Loans

9 Months Ended

Sep. 30, 2024

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

TABLE 48: LOANS


(In Millions)	SEPTEMBER 30, 2024		DECEMBER 31, 2023
Commercial
Commercial and Institutional(1)	$	10,391.3	$	11,555.3
Commercial Real Estate	5,251.0		5,134.2
Non-U.S.(1)	2,742.6		2,778.5

Other	2,448.9		5,944.8
Total Commercial	20,833.8		25,412.8
Personal
Private Client	14,195.5		14,360.0
Residential Real Estate	6,141.2		6,327.1
Non-U.S.	457.2		428.8
Other	322.6		1,088.3
Total Personal	21,116.5		22,204.2
Total Loans	$	41,950.3	$	47,617.0

(1) Commercial and institutional and commercial-non-U.S. combined include $3.8 billion and $4.5 billion of private equity capital call finance loans at September 30, 2024 and December 31, 2023, 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. In general, 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, 2024 and December 31, 2023, equity credit lines totaled $221.1 million and $228.7 million, respectively, and equity credit lines for which first liens were held by Northern Trust represented 98% and 96% of the total equity credit lines, 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 $4.5 billion and $8.4 billion at September 30, 2024 and December 31, 2023, respectively. Demand deposit overdrafts reclassified as loan balances, primarily in personal-other, totaled $19.0 million and $12.1 million at September 30, 2024 and December 31, 2023, respectively.

Loans classified as held for sale are recorded at the lower of cost or fair value. There were no loans classified as held for sale at September 30, 2024 or December 31, 2023. There were no loans sold for the three and nine months ended September 30, 2024 and September 30, 2023.

Credit Quality Indicators. Credit quality indicators are statistics, measurements or other metrics that provide information regarding the relative credit risk of loans. Northern Trust uses 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 their probability of 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, 2024 and December 31, 2023 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 49: CREDIT QUALITY INDICATOR AT AMORTIZED COST BASIS BY ORIGINATION YEAR


	TERM LOANS												REVOLVING LOANS		REVOLVING LOANS CONVERTED TO TERM LOANS
September 30, 2024	2024		2023		2022		2021		2020		PRIOR						TOTAL
Commercial
Commercial and Institutional
Risk Rating:
1 to 3 Category	$	322.6	$	247.5	$	371.2	$	588.1	$	66.1	$	381.0	$	4,222.0	$	21.3	$	6,219.8
4 to 5 Category	544.9		538.1		458.1		494.4		103.8		141.9		1,513.4		56.3		3,850.9
6 to 9 Category	34.9		81.4		63.0		81.5		2.3		2.3		48.2		7.0		320.6
Total Commercial and Institutional	902.4		867.0		892.3		1,164.0		172.2		525.2		5,783.6		84.6		10,391.3
C&I Gross Charge-offs	—		(7.3)		(1.3)		—		—		—		—		—		(8.6)
Commercial Real Estate
Risk Rating:
1 to 3 Category	97.3		339.5		289.1		219.5		18.8		68.5		53.7		—		1,086.4
4 to 5 Category	274.1		1,669.7		1,048.1		436.2		193.2		200.1		159.6		5.3		3,986.3
6 to 9 Category	14.1		16.0		126.4		17.1		4.3		0.4		—		—		178.3
Total Commercial Real Estate	385.5		2,025.2		1,463.6		672.8		216.3		269.0		213.3		5.3		5,251.0
Commercial Real Estate Gross Charge-offs	—		—		(2.4)		—		—		—		—		—		(2.4)
Non-U.S.
Risk Rating:
1 to 3 Category	1,215.8		24.2		—		—		117.7		30.2		577.0		—		1,964.9
4 to 5 Category	606.0		16.5		0.8		1.2		—		69.3		69.6		—		763.4
6 to 9 Category	0.5		—		13.8		—		—		—		—		—		14.3
Total Non-U.S.	1,822.3		40.7		14.6		1.2		117.7		99.5		646.6		—		2,742.6







