10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2008

OR

¨    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File No. 0-5965

NORTHERN TRUST CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	36-2723087
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

50 South La Salle Street Chicago, Illinois	60603
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (312) 630-6000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange On Which Registered
Common Stock, $1.66  2/3 Par Value Preferred Stock Purchase Rights	The Nasdaq Stock Market The Nasdaq Stock Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “accelerated filer”, large “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

(Check one): Large accelerated filer  x Accelerated filer  ¨ Non-accelerated filer  ¨ Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).    Yes  ¨    No  x

The aggregate market value of the Common Stock as of June 30, 2008 (the last business day of the registrant’s most recently completed second quarter), based upon the last sale price of the Common Stock at June 30, 2008 as reported by The Nasdaq Stock Market, held by non-affiliates was approximately $14,221,487,705. Determination of stock ownership by non-affiliates was made solely for the purpose of responding to this requirement and the registrant is not bound by this determination for any other purpose.

At February 25, 2009, 223,461,415 shares of Common Stock, $1.66  ²/3 par value, were outstanding.

Portions of the following documents are incorporated by reference:

Annual Report to Stockholders for the Fiscal Year Ended December 31, 2008—Part I and Part II

2009 Notice and Proxy Statement for the Annual Meeting of Stockholders to be held on April 21, 2009—Part III

Northern Trust Corporation

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

		Page
PART I
Item 1	Business	1
	Supplemental Item—Executive Officers of the Registrant	24
Item 1A	Risk Factors	24
Item 1B	Unresolved Staff Comments	32
Item 2	Properties	33
Item 3	Legal Proceedings	33
Item 4	Submission of Matters to a Vote of Security Holders	34
PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	34
Item 6	Selected Financial Data	34
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	34
Item 8	Financial Statements and Supplementary Data	35
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	35
Item 9A	Controls and Procedures	35
Item 9B	Other Information	35
PART III
Item 10	Directors, Executive Officers and Corporate Governance	36
Item 11	Executive Compensation	36
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	36
Item 13	Certain Relationships and Related Transactions, and Director Independence	36
Item 14	Principal Accountant Fees and Services	36
PART IV
Item 15	Exhibits and Financial Statement Schedules	37
Signatures		38
Exhibit Index		39

PART I

Item 1—Business

NORTHERN TRUST CORPORATION

Northern Trust Corporation (Corporation) is a financial holding company that is a leading provider of investment management, asset and fund administration, fiduciary, and banking solutions for corporations, institutions, and affluent individuals. The Corporation conducts business through various U.S. and non-U.S. subsidiaries, including The Northern Trust Company (Bank). The Corporation has a network of 85 offices in 18 U.S. states and has offices in 15 international locations outside the U.S. At December 31, 2008, the Corporation had consolidated total assets of $82.1 billion and stockholders’ equity of $6.4 billion.

The Bank is an Illinois banking corporation headquartered in the Chicago financial district and the Corporation’s principal subsidiary. Founded in 1889, the Bank conducts its business through its U.S. operations and its various U.S. and non-U.S. branches and subsidiaries. At December 31, 2008, the Bank had consolidated assets of $70.4 billion and common equity capital of $4.3 billion.

The Corporation expects that, although the operations of other banking and non-banking subsidiaries will continue to be of increasing significance, the Bank will in the foreseeable future continue to be the major source of the Corporation’s consolidated assets, revenues, and net income. Except where the context otherwise requires, the term “Northern Trust” refers to Northern Trust Corporation and its subsidiaries on a consolidated basis. A complete list of the Corporation’s direct and indirect subsidiaries is filed as Exhibit 21 to this Annual Report on Form 10-K and incorporated into this Item by reference.

BUSINESS UNITS

Under the leadership of Frederick H. Waddell, the President and Chief Executive Officer of the Corporation, Northern Trust organizes its services globally around its two client-focused principal business units: Corporate and Institutional Services (C&IS) and Personal Financial Services (PFS). Two other business units provide services to the two principal business units: Northern Trust Global Investments (NTGI), which provides investment management, and Operations and Technology (O&T), which provides operating and systems support.

Financial information regarding the Corporation and its business units is included in the Corporation’s Annual Report to Stockholders for the year ended December 31, 2008. In particular, for a discussion of significant developments in the business of the Corporation, and the impact on the financial results of the Corporation and its business units for the fiscal year ended December 31, 2008, you are urged to review the section entitled “Consolidated Results of Operations” on pages 22 through 29 of Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Corporation’s Annual Report to Stockholders for the year ended December 31, 2008, which is incorporated herein by reference.

The following is a brief summary of each business unit’s activities and the activities of the Corporate Financial Management Group and the Corporate Risk Management Group.

Corporate and Institutional Services

C&IS is a leading global provider of asset servicing, asset management, and related services to corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, and government funds. C&IS also offers a full range of commercial banking services, placing special emphasis on developing and supporting institutional relationships in two target markets: large and mid-sized corporations and financial institutions. Asset servicing, asset management, and related services encompass a full range of state-of-the-art capabilities including: global master trust and custody, trade settlement, and reporting; fund administration; cash management; investment risk and performance analytical services; and investment operations outsourcing. Client relationships are managed through the Bank and the Bank’s and the Corporation’s subsidiaries, including support from international locations in North America, Europe, the Asia-Pacific region and the Middle East. Asset servicing relationships managed by C&IS often include investment management, securities lending, transition management, and commission recapture services provided through NTGI. C&IS also provides related foreign exchange services in the U.S., U.K., Guernsey, and Singapore. At December 31, 2008, total C&IS assets under custody were $2.7 trillion and assets under management were $426.4 billion.

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Personal Financial Services

PFS provides personal trust, investment management, custody, and philanthropic services; financial consulting; guardianship and estate administration; qualified retirement plans; brokerage services; and private and business banking. PFS focuses on high net worth individuals and families, business owners, executives, professionals, retirees, and established privately-held businesses in its target markets. PFS also includes the Wealth Management Group, which provides customized products and services to meet the complex financial needs of individuals and family offices in the United States and throughout the world with assets typically exceeding $200 million.

PFS is one of the largest providers of personal trust services in the United States, with $288.3 billion in assets under custody and $132.4 billion in assets under management at December 31, 2008. PFS services are delivered through a network of 85 offices in 18 U.S. states as well as offices in London and Guernsey.

Northern Trust Global Investments

NTGI, through various subsidiaries of the Corporation, provides a broad range of investment management and related services and other products to U.S. and non-U.S. clients, including clients of C&IS and PFS. Clients include institutional and individual separately managed accounts, bank common and collective funds, registered investment companies, non-U.S. collective investment funds and unregistered private investment funds. NTGI offers both active and passive equity and fixed income portfolio management, as well as alternative asset classes (such as private equity and hedge funds of funds) and multi-manager products and services. NTGI’s activities also include brokerage, securities lending, transition management, and related services. NTGI’s business operates internationally through subsidiaries, joint ventures, alliances, and distribution arrangements.

Operations and Technology

O&T supports all of Northern Trust’s business activities, including the processing and product management activities of C&IS, PFS, and NTGI. These activities are conducted principally in the operations and technology centers in Chicago, London, and Bangalore and fund administration centers in Ireland.

Corporate Financial Management Group

The Corporate Financial Management Group includes the Chief Financial Officer, Controller, Treasurer, Corporate Development, Financial Analysis & Internal Consulting, Investor Relations, and Strategic Sourcing functions. The Group is responsible for Northern Trust’s accounting and financial infrastructure and for managing the Corporation’s financial position.

Corporate Risk Management Group

The Corporate Risk Management Group includes the Credit Policy and other Corporate Risk Management functions. The Credit Policy function is described in the “Loans and Other Extensions of Credit” section of the Annual Report to Stockholders for the year ended December 31, 2008 on pages 48-53. The Corporate Risk Management Group monitors, measures, and facilitates the management of risks across the businesses of the Corporation and its subsidiaries.

GOVERNMENT MONETARY AND FISCAL POLICIES

The earnings of Northern Trust are affected by numerous external influences. Chief among these are general economic conditions, both domestic and international, and actions that governments and their central banks take in managing their economies. These general conditions affect all of the Northern Trust’s businesses, as well as the quality, value, and profitability of their loan and investment portfolios.

The Board of Governors of the Federal Reserve System is an important regulator of U.S. economic conditions and has the general objective of promoting orderly economic growth in the United States. Implementation of this objective is accomplished by the Federal Reserve Board’s open market operations in United States Government securities, its setting of the discount rate at which member banks may borrow from Federal Reserve Banks and its changes in the reserve requirements for deposits. The policies adopted by the Federal Reserve Board may strongly influence interest rates and hence what banks earn on their loans and investments and what they pay on their savings and time deposits and other purchased funds. Fiscal policies in the United States and abroad also affect the composition and use of Northern Trust’s resources.

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COMPETITION

The businesses in which Northern Trust operates are very competitive. Competition is provided by both unregulated and regulated financial services organizations, whose products and services span the local, national, and global markets in which Northern Trust conducts operations.

Northern Trust’s principal business strategy is to provide quality financial services to targeted market segments in which it believes it has a competitive advantage and favorable growth prospects. As part of this strategy, Northern Trust seeks to deliver a level of service to its clients that distinguishes it from its competitors. In addition, Northern Trust emphasizes the development and growth of recurring sources of fee-based income and is one of a select group of major bank holding companies in the United States that generates more revenues from fee-based services than from net interest income. Northern Trust seeks to develop and expand its recurring fee-based revenue by identifying selected markets with good growth characteristics and providing a high level of individualized service to its clients in those markets. Northern Trust also seeks to preserve its asset quality through established credit review procedures and to maintain a conservative balance sheet. Finally, Northern Trust seeks to operate with a strong management team that includes senior officers having broad experience and long tenure.

Commercial banks, savings banks, savings and loan associations, and credit unions actively compete for deposits, and money market funds and investment banking firms offer deposit-like services. These institutions, as well as consumer and commercial finance companies, national retail chains, factors, insurance companies, and pension trusts, are important competitors for various types of loans. Issuers of commercial paper compete actively for funds and reduce demand for bank loans. For personal and corporate trust services and investment counseling services, trust companies, investment banking firms, insurance companies, investment counseling firms, and others offer active competition. A wide variety of U.S. and non-U.S. companies compete for settlement and other services.

REGULATION AND SUPERVISION

Financial Holding Company Regulation

Under U.S. law, the Corporation is a bank holding company that has elected to be a financial holding company under the Bank Holding Company Act (BHCA) as amended by the Gramm-Leach-Bliley Act (GLBA). Consequently, the Corporation and its business activities throughout the world are subject to the supervision, examination, and regulation of the Federal Reserve Board. The BHCA and other federal laws subject bank and financial holding companies to particular restrictions on the types of activities in which they may engage and to a range of supervisory requirements and activities, including regulatory enforcement actions for violations of laws and regulations. Supervision and regulation of bank holding companies, financial holding companies, and their subsidiaries are intended primarily for the protection of depositors and other clients of banking subsidiaries, the deposit insurance fund of the Federal Deposit Insurance Corporation (FDIC), and the banking system as a whole, not for the protection of stockholders or other creditors.

Under the BHCA, bank holding companies and their banking subsidiaries are generally limited to the business of banking and activities closely related or incidental to banking. As a financial holding company, the Corporation is permitted to engage in other activities that the Federal Reserve Board, working with the Secretary of the Treasury, determines to be financial in nature, incidental to an activity that is financial in nature, or complementary to a financial activity and that do not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally, or to acquire shares of companies engaged in such activities. Activities defined to be financial in nature include providing financial or investment advice; securities underwriting and dealing; insurance underwriting; and making merchant banking investments in commercial and financial companies, subject to significant limitations. They also include activities previously determined by the Federal Reserve Board to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. The Corporation may not, however, directly or indirectly acquire the ownership or control of more than 5% of any class of voting shares, or substantially all of the assets, of a bank holding company or a bank, without the prior approval of the Federal Reserve Board.

In order to maintain the Corporation’s status as a financial holding company, each of the Corporation’s insured depository institution subsidiaries must remain “well capitalized” and “well managed” under applicable regulations, and must have received at least a “satisfactory” rating in its most recent examination under the Community Reinvestment Act. Failure to meet one or more of these requirements would mean, depending on the requirements not met, that the Corporation could not undertake new activities, make acquisitions other than those permitted generally for bank holding companies, or continue certain activities.

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Subsidiary Regulation

The Bank is a member of the Federal Reserve System, its deposits are insured by the FDIC up to the maximum authorized limit, and it is subject to regulation by both these entities, as well as by the Division of Banking of the Illinois Department of Financial and Professional Regulation. The Bank is registered as a government securities dealer in accordance with the Government Securities Act of 1986. As a government securities dealer, its activities are subject to the rules and regulations of the Department of the Treasury. The Bank is also registered as a transfer agent with the Federal Reserve Board and is therefore subject to the rules and regulations of the Federal Reserve Board in this area. In addition, the Corporation, the Bank and the Corporation’s New York trust company subsidiary are subject to regulation by the Banking Department of the State of New York.

The Corporation’s national bank subsidiaries are members of the Federal Reserve System and are subject to regulation by the Office of the Comptroller of the Currency (OCC), with deposits insured by the FDIC to the extent provided by the Federal Deposit Insurance Act and FDIC regulations. Northern Trust Bank, FSB is a federal savings bank that is not a member of the Federal Reserve System and is subject to regulation by the Office of Thrift Supervision and the FDIC.

The Corporation’s nonbanking affiliates are all subject to examination by the Federal Reserve Board. Its broker-dealer subsidiary is registered with the Securities and Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority, subject to the rules and regulations of both of these bodies. Several subsidiaries of the Corporation are registered with the SEC under the Investment Advisers Act of 1940 and are subject to that act and the rules and regulations promulgated thereunder. Other subsidiaries are regulated by the Connecticut Department of Banking and the Office of the State Bank Commissioner in Delaware. Two families of mutual funds for which the Bank acts as investment adviser and one registered closed-end hedge fund of funds for which another subsidiary serves as investment adviser are subject to regulation by the SEC under the Investment Company Act of 1940.

Functional Regulation

Enacted in late 1999, the GLBA established a system of federal and state regulation based on functional regulation, meaning that primary regulatory oversight for a particular activity generally resides with the federal or state regulator designated as having the principal responsibility for that activity. Banking is supervised by federal and state banking regulators, insurance by state insurance regulators, and securities activities by the SEC and state securities regulators.

A significant component of the functional regulation provided in the GLBA relates to the application of federal securities laws and SEC oversight of some bank securities activities previously exempt from broker-dealer regulation. Among other things, the GLBA amended the definitions of “broker” and “dealer” under the Exchange Act to remove the blanket exemption for banks. Without this blanket exemption, banks may conduct securities activities without broker-dealer registration only if the activities fall within a set of activity-based exemptions designed to allow banks to conduct only those activities traditionally considered to be primarily banking or trust activities. Securities activities outside these exemptions, as a practical matter, need to be conducted by a registered broker-dealer affiliate. The SEC and the Federal Reserve Board in September 2007 adopted a regulation to implement the broker activities exemption of the GLBA that became effective for the Bank beginning January 1, 2009. The GLBA also amended the Investment Advisers Act of 1940 to require the registration of any bank or separately identifiable division of the bank that acts as investment adviser for mutual funds. The Corporation believes that it has taken the necessary actions to comply with these requirements of GLBA and the regulations adopted under them.

Non-U.S. Regulation

The increasingly important activities of the Corporation’s subsidiaries outside the United States are subject to regulation by a number of non-U.S. regulatory agencies. Subsidiaries conducting banking, fund administration and asset servicing businesses in the United Kingdom, for example, are authorized to do so pursuant to the UK Financial Services and Markets Act of 2000 or are otherwise subject to regulation by the Financial Services Authority (FSA). The FSA exercises broad supervisory and disciplinary powers that include the power to temporarily or permanently revoke authorization to conduct a regulated business upon breach of the relevant regulations, suspend registered employees, and impose censures and fines on both regulated businesses and their regulated employees. The non-U.S. subsidiaries of the Corporation and branches of the Bank outside the United States are subject to the laws and regulatory authorities of the jurisdictions in which they operate. Additionally, Northern Trust’s subsidiary banks located outside the U.S. are subject to regulatory capital requirements in the jurisdictions in which they operate. As of December 31, 2008, each of Northern Trust’s non-U.S. banking subsidiaries had capital ratios above their specified minimum requirements.

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Emergency Economic Stabilization Act of 2008 and Other Market-Support Measures

In response to the global credit and liquidity crisis impacting financial institutions both domestically and internationally, the United States government, particularly the U.S. Department of the Treasury (U.S. Treasury), the Federal Reserve Board and the FDIC have taken a number of extraordinary measures designed to restore confidence in the financial markets and to strengthen financial institutions, including capital injections, guarantees of bank liabilities, and the creation of special finance facilities. On October 3, 2008, the United States congress enacted the Emergency Economic Stabilization Act of 2008 (EESA), under which the U.S. Treasury is granted broad authority to take a range of actions for the purpose of stabilizing and providing liquidity to the U.S. financial markets.

The programs announced to date by the U.S. Treasury, the Federal Reserve and FDIC and other regulatory agencies are in various stages of implementation and continue to evolve. To date, the Corporation’s participation in these various programs has been limited to the capital purchase program (CPP) under the Troubled Assets Relief Program (TARP) and participation by certain funds advised by a subsidiary of the Corporation in the Temporary Guaranty Program for Money Market Funds, each of which is described below. However, the Corporation continues to monitor each of the programs announced to date and the other legislative and regulatory developments that continue to emerge in reaction to the global financial crisis and evaluate the need for, and the relative advantages and disadvantages to, participation by the Corporation in those various programs.

Troubled Assets Relief Program (TARP) — Under TARP, the U.S. Treasury has authorized a voluntary CPP to purchase up to $250 billion of senior preferred shares and warrants of qualifying financial institutions that elect to participate. On November 14, 2008, as part of the CPP, the Corporation issued and sold to the U.S. Treasury (i) 1,576,000 shares of the Corporation’s Fixed Rate Cumulative Perpetual Preferred Stock, Series B, without par value and having a liquidation preference of $1,000 per share, and (ii) a ten-year warrant to purchase up to 3,824,624 shares of the Corporation’s common stock, at an exercise price of $61.81 per share, for an aggregate purchase price of $1.576 billion in cash.

The Corporation’s ability to declare or pay dividends on, or purchase, redeem or otherwise acquire, shares of its common stock is subject to certain restrictions in the event that the Corporation fails to pay or set aside full dividends on the Series B Preferred Stock for all past dividend periods. In addition, the agreement pursuant to which the preferred shares and the warrant were sold requires regulatory approval for the payment of quarterly dividends on the Corporation’s common stock in excess of $0.28 per share, which is the amount of the last regular quarterly dividend declared by the Corporation prior to the original issuance of the preferred stock. In addition, the Corporation agreed that, until such time as the U.S. Treasury ceases to own any of the securities acquired from the Corporation, the Corporation will be subject to certain restrictions with respect to compensation of certain of its senior executive officers. On February 17, 2009, the American Recovery and Reinvestment Act of 2009 (ARRA) was signed into law. ARRA includes additional restrictions on compensation paid to executives and other specified employees of financial institutions that have sold securities to the U.S. Treasury pursuant to the TARP program. These compensation restrictions under EESA and ARRA include, among other things, a prohibition on the payment of “golden parachute payments”, a prohibition on the payment of bonuses, retention awards and incentive compensation, except for certain awards of “long-term” restricted stock, and the requirement to establish a company-wide policy regarding excessive or luxury expenditures. The specific impact of these restrictions on the Corporation is currently uncertain, as a number of the provisions remain subject to the issuance of regulations by the U.S. Treasury. ARRA also permits participants in the TARP program to redeem the preferred stock held by the U.S. Treasury without regard to whether the participant has obtained replacement Tier 1 capital and without regard to any waiting period following consultation by the U.S. Treasury with the issuer’s banking regulators. Under the investment agreement pursuant to which the U.S. Treasury acquired an issuer’s preferred stock under TARP, the issuer had been prohibited from repurchasing the preferred stock for three years unless the issuer had obtained replacement Tier 1 capital.

Temporary Guarantee Program for Money Market Mutual Funds — In late September 2008, the U.S. Treasury opened its Temporary Guarantee Program for Money Market Mutual Funds (Temporary Guarantee Program). The U.S. Treasury will guarantee the share price of any publicly–offered eligible money market fund that applies for and pays a fee to participate in the Temporary Guarantee Program. The Temporary Guarantee Program is designed to address temporary dislocations in credit markets and will run through April 30, 2009, and may be extended beyond that date if approved by the Secretary of the Treasury. If extended, it may be extended only up to September 18, 2009, and continued insurance protection is contingent upon funds renewing their coverage and paying any additional required fee. Certain funds advised by a subsidiary of the Corporation have participated in this program.

Cross-Guarantees Under the Federal Deposit Insurance Act

Under the Federal Deposit Insurance Act (FDIA), when two or more insured depository institutions are under common control, each of those depository institutions may be liable for any loss incurred, or expected to be incurred, by the FDIC in connection with the default of any of the others. Each also may be liable for any assistance the FDIC provides to the other

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institutions. “Default” means the appointment of a conservator or receiver for the institution. Thus, any of the Corporation’s banking subsidiaries could be liable to the FDIC if the FDIC were to suffer a loss in connection with any of the Corporation’s other banking subsidiaries. This cross-guarantee liability for a loss at a commonly controlled institution would be subordinated in right of payment to deposit liabilities, secured obligations, any other general or senior liability, and any obligation subordinated to depositors or other general creditors, other than obligations owed to any affiliate of the depository institution (with certain exceptions). Although neither the Corporation nor any of its nonbanking subsidiaries may be assessed for such loss under the FDIA, the Corporation has agreed to indemnify each of its banking subsidiaries, other than the Bank, for any payments a banking subsidiary may be required to make to the FDIC pursuant to these provisions of the FDIA.

Under Federal Reserve Board policy, a bank holding company is expected to act as a source of financial strength to its banking subsidiaries and commit resources to their support. This support may be required by the Federal Reserve Board at times when, absent this Federal Reserve Board policy, it would not otherwise be provided. The Corporation has source of strength agreements in place with its existing subsidiaries evidencing its commitment to provide such support as needed. In addition, any capital loans by a bank holding company to any of its depository institution subsidiaries are subordinate in right of payment to deposits and to certain other indebtedness of the banks.

Payment of Dividends

The Corporation is a legal entity separate and distinct from its subsidiaries. The principal source of funds for the Corporation is dividends from the Bank. As a result, the Corporation’s ability to pay dividends on its common stock will depend primarily on the ability of the Bank to pay dividends to the Corporation in amounts sufficient to service its obligations. Dividend payments from the Bank are subject to Illinois law and to regulatory limitations, generally based on capital levels and current and retained earnings, imposed by various regulatory agencies with authority over the Bank. The ability of the Bank to pay dividends is also subject to regulatory restrictions if paying dividends would impair its profitability, financial condition or other cash flow requirements.

The Federal Reserve Board has issued a policy statement with regard to the payment of cash dividends by bank holding companies. The policy statement provides that, as a matter of prudent banking, a bank holding company should not maintain a rate of cash dividends unless its net income available to common stockholders has been sufficient to fully fund the dividends, and the prospective rate of earnings retention appears to be consistent with the holding company’s capital needs, asset quality, and overall financial condition. Accordingly, a bank holding company should not pay cash dividends that exceed its net income or can only be funded in ways that weaken the bank holding company’s financial health, such as by borrowing. Additionally, the agreement pursuant to which the Preferred Shares and the Warrant were sold by the Corporation as part of the CPP under TARP requires regulatory approval for the payment of dividends on the Common Stock in excess of $0.28 per share per quarter, which is the amount of the last regular quarterly dividend declared by the Corporation.

Various federal and state statutory provisions limit the amount of dividends the Bank can pay to the Corporation without regulatory approval. Approval of the Federal Reserve Board is required for payment of any dividend by a state chartered bank that is a member of the Federal Reserve System if the total of all dividends declared by the bank in any calendar year would exceed the total of its retained net income (as defined by regulatory agencies) for that year combined with its retained net income for the preceding two years. In addition, a state member bank may not pay a dividend in an amount greater than its undivided profits, as defined, without regulatory and stockholder approval.

The Bank is also prohibited under federal law from paying any dividend that would cause it to become undercapitalized. In addition, the federal regulatory agencies are authorized to prohibit a bank or bank holding company from engaging in an unsafe or unsound banking practice. The payment of dividends could, depending on the financial condition of the Bank, be deemed to constitute an unsafe or unsound practice.

Capital Adequacy Requirements

The Federal Reserve Board has established risk-based and leverage capital guidelines for bank holding companies. The minimum ratio of total capital to risk-weighted assets (which are the credit risk equivalents of balance sheet assets and certain off-balance sheet items such as standby letters of credit) is eight percent. At least half of the total capital must be composed of common stockholders’ equity (including retained earnings), qualifying non-cumulative perpetual preferred stock (and, for bank holding companies only, a limited amount of qualifying cumulative perpetual preferred stock and a limited amount of trust preferred securities), and minority interests in the equity accounts of consolidated subsidiaries, less goodwill, other disallowed intangibles, and disallowed deferred tax assets, among other items (Tier 1 Capital). All of the proceeds of the Corporation’s participation in the CPP under TARP will be treated as tier 1 Capital for regulatory purposes. The remainder may consist of a limited amount of subordinated debt, other perpetual preferred stock, hybrid capital instruments, mandatory

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convertible debt securities that meet certain requirements, as well as a limited amount of reserves for loan losses (Tier 2 Capital). The Federal Reserve Board also has adopted a minimum leverage ratio for bank holding companies, requiring tier 1 Capital of at least three percent of average quarterly total consolidated assets.

The federal banking regulators have also established risk-based and leverage capital guidelines that insured banks and thrifts are required to meet. These regulations are generally similar to those established by the Federal Reserve Board for bank holding companies. The risk-based and leverage capital ratios for the Corporation and its U.S. banking subsidiaries, together with the regulatory minimum ratios and the ratios required for classification as “well-capitalized,” are provided in the following chart.

	Risk-Based and Leverage Ratios as of December 31, 2008
	Tier 1 Capital		Total Capital		Leverage Ratio
Northern Trust Corporation	13.08	%	15.36	%	8.50	%
The Northern Trust Company	10.87		14.06		6.44
Northern Trust, N.A.	9.92		11.27		8.59
Northern Trust Bank, FSB	8.51		11.17		7.71
Minimum required ratio	4.0		8.0		3.0
“Well capitalized” minimum ratio	6.0		10.0		5.0

The Corporation is subject to the framework for risk-based capital adequacy, sometimes referred to as Basel II, which was developed by the Basel Committee on Banking Supervision and has been endorsed by the central bank governors and heads of bank supervision of the G10 countries. In December 2007, the U.S. bank regulatory agencies published final rules, effective April 1, 2008, with respect to implementation of the Basel II framework, the latest agreed-version of which was released by the Basel Committee in November 2005.

Under the final Basel II rules, the Corporation is one of a small number of “core” banking organizations. As a result, the Corporation and its U.S. depository institution subsidiaries will be required to use the advanced approaches under Basel II for calculating risk-based capital related to credit risk and operational risk, instead of the methodology reflected in the regulations effective prior to adoption of Basel II. The new rules also require core banking organizations to have rigorous processes for assessing overall capital adequacy in relation to their total risk profiles, and to publicly disclose certain information about their risk profiles and capital adequacy.

In order to implement the new rules, a core banking organization such as the Corporation was required to (and the Corporation did) adopt an implementation plan by October 1, 2008 and must satisfactorily complete a four-quarter parallel run, in which it calculates capital requirements under both the new Basel II rules and regulations effective prior to the adoption of Basel II. The organization must then progress through three transitional periods of at least four quarters each, commencing no later than April 1, 2011. During these transitional periods, the maximum cumulative reduction in capital requirements from those under the regulations effective prior to adoption of Basel II may not exceed 5% for the first period, 10% for the second period and 15% for the third period. Supervisory approval is required to move through these transitional periods and out of the final transitional period. The agencies also have said they will publish a study after the end of the second transitional year that will examine the new framework for any deficiencies.

These changes in the method of calculating capital apply only to risk-based capital requirements. The leverage ratio requirements, which are not risk-based, will continue to apply.

Non-core U.S. banking organizations that qualify may elect to use the most advanced approaches under Basel II. The agencies in July 2008 also published a notice of proposed rule-making that would provide all non-core banking organizations with the option to adopt a standardized approach under Basel II, which reflects a simpler methodology than the advanced approaches required of core banking organizations.

The Corporation has for several years been preparing to comply with the advanced approaches of the Basel II framework. The Corporation has established a Program Management Office to oversee the implementation of Basel II across the Corporation. The Corporation is also addressing issues related to implementation timing differences between the U.S. and other jurisdictions, to ensure that the Corporation and the Bank comply with regulatory requirements and expectations in all jurisdictions where they operate. The Corporation’s U.K., Guernsey and Canadian entities subject to Basel II rules have already adopted or plan to adopt the standardized approach for credit risk and the basic indicator approach for operational risk in calculating minimum regulatory capital requirements.

7

Preliminary analysis of the Basel II risk-based capital framework suggests that the use of the advanced approaches of the Basel II framework will not result in the Corporation’s or the Bank’s Tier 1 Capital or total risk-based capital ratios falling below the levels required for categorization as “well capitalized.”

Prompt Corrective Action

Under the Federal Deposit Insurance Corporation Improvement Act of 1991, the federal banking agencies must take prompt supervisory and regulatory actions against undercapitalized U.S. depository institutions. U.S. depository institutions are assigned one of five capital categories: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized,” and are subjected to differential regulation corresponding to the capital category within which the institution falls. Under certain circumstances, a well capitalized, adequately capitalized or undercapitalized institution may be treated as if the institution were in the next lower capital category. A depository institution is generally prohibited from making capital distributions (including paying dividends) or paying management fees to a holding company if the institution would thereafter be undercapitalized. Adequately capitalized institutions cannot accept, renew or roll over brokered deposits except with a waiver from the FDIC, and are subject to restrictions on the interest rates that can be paid on such deposits. Undercapitalized institutions may not accept, renew or roll over brokered deposits.

The federal banking regulatory agencies are permitted or, in certain cases, required to take certain actions with respect to institutions falling within one of the three undercapitalized categories. Depending on the level of an institution’s capital, the agency’s corrective powers include, among other things:

• prohibiting the payment of principal and interest on subordinated debt;

• prohibiting any distributions without prior regulatory approval;

• placing limits on asset growth and restrictions on activities;

• placing additional restrictions on transactions with affiliates;

• restricting the interest rate the institution may pay on deposits;

• prohibiting the institution from accepting deposits from correspondent banks; and

• in the most severe cases, appointing a conservator or receiver for the institution.

A banking institution that is undercapitalized is required to submit a capital restoration plan, and such a plan will not be accepted unless, among other things, the banking institution’s holding company guarantees the plan up to a certain specified amount. Any such guarantee from a depository institution’s holding company is entitled to a priority of payment in bankruptcy. Failure to meet capital guidelines could subject the bank to a variety of enforcement remedies by federal bank regulatory agencies, including termination of deposit insurance by the FDIC, and restrictions on certain business activities. As of December 31, 2008, the Corporation and all of its U.S. banking subsidiaries exceeded the required capital ratios for classification as “well capitalized.”

In the release adopting final Basel II rules, the federal banking agencies said that these “prompt corrective action” rules will not be affected by the Basel II process and that core banking organizations will be required, during the transitional period, to use the lowest capital calculation in each category that results from the application of both the new and the old rules.

Enforcement Powers of the Federal Banking Agencies

The federal banking agencies have broad enforcement powers, including the power to issue cease and desist orders, impose substantial fines and other civil and criminal penalties, terminate deposit insurance and appoint a conservator or receiver. Failure to comply with applicable laws, regulations, and supervisory agreements could subject the Corporation and its banking subsidiaries, as well as officers, directors, and other institution-affiliated parties of these organizations, to administrative sanctions and potentially substantial civil money penalties. In addition to the grounds discussed under “Prompt Corrective Action,” the appropriate federal banking agency may appoint the FDIC as conservator or receiver for a banking institution (or the FDIC may appoint itself, under certain circumstances) if any one or more of a number of circumstances exist, including, without limitation, the fact that the banking institution:

• is undercapitalized and has no reasonable prospect of becoming adequately capitalized;

• fails to become adequately capitalized when required to do so;

• fails to submit a timely and acceptable capital restoration plan; or

• materially fails to implement an accepted capital restoration plan.

8

Restrictions on Transactions with Affiliates and Insiders

The Corporation’s bank subsidiaries are subject to restrictions under federal law, including Regulation W of the Federal Reserve Board, which limit certain transactions with the Corporation and its non-banking subsidiaries, including loans, other extensions of credit, investments or asset purchases. Such transactions by a banking subsidiary with any one affiliate are limited in amount to 10 percent of the bank’s capital and surplus and, with all affiliates together, to an aggregate of 20 percent of the bank’s capital and surplus. Furthermore, such loans and extensions of credit, as well as certain other transactions, are required to be secured in specified amounts. These and certain other transactions with the Corporation or any of its subsidiaries, including any payment of money by a banking subsidiary, must be on terms and conditions that are, or in good faith would be, offered to nonaffiliated companies.

The restrictions on loans to directors, executive officers, principal stockholders and their related interests (collectively referred to herein as “insiders”) contained in the Federal Reserve Act and Regulation O apply to all federally insured institutions. These restrictions include limits on loans to one borrower and conditions that must be met before such a loan can be made. There is also an aggregate limitation on all loans to insiders and their related interests. These loans cannot exceed the institution’s total unimpaired capital and surplus, and the FDIC may determine that a lesser amount is appropriate. Insiders are subject to enforcement actions for knowingly accepting loans in violation of applicable restrictions. Regulation O institutions are not subject to the prohibitions of the Sarbanes-Oxley Act of 2002 on certain loans to insiders.

Anti-Terrorism Legislation

The USA PATRIOT Act of 2001 includes the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, which contains anti-money laundering measures affecting insured depository institutions, broker-dealers and certain other financial institutions. These are in addition to requirements contained in the Bank Secrecy Act. The Money Laundering Abatement and Anti-Terrorist Financing Act requires U.S. financial institutions to adopt policies and procedures to combat money laundering and terrorist financing and grants the Secretary of the Treasury and bank regulatory agencies broad authority to establish regulations and to impose requirements and restrictions on financial institutions’ operations as well as sanctions for failure to meet regulatory requirements. The Corporation has established policies and procedures to comply with these laws and the related regulations.

Deposit Insurance

Under the FDIC’s risk-based insurance assessment system, as amended by the Federal Deposit Insurance Reform Act and implementing regulations effective for 2008, each insured bank is required to pay deposit insurance premium assessments to the FDIC. Each insured bank is placed in one of four risk categories based on its level of capital, supervisory ratings and other risk measures, including debt ratings for large institutions, and its insurance assessment rate is determined by its risk category. There is currently a 38 basis point spread between the highest and lowest assessment rates, so that banks classified by the FDIC in Risk Category I are subject in 2009 to an insurance assessment of 12 to 14 basis points for the first quarter and 8 to 21 basis points thereafter (according to the FDIC’s assessment of the bank’s strength), and banks classified by the FDIC in Risk Category IV are subject to an insurance assessment rate of 50 basis points for the first quarter and 43 to 77.5 basis points thereafter. Banks which paid assessments prior to December 31, 1996 are eligible for certain one-time credits against these assessments from a pool provided for in the legislation. As of December 31, 2008, the Bank had remaining credits of approximately $2.5 million and Northern Trust, N.A. had no remaining credits. In addition to its insurance assessment, each insured bank is subject in 2009 to quarterly debt service assessments in connection with bonds issued by a government corporation that financed the federal savings and loans bailout. The first quarter 2009 debt service assessment is .0114%. The Bank, Northern Trust, N.A., and Northern Trust Bank, FSB will also pay an additional fee of .10% per annum on the amount of their non-interest bearing transaction accounts exceeding $250,000 guaranteed under the Temporary Loan Guarantee Program through December 31, 2009.

9

Control Acquisitions

The Change in Bank Control Act prohibits a person or group of persons from acquiring “control” of a bank holding company unless the Federal Reserve Board has been notified and has not objected to the transaction. Under a rebuttable presumption established by the Federal Reserve Board, the acquisition of 10% or more of a class of voting stock of a bank holding company with a class of securities registered under Section 12 of the Exchange Act, such as the Corporation, would, under the circumstances set forth in the presumption, constitute acquisition of control of the Corporation. In addition, any company is required to obtain the approval of the Federal Reserve Board under the BHCA before acquiring 25% (5% in the case of an acquirer that is a bank holding company) or more of the outstanding common stock of the Corporation, or otherwise obtaining control or a “controlling influence” over the Corporation or its banking subsidiaries.

Interstate Banking and Branching

The Riegle-Neal Act enacted in 1994 permits an adequately capitalized and adequately managed bank holding company, with Federal Reserve Board approval, to acquire banking institutions located in states other than the bank holding company’s home state without regard to whether the transaction is prohibited under state law. In addition, national banks and state banks with different home states are permitted to merge across state lines, with the approval of the appropriate federal banking agency, unless the home state of a participating banking institution passed legislation prior to June 1, 1997 that expressly prohibits interstate mergers. De novo interstate branching is permitted if the laws of the host state so authorize. Thrift institutions (like Northern Trust Bank, FSB) may freely engage in de novo branching on an interstate basis. Moreover, national banks, such as Northern Trust, NA, may provide trust services in any state to the same extent as a trust company chartered by that state.

Community Reinvestment Act

The Corporation’s banking subsidiaries are subject to the Community Reinvestment Act (CRA). The CRA and the regulations issued thereunder are intended to encourage banks to help meet the credit needs of their service areas, including low and moderate income neighborhoods, consistent with the safe and sound operations of the banks. These regulations also provide for regulatory assessment of a bank’s record in meeting the needs of its service area when considering applications to establish branches, merger applications and applications to acquire the assets and assume the liabilities of another bank. The Financial Institutions Reform, Recovery and Enforcement Act of 1989 requires federal banking agencies to make public a rating of a bank’s performance under the CRA. In the case of a bank holding company, the CRA performance record of its bank subsidiaries is reviewed by federal banking agencies in connection with the filing of an application to acquire ownership or control of shares or assets of a bank or thrift or to merge with any other bank holding company. An unsatisfactory record can substantially delay or block the transaction. Each of the Corporation’s banking subsidiaries, including the Bank, received at least a satisfactory CRA rating from its regulator in its most recent CRA examination.

In addition, the GLBA requires the disclosure of agreements reached with community groups that relate to the CRA, and contains various other provisions designed to improve the delivery of financial services to consumers while maintaining an appropriate level of safety in the financial services industry.

Privacy and Security

The GLBA also establishes a minimum federal standard of financial privacy by, among other provisions, requiring banks to adopt and disclose privacy policies with respect to consumer information and setting forth certain rules with respect to the disclosure to third parties of consumer information. The Corporation has adopted and disseminated its privacy policies pursuant to the GLBA. Regulations adopted under the GLBA set standards for protecting the security, confidentiality and integrity of customer information, and require notice to regulators, and in some cases, to customers, in the event of security breaches. A number of states have adopted their own statutes requiring notification of security breaches.

Consumer Laws and Regulations

In addition to the laws and regulations discussed above, the Corporation’s banking subsidiaries are also subject to certain consumer laws and regulations that are designed to protect consumers in transactions with banks. While the following list is not exhaustive, these laws and regulations include the Truth in Lending Act, the Truth in Savings Act, the Electronic Funds Transfer Act, the Expedited Funds Availability Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act of 2003, and the Real Estate Settlement Procedures Act, among others. These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions must deal with customers and monitor account activity when taking deposits, making loans to or engaging in other types of transactions with such customers. Failure to comply with these laws and regulations could lead to substantial penalties, operating restrictions and reputational damage to the financial institution.

10

Future Legislation

Various legislation is from time to time introduced in Congress and state legislatures with respect to the regulation of financial institutions, and legislation designed to fundamentally restructure financial regulation may be introduced as one response to the recent global credit and liquidity crisis. Such legislation may change the banking statutes and the operating environment of the Corporation and its banking subsidiaries in substantial and unpredictable ways. The Corporation cannot determine the ultimate effect that potential legislation, or implementing regulations, if enacted, would have upon the financial condition or results of operations of the Corporation or its banking subsidiaries.

STAFF

Northern Trust employed 12,200 full-time equivalent officers and staff members as of December 31, 2008.

STATISTICAL DISCLOSURES

The following statistical disclosures, included in the Corporation’s Annual Report to Stockholders for the year ended December 31, 2008, are incorporated herein by reference.

Schedule	2008 Annual Report Page(s)
Ratios	20
Non-U.S. Outstandings	51-52
Nonperforming Assets and 90 Day Past Due Loans	53
Average Statement of Condition with Analysis of Net Interest Income	106-107

Additional statistical information on a consolidated basis is set forth below. Certain reclassifications have been made to prior periods’ financial information to conform to the current year’s presentation.

11

Remaining Maturity and Average Yield of Securities Held to Maturity and Available for Sale

(Yield calculated on amortized cost and presented on a taxable equivalent basis giving effect to the applicable federal and state tax rates)

	December 31, 2008
	One Year or Less				One to Five Years				Five to Ten Years				Over Ten Years				Average Maturity
($ in Millions)	Book		Yield		Book		Yield		Book		Yield		Book		Yield
Securities Held to Maturity
Obligations of States and Political Subdivisions	$	22.6	6.84	%	$	229.3	6.53	%	$	462.7	6.89	%	$	76.6	7.31	%	76 mos.
Government Sponsored Agency		17.0	4.88			35.7	4.87			1.6	5.08			.7	4.91		21 mos.
Other —Fixed		56.6	4.20			128.2	5.01			87.8	4.80			35.1	3.77		31 mos.
—Floating		.2	6.18			—	—			—	—			—	—		8 mos.
Total Securities Held to Maturity	$	96.4	4.94	%	$	393.2	5.89	%	$	552.1	6.55	%	$	112.4	6.19	%	62 mos.
Securities Available for Sale
U.S. Government	$	19.9	2.18	%	$	—	—	%	$	—	—	%	$	—	—	%	1 mo.
Obligations of States and Political Subdivisions		—	—			17.0	6.57			14.6	6.73			—	—		55 mos.
Government Sponsored Agency		7,596.5	1.83			3,116.7	2.18			277.0	3.68			271.2	3.48		12 mos.
Asset-Backed—Fixed		44.5	5.36			54.7	5.49			17.3	5.39			26.4	5.53		20 mos.
Asset-Backed—Floating		531.9	2.02			743.6	1.55			62.4	.63			91.8	.62		19 mos.
Auction Rate Securities		—	—			448.1	2.48			—	—			5.0	3.66		45 mos.
Other —Fixed		164.4	.62			—	—			—	—			27.5	6.00		17 mos.
—Floating		74.6	3.43			665.2	2.48			—	—			144.1	.59		38 mos.
Total Securities Available for Sale	$	8,431.8	1.85	%	$	5,045.3	2.21	%	$	371.3	3.37	%	$	566.0	2.50	%	14 mos.

	December 31, 2007
	One Year or Less				One to Five Years				Five to Ten Years				Over Ten Years				Average Maturity
($ in Millions)	Book		Yield		Book		Yield		Book		Yield		Book		Yield
Securities Held to Maturity
Obligations of States and Political Subdivisions	$	39.6	7.60	%	$	241.9	6.87	%	$	437.9	6.76	%	$	129.4	7.19	%	78 mos.
Government Sponsored Agency		2.7	5.62			6.3	5.63			2.7	5.61			1.6	5.60		50 mos.
Other —Fixed		59.9	5.99			110.9	7.85			75.9	7.46			35.8	4.87		64 mos.
—Floating		—	—			.2	6.61			—	—			—			20 mos.
Total Securities Held to Maturity	$	102.2	6.61	%	$	359.3	7.15	%	$	516.5	6.86	%	$	166.8	6.67	%	74 mos.
Securities Available for Sale
U.S. Government	$	5.1	5.33	%	$	—	—	%	$	—	—	%	$	—	—	%	2 mos.
Obligations of States and Political Subdivisions		—	—			17.2	6.58			14.9	6.72			—	—		48 mos.
Government Sponsored Agency		4,057.0	5.43			1,130.0	5.21			114.9	5.48			164.6	5.71		14 mos.
Asset-Backed—Fixed		128.7	5.56			144.4	5.41			22.6	5.44			4.0	5.19		26 mos.
Asset-Backed—Floating		177.4	4.55			1,167.8	5.02			30.0	4.56			228.0	5.03		21 mos.
Other —Fixed		151.9	1.82			—	—			—	—			27.5	6.00		28 mos.
—Floating		6.2	5.49			24.7	5.35			—	—			123.4	2.81		101 mos.
Total Securities Available for Sale	$	4,526.3	5.28	%	$	2,484.1	5.14	%	$	182.4	5.42	%	$	547.5	4.78	%	20 mos.

12

Securities Held to Maturity and Available for Sale

	December 31
(In Millions)	2008		2007		2006		2005		2004
Securities Held to Maturity
Obligations of States and Political Subdivisions	$	791.2	$	848.8	$	863.8	$	885.1	$	896.8
Government Sponsored Agency		55.0		13.3		14.6		9.9		11.7
Other		307.9		282.7		228.6		240.5		211.7
Total Securities Held to Maturity	$	1,154.1	$	1,144.8	$	1,107.0	$	1,135.5	$	1,120.2
Securities Available for Sale
U.S. Government	$	19.9	$	5.1	$	1.0	$	17.9	$	23.6
Obligations of States and Political Subdivisions		31.6		32.1		31.7		32.4		32.8
Government Sponsored Agency		11,261.4		5,466.5		10,245.1		8,801.0		6,710.5
Asset-Backed		1,572.6		1,902.9		767.4		950.9		900.4
Auction Rate		453.1		—		—		—		—
Other		1,075.8		333.7		204.4		168.5		251.6
Total Securities Available for Sale	$	14,414.4	$	7,740.3	$	11,249.6	$	9,970.7	$	7,918.9
Average Total Securities	$	12,287.0	$	12,459.4	$	11,803.1	$	9,898.4	$	8,153.6
Total Securities at Year-End	$	15,570.8	$	8,888.2	$	12,365.2	$	11,109.0	$	9,041.7

13

Loans and Leases by Type

	December 31
(In Millions)	2008		2007		2006		2005		2004
U.S.
Residential Real Estate	$	10,381.4	$	9,171.0	$	8,674.4	$	8,340.5	$	8,095.3
Commercial		8,253.6		5,556.4		4,679.1		3,545.3		3,217.9
Commercial Real Estate		3,014.0		2,350.3		1,836.3		1,524.3		1,307.5
Personal		4,766.7		3,850.8		3,415.8		2,961.3		2,927.2
Other		1,404.2		969.1		979.2		797.8		609.7
Lease Financing		1,143.8		1,168.4		1,291.6		1,194.1		1,221.8
Total U.S.		28,963.7		23,066.0		20,876.4		18,363.3		17,379.4
Non-U.S.		1,791.7		2,274.1		1,733.3		1,605.2		563.3
Total Loans and Leases	$	30,755.4	$	25,340.1	$	22,609.7	$	19,968.5	$	17,942.7

Remaining Maturity of Selected Loans and Leases

	December 31, 2008
(In Millions)	Total		One Year or Less		One to Five Years		Over Five Years
U.S. (Excluding Residential Real Estate and Personal Loans)
Commercial	$	8,253.6	$	5,480.3	$	1,824.7	$	948.6
Commercial Real Estate		3,014.0		908.5		1,683.4		422.1
Other		1,404.2		1,347.0		34.6		22.6
Lease Financing		1,143.8		27.1		59.6		1,057.1
Total U.S.		13,815.6		7,762.9		3,602.3		2,450.4
Non-U.S.		1,791.7		1,771.0		20.7		—
Total Selected Loans and Leases		15,607.3		9,533.9		3,623.0		2,450.4
Interest Rate Sensitivity of Loans and Leases
Fixed Rate	$	10,592.8	$	6,701.5	$	2,112.9	$	1,778.4
Variable Rate		5,014.5		2,832.4		1,510.1		672.0
Total	$	15,607.3	$	9,533.9	$	3,623.0	$	2,450.4

14

Average Deposits by Type

(In Millions)	2008		2007		2006		2005		2004
U.S. Offices
Demand and Noninterest-Bearing
Individuals, Partnerships and Corporations	$	912.5	$	864.4	$	899.5	$	902.3	$	869.4
Correspondent Banks		44.2		30.9		29.0		42.0		70.8
Other Noninterest-Bearing		4,493.6		3,789.3		3,682.0		3,764.6		3,550.7
Total Demand and Noninterest-Bearing		5,450.3		4,684.6		4,610.5		4,708.9		4,490.9
Interest-Bearing
Savings and Money Market		7,786.5		7,016.4		6,602.4		7,238.9		7,313.9
Savings Certificates less than $100,000		454.8		483.8		486.4		500.0		549.8
Savings Certificates $100,000 and more		1,669.5		1,536.0		1,207.3		1,010.7		928.8
Other		615.3		518.1		419.8		379.5		322.0
Total Interest-Bearing		10,526.1		9,554.3		8,715.9		9,129.1		9,114.5
Total U.S. Offices		15,976.4		14,238.9		13,326.4		13,838.0		13,605.4
Non-U.S. Offices
Non Interest-Bearing		3,364.5		2,963.8		1,778.7		1,138.4		920.3
Interest-Bearing		35,958.2		28,587.8		21,853.1		17,125.4		12,501.8
Total Non-U.S. Offices		39,322.7		31,551.6		23,631.8		18,263.8		13,422.1
Total Deposits	$	55,299.1	$	45,790.5	$	36,958.2	$	32,101.8	$	27,027.5

Average Rates Paid on Interest-Related Deposits by Type

	2008		2007		2006		2005		2004
Interest-Related Deposits—U.S. Offices
Savings and Money Market	1.77	%	3.37	%	2.85	%	1.70	%	.75	%
Savings Certificates less than $100,000	3.21		4.42		3.92		2.91		2.45
Savings Certificates $100,000 and more	3.44		4.83		4.33		3.09		2.51
Other Time	3.28		4.74		4.28		2.78		1.63
Total U.S. Offices Interest-Related Deposits	2.19		3.73		3.18		1.96		1.06
Total Non-U.S. Offices Interest-Related Deposits	2.46		4.22		3.69		2.62		1.61
Total Interest-Related Deposits	2.40	%	4.10	%	3.55	%	2.39	%	1.38	%

Remaining Maturity of Time Deposits $100,000 or More

	December 31, 2008						December 31, 2007
	U.S. Offices						U.S. Offices
(In Millions)	Certificates of Deposit		Other Time		Non-U.S. Offices		Certificates of Deposit		Other Time		Non-U.S. Offices
3 Months or Less	$	1,380.9	$	730.5	$	34,844.0	$	1,119.9	$	843.7	$	30,800.7
Over 3 through 6 Months		666.0		—		166.0		434.4		—		125.5
Over 6 through 12 Months		550.8		—		127.5		368.9		—		31.7
Over 12 Months		314.6		—		11.9		178.0		—		11.0
Total	$	2,912.3	$	730.5	$	35,149.4	$	2,101.2	$	843.7	$	30,968.9

15

Purchased Funds

Federal Funds Purchased

(Overnight Borrowings)

($ in Millions)		2008			2007			2006
Balance on December 31		$	1,783.5		$	1,465.8		$	2,821.6
Highest Month-End Balance			8,473.7			2,131.7			4,816.8
Year	– Average Balance		2,598.1			1,660.6			2,135.6
	– Average Rate		1.24	%		4.81	%		4.87	%
Average Rate at Year-End			0.03	%		2.15	%		4.53	%

Securities Sold under Agreements to Repurchase

($ in Millions)		2008			2007			2006
Balance on December 31		$	1,529.1		$	1,763.6		$	1,950.5
Highest Month-End Balance			2,635.7			2,845.1			2,410.2
Year	– Average Balance		1,271.5			1,620.2			2,030.0
	– Average Rate		1.79	%		4.94	%		4.88	%
Average Rate at Year-End			0.07	%		2.48	%		4.96	%

Other Borrowings

(Includes Treasury Investment Program Balances, Term Federal Funds Purchased and Other Short-Term Borrowings)

($ in Millions)		2008			2007			2006
Balance on December 31		$	736.7		$	2,108.5		$	2,976.5
Highest Month-End Balance			4,229.6			6,608.6			4,103.5
Year	– Average Balance		739.4			1,040.7			2,309.3
	– Average Rate		3.04	%		3.03	%		1.32	%
Average Rate at Year-End			0.06	%		2.72	%		1.80	%

Total Purchased Funds

($ in Millions)		2008			2007			2006
Balance on December 31		$	4,049.3		$	5,337.9		$	7,748.6
Year	– Average Balance		4,609.0			4,321.5			6,474.9
	– Average Rate		1.68	%		4.22	%		3.54	%

Commercial Paper

($ in Millions)		2008			2007			2006
Balance on December 31		$	—		$	—		$	—
Highest Month-End Balance			—			—			145.9
Year	– Average Balance		—			—			61.5
	– Average Rate		—	%		—	%		4.67	%
Average Rate at Year-End			—			—			—

16

Changes in Net Interest Income

	2008/2007									2007/2006
	Change Due To									Change Due To
(Interest on a Taxable Equivalent Basis) (In Millions)	Average Balance			Rate			Total			Average Balance			Rate			Total
Increase (Decrease) in Interest Income
Money Market Assets
Federal Funds Sold and Resell Agreements	$	12.2		$	(42.6	)	$	(30.4	)	$	21.0		$	.8		$	21.8
Time Deposits with Banks		215.0			(103.5	)		111.5			188.5			107.0			295.5
Other Interest-Bearing		83.4			(75.3	)		8.1			(.5	)		.3			(.2	)
Securities
U.S. Government		(5.7	)		(.7	)		(6.4	)		(3.1	)		.7			(2.4	)
Obligations of States and Political Subdivisions		(3.0	)		—			(3.0	)		(1.1	)		(.3	)		(1.4	)
Government Sponsored Agency		(58.5	)		(223.8	)		(282.3	)		6.9			26.9			33.8
Other		54.5			(47.0	)		7.5			30.8			(.7	)		30.1
Loans and Leases		265.9			(389.3	)		(123.4	)		132.8			22.2			155.0
Total	$	563.8		$	(882.2	)	$	(318.4	)	$	375.3		$	156.9		$	532.2
Increase (Decrease) in Interest Expense
Deposits
Savings and Money Market	$	26.0		$	(124.6	)	$	(98.6	)	$	14.0		$	34.4		$	48.4
Savings Certificates		4.9			(28.5	)		(23.6	)		15.4			8.8			24.2
Other Time		4.6			(8.9	)		(4.3	)		4.7			1.9			6.6
Non-U.S. Offices Time		311.0			(631.9	)		(320.9	)		284.2			115.3			399.5
Short-Term Borrowings		12.7			(126.8	)		(114.1	)		(98.1	)		53.3			(44.8	)
Senior Notes		18.2			(6.3	)		11.9			6.4			3.8			10.2
Long-Term Debt		27.9			(13.1	)		14.8			(9.0	)		(2.6	)		(11.6	)
Floating Rate Capital Debt		—			(4.6	)		(4.6	)		—			1.3			1.3
Total	$	405.3		$	(944.7	)	$	(539.4	)	$	217.6		$	216.2		$	433.8
Increase (Decrease) in Net Interest Income	$	158.5		$	62.5		$	221.0		$	157.7		$	(59.3	)	$	98.4

Note: Changes not due solely to average balance changes or rate changes are included in the change due to rate column.

17

Analysis of Reserve for Credit Losses

($ in Millions)	2008			2007			2006			2005			2004
Balance at Beginning of Year	$	160.2		$	151.0		$	136.0		$	139.3		$	157.2
Charge-Offs
Residential Real Estate		8.9			1.1			.2			—			.4
Commercial		7.6			4.5			.9			6.9			5.2
Commercial Real Estate		5.1			—			.1			—			—
Personal		1.8			.9			.5			.6			.7
Other		2.3			3.2			.1			.1			1.0
Lease Financing		—			—			—			—			—
Non-U.S.		—			—			—			—			—
Total Charge-Offs		25.7			9.7			1.8			7.6			7.3
Recoveries
Residential Real Estate		.3			.1			.2			.1			.2
Commercial		1.8			.3			1.3			.5			3.7
Commercial Real Estate		.1			—			—			—			.1
Personal		.3			.1			—			.4			.4
Other		—			.1			.1			.1			—
Lease Financing		—			—			—			—			—
Non-U.S.		—			.3			—			.7			—
Total Recoveries		2.5			.9			1.6			1.8			4.4
Net Charge-Offs		23.2			8.8			.2			5.8			2.9
Provision for Credit Losses		115.0			18.0			15.0			2.5			(15.0	)
Effect of Foreign Exchange Rates		(.9	)		—			.2			—			—
Net Change in Reserve		90.9			9.2			15.0			(3.3	)		(17.9	)
Balance at End of Year	$	251.1		$	160.2		$	151.0		$	136.0		$	139.3
Reserve Assigned To:
Loans and Leases	$	229.1		$	148.1		$	140.4		$	125.4		$	130.7
Unfunded Commitments and Standby Letters of Credit		22.0			12.1			10.6			10.6			8.6
Total Reserve for Credit Losses	$	251.1		$	160.2		$	151.0		$	136.0		$	139.3
Loans and Leases at Year-End	$	30,755.4		$	25,340.1		$	22,609.7		$	19,968.5		$	17,942.7
Average Total Loans and Leases	$	27,402.7		$	22,817.8		$	20,528.5		$	18,754.0		$	17,450.9
As a Percent of Year-End Loans and Leases
Net Loan Charge-Offs		.08	%		.03	%		—	%		.03	%		.02	%
Provision for Credit Losses		.37			.07			.07			.01			(.08	)
Reserve at Year-End Assigned to Loans and Leases		.75			.58			.62			.63			.73
As a Percent of Average Loans and Leases
Net Loan Charge-Offs		.08	%		.04	%		—	%		.03	%		.02	%
Reserve at Year-End Assigned to Loans and Leases		.84			.65			.68			.67			.75

18

Non-U.S. Operations (Based on Obligor’s Domicile)

See also Note 32 – Business Units and Related Information in the Notes to Consolidated Financial Statements on page 101 of the Corporation’s Annual Report to Stockholders for the year ended December 31, 2008, which is incorporated herein by reference.

Selected Average Assets and Liabilities Attributable to Non-U.S. Operations

(In Millions)	2008		2007		2006		2005		2004
Total Assets	$	27,321.0	$	21,483.2	$	17,971.7	$	14,046.1	$	12,367.4
Time Deposits with Banks		20,547.9		16,028.9		12,715.0		10,662.4		10,414.6
Loans		1,641.7		1,709.8		1,377.0		1,046.8		621.7
Customers’ Acceptance Liability		.2		.3		.3		1.0		1.0
Non-U.S. Investments		205.7		101.8		76.6		64.3		55.2
Total Liabilities	$	44,022.1	$	34,469.5	$	25,992.9	$	20,489.6	$	14,867.0
Deposits	$	40,825.6	$	32,200.2	$	24,048.2	$	18,816.5	$	14,051.6
Liability on Acceptances		.2		.3		.3		1.0		1.0

Percent of Non-U.S.-Related Average Assets and Liabilities to Total Consolidated Average Assets

	2008		2007		2006		2005		2004
Assets	37	%	35	%	34	%	31	%	30	%
Liabilities	60	%	57	%	49	%	45	%	36	%

Reserve for Credit Losses Relating to Non-U.S. Operations

(In Millions)	2008			2007			2006		2005		2004
Balance at Beginning of Year	$	8.8		$	9.3		$	4.9	$	2.0	$	1.8
Charge-Offs		—			—			—		—		—
Recoveries		—			—			—		.7		—
Provision for Credit Losses		(1.4	)		(.5	)		4.4		2.2		.2
Balance at End of Year	$	7.4		$	8.8		$	9.3	$	4.9	$	2.0

The SEC requires the disclosure of the reserve for credit losses that is applicable to international operations. The above table has been prepared in compliance with this disclosure requirement and is used in determining non-U.S. operating performance. The amounts shown in the table should not be construed as being the only amounts that are available for non-U.S. loan charge-offs, since the entire reserve for credit losses assigned to loans and leases is available to absorb losses on both U.S. and non-U.S. loans. In addition, these amounts are not intended to be indicative of future charge-off trends.

19

Distribution of Non-U.S. Loans and Deposits by Type

	December 31
Loans (In Millions)	2008		2007		2006		2005		2004
Commercial	$	351.1	$	482.5	$	815.0	$	719.6	$	174.4
Non-U.S. Governments and Official Institutions		14.8		17.0		56.2		94.8		84.9
Banks		32.4		14.9		18.8		57.7		24.5
Other *		1,393.4		1,759.7		843.3		733.1		279.5
Total	$	1,791.7	$	2,274.1	$	1,733.3	$	1,605.2	$	563.3

* Other loans include short duration advances, primarily related to overdrafts associated with the timing of custody clients’ investments.

	December 31
Deposits (In Millions)	2008		2007		2006
Commercial	$	33,091.6	$	30,787.2	$	26,061.3
Non-U.S. Governments and Official Institutions		4,419.5		3,903.7		2,563.4
Banks		667.5		748.8		799.9
Other Time		642.1		626.8		633.6
Other Demand		35.1		156.8		118.8
Total	$	38,855.8	$	36,223.3	$	30,177.0

CREDIT RISK MANAGEMENT

For the discussion of Credit Risk Management, see the following information that is incorporated herein by reference to the Corporation’s Annual Report to Stockholders for the year ended December 31, 2008:

Notes to Consolidated Financial Statements	2008 Annual Report Page(s)
1. Accounting Policies
F. Derivative Financial Instruments	67
G. Loans and Leases	67
H. Reserve for Credit Losses	68
K. Other Real Estate Owned	69
6. Loans and Leases	74-75
7. Reserve for Credit Losses	75
25. Contingent Liabilities	91-92
26. Derivative Financial Instruments	92-94
27. Off-Balance Sheet Financial Instruments	94-95
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Asset Quality and Credit Risk Management	47-57

In addition, the following schedules on pages 18 through 20 of this Form 10-K should be read in conjunction with the “Credit Risk Management” section:

Analysis of Reserve for Credit Losses

Reserve for Credit Losses Relating to Non-U.S. Operations

Distribution of Non-U.S. Loans and Deposits by Type

20

INTEREST RATE SENSITIVITY ANALYSIS

For the discussion of interest rate sensitivity, see the section entitled “Market Risk Management” on pages 55 through 57 of Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Corporation’s Annual Report to Stockholders for the year ended December 31, 2008, which is incorporated herein by reference.

The following unaudited Consolidated Balance Sheet and Consolidated Statement of Income for The Northern Trust Company were prepared in accordance with generally accepted accounting principles and are provided here for informational purposes. These consolidated financial statements should be read in conjunction with the footnotes accompanying the consolidated financial statements, included in the Corporation’s Annual Report to Stockholders for the year ended December 31, 2008, and incorporated herein by reference on page 35 of this Form 10-K.

21

The Northern Trust Company

Consolidated Balance Sheet (unaudited)

	December 31
(In Millions)	2008			2007
Assets
Cash and Due from Banks	$	2,604.1		$	3,705.3
Federal Funds Sold and Securities Purchased under Agreements to Resell		1,489.9			5,683.6
Time Deposits with Banks		16,707.5			21,242.2
Federal Reserve Deposits and Other Interest-Bearing		9,481.9			256.3
Securities
Available for Sale		13,804.9			7,570.4
Held to Maturity (Fair Value—$1,110.9 in 2008 and $1,114.1 in 2007)		1,110.1			1,098.8
Total Securities		14,915.0			8,669.2
Loans and Leases
Commercial and Other		14,906.7			11,349.9
Residential Mortgages		3,931.7			3,503.2
Total Loans and Leases (Net of unearned income—$542.2 in 2008 and $562.7 in 2007)		18,838.4			14,853.1
Reserve for Credit Losses Assigned to Loans and Leases		(152.9	)		(100.3	)
Buildings and Equipment		408.3			386.2
Customers’ Acceptance Liability		—			.2
Client Security Settlement Receivables		709.3			563.1
Goodwill		306.1			349.1
Other Assets		5,126.0			2,790.4
Total Assets	$	70,433.6		$	58,398.4
Liabilities
Deposits
Demand and Other Noninterest-Bearing	$	10,560.2		$	4,521.0
Savings and Money Market		4,016.3			3,597.2
Savings Certificates		1,209.9			1,100.9
Other Time		390.2			221.5
Non-U.S. Offices — Noninterest-Bearing		2,856.4			4,379.4
— Interest-Bearing		36,094.9			30,890.5
Total Deposits		55,127.9			44,710.5
Federal Funds Purchased		1,877.6			1,465.8
Securities Sold under Agreements to Repurchase		1,599.9			1,782.3
Other Borrowings		745.4			2,117.1
Senior Notes		145.8			199.7
Long-Term Debt		2,209.4			1,966.6
Liability on Acceptances		—			.2
Other Liabilities		4,441.1			2,778.9
Total Liabilities		66,147.1			55,021.1
Stockholder’s Equity
Capital Stock—Par Value $1		3.6			3.6
Surplus		1,155.5			655.5
Undivided Profits		3,590.1			2,791.1
Accumulated Other Comprehensive Income (Loss)		(462.7	)		(72.9	)
Total Stockholder’s Equity		4,286.5			3,377.3
Total Liabilities and Stockholder’s Equity	$	70,433.6		$	58,398.4

22

The Northern Trust Company

Consolidated Statement of Income (unaudited)

	For the Year Ended December 31
(In Millions)	2008			2007		2006
Noninterest Income
Trust, Investment and Other Servicing Fees	$	1,682.7		$	1,605.3	$	1,378.3
Foreign Exchange Trading Income		616.2			351.3		247.3
Treasury Management Fees		69.1			61.5		62.3
Security Commissions and Trading Income		10.5			11.3		2.2
Gain on Visa Share Redemption		167.9			—		—
Other Operating Income		165.7			70.4		61.9
Investment Security Gains (Losses), net		(56.3	)		6.5		1.4
Total Noninterest Income		2,655.8			2,106.3		1,753.4
Interest Income
Loans and Leases		617.5			706.8		629.4
Securities
—Available for Sale		308.7			579.0		516.6
—Held to Maturity		38.6			41.0		41.4
Total Securities		347.3			620.0		558.0
Time Deposits with Banks		887.6			776.3		481.1
Federal Funds Sold, Securities Purchased under Agreements to Resell and Other		90.9			155.3		109.4
Total Interest Income		1,943.3			2,258.4		1,777.9
Interest Expense
Deposits		989.2			1,369.8		926.4
Federal Funds Purchased		32.8			80.3		105.5
Securities Sold under Agreements to Repurchase		24.3			82.2		100.8
Other Borrowings		22.6			32.7		31.1
Senior Notes		11.5			11.6		11.8
Long-Term Debt		107.6			102.9		118.0
Total Interest Expense		1,188.0			1,679.5		1,293.6
Net Interest Income		755.3			578.9		484.3
Provision for Credit Losses		65.9			13.3		13.0
Net Interest Income after Provision for Credit Losses		689.4			565.6		471.3
Income before Noninterest Expenses		3,345.2			2,671.9		2,224.7
Noninterest Expenses
Compensation		903.7			813.2		665.1
Employee Benefits		180.4			185.8		168.4
Outside Services		347.0			317.3		256.5
Equipment and Software Expense		229.8			207.6		193.3
Occupancy Expense		120.0			106.3		101.3
Visa Indemnification Charges		(76.1	)		150.0		—
Other Operating Expenses		310.5			128.8		85.1
Total Noninterest Expenses		2,015.3			1,909.0		1,469.7
Income before Income Taxes		1,329.9			762.9		755.0
Provision for Income Taxes		521.6			229.9		262.0
Net Income	$	808.3		$	533.0	$	493.0
Dividends Paid to the Corporation	$	—		$	260.0	$	100.0

23

AVAILABLE INFORMATION

The Corporation’s Internet address is www.northerntrust.com. We make available free of charge through our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC. Additionally, the Corporation’s corporate governance guidelines, its code of business conduct and ethics applicable to directors, officers and employees, and the charters for its audit, business risk, business strategy, corporate governance, compensation and benefits, and executive committees are all available on the Corporation’s Internet website. Information contained on the Corporation’s website is not part of this report.

Supplemental Item—Executive Officers of the Registrant

The following table sets forth certain information with regard to each executive officer of the Corporation.

Name and Age	Current Position Held with the Corporation and Effective Date First Elected to Office Indicated
Frederick H. Waddell (55)	President (2/21/06) and Chief Executive Officer (1/1/08)
Sherry S. Barrat (59)	Executive Vice President and President—PFS (1/1/06)
Aileen B. Blake (41)	Executive Vice President and Controller (3/31/05)
Steven L. Fradkin (47)	Executive Vice President (1/21/03) and Chief Financial Officer (1/20/04)
Timothy P. Moen (56)	Executive Vice President and Head of Human Resources and Administration (4/16/02)
William L. Morrison (58)	Executive Vice President (5/21/02) and President—PFS (3/14/03)
Stephen N. Potter (52)	Executive Vice President (10/17/06) and President – NTGI (3/28/08)
Jana R. Schreuder (50)	Executive Vice President (6/30/05) and President—O&T (10/17/06)
Joyce St. Clair (50)	Executive Vice President and Head of Corporate Risk Management (4/1/07)
Timothy J. Theriault (48)	Executive Vice President (4/16/02) and President—C&IS (10/17/06)
Kelly R. Welsh (56)	Executive Vice President, General Counsel and Assistant Secretary (7/18/00)

With the exception of Ms. Blake, all of the executive officers have been officers of the Corporation, or a subsidiary of the Corporation, for more than five years. The prior business experience of Ms. Blake is set forth below:

Aileen B. Blake: November 2004-March 2005—Executive Vice President and Controller-Designate; April 2003-November 2004—Vice President of Financial Planning and Analysis at PepsiCo Beverages and Foods (formerly, The Quaker Oats Company); 1993-April 2003—various financial positions in auditing and financial planning at The Quaker Oats Company and PepsiCo Beverages and Foods.

The positions of Chairman of the Board, Chief Executive Officer and President are elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of stockholders. The other officers are appointed annually by the Board. Officers continue to hold office until their successors are duly elected or until their death, resignation or removal by the Board.

Item 1A—Risk Factors

From an investor’s standpoint, public companies in general and financial institutions in particular share many of the same risks. However, each company’s unique combination of strategies, markets served, product and service offerings, processes and systems, and other internal and external factors cause it to have its own set of principal risks. Following is a description of some of the principal risks inherent in Northern Trust’s business.

We explain below that many of the risks we discuss can reduce our earnings, as a result of recognizing losses or otherwise. You should understand that significant reductions in earnings can have further negative effects on us in addition to reducing the price of our common stock and other securities, such as: reducing our capital, which can have regulatory and

24

other consequences; affecting the confidence that clients and counterparties have in us, with a resulting negative effect on our ability to conduct and grow our businesses; and reducing the attractiveness of our securities to rating agencies and potential purchasers and so affecting our ability to raise capital and secure other funding or the prices at which we are able to do so.

This list is not necessarily complete because we may have failed to appreciate the potential impact on us of risks not described here. We identify and manage risk through our business strategies and plans and our risk management practices and controls. If we fail to continue to successfully identify and manage significant risks, we could incur financial loss. We may also suffer damage to our reputation that would restrict our ability to grow or conduct business profitably, or become subject to regulatory penalties or constraints that would limit some of our activities or make them significantly more expensive.

Economic, Market, and Monetary Policy Risks

Northern Trust carries on a global business. Changes in conditions in the global financial markets and general economic conditions both in the U.S. and internationally could adversely affect Northern Trust’s businesses. Factors such as the level and volatility of equity and futures prices, the overall pace of capital markets activities, interest rates, currency exchange rates, investor sentiment and inflation can affect our results.

• A downturn in economic conditions, such as the current severe global economic downturn, can negatively affect our earnings.

- Economic weakness can affect the ability of borrowers to repay loans, causing credit quality to deteriorate and resulting in increased cost of credit, a higher level of charge-offs, and higher provision for credit losses, all of which reduce our earnings.

- Economic weakness can also reduce the fees we earn for managing and servicing our customers’ assets. For example, the current downturn in equity markets and the decrease in the value of some debt-related investments as a result of market disruption or illiquidity reduce the valuations of the assets we manage or service for others. This reduces our earnings since a significant part of the fees we earn is based on asset values.

- Weak economic conditions also affect wealth creation, investment preferences, trading activities, and savings patterns, which impact demand for our trust and investment products and services. Reduced transaction volumes would also negatively impact our earnings.

• A slowing of the globalization of investment activity or pension reform could limit our revenue growth. We believe we have profited from the increasing globalization of investment activity and from pension reform in many nations that has generated new pools of assets that require management and servicing. Any slowing of this globalization or other such trends would adversely affect factors that have been important in Northern Trust’s recent growth.

• Instability, disruption or a lack of confidence in the political, economic, legal or regulatory systems of the emerging markets in which we operate could expose us to liability or loss. Northern Trust’s expanding business activities in emerging markets, including investments made for clients in those markets, present the risks inherent in conducting these activities in less mature and often less regulated business and investment environments.

• Changes in interest rates can negatively affect our earnings. The direction and level of interest rates are important factors in our earnings. Falling rates or rates that remain low can reduce our net interest margin, which is the difference between what we earn on our assets and the interest rates we pay for deposits and other sources of funding. Lower net interest margins negatively impact our net interest income and earnings.

• Fluctuations and volatility in foreign currency exchange rates can negatively affect our earnings. We hold various non-U.S. dollar denominated assets and liabilities and maintain investments in non-U.S. subsidiaries. We also provide foreign exchange services to our clients, primarily in connection with our global custody business, and effect other transactions in non-U.S. dollar currencies. Foreign currency volatility and fluctuations in exchange rates may impact the value of non-U.S. dollar denominated assets and investments and raise the potential for losses resulting from foreign currency trading positions, where aggregate obligations to purchase and sell a currency other than the U.S. dollar do not offset each other, or offset each other in different time periods. If the policies and procedures we have in place to assess and mitigate potential impacts of foreign exchange volatility are not followed or are not effective to mitigate such risks, our results and earnings may be negatively affected.

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• Declines in the value of securities held in our investment portfolio can negatively affect our earnings. The value of securities available for sale and held to maturity within our investment portfolio may fluctuate as a result of market volatility and adverse economic or financial market conditions. Generally, the fair value of those securities is determined based upon market values available from third party sources. The current period of economic turmoil and financial market disruption has negatively affected the liquidity and pricing of securities generally and asset-backed securities in particular. To the extent that any portion of the unrealized losses in our portfolio of investment securities results from declines in securities values that management determines to be other-than-temporary, the book value of those securities will be adjusted to their estimated fair value, we will recognize a charge to earnings in the quarter during which we make that determination, and our earnings may be adversely impacted. See the section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” captioned “Risk Management – Asset Quality and Credit Risk Management – Securities Portfolio” in the 2008 Annual Report to Stockholders (pages 47—48) and the section of the “Notes to Consolidated Financial Statements” in the 2008 Annual Report to Stockholders captioned “Note 4 – Securities” (pages 71—73) for additional information.

• Changes in a number of particular market conditions can negatively affect our earnings. In past periods, reductions in the volatility of currency trading markets, the level of cross-border investing activity, or the demand for borrowed securities have negatively affected our earnings from activities such as foreign exchange trading and securities lending. If these conditions occur in the future, our earnings from these activities may be negatively affected. In a few of our businesses, such as securities lending, we are compensated through sharing in our client’s earnings, so that market and other factors that reduce our clients’ earnings from investments or trading activities also reduce our revenues. The current extraordinary market conditions have produced losses in some securities lending programs, which negatively affect our earnings. This has led some clients to withdraw from these programs, and a persistence or worsening of these conditions could negatively affect earnings and result in additional withdrawals. See the section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” captioned “Off-Balance Sheet Arrangements – Variable Interests” in the 2008 Annual Report to Stockholders (pages 42—43) and the section of the “Notes to Consolidated Financial Statements” in the 2008 Annual Report to Stockholders captioned “Note 28 – Variable Interest Entities” (pages 95—96) for additional information.

• Changes in the monetary and other policies of the various regulatory authorities or central banks of the United States, non-U.S. governments and international agencies can reduce our earnings or negatively affect our growth prospects. For example, the Board of Governors of the Federal Reserve System regulates the supply of money and credit in the United States, and its policies determine in large part the level of interest rates and our cost of funds for lending and investing. Changes in interest rates and our cost of funds can negatively affect earnings. The actions of the Federal Reserve Board can reduce the value of financial instruments we hold. Its policies also can affect our borrowers by increasing interest rates or making sources of funding less available. This can increase the risk that they may fail to repay their loans from us.

• Failure to develop and implement contingency plans to address market disruptions could adversely affect us. Our success in the area of highly complex asset servicing relationships depends, in part, on our development and successful implementation of contingency plans to address significant market disruptions caused by bankruptcy, insolvency or illiquidity.

• Governmental action to combat current economic weakness and financial market disruption may not succeed, with various adverse effects on us. The second half of 2008 witnessed unprecedented disruptions in global financial markets, including volatility in asset values and constraints on the availability of credit. In response to these developments, the U.S. and other governments have taken, and may take further, steps designed to stabilize markets generally and strengthen financial institutions in particular. The current upheaval in global financial markets has accentuated each of the risks identified above and magnified their potential effect on Northern Trust. To the extent that these governmental stabilization and mitigation activities are not successful or adversely change the competitive structure of the financial services industry, these developments could have an adverse impact on Northern Trust’s revenues, costs, credit losses, access to capital, or liquidity. They also may impose additional limitations or costs on Northern Trust’s business.

Operational Risks

• Errors, breakdowns in controls or other mistakes in the provision of services to clients or in carrying out transactions for our own account can subject us to liability, result in losses or negatively affect our earnings in other ways. In our asset servicing, investment management, and other business activities, Northern Trust effects or

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processes transactions for clients and for itself that involve very large amounts of money. Failure to properly manage or mitigate operational risks can have substantial consequences, and increased volatility in the financial markets may increase the magnitude of resulting losses.

• Many types of operational risks can negatively affect our earnings. Many factors can impact operations and expose us to risks that may vary in size, scale and scope, including:

- Human errors or omissions, including failures to comply with applicable laws or corporate policies and procedures;

- Theft, fraud or misappropriation of assets, whether arising from the intentional actions of internal personnel or external third parties;

- Defects or interruptions in computer or communications systems;

- Breakdowns in processes, including manual processes, which are inherently more prone to error than automated processes, and over-reliance on manual processes, breakdowns in internal controls or failures of the technology and facilities that support our operations;

- Unsuccessful or difficult implementation of computer systems upgrades;

- Failures to meet professional or fiduciary obligations to clients;

- Defects in product design or delivery;

- Difficulty in accurately pricing assets, which can be aggravated by increased asset coverage, market volatility and illiquidity, and lack of reliable pricing from vendors;

- Negative developments in relationships with key counterparties, vendors, employees, or associates in our day-to-day operations; and

- External events that are wholly or partially beyond our control, such as natural disasters, epidemics, computer viruses, or terrorist events.

In recent years, we have expanded the operational support located in lower-cost areas, where the electricity, communications and other systems necessary to support our activities may not be as strong as in the U.S. This increases the risk that problems with these systems may occur and disrupt our operations in some of the ways just described, resulting in losses.

• Our dependence on automation exposes us to risks that can also result in losses. Automated systems to record and process transactions, as well as to monitor positions and price assets, can reduce the risk of human error, but our necessary dependence on such systems also increases the risk that system flaws, human tampering or manipulation of those systems will result in losses. The failure to upgrade systems as necessary to support growth and changing business needs could also have a material adverse effect. Additionally, failure to ensure adequate review and consideration of critical business changes prior to and during introduction and deployment of key technological systems or failure to adequately align evolving client commitments and expectations with operational capabilities can have a negative impact on our operations.

• We may fail to detect errors resulting in losses that continue until the problems are detected and fixed. Given the high volume of transactions we process, errors that affect earnings may be repeated or compounded before they are discovered and corrected.

• Our business continuity plans may not work and thus fail to prevent losses from operational failures. Our business continuity plans address many of these risks, but may not operate successfully to mitigate them. If they do not, we could incur losses, liability to clients or others or reduced earnings.

These risks are magnified as client requirements become more complex, and as our increasingly international business requires end-to-end management of operational and other processes across multiple time zones and many inter-related products and services.

Investment Performance, Fiduciary and Asset Servicing Risks

Revenues from our investment management, fiduciary, and asset servicing businesses are significant to our earnings.

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• Failure to produce adequate and competitive returns can negatively affect our earnings and growth prospects. If we do not generate risk-adjusted returns that satisfy clients in a variety of asset classes and are competitive, we will have greater difficulty maintaining existing business and attracting new business, which would negatively affect our earnings and prospects.

• If we fail to comply with legal standards, we could incur liability to our clients or lose clients, which would negatively affect our earnings. Managing or servicing assets with reasonable prudence in accordance with the terms of governing documents and applicable laws is important to client satisfaction, which in turn is important to the earnings and growth of our investment businesses. Failure to do so can also result in liability, as can failure to manage the differing interests often involved in the exercise of fiduciary responsibilities or the failure to manage these risks adequately.

• We may take actions to maintain client satisfaction that result in losses or reduced earnings. We may find it necessary to take action or incur expenses in order to maintain client satisfaction or preserve the usefulness of investments or investment vehicles we manage in light of changes in security ratings, liquidity or valuation issues or other developments, even though we are not required to do so by law or the terms of governing instruments. For example, we have entered into credit support agreements with respect to certain investment funds and we incurred substantial charges to reflect that support in the third quarter of 2008. We incurred other significant charges in that quarter to support securities lending clients and clients who had purchased certain illiquid auction rate securities. The risk that we will need to take such action and incur the resulting losses is greater in periods when credit or equity markets are deteriorating in value or are particularly volatile and liquidity in markets is disrupted, as they have been in recent months.

Credit Risks

A number of Northern Trust’s product offerings involve credit risk, which is the risk that other parties will not fulfill their financial obligations to us. These product offerings include loans, leases and other lending commitments.

• We may not evaluate accurately the prospects for repayment when we extend credit, or our reserves for credit losses may not be adequate, so that our earnings are reduced by losses or the need to make additional provisions for credit losses. We evaluate credit commitments before we make them and then allow for and reserve against credit risks based on our assessment of the credit losses inherent in our loan portfolio, including unfunded credit commitments. This process requires us to make difficult and complex judgments. Challenges associated with our credit risk assessments include identifying the proper factors to be used in assessment and accurately estimating the impacts of those factors. Reserves that prove to be inadequate can directly and negatively affect earnings.

• Weakened economic conditions can result in losses or the need for additional provisions, both of which reduce our earnings. Credit risk levels and our earnings can also be affected by the strength of the economy in general and in the particular locales in which we extend credit, a deterioration in credit quality or a reduced demand for credit and adverse changes in the financial performance or condition of our borrowers which could impact the borrowers’ abilities to repay outstanding loans. See the section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” captioned “Provision and Reserve for Credit Losses” in the 2008 Annual Report to Stockholders (pages 53 - 55).

Liquidity Risks

Northern Trust depends on access to capital markets to provide sufficient capital resources and other funds to meet our commitments and business needs and to accommodate the transaction and cash management needs of our clients.

• Many events or circumstances could adversely affect our capital costs, our ability to raise capital and, in turn, our ability to meet our commitments. Inadequate capital or the inability to meet our commitments could cause us to incur liability, restrict our ability to grow, or require us to take actions that would negatively affect our earnings. Among the developments that could have this effect are:

- A loss of confidence of debt purchasers, depositors or counterparties participating in the capital markets generally or in transactions with Northern Trust;

- Disruption in the market for debt-related securities; and

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- A significant downgrade of our debt rating.

See the section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” captioned “Liquidity and Capital Resources” in the 2008 Annual Report to Stockholders (pages 43 - 47).

• Participation in various U.S. governmental programs may not fully mitigate these risks and may have negative effects. We are participating in the Federal Deposit Insurance Corporation’s Temporary Liquidity Guarantee Program, which provides temporary federal guarantees for newly-issued senior unsecured debt and the non-interest bearing transaction accounts of clients. We are also participating in the U.S. Treasury’s Capital Purchase Program under the Troubled Asset Relief Program (“TARP”). The Capital Purchase Program requires Treasury approval for any increase in our common stock dividend prior to November 2011 and for us to repurchase shares of our common stock in excess of those needed to offset dilution from our equity compensation programs or other employee benefit plans. In addition to limiting returns to our stockholders, these restrictions could affect our ability to raise additional equity capital.

• Our success with large, complex clients can put strains on our balance sheet and impose substantial liquidity requirements. Our failure to successfully manage these balance sheet and liquidity issues would have a negative impact on our ability to meet client needs and grow.

• If the Bank or the other subsidiaries of the Corporation were unable to supply the Corporation with funds over time, the Corporation could be unable to meet its various obligations. The Corporation is a legal entity separate and distinct from the Bank and its other subsidiaries. It relies primarily on dividends paid to it by these subsidiaries to meet its obligations and to pay dividends to stockholders of the Corporation. There are various legal limitations on the extent to which the Bank and the other subsidiaries can supply funds to the Corporation by dividend or otherwise. See “Regulation and Supervision” in Item 1 of this report.

Regulation Risks

Virtually every aspect of Northern Trust’s business around the world is regulated, generally by governmental agencies that have broad supervisory powers and the ability to impose sanctions. In the United States, the Corporation, the Bank, and many of the Corporation’s other subsidiaries are heavily regulated by bank regulatory agencies at the federal and state levels. These regulations cover a variety of matters ranging from required capital levels to prohibited activities. They are specifically directed at protecting depositors, the federal deposit insurance fund and the banking system as a whole, not security holders. The Corporation and its nonbanking subsidiaries are also heavily regulated by securities regulators, domestically and internationally.

• Failure to comply with regulations can result in penalties and regulatory constraints that restrict our ability to grow or even conduct our business, or that reduce earnings as a result of higher costs. Regulatory violations or failure to meet formal or informal commitments made to regulators could generate penalties, require corrective actions that increase costs of conducting business, result in limitations on our ability to conduct business, restrict our ability to expand, or adversely impact our reputation.

• Changes in laws and regulation could result in reduced earnings. Laws, regulations, and their interpretation by regulatory agencies may change or generate enhanced scrutiny of particular activities. Those changes or enhanced emphasis can impose costs or otherwise affect our ability to compete successfully. The current disruption in financial markets may produce regulatory changes in the U.S. and elsewhere, the effects of which are difficult to predict. In addition, evolving regulations, such as the new Basel II capital regime, and regulations that generate increased scrutiny of particular activities, such as anti-money laundering procedures, require significant time, effort, and resources on our part to ensure compliance in a rapidly changing environment. We often must meet significant milestones in complying with these regulatory requirements. Failure to meet these requirements and milestones could significantly and negatively affect our business. New or modified regulations and related regulatory guidance may have unforeseen or unintended adverse effects on the financial services industry, including Northern Trust.

