filings.toolsItem 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Northern Trust Corporation:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Northern Trust Corporation and subsidiaries (the Corporation) as of December 31, 2025 and 2024, 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, 2025, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Corporation as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Corporation’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 24, 2026 expressed an unqualified opinion on the effectiveness of the Corporation’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 89 |
Assessment of the allowance for credit losses for commercial loans evaluated on a collective basis
As discussed in Notes 1 and 6 to the consolidated financial statements, the Corporation’s allowance for credit losses for commercial loans evaluated on a collective basis (the collective ACL) was $126.6 million of a total allowance for credit losses assigned to loans of $164.3 million as of December 31, 2025. Expected credit losses are measured on a collective basis as long as the financial assets included in the respective pool share similar risk characteristics. The allowance estimation methodology for the collective assessment is based on data representative of the Corporation’s financial asset portfolio from a historical observation period that includes both expansionary and recessionary periods. The estimation methodology and the related qualitative adjustment framework segregate the loan portfolio into classes based on loan and obligor specific factors, including loan type, borrower type, collateral type, loan size, and borrower credit quality. The estimation methodology applies probability of default and loss given default assumptions to the projected exposure at default on a pool basis. For each class, the probability of default (PD) and loss given default (LGD) are derived for each quarter of the remaining life of each instrument. For the first two years (the reasonable and supportable period), these factors are derived by applying quarterly macroeconomic projections using models developed from historical data on macroeconomic factors and loans with similar factors, including the borrower rating assigned to individual obligors, as applicable. For periods beyond the reasonable and supportable period, the Corporation reverts to its own long-run historical loss experience on a straight-line basis over four quarters. The projected exposure at default for every quarter is based on contractual balance projections as of each quarter-end. Estimating expected lifetime credit losses requires the consideration of the effect of future economic conditions. The Corporation employs multiple scenarios over a reasonable and supportable period to project future conditions. The Corporation determines the probability weights assigned to each scenario at each quarter-end. The quantitative allowance is then reviewed within the qualitative adjustment framework, through which the Corporation applies judgment by assessing internal risk factors, potential limitations in the quantitative methodology, and other factors that are not fully contemplated in the forecast to compute adjustments to the quantitative allowance that may impact individual or multiple classes of the loan portfolio.
We identified the assessment of the quantitative component of the collective ACL as a critical audit matter. A high degree of audit effort, including specialized skills and knowledge, and subjective and complex auditor judgment was involved in the assessment of the quantitative component of the collective ACL due to significant measurement uncertainty. Specifically, the assessment encompassed the evaluation of the quantitative component of the collective ACL methodology, including the methods and models used to estimate the PD and LGD and their significant assumptions, the multiple economic forecast scenarios and macroeconomic factors and their respective weightings, and borrower ratings for certain commercial loans. In addition, auditor judgment was required to evaluate the sufficiency of audit evidence obtained.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and operating effectiveness of certain internal controls related to the critical audit matter. This included controls related to the Corporation’s measurement of the quantitative component of the collective ACL estimate, including controls over:
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development of the quantitative component of the collective ACL methodology
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development, calibration and/or performance monitoring of certain PD and LGD models
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development and approval of the multiple economic forecast scenarios, macroeconomic factors and their respective weightings
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identification and determination of the significant assumptions used in certain PD and LGD models
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analysis of the allowance for credit losses for loans results.
We evaluated the Corporation’s process to develop the quantitative component of the collective ACL estimate by testing certain sources of data, factors, and assumptions that the Corporation used, and considered the relevance and reliability of such data, factors and assumptions. In addition, we involved credit risk professionals with specialized skills and knowledge, who assisted in:
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evaluating the quantitative component of the Corporation’s collective ACL methodology for compliance with U.S. generally accepted accounting principles
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evaluating judgments made by the Corporation relative to the development, calibration and/or performance monitoring of certain PD and LGD models
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assessing the conceptual soundness and performance testing of certain PD and LGD models by inspecting model documentation to determine whether the models were suitable for their intended use
| 90 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
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assessing the economic forecast scenarios, the economic input variables and their respective weightings through comparison to publicly available forecasts and the Corporation’s business environment
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testing individual borrower ratings for a selection of commercial loan relationships by evaluating the financial performance of the borrower, sources of repayment, and any relevant guarantees or underlying collateral.
We also assessed the sufficiency of the audit evidence obtained related to the quantitative component of the collective ACL by evaluating the:
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cumulative results of the procedures
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qualitative aspects of the Corporation’s accounting practices
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potential bias in the accounting estimate
We have served as the Corporation’s auditor since 2002.
Chicago, Illinois
February 24, 2026
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 91 |
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
| DECEMBER 31, | ||||||||
| (In Millions Except Share Information) | 2025 | 2024 | ||||||
| ASSETS | ||||||||
| Cash and Due from Banks | $ | 5,873.1 | $ | 4,677.2 | ||||
| Federal Reserve and Other Central Bank Deposits | 53,524.9 | 38,775.4 | ||||||
| Interest-Bearing Deposits with Banks | 1,729.4 | 1,944.7 | ||||||
| Federal Funds Sold and Securities Purchased under Agreements to Resell | 2,654.1 | 451.0 | ||||||
| Debt Securities | ||||||||
| Available for Sale (Amortized cost of $34,102.4 and $29,229.1) | 34,036.5 | 29,001.5 | ||||||
| Held to Maturity (Fair value of $22,381.2 and $20,654.5) | 23,429.6 | 22,296.7 | ||||||
| Total Debt Securities | 57,466.1 | 51,298.2 | ||||||
| Loans | ||||||||
| Commercial | 20,431.0 | 20,278.8 | ||||||
| Personal | 21,517.3 | 23,111.8 | ||||||
| Total Loans (Net of unearned income of $5.3 and $6.3) | 41,948.3 | 43,390.6 | ||||||
| Allowance for Credit Losses | (175.0) | (175.5) | ||||||
| Buildings and Equipment | 464.6 | 490.3 | ||||||
| Goodwill | 712.9 | 694.9 | ||||||
| Other Assets | 12,934.3 | 13,961.6 | ||||||
| Total Assets | $ | 177,132.7 | $ | 155,508.4 | ||||
| LIABILITIES | ||||||||
| Deposits | ||||||||
| Demand and Other Noninterest-Bearing | $ | 14,810.7 | $ | 14,325.6 | ||||
| Savings, Money Market and Other Interest-Bearing | 28,984.1 | 26,122.6 | ||||||
| Savings Certificates and Other Time | 6,418.9 | 5,731.7 | ||||||
| Non U.S. Offices — Noninterest-Bearing | 12,537.9 | 10,027.9 | ||||||
| — Interest-Bearing | 80,046.1 | 66,274.9 | ||||||
| Total Deposits | 142,797.7 | 122,482.7 | ||||||
| Federal Funds Purchased | 2,141.1 | 2,159.5 | ||||||
| Securities Sold Under Agreements to Repurchase | 292.2 | 462.0 | ||||||
| Other Borrowings | 7,158.3 | 6,521.0 | ||||||
| Senior Notes | 3,351.5 | 2,769.7 | ||||||
| Long-Term Debt | 3,484.4 | 4,081.3 | ||||||
| Other Liabilities | 4,949.6 | 4,243.8 | ||||||
| Total Liabilities | 164,174.8 | 142,720.0 | ||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Preferred Stock, No Par Value; Authorized 10,000,000 shares: | ||||||||
| Series D, authorized and outstanding shares of 5,000 | 493.5 | 493.5 | ||||||
| Series E, authorized and outstanding shares of 16,000 | 391.4 | 391.4 | ||||||
| Common Stock, $1.66 2/3 Par Value; Authorized 560,000,000 shares; Outstanding shares of 186,337,588 and 195,969,746 | 408.6 | 408.6 | ||||||
| Additional Paid-In Capital | 1,039.0 | 1,025.3 | ||||||
| Retained Earnings | 16,709.3 | 15,614.7 | ||||||
| Accumulated Other Comprehensive Loss | (590.5) | (814.0) | ||||||
| Treasury Stock (58,833,936 and 49,201,778 shares, at cost) | (5,493.4) | (4,331.1) | ||||||
| Total Stockholders’ Equity | 12,957.9 | 12,788.4 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 177,132.7 | $ | 155,508.4 |
See accompanying notes to consolidated financial statements on pages 96-164**.
| 92 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
| FOR THE YEAR ENDED DECEMBER 31, | |||||||||||
| (In Millions Except Share Information) | 2025 | 2024 | 2023 | ||||||||
| Noninterest Income | |||||||||||
| Trust, Investment and Other Servicing Fees | $ | 5,017.8 | $ | 4,727.8 | $ | 4,361.8 | |||||
| Foreign Exchange Trading Income | 240.8 | 231.2 | 203.9 | ||||||||
| Treasury Management Fees | 38.7 | 35.7 | 31.6 | ||||||||
| Security Commissions and Trading Income | 170.4 | 150.5 | 135.0 | ||||||||
| Other Operating Income | 207.7 | 1,157.4 | 228.7 | ||||||||
| Investment Security Gains (Losses), net | — | (189.3) | (169.5) | ||||||||
| Total Noninterest Income | 5,675.4 | 6,113.3 | 4,791.5 | ||||||||
| Net Interest Income | |||||||||||
| Interest Income | 8,624.6 | 9,762.3 | 7,325.0 | ||||||||
| Interest Expense | 6,213.6 | 7,585.2 | 5,343.0 | ||||||||
| Net Interest Income | 2,411.0 | 2,177.1 | 1,982.0 | ||||||||
| Provision for Credit Losses | (7.5) | (3.0) | 24.5 | ||||||||
| Net Interest Income after Provision for Credit Losses | 2,418.5 | 2,180.1 | 1,957.5 | ||||||||
| Noninterest Expense | |||||||||||
| Compensation | 2,571.3 | 2,471.1 | 2,321.8 | ||||||||
| Employee Benefits | 462.1 | 417.8 | 405.2 | ||||||||
| Outside Services | 988.5 | 998.0 | 906.5 | ||||||||
| Equipment and Software | 1,169.9 | 1,075.0 | 945.5 | ||||||||
| Occupancy | 217.3 | 216.8 | 232.3 | ||||||||
| Other Operating Expense | 345.3 | 455.2 | 472.9 | ||||||||
| Total Noninterest Expense | 5,754.4 | 5,633.9 | 5,284.2 | ||||||||
| Income before Income Taxes | 2,339.5 | 2,659.5 | 1,464.8 | ||||||||
| Provision for Income Taxes | 602.6 | 628.4 | 357.5 | ||||||||
| NET INCOME | $ | 1,736.9 | $ | 2,031.1 | $ | 1,107.3 | |||||
| Preferred Stock Dividends | 41.8 | 41.8 | 41.8 | ||||||||
| Net Income Applicable to Common Stock | $ | 1,695.1 | $ | 1,989.3 | $ | 1,065.5 | |||||
| PER COMMON SHARE | |||||||||||
| Net Income – Basic | $ | 8.78 | $ | 9.80 | $ | 5.09 | |||||
| Net Income – Diluted | 8.74 | 9.77 | 5.08 | ||||||||
| Average Number of Common Shares Outstanding – Basic | 191,358,026 | 201,263,646 | 207,248,094 | ||||||||
| Average Number of Common Shares Outstanding – Diluted | 192,246,525 | 201,870,105 | 207,563,746 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| FOR THE YEAR ENDED DECEMBER 31, | |||||||||||
| (In Millions) | 2025 | 2024 | 2023 | ||||||||
| Net Income | $ | 1,736.9 | $ | 2,031.1 | $ | 1,107.3 | |||||
| Other Comprehensive Income (Net of Tax and Reclassifications) | |||||||||||
| Net Unrealized Gains on Available for Sale Debt Securities | 196.8 | 325.8 | 443.7 | ||||||||
| Net Unrealized Gains (Losses) on Cash Flow Hedges | 0.3 | (0.2) | (0.4) | ||||||||
| Net Foreign Currency Adjustments | 15.8 | 29.5 | 39.0 | ||||||||
| Net Pension and Other Postretirement Benefit Adjustments | 10.6 | (31.2) | (51.0) | ||||||||
| Other Comprehensive Income | 223.5 | 323.9 | 431.3 | ||||||||
| Comprehensive Income | $ | 1,960.4 | $ | 2,355.0 | $ | 1,538.6 |
See accompanying notes to consolidated financial statements on pages 96-164**.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 93 |
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
| (In Millions Except Per Share Information) | PREFERRED STOCK | COMMON STOCK | ADDITIONAL PAID-IN CAPITAL | RETAINED EARNINGS | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | TREASURY STOCK | TOTAL | ||||||||||||||||
| Balance at January 1, 2023 | $ | 884.9 | $ | 408.6 | $ | 983.5 | $ | 13,798.5 | $ | (1,569.2) | $ | (3,246.8) | $ | 11,259.5 | |||||||||
| Net Income | — | — | — | 1,107.3 | — | — | 1,107.3 | ||||||||||||||||
| Other Comprehensive Income (Loss) (Net of Tax and Reclassifications) | — | — | — | — | 431.3 | — | 431.3 | ||||||||||||||||
| Dividends Declared: | |||||||||||||||||||||||
| Common Stock, $3.00 per share | — | — | — | (630.2) | — | — | (630.2) | ||||||||||||||||
| Preferred Stock | — | — | — | (41.8) | — | — | (41.8) | ||||||||||||||||
| Stock Awards and Options Exercised | — | — | 26.1 | — | — | 95.7 | 121.8 | ||||||||||||||||
| Stock Purchased | — | — | — | — | — | (347.5) | (347.5) | ||||||||||||||||
| Excise Tax on Share Repurchases | — | — | — | — | — | (2.5) | (2.5) | ||||||||||||||||
| Balance at December 31, 2023 | $ | 884.9 | $ | 408.6 | $ | 1,009.6 | $ | 14,233.8 | $ | (1,137.9) | $ | (3,501.1) | $ | 11,897.9 | |||||||||
| Net Income | — | — | — | 2,031.1 | — | — | 2,031.1 | ||||||||||||||||
| Other Comprehensive Income (Loss) (Net of Tax and Reclassifications) | — | — | — | — | 323.9 | — | 323.9 | ||||||||||||||||
| Dividends Declared: | |||||||||||||||||||||||
| Common Stock, $3.00 per share | — | — | — | (608.4) | — | — | (608.4) | ||||||||||||||||
| Preferred Stock | — | — | — | (41.8) | — | — | (41.8) | ||||||||||||||||
| Stock Awards and Options Exercised | — | — | 15.7 | — | — | 116.2 | 131.9 | ||||||||||||||||
| Stock Purchased | — | — | — | — | — | (937.8) | (937.8) | ||||||||||||||||
| Excise Tax on Share Repurchases | — | — | — | — | — | (8.4) | (8.4) | ||||||||||||||||
| Balance at December 31, 2024 | $ | 884.9 | $ | 408.6 | $ | 1,025.3 | $ | 15,614.7 | $ | (814.0) | $ | (4,331.1) | $ | 12,788.4 | |||||||||
| Net Income | — | — | — | 1,736.9 | — | — | 1,736.9 | ||||||||||||||||
| Other Comprehensive Income (Loss) (Net of Tax and Reclassifications) | — | — | — | — | 223.5 | — | 223.5 | ||||||||||||||||
| Dividends Declared: | |||||||||||||||||||||||
| Common Stock, $3.10 per share | — | — | — | (600.5) | — | — | (600.5) | ||||||||||||||||
| Preferred Stock | — | — | — | (41.8) | — | — | (41.8) | ||||||||||||||||
| Stock Awards and Options Exercised | — | — | 13.7 | — | — | 122.1 | 135.8 | ||||||||||||||||
| Stock Purchased | — | — | — | — | — | (1,273.5) | (1,273.5) | ||||||||||||||||
| Excise Tax on Share Repurchases | — | — | — | — | — | (10.9) | (10.9) | ||||||||||||||||
| Balance at December 31, 2025 | $ | 884.9 | $ | 408.6 | $ | 1,039.0 | $ | 16,709.3 | $ | (590.5) | $ | (5,493.4) | $ | 12,957.9 |
See accompanying notes to consolidated financial statements on pages 96-164**.
| 94 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF CASH FLOWS
| FOR THE YEAR ENDED DECEMBER 31, | |||||||||||
| (In Millions) | 2025 | 2024 | 2023 | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net Income | $ | 1,736.9 | $ | 2,031.1 | $ | 1,107.3 | |||||
| Adjustments to Reconcile Net Income to Net Cash Provided by (Used in) Operating Activities | |||||||||||
| Investment Security Losses, net | — | 189.3 | 169.5 | ||||||||
| Amortization and Accretion of Securities and Unearned Income, net | (67.8) | (35.1) | 3.0 | ||||||||
| Provision for Credit Losses | (7.5) | (3.0) | 24.5 | ||||||||
| Depreciation and Amortization | 779.1 | 716.8 | 634.6 | ||||||||
| Change in Accrued Income Taxes | (104.4) | 183.5 | (44.4) | ||||||||
| Pension Plan Contributions | (142.1) | (212.0) | (20.4) | ||||||||
| Deferred Income Tax Provision | 194.5 | 20.7 | (48.2) | ||||||||
| Change in Receivables | (42.6) | (6.1) | 12.0 | ||||||||
| Change in Interest Payable | (24.8) | (41.9) | 85.8 | ||||||||
| Change in Collateral With Derivative Counterparties, net | 2,885.7 | (3,287.7) | (72.6) | ||||||||
| Other Operating Activities, net | 326.5 | (41.6) | 774.5 | ||||||||
| Net Cash Provided by (Used in) Operating Activities | 5,533.5 | (486.0) | 2,625.6 | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Change in Federal Funds Sold and Securities Purchased under Agreements to Resell | (2,175.6) | 276.6 | 317.4 | ||||||||
| Change in Interest-Bearing Deposits with Banks | 277.2 | (121.0) | 28.5 | ||||||||
| Net Change in Federal Reserve and Other Central Bank Deposits | (13,263.6) | (5,255.3) | 6,205.9 | ||||||||
| Purchases of Held to Maturity Debt Securities | (33,137.2) | (26,524.6) | (32,773.9) | ||||||||
| Proceeds from the Maturity and Redemption of Held to Maturity Debt Securities | 32,803.6 | 30,073.9 | 32,123.0 | ||||||||
| Purchases of Available for Sale Debt Securities | (9,428.8) | (13,010.0) | (7,320.2) | ||||||||
| Proceeds from the Maturity and Sales of Available for Sale Debt Securities | 4,982.1 | 6,983.0 | 11,614.8 | ||||||||
| Change in Loans | 1,520.8 | 4,165.7 | (4,702.1) | ||||||||
| Purchases of Buildings and Equipment | (74.0) | (101.5) | (116.5) | ||||||||
| Purchases and Development of Computer Software | (700.2) | (644.0) | (559.3) | ||||||||
| Proceeds from the sale of Visa Shares | 12.1 | 800.6 | — | ||||||||
| Other Investing Activities, net | (986.3) | 793.1 | (33.5) | ||||||||
| Net Cash (Used in) Provided by Investing Activities | (20,169.9) | (2,563.5) | 4,784.1 | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Change in Deposits | 16,809.1 | 6,330.8 | (8,478.4) | ||||||||
| Change in Federal Funds Purchased | (18.4) | (885.9) | 1,148.6 | ||||||||
| Change in Securities Sold under Agreements to Repurchase | (169.8) | (322.7) | 217.5 | ||||||||
| Change in Short-Term Other Borrowings | 566.8 | (103.8) | (1,059.1) | ||||||||
| Proceeds from Long-Term Debt | 750.0 | — | 2,000.0 | ||||||||
| Repayments of Long-Term Debt | (1,350.0) | — | — | ||||||||
| Proceeds from Senior Notes | 499.8 | — | — | ||||||||
| Treasury Stock Purchased | (1,273.5) | (937.8) | (347.5) | ||||||||
| Net Proceeds from Stock Options | 6.4 | 9.4 | 2.3 | ||||||||
| Cash Dividends Paid on Common Stock | (591.6) | (602.3) | (621.5) | ||||||||
| Cash Dividends Paid on Preferred Stock | (41.8) | (41.8) | (41.8) | ||||||||
| Other Financing Activities, net | (11.1) | (6.4) | (2.7) | ||||||||
| Net Cash Provided by (Used in) Financing Activities | 15,175.9 | 3,439.5 | (7,182.6) | ||||||||
| Effect of Foreign Currency Exchange Rates on Cash | 656.4 | (504.3) | (89.8) | ||||||||
| Change in Cash and Due from Banks | 1,195.9 | (114.3) | 137.3 | ||||||||
| Cash and Due from Banks at Beginning of Period | 4,677.2 | 4,791.5 | 4,654.2 | ||||||||
| Cash and Due from Banks at End of Period | $ | 5,873.1 | $ | 4,677.2 | $ | 4,791.5 | |||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||||||||||
| Interest Paid | $ | 6,223.7 | $ | 7,610.3 | $ | 5,285.5 | |||||
| Income Taxes Paid(2) | 426.8 | 268.6 | 362.5 | ||||||||
| Transfers from Loans to OREO | — | — | 0.2 | ||||||||
| Reclassification of certain cash collateral received from Other Operating Activities to Deposits(1) | — | 1,157.2 | — |
*(1)*Beginning January 1, 2024, Northern Trust reclassified certain cash collateral received from Other Liabilities to Deposits on the consolidated statement of financial condition. Prior periods have not been restated.
(2) See Note 20, “Income Taxes” for additional information.
See accompanying notes to consolidated financial statements on pages 96-164**.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 95 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Summary of Significant Accounting Policies
The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (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 various other wholly-owned subsidiaries of the Corporation and Bank. Throughout the notes to the consolidated financial statements, the term “Northern Trust” refers to the Corporation and its subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. The consolidated statements of income include results of acquired subsidiaries from the dates of acquisition. Certain prior-year balances have been reclassified consistent with the current year’s presentation.
B. Nature of Operations. The Corporation is a bank holding company that has elected to be a financial holding company under the Bank Holding Company Act of 1956, as amended. 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 various U.S. and non-U.S. subsidiaries, including the Bank.
Northern Trust generates the majority of its revenue from its two client-focused reporting segments: Asset Servicing and Wealth Management. Asset management and related services are provided to Asset Servicing and Wealth Management clients primarily by the Asset Management business.
Asset Servicing is a leading global provider of asset servicing and related services to corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds, and other institutional investors around the globe. Asset servicing and related services encompass a full range of capabilities including but not limited to: custody; fund administration; investment operations outsourcing; investment management; investment risk and analytical services; employee benefit services; securities lending; foreign exchange; treasury management; brokerage services; transition management services; banking; and cash management. Client relationships are managed through the Bank and the Bank’s and the Corporation’s other subsidiaries, including support from locations in North America, Europe, the Middle East, and the Asia-Pacific region.
Wealth Management focuses on high-net-worth individuals and families, business owners, executives, professionals, retirees, and established privately-held businesses in its target markets. In supporting these targeted segments, Wealth Management provides trust, investment management, custody, and philanthropic services; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services; and private and business banking. Wealth Management also includes Global Family Office, which provides customized services, including but not limited to: investment management; global custody; fiduciary; and private banking; family office consulting, and technology solutions, to meet the complex financial and reporting needs of ultra-high-net-worth individuals and family offices across the globe. Wealth Management services are delivered by multidisciplinary teams through a network of offices in 19 U.S. states and Washington, D.C., as well as offices in London, Guernsey, Singapore, and Abu Dhabi.
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 in the application of certain of our significant accounting policies 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 revenue and expense during the reporting period. Actual results could differ from those estimates.
D. Foreign Currency Remeasurement and Translation. Asset and liability accounts denominated in nonfunctional currencies are remeasured into functional currencies at period-end rates of exchange, except for certain balance sheet items including but not limited to buildings and equipment, goodwill and other intangible assets, which are remeasured at historical exchange rates. Results from remeasurement of asset and liability accounts are reported in Other Operating Income on the consolidated statements of income. Income and expense accounts are remeasured at period-average rates of exchange.
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 (AOCI), a component of stockholders’ equity.
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E. Securities. Available for Sale (AFS) Securities are reported at fair value, with unrealized gains and losses credited or charged, net of the tax effect, to AOCI. Realized gains and losses on AFS securities are determined on a specific identification basis and are reported within Investment Security Gains (Losses), net, on the consolidated statements of income. Interest income is recorded on the accrual basis, adjusted for the amortization of premium and accretion of discount.
Held to Maturity (HTM) Securities 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.
Trading Account Securities are reported at fair value. Realized and unrealized gains and losses on securities held for trading are reported within Security Commissions and Trading Income on the consolidated statements of income.
Nonmarketable Securities primarily consist of Federal Reserve Bank of Chicago and Federal Home Loan Bank stock and community development investments, each of which are recorded in Other Assets on the consolidated balance sheets. Federal Reserve Bank of Chicago and Federal Home Loan Bank stock are reported at cost, which represents redemption value. Community development investments are typically reported at amortized cost. Those community development investments that are designed to generate a return primarily through realization of tax credits and other tax benefits, which are discussed in further detail in Note 28, “Variable Interest Entities,” are amortized over the lives of the related tax credits and other tax benefits.
F. 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 accounted for as collateralized financings and 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 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, either directly or via third-party custodians, of securities purchased under agreements to resell. Securities sold under agreements to repurchase are either directly held by, or pledged to the counterparty until the repurchase. Northern Trust nets securities sold under agreements to repurchase against those purchased under agreements to resell when the requirements to net are met.
G. 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 generally include foreign exchange contracts, interest rate contracts, total return swap contracts and credit default swap contracts. All derivative financial instruments, whether designated as hedges or not, are recorded at fair value within Other Assets and Other Liabilities on the consolidated balance sheets. Derivative asset and liability positions with the same counterparty are reflected on a net basis on the consolidated balance sheets in cases where legally enforceable master netting arrangements or similar agreements exist. These derivative assets and liabilities are further reduced by cash collateral received from, and deposited with, derivative counterparties. The accounting for changes in the fair value of a derivative on the consolidated statements of income depends on whether or not the contract has been designated as a hedge and qualifies for hedge accounting under GAAP. Derivative financial instruments are recorded within the line item, Other Operating Activities, net, on the consolidated statement of cash flows, except for net investment hedges which are recorded within Other Investing Activities, net.
Changes in the fair value of client-related and trading derivative instruments, which are not designated hedges under GAAP, are recognized currently in either Foreign Exchange Trading Income or Security Commissions and Trading Income on the consolidated statements of income. Changes in the fair value of derivative instruments entered into for risk management purposes but not designated as hedges are recognized currently in Other Operating Income on the consolidated statements of income. Certain derivative instruments used by Northern Trust to manage risk are formally designated and qualify for hedge accounting as fair value, cash flow, or net investment hedges.
Derivatives designated as fair value hedges are used to limit Northern Trust’s exposure to changes in the fair value of assets and liabilities due to movements in interest rates. Changes in the fair value of the derivative instrument and changes in the fair value of the hedged asset or liability attributable to the hedged risk are recognized currently in Interest Income or Interest Expense on the consolidated statements of income. For substantially all fair value hedges, Northern Trust applies the “shortcut” method of accounting, available under GAAP. As a result, changes recorded in the fair value of the hedged item are assumed to equal the offsetting gain or loss on the derivative. For fair value hedges that do not qualify for the “shortcut” method of accounting, Northern Trust utilizes regression analysis in assessing whether these hedging relationships are highly effective at inception and quarterly thereafter.
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Derivatives designated as cash flow hedges are used to minimize the variability in cash flows of earning assets or forecasted transactions caused by movements in interest or foreign exchange rates. Changes in the fair value of such derivatives are recognized in AOCI, a component of stockholders’ equity, and there is no change to the accounting for the hedged item. Balances in AOCI are reclassified to earnings when the hedged forecasted transaction impacts earnings, and are reflected in the same income statement line item. Northern Trust applies the “shortcut” method of accounting for cash flow hedges of certain AFS debt securities. For cash flow hedges of certain other AFS debt securities, foreign currency denominated securities, and forecasted foreign currency denominated revenue and expenditure transactions, Northern Trust closely matches all terms of the hedged item and hedging derivative at inception and on an ongoing basis. For cash flow hedges of AFS debt securities, to the extent all terms are not perfectly matched, effectiveness is assessed using regression analysis. For cash flow hedges of forecasted foreign currency denominated revenue and expenditure transactions and investment securities, to the extent all terms are not perfectly matched, effectiveness is assessed using the dollar-offset method.
Foreign exchange contracts and qualifying non-derivative instruments designated as net investment hedges are used to minimize Northern Trust’s exposure to variability in the foreign currency translation of net investments in non-U.S. branches and subsidiaries. Changes in the fair value of the hedging instrument are recognized in AOCI consistent with the related translation gains and losses of the hedged net investment. For net investment hedges, all critical terms of the hedged item and the hedging instrument are matched at inception and on an ongoing basis. Amounts recorded in AOCI are reclassified to earnings only upon the sale or liquidation of an investment in a non-U.S. branch or subsidiary.
Fair value, cash flow, and net investment hedges 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, the nature of the risk being hedged, and a description of the method for assessing hedge effectiveness at inception and on an ongoing basis. For hedges that do not qualify for the “shortcut” or the critical terms match methods of accounting, a formal assessment is performed on a calendar quarter basis to verify that derivatives used in hedging transactions continue to be highly effective in offsetting the changes in fair value or cash flows of the hedged item. Hedge accounting is discontinued if a derivative ceases to be highly effective, matures, is terminated or sold, if a hedged forecasted transaction is no longer expected to occur, or if Northern Trust removes the derivative’s hedge designation. Subsequent gains and losses on these derivatives are included in Foreign Exchange Trading Income or Security Commissions and Trading Income on the consolidated statements of income. For discontinued cash flow hedges, the accumulated gain or loss on the derivative remains in AOCI and is reclassified to earnings in the period in which the previously hedged forecasted transaction impacts earnings or is no longer probable of occurring. For discontinued fair value hedges, the previously hedged asset or liability ceases to be adjusted for changes in its fair value. Previous adjustments to the hedged item are amortized over the remaining life of the hedged item.
H. Loans. Loans are recognized assets that represent a contractual right to receive money either on demand or on fixed or determinable dates. Loans are disaggregated for disclosure purposes by portfolio segment (segment) and by class. Northern Trust has defined its segments as commercial and personal. A class of loans is a subset of a segment, the components of which have similar risk characteristics, measurement attributes, or risk monitoring methods. The classes within the commercial segment have been defined as commercial and institutional, commercial real estate, non-U.S. and other. The classes within the personal segment have been defined as private client, residential real estate, non-U.S. and other.
Loan Classification. Loans that are held for investment are reported at the principal amount outstanding, net of unearned income. Loans classified as held for sale are reported at the lower of cost or fair value.
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Nonaccrual Loans and Recognition of Income. 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 90 days or more contractually past due and the loan is not well-secured and in the process of collection. Loans meeting such criteria are classified as nonaccrual, and interest income is recorded on a cash basis. Past due status is based on how long since the contractual due date a principal or interest payment has been past due. For disclosure purposes, loans that are 29 days past due or less are reported as current. At the time a loan is determined to be nonaccrual, interest accrued but not collected is reversed against interest income in the current period. Interest collected on nonaccrual loans is applied to principal unless, in the opinion of management, collectability of principal is not in doubt. Management’s assessment of indicators of loan collectability, and its policies relative to the recognition of interest income, including the suspension and subsequent resumption of income recognition, do not meaningfully vary between the different loan classes. Nonaccrual loans are returned to performing status when factors indicating doubtful collectability no longer exist. Factors considered in returning a loan to performing status are consistent across all classes of loans and, in accordance with regulatory guidance, relate primarily to expected payment performance. A loan is eligible to be returned to performing status when: (i) no principal or interest that is due is unpaid and repayment of the remaining contractual principal and interest is expected or (ii) the loan has otherwise become well-secured (possessing realizable value sufficient to discharge the debt, including accrued interest, in full) and is in the process of collection (through action reasonably expected to result in debt repayment or restoration to a current status in the near future). A loan that has not been brought fully current may be restored to performing status provided there has been a sustained period of repayment performance (generally a minimum of six payment periods) by the borrower in accordance with the contractual terms, and Northern Trust is reasonably assured of repayment within a reasonable period of time. Additionally, a loan that has been formally restructured so as to be reasonably assured of repayment and performance according to its modified terms may be returned to accrual status, provided there was a well-documented credit evaluation of the borrower’s financial condition and prospects of repayment under the revised terms, and there has been a sustained period of repayment performance (generally a minimum of six payment periods) under the revised terms.
Loan Modifications to Borrowers Experiencing Financial Difficulty. For borrowers experiencing financial difficulties, Northern Trust may provide payment relief by modifying the terms of the original loan. Loan modifications to borrowers experiencing financial difficulty involve primarily the extensions of term, deferrals of principal and interest payments, interest rate concessions, and other modifications or a combination thereof. Northern Trust considers payment deferrals of less than 90 days as insignificant, absent any material modifications to other loan terms.
Collateral Dependent Financial Assets. A financial asset is collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. Most of Northern Trust’s collateral dependent credit exposure relates to its residential real estate portfolio for which the collateral is usually the underlying real estate property. For collateral dependent financial assets, it is Northern Trust’s policy to reserve or charge-off the difference between the amortized cost basis of the loan and the value of the collateral.
Premiums, Discounts, Origination Costs and Fees. Premiums and discounts on loans are recognized as an adjustment of yield using the interest method based on the contractual terms of the loan. Certain direct origination costs and fees are netted, deferred and amortized over the life of the related loan as an adjustment to the loan’s yield.
I. Allowance for Credit Losses. The allowance for credit losses represents management’s best estimate of lifetime expected credit losses related to various financial assets subject to credit risk and off-balance sheet credit exposure.
Northern Trust measures expected credit losses of financial assets with similar risk characteristics on a collective basis. A financial asset is measured individually if it does not share similar risk characteristics with other financial assets and the related allowance is determined through an individual evaluation.
Management’s estimates utilized in establishing an appropriate level of allowance for credit losses are not dependent on any single assumption. In determining an appropriate allowance level, management evaluates numerous variables and takes into consideration past events, current conditions, and reasonable and supportable forecasts.
Forecasting and Reversion. Estimating expected lifetime credit losses requires the consideration of the effect of future economic conditions. Northern Trust employs multiple scenarios over a reasonable and supportable period (currently two years) to project future conditions. Key variables determined to be relevant for projecting credit losses on the portfolios in scope include macroeconomic factors, such as GDP growth, unemployment, non-farm employment, corporate profits, consumer spending, personal income, commercial real estate prices, housing price index, credit spreads, and market volatility. For periods beyond the reasonable and supportable period, Northern Trust reverts to its own historical loss experiences on a straight-line basis over four quarters.
Allowance for Loans. The allowance estimation methodology for the collective assessment is based on data representative of the Corporation’s financial asset portfolio from a historical observation period that includes both expansionary and recessionary periods. The estimation methodology and the related qualitative adjustment framework segregate the loan portfolio into segments and classes based on similar risk characteristics or risk monitoring methods.
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Northern Trust utilizes a quantitative PD/LGD approach for the calculation of its credit allowance on a collective basis. For each of the different parameters, specific credit models or qualitative estimation methodologies for the individual loan classes were developed. For each class, PD and LGD are applied to the exposure at default for each projected quarter to determine the quantitative component of the allowance. The quantitative allowance is then reviewed within a comprehensive qualitative adjustment framework, through which management applies judgment by assessing internal risk factors, potential limitations in the quantitative methodology, and other factors that are not fully contemplated in the forecast to compute an adjustment to the quantitative allowance for each segment and class of the loan portfolio.
Northern Trust analyzes its exposure to credit losses from both on-balance sheet and off-balance sheet activity using a consistent methodology for the quantitative as well as the qualitative framework. For purposes of estimating the allowance for credit losses for undrawn loan commitments and standby letters of credit, the exposure at default includes estimated draw downs of the undrawn commitments based on credit utilization factors, resulting in a proportionate amount of expected credit losses.
The allowance related to credit exposures evaluated on an individual basis is determined through individual evaluations of loans and lending-related commitments that have defaulted, generally those with Borrower Ratings of 8 and 9. These evaluations are based on expected future cash flows, the value of collateral, and other factors that may impact the borrowers’ ability to pay. If the loan valuation is less than the recorded value of the loan, either an allowance is established or a charge-off is recorded for the difference.
When the discounted cash flow method is applied, the expected credit loss reflects the difference between the amortized cost basis and the present value of the expected cash flows. If a loan’s contractual interest rate varies based on subsequent changes in an independent factor, such as an index or rate, the loan’s effective interest rate is determined using the current contractual factor as it changes over the life of the loan and does not incorporate projections of future changes in that factor. For loan modifications to borrowers experiencing financial difficulty the expected cash-flows are measured utilizing the post-modification effective interest rate and contractual terms.
For defaulted loans for which the amount of allowance, if any, is determined based on the value of the underlying collateral, third-party appraisals are typically obtained and utilized by management. These appraisals are generally less than twelve months old and are subject to adjustments to reflect management’s judgment as to the realizable value of the collateral.
Allowance for HTM Securities. HTM debt securities classified as U.S. government, government sponsored agency, and certain securities classified as obligations of states and political subdivisions are considered to be guarantees of the U.S. government or an agency of the U.S. government, and, therefore, an allowance for credit losses is not estimated for such investments as the expected probability of non-payment of the amortized cost basis is zero.
HTM debt securities classified as “other asset-backed” and “commercial mortgage-backed” securities represent pools of underlying receivables from which the cash flows are used to pay the bonds that vary in seniority. Utilizing a qualitative estimation approach, the allowance for other asset-backed securities is assessed by evaluating underlying pool performance based on delinquency rates and available credit support.
HTM debt securities classified as “other” relate to investments purchased by Northern Trust to fulfill its obligations under the CRA. Northern Trust fulfills its obligations under the CRA by making qualified investments for purposes of supporting institutions and programs that benefit low-to-moderate income communities within Northern Trust’s market area. The allowance for CRA investments is assessed using a qualitative estimation approach primarily based on historical performance experience and default history of the underlying CRA loans to determine the quantitative allowance.
