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Reporting Segments
 9 Months Ended
Sep. 30, 2019
Segment Reporting [Abstract]  
Reporting Segments Reporting Segments
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.
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.
Effective January 1, 2019, Northern Trust implemented several enhancements to its FTP methodology, including the allocation of contingent liquidity charges to C&IS and Wealth Management client instruments and products. These methodology enhancements affect the results of each reporting segment. Due to the lack of historical information, segment results for periods ended prior to January 1, 2019 have not been revised to reflect the methodology enhancements.
Also effective January 1, 2019, all revenues, expenses and average assets are allocated to C&IS 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.
For reporting periods ended prior to January 1, 2019, income and expense associated with the wholesale funding activities and investment portfolios of the Corporation and its principal subsidiary, the Bank, as well as certain corporate-based expense, executive-level compensation and nonrecurring items, were not allocated to C&IS and Wealth Management, and were reported in Treasury and Other.
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.
The following table reflects the earnings contributions and average assets of Northern Trust’s reporting segments for the three- and nine- month periods ended September 30, 2019 and 2018.
Table 58: Results of Reporting Segments
Three Months Ended September 30,
Corporate &
Institutional Services
 
Wealth
Management
 
Treasury and
Other
 
Total
Consolidated
($ In Millions)
2019
 
2018
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
Noninterest Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trust, Investment and Other Servicing Fees
$
559.9

 
$
541.0

 
$
415.6

 
$
398.2

 
$
—

 
$
—

 
$
975.5

 
$
939.2

Foreign Exchange Trading Income
55.5

 
51.4

 
4.2

 
0.9

 
—

 
19.4

 
59.7

 
71.7

Other Noninterest Income
53.6

 
42.0

 
38.1

 
25.5

 
(6.7
)
 
(12.3
)
 
85.0

 
55.2

Net Interest Income*
229.9

 
253.0

 
195.4

 
202.9

 
—

 
(37.4
)
 
425.3

 
418.5

Revenue*
898.9

 
887.4

 
653.3

 
627.5

 
(6.7
)
 
(30.3
)
 
1,545.5

 
1,484.6

Provision for Credit Losses
4.8

 
(2.8
)
 
(11.8
)
 
(6.2
)
 
—

 
—

 
(7.0
)
 
(9.0
)
Noninterest Expense
649.2

 
601.0

 
385.9

 
362.0

 
1.2

 
39.3

 
1,036.3

 
1,002.3

Income before Income Taxes*
244.9

 
289.2

 
279.2

 
271.7

 
(7.9
)
 
(69.6
)
 
516.2

 
491.3

Provision for Income Taxes*
59.9

 
66.1

 
73.6

 
67.2

 
(1.9
)
 
(16.5
)
 
131.6

 
116.8

Net Income
$
185.0

 
$
223.1

 
$
205.6

 
$
204.5

 
$
(6.0
)
 
$
(53.1
)
 
$
384.6

 
$
374.5

Percentage of Consolidated Net Income
48
%
 
59
%
 
54
%
 
55
%
 
(2
)%
 
(14
)%
 
100
%
 
100
%
Average Assets
$
85,982.2

 
$
83,360.6

 
$
30,369.9

 
$
26,110.5

 
$
—

 
$
12,684.5

 
$
116,352.1

 
$
122,155.6

* Non-GAAP financial measures stated on a fully taxable equivalent basis (FTE). Total consolidated includes FTE adjustments of $7.6 million for 2019 and $10.3 million for 2018.
Nine Months Ended September 30,
Corporate &
Institutional Services
 
Wealth
Management
 
Treasury and
Other
 
Total
Consolidated
($ In Millions)
2019
 
2018
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
Noninterest Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trust, Investment and Other Servicing Fees
$
1,644.5

 
$
1,637.5

 
$
1,215.4

 
$
1,182.3

 
$
—

 
$
—

 
$
2,859.9

 
$
2,819.8

Foreign Exchange Trading Income
172.5

 
173.9

 
13.9

 
3.1

 
—

 
52.1

 
186.4

 
229.1

Other Noninterest Income
141.8

 
133.6

 
95.1

 
77.9

 
(14.9
)
 
(9.5
)
 
222.0

 
202.0

Net Interest Income*
694.3

 
730.3

 
585.9

 
611.3

 
—

 
(107.8
)
 
1,280.2

 
1,233.8

Revenue*
2,653.1

 
2,675.3

 
1,910.3

 
1,874.6

 
(14.9
)
 
(65.2
)
 
4,548.5

 
4,484.7

Provision for Credit Losses
1.3

 
(3.7
)
 
(14.8
)
 
(6.8
)
 
—

 
—

 
(13.5
)
 
(10.5
)
Noninterest Expense
1,930.5

 
1,785.9

 
1,137.9

 
1,097.2

 
2.8

 
111.9

 
3,071.2

 
2,995.0

Income before Income Taxes*
721.3

 
893.1

 
787.2

 
784.2

 
(17.7
)
 
(177.1
)
 
1,490.8

 
1,500.2

Provision for Income Taxes*
171.8

 
195.9

 
202.3

 
193.7

 
(4.4
)
 
(35.9
)
 
369.7

 
353.7

Net Income
$
549.5

 
$
697.2

 
$
584.9

 
$
590.5

 
$
(13.3
)
 
$
(141.2
)
 
$
1,121.1

 
$
1,146.5

Percentage of Consolidated Net Income
49
%
 
61
%
 
52
%
 
51
%
 
(1
)%
 
(12
)%
 
100
%
 
100
%
Average Assets
$
87,664.1

 
$
83,049.5

 
$
29,700.6

 
$
26,101.6

 
$
—

 
$
14,345.6

 
$
117,364.7

 
$
123,496.7


* Non-GAAP financial measures stated on a fully taxable equivalent basis (FTE). Total consolidated includes FTE adjustments of $23.1 million for 2019 and $28.3 million for 2018.
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.