Loans

9 Months Ended

Sep. 30, 2023

Amounts outstanding for Loans, by segment and class, are shown in the following table.

TABLE 46: LOANS


(In Millions)	SEPTEMBER 30, 2023		DECEMBER 31, 2022
Commercial
Commercial and Institutional(1)	$	12,061.3	$	12,415.0
Commercial Real Estate	5,063.1		4,773.0
Non-U.S.(1)	2,857.8		3,131.1

Other	2,005.1		1,316.5
Total Commercial	21,987.3		21,635.6
Personal
Private Client	14,068.6		14,119.0
Residential Real Estate	6,285.8		6,413.5
Non-U.S.	432.6		510.0
Other	802.7		215.2
Total Personal	21,589.7		21,257.7
Total Loans	$	43,577.0	$	42,893.3

(1) Commercial and institutional and commercial-non-U.S. combined include $4.8 billion and $5.6 billion of private equity capital call finance loans at September 30, 2023 and December 31, 2022, respectively.

Residential real estate loans consist of traditional first lien mortgages and equity credit lines that generally require a loan-to-collateral value 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 September 30, 2023 and December 31, 2022, equity credit lines totaled $228.1 million and $248.6 million, respectively, and equity credit lines for which first liens were held by Northern Trust represented 97% and 98% of the total equity credit lines as of September 30, 2023 and December 31, 2022, respectively.

Included within the commercial-other, commercial-non-U.S., and personal-other classes are short-duration advances primarily related to the processing of custodied client investments, totaling $4.2 billion and $2.9 billion at September 30, 2023 and December 31, 2022, respectively. Demand deposit overdrafts reclassified as loan balances, primarily in personal-other, totaled $4.5 million and $24.4 million at September 30, 2023 and December 31, 2022, respectively.

There were no loans classified as held for sale at September 30, 2023 or December 31, 2022. Loans classified as held for sale are recorded at the lower of cost or fair value. There were no loans sold for the three and nine months ended September 30, 2023, respectively, and no loans sold for the three months ended September 30, 2022. There were $11.2 million loans sold for the nine months ended September 30, 2022, which were comprised of residential real estate and commercial and institutional loans.

Credit Quality Indicators. Credit quality indicators are statistics, measurements or other metrics that provide information regarding the relative credit risk of loans. Northern Trust utilizes a variety of credit quality indicators to assess the credit risk of loans 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 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 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;

•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 segment and class balances as of September 30, 2023 and December 31, 2022 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 47: CREDIT QUALITY INDICATOR AT AMORTIZED COST BASIS BY ORIGINATION YEAR


September 30, 2023	TERM LOANS												REVOLVING LOANS		REVOLVING LOANS CONVERTED TO TERM LOANS
(In Millions)	2023		2022		2021		2020		2019		PRIOR						TOTAL
Commercial
Commercial and Institutional
Risk Rating:
1 to 3 Category	$	355.1	$	539.8	$	874.3	$	95.9	$	148.3	$	417.6	$	5,148.5	$	16.0	$	7,595.5
4 to 5 Category	689.9		818.7		669.7		147.6		125.0		180.4		1,549.0		75.3		4,255.6
6 to 9 Category	13.9		71.1		69.3		12.2		0.1		1.7		41.5		0.4		210.2
Total Commercial and Institutional	1,058.9		1,429.6		1,613.3		255.7		273.4		599.7		6,739.0		91.7		12,061.3

Commercial Real Estate
Risk Rating:
1 to 3 Category	334.2		331.8		183.5		19.1		40.8		45.9		47.7		0.5		1,003.5
4 to 5 Category	1,360.9		1,260.2		541.7		228.7		254.9		136.7		202.7		7.4		3,993.2
6 to 9 Category	16.2		3.3		21.6		—		8.2		14.6		2.5		—		66.4
Total Commercial Real Estate	1,711.3		1,595.3		746.8		247.8		303.9		197.2		252.9		7.9		5,063.1
Commercial Real Estate Gross Charge-offs	—		(4.5)		—		—		—		—		—		—		(4.5)
Non-U.S.
Risk Rating:
1 to 3 Category	842.6		—		43.9		65.4		35.8		3.2		823.5		—		1,814.4
4 to 5 Category	689.6		0.8		—		—		23.1		180.2		88.7		—		982.4
6 to 9 Category	46.5		14.5		—		—		—		—		—		—		61.0
Total Non-U.S.	1,578.7		15.3		43.9		65.4		58.9		183.4		912.2		—		2,857.8