The allowance estimation methodology for all other HTM debt securities is developed using a combination of external and internal data. The estimation methodology groups securities with shared characteristics for which PD and LGD are applied to the total exposure at default to determine a quantitative component of the allowance.
Allowance for AFS Securities. AFS debt securities impairment reviews are conducted quarterly to identify and evaluate securities that have indications of possible credit losses. The determination as to whether a security’s decline in market value is related to credit impairment takes into consideration numerous factors and the relative significance of any single factor can vary by security. Factors Northern Trust considers in determining whether impairment is credit related include, but are not limited to, the severity of the impairment; the cause of the impairment; the financial condition and near-term prospects of the issuer; activity in the market of the issuer, which may indicate adverse credit conditions; Northern Trust’s intent regarding the sale of the security as of the balance sheet date; and the likelihood that Northern Trust will not be required to sell the security for a period of time sufficient to allow for the recovery of the security’s amortized cost basis. For each security meeting the requirements of Northern Trust’s internal screening process, an extensive review is conducted to determine if a credit loss has occurred that is then based on the best estimate of cash flows to be collected from the security, discounted using the security’s effective interest rate. If the present value of the expected cash flows is found to be less than the current amortized cost of the security, an allowance for credit losses is generally recorded equal to the difference between the two amounts, limited to the amount the amortized cost basis exceeds the fair value of the security.
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If management intends to sell, or will more likely than not be required to sell, an AFS debt security prior to recovery of its amortized cost basis, the security is written down to fair value with unrealized losses recognized in Investment Security Gains (Losses), net on the consolidated statements of income.
Allowance for Other Financial Assets. The allowance for Other Financial Assets consists of the allowance for Due from Banks, Other Central Bank Deposits, Interest-Bearing Deposits with Banks, and Other Assets. The Other Assets category includes other miscellaneous credit exposures reported in Other Assets on the consolidated balance sheets. The allowance estimation methodology for Other Financial Assets primarily utilizes a similar approach as the one used for the HTM debt securities portfolio. It consists of a combination of externally and internally developed loss data, adjusted for the appropriate contractual term. Northern Trust’s portfolio of Other Financial Assets is composed mostly of institutions within the “1 to 3” internal borrower rating category and is expected to exhibit minimal to modest likelihood of loss.
The portion of the allowance assigned to loans, HTM debt securities, and Other Financial Assets is presented as a contra asset in Allowance for Credit Losses on the consolidated balance sheets. The portion of the allowance assigned to undrawn loan commitments and standby letters of credit is reported in Other Liabilities on the consolidated balance sheets. The allowance for AFS securities is presented parenthetically with the amortized cost basis of AFS debt securities on the consolidated balance sheets.
Provision for Credit Losses. Provision for Credit Losses on the consolidated statements of income represents the change in the Allowance for Credit Losses, after consideration of charge-offs and recoveries, on the consolidated balance sheets and is the charge to current period earnings. It represents the amount needed to maintain the Allowance for Credit Losses on the consolidated balance sheets at an appropriate level to absorb lifetime expected credit losses related to financial assets in scope. Actual losses may vary from current estimates.
Contractual Term. Northern Trust estimates expected credit losses over the contractual term of the financial assets adjusted for prepayments, unless prepayments are not relevant to specific portfolios or sub-portfolios. Extension and renewal options are typically not considered since it is not Northern Trust’s practice to enter into arrangements where the borrower has the unconditional option to renew, or a conditional extension option whereby the conditions are beyond Northern Trust’s control.
Accrued Interest. Northern Trust elected not to measure an allowance for credit losses for accrued interest receivables related to its loan and securities portfolios as its policy is to write-off uncollectible accrued interest receivable balances in a timely manner. Accrued interest is written off by reversing interest income during the period the financial asset is moved from an accrual to a nonaccrual status.
J. Standby Letters of Credit. Fees on standby letters of credit are recognized in Other Operating Income on the consolidated statements of income using the straight-line method over the lives of the underlying agreements.
K. Buildings and Equipment. Buildings and equipment owned are carried at original cost less accumulated depreciation. The charge for depreciation is computed using the straight-line method based on the following range of lives: buildings – up to 30 years; equipment – 3 to 10 years; and leasehold improvements – the shorter of the lease term or 15 years.
L. Other Real Estate Owned (OREO). OREO is comprised of commercial and residential real estate properties acquired in partial or total satisfaction of loans. OREO assets are carried at the lower of cost or fair value less estimated costs to sell and are recorded in Other Assets on the consolidated balance sheets. Fair value is typically based on third-party appraisals. Appraisals of OREO properties are updated on an annual basis and are subject to adjustments to reflect management’s judgment as to the realizable value of the properties. Losses identified during the 90-day period after the acquisition of such properties are charged against the Allowance for Credit Losses assigned to Loans. Subsequent write-downs to the carrying value of these assets that may be required and gains or losses realized from asset sales are recorded within Other Operating Expense on the consolidated statements of income.
M. Goodwill and Other Intangible Assets. Goodwill is not subject to amortization. Separately identifiable acquired intangible assets with finite lives are amortized over their estimated useful lives, primarily on a straight-line basis. Costs related to purchased software and internal-use software development projects that result in new or enhanced functionality, including compensation and other allowable internal costs, are capitalized. Software is amortized using the straight-line method over the estimated useful lives of the assets, generally ranging from 3 to 10 years. Fees paid for the use of software services that do not convey a software license are expensed as incurred.
Goodwill and other 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. Trust, Investment and Other Servicing Fees. Trust, Investment and Other Servicing Fees are recorded on an accrual basis, over the period in which the service is provided. Fees are primarily a function of the market value of assets custodied, managed and serviced, transaction volumes, number of accounts, and securities lending volume and spreads, 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.
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O. 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 for future tax consequences of 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. It is Northern Trust’s policy to release income tax effects from accumulated other comprehensive income on an aggregate portfolio basis.
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 on the consolidated financial statements. A valuation allowance is established for deferred tax assets if it is more-likely-than-not that all or a portion will not be realized. Northern Trust recognizes any interest and penalties related to unrecognized tax benefits in the Provision for Income Taxes on the consolidated statements of income.
P. Cash Flow Statements. Cash and cash equivalents in the cash flow statements have been defined as “Cash and Due from Banks” on the consolidated balance sheets.
Q. Pensions. Northern Trust records the funded status of its defined benefit pension plans on the consolidated balance sheets. Overfunded pension benefits are reported in Other Assets and underfunded pension benefits are reported in Other Liabilities on the consolidated balance sheets. Plan assets and benefit obligations are measured annually at December 31, unless specific circumstances require an interim remeasurement. Plan assets are determined based on fair value generally representing observable market prices. The projected benefit obligations are determined based on the present value of projected benefit distributions at an assumed discount rate. Actuarial gains and losses accumulated in AOCI are amortized as a component of net periodic pension cost if they exceed 10% of the greater of the projected benefit obligation or the market-related value of plan assets as of the beginning of the year. Amortization is recognized on a straight-line basis over the expected average remaining service period of the active employees or over the expected remaining lifetime of plan participants for plans that have been previously frozen.
R. Share-Based Compensation Plans. Northern Trust recognizes expense for share-based compensation on a straight-line basis based on the grant date fair value over the requisite service period. The fair values of stock and stock unit awards, including performance stock unit awards and director awards, are based on the closing price of the Corporation’s stock on the date of grant adjusted for certain awards that do not accrue dividends while vesting. The expense for share-based compensation is included in Compensation on the consolidated statements of income.
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. Compensation expense for performance stock unit awards are recognized on a straight-line basis over the requisite service period of the award based on expected achievement of the performance condition. Adjustments are made for employees that meet certain retirement eligibility criteria at the grant date or during the requisite service period.
Northern Trust does not include an estimate of future forfeitures in its recognition of share-based compensation expense. Share-based compensation expense is adjusted based on forfeitures as they occur. Dividend equivalents are accrued for performance stock unit awards, most restricted stock unit awards, and director awards not yet vested, and are paid upon vesting. Certain restricted stock units are not entitled to dividend equivalents during the vesting period. Cash flows resulting from the realization of excess tax benefits are classified as operating cash flows on the consolidated statements of cash flows.
S. Net Income Per Common Share. Basic net income per common share is computed by dividing net income/loss applicable to common stock by the weighted average number of common shares outstanding during each period. Diluted net income per common share is computed by dividing net income applicable to common stock and potential common shares by the aggregate of the weighted average number of common shares outstanding during the period and common share equivalents calculated for stock options outstanding using the treasury stock method. In a period of a net loss, diluted net income per common share is calculated in the same manner as basic net income per common share.
Northern Trust calculates net income applicable to common stock using the two-class method, whereby net income is allocated between common stock and participating securities.
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Note 2 – Recent Accounting Pronouncements
On January 1, 2025, Northern Trust adopted ASU No. 2023-08, “Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets” (ASU 2023-08). ASU 2023-08 requires entities to subsequently measure certain crypto assets at fair value, with changes in fair value recorded in net income in each reporting period, and present crypto assets separately from other intangible assets on the face of the balance sheet and changes in fair value of crypto assets separately from changes in the carrying amount of other intangible assets on the statement of income. ASU 2023-08 also requires enhanced disclosures about in-scope crypto assets and respective activities. As Northern Trust does not hold crypto assets, upon adoption of ASU 2023-08, there was no impact on the consolidated balance sheets or consolidated statements of income.
On December 31, 2025, Northern Trust adopted ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (ASU 2023-09). ASU 2023-09 enhances disclosures by further disaggregating existing annual income tax disclosures related to the effective tax rate reconciliation and income taxes paid. Upon adoption of ASU 2023-09, the impact was limited to certain enhancements within the notes to the consolidated financial statements and did not impact Northern Trust’s consolidated balance sheets or consolidated statements of income. Please refer to Note 20 – Income Taxes for further information.
Note 3 – Fair Value Measurements
Fair value under GAAP is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date.
Fair Value Hierarchy. The following describes the hierarchy of valuation inputs (Levels 1, 2, and 3) 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. 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. GAAP 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 within the hierarchy based on the lowest level input that is significant to their valuation. Northern Trust’s policy is to recognize transfers into and transfers out of fair value levels as of the end of the reporting period in which the transfer occurred. No transfers into or out of Level 3 occurred during the years ended December 31, 2025, or 2024.
Level 1 – Quoted, active market prices for identical assets or liabilities. Northern Trust’s Level 1 assets are comprised primarily of AFS investments in U.S. Treasury securities.
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 AFS debt securities, the fair values of which are determined predominantly by external pricing vendors. Prices received from vendors are compared to other vendor and third-party prices. If a security price obtained from a pricing vendor is determined to exceed pre-determined tolerance levels that are assigned based on an asset type’s characteristics, the exception is researched and, if the price is not able to be validated, an alternate pricing vendor is utilized, consistent with Northern Trust’s pricing source hierarchy. As of December 31, 2025, Northern Trust’s AFS debt securities portfolio included 1,003 Level 2 securities with an aggregate market value of $25.9 billion. Substantially all debt securities were valued by external pricing vendors. As of December 31, 2024, Northern Trust’s AFS debt securities portfolio included 940 Level 2 debt securities with an aggregate market value of $21.6 billion. All 940 debt securities were valued by external pricing vendors.
Northern Trust has established processes and procedures to assess the suitability of valuation methodologies used by external pricing vendors, including reviews of valuation techniques and assumptions used for selected securities. On a daily basis, periodic quality control reviews of prices received from vendors are conducted which include comparisons to prices on similar security types received from multiple pricing vendors and to the previous day’s reported prices for each security. Predetermined tolerance level exceptions are researched and may result in additional validation through available market information or the use of an alternate pricing vendor. Quarterly, Northern Trust reviews methodology documentation from third-party pricing vendors regarding the inputs used in the valuation processes and assesses whether the fair value levels assigned by Northern Trust to each security classification are appropriate. Annually, third-party pricing vendor valuations are reviewed on a sample basis. The specific inputs and assumptions used by third-party pricing vendors for each sample are assessed to verify appropriate classification within the fair value level hierarchy.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 103 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Level 2 assets and liabilities also include derivative contracts which are valued internally using widely accepted income-based models that incorporate inputs readily observable in actively quoted markets and reflect the contractual terms of the contracts. Observable inputs include foreign exchange rates and interest rates for foreign exchange contracts; interest rates for interest rate swap contracts and forward contracts; and interest rates and volatility inputs for interest rate option contracts. Northern Trust evaluates the impact of counterparty credit risk and its own credit risk on the valuation of its derivative instruments. Factors considered include the likelihood of default by Northern Trust and its counterparties, the remaining maturities of the instruments, net exposures after giving effect to master netting arrangements or similar agreements, available collateral, and other credit enhancements in determining the appropriate fair value of derivative instruments. The resulting valuation adjustments have not been considered material.
Level 3 – Valuation techniques in which one or more significant inputs are unobservable in the marketplace. Northern Trust’s Level 3 liabilities consist of swaps that Northern Trust entered into with the purchaser of 1.1 million and 1.0 million shares of Visa Class B common shares previously held by Northern Trust and sold in June 2016 and 2015, respectively. Pursuant to the swaps, Northern Trust retains the risks associated with the ultimate conversion of the Visa Class B common shares into shares of Visa Class A common shares, such that the counterparty will be compensated for any dilutive adjustments to the conversion ratio and Northern Trust will be compensated for any anti-dilutive adjustments to the ratio. The swaps also require periodic payments from Northern Trust to the counterparty calculated by reference to the market price of Visa Class A common shares and a fixed rate of interest. The fair value of the swaps is determined using a discounted cash flow methodology. The significant unobservable inputs used in the fair value measurement are Northern Trust’s own assumptions about estimated changes in the conversion rate of the Visa Class B common shares into Visa Class A common shares, the date on which such conversion is expected to occur and the estimated appreciation of the Visa Class A common share price. See “Visa Class B Common Shares and Makewhole Agreement” under Note 24, “Commitments and Contingent Liabilities,” for further information.
Northern Trust believes its valuation methods for its assets and liabilities carried at fair value are appropriate; however, 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.
Management of various businesses and departments of Northern Trust (including Corporate Market Risk, Credit Risk Management, Corporate Finance, Asset Servicing and Wealth Management) reviews valuation methods and models for Level 3 assets and liabilities. Fair value measurements are performed upon acquisitions of an asset or liability. Management of the appropriate business or department reviews assumed inputs, especially when unobservable in the marketplace, in order to substantiate their use in each fair value measurement. When appropriate, management reviews forecasts used in the valuation process considering other relevant financial projections to understand any variances between current and previous fair value measurements. In certain circumstances, third-party information is used to support the fair value measurements. If certain third-party information seems inconsistent with consensus views, a review of the information is performed by management of the respective business or department to determine the appropriate fair value of the asset or liability.
The following table presents the fair values of Northern Trust’s Level 3 liabilities as of December 31, 2025 and 2024, as well as the valuation techniques, significant unobservable inputs, and quantitative information used to develop significant unobservable inputs for such liabilities as of such dates.
TABLE 46: LEVEL 3 SIGNIFICANT UNOBSERVABLE INPUTS
| DECEMBER 31, 2025 | |||||||||||||||||||||||
| FINANCIAL INSTRUMENT | FAIR VALUE | VALUATION TECHNIQUE | UNOBSERVABLE INPUTS | INPUT VALUES | WEIGHTED-AVERAGE INPUT VALUES(1) | ||||||||||||||||||
| Swaps Related to Sale of Certain Visa Class B Common Shares | $29.7 million | Discounted Cash Flow | Conversion Rate | 1.51x | 1.51x | ||||||||||||||||||
| Visa Class A Appreciation | 9.69% | 9.69% | |||||||||||||||||||||
| Expected Duration | 14 | - | 26 months | 23 |
(1) Weighted average of expected duration based on scenario probability.
| DECEMBER 31, 2024 | |||||||||||||||||||||||
| FINANCIAL INSTRUMENT | FAIR VALUE | VALUATION TECHNIQUE | UNOBSERVABLE INPUTS | INPUT VALUES | WEIGHTED-AVERAGE INPUT VALUES(1) | ||||||||||||||||||
| Swaps Related to Sale of Certain Visa Class B Common Shares | $27.2 million | Discounted Cash Flow | Conversion Rate | 1.54x | 1.54x | ||||||||||||||||||
| Visa Class A Appreciation | 8.66% | 8.66% | |||||||||||||||||||||
| Expected Duration | 10 | - | 32.5 months | 23.5 months |
(1) Weighted average of expected duration based on scenario probability.
| 104 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following presents assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 and 2024, segregated by fair value hierarchy level.
TABLE 47: RECURRING BASIS HIERARCHY LEVELING
| DECEMBER 31, 2025 | ||||||||||||||||||||
| (In Millions) | LEVEL 1 | LEVEL 2 | LEVEL 3 | NETTING | ASSETS/ LIABILITIES AT FAIR VALUE | |||||||||||||||
| Debt Securities | ||||||||||||||||||||
| Available for Sale | ||||||||||||||||||||
| U.S. Government | $ | 8,172.4 | $ | — | $ | — | $ | — | $ | 8,172.4 | ||||||||||
| Obligations of States and Political Subdivisions | — | 313.1 | — | — | 313.1 | |||||||||||||||
| Government Sponsored Agency | — | 16,567.5 | — | — | 16,567.5 | |||||||||||||||
| Non-U.S. Government | — | 527.2 | — | — | 527.2 | |||||||||||||||
| Corporate Debt | — | 64.4 | — | — | 64.4 | |||||||||||||||
| Covered Bonds | — | 273.5 | — | — | 273.5 | |||||||||||||||
| Sub-Sovereign, Supranational and Non-U.S. Agency Bonds | — | 4,984.3 | — | — | 4,984.3 | |||||||||||||||
| Other Asset-Backed | — | 2,725.1 | — | — | 2,725.1 | |||||||||||||||
| Commercial Mortgage-Backed | — | 409.0 | — | — | 409.0 | |||||||||||||||
| Total Available for Sale | $ | 8,172.4 | $ | 25,864.1 | $ | — | $ | — | $ | 34,036.5 | ||||||||||
| Other Assets | ||||||||||||||||||||
| Equity Securities(1) | 85.0 | 127.4 | — | — | 212.4 | |||||||||||||||
| Derivative Assets | ||||||||||||||||||||
| Foreign Exchange Contracts | — | 1,988.8 | — | (1,696.1) | 292.7 | |||||||||||||||
| Interest Rate Contracts | — | 104.8 | — | (82.4) | 22.4 | |||||||||||||||
| Other Financial Derivatives(2) | — | 0.7 | — | (0.7) | — | |||||||||||||||
| Total Derivative Assets | $ | — | $ | 2,094.3 | $ | — | $ | (1,779.2) | $ | 315.1 | ||||||||||
| Other Liabilities | ||||||||||||||||||||
| Derivative Liabilities | ||||||||||||||||||||
| Foreign Exchange Contracts | — | 2,247.9 | — | (1,139.4) | 1,108.5 | |||||||||||||||
| Interest Rate Contracts | — | 130.4 | — | (5.0) | 125.4 | |||||||||||||||
| Other Financial Derivatives(3) | — | 1.6 | 29.7 | (31.3) | — | |||||||||||||||
| Total Derivative Liabilities | $ | — | $ | 2,379.9 | $ | 29.7 | $ | (1,175.7) | $ | 1,233.9 |
Note: Northern Trust has elected to net derivative assets and liabilities when legally enforceable master netting arrangements or similar agreements exist between Northern Trust and the counterparty. As of December 31, 2025, derivative assets and liabilities shown above also include reductions of $1.2 billion and $550.6 million, respectively, as a result of cash collateral received from and deposited with derivative counterparties.
(1) Equity securities consists of a money market investment, seed capital investments to certain funds managed by Northern Trust, and Visa Class C common shares with a fair value of $85.0 million, $112.5 million, and $14.9 million, respectively, respectively, as of December 31, 2025.
(2) Other Financial Derivatives assets consists of total return swap contracts.
(3) Other Financial Derivatives liabilities consists of swaps related to the sale of certain Visa Class B common shares and total return swap contracts.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 105 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| DECEMBER 31, 2024 | |||||||||||||||||
| (In Millions) | LEVEL 1 | LEVEL 2 | LEVEL 3 | NETTING | ASSETS/ LIABILITIES AT FAIR VALUE | ||||||||||||
| Debt Securities | |||||||||||||||||
| Available for Sale | |||||||||||||||||
| U.S. Government | $ | 7,367.5 | $ | — | $ | — | $ | — | $ | 7,367.5 | |||||||
| Obligations of States and Political Subdivisions | — | 297.6 | — | — | 297.6 | ||||||||||||
| Government Sponsored Agency | — | 13,288.9 | — | — | 13,288.9 | ||||||||||||
| Non-U.S. Government | — | 296.8 | — | — | 296.8 | ||||||||||||
| Corporate Debt | — | 163.8 | — | — | 163.8 | ||||||||||||
| Covered Bonds | — | 230.9 | — | — | 230.9 | ||||||||||||
| Sub-Sovereign, Supranational and Non-U.S. Agency Bonds | — | 4,583.1 | — | — | 4,583.1 | ||||||||||||
| Other Asset-Backed | — | 2,182.7 | — | — | 2,182.7 | ||||||||||||
| Commercial Mortgage Backed | — | 590.2 | — | — | 590.2 | ||||||||||||
| Total Available for Sale | $ | 7,367.5 | $ | 21,634.0 | $ | — | $ | — | $ | 29,001.5 | |||||||
| Other Assets | |||||||||||||||||
| Equity Securities(1) | 85.0 | 26.3 | — | — | 111.3 | ||||||||||||
| Derivative Assets | |||||||||||||||||
| Foreign Exchange Contracts | — | 4,997.3 | — | (1,745.2) | 3,252.1 | ||||||||||||
| Interest Rate Contracts | — | 361.2 | — | (165.2) | 196.0 | ||||||||||||
| Total Derivative Assets | $ | — | $ | 5,358.5 | $ | — | $ | (1,910.4) | $ | 3,448.1 | |||||||
| Other Liabilities | |||||||||||||||||
| Derivative Liabilities | |||||||||||||||||
| Foreign Exchange Contracts | — | 4,709.8 | — | (4,197.3) | 512.5 | ||||||||||||
| Interest Rate Contracts | — | 421.4 | — | (2.3) | 419.1 | ||||||||||||
| Other Financial Derivatives(2) | — | — | 27.2 | — | 27.2 | ||||||||||||
| Total Derivative Liabilities | $ | — | $ | 5,131.2 | $ | 27.2 | $ | (4,199.6) | $ | 958.8 |
Note: Northern Trust has elected to net derivative assets and liabilities when legally enforceable master netting arrangements or similar agreements exist between Northern Trust and the counterparty. As of December 31, 2024, derivative assets and liabilities shown above also include reductions of $368.2 million and $2.7 billion, respectively, as a result of cash collateral received from and deposited with derivative counterparties.
(1) Equity securities consists of a money market investment and Visa Class C common shares with a fair value of $85.0 million and $26.3 million, respectively, as of December 31, 2024.
(2) This line consists of swaps related to the sale of certain Visa Class B common shares.
The following table presents the changes in Level 3 liabilities for the years ended December 31, 2025 and 2024.
TABLE 48: CHANGES IN LEVEL 3 LIABILITIES
| LEVEL 3 LIABILITIES | SWAPS RELATED TO SALE OF CERTAIN VISA CLASS B COMMON SHARES | |||||||
| (In Millions) | 2025 | 2024 | ||||||
| Fair Value at January 1 | $ | 27.2 | $ | 25.4 | ||||
| Total (Gains) Losses: | ||||||||
| Included in Earnings(1) | 28.1 | 33.5 | ||||||
| Purchases, Issues, Sales, and Settlements | ||||||||
| Settlements | (25.6) | (31.7) | ||||||
| Fair Value at December 31 | $ | 29.7 | $ | 27.2 | ||||
| Unrealized Losses Included in Earnings Related to Financial Instruments Held at December 31(1) | $ | 17.6 | $ | 18.8 |
(1) (Gains) losses are recorded in Other Operating Income on the consolidated statements of income.
Carrying values of assets and liabilities that are not measured at fair value on a recurring basis may be adjusted to fair value in periods subsequent to their initial recognition, for example, to record an impairment of an asset. GAAP requires entities to separately disclose these subsequent fair value measurements and to classify them under the fair value hierarchy.
Assets measured at fair value on a nonrecurring basis at December 31, 2025 and 2024, all of which were categorized as Level 3 under the fair value hierarchy, were comprised of nonaccrual loans whose values were based on real estate and other available collateral.
| 106 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fair values of real estate loan collateral were estimated using a market approach typically supported by third-party valuations and property-specific fees and taxes. As of December 31, 2025, the fair values of real estate loan collateral were subject to adjustments to reflect management’s judgment as to realizable value and consisted of a discount factor of 40.0% with a weighted average based on fair values of 40.0%. As of December 31, 2024, the fair value of real estate loan collateral consisted of discount factor of 20.0% with a weighted average based on fair values of 20.0%. Other loan collateral, which typically consists of accounts receivable, inventory and equipment, is valued using a market approach adjusted for asset-specific characteristics and in limited instances third-party valuations are used. OREO assets are carried at the lower of cost or fair value less estimated costs to sell, with fair value typically based on third-party appraisals. There was no outstanding OREO as of December 31, 2025 and December 31, 2024.
Collateral dependent nonaccrual loans that have been adjusted to fair value totaled $1.3 million and $19.1 million at December 31, 2025 and 2024, respectively.
The following table presents the fair values of Northern Trust’s Level 3 assets that were adjusted to fair value on a nonrecurring basis during the year ended December 31, 2025 and 2024, as well as the valuation technique, significant unobservable inputs and quantitative information used to develop the significant unobservable inputs for such assets as of such dates.
TABLE 49: LEVEL 3 NONRECURRING BASIS SIGNIFICANT UNOBSERVABLE INPUTS
| DECEMBER 31, 2025 | |||||||||||||||||||||||
| FINANCIAL INSTRUMENT | FAIR VALUE(1) | VALUATION TECHNIQUE | UNOBSERVABLE INPUTS | INPUT VALUES | WEIGHTED-AVERAGE INPUT VALUES | ||||||||||||||||||
| Loans | $1.3 million | Market Approach | Discount factor applied to real estate collateral-dependent loans to reflect realizable value | 40.0% | 40.0% |
(1) Includes a real estate collateral-dependent loan.
| DECEMBER 31, 2024 | |||||||||||||||||||||||
| FINANCIAL INSTRUMENT | FAIR VALUE(1) | VALUATION TECHNIQUE | UNOBSERVABLE INPUTS | INPUT VALUES | WEIGHTED-AVERAGE INPUT VALUES | ||||||||||||||||||
| Loans | $19.1 million | Market Approach | Discount factor applied to real estate collateral-dependent loans to reflect realizable value | 20.0% | 20.0% |
(1) Includes real estate collateral-dependent loans and other collateral-dependent loans.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 107 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following tables presents the carrying value and estimated fair value, including the fair value hierarchy level, of Northern Trust’s financial instruments that are not measured at fair value on the consolidated balance sheets as of December 31, 2025 and 2024. The following tables exclude those items measured at fair value on a recurring basis.
TABLE 50: FAIR VALUE OF FINANCIAL INSTRUMENTS
| DECEMBER 31, 2025 | |||||||||||||||||
| ESTIMATED FAIR VALUE | |||||||||||||||||
| (In Millions) | CARRYING VALUE | TOTAL ESTIMATED FAIR VALUE | LEVEL 1 | LEVEL 2 | LEVEL 3 | ||||||||||||
| FINANCIAL ASSETS | |||||||||||||||||
| Cash and Due from Banks | $ | 5,873.1 | $ | 5,873.1 | $ | 5,873.1 | $ | — | $ | — | |||||||
| Federal Reserve and Other Central Bank Deposits | 53,524.9 | 53,524.9 | — | 53,524.9 | — | ||||||||||||
| Interest-Bearing Deposits with Banks | 1,729.4 | 1,729.4 | — | 1,729.4 | — | ||||||||||||
| Federal Funds Sold and Securities Purchased under Agreements to Resell | 2,654.1 | 2,654.1 | — | 2,654.1 | — | ||||||||||||
| Debt Securities - Held to Maturity | 23,429.6 | 22,381.2 | — | 22,381.2 | — | ||||||||||||
| Loans | |||||||||||||||||
| Held for Investment | 41,777.1 | 41,661.2 | — | — | 41,661.2 | ||||||||||||
| Held for Sale | 6.8 | 6.8 | — | 6.8 | |||||||||||||
| Other Assets | 1,668.6 | 1,664.8 | 86.3 | 1,578.5 | — | ||||||||||||
| FINANCIAL LIABILITIES | |||||||||||||||||
| Deposits | 142,797.7 | 142,348.6 | — | 142,348.6 | — | ||||||||||||
| Federal Funds Purchased | 2,141.1 | 2,141.1 | — | 2,141.1 | — | ||||||||||||
| Securities Sold Under Agreements to Repurchase | 292.2 | 292.2 | — | 292.2 | — | ||||||||||||
| Other Borrowings | 7,158.3 | 7,185.5 | — | 7,185.5 | — | ||||||||||||
| Senior Notes | 3,351.5 | 3,405.5 | — | 3,405.5 | — | ||||||||||||
| Long-Term Debt | 3,484.4 | 3,596.8 | — | 3,596.8 | — | ||||||||||||
| Unfunded Commitments | 373.0 | 373.0 | — | 373.0 | — | ||||||||||||
| Other Liabilities | 37.9 | 37.9 | — | — | 37.9 |
| DECEMBER 31, 2024 | |||||||||||||||||
| ESTIMATED FAIR VALUE | |||||||||||||||||
| (In Millions) | CARRYING VALUE | TOTAL ESTIMATED FAIR VALUE | LEVEL 1 | LEVEL 2 | LEVEL 3 | ||||||||||||
| FINANCIAL ASSETS | |||||||||||||||||
| Cash and Due from Banks | $ | 4,677.2 | $ | 4,677.2 | $ | 4,677.2 | $ | — | $ | — | |||||||
| Federal Reserve and Other Central Bank Deposits | 38,775.4 | 38,775.4 | — | 38,775.4 | — | ||||||||||||
| Interest-Bearing Deposits with Banks | 1,944.7 | 1,944.7 | — | 1,944.7 | — | ||||||||||||
| Federal Funds Sold and Securities Purchased under Agreements to Resell | 451.0 | 451.0 | — | 451.0 | — | ||||||||||||
| Debt Securities - Held to Maturity | 22,296.7 | 20,654.5 | — | 20,654.5 | — | ||||||||||||
| Loans | |||||||||||||||||
| Held for Investment | 43,222.5 | 42,803.2 | — | — | 42,803.2 | ||||||||||||
| Other Assets | 1,506.4 | 1,499.2 | 83.3 | 1,415.9 | — | ||||||||||||
| FINANCIAL LIABILITIES | |||||||||||||||||
| Deposits | 122,482.7 | 122,536.5 | — | 122,536.5 | — | ||||||||||||
| Federal Funds Purchased | 2,159.5 | 2,159.5 | — | 2,159.5 | — | ||||||||||||
| Securities Sold Under Agreements to Repurchase | 462.0 | 462.0 | — | 462.0 | — | ||||||||||||
| Other Borrowings | 6,521.0 | 6,545.3 | — | 6,545.3 | — | ||||||||||||
| Senior Notes | 2,769.7 | 2,800.3 | — | 2,800.3 | — | ||||||||||||
| Long-Term Debt | 4,081.3 | 4,164.4 | — | 4,164.4 | — | ||||||||||||
| Unfunded Commitments | 227.1 | 227.1 | — | 227.1 | — | ||||||||||||
| Other Liabilities | 50.6 | 50.6 | — | — | 50.6 |
| 108 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4 – Securities
The following tables provide the amortized cost, fair values, and remaining maturities of available for sale debt securities and held to maturity debt securities by security type.
TABLE 51: RECONCILIATION OF AMORTIZED COST TO FAIR VALUE OF DEBT SECURITIES
| DECEMBER 31, 2025 | ||||||||||||||
| (In Millions) | AMORTIZED COST | GROSS UNREALIZED GAINS | GROSS UNREALIZED LOSSES | FAIR VALUE | ||||||||||
| Available for Sale | ||||||||||||||
| U.S. Government | $ | 8,148.0 | $ | 29.5 | $ | 5.1 | $ | 8,172.4 | ||||||
| Obligations of States and Political Subdivisions | 322.4 | — | 9.3 | 313.1 | ||||||||||
| Government Sponsored Agency | 16,616.7 | 44.1 | 93.3 | 16,567.5 | ||||||||||
| Non-U.S. Government | 534.1 | — | 6.9 | 527.2 | ||||||||||
| Corporate Debt | 65.1 | — | 0.7 | 64.4 | ||||||||||
| Covered Bonds | 275.3 | 0.4 | 2.2 | 273.5 | ||||||||||
| Sub-Sovereign, Supranational and Non-U.S. Agency Bonds | 5,002.9 | 11.0 | 29.6 | 4,984.3 | ||||||||||
| Other Asset-Backed | 2,720.5 | 7.7 | 3.1 | 2,725.1 | ||||||||||
| Commercial Mortgage-Backed | 417.4 | 0.1 | 8.5 | 409.0 | ||||||||||
| Total Available for Sale | $ | 34,102.4 | $ | 92.8 | $ | 158.7 | $ | 34,036.5 | ||||||
| Held to Maturity | ||||||||||||||
| Obligations of States and Political Subdivisions | $ | 2,457.8 | $ | 4.6 | $ | 13.0 | $ | 2,449.4 | ||||||
| Government Sponsored Agency | 8,424.5 | 8.3 | 736.7 | 7,696.1 | ||||||||||
| Non-U.S. Government | 4,741.0 | 0.1 | 27.2 | 4,713.9 | ||||||||||
| Corporate Debt | 389.0 | — | 5.0 | 384.0 | ||||||||||
| Covered Bonds | 1,754.5 | 0.1 | 41.4 | 1,713.2 | ||||||||||
| Certificates of Deposit | 444.5 | — | 4.0 | 440.5 | ||||||||||
| Sub-Sovereign, Supranational and Non-U.S. Agency Bonds | 4,511.5 | 4.3 | 59.4 | 4,456.4 | ||||||||||
| Commercial Mortgage-Backed | 37.6 | — | 1.3 | 36.3 | ||||||||||
| Other | 669.2 | — | 177.8 | 491.4 | ||||||||||
| Total Held to Maturity | $ | 23,429.6 | $ | 17.4 | $ | 1,065.8 | $ | 22,381.2 | ||||||
| Total Debt Securities | $ | 57,532.0 | $ | 110.2 | $ | 1,224.5 | $ | 56,417.7 |
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 109 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| DECEMBER 31, 2024 | ||||||||||||||
| (In Millions) | AMORTIZED COST | GROSS UNREALIZED GAINS | GROSS UNREALIZED LOSSES | FAIR VALUE | ||||||||||
| Available for Sale | ||||||||||||||
| U.S. Government | $ | 7,388.9 | $ | 1.5 | $ | 22.9 | $ | 7,367.5 | ||||||
| Obligations of States and Political Subdivisions | 311.2 | — | 13.6 | 297.6 | ||||||||||
| Government Sponsored Agency | 13,410.5 | 10.9 | 132.5 | 13,288.9 | ||||||||||
| Non-U.S. Government | 308.9 | 0.2 | 12.3 | 296.8 | ||||||||||
| Corporate Debt | 166.6 | 0.1 | 2.9 | 163.8 | ||||||||||
| Covered Bonds | 234.0 | 0.5 | 3.6 | 230.9 | ||||||||||
| Sub-Sovereign, Supranational and Non-U.S. Agency Bonds | 4,617.0 | 8.3 | 42.2 | 4,583.1 | ||||||||||
| Other Asset-Backed | 2,188.6 | 7.0 | 12.9 | 2,182.7 | ||||||||||
| Commercial Mortgage-Backed | 603.4 | 0.3 | 13.5 | 590.2 | ||||||||||
| Total Available for Sale | $ | 29,229.1 | $ | 28.8 | $ | 256.4 | $ | 29,001.5 | ||||||
| Held to Maturity | ||||||||||||||
| Obligations of States and Political Subdivisions | $ | 2,548.2 | $ | — | $ | 89.3 | $ | 2,458.9 | ||||||
| Government Sponsored Agency | 8,635.0 | 0.9 | 1,081.3 | 7,554.6 | ||||||||||
| Non-U.S. Government | 3,735.8 | 0.2 | 56.3 | 3,679.7 | ||||||||||
| Corporate Debt | 351.6 | — | 11.0 | 340.6 | ||||||||||
| Covered Bonds | 1,776.8 | 0.1 | 62.2 | 1,714.7 | ||||||||||
| Certificates of Deposit | 336.0 | — | 0.3 | 335.7 | ||||||||||
| Sub-Sovereign, Supranational and Non-U.S. Agency Bonds | 4,146.9 | 1.4 | 171.3 | 3,977.0 | ||||||||||
| Other Asset-Backed | 107.1 | 0.3 | 0.1 | 107.3 | ||||||||||
| Commercial Mortgage-Backed | 37.6 | — | 0.8 | 36.8 | ||||||||||
| Other | 621.7 | — | 172.5 | 449.2 | ||||||||||
| Total Held to Maturity | $ | 22,296.7 | $ | 2.9 | $ | 1,645.1 | $ | 20,654.5 | ||||||
| Total Debt Securities | $ | 51,525.8 | $ | 31.7 | $ | 1,901.5 | $ | 49,656.0 |
| 110 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TABLE 52: REMAINING MATURITY OF DEBT SECURITIES
| DECEMBER 31, 2025 | ONE YEAR OR LESS | ONE TO FIVE YEARS | FIVE TO TEN YEARS | OVER TEN YEARS | TOTAL | |||||||||||||||||||||||||||
| (In Millions) | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||||||||
| Available for Sale | ||||||||||||||||||||||||||||||||
| U.S. Government | $ | 1,498.9 | $ | 1,505.4 | $ | 6,649.1 | $ | 6,667.0 | $ | — | $ | — | $ | — | $ | — | $ | 8,148.0 | $ | 8,172.4 | ||||||||||||
| Obligations of States and Political Subdivisions | — | — | 250.2 | 242.9 | 72.2 | 70.2 | — | — | 322.4 | 313.1 | ||||||||||||||||||||||
| Government Sponsored Agency | 4,407.2 | 4,401.2 | 9,015.5 | 9,004.0 | 2,145.2 | 2,129.5 | 1,048.8 | 1,032.8 | 16,616.7 | 16,567.5 | ||||||||||||||||||||||
| Non-U.S. Government | 399.0 | 396.6 | 135.1 | 130.6 | — | — | — | — | 534.1 | 527.2 | ||||||||||||||||||||||
| Corporate Debt | 43.4 | 43.1 | 21.7 | 21.3 | — | — | — | — | 65.1 | 64.4 | ||||||||||||||||||||||
| Covered Bonds | 173.5 | 173.9 | 101.8 | 99.6 | — | — | — | — | 275.3 | 273.5 | ||||||||||||||||||||||
| Sub-Sovereign, Supranational and Non-U.S. Agency Bonds | 923.1 | 920.1 | 3,877.6 | 3,870.8 | 202.2 | 193.4 | — | — | 5,002.9 | 4,984.3 | ||||||||||||||||||||||
| Other Asset-Backed | 290.8 | 288.0 | 900.9 | 906.0 | 1,127.2 | 1,129.1 | 401.6 | 402.0 | 2,720.5 | 2,725.1 | ||||||||||||||||||||||
| Commercial Mortgage-Backed | 150.2 | 149.9 | 229.1 | 226.0 | 38.1 | 33.1 | — | — | 417.4 | 409.0 | ||||||||||||||||||||||
| Total Available for Sale | $ | 7,886.1 | $ | 7,878.2 | $ | 21,181.0 | $ | 21,168.2 | $ | 3,584.9 | $ | 3,555.3 | $ | 1,450.4 | $ | 1,434.8 | $ | 34,102.4 | $ | 34,036.5 | ||||||||||||
| Held to Maturity | ||||||||||||||||||||||||||||||||
| Obligations of States and Political Subdivisions | $ | 199.9 | $ | 199.8 | $ | 1,426.3 | $ | 1,428.6 | $ | 802.3 | $ | 792.4 | $ | 29.3 | $ | 28.6 | $ | 2,457.8 | $ | 2,449.4 | ||||||||||||
| Government Sponsored Agency | 883.5 | 815.1 | 4,253.8 | 3,952.2 | 1,906.9 | 1,717.7 | 1,380.3 | 1,211.1 | 8,424.5 | 7,696.1 | ||||||||||||||||||||||
| Non-U.S. Government | 3,616.1 | 3,606.5 | 1,124.9 | 1,107.4 | — | — | — | — | 4,741.0 | 4,713.9 | ||||||||||||||||||||||
| Corporate Debt | 207.5 | 204.9 | 181.5 | 179.1 | — | — | — | — | 389.0 | 384.0 | ||||||||||||||||||||||
| Covered Bonds | 548.8 | 545.9 | 1,118.3 | 1,080.3 | 87.4 | 87.0 | — | — | 1,754.5 | 1,713.2 | ||||||||||||||||||||||
| Certificates of Deposit | 444.5 | 440.5 | — | — | — | — | — | — | 444.5 | 440.5 | ||||||||||||||||||||||
| Sub-Sovereign, Supranational and Non-U.S. Agency Bonds | 1,614.4 | 1,587.7 | 2,891.1 | 2,863.5 | 6.0 | 5.2 | — | — | 4,511.5 | 4,456.4 | ||||||||||||||||||||||
| Commercial Mortgage-Backed | — | — | 37.6 | 36.3 | — | — | — | — | 37.6 | 36.3 | ||||||||||||||||||||||
| Other | 82.4 | 80.6 | 348.2 | 319.7 | 43.2 | 34.1 | 195.4 | 57.0 | 669.2 | 491.4 | ||||||||||||||||||||||
| Total Held to Maturity | $ | 7,597.1 | $ | 7,481.0 | $ | 11,381.7 | $ | 10,967.1 | $ | 2,845.8 | $ | 2,636.4 | $ | 1,605.0 | $ | 1,296.7 | $ | 23,429.6 | $ | 22,381.2 | ||||||||||||
| Total Debt Securities | $ | 15,483.2 | $ | 15,359.2 | $ | 32,562.7 | $ | 32,135.3 | $ | 6,430.7 | $ | 6,191.7 | $ | 3,055.4 | $ | 2,731.5 | $ | 57,532.0 | $ | 56,417.7 |
Note: Mortgage-backed and asset-backed securities are included in the above table taking into account anticipated future prepayments.
