x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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36-2723087
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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50 South La Salle Street
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Chicago, Illinois
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60603
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class
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Name of Each Exchange On Which Registered
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Common Stock, $1.66
2
/3
Par Value
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The NASDAQ Stock Market LLC
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Depositary Shares, each representing 1/1000
th
interest in a share of Series C
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Non-Cumulative Perpetual Preferred Stock
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The NASDAQ Stock Market LLC
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Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Page
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Item 1
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Item 1A
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Item 1B
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Item 2
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Item 3
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Item 4
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Supplemental Item
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Item 5
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Item 6
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Item 7
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Item 7A
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Item 8
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Supplemental Item
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Item 9
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Item 9A
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Item 9B
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Item 10
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Item 11
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Item 12
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Item 13
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Item 14
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Item 15
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Item 16
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2017 Annual Report | Northern Trust Corporation
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2017 Annual Report | Northern Trust Corporation
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COMMON EQUITY
TIER 1 CAPITAL
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TIER 1 CAPITAL
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TOTAL CAPITAL
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TIER 1 LEVERAGE
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SUPPLEMENTARY LEVERAGE
|
|||||||||||||
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ADVANCED
APPROACH
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STANDARDIZED
APPROACH
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ADVANCED
APPROACH
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STANDARDIZED
APPROACH
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ADVANCED
APPROACH
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STANDARDIZED
APPROACH
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ADVANCED
APPROACH |
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STANDARDIZED
APPROACH |
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ADVANCED
APPROACH |
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Northern Trust Corporation
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13.5
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%
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12.6
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%
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14.8
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%
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13.8
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%
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16.7
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%
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15.8
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%
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7.8
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%
|
7.8
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%
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6.8
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%
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The Northern Trust Company
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13.7
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%
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12.6
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%
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13.7
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%
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12.6
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%
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15.4
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%
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14.3
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%
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7.0
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%
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7.0
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%
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6.1
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%
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Minimum required ratio
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4.5
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%
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4.5
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%
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6.0
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%
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6.0
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%
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8.0
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%
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8.0
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%
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4.0
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%
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4.0
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%
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N/A
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“Well-capitalized” minimum ratio
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6.5
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%
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6.5
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%
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8.0
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%
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8.0
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%
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10.0
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%
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10.0
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%
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5.0
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%
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5.0
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%
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N/A
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12
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•
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Average Consolidated Balance Sheets with Analysis of Net Interest Income for the years ended
December 31, 2017
,
2016
and
2015
.
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•
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Changes in Net Interest Income for the years ended
December 31, 2017
and
2016
.
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•
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Remaining Maturity and Average Yield of Securities Held to Maturity and Available for Sale as of
December 31, 2017
.
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•
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Remaining Maturity of Selected Loans and Leases as of
December 31, 2017
.
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•
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Distribution of Non-U.S. Loans by Type as of
December 31, 2017
,
2016
,
2015
,
2014
and
2013
.
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•
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Allowance for Credit Losses Relating to Non-U.S. Operations for the years ended
December 31, 2017
,
2016
,
2015
,
2014
and
2013
.
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•
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Analysis of Allowance for Credit Losses for the years ended
December 31, 2017
,
2016
,
2015
,
2014
and
2013
.
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•
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Average Deposits by Type as of
December 31, 2017
,
2016
and
2015
.
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•
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Distribution of Non-U.S. Deposits by Type as of
December 31, 2017
,
2016
and
2015
.
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•
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Remaining Maturity of Time Deposits $100,000 or More as of
December 31, 2017
.
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•
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Average Rates Paid on Interest-Related Deposits by Type for the years ended
December 31, 2017
,
2016
and
2015
.
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•
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Selected Average Assets and Liabilities Attributable to Non-U.S. Operations for the years ended
December 31, 2017
,
2016
,
2015
,
2014
, and
2013
.
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•
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Percent of Non-U.S.-Related Average Assets and Liabilities to Total Consolidated Average Assets for the years ended
December 31, 2017
,
2016
,
2015
,
2014
, and
2013
.
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•
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Non-U.S. Outstandings as of
December 31, 2017
,
2016
and
2015
.
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•
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Purchased Funds as of
December 31, 2017
,
2016
and
2015
.
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•
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Item 6, “Selected Financial Data,” includes the Corporation’s consolidated return on average common equity, return on average assets, dividend payout ratio and ratio of average equity to average assets.
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•
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The “Securities Portfolio” table (Item 7) provides the book values of investments in obligations of the U.S. government, states and political subdivisions, and other held to maturity and available for sale securities as of
December 31, 2017
,
2016
and
2015
.
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2017 Annual Report | Northern Trust Corporation
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•
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The “Composition of Loan Portfolio” table (Item 7) provides loans and leases by type as of
December 31, 2017
,
2016
,
2015
,
2014
, and
2013
.
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•
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The “Nonperforming Assets” table (Item 7) provides information about the Corporation’s nonaccrual, past due and restructured loans receivable as of
December 31, 2017
,
2016
,
2015
,
2014
, and
2013
.
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•
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The “Commercial Real Estate Loans” table (Item 7) provides details of loan concentrations as of
December 31, 2017
and
2016
.
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•
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The “Allocation of the Allowance for Credit Losses” table (Item 7) provides a breakdown of the allowance for credit losses by loan class and illustrates the proportion of each loan class to total loans.
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•
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The “Allowance and Provision for Credit Losses” section (Item 7) provides a discussion of the factors which influenced management’s judgment in determining the provision for credit losses.
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•
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Note 6, “Loans and Leases,” (Item 8) provides the Corporation’s forgone interest income on nonaccrual loans, as well as a description of the nature of non-U.S. loans as of
December 31, 2017
and
2016
.
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•
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Note 1, “Summary of Significant Accounting Policies,” (Item 8) provides a discussion of Northern Trust’s policy for placing loans on non-accrual status.
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•
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Further discussion of Northern Trust’s management of credit risk with respect to the provision and allowance for credit losses is provided in the following information that is incorporated herein by reference to the notes to the consolidated financial statements provided in Item 8, “Financial Statements and Supplementary Data.”
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2017 Annual Report | Northern Trust Corporation
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2017 Annual Report | Northern Trust Corporation
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16
2017 Annual Report | Northern Trust Corporation
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•
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failures of technological systems or breaches of security measures, including, but not limited to, those resulting from cyber-attacks;
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•
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human errors or omissions, including failures to comply with applicable laws or corporate policies and procedures;
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•
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theft, fraud or misappropriation of assets, whether arising from the intentional actions of internal personnel or external third parties;
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•
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defects or interruptions in computer or communications systems;
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•
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breakdowns in processes, over-reliance on manual processes, which are inherently more prone to error than automated processes, breakdowns in internal controls or failures of the systems and facilities that support our operations;
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•
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unsuccessful or difficult implementation of computer systems upgrades;
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•
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defects in product design or delivery;
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•
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difficulty in accurately pricing assets, which can be aggravated by increased asset coverage, market volatility and illiquidity, and lack of reliable pricing from third-party vendors;
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•
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negative developments in relationships with key counterparties, third-party vendors, employees or associates in our day-to-day operations; and
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2017 Annual Report | Northern Trust Corporation
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•
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external events that are wholly or partially beyond our control, such as natural disasters, epidemics, computer viruses, geopolitical events, political unrest or acts of terrorism.
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2017 Annual Report | Northern Trust Corporation
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2017 Annual Report | Northern Trust Corporation
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30
2017 Annual Report | Northern Trust Corporation
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2017 Annual Report | Northern Trust Corporation
31
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PERIOD
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TOTAL NUMBER OF SHARES PURCHASED
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AVERAGE PRICE PAID PER SHARE
|
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TOTAL NUMBER OF SHARES PURCHASED AS PART OF A PUBLICLY ANNOUNCED PLAN (1)
|
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MAXIMUM NUMBER OF SHARES THAT MAY YET BE PURCHASED UNDER THE PLAN
|
|
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October 1-31, 2017
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146,598
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$
|
95.50
|
|
146,598
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7,985,577
|
|
November 1-30, 2017
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1,567,473
|
|
93.78
|
|
1,567,473
|
|
6,418,104
|
|
|
December 1-31, 2017
|
71,248
|
|
98.25
|
|
71,248
|
|
6,346,856
|
|
|
|
|
|
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|
|||||
Total (Fourth Quarter)
|
1,785,319
|
|
$
|
94.10
|
|
1,785,319
|
|
6,346,856
|
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2017 Annual Report | Northern Trust Corporation
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DECEMBER 31,
|
|||||||||||
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
Northern Trust
|
100
|
|
126
|
|
140
|
|
153
|
|
193
|
|
220
|
|
S&P 500
|
100
|
|
132
|
|
151
|
|
153
|
|
171
|
|
208
|
|
KBW Bank Index
|
100
|
|
138
|
|
151
|
|
151
|
|
195
|
|
231
|
|
|
|
|
|
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2017 Annual Report | Northern Trust Corporation
33
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2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
|||||
FOR THE YEAR ENDED DECEMBER 31,
|
|
|
|
|
|
||||||||||
CONDENSED STATEMENTS OF INCOME (In Millions)
|
|
|
|
|
|
||||||||||
Noninterest Income
|
$
|
3,946.1
|
|
$
|
3,726.9
|
|
$
|
3,632.5
|
|
$
|
3,325.7
|
|
$
|
3,156.2
|
|
Net Interest Income
|
1,429.2
|
|
1,234.9
|
|
1,070.1
|
|
1,005.5
|
|
933.1
|
|
|||||
Total Revenue
|
$
|
5,375.3
|
|
$
|
4,961.8
|
|
$
|
4,702.6
|
|
$
|
4,331.2
|
|
$
|
4,089.3
|
|
Provision for Credit Losses
|
(28.0
|
)
|
(26.0
|
)
|
(43.0
|
)
|
6.0
|
|
20.0
|
|
|||||
Noninterest Expense
|
3,769.4
|
|
3,470.7
|
|
3,280.6
|
|
3,135.0
|
|
2,993.8
|
|
|||||
Income before Income Taxes
|
$
|
1,633.9
|
|
$
|
1,517.1
|
|
$
|
1,465.0
|
|
$
|
1,190.2
|
|
$
|
1,075.5
|
|
Provision for Income Taxes
|
434.9
|
|
484.6
|
|
491.2
|
|
378.4
|
|
344.2
|
|
|||||
Net Income
|
$
|
1,199.0
|
|
$
|
1,032.5
|
|
$
|
973.8
|
|
$
|
811.8
|
|
$
|
731.3
|
|
Preferred Stock Dividends
|
49.8
|
|
23.4
|
|
23.4
|
|
9.5
|
|
—
|
|
|||||
Net Income Applicable to Common Stock
|
$
|
1,149.2
|
|
$
|
1,009.1
|
|
$
|
950.4
|
|
$
|
802.3
|
|
$
|
731.3
|
|
|
|
|
|
|
|
||||||||||
PER COMMON SHARE
|
|
|
|
|
|
||||||||||
Net Income – Basic
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$
|
4.95
|
|
$
|
4.35
|
|
$
|
4.03
|
|
$
|
3.34
|
|
$
|
3.01
|
|
– Diluted
|
4.92
|
|
4.32
|
|
3.99
|
|
3.32
|
|
2.99
|
|
|||||
Cash Dividends Declared Per Common Share
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1.60
|
|
1.48
|
|
1.41
|
|
1.30
|
|
1.23
|
|
|||||
Book Value – End of Period (EOP)
|
41.28
|
|
38.88
|
|
36.27
|
|
34.54
|
|
33.34
|
|
|||||
Market Price – EOP
|
99.89
|
|
89.05
|
|
72.09
|
|
67.40
|
|
61.89
|
|
|||||
|
|
|
|
|
|
||||||||||
SELECTED BALANCE SHEET DATA (In Millions)
|
|
|
|
|
|
||||||||||
At Year End:
|
|
|
|
|
|
||||||||||
Earning Assets
|
$
|
129,656.6
|
|
$
|
115,446.4
|
|
$
|
106,848.9
|
|
$
|
100,889.8
|
|
$
|
93,367.2
|
|
Total Assets
|
138,590.5
|
|
123,926.9
|
|
116,749.6
|
|
109,946.5
|
|
102,947.3
|
|
|||||
Deposits
|
112,390.8
|
|
101,651.7
|
|
96,868.9
|
|
90,757.0
|
|
84,098.1
|
|
|||||
Senior Notes
|
1,497.3
|
|
1,496.6
|
|
1,497.4
|
|
1,497.0
|
|
1,996.6
|
|
|||||
Long-Term Debt
|
1,449.5
|
|
1,330.9
|
|
1,371.3
|
|
1,615.1
|
|
1,709.2
|
|
|||||
Stockholders’ Equity
|
10,216.2
|
|
9,770.4
|
|
8,705.9
|
|
8,448.9
|
|
7,912.0
|
|
|||||
Average Balances:
|
|
|
|
|
|
||||||||||
Earning Assets
|
$
|
111,178.3
|
|
$
|
107,037.6
|
|
$
|
102,249.8
|
|
$
|
95,947.5
|
|
$
|
85,628.3
|
|
Total Assets
|
119,607.4
|
|
115,570.3
|
|
110,715.1
|
|
104,083.5
|
|
94,857.7
|
|
|||||
Deposits
|
96,504.8
|
|
93,613.9
|
|
90,768.0
|
|
84,656.6
|
|
75,596.3
|
|
|||||
Senior Notes
|
1,496.9
|
|
1,496.6
|
|
1,497.2
|
|
1,661.2
|
|
2,247.0
|
|
|||||
Long-Term Debt
|
1,519.4
|
|
1,392.4
|
|
1,426.4
|
|
1,654.9
|
|
1,211.7
|
|
|||||
Stockholders’ Equity
|
9,980.6
|
|
9,085.3
|
|
8,624.5
|
|
8,166.5
|
|
7,667.7
|
|
|||||
|
|
|
|
|
|
||||||||||
CLIENT ASSETS (In Billions)
|
|
|
|
|
|
||||||||||
Assets Under Custody/Administration
|
$
|
10,722.6
|
|
$
|
8,541.3
|
|
$
|
7,797.0
|
|
N/A
|
|
N/A
|
|
||
Assets Under Custody
|
8,084.6
|
|
6,720.5
|
|
6,072.1
|
|
5,968.8
|
|
5,575.7
|
|
|||||
Assets Under Management
|
1,161.0
|
|
942.4
|
|
875.3
|
|
934.1
|
|
884.5
|
|
|||||
|
|
|
|
|
|
||||||||||
SELECTED RATIOS AND METRICS
|
|
|
|
|
|
||||||||||
Financial Ratios and Metrics:
|
|
|
|
|
|
||||||||||
Return on Average Common Equity
|
12.6
|
%
|
11.9
|
%
|
11.5
|
%
|
10.0
|
%
|
9.5
|
%
|
|||||
Return on Average Assets
|
1.00
|
%
|
0.89
|
%
|
0.88
|
%
|
0.78
|
%
|
0.77
|
%
|
|||||
Dividend Payout Ratio
|
32.5
|
|
34.3
|
|
35.3
|
|
39.2
|
|
41.1
|
|
|||||
Net Interest Margin
(*)
|
1.33
|
|
1.18
|
|
1.07
|
|
1.08
|
|
1.13
|
|
|||||
Average Stockholders’ Equity to Average Assets
|
8.3
|
|
7.9
|
|
7.8
|
|
7.8
|
|
8.1
|
|
Capital Ratios:
|
DECEMBER 31,
2017 |
DECEMBER 31,
2016 |
DECEMBER 31,
2015 |
December 31,
2014
|
December 31,
2013
(d)
|
|||||||||||||
|
ADVANCED
APPROACH
(a)
|
STANDARDIZED
APPROACH
(b)
|
ADVANCED
APPROACH
(a)
|
STANDARDIZED
APPROACH
(b)
|
ADVANCED
APPROACH
(a)
|
STANDARDIZED
APPROACH
(b)
|
ADVANCED
APPROACH
(a)
|
STANDARDIZED
APPROACH (b) |
|
|||||||||
Common Equity Tier 1
|
13.5
|
%
|
12.6
|
%
|
12.4
|
%
|
11.8
|
%
|
11.9
|
%
|
10.8
|
%
|
12.4
|
%
|
12.5
|
%
|
12.9
|
%
|
Tier 1
|
14.8
|
|
13.8
|
|
13.7
|
|
12.9
|
|
12.5
|
|
11.4
|
|
13.2
|
|
13.3
|
|
13.4
|
|
Total
|
16.7
|
|
15.8
|
|
15.1
|
|
14.5
|
|
14.2
|
|
13.2
|
|
15.0
|
|
15.5
|
|
15.8
|
|
Tier 1 Leverage
|
7.8
|
|
7.8
|
|
8.0
|
|
8.0
|
|
7.5
|
|
7.5
|
|
N/A
|
|
7.8
|
|
7.9
|
|
Supplementary Leverage
(c)
|
6.8
|
|
N/A
|
|
6.8
|
|
N/A
|
|
6.2
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
34
2017 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
35
|
n
|
|
64% - Trust, Investment and Other Servicing Fees
|
|
|
|
n
|
|
27% - Net Interest Income
|
|
|
|
n
|
|
4% - Foreign Exchange Trading Income
|
|
|
|
n
|
|
5% - Other Noninterest Income
|
|
|
|
|
|
|
36
2017 Annual Report | Northern Trust Corporation
|
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Millions)
|
2017
|
|
2016
|
|
2015
|
|
2017 / 2016
|
|
2016 / 2015
|
|
|||
Trust, Investment and Other Servicing Fees
|
$
|
3,434.3
|
|
$
|
3,108.1
|
|
$
|
2,980.5
|
|
10
|
%
|
4
|
%
|
Foreign Exchange Trading Income
|
209.9
|
|
236.6
|
|
261.8
|
|
(11
|
)
|
(10
|
)
|
|||
Treasury Management Fees
|
56.4
|
|
62.8
|
|
64.7
|
|
(10
|
)
|
(3
|
)
|
|||
Security Commissions and Trading Income
|
89.6
|
|
81.4
|
|
78.7
|
|
10
|
|
3
|
|
|||
Other Operating Income
|
157.5
|
|
241.2
|
|
247.1
|
|
(35
|
)
|
(2
|
)
|
|||
Investment Security Losses, net
|
(1.6
|
)
|
(3.2
|
)
|
(0.3
|
)
|
(50
|
)
|
N/M
|
|
|||
|
|
|
|
|
|
||||||||
Total Noninterest Income
|
$
|
3,946.1
|
|
$
|
3,726.9
|
|
$
|
3,632.5
|
|
6
|
%
|
3
|
%
|
|
DAILY AVERAGES
|
YEAR-END
|
||||||||||
|
2017
|
|
2016
|
|
CHANGE
|
|
2017
|
|
2016
|
|
CHANGE
|
|
|
|
|
|
|
|
|
||||||
S&P 500
|
2,448
|
|
2,094
|
|
17
|
%
|
2,674
|
|
2,239
|
|
19
|
%
|
MSCI EAFE (U.S. dollars)
|
1,886
|
|
1,646
|
|
15
|
|
2,051
|
|
1,684
|
|
22
|
|
MSCI EAFE (local currency)
|
1,105
|
|
956
|
|
16
|
|
1,164
|
|
1,037
|
|
12
|
|
|
|
|
|
|
|
|
|
AS OF DECEMBER 31,
|
|||||
|
2017
|
|
2016
|
|
CHANGE
|
|
|
|
|
|
|||
Barclays Capital U.S. Aggregate Bond Index
|
2,046
|
|
1,976
|
|
4
|
%
|
Barclays Capital Global Aggregate Bond Index
|
485
|
|
451
|
|
7
|
|
|
|
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
37
|
|
DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Billions)
|
2017
|
|
2016
|
|
2015
|
|
2017 /2016
|
|
2016 /2015
|
|
|||
Corporate & Institutional
|
$
|
10,066.8
|
|
$
|
7,987.0
|
|
$
|
7,279.7
|
|
26
|
%
|
10
|
%
|
Wealth Management
|
655.8
|
|
554.3
|
|
517.3
|
|
18
|
|
7
|
|
|||
|
|
|
|
|
|
||||||||
Total Assets Under Custody/Administration
|
$
|
10,722.6
|
|
$
|
8,541.3
|
|
$
|
7,797.0
|
|
26
|
%
|
10
|
%
|
|
DECEMBER 31,
|
CHANGE
|
FIVE-YEAR
COMPOUND
GROWTH
RATE
|
|
|||||||||||||||||
($ In Billions)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2017 /2016
|
|
2016 / 2015
|
|
|
||||||
Corporate & Institutional
|
$
|
7,439.1
|
|
$
|
6,176.9
|
|
$
|
5,565.8
|
|
$
|
5,453.1
|
|
$
|
5,079.7
|
|
20
|
%
|
11
|
%
|
11
|
%
|
Wealth Management
|
645.5
|
|
543.6
|
|
506.3
|
|
515.7
|
|
496.0
|
|
19
|
|
7
|
|
8
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Assets Under Custody
|
$
|
8,084.6
|
|
$
|
6,720.5
|
|
$
|
6,072.1
|
|
$
|
5,968.8
|
|
$
|
5,575.7
|
|
20
|
%
|
11
|
%
|
11
|
%
|
|
DECEMBER 31,
|
|||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
Equities
|
47
|
%
|
46
|
%
|
44
|
%
|
45
|
%
|
47
|
%
|
Fixed Income Securities
|
35
|
|
36
|
|
37
|
|
36
|
|
34
|
|
Cash and Other Assets
|
16
|
|
17
|
|
17
|
|
17
|
|
17
|
|
Securities Lending Collateral
|
2
|
|
1
|
|
2
|
|
2
|
|
2
|
|
|
DECEMBER 31,
|
CHANGE
|
FIVE-YEAR
COMPOUND
GROWTH
RATE
|
|
|||||||||||||||||
($ In Billions)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2017 / 2016
|
|
2016 / 2015
|
|
|
||||||
Corporate & Institutional
|
$
|
871.2
|
|
$
|
694.0
|
|
$
|
648.0
|
|
$
|
709.6
|
|
$
|
662.7
|
|
26
|
%
|
7
|
%
|
9
|
%
|
Wealth Management
|
289.8
|
|
248.4
|
|
227.3
|
|
224.5
|
|
221.8
|
|
17
|
|
9
|
|
8
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Assets Under Management
|
$
|
1,161.0
|
|
$
|
942.4
|
|
$
|
875.3
|
|
$
|
934.1
|
|
$
|
884.5
|
|
23
|
%
|
8
|
%
|
9
|
%
|
|
|
|
38
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
|||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
Equities
|
51
|
%
|
51
|
%
|
51
|
%
|
52
|
%
|
54
|
%
|
Fixed Income Securities
|
16
|
|
17
|
|
17
|
|
17
|
|
17
|
|
Cash and Other Assets
|
19
|
|
20
|
|
20
|
|
18
|
|
17
|
|
Securities Lending Collateral
|
14
|
|
12
|
|
12
|
|
13
|
|
12
|
|
|
DECEMBER 31,
|
|||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
Index
|
46
|
%
|
47
|
%
|
47
|
%
|
49
|
%
|
51
|
%
|
Active
|
41
|
|
40
|
|
40
|
|
39
|
|
43
|
|
Multi-Manager
|
5
|
|
5
|
|
4
|
|
6
|
|
4
|
|
Other
|
8
|
|
8
|
|
9
|
|
6
|
|
2
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Millions)
|
2017
|
|
2016
|
|
2015
|
|
2017 / 2016
|
|
2016 / 2015
|
|
|||
Loan Service Fees
|
$
|
50.7
|
|
$
|
56.6
|
|
$
|
59.1
|
|
(10
|
)%
|
(4
|
)%
|
Banking Service Fees
|
48.6
|
|
50.6
|
|
48.2
|
|
(4
|
)
|
5
|
|
|||
Other Income
|
58.2
|
|
134.0
|
|
139.8
|
|
(57
|
)
|
(4
|
)
|
|||
|
|
|
|
|
|
||||||||
Total Other Operating Income
|
$
|
157.5
|
|
$
|
241.2
|
|
$
|
247.1
|
|
(35
|
)%
|
(2
|
)%
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
39
|
|
|
|
40
2017 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
41
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Millions)
|
2017
|
|
2016
|
|
2015
|
|
2017 / 2016
|
|
2016 / 2015
|
|
|||
Compensation
|
$
|
1,733.7
|
|
$
|
1,541.1
|
|
$
|
1,443.3
|
|
13
|
%
|
7
|
%
|
Employee Benefits
|
319.9
|
|
293.3
|
|
285.3
|
|
9
|
|
3
|
|
|||
Outside Services
|
668.4
|
|
627.1
|
|
595.7
|
|
7
|
|
5
|
|
|||
Equipment and Software
|
524.0
|
|
467.4
|
|
454.8
|
|
12
|
|
3
|
|
|||
Occupancy
|
191.8
|
|
177.4
|
|
173.5
|
|
8
|
|
2
|
|
|||
Other Operating Expense
|
331.6
|
|
364.4
|
|
328.0
|
|
(9
|
)
|
11
|
|
|||
|
|
|
|
|
|
||||||||
Total Noninterest Expense
|
$
|
3,769.4
|
|
$
|
3,470.7
|
|
$
|
3,280.6
|
|
9
|
%
|
6
|
%
|
|
|
|
42
2017 Annual Report | Northern Trust Corporation
|
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Millions)
|
2017
|
|
2016
|
|
2015
|
|
2017 / 2016
|
|
2016 / 2015
|
|
|||
Business Promotion
|
$
|
95.4
|
|
$
|
83.6
|
|
$
|
85.1
|
|
14
|
%
|
(2
|
)%
|
FDIC Insurance Premiums
|
34.7
|
|
31.7
|
|
25.2
|
|
9
|
|
26
|
|
|||
Staff Related
|
42.8
|
|
43.0
|
|
40.5
|
|
(1
|
)
|
6
|
|
|||
Other Intangibles Amortization
|
11.4
|
|
8.8
|
|
10.9
|
|
30
|
|
(19
|
)
|
|||
Other Expenses
|
147.3
|
|
197.3
|
|
166.3
|
|
(25
|
)
|
19
|
|
|||
|
|
|
|
|
|
||||||||
Total Other Operating Expense
|
$
|
331.6
|
|
$
|
364.4
|
|
$
|
328.0
|
|
(9
|
)%
|
11
|
%
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
43
|
|
|
||
(In Millions)
|
2017
|
|
|
Federal Taxes on Mandatory Deemed Repatriation
|
$
|
150.0
|
|
Impact Related to Federal Deferred Taxes
|
(210.0
|
)
|
|
Other Adjustments
|
6.9
|
|
|
|
|
||
Provision (Benefit) for Income Taxes
|
$
|
(53.1
|
)
|
|
|
|
44
2017 Annual Report | Northern Trust Corporation
|
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Millions)
|
2017
|
|
2016
|
|
2015
|
|
2017 / 2016
|
|
2016 / 2015
|
|
|||
Noninterest Income
|
|
|
|
|
|
||||||||
Trust, Investment and Other Servicing Fees
|
$
|
3,434.3
|
|
$
|
3,108.1
|
|
$
|
2,980.5
|
|
10
|
%
|
4
|
%
|
Foreign Exchange Trading Income
|
209.9
|
|
236.6
|
|
261.8
|
|
(11
|
)
|
(10
|
)
|
|||
Other Noninterest Income
|
301.9
|
|
382.2
|
|
390.2
|
|
(21
|
)
|
(2
|
)
|
|||
Net Interest Income (Note)
|
1,475.0
|
|
1,260.0
|
|
1,095.4
|
|
17
|
|
15
|
|
|||
|
|
|
|
|
|
||||||||
Revenue (Note)
|
5,421.1
|
|
4,986.9
|
|
4,727.9
|
|
9
|
|
5
|
|
|||
Provision for Credit Losses
|
(28.0
|
)
|
(26.0
|
)
|
(43.0
|
)
|
8
|
|
(40
|
)
|
|||
Noninterest Expense
|
3,769.4
|
|
3,470.7
|
|
3,280.6
|
|
9
|
|
6
|
|
|||
|
|
|
|
|
|
||||||||
Income before Income Taxes (Note)
|
1,679.7
|
|
1,542.2
|
|
1,490.3
|
|
9
|
|
3
|
|
|||
Provision for Income Taxes (Note)
|
480.7
|
|
509.7
|
|
516.5
|
|
(6
|
)
|
(1
|
)
|
|||
|
|
|
|
|
|
||||||||
Net Income
|
$
|
1,199.0
|
|
$
|
1,032.5
|
|
$
|
973.8
|
|
16
|
%
|
6
|
%
|
|
|
|
|
|
|
||||||||
Average Assets
|
$
|
119,607.4
|
|
$
|
115,570.3
|
|
$
|
110,715.1
|
|
3
|
%
|
4
|
%
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Millions)
|
2017
|
|
2016
|
|
2015
|
|
2017 / 2016
|
|
2016 / 2015
|
|
|||
Noninterest Income
|
|
|
|
|
|
||||||||
Trust, Investment and Other Servicing Fees
|
$
|
1,984.6
|
|
$
|
1,787.8
|
|
$
|
1,696.9
|
|
11
|
%
|
5
|
%
|
Foreign Exchange Trading Income
|
197.9
|
|
224.4
|
|
249.4
|
|
(12
|
)
|
(10
|
)
|
|||
Other Noninterest Income
|
176.1
|
|
147.0
|
|
170.5
|
|
20
|
|
(14
|
)
|
|||
Net Interest Income (Note)
|
733.8
|
|
565.0
|
|
414.4
|
|
30
|
|
36
|
|
|||
|
|
|
|
|
|
||||||||
Revenue (Note)
|
3,092.4
|
|
2,724.2
|
|
2,531.2
|
|
14
|
|
8
|
|
|||
Provision for Credit Losses
|
3.4
|
|
1.9
|
|
(22.6
|
)
|
79
|
|
N/M
|
|
|||
Noninterest Expense
|
2,194.5
|
|
2,012.2
|
|
1,856.4
|
|
9
|
|
8
|
|
|||
|
|
|
|
|
|
||||||||
Income before Income Taxes (Note)
|
894.5
|
|
710.1
|
|
697.4
|
|
26
|
|
2
|
|
|||
Provision for Income Taxes (Note)
|
279.5
|
|
212.9
|
|
212.8
|
|
31
|
|
—
|
|
|||
|
|
|
|
|
|
||||||||
Net Income
|
$
|
615.0
|
|
$
|
497.2
|
|
$
|
484.6
|
|
24
|
%
|
3
|
%
|
|
|
|
|
|
|
||||||||
Percentage of Consolidated Net Income
|
51
|
%
|
48
|
%
|
50
|
%
|
|
|
|||||
Average Assets
|
$
|
80,105.6
|
|
$
|
76,194.7
|
|
$
|
73,598.4
|
|
5
|
%
|
4
|
%
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
45
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Millions)
|
2017
|
|
2016
|
|
2015
|
|
2017 / 2016
|
|
2016 / 2015
|
|
|||
Custody and Fund Administration
|
$
|
1,342.1
|
|
$
|
1,182.2
|
|
$
|
1,150.8
|
|
14
|
%
|
3
|
%
|
Investment Management
|
403.5
|
|
371.8
|
|
325.2
|
|
9
|
|
14
|
|
|||
Securities Lending
|
96.4
|
|
97.7
|
|
90.5
|
|
(1
|
)
|
8
|
|
|||
Other
|
142.6
|
|
136.1
|
|
130.4
|
|
5
|
|
4
|
|
|||
|
|
|
|
|
|
||||||||
Total Trust, Investment and Other Servicing Fees
|
$
|
1,984.6
|
|
$
|
1,787.8
|
|
$
|
1,696.9
|
|
11
|
%
|
5
|
%
|
n
|
|
68% Custody and Fund Administration
|
|
|
|
n
|
|
20% Investment Management
|
|
|
|
n
|
|
7% Other Services
|
|
|
|
n
|
|
5% Securities Lending
|
|
|
|
|
|
|
46
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Billions)
|
2017
|
|
2016
|
|
2015
|
|
2017 / 2016
|
|
2016 / 2015
|
|
|||
North America
|
$
|
3,972.1
|
|
$
|
3,334.5
|
|
$
|
2,999.0
|
|
19
|
%
|
11
|
%
|
Europe, Middle East, and Africa
|
2,602.4
|
|
2,152.2
|
|
1,971.1
|
|
21
|
|
9
|
|
|||
Asia Pacific
|
697.1
|
|
578.4
|
|
492.0
|
|
21
|
|
18
|
|
|||
Securities Lending
|
167.5
|
|
111.8
|
|
103.7
|
|
50
|
|
8
|
|
|||
|
|
|
|
|
|
||||||||
Total Assets Under Custody
|
$
|
7,439.1
|
|
$
|
6,176.9
|
|
$
|
5,565.8
|
|
20
|
%
|
11
|
%
|
n
|
|
54% North America
|
|
|
|
n
|
|
35% Europe, Middle East, and Africa
|
|
|
|
n
|
|
9% Asia Pacific
|
|
|
|
n
|
|
2% Securities Lending
|
|
|
|
|
DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Billions)
|
2017
|
|
2016
|
|
2015
|
|
2017 / 2016
|
|
2016 / 2015
|
|
|||
North America
|
$
|
533.5
|
|
$
|
450.2
|
|
$
|
410.4
|
|
19
|
%
|
10
|
%
|
Europe, Middle East, and Africa
|
127.3
|
|
98.8
|
|
102.0
|
|
29
|
|
(3
|
)
|
|||
Asia Pacific
|
42.9
|
|
33.2
|
|
31.9
|
|
29
|
|
4
|
|
|||
Securities Lending
|
167.5
|
|
111.8
|
|
103.7
|
|
50
|
|
8
|
|
|||
|
|
|
|
|
|
||||||||
Total Assets Under Management
|
$
|
871.2
|
|
$
|
694.0
|
|
$
|
648.0
|
|
26
|
%
|
7
|
%
|
n
|
|
61% North America
|
|
|
|
n
|
|
15% Europe, Middle East, and Africa
|
|
|
|
n
|
|
5% Asia Pacific
|
|
|
|
n
|
|
19% Securities Lending
|
|
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
47
|
n
|
|
51% Equities
|
|
|
|
n
|
|
13% Fixed Income Securities
|
|
|
|
n
|
|
17% Cash and Other Assets
|
|
|
|
n
|
|
19% Securities Lending
|
|
|
|
|
|
|
48
2017 Annual Report | Northern Trust Corporation
|
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Millions)
|
2017
|
|
2016
|
|
2015
|
|
2017 / 2016
|
|
2016 / 2015
|
|
|||
Noninterest Income
|
|
|
|
|
|
||||||||
Trust, Investment and Other Servicing Fees
|
$
|
1,449.7
|
|
$
|
1,320.3
|
|
$
|
1,283.6
|
|
10
|
%
|
3
|
%
|
Foreign Exchange Trading Income
|
3.1
|
|
8.6
|
|
12.4
|
|
(64
|
)
|
(32
|
)
|
|||
Other Noninterest Income
|
103.9
|
|
105.7
|
|
111.8
|
|
(2
|
)
|
(6
|
)
|
|||
Net Interest Income (Note)
|
736.2
|
|
651.4
|
|
568.1
|
|
13
|
|
15
|
|
|||
Revenue (Note)
|
2,292.9
|
|
2,086.0
|
|
1,975.9
|
|
10
|
|
6
|
|
|||
Provision for Credit Losses
|
(31.4
|
)
|
(27.9
|
)
|
(20.4
|
)
|
13
|
|
38
|
|
|||
Noninterest Expense
|
1,405.3
|
|
1,315.3
|
|
1,291.9
|
|
7
|
|
2
|
|
|||
Income before Income Taxes (Note)
|
919.0
|
|
798.6
|
|
704.4
|
|
15
|
|
13
|
|
|||
Provision for Income Taxes (Note)
|
347.2
|
|
301.1
|
|
264.7
|
|
15
|
|
14
|
|
|||
Net Income
|
$
|
571.8
|
|
$
|
497.5
|
|
$
|
439.7
|
|
15
|
%
|
13
|
%
|
Percentage of Consolidated Net Income
|
48
|
%
|
48
|
%
|
45
|
%
|
|
|
|
|
|||
Average Assets
|
$
|
26,599.9
|
|
$
|
26,525.0
|
|
$
|
25,048.7
|
|
—
|
%
|
6
|
%
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
49
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Millions)
|
2017
|
|
2016
|
|
2015
|
|
2017 / 2016
|
|
2016 / 2015
|
|
|||
Central
|
$
|
575.5
|
|
$
|
523.8
|
|
$
|
514.3
|
|
10
|
%
|
2
|
%
|
East
|
356.2
|
|
334.4
|
|
332.7
|
|
7
|
|
1
|
|
|||
West
|
291.7
|
|
268.9
|
|
267.7
|
|
8
|
|
—
|
|
|||
Global Family Office
|
226.3
|
|
193.2
|
|
168.9
|
|
17
|
|
14
|
|
|||
Total Trust, Investment and Other Servicing Fees
|
$
|
1,449.7
|
|
$
|
1,320.3
|
|
$
|
1,283.6
|
|
10
|
%
|
3
|
%
|
n
|
|
40% Central
|
|
|
|
n
|
|
24% East
|
|
|
|
n
|
|
20% West
|
|
|
|
n
|
|
16% Global Family Office
|
|
|
|
|
DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Billions)
|
2017
|
|
2016
|
|
2015
|
|
2017 / 2016
|
|
2016 / 2015
|
|
|||
Global Family Office
|
$
|
422.9
|
|
$
|
347.7
|
|
$
|
321.4
|
|
22
|
%
|
8
|
%
|
Central
|
94.8
|
|
83.8
|
|
79.5
|
|
13
|
|
5
|
|
|||
East
|
70.5
|
|
61.7
|
|
58.5
|
|
14
|
|
6
|
|
|||
West
|
57.3
|
|
50.4
|
|
46.9
|
|
14
|
|
7
|
|
|||
Total Assets Under Custody
|
$
|
645.5
|
|
$
|
543.6
|
|
$
|
506.3
|
|
19
|
%
|
7
|
%
|
n
|
|
65% Global Family Office
|
|
|
|
n
|
|
15% Central
|
|
|
|
n
|
|
11% East
|
|
|
|
n
|
|
9% West
|
|
|
|
|
|
|
50
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Billions)
|
2017
|
|
2016
|
|
2015
|
|
2017 / 2016
|
|
2016 / 2015
|
|
|||
Central
|
$
|
102.1
|
|
$
|
89.7
|
|
$
|
81.8
|
|
14
|
%
|
10
|
%
|
Global Family Office
|
87.1
|
|
69.3
|
|
61.9
|
|
26
|
|
12
|
|
|||
East
|
57.0
|
|
50.9
|
|
47.4
|
|
12
|
|
7
|
|
|||
West
|
43.6
|
|
38.5
|
|
36.2
|
|
13
|
|
6
|
|
|||
Total Assets Under Management
|
$
|
289.8
|
|
$
|
248.4
|
|
$
|
227.3
|
|
17
|
%
|
9
|
%
|
n
|
|
35% Central
|
|
|
|
n
|
|
30% Global Family Office
|
|
|
|
n
|
|
20% East
|
|
|
|
n
|
|
15% West
|
|
|
|
n
|
|
51% Equities
|
|
|
|
n
|
|
25% Fixed Income Securities
|
|
|
|
n
|
|
24% Cash and Other Assets
|
|
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
51
|
|
|
|
52
2017 Annual Report | Northern Trust Corporation
|
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Millions)
|
2017
|
|
2016
|
|
2015
|
|
2017 / 2016
|
|
2016 / 2015
|
|
|||
Noninterest Income
|
$
|
30.8
|
|
$
|
133.1
|
|
$
|
107.9
|
|
(77
|
)%
|
23
|
%
|
Net Interest Income (Note)
|
5.0
|
|
43.6
|
|
112.9
|
|
(89
|
)
|
(61
|
)
|
|||
Revenue (Note)
|
35.8
|
|
176.7
|
|
220.8
|
|
(80
|
)
|
(20
|
)
|
|||
Noninterest Expense
|
169.6
|
|
143.2
|
|
132.3
|
|
18
|
|
8
|
|
|||
Income (Loss) before Income Taxes (Note)
|
(133.8
|
)
|
33.5
|
|
88.5
|
|
N/M
|
|
(62
|
)
|
|||
Provision (Benefit) for Income Taxes (Note)
|
(146.0
|
)
|
(4.3
|
)
|
39.0
|
|
N/M
|
|
N/M
|
|
|||
Net Income
|
$
|
12.2
|
|
$
|
37.8
|
|
$
|
49.5
|
|
(68
|
)%
|
(24
|
)%
|
Percentage of Consolidated Net Income
|
1
|
%
|
4
|
%
|
5
|
%
|
|
|
|
|
|||
Average Assets
|
$
|
12,901.9
|
|
$
|
12,850.6
|
|
$
|
12,068.0
|
|
—
|
%
|
6
|
%
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
53
|
|
DECEMBER 31,
|
CHANGE
|
|||||||||||
($ In Billions)
|
2017
|
|
2016
|
|
2015
|
|
2017 / 2016
|
|
2016 / 2015
|
|
|||
Equities
|
$
|
592.3
|
|
$
|
480.6
|
|
$
|
446.6
|
|
23
|
%
|
8
|
%
|
Fixed Income Securities
|
183.5
|
|
160.5
|
|
147.1
|
|
14
|
|
9
|
|
|||
Cash and Other Assets
|
217.5
|
|
189.3
|
|
177.7
|
|
15
|
|
7
|
|
|||
Securities Lending Collateral
|
167.7
|
|
112.0
|
|
103.9
|
|
50
|
|
8
|
|
|||
Total Assets Under Management
|
$
|
1,161.0
|
|
$
|
942.4
|
|
$
|
875.3
|
|
23
|
%
|
8
|
%
|
($ In Billions)
|
2017
|
|
2016
|
|
2015
|
|
||||
Balance as of January 1,
|
$
|
942.4
|
|
$
|
875.3
|
|
$
|
934.1
|
|
|
Inflows by Investment Type
|
|
|
|
|||||||
|
Equity
|
192.1
|
|
136.0
|
|
116.2
|
|
|||
|
Fixed Income
|
68.1
|
|
59.3
|
|
41.7
|
|
|||
|
Cash & Other Assets
|
407.9
|
|
383.4
|
|
281.0
|
|
|||
|
Securities Lending Collateral
|
132.4
|
|
93.8
|
|
28.8
|
|
|||
|
|
|
|
|
||||||
Total Inflows
|
800.5
|
|
672.5
|
|
467.7
|
|
||||
|
|
|
|
|
||||||
Outflows by Investment Type
|
|
|
|
|||||||
|
Equity
|
(185.7
|
)
|
(136.1
|
)
|
(143.0
|
)
|
|||
|
Fixed Income
|
(57.2
|
)
|
(48.0
|
)
|
(54.6
|
)
|
|||
|
Cash & Other Assets
|
(384.0
|
)
|
(363.6
|
)
|
(273.3
|
)
|
|||
|
Securities Lending Collateral
|
(76.7
|
)
|
(85.7
|
)
|
(41.2
|
)
|
|||
|
|
|
|
|
||||||
Total Outflows
|
(703.6
|
)
|
(633.4
|
)
|
(512.1
|
)
|
||||
|
|
|
|
|
||||||
Net Inflows
|
96.9
|
|
39.1
|
|
(44.4
|
)
|
||||
|
|
|
|
|
||||||
Market Performance, Currency & Other
|
|
|
|
|||||||
|
Market Performance & Other
|
111.6
|
|
32.0
|
|
—
|
|
|||
|
Currency
|
10.1
|
|
(4.0
|
)
|
—
|
|
|||
Total Market Performance, Currency & Other
|
121.7
|
|
28.0
|
|
(14.4
|
)
|
||||
|
|
|
|
|
||||||
Balance as of December 31,
|
$
|
1,161.0
|
|
$
|
942.4
|
|
$
|
875.3
|
|
|
|
|
54
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
||||||||
($ In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Securities Held to Maturity
|
|
|
|
||||||
U.S. Government
|
$
|
35.0
|
|
$
|
15.0
|
|
$
|
26.0
|
|
Obligations of States and Political Subdivisions
|
34.6
|
|
63.6
|
|
89.2
|
|
|||
Government Sponsored Agency
|
5.8
|
|
7.4
|
|
9.9
|
|
|||
Other
|
12,973.6
|
|
8,835.1
|
|
5,123.2
|
|
|||
Total Securities Held to Maturity
|
$
|
13,049.0
|
|
$
|
8,921.1
|
|
$
|
5,248.3
|
|
Securities Available for Sale
|
|
|
|
||||||
U.S. Government
|
$
|
5,700.3
|
|
$
|
7,522.6
|
|
$
|
6,178.3
|
|
Obligations of States and Political Subdivisions
|
746.4
|
|
885.2
|
|
36.4
|
|
|||
Government Sponsored Agency
|
18,676.6
|
|
17,892.8
|
|
16,366.8
|
|
|||
Asset-Backed
|
2,726.4
|
|
2,556.7
|
|
2,500.1
|
|
|||
Auction Rate
|
4.3
|
|
4.7
|
|
17.1
|
|
|||
Other
|
5,888.1
|
|
6,717.8
|
|
7,219.2
|
|
|||
Total Securities Available for Sale
|
$
|
33,742.1
|
|
$
|
35,579.8
|
|
$
|
32,317.9
|
|
Trading Account
|
$
|
0.5
|
|
$
|
0.3
|
|
$
|
1.2
|
|
Total Securities at Year-End
|
$
|
46,791.6
|
|
$
|
44,501.2
|
|
$
|
37,567.4
|
|
Average Total Securities
|
$
|
44,715.7
|
|
$
|
42,041.3
|
|
$
|
37,407.9
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
55
|
|
DECEMBER 31,
|
||||||||||||||
($ In Millions)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
|||||
Commercial
|
|
|
|
|
|
||||||||||
Commercial and Institutional
|
$
|
9,042.2
|
|
$
|
9,287.4
|
|
$
|
9,307.5
|
|
$
|
8,343.7
|
|
$
|
7,341.6
|
|
Commercial Real Estate
|
3,482.7
|
|
4,002.5
|
|
3,848.8
|
|
3,333.3
|
|
2,955.8
|
|
|||||
Non-U.S.
