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Reporting Segments and Related Information
 12 Months Ended
Dec. 31, 2024
Segment Reporting [Abstract]  
Reporting Segments and Related Information Reporting Segments and Related Information
Segment Information. 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 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.
Equity is allocated to the reporting segments based on a variety of factors including, but not limited to, risk, regulatory considerations, and internal metrics. Allocations of equity and certain corporate expense may not be representative of levels that would be required if the segments were independent entities. The accounting policies used for management reporting are consistent with those described in Note 1, “Summary of Significant Accounting Policies.” Transfers of income and expense items are recorded at cost; there is no consolidated profit or loss on sales or transfers between reporting segments. Northern Trust’s presentations are not necessarily consistent with similar information for other financial institutions.
Revenues, expenses and average assets are allocated to Asset Servicing and Wealth Management, with the exception of non-recurring activities such as certain corporate transactions and costs incurred associated with acquisitions, divestitures, litigation, restructuring, and tax adjustments not directly attributable to a specific reporting segment, which are reported within the Other 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.
Effective January 2024, Northern Trust implemented certain enhancements to its FTP methodology, impacting the allocation of Net Interest Income to the Asset Servicing and Wealth Management segments. As a result, the approximate impact on the Asset Servicing and Wealth Management segments was a $132.0 million decrease and a $132.0 million increase in Net Interest Income, respectively, for the year ended December 31, 2024. Prior-year segment results have not been revised to reflect this methodology change.
Northern Trust’s Chief Operating Decision Maker is the Chief Executive Officer. The Chief Operating Decision Maker uses growth and profitability metrics to assess segments’ performance including segment revenue and income before income taxes. Those same measures are used by the Chief Operating Decision Maker as primary inputs into the allocation of resources in the annual planning process. Allocation of capital to each segment takes into consideration a variety of factors including average loans, average deposits and applicable regulatory capital requirements.
Asset Servicing. Asset Servicing is a leading global provider of asset servicing and related services to corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds, and other institutional investors around the globe. Asset servicing and related services encompass a full range of capabilities including but not limited to: custody; fund administration; investment operations outsourcing; investment management; investment risk and analytical services; employee benefit services; securities lending; foreign exchange; treasury management; brokerage services; transition management services; banking; and cash management. Client relationships are managed through the Bank and the Bank’s and the Corporation’s other subsidiaries, including support from locations in North America, Europe, the Middle East, and the Asia-Pacific region.
Wealth Management. Wealth Management focuses on high-net-worth individuals and families, business owners, executives, professionals, retirees, and established privately-held businesses in its target markets. In supporting these targeted segments, Wealth Management provides trust, investment management, custody, and philanthropic services; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services; and private and business banking. Wealth Management also includes Global Family Office, which provides customized services, including but not limited to: investment management; global custody; fiduciary; and private banking; family office consulting, and technology solutions, to meet the complex financial and reporting needs of ultra-high-net-worth individuals and family offices across the globe. Wealth Management services are delivered by multidisciplinary teams through a network of offices in 19 U.S. states and Washington, D.C., as well as offices in London, Guernsey, Singapore, and Abu Dhabi.
Other. Other includes expenses for Asset Management, corporate and support functions not directly incurred by, but ultimately allocated back to, our two client-focused reporting segments. Income and expenses associated with non-recurring activities such as certain costs associated with acquisitions, divestitures, litigation, restructuring, and tax adjustments are retained within Other. Other also includes the FTE adjustments of $31.8 million, $57.5 million, and $45.6 million for 2024, 2023, and 2022, respectively, in order to reconcile the segment results that are reported on an internal management-reporting basis into consolidated results.
The following tables reflect the earnings contribution and certain average balances of Northern Trust’s reporting segments for the years ended December 31, 2024, 2023, and 2022. Segment results are stated on an FTE basis which has no impact on net income.
TABLE 120: RESULTS OF REPORTING SEGMENTS
($ In Millions)ASSET SERVICINGWEALTH MANAGEMENT
FOR THE YEAR ENDED DECEMBER 31202420232022202420232022
Noninterest Income
Trust, Investment and Other Servicing Fees$2,632.8$2,461.9$2,496.3$2,095.0$1,899.9$1,936.3
Foreign Exchange Trading Income (Loss)247.2213.0281.0(16.0)(9.1)7.6
Other Noninterest Income271.9263.4250.7140.3150.8137.7
Total Noninterest Income3,151.92,938.33,028.02,219.32,041.62,081.6
Net Interest Income(1)
1,216.01,197.31,072.7993.4842.2860.1
Revenue(1)
4,367.94,135.64,100.73,212.72,883.82,941.7
Provision for Credit Losses(4.6)0.52.48.824.09.6
Noninterest Expense
Compensation1,016.3970.2948.5578.0557.8520.4
Employee Benefits201.5197.1190.787.784.286.8
Outside Services437.0449.8433.545.241.941.3
Allocated Expense1,660.51,469.51,344.81,202.51,125.41,109.2
Other Segment Items(2)
175.4186.6175.277.673.057.8
Total Noninterest Expense3,490.73,273.23,092.71,991.01,882.31,815.5
Income before Income Taxes(1)
881.8861.91,005.61,212.9977.51,116.6
Provision for Income Taxes(1)
193.7187.1243.2304.9245.9310.0
Net Income$688.1$674.8$762.4$908.0$731.6$806.6
Percentage of Consolidated Net Income34%61%57%45%66%60%
Average Assets$107,784.1$101,472.6$115,646.4$38,482.6$41,176.6$36,905.5
Average Loans$6,315.5$7,372.6$7,208.0$34,601.2$34,804.4$33,822.6
Average Deposits$86,775.3$81,812.6$96,166.1$25,558.2$23,432.9$29,426.3
(1) Financial measures stated on an FTE basis.