Credit Quality. AFS debt securities impairment reviews are conducted quarterly to identify and evaluate securities that have indications of possible credit losses. A determination as to whether a security’s decline in market value is related to credit impairment takes into consideration numerous factors and the relative significance of any single factor can vary by security. Factors Northern Trust considers in determining whether impairment is credit-related include, but are not limited to, the severity of the impairment; the cause of the impairment; the financial condition and near-term prospects of the issuer; activity in the market of the issuer, which may indicate adverse credit conditions; Northern Trust’s intent regarding the sale of the security as of the balance sheet date; and the likelihood that Northern Trust will not be required to sell the security for a period of time sufficient to allow for the recovery of the security’s amortized cost basis. For each security meeting the requirements of Northern Trust’s internal screening process, an extensive review is conducted to determine if a credit loss has occurred.
There was no allowance for credit losses for AFS securities for the year ended December 31, 2025, reflecting a $0.2 million release of the reserve from December 31, 2024. There was a $0.2 million allowance for credit losses for AFS securities for the year ended December 31, 2024, reflecting a $1.0 million release from December 31, 2023. The process for identifying credit losses for AFS securities is based on the best estimate of cash flows to be collected from the security, discounted using the security’s effective interest rate. If the present value of the expected cash flows is found to be less than the current amortized cost of the security, an allowance for credit losses is generally recorded equal to the difference between the two amounts, limited to the amount the amortized cost basis exceeds the fair value of the security. For additional information, please refer to Note 6, “Allowance for Credit Losses.”
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 111 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table provides information regarding AFS debt securities with no credit losses reported that had been in a continuous unrealized loss position for less than twelve months and for twelve months or longer as of December 31, 2025 and 2024.
TABLE 53: AVAILABLE FOR SALE DEBT SECURITIES IN UNREALIZED LOSS POSITION WITH NO CREDIT LOSSES REPORTED
| AS OF DECEMBER 31, 2025 | LESS THAN 12 MONTHS | 12 MONTHS OR LONGER | TOTAL | |||||||||||||||||
| (In Millions) | FAIR VALUE | UNREALIZED LOSSES | FAIR VALUE | UNREALIZED LOSSES | FAIR VALUE | UNREALIZED LOSSES | ||||||||||||||
| U.S. Government | $ | — | $ | — | $ | 194.2 | $ | 5.1 | $ | 194.2 | $ | 5.1 | ||||||||
| Obligations of States and Political Subdivisions | — | — | 313.1 | 9.3 | 313.1 | 9.3 | ||||||||||||||
| Government Sponsored Agency | 1,288.2 | 1.7 | 6,848.5 | 91.6 | 8,136.7 | 93.3 | ||||||||||||||
| Non-U.S. Government | 329.7 | 0.1 | 197.5 | 6.8 | 527.2 | 6.9 | ||||||||||||||
| Corporate Debt | 21.3 | 0.4 | 43.1 | 0.3 | 64.4 | 0.7 | ||||||||||||||
| Covered Bonds | 80.0 | 1.0 | 63.7 | 1.2 | 143.7 | 2.2 | ||||||||||||||
| Sub-Sovereign, Supranational and Non-U.S. Agency Bonds | 1,007.7 | 2.3 | 669.1 | 27.3 | 1,676.8 | 29.6 | ||||||||||||||
| Other Asset-Backed | 109.9 | 0.1 | 265.4 | 3.0 | 375.3 | 3.1 | ||||||||||||||
| Commercial Mortgage-Backed | 54.9 | — | 186.6 | 8.5 | 241.5 | 8.5 | ||||||||||||||
| Total | $ | 2,891.7 | $ | 5.6 | $ | 8,781.2 | $ | 153.1 | $ | 11,672.9 | $ | 158.7 |
Note: There were no AFS securities with an allowance for credit losses reported as of December 31, 2025. Refer to the discussion further above and Note 6, “Allowance for Credit Losses” for further information.
| AS OF DECEMBER 31, 2024 | LESS THAN 12 MONTHS | 12 MONTHS OR LONGER | TOTAL | |||||||||||||||||
| (In Millions) | FAIR VALUE | UNREALIZED LOSSES | FAIR VALUE | UNREALIZED LOSSES | FAIR VALUE | UNREALIZED LOSSES | ||||||||||||||
| U.S. Government | $ | 4,477.5 | $ | 11.1 | $ | 532.3 | $ | 11.8 | $ | 5,009.8 | $ | 22.9 | ||||||||
| Obligations of States and Political Subdivisions | — | — | 297.5 | 13.6 | 297.5 | 13.6 | ||||||||||||||
| Government Sponsored Agency | 3,298.8 | 14.5 | 6,373.8 | 118.0 | 9,672.6 | 132.5 | ||||||||||||||
| Non-U.S. Government | 54.9 | 0.1 | 181.6 | 12.2 | 236.5 | 12.3 | ||||||||||||||
| Corporate Debt | — | — | 76.9 | 1.6 | 76.9 | 1.6 | ||||||||||||||
| Covered Bonds | — | — | 119.6 | 3.6 | 119.6 | 3.6 | ||||||||||||||
| Sub-Sovereign, Supranational and Non-U.S. Agency Bonds | 881.9 | 2.6 | 720.5 | 39.6 | 1,602.4 | 42.2 | ||||||||||||||
| Other Asset-Backed | 35.4 | — | 405.4 | 12.9 | 440.8 | 12.9 | ||||||||||||||
| Commercial Mortgage-Backed | — | — | 376.1 | 13.5 | 376.1 | 13.5 | ||||||||||||||
| Total | $ | 8,748.5 | $ | 28.3 | $ | 9,083.7 | $ | 226.8 | $ | 17,832.2 | $ | 255.1 |
Note: One corporate debt AFS securities with a fair value of $38.9 million and unrealized losses of $1.3 million has been excluded from the table above as it has a $0.2 million allowance for credit losses reported as of December 31, 2024. Refer to the discussion further above and Note 6, “Allowance for Credit Losses” for further information.
As of December 31, 2025, there were 718 AFS debt securities with a combined fair value of $11.7 billion in an unrealized loss position without an allowance for credit losses, with their unrealized losses totaling $158.7 million. As of December 31, 2024, there were 767 AFS debt securities with a combined fair value of $17.8 billion in an unrealized loss position without an allowance for credit losses, with their unrealized losses totaling $255.1 million. Unrealized losses on AFS debt securities without an allowance for credit losses are primarily attributable to changes in market interest rates and credit spreads since their purchase.
| 112 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table provides the amortized cost of HTM debt securities by credit rating using ratings from Moody’s, S&P Global or Fitch Ratings. Securities not explicitly rated were grouped where possible under the credit rating of the issuer of the security.
TABLE 54: AMORTIZED COST OF HELD TO MATURITY DEBT SECURITIES BY CREDIT RATING
| AS OF DECEMBER 31, 2025 | ||||||||||||||||||||
| ($ In Millions) | AAA | AA | A | BBB | NOT RATED | TOTAL | ||||||||||||||
| Obligations of States and Political Subdivisions | $ | 986.0 | $ | 1,471.8 | $ | — | $ | — | $ | — | $ | 2,457.8 | ||||||||
| Government Sponsored Agency | — | 8,424.5 | — | — | — | 8,424.5 | ||||||||||||||
| Non-U.S. Government | 649.7 | 1,231.7 | 2,844.7 | 14.9 | — | 4,741.0 | ||||||||||||||
| Corporate Debt | 159.2 | 150.2 | 79.6 | — | — | 389.0 | ||||||||||||||
| Covered Bonds | 1,754.5 | — | — | — | — | 1,754.5 | ||||||||||||||
| Certificates of Deposit | — | — | — | — | 444.5 | 444.5 | ||||||||||||||
| Sub-Sovereign, Supranational and Non-U.S. Agency Bonds | 3,412.9 | 776.2 | 321.2 | 1.2 | — | 4,511.5 | ||||||||||||||
| Commercial Mortgage-Backed | — | 37.6 | — | — | — | 37.6 | ||||||||||||||
| Other | 53.0 | — | — | — | 616.2 | 669.2 | ||||||||||||||
| Total | $ | 7,015.3 | $ | 12,092.0 | $ | 3,245.5 | $ | 16.1 | $ | 1,060.7 | $ | 23,429.6 | ||||||||
| Percent of Total | 30 | % | 52 | % | 14 | % | — | % | 4 | % | 100 | % |
| AS OF DECEMBER 31, 2024 | ||||||||||||||||||||
| ($ In Millions) | AAA | AA | A | BBB | NOT RATED | TOTAL | ||||||||||||||
| Obligations of States and Political Subdivisions | $ | 1,024.3 | $ | 1,523.9 | $ | — | $ | — | $ | — | $ | 2,548.2 | ||||||||
| Government Sponsored Agency | 8,635.0 | — | — | — | — | 8,635.0 | ||||||||||||||
| Non-U.S. Government | 700.0 | 704.2 | 2,020.1 | 311.5 | — | 3,735.8 | ||||||||||||||
| Corporate Debt | — | 191.5 | 160.1 | — | — | 351.6 | ||||||||||||||
| Covered Bonds | 1,776.8 | — | — | — | — | 1,776.8 | ||||||||||||||
| Certificates of Deposit | 316.6 | — | — | — | 19.4 | 336.0 | ||||||||||||||
| Sub-Sovereign, Supranational and Non-U.S. Agency Bonds | 3,132.8 | 984.5 | 28.5 | 1.1 | — | 4,146.9 | ||||||||||||||
| Other Asset-Backed | 107.1 | — | — | — | — | 107.1 | ||||||||||||||
| Commercial Mortgage-Backed | 37.6 | — | — | — | — | 37.6 | ||||||||||||||
| Other | 50.7 | — | — | — | 571.0 | 621.7 | ||||||||||||||
| Total | $ | 15,780.9 | $ | 3,404.1 | $ | 2,208.7 | $ | 312.6 | $ | 590.4 | $ | 22,296.7 | ||||||||
| Percent of Total | 71 | % | 15 | % | 10 | % | 1 | % | 3 | % | 100 | % |
Credit quality indicators are metrics that provide information regarding the relative credit risk of debt securities. Northern Trust maintains a high quality debt securities portfolio, with 96% of the HTM portfolio at both December 31, 2025 and December 31, 2024, comprised of securities rated A or higher. Moody's downgraded the long-term credit rating of the U.S. from Aaa to Aa1 in May 2025. As a result, government sponsored agency securities are now AA rated in the table dated December 31, 2025 above compared to AAA as of December 31, 2024.
Investment Security Gains and Losses. There were no sales of debt securities and no net investment security gains (losses) for 2025. There were proceeds of $2.0 billion and $5.2 billion in 2024 and 2023, respectively, from the sale of debt securities that resulted in the following investment security gains (losses).
TABLE 55: INVESTMENT SECURITY GAINS AND LOSSES
| DECEMBER 31, | |||||||||||
| (In Millions) | 2025 | 2024 | 2023 | ||||||||
| Gross Realized Debt Securities Gains | $ | — | $ | 185.2 | $ | 10.5 | |||||
| Gross Realized Debt Securities Losses | — | (374.5) | (180.0) | ||||||||
| Investment Security Gains (Losses), net | $ | — | $ | (189.3) | $ | (169.5) |
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 113 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TABLE 56: INVESTMENT SECURITY GAINS AND LOSSES BY SECURITY TYPE
| DECEMBER 31, | |||||||||||
| (In Millions) | 2025 | 2024 | 2023 | ||||||||
| U.S. Governments | $ | — | $ | (34.8) | $ | (29.9) | |||||
| Obligations of States and Political Subdivisions | — | — | 9.8 | ||||||||
| Government Sponsored Agency | — | (23.0) | (73.2) | ||||||||
| Corporate Debt | — | — | (7.6) | ||||||||
| Covered Bonds | — | (4.2) | — | ||||||||
| Sub-Sovereign, Supranational and Non-U.S. Agency Bonds | — | (48.2) | (9.1) | ||||||||
| Other Asset-Backed | — | (56.5) | (58.6) | ||||||||
| Commercial Mortgage-Backed | — | (22.6) | (0.9) | ||||||||
| Investment Security Gains (Losses), net | $ | — | $ | (189.3) | $ | (169.5) |
Note 5 – Loans
Amounts outstanding for Loans, by segment and class, are shown in the following table.
TABLE 57: LOANS
| DECEMBER 31, | ||||||||
| (In Millions) | 2025 | 2024 | ||||||
| Commercial | ||||||||
| Commercial and Institutional(1) | $ | 9,995.0 | $ | 10,537.1 | ||||
| Commercial Real Estate | 5,272.2 | 5,314.2 | ||||||
| Non-U.S.(1) | 2,190.1 | 2,113.9 | ||||||
| Other | 2,973.7 | 2,313.6 | ||||||
| Total Commercial | 20,431.0 | 20,278.8 | ||||||
| Personal | ||||||||
| Private Client | 14,550.4 | 15,848.8 | ||||||
| Residential Real Estate | 6,077.3 | 6,109.9 | ||||||
| Non-U.S. | 657.4 | 674.7 | ||||||
| Other | 232.2 | 478.4 | ||||||
| Total Personal | 21,517.3 | 23,111.8 | ||||||
| Total Loans | $ | 41,948.3 | $ | 43,390.6 |
(1) Commercial and institutional and commercial-non-U.S. combined include $4.1 billion of private equity related loans, which consists primarily of capital call facilities at both December 31, 2025 and 2024.
Residential real estate loans consist of traditional first lien mortgages and equity credit lines that generally require a loan-to-collateral value ratio of 65% to 80% at inception. Northern Trust’s equity credit line products generally have draw periods of up to 10 years and a balloon payment of any outstanding balance is due at maturity. Payments are interest-only with variable interest rates. Northern Trust does not offer equity credit lines that include an option to convert the outstanding balance to an amortizing payment loan. As of December 31, 2025 and 2024, equity credit lines totaled $294.0 million and $250.3 million, respectively. Equity credit lines for which first liens were held by Northern Trust represented 96% and 97% of the total equity credit lines as of December 31, 2025 and 2024, respectively.
Included within the other commercial, non-U.S. commercial, and other personal classes are short-duration advances, primarily related to the processing of custodied client investments, totaling $4.5 billion and $3.8 billion at December 31, 2025 and 2024, respectively. Demand deposit overdrafts reclassified as loan balances, primarily in the other personal class, totaled $12.0 million and $47.6 million at December 31, 2025 and 2024, respectively. There were $6.8 million in loans classified as held for sale as of December 31, 2025. There were no loans classified as held for sale as of December 31, 2024. Loans classified as held for sale are recorded at the lower of cost or fair value. There were $3.1 million in loans sold during the year ended December 31, 2025 and no loans sold during the year ended December 31, 2024.
Credit Quality Indicators. Credit quality indicators are statistics, measurements or other metrics that provide information regarding the relative credit risk of loans. Northern Trust uses a variety of credit quality indicators to assess the credit risk of loans at the segment, class, and individual credit exposure levels.
| 114 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As part of its credit process, Northern Trust utilizes an internal borrower risk rating system to support identification, approval, and monitoring of credit risk. Borrower risk ratings are used in credit underwriting and management reporting. Risk ratings are used for ranking the credit risk of borrowers and their probability of default. Each borrower is rated using one of a number of ratings models or subjective assessment tools, which consider both quantitative and qualitative factors. The ratings models vary among classes of loans in order to capture the unique risk characteristics inherent within each particular type of credit exposure. Provided below are the more significant performance indicator attributes considered within Northern Trust’s borrower rating models, by loan class:
-
Commercial and Institutional: cash flow leverage, profit margin, liquidity, balance sheet leverage;
-
Commercial Real Estate: debt service coverage, collateral coverage, debt yield, leasing status, guarantor support;
-
Commercial - Non-U.S.: leverage, profit margin, liquidity, return on assets, capital levels;
-
Commercial - Other: cash flow leverage, profit margin, liquidity, balance sheet leverage, type of collateral, collateral coverage;
-
Residential Real Estate: payment history, credit bureau scores, collateral coverage;
-
Private Client: cash-flow-to-debt and net worth ratios, leverage, type of collateral, collateral coverage; and
-
Personal - Other: debt to income metrics, income amounts, sources of income, type of collateral, collateral coverage.
While the criteria vary by model, the objective is for the borrower ratings to be consistent in both the measurement and ranking of risk. Each model is calibrated to a master rating scale to support this consistency. Ratings for borrowers not in default range from “1” for the strongest credits to “7” for the weakest non-defaulted credits. Ratings of “8” or “9” are used for defaulted borrowers. Borrower risk ratings are monitored and are revised when events or circumstances indicate a change is required. Risk ratings are generally validated at least annually.
Loans in the “1 to 3” category are expected to exhibit minimal to modest probabilities of default and are characterized by borrowers having the strongest financial qualities, including above average financial flexibility, cash flows and capital levels. Borrowers assigned these ratings are anticipated to experience very little to moderate financial pressure in adverse down-cycle scenarios. As a result of these characteristics, borrowers within this category exhibit a minimal to modest likelihood of loss. Loans in the “4 to 5” category are expected to exhibit moderate to acceptable probabilities of default and are characterized by borrowers with less financial flexibility than those in the “1 to 3” category. Cash flows and capital levels are generally sufficient to allow for borrowers to meet current requirements, but have fewer financial resources to manage through economic downturns. As a result of these characteristics, borrowers within this category exhibit a moderate likelihood of loss. Loans in the “6 to 9” category have elevated credit risk profiles that are monitored through internal watch lists. Borrowers associated with these risk profiles may have limited financial flexibility. Cash flows and capital levels range from acceptable to potentially insufficient to meet current requirements, particularly in adverse economic cycles. As a result of these characteristics, these credits, which include all nonaccrual credits, have elevated risk of default or are currently in default.
Loan segment and class balances as of December 31, 2025 and 2024 are provided in the following tables, segregated by borrower ratings into “1 to 3,” “4 to 5” and “6 to 9” (Watch List, including accrual and nonaccrual status) categories by year of origination at amortized cost basis. Loans that are held for investment are reported at the principal amount outstanding, net of unearned income.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 115 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TABLE 58: CREDIT QUALITY INDICATOR AT AMORTIZED COST BASIS BY ORIGINATION YEAR
| DECEMBER 31, 2025 | TERM LOANS | REVOLVING LOANS | REVOLVING LOANS CONVERTED TO TERM LOANS | ||||||||||||||||||||||||||
| (In Millions) | 2025 | 2024 | 2023 | 2022 | 2021 | PRIOR | TOTAL | ||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||
| Commercial and Institutional (C&I) | |||||||||||||||||||||||||||||
| Risk Rating: | |||||||||||||||||||||||||||||
| 1 to 3 Category | $ | 340.7 | $ | 425.1 | $ | 87.8 | $ | 220.3 | $ | 111.9 | $ | 149.5 | $ | 4,294.6 | $ | 57.6 | $ | 5,687.5 | |||||||||||
| 4 to 5 Category | 528.0 | 661.5 | 354.3 | 263.7 | 218.9 | 116.6 | 1,844.1 | 35.7 | 4,022.8 | ||||||||||||||||||||
| 6 to 9 Category | 88.7 | 19.9 | 50.3 | 33.4 | 21.9 | 2.7 | 57.5 | 10.3 | 284.7 | ||||||||||||||||||||
| Total C&I | 957.4 | 1,106.5 | 492.4 | 517.4 | 352.7 | 268.8 | 6,196.2 | 103.6 | 9,995.0 | ||||||||||||||||||||
| C&I Gross Charge-offs | — | — | — | — | — | (1.4) | — | — | (1.4) | ||||||||||||||||||||
| Commercial Real Estate (CRE) | |||||||||||||||||||||||||||||
| Risk Rating: | |||||||||||||||||||||||||||||
| 1 to 3 Category | 118.5 | 98.7 | 80.8 | 52.6 | 157.3 | 20.8 | 37.9 | — | 566.6 | ||||||||||||||||||||
| 4 to 5 Category | 946.7 | 654.8 | 1,325.1 | 831.4 | 404.3 | 198.7 | 195.1 | 22.9 | 4,579.0 | ||||||||||||||||||||
| 6 to 9 Category | 71.9 | 2.0 | 6.8 | 45.5 | — | 0.4 | — | — | 126.6 | ||||||||||||||||||||
| Total CRE | 1,137.1 | 755.5 | 1,412.7 | 929.5 | 561.6 | 219.9 | 233.0 | 22.9 | 5,272.2 | ||||||||||||||||||||
| CRE Gross Charge-offs | — | — | — | (2.1) | — | — | — | — | (2.1) | ||||||||||||||||||||
| Non-U.S. | |||||||||||||||||||||||||||||
| Risk Rating: | |||||||||||||||||||||||||||||
| 1 to 3 Category | 696.5 | 119.2 | 15.4 | — | — | 112.5 | 258.6 | — | 1,202.2 | ||||||||||||||||||||
| 4 to 5 Category | 634.3 | 18.6 | 16.1 | — | — | 173.6 | 131.5 | — | 974.1 | ||||||||||||||||||||
| 6 to 9 Category | 1.0 | — | — | 12.8 | — | — | — | — | 13.8 | ||||||||||||||||||||
| Total Non-U.S. | 1,331.8 | 137.8 | 31.5 | 12.8 | — | 286.1 | 390.1 | — | 2,190.1 | ||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||
| Risk Rating: | |||||||||||||||||||||||||||||
| 1 to 3 Category | 1,730.0 | — | — | — | — | — | — | — | 1,730.0 | ||||||||||||||||||||
| 4 to 5 Category | 1,243.7 | — | — | — | — | — | — | — | 1,243.7 | ||||||||||||||||||||
| Total Other | 2,973.7 | — | — | — | — | — | — | — | 2,973.7 | ||||||||||||||||||||
| Total Commercial | 6,400.0 | 1,999.8 | 1,936.6 | 1,459.7 | 914.3 | 774.8 | 6,819.3 | 126.5 | 20,431.0 | ||||||||||||||||||||
| Commercial Gross Charge-offs | — | — | — | (2.1) | — | (1.4) | — | — | (3.5) | ||||||||||||||||||||
| Personal | |||||||||||||||||||||||||||||
| Private Client | |||||||||||||||||||||||||||||
| Risk Rating: | |||||||||||||||||||||||||||||
| 1 to 3 Category | 144.9 | 130.7 | 133.0 | 58.7 | 46.6 | 33.3 | 5,588.1 | 38.7 | 6,174.0 | ||||||||||||||||||||
| 4 to 5 Category | 400.2 | 566.3 | 128.9 | 313.5 | 151.0 | 181.3 | 6,070.8 | 540.5 | 8,352.5 | ||||||||||||||||||||
| 6 to 9 Category | — | — | 15.2 | — | — | — | 8.7 | — | 23.9 | ||||||||||||||||||||
| Total Private Client | 545.1 | 697.0 | 277.1 | 372.2 | 197.6 | 214.6 | 11,667.6 | 579.2 | 14,550.4 | ||||||||||||||||||||
| Private Client Gross Charge-offs | — | — | — | — | — | (0.1) | — | — | (0.1) | ||||||||||||||||||||
| Residential Real Estate (RRE) | |||||||||||||||||||||||||||||
| Risk Rating: | |||||||||||||||||||||||||||||
| 1 to 3 Category | 357.1 | 138.8 | 131.9 | 343.3 | 334.6 | 993.1 | 232.3 | — | 2,531.1 | ||||||||||||||||||||
| 4 to 5 Category | 250.8 | 264.2 | 232.0 | 567.5 | 635.8 | 1,306.3 | 194.4 | 1.9 | 3,452.9 | ||||||||||||||||||||
| 6 to 9 Category | 1.0 | — | 0.9 | 8.1 | 31.3 | 31.5 | 20.5 | — | 93.3 | ||||||||||||||||||||
| Total RRE | 608.9 | 403.0 | 364.8 | 918.9 | 1,001.7 | 2,330.9 | 447.2 | 1.9 | 6,077.3 | ||||||||||||||||||||
| RRE Gross Charge-offs | — | — | — | — | — | (0.1) | — | — | (0.1) | ||||||||||||||||||||
| Non-U.S. | |||||||||||||||||||||||||||||
| Risk Rating: | |||||||||||||||||||||||||||||
| 1 to 3 Category | 5.1 | — | — | — | 0.6 | 11.4 | 224.7 | — | 241.8 | ||||||||||||||||||||
| 4 to 5 Category | 29.1 | 14.6 | 12.8 | 8.8 | 22.8 | 9.6 | 280.2 | 7.4 | 385.3 | ||||||||||||||||||||
| 6 to 9 Category | 22.6 | 7.6 | — | — | — | 0.1 | — | — | 30.3 | ||||||||||||||||||||
| Total Non-U.S. | 56.8 | 22.2 | 12.8 | 8.8 | 23.4 | 21.1 | 504.9 | 7.4 | 657.4 | ||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||
| Risk Rating: | |||||||||||||||||||||||||||||
| 1 to 3 Category | 86.0 | — | — | — | — | — | — | — | 86.0 | ||||||||||||||||||||
| 4 to 5 Category | 146.2 | — | — | — | — | — | — | — | 146.2 | ||||||||||||||||||||
| Total Other | 232.2 | — | — | — | — | — | — | — | 232.2 | ||||||||||||||||||||
| Other Gross Charge-offs | (0.2) | — | — | — | — | — | — | — | (0.2) | ||||||||||||||||||||
| Total Personal | 1,443.0 | 1,122.2 | 654.7 | 1,299.9 | 1,222.7 | 2,566.6 | 12,619.7 | 588.5 | 21,517.3 | ||||||||||||||||||||
| Personal Gross Charge-offs | (0.2) | — | — | — | — | (0.2) | — | — | (0.4) | ||||||||||||||||||||
| Total Loans | $ | 7,843.0 | $ | 3,122.0 | $ | 2,591.3 | $ | 2,759.6 | $ | 2,137.0 | $ | 3,341.4 | $ | 19,439.0 | $ | 715.0 | $ | 41,948.3 | |||||||||||
| Total Loans Gross Charge-offs | $ | (0.2) | $ | — | $ | — | $ | (2.1) | $ | — | $ | (1.6) | $ | — | $ | — | $ | (3.9) |
| 116 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| December 31, 2024 | TERM LOANS | REVOLVING LOANS | REVOLVING LOANS CONVERTED TO TERM LOANS | ||||||||||||||||||||||||||
| (In Millions) | 2024 | 2023 | 2022 | 2021 | 2020 | PRIOR | TOTAL | ||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||
| Commercial and Institutional (C&I) | |||||||||||||||||||||||||||||
| Risk Rating: | |||||||||||||||||||||||||||||
| 1 to 3 Category | $ | 462.1 | $ | 238.2 | $ | 367.9 | $ | 466.2 | $ | 82.2 | $ | 277.2 | $ | 4,364.8 | $ | 26.5 | $ | 6,285.1 | |||||||||||
| 4 to 5 Category | 708.3 | 506.4 | 392.5 | 428.3 | 82.3 | 144.2 | 1,585.1 | 59.7 | 3,906.8 | ||||||||||||||||||||
| 6 to 9 Category | 34.8 | 89.3 | 65.8 | 70.2 | 2.3 | 2.3 | 73.6 | 6.9 | 345.2 | ||||||||||||||||||||
| Total C&I | 1,205.2 | 833.9 | 826.2 | 964.7 | 166.8 | 423.7 | 6,023.5 | 93.1 | 10,537.1 | ||||||||||||||||||||
| C&I Gross Charge-offs | — | (7.3) | (5.4) | — | — | — | — | — | (12.7) | ||||||||||||||||||||
| CRE | |||||||||||||||||||||||||||||
| Risk Rating: | |||||||||||||||||||||||||||||
| 1 to 3 Category | 123.2 | 256.3 | 224.4 | 203.7 | 13.8 | 43.7 | 52.6 | — | 917.7 | ||||||||||||||||||||
| 4 to 5 Category | 610.1 | 1,574.2 | 1,070.4 | 424.8 | 173.2 | 174.4 | 198.0 | 5.2 | 4,230.3 | ||||||||||||||||||||
| 6 to 9 Category | 14.0 | 15.8 | 125.7 | 6.0 | 4.3 | 0.4 | — | — | 166.2 | ||||||||||||||||||||
| Total CRE | 747.3 | 1,846.3 | 1,420.5 | 634.5 | 191.3 | 218.5 | 250.6 | 5.2 | 5,314.2 | ||||||||||||||||||||
| CRE Gross Charge-offs | — | — | (2.4) | — | — | — | — | — | (2.4) | ||||||||||||||||||||
| Non-U.S. | |||||||||||||||||||||||||||||
| Risk Rating: | |||||||||||||||||||||||||||||
| 1 to 3 Category | 707.1 | — | — | — | 70.6 | 28.8 | 614.9 | — | 1,421.4 | ||||||||||||||||||||
| 4 to 5 Category | 480.5 | 83.9 | 0.8 | 25.0 | — | 27.9 | 59.9 | — | 678.0 | ||||||||||||||||||||
| 6 to 9 Category | 0.9 | — | 13.6 | — | — | — | — | — | 14.5 | ||||||||||||||||||||
| Total Non-U.S. | 1,188.5 | 83.9 | 14.4 | 25.0 | 70.6 | 56.7 | 674.8 | — | 2,113.9 | ||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||
| Risk Rating: | |||||||||||||||||||||||||||||
| 1 to 3 Category | 1,142.4 | — | — | — | — | — | — | — | 1,142.4 | ||||||||||||||||||||
| 4 to 5 Category | 1,171.2 | — | — | — | — | — | — | — | 1,171.2 | ||||||||||||||||||||
| Total Other | 2,313.6 | — | — | — | — | — | — | — | 2,313.6 | ||||||||||||||||||||
| Total Commercial | 5,454.6 | 2,764.1 | 2,261.1 | 1,624.2 | 428.7 | 698.9 | 6,948.9 | 98.3 | 20,278.8 | ||||||||||||||||||||
| Commercial Gross Charge-offs | — | (7.3) | (7.8) | — | — | — | — | — | (15.1) | ||||||||||||||||||||
| Personal | |||||||||||||||||||||||||||||
| Private Client | |||||||||||||||||||||||||||||
| Risk Rating: | |||||||||||||||||||||||||||||
| 1 to 3 Category | 251.3 | 33.9 | 84.4 | 37.9 | 7.9 | 44.6 | 6,993.2 | 93.3 | 7,546.5 | ||||||||||||||||||||
| 4 to 5 Category | 249.0 | 660.2 | 384.0 | 390.5 | 123.5 | 181.3 | 5,734.8 | 535.3 | 8,258.6 | ||||||||||||||||||||
| 6 to 9 Category | — | 16.1 | — | — | — | — | 27.6 | — | 43.7 | ||||||||||||||||||||
| Total Private Client | 500.3 | 710.2 | 468.4 | 428.4 | 131.4 | 225.9 | 12,755.6 | 628.6 | 15,848.8 | ||||||||||||||||||||
| RRE | |||||||||||||||||||||||||||||
| Risk Rating: | |||||||||||||||||||||||||||||
| 1 to 3 Category | 197.5 | 150.5 | 436.7 | 375.2 | 325.7 | 743.6 | 114.3 | — | 2,343.5 | ||||||||||||||||||||
| 4 to 5 Category | 212.7 | 263.6 | 647.2 | 706.0 | 652.1 | 938.1 | 270.2 | 2.1 | 3,692.0 | ||||||||||||||||||||
| 6 to 9 Category | 1.7 | — | 6.8 | 3.9 | 2.3 | 32.5 | 27.2 | — | 74.4 | ||||||||||||||||||||
| Total RRE | 411.9 | 414.1 | 1,090.7 | 1,085.1 | 980.1 | 1,714.2 | 411.7 | 2.1 | 6,109.9 | ||||||||||||||||||||
| RRE Gross Charge-offs | — | — | — | — | — | (0.1) | — | — | (0.1) | ||||||||||||||||||||
| Non-U.S. | |||||||||||||||||||||||||||||
| Risk Rating: | |||||||||||||||||||||||||||||
| 1 to 3 Category | 3.3 | 1.0 | — | — | — | 6.0 | 369.6 | — | 379.9 | ||||||||||||||||||||
| 4 to 5 Category | 19.5 | 16.0 | 15.2 | 39.1 | — | 19.6 | 170.3 | 7.2 | 286.9 | ||||||||||||||||||||
| 6 to 9 Category | 7.8 | — | — | — | — | 0.1 | — | — | 7.9 | ||||||||||||||||||||
| Total Non-U.S. | 30.6 | 17.0 | 15.2 | 39.1 | — | 25.7 | 539.9 | 7.2 | 674.7 | ||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||
| Risk Rating: | |||||||||||||||||||||||||||||
| 1 to 3 Category | 168.5 | — | — | — | — | — | — | — | 168.5 | ||||||||||||||||||||
| 4 to 5 Category | 309.9 | — | — | — | — | — | — | — | 309.9 | ||||||||||||||||||||
| Total Other | 478.4 | — | — | — | — | — | — | — | 478.4 | ||||||||||||||||||||
| Other Gross Charge-Offs | — | — | — | — | — | (0.3) | — | — | (0.3) | ||||||||||||||||||||
| Total Personal | 1,421.2 | 1,141.3 | 1,574.3 | 1,552.6 | 1,111.5 | 1,965.8 | 13,707.2 | 637.9 | 23,111.8 | ||||||||||||||||||||
| Personal Gross Charge-offs | — | — | — | — | — | (0.4) | — | — | (0.4) | ||||||||||||||||||||
| Total Loans | $ | 6,875.8 | $ | 3,905.4 | $ | 3,835.4 | $ | 3,176.8 | $ | 1,540.2 | $ | 2,664.7 | $ | 20,656.1 | $ | 736.2 | $ | 43,390.6 | |||||||||||
| Total Loans Gross Charge-offs | $ | — | $ | (7.3) | $ | (7.8) | $ | — | $ | — | $ | (0.4) | $ | — | $ | — | $ | (15.5) |
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 117 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Past Due Status. Past due status is based on the length of time from the contractual due date a principal or interest payment has been past due. For disclosure purposes, loans that are 29 days past due or less are reported as current. The following table provides balances and delinquency status of accrual and nonaccrual loans by segment and class as of December 31, 2025 and 2024.