|
1,538.5
|
|
1,877.8
|
|
1,137.7
|
|
1,530.6
|
|
954.7
|
|
|||||
Lease Financing, net
|
229.2
|
|
293.9
|
|
544.4
|
|
916.3
|
|
975.1
|
|
|||||
Other
|
265.4
|
|
205.1
|
|
194.1
|
|
191.5
|
|
358.6
|
|
|||||
Total Commercial
|
$
|
14,558.0
|
|
$
|
15,666.7
|
|
$
|
15,032.5
|
|
$
|
14,315.4
|
|
$
|
12,585.8
|
|
Personal
|
|
|
|
|
|
||||||||||
Private Client
|
$
|
10,753.1
|
|
$
|
10,052.0
|
|
$
|
9,136.4
|
|
$
|
7,466.9
|
|
$
|
6,445.6
|
|
Residential Real Estate
|
7,247.6
|
|
8,077.5
|
|
8,974.7
|
|
9,820.8
|
|
10,305.5
|
|
|||||
Other
|
33.5
|
|
25.9
|
|
37.3
|
|
37.1
|
|
48.6
|
|
|||||
Total Personal
|
$
|
18,034.2
|
|
$
|
18,155.4
|
|
$
|
18,148.4
|
|
$
|
17,324.8
|
|
$
|
16,799.7
|
|
Total Loans and Leases
|
$
|
32,592.2
|
|
$
|
33,822.1
|
|
$
|
33,180.9
|
|
$
|
31,640.2
|
|
$
|
29,385.5
|
|
|
|
|
56
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
|||||
($ In Millions)
|
2017
|
|
2016
|
|
||
Commercial Mortgages:
|
|
|
||||
Office
|
$
|
825.2
|
|
$
|
866.1
|
|
Apartment/Multi-family
|
623.3
|
|
784.8
|
|
||
Retail
|
631.1
|
|
698.1
|
|
||
Industrial / Warehouse
|
311.1
|
|
359.7
|
|
||
Other
|
445.6
|
|
457.6
|
|
||
Total Commercial Mortgages
|
2,836.3
|
|
3,166.3
|
|
||
Construction, Acquisition and Development Loans
|
350.8
|
|
445.0
|
|
||
Single Family Investment
|
164.8
|
|
179.6
|
|
||
Other Commercial Real Estate Related
|
130.8
|
|
211.6
|
|
||
Total Commercial Real Estate Loans
|
$
|
3,482.7
|
|
$
|
4,002.5
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
57
|
|
DECEMBER 31,
|
||||||||||||||
($ In Millions)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
|||||
Nonperforming Loans and Leases
|
|
|
|
|
|
||||||||||
Commercial
|
|
|
|
|
|
||||||||||
Commercial and Institutional
|
$
|
26.0
|
|
$
|
9.2
|
|
$
|
18.1
|
|
$
|
15.0
|
|
$
|
23.1
|
|
Commercial Real Estate
|
8.3
|
|
11.6
|
|
16.7
|
|
37.1
|
|
49.2
|
|
|||||
Total Commercial
|
34.3
|
|
20.8
|
|
34.8
|
|
52.1
|
|
72.3
|
|
|||||
Personal
|
|
|
|
|
|
||||||||||
Residential Real Estate
|
$
|
116.4
|
|
$
|
139.1
|
|
$
|
144.9
|
|
$
|
162.4
|
|
$
|
189.1
|
|
Private Client
|
—
|
|
0.3
|
|
0.4
|
|
1.2
|
|
1.4
|
|
|||||
Total Personal
|
116.4
|
|
139.4
|
|
145.3
|
|
163.6
|
|
190.5
|
|
|||||
Total Nonperforming Loans and Leases
|
150.7
|
|
160.2
|
|
180.1
|
|
215.7
|
|
262.8
|
|
|||||
Other Real Estate Owned
|
4.6
|
|
5.2
|
|
8.2
|
|
16.6
|
|
11.9
|
|
|||||
Total Nonperforming Assets
|
$
|
155.3
|
|
$
|
165.4
|
|
$
|
188.3
|
|
$
|
232.3
|
|
$
|
274.7
|
|
90 Day Past Due Loans Still Accruing
|
$
|
8.0
|
|
$
|
31.0
|
|
$
|
7.1
|
|
$
|
22.7
|
|
$
|
16.4
|
|
Nonperforming Loans and Leases to Total Loans and Leases
|
0.46
|
%
|
0.47
|
%
|
0.54
|
%
|
0.68
|
%
|
0.89
|
%
|
|||||
Allowance for Credit Losses Assigned to Loans and Leases to Nonperforming Loans and Leases
|
0.9
|
x
|
1.0
|
x
|
1.1
|
x
|
1.2
|
x
|
1.1
|
x
|
($ In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Balance at January 1
|
$
|
192.0
|
|
$
|
233.3
|
|
$
|
295.9
|
|
Charge-Offs
|
(21.5
|
)
|
(27.3
|
)
|
(30.7
|
)
|
|||
Recoveries
|
11.3
|
|
12.1
|
|
11.2
|
|
|||
Net Charge-Offs
|
(10.2
|
)
|
(15.2
|
)
|
(19.5
|
)
|
|||
Provision for Credit Losses
|
(28.0
|
)
|
(26.0
|
)
|
(43.0
|
)
|
|||
Effects of Foreign Exchange Rates
|
—
|
|
(0.1
|
)
|
(0.1
|
)
|
|||
Balance at December 31
|
$
|
153.8
|
|
$
|
192.0
|
|
$
|
233.3
|
|
|
|
|
58
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
||||||||||||||||||||||||
|
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||||||||||||
($ In Millions)
|
ALLOWANCE
AMOUNT
|
|
PERCENT
OF
LOANS
TO
TOTAL
LOANS
|
|
ALLOWANCE
AMOUNT
|
|
PERCENT
OF
LOANS
TO
TOTAL
LOANS
|
|
ALLOWANCE
AMOUNT
|
|
PERCENT
OF
LOANS
TO
TOTAL
LOANS
|
|
ALLOWANCE
AMOUNT
|
|
PERCENT
OF
LOANS
TO
TOTAL
LOANS
|
|
ALLOWANCE
AMOUNT
|
|
PERCENT
OF
LOANS
TO
TOTAL
LOANS
|
|
|||||
Specific Allowance
|
$
|
5.4
|
|
—
|
%
|
$
|
2.1
|
|
—
|
%
|
$
|
3.1
|
|
—
|
%
|
$
|
21.1
|
|
—
|
%
|
$
|
24.9
|
|
—
|
%
|
Allocated Inherent Allowance
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Commercial
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Commercial and Institutional
|
34.7
|
|
27
|
|
34.7
|
|
27
|
|
40.4
|
|
28
|
|
73.0
|
|
26
|
|
67.5
|
|
25
|
|
|||||
Commercial Real Estate
|
43.3
|
|
11
|
|
69.2
|
|
12
|
|
69.5
|
|
12
|
|
69.4
|
|
10
|
|
71.5
|
|
10
|
|
|||||
Lease Financing, net
|
0.2
|
|
1
|
|
0.4
|
|
1
|
|
1.9
|
|
2
|
|
3.6
|
|
3
|
|
4.2
|
|
3
|
|
|||||
Non-U.S.
|
—
|
|
5
|
|
—
|
|
5
|
|
—
|
|
3
|
|
3.3
|
|
5
|
|
2.1
|
|
3
|
|
|||||
Other
|
1.5
|
|
1
|
|
0.6
|
|
1
|
|
—
|
|
1
|
|
—
|
|
1
|
|
—
|
|
2
|
|
|||||
Total Commercial
|
79.7
|
|
45
|
|
104.9
|
|
46
|
|
111.8
|
|
46
|
|
149.3
|
|
45
|
|
145.3
|
|
43
|
|
|||||
Personal
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Residential Real Estate
|
57.3
|
|
22
|
|
69.0
|
|
24
|
|
96.2
|
|
27
|
|
107.7
|
|
31
|
|
118.7
|
|
35
|
|
|||||
Private Client
|
9.5
|
|
33
|
|
13.8
|
|
30
|
|
19.7
|
|
27
|
|
17.8
|
|
24
|
|
19.0
|
|
22
|
|
|||||
Other
|
1.9
|
|
—
|
|
2.2
|
|
—
|
|
2.5
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Total Personal
|
68.7
|
|
55
|
|
85.0
|
|
54
|
|
118.4
|
|
54
|
|
125.5
|
|
55
|
|
137.7
|
|
57
|
|
|||||
Total Allocated Inherent Allowance
|
$
|
148.4
|
|
100
|
%
|
$
|
189.9
|
|
100
|
%
|
$
|
230.2
|
|
100
|
%
|
$
|
274.8
|
|
100
|
%
|
$
|
283.0
|
|
100
|
%
|
Total Allowance for Credit Losses
|
$
|
153.8
|
|
100
|
%
|
$
|
192.0
|
|
100
|
%
|
$
|
233.3
|
|
100
|
%
|
$
|
295.9
|
|
100
|
%
|
$
|
307.9
|
|
100
|
%
|
Allowance Assigned to:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Loans and Leases
|
$
|
131.2
|
|
|
$
|
161.0
|
|
|
$
|
193.8
|
|
|
$
|
267.0
|
|
|
$
|
278.1
|
|
|
|||||
Undrawn Commitments and Standby Letters of Credit
|
22.6
|
|
|
31.0
|
|
|
39.5
|
|
|
28.9
|
|
|
29.8
|
|
|
||||||||||
Total Allowance for Credit Losses
|
$
|
153.8
|
|
|
$
|
192.0
|
|
|
$
|
233.3
|
|
|
$
|
295.9
|
|
|
$
|
307.9
|
|
|
|||||
Allowance Assigned to Loans and Leases to Total Loans and Leases
|
0.40
|
%
|
|
0.48
|
%
|
|
0.58
|
%
|
|
0.84
|
%
|
|
0.95
|
%
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
59
|
|
|
|
60
2017 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
61
|
•
|
Discount Rate:
Northern Trust estimates the discount rate for its U.S. pension plans by applying the projected cash flows for future benefit payments to the Aon Hewitt AA Above Median yield curve as of the measurement date. This yield curve is composed of individual zero-coupon interest rates for 198 different time periods over a 99-year time horizon. Zero-coupon rates utilized by the yield curve are mathematically derived from observable market yields for AA-rated corporate bonds. This yield curve model referenced by Northern Trust in establishing the discount rate resulted in a rate of
3.79%
at
December 31, 2017
for the Qualified and Nonqualified plans, a decrease from
4.46%
at
December 31, 2016
.
|
•
|
Compensation Level:
Based on a review of actual and anticipated salary experience, the compensation scale assumption is based on a graded schedule from
9.00%
to
2.50%
that averages
4.39%
.
|
•
|
Rate of Return on Plan Assets:
The expected return on plan assets is based on an estimate of the long-term (30 years) rate of return on plan assets, which is determined using a building block approach that considers the current asset mix and estimates of return by asset class based on historical experience, giving proper consideration to diversification and rebalancing. Current market factors such as inflation and interest rates are also evaluated before long-term capital market assumptions are determined. Peer data and historical returns are reviewed to check for reasonability and appropriateness. As a result of these analyses, Northern Trust’s rate of return assumption for the Qualified Plan decreased from 6.75% for
2017
to 6.00% for
2018
.
|
•
|
Mortality Table:
Northern Trust uses the aggregate RP-2014 mortality table with adjustment from 2014 to 2006. Northern Trust’s pension obligations reflect proposed future improvement under scale MP-2017, released by the Society of Actuaries in October 2017. This assumption was updated at
December 31, 2017
from improvement scale MP-2016. The updated improvement scale applies to annuity payments only and results in generally lower projected mortality improvements than estimated by the MP-2016 improvement scale. Mortality assumptions on lump sum payments remain static and continue to be in line with the IRS prescribed table for minimum lump sums in 2018. The IRS prescribed table for 2018 now reflects the aggregate RP-2014 mortality table with adjustment from 2014 to 2006, and future improvements under scale MP-2016.
|
|
|
|
62
2017 Annual Report | Northern Trust Corporation
|
|
|
($ In Millions)
|
25 BASIS
POINT INCREASE
|
|
25 BASIS
POINT DECREASE
|
|
||
Increase (Decrease) in 2018 Pension Expense
|
|
|
||||
Discount Rate Change
|
$
|
(4.2
|
)
|
$
|
4.4
|
|
Compensation Level Change
|
1.8
|
|
(1.7
|
)
|
||
Rate of Return on Plan Assets Change
|
(3.7
|
)
|
3.7
|
|
||
Increase (Decrease) in 2017 Projected Benefit Obligation
|
|
|
||||
Discount Rate Change
|
(49.7
|
)
|
52.6
|
|
||
Compensation Level Change
|
6.7
|
|
(6.4
|
)
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
63
|
|
|
|
64
2017 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
65
|
|
DECEMBER 31,
|
|||||
($ In Millions)
|
2017
|
|
2016
|
|
||
Undrawn Commitments to Extend Credit
|
|
|
||||
One Year and Less
|
$
|
8,617.3
|
|
$
|
10,953.5
|
|
Over One Year
|
18,205.3
|
|
21,814.6
|
|
||
|
|
|
||||
Total
|
$
|
26,822.6
|
|
$
|
32,768.1
|
|
|
|
|
||||
Standby Letters of Credit
|
$
|
2,970.0
|
|
$
|
3,846.1
|
|
Commercial Letters of Credit
|
37.7
|
|
24.0
|
|
||
Custody Securities Lent with Indemnification
|
143,568.2
|
|
102,325.2
|
|
|
|
|
66
2017 Annual Report | Northern Trust Corporation
|
|
|
AS OF DECEMBER 31, 2017
|
COMMITMENT EXPIRATION
|
|||||||||||
($ In Millions)
|
TOTAL
COMMITMENTS
|
|
ONE YEAR
AND LESS
|
|
OVER ONE
YEAR
|
|
OUTSTANDING
LOANS
|
|
||||
Commercial
|
|
|
|
|
||||||||
Commercial and Institutional
|
|
|
|
|
||||||||
Finance and Insurance
|
$
|
3,384.4
|
|
$
|
1,609.0
|
|
$
|
1,775.4
|
|
$
|
1,056.2
|
|
Holding Companies
|
9.2
|
|
9.2
|
|
—
|
|
28.9
|
|
||||
Manufacturing
|
7,221.9
|
|
752.3
|
|
6,469.6
|
|
1,747.3
|
|
||||
Mining
|
707.5
|
|
187.1
|
|
520.4
|
|
54.4
|
|
||||
Public Administration
|
209.5
|
|
101.8
|
|
107.7
|
|
72.1
|
|
||||
Retail Trade
|
900.6
|
|
162.1
|
|
738.5
|
|
160.1
|
|
||||
Services
|
5,765.2
|
|
1,987.3
|
|
3,777.9
|
|
4,873.2
|
|
||||
Transportation and Warehousing
|
285.1
|
|
1.6
|
|
283.5
|
|
309.3
|
|
||||
Utilities
|
1,162.9
|
|
20.7
|
|
1,142.2
|
|
13.1
|
|
||||
Wholesale Trade
|
679.0
|
|
27.6
|
|
651.4
|
|
458.5
|
|
||||
Other Commercial
|
294.0
|
|
262.4
|
|
31.6
|
|
269.1
|
|
||||
|
|
|
|
|
||||||||
Commercial and Institutional (Note)
|
20,619.3
|
|
5,121.1
|
|
15,498.2
|
|
9,042.2
|
|
||||
Commercial Real Estate
|
312.5
|
|
49.3
|
|
263.2
|
|
3,482.7
|
|
||||
Lease Financing, net
|
—
|
|
—
|
|
—
|
|
229.2
|
|
||||
Non-U.S.
|
1,617.4
|
|
1,028.9
|
|
588.5
|
|
1,538.5
|
|
||||
Other
|
155.2
|
|
155.2
|
|
—
|
|
265.4
|
|
||||
|
|
|
|
|
||||||||
Total Commercial
|
22,704.4
|
|
6,354.5
|
|
16,349.9
|
|
14,558.0
|
|
||||
|
|
|
|
|
||||||||
Personal
|
|
|
|
|
||||||||
Residential Real Estate
|
1,008.3
|
|
237.7
|
|
770.6
|
|
7,247.6
|
|
||||
Private Client
|
3,090.3
|
|
2,005.5
|
|
1,084.8
|
|
10,753.1
|
|
||||
Other
|
19.6
|
|
19.6
|
|
—
|
|
33.5
|
|
||||
|
|
|
|
|
||||||||
Total Personal
|
4,118.2
|
|
2,262.8
|
|
1,855.4
|
|
18,034.2
|
|
||||
|
|
|
|
|
||||||||
Total
|
$
|
26,822.6
|
|
$
|
8,617.3
|
|
$
|
18,205.3
|
|
$
|
32,592.2
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
67
|
|
|
|
68
2017 Annual Report | Northern Trust Corporation
|
|
|
|
CREDIT RATING
|
||
|
STANDARD &
POOR’S
|
MOODY’S
|
FITCHRATINGS
|
Northern Trust Corporation:
|
|
|
|
Senior Debt
|
A+
|
A2
|
AA-
|
Subordinated Debt
|
A
|
A2
|
A+
|
Preferred Stock
|
BBB+
|
Baa1
|
BBB
|
Trust Preferred Capital Securities
|
BBB+
|
A3
|
BBB+
|
Outlook
|
Stable
|
Stable
|
Stable
|
The Northern Trust Company:
|
|
|
|
Short-Term Deposit
|
A-1+
|
P-1
|
F1+
|
Long-Term Deposit
|
AA-
|
Aa2
|
AA
|
Subordinated Debt
|
A+
|
A2
|
A+
|
Outlook
|
Stable
|
Stable
|
Stable
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
69
|
|
PAYMENT DUE BY PERIOD
|
||||||||||||||
($ In Millions)
|
TOTAL
|
|
ONE YEAR
AND LESS
|
|
1-3
YEARS
|
|
3-5 YEARS
|
|
OVER 5
YEARS
|
|
|||||
Senior Notes
(1)
|
$
|
1,497.3
|
|
$
|
—
|
|
$
|
499.6
|
|
$
|
997.7
|
|
$
|
—
|
|
Subordinated Debt
(1)
|
1,435.1
|
|
305.5
|
|
—
|
|
—
|
|
1,129.6
|
|
|||||
Floating Rate Capital Debt
(1)
|
277.5
|
|
—
|
|
—
|
|
—
|
|
277.5
|
|
|||||
Capital Lease Obligations
(2)
|
15.4
|
|
8.4
|
|
7.0
|
|
—
|
|
—
|
|
|||||
Operating Leases
(2)
|
787.8
|
|
95.9
|
|
188.2
|
|
143.2
|
|
360.5
|
|
|||||
Purchase Obligations
(3)
|
641.7
|
|
222.3
|
|
287.2
|
|
108.4
|
|
23.8
|
|
|||||
Federal Taxes on Mandatory Deemed Repatriation
(4)
|
150.0
|
|
12.0
|
|
24.0
|
|
24.0
|
|
90.0
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Contractual Obligations
|
$
|
4,804.8
|
|
$
|
644.1
|
|
$
|
1,006.0
|
|
$
|
1,273.3
|
|
$
|
1,881.4
|
|
|
|
|
70
2017 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
71
|
($ In Millions)
|
December 31, 2017
|
December 31, 2016
|
||||||||||
|
Advanced
Approach
|
Standardized
Approach
|
Advanced
Approach
|
Standardized
Approach |
||||||||
Common Equity Tier 1 Capital
|
|
|
|
|
||||||||
Common Stockholders’ Equity
|
$
|
9,334.2
|
|
$
|
9,334.2
|
|
$
|
8,888.4
|
|
$
|
8,888.4
|
|
Net Unrealized (Gains) Losses on Securities Available for Sale
|
15.0
|
|
15.0
|
|
12.9
|
|
12.9
|
|
||||
Net Unrealized (Gains) Losses on Cash Flow Hedges
|
(0.9
|
)
|
(0.9
|
)
|
(2.4
|
)
|
(2.4
|
)
|
||||
Goodwill and Other Intangible Assets, net of Deferred Tax Liability
|
(697.4
|
)
|
(697.4
|
)
|
(488.1
|
)
|
(488.1
|
)
|
||||
Pension and Other Postretirement Benefit Adjustments
|
68.4
|
|
68.4
|
|
130.1
|
|
130.1
|
|
||||
Other
|
(93.0
|
)
|
(93.0
|
)
|
(60.5
|
)
|
(60.5
|
)
|
||||
|
|
|
|
|
||||||||
Total Common Equity Tier 1
|
8,626.3
|
|
8,626.3
|
|
8,480.4
|
|
8,480.4
|
|
||||
Additional Tier 1 Capital
|
|
|
|
|
||||||||
Preferred Stock
|
882.0
|
|
882.0
|
|
882.0
|
|
882.0
|
|
||||
Other
|
(34.9
|
)
|
(34.9
|
)
|
(42.5
|
)
|
(42.5
|
)
|
||||
|
|
|
|
|
||||||||
Total Additional Tier 1 Capital
|
847.1
|
|
847.1
|
|
839.5
|
|
839.5
|
|
||||
|
|
|
|
|
||||||||
Total Tier 1 Capital
|
9,473.4
|
|
9,473.4
|
|
9,319.9
|
|
9,319.9
|
|
||||
Tier 2 Capital
|
|
|
|
|
||||||||
Qualifying Allowance for Credit Losses
|
—
|
|
153.8
|
|
—
|
|
191.9
|
|
||||
Qualifying Subordinated Debt
|
1,099.4
|
|
1,099.4
|
|
809.3
|
|
809.3
|
|
||||
Floating Rate Capital
|
134.6
|
|
134.6
|
|
161.5
|
|
161.5
|
|
||||
Other
|
—
|
|
—
|
|
(9.1
|
)
|
(7.6
|
)
|
||||
|
|
|
|
|
||||||||
Total Tier 2 Capital
|
1,234.0
|
|
1,387.8
|
|
961.7
|
|
1,155.1
|
|
||||
|
|
|
|
|
||||||||
Total Risk-Based Capital
|
$
|
10,707.4
|
|
$
|
10,861.2
|
|
$
|
10,281.6
|
|
$
|
10,475.0
|
|
Risk-Weighted Assets
(1)
|
$
|
64,018.7
|
|
$
|
68,616.4
|
|
$
|
68,257.6
|
|
$
|
72,020.9
|
|
Total Assets – End of Period (EOP)
|
138,590.5
|
|
138,590.5
|
|
123,926.9
|
|
123,926.9
|
|
||||
Adjusted Average Fourth Quarter Assets
(2)
|
121,517.1
|
|
121,517.1
|
|
116,958.0
|
|
116,958.0
|
|
||||
Total Loans and Leases – EOP
|
32,592.2
|
|
32,592.2
|
|
33,822.1
|
|
33,822.1
|
|
||||
Common Stockholders’ Equity to:
|
|
|
|
|
||||||||
Total Loans and Leases – EOP
|
28.64
|
%
|
28.64
|
%
|
26.28
|
%
|
26.28
|
%
|
||||
Total Assets – EOP
|
6.74
|
|
6.74
|
|
7.17
|
|
7.17
|
|
||||
Risk-Based Capital Ratios
|
|
|
|
|
||||||||
Common Equity Tier 1
|
13.5
|
%
|
12.6
|
%
|
12.4
|
%
|
11.8
|
%
|
||||
Tier 1
|
14.8
|
|
13.8
|
|
13.7
|
|
12.9
|
|
||||
Total (Tier 1 and Tier 2)
|
16.7
|
|
15.8
|
|
15.1
|
|
14.5
|
|
||||
Leverage
|
7.8
|
|
7.8
|
|
8.0
|
|
8.0
|
|
||||
Supplementary Leverage
(3)
|
6.8
|
|
N/A
|
|
6.8
|
|
N/A
|
|
|
|
|
72
2017 Annual Report | Northern Trust Corporation
|
|
|
Northern Trust Corporation Board of Directors
|
|||
Audit
Committee |
Business Risk
Committee |
Capital Governance
Committee |
Compensation and Benefit
Committee |
Global Enterprise Risk Committee (GERC)
|
|||||
Credit Risk Committee
|
Operational Risk
Committee |
Fiduciary Risk
Committee |
Compliance & Ethics
Oversight Committee |
Market & Liquidity Risk Committee
|
Model Risk Oversight Committee
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
73
|
|
|
|
74
2017 Annual Report | Northern Trust Corporation
|
|
|
•
|
not an originator of loan products to be sold into a secondary market or to be bundled into asset securitizations;
|
•
|
not an agent bank or syndicator of loans, where risk management is achieved post-close through the sale of participations; and
|
•
|
not a participant in leveraged financial transactions, such as project finance, private-equity-originated acquisition financing or hedge fund leveraging.
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
75
|
|
|
|
76
2017 Annual Report | Northern Trust Corporation
|
|
|
•
|
Loss Event Data Program
- a program that collects internal and external loss data for use in monitoring operational risk exposure, various business analyses and a Basel Advanced Management Approach (AMA) capital quantification.
|
•
|
Risk and Control Self-Assessment
- a structured risk management process used by Northern Trust’s businesses to analyze the risks that are present in their respective business environments, processes and activities and to assess the adequacy of associated internal controls.
|
•
|
Operational Risk Scenario Analysis
- a systematic process of obtaining expert opinions from business managers and risk management experts to derive reasoned assessments of the likelihood of occurrence and the potential loss impact of plausible high-severity operational losses.
|
•
|
Product and Process Risk Management Program
- a program used for evaluating and managing risks associated with the introduction of new and modified noncredit products and services, significant changes to operating processes, and related significant loss events.
|
•
|
Outsourcing Risk Management Program
- a program that provides processes for appropriate risk assessment, measurement, monitoring and management of outsourced technology and business process outsourcing.
|
•
|
Information Security and Technology Risk Management
- a program that communicates and implements compliance and risk management processes and controls to address information security, including cyber threats and technology risks to the organization.
|
•
|
Significant New Business Opportunity
- a program that assesses the resource requirements, impact on systems and controls, and other risk factors prior to taking on significant new business.
|
•
|
Business Continuity Management Program
- a program designed to minimize business impact and support the resumption of mission critical functions for clients following an incident.
|
•
|
Physical Security
- a program that provides for the safety of Northern Trust partners, clients, and visitors worldwide.
|
•
|
Insurance Management Program
- a program designed to reduce the monetary impact of certain operational loss events.
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
77
|
|
|
|
78
2017 Annual Report | Northern Trust Corporation
|
|
|
•
|
Regulatory Risk - risk arising from failure to comply with prudential and conduct of business or other regulatory requirements.
|
•
|
Financial Crime Risk - risk arising from financial crime (e.g., money laundering, sanctions violations, fraud, insider dealing, theft, etc.) in relation to the products, services, or accounts of the institution, its clients, or others associated with the same.
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
79
|
|
|
|
80
2017 Annual Report | Northern Trust Corporation
|
|
|
•
|
repricing, which arises from differences in the maturity and repricing terms of assets and liabilities;
|
•
|
yield curve, which arises from changes in the shape of the yield curve;
|
•
|
basis, which arises from imperfect correlation in the adjustment of the rates earned and paid on different financial instruments with otherwise similar repricing characteristics; and
|
•
|
behavioral characteristics embedded optionality, which arises from client or counterparty behavior in response to interest rate changes.
|
•
|
purchase of securities;
|
•
|
sale of securities that are classified as available for sale;
|
•
|
issuance of senior notes and subordinated notes;
|
•
|
collateralized borrowings from the Federal Home Loan Bank;
|
•
|
placing and taking Eurodollar time deposits; and
|
•
|
hedges with various types of derivative financial instruments.
|
•
|
the balance sheet size and mix remains constant over the simulation horizon with maturing assets and liabilities replaced with instruments with similar terms as those that are maturing, with the exception of certain nonmaturity deposits that are considered short-term in nature and therefore receive a more conservative interest-bearing treatment;
|
•
|
prepayments on mortgage loans and securities collateralized by mortgages are projected under each rate scenario using a third-party mortgage analytics system that incorporates market prepayment assumptions;
|
•
|
cash flows for structured securities are estimated using a third-party vendor in conjunction with the prepayments provided by the third-party mortgage analytics vendor;
|
•
|
nonmaturity deposit pricing and lives are projected based on Northern Trust’s actual historical patterns and management judgment, depending upon the availability of historical data and current pricing strategies/or judgment; and
|
•
|
new business rates are based on current spreads to market indices.
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
81
|
($ In Millions)
|
INCREASE/(DECREASE)
ESTIMATED IMPACT ON NEXT TWELVE MONTHS OF NET INTEREST INCOME |
|
|
INCREASE IN INTEREST RATES ABOVE MARKET IMPLIED FORWARD RATES
|
|
||
100 Basis Points
|
$
|
102
|
|
200 Basis Points
|
161
|
|
•
|
the present value of nonmaturity deposits are estimated using remaining lives, which are based on a combination of Northern Trust’s actual historical runoff patterns and management judgment - some balances are assumed to be core and have longer lives while other balances are assumed to be temporary and have comparatively shorter lives; and
|
•
|
the present values of most noninterest-related balances (such as receivables, equipment, and payables) are the same as their book values.
|
($ In Millions)
|
INCREASE/(DECREASE)
ESTIMATED IMPACT ON MARKET VALUE OF EQUITY |
|
|
INCREASE IN INTEREST RATES ABOVE MARKET IMPLIED FORWARD RATES
|
|
||
100 Basis Points
|
$
|
383
|
|
200 Basis Points
|
258
|
|
|
|
|
82
2017 Annual Report | Northern Trust Corporation
|
|
|
($ In Millions)
|
TOTAL VaR
(SPOT AND FORWARD)
|
FOREIGN EXCHANGE
SPOT VaR
|
FOREIGN EXCHANGE
FORWARD VaR
|
|||||||||||||||
As of December 31
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||
High
|
$
|
1.0
|
|
$
|
0.9
|
|
$
|
0.4
|
|
$
|
0.3
|
|
$
|
1.0
|
|
$
|
0.9
|
|
Low
|
0.1
|
|
0.2
|
|
—
|
|
—
|
|
0.1
|
|
0.2
|
|
||||||
Average
|
0.5
|
|
0.5
|
|
0.1
|
|
0.1
|
|
0.5
|
|
0.4
|
|
||||||
Year-End
|
0.3
|
|
0.3
|
|
—
|
|
0.2
|
|
0.3
|
|
0.3
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
83
|
•
|
Macroeconomic and geopolitical risk, which centers on events or themes that would have a significant, detrimental impact on financial markets, and by extension, financial services firms. Episodes of this kind would tend to have general, as opposed to idiosyncratic, consequences.
|
•
|
Business risk, which arises from change in the following areas:
|
•
|
Internal: situations within Northern Trust that threaten business continuity, profitability, or the achievement of strategic objectives
|
•
|
Secular: behavioral or technological change that affects clients and renders a Northern Trust process or service obsolete
|
•
|
Competitive: new products or shifts in the industry landscape that challenge Northern Trust’s performance
|
•
|
Regulatory: changes to prudential or fiscal policy that have an adverse impact on Northern Trust or its clients
|
•
|
Reputation risk, which is a residual risk which arises from negative perception on the part of clients, counterparties, stockholders, investors, debt holders, market analysts, regulators, staff, or other relevant parties that adversely affects Northern Trust’s ability to conduct its businesses or to access sources of funding.
|
|
|
|
84
2017 Annual Report | Northern Trust Corporation
|
|
|
•
|
financial market disruptions or economic recession, whether in the United States, Europe, the Middle East, Asia or other regions;
|
•
|
volatility or changes in financial markets, including debt and equity markets, that impact the value, liquidity, or credit ratings of financial assets in general, or financial assets held in particular investment funds or client portfolios, including those funds, portfolios, and other financial assets with respect to which Northern Trust has taken, or may in the future take, actions to provide asset value stability or additional liquidity;
|
•
|
the impact of equity markets on fee revenue;
|
•
|
the downgrade of U.S. government-issued and other securities;
|
•
|
changes in foreign exchange trading client volumes and volatility in foreign currency exchange rates, changes in the valuation of the U.S. dollar relative to other currencies in which Northern Trust records revenue or accrues expenses, and Northern Trust’s success in assessing and mitigating the risks arising from all such changes and volatility;
|
•
|
a decline in the value of securities held in Northern Trust’s investment portfolio, particularly asset-backed securities, the liquidity and pricing of which may be negatively impacted by periods of economic turmoil and financial market disruptions;
|
•
|
Northern Trust’s ability to address operating risks, including cyber-security or data security breach risks, human errors or omissions, pricing or valuation of securities, fraud, systems performance or defects, systems interruptions, and breakdowns in processes or internal controls;
|
•
|
Northern Trust's success in responding to and investing in changes and advancements in technology;
|
•
|
a significant downgrade of any of Northern Trust’s debt ratings;
|
•
|
the health and soundness of the financial institutions and other counterparties with which Northern Trust conducts business;
|
•
|
uncertainties inherent in the complex and subjective judgments required to assess credit risk and establish appropriate allowances therefor;
|
•
|
the pace and extent of continued globalization of investment activity and growth in worldwide financial assets;
|
•
|
changes in interest rates or in the monetary or other policies of various regulatory authorities or central banks;
|
•
|
changes in the legal, regulatory and enforcement framework and oversight applicable to financial institutions, including changes that may affect leverage limits and risk-based capital and liquidity requirements, require financial institutions to pay higher assessments, expose financial institutions to certain liabilities of their subsidiary depository institutions, or restrict or increase the regulation of certain activities carried on by financial institutions, including Northern Trust;
|
•
|
increased costs of compliance and other risks associated with changes in regulation, the current regulatory environment, and areas of increased regulatory emphasis and oversight in the United States and other countries, such as anti-money laundering, anti-bribery, and client privacy;
|
•
|
failure to address in the Corporation's resolution plan submitted in December 2017 the "shortcomings" jointly identified by the Federal Reserve Board and FDIC in the resolution plan submitted by the Corporation in December 2015;
|
•
|
failure to satisfy regulatory standards or to obtain regulatory approvals when required, including for the use and distribution of capital;
|
•
|
changes in tax laws, accounting requirements or interpretations and other legislation in the United States or other countries that could affect Northern Trust or its clients including the Tax Cuts and Jobs Act;
|
•
|
geopolitical risks and the risks of extraordinary events such as natural disasters, terrorist events and war, and the responses of the United States and other countries to those events;
|
•
|
the pending departure of the United Kingdom from the European Union, commonly referred to as “Brexit,” and any negative effects thereof on global economic conditions, global financial markets, and our business and results of operations;
|
•
|
changes in the nature and activities of Northern Trust’s competition;
|
•
|
Northern Trust’s success in maintaining existing business and continuing to generate new business in existing and targeted markets and its ability to deploy deposits in a profitable manner consistent with its liquidity requirements;
|
•
|
Northern Trust’s ability to address the complex needs of a global client base and manage compliance with legal, tax, regulatory and other requirements;
|
•
|
Northern Trust’s ability to maintain a product mix that achieves acceptable margins;
|
•
|
Northern Trust’s ability to continue to generate investment results that satisfy clients and to develop an array of investment products;
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
85
|
•
|
Northern Trust’s success in recruiting and retaining the necessary personnel to support business growth and expansion and maintain sufficient expertise to support increasingly complex products and services;
|
•
|
Northern Trust’s success in implementing its expense management initiatives, including its “Value for Spend” initiative;
|
•
|
uncertainties inherent in Northern Trust’s assumptions concerning its pension plan, including discount rates and expected contributions, returns and payouts;
|
•
|
Northern Trust’s success in continuing to enhance its risk management practices and controls and managing risks inherent in its businesses, including credit risk, operational risk, market and liquidity risk, fiduciary risk, compliance risk and strategic risk;
|
•
|
risks and uncertainties inherent in the litigation and regulatory process, including the possibility that losses may be in excess of Northern Trust’s recorded liability and estimated range of possible loss for litigation exposures;
|
•
|
risks associated with being a holding company, including Northern Trust’s dependence on dividends from its principal subsidiary;
|
•
|
the risk of damage to Northern Trust’s reputation which may undermine the confidence of clients, counterparties, rating agencies, and stockholders; and
|
•
|
other factors identified elsewhere in this Annual Report on Form 10-K, including those factors described in Item 1A, “Risk Factors,” and other filings with the SEC, all of which are available on Northern Trust’s website.
