NORTHERN TRUST CORP
For the period ended Mar 31, 2025. Filed Apr 30, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed Apr 30, 2025
NTRS$172.76+0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-10-29.
0000073124-24-000257
Items 2 and 3. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures about Market RiskCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-04-30.
0000073124-25-000187
Items 2 and 3. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures about Market RiskThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 348 previous paragraphs and 283 current paragraphs.
179 unchanged; 61 reworded; 37 added; 88 removed; 20 previous and 6 current paragraphs rearranged.
Tables are not compared: 38 previous and 31 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (37)
Current report
FIRST QUARTER CONSOLIDATED RESULTS OF OPERATIONS
Current report
TABLE 1: FINANCIAL HIGHLIGHTS
Current report
Trust, Investment and Other Servicing Fees increased to $1.2 billion in the current quarter, primarily due to favorable markets.
Current report
Other Noninterest Income increased to $158.1 million in the current quarter primarily due to the $189.4 million available for sale debt security loss reflected in Investment Security Gains (Losses) in the first quarter of 2024.
Current report
Net Interest Income increased to $568.1 million in the current quarter primarily driven by higher deposits and lower funding costs.
Current report
Noninterest Expense of $1.4 billion in the current quarter is primarily due to higher Equipment and Software expense, Compensation expense, and Outside Services expense, partially offset by a decrease in Other Operating Expense.
Current report
Asset Servicing
Current report
Wealth Management
Current report
N/M - Not meaningful
Current report
Other Operating Income decreased compared to the prior-year quarter, primarily due to lower income associated with a market value decrease in supplemental compensation plans. The lower income associated with the supplemental compensation plans resulted in a related decrease in supplemental compensation plan expense reported in Other Operating Expense.
Current report
(2)Changes due to average balance and average rate include the impact of balance sheet netting as noted in Table 14: Average Consolidated Balance Sheets with Analysis of Net Interest Income. Excluding the impact of netting, the 2025 vs. 2024 change in Federal Funds Sold and Securities Purchased under Agreements to Resell attributed to the average balance and the average rate would be $21.5 million and $(158.6) million, respectively. Excluding the impact of netting, the 2025 vs. 2024 change in Securities Sold under Agreements to Repurchase attributed to the average balance and the average rate would be $22.1 million and $(162.8) million, respectively
Current report
Net Interest Income, stated on an FTE basis, increased from the prior-year quarter, primarily driven by higher deposits and lower funding costs. Average earning assets increased from the prior-year quarter, primarily driven by an increase in placements with the Federal Reserve and other central banks driven by higher deposits
Current report
The net interest margin on an FTE basis increased from the prior-year quarter, primarily driven by lower funding costs.
Current report
Federal Reserve and Other Central Bank Deposits averaged $37.2 billion and increased $1.3 billion, or 4%, from $35.9 billion in the prior-year quarter. Interest-Bearing Due from and Deposits with Banks averaged $4.9 billion and increased $500.0 million, or 10%, from $4.4 billion in the prior-year quarter.
Current report
Federal Funds Sold and Securities Purchased under Agreements to Resell averaged $394.5 million and decreased $123.9 million, or 24%, from $518.4 million in the prior-year quarter.
Current report
The negative Provision for Credit Losses in the prior-year quarter was primarily due to a decreases in both individual and collective reserves. The decrease in individual reserves was driven by one Commercial and Institutional (C&I) loan that was charged-off. The decrease in collective reserve was primarily in the C&I portfolio, driven by improvement in the quality of the portfolio, and in the CRE portfolio, driven by improved macroeconomic factors.
Current report
Other Operating Expense decreased compared to the prior-year quarter, primarily due to a $12.5 million FDIC special assessment recorded in the prior year and lower supplemental compensation plan expense in the current quarter. The lower supplemental compensation plan expense in the prior year quarter resulted from related market value decreases in supplemental compensation plans reported in Other Operating Income.
Current report
In addition to income and expenses associated with non-recurring activities, Other includes expenses for Asset Management, corporate and other support functions not directly incurred by, but ultimately allocated back to Asset Servicing and Wealth Management. Other also includes the FTE adjustments of $5.6 million and $7.3 million for the three months ended March 31, 2025 and 2024, respectively, in order to reconcile the segment results that are reported on an internal management-reporting basis into consolidated results.
Current report
Effective January 2025, certain operations support activities were moved out of Asset Servicing and Wealth Management in connection with the formation of the Enterprise Chief Operating Office. The Enterprise Chief Operating Office provides operational support to Asset Servicing and Wealth Management. Its expenses are included within Other and are fully allocated to Asset Servicing and Wealth Management. Prior-year segment results have been recast to reflect the organizational changes.
Current report
REPORTING SEGMENTS (continued)
Current report
(1)Financial measures stated on an FTE basis.
Current report
(2)Other Segment Items include Occupancy, Equipment & Software and Other Operating Expense.
Current report
Asset Servicing
Current report
For the quarter ended March 31, 2025, there was a Provision for Credit Losses of $2.1 million compared to a negative Provision for Credit Losses of $5.8 million in the prior-year quarter. The Provision for Credit Losses for the three months ended March 31, 2025 reflected an increase in collective reserves driven by increased macroeconomic uncertainty.
Current report
REPORTING SEGMENTS (continued)
Current report
Wealth Management
Current report
For the quarter ended March 31, 2025, Net Income increased $11.1 million, or 5%, from the prior-year quarter primarily due to higher Trust, Investment and Other Servicing Fees, partially offset by higher Noninterest Expense.
Current report
For the quarter ended March 31, 2025, Other Noninterest Income decreased $5.0 million, or 13%, from the prior-year quarter primarily due to a decrease in other allocated income.
Current report
For the quarter ended March 31, 2025, there was a negative Provision for Credit Losses of $0.9 million compared to a negative Provision for Credit Losses of $1.7 million in the prior-year quarter. The negative Provision for Credit Losses for the three months ended March 31, 2025 resulted from a decrease in the collective reserve due to sector and portfolio-specific improvements in CRE, partially offset by increased macroeconomic uncertainty.
Current report
For the quarter ended March 31, 2025, Other Noninterest Expense decreased $15.8 million from the prior-year quarter, primarily due to the prior-year FDIC special assessment.
Current report
Short-Term Borrowings. Short-term borrowings includes Federal Funds Purchased, Securities Sold under Agreements to Repurchase, and Other Borrowings. These balances are primarily driven by sponsored member program activity and sources of strategic funding needs.