TABLE 59: DELINQUENCY STATUS
| ACCRUAL | NONACCRUAL WITH NO ALLOWANCE | |||||||||||||||||||||||||
| (In Millions) | CURRENT | 30 – 59 DAYS PAST DUE | 60 – 89 DAYS PAST DUE | 90 DAYS OR MORE PAST DUE | TOTAL ACCRUAL | NONACCRUAL | TOTAL LOANS | |||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||
| Commercial | ||||||||||||||||||||||||||
| Commercial and Institutional | $ | 9,865.0 | $ | 80.2 | $ | 0.8 | $ | 9.3 | $ | 9,955.3 | $ | 39.7 | $ | 9,995.0 | $ | 21.3 | ||||||||||
| Commercial Real Estate | 5,222.1 | 37.3 | 3.6 | 9.2 | 5,272.2 | — | 5,272.2 | — | ||||||||||||||||||
| Non-U.S. | 2,189.5 | — | — | — | 2,189.5 | 0.6 | 2,190.1 | — | ||||||||||||||||||
| Other | 2,973.7 | — | — | — | 2,973.7 | — | 2,973.7 | — | ||||||||||||||||||
| Total Commercial | 20,250.3 | 117.5 | 4.4 | 18.5 | 20,390.7 | 40.3 | 20,431.0 | 21.3 | ||||||||||||||||||
| Personal | ||||||||||||||||||||||||||
| Private Client | 14,403.3 | 128.8 | 8.5 | 3.1 | 14,543.7 | 6.7 | 14,550.4 | — | ||||||||||||||||||
| Residential Real Estate | 6,007.0 | 11.7 | 25.5 | 3.4 | 6,047.6 | 29.7 | 6,077.3 | 26.9 | ||||||||||||||||||
| Non-U.S. | 657.4 | — | — | — | 657.4 | — | 657.4 | — | ||||||||||||||||||
| Other | 232.2 | — | — | — | 232.2 | — | 232.2 | — | ||||||||||||||||||
| Total Personal | 21,299.9 | 140.5 | 34.0 | 6.5 | 21,480.9 | 36.4 | 21,517.3 | 26.9 | ||||||||||||||||||
| Total Loans | $ | 41,550.2 | $ | 258.0 | $ | 38.4 | $ | 25.0 | $ | 41,871.6 | $ | 76.7 | $ | 41,948.3 | $ | 48.2 | ||||||||||
| ACCRUAL | NONACCRUAL WITH NO ALLOWANCE | |||||||||||||||||||||||||
| (In Millions) | CURRENT | 30 – 59 DAYS PAST DUE | 60 – 89 DAYS PAST DUE | 90 DAYS OR MORE PAST DUE | TOTAL ACCRUAL | NONACCRUAL | TOTAL LOANS | |||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| Commercial | ||||||||||||||||||||||||||
| Commercial and Institutional | $ | 10,486.9 | $ | 12.8 | $ | 0.7 | $ | 6.9 | $ | 10,507.3 | $ | 29.8 | $ | 10,537.1 | $ | 10.5 | ||||||||||
| Commercial Real Estate | 5,304.9 | 3.3 | — | 0.4 | 5,308.6 | 5.6 | 5,314.2 | 5.6 | ||||||||||||||||||
| Non-U.S. | 2,113.0 | — | 0.4 | — | 2,113.4 | 0.5 | 2,113.9 | — | ||||||||||||||||||
| Other | 2,313.6 | — | — | — | 2,313.6 | — | 2,313.6 | — | ||||||||||||||||||
| Total Commercial | 20,218.4 | 16.1 | 1.1 | 7.3 | 20,242.9 | 35.9 | 20,278.8 | 16.1 | ||||||||||||||||||
| Personal | ||||||||||||||||||||||||||
| Private Client | 15,677.6 | 87.7 | 15.2 | 66.0 | 15,846.5 | 2.3 | 15,848.8 | 0.7 | ||||||||||||||||||
| Residential Real Estate | 6,063.4 | 17.2 | 2.5 | 9.0 | 6,092.1 | 17.8 | 6,109.9 | 17.8 | ||||||||||||||||||
| Non-U.S. | 673.1 | 1.6 | — | — | 674.7 | — | 674.7 | — | ||||||||||||||||||
| Other | 478.4 | — | — | — | 478.4 | — | 478.4 | — | ||||||||||||||||||
| Total Personal | 22,892.5 | 106.5 | 17.7 | 75.0 | 23,091.7 | 20.1 | 23,111.8 | 18.5 | ||||||||||||||||||
| Total Loans | $ | 43,110.9 | $ | 122.6 | $ | 18.8 | $ | 82.3 | $ | 43,334.6 | $ | 56.0 | $ | 43,390.6 | $ | 34.6 | ||||||||||
Interest income that would have been recorded for nonaccrual loans in accordance with their original terms was $4.1 million in 2025, $2.1 million in 2024, and $3.4 million in 2023.
Northern Trust may obtain physical possession of real estate via foreclosure or an in-substance repossession. As of December 31, 2025 and 2024, Northern Trust did not hold any foreclosed real estate properties as a result of obtaining physical possession. As of December 31, 2025 and 2024, Northern Trust had loans with a carrying value of $7.9 million and $3.5 million, respectively, for which formal foreclosure proceedings were in process.
| 118 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Loan Modifications to Borrowers Experiencing Financial Difficulty
Northern Trust may provide payment relief by modifying the terms of the original loans for borrowers experiencing financial difficulties. Loan modifications to borrowers experiencing financial difficulty involve primarily extension of term, deferrals of principal and interest, interest rate concessions, and other modifications or a combination thereof and totaled $51.3 million, $7.2 million and $40.7 million for the years ended December 31, 2025, 2024 and 2023, respectively. Northern Trust considers payment deferrals of less than 90 days as insignificant, absent any material modifications to other loan terms.
The effectiveness of Northern Trust’s modification efforts is measured by the loans’ respective past-due status under the modified terms as of the end of the period. As of December 31, 2025, of loans that were modified in the previous 12 months, there were no loans 30-89 days past due and $18.4 million 90 days and greater past due in accordance with their modified terms. As of December 31, 2024, of the loans that were modified in the previous 12 months, there were no loans 30-89 days past due and $1.3 million 90 days and greater past due in accordance with their modified terms. As of December 31, 2023, of the loans that were modified in the previous 12 months, there were $4.7 million 30-89 days past due and $16.2 million 90 days and greater past due in accordance with their modified terms. All modification to borrowers experiencing financial difficulty continue to be reported as non-accrual loans until the requirements for returning to performing status are met. Northern Trust charged off $2.0 million, $8.5 million and $2.0 million for the years ended December 31, 2025, 2024 and 2023, respectively, related to loan modifications to borrowers experiencing financial difficulty.
There were no undrawn loan commitments or standby letters of credit issued to financially distressed borrowers for which Northern Trust had modified the payment terms of the loans as of December 31, 2025 and 2024, respectively.
Note 6 – Allowance for Credit Losses
Allowance and Provision for Credit Losses. The allowance for credit losses—which represents management’s best estimate of lifetime expected credit losses related to various portfolios subject to credit risk, off-balance sheet credit exposures, and specific borrower relationships—is determined by management through a disciplined credit review process. Northern Trust measures expected credit losses of financial assets with similar risk characteristics on a collective basis. A financial asset is measured individually if it does not share similar risk characteristics with other financial assets and the related allowance is determined through an individual evaluation.
Management’s estimates utilized in establishing an appropriate level of allowance for credit losses are not dependent on any single assumption. In determining an appropriate allowance level, management evaluates numerous variables and takes into consideration past events, current conditions, and reasonable and supportable forecasts. Northern Trust employs multiple scenarios over a reasonable and supportable period (currently two years) to project future conditions. The primary forecast reflects an outlook of steady growth, stabilizing interest rates, and slightly higher unemployment rates. Recognizing the uncertainty in the primary forecast, an alternative scenario is also considered, which reflects a recession that incorporates the experiences of a wider set of historical economic cycles.
The results of the credit reserve estimation methodology are reviewed quarterly by Northern Trust’s Credit Loss Reserve Committee, which receives input from Financial Risk Management, Treasury, Corporate Finance, the Economic Research Department, and each of Northern Trust’s reporting business units. The Credit Loss Reserve Committee determines the probability weights applied to each forecast approved by Northern Trust’s MSDC, as well as, reviews and approves qualitative adjustments to the collective allowance in line with Northern Trust’s qualitative adjustment framework.
As of December 31, 2025, qualitative adjustments primarily reflected macroeconomic uncertainty affecting Northern Trust's C&I portfolio, the possible impact of climate-related risks on future CRE property values, and the potential for higher-than-anticipated losses on large individual exposures. In comparison, as of December 31, 2024, qualitative adjustments were largely driven by climate-related risks affecting both commercial and residential real estate portfolios, an increased likelihood of recession within the CRE segment mostly due to ongoing concerns around office occupancy rates, and similar concerns regarding large individual exposures. The qualitative component of the reserve decreased as of December 31, 2025, relative to December 31, 2024, primarily due to an improved outlook for both the CRE portfolio and the climate-related risk projections for RRE in certain locations. These improvements were partially offset by the introduction of the qualitative adjustment intended to capture heightened macroeconomic uncertainty around the C&I portfolio since the start of 2025.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 119 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table provides information regarding changes in the total Allowance for Credit Losses.
TABLE 60: CHANGES IN THE ALLOWANCE FOR CREDIT LOSSES
| 2025 | |||||||||||||||||
| (In Millions) | LOANS | UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT | HELD TO MATURITY DEBT SECURITIES | OTHER FINANCIAL ASSETS | TOTAL | ||||||||||||
| Balance at Beginning of Period | $ | 168.0 | $ | 30.4 | $ | 6.5 | $ | 1.0 | $ | 205.9 | |||||||
| Charge-Offs | (3.9) | — | — | — | (3.9) | ||||||||||||
| Recoveries | 3.6 | — | — | — | 3.6 | ||||||||||||
| Net Recoveries (Charge-Offs) | (0.3) | — | — | — | (0.3) | ||||||||||||
| Provision for Credit Losses(1) | (3.4) | (7.1) | 2.8 | 0.4 | (7.3) | ||||||||||||
| Balance at End of Period | $ | 164.3 | $ | 23.3 | $ | 9.3 | $ | 1.4 | $ | 198.3 |
(1) The table excludes a negative provision for credit losses of $0.2 million for the year ended December 31, 2025 for AFS debt securities. See further detail in Note 4, “Securities.”
| 2024 | |||||||||||||||||
| (In Millions) | LOANS | UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT | HELD TO MATURITY DEBT SECURITIES | OTHER FINANCIAL ASSETS | TOTAL | ||||||||||||
| Balance at Beginning of Period | $ | 178.7 | $ | 26.9 | $ | 12.7 | $ | 0.9 | $ | 219.2 | |||||||
| Charge-Offs | (15.5) | — | — | — | (15.5) | ||||||||||||
| Recoveries | 4.2 | — | — | — | 4.2 | ||||||||||||
| Net Recoveries (Charge-Offs) | (11.3) | — | — | — | (11.3) | ||||||||||||
| Provision for Credit Losses(1) | 0.6 | 3.5 | (6.2) | 0.1 | (2.0) | ||||||||||||
| Balance at End of Period | $ | 168.0 | $ | 30.4 | $ | 6.5 | $ | 1.0 | $ | 205.9 |
(1) The table excludes a negative provision for credit losses of $1.0 million for the year ended December 31, 2024 for AFS debt securities. See further detail in Note 4, “Securities.”
| 2023 | |||||||||||||||||
| (In Millions) | LOANS | UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT | HELD TO MATURITY DEBT SECURITIES | OTHER FINANCIAL ASSETS | TOTAL | ||||||||||||
| Balance at Beginning of Period | $ | 144.3 | $ | 38.5 | $ | 16.0 | $ | 0.8 | $ | 199.6 | |||||||
| Charge-Offs | (7.5) | — | (1.2) | — | (8.7) | ||||||||||||
| Recoveries | 3.7 | — | — | — | 3.7 | ||||||||||||
| Net Recoveries (Charge-Offs) | (3.8) | — | (1.2) | — | (5.0) | ||||||||||||
| Provision for Credit Losses(1) | 38.2 | (11.6) | (2.1) | 0.1 | 24.6 | ||||||||||||
| Balance at End of Period | $ | 178.7 | $ | 26.9 | $ | 12.7 | $ | 0.9 | $ | 219.2 |
(1) The table excludes a negative provision for credit losses of $0.1 million for the year ended December 31, 2023 for AFS debt securities. See further detail in Note 4, “Securities.”
Excluding the negative provisions for AFS debt securities, Northern Trust recognized a negative Provision for Credit Losses of $7.3 million and $2.0 million for the years ended December 31, 2025 and 2024, respectively, as compared to a Provision for Credit Losses of $24.6 million for the year ended December 31, 2023. The negative provision in 2025 was due to a decrease in collective reserves, primarily for the CRE portfolio, driven by an improved industry outlook; partially offset by an increase in specific reserves related to a small number of non-performing loans.
For credit exposure and the associated allowance related to fee receivables, please refer to Note 16, “Revenue from Contracts with Clients.” For information related to the allowance for AFS debt securities, please refer to Note 4, “Securities.”
| 120 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Allowance for the Loan Portfolio. The following table provides information regarding changes in the total allowance for credit losses related to loans, including undrawn loan commitments and standby letters of credit, by segment.
TABLE 61: CHANGES IN THE ALLOWANCE FOR CREDIT LOSSES RELATED TO LOANS
| 2025 | ||||||||||||||||||||
| LOANS | UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT | |||||||||||||||||||
| (In Millions) | COMMERCIAL | PERSONAL | TOTAL | COMMERCIAL | PERSONAL | TOTAL | ||||||||||||||
| Balance at Beginning of Period | $ | 138.5 | $ | 29.5 | $ | 168.0 | $ | 28.3 | $ | 2.1 | $ | 30.4 | ||||||||
| Charge-Offs | (3.5) | (0.4) | (3.9) | — | — | — | ||||||||||||||
| Recoveries | 2.2 | 1.4 | 3.6 | — | — | — | ||||||||||||||
| Net Recoveries (Charge-Offs) | (1.3) | 1.0 | (0.3) | — | — | — | ||||||||||||||
| Provision for Credit Losses | (4.7) | 1.3 | (3.4) | (6.6) | (0.5) | (7.1) | ||||||||||||||
| Balance at End of Period | $ | 132.5 | $ | 31.8 | $ | 164.3 | $ | 21.7 | $ | 1.6 | $ | 23.3 |
| 2024 | ||||||||||||||||||||
| LOANS | UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT | |||||||||||||||||||
| (In Millions) | COMMERCIAL | PERSONAL | TOTAL | COMMERCIAL | PERSONAL | TOTAL | ||||||||||||||
| Balance at Beginning of Period | $ | 146.8 | $ | 31.9 | $ | 178.7 | $ | 24.9 | $ | 2.0 | $ | 26.9 | ||||||||
| Charge-Offs | (15.1) | (0.4) | (15.5) | — | — | — | ||||||||||||||
| Recoveries | — | 4.2 | 4.2 | — | — | — | ||||||||||||||
| Net Recoveries (Charge-Offs) | (15.1) | 3.8 | (11.3) | — | — | — | ||||||||||||||
| Provision for Credit Losses | 6.8 | (6.2) | 0.6 | 3.4 | 0.1 | 3.5 | ||||||||||||||
| Balance at End of Period | $ | 138.5 | $ | 29.5 | $ | 168.0 | $ | 28.3 | $ | 2.1 | $ | 30.4 |
| 2023 | ||||||||||||||||||||
| LOANS | UNDRAWN LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT | |||||||||||||||||||
| (In Millions) | COMMERCIAL | PERSONAL | TOTAL | COMMERCIAL | PERSONAL | TOTAL | ||||||||||||||
| Balance at Beginning of Period | $ | 116.2 | $ | 28.1 | $ | 144.3 | $ | 36.3 | $ | 2.2 | $ | 38.5 | ||||||||
| Charge-Offs | (5.7) | (1.8) | (7.5) | — | — | — | ||||||||||||||
| Recoveries | 0.2 | 3.5 | 3.7 | — | — | — | ||||||||||||||
| Net Recoveries (Charge-Offs) | (5.5) | 1.7 | (3.8) | — | — | — | ||||||||||||||
| Provision for Credit Losses | 36.1 | 2.1 | 38.2 | (11.4) | (0.2) | (11.6) | ||||||||||||||
| Balance at End of Period | $ | 146.8 | $ | 31.9 | $ | 178.7 | $ | 24.9 | $ | 2.0 | $ | 26.9 |
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 121 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table provides information regarding the recorded investments in loans and the allowance for credit losses for loans and undrawn loan commitments and standby letters of credit by segment as of December 31, 2025 and 2024.
TABLE 62: RECORDED INVESTMENTS IN LOANS
| DECEMBER 31, 2025 | DECEMBER 31, 2024 | |||||||||||||||||||
| (In Millions) | COMMERCIAL | PERSONAL | TOTAL | COMMERCIAL | PERSONAL | TOTAL | ||||||||||||||
| Loans | ||||||||||||||||||||
| Evaluated on an Individual Basis | $ | 55.0 | $ | 45.9 | $ | 100.9 | $ | 35.9 | $ | 30.0 | $ | 65.9 | ||||||||
| Evaluated on a Collective Basis | 20,376.0 | 21,471.4 | 41,847.4 | 20,242.9 | 23,081.8 | 43,324.7 | ||||||||||||||
| Total Loans | 20,431.0 | 21,517.3 | 41,948.3 | 20,278.8 | 23,111.8 | 43,390.6 | ||||||||||||||
| Allowance for Credit Losses on Loans | ||||||||||||||||||||
| Evaluated on an Individual Basis | 5.9 | 4.3 | 10.2 | 1.2 | 2.0 | 3.2 | ||||||||||||||
| Evaluated on a Collective Basis | 126.6 | 27.5 | 154.1 | 137.3 | 27.5 | 164.8 | ||||||||||||||
| Allowance Assigned to Loans | 132.5 | 31.8 | 164.3 | 138.5 | 29.5 | 168.0 | ||||||||||||||
| Allowance Assigned to Undrawn Loan Commitments and Standby Letters of Credit - Evaluated on a Collective Basis | 21.7 | 1.6 | 23.3 | 28.3 | 2.1 | 30.4 | ||||||||||||||
| Total Allowance Assigned to Loans and Undrawn Loan Commitments and Standby Letters of Credit | $ | 154.2 | $ | 33.4 | $ | 187.6 | $ | 166.8 | $ | 31.6 | $ | 198.4 |
Allowance for Held to Maturity Debt Securities Portfolio. The following table provides information regarding changes in the total allowance for credit losses for held to maturity debt securities.
TABLE 63: CHANGES IN THE ALLOWANCE FOR CREDIT LOSSES RELATED TO HELD TO MATURITY DEBT SECURITIES
| 2025 | |||||||||||||||||||||||
| (In Millions) | CORPORATE DEBT | NON-U.S. GOVERNMENT | SUB-SOVEREIGN, SUPRANATIONAL, AND NON-U.S. AGENCY BONDS | OBLIGATIONS OF STATES AND POLITICAL SUBDIVISIONS**(1)** | COVERED BONDS | OTHER | TOTAL | ||||||||||||||||
| Balance at Beginning of Period | $ | 0.3 | $ | 2.0 | $ | 1.1 | $ | 0.9 | $ | — | $ | 2.2 | $ | 6.5 | |||||||||
| Provision for Credit Losses | — | 0.8 | 1.7 | 0.2 | 0.1 | — | 2.8 | ||||||||||||||||
| Balance at End of Period | $ | 0.3 | $ | 2.8 | $ | 2.8 | $ | 1.1 | $ | 0.1 | $ | 2.2 | $ | 9.3 |
(1) The allowance for Obligations of States and Political Subdivisions is related to (non pre-refunded) municipal securities that do not fall under Northern Trust’s zero-loss assumption.
| 2024 | |||||||||||||||||||||||
| (In Millions) | CORPORATE DEBT | NON-U.S. GOVERNMENT | SUB-SOVEREIGN, SUPRANATIONAL, AND NON-U.S. AGENCY BONDS | OBLIGATIONS OF STATES AND POLITICAL SUBDIVISIONS(1) | COVERED BONDS | OTHER | TOTAL | ||||||||||||||||
| Balance at Beginning of Period | $ | 0.9 | $ | 3.5 | $ | 2.2 | $ | 1.2 | $ | 0.1 | $ | 4.8 | $ | 12.7 | |||||||||
| Provision for Credit Losses | (0.6) | (1.5) | (1.1) | (0.3) | (0.1) | (2.6) | (6.2) | ||||||||||||||||
| Balance at End of Period | $ | 0.3 | $ | 2.0 | $ | 1.1 | $ | 0.9 | $ | — | $ | 2.2 | $ | 6.5 |
(1) The allowance for Obligations of States and Political Subdivisions is related to (non pre-refunded) municipal securities that do not fall under Northern Trust’s zero-loss assumption.
| 2023 | |||||||||||||||||||||||
| (In Millions) | CORPORATE DEBT | NON-U.S. GOVERNMENT | SUB-SOVEREIGN, SUPRANATIONAL, AND NON-U.S. AGENCY BONDS | OBLIGATIONS OF STATES AND POLITICAL SUBDIVISIONS(1) | COVERED BONDS | OTHER | TOTAL | ||||||||||||||||
| Balance at Beginning of Period | $ | 1.9 | $ | 3.6 | $ | 4.0 | $ | 1.5 | $ | 0.1 | $ | 4.9 | $ | 16.0 | |||||||||
| Charge-Offs | — | — | — | — | — | (1.2) | (1.2) | ||||||||||||||||
| Provision for Credit Losses | (1.0) | (0.1) | (1.8) | (0.3) | — | 1.1 | (2.1) | ||||||||||||||||
| Balance at End of Period | $ | 0.9 | $ | 3.5 | $ | 2.2 | $ | 1.2 | $ | 0.1 | $ | 4.8 | $ | 12.7 |
(1) The allowance for Obligations of States and Political Subdivisions is related to (non pre-refunded) municipal securities that do not fall under Northern Trust’s zero-loss assumption.
Allowance for Other Financial Assets. The allowance for other financial assets consists of the allowance for Due from Banks, Other Central Bank Deposits, Interest Bearing Deposits with Banks, and Other Assets. Northern Trust’s portfolio is composed mostly of institutions within the “1 to 3” internal borrower rating category and is expected to exhibit minimal to modest likelihood of loss. The Allowance for Credit Losses related to other financial assets was $1.4 million and $1.0 million as of December 31, 2025 and 2024, respectively.
| 122 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Accrued Interest. Accrued interest balances are reported within Other Assets on the consolidated balance sheets. Northern Trust elected not to measure an allowance for credit losses for accrued interest receivables related to its loans and securities portfolios as its policy is to write-off uncollectible accrued interest receivable balances in a timely manner. Accrued interest is written off by reversing interest income during the period the financial asset is moved from an accrual to a nonaccrual status.
The following table provides the amount of accrued interest excluded from the amortized cost basis of the following portfolios.
TABLE 64: ACCRUED INTEREST
| (In Millions) | DECEMBER 31, 2025 | DECEMBER 31, 2024 | ||||||
| Loans | $ | 184.6 | $ | 211.7 | ||||
| Debt Securities | ||||||||
| Held to Maturity | 76.9 | 58.9 | ||||||
| Available for Sale | 175.0 | 173.9 | ||||||
| Other Financial Assets | 62.2 | 53.1 | ||||||
| Total | $ | 498.7 | $ | 497.6 |
The amount of accrued interest reversed through interest income for loans was immaterial and there was no accrued interest reversed through interest income related to any other financial assets during the years ended 2025 and 2024.
Note 7 – Concentrations of Credit Risk
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: banks and bank holding companies, residential real estate, and commercial real estate.
Banks and Bank Holding Companies. At December 31, 2025, on-balance sheet credit risk to banks and bank holding companies, both U.S. and non-U.S., consisted primarily of Interest-Bearing Deposits with Banks of $1.7 billion, demand balances maintained at correspondent banks of $5.9 billion and Securities Purchased under Agreements to Resell of $2.7 billion. At December 31, 2024, on-balance sheet credit risk to banks and bank holding companies, both U.S. and non-U.S., consisted primarily of Interest-Bearing Deposits with Banks of $1.9 billion, demand balances maintained at correspondent banks of $4.7 billion, and Securities Purchased under Agreements to Resell of $426.0 million. Credit risk associated with U.S. and non-U.S. banks and bank holding companies deemed to be counterparties is managed by the Capital Markets Credit Committee. Credit limits are established through a review process that includes an internally-prepared financial analysis, use of an internal risk rating system, and consideration of external market indicators as well as regulatory single counterparty credit limits. Northern Trust places deposits with banks that have strong 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.
Residential Real Estate. Residential real estate loans totaled $6.1 billion at both December 31, 2025 and December 31, 2024, representing 16% and 15%, respectively, of total U.S. loans. Residential real estate loans consist of traditional first lien mortgages and equity credit lines, which generally require a loan-to-collateral value ratio of 65% to 80% at inception. Revaluations of supporting collateral are obtained upon refinancing or default or when otherwise considered warranted. Collateral revaluations for mortgages are performed by independent third parties. Legally binding undrawn commitments to extend residential real estate credit, which are primarily equity credit lines, totaled $515.2 million and $679.5 million at December 31, 2025 and 2024, respectively. The table below provides additional detail regarding residential real estate loans by geographic region.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 123 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TABLE 65: RESIDENTIAL REAL ESTATE LOANS BY GEOGRAPHIC REGION
| DECEMBER 31, | ||||||||
| (In Millions) | 2025 | 2024 | ||||||
| Residential Real Estate by geographic region: | ||||||||
| Florida | $ | 1,597.9 | $ | 1,636.5 | ||||
| California | 1,291.7 | 1,371.9 | ||||||
| Illinois | 548.5 | 591.3 | ||||||
| New York | 539.3 | 510.8 | ||||||
| Colorado | 337.7 | 309.9 | ||||||
| Texas | 301.4 | 308.7 | ||||||
| All other(1) | 1,460.8 | 1,380.8 | ||||||
| Total Residential Real Estate | $ | 6,077.3 | $ | 6,109.9 |
(1) The remainder is distributed throughout the other geographic regions within the U.S. served by Northern Trust.
Commercial Real Estate. Commercial real estate loans totaled $5.3 billion at December 31, 2025 and December 31, 2024, representing 13% of total U.S. loans in both periods. 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. The commercial real estate portfolio consists of commercial mortgages and construction, acquisition and development loans extended primarily to experienced investors well known to Northern Trust.
Underwriting standards generally reflect conservative loan-to-collateral value (LTV) ratios and debt service coverage requirements. LTV ratios, calculated as the outstanding amount of the loan divided by the estimated value of the property, are a critical component of Northern Trust’s underwriting standards. Northern Trust utilizes LTV ratios in various stages of the lending and risk management process. Northern Trust’s policy related to LTV limits is more conservative than what is prescribed by current supervisory regulations. LTV ratios are monitored and updated on a quarterly basis utilizing the most recent outstanding amounts and appraisal values based on models, automated valuation services, or updated appraisals.
All commercial real estate transactions, regardless of size, require an independent appraisal at loan origination, unless permissible and approved regulatory exemptions can be applied. Real estate appraisals are, at a minimum, performed in accordance with generally accepted appraisal standards as applicable under local regulations. Northern Trust considers obtaining a new appraisal as part of the loan renewal process or whenever credit quality or market conditions have materially and adversely changed to the point where it is prudent to reassess the value of the real estate collateral. For defaulted loans, appraisals are updated on an, at least, annual basis. Appraisal values might be discounted based upon Northern Trust’s experience with actual liquidation values and management’s judgment as to the realizable value of the property.
Recourse to personal clients through guarantees is also generally required. Commercial mortgage financing 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 are primarily located in the California, Illinois, Florida, and Texas markets. Construction, acquisition and development loans provide financing for commercial real estate prior to rental income stabilization. The intent is generally that the borrower will sell the project or refinance the loan through a commercial mortgage with Northern Trust or another financial institution upon completion. At December 31, 2025, legally binding commitments to extend credit and standby letters of credit to commercial real estate borrowers totaled $268.7 million and $79.9 million, respectively. At December 31, 2024, legally binding commitments to extend credit and standby letters of credit to commercial real estate borrowers totaled $376.5 million and $81.9 million, respectively.
| 124 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The table below provides additional detail regarding commercial real estate loan types.
TABLE 66: COMMERCIAL REAL ESTATE LOANS
| DECEMBER 31, | ||||||||
| (In Millions) | 2025 | 2024 | ||||||
| Commercial Mortgages | ||||||||
| Apartment/ Multi-family | $ | 1,586.4 | $ | 1,599.9 | ||||
| Industrial/Warehouse | 960.1 | 906.1 | ||||||
| Office | 948.0 | 944.4 | ||||||
| Retail | 695.9 | 665.6 | ||||||
| Other | 622.5 | 630.3 | ||||||
| Total Commercial Mortgages | 4,812.9 | 4,746.3 | ||||||
| Construction, Acquisition and Development Loans | 459.3 | 567.9 | ||||||
| Total Commercial Real Estate Loans | $ | 5,272.2 | $ | 5,314.2 |
Note 8 – Buildings and Equipment
A summary of Buildings and Equipment is presented in the following table.
TABLE 67: BUILDINGS AND EQUIPMENT
| DECEMBER 31, 2025 | |||||||||||
| (In Millions) | ORIGINAL COST | ACCUMULATED DEPRECIATION | NET BOOK VALUE | ||||||||
| Land and Improvements | $ | 11.5 | $ | 0.3 | $ | 11.2 | |||||
| Buildings | 227.8 | 140.0 | 87.8 | ||||||||
| Equipment | 512.0 | 335.3 | 176.7 | ||||||||
| Leasehold Improvements | 574.1 | 385.2 | 188.9 | ||||||||
| Total Buildings and Equipment | $ | 1,325.4 | $ | 860.8 | $ | 464.6 |
| DECEMBER 31, 2024 | |||||||||||
| (In Millions) | ORIGINAL COST | ACCUMULATED DEPRECIATION | NET BOOK VALUE | ||||||||
| Land and Improvements | $ | 11.5 | $ | 0.3 | $ | 11.2 | |||||
| Buildings | 226.5 | 143.4 | 83.1 | ||||||||
| Equipment | 539.6 | 343.4 | 196.2 | ||||||||
| Leasehold Improvements | 553.5 | 353.7 | 199.8 | ||||||||
| Total Buildings and Equipment | $ | 1,331.1 | $ | 840.8 | $ | 490.3 |
The charge for depreciation amounted to $100.7 million in 2025, $110.0 million in 2024, and $115.9 million in 2023 on the consolidated statements of income.
Note 9 – Lease Commitments
As of December 31, 2025, Northern Trust was obligated under a number of non-cancelable operating leases, primarily for real estate. Certain leases contain rent escalation clauses based on market indices, renewal option clauses calling for increased rentals, and rental payments based on usage. There are no restrictions imposed by any lease agreement regarding the payment of dividends, debt financing or Northern Trust entering into further lease agreements.
The components of lease costs for the years ended December 31, 2025 and 2024 were as follows.
TABLE 68: LEASE COST COMPONENTS
| FOR THE YEAR ENDED DECEMBER 31, | ||||||||
| (In Millions) | 2025 | 2024 | ||||||
| Operating Lease Cost | $ | 87.8 | $ | 93.5 | ||||
| Variable Lease Cost (1) | 50.4 | 49.3 | ||||||
| Sublease Income | (3.2) | (3.0) | ||||||
| Total Lease Cost | $ | 135.0 | $ | 139.8 |
(1) Variable Lease Cost includes rental payments based on usage, common-area maintenance costs and property taxes.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 125 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents a maturity analysis of lease liabilities as of December 31, 2025.
TABLE 69: MATURITY OF LEASE LIABILITIES
| (In Millions) | MATURITY OF LEASE LIABILITIES | ||||
| 2026 | $ | 98.0 | |||
| 2027 | 99.1 | ||||
| 2028 | 86.2 | ||||
| 2029 | 71.0 | ||||
| 2030 | 70.3 | ||||
| Later Years | 315.2 | ||||
| Total Lease Payments | 739.8 | ||||
| Less: Imputed Interest | (115.4) | ||||
| Present Value of Lease Liabilities | $ | 624.4 |
As of December 31, 2025, Northern Trust did not have any commitments for operating leases in addition to the above that have not yet commenced.
Northern Trust uses its incremental borrowing rate to determine the present value of lease payments for operating leases. Operating lease right-of-use (ROU) assets and lease liabilities may include options to extend or terminate the lease only when it is reasonably certain that Northern Trust will exercise that option. Northern Trust elects not to separate lease and non-lease components of a contract for its real estate leases. The location and amount of ROU assets and lease liabilities recorded on the consolidated balance sheets as of December 31, 2025 and 2024 are presented in the following table.
TABLE 70: LOCATION AND AMOUNT OF LEASE ASSETS AND LIABILITIES
| (In Millions) | LOCATION OF LEASE ASSETS AND LEASE LIABILITIES ON THE BALANCE SHEET | DECEMBER 31, 2025 | DECEMBER 31, 2024 | ||||||||
| Assets | |||||||||||
| Operating Lease Right-of-Use Asset | Other Assets | $ | 464.6 | $ | 478.0 | ||||||
| Liabilities | |||||||||||
| Operating Lease Liability | Other Liabilities | $ | 624.4 | $ | 648.8 |
The weighted-average remaining lease term and weighted-average discount rate applied to leases as of December 31, 2025 and 2024 were as follows:
TABLE 71: WEIGHTED-AVERAGE REMAINING LEASE TERM AND DISCOUNT RATE
| DECEMBER 31, 2025 | DECEMBER 31, 2024 | |||||||
| Operating Leases | ||||||||
| Weighted-Average Remaining Lease Term | 9.2 years | 9.7 years | ||||||
| Weighted-Average Discount Rate | 3.5 | % | 3.4 | % |
The following table provides supplemental cash flow information related to leases for the years ended December 31, 2025 and 2024.
TABLE 72: SUPPLEMENTAL CASH FLOW INFORMATION
| FOR THE YEAR ENDED DECEMBER 31, | ||||||||
| (In Millions) | 2025 | 2024 | ||||||
| Supplemental cash flow information | ||||||||
| Cash paid for amounts included in the measurement of lease liabilities - operating cash flows | $ | 105.4 | $ | 94.5 | ||||
| Supplemental non-cash information | ||||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 48.8 | $ | 36.5 |
| 126 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10 – Goodwill and Other Intangibles
Goodwill. Changes by reporting segment in the carrying amount of Goodwill for the years ended December 31, 2025 and 2024, including the effect of foreign exchange rates on non-U.S.-dollar denominated balances, were as follows.
TABLE 73: GOODWILL
| (In Millions) | ASSET SERVICING | WEALTH MANAGEMENT | TOTAL | ||||||||
| Balance at December 31, 2023 | $ | 621.9 | $ | 80.4 | $ | 702.3 | |||||
| Foreign Exchange Rates | (7.3) | (0.1) | (7.4) | ||||||||
| Balance at December 31, 2024 | $ | 614.6 | $ | 80.3 | $ | 694.9 | |||||
| Foreign Exchange Rates | 17.9 | 0.1 | 18.0 | ||||||||
| Balance at December 31, 2025 | $ | 632.5 | $ | 80.4 | $ | 712.9 |
The goodwill impairment test is performed at least annually at the reporting-unit level. The Corporation has determined its reporting units for this purpose to be Asset Servicing and Wealth Management. Goodwill was tested for impairment during the fourth quarter of 2025 using a quantitative assessment in which the estimated fair values of the reporting units are compared to their carrying values. Impairment is deemed to exist if the carrying value of a reporting unit exceeds its estimated fair value. Based upon the quantitative assessments, there were no impairments to goodwill in 2025.
Other Intangible Assets. The net carrying amount of other intangible assets was $59.6 million and $58.1 million as of December 31, 2025 and 2024, respectively. Other intangible assets consist primarily of the value of acquired client relationships and are included in Other Assets on the consolidated balance sheets. Amortization expense totaled $6.1 million and $9.2 million for the years ended December 31, 2025 and 2024, respectively.
Capitalized Software. The gross carrying amount and accumulated amortization of capitalized software as of December 31, 2025 and 2024 were as follows.
TABLE 74: CAPITALIZED SOFTWARE
| DECEMBER 31, | ||||||||
| (In Millions) | 2025 | 2024 | ||||||
| Gross Carrying Amount | $ | 4,926.2 | $ | 4,259.6 | ||||
| Less: Accumulated Amortization | 2,574.2 | 2,104.5 | ||||||
| Net Carrying Value | $ | 2,352.0 | $ | 2,155.1 |
Capitalized software, which is included in Other Assets on the consolidated balance sheets, consists primarily of costs related to purchased software and internal-use software development projects that result in new or enhanced functionality, including compensation and other allowable internal costs. Fees paid for the use of software services that do not convey a software license are expensed as incurred. Amortization expense, which is included in Equipment and Software on the consolidated statements of income, totaled $672.3 million in 2025, $597.6 million in 2024, and $509.4 million in 2023.
Note 11 – Deposits
The following table provides the scheduled maturity of total time deposits in denominations of $250,000 or greater at December 31, 2025.
