs~~such dates.

September 30, 2017
Financial Instrument Fair Value
Valuation
Technique
Unobservable Inputs Range of Inputs
Auction Rate Securities $ 4.1 million Comparables Price $87 — 99
Swaps Related to Sale of Certain Visa Class B Common Shares $ 27.7 million Discounted Cash Flow Visa Class A Appreciation 7.0 % — 11.0%
Conversion Rate 1.63 x — 1.65x
Expected Duration 1.5
— 4.0 years

December 31, 2016
Financial Instrument Fair Value
Valuation
Technique
Unobservable Inputs Range of Inputs
Auction Rate Securities $ 4.7 million Comparables Price $84 — 99
Swap Related to Sale of Certain Visa Class B Common Shares $ 25.2 million Discounted Cash Flow Visa Class A Appreciation 7.0 % — 11.0%
Conversion Rate 1.63 x — 1.65x
Expected Duration 1.5
— 4.5 years

~~Table of Contents~~

Notes to Consolidated Financial Statements (unaudited) (continued)

TABLE 35: LEVEL 3 SIGNIFICANT UNOBSERVABLE INPUTS

JUNE 30, 2023

FINANCIAL INSTRUMENT

FAIR VALUE

VALUATION TECHNIQUE

UNOBSERVABLE INPUTS

INPUT VALUES

WEIGHTED-AVERAGE INPUT VALUES(1)

Swaps Related to Sale of Certain Visa Class B Common Shares

$36.4 million

Discounted Cash Flow

Conversion Rate

1.59x

Visa Class A Appreciation

9.94%

Expected Duration

33 months

20 months

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

DECEMBER 31, 2022

FINANCIAL INSTRUMENT

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

Visa Class A Appreciation

8.53%

Expected Duration

33 months

20 months

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

The following ~~tables present~~table presents assets and liabilities measured at fair value on a recurring basis as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016,~~2022, segregated by fair value hierarchy level.

~~Table 31: Recurring Basis Hierarchy Leveling~~TABLE 36: RECURRING BASIS HIERARCHY LEVELING


													JUNE 30, 2023
(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
September 30, 2017
Securities
Debt Securities												Debt Securities
Available for Sale												Available for Sale
U.S. Government	$	5,744.4	$	—	$	—	$	—		$	5,744.4	U.S. Government	$	2,843.9	$	—	$	—	$	—	$	2,843.9
Obligations of States and Political Subdivisions	—		765.9		—		—			765.9		Obligations of States and Political Subdivisions	—		289.2		—		—		289.2
Government Sponsored Agency	—		18,082.8		—		—			18,082.8		Government Sponsored Agency	—		11,349.0		—		—		11,349.0
Non-U.S. Government	—		138.7		—		—			138.7		Non-U.S. Government	—		251.5		—		—		251.5
Corporate Debt	—		3,181.3		—		—			3,181.3		Corporate Debt	—		460.9		—		—		460.9
Covered Bonds	—		832.1		—		—			832.1		Covered Bonds	—		341.0		—		—		341.0
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	—		2,202.8		—		—			2,202.8		Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	—		2,918.0		—		—		2,918.0
Other Asset-Backed	—		2,394.3		—		—			2,394.3		Other Asset-Backed	—		4,909.6		—		—		4,909.6
Auction Rate	—		—		4.1		—			4.1
Commercial Mortgage-Backed	—		466.5		—		—			466.5		Commercial Mortgage-Backed	—		901.3		—		—		901.3
Other	—		32.0		—		—			32.0
Total Available for Sale	5,744.4		28,096.4		4.1		—			33,844.9		Total Available for Sale	2,843.9		21,420.5		—		—		24,264.4
Trading Account	—		0.8		—		—			0.8		Trading Account	—		0.1		—		—		0.1
Total Available for Sale and Trading Securities	5,744.4		28,097.2		4.1		—			33,845.7
Total Available for Sale and Trading Debt Securities												Total Available for Sale and Trading Debt Securities	2,843.9		21,420.6		—		—		24,264.5
Other Assets												Other Assets
Money Market Investment												Money Market Investment	95.0		—		—		—		95.0
Derivative Assets												Derivative Assets
Foreign Exchange Contracts	—		3,100.1		—		—			3,100.1		Foreign Exchange Contracts	—		2,264.1		—		(1,001.1)		1,263.0
Interest Rate Contracts	—		117.1		—		—			117.1		Interest Rate Contracts	—		313.9		—		(244.8)		69.1
Other Financial Derivatives												Other Financial Derivatives	—		—		—		—		—
Total Derivative Assets	—		3,217.2		—		(2,373.5		)	843.7		Total Derivative Assets	—		2,578.0		—		(1,245.9)		1,332.1
Other Liabilities												Other Liabilities
Derivative Liabilities												Derivative Liabilities
Foreign Exchange Contracts	—		3,168.6		—		—			3,168.6		Foreign Exchange Contracts	—		2,162.6		—		(1,422.1)		740.5
Interest Rate Contracts	—		84.1		—		—			84.1		Interest Rate Contracts	—		408.1		—		(4.1)		404.0
Other Financial Derivatives ⁽¹⁾	—		—		27.7		—			27.7		Other Financial Derivatives(1)	—		—		36.4		(34.8)		1.6
Total Derivative Liabilities	$	—	$	3,252.7	$	27.7	$	(2,089.8	)	$	1,190.6	Total Derivative Liabilities	$	—	$	2,570.7	$	36.4	$	(1,461.0)	$	1,146.1

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~~June 30, ~~2017,~~2023, derivative assets and liabilities shown above also include reductions of ~~$617.9~~$304.9 million and ~~$334.2~~$520.0 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.~~

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

~~Table of Contents~~

Notes to Consolidated Financial Statements (unaudited) (continued)


													DECEMBER 31, 2022
(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
December 31, 2016
Securities
Debt Securities												Debt Securities
Available for Sale												Available for Sale
U.S. Government	$	7,522.6	$	—	$	—	$	—		$	7,522.6	U.S. Government	$	2,747.4	$	—	$	—	$	—	$	2,747.4
Obligations of States and Political Subdivisions	—		885.2		—		—			885.2		Obligations of States and Political Subdivisions	—		787.6		—		—		787.6
Government Sponsored Agency	—		17,892.8		—		—			17,892.8		Government Sponsored Agency	—		11,545.2		—		—		11,545.2
Non-U.S. Government	—		417.9		—		—			417.9		Non-U.S. Government	—		360.0		—		—		360.0
Corporate Debt	—		3,765.2		—		—			3,765.2		Corporate Debt	—		1,747.6		—		—		1,747.6
Covered Bonds	—		1,143.9		—		—			1,143.9		Covered Bonds	—		388.7		—		—		388.7
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	—		1,340.7		—		—			1,340.7		Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	—		2,479.4		—		—		2,479.4
Other Asset-Backed	—		2,085.1		—		—			2,085.1		Other Asset-Backed	—		5,256.2		—		—		5,256.2
Auction Rate	—		—		4.7		—			4.7
Commercial Mortgage-Backed	—		471.6		—		—			471.6		Commercial Mortgage-Backed	—		1,387.8		—		—		1,387.8
Other	—		50.1		—		—			50.1
Total Available for Sale	7,522.6		28,052.5		4.7		—			35,579.8		Total Available for Sale	2,747.4		23,952.5		—		—		26,699.9
Trading Account	—		0.3		—		—			0.3		Trading Account	95.0		0.2		—		—		95.2
Total Available for Sale and Trading Securities	7,522.6		28,052.8		4.7		—			35,580.1
Total Available for Sale and Trading Debt Securities												Total Available for Sale and Trading Debt Securities	2,842.4		23,952.7		—		—		26,795.1
Other Assets												Other Assets
Derivative Assets												Derivative Assets
Foreign Exchange Contracts	—		3,609.6		—		—			3,609.6		Foreign Exchange Contracts	—		3,510.1		—		(2,666.4)		843.7
Interest Rate Contracts	—		247.2		—		—			247.2		Interest Rate Contracts	—		222.0		—		(144.3)		77.7
Other Financial Derivatives(1)												Other Financial Derivatives(1)	—		0.3		—		—		0.3
Total Derivative Assets	—		3,856.8		—		(2,170.4		)	1,686.4		Total Derivative Assets	—		3,732.4		—		(2,810.7)		921.7
Other Liabilities												Other Liabilities
Derivative Liabilities												Derivative Liabilities
Foreign Exchange Contracts	—		3,242.9		—		—			3,242.9		Foreign Exchange Contracts	—		3,187.5		—		(1,826.7)		1,360.8
Interest Rate Contracts	—		108.0		—		—			108.0		Interest Rate Contracts	—		431.8		—		(5.9)		425.9
Other Financial Derivatives ⁽¹⁾	—		—		25.2		—			25.2
Other Financial Derivatives(2)												Other Financial Derivatives(2)	—		—		34.8		(33.3)		1.5
Total Derivative Liabilities	$	—	$	3,350.9	$	25.2	$	(2,431.2	)	$	944.9	Total Derivative Liabilities	$	—	$	3,619.3	$	34.8	$	(1,865.9)	$	1,788.2

September 30, 2017
(In Millions) Current
30-59 Days
Past Due

60-89 Days
Past Due

90 Days or
More Past
Due

Total
Performing
Nonperforming
Total Loans
and Leases
Commercial
Commercial and Institutional $ 9,229.0
$ 3.2
$ 3.4
$ 2.0
$ 9,237.6
$ 8.8
$ 9,246.4
Commercial Real Estate 3,597.1
0.5
—
—
3,597.6
8.3
3,605.9
Non-U.S. 1,650.8
—
—
—
1,650.8
—
1,650.8
Lease Financing, net 235.7
—
—
—
235.7
—
235.7
Other 465.0
—
—
—
465.0
—
465.0
Total Commercial 15,177.6
3.7
3.4
2.0
15,186.7
17.1
15,203.8
Personal
Private Client 10,644.8
25.4
6.8
1.6
10,678.6
0.1
10,678.7
Residential Real Estate 7,260.7
4.0
5.0
5.1
7,274.8
120.1
7,394.9
Other 58.7
—
—
—
58.7
—
58.7
Total Personal 17,964.2
29.4
11.8
6.7
18,012.1
120.2
18,132.3
Total Loans and Leases $ 33,141.8
$ 33.1
$ 15.2
$ 8.7
$ 33,198.8
$ 137.3
$ 33,336.1
Other Real Estate Owned $ 8.2

Total Nonperforming Assets $ 145.5

December 31, 2016
(In Millions) Current
30-59 Days
Past Due

60-89 Days
Past Due

90 Days or
More Past
Due

Total
Performing
Nonperforming
Total Loans
and Leases
Commercial
Commercial and Institutional $ 9,269.8
$ 5.3
$ 1.9
$ 1.2
$ 9,278.2
$ 9.2
$ 9,287.4
Commercial Real Estate 3,974.4
10.9
1.0
4.6
3,990.9
11.6
4,002.5
Non-U.S. 1,877.7
0.1
—
—
1,877.8
—
1,877.8
Lease Financing, net 293.9
—
—
—
293.9
—
293.9
Other 205.1
—
—
—
205.1
—
205.1
Total Commercial 15,620.9
16.3
2.9
5.8
15,645.9
20.8
15,666.7
Personal
Private Client 9,988.7
40.8
8.5
13.7
10,051.7
0.3
10,052.0
Residential Real Estate 7,875.9
44.5
6.5
11.5
7,938.4
139.1
8,077.5
Other 25.9
—
—
—
25.9
—
25.9
Total Personal 17,890.5
85.3
15.0
25.2
18,016.0
139.4
18,155.4
Total Loans and Leases $ 33,511.4
$ 101.6
$ 17.9
$ 31.0
$ 33,661.9
$ 160.2
$ 33,822.1
Other Real Estate Owned $ 5.2

Total Nonperforming Assets $ 165.4

~~Table of Contents~~

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, 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

~~Impaired Loans.~~ ~~A loan is considered to be impaired when, based on current information~~Interest income that would have been recorded for nonaccrual loans in accordance with their original terms was $0.7 million and ~~events, management determines that it is probable that~~ $1.4 million for the three and six months ended June 30, 2023, respectively, and $1.0 million and $2.1 million for the three and six months ended June 30, 2022, respectively.

Northern Trust ~~will be unable~~may obtain physical possession of real estate via foreclosure on an in-substance repossession. As of June 30, 2023 and December 31, 2022, Northern Trust held foreclosed real estate properties with an immaterial carrying value, as a result of obtaining physical possession. In addition, as of June 30, 2023 and December 31, 2022, Northern Trust had loans with a carrying value of $1.3 million and $1.1 million, respectively, for which formal foreclosure proceedings were in process.

Loan Modifications to ~~collect all amounts due according to~~Borrowers Experiencing Financial Difficulty (After the ~~contractual~~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 ~~agreement. Impaired~~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 ~~are identified through ongoing credit management~~as of June 30, 2023, disaggregated by relevant class of financing receivable and ~~risk rating processes, including~~type of modification provided.

TABLE 49: LOAN MODIFICATIONS MADE TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY


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

Commercial Real Estate(1)	Combination of principal and/or interest deferral and extension of term	—		—		—		—


Total Commercial		$	—	—	%	$	—	—	%
Personal

Residential Real Estate	Principal and/or interest deferral	$	0.2	—	%	$	3.1	0.05	%
Private Client(1)	Extension of term	—		—		—		—


Total Personal		$	0.2	—	%	$	3.1	0.05	%
Total Loans		$	0.2	—	%	$	3.1	0.05	%

(1) During the ~~formal review~~three months ended June 30, 2023, Northern Trust provided $32.5 million of combinations of principal and/or interest deferral and term extensions for the commercial real estate portfolio and $0.2 million of term extensions for the private client portfolio for which the respective loans had no amortized cost basis as of the end of the period. The $32.5 million loan has been fully repaid as of June 30, 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: FINANCIAL EFFECT OF MODIFICATIONS MADE TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY

THREE MONTHS ENDED JUNE 30, 2023

SIX MONTHS ENDED JUNE 30, 2023

FINANCIAL EFFECT

PRINCIPAL AND INTEREST DEFERRAL

Commercial

Commercial 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 payment deferrals to borrowers for immaterial principal and interest deferral amounts.

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

TERM EXTENSION

Commercial

Commercial Real Estate

Northern Trust provided weighted average term extensions of 6 months.