Other
Risk Rating:
1 to 3 Category	1,183.9		—		—		—		—		—		—		—		1,183.9
4 to 5 Category	1,264.9		—		—		—		—		—		—		—		1,264.9
6 to 9 Category	0.1		—		—		—		—		—		—		—		0.1
Total Other	2,448.9		—		—		—		—		—		—		—		2,448.9
Other Gross Charge-offs	—		—		—		—		—		—		—		—		—
Total Commercial	5,559.1		2,932.9		2,370.5		1,838.0		506.2		893.7		6,643.5		89.9		20,833.8
Commercial Gross Charge-offs	—		(7.3)		(3.7)		—		—		—		—		—		(11.0)
Personal
Private Client
Risk Rating:
1 to 3 Category	206.7		80.0		39.5		38.3		19.1		39.8		4,503.2		144.1		5,070.7
4 to 5 Category	141.8		635.2		423.2		424.4		124.1		188.0		6,688.7		474.7		9,100.1
6 to 9 Category	0.1		16.3		—		—		—		—		8.3		—		24.7
Total Private Client	348.6		731.5		462.7		462.7		143.2		227.8		11,200.2		618.8		14,195.5
Private Client Gross Charge-offs	—		—		—		—		—		(0.3)		—		—		(0.3)
Residential Real Estate
Risk Rating:
1 to 3 Category	138.5		231.3		433.6		407.3		332.0		816.6		189.9		—		2,549.2
4 to 5 Category	134.6		224.0		664.6		706.2		678.4		940.4		165.6		2.1		3,515.9
6 to 9 Category	—		—		7.5		3.9		0.4		37.0		27.3		—		76.1
Total Residential Real Estate	273.1		455.3		1,105.7		1,117.4		1,010.8		1,794.0		382.8		2.1		6,141.2
Residential Real Estate Gross Charge-offs	—		—		—		—		—		(0.1)		—		—		(0.1)
Non-U.S.
Risk Rating:
1 to 3 Category	3.2		1.0		—		—		—		6.8		158.0		—		169.0
4 to 5 Category	19.6		16.0		15.3		39.3		—		19.2		163.6		7.3		280.3
6 to 9 Category	7.9		—		—		—		—		—		—		—		7.9
Total Non-U.S.	30.7		17.0		15.3		39.3		—		26.0		321.6		7.3		457.2

Other
Risk Rating:
1 to 3 Category	199.4		—		—		—		—		—		—		—		199.4
4 to 5 Category	123.1		—		—		—		—		—		—		—		123.1
6 to 9 Category	0.1		—		—		—		—		—		—		—		0.1
Total Other	322.6		—		—		—		—		—		—		—		322.6

Total Personal	975.0		1,203.8		1,583.7		1,619.4		1,154.0		2,047.8		11,904.6		628.2		21,116.5
Personal Gross Charge-offs	—		—		—		—		—		(0.4)		—		—		(0.4)
Total Loans	$	6,534.1	$	4,136.7	$	3,954.2	$	3,457.4	$	1,660.2	$	2,941.5	$	18,548.1	$	718.1	$	41,950.3
Total Loans Gross Charge-offs	$	—	$	(7.3)	$	(3.7)	$	—	$	—	$	(0.4)	$	—	$	—	$	(11.4)