• Compliance with evolving regulations under TARP may impact us in ways that are difficult to predict. Our participation in the U.S. Treasury’s Capital Purchase Program under TARP subjects us to increased regulatory and legislative oversight. The recently enacted American Recovery and Reinvestment Act of 2009 (“ARRA”) includes amendments to the executive compensation provisions of the Emergency Economic Stabilization Act of 2008 (“EESA”), under which TARP was established. These amendments apply not only to future participants under TARP, but also apply retroactively to companies like us that are current TARP participants. The ARRA amendments also impose restrictions on excessive or luxury expenditures. The full scope and impact of these amendments is uncertain and

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difficult to predict. ARRA directs the Secretary of the Treasury to adopt standards that will implement the amended provisions of EESA and directs the Securities and Exchange Commission to issue rules in connection with certain of the amended provisions, but the particular scope of those standards and rules, and the timing of their issuance, is not known. These new legal requirements under TARP and implementing standards may have unforeseen or unintended adverse effects on the financial services industry as a whole, and particularly on TARP participants such as Northern Trust. They may require significant time, effort, and resources on our part to ensure compliance, and the evolving regulations concerning executive compensation may impose limitations on us that affect our ability to compete successfully for executive and management talent. For additional information concerning our participation in TARP, see “Regulation and Supervision” in Item 1 of this report.

• Many of our new activities and expansion plans require regulatory approvals, and failure to obtain them will restrict our growth. Failure to obtain necessary approvals from regulatory agencies on a timely basis could adversely affect proposed acquisitions, other business opportunities and results of operations.

See “Regulation and Supervision” in Item 1 of this report.

Litigation Risks

Our businesses involve the risk that clients or others may sue us, claiming that we have failed to perform under a contract or otherwise failed to carry out a duty owed to them. Our trust, custody and investment management businesses are particularly subject to this risk. This risk may be heightened during periods when credit, equity or other financial markets are deteriorating in value or are particularly volatile, or when clients or investors, including securities lending clients, are experiencing losses, as they have been in recent months. In addition, as a publicly-held company, we are subject to the risk of claims under the federal securities laws, and the recent volatility in the stock prices of Northern Trust and other financial institutions has increased this risk.

• These claims can result in significant liability or damage to our reputation, which could result in a loss. Even where we defend them successfully, these matters are often expensive to defend. These claims may also cause damage to our reputation among existing and prospective clients, or negatively impact the confidence of counterparties, rating agencies, and stockholders, and so negatively affect our earnings.

• We may fail to set aside adequate reserves or otherwise make a mistake in evaluating our liability, with a negative effect on our earnings. We estimate our potential liability for pending and threatened claims, and accrue reserves when appropriate pursuant to applicable accounting rules, by evaluating the facts of particular claims under current judicial decisions and legislative and regulatory interpretations. This process is subject to the risk that a judge or jury could decide a case contrary to our evaluation of the law or the facts, and to the risk that a court could change or modify existing law on a particular issue important to the case. Earnings will be adversely affected to the extent that our reserves are not adequate.

Tax and Accounting Risks

In the course of its business, Northern Trust is sometimes subject to challenges from U.S. and non-U.S. tax authorities regarding the amount of taxes due.

• These challenges can result in reduced earnings in a number of ways. These challenges may result in adjustments to the timing or amount of taxable income or deductions or the allocation of income among tax jurisdictions, all of which can require a greater provision for taxes or otherwise negatively affect earnings.

• Our provision for structured lease transactions may prove to be inadequate, resulting in additional tax provisions or reduced earnings. In recent years, the U.S. Internal Revenue Service has proposed to disallow tax deductions related to certain types of structured leasing transactions. We made a substantial increase to our provision for taxes in the second quarter of 2008. If this adjustment proves to be inadequate, we would have to make an additional adjustment that would negatively affect earnings.

• Changes in tax laws and interpretations can negatively affect our earnings. Both U.S. and non-U.S. tax authorities from time to time issue new, or modify existing, tax laws and regulations. These authorities may also issue new, or modify existing, interpretations of those laws and regulations. These new laws, regulations or interpretations, and the

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Corporation’s actions taken in response to, or reliance upon, such changes in the tax laws may impact the Corporation’s tax position in a manner that results in lower earnings.

• Changes in accounting rules can negatively affect our earnings and capital ratios. The Financial Accounting Standards Board and other accounting standards-setting organizations make pronouncements and adjustments to their existing accounting guidance that may impact the manner in which the Corporation accounts for certain of its transactions in a way that results in lower earnings or adjustments to the Corporation’s balance sheet resulting in lower capital ratios.

Strategic and Competitive Risks

We have grown through a combination of internal expansion and the acquisition of selected businesses or capabilities, and we intend to continue to do so. A variety of risks could interfere with these plans.

• If we do not successfully execute expansion plans, we will not grow as we have planned and our earnings growth will be negatively impacted. Failure to integrate a substantial acquisition would have an adverse effect on our business, as would the failure to execute successfully a significant internal expansion. The challenges arising from the integration of an acquired business or significant expansion of an existing business may include preserving valuable relationships with employees, clients, suppliers, and other business partners, as well as combining accounting, data processing and internal control systems.

• Failure to execute our other strategies could also negatively affect our prospects. Our growth also depends upon successful, consistent execution of our business strategies in both PFS and C&IS. Recruiting and maintaining skilled personnel, and deploying such key talent in a manner that allows execution of these strategies is important, particularly in highly complex and rapidly growing areas of our business. A failure to do so, or to otherwise successfully carry out our plans, could negatively impact growth.

• We face a variety of competitive challenges that could negatively affect our ability to maintain satisfactory prices and grow our earnings. We provide a broad range of financial products and services in highly competitive markets, in which pricing can be a key competitive factor. Merger activity in the financial services industry, including mergers resulting from government intervention and the overall disruption in the financial services industry, continues to produce large, in some cases well-capitalized, and geographically-diverse companies that are capable of offering a wide array of financial products and services at competitive prices. In certain businesses, such as foreign exchange trading, electronic networks present a competitive challenge. Additionally, technological advances and the growth of internet-based commerce have made it possible for non-depository institutions to offer a variety of products and services competitive with certain areas of our business. Many of these non-traditional service providers have fewer regulatory constraints, and some have lower cost structures. These competitive pressures can negatively affect earnings and our ability to grow.

• Intervention of the U.S. and other governments in the financial services industry may heighten the competitive challenges we face. In response to the continuing disruptions in global financial markets currently being experienced, the government of the United States and other governments around the world have taken, and may take further, unprecedented actions designed to stabilize markets generally and strengthen financial institutions in particular. These actions may involve increased intervention by such governments and regulators in the normal operation of our businesses and the businesses of our competitors in the financial services industry. Such intervention may impact the nature and level of competition in the industry in unpredictable ways. The nature, pace and volume of this government intervention, and our ability to react in a timely manner to regulatory developments, may adversely impact our ability to compete successfully and, in turn, negatively affect our earnings.

• We need to constantly invest in innovation, and any inability or failure to do so will negatively affect our businesses and earnings. Our success in this competitive environment requires consistent investment of capital and human resources in innovation. This investment is directed at generating new products and services, and adapting existing products and services to the evolving standards and demands of the marketplace. Among other things, this helps us maintain a mix of products and services that keeps pace with our competitors and achieve acceptable margins. This investment also focuses on enhancing the delivery of our products and services in order to compete successfully for new clients or gain additional business from existing clients, and includes investment in technological innovation as well. Effectively identifying gaps or weaknesses in our product offerings, particularly in the area of securities lending, also is important. Falling behind our competition in any of these areas could adversely affect our business opportunities, our growth and our earnings.

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• Failure to understand or fully appreciate the risks associated with development or delivery of new product and service offerings will negatively affect our businesses and earnings. Our success in capitalizing on innovation depends, in part, on successful implementation of new product and service initiatives. Not only must we keep pace with competitors in the development of these new offerings, but we must accurately price them (as well as existing products) on a risk-adjusted basis and effectively deliver them to clients. Our identification of risks arising from new products and services, both in their design and implementation, and effective responses to those identified risks, including pricing, is key to our capitalizing on innovation and investment in new product and service offerings.

• Failure to adequately control our costs could negatively affect our ability to compete and thus reduce our earnings. Our success in controlling the costs and expenses of our business operations also impacts operating results. Another goal of innovation, as a part of our business strategy, is to produce efficiencies in operations that help reduce and control costs and expenses, including the costs of losses associated with operating risks attributable to servicing and managing financial assets.

• Our success with large, complex clients requires understanding of the market and legal, regulatory and accounting standards in new jurisdictions. Any failure to understand and deal with those appropriately could affect our growth prospects or negatively affect our reputation.

Reputation Risks

An important reason that clients bring their business to Northern Trust is that they believe we will serve them with high standards of ethics, performance, accuracy and compliance.

• Damage to our reputation has a direct and negative effect on our ability to compete, grow and generate revenue. Damage to our reputation for delivery of a high level of service undermines the confidence of clients and prospects in our ability to serve them and so negatively affects our earnings.

• Maintaining our reputation is important in other key relationships that affect our businesses and our earnings. Damage to our reputation also could affect the confidence of the other parties in a wide range of transactions that are important to our business, rating agencies, and stockholders in Northern Trust. Failure to maintain our reputation would ultimately have an adverse effect on our ability to manage our balance sheet or effect transactions.

• Reputation risk has many facets that could negatively affect our businesses and earnings. The maintenance of our reputation depends not only on our success in controlling or mitigating the various risks described above, but also on our success in identifying and appropriately addressing issues that may arise in a broad range of areas. These include potential conflicts of interest and other ethical issues; anti-money laundering and anti-terrorist financing procedures; customer personal information and privacy issues; effective evaluation of talent and deployment to adequately address complex and rapid growing areas of our businesses, data security; record-keeping; regulatory investigations of Northern Trust or within the banking industry; and any litigation that arises from the failure or perceived failure of Northern Trust to comply with legal and regulatory requirements.

Many of the risks described above are discussed in more detail in the section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” captioned “Risk Management” in the 2008 Annual Report to Stockholders (pages 47 - 48), in the section of the “Notes to Consolidated Financial Statements” in the 2008 Annual Report to Stockholders captioned “Note 25 – Contingent Liabilities” (pages 91 - 92), and in the sections of “Item 1 – Business” of this Annual Report on Form 10-K captioned “Government Monetary and Fiscal Policies,” “Competition” and “Regulation and Supervision” (pages 2 - 11).

Additionally, the risks described above may cause actual results to differ from the Corporation’s current expectations of future events or future results indicated in what are considered “forward-looking statements” of the Corporation. Forward-looking statements and factors that may affect future results are also discussed in the section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” captioned “Factors Affecting Future Results” in the 2008 Annual Report to Stockholders (pages 58 - 59).

Item 1B—Unresolved Staff Comments

None.

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Item 2—Properties

The executive offices of the Corporation and the Bank are located at 50 South La Salle Street in Chicago. This Bank-owned building is occupied by various divisions of Northern Trust’s business units. Adjacent to this building are two office buildings in which the Bank leases approximately 530,000 square feet of space principally for staff divisions of the business units. Financial services are provided by the Bank and other subsidiaries of the Corporation through a network of 85 offices in 18 U.S. states. The majority of those offices are leased. The Bank’s primary U.S. operations are located in three facilities: a 555,000 square foot leased facility at 801 South Canal Street in Chicago; a Bank-owned computer data center located in a 405,000 square foot facility at 840 South Canal Street in Chicago; and a Bank-owned supplementary operations/data center space of 65,000 square feet located in the western suburbs of Chicago. A majority of the Bank’s London-based staff is located at Canary Wharf in London, where 188,000 square feet of office space is leased. The Bank and the Corporation’s other subsidiaries operate from various other facilities in North America, Europe, the Asia-Pacific region, and the Middle East, most of which are leased. In addition to the above-referenced properties, subsidiaries of the Corporation maintain a number of small operations classified as retirement home/limited access banking locations, back offices, or executive suites.

The Corporation believes that its owned and leased facilities are suitable and adequate for its business needs. For additional information relating to properties and lease commitments, refer to Note 8 – Buildings and Equipment and Note 9 – Lease Commitments on pages 75—76 of the Corporation’s Annual Report to Stockholders for the year ended December 31, 2008, which information is incorporated herein by reference.

Item 3—Legal Proceedings

In the normal course of business, the Corporation and its subsidiaries are routinely defendants in or parties to a number of pending and threatened legal actions, including, but not limited to, actions brought on behalf of various claimants or classes of claimants, regulatory matters, employment matters, and challenges from tax authorities regarding the amount of taxes due. In certain of these actions and proceedings, claims for substantial monetary damages or adjustments to recorded tax liabilities are asserted. In view of the inherent difficulty of predicting the outcome of such matters, particularly matters that will be decided by a jury and actions that seek very large damages based on novel and complex damage and liability legal theories or that involve a large number of parties, the Corporation cannot state with confidence the eventual outcome of these matters or the timing of their ultimate resolution, or estimate the possible loss or range of loss associated with them; however, based on current knowledge and after consultation with legal counsel, management does not believe that judgments or settlements in excess of amounts already reserved, if any, arising from pending or threatened legal actions, regulatory matters, employment matters, or challenges from tax authorities, either individually or in the aggregate, would have a material adverse effect on the consolidated financial position or liquidity of the Corporation, although they could have a material adverse effect on operating results for a particular period.

As part of its audit of federal tax returns filed from 1997 – 2000, the Internal Revenue Service (IRS) challenged the Corporation’s tax position with respect to thirteen investments made in structured leasing transactions and proposed to disallow certain tax deductions and assess related interest and penalties. During the second quarter of 2005, the IRS issued a revised examination report that added proposed adjustments to income and penalty assessments. The Corporation anticipates that the IRS will continue to disallow deductions relating to these leases and possibly include other lease transactions with similar characteristics as part of its audit of tax returns filed after 2000. The Corporation believes that these transactions are valid leases for U.S. tax purposes and that its tax treatment of these transactions is appropriate based on its interpretation of the tax regulations and legal precedents; a court or other judicial authority, however, could disagree. The Corporation believes it has appropriate reserves to cover its tax liabilities, including liabilities related to structured leasing transactions, and related interest and penalties. The Corporation will continue to defend its position on the tax treatment of the leases vigorously.

On January 16, 2009 an amended complaint was filed in the putative class action lawsuit currently pending in the United States District Court for the Northern District of Illinois against the Corporation and others. The defendants named in the amended complaint are the Corporation, the Bank, the Northern Trust Employee Benefits Administrative Committee and its members, the Northern Trust Employee Benefits Investment Committee and its members, and certain other officers, including the present Chief Executive Officer of the Corporation and the former Chief Executive Officer of the Corporation, purportedly on behalf of participants in and beneficiaries of The Northern Trust Company Thrift-Incentive Plan (the “Plan”) whose individual accounts held shares of Corporation common stock at any time from October 19, 2007 to January 14, 2009. The complaint purports to allege breaches of fiduciary duty in violation of the Employee Retirement Income Security Act (ERISA) related to the Corporation’s stock being offered as an investment alternative for participants in the Plan and seeks monetary damages. At this early stage of the suit, it is not possible for management to assess the probability of a material adverse outcome or reasonably estimate the amount of any potential loss.

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Item 4—Submission of Matters to a Vote of Security Holders

None.

PART II

Item 5—Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The information called for by Item 5(a) relating to market price, dividend and related stockholder information is incorporated herein by reference to the section of the Consolidated Financial Statistics titled “Common Stock Dividend and Market Price” on page 108 of the Corporation’s Annual Report to Stockholders for the year ended December 31, 2008.

Information regarding dividend restrictions of the Corporation’s banking subsidiaries is incorporated herein by reference to Note 30 – Restrictions on Subsidiary Dividends and Loans or Advances on pages 96—97 of the Corporation’s Annual Report to Stockholders for the year ended December 31, 2008.

The following table shows certain information relating to the Corporation’s purchases of common stock for the three months ended December 31, 2008 pursuant to the Corporation’s share buyback program:

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly Announced Plan (2)	Maximum Number of Shares That May Yet Be Purchased Under the Plan
October 1 – 31, 2008	20,508	$	48.88	20,508
November 1 – 30, 2008	2,828		48.20	2,828
December 1 – 31, 2008	70,016		45.59	70,016
Total (Fourth Quarter)	93,352	$	46.39	93,352	7,561,340

(1) Includes shares purchased from employees in connection with equity plan transactions such as the surrender of shares to pay an option exercise price or tax withholding.

(2) The Corporation’s current stock buyback program, announced October 27, 2006, authorizes the purchase of up to 12.0 million shares of the Corporation’s common stock. The program has no fixed expiration date. The Corporation is subject to certain restrictions with respect to its purchase of shares of the Corporation’s common stock under the CPP. See the section entitled “Emergency Economic Stabilization Act of 2008 and Other Market-Support Measures” in Item  1 of this Annual Report on Form 10-K (page 5).

Item 6—Selected Financial Data

The information called for by this item is incorporated herein by reference to the table titled “Summary of Selected Consolidated Financial Data” on page 20 of the Corporation’s Annual Report to Stockholders for the year ended December 31, 2008.

Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information called for by this item is incorporated herein by reference to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 20 through 60 of the Corporation’s Annual Report to Stockholders for the year ended December 31, 2008.

Item 7A—Quantitative and Qualitative Disclosures About Market Risk

The information called for by this item is incorporated herein by reference to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 55 through 57 of the Corporation’s Annual Report to Stockholders for the year ended December 31, 2008.

34

Item 8—Financial Statements and Supplementary Data

The following financial statements of the Corporation and its subsidiaries included in the Corporation’s Annual Report to Stockholders for the year ended December 31, 2008, are incorporated herein by reference.

For Northern Trust Corporation and Subsidiaries:	2008 Annual Report Page(s)
Consolidated Balance Sheet—December 31, 2008 and 2007	62
Consolidated Statement of Income—Years Ended December 31, 2008, 2007, and 2006	63
Consolidated Statement of Comprehensive Income—Years Ended December 31, 2008, 2007, and 2006	63
Consolidated Statement of Changes in Stockholders’ Equity—Years Ended December 31, 2008, 2007, and 2006	64
Consolidated Statement of Cash Flows—Years Ended December 31, 2008, 2007, and 2006	65
For Northern Trust Corporation (Corporation only):
Condensed Balance Sheet—December 31, 2008 and 2007	103
Condensed Statement of Income—Years Ended December 31, 2008, 2007, and 2006	103
Consolidated Statement of Comprehensive Income—Years Ended December 31, 2008, 2007, and 2006	63
Consolidated Statement of Changes in Stockholders’ Equity—Years Ended December 31, 2008, 2007, and 2006	64
Condensed Statement of Cash Flows—Years Ended December 31, 2008, 2007, and 2006	104
Notes to Consolidated Financial Statements	66 - 104
Report of Independent Registered Public Accounting Firm	105

The section titled “Quarterly Financial Data” on page 108 of the Corporation’s Annual Report to Stockholders for the year ended December 31, 2008, is incorporated herein by reference.

Item 9—Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A—Controls and Procedures

The Corporation’s management, with the participation of the Corporation’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Corporation’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, such officers have concluded that, as of the end of the period covered by this report, the Corporation’s disclosure controls and procedures are effective in bringing to their attention on a timely basis material information relating to the Corporation (including its consolidated subsidiaries) required to be included in the Corporation’s periodic filings under the Exchange Act. There have been no changes in the Corporation’s internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15 and 15d-15 under the Exchange Act during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

The information called for by Item 9A relating to the report of management on the Corporation’s internal control over financial reporting and the attestation report of the Corporation’s independent registered public accounting firm is incorporated herein by reference to pages 60 and 61 of the Corporation’s Annual Report to Stockholders for the year ended December 31, 2008.

Item 9B—Other Information

Not applicable.

35

PART III

Item 10—Directors, Executive Officers and Corporate Governance

The information called for by Item 10 relating to Directors and Nominees for election to the Board of Directors is incorporated herein by reference to the “Election of Directors” and “Information about the Nominees for Director” sections of the Corporation’s definitive 2009 Notice and Proxy Statement for the Annual Meeting of Stockholders to be held April 21, 2009. The information called for by Item 10 relating to Executive Officers is set forth in Part I of this Annual Report on Form 10-K.

The information called for by Item 10 relating to Regulation S-K, Item 405 disclosure of delinquent Form 3, 4 or 5 filers is incorporated by reference to the “Security Ownership of the Board and Management – Section 16(a) Beneficial Ownership Reporting Compliance” section of the Corporation’s definitive 2009 Notice and Proxy Statement for the Annual Meeting of Stockholders to be held April 21, 2009.

The information called for by Item 10 relating to Regulation S-K, Item 406 disclosure regarding the Corporation’s code of ethics applicable to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions is incorporated by reference to the “Corporate Governance – Code of Business Conduct and Ethics” section of the Corporation’s definitive 2009 Notice and Proxy Statement for the Annual Meeting of Stockholders to be held April 21, 2009.

The information called for by Item 10 relating to Regulation S-K, Item 407(c)(3) disclosure of procedures by which security holders may recommend nominees to the Corporation’s board of directors is incorporated by reference to the “Corporate Governance – Director Nominations and Qualifications” section of the Corporation’s definitive 2009 Notice and Proxy Statement for the Annual Meeting of Stockholders to be held April 21, 2009. The information called for by Item 10 relating to Regulation S-K, Item 407(d)(4) and (d)(5) disclosure of the Corporation’s audit committee financial experts and identification of the Corporation’s audit committee is incorporated by reference to the “Board and Board Committee Information – Audit Committee” section of the Corporation’s definitive 2009 Notice and Proxy Statement for the Annual Meeting of Stockholders to be held April  21, 2009.

Item 11—Executive Compensation

The information called for by this item is incorporated herein by reference to the following sections of the Corporation’s definitive 2009 Notice and Proxy Statement for the Annual Meeting of Stockholders to be held April 21, 2009: (a) the “Executive Compensation—Compensation and Benefits Committee Report” section, (b) the “Corporate Governance – Compensation Committee Interlocks and Insider Participation” section, and (c) the “Summary Compensation Table,” “Grants of Plan-Based Awards,” “Outstanding Equity Awards at Fiscal Year-End,” “Option Exercises and Stock Vested,” “Pension Benefits,” “Potential Payments upon Termination of Employment or a Change in Control,” and “Director Compensation” subsections of the “Compensation and Discussion Analysis” section.

Item 12—Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information called for by this item is incorporated herein by reference to the “Security Ownership of the Board and Management,” “Security Ownership of Certain Beneficial Owners,” and “Equity Compensation Plan Information” sections of the Corporation’s definitive 2009 Notice and Proxy Statement for the Annual Meeting of Stockholders to be held April 21, 2009. From time to time members of senior management and other executives of the Corporation may enter into stock trading plans under Rule 10b5-1, including plans that provide for the sale of Corporation stock. The Corporation undertakes no obligation to disclose the existence of any particular plan or any change, termination or expiration of any Rule 10b5-1 plan.

Item 13—Certain Relationships and Related Transactions, and Director Independence

The information called for by this item is incorporated herein by reference to the “Corporate Governance – Director Independence” and the “Corporate Governance – Related Person Transaction Policy” sections of the Corporation’s definitive 2009 Notice and Proxy Statement for the Annual Meeting of Stockholders to be held April  21, 2009.

Item 14—Principal Accountant Fees and Services

The information called for by this item is incorporated herein by reference to the “Ratification of Independent Registered Public Accounting Firm – Fees of Independent Public Accounting Firm” and “Ratification of Independent Registered Public Accounting Firm – Pre-Approval Policies and Procedures of the Audit Committee” sections of the Corporation’s definitive 2009 Notice and Proxy Statement for the Annual Meeting of Stockholders to be held April 21, 2009.

36

PART IV

Item 15—Exhibits and Financial Statement Schedules

Item 15(a)(1) and (2)—Northern Trust Corporation and Subsidiaries List of Financial Statements and Financial Statement Schedules

The following financial information is set forth in Item 1 for informational purposes only:

Financial Information of The Northern Trust Company (Bank only):

Unaudited Consolidated Balance Sheet—December 31, 2008 and 2007.

Unaudited Consolidated Statement of Income—Years Ended December 31, 2008, 2007, and 2006.

The following consolidated financial statements of the Corporation and its subsidiaries are incorporated by reference into Item 8 from the Corporation’s Annual Report to Stockholders for the year ended December 31, 2008:

Consolidated Financial Statements of Northern Trust Corporation and Subsidiaries:

Consolidated Balance Sheet—December 31, 2008 and 2007.

Consolidated Statement of Income—Years Ended December 31, 2008, 2007, and 2006.

Consolidated Statement of Comprehensive Income—Years Ended December 31, 2008, 2007, and 2006.

Consolidated Statement of Changes in Stockholders’ Equity—Years Ended December 31, 2008, 2007, and 2006.

Consolidated Statement of Cash Flows—Years Ended December 31, 2008, 2007, and 2006.

The following financial information is incorporated by reference into Item 8 from the Corporation’s Annual Report to Stockholders for the year ended December 31, 2008:

Financial Statements of Northern Trust Corporation (Corporation only):

Condensed Balance Sheet—December 31, 2008 and 2007.

Condensed Statement of Income—Years Ended December 31, 2008, 2007, and 2006.

Consolidated Statement of Comprehensive Income—Years Ended December 31, 2008, 2007, and 2006.

Consolidated Statement of Changes in Stockholders’ Equity—Years Ended December 31, 2008, 2007, and 2006.

Condensed Statement of Cash Flows—Years Ended December 31, 2008, 2007, and 2006.

The Notes to Consolidated Financial Statements as of December 31, 2008, incorporated by reference into Item 8 from the Corporation’s Annual Report to Stockholders for the year ended December 31, 2008, pertain to the Bank only information, consolidated financial statements and Corporation only information listed above.

The Report of Independent Registered Public Accounting Firm incorporated by reference into Item 8 from the Corporation’s Annual Report to Stockholders for the year ended December 31, 2008 pertains to the consolidated financial statements and Corporation only information listed above.

Financial statement schedules have been omitted for the reason that they are not required or are not applicable.

Item 15(a)(3)—Exhibits

The exhibits listed on the Exhibit Index beginning on page 39 of this Form 10-K are filed herewith or are incorporated herein by reference to other filings.

37

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Form 10-K Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: February 27, 2009

Northern Trust Corporation
(Registrant)
By:	/s/ Frederick H. Waddell
	Frederick H. Waddell
	President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Form 10-K Annual Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.

Signature	Title
/s/ Frederick H. Waddell	President, Chief Executive Officer and Director
Frederick H. Waddell
/s/ Steven L. Fradkin	Executive Vice President and Chief Financial Officer
Steven L. Fradkin
/s/ Aileen B. Blake	Executive Vice President and Controller
Aileen B. Blake	(Chief Accounting Officer)

William A. Osborn	Chairman and Director	)
Linda Walker Bynoe	Director	)
Nicholas D. Chabraja	Director	)
Susan Crown	Director	)
Dipak C. Jain	Director	)
Arthur L. Kelly	Director	)	By	/s/ Kelly R. Welsh
Robert C. McCormack	Director	)		Kelly R. Welsh
Edward J. Mooney	Director	)		Attorney-in-Fact
John W. Rowe	Director	)
Harold B. Smith	Director	)
William D. Smithburg	Director	)
Enrique J. Sosa	Director	)
Charles A. Tribbett III	Director	)
				Date: February 27, 2009

38

EXHIBIT INDEX

Exhibit Number	Description		Exhibit Incorporated by Reference to Exhibit of Same Name in Prior Filing* or Filed Herewith
(3)	Articles of Incorporation and By-laws
	(i)	Restated Certificate of Incorporation of Northern Trust Corporation as amended to date	(35)
		(1)    Certificate of Designations of Fixed Rate Cumulative Perpetual Preferred Stock, Series B	(52)
	(ii)	By-laws as amended to date	(41)
(4)	Instruments Defining the Rights of Security Holders
	(i)	Form of The Northern Trust Company’s Global Senior Bank Note (Fixed Rate)	(18)
	(ii)	Form of The Northern Trust Company’s Global Senior Bank Note (Floating Rate)	(21)
	(iii)	Form of The Northern Trust Company’s Global Subordinated Bank Note (Fixed Rate)	(18)
	(iv)	Form of The Northern Trust Company’s Global Subordinated Bank Note (Floating Rate)	(21)
	(v)	Junior Subordinated Indenture, dated as of January 1, 1997, between Northern Trust Corporation and The First National Bank of Chicago, as Debenture Trustee	(4)
	(vi)	Amended Certificate of Designations of Series A Junior Participating Preferred Stock dated October 29, 1999	(15)
	(vii)	Fiscal Agency Agreement dated March 11, 2005 by and among The Northern Trust Company as Issuer, Kredietbank S.A. Luxembourgeoise as Fiscal Agent, and Kredietbank S.A. Luxembourgeoise, and Brown Shipley & Co. Limited as Paying Agents	(31)
	(viii)	Indenture dated as of August 15, 2006 between Northern Trust Corporation and JPMorgan Chase Bank, N.A., as Trustee	(38)
	(ix)	Form of 5.30% Note due 2011	(38)
	(x)	Form of 5.20% Note due 2012	(43)
	(xi)	Form of 5.50% Note due 2013	(48)
	(xii)	Certificate of Designations of Fixed Rate Cumulative Perpetual Preferred Stock, Series B	(52)
	(xiii)	Warrant to Purchase Common Stock dated November 14, 2008	(52)
(10)	Material Contracts
	(i)	Lease dated July 1, 1988 between American National Bank & Trust Company of Chicago as Trustee under Trust Agreement dated February 12, 1986 and known as Trust No. 66603 (Landlord) and Nortrust Realty Management, Inc. (Tenant)	(1)
		(1)    Amendment made as of September 1, 2007 and First Extension of Original Term of Lease	(42)
	(ii)	Northern Trust Employee Stock Ownership Plan as amended and restated effective January 1, 2002	(19)
		(1)    Amendment Number One dated as of August 21, 2002	(20)
		(2)    Amendment Number Two dated as of November 19, 2002	(21)
		(3)    Amendment Number Three dated as of November 19, 2002	(21)
		(4)    Amendment Number Four dated as of January 21, 2003	(22)
		(5)    Amendment Number Five dated as of April 29, 2003	(23)
		(6)    Amendment Number Six effective as of June 15, 2003	(24)
		(7)    Amendment Number Seven effective as of June 15, 2003	(24)
		(8)    Amendment Number Eight dated December 22, 2003	(25)
		(9)    Amendment Number Nine dated December 22, 2003	(25)
		(10)  Amendment Number Ten dated March 29, 2004	(26)
	(iii)	Trust Agreement between The Northern Trust Company and Citizens and Southern Trust Company (Georgia), N.A., (predecessor of NationsBank, which, effective January 1, 1998, was succeeded by U.S. Trust Company N.A.) dated January 26, 1989	(2)
		(1)    Amendment dated February 21, 1995	(6)
		(2)    Amendment dated January 2, 1998	(7)
		(3)    Amendment dated February 11, 2003	(22)

39

Exhibit Number	Description		Exhibit Incorporated by Reference to Exhibit of Same Name in Prior Filing* or Filed Herewith
	(iv)	Implementation Agreement dated June 26, 1996 between the Registrant, The Northern Trust Company, the ESOP Trust, and NationsBank (South) N.A. as Trustee (effective January 1, 1998, U.S. Trust Company, N.A. as successor Trustee)	(3)
	(v)	Deferred Compensation Plans Trust Agreement dated May 11, 1998 between Northern	(9)
		Trust Corporation and Harris Trust and Savings Bank as Trustee (which, effective August 31, 1999, was succeeded by U.S. Trust Company, N.A.) regarding the Supplemental Employee Stock Ownership Plan for Employees of The Northern Trust Company, the Supplemental Thrift-Incentive Plan for Employees of The Northern Trust Company, the Supplemental Pension Plan for Employees of The Northern Trust Company, and the Northern Trust Corporation Deferred Compensation Plan**
		(1) Amendment dated August 31, 1999	(14)
		(2) Amendment dated as of May 16, 2000	(16)
	(vi)	Northern Trust Corporation Supplemental Employee Stock Ownership Plan (As Amended and Restated Effective as of January 1, 2008)**	Filed Herewith
	(vii)	Northern Trust Corporation Supplemental Thrift-Incentive Plan (As Amended and Restated Effective as of January 1, 2008)**	Filed Herewith
	(viii)	Northern Trust Corporation Supplemental Pension Plan (As Amended and Restated Effective January 1, 2009) **	Filed Herewith
	(ix)	Northern Trust Corporation Deferred Compensation Plan (As Amended and Restated Effective January 1, 2008)**	Filed Herewith
	(x)	Rights Agreement, dated as of July 21, 1998, between Northern Trust Corporation and Norwest Bank Minnesota, N.A. (now known as Wells Fargo Bank Minnesota, N.A.)	(8)
		(1) Amendment No. 1 to Rights Agreement dated as of November 18, 1998	(10)
		(2) Amendment No. 2 to Rights Agreement dated as of February 16, 1999	(11)
	(xi)	Lease dated as of November 29, 2000 between LaSalle Bank National Association, as successor trustee to American National Bank & Trust Company of Chicago as Trustee under Trust Agreement dated April 5, 1990 and known as Trust No. 110513-07 (Landlord) and The Northern Trust Company (Tenant)	(17)
		(1) Amendment dated as of July 11, 2002	(20)
		(2) Amendment dated as of April 13, 2005	(44)
		(3) Amendment dated as of December 21, 2007	(44)
	(xii)	Lease dated December 29, 2000 between Metropolitan Life Insurance Company (Landlord) and The Northern Trust Company (Tenant)	(17)
		(1) First Amendment dated as of June 26, 2008 by and between Madison LaSalle Partners, LLC, as Manager for Madison LaSalle Partners, LLC and Chicago LaSalle Office Co-Investors, LLC, as tenants in common, as successors-in-interest by purchase to Metropolitan Life Insurance Company and The Northern Trust Company to that certain Office Lease dated as of December 29, 2000 entered into between Metropolitan Life Insurance Company as landlord and The Northern Trust Company as tenant	(46)
	(xiii)	Amended 1992 Incentive Stock Plan**	(5)
		(1) Amendment dated January 20, 1998	(13)
		(2) Amendment dated September 15, 1998	(13)
		(3) Amendment dated May 18, 1999	(13)
		(4) Amendment dated September 25, 2001	(18)
	(xiv)	Amended and Restated Northern Trust Corporation 2002 Stock Plan (Effective as of January 1, 2008)**	Filed Herewith
		(1) Form of Stock Option Terms and Conditions**	(44)
		(2) Form of Stock Award Agreement**	(29)
		(3) Form of Stock Unit Agreement**	(44)
		(4) Form of Addendum to Award Agreement**	(29)
		(5) Form of Non-Solicitation Agreement**	(29)
		(6) Form of Director Stock Agreement**	Filed  Herewith

40

Exhibit Number	Description		Exhibit Incorporated by Reference to Exhibit of Same Name in Prior Filing* or Filed Herewith
		(7) Form of Director Prorated Stock Agreement**	Filed Herewith
		(8) Form of Performance Stock Unit Award	(44)
	(xv)	Northern Trust Corporation Management Performance Plan (as amended and restated effective July 15, 2008)**	(50)
	(xvi)	Northern Trust Corporation 1997 Stock Plan for Non-Employee Directors**	(12)
	(xvii)	Northern Trust Corporation 1997 Deferred Compensation Plan for Non-Employee Directors As Amended and Restated (Effective January 1, 2008)**	Filed Herewith
	(xviii)	Form of Employment Security Agreement (Tier 1)**	(42)
	(xix)	Form of Employment Security Agreement (Tier 2)**	(42)
	(xx)	Amended and Restated Trust Agreement of NTC Capital I, dated as of January 16, 1997, among Northern Trust Corporation, as Depositor, The First National Bank of Chicago, as Property Trustee, First Chicago Delaware, Inc., as Delaware Trustee, and the Administrative Trustees named therein	(4)
	(xxi)	Guarantee Agreement, dated as of January 16, 1997, relating to NTC Capital I, by and between Northern Trust Corporation, as Guarantor, and The First National Bank of Chicago, as Guarantee Trustee	(4)
	(xxii)	Amended and Restated Trust Agreement of NTC Capital II, dated as of April 25, 1997, among Northern Trust Corporation, as Depositor, The First National Bank of Chicago, as Property Trustee, First Chicago Delaware, Inc., as Delaware Trustee, and the Administrative Trustees named therein	(5)
	(xxiii)	Guarantee Agreement, dated as of April 25, 1997, relating to NTC Capital II, by and between Northern Trust Corporation, as Guarantor, and The First National Bank of Chicago, as Guarantee Trustee	(5)
	(xxiv)	Item Processing and Lockbox Service Agreement between Fiserv Solutions, Inc. and The Northern Trust Company dated as of October 26, 2007	(44)
	(xxv)	Leases made November 25, 2002 between Heron Quays (HQ4) T1 Limited and Heron Quays (HQ4) T2 Limited (together the Landlord), Canary Wharf Management Limited, and The Northern Trust Company relating to:
		(1) Floor 4 of Building HQ4, 50 Bank Street, Canary Wharf, London E14	(21)
		(2) Floor B1 and Floors 5-8 of Building HQ4, 50 Bank Street, Canary Wharf, London E14	(21)
		(3)Level B1M and Floors 9-11 of Building HQ4, 50 Bank Street, Canary Wharf, London E14	(21)
		(4)    Deed of Variation dated May 26, 2005 among Heron Quays (HQ4) T1 Limited, Heron Quays (HQ4) T2 Limited, Canary Wharf Management Limited, and The Northern Trust Company	(32)
		(5)    Deed of Severance dated March 27, 2006 among Heron Quays Properties Limited, Heron Quays (HQ4) T1 Limited, Heron Quays (HQ4) T2 Limited, Canary Wharf Management Limited, and The Northern Trust Company	(36)
		(6)    Deed of Variation dated May 30, 2008 among Heron Quays (HQ4) T1 Limited, Heron Quays (HQ4) T2 Limited, Canary Wharf (HQ3/HQ4) Limited, The Northern Trust Company, and Canary Wharf Management Limited (relates to Floor 4 of Building HQ4, 50 Bank Street, Canary Wharf, London E14)	(46)
		(7)    Rent Review Memorandum dated May 30, 2008 for Floor 4 of Building HQ4, 50 Bank Street, Canary Wharf, London E14	(46)
		(8)    Deed of Variation dated May 30, 2008 among Heron Quays (HQ4) T1 Limited, Heron Quays (HQ4) T2 Limited, Canary Wharf (HQ3/HQ4) Limited, The Northern Trust Company, and Canary Wharf Management Limited (relates to Floor B1 and Floors 5-8 of Building HQ4, 50 Bank Street, Canary Wharf, London E14)	(46)

41

Exhibit Number	Description		Exhibit Incorporated by Reference to Exhibit of Same Name in Prior Filing* or Filed Herewith
		(9)    Rent Review Memorandum dated May 30, 2008 for Floor B1 and Floors 5-8 of Building HQ4, 50 Bank Street, Canary Wharf, London E14	(46)
		(10)  Deed of Variation dated May 30, 2008 among Heron Quays (HQ4) T1 Limited, Heron Quays (HQ4) T2 Limited, Canary Wharf (HQ3/HQ4) Limited, The Northern Trust Company, and Canary Wharf Management Limited (relates to Level B1M and Floors 9-11 of Building HQ4, 50 Bank Street, Canary Wharf, London E14	(46)
		(11)  Rent Review Memorandum dated May 30, 2008 for Level B1M and Floors 9-11 of Building HQ4, 50 Bank Street, Canary Wharf, London E14	(46)
	(xxvi)	Agreement for Lease dated May 26, 2005 among Heron Quays Properties Limited, Canary Wharf Holdings Limited, and The Northern Trust Company	(32)
	(xxvii)	Underlease dated May 26, 2005 among Heron Quays (HQ4) T1 Limited, Heron Quays (HQ4) T2 Limited, Canary Wharf Management Limited, and The Northern Trust Company	(32)
	(xxviii)	Northern Trust Corporation Severance Plan, As Amended and Restated Effective January 1, 2008**	(44)
	(xxix)	Northern Partners Incentive Plan adopted July 19, 2004**	(27)
		(1) Amendment dated December 14, 2005 and effective as of January 1, 2005	(34)
	(xxx)	Amended and Restated Northern Trust Company Thrift-Incentive Plan effective January 1, 2005**	(28)
		(1)    Amendment Number One dated August 19, 2005	(33)
		(2)    Amendment Number Two dated November 21, 2005	(34)
		(3)    Amendment Number Three dated June 6, 2006	(37)
		(4)    Amendment Number Four dated November 29, 2006	(39)
		(5)    Amendment Number Five dated May 29, 2007	(40)
		(6)    Amendment Number Six dated December 18, 2007	(44)
		(7)    Amendment Number Seven dated June 2, 2008	(46)
		(8)    Amendment Number Eight dated October 28, 2008	Filed Herewith
		(9)    Amendment Number Nine dated December 16, 2008	Filed Herewith
	(xxxi)	Share Purchase Agreement dated November 22, 2004 among Baring Asset Management Holdings Limited, ING Bank NV, The Northern Trust International Banking Corporation, and The Northern Trust Company (portions of this exhibit have been omitted pursuant to a request for confidential treatment)	(30)
		(1)    Deed of Novation and Amendment dated March 31, 2005	(31)
	(xxxii)	Northern Trust Corporation Executive Financial Consulting and Tax Preparation Services Plan (As Amended and Restated Effective January 1, 2008)	(44)
	(xxxiii)	Capital Support Agreement, dated February 21, 2008, between Northern Trust Corporation and Northern Institutional Funds on behalf of its series the Prime Obligations Portfolio	(45)
		(1)    Amendment No. 1 dated July 15, 2008	(47)
		(2)    Amendment No. 2 dated September 29, 2008	(49)
		(3)    Amendment No. 3 dated February 24, 2009	Filed Herewith
	(xxxiv)	Capital Support Agreement, dated February 21, 2008, between Northern Trust Corporation and Northern Institutional Funds on behalf of its series the Diversified Assets Portfolio	(45)
		(1)    Amendment No. 1 dated July 15, 2008	(47)
		(2)    Amendment No. 2 dated September 29, 2008	(49)
		(3)    Amendment No. 3 dated February 24, 2009	Filed Herewith
	(xxxv)	Capital Support Agreement, dated February 21, 2008, between Northern Trust Corporation and Northern Institutional Funds on behalf of its series the Liquid Assets Portfolio	(45)
		(1)    Amendment No. 1 dated July 15, 2008	(47)
		(2)    Amendment No. 2 dated September 29, 2008	(49)
		(3)    Amendment No. 3 dated February 24, 2009	Filed Herewith
	(xxxvi)	Capital Support Agreement, dated February 21, 2008, between Northern Trust Corporation	(45)

42

Exhibit Number	Description		Exhibit Incorporated by Reference to Exhibit of Same Name in Prior Filing* or Filed Herewith
		and Northern Funds on behalf of its series the Money Market Fund
		(1)    Amendment No. 1 dated July 15, 2008	(47)
		(2)    Amendment No. 2 dated September 29, 2008	(49)
		(3)    Amendment No. 3 dated February 24, 2009	Filed Herewith
	(xxxvii)	Capital Support Agreement, dated February 21, 2008, between Northern Trust Corporation and Northern Trust Global Funds plc on behalf of its sub-fund The Sterling Fund	(45)
		(1)    Amendment No. 1 dated July 15, 2008	(47)
		(2)    Amendment No. 2 dated September 29, 2008	(49)
		(3)    Amendment No. 3 dated January 26, 2009	(54)
	(xxxviii)	Capital Support Agreement, dated February 21, 2008, between Northern Trust Corporation and Northern Trust Global Funds plc on behalf of its sub-fund The U.S. Dollar Fund	(45)
		(1)    Amendment No. 1 dated July 15, 2008	(47)
		(2)    Amendment No. 2 dated September 29, 2008	(49)
		(3)    Amendment No. 3 dated January 26, 2009	(54)
	(xxxix)	Capital Support Agreement, dated February 21, 2008, between Northern Trust Corporation and The Northern Trust Company, as Securities Lending Agent on behalf of the Core Select Securities Lending Cash Collateral Pool	(45)
		(1)    Amendment Number One dated July 15, 2008	(47)
		(2)    Amendment No. 2 dated January 26, 2009	(54)
	(xl)	Amended and Restated Capital Support Agreement, dated September 29, 2008, between Northern Trust Corporation and Northern Trust Investments, N.A., as Trustee on behalf of the NTGI Collective Short Term Investment Fund	(49)
		(1)    Amendment No. 1 dated January 26, 2009	(54)
	(xli)	Capital Support Agreement, dated September 29, 2008, between Northern Trust Corporation and The Northern Trust Company on behalf of The Northern Trust Company Common Short Term Investment Fund	(49)
		(1)    Amendment No. 1 dated January 26, 2009	(54)
	(xlii)	Letter Agreement dated November 14, 2008 between Northern Trust Corporation and United States Department of the Treasury	(52)
	(xliii)	Securities Purchase Agreement – Standard Terms	(52)
	(xliv)	Form of Letter Agreement with Senior Executive Officers**	(52)
(13)	2008 Annual Report to Stockholders		Filed Herewith
(14)	Code of Ethics		(51)
(21)	Subsidiaries of the Registrant		Filed Herewith
(23)	Consent of Independent Registered Public Accounting Firm		Filed Herewith
(24)	Powers of Attorney		Filed Herewith
(31)	Rule 13a-14(a)/15d-14(a) Certification of CEO and CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002		Filed Herewith
(32)	Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002		Filed Herewith
(99)	Corporate Governance Guidelines		(53)

* Prior Filings (File No. 0-5965)

(1) Annual Report on Form 10-K for the year ended December 31, 1988

(2) Form 8-K dated January 26, 1989

(3) Quarterly Report on Form 10-Q for the quarter ended June 30, 1996

(4) Form 8-K dated January 16, 1997

43

(5) Quarterly Report on Form 10-Q for the quarter ended March 31, 1997

(6) Annual Report on Form 10-K for the year ended December 31, 1997

(7) Quarterly Report on Form 10-Q for the quarter ended March 31, 1998

(8) Form 8-A dated July 24, 1998

(9) Quarterly Report on Form 10-Q for the quarter ended June 30, 1998

(10) Form 8-K dated November 18, 1998

(11) Form 8-K dated February 16, 1999

(12) Annual Report on Form 10-K for the year ended December 31, 1998

(13) Quarterly Report on Form 10-Q for the quarter ended June 30, 1999

(14) Quarterly Report on Form 10-Q for the quarter ended September 30, 1999

(15) Annual Report on Form 10-K for the year ended December 31, 1999

(16) Quarterly Report on Form 10-Q for the quarter ended June 30, 2000

(17) Annual Report on Form 10-K for the year ended December 31, 2000

(18) Quarterly Report on Form 10-Q for the quarter ended September 30, 2001

(19) Annual Report on Form 10-K for the year ended December 31, 2001

(20) Quarterly Report on Form 10-Q for the quarter ended September 30, 2002

(21) Annual Report on Form 10-K for the year ended December 31, 2002

(22) Quarterly Report on Form 10-Q for the quarter ended March 31, 2003

(23) Quarterly Report on Form 10-Q for the quarter ended June 30, 2003

(24) Quarterly Report on Form 10-Q for the quarter ended September 30, 2003

(25) Annual Report on Form 10-K for the year ended December 31, 2003

(26) Quarterly Report on Form 10-Q for the quarter ended March 31, 2004

(27) Quarterly Report on Form 10-Q for the quarter ended September 30, 2004

(28) Form 8-K dated December 22, 2004

(29) Form 8-K dated February 15, 2005

(30) Annual Report on Form 10-K for the year ended December 31, 2004

(31) Quarterly Report on Form 10-Q for the quarter ended March 31, 2005

(32) Quarterly Report on Form 10-Q for the quarter ended June 30, 2005

(33) Quarterly Report on Form 10-Q for the quarter ended September 30, 2005

(34) Annual Report on Form 10-K for the year ended December 31, 2005

(35) Form 8-K dated April 18, 2006

(36) Quarterly Report on Form 10-Q for the quarter ended March 31, 2006

(37) Quarterly Report on Form 10-Q for the quarter ended June 30, 2006

(38) Form 8-K dated August 23, 2006

(39) Annual Report on Form 10-K for the year ended December 31, 2006

(40) Quarterly Report on Form 10-Q for the quarter ended June 30, 2007

(41) Form 8-K dated July 17, 2007

(42) Quarterly Report on Form 10-Q for the quarter ended September 30, 2007

(43) Form 8-K dated November 6, 2007

(44) Annual Report on Form 10-K for the year ended December 31, 2007

(45) Form 8-K dated February 21, 2008

(46) Quarterly Report on Form 10-Q for the quarter ended June 30, 2008

(47) Form 8-K dated July 15, 2008

(48) Form 8-K dated August 6, 2008

(49) Form 8-K dated September 29, 2008

(50) Quarterly Report on Form 10-Q for the quarter ended September 30, 2008

(51) Form 8-K dated November 11, 2008

(52) Form 8-K dated November 13, 2008

(53) Form 8-K dated January 23, 2009

(54) Form 8-K dated January 26, 2009

** Denotes management contract or compensatory plan or arrangement

44

Upon written request to Rose A. Ellis, Secretary, Northern Trust Corporation, 50 South LaSalle Street, Chicago, Illinois 60603, copies of exhibits listed above are available to Northern Trust Corporation stockholders by specifically identifying each exhibit desired in the request. In addition, prior filings in which the exhibits listed above are included are available free of charge through our website www.northerntrust.com, if the filings were made on or after May 1, 1996. Information contained on the web site is not part of this report.

Pursuant to Item 601(b)(4)(iii) of Regulation S-K, the Corporation hereby agrees to furnish the SEC, upon request, any instrument defining the rights of holders of long-term debt of the Corporation not filed as an exhibit herein. No such instrument authorizes long-term debt securities in excess of 10% of the total assets of the Corporation and its subsidiaries on a consolidated basis.

45

EX-10.(VI)

Exhibit 10(vi)

NORTHERN TRUST CORPORATION

SUPPLEMENTAL EMPLOYEE STOCK OWNERSHIP PLAN

(As Amended and Restated Effective as of January 1, 2008)

The Supplemental Employee Stock Ownership Plan for Employees of The Northern Trust Company, was initially adopted effective September 1, 1989, restated effective September 1, 1989, again restated effective February 19, 1991 and further amended and restated effective January 1, 1996 and May 1, 1996 (the “Restated Supplemental ESOP”). Effective as of July 20, 1999, the assets and obligations of the Restated Supplemental ESOP were transferred by The Northern Trust Company to its parent corporation, Northern Trust Corporation and from and after such date the Northern Trust Corporation became the sponsor of the Restated Supplemental ESOP. Northern Trust Corporation further amended and restated the Restated Supplemental ESOP effective July 20, 1999 to reflect the transfer of the assets and obligations thereof to Northern Trust Corporation and certain other changes. At that time, the Restated Supplemental ESOP was designated as the “Northern Trust Corporation Supplemental Employee Stock Ownership Plan.”

Northern Trust Corporation now hereby further amends and restates the Northern Trust Corporation Supplemental Employee Stock Ownership Plan, generally effective as of January 1, 2008 (with such other effective dates as are noted herein) to comply with various changes in applicable law, including the American Jobs Creation Act of 2004, and to make certain other changes.

ARTICLE I

DEFINITIONS

Wherever used herein the following terms shall have the meanings hereinafter set forth:

1.1 “Beneficiary” means any person eligible to receive a death benefit under the Plan as designated by the Participant, in the event of death of the Participant, subject to Section 5.1(c).

1.2 “Board” means the Board of Directors of the Corporation.

1.3 A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(a) Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of Northern Trust Corporation (the “Corporation”) (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Corporation or its affiliates) representing 20% or more of the combined voting power of the Corporation’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (c) below; or

(b) The election to the Board of Directors of the Corporation, without the recommendation or approval of two thirds of the incumbent Board of Directors of the Corporation, of the lesser of (i) three directors; or (ii) directors constituting a majority of the number of directors of the Corporation then in office, provided, however, that directors whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Corporation will not be considered as incumbent members of the Board of Directors of the Corporation for purposes of this section; or

(c) There is consummated a merger or consolidation of the Corporation or any direct or indirect subsidiary of the Corporation with any other company, other than (i) a merger or consolidation which would result in the voting securities of the Corporation outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), at least 60% of the combined voting power of the securities of the Corporation or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Corporation (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Corporation (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Corporation or its Affiliates) representing 20% or more of the combined voting power of the Corporation’s then outstanding securities; or

(d) The stockholders of the Corporation approve a plan of complete liquidation or dissolution of the Corporation or there is consummated an agreement for the sale or disposition by the Corporation of all or substantially all of the Corporation’s assets, other than a sale or disposition by the Corporation of all or substantially all of the Corporation’s assets to an entity, at least 60% of the combined voting power of the voting securities of which are owned by stockholders of the Corporation in substantially the same proportions as their ownership of the Corporation immediately prior to such sale.

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Corporation immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Corporation immediately following such transaction or series of transactions.

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For purposes of this Section 1.3 and Section 1.15 (where applicable) the following definitions shall apply:

“Affiliate” shall have the meaning set forth in Rule 12b-2 under Section 12 of the Exchange Act; “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act, except that a Person shall not be deemed to be the Beneficial Owner of any securities with respect to which such Person has properly filed a Form 13-G; “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time; and “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Corporation or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities or (iv) a corporation owned, directly or indirectly, by the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation.

In accordance with the Qualified Plan, each Participant or Inactive Participant who is an Employee on the date a Change in Control occurs shall be 100 percent vested in the adjusted balance of his or her Supplemental ESOP Account.

1.4 “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder.

1.5 “Committee” means the Employee Benefit Administrative Committee of the Company, as constituted from time to time, which has the responsibility for administering the Qualified Plan and/or the Qualified Thrift-Incentive Plan.

1.6 “Company” means The Northern Trust Company, an Illinois banking corporation; the Corporation; and such subsidiaries and affiliates of the Corporation as shall adopt the Plan.

1.7 “Company Stock” means any qualifying employer security within the meaning of Section 4975(e)(8) of the Code and Section 407(d)(1) of the Employee Retirement Income Security Act of 1974 and regulations thereunder.

1.8 “Corporation” means Northern Trust Corporation, a Delaware corporation, and to the extent provided in Section 8.8 below, any successor corporation or other entity resulting from a merger or consolidation into or with the Corporation, or a transfer of sale of substantially all of the assets of the Corporation.

1.9 “EBIC” means the Employee Benefit Investment Committee of the Company, as constituted from time to time, which has responsibility for overseeing the investment of the assets attributable to the Plan.

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1.10 “409A Amount” means the portion of a Participant’s Supplemental ESOP Account that consists of amounts deferred in taxable years beginning after December 31, 2004, and earnings on such amounts, as determined in accordance with Code Section 409A and applicable regulations and other guidance promulgated thereunder. The portion, if any, of a Participant’s Supplemental ESOP Account that consists of amounts deferred on or before December 31, 2004, and earnings on such amounts, is referred to herein as the Participant’s “Grandfathered Amount”. An amount is considered deferred on or before December 31, 2004, if on or before that date the Participant had a legally binding right to be paid the amount, and the right to the amount was earned and vested.

1.11 “Key Employee” means a Participant who is a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i). The Company’s Key Employees shall be identified annually pursuant to Section 5.3.

1.12 “Participant” means any employee of the Company who was a participant in the Qualified Plan prior to January 1, 2005, as described in Section 2.1 of the Plan, and with respect to whom contributions were made under the Plan for any Plan Year that ended on or before December 31, 2004; provided, however, that no additional employees of the Company shall become Participants in the Plan after December 31, 2004.

1.13 “Plan” means the Northern Trust Corporation Supplemental Employee Stock Ownership Plan, as amended from time to time.

1.14 “Plan Year” means the calendar year.

1.15 A “Potential Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(a) The Corporation enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

(b) The Corporation or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;

(c) Any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Corporation representing 15% or more of either the then outstanding shares of common stock of the Corporation or the combined voting power of the Corporation’s then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Corporation or its Affiliates); or

(d) The Board adopts a resolution to the effect that, for purposes of this Plan, a Potential Change in Control has occurred.

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1.16 “Qualified Plan” means the Northern Trust Employee Stock Ownership Plan, as amended and restated effective January 1, 2002, and as further amended from time to time, and each predecessor, successor or replacement employee stock ownership plan, as such Qualified Plan existed immediately prior to its merger into the Qualified Thrift-Incentive Plan, effective January 1, 2005.

1.17 “Qualified Plan Company Stock Account” means the account established for a Participant under the Qualified Plan and known as the Company Stock Account, including, if applicable, any Qualified Plan Company Stock Account maintained for a Participant in the Qualified Thrift-Incentive Plan as a result of the merger of the Qualified Plan into the Qualified Thrift-Incentive Plan effective January 1, 2005.

1.18 “Qualified Thrift-Incentive Plan” means The Northern Trust Company Thrift-Incentive Plan as amended and restated effective January 1, 2005, and each predecessor, successor or replacement employees’ cash or deferred arrangement.

1.19 “Related Company” means any person with whom the Company is considered to be a single employer under Section 414(b) of the Code and all persons with whom the Company would be considered a single employer under Code Section 414(c), substituting “50%” for the “80%” standard that would otherwise apply.

1.20 “Section 415 Limits” means the limit imposed by Section 415 of the Code, or any successor section, on aggregate annual additions in any Plan Year to the accounts of a Participant under the Qualified Plan and Qualified Thrift-Incentive Plan, and the limits imposed by Section 415(c)(6) of the Code, or any successor section, on the Qualified Plan.

1.21 “Separation from Service” means that a Participant dies, retires or otherwise has a termination of employment with the Company. A termination of employment will be deemed to occur when the Company and the Participant reasonably anticipate that the level of bona fide services the Participant will perform for the Company (whether as an employee or an independent contractor, but not as a director) after a certain date will permanently decrease to less than 50 percent of the average level of bona fide services performed by the Participant for the Company (as an employee or independent contractor, but not as a director) in the immediately preceding 36 months (or the full period of the Participant’s services to the Company if the Participant has been providing services to the Company for less than 36 months), determined in accordance with Treas. Reg. Sec. 1.409A-1(h). The employment relationship will be treated as continuing intact while the Participant is on a bona fide leave of absence (determined in accordance with Treas. Reg. Sec. 409A-1(h)) but (a) only if there is a reasonable expectation that the Participant will return to active employment status, and (b) only to the extent that such leave of absence does not exceed 6 months, or, if longer, for so long as the Participant has a statutory or contractual right to reemployment. For purposes of this Section 1.21, references to the Company shall include the Company and all Related Companies.

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1.22 “Supplemental ESOP Account” means the account maintained under the Plan for each Participant who receives Supplemental ESOP Allocations under the Plan (and earnings thereon); provided, however, that no Supplemental ESOP Allocation shall be made to the Supplemental ESOP Account of any Participant for any Plan Year that begins on or after January 1, 2005.

1.23 “Supplemental ESOP Allocation” means the amount allocated for the benefit of a Participant under and in accordance with the terms of Section 3.1 of the Plan in any Plan Year; provided, however, that no Supplemental ESOP Allocation shall be made to the Supplemental ESOP Account of any Participant for any Plan Year that begins on or after January 1, 2005.

1.24 “Supplemental Matching Contribution Account” means the account maintained under the Supplemental Thrift-Incentive Plan for a Participant that is credited with Supplemental Matching Contributions contributed under such plan.

1.25 Except as otherwise expressly provided herein, all words and phrases in the Qualified Plan shall have the same meaning in the Plan.

ARTICLE II

ELIGIBILITY

2.1 Participant. An employee of the Company who is eligible in any Plan Year to receive an allocation of Company Stock to his Company Stock Account under the Qualified Plan, the total amount of which is reduced by reason of the application of the limitation on contributions imposed by Section 401(a)(17) or Section 415 of the Code, as in effect on any date for allocation of such shares, or as in effect at any time thereafter, on the Qualified Plan, shall be a Participant in the Plan for such Plan Year; provided, however, that no additional employees of the Company shall become Participants in the Plan after December 31, 2004.

ARTICLE III

SUPPLEMENTAL ALLOCATIONS

3.1 Supplemental ESOP Allocations. The Supplemental ESOP Allocation to be made for the benefit of a Participant for any Plan Year shall be an amount equal to (a) the closing price of a share of Company Stock on the NASDAQ Stock Market on the last trading day of such Plan Year, times (b) the difference between (i) and (ii) below:

(i) The number of shares of Company Stock that would have been allocated to the Qualified Plan Company Stock Account of the Participant for the Plan Year, without giving effect to the Section 415 Limits or to the limitations imposed by Section 401 (a) (17) of the Code on the Qualified Plan;

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(ii) The number of shares of Company Stock actually allocated to the Qualified Plan Company Stock Account of the Participant for the Plan Year.

Supplemental ESOP Allocations made for the benefit of a Participant for any Plan Year shall be allocated to a Supplemental ESOP Account maintained under the Plan in the name of such Participant as of the last day of such Plan Year. Anything in the Plan to the contrary notwithstanding, no Supplemental ESOP Allocation shall be made to the Supplemental ESOP Account of any Participant for any Plan Year that begins on or after January 1, 2005.

3.2 Vesting. Each Participant shall vest in the balance of his Supplemental ESOP Account in accordance with the vesting schedule set forth in the Qualified Plan (or in the Qualified Thrift-Incentive Plan, for any Plan Year that begins on or after January 1, 2005) applicable to the undistributed balance of his Qualified Plan Company Stock Account.

ARTICLE IV

INVESTMENT OF SUPPLEMENTAL ALLOCATIONS

4.1 Investments. The Corporation may cause amounts allocated hereunder to the Supplemental ESOP Accounts of Participants to be contributed to a trust (“Trust”) designated for such purpose by the Corporation. Amounts allocated hereunder to the Supplemental ESOP Account of a Participant shall be invested in the same manner as such Participant has elected under the Northern Trust Corporation Supplemental Thrift-Incentive Plan. EBIC shall from time to time determine the investment media to which such elections shall apply.

4.2 Effect of Change in Control. Notwithstanding anything in this Plan to the contrary, for a period of two years after the date of an occurrence of a Change in Control, the Corporation shall not eliminate any of the investment elections and choices in effect immediately prior to the Change in Control and shall not decrease the frequency with which Participants may change such investment elections. Notwithstanding the foregoing, in the event that an investment election is discontinued by its sponsor and therefore becomes unavailable to Participants, the Corporation shall provide a substitute election with substantially similar investment objectives and policies.

4.3 Valuation of Supplemental ESOP Accounts. Participants’ Supplemental ESOP Accounts shall be valued no less frequently than monthly.

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ARTICLE V

DISTRIBUTIONS AND

LIMITS ON DISTRIBUTIONS

5.1 Distribution.

(a)	(i)	Subject to Section 5.2, and clause (iii) below, the vested adjusted balance of a Participant’s Supplemental ESOP Account, including gains and losses attributable to investments made pursuant to Section 4.1, shall be distributed to or with respect to the Participant in one lump sum, in cash, within 90 days after the date the Participant incurs a Separation from Service. The Participant shall have no right to designate the taxable year of such distribution.
	(ii)	Any unvested portion of a Participant’s Supplemental ESOP Account shall be forfeited and retained by the Company.
	(iii)	A Participant’s Grandfathered Amount, if any, will be paid at the time and in the form determined under the Plan as in effect on October 3, 2004.

(b) An amount that would otherwise be paid from the Supplemental ESOP Account of a Participant in a given Plan Year may be delayed to the extent that the Company reasonably anticipates that if the payment were made as scheduled the Company’s deduction with respect to such payment would not be permitted due to the application of Code Section 162(m). Amounts not paid as a result of the above limitation shall be paid in the earlier of (i) the Company’s first taxable year in which the Company reasonably anticipates that if the payment is made during such year the deduction of such payment will not be barred by application of Section 162(m), or (ii) the period beginning with the date of the Participant’s Separation from Service and ending on the later of the last day of the taxable year of the Company in which the Participant incurs a Separation from Service or the 15^th day of the third month following the Participant’s Separation from Service.

(c) If a Participant dies before a complete distribution of his Supplemental ESOP Account has been made to him, the vested adjusted balance of such Participant’s Supplemental ESOP Account, including gains or losses attributable to investments made pursuant to Section 4.1, shall be distributed in one lump sum, in cash, to the Beneficiary last designated by the Participant in a writing delivered to the Committee prior to his death, at such time as determined in accordance with Section 5.1(a). The Beneficiary designated by the Participant under this Plan must be the same beneficiary designated by the Participant under the Northern Trust Corporation Supplemental Thrift-Incentive Plan. If a Participant has not

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designated a Beneficiary, or if no designated Beneficiary is living on the date of distribution, the vested adjusted balance of such Participant’s Supplemental ESOP Account shall be distributed to those persons entitled to receive distribution of the Participant’s accounts under the Qualified Thrift-Incentive Plan.

5.2 Limits on Distributions to Key Employees. Anything in the Plan to the contrary notwithstanding, if, as of the date a Participant incurs a Separation from Service, the Participant is a Key Employee, any distribution of a 409A Amount to such Participant due to such Separation from Service that would otherwise be made during the six months following such Separation from Service shall be made on the date that is six months and one day following such Separation from Service.

5.3 Annual Identification of Key Employees. The Specified Employee Identification Date, as defined in Treas. Reg. §1.409A-1(i)(3), to be used in determining Key Employees of the Company shall be September 30 of any Plan Year. The January 1 of the Plan Year next following that Plan Year shall be the Specified Employee Effective Date, as defined in Treas. Reg. §1.409A-1(i)(4), for Participants identified as Key Employees on the immediately preceding Specified Employee Identification Date. Participants identified as Key Employees on a Specified Employee Identification Date (September 30) shall be treated as Key Employees under the Plan for the 12-month period beginning on the Specified Employee Effective Date (January 1) next following such Specified Employee Identification Date.

ARTICLE VI

ADMINISTRATION OF THE PLAN

6.1 Administration by the Committee. Except as otherwise provided in Section 4.1, the Committee shall be responsible for the general operation and administration of the Plan and for carrying out the provisions thereof. The Committee shall have discretion to interpret and construe the provisions of the Plan.

6.2 General Powers of Administration. All provisions set forth in the Qualified Thrift-Incentive Plan) with respect to the administrative powers and duties of the Committee, expenses of administration, and procedures for filing claims shall also be applicable with respect to the Plan. The Committee and EBIC shall be entitled to rely conclusively upon all tables, valuations, certificates, opinions and reports furnished by any actuary, accountant, controller, counsel or other person employed or engaged by the Committee or EBIC with respect to the Plan.

6.3 Terms Include Authorized Delegates. Where appropriate, the term “Company”, “Corporation”, “Committee” or “EBIC” as used in this Plan shall also include any applicable subcommittee or any duly authorized delegate of the Company, the Corporation, the Committee or EBIC, as the case may be. Such duly authorized delegate may be an individual or an organization within the Company, the Corporation, the Committee or EBIC, or may be an unrelated third party individual or organization.

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ARTICLE VII

AMENDMENT OR TERMINATION

7.1 Amendment or Termination. The Corporation intends the Plan to be permanent but reserves the right to amend or terminate the Plan when, in the sole discretion of the Corporation, such amendment or termination is advisable.

(a) Any such termination shall be made by action of the Compensation and Benefits Committee of the Board (or by action of the Board if the Compensation and Benefits Committee is unavailable or unable to act for any reason) and shall be effective as of the date set forth in such resolution.

(b) Any such amendment shall be made in accordance with the following:

(i) material amendments to the Plan (including any extraordinary amendment related to an acquisition or divestiture by the Company) shall be made by action of the Compensation and Benefits Committee of the Board (or by action of the Board, if the Compensation and Benefits Committee is unavailable or unable to act for any reason); and

(ii) (A) non-material or administrative amendments to the Plan (including any amendment pursuant to guidelines established by the Compensation and Benefits Committee of the Board related to an acquisition or divestiture by the Company) or (B) any amendment to the Plan deemed required, authorized or desirable under applicable statutes, regulations or rulings, shall be made by action of either Chief Executive Officer of the Corporation or the Executive Vice President and Human Resources Department Head of the Corporation (or either of their duly authorized designees).

(c) Notwithstanding the foregoing, (i) for a period of two years after the date of an occurrence of a Change in Control or (ii) in the event of a Potential Change in Control and for a period of six (6) months following the Potential Change in Control, neither the Compensation and Benefits Committee of the Board nor the Board may terminate or amend this Plan and neither the Chief Executive Officer of the Corporation nor the Executive Vice President and Human Resources Department Head of the Corporation (or either of their designees) may amend this Plan in a manner that adversely affects the rights of any Participant of the Plan.

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In addition, after the date of the occurrence of a Change in Control, no amendment of Section 5.1 of the Plan shall be effective with respect to any Participant who is a Participant as of the occurrence of a Change in Control without the consent of such Participant.

7.2 Effect of Amendment or Termination. No amendment or termination of the Plan shall directly or indirectly reduce the balance of any Supplemental ESOP Account held hereunder as of the effective date of such amendment or termination. Upon termination of the Plan, distribution of amounts in a Participant’s Supplemental ESOP Account shall be made to him or his Beneficiary in the manner and at the time described in Section 5.1 of the Plan. No additional Supplemental ESOP Allocations shall be made to the Supplemental ESOP Account of any Participant after termination of the Plan.

7.3 Amendments Necessary to Satisfy Code Section 409A. Anything in the preceding Sections 7.1 or 7.2 or elsewhere in the Plan to the contrary notwithstanding:

(a) the Plan may be amended in any manner necessary to ensure that the Plan complies in all applicable respects with Code Section 409A; and

(b) the Plan may not be amended in any manner that would cause the Plan to fail to comply in any applicable respect with Code Section 409A.

ARTICLE VIII

GENERAL PROVISIONS

8.1 Participant’s Rights Unsecured. If and to the extent amounts allocated hereunder to the Supplemental ESOP Accounts of Participants are contributed to the Trust described in Section 4.1, benefits under the Plan shall be payable pursuant to the Trust Agreement. Pursuant to the Trust Agreement, all assets held thereunder shall remain subject to the general creditors of the Corporation and the Company. The Plan at all times shall be entirely unfunded and, except as otherwise set forth herein, no provision shall at any time be made with respect to segregating any assets of the Corporation or the Company for payment of any benefits hereunder. No Participant, Beneficiary or any other person shall have any interest in any particular assets of the Corporation or the Company by reason of the right to receive a benefit under the Plan and Trust Agreement and any such Participant, Beneficiary or other person shall have only the rights of a general unsecured creditor of the Corporation and the Company with respect to any rights under the Plan and Trust Agreement.

8.2 General Conditions. Except as otherwise expressly provided herein for any Plan Year that began prior to January 1, 2005, all terms and conditions of the Qualified Plan applicable to allocations of Company Stock under the Qualified Plan shall also be

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applicable to a Supplemental ESOP Allocation made hereunder. Any allocation of Company Stock or dividends to be made under the Qualified Plan shall be made solely in accordance with the terms and conditions of the Qualified Plan and nothing in this Plan shall operate or be construed in any way to modify, amend or affect the terms and provisions of the Qualified Plan.

8.3 No Guaranty of Benefits. Nothing contained in the Plan shall constitute a guaranty by the Corporation, the Company or any other person or entity that the assets of the Corporation or the Company will be sufficient to pay any benefit hereunder.

8.4 No Enlargement of Employee Rights. No Participant shall have any right to receive a distribution under the Plan except in accordance with the terms of the Plan. Establishment of the Plan shall not be construed to give any Participant the right to be retained in the service of the Corporation or the Company.

8.5 Spendthrift Provision. No interest of any person or entity in, or right to receive a distribution under, the Plan shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind; nor may such interest or right to receive a distribution be taken, either voluntarily or involuntarily, for the satisfaction of the debts of, or other obligations or claims against, such person or entity, including claims for alimony, support, separate maintenance and claims in bankruptcy proceedings.

8.6 Applicable Law. The Plan shall be construed and administered under the laws of the State of Illinois to the extent not inconsistent with the Employee Retirement Income Security Act of 1974, as amended.

8.7 Incapacity of Recipient. If any benefit under the Plan shall be payable to a minor or a person not adjudicated incompetent but who, by reason of illness or mental or physical disability, is, in the opinion of the Committee, unable to properly manage his affairs, such benefit shall be paid in such of the following ways as the Committee deems best: (a) to the person directly; (b) in the case of a minor, to a custodian under any Uniform Gift to Minors Act for the person; or (c) to the person’s spouse, adult child or blood relative. Any benefit so paid shall be a complete discharge of any liability of the Corporation, the Company and Plan therefor.

8.8 Successors. The Plan shall not be automatically terminated by a transfer or sale of assets of the Corporation or by the merger or consolidation of the Corporation into or with any other corporation or other entity, but the Plan shall be continued after such sale, merger or consolidation only if and to the extent that the transferee, purchaser or successor entity agrees to continue the Plan, subject to the provisions of Section 7.1. In the event that the Plan is not continued by the transferee, purchaser or successor entity, then the Plan shall terminate subject to the provisions of Sections 7.1 and 7.2.

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8.9 Unclaimed Benefit. Each Participant shall keep the Committee informed of his current address and the current address of his designated Beneficiary. None of the Corporation, the Company or the Committee shall be obligated to search for the whereabouts of any person. If the Committee is unable to locate the Participant or any Beneficiary of the Participant, then none of the Corporation, the Company or the Plan shall have any further obligation to pay any benefit hereunder to such Participant or Beneficiary and such benefit shall be forfeited; provided, however, that if the Participant or Beneficiary makes a valid claim for any benefit that has been forfeited, the forfeited benefit shall be reinstated.

8.10 Electronic or Telephonic Notices. Any election, notice, direction or other such action required or permitted to be made in writing under the Plan may also be made electronically, telephonically or otherwise, to the extent then permitted by applicable law and the administrative rules prescribed by the Committee.

8.11 Limitations on Liability. Notwithstanding any of the preceding provisions of the Plan, none of the Corporation, the Company, any member of the Committee, any member of EBIC, or any individual acting as an employee or agent of the Corporation, the Company, the Committee or EBIC shall be liable to any Participant, former Participant, Beneficiary or any other person for any claim, loss, liability or expense incurred in connection with the Plan.

8.12 Gender; Headings. Words in the masculine gender shall include the feminine and the singular shall include the plural, and vice versa, unless qualified by the context. Any headings used herein are included for ease of reference only, and are not to be construed so as to alter the terms hereof.

8.13 Compliance with Code Section 409A. The Plan is intended to comply in all applicable respects with the requirements of Code Section 409A and shall be construed and administered so as to comply with that Code section.

IN WITNESS WHEREOF, Northern Trust Corporation has caused this amendment and restatement of the Plan to be executed on its behalf by its duly authorized officer this 18th day of December, 2008, effective as of January 1, 2008 (or as of such other dates as are noted herein).

NORTHERN TRUST CORPORATION
By:	/s/ Timothy P. Moen
Name:	Timothy P. Moen
Title:	Executive Vice President and Human Resources Department Head

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SUPPLEMENT #1

Special 2005 Termination of Participation for Specified Employees

This Supplement #1 to the Northern Trust Corporation Supplemental Employee Stock Ownership Plan, as amended and restated effective January 1, 2008 (the “Plan”), is made a part of the Plan and supersedes any provisions thereof to the extent that they are not consistent with this Supplement. Unless the context clearly implies or indicates to the contrary, a word, term or phrase used or defined in the Plan is similarly used or defined for purposes of this Supplement #1.

1. Effective Date. January 1, 2005.

2. Application. This Supplement #1 shall apply to any Participant who would be considered a “specified employee” as defined in proposed regulation section 1.409A-1(i) issued by the U.S. Treasury Department and the Internal Revenue Service; who terminates employment for any reason on or after the Effective Date of this Supplement #1 and on or before October 31, 2005 (individually, a “2005 Specified Employee Participant” and, collectively, the “2005 Specified Employee Participants”).

3. Special Provision. The following special provision shall apply to the 2005 Specified Employee Participants:

Special 2005 Termination of Participation: Pursuant to and in accordance with Notice 2005-1 and proposed regulations under Code section 409A issued by the U.S. Treasury Department and the Internal Revenue Service, each 2005 Specified Employee Participant shall be considered to have terminated participation in the Plan with respect to any amounts that would otherwise be subject to Code section 409A, effective as of the date such 2005 Specified Employee Participant terminated employment with the Company. Anything in the Plan to the contrary notwithstanding, such amounts shall be distributed in a lump sum distribution to such 2005 Specified Employee Participant no later than December 31, 2005, or the date such amounts become vested, if later.

4. Limitations on Supplement. Nothing in this Supplement #1 shall be construed to provide any 2005 Specified Employee Participant with any rights or benefits under the Plan other than those described in Paragraph 3 above.

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EX-10.(VII)

Exhibit 10(vii)

NORTHERN TRUST CORPORATION

SUPPLEMENTAL THRIFT-INCENTIVE PLAN

(As Amended and Restated Effective as of January 1, 2008)

The Northern Trust Company Supplemental Plan was adopted on September 16, 1975 and amended through December 16, 1986. The portions of that plan that pertained to The Northern Trust Company Thrift-Incentive Plan were amended and restated by the Restated Supplemental Thrift-Incentive Plan for Employees of The Northern Trust Company, initially adopted effective September 1, 1989, as restated effective September 1, 1989 and as further amended and restated effective January 1, 1996 and May 1, 1996 (the “Restated Supplemental Thrift-Incentive Plan”). Effective as of July 20, 1999, the assets and obligations of the Restated Supplemental Thrift-Incentive Plan, were transferred by The Northern Trust Company to its parent corporation, Northern Trust Corporation and from and after such date the Northern Trust Corporation became the sponsor of the Restated Supplemental Thrift-Incentive Plan. Northern Trust Corporation further amended and restated the Restated Supplemental Thrift-Incentive Plan effective July 20, 1999, to reflect the transfer of the assets and obligations thereof to Northern Trust Corporation and certain other changes. At that time, the Restated Supplemental Thrift-Incentive Plan was designated the “Northern Trust Corporation Supplemental Thrift-Incentive Plan.”

Northern Trust Corporation now hereby further amends and restates the Northern Trust Corporation Supplemental Thrift-Incentive Plan, generally effective as of January 1, 2008 (with such other effective dates as are noted herein) to comply with various changes in applicable law, including the American Jobs Creation Act of 2004, and to make certain other changes.

ARTICLE I

DEFINITIONS

Wherever used herein the following terms shall have the meanings hereinafter set forth:

1.1 “Beneficiary” means any person eligible to receive a death benefit under the Plan as designated by the Participant, in the event of death of the Participant, subject to Section 5.1(c).

1.2 “Board” means the Board of Directors of the Corporation.

1.3 A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(a) Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of Northern Trust Corporation (the “Corporation”) (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Corporation or its Affiliates) representing 20% or more of the combined voting power of the Corporation’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (c) below; or

(b) The election to the Board of Directors of the Corporation, without the recommendation or approval of two thirds of the incumbent Board of Directors of the Corporation, of the lesser of (i) three directors; or (ii) directors constituting a majority of the number of directors of the Corporation then in office, provided, however, that directors whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Corporation will not be considered as incumbent members of the Board of Directors of the Corporation for purposes of this section; or

(c) There is consummated a merger or consolidation of the Corporation or any direct or indirect subsidiary of the Corporation with any other company, other than (i) a merger or consolidation which would result in the voting securities of the Corporation outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), at least 60% of the combined voting power of the securities of the Corporation or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Corporation (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Corporation (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Corporation or its Affiliates) representing 20% or more of the combined voting power of the Corporation’s then outstanding securities; or

(d) The stockholders of the Corporation approve a plan of complete liquidation or dissolution of the Corporation or there is consummated an agreement for the sale or disposition by the Corporation of all or substantially all of the Corporation’s assets, other than a sale or disposition by the Corporation of all or substantially all of the Corporation’s assets to an entity, at least 60% of the combined voting power of the voting securities of which are owned by stockholders of the Corporation in substantially the same proportions as their ownership of the Corporation immediately prior to such sale.

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Corporation immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Corporation immediately following such transaction or series of transactions.

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For purposes of this Section 1.3 and Section 1.15 (where applicable) the following definitions shall apply:

“Affiliate” shall have the meaning set forth in Rule 12b-2 under Section 12 of the Exchange Act; “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act, except that a Person shall not be deemed to be the Beneficial Owner of any securities with respect to which such Person has properly filed a Form 13-G; “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time; and “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Corporation or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities or (iv) a corporation owned, directly or indirectly, by the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation.

In accordance with the Qualified Plan, upon the occurrence of a Change in Control, each Participant and Inactive Participant shall become fully vested in the balance of his or her Supplemental Matching Contribution Account and his or her Supplemental Basic Profit Sharing Contribution Account. Any amounts credited to any such Supplemental Matching Contribution Account or to any such Supplemental Basic Profit Sharing Contribution Account following such Change in Control shall also be fully vested.

1.4 “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder.

1.5 “Committee” means the Employee Benefit Administrative Committee of the Company, as constituted from time to time, which has the responsibility for administering the Qualified Plan.

1.6 “Company” means The Northern Trust Company, an Illinois banking corporation; the Corporation; and such subsidiaries and affiliates of the Corporation as shall adopt the Plan.

1.7 “Corporation” means Northern Trust Corporation, a Delaware corporation, and, to the extent provided in Section 8.8 below, any successor corporation or other entity resulting from a merger or consolidation into or with the Corporation or a transfer or sale of substantially all of the assets of the Corporation.

1.8 “Deferral Distribution Date” means the date for distribution of a Participant’s Supplemental Before-Tax Deposits as irrevocably set forth in each of his Supplemental Before-Tax Deposit Agreements.

1.9 “EBIC” means the Employee Benefit Investment Committee of the Company, as constituted from time to time, which has responsibility for overseeing the investment of the assets attributable to the Plan.

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1.10 “409A Amount” means the portion of a Participant’s Supplemental Account that consists of amounts deferred in taxable years beginning after December 31, 2004, and earnings on such amounts, as determined in accordance with Code Section 409A and applicable regulations and other guidance promulgated thereunder. The portion, if any, of a Participant’s Supplemental Account that consists of amounts deferred on or before December 31, 2004, and earnings on such amounts, is referred to herein as the Participant’s “Grandfathered Amount”. An amount is considered deferred on or before December 31, 2004, if on or before that date the Participant had a legally binding right to be paid the amount, and the right to the amount was earned and vested.

1.11 “Key Employee” means a Participant who is a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i). The Company’s Key Employees shall be identified annually pursuant to Section 5.3.

1.12 “Participant” means an employee of the Company who satisfies the eligibility criteria in Section 2.1 of the Plan for one or more types of contributions under the Plan, and by whom or with respect to whom contributions are made under the Plan.

1.13 “Plan” means the Northern Trust Corporation Supplemental Thrift-Incentive Plan as amended from time to time.

1.14 “Plan Year” means the calendar year.

1.15 A “Potential Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(a) the Corporation enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

(b) the Corporation or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;

(c) any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Corporation representing 15% or more of either the then outstanding shares of common stock of the Corporation or the combined voting power of the Corporation’s then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Corporation or its Affiliates); or

(d) the Board adopts a resolution to the effect that, for purposes of this Plan, a Potential Change in Control has occurred.

1.16 “Qualified Plan” means The Northern Trust Company Thrift-Incentive Plan as amended and restated effective January 1, 2005, and as further amended from time to time, and each predecessor, successor or replacement employees’ cash or deferred arrangement.

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1.17 “Qualified Plan Basic Profit Sharing Contribution” means the basic profit sharing contribution made by the Company with respect to a Participant under and in accordance with the terms of the Qualified Plan in any Plan Year.

1.18 “Qualified Plan Before-Tax Deposit” means the total of all salary reduction contributions made by the Company as authorized by a Participant under and in accordance with the terms of the Qualified Plan in any Plan Year.

1.19 “Qualified Plan Before-Tax Deposit Account” means the account established for a Participant under the Qualified Plan and known as the Before-Tax Deposit Account.

1.20 “Qualified Plan Matching Contribution” means the total of all matching contributions made by the Company for the benefit of a Participant under and in accordance with the terms of the Qualified Plan in any Plan Year.

1.21 “Qualified Plan Matching Contribution Account” means the account established for a Participant under the Qualified Plan and known as the Matching Contribution Account.

1.22 “Qualified Plan Profit Sharing Contribution Account” means the account established for a Participant for the receipt of basic and discretionary profit sharing contributions under the Qualified Plan and known as the Profit Sharing Contribution Account.

1.23 “Related Company” means any person with whom the Company is considered to be a single employer under Section 414(b) of the Code and all persons with whom the Company would be considered a single employer under Code Section 414(c), substituting “50%” for the “80%” standard that would otherwise apply.

1.24 “Separation from Service” means that a Participant dies, retires or otherwise has a termination of employment with the Company. A termination of employment will be deemed to occur when the Company and the Participant reasonably anticipate that the level of bona fide services the Participant will perform for the Company (whether as an employee or an independent contractor, but not as a director) after a certain date will permanently decrease to less than 50 percent of the average level of bona fide services performed by the Participant for the Company (as an employee or independent contractor, but not as a director) in the immediately preceding 36 months (or the full period of the Participant’s services to the Company if the Participant has been providing services to the Company for less than 36 months), determined in accordance with Treas. Reg. Sec. 1.409A-1(h). The employment relationship will be treated as continuing intact while the Participant is on a bona fide leave of absence (determined in accordance with Treas. Reg. Sec.1.409A-1(h)), but (a) only if there is a reasonable expectation that the Participant will return to active employment status, and (b) only to the extent that such leave of absence does not exceed 6 months, or, if longer, for so long as the Participant has a statutory or contractual right to reemployment. For purposes of this Section 1.24, references to the Company shall include the Company and all Related Companies.

1.25 “Supplemental Account” means any or all of the Supplemental Before-Tax Deposit Account, the Supplemental Matching Contribution Account and the Supplemental Basic Profit Sharing Contribution Account.

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1.26 “Supplemental Basic Profit Sharing Contribution” means the basic profit sharing contribution made by the Company for the benefit of a Participant under and in accordance with the terms of the Plan in any Plan Year.

1.27 “Supplemental Basic Profit Sharing Contribution Account” means the account maintained under the Plan for a Participant that is credited with Supplemental Basic Profit Sharing Contributions contributed under the Plan (and earnings thereon).

1.28 “Supplemental Before-Tax Deposit” means the salary reduction contribution made for the benefit of a Participant under and in accordance with the terms of the Plan in any Plan Year.

1.29 “Supplemental Before-Tax Deposit Account” means the account maintained under the Plan for a Participant that is credited with Supplemental Before-Tax Deposits contributed under the Plan (and earnings thereon).

1.30 “Supplemental ESOP Account” means the account established for a Participant under the Supplemental ESOP Plan.

1.31 “Supplemental ESOP Allocation” means the amount allocated for the benefit of a Participant under and in accordance with the terms of Section 3.1 of the Supplemental ESOP Plan in any Plan Year; provided, however, that no Supplemental ESOP Allocation shall be made to the Supplemental ESOP Account of any Participant under the Supplemental ESOP Plan for any Plan Year that begins on or after January 1, 2005.

1.32 “Supplemental ESOP Plan” means the Northern Trust Corporation Supplemental Employee Stock Ownership Plan, as amended and restated effective January 1, 2008 and as further amended from time to time.

1.33 “Supplemental Matching Contribution” means the matching contribution made by the Company for the benefit of a Participant under and in accordance with the terms of the Plan in any Plan Year.

1.34 “Supplemental Matching Contribution Account” means the account maintained under the Plan for a Participant that is credited with Supplemental Matching Contributions contributed under the Plan (and earnings thereon).

1.35 Except as otherwise expressly provided herein, all words and phrases in the Qualified Plan shall have the same meaning in the Plan.