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||||||||||||||||||||
|
2017
|
2016
|
2015
|
||||||||||||||||||||||||
($ In Millions)
|
REPORTED
|
|
FTE ADJ.
|
|
FTE
|
|
REPORTED
|
|
FTE ADJ.
|
|
FTE
|
|
REPORTED
|
|
FTE ADJ.
|
|
FTE
|
|
|||||||||
Interest Income
|
$
|
1,769.4
|
|
$
|
45.8
|
|
$
|
1,815.2
|
|
$
|
1,416.9
|
|
$
|
25.1
|
|
$
|
1,442.0
|
|
$
|
1,224.0
|
|
$
|
25.3
|
|
$
|
1,249.3
|
|
Interest Expense
|
340.2
|
|
—
|
|
340.2
|
|
182.0
|
|
—
|
|
182.0
|
|
153.9
|
|
—
|
|
153.9
|
|
|||||||||
Net Interest Income
|
$
|
1,429.2
|
|
$
|
45.8
|
|
$
|
1,475.0
|
|
$
|
1,234.9
|
|
$
|
25.1
|
|
$
|
1,260.0
|
|
$
|
1,070.1
|
|
$
|
25.3
|
|
$
|
1,095.4
|
|
Net Interest Margin
|
1.29
|
%
|
|
1.33
|
%
|
1.15
|
%
|
|
1.18
|
%
|
1.05
|
%
|
|
1.07
|
%
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Total Revenue
|
$
|
5,375.3
|
|
$
|
45.8
|
|
$
|
5,421.1
|
|
$
|
4,961.8
|
|
$
|
25.1
|
|
$
|
4,986.9
|
|
$
|
4,702.6
|
|
$
|
25.3
|
|
$
|
4,727.9
|
|
|
|
|
86
2017 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
87
|
|
|
|
88
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
|||||
(In Millions Except Share Information)
|
2017
|
|
2016
|
|
||
ASSETS
|
|
|
||||
Cash and Due from Banks
|
$
|
4,518.1
|
|
$
|
5,332.0
|
|
Federal Reserve and Other Central Bank Deposits
|
40,479.1
|
|
26,674.2
|
|
||
Interest-Bearing Deposits with Banks
|
5,611.9
|
|
4,800.6
|
|
||
Federal Funds Sold and Securities Purchased under Agreements to Resell
|
1,324.3
|
|
1,974.3
|
|
||
Securities
|
|
|
||||
Available for Sale
|
33,742.1
|
|
35,579.8
|
|
||
Held to Maturity (Fair value of $13,010.9 and $8,905.1)
|
13,049.0
|
|
8,921.1
|
|
||
Trading Account
|
0.5
|
|
0.3
|
|
||
|
|
|
||||
Total Securities
|
46,791.6
|
|
44,501.2
|
|
||
|
|
|
||||
Loans and Leases
|
|
|
||||
Commercial
|
14,558.0
|
|
15,666.7
|
|
||
Personal
|
18,034.2
|
|
18,155.4
|
|
||
|
|
|
||||
Total Loans and Leases (Net of unearned income of $35.5 and $41.2)
|
32,592.2
|
|
33,822.1
|
|
||
|
|
|
||||
Allowance for Credit Losses Assigned to Loans and Leases
|
(131.2
|
)
|
(161.0
|
)
|
||
Buildings and Equipment
|
464.6
|
|
466.6
|
|
||
Client Security Settlement Receivables
|
1,647.0
|
|
1,043.7
|
|
||
Goodwill
|
605.6
|
|
519.4
|
|
||
Other Assets
|
4,687.3
|
|
4,953.8
|
|
||
|
|
|
||||
Total Assets
|
$
|
138,590.5
|
|
$
|
123,926.9
|
|
|
|
|
||||
LIABILITIES
|
|
|
||||
Deposits
|
|
|
||||
Demand and Other Noninterest-Bearing
|
$
|
18,712.2
|
|
$
|
22,190.4
|
|
Savings and Money Market
|
16,975.3
|
|
16,509.0
|
|
||
Savings Certificates and Other Time
|
1,152.3
|
|
1,331.7
|
|
||
Non U.S. Offices – Noninterest-Bearing
|
9,878.8
|
|
7,972.5
|
|
||
– Interest-Bearing
|
65,672.2
|
|
53,648.1
|
|
||
Total Deposits
|
112,390.8
|
|
101,651.7
|
|
||
Federal Funds Purchased
|
2,286.1
|
|
204.8
|
|
||
Securities Sold Under Agreements to Repurchase
|
834.0
|
|
473.7
|
|
||
Other Borrowings
|
6,051.1
|
|
5,109.5
|
|
||
Senior Notes
|
1,497.3
|
|
1,496.6
|
|
||
Long-Term Debt
|
1,449.5
|
|
1,330.9
|
|
||
Floating Rate Capital Debt
|
277.5
|
|
277.4
|
|
||
Other Liabilities
|
3,588.0
|
|
3,611.9
|
|
||
|
|
|
||||
Total Liabilities
|
128,374.3
|
|
114,156.5
|
|
||
|
|
|
||||
STOCKHOLDERS’ EQUITY
|
|
|
||||
Preferred Stock, No Par Value; Authorized 10,000,000 shares:
|
|
|
||||
Series C, outstanding shares of 16,000
|
388.5
|
|
388.5
|
|
||
Series D, outstanding shares of 5,000
|
493.5
|
|
493.5
|
|
||
Common Stock, $1.66 2/3 Par Value; Authorized 560,000,000 shares; Outstanding shares of 226,126,674 and 228,605,485
|
408.6
|
|
408.6
|
|
||
Additional Paid-In Capital
|
1,047.2
|
|
1,035.8
|
|
||
Retained Earnings
|
9,685.1
|
|
8,908.4
|
|
||
Accumulated Other Comprehensive Loss
|
(414.3
|
)
|
(370.0
|
)
|
||
Treasury Stock (19,044,850 and 16,566,039 shares, at cost)
|
(1,392.4
|
)
|
(1,094.4
|
)
|
||
|
|
|
||||
Total Stockholders' Equity
|
10,216.2
|
|
9,770.4
|
|
||
|
|
|
||||
Total Liabilities and Stockholders' Equity
|
$
|
138,590.5
|
|
$
|
123,926.9
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
89
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions Except Share Information)
|
2017
|
|
2016
|
|
2015
|
|
|||
Noninterest Income
|
|
|
|
||||||
Trust, Investment and Other Servicing Fees
|
$
|
3,434.3
|
|
$
|
3,108.1
|
|
$
|
2,980.5
|
|
Foreign Exchange Trading Income
|
209.9
|
|
236.6
|
|
261.8
|
|
|||
Treasury Management Fees
|
56.4
|
|
62.8
|
|
64.7
|
|
|||
Security Commissions and Trading Income
|
89.6
|
|
81.4
|
|
78.7
|
|
|||
Other Operating Income
|
157.5
|
|
241.2
|
|
247.1
|
|
|||
Investment Security Losses, net (Note)
|
(1.6
|
)
|
(3.2
|
)
|
(0.3
|
)
|
|||
Total Noninterest Income
|
3,946.1
|
|
3,726.9
|
|
3,632.5
|
|
|||
Net Interest Income
|
|
|
|
||||||
Interest Income
|
1,769.4
|
|
1,416.9
|
|
1,224.0
|
|
|||
Interest Expense
|
340.2
|
|
182.0
|
|
153.9
|
|
|||
Net Interest Income
|
1,429.2
|
|
1,234.9
|
|
1,070.1
|
|
|||
Provision for Credit Losses
|
(28.0
|
)
|
(26.0
|
)
|
(43.0
|
)
|
|||
Net Interest Income after Provision for Credit Losses
|
1,457.2
|
|
1,260.9
|
|
1,113.1
|
|
|||
Noninterest Expense
|
|
|
|
||||||
Compensation
|
1,733.7
|
|
1,541.1
|
|
1,443.3
|
|
|||
Employee Benefits
|
319.9
|
|
293.3
|
|
285.3
|
|
|||
Outside Services
|
668.4
|
|
627.1
|
|
595.7
|
|
|||
Equipment and Software
|
524.0
|
|
467.4
|
|
454.8
|
|
|||
Occupancy
|
191.8
|
|
177.4
|
|
173.5
|
|
|||
Other Operating Expense
|
331.6
|
|
364.4
|
|
328.0
|
|
|||
Total Noninterest Expense
|
3,769.4
|
|
3,470.7
|
|
3,280.6
|
|
|||
Income before Income Taxes
|
1,633.9
|
|
1,517.1
|
|
1,465.0
|
|
|||
Provision for Income Taxes
|
434.9
|
|
484.6
|
|
491.2
|
|
|||
NET INCOME
|
$
|
1,199.0
|
|
$
|
1,032.5
|
|
$
|
973.8
|
|
Preferred Stock Dividends
|
49.8
|
|
23.4
|
|
23.4
|
|
|||
Net Income Applicable to Common Stock
|
$
|
1,149.2
|
|
$
|
1,009.1
|
|
$
|
950.4
|
|
PER COMMON SHARE
|
|
|
|
||||||
Net Income – Basic
|
$
|
4.95
|
|
$
|
4.35
|
|
$
|
4.03
|
|
– Diluted
|
4.92
|
|
4.32
|
|
3.99
|
|
|||
Average Number of Common Shares Outstanding – Basic
|
228,257,664
|
|
227,580,584
|
|
232,279,849
|
|
|||
– Diluted
|
229,654,401
|
|
229,151,406
|
|
234,221,729
|
|
|||
|
|
|
|
||||||
Note: Changes in Other-Than-Temporary-Impairment (OTTI) Losses
|
$
|
(0.2
|
)
|
$
|
(3.7
|
)
|
$
|
—
|
|
Other Security Gains/(Losses), net
|
(1.4
|
)
|
0.5
|
|
(0.3
|
)
|
|||
Investment Security Losses, net
|
$
|
(1.6
|
)
|
$
|
(3.2
|
)
|
$
|
(0.3
|
)
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Net Income
|
$
|
1,199.0
|
|
$
|
1,032.5
|
|
$
|
973.8
|
|
Other Comprehensive Income (Loss) (Net of Tax and Reclassifications)
|
|
|
|
||||||
Net Unrealized (Losses) Gains on Securities Available for Sale
|
(42.4
|
)
|
(1.4
|
)
|
(58.6
|
)
|
|||
Net Unrealized Gains (Losses) on Cash Flow Hedges
|
(1.6
|
)
|
9.1
|
|
1.7
|
|
|||
Foreign Currency Translation Adjustments
|
16.7
|
|
(0.9
|
)
|
(15.9
|
)
|
|||
Pension and Other Postretirement Benefit Adjustments
|
(17.0
|
)
|
(4.1
|
)
|
19.8
|
|
|||
Other Comprehensive Income (Loss)
|
(44.3
|
)
|
2.7
|
|
(53.0
|
)
|
|||
Comprehensive Income
|
$
|
1,154.7
|
|
$
|
1,035.2
|
|
$
|
920.8
|
|
|
|
|
90
2017 Annual Report | Northern Trust Corporation
|
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
PREFERRED STOCK
|
|
|
|
||||||
Balance at January 1
|
$
|
882.0
|
|
$
|
388.5
|
|
$
|
388.5
|
|
Issuance of Preferred Stock, Series D
|
—
|
|
493.5
|
|
—
|
|
|||
|
|
|
|
||||||
Balance at December 31
|
882.0
|
|
882.0
|
|
388.5
|
|
|||
|
|
|
|
||||||
COMMON STOCK
|
|
|
|
||||||
Balance at January 1 and December 31
|
408.6
|
|
408.6
|
|
408.6
|
|
|||
|
|
|
|
||||||
ADDITIONAL PAID-IN CAPITAL
|
|
|
|
||||||
Balance at January 1
|
1,035.8
|
|
1,072.3
|
|
1,050.9
|
|
|||
Treasury Stock Transactions – Stock Options and Awards
|
(117.1
|
)
|
(116.6
|
)
|
(74.0
|
)
|
|||
Stock Options and Awards – Amortization
|
128.5
|
|
87.7
|
|
77.7
|
|
|||
Stock Options and Awards – Tax Benefits
|
—
|
|
(7.6
|
)
|
17.7
|
|
|||
|
|
|
|
||||||
Balance at December 31
|
1,047.2
|
|
1,035.8
|
|
1,072.3
|
|
|||
|
|
|
|
||||||
RETAINED EARNINGS
|
|
|
|
||||||
Balance at January 1
|
8,908.4
|
|
8,242.8
|
|
7,625.4
|
|
|||
Net Income
|
1,199.0
|
|
1,032.5
|
|
973.8
|
|
|||
Dividends Declared – Common Stock
|
(372.5
|
)
|
(343.5
|
)
|
(333.0
|
)
|
|||
Dividends Declared – Preferred Stock
|
(49.8
|
)
|
(23.4
|
)
|
(23.4
|
)
|
|||
|
|
|
|
||||||
Balance at December 31
|
9,685.1
|
|
8,908.4
|
|
8,242.8
|
|
|||
|
|
|
|
||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
|
|
|
|
||||||
Balance at January 1
|
(370.0
|
)
|
(372.7
|
)
|
(319.7
|
)
|
|||
Net Unrealized (Losses) Gains on Securities Available for Sale
|
(42.4
|
)
|
(1.4
|
)
|
(58.6
|
)
|
|||
Net Unrealized Gains (Losses) on Cash Flow Hedges
|
(1.6
|
)
|
9.1
|
|
1.7
|
|
|||
Foreign Currency Translation Adjustments
|
16.7
|
|
(0.9
|
)
|
(15.9
|
)
|
|||
Pension and Other Postretirement Benefit Adjustments
|
(17.0
|
)
|
(4.1
|
)
|
19.8
|
|
|||
|
|
|
|
||||||
Balance at December 31
|
(414.3
|
)
|
(370.0
|
)
|
(372.7
|
)
|
|||
|
|
|
|
||||||
TREASURY STOCK
|
|
|
|
||||||
Balance at January 1
|
(1,094.4
|
)
|
(1,033.6
|
)
|
(704.8
|
)
|
|||
Stock Options and Awards
|
225.1
|
|
350.3
|
|
168.1
|
|
|||
Stock Purchased
|
(523.1
|
)
|
(411.1
|
)
|
(496.9
|
)
|
|||
|
|
|
|
||||||
Balance at December 31
|
(1,392.4
|
)
|
(1,094.4
|
)
|
(1,033.6
|
)
|
|||
|
|
|
|
||||||
Total Stockholders’ Equity at December 31
|
$
|
10,216.2
|
|
$
|
9,770.4
|
|
$
|
8,705.9
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
91
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
||||||
Net Income
|
$
|
1,199.0
|
|
$
|
1,032.5
|
|
$
|
973.8
|
|
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
|
|
|
|
||||||
Investment Security Losses, net
|
1.6
|
|
3.2
|
|
0.3
|
|
|||
Amortization and Accretion of Securities and Unearned Income, net
|
105.0
|
|
100.9
|
|
53.3
|
|
|||
Provision for Credit Losses
|
(28.0
|
)
|
(26.0
|
)
|
(43.0
|
)
|
|||
Depreciation on Buildings and Equipment
|
101.2
|
|
89.2
|
|
90.4
|
|
|||
Amortization of Computer Software
|
309.1
|
|
275.3
|
|
250.3
|
|
|||
Amortization of Intangibles
|
11.4
|
|
8.8
|
|
10.9
|
|
|||
Change in Accrued Income Taxes
|
36.2
|
|
(129.0
|
)
|
206.8
|
|
|||
Pension Plan Contributions
|
(14.5
|
)
|
(12.8
|
)
|
(21.1
|
)
|
|||
Deferred Income Tax Provision
|
(76.1
|
)
|
(175.8
|
)
|
(146.2
|
)
|
|||
Change in Receivables
|
(119.3
|
)
|
(129.2
|
)
|
(16.2
|
)
|
|||
Change in Interest Payable
|
10.7
|
|
(0.1
|
)
|
(8.2
|
)
|
|||
Change in Collateral With Derivative Counterparties, net
|
486.2
|
|
(180.4
|
)
|
801.4
|
|
|||
Other Operating Activities, net
|
(302.1
|
)
|
653.4
|
|
(318.1
|
)
|
|||
Net Cash Provided by Operating Activities
|
1,720.4
|
|
1,510.0
|
|
1,834.4
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||||
Net Change in Federal Funds Sold and Securities Purchased under Agreements to Resell
|
678.9
|
|
(372.9
|
)
|
(549.8
|
)
|
|||
Change in Interest-Bearing Deposits with Banks
|
(467.7
|
)
|
1,906.1
|
|
284.9
|
|
|||
Net Change in Federal Reserve and Other Central Bank Deposits
|
(12,748.7
|
)
|
(4,124.2
|
)
|
558.6
|
|
|||
Purchases of Securities – Held to Maturity
|
(11,955.2
|
)
|
(8,573.2
|
)
|
(8,075.5
|
)
|
|||
Proceeds from Maturity and Redemption of Securities – Held to Maturity
|
9,924.8
|
|
4,026.5
|
|
6,628.3
|
|
|||
Purchases of Securities – Available for Sale
|
(9,780.0
|
)
|
(14,741.9
|
)
|
(11,490.3
|
)
|
|||
Proceeds from Sale, Maturity and Redemption of Securities – Available for Sale
|
10,103.4
|
|
11,317.3
|
|
8,576.1
|
|
|||
Change in Loans and Leases
|
1,451.0
|
|
(471.0
|
)
|
(1,581.0
|
)
|
|||
Purchases of Buildings and Equipment
|
(91.6
|
)
|
(111.3
|
)
|
(98.5
|
)
|
|||
Purchases and Development of Computer Software
|
(381.2
|
)
|
(362.1
|
)
|
(335.0
|
)
|
|||
Change in Client Security Settlement Receivables
|
(592.6
|
)
|
1,105.0
|
|
(605.0
|
)
|
|||
Acquisition of a Subsidiary, Net of Cash Received
|
(188.5
|
)
|
(16.9
|
)
|
—
|
|
|||
Other Investing Activities, net
|
25.8
|
|
226.5
|
|
(212.9
|
)
|
|||
Net Cash Used in Investing Activities
|
(14,021.6
|
)
|
(10,192.1
|
)
|
(6,900.1
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||||
Change in Deposits
|
8,523.6
|
|
6,737.4
|
|
8,105.7
|
|
|||
Change in Federal Funds Purchased
|
2,081.2
|
|
(146.7
|
)
|
(581.4
|
)
|
|||
Change in Securities Sold under Agreements to Repurchase
|
360.5
|
|
(72.9
|
)
|
(338.5
|
)
|
|||
Change in Short-Term Other Borrowings
|
967.7
|
|
1,073.5
|
|
2,312.8
|
|
|||
Proceeds from Senior Notes and Long-Term Debt
|
350.0
|
|
—
|
|
—
|
|
|||
Repayments of Senior Notes and Long-Term Debt
|
(208.7
|
)
|
(6.7
|
)
|
(231.0
|
)
|
|||
Proceeds from Issuance of Preferred Stock - Series D
|
—
|
|
493.5
|
|
—
|
|
|||
Treasury Stock Purchased
|
(523.1
|
)
|
(411.1
|
)
|
(496.9
|
)
|
|||
Net Proceeds from Stock Options
|
108.0
|
|
233.8
|
|
94.0
|
|
|||
Cash Dividends Paid on Common Stock
|
(356.8
|
)
|
(333.0
|
)
|
(321.4
|
)
|
|||
Cash Dividends Paid on Preferred Stock
|
(49.8
|
)
|
(23.4
|
)
|
(27.0
|
)
|
|||
Other Financing Activities, net
|
0.1
|
|
(7.5
|
)
|
17.8
|
|
|||
Net Cash Provided by Financing Activities
|
11,252.7
|
|
7,536.9
|
|
8,534.1
|
|
|||
Effect of Foreign Currency Exchange Rates on Cash
|
234.6
|
|
58.7
|
|
(70.9
|
)
|
|||
(Decrease) Increase in Cash and Due from Banks
|
(813.9
|
)
|
(1,086.5
|
)
|
3,397.5
|
|
|||
Cash and Due from Banks at Beginning of Year
|
5,332.0
|
|
6,418.5
|
|
3,021.0
|
|
|||
Cash and Due from Banks at End of Year
|
$
|
4,518.1
|
|
$
|
5,332.0
|
|
$
|
6,418.5
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
||||||
Interest Paid
|
$
|
328.8
|
|
$
|
181.6
|
|
$
|
161.6
|
|
Income Taxes Paid
|
441.2
|
|
754.2
|
|
390.0
|
|
|||
Transfers from Loans to OREO
|
8.2
|
|
14.2
|
|
13.0
|
|
|
|
|
92
2017 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
93
|
|
|
|
94
2017 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
95
|
|
|
|
96
2017 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
97
|
|
|
|
98
2017 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
99
|
|
|
|
100
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31, 2017
|
||||||||
FINANCIAL INSTRUMENT
|
FAIR VALUE
|
|
VALUATION TECHNIQUE
|
UNOBSERVABLE INPUT
|
RANGE OF INPUTS
|
||||
Auction Rate Securities
|
$
|
4.3
|
million
|
Comparables
|
Price
|
$92
|
–
|
$100
|
|
Swaps Related to Sale of Certain
Visa Class B Common Shares
|
$
|
29.7
|
million
|
Discounted Cash Flow
|
Visa Class A Appreciation
|
7.0
|
%
|
–
|
11.0%
|
|
|
|
Conversion Rate
|
1.63
|
x
|
–
|
1.65x
|
||
|
|
|
Expected Duration
|
1.5
|
|
–
|
4.0 years
|
|
DECEMBER 31, 2016
|
||||||||
FINANCIAL INSTRUMENT
|
FAIR VALUE
|
|
VALUATION TECHNIQUE
|
UNOBSERVABLE INPUT
|
RANGE OF INPUTS
|
||||
Auction Rate Securities
|
$
|
4.7
|
million
|
Comparables
|
Price
|
$84
|
–
|
$99
|
|
Swap Related to Sale of Certain Visa Class B Common Shares
|
$
|
25.2
|
million
|
Discounted Cash Flow
|
Visa Class A Appreciation
|
7.0
|
%
|
–
|
11.0%
|
|
|
|
Conversion Rate
|
1.63
|
x
|
–
|
1.65x
|
||
|
|
|
Expected Duration
|
1.5
|
|
–
|
4.5 years
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
101
|
|
DECEMBER 31, 2017
|
|||||||||||||||
(In Millions)
|
LEVEL 1
|
|
LEVEL 2
|
|
LEVEL 3
|
|
NETTING
|
|
ASSETS/
LIABILITIES AT FAIR VALUE |
|
||||||
Securities
|
|
|
|
|
|
|||||||||||
Available for Sale
|
|
|
|
|
|
|||||||||||
U.S. Government
|
$
|
5,700.3
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
5,700.3
|
|
|
Obligations of States and Political Subdivisions
|
—
|
|
746.4
|
|
—
|
|
—
|
|
746.4
|
|
||||||
Government Sponsored Agency
|
—
|
|
18,676.6
|
|
—
|
|
—
|
|
18,676.6
|
|
||||||
Non-U.S. Government
|
—
|
|
177.2
|
|
—
|
|
—
|
|
177.2
|
|
||||||
Corporate Debt
|
—
|
|
2,993.0
|
|
—
|
|
—
|
|
2,993.0
|
|
||||||
Covered Bonds
|
—
|
|
875.6
|
|
—
|
|
—
|
|
875.6
|
|
||||||
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds
|
—
|
|
1,820.0
|
|
—
|
|
—
|
|
1,820.0
|
|
||||||
Other Asset-Backed
|
—
|
|
2,291.3
|
|
—
|
|
—
|
|
2,291.3
|
|
||||||
Auction Rate
|
—
|
|
—
|
|
4.3
|
|
—
|
|
4.3
|
|
||||||
Commercial Mortgage-Backed
|
—
|
|
435.1
|
|
—
|
|
—
|
|
435.1
|
|
||||||
Other
|
—
|
|
22.3
|
|
—
|
|
—
|
|
22.3
|
|
||||||
|
|
|
|
|
|
|||||||||||
Total Available for Sale
|
5,700.3
|
|
28,037.5
|
|
4.3
|
|
—
|
|
33,742.1
|
|
||||||
|
|
|
|
|
|
|||||||||||
Trading Account
|
—
|
|
0.5
|
|
—
|
|
—
|
|
0.5
|
|
||||||
|
|
|
|
|
|
|||||||||||
Total Available for Sale and Trading Securities
|
5,700.3
|
|
28,038.0
|
|
4.3
|
|
—
|
|
33,742.6
|
|
||||||
|
|
|
|
|
|
|||||||||||
Other Assets
|
|
|
|
|
|
|||||||||||
Derivative Assets
|
|
|
|
|
|
|||||||||||
Foreign Exchange Contracts
|
—
|
|
2,557.1
|
|
—
|
|
—
|
|
2,557.1
|
|
||||||
Interest Rate Contracts
|
—
|
|
97.0
|
|
—
|
|
—
|
|
97.0
|
|
||||||
|
|
|
|
|
|
|||||||||||
Total Derivative Assets
|
—
|
|
2,654.1
|
|
—
|
|
(1,860.0
|
)
|
794.1
|
|
||||||
|
|
|
|
|
|
|||||||||||
Other Liabilities
|
|
|
|
|
|
|||||||||||
Derivative Liabilities
|
|
|
|
|
|
|||||||||||
Foreign Exchange Contracts
|
—
|
|
2,715.1
|
|
—
|
|
—
|
|
2,715.1
|
|
||||||
Interest Rate Contracts
|
—
|
|
83.5
|
|
—
|
|
—
|
|
83.5
|
|
||||||
Other Financial Derivatives
(1)
|
—
|
|
0.7
|
|
29.7
|
|
—
|
|
30.4
|
|
||||||
|
|
|
|
|
|
|||||||||||
Total Derivative Liabilities
|
$
|
—
|
|
$
|
2,799.3
|
|
$
|
29.7
|
|
$
|
(1,621.4
|
)
|
$
|
1,207.6
|
|
|
|
|
102
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31, 2016
|
|||||||||||||||
(In Millions)
|
LEVEL 1
|
|
LEVEL 2
|
|
LEVEL 3
|
|
NETTING
|
|
ASSETS/
LIABILITIES AT FAIR VALUE |
|
||||||
Securities
|
|
|
|
|
|
|||||||||||
Available for Sale
|
|
|
|
|
|
|||||||||||
U.S. Government
|
$
|
7,522.6
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
7,522.6
|
|
|
Obligations of States and Political Subdivisions
|
—
|
|
885.2
|
|
—
|
|
—
|
|
885.2
|
|
||||||
Government Sponsored Agency
|
—
|
|
17,892.8
|
|
—
|
|
—
|
|
17,892.8
|
|
||||||
Non-U.S. Government
|
—
|
|
417.9
|
|
—
|
|
—
|
|
417.9
|
|
||||||
Corporate Debt
|
—
|
|
3,765.2
|
|
—
|
|
—
|
|
3,765.2
|
|
||||||
Covered Bonds
|
—
|
|
1,143.9
|
|
—
|
|
—
|
|
1,143.9
|
|
||||||
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds
|
—
|
|
1,340.7
|
|
—
|
|
—
|
|
1,340.7
|
|
||||||
Residential Mortgage-Backed
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Other Asset-Backed
|
—
|
|
2,085.1
|
|
—
|
|
—
|
|
2,085.1
|
|
||||||
Auction Rate
|
—
|
|
—
|
|
4.7
|
|
—
|
|
4.7
|
|
||||||
Commercial Mortgage Backed
|
—
|
|
471.6
|
|
—
|
|
—
|
|
471.6
|
|
||||||
Other
|
—
|
|
50.1
|
|
—
|
|
—
|
|
50.1
|
|
||||||
Total Available for Sale
|
7,522.6
|
|
28,052.5
|
|
4.7
|
|
—
|
|
35,579.8
|
|
||||||
|
|
|
|
|
|
|||||||||||
Trading Account
|
—
|
|
0.3
|
|
—
|
|
—
|
|
0.3
|
|
||||||
|
|
|
|
|
|
|||||||||||
Total Available for Sale and Trading Securities
|
7,522.6
|
|
28,052.8
|
|
4.7
|
|
—
|
|
35,580.1
|
|
||||||
|
|
|
|
|
|
|||||||||||
Other Assets
|
|
|
|
|
|
|||||||||||
Derivative Assets
|
|
|
|
|
|
|||||||||||
Foreign Exchange Contracts
|
—
|
|
3,609.6
|
|
—
|
|
—
|
|
3,609.6
|
|
||||||
Interest Rate Contracts
|
—
|
|
247.2
|
|
—
|
|
—
|
|
247.2
|
|
||||||
Other Financial Derivative
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Total Derivatives Assets
|
—
|
|
3,856.8
|
|
—
|
|
(2,170.4
|
)
|
1,686.4
|
|
||||||
|
|
|
|
|
|
|||||||||||
Other Liabilities
|
|
|
|
|
|
|||||||||||
Derivative Liabilities
|
|
|
|
|
|
|||||||||||
Foreign Exchange Contracts
|
—
|
|
3,242.9
|
|
—
|
|
—
|
|
3,242.9
|
|
||||||
Interest Rate Contracts
|
—
|
|
108.0
|
|
—
|
|
—
|
|
108.0
|
|
||||||
Other Financial Derivative
(1)
|
—
|
|
—
|
|
25.2
|
|
—
|
|
25.2
|
|
||||||
Total Derivative Liabilities
|
$
|
—
|
|
$
|
3,350.9
|
|
$
|
25.2
|
|
$
|
(2,431.2
|
)
|
$
|
944.9
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
103
|
LEVEL 3 ASSETS
|
AUCTION RATE SECURITIES
|
|
||||
(In Millions)
|
2017
|
|
2016
|
|
||
Fair Value at January 1
|
$
|
4.7
|
|
$
|
17.1
|
|
Total Gains (Losses):
|
|
|
||||
Included in Other Comprehensive Income
(1)
|
0.2
|
|
(0.7
|
)
|
||
Purchases, Issues, Sales, and Settlements
|
|
|
||||
Sales
|
—
|
|
(10.1
|
)
|
||
Settlements
|
(0.6
|
)
|
(1.6
|
)
|
||
|
|
|
||||
Fair Value at December 31
|
$
|
4.3
|
|
$
|
4.7
|
|
LEVEL 3 LIABILITIES
|
SWAPS RELATED TO SALE OF CERTAIN VISA CLASS B
COMMON SHARES
|
|
||||
(In Millions)
|
2017
|
|
2016
|
|
||
Fair Value at January 1
|
$
|
25.2
|
|
$
|
10.8
|
|
Total (Gains) Losses:
|
|
|
||||
Included in Earnings
(1)
|
12.7
|
|
4.4
|
|
||
Purchases, Issues, Sales, and Settlements
|
|
|
||||
Issuance
|
—
|
|
14.9
|
|
||
Settlements
|
(8.2
|
)
|
(4.9
|
)
|
||
Fair Value at December 31
|
$
|
29.7
|
|
$
|
25.2
|
|
Unrealized (Gains) Losses Included in Earnings Related to Financial Instruments Held at December 31
(1)
|
$
|
11.4
|
|
$
|
4.4
|
|
FINANCIAL INSTRUMENT
|
FAIR VALUE
|
VALUATION TECHNIQUE
|
UNOBSERVABLE INPUT
|
RANGE OF DISCOUNTS APPLIED
|
||
Loans
|
$12.2 million
|
Market Approach
|
Discount to reflect realizable value
|
15.0%
|
–
|
25.0%
|
OREO
|
$0.3 million
|
Market Approach
|
Discount to reflect realizable value
|
15.0%
|
–
|
20.0%
|
|
|
|
104
2017 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
105
|
|
DECEMBER 31, 2017
|
||||||||||||||
|
|
|
FAIR VALUE
|
||||||||||||
(In Millions)
|
BOOK VALUE
|
|
TOTAL
FAIR VALUE |
|
LEVEL 1
|
|
LEVEL 2
|
|
LEVEL 3
|
|
|||||
ASSETS
|
|
|
|
|
|
||||||||||
Cash and Due from Banks
|
$
|
4,518.1
|
|
$
|
4,518.1
|
|
$
|
4,518.1
|
|
$
|
—
|
|
$
|
—
|
|
Federal Reserve and Other Central Bank Deposits
|
40,479.1
|
|
40,479.1
|
|
—
|
|
40,479.1
|
|
—
|
|
|||||
Interest-Bearing Deposits with Banks
|
5,611.9
|
|
5,611.9
|
|
—
|
|
5,611.9
|
|
—
|
|
|||||
Federal Funds Sold and Resell Agreements
|
1,324.3
|
|
1,324.3
|
|
—
|
|
1,324.3
|
|
—
|
|
|||||
Securities
|
|
|
|
|
|
||||||||||
Available for Sale (
Note
)
|
33,742.1
|
|
33,742.1
|
|
5,700.3
|
|
28,037.5
|
|
4.3
|
|
|||||
Held to Maturity
|
13,049.0
|
|
13,010.9
|
|
35.0
|
|
12,975.9
|
|
—
|
|
|||||
Trading Account
|
0.5
|
|
0.5
|
|
—
|
|
0.5
|
|
—
|
|
|||||
Loans (excluding Leases)
|
|
|
|
|
|
||||||||||
Held for Investment
|
32,211.1
|
|
32,375.8
|
|
—
|
|
—
|
|
32,375.8
|
|
|||||
Held for Sale
|
20.9
|
|
20.9
|
|
—
|
|
—
|
|
20.9
|
|
|||||
Client Security Settlement Receivables
|
1,647.0
|
|
1,647.0
|
|
—
|
|
1,647.0
|
|
—
|
|
|||||
Other Assets
|
|
|
|
|
|
||||||||||
Federal Reserve and Federal Home Loan Bank Stock
|
223.1
|
|
223.1
|
|
—
|
|
223.1
|
|
—
|
|
|||||
Community Development Investments
|
415.3
|
|
415.3
|
|
—
|
|
415.3
|
|
—
|
|
|||||
Employee Benefit and Deferred Compensation
|
183.4
|
|
181.5
|
|
115.5
|
|
66.0
|
|
—
|
|
|||||
LIABILITIES
|
|
|
|
|
|
||||||||||
Deposits
|
|
|
|
|
|
||||||||||
Demand, Noninterest-Bearing, Savings and Money Market
|
$
|
45,566.3
|
|
$
|
45,566.3
|
|
$
|
45,566.3
|
|
$
|
—
|
|
$
|
—
|
|
Savings Certificates and Other Time
|
1,152.3
|
|
1,153.6
|
|
—
|
|
1,153.6
|
|
—
|
|
|||||
Non U.S. Offices Interest-Bearing
|
65,672.2
|
|
65,672.2
|
|
—
|
|
65,672.2
|
|
—
|
|
|||||
Federal Funds Purchased
|
2,286.1
|
|
2,286.1
|
|
—
|
|
2,286.1
|
|
—
|
|
|||||
Securities Sold under Agreements to Repurchase
|
834.0
|
|
834.0
|
|
—
|
|
834.0
|
|
—
|
|
|||||
Other Borrowings
|
6,051.1
|
|
6,052.9
|
|
—
|
|
6,052.9
|
|
—
|
|
|||||
Senior Notes
|
1,497.3
|
|
1,528.4
|
|
—
|
|
1,528.4
|
|
—
|
|
|||||
Long Term Debt (excluding Leases)
|
|
|
|
|
|
||||||||||
Subordinated Debt
|
1,435.1
|
|
1,449.8
|
|
—
|
|
1,449.8
|
|
—
|
|
|||||
Federal Home Loan Bank Borrowings
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Floating Rate Capital Debt
|
227.5
|
|
260.0
|
|
—
|
|
260.0
|
|
—
|
|
|||||
Other Liabilities
|
|
|
|
|
|
||||||||||
Standby Letters of Credit
|
30.3
|
|
30.3
|
|
—
|
|
—
|
|
30.3
|
|
|||||
Loan Commitments
|
33.1
|
|
33.1
|
|
—
|
|
—
|
|
33.1
|
|
|||||
DERIVATIVE INSTRUMENTS
|
|
|
|
|
|
||||||||||
Asset/Liability Management
|
|
|
|
|
|
||||||||||
Foreign Exchange Contracts
|
|
|
|
|
|
||||||||||
Assets
|
$
|
30.1
|
|
$
|
30.1
|
|
$
|
—
|
|
$
|
30.1
|
|
$
|
—
|
|
Liabilities
|
192.6
|
|
192.6
|
|
—
|
|
192.6
|
|
—
|
|
|||||
Interest Rate Contracts
|
|
|
|
|
|
||||||||||
Assets
|
31.9
|
|
31.9
|
|
—
|
|
31.9
|
|
—
|
|
|||||
Liabilities
|
19.4
|
|
19.4
|
|
—
|
|
19.4
|
|
—
|
|
|||||
Other Financial Derivatives
|
|
|
|
|
|
||||||||||
Assets
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Liabilities
(1)
|
30.4
|
|
30.4
|
|
—
|
|
0.7
|
|
29.7
|
|
|||||
Client-Related and Trading
|
|
|
|
|
|
||||||||||
Foreign Exchange Contracts
|
|
|
|
|
|
||||||||||
Assets
|
2,527.0
|
|
2,527.0
|
|
—
|
|
2,527.0
|
|
—
|
|
|||||
Liabilities
|
2,522.5
|
|
2,522.5
|
|
—
|
|
2,522.5
|
|
—
|
|
|||||
Interest Rate Contracts
|
|
|
|
|
|
||||||||||
Assets
|
65.1
|
|
65.1
|
|
—
|
|
65.1
|
|
—
|
|
|||||
Liabilities
|
64.1
|
|
64.1
|
|
—
|
|
64.1
|
|
—
|
|
|
|
|
106
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31, 2016
|
||||||||||||||
|
|
|
FAIR VALUE
|
||||||||||||
(In Millions)
|
BOOK VALUE
|
|
TOTAL
FAIR VALUE |
|
LEVEL 1
|
|
LEVEL 2
|
|
LEVEL 3
|
|
|||||
ASSETS
|
|
|
|
|
|
||||||||||
Cash and Due from Banks
|
$
|
5,332.0
|
|
$
|
5,332.0
|
|
$
|
5,332.0
|
|
$
|
—
|
|
$
|
—
|
|
Federal Reserve and Other Central Bank Deposits
|
26,674.2
|
|
26,674.2
|
|
—
|
|
26,674.2
|
|
—
|
|
|||||
Interest-Bearing Deposits with Banks
|
4,800.6
|
|
4,800.6
|
|
—
|
|
4,800.6
|
|
—
|
|
|||||
Federal Funds Sold and Resell Agreements
|
1,974.3
|
|
1,974.3
|
|
—
|
|
1,974.3
|
|
—
|
|
|||||
Securities
|
|
|
|
|
|
||||||||||
Available for Sale (
Note
)
|
35,579.8
|
|
35,579.8
|
|
7,522.6
|
|
28,052.5
|
|
4.7
|
|
|||||
Held to Maturity
|
8,921.1
|
|
8,905.1
|
|
15.0
|
|
8,890.1
|
|
—
|
|
|||||
Trading Account
|
0.3
|
|
0.3
|
|
—
|
|
0.3
|
|
—
|
|
|||||
Loans (excluding Leases)
|
|
|
|
|
|
||||||||||
Held for Investment
|
33,354.1
|
|
33,471.3
|
|
—
|
|
—
|
|
33,471.3
|
|
|||||
Held for Sale
|
13.4
|
|
13.4
|
|
—
|
|
—
|
|
13.4
|
|
|||||
Client Security Settlement Receivables
|
1,043.7
|
|
1,043.7
|
|
—
|
|
1,043.7
|
|
—
|
|
|||||
Other Assets
|
|
|
|
|
|
||||||||||
Federal Reserve and Federal Home Loan Bank Stock
|
203.1
|
|
203.1
|
|
—
|
|
203.1
|
|
—
|
|
|||||
Community Development Investments
|
218.9
|
|
215.5
|
|
—
|
|
215.5
|
|
—
|
|
|||||
Employee Benefit and Deferred Compensation
|
166.2
|
|
162.5
|
|
107.2
|
|
55.3
|
|
—
|
|
|||||
LIABILITES
|
|
|
|
|
|
||||||||||
Deposits
|
|
|
|
|
|
||||||||||
Demand, Noninterest-Bearing, Savings and Money Market
|
$
|
46,671.9
|
|
$
|
46,671.9
|
|
$
|
46,671.9
|
|
$
|
—
|
|
$
|
—
|
|
Savings Certificates and Other Time
|
1,331.7
|
|
1,337.5
|
|
—
|
|
1,337.5
|
|
—
|
|
|||||
Non U.S. Offices Interest-Bearing
|
53,648.1
|
|
53,648.1
|
|
—
|
|
53,648.1
|
|
—
|
|
|||||
Federal Funds Purchased
|
204.8
|
|
204.8
|
|
—
|
|
204.8
|
|
—
|
|
|||||
Securities Sold under Agreements to Repurchase
|
473.7
|
|
473.7
|
|
—
|
|
473.7
|
|
—
|
|
|||||
Other Borrowings
|
5,109.5
|
|
5,113.4
|
|
—
|
|
5,113.4
|
|
—
|
|
|||||
Senior Notes
|
1,496.6
|
|
1,535.5
|
|
—
|
|
1,535.5
|
|
—
|
|
|||||
Long Term Debt (excluding Leases)
|
|
|
|
|
|
||||||||||
Subordinated Debt
|
1,307.9
|
|
1,316.0
|
|
—
|
|
1,316.0
|
|
—
|
|
|||||
Floating Rate Capital Debt
|
277.4
|
|
251.0
|
|
—
|
|
251.0
|
|
—
|
|
|||||
Other Liabilities
|
|
|
|
|
|
||||||||||
Standby Letters of Credit
|
37.2
|
|
37.2
|
|
—
|
|
—
|
|
37.2
|
|
|||||
Loan Commitments
|
41.2
|
|
41.2
|
|
—
|
|
—
|
|
41.2
|
|
|||||
DERIVATIVE INSTRUMENTS
|
|
|
|
|
|
||||||||||
Asset/Liability Management
|
|
|
|
|
|
||||||||||
Foreign Exchange Contracts
|
|
|
|
|
|
||||||||||
Assets
|
$
|
335.4
|
|
$
|
335.4
|
|
$
|
—
|
|
$
|
335.4
|
|
$
|
—
|
|
Liabilities
|
21.2
|
|
21.2
|
|
—
|
|
21.2
|
|
—
|
|
|||||
Interest Rate Contracts
|
|
|
|
|
|
||||||||||
Assets
|
160.2
|
|
160.2
|
|
—
|
|
160.2
|
|
—
|
|
|||||
Liabilities
|
22.8
|
|
22.8
|
|
—
|
|
22.8
|
|
—
|
|
|||||
Other Financial Derivatives
|
|
|
|
|
|
||||||||||
Assets
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Liabilities
(1)
|
25.2
|
|
25.2
|
|
—
|
|
—
|
|
25.2
|
|
|||||
Client-Related and Trading
|
|
|
|
|
|
||||||||||
Foreign Exchange Contracts
|
|
|
|
|
|
||||||||||
Assets
|
3,274.2
|
|
3,274.2
|
|
—
|
|
3,274.2
|
|
—
|
|
|||||
Liabilities
|
3,221.7
|
|
3,221.7
|
|
—
|
|
3,221.7
|
|
—
|
|
|||||
Interest Rate Contracts
|
|
|
|
|
|
||||||||||
Assets
|
87.0
|
|
87.0
|
|
—
|
|
87.0
|
|
—
|
|
|||||
Liabilities
|
85.2
|
|
85.2
|
|
—
|
|
85.2
|
|
—
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
107
|
|
DECEMBER 31, 2017
|
|||||||||||
(In Millions)
|
AMORTIZED
COST
|
|
GROSS
UNREALIZED
GAINS
|
|
GROSS
UNREALIZED
LOSSES
|
|
FAIR
VALUE
|
|
||||
U.S. Government
|
$
|
5,714.4
|
|
$
|
18.0
|
|
$
|
32.1
|
|
$
|
5,700.3
|
|
Obligations of States and Political Subdivisions
