Reporting Segments and Related Information

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Reporting Segments and Related Information

Reporting Segments and Related Information

Segment Information. Northern Trust is organized around its two client-focused reporting segments: C&IS and Wealth Management. Asset management and related services are provided to C&IS 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 C&IS and Wealth Management. Income and expense associated with the Corporation’s and the Bank’s wholesale funding activities and investment portfolios, as well as certain corporate-based expense, executive level compensation and nonrecurring items are not allocated to C&IS and Wealth Management, and are reported in Northern Trust’s third reporting segment, Treasury and Other, in the tables below.

C&IS and Wealth Management results are presented to promote a greater understanding of their financial performance. The information, presented on an internal management-reporting basis as opposed to GAAP which is used for consolidated financial reporting purposes, derives from internal accounting systems that support Northern Trust’s strategic objectives and management structure. The accounting policies used for management reporting are consistent with those described in Note 1, “Summary of Significant Accounting Policies.”

The following tables show the earnings contribution of Northern Trust’s reporting segments for the years ended December 31, 2015, 2014, and 2013.

TABLE 120: CORPORATE AND INSTITUTIONAL SERVICES RESULTS OF OPERATIONS

	FOR THE YEAR ENDED DECEMBER 31,
(In Millions)	2015			2014			2013
NONINTEREST INCOME
Trust, Investment and Other Servicing Fees	$	1,696.9		$	1,584.0		$	1,443.8
Foreign Exchange Trading Income	249.4			200.4			238.8
Other Noninterest Income	170.5			177.9			177.3
Net Interest Income (Note)	414.4			310.0			275.9
Revenue (Note)	2,531.2			2,272.3			2,135.8
Provision for Credit Losses	(22.6		)	5.8			(3.4		)
Noninterest Expense	1,856.4			1,732.8			1,657.9
Income before Income Taxes (Note)	697.4			533.7			481.3
Provision for Income Taxes (Note)	212.8			149.4			145.6
Net Income	$	484.6		$	384.3		$	335.7
Percentage of Consolidated Net Income	50		%	47		%	46		%
Average Assets	$	42,313.9		$	59,462.9		$	53,308.2

Note: Stated on an FTE basis.

TABLE 121: WEALTH MANAGEMENT RESULTS OF OPERATIONS

	FOR THE YEAR ENDED DECEMBER 31,
(In Millions)	2015			2014			2013
NONINTEREST INCOME
Trust, Investment and Other Servicing Fees	$	1,283.6		$	1,248.8		$	1,166.0
Foreign Exchange Trading Income	12.4			9.7			5.6
Other Noninterest Income	111.8			98.3			116.7
Net Interest Income (Note)	568.1			536.1			557.7
Revenue (Note)	1,975.9			1,892.9			1,846.0
Provision for Credit Losses	(20.4		)	0.2			23.4
Noninterest Expense	1,291.9			1,268.7			1,215.0
Income before Income Taxes (Note)	704.4			624.0			607.6
Provision for Income Taxes (Note)	264.7			234.8			229.2
Net Income	$	439.7		$	389.2		$	378.4
Percentage of Consolidated Net Income	45		%	48		%	52		%
Average Assets	$	25,048.7		$	23,629.3		$	22,887.6

Note: Stated on an FTE basis.

TABLE 122: TREASURY AND OTHER RESULTS OF OPERATIONS

	FOR THE YEAR ENDED DECEMBER 31,
(In Millions)	2015			2014			2013
Noninterest Income	$	107.9		$	6.6		$	8.0
Net Interest Income (Note)	112.9			188.8			132.0
Revenue (Note)	220.8			195.4			140.0
Noninterest Expense	132.3			133.5			120.9
Income before Income Taxes (Note)	88.5			61.9			19.1
Provision for Income Taxes (Note)	39.0			23.6			1.9
Net Income	$	49.5		$	38.3		$	17.2
Percentage of Consolidated Net Income	5		%	5		%	2		%
Average Assets	$	43,352.5		$	20,991.3		$	18,661.9

Note: Stated on an FTE basis.