Current report
TABLE 20: BOOK VALUE OF DEBT SECURITIES BY CREDIT RATING
Current report
Short-Term Borrowings
Current report
In managing its credit exposure, management has defined a commercial real estate loan as one where: (1) the borrower’s principal business activity is the acquisition or the development of real estate for commercial purposes; (2) the principal collateral is real estate held for commercial purposes, and loan repayment is expected to flow from the operation of the property; or (3) the loan repayment is expected to flow from the sale or refinance of real estate as a normal and ongoing part of the business. The commercial real estate portfolio consists of commercial mortgages and construction, acquisition and development loans extended primarily to experienced investors well known to Northern Trust.
Current report
Underwriting standards generally reflect conservative loan-to-collateral value (LTV) ratios and debt service coverage requirements. LTV ratios, calculated as the outstanding amount of the loan divided by the estimated value of the property, are a critical component of Northern Trust’s underwriting standards. Northern Trust utilizes LTV ratios in various stages of the lending and risk management process. Northern Trust’s policy related to LTV limits is more conservative than what is prescribed by current supervisory regulations. LTV ratios are monitored and updated on a quarterly basis utilizing the most recent outstanding amounts and appraisal values based on models, automated valuation services, or updated appraisals.
Current report
All commercial real estate transactions, regardless of size, require an independent appraisal at loan origination, unless permissible and approved regulatory exemptions can be applied. Real estate appraisals are, at a minimum, performed in accordance with generally accepted appraisal standards as applicable under local regulations. Northern Trust considers obtaining a new appraisal as part of the loan renewal process or whenever credit quality or market conditions have materially and adversely changed to the point where it is prudent to reassess the value of the real estate collateral. For defaulted loans, appraisals are updated on an, at least, annual basis. Appraisal values might be discounted based upon Northern Trust’s experience with actual liquidation values and management’s judgement as to the realizable value of the property.
Current report
•changes in trade policy, including the imposition of tariffs or the impacts of retaliatory tariffs;
Removed paragraphs (88)
Previous report
THIRD QUARTER CONSOLIDATED RESULTS OF OPERATIONS
Previous report
Net Income per diluted common share was $2.22 in the current quarter and $1.49 in the third quarter of 2023. Net Income increased $137.1 million to $464.9 million in the current quarter from $327.8 million in the prior-year quarter. Annualized return on average common equity was 15.4% in the current quarter and 11.6% in the prior-year quarter. The annualized return on average assets was 1.26% in the current quarter as compared to 0.93% in the prior-year quarter.
Previous report
Revenue for the three months ended September 30, 2024 increased $242.0 million, or 14%, to $1.97 billion in the current quarter from $1.73 billion in the prior-year quarter. The current-quarter results include a $68.1 million pre-tax gain related to the sale of an equity investment (after-tax $51.4 million), partially offset by mark-to-market activity on existing Visa Class B swap agreements, including a $12.8 million expense related to litigation escrow funding, both recorded in Other Operating income. For further detail on the Visa transactions, refer to Note 20—Commitments and Contingent Liabilities.
Previous report
Trust, Investment and Other Servicing Fees increased $84.7 million, or 8%, from $1.11 billion in the prior-year quarter to $1.20 billion in the current quarter, primarily due to favorable markets.
Previous report
Other Noninterest Income increased $51.2 million, or 32%, from $158.4 million in the prior-year quarter to $209.6 million in the current quarter. The increase in Other Noninterest Income in the current quarter was primarily driven by the current quarter gain on the sale of an equity investment, partially offset by mark-to-market activity on existing Visa Class B swap agreements and a decrease in banking and credit-related service fees.
Previous report
Net Interest Income increased $106.1 million, or 23%, to $562.3 million in the current quarter as compared to $456.2 million in the prior-year quarter, primarily driven by higher deposits, securities repositioning, and a higher than average impact of other items, partially offset by a decrease in the loan portfolio.
Previous report
Noninterest Expense increased $81.2 million, or 6%, from $1.28 billion in the prior-year quarter to $1.36 billion in the current quarter, primarily due to higher Compensation expense, higher software amortization and software support expense, higher Outside Services expense, and higher Employee Benefits expense, partially offset by a decrease in Other Operating Expense.
Previous report
Other Operating Income increased compared to the prior-year quarter, primarily driven by a $68.1 million gain on the sale of an equity investment in the current quarter, partially offset by higher expenses related to existing Visa Class B swap agreements, including $12.8 million related to litigation escrow funding in the current quarter, and a decrease in banking and credit-related service fees.
Previous report
Net Interest Income, stated on an FTE basis, increased from the prior-year quarter, primarily driven by higher deposits, securities repositioning, and a higher than average impact of other items, partially offset by a decrease in the loan portfolio. Average earning assets increased from the prior-year quarter, primarily driven by an increase in deposits, partially offset by a decrease in borrowing activity.
Previous report
Federal Reserve and Other Central Bank Deposits averaged $36.1 billion and increased $8.1 billion, or 29%, from $28.0 billion in the prior-year quarter. Interest-Bearing Due from and Deposits with Banks averaged $4.8 billion and increased $0.5 billion, or 12%, from $4.3 billion in the prior-year quarter.
Previous report
Securities Purchased under Agreements to Resell averaged $977.2 million and increased $26.4 million, or 3%, from $950.8 million in the prior-year quarter. The increase in Securities Purchased under Agreements to Resell interest income and expense is primarily driven by sponsored member program activity due to increased client demand and wider spreads with the market presenting consistent opportunities to achieve higher rates.
Previous report
Loans averaged $39.9 billion and decreased $2.3 billion, or 6%, from $42.2 billion in the prior-year quarter, primarily reflecting lower levels of Non-U.S. loans and other loans, partially offset by average loan increases in commercial and institutional, residential real estate, private client, and commercial real estate loans. Non-U.S. loans averaged $3.3 billion and decreased $126.8 million, or 4%, from $3.4 billion for the prior-year quarter. Private client loans averaged $15.8 billion and increased $1.8 billion, or 13%, from $14.0 billion for the prior-year quarter. Commercial and institutional loans averaged $14.4 billion and increased $2.0 billion, or 16%, from $12.4 billion for the prior-year quarter. Residential real estate loans averaged $6.5 billion and increased $149.4 million, or 2%, from $6.4 billion for the prior-year quarter. Commercial real estate loans averaged $5.9 billion and increased $914.0 million, or 18%, from $5.0 billion for the prior-year quarter.