Personal

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 the loans that were modified since the adoption of ASU 2022-02 as of January 1, 2023, were performing in accordance with their modified terms and ~~watch list credits. Payment performance and delinquency status are critical~~were not considered past due for purposes of these disclosures as of June 30, 2023. During the current period, Northern Trust charged off $0.7 million related to modifications to borrowers experiencing financial difficulty that had been processed since the adoption of ASU 2022-02.

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 June 30, 2023.

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 in identifying impairment for all loans and leases, particularly those within the residential real estate, private client and personal-other classes. Other key factors considered in identifying impairment of loans and leases within the commercial and institutional, non-U.S., lease financing, and commercial-other classes relate tothat may impact the borrower’s ability to ~~perform under~~pay. If the ~~terms~~discounted cash flow method is utilized, the credit loss is measured based upon the present value of ~~the obligation as measured through the assessment of~~expected future cash flows, ~~including consideration~~discounted at the effective interest rate based on the post-modification 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 ~~collateral value, market value, and other factors. A~~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 ~~also~~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 ~~be impaired if its terms have~~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 ~~as impaired loans~~starting in the calendar year of their restructuring. In subsequent years, a TDR may cease being reported ~~as impaired~~ 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 ~~performing~~accrual status if it satisfies the ~~six payment periods~~six-payment-period performance ~~requirement; however, it will remain reported as impaired. Impairment~~requirement.

The expected credit loss is measured based upon the present value of expected future cash flows, discounted at the ~~loan's original~~ 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 ifat the ~~loan is collateral dependent, or the loan's observable market value.~~ reporting date.

If the loan valuation is less than the recorded value of the loan, ~~based on the certainty of loss,~~ either ~~a specific~~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 for impairment and excluded from impaired loan disclosures as allowed under applicable accounting standards.~~evaluated. Northern Trust’s accounting policies for material ~~impaired~~nonaccrual loans is consistent across all classes of ~~loans and leases.~~

loans.

~~Table of Contents~~

Notes to Consolidated Financial Statements (unaudited) (continued)

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.

~~The following tables provide information related to impaired~~Included within nonaccrual loans ~~by segment~~were $35.3 million of nonaccrual TDRs, and ~~class.~~

~~Table 45: Impaired Loans~~$39.7 million of accrual TDRs as of ~~the Period End~~

As of September 30, 2017 As of December 31, 2016
(In Millions)
Recorded
Investment

Unpaid
Principal
Balance

Specific
Allowance

Recorded
Investment

Unpaid
Principal
Balance

Specific
Allowance
With No Related Specific Allowance
Commercial and Institutional $ 3.7
$ 4.5
$ —
$ 7.9
$ 8.7
$ —
Commercial Real Estate 6.6
8.4
—
14.7
18.6
—
Private Client —
—
—
0.3
0.3
—
Residential Real Estate 95.5
129.9
—
125.5
164.3
—
With a Related Specific Allowance
Commercial and Institutional 4.1
8.2
3.3
—
—
—
Commercial Real Estate 2.8
2.8
0.7
—
—
—
Residential Real Estate 14.2
14.8
4.6
7.7
7.9
2.1
Total
Commercial 17.2
23.9
4.0
22.6
27.3
—
Personal 109.7
144.7
4.6
133.5
172.5
2.1
Total $ 126.9
$ 168.6
$ 8.6
$ 156.1
$ 199.8
$ 2.1

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In Millions)
Average
Recorded
Investment

Interest
Income
Recognized

Average
Recorded
Investment

Interest
Income
Recognized

Average
Recorded
Investment

Interest
Income
Recognized

Average
Recorded
Investment

Interest
Income
Recognized
With No Related Specific Allowance
Commercial and Institutional $ 5.1
$ —
$ 10.6
$ —
$ 7.9
$ —
$ 6.1
$ —
Commercial Real Estate 7.1
—
17.5
0.2
10.2
0.1
17.4
0.3
Lease Financing, net —
—
—
—
—
—
0.6
0.1
Private Client 0.1
—
2.3
—
0.1
—
1.3
—
Residential Real Estate 92.7
0.2
116.7
0.4
109.2
1.1
121.0
1.4
With a Related Specific Allowance
Commercial and Institutional 5.8
—
6.7
—
7.9
—
7.2
—
Commercial Real Estate 2.8
—
—
—
2.5
—
—
—
Lease Financing, net —
—
1.4
—
—
—
1.4
—
Residential Real Estate 16.7
—
1.6
—
17.9
—
1.5
—
Total
Commercial 20.8
—
36.2
0.2
28.5
0.1
32.7
0.4
Personal 109.5
0.2
120.6
0.4
127.2
1.1
123.8
1.4
Total $ 130.3
$ 0.2
$ 156.8
$ 0.6
$ 155.7
$ 1.2
$ 156.5
$ 1.8

~~Note: Average recorded investment in impaired loans is calculated as the average of the month-end impaired loan balances for the period.~~

Interest income that would have been recorded for nonperforming loans in accordance with their original terms was $2.2 million and $2.1 million, respectively, for the three months ended September 30, 2017 and 2016, and $7.0 million and $6.3 million, respectively for the nine months ended September 30, 2017 and 2016.

December 31, 2022. There were ~~$4.6 million and $2.3~~$0.2 million of aggregate undrawn loan commitments and standby letters of credit at ~~September 30, 2017 and~~ December 31, ~~2016, respectively,~~ 2022, issued to borrowers ~~whose loans were classified as nonperforming or impaired.~~

~~Table~~with TDR modifications of ~~Contents~~

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

~~Troubled Debt Restructurings (TDRs).~~ Included within impaired loans were $74.5 million and $85.2 million of nonperforming TDRs, and $26.9 million and $42.4 million of performing TDRs as of September 30, 2017 and December 31, 2016, respectively. All TDRs are reported as impaired loans in the calendar year of their restructuring. In subsequent years, a TDR may cease being reported as impaired if the loan was modified at a market rate and has performed according to the modified terms for at least six months. A loan that has been modified at a below market rate will return to performing status if it satisfies the six-month performance requirement; however, it will remain reported as impaired.

The following tables provide, by segment and class, the number of loans and leases modified in TDRs during the three- and nine- month periods ended September 30, 2017 and 2016, and the recorded investments and unpaid principal balances as of September 30, 2017 and 2016.

~~Table 46: Modified Troubled Debt Restructurings~~

($ In Millions) Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017

Number of
Loans and Leases

Recorded
Investment

Unpaid
Principal
Balance

Number of
Loans and Leases

Recorded
Investment

Unpaid
Principal
Balance
Commercial
Commercial and Institutional 2
$ —
$ 1.0
2
$ —
$ 1.0
Commercial Real Estate —
—
—
1
1.3
1.3
Total Commercial 2
—
1.0
3
1.3
2.3
Personal
Private Client —
—
—
1
—
0.1
Residential Real Estate 21
8.0
8.3
57
20.0
20.6
Total Personal 21
8.0
8.3
58
20.0
20.7
Total Loans and Leases 23
$ 8.0
$ 9.3
61
$ 21.3
$ 23.0

~~Note: Period-end balances reflect all paydowns and charge-offs during the period.~~

($ In Millions) Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016

Number of
Loans and Leases

Recorded
Investment

Unpaid
Principal
Balance

Number of
Loans and Leases

Recorded
Investment

Unpaid
Principal
Balance
Commercial
Commercial and Institutional 1
$ 0.1
$ 0.1
5
$ 4.1
$ 6.2
Commercial Real Estate 1
1.4
1.4
7
8.7
11.0
Total Commercial 2
1.5
1.5
12
12.8
17.2
Personal
Private Client 1
0.1
0.1
2
2.1
2.1
Residential Real Estate 16
6.2
6.5
60
14.8
16.1
Total Personal 17
6.3
6.6
62
16.9
18.2
Total Loans and Leases 19
$ 7.8
$ 8.1
74
$ 29.7
$ 35.4

~~Note: Period-end balances reflect all paydowns and charge-offs during the period.~~loans.

TDR modifications involve ~~interest rate concessions,~~ 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.

~~During~~The following table provides, by segment and class, the ~~three and nine months ended September 30, 2017, the majority~~number of TDR modifications of loans ~~within~~and leases entered into during the three and six months ended June 30, 2022, and the recorded investments and unpaid principal balances as of June 30, 2022.

TABLE 51: TROUBLED DEBT RESTRUCTURINGS


		THREE MONTHS ENDED JUNE 30, 2022					SIX MONTHS ENDED JUNE 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	Other modification	—	$	—	$	—	1	$	0.5	$	0.5
Total Commercial		—	—		—		1	0.5		0.5
Personal
Residential Real Estate	Interest rate concession, deferrals of principal, and extension of term	—	—		—		2	0.1		0.1
Total Personal		—	—		—		2	0.1		0.1
Total Loans and Leases		—	$	—	$	—	3	$	0.6	$	0.6

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

There were no residential real estate ~~were extension of term, other modifications, deferred principal, and interest rate concessions. During the three and nine months ended September 30, 2017, the majority of~~loan TDR modifications within commercial real estate was other modifications. During the three and nine months ended September 30, 2016, the majority of TDR modifications of loans within residential real estate were deferred principal, extension of term, interest rate concessions, and other modifications. During the three and nine months ended September 30, 2016, the majority of TDR modifications within the commercial and institutional and commercial real estate classes were extension of term and other modifications.

~~Table of Contents~~

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

~~There was one loan modified in a TDR~~ during the twelve months ended ~~June 30, 2017,~~March 31, 2022, which subsequently ~~became nonperforming~~had a payment default during the three and ~~nine months ended September 30, 2017. The total recorded investment for this loan was approximately $0.1 million. The unpaid principal balance for this loan was $0.2 million.~~

~~There was one loan modified in a TDR during the twelve~~six months ended June 30, 2016, which subsequently became nonperforming during the three and nine months ended September 30, 2016. The total recorded investment and unpaid principal balance for this loan was approximately $0.1 million.2022.

All loans and leases modified in TDRs are evaluated for impairment. The nature and extent of impairment of TDRs, including those that have experienced a subsequent default, is considered in the determination of an appropriate level of allowance for credit losses.

Northern Trust may obtain physical possession of residential real estate collateralizing a consumer mortgage loan via foreclosure on an in-substance repossession. As of September 30, 2017, Northern Trust held foreclosed residential real estate properties with a carrying value of $7.9 million as a result of obtaining physical possession. In addition, as of September 30, 2017, Northern Trust had consumer loans with a carrying value of $16.6 million collateralized by residential real estate property for which formal foreclosure proceedings were in process.

Note 76 – Allowance for Credit Losses

Allowance and Provision for Credit Losses.The allowance for credit ~~losses,~~ losses—which represents management’s best estimate of ~~probable~~lifetime expected credit losses related to various portfolios subject to credit risk, off-balance-sheet credit exposures, and specific borrower ~~relationships and inherent in the various loan and lease portfolios, undrawn commitments, and standby letters of credit,~~ relationships—is determined by management through a disciplined credit review process. Northern ~~Trust’s accounting policies~~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 ~~to the estimation~~allowance is determined through an individual evaluation.

Management’s estimates utilized in establishing an appropriate level of ~~the~~ 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 ~~charging off~~credit reserve estimation methodology are reviewed quarterly by Northern Trust’s Credit Loss Reserve Committee, which receives input from Credit Risk Management, Treasury, Corporate Finance, the Economic Research Department, and each of ~~loans, leases~~Northern Trust’s reporting segments. The Credit Loss Reserve Committee determines the probability weights applied to each forecast approved by Northern Trust’s Macroeconomic Scenario Development Committee, and ~~other extensions of credit deemed uncollectible are consistent across both loan~~also reviews and ~~lease segments.~~

~~Loans, leases and other extensions of credit deemed uncollectible are charged~~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 appropriate level to absorb lifetime expected credit ~~losses. Subsequent recoveries, if any, are credited~~losses related to ~~the allowance. Determinations as to whether an uncollectible loan is charged-off or a specific allowance is established are based on management’s assessment as to the level of certainty regarding~~financial assets in scope. Actual losses may vary from current estimates and the amount of ~~loss.~~the Provision for Credit Losses may be either greater or less than actual net charge-offs.

~~Table of Contents~~

Notes to Consolidated Financial Statements (unaudited) (continued)

The following table provides information regarding changes in the total allowance for credit losses during the three and six months ended June 30, 2023 and 2022.

TABLE 52: CHANGES IN THE ALLOWANCE FOR CREDIT LOSSES


	THREE MONTHS ENDED JUNE 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	$	159.9	$	34.3	$	16.0	$	1.0	$	211.2
Charge-Offs	(0.8)		—		—		—		(0.8)
Recoveries	0.8		—		—		—		0.8
Net Recoveries (Charge-Offs)	—		—		—		—		—
(Release of) Provision for Credit Losses(1)	(7.4)		(8.3)		0.7		—		(15.0)
Balance at End of Period	$	152.5	$	26.0	$	16.7	$	1.0	$	196.2

(1) The table excludes a release of credit reserves of $0.5 million for the three months ended June 30, 2023 for AFS debt securities. See further detail in Note 4—Securities.



	SIX MONTHS ENDED JUNE 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	(4.8)		—		—		—		(4.8)
Recoveries	1.9		—		—		—		1.9
Net Recoveries (Charge-Offs)	(2.9)		—		—		—		(2.9)
(Release of) Provision for Credit Losses(1)	11.1		(12.5)		0.7		0.2		(0.5)
Balance at End of Period	$	152.5	$	26.0	$	16.7	$	1.0	$	196.2

(1) There was no provision for credit losses for the six months ended June 30, 2023 for AFS debt securities. See further detail in Note 4—Securities.


	THREE MONTHS ENDED JUNE 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	$	136.3	$	37.5	$	14.6	$	1.1	$	189.5
Charge-Offs	—		—		—		—		—
Recoveries	5.5		—		—		—		5.5
Net Recoveries (Charge-Offs)	5.5		—		—		—		5.5
(Release of) Provision for Credit Losses(1)	(3.6)		6.0		0.8		—		3.2
Balance at End of Period	$	138.2	$	43.5	$	15.4	$	1.1	$	198.2

(1) The table excludes a provision for credit losses of $1.3 million for the three months ended June 30, 2022 for AFS debt securities. See further detail in Note 4—Securities.



	SIX MONTHS ENDED JUNE 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	(0.1)		—		—		—		(0.1)
Recoveries	8.8		—		—		—		8.8
Net Recoveries (Charge-Offs)	8.7		—		—		—		8.7
(Release of) Provision for Credit Losses(1)	(8.9)		9.4		4.2		0.1		4.8
Balance at End of Period	$	138.2	$	43.5	$	15.4	$	1.1	$	198.2

(1) The table excludes a provision for credit losses of $1.7 million for the six months ended June 30, 2022 for AFS debt securities. See further detail in Note 4—Securities.