|
749.9
|
|
—
|
|
3.5
|
|
746.4
|
|
||||
Government Sponsored Agency
|
18,745.3
|
|
39.9
|
|
108.6
|
|
18,676.6
|
|
||||
Non-U.S. Government
|
179.1
|
|
—
|
|
1.9
|
|
177.2
|
|
||||
Corporate Debt
|
3,013.7
|
|
2.2
|
|
22.9
|
|
2,993.0
|
|
||||
Covered Bonds
|
879.0
|
|
1.0
|
|
4.4
|
|
875.6
|
|
||||
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds
|
1,819.8
|
|
4.0
|
|
3.8
|
|
1,820.0
|
|
||||
Other Asset-Backed
|
2,297.7
|
|
1.5
|
|
7.9
|
|
2,291.3
|
|
||||
Auction Rate
|
4.4
|
|
—
|
|
0.1
|
|
4.3
|
|
||||
Commercial Mortgage-Backed
|
439.2
|
|
—
|
|
4.1
|
|
435.1
|
|
||||
Other
|
22.3
|
|
—
|
|
—
|
|
22.3
|
|
||||
|
|
|
|
|
||||||||
Total
|
$
|
33,864.8
|
|
$
|
66.6
|
|
$
|
189.3
|
|
$
|
33,742.1
|
|
|
DECEMBER 31, 2016
|
|||||||||||
(In Millions)
|
AMORTIZED
COST
|
|
GROSS
UNREALIZED
GAINS
|
|
GROSS
UNREALIZED
LOSSES
|
|
FAIR
VALUE
|
|
||||
U.S. Government
|
$
|
7,514.5
|
|
$
|
22.4
|
|
$
|
14.3
|
|
$
|
7,522.6
|
|
Obligations of States and Political Subdivisions
|
890.8
|
|
—
|
|
5.6
|
|
885.2
|
|
||||
Government Sponsored Agency
|
17,914.1
|
|
49.3
|
|
70.6
|
|
17,892.8
|
|
||||
Non-U.S. Government
|
420.0
|
|
—
|
|
2.1
|
|
417.9
|
|
||||
Corporate Debt
|
3,787.4
|
|
2.6
|
|
24.8
|
|
3,765.2
|
|
||||
Covered Bonds
|
1,148.6
|
|
0.8
|
|
5.5
|
|
1,143.9
|
|
||||
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds
|
1,343.6
|
|
0.9
|
|
3.8
|
|
1,340.7
|
|
||||
Other Asset-Backed
|
2,083.7
|
|
2.7
|
|
1.3
|
|
2,085.1
|
|
||||
Auction Rate
|
5.0
|
|
—
|
|
0.3
|
|
4.7
|
|
||||
Commercial Mortgage-Backed
|
474.1
|
|
—
|
|
2.5
|
|
471.6
|
|
||||
Other
|
50.1
|
|
—
|
|
—
|
|
50.1
|
|
||||
|
|
|
|
|
||||||||
Total
|
$
|
35,631.9
|
|
$
|
78.7
|
|
$
|
130.8
|
|
$
|
35,579.8
|
|
|
DECEMBER 31, 2017
|
DECEMBER 31, 2016
|
||||||||||||
(In Millions)
|
AMORTIZED
COST
|
|
FAIR
VALUE
|
|
AMORTIZED
COST
|
|
FAIR
VALUE
|
|
||||||
Due in One Year or Less
|
$
|
6,249.5
|
|
$
|
6,227.0
|
|
$
|
7,880.8
|
|
$
|
7,876.6
|
|
||
Due After One Year Through Five Years
|
20,017.2
|
|
19,937.8
|
|
21,094.8
|
|
21,058.7
|
|
||||||
Due After Five Years Through Ten Years
|
6,545.3
|
|
6,535.1
|
|
5,759.1
|
|
5,753.6
|
|
||||||
Due After Ten Years
|
1,052.8
|
|
1,042.2
|
|
897.2
|
|
890.9
|
|
||||||
|
|
|
|
|
||||||||||
Total
|
$
|
33,864.8
|
|
$
|
33,742.1
|
|
$
|
35,631.9
|
|
$
|
35,579.8
|
|
|
|
|
108
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31, 2017
|
|||||||||||
(In Millions)
|
AMORTIZED
COST
|
|
GROSS
UNREALIZED
GAINS
|
|
GROSS
UNREALIZED
LOSSES
|
|
FAIR
VALUE
|
|
||||
U.S. Government
|
$
|
35.0
|
|
$
|
—
|
|
$
|
—
|
|
$
|
35.0
|
|
Obligations of States and Political Subdivisions
|
34.6
|
|
1.4
|
|
0.1
|
|
35.9
|
|
||||
Government Sponsored Agency
|
5.8
|
|
0.4
|
|
—
|
|
6.2
|
|
||||
Corporate Debt
|
431.5
|
|
1.0
|
|
0.4
|
|
432.1
|
|
||||
Covered Bonds
|
2,821.5
|
|
11.9
|
|
3.7
|
|
2,829.7
|
|
||||
Non-U.S. Government
|
5,536.2
|
|
1.3
|
|
6.0
|
|
5,531.5
|
|
||||
Certificates of Deposit
|
43.8
|
|
—
|
|
0.1
|
|
43.7
|
|
||||
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds
|
2,788.9
|
|
5.4
|
|
4.1
|
|
2,790.2
|
|
||||
Other Asset-Backed
|
1,175.8
|
|
0.6
|
|
0.5
|
|
1,175.9
|
|
||||
Other
|
175.9
|
|
—
|
|
45.2
|
|
130.7
|
|
||||
|
|
|
|
|
||||||||
Total
|
$
|
13,049.0
|
|
$
|
22.0
|
|
$
|
60.1
|
|
$
|
13,010.9
|
|
|
DECEMBER 31, 2016
|
|||||||||||
(In Millions)
|
AMORTIZED
COST
|
|
GROSS
UNREALIZED
GAINS
|
|
GROSS
UNREALIZED
LOSSES
|
|
FAIR
VALUE
|
|
||||
U.S. Government
|
$
|
15.0
|
|
$
|
—
|
|
$
|
—
|
|
$
|
15.0
|
|
Obligations of States and Political Subdivisions
|
63.6
|
|
2.7
|
|
—
|
|
66.3
|
|
||||
Government Sponsored Agency
|
7.4
|
|
0.5
|
|
—
|
|
7.9
|
|
||||
Corporate Debt
|
231.2
|
|
0.2
|
|
0.4
|
|
231.0
|
|
||||
Covered Bonds
|
2,051.6
|
|
10.1
|
|
3.7
|
|
2,058.0
|
|
||||
Non-U.S. Government
|
3,517.5
|
|
4.9
|
|
2.3
|
|
3,520.1
|
|
||||
Certificates of Deposit
|
606.0
|
|
0.2
|
|
0.1
|
|
606.1
|
|
||||
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds
|
2,154.7
|
|
10.5
|
|
2.8
|
|
2,162.4
|
|
||||
Other Asset-Backed
|
143.4
|
|
0.1
|
|
—
|
|
143.5
|
|
||||
Other
|
130.7
|
|
—
|
|
35.9
|
|
94.8
|
|
||||
|
|
|
|
|
||||||||
Total
|
$
|
8,921.1
|
|
$
|
29.2
|
|
$
|
45.2
|
|
$
|
8,905.1
|
|
|
DECEMBER 31, 2017
|
DECEMBER 31, 2016
|
||||||||||||
(In Millions)
|
AMORTIZED
COST
|
|
FAIR
VALUE
|
|
AMORTIZED
COST
|
|
FAIR
VALUE
|
|
||||||
Due in One Year or Less
|
$
|
5,691.9
|
|
$
|
5,695.8
|
|
$
|
3,631.6
|
|
$
|
3,635.9
|
|
||
Due After One Year Through Five Years
|
6,667.8
|
|
6,663.9
|
|
5,072.7
|
|
5,081.6
|
|
||||||
Due After Five Years Through Ten Years
|
612.2
|
|
606.3
|
|
158.7
|
|
156.1
|
|
||||||
Due After Ten Years
|
77.1
|
|
44.9
|
|
58.1
|
|
31.5
|
|
||||||
|
|
|
|
|
||||||||||
Total
|
$
|
13,049.0
|
|
$
|
13,010.9
|
|
$
|
8,921.1
|
|
$
|
8,905.1
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
109
|
AS OF DECEMBER 31, 2017
|
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
|
$
|
3,595.0
|
|
$
|
32.1
|
|
$
|
—
|
|
$
|
—
|
|
$
|
3,595.0
|
|
$
|
32.1
|
|
Obligations of States and Political Subdivisions
|
687.8
|
|
3.3
|
|
52.0
|
|
0.3
|
|
739.8
|
|
3.6
|
|
||||||
Government Sponsored Agency
|
6,495.6
|
|
81.3
|
|
2,998.9
|
|
27.3
|
|
9,494.5
|
|
108.6
|
|
||||||
Non-U.S. Government
|
5,181.8
|
|
7.9
|
|
—
|
|
—
|
|
5,181.8
|
|
7.9
|
|
||||||
Corporate Debt
|
1,547.3
|
|
9.3
|
|
922.3
|
|
14.0
|
|
2,469.6
|
|
23.3
|
|
||||||
Covered Bonds
|
967.5
|
|
7.2
|
|
89.1
|
|
0.9
|
|
1,056.6
|
|
8.1
|
|
||||||
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds
|
1,692.4
|
|
7.5
|
|
235.8
|
|
0.4
|
|
1,928.2
|
|
7.9
|
|
||||||
Other Asset-Backed
|
2,453.7
|
|
8.3
|
|
29.9
|
|
0.1
|
|
2,483.6
|
|
8.4
|
|
||||||
Certificates of Deposit
|
43.7
|
|
0.1
|
|
—
|
|
—
|
|
43.7
|
|
0.1
|
|
||||||
Auction Rate
|
—
|
|
—
|
|
3.1
|
|
0.1
|
|
3.1
|
|
0.1
|
|
||||||
Commercial Mortgage-Backed
|
233.5
|
|
2.6
|
|
201.6
|
|
1.5
|
|
435.1
|
|
4.1
|
|
||||||
Other
|
82.9
|
|
27.3
|
|
48.1
|
|
17.9
|
|
131.0
|
|
45.2
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Total
|
$
|
22,981.2
|
|
$
|
186.9
|
|
$
|
4,580.8
|
|
$
|
62.5
|
|
$
|
27,562.0
|
|
$
|
249.4
|
|
AS OF DECEMBER 31, 2016
|
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
|
$
|
1,603.0
|
|
$
|
14.3
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,603.0
|
|
$
|
14.3
|
|
Obligations of States and Political Subdivisions
|
865.3
|
|
5.6
|
|
—
|
|
—
|
|
865.3
|
|
5.6
|
|
||||||
Government Sponsored Agency
|
8,252.5
|
|
58.5
|
|
2,121.0
|
|
12.1
|
|
10,373.5
|
|
70.6
|
|
||||||
Non-U.S. Government
|
2,957.1
|
|
4.4
|
|
—
|
|
—
|
|
2,957.1
|
|
4.4
|
|
||||||
Corporate Debt
|
1,601.7
|
|
11.2
|
|
1,054.4
|
|
14.0
|
|
2,656.1
|
|
25.2
|
|
||||||
Covered Bonds
|
809.0
|
|
8.6
|
|
138.9
|
|
0.6
|
|
947.9
|
|
9.2
|
|
||||||
Sub-Sovereign, Supranational and Non-U.S. Agency Bonds
|
1,136.1
|
|
5.7
|
|
249.1
|
|
0.9
|
|
1,385.2
|
|
6.6
|
|
||||||
Other Asset-Backed
|
584.3
|
|
1.3
|
|
—
|
|
—
|
|
584.3
|
|
1.3
|
|
||||||
Certificates of Deposit
|
81.4
|
|
0.1
|
|
—
|
|
—
|
|
81.4
|
|
0.1
|
|
||||||
Auction Rate
|
0.4
|
|
0.1
|
|
4.3
|
|
0.2
|
|
4.7
|
|
0.3
|
|
||||||
Commercial Mortgage-Backed
|
471.5
|
|
2.5
|
|
—
|
|
—
|
|
471.5
|
|
2.5
|
|
||||||
Other
|
50.5
|
|
17.9
|
|
59.7
|
|
18.0
|
|
110.2
|
|
35.9
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Total
|
$
|
18,412.8
|
|
$
|
130.2
|
|
$
|
3,627.4
|
|
$
|
45.8
|
|
$
|
22,040.2
|
|
$
|
176.0
|
|
|
|
|
110
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Changes in Other-Than-Temporary Impairment Losses
(1)
|
$
|
(0.2
|
)
|
$
|
(3.7
|
)
|
$
|
—
|
|
Noncredit-related Losses Recorded in / (Reclassified from) OCI
(2)
|
—
|
|
—
|
|
—
|
|
|||
|
|
|
|
||||||
Net Impairment Losses Recognized in Earnings
|
$
|
(0.2
|
)
|
$
|
(3.7
|
)
|
$
|
—
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
111
|
|
YEAR ENDED DECEMBER 31,
|
|
||||
(In Millions)
|
2017
|
|
2016
|
|
||
Cumulative Credit-Related Losses on Securities Held – Beginning of Year
|
$
|
3.4
|
|
$
|
5.2
|
|
Plus: Losses on Newly Identified Impairments
|
0.1
|
|
0.5
|
|
||
Additional Losses on Previously Identified Impairments
|
0.1
|
|
3.2
|
|
||
Less: Current and Prior Period Losses on Securities Sold or Matured During the Year
|
—
|
|
(5.5
|
)
|
||
|
|
|
|
|||
Cumulative Credit-Related Losses on Securities Held – End of Year
|
$
|
3.6
|
|
$
|
3.4
|
|
($ In Millions)
|
2017
|
|
2016
|
|
||
Balance at December 31
|
$
|
1,303.3
|
|
$
|
1,967.5
|
|
Average Balance During the Year
|
1,832.0
|
|
1,764.1
|
|
||
Average Interest Rate Earned During the Year
|
1.48
|
%
|
1.04
|
%
|
||
Maximum Month-End Balance During the Year
|
2,064.1
|
|
2,050.9
|
|
($ In Millions)
|
2017
|
|
2016
|
|
||
Balance at December 31
|
$
|
834.0
|
|
$
|
473.7
|
|
Average Balance During the Year
|
738.9
|
|
847.1
|
|
||
Average Interest Rate Paid During the Year
|
0.81
|
%
|
0.27
|
%
|
||
Maximum Month-End Balance During the Year
|
834.0
|
|
565.5
|
|
|
|
|
112
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
|||||
(In Millions)
|
2017
|
|
2016
|
|
||
Commercial
|
|
|
||||
Commercial and Institutional
|
$
|
9,042.2
|
|
$
|
9,287.4
|
|
Commercial Real Estate
|
3,482.7
|
|
4,002.5
|
|
||
Non-U.S.
|
1,538.5
|
|
1,877.8
|
|
||
Lease Financing, net
|
229.2
|
|
293.9
|
|
||
Other
|
265.4
|
|
205.1
|
|
||
|
|
|
||||
Total Commercial
|
14,558.0
|
|
15,666.7
|
|
||
|
|
|
||||
Personal
|
|
|
||||
Private Client
|
10,753.1
|
|
10,052.0
|
|
||
Residential Real Estate
|
7,247.6
|
|
8,077.5
|
|
||
Other
|
33.5
|
|
25.9
|
|
||
|
|
|
||||
Total Personal
|
18,034.2
|
|
18,155.4
|
|
||
|
|
|
||||
Total Loans and Leases
|
$
|
32,592.2
|
|
$
|
33,822.1
|
|
Allowance for Credit Losses Assigned to Loans and Leases
|
(131.2
|
)
|
(161.0
|
)
|
||
|
|
|
||||
Net Loans and Leases
|
$
|
32,461.0
|
|
$
|
33,661.1
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
113
|
|
DECEMBER 31,
|
|||||
(In Millions)
|
2017
|
|
2016
|
|
||
Direct Finance Leases
|
|
|
||||
Lease Receivable
|
$
|
26.6
|
|
$
|
37.6
|
|
Residual Value
|
72.4
|
|
75.3
|
|
||
Initial Direct Costs
|
0.7
|
|
1.0
|
|
||
Unearned Income
|
(1.5
|
)
|
(3.5
|
)
|
||
|
|
|
||||
Investment in Direct Finance Leases
|
98.2
|
|
110.4
|
|
||
|
|
|
||||
Leveraged Leases
|
|
|
||||
Net Rental Receivable
|
76.1
|
|
110.1
|
|
||
Residual Value
|
85.6
|
|
106.2
|
|
||
Unearned Income
|
(30.7
|
)
|
(32.8
|
)
|
||
|
|
|
||||
Investment in Leveraged Leases
|
131.0
|
|
183.5
|
|
||
|
|
|
||||
Lease Financing, net
|
$
|
229.2
|
|
$
|
293.9
|
|
(In Millions)
|
FUTURE MINIMUM
LEASE PAYMENTS
|
|
|
2018
|
$
|
11.2
|
|
2019
|
9.0
|
|
|
2020
|
3.9
|
|
|
2021
|
2.1
|
|
|
2022
|
—
|
|
•
|
Commercial and Institutional: leverage, profit margin, liquidity, asset size and capital levels;
|
•
|
Commercial Real Estate: debt service coverage, loan-to-value ratio, leasing status and guarantor support;
|
•
|
Lease Financing and Commercial-Other: leverage, profit margin, liquidity, asset size and capital levels;
|
•
|
Non-U.S.: leverage, profit margin, liquidity, return on assets and capital levels;
|
•
|
Residential Real Estate: payment history, credit bureau scores and loan-to-value ratio;
|
•
|
Private Client: cash flow-to-debt and net worth ratios, leverage and liquidity; and
|
•
|
Personal-Other: cash flow-to-debt and net worth ratios.
|
|
|
|
114
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31, 2017
|
DECEMBER 31, 2016
|
||||||||||||||||||||||
(In Millions)
|
1 TO 3
CATEGORY
|
|
4 TO 5
CATEGORY
|
|
6 TO 9
CATEGORY
(WATCH LIST)
|
|
TOTAL
|
|
1 TO 3
CATEGORY
|
|
4 TO 5
CATEGORY
|
|
6 TO 9
CATEGORY
(WATCH LIST)
|
|
TOTAL
|
|
||||||||
Commercial
|
|
|
|
|
|
|
|
|
||||||||||||||||
Commercial and Institutional
|
$
|
5,832.9
|
|
$
|
3,133.4
|
|
$
|
75.9
|
|
$
|
9,042.2
|
|
$
|
6,187.2
|
|
$
|
3,013.9
|
|
$
|
86.3
|
|
$
|
9,287.4
|
|
Commercial Real Estate
|
1,280.7
|
|
2,187.5
|
|
14.5
|
|
3,482.7
|
|
1,825.7
|
|
2,134.8
|
|
42.0
|
|
4,002.5
|
|
||||||||
Non-U.S.
|
606.6
|
|
930.5
|
|
1.4
|
|
1,538.5
|
|
602.8
|
|
1,273.5
|
|
1.5
|
|
1,877.8
|
|
||||||||
Lease Financing, net
|
191.4
|
|
37.8
|
|
—
|
|
229.2
|
|
214.3
|
|
79.6
|
|
—
|
|
293.9
|
|
||||||||
Other
|
155.5
|
|
109.9
|
|
—
|
|
265.4
|
|
135.5
|
|
67.9
|
|
1.7
|
|
205.1
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total Commercial
|
8,067.1
|
|
6,399.1
|
|
91.8
|
|
14,558.0
|
|
8,965.5
|
|
6,569.7
|
|
131.5
|
|
15,666.7
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||
Personal
|
|
|
|
|
|
|
|
|
||||||||||||||||
Private Client
|
6,716.0
|
|
4,027.8
|
|
9.3
|
|
10,753.1
|
|
6,373.2
|
|
3,668.4
|
|
10.4
|
|
10,052.0
|
|
||||||||
Residential Real Estate
|
2,960.5
|
|
3,978.8
|
|
308.3
|
|
7,247.6
|
|
2,723.8
|
|
5,008.5
|
|
345.2
|
|
8,077.5
|
|
||||||||
Other
|
19.6
|
|
13.9
|
|
—
|
|
33.5
|
|
17.1
|
|
8.5
|
|
0.3
|
|
25.9
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total Personal
|
9,696.1
|
|
8,020.5
|
|
317.6
|
|
18,034.2
|
|
9,114.1
|
|
8,685.4
|
|
355.9
|
|
18,155.4
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total Loans and Leases
|
$
|
17,763.2
|
|
$
|
14,419.6
|
|
$
|
409.4
|
|
$
|
32,592.2
|
|
$
|
18,079.6
|
|
$
|
15,255.1
|
|
$
|
487.4
|
|
$
|
33,822.1
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
115
|
(In Millions)
|
CURRENT
|
|
30 – 59 DAYS
PAST DUE
|
|
60 – 89 DAYS
PAST DUE
|
|
90 DAYS
OR MORE
PAST DUE
|
|
TOTAL
PERFORMING
|
|
NONPERFORMING
|
|
TOTAL LOANS
AND LEASES
|
|
|||||||
December 31, 2016
|
|
|
|
|
|
|
|
||||||||||||||
Commercial
|
|
|
|
|
|
|
|
||||||||||||||
Commercial and Institutional
|
$
|
9,269.8
|
|
$
|
5.3
|
|
$
|
1.9
|
|
$
|
1.2
|
|
$
|
9,278.2
|
|
$
|
9.2
|
|
$
|
9,287.4
|
|
Commercial Real Estate
|
3,974.4
|
|
10.9
|
|
1.0
|
|
4.6
|
|
3,990.9
|
|
11.6
|
|
4,002.5
|
|
|||||||
Non-U.S.
|
1,877.7
|
|
0.1
|
|
—
|
|
—
|
|
1,877.8
|
|
—
|
|
1,877.8
|
|
|||||||
Lease Financing, net
|
293.9
|
|
—
|
|
—
|
|
—
|
|
293.9
|
|
—
|
|
293.9
|
|
|||||||
Other
|
205.1
|
|
—
|
|
—
|
|
—
|
|
205.1
|
|
—
|
|
205.1
|
|
|||||||
|
|
|
|
|
|
|
|
||||||||||||||
Total Commercial
|
15,620.9
|
|
16.3
|
|
2.9
|
|
5.8
|
|
15,645.9
|
|
20.8
|
|
15,666.7
|
|
|||||||
|
|
|
|
|
|
|
|
||||||||||||||
Personal
|
|
|
|
|
|
|
|
||||||||||||||
Private Client
|
9,988.7
|
|
40.8
|
|
8.5
|
|
13.7
|
|
10,051.7
|
|
0.3
|
|
10,052.0
|
|
|||||||
Residential Real Estate
|
7,875.9
|
|
44.5
|
|
6.5
|
|
11.5
|
|
7,938.4
|
|
139.1
|
|
8,077.5
|
|
|||||||
Other
|
25.9
|
|
—
|
|
—
|
|
—
|
|
25.9
|
|
—
|
|
25.9
|
|
|||||||
|
|
|
|
|
|
|
|
||||||||||||||
Total Personal
|
17,890.5
|
|
85.3
|
|
15.0
|
|
25.2
|
|
18,016.0
|
|
139.4
|
|
18,155.4
|
|
|||||||
|
|
|
|
|
|
|
|
||||||||||||||
Total Loans and Leases
|
$
|
33,511.4
|
|
$
|
101.6
|
|
$
|
17.9
|
|
$
|
31.0
|
|
$
|
33,661.9
|
|
$
|
160.2
|
|
$
|
33,822.1
|
|
|
|
|
Other Real Estate Owned
|
|
$
|
5.2
|
|
|
|||||||||||||
|
|
|
Total Nonperforming Assets
|
|
$
|
165.4
|
|
|
|
|
|
116
2017 Annual Report | Northern Trust Corporation
|
|
|
|
AS OF DECEMBER 31, 2017
|
AS OF DECEMBER 31, 2016
|
||||||||||||||||
(In Millions)
|
RECORDED
INVESTMENT
|
|
UNPAID
PRINCIPAL
BALANCE
|
|
SPECIFIC
ALLOWANCE
|
|
RECORDED
INVESTMENT
|
|
UNPAID
PRINCIPAL
BALANCE
|
|
SPECIFIC
ALLOWANCE
|
|
||||||
With no related specific allowance
|
|
|
|
|
|
|
||||||||||||
Commercial and Institutional
|
$
|
24.9
|
|
$
|
30.3
|
|
$
|
—
|
|
$
|
7.9
|
|
$
|
8.7
|
|
$
|
—
|
|
Commercial Real Estate
|
5.7
|
|
7.6
|
|
—
|
|
14.7
|
|
18.6
|
|
—
|
|
||||||
Residential Real Estate
|
90.9
|
|
124.9
|
|
—
|
|
125.5
|
|
164.3
|
|
—
|
|
||||||
Private Client
|
0.7
|
|
0.7
|
|
—
|
|
0.3
|
|
0.3
|
|
—
|
|
||||||
With a related specific allowance
|
|
|
|
|
|
|
||||||||||||
Commercial and Institutional
|
0.5
|
|
5.4
|
|
0.5
|
|
—
|
|
—
|
|
—
|
|
||||||
Commercial Real Estate
|
2.8
|
|
2.8
|
|
0.6
|
|
—
|
|
—
|
|
—
|
|
||||||
Residential Real Estate
|
14.3
|
|
14.9
|
|
4.3
|
|
7.7
|
|
7.9
|
|
2.1
|
|
||||||
Total
|
|
|
|
|
|
|
||||||||||||
Commercial
|
33.9
|
|
46.1
|
|
1.1
|
|
22.6
|
|
27.3
|
|
—
|
|
||||||
Personal
|
105.9
|
|
140.5
|
|
4.3
|
|
133.5
|
|
172.5
|
|
2.1
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Total
|
$
|
139.8
|
|
$
|
186.6
|
|
$
|
5.4
|
|
$
|
156.1
|
|
$
|
199.8
|
|
$
|
2.1
|
|
|
YEAR ENDED DECEMBER 31, 2017
|
|
YEAR ENDED DECEMBER 31, 2016
|
|
||||||||
(In Millions)
|
AVERAGE
RECORDED
INVESTMENT
|
|
INTEREST
INCOME
RECOGNIZED
|
|
AVERAGE
RECORDED
INVESTMENT
|
|
INTEREST
INCOME
RECOGNIZED
|
|
||||
With no related specific allowance
|
|
|
|
|
||||||||
Commercial and Institutional
|
$
|
8.7
|
|
$
|
—
|
|
$
|
8.6
|
|
$
|
—
|
|
Commercial Real Estate
|
9.2
|
|
0.1
|
|
17.0
|
|
0.3
|
|
||||
Lease Financing, net
|
—
|
|
—
|
|
0.6
|
|
0.1
|
|
||||
Residential Real Estate
|
105.0
|
|
1.5
|
|
121.4
|
|
1.9
|
|
||||
Private Client
|
0.2
|
|
—
|
|
1.2
|
|
—
|
|
||||
With a related specific allowance
|
|
|
|
|
||||||||
Commercial and Institutional
|
6.5
|
|
—
|
|
7.6
|
|
—
|
|
||||
Commercial Real Estate
|
2.6
|
|
—
|
|
—
|
|
—
|
|
||||
Lease Financing, net
|
—
|
|
—
|
|
1.2
|
|
—
|
|
||||
Residential Real Estate
|
17.0
|
|
—
|
|
2.1
|
|
—
|
|
||||
Total
|
|
|
|
|
||||||||
Commercial
|
27.0
|
|
0.1
|
|
35.0
|
|
0.4
|
|
||||
Personal
|
122.2
|
|
1.5
|
|
124.7
|
|
1.9
|
|
||||
|
|
|
|
|
||||||||
Total
|
$
|
149.2
|
|
$
|
1.6
|
|
$
|
159.7
|
|
$
|
2.3
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
117
|
($ In Millions)
|
NUMBER OF
LOANS AND
LEASES
|
|
RECORDED
INVESTMENT
|
|
UNPAID
PRINCIPAL
BALANCE
|
|
||
December 31, 2017
|
|
|
|
|||||
Commercial
|
|
|
|
|||||
Commercial and Institutional
|
3
|
|
$
|
0.4
|
|
$
|
1.4
|
|
Commercial Real Estate
|
2
|
|
1.8
|
|
1.8
|
|
||
|
|
|
|
|||||
Total Commercial
|
5
|
|
2.2
|
|
3.2
|
|
||
|
|
|
|
|||||
Personal
|
|
|
|
|||||
Residential Real Estate
|
66
|
|
22.1
|
|
22.8
|
|
||
Private Client
|
3
|
|
0.2
|
|
0.5
|
|
||
|
|
|
|
|||||
Total Personal
|
69
|
|
22.3
|
|
23.3
|
|
||
|
|
|
|
|||||
Total Loans and Leases
|
74
|
|
$
|
24.5
|
|
$
|
26.5
|
|
($ In Millions)
|
NUMBER OF
LOANS AND
LEASES
|
|
RECORDED
INVESTMENT
|
|
UNPAID
PRINCIPAL
BALANCE
|
|
||
December 31, 2016
|
|
|
|
|||||
Commercial
|
|
|
|
|||||
Commercial and Institutional
|
7
|
|
$
|
4.3
|
|
$
|
6.5
|
|
Commercial Real Estate
|
7
|
|
8.7
|
|
11.0
|
|
||
|
|
|
|
|||||
Total Commercial
|
14
|
|
13.0
|
|
17.5
|
|
||
|
|
|
|
|||||
Personal
|
|
|
|
|||||
Residential Real Estate
|
73
|
|
22.2
|
|
23.5
|
|
||
Private Client
|
2
|
|
2.1
|
|
2.1
|
|
||
|
|
|
|
|||||
Total Personal
|
75
|
|
24.3
|
|
25.6
|
|
||
|
|
|
|
|||||
Total Loans and Leases
|
89
|
|
$
|
37.3
|
|
$
|
43.1
|
|
|
|
|
118
2017 Annual Report | Northern Trust Corporation
|
|
|
|
2017
|
2016
|
2015
|
||||||||||||||||||||||||
(In Millions)
|
COMMERCIAL
|
|
PERSONAL
|
|
TOTAL
|
|
COMMERCIAL
|
|
PERSONAL
|
|
TOTAL
|
|
COMMERCIAL
|
|
PERSONAL
|
|
TOTAL
|
|
|||||||||
Balance at Beginning of Year
|
$
|
104.9
|
|
$
|
87.1
|
|
$
|
192.0
|
|
$
|
114.8
|
|
$
|
118.5
|
|
$
|
233.3
|
|
$
|
169.7
|
|
$
|
126.2
|
|
$
|
295.9
|
|
Charge-Offs
|
(11.4
|
)
|
(10.1
|
)
|
(21.5
|
)
|
(16.6
|
)
|
(10.7
|
)
|
(27.3
|
)
|
(13.1
|
)
|
(17.6
|
)
|
(30.7
|
)
|
|||||||||
Recoveries
|
5.5
|
|
5.8
|
|
11.3
|
|
4.8
|
|
7.3
|
|
12.1
|
|
5.5
|
|
5.7
|
|
11.2
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net (Charge-Offs) Recoveries
|
(5.9
|
)
|
(4.3
|
)
|
(10.2
|
)
|
(11.8
|
)
|
(3.4
|
)
|
(15.2
|
)
|
(7.6
|
)
|
(11.9
|
)
|
(19.5
|
)
|
|||||||||
Provision for Credit Losses
|
(18.2
|
)
|
(9.8
|
)
|
(28.0
|
)
|
2.0
|
|
(28.0
|
)
|
(26.0
|
)
|
(47.2
|
)
|
4.2
|
|
(43.0
|
)
|
|||||||||
Effects of Foreign Exchange Rates
|
—
|
|
—
|
|
—
|
|
(0.1
|
)
|
—
|
|
(0.1
|
)
|
(0.1
|
)
|
—
|
|
(0.1
|
)
|
|||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Balance at End of Year
|
$
|
80.8
|
|
$
|
73.0
|
|
$
|
153.8
|
|
$
|
104.9
|
|
$
|
87.1
|
|
$
|
192.0
|
|
$
|
114.8
|
|
$
|
118.5
|
|
$
|
233.3
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Allowance for Credit Losses Assigned to:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Loans and Leases
|
$
|
63.5
|
|
$
|
67.7
|
|
$
|
131.2
|
|
$
|
83.7
|
|
$
|
77.3
|
|
$
|
161.0
|
|
$
|
86.3
|
|
$
|
107.5
|
|
$
|
193.8
|
|
Undrawn Commitments and Standby Letters of Credit
|
17.3
|
|
5.3
|
|
22.6
|
|
21.2
|
|
9.8
|
|
31.0
|
|
28.5
|
|
11.0
|
|
39.5
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Total Allowance for Credit Losses
|
$
|
80.8
|
|
$
|
73.0
|
|
$
|
153.8
|
|
$
|
104.9
|
|
$
|
87.1
|
|
$
|
192.0
|
|
$
|
114.8
|
|
$
|
118.5
|
|
$
|
233.3
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
119
|
(In Millions)
|
COMMERCIAL
|
|
PERSONAL
|
|
TOTAL
|
|
|||
December 31, 2017
|
|
|
|
||||||
Loans and Leases
|
|
|
|
||||||
Specifically Evaluated for Impairment
|
$
|
33.9
|
|
$
|
105.9
|
|
$
|
139.8
|
|
Evaluated for Inherent Impairment
|
14,524.1
|
|
17,928.3
|
|
32,452.4
|
|
|||
|
|
|
|
||||||
Total Loans and Leases
|
14,558.0
|
|
18,034.2
|
|
32,592.2
|
|
|||
Allowance for Credit Losses on Credit Exposures
|
|
|
|
||||||
Specifically Evaluated for Impairment
|
1.1
|
|
4.3
|
|
5.4
|
|
|||
Evaluated for Inherent Impairment
|
62.4
|
|
63.4
|
|
125.8
|
|
|||
|
|
|
|
||||||
Allowance Assigned to Loans and Leases
|
63.5
|
|
67.7
|
|
131.2
|
|
|||
Allowance for Undrawn Exposures
|
|
|
|
||||||
Commitments and Standby Letters of Credit
|
17.3
|
|
5.3
|
|
22.6
|
|
|||
|
|
|
|
||||||
Total Allowance for Credit Losses
|
$
|
80.8
|
|
$
|
73.0
|
|
$
|
153.8
|
|
(In Millions)
|
COMMERCIAL
|
|
PERSONAL
|
|
TOTAL
|
|
|||
December 31, 2016
|
|
|
|
||||||
Loans and Leases
|
|
|
|
||||||
Specifically Evaluated for Impairment
|
$
|
46.9
|
|
$
|
109.2
|
|
$
|
156.1
|
|
Evaluated for Inherent Impairment
|
15,619.8
|
|
18,046.2
|
|
33,666.0
|
|
|||
|
|
|
|
||||||
Total Loans and Leases
|
15,666.7
|
|
18,155.4
|
|
33,822.1
|
|
|||
Allowance for Credit Losses on Credit Exposures
|
|
|
|
||||||
Specifically Evaluated for Impairment
|
—
|
|
2.1
|
|
2.1
|
|
|||
Evaluated for Inherent Impairment
|
83.7
|
|
75.2
|
|
158.9
|
|
|||
|
|
|
|
||||||
Allowance Assigned to Loans and Leases
|
83.7
|
|
77.3
|
|
161.0
|
|
|||
Allowance for Undrawn Exposures
|
|
|
|
||||||
Commitments and Standby Letters of Credit
|
21.2
|
|
9.8
|
|
31.0
|
|
|||
|
|
|
|
||||||
Total Allowance for Credit Losses
|
$
|
104.9
|
|
$
|
87.1
|
|
$
|
192.0
|
|
|
|
|
120
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
|||||
(In Millions)
|
2017
|
|
2016
|
|
||
Commercial Mortgages
|
|
|
||||
Office
|
$
|
825.2
|
|
$
|
866.1
|
|
Apartment/ Multi-family
|
623.3
|
|
784.8
|
|
||
Retail
|
631.1
|
|
698.1
|
|
||
Industrial/ Warehouse
|
311.1
|
|
359.7
|
|
||
Other
|
445.6
|
|
457.6
|
|
||
|
|
|
||||
Total Commercial Mortgages
|
2,836.3
|
|
3,166.3
|
|
||
Construction, Acquisition and Development Loans
|
350.8
|
|
445.0
|
|
||
Single Family Investment
|
164.8
|
|
179.6
|
|
||
Other Commercial Real Estate Related
|
130.8
|
|
211.6
|
|
||
|
|
|
||||
Total Commercial Real Estate Loans
|
$
|
3,482.7
|
|
$
|
4,002.5
|
|
|
DECEMBER 31, 2017
|
||||||||
(In Millions)
|
ORIGINAL
COST
|
|
ACCUMULATED
DEPRECIATION
|
|
NET BOOK
VALUE
|
|
|||
Land and Improvements
|
$
|
15.3
|
|
$
|
1.0
|
|
$
|
14.3
|
|
Buildings
|
260.4
|
|
144.1
|
|
116.3
|
|
|||
Equipment
|
590.5
|
|
405.1
|
|
185.4
|
|
|||
Leasehold Improvements
|
389.4
|
|
263.2
|
|
126.2
|
|
|||
Buildings Leased under Capital Leases
|
80.0
|
|
57.6
|
|
22.4
|
|
|||
|
|
|
|
||||||
Total Buildings and Equipment
|
$
|
1,335.6
|
|
$
|
871.0
|
|
$
|
464.6
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
121
|
(In Millions)
|
FUTURE MINIMUM
LEASE PAYMENTS
|
|
|
2018
|
$
|
95.9
|
|
2019
|
96.0
|
|
|
2020
|
92.2
|
|
|
2021
|
76.5
|
|
|
2022
|
66.7
|
|
|
Later Years
|
360.5
|
|
|
|
|
||
Total Minimum Lease Payments
|
787.8
|
|
|
Less: Sublease Rentals
|
(21.2
|
)
|
|
|
|
||
Net Minimum Lease Payments
|
$
|
766.6
|
|
(In Millions)
|
FUTURE MINIMUM
LEASE PAYMENTS, NET
|
|
|
2018
|
$
|
8.4
|
|
2019
|
8.7
|
|
|
2020
|
(1.7
|
)
|
|
2021
|
—
|
|
|
2022
|
—
|
|
|
Later Years
|
—
|
|
|
|
|
||
Total Minimum Lease Payments, net
|
15.4
|
|
|
Less: Amount Representing Interest
|
(1.0
|
)
|
|
|
|
||
Net Present Value under Capital Lease Obligations
|
$
|
14.4
|
|
|
|
|
122
2017 Annual Report | Northern Trust Corporation
|
|
|
(In Millions)
|
CORPORATE &
INSTITUTIONAL
SERVICES
|
|
WEALTH
MANAGEMENT
|
|
TOTAL
|
|
|||
Balance at December 31, 2015
|
$
|
455.1
|
|
$
|
71.3
|
|
$
|
526.4
|
|
Goodwill Acquired
|
11.8
|
|
—
|
|
11.8
|
|
|||
Foreign Exchange Rates
|
(18.5
|
)
|
(0.3
|
)
|
(18.8
|
)
|
|||
|
|
|
|
||||||
Balance at December 31, 2016
|
$
|
448.4
|
|
$
|
71.0
|
|
$
|
519.4
|
|
Goodwill Acquired
|
78.3
|
|
—
|
|
78.3
|
|
|||
Measurement Period Adjustments
|
(1.3
|
)
|
—
|
|
(1.3
|
)
|
|||
Foreign Exchange Rates
|
9.1
|
|
0.1
|
|
9.2
|
|
|||
|
|
|
|
||||||
Balance at December 31, 2017
|
$
|
534.5
|
|
$
|
71.1
|
|
$
|
605.6
|
|
|
DECEMBER 31,
|
|||||
(In Millions)
|
2017
|
|
2016
|
|
||
Gross Carrying Amount
|
$
|
222.7
|
|
$
|
89.0
|
|
Less: Accumulated Amortization
|
61.3
|
|
47.2
|
|
||
|
|
|
||||
Net Book Value
|
$
|
161.4
|
|
$
|
41.8
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
123
|
|
DECEMBER 31,
|
|||||||
($ In Millions)
|
RATE
|
|
2017
|
|
2016
|
|
||
Corporation-Senior Notes
(1)(5)
|
|
|
|
|||||
Fixed Rate Due Nov. 2020
(6)
|
3.45
|
%
|
$
|
499.6
|
|
$
|
499.4
|
|
Fixed Rate Due Aug. 2021
(7)
|
3.38
|
|
498.8
|
|
498.5
|
|
||
Fixed Rate Due Aug. 2022
(8)
|
2.38
|
|
498.9
|
|
498.7
|
|
||
|
|
|
|
|||||
Total Senior Notes
|
|
$
|
1,497.3
|
|
$
|
1,496.6
|
|
|
DECEMBER 31,
|
|||||
($ In Millions)
|
2017
|
|
2016
|
|
||
Bank-Subordinated Debt
(1)(3)(5)(11)
|
|
|
||||
5.85% Notes due Nov. 2017
|
$
|
—
|
|
$
|
207.6
|
|
6.50% Notes due Aug. 2018
(9)
|
305.5
|
|
315.3
|
|
||
|
|
|
||||
Total Bank-Subordinated Debt
|
305.5
|
|
522.9
|
|
||
|
|
|
||||
Corporation-Subordinated Debt
(5)
|
|
|
||||
3.95% Notes due Oct. 2025
(1)(10)(11)
|
780.4
|
|
785.0
|
|
||
3.375% Fixed-to-Floating Rate Notes due May 2032
(2)
|
349.2
|
|
—
|
|
||
|
|
|
||||
Total Corporation Subordinated Debt
|
1,129.6
|
|
785.0
|
|
||
|
|
|
||||
Capital Lease Obligations
(4)
|
14.4
|
|
23.0
|
|
||
|
|
|
||||
Total Long-Term Debt
|
$
|
1,449.5
|
|
$
|
1,330.9
|
|
|
|
|
||||
Long-Term Debt Qualifying as Risk-Based Capital
|
$
|
1,099.4
|
|
$
|
809.3
|
|
|
|
|
124
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
|||||
(In Millions)
|
2017
|
|
2016
|
|
||
NTC Capital I Subordinated Debentures due January 15, 2027
|
$
|
154.2
|
|
$
|
154.1
|
|
NTC Capital II Subordinated Debentures due April 15, 2027
|
123.3
|
|
123.3
|
|
||
|
|
|
||||
Total Subordinated Debentures
|
$
|
277.5
|
|
$
|
277.4
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
125
|
|
2017
|
|
2016
|
|
2015
|
|
Balance at January 1
|
228,605,485
|
|
229,293,783
|
|
233,390,705
|
|
Incentive Plan and Awards
|
1,320,129
|
|
1,209,124
|
|
1,033,664
|
|
Stock Options Exercised
|
1,997,362
|
|
4,156,728
|
|
1,721,282
|
|
Treasury Stock Purchased
|
(5,796,302
|
)
|
(6,054,150
|
)
|
(6,851,868
|
)
|
|
|
|
|
|||
Balance at December 31
|
226,126,674
|
|
228,605,485
|
|
229,293,783
|
|
(In Millions)
|
BALANCE AT DECEMBER 31, 2017
|
|
NET
CHANGE |
|
BALANCE AT DECEMBER 31, 2016
|
|
NET
CHANGE |
|
BALANCE AT DECEMBER 31, 2015
|
|
NET
CHANGE |
|
BALANCE AT DECEMBER 31, 2014
|
|
|||||||
Net Unrealized (Losses) Gains on Securities Available for Sale*
|
$
|
(74.8
|
)
|
$
|
(42.4
|
)
|
$
|
(32.4
|
)
|
$
|
(1.4
|
)
|
$
|
(31.0
|
)
|
$
|
(58.6
|
)
|
$
|
27.6
|
|
Net Unrealized Gains (Losses) on Cash Flow Hedges
|
4.5
|
|
(1.6
|
)
|
6.1
|
|
9.1
|
|
(3.0
|
)
|
1.7
|
|
(4.7
|
)
|
|||||||
Net Foreign Currency Adjustments
|
(1.8
|
)
|
16.7
|
|
(18.5
|
)
|
(0.9
|
)
|
(17.6
|
)
|
(15.9
|
)
|
(1.7
|
)
|
|||||||
Net Pension and Other Postretirement Benefit Adjustments
|
(342.2
|
)
|
(17.0
|
)
|
(325.2
|
)
|
(4.1
|
)
|
(321.1
|
)
|
19.8
|
|
(340.9
|
)
|
|||||||
|
|
|
|
|
|
|
|
||||||||||||||
Total
|
$
|
(414.3
|
)
|
$
|
(44.3
|
)
|
$
|
(370.0
|
)
|
$
|
2.7
|
|
$
|
(372.7
|
)
|
$
|
(53.0
|
)
|
$
|
(319.7
|
)
|
|
|
|
126
2017 Annual Report | Northern Trust Corporation
|
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||||||||||||||||||||
|
2017
|
2016
|
2015
|
||||||||||||||||||||||||
(In Millions)
|
BEFORE
TAX
|
|
TAX
EFFECT
|
|
AFTER
TAX
|
|
BEFORE
TAX
|
|
TAX
EFFECT
|
|
AFTER
TAX
|
|
BEFORE
TAX
|
|
TAX
EFFECT
|
|
AFTER
TAX
|
|
|||||||||
Unrealized Gains (Losses) on Securities Available for Sale
|
|
|
|
|
|
||||||||||||||||||||||
Unrealized (Losses) Gains on Securities Available for Sale
|
$
|
(70.2
|
)
|
$
|
26.9
|
|
$
|
(43.3
|
)
|
$
|
(1.8
|
)
|
$
|
0.7
|
|
$
|
(1.1
|
)
|
$
|
(94.3
|
)
|
$
|
35.5
|
|
$
|
(58.8
|
)
|
Reclassification Adjustment for (Gains) Losses Included in Net Income
|
1.4
|
|
(0.5
|
)
|
0.9
|
|
(0.5
|
)
|
0.2
|
|
(0.3
|
)
|
0.3
|
|