December 31, 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	$	443.9	$	534.1	$	668.3	$	78.1	$	137.2	$	409.9	$	4,909.8	$	15.0	$	7,196.3
4 to 5 Category	801.4		790.9		729.5		138.7		120.5		178.7		1,332.4		72.0		4,164.1
6 to 9 Category	13.8		70.0		60.8		12.0		0.1		1.7		34.7		1.8		194.9
Total Commercial and Institutional	1,259.1		1,395.0		1,458.6		228.8		257.8		590.3		6,276.9		88.8		11,555.3
Commercial Real Estate
Risk Rating:
1 to 3 Category	403.6		389.9		159.1		23.9		37.8		44.8		51.0		—		1,110.1
4 to 5 Category	1,513.5		1,208.8		521.0		218.4		252.8		96.0		136.3		7.9		3,954.7
6 to 9 Category	16.1		—		30.5		—		8.2		14.6		—		—		69.4
Total Commercial Real Estate	1,933.2		1,598.7		710.6		242.3		298.8		155.4		187.3		7.9		5,134.2
CRE Gross Charge-offs	(0.7)		(4.4)		—		—		—		—		—		—		(5.1)
Non-U.S.
Risk Rating:
1 to 3 Category	487.9		—		43.2		65.2		34.2		3.3		760.0		—		1,393.8
4 to 5 Category	974.7		0.8		—		—		—		150.0		243.4		—		1,368.9
6 to 9 Category	1.5		14.3		—		—		—		—		—		—		15.8
Total Non-U.S.	1,464.1		15.1		43.2		65.2		34.2		153.3		1,003.4		—		2,778.5
Other
Risk Rating:
1 to 3 Category	4,313.2		—		—		—		—		—		—		—		4,313.2
4 to 5 Category	1,631.6		—		—		—		—		—		—		—		1,631.6
Total Other	5,944.8		—		—		—		—		—		—		—		5,944.8
Other Gross Charge-offs	(0.6)		—		—		—		—		—		—		—		(0.6)
Total Commercial	10,601.2		3,008.8		2,212.4		536.3		590.8		899.0		7,467.6		96.7		25,412.8
Commercial Gross Charge-offs	(1.3)		(4.4)		—		—		—		—		—		—		(5.7)
Personal
Private Client
Risk Rating:
1 to 3 Category	504.7		140.8		52.3		67.5		8.7		134.7		5,320.9		168.1		6,397.7
4 to 5 Category	290.1		488.2		655.1		100.9		158.8		44.7		5,721.5		447.8		7,907.1
6 to 9 Category	23.6		0.3		—		—		—		18.3		13.0		—		55.2
Total Private Client	818.4		629.3		707.4		168.4		167.5		197.7		11,055.4		615.9		14,360.0
Residential Real Estate
Risk Rating:
1 to 3 Category	278.7		464.0		500.6		373.3		142.4		722.4		219.8		—		2,701.2
4 to 5 Category	191.6		694.9		717.4		686.7		290.0		805.3		170.3		—		3,556.2
6 to 9 Category	—		10.9		—		0.7		1.6		43.6		12.9		—		69.7
Total Residential Real Estate	470.3		1,169.8		1,218.0		1,060.7		434.0		1,571.3		403.0		—		6,327.1
RRE Gross Charge-offs	(0.8)		—		—		—		—		(1.0)		—		—		(1.8)
Non-U.S.
Risk Rating:
1 to 3 Category	15.5		—		0.6		—		—		4.6		71.4		—		92.1
4 to 5 Category	12.7		16.0		39.2		—		16.4		8.9		236.1		7.4		336.7
6 to 9 Category	—		—		—		—		—		—		—		—		—
Total Non-U.S.	28.2		16.0		39.8		—		16.4		13.5		307.5		7.4		428.8
Other
Risk Rating:
1 to 3 Category	461.7		—		—		—		—		—		—		—		461.7
4 to 5 Category	626.6		—		—		—		—		—		—		—		626.6
Total Other	1,088.3		—		—		—		—		—		—		—		1,088.3
Total Personal	2,405.2		1,815.1		1,965.2		1,229.1		617.9		1,782.5		11,765.9		623.3		22,204.2
Personal Gross Charge-Offs	$	(0.8)	$	—	$	—	$	—	$	—	$	(1.0)	$	—	$	—	$	(1.8)
Total Loans	13,006.4		4,823.9		4,177.6		1,765.4		1,208.7		2,681.5		19,233.5		720.0		47,617.0
Total Loans Gross Charge-Offs	$	(2.1)	$	(4.4)	$	—	$	—	$	—	$	(1.0)	$	—	$	—	$	(7.5)

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, 2024 and December 31, 2023.