Notes to Consolidated Financial Statements (unaudited) (continued)

The release of credit reserves, excluding the release of credit reserves for available for sale debt securities, was $15.0 million in the current quarter, as compared to a $3.2 million provision in the prior-year quarter. The release of credit reserves was primarily due to a decrease in the reserve evaluated on a collective basis, primarily driven by improved credit quality in certain commercial and institutional and certain commercial real estate (CRE) loans, partially offset by expectations for higher economic stress in the CRE market, particularly office CRE. The reserve evaluated on a collective basis relates to pooled financial assets sharing similar risk characteristics.There were no net charge-offs during the three months ended June 30, 2023, as compared to net recoveries of $5.5 million for the three months ended June 30, 2022. For further detail, please see the Allowance for the Loan and Lease Portfolio and the Allowance for Held to Maturity Debt Securities Portfolio sections below.

The release of credit reserves was $0.5 million for the six months ended June 30, 2023, as compared to a $4.8 million provision in the prior-year period. The release of credit reserves was primarily due to a decrease in the collective basis reserve, driven by improvements in credit quality within the commercial and institutional portfolio, partially offset by growth in the size and duration of the CRE portfolio and expectations of higher economic stress in the CRE market, particularly office CRE. The reserve evaluated on a collective basis relates to pooled financial assets sharing similar risk characteristics. There were net charge-offs of $2.9 million during the six months ended June 30, 2023, as compared to net recoveries of $8.7 million during the six months ended June 30, 2022. For further detail, please see the Allowance for the Loan and Lease 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, and real estate price indices, as well as financial market factors such as equity prices, 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, labor markets, and interest rates stabilizing. 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.

Notes to Consolidated Financial Statements (unaudited) (continued)

Allowance for the Loan and Lease Portfolio. The following table provides information regarding changes in the total allowance for credit losses related to loans and leases, including undrawn loan commitments and standby letters of credit, by segment during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016.~~2022.

~~Table 47: Changes~~TABLE 53: CHANGES IN THE ALLOWANCE FOR CREDIT LOSSES RELATED TO LOANS AND LEASES


	THREE MONTHS ENDED JUNE 30, 2023
	LOANS						UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT
(In Millions)	COMMERCIAL		PERSONAL		TOTAL		COMMERCIAL		PERSONAL		TOTAL
Balance at Beginning of Period	$	130.8	$	29.1	$	159.9	$	31.3	$	3.0	$	34.3
Charge-Offs	—		(0.8)		(0.8)		—		—		—
Recoveries	0.1		0.7		0.8		—		—		—
Net Recoveries (Charge-Offs)	0.1		(0.1)		—		—		—		—
(Release of) Provision for Credit Losses	(6.9)		(0.5)		(7.4)		(8.0)		(0.3)		(8.3)
Balance at End of Period	$	124.0	$	28.5	$	152.5	$	23.3	$	2.7	$	26.0



	SIX MONTHS ENDED JUNE 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	(4.0)		(0.8)		(4.8)		—		—		—
Recoveries	0.1		1.8		1.9		—		—		—
Net Recoveries (Charge-Offs)	(3.9)		1.0		(2.9)		—		—		—
(Release of) Provision for Credit Losses	11.7		(0.6)		11.1		(13.0)		0.5		(12.5)
Balance at End of Period	$	124.0	$	28.5	$	152.5	$	23.3	$	2.7	$	26.0


	THREE MONTHS ENDED JUNE 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	$	102.5	$	33.8	$	136.3	$	34.7	$	2.8	$	37.5
Charge-Offs	—		—		—		—		—		—
Recoveries	0.2		5.3		5.5		—		—		—
Net Recoveries (Charge-Offs)	0.2		5.3		5.5		—		—		—
(Release of) Provision for Credit Losses	(0.2)		(3.4)		(3.6)		5.6		0.4		6.0
Balance at End of Period	$	102.5	$	35.7	$	138.2	$	40.3	$	3.2	$	43.5



	SIX MONTHS ENDED JUNE 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	—		(0.1)		(0.1)		—		—		—
Recoveries	2.4		6.4		8.8		—		—		—
Net Recoveries (Charge-Offs)	2.4		6.3		8.7		—		—		—
(Release of) Provision for Credit Losses	(5.5)		(3.4)		(8.9)		8.9		0.5		9.4
Balance at End of Period	$	102.5	$	35.7	$	138.2	$	40.3	$	3.2	$	43.5

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 ~~Allowance~~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 ~~Credit Losses~~the collective assessment is primarily based on internally developed loss dataspecific to the Northern Trust 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 and lease portfolio into homogenous 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 methodologies for the individual loan segments were developed. For each segment, the probability of defaultand the loss given

Three Months Ended September 30,
2017 2016
(In Millions) Commercial Personal Total Commercial Personal Total
Balance at Beginning of Period $ 97.3
$ 81.5
$ 178.8
$ 112.3
$ 114.8
$ 227.1
Charge-Offs —
(3.5 ) (3.5 ) (0.3 ) (2.7 ) (3.0 )
Recoveries 2.9
2.2
5.1
1.0
2.8
3.8
Net (Charge-Offs) Recoveries 2.9
(1.3 ) 1.6
0.7
0.1
0.8
Provision for Credit Losses (7.8 ) 0.8
(7.0 ) 4.0
(7.0 ) (3.0 )
Balance at End of Period $ 92.4
$ 81.0
$ 173.4
$ 117.0
$ 107.9
$ 224.9

Nine Months Ended September 30,
2017 2016
(In Millions) Commercial Personal Total Commercial Personal Total
Balance at Beginning of Period $ 104.9
$ 87.1
$ 192.0
$ 114.8
$ 118.5
$ 233.3
Charge-Offs (4.6 ) (8.6 ) (13.2 ) (4.7 ) (8.5 ) (13.2 )
Recoveries 5.4
4.2
9.6
3.5
5.4
8.9
Net (Charge-Offs) Recoveries 0.8
(4.4 ) (3.6 ) (1.2 ) (3.1 ) (4.3 )
Provision for Credit Losses (13.3 ) (1.7 ) (15.0 ) 3.5
(7.5 ) (4.0 )
Effect of Foreign Exchange Rates —
—
—
(0.1 ) —
(0.1 )
Balance at End of Period $ 92.4
$ 81.0
$ 173.4
$ 117.0
$ 107.9
$ 224.9

Notes to Consolidated Financial Statements (unaudited) (continued)

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 of the loan portfolio.

Allowance Related to Credit Exposure Evaluated on an Individual Basis. The 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 is 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 ~~leases and~~ the allowance for credit losses for loans and undrawn loan commitments and standby letters of credit by segment as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016.~~2022.

~~Table 48: Recorded Investments in Loans~~TABLE 54: RECORDED INVESTMENTS IN LOANS


	JUNE 30, 2023						DECEMBER 31, 2022
(In Millions)	COMMERCIAL		PERSONAL		TOTAL		COMMERCIAL		PERSONAL		TOTAL
Loans
Evaluated on an Individual Basis	$	26.7	$	51.2	$	77.9	$	63.0	$	46.1	$	109.1
Evaluated on a Collective Basis	22,334.5		21,134.3		43,468.8		21,572.6		21,211.6		42,784.2
Total Loans	22,361.2		21,185.5		43,546.7		21,635.6		21,257.7		42,893.3
Allowance for Credit Losses on Loans
Evaluated on an Individual Basis	9.0		2.0		11.0		10.4		—		10.4
Evaluated on a Collective Basis	115.0		26.5		141.5		105.8		28.1		133.9
Allowance Assigned to Loans	124.0		28.5		152.5		116.2		28.1		144.3
Allowance for Undrawn Loan Commitments and Standby Letters of Credit
Evaluated on an Individual Basis	—		—		—		—		—		—
Evaluated on a Collective Basis	23.3		2.7		26.0		36.3		2.2		38.5
Allowance Assigned to Undrawn Loan Commitments and Standby Letters of Credit	23.3		2.7		26.0		36.3		2.2		38.5
Total Allowance Assigned to Loans and Undrawn Loan Commitments and Standby Letters of Credit	$	147.3	$	31.2	$	178.5	$	152.5	$	30.3	$	182.8

Northern Trust analyzes its exposure to credit losses from both on-balance-sheet and ~~Leases~~

September 30, 2017 December 31, 2016
(In Millions) Commercial Personal Total Commercial Personal Total
Loans and Leases
Specifically Evaluated for Impairment $ 17.2
$ 109.7
$ 126.9
$ 46.9
$ 109.2
$ 156.1
Evaluated for Inherent Impairment 15,186.6
18,022.6
33,209.2
15,619.8
18,046.2
33,666.0
Total Loans and Leases 15,203.8
18,132.3
33,336.1
15,666.7
18,155.4
33,822.1
Allowance for Credit Losses on Credit Exposures
Specifically Evaluated for Impairment 4.0
4.6
8.6
—
2.1
2.1
Evaluated for Inherent Impairment 71.4
70.3
141.7
83.7
75.2
158.9
Allowance Assigned to Loans and Leases 75.4
74.9
150.3
83.7
77.3
161.0
Allowance for Undrawn Exposures
Commitments and Standby Letters of Credit 17.0
6.1
23.1
21.2
9.8
31.0
Total Allowance for Credit Losses $ 92.4
$ 81.0
$ 173.4
$ 104.9
$ 87.1
$ 192.0

~~Note 8 – Pledged Assets~~

~~Certain of Northern Trust’s subsidiaries, as required or permitted by law, pledge assets to secure public and trust deposits, repurchase agreements and Federal Home Loan Bank borrowings,~~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 ~~other purposes, including support~~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 ~~settlement, primarily~~during the three and six months ended June 30, 2023 and 2022.

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


	THREE MONTHS ENDED JUNE 30, 2023
(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	$	1.9	$	3.9	$	4.1	$	1.3	$	0.1	$	4.7	$	16.0
(Release of) Provision for Credit Losses	(0.5)		1.5		(0.7)		—		—		0.4		0.7
Balance at End of Period	$	1.4	$	5.4	$	3.4	$	1.3	$	0.1	$	5.1	$	16.7

(1) The allowance for Obligations of States and Political Subdivisions is related to ~~client activities, for potential Federal Reserve Bank discount window borrowings, and for derivative contracts.~~(non pre-refunded) municipal securities that do not fall under Northern Trust’s zero-loss assumption.

Nine Months Ended September 30, Corporate &
Institutional Services Wealth
Management Treasury and
Other Total
Consolidated
($ In Millions) 2017 2016 2017 2016 2017 2016 2017 2016
Noninterest Income
Trust, Investment and Other Servicing Fees $ 1,451.1
$ 1,331.1
$ 1,073.2
$ 982.6
$ —
$ —
$ 2,524.3
$ 2,313.7
Foreign Exchange Trading Income 146.9
169.1
2.4
7.0
(2.2 ) 2.4
147.1
178.5
Other Noninterest Income 132.4
113.0
77.4
79.8
20.4
124.8
230.2
317.6
Net Interest Income* 536.5
417.8
545.4
482.8
(2.9 ) 30.1
1,079.0
930.7
Revenue* 2,266.9
2,031.0
1,698.4
1,552.2
15.3
157.3
3,980.6
3,740.5
Provision for Credit Losses (1.6 ) —
(13.4 ) (4.0 ) —
—
(15.0 ) (4.0 )
Noninterest Expense 1,598.5
1,519.9
1,046.0
975.2
123.0
101.7
2,767.5
2,596.8
Income before Income Taxes* 670.0
511.1
665.8
581.0
(107.7 ) 55.6
1,228.1
1,147.7
Provision for Income Taxes* 213.0
158.0
251.4
219.1
(78.7 ) 4.6
385.7
381.7
Net Income $ 457.0
$ 353.1
$ 414.4
$ 361.9
$ (29.0 ) $ 51.0
$ 842.4
$ 766.0
Percentage of Consolidated Net Income 54 % 46 % 49 % 47 % (3 )% 7 % 100 % 100 %
Average Assets $ 80,229.1
$ 75,589.0
$ 26,648.7
$ 26,525.6
$ 11,818.2
12,795.3
$ 118,696.0
$ 114,909.9

* Non-GAAP financial measures stated on a fully taxable equivalent basis (FTE). Total consolidated includes FTE adjustments of $29.8 million for 2017 and $20.1 million~~for 2016.~~

~~Further discussion of reporting segment results is provided within the “Reporting Segments” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.~~

~~Table of Contents~~

Notes to Consolidated Financial Statements (unaudited) (continued)

Note 1110 – Stockholders’ Equity

Preferred Stock. The Corporation is authorized to issue 1010.0 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.

~~On August 8, 2016,~~As of June 30, 2023, 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 June 30, 2023, the Corporation had issued and ~~sold~~outstanding 500,000 depositary shares, ~~(the “Depositary Shares”),~~ each representing a 1/100th ownership interest in a share of Series D ~~Non-Cumulative Perpetual~~ Preferred Stock, ~~(the “Series~~issued in August 2016. Equity related to Series D Preferred ~~Stock”).~~Stock as of June 30, 2023 and December 31, 2022 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). ~~The aggregate proceeds from the public offering of the depositary shares, net of underwriting discounts, commissions and offering expenses, were $493.5 million.~~

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 ~~Three-Month~~the three-month CME Term Secured Overnight Finance Rate, 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 ~~1st~~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 ~~1st~~first day of January, April, July and October of each year, commencing on January 1, 2027.

~~The~~ Series DE Preferred Stock has no maturity date and is redeemable at the Corporation’s option, in whole or in part, on any dividend payment date on or after October 1, 2026. The Series D Preferred Stock is redeemable at the Corporation’s option in whole, but not in part, including prior to October 1, 2026, within 90 daysStock. As of ~~a regulatory capital treatment event, as described in the Series D Preferred Stock Certificate of Designation.~~

On ~~July 18, 2017~~,June 30, 2023, the Corporation ~~declared a cash dividend of~~ ~~$2,300~~ ~~per share of Series D Preferred Stock payable on~~ ~~October 1, 2017, to stockholders of record as of~~ ~~September 15, 2017~~.

