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Loans and Leases
 12 Months Ended
Dec. 31, 2020
Receivables [Abstract]  
Loans and Leases Loans and Leases
Amounts outstanding for Loans and Leases, by segment and class, are shown in the following table. During the first quarter of 2020, the Corporation implemented a change in the classification of certain loans and leases to specific segments to enhance the consistency of its reporting across various regulatory regimes. As a result, the loan and lease balances as of December 31, 2019 below have been adjusted to conform to the presentation for periods ended after such date. The adjustments generally reflect reclassification of loans from the commercial real estate class to commercial and institutional, residential real estate, and private client classes. There was no impact on total Loans and Leases previously reported.
TABLE 70: LOANS AND LEASES
DECEMBER 31,
(In Millions)20202019
Commercial
Commercial and Institutional$10,058.3 $9,091.1 
Commercial Real Estate3,558.4 3,104.3 
Non-U.S.1,345.7 1,576.3 
Lease Financing, net11.4 65.6 
Other288.2 164.0 
Total Commercial15,262.0 14,001.3 
Personal
Private Client11,815.1 11,071.4 
Residential Real Estate6,035.7 6,095.0 
Non-U.S.597.9 174.8 
Other49.0 67.1 
Total Personal18,497.7 17,408.3 
Total Loans and Leases$33,759.7 $31,409.6 

Residential real estate loans consist of traditional first lien mortgages and equity credit lines that generally require a loan-to-collateral value ratio of no more than 65% to 80% at inception. Northern Trust’s equity credit line products generally have draw periods of up to 10 years and a balloon payment of any outstanding balance is due at maturity. Payments are interest-only with variable interest rates. Northern Trust does not offer equity credit lines that include an option to convert the outstanding balance to an amortizing payment loan. As of December 31, 2020 and 2019, equity credit lines totaled $304.4 million and $448.5 million, respectively, and equity credit lines for which first liens were held by Northern Trust represented 97% and 97%, respectively, of the total equity credit lines as of those dates.
Included within the non-U.S., commercial-other, and personal-other classes are short duration advances, primarily related to the processing of custodied client investments, totaling $1.1 billion at each of December 31, 2020 and 2019. Demand deposit overdrafts reclassified as loan balances totaled $26.4 million and $90.4 million at December 31, 2020 and 2019, respectively.
As of December 31, 2020, there were no loans or leases classified as held for sale. As of December 31, 2019, there were no loans and $53.6 million of leases, respectively, classified as held for sale related to the decision to sell substantially all of the lease portfolio.
The components of the net investment in direct finance and leveraged leases are as follows:

TABLE 71: DIRECT FINANCE AND LEVERAGED LEASES
DECEMBER 31,
(In Millions)20202019
Direct Finance Leases
Lease Receivable$— $1.5 
Residual Value— 21.3 
Initial Direct Costs— 0.2 
Unearned Income— — 
Investment in Direct Finance Leases— 23.0 
Leveraged Leases
Net Rental Receivable11.8 19.1 
Residual Value— 33.1 
Unearned Income(0.4)(9.6)
Investment in Leveraged Leases11.4 42.6 
Lease Financing, net$11.4 $65.6 