Previous report
The Provision for Credit Losses in the prior-year quarter was primarily due to an increase in the reserve evaluated on a collective basis, driven by a small number of large new loans and renewals and credit quality deterioration of certain Commercial Real Estate (CRE) and C&I loans, partially offset by a net improvement in the overall macroeconomic outlook.
Previous report
Compensation expense, the largest component of Noninterest Expense, increased compared to the prior-year quarter, primarily due to higher base pay adjustments.
Previous report
Noninterest Expense (continued)
Previous report
Employee Benefits expense increased compared to the prior-year quarter, primarily driven by higher medical costs.
Previous report
Other Operating Expense decreased compared to the prior-year quarter, primarily due to a decrease in account servicing activities and the impact of reclassifying the amortization of certain investments from Other Operating Expense to the Provision for Income Taxes, in accordance with a new accounting standard that took effect in 2024.
Previous report
NINE-MONTH CONSOLIDATED RESULTS OF OPERATIONS
Previous report
Overview of Financial Results
Previous report
Net Income per diluted common share increased in the current period to $7.51 from $4.56 in the prior-year period. Net Income increased $581.5 million, or 59%, to $1.58 billion in the current period from $994.2 million in the prior-year period. Annualized return on average common equity was 18.2% in the current period and 12.1% in the prior-year period. The annualized return on average assets was 1.44% in the current period compared to 0.92% in the prior-year period.
Previous report
Revenue for the nine months ended September 30, 2024 increased $1.1 billion from $5.23 billion in the prior-year period to $6.33 billion in the current period. The increase was driven by a $878.4 million net gain related to the Visa transactions in the second quarter of 2024, as well as a $68.1 million pre-tax gain related to the sale of an equity investment (after-tax $51.4 million) in the third quarter of 2024, recorded in Other Operating Income, partially offset by a $189.4 million loss on the sale of available for sale debt securities recognized in the first quarter of 2024, recorded in Investment Security Gains (Losses), net. For further detail on the Visa transactions, refer to Note 20—Commitments and Contingent Liabilities.
Previous report
Trust, Investment and Other Servicing Fees increased $233.8 million, or 7%, from $3.27 billion in the prior-year period to $3.51 billion in the current period, primarily driven by favorable markets and net new business.
Previous report
Other Noninterest Income increased $754.4 million or 165%, from $457.5 million in the prior-year period to $1.21 billion in the current period, primarily driven by the net gain related to the Visa transactions in the second quarter of 2024 as well as the current quarter gain on the sale of an equity investment, partially offset by the loss on the sale of available for sale debt securities recognized in the first quarter of 2024.
Previous report
Net Interest Income increased $114.4 million, or 8%, from $1.5 billion in the prior-year period to $1.61 billion in the current period, primarily due to higher client deposits and securities repositioning, partially offset by higher funding costs in the first half of the year and a decrease in the loan portfolio.
Previous report
There was a $7.5 million Provision for Credit Losses in the current period, as compared to a $13.5 million Provision for Credit Losses in the prior-year period. For additional information, refer to the Provision for Credit Losses within “Third Quarter Consolidated Results of Operations” section.
Previous report
Noninterest Expense increased $362.3 million, or 9%, from $3.90 billion in the prior-year period to $4.26 billion in the current period, primarily attributable to higher severance-related charges recorded in Compensation expense, higher Other Operating Expense, higher Equipment and Software expense, and higher Outside Services expense, partially offset by lower Occupancy Expense.
Previous report
The Provision for Income Taxes for the nine months ended September 30, 2024 totaled $489.6 million, representing an effective tax rate of 23.7%. The Provision for Income Taxes for the nine months ended September 30, 2023 totaled $324.8 million, representing an effective tax rate of 24.6%.
Previous report
Custody and Fund Administration fees, increased from the prior-year period, primarily driven by favorable markets and net new business. Investment Management fees increased from the prior-year period, primarily due to favorable markets and new business. Securities Lending decreased from the prior-year period, primarily driven by lower spreads. The Other fees increased from the prior-year period, primarily due to new business.
Previous report
Fee income in the regions (Central, East and West) increased from the prior-year period, primarily due to favorable markets. Global Family Office fee income increased from the prior-year period, primarily due to favorable markets and asset inflows.
Previous report
Other Noninterest Income
Previous report
TABLE 17: OTHER NONINTEREST INCOME
Previous report
Foreign Exchange Trading Income increased from the prior-year period, primarily driven by higher client volumes.
Previous report
Other Operating Income increased from the prior-year period primarily driven by the $878.4 million gain related to the net impact from the Visa transactions in the second quarter of 2024 and the current quarter gain of $68.1 million on the sale of an equity investment, partially offset by losses recognized in the second quarter of 2024 as a result of securities repositioning related to the supplemental pension plan and impairment charges taken on certain investments.
Previous report
Net Interest Income
Previous report
Net Interest Income, stated on an FTE basis, increased from the prior-year period, primarily driven by higher deposits, securities repositioning, and a higher than average impact of other items, partially offset by higher funding costs and a decrease in the loan portfolio. Average earning assets increased from the prior-year period primarily due to higher client deposits and the proceeds from the sale of Visa shares in the second quarter of 2024.
Previous report
The net interest margin on an FTE basis increased from the prior-year period, primarily driven by higher deposits and securities repositioning, partially offset by higher funding costs.
Previous report
Federal Reserve and Other Central Bank Deposits averaged $36.0 billion and increased $3.0 billion, or 9%, from $33.0 billion in the prior-year period. Interest-Bearing Due from and Deposits with Banks averaged $4.7 billion in the current period and $4.4 billion in the prior-year period.
Previous report
Average Securities were $49.6 billion and decreased $0.5 billion, or 1%, from $50.1 billion in the prior-year period. Average taxable securities were $43.7 billion in the current period and $47.1 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 $5.9 billion in the current period and $3.0 billion in the prior-year period.
Previous report
Securities Purchased under Agreements to Resell averaged $743.2 million, a decrease of $335.0 million, or 31%, from $1.1 billion in the prior-year period. The increase in Securities Purchased under Agreements to Resell interest income and expense is primarily driven by sponsored member program activity due to increased client demand and wider spreads with the market presenting consistent opportunities to achieve higher rates.
Previous report
Interest expense for Interest-Bearing Deposits in the current period was driven by higher deposit costs. Average non-U.S. offices interest-bearing deposits comprised 66% and 69% of total average interest-bearing deposits for the nine months ended September 30, 2024 and 2023, respectively.
