Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2023

Fair Value Disclosures [Abstract]

Valuation Techniques, Significant Unobservable Inputs, and Quantitative Information

The following table presents the fair values of Northern Trust’s Level 3 liabilities as of December 31, 2023 and 2022, as well as the valuation techniques, significant unobservable inputs, and quantitative information used to develop significant unobservable inputs for such liabilities as of such dates.

TABLE 51: LEVEL 3 SIGNIFICANT UNOBSERVABLE INPUTS

	DECEMBER 31, 2023
FINANCIAL INSTRUMENT	FAIR VALUE	VALUATION TECHNIQUE	UNOBSERVABLE INPUTS	INPUT VALUES			WEIGHTED-AVERAGE INPUT VALUES(1)
Swaps Related to Sale of Certain Visa Class B Common Shares	$25.4 million	Discounted Cash Flow	Conversion Rate	1.59x			1.59x
			Visa Class A Appreciation	10.49%			10.49%
			Expected Duration	9	-	27 months	13 months

(1) Weighted average of expected duration based on scenario probability.

	DECEMBER 31, 2022
FINANCIAL INSTRUMENT	FAIR VALUE	VALUATION TECHNIQUE	UNOBSERVABLE INPUTS	INPUT VALUES			WEIGHTED-AVERAGE INPUT VALUES(1)
Swaps Related to Sale of Certain Visa Class B Common Shares	$34.8 million	Discounted Cash Flow	Conversion Rate	1.60x			1.60x
			Visa Class A Appreciation	8.53%			8.53%
			Expected Duration	12	-	33 months	20 months

(1) Weighted average of expected duration based on scenario probability.

The following table presents the fair values of Northern Trust’s Level 3 assets that were measured at fair value on a nonrecurring basis as of December 31, 2023 and 2022, as well as the valuation technique, significant unobservable inputs, and quantitative information used to develop the significant unobservable inputs for such assets as of such dates.

TABLE 54: LEVEL 3 NONRECURRING BASIS SIGNIFICANT UNOBSERVABLE INPUTS

	DECEMBER 31, 2023
FINANCIAL INSTRUMENT	FAIR VALUE(1)	VALUATION  TECHNIQUE	UNOBSERVABLE INPUTS	INPUT VALUES			WEIGHTED-AVERAGE INPUT VALUES
Loans	$43.3 million	Market Approach	Discount factor applied to real estate collateral-dependent loans to reflect realizable value	0.0%	–	20.0%	2.0%

(1) Includes real estate collateral-dependent loans and other collateral-dependent loans.

	DECEMBER 31, 2022
FINANCIAL INSTRUMENT	FAIR VALUE(1)	VALUATION  TECHNIQUE	UNOBSERVABLE INPUTS	INPUT VALUES			WEIGHTED-AVERAGE INPUT VALUES
Loans	$6.6 million	Market Approach	Discount factor applied to real estate collateral-dependent loans to reflect realizable value	15.0%	–	20.0%	17.2%

(1) Includes real estate collateral-dependent loans and other collateral-dependent loans.

Assets and Liabilities Measured at Fair Value on Recurring Basis Segregated by Fair Value Hierarchy Level

The following presents assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 and 2022, segregated by fair value hierarchy level.

