Allowance and Provision for Credit Losses. The allowance for credit losses—which represents management’s best estimate of lifetime expected credit losses related to various portfolios subject to credit risk, off-balance sheet credit exposures, and specific borrower relationships—is determined by management through a disciplined credit review process. Northern Trust measures expected credit losses of financial assets with similar risk characteristics on a collective basis. A financial asset is measured individually if it does not share similar risk characteristics with other financial assets and the related allowance is determined through an individual evaluation.

Management’s estimates utilized in establishing an appropriate level of allowance for credit losses are not dependent on any single assumption. In determining an appropriate allowance level, management evaluates numerous variables and takes into consideration past events, current conditions, and reasonable and supportable forecasts. Northern Trust employs multiple scenarios over a reasonable and supportable period (currently two years) to project future conditions. The primary forecast reflects an outlook of steady growth, stabilizing interest rates, and slightly higher unemployment rates. Recognizing the uncertainty in the primary forecast, an alternative scenario is also considered, which reflects a recession that incorporates the experiences of a wider set of historical economic cycles.

The results of the credit reserve estimation methodology are reviewed quarterly by Northern Trust’s Credit Loss Reserve Committee, which receives input from Financial Risk Management, Treasury, Corporate Finance, the Economic Research Department, and each of Northern Trust’s reporting business units. The Credit Loss Reserve Committee determines the probability weights applied to each forecast approved by Northern Trust’s MSDC, as well as, reviews and approves qualitative adjustments to the collective allowance in line with Northern Trust’s qualitative adjustment framework.

As of December 31, 2025, qualitative adjustments primarily reflected macroeconomic uncertainty affecting Northern Trust's C&I portfolio, the possible impact of climate-related risks on future CRE property values, and the potential for higher-than-anticipated losses on large individual exposures. In comparison, as of December 31, 2024, qualitative adjustments were largely driven by climate-related risks affecting both commercial and residential real estate portfolios, an increased likelihood of recession within the CRE segment mostly due to ongoing concerns around office occupancy rates, and similar concerns regarding large individual exposures. The qualitative component of the reserve decreased as of December 31, 2025, relative to December 31, 2024, primarily due to an improved outlook for both the CRE portfolio and the climate-related risk projections for RRE in certain locations. These improvements were partially offset by the introduction of the qualitative adjustment intended to capture heightened macroeconomic uncertainty around the C&I portfolio since the start of 2025.


	2025
(In Millions)	LOANS		UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT		HELD TO MATURITY DEBT SECURITIES		OTHER FINANCIAL ASSETS		TOTAL
Balance at Beginning of Period	$	168.0	$	30.4	$	6.5	$	1.0	$	205.9
Charge-Offs	(3.9)		—		—		—		(3.9)
Recoveries	3.6		—		—		—		3.6
Net Recoveries (Charge-Offs)	(0.3)		—		—		—		(0.3)
Provision for Credit Losses(1)	(3.4)		(7.1)		2.8		0.4		(7.3)
Balance at End of Period	$	164.3	$	23.3	$	9.3	$	1.4	$	198.3

(1) The table excludes a negative provision for credit losses of $0.2 million for the year ended December 31, 2025 for AFS debt securities. See further detail in Note 4, “Securities.”


	2024
(In Millions)	LOANS		UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT		HELD TO MATURITY DEBT SECURITIES		OTHER FINANCIAL ASSETS		TOTAL
Balance at Beginning of Period	$	178.7	$	26.9	$	12.7	$	0.9	$	219.2
Charge-Offs	(15.5)		—		—		—		(15.5)
Recoveries	4.2		—		—		—		4.2
Net Recoveries (Charge-Offs)	(11.3)		—		—		—		(11.3)
Provision for Credit Losses(1)	0.6		3.5		(6.2)		0.1		(2.0)
Balance at End of Period	$	168.0	$	30.4	$	6.5	$	1.0	$	205.9