Other
Risk Rating:
1 to 3 Category	1,190.9		—		—		—		—		—		—		—		1,190.9
4 to 5 Category	814.2		—		—		—		—		—		—		—		814.2
Total Other	2,005.1		—		—		—		—		—		—		—		2,005.1

Total Commercial	6,354.0		3,040.2		2,404.0		568.9		636.2		980.3		7,904.1		99.6		21,987.3
Commercial Gross Charge-offs	—		(4.5)		—		—		—		—		—		—		(4.5)
Personal
Private Client
Risk Rating:
1 to 3 Category	326.5		218.2		44.4		70.0		15.1		25.0		5,723.2		172.8		6,595.2
4 to 5 Category	305.3		467.8		686.6		99.9		155.4		165.7		5,115.6		429.5		7,425.8
6 to 9 Category	18.3		4.4		—		—		—		17.8		7.1		—		47.6
Total Private Client	650.1		690.4		731.0		169.9		170.5		208.5		10,845.9		602.3		14,068.6

Residential Real Estate
Risk Rating:
1 to 3 Category	198.7		536.2		565.4		405.1		154.2		729.2		229.2		—		2,818.0
4 to 5 Category	115.1		644.7		682.6		672.1		273.7		863.7		142.9		—		3,394.8
6 to 9 Category	—		17.5		5.5		2.2		11.0		33.8		3.0		—		73.0
Total Residential Real Estate	313.8		1,198.4		1,253.5		1,079.4		438.9		1,626.7		375.1		—		6,285.8
Residential Real Estate Gross Write-offs	(0.8)		—		—		—		—		(0.3)		—		—		(1.1)
Non-U.S.
Risk Rating:
1 to 3 Category	16.1		3.7		0.6		—		—		5.5		54.0		—		79.9
4 to 5 Category	9.0		20.7		39.4		—		18.8		8.3		249.0		7.5		352.7

Total Non-U.S.	25.1		24.4		40.0		—		18.8		13.8		303.0		7.5		432.6

Other
Risk Rating:
1 to 3 Category	90.5		—		—		—		—		—		—		—		90.5
4 to 5 Category	712.2		—		—		—		—		—		—		—		712.2

Total Other	802.7		—		—		—		—		—		—		—		802.7

Total Personal	1,791.7		1,913.2		2,024.5		1,249.3		628.2		1,849.0		11,524.0		609.8		21,589.7
Personal Gross Charge-offs	(0.8)		—		—		—		—		(0.3)		—		—		(1.1)
Total Loans	$	8,145.7	$	4,953.4	$	4,428.5	$	1,818.2	$	1,264.4	$	2,829.3	$	19,428.1	$	709.4	$	43,577.0
Total Loans Gross Charge-offs	$	(0.8)	$	(4.5)	$	—	$	—	$	—	$	(0.3)	$	—	$	—	$	(5.6)