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ARTICLE II

ELIGIBILITY

2.1 Conditions for Participation and Participant Elections.

(a)	(i)	An employee of the Company: (A) who is eligible to participate in the Qualified Plan on the first day of a Plan Year and (B) whose Salary (as defined in the Qualified Plan), determined as of November 30 of the prior Plan Year, exceeds the compensation limitation under Section 401(a)(17) of the Code for such prior Plan Year, shall be eligible to make Supplemental Before-Tax Deposits under the Plan for such Plan Year as soon as he has received Salary in such Plan Year equal to the Code Section 401(a)(17) limitation for that Plan Year. However, if the Code Section 401(a)(17) compensation limit for the Plan Year for which participation is being determined is known by November 30 of such prior Plan Year, participation will be based upon such limit.
	(ii)	An employee of the Company (A) who is eligible to participate in the Qualified Plan in a Plan Year and (B) for whom the Company makes a Supplemental Basic Profit Sharing Contribution to his or her Supplemental Basic Profit Sharing Contribution Account pursuant to Section 3.4 of the Plan shall be a Participant in the Plan for purposes of his or her Supplemental Basic Profit Sharing Contribution Account.
	(iii)	An employee of the Company who is ineligible to participate in the Plan on the first day of a Plan Year either because he was not eligible for the Qualified Plan on the first day of the Plan Year, or because his Salary did not exceed the Code Section 401(a)(17) limitation for the prior Plan Year, who subsequently becomes eligible for the Qualified Plan or has his Salary increased so that he receives Salary in such Plan Year that exceeds the compensation limit set forth in Code Section 401(a)(17), shall become eligible to participate in the Plan for that Plan Year for purposes of Supplemental Matching Contributions only as of the date he has received Salary in such Plan Year that exceeds the Code Section 401(a)(17) limit. Such Supplemental Matching Contributions shall be based on the employee’s rate of contribution to the Qualified Plan on the date his contributions to the Qualified Plan ceased.
(b)	An employee who meets the eligibility requirements on November 30 for Plan participation in the following Plan Year will be allowed to elect (i) to decline participation in the Plan, or (ii) to begin contributions to the Plan once he is no longer able to contribute to the Qualified Plan because he has reached the limitations of Code Section 401(a)(17).

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(c) A Participant who as of any November 30 no longer meets the eligibility requirements for Plan participation in the following Plan Year will not be allowed to continue or elect to begin contributions to the Plan for that following Plan Year, and any Supplemental Before-Tax Deposit Agreement then in effect for such Participant shall become null and void with respect to such following Plan Year and any subsequent Plan Years. If as of November 30 of any subsequent Plan Year, any such employee who was previously a Participant again meets the Plan’s eligibility requirements for Plan participation in the next following Plan Year, such employee will again be allowed to elect to decline participation or begin contributions to the Plan in such next following Plan Year in accordance with Section 2.1(b) and Article III.

ARTICLE III

SUPPLEMENTAL CONTRIBUTIONS

3.1 Supplemental Before-Tax Deposit. The Supplemental Before-Tax Deposit authorized by a Participant for any Plan Year shall be applied only to Salary in excess of Code Section 401(a)(17) limitations, in any amount equal to at least one percent (1%), but not to exceed the maximum percentage which a Participant could contribute to the Qualified Plan in such Plan Year in the absence of any statutory or administratively imposed limitations.

The Supplemental Before-Tax Deposit made for the benefit of a Participant for any Plan Year shall be allocated to a Supplemental Before-Tax Deposit Account maintained under the Plan in the name of such Participant at such time(s) as the Committee shall determine, but in any event on or before the last day of such Plan Year.

3.2 Supplemental Before-Tax Deposit Agreement. As a condition of making a Supplemental Before-Tax Deposit for the benefit of a Participant pursuant to Section 3.1 for any Plan Year, the Participant must execute a Supplemental Before-Tax Deposit Agreement, in such form as the Committee in its discretion shall determine, on which the Participant shall elect to have his Salary for such Plan Year reduced, and a Supplemental Before-Tax Deposit made on his behalf, on Salary in excess of the Code Section 401(a)(17) limitations, in any amount equal to at least one percent (1%) of his Salary, or any multiple thereof, but not to exceed the maximum percentage which a Participant could contribute to the Qualified Plan in such Plan Year in the absence of any statutory or administratively imposed limitations.

A Supplemental Before-Tax Deposit Agreement shall not be effective for any Plan Year unless it is executed and delivered to the Committee by the date established by the Committee before the beginning of that Plan Year; provided that any such Supplemental Before-Tax Deposit Agreement making any such election must be made on or before December 31 of the Participant’s taxable year preceding the taxable year in which the Participant performs the services that give rise to the Salary to be deferred. Any such Agreement and such election shall remain in effect for subsequent Plan Years until

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revised or revoked by the Participant by the execution and delivery to the Committee, prior to the first day of the Plan Year in which such revision or revocation is to become effective (or such earlier date established by the Committee), of a Supplemental Before-Tax Deposit Agreement setting forth such revision or revocation. Any Supplemental Before-Tax Deposit Agreement and election shall become irrevocable as of each December 31 (or such earlier date as the Committee may determine) with respect to Salary payable for services performed in the immediately following Plan Year.

3.3 Supplemental Matching Contributions. The Supplemental Matching Contribution to be made by the Company on behalf of a Participant for any Plan Year who (i) is a Participant at the beginning of a Plan Year eligible to make Supplemental Before-Tax Deposits under the Plan after reaching the Code Section 401(a)(17) limitation, who actually makes Supplemental Before-Tax Deposits under the Plan or (ii) during the Plan Year becomes a Participant eligible to participate under Section 2.1(a)(iii) for purposes of Supplemental Matching Contributions only, shall be made in accordance with the matching contribution formula and provisions set forth in the Qualified Plan.

Supplemental Matching Contributions made for the benefit of a Participant for any Plan Year shall be allocated to a Supplemental Matching Contribution Account maintained under the Plan in the name of such Participant at such time(s) as the Committee shall determine, but in any event as of the last day of such Plan Year.

3.4 Supplemental Basic Profit Sharing Contributions. The Company shall make a Supplemental Basic Profit Sharing Contribution on behalf of a Participant for any Plan Year, based upon the Participant’s Salary that does not exceed the Code Section 401(a)(17) limitation for such Plan Year, and only to the extent that all or part of the Qualified Plan Basic Profit Sharing Contribution cannot be made for such Plan Year due to any limitation imposed by Code Section 415 for such Plan Year. Such Supplemental Basic Profit Sharing Contribution shall be made in accordance with the basic profit sharing contribution formula and provisions set forth in the Qualified Plan.

The Supplemental Basic Profit Sharing Contribution made for the benefit of a Participant for any Plan Year shall be allocated to a Supplemental Basic Profit Sharing Contribution Account maintained under the Plan in the name of such Participant at such time(s) as the Committee shall determine, but in any event as of the last day of such Plan Year.

3.5 Vesting of Benefits. Each Participant shall at all times be fully vested in the adjusted balance of his Supplemental Before-Tax Deposit Account. Each Participant shall vest in the adjusted balance of his Supplemental Matching Contribution Account and his Supplemental Basic Profit Sharing Contribution Account in accordance with the vesting schedule applicable to his Qualified Plan Matching Contribution Account and his Qualified Plan Profit Sharing Contribution Account set forth in the Qualified Plan.

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ARTICLE IV

INVESTMENT OF SUPPLEMENTAL CONTRIBUTIONS

4.1 Investments. The Corporation may cause amounts allocated hereunder to the Supplemental Accounts of Participants to be contributed to a trust (“Trust”) designated for such purpose by the Corporation. Amounts allocated hereunder to the Supplemental Account of a Participant shall be subject to such procedures relating to investment elections as the Committee may from time to time establish. EBIC shall from time to time determine the investment media to which such elections shall apply.

A Participant shall be entitled to change investment elections applicable to his Supplemental Account, or to direct transfers of amounts in his Supplemental Account among the investment funds available under the Trust Agreement, provided that such directions shall also apply to his Supplemental ESOP Allocation. Such changes can be made monthly by written request or such other frequency as the Committee shall determine.

Notwithstanding anything in the Plan to the contrary, for a period of two years after the date of an occurrence of a Change in Control, the Corporation shall not eliminate any of the investment elections and choices which were in effect immediately prior to the Change in Control and shall not decrease the frequency with which Participants may change such investment elections. Notwithstanding the foregoing, in the event that an investment election is discontinued by its sponsor and therefore becomes unavailable to Participants, the Corporation shall provide a substitute election with substantially similar investment objectives and policies.

Participants’ Supplemental Accounts shall be valued no less frequently than monthly.

4.2 Corporation Securities. Notwithstanding anything to the contrary contained herein, in no event shall amounts allocated to the Supplemental Account of a Participant be invested directly in stock or other securities of the Corporation; provided, however, that nothing contained herein shall prohibit investment of amounts allocated to the Supplemental Account of any Participant in a mutual fund portfolio in which no more than five percent of the total fair market value of the assets of such portfolio are invested in stock or other securities of the Corporation.

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ARTICLE V

DISTRIBUTIONS AND

LIMITS ON DISTRIBUTIONS

5.1 Distribution.

(a) Subject to Sections 5.2 and 8.2,

(i) subject to clause (iv) below, all amounts allocated to a Participant’s Supplemental Before-Tax Deposit Account, and the vested adjusted balance of the Participant’s Supplemental Matching Contribution Account and Supplemental Basic Profit Sharing Contribution Account, including gains and losses attributable to investments made pursuant to Section 4.1, shall be distributed to or with respect to the Participant in one lump sum, in cash within 90 days after the date the Participant incurs a Separation from Service. The Participant shall have no right to designate the taxable year of such distribution.

(ii) subject to clause (iv) below, notwithstanding the foregoing, if a Participant is entitled to receive a Supplemental Matching Contribution or a Supplemental Basic Profit Sharing Contribution for the Plan Year in which he incurs a Separation from Service, such Supplemental Matching Contribution or Supplemental Basic Profit Sharing Contribution and any gains or losses attributable thereto shall be distributed to or with respect to the Participant in the calendar year following the calendar year in which his Separation from Service occurs.

(iii) any unvested amounts credited to a Participant’s Supplemental Matching Contribution Account and Supplemental Basic Profit Sharing Contribution Account shall be forfeited and retained by the Company.

(iv) A Participant’s Grandfathered Amount, if any, shall be paid at the time and in the form determined under the Plan as in effect on October 3, 2004.

(b) An amount that would otherwise be paid from the Supplemental Account of a Participant in a given Plan Year may be delayed to the extent that the Company reasonably anticipates that if the payment were made as scheduled the Company’s deduction with respect to such payment would not be permitted due to the application of Code Section 162(m). Amounts not paid as a result of the above limitation shall be paid in the earlier of (i) the Company’s first taxable year in which the Company reasonably anticipates that if the payment is made during such year the deduction of such payment will not be barred by application of Section 162(m), or (ii) the period beginning with the date of the Participant’s Separation from Service and ending on the later of the last day of the taxable year of the Company in which the Participant incurs a Separation from Service or the 15^th day of the third month following the Participant’s Separation from Service.

(c) If a Participant dies before a complete distribution of his Supplemental Before Tax Deposit Account, his Supplemental Matching Contribution Account or his Supplemental Basic Profit Sharing Contribution Account has been made to him, such amounts shall be distributed in one lump sum,

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in cash, to the Beneficiary last designated by the Participant in a writing delivered to the Committee prior to his death, at such time as determined in accordance with Section 5.1(a). The Beneficiary designated by the Participant under this Plan must be the same beneficiary designated by the Participant under the Supplemental ESOP Plan. If a Participant has not designated a Beneficiary, or if no designated Beneficiary is living on the date of distribution, such amounts shall be distributed to those persons entitled to receive distribution of the Participant’s accounts under the Qualified Plan.

5.2 Limits on Distributions to Key Employees. Anything in the Plan to the contrary notwithstanding, if, as of the date a Participant incurs a Separation from Service, the Participant is a Key Employee, any distribution of a 409A Amount to such Participant due to such Separation from Service that would otherwise be made during the six months following such Separation from Service shall be made on the date that is six months and one day following such Separation from Service.

5.3 Annual Identification of Key Employees. The Specified Employee Identification Date, as defined in Treas. Reg. §1.409A-1(i)(3), to be used in determining Key Employees of the Company shall be September 30 of any Plan Year. The January 1 of the Plan Year next following that Plan Year shall be the Specified Employee Effective Date, as defined in Treas. Reg. §1.409A-1(i)(4), for Participants identified as Key Employees on the immediately preceding Specified Employee Identification Date. Participants identified as Key Employees on a Specified Employee Identification Date (September 30) shall be treated as Key Employees under the Plan for the 12-month period beginning on the Specified Employee Effective Date (January 1) next following such Specified Employee Identification Date.

ARTICLE VI

ADMINISTRATION OF THE PLAN

6.1 Administration by the Committee. Except as otherwise provided in Section 4.1, the Committee shall be responsible for the general operation and administration of the Plan and for carrying out the provisions thereof. The Committee shall have discretion to interpret and construe the provisions of the Plan.

6.2 General Powers of Administration. All provisions set forth in the Qualified Plan with respect to the administrative powers and duties of the Committee, expenses of administration, and procedures for filing claims shall also be applicable with respect to the Plan. The Committee and EBIC shall be entitled to rely conclusively upon all tables, valuations, certificates, opinions and reports furnished by any actuary, accountant, controller, counsel or other person employed or engaged by the Committee or EBIC with respect to the Plan.

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6.3 Terms Include Authorized Delegates. Where appropriate, the term “Company”, “Corporation”, “Committee” or “EBIC” as used in this Plan shall also include any applicable subcommittee or any duly authorized delegate of the Company, the Corporation, the Committee or EBIC, as the case may be. Such duly authorized delegate may be an individual or an organization within the Company, the Corporation, the Committee or EBIC, or may be an unrelated third party individual or organization.

ARTICLE VII

AMENDMENT OR TERMINATION

7.1 Amendment or Termination. The Corporation intends the Plan to be permanent but reserves the right to amend or terminate the Plan when, in the sole discretion of the Corporation, such amendment or termination is advisable.

(a) Any such termination shall be made by action of the Compensation and Benefits Committee of the Board (or by action of the Board if the Compensation and Benefits Committee is unavailable or unable to act for any reason) and shall be effective as of the date set forth in such resolution.

(b) Any such amendment shall be made in accordance with the following:

(i) material amendments to the Plan (including any extraordinary amendment related to an acquisition or divestiture by the Company) shall be made by action of the Compensation and Benefits Committee of the Board (or by action of the Board, if the Compensation and Benefits Committee is unavailable or unable to act for any reason); and

(ii) (A) non-material or administrative amendments to the Plan (including any amendment pursuant to guidelines established by the Compensation and Benefits Committee of the Board related to an acquisition or divestiture by the Company) or (B) any amendment to the Plan deemed required, authorized or desirable under applicable statutes, regulations or rulings, shall be made by action of either the Chief Executive Officer of the Corporation or the Executive Vice President and Human Resources Department Head of the Corporation (or either of their duly authorized designees).

(c) Notwithstanding the foregoing, (i) for a period of two years after the date of an occurrence of a Change in Control or (ii) in the event of a Potential Change in Control and for a period of six (6) months following the Potential Change in Control, neither the Compensation and Benefits Committee of the Board nor the Board may terminate or amend the Plan and neither the Chief Executive Officer of the Corporation nor the Executive Vice President and Human Resources Department Head of the Corporation (or either of their designees) may amend the Plan in a manner that adversely affects the rights of any Participant of the Plan.

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In addition, after the date of the occurrence of a Change in Control, no amendment of Section 5.1 of the Plan shall be effective with respect to any Participant who is a Participant as of the occurrence of a Change in Control without the consent of such Participant.

7.2 Effect of Amendment or Termination. No amendment or termination of the Plan shall directly or indirectly reduce the balance of any Supplemental Account held hereunder as of the effective date of such amendment or termination. Upon termination of the Plan, distribution of amounts in a Participant’s Supplemental Account shall be made to him or his Beneficiary in the manner and at the time described in Section 5.1 of the Plan. No additional credits of Supplemental Before-Tax Deposits, Supplemental Matching Contributions or Supplemental Basic Profit Sharing Contributions shall be made to the Supplemental Account of a Participant after termination of the Plan, but gains and losses attributable to investments made pursuant to Section 4.1 shall continue to be credited to such Supplemental Account until the balance of such Supplemental Account has been fully distributed to the Participant or his Beneficiary.

7.3 Amendments Necessary to Satisfy Code Section 409A. Anything in the preceding Sections 7.1 or 7.2 or elsewhere in the Plan to the contrary notwithstanding:

(a) the Plan may be amended in any manner necessary to ensure that the Plan complies in all applicable respects with Code Section 409A; and

(b) the Plan may not be amended in any manner that would cause the Plan to fail to comply in any applicable respect with Code Section 409A.

ARTICLE VIII

GENERAL PROVISIONS

8.1 Participant’s Rights Unsecured. If and to the extent amounts allocated hereunder to the Supplemental Accounts of Participants are contributed to the Trust described in Section 4.1, benefits under the Plan shall be payable pursuant to the Trust Agreement. Pursuant to the Trust Agreement, all assets held thereunder shall remain subject to the general creditors of the Corporation and the Company. The Plan at all times shall be entirely unfunded and, except as otherwise set forth herein, no provision shall at any time be made with respect to segregating any assets of the Corporation or the Company for payment of any benefits hereunder. No Participant, Beneficiary or any other person shall have any interest in any particular assets of the Corporation or the Company by reason of the right to receive a benefit under the Plan and Trust Agreement and any such Participant, Beneficiary or other person shall have only the rights of a general unsecured creditor of the Corporation and the Company with respect to any rights under the Plan and Trust Agreement.

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8.2 General Conditions. Except as otherwise expressly provided herein, all terms and conditions of the Qualified Plan applicable to a Qualified Plan Before-Tax Deposit, a Qualified Plan Matching Contribution or a Qualified Plan Basic Profit Sharing Contribution shall also be applicable to a Supplemental Before-Tax Deposit, a Supplemental Matching Contribution or a Supplemental Basic Profit Sharing Contribution to be made hereunder. Any Qualified Plan Before-Tax Deposit, Qualified Plan Matching Contribution or Qualified Plan Basic Profit Sharing Contribution, or any other contributions to be made under the Qualified Plan, shall be made solely in accordance with the terms and conditions of the Qualified Plan and nothing in this Plan shall operate or be construed in any way to modify, amend or affect the terms and provisions of the Qualified Plan.

8.3 No Guaranty of Benefits. Nothing contained in the Plan shall constitute a guaranty by the Corporation, the Company or any other person or entity that the assets of the Corporation or the Company will be sufficient to pay any benefit hereunder.

8.4 No Enlargement of Employee Rights. No Participant shall have any right to receive a distribution under the Plan except in accordance with the terms of the Plan. Establishment of the Plan shall not be construed to give any Participant the right to be retained in the service of the Corporation or the Company.

8.5 Spendthrift Provision. No interest of any person or entity in, or right to receive a distribution under, the Plan shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind; nor may such interest or right to receive a distribution be taken, either voluntarily or involuntarily, for the satisfaction of the debts of, or other obligations or claims against, such person or entity, including claims for alimony, support, separate maintenance and claims in bankruptcy proceedings.

8.6 Applicable Law. The Plan shall be construed and administered under the laws of the State of Illinois to the extent not inconsistent with the Employee Retirement Income Security Act of 1974, as amended.

8.7 Incapacity of Recipient. If any benefit under the Plan shall be payable to a minor or a person not adjudicated incompetent but who, by reason of illness or mental or physical disability, is, in the opinion of the Committee, unable to properly manage his affairs, such benefit shall be paid in such of the following ways as the Committee deems best: (a) to the person directly; (b) in the case of a minor, to a custodian under any Uniform Gift to Minors Act for the person; or (c) to the person’s spouse, adult child or blood relative. Any benefit so paid shall be a complete discharge of any liability of the Corporation, the Company and the Plan therefor.

8.8 Successors. The Plan shall not be automatically terminated by a transfer or sale of assets of the Corporation, or by the merger or consolidation of the Corporation into or with any other corporation or other entity, but the Plan shall be continued after such sale, merger or consolidation only if and to the extent that the transferee, purchaser or successor entity agrees to continue the Plan, subject to the provisions of Section 7.1. In the event that the Plan is not continued by the transferee, purchaser or successor entity, then the Plan shall terminate, subject to the provisions of Sections 7.1 and 7.2.

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8.9 Unclaimed Benefit. Each Participant shall keep the Committee informed of his current address and the current address of his designated Beneficiary. None of the Corporation, the Company or the Committee shall be obligated to search for the whereabouts of any person. If the Committee is unable to locate the Participant or any Beneficiary of the Participant, then none of the Corporation, the Company or the Plan shall have any further obligation to pay any benefit hereunder to such Participant or Beneficiary and such benefit shall be forfeited; provided, however, that if the Participant or Beneficiary makes a valid claim for any benefit that has been forfeited, the forfeited benefit shall be reinstated.

8.10 Electronic or Telephonic Notices. Any election, notice, direction or other such action required or permitted to be made in writing under the Plan may also be made electronically, telephonically or otherwise, to the extent then permitted by applicable law and the administrative rules prescribed by the Committee.

8.11 Limitations on Liability. Notwithstanding any of the preceding provisions of the Plan, none of the Corporation, the Company, any member of the Committee, any member of EBIC, or any individual acting as an employee or agent of the Corporation, the Company, the Committee or EBIC, shall be liable to any Participant, former Participant, Beneficiary or any other person for any claim, loss, liability or expense incurred in connection with the Plan.

8.12 Gender; Headings. Words in the masculine gender shall include the feminine and the singular shall include the plural, and vice versa, unless qualified by the context. Any headings used herein are included for ease of reference only, and are not to be construed so as to alter the terms hereof.

8.13 Compliance with Code Section 409A. The Plan is intended to comply in all applicable respects with the requirements of Code Section 409A and shall be construed and administered so as to comply with that Code section.

IN WITNESS WHEREOF, Northern Trust Corporation has caused this amendment and restatement of the Plan to be executed on its behalf by its duly authorized officer this 18th day of December, 2008, effective as of January 1, 2008 (or as of such other dates as are noted herein).

NORTHERN TRUST CORPORATION
By:	/s/ Timothy P. Moen
Name:	Timothy P. Moen
Title:	Executive Vice President and Human Resources Department Head

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SUPPLEMENT #1

Special 2005 Supplemental Before-Tax Deposit Agreement

This Supplement #1 to the Northern Trust Corporation Supplemental Thrift-Incentive Plan, as amended and restated effective January 1, 2008 (the “Plan”), is made a part of the Plan and supersedes any provisions thereof to the extent that they are not consistent with this Supplement. Unless the context clearly implies or indicates to the contrary, a word, term or phrase used or defined in the Plan is similarly used or defined for purposes of this Supplement #1.

1. Effective Date. February 10, 2005.

2. Application. This Supplement #1 shall apply to all Participants who were eligible to make a Supplemental Before-Tax Deposit for the Plan Year beginning January 1, 2005 (the “2005 Plan Year”), but who failed to execute and deliver a Supplemental Before-Tax Deposit Agreement to the Committee prior to the date specified by the Committee before the beginning of the 2005 Plan Year (individually, a “Special Election Participant” and, collectively, the “Special Election Participants”).

3. Special Provision. The following special provision shall apply to the Special Election Participants:

Special 2005 Election: Pursuant to and in accordance with Notice 2005-1 issued by the U.S. Treasury Department and the Internal Revenue Service, each Special Election Participant shall have the opportunity to execute and deliver to the Committee a Supplemental Before-Tax Deposit Agreement for the 2005 Plan Year to be applied only to Salary in excess of Code Section 401(a)(17) limitations, in any amount equal to at least one percent (1%), but not to exceed forty percent (40%), subject to the requirements specified in paragraphs 4 through 6 below.

4. Special Election Deadline. To be effective, a Supplemental Before-Tax Deposit Agreement referred to in paragraph 3 above must be executed and delivered to the Committee by the Special Election Participant on or before the date specified by the Committee that is after the Effective Date of this Supplement #1, but no later than March 15, 2005.

5. Special Salary Limitation. A Supplemental Before-Tax Deposit Agreement executed and delivered by a Special Election Participant pursuant to this Supplement #1 shall only apply to Salary of the Special Election Participant that has not been paid or become payable at the time the Special Election Participant executes and delivers such Supplemental Before-Tax Deposit Agreement.

6. Limitations on Supplement. Nothing in this Supplement #1 shall be construed to provide any Special Election Participant with any rights or benefits under the Plan other than those described in Paragraphs 3 through 5 above.

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SUPPLEMENT #2

Special 2005 Termination of Participation for Specified Employees

This Supplement #2 to the Northern Trust Corporation Supplemental Thrift-Incentive Plan, as amended and restated effective January 1, 2008 (the “Plan”), is made a part of the Plan and supersedes any provisions thereof to the extent that they are not consistent with this Supplement. Unless the context clearly implies or indicates to the contrary, a word, term or phrase used or defined in the Plan is similarly used or defined for purposes of this Supplement #2.

1. Effective Date. January 1, 2005.

2. Application. This Supplement #2 shall apply to any Participant who would be considered a “specified employee” as defined in proposed regulation section 1.409A-1(i) issued by the U.S. Treasury Department and the Internal Revenue Service; who terminates employment for any reason on or after the Effective Date of this Supplement #2 and on or before October 31, 2005 (individually, a “2005 Specified Employee Participant” and, collectively, the “2005 Specified Employee Participants”).

3. Special Provision. The following special provision shall apply to the 2005 Specified Employee Participants:

Special 2005 Termination of Participation: Pursuant to and in accordance with Notice 2005-1 and proposed regulations under Code section 409A issued by the U.S. Treasury Department and the Internal Revenue Service, each 2005 Specified Employee Participant shall be considered to have terminated participation in the Plan with respect to any amounts that would otherwise be subject to Code section 409A, effective as of the date such 2005 Specified Employee Participant terminated employment with the Company. Anything in the Plan to the contrary notwithstanding, such amounts shall be distributed in a lump sum distribution to such 2005 Specified Employee Participant no later than December 31, 2005, or the date such amounts become vested, if later.

4. Limitations on Supplement. Nothing in this Supplement #2 shall be construed to provide any 2005 Specified Employee Participant with any rights or benefits under the Plan other than those described in Paragraph 3 above.

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EX-10.(VIII)

Exhibit 10(viii)

NORTHERN TRUST CORPORATION

SUPPLEMENTAL PENSION PLAN

(As Amended and Restated Effective January 1, 2009)

The Northern Trust Company Supplemental Plan was adopted on September 16, 1975 and amended through December 16, 1986. The portions of that plan that pertained to The Northern Trust Company Pension Plan were amended and restated by The Restated Supplemental Pension Plan for Employees of The Northern Trust Company, initially adopted effective September 1, 1989, restated effective September 1, 1989, further amended and restated effective January 1, 1996 and May 1, 1996 and further amended effective May 1, 1998 (“the Restated Supplemental Pension Plan”). Effective as of July 20, 1999, the assets and obligations of the Restated Supplemental Pension Plan were transferred by The Northern Trust Company to its parent corporation, Northern Trust Corporation and from and after such date the Northern Trust Corporation became the sponsor of the Restated Supplemental Pension Plan. Northern Trust Corporation further amended and restated the Restated Supplemental Pension Plan effective July 20, 1999 to reflect the transfer of assets and obligations thereof to Northern Trust Corporation and certain other changes. At that time, the Restated Supplemental Pension Plan was designated the “Northern Trust Corporation Supplemental Pension Plan.”

Northern Trust Corporation now hereby further amends and restates the Northern Trust Corporation Supplemental Pension Plan, generally effective January 1, 2009 (with such other effective dates as are noted herein) to comply with various changes in applicable law, including the American Jobs Creation Act of 2004, and to make certain other changes.

ARTICLE I

DEFINITIONS

Wherever used herein the following terms shall have the meanings hereinafter set forth:

1.1 “Annuity Starting Date” means the first day of the calendar month next following the calendar month in which a Participant incurs a Break in Service under the Qualified Plan.

1.2 “Beneficiary” means the individual designated by the Participant to receive any survivor benefits payable under the Plan. If the Participant does not designate a Beneficiary, or if the designation is ineffective for any reason, as determined by the Committee, the Participant’s Beneficiary shall be:

(a) The Participant’s Spouse or, if none,

(b) the Participant’s children (in equal amounts) or, if none,

(c) the Participant’s parents (in equal amounts) or, if none,

(d) the Participant’s brothers and sisters (in equal amounts) or, if none,

(e) the Participant’s estate.

1.3 “Board” means the Board of Directors of the Corporation.

1.4 A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(a) Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of Northern Trust Corporation (the “Corporation”) (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Corporation or its Affiliates) representing 20% or more of the combined voting power of the Corporation’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (c) below; or

(b) The election to the Board of Directors of the Corporation, without the recommendation or approval of two thirds of the incumbent Board of Directors of the Corporation, of the lesser of (i) three directors; or (ii) directors constituting a majority of the number of directors of the Corporation then in office, provided, however, that directors whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Corporation will not be considered as incumbent members of the Board of Directors of the Corporation for purposes of this section; or

(c) There is consummated a merger or consolidation of the Corporation or any direct or indirect subsidiary of the Corporation with any other company, other than (i) a merger or consolidation which would result in the voting securities of the Corporation outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), at least 60% of the combined voting power of the securities of the Corporation or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Corporation (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Corporation (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Corporation or its Affiliates) representing 20% or more of the combined voting power of the Corporation’s then outstanding securities; or

(d) The stockholders of the Corporation approve a plan of complete liquidation or dissolution of the Corporation or there is consummated an agreement for the sale or disposition by the Corporation of all or substantially all of the Corporation’s assets, other than a sale or disposition by the Corporation of all or substantially all of the Corporation’s assets to an entity, at least 60% of the combined voting power of the voting securities of which are owned by stockholders of the Corporation in substantially the same proportions as their ownership of the Corporation immediately prior to such sale.

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Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Corporation immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Corporation immediately following such transaction or series of transactions.

For purposes of this Section 1.4 and Section 1.18 (where applicable) the following definitions shall apply:

“Affiliate” shall have the meaning set forth in Rule 12b-2 under Section 12 of the Exchange Act; “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act, except that a Person shall not be deemed to be the Beneficial Owner of any securities with respect to which such Person has properly filed a Form 13-G; “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time; and “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Corporation or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities or (iv) a corporation owned, directly or indirectly, by the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation.

In accordance with the Qualified Plan, each Participant’s Supplemental Pension Benefit shall become fully vested and nonforfeitable upon the occurrence of a Change in Control. Any Supplemental Pension Benefit accrued for any such Participant following such Change in Control shall also be fully vested and nonforfeitable.

1.5 “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder.

1.6 “Committee” means the Employee Benefit Administrative Committee of the Company, as constituted from time to time, which has the responsibility for administering the Qualified Plan.

1.7 “Company” means The Northern Trust Company, an Illinois banking corporation; the Corporation; and such subsidiaries and affiliates of the Corporation as shall adopt the Plan.

1.8 “Corporation” means Northern Trust Corporation, a Delaware corporation, and, to the extent provided in Section 7 .8 below, any successor corporation or other entity resulting from a merger or consolidation into or with the Company or a transfer or sale of substantially all of the assets of the Company.

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1.9 “EBIC” means the Employee Benefit Investment Committee of the Company, as constituted from time to time, which has responsibility for overseeing the investment of the assets attributable to the Plan.

1.10 “409A Amount” means the portion of the Participant’s Supplemental Pension Benefit that consists of amounts deferred in taxable years beginning after December 31, 2004, as determined in accordance with Code Section 409A and applicable regulations promulgated thereunder. The amount of the Supplemental Pension Benefit that is considered deferred on or before December 31, 2004 equals the present value of the amount to which the Participant would have been entitled under the Plan if the Participant had voluntarily terminated service from the Company without cause on December 31, 2004, and received a payment of the Supplemental Pension Benefit available from the Plan on the earliest possible date allowed under the Plan to receive a payment of benefits following the termination of service, and received the Supplemental Pension Benefit in the form with the maximum value (the “Grandfathered Amount”); provided, however, that for any subsequent taxable year of the Participant, the Grandfathered Amount may increase to equal the present value of the Supplemental Pension Benefit the Participant actually becomes entitled to, in the form and at the time actually paid, determined under the terms of the Plan (including applicable limits under the Internal Revenue Code), as in effect on October 3, 2004, without regard to any further services rendered by the Participant after December 31, 2004, or any other events affecting the amount of or the entitlement to the Supplemental Pension Benefit (other than the Participant’s election with respect to the time or form of an available benefit). For purposes of calculating the present value of the Supplemental Pension Benefit as described in the preceding sentence, the actuarial assumptions and methods used to value benefits under the Qualified Plan shall be used.

1.11 “Key Employee” means a Participant who is a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i). The Company’s Key Employees shall be identified annually pursuant to Section 3.8.

1.12 “Modified Pension Benefit” means the Qualified Plan Pension Benefit determined as of a Participant’s Annuity Starting Date under the Plan, with the following modifications:

(a)	Code Section 401(a)(17) and Section 415 restrictions shall be disregarded;
(b)	(i)	January 1, 2002 through April 30, 2004: Any amounts of the cash portion of performance-based incentive compensation awarded on or after January 1, 2002 through April 30, 2004 under the Northern Trust Corporation Annual Performance Plan, the Northern Trust Corporation Management Performance Plan and the Specialized Incentive Plan, the receipt of which is deferred under the Northern Trust Corporation Deferred Compensation Plan and which would have been taken into account as Compensation under the Qualified Plan if not deferred, will be taken into account as Compensation as if such amounts were not so deferred;

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(ii) May 1, 2004 and thereafter: Any amounts of the cash portion of performance-based incentive compensation awarded on or after May 1, 2004 under the Northern Trust Corporation Management Performance Plan or as Northern Performance Incentives, Northern Sales Incentives and/or Northern Technical Incentives under the Northern Partners Incentive Plan, the receipt of which is deferred under the Northern Trust Corporation Deferred Compensation Plan and which would have been taken into account as Compensation under the Qualified Plan if not deferred, will be taken into account as Compensation as if such amounts were not so deferred; and

(c) Anything in the Plan to the contrary notwithstanding, in the event a Participant is entitled to additional deemed age and service credit under the Plan pursuant to an Employment Security Agreement, such Participant shall be deemed to have up to an additional 36 months of age and service, as provided in such Participant’s Employment Security Agreement, for all purposes in determining eligibility for and calculation of the Participant’s Modified Pension Benefit.

1.13 “Modified Survivor Benefit” means the Qualified Plan Survivor Benefit determined as of a Participant’s Annuity Starting Date under the Plan, with the following modifications:

(a)	Code Section 401(a)(17) and Section 415 restrictions shall be disregarded;
(b)	(i)	January 1, 2002 through April 30, 2004: Any amounts of the cash portion of performance-based incentive compensation awarded on or after January 1, 2002 through April 30, 2004 under the Northern Trust Corporation Annual Performance Plan, the Northern Trust Corporation Management Performance Plan and the Specialized Incentive Plan, the receipt of which is deferred under the Northern Trust Corporation Deferred Compensation Plan and which would have been taken into account as Compensation under the Qualified Plan if not deferred, will be taken into account as Compensation as if such amounts were not so deferred;
	(ii)	May 1, 2004 and thereafter: Any amounts of the cash portion of performance-based incentive compensation awarded on or after May 1, 2004 under the Northern Trust Corporation Management Performance Plan or as Northern Performance Incentives, Northern Sales Incentives and/or Northern Technical Incentives under the Northern Partners Incentive Plan, the receipt of which is deferred under the Northern Trust Corporation Deferred Compensation Plan and which would have been taken into account as Compensation under the Qualified Plan if not deferred, will be taken into account as Compensation as if such amounts were not so deferred; and

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1.14 “Participant” means any employee of the Company who is a participant under the Qualified Plan as described in section 2 .1 of the Plan and to whom or with respect to whom a benefit is payable under the Plan. Anything in the Plan to the contrary notwithstanding, in the event an employee of the Company is entitled to additional deemed age and service credit under the Plan pursuant to an Employment Security Agreement and is an Eligible Employee as defined in the Qualified Plan, “Participant” shall also include any such employee who is not then a participant in the Qualified Plan but who would be a participant in the Qualified Plan if such employee met applicable service requirements for participation in the Qualified Plan.

1.15 “Payment Date” means, with respect to a Participant who incurs a Separation from Service for any reason other than the Participant’s death prior to his Annuity Starting Date, the first day of the second calendar month following the calendar month in which the Participant incurs such Separation from Service, provided, however, that in the case of a Participant a portion of whose Supplemental Pension Benefit consists of a Grandfathered Amount, the Participant’s Payment Date with respect to such Grandfathered Amount shall be the first day of the second month following the calendar month in which the Participant incurs a Break in Service under the Qualified Plan.

1.16 “Plan” means the Northern Trust Corporation Supplemental Pension Plan, as amended from time to time.

1.17 “Plan Year” means the calendar year.

1.18 A “Potential Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(a) The Corporation enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

(b) The Corporation or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;

(c) Any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Corporation representing 15% or more of either the then outstanding shares of common stock of the Corporation or the combined voting power of the Corporation’s then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Corporation or its Affiliates); or

(d) The Board adopts a resolution to the effect that, for purposes of this Plan, a Potential Change in Control has occurred.

1.19 “Qualified Plan” means The Northern Trust Company Pension Plan as amended and restated effective January 1, 2002, and as further amended from time to time, and each predecessor, successor or replacement employees’ pension plan.

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1.20 “Qualified Plan Pension Benefit” means the aggregate pension benefit payable to a Participant pursuant to the Qualified Plan by reason of his termination of employment with the Company and all Related Companies.

1.21 “Qualified Plan Survivor Benefit” means the aggregate survivor benefit payable to a Beneficiary of a Participant pursuant to Section 6 .1 of the Qualified Plan in the event of death of the Participant at any time prior to the Participant’s Annuity Starting Date under the Plan.

1.22 “Related Company” means any person with whom the Company is considered to be a single employer under Section 414(b) of the Code and all persons with whom the Company would be considered a single employer under Code Section 414(c), substituting “50%” for the “80%” standard that would otherwise apply.

1.23 “Separation from Service” means that a Participant dies, retires or otherwise has a termination of employment with the Company. A termination of employment will be deemed to occur when the Company and the Participant reasonably anticipate that the level of bona fide services the Participant will perform for the Company (whether as an employee or an independent contractor, but not as a director) after a certain date will permanently decrease to less than 50 percent of the average level of bona fide services performed by the Participant for the Company (as an employee or independent contractor, but not as a director) in the immediately preceding 36 months (or the full period of the Participant’s services to the Company if the Participant has been providing services to the Company for less than 36 months,), determined in accordance with Treas. Reg. Sec 1.409A-1(h). The employment relationship will be treated as continuing intact while the Participant is on a bona fide leave of absence (determined in accordance with Treas. Reg. Sec. 1.409A-1(h)) but (a) only if there is a reasonable expectation that the Participant will return to active employment status, and (b) only to the extent that such leave of absence does not exceed 6 months, or, if longer, for so long as the Participant has a statutory or contractual right to reemployment. For purposes of this Section 1.23, references to the Company shall include the Company and all Related Companies.

1.24 “Spouse” means the person to whom the Participant was married on the date of his death.

1.25 “Supplemental Pension Benefit” means the benefit payable to a Participant pursuant to the Plan.

1.26 “Supplemental Survivor Benefit” means the benefit payable to the Beneficiary of a Participant pursuant to the Plan.

1.27 Except as otherwise expressly provided herein, all words and phrases in the Qualified Plan shall have the same meaning in the Plan.

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ARTICLE II

ELIGIBILITY

2.1 Participant. An employee of the Company who is eligible in any Plan Year to receive a Qualified Plan Pension Benefit, the amount of which is reduced by reason of the application of the limitations on benefits imposed by either or both of Section 401 (a) (17) and Section 415 of the Code on the Qualified Plan, shall be a Participant and shall be eligible to receive a Supplemental Pension Benefit for such Plan Year. Anything in the preceding sentence or elsewhere in the Plan to the contrary notwithstanding, in the event an employee of the Company is entitled to additional deemed age and service credit pursuant to an Employment Security Agreement and is an Eligible Employee as defined in the Qualified Plan, such employee shall be a Participant in the Plan.

ARTICLE III

SUPPLEMENTAL PENSION BENEFIT

3.1 Amount. The Supplemental Pension Benefit payable to an eligible Participant shall be calculated as if the Participant had elected an immediate lump sum distribution under the Qualified Plan, determined as of the Annuity Starting Date under the Plan. The Supplemental Pension Benefit shall be the difference between (a) the lump sum value of the Participant’s Modified Pension Benefit and (b) the lump sum value of the Participant’s Qualified Plan Pension Benefit determined as of the Annuity Starting Date under the Plan, regardless of whether the Participant has an Annuity Starting Date under the Qualified Plan at that time.

3.2 Vesting of Benefit. Each Participant shall vest in his Supplemental Pension Benefit in accordance with the vesting schedule applicable to his Qualified Plan Pension Benefit set forth in the Qualified Plan.

3.3 Form of Benefit. For any Supplemental Pension Benefit:

(a) If the lump sum value of a Participant’s Supplemental Pension Benefit is equal to or less than One Hundred Twenty-five Thousand Dollars ($125,000.00), such Supplemental Pension Benefit shall be paid in a single lump sum calculated pursuant to Sections 3.1 and 3.6(a).

(b) If the lump sum value of a Participant’s Supplemental Pension Benefit exceeds One Hundred Twenty-five Thousand Dollars ($125,000.00), such Supplemental Pension Benefit shall be paid as a Five-Year Certain Annuity calculated pursuant to Sections 3.1 and 3.6(b).

3.4 Commencement and Duration of Benefits.

(a) If a Participant’s Supplemental Pension Benefit is payable in the form of a lump sum, payment of such Supplemental Pension Benefit shall be made on the Participant’s Payment Date. If a Participant incurs an Annuity Starting Date, but dies prior to the payment of the lump sum referred to in the preceding sentence, such lump sum amount shall be paid to the Participant’s Beneficiary in the same amount and on the same date as the Participant would have received such payment.

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(b) If a Participant’s Supplemental Pension Benefit is payable in the form of a Five-Year Certain Annuity, the first annual installment shall be paid on the Participant’s Payment Date and a subsequent annual installment shall be paid on each of the next four anniversary dates of such Payment Date. If the Participant incurs an Annuity Starting Date, but dies before receiving all five annual installments of the Five-Year Certain Annuity, any remaining installments shall be paid to the Participant’s Beneficiary in the same amounts and on the same dates as the Participant would have received such payments.

(c) In the case of a Participant, whose Supplemental Pension Benefit consists of a Grandfathered Amount, and a Section 409A Amount, the provisions of Section 3.3 shall be applied to the entire amount of his Supplemental Pension Benefit as determined on his Annuity Starting Date, but the foregoing provisions of this Section 3.4 shall apply separately to the Grandfathered Amount and to the Section 409A Amount, by reference to the separate Payment Dates for those amounts, as applicable.

3.5 Grandfather Provision. Notwithstanding anything to the contrary contained herein, any Participant who commenced receiving payment of a Supplemental Pension Benefit hereunder in the form of an annuity prior to September 1, 1989, pursuant to the terms of the Plan on the date payment of such Benefit commenced, shall continue to receive such payments from and after September 1, 1989 in the form of such annuity.

3.6 Calculation of Benefit. For any Supplemental Pension Benefit or Supplemental Survivor Benefit:

(a) The amount of any lump sum calculated under the Plan for any Participant or Beneficiary shall be determined (subject to Section 1.12(c)) on the basis of the rates, tables and factors (including any early retirement adjustment factors) which would be used to determine the Participant’s or Beneficiary’s lump sum payment under the Qualified Plan as of the Participant’s or Beneficiary’s Annuity Starting Date under the Plan.

(b) The amount of any Five-Year Certain Annuity calculated under the Plan for any Participant or Beneficiary shall be determined: (i) by determining the lump sum value of such Participant’s Supplemental Pension Benefit as provided in Section 3.1 and 3.6(a) or such Beneficiary’s Supplemental Survivor Benefit as provided in Sections 4.1 and 3.6(a) and, (ii) by converting the lump sum calculated in paragraph (i) of this Section 3.6(b) to five guaranteed payments payable in equal annual installments using the greater of the annual yield on the monthly 5-year Treasury securities with constant maturity plus 150 basis points or the month-end Moody’s Long

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term Aa Corporate Index yield as an earnings factor. This earnings factor shall be determined as of the last month of the same calendar quarter as the interest rate used to calculate the Participant’s or Beneficiary’s lump sum in paragraph (i) of this Section 3.6(b).

3.7 Limits on Distributions to Key Employees. Anything in the Plan to the contrary notwithstanding, if, as of the date a Participant incurs a Separation from Service, the Participant is a Key Employee,

(a) any distribution in the form of a lump sum of a 409A Amount from the Plan to such Participant due to such Separation from Service shall be made on the date that is six months and one day following such Participant’s Separation from Service; and

(b) any distribution of the first installment of a 409A Amount that is payable in the form of a Five-Year Certain Annuity to such Participant from the Plan due to such Separation from Service shall be made on the date that is six months and one day following such Participant’s Separation from Service, and subsequent annual installments of such 409A Amount shall be paid on each of the next four anniversary dates of the date that would otherwise have been the Participant’s Payment Date with respect to such 409A Amount disregarding the effect of this Section 3.7(b) on the payment of the first installment of such 409A Amount.

3.8 Annual Identification of Key Employees. The Specified Employee Identification Date, as defined in Treas. Reg. §1.409A-1(i)(3), to be used in determining Key Employees of the Company shall be September 30 of any Plan Year. The January 1 of the Plan Year next following that Plan Year shall be the Specified Employee Effective Date, as defined in Treas. Reg. §1.409A-1(i)(4), for Participants identified as Key Employees on the immediately preceding Specified Employee Identification Date. Participants identified as Key Employees on a Specified Employee Identification Date (September 30) shall be treated as Key Employees under the Plan for the 12-month period beginning on the Specified Employee Effective Date (January 1) next following such Specified Employee Identification Date.

ARTICLE IV

SUPPLEMENTAL SURVIVOR BENEFIT

4.1 Amount. If a Participant incurs a Separation from Service due to his death prior to his Annuity Starting Date under the Plan under circumstances in which a Qualified Plan Survivor Benefit is payable to his Beneficiary, then a Supplemental Survivor Benefit is payable to his Beneficiary as hereinafter provided. Any Supplemental Survivor Benefit, shall be calculated as if the Beneficiary had elected a lump sum distribution under the Qualified Plan determined as of the date that would have been the Participant’s Annuity Starting Date under the Plan. The Supplemental Survivor Benefit shall be the difference between (a) the lump sum value of the Beneficiary’s Modified Survivor Benefit and (b) the lump sum value of the Beneficiary’s Qualified Plan Survivor Benefit determined as of the Annuity Starting Date under the Plan, regardless of whether the Beneficiary has an “Annuity Starting Date” (as that term is defined in the Qualified Plan) under the Qualified Plan at that time.

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4.2 Form and Commencement of Benefit. For any Supplemental Survivor Benefit:

(a)	If the lump sum value of a Beneficiary’s Supplemental Survivor Benefit is equal to or less than One Hundred Twenty-five Thousand Dollars ($125,000.00), such Beneficiary’s Supplemental Survivor Benefit shall be paid in a single lump sum calculated pursuant to Sections 4.1 and 3.6(a).
(b)	If the lump sum value of a Beneficiary’s Supplemental Survivor Benefit exceeds One Hundred Twenty-five Thousand Dollars ($125,000.00), such Beneficiary’s Supplemental Survivor Benefit shall be paid as a Five-Year Certain Annuity calculated pursuant to Sections 4.1 and 3.6(b).
(c)	(i)	If a Beneficiary’s Supplemental Survivor Benefit is payable in the form of a lump sum, payment of such Supplemental Survivor Benefit shall be made on the first day of the calendar month next following the calendar month in which the Participant died.
	(ii)	If a Beneficiary’s Supplemental Survivor Benefit is payable in the form of a Five-Year Certain Annuity, the first annual installment shall be paid on the date the Beneficiary would have received a lump sum payment as described in paragraph (i) of this Section 4.2(c). A subsequent annual installment shall be paid on each of the next four anniversary dates of such payment date. If the Beneficiary dies before receiving all five annual installments of the Five-Year Certain Annuity, any remaining installments shall be paid to the Beneficiary who would have been entitled to such Supplemental Survivor Benefit if the initial Beneficiary had predeceased the Participant. Such remaining installments shall be paid in the same amounts and on the same dates as the initial Beneficiary would have received such payments.

4.3 Grandfather Provision. Notwithstanding anything to the contrary contained herein, any Beneficiary who commenced receiving payment of a Supplemental Survivor Benefit hereunder in the form of an annuity prior to January 1, 1995, pursuant to the terms of the Plan on the date payment of such Benefit commenced, shall continue to receive such payments from and after January 1, 1995 in the form of such annuity.

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ARTICLE V

ADMINISTRATION OF THE PLAN

5.1 Administration by the Committee. Except as otherwise provided in Section 7.1, the Committee shall be responsible for the general operation and administration of the Plan and for carrying out the provisions thereof. The Committee shall have discretion to interpret and construe the provisions of the Plan.

5.2 General Powers of Administration. All provisions set forth in the Qualified Plan with respect to the administrative powers and duties of the Committee, expenses of administration, and procedures for filing claims shall also be applicable with respect to the Plan. The Committee and EBIC shall be entitled to rely conclusively upon all tables, valuations, certificates, opinions and reports furnished by any actuary, accountant, controller, counsel or other person employed or engaged by the Committee or EBIC with respect to the Plan.

5.3 Terms Include Authorized Delegates. Where appropriate, the term “Company”, “Corporation”, “Committee” or “EBIC” as used in this Plan shall also include any applicable subcommittee or any duly authorized delegate of the Company, the Corporation, the Committee or EBIC, as the case may be. Such duly authorized delegate may be an individual or an organization within the Company, the Corporation, the Committee or EBIC, or may be an unrelated third party individual or organization.

ARTICLE VI

AMENDMENT OR TERMINATION

6.1 Amendment or Termination. The Corporation intends the Plan to be permanent but reserves the right to amend or terminate the Plan when, in the sole discretion of the Corporation, such amendment or termination is advisable.

(a) Any such termination shall be made by action of the Compensation and Benefits Committee of the Board (or by action of the Board if the Compensation and Benefits Committee is unavailable or unable to act for any reason) and shall be effective as of the date set forth in such resolution.

(b) Any such amendment shall be made in accordance with the following:

(i) material amendments to the Plan (including any extraordinary amendment related to an acquisition or divestiture by the Company) shall be made by action of the Compensation and Benefits Committee of the Board (or by action of the Board, if the Compensation and Benefits Committee is unavailable or unable to act for any reason); and

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(ii) (A) non-material or administrative amendments to the Plan (including any amendment pursuant to guidelines established by the Compensation and Benefits Committee of the Board related to an acquisition or divestiture by the Company) or (B) any amendment to the Plan deemed required, authorized or desirable under applicable statutes, regulations or rulings, shall be made by action of either the Chief Executive Officer of the Corporation or the Executive Vice President and Human Resources Department Head of the Corporation (or either of their duly authorized designees).

(c) Notwithstanding the foregoing, (i) for a period of two years after the date of an occurrence of a Change in Control or (ii) in the event of a Potential Change in Control and for a period of six (6) months following the Potential Change in Control, neither the Compensation and Benefits Committee of the Board nor the Board may terminate or amend this Plan and neither the Chief Executive Officer of the Corporation nor the Executive Vice President and Human Resources Department Head of the Corporation (or either of their designees) may amend this Plan in a manner that adversely affects the rights of any Participant of the Plan.

In addition, after the date of the occurrence of a Change in Control, no amendment of Sections 3.4 or 4.2 of the Plan shall be effective with respect to any Participant who is a Participant as of the occurrence of a Change in Control without the consent of such Participant.

6.2 Effect of Amendment or Termination. No amendment or termination of the Plan shall directly or indirectly deprive any current or former Participant or Beneficiary of all or any portion of any Supplemental Pension Benefit or Supplemental Survivor Benefit, payment of which has commenced prior to the effective date of such amendment or termination, or that would be payable if the Participant terminated employment for any reason, including death, on such effective date. In the event of a Plan termination, subject to Article VIII, a Participant’s Supplemental Pension Benefit and any Beneficiary’s Supplemental Survivor Benefit shall be paid (or shall continue to be paid to Participants and Beneficiaries who began receiving Supplemental Pension Benefits or Supplemental Survivor Benefits prior to the termination) on such date(s) and in such form as each such Participant or Beneficiary is entitled under Articles III and IV.

6.3 Amendments Necessary to Satisfy Code Section 409A. Anything in the preceding Sections 6.1 or 6.2 or elsewhere in the Plan to the contrary notwithstanding:

(a) the Plan may be amended in any manner necessary to ensure that the Plan complies in all applicable respects with Code Section 409A; and

(b) the Plan may not be amended in any manner that would cause the Plan to fail to comply in any applicable respect with Code Section 409A.

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ARTICLE VII

GENERAL PROVISIONS

7.1 Funding. The Corporation may cause amounts to fund the benefits under the Plan to be contributed to a trust (“Trust”) designated for such purpose by the Corporation. Amounts contributed pursuant to the Trust shall be invested as EBIC determines is appropriate. If and to the extent amounts are contributed to the Trust hereunder, benefits under the Plan shall be payable pursuant to the Trust Agreement. Pursuant to the Trust Agreement, all assets held thereunder shall remain subject to the general creditors of the Corporation and the Company. The Plan at all times shall be entirely unfunded and, except as otherwise set forth herein, no provision shall at any time be made with respect to segregating any assets of the Corporation or the Company for payment of any benefits hereunder. No Participant, Beneficiary or any other person shall have any interest in any particular assets of the Corporation or the Company by reason of the right to receive a benefit under the Plan and Trust Agreement and any such Participant, Beneficiary or other person shall have only the rights of a general unsecured creditor of the Corporation and the Company with respect to any rights under the Plan and Trust Agreement.

7.2 General Conditions. Except as otherwise expressly provided herein, all terms and conditions of the Qualified Plan applicable to a Qualified Plan Pension Benefit or a Qualified Plan Survivor Benefit shall also be applicable to a Supplemental Pension Benefit or a Supplemental Survivor Benefit payable hereunder. Any Qualified Plan Pension Benefit or Qualified Plan Survivor Benefit, or any other benefit payable under the Qualified Plan, shall be paid solely in accordance with the terms and conditions of the Qualified Plan and nothing in the Plan shall operate or be construed in any way to modify, amend or affect the terms and provisions of the Qualified Plan.

7.3 No Guaranty of Benefits. Nothing contained in the Plan shall constitute a guaranty by the Corporation, the Company or any other entity or person that the assets of the Corporation or the Company will be sufficient to pay any benefit hereunder.

7.4 No Enlargement of Employee Rights. No Participant or Beneficiary shall have any right to a benefit under the Plan except in accordance with the terms of the Plan. Establishment of the Plan shall not be construed to give any Participant the right to be retained in the service of the Corporation or the Company.

7.5 Spendthrift Provision. No interest of any person or entity in, or right to receive a distribution under, the Plan shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind ; nor may such interest or right to receive a distribution be taken, either voluntarily or involuntarily, for the satisfaction of the debts of, or other obligations or claims against, such person or entity, including claims for alimony, support, separate maintenance and claims in bankruptcy proceedings.

7.6 Applicable Law. The Plan shall be construed and administered under the laws of the State of Illinois to the extent not inconsistent with the Employee Retirement Income Security Act of 1974, as amended.

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7.7 Incapacity of Recipient. If any benefit under the Plan shall be payable to a minor or a person not adjudicated incompetent but who, by reason of illness or mental or physical disability, is, in the opinion of the Committee, unable to properly manage his affairs, such benefit shall be paid in such of the following ways as the Committee deems best: (a) to the person directly; (b) in the case of a minor, to a custodian under any Uniform Gift to Minors Act for the person; or (c) to the person’s spouse, adult child or blood relative. Any benefit so paid shall be a complete discharge of any liability of the Corporation, the Company and Plan therefore.

7.8 Successors. The Plan shall not be automatically terminated by a transfer or sale of assets of the Corporation or by the merger or consolidation of the Corporation into or with any other corporation or other entity, but the Plan shall be continued after such sale, merger or consolidation only if and to the extent that the transferee, purchaser or successor entity agrees to continue the Plan, subject to the provisions of Section 6.1. In the event that the Plan is not continued by the transferee, purchaser or successor entity, then the Plan shall terminate subject to the provisions of Sections 6.1 and 6 .2.

7.9 Unclaimed Benefit. Each Participant shall keep the Committee informed of his current address and the current address of his designated Beneficiary. None of the Corporation, the Company or the Committee shall be obligated to search for the whereabouts of any person. If the Committee is unable to locate the Participant or any Beneficiary of the Participant, then none of the Corporation, the Company or the Plan shall have any further obligation to pay any benefit hereunder to such Participant or Beneficiary and such benefit shall be forfeited; provided, however, that if the Participant or Beneficiary makes a valid claim for any benefit that has been forfeited, the forfeited benefit shall be reinstated.

7.10 Electronic or Telephonic Notices. Any election, notice, direction or other such action required or permitted to be made in writing under the Plan may also be made electronically, telephonically or otherwise, to the extent then permitted by applicable law and the administrative rules prescribed by the Committee.

7.11 Limitations on Liability. Notwithstanding any of the preceding provisions of the Plan, none of the Corporation, the Company, any member of the Committee, any member of EBIC, or any individual acting as an employee or agent of the Corporation, the Company, the Committee or EBIC, shall be liable to any Participant, former Participant, Beneficiary or any other person for any claim, loss, liability or expense incurred in connection with the Plan.

7.12 Gender; Headings. Words in the masculine gender shall include the feminine and the singular shall include the plural, and vice versa, unless qualified by the context. Any headings used herein are included for ease of reference only, and are not to be construed so as to alter the terms hereof.

7.13 Compliance with Code Section 409A. The Plan is intended to comply in all applicable respects with the requirements of Code Section 409A and shall be construed and administered so as to comply with that Code section.

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ARTICLE VIII

CHANGE IN CONTROL

8.1 Participants and Beneficiaries Receiving Benefits. Notwithstanding any other provision of the Plan, if a Change in Control occurs, each Participant or Beneficiary who began receiving the Grandfathered Amount, if any, of a Supplemental Pension Benefit or a Supplemental Survivor Benefit prior to such Change in Control in the form of a Five-Year Certain Annuity shall receive any remaining installments of such Grandfathered Amount in the form of a single lump sum payment, with the earnings factor described in Section 3.6(b) applied through the lump sum payment date. Any lump sum payment of the Grandfathered Amount shall be made as soon as reasonably practicable after the Change in Control, but in any event no later than thirty (30) days after the Change in Control.

8.2 Participants and Beneficiaries Not Yet Receiving Benefits. Notwithstanding any other provision of the Plan, if a Change in Control occurs, the Grandfathered Amount (as defined in Section 1.10), if any, of the Supplemental Pension Benefit or Supplemental Survivor Benefit of any Participant or Beneficiary who has not begun to received such Supplemental Pension Benefit or Supplemental Survivor Benefit prior to the Change in Control shall be payable in the form of a single lump sum, and no Grandfathered Amount of such Supplemental Pension Benefit or Supplemental Survivor Benefit shall be payable in the form of a Five-Year Certain Annuity or Supplemental Survivor Benefit. The Grandfathered Amount of such lump sum Supplemental Pension Benefit shall be payable to such a Participant on the Participant’s Payment Date. The Grandfathered Amount of any such lump sum Supplemental Survivor Benefit shall be payable to a Beneficiary on the date on which the Beneficiary is entitled to payment under Section 4.2(c)(i).

8.3 Article Not Applicable to 409A Amounts. Nothing in this Article VIII shall apply to or otherwise affect in any way the 409A Amount of any Participant’s Supplemental Pension Benefit or any Beneficiary’s Supplemental Survivor Benefit. The 409A Amount of any Participant’s Supplemental Pension Benefit and any Beneficiary’s Supplemental Survivor Benefit shall be paid (or shall continue to be paid to Participants and Beneficiaries who began receiving Supplemental Pension Benefits or Supplemental Survivor Benefits prior to a Change in Control) on the date(s) and in such form as each such Participant or Beneficiary is entitled to payment as if the Change in Control had not occurred.

IN WITNESS WHEREOF, Northern Trust Corporation has caused this amendment and restatement of the Plan to be executed on its behalf by its duly authorized officer this 18th day of December 2008, effective January 1, 2009 (or as of such other dates as are noted herein.)

NORTHERN TRUST CORPORATION
By:	/s/ Timothy P. Moen
Name:	Timothy P. Moen
Title:	Executive Vice President and Human Resources Department Head

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EX-10.(IX)

Exhibit 10(ix)

NORTHERN TRUST CORPORATION

DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective as of January 1, 2008)

INTRODUCTION

The Northern Trust Corporation Deferred Compensation Plan (the “Plan”) was established by Northern Trust Corporation, a Delaware corporation (the “Corporation”) effective as of May 1, 1998. The primary purpose of the Plan is to provide a select group of management or highly compensated employees of the Corporation (and its subsidiaries and affiliates) with the opportunity to voluntarily defer all or a portion of their Incentive Compensation (as defined in Article I below). The Plan is also intended to provide Participants in the Plan with the ability to save on a tax-deferred basis. The Corporation now hereby amends and restates the Plan, generally effective as of January 1, 2008 (with such other effective dates as are noted herein) to comply with various changes in applicable law, including the American Jobs Creation Act of 2004, and to make certain other changes.

ARTICLE I

DEFINITIONS

Wherever used herein the following terms shall have the meanings hereinafter set forth:

1.1 “Assigned Base Salary” means the regular annual base wage rate of the Participant, excluding overtime wages or wages related to shift differential.

1.2 “Beneficiary” means any person eligible to receive a death benefit under the respective Incentive Compensation Plan as designated by the Participant or otherwise provided under such Incentive Compensation Plan, in the event of the death of the Participant.

1.3 “Board” means the Board of Directors of the Corporation.

1.4 A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(a) Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Corporation (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Corporation or its Affiliates) representing 20% or more of the combined voting power of the Corporation’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (c) below; or

(b) The election to the Board of Directors of the Corporation, without the recommendation or approval of two thirds of the incumbent Board of Directors of the Corporation, of the lesser of: (i) three directors; or (ii) directors constituting a majority of the number of directors of the

Corporation then in office, provided, however, that directors whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Corporation will not be considered as incumbent members of the Board of Directors of the Corporation for purposes of this section; or

(c) There is consummated a merger or consolidation of the Corporation or any direct or indirect subsidiary of the Corporation with any other company, other than (i) a merger or consolidation which would result in the voting securities of the Corporation outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), at least 60% of the combined voting power of the securities of the Corporation or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Corporation (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Corporation (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Corporation or its Affiliates) representing 20% or more of the combined voting power of the Corporation’s then outstanding securities; or

(d) The stockholders of the Corporation approve a plan of complete liquidation or dissolution of the Corporation or there is consummated an agreement for the sale or disposition by the Corporation of all or substantially all of the Corporation’s assets, other than a sale or disposition by the Corporation of all or substantially all of the Corporation’s assets to an entity, at least 60% of the combined voting power of the voting securities of which are owned by stockholders of the Corporation in substantially the same proportions as their ownership of the Corporation immediately prior to such sale.

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Corporation immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Corporation immediately following such transaction or series of transactions.

For purposes of this Section 1.4 the following definitions shall apply:

“Affiliate” shall have the meaning set forth in Rule 12b-2 under Section 12 of the Exchange Act; “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act, except that a Person shall not be deemed to be the Beneficial Owner of any securities with respect to which

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such Person has properly filed a Form 13-G; “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time; and “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Corporation or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities or (iv) a corporation owned, directly or indirectly, by the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation.

1.5 “Code” means the Internal Revenue Code of 1986, as amended from time to time.

1.6 “Committee” means the Employee Benefit Administrative Committee, which has the responsibility for administering various benefit plans of the Company, as constituted from time to time.

1.7 “Company” means The Northern Trust Company, an Illinois banking corporation; the Corporation; and such U.S. subsidiaries and affiliates of the Corporation as shall with the consent of the Board, adopt the Plan.

1.8 “Corporation” means Northern Trust Corporation, a Delaware corporation, and, to the extent provided in Section 8.8 below, any successor corporation or other entity resulting from a merger or consolidation into or with the Corporation or a transfer or sale of substantially all of the assets of the Corporation.

1.09 “Deferred Compensation Account” means an individual bookkeeping account for each Participant established hereunder. Such account shall be valued no less frequently than annually on a date or dates determined by the Committee.

1.10 “Distribution Date” means the last business day of February of any Plan Year as provided under Section 5.1 of the Plan and as irrevocably set forth in each of the Participant’s Deferral Election forms.

1.11 “Effective Date” means January 1, 2008 for the amended and restated Plan. The original effective date of the Plan was May 1, 1998.

1.12 “409A Amount” means the portion of the Deferred Compensation Account of a Participant that consists of amounts deferred in taxable years beginning after December 31, 2004, and earnings on such amounts, as determined in accordance with Code Section 409A and applicable regulations and other guidance promulgated thereunder. The portion, if any, of a Participant’s Deferred Compensation Account that consists of amounts deferred on or before December 31, 2004, and earnings on such amounts, is referred to herein as the Participant’s “Grandfathered Amount”. An amount is considered deferred on or before December 31, 2004, if on or before that date the Participant had a legally binding right to be paid the amount, and the right to the amount was earned and vested.

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1.13 “Incentive Compensation” means cash compensation earned pursuant to the Incentive Compensation Plans.

1.14 “Incentive Compensation Plans” means the Partners Incentive Plan, the Management Performance Plan and/or any other bonus program defined by the Company to be included.

1.15 “Initial Plan Year” means the eight-consecutive-month period commencing on the original Effective Date and ending on December 31, 1998.

1.16 “Investment Committee” means the Employee Benefit Investment Committee of the Company, as constituted from time to time, which has the investment responsibilities specifically allocated to it under the Plan.

1.17 “Key Employee” means a Participant who is a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i). The Company’s Key Employees shall be identified annually pursuant to Section 5.7.

1.18 “Participant” means an employee of the Company (a) who resides in the United States or is a United States expatriate on temporary foreign assignment, (b) who is eligible to participate in the Plan in accordance with Article II and (c) who has a Deferred Compensation Account under the Plan; provided, that the following shall not be considered Participants: (i) an employee employed by any office or branch of the Company located in a foreign country who, as to the United States, is a nonresident alien, and (ii) an employee who (A) as to the United States, is a foreign national, (B) is working for the Company at a location located in the United States, and (C) is covered by a retirement plan sponsored by a non-U.S. affiliate of the Corporation in the country in which that affiliate is located.

1.19 “Pension Plan” means The Northern Trust Company Pension Plan, as amended from time to time.

1.20 “Plan” means the Northern Trust Corporation Deferred Compensation Plan, as amended from time to time.

1.21 “Plan Year” means the calendar year.

1.22 “Related Company” means any person with whom the Company is considered to be a single employer under Section 414(b) of the Code and all persons with whom the Company would be considered a single employer under Code Section 414(c), substituting 50% for the 80% standard that would otherwise apply.

1.23 “Separation from Service” means that a Participant dies, retires or otherwise has a termination of employment with the Company. A termination of employment will be deemed to occur when the Company and the Participant reasonably anticipate that the level of bona fide services the Participant will perform for the Company (whether as an employee or an independent contractor, but not as a director) after a certain date will

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permanently decrease to less than 50 percent of the average level of bona fide services performed by the Participant for the Company (as an employee or independent contractor, but not as a director) in the immediately preceding 36 months (or the full period of the Participant’s services to the Company if the Participant has been providing services to the Company for less than 36 months), determined in accordance with Treas. Reg. Sec. 1.409A-1(h). The employment relationship will be treated as continuing intact while the Participant is on a bona fide leave of absence (determined in accordance with Treas. Reg. Sec.1.409A-1(h)), but (a) only if there is a reasonable expectation that the Participant will return to active employment status, and (b) only to the extent that such leave of absence does not exceed 6 months, or, if longer, for so long as the Participant has a statutory or contractual right to reemployment. For purposes of this Section 1.23, references to the Company shall include the Company and all Related Companies.

ARTICLE II

ELIGIBILITY

2.1 Conditions for Deferrals for 1998 and 1999 Incentive Compensation Payments. For Incentive Compensation which otherwise would be paid during the 1998 or 1999 Plan Years, an employee of the Company who participates in an Incentive Compensation Plan and (i) whose Assigned Base Salary, determined as of April 1, 1998, is at least $100,000, or (ii) whose Assigned Base Salary determined as of April 1, 1998 plus Incentive Compensation paid under the Incentive Compensation Plans during the period commencing on April 1, 1997 and ending on March 31, 1998 is at least $150,000, shall be eligible to defer Incentive Compensation under the Plan.

2.2 Conditions for Deferrals in Subsequent Plan Years. For Plan Years subsequent to the Plan Years provided in Section 2.1, an employee of the Company who participates in an Incentive Compensation Plan and (i) whose Assigned Base Salary, determined as of November 15 immediately preceding the Participant’s deferral election made under Section 3.2 below, is at least $100,000 (or such other amount as the Committee from time to time determines) or (ii) whose Assigned Base Salary determined as of the November 15 immediately preceding the Participant’s deferral election made under Section 3.2 below plus Incentive Compensation paid under the Incentive Compensation Plan during the twelve-month period ending on March 31 immediately preceding such deferral election (regardless of deferral under this Plan), is at least $150,000 (or such other amount as the Committee from time to time determines), shall be eligible to defer Incentive Compensation under the Plan.

ARTICLE III

DEFERRAL OPPORTUNITY

3.1 Amount Which May Be Deferred. Each Participant may elect to defer all or a portion of his or her annual Incentive Compensation as determined by the Committee; provided, however, the amount of each deferral for each payment of Incentive Compensation shall be at least $2,500. Participants shall always be one hundred percent (100%) vested in the amount they defer.

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3.2 Deferral Election. Participants shall make the election to defer Incentive Compensation under the Plan on a Deferral Election Form by such dates as the Committee from time to time establishes; provided, that any such election must be made on or before December 31 of the Participant’s taxable year preceding the taxable year in which the Participant performs the services that give rise to the Incentive Compensation to be deferred. Participants shall make the following determinations on each Deferral Election Form, which determinations shall become irrevocable on December 31 of the Plan Year in which the election is made (or such earlier date in that Plan Year as the Committee may determine):

(a) The amount to be deferred with respect to the Participant’s Incentive Compensation paid during the Plan Year for which the election applies, pursuant to the terms of Section 3.1 herein;

(b) The deferral period after which payments of deferred amounts commence (the “Deferral Period”), pursuant to the terms of Section 5.1 herein; and

(c) The form of the payment of the deferred amount, pursuant to the terms of Section 5.2 herein.

3.3 Partial Year Employment and Initial Election. An employee who commences employment with the Company after the beginning of a Plan Year shall not be permitted to make an election to defer Incentive Compensation with respect to such Plan Year. Further, an employee who commences employment with the Company after November 1 of any Plan Year (or such other date as the Company may determine in its sole discretion) shall not be eligible to defer Incentive Compensation in that Plan Year for the subsequent Plan Year under Section 2.2.

3.4 Disability or Other Absence. If the Participant experiences a disability, all previous Deferral Elections will remain in force unless the Committee, in its sole discretion, determines that the Participant has incurred an unforeseeable emergency pursuant to Section 5.3 of the Plan, in which case it will waive, upon the Participant’s request, such election(s). If the Participant takes a paid or unpaid leave of absence, all previous Deferral Elections will remain in full force.

ARTICLE IV

INVESTMENT OF DEFERRED INCENTIVE COMPENSATION

4.1 Investments. The Company shall contribute amounts allocated hereunder to the Deferred Compensation Accounts of Participants to a rabbi trust (“Trust”), to be invested in such manner as determined by the Investment Committee, consistent with the resolutions or actions of the Board or the Compensation and Benefits Committee of the Board establishing the Plan.

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4.2 Participant Statements. Statements that identify the Participant’s Deferred Compensation Account balance shall be provided to Participants no less frequently than annually.

4.3 Minimum Rate of Investment Return. Following the date of a Change in Control, notwithstanding anything to the contrary herein, each Participant’s Deferred Compensation Account shall be credited with a minimum annual investment return with respect to any calendar year (or portion thereof) at least equal to the average yield (as determined at auction) with respect to the 52 week United States Treasury bills issued during the previous calendar year, plus 50 basis points.

4.4 Valuation of Deferred Compensation Accounts. Participants’ Deferred Compensation Accounts shall be valued no less frequently than monthly.

ARTICLE V

DISTRIBUTIONS AND LIMITS ON DISTRIBUTIONS

5.1 Deferral Period. Pursuant to Section 3.2, each Participant shall irrevocably elect the Deferral Period for the Incentive Compensation payments deferred in any Plan Year; provided that the Deferral Period elected by a Participant shall be either a Short-Term Deferral (as provided under Section 5.1(a)) or a Retirement Deferral (as provided under Section 5.1(b)).

(a) If the Participant elects a Short-Term Deferral, payments under the Plan shall commence only in the form provided under Section 5.2(a) of this Plan on any Distribution Date elected by the Participant; provided that such Distribution Date shall be no earlier than the Distribution Date that is subsequent to three (3) Plan Years following the end of the Plan Year in which the Incentive Compensation would have otherwise been paid to the Participant.

(b) Subject to Section 5.6, if the Participant elects a Retirement Deferral, payments under the Plan shall commence following the Participant’s Separation from Service after reaching the Participant’s Normal, Early or Postponed Retirement date, as such dates are defined in the Pension Plan (such Separation from Service in those circumstances referred to as a “Retirement Date”), provided that payments under the Plan shall commence, as elected by the Participant in accordance with Section 3.2, either (i) within sixty (60) days of the Participant’s Retirement Date or (ii) on the Distribution Date immediately following the Plan Year in which the Participant’s Retirement Date occurs (provided that payments must commence under (ii) if the Participant elects to receive the payments in the form provided under Section 5.2(b) of the Plan).

(c) Notwithstanding anything in the Plan to the contrary, Incentive Compensation paid after a Participant’s Retirement Date or other Separation from Service is not eligible for deferral and will not be deferred, regardless of the Participant’s prior Deferral Election.

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(d) Notwithstanding any Deferral Period(s) elected by a Participant pursuant to Section 3.2(b) and this Section 5.1, and subject to Section 5.6, if at any time before the end of the elected Deferral Period,

(i)	a Participant incurs a Separation from Service, such Participant shall be paid out of the Plan in one (1) lump sum in cash within sixty (60) days after such Separation from Service; or
(ii)	(A)	with respect to a Participant’s 409A Amount, the Participant has been on disability leave for a period of six (6) months, such Participant’s 409A Amount shall be paid out of the Plan in one (1) lump sum in cash within sixty (60) days after such six (6) month disability period; and
	(B)	with respect to the Participant’s Grandfathered Amount, if any, the Participant has been on disability leave for a period of twelve (12) months, such Participant’s Grandfathered Amount shall be paid out of the Plan in one (1) lump sum in cash within sixty (60) days after such twelve (12) month disability period.

5.2 Payment of Deferred Amounts. Payment of a Participant’s Deferred Compensation Account under the Plan shall be made in cash in one of the following forms irrevocably elected by the Participant pursuant to Sections 3.2(b) and 5.1:

(a) Lump Sum Payment. Payments will be made in one (1) lump sum.

(b) Installment Payments. Payments will be made in either five (5) or ten (10) annual installments, as irrevocably elected by the Participant. Subject to Section 5.6, the initial payment shall be made on the Distribution Date following the Participant’s Retirement Date. The remaining installment payments shall be made in the form of cash each year thereafter (on each anniversary date of the initial payment), until the Participant’s entire Deferred Compensation Account has been paid. The amount of each installment payment shall be equal to the cash remaining in the Participant’s Deferred Compensation Account on the last business day of January immediately prior to each such payment, multiplied by a fraction, the numerator of which is one (1), and the denominator of which is the number of installment payments remaining.

All benefits hereunder shall be paid from the Trust, as further described in Article IV.

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5.3 Unforeseeable Emergency. The Committee shall have the sole authority to alter the timing or manner of payment of amounts from a Participant’s Deferred Compensation Account in the event that the Participant establishes, to the satisfaction of the Committee that the Participant has experienced an unforeseeable emergency, as defined in Treas. Reg. §1.409A-3(i)(3)(i). In such event, the Committee may, upon the request of the Participant:

(a) Provide that all or a portion of the amount previously deferred by the Participant immediately shall be paid to the Participant in a lump sum payment; or

(b) Provide that all or a portion of the installments payable over a period of time immediately shall be paid to the Participant in a lump sum payment.

However, the amount distributed pursuant to this Section 5.3 shall not exceed the amount that is reasonably necessary for the Participant to satisfy the emergency need at the time of distribution, as determined by the Committee in its sole discretion. In determining the amount reasonably necessary to satisfy a Participant’s emergency need, the Committee must take into account any additional compensation that is available to the Participant if the Committee has waived the Participant’s previous Deferral Elections upon the Participant’s request pursuant to Section 3.4.

The Committee shall determine whether the Participant has experienced an unforeseeable emergency based on the relevant facts and circumstances. An unforeseeable emergency will be deemed to exist in the event of an illness or accident of the Participant or the Participant’s dependent (as defined in Section 152(a) of the Code, without regard to Sections 152(b)(1), (b)(2) and (d)(1)(B)), loss of the Participant’s property due to casualty, or other similar unforeseeable and extraordinary circumstances arising as a result of events beyond the control of the Participant. The Committee’s decision with respect to whether the Participant has experienced an unforeseeable emergency and the manner in which, if at all, the payment of deferred amounts shall be altered or modified, shall be final, conclusive, and not subject to appeal.

Notwithstanding anything in this Section 5.3 to the contrary, no amounts may be distributed on account of this Section 5.3 if such unforeseeable emergency may be relieved:

(i) Through reimbursement or compensation by insurance or otherwise;

(ii) By liquidation of the Participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship; or

(iii) By cessation of deferrals under the Plan.

5.4 Maximum Deductible Amount. An amount that would otherwise be paid from the Deferred Compensation Account of a Participant in a given Plan Year may be delayed to the extent that the Company reasonably anticipates that if the payment were made as scheduled the Company’s deduction with respect to such payment would not be permitted due to the application of Code Section 162(m). Amounts not paid as a result of the above limitation shall be paid in the earlier of (a) the Company’s first taxable year in which the Company reasonably anticipates that if the payment is made during such year the

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deduction of such payment will not be barred by application of Section 162(m), or (b) the period beginning with the date of the Participant’s Separation from Service and ending on the later of the last day of the taxable year of the Company in which the Participant incurs a Separation from Service or the 15^th day of the third month following the Participant’s Separation from Service.

5.5 Death of Participant. A Participant, who at the time of his death is employed by the Company and who dies before a complete distribution of his Deferred Compensation Account has been made to him, shall have his Deferred Compensation Account distributed in cash in one (1) lump sum to his Beneficiary. Such distribution will be made within sixty (60) days following the Participant’s final wage payment following his death. A Participant, who at the time of his death is not employed by the Company and who dies before his entire Deferred Compensation Account has been paid to him, shall have his Deferred Compensation Account distributed to his Beneficiary in such manner, and at such time, as provided on his Deferral Election Form.

5.6 Limits on Distributions to Key Employees. Anything in the Plan to the contrary notwithstanding, including without limitation Section 5.3, if a Participant is a Key Employee, any distribution of a 409A Amount to such Participant due to the Participant’s Separation from Service that would otherwise be made during the six months following such Separation from Service shall be made on the date that is six months and one day following such Separation from Service.

5.7 Annual Identification of Key Employees. The Specified Employee Identification Date, as defined in Treas. Reg. §1.409A-1(i)(3), to be used in determining Key Employees of the Company shall be September 30 of any Plan Year. The January 1 of the Plan Year next following that Plan Year shall be the Specified Employee Effective Date, as defined in Treas. Reg. §1.409A-1(i)(4), for Participants identified as Key Employees on the immediately preceding Specified Employee Identification Date. Participants identified as Key Employees on a Specified Employee Identification Date (September 30) shall be treated as Key Employees under the Plan for the 12-month period beginning on the Specified Employee Effective Date (January 1) next following such Specified Employee Identification Date.

5.8 Grandfathered Amount. Notwithstanding anything herein to the contrary, a Participant’s Grandfathered Amount, if any, shall be paid at the time and in the form determined under the Plan as in effect October 3, 2004.

ARTICLE VI

ADMINISTRATION OF THE PLAN

6.1 Terms Include Authorized Delegates. Where appropriate, the terms “Company,” “Corporation,” “Committee” or “Investment Committee” as used in this Plan shall also include any applicable subcommittee or any duly authorized delegate of the Company, the Corporation, the Committee or the Investment Committee, as the case may be. Such duly authorized delegate may be an individual or an organization within the Company, the Corporation, the Committee or the Investment Committee, or may be an unrelated third party individual or organization.

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6.2 Authority of the Committees. The Committee shall administer the Plan and shall have full power to select employees for participation in the Plan and to determine the terms and conditions of each employee’s participation; to construe and interpret the Plan and any agreement or instrument entered into hereunder; and to establish, amend, or waive rules and regulations for the Plan’s administration. Further, the Committee shall have full power to make any other determination which may be necessary or advisable for the Plan’s administration. The Investment Committee shall have those powers set forth in Section 4.1 of the Plan.

6.3 Decisions Binding. Subject to the provisions of Article VII, all determinations and decisions made by the Committee or the Investment Committee pursuant to the provisions of the Plan, and all related orders, resolutions or actions of the Board, the Compensation and Benefits Committee of the Board, the Chief Executive Officer of the Corporation or the Executive Vice President and Human Resources Department Head of the Corporation (or the duly authorized designee of either of the latter two individuals) shall be final, conclusive, and binding on all persons, including the Company, its stockholders, employees, Participants, and their estates and beneficiaries.

ARTICLE VII

AMENDMENT OR TERMINATION

7.1 Amendment or Termination. The Corporation has set no termination date for the Plan but reserves the right to amend or terminate the Plan when, in the sole discretion of the Corporation, such amendment or termination is advisable.

(a) Any such termination shall be made by action of the Compensation and Benefits Committee of the Board (or by action of the Board if the Compensation and Benefits Committee is unavailable or unable to act for any reason) and shall be effective as of the date set forth in such resolution.

(b) Any such amendment shall be made in accordance with the following:

(i) material amendments to the Plan shall be made by action of the Compensation and Benefits Committee of the Board (or by action of the Board, if the Compensation and Benefits Committee is unavailable or unable to act for any reason); and

(ii) (A) non-material or administrative amendments to the Plan or (B) any amendment to the Plan deemed required, authorized or desirable under applicable statutes, regulations or rulings, shall be made by action of either the Chief Executive Officer of the Corporation or the Executive Vice President and Human Resources Department Head of the Corporation (or either of their duly authorized designees).

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7.2 Effect of Amendment or Termination. No amendment or termination of the Plan shall directly or indirectly reduce the balance of any deferred compensation held hereunder as of the effective date of such amendment or termination. Upon termination of the Plan, distribution of amounts in a Participant’s Deferred Compensation Account shall be made to him or his Beneficiary in the manner and at the time described in Article V of the Plan. No additional credits shall be made to the Deferred Compensation Account of a Participant after termination of the Plan, but the Company shall continue to credit gains and losses attributable to investments made pursuant to Section 4.1 to such Deferred Compensation Account until the balance of such Account has been fully distributed to the Participant or his Beneficiary. Following a Change in Control, no amendment to the Plan shall directly or indirectly affect the minimum rate of investment return set forth in Section 4.3 hereof.

7.3 Amendments Necessary to Satisfy Code Section 409A. Anything in the preceding Sections 7.1 or 7.2 or elsewhere in the Plan to the contrary notwithstanding:

(a) the Plan may be amended in any manner necessary to ensure that the Plan complies in all applicable respects with Code Section 409A; and

(b) the Plan may not be amended in any manner that would cause the Plan to fail to comply in any applicable respect with Code Section 409A.

ARTICLE VIII

GENERAL PROVISIONS

8.1 Participant’s Rights Unsecured. If and to the extent amounts allocated hereunder to the Deferred Compensation Accounts of Participants are contributed by the Company to the Trust described in Section 4.1, benefits under the Plan shall be payable pursuant to the Trust Agreement. Pursuant to the Trust Agreement, all assets held thereunder shall remain subject to the claims of the general creditors of the Company. The Plan at all times shall be entirely unfunded and no provision shall at any time be made with respect to segregating any assets of the Company for payment of any benefits hereunder. No Participant, Beneficiary or any other person shall have any interest in any particular assets of the Company by reason of the right to receive a benefit under the Plan and Trust Agreement and any such Participant, Beneficiary or other person shall have only the rights of a general unsecured creditor of the Company with respect to any rights under the Plan and Trust Agreement.

8.2 Tax Withholding. In connection with any deferral under the Plan, the Company shall have the right to withhold from nondeferred Incentive Compensation amounts or other compensation available at the time of the award an amount sufficient to satisfy the FICA

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tax withholding requirements applicable to such deferrals, or to require the Participant to remit to the Company an amount sufficient to satisfy the tax obligation. In connection with any distribution to the Participant of deferred Incentive Compensation, the Company shall have the right to withhold from such distribution an amount sufficient to satisfy Federal, State, and local tax withholding requirements applicable to such distributions.

8.3 No Guaranty of Benefits. Nothing contained in the Plan shall constitute a guaranty by the Company or any other person or entity that the assets of the Company will be sufficient to pay any benefit hereunder.

8.4 No Enlargement of Employee Rights. No Participant shall have any right to receive a distribution of contributions made under the Plan except in accordance with the terms of the Plan. Establishment of the Plan shall not be construed to give any Participant the right to be retained in the service of the Company.

8.5 Spendthrift Provision. No interest of any person or entity in, or right to receive a distribution under, the Plan shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind; nor may such interest or right to receive a distribution be taken, either voluntarily or involuntarily, for the satisfaction of the debts of, or other obligations or claims against, such person or entity, including claims for alimony, support, separate maintenance and claims in bankruptcy proceedings.

8.6 Applicable Law. To the extent not preempted by Federal law, the Plan shall be construed and administered under the laws of the State of Illinois.

8.7 Incapacity of Recipient. If any benefit under the Plan shall be payable to a minor or a person not adjudicated incompetent but who, by reason of illness or mental or physical disability, is, in the opinion of the Committee, unable to properly manage his affairs, such benefit shall be paid in such of the following ways as the Committee deems best: (a) to the person directly; (b) in the case of a minor, to a custodian under any Uniform Gift to Minors Act for the person; or (c) to the person’s spouse, adult child or blood relative. Any benefit so paid shall be a complete discharge of any liability of the Company and the Plan therefor.

8.8 Successors. The Plan shall not be automatically terminated by a transfer or sale of assets of the Corporation or by the merger or consolidation of the Corporation into or with any other corporation or other entity, but the Plan shall be continued after such sale, merger or consolidation only if and to the extent that the transferee, purchaser or successor entity agrees to continue the Plan. In the event that the Plan is not continued by the transferee, purchaser or successor entity, then the Plan shall terminate subject to the provisions of Section 7.2.

8.9 Unclaimed Benefit. Each Participant shall keep the Committee informed of his current address and the current address of his designated Beneficiary. None of the Corporation, the Company or the Committee shall be obligated to search for the whereabouts of any person. If the Committee is unable to locate the Participant or any Beneficiary of the Participant, then none of the Corporation, the Company or the Plan shall have any further

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obligation to pay any benefit hereunder to such Participant or Beneficiary and such benefit shall be forfeited; provided, however, that if the Participant or Beneficiary makes a valid claim for any benefit that has been forfeited, the forfeited benefit shall be reinstated.

