Securities

12 Months Ended

Dec. 31, 2023

Investments, Debt and Equity Securities [Abstract]

Securities

Securities

Available for Sale Debt Securities. The following tables provide the amortized cost, fair values, and remaining maturities of AFS debt securities.

TABLE 56: RECONCILIATION OF AMORTIZED COST TO FAIR VALUE OF AVAILABLE FOR SALE DEBT SECURITIES

	DECEMBER 31, 2023
(In Millions)	AMORTIZED COST		GROSS UNREALIZED GAINS		GROSS UNREALIZED LOSSES		FAIR VALUE
U.S. Government	$	3,681.5	$	2.2	$	61.5	$	3,622.2
Obligations of States and Political Subdivisions	315.8		—		20.0		295.8
Government Sponsored Agency	11,744.3		9.0		200.3		11,553.0
Non-U.S. Government	284.8		—		20.4		264.4
Corporate Debt	287.5		0.1		8.1		279.5
Covered Bonds	356.8		—		9.7		347.1
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	3,013.8		0.1		114.0		2,899.9
Other Asset-Backed	3,061.0		1.6		100.0		2,962.6
Commercial Mortgage-Backed	913.5		0.2		48.4		865.3
Total	$	23,659.0	$	13.2	$	582.4	$	23,089.8

	DECEMBER 31, 2022
(In Millions)	AMORTIZED COST		GROSS UNREALIZED GAINS		GROSS UNREALIZED LOSSES		FAIR VALUE
U.S. Government	$	2,837.7	$	2.5	$	92.8	$	2,747.4
Obligations of States and Political Subdivisions	817.8		—		30.2		787.6
Government Sponsored Agency	11,892.5		4.3		351.6		11,545.2
Non-U.S. Government	387.6		—		27.6		360.0
Corporate Debt	1,774.3		0.2		26.9		1,747.6
Covered Bonds	403.1		0.3		14.7		388.7
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	2,645.8		0.3		166.7		2,479.4
Other Asset-Backed	5,544.3		—		288.1		5,256.2
Commercial Mortgage-Backed	1,456.9		0.1		69.2		1,387.8
Total	$	27,760.0	$	7.7	$	1,067.8	$	26,699.9

TABLE 57: REMAINING MATURITY OF AVAILABLE FOR SALE DEBT SECURITIES

DECEMBER 31, 2023	ONE YEAR OR LESS				ONE TO FIVE YEARS				FIVE TO TEN YEARS				OVER TEN YEARS				TOTAL
(In Millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
U.S. Government	$	198.3	$	197.8	$	3,483.2	$	3,424.4	$	—	$	—	$	—	$	—	$	3,681.5	$	3,622.2
Obligations of States and Political Subdivisions	—		—		113.2		106.8		202.6		189.0		—		—		315.8		295.8
Government Sponsored Agency	2,384.3		2,357.0		5,330.2		5,237.5		3,327.0		3,282.8		702.8		675.7		11,744.3		11,553.0
Non-U.S. Government	67.9		66.1		216.9		198.3		—		—		—		—		284.8		264.4
Corporate Debt	105.2		103.8		182.3		175.7		—		—		—		—		287.5		279.5
Covered Bonds	90.3		89.2		266.5		257.9		—		—		—		—		356.8		347.1
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	280.3		277.8		2,665.8		2,567.1		67.7		55.0		—		—		3,013.8		2,899.9
Other Asset-Backed	218.1		212.8		2,724.2		2,631.1		107.8		107.8		10.9		10.9		3,061.0		2,962.6
Commercial Mortgage-Backed	41.9		39.3		736.0		708.2		135.6		117.8		—		—		913.5		865.3
Total	$	3,386.3	$	3,343.8	$	15,718.3	$	15,307.0	$	3,840.7	$	3,752.4	$	713.7	$	686.6	$	23,659.0	$	23,089.8

Note: Mortgage-backed and asset-backed securities are included in the above table taking into account anticipated future prepayments.

Available for Sale Debt Securities with Unrealized Losses. The following table provides information regarding AFS debt securities with no credit losses reported that had been in a continuous unrealized loss position for less than twelve months and for twelve months or longer as of December 31, 2023 and 2022.

