Northern Trust(NTRS) - 2025 Q3 - Quarterly Results

Financial Summary This section provides an overview of Northern Trust Corporation's profitability, capital adequacy, and per-share performance for Q3 2025 Profitability Overview Northern Trust Corporation's profitability metrics for Q3 2025 showed a slight decrease in Net Income and Earnings Allocated to Common Shares compared to Q3 2024, but diluted EPS increased by 3%. Return on Average Common Equity remained strong at 14.8% | Metric | Q3 2025 | Q3 2024 | YoY Change (%) | | :-------------------------------- | :------ | :------ | :------------- | | Net Income ($M) | $457.6 | $464.9 | (2)% | | Earnings Allocated to Common ($M) | $437.2 | $445.0 | (2)% | | Diluted EPS | $2.29 | $2.22 | 3% | | Return on Average Common Equity | 14.8% | 15.4% | (0.6) pp | | Profit Margin (pre-tax) (FTE) | 30.8% | 30.8% | 0.0 pp | | Profit Margin (after-tax) (FTE) | 22.5% | 23.5% | (1.0) pp | - Diluted EPS growth over the previous year for Q3 2025 was 3%, a significant improvement from the (51%) growth in Q2 2025[4] Capital Ratios The company maintained strong capital ratios in Q3 2025, with Common Equity Tier 1 (CET1) at 12.4% under the Standardized Approach and 15.1% under the Advanced Approach, indicating robust capital adequacy | Capital Ratio (Standardized Approach) | Q3 2025 | Q3 2024 | | :------------------------------------ | :------ | :------ | | Common Equity Tier 1 Capital | 12.4% | 12.6% | | Tier 1 Capital | 13.4% | 13.6% | | Total Capital | 15.1% | 15.6% | | Tier 1 Leverage | 8.0% | 8.1% | | Capital Ratio (Advanced Approach) | Q3 2025 | Q3 2024 | | :------------------------------------ | :------ | :------ | | Common Equity Tier 1 Capital | 15.1% | 14.0% | | Tier 1 Capital | 16.2% | 15.1% | | Total Capital | 18.0% | 17.0% | | Tier 1 Leverage | 8.0% | 8.1% | | Supplementary Leverage | Q3 2025 | Q3 2024 | | :------------------------------------ | :------ | :------ | | Supplementary Leverage | 8.9% | 9.2% | - Regulatory Capital, Risk-Weighted Assets and resulting ratios for the current quarter are considered preliminary until the Form 10-Q is filed with the Securities and Exchange Commission[4] Per Share Information and Ratios Cash dividends declared per common share increased to $0.80 in Q3 2025, up from $0.75 in Q3 2024. The dividend payout ratio remained stable at 35%. Market value per share and book value per common share both increased significantly year-over-year | Metric | Q3 2025 | Q3 2024 | YoY Change ($) | YoY Change (%) | | :------------------------------ | :-------- | :-------- | :------------- | :------------- | | Cash Dividends Declared Per Share | $0.80 | $0.75 | $0.05 | 6.7% | | Dividend Payout Ratio | 35% | 34% | 1 pp | | | Market Value Per Share (EOP) | $134.60 | $90.03 | $44.57 | 49.5% | | Book Value Per Common Share (EOP)| $63.83 | $59.85 | $3.98 | 6.6% | Income Statement This section details Northern Trust Corporation's revenue, expense, and net income performance for Q3 2025 and the nine months ended 2025 Total Revenue (FTE) Total Revenue (FTE) for Q3 2025 increased by 3% year-over-year to $2,030.9 million, driven by a 6% increase in Total Fees and a 5% increase in Net Interest Income (FTE). However, Other Operating Income saw a significant decrease | Metric | 9 Months 2025 ($M) | 9 Months 2024 ($M) | YoY Change ($M) | YoY Change (%) | | :-------------------------- | :----------------- | :----------------- | :-------------- | :------------- | | Total Noninterest Income | $4,193.9 | $4,717.5 | $(523.6) | (11)% | | Interest Income (FTE) | $6,513.8 | $7,503.6 | $(989.8) | (13)% | | Interest Expense | $4,728.6 | $5,869.0 | $(1,140.4) | (19)% | | Net Interest Income (FTE) | $1,785.2 | $1,634.6 | $150.6 | 9% | | Total Revenue (FTE) | $5,979.1 | $6,352.1 | $(373.0) | (6)% | | Metric | Q3 2025 ($M) | Q3 2024 ($M) | YoY Change ($M) | YoY Change (%) | | :-------------------------- | :----------------- | :----------------- | :-------------- | :------------- | | Total Noninterest Income | $1,434.6 | $1,406.2 | $28.4 | 2% | | Interest Income (FTE) | $2,149.8 | $2,537.3 | $(387.5) | (15)% | | Interest Expense | $1,553.5 | $1,967.9 | $(414.4) | (21)% | | Net Interest Income (FTE) | $596.3 | $569.4 | $26.9 | 5% | | Total Revenue (FTE) | $2,030.9 | $1,975.6 | $55.3 | 3% | - Investment Security Gains (Losses), net, were zero for both Q3 2025 and Q3 2024, but were a significant negative contributor in the nine months ended 2024[6] Noninterest Income Breakdown Total Fees increased by 6% year-over-year in Q3 2025, driven by growth in both Asset Servicing and Wealth Management Trust, Investment and Other Servicing Fees. Foreign Exchange Trading Income and Security Commissions also grew, while Other Operating Income declined significantly | Noninterest Income Category | Q3 2025 ($M) | Q3 2024 ($M) | YoY Change ($M) | YoY Change (%) | | :------------------------------------ | :----------- | :----------- | :-------------- | :------------- | | Asset Servicing Trust, Investment and Other Servicing Fees | $706.9 | $667.1 | $39.8 | 6% | | WM Trust, Investment and Other Servicing Fees | $558.6 | $529.5 | $29.1 | 5% | | Total Fees | $1,265.5 | $1,196.6 | $68.9 | 6% | | Foreign Exchange Trading Income | $57.2 | $54.1 | $3.1 | 6% | | Treasury Management Fees | $9.5 | $8.2 | $1.3 | 16% | | Security Commissions and Trading Income | $41.8 | $35.5 | $6.3 | 18% | | Other Operating Income | $60.6 | $111.8 | $(51.2) | (46)% | Noninterest Expense and Net Income Total Noninterest Expense increased by 5% in Q3 2025, primarily due to higher compensation and equipment & software costs. Despite this, Net Income saw a slight decrease of 2% year-over-year, while diluted EPS increased by 3% due to a reduction in average diluted shares | Expense Category | Q3 2025 ($M) | Q3 2024 ($M) | YoY Change ($M) | YoY Change (%) | | :-------------------------- | :----------- | :----------- | :-------------- | :------------- | | Compensation | $625.3 | $583.6 | $41.7 | 7% | | Employee Benefits | $115.2 | $109.2 | $6.0 | 6% | | Outside Services | $248.2 | $256.3 | $(8.1) | (3)% | | Equipment and Software | $294.2 | $270.4 | $23.8 | 9% | | Occupancy | $55.0 | $53.8 | $1.2 | 2% | | Other Operating Expense | $85.0 | $86.1 | $(1.1) | (1)% | | Total Noninterest Expense | $1,422.9 | $1,359.4 | $63.5 | 5% | | Income/EPS | Q3 2025 ($M) | Q3 2024 ($M) | YoY Change ($M) | YoY Change (%) | | :-------------------------- | :----------- | :----------- | :-------------- | :------------- | | Net Income | $457.6 | $464.9 | $(7.3) | (2)% | | Earnings Per Share - Diluted| $2.29 | $2.22 | $0.07 | 3% | | Average Diluted Shares (000s)| 191,001 | 200,549 | (9,548) | (5)% | - Provision for Credit Losses shifted from an $8.0 million expense in Q3 2024 to a $(17.0) million release in Q3 2025, indicating an improvement in credit quality outlook[6] Net Income Trends This section analyzes the historical trends in Northern Trust Corporation's revenue, expenses, net income, and earnings per share from 2020 to Q3 2025 Revenue and Expense Trends Total Revenue (FTE) has shown a general upward trend from 2020 to 2024, with Q3 2025 continuing this growth. Total Noninterest Income has been volatile, notably impacted by Investment Security Gains (Losses). Total Noninterest Expense has steadily increased over the years | Metric | 2020 ($M) | 2021 ($M) | 2022 ($M) | 2023 ($M) | 2024 ($M) | Q3 2024 ($M) | Q3 2025 ($M) | | :-------------------------- | :-------- | :-------- | :-------- | :-------- | :-------- | :----------- | :----------- | | Total Fees | $3,995.0 | $4,361.1 | $4,432.6 | $4,361.8 | $4,727.8 | $1,196.6 | $1,265.5 | | Total Noninterest Income | $4,657.6 | $5,081.8 | $4,874.0 | $4,791.5 | $6,113.3 | $1,406.2 | $1,434.6 | | Net Interest Income (FTE) | $1,477.6 | $1,418.3 | $1,932.8 | $2,039.5 | $2,208.9 | $569.4 | $596.3 | | Total Revenue (FTE) | $6,135.2 | $6,500.1 | $6,806.8 | $6,831.0 | $8,322.2 | $1,975.6 | $2,030.9 | | Total Noninterest Expense | $4,348.2 | $4,535.9 | $4,982.9 | $5,284.2 | $5,633.9 | $1,359.4 | $1,422.9 | - Investment Security Gains (Losses), net, significantly impacted Total Noninterest Income in 2024, showing a loss of $(189.3) million for the full year, but were zero in Q3 2024 and Q3 2025[8] Net Income and EPS Trends Net Income and Earnings Per Share (Diluted) have shown fluctuations over the past few years, with a notable increase in 2024. Q3 2025 saw a slight dip in Net Income compared to Q3 2024, but diluted EPS improved due to fewer average diluted shares | Metric | 2020 ($M) | 2021 ($M) | 2022 ($M) | 2023 ($M) | 2024 ($M) | Q3 2024 ($M) | Q3 2025 ($M) | | :-------------------------- | :-------- | :-------- | :-------- | :-------- | :-------- | :----------- | :----------- | | Net Income | $1,209.3 | $1,545.3 | $1,336.0 | $1,107.3 | $2,031.1 | $464.9 | $457.6 | | Earnings Per Share - Diluted| $5.46 | $7.14 | $6.14 | $5.08 | $9.77 | $2.22 | $2.29 | | Average Diluted Shares (000s)| 209,008 | 208,899 | 208,867 | 207,564 | 201,870 | 200,549 | 191,001 | - The average diluted shares outstanding have consistently decreased from 209,008 thousand in 2020 to 191,001 thousand in Q3 2025, contributing to higher EPS despite fluctuations in net income[8] Reporting Segment Results This section presents the financial performance of Northern Trust Corporation's key operating segments: Asset Servicing, Wealth Management, and Other Asset Servicing Segment The Asset Servicing segment reported a 6% increase in Trust, Investment and Other Servicing Fees for Q3 2025 compared to Q3 2024, reaching $706.9 million. Income before Income Taxes (FTE) also grew by 14% to $294.1 million, with a profit margin of 24.7% | Metric | Q3 2025 ($M) | Q3 2024 ($M) | YoY Change ($M) | YoY Change (%) | | :-------------------------------------- | :----------- | :----------- | :-------------- | :------------- | | Custody & Fund Administration Fees | $482.7 | $453.1 | $29.6 | 6.5% | | Investment Management Fees | $159.6 | $152.6 | $7.0 | 4.6% | | Securities Lending | $21.2 | $17.5 | $3.7 | 21.1% | | Other | $43.4 | $43.9 | $(0.5) | (1.1)% | | Total Asset Servicing Trust, Investment and Other Servicing Fees | $706.9 | $667.1 | $39.8 | 6% | | Income before Income Taxes (FTE) | $294.1 | $258.4 | $35.7 | 14% | | Profit Margin (pre-tax) (FTE) | 24.7% | 23.2% | 1.5 pp | | - Average Loans in Asset Servicing decreased by 3.8% year-over-year in Q3 2025, while Average Deposits increased by 4.1%[10] Wealth Management Segment The Wealth Management segment's Trust, Investment and Other Servicing Fees increased by 5% in Q3 2025 to $558.6 million. Income before Income Taxes (FTE) rose by 11% to $342.4 million, with a strong profit margin of 40.5% | Metric | Q3 2025 ($M) | Q3 2024 ($M) | YoY Change ($M) | YoY Change (%) | | :-------------------------------------- | :----------- | :----------- | :-------------- | :------------- | | Central Fees | $200.6 | $186.6 | $14.0 | 7.5% | | East Fees | $146.0 | $136.4 | $9.6 | 7.0% | | West Fees | $110.5 | $105.7 | $4.8 | 4.5% | | Global Family Office Fees | $101.5 | $100.8 | $0.7 | 0.7% | | Total Wealth Management Trust, Investment and Other Servicing Fees | $558.6 | $529.5 | $29.1 | 5% | | Income before Income Taxes (FTE) | $342.4 | $307.1 | $35.3 | 11% | | Profit Margin (pre-tax) (FTE) | 40.5% | 38.0% | 2.5 pp | | - Average Loans in Wealth Management