TABLE 75: REMAINING MATURITY OF TIME DEPOSITS $250,000 OR MORE
| DECEMBER 31, 2025 | |||||||||||
| U.S. OFFICE | NON-U.S. OFFICES | ||||||||||
| (In Millions) | CERTIFICATES OF DEPOSIT | OTHER TIME | TOTAL | ||||||||
| 1 Year or Less | $ | 5,572.4 | $ | 995.3 | $ | 6,567.7 | |||||
| Over 1 Year to 2 Years | 21.5 | — | 21.5 | ||||||||
| Over 2 Years to 3 Years | 13.5 | — | 13.5 | ||||||||
| Over 3 Years to 4 Years | 2.4 | — | 2.4 | ||||||||
| Over 4 Years to 5 Years | 1.4 | — | 1.4 | ||||||||
| Over 5 Years | — | — | — | ||||||||
| Total | $ | 5,611.2 | $ | 995.3 | $ | 6,606.5 |
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 127 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2024, there were $7.1 billion of time deposits in denominations of $250,000 or greater, of which, $4.9 billion were Certificates of Deposit and $2.2 billion were non-U.S.
Note 12 – Senior Notes and Long-Term Debt
Senior Notes. On November 19, 2025, the Corporation issued $500 million of 4.15% senior notes, due November 19, 2030. The senior notes will bear interest from the date they were issued at an annual rate of 4.15%, payable semi-annually in arrears. The senior notes are unsecured and rank equally with all of the Corporation's existing and future senior debt. The senior notes are not redeemable prior to maturity.
A summary of Senior Notes outstanding at December 31, 2025 and 2024 is presented in the following table.
TABLE 76: SENIOR NOTES
| DECEMBER 31, | |||||||||||
| ($ In Millions) | RATE | 2025 | 2024 | ||||||||
| Corporation-Senior Notes | |||||||||||
| Fixed Rate Note Due May 2027(1) | 4.00 | % | $ | 999.0 | $ | 998.3 | |||||
| Fixed Rate Note Due August 2028(2)(3) | 3.65 | 493.5 | 479.6 | ||||||||
| Fixed Rate Note Due May 2029(2)(3) | 3.15 | 483.1 | 465.3 | ||||||||
| Fixed Rate Note Due May 2030(2)(3) | 1.95 | 879.8 | 826.5 | ||||||||
| Fixed Rate Note Due November 2030(3)(4) | 4.15 | 496.1 | — | ||||||||
| Total Senior Notes | $ | 3,351.5 | $ | 2,769.7 |
(1) Redeemable within one month of maturity.
(2) Redeemable within three months of maturity.
(3) Interest rate swap contracts were entered into to modify the interest expense from fixed rates to floating rates. The swaps are recorded as fair value hedges and (decreases) increases in the carrying values of senior notes outstanding of $(142.2) million and $(224.2) million were recorded as of December 31, 2025 and 2024, respectively. See further detail in Note 25, “Derivative Financial Instruments.”
(4) Not redeemable prior to maturity.
Long-Term Debt. On November 19, 2025, the Corporation issued $750 million of 5.117% subordinated notes, due November 19, 2040. The subordinated notes will bear interest from the date they were issued at an annual rate of 5.117%, payable semi-annually in arrears until, but excluding November 19, 2035. From, and including November 19, 2035, the subordinated notes will bear a fixed interest rate equal to the five-year U.S. Treasury Rate plus 105 basis points per annum payable semi-annually in arrears. The subordinated notes are unsecured and rank junior to all of the Corporation's existing and future senior debt. On, and only on, November 19, 2035, the subordinated notes may be redeemed, in whole but not in part, at a redemption price equal to 100% of the principal amount of the subordinated notes to be redeemed plus accrued and unpaid interest thereon to, but excluding, the redemption date.
| 128 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A summary of Long-Term Debt, defined as debt with original maturities of one year or more, outstanding at December 31, 2025 and 2024 is presented in the following table. We do not reclassify Long-Term Debt to short-term borrowings within a year of maturity.
TABLE 77: LONG-TERM DEBT
| DECEMBER 31, | |||||||||||
| ($ In Millions) | RATE | 2025 | 2024 | ||||||||
| Corporation-Subordinated Debt | |||||||||||
| Fixed Rate Note due October 2025(1) | 3.950 | % | $ | — | $ | 736.0 | |||||
| Fixed-to-Floating Rate Note due May 2032(2) | 3.375 | 349.9 | 349.8 | ||||||||
| Fixed Rate Note due November 2032(3) | 6.125 | 996.0 | 995.5 | ||||||||
| Fixed-to-Fixed Rate Note due November 2040(4)(5) | 5.117 | 738.5 | — | ||||||||
| Total Corporation-Subordinated Debt | $ | 2,084.4 | $ | 2,081.3 | |||||||
| Federal Home Loan Bank (FHLB) Advances | |||||||||||
| FHLB Fixed Rate Advance due December 2025 | 5.13 | % | $ | — | $ | 30.0 | |||||
| FHLB Fixed Rate Advance due December 2025 | 5.18 | — | 570.0 | ||||||||
| FHLB Fixed Rate Advance due March 2026 | 5.13 | 600.0 | 600.0 | ||||||||
| FHLB Fixed Rate Advance due June 2026 | 5.09 | 800.0 | 800.0 | ||||||||
| Total FHLB Advances | $ | 1,400.0 | $ | 2,000.0 | |||||||
| Total Long-Term Debt | $ | 3,484.4 | $ | 4,081.3 | |||||||
| Long-Term Debt Qualifying as Risk-Based Capital | $ | 2,097.3 | $ | 1,347.1 |
(1) Redeemed in October 2025.
(2) The subordinated notes will bear interest from the date they were issued to, but excluding, May 8, 2027, at an annual rate of 3.375%, payable semi-annually in arrears. Effective February 27, 2023, the Board of Governors of the Federal Reserve adopted a final rule to implement the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”). The final rule establishes benchmark replacements for contracts governed by U.S. law that reference certain tenors of U.S. dollar LIBOR after June 30, 2023. Pursuant to the final rule, three-month LIBOR will be replaced by the three-month CME Term SOFR Reference Rate, as administered by CME Group Benchmark Administration, Ltd. (“three-month CME Term SOFR”) plus the statutory spread adjustment of 0.26161% as set forth in the final rule. As a result, from, and including, May 8, 2027, the subordinated notes will bear interest at an annual rate equal to three-month CME Term SOFR plus 0.26161% plus 1.131%, payable quarterly in arrears. The subordinated notes are unsecured and may be redeemed, in whole but not in part, on, and only on, May 8, 2027, at a redemption price equal to 100% of the principal amount of the subordinated notes to be redeemed, plus accrued and unpaid interest, if any, up to but excluding the redemption date.
(3) Redeemable within three months of maturity.
(4) The subordinated notes will bear interest from the date they were issued at an annual rate of 5.117%, payable semi-annually in arrears until, but excluding November 19, 2035. From, and including November 19, 2035, the subordinated notes will bear a fixed interest rate equal to the five-year U.S. Treasury Rate plus 105 basis points per annum payable semi-annually in arrears. The subordinated notes are unsecured and may be redeemed in whole but not in part, on, and only on, November 19, 2035, at a redemption price equal to 100% of the principal amount of the subordinated notes to be redeemed, plus accrued and unpaid interest, if any, up to but excluding the redemption date.
(5) Interest rate swap contracts were entered into to modify the interest expense from fixed rates to floating rates. The swaps are recorded as fair value hedges and (decreases) increases in the carrying values of subordinated notes outstanding of $(9.2) million were recorded as of December 31, 2025. See further detail in Note 25, “Derivative Financial Instruments.”
Note 13 – Stockholders’ Equity
Preferred Stock. The Corporation is authorized to issue 10 million shares of preferred stock without par value. The Board of Directors is authorized to fix the particular designations, preferences and relative, participating, optional and other special rights and qualifications, limitations or restrictions for each series of preferred stock issued.
As of December 31, 2025, 5,000 shares of Series D Non-Cumulative Perpetual Preferred Stock (“Series D Preferred Stock”) and 16,000 shares of Series E Non-Cumulative Perpetual Preferred Stock (“Series E Preferred Stock”) were outstanding.
Series D Preferred Stock. As of December 31, 2025, the Corporation had issued and outstanding 500,000 depositary shares, each representing a 1/100th ownership interest in a share of Series D Preferred Stock, issued in August 2016. Equity related to Series D Preferred Stock as of both December 31, 2025 and 2024 was $493.5 million. Shares of the Series D Preferred Stock have no par value and a liquidation preference of $100,000 per share (equivalent to $1,000 per depositary share).
Dividends on the Series D Preferred Stock, which are not mandatory, accrue and are payable on the liquidation preference amount, on a non-cumulative basis, at a rate per annum equal to (i) 4.60% from the original issue date of the Series D Preferred Stock to but excluding October 1, 2026; and (ii) a floating rate equal to three-month CME Term SOFR, plus a statutory spread adjustment of 0.26161% (as set forth in the final rule to implement the LIBOR Act) plus 3.202% from and including October 1, 2026. Fixed rate dividends are payable in arrears on the first day of April and October of each year, through and including October 1, 2026, and floating rate dividends will be payable in arrears on the first day of January, April, July and October of each year, commencing on January 1, 2027.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 129 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Series D Preferred Stock has no maturity date and is redeemable at the Corporation’s option in whole, or in part, on any dividend payment date on or after October 1, 2026. The Series D Preferred Stock is redeemable at the Corporation’s option in whole, but not in part, including prior to October 1, 2026, within 90 days of a regulatory capital treatment event, as described in the Series D Preferred Stock Certificate of Designation.
Shares of the Series D Preferred Stock rank senior to the Corporation’s common stock, and will rank at least equally with any other series of preferred stock it may issue (except for any senior series that may be issued with the requisite consent of the holders of the Series D Preferred Stock) and all other parity stock, with respect to the payment of dividends and distributions upon liquidation, dissolution or winding up.
Series E Preferred Stock. As of December 31, 2025, the Corporation had issued and outstanding 16 million depositary shares, each representing 1/1,000th ownership interest in a share of Series E Preferred Stock, issued in November 2019. Equity related to Series E Preferred Stock as of both December 31, 2025 and 2024 was $391.4 million. Shares of the Series E Preferred Stock have no par value and a liquidation preference of $25,000 per share (equivalent to $25 per depositary share).
Dividends on the Series E Preferred Stock, which are not mandatory, accrue and are payable on the liquidation preference amount, on a non-cumulative basis, quarterly in arrears on the first day of January, April, July and October of each year, at a rate per annum equal to 4.70%. On October 21, 2025, the Corporation declared a cash dividend of $293.75 per share of Series E Preferred Stock payable on January 1, 2026, to stockholders of record as of December 15, 2025.
The Series E Preferred Stock has no maturity date and is redeemable at the Corporation’s option in whole, or in part, on any dividend payment date effective January 1, 2025.
Shares of the Series E Preferred Stock rank senior to the Corporation’s common stock, and will rank at least equally with any other series of preferred stock it may issue (except for any senior series that may be issued with the requisite consent of the holders of the Series E Preferred Stock) and all other parity stock, with respect to the payment of dividends and distributions upon liquidation, dissolution or winding up.
Common Stock. As of December 31, 2025, the Corporation had issued and outstanding shares of common stock of 245.2 million and 186.3 million, respectively. Shares are repurchased by the Corporation to, among other things, manage the Corporation’s capital levels. Repurchased shares are used for general purposes, including the issuance of shares under stock option and other incentive plans. On July 22, 2025, the Board of Directors approved a new repurchase program that authorized the Corporation to repurchase up to $2.5 billion of the Corporation’s common stock. This program has no expiration date. Repurchases prior to July 22, 2025 were made pursuant to the stock repurchase authorization approved by the Board of Directors in October 2021 During the year ended December 31, 2025, the Corporation repurchased 11,005,509 shares of common stock, including 450,486 shares withheld to satisfy tax withholding obligations related to share-based compensation, at a total cost of $1.3 billion. During the year ended December 31, 2024, the Corporation repurchased 10,489,770 shares of common stock, including 424,806 shares withheld to satisfy tax withholding obligations related to share-based compensation at a total cost of $937.8 million. During the year ended December 31, 2023, the Corporation repurchased 4,384,678 shares of common stock, including 378,130 shares withheld to satisfy tax withholding obligations related to share-based compensation, at a total cost of $347.5 million.
The average price paid per share for common stock repurchased in 2025, 2024, and 2023 was $115.72, 89.41, and 79.26, respectively.
An analysis of changes in the number of shares of common stock outstanding follows:
TABLE 78: SHARES OF COMMON STOCK OUTSTANDING
| 2025 | 2024 | 2023 | |||||||||
| Balance at January 1 | 195,969,746 | 205,126,224 | 208,428,309 | ||||||||
| Incentive Plan and Awards | 1,283,056 | 1,178,816 | 1,040,450 | ||||||||
| Stock Options Exercised | 90,295 | 154,476 | 42,143 | ||||||||
| Treasury Stock Purchased | (11,005,509) | (10,489,770) | (4,384,678) | ||||||||
| Balance at December 31 | 186,337,588 | 195,969,746 | 205,126,224 |
| 130 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 14 – Accumulated Other Comprehensive Income (Loss)
The following tables summarize the components of Accumulated Other Comprehensive Income (Loss) (AOCI) at December 31, 2025, 2024, and 2023, and changes during the years then ended.
TABLE 79: SUMMARY OF CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
| (In Millions) | NET UNREALIZED (LOSSES) GAINS ON AVAILABLE FOR SALE DEBT SECURITIES(1) | NET UNREALIZED GAINS (LOSSES) ON CASH FLOW HEDGES | NET FOREIGN CURRENCY ADJUSTMENT | NET PENSION AND OTHER POSTRETIREMENT BENEFIT ADJUSTMENTS | TOTAL | ||||||||||||
| Balance at December 31, 2022 | $ | (1,367.6) | $ | 1.2 | $ | 164.6 | $ | (367.4) | $ | (1,569.2) | |||||||
| Net Change | 443.7 | (0.4) | 39.0 | (51.0) | 431.3 | ||||||||||||
| Balance at December 31, 2023 | $ | (923.9) | $ | 0.8 | $ | 203.6 | $ | (418.4) | $ | (1,137.9) | |||||||
| Net Change | 325.8 | (0.2) | 29.5 | (31.2) | 323.9 | ||||||||||||
| Balance at December 31, 2024 | $ | (598.1) | $ | 0.6 | $ | 233.1 | $ | (449.6) | $ | (814.0) | |||||||
| Net Change | 196.8 | 0.3 | 15.8 | 10.6 | 223.5 | ||||||||||||
| Balance at December 31, 2025 | $ | (401.3) | $ | 0.9 | $ | 248.9 | $ | (439.0) | $ | (590.5) |
(1) Includes net unrealized gains (losses) on debt securities transferred from AFS to HTM.
TABLE 80: DETAILS OF CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
| FOR THE YEAR ENDED DECEMBER 31, | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||
| (In Millions) | PRE-TAX | TAX | AFTER TAX | PRE-TAX | TAX | AFTER TAX | PRE-TAX | TAX | AFTER TAX | ||||||||||||||||||||
| Unrealized Gains (Losses) on Available for Sale Debt Securities | |||||||||||||||||||||||||||||
| Unrealized Gains (Losses) on Available for Sale Debt Securities | $ | 162.3 | $ | (40.9) | $ | 121.4 | $ | 147.7 | $ | (39.5) | $ | 108.2 | $ | 319.4 | $ | (81.1) | $ | 238.3 | |||||||||||
| Reclassification Adjustments for Losses (Gains) Included in Net Income: | |||||||||||||||||||||||||||||
| Interest Income on Debt Securities(1) | 99.9 | (24.5) | 75.4 | 101.3 | (25.1) | 76.2 | 105.6 | (26.7) | 78.9 | ||||||||||||||||||||
| Net Losses on Debt Securities(2) | — | — | — | 189.3 | (47.9) | 141.4 | 169.5 | (43.0) | 126.5 | ||||||||||||||||||||
| Net Change | $ | 262.2 | $ | (65.4) | $ | 196.8 | $ | 438.3 | $ | (112.5) | $ | 325.8 | $ | 594.5 | $ | (150.8) | $ | 443.7 | |||||||||||
| Unrealized Gains (Losses) on Cash Flow Hedges | |||||||||||||||||||||||||||||
| Foreign Exchange Contracts | $ | 20.9 | $ | (5.1) | $ | 15.8 | $ | 13.2 | $ | (3.2) | $ | 10.0 | $ | 36.3 | $ | (9.2) | $ | 27.1 | |||||||||||
| Reclassification Adjustment for (Gains) Losses Included in Net Income(3) | (20.5) | 5.0 | (15.5) | (13.4) | 3.2 | (10.2) | (36.8) | 9.3 | (27.5) | ||||||||||||||||||||
| Net Change | $ | 0.4 | $ | (0.1) | $ | 0.3 | $ | (0.2) | $ | — | $ | (0.2) | $ | (0.5) | $ | 0.1 | $ | (0.4) | |||||||||||
| Foreign Currency Adjustments | |||||||||||||||||||||||||||||
| Foreign Currency Translation Adjustments | $ | 275.2 | $ | (12.8) | $ | 262.4 | $ | (149.0) | $ | 5.4 | $ | (143.6) | $ | 100.8 | $ | (1.6) | $ | 99.2 | |||||||||||
| Long-Term Intra-Entity Foreign Currency Transaction Gains (Losses) | 1.2 | (0.2) | 1.0 | (0.9) | 0.2 | (0.7) | (0.9) | 0.2 | (0.7) | ||||||||||||||||||||
| Net Investment Hedge (Losses) Gains | (328.1) | 80.5 | (247.6) | 233.1 | (59.3) | 173.8 | (77.4) | 17.9 | (59.5) | ||||||||||||||||||||
| Net Change | $ | (51.7) | $ | 67.5 | $ | 15.8 | $ | 83.2 | $ | (53.7) | $ | 29.5 | $ | 22.5 | $ | 16.5 | $ | 39.0 | |||||||||||
| Pension and Other Postretirement Benefit Adjustments | |||||||||||||||||||||||||||||
| Net Actuarial Gains (Losses) | $ | 5.6 | $ | (4.0) | $ | 1.6 | $ | (54.0) | $ | 12.9 | $ | (41.1) | $ | (71.4) | $ | 15.7 | $ | (55.7) | |||||||||||
| Reclassification Adjustment for Losses (Gains) Included in Net Income(4) | |||||||||||||||||||||||||||||
| Amortization of Net Actuarial Loss | 12.2 | (3.0) | 9.2 | 13.0 | (3.2) | 9.8 | 6.4 | (1.7) | 4.7 | ||||||||||||||||||||
| Amortization of Prior Service Cost (Credit) | (0.1) | — | (0.1) | (0.1) | — | (0.1) | — | — | — | ||||||||||||||||||||
| Settlement Loss | (0.1) | — | (0.1) | 0.2 | — | 0.2 | — | — | — | ||||||||||||||||||||
| Net Change | $ | 17.6 | $ | (7.0) | $ | 10.6 | $ | (40.9) | $ | 9.7 | $ | (31.2) | $ | (65.0) | $ | 14.0 | $ | (51.0) | |||||||||||
| Total Net Change | $ | 228.5 | $ | (5.0) | $ | 223.5 | $ | 480.4 | $ | (156.5) | $ | 323.9 | $ | 551.5 | $ | (120.2) | $ | 431.3 |
(1) The before-tax reclassification adjustment is related to the unrealized gains (losses) amortization on AFS debt securities that were previously transferred to HTM debt securities. Upon transfer of a debt security from the AFS to HTM classification, the amortized cost is reset to fair value. Any net unrealized gain or loss at the date of transfer will remain in AOCI and be amortized into Net Interest Income over the remaining life of the securities using the effective interest method. The amortization of amounts retained in AOCI will offset the effect on interest income of the amortization of the premium or discount resulting from transferring the securities at fair value.
(2) The net losses on AFS debt securities before-tax reclassification adjustment is recorded in Investment Security Gains (Losses), net on the consolidated statements of income. Refer to Note 4, “Securities” for further information.
(3) See Note 25, "Derivative Financial Instruments" for the location of the reclassification adjustment related to cash flow hedges.
(4) The pension and other postretirement benefit before-tax reclassification adjustment is recorded in Employee Benefits expense on the consolidated statements of income. Refer to Note 21, “Employee Benefits” for further information.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 131 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 15 – Net Income per Common Share
The computations of net income per common share are presented in the following table.
TABLE 81: NET INCOME PER COMMON SHARE
| FOR THE YEAR ENDED DECEMBER 31, | |||||||||||
| ($ In Millions Except Per Common Share Information) | 2025 | 2024 | 2023 | ||||||||
| BASIC NET INCOME PER COMMON SHARE | |||||||||||
| Average Number of Common Shares Outstanding | 191,358,026 | 201,263,646 | 207,248,094 | ||||||||
| Net Income | $ | 1,736.9 | $ | 2,031.1 | $ | 1,107.3 | |||||
| Less: Dividends on Preferred Stock | 41.8 | 41.8 | 41.8 | ||||||||
| Net Income Applicable to Common Stock | 1,695.1 | 1,989.3 | 1,065.5 | ||||||||
| Less: Earnings Allocated to Participating Securities | 15.9 | 16.9 | 11.6 | ||||||||
| Earnings Allocated to Common Shares Outstanding | $ | 1,679.2 | $ | 1,972.4 | $ | 1,053.9 | |||||
| Basic Net Income Per Common Share | 8.78 | 9.80 | 5.09 | ||||||||
| DILUTED NET INCOME PER COMMON SHARE | |||||||||||
| Average Number of Common Shares Outstanding | 191,358,026 | 201,263,646 | 207,248,094 | ||||||||
| Plus Dilutive Effect of Share-based Compensation | 888,499 | 606,459 | 315,652 | ||||||||
| Average Common and Potential Common Shares | 192,246,525 | 201,870,105 | 207,563,746 | ||||||||
| Earnings Allocated to Common and Potential Common Shares | $ | 1,679.3 | $ | 1,972.3 | $ | 1,053.9 | |||||
| Diluted Net Income Per Common Share | 8.74 | 9.77 | 5.08 |
Note: For the year ended December 31, 2025, there were no common stock equivalents excluded from the computation of diluted net income per common share because their inclusion would have been antidilutive. For the years ended December 31, 2024 and 2023, there were 0.1 million common stock equivalents excluded in the computation of diluted net income per share.
Note 16 – Revenue from Contracts with Clients
Trust, Investment, and Other Servicing Fees. Custody and Fund Administration fees is comprised of revenues received from our core asset servicing business for providing custody, fund administration, and middle-office-related services, primarily to Asset Servicing clients. Investment Management and Advisory income contains revenue received from providing asset management and related services to Wealth Management and Asset Servicing clients and to Northern Trust sponsored funds. Securities Lending income represents revenues generated from securities lending arrangements that Northern Trust enters into as agent, mainly with Asset Servicing clients. Other fees largely consists of revenues received from providing employee benefit, investment risk and analytic and other services to Asset Servicing and Wealth Management clients.
Other Noninterest Income. Treasury Management income represents revenues received from providing cash and liquidity management services to Asset Servicing and Wealth Management clients. The portion of Security Commissions and Trading Income that relates to revenue from contracts with clients is primarily comprised of commissions earned from providing securities brokerage services to Wealth Management and Asset Servicing clients. The portion of Other Operating Income that relates to revenue from contracts with clients is mainly comprised of service fees for banking-related services provided to Wealth Management and Asset Servicing clients.
Performance Obligations. Clients are typically charged monthly or quarterly in arrears based on the fee arrangement agreed to with each client; payment terms will vary depending on the client and services offered.
Substantially all revenues generated from contracts with clients for asset servicing, asset management, securities lending, treasury management and banking-related services are recognized on an accrual basis, over the period in which services are provided. The nature of Northern Trust’s performance obligations is to provide a series of distinct services in which the customer simultaneously receives and consumes the benefits of the promised services as they are performed. Fee arrangements are mainly comprised of variable amounts based on market value of client assets managed and serviced, transaction volumes, number of accounts, and securities lending volume and spreads. Revenue is recognized using the output method in an amount that reflects the consideration to which Northern Trust expects to be entitled in exchange for providing each month or quarter of service. For contracts with multiple performance obligations, revenue is allocated to each performance obligation based on the price agreed to with the client, representing its relative standalone selling price.
Security brokerage revenue is primarily represented by securities commissions received in exchange for providing trade execution related services. Control is transferred at a point in time, on the trade date of the transaction, and fees are typically variable based on transaction volumes and security types.
| 132 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Northern Trust’s contracts with its clients are typically open-ended arrangements and are therefore considered to have an original duration of less than one year. Northern Trust has elected the practical expedient to not disclose the value of remaining performance obligations for contracts with an original expected duration of one year or less.
The following table presents revenues disaggregated by major revenue source.
TABLE 82: REVENUE DISAGGREGATION
| FOR THE YEAR ENDED DECEMBER 31, | |||||||||||
| (In Millions) | 2025 | 2024 | 2023 | ||||||||
| Noninterest Income | |||||||||||
| Trust, Investment and Other Servicing Fees | |||||||||||
| Custody and Fund Administration | $ | 2,026.7 | $ | 1,915.2 | $ | 1,805.3 | |||||
| Investment Management and Advisory | 2,659.7 | 2,491.5 | 2,232.3 | ||||||||
| Securities Lending | 83.0 | 74.3 | 83.9 | ||||||||
| Other | 248.4 | 246.8 | 240.3 | ||||||||
| Total Trust, Investment and Other Servicing Fees | $ | 5,017.8 | $ | 4,727.8 | $ | 4,361.8 | |||||
| Other Noninterest Income | |||||||||||
| Foreign Exchange Trading Income | $ | 240.8 | $ | 231.2 | $ | 203.9 | |||||
| Treasury Management Fees | 38.7 | 35.7 | 31.6 | ||||||||
| Security Commissions and Trading Income | 170.4 | 150.5 | 135.0 | ||||||||
| Other Operating Income | 207.7 | 1,157.4 | 228.7 | ||||||||
| Investment Security Gains (Losses), net | — | (189.3) | (169.5) | ||||||||
| Total Other Noninterest Income | $ | 657.6 | $ | 1,385.5 | $ | 429.7 | |||||
| Total Noninterest Income | $ | 5,675.4 | $ | 6,113.3 | $ | 4,791.5 |
On the consolidated statements of income, Trust, Investment and Other Servicing Fees and Treasury Management Fees represent revenue from contracts with clients. For the year ended December 31, 2025, revenue from contracts with clients also includes $162.9 million of the $170.4 million total Security Commissions and Trading Income and $41.8 million of the $207.7 million total Other Operating Income. For the year ended December 31, 2024, revenue from contracts with clients also includes $143.7 million of the $150.5 million total Security Commissions and Trading Income and $39.3 million of the $1,157.4 million total Other Operating Income. For the year ended December 31, 2023, revenue from contracts with clients also includes $115.9 million of the $135.0 million total Security Commissions and Trading Income and $38.9 million of the $228.7 million total Other Operating Income.
Receivables Balances. The following table represents receivables balances from contracts with clients, which are included in Other Assets on the consolidated balance sheets, at December 31, 2025 and 2024.
TABLE 83: CLIENT RECEIVABLES
| DECEMBER 31, | ||||||||
| (In Millions) | 2025 | 2024 | ||||||
| Trust Fees Receivable, net(1) | $ | 956.7 | $ | 932.3 | ||||
| Other | 105.6 | 64.5 | ||||||
| Total Client Receivables | $ | 1,062.3 | $ | 996.8 |
*(1)*Trust Fees Receivable is net of a $5.0 million and $12.0 million fee receivable allowance as of December 31, 2025 and 2024, respectively.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 133 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 17 – Net Interest Income
The components of Net Interest Income were as follows.
TABLE 84: NET INTEREST INCOME
| FOR THE YEAR ENDED DECEMBER 31, | |||||||||||
| (In Millions) | 2025 | 2024 | 2023 | ||||||||
| Interest Income | |||||||||||
| Federal Reserve and Other Central Bank Deposits | $ | 1,463.8 | $ | 1,735.9 | $ | 1,462.3 | |||||
| Interest-Bearing Due from and Deposits with Banks(1) | 86.6 | 122.6 | 130.1 | ||||||||
| Federal Funds Sold and Securities Purchased under Agreements to Resell | 2,829.2 | 3,340.2 | 1,585.5 | ||||||||
| Securities – Taxable | 1,879.4 | 1,888.6 | 1,534.4 | ||||||||
| – Nontaxable(2) | 1.0 | 1.1 | 1.3 | ||||||||
| Loans | 2,280.1 | 2,567.1 | 2,551.1 | ||||||||
| Other Interest-Earning Assets(3) | 84.5 | 106.8 | 60.3 | ||||||||
| Total Interest Income | $ | 8,624.6 | $ | 9,762.3 | $ | 7,325.0 | |||||
| Interest Expense | |||||||||||
| Deposits | $ | 2,663.9 | $ | 3,415.9 | $ | 2,685.3 | |||||
| Federal Funds Purchased | 94.1 | 129.2 | 256.9 | ||||||||
| Securities Sold under Agreements to Repurchase | 2,763.2 | 3,280.4 | 1,541.1 | ||||||||
| Other Borrowings | 314.0 | 362.7 | 542.5 | ||||||||
| Senior Notes | 157.5 | 173.5 | 170.0 | ||||||||
| Long-Term Debt | 220.9 | 223.5 | 147.2 | ||||||||
| Total Interest Expense | $ | 6,213.6 | $ | 7,585.2 | $ | 5,343.0 | |||||
| Net Interest Income | $ | 2,411.0 | $ | 2,177.1 | $ | 1,982.0 |
(1) Interest-Bearing Due from and Deposits with Banks includes the interest-bearing component of Cash and Due from Banks and Interest-Bearing Deposits with Banks as presented on the consolidated balance sheets.
(2) Non-taxable Securities represent securities that are exempt from U.S. federal income taxes.
(3) Other Interest-Earning Assets include certain community development investments, collateral deposits with certain securities depositories and clearing houses, Federal Home Loan Bank and Federal Reserve stock, and money market investments which are classified in Other Assets on the consolidated balance sheets.
Note 18 – Other Operating Income
The components of Other Operating Income were as follows.
TABLE 85: OTHER OPERATING INCOME
| FOR THE YEAR ENDED DECEMBER 31, | |||||||||||
| (In Millions) | 2025 | 2024 | 2023 | ||||||||
| Loan Service Fees | $ | 53.7 | $ | 55.0 | $ | 83.1 | |||||
| Banking Service Fees | 56.1 | 55.0 | 53.0 | ||||||||
| Bank Owned Life Insurance | 80.3 | 79.1 | 69.5 | ||||||||
| Other Income(1)(2) | 17.6 | 968.3 | 23.1 | ||||||||
| Total Other Operating Income | $ | 207.7 | $ | 1,157.4 | $ | 228.7 |
(1) Other Income includes the mark-to-market loss on derivative swap activity related to previous sales of certain Visa Class B common shares, realized gains related to sales of certain Visa Class C common shares, and mark-to-market gains on Visa Class C common shares held.. Refer to Note 24—Commitments and Contingent Liabilities for further information.
(2) Other Income for the year ended December 31, 2024 includes a $68.1 million pre-tax gain related to the sale of an equity investment.
| 134 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 19 – Other Operating Expense
The components of Other Operating Expense were as follows.
TABLE 86: OTHER OPERATING EXPENSE
| FOR THE YEAR ENDED DECEMBER 31, | |||||||||||
| (In Millions) | 2025 | 2024 | 2023 | ||||||||
| Business Promotion | $ | 77.2 | $ | 81.3 | $ | 74.8 | |||||
| Staff Related | 36.1 | 46.4 | 35.0 | ||||||||
| FDIC Insurance Premiums(1) | 17.8 | 43.0 | 112.0 | ||||||||
| Charitable Contributions(2) | 11.8 | 83.8 | 15.6 | ||||||||
| Other Expenses | 202.4 | 200.7 | 235.5 | ||||||||
| Total Other Operating Expense | $ | 345.3 | $ | 455.2 | $ | 472.9 |
(1) FDIC Insurance Premiums includes a release of $15.9 million, and expenses of $14.7 million and $84.6 million related to the FDIC Special Assessment for the years ended December 31, 2025, 2024 and 2023, respectively.
(2) Charitable Contributions includes a $70.0 million charitable contribution to the Northern Trust Foundation for the year ended December 31, 2024.
Note 20 – Income Taxes
The following table reconciles the statutory federal tax rate with the effective tax rate for the periods presented below.
TABLE 87: INCOME TAXES
| FOR THE YEAR ENDED DECEMBER 31, | ||||||||||||||||||||
| ($ In Millions) | 2025 | 2025 | 2024 | 2024 | 2023 | 2023 | ||||||||||||||
| Statutory Federal Tax Rate | $ | 491.3 | 21.0 | % | $ | 558.5 | 21.0 | % | $ | 307.6 | 21.0 | % | ||||||||
| Tax Credits | (7.2) | (0.3) | (8.9) | (0.3) | (4.4) | (0.3) | ||||||||||||||
| Tax Credit Investments, Net (1) | (15.5) | (0.7) | (17.9) | (0.7) | (37.5) | (2.6) | ||||||||||||||
| Nontaxable or Nondeductible Tax Benefits | 1.0 | — | (7.0) | (0.3) | (3.0) | (0.2) | ||||||||||||||
| Effects of Cross-Border Tax Laws | 13.6 | 0.6 | 10.1 | 0.4 | 10.9 | 0.7 | ||||||||||||||
| Valuation Allowance | 59.8 | 2.6 | 36.7 | 1.4 | 25.8 | 1.8 | ||||||||||||||
| Other, net | 0.8 | — | (11.5) | (0.4) | (4.5) | (0.3) | ||||||||||||||
| Domestic State and Local Income Taxes, net (2) | 38.8 | 1.7 | 65.1 | 2.4 | 34.9 | 2.4 | ||||||||||||||
| Foreign Tax Effects | 21.1 | 0.9 | 5.5 | 0.2 | 7.7 | 0.5 | ||||||||||||||
| Worldwide Changes in Unrecognized Tax Benefits | (1.1) | — | (2.2) | (0.1) | 20.0 | 1.4 | ||||||||||||||
| Effective Tax Rate | $ | 602.6 | 25.8 | % | $ | 628.4 | 23.6 | % | $ | 357.5 | 24.4 | % |
(1) Tax Credit Investments, Net includes Low Income Housing Tax Credits and New Market Tax Credits net of proportional amortization starting in 2024. Refer to Note 28, “Variable Interest Entities” for further information.
(2) State and local income taxes in Illinois, New York, and California comprise the majority of the Domestic State and Local Taxes, net category.
Income tax expense for the year ended December 31, 2025, 2024, and 2023 was $602.6 million, $628.4 million, and $357.5 million, representing an effective tax rate of 25.8%, 23.6%, and 24.4% respectively.
For the year ended December 31, 2025, the increase in the effective tax rate was primarily driven by a higher net tax impact from international operations.
The Corporation is no longer subject to income tax examinations by U.S. federal tax authorities before 2015, U.S. state or local tax authorities for years before 2011, or non-U.S. tax authorities for years before 2015.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 135 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Included in Other Liabilities on the consolidated balance sheets at December 31, 2025 and 2024 were $57.4 million and $58.5 million of unrecognized tax benefits, respectively. If recognized, the amounts would reduce 2025 and 2024 income tax expense by $49.4 million and $51.9 million, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows.
TABLE 88: UNRECOGNIZED TAX BENEFITS
| (In Millions) | 2025 | 2024 | 2023 | ||||||||
| Balance at January 1 | $ | 58.5 | $ | 60.7 | $ | 40.7 | |||||
| Additions for Tax Positions Taken in the Current Year | 2.5 | 2.0 | 2.1 | ||||||||
| Additions for Tax Positions Taken in Prior Years | 7.1 | 10.8 | 24.0 | ||||||||
| Reductions for Tax Positions Taken in Prior Years | (6.0) | (10.9) | (5.1) | ||||||||
| Reductions Resulting from Settlements with Taxing Authorities | (4.7) | (2.5) | — | ||||||||
| Reductions Resulting from Expiration of Statutes | — | (1.6) | (1.0) | ||||||||
| Balance at December 31 | $ | 57.4 | $ | 58.5 | $ | 60.7 |
A benefit for interest and penalties of $1.7 million, net of tax, was included in the Provision for Income Taxes for the year ended December 31, 2025. This compares to a provision for interest and penalties of $4.7 million, net of tax, and a provision of $0.2 million, net of tax, for the year ended December 31, 2024 and 2023, respectively. As of December 31, 2025 and 2024, the liability for the potential payment of interest and penalties totaled $14.3 million and $16.0 million, net of tax, respectively.
The components of the consolidated Provision for Income Taxes for each of the three years ended December 31 are as follows.
TABLE 89: PROVISION FOR INCOME TAXES (1)
| FOR THE YEAR ENDED DECEMBER 31, | |||||||||||
| (In Millions) | 2025 | 2024 | 2023 | ||||||||
| Current Tax Provision: | |||||||||||
| Federal | $ | 184.6 | $ | 400.2 | $ | 250.5 | |||||
| State | 23.7 | 66.7 | 63.2 | ||||||||
| Non-U.S. | 199.8 | 140.8 | 92.0 | ||||||||
| Total | $ | 408.1 | $ | 607.7 | $ | 405.7 | |||||
| Deferred Tax Provision: | |||||||||||
| Federal | $ | 159.9 | $ | (1.1) | $ | (54.0) | |||||
| State | 34.0 | 17.5 | (1.4) | ||||||||
| Non-U.S. | 0.6 | 4.3 | 7.2 | ||||||||
| Total | $ | 194.5 | $ | 20.7 | $ | (48.2) | |||||
| Provision for Income Taxes | |||||||||||
| Federal | $ | 344.5 | $ | 399.1 | $ | 196.5 | |||||
| State | 57.7 | 84.2 | 61.8 | ||||||||
| Non-U.S. | 200.4 | 145.1 | 99.2 | ||||||||
| Grand Total | $ | 602.6 | $ | 628.4 | $ | 357.5 |
(1) Refer to Note 31, “Reporting Segments and Related Information” for Income Before Income Taxes disaggregation.
In addition to the amounts shown above, tax charges (benefits) have been recorded directly to Stockholders’ Equity for the following. For further detail, refer to Note 14, “Accumulated Other Comprehensive Income (Loss).”