TABLE 50: 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, 2024
Commercial
Commercial and Institutional	$	10,246.1	$	65.3	$	16.4	$	55.4	$	10,383.2	$	8.1	$	10,391.3	$	8.1
Commercial Real Estate	5,220.6		19.8		5.0		—		5,245.4		5.6		5,251.0		5.6
Non-U.S.	2,691.6		46.9		—		3.6		2,742.1		0.5		2,742.6		—

Other	2,448.9		—		—		—		2,448.9		—		2,448.9		—
Total Commercial	20,607.2		132.0		21.4		59.0		20,819.6		14.2		20,833.8		13.7
Personal
Private Client	14,015.9		131.1		18.3		28.2		14,193.5		2.0		14,195.5		—
Residential Real Estate	6,086.6		8.5		23.0		—		6,118.1		23.1		6,141.2		23.1
Non-U.S.	457.1		0.1		—		—		457.2		—		457.2		—
Other	322.6		—		—		—		322.6		—		322.6		—
Total Personal	20,882.2		139.7		41.3		28.2		21,091.4		25.1		21,116.5		23.1
Total Loans	$	41,489.4	$	271.7	$	62.7	$	87.2	$	41,911.0	$	39.3	$	41,950.3	$	36.8
	Other Real Estate Owned										$	—
	Total Nonaccrual Assets										$	39.3


	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, 2023
Commercial
Commercial and Institutional	$	11,374.6	$	163.7	$	0.7	$	—	$	11,539.0	$	16.3	$	11,555.3	$	4.1
Commercial Real Estate	5,123.7		4.4		6.1		—		5,134.2		—		5,134.2		—
Non-U.S.	2,778.5		—		—		—		2,778.5		—		2,778.5		—
Other	5,944.8		—		—		—		5,944.8		—		5,944.8		—
Total Commercial	25,221.6		168.1		6.8		—		25,396.5		16.3		25,412.8		4.1
Personal
Private Client	14,240.0		63.9		24.8		11.0		14,339.7		20.3		14,360.0		18.3
Residential Real Estate	6,283.0		7.5		0.5		9.1		6,300.1		27.0		6,327.1		27.0
Non-U.S	428.2		—		0.6		—		428.8		—		428.8		—
Other	1,088.3		—		—		—		1,088.3		—		1,088.3		—
Total Personal	22,039.5		71.4		25.9		20.1		22,156.9		47.3		22,204.2		45.3
Total Loans	$	47,261.1	$	239.5	$	32.7	$	20.1	$	47,553.4	$	63.6	$	47,617.0	$	49.4
	Other Real Estate Owned										$	1.5
	Total Nonaccrual Assets										$	65.1

Interest income that would have been recorded for nonaccrual loans in accordance with their original terms was $0.5 million and $1.7 million for the three and nine months ended September 30, 2024, respectively, and $0.9 million and $2.3 million for the three and nine months ended September 30, 2023, respectively.

Northern Trust may obtain physical possession of real estate via foreclosure or an in-substance repossession. As of September 30, 2024 and December 31, 2023, Northern Trust held foreclosed real estate properties with an immaterial carrying value as a result of obtaining physical possession. In addition, as of September 30, 2024 and December 31, 2023, Northern Trust had loans with a carrying value of $5.2 million and $3.5 million, respectively, for which formal foreclosure proceedings were in process.

Loan Modifications to Borrowers Experiencing Financial Difficulty

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 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.

Loan modifications were immaterial for both the three and nine months ended September 30, 2024 and September 30, 2023, respectively.

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. At September 30, 2024, loans that were modified in the previous 12 months and that are now past due by more than 90 days totaled less than $1 million. No modified loans were considered past-due for purposes of these disclosures as of September 30, 2023. As of the three months ended September 30, 2024, Northern Trust had no charge offs related to modifications to borrowers experiencing financial difficulty that had been modified in the last 12 months. As of the nine months ended September 30, 2024, Northern Trust had $8.5 million charged off related to modifications to borrowers experiencing financial difficulty that had been modified in the last 12 months. As of the three and nine months ended September 30, 2023, Northern Trust had charge offs of less than $1 million related to modifications to borrowers experiencing financial difficulty that had been modified in the last 12 months.

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, 2024 and December 31, 2023, respectively.

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.