~~As of September 30, 2017, the Corporation also~~ had issued and outstanding 1616.0 million depositary shares, each representing 1/~~1000th~~1,000th ownership interest in a share of Series ~~C Non-Cumulative Perpetual~~E Preferred Stock, ~~(“Series C Preferred Stock”),~~ issued in ~~August 2014.~~November 2019. Equity related to Series CE Preferred Stock as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016 totaled $388.5~~2022 was $391.4 million. Shares of the Series CE Preferred Stock ~~has~~have no par value and ~~has~~ a liquidation preference of $25,000 (equivalent to $25 per depositary share).

Dividends on the Series CE Preferred Stock, which are not mandatory, will accrue and ~~are~~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 rate per annum equal to ~~5.85%~~4.70%. On ~~July 18, 2017,~~April 26, 2023, the Corporation declared a cash dividend of ~~$365.625~~$293.75 per share of Series CE Preferred Stock payable on ~~October~~July 1, ~~2017,~~2023, to stockholders of record as of ~~September~~June 15, ~~2017.~~2023.

The Series C Preferred Stock has no maturity date and is redeemable at the Corporation’s option, in whole or in part, on any dividend payment date on or after October 1, 2019. The Series C Preferred stock is redeemable at the Corporation’s option, in whole, but not in part, including prior to October 1, 2019, within 90 days of a regulatory capital treatment event, as described in the Series C Preferred Stock Certificate of Designation.

Shares of the Series C Preferred Stock and Series D Preferred Stock rank senior to the Corporation’s common stock, and will rank at least equally with any other series of preferred stock it may issue (except for any senior series that may be issued with the requisite consent of the holders of the Series C Preferred Stock and Series D Preferred Stock, respectively) and all other parity stock, with respect to the payment of dividends and distributions upon liquidation, dissolution or winding up.

Common Stock. ~~During the three and nine months ended September 30, 2017, the Corporation repurchased 1,411,696 shares of common~~ The Corporation’s current stock including 43,871 shares withheld related to share-based compensation, at a total cost of $124.8 million ($88.43 average price per share) and 3,983,690 shares of common stock, including 459,082 shares withheld related to share-based compensation, at a total cost of $352.5 million ($88.50 average price per share), respectively. Repurchases through July 18, 2017 were made pursuant to the repurchase ~~program announced by the Corporation on April 21, 2015, under which the Corporation’s Board of Directors authorized the Corporation~~authorization to repurchase up to ~~15.0~~25.0 million shares ofwas approved by the ~~Corporation’s common stock. This program was terminated and replaced with a new repurchase program, announced on July 18, 2017, under which the Corporation’s~~ Board of Directors ~~authorized~~in October 2021. Shares are repurchased by the Corporation to, ~~repurchase up to 9.5 million shares of~~among other things, manage the Corporation’s ~~common stock. Repurchases after July 18, 2017 were made pursuant to the new repurchase program, which has no expiration date. Shares repurchased by the Corporation~~capital levels. Repurchased shares are used for general purposes, including ~~management of~~ the ~~Corporation’s capital levels and the~~

~~Table of Contents~~

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

issuance of shares under stock option and other incentive ~~plans of the Corporation.~~plans. The ~~new~~ repurchase authorization approved by the Board of Directors has no expiration date.

~~Under~~ For the ~~Corporation’s 2017 Capital Plan, which was reviewed without objection by the Federal Reserve,~~three and six months ended June 30, 2023, the Corporation ~~may repurchase up to $625.2 million~~repurchased 1,361,828 and 2,412,055 shares of common stock, ~~after September~~respectively, at a total cost of $99.3 million ($72.91 average price per share) and $200.2 million ($82.98 average price per share), respectively, including 14,596 and 341,407 shares, respectively, withheld to satisfy tax withholding obligations related to share-based compensation. For the three and six months ended June 30, ~~2017 through June 2018.~~2022, the Corporation repurchased 2,844 and 298,254 shares of common stock, respectively, at a total cost of $0.3 million ($110.36 average price per share) and $34.1 million ($114.54 average prices per share), respectively, all of which were shares withheld to satisfy tax withholding obligations related to share-based compensation.

Notes to Consolidated Financial Statements (unaudited) (continued)

Note 1211 – Accumulated Other Comprehensive Income (Loss)

The following tables summarize the components of ~~accumulated other comprehensive income (loss)~~Accumulated Other Comprehensive Income (Loss) (AOCI) at ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, and changes during the ~~three-~~three and ~~nine- month periods~~six months then ended.

~~Table 52: Summary of Changes in Accumulated Other Comprehensive Income (Loss)~~TABLE 64: SUMMARY OF CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)


	THREE MONTHS ENDED JUNE 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 March 31, 2023	$	(1,187.4)	$	1.1	$	187.3	$	(367.2)	$	(1,366.2)
Net Change	(42.0)		(0.6)		1.9		1.0		(39.7)
Balance at June 30, 2023	$	(1,229.4)	$	0.5	$	189.2	$	(366.2)	$	(1,405.9)

(In Millions) Balance at September 30, 2017 Net Change Balance at December 31, 2016
Net Unrealized Gains (Losses) on Securities Available for Sale* $ (13.7 ) $ 18.7
$ (32.4 )
Net Unrealized Gains (Losses) on Cash Flow Hedges 1.2
(4.9 ) 6.1
Net Foreign Currency Adjustments (8.0 ) 10.5
(18.5 )
Net Pension and Other Postretirement Benefit Adjustments (314.6 ) 10.6
(325.2 )
Total $ (335.1 ) $ 34.9
$ (370.0 )

(In Millions) Balance at September 30, 2016 Net Change Balance at December 31, 2015
Net Unrealized Gains (Losses) on Securities Available for Sale $ 63.3
$ 94.3
$ (31.0 )
Net Unrealized Gains (Losses) on Cash Flow Hedges 3.6
6.6
(3.0 )
Net Foreign Currency Adjustments (16.9 ) 0.7
(17.6 )
Net Pension and Other Postretirement Benefit Adjustments (309.7 ) 11.4
(321.1 )
Total $ (259.7 ) $ 113.0
$ (372.7 )

* -(1) Includes net unrealized gains (losses) on debt securities transferred from ~~available~~AFS to HTM. Refer to Note 4—Securities for ~~sale~~further information.



	SIX MONTHS ENDED JUNE 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	138.2		(0.7)		24.6		1.2		163.3
Balance at June 30, 2023	$	(1,229.4)	$	0.5	$	189.2	$	(366.2)	$	(1,405.9)

(1) Includes net unrealized gains (losses) on debt securities transferred from AFS to ~~held~~HTM. Refer to ~~maturity during the three months ended September 30, 2017.~~Note 4—Securities for further information.


	THREE MONTHS ENDED JUNE 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 March 31, 2022	$	(761.3)	$	(3.8)	$	147.3	$	(289.2)	$	(907.0)
Net Change	(533.4)		4.4		(9.7)		(64.9)		(603.6)
Balance at June 30, 2022	$	(1,294.7)	$	0.6	$	137.6	$	(354.1)	$	(1,510.6)

(1) Includes net unrealized gains (losses) on debt securities transferred from AFS to HTM. Refer to Note 4—Securities for further information.



	SIX MONTHS ENDED JUNE 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	(1,401.8)		3.0		(17.6)		(58.6)		(1,475.0)
Balance at June 30, 2022	$	(1,294.7)	$	0.6	$	137.6	$	(354.1)	$	(1,510.6)

(1) Includes net unrealized gains (losses) on debt securities transferred from AFS to HTM. Refer to Note 4—Securities for further information.

~~Table of Contents~~

Notes to Consolidated Financial Statements (unaudited) (continued)

TABLE 65: DETAILS OF CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

~~Table 53: Details~~


THREE MONTHS ENDED JUNE 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	$	(88.7)	$	23.9	$	(64.8)	$	(731.2)	$	188.5	$	(542.7)
Reclassification Adjustments for (Gains) Losses Included in Net Income:
Interest Income on Debt Securities(1)	30.4		(7.6)		22.8		12.4		(3.1)		9.3

Net Change	$	(58.3)	$	16.3	$	(42.0)	$	(718.8)	$	185.4	$	(533.4)
Unrealized Gains (Losses) on Cash Flow Hedges
Foreign Exchange Contracts	$	1.4	$	(0.4)	$	1.0	$	4.4	$	(1.1)	$	3.3
Reclassification Adjustment for (Gains) Losses Included in Net Income(3)	(2.2)		0.6		(1.6)		1.5		(0.4)		1.1
Net Change	$	(0.8)	$	0.2	$	(0.6)	$	5.9	$	(1.5)	$	4.4
Foreign Currency Adjustments
Foreign Currency Translation Adjustments	$	26.7	$	(0.7)	$	26.0	$	(163.7)	$	2.4	$	(161.3)
Long-Term Intra-Entity Foreign Currency Transaction Gains (Losses)	(1.6)		0.4		(1.2)		(1.8)		0.5		(1.3)
Net Investment Hedge Gains (Losses)	(30.6)		7.7		(22.9)		204.3		(51.4)		152.9
Net Change	$	(5.5)	$	7.4	$	1.9	$	38.8	$	(48.5)	$	(9.7)
Pension and Other Postretirement Benefit Adjustments
Net Actuarial Gains (Losses)	$	(0.2)	$	—	$	(0.2)	$	(114.4)	$	28.8	$	(85.6)
Reclassification Adjustment for (Gains) Losses Included in Net Income(4)
Amortization of Net Actuarial Loss	1.6		(0.4)		1.2		7.6		(1.9)		5.7
Amortization of Prior Service Cost (Credit)	—		—		—		(0.2)		—		(0.2)
Settlement Loss	—		—		—		20.3		(5.1)		15.2
Net Change	$	1.4	$	(0.4)	$	1.0	$	(86.7)	$	21.8	$	(64.9)
Total Net Change	$	(63.2)	$	23.5	$	(39.7)	$	(760.8)	$	157.2	$	(603.6)



SIX MONTHS ENDED JUNE 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	$	140.6	$	(36.4)	$	104.2	$	(1,902.7)	$	489.9	$	(1,412.8)
Reclassification Adjustments for (Gains) Losses Included in Net Income:
Interest Income on Debt Securities(1)	52.3		(13.1)		39.2		14.7		(3.7)		11.0
Net Gains on Debt Securities(2)	(6.9)		1.7		(5.2)		—		—		—
Net Change	$	186.0	$	(47.8)	$	138.2	$	(1,888.0)	$	486.2	$	(1,401.8)
Unrealized Gains (Losses) on Cash Flow Hedges
Foreign Exchange Contracts	$	1.9	$	(0.5)	$	1.4	$	0.8	$	(0.2)	$	0.6

Reclassification Adjustment for (Gains) Losses Included in Net Income(3)	(2.8)		0.7		(2.1)		3.2		(0.8)		2.4
Net Change	$	(0.9)	$	0.2	$	(0.7)	$	4.0	$	(1.0)	$	3.0
Foreign Currency Adjustments
Foreign Currency Translation Adjustments	$	73.5	$	(0.5)	$	73.0	$	(214.0)	$	0.6	$	(213.4)
Long-Term Intra-Entity Foreign Currency Transaction Gains (Losses)	(1.6)		0.4		(1.2)		(1.8)		0.5		(1.3)
Net Investment Hedge Gains (Losses)	(63.1)		15.9		(47.2)		263.7		(66.6)		197.1
Net Change	$	8.8	$	15.8	$	24.6	$	47.9	$	(65.5)	$	(17.6)
Pension and Other Postretirement Benefit Adjustments
Net Actuarial Gains (Losses)	$	(1.3)	$	0.1	$	(1.2)	$	(113.6)	$	28.2	$	(85.4)
Reclassification Adjustment for (Gains) Losses Included in Net Income(4)
Amortization of Net Actuarial Loss	3.2		(0.8)		2.4		15.2		(3.8)		11.4
Amortization of Prior Service Cost (Credit)	—		—		—		(0.5)		0.1		(0.4)
Settlement Loss	—		—		—		21.0		(5.2)		15.8
Net Change	$	1.9	$	(0.7)	$	1.2	$	(77.9)	$	19.3	$	(58.6)
Total Net Change	$	195.8	$	(32.5)	$	163.3	$	(1,914.0)	$	439.0	$	(1,475.0)

(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 ~~Changes~~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 ~~Accumulated Other Comprehensive Income (Loss)~~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.

Three Months Ended September 30,
2017 2016
(In Millions) Before Tax Tax Effect After Tax Before Tax Tax Effect After Tax
Unrealized Gains (Losses) on Securities Available for Sale
Unrealized Gains (Losses) on Securities Available for Sale $ (3.4 ) $ 1.0
$ (2.4 ) $ (22.3 ) $ 8.4
$ (13.9 )
Reclassification Adjustment for (Gains) Losses Included in Net Income 0.4
(0.2 ) 0.2
(0.2 ) 0.2
—
Net Change (3.0 ) 0.8
(2.2 ) (22.5 ) 8.6
(13.9 )
Unrealized Gains (Losses) on Cash Flow Hedges
Unrealized Gains (Losses) on Cash Flow Hedges 2.9
(1.0 ) 1.9
(6.3 ) 3.5
(2.8 )
Reclassification Adjustment for (Gains) Losses Included in Net Income (6.1 ) 2.3
(3.8 ) 4.6
(1.7 ) 2.9
Net Change (3.2 ) 1.3
(1.9 ) (1.7 ) 1.8
0.1
Foreign Currency Adjustments
Foreign Currency Translation Adjustments 47.3
(6.0 ) 41.3
(11.7 ) (0.9 ) (12.6 )
Long-Term Intra-Entity Foreign Currency Transaction Gains (Losses) 0.6
(0.2 ) 0.4
0.8
(0.3 ) 0.5
Net Investment Hedge Gains (Losses) (62.3 ) 24.2
(38.1 ) 4.1
(1.5 ) 2.6
Net Change (14.4 ) 18.0
3.6
(6.8 ) (2.7 ) (9.5 )
Pension and Other Postretirement Benefit Adjustments
Net Actuarial Gain (Loss) (0.7 ) 0.2
(0.5 ) —
—
—
Reclassification Adjustment for (Gains) Losses Included in Net Income 7.4
(2.6 ) 4.8
6.3
(3.0 ) 3.3
Net Change $ 6.7
$ (2.4 ) $ 4.3
$ 6.3
$ (3.0 ) $ 3.3

~~Table of Contents~~

Notes to Consolidated Financial Statements (unaudited) (continued)