December 31, 2022	TERM LOANS												REVOLVING LOANS		REVOLVING LOANS CONVERTED TO TERM LOANS
(In Millions)	2022		2021		2020		2019		2018		PRIOR						TOTAL
Commercial
Commercial and Institutional
Risk Rating:
1 to 3 Category	$	753.3	$	1,087.5	$	209.8	$	159.3	$	45.9	$	511.3	$	6,032.8	$	17.7	$	8,817.6
4 to 5 Category	744.1		740.6		300.8		191.1		151.4		174.7		1,102.3		32.9		3,437.9
6 to 9 Category	50.8		30.5		—		13.7		—		—		64.5		—		159.5
Total Commercial and Institutional	1,548.2		1,858.6		510.6		364.1		197.3		686.0		7,199.6		50.6		12,415.0
Commercial Real Estate
Risk Rating:
1 to 3 Category	318.7		227.4		123.6		123.5		39.8		39.1		113.4		3.0		988.5
4 to 5 Category	968.5		1,040.0		637.8		447.3		153.0		256.9		181.5		17.5		3,702.5
6 to 9 Category	7.7		22.7		—		49.1		—		—		2.5		—		82.0
Total Commercial Real Estate	1,294.9		1,290.1		761.4		619.9		192.8		296.0		297.4		20.5		4,773.0
Non-U.S.
Risk Rating:
1 to 3 Category	991.9		46.2		109.6		14.8		—		6.5		1,158.3		—		2,327.3
4 to 5 Category	459.0		—		—		—		—		214.9		89.5		1.8		765.2
6 to 9 Category	0.1		—		—		23.1		—		—		15.4		—		38.6
Total Non-U.S.	1,451.0		46.2		109.6		37.9		—		221.4		1,263.2		1.8		3,131.1
Other
Risk Rating:
1 to 3 Category	993.9		—		—		—		—		—		—		—		993.9
4 to 5 Category	322.6		—		—		—		—		—		—		—		322.6
Total Other	1,316.5		—		—		—		—		—		—		—		1,316.5
Total Commercial	5,610.6		3,194.9		1,381.6		1,021.9		390.1		1,203.4		8,760.2		72.9		21,635.6
Personal
Private Client
Risk Rating:
1 to 3 Category	395.5		159.9		50.5		313.6		13.4		18.5		5,352.5		28.2		6,332.1
4 to 5 Category	430.3		755.1		192.4		191.3		38.7		160.0		5,728.6		267.2		7,763.6
6 to 9 Category	0.9		—		0.1		—		18.6		—		3.7		—		23.3
Total Private Client	826.7		915.0		243.0		504.9		70.7		178.5		11,084.8		295.4		14,119.0
Residential Real Estate
Risk Rating:
1 to 3 Category	871.6		666.7		567.7		168.1		102.9		750.8		128.4		7.9		3,264.1
4 to 5 Category	354.3		656.7		597.6		290.0		170.9		838.2		180.4		1.0		3,089.1
6 to 9 Category	—		6.8		1.5		1.1		3.7		35.9		11.3		—		60.3
Total Residential Real Estate	1,225.9		1,330.2		1,166.8		459.2		277.5		1,624.9		320.1		8.9		6,413.5
Non-U.S.
Risk Rating:
1 to 3 Category	3.0		3.7		—		—		4.6		2.3		124.6		—		138.2
4 to 5 Category	24.2		40.3		—		21.3		3.2		2.9		272.0		7.8		371.7
6 to 9 Category	—		—		—		—		—		0.1		—		—		0.1
Total Non-U.S.	27.2		44.0		—		21.3		7.8		5.3		396.6		7.8		510.0
Other
Risk Rating:
1 to 3 Category	190.8		—		—		—		—		—		—		—		190.8
4 to 5 Category	24.4		—		—		—		—		—		—		—		24.4
Total Other	215.2		—		—		—		—		—		—		—		215.2
Total Personal	2,295.0		2,289.2		1,409.8		985.4		356.0		1,808.7		11,801.5		312.1		21,257.7
Total Loans	$	7,905.6	$	5,484.1	$	2,791.4	$	2,007.3	$	746.1	$	3,012.1	$	20,561.7	$	385.0	$	42,893.3

Loans 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 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 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 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.

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 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 by segment and class, as well as the other real estate owned and nonaccrual asset balances, as of September 30, 2023 and December 31, 2022.