increased by 5.3% year-over-year in Q3 2025, while Average Deposits remained relatively stable with a slight increase of 0.8%[10] Other Segment The 'Other' segment reported a negative Income before Income Taxes (FTE) of $(11.5) million in Q3 2025, a significant improvement from $(42.7) million in Q3 2024. Average Deposits in this segment decreased by 39.3% year-over-year | Metric | Q3 2025 ($M) | Q3 2024 ($M) | YoY Change ($M) | YoY Change (%) | | :-------------------------------------- | :----------- | :----------- | :-------------- | :------------- | | Other Income before Income Taxes (FTE) | $(11.5) | $42.7 | $(54.2) | N/M | | Average Deposits | $1,134.9 | $745.7 | $389.2 | 52.2% | - The 'Other' segment's income before taxes can be volatile, showing a large positive value in Q2 2024 ($782.2M) and a negative value in Q3 2025[10] Balance Sheet (End of Period) This section provides an end-of-period snapshot of Northern Trust Corporation's assets, liabilities, and stockholders' equity as of September 30, 2025 Assets Total Assets increased by 9% year-over-year to $170,263.3 million as of September 30, 2025. This growth was primarily driven by increases in Federal Reserve and Other Central Bank Deposits, Federal Funds Sold, and Debt Securities. Cash and Due From Banks saw a significant decrease | Asset Category | 9/30/2025 ($M) | 9/30/2024 ($M) | YoY Change ($M) | YoY Change (%) | | :---------------------------------------------- | :------------- | :------------- | :-------------- | :------------- | | Federal Reserve and Other Central Bank Deposits | $49,328.9 | $40,848.3 | $8,480.6 | 21% | | Interest-Bearing Due from and Deposits with Banks | $6,404.5 | $5,464.7 | $939.8 | 17% | | Federal Funds Sold and Securities Purchased under Agreements to Resell | $1,856.3 | $981.6 | $874.7 | 89% | | Total Debt Securities | $55,864.1 | $51,020.5 | $4,843.6 | 9% | | Loans | $42,949.4 | $41,950.3 | $999.1 | 2% | | Total Earning Assets | $159,079.4 | $142,731.1 | $16,348.3 | 11% | | Cash and Due From Banks and Other Central Bank Deposits | $976.8 | $3,014.3 | $(2,037.5) | (68)% | | Total Assets | $170,263.3 | $155,753.8 | $14,509.5 | 9% | - The Allowance for Credit Losses decreased by 10% year-over-year, from $(193.3) million to $(174.6) million, suggesting an improved credit outlook or lower perceived risk[12] Liabilities and Stockholders' Equity Total Liabilities increased by 10% year-over-year to $157,307.3 million, primarily driven by growth in interest-bearing deposits, especially Savings, Money Market and Other Deposits. Total Stockholders' Equity also increased by 2% to $12,956.0 million | Liability/Equity Category | 9/30/2025 ($M) | 9/30/2024 ($M) | YoY Change ($M) | YoY Change (%) | | :---------------------------------------------- | :------------- | :------------- | :-------------- | :------------- | | Savings, Money Market and Other Deposits | $29,040.1 | $23,069.0 | $5,971.1 | 26% | | Savings Certificates and Other Time Deposits | $7,358.7 | $6,255.2 | $1,103.5 | 18% | | Non-U.S. Offices - Interest-Bearing Deposits | $73,509.9 | $69,684.3 | $3,825.6 | 5% | | Total Interest-Bearing Deposits | $109,908.7 | $99,008.5 | $10,900.2 | 11% | | Federal Funds Purchased | $1,751.9 | $2,761.9 | $(1,010.0) | (37)% | | Securities Sold under Agreements to Repurchase | $371.5 | $170.8 | $200.7 | 117% | | Total Liabilities | $157,307.3 | $143,004.8 | $14,302.5 | 10% | | Total Stockholders' Equity | $12,956.0 | $12,749.0 | $207.0 | 2% | - Accumulated Other Comprehensive Income (Loss) improved significantly, reducing the loss from $(779.5) million in Q3 2024 to $(635.1) million in Q3 2025, a 19% improvement[12] Balance Sheet Trends (Period Averages) This section examines the average balance sheet composition of Northern Trust Corporation's