Reporting Segments

9 Months Ended

Sep. 30, 2023

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 fully taxable equivalent (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-month periods ended September 30, 2023 and 2022.

TABLE 63: RESULTS OF REPORTING SEGMENTS

($ In Millions)	ASSET SERVICING						WEALTH MANAGEMENT						OTHER						RECONCILING ITEMS				TOTAL CONSOLIDATED
THREE MONTHS ENDED SEPTEMBER 30,	2023			2022			2023			2022			2023			2022			2023		2022		2023			2022
Noninterest Income
Trust, Investment and Other Servicing Fees	$	626.0		$	603.2		$	485.9		$	475.5		$	—		$	—		$	—	$	—	$	1,111.9		$	1,078.7
Foreign Exchange Trading Income (Loss)	54.3			63.7			(2.5)			1.0			—			—			—		—		51.8			64.7
Other Noninterest Income (Loss)	66.1			62.5			38.1			37.0			2.4			(1.1)			—		—		106.6			98.4
Total Noninterest Income (Loss)	746.4			729.4			521.5			513.5			2.4			(1.1)			—		—		1,270.3			1,241.8
Net Interest Income	281.2			303.3			188.2			222.0			—			—			(13.2)		(12.3)		456.2			513.0
Revenue	1,027.6			1,032.7			709.7			735.5			2.4			(1.1)			(13.2)		(12.3)		1,726.5			1,754.8
Provision for (Release of) Credit Losses	3.1			(5.1)			10.9			5.6			—			—			—		—		14.0			0.5
Noninterest Expense	809.3			760.4			456.9			449.0			12.0			20.4			—		—		1,278.2			1,229.8
Income before Income Taxes	215.2			277.4			241.9			280.9			(9.6)			(21.5)			(13.2)		(12.3)		434.3			524.5
Provision for Income Taxes	54.3			67.7			67.7			79.6			(2.3)			(5.3)			(13.2)		(12.3)		106.5			129.7
Net Income	$	160.9		$	209.7		$	174.2		$	201.3		$	(7.3)		$	(16.2)		$	—	$	—	$	327.8		$	394.8
Percentage of Consolidated Net Income	49		%	53		%	53		%	51		%	(2)		%	(4)		%	N/A		N/A		100		%	100		%
Average Assets	$	108,656.7		$	109,677.2		$	31,544.9		$	36,725.0		$	—		$	—		N/A		N/A		$	140,201.6		$	146,402.2

($ In Millions)	ASSET SERVICING						WEALTH MANAGEMENT						OTHER						RECONCILING ITEMS				TOTAL CONSOLIDATED
NINE MONTHS ENDED SEPTEMBER 30,	2023			2022			2023			2022			2023			2022			2023		2022		2023			2022
Noninterest Income
Trust, Investment and Other Servicing Fees	$	1,850.2		$	1,908.4		$	1,421.6		$	1,482.1		$	—		$	—		$	—	$	—	$	3,271.8		$	3,390.5
Foreign Exchange Trading Income (Loss)	161.2			215.9			(6.3)			7.3			—			—			—		—		154.9			223.2
Other Noninterest Income (Loss)	199.0			185.4			112.8			101.6			(9.2)			(11.2)			—		—		302.6			275.8
Total Noninterest Income (Loss)	2,210.4			2,309.7			1,528.1			1,591.0			(9.2)			(11.2)			—		—		3,729.3			3,889.5
Net Interest Income	902.6			748.5			635.8			634.3			—			—			(39.5)		(30.1)		1,498.9			1,352.7
Revenue	3,113.0			3,058.2			2,163.9			2,225.3			(9.2)			(11.2)			(39.5)		(30.1)		5,228.2			5,242.2
Provision for (Release of) Credit Losses	(3.3)			3.8			16.8			3.2			—			—			—		—		13.5			7.0
Noninterest Expense	2,459.7			2,269.4			1,402.4			1,333.2			33.6			56.7			—		—		3,895.7			3,659.3
Income before Income Taxes	656.6			785.0			744.7			888.9			(42.8)			(67.9)			(39.5)		(30.1)		1,319.0			1,575.9
Provision for Income Taxes	167.4			194.0			207.5			248.6			(10.6)			(16.9)			(39.5)		(30.1)		324.8			395.6
Net Income	$	489.2		$	591.0		$	537.2		$	640.3		$	(32.2)		$	(51.0)		$	—	$	—	$	994.2		$	1,180.3
Percentage of Consolidated Net Income	49		%	50		%	54		%	54		%	(3)		%	(4)		%	N/A		N/A		100		%	100		%
Average Assets	$	110,380.4		$	117,251.0		$	34,311.2		$	36,901.1		$	—		$	—		N/A		N/A		$	144,691.6		$	154,152.1

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.