8.10 Electronic or Telephonic Notices. Any election, notice, direction or other such action required or permitted to be made in writing under the Plan may also be made electronically, telephonically or otherwise, to the extent then permitted by applicable law and the administrative rules prescribed by the Committee.

8.11 Limitations on Liability. Notwithstanding any of the preceding provisions of the Plan, neither the Company, any member of the Committee or the Investment Committee nor any individual acting as an employee or agent of the Company, the Committee or the Investment Committee shall be liable to any Participant, former Participant, Beneficiary or any other person for any claim, loss, liability or expense incurred in connection with the Plan.

8.12 Gender; Headings. Words in the masculine gender shall include the feminine and the singular shall include the plural, and vice versa, unless qualified by the context. Any headings used herein are included for ease of reference only, and are not to be construed so as to alter the terms hereof.

8.13 Compliance with Code Section 409A. The Plan is intended to comply in all applicable respects with the requirements of Code Section 409A and shall be construed and administered so as to comply with that Code section.

IN WITNESS WHEREOF, Northern Trust Corporation has caused this amendment and restatement of the Plan to be executed on its behalf by its duly authorized officer this 18th day of December, 2008, effective as of January 1, 2008 (or as of such other dates as are noted herein).

NORTHERN TRUST CORPORATION
By:	/s/ Timothy P. Moen
Name:	Timothy P. Moen
Title:	Executive Vice President and Human Resources Department Head

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SUPPLEMENT #1

Special 2005 Deferral Election Cancellations

This Supplement #1 to the Northern Trust Corporation Deferred Compensation Plan, as amended and restated effective January 1, 2008 (the “Plan”), is made a part of the Plan and supersedes any provisions thereof to the extent that they are not consistent with this Supplement. Unless the context clearly implies or indicates to the contrary, a word, term or phrase used or defined in the Plan is similarly used or defined for purposes of this Supplement #1.

1. Effective Date. January 1, 2005.

2. Application. This Supplement #1 shall apply to:

(a) Any Participant who, prior to February 28, 2005, requested the cancellation of the Participant’s previous election to defer all or a portion of the cash award payment of Incentive Compensation scheduled to be made to the Participant on February 28, 2005;

(b) Any Participant who previously elected to defer all or a portion of the cash award payment of Incentive Compensation scheduled to be made to the Participant in the Plan Year beginning January 1, 2005 (the “2005 Plan Year”) and whose 2005 Plan Year payment schedule for such Incentive Compensation was changed from annual to quarterly after such deferral election had been made;

(individually, a “Special Election Cancellation Participant” and, collectively, the “Special Election Cancellation Participants”); and

(c) Any Participant who would be considered a “specified employee” as defined in proposed regulation section 1.409A-1(i) issued by the U.S. Treasury Department and the Internal Revenue Service; who terminates employment for any reason on or after the Effective Date of this Supplement #1 and on or before October 31, 2005 (individually, a “2005 Specified Employee Participant” and, collectively, the “2005 Specified Employee Participants”).

3. Special Provision. The following special provision shall apply to the Special Election Cancellation Participants:

Special 2005 Deferral Election Cancellation: Pursuant to and in accordance with Notice 2005-1 and proposed regulations under Code section 409A issued by the U.S. Treasury Department and the Internal Revenue Service, each Special Election Cancellation Participant shall have the opportunity to cancel a previous election to defer all or a portion of the cash award payment of Incentive Compensation for the 2005 Plan Year described in Paragraph 2(a) or (b) above, by executing and delivering to the Company a cancellation of the Participant’s previous election to defer, in the form prescribed by the Company, subject to the requirements specified in paragraphs 4 and 6 below. Any amount the deferral of which is cancelled in accordance with this Paragraph 3 shall be distributed no later than December 31, 2005, or the date such amount becomes vested, if later.

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4. Special Election Deadline. To be effective, the election cancellation referred to in Paragraph 3 above must be executed and delivered to the Company by the Special Election Cancellation Participant on or before the date specified by the Company that is after the Effective Date of this Supplement #1, but no later than December 1, 2005.

5. Special Provision. The following special provision will apply to the 2005 Specified Employee Participants:

Special 2005 Termination of Participation: Pursuant to and in accordance with Notice 2005-1 and proposed regulations under Code section 409A issued by the U.S. Treasury Department and the Internal Revenue Service, each 2005 Specified Employee Participant shall be considered to have terminated participation in the Plan with respect to any amounts that would otherwise be subject to Code section 409A, effective as of the date such 2005 Specified Employee Participant terminated employment with the Company. Anything in the Plan to the contrary notwithstanding, such amounts shall be distributed in a lump sum distribution to such 2005 Specified Employee Participant no later than December 31, 2005, or the date such amounts become vested, if later.

6. Limitations on Supplement. Nothing in this Supplement #1 shall be construed to provide any Special Election Cancellation Participant or 2005 Specified Employee Participant with any rights or benefits under the Plan other than those described in Paragraphs 3 through 5, as applicable, above.

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EX-10.(XIV)

Exhibit 10(xiv)

AMENDED AND RESTATED

NORTHERN TRUST CORPORATION 2002 STOCK PLAN

(Effective as of January 1, 2008)

The Northern Trust Corporation 2002 Stock Plan (the “2002 Plan”) was adopted on February 19, 2002 and became effective as of April 16, 2002. The 2002 Plan was amended on February 17, 2004 and was amended and restated effective as of April 17, 2007. The amended and restated 2002 Plan was designated the “Amended and Restated Northern Trust Corporation 2002 Stock Plan.” The Amended and Restated Northern Trust Corporation 2002 Stock Plan is hereby further amended and restated generally effective as of January 1, 2008 (with such other effective dates as are noted herein) to comply with various changes in applicable law, including the American Jobs Creation Act of 2004.

1. Purpose. The purpose of the Plan is to promote the growth and profitability of the Corporation and its Subsidiaries by (a) encouraging outstanding individuals to accept or continue employment with the Corporation and its Subsidiaries or to serve as Directors of the Corporation, and (b) providing those persons with incentive compensation opportunities in the form of Stock Options and other Awards based on the value or increase in the value of shares of Common Stock of the Corporation, thereby aligning their interests with those of the Corporation’s stockholders.

2. Administration.

(a) The Committee shall administer the Plan, except as otherwise determined by the Board. The Committee shall consist of at least two (2) Directors as the Board may designate from time to time. Notwithstanding anything to the contrary contained herein, membership of the Committee shall be limited to Board members who meet the “non–employee director” definition in Rule 16b-3 under Section 16 of the Exchange Act and the “outside director” definition under Section 162(m) of the Code and the regulations thereunder.

(b) The Committee shall have full power and authority to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, to determine the terms and provisions of any Award Agreement entered into under the Plan, and to make all other determinations that may be necessary or desirable for the administration of the Plan. Any interpretation of the Plan by the Committee shall be final and binding on all persons.

(c) The Committee may delegate the administration of the Plan, in whole or in part, on such terms and conditions as it may impose, to such other person or persons as it may determine in its discretion, except with respect to Awards to officers subject to Section 16 of the Exchange Act or officers who are or may be Covered Employees and except to the extent prohibited by applicable law or the applicable rules of a stock exchange.

3. Participants.

(a) Participants shall consist of Directors and Employees whom the Committee may designate from time to time to receive Awards under the Plan. Awards may be granted to Participants who are or were previously Participants under this or other plans of the Corporation or any Subsidiary and, with the agreement of the Participant, may be granted in substitution, exchange or cancellation of any rights or benefits then or theretofore held under this or other plans of the Corporation or any Subsidiary. The Corporation may continue to award bonuses and other compensation to Participants under other programs now in existence or hereafter established.

(b) The Committee shall have the authority to amend the Plan or the terms and conditions relating to an Award to the extent necessary or appropriate to comply with applicable law, regulation or accounting rules in order to permit Employees who are located outside of the United States to participate in the Plan.

4. Awards.

(a) The following types of Awards may be granted under the Plan, either alone or in combination with other Awards: (i) Stock Options, (ii) Stock Appreciation Rights, (iii) Performance Shares, (iv) Stock Awards and (v) Stock Units.

(b) The Committee may, in its discretion, provide that any Award granted under the Plan shall be subject to the attainment of performance goals in order to qualify such Award as “performance-based compensation” within the meaning of Section 162(m) of the Code. Performance goals may be based on one or more business criteria, including, but not limited to: (i) return on equity, (ii) earnings or earnings per share, (iii) Common Stock price, (iv) return on assets, (v) return on investment, (vi) net income, (vii) expense management, (viii) credit quality, (ix) revenue growth, or (x) operating leverage. Corporate performance goals may be absolute in their terms or measured against or in relationship to the performance of other companies or indices selected by the Committee. In addition, corporate performance goals may be adjusted for any events or occurrences (including extraordinary charges, losses from discontinued operations, restatements and accounting charges, and other unplanned special charges such as restructuring expenses, acquisition expenses and strategic loan loss provisions) as may be determined by the Committee. Corporate performance goals may be particular to one or more business units, lines of business or Subsidiaries or may be based on the performance of the Corporation as a whole. The corporate performance goals and the performance targets established thereunder by the Committee may be identical for all Participants for a given performance period or, at the discretion of the Committee, may differ among such Participants.

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5. Shares Issuable Under the Plan.

(a) An aggregate of 40,000,000 shares of Common Stock, consisting of authorized but unissued shares or treasury shares, may be issued under the Plan from and after the date of its initial adoption. Such aggregate number of shares shall be adjusted in accordance with the provisions of Section 11 of the Plan.

(b) The maximum number of shares of Common Stock as to which a Participant may receive Stock Options or Stock Appreciation Rights in any calendar year is 500,000, as such number shall be adjusted in accordance with the provisions of Section 11 of the Plan. The maximum number of shares for Awards (other than Stock Options and Stock Appreciation Rights) intended to qualify as “performance-based compensation” in accordance with Section 4(b) of the Plan that may be granted to any Participant in any calendar year is 150,000, as such number shall be adjusted in accordance with the provisions of Section 11 of the Plan. The maximum number of shares of Common Stock issuable under the Plan as Incentive Stock Options is 22,000,000, as such number shall be adjusted in accordance with the provisions of Section 11 of the Plan. The maximum number of shares of Common Stock available for Awards other than Stock Options or Stock Appreciation Rights after April 17, 2007 is 10,000,000, as such number shall be adjusted in accordance with the provisions of Section 11 of the Plan.

(c) Any shares of Common Stock subject to an Award may thereafter be subject to a new Award under the Plan if there is a lapse, cancellation, forfeiture, surrender, expiration or termination of any such prior Award, or if shares are issued under such Award and thereafter are reacquired by the Corporation pursuant to rights reserved by the Corporation upon issuance thereof.

(d) A share of Common Stock subject to a Stock Option and its related Stock Appreciation Right shall only be counted once for purposes of this Section 5.

6. Stock Options. The Committee may, in its discretion, grant Stock Options under the Plan to any Participant hereunder. Each Stock Option granted hereunder shall be subject to such terms and conditions as the Committee may determine at the time of grant, the general provisions of the Plan, the terms and conditions of the applicable Stock Option Agreement, and the following specific rules:

(a) Stock Options granted to a Participant under the Plan shall be governed by a Stock Option Agreement, which shall specify such terms and conditions, not inconsistent with the terms and conditions of the Plan, as the Committee shall determine.

(b) Stock Options shall consist of options to purchase Common Stock at exercise prices not less than 100% of the Fair Market Value thereof on the date the Stock Options are granted.

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(c) Stock Options shall be exercisable for such period as specified by the Committee, but in no event may Stock Options be exercisable for a period of more than ten years after their date of grant,

(d) In addition to the general terms and conditions set forth in this Section 6 in respect of Stock Options granted under the Plan, Incentive Stock Options granted under the Plan shall be subject to the following additional terms and conditions: (i) the exercise price of each Incentive Stock Option shall be at least 100% of the Fair Market Value of the Common Stock subject to such Incentive Stock Option on the date of grant; (ii) Incentive Stock Options shall be exercisable not later than ten years after the date of grant; (iii) in the case of an Incentive Stock Option granted to a Participant who, at the time of grant, owns (as determined under Section 424(d) of the Code) stock of the Corporation or its Subsidiaries possessing more than 10% of the total combined voting power of all classes of stock of any such corporation, the exercise price shall be at least 110% of the Fair Market Value of the Common Stock subject to the Incentive Stock Option at the time it is granted, and the Incentive Stock Option, by its terms, shall not be exercisable after the expiration of five (5) years from the date of its grant; and (iv) the aggregate Fair Market Value (determined with respect to each Incentive Stock Option as of the time such Incentive Stock Option is granted)of the shares of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year (under all Incentive Stock Option plans of the Corporation and its Subsidiaries) shall not exceed $100,000.

(e) Stock Options may provide that they may be exercised by payment of the exercise price (i) in cash, (ii) by the Corporation’s withholding a portion of the shares of Common Stock otherwise distributable to the Participant, (iii) by the Participant’s actual delivery of previously acquired shares of Common Stock that are acceptable to the Committee, (iv) by certification of ownership by attestation of such previously acquired shares, (v) by delivery of a properly executed notice of exercise, together with irrevocable instructions to a broker or similar third party to deliver promptly to the Corporation the amount of sale proceeds from the sale of the option shares to pay the exercise price and any withholding taxes due to the Corporation, or (vi) by any other method of payment as the Committee, in its discretion, deems appropriate. In the event that the exercise price of a Stock Option is paid in whole or in part by the withholding or delivery of shares of Common Stock pursuant to clause (ii), (iii) or (iv) above, the number of shares so withheld or delivered shall be the number of shares having an aggregate Fair Market Value equal to the exercise price, or portion thereof, so paid.

(f) If a Participant delivers shares of Common Stock to pay all or a part of the exercise price of a Stock Option, or uses shares of Common Stock to satisfy any federal, state or local tax withholding requirements, the Participant may receive, at the discretion of the Committee, an additional Stock Option (“Replacement Option”)

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equal to the sum of the number of shares delivered in payment of the exercise price and the number of shares used to pay withholding taxes. A Replacement Option shall have a term that shall not extend beyond the term of the Stock Option to which it relates and shall have an exercise price equal to the Fair Market Value of the Common Stock on the grant date of the Replacement Option. Replacement Options may be subject to such other terms and conditions, not inconsistent with the terms and conditions of the Plan, as the Committee shall determine. Replacement Options may be granted in connection with the exercise of Stock Options granted under this Plan or any other plan of the Corporation.

(g) The Committee may prescribe such other terms and conditions applicable to Stock Options granted to a Participant under the Plan that are neither inconsistent with nor prohibited by the Plan or any Stock Option Agreement.

7. Stock Appreciation Rights. The Committee may, in its discretion, grant a Stock Appreciation Right under the Plan to the holder of any Stock Option granted hereunder. Each Stock Appreciation Right granted hereunder shall be subject to such terms and conditions as the Committee may determine at the time of grant, the general provisions of the Plan, the terms and conditions of the applicable Stock Appreciation Right Agreement, and the following specific rules:

(a) Stock Appreciation Rights granted to a Participant under the Plan shall be governed by a Stock Appreciation Right Agreement, which shall specify such terms and conditions, not inconsistent with the terms and conditions of the Plan, as the Committee shall determine.

(b) A Stock Appreciation Right may be granted in connection with a Stock Option at the time of the grant of the Stock Option or at any time thereafter up to six months prior to the expiration of the Stock Option.

(c) Each Stock Appreciation Right will entitle the holder to elect to receive, in lieu of exercising the Stock Option to which it relates, an amount (payable in cash or in shares of Common Stock of the Corporation, or a combination thereof, determined by the Committee and set forth in the related Stock Appreciation Right Agreement) of up to 100% (or such lesser percentage as determined by the Committee and set forth in the related Stock Appreciation Right Agreement) of the excess of (i) the Fair Market Value per share of Common Stock on the date of exercise of such Stock Appreciation Right, multiplied by the number of shares of the Common Stock with respect to which the Stock Appreciation Right is being exercised, over (ii) the aggregate exercise price under the terms of the related Stock Option for such number of shares.

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(d) Each Stock Appreciation Right will be exercisable at the time and to the extent that the Stock Option to which it relates is exercisable, provided that no Stock Appreciation Right shall be exercisable during the first six months following the date of its grant. The exercise price of a Stock Appreciation Right shall in no event be less than 100% of the value of a share of Common Stock on the date the Stock Appreciation Right is granted.

(e) Upon exercise of a Stock Appreciation Right, the Stock Option (or portion thereof) with respect to which such Stock Appreciation Right is exercised and any other Stock Appreciation Rights with respect to such Stock Option (or portion thereof) shall be surrendered to the Corporation and shall not thereafter be exercisable.

(f) Exercise of a Stock Appreciation Right will reduce the number of shares of Common Stock purchasable pursuant to the related Stock Option and available under the Plan to the extent of the total number of shares of Common Stock with respect to which the Stock Appreciation Right is exercised.

(g) The Committee may prescribe such other terms and conditions applicable to Stock Appreciation Rights granted to a Participant under the Plan that are neither inconsistent with nor prohibited by the Plan or any Stock Appreciation Right Agreement.

8. Performance Shares. The Committee may, in its discretion, grant Performance Shares under the Plan to any Participant hereunder. Each Performance Share granted hereunder shall be subject to such terms and conditions as the Committee may determine at the time of grant, the general provisions of the Plan, the terms and conditions of the related Performance Share Agreement, and the following specific rules:

(a) Performance Shares granted to a Participant under the Plan shall be governed by a Performance Share Agreement, which shall specify such terms and conditions, not inconsistent with the terms and conditions of the Plan, as the Committee shall determine.

(b) With respect to each performance period, the Committee shall establish such performance goals relating to one or more of the business criteria identified in Section 4(b) of the Plan.

(c) With respect to each performance period, the Committee shall establish targets for Participants for achievement of performance goals. No later than two and one-half months following the calendar year in which a performance period ends, the Committee shall determine the extent to which performance goals for that performance period have been achieved and shall credit as of the end of such performance period Performance Shares to the accounts of Participants for whom targets were established, in accordance with the terms of the applicable Performance Share Agreements.

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(d) The Committee may prescribe such other terms and conditions applicable to Performance Shares granted to a Participant under the Plan that are neither inconsistent with nor prohibited by the Plan or any Performance Share Agreement.

9. Stock Awards. The Committee may, in its discretion, grant, or sell for such amount of cash, Common Stock or such other consideration as the Committee deems appropriate (which amount may be less than the Fair Market Value of the Common Stock on the date of grant or sale), shares of Common Stock under the Plan to any Participant hereunder. Each share of Common Stock granted or sold hereunder shall be subject to such restrictions, conditions and other terms as the Committee may determine at the time of grant or sale, the general provisions of the Plan, the restrictions, terms and conditions of the related Stock Award Agreement, and the following specific rules:

(a) Shares of Common Stock issued to a Participant under the Plan shall be governed by a Stock Award Agreement, which shall specify whether the shares of Common Stock are granted or sold to the Participant and such other provisions, not inconsistent with the terms and conditions of the Plan, as the Committee shall determine.

(b) The Corporation shall issue, in the name of the Participant, stock certificates representing the total number of shares of Common Stock granted or sold to the Participant, as soon as may be reasonably practicable after such grant or sale, which shall be held by the Secretary of the Corporation as provided in subsection (e) hereof.

(c) Subject to the provisions of subsection (b) hereof, and the restrictions set forth in the related Stock Award Agreement, the Participant receiving a grant of or purchasing Common Stock shall thereupon be a stockholder with respect to all of the shares represented by such certificate or certificates and shall have the rights of a stockholder with respect to such shares, including the right to vote such shares and to receive dividends and other distributions paid with respect to such shares.

(d) The Committee, in its discretion, shall have the power to accelerate the date on which the restrictions contained in any Stock Award Agreement shall lapse with respect to any or all shares of Common Stock granted or sold under the Plan.

(e) The Secretary of the Corporation shall hold the certificate or certificates representing shares of Common Stock issued under this Section 9 of the Plan on behalf of each Participant who holds such shares, whether by grant or sale, until such time as the Common Stock is forfeited, resold to the Corporation, or the restrictions lapse.

(f) The Committee may prescribe such other restrictions, terms and conditions applicable to the shares of Common Stock issued to a Participant under the Plan that are neither inconsistent with nor prohibited by the Plan or any Stock Award Agreement, including, without limitation, terms providing for a lapse of the restrictions of this Section 9 or in any Stock Award Agreement, in installments.

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(g) Notwithstanding the provisions of subsections (b) and (e) above, the Corporation, in lieu of issuing stock certificates, may reflect the issuance of shares of Common Stock to a Participant on a non–certificated basis, with the ownership of such shares by the Participant evidenced solely by book entry in the records of the Corporation’s transfer agent; provided, however that following the lapse of all restrictions with respect to the shares granted or sold to a Participant, the Corporation, upon the written request of the Participant, shall issue, in the name of the Participant, stock certificates representing such shares.

10. Stock Units. The Committee may, in its discretion, award Stock Units under the Plan to Participants hereunder. Each Stock Unit granted hereunder shall be subject to such terms and conditions as the Committee may determine at the time of grant, the general provisions of the Plan, the terms and conditions of the applicable Stock Unit Agreement and the following specific rules:

(a) Grants of Stock Units to a Participant under the Plan shall be governed by a Stock Unit Agreement, which shall specify such terms and conditions, not inconsistent with the terms and conditions of the Plan, as the Committee shall determine.

(b) Stock Units shall be denominated in an equal number of shares of Common Stock of the Corporation, as determined by the Committee, and shall be payable either in shares of Common Stock or in cash, as provided in the Stock Unit Agreement.

(c) Any Stock Unit may provide that the Participant shall receive, on the date of payment of any dividend on Common Stock occurring during the period preceding payment of the Award, an amount in cash equal in value to the dividends that the Participant would have received had he been the actual owner of the number of shares of Common Stock designated by the Committee at the time of the Award.

(d) The Corporation’s obligation to make payments or distributions with respect to Stock Units shall not be funded or secured in any manner.

(e) The Committee may prescribe such other terms and conditions applicable to Stock Units granted to a Participant under the Plan that are neither inconsistent with nor prohibited by the Plan or any Stock Unit Agreement.

11. Adjustment. ln the event of any reorganization, recapitalization, stock split, stock distribution, merger, consolidation, split-up, spin-off, combination, subdivision, consolidation or exchange of shares, any change in the capital structure of the Corporation or any similar corporate transaction, the Committee or the Board shall

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make such adjustments as are necessary and appropriate to preserve the benefits or intended benefits of the Plan and Awards granted under the Plan. Such adjustments may include: (a) adjustment in the number and kind of shares reserved for issuance under the Plan; (b) adjustment in the number and kind of shares covered by outstanding Awards; (c) adjustment in the exercise price of outstanding Stock Options and SARs or the price of other Awards under the Plan; (d) adjustments to any of the shares limitations set forth in Section 5 of the Plan; and (e) any other changes that the Committee or the Board determine to be equitable under the circumstances.

12. Nontransferability. Except as provided below, each Award granted under the Plan to a Participant shall not be transferable by the Participant other than by will or the laws of descent and distribution and shall be exercisable, during the Participant’s lifetime, only by the Participant or, in the event of disability, by the Participant’s personal representative. In the event of the death of a Participant during employment or prior to the termination, expiration, cancellation or forfeiture of any Award held by the Participant hereunder, each Award theretofore granted to the Participant shall be exercisable or payable to the extent provided therein but no later than five years after his death and then only:

(a) by or to the executor or administrator of the estate of the deceased Participant or the person or persons to whom the deceased Participant’s rights under the Award shall pass by will or the laws of descent and distribution or as provided in the Award Agreement; and

(b) to the extent set forth in the Award Agreement.

Notwithstanding the foregoing, the Committee may set forth in the Stock Option Agreement for a Non-Qualified Stock Option, at the time of grant or thereafter, that the Non-Qualified Stock Option may be transferred by the Participant, subject to such terms and conditions as may be established by the Committee.

13. Change in Control.

(a) The Committee may, in its discretion, at the time an Award is made hereunder or at any time prior to a Change in Control of the Corporation, provide for the acceleration of any time periods relating to the exercise or realization of such Awards so that such Awards may be exercised or realized as of the date of a Change in Control of the Corporation, including specifically that as of such date: (i) all outstanding Stock Options and Stock Appreciation Rights shall become fully vested and exercisable; (ii) all performance goals under any Award shall be deemed fully achieved; (iii) all outstanding Performance Shares shall become fully vested and distributable; (iv) all restrictions on outstanding Stock Awards shall lapse; and (v) all restrictions on outstanding Stock Units shall lapse and such Stock Units shall become fully vested and, in the case of Stock Units that are not subject to Code Section 409A, distributable. The Committee may, in its discretion, include such further provisions and limitations in the Award Agreement as it may deem equitable and in the best interests of the Corporation.

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Provisions for acceleration and any further provisions and limitations included by the Committee pursuant to this subsection (a) must satisfy the requirements of Code Section 409A and applicable regulations and other guidance promulgated thereunder so as to avoid the income tax, interest and penalty provisions of Section 409A.

(b) A “Change in Control” shall be deemed to have occurred if:

(i) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Corporation (not including in the securities beneficially owned by such Person any securities acquired directly from the Corporation or its Affiliates) representing 20% or more of the combined voting power of the Corporation’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (A) of paragraph (iii) below; or

(ii) the election to the Board of Directors of the Corporation, without the recommendation or approval of two-thirds of the incumbent Board of Directors of the Corporation, of the lesser of: (A) three directors; or (B) directors constituting a majority of the number of directors of the Corporation then in office, provided, however, that directors whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Corporation will not be considered as incumbent members of the Board of Directors of the Corporation for purposes of this section; or

(iii) there is consummated a merger or consolidation of the Corporation or any direct or indirect subsidiary of the Corporation with any other company, other than (A) a merger or consolidation which would result in the voting securities of the Corporation outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), at least 60% of the combined voting power of the securities of the Corporation or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Corporation (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities

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of the Corporation (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Corporation or its Affiliates) representing 20% or more of the combined voting power of the Corporation’s then outstanding securities; or

(iv) the stockholders of the Corporation approve a plan of complete liquidation or dissolution of the Corporation or there is consummated an agreement for the sale or disposition by the Corporation of all or substantially all of the Corporation’s assets, other than a sale or disposition by the Corporation of all or substantially all of the Corporation’s assets to an entity, at least 60% of the combined voting power of the voting securities of which are owned by stockholders of the Corporation in substantially the same proportions as their ownership of the Corporation immediately prior to such sale.

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the Common Stock of the Corporation immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Corporation immediately following such transaction or series of transactions.

For purposes of the foregoing, the following definitions shall apply:

“Affiliate” shall have the meaning set forth in Rule 12b-2 under Section 12 of the Exchange Act; “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act, except that a Person shall not be deemed to be the Beneficial Owner of any securities with respect to which such Person has properly filed a form 13-G; “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time; and “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Corporation or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefits plan of the Corporation or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities or (iv) a corporation owned, directly or indirectly, by the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation.

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14. Other Provisions.

(a) Any Award under the Plan shall be subject to other provisions as the Committee determines, including, without limitation, provisions for the installment purchase of Common Stock under Stock Options, provisions to assist the Participant in financing the acquisition of Common Stock, provisions for the forfeiture of, or restrictions on resale or other disposition of shares acquired under any Award, provisions to comply with Federal or state securities laws and stock exchange requirements, provisions permitting acceleration of exercise or the lapse of restrictions in the event of death, disability or retirement, understandings or conditions as to the Participant’s employment in addition to those specifically provided for under the Plan, provisions for the forfeiture of Awards in the event of breach of noncompetition or confidentiality agreements during or following termination of employment, provisions permitting the deferral of the receipt of Awards for such period and upon such terms and conditions as the Committee shall determine, provisions giving the Corporation the right to repurchase shares acquired under any Award in the event the Participant elects to dispose of such shares, provisions requiring the achievement of specified performance goals, and provisions permitting acceleration of exercise upon the occurrence of specified events or otherwise in the discretion of the Committee. Notwithstanding anything herein or in any Award Agreement to the contrary, provisions permitting the deferral of the receipt of Awards must satisfy the requirements of Code Section 409A and applicable regulations and guidance promulgated thereunder, including without limitation all deadlines for deferral elections, so as to avoid the income tax, interest and penalty provisions of Section 409A.

(b) An Award that is subject to Code Section 409A shall not be distributable on account of retirement or termination of employment, unless the individual incurs a Separation from Service.

(c) An Award that would otherwise be distributed to a Participant in a given calendar year may be delayed to the extent that the Committee reasonably anticipates that if the payment were made as scheduled the Corporation’s deduction with respect to such payment would not be permitted due to the application of Code Section 162(m). Awards not paid as a result of the above limitation shall be paid in the earlier of (i) the Corporation’s first taxable year in which the Committee reasonably anticipates that if the payment is made during such year the deduction of such payment will not be barred by application of Section 162(m), or (ii) the period beginning with the date of the Participant’s Separation from Service and ending on the the later of the last day of the taxable year of the Corporation in which the Participant incurs a Separation from Service or the 15^th day of the third month following the Participant’s Separation from Service.

    (d)   (i)     Anything in the Plan to the contrary notwithstanding, including without limitation Section 14(c) and Supplement A hereto, if as of the date a Participant incurs a Separation from Service, the Participant is a Key Employee, any distribution of an Award that is subject to the provisions of Code Section 409A to such Participant due to such Separation from Service that would otherwise be made during the six months following such Separation from Service shall be made on the date that is six months and one day following such Separation from Service.

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(ii) “Key Employee” means a Participant who is a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i). The Corporation’s Key Employees shall be identified annually pursuant to Section 14(c)(iii).

(iii) The Specified Employee Identification Date as defined in Treas. Reg. §1.409A-1(i)(3), to be used in determining Key Employees of the Corporation shall be September 30 of any calendar year. The January 1 of the calendar year next following that calendar year shall be the Specified Employee Effective Date, as defined in Treas. Reg. §1.409A-1(i)(4), for Participants identified as Key Employees on the immediately preceding Specified Employee Identification Date. Participants identified as Key Employees on a Specified Employee Identification Date (September 30) shall be treated as Key Employees under the Plan for the 12-month period beginning on the Specified Employee Effective Date (January 1) next following such Specified Employee Identification Date.

15. Taxes. The Corporation shall have the right to deduct from any payment to be made under the Plan the amount of any taxes required by law to be withheld from such payment, or to require a Participant to pay to the Corporation such amount required to be withheld prior to the issuance or delivery of any shares of Common Stock or the payment of any cash in connection with any Award under the Plan. The Committee may, in its discretion and subject to such rules as it may adopt, permit a Participant to elect to satisfy such withholding obligations through cash payment by the Participant, the surrender of shares of Common Stock acceptable to the Committee which the Participant already owns or through the surrender of shares of Common Stock which the Participant is otherwise entitled to receive under the Plan.

16. Amendment, Suspension or Termination of Plan. The Board may at any time amend, suspend or terminate the Plan as it deems advisable and in the best interests of the Corporation; provided, that no amendment, suspension or termination shall adversely affect the right of any Participant under any outstanding Award in any material way without the written consent of the Participant, unless such amendment, suspension or termination is required by applicable law. No amendment of the Plan shall be made without stockholder approval if stockholder approval is required by law, regulation or stock exchange rule. Anything in this Section 16 or elsewhere in the Plan to the contrary notwithstanding:

(a) the Plan may be amended in any manner necessary to ensure that the Plan complies in all applicable respects with Code Section 409A; and

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(b) the Plan may not be amended in any manner that would cause the Plan to fail to comply in any applicable respect with Code Section 409A.

17. No Contract of Employment. Neither the adoption of the Plan nor the grant of any Award under the Plan shall be deemed to obligate the Corporation or any Subsidiary to continue the employment of any Participant for any particular period, nor shall the granting of an Award constitute a request or consent to postpone the retirement date of any Participant.

18. Effective Date.

(a) The Plan was adopted by the Board on February 19, 2002 and became effective as of April 16, 2002 upon approval by the Corporation’s stockholders at the 2002 annual meeting of stockholders.

(b) Notwithstanding anything to the contrary contained herein, no Awards shall be granted under the Plan on or after April 16, 2012.

19. Applicable Law. All questions pertaining to the validity, construction and administration of the Plan and all Awards granted under the Plan shall be determined in conformity with the laws of the State of Illinois, without regard to the conflict of law provisions of any state, and, in the case of Incentive Stock Options, Section 422 of the Code and regulations issued thereunder.

20. Definitions. As used in the Plan, the following terms shall have the meanings set forth below:

(a) “Award” shall mean any award or benefit granted under the Plan, including, without limitation, Stock Options, Stock Appreciation Rights, Performance Shares, Stock Awards and Stock Units. Awards subject to this amended and restated Plan shall include Awards granted prior to January 1, 2008 that were not earned and vested prior to January 1, 2005, and were not distributed prior to January 1, 2008.

(b) “Award Agreement” shall mean, as applicable, a Stock Option Agreement, Stock Appreciation Agreement, Performance Share Agreement, Stock Award Agreement, Stock Unit Agreement or such other agreement evidencing an Award granted under the Plan.

(c) “Board” shall mean the Board of Directors of the Corporation.

(d) “Change in Control” shall have the meaning set forth in Section 13(b) of the Plan.

(e) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

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(f) “Committee” shall mean the Compensation and Benefits Committee of the Board or such other committee of the Board as maybe designated by the Board from time to time to administer the Plan.

(g) “Common Stock” shall mean the Common Stock, par value $1.66 2/3 per share, of the Corporation.

(h) “Corporation” shall mean Northern Trust Corporation, a Delaware corporation.

(i) “Covered Employee” shall mean “covered employee” as that term is defined in Section 162(m) of the Code or any successor provision.

(j) “Director” shall mean a director of the Corporation.

(k) “Employee” shall mean an employee of the Corporation or any Subsidiary; it being understood that an Award (other than an Incentive Stock Option) may be granted in connection with the hiring of a person prior to the date the person becomes an employee of the Corporation or any Subsidiary, provided that such Award shall not vest prior to the commencement of employment.

(l) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

(m) “Fair Market Value” shall mean the fair market value of the Common Stock, as determined by the Committee.

(n) “Incentive Stock Option” shall mean an option granted under Section 6 of the Plan that meets the requirements of Section 422(b)of the Code or any successor provision.

(o) “Non-Qualified Stock Option” shall mean an option granted under Section 6 of the Plan that is not an Incentive Stock Option.

(p) “Participant” shall mean any Employee or Director selected to receive an Award.

(q) “Performance Share” shall mean a grant of a right to receive shares of Common Stock under Section 8 of the Plan.

(r) “Plan” shall mean the Amended and Restated Northern Trust Corporation 2002 Stock Plan, as amended and restated effective as of January 1, 2008. The Plan consists of two plans for purposes of Code Section 409A, one for Awards granted to individuals in their capacity as Employees and one for Awards granted to individuals in their capacity as Directors.

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(s) “Replacement Option” shall mean an option granted under Section 6(f) of the Plan.

(t) “Separation from Service,” in the case of Awards made to an individual in his capacity as an Employee, shall mean that a Participant dies, retires or otherwise has a termination of employment with the Corporation. A termination of employment will be deemed to occur when the Corporation and the Participant reasonably anticipate that the level of bona fide services the Participant will perform for the Corporation (as an Employee or independent contractor, but not as a director) after a certain date will permanently decrease to less than 50 percent of the average level of bona fide services performed by the Participant for the Corporation (as an Employee or independent contractor, but not as a director) in the immediately preceding 36 months (or the full period of the Participant’s services to the Corporation if the Participant has been providing services to the Corporation for less than 36 months), determined in accordance with Treas. Reg. Sec. 1.409A-1(h). The employment relationship will be treated as continuing intact while the Participant is on a bona fide leave of absence (determined in accordance with Treas. Reg. Sec. 409A-1(h)) but (i) only if there is a reasonable expectation that the Participant will return to active employment status, and (ii) only to the extent that such leave of absence does not exceed 6 months, or, if longer, for so long as the Participant has a statutory or contractual right to reemployment. For purposes of this Section 20(t), references to the Corporation shall include the Corporation and any person with whom the Corporation is considered to be a single employer under Section 414(b) of the Code and all persons with whom the Corporation would be considered a single employer under Code Section 414(c) substituting 50% for the 80% standard that would otherwise apply. For purposes of determining whether an Employee has incurred a Separation from Service under this Plan with respect to Awards made to him as an Employee, his services as a Director shall be disregarded. Separation from Service in the case of Awards made to an individual in his capacity as a Director shall mean the date on which the Director dies or otherwise terminates his or her membership on the Board. For purposes of determining whether a Director has incurred a Separation from Service under this Plan with respect to Awards made to him as a Director, his services as an Employee shall be disregarded.

(u) “Stock Appreciation Right” shall mean any right granted under Section 7 of the Plan.

(v) “Stock Award” shall mean a grant of shares of Common Stock under Section 9 of the Plan.

(w) “Stock Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option granted under Section 6 of the Plan.

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(x) “Stock Unit” shall mean a grant of a right to receive shares of Common Stock or cash under Section 10 of the Plan.

(y) “Subsidiary” shall mean any entity that is directly or indirectly controlled by the Corporation or any entity in which the Corporation has a significant equity or other interest, as determined by the Committee in its discretion.

21. The Stock Options, Stock Appreciation Rights, Performance Shares and Stock Awards granted under the Plan are intended to be exempt from, and the Stock Units granted under the Plan are intended to comply in all applicable respects with, the requirements of Code Section 409A, and the Plan shall be construed and administered so as to cause such Awards to be exempt from or comply with that Code section, respectively, as applicable.

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SUPPLEMENT A

AMENDED AND RESTATED

NORTHERN TRUST CORPORATION 2002 STOCK PLAN

MODIFICATION OF “APPLICABLE DATE” UNDER CERTAIN EMPLOYEE

STOCK UNIT AGREEMENTS ISSUED IN YEARS 2002 THROUGH 2008.

This Supplement A applies to Stock Unit Awards granted prior to January 1, 2009, that have not been distributed prior to that date (other than Stock Units that were earned and vested on or before December 31, 2004). Supplement A is adopted pursuant to the authority reserved to the Executive Vice President of Human Resources. Capitalized terms as used herein shall be defined in the same manner as in the relevant Stock Unit Agreement.

1. In the case of Stock Units (other than Stock Units granted pursuant to a performance stock unit grant, which are referred to as “Performance Stock Units”) that become vested upon the last day of a vesting period (“vesting date”) specified in the relevant Stock Unit Agreement, the Applicable Date on which the Stock Units are to be distributed shall be the vesting date, provided that such Stock Units shall be treated as distributed on such date if they are distributed no later than the last day of the calendar year in which such vesting date occurs, or, if later, by the 15 ^th day of the third calendar month after such vesting date occurs, subject to and in accordance with the provisions of Treas. Reg. Sec. 1.409A-3(d), including without limitation the requirement that the employee shall in no event have the right directly or indirectly to designate the taxable year of payment.

2. In the case of Stock Units (other than Performance Stock Units) that become vested and distributable prior to the expiration of the vesting period described in the relevant Stock Unit Agreement upon an individual’s Death, Retirement, Disability or termination of employment in certain limited circumstances specified in the agreement (“distribution event”), subject to Section 14 of the Plan, the Applicable Date shall be, and distribution shall be made, as soon as practicable after the distribution event, but in no event later than 90 days after such distribution event, subject to and in accordance with the provisions of Treas. Reg. Sec. 1.409A-3(a), including without limitation the requirement that the employee shall in no event have the right directly or indirectly to designate the taxable year of payment.

3. In the case of Stock Units (other than Performance Stock Units) that become vested, prior to the end of the vesting period specified in the relevant Stock Unit Agreement, pursuant to an exercise of Committee discretion permitted under the Stock Unit Agreement, rather than on account of an event described in item 2, a Participant shall not be entitled to a distribution of the Participant’s vested Stock Units solely as a result of such vesting. Instead, such Stock Units shall be distributed upon such date or event as such Stock Units would have been distributed in the absence of such discretionary vesting.

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4. In the case of an individual whose Stock Units are mandatorily deferred on account of the limitations of Code Section 162(m), the date of distribution shall be determined in accordance with Section 14(c) and (d) in lieu of Paragraph 9 of each such applicable Stock Unit Agreement.

5. Performance Stock Units, other than those that become vested upon a Change in Control, shall be distributed no later than two and a half months after the end of the calendar year in which the performance period ends.

6. Performance Stock Units that become vested upon a Change in Control as defined in the relevant Performance Stock Unit Agreement, shall be distributed upon the date of such Change in Control.

7. In the case of Stock Units (other than Performance Stock Units), a Participant shall not be entitled to a distribution of the Participant’s vested Stock Units solely as a result of the occurrence of a Change in Control as defined in the Plan. Instead, any Stock Units that are vested at the time of, or as a result of, a Change in Control shall be distributed only upon the date, or the occurrence of the event upon which distribution would have been made in the absence of a Change in Control.

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EX-10.(XIV).(6)

Exhibit 10(xiv)(6)

FORM OF DIRECTOR STOCK AGREEMENT

UNDER THE AMENDED AND RESTATED

NORTHERN TRUST CORPORATION 2002 STOCK PLAN

This Agreement is entered into as of the      day of             , 20    , between Northern Trust Corporation (“Northern”) and              (“Participant”).

The Amended and Restated Northern Trust Corporation 2002 Stock Plan (“Plan”) provides in Section 10 of the Plan for the awarding of stock units (“Stock Units”) to participants, who may include directors of Northern who are not employees of the Corporation or its Subsidiaries (collectively, the “Corporation”), as approved by the Compensation and Benefits Committee (“Committee”) of the Board of Directors of Northern. Capitalized terms not defined in this Agreement shall have the meanings assigned to them in the Plan.

In the exercise of its discretion under the Plan, the Committee has determined that the Participant should participate in the Plan and receive an award of Stock Units under Section 10 of the Plan, and, accordingly, Northern and the Participant hereby agree as follows:

1. Grant. Northern hereby grants to the Participant an award of Stock Units equal in value to [$80,000,] as determined by the closing sale price of Northern’s Common Stock (as defined below) on the date of the 20     annual meeting of stockholders, subject to the terms and conditions of the Plan and this Agreement. A Stock Unit is the right, subject to the terms and conditions of the Plan and this Agreement, to receive a distribution of a share of common stock (“Common Stock”), pursuant to Paragraph 6 of this Agreement.

2. Stock Unit Account. Northern shall maintain an account (“Stock Unit Account”) on its books in the name of the Participant which shall reflect the number of Stock Units awarded to the Participant that the Participant is eligible to receive in distribution pursuant to Paragraph 6 of this Agreement.

3. Dividend Equivalents. Except as provided below in Paragraph 7 of this Agreement, upon the payment of any dividend on Common Stock occurring during the period preceding the distribution of the Participant’s Stock Unit award pursuant to Paragraph 6 of this Agreement, Northern shall promptly (and in any event no later than March 15 of the calendar year following the calendar year in which the dividend is declared) pay to the Participant an amount in cash equal in value to the dividends that the Participant would have received had the Participant been the actual owner on the record date of the number of shares of Common Stock represented by the Stock Units in the Participant’s Stock Unit Account on that date (“Dividend Equivalents”).

4. Forfeiture. If the Participant incurs a Separation from Service, as defined in Paragraph 7(c) below prior to the vesting date set forth in Paragraph 5 of this Agreement, the Participant’s Stock Units shall be forfeited and revert to Northern, and Northern shall have no further obligation after such date to pay Dividend Equivalents pursuant to Paragraph 3 of this Agreement. Northern shall have no further obligation to the Participant under this Agreement with respect to such Stock Units.

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5. Vesting. The Participant shall become 100% vested in his Stock Units upon the date (the “vesting date”) that is the earliest to occur of (a) the date of the Corporation’s 20     Annual Meeting of Stockholders (the “regular vesting date”), (b) the date of the Participant’s death, or (c) the date of a Change in Control, provided that the Participant has not incurred a Separation from Service prior to the earliest of the foregoing three events.

6. Distribution. Except as provided below in Paragraph 7 of this Agreement,

(a) Subject to Paragraph 6(b), if the Participant has become 100% vested in his Stock Units upon the regular vesting date, the Stock Units shall be distributed upon such regular vesting date, provided that the distribution shall be treated as made on such date if made within the period described in Treasury Regulation Section 1.409A-3(d), including without limitation the requirement that the Participant shall in no event have the right directly or indirectly to designate the taxable year of payment. Stock Units shall be distributed only in shares of Common Stock so that, pursuant to Paragraph 1 of this Agreement and this Paragraph 6, a Participant shall be entitled to receive one share of Common Stock for each Stock Unit in the Participant’s Stock Unit Account.

(b) If a Participant’s service on the Board of Directors of Northern shall terminate by reason of death prior to the regular vesting date, all cash (as provided in Paragraph 7) or Common Stock then distributable hereunder with respect to the Participant shall be distributed to such individual, trustee, trust or other entity (“Beneficiary”) as the Participant shall have designated by an instrument in writing last filed with Northern prior to death, or in the absence of a designation, to the following persons in the order indicated below:

• The Participant’s spouse; if none, then,

• The Participant’s children (in equal amounts); if none, then,

• The Participant’s parents (in equal amounts); if none, then,

• The Participant’s brothers and sisters (in equal amounts); if none, then,

• The Participant’s estate.

Except as otherwise provided in Paragraph 7(c), such distribution shall be made on the date of death, provided that the distribution shall be treated as made on such date if made within the period described in Treasury Regulation Section 1.409A-3(d), including without limitation the requirement that neither the Participant (nor the Beneficiary) shall have the right directly or indirectly to designate the taxable year of payment.

(c) If the Participant dies on or after the regular vesting date, but prior to the distribution of all amounts to which the Participant is entitled hereunder, all cash or Common Stock then distributable hereunder with respect to the Participant shall be distributed to the Beneficiary designated by the Participant, or, if none, to the persons identified in clause (b) of this Paragraph 6, within the period described in clause (a) of this Paragraph 6, except as otherwise provided in Paragraph 7(c).

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(d) In the case of Stock Units that become vested as a result of a Change in Control, the Participant shall not be entitled to a distribution of such Stock Units upon such Change in Control. Instead, any Stock Units that become vested as a result of a Change in Control shall be distributed only upon the date, or the occurrence of the event upon which, distribution would have been made in the absence of such Change in Control. For purposes of this Paragraph 6(d) the Annual Meeting in 20     shall be deemed to occur upon the third Tuesday in April in that year.

7. Voluntary Deferral.

(a) Subject to applicable law, receipt of the payment of all or any portion of the Stock Units shall be deferred until the date on which the Participant incurs a Separation from Service, as defined in clause (c) below, if the Participant has filed a deferral election, subject to and in accordance with the provisions of Paragraph 7(b), no later than the deadline described in Paragraph 7(b). Any such election shall likewise apply to the Dividend Equivalents payable with respect to such deferred Stock Units. Deferred Dividend Equivalents shall be credited to a cash account with respect to the Stock Units (“Cash Account”) maintained by Northern on its books in the name of the Participant. Until the entire balance of a Cash Account has been paid to the Participant or to the Participant’s Beneficiaries (as defined in Paragraph 6), such balance shall be adjusted on the last day of each calendar quarter to reflect accrued interest on such balance based on the rate of interest determined from time to time by the Committee.

(b) A Participant’s election to defer receipt of the payment of all or any portion of the Stock Units granted hereunder and related Dividend Equivalents to the date of his or her Separation from Service, as defined in clause (c) below, shall be effective if it was made on a deferral election form provided by the Committee and completed and delivered to the Committee no later than the last day of the calendar year preceding the calendar year in which the grant hereunder is made. Such election, if made, became irrevocable upon December 31 of the calendar year completed and delivered to the Committee. Such election shall remain in effect for grants of Stock Units in subsequent calendar years and becomes irrevocable as of each December 31 with respect to Stock Units granted for services performed in the immediately following calendar year, until modified or revoked by the Participant by the completion and delivery to the Committee of a form provided by the Committee for such purpose, setting out such modification or revocation; any such modification or revocation shall be effective only for Stock Units granted to the Participant for services performed in calendar years beginning after the calendar year in which such modification or revocation is completed and delivered to the Committee and shall have no effect on the Stock Units granted hereunder.

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(c) The entire balance of deferred Stock Units in the Stock Unit Account and deferred Dividend Equivalents in the Cash Account shall be paid to the Participant or to the Beneficiaries of the Participant (i) in a single lump sum on the 10th business day following the date the Participant incurs a Separation from Service, as defined below, or (ii) in up to 10 annual installments beginning on the 10th business day following the date the Participant incurs a Separation from Service, as defined below, as irrevocably designated by the Participant in the applicable form described in clause (b) above. In the absence of a designation, the entire balance of deferred Stock Units in the Stock Unit Account and deferred Dividend Equivalents in the Cash Account shall be paid in a single lump sum on the 10^th business day following the date the Participant incurs a Separation from Service, as defined below. For purposes of this Agreement, the term “Separation from Service” shall mean the date on which the Participant dies or otherwise terminates his or her membership on the Board of Directors of Northern.

(d) Deferred Stock Units in the Stock Unit Account shall be distributed only in shares of Common Stock. In the event of a single lump sum distribution in Common Stock, a certificate (or a non-certificated book entry) representing the number of full shares of Common Stock equal to the number of such Stock Units in the Stock Unit Account, registered in the name of the Participant or the Beneficiaries of the Participant, shall be distributed to the Participant or the Beneficiaries of the Participant, on the distribution date described in Paragraph 7(c) above. In the event of a distribution in Common Stock in up to 10 annual installments, a certificate (or a non-certificated book entry) representing the number of full shares of Common Stock equal to a fraction (the numerator of which shall be the number of Stock Units in the Stock Unit Account, and the denominator of which shall be the number of annual installments designated by the Participant), registered in the name of the Participant or the Beneficiaries of the Participant, shall be distributed to the Participant or the Beneficiaries of the Participant, on the distribution date described in Paragraph 7(c) above in each year of the installment period, provided that the number of shares in each of the installments may be rounded to avoid fractional shares and the effects of any such rounding shall be reflected in the last installment.

(e) Deferred Dividend Equivalents in the Participant’s Cash Account shall be distributed in cash. In the event of a single lump sum distribution in cash, the entire balance of the Participant’s Cash Account shall be distributed to the Participant or the Beneficiaries of the Participant on the distribution date described in Paragraph 7(c) above. In the event of a distribution in cash in up to 10 annual installments, the balance of the Cash Account shall continue to accrue interest and shall be distributed to the Participant or the Beneficiaries of the Participant on the distribution date described in Paragraph 7(c) above in each year of the installment period in an amount equal to the then current balance in the Cash Account multiplied by a fraction, the numerator of which shall be one, and the denominator of which shall be the number of years remaining in the installment period.

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8. Delivery of Shares. Northern may delay the issuance or delivery of shares of Common Stock if Northern reasonably anticipates that such issuance or delivery will violate federal securities laws or other applicable law, provided that the issuance or delivery is made at the earliest date at which Northern reasonably anticipates that such issuance or delivery will not cause such violation.

9. Adjustment. The Stock Units provided herein are subject to adjustment in accordance with the provisions of Section 11 of the Plan.

10. No Obligation to Reelect. Nothing in the Plan or this Agreement shall be deemed to create an obligation on the part of the Board of Directors to nominate the Participant for reelection by Northern’s stockholders or to fill any vacancy upon action of the Board of Directors.

11. Nontransferability. No interest hereunder of the Participant or any Beneficiary shall be assignable or transferable by voluntary or involuntary act or by operation of law other than by testamentary bequest or devise or the laws of descent or distribution, all rights hereunder shall be wholly unalienable and beyond the power of any person to anticipate or in any way create a lien or encumbrance thereon; and distribution shall be made only to (i) the Participant, (ii) the Participant’s personal representative in the event of the Participant’s adjudicated disability, or (iii) the Participant’s Beneficiaries in the event of the Participant’s death, upon his, her or their own personal receipts or endorsements. Any effort to exercise the powers herein denied shall be wholly ineffective and shall be grounds for termination by the Committee of all rights hereunder.

12. Withholding. In the event that federal, state or local taxes must be withheld from any distribution hereunder, (a) the Corporation shall deduct from any such distribution in cash the amount of such required withholding and, (b) with respect to distributions in shares of Common Stock, subject to such rules and limitations as may be established by the Committee from time to time, withholding obligations, if any, shall be satisfied from one of the following elected by the Participant: (i) by cash payment by the Participant; (ii) through the surrender of shares of Common Stock already owned by the Participant that are acceptable to the Committee; or (iii) through the surrender of shares of Common Stock to which the Participant is otherwise entitled under the Plan, provided, however, that such shares under this clause (iii) may be used to satisfy not more than the Corporation’s minimum statutory withholding obligation, if any (based on minimum statutory withholding rates for Federal and state tax purposes, including payroll taxes, that are applicable to such taxable income).

13. Administration. The Plan is administered by the Committee. The rights of the Participant hereunder are expressly subject to the terms and conditions of the Plan (including continued shareholder approval of the Plan), together with such guidelines as have been or may be adopted from time to time by the Committee. The Participant hereby acknowledges receipt of a copy of the Plan.

14. No Rights as Shareholder. Except as provided herein, the Participant will have no rights as a shareholder with respect to the Stock Units.

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15. Interpretation. Any interpretation by the Committee of the terms and conditions of the Plan, this Agreement or any guidelines shall be final. This Agreement shall be construed under the laws of the State of Illinois without regard to the conflict of law provisions of any state. Capitalized terms not defined in this Agreement shall have the meanings assigned to them in the Plan.

16. Sole Agreement. This Agreement, together with the Plan, is the entire Agreement between the parties hereto, all prior oral and written representations being merged herein. No amendment or modification of the terms of this Agreement shall be binding on either party unless reduced to writing and signed by the party to be bound. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties hereto and their respective successors.

IN WITNESS WHEREOF, the Participant and Northern Trust Corporation by its duly authorized officer have signed this Agreement the day and year first written above.

Northern Trust Corporation

By:

Participant

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EX-10.(XIV).(7)

Exhibit 10(xiv)(7)

FORM OF DIRECTOR PRORATED STOCK AGREEMENT

UNDER THE AMENDED AND RESTATED

NORTHERN TRUST CORPORATION 2002 STOCK PLAN

This Agreement is entered into as of the      day of             , 20    , between Northern Trust Corporation (“Northern”) and              (“Participant”).

The Amended and Restated Northern Trust Corporation 2002 Stock Plan (“Plan”) provides in Section 10 of the Plan for the awarding of stock units (“Stock Units”) to participants, who may include directors of Northern who are not employees of the Corporation or its Subsidiaries (collectively, the “Corporation”), as approved by the Compensation and Benefits Committee (“Committee”) of the Board of Directors of Northern. Capitalized terms not defined in this Agreement shall have the meanings assigned to them in the Plan.

In the exercise of its discretion under the Plan, the Committee has determined that the Participant should participate in the Plan and receive an award of Stock Units under Section 10 of the Plan, and, accordingly, Northern and the Participant hereby agree as follows:

1. Grant. Northern hereby grants to the Participant an award of Stock Units equal in value to $    , as determined by the closing sale price of Northern’s Common Stock (as defined below) on             , 20    , (which represents a prorated award based on the Participant’s service on the Board from the date of election on             , 20     to the regular vesting date set forth in Paragraph 5 below), subject to the terms and conditions of the Plan and this Agreement. A Stock Unit is the right, subject to the terms and conditions of the Plan and this Agreement, to receive a distribution of a share of common stock (“Common Stock”), pursuant to Paragraph 6 of this Agreement.

2. Stock Unit Account. Northern shall maintain an account (“Stock Unit Account”) on its books in the name of the Participant which shall reflect the number of Stock Units awarded to the Participant that the Participant is eligible to receive in distribution pursuant to Paragraph 6 of this Agreement.

3. Dividend Equivalents. Except as provided below in Paragraph 7 of this Agreement, upon the payment of any dividend on Common Stock occurring during the period preceding the distribution of the Participant’s Stock Unit award pursuant to Paragraph 6 of this Agreement, Northern shall promptly (and in any event no later than March 15 of the calendar year following the calendar year in which the dividend is declared) pay to the Participant an amount in cash equal in value to the dividends that the Participant would have received had the Participant been the actual owner on the record date of the number of shares of Common Stock represented by the Stock Units in the Participant’s Stock Unit Account on that date (“Dividend Equivalents”).

4. Forfeiture. If the Participant incurs a Separation from Service, as defined in Paragraph 7(c) below prior to the vesting date set forth in Paragraph 5 of this Agreement, the Participant’s Stock Units shall be forfeited and revert to Northern, and Northern shall have no further obligation after such date to pay Dividend Equivalents pursuant to Paragraph 3 of this Agreement. Northern shall have no further obligation to the Participant under this Agreement with respect to such Stock Units.

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5. Vesting. The Participant shall become 100% vested in his Stock Units upon the date (the “vesting date”) that is the earliest to occur of (a) the date of the Corporation’s 20     Annual Meeting of Stockholders (the “regular vesting date”), (b) the date of the Participant’s death, or (c) the date of a Change in Control, provided that the Participant has not incurred a Separation from Service prior to the earliest of the foregoing three events.

6. Distribution. Except as provided below in Paragraph 7 of this Agreement,

(a) Subject to Paragraph 6(b), if the Participant has become 100% vested in his Stock Units upon the regular vesting date, the Stock Units shall be distributed upon such regular vesting date, provided that the distribution shall be treated as made on such date if made within the period described in Treasury Regulation Section 1.409A-3(d), including without limitation the requirement that the Participant shall in no event have the right directly or indirectly to designate the taxable year of payment. Stock Units shall be distributed only in shares of Common Stock so that, pursuant to Paragraph 1 of this Agreement and this Paragraph 6, a Participant shall be entitled to receive one share of Common Stock for each Stock Unit in the Participant’s Stock Unit Account.

(b) If a Participant’s service on the Board of Directors of Northern shall terminate by reason of death prior to the regular vesting date, all cash (as provided in Paragraph 7) or Common Stock then distributable hereunder with respect to the Participant shall be distributed to such individual, trustee, trust or other entity (“Beneficiary”) as the Participant shall have designated by an instrument in writing last filed with Northern prior to death, or in the absence of a designation, to the following persons in the order indicated below:

• The Participant’s spouse; if none, then,

• The Participant’s children (in equal amounts); if none, then,

• The Participant’s parents (in equal amounts); if none, then,

• The Participant’s brothers and sisters (in equal amounts); if none, then,

• The Participant’s estate.

Except as otherwise provided in Paragraph 7(c), such distribution shall be made on the date of death, provided that the distribution shall be treated as made on such date if made within the period described in Treasury Regulation Section 1.409A-3(d), including without limitation the requirement that neither the Participant (nor the Beneficiary) shall have the right directly or indirectly to designate the taxable year of payment.

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(c) If the Participant dies on or after the regular vesting date, but prior to the distribution of all amounts to which the Participant is entitled hereunder, all cash or Common Stock then distributable hereunder with respect to the Participant shall be distributed to the Beneficiary designated by the Participant, or, if none, to the persons identified in clause (b) of this Paragraph 6, within the period described in clause (a) of this Paragraph 6, except as otherwise provided in Paragraph 7(c).

(d) In the case of Stock Units that become vested as a result of a Change in Control, the Participant shall not be entitled to a distribution of such Stock Units upon such Change in Control. Instead, any Stock Units that become vested as a result of a Change in Control shall be distributed only upon the date, or the occurrence of the event upon which, distribution would have been made in the absence of such Change in Control. For purposes of this Paragraph 6(d) the Annual Meeting in 20     shall be deemed to occur upon the third Tuesday in April in that year.

7. Voluntary Deferral.

(a) Subject to applicable law and the provisions of Paragraph 7(b), the Participant may elect to defer receipt of the payment of all or any portion of the Stock Units until the date on which the Participant incurs a Separation from Service, as defined in clause (c) below. Any such election shall likewise apply to the Dividend Equivalents payable with respect to such deferred Stock Units. Deferred Dividend Equivalents shall be credited to a cash account with respect to the Stock Units (“Cash Account”) maintained by Northern on its books in the name of the Participant. Until the entire balance of a Cash Account has been paid to the Participant or to the Participant’s Beneficiaries (as defined in Paragraph 6), such balance shall be adjusted on the last day of each calendar quarter to reflect accrued interest on such balance based on the rate of interest determined from time to time by the Committee.

(b) A Participant may elect to defer receipt of the payment of all or any portion of the Stock Units granted hereunder and related Dividend Equivalents to the date of his or her Separation from Service, as defined in clause (c) below only if the grant hereunder is made in the calendar year in which the Participant initially becomes eligible to participate in the Plan, and the election is made on a deferral election form provided by the Committee and completed and delivered to the Committee within 30 days after the date on which the Participant initially becomes eligible to participate in the Plan. Such election shall be effective with respect to Stock Units described in Section 1 that are paid for services to be performed by the Participant after the date such deferral election form is completed and delivered to the Committee and becomes irrevocable with respect to such Stock Units and their related Dividend Equivalents upon completion and delivery of such deferral election form to the Committee. For purposes of applying the foregoing provisions of this clause (b), the plan aggregation rules of Treasury Regulation Section 1.409A-1(c) shall apply. A Participant’s election hereunder shall remain in effect for grants of Stock Units in subsequent calendar years and becomes irrevocable as of each December 31 with

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respect to Stock Units granted for services performed in the immediately following calendar year, until modified or revoked by the Participant by the completion and delivery to the Committee of a form provided by the Committee for such purpose, setting out such modification or revocation; any such modification or revocation shall be effective only for Stock Units granted to the Participant for services performed in calendar years beginning after the calendar year in which such modification or revocation is completed and delivered to the Committee and shall have no effect on the Stock Units granted hereunder.

(c) The entire balance of deferred Stock Units in the Stock Unit Account and deferred Dividend Equivalents in the Cash Account shall be paid to the Participant or to the Beneficiaries of the Participant (i) in a single lump sum on the 10^th business day following the date the Participant incurs a Separation from Service, as defined below, or (ii) in up to 10 annual installments beginning on the 10^th business day following the date the Participant incurs a Separation from Service, as defined below, as irrevocably designated by the Participant in the applicable form described in clause (b) above. In the absence of a designation, the entire balance of deferred Stock Units in the Stock Unit Account and deferred Dividend Equivalents in the Cash Account shall be paid in a single lump sum on the 10^th business day following the date the Participant incurs a Separation from Service, as defined below. For purposes of this Agreement, the term “Separation from Service” shall mean the date on which the Participant dies or otherwise terminates his or her membership on the Board of Directors of Northern.

(d) Deferred Stock Units in the Stock Unit Account shall be distributed only in shares of Common Stock. In the event of a single lump sum distribution in Common Stock, a certificate (or a non-certificated book entry) representing the number of full shares of Common Stock equal to the number of such Stock Units in the Stock Unit Account, registered in the name of the Participant or the Beneficiaries of the Participant, shall be distributed to the Participant or the Beneficiaries of the Participant, on the distribution date described in Paragraph 7(c) above. In the event of a distribution in Common Stock in up to 10 annual installments, a certificate (or a non-certificated book entry) representing the number of full shares of Common Stock equal to a fraction (the numerator of which shall be the number of Stock Units in the Stock Unit Account, and the denominator of which shall be the number of annual installments designated by the Participant), registered in the name of the Participant or the Beneficiaries of the Participant, shall be distributed to the Participant or the Beneficiaries of the Participant, on the distribution date described in Paragraph 7(c) above in each year of the installment period, provided that the number of shares in each of the installments may be rounded to avoid fractional shares and the effects of any such rounding shall be reflected in the last installment.

(e) Deferred Dividend Equivalents in the Participant’s Cash Account shall be distributed in cash. In the event of a single lump sum distribution in cash, the entire balance of the Participant’s Cash Account shall be distributed to the Participant or the Beneficiaries of the Participant on the distribution date described in Paragraph 7(c) above. In the event of a distribution in cash in up to 10 annual installments, the balance of the Cash Account shall continue to accrue interest and shall be distributed to the Participant or the Beneficiaries of the Participant on the distribution date described in Paragraph 7(c)

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above in each year of the installment period in an amount equal to the then current balance in the Cash Account multiplied by a fraction, the numerator of which shall be one, and the denominator of which shall be the number of years remaining in the installment period.

8. Delivery of Shares. Northern may delay the issuance or delivery of shares of Common Stock if Northern reasonably anticipates that such issuance or delivery will violate federal securities laws or other applicable law, provided that the issuance or delivery is made at the earliest date at which Northern reasonably anticipates that such issuance or delivery will not cause such violation.

9. Adjustment. The Stock Units provided herein are subject to adjustment in accordance with the provisions of Section 11 of the Plan.

10. No Obligation to Reelect. Nothing in the Plan or this Agreement shall be deemed to create an obligation on the part of the Board of Directors to nominate the Participant for reelection by Northern’s stockholders or to fill any vacancy upon action of the Board of Directors.

11. Nontransferability. No interest hereunder of the Participant or any Beneficiary shall be assignable or transferable by voluntary or involuntary act or by operation of law other than by testamentary bequest or devise or the laws of descent or distribution, all rights hereunder shall be wholly unalienable and beyond the power of any person to anticipate or in any way create a lien or encumbrance thereon; and distribution shall be made only to (i) the Participant, (ii) the Participant’s personal representative in the event of the Participant’s adjudicated disability, or (iii) the Participant’s Beneficiaries in the event of the Participant’s death, upon his, her or their own personal receipts or endorsements. Any effort to exercise the powers herein denied shall be wholly ineffective and shall be grounds for termination by the Committee of all rights hereunder.

12. Withholding. In the event that federal, state or local taxes must be withheld from any distribution hereunder, (a) the Corporation shall deduct from any such distribution in cash the amount of such required withholding and, (b) with respect to distributions in shares of Common Stock, subject to such rules and limitations as may be established by the Committee from time to time, withholding obligations, if any, shall be satisfied from one of the following elected by the Participant: (i) by cash payment by the Participant; (ii) through the surrender of shares of Common Stock already owned by the Participant that are acceptable to the Committee; or (iii) through the surrender of shares of Common Stock to which the Participant is otherwise entitled under the Plan, provided, however, that such shares under this clause (iii) may be used to satisfy not more than the Corporation’s minimum statutory withholding obligation, if any (based on minimum statutory withholding rates for Federal and state tax purposes, including payroll taxes, that are applicable to such taxable income).

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13. Administration. The Plan is administered by the Committee. The rights of the Participant hereunder are expressly subject to the terms and conditions of the Plan (including continued shareholder approval of the Plan), together with such guidelines as have been or may be adopted from time to time by the Committee. The Participant hereby acknowledges receipt of a copy of the Plan.

14. No Rights as Shareholder. Except as provided herein, the Participant will have no rights as a shareholder with respect to the Stock Units.

15. Interpretation. Any interpretation by the Committee of the terms and conditions of the Plan, this Agreement or any guidelines shall be final. This Agreement shall be construed under the laws of the State of Illinois without regard to the conflict of law provisions of any state. Capitalized terms not defined in this Agreement shall have the meanings assigned to them in the Plan.

16. Sole Agreement. This Agreement, together with the Plan, is the entire Agreement between the parties hereto, all prior oral and written representations being merged herein. No amendment or modification of the terms of this Agreement shall be binding on either party unless reduced to writing and signed by the party to be bound. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties hereto and their respective successors.

IN WITNESS WHEREOF, the Participant and Northern Trust Corporation by its duly authorized officer have signed this Agreement the day and year first written above.

Northern Trust Corporation

By:

Participant

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EX-10.(XVII)

Exhibit 10(xvii)

NORTHERN TRUST CORPORATION

1997 DEFERRED COMPENSATION PLAN FOR

NON-EMPLOYEE DIRECTORS

AS AMENDED AND RESTATED

Northern Trust Corporation, a Delaware corporation (the “Corporation”) maintains the Northern Trust Corporation 1997 Deferred Compensation Plan for Non-Employee Directors, as previously amended April 15, 1997 and effective as of January 21, 2003 (the “Plan”).

In exercise of the amending power reserved to the Corporation under Section 6(a) of the Plan, and pursuant to the authority delegated to the undersigned officer by resolutions of the Board of Directors of the Corporation dated November 13, 2007, the Corporation now hereby further amends and restates the Plan, generally effective as of January 1, 2008 (with such other effective dates as are noted herein), to comply with Section 409A of the Internal Revenue Code of 1986, as amended, (the “Code”) and regulations and guidance thereunder.

1. Name. This Plan shall be known as the “Northern Trust Corporation 1997 Deferred Compensation Plan for Non-Employee Directors As Amended and Restated” (the “Plan”).

2. Definitions. The following definitions shall apply in interpreting the Plan:

(a) The term “Beneficiary” shall mean such individual, trustee, trust or other entity designated by a Non-Employee Director by an instrument in writing last filed with the Corporation prior to death to receive all or any portion of his or her Cash Account and Stock Unit Account, and all cash or Common Stock distributable hereunder with respect to such Non-Employee Director following the date of his or her death. In the absence of such a designation of any living Beneficiary, or if such designation is ineffective for any reason, the Non-Employee Director’s Beneficiary shall be his or her spouse, or if not then living, his or her then living descendants, per stirpes, or if none is then living, the personal representatives of the Non-Employee Director’s estate.

(b) The term “Board” shall mean the Board of Directors of the Corporation.

(c) The term “Cash Account” shall have the meaning set forth in Section 4(b).

(d) The term “Committee” shall mean the Compensation and Benefits Committee of the Board.

(e) The term “Common Stock” shall mean the common stock, $1.66-2/3 par value per share, of the Corporation.

(f) The term “Corporation” shall mean Northern Trust Corporation, a Delaware corporation.

(g) The term “Election Form” shall have the meaning set forth in Sections 3(b) and (c).

(h) The term “Non-Employee Director” shall mean a person who is serving as a member of the Board and is not an employee of the Corporation or any subsidiary or affiliate of the Corporation.

(i) The term “Post-2004 Benefit” shall mean the portion of a Non-Employee Director’s Cash Account and Stock Unit Account equal to the excess of (1) the balance of the Non-Employee Director’s Accounts, determined as of his or her date of Separation from Service after December 31, 2004, over (2) the Non-Employee Director’s Pre-2005 Benefit.

(j) The term “Pre-2005 Benefit” shall mean the portion of a Non-Employee’s Cash Account and Stock Unit Account deferred on or before December 31, 2004, adjusted to reflect interest, earnings, and gains and losses credited to such Accounts from and after such date. An amount is considered deferred on or before December 31, 2004 if on or before that date the Non-Employee Director had a legally binding right to be paid the amount and the right to the amount was earned and vested.

(k) The term “Separation from Service” shall mean the date on which a Non-Employee Director dies or otherwise terminates his or her membership on the Board, as determined in accordance with the provisions of Code Section 409A and the regulations thereunder.

(l) The term “Stock Unit Account” shall have the meaning set forth in Section 4(a).

3. Participation.

(a) A Non-Employee Director may elect to defer receipt of the payment of all or any portion of: (i) the annual cash retainer fee payable for services as a Director or (ii) any cash fees payable for attendance at a Board committee meeting or for any other service provided to the Corporation, in each case until the date on which the Non-Employee Director incurs a Separation from Service. Such deferral election must be set forth in an election form (the “Election Form”) provided by the Corporation.

In 1997, the Plan also permitted a Non-Employee Director to elect to defer the annual stock grant under the Northern Trust Corporation 1997 Stock Plan for Non-Employee Directors, in accordance with the terms of the Plan in effect at that time.

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(b) To be effective, an Election Form with respect to compensation described in Section 3(a)(i) or 3(a)(ii) for services performed by a Non-Employee Director in a particular calendar year must be completed and delivered to the Corporation prior to the first day of such calendar year. An Election Form shall remain in effect with respect to compensation earned with respect to services to be performed in subsequent calendar years until revised or revoked by the Non-Employee Director by the completion and delivery to the Corporation of an Election Form setting forth such revision or revocation prior to the first day of the calendar year in which services are to be performed for the compensation with respect to which such revision or revocation is to become effective. Effective as of January 1, 2005, any election shall become irrevocable as of each December 31 with respect to compensation payable for services performed in the immediately following calendar year. Except as provided in Section 3(c) below, an initial or revised Election Form shall only apply to compensation payable to a Non-Employee Director for services performed after the end of the calendar year in which such initial or revised Election Form is completed and delivered to the Corporation.

(c) Anything in the Plan to the contrary notwithstanding, an election with respect to compensation described in Section 3(a)(i) or 3(a)(ii) made by a Non-Employee Director in the calendar year in which the Non-Employee Director initially becomes eligible to participate in the Plan, and that is not made under Section 3(b), must be made pursuant to an Election Form completed and delivered to the Corporation within 30 days after the date on which the Non-Employee Director initially becomes eligible to participate in the Plan. Such Election Form shall be effective with respect to compensation described in Section 3(a)(i) or 3(a)(ii) that is paid for services to be performed by the Non-Employee Director after the date such Election Form is completed and delivered to the Corporation and shall be irrevocable with respect to such compensation upon completion and delivery of such Election Form to the Corporation. Such Election Form shall remain in effect and become irrevocable for subsequent calendar years in accordance with Section 3(b) above. On and after January 1, 2005, for purposes of applying the foregoing provisions of this Section 3(c), the plan aggregation rules of Treas. Reg. 1.409A-1(c) shall apply.

4. Deferral Accounts.

(a) All cash compensation deferred by a Non-Employee Director pursuant to Section 3 shall be credited to a stock unit account (“Stock Unit Account”) maintained by the Corporation on its books in the name of the participating Non—Employee Director and converted into stock units equivalent to full shares of the Corporation’s Common Stock as of the last trading day of the calendar quarter for which the cash compensation would have been paid. The conversion shall be determined by dividing the dollar amount of the cash compensation as of such quarterly date by the mean of the high and low sale prices of the Corporation’s Common Stock as reported by the Nasdaq Stock Market on such quarterly date. Any cash balance remaining after any such conversion shall be credited to the Cash Account of a Non-Employee Director as provided in Section 4(b) below. The shares of Common Stock representing a stock grant under the Northern Trust

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Corporation 1997 Stock Plan for Non-Employee Directors which were deferred by a Non-Employee Director pursuant to Section 3 were credited to a Stock Unit Account and converted into stock units as of the date of the annual meeting of stockholders on which the stock was granted.

(b) The Corporation also shall maintain a cash account (“Cash Account”) on its books in the name of each participating Non-Employee Director. Credits shall be made to a participating Non-Employee Director’s Cash Account in dollar amounts equal to (i) the cash balance remaining after any conversion pursuant to Section 4(a) above, and (ii) the cash dividends (or the fair market value of dividends paid in property other than Common Stock) that the Non-Employee Director would have received had the Non-Employee Director been the owner on each record date of the number of shares of Common Stock equal to the number of stock units in such Non-Employee Director’s Stock Unit Account on such date. Until the entire balance of a Cash Account has been paid to a Non-Employee Director, or to the Beneficiaries of a deceased Non-Employee Director, such balance shall be increased on the last day of each calendar quarter to reflect accrued interest on such balance based on the rate of interest determined from time to time by the Committee.

(c) In the case of a dividend in Common Stock or a Common Stock split, additional credits will be made to a Non-Employee Director’s Stock Unit Account of a number of stock units equal to the number of full shares of Common Stock that the Non-Employee Director would have received had the Non-Employee Director been the owner on each record date of the number of shares of Common Stock equal to the number of stock units in such Non-Employee Director’s Stock Unit Account on such date.

(d) Each Stock Unit Account and each Cash Account shall be maintained on the books of the Corporation until full payment of the balance thereof has been made to the applicable Non-Employee Director or to the Beneficiaries of a deceased Non-Employee Director. No funds shall be set aside or earmarked for any Account, which shall be purely a bookkeeping device.

5. Distribution of Accounts.

(a) The entire balance of a Non-Employee Director’s Stock Unit Account and Cash Account shall be paid to such Non-Employee Director

(i) in a single lump sum on the 10th business day following the date the Non-Employee Director incurs a Separation from Service for any reason other than his or her death, or

(ii) in up to 10 annual installments beginning on the 10th business day following the date the Non-Employee Director incurs a Separation from Service for any reason other than his or her death, as irrevocably designated by the Non-Employee Director.

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(iii) With respect to a Non-Employee Director’s Post-2004 Benefit, the Non-Employee Director shall make or shall have made such irrevocable designation as follows:

(A) With respect to the portion of the Post-2004 Benefit that constitutes compensation described in Section 3(a)(i) or 3(a)(ii) and for which either a deferral election was made before January 1, 2005, or an initial deferral election was made on or after January 1, 2005 and before December 31, 2005 in accordance with Section 3(c), the Non-Employee Director made such irrevocable designation in an Election Form that was completed and delivered to the Corporation on or before December 31, 2005, in accordance with Code Section 409A and guidance issued thereunder. Any such designation became irrevocable upon completion and delivery of such Election Form to the Corporation.

(B) With respect to the portion of the Post-2004 Benefit that constitutes compensation described in Section 3(a)(i) or 3(a)(ii) and that is not described in Section 5(a)(iii)(A), the Non-Employee Director shall make such irrevocable designation in the Election Form completed and delivered to the Corporation in accordance with Section 3(b) or 3(c), as applicable. Any such designation shall become irrevocable upon the completion and delivery of such Election Form to the Corporation.

(iv) Anything in the Plan to the contrary notwithstanding, if a Non-Employee Director has not designated, in accordance with the foregoing provisions of this Section 5(a) a form of payment for some portion of his or her Stock Unit Account or Cash Account on the date he or she incurs a Separation from Service for any reason other than his or her death, that portion of the Non-Employee Director’s Stock Unit Account and Cash Account shall be paid to the Non-Employee Director in a single lump sum on the 10^th business day following the date of such Separation from Service.

(b) If a Non-Employee Director incurs a Separation from Service due to death or his or her death occurs after Separation from Service but before payment to him or her of the entire balance of his or her Stock Unit Account and Cash Account, all or the remaining balance of his or her Stock Unit Account and Cash Account shall be paid to such Non-Employee Director’s Beneficiaries in a lump sum on, or in up to 10 annual installments beginning on, the 10^th business day following the date of

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death, as irrevocably elected by such Non-Employee Director in accordance with the provisions of, and subject to the deadlines of, Section 5(a) If no such designation is in effect for some portion of the Non-Employee Director’s Stock Unit Account or Cash Account on the date of his or her death, that portion of the Non-Employee Director’s Stock Unit Account and Cash Account shall be paid to his or her Beneficiaries in a single lump sum on the 10th business day following the date of such Non-Employee Director’s death.

(c) Except as provided in Section 5(d) below, the balance of a Non-Employee Director’s Stock Unit Account shall be distributed in cash. In the event of a single lump sum distribution in cash, the Non-Employee Director or the Beneficiaries of a deceased Non-Employee Director shall receive an amount in cash equal to the number of stock units in the Stock Unit Account multiplied by the mean of the high and low sales prices of the Common Stock as reported by the Nasdaq Stock Market on the fifth trading day prior to the distribution date. In the event of a distribution in cash in up to 10 annual installments, the cash amount determined in the manner provided in the immediately preceding sentence shall continue to accrue interest and shall be distributed to the Non-Employee Director or the Beneficiaries of a deceased Non-Employee Director on the distribution date in each year of the installment period in an amount equal to the then current cash balance in the Stock Unit Account multiplied by a fraction, the numerator of which shall be one, and the denominator of which shall be the number of years remaining in the installment period.

(d) Stock units in the Stock Unit Account representing the deferral of shares of Common Stock under the Northern Trust Corporation 1997 Stock Plan for Non-Employee Directors shall be distributed only in shares of Common Stock. In the event of a single lump sum distribution in Common Stock, a certificate representing the number of full shares of Common Stock equal to the number of such stock units in the Non-Employee Director’s Stock Unit Account representing the deferral of shares of Common Stock under the Northern Trust Corporation 1997 Stock Plan for Non-Employee Directors, registered in the name of the Non-Employee Director or the Beneficiaries of a deceased Non-Employee Director, shall be distributed to the Non-Employee Director or the Beneficiaries of a deceased Non-Employee Director on the distribution date referred to in Section 5(a) above. In the event of a distribution in Common Stock in up to 10 annual installments, a certificate representing the number of full shares of Common Stock equal to a fraction (the numerator of which shall be the number of stock units in the Non-Employee Director’s Stock Unit Account representing the deferral of shares of Common Stock under the Northern Trust Corporation 1997 Stock Plan for Non-Employee Directors, and the denominator of which shall be the number of annual installments designated by the Non-Employee Director), registered in the name of the Non-Employee Director or the Beneficiaries of a deceased Non-Employee Director, shall be distributed to the Non-Employee Director or the Beneficiaries of a deceased Non-Employee Director on the distribution date in each year of the installment period, provided that the number of shares in each of the installments may be rounded to avoid fractional shares.

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(e) The balance of a Non-Employee Director’s Cash Account shall be distributed in cash. In the event of a single lump sum distribution in cash, the entire balance of the Non-Employee Director’s Cash Account shall be distributed to the Non-Employee Director or the Beneficiaries of a deceased Non-Employee Director on the distribution date described in Section 5(a). In the event of a distribution in cash in up to 10 annual installments, the balance of the Cash Account shall continue to accrue interest and shall be distributed to the Non-Employee Director or the Beneficiaries of a deceased Non-Employee Director on the distribution date described in Section 5(a) in each year of the installment period in an amount equal to the then current balance in the Cash Account multiplied by a fraction, the numerator of which shall be one, and the denominator of which shall be the number of years remaining in the installment period.

6. Amendment or Termination.

(a) The Corporation intends the Plan to be permanent but reserves the right to amend or terminate the Plan when, in the sole opinion of the Corporation, such amendment or termination is advisable. Any such amendment or termination shall be made pursuant to a resolution of the Board and shall be effective as of the date of such resolution or such later date as the resolution may expressly state.

(b) No amendment or termination of the Plan shall (i) directly or indirectly deprive any current or former Non-Employee Director or any Beneficiaries, of all or any portion of such Non-Employee Director’s Stock Unit Account or Cash Account as determined as of the effective date of such amendment or termination, or (ii) directly or indirectly reduce the balance of any such Accounts held hereunder as of the effective date of such amendment or termination. Upon termination of the Plan, distribution of all Pre-2005 Benefits shall be made to Non-Employee Directors or their Beneficiaries in the manner and at the time described in Section 5 as if each Non-Employee Director incurred a Separation from Service on the date of Plan termination. Upon termination of the Plan, distribution of all Post-2004 Benefits shall be made to Non-Employee Directors or their Beneficiaries in the manner and at the time described in Section 5; provided, however, that if permitted under Code Section 409A and regulations and guidance issued thereunder, such payments shall be made as described in Section 5 as if such Non-Employee Director incurred a Separation from Service on the date of Plan termination. No additional deferrals shall be credited to the Accounts of Non-Employee Directors after termination of the Plan, but the Corporation shall continue to credit interest, earnings, gains and losses to the Accounts pursuant to Section 4 until the balances of such Accounts have been fully distributed to Non-Employee Directors or their Beneficiaries.

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(c) Anything in the preceding Sections 6(a) or 6(b) or elsewhere in the Plan to the contrary notwithstanding,

(i) the Plan may be amended in any manner necessary to ensure that the Plan complies in all applicable respects with Code Section 409A; and

(ii) the Plan may not be amended in any manner that would cause the Plan to fail to comply in any applicable respect with Code Section 409A.

7. General Provisions.

(a) The Plan at all times shall be entirely unfunded and no provision shall at any time be made with respect to segregating any assets of the Corporation for payment of any benefits hereunder. The right of a Non-Employee Director or the Beneficiaries of a deceased Non-Employee Director to receive a benefit hereunder shall be an unsecured claim against the general assets of the Corporation, and neither the Non-Employee Director nor such Beneficiaries shall have any rights in or against any specific assets of the Corporation. All amounts credited to Accounts shall constitute general assets of the Corporation.

(b) Shares of Common Stock distributed under the Plan may be authorized but unissued shares or treasury shares of the Corporation. The Corporation shall reserve such number of shares of Common Stock as may be issuable under the Plan.

(c) Nothing contained in the Plan shall constitute a guaranty by the Corporation, the Committee, or any other person or entity, that the assets of the Corporation will be sufficient to pay any benefit hereunder. No Non-Employee Director or the Beneficiaries of a deceased Non-Employee Director shall have any right to receive a distribution under the Plan except in accordance with the terms of the Plan.

(d) Establishment of the Plan shall not be construed to give any Non-Employee Director the right to be retained as a member of the Board.

(e) No interest of any person or entity in, or right to receive a distribution under, the Plan, shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind; nor may such interest or right to receive a distribution be taken, either voluntarily or involuntarily, for the satisfaction of the debts of, or other obligations or claims against, such person or entity, including claims for alimony, support, separate maintenance and claims in bankruptcy proceedings.

(f) The Plan shall be administered by the Secretary of the Corporation.

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(g) A Non-Employee Director may pay any applicable taxes due with respect to any shares distributed under the Plan in cash or in stock, either by having the Corporation withhold a portion of the shares otherwise distributable or by delivering to the Corporation shares otherwise owned by the Non-Employee Director.

(h) The Plan shall be construed and administered under the laws of the State of Delaware except to the extent preempted by federal law.

(i) Any election, notice, direction or other such action required or permitted to be made in writing under the Plan may also be made electronically, telephonically or otherwise, to the extent then permitted by applicable law and the administrative practices of the Corporation.

(j) Where appropriate, the terms “Corporation,” “Committee” or “Secretary of the Corporation” as used in this Plan shall also include any applicable subcommittee or any duly authorized delegate of the Corporation, the Committee or the Secretary of the Corporation, as the case may be. Such duly authorized delegate may be an individual or an organization within the Corporation or the Committee, or maybe an unrelated third party individual or organization.

(k) The Plan is intended to comply in all applicable respects with the requirements of Code Section 409A and shall be construed and administered so as to comply with that Code section.

IN WITNESS WHEREOF, Northern Trust Corporation has caused this amendment and restatement of the Plan to be executed on its behalf by its duly authorized officer, this 18th day of December, 2008, effective as of January 1, 2008 (or as of such other dates as are noted herein).

Northern Trust Corporation
By:	/s/ Timothy P. Moen
Name:	Timothy P. Moen
Title:	Executive Vice President - Human Resources and Administration

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EX-10.(XXX).(8)

Exhibit 10(xxx)(8)

AMENDMENT NUMBER EIGHT TO

THE NORTHERN TRUST COMPANY THRIFT-INCENTIVE PLAN

(As Amended and Restated Effective January 1, 2005)

WHEREAS, The Northern Trust Company (the “Company”) maintains The Northern Trust Company Thrift-Incentive Plan, As Amended and Restated Effective January 1, 2005, (the “Plan”); and

WHEREAS, amendment of the Plan is now considered desirable;

NOW, THEREFORE, by virtue and in exercise of the amending power reserved to the undersigned officer under Section 11.1 of the Plan, the Plan is hereby amended effective as of October 1, 2008, as follows:

1. The following shall be added as Supplement #14 to the Plan:

“Supplement #14

Special Rules for Former Employees of Lakepoint Investment Partners LLC

This Supplement #14 to The Northern Trust Company Thrift-Incentive Plan, As Amended and Restated Effective January 1, 2005 (the “Plan”), is made a part of the Plan and supersedes any provisions thereof to the extent that they are not consistent with the Supplement. Unless the context clearly implies or indicates to the contrary, a word, term or phrase used or defined in the Plan is similarly used or defined for purposes of this Supplement #14.