Paycheck Protection Program. In response to the COVID-19 pandemic, Northern Trust became a lender under the Paycheck Protection Program, as amended (PPP), which was created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and is administered by the U.S. Small Business Administration (SBA). Loans issued under the PPP are funded by Northern Trust directly to participating borrowers. The PPP loans are guaranteed by the SBA and borrowers are eligible to apply for PPP loan forgiveness for up to the full principal amount and accrued interest of the PPP loan.
To the extent a borrower uses PPP loan proceeds to cover eligible costs and has met all other SBA loan forgiveness requirements, the SBA will determine loan forgiveness under the CARES Act and will pay to Northern Trust the eligible PPP loan forgiven amount, which will be credited to the borrower’s loan to repay or pay down the PPP loan. The SBA forgiveness portal opened on August 10, 2020 and Northern Trust’s vendor portal opened on September 11, 2020 to begin processing the PPP loan forgiveness applications. When Northern Trust submits forgiveness applications to the SBA, the SBA will have at least 90 days to respond as to the approval or denial of such application. 41 PPP loan forgiveness applications went through the forgiveness process as of December 31, 2020, and 36 of those loans, totaling $6.7 million, were fully forgiven by the SBA as of such date.
As of December 31, 2020, Northern Trust had 1,087 outstanding loans totaling $207.1 million under the PPP in its commercial and institutional portfolio with an average loan balance of $0.2 million. For its origination efforts, Northern Trust received approximately $2.6 million in SBA fees, net of service charges, as of December 31, 2020.
Northern Trust accounts for loans originated under the PPP as loan receivables in accordance with Accounting Standards Codification (ASC) 310 and recognizes such loans at the principal amount less the net amount of loan origination fees. PPP loans are reported in Total Loans and Leases on the consolidated balance sheets.
The SBA provides a 100% guarantee on PPP loans covering principal and interest. Northern Trust considers the risk mitigating effects of these guarantees, and accounts for them as a credit enhancement embedded in the contract. As a result, no allowance for credit losses is measured for Northern Trust’s exposure under the PPP.

Credit Quality Indicators. Credit quality indicators are statistics, measurements or other metrics that provide information regarding the relative credit risk of loans and leases. Northern Trust utilizes a variety of credit quality indicators to assess the credit risk of loans and leases at the segment, class, and individual credit exposure levels.
As part of its credit process, Northern Trust utilizes an internal borrower risk rating system to support identification, approval, and monitoring of credit risk. Borrower risk ratings are used in credit underwriting and management reporting. Risk ratings are used for ranking the credit risk of borrowers and the probability of their default. Each borrower is rated using one of a number of ratings models, which consider both quantitative and qualitative factors. The ratings models vary among classes of loans and leases in order to capture the unique risk characteristics inherent within each particular type of credit exposure. Provided below are the more significant performance indicator attributes considered within Northern Trust’s borrower rating models, by loan and lease class.
•Commercial and Institutional: leverage, profit margin, liquidity, asset size and capital levels;
•Commercial Real Estate: debt service coverage, loan-to-value ratio, leasing status and guarantor support;
•Lease Financing and Commercial-Other: leverage, profit margin, liquidity, asset size and capital levels;
•Non-U.S.: leverage, profit margin, liquidity, return on assets and capital levels;
•Residential Real Estate: payment history, credit bureau scores and loan-to-value ratio;
•Private Client: cash-flow-to-debt and net worth ratios, leverage and liquidity; and
•Personal-Other: cash-flow-to-debt and net worth ratios.