Showing the first 40 of 88 passages. Open the source sections for the rest.
Reworded paragraphs (61)
Previous wording
The following is management’s discussion and analysis of the financial condition and results of operations (MD&A) of Northern Trust Corporation (Corporation) for the third quarter of 2024. The following should be read in conjunction with the consolidated financial statements and related footnotes included in this report as well as the Annual Report on Form 10-K for the year ended December 31, 2023. Investors also should read the section titled “Forward-Looking Statements.”
Current wording
The following is management’s discussion and analysis of the financial condition and results of operations (MD&A) of Northern Trust Corporation (Corporation) for the first quarter of 2025. The following should be read in conjunction with the consolidated financial statements and related footnotes included in this report as well as the Annual Report on Form 10-K for the year ended December 31, 2024. Investors also should read the section titled “Forward-Looking Statements.”
Previous wording
Trust, Investment and Other Servicing Fees
Current wording
Revenue for the three months ended March 31, 2025 increased to $1.9 billion in the current quarter primarily driven by an increase in Net Interest Income, Trust, Investment and Other Servicing fees, and Other Noninterest Income.
Previous wording
In the current quarter, there was a Provision for Credit Losses of $8.0 million, as compared to a Provision for Credit Losses of $14.0 million in the prior-year quarter. For additional information, refer to the Provision for Credit Losses within the “Third Quarter Consolidated Results of Operations” section.
Current wording
In the current quarter, there was a Provision for Credit Losses of $1.0 million, as compared to a negative Provision for Credit Losses of $8.5 million in the prior-year quarter. For additional information, refer to the Provision for Credit Losses within the “First Quarter Consolidated Results of Operations” section.
Previous wording
The Provision for Income Taxes in the current quarter totaled $136.2 million, representing an effective tax rate of 22.7%. The Provision for Income Taxes in the prior-year quarter totaled $106.5 million, representing an effective tax rate of 24.5%.
Current wording
The Provision for Income Taxes in the current quarter totaled $129.4 million, representing an effective tax rate of 24.8%. The Provision for Income Taxes in the prior-year quarter totaled $75.9 million, representing an effective tax rate of 26.1%.
Previous wording
Custody and Fund Administration fees, the largest component of Asset Servicing fees, are driven primarily by values of client assets under custody/administration (AUC/A), transaction volumes and the number of accounts. The asset values used to calculate these fees vary depending on the individual fee arrangements negotiated with each client. Custody fees related to asset values are client-specific and are priced based on month-end market values, quarter-end market values, or the average of month-end market values for the quarter. The fund administration fees that are asset-value-related are priced using month-end, quarter-end, or average daily balances. Investment Management fees are based generally on market values of client AUM throughout the period. Typically, the asset values used to calculate fee revenue are based on a one-month or one-quarter lag. Securities Lending revenue is affected by market values; the demand for securities to be lent, which drives volumes; and the interest rate spread earned on the investment of cash deposited by investment firms as collateral for securities they have borrowed. The Other fee category in Asset Servicing includes such products as investment risk and analytical services, benefit payments, and other services. Revenue from these products is based generally on the volume of services provided or a fixed fee.
Current wording
Custody and Fund Administration fees, the largest component of Asset Servicing fees, are driven primarily by values of client assets under custody/administration (AUC/A), transaction volumes and the number of accounts. The asset values used to calculate these fees vary depending on the individual fee arrangements negotiated with each client. Custody fees related to asset values are client-specific and are priced based on month-end market values, quarter-end market values, or the average of month-end market values for the quarter. The fund administration fees that are asset-value-related are priced using month-end, quarter-end, or average daily balances. Investment Management fees are based generally on market values of client AUM throughout the period. Typically, the asset values used to calculate fee revenue are based on a one-month or one-quarter lag. Securities Lending revenue is affected by market values; the demand for securities to be lent, which drives volumes; and the interest rate spread earned on the investment of cash deposited by investment firms as collateral for securities they have borrowed. The Other fee category in Asset Servicing includes products such as investment risk and analytical services, benefit payments, and other services. Revenue from these products is based generally on the volume of services provided or a fixed fee.
Previous wording
Custody and Fund Administration fees increased from the prior-year quarter, primarily due to favorable markets and favorable currency translation. Investment Management fees increased from the prior-year quarter, primarily due to favorable markets and new business.
Current wording
Investment Management fees increased from the prior-year quarter, primarily due to favorable markets and net new business.
Previous wording
Wealth Management fee income is calculated primarily based on market values and is impacted by both one-month and one-quarter lagged asset values. Fee income in the regions increased from the prior-year quarter, primarily due to favorable markets. Global Family Office fee income increased from the prior-year quarter, primarily due to favorable markets and asset inflows.
Current wording
Wealth Management fee income is calculated primarily based on market values and is impacted by both one-month and one-quarter lagged asset values. Fee income in the regions increased from the prior-year quarter, primarily due to favorable markets. Global Family Office fee income increased from the prior-year quarter, primarily due to asset inflows and favorable markets.
Previous wording
Consolidated assets under custody increased from the prior quarter, primarily reflecting favorable markets and favorable currency translation, partially offset by client asset outflows. Consolidated assets under custody increased from the prior-year quarter, primarily reflecting the impact of favorable markets, client asset inflows, and favorable currency translation.
Current wording
Consolidated assets under custody decreased from the prior quarter, primarily driven by client asset outflows, partially offset by favorable currency translation. Consolidated assets under custody increased from the prior-year quarter, primarily reflecting favorable markets, partially offset by client asset outflows.
Previous wording
Consolidated assets under management increased compared to the prior quarter, primarily reflecting favorable markets and client asset inflows. Consolidated assets under management increased compared to the prior-year quarter, primarily reflecting the impact of favorable markets.
Current wording
Consolidated assets under management increased compared to the prior-year quarter, primarily reflecting the impact of favorable markets.
Previous wording
Investment Security Gains (Losses), net reflects the $189.4 million loss on the sale of available for sale debt securities in the current period as compared to the $6.9 million gain on the sale of available for sale debt securities in the prior-year, each arising from a repositioning of the portfolio.
Current wording
Investment Security Gains (Losses), net reflects the $189.4 million available for sale debt security loss related to a repositioning of the portfolio in the prior-year quarter.