1. Application. This Supplement supplements and modifies the provisions of the Plan in connection with the employment by Northern Trust Bank, Federal Savings Bank (“NTB”) (or the Company or another Participating Employer) of the former employees of Lakepoint Investment Partners LLC (“Lakepoint”) who are listed on Schedule 6.1 of an Asset Purchase Agreement dated as of June 24, 2008 among NTB, Lakepoint and the individual owners of the then-outstanding equity interests of Lakepoint (the “Agreement”), pursuant to which NTB purchased substantially all of the assets of Lakepoint.

2. Effective Date. The effective date of this Supplement #14 is October 1, 2008.

3. Lakepoint Member. The term “Lakepoint Member” means any employee of Lakepoint who is listed on Schedule 6.1 of the Agreement and who became an employee of NTB (or the Company or another Participating Employer) on the Closing Date, pursuant to Section 6.1 of the Agreement.

4. Participation and Vesting Service. Anything in the plan to the contrary notwithstanding, for purposes of determining (a) eligibility to become a Participant in the Plan pursuant to section 3.1 of the Plan, (b) eligibility to receive a Matching Contribution with respect to the Lakepoint Member’s

Matchable Participant Deposits pursuant to section 5.1 of the Plan, and (c) the Vested Portion of a Lakepoint Member’s Matching Contribution Account and Profit Sharing Contribution Account pursuant to section 2.1 (mmm) of the Plan, a Lakepoint Member’s Vesting Service shall be calculated as if his or her employment with Lakepoint had been employment with the Company or a Participating Employer.”

2. The following shall be added at the end of Schedule A of the Plan:

“Affiliate Name and Acq/Div. Code		TIP Earliest Vesting Date
Lakepoint Agreement dated 6/24/08. Applicable to Lakepoint Members as defined in Supplement #14.	LP	Service Date with Lakepoint for participation and vesting.”

IN WITNESS WHEREOF, the Company has caused this amendment to be executed on its behalf this 28th of October, 2008 effective as of October 1, 2008.

THE NORTHERN TRUST COMPANY
By:	/s/ Timothy P. Moen
Name:	Timothy P. Moen
Title:	Executive Vice President and Human Resources Department Head

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EX-10.(XXX)(9)

Exhibit 10(xxx)(9)

AMENDMENT NUMBER NINE TO

THE NORTHERN TRUST COMPANY THRIFT-INCENTIVE PLAN

(As Amended and Restated Effective January 1, 2005)

WHEREAS, The Northern Trust Company (the “Company”) maintains The Northern Trust Company Thrift-Incentive Plan, As Amended and Restated Effective January 1, 2005 (the “Plan”); and

WHEREAS, amendment of the Plan is now considered desirable;

NOW, THEREFORE, by virtue and in exercise of the amending power reserved to the undersigned officer under section 11.1 of the Plan, the Plan is hereby amended, effective as of the dates provided herein, as follows:

1. Effective January 1, 2009, to delete section 2.1(t) of the Plan in its entirety and to substitute the following therefor:

“(t) “Discretionary Profit Sharing Contribution” means the contribution made by the Company and Participating Employers with respect to Discretionary Profit Sharing Eligible Employees for Plan Years beginning on or after January 1, 2005 and prior to January 1, 2009, if any, as provided in sections 5.2(b) and 5.2(c).”

2. Effective January 1, 2009, to add the following new sentence to the end of section 2.1(bbb) of the Plan:

“Effective January 1, 2009, Salary shall also include any differential wage payment (within the meaning of Code Section 3401(h)(2)) made while a Participant is performing service in the uniformed services.”

3. Effective as of January 1, 2007, to add the following new sentence to the end of section 2.1(mmm) of the Plan:

“Notwithstanding any provision of the Plan to the contrary, a Member shall also become fully vested in his or her Matching Contribution Account, Profit Sharing Contribution Account and Former ESOP Account if the Member dies while performing qualified military service (within the meaning of Code Section 414(u)), provided the Member would have been eligible for reinstatement of employment with the Company and Participating Employers had the Member’s qualified military service ended on the date before his or her death.”

4. Effective January 1, 2009, to delete section 5.2(b) of the Plan in its entirety and to substitute the following therefor:

“(b) Discretionary Profit Sharing Contributions. For each Plan Year beginning on or after January 1, 2005 and prior to January 1, 2009, the Company and Participating Employers may make a Discretionary Profit Sharing Contribution on behalf of Discretionary Profit Sharing Eligible Employees in

the amount, if any, determined by the Company and Participating Employers in their sole discretion, subject to the rules set forth in paragraph (c) next below. If the Company or Participating Employers determine to make a Discretionary Profit Sharing Contribution for a Plan Year, such contribution shall be allocated based on a formula providing for both a fixed dollar amount (which may be zero) that shall be allocated to the Profit Sharing Contribution Account of each such Discretionary Profit Sharing Eligible Employee, and an amount (which may be zero) that shall be allocated to the Profit Sharing Contribution Account of each such Discretionary Profit Sharing Eligible Employee as a percentage of such Discretionary Profit Sharing Eligible Employee’s Salary for such Plan Year. Discretionary Profit Sharing Contributions shall be discontinued for Plan Years beginning on and after January 1, 2009.”

5. Effective as of January 1, 2008, to add the following new sentence at the end of section 5.3(e) of the Plan:

“Effective January 1, 2008, “compensation” for purposes of this section 5.3 shall include regular pay (within the meaning of Treas. Reg. §1.415-(c)-2(e)(3)(ii)) that is received during the period ending on the later of the end of the calendar year in which the Participant’s severance from employment occurs or the date which is 2-1/2 months after the Participant’s severance from employment.”

6. Effective January 1, 2009, to add the following new section 9.8 to the Plan.

“9.8 Distribution of Before-Tax Deposits for Members Performing Military Service.

Notwithstanding any provision of the Plan to the contrary, a Member who continues to be treated as an active employee of the Company or a Participating Employer while performing service in the uniformed services (within the meaning of Code Section 3401(h)(2)(A)) shall be eligible to receive a distribution of his or her Before-Tax Deposit Account during such service. If a Member elects to take a distribution under this section 9.8, the Member shall be prohibited from making Salary Reduction Contributions for a period of six months following such distribution.”

IN WITNESS WHEREOF, the Company has caused this amendment to be executed on its behalf this 16th day of December, 2008, effective as of the dates provided herein.

THE NORTHERN TRUST COMPANY
By:	/s/ Timothy P. Moen
Name:	Timothy P. Moen
Title:	Executive Vice President and Human Resources Department Head

- 2 -

EX-10.(XXXIII).(3)

Exhibit 10(xxxiii)(3)

AMENDMENT NO. 3 TO

CAPITAL SUPPORT AGREEMENT

This Amendment No. 3 (the “Amendment”) to the Capital Support Agreement, is made as of the 24th day of February 2009, by and between NORTHERN TRUST CORPORATION (the “Support Provider”) and NORTHERN INSTITUTIONAL FUNDS (the “Trust”), on behalf of its series the Prime Obligations Portfolio (the “Fund”).

WHEREAS, the parties have entered into a Capital Support Agreement (the “Agreement”), dated as of February 21, 2008 and amended the Agreement on July 15, 2008 and September 29, 2008; and

WHEREAS, the parties desire to further amend the Agreement on the terms and subject to the conditions provided herein.

NOW THEREFORE, the parties, intending to be legally bound, hereby agree as follows:

1. Unless otherwise expressly provided herein, capitalized terms shall have the meanings assigned to them in the Agreement.

2. Section 1(c) is hereby deleted in its entirety and replaced as set forth below:

(c) “Contribution Event” means, with respect to any Eligible Note held by the Fund, any of the following occurrences:

(i) Any sale of the Eligible Note by the Fund for cash in an amount, after deduction of any commissions or similar transaction costs, less than the Amortized Cost Value (including any interest accrued by the Fund and unpaid) of the Eligible Note sold as of the date of settlement;

(ii) Receipt of final payment on the Eligible Note in an amount less than the Amortized Cost Value (including any interest accrued by the Fund and unpaid) of that Eligible Note as of the date such payment is received;

(iii) Issuance of orders by a court having jurisdiction over the matter discharging the Issuer from liability for the Eligible Note and providing for payments on that Eligible Note in an amount less than the Amortized Cost Value (including any interest accrued by the Fund and unpaid) of that Eligible Note as of the date such payment is received;

(iv) Receipt on or after April 1, 2009 of any Replacement Notes that are Eligible Notes and that have an Amortized Cost Value that is less than the Amortized Cost Value (including any interest accrued by the Fund and unpaid) of the Notes on the date that the Fund receives the Replacement Notes; provided, however, that such a receipt of Replacement Notes shall not be a Contribution Event if:

(x) the Board of Trustees of the Fund determines, after considering all options available to the Fund in the applicable exchange offer, debt restructuring, reorganization or similar transaction, that no option other than receipt of such Replacement Notes would be in the best interests of the Fund, in light of the Board’s fiduciary duties to the Fund under applicable law; and

(y) the Fund notifies the Division of Investment Management of the option selected; and

(z) record of the reasons for the Board’s determination is maintained in the relevant Board minutes and such minutes are made available to the U.S. Securities and Exchange Commission for inspection; or

(v) Receipt of any Replacement Notes that are or become “Eligible Securities,” as defined in paragraph (a)(10) of Rule 2a-7, and that have an Amortized Cost Value that is less than the Amortized Cost Value (including any interest accrued by the Fund and unpaid) of the Notes on the date that the Fund receives the Replacement Notes.

“Replacement Notes” are securities or other instruments received in exchange for, or as a replacement of, the Notes, as a result of an exchange offer, debt restructuring, reorganization or similar transaction pursuant to which the Notes, are exchanged for, or replaced with, new securities of the Issuer or a third party.

The excess of the Amortized Cost Value of the Eligible Notes subject to a Contribution Event over the amount received by the Fund in connection with such Contribution Event shall constitute the “Loss” on such Eligible Notes.

3. Section 3(c)(iii) of the Agreement is hereby deleted in its entirety and replaced as set forth below:

(iii) 5:00 p.m. Eastern Time on November 6, 2009.

4. Section 6(e) of the Agreement is hereby deleted in its entirety and replaced as set forth below:

(e) No amendment, change, waiver or discharge hereof shall be valid unless in writing and signed by the Support Provider and the Trust, on behalf of the Fund and notice of such amendment is provided to the staff of the U.S. Securities and Exchange Commission (the “Commission”); provided that, in no event shall any amendment, change, waiver or discharge hereof extend the date set forth in Section 3(c)(iii), unless the parties hereto have obtained the prior approval of the staff of the Commission.

2

IN WITNESS WHEREOF, the parties caused this Amendment No. 3 to the Capital Support Agreement to be executed.

NORTHERN TRUST CORPORATION
By:	/s/ William R. Dodds, Jr.
Name:	William R. Dodds, Jr.
Title:	Treasurer
ADDRESS FOR NOTICES:
50 S. LaSalle St.
Chicago, IL 60603
Attn:	William R. Dodds, Jr.
NORTHERN INSTITUTIONAL FUNDS FOR AND ON BEHALF OF ITS PRIME OBLIGATIONS PORTFOLIO
By:	/s/ Lloyd A. Wennlund
Name:	Lloyd A. Wennlund
Title:	President
ADDRESS FOR NOTICES:
50 S. LaSalle St.
Chicago, IL 60603
Attn:	Lloyd A. Wennlund

3

EX-10.(XXXIV).(3)

Exhibit 10(xxxiv)(3)

AMENDMENT NO. 3 TO

CAPITAL SUPPORT AGREEMENT

This Amendment No. 3 (the “Amendment”) to the Capital Support Agreement, is made as of the 24th day of February 2009, by and between NORTHERN TRUST CORPORATION (the “Support Provider”) and NORTHERN INSTITUTIONAL FUNDS (the “Trust”), on behalf of its series the Diversified Assets Portfolio (the “Fund”).

WHEREAS, the parties have entered into a Capital Support Agreement (the “Agreement”), dated as of February 21, 2008 and amended the Agreement on July 15, 2008 and September 29, 2008; and

WHEREAS, the parties desire to further amend the Agreement on the terms and subject to the conditions provided herein.

NOW THEREFORE, the parties, intending to be legally bound, hereby agree as follows:

1. Unless otherwise expressly provided herein, capitalized terms shall have the meanings assigned to them in the Agreement.

2. Section 1(c) is hereby deleted in its entirety and replaced as set forth below:

(c) “Contribution Event” means, with respect to any Eligible Note held by the Fund, any of the following occurrences:

(i) Any sale of the Eligible Note by the Fund for cash in an amount, after deduction of any commissions or similar transaction costs, less than the Amortized Cost Value (including any interest accrued by the Fund and unpaid) of the Eligible Note sold as of the date of settlement;

(ii) Receipt of final payment on the Eligible Note in an amount less than the Amortized Cost Value (including any interest accrued by the Fund and unpaid) of that Eligible Note as of the date such payment is received;

(iii) Issuance of orders by a court having jurisdiction over the matter discharging the Issuer from liability for the Eligible Note and providing for payments on that Eligible Note in an amount less than the Amortized Cost Value (including any interest accrued by the Fund and unpaid) of that Eligible Note as of the date such payment is received;

(iv) Receipt on or after April 1, 2009 of any Replacement Notes that are Eligible Notes and that have an Amortized Cost Value that is less than the Amortized Cost Value (including any interest accrued by the Fund and unpaid) of the Notes on the date that the Fund receives the Replacement Notes; provided, however, that such a receipt of Replacement Notes shall not be a Contribution Event if:

(x) the Board of Trustees of the Fund determines, after considering all options available to the Fund in the applicable exchange offer, debt restructuring, reorganization or similar transaction, that no option other than receipt of such Replacement Notes would be in the best interests of the Fund, in light of the Board’s fiduciary duties to the Fund under applicable law; and

(y) the Fund notifies the Division of Investment Management of the option selected; and

(z) record of the reasons for the Board’s determination is maintained in the relevant Board minutes and such minutes are made available to the U.S. Securities and Exchange Commission for inspection; or

(v) Receipt of any Replacement Notes that are or become “Eligible Securities,” as defined in paragraph (a)(10) of Rule 2a-7, and that have an Amortized Cost Value that is less than the Amortized Cost Value (including any interest accrued by the Fund and unpaid) of the Notes on the date that the Fund receives the Replacement Notes.

“Replacement Notes” are securities or other instruments received in exchange for, or as a replacement of, the Notes, as a result of an exchange offer, debt restructuring, reorganization or similar transaction pursuant to which the Notes, are exchanged for, or replaced with, new securities of the Issuer or a third party.

The excess of the Amortized Cost Value of the Eligible Notes subject to a Contribution Event over the amount received by the Fund in connection with such Contribution Event shall constitute the “Loss” on such Eligible Notes.

3. Section 3(c)(iii) of the Agreement is hereby deleted in its entirety and replaced as set forth below:

(iii) 5:00 p.m. Eastern Time on November 6, 2009.

4. Section 6(e) of the Agreement is hereby deleted in its entirety and replaced as set forth below:

(e) No amendment, change, waiver or discharge hereof shall be valid unless in writing and signed by the Support Provider and the Trust, on behalf of the Fund and notice of such amendment is provided to the staff of the U.S. Securities and Exchange Commission (the “Commission”); provided that, in no event shall any amendment, change, waiver or discharge hereof extend the date set forth in Section 3(c)(iii), unless the parties hereto have obtained the prior approval of the staff of the Commission.

2

IN WITNESS WHEREOF, the parties caused this Amendment No. 3 to the Capital Support Agreement to be executed.

NORTHERN TRUST CORPORATION
By:	/s/ William R. Dodds, Jr.
Name:	William R. Dodds, Jr.
Title:	Treasurer
ADDRESS FOR NOTICES:
50 S. LaSalle St.
Chicago, IL 60603
Attn:	William R. Dodds, Jr.
NORTHERN INSTITUTIONAL FUNDS FOR AND ON BEHALF OF ITS DIVERSIFIED ASSETS PORTFOLIO
By:	/s/ Lloyd A. Wennlund
Name:	Lloyd A. Wennlund
Title:	President
ADDRESS FOR NOTICES:
50 S. LaSalle St. Chicago, IL 60603
Attn:	Lloyd A. Wennlund

3

EX-10.(XXXV).(3)

Exhibit 10(xxxv)(3)

AMENDMENT NO. 3 TO

CAPITAL SUPPORT AGREEMENT

This Amendment No. 3 (the “Amendment”) to the Capital Support Agreement, is made as of the 24th day of February 2009, by and between NORTHERN TRUST CORPORATION (the “Support Provider”) and NORTHERN INSTITUTIONAL FUNDS (the “Trust”), on behalf of its series the Liquid Assets Portfolio (the “Fund”).

WHEREAS, the parties have entered into a Capital Support Agreement (the “Agreement”), dated as of February 21, 2008 and amended the Agreement on July 15, 2008 and September 29, 2008; and

WHEREAS, the parties desire to further amend the Agreement on the terms and subject to the conditions provided herein.

NOW THEREFORE, the parties, intending to be legally bound, hereby agree as follows:

1. Unless otherwise expressly provided herein, capitalized terms shall have the meanings assigned to them in the Agreement.

2. Section 1(c) is hereby deleted in its entirety and replaced as set forth below:

(c) “Contribution Event” means, with respect to any Eligible Note held by the Fund, any of the following occurrences:

(i) Any sale of the Eligible Note by the Fund for cash in an amount, after deduction of any commissions or similar transaction costs, less than the Amortized Cost Value (including any interest accrued by the Fund and unpaid) of the Eligible Note sold as of the date of settlement;

(ii) Receipt of final payment on the Eligible Note in an amount less than the Amortized Cost Value (including any interest accrued by the Fund and unpaid) of that Eligible Note as of the date such payment is received;

(iii) Issuance of orders by a court having jurisdiction over the matter discharging the Issuer from liability for the Eligible Note and providing for payments on that Eligible Note in an amount less than the Amortized Cost Value (including any interest accrued by the Fund and unpaid) of that Eligible Note as of the date such payment is received;

(iv) Receipt on or after April 1, 2009 of any Replacement Notes that are Eligible Notes and that have an Amortized Cost Value that is less than the Amortized Cost Value (including any interest accrued by the Fund and unpaid) of the Notes on the date that the Fund receives the Replacement Notes; provided, however, that such a receipt of Replacement Notes shall not be a Contribution Event if:

(x) the Board of Trustees of the Fund determines, after considering all options available to the Fund in the applicable exchange offer, debt restructuring, reorganization or similar transaction, that no option other than receipt of such Replacement Notes would be in the best interests of the Fund, in light of the Board’s fiduciary duties to the Fund under applicable law; and

(y) the Fund notifies the Division of Investment Management of the option selected; and

(z) record of the reasons for the Board’s determination is maintained in the relevant Board minutes and such minutes are made available to the U.S. Securities and Exchange Commission for inspection; or

(v) Receipt of any Replacement Notes that are or become “Eligible Securities,” as defined in paragraph (a)(10) of Rule 2a-7, and that have an Amortized Cost Value that is less than the Amortized Cost Value (including any interest accrued by the Fund and unpaid) of the Notes on the date that the Fund receives the Replacement Notes.

“Replacement Notes” are securities or other instruments received in exchange for, or as a replacement of, the Notes, as a result of an exchange offer, debt restructuring, reorganization or similar transaction pursuant to which the Notes, are exchanged for, or replaced with, new securities of the Issuer or a third party.

The excess of the Amortized Cost Value of the Eligible Notes subject to a Contribution Event over the amount received by the Fund in connection with such Contribution Event shall constitute the “Loss” on such Eligible Notes.

3. Section 3(c)(iii) of the Agreement is hereby deleted in its entirety and replaced as set forth below:

(iii) 5:00 p.m. Eastern Time on November 6, 2009.

4. Section 6(e) of the Agreement is hereby deleted in its entirety and replaced as set forth below:

(e) No amendment, change, waiver or discharge hereof shall be valid unless in writing and signed by the Support Provider and the Trust, on behalf of the Fund and notice of such amendment is provided to the staff of the U.S. Securities and Exchange Commission (the “Commission”); provided that, in no event shall any amendment, change, waiver or discharge hereof extend the date set forth in Section 3(c)(iii), unless the parties hereto have obtained the prior approval of the staff of the Commission.

2

IN WITNESS WHEREOF, the parties caused this Amendment No. 3 to the Capital Support Agreement to be executed.

NORTHERN TRUST CORPORATION
By:	/s/ William R. Dodds, Jr.
Name:	William R. Dodds, Jr.
Title:	Treasurer
ADDRESS FOR NOTICES:
50 S. LaSalle St.
Chicago, IL 60603
Attn:	William R. Dodds, Jr.
NORTHERN INSTITUTIONAL FUNDS FOR AND ON BEHALF OF ITS LIQUID ASSETS PORTFOLIO
By:	/s/ Lloyd A. Wennlund
Name:	Lloyd A. Wennlund
Title:	President
ADDRESS FOR NOTICES:
50 S. LaSalle St.
Chicago, IL 60603
Attn:	Lloyd A. Wennlund

3

EX-10.(XXXVI).(3)

Exhibit 10(xxxvi)(3)

AMENDMENT NO. 3 TO

CAPITAL SUPPORT AGREEMENT

This Amendment No. 3 (the “Amendment”) to the Capital Support Agreement, is made as of the 24th day of February 2009, by and between NORTHERN TRUST CORPORATION (the “Support Provider”) and NORTHERN FUNDS (the “Trust”), on behalf of its series the Money Market Fund (the “Fund”).

WHEREAS, the parties have entered into a Capital Support Agreement (the “Agreement”), dated as of February 21, 2008 and amended the Agreement on July 15, 2008 and September 29, 2008; and

WHEREAS, the parties desire to further amend the Agreement on the terms and subject to the conditions provided herein.

NOW THEREFORE, the parties, intending to be legally bound, hereby agree as follows:

1. Unless otherwise expressly provided herein, capitalized terms shall have the meanings assigned to them in the Agreement.

2. Section 1(c) is hereby deleted in its entirety and replaced as set forth below:

(c) “Contribution Event” means, with respect to any Eligible Note held by the Fund, any of the following occurrences:

(i) Any sale of the Eligible Note by the Fund for cash in an amount, after deduction of any commissions or similar transaction costs, less than the Amortized Cost Value (including any interest accrued by the Fund and unpaid) of the Eligible Note sold as of the date of settlement;

(ii) Receipt of final payment on the Eligible Note in an amount less than the Amortized Cost Value (including any interest accrued by the Fund and unpaid) of that Eligible Note as of the date such payment is received;

(iii) Issuance of orders by a court having jurisdiction over the matter discharging the Issuer from liability for the Eligible Note and providing for payments on that Eligible Note in an amount less than the Amortized Cost Value (including any interest accrued by the Fund and unpaid) of that Eligible Note as of the date such payment is received;

(iv) Receipt on or after April 1, 2009 of any Replacement Notes that are Eligible Notes and that have an Amortized Cost Value that is less than the Amortized Cost Value (including any interest accrued by the Fund and unpaid) of the Notes on the date that the Fund receives the Replacement Notes; provided, however, that such a receipt of Replacement Notes shall not be a Contribution Event if:

(x) the Board of Trustees of the Fund determines, after considering all options available to the Fund in the applicable exchange offer, debt restructuring, reorganization or similar transaction, that no option other than receipt of such Replacement Notes would be in the best interests of the Fund, in light of the Board’s fiduciary duties to the Fund under applicable law; and

(y) the Fund notifies the Division of Investment Management of the option selected; and

(z) record of the reasons for the Board’s determination is maintained in the relevant Board minutes and such minutes are made available to the U.S. Securities and Exchange Commission for inspection; or

(v) Receipt of any Replacement Notes that are or become “Eligible Securities,” as defined in paragraph (a)(10) of Rule 2a-7, and that have an Amortized Cost Value that is less than the Amortized Cost Value (including any interest accrued by the Fund and unpaid) of the Notes on the date that the Fund receives the Replacement Notes.

“Replacement Notes” are securities or other instruments received in exchange for, or as a replacement of, the Notes, as a result of an exchange offer, debt restructuring, reorganization or similar transaction pursuant to which the Notes, are exchanged for, or replaced with, new securities of the Issuer or a third party.

The excess of the Amortized Cost Value of the Eligible Notes subject to a Contribution Event over the amount received by the Fund in connection with such Contribution Event shall constitute the “Loss” on such Eligible Notes.

3. Section 3(c)(iii) of the Agreement is hereby deleted in its entirety and replaced as set forth below:

(iii) 5:00 p.m. Eastern Time on November 6, 2009.

4. Section 6(e) of the Agreement is hereby deleted in its entirety and replaced as set forth below:

(e) No amendment, change, waiver or discharge hereof shall be valid unless in writing and signed by the Support Provider and the Trust, on behalf of the Fund and notice of such amendment is provided to the staff of the U.S. Securities and Exchange Commission (the “Commission”); provided that, in no event shall any amendment, change, waiver or discharge hereof extend the date set forth in Section 3(c)(iii), unless the parties hereto have obtained the prior approval of the staff of the Commission.

2

IN WITNESS WHEREOF, the parties caused this Amendment No. 3 to the Capital Support Agreement to be executed.

NORTHERN TRUST CORPORATION
By:	/s/ William R. Dodds, Jr.
Name:	William R. Dodds, Jr.
Title:	Treasurer
ADDRESS FOR NOTICES:
50 S. LaSalle St.
Chicago, IL 60603
Attn:	William R. Dodds, Jr.
NORTHERN FUNDS FOR AND ON BEHALF OF ITS MONEY MARKET FUND
By:	/s/ Lloyd A. Wennlund
Name:	Lloyd A. Wennlund
Title:	President
ADDRESS FOR NOTICES:
50 S. LaSalle St.
Chicago, IL 60603
Attn:	Lloyd A. Wennlund

3

EX-13

Exhibit 13

FINANCIAL REVIEW

20

60

61

62

66

105

106

109

110

111

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA

($ In Millions Except Per Share Information)	2008			2007			2006			2005			2004
FOR THE YEAR ENDED DECEMBER 31
Noninterest Income
Trust, Investment and Other Servicing Fees	$	2,134.9		$	2,077.6		$	1,791.6		$	1,559.4		$	1,330.3
Foreign Exchange Trading Income		616.2			351.3			247.3			180.2			158.0
Security Commissions and Trading Income		77.0			67.6			62.7			55.2			50.5
Treasury Management Fees		72.8			65.3			65.4			71.2			88.1
Gain on Visa Share Redemption		167.9			–			–			–			–
Other Operating Income		186.9			95.3			83.0			85.2			78.0
Investment Security Gains (Losses), net		(56.3	)		6.5			1.4			.3			.2
Total Noninterest Income		3,199.4			2,663.6			2,251.4			1,951.5			1,705.1
Net Interest Income		1,079.1			845.4			744.7			673.7			566.9
Provision for Credit Losses		115.0			18.0			15.0			2.5			(15.0	)
Income before Noninterest Expenses		4,163.5			3,491.0			2,981.1			2,622.7			2,287.0
Noninterest Expenses
Compensation		1,133.1			1,038.2			876.6			774.2			661.7
Employee Benefits		223.4			234.9			217.6			190.4			161.5
Outside Services		413.8			386.2			316.2			268.0			228.0
Equipment and Software Expense		241.2			219.3			205.3			196.6			192.8
Occupancy Expense		166.1			156.5			145.4			133.7			121.5
Visa Indemnification Charges		(76.1	)		150.0			–			–			–
Other Operating Expenses		786.3			245.1			195.8			172.0			166.2
Total Noninterest Expenses		2,887.8			2,430.2			1,956.9			1,734.9			1,531.7
Income before Income Taxes		1,275.7			1,060.8			1,024.2			887.8			755.3
Provision for Income Taxes		480.9			333.9			358.8			303.4			249.7
Net Income	$	794.8		$	726.9		$	665.4		$	584.4		$	505.6
Net Income Applicable to Common Stock	$	782.8		$	726.9		$	665.4		$	584.4		$	505.6
Average Total Assets	$	73,029		$	60,588		$	53,106		$	45,974		$	41,300
PER COMMON SHARE
Net Income – Basic	$	3.53		$	3.31		$	3.06		$	2.68		$	2.30
– Diluted		3.47			3.24			3.00			2.64			2.27
Cash Dividends Declared		1.12			1.03			.94			.86			.78
Book Value – End of Period (EOP)		21.89			20.44			18.03			16.51			15.04
Market Price – EOP		52.14			76.58			60.69			51.82			48.58
AT YEAR END
Senior Notes		1,053			654			445			272			200
Long-Term Debt		3,293			2,682			2,308			2,818			2,625
Floating Rate Capital Debt		277			277			276			276			276
Stockholders		2,799			2,842			3,040			3,239			3,525
Staff (full-time equivalent)		12,200			10,900			9,700			9,000			8,000
RATIOS
Dividend Payout Ratio		32.0	%		31.4	%		30.8	%		32.1	%		33.9	%
Return on Average Assets		1.09			1.20			1.25			1.27			1.22
Return on Average Common Equity		15.98			17.46			17.57			17.01			16.07
Tier 1 Capital to Risk-Weighted Assets – EOP		13.1			9.7			9.8			9.7			11.0
Total Capital to Risk-Weighted Assets – EOP		15.4			11.9			11.9			12.3			13.3
Risk-Adjusted Leverage Ratio		8.5			6.8			6.7			7.1			7.6
Average Stockholders’ Equity to Average Assets		7.0			6.9			7.1			7.5			7.6

OPERATING RESULTS – EXCLUDING VISA RELATED ADJUSTMENTS

($ In Millions Except Per Share Information)	2008			2007			2006			2005			2004
Operating Earnings	$	641.3		$	821.1		$	665.4		$	584.4		$	505.6
Operating Earnings per Common Share – Basic	$	2.84		$	3.73		$	3.06		$	2.68		$	2.30
– Diluted		2.79			3.66			3.00			2.64			2.27
Operating Return on Average Common Equity		12.89	%		19.72	%		17.57	%		17.01	%		16.07	%

Operating results for 2008 and 2007 exclude adjustments relating to Visa Inc. (Visa). Excluded are Visa indemnification related charges totaling $150.0 million recorded in 2007, and benefits totaling $244.0 million recorded in 2008 in connection with Visa’s initial public offering. The 2008 benefits included a gain on the mandatory partial redemption of Northern Trust’s Visa shares totaling $167.9 million and a $76.1 million offset of the Visa indemnification related charges recorded in 2007. Visa related adjustments are discussed in further detail in Note 20 to the consolidated financial statements.

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

20

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW OF CORPORATION

Focused Business Strategy

Northern Trust Corporation (Northern Trust or the Corporation) is a leading provider of global financial solutions for asset management, asset servicing, fiduciary, and banking needs of corporations, institutions, and affluent individuals. Northern Trust is focused on the management, custody, and servicing of client assets in two target market segments, successful individuals, families, and privately-held businesses through its Personal Financial Services (PFS) business unit and institutional investors worldwide through its Corporate and Institutional Services (C&IS) business unit. An important element of this strategy is to provide an array of asset management and related service solutions to PFS and C&IS clients which are provided by a third business unit, Northern Trust Global Investments (NTGI). In executing this strategy, Northern Trust emphasizes quality through a high level of service complemented by the effective use of technology. Operating and systems support for these business units is provided through the Operations and Technology (O&T) business unit.

Business Structure

Northern Trust is a financial holding company that is a leading provider of investment management, asset and fund administration, fiduciary, and banking solutions for corporations, institutions, and successful individuals, families, and privately-held businesses. The Corporation conducts business through various U.S. and non-U.S. subsidiaries, including The Northern Trust Company (Bank). The Corporation has a network of 85 offices in 18 U.S. states and has offices in 15 international locations outside the U.S.

Except where the context otherwise requires, the term “Northern Trust” refers to Northern Trust Corporation and its subsidiaries on a consolidated basis.

FINANCIAL OVERVIEW

Northern Trust Corporation reported net income of $794.8 million in 2008, as compared with net income of $726.9 million in 2007. Reported results in both 2008 and 2007 were impacted by various adjustments related to Visa, Inc. (Visa), as further described in Note 20 to the consolidated financial statements.

Northern Trust is providing operating earnings in order to present a clearer indication of the results and trends in our core businesses, absent adjustments related to Visa. A reconciliation of operating earnings to reported earnings prepared in accordance with U.S. generally accepted accounting principles (GAAP) is included in the table below.

	2008						2007
($ In Millions Except Per Share Data)	Amount			Per Share			Amount		Per Share
Reported Earnings	$	794.8		$	3.47		$	726.9	$	3.24
Visa Indemnification Accrual (net of tax effects of $28.2 in 2008 and $55.8 in 2007)		(47.9	)		(.21	)		94.2		.42
Visa Initial Public Offering (net of $62.3 tax effect)		(105.6	)		(.47	)		–		–
Operating Earnings	$	641.3		$	2.79		$	821.1	$	3.66

Excluding the impact of Visa related items, Northern Trust achieved operating earnings of $641.3 million in 2008, down 22% as compared with $821.1 million in operating earnings achieved in 2007. Operating net income per common share equaled $2.79 in 2008, down 24% from $3.66 per common share in 2007.

Northern Trust’s 2008 results were strong in the context of the extremely difficult market and economic conditions of the past year. Revenues, excluding Visa related items, equaled a record $4.16 billion on a fully taxable equivalent (FTE) basis, an increase of 16% from 2007. Trust, investment and other servicing fees, the largest component of consolidated revenues, totaled $2.13 billion, up 3% compared with the prior year, reflecting new business, partially offset by the effect of lower market valuations. Foreign exchange trading income and net interest income (FTE) both achieved record levels in 2008. Foreign exchange trading income increased 75% and totaled $616.2 million, reflecting strong client volumes and high levels of currency volatility throughout 2008. Net interest income (FTE) increased 24% and totaled $1.13 billion, primarily reflecting higher levels of average earning assets and an increase in the net interest margin from 1.70% in 2007 to 1.76% in 2008.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Noninterest expenses, excluding Visa related adjustments, equaled $2.96 billion and increased 30% when compared with 2007. Northern Trust’s results in 2008 were negatively impacted by the following client support related and other significant charges recorded during the year:

Client Support Related Charges

Ÿ Pre-tax charges totaling $314.1 million ($198.8 million after tax, or $.88 per common share) in connection with support provided to cash investment funds under capital support agreements.

Ÿ Pre-tax charges totaling $167.6 million ($106.1 million after tax, or $.47 per common share) in connection with actions taken to provide support for Northern Trust’s securities lending clients.

Ÿ A $54.6 million pre-tax charge ($34.5 million after tax, or $.15 per common share) related to the establishment of a program to purchase certain illiquid auction rate securities that were purchased by a limited number of Northern Trust clients.

Other Significant Charges

Ÿ A $38.9 million pre-tax charge ($100.2 million after tax, or $.44 per common share) reducing net interest income and increasing income taxes to revised estimates regarding the outcome of the Corporation’s tax position with respect to certain structured leasing transactions.

Ÿ A $61.3 million pre-tax charge ($38.8 million after tax, or $.17 per common share) to reflect the other-than-temporary impairment of six asset-backed securities held within Northern Trust’s balance sheet investment portfolio.

Ÿ A $19.2 million pre-tax charge ($13.0 million after tax, or $.06 per common share) associated with severance and benefits and other operating costs in connection with the previously announced plan to reduce staff expense levels and better position the company for improved profitability and continued global growth.

Partially offsetting these charges were reductions in performance-based compensation and defined contribution plan expense, primarily reflecting the impact of the above charges on full year performance.

The provision for credit losses increased significantly in 2008, totaling $115.0 million as compared with $18.0 million in 2007. The higher provision for credit losses reflects both loan growth and the weak economic environment. Loans and leases equaled $30.8 billion at year end, an increase of 21% when compared with $25.3 billion at the end of 2007. The credit quality of our loan portfolio continued to be strong, with nonperforming assets at year end equal to only $100.2 million, or 0.33% of total loans and other real estate owned.

Reflecting the difficult market and economic environment, Northern Trust achieved only one of its four long-term, across cycle, strategic financial targets, measured exclusive of Visa related items. In 2008, we achieved revenue growth of 16%, exceeding our goal of 8-10% revenue growth. Strategic financial targets that were not achieved in 2008 were:

Ÿ earnings per share growth goal of 10-12% (operating earnings per share declined 24%);

Ÿ return on common equity goal of 16-18% (return on common equity equaled 12.89%); and

Ÿ positive operating leverage goal (expense growth exceeded revenue growth).

Client assets under custody equaled $3.01 trillion at year end 2008, down 27% from $4.14 trillion one year earlier. Client assets under management equaled $558.8 billion, down 26% from $757.2 billion the prior year. The decline in client assets reflects the market environment in 2008, which saw a 38% decline in the S&P 500^® index and a 45% decline in the international MSCI EAFE^® (USD) index. Partially offsetting the impact of market depreciation in 2008 was new business won from both existing and new clients.

Northern Trust continues to maintain its strong capital position, exceeding “well capitalized” levels under federal bank regulatory capital requirements. At year end, total stockholders’ equity equaled $6.39 billion, an increase of 42% from $4.51 billion one year earlier. The increase reflects the issuance of senior preferred stock and a related warrant to the U.S. Department of the Treasury pursuant to the terms of its Capital Purchase Program and the retention of earnings, offset in part by the repurchase of common stock.

CONSOLIDATED RESULTS OF OPERATIONS

REVENUE

Northern Trust generates the majority of its revenues from noninterest income, primarily consisting of trust, investment and other servicing fees. Net interest income comprises the remainder of revenues and consists of interest income generated by earning assets, net of interest expense on deposits and borrowed funds.

Total revenue for 2008 was $4.33 billion on a fully taxable equivalent basis, up 21% from $3.57 billion in 2007, which in turn was up 17% from 2006 revenues of $3.06 billion. When adjusted to an FTE basis, yields on taxable, nontaxable, and partially taxable assets are comparable, although the adjustment to an FTE basis has no impact on net income. Noninterest income totaled $3.20 billion in 2008, up 19%

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

from $2.66 billion in 2007, and represented 74% of total taxable equivalent revenue in 2008. Noninterest income of $2.66 billion in 2007 was up 18% from $2.25 billion in 2006, and represented 75% of total taxable equivalent revenue in 2007.

Net interest income for 2008 was $1.08 billion, up 28% from $845.4 million in 2007, which was up 14% from $744.7 million in 2006.

The largest contributor to the current year growth in revenues and noninterest income was foreign exchange trading income, up 75% to $616.2 million compared with $351.3 million in 2007. The increase in net interest income in 2008 is primarily attributable to a $10.8 billion or 20% increase in average earning assets and an increase in the net interest margin to 1.76% from 1.70% in 2007. Trust, investment and other servicing fees, the largest component of noninterest income, increased 3% to $2.13 billion compared with 2007 fees of $2.08 billion, reflecting new business offset by lower market valuations. Additional information regarding Northern Trust’s revenues by type is provided below.

2008 TOTAL REVENUE OF $4.33 BILLION (FTE)

Noninterest Income

The components of noninterest income, and a discussion of significant changes during 2008 and 2007, are provided below.

NONINTEREST INCOME

(In Millions)	2008			2007		2006
Trust, Investment and Other Servicing Fees	$	2,134.9		$	2,077.6	$	1,791.6
Foreign Exchange Trading Income		616.2			351.3		247.3
Security Commissions and Trading Income		77.0			67.6		62.7
Treasury Management Fees		72.8			65.3		65.4
Gain on Visa Share Redemption		167.9			–		–
Other Operating Income		186.9			95.3		83.0
Investment Security Gains (Losses), net		(56.3	)		6.5		1.4
Total Noninterest Income	$	3,199.4		$	2,663.6	$	2,251.4

2008 NONINTEREST INCOME

Trust, Investment and Other Servicing Fees

Trust, investment and other servicing fees accounted for 49% of total taxable equivalent revenue in 2008. Trust, investment and other servicing fees for 2008 increased 3% to $2.13 billion from $2.08 billion in 2007. Over the past five years, trust, investment and other servicing fees have increased at a compound annual growth rate of 12.4%. For a more detailed discussion of trust, investment and other servicing fees, refer to the “Business Unit Reporting” section.

Trust, investment and other servicing fees are generally based on the market value of assets custodied, managed, and serviced; the volume of transactions; securities lending volume and spreads; and fees for other services rendered. Certain market value calculations are performed on a monthly or quarterly basis in arrears. Certain investment management fee arrangements also may provide for performance fees, based on client portfolio returns exceeding predetermined levels. Securities lending fees are also impacted by Northern Trust’s share of unrealized investment gains and losses in one investment fund, used in our securities lending activities, that is accounted for at fair value. Based on analysis of historical trends and current asset and product mix, management estimates that a 10% rise or fall in overall equity markets would cause a corresponding increase or decrease in Northern Trust’s trust, investment and other servicing fees of approximately 4% and in total revenues of approximately 2%.

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table presents selected average month-end, average quarter-end, and year-end equity market indices and the percentage changes year over year.

MARKET INDICES	AVERAGE OF MONTH-END			AVERAGE OF QUARTER-END			YEAR-END
	2008	2007	CHANGE	2008	2007	CHANGE	2008	2007	CHANGE
S&P 500 ®	1,215	1,477	(18)%	1,168	1,475	(21)%	903	1,468	(38	)%
MSCI EAFE ® *	1,777	2,230	(20)%	1,699	2,241	(24)%	1,237	2,253	(45	)%
* In U.S. dollars.

In addition, C&IS client relationships are generally priced to reflect earnings from activities such as foreign exchange trading and custody-related deposits that are not included in trust, investment and other servicing fees. Custody-related deposits maintained with bank subsidiaries and foreign branches are primarily interest-bearing and averaged $33.2 billion in 2008, $28.3 billion in 2007, and $20.7 billion in 2006. Total assets under custody at December 31, 2008, which form the primary basis of our trust, investment and other servicing fees, were $3.01 trillion, down 27% from $4.14 trillion a year ago, and included $1.42 trillion of global custody assets. Managed assets totaled $558.8 billion, down 26% from $757.2 billion at the end of 2007. The above are in comparison to the twelve month declines in the S&P 500^® index of approximately 38% and the MSCI EAFE^® index (USD) of approximately 45% noted above.

ASSETS UNDER CUSTODY			DECEMBER 31								PERCENT CHANGE		FIVE-YEAR COMPOUND GROWTH RATE
($ In Billions)	2008		2007		2006		2005		2004		2008/07
Corporate & Institutional	$	2,719.2	$	3,802.9	$	3,263.5	$	2,699.7	$	2,345.1	(28	)%	7	%
Personal		288.3		332.3		281.9		225.6		209.3	(13	)	9
Total Assets Under Custody	$	3,007.5	$	4,135.2	$	3,545.4	$	2,925.3	$	2,554.4	(27	)%	8	%

C&IS ASSETS UNDER CUSTODY ($ in Billions)	PFS ASSETS UNDER CUSTODY ($ in Billions)

ASSETS UNDER MANAGEMENT			DECEMBER 31								PERCENT CHANGE		FIVE-YEAR COMPOUND GROWTH RATE
($ In Billions)	2008		2007		2006		2005		2004		2008/07
Corporate & Institutional	$	426.4	$	608.9	$	562.5	$	500.7	$	461.5	(30	)%	3	%
Personal		132.4		148.3		134.7		117.2		110.4	(11	)	5
Total Managed Assets	$	558.8	$	757.2	$	697.2	$	617.9	$	571.9	(26	)%	3	%

C&IS ASSETS UNDER MANAGEMENT ($ in Billions)	PFS ASSETS UNDER MANAGEMENT ($ in Billions)

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Foreign Exchange Trading Income

Northern Trust provides foreign exchange services in the normal course of business as an integral part of its global custody services. Active management of currency positions, within conservative limits, also contributes to trading income. Foreign exchange trading income totaled a record $616.2 million in 2008 compared with $351.3 million in 2007. The increase reflects strong client volumes as well as exceptionally high currency volatility.

Security Commissions and Trading Income

Revenues from security commissions and trading income totaled $77.0 million in 2008, compared with $67.6 million in 2007. This income is primarily generated from securities brokerage services provided by Northern Trust Securities, Inc. (NTSI). The increase in 2008 primarily reflects increased revenue from core brokerage services.

Treasury Management Fees

The fee portion of treasury management revenues totaled $72.8 million in 2008, up 11% from the $65.3 million reported in 2007. The increase resulted from more clients electing to pay for services in fees rather than with compensating deposit balances.

Gain on Visa Share Redemption

A gain of $167.9 million was realized in connection with Visa Inc.’s (Visa) March 2008 initial public offering.

Other Operating Income

The components of other operating income were as follows:

(In Millions)	2008		2007			2006
Loan Service Fees	$	30.0	$	16.5		$	17.1
Banking Service Fees		39.4		35.7			35.8
Non-Trading Foreign Exchange Gains (Losses)		36.1		2.1			(.6	)
Credit Default Swap Gains (Losses)		35.4		4.8			(1.6	)
Loss on Sale of Non-U.S. Subsidiary		–		(4.1	)		–
Other Income		46.0		40.3			32.3
Total Other Operating Income	$	186.9	$	95.3		$	83.0

The increase in loan service fees from the prior year primarily reflects increased commercial loan-related commitment fees. The increase in non-trading foreign exchange gains primarily reflects the foreign exchange rate impact of translating non-U.S. dollar denominated assets and liabilities. Other income increased primarily as a result of higher custody-related deposit revenue.

Investment Security Gains (Losses)

Net investment security losses were $56.3 million in 2008 compared with gains of $6.5 million in 2007. Included in the 2008 losses is a $61.3 million charge recorded to adjust the book values of six asset-backed securities to their estimated fair values, as management determined the securities to be other-than-temporarily impaired. Gains of $4.9 million and $6.3 million were recorded in 2008 and 2007, respectively, from the sale of CME Group Inc. stock acquired from the demutualizations and subsequent merger of the Chicago Mercantile Exchange and the Chicago Board of Trade.

NONINTEREST INCOME — 2007 COMPARED WITH 2006

Trust, investment and other servicing fees for 2007 accounted for 78% of total noninterest income and 58% of total taxable equivalent revenue and increased 16% to $2.08 billion from $1.79 billion for 2006. The increase from 2006 reflects the benefits of strong growth in global fees, strong new business, and higher equity markets. Total assets under custody at December 31, 2007 were $4.14 trillion, up 17% from $3.55 trillion in 2006, and included $2.09 trillion of global custody assets. Managed assets totaled $757.2 billion, up 9% from $697.2 billion at the end of 2006.

Foreign exchange trading income totaled $351.3 million in 2007, a 42% increase compared with $247.3 million in 2006. The increase primarily reflects strong client volumes as well as higher currency volatility.

Revenues from security commissions and trading income totaled $67.6 million in 2007, compared with $62.7 million in 2006, with the increase reflecting higher income from derivative instruments not designated in hedging relationships, partially offset by decreased revenue from core brokerage services and transition management services.

Total other operating income of $95.3 million in 2007 increased 15% from the 2006 balance of $83.0 million. 2007 included increases in the other income component resulting primarily from higher custody-related deposit revenue. Net security gains were $6.5 million in 2007 compared with net gains of $1.4 million in 2006.

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Net Interest Income

An analysis of net interest income on an FTE basis, major balance sheet components impacting net interest income, and related ratios are provided below.

ANALYSIS OF NET INTEREST INCOME [FTE]

										PERCENT CHANGE
($ In Millions)	2008			2007			2006			2008/07		2007/06
Interest Income	$	2,478.5		$	2,784.2		$	2,249.7		(11.0	)%	23.8	%
FTE Adjustment		49.8			62.5			64.8		(20.3	)	(3.5	)
Interest Income – FTE		2,528.3			2,846.7			2,314.5		(11.2	)	23.0
Interest Expense		1,399.4			1,938.8			1,505.0		(27.8	)	28.9
Net Interest Income – FTE Adjusted	$	1,128.9		$	907.9		$	809.5		24.3	%	12.1	%
Net Interest Income – Unadjusted	$	1,079.1		$	845.4		$	744.7		27.6	%	13.5	%
AVERAGE BALANCE
Earning Assets	$	64,249.9		$	53,426.4		$	45,994.8		20.3	%	16.2	%
Interest-Related Funds		55,173.9			45,722.7			40,410.0		20.7		13.1
Net Noninterest-Related Funds		9,076.0			7,703.7			5,584.8		17.8		37.9
										CHANGE IN PERCENTAGE
AVERAGE RATE
Earning Assets		3.94	%		5.33	%		5.03	%	(1.39	)	.30
Interest-Related Funds		2.54			4.24			3.72		(1.70	)	.52
Interest Rate Spread		1.40			1.09			1.31		.31		(.22	)
Total Source of Funds		2.18			3.63			3.27		(1.45	)	.36
Net Interest Margin		1.76	%		1.70	%		1.76	%	.06		(.06	)

Refer to pages 106 and 107 for a detailed analysis of net interest income.

Net interest income is defined as the total of interest income and amortized fees on earning assets, less interest expense on deposits and borrowed funds, adjusted for the impact of interest related hedging activity. Earning assets, which consist of securities, loans, and money market assets, are financed by a large base of interest-bearing funds, including personal and institutional deposits, wholesale deposits, short-term borrowings, senior notes, and long-term debt. Earning assets are also funded by net noninterest-related funds. Net noninterest-related funds include demand deposits, the reserve for credit losses, and stockholders’ equity, reduced by nonearning assets including cash and due from banks, items in process of collection and buildings and equipment. Variations in the level and mix of earning assets, interest-bearing funds, and net noninterest-related funds, and their relative sensitivity to interest rate movements, are the dominant factors affecting net interest income. In addition, net interest income is impacted by the level of nonperforming assets and client use of compensating deposit balances to pay for services.

Net interest income for 2008 was $1.08 billion, up 28% from $845.4 million in 2007. When adjusted to an FTE basis, yields on taxable, nontaxable, and partially taxable assets are comparable, although the adjustment to an FTE basis has no impact on net income. Net interest income on an FTE basis for 2008 was $1.13 billion, an increase of 24% from $907.9 million in 2007. The increase in net interest income in 2008 is primarily the result of a $10.8 billion or 20% increase in average earning assets, primarily money market assets and loans, and an increase in the net interest margin. The net interest margin increased to 1.76% from 1.70% in the prior year, reflecting a widening of the spread between interest rates on short-term investments and on overnight funding sources, including the impact of Federal Reserve Bank rate reductions. The results for 2008 and 2007 were negatively impacted by leasing related adjustments that reduced net interest income by $38.9 million and $13.0 million, respectively. Excluding the impact of the leasing adjustments, the net interest margin would have been 1.82% and 1.72%, respectively.

Earning assets averaged $64.2 billion, up 20% from the $53.4 billion reported in 2007. The growth in average earning assets reflects a $6.4 billion increase in money market assets, a $4.6 billion increase in loans and a $172.4 million decrease in securities.

Loans averaged $27.4 billion, 20% higher than last year. The year-to-year comparison reflects a 39% increase in average commercial loans to $7.0 billion. Residential mortgages rose 9% to average $9.7 billion and personal loans

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

increased 33% to $4.4 billion. Non-U.S. loans decreased 4% to $1.6 billion in 2008 from the prior year average of $1.7 billion. Money market assets averaged $24.6 billion in 2008, up 35% from 2007 levels. Securities averaged $12.3 billion in 2008, down 1% from 2007. Government sponsored agency securities averaged $8.7 billion in 2008, down 11% from $9.7 billion in the prior year.

The increase in average earning assets of $10.8 billion was funded primarily through growth in interest-bearing deposits. The deposit growth was primarily in non-U.S. office interest-bearing deposits, up $7.4 billion, and reflects increased global custody activity. Savings and money market deposits were up 11% and savings certificates increased 5%. Other interest-related funds averaged $8.7 billion, up $1.1 billion due primarily to higher levels of senior and subordinated debt, and Federal Home Loan Bank borrowings. Average net noninterest-related funds increased 18% and averaged $9.1 billion, due primarily to higher levels of noninterest-bearing deposits in both domestic and non-U.S. offices. Stockholders’ equity for the year averaged $5.1 billion, an increase of $942.0 million or 23% from 2007, principally due to the retention of earnings and the issuance of senior preferred stock and related warrant to the U.S. Department of the Treasury, offset in part by the repurchase of 1.1 million shares of the Corporation’s common stock at a total cost of $75.1 million ($66.68 average price per share).

For additional analysis of average balances and interest rate changes affecting net interest income, refer to the Average Statement of Condition with Analysis of Net Interest Income on pages 106 and 107.

NET INTEREST INCOME — 2007 COMPARED WITH 2006

The increase in net interest income in 2007 was primarily the result of a $7.4 billion or 16% increase in average earning assets, primarily money market assets and loans, offset in part by a reduction in the net interest margin. The net interest margin decrease to 1.70% from 1.76% in 2006 reflects the $13.0 million negative impact of the 2007 lease adjustment, a narrowing of the interest rate spread to 1.09% in 2007 compared to 1.31% in 2006, and the significant growth in global custody related deposits which were invested in lower-yielding short-term money market assets and securities.

Earning assets averaged $53.4 billion in 2007, up 16% from the $46.0 billion reported in 2006. The growth in average earning assets in 2007 reflected a $4.5 billion increase in money market assets, a $2.3 billion increase in loans, and a $656.3 million increase in securities.

Loans averaged $22.8 billion in 2007, 11% higher than in 2006. The year-to-year comparison reflects a 19% increase in average commercial loans to $5.0 billion. Residential mortgages rose 4% to average $8.9 billion and personal loans increased 11% to $3.3 billion. Non-U.S. loans increased 36% to $1.7 billion in 2007 from the 2006 average of $1.3 billion. Money market assets averaged $18.1 billion in 2007, up 33% from 2006 levels. Securities averaged $12.5 billion in 2007, up 6% resulting primarily from higher levels of asset-backed and government sponsored agency securities.

The increase in average earning assets of $7.4 billion in 2007 was funded primarily through growth in interest-bearing deposits. The deposit growth was concentrated in non-U.S. office interest-bearing deposits, up $6.7 billion resulting from increased global custody activity. Savings and money market deposits were up 6% and savings certificates increased 19%. Other interest-related funds averaged $7.6 billion, down $2.2 billion due primarily to lower levels of federal funds purchased, securities sold under agreements to repurchase, and other borrowed funds. Average net noninterest-related funds increased 38% and averaged $7.7 billion, due primarily to higher levels of noninterest-bearing deposits in non-U.S. offices and other liabilities. Stockholders’ equity for 2007 averaged $4.2 billion, an increase of $377.5 million or 10% from 2006, principally due to the retention of earnings, offset in part by the repurchase of over 3.2 million shares of the Corporation’s common stock at a total cost of $218.9 million ($67.10 average price per share).

Provision for Credit Losses

The provision for credit losses was $115.0 million in 2008 compared with an $18.0 million provision in 2007 and a $15.0 million provision in 2006. The current year provision reflects loan growth and weakness in the broader economic environment. For a fuller discussion of the reserve and provision for credit losses for 2008, 2007, and 2006, refer to pages 53 through 55.

Noninterest Expenses

Noninterest expenses for 2008 totaled $2.89 billion, up 19% from $2.43 billion in 2007. On an operating basis, which excludes the impact in 2008 and 2007 of the Visa indemnification related charges discussed below, noninterest expenses increased $683.7 million or 30%. The 2008 results were negatively impacted by the $536.3 million of client support related charges. The components of noninterest expenses and a discussion of significant changes in balances during 2008 and 2007 are provided below.

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

NONINTEREST EXPENSES

(In Millions)	2008			2007		2006
Compensation	$	1,133.1		$	1,038.2	$	876.6
Employee Benefits		223.4			234.9		217.6
Outside Services		413.8			386.2		316.2
Equipment and Software Expense		241.2			219.3		205.3
Occupancy Expense		166.1			156.5		145.4
Visa Indemnification Charges		(76.1	)		150.0		–
Other Operating Expenses		786.3			245.1		195.8
Total Noninterest Expenses	$	2,887.8		$	2,430.2	$	1,956.9

Compensation and Benefits

Compensation costs, which are the largest component of noninterest expenses, increased $94.9 million, or 9% from 2007, reflecting the impact of higher staff levels, annual salary increases, and the $17.0 million charge in connection with the plan to reduce staff expense levels. Partially offsetting this increase was a $36.4 million decrease in performance-based compensation. Staff on a full-time equivalent basis averaged 11,679 in 2008, up 14% compared with 10,273 in 2007. Increases in 2008 were due primarily to additional staff to support international growth. Staff on a full-time equivalent basis totaled 12,200 at December 31, 2008 compared with 10,900 at December 31, 2007.

Employee benefit costs for 2008 totaled $223.4 million, down $11.5 million or 5% from $234.9 million in 2007. The current year reflects lower defined benefit and defined contribution plan expenses, partially offset by higher expenses related to employment taxes and health care costs.

Outside Services

Outside services expense totaled $413.8 million in 2008, up 7% from $386.2 million in 2007. The increase reflects higher expenses for legal fees, and technical, consulting, and other outsourced services. Technical services includes expenses for services such as systems and application support, the provision of market and research data, and outsourced check processing and lockbox services.

Equipment and Software Expense

Equipment and software expense, comprised of depreciation and amortization, rental, and maintenance costs, totaled $241.2 million, up 10% from $219.3 million in 2007. The increase resulted from higher computer software expense.

Occupancy Expense

Net occupancy expense totaled $166.1 million, up 6% from $156.5 million in 2007. Occupancy expense for 2008 reflects higher levels of operating expense and building maintenance, partially offset by lower levels of rent expense.

Visa Indemnification Charges

The 2008 expenses reflect the $76.1 million offset to the Visa indemnification accruals and related charges established in the fourth quarter of 2007. Northern Trust, as a member bank of Visa U.S.A., Inc., recorded 2007 charges totaling $150 million related to our obligation to share in potential losses resulting from certain indemnified litigation involving Visa. These charges were partially offset in the first quarter of 2008 by Northern Trust’s proportionate share of a litigation escrow account established by Visa to fund the settlements of, or judgments in, the indemnified litigation. Visa indemnification charges are further discussed in Note 20 to the consolidated financial statements.

Other Operating Expenses

The components of other operating expenses were as follows:

(In Millions)	2008		2007		2006
Business Promotion	$	87.8	$	77.0	$	65.2
Other Intangibles Amortization		17.8		20.9		22.4
Capital Support Agreements		314.1		–		–
Securities Lending Client Support		167.6		–		–
Auction Rate Securities Purchase Program		54.6		–		–
Other Expenses		144.4		147.2		108.2
Total Other Operating Expenses	$	786.3	$	245.1	$	195.8

The increase in business promotion for the current year primarily reflects expenses related to the sponsorship of the Northern Trust Open golf tournament. Included in the current year other expenses component of other operating expenses are higher charges related to account servicing activities and legal matters, offset by a $20.1 million currency translation related benefit associated with Lehman Brothers bankruptcy matters.

NONINTEREST EXPENSE — 2007 COMPARED WITH 2006

Noninterest expenses for 2007 totaled $2.43 billion, up 24% from $1.96 billion in 2006. Excluding the $150.0 million of Visa indemnification charges, noninterest expenses for 2007 increased 17%. Compensation and employee benefits of $1.27 billion in 2007 represented 52% of total noninterest expenses. The year-over-year increase was $178.9 million, or 16%, from $1.09 billion in 2006. Compensation costs in 2007 totaled $1.04 billion, reflecting the impact of higher staff levels, higher performance-based compensation, and annual salary increases. Staff on a full-time equivalent basis averaged 10,273 in 2007, up 10% compared with 9,312 in 2006 due primarily to additional staff to support international growth. Staff on a full-time equivalent basis totaled 10,900 at December 31, 2007 compared with 9,700 at December 31, 2006.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Employee benefit costs for 2007 totaled $234.9 million, up $17.3 million or 8% from $217.6 million in 2006. The increase reflects higher expenses related to employment taxes and health care costs.

Outside services expense totaled $386.2 million in 2007, 22% higher than the $316.2 million in 2006. The increase reflects higher expenses for technical and consulting services, and volume-driven growth in global subcustody and investment manager sub-advisor expenses.

Equipment and software expense, comprised of depreciation and amortization, rental, and maintenance costs, totaled $219.3 million in 2007, which was 7% higher than the $205.3 million in 2006. The increase in 2007 resulted from higher computer software expense.

Occupancy expense totaled $156.5 million in 2007, up 8% from $145.4 million in 2006. Occupancy expense for 2007 reflects increased levels of building maintenance and operating expense, and increased rental costs.

Other operating expenses for 2007 excluding the $150.0 million of Visa indemnification charges totaled $245.1 million, up 25% from $195.8 million in 2006, reflecting significantly higher charges related to account servicing activities, higher business promotion and advertising, and increased hiring and employee relocation costs.

Provision for Income Taxes

The provision for income tax expense was $480.9 million in 2008 representing an effective rate of 37.7%. This compares with $333.9 million in income tax expense and an effective rate of 31.5% in 2007. The 2008 provision reflects an increase in pre-tax earnings and a $61.3 million increase related to revised estimates regarding the outcome of the Corporation’s tax position with respect to certain structured leasing transactions. The current year effective rate excluding the impact of client support, Visa indemnification, and leasing related charges was 32.8%. The effective tax rate in 2008 reflects a $47.8 million reduction in the tax provision resulting from management’s decision to indefinitely reinvest earnings of certain non-U.S. subsidiaries as compared with $18.4 million in 2007. The 2007 effective tax rate benefited from a reduction in net deferred tax liabilities resulting from new state tax legislation enacted during 2007.

PROVISION FOR INCOME TAXES — 2007 COMPARED WITH 2006

The provision for income tax expense of $333.9 million in 2007 representing an effective rate of 31.5%, compared with income tax expense of $358.8 million and an effective rate of 35.0% in 2006. The effective tax rate in 2007 reflects an $18.4 million reduction in the tax provision resulting from management’s decision to indefinitely reinvest 2007 earnings of certain non-U.S. subsidiaries and compares with $7.9 million in 2006. The 2007 effective tax rate also benefited from a lower state income tax provision due to a higher proportion of income generated in tax jurisdictions outside the U.S. and a reduction in net deferred tax liabilities resulting from new state tax legislation enacted during 2007. The 2006 provision includes $16.8 million related to leveraged leasing transactions.

BUSINESS UNIT REPORTING

Northern Trust, under the leadership of President and Chief Executive Officer Frederick H. Waddell, is organized around its two principal client-focused business units, C&IS and PFS. Investment management services and products are provided to the clients of these business units by NTGI. Operating and systems support is provided to each of the business units by O&T. Effective January 1, 2008, Mr. Waddell became Chief Executive Officer of Northern Trust and its chief operating decision maker, having final authority over resource allocation decisions and performance assessment. Prior to January 1, 2008, William A. Osborn, Chairman of the Corporation, served as Northern Trust’s Chief Executive Officer and was considered the chief operating decision maker.

Information regarding the financial performance of C&IS and PFS is presented in order to promote a greater understanding of their financial performance. The information, presented on an internal management-reporting basis, is derived from internal accounting systems that support Northern Trust’s strategic objectives and management structure. Management has developed accounting systems to allocate revenue and direct expenses related to each segment, and which incorporate processes for allocating assets, liabilities, and equity, and the applicable interest income and expense. Equity is allocated based on the proportion of economic capital associated with the business units.

Allocations of capital and certain corporate expenses 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 to the consolidated financial statements. Transfers of income and expense items are recorded at cost; there is no profit or loss on sales or transfers between business units. Northern Trust’s presentations are not necessarily consistent with similar information for other financial institutions.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In 2008, Northern Trust transitioned to new management accounting systems. In connection with the implementation of the new systems, enhancements were made to certain management accounting methodologies used for business unit reporting. These enhancements include changes in the application of funds transfer pricing used in calculating net interest income and revisions to the methodologies for allocating revenue, expense, and capital. These changes had no impact on Northern Trust’s consolidated results of operation or financial condition. Prior year information on a comparable basis is not available and, as a result, year over year changes are not necessarily indicative of changes in business unit performance from the prior year.

In this transition year, internal management reporting is centered on business unit direct contribution, defined as revenues less provision for credit losses and direct expenses. Direct expenses are those incurred directly by each business unit and exclude expenses relating to product and operating support provided by NTGI, O&T, and other support service functions. For management reporting purposes, expenses associated with NTGI and O&T, the impact of long-term debt and holding company investments, and certain corporate operating expenses and nonrecurring items are not allocated to the business units and are presented as part of “Treasury and Other Support Services.” Although prior year information has not been restated, business unit direct expenses and direct contribution for the prior years have been provided in the tables below for comparative purposes.

CONSOLIDATED FINANCIAL INFORMATION

(In Millions)	2008			2007		2006
Noninterest Income
Trust, Investment and Other Servicing Fees	$	2,134.9		$	2,077.6	$	1,791.6
Gain on Visa Share Redemption		167.9			–		–
Other		896.6			586.0		459.8
Net Interest Income (FTE)*		1,128.9			907.9		809.5
Revenues (FTE)*		4,328.3			3,571.5		3,060.9
Provision for Credit Losses		115.0			18.0		15.0
Visa Indemnification Charges		(76.1	)		150.0		–
Direct Expenses		2,963.9			2,280.2		1,956.9
Total Direct Contribution*		1,325.5			1,123.3		1,089.0
Average Assets	$	73,028.5		$	60,588.0	$	53,105.9

* Stated on an FTE basis. The consolidated figures include $49.8 million, $62.5 million, and $64.8 million of FTE adjustment for 2008, 2007, and 2006, respectively.

Corporate and Institutional Services

The C&IS business unit is a leading global provider of asset servicing, asset management, and related services to corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, and government funds. C&IS also offers a full range of commercial banking services, placing special emphasis on developing and supporting institutional relationships in two target markets: large and mid-sized corporations and financial institutions. Asset servicing, asset management, and related services encompass a full range of state-of-the-art capabilities including: global master trust and custody, trade settlement, and reporting; fund administration; cash management; investment risk and performance analytical services; and investment operations outsourcing. Client relationships are managed through the Bank and the Bank’s and the Corporation’s subsidiaries, including support from international locations in North America, Europe, the Asia-Pacific region and the Middle East. Asset servicing relationships managed by C&IS often include investment management, securities lending, transition management, and commission recapture services provided through the NTGI business unit. C&IS also provides related foreign exchange services in the U.S., U.K., Guernsey, and Singapore.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table summarizes the direct contribution of C&IS for the years ended December 31, 2008, 2007, and 2006 on a management-reporting basis.

CORPORATE AND INSTITUTIONAL SERVICES

DIRECT CONTRIBUTION

(In Millions)	2008		2007		2006
Noninterest Income
Trust, Investment and Other Servicing Fees	$	1,225.9	$	1,179.8	$	1,012.4
Other		804.6		462.8		346.7
Net Interest Income (FTE)		571.1		423.2		330.0
Revenues (FTE)		2,601.6		2,065.8		1,689.1
Provision for Credit Losses		25.2		4.5		9.1
Direct Expenses		856.3		377.7		331.0
Direct Contribution	$	1,720.1	$	1,683.6	$	1,349.0
Average Assets	$	49,490.4	$	41,510.2	$	33,899.4

C&IS direct contribution increased 2% in 2008 and totaled $1.72 billion compared with $1.68 billion in 2007, which increased 25% from $1.35 billion in 2006. The increase in 2008 resulted primarily from record foreign exchange trading results, record net interest income, and a record level of trust, investment and other servicing fees. Partially offsetting these increases were client support related charges totaling $454.9 million. Direct contribution increased in 2007 primarily due to higher levels of trust, investment and other servicing fees, foreign exchange trading results, and a 28% increase in net interest income.

C&IS Trust, Investment and Other Servicing Fees

C&IS trust, investment and other servicing fees are attributable to four general product types: Custody and Fund Administration, Investment Management, Securities Lending, and Other Services. Custody and fund administration services are priced, in general, using asset values at the beginning of the quarter. There are, however, fees within custody and fund administration services that are not related to asset values, but instead are based on transaction volumes or account fees. Investment management fees are primarily based on market values throughout a period. Securities lending revenue is impacted by market values and the demand for securities to be lent, which drives volumes, and the interest rate spread earned on the investment of cash deposited by investment firms as collateral for securities they have borrowed. Securities lending fees also include Northern Trust’s share of unrealized gains and losses on one mark-to-market investment fund used in securities lending activities. The other services fee category in C&IS includes such products as benefit payment, performance analysis, electronic delivery, and other services. Revenues from these products are generally based on the volume of services provided or a fixed fee.

Trust, investment and other servicing fees in C&IS increased 4% in 2008 to $1.23 billion from $1.18 billion in 2007. Provided below are the components of trust, investment and other servicing fees and a breakdown of assets under custody and under management.

CORPORATE AND INSTITUTIONAL SERVICES

TRUST, INVESTMENT AND OTHER SERVICING FEES

(In Millions)	2008		2007		2006
Custody and Fund Administration	$	661.6	$	615.2	$	502.4
Investment Management		277.4		290.6		256.3
Securities Lending		221.4		207.1		191.5
Other Services		65.5		66.9		62.2
Total Trust, Investment and Other Servicing Fees	$	1,225.9	$	1,179.8	$	1,012.4

2008 C&IS FEES

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CORPORATE AND INSTITUTIONAL SERVICES

ASSETS UNDER CUSTODY

	DECEMBER 31
(In Billions)	2008		2007		2006
North America	$	1,661.1	$	2,166.1	$	1,908.4
Europe, Middle East, and Africa		801.7		1,139.3		955.2
Asia-Pacific Region		146.2		228.0		152.0
Securities Lending		110.2		269.5		247.9
Total Assets Under Custody	$	2,719.2	$	3,802.9	$	3,263.5

2008 C&IS ASSETS UNDER CUSTODY

CORPORATE AND INSTITUTIONAL SERVICES

ASSETS UNDER MANAGEMENT

	DECEMBER 31
(In Billions)	2008		2007		2006
North America	$	232.3	$	281.3	$	258.9
Europe, Middle East, and Africa		52.8		35.1		36.1
Asia-Pacific Region		31.1		23.0		19.6
Securities Lending		110.2		269.5		247.9
Total Assets Under Management	$	426.4	$	608.9	$	562.5

2008 C&IS ASSETS UNDER MANAGEMENT

The increase in C&IS trust, investment and other servicing fees reflects new business, partially offset by lower market valuations. Custody and fund administration fees increased 8% to $661.6 million compared with $615.2 million a year ago, reflecting growth in global fees. Fees from investment management totaled $277.4 million compared with $290.6 million in the year-ago period. The 5% decrease in investment management fees primarily reflects lower market valuations. Securities lending fees increased 7% to $221.4 million compared with $207.1 million in 2007. The increase was primarily due to improved spreads on the investment of cash collateral, partially offset by decreased volumes and net unrealized asset valuation losses in one mark-to-market investment fund used in our securities lending activities which reduced fees by approximately $212.7 million in 2008 and approximately $93.8 million in 2007.

C&IS assets under custody totaled $2.72 trillion at December 31, 2008, 28% lower than $3.80 trillion at December 31, 2007. Managed assets totaled $426.4 billion and $608.9 billion at December 31, 2008 and 2007, respectively, and as of the current year-end were invested 37% in equity securities, 15% in fixed income securities and 48% in cash and other assets. Cash and other assets that have been deposited by investment firms as collateral for securities they have borrowed from custody clients are invested by Northern Trust and are included in assets under custody and under management. This collateral totaled $110.2 billion and $269.5 billion at December 31, 2008 and 2007, respectively, primarily reflecting lower market valuations and the impact of changes in the relative values of non-U.S. currencies to the U.S. dollar.

C&IS Other Noninterest Income

Other noninterest income in 2008 increased 74% from the prior year primarily due to a 76% increase in foreign exchange trading income, $35.4 million of valuation gains recorded on certain credit default swap contracts, a $34.3 million increase in non-trading foreign exchange gains primarily due to the translation of non-U.S. dollar denominated assets and liabilities, and higher levels of custody-related deposit revenue and commercial loan-related commitment fees. The increase in other noninterest income in 2007 compared with 2006 resulted from a 43% increase in foreign exchange trading income and higher levels of custody-related deposit revenue.

C&IS Net Interest Income

Net interest income increased 35% in 2008, resulting primarily from an $8.9 billion or 25% increase in average earning assets, primarily short-term money market assets and loans. The net interest margin was 1.27% in 2008 and 1.17% in 2007. The 28% increase in net interest income for 2007 from the previous year was also primarily due to an increase in short-term money market assets and loans.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

C&IS Provision for Credit Losses

The provision for credit losses was $25.2 million for 2008, compared with $4.5 million in 2007, and $9.1 million in 2006. The increase in the provision for credit losses from the prior year reflects growth in the commercial loan portfolio and weakness in the broader economic environment. The provision for credit losses in 2007 and 2006 primarily reflected overall growth in the commercial loan portfolio.

C&IS Direct Expenses

Direct expenses of C&IS increased 127% in 2008 and 14% in 2007. Included in the current year results are $454.9 million of client support related charges. Excluding the impact of these expenses, direct expenses were $401.4 million, up 6% from 2007. The growth in expenses for 2008 reflects the impact of higher staff levels, annual salary increases and other staff-related charges, and higher expenses related to account servicing activities, partially offset by a decrease in performance-based compensation, and lower expenses for technical and global subcustody services. The growth in expenses for 2007 reflects the impact of higher staff levels, annual salary increases, increased performance-based compensation, employee benefit charges and higher volume-driven growth in global subcustody expenses and consulting services.

Personal Financial Services

The PFS business unit provides personal trust, investment management, custody, and philanthropic services; financial consulting; guardianship and estate administration; qualified retirement plans; brokerage services; and private and business banking. PFS focuses on high net worth individuals and families, business owners, executives, professionals, retirees, and established privately-held businesses in its target markets. PFS also includes the Wealth Management Group, which provides customized products and services to meet the complex financial needs of individuals and family offices in the United States and throughout the world with assets typically exceeding $200 million. PFS services are delivered through a network of 85 offices in 18 U.S. states as well as offices in London and Guernsey.

The following table summarizes the direct contribution of PFS for the years ended December 31, 2008, 2007, and 2006 on a management-reporting basis.

PERSONAL FINANCIAL SERVICES

DIRECT CONTRIBUTION

(In Millions)	2008		2007		2006
Noninterest Income
Trust, Investment and Other Servicing Fees	$	909.0	$	897.8	$	779.2
Other		132.6		99.4		96.8
Net Interest Income (FTE)		542.7		518.9		497.7
Revenues (FTE)		1,584.3		1,516.1		1,373.7
Provision for Credit Losses		89.8		13.5		5.9
Direct Expenses		623.5		514.6		487.0
Direct Contribution	$	871.0	$	988.0	$	880.8
Average Assets	$	22,868.7	$	18,888.6	$	17,482.0

PFS direct contribution totaled $871.0 million in 2008, a decrease of 12% from 2007, which in turn was 12% above the direct contribution achieved in 2006. The decline in direct contribution in 2008 resulted primarily from $81.4 million of client support related charges, and a $76.3 million increase in the provision for credit losses. Total revenues increased 4% to $1.58 billion from 2007 results reflecting record levels of trust, investment and other servicing fees and a 5% increase in net interest income. The increase in 2007 direct contribution is attributable primarily to higher trust, investment and other servicing fees and higher net interest income.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

PFS Trust, Investment and Other Servicing Fees

Provided below is a summary of trust, investment and other servicing fees and assets under custody and under management.

PERSONAL FINANCIAL SERVICES

TRUST, INVESTMENT AND OTHER SERVICING FEES

(In Millions)	2008		2007		2006
Illinois	$	301.6	$	302.5	$	260.6
Florida		205.5		207.3		189.2
California		90.7		92.2		82.8
Arizona		47.8		47.9		42.5
Texas		37.9		36.0		32.5
Other		83.1		78.3		60.5
Wealth Management		142.4		133.6		111.1
Total Trust, Investment and Other Servicing Fees	$	909.0	$	897.8	$	779.2

2008 PFS FEES

PERSONAL FINANCIAL SERVICES

ASSETS UNDER CUSTODY

	DECEMBER 31
(In Billions)	2008		2007		2006
Illinois	$	46.6	$	54.2	$	48.9
Florida		28.6		34.7		31.3
California		14.3		17.4		14.5
Arizona		5.7		7.3		7.2
Texas		6.1		6.6		5.9
Other		18.6		17.1		14.5
Wealth Management		168.4		195.0		159.6
Total Assets Under Custody	$	288.3	$	332.3	$	281.9

2008 PFS ASSETS UNDER CUSTODY

PERSONAL FINANCIAL SERVICES

ASSETS UNDER MANAGEMENT

	DECEMBER 31
(In Billions)	2008		2007		2006
Illinois	$	35.7	$	41.3	$	37.1
Florida		23.3		27.9		25.8
California		10.2		12.0		10.2
Arizona		4.5		5.6		5.4
Texas		4.5		4.7		4.1
Other		25.2		26.9		24.6
Wealth Management		29.0		29.9		27.5
Total Assets Under Management	$	132.4	$	148.3	$	134.7

2008 PFS ASSETS UNDER MANAGEMENT

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Fees in the majority of locations in which PFS operates, and all mutual fund-related revenue, are accrued based on market values. PFS trust, investment and other servicing fees totaled a record $909.0 million for the year, up 1% from $897.8 million in 2007, which in turn was up 15% from $779.2 million in 2006. The current year performance was positively impacted by strong new business, offset in part by lower equity markets. The 2007 performance was positively impacted by new business and higher equity markets when compared with 2006.

At December 31, 2008, assets under custody in PFS totaled $288.3 billion, compared with $332.3 billion at December 31, 2007. Included in assets under custody are those for which Northern Trust has management responsibility. Managed assets totaled $132.4 billion at December 31, 2008, 11% lower than the previous year end, and were invested 31% in equity securities, 28% in fixed income securities and 41% in cash and other assets.

PFS Other Income

Other noninterest income for 2008 totaled $132.6 million compared with $99.4 million last year. The increase in noninterest income for 2008 was primarily driven by higher security commissions and trading income, commercial loan-related commitment fees, and treasury management fees. Noninterest income for 2007 was 3% higher than 2006.

PFS Net Interest Income

Net interest income of $542.7 million was 5% higher than the previous year. Average loan volume grew $3.6 billion or 20%, while the net interest margin decreased to 2.43% from 2.84% in 2007. The net interest margin reflects asset yields that have declined at a more accelerated pace than the related total funding sources, and the impact of changes to management accounting system methodologies relating to the application of funds transfer pricing and the allocation of capital. Net interest income for 2007 of $518.9 million was 4% higher than for 2006 resulting primarily from higher average loan volume, partially offset by a decrease in the net interest margin from 2.96% in 2006 to 2.84% in 2007.

PFS Provision for Credit Losses

The provision for credit losses was $89.8 million for 2008, compared with $13.5 million in 2007, and $5.9 million in 2006. The increase in the provision for credit losses from 2007 reflects growth in the commercial loan portfolio and weakness in the broader economic environment. The provision for credit losses in 2007 and 2006 primarily reflects growth in the loan portfolio and the migration of certain loans to higher risk credit ratings.

PFS Direct Expenses

Direct expenses of PFS increased 21% in 2008 and 6% in 2007. Included in the current year results are the client support related charges totaling $81.4 million, related to the auction rate securities purchase program and other client support related charges. Excluding the impact of these expenses, total direct expenses were $542.1 million, up $27.5 million or 5% from 2007. The remaining growth in noninterest expenses for 2008 reflects annual salary increases, higher charges related to account servicing activities and legal matters, and fees for legal services, partially offset by lower performance-based compensation, occupancy costs, and lower business promotion and advertising. The growth in expenses for 2007 reflects annual salary increases, higher performance-based compensation, and higher occupancy costs, partially offset by lower costs associated with business promotion and advertising.

Northern Trust Global Investments

NTGI, through various subsidiaries of the Corporation, provides a broad range of investment management and related services and other products to U.S. and non-U.S. clients, including clients of C&IS and PFS. Clients include institutional and individual separately managed accounts, bank common and collective funds, registered investment companies, non-U.S. collective investment funds, and unregistered private investment funds. NTGI offers both active and passive equity and fixed income portfolio management, as well as alternative asset classes (such as private equity and hedge funds of funds) and multi-manager products and services. NTGI’s activities also include brokerage, securities lending, transition management, and related services. NTGI’s business operates internationally and its revenues are fully allocated to C&IS and PFS.

At year-end 2008, Northern Trust managed $558.8 billion in assets for personal and institutional clients compared with $757.2 billion at year-end 2007. The decrease in assets is attributable to lower equity markets, partially offset by strong new business. Assets under management have grown at a five-year compound annual rate of 3%.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

NORTHERN TRUST GLOBAL INVESTMENTS

$558.8 BILLION ASSETS UNDER MANAGEMENT

ASSET CLASSES

CLIENT SEGMENTS

MANAGEMENT STYLES

Operations and Technology

The O&T business unit supports all of Northern Trust’s business activities, including the processing and product management activities of C&IS, PFS, and NTGI. These activities are conducted principally in the operations and technology centers in Chicago, London, and Bangalore and fund administration centers in Ireland.

Corporate Financial Management Group

The Corporate Financial Management Group includes the Chief Financial Officer, Controller, Treasurer, Corporate Development, Financial Analysis & Internal Consulting, Investor Relations, and Strategic Sourcing functions. The Group is responsible for Northern Trust’s accounting and financial infrastructure and for managing the Corporation’s financial position.

Corporate Risk Management Group

The Corporate Risk Management Group includes the Credit Policy and other Corporate Risk Management functions. The Credit Policy function is described in the “Risk Management – Loans and Other Extensions of Credit” section. The Corporate Risk Management Group monitors, measures, and facilitates the management of risks across the businesses of the Corporation and its subsidiaries.

Treasury and Other Support Services

Treasury and Other Support Services includes expenses associated with NTGI and O&T product and operating support and expenses associated with the wholesale funding activities and the investment portfolios of the Corporation and the Bank. Treasury and Other Support Services also includes certain corporate-based expenses, executive level compensation, and nonrecurring items not allocated to the business units.

The following table summarizes the direct contribution of Treasury and Other Support Services for the years ended December 31, 2008, 2007, and 2006 on a management-reporting basis.

TREASURY AND OTHER SUPPORT SERVICES

DIRECT CONTRIBUTION

(In Millions)	2008			2007			2006
Gain on Visa Share Redemption	$	167.9		$	–		$	–
Other Noninterest Income		(40.6	)		23.8			16.3
Net Interest Income (Expense) (FTE)		15.1			(34.2	)		(18.2	)
Revenues (FTE)		142.4			(10.4	)		(1.9	)
Visa Indemnification Charges		(76.1	)		150.0			–
Direct Expenses		1,484.1			1,387.9			1,138.9
Direct Contribution	$	(1,265.6	)	$	(1,548.3	)	$	(1,140.8	)
Average Assets	$	669.4		$	189.2		$	1,724.5

Treasury and Other Support Services other noninterest income was a negative $40.6 million compared with $23.8 million in the prior year. The current year was impacted by losses totaling $61.3 million recognized in connection with the write-down to estimated fair value of six asset-backed securities determined to be other-than-temporarily impaired. Net interest income for 2008 of $15.1 million, as compared with a negative $34.2 million in 2007 and a negative $18.2 million in 2006, benefited as a result of methodology changes under the new management accounting systems. The current year also includes the $76.1 million offset to the Visa indemnification accruals and related charges totaling $150.0

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

million that were recorded in 2007. Direct expenses totaled $1.48 billion for 2008 compared with $1.39 billion in the prior year. Contributing to the current year increase in direct expenses are higher staff levels and annual salary increases, higher levels of consulting and other professional service fees, and increases in software related expense, partially offset by lower performance-based compensation. Expenses in 2007 increased due to higher levels of compensation, increases in consulting and other professional service fees, and higher costs associated with business promotion and advertising.

CRITICAL ACCOUNTING ESTIMATES

The use of estimates and assumptions is required in the preparation of financial statements in conformity with GAAP and actual results could differ from those estimates. The Securities and Exchange Commission has issued guidance relating to the disclosure of critical accounting estimates. Critical accounting estimates are those that require management to make subjective or complex judgments about the effect of matters that are inherently uncertain and may change in subsequent periods. Changes that may be required in the underlying assumptions or estimates in these areas could have a material impact on Northern Trust’s future financial condition and results of operations.

For Northern Trust, accounting estimates that are viewed as critical are those relating to reserving for credit losses, pension plan accounting, other than temporary impairment of investment securities, and accounting for structured leasing transactions. Management has discussed the development and selection of each critical accounting estimate with the Audit Committee of the Board of Directors.

Reserve for Credit Losses

The reserve for credit losses represents management’s estimate of probable losses that have occurred as of the date of the financial statements. The loan and lease portfolio and other credit exposures are regularly reviewed to evaluate the adequacy of the reserve for credit losses. In determining the level of the reserve, Northern Trust evaluates the adequacy of the reserve related to performing loans and lending-related commitments as well as loans and lending-related commitments that are deemed impaired.

The quarterly analysis of specific and inherent loss components and the control process maintained by Credit Policy and the lending staff, as described in the “Risk Management – Loans and Other Extensions of Credit” section, are the principal methods relied upon by management for the timely identification of, and adjustment for, changes in estimated credit loss levels. In addition to Northern Trust’s own experience, management also considers the experience of peer institutions and regulatory guidance. Control processes and analyses employed to evaluate the adequacy of the reserve for credit losses are reviewed on at least an annual basis and modified as considered appropriate. As discussed in more detail in the “Risk Management – Provision and Reserve for Credit Losses” section, effective in 2008, the methodology used by management to determine the appropriate level of the reserve was modified to better align loan loss reserves with the related credit risk.

Loans, leases and other extensions of credit deemed uncollectible are charged to the reserve. Subsequent recoveries, if any, are credited to the reserve. The provision for credit losses, which is charged to income, is the amount necessary to adjust the reserve to the level determined through the above process. Actual losses may vary from current estimates and the amount of the provision may be either greater than or less than actual net charge-offs.

Management’s estimates utilized in establishing an adequate reserve for credit losses are not dependent on any single assumption. Management evaluates numerous variables, many of which are interrelated or dependent on other assumptions and estimates, in determining reserve adequacy. Due to the inherent imprecision in accounting estimates, other estimates or assumptions could reasonably have been used in the current period and changes in estimates are reasonably likely to occur from period to period. However, management believes that the established reserve for credit losses appropriately addresses these uncertainties and is adequate to cover probable losses which have occurred as of the date of the financial statements.

The reserve for credit losses consists of the following components:

Specific Reserve: The amount of specific reserves is determined through an individual evaluation of loans and lending-related commitments considered impaired that is based on expected future cash flows, the value of collateral, and other factors that may impact the borrower’s ability to pay.

Inherent Reserve: The amount of inherent loss reserves is based primarily on reserve factors which incorporate management’s evaluation of historical charge-off experience and various qualitative factors such as management’s evaluation of economic and business conditions and changes in the character and size of the loan portfolio. Reserve factors are applied to loan and lease credit exposures aggregated by shared risk characteristics and are reviewed quarterly by

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Northern Trust’s Loan Loss Reserve Committee which includes representatives from Credit Policy, business unit management, and Corporate Financial Management.

Pension Plan Accounting

As summarized in Note 22 to the consolidated financial statements, Northern Trust maintains a noncontributory defined benefit pension plan covering substantially all U.S. employees (the Qualified Plan) and a noncontributory supplemental pension plan (the Nonqualified Plan). Certain European-based employees also participate in local defined benefit pension plans that have been closed to new employees in prior years. Measuring cost and reporting liabilities resulting from defined benefit pension plans requires the use of several assumptions regarding future interest rates, asset returns, compensation increases and other actuarial-based projections relating to the plans. Due to the long-term nature of this obligation and the estimates that are required to be made, the assumptions used in determining the periodic pension expense and the projected pension obligation are closely monitored and annually reviewed for adjustments that may be required. The Financial Accounting Standards Board’s (FASB) Statement of Financial Accounting Standards (SFAS) No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” (SFAS No. 158) requires that differences between the estimates and actual experience be recognized as other comprehensive income in the period in which they occur. The differences are amortized into net periodic pension expense from accumulated other comprehensive income over the future working lifetime of eligible participants. As a result, differences between the estimates made in the calculation of periodic pension expense and the projected pension obligation and actual experience affect stockholders’ equity in the period in which they occur but continue to be recognized as expense systematically and gradually over subsequent periods.