TABLE 58: AVAILABLE FOR SALE DEBT SECURITIES IN UNREALIZED LOSS POSITION WITH NO CREDIT LOSSES REPORTED

AS OF DECEMBER 31, 2023	LESS THAN 12 MONTHS				12 MONTHS OR LONGER				TOTAL
(In Millions)	FAIR VALUE		UNREALIZED LOSSES		FAIR VALUE		UNREALIZED LOSSES		FAIR VALUE		UNREALIZED LOSSES
U.S. Government	$	—	$	—	$	3,364.7	$	61.5	$	3,364.7	$	61.5
Obligations of States and Political Subdivisions	87.8		5.9		208.0		14.1		295.8		20.0
Government Sponsored Agency	331.0		11.5		9,486.6		188.8		9,817.6		200.3
Non-U.S. Government	—		—		264.5		20.4		264.5		20.4
Corporate Debt	4.4		0.1		143.0		2.1		147.4		2.2
Covered Bonds	—		—		213.2		9.7		213.2		9.7
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	—		—		2,477.0		105.8		2,477.0		105.8
Other Asset-Backed	19.8		2.0		1,998.7		98.0		2,018.5		100.0
Commercial Mortgage-Backed	60.0		4.6		776.6		43.8		836.6		48.4
Total	$	503.0	$	24.1	$	18,932.3	$	544.2	$	19,435.3	$	568.3

Note: Three corporate debt AFS securities with a fair value of $98.4 million and unrealized losses of $5.9 million and one sub-sovereign, supranational and non-U.S. agency bonds AFS security with a fair value of $71.0 million and unrealized loss of $8.2 million have been excluded from the table above as these AFS securities have a $1.2 million allowance for credit losses reported as of December 31, 2023. Refer to the discussion further below and Note 6, “Allowance for Credit Losses” for further information.

AS OF DECEMBER 31, 2022	LESS THAN 12 MONTHS				12 MONTHS OR LONGER				TOTAL
(In Millions)	FAIR VALUE		UNREALIZED LOSSES		FAIR VALUE		UNREALIZED LOSSES		FAIR VALUE		UNREALIZED LOSSES
U.S. Government	$	1,123.6	$	64.1	$	343.1	$	28.7	$	1,466.7	$	92.8
Obligations of States and Political Subdivisions	160.0		16.8		120.6		13.4		280.6		30.2
Government Sponsored Agency	7,631.4		262.1		2,737.7		89.5		10,369.1		351.6
Non-U.S. Government	235.4		17.3		124.6		10.3		360.0		27.6
Corporate Debt	427.3		14.6		130.3		2.8		557.6		17.4
Covered Bonds	238.0		13.5		42.8		1.2		280.8		14.7
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	1,305.4		74.4		807.1		83.2		2,112.5		157.6
Other Asset-Backed	3,873.4		217.5		1,247.6		70.6		5,121.0		288.1
Commercial Mortgage-Backed	670.9		47.4		215.6		21.8		886.5		69.2
Total	$	15,665.4	$	727.7	$	5,769.4	$	321.5	$	21,434.8	$	1,049.2

Note: Three corporate debt AFS securities with a fair value of $93.8 million and unrealized losses of $9.5 million and one sub-sovereign, supranational and non-U.S. agency bonds AFS security with a fair value of $68.3 million and unrealized loss of $9.1 million have been excluded from the table above as these AFS securities have a $1.3 million allowance for credit losses reported as of December 31, 2022. Refer to the discussion further below and Note 6, “Allowance for Credit Losses” for further information.

As of December 31, 2023, 898 AFS debt securities with a combined fair value of $19.4 billion were in an unrealized loss position without an allowance for credit losses, with their unrealized losses totaling $568.3 million. As of December 31, 2023, unrealized losses in AFS debt securities of $200.3 million, $105.8 million, and $100.0 million related to government sponsored agency, sub-sovereign, supranational and non-U.S. agency bonds, and other asset-backed, respectively, which are primarily attributable to lower yields and tighter spreads.

As of December 31, 2022, 1,030 AFS debt securities with a combined fair value of $21.4 billion were in an unrealized loss position without an allowance for credit losses, with their unrealized losses totaling $1.0 billion. As of December 31, 2022, unrealized losses in AFS debt securities of $351.6 million, $288.1 million, and $157.6 million related to government-sponsored agency, other asset-backed, and sub-sovereign, supranational and non-U.S. agency bonds, respectively, which are primarily attributable to changes in market interest rates and credit spreads since their purchase.