TABLE 123: CONSOLIDATED FINANCIAL INFORMATION

	FOR THE YEAR ENDED DECEMBER 31,
(In Millions)	2015			2014		2013
NONINTEREST INCOME
Trust, Investment and Other Servicing Fees	$	2,980.5		$	2,832.8	$	2,609.8
Foreign Exchange Trading Income	261.8			210.1		244.4
Other Noninterest Income	390.2			282.8		302.0
Net Interest Income (Note)	1,095.4			1,034.9		965.6
Revenue (Note)	4,727.9			4,360.6		4,121.8
Provision for Credit Losses	(43.0		)	6.0		20.0
Noninterest Expense	3,280.6			3,135.0		2,993.8
Income before Income Taxes (Note)	1,490.3			1,219.6		1,108.0
Provision for Income Taxes (Note)	516.5			407.8		376.7
Net Income	$	973.8		$	811.8	$	731.3
Average Assets	$	110,715.1		$	104,083.5	$	94,857.7

Note: Stated on an FTE basis. The consolidated figures include $25.3 million, $29.4 million, and $32.5 million, of FTE adjustments for 2015, 2014, and 2013, respectively.

In 2015, the presentation of certain assets was changed from C&IS to Treasury and Other to reflect better the internal management responsibility for these assets. In addition to the transfer of assets, the Corporation’s internal funds pricing treatment of deposits that fund the transferred assets were updated to reflect the economics of these deposits. Further discussion of reporting segment results is provided within the “Reporting Segments and Related Information” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Geographic Area Information. Northern Trust’s non-U.S. activities are primarily related to its asset servicing, asset management, foreign exchange, cash management, and commercial banking businesses. The operations of Northern Trust are managed on a reporting segment basis and include components of both U.S and non-U.S. source income and assets. Non-U.S. source income and assets are not separately identified in Northern Trust’s internal management reporting system. However, Northern Trust is required to disclose non-U.S. activities based on the domicile of the customer. Due to the complex and integrated nature of Northern Trust’s activities, it is difficult to segregate with precision revenues, expenses and assets between U.S. and non-U.S.-domiciled customers. Therefore, certain subjective estimates and assumptions have been made to allocate revenues, expenses and assets between U.S. and non-U.S. operations.

For purposes of this disclosure, all foreign exchange trading income has been allocated to non-U.S. operations. Interest expense is allocated to non-U.S. operations based on specifically matched or pooled funding. Allocations of indirect noninterest expenses related to non-U.S. activities are not significant, but when made, are based on various methods such as time, space, and number of employees.

The table below summarizes Northern Trust’s performance based on the allocation process described above without regard to guarantors or the location of collateral.

TABLE 124: DISTRIBUTION OF TOTAL ASSETS AND OPERATING PERFORMANCE

(In Millions)	TOTAL ASSETS		TOTAL REVENUE		INCOME BEFORE INCOME TAXES		NET INCOME
2015
Non-U.S.	$	30,636.5	$	1,358.4	$	483.2	$	344.4
U.S.	86,113.1		3,344.2		981.8		629.4
Total	$	116,749.6	$	4,702.6	$	1,465.0	$	973.8
2014
Non-U.S.	$	28,326.1	$	1,341.8	$	446.5	$	322.7
U.S.	81,620.4		2,989.4		743.7		489.1
Total	$	109,946.5	$	4,331.2	$	1,190.2	$	811.8
2013
Non-U.S.	$	30,241.3	$	1,101.0	$	272.4	$	201.3
U.S.	72,706.0		2,988.3		803.1		530.0
Total	$	102,947.3	$	4,089.3	$	1,075.5	$	731.3

Note: Total revenue is comprised of net interest income and noninterest income.