Allowance for Credit Losses

The allowance for credit losses, which represents management’s estimate of probable losses related to specific borrower relationships and inherent in the various loan and lease portfolios, undrawn commitments, and standby letters of credit, is determined by management through a disciplined credit review process. Northern Trust’s accounting policies related to the estimation of the allowance for credit losses and the charging off of loans, leases and other extensions of credit deemed uncollectible are consistent across both loan and lease segments.

Loans, leases and other extensions of credit deemed uncollectible are charged to the allowance for credit losses. Subsequent recoveries, if any, are credited 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 the amount of loss.

Changes in the allowance for credit losses by segment were as follows:

TABLE 66: CHANGES IN THE ALLOWANCE FOR CREDIT LOSSES



	2016									2015									2014
(In Millions)	COMMERCIAL			PERSONAL			TOTAL			COMMERCIAL			PERSONAL			TOTAL			COMMERCIAL			PERSONAL			TOTAL
Balance at Beginning of Year	$	114.8		$	118.5		$	233.3		$	169.7		$	126.2		$	295.9		$	168.0		$	139.9		$	307.9
Charge-Offs	(16.6		)	(10.7		)	(27.3		)	(13.1		)	(17.6		)	(30.7		)	(12.9		)	(23.2		)	(36.1		)
Recoveries	4.8			7.3			12.1			5.5			5.7			11.2			11.1			7.0			18.1

Net (Charge-Offs) Recoveries	(11.8		)	(3.4		)	(15.2		)	(7.6		)	(11.9		)	(19.5		)	(1.8		)	(16.2		)	(18.0		)
Provision for Credit Losses	2.0			(28.0		)	(26.0		)	(47.2		)	4.2			(43.0		)	3.5			2.5			6.0
Effects of Foreign Exchange Rates	(0.1		)	—			(0.1		)	(0.1		)	—			(0.1		)	—			—			—

Balance at End of Year	$	104.9		$	87.1		$	192.0		$	114.8		$	118.5		$	233.3		$	169.7		$	126.2		$	295.9

Allowance for Credit Losses Assigned to:
Loans and Leases	$	83.7		$	77.3		$	161.0		$	86.3		$	107.5		$	193.8		$	143.8		$	123.2		$	267.0
Undrawn Commitments and Standby Letters of Credit	21.2			9.8			31.0			28.5			11.0			39.5			25.9			3.0			28.9

Total Allowance for Credit Losses	$	104.9		$	87.1		$	192.0		$	114.8		$	118.5		$	233.3		$	169.7		$	126.2		$	295.9

The following table provides information regarding the recorded investments in loans and leases and the allowance for credit losses by segment as of December 31, 2016 and 2015.

TABLE 67: RECORDED INVESTMENTS IN LOANS AND LEASES



(In Millions)	COMMERCIAL		PERSONAL		TOTAL
December 31, 2016
Loans and Leases
Specifically Evaluated for Impairment	$	46.9	$	109.2	$	156.1
Evaluated for Inherent Impairment	15,855.4		17,810.6		33,666.0

Total Loans and Leases	15,902.3		17,919.8		33,822.1
Allowance for Credit Losses on Credit Exposures
Specifically Evaluated for Impairment	—		2.1		2.1
Evaluated for Inherent Impairment	83.7		75.2		158.9

Allowance Assigned to Loans and Leases	83.7		77.3		161.0
Allowance for Undrawn Exposures
Commitments and Standby Letters of Credit	21.2		9.8		31.0

Total Allowance for Credit Losses	$	104.9	$	87.1	$	192.0



(In Millions)	COMMERCIAL		PERSONAL		TOTAL
December 31, 2015
Loans and Leases
Specifically Evaluated for Impairment	$	56.3	$	101.0	$	157.3
Evaluated for Inherent Impairment	15,100.2		17,923.4		33,023.6

Total Loans and Leases	15,156.5		18,024.4		33,180.9
Allowance for Credit Losses on Credit Exposures
Specifically Evaluated for Impairment	3.0		0.1		3.1
Evaluated for Inherent Impairment	83.3		107.4		190.7

Allowance Assigned to Loans and Leases	86.3		107.5		193.8
Allowance for Undrawn Exposures
Commitments and Standby Letters of Credit	28.5		11.0		39.5

Total Allowance for Credit Losses	$	114.8	$	118.5	$	233.3