While the criteria vary by model, the objective is for the borrower ratings to be consistent in both the measurement and ranking of risk. Each model is calibrated to a master rating scale to support this consistency. Ratings for borrowers not in default range from “1” for the strongest credits to “7” for the weakest non-defaulted credits. Ratings of “8” or “9” are used for defaulted borrowers. Borrower risk ratings are monitored and are revised when events or circumstances indicate a change is required. Risk ratings are generally validated at least annually.
Loan and lease segment and class balances as of December 31, 2020 are provided in the following table, segregated by borrower ratings into “1 to 3,” “4 to 5” and “6 to 9” (watch list and nonaccrual status) categories by year of origination at amortized cost basis. Loans that are held for investment are reported at the principal amount outstanding, net of unearned income.
TABLE 72: CREDIT QUALITY INDICATOR AT AMORTIZED COST BASIS BY ORIGINATION YEAR
DECEMBER 31, 2020TERM LOANS AND LEASESREVOLVING LOANSREVOLVING LOANS CONVERTED TO TERM LOANS
(In Millions)20202019201820172016PRIORTOTAL
Commercial
Commercial and Institutional
Risk Rating:
1 to 3 Category$663.8 $546.0 $204.6 $96.0 $396.0 $448.8 $3,742.4 $5.5 $6,103.1 
4 to 5 Category793.4 505.1 354.1 405.4 134.6 167.3 1,238.7 32.3 3,630.9 
6 to 9 Category34.3 119.8 37.3 42.8 23.0 6.0 61.1 — 324.3 
Total Commercial and Institutional1,491.5 1,170.9 596.0 544.2 553.6 622.1 5,042.2 37.8 10,058.3 
Commercial Real Estate
Risk Rating:
1 to 3 Category406.3 109.2 27.6 36.5 11.8 99.4 124.3 8.7 823.8 
4 to 5 Category703.1 811.8 332.7 107.4 184.5 382.8 60.4 11.4 2,594.1 
6 to 9 Category 15.3 55.2 32.0 25.8 — 12.2 — — 140.5 
Total Commercial Real Estate1,124.7 976.2 392.3 169.7 196.3 494.4 184.7 20.1 3,558.4 
Non-U.S.
Risk Rating:
1 to 3 Category555.2 16.8 — 11.1 — — 78.5 — 661.6 
4 to 5 Category313.1 0.7 2.0 — — 157.9 39.2 1.8 514.7 
6 to 9 Category— 23.1 — — — — 146.3 — 169.4 
Total Non-U.S.868.3 40.6 2.0 11.1 — 157.9 264.0 1.8 1,345.7 
Lease Financing, net
Risk Rating:
4 to 5 Category— — — — — 11.4 — — 11.4 
Total Lease Financing, net— — — — — 11.4 — — 11.4 
Other
Risk Rating:
1 to 3 Category81.7 — — — — — — — 81.7 
4 to 5 Category206.5 — — — — — — — 206.5 
Total Other288.2 — — — — — — — 288.2 
Total Commercial3,772.7 2,187.7 990.3 725.0 749.9 1,285.8 5,490.9 59.7 15,262.0 
Personal
Private Client
Risk Rating:
1 to 3 Category668.6 273.7 51.7 60.4 10.2 136.1 5,392.8 47.9 6,641.4 
4 to 5 Category492.1 479.9 117.3 60.4 77.5 77.5 3,564.7 207.3 5,076.7 
6 to 9 Category 6.0 0.5 22.1 3.2 — — 63.7 1.5 97.0 
Total Private Client1,166.7 754.1 191.1 124.0 87.7 213.6 9,021.2 256.7 11,815.1 
Residential Real Estate
Risk Rating:
1 to 3 Category1,554.3 317.4 42.9 109.9 205.1 627.8 152.8 1.7 3,011.9 
4 to 5 Category854.6 359.5 115.8 163.2 209.7 896.5 273.1 7.4 2,879.8 
6 to 9 Category 15.3 8.3 0.7 0.5 1.9 94.8 22.5 — 144.0 
Total Residential Real Estate2,424.2 685.2 159.4 273.6 416.7 1,619.1 448.4 9.1 6,035.7 
Non-U.S.
Risk Rating:
1 to 3 Category23.3 14.9 — — — 1.8 275.6 — 315.6 
4 to 5 Category12.7 26.0 11.8 0.5 0.5 7.9 217.5 5.1 282.0 
6 to 9 Category — — — — — 0.3 — — 0.3 
Total Non-U.S.36.0 40.9 11.8 0.5 0.5 10.0 493.1 5.1 597.9 
Other
Risk Rating:
1 to 3 Category34.6 — — — — — — — 34.6 
4 to 5 Category14.4 — — — — — — — 14.4 
Total Other49.0 — — — — — — — 49.0 
Total Personal3,675.9 1,480.2 362.3 398.1 504.9 1,842.7 9,962.7 270.9 18,497.7 
Total Loans and Leases$7,448.6 $3,667.9 $1,352.6 $1,123.1 $1,254.8 $3,128.5 $15,453.6 $330.6 $33,759.7 
Loans and leases in the “1 to 3” category are expected to exhibit minimal to modest probabilities of default and are characterized by borrowers having the strongest financial qualities, including above average financial flexibility, cash flows
and capital levels. Borrowers assigned these ratings are anticipated to experience very little to moderate financial pressure in adverse down-cycle scenarios. As a result of these characteristics, borrowers within this category exhibit a minimal to modest likelihood of loss.