AFS debt securities impairment reviews are conducted quarterly to identify and evaluate securities that have indications of possible credit losses. A determination as to whether a security’s decline in market value is related to credit impairment takes into consideration numerous factors and the relative significance of any single factor can vary by security. Factors Northern Trust considers in determining whether impairment is credit-related include, but are not limited to, the severity of the impairment; the cause of the impairment; the financial condition and near-term prospects of the issuer; activity in the market of the issuer, which may indicate adverse credit conditions; Northern Trust’s intent regarding the sale of the security as of the balance sheet date; and the likelihood that Northern Trust will not be required to sell the

security for a period of time sufficient to allow for the recovery of the security’s amortized cost basis. For each security meeting the requirements of Northern Trust’s internal screening process, an extensive review is conducted to determine if a credit loss has occurred.

As of December 31, 2022, the Corporation intended to sell certain AFS debt securities that were in an unrealized loss position. The securities were written down to their fair value of $2.1 billion with a $213.0 million loss recognized in Investment Security Gains (Losses), net on the consolidated statements of income for the period ended December 31, 2022. In January 2023, the securities were subsequently sold, resulting in an incremental $6.9 million gain upon sale. In November 2023, the Corporation sold an additional $3.2 billion of AFS securities with a fair value of $3.0 billion, which resulted in a $176.4 million loss recognized in Investment Securities Gains (Losses), net on the consolidated statements of income for the period ended December 31, 2023.

There was a $1.2 million allowance for credit losses for AFS securities for the year ended December 31, 2023, primarily for corporate debt securities, reflecting a $0.1 million release from December 31, 2022. There was a $1.3 million allowance for credit losses for AFS securities for the year ended December 31, 2022, primarily for corporate debt securities, reflecting an increase of $1.3 million from December 31, 2021. The process for identifying credit losses for AFS securities is based on the best estimate of cash flows to be collected from the security, discounted using the security’s effective interest rate. If the present value of the expected cash flows is found to be less than the current amortized cost of the security, an allowance for credit losses is generally recorded equal to the difference between the two amounts, limited to the amount the amortized cost basis exceeds the fair value of the security. For additional information, please refer to Note 6, “Allowance for Credit Losses.”

Held to Maturity Debt Securities. The following tables provide the amortized cost, fair values and remaining maturities of held to maturity (HTM) debt securities.

TABLE 59: RECONCILIATION OF AMORTIZED COST TO FAIR VALUES OF HELD TO MATURITY DEBT SECURITIES

	DECEMBER 31, 2023
(In Millions)	AMORTIZED COST		GROSS UNREALIZED GAINS		GROSS UNREALIZED LOSSES		FAIR VALUE
U.S. Government	$	—	$	—	$	—	$	—
Obligations of States and Political Subdivisions	2,563.9		0.5		72.4		2,492.0
Government Sponsored Agency	9,355.3		2.3		1,012.4		8,345.2
Non-U.S. Government	4,789.1		0.2		90.7		4,698.6
Corporate Debt	646.1		—		28.2		617.9
Covered Bonds	2,208.6		0.3		108.3		2,100.6
Certificates of Deposit	585.1		—		0.7		584.4
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	5,245.5		3.2		294.9		4,953.8
Other Asset-Backed	214.2		0.4		0.2		214.4
Commercial Mortgage-Backed	37.6		—		0.8		36.8
Other	576.3		—		147.0		429.3
Total	$	26,221.7	$	6.9	$	1,755.6	$	24,473.0

	DECEMBER 31, 2022
(In Millions)	AMORTIZED COST		GROSS UNREALIZED GAINS		GROSS UNREALIZED LOSSES		FAIR VALUE
U.S. Government	$	50.0	$	—	$	—	$	50.0
Obligations of States and Political Subdivisions	2,565.3		—		149.8		2,415.5
Government Sponsored Agency	9,407.7		—		1,076.0		8,331.7
Non-U.S. Government	3,234.0		0.1		133.8		3,100.3
Corporate Debt	713.3		—		45.4		667.9
Covered Bonds	2,530.3		0.3		158.7		2,371.9
Certificates of Deposit	35.9		—		—		35.9
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	5,703.3		1.0		436.1		5,268.2
Other Asset-Backed	263.7		—		1.0		262.7
Other	532.6		—		157.4		375.2
Total	$	25,036.1	$	1.4	$	2,158.2	$	22,879.3