Nine Months Ended September 30,
2017 2016
(In Millions) Before Tax Tax Effect After Tax Before Tax Tax Effect After Tax
Unrealized Gains (Losses) on Securities Available for Sale
Unrealized Gains (Losses) on Securities Available for Sale $ 29.6
$ (11.5 ) $ 18.1
$ 152.2
$ (57.6 ) $ 94.6
Reclassification Adjustment for (Gains) Losses Included in Net Income 1.0
(0.4 ) 0.6
(0.5 ) 0.2
(0.3 )
Net Change 30.6
(11.9 ) 18.7
151.7
(57.4 ) 94.3
Unrealized Gains (Losses) on Cash Flow Hedges
Unrealized Gains (Losses) on Cash Flow Hedges 20.6
(15.3 ) 5.3
3.7
(0.3 ) 3.4
Reclassification Adjustment for (Gains) Losses Included in Net Income (16.4 ) 6.2
(10.2 ) 5.2
(2.0 ) 3.2
Net Change 4.2
(9.1 ) (4.9 ) 8.9
(2.3 ) 6.6
Foreign Currency Adjustments
Foreign Currency Translation Adjustments 136.4
(6.1 ) 130.3
(52.7 ) (2.3 ) (55.0 )
Long-Term Intra-Entity Foreign Currency Transaction Gains (Losses) 1.0
(0.4 ) 0.6
2.0
(0.8 ) 1.2
Net Investment Hedge Gains (Losses) (194.7 ) 74.3
(120.4 ) 87.6
(33.1 ) 54.5
Net Change (57.3 ) 67.8
10.5
36.9
(36.2 ) 0.7
Pension and Other Postretirement Benefit Adjustments
Net Actuarial Gain (Loss) (3.2 ) 0.3
(2.9 ) —
—
—
Reclassification Adjustment for (Gains) Losses Included in Net Income 20.6
(7.1 ) 13.5
19.1
(7.7 ) 11.4
Net Change $ 17.4
$ (6.8 ) $ 10.6
$ 19.1
$ (7.7 ) $ 11.4

~~The following table provides the location and before-tax amounts of reclassifications out of AOCI during the three and nine months ended September 30, 2017.~~

~~Table 54: Reclassification Adjustment out of Accumulated Other Comprehensive Income~~

(In Millions)
Location of
Reclassification Adjustments Recognized
in Income
Amount of Reclassification
Adjustments Recognized
in Income
Three Months Ended Nine Months Ended
September 30, 2017
Securities Available for Sale
Realized (Gains) Losses on Securities Available for Sale Investment Security Gains (Losses), net $ 0.4
$ 1.0
Realized Gains on Cash Flow Hedges
Foreign Exchange Contracts Other Operating Income/Expense (6.1 ) (16.4 )
Pension and Other Postretirement Benefit Adjustments
Amortization of Net Actuarial Loss Employee Benefits 7.4
20.8
Amortization of Prior Service Cost Employee Benefits —
(0.2 )
Gross Reclassification Adjustment $ 7.4
$ 20.6

~~Table of Contents~~

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

Note 1312 – Net Income Per Common Share ~~Computations~~

The computations of net income per common share are presented in the following table.

~~Table 55: Net Income per Common Share~~TABLE 66: NET INCOME PER COMMON SHARE


	THREE MONTHS ENDED JUNE 30,				SIX MONTHS ENDED JUNE 30,
($ In Millions Except Per Common Share Information)	2023		2022		2023		2022
Basic Net Income Per Common Share
Average Number of Common Shares Outstanding	207,638,671		208,383,991		207,911,242		208,205,469
Net Income	$	331.8	$	396.2	$	666.4	$	785.5
Less: Dividends on Preferred Stock	4.7		4.7		20.9		20.9
Net Income Applicable to Common Stock	327.1		391.5		645.5		764.6
Less: Earnings Allocated to Participating Securities	3.4		3.2		6.6		6.3
Earnings Allocated to Common Shares Outstanding	323.7		388.3		638.9		758.3
Basic Net Income Per Common Share	$	1.56	$	1.86	$	3.07	$	3.64
Diluted Net Income Per Common Share
Average Number of Common Shares Outstanding	207,638,671		208,383,991		207,911,242		208,205,469
Plus: Dilutive Effect of Share-based Compensation	177,344		494,359		359,435		638,465
Average Common and Potential Common Shares	207,816,015		208,878,350		208,270,677		208,843,934
Earnings Allocated to Common and Potential Common Shares	$	323.6	$	388.3	$	638.8	$	758.3
Diluted Net Income Per Common Share	1.56		1.86		3.07		3.63

Three Months Ended September 30, Nine Months Ended September 30,
($ In Millions Except Per Common Share Information) 2017 2016 2017 2016
Basic Net Income Per Common Share
Average Number of Common Shares Outstanding 228,010,866
226,540,086
228,751,804
227,561,218
Net Income $ 298.4
$ 257.6
$ 842.4
$ 766.0
Less: Dividends on Preferred Stock 17.3
5.9
43.9
17.6
Net Income Applicable to Common Stock 281.1
251.7
798.5
748.4
Less: Earnings Allocated to Participating Securities 4.4
4.8
13.3
13.7
Earnings Allocated to Common Shares Outstanding 276.7
246.9
785.2
734.7
Basic Net Income Per Common Share $ 1.21
$ 1.09
$ 3.43
$ 3.23
Diluted Net Income Per Common Share
Average Number of Common Shares Outstanding 228,010,866
226,540,086
228,751,804
227,561,218
Plus: Dilutive Effect of Share-based Compensation 1,302,779
1,515,109
1,437,485
1,479,400
Average Common and Potential Common Shares 229,313,645
228,055,195
230,189,289
229,040,618
Earnings Allocated to Common and Potential Common Shares $ 276.7
$ 247.0
$ 785.2
$ 734.8
Diluted Net Income Per Common Share 1.20
1.08
3.41
3.21

Note: For the three and six months ended ~~September~~June 30, ~~2017,~~2023 and 2022, there were no common stock equivalents excluded in the computation of diluted net income per share. ~~Common stock equivalents~~

Note 13 – Revenue from Contracts with Clients

Trust, Investment, and Other Servicing Fees. Custody and Fund Administration income is comprised of ~~154,411~~revenues received from our core asset servicing business for providing custody, fund administration, and middle-office-related services, primarily 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 ~~nine months ended September 30, 2017,~~fee arrangement agreed to with each client; payment terms will vary depending on the client and ~~334,184~~services offered.

Substantially all revenues generated from contracts with clients for asset servicing, asset management, securities lending, treasury management and ~~1,480,118~~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 ~~three~~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 ~~nine months ended September 30, 2016, respectively, were~~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 ~~included in~~disclose the ~~computation~~value of ~~diluted net income per common share because their inclusion would have been antidilutive.~~

remaining performance obligations for contracts with an original expected duration of one year or less.

~~Table of Contents~~

Notes to Consolidated Financial Statements (unaudited) (continued)

The following table presents revenues disaggregated by major revenue source.

TABLE 67: REVENUE DISAGGREGATION


	THREE MONTHS ENDED JUNE 30,				SIX MONTHS ENDED JUNE 30,
(In Millions)	2023		2022		2023		2022
Noninterest Income
Trust, Investment and Other Servicing Fees
Custody and Fund Administration	$	458.1	$	464.4	$	899.7	$	948.4
Investment Management and Advisory	558.8		597.3		1,099.3		1,200.5
Securities Lending	21.5		21.6		40.6		40.5
Other	57.9		60.1		120.3		122.4
Total Trust, Investment and Other Servicing Fees	$	1,096.3	$	1,143.4	$	2,159.9	$	2,311.8
Other Noninterest Income
Foreign Exchange Trading Income	$	50.1	$	77.6	$	103.1	$	158.5
Treasury Management Fees	7.9		10.6		16.3		21.7
Security Commissions and Trading Income	36.1		32.8		70.8		69.0
Other Operating Income	55.2		45.6		102.0		86.7
Investment Security Gains (Losses), net	—		—		6.9		—
Total Other Noninterest Income	$	149.3	$	166.6	$	299.1	$	335.9
Total Noninterest Income	$	1,245.6	$	1,310.0	$	2,459.0	$	2,647.7

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 June 30, 2023, revenue from contracts with clients also includes $29.0 million of the $36.1 million total Security Commissions and Trading Income and $10.2 million of the $55.2 million total Other Operating Income. For the six months ended June 30, 2023, revenue from contracts with clients also includes $58.9 million of the $70.8 million total Security Commissions and Trading Income and $19.3 million of the $102.0 million total Other Operating Income.

For the three months ended June 30, 2022, revenue from contracts with clients also includes $27.3 million of the $32.8 million total Security Commissions and Trading Income and $9.7 million of the $45.6 million total Other Operating Income. For the six months ended June 30, 2022, revenue from contracts with clients also includes $58.9 million of the $69.0 million total Security Commissions and Trading Income and $19.4 million of the $86.7 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 June 30, 2023 and December 31, 2022.

TABLE 68: CLIENT RECEIVABLES


(In Millions)	JUNE 30, 2023		DECEMBER 31, 2022
Trust Fees Receivable, net(1)	$	864.4	$	882.5
Other	50.2		55.4
Total Client Receivables	$	914.6	$	937.9

(1) Trust Fees Receivable is net of a $14.5 million and $13.5 million fee receivable allowance as of June 30, 2023 and December 31, 2022, respectively.

Notes to Consolidated Financial Statements (unaudited) (continued)

Note 14 – Net Interest Income

The components of ~~net interest income~~Net Interest Income were as ~~follows:~~follows.

~~Table 56: Net Interest Income~~TABLE 69: NET INTEREST INCOME


	THREE MONTHS ENDED JUNE 30,				SIX MONTHS ENDED JUNE 30,
(In Millions)	2023		2022		2023		2022
Interest Income
Federal Reserve and Other Central Bank Deposits	$	398.9	$	59.2	$	775.9	$	76.8
Interest-Bearing Due from and Deposits with Banks(1)	32.1		6.5		60.3		9.1
Federal Funds Sold	0.1		—		0.3		—
Securities Purchased under Agreements to Resell	284.3		7.0		410.2		7.9
Securities — Taxable	366.3		193.7		704.1		362.7
— Nontaxable(2)	0.4		0.3		0.7		0.7
Loans and Leases	639.2		256.4		1,217.4		447.6
Other Interest-Earning Assets(3)	13.7		1.7		21.5		3.5
Total Interest Income	$	1,735.0	$	524.8	$	3,190.4	$	908.3
Interest Expense
Deposits	$	633.5	$	23.2	$	1,198.1	$	7.3
Federal Funds Purchased	87.6		2.8		127.7		2.8
Securities Sold Under Agreements to Repurchase	273.4		6.0		389.5		6.3
Other Borrowings	156.5		8.4		291.5		11.5
Senior Notes	42.1		18.9		81.3		28.5
Long-Term Debt	30.4		6.8		59.6		12.2
Total Interest Expense	$	1,223.5	$	66.1	$	2,147.7	$	68.6
Net Interest Income	$	511.5	$	458.7	$	1,042.7	$	839.7

Three Months Ended September 30, Nine Months Ended September 30,
(In Millions) 2017 2016 2017 2016
Interest Income
Loans and Leases $ 239.4
$ 202.1
$ 677.2
$ 604.3
Securities — Taxable 143.4
103.3
421.5
303.4
— Non-Taxable 2.3
2.2
7.5
5.0
Interest-Bearing Due from and Deposits with Banks ⁽¹⁾
16.0
15.4
45.0
49.4
Federal Reserve and Other Central Bank Deposits 52.7
26.2
130.1
83.8
Total Interest Income 453.8
349.2
1,281.3
1,045.9
Interest Expense
Deposits 55.1
20.0
123.7
63.4
Federal Funds Purchased 4.3
0.4
5.7
1.0
Securities Sold Under Agreements to Repurchase 1.8
0.5
4.0
1.5
Other Borrowings 14.2
5.7
31.8
12.4
Senior Notes 11.5
11.8
35.0
35.2
Long-Term Debt 11.3
6.8
28.3
19.3
Floating Rate Capital Debt 1.4
0.9
3.6
2.5
Total Interest Expense 99.6
46.1
232.1
135.3
Net Interest Income $ 354.2
$ 303.1
$ 1,049.2
$ 910.6
(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.

⁽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.

Note 15 – Other Operating Income

The components of Other Operating Income ~~Taxes~~were as follows.

TABLE 70: OTHER OPERATING INCOME


	THREE MONTHS ENDED JUNE 30,				SIX MONTHS ENDED JUNE 30,
(In Millions)	2023		2022		2023		2022
Loan Service Fees	$	21.4	$	18.1	$	40.1	$	34.8
Banking Service Fees	13.6		12.9		25.8		25.6
Bank Owned Life Insurance	17.0		14.9		33.7		26.7
Other Income(1)	3.2		(0.3)		2.4		(0.4)
Total Other Operating Income	$	55.2	$	45.6	$	102.0	$	86.7

(1) Other Income ~~tax expense for~~includes the three and nine months ended September 30, 2017 was $118.2 million and $355.9 million, representing an effective tax rate of 28.4% and 29.7%, respectively. The provision for income taxes includes Federal and State research tax credits of $17.6 million recognized in the three months ended September 30, 2017 duemark-to-market gain or loss on derivative swap activity primarily related to the ~~completion~~sale of a recent study of the Corporation’s technology spend between 2013 and 2016, partially offset by $4.3 million related to an increase in the Illinois state deferred income tax reserve resulting from an increase in the Illinois income tax rate.certain Visa Class B common shares.

Note 16 – Other Operating Expense

The ~~prior-year three- and nine- month provision for income taxes was $116.1 million and $361.6 million, representing an effective tax rate~~components of ~~31.1% and 32.1%, respectively.~~Other Operating Expense were as follows.

TABLE 71: OTHER OPERATING EXPENSE


	THREE MONTHS ENDED JUNE 30,				SIX MONTHS ENDED JUNE 30,
($ In Millions)	2023		2022		2023		2022
Business Promotion	$	21.1	$	18.1	$	37.3	$	28.9
Staff Related	8.9		6.2		16.7		9.1
FDIC Insurance Premiums	6.6		4.6		12.8		10.4
Charitable Contributions	4.3		4.6		7.5		7.1
Other Expenses	71.1		56.4		123.3		114.1
Total Other Operating Expense	$	112.0	$	89.9	$	197.6	$	169.6

~~Table of Contents~~

Notes to Consolidated Financial Statements (unaudited) (continued)

Note 1617 – Pension ~~and Postretirement Health Care~~

The following ~~tables set~~table sets forth the net periodic pension ~~and postretirement benefit~~ expense for Northern Trust’s U.S. Qualified Plan, Non-U.S. Pension Plans, and ~~non-U.S. pension plans, supplemental pension plan, and postretirement health care plan~~U.S. Non-Qualified Plan for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016.~~2022.