Previous wording
(2)Includes the impact of balance sheet netting under master netting arrangements of approximately $64.3 billion and $33.5 billion for the three months ended September 30, 2024 and 2023, respectively. Excluding the impact of netting for the three months ended September 30, 2024 and 2023, the average interest rate on Securities Purchased under Agreements to Resell would be approximately 5.43% and 5.34%, respectively. Excluding the impact of netting for the three months ended September 30, 2024 and 2023, the average interest rate on Securities Sold under Agreements to Repurchase would be approximately 5.34% and 5.30%, respectively. Northern Trust nets securities sold under repurchase agreements against those purchased under resale agreements when there is a legally enforceable master netting agreement.
Current wording
(2)Includes the impact of balance sheet netting under master netting arrangements of approximately $62.0 billion and $60.2 billion for the three months ended March 31, 2025 and 2024, respectively. Excluding the impact of netting for the three months ended March 31, 2025 and 2024, the average interest rate on Federal Funds Sold and Securities Purchased under Agreements to Resell would be approximately 4.46% and 5.46%, respectively. Excluding the impact of netting for the three months ended March 31, 2025 and 2024, the average interest rate on Securities Sold under Agreements to Repurchase would be approximately 4.37% and 5.39%, respectively. Northern Trust nets securities sold under repurchase agreements against those purchased under resale agreements when the GAAP requirements to net are met.
Previous wording
(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. Changes due to average rates includes the impact of balance sheet netting as noted in Table 13: Average Consolidated Balance Sheets with Analysis of Net Interest Income.
Current wording
(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.
Previous wording
Notes: Net Interest Income (FTE), a non-GAAP financial measure, includes adjustments to a fully taxable equivalent basis for loans, securities and other interest-earning assets. The adjustments are based on a federal income tax rate of 21.0%, where the rate is adjusted for applicable state income taxes, net of related federal tax benefit. Total taxable equivalent interest adjustments amounted to $7.1 million and $13.2 million for the three months ended September 30, 2024 and 2023, respectively. A reconciliation of Net Interest Income and net interest margin on a GAAP basis to Net Interest Income and net interest margin on an FTE basis (each of which is a non-GAAP financial measure) is provided in “Reconciliation to Fully Taxable Equivalent” within this MD&A. Net interest margin is calculated by dividing annualized Net Interest Income by average interest-earning assets.
Current wording
Notes: Net Interest Income (FTE), a non-GAAP financial measure, includes adjustments to a fully taxable equivalent basis for Loans, Securities and Other Interest-Earning assets. The adjustments are based on a federal income tax rate of 21.0%, where the rate is adjusted for applicable state income taxes, net of related federal tax benefit. See Table 14: Average Consolidated Balance Sheets with Analysis of Net Interest Income which reflects the applied FTE adjustment. 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.
Previous wording
Interest Income on cash collateral positions is reported above in Interest-Bearing Due from and Deposits with Banks, Loans and in Other Interest-Earning Assets. Interest Expense on cash collateral positions is reported above in Savings, Money Market and Other and in Non-U.S. Offices Interest-Bearing Deposits. Where it can be netted, related cash collateral received from and deposited with derivative counterparties is recorded net of the associated derivative contract in Other Assets and Other Liabilities, respectively.
Current wording
Interest revenue on cash collateral positions is reported above within Interest-Bearing Due from and Deposits with Banks, Loans and within Other Interest-Earning Assets. Interest expense on cash collateral positions is reported above within Savings, Money Market and Other and in 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 in Other Assets and Other Liabilities, respectively.
Previous wording
Average Securities were $50.3 billion and decreased $0.1 billion, from $50.4 billion in the prior-year quarter. Average taxable Securities were $44.0 billion in the current quarter and $47.4 billion in the prior-year quarter. Average nontaxable Securities, which represent securities that are primarily exempt from U.S. federal and state income taxes, were $6.3 billion in the current quarter and $3.0 billion in the prior-year quarter.
Current wording
Average Securities were $52.0 billion and increased $3.5 billion, from $48.5 billion in the prior-year quarter. Average taxable Securities were $44.0 billion in the current quarter and $43.3 billion in the prior-year quarter. Average nontaxable Securities, which represent securities that are primarily exempt from U.S. federal and state income taxes, were $8.0 billion in the current quarter and $5.2 billion in the prior-year quarter.
Previous wording
Loans averaged $40.8 billion and decreased $1.3 billion, or 3%, from $42.2 billion in the prior-year period, primarily reflecting lower levels of commercial and institutional, non-U.S., and residential real estate, partially offset by higher levels of commercial real estate and private loans. Commercial and institutional loans averaged $11.2 billion and decreased $1.4 billion, or 11%, from $12.6 billion for the prior-year period. Non-U.S. loans averaged $3.0 billion and decreased $462.8 million, or 13%, from $3.4 billion for the prior-year period. Residential real estate loans averaged $6.3 billion and decreased $141.3 million, or 2%, from $6.4 billion for the prior-year period. Commercial real estate loans averaged $5.3 billion and increased $384.3 million, or 8%, from $4.9 billion for the prior-year period. Private client loans averaged $14.1 billion and increased $226.7 million, or 2%, from $13.9 billion for the prior-year period.
Current wording
Loans averaged $41.1 billion and decreased $510.4 million, or 1%, from $41.6 billion in the prior-year quarter, primarily reflecting lower levels of residential real estate loans and decreases in other loans, partially offset by higher levels of private client loans, commercial and institutional loans, commercial real estate loans, and Non-U.S. loans. Residential real estate loans averaged $6.1 billion and decreased $177.4 million, or 3%, from $6.3 billion for the prior-year quarter. Private client loans averaged $14.7 billion and increased $1.3 billion, or 10%, from $13.4 billion for the prior-year quarter. Commercial and institutional loans averaged $10.8 billion and increased $160.2 million, or 2%, from $10.6 billion for the prior-year quarter. Commercial real estate loans averaged $5.3 billion and increased $87.5 million, or 2%, from $5.2 billion for the prior-year quarter. Non-U.S. loans averaged $2.9 billion and increased $81.8 million, or 3%, from $2.8 billion for the prior-year quarter.
Previous wording
Average Other Interest-Earning Assets include collateral deposits with certain securities depositories and clearing houses, certain community development investments, Federal Home Loan Bank stock, a money market investment, and Federal Reserve stock of $1.4 billion, $836.7 million, $342.7 million, $94.3 million, and $70.0 million, respectively, which are recorded in Other Assets on the consolidated balance sheets.