assets, liabilities, and equity for Q3 2025 compared to Q3 2024 Average Assets Average Total Assets for Q3 2025 were $151,041.5 million, showing a slight decrease from Q3 2024. Federal Reserve and Other Central Bank Deposits, and Debt Securities (Available For Sale) were key components, with Loans and Leases remaining relatively stable | Asset Category | Q3 2025 ($M) | Q3 2024 ($M) | YoY Change ($M) | YoY Change (%) | | :---------------------------------------------- | :----------- | :----------- | :-------------- | :------------- | | Federal Reserve and Other Central Bank Deposits | $33,754.2 | $36,067.3 | $(2,313.1) | (6)% | | Total Debt Securities | $55,152.4 | $50,296.6 | $4,855.8 | 9.7% | | Loans and Leases | $41,500.6 | $39,884.0 | $1,616.6 | 4.1% | | Total Earning Assets | $139,338.9 | $134,767.8 | $4,571.1 | 3.4% | | Total Assets | $151,041.5 | $146,842.9 | $4,198.6 | 2.9% | - Average Federal Funds Sold and Securities Purchased under Agreements to Resell significantly increased by 33.1% from Q3 2024 to Q3 2025, indicating increased short-term lending activities[14] Average Liabilities and Stockholders' Equity Average Total Liabilities for Q3 2025 were $138,334.5 million, an increase from Q3 2024. This was primarily driven by growth in Total Interest-Bearing Deposits, particularly Non-U.S. Offices - Interest-Bearing Deposits. Average Total Stockholders' Equity also saw a modest increase | Liability/Equity Category | Q3 2025 ($M) | Q3 2024 ($M) | YoY Change ($M) | YoY Change (%) | | :---------------------------------------------- | :----------- | :----------- | :-------------- | :------------- | | Total Interest-Bearing Deposits | $100,403.3 | $96,219.8 | $4,183.5 | 4.3% | | Non-U.S. Offices - Interest-Bearing Deposits | $65,354.5 | $64,347.2 | $1,007.3 | 1.6% | | Federal Funds Purchased | $2,467.7 | $2,320.9 | $146.8 | 6.3% | | Other Borrowings | $6,938.4 | $7,085.9 | $(147.5) | (2.1)% | | Total Liabilities | $138,334.5 | $134,368.8 | $3,965.7 | 2.9% | | Total Stockholders' Equity | $12,707.0 | $12,474.1 | $232.9 | 1.9% | - Average Demand and Other Noninterest-Bearing Deposits decreased by 0.3% from Q3 2024 to Q3 2025, indicating a shift towards interest-bearing accounts or other funding sources[14] Balance Sheet Mix Trends (Period Averages) This section analyzes the proportional composition of Northern Trust Corporation's average assets, liabilities, and equity for Q3 2025 compared to Q3 2024 Asset Mix The composition of average assets in Q3 2025 showed Federal Reserve and Other Central Bank Deposits at 22.3% of total assets, a decrease from 24.6% in Q3 2024. Total Debt Securities increased their share to 36.5%, while Loans and Leases remained stable at 27.5% | Asset Category | Q3 2025 (%) | Q3 2024 (%) | | :---------------------------------------------- | :---------- | :---------- | | Federal Reserve and Other Central Bank Deposits | 22.3% | 24.6% | | Interest-Bearing Due from and Deposits with Banks | 3.5% | 3.3% | | Federal Funds Sold and Securities Purchased under Agreements to Resell | 0.9% | 0.7% | | Total Debt Securities | 36.5% | 34.3% | | Loans and Leases | 27.5% | 27.2% | | Total Earning Assets | 92.3% | 91.8% | | Cash and Due From Banks and Other Central Bank Deposits | 0.8% | 1.2% | | Total Assets | 100.0% | 100.0% | - The proportion of Available For Sale Debt Securities increased from 18.7% in Q3 2024 to 21.9% in Q3 2025, while Held To Maturity Debt Securities decreased from 15.5% to 14.7%[16] Liabilities and Equity Mix The average liability mix in Q3 2025 showed Total Interest-Bearing Deposits at 66.5% of total liabilities and equity, a slight increase from 65.5% in Q3 2024. Demand and Other Noninterest-Bearing Deposits decreased their share to 10.8%. Total Stockholders' Equity remained