Northern Trust recognizes the significant impact that these pension-related assumptions have on the determination of the pension obligations and related expense and has established procedures for monitoring and setting these assumptions each year. These procedures include an annual review of actual demographic and investment experience with the pension plan’s actuaries. In addition to actual experience, adjustments to these assumptions consider observable yields on fixed income securities, known compensation trends and policies, as well as economic conditions and investment strategies that may impact the estimated long-term rate of return on plan assets.

In determining the pension expense for the U.S. plans in 2008, Northern Trust utilized a discount rate of 6.25% for both the Qualified Plan and the Nonqualified Plan. The rate of increase in the compensation level is based on a sliding scale that averaged 4.02%. The expected long-term rate of return on Qualified Plan assets was 8.25%.

In evaluating possible revisions to pension-related assumptions for the U.S. plans as of Northern Trust’s December 31, 2008 measurement date, the following events were considered:

Discount Rate: Northern Trust estimates the discount rate for its U.S. pension plans using the weighted average of market-observed yields for high quality fixed income securities with maturities that closely match the duration of the plans’ liabilities. The yield curve models referenced by Northern Trust in establishing the discount rate supported a rate between 5.93% and 6.85%, with an average decrease of 8 basis points over the prior year. As such, Northern Trust maintained the discount rate for the Qualified and Nonqualified plans at 6.25% for 2008.

Compensation Level: As compensation policies remained consistent with prior years, no changes were made to the compensation scale assumption, which was revised in 2007 based on a review of actual salary experience of eligible employees.

Rate of Return on Plan Assets: The expected return on plan assets is based on an estimate of the long-term rate of return on plan assets, which is determined using a building block approach that considers the current asset mix and estimates of return by asset class based on historical experience, giving proper consideration to diversification and rebalancing. Current market factors such as inflation and interest rates are also evaluated before long-term capital market assumptions are determined. Peer data and historical returns are reviewed to check for reasonability and appropriateness. As a result of these analyses, Northern Trust’s rate of return assumption for 2008 was decreased from 8.25% to 8.00% for 2008.

Mortality Table: In 2006, Northern Trust adopted the mortality table proposed by the U.S. Treasury for use in accordance with the provisions of the Pension Protection Act of 2006 (PPA) for both pre- and post-retirement mortality assumptions. This table is based on the RP2000 mortality table used by Northern Trust in 2005 but includes projections of expected future mortality. This same table was used in 2007 and in 2008.

In order to illustrate the sensitivity of these assumptions on the expected periodic pension expense in 2009 and the

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projected benefit obligation, the following table is presented to show the effect of increasing or decreasing each of these assumptions by 25 basis points.

(In Millions)	25 BASIS POINT INCREASE		25 BASIS POINT DECREASE
Increase (Decrease) in 2009 Pension Expense
Discount Rate Change	(3.9	)	4.1
Compensation Level Change	2.0		(1.9	)
Rate of Return on Asset Change	(1.7	)	1.7
Increase (Decrease) in Projected Benefit Obligation
Discount Rate Change	(24.3	)	25.7
Compensation Level Change	7.5		(7.3	)

Pension Contributions: The PPA provided for an increase in the deduction limits specified by the Internal Revenue Code for contributions made by sponsors of defined benefit pension plans. This increase provided Northern Trust with the opportunity to make an additional $105.0 million contribution to the Qualified Plan, which was made in December 2006. No contributions were made in 2007. Northern Trust contributed another $110.0 million to the Qualified Plan in 2008. The investment return on these contributions decreases the U.S. pension expense. This benefit will be partially offset by the related forgone net interest income. The continuing effect of the PPA on Northern Trust’s annual contributions is not expected to be significant. The minimum required contribution is expected to be zero in 2009 and for several years thereafter. The maximum deductible contribution, which is based on a “Target Liability” under the provisions of the PPA, is estimated at $180.0 million in 2009.

As a result of the pension-related assumptions currently utilized, the contributions to the Qualified Plan, and other actuarial experiences of the qualified and nonqualified plans, the estimated U.S. pension expense is expected to increase by approximately $10.0 million in 2009 from 2008 expense of $20.4 million.

Other Than Temporary Impairment of Investment Securities

Under GAAP, companies are required to perform periodic reviews of securities with unrealized losses to determine whether the declines in value are considered other than temporary. If a review results in a determination that an impairment is other than temporary, the carrying value of the security is written down to fair value, and a loss is recognized through earnings in the period in which the determination was made. The application of significant judgment is required in determining whether impairment loss recognition is appropriate. Additionally, estimates as to the collectability of principal or interest are inherently subject to change in future periods. Different judgments or subsequent changes in estimates could result in materially different impairment loss recognition. The current economic and financial market conditions have negatively affected the liquidity and pricing of investment securities generally and asset-backed securities in particular, and have resulted in an increase in the likelihood and severity of other-than-temporary impairment charges.

Northern Trust conducts security impairment reviews quarterly to evaluate those securities within its investment portfolio that have indications of possible other-than-temporary impairment. Impairment losses are recognized when quantitative and qualitative factors indicate that it is probable that a contractual principal loss or interest shortfall will occur. For debt securities, cash flow analyses employing macroeconomic and security specific assumptions, are an important element in determining whether an other-than-temporary impairment has occurred. Other factors considered in an impairment review, which can vary by security as to their relative significance, include the length of time and extent to which a security’s market value has been below amortized cost; the financial condition and prospects of the issuer of the security; and Northern Trust’s intent and ability to retain the security until a recovery of fair value, which may be maturity. The Corporate Asset and Liability Policy Committee (ALCO) reviews the results of impairment analyses and concludes on whether other-than-temporary impairment exists.

Impairment reviews conducted in 2008 identified six asset-backed securities determined to be other-than-temporarily impaired and losses totaling $61.3 million were recorded to write the securities down to their estimated fair values. The remaining securities with unrealized losses within Northern Trust’s portfolio as of December 31, 2008 are not considered to be other-than-temporarily impaired. However, due to market and economic conditions, additional other-than-temporary impairments may occur in future periods.

Accounting for Structured Leasing Transactions

Through its leasing subsidiary, Norlease, Inc., Northern Trust acts as a lessor in leveraged lease transactions primarily for transportation equipment, including commercial aircraft and railroad equipment. Northern Trust’s net investment in leveraged leases is reported at the aggregate of lease payments receivable and estimated residual values, net of non-recourse debt and unearned income. Unearned income is required to be recognized in interest income in a manner that yields a level rate of return on the net investment. Determining the net investment in a leveraged lease and the interest income to be

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recognized requires management to make assumptions regarding the amount and timing of cash flows, estimates of residual values, and the impact of income tax regulations and rates. Changes in these assumptions in future periods could affect asset balances and related interest income.

As further described in Note 21 to the consolidated financial statements, FSP 13-2, adopted by Northern Trust on January 1, 2007, requires a recalculation of the allocation and rate of return of income from the inception of a leveraged lease if, during the lease term, the expected timing of the income tax cash flows generated by the leveraged lease is revised.

Northern Trust has entered into certain leveraged leasing transactions commonly referred to as Lease-In/Lease-Out (LILO) and Sale-In/Sale-Out (SILO) transactions. The IRS is challenging the amount and timing of tax deductions with respect to these types of transactions and proposing to assess related interest and penalties as part of its audit of federal tax returns filed from 1997-2000. The Corporation anticipates that the IRS will continue to disallow deductions relating to these leases and possibly include other lease transactions with similar characteristics as part of its audit of tax returns filed after 2000. The Corporation believes its tax treatment relating to these transactions is appropriate based on its interpretation of the tax regulations and legal precedents; a court or other judicial authority, however, could disagree. Accordingly, management’s estimates of future cash flows related to leveraged leasing transactions include assumptions about the eventual resolution of this matter, including the timing and amount of any potential payments. Due to the nature of this tax matter, it is difficult to estimate future cash flows with precision. On August 6, 2008, the IRS announced that settlements would be offered to taxpayers who participated in LILO and SILO transactions. Although Northern Trust elected not to participate in the IRS offer, the Corporation revised its estimates regarding the likely outcome of leveraged leasing tax positions in light of the terms of the settlement offer. As a result of the reallocation of lease income and increase in taxes over the life of certain of the leveraged leases under the revised assumptions, Northern Trust recorded $38.9 million in charges against interest income for the year ended December 31, 2008. The provision for taxes related to these adjustments, inclusive of interest and penalties, totaled $61.3 million. Management does not believe that subsequent changes that may be required in these assumptions would have a material effect on the consolidated financial position or liquidity of Northern Trust, although they could have a material effect on operating results for a particular period.

FAIR VALUE MEASUREMENTS

The preparation of financial statements in conformity with GAAP requires certain assets and liabilities to be reported at fair value. As of December 31, 2008, approximately 22% of Northern Trust’s consolidated total assets and approximately 4% of its total liabilities were carried on the balance sheet at fair value in accordance with these principles. As discussed more fully in Note 31 to the consolidated financial statements, FASB SFAS No. 157, “Fair Value Measurements”, (SFAS No. 157) requires entities to categorize financial assets and liabilities carried at fair value according to a three-level valuation hierarchy. The hierarchy gives the highest priority to quoted, active market prices for identical assets and liabilities (Level 1) and the lowest priority to valuation techniques that require significant management judgment because one or more of the significant inputs are unobservable in the market place (Level 3). Less than one percent of Northern Trust’s assets and liabilities carried at fair value are classified as Level 1 as Northern Trust typically does not hold equity securities or other instruments that would be actively traded on an exchange.

Approximately 97% of Northern Trust’s assets and 87% of its liabilities that are carried at fair value are valued using models in which all significant inputs are observable in active markets and are, therefore, categorized as Level 2. Investment securities classified as available for sale make up 81% of Level 2 assets with the remaining 19% primarily consisting of derivative financial instruments. Level 2 liabilities consist of derivative financial instruments.

Investment securities are principally valued by third party pricing vendors. Northern Trust has a well-established process to validate all prices received from pricing vendors. Prices are compared to separate independent sources such as non-binding broker quotes and other vendor price feeds to ensure the fair value determination is consistent with SFAS No. 157 and to ensure the proper classification of assets and liabilities in the fair value hierarchy.

As of December 31, 2008, all derivative assets and liabilities were classified in Level 2 and in excess of 95%, measured on a notional value basis, related to client-related and trading activities, predominantly consisting of foreign exchange contracts. Derivative instruments are valued internally using widely accepted models that incorporate inputs readily observable in actively quoted markets and do not require significant management judgment. Northern Trust evaluated the impact of counterparty credit risk and its own credit risk on the valuation of derivative instruments. Factors considered included the likelihood of default by us and our counterparties, the remaining maturities

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of the instruments, our net exposures after giving effect to master netting agreements, available collateral, and other credit enhancements in determining the appropriate fair value of our derivative instruments. The resulting valuation adjustments are not considered material.

As of December 31, 2008, the fair value of Northern Trust’s Level 3 assets and liabilities were $453.1 million and $418.3 million, respectively, and represented approximately 3% of assets and 13% of liabilities carried at fair value, respectively. Level 3 assets consist of auction rate securities purchased from Northern Trust clients in the fourth quarter of 2008. Since February 2008, the market for auction rate securities has had minimal activity as the majority of auctions have failed preventing holders from liquidating their investments. The lack of activity in the auction rate security market has resulted in a lack of observable market inputs to use in determining fair value. Therefore, Northern Trust incorporated its own assumptions about future cash flows and the appropriate discount rate adjusted for credit and liquidity factors. In developing these assumptions, Northern Trust incorporated the contractual terms of the securities, the type of collateral, any credit enhancements available, and relevant market data, where available. Level 3 liabilities principally include capital support agreements (Capital Support Agreements) with certain investment funds and investment asset pools for which Northern Trust acts as investment advisor. These agreements are valued using an option pricing model that includes prices for securities not actively traded in the marketplace as a significant input. Level 3 liabilities also include the net estimated liability for Visa related indemnifications and financial guarantees relating to standby letters of credit, the fair values of which are based on significant management judgment and relevant market data, where available.

While Northern Trust believes its valuation methods for its assets and liabilities carried at fair value are appropriate and consistent with other market participants, the use of different methodologies or assumptions, particularly as applied to Level 3 assets and liabilities, could have a material effect on the computation of their estimated fair values.

The provisions of SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” were effective January 1, 2008. SFAS No. 159 gives entities the option, at specified election dates, to measure certain financial assets and liabilities at fair value. The election may be applied to financial assets and liabilities on an instrument by instrument basis, is irrevocable, and may only be applied to entire instruments. Northern Trust has not elected to apply SFAS No. 159 to any assets or liabilities.

IMPLEMENTATION OF ACCOUNTING STANDARDS

Information related to recent accounting pronouncements is contained in Note 2 to the consolidated financial statements.

CAPITAL EXPENDITURES

Proposed significant capital expenditures are reviewed and approved by Northern Trust’s senior management and, where appropriate, by the Board of Directors. This process is designed to assure that the major projects to which Northern Trust commits its resources produce benefits compatible with corporate strategic goals.

Capital expenditures in 2008 included ongoing enhancements to Northern Trust’s hardware and software capabilities and expansion or renovation of several existing offices. Capital expenditures for 2008 totaled $309.9 million, of which $205.7 million was for software, $54.6 million was for computer hardware and machinery, $42.0 million was for building and leasehold improvements, and $7.6 million was for furnishings. These capital expenditures are designed principally to support and enhance Northern Trust’s transaction processing, investment management, and asset servicing capabilities, as well as relationship management and client interaction. Additional capital expenditures planned for systems technology will result in future expenses for the depreciation of hardware and amortization of software. Depreciation on computer hardware and machinery and software amortization are charged to equipment and software expense. Depreciation on building and leasehold improvements and on furnishings is charged to occupancy expense and equipment expense, respectively.

OFF-BALANCE SHEET ARRANGEMENTS

Assets Under Custody and Assets Under Management

Northern Trust, in the normal course of business, holds assets under custody, management and servicing in a fiduciary or agency capacity for its clients. In accordance with GAAP, these assets are not assets of Northern Trust and are not included in its consolidated balance sheet.

Financial Guarantees and Indemnifications

Northern Trust issues financial guarantees in the form of standby letters of credit to meet the liquidity and credit enhancement needs of its clients. Standby letters of credit obligate Northern Trust to meet certain financial obligations of its clients, if, under the contractual terms of the agreement,

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the clients are unable to do so. These instruments are primarily issued to support public and private financial commitments, including commercial paper, bond financing, initial margin requirements on futures exchanges and similar transactions.

Credit risk is the principal risk associated with these instruments. The contractual amounts of these instruments represent the credit risk should the instrument be fully drawn upon and the client default. To control the credit risk associated with issuing letters of credit, Northern Trust subjects such activities to the same credit quality and monitoring controls as its lending activities. Certain standby letters of credit have been secured with cash deposits or participated to others. Northern Trust is obligated to meet the entire financial obligation of these agreements and in certain cases is able to recover the amounts paid through recourse against cash deposits or other participants.

The following table shows the contractual amounts of standby letters of credit.

	DECEMBER 31
(In Millions)	2008		2007
Standby Letters of Credit:
Corporate	$	1,136.2	$	1,095.0
Industrial Revenue		2,080.7		1,102.0
Other		808.1		684.8
Total Standby Letters of Credit*	$	4,025.0	$	2,881.8

*These amounts include $340.1 million and $356.7 million of standby letters of credit secured by cash deposits or participated to others as of December 31, 2008 and 2007, respectively. The weighted average maturity of standby letters of credit was 25 months at December 31, 2008 and 23 months at December 31, 2007.

As part of the Corporation’s securities custody activities and at the direction of clients, Northern Trust lends securities owned by clients to borrowers who are reviewed and approved by the Senior Credit Committee. In connection with these activities, Northern Trust has issued certain indemnifications to clients against loss resulting from the bankruptcy of the borrower of securities. The borrower is required to fully collateralize securities received with cash, marketable securities, or irrevocable standby letters of credit. As securities are loaned, collateral is maintained at a minimum of 100 percent of the fair value of the securities plus accrued interest, with the collateral revalued on a daily basis. The amount of securities loaned as of December 31, 2008 and 2007 subject to indemnification was $82.7 billion and $179.8 billion, respectively. Because of the credit quality of the borrowers and the requirement to fully collateralize securities borrowed, management believes that the exposure to credit loss from this activity is not significant.

Northern Trust, as a member bank of Visa U.S.A., Inc., is obligated to share in potential losses resulting from certain indemnified litigation involving Visa. In the fourth quarter of 2007, Northern Trust recorded liabilities totaling $150.0 million in connection with the indemnifications. As anticipated, Visa placed a portion of the proceeds from its initial public offering into an escrow account to fund the settlements of, or judgments in, the indemnified litigation. Northern Trust recorded $76.1 million, its proportionate share of the escrow account balance, in the first quarter of 2008 as an offset to the indemnification liabilities and related charges recorded in the fourth quarter of 2007. Northern Trust’s net Visa related indemnification liability at December 31, 2008 and 2007 totaled $73.9 million and $150.0 million, respectively. The value of Northern Trust’s remaining Visa shares is expected to be more than adequate to offset any remaining indemnification liabilities related to Visa litigation. Visa indemnifications are further discussed in Note 20 to the consolidated financial statements.

Variable Interests

Variable Interest Entities (VIEs) are defined in FASB Interpretation, “Consolidation of Variable Interest Entities (revised December 2003)—an interpretation of ARB No. 51” (FIN 46-R) as entities which either have a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support or whose equity investors lack the characteristics of a controlling financial interest. Investors that finance a VIE through debt or equity interests, or other counterparties that provide other forms of support, such as guarantees, subordinated fee arrangements, or certain types of derivative contracts, are variable interest holders in the entity and the variable interest holder, if any, that will absorb a majority of the entity’s expected losses, receive a majority of the entity’s expected residual returns, or both, is deemed to be the VIEs primary beneficiary and is required to consolidate the VIE.

In 1997, Northern Trust issued $150 million of Floating Rate Capital Securities, Series A, and $120 million of Floating Rate Capital Securities, Series B, through statutory business trusts wholly-owned by the Corporation (“NTC Capital I” and “NTC Capital II”, respectively). The sole assets of the trusts are Subordinated Debentures of Northern Trust Corporation that have the same interest rates and maturity dates as the corresponding distribution rates and redemption dates of the Floating Rate Capital Securities.

The outstanding principal amount of the Subordinated Debentures, net of discount, held by the trusts totaled $276.7

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million as of December 31, 2008. The book value of the Series A and Series B Securities totaled $268.4 million as of December 31, 2008. Both Series A and B Securities qualify as tier 1 capital for regulatory purposes. NTC Capital I and NTC Capital II are considered variable interest entities. However, as the Corporation has determined that it is not the primary beneficiary of the trusts, they are not consolidated by the Corporation.

Northern Trust acts as investment advisor to Registered Investment Companies, Undertakings for the Collective Investment of Transferable Securities and other unregistered short-term investment pools in which various clients of Northern Trust are investors. As discussed in further detail in Note 28 to the consolidated financial statements, although not obligated to do so, in 2008, Northern Trust entered into Capital Support Agreements with certain of these entities (Funds) whereby Northern Trust would be required to contribute capital to the Funds, not to exceed $550 million in the aggregate and for no consideration, should certain asset loss events occur. In the first quarter of 2009, Northern Trust extended the termination dates of the Capital Support Agreements through November 6, 2009 with all other significant terms, including the maximum contribution limits of $550 million in the aggregate, remaining unchanged. As of December 31, 2008, no capital contributions have been made under the agreements. Although not obligated to do so, Northern Trust also incurred a pre-tax charge of $167.6 million in connection with support provided to securities lending clients whose cash collateral was invested in five unregistered short-term investment collateral pools (Pools).

Under FIN 46-R and related interpretations, the above actions reflect Northern Trust’s implicit interest in the credit risk of the affected Funds and Pools, thus creating a significant variable interest in these entities. Northern Trust has determined, in accordance with FIN 46-R, that it is not the primary beneficiary of the Funds or the Pools and is, therefore, not required to consolidate them within its consolidated balance sheet.

Northern Trust has interests in other variable interest entities which are also not consolidated as Northern Trust is not considered the primary beneficiary of those entities. Northern Trust’s interests in those entities are not considered significant and do not have a material impact on its consolidated financial position or results of operations.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity Risk Management

The objectives of liquidity risk management are to ensure that Northern Trust can meet its cash flow requirements and capitalize on business opportunities on a timely and cost effective basis.

Northern Trust manages its liquidity on a global basis, utilizing regional management when appropriate. The Corporate Treasury department has the day-to-day responsibility for measuring and managing the liquidity risk within guidelines and limits established by the Corporate Asset and Liability Policy and Business Risk Committees. The management of liquidity is based on a framework that monitors the various sources and uses of liquidity, the alignment of their maturities and their level of stability. Liquidity is provided by a variety of sources, including client deposits (institutional and personal) from our C&IS and PFS businesses, wholesale funding from the capital markets, and unencumbered liquid assets that can be sold or pledged to secure additional funding. While management does not view the Federal Reserve’s discount window as a primary source of funds, the Bank can borrow from the discount window on a collateralized basis. Liquidity is used in a variety of activities, including client withdrawals, purchases of securities, and draws on unfunded commitments to extend credit. Certain of our client deposits are payable on demand, which could put pressure on our liquidity during periods of stress. During 2008, the financial markets experienced periods of stress that challenged overall market liquidity. Notably, our sources and uses of liquidity remained stable and we experienced growth in our client deposits.

During 2008, U.S. regulatory agencies took various actions in order to improve liquidity in the financial markets. One of those actions was the establishment by the Federal Deposit Insurance Corporation (FDIC) in October of 2008 of the Temporary Liquidity Guarantee Program (TLGP). This program provides a guarantee of certain newly issued senior unsecured debt issued by eligible entities, including the Bank, and guarantees of funds over $250,000 in non-interest bearing transaction deposit accounts held at FDIC insured banks. The debt guarantee is available, subject to certain limitations, for debt issued through June 30, 2009, and the deposit coverage extends through December 31, 2009. Northern Trust is able to issue debt under the TLGP of approximately $1.5 billion prior to June 30, 2009.

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Northern Trust maintains a liquid balance sheet with loans representing only 37% of total assets as of December 31, 2008. Further, at December 31, 2008, there were significant sources of liquidity within Northern Trust’s consolidated balance sheet in the form of cash and due from banks, securities available for sale, and money market assets, which in aggregate totaled $43.4 billion or 53% of total assets.

An important element of our liquidity management is our contingent liquidity plan which can be employed in the event of a liquidity crisis. The objective of the contingent liquidity plan is to ensure that we maintain our liquidity during periods of stress. This plan takes into consideration a variety of scenarios that could challenge our liquidity. These scenarios include specific and systemic events that can impact our on- and off-balance sheet sources and uses of liquidity.

The liquidity of the Corporation is managed separately from that of its banking subsidiaries. The Corporation’s uses of cash consist mainly of dividend payments to the Corporation’s stockholders, the payment of principal and interest to note holders, investments in its subsidiaries, purchases of its common stock, and acquisitions. The more significant uses of cash by the Corporation during 2008 were a $500.0 million investment in the Bank, $247.7 million of common dividends paid to stockholders, and $68.3 million for the repurchase of common stock.

The primary sources of cash for the Corporation are the issuance of equity (common and preferred), issuance of debt, dividend payments from its subsidiaries, and interest and dividends earned on investment securities and money market assets.

On November 14, 2008, in connection with the Corporation’s participation in the U.S. Department of the Treasury’s (U.S. Treasury) Troubled Asset Relief Program’s Capital Purchase Program (Capital Purchase Program), the Corporation issued preferred stock and a warrant for the purchase of the Corporation’s common stock to the U.S. Treasury for total proceeds of $1,576.0 million. Participation in this program puts additional cash flow requirements on the Corporation in future years in the form of preferred dividends. This program also contains certain restrictions, including limits on dividends and share repurchase programs. For additional detail, see Note 14 to the consolidated financial statements. Prior to the establishment of the Capital Purchase Program, the Corporation issued, on August 6, 2008, $400 million in senior debt to mature in 2013 with a coupon of 5.50%.

Bank subsidiary dividends are subject to certain restrictions, as discussed in further detail in Note 30 to the consolidated financial statements. Bank subsidiaries have the ability to pay dividends during 2009 equal to their 2009 eligible net profits plus $1,295.6 million. During 2008, the Corporation received $86.4 million in subsidiary dividends.

The Corporation’s liquidity, defined as the amount of marketable assets in excess of commercial paper, was strong at $1.24 billion at year-end 2008 and $386.0 million at year-end 2007. The cash flows of the Corporation are shown in Note 34 to the consolidated financial statements. The Corporation also has available a $150 million revolving line of credit.

A significant source of liquidity for both Northern Trust and the holding company is the ability to draw funding from capital markets globally. The availability and cost of these funds are influenced by our credit rating; as a result, a downgrade could have an adverse impact on our liquidity. The credit ratings of the Corporation and the Bank as of December 31, 2008, provided below, allow Northern Trust to access capital markets on favorable terms.

	Standard & Poor’s	Moody’s	FitchRatings
Northern Trust Corporation:
Commercial Paper	A-1+	P-1	F1+
Senior Debt	AA-	A1	AA-
The Northern Trust Company:
Short-Term Deposit / Debt	A-1+	P-1	F1+
Long-Term Deposit / Debt	AA	Aa3	AA / AA-
Outlook	Stable	Stable	Negative

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The following table shows Northern Trust’s contractual obligations at December 31, 2008.

CONTRACTUAL OBLIGATIONS

	PAYMENT DUE BY PERIOD
(In Millions)	TOTAL		ONE YEAR AND LESS		1-3 YEARS			4-5 YEARS		OVER 5 YEARS
Senior Notes*	$	1,052.6	$	–	$	395.3		$	657.3	$	–
Subordinated Debt*		1,365.7		200.0		150.0			200.0		815.7
Federal Home Loan Bank Borrowings*		1,917.7		180.0		629.6			872.0		236.1
Floating Rate Capital Debt*		278.4		–		–			–		278.4
Capital Lease Obligations**		36.1		3.1		(30.6	)		16.0		47.6
Operating Leases**		663.5		64.0		118.1			94.8		386.6
Purchase Obligations***		319.7		90.5		149.2			78.0		2.0
Total Contractual Obligations	$	5,633.7	$	537.6	$	1,411.6		$	1,918.1	$	1,766.4

Note: Obligations as shown do not include deposit liabilities or interest requirements on funding sources.

* Refer to Notes 12 and 13 to the consolidated financial statements for further details.

** Refer to Note 9 to the consolidated financial statements for further details.

*** Purchase obligations consist primarily of ongoing operating costs related to outsourcing arrangements for certain cash management services and the support and maintenance of the Corporation’s technological requirements. Certain obligations are in the form of variable rate contracts and, in some instances, 2008 activity was used as a base to project future obligations.

Capital Management

One of management’s primary objectives is to maintain a strong capital position to merit and maintain the confidence of clients, the investing public, bank regulators and stockholders. A strong capital position helps Northern Trust take advantage of profitable investment opportunities and withstand unforeseen adverse developments.

Northern Trust manages its capital both on a total Corporation basis and, where appropriate, on a legal entity basis. The Corporate Treasury department has the day-to-day responsibility for measuring and managing capital levels within guidelines and limits established by the Corporate Asset and Liability Policy and Business Risk Committees. The management of capital will also involve regional management when appropriate. In establishing the guidelines and limits for capital, a variety of factors are taken into consideration, including the overall risk of the business, regulatory requirements, capital levels relative to our peers, and the impact on our credit ratings.

In 2008, capital levels were strengthened as average common equity increased 18% or $735.4 million reaching a record $4.89 billion at year-end. Total stockholders’ equity increased to $6.39 billion reflecting the issuance of senior preferred stock and related warrant to the U.S. Treasury pursuant to the terms of the Capital Purchase Program and the retention of earnings. The increase in common equity was accomplished while paying common dividends and purchasing shares under the Corporation’s share buyback program. The Corporation paid common dividends totaling $247.7 million in 2008 and, in October 2008, the Board of Directors maintained the quarterly dividend at $.28 per common share. The common dividend has increased 47% from its level five years ago. During 2008, the Corporation purchased 1.1 million of its own common shares at a cost of $75.1 million as part of the share buyback program. The buyback program is used for general corporate purposes, including management of the Corporation’s capital level. Under the share buyback program, the Corporation may purchase up to 7.6 million additional shares after December 31, 2008, subject to certain restrictions related to the Corporation’s Series B Preferred Stock as discussed in further detail in Note 14 to the consolidated financial statements.

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CAPITAL ADEQUACY	DECEMBER 31
($ In Millions)	2008			2007
TIER 1 CAPITAL
Common Stockholders’ Equity	$	4,888		$	4,509
Preferred Stock Series B		1,501			–
Floating Rate Capital Securities		268			268
Goodwill and Other Intangible Assets		(462	)		(529	)
Pension and Other Postretirement Benefit Adjustments		274			80
Other		234			31
Total Tier 1 Capital		6,703			4,359
TIER 2 CAPITAL
Reserve for Credit Losses Assigned to Loans and Leases		229			148
Off-Balance Sheet Credit Loss Reserve		22			12
Reserves Against Identified Losses		(24	)		(11	)
Long-Term Debt*		939			830
Total Tier 2 Capital		1,166			979
Total Risk-Based Capital	$	7,869		$	5,338
Risk-Weighted Assets**	$	51,258		$	44,852
Total Assets – End of Period (EOP)	$	82,054		$	67,611
Average Fourth Quarter Assets**		78,903			64,255
Total Loans – EOP		30,755			25,340
RATIOS
Risk-Based Capital Ratios
Tier 1		13.1	%		9.7	%
Total (Tier 1 and Tier 2)		15.4			11.9
Leverage		8.5			6.8
COMMON STOCKHOLDERS’ EQUITY TO
Total Loans EOP		15.89	%		17.8	%
Total Assets EOP		5.96			6.7

* Long-Term Debt that qualifies for risk-based capital amortizes for the purpose of inclusion in tier 2 capital during the five years before maturity.

** Assets have been adjusted for goodwill and other intangible assets, net unrealized (gain) loss on securities and excess reserve for credit losses that have been excluded from tier 1 and tier 2 capital, if any.

The 2008 capital levels reflect Northern Trust’s ongoing retention of earnings to allow for strategic expansion while maintaining a strong balance sheet. The Corporation’s capital supported risk-weighted asset growth of 14% in 2008 with all of its capital ratios well above the ratios that are a requirement for regulatory classification as “well-capitalized”. At December 31, 2008, the Corporation’s tier 1 capital was 13.1% and total capital was 15.4% of risk-weighted assets. The “well-capitalized” minimum ratios are 6.0% and 10.0%, respectively. The Corporation’s leverage ratio (tier 1 capital to fourth quarter average assets) of 8.5% is also well above the “well-capitalized” minimum requirement of 5.0%. In addition, each of the Corporation’s U.S. subsidiary banks had a ratio of at least 8.5% for tier 1 capital, 11.2% for total risk-based capital, and 6.4% for the leverage ratio.

The Corporation is subject to the framework for risk-based capital adequacy, sometimes referred to as Basel II, which was developed by the Basel Committee on Banking Supervision and has been endorsed by the central bank governors and heads of bank supervision of the G10 countries. In December 2007, the U.S. bank regulatory agencies published final rules, effective April 1, 2008, with respect to implementation of the Basel II framework, the latest agreed-version of which was released by the Basel Committee in November 2005.

Under the final Basel II rules, the Corporation is one of a small number of “core” banking organizations. As a result, the Corporation and its U.S. depository institution subsidiaries will be required to use the advanced approaches under Basel II for calculating risk-based capital related to credit risk and operational risk, instead of the methodology reflected in the regulations effective prior to adoption of Basel II. The new rules also require core banking organizations to have rigorous processes for assessing overall capital adequacy in relation to their total risk profiles, and to publicly disclose certain information about their risk profiles and capital adequacy.

In order to implement the new rules, a core banking organization such as the Corporation was required to (and the Corporation did) adopt an implementation plan by October 1, 2008 and must satisfactorily complete a four-quarter parallel

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run, in which it calculates capital requirements under both the new Basel II rules and regulations effective prior to the adoption of Basel II. The organization must then progress through three transitional periods of at least four quarters each, commencing no later than April 1, 2011. During these transitional periods, the maximum cumulative reduction in capital requirements from those under the regulations effective prior to adoption of Basel II may not exceed 5% for the first period, 10% for the second period and 15% for the third period. Supervisory approval is required to move through these transitional periods and out of the final transitional period. The agencies also have said they will publish a study after the end of the second transitional year that will examine the new framework for any deficiencies.

RISK MANAGEMENT

Overview

The Board of Directors’ Business Risk Committee provides oversight with respect to the following risks inherent in Northern Trust’s businesses: credit risk, market and liquidity risk, fiduciary risk, operational risk and the regulatory component of compliance risk. The Business Risk Committee has approved a Corporate Risk Appetite Statement articulating Northern Trust’s expectation that risk is consciously considered as part of strategic decisions and in day-to-day activities. Northern Trust’s business units are expected to manage business activities within the parameters set forth in the Corporate Risk Appetite Statement.

Risk tolerances are further detailed in separate credit, operational, market, fiduciary and compliance risk policies and appetite statements. Various corporate committees and oversight entities have been established to review and approve risk management strategies, standards, management practices and tolerance levels. These committees and entities monitor and provide periodic reporting to the Business Risk Committee on risk performance and effectiveness of risk management processes.

Asset Quality and Credit Risk Management

Securities Portfolio

Northern Trust maintains a high quality securities portfolio, with 90% of the total portfolio at December 31, 2008 composed of U.S. Treasury and government sponsored agency securities, Federal Home Loan Bank and Federal Reserve Bank stock, and triple-A rated asset-backed securities, auction rate securities and obligations of states and political subdivisions. The remaining portfolio was composed of asset- backed securities, obligations of states and political subdivisions, auction rate securities and other securities, of which 4% were rated double-A, 3% were rated below double-A, and 3% were not rated by Standard and Poor’s or Moody’s Investors Service. Asset-backed securities held at December 31, 2008 were predominantly floating rate, with average lives less than 5 years, and 85% were rated triple-A, 10% were rated double-A, and the remaining 5% rated below double-A. Asset-backed securities rated below double-A had a total amortized cost and fair value of $145.5 million and $76.1 million, respectively, and were comprised primarily of sub-prime and Alt-A residential mortgage-backed securities.

Auction rate securities were purchased in 2008 in connection with a program to purchase at par value certain illiquid auction rate securities held for clients under investment discretion or that were acquired by clients from Northern Trust’s affiliated broker/dealer. A $54.6 million charge was recorded within other operating expenses reflecting differences between the securities’ par values and estimated purchase date fair market values. At December 31, 2008, 96% of these securities were investment grade. The remaining 4% that were below investment grade had a total amortized cost and fair value of $5 million and $3 million, respectively.

Total unrealized losses within the investment securities portfolio at December 31, 2008 were $387.9 million as compared to $175.5 million at June 30, 2008 and $64.8 million at December 31, 2007. The $323.1 million increase in unrealized losses from the prior year end primarily reflects lower valuations of asset-backed securities due to the widening of credit spreads and deterioration in overall market conditions experienced in the second half of 2008. As discussed above in the “Critical Accounting Estimates – Other Than Temporary Impairment of Investment Securities” section, processes are in place to provide for the timely identification of other-than-temporary impairment. Losses totaling $61.3 million were recognized in 2008 in connection with the write-down to estimated fair value of six asset-backed securities determined to be other-than-temporarily impaired. The remaining securities with unrealized losses within Northern Trust’s portfolio as of December 31, 2008 are not considered to be other-than-temporarily impaired. However, due to market and economic conditions, additional other-than-temporary impairments may occur in future periods.

Northern Trust is an active participant in the repurchase agreement market. This market provides a relatively low cost alternative for short-term funding. Securities purchased under agreements to resell and securities sold under agreements to repurchase are recorded at the amounts at which the securities

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were acquired or sold plus accrued interest. To minimize any potential credit risk associated with these transactions, the fair value of the securities purchased or sold is continuously monitored, limits are set on exposure with counterparties, and the financial condition of counterparties is regularly assessed. It is Northern Trust’s policy to take possession of securities purchased under agreements to resell. Securities sold under agreements to repurchase are held by the counterparty until the repurchase.

Loans and Other Extensions of Credit

Credit risk is inherent in Northern Trust’s various lending activities. Northern Trust focuses its lending efforts on clients who are looking to establish a full range of financial services with Northern Trust. Credit risk is managed through the Credit Policy function, which is designed to assure adherence to a high level of credit standards. Credit Policy reports to the Corporation’s Head of Corporate Risk Management. Credit Policy provides a system of checks and balances for Northern Trust’s diverse credit-related activities by establishing and monitoring all credit-related policies and practices throughout Northern Trust and assuring their uniform application. These activities are designed to diversify credit exposure on an industry and client basis, thus lessening overall credit risk. These credit management activities also apply to Northern Trust’s use of derivative financial instruments, including foreign exchange contracts and interest risk management instruments.

Individual credit authority for commercial and other loans is limited to specified amounts and maturities. Credit decisions involving commitment exposure in excess of the specified individual limits are submitted to the appropriate Credit Approval Committee (Committee). Each Committee is chaired by the executive in charge of the area or their designee and has a Credit Policy officer as a voting participant. Each Committee’s credit approval authority is specified, based on commitment levels, credit ratings and maturities. Credits involving commitment exposure in excess of these limits require the approval of the Senior Credit Committee.

The Counterparty Risk Management Committee established by Credit Policy manages counterparty risk. This committee has sole credit authority for exposure to all non-U.S. banks, certain U.S. banks which Credit Policy deems to be counterparties and which do not have commercial credit relationships within the Corporation, and certain other exposures.

Under the auspices of Credit Policy, country exposure limits are reviewed and approved on a country-by-country basis.

As part of Northern Trust’s ongoing credit granting process Credit Policy assigns internal ratings to each client and credit before credit is extended, based on an assessment of creditworthiness. Credit Policy performs, at least annually, a review of selected significant credit exposures to identify, at an early stage, clients who might be facing financial difficulties. Internal credit ratings are also reviewed during this process. Credit ratings range from “1” for the strongest credits to “9” for the weakest credits; a “9” rated loan would normally represent a complete loss. Above average risk loans receive special attention by both lending officers and Credit Policy. This approach allows management to take remedial action in an effort to deal with potential problems.

An integral part of the Credit Policy function is a formal review of past due and potential problem loans to determine which credits, if any, need to be placed on nonaccrual status or charged off. As more fully described in the “Provision and Reserve For Credit Losses” section below, the provision for credit losses is reviewed quarterly to determine the amount necessary to maintain an adequate reserve for credit losses.

A further way in which credit risk is managed is by requiring collateral. Management’s assessment of the borrower’s creditworthiness determines whether collateral is obtained. The amount and type of collateral held varies but may include deposits held in financial institutions, U.S. Treasury securities, other marketable securities, income-producing commercial properties, accounts receivable, residential real estate, property, plant and equipment, and inventory. Collateral values are monitored on a regular basis to ensure that they are maintained at an appropriate level.

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The largest component of credit risk relates to the loan portfolio. In addition, credit risk is inherent in certain contractual obligations such as legally binding unfunded commitments to extend credit, commercial letters of credit, and standby letters of credit. These contractual obligations and arrangements are discussed in Note 27 to the consolidated financial statements and are presented in the tables that follow.

COMPOSITION OF LOAN PORTFOLIO	DECEMBER 31
(In Millions)	2008		2007		2006		2005		2004
U.S.
Residential Real Estate	$	10,381.4	$	9,171.0	$	8,674.4	$	8,340.5	$	8,095.3
Commercial		8,253.6		5,556.4		4,679.1		3,545.3		3,217.9
Commercial Real Estate		3,014.0		2,350.3		1,836.3		1,524.3		1,307.5
Personal		4,766.7		3,850.8		3,415.8		2,961.3		2,927.2
Other		1,404.2		969.1		979.2		797.8		609.7
Lease Financing		1,143.8		1,168.4		1,291.6		1,194.1		1,221.8
Total U.S.	$	28,963.7	$	23,066.0	$	20,876.4	$	18,363.3	$	17,379.4
Non-U.S.		1,791.7		2,274.1		1,733.3		1,605.2		563.3
Total Loans and Leases	$	30,755.4	$	25,340.1	$	22,609.7	$	19,968.5	$	17,942.7

SUMMARY OF OFF-BALANCE SHEET FINANCIAL INSTRUMENTS WITH CONTRACT AMOUNTS THAT REPRESENT CREDIT RISK	DECEMBER 31
(In Millions)	2008		2007
Unfunded Commitments to Extend Credit
One Year and Less	$	9,902.4	$	6,327.6
Over One Year		15,453.9		15,796.7
Total	$	25,356.3	$	22,124.3
Standby Letters of Credit		4,025.0		2,881.8
Commercial Letters of Credit		36.7		35.9
Custody Securities Lent with Indemnification		82,728.2		179,779.5

UNFUNDED COMMITMENTS TO EXTEND CREDIT AT DECEMBER 31, 2008

BY INDUSTRY SECTOR

(In Millions)	COMMITMENT EXPIRATION
Industry Sector	TOTAL COMMITMENTS		ONE YEAR AND LESS		OVER ONE YEAR		OUTSTANDING LOANS
Finance and Insurance	$	2,461.7	$	1,278.3	$	1,183.4	$	731.6
Holding Companies		214.1		130.6		83.5		212.0
Manufacturing		5,037.2		833.1		4,204.1		1,982.4
Mining		183.2		37.0		146.2		96.8
Public Administration		20.1		15.6		4.5		365.9
Retail Trade		701.8		110.8		591.0		238.4
Security and Commodity Brokers		84.1		35.0		49.1		–
Services		4,102.6		1,870.4		2,232.2		3,645.1
Transportation and Warehousing		343.6		47.6		296.0		96.4
Utilities		604.1		66.4		537.7		208.8
Wholesale Trade		675.3		100.8		574.5		485.5
Other Commercial		273.6		67.2		206.4		190.7
Total Commercial*	$	14,701.4	$	4,592.8	$	10,108.6	$	8,253.6
Residential Real Estate		2,386.0		279.6		2,106.4		10,381.4
Commercial Real Estate		613.3		186.9		426.4		3,014.0
Personal		5,561.6		3,229.5		2,332.1		4,766.7
Other		1,262.1		915.9		346.2		1,404.2
Lease Financing		–		–		–		1,143.8
Non-U.S.		831.9		697.7		134.2		1,791.7
Total	$	25,356.3	$	9,902.4	$	15,453.9	$	30,755.4

* Commercial industry sector information is presented on the basis of the North American Industry Classification System (NAICS).

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Although credit exposure is well diversified, there are certain groups of credits that meet the accounting definition of credit risk concentrations under FASB SFAS No. 107 “Disclosures about Fair Value of Financial Instruments”. According to this standard, group concentrations of credit risk exist if a number of borrowers or other counterparties are engaged in similar activities and have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. The fact that a credit exposure falls into one of these groups does not necessarily indicate that the credit has a higher than normal degree of credit risk. These groups are: residential real estate, banks and bank holding companies, and commercial real estate.

Residential Real Estate

The residential real estate loan portfolio is primarily composed of mortgages to clients with whom Northern Trust is seeking to establish a comprehensive financial services relationship. At December 31, 2008, residential real estate loans totaled $10.4 billion or 36% of total U.S. loans at December 31, 2008, compared with $9.2 billion or 40% at December 31, 2007. All mortgages were underwritten utilizing Northern Trust’s stringent credit standards. Residential real estate loans consist of conventional home mortgages and equity credit lines, which generally require a loan to collateral value of no more than 75% to 80% at inception.

Of the total $10.4 billion in residential real estate loans, $3.9 billion were in the greater Chicago area, $2.8 billion were in Florida, and $1.0 billion were in Arizona, with the remainder distributed throughout the other geographic regions within the U.S. served by Northern Trust. Legally binding commitments to extend residential real estate credit, which are primarily equity credit lines, totaled $2.4 billion and $2.3 billion at December 31, 2008 and 2007, respectively.

Banks and Bank Holding Companies

On-balance sheet credit risk to banks and bank holding companies, both U.S. and non-U.S., consists primarily of short-term money market assets, which totaled $16.9 billion and $25.1 billion at December 31, 2008 and December 31, 2007, respectively, and noninterest-bearing demand balances maintained at correspondent banks, which totaled $2.6 billion and $3.7 billion at December 31, 2008 and December 31, 2007, respectively.

Credit risk associated with banks and bank holding companies is managed by committees within the Credit Policy function which approve and monitor U.S. and non-U.S bank exposures. Credit limits are also established by these committees through a review process that includes an internally prepared financial analysis, use of an internal rating system and consideration of external ratings from rating agencies. Northern Trust places deposits with banks that have high internal and external credit ratings and the average life to maturity of deposits with banks is maintained on a short-term basis in order to respond quickly to changing credit conditions.

Northern Trust also provides commercial financing to banks and bank holding companies with which it has a substantial business relationship. Northern Trust’s outstanding lending exposure to these entities, primarily U.S. bank holding companies located in the Greater Midwest, was not considered material to its consolidated financial position as of December 31, 2008 or 2007.

Commercial Real Estate

In managing its credit exposure, management has defined a commercial real estate loan as one where: (1) the borrower’s principal business activity is the acquisition or the development of real estate for commercial purposes; (2) the principal collateral is real estate held for commercial purposes, and loan repayment is expected to flow from the operation of the property; or (3) the loan repayment is expected to flow from the sale or refinance of real estate as a normal and ongoing part of the business. Unsecured lines of credit to firms or individuals engaged in commercial real estate endeavors are included without regard to the use of loan proceeds. The commercial real estate portfolio consists of interim loans and commercial mortgages.

Short-term interim loans provide financing for the initial phases of the acquisition or development of commercial real estate, with the intent that the borrower will refinance the loan through another financial institution or sell the project upon its completion. The interim loans are primarily in those markets where Northern Trust has a strong presence and a thorough knowledge of the local economy. The interim loans, which totaled $606.5 million and $511.5 million as of December 31, 2008 and 2007, respectively, are composed primarily of loans to developers that are highly experienced and well known to Northern Trust.

Commercial mortgage financing, which totaled $2.4 billion and $1.9 billion as of December 31, 2008 and 2007, respectively, is provided for the acquisition or refinancing of income producing properties. Cash flows from the properties generally are sufficient to amortize the loan. These loans average approximately $1 million each and are primarily located in the Illinois and Florida markets.

At December 31, 2008, legally binding commitments to extend credit and standby letters of credit to commercial real

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estate developers totaled $613.3 million and $63.4 million, respectively. At December 31, 2007, legally binding commitments were $620.9 million and standby letters of credit were $57.6 million.

Non-U.S. Outstandings

As used in this discussion, non-U.S. outstandings are cross-border outstandings as defined by the Securities and Exchange Commission. They consist of loans, acceptances, interest-bearing deposits with financial institutions, accrued interest and other monetary assets. Not included are letters of credit, loan commitments, and non-U.S. office local currency claims on residents funded by local currency liabilities. Non-U.S. outstandings related to a specific country are net of guarantees given by third parties resident outside the country and the value of tangible, liquid collateral held outside the country. However, transactions with branches of non-U.S. banks are included in these outstandings and are classified according to the country location of the non-U.S. banks’ head office.

Short-term interbank time deposits with non-U.S. banks represent the largest category of non-U.S. outstandings. Northern Trust actively participates in the interbank market with U.S. and non-U.S. banks. International commercial lending activities also include import and export financing for U.S.-based clients.

Northern Trust places deposits with non-U.S. counterparties that have high internal (Northern Trust) and external credit ratings. These non-U.S. banks are approved and monitored by Northern Trust’s Counterparty Risk Management Committee, which has credit authority for exposure to all non-U.S. banks and employs a review process that results in credit limits. This process includes financial analysis of the non-U.S. banks, use of an internal rating system and consideration of external ratings from rating agencies. Each counterparty is reviewed at least annually and potentially more frequently based on deteriorating credit fundamentals or general market conditions. Separate from the entity-specific review process, the average life to maturity of deposits with non-U.S. banks is deliberately maintained on a short-term basis in order to respond quickly to changing credit conditions. Additionally, the Committee performs a country-risk analysis and imposes limits to country exposure. The following table provides information on non-U.S. outstandings by country that exceed 1.00% of Northern Trust’s assets.

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NON-U.S. OUTSTANDINGS

(In Millions)	BANKS		COMMERCIAL AND OTHER		TOTAL
At December 31, 2008
United Kingdom	$	2,640	$	63	$	2,703
France		2,455		1		2,456
Belgium		1,382		–		1,382
Canada		1,252		3		1,255
Netherlands		1,025		95		1,120
Channel Islands & Isle of Man		823		11		834
At December 31, 2007
France	$	2,982	$	1	$	2,983
United Kingdom		2,693		109		2,802
Canada		1,905		12		1,917
Netherlands		1,527		188		1,715
Belgium		1,540		8		1,548
Germany		1,499		2		1,501
Australia		1,316		19		1,335
Spain		1,004		1		1,005
Switzerland		967		4		971
Sweden		877		3		880
Ireland		522		309		831
Singapore		779		2		781
Channel Islands & Isle of Man		666		21		687
At December 31, 2006
France	$	3,187	$	1	$	3,188
United Kingdom		2,176		52		2,228
Netherlands		1,313		219		1,532
Ireland		654		374		1,028
Hong Kong		951		–		951
Belgium		871		13		884
Germany		791		3		794
Sweden		727		2		729

Countries whose aggregate outstandings totaled between .75% and 1.00% of total assets were as follows: Ireland with aggregate outstandings of $773 million and Spain with aggregate outstandings of $752 million at December 31, 2008, Denmark with aggregate outstandings of $593 million at December 31, 2007, and Canada with aggregate outstandings of $489 million at December 31, 2006.

NONPERFORMING ASSETS	DECEMBER 31
(In Millions)	2008		2007		2006		2005		2004
Nonaccrual Loans
U.S.
Residential Real Estate	$	32.7	$	5.8	$	8.1	$	5.0	$	2.8
Commercial		21.3		10.4		18.8		16.1		29.5
Commercial Real Estate		35.8		–		–		–		.1
Personal		6.9		7.0		7.6		8.7		.5
Non-U.S.		–		–		1.2		1.2		–
Total Nonaccrual Loans		96.7		23.2		35.7		31.0		32.9
Other Real Estate Owned		3.5		6.1		1.4		.1		.2
Total Nonperforming Assets	$	100.2	$	29.3	$	37.1	$	31.1	$	33.1
90 Day Past Due Loans Still Accruing	$	27.8	$	8.6	$	24.6	$	29.9	$	9.9

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Nonperforming Assets and 90 Day Past Due Loans

Nonperforming assets consist of nonaccrual loans and Other Real Estate Owned (OREO). OREO is comprised of commercial and residential properties acquired in partial or total satisfaction of problem loans. Past due loans are loans that are delinquent 90 days or more and still accruing interest. The level of 90 day past due loans at any reporting period can fluctuate widely based on the timing of cash collections, renegotiations and renewals.

Maintaining a low level of nonperforming assets is important to the ongoing success of a financial institution. In addition to the negative impact on both net interest income and credit losses, nonperforming assets also increase operating costs due to the expense associated with collection efforts. Northern Trust’s comprehensive credit review and approval process is a critical part of its ability to minimize nonperforming assets on a long-term basis.

The previous table presents the nonperforming assets and past due loans for the current and prior four years. Of the total loan portfolio of $30.8 billion at December 31, 2008, $96.7 million, or .31%, was nonaccrual, compared with $23.2 million, or .09%, at December 31, 2007.

Included in the portfolio of nonaccrual loans are those loans that meet the criteria of being “impaired.” A loan is impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. As of December 31, 2008, impaired loans, all of which have been classified as nonaccrual, totaled $85.6 million. These loans had $15.5 million of the reserve for credit losses allocated to them.

Provision and Reserve for Credit Losses

Changes in the reserve for credit losses were as follows:

(In Millions)	2008			2007			2006
Balance at Beginning of Year	$	160.2		$	151.0		$	136.0
Charge-Offs		(25.7	)		(9.7	)		(1.8	)
Recoveries		2.5			.9			1.6
Net Charge-Offs		(23.2	)		(8.8	)		(.2	)
Provision for Credit Losses		115.0			18.0			15.0
Effect of Foreign Exchange Rates		(.9	)		–			.2
Balance at End of Year	$	251.1		$	160.2		$	151.0

The provision for credit losses is the charge to current earnings that is determined by management, through a disciplined credit review process, to be the amount needed to maintain a reserve that is sufficient to absorb probable credit losses that have been identified with specific borrower relationships (specific loss component) and for probable losses that are believed to be inherent in the loan and lease portfolios, unfunded commitments, and standby letters of credit (inherent loss component). The following table shows the specific portion of the reserve and the allocated portion of the inherent reserve and its components by loan category at December 31, 2008 and each of the prior four year-ends, and the unallocated portion of the reserve at each of the prior four year-ends.

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ALLOCATION OF THE RESERVE FOR CREDIT LOSSES

	DECEMBER 31
	2008				2007				2006				2005				2004
($ In Millions)	RESERVE AMOUNT		PERCENT OF LOANS TO TOTAL LOANS		RESERVE AMOUNT		PERCENT OF LOANS TO TOTAL LOANS		RESERVE AMOUNT		PERCENT OF LOANS TO TOTAL LOANS		RESERVE AMOUNT		PERCENT OF LOANS TO TOTAL LOANS		RESERVE AMOUNT		PERCENT OF LOANS TO TOTAL LOANS
Specific Reserve	$	23.5	–	%	$	10.8	–	%	$	19.6	–	%	$	20.3	–	%	$	24.0	–	%
Allocated Inherent Reserve
Residential Real Estate		37.0	34			13.6	36			13.4	38			12.4	42			11.6	45
Commercial		114.7	27			64.1	22			55.0	21			48.3	18			49.9	18
Commercial Real Estate		43.8	10			28.4	9			21.5	8			17.7	7			17.1	7
Personal		19.7	15			6.2	15			5.9	15			6.1	15			5.5	16
Other		1.7	4			–	4			–	4			–	4			–	4
Lease Financing		3.3	4			3.6	5			3.7	6			3.9	6			4.5	7
Non-U.S.		7.4	6			7.4	9			6.6	8			2.9	8			1.6	3
Total Allocated Inherent Reserve	$	227.6	100	%	$	123.3	100	%	$	106.1	100	%	$	91.3	100	%	$	90.2	100	%
Unallocated Inherent Reserve		–	–			26.1	–			25.3	–			24.4	–			25.1	–
Total Reserve for Credit Losses	$	251.1	100	%	$	160.2	100	%	$	151.0	100	%	$	136.0	100	%	$	139.3	100	%
Reserve Assigned to:
Loans and Leases	$	229.1			$	148.1			$	140.4			$	125.4			$	130.7
Unfunded Commitments and Standby Letters of Credit		22.0				12.1				10.6				10.6				8.6
Total Reserve for Credit Losses	$	251.1			$	160.2			$	151.0			$	136.0			$	139.3

Specific Component of the Reserve

The amount of specific reserves is determined through an individual evaluation of loans and lending-related commitments considered impaired based on expected future cash flows, collateral value, market value, and other factors that may impact the borrower’s ability to pay.

At December 31, 2008, the specific reserve component amounted to $23.5 million compared with $10.8 million at the end of 2007. The $12.7 million increase primarily reflects additional reserves provided for three credit exposures that are considered impaired, partially offset by principal repayments received and charge-offs.

The decrease in the specific loss component of the reserve from $19.6 million in 2006 to $10.8 million in 2007 reflects principal repayments received and charge-offs.

Inherent Component of the Reserve

The inherent component of the reserve addresses exposure relating to probable but unidentified credit-related losses. The amount of inherent loss reserves is based primarily on reserve factors which incorporate management’s evaluation of historical charge-off experience and various qualitative factors such as management’s evaluation of economic and business conditions and changes in the character and size of the loan portfolio. Effective in 2008, the methodology used to determine the qualitative element of the inherent reserve was modified to provide for the assignment of reserves to loan and lease credit exposures aggregated by shared risk characteristics to better align the reserves with the related credit risk. Previously, this element of the inherent reserve was associated with the credit portfolio as a whole and was referred to as the unallocated inherent reserve.

The historical charge-off experience for each loan category is based on data from the preceding four years. Qualitative factors reviewed by management include changes in asset quality metrics, changes in the nature and volume of the portfolio, changes in economic and business conditions, changes in collateral valuations, such as property values, and other pertinent information.

The inherent component of the reserve also covers the credit exposure associated with undrawn loan commitments and standby letters of credit. To estimate the reserve for credit losses on these instruments, management uses conversion rates to determine their balance sheet equivalent amount and assigns a reserve factor based on the methodology utilized for outstanding loans.

The inherent portion of the reserve increased $78.2 million to $227.6 million at December 31, 2008, compared with $149.4 million at December 31, 2007, which in turn increased $18.0 million from $131.4 million at December 31, 2006. The increase in this component of the reserve from the

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prior year is primarily attributable to loan growth and weakness in the broader economic environment. The increase during 2007 is primarily attributable to growth in the commercial loan portfolio.

Other Factors

The total amount of the two highest risk loan groupings, those rated “7” and “8” (based on Northern Trust’s internal rating scale, which closely parallels that of the banking regulators), increased $337.7 million to $401.0 million, of which $85.6 million was classified as impaired. This compares with $63.3 million last year-end when $19.4 million was classified as impaired. The increase in 2008 primarily reflects the migration of loans to higher risk ratings as a result continued weakness in the broader economic environment. There were no “9” rated loans reported at any time during the periods because loans are charged-off when they are so rated. At December 31, 2008, these highest risk loans represented 1.30% of outstanding loans.

Overall Reserve

In establishing the overall reserve level, management considers that 34% of the loan portfolio consists of lower risk residential mortgage loans. The evaluation of the factors above resulted in a reserve for credit losses of $251.1 million at December 31, 2008 compared with $160.2 million at the end of 2007. The reserve of $229.1 million assigned to loans and leases, as a percentage of total loans and leases, was .75% at December 31, 2008, compared with .58% at December 31, 2007. The increase in the reserve level reflects loan growth and weakness in the broader economic environment.

Reserves assigned to unfunded loan commitments and standby letters of credits totaled $22.0 million and $12.1 million at December 31, 2008 and December 31, 2007, respectively, and are included in other liabilities in the consolidated balance sheet.

Provision

The provision for credit losses was $115.0 million for 2008 and net charge-offs totaled $23.2 million. This compares with an $18.0 million provision for credit losses and net charge-offs of $8.8 million in 2007 and a $15.0 million provision for credit losses and net charge-offs of $.2 million in 2006.

Market Risk Management

Overview

To ensure adherence to Northern Trust’s interest rate and foreign exchange risk management policies, ALCO establishes and monitors guidelines to control the sensitivity of earnings to changes in interest rates and foreign currency exchange rates. The guidelines apply to both on- and off-balance sheet positions. The goal of the ALCO process is to maximize earnings while maintaining a high quality balance sheet and carefully controlling interest rate and foreign exchange risk.

Asset/Liability Management

Asset/liability management activities include lending, accepting and placing deposits, investing in securities, issuing debt, and hedging interest rate and foreign exchange risk with derivative financial instruments. The primary market risk associated with asset/liability management activities is interest rate risk and, to a lesser degree, foreign exchange risk.

Interest Rate Risk Management

Sensitivity of earnings to interest rate changes arises when yields on assets change in a different time period or in a different amount from that of interest costs on liabilities. To mitigate interest rate risk, the structure of the balance sheet is managed so that movements of interest rates on assets and liabilities (adjusted for off-balance sheet hedges) are highly correlated which allows Northern Trust’s interest-bearing assets and liabilities to contribute to earnings even in periods of volatile interest rates.

Northern Trust utilizes the following measurement techniques in the management of interest rate risk: simulation of earnings; simulation of the economic value of equity; and gap analysis. These three techniques are complementary and are used in concert to provide a comprehensive interest rate risk management capability.

Simulation of earnings is the primary tool used to measure the sensitivity of earnings to interest rate changes. Using modeling techniques, Northern Trust is able to measure the potential impact of different interest rate assumptions on pre-tax earnings. The model includes U.S. dollar-based on-balance sheet positions, as well as derivative financial instruments (principally interest rate swaps) that are used to manage interest rate risk.

Northern Trust used model simulations as of December 31, 2008 to measure its earnings sensitivity relative to management’s most likely interest rate forecast for the following year. Management’s most likely 2009 interest rate forecast reflects the current low level of market rates and has the current yield curve steepening by the end of the year. The interest sensitivity was tested by running alternative scenarios above and below the most likely interest rate forecast. The following table shows the estimated impact on 2009 pre-tax earnings of 100 and 200 basis point upward and downward movements in interest rates relative to management’s most

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likely interest rate forecast. Each of the movements in interest rates was assumed to have occurred gradually over a one-year period. The 100 basis point increase, for example, consisted of twelve consecutive monthly increases of 8.3 basis points. The following assumptions were also incorporated into the model simulations:

Ÿ the balance sheet size was assumed to remain constant over the one-year simulation horizon;

Ÿ maturing assets and liabilities were replaced on the balance sheet with the same terms;

Ÿ prepayments on mortgage loans were projected under each rate scenario using a third-party mortgage analytics system that incorporated market prepayment assumptions; and

Ÿ changes in the spreads between retail deposit rates and asset yields were estimated based on historical patterns and current competitive trends; and

Ÿ implied floors are assumed as interest rates approach zero in the declining rate scenarios, resulting in spread compression and lower net interest income.

INTEREST RATE RISK SIMULATION OF PRE-TAX

INCOME AS OF DECEMBER 31, 2008

(In Millions)	ESTIMATED IMPACT ON 2009 PRE-TAX INCOME INCREASE/(DECREASE)
INCREASE IN INTEREST RATES ABOVE MANAGEMENT’S INTEREST RATE FORECAST
100 Basis Points	$	13.6
200 Basis Points		8.8
DECREASE IN INTEREST RATES BELOW MANAGEMENT’S INTEREST RATE FORECAST
100 Basis Points	$	(46.1	)
200 Basis Points		(69.2	)

The simulations of earnings do not incorporate any management actions that might moderate the negative consequences of actual interest rate deviations. For that reason and others, they do not reflect likely actual results but serve as conservative estimates of interest rate risk.

A second technique used to measure interest rate risk is simulation of the economic value of equity, which is defined as the present value of assets minus the present value of liabilities net of the value of instruments that are used to manage the interest rate risk of balance sheet items. This measurement of interest rate risk provides estimates of the potential future impact on the economic value of equity of various changes in interest rates. The potential effect of interest rate changes on economic equity is derived from the impact of such changes on the market values of assets, liabilities and off-balance sheet instruments. Northern Trust limits aggregate market risk, as measured in this fashion, to an acceptable level within the context of risk-return trade-offs.

The third technique that is used to measure interest rate risk is gap analysis. The calculation of the interest sensitivity gap measures the timing mismatches between assets and liabilities. This interest sensitivity gap is determined by subtracting the amount of liabilities from the volume of assets that reprice or mature in a particular time interval. A liability sensitive position results when more liabilities than assets reprice or mature within a given period. Under this scenario, as interest rates decline, increased net interest income will be generated. Conversely, an asset sensitive position results when more assets than liabilities reprice within a given period; in this instance, net interest income would benefit from an increasing interest rate environment. The economic impact of a liability or asset sensitive position depends on the magnitude of actual changes in interest rates relative to the current expectations of market price participants. Northern Trust utilizes interest rate risk gap analysis to measure and limit the interest rate risk of its assets and liabilities denominated in non-U.S. currencies.

A variety of actions may be used to implement risk management strategies including:

Ÿ purchases of securities;

Ÿ sales of securities that are classified as available for sale;

Ÿ sales of held for sale residential real estate loans;

Ÿ issuance of senior notes and subordinated notes;

Ÿ collateralized borrowings from the Federal Home Loan Bank;

Ÿ placing and taking Eurodollar time deposits; and

Ÿ hedging with various types of derivative financial instruments.

Northern Trust strives to use the most effective instruments for implementing its interest risk management strategies, considering the costs, liquidity, collateral and capital requirements of the various alternatives.

Foreign Exchange Risk Management

Northern Trust is exposed to non-trading foreign exchange risk as a result of its holdings of non-U.S. dollar denominated assets and liabilities, investment in non-U.S. subsidiaries, and other transactions in non-U.S. dollar currencies. To manage non-trading foreign exchange volatility and minimize the earnings impact of translation gains and losses, Northern Trust utilizes non-U.S. dollar denominated liabilities to fund non-U.S. dollar denominated net assets. If those currency offsets do not exist on the balance sheet, Northern Trust will use various foreign exchange derivative contracts to mitigate its currency exposure.

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Foreign Exchange Trading. Foreign exchange trading activities consist principally of providing foreign exchange services to clients. Most of these services are provided in connection with Northern Trust’s growing global custody business. However, in the normal course of business Northern Trust also engages in proprietary trading of non-U.S. currencies. The primary market risk associated with these activities is foreign exchange risk.

Foreign currency trading positions exist when aggregate obligations to purchase and sell a currency other than the U.S. dollar do not offset each other, or offset each other in different time periods. Northern Trust mitigates the risk related to its non-U.S. currency positions by establishing limits on the amounts and durations of its positions. The limits on overnight inventory positions are generally lower than the limits established for intra-day trading activity. All overnight positions are monitored by a risk management function, which is separate from the trading function, to ensure that the limits are not exceeded. Although position limits are important in controlling foreign exchange risk, they are not a substitute for the experience or judgment of Northern Trust’s senior management and its currency traders, who have extensive knowledge of the currency markets. Non-U.S. currency positions and strategies are adjusted as needed in response to changing market conditions.

As part of its risk management activities, Northern Trust regularly measures the risk of loss associated with non-U.S. currency positions using a value at risk model. This statistical model provides an estimate, based on a 99% confidence level, of the potential loss in earnings that may be incurred if an adverse one-day shift in non-U.S. currency exchange rates were to occur. The model, which is based on a variance/co-variance methodology, incorporates historical currency price data and historical correlations in price movement among the currencies. All non-U.S. currency trading positions are included in the model.

Northern Trust’s value at risk based on non-U.S. currency positions totaled $544 thousand and $916 thousand as of December 31, 2008 and 2007, respectively. Value at risk totals representing the average, high and low for 2008 were $548 thousand, $1.7 million and $132 thousand, respectively, with the average, high and low for 2007 being $309 thousand, $1.1 million and $44 thousand, respectively. These totals indicate the degree of risk inherent in non-U.S. currency dispositions as of year-end and during the year; however, it is not a prediction of an expected gain or loss. Actual future gains and losses will vary depending on market conditions and the size and duration of future non-U.S. currency positions. During 2008 and 2007, Northern Trust did not incur an actual trading loss in excess of the daily value at risk estimate.

Other Trading Activities. Market risk associated with other trading activities is negligible. Northern Trust is a party to various derivative financial instruments, most of which consist of interest rate swaps entered into to meet clients’ interest risk management needs. When Northern Trust enters into such swaps, its policy is to mitigate the resulting market risk with an offsetting swap or with futures contracts. Northern Trust carries in its trading portfolio a small inventory of securities that are held for sale to its clients. The interest rate risk associated with these securities is insignificant.

OPERATIONAL RISK MANAGEMENT

In providing its services, Northern Trust is exposed to operational risk which is the risk of loss from inadequate or failed internal processes, people, and systems or from external events. Northern Trust’s success depends, in part, upon maintaining its reputation as a well managed institution with shareholders, existing and prospective clients, creditors and regulators.

In order to maintain this reputation, Northern Trust seeks to minimize the frequency and severity of operational losses associated with compliance and fiduciary matters, product, process, and technology failures, and business continuity.

Operational risk is mitigated through a system of internal controls and risk management practices that are designed to keep operational risk at levels appropriate to the Northern Trust’s overall risk appetite and the inherent risk in the markets it operates. While operational risk controls are extensive, operational losses have occurred and there can be no assurance that such losses will not occur in the future.

The Operational Risk Committee of Northern Trust provides independent oversight and is responsible for setting the Corporate Operational Risk Management Policy and developing the operational risk management framework and programs that support the coordination of operational risk activities to identify, monitor, manage and report on operational risk.

The Corporate Operational Risk function is the focal point for the operational risk management framework and works closely with the business units to achieve the goal of assuring proactive management of operational risk within Northern Trust. To further limit operational risks, committee structures have been established to draft, enforce, and monitor adherence to corporate policies and established procedures. Each business unit is responsible for complying with corporate policies and external regulations applicable to the unit,

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and is responsible for establishing specific procedures to do so. Northern Trust’s internal auditors monitor the overall effectiveness of the system of internal controls on an ongoing basis.

FACTORS AFFECTING FUTURE RESULTS

This report contains statements that may be considered forward-looking, such as the statements relating to Northern Trust’s financial goals, dividend policy, expansion and business development plans, anticipated expense levels and projected profit improvements, business prospects and positioning with respect to market, demographic and pricing trends, strategic initiatives, re-engineering and outsourcing activities, new business results and outlook, changes in securities market prices, credit quality including reserve levels, planned capital expenditures and technology spending, anticipated tax benefits and expenses, and the effects of any extraordinary events and various other matters (including developments with respect to litigation, other contingent liabilities and obligations, and regulation involving Northern Trust and changes in accounting policies, standards and interpretations) on Northern Trust’s business and results.

Forward-looking statements are typically identified by words or phrases such as “believe”, “expect”, “anticipate”, “intend”, “estimate”, “may increase”, “may fluctuate”, “plan”, “goal”, “target”, “strategy”, and similar expressions or future or conditional verbs such as “may”, “will”, “should”, “would”, and “could.” Forward-looking statements are Northern Trust’s current estimates or expectations of future events or future results. Actual results could differ materially from the results indicated by these statements because the realization of those results is subject to many risks and uncertainties including: the health of the U.S. and international economies; changes in financial markets, including debt and equity markets, that impact the value, liquidity, or credit ratings of financial assets in general, or financial assets in particular investment funds, client portfolios, or securities lending collateral pools, including those funds, portfolios, collateral pools, and other financial assets with respect to which Northern Trust has taken, or may in the future take, actions to provide asset value stability or additional liquidity, such as entry into capital support agreements and other client support actions; the impact of recent upheaval in the financial markets, the effectiveness of domestic and international governmental actions taken in response, such as the U.S. Treasury’s Troubled Asset Relief Program and the FDIC’s Temporary Liquidity Guarantee Program, and the effect of such governmental actions on Northern Trust, its competitors and counterparties, financial markets generally and availability of credit specifically, and the U.S. and international economies; changes in foreign exchange trading client volumes, fluctuations and volatility in foreign currency exchange rates, and Northern Trust’s success in assessing and mitigating the risks arising from such changes, fluctuations and volatility; decline in the value of securities held in Northern Trust’s investment portfolio, particularly asset-backed securities, the liquidity and pricing of which may be negatively impacted by periods of economic turmoil and financial market disruptions, and difficulties in measuring the fair value of those securities; Northern Trust’s success in managing various risks inherent in its business, including credit risk, interest rate risk and liquidity risk, particularly during times of economic uncertainty and volatility in the credit and other markets; geopolitical risks and the risks of extraordinary events such as natural disasters, terrorist events, war and the U.S. government’s response to those events; the pace and extent of continued globalization of investment activity and growth in worldwide financial assets; regulatory and monetary policy developments; failure to obtain regulatory approvals when required; changes in tax laws, accounting requirements or interpretations and other legislation in the U.S. or other countries that could affect Northern Trust or its clients; changes in the nature and activities of Northern Trust’s competition, including increased consolidation within the financial services industry; Northern Trust’s success in maintaining existing business and continuing to generate new business in its existing markets; Northern Trust’s success in identifying and penetrating targeted markets, through acquisition, strategic alliance or otherwise; Northern Trust’s success in integrating recent and future acquisitions, strategic alliances, and preferred provider arrangements; Northern Trust’s success in addressing the complex needs of a global client base across multiple time zones and from multiple locations, and managing compliance with legal, tax, regulatory and other requirements in areas of faster growth in its businesses, especially in immature markets; Northern Trust’s ability to maintain a product mix that achieves acceptable margins; Northern Trust’s ability to continue to generate investment results that satisfy its clients and continue to develop its array of investment products; Northern Trust’s success in generating revenues in its securities lending business for itself and its clients, especially in periods of economic and financial market uncertainty; Northern Trust’s success in recruiting and retaining the necessary personnel to support business growth and expansion and maintain sufficient expertise to support increasingly complex products and services; Northern Trust’s ability, as products, methods of

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delivery, and client requirements change or become more complex, to continue to fund and accomplish innovation, improve risk management practices and controls, and address operating risks, including human errors or omissions, pricing or valuation of securities, fraud, systems performance or defects, systems interruptions, and breakdowns in processes or internal controls; Northern Trust’s success in controlling expenses particularly in a difficult economic environment; increased costs of compliance and other risks associated with changes in regulation and the current regulatory environment, including the requirements of the new Basel II capital regime and areas of increased regulatory emphasis and oversight such as the Bank Secrecy Act and Anti-Money Laundering Act; risks and uncertainties inherent in the litigation and regulatory process, including the adequacy of contingent liability, tax, and other reserves; and the risk of events that could harm Northern Trust’s reputation and so undermine the confidence of clients, counterparties, rating agencies, and stockholders.

Some of these and other risks and uncertainties that may affect future results are discussed in more detail in the section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” captioned “Risk Management” in the 2008 Annual Report to Shareholders (pages 47 – 58), in the section of the “Notes to Consolidated Financial Statements” in the 2008 Annual Report to Shareholders captioned “Note 25 – Contingent Liabilities” (page 91 and 92), in the sections of “Item 1 – Business” of the 2008 Annual Report on Form 10-K captioned “Government Monetary and Fiscal Polices,” “Competition” and “Regulation and Supervision” (pages 2 – 11), and in “Item 1A – Risk Factors” of the 2008 Annual Report on Form 10-K (pages 26 – 34). All forward-looking statements included in this report are based upon information presently available, and Northern Trust assumes no obligation to update any forward-looking statements.

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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of Northern Trust Corporation (Northern Trust) is responsible for establishing and maintaining adequate internal control over financial reporting. This internal control contains monitoring mechanisms, and actions are taken to correct deficiencies identified.

Management assessed Northern Trust’s internal control over financial reporting as of December 31, 2008. This assessment was based on criteria for effective internal control over financial reporting described in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management believes that, as of December 31, 2008, Northern Trust maintained effective internal control over financial reporting, including maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of Northern Trust, and policies and procedures that provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States and that receipts and expenditures of Northern Trust are being made only in accordance with authorizations of management and directors of Northern Trust. Additionally, KPMG LLP, the independent registered public accounting firm that audited Northern Trust’s consolidated financial statements as of, and for the year ended, December 31, 2008, included in this Annual Report, has issued an attestation report (included herein on page 61) on the effectiveness of Northern Trust’s internal control over financial reporting.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF NORTHERN TRUST CORPORATION:

We have audited Northern Trust Corporation’s internal control over financial reporting as of December 31, 2008, based on criteria established in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Northern Trust Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management’s Report on Internal Control Over Financial Reporting”. Our responsibility is to express an opinion on Northern Trust Corporation’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Northern Trust Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Northern Trust Corporation and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2008, and our report dated February 27, 2009 expressed an unqualified opinion on those consolidated financial statements.

CHICAGO, ILLINOIS

FEBRUARY 27, 2009

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CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEET

	DECEMBER 31
($ In Millions Except Share Information)	2008			2007
ASSETS
Cash and Due from Banks	$	2,648.2		$	3,921.6
Federal Funds Sold and Securities Purchased under Agreements to Resell		169.0			3,790.7
Time Deposits with Banks		16,721.0			21,260.0
Federal Reserve Deposits and Other Interest-Bearing		9,403.8			21.5
Securities
Available for Sale		14,414.4			7,740.3
Held to Maturity (Fair value – $1,156.1 in 2008 and $1,160.9 in 2007)		1,154.1			1,144.8
Trading Account		2.3			3.1
Total Securities		15,570.8			8,888.2
Loans and Leases
Commercial and Other		20,374.0			16,169.1
Residential Mortgages		10,381.4			9,171.0
Total Loans and Leases (Net of unearned income – $539.5 in 2008 and $559.6 in 2007)		30,755.4			25,340.1
Reserve for Credit Losses Assigned to Loans and Leases		(229.1	)		(148.1	)
Buildings and Equipment		506.6			491.9
Customers’ Acceptance Liability		.5			.5
Client Security Settlement Receivables		709.3			563.1
Goodwill		389.4			425.8
Other Assets		5,408.7			3,055.9
Total Assets	$	82,053.6		$	67,611.2
LIABILITIES
Deposits
Demand and Other Noninterest-Bearing	$	11,823.6		$	5,739.3
Savings and Money Market		9,079.2			7,533.9
Savings Certificates		2,606.8			2,028.0
Other Time		801.6			557.5
Non-U.S. Offices – Noninterest-Bearing		2,855.7			4,379.0
– Interest-Bearing		35,239.5			30,975.4
Total Deposits		62,406.4			51,213.1
Federal Funds Purchased		1,783.5			1,465.8
Securities Sold under Agreements to Repurchase		1,529.1			1,763.6
Other Borrowings		736.7			2,108.5
Senior Notes		1,052.6			653.9
Long-Term Debt		3,293.4			2,682.4
Floating Rate Capital Debt		276.7			276.6
Liability on Acceptances		.5			.5
Other Liabilities		4,585.3			2,937.7
Total Liabilities		75,664.2			63,102.1
STOCKHOLDERS’ EQUITY
Preferred Stock – Series B (Net of discount – $74.7)		1,501.3			–
Common Stock, $1.66  2/3 Par Value; Authorized 560,000,000 shares; Outstanding 223,263,132 shares in 2008 and 220,608,834 shares in 2007		379.8			379.8
Additional Paid-in Capital		178.5			69.1
Retained Earnings		5,091.2			4,556.2
Accumulated Other Comprehensive Income		(494.9	)		(90.3	)
Treasury Stock (at cost – 4,658,392 shares in 2008 and 7,312,690 shares in 2007)		(266.5	)		(405.7	)
Total Stockholders’ Equity		6,389.4			4,509.1
Total Liabilities and Stockholders’ Equity	$	82,053.6		$	67,611.2

See accompanying notes to consolidated financial statements on pages 66-104.

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

62

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF INCOME

	FOR THE YEAR ENDED DECEMBER 31
($ In Millions Except Per Share Information)	2008			2007			2006
Noninterest Income
Trust, Investment and Other Servicing Fees	$	2,134.9		$	2,077.6		$	1,791.6
Foreign Exchange Trading Income		616.2			351.3			247.3
Security Commissions and Trading Income		77.0			67.6			62.7
Treasury Management Fees		72.8			65.3			65.4
Gain on Visa Share Redemption		167.9			–			–
Other Operating Income		186.9			95.3			83.0
Investment Security Gains (Losses), net		(56.3	)		6.5			1.4
Total Noninterest Income		3,199.4			2,663.6			2,251.4
Net Interest Income
Interest Income		2,478.5			2,784.2			2,249.7
Interest Expense		1,399.4			1,938.8			1,505.0
Net Interest Income		1,079.1			845.4			744.7
Provision for Credit Losses		115.0			18.0			15.0
Net Interest Income after Provision for Credit Losses		964.1			827.4			729.7
Noninterest Expenses
Compensation		1,133.1			1,038.2			876.6
Employee Benefits		223.4			234.9			217.6
Outside Services		413.8			386.2			316.2
Equipment and Software Expense		241.2			219.3			205.3
Occupancy Expense		166.1			156.5			145.4
Visa Indemnification Charges		(76.1	)		150.0			–
Other Operating Expenses		786.3			245.1			195.8
Total Noninterest Expenses		2,887.8			2,430.2			1,956.9
Income before Income Taxes		1,275.7			1,060.8			1,024.2
Provision for Income Taxes		480.9			333.9			358.8
Net Income	$	794.8		$	726.9		$	665.4
Net Income Applicable to Common Stock	$	782.8		$	726.9		$	665.4
Per Common Share
Net Income – Basic	$	3.53		$	3.31		$	3.06
– Diluted		3.47			3.24			3.00
Cash Dividends Declared		1.12			1.03			.94
Average Number of Common Shares Outstanding – Basic		221,446,382			219,680,628			217,766,035
– Diluted		225,378,383			224,315,665			221,784,114
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
	FOR THE YEAR ENDED DECEMBER 31
(In Millions)	2008			2007			2006
Net Income	$	794.8		$	726.9		$	665.4
Other Comprehensive Income (Loss) (net of tax and reclassifications)
Net Unrealized Gains (Losses) on Securities Available for Sale		(184.2	)		(33.2	)		9.7
Net Unrealized Gains (Losses) on Cash Flow Hedge Designations		(17.7	)		(5.2	)		3.0
Foreign Currency Translation Adjustments		(8.4	)		2.7			17.0
Pension and Other Postretirement Benefit Adjustments		(194.3	)		94.0			14.2
Other Comprehensive Income (Loss)		(404.6	)		58.3			43.9
Comprehensive Income	$	390.2		$	785.2		$	709.3

See accompanying notes to consolidated financial statements on pages 66-104.

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

63

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

	FOR THE YEAR ENDED DECEMBER 31
(In Millions)	2008			2007			2006
PREFERRED STOCK
Balance at January 1	$	–		$	–		$	–
Preferred Stock Issuance, Series B		1,499.6			–			–
Discount Accretion – Preferred Stock		1.7			–			–
Balance at December 31		1,501.3			–			–
COMMON STOCK
Balance at January 1		379.8			379.8			379.8
Balance at December 31		379.8			379.8			379.8
ADDITIONAL PAID-IN CAPITAL
Balance at January 1		69.1			30.9			–
Transferred from Common Stock Issuable – Stock Incentive Plans		–			–			55.5
Transferred from Deferred Compensation		–			–			(29.5	)
Issuance of Warrant to Purchase Common Stock		76.4			–			–
Treasury Stock Transaction – Stock Options and Awards		(46.1	)		(45.3	)		(43.9	)
Stock-Based Awards – Amortization		44.1			38.4			27.5
Stock-Based Awards – Tax Benefits		35.0			45.1			21.3
Balance at December 31		178.5			69.1			30.9
RETAINED EARNINGS
Balance at January 1, as Previously Reported		4,556.2			4,131.2			3,672.1
Cumulative Effect of Applying FSP 13-2		–			(73.4	)		–
Change in Measurement Date of Postretirement Plans		(7.4	)		–			–
Balance at January 1, as Adjusted		4,548.8			4,057.8			3,672.1
Net Income		794.8			726.9			665.4
Dividends Declared – Common Stock		(250.7	)		(228.5	)		(206.3	)
Discount Accretion – Preferred Stock		(1.7	)		–			–
Balance at December 31		5,091.2			4,556.2			4,131.2
ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance at January 1		(90.3	)		(148.6	)		(18.7	)
Other Comprehensive Income (Loss)		(404.6	)		58.3			43.9
Pension and Other Postretirement Benefit Adjustments		–			–			(173.8	)
Balance at December 31		(494.9	)		(90.3	)		(148.6	)
COMMON STOCK ISSUABLE – STOCK INCENTIVE PLANS
Balance at January 1		–			–			55.5
Transferred to Additional Paid-in Capital		–			–			(55.5	)
Balance at December 31		–			–			–
DEFERRED COMPENSATION
Balance at January 1		–			–			(29.5	)
Transferred to Additional Paid-in Capital		–			–			29.5
Balance at December 31		–			–			–
TREASURY STOCK
Balance at January 1		(405.7	)		(449.4	)		(458.4	)
Stock Options and Awards		214.3			262.6			140.3
Stock Purchased		(75.1	)		(218.9	)		(131.3	)
Balance at December 31		(266.5	)		(405.7	)		(449.4	)
Total Stockholders’ Equity At December 31	$	6,389.4		$	4,509.1		$	3,943.9

See accompanying notes to consolidated financial statements on pages 66-104.

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

64

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF CASH FLOWS

	FOR THE YEAR ENDED DECEMBER 31
(In Millions)	2008			2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	794.8		$	726.9		$	665.4
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Investment Security (Gains) Losses, net		56.3			(6.5	)		(1.4	)
Amortization and Accretion of Securities and Unearned Income		(20.3	)		(256.1	)		(161.2	)
Provision for Credit Losses		115.0			18.0			15.0
Depreciation on Buildings and Equipment		87.6			84.8			83.7
Amortization of Computer Software		115.0			105.7			93.5
Amortization of Intangibles		17.8			20.9			22.4
Client Support Related Charges		320.3			–			–
Decrease in Accrued Income Taxes		(220.0	)		(137.9	)		(95.7	)
Qualified Pension Plan Contributions		(110.0	)		–			(162.0	)
Visa Indemnification Charges		(76.1	)		150.0			–
Excess Tax Benefits from Stock Incentive Plans		(35.0	)		(45.1	)		(21.3	)
Deferred Income Tax Provision		(60.7	)		(70.3	)		83.9
Net (Increase) Decrease in Trading Account Securities		.8			5.5			(5.8	)
(Increase) Decrease in Receivables		81.5			(86.1	)		(147.2	)
Increase (Decrease) in Interest Payable		(1.0	)		3.4			13.0
Other Operating Activities, net		(210.7	)		367.5			6.2
Net Cash Provided by Operating Activities		855.3			880.7			388.5
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (Increase) Decrease in Federal Funds Sold and Securities Purchased under Agreements to Resell		3,621.7			(2,491.0	)		3,545.4
Net (Increase) Decrease in Time Deposits with Banks		4,539.0			(5,791.3	)		(4,345.6	)
Net (Increase) Decrease in Other Interest-Bearing Assets		(9,382.3	)		.4			45.6
Purchases of Securities – Held to Maturity		(194.0	)		(122.0	)		(53.3	)
Proceeds from Maturity and Redemption of Securities – Held to Maturity		188.9			93.4			86.4
Purchases of Securities – Available for Sale		(15,324.0	)		(55,043.7	)		(87,092.2	)
Proceeds from Sale, Maturity and Redemption of Securities – Available for Sale		8,267.1			58,718.8			85,966.7
Net Increase in Loans and Leases		(5,422.8	)		(2,787.8	)		(2,588.6	)
Purchases of Buildings and Equipment, net		(102.3	)		(89.5	)		(99.4	)
Purchases and Development of Computer Software		(205.7	)		(164.0	)		(139.1	)
Net Increase in Client Security Settlement Receivables		(146.2	)		(223.8	)		(22.3	)
Decrease in Cash Due to Acquisitions		(8.6	)		–			–
Other Investing Activities, net		(178.0	)		431.3			(686.8	)
Net Cash Used in Investing Activities		(14,347.2	)		(7,469.2	)		(5,383.2	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Increase in Deposits		11,193.3			7,392.9			5,300.7
Net Increase (Decrease) in Federal Funds Purchased		317.7			(1,355.8	)		1,724.7
Net Increase (Decrease) in Securities Sold under Agreements to Repurchase		(234.5	)		(187.1	)		339.7
Net Increase (Decrease) in Short-Term Other Borrowings		(1,809.1	)		(894.1	)		316.6
Proceeds from Term Federal Funds Purchased		1,989.9			247.5			107.0
Repayments of Term Federal Funds Purchased		(1,553.9	)		(221.5	)		(95.0	)
Proceeds from Senior Notes & Long-Term Debt		1,864.8			2,034.9			649.1
Repayments of Senior Notes & Long-Term Debt		(867.0	)		(1,460.7	)		(1,046.0	)
Treasury Stock Purchased		(68.3	)		(213.0	)		(127.4	)
Net Proceeds from Stock Options		161.9			204.8			84.4
Excess Tax Benefits from Stock Incentive Plans		35.0			45.1			21.3
Cash Dividends Paid on Common Stock		(247.7	)		(219.5	)		(200.5	)
Proceeds from Preferred Stock – Series B and Warrant to Purchase Common Stock		1,576.0			–			–
Other Financing Activities, net		18.0			86.9			(268.1	)
Net Cash Provided by Financing Activities		12,376.1			5,460.4			6,806.5
Effect of Foreign Currency Exchange Rates on Cash		(157.6	)		88.7			153.0
Increase (Decrease) in Cash and Due from Banks		(1,273.4	)		(1,039.4	)		1,964.8
Cash and Due from Banks at Beginning of Year		3,921.6			4,961.0			2,996.2
Cash and Due from Banks at End of Year	$	2,648.2		$	3,921.6		$	4,961.0
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest Paid	$	1,400.4		$	1,882.7		$	1,463.9
Income Taxes Paid		485.1			368.0			304.1

See accompanying notes to consolidated financial statements on pages 66-104.

