Northern Trust(NTRS) - 2025 Q2 - Quarterly Report

FORM 10-Q Filing Information Registrant Information Northern Trust Corporation filed its Form 10-Q for the quarterly period ended June 30, 2025. The company is a large accelerated filer and has filed all required reports - Registrant: NORTHERN TRUST CORPORATION, Delaware incorporation, (312) 630-6000[2] Registered Securities | Title of each class | Trading Symbol | Name of each exchange on which registered | | :------------------ | :------------- | :---------------------------------------- | | Common Stock, $1.66 2/3 Par Value | NTRS | The NASDAQ Stock Market LLC | | Depositary Shares, each representing 1/1,000th interest in a share of Series E Non-Cumulative Perpetual Preferred Stock | NTRSO | The NASDAQ Stock Market LLC | - The registrant is a large accelerated filer and has filed all required reports during the preceding 12 months[3][4] - As of June 30, 2025, 191,233,304 shares of common stock, $1.66 2/3 par value, were outstanding[4] Table of Contents Consolidated Financial Highlights (Unaudited) Condensed Income Statements Northern Trust Corporation reported a significant decrease in net income for both the three and six months ended June 30, 2025, primarily driven by a substantial decline in noninterest income, despite growth in net interest income Condensed Income Statements ($ Million) | CONDENSED INCOME STATEMENTS ($ Million) | 2025 (Three Months) | 2024 (Three Months) | % CHANGE (Three Months) | 2025 (Six Months) | 2024 (Six Months) | % CHANGE (Six Months) | | :---------------------------------------- | :------------------ | :------------------ | :---------------------- | :---------------- | :---------------- | :-------------------- | | Noninterest Income | $1,387.4 | $2,192.6 | (37)% | $2,759.3 | $3,311.3 | (17)% | | Net Interest Income | 610.5 | 522.9 | 17 | 1,178.6 | 1,051.0 | 12 | | Total Revenue | 1,997.9 | 2,715.5 | (26) | 3,937.9 | 4,362.3 | (10) | | Provision for Credit Losses | 16.5 | 8.0 | N/M | 17.5 | (0.5) | N/M | | Noninterest Expense | 1,416.6 | 1,533.9 | (8) | 2,834.2 | 2,898.6 | (2) | | Income before Income Taxes | 564.8 | 1,173.6 | (52) | 1,086.2 | 1,464.2 | (26) | | Provision for Income Taxes | 143.5 | 277.5 | (48) | 272.9 | 353.4 | (23) | | Net Income | $421.3 | $896.1 | (53)% | $813.3 | $1,110.8 | (27)% | Per Common Share | PER COMMON SHARE | 2025 (Three Months) | 2024 (Three Months) | % CHANGE (Three Months) | 2025 (Six Months) | 2024 (Six Months) | % CHANGE (Six Months) | | :--------------- | :------------------ | :------------------ | :---------------------- | :---------------- | :---------------- | :-------------------- | | Net Income — Basic | $2.14 | $4.35 | (51)% | $4.05 | $5.30 | (24)% | | — Diluted | 2.13 | 4.34 | (51) | 4.03 | 5.28 | (24) | | Cash Dividends Declared Per Common Share | 0.75 | 0.75 | — | 1.50 | 1.50 | — | | Book Value — End of Period (EOP) | 62.65 | 58.38 | 7 | 62.65 | 58.38 | 7 | | Market Value — EOP | 126.79 | 83.98 | 51 | 126.79 | 83.98 | 51 | Selected Balance Sheet Data The company's balance sheet showed growth in total assets, earning assets, and deposits as of June 30, 2025, compared to December 31, 2024, and the prior-year quarter, indicating an expansion of its financial base Selected Balance Sheet Data ($ Million) | SELECTED BALANCE SHEET DATA ($ Million) | JUNE 30, 2025 | DECEMBER 31, 2024 | % CHANGE | | :---------------------------------------- | :------------ | :---------------- | :------- | | End of Period: | | | | | Total Assets | $171,883.6 | $155,508.4 | 11 % | | Earning Assets | 159,485.5 | 142,228.0 | 12 | | Deposits | 137,053.7 | 122,482.7 | 12 | | Stockholders' Equity | 12,866.5 | 12,788.4 | 1 | Average Balances ($ Million) | Average Balances: | 2025 (Three Months) | 2024 (Three Months) | % CHANGE (Three Months) | 2025 (Six Months) | 2024 (Six Months) | % CHANGE (Six Months) | | :---------------- | :------------------ | :------------------ | :---------------------- | :---------------- | :---------------- | :-------------------- | | Total Assets | $157,719.2 | $148,001.2 | 7 % | $154,011.3 | $146,559.8 | 5 % | | Earning Assets | 145,822.0 | 135,401.1 | 8 | 141,936.5 | 134,608.9 | 5 | | Deposits | 122,377.8 | 113,341.6 | 8 | 119,166.3 | 112,852.2 | 6 | | Stockholders' Equity | 12,612.1 | 12,358.8 | 2 | 12,608.1 | 12,071.3 | 4 | Client Assets Client assets under custody/administration (AUC/A) and assets under management (AUM) both increased significantly as of June 30, 2025, compared to December 31, 2024, reflecting favorable market conditions and net new business Client Assets ($ Billion) | CLIENT ASSETS ($ Billion) | JUNE 30, 2025 | DECEMBER 31, 2024 | % CHANGE | | :---------------------------- | :------------ | :---------------- | :------- | | AUC/A | $18,068.3 | $16,788.0 | 8 % | | AUC | 14,243.7 | 13,349.2 | 7 | | AUM | 1,697.7 | 1,610.4 | 5 | Selected Ratios and Metrics Key financial ratios show a decrease in return on average common equity and an increase in dividend payout ratio, while net interest margin improved. Capital ratios remained strong, exceeding regulatory minimums for a 'well-capitalized' institution Financial Ratios | Financial Ratios: | 2025 (Three Months) | 2024 (Three Months) | 2025 (Six Months) | 2024 (Six Months) | | :---------------- | :------------------ | :------------------ | :---------------- | :---------------- | | Return on Average Common Equity | 14.2 % | 31.2 % | 13.6 % | 19.6 % |\ | Dividend Payout Ratio | 35.2 | 17.3 | 37.2 | 28.4 |\ | Net Interest Margin | 1.69 | 1.57 | 1.69 | 1.59 | Capital Ratios: Northern Trust Corporation | Capital Ratios: Northern Trust Corporation | June 30, 2025 (Standardized) | Dec 31, 2024 (Standardized) | June 30, 2025 (Advanced) | Dec 31, 2024 (Advanced) | WELL CAPITALIZED RATIOS | MINIMUM CAPITAL RATIOS | | :--------------------------------------- | :--------------------------- | :-------------------------- | :----------------------- | :---------------------- | :---------------------- | :--------------------- | | Common Equity Tier 1 Capital | 12.2 % | 12.4 % | 15.0 % | 14.5 % | N/A | 4.5 % | | Tier 1 Capital | 13.1 | 13.3 | 16.1 | 15.6 | 6.0 | 6.0 | | Total Capital | 14.8 | 15.1 | 17.9 | 17.4 | 10.0 | 8.0 | | Tier 1 Leverage | 7.6 | 8.1 | 7.6 | 8.1 | N/A | 4.0 | | Supplementary Leverage | N/A | N/A | 9.1 | 8.9 | N/A | 3.0 | Capital Ratios: The Northern Trust Company | Capital Ratios: The Northern Trust Company | June 30, 2025 (Standardized) | Dec 31, 2024 (Standardized) | June 30, 2025 (Advanced) | Dec 31, 2024 (Advanced) | WELL CAPITALIZED RATIOS | MINIMUM CAPITAL RATIOS | | :--------------------------------------- | :--------------------------- | :-------------------------- | :----------------------- | :---------------------- | :---------------------- | :--------------------- | | Common Equity Tier 1 Capital | 11.4 % | 11.4 % | 14.3 % | 13.6 % | 6.5 % | 4.5 % | | Tier 1 Capital | 11.4 | 11.4 | 14.3 | 13.6 | 8.0 | 6.0 | | Total Capital | 12.8 | 12.8 | 15.7 | 15.0 | 10.0 | 8.0 | | Tier 1 Leverage | 6.6 | 6.9 | 6.6 | 6.9 | 5.0 | 4.0 | | Supplementary Leverage | N/A | N/A | 7.9 | 7.5 | 3.0 | 3.0 | PART I – FINANCIAL INFORMATION Management's Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures about Market Risk This section provides management's perspective on Northern Trust Corporation's financial performance and condition for the second quarter of 2025, highlighting significant changes in revenue, expenses, and balance sheet items, along with disclosures on market risk management - Northern Trust is a leading provider of asset servicing, wealth management, asset management, and banking solutions, focusing on managing and servicing client assets through its Asset Servicing and Wealth Management segments[13] Total Revenue and Net Income ($ Million) | ($ Million) | 2025 (Three Months) | 2024 (Three Months) | CHANGE (Three Months) | 2025 (Six Months) | 2024 (Six Months) | CHANGE (Six Months) | | :-------------- | :------------------ | :------------------ | :-------------------- | :---------------- | :---------------- | :------------------ | | Total Revenue | $1,997.9 | $2,715.5 | $(717.6) (26)% | $3,937.9 | $4,362.3 | $(424.4) (10)% |\ | Net Income | $421.3 | $896.1 | $(474.8) (53)% | $813.3 | $1,110.8 | $(297.5) (27)% | - Revenue for the three months ended June 30, 2025, decreased to $2.0 billion, primarily due to lower Other Noninterest Income, which in the prior year included an $878.4 million net gain from the Visa exchange program[18][14] - Net Interest Income increased to $610.5 million in Q2 2025, driven by higher deposits, lower funding costs, and foreign exchange swap activity[18] Consolidated Results of Operations Northern Trust experienced a significant decline in net income for Q2 2025 and the first six months of 2025, primarily due to a substantial decrease in other noninterest income compared to the prior year, which included a large one-time gain. Despite this, net interest income showed growth, driven by higher deposits and lower funding costs Trust, Investment and Other Servicing Fees Trust, Investment and Other Servicing Fees increased due to favorable markets and net new business, contributing to overall revenue growth - Trust, Investment and Other Servicing Fees increased by 6% to $1.23 billion for Q2 2025 and $2.44 billion for the six months ended June 30, 2025, primarily due to favorable markets and net new business[18][14] Trust, Investment and Other Servicing Fees ($ Million) | ($ Million) | 2025 (Three Months) | 2024 (Three Months) | CHANGE (Three Months) | 2025 (Six Months) | 2024 (Six Months) | CHANGE (Six Months) | | :-------------- | :------------------ | :------------------ | :-------------------- | :---------------- | :---------------- | :------------------ | | Custody and Fund Administration | $469.2 | $445.9 | $23.3 (5%) | $922.5 | $882.6 | $39.9 (5%) |\ | Investment Management | 157.3 | 145.7 | 11.6 (8%) | 309.8 | 285.7 | 24.1 (8%) |\ | Securities Lending | 20.2 | 16.5 | 3.7 (22%) | 38.1 | 34.4 | 3.7 (11%) |\ | Other | 45.1 | 42.5 | 2.6 (6%) | 93.3 | 87.5 | 5.8 (7%) |\ | Total Asset Servicing | $691.8 | $650.6 | $41.2 (6%) | $1,363.7 | $1,290.2 | $73.5 (6%) |\ | Central (WM) | $189.2 | $180.7 | $8.5 (5%) | $378.3 | $359.0 | $19.3 (5%) |\ | East (WM) | 139.3 | 132.7 | 6.6 (5%) | 280.3 | 262.6 | 17.7 (7%) |\ | West (WM) | 106.3 | 103.3 | 3.0 (3%) | 214.3 | 203.2 | 11.1 (5%) |\ | Global Family Office (WM) | 104.5 | 98.8 | 5.7 (6%) | 208.3 | 194.0 | 14.3 (7%) |\ | Total Wealth Management | $539.3 | $515.5 | $23.8 (5%) | $1,081.2 | $1,018.8 | $62.4 (6%) |\ | Total Consolidated | $1,231.1 | $1,166.1 | $65.0 (6%) | $2,444.9 | $2,309.0 | $135.9 (6%) | Market Indices (Daily Averages) | Market Indices (Daily Averages) | 2025 (Three Months) | 2024 (Three Months) | CHANGE | | :------------------------------ | :------------------ | :------------------ | :----- | | S&P 500 | 5,730 | 5,247 | 9 % |\ | MSCI EAFE (U.S. dollars) | 2,512 | 2,325 | 8 |\ | MSCI EAFE (local currency) | 1,549 | 1,516 | 2 | Client Assets Under Custody / Administration ($ Billion) | Client Assets Under Custody / Administration ($ Billion) | JUNE 30, 2025 | MARCH 31, 2025 | JUNE 30, 2024 | CHANGE Q2-25/Q1-25 | CHANGE Q2-25/Q2-24 | | :------------------------------------------------------- | :------------ | :------------- | :------------ | :----------------- | :----------------- | | Asset Servicing | $16,864.9 | $15,804.7 | $15,470.8 | 7 % | 9 % |\ | Wealth Management | 1,203.4 | 1,119.3 | 1,096.6 | 8 | 10 |\ | Total Assets Under Custody / Administration | $18,068.3 | $16,924.0 | $16,567.4 | 7 % | 9 % | Client Assets Under Management ($ Billion) | Client Assets Under Management ($ Billion) | JUNE 30, 2025 | MARCH 31, 2025 | JUNE 30, 2024 | CHANGE Q2-25/Q1-25 | CHANGE Q2-25/Q2-24 | | :--------------------------------------------- | :------------ | :------------- | :------------ | :----------------- | :----------------- | | Asset Servicing | $1,229.2 | $1,160.9 | $1,107.3 | 6 % | 11 % |\ | Wealth Management | 468.5 | 446.9 | 419.4 | 5 | 12 |\ | Total AUM | $1,697.7 | $1,607.8 | $1,526.7 | 6 % | 11 % | Other Noninterest Income Other Noninterest Income significantly decreased due to a prior-year one-time gain from the Visa Exchange Offer - Other Noninterest Income decreased significantly by 85% to $156.3 million for Q2 2025 and 69% to $314.4 million for the six months ended June 30, 2025, primarily due to the prior-year's $878.4 million net gain from the Visa Exchange Offer[18][14][41] Other Noninterest Income ($ Million) | ($ Million) | 2025 (Three Months) | 2024 (Three Months) | CHANGE (Three Months) | 2025 (Six Months) | 2024 (Six Months) | CHANGE (Six Months) | | :-------------- | :------------------ | :------------------ | :-------------------- | :---------------- | :---------------- | :------------------ | | Foreign Exchange Trading Income | $50.6 | $58.4 | $(7.8) (13)% | $109.3 | $115.4 | $(6.1) (5)% |\ | Treasury Management Fees | 9.7 | 9.0 | 0.7 (7%) | 19.3 | 18.3 | 1.0 (5%) |\ | Security Commissions and Trading Income | 39.6 | 34.3 | 5.3 (16%) | 78.7 | 72.2 | 6.5 (9%) |\ | Other Operating Income | 56.4 | 924.7 | (868.3) (94%) | 107.1 | 985.7 | (878.6) (89%) |\ | Investment Security Gains (Losses), net | — | 0.1 | 0.1 (N/M) | — | (189.3) | 189.3 (N/M) |\ | Total Other Noninterest Income | $156.3 | $1,026.5 | $(870.2) (85)% | $314.4 | $1,002.3 | $(687.9) (69)% | Net Interest Income Net Interest Income increased, driven by higher deposits, lower funding costs, and foreign exchange swap activity, leading to an improved net interest margin - Net Interest Income (FTE basis) increased by 17% to $615.2 million for Q2 2025 and 12% to $1.19 billion for the six months ended June 30, 2025, primarily due to higher deposits, lower funding costs, and foreign exchange swap activity[18][51][62] - The net interest margin on an FTE basis increased to 1.69% for Q2 2025 and 1.69% for the six months ended June 30, 2025, driven by lower funding costs, partially offset by lower yields on earning assets[9][52][63] Interest and Rate on a Fully Taxable Equivalent Basis ($ Million) | (INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS) | 2025 (Three Months) | 2024 (Three Months) | 2025 (Six Months) | 2024 (Six Months) | | :------------------------------------------------------ | :------------------ | :------------------ | :---------------- | :---------------- | | Total Interest-Earning Assets (Average Balance, $ Million) | $145,822.0 | $135,401.1 | $141,936.5 | $134,608.9 |\ | Total Interest-Bearing Liabilities (Average Balance, $ Million) | $122,575.2 | $114,237.2 | $119,193.5 | $113,350.7 |\ | Net Interest Income (FTE Adjusted, $ Million) | $615.2 | $529.8 | $1,188.9 | $1,065.2 |\ | Net Interest Margin (FTE Adjusted) | 1.69 % | 1.57 % | 1.69 % | 1.59 % | Provision for Credit Losses Provision for Credit Losses increased due to higher specific reserves for non-performing loans and a worsening macroeconomic outlook, partially offset by CRE portfolio improvements - Provision for Credit Losses was $16.5 million for Q2 2025 and $17.5 million for the six months ended June 30, 2025, an increase from the prior year. This was due to increased specific reserves for non-performing loans and a worsening macroeconomic outlook, partially offset by improvements in the Commercial Real Estate (CRE) portfolio[18][69] - Net recoveries in Q2 2025 were $0.3 million, reflecting $0.4 million of recoveries and $0.1 million of charge-offs. For the six months, net recoveries totaled $0.5 million[69] Noninterest Expense Noninterest Expense decreased, primarily due to lower other operating and compensation expenses, influenced by prior-year one-time charges - Noninterest Expense decreased by 8% to $1.42 billion for Q2 2025 and 2% to $2.83 billion for the six months ended June 30, 2025, primarily due to lower Other Operating Expense and Compensation expense[18][14] Noninterest Expense ($ Million) | ($ Million) | 2025 (Three Months) | 2024 (Three Months) | CHANGE (Three Months) | 