stable at 8.4% | Liability/Equity Category | Q3 2025 (%) | Q3 2024 (%) | | :---------------------------------------------- | :---------- | :---------- | | Savings, Money Market and Other Deposits | 18.8% | 17.2% | | Savings Certificates and Other Time Deposits | 4.4% | 4.5% | | Non-U.S. Offices - Interest-Bearing Deposits | 43.3% | 43.8% | | Total Interest-Bearing Deposits | 66.5% | 65.5% | | Federal Funds Purchased | 1.6% | 1.6% | | Other Borrowings | 4.6% | 4.8% | | Total Interest-Bearing Liabilities | 77.6% | 77.0% | | Demand and Other Noninterest-Bearing Deposits | 10.8% | 11.1% | | Total Liabilities | 91.6% | 91.5% | | Total Stockholders' Equity | 8.4% | 8.5% | - The share of Other Borrowings decreased slightly from 4.8% in Q3 2024 to 4.6% in Q3 2025, while Securities Sold under Agreements to Repurchase remained stable at 0.3%[16] Interest Rate Trends (FTE Basis) This section analyzes the fully taxable equivalent (FTE) interest rates on Northern Trust Corporation's earning assets and interest-bearing liabilities, along with net interest spread and margin Earning Assets Rates Interest rates on earning assets generally decreased in Q3 2025 compared to Q3 2024. The rate on Federal Reserve and Other Central Bank Deposits fell to 3.84%, and Loans and Leases also saw a decline to 5.59%. However, Federal Funds Sold and Securities Purchased under Agreements to Resell showed significant volatility | Earning Asset Category | Q3 2025 Rate (%) | Q3 2024 Rate (%) | YoY Change (pp) | | :------------------------------------------------------ | :--------------- | :--------------- | :-------------- | | Federal Reserve and Other Central Bank Deposits | 3.84% | 4.98% | (1.14) | | Interest-Bearing Due from and Deposits with Banks | 1.57% | 2.35% | (0.78) | | Federal Funds Sold and Securities Purchased under Agreements to Resell | 217.12% | 362.57% | (145.45) | | Total Debt Securities | 3.47% | 3.86% | (0.39) | | Loans and Leases | 5.59% | 6.45% | (0.86) | | Total Earning Assets | 6.12% | 7.49% | (1.37) | - The average interest rate on Federal Funds Sold and Securities Purchased under Agreements to Resell, excluding the impact of balance sheet netting, would be approximately 4.41% for Q3 2025[19] Interest-Bearing Funds Rates Interest rates on interest-bearing funds generally decreased in Q3 2025 compared to Q3 2024. The rate on Total Interest-Bearing Deposits fell to 2.60%, and Other Borrowings also saw a decline to 4.55%. Federal Funds Purchased and Securities Sold under Agreements to Repurchase also showed decreases | Interest-Bearing Fund Category | Q3 2025 Rate (%) | Q3 2024 Rate (%) | YoY Change (pp) | | :------------------------------------------------------ | :--------------- | :--------------- | :-------------- | | Savings, Money Market and Other | 3.16% | 3.76% | (0.60) | | Savings Certificates and Other Time | 4.25% | 5.19% | (0.94) | | Non-U.S. Offices - Interest-Bearing | 2.19% | 3.39% | (1.20) | | Total Interest-Bearing Deposits | 2.60% | 3.61% | (1.01) | | Federal Funds Purchased | 3.99% | 5.07% | (1.08) | | Securities Sold under Agreements to Repurchase | 551.02% | 686.17% | (135.15) | | Other Borrowings | 4.55% | 5.32% | (0.77) | | Total Interest Bearing Liabilities | 5.26% | 6.93% | (1.67) | - The average interest rate on Securities Sold under Agreements to Repurchase, excluding the impact of balance sheet netting, would be approximately 4.37% for Q3 2025[19] Net Interest Spread and Margin Net Interest Spread (FTE) increased to 0.86% in Q3 2025 from 0.56% in Q3 2024, while Net Interest Margin (FTE) also improved to 1.70% from 1.68%. This indicates an expansion in the profitability of interest-earning activities | Metric | Q3 2025 Rate (%) | Q3 2024 Rate (%) | YoY Change (pp) | | :------------------ | :--------------- | :--------------- | :-------------- | | Net Interest Spread | 0.86% | 0.56% | 0.30 | | Net Interest Margin | 1.70% | 1.68% | 0.02 | - Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets. Net interest spread is calculated as the difference between the interest rate earned and the interest rate incurred[18] Asset Quality This section evaluates Northern Trust Corporation's asset quality, focusing on the allowance for credit losses and key loan quality ratios Allowance for Credit Losses The Ending Allowance for Credit Losses decreased to $206.7 million in Q3 2025 from $220.0 million in Q3 2024. This was primarily due to a significant provision for credit losses release of $(17.0) million in Q3 2025, compared to an $8.0 million provision in Q3 2024 | Metric | Q3 2025 ($M) | Q3 2024 ($M) | YoY Change ($M) | YoY Change (%) | | :-------------------------------------- | :----------- | :----------- | :-------------- | :------------- | | Beginning Allowance for Credit Losses | $224.1 | $209.6 | $14.5 | 6.9% | | Provision for (Release of) Credit Losses| $(17.0) | $8.0 | $(25.0) | N/M | | Net (Charge-offs) Recoveries | $(0.4) | $2.4 | $(2.8) | N/M | | Ending Allowance for Credit Losses | $206.7 | $220.0 | $(13.3) | (6.0)% | - The Allowance for Credit Losses Assigned to Loans and Leases decreased by 11% year-over-year, from $184.8 million in Q3 2024 to $164.4 million in Q3 2025[21] Loan Quality Ratios Nonaccrual Loans and Leases increased to $78.8 million in Q3 2025 from $39.3 million in Q3 2024. Consequently, the ratio of Nonaccrual Assets to Loans and Leases and OREO increased to 0.18% from 0.09%. The Allowance for Credit Losses to Total Loans and Leases decreased slightly to 0.38% | Metric | Q3 2025 | Q3 2024 | YoY Change | | :-------------------------------------- | :----------- | :----------- | :----------- | | Average Loans and Leases Outstanding ($M)| $41,501 | $39,884 | $1,617 | | Annualized Loan Related Net (Charge-offs) Recoveries to Average Loans and Leases | — % | 0.02 % | (0.02) pp | | Allowance for Credit Losses Assigned to Loans and Leases to Total Loans and Leases | 0.38 % | 0.44 % | (0.06) pp | | Nonaccrual Loans and Leases ($M) | $78.8 | $39.3 | $39.5 | | Nonaccrual Assets to Loans and Leases and OREO | 0.18 % | 0.09 % | 0.09 pp | | Allowance to Nonaccrual Loans and Leases| 2.1x | 4.7x | (2.6)x | - The Allowance to Nonaccrual Loans and Leases ratio significantly decreased from 4.7x in Q3 2024 to 2.1x in Q3 2025, indicating a lower coverage of nonaccrual loans by the allowance[21] Assets Under Management and Custody This section provides an overview of Northern Trust Corporation's Assets Under Management (AUM) and Assets Under Custody/Administration (AUC/A) for Q3 2025 Assets Under Management (AUM) Total Assets Under Management (AUM) increased by 9.3% year-over-year to $1,772.7 billion in Q3 2025. This growth was seen across both Asset Servicing and Wealth Management segments, with Equities being the largest asset allocation | Metric | Q3 2025 ($B) | Q3 2024 ($B) | YoY Change ($B) | YoY Change (%) | | :-------------------------------------- | :----------- | :----------- | :-------------- | :------------- | | Asset Servicing AUM | $1,280.1 | $1,177.9 | $102.2 | 8.7% | | Wealth Management AUM | $492.6 | $443.9 | $48.7 | 11.0% | | Total Assets Under Management | $1,772.7 | $1,621.8 | $150.9 | 9.3% | | AUM Asset Allocation: Equities | $1,001.5 | $908.8 | $92.7 | 10.2% | | AUM Asset Allocation: Fixed Income Securities | $230.0 | $219.7 | $10.3 | 4.7% | | AUM Asset Allocation: Cash and Other Assets | $334.6 | $317.2 | $17.4 | 5.5% | | AUM Asset Allocation: Securities Lending Collateral | $206.6 | $176.1 | $30.5 | 17.3% | - Wealth Management Global Family Office AUM increased by 15% year-over-year, from $161.8 