(2) Other Segment Items include Occupancy, Equipment & Software and Other Operating Expense.
($ In Millions)OTHERTOTAL CONSOLIDATED
FOR THE YEAR ENDED DECEMBER 31202420232022202420232022
Noninterest Income
Trust, Investment and Other Servicing Fees$—$—$—$4,727.8$4,361.8$4,432.6
Foreign Exchange Trading Income———231.2203.9288.6
Other Noninterest Income (Loss)742.1(188.4)(235.6)1,154.3225.8152.8
Total Noninterest Income742.1(188.4)(235.6)6,113.34,791.54,874.0
Net Interest Income(32.3)(57.5)(45.6)2,177.11,982.01,887.2
Revenue709.8(245.9)(281.2)8,290.46,773.56,761.2
Provision for Credit Losses(7.2)——(3.0)24.512.0
Noninterest Expense
Compensation876.8793.8779.12,471.12,321.82,248.0
Employee Benefits128.6123.9159.9417.8405.2437.4
Outside Services515.8414.8405.5998.0906.5880.3
Allocated Expense(2,863.0)(2,594.9)(2,454.0)———
Other Segment Items(1)
1,494.01,391.11,184.21,747.01,650.71,417.2
Total Noninterest Expense152.2128.774.75,633.95,284.24,982.9
Income before Income Taxes564.8(374.6)(355.9)2,659.51,464.81,766.3
Provision for Income Taxes129.8(75.5)(122.9)628.4357.5430.3
Net Income$435.0$(299.1)$(233.0)$2,031.1$1,107.3$1,336.0
Percentage of Consolidated Net Income21%(27)%(17)%100%100%100%
Average Assets$366.8$—$—$146,633.5$142,649.2$152,551.9
Average Loans$—$—$—$40,916.7$42,177.0$41,030.6
Average Deposits$366.8$—$—$112,700.3$105,245.5$125,592.4
(1) Other Segment Items include Occupancy, Equipment & Software and Other Operating Expense.
Geographic Area Information. Northern Trust’s non-U.S. activities are primarily related to its asset servicing, asset management, foreign exchange, cash management, and commercial banking businesses. The operations of Northern Trust are managed on a reporting segment basis and include components of both U.S and non-U.S. source income and assets. Non-U.S. source income and assets are not separately identified in Northern Trust’s internal management reporting system. However, Northern Trust is required to disclose non-U.S. activities based on the domicile of the customer. Due to the complex and integrated nature of Northern Trust’s activities, it is difficult to segregate with precision revenues, expenses and assets between U.S. and non-U.S.-domiciled customers. Therefore, certain subjective estimates and assumptions have been made to allocate revenues, expenses and assets between U.S. and non-U.S. operations.
For purposes of this disclosure, all foreign exchange trading income has been allocated to non-U.S. operations. Interest expense is allocated to non-U.S. operations based on specifically matched or pooled funding. Allocations of indirect noninterest expenses, when made, are based on various methods such as time, space, and number of employees.
The following table summarizes Northern Trust’s performance based on the allocation process described above without regard to guarantors or the location of collateral.
TABLE 121: DISTRIBUTION OF TOTAL ASSETS AND OPERATING PERFORMANCE
($ In Millions)TOTAL ASSETS% OF TOTAL
TOTAL
REVENUE(1)
% OF TOTALINCOME BEFORE
INCOME TAXES		% OF TOTALNET INCOME% OF TOTAL
2024
Non-U.S.$43,173.2 28 %$2,244.5 27 %$569.2 21 %$429.9 21 %
U.S.112,335.2 72 %6,045.9 73 %2,090.3 79 %1,601.2 79 %
Total$155,508.4 100 %$8,290.4 100 %$2,659.5 100 %$2,031.1 100 %
2023
Non-U.S.$39,661.5 26 %$2,156.1 32 %$473.7 32 %$354.0 32 %
U.S.111,121.6 74 %4,617.4 68 %991.1 68 %753.3 68 %
Total$150,783.1 100 %$6,773.5 100 %$1,464.8 100 %$1,107.3 100 %
2022
Non-U.S.$35,991.3 23 %$2,273.3 34 %$560.9 32 %$420.2 31 %
U.S.119,045.4 77 %4,487.9 66 %1,205.4 68 %915.8 69 %
Total$155,036.7 100 %$6,761.2 100 %$1,766.3 100 %$1,336.0 100 %
(1) Total revenue is comprised of net interest income and noninterest income.