TABLE 48: DELINQUENCY STATUS


	ACCRUAL														NONACCRUAL WITH NO ALLOWANCE
(In Millions)	CURRENT		30 – 59 DAYS PAST DUE		60 – 89 DAYS PAST DUE		90 DAYS OR MORE PAST DUE		TOTAL ACCRUAL		NONACCRUAL		TOTAL LOANS
September 30, 2023
Commercial
Commercial and Institutional	$	12,032.4	$	7.9	$	1.6	$	3.1	$	12,045.0	$	16.3	$	12,061.3	$	6.9
Commercial Real Estate	5,059.9		—		—		—		5,059.9		3.2		5,063.1		3.2
Non-U.S.	2,854.8		3.0		—		—		2,857.8		—		2,857.8		—

Other	2,005.1		—		—		—		2,005.1		—		2,005.1		—
Total Commercial	21,952.2		10.9		1.6		3.1		21,967.8		19.5		21,987.3		10.1
Personal
Private Client	13,911.3		91.0		13.4		33.1		14,048.8		19.8		14,068.6		17.8
Residential Real Estate	6,254.9		—		1.4		—		6,256.3		29.5		6,285.8		28.1
Non-U.S.	432.6		—		—		—		432.6		—		432.6		—
Other	802.7		—		—		—		802.7		—		802.7		—
Total Personal	21,401.5		91.0		14.8		33.1		21,540.4		49.3		21,589.7		45.9
Total Loans	$	43,353.7	$	101.9	$	16.4	$	36.2	$	43,508.2	$	68.8	$	43,577.0	$	56.0
	Other Real Estate Owned										$	0.3
	Total Nonaccrual Assets										$	69.1


	ACCRUAL														NONACCRUAL WITH NO ALLOWANCE
(In Millions)	CURRENT		30 – 59 DAYS PAST DUE		60 – 89 DAYS PAST DUE		90 DAYS OR MORE PAST DUE		TOTAL ACCRUAL		NONACCRUAL		TOTAL LOANS
December 31, 2022
Commercial
Commercial and Institutional	$	12,353.7	$	40.2	$	3.0	$	0.7	$	12,397.6	$	17.4	$	12,415.0	$	4.4
Commercial Real Estate	4,761.5		1.3		—		—		4,762.8		10.2		4,773.0		6.2
Non-U.S.	3,131.1		—		—		—		3,131.1		—		3,131.1		—
Other	1,316.5		—		—		—		1,316.5		—		1,316.5		—
Total Commercial	21,562.8		41.5		3.0		0.7		21,608.0		27.6		21,635.6		10.6
Personal
Private Client	13,843.5		192.3		29.9		53.3		14,119.0		—		14,119.0		—
Residential Real Estate	6,373.2		9.6		12.3		0.1		6,395.2		18.3		6,413.5		18.3
Non-U.S	509.9		—		—		0.1		510.0		—		510.0		—
Other	215.2		—		—		—		215.2		—		215.2		—
Total Personal	20,941.8		201.9		42.2		53.5		21,239.4		18.3		21,257.7		18.3
Total Loans	$	42,504.6	$	243.4	$	45.2	$	54.2	$	42,847.4	$	45.9	$	42,893.3	$	28.9
	Other Real Estate Owned										$	—
	Total Nonaccrual Assets										$	45.9

Interest income that would have been recorded for nonaccrual loans in accordance with their original terms was $0.9 million and $2.3 million for the three and nine months ended September 30, 2023, respectively, and $1.1 million and $3.2 million for the three and nine months ended September 30, 2022, respectively.

Northern Trust may obtain physical possession of real estate via foreclosure on an in-substance repossession. As of September 30, 2023 and December 31, 2022, Northern Trust held foreclosed real estate properties with an immaterial carrying value, as a result of obtaining physical possession. In addition, as of both September 30, 2023 and December 31, 2022, Northern Trust had loans with a carrying value of $1.1 million, for which formal foreclosure proceedings were in process.

Loan Modifications to Borrowers Experiencing Financial Difficulty (After the Adoption of Accounting Standards Update No. 2022-02)

For borrowers experiencing financial difficulties, Northern Trust may provide payment relief by modifying the terms of the original loan. Loan modifications to borrowers experiencing financial difficulty involve primarily the extensions of term, deferrals of principal and interest, interest rate concessions, and other modifications or a combination thereof. Northern Trust considers payment deferrals of less than 90 days as insignificant, absent any material modifications to other loan terms.