Current wording
Average Other Interest-Earning Assets include collateral deposits with certain securities depositories and clearing houses, certain community development investments, Federal Home Loan Bank stock, a money market investment, and Federal Reserve stock of $1.1 billion, $865.6 million, $342.7 million, $85.0 million, and $70.0 million, respectively, which are recorded in Other Assets on the consolidated balance sheets.
Previous wording
Northern Trust utilizes a diverse mix of funding sources. Average Interest-Bearing Deposits increased $11.2 billion, or 13%, to an average of $96.2 billion in the current quarter from $85.0 billion in the prior-year quarter. Interest expense for Interest-Bearing Deposits in the current quarter was driven by higher deposit costs. Average Non-U.S. Offices Interest-Bearing Deposits comprised 67% and 69% of total average Interest-Bearing Deposits for the three months ended September 30, 2024 and 2023, respectively. Average other interest-bearing liabilities decreased $5.4 billion, or 24%, to an average of $16.8 billion in the current quarter from $22.2 billion in the prior-year quarter. The balances within short-term borrowing classifications vary based on funding requirements and strategies, interest rate levels, changes in the volume of lower-cost deposit sources, and the availability of collateral to secure these borrowings.
Current wording
Northern Trust utilizes a diverse mix of funding sources. Average Interest-Bearing Deposits increased $3.3 billion, or 4%, to an average of $99.0 billion in the current quarter from $95.7 billion in the prior-year quarter. Average Non-U.S. Offices Interest-Bearing Deposits comprised 65% and 67% of total average Interest-Bearing Deposits for the three months ended March 31, 2025 and 2024, respectively. Average other interest-bearing liabilities decreased $82.5 million, to an average of $16.7 billion in the current quarter from $16.8 billion in the prior-year quarter. The balances within short-term borrowing classifications vary based on funding requirements and strategies, interest rate levels, changes in the volume of lower-cost deposit sources, and the availability of collateral to secure these borrowings.
Previous wording
In the current quarter, there was a Provision for Credit Losses of $8.0 million, as compared to a Provision for Credit Losses of $14.0 million in the prior-year quarter. The Provision for Credit Losses in the current quarter resulted from an increase in both the collective and individual reserves. The increase in collective reserves was primarily driven by a small number of downgrades and extensions in the Commercial and Institutional (C&I) portfolio. The reserve evaluated on a collective basis relates to pooled financial assets sharing similar risk characteristics. The increase in individual reserves was driven by the default of one C&I loan.
Current wording
In the current quarter, there was a Provision for Credit Losses of $1.0 million, as compared to a negative Provision for Credit Losses of $8.5 million in the prior-year quarter. The Provision for Credit Losses in the current quarter resulted from an increase in the collective reserve, primarily driven by increased projected macroeconomic uncertainty, partially offset by sector and portfolio-specific improvements within the Commercial Real Estate (CRE) portfolio.
Previous wording
Net recoveries in the current quarter were $2.4 million, reflecting $2.4 million of recoveries and de minimis charge-offs. The prior-year quarter included $0.3 million net recoveries, reflecting $1.1 million of recoveries and $0.8 million of charge-offs.
Current wording
Net recoveries in the current quarter were $0.2 million, reflecting $0.5 million of recoveries and $0.3 million of charge-offs. The prior-year quarter included $10.4 million net charge-offs, reflecting $11.1 million of charge-offs and $0.7 million of recoveries.
Previous wording
Income tax expense for the three months ended September 30, 2024 was $136.2 million, representing an effective tax rate of 22.7%, compared to $106.5 million in the prior-year quarter, representing an effective tax rate of 24.5%.
Current wording
Income tax expense for the three months ended March 31, 2025 was $129.4 million, representing an effective tax rate of 24.8%, compared to $75.9 million in the prior-year quarter, representing an effective tax rate of 26.1%.
Previous wording
The effective tax rate decreased compared to the prior-year quarter primarily due to higher current year benefits.
Current wording
The effective tax rate decreased compared to the prior-year quarter primarily due to higher tax benefits associated with share-based compensation and a lower state effective tax rate.
Previous wording
Revenues, expenses and average assets are allocated to Asset Servicing and Wealth Management, with the exception of non-recurring activities such as certain corporate transactions and costs incurred associated with acquisitions, divestitures, litigation, restructuring, and tax adjustments not directly attributable to a specific reporting segment, which are reported within the Other segment.
Current wording
Revenues, expenses and average assets are allocated to Asset Servicing and Wealth Management, with the exception of non-recurring activities such as certain corporate transactions and costs incurred associated with acquisitions, divestitures, litigation, restructuring, and tax adjustments not directly attributable to a specific reporting segment, which are reported within Other.
Previous wording
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. For further details, please refer to Note 9—Reporting Segments.
Current wording
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 retrospective basis unless it is impractical to do so.
Previous wording
The following table presents the earnings contributions and average assets of Northern Trust’s reporting segments for the three- and nine-month periods ended September 30, 2024 and 2023.
Current wording
The following table presents the earnings contributions and average assets of Northern Trust’s reporting segments for the three month periods ended March 31, 2025 and 2024.
Previous wording
For the three and nine months ended September 30, 2024, Net Income increased $54.8 million, or 31%, from the prior-year quarter and $94.8 million, or 18%, from the prior-year period, primarily due to higher Trust, Investment and Other Servicing Fees and higher Net Interest Income, partially offset by higher Noninterest Expense.
Current wording
For the quarter ended March 31, 2025, Net Income increased $13.4 million, or 8%, from the prior-year quarter, primarily due to higher Trust, Investment and Other Servicing Fees and Net Interest Income, partially offset by higher Noninterest Expense.
Previous wording
For the quarter ended September 30, 2024, Net Interest Income stated on an FTE basis increased $40.2 million, or 14%, from the prior-year quarter, primarily driven by deposit balances and higher spreads, partially offset by the change in reporting segment allocation methodology beginning in 2024 noted above.
Current wording
For the quarter ended March 31, 2025, Net Interest Income stated on an FTE basis increased $30.8 million, or 11%, from the prior-year quarter, primarily driven by higher deposit balances and lower funding costs.
Previous wording
For the three and nine months ended September 30, 2024, Noninterest Expense, which includes the direct expense of the reporting segment, indirect expense allocations for product and operating support and indirect expense allocations for certain corporate support services, increased $51.4 million, or 6%, from the prior-year quarter primarily due to higher expense allocations, and $174.3 million, or 7%, from the prior-year period primarily due to higher severance related-charges and higher expense allocations.