~~Table 57: Net Periodic Pension Expense (Benefit)~~TABLE 72: NET PERIODIC PENSION EXPENSE (BENEFIT)


U.S. QUALIFIED PLAN	THREE MONTHS ENDED JUNE 30,				SIX MONTHS ENDED JUNE 30,
(In Millions)	2023		2022		2023		2022
Service Cost	$	11.5	$	13.2	$	23.0	$	26.4
Interest Cost	13.5		10.3		27.0		20.6
Expected Return on Plan Assets	(25.3)		(20.2)		(50.6)		(40.4)
Amortization
Net Actuarial Loss	0.4		5.7		0.8		11.4
Prior Service Cost (Credit)	—		—		—		(0.1)
Net Periodic Pension Expense	$	0.1	$	9.0	$	0.2	$	17.9
Settlement Expense	—		20.3		—		20.3
Total Pension Expense	$	0.1	$	29.3	$	0.2	$	38.2


Net Periodic Pension Expense U.S. Plan	Three Months Ended September 30,						Nine Months Ended September 30,
NON-U.S. PENSION PLANS													NON-U.S. PENSION PLANS	THREE MONTHS ENDED JUNE 30,				SIX MONTHS ENDED JUNE 30,
(In Millions)	2017			2016			2017			2016			(In Millions)	2023		2022		2023		2022
Service Cost	$	9.6		$	9.3		$	28.8		$	28.0		Service Cost	$	0.4	$	0.5	$	0.7	$	0.9
Interest Cost	11.4			11.5			34.4			34.4			Interest Cost	1.2		0.6		2.4		1.3
Expected Return on Plan Assets	(23.4		)	(23.6		)	(70.4		)	(70.8		)	Expected Return on Plan Assets	(1.6)		(0.8)		(3.1)		(1.5)
Amortization													Amortization
Net Actuarial Loss	4.7			4.7			14.3			14.1
Prior Service Cost	(0.1		)	(0.1		)	(0.3		)	(0.3		)
Net Periodic Pension Expense	$	2.2		$	1.8		$	6.8		$	5.4
Net Actuarial Loss (Gain)													Net Actuarial Loss (Gain)	(0.1)		0.2		(0.2)		0.4
Net Periodic Pension Expense (Benefit)													Net Periodic Pension Expense (Benefit)	$	(0.1)	$	0.5	$	(0.2)	$	1.1
Settlement Expense													Settlement Expense	—		—		—		0.7
Total Pension Expense (Benefit)													Total Pension Expense (Benefit)	$	(0.1)	$	0.5	$	(0.2)	$	1.8

(In Millions)
Location of
Derivative Gain / (Loss) Recognized
in Income
Amount of Derivative Gain / (Loss)
Recognized in Income
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Foreign Exchange Contracts Other Operating Income $ (5.9 ) $ (1.2 ) $ 2.2
$ (0.2 )
Other Financial Derivatives ⁽¹⁾
Other Operating Income (4.0 ) (2.3 ) (8.4 ) (8.6 )
Total $ (9.9 ) $ (3.5 ) $ (6.2 ) $ (8.8 )


⁽¹⁾	~~This line includes swaps related to sales of certain Visa Class B common shares, total return swap contracts, and credit default swap contracts.~~

~~Table of Contents~~

Notes to Consolidated Financial Statements (unaudited) (continued)

TABLE 79: LOCATION AND AMOUNT OF GAINS AND LOSSES RECORDED IN INCOME FOR DERIVATIVES NOT DESIGNATED AS HEDGING UNDER GAAP


(In Millions)	DERIVATIVE GAINS (LOSSES) LOCATION RECOGNIZED IN INCOME	AMOUNT OF DERIVATIVE GAINS (LOSSES) RECOGNIZED IN INCOME
		THREE MONTHS ENDED JUNE 30,				SIX MONTHS ENDED JUNE 30,
		2023		2022		2023		2022
Non-designated risk management derivatives
Foreign Exchange Contracts	Other Operating Income	$	0.8	$	(4.1)	$	1.5	$	(1.4)
Other Financial Derivatives(1)	Other Operating Income	(11.9)		(5.6)		(20.7)		(10.1)
Gains (Losses) from non-designated risk management derivatives		$	(11.1)	$	(9.7)	$	(19.2)	$	(11.5)
Client-related and trading derivatives
Foreign Exchange Contracts	Foreign Exchange Trading Income	$	50.1	$	77.6	$	103.1	$	158.5
Interest Rate Contracts	Security Commissions and Trading Income	4.4		3.2		6.9		4.2
Gains from client-related and trading derivatives		$	54.5	$	80.8	$	110.0	$	162.7
Total gains from derivatives not designated as hedging under GAAP		$	43.4	$	71.1	$	90.8	$	151.2

(1) This line includes swaps related to the sale of certain Visa Class B common shares and total return swap contracts.

Note 2122 – 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 and the conditions to net are met.

The following table provides information regarding repurchase agreements that are accounted for as secured borrowings as of June 30, 2023 and December 31, 2022.

TABLE 80: REPURCHASE AGREEMENTS ACCOUNTED FOR AS SECURED BORROWINGS


	REMAINING CONTRACTUAL MATURITY OF THE AGREEMENTS
	JUNE 30, 2023		DECEMBER 31, 2022
($ In Millions)	OVERNIGHT AND CONTINUOUS
U.S. Treasury and Agency Securities	$	988.1	$	567.2
Total Borrowings	988.1		567.2
Net Amount of Recognized Liabilities for Repurchase Agreements in Note 23	988.1		567.2

Notes to Consolidated Financial Statements (unaudited) (continued)

Note 23 – Offsetting of Assets and Liabilities

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.

The following ~~tables provide~~table provides information regarding the offsetting of derivative assets and securities purchased under agreements to resell within the consolidated balance sheets as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016.~~2022.

~~Table 68:~~ TABLE 81: OFFSETTING OF DERIVATIVE ASSETS AND SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL


	JUNE 30, 2023
(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)
Foreign Exchange Contracts Over the Counter (OTC)	$	1,827.6	$	1,001.1	$	826.5	$	3.9	$	822.6
Interest Rate Swaps OTC	313.9		244.8		69.1		—		69.1
Interest Rate Swaps Exchange Cleared	—		—		—		—		—
Other Financial Derivative	—		—		—		—		—
Total Derivatives Subject to a Master Netting Arrangement	2,141.5		1,245.9		895.6		3.9		891.7
Total Derivatives Not Subject to a Master Netting Arrangement	436.5		—		436.5		—		436.5
Total Derivatives	2,578.0		1,245.9		1,332.1		3.9		1,328.2
Securities Purchased under Agreements to Resell(2)	$	35,761.2	$	34,532.3	$	1,228.9	$	1,228.9	$	—


	DECEMBER 31, 2022
(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)
Foreign Exchange Contracts OTC	$	2,928.9	$	2,666.4	$	262.5	$	5.0	$	257.5
Interest Rate Swaps OTC	217.6		144.3		73.3		—		73.3
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	3,151.2		2,810.7		340.5		5.0		335.5
Total Derivatives Not Subject to a Master Netting Arrangement	581.2		—		581.2		—		581.2
Total Derivatives	3,732.4		2,810.7		921.7		5.0		916.7
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 $9.8 billion and $8.9 billion as of June 30, 2023 and December 31, 2022, respectively.

(2)Offsetting of ~~Derivative Assets and~~ Securities Purchased ~~Under~~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 June 30, 2023 and December 31, 2022.

September 30, 2017
(In Millions)
Gross
Recognized
Assets

Gross
Amounts
Offset

Net
Amounts
Presented

Gross
Amounts
Not Offset

Net
Amount ⁽³⁾
Derivative Assets ⁽¹⁾

Foreign Exchange Contracts Over the Counter (OTC) $ 2,459.4
$ 1,702.0
$ 757.4
$ —
$ 757.4
Interest Rate Swaps OTC 3.0
12.4
(9.4 ) —
(9.4 )
Interest Rate Swaps Exchange Cleared 114.1
22.1
92.0
—
92.0
Cross Product Netting Adjustment —
19.1
—
—
—
Cross Product Collateral Adjustment —
617.9
—
—
—
Total Derivatives Subject to a Master Netting Arrangement 2,576.5
2,373.5
203.0
—
203.0
Total Derivatives Not Subject to a Master Netting Arrangement 640.7
—
640.7
—
640.7
Total Derivatives $ 3,217.2
$ 2,373.5
$ 843.7
$ —
$ 843.7
Securities Purchased under Agreements to Resell ⁽²⁾
$ 1,605.8
$ —
$ 1,605.8
$ 1,605.8
$ —

December 31, 2016
(In Millions)
Gross
Recognized
Assets

Gross
Amounts
Offset

Net
Amounts
Presented

Gross
Amounts
Not Offset

Net
Amount ⁽³⁾
Derivative Assets ⁽¹⁾

Foreign Exchange Contracts OTC $ 2,800.4
$ 1,651.9
$ 1,148.5
$ —
$ 1,148.5
Interest Rate Swaps OTC 129.8
18.2
111.6
—
111.6
Interest Rate Swaps Exchange Cleared 117.4
21.8
95.6
—
95.6
Cross Product Netting Adjustment —
17.2
—
—
—
Cross Product Collateral Adjustment —
461.3
—
—
—
Total Derivatives Subject to a Master Netting Arrangement 3,047.6
2,170.4
877.2
—
877.2
Total Derivatives Not Subject to a Master Netting Arrangement 809.2
—
809.2
—
809.2
Total Derivatives 3,856.8
2,170.4
1,686.4
—
1,686.4
Securities Purchased under Agreements to Resell ⁽²⁾
$ 1,967.5
$ —
$ 1,967.5
$ 1,967.5
$ —


⁽¹⁾	Derivative assets are reported in other assets in the consolidated balance sheets. Other assets (excluding derivative assets) totaled $3.8 billion and $3.3 billion as of September 30, 2017 and December 31, 2016, respectively.


⁽²⁾	Securities purchased under agreements to resell are reported in federal funds sold and securities purchased under agreements to resell in the consolidated balance sheets. There were $65.0 million Federal funds sold and $6.8 million Federal funds sold as of September 30, 2017 and December 31, 2016, respectively.


⁽³⁾	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, 2017 and December 31, 2016.

~~Table of Contents~~

Notes to Consolidated Financial Statements (unaudited) (continued)

The following ~~tables provide~~table provides information regarding the offsetting of derivative liabilities and securities sold under agreements to repurchase within the consolidated balance sheets as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016.~~2022.

~~Table 69:~~ TABLE 82: OFFSETTING OF DERIVATIVE LIABILITIES AND SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE


	JUNE 30, 2023
(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)
Foreign Exchange Contracts OTC	$	1,632.2	$	1,422.1	$	210.1	$	—	$	210.1
Interest Rate Swaps OTC	408.1		4.1		404.0		—		404.0

Other Financial Derivatives	36.4		34.8		1.6		—		1.6
Total Derivatives Subject to a Master Netting Arrangement	2,076.7		1,461.0		615.7		—		615.7
Total Derivatives Not Subject to a Master Netting Arrangement	530.4		—		530.4		—		530.4
Total Derivatives	2,607.1		1,461.0		1,146.1		—		1,146.1
Securities Sold under Agreements to Repurchase(2)	$	35,520.4	$	34,532.3	$	988.1	$	988.1	$	—


	DECEMBER 31, 2022
(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)
Foreign Exchange Contracts OTC	$	2,082.3	$	1,826.7	$	255.6	$	—	$	255.6
Interest Rate Swaps OTC	426.5		5.9		420.6		—		420.6
Interest Rate Swaps Exchange Cleared	5.3		—		5.3		—		5.3
Other Financial Derivatives	34.8		33.3		1.5		—		1.5
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	1,105.2		—		1,105.2		—		1,105.2
Total Derivatives	3,654.1		1,865.9		1,788.2		—		1,788.2
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 $3.3 billion and $3.2 billion as of June 30, 2023 and December 31, 2022, respectively.

(2)Offsetting of ~~Derivative Liabilities and~~ Securities Sold ~~Under~~under Agreements to Repurchase primarily relates to our involvement in the FICC.

(3)Including cash collateral deposited with counterparties.

September 30, 2017
(In Millions)
Gross
Recognized
Liabilities

Gross
Amounts
Offset

Net
Amounts
Presented

Gross
Amounts
Not Offset

Net
Amount ⁽²⁾
Derivative Liabilities ⁽¹⁾

Foreign Exchange Contracts OTC $ 2,215.8
$ 1,702.0
$ 513.8
$ —
$ 513.8
Interest Rate Swaps OTC 62.0
12.4
49.6
—
49.6
Interest Rate Swaps Exchange Cleared 22.1
22.1
—
—
—
Other Financial Derivatives 27.7
—
27.7
—
27.7
Cross Product Netting Adjustment —
19.1
—
—
—
Cross Product Collateral Adjustment —
334.2
—
—
—
Total Derivatives Subject to a Master Netting Arrangement 2,327.6
2,089.8
237.8
—
237.8
Total Derivatives Not Subject to a Master Netting Arrangement 952.8
—
952.8
—
952.8
Total Derivatives 3,280.4
2,089.8
1,190.6
—
1,190.6
Securities Sold under Agreements to Repurchase $ 523.9
$ —
$ 523.9
$ 523.9
$ —
(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 June 30, 2023 and December 31, 2022.

December 31, 2016
(In Millions)
Gross
Recognized
Liabilities

Gross
Amounts
Offset

Net
Amounts
Presented

Gross
Amounts
Not Offset

Net
Amount ⁽²⁾
Derivative Liabilities ⁽¹⁾

Foreign Exchange Contracts OTC $ 2,634.4
$ 1,651.9
$ 982.5
$ —
$ 982.5
Interest Rate Swaps OTC 86.2
18.2
68.0
—
68.0
Interest Rate Swaps Exchange Cleared 21.8
21.8
—
—
—
Other Financial Derivatives 25.2
—
25.2
—
25.2
Cross Product Netting Adjustment —
17.2
—
—
—
Cross Product Collateral Adjustment —
722.1
—
—
—
Total Derivatives Subject to a Master Netting Arrangement 2,767.6
2,431.2
336.4
—
336.4
Total Derivatives Not Subject to a Master Netting Arrangement 608.5
—
608.5
—
608.5
Total Derivatives 3,376.1
2,431.2
944.9
—
944.9
Securities Sold under Agreements to Repurchase $ 473.7
$ —
$ 473.7
$ 473.7
$ —


⁽¹⁾	Derivative liabilities are reported in other liabilities in the consolidated balance sheets. Other liabilities (excluding derivative liabilities) totaled $2.1 billion and $2.7 billion as of September 30, 2017 and December 31, 2016, respectively.


