Reporting Segments

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Reporting Segments

Reporting Segments

Northern Trust is organized around its two client-focused reporting segments: Asset Servicing and Wealth Management. Asset management and related services are provided to Asset Servicing 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 Asset Servicing 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. Additionally, segment information is presented on an FTE basis as management believes an FTE presentation provides a clearer indication of net interest income. The adjustment to an FTE basis has no impact on Net Income.

Revenues, expenses and average assets are allocated to Asset Servicing 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.

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 presents the earnings contributions and average assets of Northern Trust’s reporting segments for the three and nine months ended September 30, 2022 and 2021.

TABLE 61: RESULTS OF REPORTING SEGMENTS

($ In Millions)	ASSET SERVICING						WEALTH MANAGEMENT						OTHER						RECONCILING ITEMS				TOTAL CONSOLIDATED
THREE MONTHS ENDED SEPTEMBER 30,	2022			2021			2022			2021			2022			2021			2022		2021		2022			2021
Noninterest Income
Trust, Investment and Other Servicing Fees	$	603.2		$	630.2		$	475.5		$	480.8		$	—		$	—		$	—	$	—	$	1,078.7		$	1,111.0
Foreign Exchange Trading Income	63.7			63.2			1.0			3.2			—			—			—		—		64.7			66.4
Other Noninterest Income	62.5			65.6			37.0			48.0			(1.1)			(3.6)			—		—		98.4			110.0
Total Noninterest Income	729.4			759.0			513.5			532.0			(1.1)			(3.6)			—		—		1,241.8			1,287.4
Net Interest Income	303.3			158.9			222.0			198.2			—			—			(12.3)		(10.7)		513.0			346.4
Revenue	1,032.7			917.9			735.5			730.2			(1.1)			(3.6)			(12.3)		(10.7)		1,754.8			1,633.8
Provision for Credit Losses	(5.1)			(6.9)			5.6			(6.1)			—			—			—		—		0.5			(13.0)
Noninterest Expense	760.4			716.6			449.0			410.9			20.4			1.2			—		—		1,229.8			1,128.7
Income before Income Taxes	277.4			208.2			280.9			325.4			(21.5)			(4.8)			(12.3)		(10.7)		524.5			518.1
Provision for Income Taxes	67.7			50.0			79.6			84.3			(5.3)			(1.2)			(12.3)		(10.7)		129.7			122.4
Net Income	$	209.7		$	158.2		$	201.3		$	241.1		$	(16.2)		$	(3.6)		$	—	$	—	$	394.8		$	395.7
Percentage of Consolidated Net Income	53		%	40		%	51		%	61		%	(4)		%	(1)		%	N/A		N/A		100		%	100		%
Average Assets	$	109,677.2		$	119,951.9		$	36,725.0		$	36,500.9		$	—		$	—		N/A		N/A		$	146,402.2		$	156,452.8

($ In Millions)	ASSET SERVICING						WEALTH MANAGEMENT						OTHER						RECONCILING ITEMS				TOTAL CONSOLIDATED
NINE MONTHS ENDED SEPTEMBER 30,	2022			2021			2022			2021			2022			2021			2022		2021		2022			2021
Noninterest Income
Trust, Investment and Other Servicing Fees	$	1,908.4		$	1,862.2		$	1,482.1		$	1,387.9		$	—		$	—		$	—	$	—	$	3,390.5		$	3,250.1
Foreign Exchange Trading Income	215.9			205.6			7.3			10.1			—			—			—		—		223.2			215.7
Other Noninterest Income	185.4			194.8			101.6			130.5			(11.2)			(15.7)			—		—		275.8			309.6
Total Noninterest Income	2,309.7			2,262.6			1,591.0			1,528.5			(11.2)			(15.7)			—		—		3,889.5			3,775.4
Net Interest Income	748.5			472.7			634.3			575.0			—			—			(30.1)		(25.6)		1,352.7			1,022.1
Revenue	3,058.2			2,735.3			2,225.3			2,103.5			(11.2)			(15.7)			(30.1)		(25.6)		5,242.2			4,797.5
Provision for Credit Losses	3.8			(29.1)			3.2			(40.9)			—			—			—		—		7.0			(70.0)
Noninterest Expense	2,269.4			2,133.3			1,333.2			1,212.5			56.7			21.2			—		—		3,659.3			3,367.0
Income before Income Taxes	785.0			631.1			888.9			931.9			(67.9)			(36.9)			(30.1)		(25.6)		1,575.9			1,500.5
Provision for Income Taxes	194.0			153.1			248.6			243.3			(16.9)			(9.2)			(30.1)		(25.6)		395.6			361.6
Net Income	$	591.0		$	478.0		$	640.3		$	688.6		$	(51.0)		$	(27.7)		$	—	$	—	$	1,180.3		$	1,138.9
Percentage of Consolidated Net Income	50		%	42		%	54		%	60		%	(4)		%	(2)		%	N/A		N/A		100		%	100		%
Average Assets	$	117,251.0		$	119,859.4		$	36,901.1		$	34,821.9		$	—		$	—		N/A		N/A		$	154,152.1		$	154,681.3

Note: Segment results are stated on an FTE basis. The FTE adjustments are eliminated in the reconciling items column with the Corporation’s total consolidated financial results stated on a GAAP basis. The adjustment to an FTE basis has no impact on net income.