Current wording
For the quarter ended March 31, 2025, Noninterest Expense, which includes the direct expense of the reporting segment, indirect expense allocations for product and operating support and indirect expense allocations for certain corporate support services, increased $41.3 million, or 5%, from the prior-year quarter primarily due to higher indirect expense allocations.
Previous wording
For the three and nine months ended September 30, 2024, Noninterest Expense, which includes the direct expenses of the reporting segment, indirect expense allocations for product and operating support and indirect expense allocations for certain corporate support services, increased $34.4 million, or 8%, from the prior-year quarter and $102.5 million, or 7%, from the prior-year period, primarily reflecting higher indirect expense allocations.
Current wording
For the quarter ended March 31, 2025, 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 $27.4 million, or 6%, from the prior-year quarter primarily reflecting higher indirect expense allocations and higher expense associated with equity incentives.
Previous wording
For the nine months ended September 30, 2024, Other Noninterest Income increased $747.1 million from the prior-year period primarily due to the gain related to the net impact from the Visa transactions in the second quarter of 2024 and the current-quarter gain related to the sale of an equity investment, partially offset by the loss on sale of available for sale debt securities arising from a repositioning of the portfolio in the first quarter of 2024.
Current wording
For the quarter ended March 31, 2025, Other Noninterest Income increased $187.7 million from the prior-year quarter, primarily due to the prior-year loss on sale of available for sale debt securities arising from a repositioning of the portfolio.
Previous wording
Average balances are considered to be a better measure of balance sheet trends, as period-end balances can be impacted by the timing of deposit and withdrawal activity involving large client balances. Average earning assets increased from the prior-year quarter, primarily due to higher client deposits. Average earning assets were relatively unchanged compared to the prior-year period.
Current wording
Average balances are considered to be a better measure of balance sheet trends, as period-end balances can be impacted by the timing of deposit and withdrawal activity involving large client balances. Average earning assets increased from the prior-year quarter, primarily driven by an increase in placements with the Federal Reserve and other central banks driven by higher deposits.
Previous wording
Select Earning Assets. Average securities decreased from the prior-year quarter and the prior-year period reflecting the impact of repositioning and reinvesting in short-term and long-term securities. For additional discussion relating to the securities
Current wording
Select Earning Assets. Average securities increased from the prior-year quarter reflecting the impact of repositioning and reinvesting in short-term and long-term securities. For additional discussion relating to the securities portfolio, refer to the “Asset Quality” section in this MD&A and to Note 4—Securities to the consolidated financial statements provided in Item 1. Consolidated Financial Statements (unaudited).
Previous wording
Client Deposits. Average Interest-Bearing Deposits increased in both the the prior-year quarter and prior-year period primarily due to an increase in client balances as a result of strategic pricing actions. Demand and Other Noninterest-Bearing Deposits decreased in both the prior-year quarter and prior-year period as clients migrated into higher yield products.
Current wording
Client Deposits. Average Interest-Bearing Deposits increased from the prior-year quarter primarily due to an increase in client balances as a result of seasonal and strategic client activity. Demand and Other Noninterest-Bearing Deposits increased from the prior-year quarter driven by seasonal activity.
Previous wording
Stockholders’ Equity. During the three and nine months ended September 30, 2024, the Corporation declared cash dividends totaling $151.6 million and $459.3 million to common stockholders, and cash dividends totaling $16.2 million and $37.1 million to preferred stockholders, respectively. During the three and nine months ended September 30, 2023, the Corporation declared cash dividends totaling $157.6 million and $474.0 million to common stockholders, and cash dividends totaling $16.2 million and $37.1 million to preferred stockholders, respectively.
Current wording
Stockholders’ Equity. During the three months ended March 31, 2025, the Corporation declared cash dividends totaling $148.2 million to common stockholders, and cash dividends totaling $16.2 million to preferred stockholders. During the three months ended March 31, 2024, the Corporation declared cash dividends totaling $153.4 million to common stockholders, and cash dividends totaling $16.2 million to preferred stockholders.
Previous wording
For the three and nine months ended September 30, 2024, the Corporation repurchased 3,463,546 and 8,112,288 shares of common stock, respectively, at a total cost of $301.4 million ($87.01 average price per share) and $684.2 million ($84.34 average price per share), respectively, including 15,629 and 398,646 shares withheld, respectively, to satisfy tax withholding obligations related to share-based compensation.
Current wording
For the three months ended March 31, 2025, the Corporation repurchased 2,616,238 shares of common stock at a total cost of $287.2 million ($109.79 average price per share), including 411,132 shares withheld to satisfy tax withholding obligations related to share-based compensation.
Previous wording
For the three and nine months ended September 30, 2023, the Corporation repurchased 14,738 and 2,426,793 shares of common stock, respectively, at a total cost of $1.1 million ($77.39 average price per share) and $201.3 million ($82.95 average price per share), respectively, including 14,738 and 356,145 shares withheld, respectively, to satisfy tax withholding obligations related to share-based compensation.
Current wording
For the three months ended March 31, 2024, the Corporation repurchased 1,647,526 shares of common stock, at a total cost of $132.0 million ($80.11 average price per share), including 373,623 shares withheld to satisfy tax withholding obligations related to share-based compensation.
Previous wording
Northern Trust maintains a high quality debt securities portfolio. 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. Debt securities not explicitly rated were grouped where possible under the credit rating of the issuer of the security.
Current wording
Northern Trust maintains a high quality debt securities portfolio. The following tables provide the book value of debt securities by credit rating using ratings from Moody’s S&P Global or Fitch Ratings. Book value is fair value for AFS debt securities and amortized cost for HTM debt securities. Debt securities not explicitly rated were grouped where possible under the credit rating of the issuer of the security.
Previous wording
As of September 30, 2024 and December 31, 2023, the 3% and 2%, respectively, of HTM debt securities not rated by Moody’s, S&P Global or Fitch Ratings consisted primarily of investments purchased by Northern Trust to fulfill its obligations under the Community Reinvestment Act (CRA). Northern Trust fulfills its obligations under the CRA by making qualified investments for purposes of supporting institutions and programs that benefit low-to-moderate income communities within Northern Trust’s market area.
Current wording
As of March 31, 2025 and December 31, 2024, HTM debt securities not rated by Moody’s, S&P Global or Fitch Ratings primarily consisted of certificates of deposit with a remaining life of less than six months, as well as investments purchased by Northern Trust to fulfill its obligations under the Community Reinvestment Act (CRA). Northern Trust fulfills its obligations under the CRA by making qualified investments for purposes of supporting institutions and programs that benefit low-to-moderate income communities within Northern Trust’s market area.