	2023
(In Millions)	LOANS		UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT		HELD TO MATURITY DEBT SECURITIES		OTHER FINANCIAL ASSETS		TOTAL
Balance at Beginning of Period	$	144.3	$	38.5	$	16.0	$	0.8	$	199.6
Charge-Offs	(7.5)		—		(1.2)		—		(8.7)
Recoveries	3.7		—		—		—		3.7
Net Recoveries (Charge-Offs)	(3.8)		—		(1.2)		—		(5.0)
Provision for Credit Losses(1)	38.2		(11.6)		(2.1)		0.1		24.6
Balance at End of Period	$	178.7	$	26.9	$	12.7	$	0.9	$	219.2

Excluding the negative provisions for AFS debt securities, Northern Trust recognized a negative Provision for Credit Losses of $7.3 million and $2.0 million for the years ended December 31, 2025 and 2024, respectively, as compared to a Provision for Credit Losses of $24.6 million for the year ended December 31, 2023. The negative provision in 2025 was due to a decrease in collective reserves, primarily for the CRE portfolio, driven by an improved industry outlook; partially offset by an increase in specific reserves related to a small number of non-performing loans.

For credit exposure and the associated allowance related to fee receivables, please refer to Note 16, “Revenue from Contracts with Clients.” For information related to the allowance for AFS debt securities, please refer to Note 4, “Securities.”

Allowance for the Loan Portfolio. The following table provides information regarding changes in the total allowance for credit losses related to loans, including undrawn loan commitments and standby letters of credit, by segment.


	2025
	LOANS						UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT
(In Millions)	COMMERCIAL		PERSONAL		TOTAL		COMMERCIAL		PERSONAL		TOTAL
Balance at Beginning of Period	$	138.5	$	29.5	$	168.0	$	28.3	$	2.1	$	30.4
Charge-Offs	(3.5)		(0.4)		(3.9)		—		—		—
Recoveries	2.2		1.4		3.6		—		—		—
Net Recoveries (Charge-Offs)	(1.3)		1.0		(0.3)		—		—		—
Provision for Credit Losses	(4.7)		1.3		(3.4)		(6.6)		(0.5)		(7.1)
Balance at End of Period	$	132.5	$	31.8	$	164.3	$	21.7	$	1.6	$	23.3


	2024
	LOANS						UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT
(In Millions)	COMMERCIAL		PERSONAL		TOTAL		COMMERCIAL		PERSONAL		TOTAL
Balance at Beginning of Period	$	146.8	$	31.9	$	178.7	$	24.9	$	2.0	$	26.9
Charge-Offs	(15.1)		(0.4)		(15.5)		—		—		—
Recoveries	—		4.2		4.2		—		—		—
Net Recoveries (Charge-Offs)	(15.1)		3.8		(11.3)		—		—		—
Provision for Credit Losses	6.8		(6.2)		0.6		3.4		0.1		3.5
Balance at End of Period	$	138.5	$	29.5	$	168.0	$	28.3	$	2.1	$	30.4


	2023
	LOANS						UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT
(In Millions)	COMMERCIAL		PERSONAL		TOTAL		COMMERCIAL		PERSONAL		TOTAL
Balance at Beginning of Period	$	116.2	$	28.1	$	144.3	$	36.3	$	2.2	$	38.5
Charge-Offs	(5.7)		(1.8)		(7.5)		—		—		—
Recoveries	0.2		3.5		3.7		—		—		—
Net Recoveries (Charge-Offs)	(5.5)		1.7		(3.8)		—		—		—
Provision for Credit Losses	36.1		2.1		38.2		(11.4)		(0.2)		(11.6)
Balance at End of Period	$	146.8	$	31.9	$	178.7	$	24.9	$	2.0	$	26.9

The following table provides information regarding the recorded investments in loans and the allowance for credit losses for loans and undrawn loan commitments and standby letters of credit by segment as of December 31, 2025 and 2024.