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

65

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Summary of Significant Accounting Policies

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (GAAP) and reporting practices prescribed for the banking industry. A description of the more significant accounting policies follows:

A. Basis of Presentation. The consolidated financial statements include the accounts of Northern Trust Corporation (Corporation) and its wholly-owned subsidiary, The Northern Trust Company (Bank), and their wholly-owned subsidiaries. Throughout the notes, the term “Northern Trust” refers to the Corporation and its subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. The consolidated statement of income includes results of acquired subsidiaries from the dates of acquisition.

B. Nature of Operations. The Corporation is a financial holding company under the Gramm-Leach-Bliley Act. The Bank is an Illinois banking corporation headquartered in Chicago and the Corporation’s principal subsidiary. The Corporation conducts business in the United States (U.S.) and internationally through the Bank, a national bank subsidiary, a federal savings bank subsidiary, trust companies, and various other U.S. and non-U.S. subsidiaries.

Northern Trust generates the majority of its revenues from its two primary business units: Corporate and Institutional Services (C&IS) and Personal Financial Services (PFS). Investment management services and products are provided to C&IS and PFS through a third business unit, Northern Trust Global Investments (NTGI). Operating and systems support for these business units is provided by a fourth business unit, Operations and Technology (O&T).

The C&IS business unit provides asset servicing, asset management, and related services to corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, and government funds; a full range of commercial banking services to large and mid-sized corporations and financial institutions; and foreign exchange services. C&IS products are delivered to clients from offices in 16 locations in North America, Europe, the Asia-Pacific region, and the Middle East.

The PFS business unit provides personal trust, investment management, custody, and philanthropic services; financial consulting; wealth management and family office services; guardianship and estate administration; qualified retirement plans; brokerage services; and private and business banking. PFS focuses on high net worth individuals and families, business owners, executives, professionals, retirees, and established privately-held businesses in its target markets. PFS services are delivered through a network of 85 offices in 18 U.S. states as well as offices in London and Guernsey.

C. Use of Estimates in the Preparation of Financial Statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

D. Foreign Currency Translation. Asset and liability accounts denominated in a foreign currency are remeasured into functional currencies at period end rates of exchange, except for buildings and equipment which are remeasured at exchange rates in effect at the date of acquisition. Income and expense accounts are remeasured at period average rates of exchange. Results from remeasurement are reported in other operating income.

Asset and liability accounts of entities with functional currencies that are not the U.S. dollar are translated at period end rates of exchange. Income and expense accounts are translated at period average rates of exchange. Translation adjustments, net of applicable taxes, are reported directly to accumulated other comprehensive income, a component of stockholders’ equity.

E. Securities. Securities Available for Sale are reported at fair value, with unrealized gains and losses credited or charged, net of the tax effect, to accumulated other comprehensive income, a component of stockholders’ equity. Realized gains and losses on securities available for sale are determined on a specific identification basis and are reported in the consolidated statement of income as investment security gains (losses), net. Interest income is recorded on the accrual basis, adjusted for the amortization of premium and accretion of discount.

Securities Held to Maturity consist of debt securities that management intends to, and Northern Trust has the ability to, hold until maturity. Such securities are reported at cost, adjusted for amortization of premium and accretion of discount. Interest income is recorded on the accrual basis adjusted for the amortization of premium and accretion of discount.

Securities Held for Trading are stated at fair value. Realized and unrealized gains and losses on securities held for trading are reported in the consolidated statement of income under security commissions and trading income.

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

66

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Security Impairment Reviews are conducted at least quarterly to identify and evaluate securities that have indications of possible other-than-temporary impairment. A determination as to whether a security’s decline in market value is other-than-temporary takes into consideration numerous factors and the relative significance of any single factor can vary by security. Factors considered include estimates of future cash flows; the length of time and extent to which the security’s market value has been below amortized cost; the financial condition and prospects of the issuer of the security; and Northern Trust’s intent and ability to retain the security for a period sufficient to allow for an anticipated recovery in fair value. If, based upon an analysis of the above factors, it is determined that the impairment is other-than-temporary, the carrying value of the security is written down to fair value, and a loss is recognized through earnings in the period in which the determination was made.

F. Derivative Financial Instruments. Northern Trust is a party to various derivative instruments to meet the risk management needs of its clients, as part of its trading activity for its own account, and as part of its risk management activities. Derivative financial instruments include interest rate swap and option contracts, foreign exchange contracts, and credit default swaps. Derivative financial instruments are recorded at fair value, adjusted for counterparty credit risk where appropriate. Fair value is determined using widely accepted models that incorporate inputs readily observable in actively quoted markets and do not require significant judgment. Inputs to these models reflect the contractual terms of the contracts and, based on the type of instrument, can include foreign exchange rates, interest rates, credit spreads, and volatility inputs. Unrealized gains and receivables are reported as other assets and unrealized losses and payables are reported as other liabilities in the consolidated balance sheet. Derivative asset and liability positions with the same counterparty are reflected on a net basis in cases where legally enforceable master netting agreements exist.

Risk Management Instruments. Fair value, cash flow, or net investment hedge derivatives are designated and formally documented as such contemporaneous with the transaction. The formal documentation describes the hedge relationship and identifies the hedging instruments and hedged items. Included in the documentation is a discussion of the risk management objectives and strategies for undertaking such hedges, as well as a description of the method for assessing hedge effectiveness at inception and on an ongoing basis. A formal assessment is performed on a calendar quarter basis to verify that derivatives used in hedging transactions continue to be highly effective as offsets to changes in fair value or cash flows of the hedged item. If a derivative ceases to be highly effective, or if the hedged item matures, is sold, or is terminated, or if a hedged forecasted transaction is no longer expected to occur, hedge accounting is terminated and the derivative is treated as if it were a trading instrument.

Derivatives are designated as fair value hedges to limit Northern Trust’s exposure to changes in the fair value of assets and liabilities due to movements in interest rates. Interest accruals and changes in fair value of the derivative are recognized as a component of the interest income or expense classification of the hedged item. Changes in fair value of the hedged item attributable to the risk being hedged are reflected in its carrying amount and are also recognized as a component of its interest income or expense.

Derivatives are designated as cash flow hedges to minimize the variability in cash flows of earning assets or forecasted transactions caused by movements in interest or foreign exchange rates. The effective portion of unrealized gains and losses on such derivatives is recognized in accumulated other comprehensive income, a component of stockholders’ equity. Any hedge ineffectiveness is recognized currently in the income or expense classification of the hedged item. When the hedged forecasted transaction impacts earnings, balances in other comprehensive income are reclassified to the same income or expense classification as the hedged item.

Foreign exchange contracts and qualifying nonderivative instruments are designated as net investment hedges to minimize Northern Trust’s exposure to foreign currency translation gains and losses on net investments in non-U.S. branches and subsidiaries. Changes in the fair value of the hedging instrument are recognized in accumulated other comprehensive income. Any ineffectiveness is recorded in other income.

Other derivatives transacted as economic hedges of non-U.S. dollar denominated assets and liabilities and of credit risk are carried on the balance sheet at fair value and any changes in fair value are recognized currently in income.

G. Loans and Leases. Loans that are held for investment are reported at the principal amount outstanding, net of unearned income. Residential real estate loans classified as held for sale are reported at the lower of aggregate cost or market value. Loan commitments for residential real estate loans that will be classified as held for sale at the time of funding and which have an interest-rate lock are recorded on the balance sheet at fair value with subsequent gains or losses recognized as other income. Unrealized gains on these loan commitments are reported as other assets, with unrealized losses reported as other liabilities. Other unfunded loan

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67

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

commitments that are not held for sale are carried at the amount of unamortized fees with a reserve for credit loss liability recognized for any probable losses.

Interest income on loans is recorded on an accrual basis unless, in the opinion of management, there is a question as to the ability of the debtor to meet the terms of the loan agreement, or interest or principal is more than 90 days contractually past due and the loan is not well-secured and in the process of collection. At the time a loan is placed on nonaccrual status, interest accrued but not collected is reversed against interest income of the current period. Loans are returned to accrual status when factors indicating doubtful collectibility no longer exist. Interest collected on nonaccrual loans is applied to principal unless, in the opinion of management, collectibility of principal is not in doubt.

A loan is considered to be impaired when, based on current information and events, management determines that it is probable that Northern Trust will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans are measured based upon the loan’s market price, the present value of expected future cash flows, discounted at the loan’s effective interest rate, or at the fair value of the collateral if the loan is collateral dependent. If the loan valuation is less than the recorded value of the loan, a specific reserve is established for the difference.

Premiums and discounts on loans are recognized as an adjustment of yield using the interest method based on the contractual terms of the loan. Commitment fees that are considered to be an adjustment to the loan yield, loan origination fees and certain direct costs are deferred and accounted for as an adjustment to the yield.

Unearned lease income from direct financing and leveraged leases is recognized using the interest method. This method provides a constant rate of return on the unrecovered investment over the life of the lease. The rate of return and the allocation of income over the lease term are recalculated from the inception of the lease if during the lease term assumptions regarding the amount or timing of estimated cash flows change. Lease residual values are established at the inception of the lease based on in-house valuations and market analyses provided by outside parties. Lease residual values are reviewed at least annually for other than temporary impairment. A decline in the estimated residual value of a leased asset determined to be other than temporary would be recorded as a reduction of other operating income in the period in which the decline is identified.

H. Reserve for Credit Losses. The reserve for credit losses represents management’s estimate of probable losses which have occurred as of the date of the financial statements. The loan and lease portfolio and other credit exposures are regularly reviewed to evaluate the adequacy of the reserve for credit losses. In determining the level of the reserve, Northern Trust evaluates the reserve necessary for specific nonperforming loans and also estimates losses inherent in other credit exposures. The result is a reserve with the following components:

Specific Reserve. The amount of specific reserves is determined through a loan-by-loan analysis of impaired loans that considers expected future cash flows, the value of collateral and other factors that may impact the borrower’s ability to pay.

Inherent Reserve. The amount of inherent loss reserves is based primarily on reserve factors which incorporate management’s evaluation of historical charge-off experience and various qualitative factors such as management’s evaluation of economic and business conditions and changes in the character and size of the loan portfolio. Reserve factors are applied to loan and lease credit exposures aggregated by shared risk characteristics and are reviewed quarterly by Northern Trust’s Loan Loss Reserve Committee which includes representatives from Credit Policy, business unit management, and Corporate Financial Management.

Loans, leases and other extensions of credit deemed uncollectible are charged to the reserve. Subsequent recoveries, if any, are credited to the reserve. Actual losses may vary from current estimates and the amount of the provision may be either greater than or less than actual net charge-offs. The related provision for credit losses, which is charged to income, is the amount necessary to adjust the reserve to the level determined through the above process.

Although Northern Trust analyzes its exposure to credit losses from both on- and off-balance sheet activity as one process, the portion of the reserve assigned to loans and leases is reported as a contra asset, directly following loans and leases in the consolidated balance sheet. The portion of the reserve assigned to unfunded commitments and standby letters of credit is reported in other liabilities for financial reporting purposes.

I. Standby Letters of Credit and Bankers Acceptances. Fees on standby letters of credit are recognized in other operating income on the straight-line method over the lives of the underlying agreements. Northern Trust’s recorded liability for standby letters of credit, reflecting the obligation it has undertaken, is measured as the amount of unamortized fees on these instruments. Income from commissions on bankers acceptances is recognized in other operating income when the payment from the customer is received by the accepting bank.

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J. Buildings and Equipment. Buildings and equipment owned are carried at original cost less accumulated depreciation. The charge for depreciation is computed on the straight-line method based on the following range of lives: buildings – 10 to 30 years; equipment – 3 to 10 years; and leasehold improvements – the shorter of the lease term or 15 years. Leased properties meeting certain criteria are capitalized and amortized using the straight-line method over the lease period.

K. Other Real Estate Owned (OREO). OREO is comprised of commercial and residential real estate properties acquired in partial or total satisfaction of problem loans. OREO assets are carried at the lower of cost or fair value. Losses identified at the time of acquisition of such properties are charged against the reserve for credit losses assigned to loans and leases. Subsequent write-downs that may be required to the carrying value of these assets and losses realized from asset sales are charged to other operating expenses.

L. Unconsolidated Affiliates. Northern Trust’s 9% interest in EquiLend Holdings, LLC (securities lending services) is carried on the equity method of accounting and had a book value of $.7 million at December 31, 2008. Northern Trust’s $4.9 million investment in CLS Group Holdings (foreign exchange settlement services) and $.8 million investment in Pendo Systems (client accounting and reporting) are carried at cost.

M. Intangible Assets. Separately identifiable acquired intangible assets are amortized over their estimated useful lives, primarily on a straight-line basis. Goodwill is not subject to amortization. Purchased software and allowable internal costs, including compensation relating to software developed for internal use, are capitalized. Software is being amortized using the straight-line method over the estimated useful life of the asset, generally ranging from 3 to 10 years.

Intangible assets are reviewed for impairment on an annual basis or more frequently if events or changes in circumstances indicate the carrying amounts may not be recoverable.

N. Assets Under Custody and Assets Under Management. Assets held in fiduciary or agency capacities are not included in the consolidated balance sheet, since such items are not assets of Northern Trust.

O. Trust, Investment and Other Servicing Fees. Trust, investment and other servicing fees are recorded on the accrual basis, over the period in which the service is provided. Fees are a function of the market value of assets custodied, managed and serviced, the volume of transactions, securities lending volume and spreads, and fees for other services rendered, as set forth in the underlying client agreement. This revenue recognition involves the use of estimates and assumptions, including components that are calculated based on estimated asset valuations and transaction volumes.

Securities lending fees are also impacted by Northern Trust’s share of unrealized investment gains and losses in one investment fund, used in our securities lending activities, that is accounted for at fair value. Certain investment management fee arrangements also may provide performance fees that are based on client portfolio returns exceeding predetermined levels. Northern Trust adheres to a policy in which it does not record any performance-based fee income until the end of the contract year, thereby eliminating the potential that revenue will be recognized in one quarter and reversed in a future quarter. Therefore, Northern Trust does not record any revenue under incentive fee programs that is at risk due to future performance contingencies. These arrangements often contain similar terms for the payment of performance-based fees to sub-advisors. The accounting for these performance-based expenses matches the treatment for the related performance-based revenues.

Client reimbursed out-of-pocket expenses that are an extension of existing services that are being rendered are recorded on a gross basis as revenue.

P. Client Security Settlement Receivables. These receivables represent other collection items presented on behalf of custody clients.

Q. Income Taxes. Northern Trust follows an asset and liability approach to account for income taxes. The objective is to recognize the amount of taxes payable or refundable for the current year, and to recognize deferred tax assets and liabilities resulting from temporary differences between the amounts reported in the financial statements and the tax bases of assets and liabilities. The measurement of tax assets and liabilities is based on enacted tax laws and applicable tax rates.

Tax positions taken or expected to be taken on a tax return are evaluated based on their likelihood of being sustained upon examination by tax authorities. Only tax positions that are considered more-likely-than-not to be sustained are recorded in the consolidated financial statements. Northern Trust recognizes any interest and penalties related to unrecognized tax benefits in the provision for income taxes.

R. Cash Flow Statements. Cash and cash equivalents have been defined as “Cash and Due from Banks”.

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S. Pension and Other Postretirement Benefits. Northern Trust records the funded status of its defined benefit pension and other postretirement plans on the consolidated balance sheet. Prepaid pension benefits are reported in other assets and unfunded pension and postretirement benefit liabilities are reported in other liabilities. Plan assets and benefit obligations are measured annually. In accordance with the accounting requirements of the Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106, and 132(R)” (SFAS No. 158), in 2008, Northern Trust moved to a December 31 measurement date from the September 30 measurement date used in prior years. Pension costs are recognized ratably over the estimated working lifetime of eligible participants.

T. Stock-Based Compensation Plans. Northern Trust recognizes as compensation expense the grant-date fair value of stock options and other equity-based compensation granted to employees within the income statement using a fair-value-based method. The fair values of stock and stock unit awards, including performance stock unit awards and director awards, are based on the price of the Corporation’s stock on the date of grant. The fair value of stock options is estimated on the date of grant using the Black-Scholes option pricing model. The model utilizes weighted-average assumptions regarding the period of time that options granted are expected to be outstanding (expected term) based primarily on the historical exercise behavior attributable to previous option grants, the estimated yield from dividends paid on the Corporation’s stock over the expected term of the options, the expected volatility of Northern Trust’s stock price over a period equal to the expected term of the options, and a risk free interest rate based on the U.S. Treasury yield curve at the time of grant for a period equal to the expected term of the options granted.

Compensation expense for share-based award grants with terms that provide for a graded vesting schedule, whereby portions of the award vest in increments over the requisite service period, are recognized on a straight-line basis over the requisite service period for the entire award. Northern Trust does not include an estimate of future forfeitures in its recognition of stock-based compensation as historical forfeitures have not been significant. Stock-based compensation is adjusted based on forfeitures as they occur. Dividend equivalents are paid on stock units on a current basis prior to vesting and distribution. Cash flows resulting from the realization of tax deductions from the exercise of stock options in excess of the compensation cost recognized (excess tax benefits) are classified as financing cash flows.

Note 2 – Recent Accounting Pronouncements

In December 2008, the FASB issued Staff Position (FSP) FAS 140-4 and FIN 46(R)-8, “Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities,” (FSP FAS 140-4 and FIN 46(R)-8). This FSP amends FASB Statement No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” to require public entities to provide additional disclosures about transfers of financial assets. It also amends FASB Interpretation No. 46 (revised December 2003), “Consolidation of Variable Interest Entities,” to require public enterprises, including sponsors that have a variable interest in a variable interest entity, to provide additional disclosures about their involvement with variable interest entities. The FSP was effective for financial statements issued for reporting periods ending after December 15, 2008. The disclosures required by this FSP are intended to provide greater transparency to financial statement users about an enterprise’s involvement with variable interest entities and qualifying special purpose entities. Northern Trust’s involvement with variable interest entities is disclosed in Note 28 – Variable Interest Entities. Northern Trust has no involvement in qualifying special purpose entities. Since FSP FAS 140-4 and FIN 46(R)-8 addresses financial statement disclosures only, its adoption effective December 31, 2008 did not impact Northern Trust’s consolidated financial position or results of operations.

In December 2008, the FASB also issued FSP FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets.” This FSP amends FASB Statement No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. The FSP requires the disclosure of additional information about investment allocation decisions, major categories of plan assets, including concentrations of risk and fair-value measurements, and the fair-value techniques and inputs used to measure plan assets. The FSP is effective for financial statements issued for reporting periods ending after December 15, 2009. Since FSP 132(R)-1 addresses financial statement disclosures only, its adoption will not impact Northern Trust’s consolidated financial position or results of operations.

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In January 2009, the FASB issued FSP EITF 99-20-1, “Amendments to the Impairment Guidance of EITF Issue No. 99-20”. This FSP amends EITF Issue No. 99-20, “Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a Transferor in Securitized Financial Assets,” to achieve more consistent determination of whether other-than-temporary impairments of available-for-sale or held-to-maturity debt securities have occurred. The new requirements are effective for interim and annual reporting periods ending after December 15, 2008. As Northern Trust does not currently hold any securities subject to the requirements of EITF 99-20, the issuance of this FSP had no impact Northern Trust’s consolidated financial position or results of operations.

Note 3 – Reclassifications

Effective January 1, 2008, certain custody related deposit and overdraft amounts, previously included within other operating income in the consolidated statement of income, are now included within net interest income. Revenues from custody client overdrafts are now reported as interest on loans, interest charges from subcustodians as interest expense on other borrowings, and certain adjustments to client deposit earnings as interest expense on non-U.S. deposits. The reclassifications were made to better align the classifications of these income and expense amounts with the related balance sheet presentation. All prior period amounts have been reclassified consistent with the revised presentations.

Note 4 – Securities

Securities Available for Sale. The following tables summarize the amortized cost, fair values, and remaining maturities of securities available for sale.

RECONCILIATION OF AMORTIZED COST TO FAIR VALUES OF SECURITIES AVAILABLE FOR SALE

	DECEMBER 31, 2008
(In Millions)	AMORTIZED COST		GROSS UNREALIZED GAINS		GROSS UNREALIZED LOSSES		FAIR VALUE
U.S. Government	$	19.8	$	.1	$	–	$	19.9
Obligations of States and Political Subdivisions		30.5		1.1		–		31.6
Government Sponsored Agency		11,256.4		37.7		32.7		11,261.4
Asset-Backed		1,879.3		1.7		308.4		1,572.6
Auction Rate		467.0		–		13.9		453.1
Other		1,079.9		.9		5.0		1,075.8
Total	$	14,732.9	$	41.5	$	360.0	$	14,414.4
	DECEMBER 31, 2007
(In Millions)	AMORTIZED COST		GROSS UNREALIZED GAINS		GROSS UNREALIZED LOSSES		FAIR VALUE
U.S. Government	$	5.1	$	–	$	–	$	5.1
Obligations of States and Political Subdivisions		30.6		1.5		–		32.1
Government Sponsored Agency		5,460.6		7.6		1.7		5,466.5
Asset-Backed		1,951.9		.6		49.6		1,902.9
Other		326.9		7.0		.2		333.7
Total	$	7,775.1	$	16.7	$	51.5	$	7,740.3

REMAINING MATURITY OF SECURITIES AVAILABLE FOR SALE

	DECEMBER 31, 2008
(In Millions)	AMORTIZED COST		FAIR VALUE
Due in One Year or Less	$	8,491.3	$	8,431.8
Due After One Year Through Five Years		5,203.7		5,045.3
Due After Five Years Through Ten Years		415.4		371.3
Due After Ten Years		622.5		566.0
Total	$	14,732.9	$	14,414.4

Asset-backed and government sponsored agency mortgage-backed securities are included in the above table taking into account anticipated future prepayments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Auction Rate Securities Purchase Program. Although not obligated to do so, in 2008 Northern Trust initiated a program to purchase at par value certain illiquid auction rate securities held for clients under investment discretion or that were acquired by clients from Northern Trust’s affiliated broker/dealer. A $54.6 million charge was recorded within other operating expenses reflecting differences between the securities’ par values and estimated purchase date fair market values. Auction rate security purchases were substantially completed in the fourth quarter of 2008. Purchased securities have been designated as available for sale. Accordingly, after their purchase, the securities are reported at fair value, with unrealized gains and losses credited or charged, net of the tax effect, to accumulated other comprehensive income.

FHLBC Stock. Since October 2007, the Federal Home Loan Bank of Chicago (FHLBC) has been under a consensual cease and desist order with its regulator, the Federal Housing Finance Board (Finance Board). Under the terms of the order, capital stock repurchases, redemptions of FHLBC stock, and dividend declarations are subject to prior written approval from the Finance Board, and the FHLBC has not declared or paid a dividend since the third quarter of 2007. Included at cost in available for sale securities at December 31, 2008, were $64.9 million of FHLBC stock, all of which management believes will ultimately be recovered.

Securities Held to Maturity. The following tables summarize the book values, fair values and remaining maturities of securities held to maturity.

RECONCILIATION OF BOOK VALUES TO FAIR VALUES OF SECURITIES HELD TO MATURITY

	DECEMBER 31, 2008
(In Millions)	BOOK VALUE		GROSS UNREALIZED GAINS		GROSS UNREALIZED LOSSES		FAIR VALUE
Obligations of States and Political Subdivisions	$	791.2	$	28.6	$	.5	$	819.3
Government Sponsored Agency		55.0		1.1		–		56.1
Other		307.9		.2		27.4		280.7
Total	$	1,154.1	$	29.9	$	27.9	$	1,156.1

	DECEMBER 31, 2007
(In Millions)	BOOK VALUE		GROSS UNREALIZED GAINS		GROSS UNREALIZED LOSSES		FAIR VALUE
Obligations of States and Political Subdivisions	$	848.8	$	29.2	$	.1	$	877.9
Government Sponsored Agency		13.3		.2		.2		13.3
Other		282.7		–		13.0		269.7
Total	$	1,144.8	$	29.4	$	13.3	$	1,160.9

REMAINING MATURITY OF SECURITIES HELD TO MATURITY

	DECEMBER 31, 2008
(In Millions)	BOOK VALUE		FAIR VALUE
Due in One Year or Less	$	96.4	$	96.0
Due After One Year Through Five Years		393.2		393.5
Due After Five Years Through Ten Years		552.1		563.7
Due After Ten Years		112.4		102.9
Total	$	1,154.1	$	1,156.1

Government sponsored agency mortgage-backed securities are included in the above table taking into account anticipated future prepayments.

Investment Security Gains and Losses. Losses totaling $61.3 million were recognized in 2008 in connection with the write-down to estimated fair value of six asset-backed securities, with a total original amortized cost basis of $89.3 million, determined to be other-than-temporarily impaired. As described in Note 1 – Significant Accounting Policies,

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management periodically reviews the investment securities portfolio to determine if other-than-temporary impairment has occurred. Management determined that these asset-backed securities were other-than-temporarily impaired given their significantly depressed market values and the uncertainty as to their future performance under expected economic conditions. Realized security gains totaled $5.0 million in 2008 and included a gain on the sale of the remaining CME Group Inc. stock acquired from the demutualization and subsequent merger of the Chicago Mercantile Exchange and the Chicago Board of Trade. Realized security gains totaled $6.5 million and $1.4 million, respectively, in 2007 and 2006. There were no realized security losses for these periods.

Securities with Unrealized Losses. The following table provides information regarding securities at December 31, 2008 that have been in a continuous unrealized loss position for less than 12 months and for 12 months or longer.

	LESS THAN 12 MONTHS				12 MONTHS OR LONGER				TOTAL
(In Millions)	FAIR VALUE		UNREALIZED LOSSES		FAIR VALUE		UNREALIZED LOSSES		FAIR VALUE		UNREALIZED LOSSES
Obligations of States and Political Subdivisions	$	13.0	$	.2	$	3.6	$	.3	$	16.6	$	.5
Government Sponsored Agency		4,956.5		26.9		160.9		5.8		5,117.4		32.7
Asset-Backed		528.6		47.1		1,040.9		261.3		1,569.5		308.4
Auction Rate		445.8		13.9		–		–		445.8		13.9
Other		278.7		10.6		51.7		21.8		330.4		32.4
Total Temporarily Impaired Securities	$	6,222.6	$	98.7	$	1,257.1	$	289.2	$	7,479.7	$	387.9

As of December 31, 2008, 841 securities with a combined fair value of $7.5 billion were in an unrealized loss position. Of the total $387.9 million pre-tax of unrealized losses at December 31, 2008, the majority reflects the impact of widening credit spreads on the valuations of 69 asset-backed securities with unrealized losses totaling $308.4 million. These unrealized losses represent approximately 16.4% of the total amortized cost of asset-backed securities with unrealized losses at December 31, 2008. Of these, 18 securities with an unrealized loss of $47.1 million have been at a loss for less than 12 months. The remaining 51 securities with an unrealized loss of $261.3 million have been at a loss for more than 12 months. Asset-backed securities held at December 31, 2008 were predominantly floating rate, with average lives less than 5 years, and 85% were rated triple-A, 10% were rated double-A, and the remaining 5% were rated below double-A. Asset-backed securities rated below double-A had a total amortized cost and fair value of $145.5 million and $76.1 million, respectively, and were comprised primarily of sub-prime and Alt-A residential mortgage-backed securities.

Unrealized losses of $32.7 million related to government sponsored agency securities are primarily attributable to reduced market liquidity. The majority of the unrealized losses of $32.4 million in other securities relate to securities which Northern Trust purchases for compliance with the Community Reinvestment Act (CRA). Unrealized losses on these CRA related other securities are attributable to their purchase at below market rates for the purpose of supporting institutions and programs that benefit low to moderate income communities within Northern Trust’s market area. Unrealized losses of $13.9 million related to auction rate securities primarily reflect reduced market liquidity as a majority of auctions continue to fail preventing holders from liquidating their investments at par. The remaining unrealized losses in Northern Trust’s securities portfolio as of December 31, 2008 are attributable to changes in overall market interest rates, increased credit spreads, and reduced market liquidity.

Northern Trust has evaluated securities with unrealized losses for possible other-than-temporary impairment in accordance with its existing security impairment review policy, described in Note 1 – Significant Accounting Policies. Based on the results of those evaluations, which show no projected loss of principal or interest, and Northern Trust’s ability and intent to hold all of its securities with unrealized losses until a recovery of fair value, which may be maturity, management does not consider these securities to be other-than-temporarily impaired at December 31, 2008. However, due to market and economic conditions, additional other-than-temporary impairments may occur in future periods.

Note 5 – Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase

Securities purchased under agreements to resell and securities sold under agreements to repurchase are recorded at the amounts at which the securities were acquired or sold plus accrued interest. To minimize any potential credit risk associated with these transactions, the fair value of the securities purchased or sold is continuously monitored, limits

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

are set on exposure with counterparties, and the financial condition of counterparties is regularly assessed. It is Northern Trust’s policy to take possession of securities purchased under agreements to resell.

The following tables summarize information related to securities purchased under agreements to resell and securities sold under agreements to repurchase.

SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL	DECEMBER 31
($ In Millions)	2008			2007
Balance at December 31	$	32.6		$	347.6
Average Balance During the Year		298.9			313.4
Average Interest Rate Earned During the Year		1.69	%		4.98	%
Maximum Month-End Balance During the Year		590.4			540.0

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE	DECEMBER 31
($ In Millions)	2008			2007
Balance at December 31	$	1,529.1		$	1,763.6
Average Balance During the Year		1,271.5			1,620.2
Average Interest Rate Paid During the Year		1.79	%		4.94	%
Maximum Month-End Balance During the Year		2,635.7			2,845.1

Note 6 – Loans and Leases

Amounts outstanding in selected categories are shown below.

	DECEMBER 31
(In Millions)	2008			2007
U.S.
Residential Real Estate	$	10,381.4		$	9,171.0
Commercial		8,253.6			5,556.4
Commercial Real Estate		3,014.0			2,350.3
Personal		4,766.7			3,850.8
Other		1,404.2			969.1
Lease Financing, net		1,143.8			1,168.4
Total U.S.		28,963.7			23,066.0
Non-U.S.		1,791.7			2,274.1
Total Loans and Leases		30,755.4			25,340.1
Reserve for Credit Losses Assigned to Loans and Leases		(229.1	)		(148.1	)
Net Loans and Leases	$	30,526.3		$	25,192.0

Other U.S. loans and non-U.S. loans at December 31, 2008 and 2007 included $1.9 billion of short duration advances, primarily related to the processing of custodied client investments.

Residential real estate loans classified as held for sale totaled $7.3 million at December 31, 2008 and $.7 million at December 31, 2007.

The components of the net investment in direct finance and leveraged leases are as follows:

	DECEMBER 31
(In Millions)	2008			2007
Direct Finance Leases:
Lease Receivable	$	134.2		$	150.0
Residual Value		133.2			127.8
Initial Direct Costs		.5			.8
Unearned Income		(43.4	)		(46.0	)
Investment in Direct Finance Leases	$	224.5		$	232.6
Leveraged Leases:
Net Rental Receivable	$	621.4		$	697.8
Residual Value		717.1			692.5
Unearned Income		(419.2	)		(454.5	)
Investment in Leveraged Leases		919.3			935.8
Total Investment in Leases	$	1,143.8		$	1,168.4

The following schedule reflects the future minimum lease payments to be received over the next five years under direct finance leases:

(In Millions)	FUTURE MINIMUM LEASE PAYMENTS
2009	$	28.7
2010		25.1
2011		21.2
2012		17.4
2013		12.8

Concentrations of Credit Risk. The information on pages 50-51 in the section titled “Residential Real Estate” through the section titled “Commercial Real Estate” is incorporated herein by reference.

NONPERFORMING ASSETS

	DECEMBER 31
(In Millions)	2008		2007
Nonaccrual Loans
U.S.	$	96.7	$	23.2
Non-U.S.		–		–
Total Nonaccrual Loans		96.7		23.2
Other Real Estate Owned		3.5		6.1
Total Nonperforming Assets	$	100.2	$	29.3
90 Day Past Due Loans Still Accruing	$	27.8	$	8.6
Impaired Loans with Reserves		31.5		15.4
Impaired Loans without Reserves*		54.1		4.0
Total Impaired Loans	$	85.6	$	19.4
Reserves for Impaired Loans		15.5		10.8
Average Balance of Impaired Loans during the Year	$	31.5	$	26.3

* When an impaired loan’s discounted cash flows, collateral value or market price equals or exceeds its carrying value (net of charge-offs) , a reserve is not required.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

There were $72.5 million and $4.2 million of unfunded loan commitments and standby letters of credit at December 31, 2008 and 2007, respectively, issued to borrowers whose loans were classified as nonaccrual or where the underlying credit was determined to be impaired.

Interest income that would have been recorded on nonaccrual loans in accordance with their original terms amounted to approximately $2.7 million in 2008, $3.2 million in 2007, and $2.9 million in 2006, compared with amounts that were actually recorded of approximately $382 thousand, $222 thousand, and $42 thousand, respectively.

Note 7 – Reserve for Credit Losses

Changes in the reserve for credit losses were as follows:

(In Millions)	2008			2007			2006
Balance at Beginning of Year	$	160.2		$	151.0		$	136.0
Charge-Offs		(25.7	)		(9.7	)		(1.8	)
Recoveries		2.5			.9			1.6
Net Charge-Offs		(23.2	)		(8.8	)		(.2	)
Provision for Credit Losses		115.0			18.0			15.0
Effect of Foreign Exchange Rates		(.9	)		–			.2
Balance at End of Year	$	251.1		$	160.2		$	151.0
Reserve for Credit Losses Assigned to:
Loans and Leases	$	229.1		$	148.1		$	140.4
Unfunded Commitments and Standby Letters of Credit		22.0			12.1			10.6
Total Reserve for Credit Losses	$	251.1		$	160.2		$	151.0

Note 8 – Buildings and Equipment

A summary of buildings and equipment is presented below.

	DECEMBER 31, 2008
(In Millions)	ORIGINAL COST		ACCUMULATED DEPRECIATION		NET BOOK VALUE
Land and Improvements	$	40.9	$	.6	$	40.3
Buildings		210.0		80.5		129.5
Equipment		356.6		175.5		181.1
Leasehold Improvements		186.4		75.8		110.6
Buildings Leased under Capital Leases		83.9		38.8		45.1
Total Buildings and Equipment	$	877.8	$	371.2	$	506.6

	DECEMBER 31, 2007
(In Millions)	ORIGINAL COST		ACCUMULATED DEPRECIATION		NET BOOK VALUE
Land and Improvements	$	40.7	$	.6	$	40.1
Buildings		185.2		72.8		112.4
Equipment		359.4		177.9		181.5
Leasehold Improvements		174.6		64.2		110.4
Buildings Leased under Capital Leases		83.8		36.3		47.5
Total Buildings and Equipment	$	843.7	$	351.8	$	491.9

The charge for depreciation, which includes depreciation of assets recorded under capital leases, amounted to $87.6 million in 2008, $84.8 million in 2007, and $83.7 million in 2006.

Note 9 – Lease Commitments

At December 31, 2008, Northern Trust was obligated under a number of non-cancelable operating leases for buildings and equipment. Certain leases contain rent escalation clauses based on market indices or increases in real estate taxes and other operating expenses and renewal option clauses calling for increased rentals. There are no restrictions imposed by any lease agreement regarding the payment of dividends, debt financing or Northern Trust entering into further lease agreements. Minimum annual lease commitments as of December 31, 2008 for all non-cancelable operating leases with a term of 1 year or more are as follows:

(In Millions)	FUTURE MINIMUM LEASE PAYMENTS
2009	$	64.0
2010		61.2
2011		56.9
2012		50.0
2013		44.8
Later Years		386.6
Total Minimum Lease Payments	$	663.5

Net rental expense for operating leases included in occupancy expense amounted to $67.6 million in 2008, $75.3 million in 2007, and $72.0 million in 2006.

One of the buildings and related land utilized for Chicago operations has been leased under an agreement that qualifies as a capital lease. The long-term financing for the property was provided by the Corporation and the Bank. In the event of sale or refinancing, the Bank would anticipate receiving all proceeds except for 58% of any proceeds in excess of the original project costs, which will be paid to the lessor.

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The following table reflects the future minimum lease payments required under capital leases, net of any payments received on the long-term financing, and the present value of net capital lease obligations at December 31, 2008.

(In Millions)	FUTURE MINIMUM LEASE PAYMENTS, NET
2009	$	3.1
2010		(38.3	)
2011		7.7
2012		7.9
2013		8.1
Later Years		47.6
Total Minimum Lease Payments, net		36.1
Less: Amount Representing Interest		26.1
Net Present Value under Capital Lease Obligations	$	10.0

Note: In 2007, the term of the capital lease for the Chicago operations center was extended. The minimum lease payments shown in the table above include an anticipated principal re-payment in 2010 and the revised future minimum lease payments under the terms of the lease extension.

Note 10 – Business Combinations

On October 1, 2008, Northern Trust completed its acquisition of Lakepoint Investment Partners LLC, a Cleveland, Ohio investment manager for high net worth individuals and institutions such as pension funds and endowments. At the date of acquisition, Lakepoint managed approximately $395 million in assets.

Note 11 – Goodwill and Other Intangibles

The changes in the carrying amount of goodwill for the years ended December 31, 2008 and 2007 are as follows:

(In Millions)	CORPORATE AND INSTITUTIONAL SERVICES			PERSONAL FINANCIAL SERVICES			TOTAL
Balance at December 31, 2006	$	361.7		$	60.8		$	422.5
Sale of Non-U.S. Subsidiary		(.2	)		–			(.2	)
Other Changes *		3.5			–			3.5
Balance at December 31, 2007	$	365.0		$	60.8		$	425.8
Goodwill Acquired:
Lakepoint Investment Partners LLC		–			6.6			6.6
Other Changes *		(42.4	)		(.6	)		(43.0	)
Balance at December 31, 2008	$	322.6		$	66.8		$	389.4

* Includes the effect of foreign exchange rates on non-U.S. dollar denominated goodwill.

Other intangible assets are included in other assets in the consolidated balance sheet. The gross carrying amount and accumulated amortization of other intangible assets as of December 31, 2008 and 2007 are as follows:

OTHER INTANGIBLE ASSETS-SUBJECT TO AMORTIZATION *

	DECEMBER 31
(In Millions)	2008 **		2007
Gross Carrying Amount	$	233.1	$	245.2
Accumulated Amortization		159.9		142.1
Net Book Value	$	73.2	$	103.1

* Includes the effect of foreign exchange rates on non-U.S. dollar denominated intangible assets.

** 2008 balances include an addition of $2.0 million related to the acquisition of Lakepoint Investment Partners LLC.

Other intangible assets consist primarily of the value of acquired client relationships. Amortization expense related to other intangible assets was $17.8 million, $20.9 million, and $22.4 million for the years ended December 31, 2008, 2007, and 2006, respectively. Amortization expense for the years 2009, 2010, 2011, 2012, and 2013 is estimated to be $15.5 million, $13.6 million, $10.2 million, $10.0 million, and $9.7 million, respectively.

Note 12 – Senior Notes, Long-Term Debt, and Line of Credit

Senior Notes. A summary of senior notes outstanding at December 31 is presented below.

($ In Millions)	RATE		2008		2007
Corporation-Senior Notes (a) (d)
Fixed Rate Due Aug. 2011 (f)	5.30	%	$	249.5	$	249.4
Fixed Rate Due Nov. 2012 (g) (j)	5.20			220.1		204.8
Fixed Rate Due Aug. 2013 (h) (j)	5.50			437.2		–
Bank-Senior Note (a) (d)
Floating Rate – Sterling Denominated Due March 2010	3.31875			145.8		199.7
Total Senior Notes			$	1,052.6	$	653.9

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Long-Term Debt. A summary of long-term debt outstanding at December 31 is presented below.

($ In Millions)	2008		2007
Bank-Subordinated Debt (a) (d)
6.25% Notes due June 2008 (b)	$	–	$	100.0
7.10% Notes due Aug. 2009 (b)		200.0		200.0
6.30% Notes due March 2011 (b)		150.0		150.0
4.60% Notes due Feb. 2013 (b)		200.0		200.0
5.85% Notes due Nov. 2017 (b) (j)		241.2		207.0
6.50% Notes due Aug. 2018 (b) (i) (j)		356.6		–
5.375% Sterling Denominated Notes due March 2015 (e)		217.9		298.6
Total Bank-Subordinated Debt		1,365.7		1,155.6
Federal Home Loan Bank Borrowings
One Year or Less (Average Rate at Year End – 6.27% in 2008; 4.98% in 2007)		180.0		354.9
One to Three Years (Average Rate at Year End – 4.73% in 2008; 6.56% in 2007)		629.6		330.0
Three to Five Years (Average Rate at Year End – 4.46% in 2008; 5.05% in 2007)		872.0		595.0
Five to Ten Years (Average Rate at Year End – 5.25% in 2008; 5.25% in 2007)		236.1		235.1
Total Federal Home Loan Bank Borrowings		1,917.7		1,515.0
Capital Lease Obligations (c)		10.0		11.8
Total Long-Term Debt	$	3,293.4	$	2,682.4
Long-Term Debt Qualifying as Risk-Based Capital	$	938.7	$	829.6

(a) Not redeemable prior to maturity.

(b) Under the terms of its current Offering Circular dated August 5, 2008, the Bank has the ability to offer from time to time its senior bank notes in an aggregate principal amount of up to $4.5 billion at any one time outstanding and up to an additional $500 million of subordinated notes. Each senior note will mature from 30 days to fifteen years, and each subordinated note will mature from five years to fifteen years, following its date of original issuance. Each note will mature on such date as selected by the initial purchaser and agreed to by the Bank.

(c) Refer to Note 9.

(d) Debt issue costs are recorded as an asset and amortized on a straight-line basis over the life of the Note.

(e) Notes issued at a discount of .484%.

(f) Notes issued at a discount of .035%.

(g) Notes issued at a discount of .044%.

(h) Notes issued at a discount of .09%.

(i) Notes issued at a discount of .02%.

(j) Interest-rate swap contracts were entered into to modify the interest expense on these senior and subordinated notes from fixed rates to floating rates. The swaps are recorded as fair value hedges and at December 31, 2008, increases in the carrying values of the senior and subordinated notes outstanding of $59.0 million and $98.3 million, respectively, were recorded. As of December 31, 2007, increases in the carrying values of senior and subordinated notes outstanding of $5.2 million and $7.0 million, respectively, were recorded.

Line of Credit. The Corporation maintains an available revolving line of credit totaling $150 million. Commitment fees required under the revolver are based on the long-term senior debt ratings of the Corporation. There were no borrowings under the line of credit during 2008 or 2007, except for discretionary borrowings of minimum amounts to test the draw-down process.

Note 13 – Floating Rate Capital Debt

In January 1997, the Corporation issued $150 million of Floating Rate Capital Securities, Series A, through a statutory business trust wholly-owned by the Corporation (“NTC Capital I”). In April 1997, the Corporation also issued, through a separate wholly-owned statutory business trust (“NTC Capital II”), $120 million of Floating Rate Capital Securities, Series B. The sole assets of the trusts are Subordinated Debentures of Northern Trust Corporation that have the same interest rates and maturity dates as the corresponding distribution rates and redemption dates of the Floating Rate Capital Securities. The Series A Securities were issued at a discount to yield 60.5 basis points above the three-month London Interbank Offered Rate (LIBOR) and are due January 15, 2027. The Series B Securities were issued at a discount to yield 67.9 basis points above the three-month LIBOR and are due April 15, 2027. Both Series A and B Securities qualify as tier 1 capital for regulatory purposes. NTC Capital I and NTC Capital II are considered variable interest entities under FASB Interpretation No. 46(R), “Consolidation of Variable Interest Entities”. However, as the Corporation has determined that it is not the primary beneficiary of the trusts, they are not consolidated by the Corporation.

The Corporation has fully, irrevocably and unconditionally guaranteed all payments due on the Series A and B Securities. The holders of the Series A and B Securities are entitled to receive preferential cumulative cash distributions quarterly in arrears (based on the liquidation amount of $1,000 per Security) at an interest rate equal to the rate on the corresponding Subordinated Debentures. The interest rate on the Series A and Series B securities is equal to three-month LIBOR plus 0.52% and 0.59%, respectively. Subject to certain exceptions, the Corporation has the right to defer payment of interest on the Subordinated Debentures at any time or from time to time for a period not exceeding 20 consecutive quarterly periods provided that no extension period may extend beyond the stated maturity date. If interest is deferred on the Subordinated Debentures, distributions on the Series A and B Securities will also be deferred and the Corporation will not be permitted, subject to certain exceptions, to pay or declare any cash distributions with respect to the Corporation’s capital stock or debt securities that rank the same as or junior to the Subordinated Debentures, until all past due distributions are paid. The

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Subordinated Debentures are unsecured and subordinated to substantially all of the Corporation’s existing indebtedness.

The Corporation has the right to redeem the Series A and Series B Subordinated Debentures, in whole or in part, at a price equal to the principal amount plus accrued and unpaid interest. The following table summarizes the book values of the outstanding Subordinated Debentures as of December 31, 2008 and 2007:

	DECEMBER 31
(In Millions)	2008		2007
NTC Capital I Subordinated Debentures due January 15, 2027	$	153.7	$	153.7
NTC Capital II Subordinated Debentures due April 15, 2027		123.0		122.9
Total Subordinated Debentures	$	276.7	$	276.6

Note 14 – Stockholders’ Equity

Preferred Stock. The Corporation is authorized to issue 10,000,000 shares of preferred stock without par value. The Board of Directors of the Corporation is authorized to fix the particular preferences, rights, qualifications and restrictions for each series of preferred stock issued. At December 31, 2008, 1,576,000 shares of the Corporation’s Fixed Rate Cumulative Perpetual Preferred Stock, Series B (the “Series B Preferred Stock”) were outstanding. There was no preferred stock outstanding at December 31, 2007.

Preferred Stock Purchase Rights. On July 21, 1998 the Board of Directors of the Corporation declared a dividend distribution of one Preferred Stock Purchase Right for each outstanding share of the Corporation’s common stock issuable to stockholders of record at the close of business on October 31, 1999. As a result of anti-dilution provisions, each share of common stock now has one-half of one Right associated with it. Each Right is exercisable for one one-hundredth of a share of Series A Junior Participating Preferred Stock at an exercise price of $330.00, subject to adjustment. The Rights will be evidenced by the common stock certificates and will not be exercisable or transferable apart from the common stock until twenty days after a person or group acquires 15 percent or more of the shares of common stock then outstanding or announces a tender or exchange offer which if consummated would result in ownership of 15 percent or more of the outstanding common stock.

In the event that any person or group acquires 15 percent or more of the outstanding shares of common stock, each Right entitles the holder, other than such person or group, to purchase that number of shares of common stock of the Corporation having a market value of twice the exercise price of the Right. At any time thereafter if the Corporation consummates a business combination transaction or sells substantially all of its assets, each Right entitles the holder, other than the person or group acquiring 15 percent or more of the outstanding shares of common stock, to purchase that number of shares of surviving company stock which at the time of the transaction would have a market value of twice the exercise price of the Right.

The Rights do not have voting rights and are redeemable at the option of the Corporation at a price of one cent per Right (equivalent to one-half cent per share) at any time prior to the close of business on the twentieth day following announcement by the Corporation of the acquisition of 15 percent or more of the outstanding common stock by a person or group. Unless earlier redeemed, the Rights will expire on October 31, 2009.

U.S. Treasury Capital Purchase Program. On November 14, 2008, in connection with the Corporation’s participation in the U.S. Department of the Treasury’s (U.S. Treasury) Troubled Asset Relief Program’s Capital Purchase Program (Capital Purchase Program), the Corporation issued 1,576,000 shares of Series B Preferred Stock and a warrant for the purchase of the Corporation’s common stock to the U.S. Treasury for total proceeds of $1,576.0 million. The proceeds received were allocated between the preferred stock and the warrant based on their relative fair values, which resulted in the recording of a discount on the preferred stock upon issuance that reflects the value allocated to the warrant. This discount will be accreted using a constant effective yield of approximately 6.13% over a five year term, consistent with management’s estimate of the life of the preferred stock. Dividends on the preferred stock and the related accretion of the discount on preferred stock reduced net income applicable to common stock by $12.0 million in 2008. The unamortized discount on preferred stock was $74.7 million at December 31, 2008.

Series B Preferred Stock. The Series B Preferred Stock is without par value and has a liquidation preference of $1,000 per share. Cumulative dividends on the Series B Preferred Stock accrue on the liquidation preference at a rate of 5% per annum for the first five years, and at a rate of 9% per annum thereafter, but will be paid only if, as and when declared by the Corporation’s Board of Directors. The Series B Preferred Stock has no maturity date and ranks senior to the Corporation’s common stock with respect to the payment of dividends and distributions and amounts payable upon liquidation, dissolution and winding up of the Corporation.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Corporation’s ability to declare or pay dividends on, or purchase, redeem or otherwise acquire, shares of its common stock is subject to certain restrictions in the event that the Corporation fails to pay or set aside full dividends on the Series B Preferred Stock for all past dividend periods. In addition, under the agreement pursuant to which the Series B Preferred Stock was sold, until the earliest of November 14, 2011, the redemption of all of the Series B Preferred Stock or the transfer by the U.S. Treasury of all of its shares of Series B Preferred Stock to third parties, the Corporation must obtain regulatory approval to pay dividends on its common stock in excess of $0.28 per share and, with some exceptions, to repurchase shares of its common stock. The Series B Preferred Stock is redeemable at the option of the Corporation at 100% of the liquidation preference. The agreement pursuant to which the Series B Preferred Stock was sold provides that the Series B Preferred Stock may be redeemed prior to November 14, 2011 only if (i) the Corporation has raised aggregate gross proceeds in one or more qualified equity offerings in excess of $394.0 million and (ii) the aggregate redemption price does not exceed the aggregate net proceeds from such qualified equity offerings. However, the American Recovery and Reinvestment Act of 2009 (signed into law on February 17, 2009) provides that the Corporation may redeem the Series B Preferred Stock without regard to whether the Corporation has replaced such funds through a qualified equity offering and without regard to any waiting period following consultation by the U.S. Treasury with the Corporation’s banking regulators.

Common Stock Warrant. The warrant issued in connection with the Capital Purchase Program entitles the U.S. Treasury to purchase 3,824,624 shares of the Corporation’s common stock at an exercise price of $61.81 per share. Both the number of shares underlying the warrant and the exercise price are subject to anti-dilution provisions as stipulated in the warrant. The warrant has a 10-year term. The U.S. Treasury may not transfer a portion or portions of the warrant with respect to, or exercise the warrant for more than one-half of, the 3,824,624 shares of common stock issuable upon exercise of the warrant, in the aggregate, until the earlier of (i) the date on which the Corporation has received aggregate gross proceeds of not less than $1,576.0 million from one or more qualified equity offerings and (ii) December 31, 2009. If on or before December 31, 2009 the Corporation raises aggregate gross proceeds in one or more qualified equity offerings in excess of $1,576.0 million, the number of shares of common stock underlying the warrant then held by the U.S. Treasury will be reduced by one-half of the original number of shares, considering all adjustments, underlying the warrant. The U.S. Treasury has agreed not to exercise voting power with respect to any shares of the Corporation’s common stock issued upon exercise of the warrant.

Common Stock. An analysis of changes in the number of shares of common stock outstanding follows:

	2008		2007		2006
Balance at January 1	220,608,834		218,700,956		218,128,986
Incentive Plan and Awards	296,621		128,095		166,681
Stock Options Exercised	3,450,608		5,042,322		2,764,505
Treasury Stock Purchased	(1,092,931	)	(3,262,539	)	(2,359,216	)
Balance at December 31	223,263,132		220,608,834		218,700,956

The Corporation’s current share buyback program authorization was increased to 12.0 million shares in October 2006. Under this program, the Corporation may purchase an additional 7.6 million shares after December 31, 2008. The repurchased shares would be used for general purposes of the Corporation, including the issuance of shares under stock option and other incentive plans of the Corporation. The average price paid per share for common stock repurchased in 2008, 2007, and 2006 was $68.68, $67.10, and $55.65, respectively. As noted above, the Corporation’s ability to repurchase shares of its common stock, including shares under the buyback program, is subject to certain restrictions under the terms of the Corporation’s Series B Preferred Stock and the agreement pursuant to which the Series B Preferred Stock was sold.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 15 – Accumulated Other Comprehensive Income

The following table summarizes the components of accumulated other comprehensive income at December 31, 2008, 2007, and 2006, and changes during the years then ended.

	PERIOD CHANGE
(In Millions)	BEGINNING BALANCE (NET OF TAX)			BEFORE TAX AMOUNT			TAX EFFECT			ENDING BALANCE (NET OF TAX)
DECEMBER 31, 2008
Unrealized Gains (Losses) on Securities Available for Sale	$	(28.7	)	$	(348.9	)	$	129.1		$	(248.5	)
Less: Reclassification Adjustments		–			(56.3	)		20.7			(35.6	)
Net Unrealized Gains (Losses) on Securities Available for Sale		(28.7	)		(292.6	)		108.4			(212.9	)
Unrealized Gains (Losses) on Cash Flow Hedge Designations		(3.0	)		(9.7	)		3.6			(9.1	)
Less: Reclassification Adjustments		–			18.5			(6.9	)		11.6
Net Unrealized Gains (Losses) on Cash Flow Hedge Designations		(3.0	)		(28.2	)		10.5			(20.7	)
Foreign Currency Translation Adjustments		21.2			91.9			(100.3	)		12.8
Pension and Other Postretirement Benefit Adjustments
Net Actuarial (Loss) Gain		(71.0	)		(310.1	)		114.6			(266.5	)
Prior Service Cost		(7.1	)		1.4			(.7	)		(6.4	)
Transition Obligation		(1.7	)		.8			(.3	)		(1.2	)
Total Pension and Other Postretirement Benefit Adjustments		(79.8	)		(307.9	)		113.6			(274.1	)
Accumulated Other Comprehensive Income	$	(90.3	)	$	(536.8	)	$	132.2		$	(494.9	)
DECEMBER 31, 2007
Unrealized Gains (Losses) on Securities Available for Sale	$	4.5		$	(45.3	)	$	17.0		$	(23.8	)
Less: Reclassification Adjustments		–			7.8			(2.9	)		4.9
Net Unrealized Gains (Losses) on Securities Available for Sale		4.5			(53.1	)		19.9			(28.7	)
Unrealized Gains (Losses) on Cash Flow Hedge Designations		2.2			(18.6	)		7.0			(9.4	)
Less: Reclassification Adjustments		–			(10.2	)		3.8			(6.4	)
Net Unrealized Gains (Losses) on Cash Flow Hedge Designations		2.2			(8.4	)		3.2			(3.0	)
Foreign Currency Translation Adjustments		18.5			(9.4	)		12.1			21.2
Pension and Other Postretirement Benefit Adjustments
Net Actuarial Loss		(165.0	)		137.4			(43.4	)		(71.0	)
Prior Service Cost		(6.7	)		(.8	)		.4			(7.1	)
Transition Obligation		(2.1	)		.6			(.2	)		(1.7	)
Total Pension and Other Postretirement Benefit Adjustments		(173.8	)		137.2			(43.2	)		(79.8	)
Accumulated Other Comprehensive Income	$	(148.6	)	$	66.3		$	(8.0	)	$	(90.3	)
DECEMBER 31, 2006
Unrealized Gains (Losses) on Securities Available for Sale	$	(5.2	)	$	16.9		$	(6.3	)	$	5.4
Less: Reclassification Adjustments		–			1.4			(.5	)		.9
Net Unrealized Gains (Losses) on Securities Available for Sale		(5.2	)		15.5			(5.8	)		4.5
Unrealized Gains (Losses) on Cash Flow Hedge Designations		(.8	)		3.7			(1.4	)		1.5
Less: Reclassification Adjustments		–			(1.2	)		.5			(.7	)
Net Unrealized Gains (Losses) on Cash Flow Hedge Designations		(.8	)		4.9			(1.9	)		2.2
Foreign Currency Translation Adjustments *		1.5			1.3			15.7			18.5
Minimum Pension Liability		(14.2	)		22.7			(8.5	)		–
Pension and Other Postretirement Benefit Adjustments
Net Actuarial Loss		–			(260.9	)		95.9			(165.0	)
Prior Service Cost		–			(10.7	)		4.0			(6.7	)
Transition Obligation		–			(3.3	)		1.2			(2.1	)
Total Pension and Other Postretirement Benefit Adjustments		–			(274.9	)		101.1			(173.8	)
Accumulated Other Comprehensive Income	$	(18.7	)	$	(230.5	)	$	100.6		$	(148.6	)

* The 2006 tax effect on foreign currency translation adjustments reflects the reversal of deferred taxes on translation gains associated with certain foreign investments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 16 – Net Income Per Common Share Computations

The computation of net income per common share is presented below.

(In Millions Except Share Information)	2008			2007		2006
Basic Net Income Per Common Share
Average Number of Common Shares Outstanding		221,446,382			219,680,628		217,766,035
Net Income	$	794.8		$	726.9	$	665.4
Less: Dividends on Preferred Stock		(12.0	)		–		–
Net Income Applicable to Common Stock		782.8			726.9		665.4
Basic Net Income Per Common Share		3.53			3.31		3.06
Diluted Net Income Per Common Share
Average Number of Common Shares Outstanding		221,446,382			219,680,628		217,766,035
Plus: Dilutive Potential Common Shares
Stock Options		2,607,048			3,398,552		2,957,063
Stock Incentive Plans		1,324,953			1,236,485		1,061,016
Average Common and Potential Common Shares		225,378,383			224,315,665		221,784,114
Net Income Applicable to Common Stock	$	782.8		$	726.9	$	665.4
Diluted Net Income Per Common Share		3.47			3.24		3.00

Note: Common stock equivalents totaling 3,431,701, 3,748,499, and 5,127,246 for the years ended December 31, 2008, 2007, and 2006, respectively, were not included in the computation of diluted earnings per share because their inclusion would have been antidilutive.

Note 17 – Net Interest Income

The components of net interest income were as follows:

(In Millions)	2008		2007		2006
Interest Income
Loans and Leases	$	1,187.2	$	1,308.3	$	1,154.4
Securities – Taxable		320.7		591.5		527.2
– Non-Taxable		35.9		38.9		39.7
Time Deposits with Banks		888.2		776.7		481.2
Federal Funds Sold and Securities Purchased under Agreements to Resell and Other		46.5		68.8		47.2
Total Interest Income		2,478.5		2,784.2		2,249.7
Interest Expense
Deposits		1,116.0		1,563.4		1,084.7
Federal Funds Purchased		32.2		79.9		104.0
Securities Sold under Agreements to Repurchase		22.7		80.1		99.0
Commercial Paper		–		–		2.9
Other Borrowings		22.5		31.5		30.4
Senior Notes		44.3		26.7		16.5
Long-Term Debt		150.1		141.0		152.6
Floating Rate Capital Debt		11.6		16.2		14.9
Total Interest Expense		1,399.4		1,938.8		1,505.0
Net Interest Income	$	1,079.1	$	845.4	$	744.7

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 18 – Other Operating Income

The components of other operating income were as follows:

(In Millions)	2008		2007			2006
Loan Service Fees	$	30.0	$	16.5		$	17.1
Banking Service Fees		39.4		35.7			35.8
Non-Trading Foreign Exchange Gains (Losses)		36.1		2.1			(.6	)
Credit Default Swap Gains (Losses)		35.4		4.8			(1.6	)
Loss on Sale of Non-U.S. Subsidiary		–		(4.1	)		–
Other Income		46.0		40.3			32.3
Total Other Operating Income	$	186.9	$	95.3		$	83.0

Note 19 – Other Operating Expenses

The components of other operating expenses were as follows:

(In Millions)	2008		2007		2006
Business Promotion	$	87.8	$	77.0	$	65.2
Other Intangibles Amortization		17.8		20.9		22.4
Capital Support Agreements		314.1		–		–
Securities Lending Client Support		167.6		–		–
Auction Rate Securities Purchase Program		54.6		–		–
Other Expenses		144.4		147.2		108.2
Total Other Operating Expenses	$	786.3	$	245.1	$	195.8

Note 20 – Visa Membership

In October 2007, Northern Trust, as a member of Visa U.S.A. Inc. (Visa U.S.A.), received shares of restricted stock in Visa, Inc. (Visa) as a result of its participation in the global restructuring of Visa U.S.A., Visa Canada Association, and Visa International Service Association in preparation for an initial public offering by Visa. In connection with Visa’s initial public offering in March 2008, a portion of the shares of Visa common stock held by Northern Trust was redeemed pursuant to a mandatory redemption. The proceeds of the redemption totaled $167.9 million and were recorded as a gain in the first quarter of 2008. The remaining Visa shares held by Northern Trust are recorded at their original cost basis of zero. These shares have restrictions as to their sale or transfer and the ultimate realization of their value is subject to future adjustments based on the resolution of outstanding indemnified litigation.

Northern Trust, as a member bank of Visa U.S.A., and in conjunction with other member banks, is obligated to share in losses resulting from certain indemnified litigation involving Visa. A member bank such as Northern Trust is also required to recognize the contingent obligation to indemnify Visa under Visa’s bylaws (as those bylaws were modified at the time of the Visa restructuring on October 3, 2007), for potential losses arising from the other indemnified litigation that has not yet settled at its estimated fair value in accordance with GAAP. Northern Trust is not a party to this litigation and does not have access to any specific, non-public information concerning the matters that are the subject of the indemnification obligations.

During 2007, Northern Trust recorded charges and corresponding liabilities of $150 million relating to Visa indemnified litigation. In March 2008, Visa placed a portion of the proceeds from its initial public offering into an escrow account to fund the settlements of, or judgments in, the indemnified litigation. Northern Trust recorded $76.1 million, its proportionate share of the escrow account balance, in the first quarter of 2008 as an offset to the indemnification liabilities and related charges recorded in the fourth quarter of 2007, reducing the net indemnification liability to $73.9 million.

In the third quarter of 2008, in consideration of Visa’s announced settlement of the litigation involving Discover Financial Services, Northern Trust recorded a charge of $30.0 million to increase the Visa indemnification liability. In the fourth quarter of 2008, Northern Trust fully reversed the $30.0 million charge recorded in the third quarter as Visa funded its litigation escrow account to cover the amount of the settlement.

Northern Trust’s net Visa related indemnification liability at December 31, 2008 and 2007, included within other liabilities in the consolidated balance sheet, totaled $73.9 million and $150 million, respectively. It is expected that required additional contributions to the litigation escrow account will be funded through subsequent sales of Visa stock with corresponding adjustments to the future realization of the value of the outstanding shares held by Visa U.S.A. member banks. While the ultimate resolution of outstanding Visa related litigation is highly uncertain and the estimation of any potential losses is highly judgmental, Northern Trust anticipates that the value of its remaining shares of Visa stock will be more than adequate to offset any remaining indemnification liabilities related to Visa litigation.

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Note 21 – Income Taxes

The following table reconciles the total provision for income taxes recorded in the consolidated statement of income with the amounts computed at the statutory federal tax rate of 35%.

(IN MILLIONS)	2008			2007			2006
Tax at Statutory Rate	$	446.5		$	371.3		$	358.5
Tax Exempt Income		(12.4	)		(12.3	)		(12.6	)
Leveraged Lease Adjustments		61.3			–			16.8
Foreign Tax Rate Differential		(47.8	)		(18.4	)		(7.9	)
State Taxes, net		18.3			6.2			15.2
Other		15.0			(12.9	)		(11.2	)
Provision for Income Taxes	$	480.9		$	333.9		$	358.8

The Corporation files income tax returns in the U.S. federal, various state, and foreign jurisdictions. The Corporation is no longer subject to income tax examinations by U.S. federal, state, or local, or by non-U.S. tax authorities for years before 1997.

The Corporation adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement 109” (FIN 48), on January 1, 2007. Included in other liabilities within the consolidated balance sheet at December 31, 2008 and 2007 were $334.9 million and $237.0 million of unrecognized tax benefits, respectively. If recognized, 2008 and 2007 net income would have increased by $47.9 million and $20.6 million, respectively, resulting in a decrease of the effective income tax rates. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(IN MILLIONS)	2008			2007
Balance at January 1	$	237.0		$	211.2
Additions for tax positions taken in current year		7.7			19.5
Additions for tax positions taken in prior years		91.3			9.6
Reductions for tax positions taken in prior years		(.7	)		(2.8	)
Reductions resulting from expiration of statutes		(.4	)		(.5	)
Balance at December 31	$	334.9		$	237.0

As described further in Note 25 – Contingent Liabilities, the IRS challenged the Corporation’s tax position with respect to certain structured leasing transactions and proposed to disallow certain tax deductions and assess related interest and penalties. Included in unrecognized tax benefits at December 31, 2007 were $208 million of U.S. federal and state tax positions related to leveraged leasing tax deductions challenged by IRS for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility. Because of the effect of deferred tax accounting, the disallowance of accelerated deductions does not impact net income, except for related interest and penalties. Management periodically reassesses the likely outcome of uncertain tax positions related to leveraged leases. In August 2008, the IRS announced that settlements would be offered to taxpayers who participated in Lease-In/Lease-Out (LILO) and Sale-In/Sale-Out (SILO) transactions. Although Northern Trust elected not to participate in the IRS offer, the Corporation revised its estimates regarding the likely outcome of leveraged leasing tax positions in light of the settlement terms. The revised estimates include an increase in taxes over the life of certain of the leveraged leases. Primarily as a result of these revisions, the amount included in unrecognized tax benefits related to leveraged leasing increased to $292.0 million as of December 31, 2008. As of December 31, 2008, Northern Trust had deposited $364.1 million with the IRS to mitigate the amount of additional interest that would become due should the IRS prevail in this matter. Of the total amount deposited, $111.2 million, ($69.4 million after-tax) related to interest currently accrued.

FASB Staff Position No. FAS 13-2, “Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged Lease Transaction” (FSP 13-2), requires a reallocation of lease income from the inception of a leveraged lease if during the lease term the expected timing of income tax deductions is revised. Based on estimates relating to the eventual resolution of the leveraged leasing tax matter with the IRS, including the timing and amount of potential payments, adoption of FSP 13-2 as of January 1, 2007 reduced Northern Trust's stockholders' equity by $73.4 million. In accordance with FSP 13-2, the impacts of revisions to management's assumptions after January 1, 2007 were recorded through earnings in the period in which the assumptions changed. As noted above, management revised its assumptions during 2008. As a result of the reallocation of lease income and increase in taxes over the life of certain of the leveraged leases under the revised assumptions, Northern Trust recorded $38.9 million in charges against interest income for the year ended December 31, 2008. The provision for taxes related to these adjustments, inclusive of interest and penalties, totaled $61.3 million.

In 2009, Northern Trust terminated certain of the structured leasing transactions challenged by the IRS. In connection with these terminations, the amount of leveraged lease related uncertain tax positions will be reduced by approximately $112 million. As noted above, the acceleration of tax payments related to these leases does not affect net income. The payment of taxes in connection with these terminations does not resolve the IRS challenges with respect to the timing of previous tax deductions taken on these leases or the associated interest and penalties. It is possible that additional changes in the amount of leveraged lease related

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uncertain tax positions and related cash flows could occur in the next twelve months if Northern Trust terminates additional leases, is able to resolve this matter with the IRS, or if management becomes aware of new information that would lead it to change its assumptions regarding the timing or amount of any potential payments to the IRS. Management does not believe future changes, if any, would have a material effect on the consolidated financial position or liquidity of Northern Trust, although they could have a material effect on operating results for a particular period.

During the years ended December 31, 2008, 2007, and 2006, $46.1 million, $7.3 million, and $15.7 million of interest and penalties, net of tax, were included in the provision for income taxes. As of December 31, 2008 and 2007 the liability for the potential payment of interest and penalties totaled $83.2 million and $46.3 million net of tax, respectively.

Pre-tax earnings of non-U.S. subsidiaries are subject to U.S. taxation when effectively repatriated. Northern Trust provides income taxes on the undistributed earnings of non-U.S. subsidiaries, except to the extent that those earnings are indefinitely reinvested outside the U.S. Northern Trust elected to indefinitely reinvest $185.8 million, $119.5 million, and $60.0 million of the 2008, 2007 and 2006 earnings, respectively, of certain non-U.S. subsidiaries and, therefore, in accordance with APB Opinion No. 23, “Accounting for Income Taxes – Special Areas,” no deferred income taxes were recorded on those earnings. As of December 31, 2008, the cumulative amount of undistributed pre-tax earnings in these subsidiaries approximated $365.3 million. Based on the current U.S. federal income tax rate, an additional deferred tax liability of approximately $74.0 million, would have been required as of December 31, 2008 if Northern Trust had not elected to indefinitely reinvest those earnings.

The components of the consolidated provision for income taxes for each of the three years ended December 31 are as follows:

(In Millions)	2008			2007			2006
Current Tax Provision:
Federal	$	528.8		$	286.6		$	188.7
State		43.0			14.1			17.6
Non-U.S.		100.0			103.5			68.6
Total	$	671.8		$	404.2		$	274.9
Deferred Tax Provision:
Federal	$	(185.2	)		(65.8	)	$	78.1
State		(5.7	)		(4.5	)		5.8
Total	$	(190.9	)		(70.3	)		83.9
Provision for Income Taxes	$	480.9		$	333.9		$	358.8

In addition to the amounts shown above, tax charges (benefits) have been recorded directly to stockholders’ equity for the following items:

(In Millions)	2008			2007			2006
Current Tax Benefit for Employee Stock Options and Other Stock-Based Plans	$	(35.0	)	$	(45.1	)	$	(21.3	)
Tax Effect of Other Comprehensive Income		(132.2	)		8.0			(100.6	)

Deferred taxes result from temporary differences between the amounts reported in the consolidated financial statements and the tax bases of assets and liabilities. Deferred tax liabilities and assets have been computed as follows:

	DECEMBER 31
(In Millions)	2008		2007		2006
Deferred Tax Liabilities:
Lease Financing	$	424.1	$	475.1	$	689.1
Software Development		163.8		128.6		118.3
Accumulated Depreciation		14.3		11.0		16.0
Compensation and Benefits		–		12.5		–
State Taxes, net		19.2		31.6		44.2
Other Liabilities		47.1		48.5		21.9
Gross Deferred Tax Liabilities		668.5		707.3		889.5
Deferred Tax Assets:
Reserve for Credit Losses		86.4		54.6		51.5
Compensation and Benefits		71.0		–		19.0
Capital Support Agreements		109.9		–		–
Visa Indemnification		25.9		52.5		–
Other Assets		153.6		55.3		27.9
Gross Deferred Tax Assets		446.8		162.4		98.4
Valuation Reserve		–		–		–
Deferred Tax Assets, net of Valuation Reserve		446.8		162.4		98.4
Net Deferred Tax Liabilities	$	221.7	$	544.9	$	791.1

No valuation allowance related to deferred tax assets has been recorded at December 31, 2008, 2007, and 2006, as management believes it is more likely than not that the deferred tax assets will be fully realized. At December 31, 2008, Northern Trust had no net operating loss carryforwards.

Note 22 – Employee Benefits

The Corporation and certain of its subsidiaries provide various benefit programs, including defined benefit pension, postretirement health care, and defined contribution plans. A description of each major plan and related disclosures are provided below.

Effective with the adoption of the recognition provisions of SFAS No. 158 on December 31, 2006, Northern Trust

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recorded in accumulated other comprehensive income, net of tax, actuarial gains and losses, prior service costs and benefits, and the unamortized transition obligation associated with its defined benefit pension and postretirement health care plans that had not yet been recognized within net periodic benefit expense. Previously, Northern Trust accounted for its defined benefit pension and postretirement health care plans in accordance with FASB Statements No. 87 and 106, respectively, which provided for such amounts to be recorded as adjustments to the prepaid or accrued pension or postretirement benefit cost. Expense recognition under the new standard does not change since amounts recorded in accumulated other comprehensive income will continue to be recognized as components of net periodic benefit expense over the future working lifetime of eligible participants.

In 2008, Northern Trust adopted the measurement date provisions of SFAS No. 158 and has valued pension assets and liabilities at December 31 versus a September 30 measurement date used in 2007 and prior years. Pursuant to SFAS No. 158, an adjustment totaling $7.4 million was made to the January 1, 2008 balance of retained earnings to effect this change. There was no income statement impact. Actuarial gains and losses arising in the 15 month period between September 30, 2007 and December 31, 2008 were recorded in other comprehensive income in 2008.

Pension. A noncontributory qualified defined benefit pension plan covers substantially all U.S. employees of Northern Trust. Employees of various European subsidiaries participate in local defined benefit plans, although those plans have been closed to new participants.

Northern Trust also maintains a noncontributory supplemental pension plan for participants whose retirement benefit payments under the U.S. plan are expected to exceed the limits imposed by federal tax law. Northern Trust has a nonqualified trust, referred to as a “Rabbi” Trust, used to hold assets designated for the funding of benefits in excess of those permitted in certain of its qualified retirement plans. This arrangement offers participants a degree of assurance for payment of benefits in excess of those permitted in the related qualified plans. As the “Rabbi” Trust assets remain subject to the claims of creditors and are not the property of the employees, they are accounted for as corporate assets and are included in other assets in the consolidated balance sheet. Total assets in the “Rabbi” Trust related to the nonqualified pension plan at December 31, 2008 and 2007 amounted to $45.2 million and $49.1 million, respectively.

The following tables set forth the status, amounts included in accumulated other comprehensive income, and the net periodic pension expense of the U.S. plan, non-U.S. plans, and supplemental plan for 2008 and 2007. Prior service costs are being amortized on a straight-line basis over 9 years for the U.S. plan and 8 years for the supplemental plan.

PLAN STATUS

	U.S. PLAN						NON-U.S. PLANS						SUPPLEMENTAL PLAN
($ In Millions)	2008			2007			2008			2007			2008			2007
Accumulated Benefit Obligation	$	484.8		$	445.4		$	75.9		$	95.5		$	56.8		$	52.0
Projected Benefit		558.8			518.1			91.0			126.9			68.5			61.3
Plan Assets at Fair Value		586.2			741.5			87.9			139.7			–			–
Funded Status at Measurement Date		27.4			223.4			(3.1	)		12.8			(68.5	)		(61.3	)
Funding Between Measurement Date and Year-end		N/A			–			N/A			3.1			N/A			1.9
Funded Status at December 31	$	27.4		$	223.4		$	(3.1	)	$	15.9		$	(68.5	)	$	(59.4	)
Weighted-Average Assumptions:
Discount Rates		6.25	%		6.25	%		5.80	%		5.71	%		6.25	%		6.25	%
Rate of Increase in Compensation Level		4.02			4.02			4.15			4.61			4.02			4.02
Expected Long-Term Rate of Return on Assets		8.00			8.25			6.66			7.25			N/A			N/A

AMOUNTS INCLUDED IN ACCUMULATED OTHER COMPREHENSIVE INCOME

	U.S. PLAN				NON-U.S. PLANS					SUPPLEMENTAL PLAN
($ In Millions)	2008		2007		2008		2007			2008		2007
Net Actuarial Loss (Gain)	$	371.5	$	79.5	$	12.8	$	(2.3	)	$	38.8	$	27.9
Prior Service Cost		9.3		10.9		–		–			1.4		1.4
Gross Amount in Accumulated Other Comprehensive Income		380.8		90.4		12.8		(2.3	)		40.2		29.3
Income Tax Effect		144.3		34.3		2.9		.5			15.8		11.1
Net Amount in Accumulated Other Comprehensive Income	$	236.5	$	56.1	$	9.9	$	(2.8	)	$	24.4	$	18.2

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NET PERIODIC PENSION EXPENSE

	U.S. PLAN									NON-U.S. PLANS									SUPPLEMENTAL PLAN
($ In Millions)	2008			2007			2006			2008			2007			2006			2008			2007			2006
Service Cost	$	29.6		$	31.0		$	29.3		$	4.4		$	5.8		$	5.7		$	1.9		$	2.0		$	2.3
Interest Cost		30.9			28.6			27.7			6.8			6.6			5.1			3.5			3.6			3.4
Expected Return on Plan Assets		(57.5	)		(48.5	)		(37.9	)		(9.3	)		(8.3	)		(6.5	)		N/A			N/A			N/A
Amortization:
Net Loss		8.2			14.9			15.6			.3			1.2			1.1			2.5			2.9			2.9
Prior Service Cost		1.3			1.1			1.1			–			–			–			–			–			–
Net Periodic Pension Expense	$	12.5		$	27.1		$	35.8		$	2.2		$	5.3		$	5.4		$	7.9		$	8.5		$	8.6
Weighted-Average Assumptions:
Discount Rates		6.25	%		5.75	%		5.50	%		5.71	%		4.97	%		4.87	%		6.25	%		5.75	%		5.00	%
Rate of Increase in Compensation Level		4.02			3.80			3.80			4.61			4.40			4.27			4.02			3.80			3.80
Expected Long-Term Rate of Return on Assets		8.25			8.25			8.25			7.25			6.83			6.39			N/A			N/A			N/A

Pension expense for 2009 is expected to include approximately $17.0 million and $1.2 million related to the amortization of net loss and prior service benefit balances, respectively, from accumulated other comprehensive income.

CHANGE IN BENEFIT OBLIGATION

(MEASURED AS OF DECEMBER 31 IN 2008 AND SEPTEMBER 30 IN 2007)

	U.S. PLAN						NON-U.S. PLANS						SUPPLEMENTAL PLAN
(In Millions)	2008			2007			2008			2007			2008			2007
Beginning Balance	$	518.1		$	518.5		$	126.9		$	133.2		$	61.3		$	67.4
Service Cost		37.0			31.0			5.3			5.8			2.4			2.0
Interest Cost		38.6			28.6			8.2			6.6			4.4			3.6
Plan Change		–			1.8			–			–			–			–
Actuarial Loss (Gain)		17.9			(32.7	)		(14.4	)		(21.0	)		14.0			(4.6	)
Benefits Paid		(52.8	)		(29.1	)		(2.3	)		(2.2	)		(13.6	)		(7.1	)
Foreign Exchange Rate Changes		–			–			(32.7	)		4.5			–			–
Ending Balance	$	558.8		$	518.1		$	91.0		$	126.9		$	68.5		$	61.3

Note: Due to the change in measurement date from September 30 to December 31 in 2008, the 2008 change includes 15 months of activity.

ESTIMATED FUTURE BENEFIT PAYMENTS

(In Millions)	U.S. PLAN		NON-U.S. PLANS		SUPPLEMENTAL PLAN
2009	$	50.6	$	1.4	$	10.9
2010		52.6		1.8		11.1
2011		55.3		2.0		8.0
2012		57.1		2.1		8.3
2013		60.2		2.5		8.7
2014-2018		313.3		17.3		34.6

CHANGE IN PLAN ASSETS

(MEASURED AS OF DECEMBER 31 IN 2008 AND SEPTEMBER 30 IN 2007)

	U.S. PLAN						NON-U.S. PLANS
(In Millions)	2008			2007			2008			2007
Fair Value of Assets at Beginning of Period	$	741.5		$	558.5		$	139.7		$	122.3
Actual Return on Assets		(212.5	)		107.1			(23.8	)		8.7
Employer Contributions		110.0			105.0			7.4			7.2
Benefits Paid		(52.8	)		(29.1	)		(2.3	)		(2.2	)
Foreign Exchange Rate Changes		–			–			(33.1	)		3.7
Fair Value of Assets at End of Period	$	586.2		$	741.5		$	87.9		$	139.7

Note: Due to the change in measurement date from September 30 to December 31 in 2008, the 2008 change includes 15 months of activity.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The minimum required contribution for the U.S. qualified plan in 2009 is estimated to be zero and the maximum deductible contribution is estimated at $180.0 million.

The allocation of the fair value of Northern Trust’s U.S. pension plan assets as of December 31, 2008 and September 30, 2007, and the target allocation effective as of November 20, 2008, by asset category, are as follows:

Asset Category	TARGET ALLOCATION		ACTUAL – 2008		ACTUAL – 2007
Equity Securities	61.0	%	61.1	%	72.7	%
Debt Securities	21.0		24.7		19.5
Other	18.0		14.2		7.8
Total	100.0	%	100.0	%	100.0	%

A total return investment strategy approach is employed to Northern Trust’s U.S. pension plan whereby a mix of equities, fixed income and alternative asset investments are used to maximize the long-term return of plan assets for a prudent level of risk. The intent of this strategy is to minimize plan expenses by outperforming plan liabilities over the long run. Risk tolerance is established through careful consideration of plan liabilities, plan funded status, and corporate financial condition. Assets held consist primarily of commingled funds that invest primarily in a diversified blend of publicly traded equities, fixed income and some private equity and hedge fund investments. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks and divided by investment style and market capitalization. Other assets, such as private equity and hedge funds, are used judiciously to enhance long-term returns while improving portfolio diversification. Derivatives may be used to gain market exposure in an efficient and timely manner; however, derivatives may not be used to leverage the portfolio beyond the market value of the underlying investments except for the hedge fund. Investment risk is measured and monitored on an ongoing basis through annual liability measurements, periodic asset/liability studies, and quarterly investment portfolio reviews.

A building block approach is employed to Northern Trust’s U.S. pension plan in determining the long-term rate of return for plan assets. Historical markets and long-term historical relationships between equities, fixed income and other asset classes are studied using the widely-accepted capital market principle that assets with higher volatility generate a greater return over the long-run. Current market factors such as inflation and interest rates are evaluated before long-term capital market assumptions are determined. The long-term portfolio rate of return is established with consideration given to diversification and rebalancing. The rate is reviewed against peer data and historical returns to verify the return is reasonable and appropriate. Based on this approach and the plan’s target asset allocation, the expected long-term rate of return on assets as of the plan’s December 31, 2008 measurement date was set at 8.00%.

Postretirement Health Care. Northern Trust maintains an unfunded postretirement health care plan. Employees retiring at age 55 or older under the provisions of the U.S. defined benefit plan who have attained 15 years of service, and U.S. employees terminating at age 55 with 5 to 14 years of service, are eligible for postretirement health care coverage. Effective January 1, 2003, the cost of this benefit is no longer subsidized by Northern Trust for new employee hires or employees who were under age 40 at December 31, 2002, or those who have not attained 15 years of service by their termination date. The provisions of this plan may be changed further at the discretion of Northern Trust, which also reserves the right to terminate these benefits at any time.

The following tables set forth the postretirement health care plan status and amounts included in accumulated other comprehensive income at December 31, the net periodic postretirement benefit cost of the plan for 2008 and 2007, and the change in the accumulated postretirement benefit obligation during 2008 and 2007. In 2008, Northern Trust adopted the measurement date provisions of SFAS No. 158 and has valued postretirement health care liabilities at December 31 versus a September 30 measurement date used in 2007 and prior years. The transition obligation established January 1, 1993 is being amortized to expense over a 20 year period.

PLAN STATUS

(In Millions)	2008		2007
Accumulated Postretirement Benefit Obligation (APBO) at Measurement Date:
Retirees and Dependents	$	24.1	$	28.1
Actives Eligible for Benefits		11.6		10.5
Actives Not Yet Eligible		25.0		24.1
Net Postretirement Benefit Liability	$	60.7	$	62.7

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AMOUNTS INCLUDED IN ACCUMULATED OTHER COMPREHENSIVE INCOME

($ In Millions)	2008			2007
Net Actuarial Loss	$	10.5		$	18.4
Transition Obligation		1.9			2.7
Prior Service Benefit		(.6	)		(.8	)
Gross Amount in Accumulated Other Comprehensive Income		11.8			20.3
Income Tax Effect		8.5			12.0
Net Amount in Accumulated Other Comprehensive Income	$	3.3		$	8.3

The income tax effect shown above includes the expected impact of the non-taxable Medicare prescription drug subsidy.

NET PERIODIC POSTRETIREMENT BENEFIT EXPENSE

(In Millions)	2008			2007			2006
Service Cost	$	1.7		$	1.9		$	1.7
Interest Cost		3.9			3.5			3.5
Amortization
Net Loss		1.1			1.3			1.8
Transition Obligation		.6			.6			.6
Prior Service Benefit		(.1	)		(.1	)		(.1	)
Net Periodic Postretirement Benefit Expense	$	7.2		$	7.2		$	7.5

CHANGE IN ACCUMULATED POSTRETIREMENT

BENEFIT OBLIGATION

(MEASURED AS OF DECEMBER 31 IN 2008 AND SEPTEMBER 30 IN 2007)

(In Millions)	2008			2007
Beginning Balance	$	62.7		$	61.4
Service Cost		2.1			1.9
Interest Cost		4.9			3.5
Actuarial Gain		(6.5	)		(1.1	)
Benefits Paid		(2.5	)		(3.0	)
Ending Balance	$	60.7		$	62.7

Note: Due to the change in measurement date from September 30 to December 31 in 2008, the 2008 change includes 15 months of activity.

ESTIMATED FUTURE BENEFIT PAYMENTS

(In Millions)	TOTAL POSTRETIREMENT MEDICAL BENEFITS		EXPECTED PRESCRIPTION DRUG SUBSIDY AMOUNT
2009	$	4.1	$	(.6	)
2010		4.4		(.7	)
2011		4.7		(.8	)
2012		5.0		(.9	)
2013		5.2		(1.0	)
2014-2018		31.5		(7.2	)

Net periodic postretirement benefit expense for 2009 is expected to include approximately $.5 million and $.6 million related to the amortization from accumulated other comprehensive income of the net loss and transition obligation, respectively, and to be decreased by $.1 million related to the amortization from accumulated other comprehensive income of the prior service benefit.

The weighted average discount rate used in determining the accumulated postretirement benefit obligation was 6.25% at December 31, 2008 and 2007. For measurement purposes, an 8.00% annual increase in the cost of covered medical benefits and a 10.30% annual increase in the cost of covered prescription drug benefits were assumed for 2008. These rates are assumed to gradually decrease until they reach 5.00% in 2014. The health care cost trend rate assumption has an effect on the amounts reported. For example, increasing or decreasing the assumed health care trend rate by one percentage point in each year would have the following effect.