⁽²⁾	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, 2017 and December 31, 2016.

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

~~Table of Contents~~

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

arrangement, Northern Trust is entitled to ~~set off~~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.

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.

Credit risk associated with derivative instruments relates to the failure of the counterparty and the failure of Northern Trust ~~centrally clears~~to pay based on the contractual terms of the agreement, and is generally limited to the unrealized fair value gains and losses on these instruments, net of any collateral received or deposited. The amount of credit risk will increase or decrease during the 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

Notes to Consolidated Financial Statements (unaudited) (continued)

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 ~~interest rate~~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 $75.8 million and $129.2 million, respectively, as of June 30, 2023, and $131.8 million and $26.3 million, respectively, as of December 31, 2022, 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 ~~addressed under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. These transactions are subject to an agreement similar to~~with credit-risk-related contingent features that were in a ~~master netting arrangement which has the same rights of offset as described above.~~

~~Note 22 – Subsequent Events~~

On October 1, 2017, Northern Trust completed its acquisition of UBS Asset Management’s fund administration servicing businesses in Luxembourg and Switzerland. The purchase price recorded in connection with the closing of the acquisition, which remains subject to adjustment through May 2018, totaled $199.4liability position was $354.8 million and ~~was comprised~~$190.9 million at June 30, 2023 and December 31, 2022, respectively. Cash collateral amounts deposited with derivative counterparties on those dates included $290.0 million and $55.1 million, respectively, posted against these liabilities, resulting in a net maximum amount of ~~$180.0~~termination payments that could have been required at June 30, 2023 and December 31, 2022, of $64.8 million and $135.8 million, respectively. Accelerated settlement of ~~cash and $19.4 million~~these liabilities would not have a material effect on the consolidated financial position or liquidity of ~~contingent consideration.~~Northern Trust.

~~Table of Contents~~

Item 4. Controls and Procedures

As of ~~September~~June 30, ~~2017,~~2023, 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~~June 30, ~~2017,~~2023, 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.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

The information presented under the caption “Legal Proceedings” in ~~“Note 19 —~~Note 20—Commitments and Contingent ~~Liabilities”~~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, for a discussion of risks identified as being most significant to Northern Trust.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c) The following table shows certain information relating to the Corporation’s purchases of common stock for the three months ended ~~September~~June 30, ~~2017.~~2023.

~~Table 70: Repurchases~~TABLE 83: 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
April 1 - 30, 2023	103,771	$	77.09	103,771	24,172,813
May 1 - 31, 2023	1,215,671	72.37		1,215,671	22,957,142
June 1 - 30, 2023	27,790	72.78		27,790	22,929,352
Total (Second Quarter)	1,347,232	$	72.74	1,347,232	22,929,352

On October 19, 2021, the Corporation announced a share repurchase program under which the Corporation’s Board of ~~Common Stock~~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 June 30, 2023, 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).

Period Total Number
of Shares
Purchased Average
Price Paid
per Share
Total Number of
Shares Purchased
as Part of a Publicly
Announced Plan ⁽¹⁾
Maximum Number of
Shares that May Yet
Be Purchased
Under the Plan
July 1-31, 2017 140,940
$ 87.98
140,940
9,359,060
August 1-31, 2017 805,946
88.47
805,946
8,553,114
September 1-30, 2017 420,939
88.37
420,939
8,132,175
Total (Third Quarter) 1,367,825
$ 88.39
1,367,825
8,132,175

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.

⁽¹⁾31.1			~~Repurchases through July 18, 2017 were made pursuant~~ Rule 13a-14(a)/15d-14(a) Certification of CEO Pursuant to ~~the repurchase program announced by the Corporation on April 21, 2015, under which the Corporation’s Board of Directors authorized the Corporation to repurchase up to 15.0 million shares~~Section 302 of the ~~Corporation’s common stock. This program was terminated and replaced with a new repurchase program, announced on July 18, 2017, under which the Corporation’s Board~~Sarbanes-Oxley Act of ~~Directors authorized the Corporation~~2002

31.2			Rule 13a-14(a)/15d-14(a) Certification of CFO Pursuant to ~~repurchase up to 9.5 million shares~~Section 302 of the ~~Corporation’s common stock. Repurchases after July~~Sarbanes-Oxley Act of 2002

32			Certifications of CEO and CFO Pursuant to 18 ~~2017 were made pursuant~~U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the ~~new repurchase program, which has no expiration date.~~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 June 30, 2023, 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.

~~Item 6. Exhibits~~

~~A list of exhibits to this Form 10-Q is set forth on the Exhibit Index immediately preceding such exhibits and is incorporated herein by reference.~~

~~Table of Contents~~

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:			July 25, 2023	~~NORTHERN TRUST CORPORATION~~By:	/s/ Jason J. Tyler
				~~(Registrant)~~

~~Date:~~	~~October 26, 2017~~	~~By:~~	~~/s/ S. Biff Bowman~~
			~~S. Biff Bowman~~ Jason J. Tyler Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)

Date:			~~October 26, 2017~~July 25, 2023	By:	/s/ ~~Aileen B. Blake~~Lauren Allnutt
					~~Aileen B. Blake~~ Lauren Allnutt Executive Vice President and Controller (Principal Accounting Officer)

~~Table of Contents~~

~~EXHIBIT INDEX~~



~~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.

~~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, 2017, formatted in Extensible Business Reporting Language (XBRL): (1) the Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016, (2) the Consolidated Statements of Income for the three and nine months ended September 30, 2017 and 2016, (3) the Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016, (4) the Consolidated Statements of Changes in Stockholders’ Equity for the nine months ended September 30, 2017 and 2016, (5) the Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016, and (6) Notes to Consolidated Financial Statements

8486



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



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


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


Large accelerated filer		x			Accelerated filer		¨

~~Large accelerated filer~~		x	~~Accelerated filer~~	¨

Non-accelerated filer	¨ ~~(Do not check if a smaller reporting company)~~		Smaller reporting company			¨☐

					Emerging growth company		¨☐




	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)		3335
Consolidated Balance Sheets		3335
Consolidated Statements of Income		3436
Consolidated Statements of Comprehensive Income		3436
Consolidated Statements of Changes in Stockholders’ Equity		3537
Consolidated Statements of Cash Flows		3638
Notes to Consolidated Financial Statements		3739
Item 4: Controls and Procedures		8283

Part II – Other Information
Item 1: Legal Proceedings		8284
Item 1A: Risk Factors		84
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds		8284
Item 3: Defaults Upon Senior Securities		84
Item 4: Mine Safety Disclosures		84
Item 5: Other Information		84
Item 6: Exhibits		8285

Signatures		8386



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



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


	THREE MONTHS ENDED JUNE 30,						SIX MONTHS ENDED JUNE 30,
CONDENSED INCOME STATEMENTS ($ In Millions)	2023		2022		% CHANGE(1)		2023		2022		% CHANGE(1)
Noninterest Income	$	1,245.6	$	1,310.0	(5)	%	$	2,459.0	$	2,647.7	(7)	%
Net Interest Income	511.5		458.7		12		1,042.7		839.7		24
Total Revenue	1,757.1		1,768.7		(1)		3,501.7		3,487.4		—
(Release of) Provision for Credit Losses	(15.5)		4.5		N/M		(0.5)		6.5		N/M
Noninterest Expense	1,331.9		1,223.6		9		2,617.5		2,429.5		8
Income before Income Taxes	440.7		540.6		(18)		884.7		1,051.4		(16)
Provision for Income Taxes	108.9		144.4		(25)		218.3		265.9		(18)
Net Income	$	331.8	$	396.2	(16)	%	$	666.4	$	785.5	(15)	%


PER COMMON SHARE
Net Income — Basic	$	1.56	$	1.86	(16)	%	$	3.07	$	3.64	(16)	%
— Diluted	1.56		1.86		(16)		3.07		3.63		(16)
Cash Dividends Declared Per Common Share	0.75		0.70		7		1.50		1.40		7
Book Value — End of Period (EOP)	51.94		48.87		6		51.94		48.87		6
Market Price — EOP	74.14		96.48		(23)		74.14		96.48		(23)



	Three Months Ended September 30,								Nine Months Ended September 30,
CONDENSED INCOME STATEMENTS (In Millions)	2017			2016			% Change ⁽¹⁾		2017			2016			% Change ⁽¹⁾
Noninterest Income	$	991.0		$	910.6		9	%	$	2,901.6		$	2,809.8		3	%
Net Interest Income	354.2			303.1			17		1,049.2			910.6			15
Provision for Credit Losses	(7.0		)	(3.0		)	134		(15.0		)	(4.0		)	N/M
Noninterest Expense	935.6			843.0			11		2,767.5			2,596.8			7
Income before Income Taxes	416.6			373.7			11		1,198.3			1,127.6			6
Provision for Income Taxes	118.2			116.1			2		355.9			361.6			(2	)
Net Income	$	298.4		$	257.6		16	%	$	842.4		$	766.0		10	%


SELECTED BALANCE SHEET DATA ($ In Millions)	JUNE 30, 2023		DECEMBER 31, 2022		% CHANGE(1)
End of Period:
Total Assets	$	156,752.5	$	155,036.7	1	%
Earning Assets	145,042.1		142,484.7		2
Deposits	113,203.6		123,932.1		(9)
Stockholders’ Equity	11,635.7		11,259.5		3



PER COMMON SHARE
Net Income — Basic	$	1.21	$	1.09	11	%	$	3.43	$	3.23	6	%
— Diluted	1.20		1.08		11		3.41		3.21		6
Cash Dividends Declared Per Common Share	0.42		0.38		11		1.18		1.10		7
Book Value — End of Period (EOP)	40.82		38.41		6		40.82		38.41		6
Market Price — EOP	91.93		67.99		35		91.93		67.99		35


CLIENT ASSETS ($ In Billions)	JUNE 30, 2023		DECEMBER 31, 2022		% CHANGE(1)
Assets Under Custody/Administration(2)	$	14,478.9	$	13,604.0	6	%
Assets Under Custody	11,284.8		10,604.6		6
Assets Under Management	1,365.8		1,249.5		9



SELECTED BALANCE SHEET DATA (In Millions)
	September 30, 2017		December 31, 2016		% Change ⁽¹⁾
End of Period:
Assets	$	131,400.2	$	123,926.9	6	%
Earning Assets	122,565.9		115,446.4		6
Deposits	105,810.6		101,651.7		4
Stockholders’ Equity	10,165.2		9,770.4		4



CLIENT ASSETS (In Billions)	September 30, 2017		December 31, 2016		% Change ⁽¹⁾
Assets Under Custody/Administration ⁽²⁾	$	9,696.0	$	8,541.3	14	%
Assets Under Custody	7,753.8		6,720.5		15
Assets Under Management	1,125.1		942.4		19


	DAILY AVERAGES				PERIOD-END
	THREE MONTHS ENDED JUNE 30,				AS OF JUNE 30,
	2023	2022	CHANGE		2023	2022	CHANGE
S&P 500	4,205	4,112	2	%	4,450	3,785	18	%
MSCI EAFE (U.S. dollars)	2,121	2,001	6		2,132	1,846	15
MSCI EAFE (local currency)	1,337	1,253	7		1,357	1,188	14


⁽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.~~


	JUNE 30, 2023				DECEMBER 31, 2022
	STANDARDIZED APPROACH		ADVANCED APPROACH		STANDARDIZED APPROACH		ADVANCED APPROACH		WELL-CAPITALIZED RATIOS		MINIMUM CAPITAL RATIOS
Capital Ratios:
Northern Trust Corporation
Common Equity Tier 1 Capital	11.3	%	13.0	%	10.8	%	11.5	%	N/A		4.5	%
Tier 1 Capital	12.3		14.1		11.8		12.5		6.0		6.0
Total Capital	14.4		16.3		13.9		14.5		10.0		8.0
Tier 1 Leverage	7.4		7.4		7.1		7.1		N/A		4.0
Supplementary Leverage	N/A		8.3		N/A		7.9		N/A		3.0

The Northern Trust Company
Common Equity Tier 1 Capital	12.1	%	14.3	%	11.6	%	12.4	%	6.5	%	4.5	%
Tier 1 Capital	12.1		14.3		11.6		12.4		8.0		6.0
Total Capital	13.9		16.2		13.5		14.2		10.0		8.0
Tier 1 Leverage	7.4		7.4		6.9		6.9		5.0		4.0
Supplementary Leverage	N/A		8.2		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 on page 28.