2025 (Six Months) | 2024 (Six Months) | CHANGE (Six Months) | | :-------------- | :------------------ | :------------------ | :-------------------- | :---------------- | :---------------- | :------------------ | | Compensation | $614.8 | $665.2 | $(50.4) (8)% | $1,259.2 | $1,292.3 | $(33.1) (3)% |\ | Employee Benefits | 117.7 | 100.2 | 17.5 (17%) | 227.4 | 201.3 | 26.1 (13%) |\ | Outside Services | 247.0 | 260.9 | (13.9) (5%) | 492.2 | 490.2 | 2.0 (—) |\ | Equipment and Software | 293.7 | 277.5 | 16.2 (6%) | 574.6 | 530.2 | 44.4 (8%) |\ | Occupancy | 52.5 | 54.8 | (2.3) (4%) | 105.9 | 108.9 | (3.0) (3%) |\ | Other Operating Expense | 90.9 | 175.3 | (84.4) (48%) | 174.9 | 275.7 | (100.8) (37%) |\ | Total Noninterest Expense | $1,416.6 | $1,533.9 | $(117.3) (8)% | $2,834.2 | $2,898.6 | $(64.4) (2)% | - Compensation expense decreased due to a prior-year severance charge, partially offset by higher headcount and base pay adjustments in the current quarter[73] - Other Operating Expense decreased significantly due to a $70 million charitable contribution and a $10.6 million legal settlement recorded in the prior year[76] Provision for Income Taxes Provision for Income Taxes decreased, with the effective tax rate increasing due to prior-year favorable discrete tax benefits - Provision for Income Taxes was $143.5 million for Q2 2025 (effective tax rate of 25.4%) and $272.9 million for the six months ended June 30, 2025 (effective tax rate of 25.1%)[18][77][78] - The effective tax rate increased compared to the prior year primarily due to favorable discrete tax benefits recognized in the prior year related to state tax legislation and audit resolutions[77][78] - The recently enacted 'The One Big Beautiful Bill Act' is not expected to have a material impact on consolidated financial statements[79] Reporting Segments Northern Trust operates through two client-focused segments: Asset Servicing and Wealth Management, with asset management and support functions allocated to these segments. Segment results are presented on an internal management-reporting and FTE basis, reflecting organizational changes and allocation methodologies - Northern Trust is organized into two client-focused reporting segments: Asset Servicing and Wealth Management[81] - Segment financial information is presented on an internal management-reporting basis, incorporating an FTP methodology for asset/liability allocation and an FTE basis for net interest income[82] - Effective January 2025, certain operations support activities were moved to the Enterprise Chief Operating Office, with expenses fully allocated to Asset Servicing and Wealth Management[86] Segment Financial Information ($ Million) | ($ Million) | ASSET SERVICING (2025) | ASSET SERVICING (2024) | WEALTH MANAGEMENT (2025) | WEALTH MANAGEMENT (2024) | OTHER (2025) | OTHER (2024) | TOTAL CONSOLIDATED (2025) | TOTAL CONSOLIDATED (2024) | | :-------------- | :--------------------- | :--------------------- | :----------------------- | :----------------------- | :----------- | :----------- | :------------------------ | :------------------------ | | THREE MONTHS ENDED JUNE 30, | | | | | | | | |\ | Total Noninterest Income | 823.4 | 772.2 | 563.5 | 541.7 | 0.5 | 878.7 | 1,387.4 | 2,192.6 |\ | Net Interest Income (Expense) | 347.2 | 282.7 | 268.3 | 244.3 | (5.0) | (4.1) | 610.5 | 522.9 |\ | Revenue | 1,170.6 | 1,054.9 | 831.8 | 786.0 | (4.5) | 874.6 | 1,997.9 | 2,715.5 |\ | Provision for Credit Losses | 3.9 | 4.5 | 11.2 | 5.0 | 1.4 | (1.5) | 16.5 | 8.0 |\ | Total Noninterest Expense | 895.6 | 914.8 | 511.0 | 518.3 | 10.0 | 100.8 | 1,416.6 | 1,533.9 |\ | Income (Loss) before Income Taxes | 271.1 | 135.6 | 309.6 | 262.7 | (15.9) | 775.3 | 564.8 | 1,173.6 |\ | Provision for Income Taxes | 58.1 | 29.2 | 75.6 | 66.3 | 9.8 | 182.0 | 143.5 | 277.5 |\ | Net Income (Loss) | $213.0 | $106.4 | $234.0 | $196.4 | $(25.7) | $593.3 | $421.3 | $896.1 |\ | Percentage of Consolidated Net Income | 51 % | 12 % | 56 % | 22 % | (7)% | 66 % | 100 % | 100 % |\ | Average Assets | $117,044.6 | $108,290.3 | $39,094.5 | $38,828.7 | $1,580.1 | $882.2 | $157,719.2 | $148,001.2 |\ | Average Loans | $5,812.8 | $6,472.3 | $35,345.2 | $34,562.3 | $— | $— | $41,158.0 | $41,034.6 |\ | Average Deposits | $95,506.7 | $86,223.0 | $25,291.0 | $26,236.4 | $1,580.1 | $882.2 | $122,377.8 | $113,341.6 |\ | SIX MONTHS ENDED JUNE 30, | | | | | | | | |\ | Total Noninterest Income (Loss) | 1,627.8 | 1,542.4 | 1,133.7 | 1,080.6 | (2.2) | 688.3 | 2,759.3 | 3,311.3 |\ | Net Interest Income | 670.9 | 575.3 | 518.4 | 485.7 | (10.7) | (10.0) | 1,178.6 | 1,051.0 |\ | Revenue | 2,298.7 | 2,117.7 | 1,652.1 | 1,566.3 | (12.9) | 678.3 | 3,937.9 | 4,362.3 |\ | Provision for Credit Losses | 6.0 | (1.3) | 10.3 | 3.3 | 1.2 | (2.5) | 17.5 | (0.5) |\ | Total Noninterest Expense | 1,786.2 | 1,764.1 | 1,027.9 | 1,007.8 | 20.1 | 126.7 | 2,834.2 | 2,898.6 |\ | Income before Income Taxes | 506.5 | 354.9 | 613.9 | 555.2 | (34.2) | 554.1 | 1,086.2 | 1,464.2 |\ | Provision for Income Taxes | 108.9 | 77.7 | 150.1 | 139.9 | 13.9 | 135.8 | 272.9 | 353.4 |\ | Net Income | $397.6 | $277.2 | $463.8 | $415.3 | $(48.1) | $418.3 | $813.3 | $1,110.8 |\ | Percentage of Consolidated Net Income | 49 % | 25 % | 57 % | 37 % | (6)% | 38 % | 100 % | 100 % |\ | Average Assets | $113,432.9 | $107,563.3 | $39,121.2 | $38,502.4 | $1,457.2 | $494.1 | $154,011.3 | $146,559.8 |\ | Average Loans | $5,781.2 | $6,690.9 | $35,336.2 | $34,619.8 | $— | $— | $41,117.4 | $41,310.7 |\ | Average Deposits | $92,418.8 | $86,455.9 | $25,290.3 | $25,902.2 | $1,457.2 | $494.1 | $119,166.3 | $112,852.2 | Consolidated Balance Sheets Northern Trust's consolidated balance sheet as of June 30, 2025, shows an increase in total assets, earning assets, and deposits compared to December 31, 2024, reflecting growth in Federal Reserve deposits and debt securities, while stockholders' equity remained stable Consolidated Balance Sheets ($ Billion) | ($ Billion) | JUNE 30, 2025 | DECEMBER 31, 2024 | CHANGE | % CHANGE | | :-------------- | :------------ | :---------------- | :----- | :------- | | Assets | | | | |\ | Federal Reserve and Other Central Bank Deposits | $52.3 | $38.8 | $13.5 | 35 % |\ | Interest-Bearing Due from and Deposits with Banks | 6.8 | 5.6 | 1.2 | 22 |\ | Federal Funds Sold and Securities Purchased under Agreements to Resell | 0.9 | 0.4 | 0.5 | 104 |\ | Total Debt Securities | 53.7 | 51.3 | 2.4 | 5 |\ | Loans | 43.3 | 43.4 | (0.1) | — |\ | Other Interest-Earning Assets | 2.5 | 2.7 | (0.2) | (8) |\ | Total Earning Assets | 159.5 | 142.2 | 17.3 | 12 |\ | Total Assets | 171.9 | 155.5 | 16.4 | 11 |\ | Liabilities and Stockholders' Equity | | | | |\ | Total Interest-Bearing Deposits | 111.9 | 98.1 | 13.8 | 14 |\ | Demand and Other Noninterest-Bearing Deposits | 25.1 | 24.4 | 0.7 | 3 |\ | Federal Funds Purchased | 2.4 | 2.2 | 0.2 | 11 |\ | Securities Sold under Agreements to Repurchase | 0.8 | 0.5 | 0.3 | 82 |\ | Other Borrowings | 6.5 | 6.5 | — | — |\ | Total Stockholders' Equity | 12.9 | 12.8 | 0.1 | 1 | - Average earning assets increased from the prior-year quarter and period, primarily driven by increased placements with the Federal Reserve and other central banks due to higher deposits[102] - Total Stockholders' Equity increased by 1% to $12.9 billion as of June 30, 2025, from $12.8 billion at December 31, 2024[101] - The Corporation repurchased 3,374,980 common shares for $339.4 million in Q2 2025 and 5,991,218 shares for $626.6 million in the first six months of 2025[106] Asset Quality Northern Trust maintains a high-quality debt securities portfolio, with a significant portion rated A or higher. Nonaccrual loans increased, primarily due to downgrades across multiple segments, while the allowance for credit losses also increased to reflect a worsening macroeconomic outlook and specific non-performing loans - Northern Trust maintains a high-quality debt securities portfolio, with 87% of total debt securities rated AAA as of June 30, 2025[110] Book Value of Debt Securities by Credit Rating ($ Million) | Book Value of Debt Securities by Credit Rating ($ Million) | AAA | AA | A | BBB | NOT RATED | TOTAL | | :--------------------------------------------- | :----------- | :--------- | :--------- | :--------- | :--------- | :----------- | | Available for Sale | | | | | | |\ | Total Available for Sale | $31,189.4 | $812.1 | $248.9 | $— | $— | $32,250.4 |\ | Percent of Total Available for Sale | 96 % | 3 % | 1 % | — % | — % | 100 % |\ | Held to Maturity | | | | | | |\ | Total Held to Maturity | $15,374.7 | $3,730.2 | $1,325.8 | $365.7 | $604.4 | $21,400.8 |\ | Percent of Total Held to Maturity | 72 % | 17 % | 6 % | 2 % | 3 % | 100 % |\ | Total Debt Securities | $46,564.1| $4,542.3| $1,574.7| $365.7 | $604.4 | $53,651.2|\ | Percent of Total Debt Securities | 87 % | 8 % | 3 % | 1 % | 1 % | 100 % | - Nonaccrual assets increased by $36.8 million (66%) to $92.8 million as of June 30, 2025, compared to December 31, 2024, primarily due to downgrades of a small number of loans[117] Nonaccrual Loans ($ Million) | Nonaccrual Loans ($ Million) | JUNE 30, 2025 | DECEMBER 31, 2024 | | :------------------------------- | :------------ | :---------------- | | Total Nonaccrual Loans | $92.8 | $56.0 |\ | 90 Day Past Due Loans Still Accruing | $39.9 | $82.3 |\ | Nonaccrual Loans to Total Loans | 0.21 % | 0.13 % |\ | Allowance for Credit Losses Assigned to Loans to Nonaccrual Loans | 1.9 x | 3.0 x | - The Allowance for Credit Losses related to loans increased to $180.5 million as of June 30, 2025, from $168.0 million at December 31, 2024, reflecting an increase in specific reserves and a worsening macroeconomic outlook[123][255] Statements of Cash Flows For the six months ended June 30, 2025, Northern Trust generated significant net cash from operating activities, primarily due to lower net collateral deposited with derivative counterparties. Investing activities used substantial cash for Federal Reserve deposits and AFS debt securities, while financing activities provided cash through increased deposits Statements of Cash Flows ($ Million) | (In Millions) | 2025 (Six Months) | 2024 (Six Months) | | :------------ | :---------------- | :---------------- | | Net cash provided by (used in): | | |\ | Operating activities | $4,619.3 | $1,537.7 |\ | Investing activities | (13,906.6) | (3,842.9) |\ | Financing activities | 10,340.6 | 4,298.2 |\ | Effect of Foreign Currency Exchange Rates on Cash | 692.9 | (217.5) |\ | Change in Cash and Due from Banks | $1,746.2 | $1,775.5 | - Net cash provided by operating activities increased to $4.6 billion for the six months ended June 30, 2025, primarily due to lower