Loans and leases in the “4 to 5” category are expected to exhibit moderate to acceptable probabilities of default and are characterized by borrowers with less financial flexibility than those in the “1 to 3” category. Cash flows and capital levels are generally sufficient to allow for borrowers to meet current requirements, but have fewer financial resources to manage through economic downturns. As a result of these characteristics, borrowers within this category exhibit a moderate likelihood of loss.
Loans and leases in the watch list category have elevated credit risk profiles that are monitored through internal watch lists, and consist of credits with borrower ratings of “6 to 9.” These credits, which include all nonaccrual credits, are expected to exhibit minimally acceptable probabilities of default, elevated risk of default, or are currently in default. Borrowers associated with these risk profiles that are not currently in default have limited financial flexibility. Cash flows and capital levels range from acceptable to potentially insufficient to meet current requirements, particularly in adverse down cycle scenarios. As a result of these characteristics, borrowers in this category exhibit an elevated to probable likelihood of loss.
For credit quality indicator information that was required under the former provisions of ASC Topic 310, please refer to Note 6, “Loans and Leases” included under Item 8, “Financial Statements and Supplementary Data” in the Annual Report on Form 10-K for the year ended December 31, 2019.
Past Due Status. Past due status is based on the length of time from the contractual due date a principal or interest payment has been past due. For disclosure purposes, loans and leases that are 29 days past due or less are reported as current.
The following table provides balances and delinquency status of accrual and nonaccrual loans and leases by segment and class, as well as the other real estate owned and nonaccrual asset balances, as of December 31, 2020 and 2019.
TABLE 73: DELINQUENCY STATUS
ACCRUALNONACCRUAL WITH NO ALLOWANCE
(In Millions)CURRENT30 – 59 DAYS
PAST DUE		60 – 89 DAYS
PAST DUE		90 DAYS
OR MORE
PAST DUE		TOTAL ACCRUALNONACCRUALTOTAL LOANS
AND LEASES
December 31, 2020
Commercial
Commercial and Institutional$9,877.0 $153.7 $1.2 $— $10,031.9 $26.4 $10,058.3 $9.1 
Commercial Real Estate3,516.2 2.0 — — 3,518.2 40.2 3,558.4 32.3 
Non-U.S.1,345.7 — — — 1,345.7 — 1,345.7 — 
Lease Financing, net11.4 — — — 11.4 — 11.4 — 
Other288.2 — — — 288.2 — 288.2 — 
Total Commercial15,038.5 155.7 1.2 — 15,195.4 66.6 15,262.0 41.4 
Personal
Private Client11,765.4 29.1 9.9 7.8 11,812.2 2.9 11,815.1 2.9 
Residential Real Estate5,946.0 23.5 2.9 1.1 5,973.5 62.2 6,035.7 53.8 
Non-U.S.596.7 1.2 — — 597.9 — 597.9 — 
Other49.0 — — — 49.0 — 49.0 — 
Total Personal18,357.1 53.8 12.8 8.9 18,432.6 65.1 18,497.7 56.7 
Total Loans and Leases$33,395.6 $209.5 $14.0 $8.9 $33,628.0 $131.7 $33,759.7 $98.1 
Other Real Estate Owned$0.7 
Total Nonaccrual Assets$132.4 
ACCRUALNONACCRUAL WITH NO ALLOWANCE
(In Millions)CURRENT30 – 59 DAYS
PAST DUE		60 – 89 DAYS
PAST DUE		90 DAYS
OR MORE
PAST DUE		TOTAL ACCRUALNONACCRUALTOTAL LOANS
AND LEASES
December 31, 2019
Commercial
Commercial and Institutional$9,068.3 $4.1 $9.9 $1.2 $9,083.5 $7.6 $9,091.1 $0.8 
Commercial Real Estate3,089.6 2.3 4.1 4.7 3,100.7 3.6 3,104.3 2.4 
Non-U.S.1,576.3 — — — 1,576.3 — 1,576.3 — 
Lease Financing, net65.6 — — — 65.6 — 65.6 — 
Other164.0 — — — 164.0 — 164.0 — 
Total Commercial13,963.8 6.4 14.0 5.9 13,990.1 11.2 14,001.3 3.2 
Personal
Private Client11,027.9 33.2 9.5 0.3 11,070.9 0.5 11,071.4 0.5 
Residential Real Estate5,997.7 19.8 4.9 1.2 6,023.6 71.4 6,095.0 66.4 
Non-U.S174.1 0.2 — — 174.3 0.5 174.8 0.5 
Other67.1 — — — 67.1 — 67.1 — 
Total Personal17,266.8 53.2 14.4 1.5 17,335.9 72.4 17,408.3 67.4 
Total Loans and Leases$31,230.6 $59.6 $28.4 $7.4 $31,326.0 $83.6 $31,409.6 $70.6 
Other Real Estate Owned$3.2 
Total Nonaccrual Assets$86.8 
Interest income that would have been recorded for nonaccrual loans and leases in accordance with their original terms was $4.6 million in 2020, $7.3 million in 2019, and $8.0 million in 2018.