As of December 31, 2023, the $26.2 billion HTM debt securities portfolio had unrealized losses of $1.0 billion and $294.9 million related to government sponsored agency and sub-sovereign, supranational and non-U.S. agency bonds, respectively, which are primarily attributable to lower yields and tighter spreads. As of December 31, 2022, the $25.0 billion HTM debt securities portfolio had unrealized losses of $1.1 billion and $436.1 million related to government-sponsored agency and sub-sovereign, supranational and non-U.S. agency bonds, respectively, which are primarily attributable to changes in overall market interest rates and credit spreads since their purchase.

TABLE 60: REMAINING MATURITY OF HELD TO MATURITY DEBT SECURITIES

DECEMBER 31, 2023	ONE YEAR OR LESS				ONE TO FIVE YEARS				FIVE TO TEN YEARS				OVER TEN YEARS				TOTAL
(In Millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
U.S. Government	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Obligations of States and Political Subdivisions	45.7		45.3		1,100.7		1,076.8		1,126.3		1,090.8		291.2		279.1		2,563.9		2,492.0
Government Sponsored Agency	984.3		885.4		3,381.4		3,037.6		3,248.6		2,905.4		1,741.0		1,516.8		9,355.3		8,345.2
Non-U.S. Government	3,376.0		3,374.3		1,379.3		1,294.7		33.8		29.6		—		—		4,789.1		4,698.6
Corporate Debt	276.8		269.5		353.7		335.2		15.6		13.2		—		—		646.1		617.9
Covered Bonds	345.4		342.1		1,623.1		1,542.5		240.1		216.0		—		—		2,208.6		2,100.6
Certificates of Deposit	585.1		584.4		—		—		—		—		—		—		585.1		584.4
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	1,080.8		1,055.6		4,159.0		3,893.6		5.7		4.6		—		—		5,245.5		4,953.8
Other Asset-Backed	14.7		14.7		102.0		102.1		97.5		97.6		—		—		214.2		214.4
Commercial Mortgage-Backed	—		—		37.6		36.8		—		—		—		—		37.6		36.8
Other	47.8		46.7		319.0		287.9		30.7		23.5		178.8		71.2		576.3		429.3
Total	$	6,756.6	$	6,618.0	$	12,455.8	$	11,607.2	$	4,798.3	$	4,380.7	$	2,211.0	$	1,867.1	$	26,221.7	$	24,473.0

Note: Mortgage-backed and asset-backed securities are included in the above table taking into account anticipated future prepayments.

HTM debt securities consist of securities that management intends to, and Northern Trust has the ability to, hold until maturity. During the year ended December 31, 2022, for capital management purposes, the Corporation transferred government sponsored agency and obligations of states and political subdivisions securities that had a fair value of $6.6 billion from the AFS to HTM classification, all of which were transferred in the third quarter of 2022. Upon transfer of a debt security from the AFS to HTM classification, the amortized cost is reset to fair value. Any net unrealized gain or loss at the date of transfer will remain in AOCI and be amortized into Net Interest Income over the remaining life of the securities using the effective interest method. The amortization of amounts retained in AOCI will offset the effect on interest income of the amortization of the premium or discount resulting from transferring the securities at fair value.

Credit Quality Indicators. The following table provides the amortized cost of HTM debt securities by credit rating.

TABLE 61: AMORTIZED COST OF HELD TO MATURITY DEBT SECURITIES BY CREDIT RATING

	AS OF DECEMBER 31, 2023
($ In Millions)	AAA			AA			A			BBB			NOT RATED			TOTAL
U.S. Government	$	—		$	—		$	—		$	—		$	—		$	—
Obligations of States and Political Subdivisions	954.7			1,609.0			—			—			0.2			2,563.9
Government Sponsored Agency	9,355.3			—			—			—			—			9,355.3
Non-U.S. Government	813.3			1,179.6			2,463.3			332.9			—			4,789.1
Corporate Debt	2.1			302.6			341.4			—			—			646.1
Covered Bonds	2,208.6			—			—			—			—			2,208.6
Certificates of Deposit	545.9			—			—			—			39.2			585.1
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	4,047.9			1,166.5			30.0			1.1			—			5,245.5
Other Asset-Backed	214.2			—			—			—			—			214.2
Commercial Mortgage-Backed	37.6			—			—			—			—			37.6
Other	54.8			—			—			—			521.5			576.3
Total	$	18,234.4		$	4,257.7		$	2,834.7		$	334.0		$	560.9		$	26,221.7
Percent of Total	70		%	16		%	11		%	1		%	2		%	100		%