(0.1
|
)
|
0.2
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net Change
|
$
|
(68.8
|
)
|
$
|
26.4
|
|
$
|
(42.4
|
)
|
$
|
(2.3
|
)
|
$
|
0.9
|
|
$
|
(1.4
|
)
|
$
|
(94.0
|
)
|
$
|
35.4
|
|
$
|
(58.6
|
)
|
Unrealized (Losses) Gains on Cash Flow Hedges
|
|
|
|
|
|
||||||||||||||||||||||
Unrealized (Losses) Gains on Cash Flow Hedges
|
$
|
33.8
|
|
$
|
(20.3
|
)
|
$
|
13.5
|
|
$
|
4.4
|
|
$
|
5.9
|
|
$
|
10.3
|
|
$
|
(1.2
|
)
|
$
|
0.2
|
|
$
|
(1.0
|
)
|
Reclassification Adjustment for (Gains) Losses Included in Net Income
|
(24.5
|
)
|
9.4
|
|
(15.1
|
)
|
(1.9
|
)
|
0.7
|
|
(1.2
|
)
|
4.7
|
|
(2.0
|
)
|
2.7
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net Change
|
$
|
9.3
|
|
$
|
(10.9
|
)
|
$
|
(1.6
|
)
|
$
|
2.5
|
|
$
|
6.6
|
|
$
|
9.1
|
|
$
|
3.5
|
|
$
|
(1.8
|
)
|
$
|
1.7
|
|
Foreign Currency Adjustments
|
|
|
|
|
|
||||||||||||||||||||||
Foreign Currency Translation Adjustments
|
$
|
156.5
|
|
$
|
(3.1
|
)
|
$
|
153.4
|
|
$
|
(126.5
|
)
|
$
|
(3.1
|
)
|
$
|
(129.6
|
)
|
$
|
(101.5
|
)
|
$
|
4.9
|
|
$
|
(96.6
|
)
|
Long-Term Intra-Entity Foreign Currency Transaction Losses
|
2.0
|
|
(0.7
|
)
|
1.3
|
|
(5.3
|
)
|
2.0
|
|
(3.3
|
)
|
(18.7
|
)
|
7.1
|
|
(11.6
|
)
|
|||||||||
Net Investment Hedge Gains (Losses)
|
(223.2
|
)
|
85.2
|
|
(138.0
|
)
|
212.4
|
|
(80.4
|
)
|
132.0
|
|
148.6
|
|
(56.3
|
)
|
92.3
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net Change
|
$
|
(64.7
|
)
|
$
|
81.4
|
|
$
|
16.7
|
|
$
|
80.6
|
|
$
|
(81.5
|
)
|
$
|
(0.9
|
)
|
$
|
28.4
|
|
$
|
(44.3
|
)
|
$
|
(15.9
|
)
|
Pension and Other Postretirement Benefit Adjustments
|
|
|
|
|
|
||||||||||||||||||||||
Net Actuarial Gains (Losses)
|
$
|
(58.4
|
)
|
$
|
25.4
|
|
$
|
(33.0
|
)
|
$
|
(31.1
|
)
|
$
|
11.2
|
|
$
|
(19.9
|
)
|
$
|
(12.2
|
)
|
$
|
8.2
|
|
$
|
(4.0
|
)
|
Reclassification Adjustment for Losses Included in Net Income
|
25.9
|
|
(9.9
|
)
|
16.0
|
|
25.4
|
|
(9.6
|
)
|
15.8
|
|
38.3
|
|
(14.5
|
)
|
23.8
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net Change
|
$
|
(32.5
|
)
|
$
|
15.5
|
|
$
|
(17.0
|
)
|
$
|
(5.7
|
)
|
$
|
1.6
|
|
$
|
(4.1
|
)
|
$
|
26.1
|
|
$
|
(6.3
|
)
|
$
|
19.8
|
|
(In Millions)
|
LOCATION OF
RECLASSIFICATION ADJUSTMENTS
RECOGNIZED IN INCOME
|
AMOUNT OF RECLASSIFICATION
ADJUSTMENTS RECOGNIZED
IN INCOME
YEAR ENDED DECEMBER 31,
|
||||||||
2017
|
2016
|
2015
|
||||||||
Securities Available for Sale
|
|
|
|
|
||||||
Realized Losses on Securities Available for Sale
|
Investment Security Gains
(Losses), net |
$
|
1.4
|
|
$
|
(0.5
|
)
|
$
|
0.3
|
|
|
|
|
|
|
||||||
Realized (Gains) Losses on Cash Flow Hedges
|
|
|
|
|
||||||
Foreign Exchange Contracts
|
Other Operating Income/Expense
|
(24.5
|
)
|
(1.9
|
)
|
4.7
|
|
|||
|
|
|
|
|
||||||
Pension and Other Postretirement Benefit Adjustments
|
|
|
|
|
||||||
Amortization of Net Actuarial Losses
|
Employee Benefits
|
26.0
|
|
25.6
|
|
38.5
|
|
|||
Amortization of Prior Service Cost
|
Employee Benefits
|
(0.1
|
)
|
(0.2
|
)
|
(0.2
|
)
|
|||
|
|
|
|
|
||||||
Gross Reclassification Adjustment
|
|
$
|
25.9
|
|
$
|
25.4
|
|
$
|
38.3
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
127
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
($ In Millions Except Per Common Share Information)
|
2017
|
|
2016
|
|
2015
|
|
|||
BASIC NET INCOME PER COMMON SHARE
|
|
|
|
||||||
Average Number of Common Shares Outstanding
|
228,257,664
|
|
227,580,584
|
|
232,279,849
|
|
|||
Net Income
|
$
|
1,199.0
|
|
$
|
1,032.5
|
|
$
|
973.8
|
|
Less: Dividends on Preferred Stock
|
49.8
|
|
23.4
|
|
23.4
|
|
|||
|
|
|
|
||||||
Net Income Applicable to Common Stock
|
$
|
1,149.2
|
|
$
|
1,009.1
|
|
$
|
950.4
|
|
Less: Earnings Allocated to Participating Securities
|
18.8
|
|
18.7
|
|
15.4
|
|
|||
|
|
|
|
||||||
Earnings Allocated to Common Shares Outstanding
|
1,130.4
|
|
990.4
|
|
935.0
|
|
|||
Basic Net Income Per Common Share
|
4.95
|
|
4.35
|
|
4.03
|
|
|||
|
|
|
|
||||||
DILUTED NET INCOME PER COMMON SHARE
|
|
|
|
||||||
Average Number of Common Shares Outstanding
|
228,257,664
|
|
227,580,584
|
|
232,279,849
|
|
|||
Plus Dilutive Effect of Share-based Compensation
|
1,396,737
|
|
1,570,822
|
|
1,941,880
|
|
|||
|
|
|
|
||||||
Average Common and Potential Common Shares
|
229,654,401
|
|
229,151,406
|
|
234,221,729
|
|
|||
|
|
|
|
||||||
Earnings Allocated to Common and Potential Common Shares
|
$
|
1,130.5
|
|
$
|
990.4
|
|
$
|
935.0
|
|
Diluted Net Income Per Common Share
|
4.92
|
|
4.32
|
|
3.99
|
|
|
|
|
128
2017 Annual Report | Northern Trust Corporation
|
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Interest Income
|
|
|
|
||||||
Loans and Leases
|
$
|
919.1
|
|
$
|
806.5
|
|
$
|
731.9
|
|
Securities – Taxable
|
594.1
|
|
428.8
|
|
332.2
|
|
|||
– Non-Taxable
|
9.8
|
|
7.5
|
|
4.8
|
|
|||
Interest-Bearing Due from and Deposits with Banks
(1)
|
63.8
|
|
64.3
|
|
84.9
|
|
|||
Federal Reserve and Other Central Bank Deposits and Other
|
182.6
|
|
109.8
|
|
70.2
|
|
|||
|
|
|
|
||||||
Total Interest Income
|
$
|
1,769.4
|
|
$
|
1,416.9
|
|
$
|
1,224.0
|
|
|
|
|
|
||||||
Interest Expense
|
|
|
|
||||||
Deposits
|
$
|
182.1
|
|
$
|
83.5
|
|
$
|
74.3
|
|
Federal Funds Purchased
|
10.4
|
|
1.5
|
|
0.7
|
|
|||
Securities Sold under Agreements to Repurchase
|
6.0
|
|
2.3
|
|
0.3
|
|
|||
Other Borrowings
|
50.7
|
|
18.0
|
|
5.0
|
|
|||
Senior Notes
|
46.9
|
|
46.8
|
|
46.8
|
|
|||
Long-Term Debt
|
39.2
|
|
26.4
|
|
24.4
|
|
|||
Floating Rate Capital Debt
|
4.9
|
|
3.5
|
|
2.4
|
|
|||
|
|
|
|
||||||
Total Interest Expense
|
$
|
340.2
|
|
$
|
182.0
|
|
$
|
153.9
|
|
|
|
|
|
||||||
Net Interest Income
|
$
|
1,429.2
|
|
$
|
1,234.9
|
|
$
|
1,070.1
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Loan Service Fees
|
$
|
50.7
|
|
$
|
56.6
|
|
$
|
59.1
|
|
Banking Service Fees
|
48.6
|
|
50.6
|
|
48.2
|
|
|||
Other Income
|
58.2
|
|
134.0
|
|
139.8
|
|
|||
|
|
|
|
||||||
Total Other Operating Income
|
$
|
157.5
|
|
$
|
241.2
|
|
$
|
247.1
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
129
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Business Promotion
|
$
|
95.4
|
|
$
|
83.6
|
|
$
|
85.1
|
|
FDIC Insurance Premiums
|
34.7
|
|
31.7
|
|
25.2
|
|
|||
Staff Related
|
42.8
|
|
43.0
|
|
40.5
|
|
|||
Other Intangibles Amortization
|
11.4
|
|
8.8
|
|
10.9
|
|
|||
Other Expenses
|
147.3
|
|
197.3
|
|
166.3
|
|
|||
|
|
|
|
||||||
Total Other Operating Expense
|
$
|
331.6
|
|
$
|
364.4
|
|
$
|
328.0
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Tax at Statutory Rate
|
$
|
571.9
|
|
$
|
531.0
|
|
$
|
512.7
|
|
Tax Exempt Income
|
(9.6
|
)
|
(7.2
|
)
|
(4.8
|
)
|
|||
Foreign Tax Rate Differential
|
(50.0
|
)
|
(50.9
|
)
|
(44.2
|
)
|
|||
Excess Tax Benefit Related to Share-Based Compensation
|
(31.6
|
)
|
(12.3
|
)
|
—
|
|
|||
State Taxes, net
|
41.0
|
|
31.1
|
|
33.1
|
|
|||
Impact of Tax Cuts and Jobs Act
|
(53.1
|
)
|
—
|
|
—
|
|
|||
Other
|
(33.7
|
)
|
(7.1
|
)
|
(5.6
|
)
|
|||
|
|
|
|
||||||
Provision for Income Taxes
|
$
|
434.9
|
|
$
|
484.6
|
|
$
|
491.2
|
|
|
|
|
130
2017 Annual Report | Northern Trust Corporation
|
|
|
|
|
||
(In Millions)
|
2017
|
|
|
Federal Taxes on Mandatory Deemed Repatriation
|
$
|
150.0
|
|
Impact Related to Federal Deferred Taxes
|
(210.0
|
)
|
|
Other Adjustments
|
6.9
|
|
|
|
|
||
Provision (Benefit) for Income Taxes
|
$
|
(53.1
|
)
|
(In Millions)
|
2017
|
|
2016
|
|
||
Balance at January 1
|
$
|
17.2
|
|
$
|
12.3
|
|
Additions for Tax Positions Taken in the Current Year
|
9.9
|
|
—
|
|
||
Additions for Tax Positions Taken in Prior Years
|
6.2
|
|
6.6
|
|
||
Reductions for Tax Positions Taken in Prior Years
|
(5.4
|
)
|
(1.2
|
)
|
||
Reductions Resulting from Expiration of Statutes
|
(0.2
|
)
|
(0.5
|
)
|
||
|
|
|
||||
Balance at December 31
|
$
|
27.7
|
|
$
|
17.2
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
131
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Current Tax Provision:
|
|
|
|
||||||
Federal
|
$
|
347.3
|
|
$
|
495.8
|
|
$
|
489.8
|
|
State
|
38.3
|
|
65.3
|
|
64.5
|
|
|||
Non-U.S.
|
125.4
|
|
99.3
|
|
83.1
|
|
|||
|
|
|
|
||||||
Total
|
511.0
|
|
660.4
|
|
637.4
|
|
|||
Deferred Tax Provision:
|
|
|
|
||||||
Federal
|
$
|
(96.4
|
)
|
$
|
(159.0
|
)
|
$
|
(131.1
|
)
|
State
|
24.6
|
|
(18.9
|
)
|
(13.6
|
)
|
|||
Non-U.S.
|
(4.3
|
)
|
2.1
|
|
(1.5
|
)
|
|||
|
|
|
|
||||||
Total
|
(76.1
|
)
|
(175.8
|
)
|
(146.2
|
)
|
|||
|
|
|
|
||||||
Provision for Income Taxes
|
$
|
434.9
|
|
$
|
484.6
|
|
$
|
491.2
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Current Tax Benefit (Charge) for Employee Stock Options and Other Stock-Based Plans
|
$
|
—
|
|
$
|
(7.6
|
)
|
$
|
17.7
|
|
Tax Effect of Other Comprehensive Income
|
(112.4
|
)
|
72.4
|
|
17.0
|
|
|
|
|
132
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Deferred Tax Liabilities:
|
|
|
|
||||||
Lease Financing
|
$
|
85.8
|
|
$
|
148.7
|
|
$
|
272.6
|
|
Software Development
|
187.8
|
|
352.0
|
|
339.9
|
|
|||
Accumulated Depreciation
|
41.0
|
|
26.0
|
|
20.6
|
|
|||
Compensation and Benefits
|
—
|
|
50.2
|
|
70.7
|
|
|||
State Taxes, net
|
59.4
|
|
33.3
|
|
48.8
|
|
|||
Other Liabilities
|
145.7
|
|
243.1
|
|
169.1
|
|
|||
|
|
|
|
||||||
Gross Deferred Tax Liabilities
|
519.7
|
|
853.3
|
|
921.7
|
|
|||
|
|
|
|
||||||
Deferred Tax Assets:
|
|
|
|
||||||
Allowance for Credit Losses
|
32.3
|
|
67.2
|
|
81.7
|
|
|||
Compensation and Benefits
|
35.5
|
|
—
|
|
—
|
|
|||
Other Assets
|
88.3
|
|
233.8
|
|
185.0
|
|
|||
|
|
|
|
||||||
Gross Deferred Tax Assets
|
156.1
|
|
301.0
|
|
266.7
|
|
|||
|
|
|
|
||||||
Valuation Reserve
|
(1.1
|
)
|
(0.9
|
)
|
(1.6
|
)
|
|||
Deferred Tax Assets, net of Valuation Reserve
|
155.0
|
|
300.1
|
|
265.1
|
|
|||
|
|
|
|
||||||
Net Deferred Tax Liabilities
|
$
|
364.7
|
|
$
|
553.2
|
|
$
|
656.6
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
133
|
|
U.S. PLAN
|
NON-U.S. PLANS
|
SUPPLEMENTAL PLAN
|
|||||||||||||||
($ In Millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||
Accumulated Benefit Obligation
|
$
|
1,088.4
|
|
$
|
953.2
|
|
$
|
192.2
|
|
$
|
158.3
|
|
$
|
129.0
|
|
$
|
108.9
|
|
|
|
|
|
|
|
|
||||||||||||
Projected Benefit Obligation
|
1,209.9
|
|
1,062.7
|
|
198.3
|
|
155.9
|
|
144.5
|
|
121.1
|
|
||||||
Plan Assets at Fair Value
|
1,506.4
|
|
1,393.5
|
|
178.7
|
|
139.3
|
|
—
|
|
—
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Funded Status at December 31
|
$
|
296.5
|
|
$
|
330.8
|
|
$
|
(19.6
|
)
|
$
|
(16.6
|
)
|
$
|
(144.5
|
)
|
$
|
(121.1
|
)
|
Weighted-Average Assumptions:
|
|
|
|
|
|
|
||||||||||||
Discount Rates
|
3.79
|
%
|
4.46
|
%
|
2.08
|
%
|
2.39
|
%
|
3.79
|
%
|
4.46
|
%
|
||||||
Rate of Increase in Compensation Level
|
4.39
|
|
4.39
|
|
N/A
|
|
N/A
|
|
4.39
|
|
4.39
|
|
||||||
Expected Long-Term Rate of Return on Assets
|
6.00
|
|
6.75
|
|
2.61
|
|
3.22
|
|
N/A
|
|
N/A
|
|
|
U.S. PLAN
|
NON-U.S. PLANS
|
SUPPLEMENTAL PLAN
|
|||||||||||||||
(In Millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||
Net Actuarial Loss
|
$
|
399.0
|
|
$
|
378.1
|
|
$
|
44.2
|
|
$
|
55.8
|
|
$
|
83.2
|
|
$
|
67.4
|
|
Prior Service Cost
|
(1.8
|
)
|
(2.3
|
)
|
2.5
|
|
—
|
|
0.6
|
|
0.8
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Gross Amount in Accumulated Other Comprehensive Income
|
397.2
|
|
375.8
|
|
46.7
|
|
55.8
|
|
83.8
|
|
68.2
|
|
||||||
Income Tax Effect
|
151.6
|
|
142.3
|
|
5.3
|
|
6.7
|
|
31.9
|
|
25.8
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Net Amount in Accumulated Other Comprehensive Income
|
$
|
245.6
|
|
$
|
233.5
|
|
$
|
41.4
|
|
$
|
49.1
|
|
$
|
51.9
|
|
$
|
42.4
|
|
|
U.S. PLAN
|
NON-U.S. PLANS
|
SUPPLEMENTAL PLAN
|
||||||||||||||||||||||||
($ In Millions)
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
|
|||||||||
Service Cost
|
$
|
38.3
|
|
$
|
37.4
|
|
$
|
37.8
|
|
$
|
0.4
|
|
$
|
—
|
|
$
|
—
|
|
$
|
3.7
|
|
$
|
3.5
|
|
$
|
3.6
|
|
Interest Cost
|
45.9
|
|
45.8
|
|
44.7
|
|
4.0
|
|
4.7
|
|
5.7
|
|
5.2
|
|
5.1
|
|
5.0
|
|
|||||||||
Expected Return on Plan Assets
|
(93.8
|
)
|
(94.4
|
)
|
(96.5
|
)
|
(4.5
|
)
|
(4.6
|
)
|
(5.9
|
)
|
—
|
|
N/A
|
|
N/A
|
|
|||||||||
Settlement Expense
|
—
|
|
—
|
|
—
|
|
1.1
|
|
3.7
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net Loss
|
19.0
|
|
18.8
|
|
29.7
|
|
1.3
|
|
1.0
|
|
1.5
|
|
5.7
|
|
5.8
|
|
7.3
|
|
|||||||||
Prior Service Cost
|
(0.4
|
)
|
(0.4
|
)
|
(0.4
|
)
|
0.1
|
|
—
|
|
—
|
|
0.2
|
|
0.2
|
|
0.2
|
|
|||||||||
Net Periodic Pension Expense
|
$
|
9.0
|
|
$
|
7.2
|
|
$
|
15.3
|
|
$
|
2.4
|
|
$
|
4.8
|
|
$
|
1.3
|
|
$
|
14.8
|
|
$
|
14.6
|
|
$
|
16.1
|
|
Weighted-Average Assumptions:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Discount Rates
|
4.46
|
%
|
4.71
|
%
|
4.25
|
%
|
2.33
|
%
|
3.39
|
%
|
3.20
|
%
|
4.46
|
%
|
4.71
|
%
|
4.25
|
%
|
|||||||||
Rate of Increase in Compensation Level
|
4.39
|
|
4.25
|
|
4.25
|
|
1.75
|
|
N/A
|
|
N/A
|
|
4.39
|
|
4.25
|
|
4.25
|
|
|||||||||
Expected Long-Term Rate of Return on Assets
|
6.75
|
|
7.00
|
|
7.25
|
|
3.13
|
|
3.73
|
|
4.00
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
134
2017 Annual Report | Northern Trust Corporation
|
|
|
|
U.S. PLAN
|
NON-U.S. PLANS
|
SUPPLEMENTAL PLAN
|
|||||||||||||||
(In Millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||
Beginning Balance
|
$
|
1,062.7
|
|
$
|
1,006.5
|
|
$
|
155.9
|
|
$
|
156.5
|
|
$
|
121.1
|
|
$
|
113.9
|
|
Service Cost
|
38.3
|
|
37.4
|
|
0.4
|
|
—
|
|
3.7
|
|
3.5
|
|
||||||
Interest Cost
|
45.9
|
|
45.8
|
|
4.0
|
|
4.7
|
|
5.2
|
|
5.1
|
|
||||||
Employee Contributions
|
—
|
|
—
|
|
0.1
|
|
—
|
|
—
|
|
—
|
|
||||||
Plan Amendment
|
—
|
|
—
|
|
2.5
|
|
—
|
|
—
|
|
—
|
|
||||||
Actuarial (Gain) Loss
|
142.6
|
|
31.5
|
|
0.4
|
|
26.0
|
|
21.5
|
|
7.4
|
|
||||||
Settlement
|
—
|
|
—
|
|
(6.8
|
)
|
(7.3
|
)
|
—
|
|
—
|
|
||||||
Acquisitions/Divestitures
|
—
|
|
—
|
|
27.0
|
|
—
|
|
—
|
|
—
|
|
||||||
Benefits Paid
|
(79.6
|
)
|
(58.5
|
)
|
(3.0
|
)
|
(2.4
|
)
|
(7.0
|
)
|
(8.8
|
)
|
||||||
Foreign Exchange Rate Changes
|
—
|
|
—
|
|
17.8
|
|
(21.6
|
)
|
—
|
|
—
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Ending Balance
|
$
|
1,209.9
|
|
$
|
1,062.7
|
|
$
|
198.3
|
|
$
|
155.9
|
|
$
|
144.5
|
|
$
|
121.1
|
|
(In Millions)
|
U.S.
PLAN |
|
NON-U.S.
PLANS |
|
SUPPLEMENTAL
PLAN |
|
|||
2018
|
$
|
77.2
|
|
$
|
3.7
|
|
$
|
8.0
|
|
2019
|
75.7
|
|
3.5
|
|
12.5
|
|
|||
2020
|
78.0
|
|
3.9
|
|
12.7
|
|
|||
2021
|
75.9
|
|
4.2
|
|
15.5
|
|
|||
2022
|
74.8
|
|
4.0
|
|
14.9
|
|
|||
2023-2027
|
375.1
|
|
24.9
|
|
66.8
|
|
|
U.S. PLAN
|
NON-U.S. PLANS
|
||||||||||
(In Millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||
Fair Value of Assets at Beginning of Period
|
$
|
1,393.5
|
|
$
|
1,342.0
|
|
$
|
139.3
|
|
$
|
144.3
|
|
Actual Return on Assets
|
192.5
|
|
110.0
|
|
12.4
|
|
21.9
|
|
||||
Employer Contributions
|
—
|
|
—
|
|
3.0
|
|
4.3
|
|
||||
Employee Contributions
|
|
|
|
|
0.1
|
|
|
|
||||
Settlement
|
—
|
|
—
|
|
(6.8
|
)
|
(7.3
|
)
|
||||
Acquisitions/Divestitures
|
—
|
|
—
|
|
18.5
|
|
—
|
|
||||
Benefits Paid
|
(79.6
|
)
|
(58.5
|
)
|
(3.0
|
)
|
(2.4
|
)
|
||||
Foreign Exchange Rate Changes
|
—
|
|
—
|
|
15.2
|
|
(21.5
|
)
|
||||
|
|
|
|
|
||||||||
Fair Value of Assets at End of Period
|
$
|
1,506.4
|
|
$
|
1,393.5
|
|
$
|
178.7
|
|
$
|
139.3
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
135
|
|
|
|
136
2017 Annual Report | Northern Trust Corporation
|
|
|
|
December 31, 2017
|
|||||||||||
(In Millions)
|
LEVEL 1
|
|
LEVEL 2
|
|
LEVEL 3
|
|
TOTAL
|
|
||||
Domestic Common Stock
|
$
|
38.6
|
|
$
|
—
|
|
$
|
—
|
|
$
|
38.6
|
|
Foreign Common Stock
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
U.S. Government Obligations
|
—
|
|
1,072.0
|
|
—
|
|
1,072.0
|
|
||||
Northern Trust Mutual Fund
|
44.5
|
|
—
|
|
—
|
|
44.5
|
|
||||
Northern Trust Collective Trust Funds
|
—
|
|
268.6
|
|
—
|
|
268.6
|
|
||||
Northern Trust Private Equity Funds
|
—
|
|
—
|
|
29.3
|
|
29.3
|
|
||||
Northern Trust Hedge Funds
|
—
|
|
—
|
|
44.6
|
|
44.6
|
|
||||
Cash and Other
|
8.7
|
|
—
|
|
—
|
|
8.7
|
|
||||
|
|
|
|
|
||||||||
Total Assets at Fair Value
|
$
|
91.9
|
|
$
|
1,340.6
|
|
$
|
73.9
|
|
$
|
1,506.4
|
|
|
December 31, 2016
|
|||||||||||
(In Millions)
|
LEVEL 1
|
|
LEVEL 2
|
|
LEVEL 3
|
|
TOTAL
|
|
||||
Domestic Common Stock
|
$
|
52.1
|
|
$
|
—
|
|
$
|
—
|
|
$
|
52.1
|
|
Foreign Common Stock
|
0.1
|
|
—
|
|
—
|
|
0.1
|
|
||||
U.S. Government Obligations
|
—
|
|
134.6
|
|
—
|
|
134.6
|
|
||||
Northern Trust Mutual Fund
|
70.7
|
|
—
|
|
—
|
|
70.7
|
|
||||
Northern Trust Collective Trust Funds
|
—
|
|
1,029.9
|
|
—
|
|
1,029.9
|
|
||||
Northern Trust Private Equity Funds
|
—
|
|
—
|
|
35.7
|
|
35.7
|
|
||||
Northern Trust Hedge Funds
|
—
|
|
—
|
|
64.8
|
|
64.8
|
|
||||
Cash and Other
|
5.6
|
|
—
|
|
—
|
|
5.6
|
|
||||
|
|
|
|
|
||||||||
Total Assets at Fair Value
|
$
|
128.5
|
|
$
|
1,164.5
|
|
$
|
100.5
|
|
$
|
1,393.5
|
|
|
PRIVATE EQUITY
FUNDS
|
HEDGE FUNDS
|
||||||||||
(In Millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||
Fair Value at January 1
|
$
|
35.7
|
|
$
|
47.5
|
|
$
|
64.8
|
|
$
|
63.4
|
|
Actual Return on Plan Assets
|
(5.4
|
)
|
(5.6
|
)
|
(3.1
|
)
|
1.5
|
|
||||
Realized Gain
|
—
|
|
—
|
|
5.0
|
|
—
|
|
||||
Purchases
|
0.8
|
|
2.0
|
|
—
|
|
—
|
|
||||
Sales
|
(1.8
|
)
|
(8.2
|
)
|
(22.1
|
)
|
(0.1
|
)
|
||||
|
|
|
|
|
||||||||
Fair Value at December 31
|
$
|
29.3
|
|
$
|
35.7
|
|
$
|
44.6
|
|
$
|
64.8
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
137
|
|
DECEMBER 31,
|
|||||
(In Millions)
|
2017
|
|
2016
|
|
||
Accumulated Postretirement Benefit Obligation at Measurement Date:
|
|
|
||||
Retirees and Dependents
|
$
|
27.7
|
|
$
|
26.4
|
|
Actives Eligible for Benefits
|
6.7
|
|
7.7
|
|
||
|
|
|
||||
Net Postretirement Benefit Obligation
|
$
|
34.4
|
|
$
|
34.1
|
|
|
DECEMBER 31,
|
|||||
(In Millions)
|
2017
|
|
2016
|
|
||
Net Actuarial Loss / (Gain)
|
$
|
3.9
|
|
$
|
0.3
|
|
Prior Service Cost
|
—
|
|
—
|
|
||
|
|
|
||||
Gross Amount in Accumulated Other Comprehensive Income
|
3.9
|
|
0.3
|
|
||
Income Tax Effect
|
1.5
|
|
0.1
|
|
||
|
|
|
||||
Net Amount in Accumulated Other Comprehensive Income
|
$
|
2.4
|
|
$
|
0.2
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Service Cost
|
$
|
0.1
|
|
$
|
0.1
|
|
$
|
0.1
|
|
Interest Cost
|
1.4
|
|
1.5
|
|
1.4
|
|
|||
Expected Return on Plan Assets
|
—
|
|
—
|
|
—
|
|
|||
Amortization
|
|
|
|
||||||
Net Gain
|
—
|
|
—
|
|
—
|
|
|||
Prior Service Benefit
|
—
|
|
—
|
|
—
|
|
|||
|
|
|
|
||||||
Net Periodic Postretirement Expense
|
$
|
1.5
|
|
$
|
1.6
|
|
$
|
1.5
|
|
|
FOR THE YEAR ENDED
DECEMBER 31,
|
|||||
(In Millions)
|
2017
|
|
2016
|
|
||
Beginning Balance
|
$
|
34.1
|
|
$
|
32.2
|
|
Service Cost
|
0.1
|
|
0.1
|
|
||
Interest Cost
|
1.4
|
|
1.5
|
|
||
Actuarial Loss / (Gain)
|
(0.2
|
)
|
2.7
|
|
||
Net Claims Paid
|
(1.0
|
)
|
(2.4
|
)
|
||
Medicare Subsidy
|
—
|
|
—
|
|
||
|
|
|
||||
Ending Balance
|
$
|
34.4
|
|
$
|
34.1
|
|
|
|
|
138
2017 Annual Report | Northern Trust Corporation
|
|
|
(In Millions)
|
TOTAL
POSTRETIREMENT MEDICAL BENEFITS |
|
|
2018
|
$
|
2.7
|
|
2019
|
2.7
|
|
|
2020
|
2.7
|
|
|
2021
|
2.6
|
|
|
2022
|
2.5
|
|
|
2023-2027
|
11.4
|
|
(In Millions)
|
1–PERCENTAGE
POINT INCREASE |
|
1–PERCENTAGE
POINT DECREASE |
|
||
Effect on Postretirement Benefit Obligation
|
$
|
0.8
|
|
$
|
(0.7
|
)
|
Effect on Total Service and Interest Cost Components
|
—
|
|
—
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Restricted Stock Unit Awards
|
$
|
87.3
|
|
$
|
60.2
|
|
$
|
51.5
|
|
Stock Options
|
9.0
|
|
9.0
|
|
10.0
|
|
|||
Performance Stock Units
|
31.7
|
|
17.6
|
|
14.9
|
|
|||
|
|
|
|
||||||
Total Share-Based Compensation Expense
|
$
|
128.0
|
|
$
|
86.8
|
|
$
|
76.4
|
|
Tax Benefits Recognized
|
$
|
48.7
|
|
$
|
32.8
|
|
$
|
28.8
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
139
|
|
2017
|
|
2016
|
|
2015
|
|
Expected Term (in Years)
|
6.9
|
|
7.0
|
|
7.1
|
|
Dividend Yield
|
1.81
|
%
|
2.57
|
%
|
2.07
|
%
|
Expected Volatility
|
23.2
|
|
32.3
|
|
30.4
|
|
Risk-Free Interest Rate
|
2.11
|
|
1.45
|
|
1.83
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions, Except Per Share Information)
|
2017
|
|
2016
|
|
2015
|
|
|||
Weighted Average Grant-Date Per Share Fair Value of Stock Options Granted
|
$
|
19.18
|
|
$
|
14.84
|
|
$
|
18.72
|
|
Grant-Date Fair Value of Stock Options Vested
|
7.3
|
|
9.6
|
|
16.0
|
|
|||
Stock Options Exercised
|
|
|
|
||||||
Intrinsic Value as of Exercise Date
|
74.7
|
|
83.9
|
|
32.1
|
|
|||
Cash Received
|
108.0
|
|
233.8
|
|
94.0
|
|
|||
Tax Deduction Benefits Realized
|
73.1
|
|
80.0
|
|
30.1
|
|
|
|
|
140
2017 Annual Report | Northern Trust Corporation
|
|
|
($ 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, 2016
|
4,703,769
|
|
$
|
55.20
|
|
|
|
||
Granted
|
468,381
|
|
88.06
|
|
|
|
|||
Exercised
|
(1,997,362
|
)
|
54.08
|
|
|
|
|||
Forfeited, Expired or Cancelled
|
(101,690
|
)
|
53.35
|
|
|
|
|||
|
|
|
|
|
|||||
Options Outstanding, December 31, 2017
|
3,073,098
|
|
$
|
60.99
|
|
5.8
|
$
|
119.5
|
|
|
|
|
|
|
|||||
Options Exercisable, December 31, 2017
|
1,826,593
|
|
$
|
53.66
|
|
4.2
|
$
|
84.4
|
|
($ In Millions)
|
NUMBER
|
|
AGGREGATE
INTRINSIC VALUE |
|
|
Restricted Stock Unit Awards Outstanding, December 31, 2016
|
3,695,657
|
|
$
|
329.1
|
|
Granted
|
863,308
|
|
|
||
Distributed
|
(1,040,725
|
)
|
|
||
Forfeited
|
(118,802
|
)
|
|
||
|
|
|
|||
Restricted Stock Unit Awards Outstanding, December 31, 2017
|
3,399,438
|
|
$
|
339.6
|
|
|
|
|
|||
Units Convertible, December 31, 2017
|
168,111
|
|
$
|
16.8
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
141
|
NONVESTED RESTRICTED
STOCK UNITS |
NUMBER
|
|
WEIGHTED
AVERAGE GRANT- DATE FAIR VALUE PER UNIT |
|
WEIGHTED
AVERAGE REMAINING VESTING TERM (YEARS) |
|
Nonvested at December 31, 2016
|
3,515,632
|
|
$
|
61.80
|
|
2.0
|
Granted
|
863,308
|
|
88.19
|
|
|
|
Vested
|
(1,028,835
|
)
|
58.64
|
|
|
|
Forfeited
|
(118,778
|
)
|
66.79
|
|
|
|
|
|
|
|
|||
Nonvested at December 31, 2017
|
3,231,327
|
|
$
|
69.67
|
|
1.9
|
|
|
|
142
2017 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
143
|
|
DECEMBER 31,
|
|||||
(in Millions)
|
2017
|
|
2016
|
|
||
Pledged to others:
|
|
|
||||
Not permitted by contract or custom to sell or repledge
|
$
|
39.9
|
|
$
|
70.7
|
|
Permitted by contract or custom to sell or repledge
|
—
|
|
—
|
|
||
|
|
|
||||
Accepted from others:
|
|
|
||||
Not permitted by contract or custom to sell or repledge
|
—
|
|
—
|
|
||
Permitted by contract or custom to sell or repledge
|
4.6
|
|
—
|
|
|
|
|
144
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31, 2017
|
DECEMBER 31, 2016
|
||||||||||||||||
|
|
FAIR VALUE
|
|
FAIR VALUE
|
||||||||||||||
(In Millions)
|
NOTIONAL
VALUE
|
|
ASSET
|
|
LIABILITY
|
|
NOTIONAL
VALUE
|
|
ASSET
|
|
LIABILITY
|
|
||||||
Foreign Exchange Contracts
|
$
|
317,882.5
|
|
$
|
2,527.0
|
|
$
|
2,522.5
|
|
$
|
273,213.1
|
|
$
|
3,274.2
|
|
$
|
3,221.7
|
|
Interest Rate Contracts
|
7,418.0
|
|
65.1
|
|
64.1
|
|
6,968.3
|
|
87.0
|
|
85.2
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Total
|
$
|
325,300.5
|
|
$
|
2,592.1
|
|
$
|
2,586.6
|
|
$
|
280,181.4
|
|
$
|
3,361.2
|
|
$
|
3,306.9
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
145
|
(In Millions)
|
LOCATION OF DERIVATIVE
GAIN RECOGNIZED
IN INCOME
|
AMOUNT OF DERIVATIVE GAIN RECOGNIZED IN INCOME DECEMBER 31,
|
||||||||
2017
|
|
2016
|
|
2015
|
|
|||||
Foreign Exchange Contracts
|
Foreign Exchange Trading Income
|
$
|
209.9
|
|
$
|
236.6
|
|
$
|
261.8
|
|
Interest Rate Contracts
|
Security Commissions and Trading Income
|
10.7
|
|
11.4
|
|
17.5
|
|
|||
|
|
|
|
|
||||||
Total
|
|
$
|
220.6
|
|
$
|
248.0
|
|
$
|
279.3
|
|
|
|
|
December 31, 2017
|
December 31, 2016
|
||||||||||||||||
|
|
|
|
FAIR VALUE
|
|
FAIR VALUE
|
||||||||||||||
(In Millions)
|
DERIVATIVE
INSTRUMENT
|
RISK
CLASSIFICATION
|
NOTIONAL
VALUE
|
|
ASSET
|
|
LIABILITY
|
|
NOTIONAL
VALUE
|
|
ASSET
|
|
LIABILITY
|
|
||||||
FAIR VALUE HEDGES
|
|
|
|
|
|
|
|
|
||||||||||||
Available for Sale Investment Securities
|
Interest Rate
Swap Contracts |
Interest Rate
|
$
|
3,423.1
|
|
$
|
15.7
|
|
$
|
14.5
|
|
$
|
3,873.4
|
|
$
|
88.3
|
|
$
|
16.8
|
|
Senior Notes and Long-Term Subordinated Debt
|
Interest Rate
Swap Contracts |
Interest Rate
|
1,050.0
|
|
16.0
|
|
3.7
|
|
1,250.0
|
|
71.8
|
|
3.3
|
|
||||||
CASH FLOW HEDGES
|
|
|
|
|
|
|
|
|
||||||||||||
Forecasted Foreign Currency Denominated Transactions
|
Foreign Exchange
Contracts |
Foreign Currency
|
436.2
|
|
13.5
|
|
6.4
|
|
329.3
|
|
8.5
|
|
7.8
|
|
||||||
Foreign Currency Denominated Investment Securities
|
Foreign Exchange Contracts
|
Foreign Currency
|
2,852.8
|
|
14.9
|
|
6.6
|
|
1,431.6
|
|
151.5
|
|
0.8
|
|
||||||
Available for Sale Investment Securities
|
Interest Rate
Contracts |
Interest Rate
|
$
|
925.0
|
|
$
|
0.2
|
|
$
|
1.2
|
|
$
|
975.0
|
|
$
|
0.1
|
|
$
|
2.7
|
|
NET INVESTMENT HEDGES
|
|
|
|
|
|
|
|
|
||||||||||||
Net Investments in Non-U.S. Affiliates
|
Foreign Exchange
Contracts |
Foreign Currency
|
3,011.3
|
|
0.6
|
|
179.6
|
|
2,083.6
|
|
174.6
|
|
10.8
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||||||||
Total
|
|
|
$
|
11,698.4
|
|
$
|
60.9
|
|
$
|
212.0
|
|
$
|
9,942.9
|
|
$
|
494.8
|
|
$
|
42.2
|
|
|
DERIVATIVE
INSTRUMENT
|
LOCATION OF DERIVATIVE
GAIN/(LOSS) RECOGNIZED
IN INCOME
|
AMOUNT OF DERIVATIVE GAIN/
(LOSS) RECOGNIZED IN INCOME
DECEMBER 31,
|
||||||||
(In Millions)
|
|
|
2017
|
|
2016
|
|
2015
|
|
|||
Available for Sale Investment Securities
|
Interest Rate Swap Contracts
|
Interest Income
|
$
|
(0.8
|
)
|
$
|
63.4
|
|
$
|
(21.1
|
)
|
Senior Notes and Long-Term Subordinated Debt
|
Interest Rate Swap Contracts
|
Interest Expense
|
3.4
|
|
5.0
|
|
34.7
|
|
|||
|
|
|
|
|
|
||||||
Total
|
|
|
$
|
2.6
|
|
$
|
68.4
|
|
$
|
13.6
|
|
|
|
|
146
2017 Annual Report | Northern Trust Corporation
|
|
|
|
FOREIGN EXCHANGE
CONTRACTS
(BEFORE TAX)
|
INTEREST RATE
CONTRACTS
(BEFORE TAX)
|
||||||||||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
|
||||||
Net Gain/(Loss) Recognized in AOCI
|
$
|
32.5
|
|
$
|
7.9
|
|
$
|
(1.2
|
)
|
$
|
1.3
|
|
$
|
(3.4
|
)
|
$
|
—
|
|
|
|
|
|
|
|
|
||||||||||||
Net Gain/(Loss) Reclassified from AOCI to Earnings
|
|
|
|
|
|
|
||||||||||||
Other Operating Income
|
5.0
|
|
(6.4
|
)
|
(8.0
|
)
|
—
|
|
—
|
|
—
|
|
||||||
Interest Income
|
19.3
|
|
6.4
|
|
—
|
|
0.3
|
|
2.8
|
|
5.2
|
|
||||||
Other Operating Expense
|
(0.1
|
)
|
(0.9
|
)
|
(1.9
|
)
|
—
|
|
—
|
|
—
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Total
|
$
|
24.2
|
|
$
|
(0.9
|
)
|
$
|
(9.9
|
)
|
$
|
0.3
|
|
$
|
2.8
|
|
$
|
5.2
|
|
|
DECEMBER 31, 2017
|
DECEMBER 31, 2016
|
||||||||||||||||
|
|
FAIR VALUE
|
|
FAIR VALUE
|
||||||||||||||
(In Millions)
|
NOTIONAL
VALUE
|
|
ASSET
|
|
LIABILITY
|
|
NOTIONAL
VALUE
|
|
ASSET
|
|
LIABILITY
|
|
||||||
Foreign Exchange Contracts
|
$
|
214.1
|
|
$
|
1.1
|
|
$
|
0.1
|
|
$
|
289.6
|
|
$
|
0.8
|
|
$
|
1.8
|
|
Other Financial Derivatives
(1)
|
404.7
|
|
—
|
|
30.4
|
|
270.0
|
|
—
|
|
25.2
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Total
|
$
|
618.8
|
|
$
|
1.1
|
|
$
|
30.5
|
|
$
|
559.6
|
|
$
|
0.8
|
|
$
|
27.0
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
147
|
|
LOCATION OF DERIVATIVE GAIN/
(LOSS) RECOGNIZED IN INCOME
|
AMOUNT RECOGNIZED IN INCOME
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
||||
Foreign Exchange Contracts
|
Other Operating Income
|
$
|
8.2
|
|
$
|
(6.7
|
)
|
$
|
(10.9
|
)
|
Other Financial Derivatives
(1)
|
Other Operating Income
|
(13.3
|
)
|
(6.1
|
)
|
(1.0
|
)
|
|||
|
|
|
|
|
||||||
Total
|
|
$
|
(5.1
|
)
|
$
|
(12.8
|
)
|
$
|
(11.9
|
)
|
|
|
|
148
2017 Annual Report | Northern Trust Corporation
|
|
|
December 31, 2017
|
|||||||||||||||
(In Millions)
|
GROSS
RECOGNIZED
ASSETS
|
|
GROSS
AMOUNTS
OFFSET
|
|
NET
AMOUNTS
PRESENTED
|
|
GROSS
AMOUNTS
NOT OFFSET
|
|
NET
AMOUNT
(3)
|
|
|||||
Derivative Assets
(1)
|
|
|
|
|
|
||||||||||
Foreign Exchange Contracts Over the Counter (OTC)
|
$
|
2,106.3
|
|
$
|
1,397.7
|
|
$
|
708.6
|
|
$
|
—
|
|
$
|
708.6
|
|
Interest Rate Swaps OTC
|
86.9
|
|
14.2
|
|
72.7
|
|
—
|
|
72.7
|
|
|||||
Interest Rate Swaps Exchange Cleared
|
10.1
|
|
10.1
|
|
—
|
|
—
|
|
—
|
|
|||||
Cross Product Netting Adjustment
|
—
|
|
10.4
|
|
—
|
|
—
|
|
—
|
|
|||||
Cross Product Collateral Adjustment
|
—
|
|
427.6
|
|
—
|
|
—
|
|
—
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Derivatives Subject to a Master Netting Arrangement
|
2,203.3
|
|
1,860.0
|
|
343.3
|
|
—
|
|
343.3
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Derivatives Not Subject to a Master Netting Arrangement
|
450.8
|
|
—
|
|
450.8
|
|
—
|
|
450.8
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Derivatives
|
2,654.1
|
|
1,860.0
|
|
794.1
|
|
—
|
|
794.1
|
|
|||||
|
|
|
|
|
|
||||||||||
Securities Purchased under Agreements to Resell
(2)