TABLE 90: TAX CHARGES (BENEFITS) RECORDED DIRECTLY TO STOCKHOLDERS’ EQUITY
| FOR THE YEAR ENDED DECEMBER 31, | |||||||||||
| (In Millions) | 2025 | 2024 | 2023 | ||||||||
| Tax Effect of Other Comprehensive Income | $ | 5.0 | $ | 156.5 | $ | 120.2 |
| 136 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The components of Income Taxes Paid for each of the three years ended December 31 are as follows.
TABLE 91: INCOME TAXES PAID**(1)**
| FOR THE YEAR ENDED DECEMBER 31, | |||||||||||
| (In Millions) | 2025 | 2024 | 2023 | ||||||||
| US Federal | $ | 169.3 | $ | 97.9 | $ | 173.2 | |||||
| US State and Local | |||||||||||
| Illinois | ***** | 21.7 | 42.0 | ||||||||
| New Jersey | ***** | (17.6) | * | ||||||||
| Other | 38.7 | 35.1 | 41.8 | ||||||||
| Total US State and Local | $ | 38.7 | $ | 39.2 | $ | 83.8 | |||||
| Foreign | |||||||||||
| United Kingdom | 122.6 | 43.4 | 43.2 | ||||||||
| Australia | 25.2 | * | * | ||||||||
| Luxembourg | ***** | 32.3 | * | ||||||||
| India | ***** | 18.3 | * | ||||||||
| Other | 71.0 | 37.5 | 62.3 | ||||||||
| Total Foreign | $ | 218.8 | $ | 131.5 | $ | 105.5 | |||||
| Total Income Taxes Paid | $ | 426.8 | $ | 268.6 | $ | 362.5 |
(1) Income Taxes Paid (net of refunds received) are based on earnings and current tax liabilities which vary year-over-year by jurisdiction and in total. Payments (net of refunds) in a given year and by jurisdiction may also be impacted by the timing of final settlements with tax authorities and non-recurring items, such as refund claims, that may relate to prior years limiting comparability between years.
*** The amount of income taxes paid during the year does not meet the 5% disaggregation threshold.
Deferred taxes result from temporary differences between the amounts reported on the consolidated financial statements and the tax bases of assets and liabilities. Deferred tax assets and liabilities have been computed as follows.
TABLE 92: DEFERRED TAX ASSETS AND LIABILITIES
| DECEMBER 31, | ||||||||
| (In Millions) | 2025 | 2024 | ||||||
| Deferred Tax Liabilities: | ||||||||
| Software Development | $ | 423.6 | $ | 419.9 | ||||
| Compensation and Benefits | 61.0 | 9.5 | ||||||
| State Taxes, net | 74.1 | 46.7 | ||||||
| Other Liabilities | 108.9 | 85.2 | ||||||
| Gross Deferred Tax Liabilities | $ | 667.6 | $ | 561.3 | ||||
| Deferred Tax Assets: | ||||||||
| Depreciation and Amortization | 39.7 | 38.4 | ||||||
| Allowance for Credit Losses | 41.5 | 43.2 | ||||||
| Unrealized Losses on Securities, net | 73.7 | 143.3 | ||||||
| Tax Credit and Loss Carryforwards | 217.7 | 157.9 | ||||||
| Other Assets | 94.0 | 117.2 | ||||||
| Gross Deferred Tax Assets | $ | 466.6 | $ | 500.0 | ||||
| Valuation Reserve | (217.7) | (157.9) | ||||||
| Deferred Tax Assets, net of Valuation Reserve | 248.9 | 342.1 | ||||||
| Net Deferred Tax Assets (Liabilities) | $ | (418.7) | $ | (219.2) |
The Corporation generated a foreign tax credit carryforward during the years ended December 31, 2025 and 2024, expiring in 2035 and 2034, respectively. A cumulative valuation allowance related to the credit carryforward of $217.3 million and $157.5 million was recorded at December 31, 2025 and 2024, respectively, as management believes the foreign tax credit carryforwards will not be fully realized.
Northern Trust had various state net operating loss carryforwards as of December 31, 2025 and 2024. The income tax benefits associated with these loss carryforwards were approximately $0.4 million as of both December 31, 2025 and 2024. A valuation allowance related to the loss carryforwards of $0.4 million was recorded at both December 31, 2025 and 2024, as management believes the net operating losses will not be fully realized.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 137 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 21 – Employee Benefits
The Corporation and certain of its subsidiaries provide various benefit programs, including defined benefit pension and defined contribution plans. A description of each major plan and related disclosures are provided below.
Pension. A noncontributory qualified defined benefit pension plan covers substantially all U.S. employees of Northern Trust. Employees of certain European subsidiaries retain benefits in local defined benefit plans, although those plans are closed to new participants and to future benefit accruals. Employees continue to accrue benefits under the Swiss pension plan, which is accounted for as a defined benefit plan under U.S. GAAP.
Northern Trust also maintains a noncontributory supplemental pension plan for participants whose retirement benefits under the U.S. Qualified 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 on the consolidated balance sheets. Total assets in the “Rabbi” Trust related to the nonqualified pension plan at December 31, 2025 and 2024 amounted to $86.3 million and $83.3 million, respectively. Contributions of $12.9 million and $8.0 million were made to the “Rabbi” Trust in 2025 and 2024, respectively.
The following tables set forth the status, amounts included in AOCI, and net periodic pension expense of the U.S. Qualified Plan, Non-U.S. Pension Plans, and U.S. Non-Qualified Plan.
TABLE 93: EMPLOYEE BENEFIT PLAN STATUS
| U.S. QUALIFIED PLAN | NON-U.S. PENSION PLANS | U.S. NON-QUALIFIED PLAN | ||||||||||||||||||
| ($ In Millions) | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | ||||||||||||||
| Accumulated Benefit Obligation | $ | 1,055.6 | $ | 1,005.9 | $ | 132.2 | $ | 125.7 | $ | 86.3 | $ | 88.9 | ||||||||
| Projected Benefit Obligation | $ | 1,196.4 | $ | 1,139.0 | $ | 137.1 | $ | 130.7 | $ | 103.4 | $ | 103.8 | ||||||||
| Plan Assets at Fair Value | 1,535.3 | 1,338.1 | 153.2 | 139.8 | — | — | ||||||||||||||
| Funded Status at December 31 | $ | 338.9 | $ | 199.1 | $ | 16.1 | $ | 9.1 | $ | (103.4) | $ | (103.8) | ||||||||
| Weighted-Average Assumptions: | ||||||||||||||||||||
| Discount Rates | 5.53 | % | 5.70 | % | 3.68 | % | 3.32 | % | 5.22 | % | 5.55 | % | ||||||||
| Rate of Increase in Compensation Level | 5.76 | 5.56 | 1.50 | 1.50 | 5.76 | 5.56 | ||||||||||||||
| Expected Long-Term Rate of Return on Assets | 7.25 | 7.25 | 4.02 | 3.89 | N/A | N/A |
TABLE 94: AMOUNTS INCLUDED IN ACCUMULATED OTHER COMPREHENSIVE INCOME
| U.S. QUALIFIED PLAN | NON-U.S. PENSION PLANS | U.S. NON-QUALIFIED PLAN | ||||||||||||||||||
| (In Millions) | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | ||||||||||||||
| Net Actuarial Loss | $ | 499.5 | $ | 516.5 | $ | 27.5 | $ | 29.8 | $ | 56.5 | $ | 56.6 | ||||||||
| Prior Service (Credit) Cost | — | — | (0.1) | (0.2) | — | — | ||||||||||||||
| Gross Amount in Accumulated Other Comprehensive Income | 499.5 | 516.5 | 27.4 | 29.6 | 56.5 | 56.6 | ||||||||||||||
| Income Tax Effect | 125.3 | 129.5 | 1.0 | 3.7 | 14.2 | 14.2 | ||||||||||||||
| Net Amount in Accumulated Other Comprehensive Income | $ | 374.2 | $ | 387.0 | $ | 26.4 | $ | 25.9 | $ | 42.3 | $ | 42.4 |
| 138 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TABLE 95: NET PERIODIC PENSION EXPENSE
| U.S. QUALIFIED PLAN | NON-U.S. PENSION PLANS | U.S. NON-QUALIFIED PLAN | |||||||||||||||||||||||||||
| ($ In Millions) | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||||||||
| Service Cost | $ | 54.9 | $ | 53.6 | $ | 46.0 | $ | 2.1 | $ | 1.9 | $ | 1.6 | $ | 4.7 | $ | 4.7 | $ | 4.8 | |||||||||||
| Interest Cost | 62.1 | 55.6 | 53.9 | 4.6 | 4.5 | 4.8 | 5.3 | 5.0 | 5.3 | ||||||||||||||||||||
| Expected Return on Plan Assets | (122.5) | (115.7) | (100.9) | (7.0) | (6.7) | (6.7) | — | — | — | ||||||||||||||||||||
| Amortization: | |||||||||||||||||||||||||||||
| Net Actuarial Loss (Gain) | 7.7 | 7.8 | 1.5 | — | 0.1 | (0.4) | 4.5 | 5.1 | 5.3 | ||||||||||||||||||||
| Prior Service (Credit) Cost | — | — | — | (0.1) | (0.1) | — | — | — | — | ||||||||||||||||||||
| Net Periodic Pension Expense | $ | 2.2 | $ | 1.3 | $ | 0.5 | $ | (0.4) | $ | (0.3) | $ | (0.7) | $ | 14.5 | $ | 14.8 | $ | 15.4 | |||||||||||
| Settlement Expense | — | — | — | (0.1) | 0.2 | — | — | — | — | ||||||||||||||||||||
| Total Pension Expense | $ | 2.2 | $ | 1.3 | $ | 0.5 | $ | (0.5) | $ | (0.1) | $ | (0.7) | $ | 14.5 | $ | 14.8 | $ | 15.4 | |||||||||||
| Weighted-Average Assumptions: | |||||||||||||||||||||||||||||
| Discount Rates | 5.70 | % | 5.03 | % | 5.22 | % | 3.32 | % | 3.12 | % | 3.76 | % | 5.55 | % | 4.95 | % | 5.15 | % | |||||||||||
| Rate of Increase in Compensation Level | 5.56 | 5.56 | 5.56 | 1.50 | 1.75 | 1.75 | 5.56 | 5.56 | 5.56 | ||||||||||||||||||||
| Expected Long-Term Rate of Return on Assets | 7.25 | 7.25 | 7.25 | 3.89 | 3.90 | 3.99 | N/A | N/A | N/A |
The components of net periodic pension expense are included in Employee Benefits expense on the consolidated statements of income. Assumptions utilized to determine net periodic pension expense for 2025, 2024, and 2023 are set as of December 31, 2024, 2023, and 2022, respectively.
TABLE 96: CHANGE IN PROJECTED BENEFIT OBLIGATION
| U.S. QUALIFIED PLAN | NON-U.S. PENSION PLANS | U.S. NON-QUALIFIED PLAN | ||||||||||||||||||
| (In Millions) | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | ||||||||||||||
| Beginning Balance | $ | 1,139.0 | $ | 1,151.7 | $ | 130.7 | $ | 148.6 | $ | 103.8 | $ | 109.2 | ||||||||
| Service Cost | 54.9 | 53.6 | 2.1 | 1.9 | 4.7 | 4.7 | ||||||||||||||
| Interest Cost | 62.1 | 55.6 | 4.6 | 4.5 | 5.3 | 5.0 | ||||||||||||||
| Employee Contributions | — | — | 0.9 | 0.8 | — | — | ||||||||||||||
| Plan Amendment | — | — | 0.2 | (0.4) | — | — | ||||||||||||||
| Actuarial Loss (Gain) | 23.4 | (60.9) | (7.2) | (11.9) | 4.4 | (0.8) | ||||||||||||||
| Settlements | — | — | (5.1) | (1.7) | — | — | ||||||||||||||
| Benefits Paid | (83.0) | (61.0) | (3.6) | (4.3) | (14.8) | (14.3) | ||||||||||||||
| Foreign Exchange Rate Changes | — | — | 14.5 | (6.8) | — | — | ||||||||||||||
| Ending Balance | $ | 1,196.4 | $ | 1,139.0 | $ | 137.1 | $ | 130.7 | $ | 103.4 | $ | 103.8 |
Actuarial losses of $20.6 million in 2025 were primarily driven by declining discount rates, while actuarial gains of $73.6 million in 2024 reflected rising discount rates.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 139 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TABLE 97: ESTIMATED FUTURE BENEFIT PAYMENTS
| (In Millions) | U.S. QUALIFIED PLAN | NON-U.S. PENSION PLANS | U.S. NON-QUALIFIED PLAN | ||||||||
| 2026 | $ | 103.9 | $ | 5.4 | $ | 13.2 | |||||
| 2027 | 106.5 | 6.2 | 11.4 | ||||||||
| 2028 | 102.4 | 6.8 | 11.1 | ||||||||
| 2029 | 103.6 | 6.2 | 12.6 | ||||||||
| 2030 | 101.3 | 7.5 | 12.8 | ||||||||
| 2031-2035 | 510.3 | 38.7 | 54.6 |
TABLE 98: CHANGE IN PLAN ASSETS
| U.S. QUALIFIED PLAN | NON-U.S. PENSION PLANS | |||||||||||||
| (In Millions) | 2025 | 2024 | 2025 | 2024 | ||||||||||
| Fair Value of Assets at Beginning of Period | $ | 1,338.1 | $ | 1,200.8 | $ | 139.8 | $ | 148.7 | ||||||
| Actual Return on Assets | 155.2 | (1.7) | 1.9 | (1.2) | ||||||||||
| Employer Contributions | 125.0 | 200.0 | 4.2 | 4.0 | ||||||||||
| Employee Contributions | — | — | 0.9 | 0.8 | ||||||||||
| Settlements | — | — | (5.1) | (1.7) | ||||||||||
| Benefits Paid | (83.0) | (61.0) | (3.6) | (4.3) | ||||||||||
| Foreign Exchange Rate Changes | — | — | 15.1 | (6.5) | ||||||||||
| Fair Value of Assets at End of Period | $ | 1,535.3 | $ | 1,338.1 | $ | 153.2 | $ | 139.8 |
The minimum required and maximum deductible contributions for the U.S. Qualified Plan in 2026 are estimated to be zero and $280.0 million, respectively. A cash contribution of $125.0 million for the 2025 plan year and $200.0 million for the 2024 plan year were made to the U.S. Qualified Plan during January 2025 and 2024, respectively.
The investment strategy employed for Northern Trust’s U.S. Qualified Plan utilizes a dynamic glide path based on a set of pre-approved asset allocations to return-seeking and liability-hedging assets that vary in accordance with the U.S. Qualified Plan’s projected benefit obligation funded ratio. In general, as the U.S. Qualified Plan’s projected benefit obligation funded ratio increases beyond an established threshold, the U.S. Qualified Plan’s allocation to liability-hedging assets will increase while the allocation to return-seeking assets will decrease. Conversely, a decrease in the U.S. Qualified Plan’s projected benefit obligation funded ratio beyond an established threshold will generally result in a decrease in the U.S. Qualified Plan’s allocation to liability-hedging assets and increase in the allocation to return-seeking assets. Liability-hedging assets include U.S. long duration credit bonds, and a custom completion strategy which holds U.S. government bonds of varying maturities as well as interest rate derivatives used to hedge more closely the liability duration of projected plan benefits with bond duration across all durations. Return-seeking assets include: U.S. equity, international developed equity, emerging markets equity, real estate, high yield bonds, global listed infrastructure, emerging market debt, private equity and hedge funds. The asset allocation of the U.S. Qualified Plan was kept consistent throughout 2025 and 2024.
Northern Trust utilizes an asset/liability methodology to determine the investment policies that will best meet its short and long-term objectives. The process is performed by modeling current and alternative strategies for asset allocation, funding policy and actuarial methods and assumptions. The financial modeling uses projections of expected capital market returns and expected volatility of those returns to determine alternative asset mixes having the greatest probability of meeting the U.S. Qualified Plan’s investment objectives. Risk tolerance is established through careful consideration of the U.S. Qualified Plan liabilities, funded status, and corporate financial condition. The intent of this strategy is to protect the U.S. Qualified Plan’s funded status and generate returns, which in combination with voluntary contributions are expected to outpace the U.S. Qualified Plan’s liability growth over the long run.
As of December 31, 2025, the target allocation of the U.S. Qualified Plan assets consisted of 45% U.S. long duration credit bonds, 20% global equities (U.S., international developed and emerging markets), 10% custom completion strategy, 5% private equity, 5% high yield bonds, 4% emerging market debt, 4% global listed infrastructure, 4% private real estate, and 3% hedge funds.
| 140 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Global equity investments include common stocks that are listed on an exchange and investments in commingled funds that invest primarily in publicly traded equities. Equity investments are diversified across country, region, investment style and market capitalization. Fixed income securities held include U.S. treasury securities, corporate bonds, and investments in commingled funds that invest in a diversified blend of longer duration fixed income securities; the custom completion strategy uses U.S. treasury securities and interest rate derivatives to align more closely with the target hedge ratio across maturities. Diversifying investments, including private equity, hedge funds, private real estate, emerging market debt, high yield bonds, and global listed infrastructure, are used judiciously to enhance long-term returns while improving portfolio diversification. Private equity assets consist primarily of investments in limited partnerships that invest in individual companies in the form of non-public equity or non-public debt positions. Direct or co-investment in non-public stock by the U.S. Qualified Plan is prohibited. The U.S. Qualified Plan’s private equity investments are limited to 20% of each of the total limited partnership or fund of funds and the maximum allowable loss cannot exceed the commitment amount. The U.S. Qualified Plan invests in a hedge fund of funds, which invests, either directly or indirectly, in diversified portfolios of funds or other pooled investment vehicles. Investments in private real estate, high yield bonds, emerging market debt, and global listed infrastructure are designed to provide income and added diversification.
Derivatives may be used, depending on the nature of the asset class to which they relate, to gain market exposure in an efficient and timely manner, to hedge foreign currency exposure or interest rate risk, or to alter the duration of a portfolio. There were five fixed income derivatives held by the U.S. Qualified Plan at December 31, 2025 and four at December 31, 2024.
Investment risk is measured and monitored on an ongoing basis through monthly liability measurements, periodic asset/liability studies, and quarterly investment portfolio reviews. Standards used to evaluate the U.S. Qualified Plan’s investment manager performance include, but are not limited to, the achievement of objectives, operation within guidelines and policy, and comparison against a benchmark. In addition, each manager of the investment funds held by the U.S. Qualified Plan is ranked against a universe of peers and compared to a benchmark. Total U.S. Qualified Plan performance analysis includes an analysis of the market environment, asset allocation impact on performance, risk and return relative to other ERISA plans, and manager impacts upon U.S. Qualified Plan performance.
The following describes the hierarchy of inputs used to measure fair value and the primary valuation methodologies used by Northern Trust for the U.S. Qualified Plan assets measured at fair value.
Level 1 – Quoted, active market prices for identical assets or liabilities. The U.S. Qualified Plan’s Level 1 assets are comprised primarily of U.S. treasury securities, mutual funds, and common stocks. The U.S. Qualified Plan’s Level 1 investments that are exchange traded are valued at the closing price reported by the respective exchanges on the day of valuation.
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. The U.S. Qualified Plan’s Level 2 assets are comprised of collective trust funds, corporate bonds, non-U.S. government obligations, and municipal and provincial bonds. The investments in collective trust funds fair values are calculated on a scheduled basis using the closing market prices and accruals of securities in the funds (total value of the funds) divided by the number of fund shares currently issued and outstanding. Redemptions of the collective trust funds occur by contract at the respective fund’s redemption date net asset value (NAV).
Level 3 – Valuation techniques in which one or more significant inputs are unobservable in the marketplace. The U.S. Qualified Plan did not hold Level 3 assets as of December 31, 2025 and 2024.
Assets valued at fair value using NAV per share - The U.S. Qualified Plan’s assets valued at fair value using NAV per share include investments in private equity funds and a hedge fund, which invest in underlying groups of investment funds or other pooled investment vehicles that are selected by the respective funds’ investment managers. The investment funds and the underlying investments held by these investment funds are valued at fair value. In determining the fair value of the underlying investments of each fund, the fund’s investment manager or general partner takes into account the estimated value reported by the underlying funds as well as any other considerations that may, in their judgment, increase or decrease such estimated value. The investments in the private equity funds and the hedge fund are considered to be long-term investments. There are no capital withdrawal options related to the investments in the private equity funds. However, capital is periodically distributed as underlying investments are sold. It is estimated that the current private equity investments would be materially liquidated over 1 year to 15 years, depending on the vintage year of a particular fund. With sixty days advance notice, the Plan’s investment in the hedge fund can be withdrawn at the next calendar quarter end.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 141 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The U.S. Qualified Plan’s assets valued at fair value using NAV per share also include investments in a real estate fund, which invests in real estate assets. The investment in properties by the real estate fund are carried at fair value, which is estimated based on the price that would be received to sell an asset in an orderly transaction between marketplace participants at the measurement date. The valuation for each real estate investment is subject to review on an annual basis which is based on either an external appraisal from appraisal firms or internal valuations prepared by the real estate fund’s investment advisor. The Plan’s investment in the real estate fund is considered to be a long-term investment and, with forty-five days advance notice, can be withdrawn at the next calendar quarter end to the extent the real estate fund has liquid assets, as determined at the sole discretion of the fund manager.
As investments in the private equity funds, hedge fund, and real estate fund are valued at fair value using NAV per share, they are not required to be categorized within the fair value hierarchy.
While Northern Trust believes its valuation methods for U.S. Qualified Plan assets are appropriate and consistent with other market participants, the use of different methodologies or assumptions could have a material effect on the computation of the estimated fair values.
The following table presents the fair values of Northern Trust’s U.S. Qualified Plan assets, by major asset category, and their level within the fair value hierarchy defined by GAAP as of December 31, 2025 and 2024.
TABLE 99: FAIR VALUE OF U.S. QUALIFIED PLAN ASSETS
| DECEMBER 31, 2025 | ||||||||||||||
| (In Millions) | LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL | ||||||||||
| Domestic Common Stock | $ | 62.7 | $ | — | $ | — | $ | 62.7 | ||||||
| Foreign Common Stock | 29.5 | — | — | 29.5 | ||||||||||
| Domestic Corporate Bonds | — | 274.1 | — | 274.1 | ||||||||||
| Foreign Corporate Bonds | — | 26.0 | — | 26.0 | ||||||||||
| U.S. Government Obligations | 102.9 | — | — | 102.9 | ||||||||||
| Non-U.S. Government Obligations | — | 15.3 | — | 15.3 | ||||||||||
| Domestic Municipal and Provincial Bonds | — | 18.0 | — | 18.0 | ||||||||||
| Foreign Municipal and Provincial Bonds | — | 0.2 | — | 0.2 | ||||||||||
| Collective Trust Funds | — | 837.2 | — | 837.2 | ||||||||||
| Cash and Other(1) | (0.7) | — | — | (0.7) | ||||||||||
| Total Assets at Fair Value in the Fair Value Hierarchy | $ | 194.4 | $ | 1,170.8 | $ | — | $ | 1,365.2 | ||||||
| Assets Valued at NAV per share | ||||||||||||||
| Northern Trust Private Equity Funds | 62.2 | |||||||||||||
| Northern Trust Hedge Fund | 41.5 | |||||||||||||
| Real Estate Funds | 66.4 | |||||||||||||
| Total Assets at Fair Value | $ | 1,535.3 |
(1) Negative balance in Cash and Other as of December 31, 2025 primarily relates to variation margin.
| 142 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| DECEMBER 31, 2024 | ||||||||||||||
| (In Millions) | LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL | ||||||||||
| Domestic Common Stock | $ | 17.6 | $ | — | $ | — | $ | 17.6 | ||||||
| Foreign Common Stock | 0.3 | — | — | 0.3 | ||||||||||
| Domestic Corporate Bonds | — | 244.9 | — | 244.9 | ||||||||||
| Foreign Corporate Bonds | — | 30.1 | — | 30.1 | ||||||||||
| U.S. Government Obligations | 58.3 | — | — | 58.3 | ||||||||||
| Non-U.S. Government Obligations | — | 17.0 | — | 17.0 | ||||||||||
| Domestic Municipal and Provincial Bonds | — | 14.3 | — | 14.3 | ||||||||||
| Foreign Municipal and Provincial Bonds | — | 0.2 | — | 0.2 | ||||||||||
| Collective Trust Funds | — | 734.9 | — | 734.9 | ||||||||||
| Mutual Funds | 56.3 | — | — | 56.3 | ||||||||||
| Cash and Other(1) | (1.2) | — | — | (1.2) | ||||||||||
| Total Assets at Fair Value in the Fair Value Hierarchy | $ | 131.3 | $ | 1,041.4 | $ | — | $ | 1,172.7 | ||||||
| Assets Valued at NAV per share | ||||||||||||||
| Northern Trust Private Equity Funds | 53.2 | |||||||||||||
| Northern Trust Hedge Fund | 39.2 | |||||||||||||
| Real Estate Funds | 73.0 | |||||||||||||
| Total Assets at Fair Value | $ | 1,338.1 |
(1) Negative balance in Cash and Other as of December 31, 2024 primarily relates to due to broker for securities purchased.
A building block approach is employed for Northern Trust’s U.S. Qualified Plan in determining the long-term rate of return on 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 expectations 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 U.S. Qualified Plan’s target asset allocation, the expected long-term rate of return on assets as of the U.S. Qualified Plan’s December 31, 2025 measurement date was set at 7.25%.
Defined Contribution Plans. The Corporation and its subsidiaries maintain various defined contribution plans covering substantially all employees. The Corporation’s contribution to the U.S. plan and to certain European-based plans includes a matching component. The expense associated with defined contribution plans is charged to Employee Benefits expense on the consolidated statements of income and totaled $92.3 million in 2025, $78.8 million in 2024, and $72.4 million in 2023.
Note 22 – Share-Based Compensation Plans
Northern Trust recognizes as expense the grant-date fair value of share-based compensation granted to employees and non-employee directors as Compensation on the consolidated statements of income.
Total Compensation expense for share-based compensation arrangements to employees and the associated tax impacts were as follows for the periods presented.
TABLE 100: TOTAL COMPENSATION EXPENSE FOR SHARE-BASED COMPENSATION ARRANGEMENTS TO EMPLOYEES
| FOR THE YEAR ENDED DECEMBER 31, | |||||||||||
| (In Millions) | 2025 | 2024 | 2023 | ||||||||
| Restricted Stock Unit Awards | $ | 101.0 | $ | 91.4 | $ | 95.7 | |||||
| Performance Stock Units | 25.5 | 28.0 | 22.5 | ||||||||
| Total Share-Based Compensation Expense | $ | 126.5 | $ | 119.4 | $ | 118.2 | |||||
| Tax Benefits Recognized | $ | 31.0 | $ | 29.3 | $ | 29.9 |
As of December 31, 2025, there was $89.8 million of unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Corporation’s share-based compensation plans. That cost is expected to be recognized as expense over a weighted-average period of approximately 3 years.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 143 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Northern Trust Corporation 2017 Long-Term Incentive Plan (2017 Plan) is administered by the Human Capital and Compensation 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 2017 Plan. The 2017 Plan provides for the grant of non-qualified and incentive stock options; tandem and free-standing stock appreciation rights; stock awards in the form of restricted stock, restricted stock units and other stock awards; and performance awards.
Restricted stock unit and performance stock unit grants continue to vest in accordance with the original terms of the award if the applicable employee retires after satisfying applicable age and service requirements, unless otherwise noted in the terms of the award.
Grants are outstanding under the 2017 Plan, the Northern Trust Corporation 2012 Stock Plan (2012 Plan), and the Amended and Restated Northern Trust Corporation 2002 Stock Plan (2002 Plan). The 2017 Plan was approved by stockholders in April 2017. Upon approval of the 2017 Plan, no additional shares have been or will be granted under the 2012 Plan or 2002 Plan. The total number of shares of the Corporation’s common stock authorized for issuance under the 2017 Plan is 20,000,000 plus shares forfeited under the 2012 Plan and 2002 Plan. As of December 31, 2025, shares available for future grant under the 2017 Plan, including shares forfeited under the 2012 Plan and 2002 Plan, totaled 11,211,977.
The following describes Northern Trust’s share-based payment arrangements and applies to awards under the 2017 Plan, 2012 Plan and the 2002 Plan, as applicable.
Stock Options. Stock options consist of options to purchase common stock of the Corporation at prices not less than 100% of the fair value thereof on the date the options are granted. Options have a maximum 10 year life and generally vest and become exercisable in 1 year to 4 years after the date of grant. All options terminate at such time as determined by the Committee and as provided in the terms and conditions of the respective option grants. There were no options granted during the years ended December 31, 2025, 2024, and 2023.
The following table provides information about stock options exercised in the years ended December 31, 2025, 2024, and 2023.
TABLE 101: STOCK OPTIONS EXERCISED
| FOR THE YEAR ENDED DECEMBER 31, | |||||||||||
| (In Millions) | 2025 | 2024 | 2023 | ||||||||
| Stock Options Exercised | |||||||||||
| Intrinsic Value as of Exercise Date | $ | 4.2 | $ | 2.9 | $ | 1.6 | |||||
| Cash Received | 4.8 | 9.4 | 2.3 | ||||||||
| Tax Deduction Benefits Realized | 4.2 | 2.9 | 1.6 |
A summary of the status of stock options at December 31, 2025, and changes during the year then ended, are presented in the following table.
TABLE 102: STATUS OF STOCK OPTIONS AND CHANGES
| ($ 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, 2024 | 213,182 | $ | 74.36 | |||||||||||
| Granted | — | — | ||||||||||||
| Exercised | (90,295) | 71.14 | ||||||||||||
| Forfeited, Expired or Cancelled | — | — | ||||||||||||
| Options Outstanding, December 31, 2025 | 122,887 | $ | 76.72 | 0.8 | $ | 7.4 | ||||||||
| Options Exercisable, December 31, 2025 | 122,887 | $ | 76.72 | 0.8 | $ | 7.4 |
Restricted Stock Unit Awards. Restricted stock units may be granted to participants and entitles them to receive a payment in the Corporation’s common stock or cash and such other terms and conditions as the Committee deems appropriate. Each restricted stock unit provides the recipient the opportunity to receive one share of common stock for each restricted stock unit that vests. The restricted stock units granted in 2025 predominately vest at a rate equal to 25% per year for four years on the first day of the month following the month in which the grant date falls. Restricted stock unit grants totaled 1,015,151, 1,182,007, and 1,166,376, with weighted average grant-date fair values of $112.08, $79.96, and $91.56 per share, for the years ended December 31, 2025, 2024, and 2023, respectively. The total fair value of restricted stock units vested during the years ended December 31, 2025, 2024, and 2023, was $91.9 million, $89.6 million, and $85.9 million, respectively.
| 144 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A summary of the status of outstanding restricted stock unit awards at December 31, 2025, and changes during the year then ended, is presented in the following table.
TABLE 103: OUTSTANDING RESTRICTED STOCK UNIT AWARDS
| ($ In Millions) | NUMBER | AGGREGATE INTRINSIC VALUE | ||||||
| Restricted Stock Unit Awards Outstanding, December 31, 2024 | 2,715,437 | $ | 278.3 | |||||
| Granted | 1,015,151 | |||||||
| Distributed | (979,218) | |||||||
| Forfeited or Cancelled | (159,305) | |||||||
| Restricted Stock Unit Awards Outstanding, December 31, 2025 | 2,592,065 | $ | 354.1 | |||||
| Units Convertible, December 31, 2025 | 18,887 | $ | 2.6 |
The following is a summary of nonvested restricted stock unit awards at December 31, 2025, and changes during the year then ended.
TABLE 104: NONVESTED RESTRICTED STOCK UNIT AWARDS
| NONVESTED RESTRICTED STOCK UNITS | NUMBER | WEIGHTED AVERAGE GRANT- DATE FAIR VALUE PER UNIT | WEIGHTED AVERAGE REMAINING VESTING TERM (YEARS) | ||||||||
| Nonvested at December 31, 2024 | 2,696,550 | $ | 90.33 | 2.4 | |||||||
| Granted | 1,015,151 | 112.08 | |||||||||
| Vested | (979,218) | 93.86 | |||||||||
| Forfeited or Cancelled | (159,305) | 97.83 | |||||||||
| Nonvested at December 31, 2025 | 2,573,178 | $ | 97.10 | 1.9 |
Performance Stock Units. Each performance stock unit provides the recipient the opportunity to receive one share of the Corporation’s common stock for each stock unit based on the attainment of certain performance criteria over a three-year period. The number of units that will vest are subject to the attainment of specified performance targets that are a function of average return on equity goals and average return on equity performance relative to that of a performance peer group, each measured over a three-year period. For performance stock units outstanding as of December 31, 2025, the number of performance stock units that will vest ranges from 0% to 150% of the original award granted based on the achievement of both absolute and relative return on equity goals over a three-year period compared to performance targets. Distribution of the shares is then made after vesting.
Performance stock unit grants totaled 186,460, 262,557, and 219,314 for the years ended December 31, 2025, 2024, and 2023, respectively, with weighted average grant-date fair values of $113.22, $79.89, and $93.97. Performance stock units outstanding at target level performance totaled 621,465, 675,690, and 613,450 at December 31, 2025, 2024, and 2023, respectively. Performance stock units had aggregate intrinsic values of $84.9 million, $69.3 million, and $51.8 million, and weighted average remaining vesting terms of 0.9 years at December 31, 2025, and 1.1 years at December 31, 2024, and 2023, respectively.
Non-employee Director Stock Awards. Director stock units with total values of $2.0 million (22,824 units), $1.5 million (18,220 units), and $1.6 million (20,405 units) were granted to non-employee directors in 2025, 2024, and 2023, respectively, which vest or vested on the date of the annual meeting of the Corporation’s stockholders in the following years. Total Compensation expense recognized on these grants was $2.1 million, $1.6 million, and $1.7 million in 2025, 2024, and 2023, respectively. 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. Deferred cash compensation is converted into stock units representing shares of common stock of the Corporation. Distributions of deferred stock units are made in common stock. For compensation deferred prior to January 1, 2018, distributions of the stock unit accounts that relate to cash-based compensation are made in cash based on the fair value of the stock units at the time of distribution. For compensation deferred on or after January 1, 2018, distributions of the stock unit accounts that relate to cash-based compensation are made in common stock.
Note 23 – Cash-Based Compensation Plans
Various incentive plans provide for cash incentives and bonuses to selected employees based upon accomplishment of corporate net income objectives, goals of the reporting segments and support functions, and individual performance. The provision for awards under these plans is charged to Compensation expense and totaled $402.9 million in 2025, $381.7 million in 2024, and $358.7 million in 2023.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 145 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 24 – Commitments and Contingent Liabilities
Off-Balance Sheet Financial Instruments, Guarantees and Other Commitments. 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. The contractual amounts of these instruments represent the maximum potential credit exposure 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. Northern Trust does not believe the total contractual amount of these instruments to be representative of its future credit exposure or funding requirements.
The following table provides details of Northern Trust's off-balance sheet financial instruments as of December 31, 2025 and 2024.
TABLE 105: SUMMARY OF OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
| DECEMBER 31, | ||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||
| (In Millions) | ONE YEAR AND LESS | OVER ONE YEAR | TOTAL | ONE YEAR AND LESS | OVER ONE YEAR | TOTAL | ||||||||||||||
| Undrawn Commitments(1) | $ | 10,959.6 | $ | 18,154.7 | $ | 29,114.3 | $ | 10,849.6 | $ | 17,293.2 | $ | 28,142.8 | ||||||||
| Standby Letters of Credit and Financial Guarantees(2)(3) | 148,883.9 | 671.0 | 149,554.9 | 112,256.3 | 490.1 | 112,746.4 | ||||||||||||||
| Commercial Letters of Credit | 18.1 | 0.1 | 18.2 | 20.3 | 0.2 | 20.5 | ||||||||||||||
| Securities Lent with Indemnification | 170,738.8 | — | 170,738.8 | 144,543.7 | — | 144,543.7 | ||||||||||||||
| Total Off-Balance Sheet Financial Instruments | $ | 330,600.4 | $ | 18,825.8 | $ | 349,426.2 | $ | 267,669.9 | $ | 17,783.5 | $ | 285,453.4 |
(1) These amounts exclude $175.1 million and $268.5 million of commitments participated to others at December 31, 2025 and 2024, respectively.
(2) These amounts include $68.1 million and $109.4 million of standby letters of credit secured by cash deposits or participated to others as of December 31, 2025 and 2024, respectively.
(3) This amount includes a $147.8 billion guarantee to the Fixed Income Clearing Corporation (FICC) under the sponsored member program, without taking into consideration the related collateral, as of December 31, 2025. As of December 31, 2024, there was a $110.8 billion guarantee to the FICC.
Undrawn Commitments generally have fixed expiration dates or other termination clauses. Since commitments can expire without being drawn upon, the total commitment amount does not necessarily represent future loans or liquidity requirements.
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. 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 collateral received or other participants. Since the vast majority of the standby letters of credit are never drawn, the total standby letters of credit amount does not necessarily represent future loans or liquidity requirements.
Financial Guarantees are issued by Northern Trust to guarantee the performance of a client to a third party under certain arrangements.
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 and other similar instruments. Commercial letters of credit are issued primarily to facilitate international trade.
Securities Lent with Indemnification involves Northern Trust acting as an agent in lending securities on behalf of its clients to borrowers who are reviewed and approved by the Northern Trust Capital Markets Credit Committee. In connection with these activities, Northern Trust has issued indemnifications to certain clients against losses that are a direct result of a borrower’s failure to return securities when due, should the value of such securities exceed the value of the collateral posted. Borrowers are required to fully collateralize securities which are valued on a daily basis and subject to daily collateral calls to maintain the required levels of over-collateralization. The amount of securities loaned subject to indemnification as of December 31, 2025 and December 31, 2024, was $170.7 billion and $144.5 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 and no liability was recorded at December 31, 2025, or 2024 related to these indemnifications.