Previous wording
portfolio, refer to the “Asset Quality” section in this MD&A and to Note 4—Securities to the consolidated financial statements provided in Item 1. Consolidated Financial Statements (unaudited).
Current wording
For additional information relating to the securities portfolio, refer to Note 4, “Securities” to the consolidated financial statements provided in Item 1. Consolidated Financial Statements (unaudited).
Previous wording
Short-Term Borrowings. Short-term borrowings includes Federal Funds Purchased, Securities Sold under Agreements to Repurchase, and Other Borrowings. The decrease in average Other Borrowings from the prior-year quarter and prior-year period was primarily due to strategic utilization of balance sheet capacity.
Current wording
Short-term borrowings includes Federal Funds Purchased, Securities Sold under Agreements to Repurchase, and Other
Showing the first 40 of 61 pairs. Open the source sections for the rest.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
(8)A reconciliation of Net Interest Income on a GAAP basis to Net Interest Income on an FTE basis is provided in “Reconciliation to Fully Taxable Equivalent” within this MD&A.
Current report — wording carried from elsewhere
For further details, please refer to Note 9—Reporting Segments to the consolidated financial statements provided in Item 1. Consolidated Financial Statements (unaudited).
Current report — wording carried from elsewhere
The results of the credit reserve estimation methodology are reviewed quarterly by Northern Trust’s Credit Loss Reserve Committee, which receives input from Financial Risk Management, Treasury, Corporate Finance, the Economic Research Department, and each of Northern Trust’s reporting business units.
Current report — wording carried from elsewhere
Net cash used in investing activities of $4.8 billion for the three months ended March 31, 2024, was primarily attributable to increased levels of Federal Reserve and other central bank deposits and net purchases of AFS debt securities partially offset by net proceeds of HTM debt securities.
Current report — wording carried from elsewhere
Net cash provided by financing activities of $6.9 billion for the three months ended March 31, 2024, was primarily attributable to the increased levels of total deposits, partially offset by decreased levels of federal funds purchased.
Current report — wording carried from elsewhere
The simulation cannot precisely estimate NII sensitivity given uncertainty in the assumptions. The following key assumptions are incorporated into the simulation:
Rearranged previous paragraphs (20)
Previous report — wording carried elsewhere
Trust, Investment and Other Servicing Fees are based primarily on the market value of assets held in custody, managed or serviced; the volume of transactions; securities lending volume and spreads; and fees for other services rendered. Certain market value calculations on which fees are based are performed on a monthly or quarterly basis in arrears. The components of Trust, Investment and Other Servicing Fees are provided in the table below.
Previous report — wording carried elsewhere
TABLE 16: TRUST, INVESTMENT AND OTHER SERVICING FEES
Previous report — wording carried elsewhere
The components of other noninterest income are provided in the following table.
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
TABLE 18: AVERAGE CONSOLIDATED BALANCE SHEETS WITH ANALYSIS OF NET INTEREST INCOME
Previous report — wording carried elsewhere
(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.
Previous report — wording carried elsewhere
(2)Includes the impact of balance sheet netting under master netting arrangements of approximately $62.5 billion and $21.7 billion for the nine months ended September 30, 2024 and 2023, respectively. Excluding the impact of netting for the nine months ended September 30, 2024 and 2023, the average interest rate on Securities Purchased under Agreements to Resell would be approximately 5.45% and 5.13%, respectively. Excluding the impact of netting for the nine months ended September 30, 2024 and 2023, the average interest rate on Securities Sold under Agreements to Repurchase would be approximately 5.37% and 5.10%, respectively. Northern Trust nets securities sold under repurchase agreements against those purchased under resale agreements when there is a legally enforceable master netting agreement.
Previous report — wording carried elsewhere
(3)Average balances include nonaccrual loans.
Previous report — wording carried elsewhere
(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.
Previous report — wording carried elsewhere
(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.
Previous report — wording carried elsewhere
(6)Other Borrowings primarily includes advances from the Federal Home Loan Bank of Chicago.
Previous report — wording carried elsewhere
(7)Rate calculations are based on actual balances rather than the rounded amounts presented in the table above.
Previous report — wording carried elsewhere
TABLE 19: ANALYSIS OF NET INTEREST INCOME CHANGES DUE TO VOLUME AND RATE(1)
Previous report — wording carried elsewhere
(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. Changes due to average rates includes the impact of balance sheet netting as noted in Table 18: Average Consolidated Balance Sheets with Analysis of Net Interest Income.
Previous report — wording carried elsewhere
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 $21.3 million and $39.5 million for the nine months ended September 30, 2024 and 2023, respectively. A reconciliation of Net Interest Income and net interest margin on a GAAP basis to Net Interest Income and net interest margin on an FTE basis (each of which is a non-GAAP financial measure) is provided in “Reconciliation to Fully Taxable Equivalent” within this MD&A. Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets.
Previous report — wording carried elsewhere
Interest Income on cash collateral positions is reported above in Interest-Bearing Due from and Deposits with Banks, Loans and in Other Interest-Earning Assets. Interest Expense on cash collateral positions is reported above in Savings, Money Market and Other and in Non-U.S. Offices Interest-Bearing Deposits. Where it can be netted, related cash collateral received from and deposited with derivative counterparties is recorded net of the associated derivative contract in Other Assets and Other Liabilities, respectively.
Previous report — wording carried elsewhere
Average Other Interest-Earning Assets include collateral deposits with certain securities depositories and clearing houses, certain community development investments, Federal Home Loan Bank stock, a money market investment, and Federal Reserve stock of $1.5 billion, $856.7 million, $332.5 million, $94.8 million, and $70.0 million respectively, which are recorded in Other Assets on the consolidated balance sheets.
Previous report — wording carried elsewhere
Northern Trust utilizes a diverse mix of funding sources. Average Interest-Bearing Deposits increased $7.9 billion, or 9%, to an average of $96.2 billion in the current period from $88.3 billion in the prior-year period. Other average interest-related funding decreased $5.3 billion, to an average of $17.0 billion in the current period from $22.3 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.
Previous report — wording carried elsewhere
For additional discussion of the allowance for credit losses, refer to the “Asset Quality” section in this MD&A.
Previous report — wording carried elsewhere
The components of Noninterest Expense are provided in the following table.