	AS OF DECEMBER 31, 2022
($ In Millions)	AAA			AA			A			BBB			NOT RATED			TOTAL
U.S. Government	$	50.0		$	—		$	—		$	—		$	—		$	50.0
Obligations of States and Political Subdivisions	926.8			1,638.5			—			—			—			2,565.3
Government Sponsored Agency	9,407.7			—			—			—			—			9,407.7
Non-U.S. Government	762.2			926.5			1,223.0			322.3			—			3,234.0
Corporate Debt	2.1			305.7			405.5			—			—			713.3
Covered Bonds	2,530.3			—			—			—			—			2,530.3
Certificates of Deposit	—			—			—			—			35.9			35.9
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	4,171.3			1,502.0			28.9			1.1			—			5,703.3
Other Asset-Backed	263.7			—			—			—			—			263.7
Other	65.8			—			—			—			466.8			532.6
Total	$	18,179.9		$	4,372.7		$	1,657.4		$	323.4		$	502.7		$	25,036.1
Percent of Total	73		%	17		%	7		%	1		%	2		%	100		%

Credit quality indicators are metrics that provide information regarding the relative credit risk of debt securities. Northern Trust maintains a high quality debt securities portfolio, with 97% of the HTM portfolio composed of securities rated A or higher as of both December 31, 2023 and 2022. The remaining HTM debt securities portfolio was composed of 1% rated BBB at both December 31, 2023 and 2022, and 2% not rated by Moody’s, S&P Global, or Fitch Ratings at both December 31, 2023 and 2022. Securities not explicitly rated were grouped where possible under the credit rating of the issuer of the security.

Investment Security Gains and Losses. There was a $176.4 million available for sale debt security loss arising from a repositioning of the portfolio during the fourth quarter of 2023 and a $6.9 million gain upon sale of certain available for sale debt securities in the first quarter of 2023. During the fourth quarter of 2022, losses of $213.0 million were recognized in conjunction with the intent to sell certain AFS debt securities which is included in the tables below. Proceeds of $5.2 billion, $138.7 million and $116.7 million in 2023, 2022 and 2021, respectively, from the sale of debt securities resulted in the following pre-tax Investment Security Gains (Losses), net shown in the following tables.

TABLE 62: INVESTMENT SECURITY GAINS AND LOSSES

	DECEMBER 31,
(In Millions)	2023		2022		2021
Gross Realized Debt Securities Gains	$	10.5	$	—	$	1.4
Gross Realized Debt Securities Losses	(180.0)		(214.0)		(1.7)
Investment Security Gains (Losses), net(1)	$	(169.5)	$	(214.0)	$	(0.3)

(1) $214.0 million of Investment Security Gains (Losses), net includes a $213.0 million loss recognized in 2022 in conjunction with the intent to sell certain AFS debt securities.

TABLE 63: INVESTMENT SECURITY GAINS AND LOSSES BY SECURITY TYPE

	DECEMBER 31,
(In Millions)	2023		2022		2021
U.S. Governments	$	(29.9)	$	—	$	—
Obligations of States and Political Subdivisions	9.8		(95.8)		—
Government Sponsored Agency	(73.2)		—		—
Corporate Debt	(7.6)		(67.3)		(0.3)
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	(9.1)		—		—
Other Asset-Backed	(58.6)		(17.1)		—
Commercial Mortgage-Backed	(0.9)		(33.8)		—
Investment Security Gains (Losses), net(1)	$	(169.5)	$	(214.0)	$	(0.3)

(1) $214.0 million of Investment Security Gains (Losses), net includes a $213.0 million loss recognized in 2022 in conjunction with the intent to sell certain AFS debt securities.