	DECEMBER 31, 2025						DECEMBER 31, 2024
(In Millions)	COMMERCIAL		PERSONAL		TOTAL		COMMERCIAL		PERSONAL		TOTAL
Loans
Evaluated on an Individual Basis	$	55.0	$	45.9	$	100.9	$	35.9	$	30.0	$	65.9
Evaluated on a Collective Basis	20,376.0		21,471.4		41,847.4		20,242.9		23,081.8		43,324.7
Total Loans	20,431.0		21,517.3		41,948.3		20,278.8		23,111.8		43,390.6
Allowance for Credit Losses on Loans
Evaluated on an Individual Basis	5.9		4.3		10.2		1.2		2.0		3.2
Evaluated on a Collective Basis	126.6		27.5		154.1		137.3		27.5		164.8
Allowance Assigned to Loans	132.5		31.8		164.3		138.5		29.5		168.0



Allowance Assigned to Undrawn Loan Commitments and Standby Letters of Credit - Evaluated on a Collective Basis	21.7		1.6		23.3		28.3		2.1		30.4
Total Allowance Assigned to Loans and Undrawn Loan Commitments and Standby Letters of Credit	$	154.2	$	33.4	$	187.6	$	166.8	$	31.6	$	198.4


	2025
(In Millions)	CORPORATE DEBT		NON-U.S. GOVERNMENT		SUB-SOVEREIGN, SUPRANATIONAL, AND NON-U.S. AGENCY BONDS		OBLIGATIONS OF STATES AND POLITICAL SUBDIVISIONS(1)		COVERED BONDS		OTHER		TOTAL
Balance at Beginning of Period	$	0.3	$	2.0	$	1.1	$	0.9	$	—	$	2.2	$	6.5



Provision for Credit Losses	—		0.8		1.7		0.2		0.1		—		2.8
Balance at End of Period	$	0.3	$	2.8	$	2.8	$	1.1	$	0.1	$	2.2	$	9.3


	2024
(In Millions)	CORPORATE DEBT		NON-U.S. GOVERNMENT		SUB-SOVEREIGN, SUPRANATIONAL, AND NON-U.S. AGENCY BONDS		OBLIGATIONS OF STATES AND POLITICAL SUBDIVISIONS(1)		COVERED BONDS		OTHER		TOTAL
Balance at Beginning of Period	$	0.9	$	3.5	$	2.2	$	1.2	$	0.1	$	4.8	$	12.7



Provision for Credit Losses	(0.6)		(1.5)		(1.1)		(0.3)		(0.1)		(2.6)		(6.2)
Balance at End of Period	$	0.3	$	2.0	$	1.1	$	0.9	$	—	$	2.2	$	6.5


	2023
(In Millions)	CORPORATE DEBT		NON-U.S. GOVERNMENT		SUB-SOVEREIGN, SUPRANATIONAL, AND NON-U.S. AGENCY BONDS		OBLIGATIONS OF STATES AND POLITICAL SUBDIVISIONS(1)		COVERED BONDS		OTHER		TOTAL
Balance at Beginning of Period	$	1.9	$	3.6	$	4.0	$	1.5	$	0.1	$	4.9	$	16.0
Charge-Offs	—		—		—		—		—		(1.2)		(1.2)


Provision for Credit Losses	(1.0)		(0.1)		(1.8)		(0.3)		—		1.1		(2.1)
Balance at End of Period	$	0.9	$	3.5	$	2.2	$	1.2	$	0.1	$	4.8	$	12.7

Allowance for Other Financial Assets. The allowance for other financial assets consists of the allowance for Due from Banks, Other Central Bank Deposits, Interest Bearing Deposits with Banks, and Other Assets. Northern Trust’s portfolio is composed mostly of institutions within the “1 to 3” internal borrower rating category and is expected to exhibit minimal to modest likelihood of loss. The Allowance for Credit Losses related to other financial assets was $1.4 million and $1.0 million as of December 31, 2025 and 2024, respectively.

Accrued Interest. Accrued interest balances are reported within Other Assets on the consolidated balance sheets. Northern Trust elected not to measure an allowance for credit losses for accrued interest receivables related to its loans and securities portfolios as its policy is to write-off uncollectible accrued interest receivable balances in a timely manner. Accrued interest is written off by reversing interest income during the period the financial asset is moved from an accrual to a nonaccrual status.

The amount of accrued interest reversed through interest income for loans was immaterial and there was no accrued interest reversed through interest income related to any other financial assets during the years ended 2025 and 2024.