TABLE 52: RECURRING BASIS HIERARCHY LEVELING

	DECEMBER 31, 2023
(In Millions)	LEVEL 1		LEVEL 2		LEVEL 3		NETTING		ASSETS/ LIABILITIES AT FAIR VALUE
Debt Securities
Available for Sale
U.S. Government	$	3,622.2	$	—	$	—	$	—	$	3,622.2
Obligations of States and Political Subdivisions	—		295.8		—		—		295.8
Government Sponsored Agency	—		11,553.0		—		—		11,553.0
Non-U.S. Government	—		264.4		—		—		264.4
Corporate Debt	—		279.5		—		—		279.5
Covered Bonds	—		347.1		—		—		347.1
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	—		2,899.9		—		—		2,899.9
Other Asset-Backed	—		2,962.6		—		—		2,962.6
Commercial Mortgage-Backed	—		865.3		—		—		865.3
Total Available for Sale	3,622.2		19,467.6		—		—		23,089.8
Other Assets
Money Market Investment	95.0		—		—		—		95.0
Derivative Assets
Foreign Exchange Contracts	—		3,266.7		—		(2,937.2)		329.5
Interest Rate Contracts	—		301.5		—		(189.5)		112.0
Total Derivative Assets	—		3,568.2		—		(3,126.7)		441.5
Other Liabilities
Derivative Liabilities
Foreign Exchange Contracts	—		3,255.2		—		(2,175.7)		1,079.5
Interest Rate Contracts	—		369.2		—		(6.0)		363.2
Other Financial Derivatives(1)	—		—		25.4		(23.7)		1.7
Total Derivative Liabilities	$	—	$	3,624.4	$	25.4	$	(2,205.4)	$	1,444.4

Note: Northern Trust has elected to net derivative assets and liabilities when legally enforceable master netting arrangements or similar agreements exist between Northern Trust and the counterparty. As of December 31, 2023, derivative assets and liabilities shown above also include reductions of $2,093.8 million and $1,172.5 million, respectively, as a result of cash collateral received from and deposited with derivative counterparties.

(1) This line consists of swaps related to the sale of certain Visa Class B common shares.

	DECEMBER 31, 2022
(In Millions)	LEVEL 1		LEVEL 2		LEVEL 3		NETTING		ASSETS/ LIABILITIES AT FAIR VALUE
Debt Securities
Available for Sale
U.S. Government	$	2,747.4	$	—	$	—	$	—	$	2,747.4
Obligations of States and Political Subdivisions	—		787.6		—		—		787.6
Government Sponsored Agency	—		11,545.2		—		—		11,545.2
Non-U.S. Government	—		360.0		—		—		360.0
Corporate Debt	—		1,747.6		—		—		1,747.6
Covered Bonds	—		388.7		—		—		388.7
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds	—		2,479.4		—		—		2,479.4
Other Asset-Backed	—		5,256.2		—		—		5,256.2
Commercial Mortgage Backed	—		1,387.8		—		—		1,387.8
Total Available for Sale	2,747.4		23,952.5		—		—		26,699.9
Trading Account	95.0		0.2		—		—		95.2
Total Available for Sale and Trading Debt Securities	2,842.4		23,952.7		—		—		26,795.1
Other Assets
Derivative Assets
Foreign Exchange Contracts	—		3,510.1		—		(2,666.4)		843.7
Interest Rate Contracts	—		222.0		—		(144.3)		77.7
Other Financial Derivatives(1)	—		0.3		—		—		0.3
Total Derivatives Assets	—		3,732.4		—		(2,810.7)		921.7
Other Liabilities
Derivative Liabilities
Foreign Exchange Contracts	—		3,187.5		—		(1,826.7)		1,360.8
Interest Rate Contracts	—		431.8		—		(5.9)		425.9
Other Financial Derivatives(2)	—		—		34.8		(33.3)		1.5
Total Derivative Liabilities	$	—	$	3,619.3	$	34.8	$	(1,865.9)	$	1,788.2

Note: Northern Trust has elected to net derivative assets and liabilities when legally enforceable master netting arrangements or similar agreements exist between Northern Trust and the counterparty. As of December 31, 2022, derivative assets and liabilities shown above also include reductions of $1,140.2 million and $195.3 million, respectively, as a result of cash collateral received from and deposited with derivative counterparties.

(1) This line consists of total return swap contracts.

(2) This line consists of swaps related to the sale of certain Visa Class B common shares.

Changes in Level 3 Liabilities

The following table presents the changes in Level 3 liabilities for the years ended December 31, 2023 and 2022.

TABLE 53: CHANGES IN LEVEL 3 LIABILITIES

LEVEL 3 LIABILITIES	SWAPS RELATED TO SALE OF CERTAIN VISA CLASS B COMMON SHARES
(In Millions)	2023		2022
Fair Value at January 1	$	34.8	$	37.5
Total (Gains) Losses:
Included in Earnings(1)	18.9		22.6
Purchases, Issues, Sales, and Settlements
Settlements	(28.3)		(25.3)
Fair Value at December 31	$	25.4	$	34.8
Unrealized Losses (Gains) Included in Earnings Related to Financial Instruments Held at December 31(1)	$	15.4	$	16.6

(1) Gains (losses) are recorded in Other Operating Income on the consolidated statements of income.