The following table shows the amortized cost basis of loan modifications provided to financially distressed borrowers that impacted the respective cash flows of the underlying loans as of September 30, 2023, disaggregated by relevant class of financing receivable and type of modification provided.

TABLE 49: LOAN MODIFICATIONS MADE TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY


		THREE MONTHS ENDED SEPTEMBER 30, 2023				NINE MONTHS ENDED SEPTEMBER 30, 2023
(in $ million)	LOAN MODIFICATION DETAIL	AMORTIZED COST BASIS		% OF TOTAL SEGMENT		AMORTIZED COST BASIS			% OF TOTAL SEGMENT
Commercial

Commercial and Institutional	Extension of term	$	16.7	0.14	%	$	16.7		0.14	%
Commercial Real Estate	Combination of principal and/or interest deferral and extension of term	—		—		—		(1)	—


Total Commercial		16.7		0.08		16.7			0.08
Personal

Residential Real Estate	Principal and/or interest deferral	0.1		—		3.2			0.05
Residential Real Estate	Combination of principal and/or interest deferral and extension of term	4.7		0.08		4.7			0.08
Private Client	Extension of term	—		—		—		(1)	—


Total Personal		4.8		0.02		7.9			0.04
Total Loans		$	21.5	0.05	%	$	24.6		0.06	%

(1) Included are financially distressed modifications of $32.5 million (combinations of principal and/or interest deferral and term extensions) for the commercial real estate portfolio and $0.2 million (term extensions) for the private client portfolio for which the respective loans had no amortized cost basis as of the end of the respective period. The $32.5 million loan was fully repaid during the second quarter of 2023.

The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty.

TABLE 50: FINANCIAL EFFECT OF MODIFICATIONS MADE TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY

THREE MONTHS ENDED SEPTEMBER 30, 2023

NINE MONTHS ENDED SEPTEMBER 30, 2023

FINANCIAL EFFECT

PRINCIPAL AND INTEREST DEFERRAL

Commercial

Commercial Real Estate

—

Northern Trust provided a weighted average of 6 months payment deferrals to borrowers for total deferred principal and interest of $32.5 million.

Personal

Residential Real Estate

Northern Trust provided a weighted average of 9 months payment deferrals to borrowers for immaterial principal and interest deferral amounts.

TERM EXTENSION

Commercial

Commercial and Institutional

Northern Trust provided weighted average term extensions of 12 months.

Commercial Real Estate

—

Northern Trust provided weighted average term extensions of 6 months.

Personal

Residential Real Estate

Northern Trust provided weighted average term extensions of 9 months.

Private Client

—

Northern Trust provided weighted average term extensions of 60 months.

The effectiveness of Northern Trust’s modification efforts is measured by the loans’ respective past due status under the modified terms as of the end of the period. All of the loans that were modified since the adoption of ASU 2022-02 as of January 1, 2023, were performing in accordance with their modified terms and were not considered past due for purposes of these disclosures as of September 30, 2023. During the current period, Northern Trust did not recognize any charge-offs related to modifications to borrowers experiencing financial difficulty that had been processed since the adoption of ASU 2022-02. For the nine months ended September 30, 2023, Northern Trust charged off $0.7 million related to these modifications.

There were no undrawn loan commitments or standby letters of credit issued to financially distressed borrowers for which Northern Trust has modified the payment terms of the loans as of September 30, 2023.