Assets Under Custody	September 30, 2017		June 30, 2017		September 30, 2016		Change Q3-17/Q2-17		Change Q3-17/Q3-16
($ In Billions)	September 30, 2017		June 30, 2017		September 30, 2016		Change Q3-17/Q2-17		Change Q3-17/Q3-16
Corporate & Institutional	$	7,130.9	$	6,786.3	$	6,173.6	5	%	16	%
Wealth Management	622.9		593.3		533.2		5		17
Total Assets Under Custody	$	7,753.8	$	7,379.6	$	6,706.8	5	%	16	%


		Three Months Ended																	THREE MONTHS ENDED
($ In Billions)	($ In Billions)	September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			($ In Billions)		JUNE 30, 2023		MARCH 31, 2023		DECEMBER 31, 2022		SEPTEMBER 30, 2022		JUNE 30, 2022
Beginning Balance of AUM	Beginning Balance of AUM	$	1,028.8		$	1,001.3		$	942.4		$	945.8		$	906.2		Beginning Balance of AUM		$	1,330.4	$	1,249.5	$	1,209.9	$	1,302.8	$	1,487.8
Inflows by Investment Type
	Equity	51.2			36.3			41.6			44.5			27.2
Inflows by Product																	Inflows by Product
	Fixed Income	19.8			11.6			13.7			16.2			13.1				Equities	44.8		52.1		37.7		39.5		51.4
	Cash & Other Assets	101.6			98.2			91.8			95.7			109.5				Fixed Income	11.2		14.4		11.6		12.3		11.8
	Securities Lending Collateral	45.5			24.9			29.6			24.8			27.1				Cash and Other Assets	551.3		276.7		121.9		128.9		186.5
																		Securities Lending Collateral	53.4		66.3		48.2		55.3		61.6
Total Inflows	Total Inflows	218.1			171.0			176.7			181.2			176.9			Total Inflows		660.7		409.5		219.4		236.0		311.3

Outflows by Investment Type
	Equity	(41.0		)	(38.6		)	(38.4		)	(50.0		)	(26.6		)
Outflows by Product																	Outflows by Product
	Fixed Income	(13.0		)	(10.5		)	(13.0		)	(14.1		)	(8.8		)		Equities	(54.7)		(59.2)		(42.8)		(56.5)		(60.6)
	Cash & Other Assets	(83.0		)	(99.5		)	(89.7		)	(98.4		)	(100.2		)		Fixed Income	(10.2)		(16.6)		(12.7)		(12.4)		(14.8)
	Securities Lending Collateral	(14.4		)	(17.5		)	(18.0		)	(26.8		)	(21.4		)		Cash and Other Assets	(529.7)		(264.0)		(128.5)		(152.2)		(220.3)
																		Securities Lending Collateral	(52.5)		(46.7)		(62.0)		(62.5)		(69.5)
Total Outflows	Total Outflows	(151.4		)	(166.1		)	(159.1		)	(189.3		)	(157.0		)	Total Outflows		(647.1)		(386.5)		(246.0)		(283.6)		(365.2)

Net Inflows / (Outflows)		66.7			4.9			17.6			(8.1		)	19.9

Net Inflows (Outflows)																	Net Inflows (Outflows)		13.6		23.0		(26.6)		(47.6)		(53.9)
Market Performance, Currency & Other	Market Performance, Currency & Other																Market Performance, Currency & Other
	Market Performance & Other	26.6			18.2			38.9			—			—				Market Performance & Other	27.7		52.4		55.9		(35.1)		(118.5)
	Currency	3.0			4.4			2.4			—			—				Currency	(5.9)		5.5		10.3		(10.2)		(12.6)
Total Market Performance, Currency & Other	Total Market Performance, Currency & Other	29.6			22.6			41.3			4.7			19.7			Total Market Performance, Currency & Other		21.8		57.9		66.2		(45.3)		(131.1)

Ending Balance of AUM	Ending Balance of AUM	$	1,125.1		$	1,028.8		$	1,001.3		$	942.4		$	945.8		Ending Balance of AUM		$	1,365.8	$	1,330.4	$	1,249.5	$	1,209.9	$	1,302.8



	NORTHERN TRUST CORPORATION
(Interest and Rate on a Fully Taxable Equivalent Basis)	THIRD QUARTER
(Interest and Rate on a Fully Taxable Equivalent Basis)	2017							2016
($ In Millions)	Interest		Average Balance			Rate ⁽⁵⁾		Interest		Average Balance			Rate ⁽⁵⁾
Average Earning Assets

Federal Reserve and Other Central Bank Deposits	$	44.9	$	25,182.9		0.71	%	$	21.8	$	20,829.6		0.42	%
Interest-Bearing Due from and Deposits with Banks ⁽¹⁾	16.0		7,145.8			0.88		15.4		8,232.2			0.74
Federal Funds Sold and Securities Purchased under Agreements to Resell	7.8		1,945.8			1.58		4.4		1,613.2			1.08
Securities
U.S. Government	22.1		6,002.2			1.46		19.9		7,292.5			1.08
Obligations of States and Political Subdivisions	3.0		845.3			1.41		3.3		734.7			1.80
Government Sponsored Agency	65.4		17,974.7			1.45		38.8		17,583.7			0.88
Other ⁽²⁾	64.2		19,920.1			1.28		48.5		17,647.8			1.09
Total Securities	154.7		44,742.3			1.37		110.5		43,258.7			1.02
Loans and Leases ⁽³⁾	242.4		33,468.2			2.87		204.1		33,910.1			2.39
Total Earning Assets	465.8		112,485.0			1.64		356.2		107,843.8			1.31
Allowance for Credit Losses Assigned to Loans and Leases	—		(155.1		)	—		—		(192.9		)	—
Cash and Due from Banks and Other Central Bank Deposits ⁽⁴⁾	—		2,666.8			—		—		1,933.8			—
Buildings and Equipment	—		467.3			—		—		441.3			—
Client Security Settlement Receivables	—		917.0			—		—		1,200.7			—
Goodwill	—		523.9			—		—		525.5			—
Other Assets	—		4,254.5			—		—		4,630.3			—
Total Assets	$	—	$	121,159.4		—	%	$	—	$	116,382.5		—	%
Average Source of Funds
Deposits
Savings, Money Market and Other	$	7.3	$	15,617.1		0.19	%	$	3.2	$	15,025.7		0.08	%
Savings Certificates and Other Time	2.4		1,255.1			0.75		2.1		1,450.3			0.58
Non-U.S. Offices — Interest-Bearing	45.4		58,503.4			0.31		14.7		51,468.6			0.11
Total Interest-Bearing Deposits	55.1		75,375.6			0.29		20.0		67,944.6			0.12
Short-Term Borrowings	20.3		7,264.5			1.11		6.6		6,961.0			0.38
Senior Notes	11.5		1,497.0			3.11		11.8		1,496.3			3.11
Long-Term Debt	11.3		1,672.5			2.68		6.8		1,406.9			1.91
Floating Rate Capital Debt	1.4		277.5			1.87		0.9		277.4			1.24
Total Interest-Related Funds	99.6		86,087.1			0.46		46.1		78,086.2			0.23
Interest Rate Spread	—		—			1.18		—		—			1.08
Demand and Other Noninterest-Bearing Deposits	—		21,736.4			—		—		25,829.3			—
Other Liabilities	—		3,295.7			—		—		3,236.4			—
Stockholders’ Equity	—		10,040.2			—		—		9,230.6			—
Total Liabilities and Stockholders’ Equity	$	—	$	121,159.4		—	%	$	—	$	116,382.5		—	%
Net Interest Income/Margin (FTE Adjusted)	$	366.2	$	—		1.29	%	$	310.1	$	—		1.14	%
Net Interest Income/Margin (Unadjusted)	$	354.2	$	—		1.25	%	$	303.1	$	—		1.12	%



	Three Months Ended September 30, 2017/2016
	Change Due To
(In Millions)	Average Balance		Rate		Total
Earning Assets (FTE)	$	19.2	$	90.4	$	109.6
Interest-Related Funds	5.2		48.3		53.5
Net Interest Income (FTE)	$	14.0	$	42.1	$	56.1


~~(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 securities include certain community development investments and Federal Home Loan Bank and Federal Reserve stock, which are classified in other assets in the consolidated balance sheets as of September 30, 2017 and 2016.


~~(3)~~	~~Average balances include nonaccrual loans. Lease financing receivable balances are reduced by deferred income.~~


~~(4)~~	~~Cash and Due from Banks and Other Central Bank Deposits includes the non-interest-bearing component of Federal Reserve and Other Central Bank Deposits as presented on the consolidated balance sheets.~~


~~(5)~~	~~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.~~


(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)	SECOND QUARTER
	2023						2022
($ In Millions)	INTEREST		AVERAGE BALANCE		AVERAGE RATE(7)		INTEREST		AVERAGE BALANCE		AVERAGE RATE(7)
Interest-Earning Assets
Federal Reserve and Other Central Bank Deposits	$	398.9	$	34,380.4	4.65	%	$	59.2	$	36,691.1	0.65	%
Interest-Bearing Due from and Deposits with Banks(1)	32.1		4,573.4		2.82		6.5		4,227.6		0.62
Federal Funds Sold	0.1		2.9		5.25		—		2.2		0.75
Securities Purchased under Agreements to Resell(2)	284.3		1,238.6		92.09		7.0		1,149.3		2.47
Debt Securities
Available for Sale	254.7		24,511.8		4.17		138.1		35,676.6		1.55
Held to Maturity	112.5		25,053.3		1.80		56.2		20,244.3		1.11
Trading Account	—		0.2		42.53		—		0.4		5.40
Total Debt Securities	367.2		49,565.3		2.97		194.3		55,921.3		1.39
Loans and Leases(3)	640.5		42,365.4		6.06		257.1		40,747.0		2.53
Other Interest-Earning Assets(4)	25.0		1,990.4		5.04		11.8		1,163.0		4.07
Total Interest-Earning Assets	1,748.1		134,116.4		5.23		535.9		139,901.5		1.54
Cash and Due from Banks and Other Central Bank Deposits(5)	—		1,842.5		—		—		2,559.1		—
Other Noninterest-Earning Assets	—		9,940.7		—		—		11,623.5		—
Total Assets	$	—	$	145,899.6	—	%	$	—	$	154,084.1	—	%
Average Source of Funds
Deposits
Savings, Money Market and Other	$	152.8	$	22,961.2	2.67	%	$	18.7	$	30,967.5	0.24	%
Savings Certificates and Other Time	32.0		3,036.1		4.23		1.1		792.3		0.58
Non-U.S. Offices — Interest-Bearing	448.7		62,046.3		2.90		3.4		63,900.7		0.02
Total Interest-Bearing Deposits	633.5		88,043.6		2.89		23.2		95,660.5		0.10
Federal Funds Purchased	87.6		7,070.0		4.97		2.8		922.8		1.22
Securities Sold under Agreements to Repurchase(2)	273.4		467.8		234.39		6.0		596.7		4.01
Other Borrowings(6)	156.5		12,132.6		5.17		8.4		4,186.7		0.80
Senior Notes	42.1		2,761.1		6.14		18.9		2,885.1		2.65
Long-Term Debt	30.4		2,069.7		5.89		6.8		1,096.4		2.47

Total Interest-Related Funds	1,223.5		112,544.8		4.36		66.1		105,348.2		0.25
Interest Rate Spread	—		—		0.87		—		—		1.29
Demand and Other Noninterest-Bearing Deposits	—		17,555.1		—		—		33,733.3		—
Other Noninterest-Bearing Liabilities	—		4,351.0		—		—		4,095.6		—
Stockholders’ Equity	—		11,448.7		—		—		10,907.0		—
Total Liabilities and Stockholders’ Equity	$	—	$	145,899.6	—	%	$	—	$	154,084.1	—	%
Net Interest Income/Margin (FTE Adjusted)	$	524.6	$	—	1.57	%	$	469.8	$	—	1.35	%
Net Interest Income/Margin (Unadjusted)	$	511.5	$	—	1.53	%	$	458.7	$	—	1.31	%


(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)	THREE MONTHS ENDED JUNE 30, 2023/2022
	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	$	(3.9)	$	343.6	$	339.7
Interest-Bearing Due from and Deposits with Banks	0.5		25.1		25.6
Federal Funds Sold	—		0.1		0.1
Securities Purchased under Agreements to Resell	0.6		276.7		277.3
Debt Securities
Available for Sale	(64.8)		181.4		116.6
Held to Maturity	15.6		40.7		56.3
Trading Account	—		—		—
Total Debt Securities	(49.2)		222.1		172.9
Loans and Leases	10.6		372.8		383.4
Other Interest-Earning Assets	9.9		3.3		13.2
Total Interest Income	$	(31.5)	$	1,243.7	$	1,212.2

Interest-Bearing Deposits
Savings, Money Market and Other	$	(38.9)	$	173.0	$	134.1
Savings Certificates and Other Time	9.5		21.4		30.9
Non-U.S. Offices - Interest-Bearing	(0.1)		445.4		445.3
Total Interest-Bearing Deposits	(29.5)		639.8		610.3
Federal Funds Purchased	58.0		26.8		84.8
Securities Sold under Agreements to Repurchase	(1.6)		269.0		267.4
Other Borrowings	38.3		109.8		148.1
Senior Notes	(0.8)		24.0		23.2
Long-Term Debt	9.3		14.3		23.6

Total Interest Expense	$	73.7	$	1,083.7	$	1,157.4
Increase (Decrease) in Net Interest Income (FTE)	$	(105.2)	$	160.0	$	54.8



Three Months Ended September 30,	Corporate & Institutional Services						Wealth Management						Treasury and Other						Total Consolidated
($ In Millions)	2017			2016			2017			2016			2017			2016			2017			2016
Noninterest Income
Trust, Investment and Other Servicing Fees	$	501.1		$	450.8		$	366.8		$	337.5		$	—		$	—		$	867.9		$	788.3
Foreign Exchange Trading Income	47.2			55.2			0.7			0.9			1.2			(2.5		)	49.1			53.6
Other Noninterest Income	43.8			41.5			25.2			26.3			5.0			0.9			74.0			68.7
Net Interest Income*	194.0			138.2			186.6			164.1			(14.4		)	7.8			366.2			310.1
Revenue*	786.1			685.7			579.3			528.8			(8.2		)	6.2			1,357.2			1,220.7
Provision for Credit Losses	0.8			4.0			(7.8		)	(7.0		)	—			—			(7.0		)	(3.0		)
Noninterest Expense	542.1			487.8			348.8			318.0			44.7			37.2			935.6			843.0
Income before Income Taxes*	243.2			193.9			238.3			217.8			(52.9		)	(31.0		)	428.6			380.7
Provision for Income Taxes*	78.4			61.8			90.3			82.3			(38.5		)	(21.0		)	130.2			123.1
Net Income	$	164.8		$	132.1		$	148.0		$	135.5		$	(14.4	)	$	(10.0	)	$	298.4		$	257.6
Percentage of Consolidated Net Income	55		%	51		%	50		%	53		%	(5		)%	(4		)%	100		%	100		%
Average Assets	$	82,250.9		$	75,696.5		$	26,463.0		$	26,601.7		$	12,445.5		$	14,084.3		$	121,159.4		$	116,382.5



C&IS Trust, Investment and Other Servicing Fees	Nine Months Ended September 30,
($ In Millions)	2017		2016		Change
Custody and Fund Administration	$	973.1	$	879.1	$	94.0		11	%
Investment Management	297.1		277.7		19.4			7
Securities Lending	71.2		72.5		(1.3		)	(2	)
Other	109.7		101.8		7.9			8
Total	$	1,451.1	$	1,331.1	$	120.0		9	%



ANALYSIS OF NET INTEREST INCOME CHANGES DUE TO VOLUME AND RATE
	Nine Months Ended September 30, 2017/2016
	Change Due To
(In Millions)	Average Balance		Rate		Total
Earning Assets (FTE)	$	34.9	$	210.2	$	245.1
Interest-Related Funds	11.3		85.5		96.8
Net Interest Income (FTE)	$	23.6	$	124.7	$	148.3


▪	the present value of nonmaturity deposits are estimated using remaining lives, which are based on a combination of Northern Trust’s actual historical runoff patterns and management judgment — some balances are assumed to be core and have long lives while other balances are assumed to be temporary and have comparatively shorter lives; and


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