Collateral Dependent Financial Assets. A financial asset is collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. Most of Northern Trust’s collateral dependent credit exposure relates to its residential real estate portfolio for which the collateral is usually the underlying real estate property. For collateral dependent financial assets, it is Northern Trust’s policy to reserve or charge-off the difference between the amortized cost basis of the loan and the value of the collateral. The collateral dependent financial asset balance as of December 31, 2020 was immaterial to Northern Trust’s financial statements.

Nonaccrual Loans and Troubled Debt Restructurings (TDRs). 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). Included within nonaccrual loans were $38.9 million and $54.9 million of nonaccrual TDRs and $29.3 million and $27.7 million of accrual TDRs as of December 31, 2020 and 2019, respectively. There were $10.4 million and $8.2 million of aggregate undrawn loan commitments and standby letters of credit at December 31, 2020 and 2019, respectively, issued to borrowers with TDR modifications of loans.
The following table provides, by segment and class, the number of TDR modifications of loans and leases during the years ended December 31, 2020, and 2019, and the recorded investments and unpaid principal balances as of December 31, 2020 and 2019.

TABLE 74: TROUBLED DEBT RESTRUCTURINGS
($ In Millions)NUMBER OF
LOANS AND
LEASES		RECORDED
INVESTMENT		UNPAID
PRINCIPAL
BALANCE
December 31, 2020
Commercial
Commercial and Institutional3 $24.3 $24.5 
Total Commercial3 24.3 24.5 
Personal
Residential Real Estate22 16.2 16.7 
Total Personal22 16.2 16.7 
Total Loans and Leases25 $40.5 $41.2 
Note: Period-end balances reflect all paydowns and charge-offs during the year.
($ In Millions)NUMBER OF
LOANS AND
LEASES		RECORDED
INVESTMENT		UNPAID
PRINCIPAL
BALANCE
December 31, 2019
Commercial
Commercial and Institutional1 $7.5 $8.8 
Commercial Real Estate2 — — 
Total Commercial3 7.5 8.8 
Personal
Residential Real Estate45 37.4 38.8 
Total Personal45 37.4 38.8 
Total Loans and Leases48 $44.9 $47.6 
Note: Period-end balances reflect all paydowns and charge-offs during the year.

TDR modifications involve 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 year ended December 31, 2020, the TDR modifications of loans within residential real estate were primarily extensions of term, other modifications, deferrals of principal, and interest rate concessions. During the year ended December 31, 2020, TDR modifications of loans within commercial and institutional were other modifications and extensions of term.
During the year ended December 31, 2019, the TDR modifications of loans within residential real estate were primarily other modifications, extensions of term, deferrals of principal, and interest rate concessions. During the year ended December 31, 2019, TDR modifications of loans within commercial and institutional and commercial real estate were other modifications, extensions of term, and deferrals of principal.
There were zero loans or leases TDR modifications during the previous twelve-month period which subsequently had a payment default during the year ended December 31, 2020.
There were five loans or leases TDR modifications during the previous twelve-month period which subsequently had a payment default during the year ended December 31, 2019. The total recorded investment for these loans was approximately $5.8 million and the unpaid principal balance for these loans was approximately $6.1 million.
Northern Trust may obtain physical possession of real estate via foreclosure on an in-substance repossession. As of December 31, 2020 and 2019, Northern Trust held foreclosed real estate properties with a carrying value of $0.7 million and $3.2 million, respectively, as a result of obtaining physical possession. In addition, as of December 31, 2020 and 2019, Northern Trust had loans with a carrying value of $7.9 million and $18.1 million, respectively, for which formal foreclosure proceedings were in process.