Unsettled Repurchase and Reverse Repurchase Agreements**.** Northern Trust enters into repurchase agreements and reverse repurchase agreements which may settle at a future date. In repurchase agreements, Northern Trust receives cash from and provides securities as collateral to a counterparty. In reverse repurchase agreements, Northern Trust advances cash to and receives securities as collateral from a counterparty. These transactions are recorded on the consolidated balance sheets on the settlement date. As of December 31, 2025, and 2024, there were no unsettled reverse repurchase agreements. As of December 31, 2025, and 2024, there were no unsettled repurchase agreements.
| 146 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Sponsored Member Program. Northern Trust is an approved Government Securities Division (GSD) netting and sponsoring member in the Fixed Income Clearing Corporation (FICC) sponsored member program, through which Northern Trust submits eligible repurchase and reverse repurchase transactions in U.S. government securities between Northern Trust and its sponsored member clients for novation and clearing. Northern Trust may sponsor clients to clear their eligible repurchase transactions with the FICC. As a sponsoring member, Northern Trust guarantees to the FICC the prompt and full payment and performance of its sponsored member clients’ respective obligations under the FICC GSD’s rules. To mitigate Northern Trust’s credit exposure under this guarantee, Northern Trust obtains a security interest in its sponsored member clients’ collateral. Please refer to Note 27, “Offsetting of Assets and Liabilities” for additional information on Northern Trust’s repurchase and reverse repurchase agreements.
Clearing and Settlement Organizations. The Bank is a participating member of various cash, securities and foreign exchange clearing and settlement organizations. It participates in these organizations on behalf of its clients and on its own behalf as a result of its own activities. A wide variety of cash and securities transactions are settled through these organizations, including those involving U.S. Treasuries, obligations of states and political subdivisions, asset-backed securities, commercial paper, dollar placements, and securities issued by the Government National Mortgage Association.
Certain of these industry clearing and settlement exchanges require their members to guarantee their obligations and liabilities and/or to provide liquidity support in the event other members do not honor their obligations as stipulated in each clearing organization’s membership agreement. Exposure related to these agreements varies, primarily as a result of fluctuations in the volume of transactions cleared through the organizations. At December 31, 2025 and 2024, Northern Trust has not recorded any material liabilities under these arrangements as Northern Trust believes the likelihood that a clearing or settlement exchange (of which Northern Trust is a member) would become insolvent is remote. Controls related to these clearing transactions are closely monitored by management to protect the assets of Northern Trust and its clients.
Legal Proceedings. In the normal course of business, the Corporation and its subsidiaries are routinely defendants in or parties to pending and threatened legal actions, and are subject to regulatory examinations, information-gathering requests, investigations, and proceedings, both formal and informal. In certain legal actions, claims for substantial monetary damages are asserted. In regulatory matters, claims for disgorgement, restitution, penalties and/or other remedial actions or sanctions may be sought.
Based on current knowledge, after consultation with legal counsel and after taking into account current accruals, management does not believe that losses, fines or penalties, if any, arising from pending litigation or threatened legal actions or regulatory matters either individually or in the aggregate, after giving effect to applicable reserves and insurance coverage will have a material adverse effect on the consolidated financial position or liquidity of the Corporation, although such matters could have a material adverse effect on the Corporation’s operating results for a particular period.
Under GAAP, (i) an event is “probable” if the “future event or events are likely to occur”; (ii) an event is “reasonably possible” if “the chance of the future event or events occurring is more than remote but less than likely”; and (iii) an event is “remote” if “the chance of the future event or events occurring is slight.”
The outcome of litigation and regulatory matters is inherently difficult to predict and/or the range of loss often cannot be reasonably estimated, particularly for matters that (i) will be decided by a jury, (ii) are in early stages, (iii) involve uncertainty as to the likelihood of a class being certified or the ultimate size of the class, (iv) are subject to appeals or motions, (v) involve significant factual issues to be resolved, including with respect to the amount of damages, (vi) do not specify the amount of damages sought or (vii) seek very large damages based on novel and complex damage and liability legal theories. Accordingly, the Corporation cannot reasonably estimate the eventual outcome of these pending matters, the timing of their ultimate resolution or what the eventual loss, fines or penalties, if any, related to each pending matter will be.
In accordance with applicable accounting guidance, the Corporation records accruals for litigation and regulatory matters when those matters present loss contingencies that are both probable and reasonably estimable. When loss contingencies are not both probable and reasonably estimable, the Corporation does not record accruals. No material accruals have been recorded for pending litigation or threatened legal actions or regulatory matters.
For a limited number of matters for which a loss is reasonably possible in future periods, whether in excess of an accrued liability or where there is no accrued liability, the Corporation is able to estimate a range of possible loss. As of December 31, 2025, the Corporation has estimated the range of reasonably possible loss for these matters to be from zero to approximately $15 million in the aggregate. The Corporation’s estimate with respect to the aggregate range of reasonably possible loss is based upon currently available information and is subject to significant judgment and a variety of assumptions and known and unknown uncertainties. The matters underlying the estimated range will change from time to time, and actual results may vary significantly from the current estimate.
In certain other pending matters, there may be a range of reasonably possible loss (including reasonably possible loss in excess of amounts accrued) that cannot be reasonably estimated for the reasons described above. Such matters are not included in the estimated range of reasonably possible loss discussed above.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 147 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In 2015, Northern Trust Fiduciary Services (Guernsey) Limited (NTFS), an indirect subsidiary of the Corporation, was charged by a French investigating magistrate judge with complicity in estate tax fraud in connection with the administration of two trusts for which it serves as trustee. Charges also were brought against a number of other persons and entities related to this matter. NTFS provided no tax advice and was not involved in the preparation or filing of the challenged estate tax filings in this case. In 2017, a French court found no estate tax fraud had occurred and NTFS and all other persons and entities charged were acquitted. The Public Prosecutor’s Office of France appealed the court decision and in June 2018 a French appellate court issued its opinion on the matter, acquitting all persons and entities charged, including NTFS. In January 2021, the Cour de Cassation, the highest court in France, reversed the June 2018 appellate court ruling, requiring a re-trial at the appellate court level. This re-trial concluded in October 2023. On March 5, 2024, the appellate court rendered a judgment against all defendants, including NTFS. NTFS was ordered to pay a fine of €187,500 in conjunction with the judgment. In addition, the court ordered that certain of those convicted in relation to tax fraud or aiding and abetting tax fraud, including NTFS, are jointly and severally liable for any allegedly unpaid estate taxes owing, plus penalties and interest. NTFS filed an appeal of the judgment on March 5, 2024. On February 4, 2026, the Cour de Cassation affirmed the appellate court’s judgment against all of the defendants, including NTFS. The determination of the parties’ joint and several liability for the unpaid estate taxes owing, plus penalties and interest, is dependent on a final decision in a separate proceeding still pending before the tax courts.
Visa Class B Common Shares and Makewhole Agreement. Northern Trust, as a member of Visa U.S.A. Inc. (Visa U.S.A.) and in connection with the 2007 restructuring of Visa U.S.A. and its affiliates and the 2008 initial public offering of Visa Inc. (Visa), received certain Visa Class B common shares. The Visa Class B common shares are subject to certain transfer restrictions until the final resolution of certain litigation related to interchange fees involving Visa (the covered litigation), at which time the shares are convertible into Visa Class A common shares based on a conversion rate dependent upon the ultimate cost of resolving the covered litigation. Since 2018, Visa has deposited an additional $5.6 billion into an escrow account previously established with respect to the covered litigation. As a result of the additional contributions to the escrow account, the rate at which Visa Class B-2 common shares will convert into Visa Class A common shares is 1.5108 as of December 31, 2025.
In September 2018, Visa reached a proposed class settlement agreement covering damage claims but not injunctive relief claims regarding the covered litigation. In December 2019, the district court granted final approval for the proposed class settlement agreement. In March 2023, the Second Circuit Court of Appeals affirmed the district court’s approval of the class settlement agreement. Certain merchants have opted out of the class settlement and are pursuing claims separately. The ultimate resolution of the covered litigation, the timing for removal of the selling restrictions on the Visa Class B common shares and the rate at which such shares will ultimately convert into Visa Class A common shares are uncertain.
In May 2024, Northern Trust received 2.1 million Visa Class B-2 common shares and 819.5 thousand Visa Class C common shares via its full participation in an offer to exchange outstanding shares of Visa’s Class B common stock (Exchange Offer). The newly issued series of Visa Class B common shares are subject to the same transfer and convertibility restrictions as the previously outstanding Visa Class B common shares. The Visa Class C common shares will automatically be converted at the then-applicable conversion rate into shares of Visa Class A common stock if transferred to a person other than a Visa member or an affiliate of a Visa member. After the initial exchange offer, Visa can, at its discretion, conduct up to three successive potential exchange offers, in each case, if more than 12 months have passed since the previous exchange offer and after a further 50% reduction of interchange fees at issue in the unresolved claims for damages in the covered litigation. On February 13, 2026, Visa announced its intention to proceed with a successive exchange offer once these conditions are met. Northern Trust expects to participate in such exchange offer.
Northern Trust holds the Visa Class B-2 common shares received in the Exchange Offer at their carryover basis of zero as of December 31, 2025. Based upon the December 31, 2025, closing price of $350.71 for a Visa Class A common share, the estimated value of Northern Trust’s Visa Class B-2 common shares was approximately $1.1 billion at the current conversion rate of Visa Class B-2 to Visa Class A common shares. The estimated value does not represent fair value given the shares’ limited transferability.
As of December 31, 2025, Northern Trust continues to hold 10.7 thousand Visa Class C common shares which are recorded at their fair value of $14.9 million in Other Assets on the consolidated balance sheets with changes in fair value recorded in Other Operating Income on the consolidated statement of income.
In conjunction with Northern Trust’s participation in the Exchange Offer, Northern Trust was required to enter into the Makewhole Agreement whereby if all the Visa Class B-2 common share value is exhausted via additional escrow contributions, the Visa Class B-2 shareholders have to step in and make whole what the original Visa Class B common shares would have been obligated to cover absent the Exchange Offer. At December 31, 2025, Northern Trust has not recorded a liability under this agreement as Northern Trust believes the likelihood that a payment under the Makewhole Agreement will have to be made is remote.
| 148 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 25 – 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 may include foreign exchange contracts, interest rate contracts, total return swap contracts, and swaps related to the sale of certain Visa Class B common shares. Please refer to Note 1, “Summary of Significant Accounting Policies” for the significant accounting policies for derivative financial instruments.
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 and risk management purposes. For risk management purposes, Northern Trust uses foreign exchange contracts to reduce its exposure to changes in foreign exchange rates relating to certain forecasted non-functional-currency-denominated revenue and expenditure transactions and foreign-currency- denominated assets and liabilities, including debt securities 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 with its clients and also may utilize such contracts to reduce or eliminate the exposure to changes in the cash flows or fair value of hedged assets or liabilities due to changes in interest rates. Interest rate option contracts may include caps, floors, collars and swaptions, and provide for the transfer or reduction of interest rate risk, typically 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 or enter into option contracts for risk management purposes including to reduce the exposure to changes in the cash flows of hedged assets due to changes in interest rates.
The following table shows the notional and fair values of all derivative financial instruments as of December 31, 2025 and 2024.
TABLE 106: NOTIONAL AND FAIR VALUES OF DERIVATIVE FINANCIAL INSTRUMENTS
| DECEMBER 31, 2025 | DECEMBER 31, 2024 | |||||||||||||||||||
| FAIR VALUE | FAIR VALUE | |||||||||||||||||||
| (In Millions) | NOTIONAL VALUE | ASSET**(1)** | LIABILITY**(2)** | NOTIONAL VALUE | ASSET(1) | LIABILITY(2) | ||||||||||||||
| Derivatives Designated as Hedging under GAAP | ||||||||||||||||||||
| Interest Rate Contracts | ||||||||||||||||||||
| Fair Value Hedges | $ | 10,897.4 | $ | 16.5 | $ | — | $ | 9,706.3 | $ | 189.4 | $ | 159.3 | ||||||||
| Foreign Exchange Contracts | ||||||||||||||||||||
| Cash Flow Hedges | 1,312.0 | 29.6 | — | 872.8 | 40.8 | — | ||||||||||||||
| Net Investment Hedges | 4,734.5 | 8.7 | 351.8 | 4,558.6 | 196.5 | 24.3 | ||||||||||||||
| Total Derivatives Designated as Hedging under GAAP | $ | 16,943.9 | $ | 54.8 | $ | 351.8 | $ | 15,137.7 | $ | 426.7 | $ | 183.6 | ||||||||
| Derivatives Not Designated as Hedging under GAAP | ||||||||||||||||||||
| Non-Designated Risk Management Derivatives | ||||||||||||||||||||
| Foreign Exchange Contracts | $ | 1.6 | $ | — | $ | — | $ | 1.7 | $ | — | $ | — | ||||||||
| Other Financial Derivatives(3) | 606.6 | 0.7 | 31.3 | 512.0 | — | 27.2 | ||||||||||||||
| Total Non-Designated Risk Management Derivatives | $ | 608.2 | $ | 0.7 | $ | 31.3 | $ | 513.7 | $ | — | $ | 27.2 | ||||||||
| Client-Related and Trading Derivatives | ||||||||||||||||||||
| Foreign Exchange Contracts | $ | 392,874.0 | $ | 1,950.5 | $ | 1,896.1 | $ | 362,658.7 | $ | 4,760.0 | $ | 4,685.5 | ||||||||
| Interest Rate Contracts | 11,132.1 | 88.3 | 130.4 | 15,081.7 | 171.8 | 262.1 | ||||||||||||||
| Total Client-Related and Trading Derivatives | $ | 404,006.1 | $ | 2,038.8 | $ | 2,026.5 | $ | 377,740.4 | $ | 4,931.8 | $ | 4,947.6 | ||||||||
| Total Derivatives Not Designated as Hedging under GAAP | $ | 404,614.3 | $ | 2,039.5 | $ | 2,057.8 | $ | 378,254.1 | $ | 4,931.8 | $ | 4,974.8 | ||||||||
| Total Gross Derivatives | $ | 421,558.2 | $ | 2,094.3 | $ | 2,409.6 | $ | 393,391.8 | $ | 5,358.5 | $ | 5,158.4 | ||||||||
| Less: Netting(4) | 1,779.2 | 1,175.7 | 1,910.4 | 4,199.6 | ||||||||||||||||
| Total Derivative Financial Instruments | $ | 315.1 | $ | 1,233.9 | $ | 3,448.1 | $ | 958.8 |
(1) Derivative assets are reported in Other Assets on the consolidated balance sheets.
(2) Derivative liabilities are reported in Other Liabilities on the consolidated balance sheets.
(3) This line includes swaps related to sales of certain Visa Class B common shares and total return swap contracts.
(4) See further detail in Note 27, "Offsetting of Assets and Liabilities."
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 149 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notional amounts of derivative financial instruments do not represent credit risk, and are not recorded on the consolidated balance sheets. They are used merely to express the volume of this activity. Northern Trust’s credit-related risk of loss is limited to the positive fair value of the derivative instrument, net of any collateral received, which is significantly less than the notional amount.
Hedging Derivative Instruments Designated under GAAP. Northern Trust uses derivative instruments to hedge its exposure to foreign currency and interest rate risk. Certain hedging relationships are formally designated and qualify for hedge accounting under GAAP as fair value, cash flow or net investment hedges.
Fair Value Hedges. 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.
Cash Flow Hedges. Derivatives are also designated as cash flow hedges in order to minimize the variability in cash flows of earning assets or forecasted transactions caused by movements in interest or foreign exchange rates.
There were no material gains or losses reclassified into earnings during the years ended December 31, 2025, 2024, and 2023 as a result of the discontinuance of cash flow hedges of forecasted transactions that were no longer probable of occurring. It is estimated that net gains of $15.2 million will be reclassified into Net Income within the next twelve months relating to cash flow hedges of foreign-currency-denominated debt securities. As of December 31, 2025, 6 months was the maximum length of time over which the exposure to variability in future cash flows of forecasted foreign-currency-denominated debt securities was being hedged.
The following table provides fair value and cash flow hedge derivative gains and losses recognized in income during the years ended December 31, 2025, 2024 and 2023.
TABLE 107: LOCATION AND AMOUNT OF FAIR VALUE AND CASH FLOW HEDGE DERIVATIVE GAINS AND LOSSES RECORDED IN INCOME
| (In Millions) | INTEREST INCOME | INTEREST EXPENSE | OTHER OPERATING INCOME | ||||||||||||||||||||||||||
| For the Year Ended December 31, | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||||||||
| Total amounts on the consolidated statements of income | $ | 8,624.6 | $ | 9,762.3 | $ | 7,325.0 | $ | 6,213.6 | $ | 7,585.2 | $ | 5,343.0 | $ | 207.7 | $ | 1,157.4 | $ | 228.7 | |||||||||||
| Gains (Losses) on fair value hedges recognized on | |||||||||||||||||||||||||||||
| Interest Rate Contracts | |||||||||||||||||||||||||||||
| Recognized on derivatives | (139.7) | 126.6 | (132.6) | 72.8 | (5.1) | 74.9 | — | — | — | ||||||||||||||||||||
| Recognized on hedged items | 139.7 | (126.6) | 132.6 | (72.8) | 5.1 | (74.9) | — | — | — | ||||||||||||||||||||
| Amounts related to interest settlements on derivatives | 30.9 | 96.6 | 47.1 | (58.6) | (76.9) | (86.5) | — | — | — | ||||||||||||||||||||
| Total gains (losses) recognized on fair value hedges | $ | 30.9 | $ | 96.6 | $ | 47.1 | $ | (58.6) | $ | (76.9) | $ | (86.5) | $ | — | $ | — | $ | — | |||||||||||
| Gains (Losses) on cash flow hedges recognized on | |||||||||||||||||||||||||||||
| Foreign Exchange Contracts | |||||||||||||||||||||||||||||
| Net gains (losses) reclassified from AOCI to net income | $ | 20.5 | $ | 13.4 | $ | 34.9 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1.9 | |||||||||||
| Total gains (losses) reclassified from AOCI to net income on cash flow hedges | $ | 20.5 | $ | 13.4 | $ | 34.9 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1.9 |
The following table provides the impact of fair value hedge accounting on the carrying value of the designated hedged items, which includes hedged items no longer designated.
TABLE 108: HEDGED ITEMS IN FAIR VALUE HEDGES
| DECEMBER 31, 2025 | DECEMBER 31, 2024 | |||||||||||||
| (In Millions) | CARRYING VALUE OF THE HEDGED ITEMS | CUMULATIVE HEDGE ACCOUNTING BASIS ADJUSTMENT**(1)(2)** | CARRYING VALUE OF THE HEDGED ITEMS | CUMULATIVE HEDGE ACCOUNTING BASIS ADJUSTMENT(1)(2) | ||||||||||
| Available for Sale Debt Securities(3) | $ | 7,674.8 | $ | 94.1 | $ | 7,567.3 | $ | (48.7) | ||||||
| Senior Notes and Long-Term Debt | 3,091.1 | (151.4) | 2,507.5 | (238.0) |
(1) The cumulative hedge accounting basis adjustment includes $1.3 million and $1.8 million related to discontinued hedging relationships of AFS Debt Securities as of December 31, 2025 and 2024, respectively. There were no amounts related to discontinued hedging relationships in the cumulative hedge accounting basis adjustment of Senior Notes and Long-Term Debt as of December 31, 2025 and $13.8 million as of December 31, 2024.
(2) Positive (negative) amounts related to AFS Debt Securities represent cumulative fair value hedge basis adjustments that will reduce (increase) net interest income in future periods. Positive (negative) amounts related to Senior Notes and Long-Term Debt represent cumulative fair value hedge basis adjustments that will increase (reduce) net interest income in future periods.
(3) Carrying value represents amortized cost.
| 150 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Net Investment Hedges. Certain foreign exchange contracts are designated as net investment hedges to minimize Northern Trust’s exposure to variability in the foreign currency translation of net investments in non-U.S. branches and subsidiaries. Net investment hedge losses of $328.1 million and net investment hedge gains of $233.1 million were recognized in AOCI related to foreign exchange contracts for the years ended December 31, 2025 and 2024, respectively.
Derivative Instruments Not Designated as Hedging under GAAP. Northern Trust’s derivative instruments that are not designated as hedging under GAAP include derivatives for purposes of client-related and trading activities, as well as other risk management purposes. These activities consist principally of providing foreign exchange services to clients in connection with Northern Trust’s asset servicing business. However, in the normal course of business, Northern Trust also engages in trading of currencies for its own account.
Non-designated risk management derivatives include foreign exchange contracts entered into to manage the foreign currency risk of non-U.S.-dollar-denominated assets and liabilities, the net investment in certain non-U.S. affiliates, commercial loans, and forecasted foreign-currency-denominated transactions. Swaps related to sales of certain Visa Class B common shares were entered into pursuant to which Northern Trust retains the risks associated with the ultimate conversion of the Visa Class B common shares into Visa Class A common shares. Total return swaps are entered into to manage the equity price risk associated with certain investments.
Changes in the fair value of derivative instruments not designated as hedges under GAAP are recognized currently in income. The following table provides the location and amount of gains and losses recorded on the consolidated statements of income for the years ended December 31, 2025, 2024, and 2023 for derivative instruments not designated as hedges under GAAP.
TABLE 109: LOCATION AND AMOUNT OF GAINS AND LOSSES RECORDED IN INCOME FOR DERIVATIVES NOT DESIGNATED AS HEDGING UNDER GAAP
| (In Millions) | DERIVATIVE GAINS (LOSSES) LOCATION RECOGNIZED IN INCOME | AMOUNT OF DERIVATIVE GAINS (LOSSES) RECOGNIZED IN INCOME | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||
| Non-designated risk management derivatives | ||||||||||||||
| Foreign Exchange Contracts | Other Operating Income | $ | — | $ | (0.2) | $ | 1.8 | |||||||
| Other Financial Derivatives(1) | Other Operating Income | (29.0) | (33.5) | (21.2) | ||||||||||
| Gains (Losses) from non-designated risk management derivatives | $ | (29.0) | $ | (33.7) | $ | (19.4) | ||||||||
| Client-related and trading derivatives | ||||||||||||||
| Foreign Exchange Contracts | Foreign Exchange Trading Income | $ | 240.8 | $ | 231.2 | $ | 203.9 | |||||||
| Interest Rate Contracts | Security Commissions and Trading Income | 4.2 | 4.0 | 8.9 | ||||||||||
| Gains from client-related and trading derivatives | $ | 245.0 | $ | 235.2 | $ | 212.8 | ||||||||
| Total gains from derivatives not designated as hedging under GAAP | $ | 216.0 | $ | 201.5 | $ | 193.4 |
(1) This line includes swaps related to the sale of certain Visa Class B common shares and total return swap contracts.
Note 26 – 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 accounted for as collateralized financings and 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 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, either directly or via third-party custodians, of securities purchased under agreements to resell. Securities sold under agreements to repurchase are either directly held by, or pledged to the counterparty until the repurchase. Northern Trust nets securities sold under repurchase agreements against those purchased under resale agreements when the requirements to net are met.
The following tables summarize information related to Securities Purchased under Agreements to Resell and Securities Sold under Agreements to Repurchase.
TABLE 110: SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL
| ($ In Millions) | 2025 | 2024 | ||||||
| Balance at December 31 | $ | 2,654.1 | $ | 426.0 | ||||
| Average Balance During the Year | 1,003.8 | 727.5 | ||||||
| Average Interest Rate Earned During the Year | 281.85 | % | 459.13 | % | ||||
| Maximum Month-End Balance During the Year | $ | 2,654.1 | $ | 1,034.6 |
Note: The table above includes the impact of balance sheet netting of approximately $64.3 billion and $62.4 billion in 2025 and 2024, respectively. Excluding the impact of netting, the average interest rate on Securities Purchased under Agreements to Resell would be approximately 4.33% and 5.29% in 2025 and 2024, respectively. Northern Trust nets securities sold under repurchase agreements against those purchased under resale agreements when there is a legally enforceable master netting arrangement.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 151 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TABLE 111: SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
| ($ In Millions) | 2025 | 2024 | ||||||
| Balance at December 31 | $ | 292.2 | $ | 462.0 | ||||
| Average Balance During the Year | 506.8 | 518.5 | ||||||
| Average Interest Rate Paid During the Year | 545.26 | % | 632.65 | % | ||||
| Maximum Month-End Balance During the Year | $ | 841.4 | $ | 811.8 |
Note: The table above includes the impact of balance sheet netting of approximately $64.3 billion and $62.4 billion in 2025 and 2024, respectively. Excluding the impact of netting, the average interest rate on Securities Sold under Agreements to Repurchase would be approximately 4.26% and 5.21% in 2025 and 2024, respectively. Northern Trust nets securities sold under repurchase agreements against those purchased under resale agreements when there is a legally enforceable master netting arrangement.
TABLE 112: REPURCHASE AGREEMENTS ACCOUNTED FOR AS SECURED BORROWINGS
| REMAINING CONTRACTUAL MATURITY OF THE AGREEMENTS | ||||||||
| OVERNIGHT AND CONTINUOUS | ||||||||
| (In Millions) | December 31, 2025 | December 31, 2024 | ||||||
| U.S. Treasury and Agency Securities | $ | 90,307.8 | $ | 65,374.8 | ||||
| Total Borrowings | 90,307.8 | 65,374.8 |
Note 27 – Offsetting of Assets and Liabilities
The following table provides information regarding the offsetting of derivative assets and of securities purchased under agreements to resell within the consolidated balance sheets as of December 31, 2025 and 2024.
TABLE 113: OFFSETTING OF DERIVATIVE ASSETS AND SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL
| DECEMBER 31, 2025 | |||||||||||||||||
| (In Millions) | GROSS RECOGNIZED ASSETS | GROSS AMOUNTS OFFSET IN THE BALANCE SHEET**(3)** | NET AMOUNTS PRESENTED IN THE BALANCE SHEET | GROSS AMOUNTS NOT OFFSET IN THE BALANCE SHEET**(4)** | NET AMOUNT**(5)** | ||||||||||||
| Derivative Assets(1) | |||||||||||||||||
| Foreign Exchange Contracts Over the Counter (OTC) | $ | 1,707.2 | $ | 1,696.1 | $ | 11.1 | $ | 2.7 | $ | 8.4 | |||||||
| Interest Rate Swaps OTC | 83.4 | 82.4 | 1.0 | — | 1.0 | ||||||||||||
| Other Financial Derivative | 0.7 | 0.7 | — | — | — | ||||||||||||
| Total Derivatives Subject to a Master Netting Arrangement | 1,791.3 | 1,779.2 | 12.1 | 2.7 | 9.4 | ||||||||||||
| Total Derivatives Not Subject to a Master Netting Arrangement | 303.0 | — | 303.0 | — | 303.0 | ||||||||||||
| Total Derivatives | 2,094.3 | 1,779.2 | 315.1 | 2.7 | 312.4 | ||||||||||||
| Securities Purchased under Agreements to Resell(2) | $ | 92,669.7 | $ | 90,015.6 | $ | 2,654.1 | $ | 2,654.1 | $ | — |
| DECEMBER 31, 2024 | |||||||||||||||||
| (In Millions) | GROSS RECOGNIZED ASSETS | GROSS AMOUNTS OFFSET IN THE BALANCE SHEET(3) | NET AMOUNTS PRESENTED IN THE BALANCE SHEET | GROSS AMOUNTS NOT OFFSET IN THE BALANCE SHEET(4) | NET AMOUNT(5) | ||||||||||||
| Derivative Assets(1) | |||||||||||||||||
| Foreign Exchange Contracts OTC | $ | 3,801.6 | $ | 1,745.2 | $ | 2,056.4 | $ | 23.6 | $ | 2,032.8 | |||||||
| Interest Rate Swaps OTC | 359.3 | 165.2 | 194.1 | — | 194.1 | ||||||||||||
| Interest Rate Swaps Exchange Cleared | 1.9 | — | 1.9 | — | 1.9 | ||||||||||||
| Total Derivatives Subject to a Master Netting Arrangement | 4,162.8 | 1,910.4 | 2,252.4 | 23.6 | 2,228.8 | ||||||||||||
| Total Derivatives Not Subject to a Master Netting Arrangement | 1,195.7 | — | 1,195.7 | — | 1,195.7 | ||||||||||||
| Total Derivatives | 5,358.5 | 1,910.4 | 3,448.1 | 23.6 | 3,424.5 | ||||||||||||
| Securities Purchased under Agreements to Resell(2) | $ | 65,338.8 | $ | 64,912.8 | $ | 426.0 | $ | 426.0 | $ | — |
(1) Derivative assets are reported in Other Assets on the consolidated balance sheets.
(2) Offsetting of Securities Purchased under Agreements to Resell primarily relates to our involvement in the FICC.
(3) Including cash collateral received from counterparties.
(4) Including financial assets accepted as collateral which are received from counterparties.
(5) Northern Trust did not possess any cash collateral that was not offset on the consolidated balance sheets that could have been used to offset the net amounts presented on the consolidated balance sheets as of December 31, 2025 and 2024.
| 152 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table provides information regarding the offsetting of derivative liabilities and of securities sold under agreements to repurchase within the consolidated balance sheets as of December 31, 2025 and 2024.
TABLE 114: OFFSETTING OF DERIVATIVE LIABILITIES AND SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
| DECEMBER 31, 2025 | |||||||||||||||||
| (In Millions) | GROSS RECOGNIZED LIABILITIES | GROSS AMOUNTS OFFSET IN THE BALANCE SHEET**(3)** | NET AMOUNTS PRESENTED IN THE BALANCE SHEET | GROSS AMOUNTS NOT OFFSET IN THE BALANCE SHEET**(4)** | NET AMOUNT**(5)** | ||||||||||||
| Derivative Liabilities(1) | |||||||||||||||||
| Foreign Exchange Contracts OTC | $ | 1,334.8 | $ | 1,139.4 | $ | 195.4 | $ | — | $ | 195.4 | |||||||
| Interest Rate Swaps OTC | 5.0 | 5.0 | — | — | — | ||||||||||||
| Interest Rate Swaps Exchange Cleared | — | — | — | — | — | ||||||||||||
| Other Financial Derivatives | 31.3 | 31.3 | — | — | — | ||||||||||||
| Total Derivatives Subject to a Master Netting Arrangement | 1,371.1 | 1,175.7 | 195.4 | — | 195.4 | ||||||||||||
| Total Derivatives Not Subject to a Master Netting Arrangement | 1,038.5 | — | 1,038.5 | — | 1,038.5 | ||||||||||||
| Total Derivatives | 2,409.6 | 1,175.7 | 1,233.9 | — | 1,233.9 | ||||||||||||
| Securities Sold under Agreements to Repurchase(2) | $ | 90,307.8 | $ | 90,015.6 | $ | 292.2 | $ | 292.2 | $ | — |
| DECEMBER 31, 2024 | |||||||||||||||||
| (In Millions) | GROSS RECOGNIZED LIABILITIES | GROSS AMOUNTS OFFSET IN THE BALANCE SHEET(3) | NET AMOUNTS PRESENTED IN THE BALANCE SHEET | GROSS AMOUNTS NOT OFFSET IN THE BALANCE SHEET(4) | NET AMOUNT(5) | ||||||||||||
| Derivative Liabilities(1) | |||||||||||||||||
| Foreign Exchange Contracts OTC | $ | 4,392.7 | $ | 4,197.3 | $ | 195.4 | $ | — | $ | 195.4 | |||||||
| Interest Rate Swaps OTC | 421.2 | 2.3 | 418.9 | — | 418.9 | ||||||||||||
| Interest Rate Swaps Exchange Cleared | 0.2 | — | 0.2 | — | 0.2 | ||||||||||||
| Other Financial Derivatives | 27.2 | — | 27.2 | — | 27.2 | ||||||||||||
| Total Derivatives Subject to a Master Netting Arrangement | 4,841.3 | 4,199.6 | 641.7 | — | 641.7 | ||||||||||||
| Total Derivatives Not Subject to a Master Netting Arrangement | 317.1 | — | 317.1 | — | 317.1 | ||||||||||||
| Total Derivatives | 5,158.4 | 4,199.6 | 958.8 | — | 958.8 | ||||||||||||
| Securities Sold under Agreements to Repurchase(2) | $ | 65,374.8 | $ | 64,912.8 | $ | 462.0 | $ | 462.0 | $ | — |
(1) Derivative liabilities are reported in Other Liabilities on the consolidated balance sheets.
(2) Offsetting of Securities Sold under Agreements to Repurchase primarily relates to our involvement in the FICC.
(3) Including cash collateral deposited with counterparties.
(4) Including financial assets accepted as collateral which are deposited with counterparties.
(5) Northern Trust did not place any cash collateral with counterparties that was not offset on the consolidated balance sheets that could have been used to offset the net amounts presented on the consolidated balance sheets as of December 31, 2025 and 2024.
All of Northern Trust’s securities sold under agreements to repurchase (repurchase agreements) and securities purchased under agreements to resell (reverse repurchase agreements) involve the transfer of financial assets in exchange for cash subject to a right and obligation to repurchase those assets for an agreed upon amount. In the event of a repurchase failure, the cash or financial assets are available for offset. All of Northern Trust’s repurchase agreements and reverse repurchase agreements are subject to a master netting arrangement, which sets forth the rights and obligations for repurchase and offset. Under the master netting arrangement, Northern Trust is entitled to set off receivables from and collateral placed with a single counterparty against obligations owed to that counterparty. In addition, collateral held by Northern Trust can be offset against receivables from that counterparty. Northern Trust has elected to net securities sold under repurchase agreements against those purchased under resale agreements when the GAAP requirements to net are met.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 153 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Derivative asset and liability positions with a single counterparty can be offset against each other in cases where legally enforceable master netting arrangements or similar agreements exist. Derivative assets and liabilities can be further offset by cash collateral received from, and deposited with, the transacting counterparty. The basis for this view is that, upon termination of transactions subject to a master netting arrangement or similar agreement, the individual derivative receivables do not represent resources to which general creditors have rights and individual derivative payables do not represent claims that are equivalent to the claims of general creditors. Northern Trust has elected to net derivative assets and liabilities when legally enforceable master netting arrangements or similar agreements exist between Northern Trust and the counterparty.
Credit risk associated with derivative instruments relates to the failure of the counterparty and the failure of Northern Trust to pay based on the contractual terms of the agreement, and is generally limited to the unrealized fair value gains and losses on these instruments, net of any collateral received or deposited. The amount of credit risk will increase or decrease during the lives of the instruments as interest rates, foreign exchange rates, or equity prices fluctuate. Northern Trust’s 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. Credit support annexes and other similar agreements are currently in place with a number of Northern Trust’s counterparties which mitigate the aforementioned credit risk associated with derivative activity conducted with those counterparties by requiring that significant net unrealized fair value gains be supported by collateral placed with Northern Trust.
Additional cash collateral received from and deposited with derivative counterparties totaling $420.8 million and $144.1 million, respectively, as of December 31, 2025, and $140.6 million and $36.4 million, respectively, as of December 31, 2024, was not offset against derivative assets and liabilities on the consolidated balance sheets as the amounts exceeded the net derivative positions with those counterparties.
Certain master netting arrangements Northern Trust enters into with derivative counterparties contain credit risk-related contingent features in which the counterparty has the option to declare Northern Trust in default and accelerate cash settlement of net derivative liabilities with the counterparty in the event Northern Trust’s credit rating falls below specified levels. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a liability position was $306.7 million and $1.6 billion at December 31, 2025 and 2024, respectively. Cash collateral amounts deposited with derivative counterparties on those dates included $299.1 million and $1.4 billion, respectively, posted against these liabilities, resulting in a net maximum amount of termination payments that could have been required at December 31, 2025 and 2024 of $7.6 million and $158.8 million, respectively. Accelerated settlement of these liabilities would not have a material effect on the consolidated financial position or liquidity of Northern Trust.
Note 28 – Variable Interest Entities
Northern Trust is involved with various entities in the normal course of business that are deemed to be variable interest entities (VIEs). VIEs are defined within GAAP as entities which either (1) lack sufficient equity at risk to permit the entity to finance its activities without additional subordinated financial support, (2) have equity investors that lack attributes typical of an equity investor, such as the ability to make significant decisions through voting rights affecting the entity’s operations, or the obligation to absorb expected losses or the right to receive residual returns of the entity, or (3) are structured with voting rights that are disproportionate to the equity investor’s obligation to absorb losses or right to receive returns, and substantially all of the activities are conducted on behalf of the holder of the equity investment at risk with disproportionately few voting rights. Investors that finance a VIE through debt or equity interests are variable interest holders in the entity and the variable interest holder, if any, that has both the power to direct the activities that most significantly impact the entity’s economic performance and, through its variable interest, the obligation to absorb losses or the right to receive returns that could potentially be significant to the entity is deemed to be the VIE’s primary beneficiary and is required to consolidate the VIE.
Community Reinvestment Act (CRA) Investments. Northern Trust fulfills its obligations under the CRA by making a variety of qualified investments for purposes of supporting institutions and programs that benefit low-to-moderate income communities within Northern Trust’s market area. These investments are made in legal entities that are primarily VIEs and consist of equity in limited partnerships and beneficial interests in securitized debt. Based on its analysis, Northern Trust has determined that it is not the primary beneficiary of these VIEs under GAAP and therefore they are not consolidated.
Northern Trust’s investments in these unconsolidated entities are reported in Other Assets or HTM Debt Securities, depending on the structure of the investment.
| 154 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Tax credit structures. Northern Trust holds tax-advantaged investments in unconsolidated entities that own and operate affordable housing and projects through the new markets tax credit program. These entities, which are limited partnerships and similar entities, are primarily VIEs and are designed to generate a return primarily through the realization of tax credits and other tax benefits, such as tax deductions from operating losses of the investments. Northern Trust invests as a limited partner/investor member and lacks both the power to direct the entities’ most significant activities and the obligation to absorb losses or right to receive benefits that could potentially be significant to the entities. Northern Trust is not required to consolidate these entities as it does not have a controlling financial interest and thus is not the primary beneficiary.
Northern Trust’s maximum exposure to loss as a result of its involvement with tax credit structures and other CRA investments is limited to the carrying amounts of its investments, including any undrawn commitments. Northern Trust’s funding requirements are limited to its invested capital and undrawn commitments for future equity contributions. Northern Trust has no exposure to loss from liquidity arrangements and no obligation to purchase assets of these entities.