(In Millions)	1–PERCENTAGE POINT INCREASE		1–PERCENTAGE POINT DECREASE
Effect on Total Service and Interest Cost Components	$	.1	$	(.1	)
Effect on Postretirement Benefit Obligation		1.3		(1.2	)

Defined Contribution Plans. The Corporation and its subsidiaries maintain various defined contribution plans covering substantially all employees. The Corporation’s contribution includes a matching component and a corporate performance-based component contingent upon meeting predetermined performance objectives. The estimated contribution to defined contribution plans is charged to employee benefits and totaled $42.0 million in 2008, $44.0 million in 2007, and $35.3 million in 2006.

Note 23 – Stock-Based Compensation Plans

Northern Trust recognizes as compensation expense the grant-date fair value of stock options and other equity based compensation granted to employees within the income statement using a fair value-based method.

Total compensation expense for share-based payment arrangements was as follows:

	FOR THE YEAR ENDED DECEMBER 31,
(In Millions)	2008		2007		2006
Stock Options	$	19.3	$	17.8	$	17.7
Stock and Stock Unit Awards		15.0		14.2		15.0
Performance Stock Units		8.3		12.1		2.2
Total Share-Based Compensation Expense	$	42.6	$	44.1	$	34.9
Tax Benefits Recognized	$	15.8	$	16.5	$	13.1

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

88

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2008, there was $74.1 million of unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Corporation’s stock-based compensation plans. That cost is expected to be recognized as expense over a weighted-average period of approximately 2 years.

The Amended and Restated Northern Trust Corporation 2002 Stock Plan (the Plan) is administered by the Compensation and Benefits Committee (Committee) of the Board of Directors. All employees of the Corporation and its subsidiaries and all directors of the Corporation are eligible to receive awards under the Plan. The Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, stock awards, stock units and performance shares. As detailed below, grants are outstanding under both the Plan and The Northern Trust Corporation Amended 1992 Incentive Stock Plan (1992 Plan), a predecessor plan. The total number of shares of the Corporation’s common stock authorized for issuance under the Plan is 40,000,000. As of December 31, 2008, shares available for future grant under the Plan totaled 20,983,613.

The following describes Northern Trust’s share-based payment arrangements and applies to awards under the Plan and the 1992 Plan, as applicable.

Stock Options. Stock options consist of options to purchase common stock at prices not less than 100% of the fair market value thereof on the date the options are granted. Options have a maximum ten-year life and generally vest and become exercisable in one to four years after the date of grant. In addition, all options may become exercisable upon a “change of control” as defined in the Plan or the 1992 Plan. All options terminate at such time as determined by the Committee and as provided in the terms and conditions of the respective option grants.

The weighted-average assumptions used for options granted during the years ended December 31 are as follows:

	2008		2007		2006
Expected Term (in Years)	6.3		5.9		5.7
Dividend Yield	2.48	%	2.50	%	2.75	%
Expected Volatility	27.1		28.3		33.7
Risk Free Interest Rate	3.16		4.67		4.36

The expected term of the options represents the period of time that options granted are expected to be outstanding based primarily on the historical exercise behavior attributable to previous option grants. Dividend yield represents the estimated yield from dividends paid on the Corporation’s stock over the expected term of the options. Expected volatility is determined based on the historical daily volatility of Northern Trust’s stock price over a period equal to the expected term of the option. The risk free interest rate is based on the U.S. Treasury yield curve at the time of grant for a period equal to the expected term of the options granted.

The following table provides information about stock options granted, vested, and exercised in the years ended December 31.

(In Millions, Except Per Share Information)	2008		2007		2006
Weighted average grant-date per share fair value of stock options granted	$	17.16	$	17.40	$	15.35
Fair value of stock options vested		20.1		15.3		22.8
Stock options exercised
Intrinsic value		98.5		130.7		69.0
Cash received		161.9		204.8		84.4
Tax deduction benefits realized		27.9		38.4		17.0

The following is a summary of changes in nonvested stock options for the year ended December 31, 2008.

NONVESTED SHARES	SHARES		WEIGHTED- AVERAGE GRANT-DATE FAIR VALUE PER SHARE
Nonvested at December 31, 2007	3,182,563		$	15.89
Granted	1,450,630			17.16
Vested	(1,329,298	)		15.11
Forfeited or cancelled	(89,392	)		16.28
Nonvested at December 31, 2008	3,214,503		$	16.78

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

89

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of the status of stock options under the Plan and the 1992 Plan at December 31, 2008, and changes during the year then ended, are presented in the table below.

($ In Millions Except Per Share Information)	SHARES		WEIGHTED AVERAGE EXERCISE PRICE PER SHARE		WEIGHTED AVERAGE REMAINING CONTRACTUAL TERM (YEARS)	AGGREGATE INTRINSIC VALUE
Options Outstanding, December 31, 2007	17,966,619		$	52.53
Granted	1,450,630			71.09
Exercised	(3,450,608	)		48.88
Forfeited, expired or cancelled	(144,269	)		56.96
Options Outstanding, December 31, 2008	15,822,372			54.99	4.8	$	55.0
Options Exercisable, December 31, 2008	12,607,869		$	52.69	3.9	$	55.0

Stock and Stock Unit Awards. Stock or stock unit awards may be granted by the Committee to participants which entitle them to receive a payment in the Corporation’s common stock or cash under the terms of the Plan and such other terms and conditions as the Committee deems appropriate. Each stock unit provides the recipient the opportunity to receive one share of stock for each stock unit that vests. The stock units granted in 2008 vest at a rate equal to 50% on the third anniversary date of the grant and 50% on the fourth anniversary date. Stock and stock unit grants totaled 205,435, 235,663, and 385,588, with weighted average grant-date fair values of $70.44, $64.68 and $52.56 per share, for the years ended December 31, 2008, 2007, and 2006, respectively. The total fair value of shares vested during the years ended December 31, 2008, 2007, and 2006, was $17.1 million, $9.2 million, and $15.1 million, respectively.

A summary of the status of outstanding stock and stock unit awards under the Plan and the 1992 Plan at December 31, 2008, and changes during the year then ended, is presented in the table below.

($ In Millions)	NUMBER		AGGREGATE INTRINSIC VALUE
Stock and Stock Unit Awards Outstanding, December 31, 2007	1,564,556
Granted	205,435
Distributed	(420,398	)
Forfeited	(56,660	)
Stock and Stock Unit Awards Outstanding, December 31, 2008	1,292,933		$	67.4
Units Convertible, December 31, 2008	176,475			9.2

The following is a summary of nonvested stock and stock unit awards at December 31, 2008, and changes during the year then ended.

NONVESTED STOCK AND STOCK UNITS	NUMBER		WEIGHTED AVERAGE GRANT-DATE FAIR VALUE PER UNIT		WEIGHTED AVERAGE REMAINING VESTING TERM (YEARS)
Nonvested at December 31, 2007	1,296,326		$	49.86
Granted	205,435			70.44
Vested	(328,643	)		40.42
Forfeited	(56,660	)		52.25
Nonvested at December 31, 2008	1,116,458		$	56.31	1.4

Performance Stock Units. Each performance stock unit provides the recipient the opportunity to receive one share of stock for each stock unit that vests. The number of performance stock units granted that will vest can range from 0% to 125% of the original award granted based on the level of attainment of an average earnings per share goal for a three-year period. Distribution of the award is then made after vesting. Performance stock unit grants totaled 289,409, 393,518 and 152,280 with a weighted average grant-date fair value of $71.23, $63.36 and $52.09 for the years ended December 31, 2008, December 31, 2007 and December 31, 2006, respectively.

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90

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of the status of performance stock units under the Plan at December 31, 2008, and changes during the year then ended, is presented in the table below.

($ In Millions)	UNITS		WEIGHTED AVERAGE REMAINING VESTING TERM (YEARS)	AGGREGATE INTRINSIC VALUE
Units Outstanding, December 31, 2007	510,744
Granted	289,409
Converted	–
Forfeited	(57,736	)
Units Outstanding, December 31, 2008	742,417		1.3	38.7
Units Convertible, December 31, 2008	–		–	–

Director Stock Awards. In 2008, stock units with a total value of $960,000 (14,109 stock units) that vest on the date of the 2009 annual meeting of the Corporation’s stockholders were granted to non-employee directors. Also in November 2008, an employee director became a non-employee director and received a prorated grant of stock units with a value of $35,069 (773 stock units) that vested on the date of the 2008 annual meeting of stockholders. In 2007, stock units with a total value of $960,000 (14,935 stock units) that vested on the date of the 2008 annual meeting of stockholders were granted to non-employee directors. Stock units granted to non-employee directors do not have voting rights. Each stock unit entitles a director to one share of common stock at vesting, unless a director elects to defer receipt of the shares. Directors may elect to defer the payment of their annual stock unit grant and cash-based compensation until termination of services as director. Amounts deferred are converted into stock units representing shares of common stock of the Corporation. Distributions of deferred stock units are made in stock. Distributions of the stock unit account that relate to cash-based compensation are made in cash based on the fair value of the stock units at the time of distribution.

Note 24 – Cash-Based Compensation Plans

Various incentive plans provide for cash incentives and bonuses to selected employees based upon accomplishment of corporate net income objectives, business unit goals, and individual performance. The estimated contributions to these plans are charged to compensation expense and totaled $155.8 million in 2008, $192.5 million in 2007, and $145.5 million in 2006.

Note 25 – Contingent Liabilities

In the normal course of business, the Corporation and its subsidiaries are routinely defendants in or parties to a number of pending and threatened legal actions, including, but not limited to, actions brought on behalf of various claimants or classes of claimants, regulatory matters, employment matters, and challenges from tax authorities regarding the amount of taxes due. In certain of these actions and proceedings, claims for substantial monetary damages or adjustments to recorded tax liabilities are asserted. In view of the inherent difficulty of predicting the outcome of such matters, particularly matters that will be decided by a jury and actions that seek very large damages based on novel and complex damage and liability legal theories or that involve a large number of parties, the Corporation cannot state with confidence the eventual outcome of these matters or the timing of their ultimate resolution, or estimate the possible loss or range of loss associated with them; however, based on current knowledge and after consultation with legal counsel, management does not believe that judgments or settlements in excess of amounts already reserved, if any, arising from pending or threatened legal actions, regulatory matters, employment matters, or challenges from tax authorities, either individually or in the aggregate, would have a material adverse effect on the consolidated financial position or liquidity of the Corporation, although they could have a material adverse effect on operating results for a particular period.

As part of its audit of federal tax returns filed from 1997 – 2000, the IRS challenged the Corporation’s tax position with respect to thirteen investments made in structured leasing transactions and proposed to disallow certain tax deductions and assess related interest and penalties. During the second quarter of 2005, the IRS issued a revised examination report that added proposed adjustments to income and penalty assessments. The Corporation anticipates that the IRS will continue to disallow deductions relating to these leases and possibly include other lease transactions with similar characteristics as part of its audit of tax returns filed after 2000. The Corporation believes that these transactions are valid leases for U.S. tax purposes and that its tax treatment of these transactions is appropriate based on its interpretation of the tax regulations and legal precedents; a court or other judicial authority, however, could disagree. The Corporation believes it has appropriate reserves to cover its tax liabilities, including liabilities related to structured leasing transactions, and related interest and penalties. The Corporation will continue to defend its position on the tax treatment of the leases vigorously.

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

91

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As discussed in further detail in Note 20 – Visa Membership, Northern Trust, as a member bank of Visa U.S.A., and in conjunction with other member banks, is obligated to share in losses resulting from certain indemnified litigation involving Visa. The estimated fair value of the net Visa indemnification liability, recorded within other liabilities in the consolidated balance sheet, was $73.9 million at December 31, 2008 and $150.0 million at December 31, 2007.

As discussed in further detail in Note 28 – Variable Interest Entities, the estimated fair value of the Corporation’s contingent liability under capital support agreements (Capital Support Agreements) with certain Northern Trust investment vehicles, recorded within other liabilities in the consolidated balance sheet, was $314.1 million at December 31, 2008. As of December 31, 2008, no capital contributions have been made under the agreements.

Note 26 – Derivative Financial Instruments

Northern Trust is a party to various derivative financial instruments that are used in the normal course of business to meet the needs of its clients; as part of its trading activity for its own account; and as part of its risk management activities. These instruments include foreign exchange contracts, interest rate contracts, and credit default swap contracts.

Northern Trust’s primary risks associated with these instruments is the possibility that interest rates, foreign exchange rates, or credit spreads could change in an unanticipated manner, resulting in higher costs or a loss in the underlying value of the instrument. These risks are mitigated by establishing limits, monitoring the level of actual positions taken against such established limits, and monitoring the level of any interest rate sensitivity gaps created by such positions. When establishing position limits, market liquidity and volatility, as well as experience in each market, are all taken into account.

The estimated credit risk associated with these instruments relates to the failure of the counterparty to pay based on the contractual terms of the agreement, and is generally limited to the unrealized market value gains on these instruments. The amount of credit risk will increase or decrease during the lives of the instruments as interest rates, foreign exchange rates, or credit spreads fluctuate. This risk is controlled by limiting such activity to an approved list of counterparties and by subjecting such activity to the same credit and quality controls as are followed in lending and investment activities.

Foreign Exchange Contracts are agreements to exchange specific amounts of currencies at a future date, at a specified rate of exchange. Foreign exchange contracts are entered into primarily to meet the foreign exchange needs of clients. Foreign exchange contracts are also used for trading purposes and risk management. For risk management purposes, Northern Trust currently uses foreign exchange contracts to reduce or eliminate its exposure to changes in foreign exchange rates relating to certain forecasted non-U.S. dollar denominated revenue and expenditure transactions, non-U.S. dollar denominated assets and liabilities, and net investments in non-U.S. affiliates.

Interest Rate Contracts include swap and option contracts. Interest rate swap contracts involve the exchange of fixed and floating rate interest payment obligations without the exchange of the underlying principal amounts. Northern Trust enters into interest rate swap contracts on behalf of its clients and also utilizes such contracts to reduce or eliminate the exposure to changes in the cash flows or value of hedged assets or liabilities due to changes in interest rates. Interest rate option contracts consist of caps, floors, and swaptions, and provide for the transfer or reduction of interest rate risk in exchange for a fee. Northern Trust enters into option contracts primarily as a seller of interest rate protection to clients. Northern Trust receives a fee at the outset of the agreement for the assumption of the risk of an unfavorable change in interest rates. This assumed interest rate risk is then mitigated by entering into an offsetting position with an outside counterparty. Northern Trust may also purchase option contracts for risk management purposes.

Credit Default Swap Contracts are agreements to transfer credit default risk from one party to another in exchange for a fee. Northern Trust enters into credit default swaps with outside counterparties where the counterparty agrees to assume the underlying credit exposure of a specific Northern Trust commercial loan or commitment.

Client-Related and Trading Derivative Instruments. The following table shows the notional amounts of client-related and trading derivative financial instruments. Notional amounts of derivative financial instruments do not represent credit risk, and are not recorded in the consolidated balance sheet. They are used merely to express the volume of this activity. Credit risk is limited to the positive fair value of the derivative instrument, which is significantly less than the notional amount. In excess of 95% of Northern Trust’s derivatives outstanding at December 31, 2008 and 2007, measured on a notional value basis, related to client-related and trading activities.

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

92

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CLIENT-RELATED AND TRADING DERIVATIVE INSTRUMENTS

	DECEMBER 31, 2008					DECEMBER 31, 2007
(In Millions)	NOTIONAL VALUE		FAIR VALUE			NOTIONAL VALUE		FAIR VALUE
Foreign Exchange Contracts	$	123,755.1	$	340.7		$	152,449.7	$	21.0
Interest Rate Option Contracts
Purchased		200.9		.3			284.8		3.8
Sold		200.9		(.3	)		284.8		(3.8	)
Interest Rate Swap Contracts		3,351.0		5.8			2,052.9		4.6
Futures Contracts		.5		–			.8		–

Risk Management Derivative Instruments. The following tables identify the types and classifications of derivative instruments used by Northern Trust to manage risk, their notional and fair values and the respective risks addressed.

RISK MANAGEMENT DERIVATIVE INSTRUMENTS — DESIGNATED AS HEDGES

				DECEMBER 31, 2008					DECEMBER 31, 2007
(In Millions)	DERIVATIVE INSTRUMENT	HEDGE CLASSIFICATION	RISK CLASSIFICATION	NOTIONAL VALUE		FAIR VALUE			NOTIONAL VALUE		FAIR VALUE
Available for Sale Investment Securities	Interest Rate Swap Contracts	Fair Value	Interest Rate	$	2,605.8	$	(31.8	)	$	2,975.8	$	(8.0	)
Senior Notes and Long-Term Subordinated Debt	Interest Rate Swap Contracts	Fair Value	Interest Rate		1,100.0		168.9			400.0		12.2
Available for Sale Investment Securities	Interest Rate Swap Contracts	Cash Flow	Interest Rate		100.0		1.3			375.0		4.8
Forecasted Foreign Currency Denominated Transactions	Foreign Exchange Contracts	Cash Flow	Foreign Currency		1,008.0		(26.3	)		950.0		(4.0	)
Net Investments in Non-U.S. Affiliates	Foreign Exchange Contracts	Net Investment	Foreign Currency		1,035.9		3.5			1,054.5		4.5

In addition to the above, Sterling denominated senior and subordinated debt, totaling $364.5 million and $499.4 million at December 31, 2008 and 2007, respectively, were designated as hedges of the foreign exchange risk associated with the net investment in certain non-U.S. affiliates.

For all fair value and cash flow hedges of available for sale investment securities, senior notes, and subordinated debt, Northern Trust applies the “shortcut” method of accounting, available under SFAS No. 133, which assumes there is no ineffectiveness in a hedge. There was no ineffectiveness recorded for available for sale investment securities, senior notes, or subordinated debt during the years ended December 31, 2008 or 2007.

For cash flow hedges of forecasted foreign currency denominated revenue and expenditure transactions, Northern Trust utilizes the dollar-offset method, a “long-haul” method of accounting under SFAS No. 133, in assessing whether these hedging relationships are highly effective at inception and on an ongoing basis. Any ineffectiveness is recognized currently in earnings. There was no ineffectiveness recognized in earnings for cash flow hedges of forecasted foreign currency denominated revenue and expenditure transactions for the years ended December 31, 2008 or 2007. As of December 31, 2008, the maximum length of time over which these hedges exist is 23 months. For all cash flow hedges, it is estimated that a net loss of $27.8 million will be reclassified into earnings within the next twelve months.

For net investment hedges, all critical terms of the hedged item and the hedging instrument are matched at inception and on an ongoing basis to eliminate hedge ineffectiveness. As a result, no ineffectiveness was recorded for these hedges during the years ended December 31, 2008 or 2007. A net gain of $175.4 million and a net loss of $33.1 million were recorded in accumulated other comprehensive income relating to net investment hedge designations for the years ended December 31, 2008 and 2007, respectively.

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

93

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RISK MANAGEMENT DERIVATIVE INSTRUMENTS — NOT DESIGNATED AS HEDGES

			DECEMBER 31, 2008					DECEMBER 31, 2007
(In Millions)	DERIVATIVE INSTRUMENT	RISK CLASSIFICATION	NOTIONAL VALUE		FAIR VALUE			NOTIONAL VALUE		FAIR VALUE
Loans and Leases – Commercial and Other	Credit Default Swap Contracts	Credit	$	235.5	$	38.1		$	278.8	$	2.6
Loans and Leases – Commercial and Other	Foreign Exchange Contracts	Foreign Currency		129.9		(1.1	)		53.1		(.1	)
Net Investments in Non-U.S. Affiliate Assets and Liabilities	Foreign Exchange Contracts	Foreign Currency		63.8		5.0			52.0		(2.7	)

Note 27 – Off-Balance Sheet Financial Instruments

Commitments and Letters of Credit. Northern Trust, in the normal course of business, enters into various types of commitments and issues letters of credit to meet the liquidity and credit enhancement needs of its clients. Credit risk is the principal risk associated with these instruments. The contractual amounts of these instruments represent the credit risk should the instrument be fully drawn upon and the client default. To control the credit risk associated with entering into commitments and issuing letters of credit, Northern Trust subjects such activities to the same credit quality and monitoring controls as its lending activities.

Commitments and letters of credit consist of the following:

Legally Binding Commitments to Extend Credit generally have fixed expiration dates or other termination clauses. Since a significant portion of the commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future loans or liquidity requirements.

Bankers Acceptances obligate Northern Trust, in the event of default by the counterparty, to reimburse the holder of the acceptance.

Commercial Letters of Credit are instruments issued by Northern Trust on behalf of its clients that authorize a third party (the beneficiary) to draw drafts up to a stipulated amount under the specified terms and conditions of the agreement. Commercial letters of credit are issued primarily to facilitate international trade.

Standby Letters of Credit obligate Northern Trust to meet certain financial obligations of its clients, if, under the contractual terms of the agreement, the clients are unable to do so. These instruments are primarily issued to support public and private financial commitments, including commercial paper, bond financing, initial margin requirements on futures exchanges, and similar transactions. Certain standby letters of credit have been secured with cash deposits or participated to others. Northern Trust is obligated to meet the entire financial obligation of these agreements and in certain cases is able to recover the amounts paid through recourse against cash deposits or other participants.

The following table shows the contractual amounts of commitments and letters of credit.

COMMITMENTS AND LETTERS OF CREDIT

	DECEMBER 31
(In Millions)	2008		2007
Legally Binding Commitments to Extend Credit*	$	25,356.3	$	22,124.3
Commercial Letters of Credit		36.7		35.9
Standby Letters of Credit:
Corporate		1,136.2		1,095.0
Industrial Revenue		2,080.7		1,102.0
Other		808.1		684.8
Total Standby Letters of Credit**	$	4,025.0	$	2,881.8

* These amounts exclude $1.7 billion and $1.8 billion of commitments participated to others at December 31, 2008 and 2007, respectively.

** These amounts include $340.1 million and $356.7 million of standby letters of credit secured by cash deposits or participated to others as of December 31, 2008 and 2007, respectively. The weighted average maturity of standby letters of credit was 25 months at December 31, 2008 and 23 months at December 31, 2007.

Other Off-Balance Sheet Financial Instruments. As part of securities custody activities and at the direction of clients, Northern Trust lends securities owned by clients to borrowers who are reviewed and approved by the Senior Credit Committee. In connection with these activities, Northern Trust has issued certain indemnifications against loss resulting from the bankruptcy of the borrower of securities. The borrowing party is required to fully collateralize securities received with cash, marketable securities, or irrevocable standby letters of credit. As securities are loaned, collateral is maintained at a minimum of 100 percent of the fair value of the securities plus accrued interest, with revaluation of the collateral on a daily basis. The amount of securities loaned as of December 31, 2008 and 2007 subject to indemnification was $82.7 billion and $179.8 billion, respectively. Because of the credit quality of the borrowers and the requirement to fully collateralize securities borrowed, management believes that the exposure to credit loss from this activity is not

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

significant and, therefore, no liability has been recorded relating to the indemnifications provided.

The Bank is a participating member of various cash, securities, and foreign exchange clearing and settlement organizations such as The Depository Trust Company in New York. It participates in these organizations on behalf of its clients and on its own behalf as a result of its own investment and trading activities. A wide variety of cash and securities transactions are settled through these organizations, including those involving obligations of states and political subdivisions, asset-backed securities, commercial paper, dollar placements, and securities issued by the Government National Mortgage Association.

As a result of its participation in cash, securities, and foreign exchange clearing and settlement organizations, the Bank could be responsible for a pro rata share of certain credit-related losses arising out of the clearing activities. The method in which such losses would be shared by the clearing members is stipulated in each clearing organization’s membership agreement. Credit exposure related to these agreements varies from day to day, primarily as a result of fluctuations in the volume of transactions cleared through the organizations. The estimated credit exposure at December 31, 2008 and 2007 was $61 million and $65 million, respectively, based on the membership agreements and clearing volume for those days. Controls related to these clearing transactions are closely monitored to protect the assets of Northern Trust and its clients.

Note 28 – Variable Interest Entities

A variable interest entity (VIE) is defined in the FASB Interpretation, “Consolidation of Variable Interest Entities (revised December 2003)—an interpretation of ARB No. 51 (FIN 46-R)” as an entity which either has total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support or whose equity investors lack the characteristics of a controlling financial interest (such as the ability to make significant decisions through voting rights or the right to receive the expected residual returns of the entity and the obligation to absorb the expected losses of the entity). Investors that finance a VIE through debt or equity interests, or other counterparties that provide other forms of support, such as guarantees, subordinated fee arrangements, or certain types of derivative contracts, are variable interest holders in the entity. The variable interest holder, if any, that will absorb a majority of the entity’s expected losses, receive a majority of the entity’s expected residual returns, or both, is deemed to be the primary beneficiary of the VIE and is required to consolidate the VIE. Assessments of variable interests under FIN 46-R are based on expected losses and residual returns, which consider various scenarios on a probability-weighted basis.

FIN 46-R requires disclosure of Northern Trust’s maximum exposure to loss where it has “significant” variable interests in an unconsolidated VIE. FIN 46-R does not define “significant” and, as such, judgment is required.

Northern Trust acts as investment advisor to Registered Investment Companies, Undertakings for the Collective Investment of Transferable Securities and other unregistered short-term investment pools in which various clients of Northern Trust are investors. Although not obligated to do so, in 2008 the Corporation entered into Capital Support Agreements with certain of these entities (Funds) in order to provide financial stability to the Funds and investors in the Funds. Under the terms of the agreements, the Corporation would be required to contribute capital to the funds, not to exceed $550 million in the aggregate and for no consideration, should certain asset loss events occur. The estimated fair value of the Corporation’s contingent liability under the agreements was $314.1 million at December 31, 2008 and was recorded within other liabilities in the consolidated balance sheet. As of December 31, 2008, no capital contributions have been made under the agreements. In the first quarter of 2009, Northern Trust extended the termination dates of the Capital Support Agreements through November 6, 2009 with all other significant terms, including the maximum contribution limits of $550 million in the aggregate, remaining unchanged.

Separately, although not obligated to do so, in September 2008 the Corporation decided to take certain actions to provide support for securities lending clients, primarily those whose cash collateral was invested in five unregistered short-term investment collateral pools (Pools) for which collateral deficiencies were declared in September of 2008. Collateral deficiencies were declared in these Pools in order to protect the interests of all participating clients related to the strain on the market-to-book ratio of the cash reinvestment portion of the Pools due to the ongoing financial market crisis. Northern Trust incurred a pre-tax charge of $167.6 million in connection with these actions and has no further obligations related to these actions as of December 31, 2008.

Under FIN 46-R and related interpretations, the above actions reflect Northern Trust’s implicit interest in the credit risk of the affected Funds and Pools. Implicit interests are required to be considered when determining the primary beneficiary of a variable interest entity.

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The Funds and the Pools were designed to create and pass to investors interest rate and credit risk. In determining whether Northern Trust is the primary beneficiary of the Funds or the Pools, expected loss calculations based on the characteristics of the underlying investments in the Funds and Pools are used to estimate the expected losses related to interest rate and credit risk, while also considering the relative rights and obligations of each of the variable interest holders. These analyses concluded that interest rate risk is the primary driver of expected losses within the Funds and Pools. As such, Northern Trust has determined that it is not the primary beneficiary of the Funds or the Pools and is not required to consolidate them within its balance sheet.

The following table summarizes Northern Trust’s significant involvement with unconsolidated variable interest entities as of December 31, 2008 (in millions):

FAIR VALUE OF ASSETS HELD BY THE FUNDS AND THE POOLS	CAPITAL SUPPORT AGREEMENT CONTINGENT LIABILITY		MAXIMUM EXPOSURE TO LOSS
$114,157.2	$	314.1	$	550.0

The valuation of the contingent liability under the Capital Support Agreements as of December 31, 2008 was based on an option pricing model which incorporates agreement-specific assumptions, the value of covered investments and future volatility assumptions of underlying assets in the affected Funds. As Northern Trust has no plans to provide support additional to that which is noted above, the maximum exposure to loss from its implicit interests in the Funds and the Pools is the contractual exposure under the Capital Support Agreements. Any potential future support would be evaluated by Northern Trust based on specific facts and circumstances and with careful consideration as to potential impacts to Northern Trust’s ability to maintain well-capitalized status and meet its operational needs.

Note 29 – Pledged and Restricted Assets

Certain of Northern Trust’s subsidiaries, as required or permitted by law, pledge assets to secure public and trust deposits, repurchase agreements, and for other purposes. On December 31, 2008, securities and loans totaling $23.6 billion ($10.1 billion of government sponsored agency and other securities, $879.7 million of obligations of states and political subdivisions, and $12.7 billion of loans), were pledged. Collateral required for these purposes totaled $6.0 billion. Included in the total pledged assets are available for sale securities with a total fair value of $1.6 billion which were pledged as collateral for agreements to repurchase securities sold transactions. The secured parties to these transactions have the right to repledge or sell these securities.

Northern Trust is permitted to repledge or sell collateral accepted from agreements to resell securities purchased transactions. The total fair value of accepted collateral as of December 31, 2008 and 2007 was $32.4 million and $359.6 million, respectively. There was no repledged or sold collateral as of December 31, 2008 or 2007.

Deposits maintained to meet Federal Reserve Bank reserve requirements averaged $148.5 million in 2008 and $190.5 million in 2007.

Note 30 – Restrictions on Subsidiary Dividends and Loans or Advances

Provisions of state and federal banking laws restrict the amount of dividends that can be paid to the Corporation by its banking subsidiaries. Under applicable state and federal laws, no dividends may be paid in an amount greater than the net or undivided profits (as defined) then on hand, subject to other applicable provisions of law. In addition, prior approval from the relevant federal banking regulator is required if dividends declared by any of the Corporation’s banking subsidiaries in any calendar year will exceed its net profits for that year, combined with its retained net profits for the preceding two years. Based on these regulations, the Corporation’s banking subsidiaries, without regulatory approval, could declare dividends during 2009 equal to their 2009 eligible net profits (as defined) plus $1,295.6 million. The ability of each banking subsidiary to pay dividends to the Corporation may be further restricted as a result of regulatory policies and guidelines relating to dividend payments and capital adequacy.

State and federal laws limit the transfer of funds by a banking subsidiary to the Corporation and certain of its affiliates in the form of loans or extensions of credit, investments or purchases of assets. Transfers of this kind to the Corporation or a nonbanking subsidiary by a banking subsidiary are each limited to 10% of the banking subsidiary’s capital and surplus with respect to each affiliate and to 20% in the aggregate, and are also subject to certain collateral requirements. These transactions, as well as other transactions between a banking subsidiary and the Corporation or its affiliates, must also be on terms substantially the same as, or at least as favorable as, those prevailing at the time for comparable transactions with non-affiliated companies or, in the absence of comparable transactions, on terms, or under

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circumstances, including credit standards, that would be offered to, or would apply to, non-affiliated companies.

In addition to the above restrictions on the payment of subsidiary dividends, the Corporation’s ability to declare or pay dividends is subject to certain restrictions as part of its participation in the Capital Purchase Program, as discussed in further detail in Note 14 – Stockholders’ Equity.

Note 31 – Fair Value Measurements

Effective January 1, 2008, Northern Trust adopted FASB SFAS No. 157 "Fair Value Measurements." SFAS No. 157 defines fair value, establishes a framework for measuring fair value, and enhances disclosures about fair value measurements required under other accounting pronouncements, but does not change existing guidance as to whether or not an instrument is carried at fair value. No transition-related adjustments to income or retained earnings were required in connection with Northern Trust’s adoption of SFAS No. 157.

Fair value under SFAS No. 157 is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. SFAS No. 157 establishes a hierarchy of valuation inputs based on the extent to which the inputs are observable in the marketplace. Observable inputs reflect market data obtained from sources independent of the reporting entity; unobservable inputs reflect the entity’s own assumptions about how market participants would value an asset or liability based on the best information available. The standard requires an entity measuring fair value to maximize the use of observable inputs and minimize the use of unobservable inputs and establishes a fair value hierarchy of inputs. Financial instruments are categorized based on the lowest level input that is significant to their valuation.

While Northern Trust believes its valuation methods for its assets and liabilities carried at fair value are appropriate and consistent with other market participants, the use of different methodologies or assumptions, particularly as applied to Level 3 assets and liabilities described below, could have a material effect on the computation of their estimated fair values.

Fair Value Hierarchy. The following describes the hierarchy of inputs used to measure fair value and the primary valuation methodologies used by Northern Trust for financial instruments measured at fair value on a recurring basis.

Level 1 – Quoted, active market prices for identical assets or liabilities. Northern Trust’s Level 1 assets and liabilities include available for sale investments in U.S. treasury securities, seed investments for the development of managed fund products consisting of common stock and securities sold but not yet purchased, and U.S. treasury securities held to fund employee benefit and deferred compensation obligations.

Level 2 – Observable inputs other than Level 1 prices, such as quoted active market prices for similar assets or liabilities, quoted prices for identical or similar assets in inactive markets, and model-derived valuations in which all significant inputs are observable in active markets. Northern Trust’s Level 2 assets include available for sale and trading account investments in government sponsored agency securities, asset-backed securities, obligations of states and political subdivisions, corporate debt securities, and non-U.S. government securities, the fair values of which are modeled by external pricing vendors or, in limited cases, modeled internally, using a discounted cash flow approach that incorporates current market yield curves and assumptions regarding anticipated prepayments and defaults. Level 2 assets and liabilities also include derivative contracts such as foreign exchange contracts, interest rate contracts, and credit default swap contracts that are valued using widely accepted models that incorporate inputs readily observable in actively quoted markets and do not require significant judgment. Inputs to these models reflect the contractual terms of the contracts and, based on the type of instrument, can include foreign exchange rates, interest rates, credit spreads, and volatility inputs. Northern Trust evaluated the impact of counterparty credit risk and our own credit risk on the valuation of our derivative instruments. Factors considered included the likelihood of default by us and our counterparties, the remaining maturities of the instruments, our net exposures after giving effect to master netting agreements, available collateral, and other credit enhancements in determining the appropriate fair value of our derivative instruments. The resulting valuation adjustments are not considered material. Level 2 other assets represent investments in mutual funds held to fund employee benefit and deferred compensation obligations. These investments are valued at the funds’ net asset values.

Level 3 – Valuation techniques in which one or more significant inputs are unobservable in the marketplace. Northern Trust's Level 3 assets consist of auction rate securities purchased from Northern Trust clients in the fourth quarter of 2008. Since February 2008, the market for auction rate securities has had minimal activity as the majority of auctions have failed preventing holders from liquidating their investments. The lack of activity in the auction rate security

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market has resulted in a lack of observable market inputs to use in determining fair value. Therefore, Northern Trust incorporated its own assumptions about future cash flows and the appropriate discount rate adjusted for credit and liquidity factors. In developing these assumptions, Northern Trust incorporated the contractual terms of the securities, the type of collateral, any credit enhancements available, and relevant market data, where available. Northern Trust’s Level 3 liabilities include Capital Support Agreements with certain investment funds and investment asset pools for which Northern Trust acts as investment advisor. These agreements are valued using an option pricing model that includes prices for securities not actively traded in the marketplace as a significant input. Level 3 liabilities also include financial guarantees relating to standby letters of credit and a net estimated liability for Visa related indemnifications, the fair values of which are based on available market data and significant management judgment.

The following table presents Northern Trust’s assets and liabilities measured at fair value on a recurring basis at December 31, 2008, segregated by fair value hierarchy level.

(In Millions)	LEVEL 1		LEVEL 2		LEVEL 3		NETTING *			ASSETS/ LIABILITIES AT FAIR VALUE
Securities
Available for Sale	$	19.9	$	13,941.4	$	453.1	$	–		$	14,414.4
Trading Account		–		2.3		–		–			2.3
Total		19.9		13,943.7		453.1		–			14,416.7
Other Assets
Derivatives		–		4,968.7		–		(1,649.0	)		3,319.7
All Other		58.5		27.2		–		–			85.7
Total		58.5		4,995.9		–		(1,649.0	)		3,405.4
Total Assets at Fair Value	$	78.4	$	18,939.6	$	453.1	$	(1,649.0	)	$	17,822.1
Other Liabilities
Derivatives	$	–	$	4,466.5	$	314.1	$	(1,649.0	)	$	3,131.6
All Other		3.3		–		104.2		–			107.5
Total Liabilities at Fair Value	$	3.3	$	4,466.5	$	418.3	$	(1,649.0	)	$	3,239.1

* Amounts represent adjustments for legally enforceable master netting agreements.

The following table presents the changes in Level 3 liabilities for the year ended December 31, 2008.

	SECURITIES AVAILABLE FOR SALE (1)		OTHER LIABILITIES
(In Millions)			DERIVATIVES (2)		ALL OTHER (3)
Fair Value at January 1, 2008	$	–	$	–	$	162.9
Total realized and unrealized (gains) losses
Included in earnings		–		314.1		(83.1)
Included in other comprehensive income		13.9		–		–
Purchases, sales, issuances, and settlements		467.0		–		24.4
Fair Value at December 31, 2008	$	453.1	$	314.1	$	104.2

(1) Balance represents the fair value of auction rate securities.

(2) Balance represents the fair value of the Capital Support Agreements (Refer to Note 28).

(3) Balance represents standby letters of credit and the net estimated liability for Visa related indemnifications (Refer to Notes 27 and 20).

As discussed in Note 4 – Securities, Auction Rate Securities Purchase Program, Northern Trust purchased certain illiquid auction rate securities from clients in the fourth quarter of 2008. These auction rate securities were recorded at their purchase date fair market values, which totaled $467.0 million, and were designated as available for sale securities. Accordingly, subsequent to their purchase the securities are reported at fair value, with unrealized gains and losses credited or charged, net of the tax effect, to accumulated other comprehensive income. As of December 31, 2008, the unrealized loss related to these securities was $13.9 million ($8.8 million net of tax). All realized and unrealized gains and losses related to Level 3 liabilities are included in other operating income or expense with the exception of charges related to the Visa indemnification liability, which have been presented separately in the consolidated statement of income. Of the total realized and unrealized gains and losses included in earnings for the year ended December 31, 2008, losses totaling $314.1 million were unrealized and related to the

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valuation of the Corporation’s estimated liability under the Capital Support Agreements.

In February 2008, the FASB issued Staff Position No. FAS 157-2, "Effective Date of FASB Statement No. 157" (FSP 157-2) which delayed the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008 for all nonfinancial assets and liabilities that are recognized or disclosed in the financial statements at fair value on a nonrecurring basis only. These include nonfinancial assets and liabilities not measured at fair value on an ongoing basis but subject to fair value adjustments in certain circumstances, for example, assets that have been deemed to be impaired. Northern Trust elected to adopt FSP 157-2 upon its issuance in February 2008 for its nonrecurring, nonfinancial assets and liabilities, the major categories of which include goodwill and other intangibles.

The provisions of SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” were effective January 1, 2008. SFAS No. 159 gives entities the option, at specified election dates, to measure certain financial assets and liabilities at fair value. The election may be applied to financial assets and liabilities on an instrument by instrument basis, is irrevocable, and may only be applied to entire instruments. Unrealized gains and losses on instruments for which the fair value option has been elected are reported in earnings at each subsequent reporting date. Northern Trust has not elected to apply SFAS No. 159 to any assets or liabilities.

Fair Value of Financial Instruments. SFAS No. 107, “Disclosures About Fair Value of Financial Instruments,” requires disclosure of the estimated fair value of certain financial instruments and the methods and significant assumptions used to estimate fair value. SFAS No. 107 excludes from its scope nonfinancial assets and liabilities, as well as a wide range of franchise, relationship, and intangible values that add value to Northern Trust. Accordingly, the fair value disclosures presented below provide only a partial estimate of the fair value of Northern Trust.

Financial instruments recorded at fair value on Northern Trust’s consolidated balance sheet have been discussed above. The following methods and assumptions were used in estimating the fair values of the financial instruments not carried at fair value on Northern Trust's consolidated balance sheet:

Held to Maturity Securities. The fair values of held to maturity securities are modeled by external pricing vendors or, in limited cases, modeled internally, using a discounted cash flow approach that incorporates current market yield curves and assumptions regarding anticipated prepayments and defaults.

Loans (excluding lease receivables). The fair values of one-to-four family residential mortgages were based on quoted market prices of similar loans sold, adjusted for differences in loan characteristics. The fair values of the remainder of the loan portfolio were estimated using a discounted cash flow method in which the interest component of the discount rate used was the rate at which Northern Trust would have originated the loan had it been originated as of the date of the financial statement. The fair values of all loans were adjusted to reflect current assessments of loan collectibility.

Savings Certificates, Other Time, and Non-U.S. Offices Interest-Bearing Deposits. The fair values of these instruments were estimated using a discounted cash flow method that incorporated market interest rates.

Senior Notes, Subordinated Debt, Federal Home Loan Bank Borrowings, and Floating Rate Capital Debt. Fair values were based on quoted market prices, when available. If quoted market prices were not available, fair values were based on quoted market prices for comparable instruments.

Financial Guarantees and Loan Commitments. The fair values of financial guarantees and loan commitments represent the amount of unamortized fees on these instruments.

Financial Instruments Valued at Carrying Value. Due to their short maturity, the respective carrying values of certain financial instruments approximated their fair values. These financial instruments include cash and due from banks; money market assets (includes federal funds sold and securities purchased under agreements to resell, time deposits with banks, and other interest-bearing assets); customers’ acceptance liability; client security settlement receivables; federal funds purchased; securities sold under agreements to repurchase; other borrowings (includes Treasury Investment Program balances, term federal funds purchased, and other short-term borrowings); and liability on acceptances.

The fair values required to be disclosed for demand, noninterest-bearing, savings, and money market deposits pursuant to SFAS No. 107 must equal the amounts disclosed in the consolidated balance sheet, even though such deposits are typically priced at a premium in banking industry consolidations.

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The following table summarizes the fair values of financial instruments.

	DECEMBER 31
	2008				2007
(In Millions)	BOOK VALUE		FAIR VALUE		BOOK VALUE		FAIR VALUE
ASSETS
Cash and Due from Banks	$	2,648.2	$	2,648.2	$	3,921.6	$	3,921.6
Money Market Assets		26,293.8		26,293.8		25,072.2		25,072.2
Securities:
Available for Sale		14,414.4		14,414.4		7,740.3		7,740.3
Held to Maturity		1,154.1		1,156.1		1,144.8		1,160.9
Trading Account		2.3		2.3		3.1		3.1
Loans (excluding Leases)
Held to Maturity		29,378.4		29,506.0		24,026.5		24,239.6
Held for Sale		7.3		7.3		.7		.7
Customers’ Acceptance Liability		.5		.5		.5		.5
Client Security Settlement Receivables		709.3		709.3		563.1		563.1
LIABILITIES
Deposits:
Demand, Noninterest-Bearing, Savings and Money Market		23,758.5		23,758.5		17,652.2		17,652.2
Savings Certificates, Other Time and Non-U.S. Offices Interest-Bearing		38,647.9		38,676.4		33,560.9		33,569.5
Federal Funds Purchased		1,783.5		1,783.5		1,465.8		1,465.8
Securities Sold under Agreements to Repurchase		1,529.1		1,529.1		1,763.6		1,763.6
Other Borrowings		736.7		736.7		2,108.5		2,108.5
Senior Notes		1,052.6		998.4		653.9		663.7
Long Term Debt:
Subordinated Debt		1,365.7		1,277.6		1,155.6		1,158.5
Federal Home Loan Bank Borrowings		1,917.7		1,942.2		1,515.0		1,533.7
Floating Rate Capital Debt		276.7		208.8		276.6		202.8
Liability on Acceptances		.5		.5		.5		.5
Financial Guarantees		30.3		30.3		12.9		12.9
Loan Commitments		19.9		19.9		7.7		7.7
DERIVATIVE INSTRUMENTS
Asset/Liability Management:
Foreign Exchange Contracts
Assets		103.0		103.0		14.7		14.7
Liabilities		121.9		121.9		16.9		16.9
Interest Rate Swap Contracts
Assets		170.2		170.2		42.8		42.8
Liabilities		31.8		31.8		33.8		33.8
Credit Default Swaps
Assets		38.4		38.4		2.8		2.8
Liabilities		.3		.3		.2		.2
Client-Related and Trading:
Foreign Exchange Contracts
Assets		2,931.8		2,931.8		770.0		770.0
Liabilities		2,591.1		2,591.1		749.0		749.0
Interest Rate Swap Contracts
Assets		190.7		190.7		50.0		50.0
Liabilities		184.9		184.9		45.4		45.4
Interest Rate Option Contracts
Assets		.3		.3		3.8		3.8
Liabilities		.3		.3		3.8		3.8

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Note 32 – Business Units and Related Information

Information regarding the Corporation’s major business units is contained in the Direct Contribution tables included in the section titled Business Unit Reporting beginning on page 29 and is incorporated herein by reference.

Northern Trust’s international activities are centered in the global custody, treasury activities, foreign exchange, asset servicing, asset management, and commercial banking businesses. The operations of Northern Trust are managed on a business unit 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 impossible 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 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 related to non-U.S. activities are not significant but, when made, are based on various methods such as time, space, and number of employees.

The table below summarizes international performance based on the allocation process described above without regard to guarantors or the location of collateral. The U.S. performance includes the impacts of benefits totaling $244.0 million recorded in 2008 in connection with Visa Inc.’s initial public offering and of $150 million of pre-tax charges recorded in 2007 for accruals related to certain indemnifications of Visa Inc., as discussed in further detail in Note 20 – Visa Membership.

DISTRIBUTION OF TOTAL ASSETS AND OPERATING PERFORMANCE

(In Millions)	TOTAL ASSETS		TOTAL REVENUE*		INCOME BEFORE INCOME TAXES		NET INCOME
2008
Non-U.S.	$	24,433.0	$	1,598.6	$	842.2	$	534.9
U.S.		57,620.6		2,679.9		433.5		259.9
Total	$	82,053.6	$	4,278.5	$	1,275.7	$	794.8
2007
Non-U.S.	$	25,209.9	$	1,183.5	$	577.5	$	378.4
U.S.		42,401.3		2,325.5		483.3		348.5
Total	$	67,611.2	$	3,509.0	$	1,060.8	$	726.9
2006
Non-U.S.	$	22,710.0	$	902.3	$	374.3	$	233.7
U.S.		38,002.2		2,093.8		649.9		431.7
Total	$	60,712.2	$	2,996.1	$	1,024.2	$	665.4

* Revenue is comprised of net interest income and noninterest income.

Note 33 – Regulatory Capital Requirements

Northern Trust and its U.S. subsidiary banks are subject to various regulatory capital requirements administered by the federal bank regulatory authorities. Under these requirements, banks must maintain specific ratios of total and tier 1 capital to risk-weighted assets and of tier 1 capital to average quarterly assets in order to be classified as “well capitalized.” The regulatory capital requirements impose certain restrictions upon banks that meet minimum capital requirements but are not “well capitalized” and obligate the federal bank regulatory authorities to take “prompt corrective action” with respect to banks that do not maintain such minimum ratios. Such prompt corrective action could have a direct material effect on a bank’s financial statements.

As of December 31, 2008, each of Northern Trust’s U.S. subsidiary banks had capital ratios above the level required for classification as a “well capitalized” institution and had not received any regulatory notification of a lower classification. Additionally, Northern Trust’s subsidiary banks located outside the U.S. are subject to regulatory capital requirements in the jurisdictions in which they operate. As of December 31, 2008, each of Northern Trust’s non-U.S. banking subsidiaries had capital ratios above their specified minimum requirements. There are no conditions or events since December 31, 2008 that management believes have adversely affected the capital categorization of any Northern Trust subsidiary bank.

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The table below summarizes the risk-based capital amounts and ratios for Northern Trust and for each of its U.S. subsidiary banks whose net income for 2008 or 2007 exceeded 10% of the consolidated total.

	ACTUAL				MINIMUM TO QUALIFY AS WELL CAPITALIZED
($ In Millions)	AMOUNT		RATIO		AMOUNT		RATIO
AS OF DECEMBER 31, 2008
Total Capital to Risk-Weighted Assets
Consolidated	$	7,869	15.4	%	$	5,125	10.0	%
The Northern Trust Company		5,673	14.1			4,034	10.0
Northern Trust, NA		1,109	11.3			985	10.0
Tier 1 Capital to Risk-Weighted Assets
Consolidated		6,703	13.1			3,075	6.0
The Northern Trust Company		4,385	10.9			2,421	6.0
Northern Trust, NA		976	9.9			591	6.0
Tier 1 Capital (to Fourth Quarter Average Assets)
Consolidated		6,703	8.5			3,945	5.0
The Northern Trust Company		4,385	6.4			3,403	5.0
Northern Trust, NA		976	8.6			568	5.0
AS OF DECEMBER 31, 2007
Total Capital to Risk-Weighted Assets
Consolidated	$	5,338	11.9	%	$	4,485	10.0	%
The Northern Trust Company		4,150	11.3			3,665	10.0
Northern Trust, NA		972	11.2			868	10.0
Tier 1 Capital to Risk-Weighted Assets
Consolidated		4,359	9.7			2,691	6.0
The Northern Trust Company		3,021	8.2			2,199	6.0
Northern Trust, NA		866	10.0			521	6.0
Tier 1 Capital (to Fourth Quarter Average Assets)
Consolidated		4,359	6.8			3,213	5.0
The Northern Trust Company		3,021	5.5			2,769	5.0
Northern Trust, NA		866	8.5			509	5.0

The bank regulatory authorities of several nations, individually but in coordination with the Basel Committee on Banking Supervision (Basel Committee), have enacted changes to the risk-based capital adequacy framework that affect the capital guidelines applicable to financial holding companies and banks. The Basel Committee published the latest agreed upon version of the new Basel Capital Accord (BCA) in November 2005. U.S. regulatory agencies have issued final rules related to implementation of the BCA in the United States. The rules became effective April 1, 2008 and require the completion, within thirty-six months of the effective date, of a four-quarter parallel run under both the new and current capital rules. Transitional arrangements are effective for at least three years following the completion of the four-quarter parallel run, during which minimum regulatory capital requirements are subject to floors tied to the current capital rules. Northern Trust has for several years been preparing to comply with the advanced approaches of the BCA framework for calculating risk-based capital related to credit risk and operational risk and has established a program management office to oversee implementation across the Corporation.

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Note 34 – Northern Trust Corporation (Corporation only)

Condensed financial information is presented below. Investments in wholly-owned subsidiaries are carried on the equity method of accounting.

CONDENSED BALANCE SHEET

	DECEMBER 31
(In Millions)	2008			2007
ASSETS
Cash on Deposit with Subsidiary Bank	$	22.5		$	.2
Time Deposits with Subsidiary Banks		1,216.0			385.8
Securities		410.1			3.2
Advances to Wholly-Owned Subsidiaries – Banks		260.0			260.0
– Nonbank		30.0			20.0
Investments in Wholly-Owned Subsidiaries – Banks		5,290.8			4,270.8
– Nonbank		229.3			197.7
Buildings and Equipment		3.4			3.4
Other Assets		658.0			324.8
Total Assets	$	8,120.1		$	5,465.9
LIABILITIES
Long-Term Debt	$	906.8		$	454.2
Floating Rate Capital Debt		276.7			276.6
Other Liabilities		547.2			226.0
Total Liabilities		1,730.7			956.8
STOCKHOLDERS’ EQUITY
Preferred Stock – Series B (Net of discount of $74.7)		1,501.3			–
Common Stock		379.8			379.8
Additional Paid-in Capital		178.5			69.1
Retained Earnings		5,091.2			4,556.2
Accumulated Other Comprehensive Income		(494.9	)		(90.3	)
Treasury Stock		(266.5	)		(405.7	)
Total Stockholders’ Equity		6,389.4			4,509.1
Total Liabilities and Stockholders’ Equity	$	8,120.1		$	5,465.9

CONDENSED STATEMENT OF INCOME

	FOR THE YEAR ENDED DECEMBER 31
(In Millions)	2008			2007			2006
OPERATING INCOME
Dividends – Bank Subsidiaries	$	30.0		$	308.0		$	203.8
– Nonbank Subsidiaries		56.4			65.9			33.8
Intercompany Interest and Other Charges		39.3			17.2			12.3
Interest and Other Income		(13.2	)		6.5			4.5
Total Operating Income		112.5			397.6			254.4
OPERATING EXPENSES
Interest Expense		39.1			31.8			22.9
Other Operating Expenses		367.8			13.2			13.8
Total Operating Expenses		406.9			45.0			36.7
Income (Loss) before Income Taxes and Equity in Undistributed Net Income of Subsidiaries		(294.4	)		352.6			217.7
Benefit for Income Taxes		160.2			18.3			13.7
Income (Loss) before Equity in Undistributed Net Income of Subsidiaries		(134.2	)		370.9			231.4
Equity in Undistributed Net Income of Subsidiaries – Banks		918.9			361.6			419.0
– Nonbank		10.1			(5.6	)		15.0
Net Income	$	794.8		$	726.9		$	665.4
Net Income Applicable to Common Stock	$	782.8		$	726.9		$	665.4

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

103

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED STATEMENT OF CASH FLOWS

	FOR THE YEAR ENDED DECEMBER 31
(In Millions)	2008			2007			2006
OPERATING ACTIVITIES:
Net Income	$	794.8		$	726.9		$	665.4
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Equity in Undistributed Net Income of Subsidiaries		(929.0	)		(356.0	)		(434.0	)
Decrease in Prepaid Expenses		1.4			.3			.8
Client Support-Related Charges		320.3			–			–
Excess Tax Benefits from Stock Incentive Plans		(35.0	)		(45.1	)		(21.3	)
Increase (Decrease) in Accrued Income Taxes		(290.5	)		(8.8	)		9.8
Other, net		112.9			61.1			34.7
Net Cash (Used in) Provided by Operating Activities		(25.1	)		378.4			255.4
INVESTING ACTIVITIES:
Net (Increase) Decrease in Time Deposits with Banks		(830.2	)		(138.0	)		85.2
Purchases of Securities		(468.9	)		–			(5.5	)
Sales of Securities		–			9.8			5.3
Net Increase in Capital Investments in Subsidiaries		(521.3	)		(3.6	)		(216.5	)
Advances to Wholly-Owned Subsidiaries		(10.0	)		(280.0	)		–
Other, net		11.1			7.5			(20.2	)
Net Cash Used in Investing Activities		(1,819.3	)		(404.3	)		(151.7	)
FINANCING ACTIVITIES:
Net Decrease in Commercial Paper		–			–			(144.6	)
Net Increase in Senior Notes		396.9			199.6			248.5
Proceeds from Preferred Stock – Series B and Warrant to Purchase Common Stock		1,576.0			–			–
Treasury Stock Purchased		(68.3	)		(213.0	)		(127.4	)
Cash Dividends Paid on Common Stock		(247.7	)		(219.5	)		(200.5	)
Net Proceeds from Stock Options		161.9			204.8			84.4
Excess Tax Benefits from Stock Incentive Plans		35.0			45.1			21.3
Other, net		12.9			8.8			14.8
Net Cash Provided by (Used in) Financing Activities		1,866.7			25.8			(103.5	)
Net Change in Cash on Deposit with Subsidiary Bank		22.3			(.1	)		.2
Cash on Deposit with Subsidiary Bank at Beginning of Year		.2			.3			.1
Cash on Deposit with Subsidiary Bank at End of Year	$	22.5		$	.2		$	.3

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

104

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF NORTHERN TRUST CORPORATION:

We have audited the accompanying consolidated balance sheets of Northern Trust Corporation and subsidiaries (Northern Trust) as of December 31, 2008 and 2007, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2008. These consolidated financial statements are the responsibility of Northern Trust’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Northern Trust Corporation and subsidiaries as of December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 22 to the consolidated financial statements, effective December 31, 2006, Northern Trust changed its method of accounting for defined benefit pension and other postretirement plans.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Northern Trust Corporation’s internal control over financial reporting as of December 31, 2008, based on criteria established in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 27, 2009 expressed an unqualified opinion on the effectiveness of Northern Trust Corporation’s internal control over financial reporting.

CHICAGO, ILLINOIS

FEBRUARY 27, 2009

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

105

CONSOLIDATED FINANCIAL STATISTICS

AVERAGE STATEMENT OF CONDITION WITH ANALYSIS OF NET INTEREST INCOME

(INTEREST AND RATE ON A TAXABLE EQUIVALENT BASIS)	2008							2007
($ In Millions)	INTEREST		AVERAGE BALANCE			RATE		INTEREST		AVERAGE BALANCE			RATE
AVERAGE EARNING ASSETS
Money Market Assets
Federal Funds Sold and Resell Agreements	$	37.2	$	1,569.8		2.37	%	$	67.6	$	1,330.6		5.08	%
Time Deposits with Banks		888.2		21,451.9		4.14			776.7		16,797.3		4.62
Federal Reserve Deposits and Other Interest-Bearing		9.3		1,538.5		.60			1.2		21.3		5.50
Total Money Market Assets		934.7		24,560.2		3.81			845.5		18,149.2		4.66
Securities
U.S. Government		.4		19.2		2.08			6.8		124.3		5.46
Obligations of States and Political Subdivisions		56.0		838.2		6.68			59.0		883.7		6.68
Government Sponsored Agency		243.1		8,655.7		2.81			525.4		9,740.2		5.39
Other		95.2		2,773.9		3.43			87.7		1,711.2		5.13
Total Securities		394.7		12,287.0		3.21			678.9		12,459.4		5.45
Loans and Leases		1,198.9		27,402.7		4.38			1,322.3		22,817.8		5.80
Total Earning Assets		2,528.3		64,249.9		3.94	%	$	2,846.7		53,426.4		5.33	%
Reserve for Credit Losses Assigned to Loans and Leases		–		(170.0	)	–			–		(140.2	)	–
Cash and Due from Banks		–		3,236.8		–			–		3,026.9		–
Other Assets		–		5,711.8		–			–		4,274.9		–
Total Assets		–	$	73,028.5		–			–	$	60,588.0		–
AVERAGE SOURCE OF FUNDS
Deposits
Savings and Money Market	$	137.9	$	7,786.5		1.77	%	$	236.5	$	7,016.4		3.37	%
Savings Certificates		72.0		2,124.3		3.39			95.6		2,019.8		4.73
Other Time		20.2		615.3		3.28			24.5		518.1		4.74
Non-U.S. Offices Time		885.9		35,958.2		2.46			1,206.8		28,587.8		4.22
Total Interest-Bearing Deposits		1,116.0		46,484.3		2.40			1,563.4		38,142.1		4.10
Short-Term Borrowings		77.4		4,609.0		1.68			191.5		4,321.5		4.43
Senior Notes		38.6		804.1		4.80			26.7		478.6		5.58
Long-Term Debt		155.8		2,999.9		5.19			141.0		2,504.0		5.63
Floating Rate Capital Debt		11.6		276.6		4.19			16.2		276.5		5.88
Total Interest-Related Funds		1,399.4		55,173.9		2.54			1,938.8		45,722.7		4.24
Interest Rate Spread		–		–		1.40			–		–		1.09
Noninterest-Bearing Deposits		–		8,814.8		–			–		7,648.4		–
Other Liabilities		–		3,933.6		–			–		3,052.7		–
Stockholders’ Equity		–		5,106.2		–			–		4,164.2		–
Total Liabilities and Stockholders’ Equity		–	$	73,028.5		–			–	$	60,588.0		–
Net Interest Income/Margin (FTE Adjusted)	$	1,128.9		–		1.76	%	$	907.9		–		1.70	%
Net Interest Income/Margin (Unadjusted)	$	1,079.1		–		1.68	%	$	845.4		–		1.58	%
Net Interest Income/Margin Components
U.S.	$	762.2	$	41,740.7		1.83	%	$	749.5	$	35,472.3		2.11	%
Non-U.S.		366.7		22,509.2		1.63			158.4		17,954.1		.88
Consolidated	$	1,128.9	$	64,249.9		1.76	%	$	907.9	$	53,426.4		1.70	%

Notes – Average balance includes nonaccrual loans.

– Total interest income includes adjustments on loans and securities to a taxable equivalent basis. Such adjustments are based on the U.S. federal income tax rate (35%) and State of Illinois income tax rate (7.30%). Lease financing receivable balances are reduced by deferred income. Total taxable equivalent interest adjustments amounted to $49.8 million in 2008, $62.5 million in 2007, $64.8 million in 2006, $60.9 million in 2005, and $54.4 million in 2004.

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

106

CONSOLIDATED FINANCIAL STATISTICS

2006							2005							2004
INTEREST		AVERAGE BALANCE			RATE		INTEREST		AVERAGE BALANCE			RATE		INTEREST		AVERAGE BALANCE			RATE
$	45.8	$	916.4		5.00	%	$	36.4	$	1,098.0		3.32	%	$	14.2	$	954.2		1.49	%
	481.2		12,716.9		3.78			341.3		10,664.5		3.20			246.1		10,417.0		2.36
	1.4		29.9		4.52			1.0		39.2		2.44			.3		34.0		.94
	528.4		13,663.2		3.87			378.7		11,801.7		3.21			260.6		11,405.2		2.29
	9.2		180.9		5.07			.8		27.6		2.91			.8		64.4		1.28
	60.4		900.8		6.71			63.8		926.3		6.89			65.2		919.9		7.09
	491.6		9,612.0		5.11			256.5		7,522.4		3.41			93.0		6,162.7		1.51
	57.6		1,109.4		5.20			59.2		1,422.1		4.15			35.7		1,006.6		3.54
	618.8		11,803.1		5.24			380.3		9,898.4		3.84			194.7		8,153.6		2.39
	1,167.3		20,528.5		5.69			913.9		18,754.0		4.87			725.7		17,450.9		4.16
$	2,314.5		45,994.8		5.03	%	$	1,672.9		40,454.1		4.14	%	$	1,181.0		37,009.7		3.19	%
	–		(132.0	)	–			–		(129.4	)	–			–		(145.0	)	–
	–		3,667.4		–			–		2,199.4		–			–		1,713.9		–
	–		3,575.7		–			–		3,450.0		–			–		2,721.7		–
	–	$	53,105.9		–			–	$	45,974.1		–			–	$	41,300.3		–
$	188.1	$	6,602.4		2.85	%	$	122.9	$	7,238.9		1.70	%	$	54.8	$	7,313.9		.75	%
	71.4		1,693.7		4.21			45.7		1,510.7		3.03			36.8		1,478.6		2.49
	17.9		419.8		4.28			10.5		379.5		2.78			5.2		322.0		1.63
	807.3		21,853.1		3.69			449.4		17,125.4		2.62			201.6		12,501.8		1.61
	1,084.7		30,569.0		3.55			628.5		26,254.5		2.39			298.4		21,616.3		1.38
	236.3		6,536.4		3.62			120.6		4,520.3		2.67			77.6		6,072.2		1.28
	16.5		364.8		4.52			11.7		257.9		4.53			19.2		328.3		5.84
	152.6		2,663.4		5.73			166.6		2,889.6		5.77			158.8		2,603.4		6.10
	14.9		276.4		5.40			10.9		276.4		3.95			5.7		276.3		2.08
	1,505.0		40,410.0		3.72			938.3		34,198.7		2.74			559.7		30,896.5		1.81
	–		–		1.31			–		–		1.40			–		–		1.38
	–		6,389.2		–			–		5,847.3		–			–		5,411.2		–
	–		2,520.0		–			–		2,493.3		–			–		1,847.3		–
	–		3,786.7		–			–		3,434.8		–			–		3,145.3		–
	–	$	53,105.9		–			–	$	45,974.1		–			–	$	41,300.3		–
$	809.5		–		1.76	%	$	734.6		–		1.82	%	$	621.3		–		1.68	%
$	744.7		–		1.62	%	$	673.7		–		1.67	%	$	566.9		–		1.53	%
$	713.0	$	31,826.3		2.24	%	$	656.7	$	28,680.6		2.29	%	$	530.5	$	25,918.2		2.05	%
	96.5		14,168.5		.68			77.9		11,773.5		.66			90.8		11,091.5		.82
$	809.5	$	45,994.8		1.76	%	$	734.6	$	40,454.1		1.82	%	$	621.3	$	37,009.7		1.68	%

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

107

CONSOLIDATED FINANCIAL STATISTICS

QUARTERLY FINANCIAL DATA [UNAUDITED]

STATEMENT OF INCOME	2008									2007
($ In Millions Except Per Share Information)	FOURTH QUARTER			THIRD QUARTER		SECOND QUARTER		FIRST QUARTER		FOURTH QUARTER			THIRD QUARTER		SECOND QUARTER		FIRST QUARTER
Trust, Investment and Other Servicing Fees	$	488.1		474.9		645.1		526.8		$	547.2		508.8		532.7		488.9
Other Noninterest Income		313.3		197.9		200.2		353.1			173.1		151.7		140.7		120.5
Net Interest Income
Interest Income		571.6		640.9		588.9		677.1			733.9		720.9		678.1		651.2
Interest Expense		235.5		387.5		352.8		423.6			496.1		507.7		482.5		452.4
Net Interest Income		336.1		253.4		236.1		253.5			237.8		213.2		195.6		198.8
Provision for Credit Losses		60.0		25.0		10.0		20.0			8.0		6.0		4.0		–
Noninterest Expenses		555.2		1,154.0		643.3		535.3			782.4		566.6		555.3		525.9
Provision (Benefit) for Income Taxes		180.0		(104.5	)	212.5		192.9			42.7		92.8		102.8		95.6
Net Income		342.3		(148.3	)	215.6		385.2			125.0		208.3		206.9		186.7
Net Income Applicable to Common Stock		330.3		(148.3	)	215.6		385.2			125.0		208.3		206.9		186.7
PER COMMON SHARE
Net Income – Basic	$	1.48		(.67	)	.98		1.75		$	.57		.95		.94		.85
– Diluted		1.47		(.67	)	.96		1.71			.55		.93		.92		.84
AVERAGE BALANCE SHEET ASSETS
Cash and Due from Banks	$	2,076.7		3,010.0		4,080.2		3,516.2		$	3,766.3		3,463.8		2,555.8		2,300.7
Money Market Assets		24,887.3		24,812.0		24,238.5		24,576.2			22,048.9		16,367.9		17,183.4		16,960.1
Securities		14,257.9		12,803.0		11,770.2		10,289.4			10,141.8		14,040.6		13,149.7		12,514.4
Loans and Leases		30,227.8		27,704.9		26,866.2		24,777.5			23,997.6		23,291.2		22,517.9		21,430.9
Reserve for Credit Losses Assigned to Loans		(192.8	)	(173.9	)	(164.7	)	(148.2	)		(143.5	)	(139.2	)	(137.8	)	(140.1	)
Other Assets		8,098.1		5,161.4		4,486.2		5,081.3			4,983.9		4,232.3		3,889.1		3,983.7
Total Assets	$	79,355.0		73,317.4		71,276.6		68,092.4		$	64,795.0		61,256.6		59,158.1		57,049.7
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Demand and Other Noninterest-Bearing	$	6,996.7		5,048.2		4,826.5		4,917.4		$	4,667.9		4,694.5		4,769.2		4,605.9
Savings and Other Interest-Bearing		10,481.9		9,800.0		9,795.1		9,561.2			9,155.3		9,177.4		8,979.6		8,827.7
Other Time		770.3		604.0		557.3		527.8			541.2		541.1		517.8		471.1
Non-U.S. Offices		37,913.4		41,537.8		40,064.3		37,766.1			35,179.1		31,219.3		30,051.9		29,699.6
Total Deposits		56,162.3		56,990.0		55,243.2		52,772.5			49,543.5		45,632.3		44,318.5		43,604.3
Short-Term Borrowings		6,659.4		3,337.7		4,682.2		3,748.2			3,387.9		5,208.6		4,746.9		3,939.0
Senior Notes		1,037.9		861.9		655.7		657.8			570.0		451.3		447.0		445.0
Long-Term Debt		3,264.3		3,279.3		2,762.4		2,687.6			2,599.0		2,458.4		2,435.7		2,522.4
Floating Rate Capital Debt		276.7		276.6		276.6		276.6			276.6		276.5		276.5		276.5
Other Liabilities		6,109.1		3,494.0		2,769.6		3,343.0			4,046.7		2,991.8		2,831.5		2,322.0
Stockholders’ Equity		5,845.3		5,077.9		4,886.9		4,606.7			4,371.3		4,237.7		4,102.0		3,940.5
Total Liabilities and Stockholders’ Equity	$	79,355.0		73,317.4		71,276.6		68,092.4		$	64,795.0		61,256.6		59,158.1		57,049.7
ANALYSIS OF NET INTEREST INCOME
Earning Assets	$	69,373.0		65,319.9		62,874.9		59,643.1		$	56,188.3		53,699.7		52,851.0		50,905.4
Interest-Related Funds		57,663.5		56,865.4		54,621.6		51,499.1			47,979.2		45,794.4		45,165.6		43,906.0
Noninterest-Related Funds		11,709.5		8,454.5		8,253.3		8,144.0			8,209.1		7,905.3		7,685.4		6,999.4
Net Interest Income (Taxable equivalent)		348.3		265.7		248.8		266.1			252.5		232.0		209.0		214.4
Net Interest Margin (Taxable equivalent)		2.00	%	1.62		1.59		1.79			1.79	%	1.71		1.59		1.71
COMMON STOCK DIVIDEND AND MARKET PRICE
Dividends		.28		.28		.28		.28			.28		.25		.25		.25
Market Price Range – High		74.34		88.92		78.00		77.13			83.17		68.67		66.15		63.49
– Low		33.88		47.89		64.90		62.54			66.08		58.73		59.37		56.52

Note: The common stock of Northern Trust Corporation is traded on the Nasdaq Stock Market under the symbol NTRS.

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

108

SENIOR OFFICERS

NORTHERN TRUST CORPORATION

THE NORTHERN TRUST COMPANY

Management Group

Frederick H. Waddell

President and Chief Executive Officer

Sherry S. Barrat

President –

Personal Financial Services

Steven L. Fradkin

Executive Vice President

Chief Financial Officer

Timothy P. Moen

Executive Vice President

Human Resources and Administration

William L. Morrison

President –

Personal Financial Services

Stephen N. Potter

President –

Northern Trust Global Investments

Jana R. Schreuder

President –

Operations and Technology

Joyce M. St. Clair

Executive Vice President and

Head of Corporate Risk Management

Timothy J. Theriault

President –

Corporate and Institutional Services

Kelly R. Welsh

Executive Vice President

General Counsel

NORTHERN TRUST CORPORATION

Other Senior Officers

Aileen B. Blake

Executive Vice President and

Controller

Robert P. Browne

Executive Vice President and

Chief Investment Officer

Caroline E. Devlin

Senior Vice President and

Head of Corporate Strategy

William R. Dodds, Jr.

Executive Vice President and Treasurer

Rose A. Ellis

Corporate Secretary and

Assistant General Counsel

Beverly J. Fleming

Senior Vice President and

Director of Investor Relations

Saverio Mirarchi

Senior Vice President and

Chief Compliance and Ethics Officer

Dan E. Phelps

Executive Vice President and

General Auditor

Mark Van Grinsven

Senior Vice President

Credit Policy

THE NORTHERN TRUST COMPANY

Other Executive Vice Presidents

Gregg D. Behrens

Penelope J. Biggs

David C. Blowers

Stephen Bowman

Peter B. Cherecwich

Jeffrey D. Cohodes

Marianne G. Doan

Jennifer L. Driscoll

Peter A. Gloyne

Wilson Leech

Connie L. Lindsey

Lyle L. Logan

R. Hugh Magill

K. Kelly Mannard

Brian P. Ovaert

Teresa A. Parker

James M. Rauh

Douglas P. Regan

Lee S. Selander

Jean E. Sheridan

John D. Skjervem

Lloyd A. Wennlund

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

109

BOARD OF DIRECTORS

William A. Osborn

Chairman of the Board

Northern Trust Corporation and

The Northern Trust Company (4)

Linda Walker Bynoe

President and Chief Executive Officer

Telemat Ltd.

Project management and consulting firm (1, 5)

Nicholas D. Chabraja

Chairman of the Board and Chief Executive Officer

General Dynamics Corporation

Worldwide defense, aerospace and other

technology products manufacturer (1, 2)

Susan Crown

Vice President

Henry Crown and Company

Worldwide company with

diversified manufacturing operations,

real estate and securities (2, 3, 4)

Dipak C. Jain

Dean

Kellogg School of Management

Northwestern University

Educational institution (1, 6)

Arthur L. Kelly

Managing Partner

KEL Enterprises L.P.

Holding and investment partnership (3, 4, 6)

Robert C. McCormack

Advisory Director

Trident Capital

Venture capital firm (1, 4, 5)

Edward J. Mooney

Retired Délégué Général–North America

Suez Lyonnaise des Eaux

Worldwide provider of energy, water, waste

and communications services;

Retired Chairman and Chief Executive Officer

Nalco Chemical Company

Manufacturer of specialized service chemicals (1, 2, 4)

John W. Rowe

Chairman and Chief Executive Officer

Exelon Corporation

Producer and wholesale marketer of energy (3, 4, 6)

Harold B. Smith

Chairman of the Executive Committee

Illinois Tool Works Inc.

Worldwide manufacturer and marketer

of engineered components and industrial systems

and consumables (3, 5, 6)

William D. Smithburg

Retired Chairman, President and Chief Executive Officer

The Quaker Oats Company

Worldwide manufacturer and marketer of

beverages and grain-based products (2, 3)

Enrique J. Sosa

Retired President

BP Amoco Chemicals

Worldwide chemical division of BP p.l.c. (5, 6)

Charles A. Tribbett III

Managing Director

Russell Reynolds Associates

Worldwide recruiting firm (2, 5)

Frederick H. Waddell

President and Chief Executive Officer

Northern Trust Corporation and

The Northern Trust Company (4)

Board Committees

1. Audit Committee

2. Compensation and Benefits Committee

3. Corporate Governance Committee

4. Executive Committee

5. Business Risk Committee

6. Business Strategy Committee

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

110

CORPORATE INFORMATION

Comparison of Five-Year Cumulative Total Return

The graph below compares the cumulative total stockholder return on the Corporation’s Common Stock to the cumulative total return of the S&P 500 Index and the KBW Bank Index for the five fiscal years which commenced January 1, 2004 and ended December 31, 2008. The cumulative total stockholder return assumes the investment of $100 in the Corporation’s common stock and in each index on December 31, 2003 and assumes reinvestment of dividends. The KBW Bank Index is a modified-capitalization-weighted index made up of 24 of the largest banking companies in the U.S. The Corporation is included in both the S&P 500 Index and the KBW Bank Index.

We caution you not to draw any conclusions from the data in this performance graph, as past results do not necessarily indicate future performance.

Total Return Assumes $100 Invested on

December 31, 2003 with Reinvestment of Dividends

Five-Year Cumulative Total Return

	December 31,
	2003	2004	2005	2006	2007	2008
Northern Trust	100	107	116	138	177	123
S&P 500	100	111	116	135	142	90
KBW Bank Index	100	110	114	133	104	55

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

111

CORPORATE INFORMATION

ANNUAL MEETING

The annual meeting of stockholders will be held on Tuesday, April 21, 2009, at 10:30 A.M. (Central Daylight Time) at 50 South La Salle Street, Chicago, Illinois 60603.

STOCK LISTING

The common stock of Northern Trust Corporation is traded on the NASDAQ Stock Market under the symbol NTRS.

STOCK TRANSFER AGENT, REGISTRAR

AND DIVIDEND DISBURSING AGENT

Wells Fargo Bank, N.A.

Shareowner Services

161 North Concord Exchange Street

South St. Paul, Minnesota 55075

General Phone Number: 1-800-468-9716

Internet Site: www.wellsfargo.com/shareownerservices

AVAILABLE INFORMATION

The Corporation’s Internet address is northerntrust.com. Through our Web site, we make available free of charge our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act (15 U.S.C. 78m(a) or 78o(d)) as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the Securities and Exchange Commission. Information contained on the Web site is not part of the Annual Report.

10-K REPORT

Copies of the Corporation’s 2008 10-K Report filed with the Securities and Exchange Commission will be available by the end of March 2009 and will be mailed to stockholders and other interested persons upon written request to:

Rose A. Ellis

Corporate Secretary

Northern Trust Corporation

50 South La Salle Street, M-9

Chicago, Illinois 60603

QUARTERLY EARNINGS RELEASES

Copies of the Corporation’s quarterly earnings releases may be obtained by accessing Northern Trust’s Web site at northerntrust.com or by calling the Corporate Communications department at (312) 444-4272.

INVESTOR RELATIONS

Please direct Investor Relations inquiries to: Beverly J. Fleming, Director of Investor Relations, at (312) 444-7811 or beverly_fleming@ntrs.com.

NORTHERNTRUST.COM

Information about the Corporation, including financial performance and products and services, is available on Northern Trust’s Web site at northerntrust.com.

NORTHERN TRUST GLOBAL INVESTMENTS

Northern Trust Corporation uses the name Northern Trust Global Investments to identify the investment management business, including portfolio management, research and trading, carried on by several of its affiliates, including The Northern Trust Company, Northern Trust Global Advisors and Northern Trust Investments.

NORTHERN TRUST CORPORATION 2008 ANNUAL REPORT TO SHAREHOLDERS

112

northerntrust.com

EX-21

Exhibit 21

NORTHERN TRUST CORPORATION SUBSIDIARIES AS OF FEBRUARY 27, 2009

	Percent Owned		Jurisdiction of Incorporation
The Northern Trust Company	100	%	Illinois
Norlease, Inc.	100	%	Delaware
TNT-NL Leasing I, Inc.	100	%	Delaware
TNT-NL Eurolease I, Ltd.	100	%	Bermuda
TNT-NL Eurolease II, Ltd.*	100	%	Bermuda
Clenston Ltd.*	100	%	Bermuda
BAFSC/TNT-NL CX HUL I, Ltd.*	75	%	Bermuda
BAFSC/TNT-NL CX HUO, Ltd.*	75	%	Bermuda
MFC Company, Inc.	100	%	Delaware
The Northern Trust Company, Canada	100	%	Ontario, Canada
Nortrust Nominees, Ltd.	100	%	England
The Northern Trust Company U.K. Pension Plan Limited	100	%	England
Northern Trust Guernsey Holdings Limited	99	%	Guernsey
Northern Trust (Guernsey) Limited	99	%	Guernsey
The Northern Trust International Banking Corporation	100	%	Edge Act
Northern Trust Cayman International, Ltd.	100	%	Cayman Islands, BWI
The Northern Trust Company of Hong Kong Limited	99.99	%	Hong Kong
Northern Trust Fund Managers (Ireland) Limited	100	%	Ireland
Nortrust Nominees (Ireland) Limited	100	%	Ireland
Northern Trust Property Services (Ireland) Limited	100	%	Ireland
Northern Trust Management Services Limited	100	%	England
Northern Trust Global Investments Limited	100	%	England
The Northern Trust Scottish Limited Partnership	99	%	Scotland
Northern Trust Luxembourg Capital S.A.R.L.	100	%	Luxembourg
Northern Trust (Ireland) Limited	100	%	Ireland
Northern Trust Investor Services (Ireland) Limited	100	%	Ireland
Northern Trust Custodial Services (Ireland) Limited	100	%	Ireland
Northern Trust Fund Services (Ireland) Limited	100	%	Ireland
Northern Trust Management Services (Ireland) Limited	100	%	Ireland
Northern Trust International Fund Administration Services (Ireland) Limited	100	%	Ireland
International Securisation Managers (Ireland) Limited	100	%	Ireland
Northern Trust Fiduciary Services (Ireland) Limited	100	%	Ireland
BBI Nominees Limited	100	%	Ireland
Northern Trust GFS Holdings Limited	99	%	Guernsey
Northern Trust Fiduciary Services (UK) Limited	100	%	England
Northern Trust Fiduciary Services (Guernsey) Limited	99	%	Guernsey
Arnold Limited	99	%	Guernsey
Control Nominees Limited	99	%	Guernsey
Truchot Limited	99	%	Guernsey
Vivian Limited	99	%	Guernsey
Doyle Administration Limited	99	%	Isle of Man
Barfield Nominees Limited	99	%	Isle of Man
Northern Trust Fiduciary Company (Guernsey) Limited	100	%	Guernsey
NT Director One Limited	100	%	Guernsey

NORTHERN TRUST CORPORATION SUBSIDIARIES AS OF FEBRUARY 27, 2009

(continued)

	Percent Owned		State of Incorporation
NT Director Two Limited	100	%	Guernsey
NT Nominee One Limited	100	%	Guernsey
NT Nominee Two Limited	100	%	Guernsey
NT Secretary Limited	100	%	Guernsey
Trafalgar Trust Company (Guernsey) Limited	100	%	Guernsey
Northern Trust International Fund Administration Services (Guernsey) Limited	99	%	Guernsey
Trafalgar Representatives Limited	50	%	Guernsey
Nelson Representatives Limited	50	%	Guernsey
Admiral Nominees Limited	50	%	Guernsey
Northern Trust Fiduciary Services (Jersey) Limited	99	%	Jersey
Saline Nominees Limited	99	%	Guernsey
Northern Trust International Fund Administrators (Jersey) Limited	100	%	Jersey
Northern Trust Partners Scotland Limited	100	%	Scotland
Northern Operating Services Private Limited	99	%	India
NTG Services LLC	100	%	Delaware LLC
NT Mortgage Holdings LLC	100	%	Delaware LLC
Northern Trust Investments, National Association	100	%	National
Northern Trust Holdings Limited	100	%	England
Northern Trust Global Services Limited	100	%	England
Northern Trust European Holdings Limited	100	%	England
Northern Trust Luxembourg Management Company S.A.	99.99	%	Luxembourg
Northern Trust Directors Services (Guernsey) Limited	100	%	Guernsey
Northern Trust, NA	100	%	National Bank
Realnor Properties, Inc.	100	%	Florida
Realnor Special Properties, Inc.	100	%	Florida
Realnor Hallandale, Inc.	100	%	Florida
Realnor 1177, Inc.	100	%	Florida
Northern Annuity Sales, Inc.	100	%	Florida
Fiduciary Services Inc.	100	%	Texas (Inactive)
Northern Trust Bank, FSB	100	%	Federal Savings Bank
Northern Trust Holdings L.L.C.	100	%	Delaware
Northern Investment Corporation	100	%	Delaware
Northern Investment Management Company	100	%	Delaware (Inactive)
Northern Trust Securities, Inc.	100	%	Delaware
Northern Trust Services, Inc.	100	%	Illinois
Nortrust Realty Management, Inc.	100	%	Illinois

NORTHERN TRUST CORPORATION SUBSIDIARIES AS OF FEBRUARY 27, 2009

(continued)

	Percent Owned		State of Incorporation
The Northern Trust Company of New York	100	%	New York
Northern Trust Global Advisors, Inc.	100	%	Delaware
NT Global Advisors, Inc.	100	%	Ontario, Canada
The Northern Trust Company of Connecticut	100	%	Connecticut
Northern Trust Global Investments Japan, K.K.	100	%	Japan
NTC Capital I	100	%	Delaware
NTC Capital II	100	%	Delaware
Equilend Holdings LLC	10	%	Delaware
The Northern Trust Company of Delaware	100	%	Delaware

* Indirectly owned by Norlease Inc. through Delaware business trusts.

EX-23

Exhibit 23

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Northern Trust Corporation:

We consent to the incorporation by reference in the registration statements on Form S-3 Nos. 333-152678, 333-152678-01, 333-152678-02, and 333-152678-03 and on Form S-8 Nos. 333-144848, 333-86418, 333-84085, 333-52623, and 333-58784 of Northern Trust Corporation of our reports dated February 27, 2009, with respect to the consolidated balance sheets of Northern Trust Corporation and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2008, and the effectiveness of internal control over financial reporting as of December 31, 2008, which reports appear in the Form 10-K of Northern Trust Corporation dated February 27, 2009. The aforementioned report with respect to the consolidated financial statements of Northern Trust Corporation and subsidiaries refers to changes in its method of accounting for defined benefit pension and other postretirement plans in 2006.

/s/ KPMG LLP

Chicago, Illinois

February 27, 2009

EX-24

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

That the undersigned officers and directors of Northern Trust Corporation hereby severally constitute and appoint Frederick H. Waddell, Steven L. Fradkin and Kelly R. Welsh, and each of them singly, our true and lawful attorneys and agents with full power to them and each of them singly, to sign for us in our names, in the capacities indicated below, Form 10-K, annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended December 31, 2008, and to file such Form, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby granting to such attorneys and agents, and each of them, full power of substitution and revocation in the premises, and generally to do all such things in our name and behalf in our capacities as officers and directors to enable Northern Trust Corporation to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all regulations of the Securities and Exchange Commission thereunder, hereby ratifying and confirming our signatures as they may be signed by our attorneys, or any one of them, to such Form, and all that our attorneys and agents, or any of them, may do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, the undersigned have hereunto executed this Power of Attorney this 17th day of February, 2009.

/s/ Frederick H. Waddell
Frederick H. Waddell President, Chief Executive Officer, and Director
/s/ Steven L. Fradkin	/s/ Aileen B. Blake
Steven L. Fradkin Executive Vice President and Chief Financial Officer	Aileen B. Blake Executive Vice President and Controller (Chief Accounting Officer)
/s/ Linda Walker Bynoe	/s/ Nicholas D. Chabraja
Linda Walker Bynoe Director	Nicholas D. Chabraja Director
/s/ Susan Crown	/s/ Dipak C. Jain
Susan Crown Director	Dipak C. Jain Director
/s/ Arthur L. Kelly	/s/ Robert C. McCormack
Arthur L. Kelly Director	Robert C. McCormack Director

1

/s/ Edward J. Mooney	/s/ William A. Osborn
Edward J. Mooney Director	William A. Osborn Chairman and Director
/s/ John W. Rowe	/s/ Harold B. Smith
John W. Rowe Director	Harold B. Smith Director
/s/ William D. Smithburg	/s/ Enrique J. Sosa
William D. Smithburg Director	Enrique J. Sosa Director
/s/ Charles A. Tribbett III
Charles A. Tribbett III Director

STATE OF ILLINOIS	)
	)	SS
COUNTY OF COOK	)

I, Victoria Antoni , a Notary Public, DO HEREBY CERTIFY that the above named directors and officers of Northern Trust Corporation, personally known to me to be the same persons whose names are subscribed to the foregoing instrument, appeared before me this day in person, and severally acknowledged that they signed and delivered the instrument as their free and voluntary act, for the uses and purposes therein set forth.

GIVEN under my hand and notarial seal this 17th day of February, 2009.

/s/ Victoria Antoni

Victoria Antoni

Notary Public

My Commission Expires:

7/25/11

2

EX-31.(I)

Exhibit 31(i)

Certification of CEO Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Frederick H. Waddell, certify that:

1. I have reviewed this report on Form 10-K for the year ending December 31, 2008 of Northern Trust Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 27, 2009	/s/ Frederick H. Waddell
	Frederick H. Waddell
	Chief Executive Officer

EX-31.(II)

Exhibit 31(ii)

Certification of CFO Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Steven L. Fradkin, certify that:

1. I have reviewed this report on Form 10-K for the year ending December 31, 2008 of Northern Trust Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 27, 2009	/s/ Steven L. Fradkin
	Steven L. Fradkin
	Chief Financial Officer

EX-32

Exhibit 32

Certifications of CEO and CFO Pursuant to

18 U.S.C. Section 1350, as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of Northern Trust Corporation (the “Corporation”) on Form 10-K for the period ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Frederick H. Waddell, as Chief Executive Officer of the Corporation, and Steven L. Fradkin, as Chief Financial Officer of the Corporation, each hereby certifies, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ Frederick H. Waddell

Frederick H. Waddell

Chief Executive Officer

February 27, 2009

/s/ Steven L. Fradkin

Steven L. Fradkin

Chief Financial Officer

February 27, 2009

This certification accompanies the Report pursuant to section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by Northern Trust Corporation for purposes of section 18 of the Securities Exchange Act of 1934, as amended.