|
$
|
1,303.3
|
|
$
|
—
|
|
$
|
1,303.3
|
|
$
|
1,303.3
|
|
$
|
—
|
|
December 31, 2016
|
|||||||||||||||
(In Millions)
|
GROSS
RECOGNIZED
ASSETS
|
|
GROSS
AMOUNTS
OFFSET
|
|
NET
AMOUNTS
PRESENTED
|
|
GROSS
AMOUNTS
NOT OFFSET
|
|
NET
AMOUNT
(3)
|
|
|||||
Derivative Assets
(1)
|
|
|
|
|
|
||||||||||
Foreign Exchange Contracts Over the Counter (OTC)
|
$
|
2,800.4
|
|
$
|
1,651.9
|
|
$
|
1,148.5
|
|
$
|
—
|
|
$
|
1,148.5
|
|
Interest Rate Swaps OTC
|
129.8
|
|
18.2
|
|
111.6
|
|
—
|
|
111.6
|
|
|||||
Interest Rate Swaps Exchange Cleared
|
117.4
|
|
21.8
|
|
95.6
|
|
—
|
|
95.6
|
|
|||||
Cross Product Netting Adjustment
|
—
|
|
17.2
|
|
—
|
|
—
|
|
—
|
|
|||||
Cross Product Collateral Adjustment
|
—
|
|
461.3
|
|
—
|
|
—
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|||||||||
Total Derivatives Subject to a Master Netting Arrangement
|
3,047.6
|
|
2,170.4
|
|
877.2
|
|
—
|
|
877.2
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Derivatives Not Subject to a Master Netting Arrangement
|
809.2
|
|
—
|
|
809.2
|
|
—
|
|
809.2
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Derivatives
|
3,856.8
|
|
2,170.4
|
|
1,686.4
|
|
—
|
|
1,686.4
|
|
|||||
|
|
|
|
|
|
||||||||||
Securities Purchased under Agreements to Resell
(2)
|
$
|
1,967.5
|
|
$
|
—
|
|
$
|
1,967.5
|
|
$
|
1,967.5
|
|
$
|
—
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
149
|
December 31, 2017
|
|||||||||||||||
(In Millions)
|
GROSS
RECOGNIZED
LIABILITIES
|
|
GROSS
AMOUNTS
OFFSET
|
|
NET
AMOUNTS
PRESENTED
|
|
GROSS
AMOUNTS
NOT OFFSET
|
|
NET
AMOUNT
(2)
|
|
|||||
Derivative Liabilities
(1)
|
|
|
|
|
|
||||||||||
Foreign Exchange Contracts OTC
|
$
|
1,889.2
|
|
$
|
1,397.7
|
|
$
|
491.5
|
|
$
|
—
|
|
$
|
491.5
|
|
Interest Rate Swaps OTC
|
69.2
|
|
14.2
|
|
55.0
|
|
—
|
|
55.0
|
|
|||||
Interest Rate Swaps Exchange Cleared
|
14.3
|
|
10.1
|
|
4.2
|
|
—
|
|
4.2
|
|
|||||
Other Financial Derivatives
|
30.4
|
|
—
|
|
30.4
|
|
—
|
|
30.4
|
|
|||||
Cross Product Netting Adjustment
|
—
|
|
10.4
|
|
—
|
|
—
|
|
—
|
|
|||||
Cross Product Collateral Adjustment
|
—
|
|
189.0
|
|
—
|
|
—
|
|
—
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Derivatives Subject to a Master Netting Arrangement
|
2,003.1
|
|
1,621.4
|
|
381.7
|
|
—
|
|
381.7
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Derivatives Not Subject to a Master Netting Arrangement
|
825.9
|
|
—
|
|
825.9
|
|
—
|
|
825.9
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Derivatives
|
2,829.0
|
|
1,621.4
|
|
1,207.6
|
|
—
|
|
1,207.6
|
|
|||||
|
|
|
|
|
|
||||||||||
Securities Sold under Agreements to Repurchase
|
$
|
834.0
|
|
$
|
—
|
|
$
|
834.0
|
|
$
|
834.0
|
|
$
|
—
|
|
December 31, 2016
|
|||||||||||||||
(In Millions)
|
GROSS
RECOGNIZED
LIABILITIES
|
|
GROSS
AMOUNTS
OFFSET
|
|
NET
AMOUNTS
PRESENTED
|
|
GROSS
AMOUNTS
NOT OFFSET
|
|
NET
AMOUNT
(2)
|
|
|||||
Derivative Liabilities
(1)
|
|
|
|
|
|
||||||||||
Foreign Exchange Contracts OTC
|
$
|
2,634.4
|
|
$
|
1,651.9
|
|
$
|
982.5
|
|
$
|
—
|
|
$
|
982.5
|
|
Interest Rate Swaps OTC
|
86.2
|
|
18.2
|
|
68.0
|
|
—
|
|
68.0
|
|
|||||
Interest Rate Swaps Exchange Cleared
|
21.8
|
|
21.8
|
|
—
|
|
—
|
|
—
|
|
|||||
Other Financial Derivatives
|
25.2
|
|
—
|
|
25.2
|
|
—
|
|
25.2
|
|
|||||
Cross Product Netting Adjustment
|
—
|
|
17.2
|
|
—
|
|
—
|
|
—
|
|
|||||
Cross Product Collateral Adjustment
|
—
|
|
722.1
|
|
—
|
|
—
|
|
—
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Derivatives Subject to a Master Netting Arrangement
|
2,767.6
|
|
2,431.2
|
|
336.4
|
|
—
|
|
336.4
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Derivatives Not Subject to a Master Netting Arrangement
|
608.5
|
|
—
|
|
608.5
|
|
—
|
|
608.5
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Derivatives
|
3,376.1
|
|
2,431.2
|
|
944.9
|
|
—
|
|
944.9
|
|
|||||
|
|
|
|
|
|
||||||||||
Securities Sold under Agreements to Repurchase
|
$
|
473.7
|
|
$
|
—
|
|
$
|
473.7
|
|
$
|
473.7
|
|
$
|
—
|
|
|
|
|
150
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
|||||
(In Millions)
|
2017
|
|
2016
|
|
||
Legally Binding Commitments to Extend Credit
(1)
|
$
|
26,822.6
|
|
$
|
32,768.1
|
|
Standby Letters of Credit
(2)
|
2,970.0
|
|
3,846.1
|
|
||
Commercial Letters of Credit
|
37.7
|
|
24.0
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
151
|
|
|
|
152
2017 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
153
|
|
|
|
154
2017 Annual Report | Northern Trust Corporation
|
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Noninterest Income
|
|
||||||||
Trust, Investment and Other Servicing Fees
|
$
|
1,984.6
|
|
$
|
1,787.8
|
|
$
|
1,696.9
|
|
Foreign Exchange Trading Income
|
197.9
|
|
224.4
|
|
249.4
|
|
|||
Other Noninterest Income
|
176.1
|
|
147.0
|
|
170.5
|
|
|||
Net Interest Income (Note)
|
733.8
|
|
565.0
|
|
414.4
|
|
|||
|
|
|
|
||||||
Revenue (Note)
|
3,092.4
|
|
2,724.2
|
|
2,531.2
|
|
|||
Provision for Credit Losses
|
3.4
|
|
1.9
|
|
(22.6
|
)
|
|||
Noninterest Expense
|
2,194.5
|
|
2,012.2
|
|
1,856.4
|
|
|||
|
|
|
|
||||||
Income before Income Taxes (Note)
|
894.5
|
|
710.1
|
|
697.4
|
|
|||
Provision for Income Taxes (Note)
|
279.5
|
|
212.9
|
|
212.8
|
|
|||
|
|
|
|
||||||
Net Income
|
$
|
615.0
|
|
$
|
497.2
|
|
$
|
484.6
|
|
|
|
|
|
||||||
Percentage of Consolidated Net Income
|
51
|
%
|
48
|
%
|
50
|
%
|
|||
|
|
|
|
||||||
Average Assets
|
$
|
80,105.6
|
|
$
|
76,194.7
|
|
$
|
73,598.4
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Noninterest Income
|
|
||||||||
Trust, Investment and Other Servicing Fees
|
$
|
1,449.7
|
|
$
|
1,320.3
|
|
$
|
1,283.6
|
|
Foreign Exchange Trading Income
|
3.1
|
|
8.6
|
|
12.4
|
|
|||
Other Noninterest Income
|
103.9
|
|
105.7
|
|
111.8
|
|
|||
Net Interest Income (Note)
|
736.2
|
|
651.4
|
|
568.1
|
|
|||
|
|
|
|
||||||
Revenue (Note)
|
2,292.9
|
|
2,086.0
|
|
1,975.9
|
|
|||
Provision for Credit Losses
|
(31.4
|
)
|
(27.9
|
)
|
(20.4
|
)
|
|||
Noninterest Expense
|
1,405.3
|
|
1,315.3
|
|
1,291.9
|
|
|||
|
|
|
|
||||||
Income before Income Taxes (Note)
|
919.0
|
|
798.6
|
|
704.4
|
|
|||
Provision for Income Taxes (Note)
|
347.2
|
|
301.1
|
|
264.7
|
|
|||
|
|
|
|
||||||
Net Income
|
$
|
571.8
|
|
$
|
497.5
|
|
$
|
439.7
|
|
|
|
|
|
||||||
Percentage of Consolidated Net Income
|
48
|
%
|
48
|
%
|
45
|
%
|
|||
|
|
|
|
||||||
Average Assets
|
$
|
26,599.9
|
|
$
|
26,525.0
|
|
$
|
25,048.7
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
155
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Noninterest Income
|
$
|
30.8
|
|
$
|
133.1
|
|
$
|
107.9
|
|
Net Interest Income (Note)
|
5.0
|
|
43.6
|
|
112.9
|
|
|||
|
|
|
|
||||||
Revenue (Note)
|
35.8
|
|
176.7
|
|
220.8
|
|
|||
Noninterest Expense
|
169.6
|
|
143.2
|
|
132.3
|
|
|||
|
|
|
|
||||||
Income before Income Taxes (Note)
|
(133.8
|
)
|
33.5
|
|
88.5
|
|
|||
Provision for Income Taxes (Note)
|
(146.0
|
)
|
(4.3
|
)
|
39.0
|
|
|||
|
|
|
|
||||||
Net Income
|
$
|
12.2
|
|
$
|
37.8
|
|
$
|
49.5
|
|
|
|
|
|
||||||
Percentage of Consolidated Net Income
|
1
|
%
|
4
|
%
|
5
|
%
|
|||
|
|
|
|
||||||
Average Assets
|
$
|
12,901.9
|
|
$
|
12,850.6
|
|
$
|
12,068.0
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Noninterest Income
|
|
|
|
||||||
Trust, Investment and Other Servicing Fees
|
$
|
3,434.3
|
|
$
|
3,108.1
|
|
$
|
2,980.5
|
|
Foreign Exchange Trading Income
|
209.9
|
|
236.6
|
|
261.8
|
|
|||
Other Noninterest Income
|
301.9
|
|
382.2
|
|
390.2
|
|
|||
Net Interest Income (Note)
|
1,475.0
|
|
1,260.0
|
|
1,095.4
|
|
|||
|
|
|
|
||||||
Revenue (Note)
|
5,421.1
|
|
4,986.9
|
|
4,727.9
|
|
|||
Provision for Credit Losses
|
(28.0
|
)
|
(26.0
|
)
|
(43.0
|
)
|
|||
Noninterest Expense
|
3,769.4
|
|
3,470.7
|
|
3,280.6
|
|
|||
|
|
|
|
||||||
Income before Income Taxes (Note)
|
1,679.7
|
|
1,542.2
|
|
1,490.3
|
|
|||
Provision for Income Taxes (Note)
|
480.7
|
|
509.7
|
|
516.5
|
|
|||
|
|
|
|
||||||
Net Income
|
$
|
1,199.0
|
|
$
|
1,032.5
|
|
$
|
973.8
|
|
|
|
|
|
||||||
Average Assets
|
$
|
119,607.4
|
|
$
|
115,570.3
|
|
$
|
110,715.1
|
|
|
|
|
156
2017 Annual Report | Northern Trust Corporation
|
|
|
(In Millions)
|
TOTAL ASSETS
|
|
TOTAL
REVENUE
|
|
INCOME BEFORE
INCOME TAXES
|
|
NET INCOME
|
|
||||
2017
|
|
|
|
|
||||||||
Non-U.S.
|
$
|
30,325.3
|
|
$
|
1,709.7
|
|
$
|
613.5
|
|
$
|
430.0
|
|
U.S.
|
108,265.2
|
|
3,665.6
|
|
1,020.4
|
|
769.0
|
|
||||
|
|
|
|
|
||||||||
Total
|
$
|
138,590.5
|
|
$
|
5,375.3
|
|
$
|
1,633.9
|
|
$
|
1,199.0
|
|
|
|
|
|
|
||||||||
2016
|
|
|
|
|
||||||||
Non-U.S.
|
$
|
24,944.0
|
|
$
|
1,221.2
|
|
$
|
284.3
|
|
$
|
225.1
|
|
U.S.
|
98,982.9
|
|
3,740.6
|
|
1,232.8
|
|
807.4
|
|
||||
|
|
|
|
|
||||||||
Total
|
$
|
123,926.9
|
|
$
|
4,961.8
|
|
$
|
1,517.1
|
|
$
|
1,032.5
|
|
|
|
|
|
|
||||||||
2015
|
|
|
|
|
||||||||
Non-U.S.
|
$
|
30,636.5
|
|
$
|
1,358.4
|
|
$
|
483.2
|
|
$
|
344.4
|
|
U.S.
|
86,113.1
|
|
3,344.2
|
|
981.8
|
|
629.4
|
|
||||
|
|
|
|
|
||||||||
Total
|
$
|
116,749.6
|
|
$
|
4,702.6
|
|
$
|
1,465.0
|
|
$
|
973.8
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
157
|
|
December 31, 2017
|
December 31, 2016
|
||||||||||||||||||
($ In Millions)
|
ADVANCED APPROACH
|
STANDARDIZED APPROACH
|
ADVANCED APPROACH
|
STANDARDIZED APPROACH
|
||||||||||||||||
|
BALANCE
|
|
RATIO
|
|
BALANCE
|
|
RATIO
|
|
BALANCE
|
|
RATIO
|
|
BALANCE
|
|
RATIO
|
|
||||
Common Equity Tier 1
|
|
|
|
|
|
|
|
|
||||||||||||
Northern Trust Corporation
|
$
|
8,626.3
|
|
13.5
|
%
|
$
|
8,626.3
|
|
12.6
|
%
|
$
|
8,480.4
|
|
12.4
|
%
|
$
|
8,480.4
|
|
11.8
|
%
|
The Northern Trust Company
|
8,517.8
|
|
13.7
|
|
8,517.8
|
|
12.6
|
|
8,201.4
|
|
12.4
|
|
8,201.4
|
|
11.5
|
|
||||
Minimum to qualify as well-capitalized
|
|
|
|
|
|
|
|
|
||||||||||||
Northern Trust Corporation
|
4,161.2
|
|
6.5
|
|
4,460.1
|
|
6.5
|
|
4,436.7
|
|
6.5
|
|
4,681.4
|
|
6.5
|
|
||||
The Northern Trust Company
|
4,032.7
|
|
6.5
|
|
4,406.8
|
|
6.5
|
|
4,296.2
|
|
6.5
|
|
4,624.8
|
|
6.5
|
|
||||
Tier 1
|
|
|
|
|
|
|
|
|
||||||||||||
Northern Trust Corporation
|
9,473.4
|
|
14.8
|
|
9,473.4
|
|
13.8
|
|
9,319.9
|
|
13.7
|
|
9,319.9
|
|
12.9
|
|
||||
The Northern Trust Company
|
8,517.8
|
|
13.7
|
|
8,517.8
|
|
12.6
|
|
8,201.4
|
|
12.4
|
|
8,201.4
|
|
11.5
|
|
||||
Minimum to qualify as well-capitalized:
|
|
|
|
|
|
|
|
|
||||||||||||
Northern Trust Corporation
|
5,121.5
|
|
8.0
|
|
5,489.3
|
|
8.0
|
|
5,460.6
|
|
8.0
|
|
5,761.7
|
|
8.0
|
|
||||
The Northern Trust Company
|
4,963.3
|
|
8.0
|
|
5,423.8
|
|
8.0
|
|
5,287.6
|
|
8.0
|
|
5,692.1
|
|
8.0
|
|
||||
Total
|
|
|
|
|
|
|
|
|
||||||||||||
Northern Trust Corporation
|
10,707.4
|
|
16.7
|
|
10,861.2
|
|
15.8
|
|
10,281.6
|
|
15.1
|
|
10,475.0
|
|
14.5
|
|
||||
The Northern Trust Company
|
9,527.8
|
|
15.4
|
|
9,681.6
|
|
14.3
|
|
9,271.4
|
|
14.0
|
|
9,463.4
|
|
13.3
|
|
||||
Minimum to qualify as well-capitalized:
|
|
|
|
|
|
|
|
|
||||||||||||
Northern Trust Corporation
|
6,401.9
|
|
10.0
|
|
6,861.6
|
|
10.0
|
|
6,825.8
|
|
10.0
|
|
7,202.1
|
|
10.0
|
|
||||
The Northern Trust Company
|
6,204.2
|
|
10.0
|
|
6,779.7
|
|
10.0
|
|
6,609.5
|
|
10.0
|
|
7,115.1
|
|
10.0
|
|
||||
Tier 1 Leverage
|
|
|
|
|
|
|
|
|
||||||||||||
Northern Trust Corporation
|
9,473.4
|
|
7.8
|
|
9,473.4
|
|
7.8
|
|
9,319.9
|
|
8.0
|
|
9,319.9
|
|
8.0
|
|
||||
The Northern Trust Company
|
8,517.8
|
|
7.0
|
|
8,517.8
|
|
7.0
|
|
8,201.4
|
|
7.0
|
|
8,201.4
|
|
7.0
|
|
||||
Minimum to qualify as well-capitalized:
|
|
|
|
|
|
|
|
|
||||||||||||
Northern Trust Corporation
|
6,075.9
|
|
5.0
|
|
6,075.9
|
|
5.0
|
|
5,847.9
|
|
5.0
|
|
5,847.9
|
|
5.0
|
|
||||
The Northern Trust Company
|
6,057.9
|
|
5.0
|
|
6,057.9
|
|
5.0
|
|
5,831.0
|
|
5.0
|
|
5,831.0
|
|
5.0
|
|
||||
Supplementary Leverage
(1)
|
|
|
|
|
|
|
|
|
||||||||||||
Northern Trust Corporation
|
9,473.4
|
|
6.8
|
|
N/A
|
|
N/A
|
|
9,319.9
|
|
6.8
|
|
N/A
|
|
N/A
|
|
||||
The Northern Trust Company
|
8,517.8
|
|
6.1
|
|
N/A
|
|
N/A
|
|
8,201.4
|
|
6.0
|
|
N/A
|
|
N/A
|
|
||||
Minimum to qualify as well-capitalized:
|
|
|
|
|
|
|
|
|
||||||||||||
Northern Trust Corporation
|
4,175.7
|
|
N/A
|
|
N/A
|
|
N/A
|
|
4,129.9
|
|
N/A
|
|
N/A
|
|
N/A
|
|
||||
The Northern Trust Company
|
4,164.7
|
|
N/A
|
|
N/A
|
|
N/A
|
|
4,120.0
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
158
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
|||||
(In Millions)
|
2017
|
|
2016
|
|
||
ASSETS
|
|
|
||||
Cash on Deposit with Subsidiary Bank
|
$
|
1,002.5
|
|
$
|
757.0
|
|
Securities
|
0.9
|
|
0.9
|
|
||
Advances to Wholly-Owned Subsidiaries – Banks
|
2,460.0
|
|
2,560.0
|
|
||
– Nonbank
|
13.5
|
|
13.5
|
|
||
Investments in Wholly-Owned Subsidiaries – Banks
|
9,223.9
|
|
8,635.0
|
|
||
– Nonbank
|
212.9
|
|
184.8
|
|
||
Other Assets
|
706.4
|
|
599.1
|
|
||
Total Assets
|
$
|
13,620.1
|
|
$
|
12,750.3
|
|
LIABILITIES
|
|
|
||||
Senior Notes
|
$
|
1,497.3
|
|
$
|
1,496.6
|
|
Long Term Debt
|
1,129.6
|
|
785.0
|
|
||
Floating Rate Capital Debt
|
277.5
|
|
277.4
|
|
||
Other Liabilities
|
499.5
|
|
420.9
|
|
||
Total Liabilities
|
3,403.9
|
|
2,979.9
|
|
||
STOCKHOLDERS’ EQUITY
|
|
|
||||
Preferred Stock
|
882.0
|
|
882.0
|
|
||
Common Stock
|
408.6
|
|
408.6
|
|
||
Additional Paid-in Capital
|
1,047.2
|
|
1,035.8
|
|
||
Retained Earnings
|
9,685.1
|
|
8,908.4
|
|
||
Accumulated Other Comprehensive Income (Loss)
|
(414.3
|
)
|
(370.0
|
)
|
||
Treasury Stock
|
(1,392.4
|
)
|
(1,094.4
|
)
|
||
Total Stockholders’ Equity
|
10,216.2
|
|
9,770.4
|
|
||
Total Liabilities and Stockholders’ Equity
|
$
|
13,620.1
|
|
$
|
12,750.3
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
159
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
OPERATING INCOME
|
|
|
|
||||||
Dividends – Bank Subsidiaries
|
$
|
525.0
|
|
$
|
300.0
|
|
$
|
600.0
|
|
– Nonbank Subsidiaries
|
—
|
|
3.4
|
|
8.7
|
|
|||
Intercompany Interest and Other Charges
|
58.2
|
|
39.8
|
|
38.5
|
|
|||
Interest and Other Income
|
18.1
|
|
7.5
|
|
5.4
|
|
|||
Total Operating Income
|
601.3
|
|
350.7
|
|
652.6
|
|
|||
OPERATING EXPENSES
|
|
|
|
||||||
Interest Expense
|
76.5
|
|
63.5
|
|
59.3
|
|
|||
Other Operating Expenses
|
25.9
|
|
19.9
|
|
56.8
|
|
|||
Total Operating Expenses
|
102.4
|
|
83.4
|
|
116.1
|
|
|||
Income before Income Taxes and Equity in Undistributed Net Income of Subsidiaries
|
498.9
|
|
267.3
|
|
536.5
|
|
|||
Benefit for Income Taxes
|
43.7
|
|
28.3
|
|
29.0
|
|
|||
Income before Equity in Undistributed Net Income of Subsidiaries
|
542.6
|
|
295.6
|
|
565.5
|
|
|||
Equity in Undistributed Net Income of Subsidiaries – Banks
|
632.6
|
|
708.3
|
|
392.8
|
|
|||
– Nonbank
|
23.8
|
|
28.6
|
|
15.5
|
|
|||
Net Income
|
$
|
1,199.0
|
|
$
|
1,032.5
|
|
$
|
973.8
|
|
Preferred Stock Dividends
|
49.8
|
|
23.4
|
|
23.4
|
|
|||
Net Income Applicable to Common Stock
|
$
|
1,149.2
|
|
$
|
1,009.1
|
|
$
|
950.4
|
|
|
|
|
160
2017 Annual Report | Northern Trust Corporation
|
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
OPERATING ACTIVITIES:
|
|
|
|
||||||
Net Income
|
$
|
1,199.0
|
|
$
|
1,032.5
|
|
$
|
973.8
|
|
Adjustments to Reconcile Net Income to Net Cash Provided by (Used in) Operating Activities:
|
|
|
|
||||||
Equity in Undistributed Net Income of Subsidiaries
|
(656.4
|
)
|
(736.9
|
)
|
(408.3
|
)
|
|||
Change in Prepaid Expenses
|
(0.3
|
)
|
3.0
|
|
1.2
|
|
|||
Change in Accrued Income Taxes
|
17.2
|
|
(17.9
|
)
|
22.8
|
|
|||
Other, net
|
55.7
|
|
55.7
|
|
58.4
|
|
|||
Net Cash Provided by Operating Activities
|
615.2
|
|
336.4
|
|
647.9
|
|
|||
INVESTING ACTIVITIES:
|
|
|
|
||||||
Proceeds from Sale, Maturity and Redemption of Securities – Available for Sale
|
—
|
|
0.2
|
|
1.3
|
|
|||
Change in Capital Investments in Subsidiaries
|
—
|
|
(3.0
|
)
|
(10.0
|
)
|
|||
Advances to Wholly-Owned Subsidiaries
|
100.0
|
|
(295.0
|
)
|
—
|
|
|||
Other, net
|
1.9
|
|
1.2
|
|
0.2
|
|
|||
Net Cash Used in Investing Activities
|
101.9
|
|
(296.6
|
)
|
(8.5
|
)
|
|||
FINANCING ACTIVITIES:
|
|
|
|
||||||
Proceeds from Senior Notes and Long-Term Debt
|
350.0
|
|
—
|
|
—
|
|
|||
Proceeds from Issuance of Preferred Stock – Series C and Series D
|
—
|
|
493.5
|
|
—
|
|
|||
Treasury Stock Purchased
|
(523.1
|
)
|
(411.1
|
)
|
(496.9
|
)
|
|||
Net Proceeds from Stock Options
|
108.0
|
|
233.8
|
|
94.0
|
|
|||
Cash Dividends Paid on Common Stock
|
(356.8
|
)
|
(333.0
|
)
|
(321.4
|
)
|
|||
Cash Dividends Paid on Preferred Stock
|
(49.8
|
)
|
(23.4
|
)
|
(27.0
|
)
|
|||
Other, net
|
0.1
|
|
(0.1
|
)
|
—
|
|
|||
Net Cash Used in Financing Activities
|
(471.6
|
)
|
(40.3
|
)
|
(751.3
|
)
|
|||
Net Change in Cash on Deposit with Subsidiary Bank
|
245.5
|
|
(0.5
|
)
|
(111.9
|
)
|
|||
Cash on Deposit with Subsidiary Bank at Beginning of Year
|
757.0
|
|
757.5
|
|
869.4
|
|
|||
Cash on Deposit with Subsidiary Bank at End of Year
|
$
|
1,002.5
|
|
$
|
757.0
|
|
$
|
757.5
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
161
|
STATEMENTS OF INCOME
|
2017
|
2016
|
||||||||||||||||||||||
($ In Millions Except Per Share Information)
|
FOURTH
QUARTER
|
|
THIRD
QUARTER
|
|
SECOND
QUARTER
|
|
FIRST
QUARTER
|
|
FOURTH
QUARTER
|
|
THIRD
QUARTER
|
|
SECOND
QUARTER
|
|
FIRST
QUARTER
|
|
||||||||
Trust, Investment and Other Servicing Fees
|
$
|
910.0
|
|
$
|
867.9
|
|
$
|
848.2
|
|
$
|
808.2
|
|
$
|
794.4
|
|
$
|
788.3
|
|
$
|
777.2
|
|
$
|
748.2
|
|
Other Noninterest Income
|
134.5
|
|
123.1
|
|
131.5
|
|
122.7
|
|
122.7
|
|
122.3
|
|
239.8
|
|
134.0
|
|
||||||||
Net Interest Income
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest Income
|
488.1
|
|
453.8
|
|
417.2
|
|
410.3
|
|
371.0
|
|
349.2
|
|
344.7
|
|
352.0
|
|
||||||||
Interest Expense
|
108.1
|
|
99.6
|
|
75.7
|
|
56.8
|
|
46.7
|
|
46.1
|
|
45.0
|
|
44.2
|
|
||||||||
Net Interest Income
|
380.0
|
|
354.2
|
|
341.5
|
|
353.5
|
|
324.3
|
|
303.1
|
|
299.7
|
|
307.8
|
|
||||||||
Provision for Credit Losses
|
(13.0
|
)
|
(7.0
|
)
|
(7.0
|
)
|
(1.0
|
)
|
(22.0
|
)
|
(3.0
|
)
|
(3.0
|
)
|
2.0
|
|
||||||||
Noninterest Expense
|
1,001.9
|
|
935.6
|
|
937.4
|
|
894.5
|
|
873.9
|
|
843.0
|
|
925.0
|
|
828.8
|
|
||||||||
Provision for Income Taxes
|
79.0
|
|
118.2
|
|
122.9
|
|
114.8
|
|
123.0
|
|
116.1
|
|
131.7
|
|
113.8
|
|
||||||||
Net Income
|
$
|
356.6
|
|
$
|
298.4
|
|
$
|
267.9
|
|
$
|
276.1
|
|
$
|
266.5
|
|
$
|
257.6
|
|
$
|
263.0
|
|
$
|
245.4
|
|
Preferred Stock Dividends
|
5.9
|
|
17.3
|
|
5.9
|
|
20.7
|
|
5.8
|
|
5.9
|
|
5.8
|
|
5.9
|
|
||||||||
Net Income Applicable to Common Stock
|
$
|
350.7
|
|
$
|
281.1
|
|
$
|
262.0
|
|
$
|
255.4
|
|
$
|
260.7
|
|
$
|
251.7
|
|
$
|
257.2
|
|
$
|
239.5
|
|
PER COMMON SHARE
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net Income – Basic
|
$
|
1.52
|
|
$
|
1.21
|
|
$
|
1.12
|
|
$
|
1.10
|
|
$
|
1.12
|
|
$
|
1.09
|
|
$
|
1.11
|
|
$
|
1.03
|
|
– Diluted
|
1.51
|
|
1.20
|
|
1.12
|
|
1.09
|
|
1.11
|
|
1.08
|
|
1.10
|
|
1.03
|
|
||||||||
AVERAGE BALANCE SHEET ASSETS
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash and Due from Banks
|
$
|
2,838.8
|
|
$
|
2,666.8
|
|
$
|
2,701.1
|
|
$
|
2,116.6
|
|
$
|
1,923.6
|
|
$
|
1,933.8
|
|
$
|
2,093.9
|
|
$
|
2,192.4
|
|
Federal Reserve and Other Central Bank Deposits
|
25,995.8
|
|
25,182.9
|
|
22,570.0
|
|
21,806.9
|
|
20,079.6
|
|
20,829.6
|
|
19,657.8
|
|
21,170.2
|
|
||||||||
Interest-Bearing Due from and Deposits with Banks
(1)
|
7,084.7
|
|
7,145.8
|
|
7,653.9
|
|
6,684.3
|
|
7,869.1
|
|
8,232.2
|
|
9,827.9
|
|
9,056.8
|
|
||||||||
Federal Funds Sold and Securities Purchased under Agreements to Resell
|
1,389.8
|
|
1,945.8
|
|
2,059.4
|
|
2,011.7
|
|
1,980.1
|
|
1,613.2
|
|
1,915.2
|
|
1,593.7
|
|
||||||||
Securities
(2)
|
45,601.9
|
|
44,742.3
|
|
43,731.8
|
|
44,777.7
|
|
45,297.6
|
|
43,258.7
|
|
40,756.5
|
|
38,803.3
|
|
||||||||
Loans and Leases
|
33,235.6
|
|
33,468.2
|
|
33,891.4
|
|
33,671.2
|
|
33,818.5
|
|
33,910.1
|
|
34,456.1
|
|
33,993.4
|
|
||||||||
Allowance for Credit Losses Assigned to Loans and Leases
|
(149.1
|
)
|
(155.1
|
)
|
(162.3
|
)
|
(160.8
|
)
|
(189.7
|
)
|
(192.9
|
)
|
(195.4
|
)
|
(193.5
|
)
|
||||||||
Other Assets
|
6,314.5
|
|
6,162.7
|
|
5,955.4
|
|
5,568.8
|
|
6,758.5
|
|
6,797.8
|
|
6,401.8
|
|
6,800.8
|
|
||||||||
Total Assets
|
$
|
122,312.0
|
|
$
|
121,159.4
|
|
$
|
118,400.7
|
|
$
|
116,476.4
|
|
$
|
117,537.3
|
|
$
|
116,382.5
|
|
$
|
114,913.8
|
|
$
|
113,417.1
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
||||||||||||||||
Deposits
|
|
|
|
|
|
|
|
|
||||||||||||||||
Demand and Other Noninterest-Bearing
|
$
|
21,385.5
|
|
$
|
21,736.4
|
|
$
|
23,518.1
|
|
$
|
25,712.5
|
|
$
|
26,168.4
|
|
$
|
25,829.3
|
|
$
|
26,718.0
|
|
$
|
26,214.5
|
|
Savings, Money Market, and Other
|
15,996.1
|
|
15,617.1
|
|
15,236.1
|
|
15,446.7
|
|
15,136.8
|
|
15,025.7
|
|
15,041.3
|
|
15,367.3
|
|
||||||||
Savings Certificates and Other Time
|
1,189.2
|
|
1,255.1
|
|
1,312.7
|
|
1,338.5
|
|
1,413.2
|
|
1,450.3
|
|
1,405.0
|
|
1,459.6
|
|
||||||||
Non-U.S. Offices – Interest-Bearing
|
58,632.0
|
|
58,503.4
|
|
56,672.3
|
|
52,435.9
|
|
51,866.5
|
|
51,468.6
|
|
50,443.8
|
|
49,434.9
|
|
||||||||
Total Deposits
|
97,202.8
|
|
97,112.0
|
|
96,739.2
|
|
94,933.6
|
|
94,584.9
|
|
93,773.9
|
|
93,608.1
|
|
92,476.3
|
|
||||||||
Short-Term Borrowings
|
8,411.9
|
|
7,264.5
|
|
5,412.0
|
|
5,659.1
|
|
6,598.0
|
|
6,961.0
|
|
6,195.0
|
|
5,584.1
|
|
||||||||
Senior Notes
|
1,497.2
|
|
1,497.0
|
|
1,496.9
|
|
1,496.7
|
|
1,496.5
|
|
1,496.3
|
|
1,496.1
|
|
1,497.4
|
|
||||||||
Long-Term Debt
|
1,540.1
|
|
1,672.5
|
|
1,536.1
|
|
1,324.9
|
|
1,360.5
|
|
1,406.9
|
|
1,403.2
|
|
1,399.3
|
|
||||||||
Floating Rate Capital Debt
|
277.5
|
|
277.5
|
|
277.4
|
|
277.4
|
|
277.4
|
|
277.4
|
|
277.4
|
|
277.3
|
|
||||||||
Other Liabilities
|
3,271.7
|
|
3,295.7
|
|
2,963.1
|
|
2,993.3
|
|
3,600.7
|
|
3,236.4
|
|
3,141.3
|
|
3,491.5
|
|
||||||||
Stockholders’ Equity
|
10,110.8
|
|
10,040.2
|
|
9,976.0
|
|
9,791.4
|
|
9,619.3
|
|
9,230.6
|
|
8,792.7
|
|
8,691.2
|
|
||||||||
Total Liabilities and Stockholders’ Equity
|
$
|
122,312.0
|
|
$
|
121,159.4
|
|
$
|
118,400.7
|
|
$
|
116,476.4
|
|
$
|
117,537.3
|
|
$
|
116,382.5
|
|
$
|
114,913.8
|
|
$
|
113,417.1
|
|
ANALYSIS OF NET INTEREST INCOME
|
|
|
|
|
|
|
|
|
||||||||||||||||
Earning Assets
|
$
|
113,307.8
|
|
$
|
112,485.0
|
|
$
|
109,906.5
|
|
$
|
108,951.8
|
|
$
|
109,044.9
|
|
$
|
107,843.8
|
|
$
|
106,613.5
|
|
$
|
104,617.4
|
|
Interest-Related Funds
|
87,544.0
|
|
86,087.1
|
|
81,943.5
|
|
77,979.2
|
|
78,148.9
|
|
78,086.2
|
|
76,261.8
|
|
75,019.9
|
|
||||||||
Noninterest-Related Funds
|
$
|
25,763.8
|
|
$
|
26,397.9
|
|
$
|
27,963.0
|
|
$
|
30,972.6
|
|
$
|
30,896.0
|
|
$
|
29,757.6
|
|
$
|
30,351.7
|
|
$
|
29,597.5
|
|
Net Interest Income (Fully Taxable Equivalent)
|
396.0
|
|
366.2
|
|
350.4
|
|
362.4
|
|
329.3
|
|
310.1
|
|
306.6
|
|
314.0
|
|
||||||||
Net Interest Margin (Fully Taxable Equivalent)
|
1.39
|
%
|
1.29
|
%
|
1.28
|
%
|
1.35
|
%
|
1.20
|
%
|
1.14
|
%
|
1.16
|
%
|
1.21
|
%
|
||||||||
COMMON STOCK DIVIDEND AND MARKET PRICE
|
|
|
|
|
|
|
|
|
||||||||||||||||
Dividends-Common Stock
|
$
|
0.42
|
|
$
|
0.42
|
|
$
|
0.38
|
|
$
|
0.38
|
|
$
|
0.38
|
|
$
|
0.38
|
|
$
|
0.36
|
|
$
|
0.36
|
|
Market Price Range – High
|
101.46
|
|
99.30
|
|
98.72
|
|
91.14
|
|
90.96
|
|
71.66
|
|
74.86
|
|
71.13
|
|
||||||||
– Low
|
91.06
|
|
85.69
|
|
84.93
|
|
81.92
|
|
66.83
|
|
61.86
|
|
61.32
|
|
54.38
|
|
|
|
|
162
2017 Annual Report | Northern Trust Corporation
|
|
|
|
2017
|
2016
|
2015
|
|||||||||||||||||||||
($ In Millions)
|
INTEREST
|
|
AVERAGE
BALANCE
|
|
RATE
(4)
|
|
INTEREST
|
|
AVERAGE
BALANCE
|
|
RATE
(4)
|
|
INTEREST
|
|
AVERAGE
BALANCE
|
|
RATE
(4)
|
|
||||||
AVERAGE EARNING ASSETS
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Federal Reserve and Other Central Bank Deposits
|
$
|
155.1
|
|
$
|
23,903.9
|
|
0.65
|
%
|
$
|
91.4
|
|
$
|
20,434.4
|
|
0.45
|
%
|
$
|
63.9
|
|
$
|
19,949.8
|
|
0.32
|
%
|
Interest-Bearing Due from and Deposits with
Banks
(1)
|
63.8
|
|
7,143.3
|
|
0.89
|
|
64.3
|
|
8,742.7
|
|
0.73
|
|
84.9
|
|
10,713.4
|
|
0.79
|
|
||||||
Federal Funds Sold and Securities Purchased under Agreements to Resell
|
27.5
|
|
1,850.2
|
|
1.48
|
|
18.4
|
|
1,775.7
|
|
1.04
|
|
6.3
|
|
1,162.6
|
|
0.54
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Securities
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
U.S. Government
|
89.4
|
|
6,342.5
|
|
1.41
|
|
78.1
|
|
7,073.1
|
|
1.10
|
|
55.2
|
|
4,985.5
|
|
1.11
|
|
||||||
Obligations of States and Political Subdivisions
|
13.1
|
|
887.3
|
|
1.48
|
|
11.3
|
|
585.8
|
|
1.94
|
|
7.4
|
|
113.2
|
|
6.58
|
|
||||||
Government Sponsored Agency
|
283.2
|
|
17,987.0
|
|
1.57
|
|
177.2
|
|
17,421.0
|
|
1.02
|
|
144.0
|
|
16,458.8
|
|
0.87
|
|
||||||
Other
(2)
|
253.3
|
|
19,498.9
|
|
1.30
|
|
189.9
|
|
16,961.4
|
|
1.12
|
|
149.5
|
|
15,850.4
|
|
0.94
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total Securities
|
639.0
|
|
44,715.7
|
|
1.43
|
|
456.5
|
|
42,041.3
|
|
1.09
|
|
356.1
|
|
37,407.9
|
|
0.95
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Loans and Leases
(3)
|
929.8
|
|
33,565.2
|
|
2.77
|
|
811.4
|
|
34,043.5
|
|
2.38
|
|
738.1
|
|
33,016.1
|
|
2.24
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total Earning Assets
|
1,815.2
|
|
111,178.3
|
|
1.63
|
|
1,442.0
|
|
107,037.6
|
|
1.35
|
|
1,249.3
|
|
102,249.8
|
|
1.22
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Allowance for Credit Losses Assigned to Loans and Leases
|
—
|
|
(156.8
|
)
|
—
|
|
—
|
|
(192.9
|
)
|
—
|
|
—
|
|
(255.9
|
)
|
—
|
|
||||||
Cash and Due from Banks
|
—
|
|
2,583.1
|
|
—
|
|
—
|
|
2,035.3
|
|
—
|
|
—
|
|
2,138.7
|
|
—
|
|
||||||
Buildings and Equipment
|
—
|
|
466.0
|
|
—
|
|
—
|
|
445.5
|
|
—
|
|
—
|
|
442.5
|
|
—
|
|
||||||
Client Security Settlement Receivables
|
—
|
|
891.6
|
|
—
|
|
—
|
|
1,136.6
|
|
—
|
|
—
|
|
1,002.2
|
|
—
|
|
||||||
Goodwill
|
—
|
|
544.0
|
|
—
|
|
—
|
|
524.9
|
|
|
—
|
|
530.8
|
|
—
|
|
|||||||
Other Assets
|
—
|
|
4,101.2
|
|
—
|
|
—
|
|
4,583.3
|
|
—
|
|
—
|
|
4,607.0
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total Assets
|
$
|
—
|
|
$
|
119,607.4
|
|
—
|
%
|
$
|
—
|
|
$
|
115,570.3
|
|
—
|
%
|
$
|
—
|
|
$
|
110,715.1
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
AVERAGE SOURCE OF FUNDS
|
|
|
|
|
|
|
|
|
||||||||||||||||
Deposits
|
|
|
|
|
|
|
|
|
||||||||||||||||
Savings, Money Market, and Other
|
$
|
24.3
|
|
$
|
15,575.6
|
|
0.16
|
%
|
$
|
11.9
|
|
$
|
15,142.4
|
|
0.08
|
%
|
$
|
9.7
|
|
$
|
15,306.9
|
|
0.06
|
%
|
Savings Certificates and Other Time
|
9.4
|
|
1,273.4
|
|
0.74
|
|
8.3
|
|
1,432.0
|
|
0.58
|
|
7.5
|
|
1,609.9
|
|
0.47
|
|
||||||
Non-U.S. Offices – Interest-Bearing
|
148.4
|
|
56,583.2
|
|
0.26
|
|
63.3
|
|
50,808.2
|
|
0.12
|
|
57.1
|
|
49,377.1
|
|
0.12
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total Interest-Bearing Deposits
|
182.1
|
|
73,432.2
|
|
0.25
|
|
83.5
|
|
67,382.6
|
|
0.12
|
|
74.3
|
|
66,293.9
|
|
0.11
|
|
||||||
Short-Term Borrowings
|
67.1
|
|
6,696.0
|
|
1.00
|
|
21.8
|
|
6,337.0
|
|
0.34
|
|
6.0
|
|
4,757.9
|
|
0.13
|
|
||||||
Senior Notes
|
46.9
|
|
1,496.9
|
|
3.13
|
|
46.8
|
|
1,496.6
|
|
3.13
|
|
46.8
|
|
1,497.2
|
|
3.13
|
|
||||||
Long-Term Debt
|
39.2
|
|
1,519.4
|
|
2.58
|
|
26.4
|
|
1,392.4
|
|
1.90
|
|
24.4
|
|
1,426.4
|
|
1.71
|
|
||||||
Floating Rate Capital Debt
|
4.9
|
|
277.5
|
|
1.75
|
|
3.5
|
|
277.4
|
|
1.25
|
|
2.4
|
|
277.3
|
|
0.86
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total Interest-Related Funds
|
340.2
|
|
83,422.0
|
|
0.41
|
|
182.0
|
|
76,886.0
|
|
0.24
|
|
153.9
|
|
74,252.7
|
|
0.21
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest Rate Spread
|
—
|
|
—
|
|
1.22
|
|
—
|
|
—
|
|
1.11
|
|
—
|
|
—
|
|
1.01
|
|
||||||
Demand and Other Noninterest-Bearing Deposits
|
—
|
|
23,072.6
|
|
—
|
|
—
|
|
26,231.3
|
|
—
|
|
—
|
|
24,474.1
|
|
—
|
|
||||||
Other Liabilities
|
—
|
|
3,132.2
|
|
—
|
|
—
|
|
3,367.7
|
|
—
|
|
—
|
|
3,363.8
|
|
—
|
|
||||||
Stockholders’ Equity
|
—
|
|
9,980.6
|
|
—
|
|
—
|
|
9,085.3
|
|
—
|
|
—
|
|
8,624.5
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total Liabilities and Stockholders’ Equity
|
$
|
—
|
|
$
|
119,607.4
|
|
—
|
%
|
$
|
—
|
|
$
|
115,570.3
|
|
—
|
%
|
$
|
—
|
|
$
|
110,715.1
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net Interest Income/Margin (FTE Adjusted)
|
$
|
1,475.0
|
|
$
|
—
|
|
1.33
|
%
|
$
|
1,260.0
|
|
$
|
—
|
|
1.18
|
%
|
$
|
1,095.4
|
|
$
|
—
|
|
1.07
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net Interest Income/Margin (Unadjusted)
|
$
|
1,429.2
|
|
$
|
—
|
|
1.29
|
%
|
$
|
1,234.9
|
|
$
|
—
|
|
1.15
|
%
|
$
|
1,070.1
|
|
$
|
—
|
|
1.05
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net Interest Income/Margin Components (FTE Adjusted)
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
U.S.