Book and Fair Values of All Financial Instruments

The following tables presents the book value and estimated fair value, including the fair value hierarchy level, of Northern Trust’s financial instruments that are not measured at fair value on the consolidated balance sheets as of December 31, 2023 and 2022. The following tables exclude those items measured at fair value on a recurring basis.

TABLE 55: FAIR VALUE OF FINANCIAL INSTRUMENTS

	DECEMBER 31, 2023
					ESTIMATED FAIR VALUE
(In Millions)	BOOK VALUE		TOTAL ESTIMATED FAIR VALUE		LEVEL 1		LEVEL 2		LEVEL 3
FINANCIAL ASSETS
Cash and Due from Banks	$	4,791.5	$	4,791.5	$	4,791.5	$	—	$	—
Federal Reserve and Other Central Bank Deposits	34,326.2		34,326.2		—		34,326.2		—
Interest-Bearing Deposits with Banks	1,939.0		1,939.0		—		1,939.0		—
Securities Purchased under Agreements to Resell	784.7		784.7		—		784.7		—
Debt Securities - Held to Maturity	26,221.7		24,473.0		—		24,473.0		—
Loans
Held for Investment	47,438.3		47,598.3		—		—		47,598.3
Other Assets	1,476.6		1,458.0		86.1		1,371.9		—
FINANCIAL LIABILITIES
Deposits	116,164.0		116,207.6		—		116,207.6		—
Federal Funds Purchased	3,045.4		3,045.4		—		3,045.4		—
Securities Sold Under Agreements to Repurchase	784.7		784.7		—		784.7		—
Other Borrowings	6,567.8		6,607.4		—		6,607.4		—
Senior Notes	2,773.2		2,798.1		—		2,798.1		—
Long-Term Debt	4,065.0		4,186.8		—		4,186.8		—
Unfunded Commitments	178.8		178.8		—		178.8		—
Other Liabilities	74.9		74.9		—		—		74.9

	DECEMBER 31, 2022
					ESTIMATED FAIR VALUE
(In Millions)	BOOK VALUE		TOTAL ESTIMATED FAIR VALUE		LEVEL 1		LEVEL 2		LEVEL 3
FINANCIAL ASSETS
Cash and Due from Banks	$	4,654.2	$	4,654.2	$	4,654.2	$	—	$	—
Federal Reserve and Other Central Bank Deposits	40,030.4		40,030.4		—		40,030.4		—
Interest-Bearing Deposits with Banks	1,941.1		1,941.1		—		1,941.1		—
Federal Funds Sold	32.0		32.0		—		32.0		—
Securities Purchased under Agreements to Resell	1,070.3		1,070.3		—		1,070.3		—
Debt Securities - Held to Maturity	25,036.1		22,879.3		50.0		22,829.3		—
Loans
Held for Investment	42,749.0		42,636.5		—		—		42,636.5
Other Assets	1,476.9		1,460.4		94.7		1,365.7		—
FINANCIAL LIABILITIES
Deposits(1)	123,932.1		123,926.9		—		123,926.9		—
Federal Funds Purchased	1,896.9		1,896.9		—		1,896.9		—
Securities Sold Under Agreements to Repurchase	567.2		567.2		—		567.2		—
Other Borrowings	7,592.3		7,592.8		—		7,592.8		—
Senior Notes	2,724.2		2,729.8		—		2,729.8		—
Long-Term Debt	2,066.2		2,110.7		—		2,110.7		—
Unfunded Commitments	218.9		218.9		—		218.9		—
Other Liabilities	73.2		73.2		—		—		73.2

(1) Northern Trust reclassified its leveling interpretation on client deposits, moving Demand, Noninterest-Bearing, Savings, Money Market and Other Interest-Bearing from Level 1 to Level 2 during 2023, and collapsed client deposits into one row.