net collateral deposited with derivative counterparties and period earnings[133] - Net cash used in investing activities was $13.9 billion, mainly due to increased Federal Reserve deposits and net purchases of AFS debt securities[135] - Net cash provided by financing activities was $10.3 billion, primarily from increased total deposits, partially offset by increased share repurchases[137] Regulatory Capital Northern Trust's capital ratios remained strong as of June 30, 2025, exceeding 'well-capitalized' requirements. The company is a Category II institution, adhering to stringent regulatory capital standards, including DFAST and ongoing monitoring of the Basel III Endgame Proposal - Capital ratios remained strong at June 30, 2025, exceeding the requirements for classification as 'well-capitalized' under applicable U.S. regulatory requirements[139] - Northern Trust is a Category II institution, adhering to regulatory capital standards including daily LCR and Net Stable Funding Ratio calculations and annual stress testing (CCAR)[140][151] Capital Ratios: Northern Trust Corporation | Capital Ratios: Northern Trust Corporation | June 30, 2025 (Standardized) | Dec 31, 2024 (Standardized) | June 30, 2025 (Advanced) | Dec 31, 2024 (Advanced) | WELL CAPITALIZED RATIOS | MINIMUM CAPITAL RATIOS | | :--------------------------------------- | :--------------------------- | :-------------------------- | :----------------------- | :---------------------- | :---------------------- | :--------------------- | | Common Equity Tier 1 Capital | 12.2 % | 12.4 % | 15.0 % | 14.5 % | N/A | 4.5 % |\ | Tier 1 Capital | 13.1 | 13.3 | 16.1 | 15.6 | 6.0 | 6.0 |\ | Total Capital | 14.8 | 15.1 | 17.9 | 17.4 | 10.0 | 8.0 |\ | Tier 1 Leverage | 7.6 | 8.1 | 7.6 | 8.1 | N/A | 4.0 |\ | Supplementary Leverage | N/A | N/A | 9.1 | 8.9 | N/A | 3.0 | - The 2025 DFAST results maintained Northern Trust's stress capital buffer and effective Common Equity Tier 1 capital ratio minimum requirement at 2.5% and 7.0%, respectively[141] Recent Accounting Pronouncements and Developments Northern Trust is evaluating recent FASB ASUs, including ASU 2023-09 on Income Tax Disclosures and ASU 2024-03 on Expense Disaggregation Disclosures, which are expected to impact financial statement notes but not the consolidated balance sheets or income statements upon adoption - ASU No. 2023-09, 'Income Taxes (Topic 740): Improvements to Income Tax Disclosures,' effective for annual periods beginning after December 15, 2024, will enhance income tax disclosures but is not expected to impact consolidated balance sheets or income statements[148] - ASU No. 2024-03, 'Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,' effective for annual periods beginning after December 15, 2026, will require disaggregated expense disclosures but is not expected to impact consolidated balance sheets or income statements[149] Risk Management Northern Trust actively manages liquidity risk, maintaining a highly liquid balance sheet, and market risk, using NII and MVE sensitivity analyses and a Value-at-Risk model for trading positions. The company's risk management practices are designed to mitigate potential impacts from interest rate movements and market volatility - Northern Trust maintains a highly liquid balance sheet, with cash, Federal Reserve deposits, money market assets, and investment securities comprising 66% of total assets as of June 30, 2025[152] - 87% of Northern Trust's securities portfolio consists of U.S. Treasury, government-sponsored agency, and other triple-A rated securities[152] - Market risk management focuses on interest rate risk (NII and MVE sensitivity) and trading risk (Value-at-Risk model)[153][154][155] Net Interest Income Sensitivity ($ Million) | NET INTEREST INCOME SENSITIVITY (In Millions) | JUNE 30, 2025 | JUNE 30, 2024 | | :-------------------------------------------- | :------------ | :------------ | | Increase in Interest Rates Above Market Implied Forward Rates |\ | 100 Basis Points | $69 | $22 |\ | 200 Basis Points | 147 | 41 |\ | Decrease in Interest Rates Below Market Implied Forward Rates |\ | 100 Basis Points | $(89) | $(41) |\ | 200 Basis Points | (188) | (104) | Market Value of Equity Sensitivity ($ Million) | MARKET VALUE OF EQUITY SENSITIVITY (In Millions) | JUNE 30, 2025 | DECEMBER 31, 2024 | | :----------------------------------------------- | :------------ | :---------------- | | Increase in Interest Rates Above Market Implied Forward Rates |\ | 100 Basis Points | $(441) | $(374) |\ | 200 Basis Points | (930) | (808) |\ | Decrease in Interest Rates Below Market Implied Forward Rates |\ | 100 Basis Points | $627 | $508 |\ | 200 Basis Points | 1,130 | 951 | Value-at-Risk ($ Million) | VALUE-AT-RISK (In Millions) | Combined Trading Book VaR (Q2 2025) | Combined Trading Book VaR (Q2 2024) | FX VaR (Q2 2025) | FX VaR (Q2 2024) | IR VaR (Q2 2025) | IR VaR (Q2 2024) | | :-------------------------- | :---------------------------------- | :---------------------------------- | :--------------- | :--------------- | :--------------- | :--------------- | | High | $0.6 | $1.6 | $0.6 | $2.0 | $0.3 | $0.3 |\ | Low | 0.3 | 0.2 | 0.2 | 0.1 | 0.1 | 0.1 |\ | Average | 0.4 | 0.6 | 0.3 | 0.5 | 0.2 | 0.1 |\ | Quarter-End | 0.3 | 0.8 | 0.2 | 0.8 | 0.1 | 0.1 | Reconciliation to Fully Taxable Equivalent