|
$
|
1,076.4
|
|
$
|
90,090.3
|
|
1.19
|
%
|
$
|
959.5
|
|
$
|
88,514.4
|
|
1.08
|
%
|
$
|
842.5
|
|
$
|
78,136.5
|
|
1.08
|
%
|
Non-U.S.
|
398.6
|
|
21,088.0
|
|
1.89
|
|
300.5
|
|
18,523.2
|
|
1.62
|
%
|
252.9
|
|
24,113.3
|
|
1.05
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Consolidated
|
$
|
1,475.0
|
|
$
|
111,178.3
|
|
1.33
|
%
|
$
|
1,260.0
|
|
$
|
107,037.6
|
|
1.18
|
%
|
$
|
1,095.4
|
|
$
|
102,249.8
|
|
1.07
|
%
|
Notes:
|
Net Interest Income (FTE Adjusted) includes adjustments to a fully taxable equivalent basis for loans and securities. Such adjustments are based on a blended federal and state tax rate of
38.1%
. Total taxable equivalent interest adjustments amounted to
$45.8 million
in
2017
,
$25.1 million
in
2016
and
$25.3 million
in
2015
. Interest revenue on cash collateral positions is reported above within interest-bearing due from and deposits with banks and within loans and leases. Interest expense on cash collateral positions is reported above within non-U.S. offices interest-bearing deposits. Related cash collateral received from and deposited with derivative counterparties is recorded net of the associated derivative contract within other assets and other liabilities, respectively.
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
163
|
(INTEREST AND RATE ON A FULLY TAXABLE EQUIVALENT BASIS)
|
2017/2016 CHANGE DUE TO
|
2016/2015 CHANGE DUE TO
|
||||||||||||||||
(In Millions)
|
AVERAGE
BALANCE |
|
RATE
|
|
TOTAL
|
|
AVERAGE
BALANCE |
|
RATE
|
|
TOTAL
|
|
||||||
Increase (Decrease) in Interest Income
|
|
|
|
|
|
|
||||||||||||
Money Market Assets
|
|
|
|
|
|
|
||||||||||||
Federal Reserve and Other Central Bank Deposits
|
$
|
17.6
|
|
$
|
46.1
|
|
$
|
63.7
|
|
$
|
1.6
|
|
$
|
25.9
|
|
$
|
27.5
|
|
Interest-Bearing Due from and Deposits with Banks
|
2.5
|
|
(3.0
|
)
|
(0.5
|
)
|
(14.6
|
)
|
(6.0
|
)
|
(20.6
|
)
|
||||||
Federal Funds Sold and Securities Purchased under Agreements to Resell
|
0.8
|
|
8.3
|
|
9.1
|
|
4.4
|
|
7.7
|
|
12.1
|
|
||||||
Securities
|
|
|
|
|
|
|
||||||||||||
U.S. Government
|
(6.5
|
)
|
17.8
|
|
11.3
|
|
23.4
|
|
(0.5
|
)
|
22.9
|
|
||||||
Obligations of States and Political Subdivisions
|
3.4
|
|
(1.6
|
)
|
1.8
|
|
4.7
|
|
(0.8
|
)
|
3.9
|
|
||||||
Government Sponsored Agency
|
6.1
|
|
99.9
|
|
106.0
|
|
8.4
|
|
24.8
|
|
33.2
|
|
||||||
Other
|
30.6
|
|
32.8
|
|
63.4
|
|
10.8
|
|
29.6
|
|
40.4
|
|
||||||
Loans and Leases
|
20.5
|
|
97.9
|
|
118.4
|
|
(5.1
|
)
|
78.4
|
|
73.3
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Total
|
$
|
75.0
|
|
$
|
298.2
|
|
$
|
373.2
|
|
$
|
33.6
|
|
$
|
159.1
|
|
$
|
192.7
|
|
|
|
|
|
|
|
|
||||||||||||
Increase (Decrease) in Interest Expense
|
|
|
|
|
|
|
||||||||||||
Deposits
|
|
|
|
|
|
|
||||||||||||
Savings and Money Market
|
$
|
0.3
|
|
$
|
12.1
|
|
$
|
12.4
|
|
$
|
(0.1
|
)
|
$
|
2.3
|
|
$
|
2.2
|
|
Savings Certificates and Other Time
|
(0.7
|
)
|
1.8
|
|
1.1
|
|
(0.6
|
)
|
1.4
|
|
0.8
|
|
||||||
Non-U.S. Offices Time
|
7.5
|
|
77.6
|
|
85.1
|
|
6.2
|
|
—
|
|
6.2
|
|
||||||
Short-Term Borrowings
|
1.3
|
|
44.0
|
|
45.3
|
|
2.7
|
|
13.1
|
|
15.8
|
|
||||||
Senior Notes
|
—
|
|
0.1
|
|
0.1
|
|
—
|
|
—
|
|
—
|
|
||||||
Subordinated Notes
|
|
|
|
|
|
|
||||||||||||
Long-Term Debt
|
10.3
|
|
2.5
|
|
12.8
|
|
0.6
|
|
1.4
|
|
2.0
|
|
||||||
Floating Rate Capital Debt
|
—
|
|
1.4
|
|
1.4
|
|
—
|
|
1.1
|
|
1.1
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Total
|
$
|
18.7
|
|
$
|
139.5
|
|
$
|
158.2
|
|
$
|
8.8
|
|
$
|
19.3
|
|
$
|
28.1
|
|
|
|
|
|
|
|
|
||||||||||||
Increase in Net Interest Income
|
$
|
56.3
|
|
$
|
158.7
|
|
$
|
215.0
|
|
$
|
24.8
|
|
$
|
139.8
|
|
$
|
164.6
|
|
|
|
|
164
2017 Annual Report | Northern Trust Corporation
|
|
|
|
December 31, 2017
|
||||||||||||||||||||
|
ONE YEAR OR LESS
|
ONE TO FIVE YEARS
|
FIVE TO TEN YEARS
|
OVER TEN YEARS
|
AVERAGE
MATURITY |
||||||||||||||||
($ in Millions)
|
BOOK
|
|
YIELD
|
|
BOOK
|
|
YIELD
|
|
BOOK
|
|
YIELD
|
|
BOOK
|
|
YIELD
|
|
|||||
Securities Held to Maturity
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government
|
$
|
35.0
|
|
1.12
|
%
|
$
|
—
|
|
—
|
%
|
$
|
—
|
|
—
|
%
|
$
|
—
|
|
—
|
%
|
1 mo.
|
Obligations of States and Political Subdivisions
|
16.5
|
|
3.68
|
|
18.1
|
|
4.97
|
|
—
|
|
—
|
|
—
|
|
—
|
|
18 mos.
|
||||
Government Sponsored Agency
|
0.4
|
|
3.90
|
|
0.8
|
|
4.83
|
|
1.3
|
|
4.85
|
|
3.3
|
|
4.87
|
|
130 mos.
|
||||
Other – Fixed
|
5,032.7
|
|
1.16
|
|
5,187.4
|
|
0.69
|
|
31.9
|
|
1.75
|
|
73.8
|
|
2.30
|
|
22 mos.
|
||||
– Floating
|
607.3
|
|
1.98
|
|
1,461.5
|
|
2.13
|
|
579.0
|
|
2.19
|
|
—
|
|
—
|
|
37 mos.
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total Securities Held to Maturity
|
$
|
5,691.9
|
|
1.26
|
%
|
$
|
6,667.8
|
|
1.02
|
%
|
$
|
612.2
|
|
2.18
|
%
|
$
|
77.1
|
|
2.41
|
%
|
25 mos.
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Securities Available for Sale
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government
|
$
|
398.0
|
|
1.33
|
%
|
$
|
3,865.2
|
|
1.50
|
%
|
$
|
1,437.1
|
|
1.58
|
%
|
$
|
—
|
|
—
|
%
|
37 mos.
|
Obligations of States and Political Subdivisions
|
430.1
|
|
0.85
|
|
316.3
|
|
1.23
|
|
—
|
|
—
|
|
—
|
|
—
|
|
12 mos.
|
||||
Government Sponsored Agency
|
3,152.3
|
|
1.73
|
|
9,666.8
|
|
1.76
|
|
4,822.1
|
|
1.76
|
|
1,035.4
|
|
2.03
|
|
52 mos.
|
||||
Asset-Backed – Fixed
|
741.9
|
|
1.53
|
|
1,425.5
|
|
1.81
|
|
—
|
|
—
|
|
—
|
|
—
|
|
18 mos.
|
||||
Asset-Backed – Floating
|
106.9
|
|
1.76
|
|
452.1
|
|
1.87
|
|
—
|
|
—
|
|
—
|
|
—
|
|
30 mos.
|
||||
Auction Rate Securities
|
—
|
|
—
|
|
0.6
|
|
2.33
|
|
—
|
|
—
|
|
3.7
|
|
2.95
|
|
166 mos.
|
||||
Other – Fixed
|
1,313.3
|
|
1.39
|
|
2,920.3
|
|
1.97
|
|
205.3
|
|
1.81
|
|
—
|
|
—
|
|
28 mos.
|
||||
– Floating
|
84.5
|
|
1.83
|
|
1,291.0
|
|
1.78
|
|
70.6
|
|
1.75
|
|
3.1
|
|
1.85
|
|
36 mos.
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total Securities Available for Sale
|
$
|
6,227.0
|
|
1.55
|
%
|
$
|
19,937.8
|
|
1.74
|
%
|
$
|
6,535.1
|
|
1.73
|
%
|
$
|
1,042.2
|
|
2.03
|
%
|
42 mos.
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
165
|
|
December 31, 2017
|
|||||||||||
(In Millions)
|
TOTAL
|
|
ONE YEAR
OR LESS |
|
ONE TO FIVE
YEARS |
|
OVER FIVE
YEARS |
|
||||
U.S. (Excluding Residential Real Estate and Private Client Loans):
|
|
|
|
|
||||||||
Commercial and Institutional
|
$
|
9,042.2
|
|
$
|
5,478.2
|
|
$
|
2,059.4
|
|
$
|
1,504.6
|
|
Commercial Real Estate
|
3,482.7
|
|
764.9
|
|
2,033.6
|
|
684.2
|
|
||||
Lease Financing, net
|
229.2
|
|
10.2
|
|
110.5
|
|
108.5
|
|
||||
Other-Commercial
|
265.4
|
|
160.8
|
|
60.4
|
|
44.2
|
|
||||
Other-Personal
|
33.5
|
|
1.7
|
|
2.4
|
|
29.4
|
|
||||
|
|
|
|
|
||||||||
Total U.S.
|
$
|
13,053.0
|
|
$
|
6,415.8
|
|
$
|
4,266.3
|
|
$
|
2,370.9
|
|
|
|
|
|
|
||||||||
Non-U.S.
|
$
|
1,538.5
|
|
$
|
1,467.8
|
|
$
|
37.5
|
|
$
|
33.2
|
|
Total Selected Loans and Leases
|
$
|
14,591.5
|
|
$
|
7,883.6
|
|
$
|
4,303.8
|
|
$
|
2,404.1
|
|
Interest Rate Sensitivity of Loans and Leases:
|
|
|
|
|
||||||||
Fixed Rate
|
$
|
8,525.1
|
|
$
|
5,995.2
|
|
$
|
1,299.2
|
|
$
|
1,230.7
|
|
Variable Rate
|
6,066.4
|
|
1,925.5
|
|
2,995.4
|
|
1,145.5
|
|
||||
|
|
|
|
|
||||||||
Total
|
$
|
14,591.5
|
|
$
|
7,920.7
|
|
$
|
4,294.6
|
|
$
|
2,376.2
|
|
|
DECEMBER 31,
|
||||||||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
|||||
Commercial
|
$
|
289.5
|
|
$
|
318.0
|
|
$
|
335.2
|
|
$
|
154.0
|
|
$
|
497.0
|
|
Non-U.S. Governments and Official Institutions
|
—
|
|
—
|
|
—
|
|
—
|
|
250.1
|
|
|||||
Banks
|
—
|
|
26.2
|
|
8.5
|
|
—
|
|
10.4
|
|
|||||
Other
|
1,249.0
|
|
1,533.6
|
|
794.0
|
|
1,376.6
|
|
197.2
|
|
|||||
|
|
|
|
|
|
||||||||||
Total
|
$
|
1,538.5
|
|
$
|
1,877.8
|
|
$
|
1,137.7
|
|
$
|
1,530.6
|
|
$
|
954.7
|
|
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
|||||
Balance at Beginning of Year
|
$
|
—
|
|
$
|
—
|
|
$
|
3.3
|
|
$
|
2.1
|
|
$
|
3.4
|
|
Charge-Offs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Recoveries
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Provision for Credit Losses
|
—
|
|
—
|
|
(3.3
|
)
|
1.2
|
|
(1.3
|
)
|
|||||
|
|
|
|
|
|
||||||||||
Balance at End of Year
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
3.3
|
|
$
|
2.1
|
|
|
|
|
166
2017 Annual Report | Northern Trust Corporation
|
|
|
($ in Millions)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
|||||
Balance at Beginning of Year
|
$
|
192.0
|
|
$
|
233.3
|
|
$
|
295.9
|
|
$
|
307.9
|
|
$
|
327.6
|
|
Charge-Offs
|
|
|
|
|
|
||||||||||
Commercial
|
|
|
|
|
|
||||||||||
Commercial and Institutional
|
10.3
|
|
15.8
|
|
9.2
|
|
5.4
|
|
5.0
|
|
|||||
Commercial Real Estate
|
1.1
|
|
0.8
|
|
3.9
|
|
7.5
|
|
11.7
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Commercial
|
11.4
|
|
16.6
|
|
13.1
|
|
12.9
|
|
16.7
|
|
|||||
|
|
|
|
|
|
||||||||||
Personal
|
|
|
|
|
|
||||||||||
Residential Real Estate
|
8.0
|
|
10.4
|
|
16.7
|
|
21.2
|
|
37.0
|
|
|||||
Private Client
|
2.1
|
|
0.3
|
|
0.9
|
|
2.0
|
|
5.5
|
|
|||||
Other
|
—
|
|
—
|
|
—
|
|
—
|
|
0.1
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Personal
|
10.1
|
|
10.7
|
|
17.6
|
|
23.2
|
|
42.6
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Charge-Offs
|
21.5
|
|
27.3
|
|
30.7
|
|
36.1
|
|
59.3
|
|
|||||
|
|
|
|
|
|
||||||||||
Recoveries
|
|
|
|
|
|
||||||||||
Commercial
|
|
|
|
|
|
||||||||||
Commercial and Institutional
|
3.7
|
|
3.3
|
|
1.7
|
|
1.3
|
|
3.6
|
|
|||||
Commercial Real Estate
|
1.8
|
|
1.5
|
|
3.8
|
|
9.8
|
|
5.0
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Commercial
|
5.5
|
|
4.8
|
|
5.5
|
|
11.1
|
|
8.6
|
|
|||||
|
|
|
|
|
|
||||||||||
Personal
|
|
|
|
|
|
||||||||||
Residential Real Estate
|
5.4
|
|
6.6
|
|
4.5
|
|
5.6
|
|
9.4
|
|
|||||
Private Client
|
0.4
|
|
0.7
|
|
1.2
|
|
1.4
|
|
1.6
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Personal
|
5.8
|
|
7.3
|
|
5.7
|
|
7.0
|
|
11.0
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Recoveries
|
11.3
|
|
12.1
|
|
11.2
|
|
18.1
|
|
19.6
|
|
|||||
|
|
|
|
|
|
||||||||||
Net Charge-Offs
|
10.2
|
|
15.2
|
|
19.5
|
|
18.0
|
|
39.7
|
|
|||||
Provision for Credit Losses
|
(28.0
|
)
|
(26.0
|
)
|
(43.0
|
)
|
6.0
|
|
20.0
|
|
|||||
Effect of Foreign Exchange Rates
|
—
|
|
(0.1
|
)
|
(0.1
|
)
|
—
|
|
—
|
|
|||||
Net Change in Allowance
|
(38.2
|
)
|
(41.3
|
)
|
(62.6
|
)
|
(12.0
|
)
|
(19.7
|
)
|
|||||
|
|
|
|
|
|
||||||||||
Balance at End of Year
|
153.8
|
|
192.0
|
|
233.3
|
|
295.9
|
|
307.9
|
|
|||||
|
|
|
|
|
|
||||||||||
Allowance Assigned To:
|
|
|
|
|
|
||||||||||
Loans and Leases
|
$
|
131.2
|
|
$
|
161.0
|
|
$
|
193.8
|
|
$
|
267.0
|
|
$
|
278.1
|
|
Undrawn Commitments and Standby Letters of Credit
|
22.6
|
|
31.0
|
|
39.5
|
|
28.9
|
|
29.8
|
|
|||||
|
|
|
|
|
|
||||||||||
Total Allowance for Credit Losses
|
$
|
153.8
|
|
$
|
192.0
|
|
$
|
233.3
|
|
$
|
295.9
|
|
$
|
307.9
|
|
|
|
|
|
|
|
||||||||||
Loans and Leases at Year-End
|
$
|
32,592.2
|
|
$
|
33,822.1
|
|
$
|
33,180.9
|
|
$
|
31,640.2
|
|
$
|
29,385.5
|
|
Average Total Loans and Leases
|
$
|
33,565.2
|
|
$
|
34,043.5
|
|
$
|
33,016.1
|
|
$
|
30,215.6
|
|
$
|
28,696.5
|
|
As a Percent of Year-End Loans and Leases
|
|
|
|
|
|
||||||||||
Net Loan Charge-Offs
|
0.03
|
%
|
0.04
|
%
|
0.06
|
%
|
0.06
|
%
|
0.14
|
%
|
|||||
Provision for Credit Losses
|
(0.09
|
)
|
(0.08
|
)
|
(0.13
|
)
|
0.02
|
|
0.07
|
|
|||||
Allowance at Year-End Assigned to Loans and Leases
|
0.40
|
|
0.48
|
|
0.58
|
|
0.84
|
|
0.95
|
|
|||||
As a Percent of Average Loans and Leases
|
|
|
|
|
|
||||||||||
Net Loan Charge-Offs
|
0.03
|
%
|
0.04
|
%
|
0.06
|
%
|
0.06
|
%
|
0.14
|
%
|
|||||
Allowance at Year-End Assigned to Loans and Leases
|
0.39
|
|
0.47
|
|
0.59
|
|
0.88
|
|
0.97
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
167
|
|
DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
U.S. Offices
|
|
|
|
||||||
Demand and Noninterest-Bearing
|
|
|
|
||||||
Individuals, Partnerships and Corporations
|
$
|
16,410.6
|
|
$
|
20,764.8
|
|
$
|
20,684.9
|
|
Correspondent Banks
|
60.3
|
|
58.0
|
|
59.8
|
|
|||
Other Noninterest-Bearing
|
1.4
|
|
76.3
|
|
124.6
|
|
|||
|
|
|
|
||||||
Total Demand and Noninterest-Bearing
|
16,472.3
|
|
20,899.1
|
|
20,869.3
|
|
|||
|
|
|
|
||||||
Interest-Bearing
|
|
|
|
||||||
Savings, Money Market, and Other
|
15,575.6
|
|
15,142.4
|
|
15,306.9
|
|
|||
Savings Certificates less than $100,000
|
130.1
|
|
150.9
|
|
175.9
|
|
|||
Savings Certificates $100,000 and more
|
717.3
|
|
672.0
|
|
669.9
|
|
|||
Other
|
426.0
|
|
609.1
|
|
764.1
|
|
|||
|
|
|
|
||||||
Total Interest-Bearing
|
16,849.0
|
|
16,574.4
|
|
16,916.8
|
|
|||
|
|
|
|
||||||
Total U.S. Offices
|
33,321.3
|
|
37,473.5
|
|
37,786.1
|
|
|||
Non-U.S. Offices
|
|
|
|
||||||
Noninterest-Bearing
|
6,600.3
|
|
5,332.2
|
|
3,604.8
|
|
|||
Interest-Bearing
|
56,583.2
|
|
50,808.2
|
|
49,377.1
|
|
|||
|
|
|
|
||||||
Total Non-U.S. Offices
|
63,183.5
|
|
56,140.4
|
|
52,981.9
|
|
|||
|
|
|
|
||||||
Total Deposits
|
$
|
96,504.8
|
|
$
|
93,613.9
|
|
$
|
90,768.0
|
|
|
DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Commercial
|
$
|
70,987.1
|
|
$
|
57,354.0
|
|
$
|
50,965.8
|
|
Non-U.S. Governments and Official Institutions
|
4,246.0
|
|
3,971.8
|
|
5,464.3
|
|
|||
Banks
|
305.5
|
|
276.6
|
|
489.5
|
|
|||
Other Time
|
6.3
|
|
9.4
|
|
18.2
|
|
|||
Other Demand
|
6.1
|
|
8.8
|
|
3.9
|
|
|||
|
|
|
|
||||||
Total
|
$
|
75,551.0
|
|
$
|
61,620.6
|
|
$
|
56,941.7
|
|
|
DECEMBER 31, 2017
|
||||||||
|
U.S. OFFICES
|
NON-U.S. OFFICES
|
|||||||
(In Millions)
|
CERTIFICATES
OF DEPOSIT
|
|
OTHER
TIME
|
|
|
||||
3 Months or Less
|
$
|
507.2
|
|
$
|
—
|
|
$
|
12,680.0
|
|
Over 3 through 6 Months
|
219.0
|
|
—
|
|
13.7
|
|
|||
Over 6 through 12 Months
|
237.5
|
|
—
|
|
2.4
|
|
|||
Over 12 Months
|
60.9
|
|
—
|
|
0.2
|
|
|||
|
|
|
|
||||||
Total
|
$
|
1,024.6
|
|
$
|
—
|
|
$
|
12,696.3
|
|
|
|
|
168
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
|||||
Interest-Related Deposits – U.S. Offices
|
2017
|
|
2016
|
|
2015
|
|
Savings, Money Market, and Other
|
0.16
|
%
|
0.08
|
%
|
0.06
|
%
|
Savings Certificates less than $100,000
|
0.15
|
|
0.15
|
|
0.19
|
|
Savings Certificates $100,000 and more
|
0.46
|
|
0.35
|
|
0.38
|
|
Other Time
|
1.38
|
|
0.94
|
|
0.63
|
|
Total U.S. Offices Interest-Related Deposits
|
0.20
|
|
0.12
|
|
0.10
|
|
Total Non-U.S. Offices Interest-Related Deposits
|
0.26
|
|
0.12
|
|
0.12
|
|
Total Interest-Related Deposits
|
0.25
|
%
|
0.12
|
%
|
0.11
|
%
|
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
|||||
Total Assets
|
$
|
26,510.1
|
|
$
|
24,031.0
|
|
$
|
29,411.2
|
|
$
|
28,072.8
|
|
$
|
29,315.6
|
|
Time Deposits with Banks
|
5,013.4
|
|
6,331.3
|
|
13,712.9
|
|
16,106.9
|
|
17,785.5
|
|
|||||
Loans
|
2,014.8
|
|
1,894.3
|
|
1,759.4
|
|
1,490.2
|
|
1,164.0
|
|
|||||
Customers’ Acceptance Liability
|
—
|
|
—
|
|
—
|
|
—
|
|
0.5
|
|
|||||
Non-U.S. Investments
|
14,047.8
|
|
10,255.7
|
|
8,590.8
|
|
6,446.5
|
|
5,334.1
|
|
|||||
Total Liabilities
|
64,267.3
|
|
57,270.0
|
|
54,521.0
|
|
52,123.3
|
|
48,144.4
|
|
|||||
Deposits
|
63,183.5
|
|
56,139.8
|
|
52,981.2
|
|
49,854.7
|
|
45,865.7
|
|
|||||
Liability on Acceptances
|
—
|
|
—
|
|
—
|
|
—
|
|
0.5
|
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
Assets
|
22
|
%
|
21
|
%
|
27
|
%
|
27
|
%
|
31
|
%
|
Liabilities
|
54
|
%
|
50
|
%
|
49
|
%
|
50
|
%
|
51
|
%
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
169
|
(In Millions)
|
BANKS
|
|
COMMERCIAL
AND OTHER |
|
TOTAL
|
|
|||
AT DECEMBER 31, 2017
|
|
|
|||||||
Japan
|
$
|
510
|
|
$
|
3,375
|
|
$
|
3,885
|
|
Canada
|
1,437
|
|
196
|
|
1,633
|
|
|||
|
|
|
|
||||||
AT DECEMBER 31, 2016
|
|
|
|||||||
Japan
|
$
|
900
|
|
$
|
1,608
|
|
$
|
2,508
|
|
Canada
|
2,114
|
|
309
|
|
2,423
|
|
|||
France
|
1,311
|
|
233
|
|
1,544
|
|
|||
Sweden
|
1,112
|
|
217
|
|
1,329
|
|
|||
|
|
|
|
||||||
AT DECEMBER 31, 2015
|
|
|
|||||||
Canada
|
$
|
2,293
|
|
$
|
277
|
|
$
|
2,570
|
|
Japan
|
2,290
|
|
—
|
|
2,290
|
|
|||
United Kingdom
|
428
|
|
764
|
|
1,192
|
|
|||
|
|
|
|
|
DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Balance on December 31
|
$
|
2,286.1
|
|
$
|
204.8
|
|
$
|
351.5
|
|
Highest Month-End Balance
|
2,286.1
|
|
378.5
|
|
982.2
|
|
|||
Year – Average Balance
|
1,102.6
|
|
617.7
|
|
823.6
|
|
|||
– Average Rate
|
0.95
|
%
|
0.25
|
%
|
0.08
|
%
|
|||
Average Rate at Year-End
|
1.17
|
%
|
0.07
|
%
|
0.05
|
%
|
|
DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Balance on December 31
|
$
|
834.0
|
|
$
|
473.7
|
|
$
|
546.6
|
|
Highest Month-End Balance
|
834.0
|
|
565.5
|
|
802.4
|
|
|||
Year – Average Balance
|
738.9
|
|
847.1
|
|
649.5
|
|
|||
– Average Rate
|
0.81
|
%
|
0.27
|
%
|
0.05
|
%
|
|||
Average Rate at Year-End
|
1.29
|
%
|
0.64
|
%
|
0.36
|
%
|
|
|
|
170
2017 Annual Report | Northern Trust Corporation
|
|
|
|
DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Balance on December 31
|
$
|
6,051.1
|
|
$
|
5,109.5
|
|
$
|
4,055.1
|
|
Highest Month-End Balance
|
7,040.4
|
|
6,037.6
|
|
4,123.2
|
|
|||
Year – Average Balance
|
4,854.5
|
|
4,872.1
|
|
3,284.9
|
|
|||
– Average Rate
|
1.04
|
%
|
0.37
|
%
|
0.15
|
%
|
|||
Average Rate at Year-End
|
1.38
|
%
|
0.57
|
%
|
0.16
|
%
|
|
DECEMBER 31,
|
||||||||
(In Millions)
|
2017
|
|
2016
|
|
2015
|
|
|||
Balance on December 31
|
$
|
9,171.2
|
|
$
|
5,788.0
|
|
$
|
4,953.2
|
|
Year – Average Balance
|
6,696.0
|
|
6,337.0
|
|
4,757.9
|
|
|||
– Average Rate
|
1.00
|
%
|
0.34
|
%
|
0.13
|
%
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
171
|
|
|
|
172
2017 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
173
|
|
|
|
174
2017 Annual Report | Northern Trust Corporation
|
|
|
For Northern Trust Corporation and Subsidiaries:
|
Consolidated Balance Sheets - December 31, 2017 and 2016
|
Consolidated Statements of Income - Years Ended December 31, 2017, 2016, and 2015
|
Consolidated Statements of Comprehensive Income - Years Ended December 31, 2017, 2016, and 2015
|
Consolidated Statements of Changes in Stockholders' Equity - Years Ended December 31, 2017, 2016, and 2015
|
Consolidated Statements of Cash Flows - Years Ended December 31, 2017, 2016, and 2015
|
Notes to Consolidated Financial Statements
|
Report of Independent Registered Public Accounting Firm
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
175
|
Northern Trust Corporation
|
|
|
|
(Registrant)
|
|
|
|
By:
|
/s/ Michael G. O’Grady
|
|
Michael G. O’Grady
|
|
President and Chief Executive Officer
|
Signature
|
|
Capacity
|
|
|
|
/s/ Michael G. O'Grady
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
Michael G. O’Grady
|
|
|
|
|
|
/s/ S. Biff Bowman
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
S. Biff Bowman
|
|
|
|
|
|
/s/ Aileen B. Blake
|
|
Executive Vice President and Controller
(Principal Accounting Officer)
|
Aileen B. Blake
|
|
|
|
|
|
/s/ Frederick H. Waddell
|
|
Chairman
|
Frederick H. Waddell
|
|
|
|
|
|
/s/ Linda Walker Bynoe
|
|
Director
|
Linda Walker Bynoe
|
|
|
|
|
|
/s/ Susan Crown
|
|
Director
|
Susan Crown
|
|
|
|
|
|
/s/ Dean M. Harrison
|
|
Director
|
Dean M. Harrison
|
|
|
|
|
|
/s/ Jay L. Henderson
|
|
Director
|
Jay L. Henderson
|
|
|
|
|
|
/s/ Jose Luis Prado
|
|
Director
|
Jose Luis Prado
|
|
|
|
|
|
176
2017 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
/s/ Thomas E. Richards
|
|
Director
|
Thomas E. Richards
|
|
|
|
|
|
/s/ John W. Rowe
|
|
Director
|
John W. Rowe
|
|
|
|
|
|
/s/ Martin P. Slark
|
|
Director
|
Martin P. Slark
|
|
|
|
|
|
/s/ David H.B. Smith, Jr.
|
|
Director
|
David H.B. Smith, Jr.
|
|
|
|
|
|
/s/ Donald Thompson
|
|
Director
|
Donald Thompson
|
|
|
|
|
|
/s/ Charles A. Tribbett, III
|
|
Director
|
Charles A. Tribbett, III
|
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
177
|
|
|
|
178
2017 Annual Report | Northern Trust Corporation
|
|
|
Exhibit
Number
|
Description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
179
|
Exhibit
Number
|
Description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
180
2017 Annual Report | Northern Trust Corporation
|
|
|
|
|
|
|
|
2017 Annual Report | Northern Trust Corporation
181
|
Exhibit
Number
|
Description
|
|
|
|
|
101
|
Includes the following financial and related information from the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets as of December 31, 2017 and 2016, (ii) the Consolidated Statements of Income for the twelve months ended December 31, 2017, 2016 and 2015, (iii) the Consolidated Statements of Comprehensive Income for the twelve months ended December 31, 2017, 2016 and 2015, (iv) the Consolidated Statements of Changes in Stockholders’ Equity for the twelve months ended December 31, 2017, 2016 and 2015, (v) the Consolidated Statements of Cash Flows for the twelve months ended December 31, 2017, 2016 and 2015, and (vi) Notes to Consolidated Financial Statements.
|
|
|
|
182
2017 Annual Report | Northern Trust Corporation
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1.1
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“Assigned Base Salary” means the regular annual base wage rate of the Participant, excluding overtime wages or wages related to shift differential.
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1.2
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“Beneficiary” means any person eligible to receive a death benefit under the respective Incentive Compensation Plan as designated by the Participant or otherwise provided under such Incentive Compensation Plan, in the event of the death of the Participant.
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1.3
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“Board” means the Board of Directors of the Corporation.
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1.4
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A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:
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(a)
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any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Corporation (not including in the securities beneficially owned by such Person any securities acquired directly from the Corporation or its Affiliates) representing 30% or more of the combined voting power of the Corporation's then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (c) below
;
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(b)
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the election to the Board, without the recommendation or approval of two-
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(c)
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there is consummated a merger or consolidation of the Corporation or any direct or indirect Subsidiary of the Corporation with any other company, other than (i) a merger or consolidation which would result in the voting securities of the Corporation outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), at least 60% of the combined voting power of the securities of the Corporation or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Corporation (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Corporation (not including in the securities beneficially owned by such Person any securities acquired directly from the Corporation or its Affiliates) representing 20% or more of the combined voting power of the Corporation's then outstanding securities; or
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(d)
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there is consummated the sale or disposition by the Corporation of all or substantially all of the Corporation's assets, other than a sale or disposition by the Corporation of all or substantially all of the Corporation's assets to an entity, at least 60% of the combined voting power of the voting securities of which are owned by stockholders of the Corporation in substantially the same proportions as their ownership of the Corporation immediately prior to such sale or the stockholders of the Corporation approve a plan of complete liquidation or dissolution of the Corporation.
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1.5
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“Code” means the Internal Revenue Code of 1986, as amended from time to time.
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1.6
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“Committee” means the Employee Benefit Administrative Committee, which has the responsibility for administering various benefit plans of the Company, as constituted from time to time.
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1.7
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“Company” means The Northern Trust Company, an Illinois banking corporation; the Corporation; and such U.S. Related Companies as shall, with the consent of the Board, adopt the Plan.
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1.8
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“Corporation” means Northern Trust Corporation, a Delaware corporation, and, to the extent provided in Section 8.8 below, any successor corporation or other entity resulting from a merger or consolidation into or with the Corporation or a transfer or sale of substantially all of the assets of the Corporation.