The expected credit loss for nonaccrual loans including loan modifications to borrowers experiencing financial difficulty is measured based on either the expected future cash flows, the value of collateral, or other factors that may impact the borrower’s ability to pay. If the discounted cash flow method is utilized, the credit loss is measured based upon the present value of expected future cash flows, discounted at the effective interest rate based on the post-modification contractual rate. If a loan’s contractual interest rate varies based on subsequent changes in an independent factor, such as an index or rate, the loan’s effective interest rate is calculated based on the factor as it changes over the life of the loan. Northern Trust elected not to project changes in the factor for purposes of estimating expected future cash flows. Further, Northern Trust elected not to adjust the effective interest rate for prepayments. If the loan is collateral dependent, the expected loss is measured based on the fair value of the collateral at the reporting date. If the loan valuation is less than the recorded value of the loan, either an allowance is established or a charge-off is recorded for the difference. The nature and extent of further deterioration in credit quality, including a subsequent default, is considered in the determination of an appropriate level of allowance for credit losses for all loan modifications to borrowers experiencing financial difficulty.

Troubled Debt Restructurings (Prior to the Adoption of Accounting Standards Update No. 2022-02)

Prior to January 1, 2023, 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). All TDRs are reported starting in the calendar year of their restructuring. In subsequent years, a TDR may cease being reported if the loan was modified at a market rate and has performed according to the modified terms for at least six payment periods. A loan that has been modified at a below market rate will return to accrual status if it satisfies the six-payment-period performance requirement.

The expected credit loss is measured based upon the present value of expected future cash flows, discounted at the effective interest rate based on the original contractual rate. If a loan’s contractual interest rate varies based on subsequent changes in an independent factor, such as an index or rate, the loan’s effective interest rate is calculated based on the factor as it changes over the life of the loan. Northern Trust elected not to project changes in the factor for purposes of estimating expected future cash flows. Further, Northern Trust elected not to adjust the effective interest rate for prepayments. If the loan is collateral dependent, the expected loss is measured based on the fair value of the collateral at the reporting date.

If the loan valuation is less than the recorded value of the loan, either an allowance is established or a charge-off is recorded for the difference. Smaller balance (individually less than $1 million) homogeneous loans are collectively evaluated. Northern Trust’s accounting policies for material nonaccrual loans is consistent across all classes of loans.

All loans with TDR modifications are evaluated for additional expected credit losses. The nature and extent of further deterioration in credit quality, including a subsequent default, is considered in the determination of an appropriate level of allowance for credit losses.

Included within nonaccrual loans were $35.3 million of nonaccrual TDRs, and $39.7 million of accrual TDRs as of December 31, 2022. There were $0.2 million of aggregate undrawn loan commitments and standby letters of credit at December 31, 2022, issued to borrowers with TDR modifications of loans.

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. The following table provides, by segment and class, the number of TDR modifications of loans entered into during the three and nine months ended September 30, 2022, and the recorded investments and unpaid principal balances as of September 30, 2022.

TABLE 51: TROUBLED DEBT RESTRUCTURINGS


		THREE MONTHS ENDED SEPTEMBER 30, 2022					NINE MONTHS ENDED SEPTEMBER 30, 2022
($ In Millions)	LOAN MODIFICATION DETAIL	NUMBER OF LOANS AND LEASES	RECORDED INVESTMENT		UNPAID PRINCIPAL BALANCE		NUMBER OF LOANS AND LEASES	RECORDED INVESTMENT		UNPAID PRINCIPAL BALANCE

Commercial
Commercial and Institutional	Interest rate concession, extension of term and other modification	1	$	0.1	$	0.1	2	$	0.6	$	0.6
Commercial Real Estate	Interest rate concession and other modification	1	31.6		32.5		1	31.6		32.5
Total Commercial		2	31.7		32.6		3	32.2		33.1
Personal
Residential Real Estate	Interest rate concession, deferrals of principal, extension of term and other modification	1	0.1		0.1		3	0.2		0.2
Total Personal		1	0.1		0.1		3	0.2		0.2
Total Loans and Leases		3	$	31.8	$	32.7	6	$	32.4	$	33.3

Note: Period-end balances reflect all pay downs and charge-offs during the year.

There were no residential real estate loan TDR modifications during the twelve months ended June 30, 2022, which subsequently had a payment default during the three and nine months ended September 30, 2022.