TDR Relief — COVID-19. Due to the economic environment arising from the COVID-19 pandemic, there have been two forms of relief provided for classifying loans as TDRs: the Interagency Guidance (as defined below) and the CARES Act.
Various banking regulators, including the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the
Consumer Financial Protection Bureau, have issued guidance in the April 7, 2020 Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (revised) on loan modification treatment (Interagency Guidance) pursuant to which financial institutions can apply ASC 310-40 Receivables – Troubled Debt Restructurings by Creditors. In accordance with the Interagency Guidance, a loan modification is not considered a TDR if the modification is related to COVID-19; the borrower had been current (not more than 29 days past due) when the modification program was implemented; and the modification includes payment deferrals for not more than 6 months.
Under section 4013 of the CARES Act, relief provided to lenders exempting certain loan modifications which would otherwise be classified as TDRs from such classification applies for loans that were not more than 30 days past due as of December 31, 2019. The TDR relief under the CARES Act applies to COVID-19-related modifications that were made from March 1, 2020 until the earlier of (a) January 1, 2022 (this date was updated from December 31, 2020, after the Consolidated Appropriations Act, 2021 was enacted on December 27, 2020) or (b) 60 days from the date the COVID-19 national emergency officially ends.
Financial institutions may account for eligible loan modifications under the Interagency Guidance and/or the CARES Act. Northern Trust has elected to apply both the CARES Act and the Interagency Guidance, as applicable, in providing borrowers with loan modification relief in response to the COVID-19 pandemic. All other types of modifications which do not meet the CARES Act or Interagency Guidance requirements continue to be governed by existing regulations and accounting policies.
The following tables provide, by segment and class, the number of total COVID-19-related loan modifications including the loan volume and deferred principal and interest balances as of December 31, 2020, for which Northern Trust applied an exemption from TDR classification that are in active deferral (loans currently in the deferral period) or completed deferral (loans that returned to their regular payment schedule).
TABLE 75: COVID-19 LOAN MODIFICATIONS NOT CONSIDERED TDRS IN ACTIVE DEFERRAL STATUS
DECEMBER 31, 2020
($ In Millions)NUMBER OF COVID-19 RELATED MODIFICATIONSLOAN VOLUMEDEFERRED PRINCIPAL AMOUNTDEFERRED INTEREST AMOUNT
Commercial
Commercial and Institutional1 $6.0 $— $— 
Commercial Real Estate1 0.7 — — 
Total Commercial2 $6.7 $— $— 
Personal
Private Client8 $8.9 $0.1 $0.1 
Residential Real Estate21 5.1 0.1 0.1 
Total Personal29 $14.0 $0.2 $0.2 
Total Loans31 $20.7 $0.2 $0.2 

TABLE 76: COVID-19 LOAN MODIFICATIONS NOT CONSIDERED TDRS THAT HAVE COMPLETED DEFERRAL
DECEMBER 31, 2020
($ In Millions)NUMBER OF COVID-19 RELATED MODIFICATIONSLOAN VOLUMEDEFERRED PRINCIPAL AMOUNTDEFERRED INTEREST AMOUNT
Commercial
Commercial and Institutional99 $249.3 $0.1 $2.2 
Commercial Real Estate97 467.8 — 3.2 
Total Commercial196 $717.1 $0.1 $5.4 
Personal
Private Client27 $171.9 $— $1.1 
Residential Real Estate412 182.7 1.6 2.2 
Total Personal439 $354.6 $1.6 $3.3 
Total Loans635 $1,071.7 $1.7 $8.7 

Not included in the table above are 57 loans with a previous $63.0 million loan balance that had been granted payment deferrals but have since paid off.
Northern Trust continues to accrue and recognize interest income during the loan deferral period, and hence has not moved these loans to nonaccrual or reported them as past due. Further, these loan balances continue to be assessed on a collective basis for purposes of measuring an allowance for expected credit losses.