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1.9
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“Deferred Compensation Account” means an individual bookkeeping account for each Participant established hereunder.
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1.10
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“Early Retirement Age” means the Participant’s age upon the date the Participant has both attained at least age 55 and earned 15 or more years of “Credited Service” as defined under the Pension Plan, provided, however, that in the case of amounts credited to a Participant’s Deferred Compensation Account that are attributable to services performed prior to 2018, “Early Retirement Age” shall have the meaning assigned to it under the Plan as in effect prior to November 1, 2017.
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1.11
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“Effective Date” means November 1, 2017, for the amended and restated Plan. The original effective date of the Plan was May 1, 1998.
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1.12
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“409A Amount” means the portion of the Deferred Compensation Account of a Participant that consists of amounts deferred in taxable years beginning after December 31, 2004, and earnings on such amounts, as determined in accordance with Code Section 409A and
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1.13
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“Incentive Compensation” means cash compensation earned pursuant to the Incentive Compensation Plans.
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1.14
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“Incentive Compensation Plans” means the Partners Incentive Plan, the Management Performance Plan and/or any other bonus program defined by the Company to be included.
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1.15
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“Initial Plan Year” means the eight-consecutive-month period commencing on the original effective date and ending on December 31, 1998.
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1.16
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“Investment Committee” means the Employee Benefit Investment Committee of the Company, as constituted from time to time, which has the investment responsibilities specifically assigned to it under Article IV.
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1.17
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“Key Employee” means a Participant who is a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i). The Company’s Key Employees shall be identified annually pursuant to Section 5.7.
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1.18
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“Normal Retirement Age” means age 65, provided that in the case of an individual who commences participation in the Pension Plan after his sixtieth (60
th
) birthday, the individual’s “Normal Retirement Age” shall mean his age on the earlier of (i) the fifth (5
th
) anniversary of the date the individual commenced participation in the Pension Plan, or (ii) the date the individual completes five (5) years of “Vesting Service,” as defined under the Pension Plan.
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1.19
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“Participant” means an employee of the Company (a) who resides in the United States or is a United States expatriate on temporary foreign assignment, (b) who is eligible to participate in the Plan in accordance with Article II and (c) who has a Deferred Compensation Account under the Plan; provided, that the following shall not be considered Participants: (i) an employee employed by any office or branch of the Company located in a foreign country who, as to the United States, is a nonresident alien, and (ii) an employee who (A) as to the United States, is a foreign national, (B) is working for the Company at a location located in the United States, and (C) is covered by a retirement plan sponsored by a non-U.S. affiliate of the Corporation in the country in which that affiliate is located.
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1.20
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“Pension Plan” means The Northern Trust Company Pension Plan, as amended from time to time.
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1.21
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“Plan” means the Northern Trust Corporation Deferred Compensation Plan, as amended from time to time.
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1.22
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“Plan Year” means the calendar year.
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1.23
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“Postponed Retirement Age” means the Participant’s age after Normal Retirement Age when such Participant incurs a Break in Service.
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1.24
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“Related Company” means any person with whom the Company is considered to be a single employer under Section 414(b) of the Code and all persons with whom the Company would be considered a single employer under Code Section 414(c), substituting 50% for the 80% standard that would otherwise apply.
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1.25
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“Retirement Deferral” means the category of deferral described in Section 5.1(a).
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1.26
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“Retirement Date” means the date, if any, of the Participant’s Separation from Service after reaching the Participant’s Normal, Early or Postponed Retirement Age.
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1.27
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“Retirement Distribution Date” means the last business day of the 12
th
month following the month in which the Participant’s Retirement Date occurs.
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1.28
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“Separation from Service” means a Participant’s termination of employment with the Company for any reason other than death. A termination of employment will be deemed to occur when the Company and the Participant reasonably anticipate that the level of bona fide services the Participant will perform for the Company (whether as an employee or an independent contractor, but not as a director) after a certain date will permanently decrease to less than 50 percent of the average level of bona fide services performed by the Participant for the Company (as an employee or independent contractor, but not as a director) in the immediately preceding 36 months (or the full period of the Participant’s services to the Company if the Participant has been providing services to the Company for less than 36 months), determined in accordance with Treas. Reg. Sec. 1.409A-1(h). The employment relationship will be treated as continuing intact while the Participant is on a bona fide leave of absence (determined in accordance with Treas. Reg. Sec. 1.409A-1(h)), but (a) only if there is a reasonable expectation that the Participant will return to active employment status, and (b) only to the extent that such leave of absence does not exceed 6 months, or, if longer, for so long as the Participant has a statutory or contractual right to reemployment. For purposes of this Section 1.28, references to the Company shall include the Company and all Related Companies.
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1.29
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Short-Term Deferral means the category of deferral described in Section 5.1(b).
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1.30
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“Short-Term Distribution Date” means the last business day of January of any Plan Year as provided under Section 5.1 of the Plan and as irrevocably set forth in each of the Participant’s Short-Term Deferral election forms.
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2.1
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Conditions for Deferrals for 1998 and 1999 Incentive Compensation Payments
. For Incentive Compensation which otherwise would be paid during the 1998 or 1999 Plan Years, an employee of the Company who participates in an Incentive Compensation Plan and (i) whose Assigned Base Salary, determined as of April 1, 1998, is at least $100,000, or (ii) whose Assigned Base Salary determined as of April 1, 1998 plus Incentive Compensation paid under the Incentive Compensation Plans during the period commencing on April 1, 1997 and ending on March 31, 1998 is at least $150,000, shall be eligible to defer Incentive Compensation under the Plan.
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2.2
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Conditions for Deferrals in Subsequent Plan Years
. For Plan Years beginning after 1999 and prior to 2018, the Plan required that the Participant’s Assigned Base Salary or Assigned Based Salary plus Incentive Compensation meet certain dollar thresholds described in the Plan. For Incentive Compensation attributable to services performed in the 2018 Plan Year and each subsequent Plan Year, an employee of the Company who participates in an Incentive Compensation Plan for such year and whose Assigned Base Salary, determined as of November 15 immediately preceding the Participant’s deferral election made under Section 3.2 below with respect to such year, is at least $165,000 (or such other amount as the Committee from time to time determines) shall be eligible to defer Incentive Compensation under the Plan for such year.
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3.1
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Amount Which May Be Deferred
. Each Participant may elect to defer all or a portion of his or her annual Incentive Compensation as determined by the Committee; provided, however, the amount of each deferral for each payment of Incentive Compensation shall be at least $2,500. Participants shall always be one hundred percent (100%) vested in the amount they defer.
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3.2
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Deferral Election
. Participants shall make the election to defer Incentive Compensation under the Plan on a Deferral Election Form within such dates as the Committee from time to time establishes; provided, that any such election must be made on or before December 31 of the Participant’s taxable year preceding the taxable year in which the Participant performs the services that give rise to the Incentive Compensation to be deferred. Participants shall make the following determinations on each Deferral Election Form, which determinations shall become irrevocable on December 31 of the Plan Year in which the election is made (or such earlier date in that Plan Year as the Committee may determine):
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(a)
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the amount to be deferred with respect to the Participant’s Incentive Compensation to which the election applies pursuant to the terms of Sections 3.1 and 3.2 herein;
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(b)
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with respect to the automatic Retirement Deferral election described in Section 5.1(a), the date as of which payments are to commence in accordance with Section
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(c)
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if the Participant is making an optional Short-Term Deferral election described in Section 5.1(b), the Short-Term Distribution Date on which such Short-Term Deferral is to be paid in accordance with and subject to the terms and conditions of Article V.
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3.3
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Partial Year Employment and Initial Election
. An employee who commences employment with the Company after the beginning of a Plan Year shall not be permitted to make an election to defer Incentive Compensation attributable to services performed in such Plan Year. Further, an employee who commences employment with the Company after November 15 of any Plan Year (or such other date as the Company may determine in its sole discretion) shall not be eligible under Section 2.2 to defer Incentive Compensation attributable to services performed in the subsequent Plan Year.
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3.4
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Disability or Other Absence
. Subject to Section 5.1(d), if the Participant experiences a disability, all previous Deferral Elections will remain in force unless the Committee, in its sole discretion, determines that the Participant has incurred an unforeseeable emergency pursuant to Section 5.3 of the Plan, in which case it will waive, upon the Participant’s request, such election(s). Subject to the foregoing, if the Participant takes a paid or unpaid leave of absence, all previous Deferral Elections will remain in full force.
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4.1
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Investment Options/Earnings Credited to Participant Accounts. The Deferred Compensation Account of each Participant shall be a notional account. All amounts credited to such accounts shall be bookkeeping entries only. The Investment Committee may permit Participants to select among certain investment alternatives designated by the Investment Committee, and amounts credited to Participant Deferred Compensation Accounts shall be treated as if they were invested in such investment alternatives and shall be credited with earnings based on the performance of such investment alternatives.
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4.2
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A Participant may transfer amounts credited to the Particpant’s Deferred Compensation Account among the investment alternatives specified by the Investment Committee in accordance with such rules and requirements as established by the Investment Committee on a uniform and nondiscriminatory basis. Transfers among investment alternatives shall generally be made effective on the business day following the business day a transfer election is filed, subject to the Investment Committee’s discretion to suspend transfers in the event of market disruption or such other factor that the Investment Committee deems relevant.
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4.3
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Participant Statements
. Statements that identify the Participant’s Deferred Compensation Account balance shall be provided, or made available, to Participants no less frequently than annually.
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4.4
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Notwithstanding anything in the Plan to the contrary, for a period of two years after the date of an occurrence of a Change in Control, neither the Investment Committee, nor the Company or Corporation or any successor of any of the foregoing, shall eliminate any of the investment alternatives and elections that were in effect immediately prior to the Change in Control and shall not decrease the frequency with which Participants may change investment elections. Notwithstanding the foregoing, in the event that an investment alternative is discontinued by its sponsor and therefore becomes unavailable to Participants, the Investment Committee or its successor shall provide a substitute alternative with substantially similar investment objectives and policies.
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4.5
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Valuation of Deferred Compensation Accounts
. Participants’ Deferred Compensation Accounts shall be valued as of each business day.
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5.1
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Deferral Period
. Pursuant to Section 3.2, each Participant shall irrevocably elect the Deferral Period for the Incentive Compensation payments deferred in any Plan Year, as described below:
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(a)
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Automatic Retirement Deferral Election
. Subject to Section 5.1(b), each Participant shall be deemed to irrevocably elect, with respect to the Incentive Compensation payments deferred in any Plan Year under Section 3.2, a Retirement Deferral, pursuant to which payments under the Plan shall commence, provided that the Participant incurs a Retirement Date and subject to Section 5.6, (i) either (A) within sixty (60) days of the Participant’s Retirement Date, or (B) on the Retirement Distribution Date, and (ii) in the form elected by the Participant in accordance with Section 5.2 of the Plan, each as elected by the Participant in accordance with Section 3.2 (provided, however, that payments must commence in accordance with clause (i)(B) of this Section 5.1(a) if the Participant elects to receive payment in the form provided under Section 5.2(b)). Any election by the Participant to defer Incentive Compensation under Section 3.2 and this Section 5.1 shall not be effective unless the Participant completes the elections described in clauses (i) and (ii) of this Section 5.1(a).
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(b)
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Optional Short-Term Deferral Election
. In addition to the automatic Retirement Deferral election described in Section 5.1(a), each Participant may also irrevocably elect, with respect to the Incentive Compensation payments deferred in any Plan Year, a Short-Term Deferral, pursuant to which payments under the Plan shall commence only in the form provided under Section 5.2(a) of this Plan on any Short-Term Distribution Date elected by the Participant, provided that such Short-Term Distribution Date shall be no earlier than the Short-Term Distribution Date that is subsequent to three (3) Plan Years following the end of the Plan Year in which the Incentive
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(c)
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Notwithstanding anything in the Plan to the contrary, Incentive Compensation paid after a Participant’s Retirement Date, other Separation from Service or death, is not eligible for deferral and will not be deferred, regardless of the Participant’s prior Deferral Election.
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(d)
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Notwithstanding any Deferral Period(s) elected by a Participant pursuant to Section 3.2(b) or 3.2(c), as applicable, and this Section 5.1, and subject to Section 5.6, if a Participant has a Separation from Service prior to Early Retirement Age and prior to the Short-Term Distribution Date, if any, elected by the Participant in accordance with Section 5.1(b),
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(i)
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such Participant shall be paid out of the Plan in one (1) lump sum in cash within sixty (60) days after such Separation from Service; or
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(ii)
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(A) with respect to a Participant’s 409A Amount, if the Participant has been on disability leave for a period of six (6) months and the Participant does not retain a right to reemployment under an applicable statute or by contract, such Participant’s 409A Amount shall be paid out of the Plan in one (1) lump sum in cash within sixty (60) days after such six (6) month disability period has elapsed; and
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(B)
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with respect to a Participant’s Grandfathered Amount, if any, if the Participant has been on disability leave for a period of twelve (12) months, such Participant’s Grandfathered Amount shall be paid out of the Plan in one (1) lump sum in cash within sixty (60) days after such twelve (12) month disability period has elapsed.
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5.2
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Payment of Deferred Amounts
. Subject to Section 5.6(d), payment of a Participant’s Deferred Compensation Account under the Plan shall be made in cash in one of the following forms irrevocably elected by the Participant pursuant to Sections 3.2(b) and 5.1:
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(a)
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Lump Sum Payment
. Payments shall be made in one (1) lump sum in an amount equal to the value of the Participant’s Deferred Compensation Account (i) in the case of payment pursuant to an election made under Sections 3.2(b) and 5.1(a)(i)(A), on the last business day of the month preceding the date of payment; (ii) in the case of payment pursuant to an election to commence payment under Sections 3.2(b) and 5.1(a)(i)(B) in the form of a lump sum, on the Retirement Distribution Date; and (iii) in the case of payment pursuant to an election made under Section 5.1(b) on the Short-Term Distribution Date.
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(b)
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Installment Payments
. Payments shall be made in either five (5) or ten (10) annual installments, as irrevocably elected by the Participant. Subject to Section 5.6, the initial payment shall be made on the Retirement Distribution Date. The remaining installment payments shall be made in the form of cash each year thereafter on the anniversary date of the Retirement Distribution Date (notwithstanding any delay of an initial payment due to the application of Section 5.6), until the Participant’s entire Deferred Compensation Account has been paid. The amount of each installment payment shall be equal to value of the Participant’s Deferred Compensation Account on the Retirement Distribution Date or anniversary date thereof. as applicable (or if that day is not a business day, then on the immediately preceding business day), multiplied by a fraction, the numerator of which is one (1), and the denominator of which is the number of installment payments remaining.
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5.3
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Unforeseeable Emergency
. The Committee shall have the sole authority to alter the timing or manner of payment of amounts from a Participant’s Deferred Compensation Account in the event that the Participant establishes, to the satisfaction of the Committee that the Participant has experienced an unforeseeable emergency, as defined in Treas. Reg. Sec. 1.409A-3(i)(3)(i). In such event, the Committee may, upon the request of the Participant:
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(a)
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Provide that all or a portion of the amount previously deferred by the Participant immediately shall be paid to the Participant in a lump sum payment; or
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(b)
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Provide that all or a portion of the installments payable over a period of time immediately shall be paid to the Participant in a lump sum payment.
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(i)
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Through reimbursement or compensation by insurance or otherwise;
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(ii)
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By liquidation of the Participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship; or
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(iii)
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By cessation of deferrals under the Plan.
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5.4
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Maximum Deductible Amount
. An amount that would otherwise be paid from the Deferred Compensation Account of a Participant in a given Plan Year may be delayed to the extent that the Company reasonably anticipates that if the payment were made as scheduled the Company’s deduction with respect to such payment would not be permitted due to the application of Code Section 162(m). Subject to the first sentence of Section 5.5, amounts not paid as a result of the above limitation shall be paid in the earlier of (a) the Company’s first taxable year in which the Company reasonably anticipates that if the payment is made during such year the deduction of such payment will not be barred by application of Section 162(m), or (b) the period beginning with the date of the Participant’s Separation from Service or death, and ending on the later of (i) the last day of the taxable year of the Company in which the Participant incurs a Separation from Service or dies, or (ii) the 15
th
day of the third month following the Participant’s Separation from Service or death.
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5.5
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Death of Participant
. A Participant, who at the time of his death is employed by the Company or any Related Company and who dies before a complete distribution of his Deferred Compensation Account has been made to him, or who has a Separation from Service and subsequently dies before a complete distribution of his Deferred Compensation Account has been paid to him, shall have his remaining Deferred Compensation Account distributed in cash in one (1) lump sum to his Beneficiary. Such distribution shall be made any time during the period beginning on the date of death and ending on December 31 of the first calendar year following the calendar year in which the Participant’s death occurs.
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5.6
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Limits on Distributions to Key Employees
. Anything in the Plan to the contrary notwithstanding, including without limitation Section 5.3, if a Participant is a Key Employee, any distribution of a 409A Amount to such Participant due to the Participant’s Separation from Service that would otherwise be made during the six months following such Separation from Service shall in no event be made earlier than the earlier of (i) the date that is six months and one day following such Separation from Service, or (ii) the Participant’s death.
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5.7
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Annual Identification of Key Employees
. The Specified Employee Identification Date, as defined in Treas. Reg. Sec. 1.409A-1(i)(3), to be used in determining Key Employees of the Company shall be September 30 of any Plan Year. The January 1 of the Plan Year next following that Plan Year shall be the Specified Employee Effective Date, as defined in Treas. Reg. Sec. 1.409A-1(i)(4), for Participants identified as Key Employees on the immediately preceding Specified Employee Identification Date. Participants identified as Key Employees on a Specified Employee Identification Date (September 30) shall be treated as Key Employees under the Plan for the 12-month period beginning on the Specified Employee Effective Date (January 1) next following such Specified Employee Identification Date.
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5.8
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Grandfathered Amount
. Notwithstanding anything herein to the contrary, a Participant’s Grandfathered Amount, if any, shall be paid at the time and in the form determined under the Plan as in effect October 3, 2004.
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5.9
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409A Amounts Attributable to Service Prior to 2018
. Notwithstanding anything herein to the contrary, a Participant’s 409A amounts attributable to services performed prior to 2018 shall be paid at the time and in the form determined under the Plan as in effect prior to November 1, 2017, which are described in Supplement 2; provided, however that amounts payable on account of the death of Participant shall be paid in accordance with Section 5.5
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6.1
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Terms Include Authorized Delegates
. Where appropriate, the terms “Company,” “Corporation,” “Committee” or “Investment Committee” as used in this Plan shall also include any applicable subcommittee or any duly authorized delegate of the Company, the Corporation, the Committee or the Investment Committee, as the case may be. Such duly authorized delegate may be an individual or an organization within the Company, the Corporation, the Committee or the Investment Committee, or may be an unrelated third party individual or organization.
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6.2
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Authority of the Committees
. The Committee shall administer the Plan and shall have full power to select employees for participation in the Plan and to determine the terms and conditions of each employee’s participation; to construe and interpret the Plan and any agreement or instrument entered into hereunder; and to establish, amend, or waive rules and regulations for the Plan’s administration. Further, the Committee shall have full power to make any other determination which may be necessary or advisable for the Plan’s administration. The Investment Committee shall have those powers set forth in Section 4.1 of the Plan.
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6.3
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Decisions Binding
. Subject to the provisions of Article VII, all determinations and decisions made by the Committee or the Investment Committee pursuant to the provisions of the Plan, and all related orders, resolutions or actions of the Board, the Compensation and Benefits Committee of the Board, the Chief Executive Officer of the Corporation or the Executive Vice President and Human Resources Department Head of the Corporation (or the duly authorized designee of either of the latter two individuals) shall be final, conclusive, and binding on all persons, including the Company, its stockholders, employees, Participants, and their estates and beneficiaries.
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7.1
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Amendment or Termination
. The Corporation has set no termination date for the Plan but reserves the right to amend or terminate the Plan when, in the sole discretion of the Corporation, such amendment or termination is advisable.
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(a)
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Any such termination shall be made by action of the Compensation and Benefits Committee of the Board (or by action of the Board if the Compensation and Benefits Committee is unavailable or unable to act for any reason) and shall be effective as of the date set forth in such resolution.
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(b)
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Any such amendment shall be made in accordance with the following:
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(i)
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material amendments to the Plan shall be made by action of the Compensation and Benefits Committee of the Board (or by action of the Board, if the Compensation and Benefits Committee is unavailable or unable to act for any reason); and
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(ii)
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(A) non-material or administrative amendments to the Plan or (B) any amendment to the Plan deemed required, authorized or desirable under applicable statutes, regulations or rulings, shall be made by action of either the Chief Executive Officer of the Corporation or the Executive Vice President and Human Resources Department Head of the Corporation (or either of their duly authorized designees).
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7.2
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Effect of Amendment or Termination
. No amendment or termination of the Plan shall directly or indirectly reduce the balance of any deferred compensation held hereunder as of the effective date of such amendment or termination. Upon termination of the Plan, distribution of amounts in a Participant’s Deferred Compensation Account shall be made to him or his Beneficiary in the manner and at the time described in Article V of the Plan. No additional credits shall be made to the Deferred Compensation Account of a Participant for any Plan Year beginning after the termination of the Plan, but the Company shall continue to credit gains and losses attributable to investments made pursuant to Section 4.1 to such Deferred Compensation Account until the balance of such Account has been fully distributed to the Participant or his Beneficiary.
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7.3
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Amendments Necessary to Satisfy Code Section 409A
. Anything in the preceding Sections 7.1 or 7.2 or elsewhere in the Plan to the contrary notwithstanding:
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(a)
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the Plan may be amended in any manner necessary to ensure that the Plan complies in all applicable respects with Code Section 409A; and
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(b)
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the Plan may not be amended in any manner that would cause the Plan to fail to comply in any applicable respect with Code Section 409A.
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8.1
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Plan Unfunded
/
Participant’s Rights Unsecured
. The Plan at all times shall be entirely unfunded and no provision shall at any time be made with respect to segregating any assets of the Company for payment of any benefits hereunder. The Company shall contribute assets to a rabbi trust described in Revenue Procedure 92-64 (the “Trust”) for the purpose of paying benefits under this Plan, and if and to the extent that the Company does so, benefits under the Plan shall be payable pursuant to and in accordance with the Trust Agreement, which shall in all events provide that all assets held thereunder remain subject to the claims of the general creditors of the Company. No Participant, Beneficiary or any other person shall have any interest in any particular assets of the Company or the Trust by reason of the right to receive a benefit under the Plan and any such Participant, Beneficiary or other person shall have only the rights of a general unsecured creditor of the Company with respect to any rights under the Plan and Trust Agreement.
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8.2
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Tax Withholding
. In connection with any deferral under the Plan, the Company shall have the right to withhold from nondeferred Incentive Compensation amounts or other compensation available at the time of the award an amount sufficient to satisfy the FICA tax withholding requirements applicable to such deferrals, or to require the Participant to remit to the Company an amount sufficient to satisfy the tax obligation. In connection with any distribution to the Participant of deferred Incentive Compensation, the Company shall have the right to withhold from such distribution an amount sufficient to satisfy Federal, State, and local tax withholding requirements applicable to such distributions.
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8.3
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No Guaranty of Benefits
. Nothing contained in the Plan shall constitute a guaranty by the Company or any other person or entity that the assets of the Company will be sufficient to pay any benefit hereunder.
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8.4
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No Enlargement of Employee Rights
. No Participant shall have any right to receive a distribution of contributions made under the Plan except in accordance with the terms of the Plan. Establishment of the Plan shall not be construed to give any Participant the right to be retained in the service of the Company.
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8.5
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Spendthrift Provision
. No interest of any person or entity in, or right to receive a distribution under, the Plan shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind; nor may such interest or right to receive a distribution be taken, either voluntarily or involuntarily, for the satisfaction of the debts of, or other obligations or claims against, such person or entity, including claims for alimony, support, separate maintenance and claims in bankruptcy proceedings.
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8.6
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Applicable Law
. To the extent not preempted by Federal law, the Plan shall be construed and administered under the laws of the State of Illinois.
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8.7
|
Incapacity of Recipient
. If any benefit under the Plan shall be payable to a minor or a person not adjudicated incompetent but who, by reason of illness or mental or physical disability, is, in the opinion of the Committee, unable to properly manage his affairs, such benefit shall be paid in such of the following ways as the Committee deems best: (a) to the person directly; (b) in the case of a minor, to a custodian under any Uniform Gift to Minors Act for the person; or (c) to the person’s spouse, adult child or blood relative. Any benefit so paid shall be a complete discharge of any liability of the Company and the Plan therefor.
|
8.8
|
Successors
. The Plan shall not be automatically terminated by a transfer or sale of assets of the Corporation or by the merger or consolidation of the Corporation into or with any other corporation or other entity, but the Plan shall be continued after such sale, merger or consolidation only if and to the extent that the transferee, purchaser or successor entity agrees to continue the Plan. In the event that the Plan is not continued by the transferee, purchaser or successor entity, then the Plan shall terminate subject to the provisions of Section 7.2.
|
8.9
|
Unclaimed Benefit
. Each Participant shall keep the Committee informed of his current address and the current address of his designated Beneficiary. None of the Corporation, the Company or the Committee shall be obligated to search for the whereabouts of any person. If the Committee is unable to locate the Participant or any Beneficiary of the Participant, then none of the Corporation, the Company or the Plan shall have any further obligation to pay any benefit hereunder to such Participant or Beneficiary and such benefit shall be forfeited; provided, however, that if the Participant or Beneficiary makes a valid claim for any benefit that has been forfeited, the forfeited benefit shall be reinstated.
|
8.10
|
Electronic or Telephonic Notices
. Any election, notice, direction or other such action
|
8.11
|
Limitations on Liability
. Notwithstanding any of the preceding provisions of the Plan, neither the Company, any member of the Committee or the Investment Committee nor any individual acting as an employee or agent of the Company, the Committee or the Investment Committee shall be liable to any Participant, former Participant, Beneficiary or any other person for any claim, loss, liability or expense incurred in connection with the Plan.
|
8.12
|
Gender; Headings
. Words in the masculine gender shall include the feminine and the singular shall include the plural, and vice versa, unless qualified by the context. Any headings used herein are included for ease of reference only, and are not to be construed so as to alter the terms hereof.
|
8.13
|
Compliance with Code Section 409A
. The Plan is intended to comply in all applicable respects with the requirements of Code Section 409A and shall be construed and administered so as to comply with that Code section.
|
2.
|
Application
. This Supplement #1 shall apply to:
|
(a)
|
Any Participant who, prior to February 28, 2005, requested the cancellation of the Participant’s previous election to defer all or a portion of the cash award payment of Incentive Compensation scheduled to be made to the Participant on February 28, 2005;
|
(b)
|
Any Participant who previously elected to defer all or a portion of the cash award payment of Incentive Compensation scheduled to be made to the Participant in the Plan Year beginning January 1, 2005 (the “2005 Plan Year”) and whose 2005 Plan Year payment schedule for such Incentive Compensation was changed from annual to quarterly after such deferral election had been made;
|
(c)
|
Any Participant who would be considered a “specified employee” as defined in proposed regulation section 1.409A-1(i) issued by the U.S. Treasury Department and the Internal Revenue Service; who terminates employment for any reason on or after the Effective Date of this Supplement #1 and on or before October 31, 2005 (individually, a “2005 Specified Employee Participant” and, collectively, the “2005 Specified Employee Participants”).
|
3.
|
Special Provision
. The following special provision shall apply to the Special Election Cancellation Participants:
|
4.
|
Special Election Deadline
. To be effective, the election cancellation referred to in Paragraph 3 above must be executed and delivered to the Company by the Special Election Cancellation Participant on or before the date specified by the Company that is after the Effective Date of this Supplement #1, but no later than December 1, 2005.
|
5.
|
Special Provision
. The following special provision will apply to the 2005 Specified Employee Participants:
|
6.
|
Limitations on Supplement
. Nothing in this Supplement #1 shall be construed to provide any Special Election Cancellation Participant or 2005 Specified Employee Participant with any rights or benefits under the Plan other than those described in Paragraphs 3 through 5, as applicable, above.
|
1.
|
“Distribution Date” was defined under the pre-November 1, 2017 Plan as the last business day of February of any Plan Year as provided under Section 5.1 of the Plan and as irrevocably set forth in each of the Participant’s Deferral Election forms.
|
2.
|
Deferral Election. Section 3.2 of the Plan provided that Participants “shall make the election to defer Incentive Compensation under the Plan on a Deferral Election Form by such dates as the Committee from time to time establishes; provided, that any such election must be made on or before December 31 of the Participant’s taxable year preceding the taxable year in which the Participant performs the services that give rise to the Incentive Compensation to be deferred. Participants shall make the following determinations on each Deferral Election Form, which determinations shall become irrevocable on December 31 of the Plan Year in which the election is made (or such earlier date in that Plan Year as the Committee may determine):
|
(a)
|
The amount to be deferred with respect to the Participant’s Incentive Compensation paid during the Plan Year for which the election applies, pursuant to the terms of Section 3.1 herein;
|
(b)
|
The deferral period after which payments of deferred amounts commence (the “Deferral Period”), pursuant to the terms of Section 5.1 herein; and
|
(c)
|
The form of the payment of the deferred amount, pursuant to the terms of Section 5.2 herein.
|
3.
|
Article V described the payment provisions applicable to Retirement Deferrals and Short- Term Deferrals. Under the pre-November 1, 2017 Plan, Retirement Deferrals were not automatic. Sections 5.1 and 5.2 provided:
|
(a)
|
If the Participant elects a Short-Term Deferral, payments under the Plan shall commence only in the form provided under Section 5.2(a) of this Plan on any Distribution Date elected by the Participant; provided that such Distribution Date shall be no earlier than the Distribution Date that is subsequent to three (3) Plan Years following the end of the Plan Year in which the Incentive Compensation would have otherwise been paid to the Participant.
|
(b)
|
Subject to Section 5.6, if the Participant elects a Retirement Deferral, payments under the Plan shall commence following the Participant’s Separation from Service after reaching the Participant’s Normal, Early or Postponed Retirement date, as such dates are defined in the Pension Plan (such Separation from Service in those circumstances referred to as a “Retirement Date”), provided that payments under the Plan shall commence, as elected by the Participant in accordance with Section 3.2, either (i) within sixty (60) days of the Participant’s Retirement Date or (ii) on the Distribution Date immediately following the Plan Year in which the Participant’s Retirement Date occurs (provided that payments must commence under (ii) if the Participant elects to receive the payments in the form provided under Section 5.2(b) of the Plan).
|
(c)
|
Notwithstanding anything in the Plan to the contrary, Incentive Compensation paid after a Participant’s Retirement Date or other Separation from Service is not eligible for deferral and will not be deferred, regardless of the Participant’s prior Deferral Election.
|
(d)
|
Notwithstanding any Deferral Period(s) elected by a Participant pursuant to Section 3.2(b) and this Section 5.1, and subject to Section 5.6, if at any time before the end of the elected Deferral Period,
|
(i)
|
a Participant incurs a Separation from Service, such Participant shall be paid out of the Plan in one (1) lump sum in cash within sixty (60) days after such Separation from Service; or
|
(ii)
|
(A) with respect to a Participant’s 409A Amount, the Participant has been on disability leave for a period of six (6) months, such Participant’s 409A Amount shall be paid out of the Plan in one (1) lump sum in cash within sixty (60) days after such six (6) month disability period; and
|
(B)
|
with respect to the Participant’s Grandfathered Amount, if any, the Participant has been on disability leave for a period of twelve (12) months, such Participant’s Grandfathered Amount shall be paid out
|
(b)
|
Installment Payments
. Payments will be made in either five (5) or ten (10) annual installments, as irrevocably elected by the Participant. Subject to Section 5.6, the initial payment shall be made on the Distribution Date following the Participant’s Retirement Date. The remaining installment payments shall be made in the form of cash each year thereafter (on each anniversary date of the initial payment), until the Participant’s entire Deferred Compensation Account has been paid. The amount of each installment payment shall be equal to the value of the the Participant’s Deferred Compensation Account on the last business day of January immediately prior to each such payment, multiplied by a fraction, the numerator of which is one (1), and the denominator of which is the number of installment payments remaining.
|
Vesting Date
|
Percentage of Cash Award Vesting
|
First Anniversary of Grant Date
|
0%
|
Second Anniversary of Grant Date
|
0%
|
Third Anniversary of Grant Date
|
50%
|
Fourth Anniversary of Grant Date
|
50%
|
Vesting Date
|
Percentage of Cash Award Vesting
|
|
|
|
|
|
|
|
|
Vesting Date
|
Percentage of Stock Options Vesting
|
First Anniversary of Grant Date
|
25%
|
Second Anniversary of Grant Date
|
25%
|
Third Anniversary of Grant Date
|
25%
|
Fourth Anniversary of Grant Date
|
25%
|
Vesting Date
|
Percentage of Stock Options Vesting
|
|
|
|
|
|
|
|
|
Vesting Date
|
Percentage of Stock Units Vesting
|
First Anniversary of Grant Date
|
0%
|
Second Anniversary of Grant Date
|
0%
|
Third Anniversary of Grant Date
|
50%
|
Fourth Anniversary of Grant Date
|
50%
|
Vesting Date
|
Percentage of Stock Units Vesting
|
|
|
|
|
|
|
|
|
Average Annual Rate of Return on Equity
|
Less than 7.5%
|
7.5%
|
9.0%
|
12.0%
|
≥ 15%
|
PSU Multiplier
|
0%
|
25%
|
50%
|
100%
|
150%
|
(i)
|
The average annual rate of return on equity for the Performance Period attained by the Corporation is the return on average common equity, based on the Corporation’s net income, and shall be determined by the Committee in its sole and absolute discretion in accordance with generally accepted accounting principles (subject to the adjustments set forth below). For purposes of the foregoing, the average annual rate of return on equity shall be calculated as the simple average annual rate of return on equity for the three-year Performance Period measured across the Corporation as a whole.
|
(ii)
|
Notwithstanding anything herein to the contrary, for purposes of determining the average annual rate of return on equity for any individual fiscal year of the Corporation within the Performance Period, if any of the following items, individually or aggregated with other items as reflected herein, would produce a change to net income in excess of $100 million, net income shall be determined for such fiscal year by excluding such item(s) as aggregated:
|
(A)
|
the gains or losses resulting from, and the expenses incurred in connection with, the acquisition or disposition of a business, a merger, or a similar transaction, and integration in connection therewith;
|
(B)
|
the impact of securities issuances in connection with events described in item (A), above, and expenses incurred in connection therewith;
|
(C)
|
any gain, loss, income or expense resulting from changes in accounting principles, tax laws, or other laws or provisions affecting reported results, that become effective during the Performance Period;
|
(D)
|
any gain or loss resulting from, and expenses incurred in connection with, any litigation or regulatory investigations;
|
(E)
|
any charges and expenses incurred in connection with restructuring activity, including but not limited to, reductions in force;
|
(F)
|
the impact of discontinued operations;
|
(G)
|
asset write-downs;
|
(H)
|
the impact on goodwill impairment; or
|
(I)
|
any other gain, loss, income or expense with respect to the Performance Period that is extraordinary, unusual and/or infrequent.
|
|
Percent Owned
|
Jurisdiction of
Incorporation
|
The Northern Trust Company
|
100%
|
Illinois
|
MFC Company, Inc.
|
100%
|
Delaware
|
Norlease, Inc.
|
100%
|
Delaware
|
Clenston Ltd.*
|
100%
|
Bermuda
|
NL-Camillus NMTC Fund, LLC
|
100%
|
Delaware
|
Northern CDE Corporation
|
100%
|
Illinois
|
Northern Trust Company of California
|
100%
|
California
|
Northern Trust Guernsey Holdings Limited
|
100%
|
Guernsey
|
Northern Trust (Guernsey) Limited
|
100%
|
Guernsey
|
Northern Trust Hedge Fund Services LLC
|
100%
|
Delaware
|
Northern Trust Holdings Limited
|
100%
|
England
|
Northern Trust Global Services Limited
|
100%
|
England
|
1889 Holdings, S.A.
|
100%
|
Luxembourg
|
Northern Trust Switzerland AG
|
100%
|
Switzerland
|
NT Property Nominees 1A Limited
|
100%
|
England
|
NT Property Nominees 1B Limited
|
100%
|
England
|
Northern Trust Investments, Inc.
|
100%
|
Illinois
|
Nortrust Nominees Limited
|
100%
|
England
|
NTC-Dormae NMTC Fund, LLC
|
100%
|
Delaware
|
The Northern Trust Company of Delaware
|
100%
|
Delaware
|
The Northern Trust Company of Nevada
|
100%
|
Nevada
|
The Northern Trust Company UK Pension Plan Limited
|
100%
|
England
|
The Northern Trust Company, Canada
|
100%
|
Ontario, Canada
|
The Northern Trust International Banking Corporation
|
100%
|
Edge Act
|
Northern Operating Services Private Limited
|
100%
|
India
|
Northern Trust Cayman International, Ltd.
|
100%
|
Cayman Islands, BWI
|
Northern Trust Convertibles LLP
|
100%
|
England
|
Northern Trust Equities Limited
|
100%
|
England
|
Aviate Equities Pty Ltd.
|
100%
|
Australia
|
Northern Trust Fund Managers (Ireland) Limited
|
100%
|
Ireland
|
Northern Trust Global Fund Services Cayman Limited
|
100%
|
Cayman Islands, BWI
|
Northern Trust Management Services Asia Pte. Ltd.
|
100%
|
Singapore
|
Northern Operating Services Asia Inc.
|
99.99%
|
Philippines
|
The Northern Trust Company of Hong Kong Limited
|
100%
|
Hong Kong
|
NT Securities Asia Ltd.
|
100%
|
Hong Kong
|
Northern Trust Management Services Limited
|
100%
|
England
|
Northern Trust Global Investments Limited
|
100%
|
England
|
Northern Trust Partners Scotland Limited
|
100%
|
Scotland
|
Northern Trust Securities LLP
|
100%
|
England
|
NT Global Advisors, Inc.
|
100%
|
Ontario, Canada
|
The Northern Trust Scottish Limited Partnership
|
100%
|
Scotland
|
Northern Trust (Ireland) Limited
|
100%
|
Ireland
|
Northern Trust Fiduciary Services (Ireland) Limited
|
100%
|
Ireland
|
Northern Trust Fund Services (Ireland) Limited
|
100%
|
Ireland
|
Northern Trust International Fund Administration Services (Ireland) Limited
|
100%
|
Ireland
|
|
|
|
|
Percent Owned
|
Jurisdiction of
Incorporation
|
Northern Trust Management Services (Ireland) Limited
|
100%
|
Ireland
|
Northern Trust Nominees (Ireland) Limited
|
100%
|
Ireland
|
Northern Trust Pension Trustees (Ireland) Limited
|
100%
|
Ireland
|
NTRS Nominees Limited
|
100%
|
Ireland
|
Northern Trust GFS Holdings Limited
|
100%
|
Guernsey
|
Northern Trust Fiduciary Services (Guernsey) Limited
|
100%
|
Guernsey
|
Arnold Limited
|
100%
|
Guernsey
|
Doyle Administration Limited
|
100%
|
Guernsey
|
Barfield Nominees Limited
|
100%
|
Guernsey
|
Truchot Limited
|
100%
|
Guernsey
|
Vivian Limited
|
100%
|
Guernsey
|
Northern Trust International Fund Administration Services (Guernsey) Limited
|
100%
|
Guernsey
|
Admiral Nominees Limited
|
100%
|
Guernsey
|
Nelson Representatives Limited
|
100%
|
Guernsey
|
Northern Trust Luxembourg Capital S.A.R.L.
|
100%
|
Luxembourg
|
Northern Trust Management Services (Deutschland) GmbH
|
100%
|
Germany
|
NT EBT Limited
|
100%
|
England
|
The Northern Trust Company of Saudi Arabia (a closed joint stock company)
|
100%
|
Kingdom of Saudi Arabia
|
TNT-CASFV NMTC Fund, LLC
|
100%
|
Illinois
|
Northern CDE 7, LLC
|
100%
|
Illinois
|
TNT-DHA NMTC Fund, LLC
|
100%
|
Illinois
|
Northern CDE 2, LLC
|
100%
|
Illinois
|
TNT-Eastside NMTC Fund, LLC
|
100%
|
Illinois
|
Northern CDE 1, LLC
|
100%
|
Illinois
|
TNT-HHO NMTC Fund, LLC
|
100%
|
Illinois
|
Northern CDE 5, LLC
|
100%
|
Illinois
|
TNT-PBSA NMTC Fund, LLC
|
100%
|
Illinois
|
Northern CDE 3, LLC
|
100%
|
Illinois
|
TNT-Student U NMTC Fund, LLC
|
100%
|
Illinois
|
Northern CDE 4, LLC
|
100%
|
Illinois
|
50 South Capital Advisors, LLC
|
100%
|
Delaware
|
Equilend Holdings LLC
|
10%
|
Delaware
|
Northern Trust European Holdings Limited
|
100%
|
England
|
Northern Trust Luxembourg Management Company S.A.
|
100%
|
Luxembourg
|
Northern Trust Global Investments Japan, K.K.
|
100%
|
Japan
|
Northern Trust Holdings L.L.C.
|
100%
|
Delaware
|
Northern Trust Securities, Inc.
|
100%
|
Delaware
|
Northern Trust Services, Inc.
|
100%
|
Illinois
|
Nortrust Realty Management, Inc.
|
100%
|
Illinois
|
NTC Capital I
|
100%
|
Delaware
|
NTC Capital II
|
100%
|
Delaware
|
1.
|
I have reviewed this report on Form 10-K for the year ended
December 31, 2017
of Northern Trust Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
February 27, 2018
|
/s/ Michael G. O’Grady
|
|
|
Michael G. O’Grady
|
|
|
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this report on Form 10-K for the year ended
December 31, 2017
of Northern Trust Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
February 27, 2018
|
/s/ S. Biff Bowman
|
|
|
S. Biff Bowman
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.
|
/s/ Michael G. O’Grady
|
Michael G. O’Grady
|
Chief Executive Officer
|
(Principal Executive Officer)
|
February 27, 2018
|
/s/ S. Biff Bowman
|
S. Biff Bowman
|
Chief Financial Officer
|
(Principal Financial Officer)
|
February 27, 2018
|