Northern Trust provides a reconciliation of GAAP financial measures to a fully taxable equivalent (FTE) basis for Interest Income, Net Interest Income, Net Interest Margin, and Total Revenue. This non-GAAP presentation facilitates comparative analysis of asset yields without impacting Net Income - FTE presentation facilitates analysis of asset yields and provides a clearer indication of net interest margins for comparative purposes, with no impact on Net Income[170] Reconciliation to Fully Taxable Equivalent ($ Million) | ($ Million) | 2025 (Three Months) | 2024 (Three Months) | 2025 (Six Months) | 2024 (Six Months) | | :-------------- | :------------------ | :------------------ | :---------------- | :---------------- | | Interest Income - GAAP | $2,212.8 | $2,506.5 | $4,353.7 | $4,952.1 |\ | Add: FTE Adjustment | 4.7 | 6.9 | 10.3 | 14.2 |\ | Interest Income (FTE) - Non-GAAP | $2,217.5 | $2,513.4 | $4,364.0 | $4,966.3 |\ | Net Interest Income - GAAP | $610.5 | $522.9 | $1,178.6 | $1,051.0 |\ | Add: FTE Adjustment | 4.7 | 6.9 | 10.3 | 14.2 |\ | Net Interest Income (FTE) - Non-GAAP | $615.2 | $529.8 | $1,188.9 | $1,065.2 |\ | Net Interest Margin - GAAP | 1.68 % | 1.55 % | 1.67 % | 1.57 % |\ | Net Interest Margin (FTE) - Non-GAAP | 1.69 % | 1.57 % | 1.69 % | 1.59 % |\ | Total Revenue - GAAP | $1,997.9 | $2,715.5 | $3,937.9 | $4,362.3 |\ | Add: FTE Adjustment | 4.7 | 6.9 | 10.3 | 14.2 |\ | Total Revenue (FTE) - Non-GAAP | $2,002.6 | $2,722.4 | $3,948.2 | $4,376.5 | Forward-Looking Statements This section outlines various forward-looking statements regarding Northern Trust's financial results, capital adequacy, and market trends, emphasizing that these statements are based on current beliefs and expectations, subject to numerous risks and uncertainties that could cause actual results to differ materially - Forward-looking statements include projections on financial results, capital adequacy, dividend policy, accounting estimates, credit quality, and market trends[172] - These statements are subject to risks and uncertainties, including financial market disruptions, interest rate changes, operational risks (cybersecurity, data privacy), geopolitical risks, and regulatory changes[172][174] - Northern Trust assumes no obligation to update its forward-looking statements, and actual results may differ materially from those expressed or implied[173] Consolidated Financial Statements (Unaudited) This section presents Northern Trust Corporation's unaudited consolidated financial statements, including balance sheets, income statements, comprehensive income, changes in stockholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, accounting policies, and specific financial instrument details Consolidated Balance Sheets The consolidated balance sheets detail Northern Trust's financial position, showing assets, liabilities, and stockholders' equity as of June 30, 2025, and December 31, 2024 Consolidated Balance Sheets ($ Million) | (In Millions) | JUNE 30, 2025 | DECEMBER 31, 2024 | | :------------ | :------------ | :---------------- | | ASSETS | | |\ | Cash and Due from Banks | $6,423.4 | $4,677.2 |\ | Federal Reserve and Other Central Bank Deposits | 52,266.0 | 38,775.4 |\ | Total Debt Securities | 53,651.2 | 51,298.2 |\ | Total Loans | 43,323.4 | 43,390.6 |\ | Allowance for Credit Losses | (188.5) | (175.5) |\ | Goodwill | 714.6 | 694.9 |\ | Other Assets | 11,891.8 | 13,961.6 |\ | Total Assets | $171,883.6| $155,508.4 |\ | LIABILITIES | | |\ | Total Deposits | 137,053.7 | 122,482.7 |\ | Federal Funds Purchased | 2,388.5 | 2,159.5 |\ | Securities Sold Under Agreements to Repurchase | 841.4 | 462.0 |\ | Other Borrowings | 6,532.9 | 6,521.0 |\ | Senior Notes | 2,835.2 | 2,769.7 |\ | Long-Term Debt | 4,089.8 | 4,081.3 |\ | Other Liabilities | 5,275.6 | 4,243.8 |\ | Total Liabilities | 159,017.1 | 142,720.0 |\ | STOCKHOLDERS' EQUITY | | |\ | Preferred Stock | 884.9 | 884.9 |\ | Common Stock | 408.6 | 408.6 |\ | Additional Paid-In Capital | 1,010.5 | 1,025.3 |\ | Retained Earnings | 16,112.7 | 15,614.7 |\ | Accumulated Other Comprehensive Loss | (699.2) | (814.0) |\ | Treasury Stock | (4,851.0) | (4,331.1) |\ | Total Stockholders' Equity | 12,866.5 | 12,788.4 |\ | Total Liabilities and Stockholders' Equity | $171,883.6| $155,508.4 | Consolidated Statements of Income The consolidated statements of income present Northern Trust's revenues, expenses, and net income for the three and six months ended June 30, 2025 and 2024 Consolidated Statements of Income ($ Million Except Share Information) | (In Millions Except Share Information) | 2025 (Three Months) | 2024 (Three Months) | 2025 (Six Months) | 2024 (Six Months) | | :----------------------------------- | :------------------ | :------------------ | :---------------- | :---------------- | | Noninterest Income | | | | |\ | Trust, Investment and Other Servicing Fees | $1,231.1 | $1,166.1 | $2,444.9 | $2,309.0 |\ | Foreign Exchange Trading Income | 50.6 | 58.4 | 109.3 | 115.4 |\ | Treasury Management Fees | 9.7 | 9.0 | 19.3 | 18.3 |\ | Security Commissions and Trading Income | 39.6 | 34.3 | 78.7 | 72.2 |\ | Other Operating Income | 56.4 | 924.7 | 107.1 | 985.7 |\ | Investment Security Gains (Losses), net | — | 0.1 | — | (189.3) |\ | Total Noninterest Income | 1,387.4 | 2,192.6 | 2,759.3 | 3,311.3 |\ | Net