Northern Trust’s investments in these unconsolidated tax credit structures and related unfunded commitments are reported in Other Assets and Other Liabilities, respectively, on the consolidated balance sheets.
TABLE 115: SUMMARY OF UNCONSOLIDATED TAX CREDIT STRUCTURES
| (In Millions) | DECEMBER 31, 2025 | DECEMBER 31, 2024 | ||||||
| Investment Carrying Amount | ||||||||
| Affordable Housing | $ | 834.0 | $ | 657.0 | ||||
| New Markets | 192.9 | 219.7 | ||||||
| Total Investment Carrying Amount(1) | $ | 1,026.9 | $ | 876.7 | ||||
| Unfunded Commitments(2) | ||||||||
| Affordable Housing | $ | 373.0 | $ | 227.1 | ||||
| Total Unfunded Commitments(3) | $ | 373.0 | $ | 227.1 |
(1) As of December 31, 2025 and December 31, 2024, $1.0 billion and $849.3 million are VIEs, respectively.
(2) As of December 31, 2025, and December 31, 2024, there were no unfunded commitments for New Markets.
(3) As of December 31, 2025 and December 31, 2024, $369.7 million and $221.0 million relate to undrawn commitments on VIEs, respectively.
On January 1, 2024, Northern Trust adopted ASU No. 2023-02, “Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method—a consensus of the Emerging Issues Task Force” (ASU 2023-02). Upon adoption of ASU 2023-02, Northern Trust elected to account for qualifying new markets tax credit investments under the proportional amortization method. Prior to the adoption of ASU 2023-02, Northern Trust accounted for qualifying affordable housing investments under the proportional amortization method and continues to do so subsequent to the adoption of ASU 2023-02. Under the proportional amortization method, the carrying amount of the investment is amortized in proportion to the income tax credits and other income tax benefits received in the current period as compared to the total income tax credits and income tax benefits expected to be received over the life of the investment. Income tax credits and other income tax benefits and amortization expense associated with unconsolidated tax credit structures are primarily reported in the Provision for Income Tax on the consolidated statement of income.
Northern Trust adopted ASU 2023-02 on a modified retrospective basis. As a result, amortization expense related to new markets tax credit investments is reported in the Provision for Income Tax beginning January 1, 2024. Prior to January 1, 2024, amortization expense related to new markets tax credit investments was reported in Other Operating Expense.
TABLE 116: INCOME TAX CREDITS AND OTHER TAX BENEFITS AND AMORTIZATION EXPENSE ASSOCIATED WITH TAX CREDIT STRUCTURES
| FOR THE YEAR ENDED DECEMBER 31, | |||||||||||
| (In Millions) | 2025 | 2024 | 2023 | ||||||||
| Income Tax Credits and Other Income Tax Benefits | |||||||||||
| Affordable Housing | $ | 97.3 | $ | 87.0 | $ | 89.3 | |||||
| New Markets | 16.7 | 20.1 | 24.6 | ||||||||
| Total Income Tax Credits and Other Income Tax Benefits | $ | 114.0 | $ | 107.1 | $ | 113.9 | |||||
| Amortization Expense | |||||||||||
| Affordable Housing | $ | 83.4 | $ | 71.8 | $ | 76.8 | |||||
| New Markets | 15.1 | 17.5 | 19.7 | ||||||||
| Total Amortization Expense | $ | 98.5 | $ | 89.3 | $ | 96.5 |
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 155 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Investment funds. Northern Trust acts as an asset manager for various funds in which clients of Northern Trust are investors. As an asset manager of funds, Northern Trust earns a competitively priced fee that is based on assets managed and varies with each fund’s investment objective. Based on its analysis, Northern Trust has determined that it is not the primary beneficiary of these VIEs under GAAP and therefore, the funds are not consolidated. Northern Trust’s maximum exposure to loss is limited to the carrying amount of its investments, including any undrawn commitments.
Certain funds for which Northern Trust acts as an asset manager comply or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds and, therefore, the funds are exempt from the consolidation requirements in ASC 810-10. Northern Trust does not have any contractual obligations to provide financial support to the funds. Any potential future support of the funds will be at the discretion of Northern Trust after an evaluation of the specific facts and circumstances.
Periodically, Northern Trust makes seed capital investments to certain funds which are VIEs. As of December 31, 2025, Northern Trust had $122.9 million of seed capital investments valued using net asset value per share and had $19.6 million of unfunded commitments related to seed capital investments. As of December 31, 2024, Northern Trust had no seed capital investments and no unfunded commitments related to seed capital investments.
Note 29 – Pledged Assets, Accepted Collateral and Restricted Assets
Pledged Assets. As part of its liquidity management strategy, Northern Trust may pledge loans and/or securities to various financial market utilities to allow for client payment, clearing and settlement processing as part of our custody services. Northern Trust may also pledge loans or securities to Central Banks, Federal Home Loan Bank (FHLB) of Chicago and third parties for various purposes, for example: securing public and trust deposits, repurchase agreements, borrowings and derivative contracts.
The following table presents the carrying value of Northern Trust's pledged assets by type.
TABLE 117: TYPE OF PLEDGED ASSETS
| FOR THE YEAR ENDED DECEMBER 31, | ||||||||
| (In Billions) | 2025 | 2024 | ||||||
| Debt Securities(1) | $ | 33.0 | $ | 29.3 | ||||
| Loans(2) | 9.4 | 9.5 | ||||||
| Total Pledged Assets | $ | 42.4 | $ | 38.8 |
(1) Debt securities are comprised of held to maturity and available for sale securities.
(2) Loans pledged at the FHLB of Chicago and the Federal Reserve Bank of Chicago.
As of December 31, 2025 and 2024, $1.0 billion and $1.2 billion, respectively, of collateral pledged related to loans and/or securities, is eligible to be repledged or sold by the secured party.
Accepted Collateral. Northern Trust accepts financial assets as collateral that it may, in some instances, be permitted to repledge or sell. The collateral is generally obtained under certain reverse repurchase agreements and derivative contracts.
The following table presents the fair value of securities accepted as collateral.
TABLE 118: ACCEPTED COLLATERAL
| FOR THE YEAR ENDED DECEMBER 31, | ||||||||
| (In Millions) | 2025 | 2024 | ||||||
| Collateral that may be repledged or sold | ||||||||
| Reverse repurchase agreements(1) | $ | 90,475.4 | $ | 65,311.1 | ||||
| Derivative contracts | 2.7 | 23.6 | ||||||
| Collateral that may not be repledged or sold | ||||||||
| Reverse repurchase agreements | — | — | ||||||
| Total Collateral Accepted | $ | 90,478.1 | $ | 65,334.7 |
(1) The fair value of securities collateral that was repledged or sold totaled $89.7 billion and $64.8 billion at December 31, 2025 and 2024, respectively. This primarily includes collateral accepted as related to the FICC sponsored member program. Refer to Note 24, “Commitments and Contingent Liabilities” and Note 27, “Offsetting of Assets and Liabilities” for further information.
Restricted Assets. Certain cash may be restricted in terms of usage or withdrawal. As a result of the continuing military conflict involving Ukraine and the Russian Federation and related sanctions and legal restrictions in place, cash balances denominated in Russian rubles received for the benefit of certain clients in our Asset Servicing business are subject to distribution restrictions. As of December 31, 2025 and 2024, these balances totaled $1.8 billion and $1.1 billion respectively, and are reported in Cash and Due from Banks on the consolidated balance sheet.
| 156 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2025 and 2024, Northern Trust held cash of $531.2 million and $491.2 million, respectively, to meet non-U.S. reserve requirements. The Federal Reserve’s U.S. reserve requirement is zero percent. There were no average deposits required to meet Federal Reserve Bank reserve requirements at December 31, 2025 and 2024.
Note 30 – Restrictions on Subsidiary Dividends and Loans or Advances
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.
Under Illinois law, an Illinois state bank, prior to paying a dividend, must carry over to surplus at least one-tenth of its net profits since the date of the declaration of the last preceding dividend, until the bank’s surplus is equal to its capital. In addition, an Illinois state bank may not pay any dividend in an amount greater than its net profits then on hand, after deduction of losses and bad debts (defined as debts due to a state bank on which interest is past due and unpaid for a period of six months or more, unless the same are well secured and in the process of collection).
The Bank is also prohibited under federal law from paying any dividends if the Bank is undercapitalized or if the payment of the dividends would cause the Bank 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. The Dodd-Frank Act and Basel III impose additional restrictions on the ability of banking institutions to pay dividends (e.g., the Corporation may pay dividends only in accordance with the capital plan rules and capital adequacy standards of the Federal Reserve). Subsequent to December 31, 2025, our Bank subsidiary could declare dividends to the Corporation of approximately $391 million, without obtaining prior regulatory approval.
Under federal law, financial transactions by the Bank, the Corporation’s insured banking subsidiary, with the Corporation and its affiliates that are in the form of loans or extensions of credit, investments, guarantees, derivative transactions, repurchase agreements, securities lending transactions or purchases of assets, are restricted. These transactions must be on terms and conditions that are, or in good faith would be, offered to non-affiliated companies (i.e. on terms not less favorable to the Bank than market terms). Further, extensions of credit must be secured fully with qualifying collateral and are limited to 10% of the Bank’s capital and surplus for transactions with a single affiliate and to 20% of the Bank’s capital and surplus with all affiliates. Other state and federal laws may limit the transfer of funds by the Corporation’s banking subsidiaries to the Corporation and certain of its affiliates.
Note 31 – Reporting Segments and Related Information
Segment Information. Northern Trust is organized around its two client-focused reporting segments: Asset Servicing and Wealth Management. Asset management and related services are provided to Asset Servicing and Wealth Management clients primarily by the Asset Management business. The revenue and expenses of Asset Management and certain other support functions are allocated fully to Asset Servicing and Wealth Management.
Reporting segment financial information, presented on an internal management-reporting basis, is determined by accounting systems used to allocate revenue and expense to each segment, and incorporates processes for allocating assets, liabilities, equity and the applicable interest income and expense utilizing a funds transfer pricing (FTP) methodology. Under the methodology, assets and liabilities receive a funding charge or credit that considers interest rate risk, liquidity risk, and other product characteristics on an instrument level. Additionally, segment information is presented on an FTE basis as management believes an FTE presentation provides a clearer indication of net interest income. The adjustment to an FTE basis has no impact on Net Income.
Equity is allocated to the reporting segments based on a variety of factors including, but not limited to, risk, regulatory considerations, and internal metrics. Allocations of equity and certain corporate expense may not be representative of levels that would be required if the segments were independent entities. The accounting policies used for management reporting are consistent with those described in Note 1, “Summary of Significant Accounting Policies.” Transfers of income and expense items are recorded at cost; there is no consolidated profit or loss on sales or transfers between reporting segments. Northern Trust’s presentations are not necessarily consistent with similar information for other financial institutions.
Revenues, expenses and average assets are allocated to Asset Servicing and Wealth Management, with the exception of non-recurring activities such as certain corporate transactions and costs incurred associated with acquisitions, divestitures, litigation, restructuring, and tax adjustments not directly attributable to a specific reporting segment, which are reported within Other.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 157 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Reporting segment results are subject to reclassification when organizational changes are made. The results are also subject to refinements in revenue and expense allocation methodologies, which are typically reflected on a retrospective basis unless it is impractical to do so.
Effective January 2025, certain operations support activities were moved out of Asset Servicing and Wealth Management in connection with the formation of the Enterprise Chief Operating Office. The Enterprise Chief Operating Office provides operational support to Asset Servicing and Wealth Management. Its expenses are included within Other and are fully allocated to Asset Servicing and Wealth Management. Prior-year segment results have been recast, where practical, to reflect the organizational changes.
Effective January 2024, Northern Trust implemented certain enhancements to its FTP methodology, impacting the allocation of Net Interest Income to the Asset Servicing and Wealth Management segments. As a result, the approximate impact on the Asset Servicing and Wealth Management segments was a $132.0 million decrease and a $132.0 million increase in Net Interest Income, respectively, for the year ended December 31, 2024. Prior-year segment results have not been revised to reflect this methodology change.
Northern Trust’s Chief Operating Decision Maker is the Chief Executive Officer. The Chief Operating Decision Maker uses growth and profitability metrics to assess segments’ performance including segment revenue and income before income taxes. Those same measures are used by the Chief Operating Decision Maker as primary inputs into the allocation of resources in the annual planning process. Allocation of capital to each segment takes into consideration a variety of factors including average loans, average deposits and applicable regulatory capital requirements.
Asset Servicing. Asset Servicing is a leading global provider of asset servicing and related services to corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds, and other institutional investors around the globe. Asset servicing and related services encompass a full range of capabilities including but not limited to: custody; fund administration; investment operations outsourcing; investment management; investment risk and analytical services; employee benefit services; securities lending; foreign exchange; treasury management; brokerage services; transition management services; banking; and cash management. Client relationships are managed through the Bank and the Bank’s and the Corporation’s other subsidiaries, including support from locations in North America, Europe, the Middle East, and the Asia-Pacific region.
Wealth Management. Wealth Management focuses on high-net-worth individuals and families, business owners, executives, professionals, retirees, and established privately-held businesses in its target markets. In supporting these targeted segments, Wealth Management provides trust, investment management, custody, and philanthropic services; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services; and private and business banking. Wealth Management also includes Global Family Office, which provides customized services, including but not limited to: investment management; global custody; fiduciary; and private banking; family office consulting, and technology solutions, to meet the complex financial and reporting needs of ultra-high-net-worth individuals and family offices across the globe. Wealth Management services are delivered by multidisciplinary teams through a network of offices in 19 U.S. states and Washington, D.C., as well as offices in London, Guernsey, Singapore, and Abu Dhabi.
Other**.** Other includes expenses for the Enterprise Chief Operating Office, Asset Management, corporate and support functions not directly incurred by, but ultimately allocated back to, our two client-focused reporting segments. Income and expenses associated with non-recurring activities such as certain costs associated with acquisitions, divestitures, litigation, restructuring, and tax adjustments are retained within Other. Other also includes the FTE adjustments of $28.5 million, $31.8 million, and $57.5 million for 2025, 2024, and 2023, respectively, in order to reconcile the segment results that are reported on an internal management-reporting basis into consolidated results.
| 158 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following tables reflect the earnings contribution and certain average balances of Northern Trust’s reporting segments for the years ended December 31, 2025, 2024, and 2023. Segment results are stated on an FTE basis which has no impact on net income.
TABLE 119: RESULTS OF REPORTING SEGMENTS
| ($ In Millions) | ASSET SERVICING(3) | WEALTH MANAGEMENT(3) | ||||||||||||||||||
| FOR THE YEAR ENDED DECEMBER 31 | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||
| Noninterest Income | ||||||||||||||||||||
| Trust, Investment and Other Servicing Fees | $ | 2,800.2 | $ | 2,632.8 | $ | 2,461.9 | $ | 2,217.6 | $ | 2,095.0 | $ | 1,899.9 | ||||||||
| Foreign Exchange Trading Income (Loss) | 268.0 | 247.2 | 213.0 | (27.2) | (16.0) | (9.1) | ||||||||||||||
| Other Noninterest Income | 298.2 | 271.0 | 263.4 | 143.8 | 140.3 | 150.8 | ||||||||||||||
| Total Noninterest Income | 3,366.4 | 3,151.0 | 2,938.3 | 2,334.2 | 2,219.3 | 2,041.6 | ||||||||||||||
| Net Interest Income(1) | 1,398.3 | 1,209.5 | 1,197.3 | 1,042.5 | 993.4 | 842.2 | ||||||||||||||
| Revenue(1) | 4,764.7 | 4,360.5 | 4,135.6 | 3,376.7 | 3,212.7 | 2,883.8 | ||||||||||||||
| Provision for Credit Losses | (3.2) | (4.6) | 0.5 | (7.5) | 8.8 | 24.0 | ||||||||||||||
| Noninterest Expense | ||||||||||||||||||||
| Compensation | 328.5 | 399.3 | 361.1 | 577.4 | 576.5 | 551.2 | ||||||||||||||
| Employee Benefits | 66.9 | 70.0 | 66.2 | 90.9 | 87.4 | 83.0 | ||||||||||||||
| Outside Services | 122.1 | 188.2 | 191.3 | 61.4 | 46.4 | 43.2 | ||||||||||||||
| Allocated Expense | 3,047.5 | 2,738.6 | 2,542.1 | 1,262.0 | 1,200.8 | 1,132.6 | ||||||||||||||
| Other Segment Items(2) | 75.8 | 91.6 | 110.0 | 94.6 | 79.7 | 74.8 | ||||||||||||||
| Total Noninterest Expense | 3,640.8 | 3,487.7 | 3,270.7 | 2,086.3 | 1,990.8 | 1,884.8 | ||||||||||||||
| Income before Income Taxes(1) | 1,127.1 | 877.4 | 864.4 | 1,297.9 | 1,213.1 | 975.0 | ||||||||||||||
| Provision for Income Taxes(1) | 244.5 | 192.4 | 187.1 | 317.2 | 304.9 | 245.9 | ||||||||||||||
| Net Income | $ | 882.6 | $ | 685.0 | $ | 677.3 | $ | 980.7 | $ | 908.2 | $ | 729.1 | ||||||||
| Percentage of Consolidated Net Income | 51% | 34% | 61% | 56% | 45% | 66% | ||||||||||||||
| Average Assets | $ | 113,080.3 | $ | 107,700.1 | $ | 101,402.1 | $ | 39,241.4 | $ | 38,482.6 | $ | 41,176.6 | ||||||||
| Average Loans | $ | 5,676.2 | $ | 6,315.5 | $ | 7,372.6 | $ | 35,396.9 | $ | 34,601.2 | $ | 34,804.4 | ||||||||
| Average Deposits | $ | 91,906.8 | $ | 86,691.3 | $ | 81,742.1 | $ | 25,633.6 | $ | 25,558.2 | $ | 23,432.9 |
(1) Financial measures stated on an FTE basis.
(2) Other Segment Items include Occupancy, Equipment & Software and Other Operating Expense.
(3) The current $58.8 million and prior-year $85.2 million severance-related charges, as well as, the prior-year $16.4 million software amortization acceleration and dispositions, and $6.5 million loss on securities repositioning related to the supplemental pension plan, are allocated to the Reporting Segments based on the nature of the item.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 159 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| ($ In Millions) | OTHER(3) | TOTAL CONSOLIDATED | ||||||||||||||||||
| FOR THE YEAR ENDED DECEMBER 31 | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||
| Noninterest Income | ||||||||||||||||||||
| Trust, Investment and Other Servicing Fees | $ | — | $ | — | $ | — | $ | 5,017.8 | $ | 4,727.8 | $ | 4,361.8 | ||||||||
| Foreign Exchange Trading Income | — | — | — | 240.8 | 231.2 | 203.9 | ||||||||||||||
| Other Noninterest Income (Loss) | (25.2) | 743.0 | (188.4) | 416.8 | 1,154.3 | 225.8 | ||||||||||||||
| Total Noninterest Income | (25.2) | 743.0 | (188.4) | 5,675.4 | 6,113.3 | 4,791.5 | ||||||||||||||
| Net Interest Income (Expense)(1) | (29.8) | (25.8) | (57.5) | 2,411.0 | 2,177.1 | 1,982.0 | ||||||||||||||
| Revenue(1) | (55.0) | 717.2 | (245.9) | 8,086.4 | 8,290.4 | 6,773.5 | ||||||||||||||
| Provision for Credit Losses | 3.2 | (7.2) | — | (7.5) | (3.0) | 24.5 | ||||||||||||||
| Noninterest Expense | ||||||||||||||||||||
| Compensation | 1,665.4 | 1,495.3 | 1,409.5 | 2,571.3 | 2,471.1 | 2,321.8 | ||||||||||||||
| Employee Benefits | 304.3 | 260.4 | 256.0 | 462.1 | 417.8 | 405.2 | ||||||||||||||
| Outside Services | 805.0 | 763.4 | 672.0 | 988.5 | 998.0 | 906.5 | ||||||||||||||
| Allocated Expense | (4,309.5) | (3,939.4) | (3,674.7) | — | — | — | ||||||||||||||
| Other Segment Items(2) | 1,562.1 | 1,575.7 | 1,465.9 | 1,732.5 | 1,747.0 | 1,650.7 | ||||||||||||||
| Total Noninterest Expense | 27.3 | 155.4 | 128.7 | 5,754.4 | 5,633.9 | 5,284.2 | ||||||||||||||
| Income before Income Taxes(1) | (85.5) | 569.0 | (374.6) | 2,339.5 | 2,659.5 | 1,464.8 | ||||||||||||||
| Provision for Income Taxes(1) | 40.9 | 131.1 | (75.5) | 602.6 | 628.4 | 357.5 | ||||||||||||||
| Net Income | $ | (126.4) | $ | 437.9 | $ | (299.1) | $ | 1,736.9 | $ | 2,031.1 | $ | 1,107.3 | ||||||||
| Percentage of Consolidated Net Income | (7)% | 21% | (27)% | 100% | 100% | 100% | ||||||||||||||
| Average Assets | $ | 1,171.5 | $ | 450.8 | $ | 70.5 | $ | 153,493.2 | $ | 146,633.5 | $ | 142,649.2 | ||||||||
| Average Loans | $ | — | $ | — | $ | — | $ | 41,073.1 | $ | 40,916.7 | $ | 42,177.0 | ||||||||
| Average Deposits | $ | 1,171.5 | $ | 450.8 | $ | 70.5 | $ | 118,711.9 | $ | 112,700.3 | $ | 105,245.5 |
(1) Financial measures stated on an FTE basis. The FTE adjustment was $28.5 million, $31.8 million, and $57.5 million for 2025, 2024, and 2023, respectively, and is eliminated within “Other” in order for “Total Consolidated” to reconcile with the Consolidated Statement of Income.
(2) Other Segment Items include Occupancy, Equipment & Software and Other Operating Expense.
(3) Current year includes the $19.2 million expense related to mark-to-market activity associated with existing Visa Class B swap agreements and the $15.9 million release of a Federal Deposit Insurance Corporation (FDIC) special assessment reserve. Prior-year includes the $878.4 million net gain related to Northern Trust’s participation in a Visa Exchange Offer, a $68.1 million gain related to the sale of an equity investment, partially offset by a $189.3 million loss on available for sale debt securities sold in conjunction with a repositioning of the portfolio.
Geographic Area Information. Northern Trust’s non-U.S. activities are primarily related to its asset servicing, asset management, foreign exchange, cash management, and commercial banking businesses. The operations of Northern Trust are managed on a reporting segment basis and include components of both U.S. and non-U.S. source income and assets. Non-U.S. source income and assets are not separately identified in Northern Trust’s internal management reporting system. However, Northern Trust is required to disclose non-U.S. activities based on the domicile of the customer. Due to the complex and integrated nature of Northern Trust’s activities, it is difficult to segregate with precision revenues, expenses and assets between U.S. and non-U.S.-domiciled customers. Therefore, certain subjective estimates and assumptions have been made to allocate revenues, expenses and assets between U.S. and non-U.S. operations. The results are also subject to refinements in allocation methodologies, which are typically reflected on a retrospective basis unless it is impractical to do so. In 2025, Northern Trust refined its methodology for allocating revenues, expenses and assets between U.S. and non-U.S. operations and prior year results have been revised to reflect the refined methodology.
| 160 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes Northern Trust’s performance based on the allocation process described above without regard to guarantors or the location of collateral.
TABLE 120: DISTRIBUTION OF TOTAL ASSETS AND OPERATING PERFORMANCE
| ($ In Millions) | TOTAL ASSETS | % OF TOTAL | TOTAL REVENUE**(1)** | % OF TOTAL | INCOME BEFORE INCOME TAXES | % OF TOTAL | NET INCOME | % OF TOTAL | ||||||||||||||||||
| 2025 | ||||||||||||||||||||||||||
| Non-U.S. | $ | 54,803.5 | 31 | % | $ | 2,434.6 | 30 | % | $ | 556.6 | 24 | % | $ | 439.5 | 25 | % | ||||||||||
| U.S. | 122,329.2 | 69 | 5,651.8 | 70 | 1,782.9 | 76 | 1,297.4 | 75 | ||||||||||||||||||
| Total | $ | 177,132.7 | 100 | % | $ | 8,086.4 | 100 | % | $ | 2,339.5 | 100 | % | $ | 1,736.9 | 100 | % | ||||||||||
| 2024 | ||||||||||||||||||||||||||
| Non-U.S. | $ | 52,343.8 | 34 | % | $ | 2,123.2 | 26 | % | $ | 388.9 | 15 | % | $ | 307.9 | 15 | % | ||||||||||
| U.S. | 103,164.6 | 66 | 6,167.2 | 74 | 2,270.6 | 85 | 1,723.2 | 85 | ||||||||||||||||||
| Total | $ | 155,508.4 | 100 | % | $ | 8,290.4 | 100 | % | $ | 2,659.5 | 100 | % | $ | 2,031.1 | 100 | % | ||||||||||
| 2023 | ||||||||||||||||||||||||||
| Non-U.S. | $ | 51,699.4 | 34 | % | $ | 2,085.9 | 31 | % | $ | 473.8 | 32 | % | $ | 374.6 | 34 | % | ||||||||||
| U.S. | 99,083.7 | 66 | 4,687.6 | 69 | 991.0 | 68 | 732.7 | 66 | ||||||||||||||||||
| Total | $ | 150,783.1 | 100 | % | $ | 6,773.5 | 100 | % | $ | 1,464.8 | 100 | % | $ | 1,107.3 | 100 | % |
(1) Total revenue is comprised of net interest income and noninterest income.
Note 32 – Regulatory Capital Requirements
The Corporation and the Bank are subject to various regulatory capital requirements administered by the federal bank regulatory authorities. Under these requirements, banks must maintain specific risk-based capital and leverage ratios 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, 2025 and 2024, the Bank had capital ratios above the levels required for classification as a “well-capitalized” institution and had not received any regulatory notification of a lower classification. The results of the 2025 DFAST, published by the Federal Reserve Board on June 27, 2025, resulted in Northern Trust’s stress capital buffer and effective Common Equity Tier 1 capital ratio minimum requirement remaining constant at 2.5% and 7.0%, respectively, for the annual capital plan cycle, which began on October 1, 2025 and continues through September 30, 2026. On February 4, 2026, the Federal Reserve notified the Corporation that because the Stress Testing Transparency Proposal remains subject to public comment, absent further action from the Federal Reserve, the Corporation’s stress capital buffer requirement will remain at 2.5% until September 30, 2027.
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, 2025 and 2024, Northern Trust’s non-U.S. banking subsidiaries had capital ratios above their specified minimum requirements. There were no conditions or events since December 31, 2025, that management believes have adversely affected the capital categorization of any Northern Trust subsidiary bank. The following table provides capital ratios for the Corporation and the Bank determined by Basel III phased in requirements.
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 161 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TABLE 121: RISK-BASED AND LEVERAGE CAPITAL AMOUNTS AND RATIOS
| DECEMBER 31, 2025 | DECEMBER 31, 2024 | |||||||||||||||||||||||||
| ($ In Millions) | STANDARDIZED APPROACH | ADVANCED APPROACH | STANDARDIZED APPROACH | ADVANCED APPROACH | ||||||||||||||||||||||
| BALANCE | RATIO | BALANCE | RATIO | BALANCE | RATIO | BALANCE | RATIO | |||||||||||||||||||
| Common Equity Tier 1 Capital | ||||||||||||||||||||||||||
| Northern Trust Corporation | $ | 11,192.5 | 12.6 | % | $ | 11,192.5 | 15.0 | % | $ | 11,038.2 | 12.4 | % | $ | 11,038.2 | 14.5 | % | ||||||||||
| The Northern Trust Company | 10,582.2 | 12.1 | 10,582.2 | 14.6 | 9,983.8 | 11.4 | 9,983.8 | 13.6 | ||||||||||||||||||
| Minimum to qualify as well-capitalized: | ||||||||||||||||||||||||||
| Northern Trust Corporation | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||
| The Northern Trust Company | 5,700.4 | 6.5 | 4,718.7 | 6.5 | 5,703.2 | 6.5 | 4,789.1 | 6.5 | ||||||||||||||||||
| Tier 1 Capital | ||||||||||||||||||||||||||
| Northern Trust Corporation | 12,008.5 | 13.5 | 12,008.5 | 16.0 | 11,870.2 | 13.3 | 11,870.2 | 15.6 | ||||||||||||||||||
| The Northern Trust Company | 10,582.2 | 12.1 | 10,582.2 | 14.6 | 9,983.8 | 11.4 | 9,983.8 | 13.6 | ||||||||||||||||||
| Minimum to qualify as well-capitalized: | ||||||||||||||||||||||||||
| Northern Trust Corporation | 5,340.9 | 6.0 | 4,490.6 | 6.0 | 5,336.4 | 6.0 | 4,555.3 | 6.0 | ||||||||||||||||||
| The Northern Trust Company | 7,015.9 | 8.0 | 5,807.6 | 8.0 | 7,019.4 | 8.0 | 5,894.2 | 8.0 | ||||||||||||||||||
| Total Capital | ||||||||||||||||||||||||||
| Northern Trust Corporation | 14,304.2 | 16.1 | 14,105.8 | 18.8 | 13,423.2 | 15.1 | 13,217.3 | 17.4 | ||||||||||||||||||
| The Northern Trust Company | 12,530.5 | 14.3 | 12,332.2 | 17.0 | 11,241.7 | 12.8 | 11,035.8 | 15.0 | ||||||||||||||||||
| Minimum to qualify as well-capitalized: | ||||||||||||||||||||||||||
| Northern Trust Corporation | 8,901.5 | 10.0 | 7,484.4 | 10.0 | 8,894.0 | 10.0 | 7,592.1 | 10.0 | ||||||||||||||||||
| The Northern Trust Company | 8,769.8 | 10.0 | 7,259.5 | 10.0 | 8,774.2 | 10.0 | 7,367.8 | 10.0 | ||||||||||||||||||
| Tier 1 Leverage | ||||||||||||||||||||||||||
| Northern Trust Corporation | 12,008.5 | 7.8 | 12,008.5 | 7.8 | 11,870.2 | 8.1 | 11,870.2 | 8.1 | ||||||||||||||||||
| The Northern Trust Company | 10,582.2 | 6.9 | 10,582.2 | 6.9 | 9,983.8 | 6.9 | 9,983.8 | 6.9 | ||||||||||||||||||
| Minimum to qualify as well-capitalized: | ||||||||||||||||||||||||||
| Northern Trust Corporation | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||
| The Northern Trust Company | 7,676.0 | 5.0 | 7,676.0 | 5.0 | 7,262.3 | 5.0 | 7,262.3 | 5.0 | ||||||||||||||||||
| Supplementary Leverage | ||||||||||||||||||||||||||
| Northern Trust Corporation | N/A | N/A | 12,008.5 | 8.7 | N/A | N/A | 11,870.2 | 8.9 | ||||||||||||||||||
| The Northern Trust Company | N/A | N/A | 10,582.2 | 7.7 | N/A | N/A | 9,983.8 | 7.5 | ||||||||||||||||||
| Minimum to qualify as well-capitalized: | ||||||||||||||||||||||||||
| Northern Trust Corporation | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||
| The Northern Trust Company | N/A | N/A | 4,126.8 | 3.0 | N/A | N/A | 3,974.3 | 3.0 |
Under the final Basel III rules, the Corporation and the Bank are required to calculate and publicly disclose risk-based capital ratios using two methodologies: an advanced approach and a standardized approach. Under the advanced approach, credit RWA are based on internal credit models and parameters. Additionally, the advanced approach incorporates operational risk RWA. Under the standardized approach, RWA are based on supervisory prescribed risk weights that are primarily dependent on counterparty type and asset class.
Pursuant to the Federal Reserve Board's implementation in the final Basel III rules of a provision of the Dodd-Frank Act, the capital adequacy of the Corporation and the Bank is assessed based on the lower of the advanced approach or standardized approach capital ratios.
| 162 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 33 – Northern Trust Corporation (Corporation only)
Condensed financial information is presented in the following tables. Investments in wholly-owned subsidiaries are carried on the equity method of accounting.
TABLE 122: CONDENSED BALANCE SHEETS
| DECEMBER 31, | ||||||||
| (In Millions) | 2025 | 2024 | ||||||
| ASSETS | ||||||||
| Cash on Deposit with Subsidiary Bank | $ | 2,320.6 | $ | 2,383.1 | ||||
| Advances to Wholly-Owned Subsidiaries – Banks | 3,760.0 | 3,760.0 | ||||||
| Investments in Wholly-Owned Subsidiaries – Banks | 11,414.5 | 10,800.3 | ||||||
| – Nonbank | 243.2 | 212.8 | ||||||
| Other Assets | 1,171.7 | 987.3 | ||||||
| Total Assets | $ | 18,910.0 | $ | 18,143.5 | ||||
| LIABILITIES | ||||||||
| Senior Notes | $ | 3,351.5 | $ | 2,769.7 | ||||
| Long-Term Debt | 2,084.4 | 2,081.3 | ||||||
| Other Liabilities | 516.2 | 504.1 | ||||||
| Total Liabilities | 5,952.1 | 5,355.1 | ||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred Stock | 884.9 | 884.9 | ||||||
| Common Stock | 408.6 | 408.6 | ||||||
| Additional Paid-in Capital | 1,039.0 | 1,025.3 | ||||||
| Retained Earnings | 16,709.3 | 15,614.7 | ||||||
| Accumulated Other Comprehensive Income (Loss) | (590.5) | (814.0) | ||||||
| Treasury Stock | (5,493.4) | (4,331.1) | ||||||
| Total Stockholders’ Equity | 12,957.9 | 12,788.4 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 18,910.0 | $ | 18,143.5 |
TABLE 123: CONDENSED STATEMENTS OF INCOME
| FOR THE YEAR ENDED DECEMBER 31, | |||||||||||
| (In Millions) | 2025 | 2024 | 2023 | ||||||||
| OPERATING INCOME | |||||||||||
| Dividends – Bank Subsidiaries | $ | 1,305.0 | $ | 3,100.6 | $ | 850.0 | |||||
| – Nonbank Subsidiaries | — | 20.0 | — | ||||||||
| Intercompany Interest and Other Charges | 281.2 | 291.1 | 260.2 | ||||||||
| Interest and Other Income | 15.4 | 75.3 | 12.2 | ||||||||
| Total Operating Income | 1,601.6 | 3,487.0 | 1,122.4 | ||||||||
| OPERATING EXPENSES | |||||||||||
| Interest Expense | 263.6 | 302.8 | 279.5 | ||||||||
| Other Operating Expenses | 42.3 | 47.5 | 32.3 | ||||||||
| Total Operating Expenses | 305.9 | 350.3 | 311.8 | ||||||||
| Income before Income Taxes and Equity in Undistributed Net Income of Subsidiaries | 1,295.7 | 3,136.7 | 810.6 | ||||||||
| Benefit (Expense) for Income Taxes | 11.1 | (4.1) | 12.4 | ||||||||
| Income before Equity in Undistributed Net Income of Subsidiaries | 1,306.8 | 3,132.6 | 823.0 | ||||||||
| Equity in Undistributed Net Income of Subsidiaries – Banks | 399.7 | (1,104.6) | 269.4 | ||||||||
| – Nonbank | 30.4 | 3.1 | 14.9 | ||||||||
| Net Income | $ | 1,736.9 | $ | 2,031.1 | $ | 1,107.3 | |||||
| Preferred Stock Dividends | 41.8 | 41.8 | 41.8 | ||||||||
| Net Income Applicable to Common Stock | $ | 1,695.1 | $ | 1,989.3 | $ | 1,065.5 |
| 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION 163 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TABLE 124: CONDENSED STATEMENTS OF CASH FLOWS
| FOR THE YEAR ENDED DECEMBER 31, | |||||||||||
| (In Millions) | 2025 | 2024 | 2023 | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net Income | $ | 1,736.9 | $ | 2,031.1 | $ | 1,107.3 | |||||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | |||||||||||
| Equity in Undistributed Net Income of Subsidiaries | (430.1) | 1,101.5 | (284.3) | ||||||||
| Change in Prepaid Expenses | (1.6) | 1.4 | 1.7 | ||||||||
| Change in Accrued Income Taxes | (17.4) | (92.9) | (10.2) | ||||||||
| Other Operating Activities, net | 170.8 | 118.9 | 138.1 | ||||||||
| Net Cash Provided by Operating Activities | 1,458.6 | 3,160.0 | 952.6 | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Investments in and Advances to Subsidiaries, net | — | — | 250.0 | ||||||||
| Other Investing Activities, net(1) | (116.6) | 0.1 | — | ||||||||
| Net Cash (Used in) Provided by Investing Activities | (116.6) | 0.1 | 250.0 | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Proceeds from Senior Notes | 499.8 | — | — | ||||||||
| Proceeds from Long-Term Debt | 750.0 | — | — | ||||||||
| Repayments of Long-Term Debt | (750.0) | — | — | ||||||||
| Treasury Stock Purchased | (1,273.5) | (937.8) | (347.5) | ||||||||
| Net Proceeds from Stock Options | 6.4 | 9.4 | 2.3 | ||||||||
| Cash Dividends Paid on Common Stock | (591.6) | (602.3) | (621.5) | ||||||||
| Cash Dividends Paid on Preferred Stock | (41.8) | (41.8) | (41.8) | ||||||||
| Other Financing Activities, net | (3.8) | — | — | ||||||||
| Net Cash Used in Financing Activities | (1,404.5) | (1,572.5) | (1,008.5) | ||||||||
| Net Change in Cash on Deposit with Subsidiary Bank | (62.5) | 1,587.6 | 194.1 | ||||||||
| Cash on Deposit with Subsidiary Bank at Beginning of Year | 2,383.1 | 795.5 | 601.4 | ||||||||
| Cash on Deposit with Subsidiary Bank at End of Year | $ | 2,320.6 | $ | 2,383.1 | $ | 795.5 |
(1) Other Investing Activities, net includes $111.7 million of seed capital investments to certain funds which are VIEs. Refer to Note 28, "Variable Interest Entities" for further information.
| 164 2025 ANNUAL REPORT | NORTHERN TRUST CORPORATION |
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