billion in Q3 2024 to $186.1 billion in Q3 2025[23] Assets Under Custody / Administration (AUC/A) Total Assets Under Custody / Administration (AUC/A) grew by 4.7% year-over-year to $18,247.6 billion in Q3 2025. Both Asset Servicing and Wealth Management segments contributed to this growth | Metric | Q3 2025 ($B) | Q3 2024 ($B) | YoY Change ($B) | YoY Change (%) | | :-------------------------------------- | :----------- | :----------- | :-------------- | :------------- | | Asset Servicing AUC/A | $16,990.4 | $16,278.0 | $712.4 | 4.4% | | Wealth Management AUC/A | $1,257.2 | $1,145.0 | $112.2 | 9.8% | | Total Assets Under Custody / Administration | $18,247.6 | $17,423.0 | $824.6 | 4.7% | Assets Under Custody (AUC) Total Assets Under Custody (AUC) increased by 4.7% year-over-year to $14,439.1 billion in Q3 2025. Equities remained the largest asset class, showing a 5.4% increase | Metric | Q3 2025 ($B) | Q3 2024 ($B) | YoY Change ($B) | YoY Change (%) | | :-------------------------------------- | :----------- | :----------- | :-------------- | :------------- | | Asset Servicing AUC | $13,195.0 | $12,662.1 | $532.9 | 4.2% | | Wealth Management AUC | $1,244.1 | $1,132.7 | $111.4 | 9.8% | | Total Assets Under Custody | $14,439.1 | $13,794.8 | $644.3 | 4.7% | | AUC Asset Allocation: Equities | $7,166.5 | $6,799.5 | $367.0 | 5.4% | | AUC Asset Allocation: Fixed Income Securities | $4,297.9 | $4,031.7 | $266.2 | 6.6% | | AUC Asset Allocation: Cash and Other Assets | $2,768.1 | $2,787.5 | $(19.4) | (0.7)% | | AUC Asset Allocation: Securities Lending Collateral | $206.6 | $176.1 | $30.5 | 17.3% | - Wealth Management Global Family Office AUC increased by 9.7% year-over-year, from $798.0 billion in Q3 2024 to $875.8 billion in Q3 2025[23] Reconciliation to Fully Taxable Equivalent This section explains the reconciliation of Northern Trust Corporation's financial measures and ratios to a fully taxable equivalent (FTE) basis, a non-GAAP adjustment FTE Financial Measures Northern Trust presents certain financial measures on a fully taxable equivalent (FTE) basis, which is a non-GAAP measure. This adjustment makes yields on taxable, nontaxable, and partially taxable assets comparable, though it has no impact on net income. For Q3 2025, the FTE adjustment for Net Interest Income was $5.5 million | Metric | GAAP Q3 2025 ($M) | FTE Adjustment Q3 2025 ($M) | FTE Non-GAAP Q3 2025 ($M) | | :-------------------------------------- | :---------------- | :-------------------------- | :------------------------ | | Interest Income | $2,144.3 | $5.5 | $2,149.8 | | Net Interest Income | $590.8 | $5.5 | $596.3 | | Total Revenue | $2,025.4 | $5.5 | $2,030.9 | | Income before Income Taxes | $619.5 | $5.5 | $625.0 | | Provision for Income Taxes | $161.9 | $5.5 | $167.4 | - The FTE adjustment is based on the federal income tax rate, adjusted for applicable state income taxes, net of related federal tax benefit[27] FTE Financial Ratios The FTE presentation also impacts various financial ratios, providing a clearer comparative view. For Q3 2025, the FTE adjustment resulted in a slightly higher Profit Margin (pre-tax) and Net Interest Margin compared to their GAAP counterparts | Ratio | GAAP Q3 2025 (%) | FTE Non-GAAP Q3 2025 (%) | | :-------------------------------------- | :--------------- | :----------------------- | | Profit Margin (pre-tax) | 30.6% | 30.8% | | Profit Margin (after-tax) | 22.6% | 22.5% | | Effective Tax Rate | 26.1% | 26.8% | | Noninterest Income to Total Revenue | 70.8% | 70.6% | | Trust Fees to Total Revenue | 62.5% | 62.3% | | Net Interest Spread | 0.85% | 0.86% | | Net Interest Margin | 1.68% | 1.70% | - Management believes an FTE presentation provides a clearer indication of these financial measures for comparative purposes[30]