Interest Income | | | | |\ | Interest Income | 2,212.8 | 2,506.5 | 4,353.7 | 4,952.1 |\ | Interest Expense | 1,602.3 | 1,983.6 | 3,175.1 | 3,901.1 |\ | Net Interest Income | 610.5 | 522.9 | 1,178.6 | 1,051.0 |\ | Provision for Credit Losses | 16.5 | 8.0 | 17.5 | (0.5) |\ | Net Interest Income after Provision for Credit Losses | 594.0 | 514.9 | 1,161.1 | 1,051.5 |\ | Noninterest Expense | | | | |\ | Compensation | 614.8 | 665.2 | 1,259.2 | 1,292.3 |\ | Employee Benefits | 117.7 | 100.2 | 227.4 | 201.3 |\ | Outside Services | 247.0 | 260.9 | 492.2 | 490.2 |\ | Equipment and Software | 293.7 | 277.5 | 574.6 | 530.2 |\ | Occupancy | 52.5 | 54.8 | 105.9 | 108.9 |\ | Other Operating Expense | 90.9 | 175.3 | 174.9 | 275.7 |\ | Total Noninterest Expense | 1,416.6 | 1,533.9 | 2,834.2 | 2,898.6 |\ | Income before Income Taxes | 564.8 | 1,173.6 | 1,086.2 | 1,464.2 |\ | Provision for Income Taxes | 143.5 | 277.5 | 272.9 | 353.4 |\ | Net Income | $421.3 | $896.1 | $813.3 | $1,110.8 |\ | Preferred Stock Dividends | 4.7 | 4.7 | 20.9 | 20.9 |\ | Net Income Applicable to Common Stock | $416.6 | $891.4 | $792.4 | $1,089.9 |\ | Per Common Share | | | | |\ | Net Income – Basic | $2.14 | $4.35 | $4.05 | $5.30 |\ | – Diluted | 2.13 | 4.34 | 4.03 | 5.28 | Consolidated Statements of Comprehensive Income The consolidated statements of comprehensive income report Northern Trust's net income and other comprehensive income (loss) components for the three and six months ended June 30, 2025 and 2024 Consolidated Statements of Comprehensive Income ($ Million) | (In Millions) | 2025 (Three Months) | 2024 (Three Months) | 2025 (Six Months) | 2024 (Six Months) | | :------------ | :------------------ | :------------------ | :---------------- | :---------------- | | Net Income | $421.3 | $896.1 | $813.3 | $1,110.8 |\ | Other Comprehensive Income (Loss) (Net of Tax and Reclassifications) | | | | |\ | Net Unrealized Gains (Losses) on Available for Sale Debt Securities | 45.9 | 43.4 | 116.9 | 256.8 |\ | Net Unrealized Gains (Losses) on Cash Flow Hedges | (0.1) | (0.1) | (0.6) | (0.8) |\ | Net Foreign Currency Adjustments | (7.7) | 7.0 | (3.0) | 11.6 |\ | Net Pension and Other Postretirement Benefit Adjustments | 2.2 | 2.3 | 1.5 | 5.3 |\ | Other Comprehensive Income (Loss) | 40.3 | 52.6 | 114.8 | 272.9 |\ | Comprehensive Income (Loss) | $461.6 | $948.7 | $928.1 | $1,383.7 | Consolidated Statements of Changes in Stockholders' Equity The consolidated statements of changes in stockholders' equity detail the movements in equity accounts, including net income, dividends, and share repurchases, for the six months ended June 30, 2025 Consolidated Statements of Changes in Stockholders' Equity ($ Million) | (In Millions) | PREFERRED STOCK | COMMON STOCK | ADDITIONAL PAID-IN CAPITAL | RETAINED EARNINGS | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | TREASURY STOCK | TOTAL | | :------------ | :-------------- | :----------- | :------------------------- | :---------------- | :-------------------------------------------- | :------------- | :---- | | 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 | — | — | — | 392.0 | — | — | 392.0 |\ | Other Comprehensive Income (Loss) | — | — | — | — | 74.5 | — | 74.5 |\ | Dividends Declared: Common Stock | — | — | — | (148.2) | — | — | (148.2) |\ | Dividends Declared: Preferred Stock | — | — | — | (16.2) | — | — | (16.2) |\ | Stock Awards and Options Exercised | — | — | (28.3) | — | — | 105.1 | 76.8 |\ | Stock Purchased | — | — | — | — | — | (287.2) | (287.2) |\ | Excise Tax on Share Repurchases | — | — | — | — | — | (1.6) | (1.6) |\ | Balance at March 31, 2025 | $884.9 | $408.6 | $997.0 | $15,842.3 | $(739.5) | $(4,514.8) | $12,878.5 |\ | Net Income | — | — | — | 421.3 | — | — | 421.3 |\ | Other Comprehensive Income (Loss) | — | — | — | — | 40.3 | — | 40.3 |\ | Dividends Declared: Common Stock | — | — | — | (146.2) | — | — | (146.2) |\ | Dividends Declared: Preferred Stock | — | — | — | (4.7) | — | — | (4.7) |\ | Stock Awards and Options Exercised | — | — | 13.5 | — | — | 6.2 | 19.7 |\ | Stock Purchased | — | — | — | — | — | (339.4) | (339.4) |\ | Excise Tax on Share Repurchases | — | — | — | — | — | (3.0) | (3.0) |\ | Balance at June 30, 2025 | $884.9 | $408.6 | $1,010.5 | $16,112.7 | $(699.2) | $(4,851.0) | $12,866.5 | Consolidated Statements of Cash Flows The consolidated statements of cash flows categorize Northern Trust's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Consolidated Statements of Cash Flows ($ Million) | (In Millions) | 2025 (Six Months) | 2024 (Six Months) | | :------------ | :---------------- | :---------------- | | CASH FLOWS FROM OPERATING ACTIVITIES | | |\ | Net Income | $813.3 | $1,110.8 |\ | Net Cash Provided by / (Used in) Operating Activities | 4,619.3 | 1,537.7 |\ | CASH FLOWS FROM INVESTING ACTIVITIES | | |\ | Net Cash (Used in) Investing Activities | (13,906.6) | (3,842.9) |\ | CASH FLOWS FROM FINANCING ACTIVITIES | | |\ | Net Cash Provided by Financing Activities | 10,340.6 | 4,298.2 |\ | Effect of Foreign Currency Exchange Rates on Cash | 692.9 | (217.5) |\ | Change in Cash and Due from Banks | 1,746.2 | 1,775.5 |\ | Cash and Due from Banks at Beginning of Period | 4,677.2 | 4,791.5 |\ | Cash and Due from Banks at End of Period | $6,423.4 | $6,567.0 |\ | SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |